### Integrated Annual Report 2022 ## OPEN UP ## MOMENTS ## THAT ## REFRESH ## US ALL Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 Report Governance Statements Reporting Information ### Contents 2022 highlights | Strategic Report | Corporate Governance | | Swiss Statutory Reporting | | Volume (m unit cases) | | Net sales revenue (€m) | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 1 Our purpose | 94 Chairman’s introduction | | 223 Report of the statutory auditor | | | | | | | 7 Chairman’s letter | | tocorporate governance | | onCoca‑Cola HBC AG’s | 2,711.8 | | 9,198.4 | | | 9 Chief Executive Officer’s letter | 98 Board of Directors | | | consolidated financial | | | | | | | | | | | 2021: 2,412.7 | | 2021: 7,168.4 | | | 12 Our business at a glance | 101 Corporate Governance Report | | | statements | | | | | | | | | 228 Report of the statutory auditor | | | 1 | | 1 | | 14 Our business model | 128 Directors’ Remuneration Report | | | | Comparable EBIT | (€m) | Comparable EBIT | margin (%) | | 16 Stakeholder engagement | 156 Statement of Directors’ | | | onCoca‑Cola HBC AG’s financial | | | | | | 19 Market trends | | responsibilities | | statements | | | | | | | | | | | 929.7 | | 10.1 | | | 21 Our purpose framework | | | 230 Coca‑Cola HBC AG’s financial | | | | | | Financial Statements statements 2021: 831.0 2021: 11.6 23 Our strategy | | | 158 Independent auditor’s report | 240 Report of the statutory auditor | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | 24 Leverage our unique | | | | | | | 2 | | | | | | | Profit before tax (€m) | Net profit | (€m) | | | 24/7portfolio | 166 Financial statements | | onthe Remuneration Report | | | | | 28 Win in the marketplace | | 170 Notes to the consolidated | 242 Statutory Remuneration Report | | | | | financialstatements ## 32 Fuel growth through Supplementary Information 623.6 415.4 competitiveness and investment 2021: 734.9 2021: 547.2 245 Alternative performance 36 Feature: Egypt measures 1 38 Cultivate the potential Comparable EPS (€) Basic EPS (€) 250 Assurance statement ofourpeople 253 Shareholder information 43 Feature: Ukraine ## 254 2022 SASB index 1.706 1.134 45 Earn our licence tooperate 257 Glossary 2021: 1.584 2021: 1.499 54 Key performance indicators 57 Mission 2025 Sustainability Primary packaging collected Energy-efficient coolers commitments forrecycling(equivalent) 59 Managing risk and materiality ## 80 TCFD recommendations 49% ## 82 Viability statement 48% 2021: 42% 84 Financial review 2021: 46% 88 Segment highlights 91 Non-financial reporting directive Integrated report online Please click here to view our integrated report online https://www.coca-colahellenic. com/en/investor-relations/2022- Front cover: This is a team fromCoca‑ColaHBC integrated-annual-report 1. For details on APMs, refer to ‘Alternative performance measures’ section. Egyptenjoying a sparkling beverage break. 2. Net profit refers to net profit after tax attributable toowners of the parent. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 1 Report Governance Statements Reporting Information ### Our purpose ## OUR WORK ## REQUIRES SEALING ## REFRESHMENT IN... Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 2 Report Governance Statements Reporting Information ### Our purpose continued ## …BUT IT’S THE ## MOMENTS WE ## Delivering for ## OPEN UP THAT ## ourstakeholders At Coca-Cola HBC we look to create andshare value with all our stakeholders. ## MATTER MOST Read more on pages 16-18 Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 3 Report Governance Statements Reporting Information ### Our purpose continued ## WE OPEN UP ## OPPORTUNITIES ## FOR OUR ## Our customers Our suppliers ## CUSTOMERS We put our customers first, creating shared We are working together to reduce value and growing their, and our business. emissionsacross the value chain. Partnershipwith oursuppliers helps ## The Coca-Cola ustoavoid supply chaindisruptions. ## AND PARTNERS ## Company Our longest standing and closest strategic partner: wehave worked together since 1951. Read more on pages 28-31 Read more on pages 32-35 Read more on page 18 Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 4 Report Governance Statements Reporting Information ### Our purpose continued ## WE OPEN UP ## EMPLOYEES TO ## THEIR FULL ## POTENTIAL ## Our people People are our most important asset. Weareinvesting behind our people, building the best teams in the industry and creating aninclusive growthculture. Read more on pages 38-42 Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 5 Report Governance Statements Reporting Information ### Our purpose continued ## WE OPEN UP LIFE Our consumers Our 24/7 portfolio caters to a growing rangeof tastes and offers choice across everyoccasion, all in increasingly ## TO EXPERIENCES sustainablepackaging. Read more on pages 24-27 ## THAT DELIGHT Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 6 Report Governance Statements Reporting Information ### Our purpose continued ## Our communities ## AND WE OPEN UP We are a part of our communities, providingemployment directly or throughthewider value chain. We make ## NetZeroby40 adifferencethrough programmes like ## THE CHANCE TO #YouthEmpoweredand through progress We are fully committed to our ambitious onour sustainabilitycommitments. netzero target, with management incentivesaligned. To achieve this goal weneed to collaborate with our existing ## MAKE A DIFFERENCE Read more on pages 45-53 andfuture partners. Read more on page 48 Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 7 Report Governance Statements Reporting Information ### Chairman’s letter ## LEADERSHIP ## FOR LONG- ## TERM SUCCESS ## “We are proud to continue Dear Stakeholder, 2022 was a challenging year for many businesses, ## opening up moments that and Coca‑Cola HBC was no exception. From the ## refresh us all, both now very early days of the war in Ukraine, wehave focused on the health and safety of our people. ## andin the future, with the We are providing aid to both our colleagues and ## long-term needs of all our communities and will continue to do so. ## stakeholders at the heart The conflict between Russia and Ukraine has affected our business in those countries and ## of our decision making.” beyond, as commodity prices increased and inflation rose. Anastassis G. David Chairman of the Board While facing difficulties, our people constantly givetheir best. We have seen this through pandemic-related disruptions and now, with newunimaginable challenges due to geopolitical upheaval. Our Ukraine team in particular has shown tremendous perseverance and care, requesting in May that werestart production outside Kyiv so they could return to serving customers. I would like to extend my thanks to all of our people across the Group fortheir dedication, commitment and sheer enthusiasm to deliver for all our stakeholders. 8 Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 ## Chairman's letter continued ### Seizing opportunities Our acquisition of the Coca-Cola bottler in Egypt was completed at the beginning of the year, expanding our footprint in high-growth markets. I had the pleasure of meeting the team in Egypt during the year and saw first-hand how well they are integrating within the Coca-Cola HBC family. I was particularly impressed by their dedication to their customers and their communities—important values we share. The Board has followed the integration of this new market closely. We remain convinced that sharing the Group's proven capabilities, experience and best practices will unlock the growth potential of Egypt, opening opportunities for our people and the wider community there, as together we positively impact livelihoods and improve sustainability practices at scale. ### Purpose and strategy Throughout the last year, despite, and indeed because of turbulence and challenges, the Board has remained focused on our medium-term Growth Story 2025 strategy, creating value for our customers and delighting consumers. By remaining focused on our strategy, we have been able to prioritise the actions and investments that have positioned the company for sustained success. Our performance in 2022 was testament to this. Coca-Cola HBC delivered strong financial performance with record levels of comparable EBIT, free cash flow and strong ROIC. It was also another year where the company made progress towards our vision of being The Leading 24/7 Beverage Partner with investments behind the 24/7 portfolio, our capabilities and sustainability. I was particularly proud that the Company was ranked this year as the number one beverage company globally by the Dow Jones Sustainability Index¹. As geopolitical turmoil and macroeconomic uncertainty continue, it is more important than ever that we inspire and empower our people to act with speed and agility, keeping customers at the heart of what they do. To further refine our focus, we as a Board have approved and championed a new purpose for our Company: **open up moments that refresh us all**. This captures the essence of what we bring to our customers, consumers and communities, spreading delight with our iconic and loved brands. ### Leadership in action I'm extremely proud of how the Board has performed during another challenging year. We have robust discussions, representing a variety of viewpoints which allow rigorous evaluation and decision making that benefits all our stakeholders in the long term. We also continue to take bold decisions regarding sustainability, approving new, long-term targets for food waste and biodiversity during the year. 1. As per the DJ9 results, 9 December 2022. As part of our Mission 2025, we are committed to enhancing biodiversity by reducing emissions and water use, preserving and re-instating water priority areas, and by sourcing agricultural ingredients sustainably. Our aim is to leave nature in a state better than the one we found it in. For more on this, and our ambitious Mission 2025 sustainability targets, see page 57. We had no new Board members in 2022, so it's been an opportunity to cement Board performance as a team. The feedback from our annual Board effectiveness study was extremely positive and we will be implementing the follow-up actions in the coming months. ### Dividend growth For 2023 the Board is proposing a dividend of 40.78 per share. This is a 9.9% increase versus the 40.71 dividend paid during 2022, maintaining our commitment to a progressive dividend. This proposed dividend will represent a 48% pay-out ratio, within our targeted range of 40 to 50% of comparable EPS. The consistent growth of our dividend is testament to our confidence in the strong fundamentals of our business, as well as our commitment to shareholders. ### Looking ahead As I write, fighting and humanitarian suffering continue in Ukraine and the macroeconomic climate, while showing signs of improvement, remains uncertain. Climate change is a critical priority for mankind and there is much-needed pressure to tackle this and other sustainability issues. We are well equipped to face these challenges thanks to the strength of our portfolio, proven capabilities and committed partnerships. Constant change in the global economy is the new normal, and it is more important than ever that we have taken the necessary steps to position the Company to remain resilient and adaptable. The financial performance of the business over the last few years, despite the impact of COVID-19, inflation and war, is testament to the way that we have strengthened the business since the last economic downturn. I am very proud of the work the team has done to prioritise investment behind our most critical drivers of future performance while retaining a laser-sharp focus on costs. This work will continue, alongside initiatives to further embed our values-based culture to deliver on our purpose. Our people and culture are at the heart of our success. We continue to open up moments that refresh us all and will continue to do so for generations to come. **Anastassis G. David** Chairman of the Board ### Section 172 statement Section 172 of the UK Companies Act 2006 requires directors to promote the success of their company for the benefit of the members as a whole, having regard to the interests of stakeholders in their decision making. Engaging with stakeholders is an indispensable part of how Coca-Cola HBC does business. The Board considers the interests of the Group's employees and other stakeholders in its decision making as a matter of good governance, and understands the importance, and value, of taking into account their views, as well as considering the impact of the Company's activities on the community, environment and the Group's reputation. The Board also considers what is most likely to promote the success of the Company for its shareholders in the long term. Although the Company is Swiss-incorporated and as such the UK Companies Act 2006 has no legal effect, this approach is in accordance with the UK Corporate Governance Code 2018. Read more about: How we manage risks and materiality on pages 59 to 83 and how we engage with key stakeholders on pages 16 to 18 Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 9 Report Governance Statements Reporting Information ### Chief Executive Officer’s letter ## OPENING UP ## OPPORTUNITIES ## “While our work requires Dear Stakeholder, 2022 was a year that will be remembered for ## sealing beverages in, theimmense challenges faced by so many, the ## thereal magic happens tragic war in Ukraine and the difficult economic conditions that followed across the globe. ## when they are opened up. The impact of war was acutely felt by our people ## Ourtrue purpose inUkraine, where we have operated for over ## comesfrom opening up 30years. Our focus and care remain with our colleagues and their families who are suffering. ## possibilities with our The Coca-Cola System was united in its response, ## customers, partners and committing to contributions of more than US$20million to support our colleagues and the ## employees to create value humanitarian efforts across the region. We have ## for all we serve. It’s this also announced an additional donation of €10 million by Coca‑Cola HBC to help our colleagues ## optimistic spirit that drives and their communities rebuild their lives. ## us towards new markets, In the early stages of the conflict and since, ## new relationships, new ourpeople did what they could to alleviate the suffering in the region – volunteering their time, ## development opportunities, providing transport and accommodation, and opening their homes to colleagues fleeing Ukraine. ## and new ideas for a It is this spirit of togetherness in these darkest ## betterfuture.” oftimes that gives us hope for a brighter future. Zoran Bogdanovic Chief Executive Officer Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 10 Report Governance Statements Reporting Information ### Chief Executive Officer’s letter continued Following the decision of The Coca-Cola I’m also pleased to see that the integration is Accelerated investments behind digitalisation and We launched Coca-Cola Zero Sugar Zero Company on 8 March to suspend its business in opening up learning and development opportunities technology continue to be a key enabler of our Caffeineacross a range of markets last year Russia, we immediately stopped placing orders for our colleagues in Egypt – astrong indicator growth and business transformation. Within our andwillcontinue to scale this innovation in 2023. forconcentrate in the country and stopped all offuture success. ambitious agenda we are making significant AdultSparkling, including brands like Schweppes investment from the Group. We depleted the strides in digital commerce. This is generating and Kinley, remains a jewel in our portfolio, which Executing our Growth Story brands of The Coca-Cola Company in the market incremental revenues for our business, while we have consistently invested behind given its Against a challenging backdrop, it is a testament and transitioned to a local, self-sufficient business providing invaluable customer and consumer data huge potential. to the strength of our business, our culture in Russia, which is managed by a local team and and insights that continue to inform our strategy. andour team spirit that we have continued to Energy continues to increase its share of our focused on local brands. This decision was the | | performso well. | We recognise that our long-term success | business and in the market. With volumes up by | | | --- | --- | --- | --- | --- | | best way to protect our people and assets. | | | | 1 | | | | cannotbe achieved alone, and our performance | 32% on an organic | basis excluding Russia and | Our portfolio and capabilities ensure that we Egypt, an exciting acquisition and delivery of our Growth Story strategy is Ukraine in 2022, this category now makes up continue to increase share in a growing industry. An exciting milestone in our Growth Story came in underpinned by the strength of our partnerships. 6%of our Group revenue. We continue to see Volumes grew across all our markets, excluding January, with the acquisition of Coca-Cola Bottling We embrace our opportunities and challenges potential for growth through increased penetration Russia and Ukraine, while we also expanded Company of Egypt. together with our closest strategic partner, across our markets and the launch of Energy in revenue per case. Moreover, despite historically TheCoca‑Cola Company, and all our other brand Egypt in 2023. Similarly, we have been investing Due to its size and demographics, we see high levels of inflation, we delivered record levels partners. Equally we are committed to working behind our Coffee portfolio with Costa coffee 1 | immense potential to unlock growth opportunities | of comparable EBIT and free cash flow | , excellent | | | | --- | --- | --- | --- | --- | | | | | collaboratively with all our customers, suppliers | nowin 16 markets and Caffè Vergnano, the | | in the Egyptian market. With our leading commercial | returns on invested capital and maintained | | | | | | | | and other stakeholders, and are grateful for their | super-premium coffee brand, in 14 markets. | | capabilities, together with the talent and energy | astrong balance sheet. | | | | | | | | trust and support – particularly in the current more | Weare building dedicated teams and investing | ofthe Egyptian team, I am confident that we can Our robust performance confirms that our challenging operating environment. behind coffee-specific capabilities. This investment increase penetration of our portfolio, enhance investments across our prioritised capabilities is creating the opportunities for further growth, profitability and grow market share. Our 24/7 portfolio have been the right ones, particularly in this and in 2022 we grew volumes 45%, on an organic We are proud to have developed one of the It is our vision to be the leading 24/7 beverage inflationary environment. One of our priority basis excluding Russia and Ukraine, andgained share. strongest, broadest and most flexible portfolios partner in every market in which we operate and capabilities, Data, Insights & Analytics (DI&A), inthe industry and we continue to invest for the Investing in our people our ambitions for Egypt are no different. isproviding valuable sophistication in two others, future. Three of our most important categories, We are proud we remain among the top 10 most Revenue Growth Management (RGM) and In November, together with our Chairman, Sparkling, Energy and Coffee were key growth attractive employers in the FMCG industry across Route‑to‑Market (RTM). These complement the Anastassis David, I returned to the Egyptian 3 drivers in 2022. all our markets and we continue to invest to overall strength of our other prioritised capabilities: marketand visited the bottling plant in Sadat, create an enjoyable and inclusive work environment Key Account Management and Digital Commerce. The sparkling category remains our biggest where we are expanding capacity. Following our that nurtures and develops all our people. focusand largest opportunity as the single most €16 million investment, we saw the team preparing We are successfully managing the pricing of our important driver of growth and profit. We have This includes reshaping how we work together. for the installation of a new, high-speed can line, products to customers and value for them, while | | | continued to gain significant share in Sparkling | In2022, we launched Project Oxygen, a programme | | --- | --- | --- | --- | | toexpand production in this prioritised | promoting affordability for shoppers. We are | | | | | | in2022, benefitting from strong activations | that will simplify our business processes, reducing | | packagingtype. | particularly pleased we remain the number one | | | | | | throughout the year, particularly around the | bureaucracy and complexity. The aim is to free | contributor to revenue growth within the FMCG In just a few months the team has been improving summer season and Christmas. Low- and upour people to focus on the work that matters 2 industry across for our retail customers . and we are already at an advanced stage of no-sugar variants maintained good momentum, most. To understand the levels of internal integration with Coca‑Cola HBC policies, systems with volumes up double digits in the year, growing collaboration across functions, we deployed and structures. We have enhanced route-to-market ahead of regular offerings in all segments. thesame NPS methodology we use to measure and revenue growth management capabilities, and customer satisfaction. started the important process of migration to our Coca‑Cola HBC SAP S/4HANA platform. 1. For details on APMs refer to ‘Alternative Performance Measures’ and ‘Definitions and reconciliations of APMs’ sections. 2. Nielsen 3. Universum 2022. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 11 Report Governance Statements Reporting Information ### Chief Executive Officer’s letter continued We have a dedicated plan in place for 2023 to To help us reach our rPET goals, we have invested This purpose is our guiding light for the future Outlook for 2023 and beyond address the pain points that will drive maximum €45 million in in-house rPET facilities to date. This aswe seek to refresh generations to come. Our We are fortunate to operate in a growing industry impact for our people and our business. includes our Gaglianico plant in Italy that will success is down to how we come together as one with very strong brands. While we are mindful transform up to 30,000 tonnes of PET per year company. We can only make a difference when it ofthe macroeconomic environment, to date A culture of learning is key to our success, and into new 100% recycled PET preforms, enough to serves us all. Having a meaningful impact takes there have been only a handful of our markets weare proud to report that our people undertook meet our annual beverage bottling needs in the each one of us, working side-by-side, with a where wehaveseen changes in consumer almost one million hours of learning in 2022. country. Italso reduces the carbon footprint of genuine concern for our communities and the behaviour orsigns of slowdown. Thisincluded our third Learn Fest, a virtual event producing a preform by up to 70% compared with planet. And always through the lens of sustainability. that saw almost 6,000 attendees. This builds on Whatever 2023 brings, we are confident in the virgin plastic. We have introduced rPET production the dedicated talent programmes and ‘Academies’ My experience in over two decades with Coca- resilience we have built in our business in recent technology in Poland too, and Romania will follow forour Business Developers, Supply Chain and Cola HBC has shown me that our people make all years, and have the trust that we can overcome later this year. other functions. the difference. With that, I would like to thank all any obstacles that come our way. This confidence We issued our first green bond for €500 million in my colleagues who continue to create the magic comes from the winning spirit that I saw across We remain committed to making tangible September, with proceeds to be allocated to every day that makes me so proud to work for this many of the markets I had the pleasure of visiting progress towards achieving gender balance at eligible green projects that accelerate progress company and this team. in 2022. Thanks to the dedication and passion management level by 2025, and are accelerating | | towards our sustainability goals. | | ofour people, there are an abundance of | | | --- | --- | --- | --- | --- | | our efforts. In 2022, women held 39.6% of | | | | Ialso extend my gratitude to all our customers, | | | | | opportunities that are opened up daily. Thisgrowth | The Coca-Cola Company and all our partners | | management roles, so while we are on the right | The year culminated with our twelfth consecutive | | | | | | | | mindset is supported by the strong customer | andstakeholders. In this year of challenges, we | | track, there is more to do to reach our 2025 goal. | ranking in the top three beverage companies | | | | | | | 4 | relationships we have forged, which will stand us | have had to adapt to win, and fundamentally it | | Our plan includes addressing issues of retention | globally by the Dow Jones Sustainability Index | , | | | | | | | ingood stead even in challenging times. | isour togetherness that has contributed to our | | and recruitment of female talent, and we have | and this year we were ranked world number one | | | | | deployed dedicated leadership and development | for a sixth time. We are honoured that our score | | | record performance and our strong belief | Together with the strength of our portfolio, the actions and targets across our markets. positioned us top among 7,822 companies across inthefuture ahead. diversity of our markets and our capabilities, 2023 61 industries according to the recently issued S&P will be another year of acceleration towards our Keeping our people safe remains our most Global Sustainability Yearbook 2023. We were also vision of being The Leading 24/7 Beverage Partner. important priority. We have set clear standards 5 recognised as an ‘Industry Mover’ as, with a and targets for this throughout the business, and Opening up moments that refresh us all seven-point increase, we were the most improved our culture of collaboration is helping to create In 2022, we took time to reflect on our wider Zoran Bogdanovic in the beverage industry since last year. ateam that supports, trusts and cares for one purpose and culture as a business. We drew on Chief Executive Officer another. While we are making consistent progress Still, as I reflect on the scale of the climate more than 70 years of history, our innate values over time, any accident is one too many. We must challenge, I draw again on the importance of and our hopes for the next chapter of growth to and will do better. partnerships for progress. Working together with define our new purpose: open up moments that our customers, suppliers, industry and community refresh us all. Investing in a more sustainable future partners, we are identifying and scaling the 2022 saw us invest seriously behind our Mission This recognises that while our work requires solutions that will make a difference. We have 2025 sustainability commitments and our goal sealing beverages in, the real magic happens when been investing time and resources to build a toachieve net zero emissions across our value they are opened up. Our true purpose comes broader network and to explore the ideas and chainby 2040. fromopening up possibilities with our customers, technologies of the future. Itis also our partners and employees to create value for all We made significant progress on our packaging commitment to listen and learn from all weserve. It’s this optimistic spirit that drives us agenda, moving our entire locally produced stakeholders along the way. towards new markets, new relationships, new portfolio in Switzerland to 100% recycled PET development opportunities and new ideas for (rPET). At the same time in Switzerland, Valser abetter future. water transitioned to a label-free bottle, reducing plastic use and improving recyclability. 4. As per DJSI results, 9 December 2022. 5. S&P Global Sustainability Yearbook 2023, as of 7 February 2023. Strategic Corporate Financial Swiss Statutory Supplementary Coca‑Cola HBC Integrated Annual Report 2022 ### 12 Report Governance Statements Reporting Information ### Our business at a glance ### Diverse, growing markets Integrated approach ## The Leading 24/7 Our roots date back to 1951 when A.G. Leventis ### tosustainability founded the Nigerian Bottling Company in Lagos. We endeavour to create value for all our Since then the business has expanded, from stakeholders. We make a strong contribution ## BeveragePartner Armenia to Austria, from Egypt to Estonia and todeveloping the societies in which we operate from Serbia to Switzerland. In 2022 wecompleted through employment and our wider supply the acquisition of the Coca-Cola Bottling Company chain,as well as through supporting community of Egypt, bringing the total number of countries ### Coca-Cola HBC is a Unrivalled product portfolio projects.We operate in a way that preserves our where we operate to 29. Our portfolio is the strongest and broadest environment, integrating sustainability into our ### growth-focused consumer inthe beverage industry. Our products cater decision making and actions. ### packaged goods business to a growing range of tastes with a wider ### andstrategic bottling partner choice of healthier options. We differentiate ## 29 ### ofTheCoca-Cola Company. ourselves with premium products and countries increasingly sustainable packaging, enabling us to open up moments that refresh our ## consumers 24 hours a day. 715 million consumers ## 33,000 employees ### N G ### I ### D ### A Established markets ### E Diverse markets ### L ### E We produce and sell an unparalleled portfolio | H | 32% | 10.3% | | | --- | --- | --- | --- | | T | | | ofbeverage brands relevant to every customer, | | | of Group revenue | Comparable EBIT | | consumer and occasion. Our route to market margin includes a wide range of consumer channels – Developing markets from supermarkets and convenience stores to hotels, cafés and restaurants – and encompasses ### R ## 19% 6.7% more customers than any competitor. Customer ### E ### N service and focus are critical for our business and of Group revenue Comparable EBIT ### T ### R margin we are devoted to helping our customers grow ### A ### P their businesses, which in turn grows ours. ### E ### B A G Emerging markets ### E V E R ## 120 bps ## 49% 11.3% value share gained in NARTD of Group revenue Comparable EBIT Explore our 24/7 brands: margin www.cchbc.com For details on APMs refer to ‘AlternativePerformance Measures’ and ‘Definitions andreconciliations of APMs’ sections on page246‑249. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 13 Report Governance Statements Reporting Information ### Our business at a glance continued ### We have a drink for every occasion during the day, from sunrise to sunset. ## Our 24/7 portfolio Our strategic priorities are Sparkling, Energy and Coffee. Sparkling, ### including Adult Sparkling, is 72% of our business. Energy comprises 6%, ### with a 32% growth rate in 2022, on an organic basis excluding Russia ### andUkraine. Coffee is smaller at less than 1% of revenue, but with a 45% ### growth rate in 2022, on an organic basis excluding Russia and Ukraine. Percentage of Coca-Cola HBC revenue Organic growth excluding Russia and Ukraine 1 ### SPARKLING Adult Sparkling 72% +7.7% 5% +9.5% ### ENERGY 2 | | | | 6% | +32% | | | --- | --- | --- | --- | --- | --- | | Juice | Tea | Plant-based | | | | | 7% | 2% | <1% | | | Hydration | 7% ### COFFEE Snacks <1% +45% <2% ### Premium Spirits 1. Adult Sparkling is a category within Sparkling 3% 2. 7% excluding Egypt acquisition and Multon consolidation Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 14 Report Governance Statements Reporting Information ### Our business model ### H o w w e d o i t ## Delivering value for ## our stakeholders ### Our capital resources 1 Working with suppliers Human We work with our suppliers to procure high-quality Our success is dependent on the passion and ingredients, sustainably sourced raw materials, and customer focus of our talented people – our secret equipment and services required to produce beverages. ingredient. We empower them to pursue growth opportunities, both for themselves and our Company. ### What we do Natural To create our products, we use natural resources We are a strategic bottling partner of including water, energy and PET. We source The Coca-Cola Company theseusing sustainable practices and seek to use We have the exclusive right to manufacture and sell the themefficiently. beverages of The Coca-Cola Company in our markets. We also 4 partner with other beverage businesses such as Monster 2 Energy, Brown-Forman, Campari and Edrington to sell their Serving Producing beverages Social and relationships products in our markets. Maintaining the trust of stakeholders is essential to our consumers efficiently and How our partnership works our business. Our most valuable human connections and communities sustainably The Coca-Cola Company owns and develops its brands while and relationships are with The Coca-Cola Company, Our 24/7 product portfolio Coca‑Cola HBC is responsible for producing, distributing and Using concentrate from our people and the communities we operate in, and caters to a range oftastes selling these beverages, using concentrate we buy from The The Coca-Cola Company our customers, suppliers, governments and regulators. Coca-Cola Company under an incidence-based pricing model. and preferences and we along with other ingredients, We work together to ensure we have the right portfolio for our continually innovate to lead we prepare, package and customers and consumers in each market and to ensure Financial the sector. deliver products with an excellent, efficient execution. We also share marketing costs Our business activities require financial capital, which and responsibilities, with The Coca-Cola Company marketing optimised manufacturing we allocate efficiently. This capital is provided by our to consumers, while we take responsibility for trade marketing infrastructure and to our customers. equity and debt holders, as well as cash flow earned logistics network. from our operations. Intellectual Innovation is embedded in our culture. The intellectual property from innovation includes new packaging know-how, new products and improvements in manufacturing, logistics and sales execution. 3 Partnering with ourcustomers Manufacturing Read more about how we We grow by supporting our customers’ growth, leveraging leverage our unique 24/7 Investing in our plant and logistics assets allows us to our 24/7 portfolio, focusing on areas of high-value portfolio and win in the efficiently prepare, package and deliver our products opportunity and executing with excellence. marketplace on pages to meet the needs of customers and consumers. 24to31. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 15 Report Governance Statements Reporting Information ### Our business model continued ### o w w e d o Our impact ### H i t Value created Socio-economic contribution We believe that the only way Our people tocreate long‑term value for ## >900,000 allour stakeholders is through • In 2022 we provided jobs directly to 33,043 employees in29countries* training hours for sustainable growth. We create ## €1,204m* our people socio-economic value for the • Median basic salary ratio women/men: 1.13 total employee costs societies in which we operate bycreating jobs, training people, | Our customers | | 40% | building physical infrastructure, | | --- | --- | --- | --- | | | 1.7m | | procuring raw materials, | | • We increased the frequency of our customer | | women in managerial | | | engagement, providing customers with the best support | customers served | | transferring technology, paying | positions taxes, expanding access to • In the marketplace we achieved a total number of 49% products and services, and energy-efficient coolers creating growth opportunities for our customers, distributors, Our communities retailers and suppliers. ## 794,943 • In 2022, we trained 246,108 young people through our | | 1 | | 10 | | Measuring and managing | | --- | --- | --- | --- | --- | --- | | #YouthEmpowered programme to boost employability | | = | | cumulative number of young people | | | | | | | trained in our communities between | thesecontributions through | | | job in the | | jobs in our | | | • We invested €7.4 million in local community initiatives* 2017-2022 thesustainable growth of our System community business is an important part ofour purpose. Since 2010 Our shareholders ## 323,727 wehave conducted socio‑ • We delivered strong financial performance in 2022, with indirect jobs across thevalue economic impact studies in our organic revenue up 14.2% and reported revenue up 28.3% chain markets to better understand ## €10.8b • In recognition of our business strength and future the range and extent of the value created in added value opportunities, the Board has proposed a dividend of we create in our ecosystem. across our value chain €0.78per share, a 9.9% increase compared with last year Our wider stakeholders ## €589.5m ## €3.6b • Our business activities generate revenue for our suppliers CapEx spend and contractors and their extended value chain paid in taxes Our consumers ## 715m* ## • We provide high-quality beverages and healthy options, >16,800* reducing calories per 100ml of sparkling soft drinks potential consumers suppliers operating refreshed by17% in 2022 compared to our 2015 baseline acrossour value chain ### * ## Our suppliers c.5 €b To read the methodology | • We spent circa €5* billion with local suppliers | | spent with local | behind our socio-economic | | --- | --- | --- | --- | | andcontractors | | suppliers | impact numbers, please see | | | * With the addition of Egypt. | | page 258 | • We are working with our suppliers to support their sustainable practices and emission reduction plans Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 16 Report Governance Statements Reporting Information ### Stakeholder engagement ### The strength of our stakeholder ## Building on over 70 years of stakeholder ecosystem enabled us to ensure ### thesafety of our people, partners ### andcommunities while maintaining ## engagement for mutual benefit ### production throughout the year. ### Our people Our customers Our consumers Material issues Outcomes of engagement Material issues Outcomes of engagement Material issues Outcomes of engagement • Employee wellbeing • Maintaining high engagement • Economic impact • We increased direct • Economic impact • We continued to evolve our andengagement levels • Nutrition engagement via our • Nutrition portfolio to address changing • Human rights, diversity • Higher levels of satisfaction customer teams and via consumer moments and • Packaging and waste • Product quality andinclusion with line manager support customer surveys invested further in digital and management • Responsible marketing were reported as we • Programmes to reduce food e-commerce to meet new Growth pillars • Food loss and waste Growth pillars shopper needs addressed the needs of loss and waste Growth pillars people working under • Piloting of new packaging Relevant KPIs different conditions solutions, such as • Percentage reduction of Key challenges packageless calories per 100ml SSD Relevant KPIs Key challenges • Building the best teams • Employee engagement Key challenges Relevant KPIs • Ensuring product safety and • Number of consumer intheindustry • Percentage of managers • Opportunities for growth • Volume and organic revenue supply complaints • Engagement as remote andvalue creation thatare women growth • Continuously evolving our Principal risks working continues • Lost time accident rate • Offering a 24/7 beverage • Customer feedback products to meet consumers’ • Product quality and food • Mental wellbeing portfolio that meets the needs for healthy hydration, fromsurveys safety Principal risks changing preferences quality, taste, innovation How we engage • High merchandising • Product relevance and • Health and safety ofconsumers andconvenience • Focused and continuous standards acceptability • People retention conversations • Supply and delivery challenges • Cooler coverage of high- How we engage • Geopolitical and security • Employee Assistance How we engage potential outlets • Together with The Coca-Cola environment Programme • Key account managers Company, we understand Principal risks • Regular employee surveys engage with our customers consumers’ needs and • Changing retail environment tounderstand and act ata strategic level preferences through our • Product quality and onneeds and wellbeing access to consumer insights • Our business developers foodsafety • Offering personalised continue to make regular • Consumers also provide • Competing in the digital experiences and visits to outlets feedback on social media and marketplace opportunities for personal via consumer hotlines • Partnering to reduce food and professional growth loss and waste • Ongoing dialogue with • Introducing new packaging employee representative types in the assortment and bodies supporting packaging Read more on pages 38-42 Read more on pages 28-31 Read more on pages 24-27 collection Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 17 Report Governance Statements Reporting Information ### Stakeholder engagement continued ### Governments Our communities NGOs Material issues Outcomes of engagement Material issues Outcomes of engagement Material issues • We partner with specific • Climate change • In response to regulations • Climate change • Our support of new collection • Climate change NGOs for targeted • Nutrition and levies on certain types • Corporate citizenship schemes is translating into • Corporate citizenship environmental and social ofplastic packaging, we increased collection rates projects • Packaging and waste • Economic impact • Human rights, diversity havelightweighted packages forpackaging waste in • We engage through our management • Packaging and waste andinclusion andused more sustainable manymarkets annual Group Stakeholder • Water stewardship management • Packaging and waste materials • We have committed to Forum and our annual • Water stewardship management Growth pillar • To address health and NetZeroby40 across the materiality assessment, • Water stewardship nutrition concerns, we Growth pillars entire value chain aswell as through ad hoc • Food loss and waste continue to add low- or • Water stewardship meetings no-sugar drink options in community projects in water Growth pillar Key challenges Outcomes of engagement every market and provide priority locations • Industry and/or product- Key challenges • Percentage of participants transparent nutritional specific policies, such as taxes, • Climate change Relevant KPIs from NGOs in our first-time information restrictions or regulations • Number of young people manager programmes • Waste from our packaging Key challenges • Environmental policies Relevant KPIs trained in our communities • Climate adaptation, move • Increased number of • Water conservation • Percentage of absolute through #YouthEmpowered towards net zero emissions community projects for waste How we engage • Empowering youth emissions reduction and water and energy use reduction, water stewardship • Much of our engagement with andwomen • Percentage of absolute • Percentage reduction of emissions reduction • Packaging waste and carbon removal governments is conducted How we engage calories per100ml SSD atan industry level through • Number of water stewardship • Sustainable sourcing Relevant KPIs • We engage with customers trade associations • Percentage of primary projects in water priority • Partnerships with • Number of and investments and partners to understand packaging collected locations • We partner with local communities and grassroots in community projects what skills and training governments to tackle waste • Number of water stewardship • Percentage of primary organisations youngadults need in Principal risks collection challenges and projects in water priority packaging collected specificmarkets • Diversity and human rights • Cost and availability of water availability locations • Number of volunteering hours • Via our #YouthEmpowered How we engage sustainable packaging Principal risks sessions we increase the • Number of and investments • We include NGOs and • Managing our carbon • Product-related taxes employability of young people in community projects community partners in our footprint andregulatory changes • We participate actively to Principal risks leadership development • Suppliers and sustainable • Ethics and compliance support the set-up and programmes, offering online • Geopolitical and security sourcing implementation of new environment training for managing virtual • Water availability and usage packaging collection schemes • Cost and availability of teams and leading in times • Ethics and compliance • Addressing water challenges sustainable packaging ofcrisis in water priority locations • Managing our carbon footprint • Water availability and usage Read more on pages 45-53 Read more on pages 45-53 Read more on pages 45-53 Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 18 Report Governance Statements Reporting Information ### Stakeholder engagement continued ### The Coca-Cola Company Our investors Our suppliers | Material issues | Outcomes of engagement | Material issues | Relevant KPIs | Material issues | Outcomes of engagement | | --- | --- | --- | --- | --- | --- | | • Nutrition | • Our partnership added to the | • Economic impact | • Management access and | • Climate change | • Our long-term work with | | • Responsible marketing | strength and depth of our | • Climate change | positive investor perceptions | • Sustainable sourcing | partners to reduce our water | | | 24/7 portfolio, especially | | of strategy | | and energy use has also | | • Sustainable sourcing | | • Packaging and waste | | • Water stewardship | | | | thanks to the continued | | • Total shareholder return | | brought efficiencies. This is | | • Corporate citizenship | | management | | • Economic impact | | | | roll-out of Costa coffee | | | | particularly important given | | | | • Corporate governance | Principal risks | • Biodiversity | | | Growth pillars | | | | | our NetZeroby40 | • We increased implementation • Cost and availability of Growth pillars Growth pillars commitment of sustainable, ethical sustainable packaging practices in our supply chain • Activities related to • Changing retail environment through System-wide sustainable sourcing and Key challenges • Commodity costs collaboration certifications • Support for consumers, Key challenges Key challenges • Product-related taxes and customers and communities Relevant KPIs • Increasing focus on ESG and • Rising costs of ingredients, Relevant KPIs regulatory changes • Profitable growth • Revenue ESG incentives labour, packaging materials, • Percentage of key agricultural • Foreign exchange opportunities • Value share • Maintaining focus on energy and water ingredients sustainably fluctuations • Value share in our markets long-term potential of the • Minimising the environmental certified Principal risks • Managing our carbon Group rather than short- impact of water and energy • Percentage of our suppliers • Sustainable sourcing • Suppliers and sustainable footprint termvolatility resources, as well as emissions adopting our Supplier Guiding How we engage sourcing • Geopolitical and security | | | | | • Traceability in the whole | Principles | | --- | --- | --- | --- | --- | --- | | | • Strategic stakeholder | How we engage | | | | | • Day-to-day interaction | | | environment | | | | | | • Communication during our | | valuechain, including Tier 2 | Principal risks | | asbusiness partners, joint | relationships | | | | | • Suppliers and sustainable | | Annual General Meetings, | | and 3 suppliers for human | • Cost and availability of | | --- | --- | --- | --- | --- | | projects, joint business | | sourcing | | | | | investor roadshows, press | | rights risk, biodiversity | sustainable packaging | planning, functional groups releases and results briefings • Water availability and usage onstrategic issues and How we engage and ongoing dialogue with ‘top‑to‑top’ senior • Feedback received • Commodity costs analysts and investors management forums throughour annual Group • Ethics and compliance Outcomes of engagement StakeholderForum • Managing our carbon • Stepped up consultation • Regular, ongoing interaction footprint efforts and strengthened with the Coca-Cola System’s two-way dialogue between Central Procurement Group the Company and investors, and our technology and ensuring both good commodity suppliers understanding of long-term Company strategy in the markets and that investor concerns are considered indecision making • Issuing of our first green bond Read more on page 14 Read more on page 111 Read more on pages 32-35 European Bank Corporate Governance Financial Statements Semi-Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 19 # Market trends # Trends in our broad and diverse markets | | How we are responding | Delivered through | Growth pillar | | --- | --- | --- | --- | | **Dynamic retail environment** In 2022, we saw strong category value growth resulting from price increases and faster growth in single-serve packs. Category volume increases were lower than in 2021, yet still positive across most of our markets. As pandemic restrictions eased in 2022, hotels, restaurants and cafes reopened and out-of-home consumption recovered. Online retailers and discounters also experienced strong growth. | This year we put more focus on improving our single-serve mix and continued driving the shift from multi-serve packs to single-serve packs across all markets and in both the at-home and out-of-home channels. To better understand and serve customers, we created targeted teams for hotels, restaurants and cafes, with support from The Coca-Cola Company. We subsequently gained or maintained market share in the majority of our markets in 2022 in the non-alcoholic ready-to-drink (NARTD) category, with notable gains in Sparkling. | **+3.5pp** We improved single-serve mix by 3.5 percentage points in 2022, driving positive package mix and improved revenue per case | **3** **3** | | **Consumer environment** Cost of living is an important theme, with high inflation in essentials such as food, housing and energy, putting consumers' disposable income under pressure. Despite the inflationary environment, we have not seen significant changes in shopping behaviour in most markets. Affordability remains a key theme, yet we still see premiumisation opportunities as shoppers seek quality and small treats despite budget pressure. | We are very mindful of the demand for affordability in a period of high inflation. To support category growth, we have focused on smaller multi-serve offerings. This allows us to compete at attractive price points for the consumer and penetrate smaller baskets in a more profitable way. Our ability to address consumer demand for premiumisation was boosted by the acquisition of Three Cents super-premium adult sparkling beverage and mixer products in 2022. | **+1.7pp** We gained or maintained share in the majority of our markets in the sparkling category and gained 1.7pp of value share | **4** **3** | | **Digital evolution** The global trend towards digitisation, which surged during the pandemic, continued to grow significantly in 2022 evidenced by 5G adoption, for example. Consumers have become much more comfortable and familiar with e-commerce. Technology has advanced, and both convenience and ease-of-use of online shopping have improved. Companies are also increasing the use of digital tools to improve efficiency of operations, customer service and marketing spend. | Our business-to-business (B2B) platform, Customer Portal, is now deployed in all our markets and growing at a high double-digit rate in terms of customer numbers, orders and revenue creation. Our e-commerce platforms remained a strategic channel with revenues tripling between 2020 and 2022. We are continuing to build our partnerships with all leading digital platforms. | **+77%** Revenue in the digital commerce channel grew by 77% in 2022 compared with 2021, excluding Russia and Ukraine | **3** **3** **3** | Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 20 Report Governance Statements Reporting Information ### Market trends continued How we are responding Delivered through Growth pillar Sustainability Following the announcement of our NetZeroby40 goal in 2021, ## -21% In 2022, corporate commitments to net zero targets increased we built out our net zero transition plan and developed long-term across all industries. At the same time, we saw growing scrutiny climate scenarios. We made new commitments in 2022, Absolute carbon regarding companies’ plans to deliver their net zero ambition. pledging to achieve a net positive impact on biodiversity in emissions in operations Concerns about climate change, climate justice and energy critical areas by 2040 and eliminate deforestation in our supply were lower by 21% security are growing. Also, the focus on the need to move chain by 2030. in2022 compared towards a net positive world is increasing, with rising awareness with2017 We joined the Science Based Targets Network (SBTN) of the positive impact of biodiversity. Corporate Engagement Programme and we will work Our stakeholders, including consumers, expect businesses to toimplement their guidelines in 2023. generate wealth, foster inclusion and diversity, respect human We also issued our first green bond to support and further rights across their entire value chain, support their communities advance our investments towards sustainability targets. and take concrete action on important societal and Weareworking to expand our partnerships and looking for new environmental issues. collaboration networks, since we believe that ambitious goals and commitments can only be achieved through collective action. Regulatory environment We are continuing to engage with regulators and governments ## 48% | Regulation and regulatory frameworks continue to evolve | on more sustainable ways of doing business, as well as addressing | | | --- | --- | --- | | across our territories. | budgetary requirements whilst allowing for business growth | In 2022, we recovered | | | andinvestment. | 48% of the primary | Sustainability remained in the spotlight through the packaging we put implementation of the EU Single-Use Plastics Directive and We are supporting Deposit Return Schemes and proactively inthemarketplace therecent EU Commission proposal regarding plastic packaging taking steps towards a more sustainable packaging mix. and packaging waste regulation, which have notable implications Weareinvesting in in‑house rPET facilities, adopting for the beverage industry. packageless and refillable packaging options and removing plastics in secondary packaging. The new Corporate Sustainability Reporting Directive in the EUis expected to broaden the scope of information disclosed We are committed to our Mission 2025 goals and are well- by businesses. positioned to address the environment and circularity ambition of the European Union. We support the EUCommission’s Farm to Fork objectives and the Code of Conduct on Responsible Food Business and Marketing Practices. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 21 Report Governance Statements Reporting Information ### Our purpose framework ### Our new purpose Our vision is... ...delivered through our ## Open up ### strategy… ## moments ## that refresh In 1951, we began as a family-owned company ### ...to be the Leading 24/7 ### 1 Leverage our unique inNigeria and have grown into the essential ### BeveragePartner... | | partner that puts beloved brands into thehands | | 24/7 portfolio | | --- | --- | --- | --- | | us all | of so many. Whether inour facilities, out on the | | | | | | 2 | Win in the marketplace | road, oralongside our customers, we bring Read more on pages 12-13 ### refreshment to life, 24/7. Fuel growth through 3 ### And as we drive impact through our values, competitivenessand weopen up new markets that grow businesses, ### investment | A new purpose | empower our people to reach their full potential, | | | | --- | --- | --- | --- | | A purpose is a powerful force. It defines why | help communities flourish and work toward | 4 | Cultivate the potential | | weexist. 2022 saw us develop our new purpose, | aworld without waste for everyone. | | | ### ofourpeople ‘Open up moments that refresh us all’. With each twist of a cap or pull ofatab, we open ### 5 Earn our licence to operate As a bottler, our work requires sealing up opportunities that delight everyone. refreshment in, but we believe that it is the As one Hellenic, weopen up moments moments that we open up that matter most. thatrefresh us all. Though our purpose is new, the optimistic spirit Read more on pages 23-53 that drives our work remains steadfast, and our vision and strategy remain consistent. Our new purpose further drives us to build on our Growth Story towards 2025. Our focus will therefore be to open up opportunities for our customers and partners and ensure we open up employees to their full potential, whilst opening up life to experiences that refresh and delight, and never losing sight oftheopportunities to make a difference Read more on page 11 asoneHellenic. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 22 Report Governance Statements Reporting Information ### Our purpose framework continued ### ... and enabled by our four values, which Achieving our strategy is ...and flows into our ### define how we behave every day. reflected in remuneration… socio-economic contribution. Our strategy and targets link directly to executive remuneration. ### R O C E S S E S ### P The Management Incentive Plan (MIP) is based on three metrics which are an outcome of ## 794,943 successful progress towards Growth Story 2025: ## M cumulative number of young ## T A ## S revenue, comparable EBIT and free cash flow. ## R K people trained in our ## I ## F E Our Longer Term Incentive Plan (LTIP) balances communities between ## I ## R T 2017-2022 ## E shareholder value creation with environmental ## S ## M impact being based on ROIC, EPS and CO 2 ## I ## M | O | | emission reductions across scope 1, 2 and 3. | | --- | --- | --- | | T | P | | | S | L | | ## E ## U 1 = 10 ## C job in the jobs in our ### E I ### N System community ### D ### I S ## DRIVE ### S I ### D | T | D | | | | | --- | --- | --- | --- | --- | | | | IMPACT | E | | | U | | | | 323,727 | | O | E | | | | indirect jobs across ## L thevalue chain ## I ## V ## E ## I ## R ## R ## S ## E ## U €10.8b ## V ## S ## T O created in added value across ## A ## E our value chain ## I ## N W ## A ## B ## L Y ## €589.5m CapEx spend in our markets ### P E O P L E Read more on pages 128-155 Read more on pages 14-15 Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 23 Report Governance Statements Reporting Information ### Our strategy ### Our growth pillars Growth Story 2025 How we are growing ### targets • Offer the best 24/7 beverage portfolio on the ## 1 Leverage our planettogether with The Coca‑Cola Company ## andother partners 5-6% ## unique 24/7 portfolio organic revenue growth per annum, Read more on pages 24-27 on average • Build unrivalled teams of true partners for our ## 2 Win in the customers, executing with excellence in every ## marketplace channel for prioritised drinking moments • Fast-forward critical capabilities for growth ## 20-40bps Read more on pages 28-31 comparable EBIT margin growth perannum, • Transform, innovate and digitise our business onaverage ## 3 Fuel growth through toensure that weare fit for the future ## competitivenessand ## investment Read more on pages 32-35 Employee engagement score greater • Invest in building the best teams in the industry | 4 | Cultivate the potential | | thanthe global | | --- | --- | --- | --- | | | | • Develop an inclusive growth culture around our | top-decile norm | | | ofourpeople | empowered people | | Read more on pages 38-42 | | | • Be an environmental leader, engage our | Accomplish | | --- | --- | --- | --- | | 5 | Earn our licence | | | | | | communities behind water and waste initiatives, | Mission 2025 | | | | and empower youth, together with our partners | sustainability | ## to operate commitments Read more on pages 45-53 Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 24 Report Governance Statements Reporting Information ### Growth pillar: Highlights in 2022 ## Sparkling ## performance We gained share across all brands, including Trademark Coke, Fanta and Sprite. ## Adult ## Sparkling continues to grow as a percentage ofoverall Sparkling, boosting revenuepercase. ## Coffee ## Energy energised ## boosted Proliferation of flavours and double-digit by Costa: now in 8,000 revenue growth. out-of-homeoutlets. ## Stills bounced ## back after the pandemic. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 25 Report Governance Statements Reporting Information ### Leverage our unique 24/7 portfolio continued Broad, unique portfolio delivered In 2022 we took a more strategic and holistic The reopening of hotels, restaurants and cafes KPIs approach to the consumption occasion of ‘breaks’ was fundamental to our success during the year. continued growth • Organic revenue growth – moments that create a positive mindset. We We continued delighting our consumers, driving As we emerged from the global pandemic, the war further increased teen recruitment and solidified revenue through single-serve consumption and • Organic revenue percase growth in Ukraine cast a large shadow emotionally and value share for Trademark Coke, focusing on the generating increased value for our customers. • Volume growth operationally over us all. We delivered strong breaks occasion with screen time and music, with performance in 2022 for our people and our Strong growth in still products dedicated activation peaks throughout the year. business, despite the challenges we faced given 2022 marked a good year for our Still category Principal risks Ukraine and Russia are both Coca‑Cola HBC Trademark Coke also led our Christmas across all business units. We delivered double- • Competing in the digital marketplace markets. activations, propelled by the focus, passion and digit revenue growth thanks to good momentum • Product relevance and acceptability creativity of our people across our markets. We and impactful execution, leveraging new We remained focused and disciplined on • Strategic stakeholder relationships succeeded in emotionally connecting with communication campaigns and consumer executing our growth strategy, with our broad and consumers, while increasing value creation and promotions to drive transactions of ready-to- unique 24/7 portfolio combined with solid pack/ Stakeholders partnership with customers. drink (RTD) tea and sport drinks. As a result, we price architecture and strong execution. Our strong partnerships with customers supported gained value share in both areas. Organic volume growth for Adult Sparkling was up our growth momentum and we continued 9.5% (ex Russia and Ukraine) in 2022 compared In Water, we stayed focused on execution, cost | | investing behind our strategic priorities | with 2021, with growth across Schweppes and | | | --- | --- | --- | --- | | Our customers | | | leadership and selective expansion into highly | | | throughout the year. | Kinley. We expanded our footprint into the | | profitable emerging segments to deliver profitable super-premium adult sparkling segment by growth. Sustainability continues to be a key focus Sparkling growth driven by consistent acquiring artisanal mixer company, Three Cents, of our water business. We introduced the first strategic focus Our consumers which was founded by bartenders and label-free branded water packaging in Switzerland, Our sparkling portfolio remained resilient and was entrepreneurs. Three Cents premium mixers are launching three label-free variants of Valser. The once again one of the best performing categories targeted to mixologists and high-end hotel, distinctive look differentiates our products while across our markets in 2022. We grew share across restaurant and cafe outlets. Artisanal mixers are improving the ease of package recycling. The Coca-Cola Company Trademark Coke, Fanta and Sprite, driven by an attractive addition to our 24/7 product portfolio targeted campaigns and activations. In RTD Tea, we delivered double-digit revenue as consumption shifts back to out-of-home growth, boosting revenues with exciting Adult Sparkling continued to be a key driver of channels after the pandemic. advertising campaigns, the acceleration of premiumisation with strong growth momentum. Shareholders As inflation increased across our markets, we zero-sugar flavours and strong in-store execution. Low- and no-sugar variants performed particularly flexed our offering by downsizing multi-serve In Juice, we expanded our footprint in active well, with organic volume growth ex Russia and packs to address affordability concerns. We also markets with our Cappy and Next Lemonades and Ukraine up 14.3% compared with 2021. brought forward premiumisation efforts, as added interest with the new elderflower flavour. We continued building on the well-established consumers looked for affordable treats. For Sport Drinks reported an exceptional performance association of ‘Coke and Meals’ that resonates example, we engaged consumers in fun due to growing consumer demand and targeted with consumers, adds value to our customers and Schweppes and Kinley ‘mixability’ experiences with investments in priority markets. We had particular is the primary profit driver for Trademark Coke. our premium spirits partners. These highlighted success with Powerade in Italy, achieving and Coke and Meals was supported with dedicated opportunities to blend our portfolio and add value retaining our market share leadership position activation plans across our markets throughout across beverage categories. during the year. the year, leveraging our unrivalled in-market execution capabilities. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 26 Report Governance Statements Reporting Information ### Leverage our unique 24/7 portfolio continued Growth of coffee capabilities across our teams Premium Spirits in prime position Developing specialised capabilities is an important Energy is energised remains a key focus. In 2022 we invested in our Premium Spirits benefited from developments in part of our success in this segment. To further Energy is one of the fastest growing categories of Coffee Experts and Coffee Training Centres consumer preferences and out-of-home channel improve, we launched a Premium Spirits Academy non‑alcoholic ready‑to‑drink (NARTD) products. network and launched our Coffee Academy, trends during the year. Revenue growth was driven to train our dedicated teams. The capabilities We continue to increase our market share as a building on the success of our Sales Academy by our strategy of premium positioning, which ofmore than 6,000 Business Developers will be result of our well-defined strategy – offering a development programme for Business Developers. remains attractive as consumers seek affordable upskilled through this initiative over the next complete brand portfolio, using disruptive We also expanded our use of digital-enabled treats despite inflationary pressures. twoyears. marketing platforms and offering a range of flavours to give consumers choice and entice decision making, with over 75% of our professional Brown-Forman, Edrington, Campari and Nemiroff newcomers into the category. coffee machines connected with telemetry. In fact, continue to be strong regional partners. In 2022 most of our markets use our Data, Insights and We continued building our Monster portfolio by we formed an exciting new partnership with Analytics bespoke software for coffee‑specific growing Monster Ultra, a zero-sugar variant, and Bacardi in Czech Republic and Hungary with a very customer segmentation. Monster Juiced. In Nigeria and Poland, we promising start. achieved growth while addressing affordability with Predator. Post-pandemic, we reignited the support behind Burn, with very good results attained in Hungary and the Baltics. We continued our journey into the performance drinks segment with our targeted brand, Reign. Itspopularity increased in our target markets of Ireland and Poland, where our strategy of appointing high-profile sporting brand ambassadors paid off. Coffee grows as we expand our portfolio Coffee continues to grow, primarily driven by doubling our away-from-home outlets as well as growing sales of beans, ground coffee and capsules for at-home occasions. Costa coffee continues to thrive, with a strong presence in 16 of our markets after exiting Russia. We were the first Coca-Cola bottler to pilot and launch the Costa proprietary capsule system for out-of-home occasions in 2022, with very encouraging initial results. Poland is our biggest Costa market both in terms of volume as well as revenue, also benefiting from the growth in e-commerce there. Our distribution agreement with Caffè Vergnano expands our 24/7 portfolio with a super-premium coffee product for high-end hotels, restaurants and cafes. Combined with Costa, this gives usatotal coffee portfolio for all customers and occasions. Caffè Vergnano is now available in 14ofour markets. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 27 Report Governance Statements Reporting Information ### Leverage our unique 24/7 portfolio continued | Taking action to improve | enable portion control and promote low- and | Ensuring fresh, quality products | | | --- | --- | --- | --- | | | no- calorie beverage options. | | Priorities in 2023 | | consumers’health & nutrition | | andreducing waste | | | Understanding what our consumers want and | As part of our Mission 2025 targets, we have | The rate of consumer complaints improved by | • Continue to deliver strategic priorities | | need is fundamental to our long-term success as | committed to reduce calories per 100ml of | 11% compared to 2021, even though consumer | of Sparkling, Energy and Coffee | | a 24/7 beverage company. Increasingly | sparkling soft drinks by 25% between 2015 and | preferences continue to evolve. Our efforts to | • Relentless focus on execution, growing | | consumers are interested in healthier options, | 2025 across all our markets. By the end of 2022, | improve and modernise manufacturing processes | at-home and out-of-home occasions | | including reducing their sugar intake, while still | we had achieved a 17% reduction. Through these | and our focus on product quality, safety and | • Focus on pack architecture and price/ | | consuming products that taste great. | efforts, we are contributing to the European Soft | integrity helped us achieve this reduction. We also | mix to balance affordability and | | | Drinks Association’s (UNESDA’s) target to reduce | voluntarily took back products from the market on | premiumisation | At Coca‑Cola HBC, we are taking meaningful added sugar in beverages by 10% by 2025 from a four occasions, in Greece and Cyprus, Poland and | actions to help people make informed choices. We | | | • Capitalise on Energy, Coffee and | | --- | --- | --- | --- | | | 2019 baseline. | Romania, and had one product recall from the | | | support the EU’s Farm to Fork goals for a healthy, | | | Premium Spirits by increasing our | market in Italy during the year. | sustainable food system and, as part of the | We are also committed to providing clear and | | capabilities through training | | --- | --- | --- | --- | | Coca-Cola System, we follow the EU Code of | transparent nutrient information about our drinks, | To maintain awareness amongst our employees | • Continue to focus on reducing sugar | | Conduct for Responsible Business and Marketing | such as the Guideline Daily Amount (GDA) labels | and build their capabilities in quality and logistics, | content in our beverages to meet our | | Practices. The latter calls upon industry and | on our packages. We adhere to the policies of the | we introduced a Supply Chain Academy. We also | Mission 2025 sustainability target | | retailers to reformulate products, encourage | Coca-Cola System for global responsible | marked World Food Safety Day in June and World | | | portion control and market responsibly. | marketing, including the Global School Beverage | Quality Week in November. | | UN Sustainable Policy and the Global Responsible Alcohol Our actions are aligned with our Coca-Cola We strive to minimise food loss and food waste in Marketing Policy. We also adhere to UNESDA’s Development Goals System partners and fall in five key areas: our operations as this helps us preserve water and We serve our consumers with abroad range pledges on Responsible Marketing. other natural resources, avoid carbon emissions • less sugar, more choices ofhigh‑quality products. In doing so, we We commit to not market directly to children and mitigate the social and economic impacts of createvalue by contributing toglobal goals • new and different drinks agriculture. forgoodhealth and wellbeing, innovation, under 13 and do not offer any soft drinks in • informed decisions responsibleproduction and consumption primary schools. For 2022, relevant employees In 2022 we committed to food loss and waste aswellaspartnerships. • no marketing targeting children and both direct and indirect distributors were once goals, following our adoption of a new food loss • promoting low- and no-sugar choices again made aware of The Coca-Cola Company’s policy in 2021. Our target is to reduce absolute We have embraced the recommendations that Responsible Marketing Policies. food losses in dry matter by 30% by 2025, and by individuals should not consume more than 10% of Looking ahead to 2023, we expect further 40% by 2030 compared to our 2019 baseline. their total daily calories from added sugar. In developments regarding front-of-pack nutritional These are absolute targets irrespective of volume support of this, we continue to offer products labelling and sweeteners. As part of the Coca‑ growth in our business. Unused beverages are where we have changed recipes to reduce added ColaSystem, we remain highly engaged with key treated at either our own plant or external sugar, sell more beverages in smaller packages to stakeholders through our participation in wastewater treatment facilities. Liquid is industryassociations. reinstated after treatment to levels necessary to support aquatic life. Any remaining material is sludge, or dry food loss, which is then used for alternative purposes such as composting for agricultural needs or incineration for energy recovery and biogas/biofuel. Our absolute amount of food loss from finished beverages was reduced by 1% in 2022 compared to 2021. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 28 Report Governance Statements Reporting Information ### Growth pillar: Highlights in 2022 ## Implemented ## price increases ## and mix ## initiatives expanding revenue per case and mitigating inflation, while driving market share gains. ## Introduced new ## Academies including the Coffee Academy and Premium Spirits Academy, driving our salesforce’s capability to deliver improved service, performance and execution. ## Achieving ## highermarket ## Next generation ## share online ## of segmented by strengthening our relationship withe-retailers and developing ## execution partnerships with new channels. developed, including capabilities tomicro-segment our customers. ## Updated data ## andanalytics ## Cooler coverage ## tools ## extended to 86% and targeted training programmes of top customer outlets. furthersupported revenue growth management capabilities. Strategic Report Corporate Governance Financial Statements Sales Statutory Reporting Supplementary Information Coca-Cola MBC Integrated Annual Report 2022 29 # Win in the marketplace continued # KPIs - Organic revenue growth - Organic revenue per case growth - Organic volume growth - Value share # Principal risks - Commodity costs - Competing in the digital marketplace - Foreign exchange fluctuations - Geopolitical and security environment - Marketplace economic conditions - Suppliers and sustainable sourcing # Stakeholders Our customers Our consumers The Coca-Cola Company Shareholders # Winning in the marketplace through targeted investment in capabilities Our ability to win in the marketplace has been enhanced over the last few years with targeted ambitious investment behind our prioritised capabilities, including revenue growth management, route to market and data, insights and analytics. Our customers range from global supermarket brands and independent convenience stores, to restaurants and e-retailers. Understanding the needs of these different customers, and their relationship with consumers, is critical to our success. We are winning with both customers and shoppers through our value-led approach to revenue growth management, which proved critical in a year of significant cost inflation. Our dynamic route to market is expanding our coverage across all customers, complemented by our digital commerce strategy. Our investment in data has built a market leading capability, which creates a flywheel to enhance revenue growth management and route to market, allowing us to segment the market as never before. These capabilities are critical for us to better understand the real and changing needs of our customers and consumers, drive profitable revenue growth and anticipate or react to new challenges. The power of our portfolio and consistent investment in our capabilities allowed us to balance pricing and mix enhancements, while also achieving another year of strong share gains. # Revenue growth management In 2022, we further built our revenue growth management capabilities to navigate a challenging inflationary environment. We have proactively driven revenue per case through pricing and mix actions and have focused on helping our customers meet consumer demand for affordability as well as premiumisation. We continued to invest in capabilities, implementing training programmes across different layers of our organisation, and we drove further integration with route to market and data, insights and analytics. We implemented price increases across all our markets in 2022. Using updated data and analytics tools allowed for better understanding of price elasticities per brand and pack type, improving our approach to pricing decisions. We are very mindful of the demand for affordability in a period of high inflation. To support category growth, we have focused on smaller multi-serve offerings. We launched a 300ml bottle in Switzerland and 1 litre in Slovakia. This allows us to compete at attractive price points for the consumer and penetrate smaller baskets in a more profitable way. To recruit new consumers, we offer smaller, more attractively priced single serve offerings, such as a 300ml PET Sparkling size launched in Bulgaria. We also provide our customers with affordable options through our promotion strategy, where we have been using advanced analytics to maximise benefit for our customers and return on investment. Despite higher inflation, we do see demand for higher-value, premium beverages. We saw growth in our Adult sparkling business, particularly in the hotels, restaurants and café channel, while also leveraging the growth of socialising at-home occasions in the at-home channel. We expanded our pack offerings in Adult sparkling, with the launch of a 330ml can of Kinley in Austria, and a 1 litre PET of Schweppes in Romania. Another driver of premiumisation is the growth of glass packages, and we expanded our 1 litre returnable glass bottles in Austria to zero-sugar variants. We drove greater sales across our markets in 2022 by focusing on multi-packs of single serves. This helped us improve our single-serve mix in the at-home channel, with single-serve volumes growing 10% in 2022; 25% above pre-pandemic levels in 2019. # Partnering with customers to drive value We know that our success is dependent on the success of our customers. We achieved improved alignment with our customers with joint business planning and strategic planning workshops and invited our customers to share their perspectives with our people. We have also worked with customers on our sustainability programmes, such as the launch of the 100% iPET portfolio in Switzerland. As pandemic restrictions eased in 2022, we worked closely with our out-of-home channel customers and saw successful execution to capture the full potential of reopening in our markets, particularly ahead of and during the summer season. We saw the hotel, restaurant and café channel grow organic revenues strongly in the year (excluding Russia and Ukraine). In 2022, we created targeted teams for this channel, with support from The Coca-Cola Company, to accelerate performance by better understanding customer needs. We complemented this with a continued focus on opportunities in the at-home channel, leveraging the strength of our portfolio with strong marketing campaigns and execution. Our work is paying off and we are creating value for our customers. According to data from Nielsen, once again, in 2022, we were the number one contributor to revenue growth in FMCG across our retail customers. We are committed to improving our customer experience. When a customer has an issue, we target a 48-hour response time, and empower our salespeople to 'close the loop' and resolve issues immediately. We now collect ongoing feedback from over 40% our customers through Customer Gauge as we value feedback from all customers, and we want to make their experience with us even better tomorrow. We now consider Net Promoter Score® an important metric to measure customer satisfaction and we're encouraged by early progress. This is directly connected to driving revenue growth. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 30 Report Governance Statements Reporting Information ### Win in the marketplace continued Excluding Russia and Ukraine, we saw good growth We are pleased to have seen a positive initial | Our digitally enabled route to market | Accelerating digital commerce | | | | --- | --- | --- | --- | | | | in the number of customers, orders and revenue | response tothe platform and are planning an | | With the reopening of markets through the | In 2022, we continued to invest in and develop our | | | | | | delivered, with the number of customers and | expanded rollout in 2023. | | firstpart of the year we benefited from a flexible | suite of digital commerce platforms and solutions | | | orders close to doubling year-on-year. If we route to market, which allowed us to maximise to serve the growing numbers of consumers and When it comes to route-to-consumer, we are consider small individual non-chain stores only, opportunities and drive joint value with customers choosing to shop online. We have partnering with e-retailers and food delivery 20% of all the orders from the channel came ourcustomers. strengthened our online capabilities across the platforms to create unique omnichannel through our Customer Portal. We have seen a business, as well as developed new tools that are experiences for our shoppers and drive profitable In 2022, we further improved our route to market standout performance from Czech Republic and allowing us to drive our online business in more growth. Our revenue in the channel expanded with enhanced digital tools and data capabilities. Slovakia, where we reached 34% of total orders efficient and data-focused ways. by59% vs 2022, a third consecutive year of These allow for a more granular segmentation of placed on Customer Portal in December 2022. growth acceleration. our customer base and more targeted services. Customer Portal is our business-to-business In Q3 2022 we launched SIRVIS in Italy, our B2B As a result, we improved both our physical and (B2B) platform, an omnichannel service tool for In e-retail, we increased our digital shelf space and marketplace for the out-of-home channel, digital coverage of customers during the year, our customers that delivers incremental revenue visibility. With food delivery platforms, we achieved offering a 24/7 multi-category ordering anddrove stronger execution. growth. The share of total customer orders placed a beverage attachment rate of 25%, increasing experience, as well as a range of services. online was 4% in 2022, a reduction compared to 9pp year‑on‑year. We continued to drive our market leadership 2021, due to the negative impact from Russia. through increased market execution in displays and the placement of digitally connected coolers. We also enhanced our execution capabilities by the expansion of image recognition into 26 markets, up from eight in 2021. We continued to invest in new coolers as they help to drive single-serve mix and revenue growth. We have focused on using data to increase our profitable cooler coverage. We reached 86% coverage of our top customer outlets, up 2.8pp organically compared to 2021 (excluding Russia & Ukraine). We have a total of 1.33 million coolers on customer premises, and, excluding Russia & Ukraine, 53% of these now have online connections, up nearly 4 percentage points organically year-on-year. This bolsters the efficiency of our assets and increases the productivity of our sales teams. In 2022 we also piloted a next generation customer relationship management system, another example of our ongoing digital transformation. Providing a digital tool for communication drives better service and allows our salespeople to spend more time with our customers. We plan to scale the platform across all markets in 2023. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 31 Report Governance Statements Reporting Information ### Win in the marketplace continued execution. It is now live in 10 markets as of the end of 2022, with further roll outs planned for 2023. Priorities in 2023 | In 2022, we leveraged AI and advanced analytics | • Continue to execute our revenue | | --- | --- | | algorithms to accelerate the transformation of our | growth strategies to drive both price | | promotion management and demand forecasting. | and mix acceleration, while addressing | | By using advanced analytics algorithms, our | consumer needs for affordability as well | | markets can evaluate promotion spend | as premiumisation | | effectiveness, improving allocation of investment | • We will further drive usage of insights | | in promotions which drive higher-return | from segmented execution and increase | | opportunities and increase joint value created with | promotion spend effectiveness to | | our customers. AI‑enabled forecasting for short‑ | accelerate value delivery | | and long-term demand also streamlines inventory | • Continue to invest to improve our | | management, preventing out-of-stock incidents, | digitalcommerce abilities and respond | | and improvement in demand planning. | to rapid growth | | Finally, as we accelerate our journey to become a | • Improve our coverage of dynamic | | data-driven organisation, we are building the | route-to-market solutions, supported | | capabilities of our people. We launched the Data | by the deployment of image recognition | | and Analytics Academy during the year to support | in all markets and an acceleration in | | capability building of our employees across all | theincrease of coverage by | | functions and further accelerate the culture of | connectedcoolers | data driven decision making. | | | Driving stronger capabilities across | UN Sustainable | | --- | --- | --- | --- | | | | oursalesforce | Development Goals | | Quick commerce, where it takes a maximum of 30 | market, continuing to scale the capabilities | | | | | | To deliver our strategy, our people need the right | As we build our business by helping our | | minutes for home delivery, is another fast-growing | required to drive a competitive advantage. | | customersto grow and thrive, we make | tools to address customer needs. We now have sub-channel in urban areas where we are substantial contributions to the achievement Segmented execution is where we use our seven types of Sales Academies across different ofthe Sustainable Development Goals related partnering with multiple players. In 2023, we will capabilities to identify customer needs in different sales roles, in all of our markets. These aim to build toending poverty, decent work, sustainable continue to invest to improve our ability to serve | | locations and distinct types of outlets to better | unrivalled sales teams that constantly strive to | communities, responsible production, justice | | --- | --- | --- | --- | | online shoppers. | | | andstrong institutions, aswellaspartnerships. | | | target product assortment and personalise | improve our service and drive value with and for | | | Within the direct‑to‑consumer (D2C) channel, | marketing activities. We developed the next | our customers. | | | weare experimenting with different models in | generation of segmented execution, including | | | The academies offer a comprehensive end-to- different markets and implementing data-driven improved micro segmentation of our customers, end developmental experience, and we are commercial strategies. For example, in Switzerland, leveraging rich and granular external data. With constantly updating the programmes, keeping the we launched Qwell Express, a quick beverage and micro segmentation we can identify outlets for curriculum current with relevant market insights. snack delivery platform. In 2023, we will continue accelerating certain packs and products. For the We had tremendous uptake in 2022, with 98% of growing our existing D2C businesses and learning launch of the 300ml PET bottle in Bulgaria, we the Business Developers that took part achieving about new models. used micro segmentation to target outlets which certification through completion of the had higher-than-average traffic and a younger Data, insights and analytics programme. We also launched two new demographic. The next generation of segmented We made further progress leveraging data, academies during the year, designed to grow execution uses AI‑enabled algorithms to help insights and analytics capabilities to strengthen capabilities in Coffee and Premium Spirits. predict the potential value of an outlet and each our revenue growth management and route to product category, to drive targeted and focused Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 32 Report Governance Statements Reporting Information ### Growth pillar: Highlights in 2022 ## Industry 4.0 in ## supply chain by scaling ‘vision picking’ so that it covers more than45% of Company picking volume,continuing to deploy automated yardmanagement in addition to real-time transportvisibility. ## Deploying image- ## recognition ## technology leading to improved market execution by activating image recognition in 24 of our markets, covering 265,000 outlets. ## Reducing | Supporting our | secondary | | | --- | --- | --- | | customers | packaging | | | with the implementation of the new customer | and CO | 2 emissions through our | | relationship management platform, which | packaging optimisation initiatives. | | deliveredincreased customer retention andsatisfaction. ## Increasing ## coolers in the ## market by placing 99,000new coolers in 2022. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 33 Report Governance Statements Reporting Information ### Fuel growth through competitiveness and investment continued | | In a challenging year with significant inflationary | Our newest coolers are connected online to | During 2022, we upgraded our talent acquisition | | --- | --- | --- | --- | | KPIs | pressures across our business and supply chain, | provide better service to our customers and a | digital capabilities by consolidating sourcing, | | • Organic EBIT growth | we continued to invest to support long-term | better shopping experience for consumers, | candidate relationship management, selection | | | growth. In the face of macroeconomic uncertainty | boosting brand recognition and market | and applicant tracking under the Avature Platform, | • Comparable EBIT and geopolitical turmoil, our business remained penetration. They are also energy-efficient, with an aim to access a wider set of candidates, • Comparable EBIT margin resilient. We maintained supply and had no reducing emissions in our value chain. optimise the hiring process and improve speed • Capital Expenditure as % of NSR disruption in our production, except for a brief ofrecruiting and candidate experience. Following our acquisition of the Coca-Cola • ROIC shut-down in Ukraine, when our plant outside Kyiv Bottling Company of Egypt, with five production New digital tools are improving operational was temporarily in occupied territory. We also plants and a new mineral water plant in Serbia, we productivity and helping us serve customers in Principal risks continued expanding our use of new technological have now 62 production plants, compared with 56 amore cost‑effective way with better monitoring | • Competing in the digital marketplace | tools to improve efficiencies and reduce costs. | | | | --- | --- | --- | --- | | | | at the end of 2021. To reduce our costs for | ofinsights and data. We introduced a range of | | • Cost and availability of sustainable | | maintenance and energy and limit production | solutions for digital transformation across many | Supporting profitable growth packaging downtime, we expanded our use of digital different business areas during the year, including We continue investing in new and upgraded • Cyber incidents production lines to support our revenue growth production and predictive maintenance systems planning, manufacturing and supply chain using • Managing our carbon footprint management initiatives and the growth of key to twelve additional markets by the end of 2022. Industry 4.0 principles. We developed a ‘digital categories in our product portfolio. twin’ of our Austrian physical manufacturing plant • Water availability and usage Leveraging digital and technology in the industrial metaverse. This pilot digital twin In Austria, we invested in a refillable glass bottle In 2022, we continued investing in effective digital project led to a 9% reduction of energy usage | Stakeholders | line to support the production of our 1 litre and | tools and technology solutions, and expanded our | | | | --- | --- | --- | --- | --- | | | | | anda reduction of CO | 2 emissions in the piloted | | | 400 ml sparkling proposition. This investment | capabilities focusing on customer and consumer- | | | production line. secures supply of refillable glass bottles and centricity, employee experience as well as enables growth in sustainable packaging, helping operational productivity. To identify opportunities for simplification, in Our customers us respond to market trends. 2022we invested in process mining, using artificial To improve market execution, we fully activated intelligence to map core processes. Combining Energy is one of the fastest growing categories in our in-store image recognition technology in 24 the analysis with process expertise, we have now non-alcoholic, ready-to-drink beverages. To meet countries, with 265,000 outlets covered. We are defined priority areas where technology will be Shareholders demand, we are investing in new, dedicated can processing over 1.7 million product execution used to simplify and standardise for greater lines and syrup capability for Monster products at images every month, continuing to free up efficiency. For more information on our our plants. By increasing in-house production we salespeople to spend more time with customers simplification drive, Project Oxygen, see page 39. can better satisfy growing demand for Monster and improving revenue per outlet. Our suppliers During the year we also continued to enhance and products and also create a more efficient supply We continued our efforts behind a technology- chain in our countries. We currently produce strengthen reporting and analytics capabilities, enabled route to market by further implementing Monster products in five countries and six democratising data access using cloud technology business analytics tools to support segmented production lines, with plans to expandfurther with and enhancing data insights with cross-functional execution. Using extensive internal and external two additional lines in 2023. management reporting. Business data combined data to generate outlet-specific suggested orders with purchased data helps us leverage artificial The growth of our single-serve packages is a key and recommended activities, we have improved intelligence, improving segmented execution, strategic focus of our revenue growth the order-taking process and execution. demand forecasting and product performance. management strategy. In this context we Further benefits have been achieved through the continued our investment in coolers, with 99,000 As our business continues to grow, we have pilot of an online customer relationship new coolers in our markets, to provide further integrated technology to a common standard set management platform leading to faster and more support for single-serve growth. of solutions. This simplifies technology integration flexible customer interactions and greater as our Company expands, adding operations customer satisfaction. inanew market, Egypt, and Three Cents adult sparkling in 2022. Technology integration is done in a phased manner, and is continuing into 2023. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 34 Report Governance Statements Reporting Information ### Fuel growth through competitiveness and investment continued Embedding sustainability To achieve our NetZeroby40 commitment Sustainability is at the core of all our sourcing toreduce our emissions, together with the activities and our suppliers are critical partners in Coca-Cola System, we are engaging with our improving our impact. We monitor the performance most critical suppliers to tackle emissions in our of our critical suppliers through our internal supply supply chain. This involves support for measuring base assessments, audits of compliance and the greenhouse gas emissions and prompting public EcoVadis platform. EcoVadis helps us monitor a disclosure through CDP and development of range of risks using 21 criteria from international suppliers’ own commitments to science-based standard setters including the UN Global Compact, targets. We have teamed up with a reputable ISO 26000, the Global Reporting Initiative (GRI) specialist consultancy to develop a methodology and the International Labour Organization. for capturing emissions data and calculating Supplier‑Specific Emissions Factors (SSEFs). In 2021, we revised our procurement assessment Through these efforts, we are helping our guidelines to implement stricter rules for supplier suppliers build a strong foundation to start practices in regard to human rights, ethics and reducing greenhouse gas emissions. In Greece compliance practices. We also re-trained our and Poland, we piloted workshops with key buyers on the sustainability risk assessment tools suppliers, exchanging views on sustainability and available for supplier selection and governance. exploring how we can work together to achieve This training was repeated in 2022, and rolled out emissions reduction and net zero. ## in Egypt, our newest market. “We expanded our ability to produce rPET Packaging and transport ## In 2022, over 1,400 of our critical suppliers were in-house, with a €30 million investment for Improving the sustainability of our packaging is assessed using EcoVadis, an increase of 27% ## one of our Mission 2025 sustainability objectives. a dedicated facility in Gaglianico, Italy.” versus 2021. Our plan is to expand the use of To deliver on this, we undertook a number of these assessments for better, more objective targeted sustainability initiatives in 2022. These supplier monitoring and to leverage our EcoVadis helped us to secure supplies of rPET and reduce partnership across the Coca-Cola System to packaging size and weight. We also took further exchange intelligence. We are also investigating steps in our Green Fleet initiative, reducing the how to further extend the assessment of the risks impact of our fleet vehicles. in our supply base, leveraging new tools, artificial intelligence and customised alerts. We expanded our ability to produce rPET in-house, with a €30 million investment for a dedicated facility We recognise supplier certifications as per in Gaglianico, Italy. It has the capacity to transform international standards including ISO 9001, ISO up to 30,000 tonnes of PET per year into new 14001, ISO 50001, FSSC 22000 and ISO 45001. 100% rPET preforms, enough to meet our For agricultural commodities, we are aligning with beverage bottling needs in the country. the wider industry to recognise the Rainforest Alliance, Fair Trade, Bonsucro and the Sustainable You can read more about this in a case Agriculture Initiative Platform (SAI‑ FSA) and studyon page 51. Global GAP+GRASP. Through our workplace accountability audits, which have a three-year audit cycle, all long-term contractors and contracted services on-site are assessed in regard to human rights. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 35 Report Governance Statements Reporting Information ### Fuel growth through competitiveness and investment continued In Switzerland, we began using 100% rPET for all In Italy, weintroduced tethered closures for “ Improving the sustainability of our locally produced products. Italy and Austria also aseptic packaging, used for AdeZ products for Priorities in 2023 packaging is one of our Mission 2025 began transitioning their locally produced PET example, and sparkling products. In Bulgaria, we • Continue to invest in new modernised objectives which also contributes to portfolios* to 100% rPET in Q4 2022. These steps have done the same for our local water brands. In production lines to support the growth emissions reduction. To deliver on this, reduce our annual use of virgin PET by approximately 2023, we will implement tethered closures for of the business we undertook a number of targeted 20,000 tonnes. We will reduce our use of PET by more products, in more markets. In conjunction • Expand in-house production of Monster sustainability initiatives in 2022.” another 127 tonnes annually after lightweighting with our customers, we are also evaluating products with additional production the preforms used for products in Cyprus. alternatives to replace plastic drink lids with lines in our plants Ourcans are among the lightest in the market and, sustainable materials such as paper in advance of • Scaling of our new customer within the Coca-Cola System, we have already new requirements inthe EU. relationship management platform gained benchmark status for can-weight We also targeted reduction of plastic used in labels across our countries to further support optimisations. BALL, a strategic partner that by reducing label size. An initiative to optimise customer interaction and satisfaction supplies over 25% of our total can volume, began label height was rolled out at the end of 2022 for • Continue Egypt’s integration in our using renewable electricity for all ofcans supplied core sparkling brands in four pilot markets: Cyprus, systems and implementation of SAP’s to Coca‑Cola HBC in Europe, reducing emissions Greece, Italy and Poland. This will be rolled out S/4HANA in the country by more than 9,000 metric tonnes annually. across the Group in 2023. We aim to reduce • Further improving sustainability of our Alsowith BALL’s support, we further lightweighted costswhile also decreasing annually our plastic packaging by even greater reduction of our 25cl aluminium cans, cutting another 370 | | | use by120 tonnes, and related CO | 2 emissions | | | | --- | --- | --- | --- | --- | --- | | | | | | plastic used and CO | 2 emissions | | metric tonnes of CO | 2 emissions per year. | | | | | by300tonnes. We made progress in reducing secondary We have also optimised our use of cardboard. As packaging in a number of markets during the year. UN Sustainable an example, Czech Republic optimised the weight In Poland, we piloted a new stretch film, reducing of corrugated cardboard trays by 32%, saving 112 Development Goals the amount of plastic needed annually by 35 Our sustained efforts to reduce our costs and tonnes of paper raw materials. Implementation of tonnes, with a subsequent 73-tonne reduction improve our impact have generated significant our Keel Clip™, which replaces plastic film on can results for our business, our communities, society inCO 2 emissions. Coca‑Cola HBC Polska was multipacks with an innovative paperboard solution and the environment. These results correspond recognised for this implementation, receiving was extended during the year. In Greece, Keel to contributions to the Sustainable Development theGolden Innovation Retail 2022 award. Further Goals for clean water and sanitation, clean Clip™ use was expanded to an additional roll-out of this innovation is planned in 2023. energy,economic growth, industry innovation, production line and in Hungary, Keel Clip™ was sustainable communities, responsible production, Wealso took steps to optimise our shrink plastic introduced in 2022. climate action, lifebelow water and life on land. film for packaging in Austria, Czech Republic, Ireland and Switzerland. Our efforts in these We also continued rolling out our Green Fleet markets reduced CO emissions by 238 tonnes, programme to achieve progress against our 2030 2 reducing also the related use of plastic materials. CO 2 emissions reduction roadmap. This programme is centred on transitioning our fleet to We are working diligently towards fulfilling the electric and more sustainable vehicles. In 2022 we requirements of the EU’s Single-Use Plastics reduced our carbon footprint compared to our Directive. In 2022, we began introducing tethered baseline (2017) by 39%, which is a reduction of closures, which help capture the entire package about 40,000 tonnes of CO 2 in comparison to the for recycling. In Greece, we introduced tethered baseline. In addition, we introduced 1,157 green closures for our aseptic fibre packages, along with new vehicles in 2022, which now comprise 28% of plant-based packaging materials, reducing CO 2 our total light fleet, compared to 16% in 2021. emissions by 1,028 tonnes annually. * Excluding water in Italy. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 36 Report Governance Statements Reporting Information ### Feature: Focus on Egypt ### Egypt joined our Group in January ## Introducing 2022 after the acquisition of ### theCoca-Cola Bottling Company ## our newest ofEgypt (CCBCE), and we are ### veryexcited to welcome our ### newcolleagues. ## market Egypt has a young population of over 100 million and is one of the largest non-alcoholic ready- to-drink, (NARTD) markets by volume in Africa. We are building on our existing scale in Africa andincreasing our exposure to high-growth geographies. Egypt is one of the few countries where Coca-Cola does not have leading market share, and we see great potential for us to unlock considerable opportunities in this territory. Increasing brand portfolio Our current portfolio in Egypt spans our sparkling range: Trademark Coke, Coke Zero, Sprite, Fanta, Schweppes, Canada Dry and Water, including several variants of Dasani water. We see significant opportunity toleverage our proven route-to-market capabilities and over 70years of experience inemerging markets to increase penetration ofThe Coca-Cola Company’s brand portfolio, driving category leadership. Young and growing population ## 100m+ Opportunity to increase per-capita consumption Opportunity to become market leader Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 37 Report Governance Statements Reporting Information ### Feature: Focus on Egypt continued Collection and recycling Through our partnership with BariQ, the | “Our integration journey has started and | largest “bottle-to-bottle” recycler and | | --- | --- | | I’mparticularly proud of how we’ve already | producer of rPET pellets in the Middle East, | | improved our execution capabilities, | we support the collection and recycling of | | withbetter route-to-market and business | PET bottles in Egypt. In 2022, more than | | analytics. At the same time, our expertise | 31,000 tonnes of PET bottles were collected | | inoperating in a high-growth market has been | for recycling by BariQ, delivering a packaging | | welcomed in Coca-Cola HBC. My colleagues | collection rate of 43% for Coca-Cola HBC | | and Iare excited about 2023 andthe | Egypt. Through this ongoing partnership, | | opportunities we can develop as part of | wecontinue to support collection and | | Coca-Cola HBC.” | high-quality recycling in the region. | | Ahmed Elafifi | Water stewardship | | General Manager | Egypt has a growing population and is almost | entirely dependent on the Nile River for | Sustainability | We are strengthening the cooler network and | water, which is a scarce resource. We are | | --- | --- | --- | | The team in Egypt has a forward-looking | have invested in the market by installing new | committed to reducing our water usage ratio | | attitudeto sustainability, for example, installing | energy-efficient coolers this year in high- | and working with communities to help secure | | in partnership with a supplier via a power | potential outlets and locations, thus expanding | water availability in water risk areas. | | purchase agreement (PPA), 4.5 megawatt | the reach of our portfolio. | | In the two water priority locations in Egypt solarphotovoltaic rooftop plants at four We also integrated HR processes, including (Assiout and Kaliub), with the funds of manufacturing sites. We believe this is an performance evaluations, selection tools and TheCoca-Cola Foundation and partnering example of how our values are aligned. | | talent development, while respecting local | with the UNDP and local NGOs, we | | --- | --- | --- | | The business is committed to contributing to the | cultural imperatives. | implemented several water stewardship | | Group’s Mission 2025 sustainability targets and | | projects that replenished 3.6 billion litres | Market share improves in 2022 NetZeroby40 commitment and has started to ofwater. Theinterventions include riverbank We are encouraged to see early signs of align initiatives accordingly. We plan to include filtration unit construction; improvement successfrom the investments we are making Egypt in our sustainability reporting from 2023. ofsoils, yields and irrigation demand through tostrengthen long-term opportunities in Egypt. composting and use of a greenhouse Integration is progressing according In 2022 Egypt arrested the market share loss cultivation model in marginal and sub- they had seen for several years. We’re proud of toplan marginal lands witha hydroponic system. these achievements and excited for what the We are implementing our execution capabilities, Oneof the projectsalsoprovided water future can bring. focusing on revenue growth management. access in 17 villageswhere more than 33,000 Back-office integration is on track, enabling cost people werebeneficiaries. synergies in central functions. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 38 Report Governance Statements Reporting Information ### Growth pillar: Highlights in 2022 ## Kept our ## Continued to ## peoplesafe ## listen closely to during turbulent geopolitical events. ## our people and act on their feedback, simplifying processes and investing in capabilities necessary to achieve our Growth Story ## Helped our 2025targets. ## customers and ## Continued our our people adapt to the changing external ## efforts to build environmentwith speed and agility throughnew ways of working. ## aninclusive ## workplace and a diverse workforce that reflects our customer base and communities. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 39 Report Governance Statements Reporting Information ### Cultivate the potential of our people continued Strengthening our culture and KPIs supporting our people • Employee engagement From the first days of the war, we have worked to • Percentage of managers that are protect our people. We provided advance salary women payments when necessary, and re-skilling and redeployment options. We ensured that medical • Lost time accident rate and life insurance programmes in Ukraine were operating and provided high levels of support Principal risks andoffered targeted mental health assistance. • Health and safety Foranoverview of our efforts to support our • People retention peopleandcritically vulnerable populations in • Geopolitical and security environment Ukraine,seepage 43. To simplify processes and make our people’s lives Stakeholders easier, we have introduced a new, refined purpose, which highlights the value we create for all of our stakeholders: open up moments that refresh us all. To support the roll-out of this refined purpose, Our people a new culture manifesto is being introduced, along with a new leadership model. These will be rolled out across the organisation throughout 2023. These efforts align with ongoing efforts to simplify and transform our business, Project Oxygen and Project Dolphin. | A highlight of 2022 was welcoming Egypt into our | plan to remove complexity, drive process | Targeted improvements in engagement | | --- | --- | --- | | Group. We integrated our HR processes, starting | simplification and ensure a much better employee | As the fast pace of change continues, we made | | with HR reporting, performance evaluation, | experience in those key moments. | pulse surveys a permanent part of our internal | | selection tools and talent development, while | | communications. This helps ensure that | We implemented a Group-wide organisational respecting local cultural imperatives. In parallel, management and the Board really understand structure redesign, Project Dolphin, with westarted an internal talent exchange programme what our people need to succeed. consistent but modular functional frameworks. that gives our people the opportunity to pursue This ensures we have a consistent structure with We conducted two all-employee surveys in 2022. developmental assignments across our markets. | | some local modification when needed to best | The Company’s Employee Engagement Index | | --- | --- | --- | | Designing a future-ready organisation | serve customers locally, while prioritising the | score, the outcome of our annual engagement | | To achieve our Growth Story 2025 strategy and to | capabilities critical for future growth. | survey conducted in October 2022, remained | | future‑proof our journey, we have taken a hard | | steady at 85% with 88% of the workforce | To fuel our agility and ensure success in critical look at how we are organised and how we work. participating. We continue to benchmark our areas, we introduced a new, dynamic structure employee engagement against other high- A Group‑wide initiative launched in 2022, Project called Dynamic Pods. These cross-functional performing companies, partnering with Qualtrics. Oxygen aims to reduce bureaucracy, simplify our teams are completely dedicated to critical Our 2022 results were three percentage points processes and allow more time for value-adding business missions to enhance speed, quality and below the Qualtrics Global Top Decile Norm, which tasks. We have identified the most critical pain focus. In 2022, we deployed 10 Dynamic Pods represents the top 10% of more than 15 million points for our employees, prioritised them and focused on business acceleration in the hotel, people from more than 350 companies. secured investment behind the most impactful restaurant and café channel and trade investment ones. We have developed a clear and sequenced optimisation. We plan to introduce more in 2023, with some focused on specific markets. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 40 Report Governance Statements Reporting Information ### Cultivate the potential of our people continued Our 2022 employee engagement results highlight Regrettably, for the first time in five years, one of Accidents per million kilometres (APMK) trend progress in areas of focus since the 2021 survey. our employees died in a work-related road accident Both willingness to help each other and managers in 2022. In addition, seven contractors had fatal helping prioritise work increased by one incidents, mainly road accidents. This compares 8.93 percentage point to 89% and 86%, respectively, tothree contractor fatalities in 2021. All of these compared with 2021. We have invested in our reported fatalities were followed by investigation 7.64 | Business Developers, a key segment of our | and root‑cause analysis. Appropriate corrective | | | --- | --- | --- | | workforce, and survey results found a significant | action were defined and relevant lessons learned | | | increase in their perception of having the | in each case, which have also been shared | 5.4 | 4.96 equipment and resources required. This metric acrossour markets. 4.22 increased five percentage points to 86% 3.92 Overall, our Lost Time Accident Rate increased to 3.66 compared with the prior year. We have also 0.35 for 2022 compared with 0.25 in the prior year, 2.63 adapted their pay, a key driver of retention. In 2022, primarily due to falls/slips/trips, road accidents 2.20 2.02 62% of our Business Developers reported feeling 1.69 andcontact with machinery and tools. In order to fairly paid, an increase of three percentage points reverse this trend and stay on track towards compared with 2021. 201720162015201420132012 2018 2019 2020 2021 2022 our2025 commitment, we are closely working Retention is also a key priority, supported by withthe leadership teams of selected business | anongoing exit survey, continued focus on | units with the highest Lost Time Accident Rate. | | --- | --- | | remuneration and plans to introduce stay | Wearealso putting strong focus on refreshing | | conversations. Overall turnover was 11.4% in | their behaviour-based safety programmes and | | 2022 compared with 13.1% in 2021, showing a | strengthening the safety culture of our employees. | significant improvement due to our conscious Aiming to create a proactive safety culture, our efforts. As retention rates for women were lower, refreshed behaviour-based safety programme we conducted focus groups to better understand has been implemented in all our business units the root causes, and subsequently introduced excluding Egypt. All of our manufacturing facilities, relevant action plans. By year end, retention rates and all of our commercial territories excluding amongst women had stabilised in key markets. Nigeria, are covered by the programme. Health, safety and wellbeing In 2022, we expanded it to Group offices,achieving We have focused on reducing road accidents 52% coverage. We have eliminated 84.7% of the formany years, and our 16.3% improvement in barriers to safety identified and have trained 9,219 accidents per million kilometres travelled in 2022 employees and 1,229 contractors as behaviour‑ was our tenth consecutive year of improvement. based safety observers supporting the programme. We established dedicated routines and corrective We plan to deploy this programme in Egypt in 2023. 10 actions for our markets with higher road traffic To maintain engagement around health and incidents, Nigeria and Egypt, in 2022. We also safety, we conducted three communication introduced our first virtual training simulator in 8 campaigns across the Group in 2022. We also Nigeria to train employees and contracted expanded our quarterly assessment of partners who operate forklifts and drive trucks. compliance with The Coca-Cola Company’s 6 These new initiatives build on our fleet safety Life-Saving Rules from manufacturing to include training, which blends classroom and on-the-road all non-manufacturing locations, achieving a final elements, and our installation of collision 4 assessment score in the fourth quarter of 2022 avoidance technology in fleet vehicles. of81.2% (excluding Russia), vs 62.5% reported in2021 (including Russia). 2 0 Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 41 Report Governance Statements Reporting Information ### Cultivate the potential of our people continued We improved our external hiring gender ratio for Trust and belonging as a foundation Prioritising diversity and inclusion management roles by 11 percentage points in ofour culture As a part of our commitment to have at least 50% 2022 compared with the prior year. With special How well we collaborate across functions makes a of management positions held by women by 2025, focus on Commercial roles, we increased the ratio big difference in our ability to have an impact on we have accelerated our diversity and inclusion of women amongst our externally hired managers the market – to act fast and exceed customer efforts. Our strategy starts from retention, in the Sales and Marketing functions to 68%, an expectations. Therefore, for the first time this year building capabilities, complemented by external increase of 25 percentage points from 2021. we introduced a standardised measurement of hiring to create a gender-balanced organisation. We view mental health as an important part of cross-functional collaboration, the Collaborating Every country has targets included in their We continue to be a proud supporter of WeQual, employee wellness and are equipping our people for Impact survey. We applied the same approach business plan together with prioritised diversity and our CEO continues to be a judge of the with tools to recognise and address mental health that we use for measuring our collaboration with and inclusion actions. In 2022, 51% of our internal WeQual awards for female leaders. The network issues and early signs of burnout. our customers, a Net Promoter Score as a gold appointments were women, and women held we launched with our Coca-Cola System partners To attend to trauma due to geopolitical turmoil, standard for measuring customer experience. As 39.6% of management roles, compared with organised the largest diversity and inclusion event special group sessions led by trauma experts were all employees had the opportunity to anonymously 39.2% in 2021. In addition, in 2022 female for the European FMCG and Retail industry in Paris held in Ukraine, Poland and the Baltic countries. share their opinion, we received almost 15,000 representation among senior leaders grew to in 2022, where we also participated. As members Through these sessions, we also reminded our feedback points with ideas how to strengthen 39.5% from 36.5% in 2021. Our efforts to create a of The Boardroom in Greece and Switzerland, we people of the support services available to them. collaboration and further simplify our ways or more diverse work environment were recognised support development of women for Board positions. Our global Employee Assistance Programme working. Going forward, we are addressing the externally in 2022 with 11 diversity-related awards. provides 24/7 confidential support for our people To ensure we adhere to all applicable laws and biggest opportunities to create a tangible impact The entire Executive Leadership Team regulations and demonstrate best practice, we and their families. Specialised support is also with our frontliners and our customers. volunteered to sponsor participants of our regularly review our Human Rights Policy, our provided to our line managers to help them In 2022, storytelling remained the main tool for Women in Leadership programmes, which involve Code of Business Conduct, and other internal support team members. fostering a culture of belonging and trust. One of sponsors to help participants work through standards. These documents are online at https:// Our wellbeing framework also addresses our main storytelling tools remains Red Talks, a common career barriers. In 2022, 80 women in our www.coca-colahellenic.com/en/about-us/ employees’ physical, financial and social needs. format for sharing stories about one’s growth workforce participated. To increase opportunities corporate-governance/policies. Toaddress employees’ concerns about energy either during meetings or through recordings for networking, we added three women’s networks costs and inflation, we offered a financial wellbeing shared through internal channels. We also in Poland, Nigeria and Austria to our existing base session during our annual Learn Fest, providing continued to grow our informal Coffee Corner of local networks, with participation of our tips on budgeting. events, inviting our storytellers to talk about topics SeniorLeadership. such as caring leadership and effective collaboration. These events inspired a growing interest in learning from each other’s stories across the organisation. To celebrate collaboration across the Group, we invited colleagues to write thank-you notes to their most important or most frequent collaborators during the year, and these touching messages of gratitude were shared at festive year-end events. The toolkit for this culture activation was shared with all of our markets in the Red Talks community. In our third year of continuous performance conversations with mutual accountability, more than 70% of our people provided feedback to their managers in 2022. Nearly all of our people, 93%, completed quarterly snapshot discussions with their managers. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 42 Report Governance Statements Reporting Information ### Cultivate the potential of our people continued | Helping our people realise their | Developing critical capabilities in | Staying relevant to our candidates | | | --- | --- | --- | --- | | potential and developing talent | oursales and supply chain teams | According to a bespoke talent market survey | Priorities in 2023 | | Our employees had over 900,000 hours of | To provide the best solutions to our customers, | conducted by Universum, we maintained Top 10 | • Build unmatched sales teams by | | learning in 2022, including 56,000 in personal skills. | we have carried out a 360-degree review of our | rankings amongst the most attractive employers | strengthening our commercial talent | | About 80% of learning items completed – | most important customer-facing role, the | in the fast-moving consumer goods industry | pipeline | | representing more than half of all learning hours | Business Developer. We successfully launched a | inallof our markets in 2022. In 14 of our markets | • Stay resilient and closely connected | | – are self-paced and driven by our employees, | new, fully-integrated selection tool and upgraded | we are ranked in the Top 5 FMCG desired | with our teams through continuous | | demonstrating our culture of continuous learning. | our Sales Academy curriculum, upskilling Sales | employers,and in 6 markets we are the number | listening and simplifying their lives to | | | Team Leaders to help Business Developers grow. | 1FMCG employer. | the maximum, so that they continue | To enhance continuous learning, we organised our | | | More than 40% of our external social media | focusing on helping our customers grow | | --- | --- | --- | --- | | virtual Learn Fest for the third consecutive year, | Over 1,000 new Business Developers received | | | | drawing over 6,000 attendees. Ensuring all | their Licence to Start and Licence to Sell | communication is diversity-focused, including our | • Shape our culture of proactive | | employees can also learn from each other, we | certifications through the Sales Academy in 2022, | video series ‘Women of Coca‑Cola HBC’ which | collaboration using the power of our | | provide all employees with access to pools of | and over 8,500 existing sales force members were | highlights the successes of women across the | cross-functional teams through | | coaches and mentors through technology- | re-certified in Licence to Sell. To build on our | Group, reaching over 15 million people so far. | everyday behaviours, to be ready for | | enabled solutions. In 2022, the number of active | success, licences for the roles of Sales Team | Ourpractices have been externally recognised | whatever challenges the future may | | mentors rose to 349. After a campaign to | Leader, Sales Manager and Sales Trainer have also | across markets, with 60 awards and certifications | bring | | encourage internal coaching relationships, the | been added, with over 40 people managers and 25 | received in 2022, such as Top Employers, | • Continue to build a diverse and inclusive | | number of active engagements rose to 71. | sales trainers acquiring licences in 2022. | Randstad or PWC Employers ranking. Out of | workplace where we value and respect | | | | these, 11 recognitions are in the area of inclusion | the skills and differences of our | | We also accelerated development through our | Inspired by the effect of the Sales Academy on our | | | | | | and diversity, and we’re also listed 26th in the | employees, allowing all unique voices to | | Talent Review Framework. Compared to 2021, we | people’s growth, we launched specialised versions | | | | | | Refinitiv Top 100 Global Diversity & Inclusion Index. | be heard | | increased identification of potential emerging | of the content to meet the needs of our dedicated | | | | leaders within our workforce by 20% in 2022. More | coffee and premium spirit teams and introduced a | Employee-generated content is a key element | | | than 300 talents went through acceleration | Supply Chain Academy. Covering manufacturing, | ofour external presence and nearly a third of our | | UN Sustainable programmes in 2022, while, every year, more than logistics, planning, quality and procurement, over social media content is ‘behind the scenes’, such Development Goals half of the participants are getting promoted in 1,000 employees have already been certified as #Togetherness moments posted by our Efforts to foster an engaging workplace and their first year after programme completion. through our Supply Chain Academy. colleagues. Our employees’ active posting on aninclusive environment, nurture and develop | | | social media ranked us in the Top 50 most | thecapabilities of our people, increase gender | | --- | --- | --- | --- | | To optimise the hiring process and improve | To increase the time Business Developers have to | | | | | | activefood and beverage companies in Europe | balance in our management ranks and reduce | | efficiency and collaboration within hiring teams, | spend with customers, we created guidelines to | | stress and support employee wellbeing all | in2022 according to employee‑influencer we launched a new recruitment platform. We also streamline meetings and introduced feedback contribute toward global goals for development. platformDSMN8. Looking ahead, we will continue Thespecific Sustainable Development Goals | continued our internal gig project postings | mechanisms to understand their pain points. We | | | | --- | --- | --- | --- | | | | to strengthen our candidate pipeline by | supported are those for: good health and | | through Opportunity Marketplace, increasing | have also committed to set fewer priorities and | | | | | | communicating our internal strengths authentically. | wellbeing; gender equality; decent work | | visibility of opportunities, while piloting Talent | clarify links between targets and incentives. Sales | | andeconomic growth; reducing inequalities; | | Marketplace in Austria as an integrated, skill‑based | leadership teams in each market are implementing | | andpeace, justice and stronginstitutions. | | talent management solution. | these changes in 2023. | | | Onboarding has also remained an important focus point. Following the launch of our digitised onboarding experience for our Business Developers in 2021, we simplified the experience and onboarded 39 new Sales Team Leaders using an improved, user-centric development experience in 2022. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 43 Report Governance Statements Reporting Information ### Feature: Ukraine ## Taking care of our people ## and communities in Ukraine ### With a presence in Ukraine for ### more than 30 years, the safety ### ofour people has been our ### number one priority in 2022. ### Wehave provided practical and ### financial support, together with ### contributions totalling over ### US$20million in 2022 to support ### our colleagues and humanitarian ### reliefefforts. Addressing immediate needs In the early days of the conflict, our focus was onsupporting those in immediate need however we could. This included cash grants to our people through the Coca-Cola Disaster Relief and Coca-Cola HBC Employee Donation funds, on top of salary advance payments where necessary. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 44 Report Governance Statements Reporting Information ### Feature: Ukraine continued Adapting to a new reality Production restarted in the Coca-Cola HBC plant near Kyiv in May 2022, following repairs to extensive damage and with consideration for all safety and quality requirements. All employment has been maintained since the start of the war. Even when production was halted, our people continued to serve customers with deliveries from regional warehouses and also from neighbouring countries. As our people relocated, we offered a unique redeployment programme, ‘Re-skill 2 Win’, with opportunities to obtain new skills in sales, quality and manufacturing. After obtaining new skills, 22 of our commercial colleagues started cross- functional assignments as plant operators and forklift drivers. We supported those fleeing the country across | Europe through volunteering initiatives, financial | Our colleagues in neighbouring countries | | --- | --- | | donations and the provision of our beverages. To | provided help also to the family members of | | date, almost 2 million litres of beverages have | employees who evacuated from Ukraine, | | been donated. Nearly all our markets were | providing accommodation, covering essentials | | involved in some way, but neighbouring areas in | when needed and finding relevant job | | Poland and the Baltics, Slovakia, Romania and | assignments for them. | Hungary were at the forefront of relief efforts. We provided further help through our Employee Assistance Programme, including dedicated Continuing to support colleagues We established 12 Coca-Cola Care Centres at | some of our offices, particularly in central and | webinars on fostering resilience, supporting | andcommunities in need in 2023 | | --- | --- | --- | | western Ukraine. These became a safe place for | relatives and children, providing first aid and | While we hope for a speedy and peaceful | | temporary stays, equipped with food, water and | much more. We offered targeted mental health | resolution, we continue to provide support while | | other supplies. More than 700 people – our | assistance and nurtured the emotional | the conflict continues. For 2023, we have | | employees and their families – were able to have | connection with our people and their families | committed a further €10 million to address the | | some rest and replenishment during their | through different master classes, contests for | needs of our colleagues and Ukrainian | | evacuation to safer regions. | children and informal meet-ups. | communities, helping them to rebuild their lives | and livelihoods. | We also collaborated with our partners, providing | We know that the need for humanitarian aid is | | | --- | --- | --- | | further help. Together with our customer SPAR | ongoing. As part of the overall US$20 million | Together with The Coca-Cola Company, we are | | International, we delivered 62 trucks of water to | contribution, the Coca-Cola System has | supporting efforts to rebuild the local | | those who needed it most. This was achieved | contributed US$5 million in funding towards a | community near our Ukrainian bottling plant, | | through SPAR International’s Aid for Ukraine | partnership with the Italian Red Cross to provide | including rebuilding a kindergarten. | | scheme, which coordinates humanitarian aid via | food kits and beverages to 70,000 families in | | We strongly believe in a brighter tomorrow. In a network of non-governmental organisations. Ukraine. One kit provides a month’s supply of the meantime, as one connected team, we will highly nutritious, long-life products. continue to care for and support each other. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 45 Report Governance Statements Reporting Information ### Growth pillar: Highlights in 2022 ## Ranked as the ## world’s most ## sustainable ## beverage ## company according to DowJonesSustainability Index***andmaintained leading scores inseveralothertop ESG benchmarks. ## Donated over ## US$20million to support our people and communities in Ukraine in partnership with The Coca-Cola ## Foundation and the global Coca-Cola System. Continued ## progress in ## reusable ## 15% reduction ## packaging ## inemissions with first “new generation” Compact across scope 1, 2 and 3 compared with 2017 Freestyle dispensing machines going baseline, and 6% reduction compared to 2021*. liveinfour of our markets, and refillable packagingofferings expanded in Austria. ## 100% rPET Supported the ## transition launch of two in Switzerland for locally produced portfolio. ## Austria and Italy** are moving their portfolios new Deposit to 100% rPET. ## Return Schemes in Latvia and Slovakia and a new Packaging * Recalculation of all emissions made dueto conversion factors change. Recovery Organisation in Moldova. ** Excluding water. *** As of December 2022. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 46 Report Governance Statements Reporting Information ### Earn our licence to operate continued ### Continuing to deliver results We continued to create value for all stakeholders KPIs by making significant contributions to the #YouthEmpowered in action ### forall our stakeholders • Absolute greenhouse gas emissions development of the societies in which we operate, Greece At Coca‑Cola HBC, we are proud of our strong Scope 1, 2, 3 while also finding ways to take care of our #YouthEmpowered has become a holistic track record in sustainability, which is demonstrated environment by integrating sustainability into platform offering targeted upskilling and • Water usage in water-risk areas by our leading scores in eight out of the ten most ourdecision‑making and actions. reskilling to youth, women and hotel, • # young people trained through recognised external ESG benchmarks. These restaurant and café (HoReCa) workers in #YouthEmpowered #YouthEmpowered results show that we are committed to growing Greece. With more than 30,000 participants • % primary packaging collected the right way, for the long term. Our flagship community programme aims to since inception, it has become a leading prevent and combat youth unemployment and Throughout the year we remained focused on employability programme of the private addresses educational inequalities by providing Principal risks delivering our Mission 2025 and NetZeroby40 sector. Seeking to bridge the gap between participants with a future-fit skillset. It offers • Cost and availability of sustainable goals. The year culminated with the business the skills young people have and those in‑person and online training aswell as networking packaging ranking, for a sixth time, as world number one needed to get a job, or transition to a better and mentoring sessions alongside Coca‑Cola HBC • Ethics and compliance inthe beverage industry by the Dow Jones job, the programme uses a curriculum which senior managers. • Managing our carbon footprint Sustainability Index*.We are honoured that our maps the skillsets needed for 40 sought- score positioned us top among 7,822 companies We seek to train one million young people across after careers, using the O*Net and ESCO • Suppliers and sustainable sourcing across 61 industries, according to the recently all our markets by 2025, boosting their confidence international classification systems. The • Water availability and usage issued S&P Global Sustainability Yearbook 2023 and employability in a dynamic job market, and programme has grown thanks to over 30 | | We were also recognised as an ‘Industry Mover’ as, | targeting those not in education, employment or | partners, and with their contributions, the | | --- | --- | --- | --- | | Stakeholders | | training. By the end of 2022, #YouthEmpowered | | | | with a seven-point increase, we were the most | | programme now offers: | | | improved in the beverage industry since last year. | had reached over 790,000 young people since its | | • live sessions and e-learning on the most launch in 2017. Our people Our focus on sustainability is in the following key important skillsets areas: communities, climate change, packaging, Our focus in 2023 will be to drive a stronger impact • high-impact interventions including water stewardship, biodiversity, nutrition and for our broader value chain, connecting young scholarships, internship opportunities, sustainable sourcing. Underpinning all these people with future employers and partners. Our consumers individual and group mentoring and priorities are partnerships with The Coca-Cola career consultations Company, The Coca-Cola Foundation, and Cumulative number of young people trained • an app for on-the-go learning with more external organisations such as universities through #YouthEmpowered since 2017 Governments than 8,500 registered users in Greece andNGOs. Only by working together can we contribute more effectively to a better world. Our communities Communities Over the years, the Coca-Cola System has had a 1,000,000 huge impact on local communities and the lives of vulnerable people. We are always there in time of 794,943 NGOs need, and we remain committed to providing humanitarian support to those in crisis. This year, we have witnessed one of the worst crises in 548,835 The Coca-Cola Company Europe with millions of Ukrainian families 203,865 experiencing unimaginable suffering. We quickly 338,413 mobilised our support for our people and those 85,812 Our shareholders 21,401 inneed, and will carry on doing so. | | | 20182017 | 2019 | 2020 2021 2025 | 2022 | | | --- | --- | --- | --- | --- | --- | --- | | | * As of December 2022. | | | | | goal | | Our suppliers | All environmental and sustainability reporting excludes | | | | | | Egyptfor2022. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 47 Report Governance Statements Reporting Information ### Earn our licence to operate continued Bridging social, environmental Supporting our communities andeconomic needs for the benefit Reducing food waste and tackling ofcommunities climate change We always seek to positively impact people’s Ireland Product donations livesin the communities where we operate, and Three-year strategic partnerships with tosupport communities in need with product foodredistribution services FoodCloud and donations, volunteering initiatives and disaster FareShare have ensured that Coca-Cola ## c.2m litres relief activities. Also Coca‑Cola HBC has over the HBC products reaching end‑of‑life can focused on supporting Ukraine years expanded community investments from just beefficiently redistributed to 870 frontline andUkrainian refugees | standalone philanthropic initiatives to long-term | charities across the island of Ireland. | | --- | --- | | programmes closely linked to our business | Annually, this sees 750,000 ofour beverages | | priorities and material issues. We want to explore | redirected to those in need. | how we can deliver positive social outcomes ## c.3.7m litres Employees have also fundraised €20,000 through the way we do business and partner towards the salary of one food redistribution to food banks and disaster relief withour value chain. driver for the charity, which inturn enabled | | We seek opportunities to contribute to communities | | the delivery of more than 1.1million | | --- | --- | --- | --- | | | by bridging social, environmental and economic | | meals.To increase engagement further, | | Volunteering | | Investing in the birthplace | | | | needs, driving positive societal change while | | wepartnered with FoodCloud and Tesco | ofCoca‑Cola HBC creating shared value. Ireland to support those in need with ### * Nigeria their‘Win a Meal, Give a Meal’ Christmas ## c.2,800 The two programmes described here, one in To mark the 70th anniversary of the campaign, and supported employees to | | Nigeria, one in Ireland, are examples of driving | business in Nigeria, the birthplace of | | | --- | --- | --- | --- | | colleagues | | | volunteer their time with the charity partners. | | | positive change with a holisticapproach. | Coca‑Cola HBC, we donated €1 million to | | | focused on supporting vulnerable | | | By 2025, the initiative will have achieved | local communities. This funding, completed | communities, youth and the environment | | | | 1 | | --- | --- | --- | --- | --- | | | in 2022, targets programmes dedicated | 2,571 tonnes of CO | 2 avoidance | , | | | toincreasing quality of life in the country | contributing to UN Sustainability | | | | | through improvements to water and | Development Goal 12.3 and Ireland’s | | | | Community investments* | sanitation, packaging waste recycling | Climate Action Plan to reduce food waste | | | | | andthe empowerment of women and | by 50% by 2030. | | | young people. ## c.€7.4m These initiatives demonstrate how our • Long-term community initiatives environmental sustainability investments • Disaster relief (Bulgaria, Czech Republic, can also support value creation in local Nigeria, North Macedonia and Serbia) communities, improving lives and livelihoods with cleaner environments andjob opportunities. * Including Bambi and Egypt. 1. These figures have been provided by NGO partners and are not Verified Carbon Standard (VCS) – we will work with our NGO partners to explore VCS certification for approved carbon offset in the future. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 48 Report Governance Statements Reporting Information ### Earn our licence to operate continued Scope 1: direct Scope 2: indirect Scope 3: indirect ## Climate and net zero emissions in direct emissions in direct emissions up/ operations operations downstream ## #NetZeroby40 roadmap for Scopes 1, 2 and 3 | 5.4% | 5.4% | 89.2% | | --- | --- | --- | | Fuels used in | Purchased energy: | Packaging, ingredients, | | manufacturing, by our | electricity, used heat, | coolers, third-party | | own transportation fleet | steam, Combined Heat | transportation fleet | | or in remote properties** | and Power (CHP) output | | In 2016 we were one CO 2 reduction ofthe first companies plan endorsed by 2024-2026 toadopt the Science SBTi on 1.5º Based Targets. We also We will introduce pathway in2021 | introduced aninternal | | | renewable fuels | | | Accelerate | | --- | --- | --- | --- | --- | --- | --- | | carbon price for business | | | | for thermal | | packaging | | | decision‑making | | | energy | decarbonisation | | | | | 49% of coolers | | | | as of 2025 | energy efficient 5.9 in 2022 6 -27% CO 2 2020 vs. 2010 -14% CO 2 2030 vs. 2020 4.3* 3.7* 4 e -56% CO 2 2 2040 vs. 2030 1.6* 2 Million tonnes of CO 20172016 2020 2025 2030 2035 20402010 0 Baseline for our first Baseline for Science From 2024 to 2039: Science Based Targets (2010). Based Targets as per Beyond value chain mitigation*** Neutralisation Those targets achieved two 1.5 degree scenarios (2017) #NetZeroby40 -2 of residual emissions goal years ahead of the target from 2040 year of 2020 * Recalculation of all emissions made due to conversion factors change and according to the GHG Protocol Corporate Accounting and Reporting Standard. ** Remote properties – warehouses, distribution centres or offices where there are Coca-Cola HBC employees but there is no manufacturing site (plant). *** As defined by SBTi. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 49 Report Governance Statements Reporting Information ### Earn our licence to operate continued 20,000 tonnes of emissions reduction over the • Installation of additional rooftop solar panels in Reducing electricity consumption in our coolers ### Climate and net zero same period of time for our heavy fleet. Nigeria, bringing total solar electricity generated Toachieve our net zero goal, we are accelerating In 2021, we committed to reduce the replacement of existing coolers with new, across six production sites to 5.2 GWh in2022 Scope 2: Reducing indirect emissions emissions across our entire value chain (2.7% of total consumed electricity inNigerian energy‑efficient ones. Our goal is that 50% of our inour own operations to net zero by 2040. Over the past decade, plants), with an estimated emission reduction coolers will be energy-efficient or eco-friendly by Our scope 2 emissions come mainly from we halved our direct emissions, and our of2,170 tonnes. 2025. At the end of 2022, 49% of all coolers in our purchased or acquired energy. In 2022, scope 2 markets were energy-efficient or eco-friendly. greenhouse gas emissions reduction • Switching our grid electricity in Nigeria to emissions increased by 30% vs the prior year, This €90 million of investments delivered a total renewable, reducing emissions by 5,600 tonnes. plan to 2030 is already endorsed and heavily influenced by the current geopolitical reduction of approximately 120,000 tonnes of • Increase in renewable energy supply in total approved by the Science Based Targets situation in Europe and its impact on the energy greenhouse gas emissions in2022 vs 2017 baseline. energy mix in Romania, from 24% in 2021 to | initiative (SBTi) in line with the 1.5˚C | supply market. | | | | --- | --- | --- | --- | | | | 31% in 2022, saving 1,950 tonnes of emissions. | Together with our suppliers, we are exploring | | pathway. As 89% of our emissions are in | Renewable and clean energy | | | cooling solution innovations. In Greece and Italy, Scope 3, we must therefore collaborate Our use of renewable and clean electricity in our Scope 3: Reducing indirect emissions for example, we are currently trialling prototypes with our suppliers and customers to EU and Swiss manufacturing facilities increased to across our value chain using static cooling technology, which does not 99.2% in 2022. In 2022, we made significant progress in reducing reduce them to an absolute minimum. use fans or motors. our scope 3 emissions**, with a 7% reduction vs However, the impact of the current geopolitical By 2030 we will reduce our value chain emissions Improving the carbon footprint of our theprior year. situation drove a decline in our sourcing of inscopes 1, 2 and 3 by 25% vs 2017. In 2022, ingredients renewable and clean electricity and energy from A key driver of this performance was our increased wecontinued our journey to reduce our emissions, Since 2015, our emphasis on low- and no-sugar 53% in 2021 to 43% in 2022 in total, across the share in energy efficient cold drink equipment reducing absolute emissions from our direct drinks has decreased calories in our sparkling whole of Coca‑Cola HBC. placed in our customers’ outlets (49% vs 42% in operations and production by 21% and total value drinks by 17% per 100ml, contributing to a saving 2021). Additionally, we made significant progress chain emissions by 15% against our 2017 baseline*. Despite this decline, we delivered several projects of approximately 75,000 tonnes of emissions. in defining supplier-specific emissions factors, that helped to progress reductions in scope 2 Scope 1: Reducing direct emissions which are critical for future emissions reduction. emissions of CO 2 : inour own operations Scope 1 includes activities that are under our operational control, primarily our on-site energy Absolute Scope 1 and 2 CO 2 eq emissions Absolute Scope 3 CO 2 eq emissions* Renewable and clean* electricity in operations production and fleet. In 2022 scope 1 emissions (‘000 tonnes) (‘000 tonnes) in the European Union and Switzerland (%) reduced by 13% vs prior year. This reduction was supported by total investments of €13.7 million in -4% projects aimed at improving the energy efficiency -1% 563 -5% | | of the installations in our plants. | 538 | -14% | | | | | | | | -8% | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | 4,305 | 4,269 | | -11% | | | | | | | | | | | | | | | | | -21% | | | | | | -15% | | | | | 99 | 99 | 100 | | | | | | -23% | -24% | | | | 4,105 | | | | | | | 97 | | | | | | | | 481 | | | | | | | | 3,958 | | | | | | | | | | | Green Fleet | | | | | | | | | 3,824 | | | -21% | | | | | | | | | | | | | | | | | | | | 3,678 | | | 89 | | | | | | | | | | 432 | 426 | | | | | | | | | 87 | | | | | | | 600 5,000 120 | We have accelerated the transition of our light | | | | | | | | | | | | 3,410 | | | | | | | 443 78 fleet in 2022, introducing over a thousand green 100% -55% -21% -55% 2030 vs. 2017 2030 vs. 2017 in 2025 vehicles. 28% of our light fleet now consists of 500 100 4,000 more environmentally friendly vehicle models 256 –afour‑fold increase vs the start of our transition, | 400 80 | | | | --- | --- | --- | | 3,000 | helping to deliver a reduction of 19,500 tonnes of | | | | CO | 2 compared to our baseline, and approximately | | 300 60 | | | 2,000 * All the numbers on this page refer to total CCHBC 200 40 20182017 2019 2020 2021 2022 2030 20182017 2019 2020 2021 2022 2030 20182017 2019 2020 2021 2022 2025 excluding Egypt unless otherwise stated. goal goal goal ** Recalculation of the baseline emissions (2017) made due 1,000 100 20 to conversion factors change in 2022. * Recalculation of all emissions made due to conversion * Clean source means CHP using natural gas. factorschange. 0 0 0 Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 50 Report Governance Statements Reporting Information ### Earn our licence to operate continued ### i n a b l e p a c k a ### s t a g i n ### S u g ### H o w w e d ### o i ### t ## Progress towards 1 Design ## sustainable packaging • Lightweighted • Less packaging • Recyclable • Innovations Circular‑by‑design packaging Our Mission 2025 sustainable We believe every package has value packaging commitments Sustainable packaging is attractive andlife beyond its initial use and that it • Recover 75% of our primary to consumers and widely accepted. | should be collected and recycled into a | packaging for recycling or reuse | | | | | | --- | --- | --- | --- | --- | --- | | new package or re-used. We also seek to | by2025 | | | | | | minimise the overall amount of packaging | | 4 | | | 2 | | | • Make 100% of our primary packaging | Collect | | | Sell | | that we use. Together with our suppliers | | | Consumer | Customer | | | | fully recyclable by 2025 | • Deposit Return | | | • Energy-efficient | | and partners, we are working to design | | | attractiveness | acceptance | | | | • Increase the percentage of rPET | Schemes | | | coolers | more sustainable packaging and take inourbottles to 35% by 2025. Inour • Packaging Recovery • Delivered with action to ensure that our packaging EU countries and Switzerland, we Organisations Green Fleet doesn’t end up as waste. planto reach 50% rPET by2025 Carbon • Refillables reverse logistics emissions Waste Sustainable packaging contributes to reducing carbon emissions and waste 2022 achievements | 48% | 100% | | | --- | --- | --- | | of our total primary packaging was | of our primary packaging is recyclable | | | collected in2022forrecycling or reuse | bydesign | 3 Reuse or Recycle | • Returnable glass bottle • rPET bottles rPET: • Dispensed solution with bag-in-box or cartridge technologies • Reusable vessels | 10.5% | 22.3% | | --- | --- | | of the PET that we used across total | of the PET that we used in Coca-Cola | | Coca-Cola HBC marketswas rPET | HBC EUandSwitzerland markets | wasrPET Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 51 Report Governance Statements Reporting Information ### Earn our licence to operate continued | H | o w | w | | | | Designing in circularity | To help us reach ourrPETgoals, we are investing | Improving collection schemes | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | e d o | | | | | | | | | | | i t | | | | | | | | | | | Investing in in-house rPET | We use the concept of circular-by-design | in in‑house rPET facilities. | Our goal is to recover 75% of our primary | | | | | | | | packaging with objectives of reducing waste | | packaging for recycling or reuse by 2025, and we | | | | | | | production | | We have introduced in-house rPET production | | | | | | | | | andcarbon footprint, while maximising | | strive to collect a bottle or can for every one that | | | | | | | Italy | | technology at plants in Italy*, PolandandRomania. | | | | | | | | | commercial value. | | we sell by 2030. To achieve this, we are investing | In 2022 we converted an old factory in Our total investment in these technologies will be incircular systems that support high rates of Gaglianico into an innovative hub, which • We introduced the first label-free branded almost€50 million in 2023. packaging collection, effective recycling and use transforms up to 30,000 tonnes of PET per water packaging in Switzerland, launching three of recycled materials. | year into new 100% recycled PET preforms, | label-free variants of Valser. The distinctive look | Supporting reusable beverage systems | | | --- | --- | --- | --- | | enough to meet our beverage bottling | differentiates our products while improving the | We support increasing reusable beverage systems | • Deposit Return Schemes (DRS): In 2022, we | | needs in the country. The site is fully | ease of package recycling. | as part of a suite of measures to improve | supported the launch of two new DRS in | | powered by electricity from 100% renewable | | circularity for packaging and to reduce total | Slovakia and Latvia, bringing the total number of | • Our KeelClip™innovation has allowed us to | sources leading to a reduction in the CO | | | emissions. We are implementing solutions such as | DRS in Coca‑Cola HBC territories to five, | | --- | --- | --- | --- | --- | | | 2 | eliminate plastic packaging from our can | | | | emissions of producing a preform by | | | refillable bottles and packageless dispensers, | including Croatia, Estonia and Lithuania. | multipacks in 22 countries so far, helping us | upto70% compared with virgin plastic. | | where reusable vessels may be used. | | | --- | --- | --- | --- | | | toreduce our plastic packaging footprint. | | • Packaging Recovery Organisations (PROs): | | Thesiteemploys around 40 people and | | | Following a successful pilot programme in | | | • Tethered caps: In 2022, we moved to tethered | • 12% of total transactions (or packaging units) | | | uses advanced recycling technologies. | | | Moldova, we played an active role in the launch | | | caps in 3 countries (Hungary, Italy and Bulgaria), | sold across Coca‑Cola HBC markets in 2022 | | | Itisable to produce nine types of preforms, | | | of a new PRO there in late 2022. We look forward | | | across various portfolios, including sparkling | were in refillable containers. Nigeria and North | | | performing 4,700 quality checks per day | | | to increasing collection rates further in Moldova | | | soft drinks, water and aseptic PET. In 2023, | Macedonia have the highest proportion of | | | inorder to ensure that our high quality | | | as a result of this launch, and supporting a | | | wewill continue with this roll‑out to ensure full | refillable packaging within their portfolios, both | | | standards are met. This is enabling our | | | similar PRO launch in Ukraine in 2023, subject | | | compliance in all EU countries by the Single-Use | at 35%, while Bulgaria and Croatia have 27% and | | | Italian operation to shift its entire portfolio* | | | todevelopments. | | | Plastics Directive (SUPD) deadline. | 29% refillable containers, respectively. Austria is | | to 100% rPET. one of the fastest growing refillable markets, Shifting to recycled PET from 12% in 2021 to 16% in 2022. We expect 100% of our primary packaging is recyclable by this trend to continue in 2023, driven by design and we are committed toincreasing the continued investment and marketing support. use ofrPETin our bottles across the Group. • We continue to innovate with bag-in-box and | • By 2025 at least 35% of thePET we use to make | cartridge technologies. The first Compact | | --- | --- | | our bottles across our Group and 50%in EU | Freestyle machines are going live in four of our | | countries and Switzerland will be recycled plastic. | business units – Switzerland, Austria, the island | | • In 2022, Switzerland moved all its locally | of Ireland and Italy. | | produced portfolio in plastic bottles | • Moving forward we plan to introduce more | | to100%rPET. | initiatives to implement reusable vessels for | | • Italy and Austria also began transitioning their | ourpackageless solutions, in partnership with | | locally produced PET portfolios* to 100% rPET | our customers. | in Q4 2022. * Excluding water in Italy. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 52 Report Governance Statements Reporting Information ### Earn our licence to operate continued Going forward, we continue to implement water Mission 2025 target ### Water stewardship reduction plans at priority locations in water risk Water is the main component of our zones. In addition to upgrading our production ## 20% beverageproduction and is essential to our facilities with equipment and technologies manufacturing processes. We are committed reduction in water use in water risk zones requiring less water consumption, we are seizing to protect this valuable resource and to reduce opportunities to reuse water in production the amount of water we use in all our activities. facilities, designing full-plant water reuse systems. ## To achieve our Mission 2025 objectives, we are Help secure working to minimise water use by 20% in plants Water stewardship program in Nicosia water availability for all our communities | that are located in water risk zones. Together | In 2022 we started, in collaboration with Global | inwaterrisk areas | | --- | --- | --- | | with our stakeholders and local communities, | Water Partnership – Mediterranean (GWP‑Med) | | | we also want to make sure that people in water | and with the support of The Coca-Cola | | | risk zones where we operate have access to | Foundation, a new water stewardship project | | | safe, clean water. | inNicosia, in Cyprus, which is one of our water | | priority locations. The project is designed for All our plants, except the recently acquired Non‑Conventional Water Resources (NCWR) Lurisia plant in Italy, Teplice in Czech Republic, technical solutions in a smart-city context. Natura in Serbia and Egypt plants are certified Itsscope includes greywater reuse, rainwater by Alliance for Water Stewardship (AWS) which harvesting, information & communication confirms that the plants meet the global technologies for smart watering, water efficiency Water use ratio in water priority plants benchmark for responsible water stewardship. applications and awareness building. The expected (litre/litre of produced beverage) This certification covers 95% of the plants and benefit of the project will be around five million 99.6% of the production volume (excluding litres of saved water annually. Egypt plants, Bambi and Tsakiris), and 87% of | the plants and 88.8% of the production volume | ‘Zero Drop’ | | | | | | --- | --- | --- | --- | --- | --- | | (excluding Bambi and Tsakiris). | In the community of Profitis Ilias in Heraklion | 1.97 | 1.93 | | | | | | | | 1.80 | 1.821.821.82 | (Greece) we launched ‘Zero Drop’ programme The water usage ratio of our priority locations inpartnership with the Global Water Partnership 1.57 increased slightly in 2022 due to changes in – Mediterranean (GWP‑Med) and The Coca‑Cola production patterns at several big volume Foundation. A new water piping network will plants. Despite the overall increase, we replace the old existing pipes and as a result the achieved significant reductions in water treated wastewater will be used for irrigation consumption at anumber of plants. Water use ofadjacent agricultural areas. The estimated ratio fell by 17% inHeraklion (Greece), 16% in 2.5 current annual losses with the existing piping Yerevan (Armenia), 8% in Asejire (Nigeria), and -20% network arearound 10 million litres of treated 2025 vs. 2017 2% in Rionero (Italy). wastewater which will be saved within the 20182017 2019 2020 2021 2025 2022 2.0 goal ‘ZeroDrop’programme. 1.5 1.0 0.5 0.0 Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 53 Report Governance Statements Reporting Information ### Earn our licence to operate continued We are already reducing our water consumption and contributing to water security through water Priorities in 2023 replenishment activities, wetland restoration and • Continue reducing emissions in alignment WASH (water, sanitation and hygiene) projects. with our NetZeroby40 roadmap We also ensure that 100% of all wastewater from • Accelerate decarbonisation of our our bottling plants is treated to the levels packaging while connecting these changes supporting aquatic life before it is returned to with revenue growth watersheds and nature. These actions protect and • Support further roll-out of Deposit Return reinstate watersheds that foster biodiversity. Schemes in CCHBC countries, with a focus on our EU markets. Promote EPR policies | | Sustainable sourcing | | and the launch of new packaging collection | | --- | --- | --- | --- | | | We are committed to sourcing 100% of our key | | systems in priority markets, including | | | ingredients in line with the Principles for Sustainable | | Ukraine, Egypt and Nigeria | | | Agriculture as set out by The Coca‑Cola Company. | • Complete biodiversity impact study and | | | approach. Our efforts will begin with a mapping | Of specific importance to achieving our biodiversity | | start designing our action plan | ### Biodiversity and materiality assessment on biodiversity across goal are the principles on conservation of forests, • Expand our partnerships in water and In 2022, we committed to achieve a net positive our value chain to help us measure our progress. conservation of natural habitats, biodiversity waste reduction, while exploring new impact on biodiversity in critical areas of our We are also engaging with partners and andecosystems, soil management and areasof partnerships: biodiversity and operations and supply chain by 2040. We also collaborating with The Coca-Cola Company agrochemicalmanagement. carbon removal wantto eliminate deforestation in our supply todetermine priorities, target dates and chainby 2030. Overall, the principles protect and support • Continue focus on #YouthEmpowered implementation plans, and will communicate biodiversity and ecosystems, uphold human and asour flagship community programme We will do this by reducing emissions and water these over time. workplace rights, ensure animal health and welfare • On-going support to communities in need use, preserving and reinstating water priority areas In June 2022, we joined the Science Based and help build thriving communities. They apply to and sourcing agricultural ingredients sustainably. Targets Network (SBTN) Corporate Engagement farm-level production and form the basis for our In so doing, we will build adaptation and resilience Programme. We will work to implement the SBTN’s continued engagement with Tier 1 suppliers to into our sourcing and operations. guidance, which provides a framework and tools ensure sustainable long-term supply with lower UN Sustainable We are working to establish baselines so we can tofocus efforts so both nature and business environmental impact. Development Goals pursue our goal through a science-based canthrive. Our initiatives in communities help advance the global objectives of good health and wellbeing, and sustainable cities and communities. Ourinitiatives to empower youth and women Professor Andy Pickford, Operations Director at We are continuously seeking innovative contribute to the goals for quality education, ### Partnerships | | the Centre for Enzyme Innovation said: “There | solutions to make our packaging more | decent work and economic growth, sustainable | | | --- | --- | --- | --- | --- | | Only by working together we can build a better, | | | cities and communities, and partnerships. | | | | are many benefits to using enzymes to recycle | sustainable and we understand that science is | | | | more sustainable and inclusive future. Our | | | Ourinitiatives regarding water stewardship, | | | | PET, since the process has the potential to | key to unlocking solutions. For this reason in | | | | success today is only possible due to our strong | | | CO | 2 emissions reduction and waste reduction | | | deliver infinitely recyclable rPET with virgin- | 2022 we also invited start-up companies to bid | aidglobal progress towards the SDGs for clean | | and professional partners. Notable examples likeproperties, thus reducing the for €100k to develop their innovative solutions water and sanitation, and climate action. ofour partnerships are in the area of environmentalimpact of plastic waste. We are contributing to circularity. sustainablepackaging. eager to work with Coca‑Cola HBC to explore Our partnership plans for 2023 include We were excited to embark on a new how the process could be translated from the increasing the scope of existing partnerships in collaboration in 2022 with the Centre for laboratory to commercial scale.” water and waste reduction and entering new Enzyme Innovation at the University of partnerships in support of biodiversity and Portsmouth in the UK to scale innovations carbon removal. inPET recycling using enzymes. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 54 Report Governance Statements Reporting Information ### Key performance indicators ## 1 Leverage our unique 24/7 portfolio ## Tracking our ## progress 2 Win in the marketplace | We measure performance against our | | | 1 | | --- | --- | --- | --- | | | How we measure our progress | Organic | volume growth (%) | | strategic objectives using specific key | Volume is measured in unit cases, where one unit case | | | represents 5.678 litres. We grow volume as we expand performance indicators (KPIs). These | | per-capita consumption of our products and expand into | 14.0 | | --- | --- | --- | | KPIs allow us, and our stakeholders, | new markets or categories. Since the start of 2022 we | | | totrack our progress in delivering | measure volume growth on an organic basis. | | | onourtargets. | What happened in the year | | Volume declined by 1.5% on an organic basis, adversely These are also the financial and impacted by declines in Russia and Ukraine. Excluding these markets, organic volume growth was up 8.1%. operational milestones which we focus 2.6 Link to remuneration 2020 2022 on in implementing our Growth Story | | Revenue growth is used to assess business | 2019 | | 2021 | -1.5 | | --- | --- | --- | --- | --- | --- | | 2025 strategy. | performancefor the purpose of annual Management | | | | | | | Incentive Plan (MIP) bonus awards, and volume is a key | | -4.6 | | | component ofrevenue. See p139 for a full description of the MIP. 1 1 How we measure our progress Organic revenue per case growth (%) Organic revenue growth (%) We measure revenues per case and revenues on an organic basis to allow better focus on the underlying performance of the business. We grow organic revenue per case through pricing and improving mix. 20.6 15.9 What happened in the year Organic revenue per case grew by 15.9% as pricing and 15 25 20 14.2 revenue growth management actions in all markets drove improvements throughout the year. Organic 12 20 revenue grew by 14.2%, while excluding Russia and 15 Ukraine organic revenue grew by 22.7%. 9 5.8 15 Link to remuneration 3.7 2020 | 6 | Revenue growth is used to assess business performance | | | | | | --- | --- | --- | --- | --- | --- | | 10 | | | | 2019 | 2021 2022 | | 10 | | 1.1 | 2020 | | | for the purpose of our MIP awards. | 3 | | 2019 | | 2021 2022 | | | --- | --- | --- | --- | --- | --- | | 5 | | | -4,1 | | -8.5 | | 5 | See p139 for a full description of the MIP. | | | | | 0 0 | -3 | 1. For details on APMs refer to ‘Alternative Performance Measures’ | | --- | --- | | 0 | and ‘Definitions and reconciliations of APMs’ sections on | | -5 | pages245‑249. | -6 -10 -5 -9 Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 55 Report Governance Statements Reporting Information ### Key performance indicators continued ## 3 Fuel growth through competitiveness and investment 1 1 How we measure our progress (€m) Comparable EBIT margin (%)Comparable EBIT We measure this by comparable EBIT and comparable EBIT margin progress. We generate positive operational leverage as we grow revenues on our efficient cost base. 929.7 11.6 Using a comparable measure allows us to adjust for one-off items which impact comparability of performance 831.0 11.0 10.8 year on year. 758.7 What happened in the year 672.3 10.1 Comparable EBIT grew by 11.9% and by 1.3% on an organic basis. Comparable EBIT margins declined by 150bps and by 130bps on an organic basis. Link to remuneration Comparable EBIT is used to assess business performance for the purpose of our MIP awards. See p139 for a full description of the MIP. 2019 2020 2021 2022 2019 2020 2021 2022 1 1 How we measure our progress Capex as percentage of NSR (%) ROIC (%) We measure capital expenditure (capex) as a percentage of net sales revenue (NSR), and ROIC (return on invested capital), to ensure prudent capital allocation and efficient working capital management. Disciplined investment 7.6 7.5 | supports our growth. | | | 14.8 | | | --- | --- | --- | --- | --- | | | | 14.2 | | 14.1 | | What happened in the year | 6.9 | | | | Capex as a percentage of NSR reached 6.4%, just below our targeted range for this metric following the 6.4 suspension of capex investment in Russia in 2022. We delivered another year of good ROIC performance. 8 16 12 1000 ROIC excluding Egypt was 15.8%. 11.1 Link to remuneration 800 ROIC is given a 42.5% weighting in the assessment of 7 14 performance conditions used to determine long-term Performance Share Plan (PSP) awards. 10 600 2019 2020 2021 2022 2019 2020 2021 2022 See p139 for a full description of the PSP. 6 12 400 8 5 10 200 1. For details on APMs refer to ‘Alternative Performance Measures’ and ‘Definitions and reconciliations of APMs’ sections on pages245‑249. 4 8 6 0 Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 56 Report Governance Statements Reporting Information ### Key performance indicators continued ## 4 Cultivate the potential of our people How we measure our progress Employee engagement score (%) We conduct an engagement survey with an independent third party and measure our results against the norm for companies which perform highly on this metric. What happened in the year 88 85 Our employee engagement is below the global top decilenorm. Link to remuneration Maintaining our high engagement score is one of the CEO’s individual performance metrics. These are used along with business performance measures to determine the CEO’s annual MIP bonus award. Read more on pages 38-42. Global top Employee decile norm engagement How we measure our progress Percentage of managers that are women (%) One of our Mission 2025 commitments is to have at least 50% of management positions held by women by 2025. 50 What happened in the year In 2022 women held 39.6% of management roles, compared with 39.2% in 2021. Our efforts to create a 39.6 more diverse work environment were recognised externally in 2022 with 11 diversity-related awards. Read more on pages 38-42. 100 50 80 40 60 30 2025 target Women managers 40 20 20 10 0 0 Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 57 Report Governance Statements Reporting Information ### Key performance indicators continued ### Mission 2025 – our sustainability commitments ## 5 Earn our licence Sustainability is integrated into every aspect of Our Mission 2025 approach is based on our The table provides data on the progress of each tooperate ourbusiness. It is fundamental to our business stakeholder materiality matrix and is fully aligned ofthe six sustainability pillars. strategy, which aims to create and share value with the United Nations Sustainable Development How we measure our progress with all of our stakeholders. Goals (SDGs) and their targets. Our six key focus Progress on Mission 2025 as well as progress towards areas reflect our value chain: reducing emissions; our NetZeroby40 ambition. water reduction and stewardship; packaging What happened in the year (World Without Waste); ingredient sourcing; We made progress against most areas of our nutrition; and our people and communities. commitments; however, we need to accelerate our improvement in packaging and focus more on water reduction and health and safety. Link to remuneration ### Sustainability targets Our efforts and ambitions are long term and cumulative, therefore greenhouse gas reduction is used to determine long-term PSP awards. Greenhouse gas Sustainability areas UN’s Sustainable Development Goals 2022 1 2025 commitments Status reductions have a 15% weighting in PSP determinations. and material issues (SDGs) and their targets performance The benefit of this KPI is that it is quantifiable, and several of our Mission 2025 commitments feed into its progress. Climate and 7.2 9.4 11.6 reduction in carbon ratio ## 30% 31% indirectoperations 7.3 renewable energy Read more on pages 45-53. • Climate change 12.2 13.1 increase in energy-efficient • Economic impact ## 50% 49% refrigerators to half of our coolers in the market | | of our total energy from | | Impact from Russian | | --- | --- | --- | --- | | 50% | | 43% | | | | renewable | | operations. | 2 andclean sources total electricity used in the ## 100% 99% EUandSwitzerland from 2 | | | | | renewable andclean | sources | | | | --- | --- | --- | --- | --- | --- | --- | --- | | Water reduction | 6.1 | 9.4 11.6 | | water reduction in plants | | | Impact from Russian | | | | | 20% | | | 7.4% | | | | | | | locatedinwater‑risk areas | | | operations. Further | 6.4 and stewardship (waterpriority locations) implementation of 6.5 • Water stewardship successful practices 6.6 and innovations • Economic impact forthose locations • Biodiversity isplanned. | 12.1 | 15.1 17.17 | | help secure water availability | | Eight projects out | | --- | --- | --- | --- | --- | --- | | | | 100% | | 42% | | | | | | for allour communities | | of19locations. | 12.2 inwater‑risk areas (water 12.4 priority locations) Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 58 Report Governance Statements Reporting Information ### Key performance indicators continued Key to performance status ### Sustainability targets continued Each of the Mission 2025 commitments is broken down into aseries of annual targets that need to be met in Sustainability areas UN’s Sustainable Development Goals 2022 order tobe fully on track with our 2025 goal. Thecolour 1 2025 commitments Status and material issues (SDGs) and their targets performance coding below reflects the current status in relation to the desired position at this point in time on the trajectory | World Without | 8.4 9.4 11.6 | | help collect the equivalent of | | Action plan in place to | | | --- | --- | --- | --- | --- | --- | --- | | | | 75% | | 48% | | towards 2025 and our agreed action plans, i.e.: | | | | | 75% of our primary packaging | | deliver roadmap targets, | | Waste | | | | | | | see page 50-51. | We are fully ahead or on track tomeeting | | --- | --- | --- | --- | --- | --- | --- | --- | | • Packaging and waste | | | | | | | thetarget | | management | 12.1 | 14.1 17.17 | | of total PET used from | | Annualised benefits from | | | | | | 35% | | 10.5% | | We are not fully on track, but wedo not believe | | | | | | recycledPET and/or PET | | transition to 100% rPET in | | | • Economic impact | 12.2 | | | | | | | | | | | | from renewablematerial | | Switzerland, Austria and | there is risk tomeeting the target | 12.5 Italy will be reflected in We are not on track, and without corrective action 2023 results. there is risk thatwe will miss the target of consumer packaging to ## 100% 3 100% berecyclable | Ingredient sourcing | 8.3 | 9.4 12.1 | | | of our key agricultural | | Impact of geopolitical | | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | 100% | | 78% | | | | | | | | ingredients sourced in line | | situation in Russia and | | • Product quality | 8.8 | | 12.2 | | | | | | | | | | | with sustainable agricultural | | Ukraine. | 12.4 • Human rights, diversity principles 12.6 andinclusion 13.1 12.7 • Economic impact • Sustainable sourcing Nutrition 3.4 12.8 reduce calories per 100ml ## 25% 17% ofsparkling softdrinks • Product quality 4 (allCCHBC countries) • Nutrition • Responsible marketing Our people and 3.4 4.3 5.5 community participants ## 10% 9% infirst‑time managers’ 3.6 4.4 communities development programmes • Human rights, diversity | andinclusion | 8.5 | 10.2 | 11.6 | | train one million young people | | Cumulative number | | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | 1 M | | 794,943 | | | | | | | | through #YouthEmpowered | | 2017-2022; 2022-only | | • Employee wellbeing | 8.6 | 10.4 | | | | | | number is246,108. | andengagement | 8.8 | | | | | | | --- | --- | --- | --- | --- | --- | --- | | • Corporate citizenship | 12.2 | 16.7 17.16 | | engage in 20 zero-waste | | 5 | | | | | 20 | | 14 | | partnerships (cityand/ • Packaging andwaste 12.4 17.17 orcoast) management • Economic impact of employees take part ## 10% 10% involunteeringinitiatives Note: The 17 SDGs are an urgent call for action byallcountries target zero fatalities among ## ZER0 1 –developed and developing – ina global partnership. Each of the ourworkforce 17 goals hasveryspecific targets, referenced by the numbers | | reduced (lost time) accident | | Themain causes: falls / | shown above. | | --- | --- | --- | --- | --- | | 50% | | 15% | | | | | rate per 100 FTE | | slips / trips, road accidents | 1. Baseline 2017. Egypt is excluded as the integration has not | | | | | and contact with | been finished. | | | | | machinery and tools. | 2. Clean source means CHP using natural gas. | 3. Technical recyclability by design. of managers are women Female retention, 4. Baseline 2015. ## 50% 40% capability building, 5. Supported by The Coca-Cola Foundation. balanced external hiring, country specific targets and plans, see page 41. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 59 Report Governance Statements Reporting Information ### Managing risk and materiality To assess inward impacts, we use our annual 2022 Materiality matrix materiality survey, but also investor-driven ## Materiality frameworks such as the Sustainability Accounting Economic dimension Standards Board (SASB), insights from regular Environmental dimension callswith investors, our risk management process, Very highHighModerate ## assessment including climate scenario analysis, and input from Social dimension our markets and business units. Our assessment of material outward impacts is presented in the | To understand which issues matter most to our | horizontal axis of the materiality matrix, and in the | | Climate | | --- | --- | --- | --- | | | | Packaging and waste management | change | | business, our stakeholders, the communities | 2022 GRI Content Index. | | | where we operate and for the wider world, we At the end of 2022, we approached approximately Economic impact regularly (at least annually) conduct a rigorous Corporate governance 1,570 internal and external stakeholders, including materiality assessment. We take an integrated, consumers, customers, employees, suppliers, Human rights, diversity inclusive approach, designing the process in Product quality community representatives, governments, and inclusion collaboration with colleagues across multiple Employee wellbeing Sustainable sourcing non-governmental organisations, investors, trade and engagement functions and partnering with The Coca-Cola associations and academics. We asked Corporate Importance to stakeholders Company on our annual materiality survey. citizenship Water stewardship stakeholders to identify those topics with the Nutrition Biodiversity greatest impact on environment, people, society 2022 materiality assessment and economy over time, and the greatest Responsible Food loss and waste Our materiality assessment is carried out in four marketing importance to our stakeholders and our business. phases: 1) identify potentially relevant material issues; 2) assess their impact on, or importance Using findings from our materiality survey and Very highHighModerate to, stakeholders and to the business, including research, we derive the relative impact of each financial impact; 3) assess their impact on society Impact of the issue on environment and society issue and prioritise them accordingly. The Social and environment; and 4) review and validate Responsibility Committee of the Board reviews findings. This process allows us to gauge the and subsequently endorses the prioritised list In addition, in 2022, with a cross-functional internal Global Reporting Initiative (GRI) Universal relevance of different topics for key stakeholder ofissues, resulting in the materiality matrix. team, we assessed the qualitative impact of the Standards (2021), amongst others. groups and helps us identify and manage our material issues on planet, society and people, For a third year in a row, climate change and The Executive Leadership Team has responsibility impacts as they change and as new ones arise. asshown in the diagram on the next page. packaging and waste management are the most for integrating our sustainability priorities into our We periodically adjust our approach as standards significant material topics for Coca‑Cola HBC. business strategy and activities. Management of Managing and disclosing material issues and best practice evolve. For example, as part of Our2022 assessment also confirmed the critical the potential risks, opportunities and impacts of Regular assessments of materiality inform our our materiality survey in 2022 we asked questions importance of sustainable sourcing, economic our material issues takes place across the approach to sustainability, ensuring we focus on in order to assess double materiality. Double impact and corporate governance. Company and is disclosed throughout this report. the biggest impacts and tackle the issues that materiality requires the business to assess both Additional information about our material issues matter most. Material issues are integrated in our In 2022, we added two new material topics to the the risks and opportunities linked to ESG topics isincluded in our GRI Content Index. Growth Story 2025 strategy, our short-, medium-, 12 topics already identified as material. Based that can influence enterprise value creation, and long-term goals and are linked to our risks We support the UN sustainability agenda and align onthe outcome of our materiality assessment orinward impacts, and the ESG impacts that a andopportunities. our efforts with the UN Sustainable Development process, biodiversity and food loss and waste are company can have on the environment and society, now managed and disclosed as material issues. Goals. Annually, we report our UN Global Compact Our materiality process also informs our or outward impacts. Dynamic materiality recognises We also made new commitments related to our Communication on Progress on the UN website. disclosure, including the content of this report. that the financial materiality of sustainability progress in these two areas. For details about Our Mission 2025 sustainability commitments, Our Integrated Annual Report is aligned with the impact can evolve over time, and sometimes ournew targets for biodiversity and food loss and ourshort‑, medium‑and long‑term ESG goals, principles and elements of the International quiterapidly. In other words, topics that might be waste, please see pages 53 and 27, respectively. including our NetZeroby40 goal, and our material Integrated Reporting Council’s (IIRC) framework, considered financially immaterial today could issues, are all linked with the UN Sustainable the SASB, and prepared in accordance with the prove to be of critical importance tomorrow. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 60 Report Governance Statements Reporting Information ### Managing risk and materiality continued | Development Goals and their underlying targets. | To get inspired and learn from opinion leaders | Our stakeholders identified scale as the most | • expanding impact by working with small and | | --- | --- | --- | --- | | You can find more about how our material issues | andexperts we focused our event on the | important barrier in creating shared value and | medium-sized companies across the value | | and sustainability commitments link to the | followingaspects: | acknowledged that this can only be resolved | chain, and not only with large entities; | | Sustainable Development Goals on pages 57-58 | | through collaboration across business and the | • embedding circularity throughout projects; and | • the economic transitions needed for the of this report and on our website. public sector. Forum participants emphasised that • strengthening social impact through creation of nextdecade; tackling social issues is an organisational task, not shared value, including profitability, which Recommendations from stakeholder • aligning business growth opportunities with a functional one, as social, economic and incentivises programme expansion. forums help us grow together social needs; environmental issues are increasingly intertwined. These outcomes and recommendations were Every year we hold a Group Stakeholder Forum to • driving economic progress through community Our stakeholders concluded that shared value subsequently discussed with the Social solicit input and recommendations from a group programmes; creation is a new way to achieve economic success. Responsibility Committee of the Board. They will of experts. Many of the sustainability initiatives • enabling sustainable and inclusive growth Additional suggestions from our stakeholders help us further evolve our programmes for the highlighted in this report initially came from through our value chain; and included: communities where we operate, as we seek to discussions at our annual stakeholder forums. • tools for measuring the social and business increase impact and expand shared value creation. Forexample, the 2018 stakeholder forum focused • expanding the scale of Coca‑Cola HBC’s impact of our investments. on packaging and our stakeholders recommended projects by including customers, suppliers and reducing packaging design complexity, as we broader stakeholder groups; havedone with the label‑free water packaging weintroduced in Switzerland. This improves Material issue impact in each Upstream Direct operations Downstream recyclability and reduces waste. stepof our value chain: how The theme of our 2021 stakeholder forum was significantly each material topic forming better, stronger ESG partnerships. We impacts society and environment, subsequently developed our Sustainability based on the scale of the impact, Partnership Model to guide joint value creation Packaging Manufacturing* Distribution Cold drink Customers and severity and likelihood Agriculture and with customers. equipment communities ingredients To minimise the carbon footprint of our Biodiversity engagement, our 2022 stakeholder forum was Climate change once again held online. The focus of the 2022 Corporate citizenship forum was delivering value both for business and | society (the exact Forum theme was: Bridging | Corporate governance | | --- | --- | | thesocial and the economic: how can companies | Economic impact | | invest to deliver value both for business and | Employee wellbeing | | society?). We welcomed 81 stakeholders from | and engagement | 25markets to discuss opportunities for creating Food loss and waste shared value and strengthening positive change in Human rights, diversity & inclusion society. As in prior years, participants included our investors, customers, suppliers, NGOs, academia, Nutrition policymakers, and other stakeholders. Together, Packaging and waste management we explored potential solutions to social challenges Product quality and ways to reinforce the links between social and Responsible marketing economic progress. Sustainable sourcing Water stewardship * Includes our direct operations, not only manufacturing plants. Low Medium High Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 61 Report Governance Statements Reporting Information ### Managing risk and materiality continued Our approach to risk and resilience Risk and resilience in our business units In 2022, we continued the integration of and markets ## Managing risk enterprise risk management (ERM), insurance, Risk sponsors and risk and insurance coordinators security, business continuity and crisis in every business unit facilitate the cross- management to develop our holistic business functional process of continuous identification ## and resilience resilience programme. For us, business resilience and assessment of operational and emerging risks is focused on building and improving the and opportunities on a country-by-country basis Company’s capability to prepare for and respond as set out in our ERM framework. Our rigorous, ongoing risk management process to changes in our environment to ensure we meet As we navigate geopolitical uncertainty This assessment is discussed at senior leadership supports business resilience and is an input to our our short (12‑18 months), medium (2‑5 years) and and inflationary pressures while team meetings every month and risk registers are annual assessment of material issues. See page long‑term (5 years+) objectives. It recognises that remaining focused on our Growth updated accordingly. All risk registers are visible to 59 for our materiality process and material issues. while our risks present potential negative impacts, Story2025 to support the long-term the Group’s Business Resilience Team who review Due to their criticality, our material issues and they also present opportunities. The earlier we sustainable success of our business, the operational and emerging risks, identify key trends principal risks are monitored closely by the identify, assess and manage risk, the higher the process of understanding and managing and provide benchmarking for the identification, Executive Leadership Team and our Board. likelihood we can prevent or reduce negative assessment and management of risks and our material issues and principal risks is impact and take advantage of opportunities. opportunities across the business. The Business more important than ever. To support Business resilience starts with the review of our Resilience Team also reviews business continuity success, we use a well-established, constantly changing operating environment and plans across the Group to ensure they are up to collaborative approach, which we the assessment of the current and emerging risks date and have been tested. periodically refresh as best practice, and opportunities inherent in it. Our managers Twice a year the Business Resilience Team, led by international standards and our business develop and implement plans to manage those the CRO, hosts a business resilience conference risks – including ensuring we can continue to serve needs evolve. where all risk sponsors and risk and insurance our customers if events lead to disruptions; or coordinators are updated on key trends and take advantage of those opportunities. For those emerging risks across the business. The CRO also events we cannot prevent, we have well- facilitates a discussion with the regional established processes to reduce the impact on management teams and General Managers twice the business via our crisis management each year in key markets to discuss risk and programme (the Incident Management and Crisis resilience issues and trends, and to benchmark Resolution, or IMCR programme) and the financial risks across the business. impact through our insurance programme. This seamless, cross-functional approach breaks down organisational silos and ensures alignment on positive forward momentum. The business resilience programme is led by our Chief Risk Officer (CRO), who works in close collaboration with the risk owners across our business units, Group functions and Executive Leadership Team. The CRO is tasked with maintaining a wide-angled view of all business streams and emerging risks and opportunities and, through regular reporting, ensures that visibility and decision support is provided to the Executive Leadership Team and our Board. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 62 Report Governance Statements Reporting Information ### Managing risk and materiality continued | At least once every other year, each business unit | The outcome of these discussions with business | A key role of the Board is to establish the Group’s | | | | --- | --- | --- | --- | --- | | participates in an incident management and crisis | units, region teams and the Group function heads | risk appetite. In 2021, the Audit and Risk | In the section below, we have grouped | | | resolution (IMCR) validation exercise. This includes | are integrated into our Principal Risk Report that | Committee approved a revised Risk Appetite | our principal risks to highlight the | | | training and participation in a crisis simulation | isreviewed by the Group Risk and Compliance | Statement but also reviewed a series of | connectivity between risks. | | | based on a relevant business risk. | Committee (GRCC), which meets quarterly and is | supporting statements for each risk category | | | | | co-chaired by the CRO. The GRCC is made up of | inour Risk Universe. In 2022 these supporting | | Responding to upheavals | In 2022, we prepared the Egypt management the Group function heads that are the ‘risk owners’ statements were integrated into our risk inthe macroeconomic and team for full incorporation into our resilience for each of our risk categories; it ensures that our assessment process, providing additional geopolitical environment programme, holding training and development principal risks are reviewed from a broader guidance to business units and Group functions sessions with key managers and the senior cross-functional perspective. The results of the on risk appetite thresholds. In 2023, we will drive Leveraging our unique leadership team in risk management and IMCR. In GRCC’s discussion are integrated into the practical application of our risk appetite further 24/7portfolio – and 2023, we expect to fully incorporate the Egyptian Principal Risk Report that the CRO provides the into the business by establishing risk tolerance responding tochange business including the adoption of the monthly Executive Leadership Team and the Audit and Risk levels for each risk as a key element of our risk risk review routines and participation in an IMCR Committee of the Board each quarter. assessment process. The Board will review the Maintaining operational training and validation exercise. Risk Appetite Statement again in 2023. excellence in volatile markets Risk governance and the role Group management Our internal audit department conducts an annual oftheBoard The CRO also facilitates a discussion twice a year independent review of the business resilience Managing the risks and The Board retains overall accountability and with Group function heads and their teams to programme and its implementation, assessing the opportunities of climate responsibility for the Group’s risk management review key operational, strategic and emerging Company’s risk management, business continuity change and internal control systems, has defined the risks across the business and identify best and crisis management processes and their Group’s risk appetite, and, through the Audit and practices for mitigation plans to improve our risk application against business best practices and Risk Committee, reviews the effectiveness of these and resilience programme. International Accounting Standards. The Corporate Principal risks trend systems. During the year, the Board considered One of the most significant risks to our Company’s Audit Director makes recommendations to the nature and extent of the principal and emerging Increasing resilience over the longer term is climate change. improve the overall business resilience programme, risks and opportunities, including those associated It also presents us with significant opportunities where required, with the findings submitted to the Stable with climate change, that have the potential to ifwe proactively prepare our business with Audit and Risk Committee of the Board. Building impact the Group’s strategic objectives. Decreasing well‑thought‑out adjustments to our business on this review, the Board and its Committees also Additionally, the Social Responsibility Committee strategy and capital investments. As climate conduct annual reviews of the effectiveness of of the Board takes a particular interest in risks change risk is fully integrated into our risk ourinternal controls. Further details of that review associated with climate change as set out on Risk included in viability assessment management programme, the CRO also facilitates are set out in the Audit and Risk Committee pages 126-127. | more regular discussions with a cross-functional | | Report on pages 118-123. | | | --- | --- | --- | --- | | team that includes representatives from Business | During the year, the Audit and Risk Committee | | Link to growth pillars | | Resilience; Finance; Quality, Safety and Environment; | ofthe Board conducted a robust assessment of | | | 4 51 2 3 and Corporate Affairs and Sustainability, applying the principal and emerging risks, considering the our risk management models to our assessment nature and extent of the principal risks that have of climate change risks. For more information, the potential to impact the ability of the Group to seepages 72‑74. achieve its strategic objectives, as well as reviewing the structure and implementation of the ERM programme and internal control systems. This enabled the Audit and Risk Committee to provide assurance the Board that the company’s principal and emerging risks were being managed effectively. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 63 Report Governance Statements Reporting Information ### Managing risk and materiality continued ## Principal risks 2022 In 2022, as general market conditions continued Principal risks: ### Responding to upheavals in the macroeconomic to improve with hotels, restaurants and cafés ### and geopolitical environment • Commodity costs returning to normal business operations post COVID‑19, the general macroeconomic and • Foreign exchange fluctuations Principal risks trend Risk included in geopolitical environment exacerbated by the viabilityassessment • Economic conditions Russia/Ukraine crisis affected many of our Increasing • Geopolitical and security environment principal risks. Stable Link to growth pillars 4 51 2 3 Decreasing Principal risk: Commodity costs Key drivers Mitigation Outlook In 2022, we continued to see pricing fluctuations • Global macroeconomic conditions and In 2022, we: Energy prices are expected to remain high during in key raw materials such as resin, sugar and inflationary pressures, 2023, increasing direct operating expenses • managed pricing volatility for hedgeable raw aluminium. Driven largely by the Russia/Ukraine • Ongoing geopolitical tensions, including Russia/ andflowing through to higher ingredient costs. materials through hedging/fixing of forward prices; crisis, increased pressure on gas and oil Ukraine crisis Weexpect to see continuing volatility in the short • utilised established protocols under our Treasury pricesand market volatility led to an increase • Continuing supply chain volatility, to medium term. Commodity market prices are & Procurement Policies; inutilitycosts. • Impact of climate change over the longer term. expected to be mixed with continuing high prices • introduced a hedgeable energy component in ofsugar but the price of PET reducing, together In the medium-longer term we expect commodities contracts; with reducing ocean freight costs. | commodity costs will be impacted by climate | | • provided reporting and visibility; | | | --- | --- | --- | --- | | change as suppliers are affected by changing | | • and sought advice from the Financial Risk | Trajectory: | | weather patterns and increasing cost of carbon | | Management Committee and the Audit and Risk | | | emissions as we transition to a low carbon | | Committee of the Board. | | | economy (see Emerging Risk: Cost and | Consequences Metrics and targets Focus for 2023 | | | availability of ingredients and raw materials, • Increased input costs putting pressure Percentage of contracts hedged/fixed, input costs Continue monitoring key indicators and manage page 78) which may be passed on in additional onmargins per unit case volatility under our current policies and costs to us. programmes. Risk included in viability assessment: Link to material issues: Economic impact, sustainable sourcing Strategic Growth Pillar: Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 64 Report Governance Statements Reporting Information ### Managing risk and materiality continued Principal risk: Foreign exchange fluctuations Key drivers Mitigation Outlook In 2022, we continued to see foreign exchange • Macroeconomic conditions In 2022, we: We expect continuing short- to medium-term volatility and rate fluctuations, particularly in the • National instability and government responses volatility in key markets, particularly Nigeria and • maintained our target of hedging 25% – 80% Russian rouble, Nigerian naira and Egyptian pound. to global and domestic economic conditions, Egypt. There is a possibility of a global recession in ofrolling 12‑month forecasted transactional | | particularly in Russia, Nigeria and Egypt | | 2023 as result of high inflation, high interest rates | | --- | --- | --- | --- | | Risk included in viability assessment: | | foreign currency exposures as per treasury | | | | • Possibility of global recession in 2023 | | and insufficient capacity to maintain government | policy, endorsed by the Board; support in many countries. • used derivative financial instruments, whereavailable, to reduce net exposure; Trajectory: Link to material issues: • provided reporting and visibility; Economic impact • and sought advice from the Financial Risk Strategic Growth Pillar: Management Committee and the Audit and Risk Committee of the Board. Consequences Metrics and targets Focus for 2023 • Financial losses and increased cost base Percentage of hedged foreign currency exposures, Continue monitoring key indicators and manage • Asset impairment foreign exchange losses volatility under our current policies and programmes. • Limitations on cash repatriation Principal risk: Marketplace economic conditions Key drivers Mitigation Outlook In 2022, we continued to see increases in inflation • Challenging economic conditions In 2022, we: We expect challenging economic conditions to and interest rates across our markets. These • Government and central bank responses continue in the short term as central banks • used pricing and targeted actions to drive mix conditions may reduce consumer purchasing including taxation and interest rate increases increase interest rates to manage inflation, the ascritical tools to manage cost inflation; power, which may impact the affordability of our • Unemployment and underemployment rates Russia/Ukraine crisis continues and China struggles • carefully managed operational expense and products. This is particularly relevant when input • Aggressive discounting and/or pricing pressure to manage COVID‑19 outbreaks in early 2023. costcontrols; costs are increasing and, to maintain profitability, from large retailers There is a possibility of a global recession in 2023. • managed cash out flows; we need to increase prices. • Price elasticity • developed coordinated and targeted plans with Trajectory: Risk included in viability assessment: TCCC and other business partners on promotions and marketing initiatives; and • continued monitoring of conditions and adjustment of action plans. Link to material issues: Economic impact Consequences Metrics and targets Focus for 2023 • Volume and revenue decline Organic revenue growth, operating expenses, Continue to monitor key economic indicators in Strategic Growth Pillar: • Reduced profitability profitability each market and adjust plans as required. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 65 Report Governance Statements Reporting Information ### Managing risk and materiality continued Principal risk: Geopolitical and security environment Key drivers Mitigation Outlook In 2022, our concerns were clearly centred on • Russia/Ukraine crisis and potential for expansion In 2022, we: We expect continuing volatility over the short theRussia/Ukraine crisis. In Ukraine our focus into other countries tomedium term. While the situation remains • enhanced security risk assessments to better wasand remains the safety of our people first, • Continuing political unrest and social instability unpredictable, we do not expect a resolution of the inform management plans; and the resumption of our production and inseveral countries including Nigeria, the Russia/Ukraine crisis in the short term. Continuing • developed emergency and contingency plans for distribution where it was safe to do so. In Russia, Balkans,Armenia tough economic conditions in the short term all potentially affected markets; thedecision by The Coca‑Cola Company to • Social discontent driven by continuing tough willincrease the risk of social discontent and • continued IMCR development and training in cease operations and economic and other economic conditions politicalinstability. business units and at Group and ELT level. sanctions imposed by many countries, had a Trajectory: significant impact on our business. The security environment in Nigeria remains volatile in the lead up to national elections in early 2023. Tensions Consequences Metrics and targets Focus for 2023 remain in the Balkans and Armenia and these led • Safety of our people Reduced impact of security-related incidents, Continuing development of our cross-functional to incidents that had the potential to affect the • Financial impact of economic and other sanctions reduction in residual risk levels, number of IMCR business resilience programmes, particularly safety of our people and disrupt our operations. • Potential for business disruptions validations successfully completed. incapability development. Risk included in viability assessment: • Supply chain instability Link to material issues: Employee wellbeing and engagement Economicimpact Strategic Growth Pillar: ### Risk management in action | Enhancing our risk‑based approach to | to develop their capabilities and enhance | development of the assessments that were | | --- | --- | --- | | security & emergency management | processes for the development of assessments | calibrated by the Group business resilience | | While this was part of our five-year business | in the Geopolitical and security environment | team. In markets assessed as higher risk, notably | | resilience improvement plan that commenced | riskcategory. At the Group level, the business | those bordering Ukraine, our risk and security | | in2020, the volatile geopolitical environment | resilience team developed a template that | leaders focused on building sensible management | | served to drive greater urgency into the | mirrored and informed our existing ERM process | and contingency plans for protecting our people | | enhancement of our risk-based approach | as well as additional requirements for collection | and the continuity of our business. | | tosecurity and emergency management | and analysis of internal and external data to | | In 2023, we will continue to update these plansin2022. support the accuracy of those assessments. assessments and use them to review and adjust The Group business resilience team worked Our risk and security leaders facilitated the management plans consistently at the country closely with our Risk and Security Leaders and process at country level, engaging with a broad and plant level. functional managers across our business units range of internal and external stakeholders in Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 66 Report Governance Statements Reporting Information ### Managing risk and materiality continued To maintain true business resilience, we need to Principal risks: ### Leveraging our unique 24/7 portfolio – continue to evolve our portfolio of products and ### and responding tochange • Product relevance and acceptability routes to market. To do that, we need to maintain strong relationships with our partners, constantly • Strategic stakeholder relationships Principal risks trend Risk included in monitor and respond to changing consumer viabilityassessment • Competing in the digital marketplace preferences, customer needs and the business Increasing and regulatory environment. In 2022 we faced Stable Link to growth pillars significant challenges but adapted our business torespond to those challenges while keeping our 4 51 2 3 Decreasing long‑term objectives firmly in sight. Principal risk: Product relevance and acceptability Key drivers Mitigation Outlook In 2022, debates around sugar and sweeteners, • Changing consumer sentiment, In 2022, we: Increasing risk of additional sugar/beverage taxes as well as discussion on appropriate responses • Actions of public health advocates and NGOs in the short term. Heightening concerns particularly • continued product innovation and expansion tokey environmental, social and governance • Government responses to health issues and around sustainability and the impact of climate ofour 24/7 portfolio to respond to consumer concerns increased the potential for regulatory climate change at EU and national levels change into the medium to longer term. The EU needs, including expansion of low- and change and imposition of additional taxes. regulatory environment will increasingly focus on no‑sugarbeverages; Despite these concerns, ensuring we have highly health and sustainability issues and new directives • took a proactive approach in partnership with relevant and high-quality products that continue and regulations are likely. There is significant keystakeholders to better understand and to delight consumers while balancing the ongoing opportunity for growth in getting the balance right. address concerns; and emerging health and environmental concerns • focused strategy on proactive advocacy with Trajectory: remains a significant opportunity for our business. assets repository and BU support plans in place; This risk is closely linked with climate change risks, • developed and implemented Group-wide particularly the Principal risk: The cost and assessment tool. availability of sustainable packaging (see page Consequences Metrics and targets Focus for 2023 75) and the Emerging risk Impact of climate • Discriminatory taxes ESG reputation scores, calorie reduction targets, Continuing proactive approach in partnership with change on our reputation (see page 79). • Brand and reputation damage Mission 2025 targets key stakeholders to better understand and address Risk included in viability assessment: • Financial impact concerns. Key sustainability projects such as the • Forced changes in product formulations packaging mix of the future. andportfolio mix Link to material issues: Corporate citizenship, responsible marketing, nutrition, economicimpact, product quality, foodloss and waste Strategic Growth Pillar: Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 67 Report Governance Statements Reporting Information ### Managing risk and materiality continued Principal risk: Strategic stakeholder relationships Key drivers Mitigation Outlook It is critical that we remain aligned with our key strategic partners such as TheCoca‑ • Potential for disagreements In 2022, we: Given the importance of our key partner Cola Company, Monster Energy, Costa coffee and premium spirits manufacturers. between independent businesses relationships over the long term and the • maintained established In2022, the Russia/Ukraine crisis resulted in The Coca‑Cola Company making the when strategic objectives are changing global environment which may processes, routines, and decision to stop sales of its brands in Russia, which had a significant impact on our notaligned impact our independent businesses differently, communication channels to business there. Despite this, our relationship with all our strategic partners, including • Different environments, including we continue to focus on maintaining aligned manage strategic relationships The Coca-Cola Company remains strong, reflected in the announcement of the regulatory environments, in which strategic objectives. at the most senior levels; expected renewal, strong marketing support across our territory and close collaboration our partners operate and broader • closely monitored agreed Trajectory: and alignment on our sustainability initiatives. Our relationships with our key partners global priorities business indicators defined is important for our sustainability agenda and our response to climate change, • The impact of climate change and during business planning and to particularly in new products and formulations and pack mix. This risk is closely linked need for collaboration on new analyse deviations so that with climate change risks, particularly the cost and availability of sustainable packaging formulations and pack mix corrective actions could be and impact of climate change on our reputation (see pages 75‑79). taken when needed. | Risk included in viability assessment: Strategic Growth Pillar: | Consequences Metrics and targets Focus for 2023 | | | | --- | --- | --- | --- | | | • Financial impact | Organic revenue growth We will maintain our close working relationship | | | | • Damage to Coca-Cola System and | | with our strategic partners to ensure we | | Link to material issues: | brand reputation | | remain aligned. We will continue to collaborate | | Economic impact, corporate governance | | | on our key sustainability initiatives particularly | our packaging mix of the future project. Principal risk: Competing in the digital marketplace Key drivers Mitigation Outlook In 2022, the digital marketplace continued to evolve • Dominance of large e-commerce platforms In 2022, we: We expect the continued strong growth of B2B and B2C and remained highly competitive with new and existing • Proliferation of new and existing players e-commerce sales over the medium to long term. • continued to build and invest in | companies seeking to take advantage of e-commerce | with varying business models | | | | --- | --- | --- | --- | | | | digital commerce capabilities and | Trajectory: | | growth. In2022, we saw 59% growth (year onyear) | • Growing consumer preference for speed | | | systems to enhance our B2B, ine‑retail and food delivery service sales. and convenience of online purchases e-retail, food service aggregator Link to material issues: and direct to consumer pillars; Economic impact, responsible marketing • continued to evolve our model for direct-to-consumer routes to Strategic Growth Pillar: market in selected countries. Consequences Metrics and targets Focus for 2023 Given the rapidly changing environment including • Significant opportunity to grow sales and % active e‑customer coverage, Drive active e-customer coverage and enhance regular data the proliferation of new and existing players and market share through well-developed and revenue and market share on leading sharing. Strengthen relationships with leading e-commerce evolving business models, we expect the risks executed e-commerce strategies e-commerce platforms, number of platforms. Enhance our collection and analysis of data to accelerate and opportunities to remain significant for the • Potential to lose market share or fail to active customers on customer our revenue and market share growth via data-based decisions. foreseeable future. We consider Competing in | | take full advantage of growing | portal, revenue generated on B2B | | | --- | --- | --- | --- | | the digital marketplace as an emerging risk. | | | Accelerate systematic efforts to raise digital capabilities in our core | | | e-commerce market | platforms, share of B2B orders | | business teams ensuring that digital transformation of our business • Potential for new business models and generated digitally model is keeping pace with the evolution of our market and ventures to fail competitive landscape. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 68 Report Governance Statements Reporting Information ### Managing risk and materiality continued In 2022, the macroeconomic and geopolitical Principal risks: environment combined with regional and national ### Maintaining operational excellence in volatile markets issues created volatile operating conditions in our • Health and safety markets. The Russia/Ukraine crisis created safety • Suppliers and sustainable sourcing Principal risks trend Risk included in risks for our people and disrupted established viabilityassessment • Cyber incidents supply chains across our territory. Our people Increasing | | | | adapted quickly to these volatile conditions to | • People retention | | --- | --- | --- | --- | --- | | Stable | Link to growth pillars | | | | | | | | manage safety challenges, maintain business | • Ethics and compliance | | | | 4 51 2 3 | operations to continue to serve our customers | | Decreasing and achieve excellent results. Principal risk: Health and safety of our people Key drivers Mitigation Outlook In 2022, the risks associated with • New variants of COVID‑19 being reported In 2022, we: We remain optimistic that COVID‑19 and influenza COVID‑19 reduced as less severe strains • Impact of winter on COVID‑19 and influenza cases cases will remain manageable over the short term • refined a number of our pandemic protocols based became more dominant and governments • Vaccination rates, including booster programs but remain vigilant and ready to reintroduce onlearnings across the Group and remain ready to continued to roll out vaccination programs, inour markets protocols if required. re-impose those protocols should case rates including booster shots. We saw spikes • Non‑compliance with or breaches of Health and increasesignificantly, Trajectory: during the winter season in countries Safety requirements • Increased focus on mental well-being in our employee inthesouthern hemisphere of not only assistance programme COVID‑19 but also influenza. Increased • Continued implementation of our Behaviour Based hygiene measures adopted during the Safety (BBS) program COVID‑19 period saw drastically reduced • Enhanced end to end contractor management process influenza rates compared to previous • Involved leaders on all levels in H&S observations and years and the 2022 winter season in H&S conversations thesouthern hemisphere witnessed a • Ensured compliance lifesaving rules incorporated significant return. We will continue to incross country verification program. monitor COVID‑19 and influenza rates • H&S management system certification. closely. Consequences Metrics and targets Focus for 2023 Link to material Issues: • Fatalities and/or serious injury of employees, • Fatalities • Closely monitor reported COVID‑19 and Employee wellbeing and engagement contractors, third parties, and members • Lost Time Accident (LTA) rates influenza rates across our countries and Strategic Growth Pillar: ofthepublic continue to enhance our pandemic response • Absentee rates • Potential for business interruption with higher protocols based on lessons from previous years • Case rates per 100 FTE vs country rates than normal absentee rates in certain positions and best practice sharing. • Continue to enhance our business continuity program which includes preparing for and responding to pandemics. • Work closely with leadership teams in business units with highest LTA’s to refresh BBS programme and strengthen the safety culture of our employees and contractors. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 69 Report Governance Statements Reporting Information ### Managing risk and materiality continued Principal risk: Suppliers and sustainable sourcing Key drivers Mitigation Outlook In 2022, the macroeconomic environment, the • Global macroeconomic conditions and supply In 2022, we: We expect continuing volatility in the short-to- Russia/Ukraine crisis, China’s COVID zero policy chain disruptions medium term as a result of macroeconomic and • contracted volumes of key ingredients and supply-demand imbalances continued to • Increased financial speculation on global geopolitical conditions and continuing supply- &packaging materials; create challenging conditions for securing supply commodities demand imbalances. Over the longer term we • contracted prices with focus on local currency of key ingredients, packaging and services at a • Hard currency liquidity issues expect climate change and our suppliers’ response wherever feasible; reasonable cost. This risk is closely linked with • Supply/demand imbalances and/or crop yields to climate change to affect the cost of ingredients • ensured hedgeable contracts and introduced climate change risks, particularly cost and • Russia/Ukraine crisis and effects on European as noted in Emerging risk: The cost and hedgeable energy component; availability of sustainable packaging, the impact of gas and oil prices flowing through to increased availability of ingredients and raw materials • expanded our supplier base and introduced new/ climate change on the cost and availability of key raw material costs (seepage 78). alternative suppliers; ingredients and impact of climate change on our • Impact of climate change over the longer term • secured raw materials for suppliers to provide Trajectory: reputation (see pages 78‑79). security of supply; Risk included in viability assessment: • developed contingency plans with suppliers due to energy risks and risk mapping with our production areas; and • investigated alternative and sustainable Link to material issues: energyoptions for long‑term availability and Sustainable sourcing, economic impact, climate pricing stability. change, biodiversity, food loss and waste Strategic Growth Pillar: Consequences Metrics and targets Focus for 2023 Given the increasing requirements for supply • Production disruptions • COGS per case Collaborating with our key suppliers to manage chain transparency and consequent evolution • Failure to meet contractual obligations • % sustainably sourced agricultural ingredients volatility and maintain continuity. Continuing of the regulatory environment as well as • Increased input costs and margin pressure discussions to better understand challenges to key thepotential impact of climate change, • Energy availability and cost ingredient supply as a result of climate change and Suppliersand sustainable sourcing is also ESG performance. Enhancing our risk monitoring anemerging risk. inareas that may affect commodity availability andpricing. 70 European Bankers Corporate Governance Financial Statements Sales Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 # Managing risk and materiality continued # Principal risk: Cyber incidents In 2022, we saw continuing cyber-attacks against government operations and companies in many of our markets. Many of these incidents were linked to the Russia/Ukraine crisis, although several known actors continued to conduct high profile ransomware attacks. Organisations such as Europol and several US agencies continued to enhance their capabilities to investigate, prevent and respond to cybercrime which also helps to reduce risk to companies such as ours. # Link to material issues: Economic impact, corporate governance, corporate citizenship # Strategic Growth Pillar: # Key drivers - Increasing use of cloud-based IT solutions and working from home increasing exposure - Increasing sophistication of malware and ransomware actors - Adoption of Industry 4.0 technologies in plants - Russia/Ukraine crisis # Mitigation In 2022, we: - Certified our Information Security Management System against ISO27001 - Enhanced our protection of cloud resources - Improved network security in our plants through network segmentation and more secure remote access - Enhanced our privileged access management and identity protection controls # Outlook The number and sophistication of cyber incidents is expected to increase in the short- to-medium term. Stakeholder concerns about data privacy and requirements to protect it will continue to increase. Government agencies will continue to improve their capabilities to investigate and respond to cybercrime. # Trajectory: # Consequences - Operational disruptions and financial losses - Damage to corporate reputation - Potential for release of personal and customer data - Non-compliance with data protection legislation # Metrics and targets Cyber security maturity level, cyber-attacks detected and prevented # Focus for 2023 - Engage recognised leader in cyber defence to help us further identify cyber risks in critical infrastructure and implement strategy to strengthen our defences - Continue implementing internationally recognized security hardening standards to decrease our vulnerabilities to cyber attacks - Improve plant security by design in alignment with IEC 62443 # Principal risk: People retention In 2022, we saw vacancies in some specific areas although our overall turnover rates improved to 11.4% in 2022 from 13.1% in 2021. We continue to see challenges in the attractiveness of consumer packaged goods companies as an employer of choice. The COVID-19 period has led to people reviewing their work situations and relationship with their employer and like many companies we have seen some resignations as we returned to a 'new normal', that included balanced home/office working arrangements. Our people have appreciated this flexibility and maintained their productivity and engagement. Our engagement score remained stable at 85%. We noted higher turnover rates for female employees and sought to understand the causes and address them. By the end of 2022, retention rates amongst women had stabilised in key markets. # Link to material issues: Employee wellbeing & engagement, human rights, diversity & inclusion; Corporate citizenship # Strategic Growth Pillar: # Key drivers - Changing expectations for flexible working arrangements - Maintaining value proposition as an employer of choice - Development of technology and online tools to enhance team engagement # Mitigation In 2022, we: - continued to leverage continuous listening to measure culture and engagement and address findings; - improved people management skills to enhance engagement and energise employees sustainably, including how to manage remote teams; - maintained our leadership development programme and continued to foster our coaching and mentoring culture; - implemented action plans to improve retention of female employees. # Outlook Talent retention will be an ongoing challenge over the short-medium term as adjustments are made to new ways of working. # Trajectory: # Consequences - Failure to attract and retain people to meet our goals - High turnover in critical positions resulting in knowledge and productivity loss - Potential imbalance between male and female employees due to different retention rates # Metrics and targets Retention rate, engagement score # Focus for 2023 As described on page 39, we will roll out our new, refined purpose in 2023 including a new culture manifesto and leadership, with the principle to simplify processes and make our people's lives easier. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 71 Report Governance Statements Reporting Information ### Managing risk and materiality continued Principal risk: Ethics and compliance Key drivers Mitigation Outlook In 2022, a raft of economic and other sanctions • The Russia/Ukraine crisis and the international In 2022, we: We expect the international sanctions environment imposed by many countries against Russia and response to remain complex in the short to medium term. • enhanced our monitoring of economic and other Belarus increased the risk of inadvertent • Potential for broadening of sanctions Given we operate in a number of countries where sanctions imposed against Russia and Belarus; non-compliance. In response, we enhanced our • Continuing levels of real and perceived corruption the perception of corruption is high, we expect this • enhanced our risk assessment and screening screening processes, particularly for suppliers in some countries that we operate within, risk to remain significant for the foreseeable future. processes, particularly for suppliers and based in Russia, Belarus and Ukraine. The risk of including our newly acquired business in Egypt customers in Russia, Belarus and Ukraine; Trajectory: fraud against the Company, and non-compliance • Tougher economic conditions that increase the • updated our Sanctions Policy and enhanced our with anti-bribery and corruption standards, risk of internal and external fraud sanctions training programme; and introduced continued to be a focus area. aRecusal Policy to provide additional guidance Link to material issues: toemployees; Corporate governance • continued training our people and ran additional awareness initiatives on our Code of Business Strategic Growth Pillar: Conduct and Anti‑Bribery and Corruption Policy; • continued monitoring our Speak Up! hotline and other avenues for reporting concerns involving potential violations of all of our policies and ensured all allegations were investigated inaccordance with our policies; • internal audit team continued to focus on compliance and internal controls. Consequences Metrics and targets Focus for 2023 • Damage to our reputation Percentage of employees trained, resolution Completing the Egypt compliance integration • Significant financial penalties ofSpeak Up! reports, audit reports planimplementation, including introduction • Increased management time and effort to ofacross‑functional joint taskforce. Continued resolve incidents strengthening of our Code of Business Conduct, • Financial loss Anti‑bribery and corruption and sanctions compliance programmes, taking a risk- basedapproach. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 72 Report Governance Statements Reporting Information ### Managing risk and materiality continued In 2022, we continued to assess risks to our Principal risks: business associated with climate change with ### Managing the risks and opportunities of climate change | | | theaddition of comprehensive quantitative | • (T1) The cost and availability of | | --- | --- | --- | --- | | | | assessments on managing our carbon footprint, | sustainable packaging | | Principal risks trend | Risk included in | | | and the potential impact of increasing extreme viabilityassessment • (P4/T4) Water availability and usage weather events on our production and distribution. Increasing • (T2) Managing our carbon footprint We continued to invest in key sustainability | Stable | Link to growth pillars | | | | | --- | --- | --- | --- | --- | | | | | initiatives to reduce our carbon footprint, our use | The following risks associated with climate change | | | | 4 51 2 3 | of water and move to more sustainable packaging. | are emerging risks: | Decreasing • (P2/P3) Impact of extreme weather onproduction and distribution • (P1) Impact of climate change on the cost and availability of ingredients • (T3) Impact of climate change on our reputation Climate change is having and will have a significant • (P3) The effect of extreme weather events We analyse our internal data and work with For additional information on our climate-related impact our business in a number of ways. Given onour distribution recognised specialist agencies, our insurance disclosures, see our 2022 CDP submission online. the longer term nature of climate risks and the • (P4) The effect of increasing water scarcity brokers and insurers to obtain regional analysis Governance number of variables – many of which we have no onour production ofthe potential impact of climate change. As noted from page 94 onwards, governance control over, we need to continually update our Thishelps us make informed decisions and Transition risks: ofallrisks including climate change risks, is assessment and management of risks associated improves our understanding of the potential theresponsibility of our Board and specifically with climate change as more accurate data • (T1) The effect on the cost and availability climate vulnerabilities in our operations and the theAudit and RiskCommittee and the Social becomes available and organisations around the ofsustainable packaging materials as a result communities in which we operate. This data and Responsibility Committee, following a clearly world respond to its effects. ofchanging government regulations resulting analysis is shared across our business defined structure and process from business • (T2) The effect of increasing regulations on units, supporting climate resilience across our Many of the risks associated with climate change units, to Group, our ELT and the Board. GHG emissions on our costs of production planning and operations. are common across the global Coca-Cola system. anddistribution Strategy We therefore take a system approach to the • (T3) The effect of consumer perceptions Taskforce for Climate‑related Given the longer-term nature and the implications assessment of climate risks and leverage the work ofourenvironmental performance on our of climate change, our response to climate ### being done by The Coca-Cola Company and Financial Disclosures (TCFD) corporate reputation changetranscends all areas of our strategy and bottlers around the world, to manage those risks. The Taskforce on Climate -related Financial operations. Our future packaging mix for example • (T4) The effect of increasing government The Coca-Cola system has identified 8 risks Disclosures (TCFD) is an important framework for has significant implications for our business given regulation on the cost and availability of water –4physical risks and 4 transitional risks; that are reporting climate-related risks and opportunities. the substantial capital investments in our plants common to the Coca‑Cola system. As depicted We have fully integrated the assessment and We considered the 2021 TCFD “Implementing and routes to market needed to make significant on the pictogram on page 74, they are: mitigation of these physical and transitional risks Guidance” for All sectors and the Beverage sector packaging changes. Changes needed to meet our associated with climate change into our ERM in our disclosures which can be found throughout NetZeroby40 commitments and the impact of Physical risks: programme, which underpins our robust approach this report. The table on page 80-81, provides climate change on the availability and cost of key • (P1) The effect of changes to weather patterns to all risks to our business. In the following pages, asummary on where those disclosure scores can ingredients have implications for our supplier base on the cost and availability of key ingredients we have provided more detail on the assessment be found and how the information is consistent and our distribution systems. Our response to and raw materials and management of those climate-related risks with the TCFD recommendations. climate change has a significant impact on our • (P2) The effect of extreme weather events identified as principal risks and those identified as reputation with key stakeholders and ultimately onour production emerging risks. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 73 Report Governance Statements Reporting Information ### Managing risk and materiality continued our ability to attract and retain people, attract – the primary means by which we will manage the capital, and the willingness of consumers to buy Principal risk: Manage our carbon footprint, to our products. 2040. In 2022, we conducted a comprehensive quantitative assessment of this risk, the results While there are numerous costs associated with ofwhich are summarised on page 78. managing climate change risks, we also recognise that there are significant opportunities for our Metrics and targets business in continuing to meet the needs and We use clear metrics and targets in the expectations of our stakeholders. As noted in assessment and management of all of our risks in “Impact of climate change on our reputation” (see order to continually measure risk drivers, the page 79), there is a strong correlation between potential impact – including financial impact of consumers perception of how we are responding risks and key performance indicators to ensure we to climate change and their intent to purchase our are managing risks effectively. These are noted products. The longer-term structural changes under “Metrics and Targets” for each risk. Many of inherent in our sustainability strategy is embedded our climate change metrics and targets are also in our business strategy, which is constantly outlined in our Mission 2025 and NetZeroby40 reviewed as our understanding of the potential commitments. effects of climate change risks and opportunities Given the longer term nature of managing improves, to ensure our business remains resilient climate-related risks, our allocation of capex will be and focused on growth. important in meeting our sustainability targets. We Risk assessment have been increasing our investment in initiatives As noted, we take a global system approach to the designed to mitigate the risks associated with identification, assessment, and management of climate change. In 2022, we invested €206 million climate-related risks. The Coca-Cola System in CAPEX initiatives aligned with our sustainability – which consists of The Coca-Cola Company and strategy, which represents 35% of our total its bottling partners of which CCHBC is one of the CAPEX. We are planning to increase our allocation largest, has identified eight potentially material of our annual CAPEX to investments aligned with | risks relating to the physical and transitional | our sustainability strategy, expecting to reach 40% | | --- | --- | | impact of climate change on our business. | of CAPEX by 2025 and 50% of CAPEX by 2030. | | Theseare depicted in the diagram on page 74. | This demonstrates our commitment to manage | climate-related risks using a gradual, well thought In 2021, we focused our attention on a out program of capital expenditure over the comprehensive quantitative assessment of our medium to long term based on our assessment water risk given the fundamental importance of ofthe risks to our business and stakeholders. water to our business. This was updated in 2022 (see Principal Risk: Water Availability and Usage onpage 76). In 2022, we also enhanced our understanding of climate-related risks by conducting comprehensive quantitative assessments of a number of other potentially material risks including the impact of extreme weather events on our production and distribution (see “Impact of extreme weather on production and distribution” on page 78). In 2021 we announced our commitment to NetZeroby40 Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 74 Report Governance Statements Reporting Information ### Managing risk and materiality continued ### The impact of climate change risk Agriculture and Packaging Manufacturing Distribution Cold drink Customers and Cause Risk ingredients equipment communities Estimated share of carbon emissions ## 28% 34% 11% 6% 21% Business impacts: Physical risks of climate change (Risks P1‑4) | Changes to weather | P1: Cost and | | --- | --- | | and precipitation | availability | | patterns | ofingredients and | raw materials Extreme P2: Impact of weatherevents extreme weather on production. P3: Impact of extreme weather on distribution Water scarcity P4: Water availability and usage Business impacts: Risks of transition to a low‑carbon economy (Risks T1‑4) GHG regulation T1: Cost and availability of sustainable packaging T2: Managing our carbon footprint Stakeholder T3: Impact on our perceptions of our reputation sustainability performance Water regulation T4: Water availability and usage For more details on these eight risks, please see previous pages 75‑79. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 75 Report Governance Statements Reporting Information ### Managing risk and materiality continued Principal risk: Cost and availability of sustainable packaging Key drivers Mitigation Outlook Given the potential impact that significant changes to our • Price increases of recycle-friendly raw materials In 2022, we: We will continue to see heightened stakeholder packaging mix could have to longer-term capital such as rPET and aluminium concerns over the medium term and increased • focused on meeting Mission 2025 investment in production and distribution, and the • Low collection rates in high plastic volume markets regulation across EU markets. The price of commitments including increasing our overall influence that packaging has on our ability to meet our • Low access to quality feedstock to enable shift good quality recycled material will continue to Group packaging collection rate and NetZeroby40 commitments – packaging represents 34% to rPET at balanced prices rise over the medium term as industries focus increasing the amount of recycled PET used of our emissions, the management of risks associated • New EU regulations on Plastics & Packaging Waste on increasing recycled content. in our bottles; | with the cost and availability of sustainable packaging is | • Impact of packaging on meeting our | | | | --- | --- | --- | --- | | | | • partnered with governments and industry | Trajectory: | | intertwined with our future business strategy. It is closely | NetZeroby40 commitments | | | peers to support the launch of two new linked with other Principal risks, particularly Managing our • Consumers’ concerns on waste and its influence deposit return schemes in Latvia and Slovakia carbon footprint (see page 77). In 2022, we continued on perceptions of our environmental performance and a establishing a new Packaging Recovery towork on our plans for the packaging mix of the future. Organisation in Moldova; The development of a profitable packaging strategy • awarded our first €100K Coca‑Cola HBC thatreduces our environmental impact and addresses Sustainability Challenge to a start-up with an escalating stakeholder concerns relating to packaging innovative solution for collecting and waste also represents a significant opportunity for our recycling PET. business. In November 2022, the EU released draft | regulations that provide minimum requirements for | Consequences Metrics and Targets Focus for 2023 | | | | --- | --- | --- | --- | | reusable and recycled packaging. | • Impact on reputation and ultimately | Mission 2025 targets relating to collection of | Start ‘packaging mix of the future’ journey to | | | consumerbase | packaging, use of recycled PET and percentage | accelerate decarbonisation of our packaging | Link to material issues: • Increased operating costs, taxes and Capex of packaging that is recyclable while connecting these changes with Packaging and waste management, sustainable sourcing, costs associated with changing packaging mix revenuegrowth. biodiversity • Very significant opportunity associated with Include a quantitative assessment* of the risk Strategic Growth Pillar: developing innovative, profitable solutions and opportunity of changing our pack mix under at least two different climate change scenarios. Given the rapid changes in technology and the evolution of the regulatory environment, and the significant impact that major changes in our packaging mix have for our NetZeroby40 commitment and ourfuture business strategy, Cost and availability ofsustainable packaging is also an emerging risk. * Note: We had intended to conduct a quantitative assessment in 2022 however the release of the new EU Packaging legislation – which could haveamaterial impact onthat assessment was only released at the end of November 2022 and is to be debated before being adopted in 2023. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 76 Report Governance Statements Reporting Information ### Managing risk and materiality continued Principal risk: Water availability and usage Key drivers Mitigation Outlook In 2021 we conducted a comprehensive • 7 countries and 19 plants (water priority In 2022, we: We expect that water stress in our water priority quantitative assessment of our future water locations) that are likely to come under increased locations will continue to increase over the medium • continued to implement water usage reduction requirements under current conditions and under water stress with climate change to long term . The extent of that increase will plans across our operations; two different projected climate change scenarios • Local community needs for clean water, depend both on our actions and on the global • implemented water stewardship programmes up to 2040. In 2022, we updated that assessment particularly in areas of water stress response to climate change. We expect that inwater priority locations to mitigate shared based on revised data due to revised volume • Increased regulatory pressure, including regulatory pressure will increase over the medium water risks; estimates and updates to our True Cost of Water imposition of taxes and levies, designed to term and that will flow through to additional • updated source vulnerability assessments for all metric. Egypt was not included in the assessment reduce water usage and/or fund additional operating costs associated with water that we have plants and enhanced our plans, including for 2022 but will be included in the 2023 infrastructure estimated in our assessment. identification of additional capital expenditure assessment. Availability and quality of clean water required for enhancing infrastructure. Trajectory: is fundamental to our business and for the local communities in which we operate. | Risk included in viability assessment: | Consequences Metrics and Targets Focus for 2023 | | | | --- | --- | --- | --- | | | • Insufficient water to service our needs and the | Reduce water usage by 20% by 2025, Number of | In 2023 we will further implement innovations to | | | needs of the local community | water availability projects in water risk areas | reduce our water usage, particularly in water | | Link to material issues: | • Increased annual baseline water costs by up to | implemented (target = 19) | priority locations. We will complete the inclusion of | | Water stewardship, sustainable sourcing, | 48% by 2030 and 39% by 2040 and a | | water usage data for our Egyptian plants in our | | biodiversity, climate change | requirement for an additional €95.6million in | | water risk assessment. We will implement | | | capital expenditure over the next 17 years to | | additional community water projects to help secure | Strategic Growth Pillar: meet our needs and to replenish watersheds for water availability for local communities in an local communities in water priority areas additional four locations. • Damage to our reputation Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 77 Report Governance Statements Reporting Information ### Managing risk and materiality continued Risk in focus: Managing our carbon footprint Key drivers Mitigation Outlook In 2021, we announced our commitment to NetZeroby40 – • Impact of high emissions on global warming In 2022, we: We will continue to see heightened theprimary means by which we will manage the principal risk: andsubsequent climate change stakeholder concerns and • Strategic sustainability approach – Managing our carbon footprint, to 2040. In 2022, we conducted • Increasing consumer focus on the carbon increased regulation across EU long-term climate targets: 2030 carbon acomprehensive quantitative assessment of the risks footprint of company’s they purchase from markets over the medium term. targets validated and approved by associated with managing our carbon footprint. • Government use of carbon taxes or carbon Weexpect greater scrutiny of our Science Based Target initiative (SBTi); | | markets to encourage emissions reduction | | progress against our NetZeroby40 | | --- | --- | --- | --- | | Coca‑Cola HBC, like most large manufacturing and distribution | | NetZeroby40 commitment and | | | | increasing costs related to our emissions | | commitments. We will gradually | | businesses, has a significant carbon footprint. This is made up of: | | implementation; | | | | • Increasingly ambitious reduction goals under | | increase our investment in | • Environmental management system • scope 1 emissions, which are direct emissions of CO 2 and different climate scenarios sustainability initiatives over the certification. other greenhouse gases (GHG) from our manufacturing • community perceptions of corporate short – medium term, investing • Sustainable packaging mix of the operations which represents around 5.4% of our total “greenwashing” 50% of our total Capex annually futureproject, emissions, by2030. • Connect revenue growth management • scope 2 emissions, which are indirect emissions resulting from initiatives with carbon footprint. Trajectory: purchased electricity and thermal energy in our operations • Continuing enhancement of the which represents around 5.4% of our emissions, integration of climate related risks and • scope 3 emissions, which are indirect emissions generated opportunities into strategic planning. either downstream in the use of our products such as use of • Contingency plans developed to support coolers, third-party logistics to deliver products; or upstream transition to alternative fuel sources by our suppliers in ingredients and packaging, which Consequences Metrics and Targets Focus for 2023 represents around 89.2% of our emissions. • Annual operating costs of our projected scope 1 NetZeroby40 targets including annual In 2023 we will continue to drive our In 2022, we took and will continue to take major steps forward and 2 carbon emissions: carbon emissions against target pathway, emissions reductions initiatives and inreducing energy, switching to renewable energy and moving – estimated to peak around €43 million annually Mission 2025 targets, cost of carbon (taxes, refine our assessment of the risks torecycled packaging. For further information on our carbon by 2030, reducing to €6 million annually by trading schemes), renewable energy usage, and opportunities associated with reduction efforts, please see ‘Climate and NetZero’ on page 48. 2040 under a Paris Ambition (RCP 1.9) energy efficient coolers. managing our carbon footprint, Our biggest opportunities for reducing our carbon footprint is scenario, including the integration of key risk working with our suppliers and customers to reduce our scope 3 – estimated to peak around €21 million annually areas such as sustainable packaging emissions, which represent 89% of our total emissions. by 2030, reducing to €2 million by 2040 under mix and cost and availability of Risk included in viability assessment: aRCP 4.5 scenario ingredients and raw materials as contributors to our meeting and • Significant opportunity in increased consumer exceeding our emissions targets. “intent to purchase” and sales in meeting or We will continue to fully integrate Link to material issues: exceeding stakeholder expectations Egyptian operations to CCH climate Climate change, sustainable sourcing, packaging andwaste • Significant opportunity in enhanced “willingness plans, understand their impact and management, biodiversity to invest” by investment community and define relevant action plans. Strategic Growth Pillar: “willingness to work for” in current and future workforce • Capex costs of emissions reduction initiatives (see page 73 for estimated Capex investments associated with sustainability initiatives) 78 Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 # Managing risk and materiality continued # Emerging risk: Impact of extreme weather on our production and distribution Risk included in viability assessment: Link to material issues: Economic impact, biodiversity, climate change Strategic Growth Filter: In 2022 we conducted a comprehensive assessment of the potential impact of two different climate change scenarios (RCP4.5 and RCP8.5) relating to extreme weather on our plants using credible insurance industry data. We specifically assessed projected increases in flood risk, increase in likelihood of wildfires, increased precipitation and drought. We assessed data relating to 62 locations and identified 19 plants that we considered high risk and requiring capex to mitigate risks associated with extreme weather. Of those nineteen, fourteen facilities are considered high risk over the short term, and subject to current mitigation planning. Five were assessed as requiring additional capex as a result of climate change over the medium to long term. We have estimated that one-off capex requirements to mitigate the impact of extreme weather including the impact of climate change between now and 2030, is €27 million. We expect increases in insurance premiums as a result of insurance underwriters considering our facilities higher risk of extreme weather. The SwissRe Institute has estimated that insurance premiums may increase by 40% for fire and 25% for flood and precipitation. Assuming insurers apply those premium increases against facilities considered to be at risk, and not across the board, we have estimated potential annual increases in insurance premiums as a result of climate change to be approximately €1.6 million per annum by 2050 under an RCP4.5 climate scenario or by 2030 under an RCP8.5 scenario. During 2022 we started an assessment of the potential for increases in cost of working as a result of business interruption across all plants for any reason, not just climate change. Given the complexity of the exercise, we expect to complete this assessment in 2023. Our initial review of plants at risk through climate change has estimated those costs are unlikely to be material. # Emerging risk: Impact of climate change on the cost and availability of ingredients and raw materials Link to material issues: Sustainable sourcing, flood loss and waste, climate change Strategic Growth Filter: In 2022, we started developing our model for assessing the impact of climate change on the cost and availability of ingredients particularly corn and sugar as the base ingredients for our natural sweeteners, fruit as the base for our juice products, coffee and tea. We expect to work closely with our key suppliers in 2023 to refine the model and populate it with climate change data to conduct a more comprehensive assessment. Although we did not conduct a quantitative assessment in 2022, according to information from The Coca-Cola Company's qualitative assessment of its global suppliers, climate change is likely to cause rising temperatures and heat stress, increased precipitation and drought in sourcing regions over the medium to long term. These environmental factors will impact productivity and crop yields, and ultimately may increase the cost base of these key ingredients. Although many sourcing regions, are at medium/high risk in a high carbon scenario (worst case scenario), drought is the only one that is projected to have a major impact, with tea, beet sugar and apple juice and cane sugar regions considered to have a high sensitivity to climate change in a high-carbon scenario by 2050. Coffee and lemon growing regions are considered medium to high risk of heat stress. Corn is considered lower risk. The TCCC assessment noted that the majority of growers are conducting their own assessments and developing contingency plans that include identification of alternative regions for supply. While we are concerned about the impact of climate change on ingredients as all companies in the food and beverage industries are, physical risks are more likely to have an impact over a longer timeframe. We have more opportunity to better understand the potential impact and find ways of adapting to changing conditions and create appropriate contingency plans. We also see the continuing strong trend towards low- and no-sugar beverages, which means that risks associated with sugar and corn for example are significant, but we are confident that they are manageable. Over the medium to long term, all parts of the supply chain will be expected to reduce their carbon footprint which increases their operating costs and need for investment in carbon reduction initiatives. This is likely to increase the cost of ingredients and raw materials, as suppliers look to pass on at least some of those costs. This could lead to an increase in our input costs. 1. As part of our assessment, we reviewed RCP1.9 (Paris Antidion) and RCP2.6 (Paris Agreement) and concluded that given a number of our facilities are already at risk under current conditions and the impact of RCP4.5 and RCP8.5 were assessed as moderate, there is currently not enough data to conclude that either RCP1.9 or RCP2.6 will have a material impact of the risk on our facilities. We will revisit both RCP1.9 and 2.6 as part of our planned update of the assessment in 2023. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 79 Report Governance Statements Reporting Information ### Managing risk and materiality continued Emerging risk: Impact of climate change on our reputation Link to material issues: In 2022, we developed and started populating a model for Our review of general consumer data across a selection of Our assessment indicates that, like many large companies Climate change, estimating the impact on our reputation of meeting or not our markets however indicated that consumers were not in the food and beverage sector, there is currently a high sustainable sourcing, meeting the expectations of key stakeholder groups on as convinced of our environmental performance and we likelihood that consumers perceive we are not meeting packaging andwaste progress on our environmental performance. Our materiality chose to concentrate our assessment on this group. expectations in environmental performance and that those management, corporate assessment shows that our response to various aspects of perceptions are creating an opportunity cost for us. The Our assessment included a measure of the perceptions of citizenship, responsible climate change is already a key concern and this is likely to assessment also allows us to quantify the potential general consumers in eight selected markets of our marketing grow over the medium to longer term. We consider three opportunity of meeting and exceeding consumer environmental performance in comparison to our peers key stakeholder groups: expectations. Strategic Growth Pillar: and other companies in the consumer goods sectors, of • current and future employees and their willingness to our Environmental reputation – or ‘E‑score’. These studies work for us which could ultimately impact our ability to indicated that an increase in E-score led to an increase in attract and retain talented people the likelihood of consumers to purchase creating an • investors and their willingness to invest in us which could opportunity for our business and conversely a decrease in impact our cost of capital E-score increased the likelihood that consumers do not intend to purchase our products. Intent to purchase scores • consumers and their willingness to purchase our was used to determine the impact on our business of products meeting, exceeding or failing to meet expectations. Of those three groups, we determined that employees and investors were generally aware of our environmental performance through external ESG benchmarking programmes such as DJSI where we were recently named as the most sustainable beverage company in the world. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 80 Report Governance Statements Reporting Information ### Managing risk and materiality continued Location of disclosures consistent with TCFD recommendations In disclosing information related to the risks and opportunities associated with climate change, we considered the 2021 TCFD Implementing Guidance for all sectors and the beverage sector. Governance: Disclose the Company’s governance around climate‑related risks and opportunities Consistency status a) Describe the Board’s a) Fully consistent oversight of climate-related risks and opportunities The role of the Social Responsibility Committee of the Board for oversight of climate‑related risks and opportunities is described inpages 126‑127 The role of the Audit and Risk Committee of the Board for oversight of all principal and emerging risks, including climate‑related risks isoutlined in the section “Work and Activities” on pages 119‑120 and “Risk Management” on pages 121‑122. b) Describe management’s Our Materiality assessment, on page 58 in the section “Managing and disclosing material issues” describes the Executive Leadership Team’s role in managing b) Fully consistent role in identifying, assessing risks and opportunities and integrating sustainability initiatives into our business strategy. and managing climate-related Management’s role in identifying, assessing and managing all risks, including climate-related is outlined “Managing Risk and Resilience on pages 61-62, risks and opportunities andfurther described specifically relating to climate‑related risks in “Managing climate change risk”, pages 72‑79 Strategy: Disclose the actual and potential impacts of climate‑related risks and opportunities on the Company’s business, strategy and financial planning where material a) Describe the climate‑ a) Fully consistent related risks and opportunities that the organisation has The section “D: Managing climate change risk” on pages 72‑79 provides a detailed description of the Principal and Emerging risks andopportunities that identified over the short, thecompany has identified over the short, medium and long term associated with climate change, and medium and long term Section C2.3 and C2.4, on pages 11-17 of our 2022 CDP Climate response, describes a number of risks and opportunities associated with climate change that the Company has identified. b) Describe the impact of The section “D: Managing climate change risk” on pages 72‑79 describes the impact of each of the Principal and Emerging risks and opportunities related b) Work in progress – qualitative impact has climate-related risk and with climate change and the consequences and mitigation actions including impact on the Company’s business, strategy and financial planning been completed for the whole value chain, opportunity on the Company’s along with a quantitative assessment of The impact of climate-related risks and opportunities on our business and strategy and the financial planning changes in managing those risks and business, strategy and some elements however, more work will be opportunities is described in “Earn our licence to operate” particularly page 49 (carbon emissions), page 50 (sustainablepackaging) and page 52 financial planning done to get a better understanding of the (waterstewardship). impact on business, strategy and financial Section C3.3 and C3.4 on page 21 of our 2022 CDP Climate response describes how our assessments of climate‑related risks andopportunities have planning through more holistic scenario influenced our strategy and financial planning. planning exercises in 2023. | c) Describe the resilience of | The section “D: Managing climate change risk” on pages 72‑79 describes our assessment of the impact of each of the Principal and Emerging risks | c) Work in progress – work has been | | --- | --- | --- | | the organisation’s strategy | andopportunities associated with climate change and how the Company is mitigating those risks and opportunities. | completed using multiple scenarios, | | considering different | | including “Paris Ambition” (1.5 degree) | | climate-related scenarios, | | related to physical and transitional risks | | including a 2-degree or | | associated with the impact on water | | lowerscenario | | availability and costs, the impact of extreme | weather events on our production, and managing our carbon footprint and how these impact our strategy. More work will bedone in 2023 on the impact of other elements of climate change, particularly the cost wand availability of key ingredients and raw materials and the cost and availability ofsustainable packaging which have a significant impact on our strategy. Economic Report Corporate Governance Financial Statements Sales Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 81 # Managing risk and materiality continued Location of disclosures consistent with TCFD recommendations Risk management: Disclose how the Company identifies, assesses and manages climate-related risks and opportunities | al Describe the Company's process for identifying and assessing climate-related risks and opportunities | 1 "Managing risk and resilience" on page 61-62 provides an overview of the Company's process for identifying all risks and opportunities including those relating to climate change, and "Managing climate change risk", on pages 72-73 describes those processes specifically relating to the Principal and Emerging risks and opportunities related to climate change. Section 2.1a, 2.1b and 2.2a on page 8 and 10 of our 2022 CDP Climate response describes the process for identification of the climate-related risks and opportunities | al Fully consistent | | --- | --- | --- | | bi Describe the Company's process for managing climate-related risks and opportunities | "Managing climate change risk", on pages 72-73 describes how the company is managing the risks and opportunities specifically relating to climate change, particularly in the "Mitigation", and "Focus for 2025" sections for each of the Principal and Emerging risks and opportunities. Key performance indicators on pages 57-58 relating to the "Earn our licence to operate" pillar describe how the Company is managing climate-related risks and opportunities. | bi Fully consistent | | ci Describe how these processes are integrated into the overall risk management programme | "Managing risk and resilience" on page 61-62 provides an overview of how the Company has embedded the assessment of the risks and opportunities associated with climate change into its enterprise risk management programme. "Managing climate change risk", on pages 71-72 further describes how the company has integrated each of the Principal and Emerging risks and opportunities related to climate change into its enterprise risk management program, and pages 73-77 provides an overview of the outcomes of that process relating to each climate-related risk and opportunity. | ci Fully consistent | | Metrics and targets: Disclose the metrics and targets used to assess and manage climate-related risks and opportunities | | | | al Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management process | 2 "Managing climate change risk", on pages 73-77 provides metrics and targets relating to each of the Principal and Emerging risks and opportunities associated with climate change in the "metrics and targets" section, and Key performance indicators on pages 57-58 relating to the "Earn our licence to operate" pillar (Mission 2025 commitments), and the sections relating to "NetZeroby40" on pages 48-49. Sustainable packaging on page 50 and water stewardship on page 52 describe the metrics and targets the Company is using to assess climate-related risks and opportunities in line with our strategy and risk management process, and Section C4.1 and C4.2 on pages 22-28 of our 2022 CDP Climate response lists a number of metrics and targets used to assess climate-related risks and opportunities. | al Fully consistent | | bi Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks | NetZeroby40 target across the whole value chain charts on page 49 show our Scope 1, 2 and 3 GHG emissions, and The Principal risk. Managing our carbon footprint" on page 77 describes how we are managing the risks and opportunities associated with our emissions. Section C5.2 pages 32-36 and Section C6, pages 36-44 of our 2022 CDP Climate response provides further detail on Scope 1, 2 and 3 emissions and the risks associated with them. In the 2022 GRI Content Index, in the environmental table on page 51 and as part of the disclosures 305-1 (page 26), 305-2 (page 26), and 305-3 (page 27) provides details of our GHG emissions. | bi Fully consistent | | ci Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against targets | "Managing climate change risk", on pages 73-77 describes targets relating to each of the Principal and Emerging risks and opportunities associated with climate change in the "metrics and targets" section, and Key performance indicators on pages 57-58 relating to the "Earn our licence to operate" pillar (Mission 2025 commitment), and the sections relating to "NetZeroby40" on pages 48-49. Sustainable packaging on page 50 and water stewardship on page 52 describe the metrics and targets the Company is using to assess climate-related risks and opportunities and our performance against those targets, and Section C4.1 and C4.2 on pages 22-28 of our 2022 CDP Climate response lists a number of metrics and targets used to assess climate-related risks and opportunities. | ci Fully consistent | Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 82 Report Governance Statements Reporting Information ### Viability statement ## Viability statement | Business model and prospects | The conflict between Russia and Ukraine had a | The Board considers that our markets will face | • the impact of the Russia-Ukraine conflict, | | --- | --- | --- | --- | | Our business model and strategy, outlined on | significant impact on the global supply chain, | changes over the medium to longer term but | including loss of sales volume and revenues as | | pages 14-23 of this report, documents the key | foreign exchange rates and input costs including | continues to believe that our diverse geographic | aresult of TCCC’s suspension of its operations | | factors that underpin the evaluation of our | raw materials and energy. Economic sanctions | footprint, including exposure to emerging markets | in Russia; | | prospects. These factors include our: | imposed on Russia by the US, UK and EU as well as | that have low per capita consumption and | • foreign exchange rates; including the economic | | | many other countries remain in place, while | therefore greater opportunity for growth, and a | conditions affecting the Egyptian pound, the | • attractive geographic diversity; counter sanctions were imposed by the Russian proven strategy in combination with our leading Nigerian Naira and the impact of the Russia- • strong sales and execution capabilities; government in retaliation. On 8 March 2022, The market position, offer significant opportunities for Ukraine conflict; • ability to innovate; Coca-Cola Company announced the suspension future growth. • spending for production overhead and • market leadership; of its business in Russia which had a significant Our Board has historically applied and continues to operating expenses; • global brands; and impact on our business. We have considered the apply a prudent approach to the Group’s decisions • working capital levels; and • diverse beverage portfolio. potential future implications of the conflict in our relating to major projects and investments. From • capital expenditure. financial forecasts to the extent possible. 2018 to 2022, we generated free cash flow of The Board has assessed that a viability period of €511 million per year on average. five years remains the most appropriate. This is Key assumptions of the business plan due to its alignment with the Group’s strategic and related viability period business planning cycle, consistency with the The Group maintains a well-established strategic evaluated potential impacts of our principal risks business planning process which has formed the as disclosed on pages 63-76 and our impairment basis of the Board’s quantitative assessment of review process, where goodwill and indefinite- the Group’s viability, with the plan reflecting our lived intangible assets are tested based on our current strategy over a rolling five-year period. five-year forecasts. The financial forecasts in the plan are based on Assessment of viability assumptions for the following: Qualitatively and quantitatively, we analysed the output of our robust enterprise risk management, • key macroeconomic data that could impact internal business planning and liquidity management ourconsumers’ disposable income and processes, to ensure that the risks to the consequently our sales volume and revenues; Group’sviability are understood and are being • various scenarios relating to the ability of effectivelymanaged. governments in key markets to manage the economic conditions in their countries; The integration of the Coca-Cola Bottling Company of Egypt (CCBCE) progressed significantly during • key raw material and other input costs; 2022. Considering the successful outcomes of • the impact of climate change under multiple the integration process in the year, no risks to the climate scenarios (see also page 78 for more Group’s viability over the five-year period of this information on our quantitative assessments assessment have been identified as a result of the ofthe impact of climate change. In addition acquisition and integration of this business. to2030 and 2040, we also included interim calculations to 2027 for the purpose of our viability assessment); Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 83 Report Governance Statements Reporting Information ### Viability statement continued The Board has concluded that the Group’s Following a thorough and robust assessment of Scenario 3 well-established processes across multiple the Group’s risks that could threaten our business streams continues to provide a comprehensive Continued stakeholder focus on issues relating to model, future performance, solvency or liquidity, framework that effectively supports the sugar and packaging resulting in the potential for the Board has concluded that the Group is well operational and strategic objectives of the Group. discriminatory taxation. Principal risks: Product positioned to effectively manage its financial, It also provides a robust basis for assessment and relevance and acceptability, and Cost and operational and strategic risks. confirmation of the Group’s ability to continue availability of sustainable packaging. Viability Statement operations and meet its obligations as they fall due Based on our assessment of the Group’s over the period of assessment. Scenario 4 prospects, business model and viability as outlined | Supporting the qualitative assessment was a | Higher input costs including raw material and | above, the Directors can confirm that they have a | | --- | --- | --- | | quantitative analysis performed as part of | energy costs. Principal risks: Commodity costs, | reasonable expectation that the Group will be able | | strategic business planning. This assessment | Suppliers and sustainable sourcing, and | to continue operating and meet its liabilities as | | included, but was not limited to, the Group’s ability | Marketplace economic conditions | they fall due over the five-year period ending 31 | | to generate cash. | | December 2027. | Scenario 5 We have continued to stress test the plan against several severe but plausible downside scenarios Higher costs of water, carbon and extreme linked to certain principal risks as follows: weather as a result of the effects of climate change under multiple climate scenarios, as well as Scenario 1 the increased capital expenditure required to mitigate risks associated with climate change. The impact of changes to foreign exchange rates Principal risks: Water availability and usage, was considered, particularly the depreciation of Managing our carbon footprint, Impact of extreme foreign currencies including the Egyptian pound, weather on our production and distribution Nigerian Naira and Russian Rouble, also (Emerging risk). considering effects from the Russia-Ukraine conflict. Principal risks: Foreign exchange The above scenarios were tested both in isolation fluctuations, Commodity costs and Geopolitical and in combination. The stress testing showed and security environment. that due to the stable cash generation of our business, the Group would be able to withstand Scenario 2 the impact of these scenarios occurring over the period of the financial forecasts. This could be Lower estimates for sales volumes for various conducted by making adjustments, if required, to reasons including the continuing difficult our operating plans within the normal course of economic conditions in our markets and the ability business, including but not limited to adjustments of governments to manage these, including the to our operations and temporary reductions in impact of the continued Russia-Ukraine conflict. discretionary spending. Principal risks: Marketplace economic conditions, and Geopolitical and security environment. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 84 Report Governance Statements Reporting Information ### Financial review ## ANOTHER YEAR ## OF STRONG ## FINANCIAL ## PERFORMANCE ## “Another year of strong Dear Stakeholder, I’m very pleased with another year of strong ## financial performance, financial performance. Our resilience is testament ## while navigating a to the foundations we have put in place and the hard work of colleagues across the business. ## challenging Wehave well and truly stepped up our performance ## macroeconomic and inthe last two years with 2022 revenues 28% 1 aheadof 2019 levels on an organic basis. ## geopolitical backdrop.” Just like the broader industry, we have been Ben Almanzar wrestling with sharp inflation across our COGS Chief Financial Officer lines and have used every tool at our disposal to successfully manage these headwinds, leading to 1 record Comparable EBIT performance and free cash flow. I’m also really proud of the team for issuing our first-ever green bond for €500 million, which was very well received by investors and supports our ongoing commitment to being leaders in sustainability. 1. For details on APMs refer to ‘Alternative Performance Measures’ and ‘Definitions and reconciliations of APMs’ sections on pages 245‑249. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 85 Report Governance Statements Reporting Information ### Financial review continued | Income statement | Marketing spend was up 11.5% year on year, | | | | --- | --- | --- | --- | | Consistently strong top-line performance | (excluding Russia and Ukraine). Wearefully funding | €500 million green bond | The funds will accelerate progress of our | | We closed the year with good top-line momentum | newer categories such as Coffee, making big bets | In September 2022, we issued our first ever | NetZeroby40 and Mission 2025 commitments, | | leading to net sales revenue growth of 28.3% in | in digital and data as well as investments to deliver | green bond for €500 million in support of | including innovation in sustainable packaging, | | 2022, compared to the prior year, driven by pricing | our sustainability agenda – all in service of our | ourambitious sustainability projects. Behind | energy efficiency, water stewardship, | | initiatives and mix improvements, supported by | vision of being The Leading 24/7 Beverage Partner. | everybond issuance is a highly committed | biodiversity and community programmes. | | favourable foreign currency movements as well as | | andpassionate finance team. This team was | Investing in these projects means we continue | Organic EBIT up 1.3% despite cost inflation the consolidation of Egypt and Multon. Organic passionate about embedding sustainability to make tangible progress on sustainability and As a result of our focus on costs and discipline, revenue growth was 14.2%, including Russia and intofinancing the business, as outlined in the supports our goal of remaining a leader here. organic EBIT was up 1.3% despite cost inflation. Ukraine. Excluding these two markets organic Group’s Green Finance Framework. We are proud of that performance given the growth was 22.7%. Volume growth was 8.1% challenging macroeconomic backdrop, The bond was oversubscribed and we secured excluding Russia and Ukraine on an organic basis, compounded by the war in Ukraine. attractive rates, allowing us to turn short-term with our priority categories as the best performing. funding into mid-term funding at a time of Comparable operating profit grew by 11.9% Pricing was the largest contributor to revenue per rising interest rates. in2022, reflecting the benefits from the case, accounting for approximately two thirds of consolidation of Egypt and Multon and mix the improvement in the period. The remaining one improvements, which were only partially offset third came from mix levers, led by package and byhigher input costs and operating expenses. category mix. Operating profit deteriorated by 11.9% in 2022, Managing significant cost inflation in2022 compared to the prior year period, as the 2022 was dominated by inflation and supply chain benefitsdescribed were more than offset by Key financial information challenges. Just like the broader industry, we have theimpairment losses net of reversals related been wrestling with sharp inflation across our % Reported toRussia, and acquisition and integration costs 2022 2021 change COGS lines. Raw materials, packaging and finished associated with the business combinations Volume (million unit cases) 2,711.8 2,412.7 12.4 goods were adversely impacted by inflation across ofMulton and Egypt. Net sales revenue (€ million) 9,198.4 7,168.4 28.3 all major commodities. These were amplified by Net finance costs increased by €15.1 million Net sales revenue per unit case (€) 3.39 2.97 14.2 embedded higher energy prices, resulting in | | during 2022 compared to the prior year, mainly | | | 2 | | --- | --- | --- | --- | --- | | increased conversion costs. Our own production | | Operating profit (EBIT) | | (€ million) 703.8 799.3 ‑11.9 | | | driven by higher interest expense due to the | | 1 | | | and haulage costs were affected by labour | | Comparable EBIT | (€ million) 929.7 831.0 11.9 | | | | consolidation of Egypt and increased hedging | EBIT margin (%) 7.7 11.2 -350bps | | | andenergy inflation across our markets. And | | costof borrowings in Nigeria as well as higher net | | 1 | | --- | --- | --- | --- | | concentrate costs also increased as revenue | | Comparable EBIT margin | (%) 10.1 11.6 -150bps | | | foreign exchange losses, which were only partially | Net profit (€ million) 415.4 547.2 -24.1 | | percase expanded. | | | offset by higher interest income. | | 1,3 | | --- | --- | --- | --- | --- | | | 1 | | Comparable net profit | (€ million) 624.9 578.1 8.1 | | Comparable cost of goods sold | increased by | | | | 1,3 On a comparable basis, the effective tax rate Comparable basic earnings per share (€) 1.706 1.584 7.7 32.3% in 2022, driven by the consolidation of was26.4% for 2022 and 24.5% for 2021. On a Egypt and Multon, as well as energy and input cost Percentage changes are calculated on precise numbers. 1 reported basis, the effective tax rate was 33.4% inflation. Comparable operating expenses for 2022, mainly impacted by the impairment increased by 25.7% in 2022 mainly driven by higher losses relating to the Group’s operations in Russia, selling, delivery and administrative expenses and 25.5% for 2021. andthe consolidation of Egypt and Multon; while operating expenses increased by 28.4% in 2022 compared to the prior year further impacted by acquisition and integration costs associated with the business combinations of Egypt and Multon. 1. For details on APMs refer to ‘Alternative Performance Measures’ and ‘Definitions and reconciliations of APMs’ sections. 2. Refer to the consolidated income statement. 3. Net profit and comparable net profit refer to net profit and comparable net profit respectively after tax attributable to owners oftheparent. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 86 Report Governance Statements Reporting Information ### Financial review continued Balance sheet Borrowings Organic revenue growth year on year At the close of the year net debt to comparable | | | 2022 | 2021 | | | | --- | --- | --- | --- | --- | --- | | | € million | | € million | | EBITDA was 1.2 times. The business is well | | Assets | | | | 14.2% | insulated from interest rate exposure by having | | Total non-current assets 6,139.5 5,357.4 | | | | | most of our debt on fixed rates. Our next bond | | Total current assets 3,716.2 3,156.9 | | | | | repayment is not due until November 2024. | Comparable EBIT Total assets 9,855.7 8,514.3 Dividend Liabilities The Board of Directors has proposed a dividend ## Total current liabilities 3,006.7 2,516.4 €929.7m of€0.78 per share, a 9.9% increase from the Total non-current liabilities 3,463.4 2,880.8 €0.71per share dividend paid in 2021, continuing Total liabilities 6,470.1 5,397.2 the Group’s progressive dividend policy, and Organic EBIT growth year on year Equity reflecting the strength of its balance sheet and Owners of the parent 3,282.3 3,114.5 healthy liquidity position, The pay‑out ratio is 46%, Non-controlling interests 103.3 2.6 within the updated target pay-out ratio of 40 ## +1.3% Total equity 3,385.6 3,117.1 to50%. The dividend payment will be subject Total equity and liabilities 9,855.7 8,514.3 toshareholders’ approval at our Annual GeneralMeeting. Comparable net profit grew by 8.1% versus the Net current assets increased by €69.0 million Cash flow prior-year period, due to higher operating largely driven by the consolidation of Multon, 2022 2021 profitability, while net profit contracted by 24.1%, higher investments in financial assets and lower € million € million largely due to the net impairment losses after tax, current borrowings, partially offset by higher trade Cash flow from operating activities 1,234.6 1,142.2 relating to the Group’s operations in Russia, and payables. Total non-current liabilities increased by 1 Payments for purchases of property, plant and equipment (531.8) (513.6) acquisition and integration costs associated with €582.6 million during 2022, mainly due to the new Proceeds from sales of property, plant and equipment 7.5 35.8 the business combinations of Egypt and Multon. green bond which was issued in September 2022. Principal repayments of lease obligations (65.2) (63.1) Free cash flow 645.1 601.3 | Strong and flexible balance sheet | Another year of investment and record | | | | --- | --- | --- | --- | | Our balance sheet remains very strong. Prudent | free cash flow generation | | 1. Payments for purchases of property, plant and equipment for 2022 include €8.4 million (2021: €7.1 million) relating to repayment | | financial management of our balance sheet is a | | 2 | ofborrowings undertaken to finance the purchase of production equipment by the Group’s subsidiary in Nigeria, classified as | | | Capital expenditure (Capex) | increased by €48.6 | | ‘Repayments of borrowings’ in the consolidated cash flow statement. source of strength and flexibility, providing ample million in 2022 as we continue to deploy capital 2. For details on APMs refer to ‘Alternative Performance Measures’ and ‘Definitions and reconciliations of APMs’ sections. capacity for investments both organically and into critical growth projects. In particular, we are through M&A. investing behind upgrading our manufacturing facilities in selected markets, expanding our base Total non-current assets increased by €782.1 of energy efficient coolers to drive single-serve million during 2022, mainly driven by the growth and delivering our sustainability goals. consolidation of Egypt, Multon and Three Cents, Capex finished at 6.4% ofrevenue, slightly below as well as continued investment in property, plant our guided range, following suspension of capex and equipment, which was only partially offset by investment in Russia in 2022. Free cash flow impairment losses for property, plant and increased by €43.8million year on year to €645.1 equipment, goodwill and equity method million – a record highfor our company. investments in connection with our operations in Russia and foreign currency translation impact. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 87 Report Governance Statements Reporting Information ### Financial review continued Continued strong ROIC performance Asamatter of Group policy, translational Total tax by category in 2022 (%) exposures are not hedged. Taxes we contribute to our Return on Invested Capital (ROIC) is one our most important KPIs. To be The Leading 24/7 Beverage communities Looking ahead Partner we need to make thoughtful choices, When considering tax, Coca‑Cola HBC While we remain attentive to macroeconomic and ensuring that we deploy capital efficiently and givesdue consideration to the importance geopolitical risks, we have high confidence that effectively in the service of profitable growth. We ofearning community trust. More specifically, our portfolio, capabilities, attractive markets and delivered another year of good ROIC performance we commit to continue paying taxes in the talented people will allow us to continue to make despite the challenging macroeconomic and countries where value is created and ensure progress on our strategy in 2023. geopolitical environment. that we are fully compliant with the spirit as At our full year results presentation on 14 February well as the letter of tax laws and regulations Higher profits resulted in another strong 2023, we announced our full year guidance for the across all jurisdictions we operate in. In addition, performance on ROIC of 14.1% (2021: 14.8%). year. We expect another year of organic revenue we commit to being open and transparent ROIC excluding Egypt was 15.8%. growth above the 5 to 6% average mid‑term with tax authorities about the Group’s tax Corporate income tax Financial risk management range guidance. While we have seen signs of affairs and to disclose relevant information to Withholding tax The Group’s activities expose it to a variety of improvement in some commodities, overall enable tax authorities to carry out their reviews. Payroll taxes financial risks: market risk (including currency risk, inflation levels remain high and we expect COGS VAT (cost) We support the communities in the countries Environmental taxes interest rate risk and commodity price risk), credit per unit case to increase by low teens. Given the where we operate directly, by creating Other taxes risk, liquidity risk and capital risk. There have been good momentum, combined with our proactive economic wealth, and also indirectly, by no material changes in the risk management management of the P&L, we now expect organic paying taxes. These taxes include corporate policies since the previous year end. EBIT growth in the range of plus to minus 3%. income tax calculated on each country’s | The Group maintains its healthy liquidity position | I am confident that our talented people, in | taxable profit, employer taxes and social | 2022 Borrowing structure (€ m) | | --- | --- | --- | --- | | and is able to meet its liabilities as they fall due. | partnership with our customers, The Coca-Cola | security contributions, net VAT cost and | | | | Company, the Monster Energy team, and other | other taxes that are reflected as operating | €3,419.9 m | Asat 31 December 2022, the Group has net debt | of €1.7 billion. In addition, as at 31 December | valued stakeholders, will continue to open up | expenses. Excise taxes and taxes borne by | | --- | --- | --- | | 2022, the Group had cash and cash equivalents | moments to refresh us all in 2023 and deliver | employees are not included. | | and other financial assets of €1.7 billion, an | another year of strong financial performance. | | undrawn Revolving Credit Facility of €0.8 billion, anuncommitted Money Market Loan agreement of €0.2 billion, as well as €0.8 billion available out ofthe €1.0 billion Commercial Paper Programme. Ben Almanzar None of our debt facilities are subject to any Chief Financial Officer financial covenants that would impact the Group’s liquidity or access to capital. Effective financial risk management proved | | Bonds issued | 2,883.4 | | --- | --- | --- | | successful in mitigating a material part of input | Commercial paper | 167.5 | | cost increases for 2022. In terms of foreign | Leases | 206.0 | | exchange risk, the Group is exposed to exchange | Other | 163.0 | rate fluctuation of the Euro versus the US Dollar and the local currency of each country of our operations. Our risk management strategy involves hedging transactional exposures arising from currency fluctuations, with available financial instruments on a 12-month rolling basis. 48.9% 2.2% | 39.1% | m | | --- | --- | | 3.2% | m | | 0.1% | m | | 6.5% | m | Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 88 Report Governance Statements Reporting Information ### Financial review continued ## Segment highlights While Sparkling and Energy were the main growth ### Established markets Volume breakdown by country (%) drivers in Established, we were also pleased by the In the Established segment, organic revenues strong performance in some of the smaller Stills grew by 18.6%. Strong organic revenue per case categories. For example, Fuze Tea volumes grew expansion of 8.6% was achieved through over 20% in Italy. improvements in category and package mix, as well as pricing actions throughout the year in all For the segment, comparable EBIT grew 1.3% on markets. Volumes in the segment were robust, an organic basis while operating profit increased with volumes accelerating in H2 versus H1 on a by 8.7%. As a reminder, in 2021 the Established three‑year stack. All the main markets achieved segment benefitted from a one-off property sale | high single digit volume growth in 2022. We have | in Cyprus, which we are lapping this year. Without | | | --- | --- | --- | | been pleased with the strong performance on | it, comparable EBIT growth was up 9.5% on an | | | package mix in the segment, with single serve mix | organic basis. | | | up 4.5 percentage points. | | Italy | Greece | | | % change | % change | Austria | | --- | --- | --- | --- | --- | | | 2022 2021 | reported | organic | Republic of Ireland and Northern Ireland | | Volume (million unit cases) 643.9 589.9 9.2 9.1 | | | | Switzerland | Cyprus Net sales revenue (€ million) 2,974.1 2,479.0 20.0 18.6 Comparable EBIT (€ million) 307.1 300.8 2.1 1.3 Operating profit (EBIT) (€ million) 310.4 285.6 8.7 1 | | Total taxes | (€ million) 156.3 130.7 19.6 | | --- | --- | --- | | Organic volume growth | | 2 | | | Population | (million) 94 94 – | GDP per capita (US$) 40,617 39,487 2.9 ## 9.1% Bottling plants (number) 15 15 – Employees (number) 6,392 6,251 2.2 Water footprint (billion litres) 4.048 3.751 7.9 Organic revenue per case growth Carbon emissions (tonnes) 67,720 65,568 3.3 Safety rate (lost time accidents >1day per100 employees) 0.69 0.44 56.8 ## 8.6% 1. Total taxes include corporate income tax, withholding tax and deferred tax, as well as social security costs and other taxes that are reflected as operating expenses; asperIFRSaccounts. 2. Population source: International Monetary Fund, World Economic Outlook Database, October 2022. 43% 18% 13% 13% 11% 2% Economic Review Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 89 # Financial review continued ![img-0.jpeg](img-0.jpeg) Organic volume growth 15.2% Organic revenue per case growth 11.9% # Developing markets In the Developing segment, organic revenue grew 29.0%, benefitting from very good price/mix expansion and sustained volume growth. All the main markets gained share and achieved double-digit volume growth in the year led by Sparkling and Energy. We are also seeing success from our focus on multi-packs of single serve, particularly in Poland and Czech Republic. Poland delivered excellent volume growth and we continued to accelerate share gains, as the category recovered from the 2021 sugar tax. Low/no sugar variants saw another year of robust volume expansion. Developing segment comparable EBIT grew by 12.7% on an organic basis, while operating profit grew by 8.0%. | | 2022 | 2021 | % change reported | % change organic | | --- | --- | --- | --- | --- | | **Volume** (million unit cases) | **478.8** | **415.5** | 15.2 | 15.2 | | **Net sales revenue** (€ million) | **1,719.7** | **1,365.6** | 25.9 | 29.0 | | **Comparable EBIT** (€ million) | **115.1** | **106.5** | 8.1 | 12.7 | | **Operating profit (EBIT)** (€ million) | **113.1** | **104.7** | 8.0 | | | **Total taxes**^{1} (€ million) | **66.0** | **45.6** | 44.9 | | | **Population**^{2} (million) | **76** | **76** | – | | | **GDP per capita** (US$) | **17,824** | **17,618** | 1.2 | | | **Bottling plants** (number) | **9** | **9** | – | | | **Employees** (number) | **4,157** | **4,261** | -2.4 | | | **Water footprint** (billion litres) | **3,557** | **3,214** | 10.7 | | | **Carbon emissions** (tonnes) | **47,779** | **45,633** | 4.7 | | | **Safety rate** (lost time accidents >1 day per 100 employees) | **0.46** | **0.47** | -2.1 | | 1. Total taxes include corporate income tax, withholding tax and deferred tax, as well as social security costs and other taxes that are reflected as operating expenses, as per IFRS accounts. 2. Population source: International Monetary Fund, World Economic Outlook Database, October 2022. # Volume breakdown by country (%) ![img-1.jpeg](img-1.jpeg) | Poland | 44% | | --- | --- | | Hungary | 21% | | Czech Republic | 13% | | Belarus | 8% | | Croatia | 7% | | Slovakia | 5% | | Slovenia | 2% | Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 90 Report Governance Statements Reporting Information ### Financial review continued translational currency benefits. FX, combined ### Emerging markets Volume breakdown by country (%) withthe impact of consolidating Multon, meant In the Emerging segment, organic revenue that Russia’s comparable EBIT was higher in 2022 finished up 5.5%. Top line growth was negatively than 2021. impacted by the war in Ukraine. Without Russia | and Ukraine, organic revenue grew by 23.5% | In the Emerging segment as a whole, organic | | --- | --- | | –demonstrating the health of the non‑affected | volumes declined by 10.9%, but grew 4.3%, if we | | areas of the business. | exclude Russia and Ukraine. Segment revenue | percase expanded 18.4% on an organic basis as Volume contracted 41% in Russia on an organic we took decisive action on pricing and mix across basis, with most of that decline in the second half, all countries to manage inflation, and currency after the depletion of The Coca-Cola Company weakness in selected markets. Segmental brands in the market at the end of July. While comparable EBIT declined by 1.1% on an organic volumes were in steep decline, we saw a surprisingly basis, while operating profit declined by 31.5%. Nigeria strong Rouble which generated transactional and Egypt Russian Federation % change % change Romania 2022 2021 reported organic Serbia (including the Republic of Kosovo) Volume (million unit cases) 1,589.1 1,407.3 12.9 ‑10.9 Ukraine Net sales revenue (€ million) 4,504.6 3,323.8 35.5 5.5 Bulgaria Comparable EBIT (€ million) 507.5 423.7 19.8 -1.1 Belarus Bosnia and Herzegovina Operating profit (EBIT) (€ million) 280.3 409.0 -31.5 Armenia 1 Organic volume growth Total taxes (€ million) 185.0 189.3 -2.2 Moldova 2 Population (million) 543 549 -1.0 GDP per capita (US$) 5,735.7 5,372.9 6.8 ## -10.9% Bottling plants (number) 38 32 18.8 Employees (number) 22,494 16,700 34.7 Water footprint (billion litres) 9.726 10.721 ‑9.3 Organic revenue per case growth Carbon emissions (tonnes) 327,206 314,582 4.0 Safety rate (lost time accidents >1day per ## 18.4% 100 employees) 0.21 0.14 50.0 1. Total taxes include corporate income tax, withholding tax and deferred tax, as well as social security costs and other taxes that are reflected as operating expenses; asperIFRSaccounts. 2. Population source: International Monetary Fund, World Economic Outlook Database, October 2022. Population includes N. Macedonia. 26% 18% 17% 13% 10% 6% 4% 3% 1% 1% 1% Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 91 Report Governance Statements Reporting Information ### Non-financial reporting directive ### This spread constitutes our non-financial information statement. ## Delivering 24/7 takes Thebelow information provides page references mapping out how our ### report complies with relevant regulation on non-financial information. ## anintegratedapproach Thisinformation is supplementary. ### Our purpose Policies and values Effective oversight Open up moments that refresh us all. Underpinning our business and setting the Our Board and senior management ensure we Serving as our north starambition toguide direction for how we achieve ourgoals. stay on course to achieve ourvision. everythingwedo. Human rights Our purpose pages 1-6, 21-22 Values page 22 The Executive Leadership Team • Human Rights Policy • Customer first pages 114-116 • Supplier Guiding Principles • Make it simple • Slavery and Human Trafficking statement • We over I • Deliver sustainably Social matters • Health and Wellness Policy Policies (see our website) • HIV/AIDS Policy Environmental matters • Code of Business Conduct • Environmental Policy • Supplier Guiding Principles • Climate Change Policy • GMO position statement • Packaging waste management Policy • Community Contributions Policy • Principles for Sustainable Agriculture • Premium Spirits Responsible Marketing Policy • Water Stewardship Policy • Public Policy Engagement Policy • Biodiversity Statement • Quality and Food Safety Policy Employees • Code of Business Conduct Anti-bribery and Corruption • Code of Business Conduct • Diversity and Inclusion Policy • Anti‑bribery Policy and Compliance Handbook • Occupational Health and Safety Policy • Supplier Guiding Principles • Quality and Food Safety Policy ### The purpose recognises that How our Board considers stakeholders • Community Contributions Policy in decision making page 109 ### whileour work requires sealing • Whistleblowing Policy ### beverages in, the real magic Principal risk Social Responsibility Committee ### happens when they are opened up: • Risk Policy pages126‑127 ### opening up new markets, new ### relationships and new ideas for ### abetter future. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 92 Report Governance Statements Reporting Information ### Non-financial reporting directive continued ### Positive influence Executing our vision Defining our success EU Taxonomy We are committed to achieving net zero Being conscious of stakeholders, risks, market To fulfil our Growth Story 2025 we will execute Operating in a sustainable way to ensure our emissions across our entire value chain by 2040 changes and material issues, while responding on each of our five growth pillars, considering remuneration and sustainability commitments and we support the European Commission’s through our business model in a positive way. all stakeholders at every step of the journey. are interlinked. action plan to redirect capital flows towards a more sustainable economy. The EU Taxonomy, Growth pillars page 23 Remuneration report pages 128-155Business model pages 14-15 which is a key part of this action plan, introduces a classification system for sustainable activities in support of the EU’s Green Deal. The CEO’s individual performance is measured | 1 | Leverage our unique | | | | --- | --- | --- | --- | | | | in key strategic areas and taken into account | Under the EU Taxonomy, non-financial companies | | | 24/7 portfolio | for MIP. These strategic areas include the | | are to disclose what percentage of their turnover, | | | Company’s performance in ESG benchmarks. | CapEx, and OpEx meet its criteria. As a company | | --- | --- | --- | --- | | 2 | Win in the marketplace | | | | | | TheCompany received the highest scores in | domiciled in Switzerland, Coca‑Cola HBC is not | | 3 | Fuel growth through | 8of the 10 most recognised ESG benchmarks, | subject to the EU Non‑Financial Reporting | | | | including DJSI, MSCI ESG, FTSE4Good, ISS | Directive (NFRD) or required to report using the | ### competitivenessand | | | ESG, and V.E. ThePSP contains metrics linked | | | EU Taxonomy. However, we have been voluntarily | | --- | --- | --- | --- | --- | --- | | | investment | to a reduction in CO | emissions. The CO | | | | | | | 2 | 2 | complying with other requirements of the NFRD | | | | emissions target in the PSP implicitly captures | | | since 2018. | | 4 | Cultivate the potential | | | | | reduction in plastics, which was a key driver ### ofourpeople In 2022, there were delays in the finalisation of the ofits selection asametric. EU Taxonomy delegation acts. At the time this ### 5 Earn our licence to operate See pages 148-151 report was written, the remaining four CEO pay ratio environmental objectives of the EU Taxonomy See page 152 – sustainable use and protection of water and marine resources; transition to a circular Stakeholder engagement pages 16-18 Mission 2025 sustainability economy; pollution prevention and control; and protection and restoration of biodiversity and commitments pages 57-58 Market trends pages 19‑20 ecosystems – had not yet been published. • Emissions reduction • Regulatory environment • Water reduction and stewardship Thus, our disclosure regarding the EU Taxonomy • Sustainability • World Without Waste (Packaging) is consistent with our 2021 report. The primary economic activity of the Group – manufacturing Principal risks pages 61-81 • Ingredient sourcing ofbeverages and food products – does not have • Nutrition the potential to substantially contribute to climate Material issues pages 59‑60 • Our people and communities change adaptation and mitigation. In addition, noother taxonomy‑eligible activities have GRI Content Index beenidentified. In 2023, we will remain alert to the evolving EUlegislation around corporate sustainability disclosure requirements, and we will continue our work to maintain best-in-class ESG reporting. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 93 Report Governance Statements Reporting Information ### Contents Corporate Governance 94 Chairman’s introduction to corporate governance 98 Board of Directors 101 Corporate Governance Report 128 Directors’ Remuneration Report 156 Statement of Directors’ Responsibilities ## CORPORATE ## GOVERNANCE 94 Strategic Report Corporate Governance Financial Statements Sales Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 ## Chairman's introduction to corporate governance # Governing adaptation and change ## Letter from the Chairman of the Board ![img-2.jpeg](img-2.jpeg) ### Dear Shareholder **Our corporate governance report for 2022 details our robust governance arrangements throughout the Group and the key activities and decisions undertaken by the Board during the year. Despite the impact of the conflict between Russia and Ukraine, the Board has remained focused on our Growth Story 2025 to support the long-term sustainable success of our business and our commitment to achieving net zero emissions across the entire value chain by 2040.** ### Conflict between Russia and Ukraine The conflict between Russia and Ukraine continues to affect our business in those countries with some continuing impact on our supply chain. We prioritised the health and safety of our people in all impacted countries and are providing practical and financial support, as well as donations for humanitarian relief in the impacted region. In March 2022, The Coca-Cola Company announced the suspension of its business in Russia, which has had, and will continue to have, an impact on our operations in Russia. Following this decision, we implemented a new operating model in Russia, a self-sufficient business, selling local brands. Economic sanctions imposed on Russia have had a significant impact on foreign exchange rates and the price of a number of commodities such as oil, which affects PET prices, and aluminium. Countersanctions imposed by Russia may have an impact on our Russian operations as well as other countries in our territory. We expect the geopolitical environment to remain volatile for some time, but we continue to position the Company to deal with this continued volatility and most importantly to protect our employees and their families through practical and financial support. ### Coca-Cola Bottling Company of Egypt In August 2021, we announced the acquisition of the Coca-Cola Bottling Company of Egypt S.A.E. (CCBCE), a leading producer of non-alcoholic ready-to-drink beverages in Egypt. The acquisition, which was completed on 13 January 2022, provides access to one of the largest non-alcoholic ready-to-drink markets by volume in Africa. Since completion, our focus has been on integrating the business financially, operationally and from a governance perspective. The Board has monitored the integration closely and has received regular updates on progress. ### Three Cents In August 2022, we announced the acquisition of ESM Effervescent Sodas Management Limited, the owner of the super-premium adult sparkling beverage and mixer product line under the Three Cents brand. This acquisition will strengthen our premium brand offerings and was completed in October 2022. ### Green Bond In September 2022, we successfully raised €500 million through the issue of our first green bond in support of our ambitious sustainability projects. The net proceeds of the green bond will be allocated to projects that meet the eligibility criteria outlined in our Green Finance Framework. They will accelerate progress of our NetZeroby40 and Mission 2025 commitments including: circularity, energy efficiency, water stewardship, biodiversity and community programmes, innovation in sustainable packaging and support of sustainable agriculture and procurement. This milestone initiative demonstrates how sustainability is embedded in every aspect of our business, including our financing. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 95 Report Governance Statements Reporting Information ### Chairman’s introduction to corporate governance continued Importance of good governance role in shaping the culture of the Company by Board evaluation ## “As always, we look to the As a Board, our aim is to always ensure the highest promoting growth-focused and values-based In line with our commitment to adhere to best ## long-term potential of the conduct and ensuring increased focus on continued standards of corporate governance, accountability corporate governance practices, an externally and risk management. Our internal policies and learning and the smart risk taking necessary facilitated Board effectiveness evaluation was ## business to ensure that we | | procedures, which have been consistently | forthe Company’s adaptation. TheBoard is | conducted in the second half of 2022. We will do | | --- | --- | --- | --- | | are making the progress | | overseeing the development and implementation | | | | effective since the Group was formed, are | | this once again in 2023 to build upon the learnings | | | properly documented and communicated against | of a new culture manifesto and leadership | of the 2022 evaluation. Key outcomes from the | ## that would make those who | | the framework applicable to companies with a | model,ensuring that the revised purpose is | Board effectiveness evaluation conducted in 2022 | | --- | --- | --- | --- | | passed its stewardship | | well-embedded in the Company’s culture. | | | | premium listing in the UK. | | are included on page 112. Further details are | disclosed in the Nomination Committee report ## onto us proud.” The Board and its committees conducted an We monitor our progress in integrating our values onpage 124. annual review of the effectiveness of our risk through various indicators, including our employee management system and internal controls, further engagement index, diversity indicators, and health Board composition and diversity details of which are set out in the Audit and Risk and safety indicators, and our Directors lead by The composition and size of the Board continues Committee report on 118. The Board confirms example as ambassadors of our values, cascading to be kept under review. We believe that our Board that it has concluded that our risk management good behaviour throughout the organisation. is well-balanced and diverse, with the right mix of and internal control systems are effective. international skills, experience, background, As pandemic‑related disruptions eased across ourterritory, but new challenges due to the independence and knowledge in order to We are subject to the UK Corporate Governance conflict between Russia and Ukraine presented discharge its duties and responsibilities effectively. Code 2018. It sets out the principles of good practice in relation to: Board leadership and themselves, we have maintained a level of We continue to attach great importance to all company purpose; division of responsibilities; engagement with our people to ensure we aspects of diversity in our nomination processes composition, success and evaluation; audit, risk understood their needs and challenges. One at Board and senior management levels, while and internal controls; and remuneration. Further all-employee pulse survey, one Engagement appointing candidates with the credentials that information on how we have applied the principles survey and one Collaborating for Impact survey arenecessary for the continuing growth of our and complied with the provisions of the UK were conducted in 2022. While Charlotte Boyle operations within our highly specialised industry. Corporate Governance Code 2018 for the year isour designated non‑Executive Director We believe that having a diverse Board fosters ended 31 December 2022 can be found in this responsible for engaging with our people to both innovation and resilience and are proud of report on 96. provide feedback to the Board, feedback from our track record of female representation. As of ourpeople through these surveys was brought to the date of this report, female Directors comprise Board meetings normally take place in Zug, the full Board’s attention in 2022 to facilitate more than 30% of our Board. Switzerland, but also in selected markets across understanding of the concerns raised and ensure our territories. a rapid response. Purpose culture and values In early 2023, the Board endorsed the Company’s revised purpose: opening up moments that refresh us all. This revision provides greater clarity and inspiration, and also supports our alignment Anastassis G. David with the Coca-Cola system. Chairman of the Board The long-term success of our business remains connected to the success of our customers and partners, and our ability to delight consumers with the beverages and brands that they love. We are able to accomplish this due to our well-embedded, values-based culture. The Board plays a critical Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 96 Report Governance Statements Reporting Information ### UK Corporate Governance Code 2018 been a Board member for more than nine years On the appointment of any new Executive (provision 19), and a full explanation for this Director, we intend that their pension ## The UK Corporate departure is provided on pages 97 and 102. contributions will be aligned with the pension Onappointment the Board unanimously scheme for the widerworkforce. supported Anastassis David’s appointment as ## Governance Code 2018 Pursuant to our obligations under the Listing Chairman. TheBoard regularly reviews Anastassis Rules, we apply the principles and comply with the David’s position and considers that he continues provisions of the UK Corporate Governance Code to effectively lead the Board, his deep knowledge or explain any instances of non-compliance in As a Swiss corporation listed on the London Stock In respect of the year ended 31 December 2022, of the Coca-Cola System is invaluable and as such ourAnnual Report. The Company has applied the Exchange (LSE) with a secondary listing on the the Company was subject to the UK Corporate it remains appropriate for him to continue in his principles as far as possible and in accordance with Athens Exchange, we aim to ensure that our Governance Code 2018 (a copy is available at role as Chairman; and (2) Provision 38 requires and as permitted by Swiss law. Further information corporate governance systems remain in line www.frc.org.uk). alignment of Executive Director pension on appointment of Directors and compliance withinternational best practices. Our corporate contributions with the wider workforce. Our Board confirms that the Company applied the withthe UK Corporate Governance Code can be governance standards and procedures are Ourdifficulties in compliance with this provision principles and complied with the provisions of the found as follows: continuously reviewed in light of current due to existing contractual obligations were UK Corporate Governance Code throughout the developments and rulemaking processes in the outlined in the Annual Report published in 2021 financial year ended December 2022, except for UK, Switzerland and also the EU. Further details and are explained on page 136 of the Directors’ the following provisions: (1) The Chairman was not are available on our website. Remuneration Report. independent on appointment (provision 9) and has Section 1: Board leadership and company purpose See page Section 2: Division of responsibilities See page Section 4: Audit, risk and internal controls See page A. Effective and entrepreneurial Board to promote the F. Leadership of Board by chair M. Independence and effectiveness of internal and external long-term sustainable success of the Company, generating G. Board composition and responsibilities audit functions and integrity of financial and narrative value for shareholders and contributing to wider society statements H. Role of non-Executive Directors B. Purpose, values and strategy with alignment to culture N. Fair, balanced and understandable assessment of the I. Company secretary, policies, processes, information, C. Resources for the Company to meet its objectives and Company’s position and prospects timeand resources | | measure performance. Controls framework for | | O. Risk management and internal control framework and | | | --- | --- | --- | --- | --- | | | management and assessment of risks | • Board composition 102 | | principal risks Company is willing to take to achieve its | | D. Effective engagement with shareholders and stakeholders | | | | long‑term objectives | • Key roles and responsibilities 104 E. Consistency of workforce policies and practices to support • Audit and Risk Committee report 118 long-term sustainable success • General qualifications required of all Directors 101 • Strategic Report 12 • Chairman’s letter 7 • Information and training 112 • Fair, balanced and understandable Annual Report 119, 123, • Strategic Report 12 • Board appointments and succession planning 112 156 • Board engagement with key stakeholders 110 Section 3: Composition, succession and evaluation See page • Going concern basis of accounting 162 • Shareholder engagement 111 J. Board appointments and succession plans for board and • Viability statement 82 senior management and promotion of diversity • Audit and Risk Committee report 118 K. Skills, experience and knowledge of board and length of Section 5: Remuneration See page service of board as a whole • Conflicts of interest 113 P. Remuneration policies and practices to support strategy L. Annual evaluation of Board and Directors and and promote long-term sustainable success with executive demonstration of whether each Director continues to remuneration aligned to Company purpose and values contribute effectively Q. Procedure for Executive Director and senior management • Board composition 102 remuneration R. Authorisation of remuneration outcomes • Diversity, tenure and experience 105 • Remuneration Committee report 128 • Board, committee and Director performance evaluation 112 • Nomination Committee report 124 Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 97 # UK Corporate Governance Code 2018 continued ## Certain differences between the Company's corporate governance practices and the UK Corporate Governance Code The Swiss corporate rules regarding the compensation in listed companies further limits the authority of the Remuneration Committee and the Board to determine compensation. The effective limitations include requiring that the Annual General Meeting approve the maximum total compensation of each member of the Board and the Executive Leadership Team, requiring that certain compensation elements be authorised in the Articles of Association and prohibiting certain forms of compensation, such as severance payments and financial or monetary incentives for the acquisition or disposal of firms. We are in compliance with the requirements of the Swiss corporate rules regarding the compensation in Listed Companies and have amended our Articles of Association to that effect. Anastassis David was originally appointed as non-Executive Director in 2006 at the request of Kar-Tess Holding and was not, at the time of his appointment as Chairman, in 2016, independent as defined by the UK Corporate Governance Code. In view of Anastassis David's strong identification with the Company and its shareholder interests, combined with his deep knowledge and experience of the Coca-Cola System, the Board deemed it to be in the best interests of the Group and its shareholders for him to be appointed as Chairman, to continue to promote an effective and appropriately balanced leadership of the Group. In accordance with the established policy of appointing all Directors for one year at a time, the Board intends to continue to keep all positions under regular review and subject to annual election by shareholders at the Annual General Meeting. The Board is cognisant of the length of tenure of the Chairman and when he was first appointed to the Board. However, the Board continues to believe that the proven leadership of our Chairman in combination with his deep knowledge of the Coca-Cola System position him as unique to steer the Group at the current time. ## Application of governance codes ### Other corporate governance codes There is no mandatory corporate governance code under Swiss law applicable to the Company. The main source of law for Swiss governance rules is the company law contained in article 620 ff. of the Swiss Code of Obligations, as well as the Swiss corporate rules regarding the compensation in listed companies. In addition, the UK's City Code on Takeovers and Mergers (the 'City Code') does not apply to the Company, because The Company does not have its registered office in the United Kingdom, the Channel Islands or Isle of Man. The Articles of Association include specific provisions designed to prevent any person acquiring shares carrying 30% or more of the voting rights (taken together with any interest in shares held or acquired by the acquirer or persons acting in concert with the acquirer) except if (subject to certain exceptions) such acquisition would not have been prohibited by the City Code or if such acquisition is made through an offer conducted in accordance with the City Code. For further details, please refer to the Company's Articles of Association, which are available on our website. ## Amending the Articles of Association The Articles of Association may only be amended by a resolution of the shareholders passed by a majority of at least two-thirds of the voting rights represented and an absolute majority of the nominal value of the shares represented. ## Share capital structure The Company has ordinary shares in issue with a nominal value of CHF 6.70 each. Rights attaching to each share are identical and each share carries one vote. The Company's Articles of Association also allow, subject to shareholder approval, for the conversion of registered shares into bearer shares and bearer shares into registered shares. Details of the movement in ordinary share capital during the year can be found on page 215. There are no persons holding shares that carry special rights with regard to the control of the Company. ## Powers of Directors to issue and buy back shares Subject to the provisions of the relevant laws and the Articles of Association, the Board acting collectively has the ultimate responsibility for running the Company and the supervision and control of its executive management. The Directors may take decisions on all matters that are not expressly reserved to the shareholders by the Articles of Association. Pursuant to the provisions of the Articles of Association, the Directors require shareholder authority to issue and repurchase shares. At the Annual General Meeting on 21 June 2022, the shareholders authorised the Directors to repurchase ordinary shares of CHF 6.70 each in the capital of the Company up to a maximum aggregate number of 10,000,000 representing less than 10% of the Company's issued share capital as of 10 May 2022. The authority will expire at the conclusion of the 2023 Annual General Meeting on 17 May 2023 or at midnight on 30 June 2023, whichever is earlier. Total shares held in treasury are 5,386,717 of which 1,958,582 shares are held by Coca-Cola HBC AG and 3,430,135 shares are held by its subsidiary, Coca-Cola HBC Services MEPE. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 98 Report Governance Statements Reporting Information ### Board of Directors ## The Board ## ofDirectors | Anastassis G. David | Zoran Bogdanovic | Charlotte J. Boyle | Henrique Braun | | --- | --- | --- | --- | | Non-Executive Chairman | Chief Executive Officer, Executive Director | Independent non-Executive Director | Non-Executive Director | | Appointed: January 2016. He joined the | Appointed: June 2018. | Appointed: June 2017. | Appointed: June 2021. | Board of Coca‑Cola HBC as a non‑Executive Skills, experience and contribution: Zoran Skills, experience and contribution: After Skills, experience and contribution: Director in 2006 and was appointed Vice was previously the Company’s Region 14 years with The Zygos Partnership, an Henrique has vast experience in corporate Chairman in 2014. | | Director responsible for operations in 12 | international executive search and board | functions as well as regional and business | | --- | --- | --- | --- | | Skills, experience and contribution: | countries and has been a member of the | advisory firm, including nine years as a | unit operations in The Coca-Cola Company. | | Anastassis brings to his role more than 20 | Executive Leadership Team since 2013. He | partner, she retired from her position in July | He joined The Coca‑Cola Company in 1996 | | years’ experience as an investor and | joined the Company in 1996 and has held a | 2017. Prior to that, Charlotte worked at | in Atlanta and progressed through increasing | | non-Executive Director in the beverage | number of senior leadership positions, | Goldman Sachs International and at Egon | responsibilities in North America, Europe and | | industry. Anastassis is also a former | including as General Manager of the | Zehnder International, an international | Latin America. His career responsibilities | | Chairman of Navios Corporation. He holds a | Company’s operations in Croatia, | executive search and management | have included supply chain, new business | | BA in History from Tufts University. | Switzerland and Greece. Zoran has a track | assessment firm. Charlotte obtained an MBA | development, marketing, innovation, general | | | record of delivering results across our | from the London Business School and an MA | management and bottling operations. From | External appointments: Anastassis is active territories and demonstrating the values that from Oxford University and was a Bahrain 2020 to 2022, Henrique served as President in the international community. He serves as are the foundation of our Company culture. British Foundation Scholar. of the Latin America operating unit, from Vice Chairman of Aegean Airlines S.A., Vice 2016 to 2020, he served as the President of Chairman of the Cyprus Union of Shipowners External appointments: None External appointments: Charlotte serves the Brazil business unit and from 2013 to and Chairman of the Board of Sea Trade as Chair of UK for UNHCR, an independent Nationality: Croatian 2016, he was the President for Greater China Holdings Inc, a shipowning company of dry non-executive director and chair of the and Korea. His other roles in The Coca‑Cola cargo vessels. He is also a member of the Environment, Sustainability and Community Company in the past include Vice President Board of Trustees of College Year in Athens. Committee of Shaftesbury Capital PLC, a of Innovation and Operations in Brazil and Nationality: British non-Executive Director of Thatchers Cider Director for Still Beverages (non‑carbonated Company Ltd, a non-executive adviser to beverages) in Europe. He first joined The the Group Executive Board of Knight Frank Coca-Cola Company as a trainee in Global LLP and as a Trustee and chair of the finance Engineering in the US. Henrique holds a committee of Alfanar, the venture bachelor’s degree in agricultural engineering philanthropy organisation. from the University Federal of Rio de Janeiro, Nationality: British a master’s in industrial engineering from Michigan State University and an MBA from Georgia State University. External appointments: Henrique currently Board committees serves as President, International Audit and Risk Committee 118 Development for The Coca-Cola Company, Nomination Committee 124 overseeing the company’s operating units for Latin America, Japan and South Korea, Social Responsibility Committee 126 ASEAN and South Pacific, Greater China and Remuneration Committee 128 Mongolia, Africa, India and Southwest Asia and Eurasia and Middle East. Committee Chair Nationality: American and Brazilian Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 99 Report Governance Statements Reporting Information ### Board of Directors continued | Olusola (Sola) David‑Borha | Anna Diamantopoulou | William W. (Bill) Douglas III | Reto Francioni | Anastasios I. Leventis | | --- | --- | --- | --- | --- | | Independent non-Executive Director | Independent non-Executive Director | Independent non-Executive Director | Senior Independent non-Executive Director | Non-Executive Director | | Appointed: June 2015. | Appointed: June 2020. | Appointed: June 2016. | Appointed: June 2016. | Appointed: June 2014. | | Skills, experience and contribution: Sola | Skills, experience and contribution: Anna, | Skills, experience and contribution: Bill is | Skills, experience and contribution: Reto | Skills, experience and contribution: | | has more than 30 years’ experience in | as a former European Commissioner, brings | aformer Vice President of Coca‑Cola | has been Professor of Applied Capital | Anastasios began his career as a banking | | financial services and held several senior | to the Group a unique expertise on matters | Enterprises, a position in which he served | Markets Theory at the University of Basel | analyst at Credit Suisse and then American | | roles within the Stanbic Group, including the | of employment and equal opportunity | from July 2004 until his retirement in June | since 2006 and is the author of several highly | Express Bank. He has previously served on | | position of Chief Executive of Stanbic IBTC | together with deep knowledge of the | 2016. From 2000 until 2004, Bill served as | respected books on capital market issues. | the boards of the Cyprus Development Bank | | Bank from May 2011 to November 2012. She | European CSR agenda. Anna was an elected | Chief Financial Officer of Coca‑Cola HBC. Bill | From 2005 until 2015, Reto was Chief | and Papoutsanis SA. He holds a BA in | | also served as Deputy Chief Executive | Member of the Greek Parliament for over a | has held various positions within the | Executive Officer of Deutsche Börse AG and | Classics from the University of Exeter and an | | Officer of Stanbic IBTC Bank and Head of | decade, during which time she served as | Coca‑Cola System since 1985, including | from 2002 until 2005, he served as Chairman | MBA from New York University’s Leonard | | Investment Banking Coverage Africa | Deputy Minister for Industries, Minister of | positions with responsibility for the IT | of the Supervisory Board and President of | Stern School of Business. | | (excluding South Africa). Stanbic IBTC | Education, Lifelong Learning and Religious | function. Before joining the Coca‑Cola | the SWX Group, which owns the Swiss Stock | | External appointments: Anastasios is a Holdings is listed on the Nigerian Stock Affairs and Minister of Development, System, Bill was associated with Ernst & Exchange and has holdings in other board member of A.G. Leventis (Nigeria) Ltd. Exchange and is a member of Standard Bank Competitiveness and Shipping of the Whinney, an international accounting firm. exchanges. Between 2000 and 2002, Reto He is also a director of Alpheus Group. Between January 2017 and March Hellenic Republic. From 1999 to 2004, Anna He received his undergraduate degree from was Co-Chief Executive Officer and Administration, a private company that 2021, Sola has been the Chief Executive of served as a member of the European the J.M. Tull School of Accounting at the Spokesman for the Board of Directors of administers assets for private clients and the Africa Regions (excluding South Africa) Commission in charge of Employment, University of Georgia. Consors AG. Between 1993 and 2000, he charitable foundations. In addition, he serves | for Standard Bank Group, Africa’s largest | Social Affairs and Equal Opportunities. | | held various management positions at | | | --- | --- | --- | --- | --- | | | | External appointments: Bill is the Lead | | as a trustee of the A.G. Leventis Foundation, | | bank by assets with operations in 20 | | | Deutsche Börse AG, including that of Deputy | | | | External appointments: Founder and | Director and Chairman of the Audit | | a member of the Board of Overseers of the | | countries across the continent. | | | Chief Executive Officer. He earned his | | | | President of DIKTIO-Network for Reform in | Committee of SiteOne Landscape Supply, | | Gennadius Library in Athens and a member | Doctorate of Law at the University of Zurich. Sola holds a first degree in Economics and Greece and Europe, a leading Athens‑based Inc. He is also a member of the Board of of the Campaign board of the University of obtained an MBA degree from Manchester independent, non‑partisan policy institute. A Directors and Chair of the Audit Committee External appointments: Reto serves as Exeter. He is a co‑founder of the Cyclades Business School. Her executive education Council Member of the European Council on for The North Highland company. He also Chairman of the Supervisory Board of UBS Preservation Fund. experience includes the Advanced Foreign Relations, an Advisory Board serves on the Board and is a past Chair of the Europe SE and also as the Chairman of the Nationality: British Management Programme of the Harvard Member of Delphi Economic Forum and a University of Georgia Trustees. Supervisory Board of Swiss International Business School and the Global CEO member of the Honorary Board of the Airlines. Reto is also a Vice Chairman at the Nationality: American Programme of CEIBS, Wharton and IESE. Bussola Institute, a foundation aiming to Board of Directors of Medtech Innovation strengthen cooperation between the EU and Partners AG, Basel. External appointments: Sola serves as the GCC. Finally, Anna is the Chair of the non-executive director on the boards of Nationality: Swiss European Commission’s High Level Group Stanbic IBTC Holdings Plc and Stanbic on the future of social protection and the Uganda Holdings Limited, listed entities that welfare state in the EU. are members of the Standard Bank Group. Finally, Sola was appointed Chairman of Nationality: Greek Stanbic IBTC Bank Plc, a non-listed subsidiary of Stanbic IBTC Holdings Plc in October 2021. Nationality: Nigerian Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 100 Report Governance Statements Reporting Information ### Board of Directors continued | Christo Leventis | Alexandra Papalexopoulou | Bruno Pietracci | Ryan Rudolph | | --- | --- | --- | --- | | Non-Executive Director | Independent non-Executive Director | Non-Executive Director | Non-Executive Director | | Appointed: June 2014. | Appointed: June 2015. | Appointed: June 2021. | Appointed: June 2016. | | Skills, experience and contribution: | Skills, experience and contribution: | Skills, experience and contribution: | Skills, experience and contribution: | | Christo worked as an Investment Analyst | Alexandra worked previously for the OECD | Brunohas a more than 20‑year track record | From2006 until 2019, Ryan was an attorney | | with Credit Suisse Asset Management from | and the consultancy firm Booz, Allen & | of transforming businesses, people and | and partner at the law firm Oesch & Rudolph. | | 1994 to 1999. In 2001, he joined J.P. Morgan | Hamilton, in Paris. From 2003 until February | communities and brings experience and | From 1993 until 2006, he worked as an | | Securities as an Equity Research Analyst | 2015, she served as a member of the board | knowledge of the Coca-Cola System, having | attorney at the business law firm Lenz & | | focusing on European beverage companies. | of directors of Frigoglass S.A.I.C. From 2010 | held a number of roles at The Coca-Cola | Staehelin in Zurich. Prior to that, he worked | | From 2003 until March 2014, Christo was a | to 2015, she served as a member of the | Company since 2008. From 2018 to 2020, | as a public relations consultant at the public | | member of the Board of Directors of | board of directors of National Bank of | hewas President of The Coca‑Cola | relations agency Huber & Partner in Zurich, | | Frigoglass S.A.I.C., a leading global | Greece and from 2007 to 2009, she served | Company’s Southern and East Africa Business | as marketing assistant and subsequently as | | manufacturer of commercial refrigeration | as a member of the board of directors of | Unit and from 2016 to 2018, he served as | manager at Winterthur Life Insurance as well | | products for the beverage industry. Christo | Emporiki Bank. Alexandra holds a BA in | theVice‑President of Operations in Europe, | as part-time with D&S, the Institute for | | holds a BA in Classics from University College | Economics and Mathematics from | Middle East and Africa. Prior to that, he was | Marketing and Communications Research in | | London and an MBA from the Kellogg School | Swarthmore College in the US and an MBA | the General Manager for Colombia, | Zurich. Ryan obtained an LLM from the | | of Management in Chicago. | from INSEAD in France. | Venezuela and Ecuador (from 2014 to 2016) | University of Zurich and is admitted to the | | | | and General Manager of FU Center in Brazil | Zurich bar. Ryan also studied at the Faculté | | External appointments: Christo is the | External appointments: Alexandra is the | | | | | | (from 2012 to 2014). From 2010 to 2012, | des Lettres of the University of Geneva, as | | Chairman of Alpheus Capital, a single‑family | Deputy Chair of the Group Executive | | | | | | hewas the General Manager of FU South in | well as the Ecole Polytechnique in Lausanne. | | private equity investment office. | Committee at Titan Cement Company S.A., | | | Brazil. Bruno joined The Coca‑Cola Company with direct oversight of Group Strategy and External appointments: Ryan is an attorney Nationality: British in 2008 as Vice-President of Strategy, Business Development, Trading, Legal and and partner at the Zurich-based law firm RCS Insightsand Innovation in Brazil. Prior to that the Group’s operations in the Eastern Trust & Legal AG. In addition, he serves as a he worked at McKinsey & Company in Brazil Mediterranean, where she has been member of the Foundation Board of the A.G. andPortugal from 1997 to 2008, working in employed since 1992 and has served as Leventis Foundation and as a member of the marketing and sales with consumer-packaged Executive Director since 1995. Alexandra is board of various privately-held companies goods and telecommunications clients. treasurer and a member of the board of and charitable foundations. Hehas served on the board of Coca‑Cola directors of the Paul and Alexandra Nationality: Swiss Beverages Africa since 2017 and has also Canellopoulos Foundation, a member of the served on the boards of Toni Corp in Ecuador board of trustees of the INSEAD business (2016) and Matte Leão in Brazil (2009). school and, a member of the board of In2016, he was the Chairman of Corporación trustees of the American College of Greece Juego y Niñez in Colombia. Bruno holds a and an independent non-executive director bachelor’s degree in mechanical engineering of Aegean Airlines. from the Universidade Estadual de Campinas Nationality: Greek in Brazil and an MBA from INSEAD in France. External appointments: Bruno currently serves as President of the Africa Operating Unit for The Cola-Cola Company, a role which he has held since 2020. Nationality: Brazilian and Italian Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 101 Report Governance Statements Reporting Information ### Corporate governance report | General qualifications required | Environmental, social and | Business characteristics Qualifications, skills and experience Directors | | | | --- | --- | --- | --- | --- | | ofall Directors | corporate governance (ESG) | Our business is extensive and involves complex | Experience in finance, investments | 12 | | | | financial transactions in the various jurisdictions | andaccounting | | | Coca‑Cola HBC’s Board Nomination Policy | skillsandexperience | | | | where we operate requires that each Director is recognised as a As evidenced by our commitment to achieve net person of the highest integrity and standing, both Our business is truly international with Broad international exposure, and 13 zero emissions by 2040, which was announced in personally and professionally. Each Director must operations in 29 countries, at different stages emerging and developing markets October 2021, the Company’s approach to be ready to devote the time necessary to fulfil his of development, on three continents experience managing our environmental impact is ambitious. or her responsibilities to the Company according In support of this ambition, which builds on our Our business involves the preparation, Extensive knowledge of our business 6 to the terms and conditions of his or her letter of long history of sustainability management, the packaging, sale and distribution of the world’s and the fast-moving consumer goods appointment. Each Director should have Board approved a robust plan in 2021 that it leading non-alcoholic beverage brands industry, as well as experience with demonstrable experience, skills and knowledge continues to implement, in order to achieve its manufacturing, route-to-market and which enhance Board effectiveness and will targets by 2040. customer relationships complement those of the other members of the As part of this effort, the Social Responsibility Board to ensure an overall balance of experience, Our Board’s responsibilities include the Risk oversight and management 12 Committee proposed, and the Board approved, skills and knowledge on the Board. In addition, understanding and oversight of the key risks we expertise science-based targets for the Company to reduce each Director must demonstrate familiarity with are facing, establishing our risk appetite and its value chain emissions in Scopes 1, 2 and 3 by and respect for good corporate governance ensuring that appropriate policies and 2040. Anna Diamantopoulou’s familiarity with the practices, sustainability and responsible procedures are in place to effectively manage social protection and welfare state at the EU approaches to social issues. and mitigate risks Commission High‑Level Group, in addition to the | expertise of a number of our Board members that | Building community trust through the | Expertise in sustainable sourcing | | 8 | | --- | --- | --- | --- | --- | | sit on the Boards of other multi-nationals that face | responsible and sustainable management | andpackaging, CO | 2 emissions and | | | similar challenges and have similar concerns on | ofour business is an indispensable part | experience in wider stakeholder | | | | the ESG agenda, helped us identify the | ofourculture | engagement | | | commitments that we want to make in the area Our business involves compliance with many Expertise in corporate governance 7 and set the relevant targets. different regulatory and corporate governance and/or government relations requirements across a number of countries, as Expertise in ESG matters and well as relationships with national governments sustainable and responsible business and local authorities practices Environmental, social and corporate governance (ESG) are prominent in our business, in particular workforce matters, environmental and climate change issues andsupply chain sustainability Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 102 Report Governance Statements Reporting Information ### Corporate governance report continued Our Chairman serves as Vice‑Chairman of Aegean Independence The consensus and recommendation was that ### Board composition Airlines S.A., Vice‑Chairman of the Cyprus Union Our Board has concluded that Charlotte J. Boyle, Anastassis David was the appropriate candidate Membership of the Board of Ship-owners and Chairman of the Board of Sea Olusola (Sola) David‑Borha, Anna Diamantopoulou, tobecome Chairman and that he continues to be On 31 December 2022, our Board comprised 13 Trade Holdings Inc., a ship owning company of dry William W. (Bill) Douglas III, Reto Francioni and effective in his leadership of the Board. Anastassis Directors: the Chairman, one Senior Independent cargo vessels. He is also a member of the Board of Alexandra Papalexopoulou are deemed to be David has the continuing support of the Board Director, 10 non-Executive Directors and one Trustees of College Year in Athens. In this context, independent in accordance with the criteria set andmajor shareholders to remain as Chairman. Executive Director. The biographies of each | | the Board considers that fewer than four of the | out in the UK Corporate Governance Code, with | | | --- | --- | --- | --- | | member of the Board are set out on pages 98. | | | Shareholders’ nominees | | | positions held by the Chairman are considered to | such individuals being independent in both | | As described under the heading ‘Major The non-Executive Directors, of whom six be significant. character and judgement. shareholders’ on page 253, since the main listing (representing half of the members of the Board, A number of our other Directors also have other The other non‑Executive Directors, Anastassis of the Company on the Official List of the London excluding the Chairman) are determined by the external roles, but having considered the scope David (Chairman), Henrique Braun, Anastasios I. Stock Exchange in 2013, Kar‑Tess Holding, The Board to be independent, are experienced ofthe external appointments of all Directors, Leventis, Christo Leventis, Bruno Pietracci and Coca-Cola Company and their respective affiliates individuals from a range of backgrounds, countries including the Chairman, our Board is satisfied that Ryan Rudolph, were appointed at the request of have no special rights in relation to the appointment and industries. The composition of the Board they do not compromise the effectiveness of the shareholders of the Company: Kar‑Tess Holding or re-election of nominee Directors, and those complies with the UK Corporate Governance Code’s Board as each Director has sufficient time to and The Coca-Cola Company. They are therefore Directors of the Company who were originally recommendation that at least half of the Board, devote to his or her role on the Board as the Board not considered, by the Board, to be independent nominated at the request of The Coca-Cola excluding the Chairman, comprise independent requires. According to the terms of appointment as defined by the UK Corporate Governance Code. Company or Kar‑Tess Holding will be required Directors. There were no changes to the Board the Directors are expected to devote such time as tostand for re‑election on an annual basis in the orcommittee memberships during 2022. Anastassis David was appointed as Chairman on necessary for the performance of their duties. same way as the other Directors. The Nomination 27 January 2016. The Board firmly believes that This will include attendance annually at Committee is responsible for identifying and Outside appointments Anastassis David embodies the Company’s core approximately 10 Board meetings, Annual General recommending persons for subsequent The Articles of Association of the Company values, heritage and culture and that these Meetings and other meetings. As can be seen in nomination by the Board for election as Directors (article 36) set limits on the maximum number of attributes, together with his strong identification the table of attendance of Board and Board by the shareholders on an annual basis. external appointments that members of our Board with the Company and its shareholders’ interests, Committee meetings on page 105, the Directors and executive management may hold. In addition, and his deep knowledge and experience of the As our Board currently comprises 13 Directors, were able to devote the time required of them to if a Board member wishes to take up an external Coca-Cola System, ensure an effective and neither Kar‑Tess Holding nor The Coca‑Cola their role on the Board. The Board has determined appointment, he or she must obtain prior Board appropriately balanced leadership of the Board Company is in a position to control (positively or that each member of the Board commits approval. The Board will assess all requests on a and the Company. Anastassis David was first negatively) decisions of the Board that are subject sufficient time and energy to the role and case-by-case basis, including whether the appointed as a member of the Board in 2006 to simple majority approval. However, decisions of continues to make a valuable contribution to the appointment in question could negatively impact before being appointed Chairman in 2016. Prior to the Board that are subject to the special quorum Board and its committees. the Company or the performance of the Director’s his appointment as Chairman, major shareholders provisions and supermajority requirements duties to the Group. were consulted, and an external search contained in the Articles of Association, in The nature of the appointment and the expected consultancy engaged to find suitable candidates. practice, require the support of Directors time commitment are also assessed to ensure nominated at the request of at least one of either that the effectiveness of the Board would not The Coca‑Cola Company or Kar‑Tess Holding becompromised. inorder to be approved. Details of the external appointments of our non-Executive Directors are contained in their respective biographies set out on pages 114to116. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 103 Report Governance Statements Reporting Information ### Corporate governance report continued In addition, based on their current shareholdings, neither Kar‑Tess Holding nor The Coca‑Cola Company is in a position to control a decision of the shareholders (positively or negatively), except to block a resolution to wind up or dissolve the Company or to amend the supermajority voting requirements. The latter requires the approval of 80% of shareholders where all shareholders are represented and voting. Depending on the attendance levels at Annual General Meetings, Kar‑Tess Holding or The Coca‑Cola Company may also be in a position to control other matters requiring supermajority shareholder approval. Anastassis G. David, Anastasios I. Leventis, Christo Leventis and Ryan Rudolph were all originally appointed at the request of Kar-Tess Holding. Henrique Braun and Bruno Pietracci havebeen appointed at the request of TheCoca‑Cola Company. Separation of roles There is a clear separation of the roles of the Chairman and the Chief Executive Officer. TheChairman is responsible for the operation ofthe Board and for ensuring that all Directors are properly informed and consulted on all relevant matters. The Chairman, in the context of the Board meetings and as a matter of practice, alsomeets separately with the non‑Executive Directors without the presence of the Chief Executive Officer and promotes a culture of openness and debate within the Board sessions aswell as outside the formal sessions. The Chairman is also actively involved in the work of the Nomination Committee concerning succession planning and the selection of key people. The Chief Executive Officer, Zoran Bogdanovic, is responsible for the day-to-day management and performance of the Company and for the implementation of the strategy approved by the Board. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 104 Report Governance Statements Reporting Information ### Corporate governance report continued Key roles and responsibilities Board of Directors The governance process of the Board is set out in our Articles of Association and the Organisational Regulations. Our Board has ultimate responsibility for our long-term success and for delivering sustainable shareholder value These regulations define the role and responsibilities of the Board and its committees. These documents, together aswell as contributing to wider society. The Board is responsible for setting the Company’s purpose, values and with the responsibilities of the Chairman, Chief Executive Officer and Senior Independent Director, can be found at strategy and ensures the alignment with its culture; this includes ensuring that workforce policies and practices are https://www.coca-colahellenic.com/en/about-us/corporate-governance. In addition, the Swiss corporate rules consistent with the Company’s values and support its long-term sustainable vision. Further details are set out on regarding the compensation in listed companies imposes certain obligations on the Board, including a requirement pages 21 to 22. This is achieved by approving the corporate strategy, monitoring performance toward strategic to prepare and make available a Remuneration Report pursuant to Swiss law. objectives, overseeing implementation of the strategy by the Executive Leadership Team and approving matters reserved by the Articles of Association for decision by the Board. Specific tasks are delegated by the Board to its committees for audit and risk, nomination, remuneration and social responsibility. Chairman Chief Executive Officer Senior Independent Director Non-Executive Directors Company Secretary • leads the Board, sets the agenda • leads the business, implements • acts as a sounding board for the • contribute to developing • ensures that correct Board procedures andpromotes a culture of openness strategy and chairs the Executive Chairman and appraises his Groupstrategy; are followed and ensures the Board and debate; Leadership Team; and performance; • scrutinise and constructively challenge hasfull and timely access to all • is responsible for overall effectiveness • communicates with the Board, • leads the independent non-Executive the performance of management in the relevantinformation; in leading the Company and setting shareholders, employees, government Directors on matters that benefit from execution of the Group’s strategy; and • facilitates induction and training theculture; authorities, other stakeholders an independent review; and • oversee succession planning, including programmes, and assists with the • ensures the highest standards andthepublic. • is available to shareholders if they have the appointment of Executive Directors. Board’s professional development ofcorporate governance; concerns that have not been resolved requirements; and • is the main point of contact between through the normal channels of • advises the Board on governance the Board and management; and communication. matters. • ensures effective communication withshareholders and stakeholders. Board committees committees and the other members of the Board, the Audit and Risk Committee, the Nomination Committee, Our Board has delegated specific tasks to its committees as set out in the Organisational Regulations and reports theRemuneration Committee and the Social Responsibility Committee are set out on pages 118 to 127. from these committees are set out in this corporate governance report. Biographies of the Chairs of the Board | Audit and Risk Committee | Remuneration Committee | Nomination Committee | Social Responsibility Committee | | --- | --- | --- | --- | | Responsibilities | Responsibilities | Responsibilities | Responsibilities | | • Oversight of the accounting policies, financial | • Establishment of the remuneration strategy for the | • Identification and nomination of new Board | • Supports the Board in its responsibilities to | | reporting and disclosure controls; the Group’s | Group; determines and agrees with the Board the | members, including recommending Directors | safeguard the Group’s reputation for responsible | | approach to internal controls and risk management; | remuneration of Group Executives and approves | tobemembers of each Board committee. | and sustainable operations. | | and the quality, adequacy and scope of internal and | remuneration for the Chairman and the Chief | • Ensuring adequate Board training; supporting | • Oversight of the Group’s engagement with | | external audit functions. | Executive Officer. | theBoard and each committee in conducting | stakeholders to assess their expectations, and the | | • Oversight of the Company’s compliance with legal, | • Makes recommendations to the Board regarding | aself‑assessment. | possible consequences of these expectations for | | regulatory and financial reporting requirements, and | remuneration matters to be approved at the Annual | • Oversight of the establishment of a talent | the Group. | | the work programme of the internal audit function. | General Meeting. | development framework for the Group. | • Establishes principles governing social and | | • External auditor reports directly to the Committee. | • Implementation or modification of any employee | • Oversees effective succession planning for the | environmental management and oversees | | | benefit plan resulting in an increased annual cost | Chief Executive Officer, in consultation with the | development of performance management to | | | of€5 million or more. | Chairman, and for the Executive Leadership Team, | achieve social and environmental goals. | in consultation with the Chief Executive Officer. Executive Leadership Team of the Group’s countries; working closely with the country General Managers, as set out in our operating framework; The Executive Leadership Team, led by the Chief Executive Officer, meets monthly each year and provides the and the setting of annual targets and approval of annual business plans which form the basis of the Group’s Group with executive leadership. The Committee has responsibility for: the development of long-term strategies performance management. and the implementation of strategies approved by the Board; providing adequate head-office support for each Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 105 Report Governance Statements Reporting Informaation ### Corporate governance report continued ### Board composition dashboard ## Governance at a glance Board gender diversity Shareholder structure (%) ### Highlights ## 929.7(€m) 85% #1 Comparable EBIT employee engagement score Ranked the world’s most sustainable beverage company by the 2022 Dow | The Board has remained focused on our | The engagement score remains stable | JonesSustainability Index. This is the 12th | | | | --- | --- | --- | --- | --- | | medium-term Growth Story 2025 strategy | andturnover rates have reduced to 11.4%. | consecutive year that Coca-Cola HBC has | | | | and has been able to prioritise the actions | Seepage 109 for how the Board monitors | featured among the top three performers, | | | | and investments that have positioned | and engages with our people and page | and the sixth time it has been named the | | | | thecompany for sustained success. | 131for more insight into our enhanced | industry leader. See more on the work of the | Men | The Coca-Cola Company | | Ourperformance in 2022 was testament to | workforce remuneration arrangements | social responsibility committee on page 126. | Women | KAR-Tess Holding | | thiswith record levels of comparable EBIT, | inlight of the cost of living crisis. | | | Free float | freecash flow and strong ROIC. Tenure (years) Age profile (years) | Attendance table | | | 40 to 49 | | | --- | --- | --- | --- | --- | | | 1-2 2 | | | 1 | | | 2-3 1 | 50 to 59 7 | | | Social | | | | | | | Board Audit andRisk Remuneration Nomination | | | | | | | Responsibility | 4-5 1 | 60 to 69 5 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | Attended/ | | | Attended/ | | Attended/ | | Attended/ | Attended/ | | | | | | | | | | | | | | | | | | | 5-6 1 | 70+ | 0 | | Director | | | Appointed | Total meetings | | | Total meetings | | Total meetings | | Total meetings | | Total meetings | | | | | | 1 | | | | | | | | | | | | | 6-7 3 | | | | Anastassis G. David | | January 2016 7/7 | | | | | | | | | | | | | | | | Zoran Bogdanovic June 2018 7/7 | | | | | | | | | | | | | | 7-8 2 | | | | Charlotte J. Boyle June 2017 7/7 3/3 3/3 | | | | | | | | | | | | | | 8-9 2 | | | Board Independence Henrique Braun June 2021 7/7 15-16 1 Independent non-executive 6 Anna Diamantopoulou June 2020 7/7 3/3 3/3 4/4 directors Olusola (Sola) David-Borha June 2015 7/7 8/8 Non-independent directors 7 William W. (Bill) Douglas III June 2016 7/7 8/8 Reto Francioni June 2016 7/7 3/3 3/3 Executive directors 1 Anastasios I. Leventis June 2014 7/7 4/4 Christo Leventis June 2014 7/7 Nationalities Experience Alexandra Papalexopoulou June 2015 7/7 8/8 2 Bruno Pietracci June 2021 7/7 3/4 American 1 Corporate governance 7 Ryan Rudolph June 2016 7/7 American/Brazilian 1 Finance, investments 12 1. Anastassis David was appointed as Chairman in 2016 having been appointed to the Board in 2006. andaccounting Brazilian/Italian 1 2. Bruno attended the Board meeting in December 2022, but was not able to attend the Social Responsibility meeting due to other long-standing commitments. FMCG knowledge / experience 6 British 4 International exposure 13 Croatian 1 Risk oversight and 12 Greek 2 management Nigerian 1 Sustainability and community 8 Swiss 2 engagement 21 23 9 56 4 Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 106 Report Governance Statements Reporting Information ### Corporate governance report continued Performance Risk management and internal control Operational ## Applied Regions and functions Principal and emerging risks Cost optimisation and investment Deep dive reviews of regions and key functions Continued review of principal and emerging risks Ongoing review of the Group’s cost optimisation and ## Governance andmitigation programmes investment programmes Business performance Regular reviews of the business performance by Finance and IT New acquisitions reporting segments and monitoring of the performance Reviewing the liquidity, financing status and commodity Consolidation and integration of Egypt, including review of the coffee and snack businesses exposure of the Group and reviewing information and approval of the acquisition of the craft adult sparkling ### Key activities of the Board technology plans, including cyber security business, Three Cents ### in2022 The key activities of the Board during the year Performance measurement Focusing on the performance of the Revenue Growth Modern Trade and e-commerce Capital expenditure are set out opposite. Management, Route-to-Market and big data and Reviewing the execution initiatives in modern trade, Review of material capital expenditure projects The Board recognises the value of maintaining advanced analytics programme in order to build the e-commerce and growth results necessary insight capabilities close relationships with its stakeholders, understanding their views and the importance Russia/Ukraine of these relationships in delivering our strategy. New Sales Academy Reviewing the business model in Russia following The Group’s key stakeholders and their Innovation for Growth Monitoring the progress of the new sales academy TheCoca‑Cola Company’s decision to suspend its Following the Group’s Innovation for Growth plans forthe Group’s business developers business there differing perspectives are taken into account as part of the Board’s discussions. You can Establishing a crisis management plan for Ukraine focusing on protecting the Group’s people and assets readmore in our s172 statement on page 8. Board meeting discussions are structured Digital Strategy Review of the digital strategy and its key priorities around using a carefully tailored agenda that is agreed consumer and customer centricity, employee experience in advance by the Chair in conjunction with the Net Zero initiatives and operational productivity Review of projects involving the in‑house production CEO and the Company Secretary. A typical ofPET from recycled PET (rPET) flakes and production Board meeting will comprise of the ofCO 2 collected from the air followingelements: • committee reports from the Chairs of our Culture and values Succession planning and diversity Board Committees on the proceedings of Employee engagement surveys Succession planning those meetings, including the key discussion Discussing the employee engagement surveys and Reviewing succession planning for Board and senior points and particular matters to bring to the people plans management Board’s attention; • performance reports including CEO Overview, COO Overview, CFO Review and Organisational design Talent development operational performance reports; Reflecting on the implementation of the Group’s Reviewing the Company’s talent development plans organisational design • deep-dive reports into areas of particular strategic importance to evaluate progress, provide insight and, where necessary, decide on appropriate action; and Engagement initiatives Working with the designated non-Executive Director • legal and governance updates including onissues that are identified through the employee proxy agencies scoring and annual Board engagement process assessment. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 107 Report Governance Statements Reporting Information ### Corporate governance report continued ### Overseeing Strategic Delivery Our growth pillars What did the Board consider? What did the Board discuss What were the material and approve? stakeholder considerations? Reviewing the accelerators for the Continued acceleration of our Segmented portfolio can play critical Leverage our future including initiatives insparkling, sparkling, energy and coffee portfolios role to acceleraterevenue ## 1 energy and coffee ### unique 24/7 portfolio Customer portals and digital Considering B2B models Developing advanced reporting and ### Win in the marketing initiatives analytics tools for on-line commerce ## 2 ### marketplace Investments in returnable glass in The CapEx required and timelines for Consumer needs and recycling ### Fuel growth through Austrian operations, as well as, investments ## 3 investments in on-line platforms ### competitivenessand rPET conversion facilities in Italy, ### investment Romania and Poland Collaborating for Impact survey A new initiative discussed: Online, anonymous democratised ### Cultivate the “Collaborating for Impact” measuring survey where every single employee ## 4 cross-department collaboration had the opportunity to provide ### potential opportunities feedback ### ofourpeople 100% rPET launch in Switzerland and All primary and secondary packaging Fully fledged 360 plan engaging Earn our licence Italy with other Group countries to for products produced in Switzerland consumers, shoppers, customers and ## 5 follow in 2023 stakeholders ### to operate Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 108 Report Governance Statements Reporting Information ### Corporate governance report continued ## Oversight of the Culture in action Doing the right thing • We implemented a group-wide organisational We continue to prioritise the safety of our people structure redesign, Project Dolphin, to ensure ## Company’sculture and their families impacted by the war in Ukraine. that we have an efficient and adaptable We are providing immediate financial support to structure which serves local customers our people in Ukraine and continue to work andprioritises our most critical capabilities through The Coca-Cola Foundation and Red forthefuture. provide feedback to senior management to ### How the Board measures and Cross to provide humanitarian relief in the • We launched Project Oxygen, a Group‑wide identify whether further actions were required. region. This includes cash grants to our people initiative to reduce bureaucracy, simplify ### assesses culture The feedback was reviewed by the Executive through the Coca-Cola Disaster Relief and ourprocesses and allow more time for The Board is responsible for monitoring and Leadership Team with the findings reported Coca‑Cola HBC Employee Donation Funds, value-added tasks. assessing our culture. The Chairman ensures that tothe Board. ontop of salary advance payments and | the Board is operating appropriately and sets the | | | Sustainability | | --- | --- | --- | --- | | | • Customer retention – assessments of | refugeeassistance centres across Ukraine. | | | Board’s culture, which in turn forms the culture | | | • We accelerated our #YouthEmpowered | | | customer satisfaction. In 2021 we adopted a | Wetemporarily closed our plant in Ukraine | | | ofthe Company. The Chief Executive Officer, | | | programme using both in-person and online | | | new approach and we continued to monitor | andstopped production for safety reasons, | | | supported by members of the Executive | | | modules. The programme reached more than | | | customer feedback in 2022 by use of Customer | butprogressively restarted manufacturing when | | | Leadership Team, is responsible for ensuring | | | 246,000 people in 2022. | | | Gauge across all our markets to receive | it was safe to do so. This demonstrated our | | | culture is embedded throughout the business | | | • To improve our supply of rPET we repurposed | | | customer feedback on an ongoing basis. This | commitment to our people and to the countries | | | andits operations and in all our dealings with | | | an existing site, building a new plant that can | | | software-as-a-service tool gives us deeper, | in which we do business. | | | ourstakeholders. | | | convert 30,000 tonnes of plastics per annum | more frequent insight than our annual customer Throughout, our actions have been guided by survey, leading to more actionable insights that into 100% rPET preform bottles. The Board measures the culture of the Group our values. Below are some examples of culture using internal and external metrics which also can be addressed quickly. We continue to work • We continued to prioritise a circular approach in action during 2022: enable it to identify further actions to ensure with our customers, consumers, suppliers, local to packaging. For example, in Switzerland, culture remains appropriate. The Board also community representatives and other business Resilience, adaptability and agility wesuccessfully moved our entire, locally monitors the Group’s performance against its partners across the value chain every day. • We stood by our people and focused on the produced portfolio to rPET and rolled out peer group within the same sector. The Board Theirinput, cooperation and trust factors into health and safety of those who were impacted label-free bottles for our carbon-neutral water considers the following: Board decision-making and the success of the by the conflict between Russia and Ukraine. brand, Valser. business. Examples of governance in action Following The Coca-Cola Company’s • We are committed to achieving a net positive • Health and safety – an area of paramount areon page 107. suspension of business in Russia, we adapted impact on biodiversity in critical areas by 2040 importance to our people, customers, partners, our Russian business to focus on the and eliminate deforestation in our supply chain and consumers of our products, especially given production and sale of existing local brands. by 2030. In June 2022, we joined the Science the continuing impact of the conflict between The Group is continuously monitoring Based Targets Network corporate Russia and Ukraine. We continue to focus on performance of its Russian and Ukrainian engagement programme. the health and safety of our people in all operations as well as the developments in the • In September 2022, we raised €500 million countries. We closely monitored the situation region, to ensure timely actions and initiatives through the issue of our first green bond. and challenges in Ukraine to ensure we provided are undertaken to minimise potential adverse Thenet proceeds will be allocated to projects the appropriate support. impact for the Group. that meet the eligibility criteria outlined in our • Employee retention – our employees are our Green Finance Framework and will accelerate greatest asset and it is important that we do progress of our NetZeroby40 and Mission everything we can to retain them. We conduct 2025 commitments. an annual employee engagement survey of the workforce, and during 2022 an additional two all-employee surveys were conducted to Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 109 Report Governance Statements Reporting Information ### Corporate governance report continued ## Workforce engagement Engagement with key stakeholder groups The Board closely monitors and reviews the results strengthens our relationships and is an ongoing of the Company’s Employee Engagement surveys. Workforce engagement mechanism part of the operational management of the Charlotte Boyle, our designated non-Executive the Company is taking to become more diverse In addition, the Board reviews talent development Group.This includes employee surveys, assessing Director for workforce engagement, attended and inclusive (see page 41 for activities in this initiatives designed to support long-term success. customer satisfaction and ongoing conversations the meetings during the year with our European area). To embed these attributes within the For further details please see below and the Growth with regulators and non-governmental Works Council. During the course of these Company’s culture, multiple initiatives have Pillar 4 section of the report on pages 38 to 42. organisations. The Board receives regular updates meetings Charlotte heard from elected beenlaunched to increase awareness and from senior management on insights and feedback Charlotte Boyle, our designated non-Executive employee representatives from our businesses understanding and improve policies and practices from stakeholders, which allows the Board to Director for workforce engagement, attended in EU countries. These meetings allow employee to create a more equitable and inclusive workplace understand and consider the perspectives of key anumber of meetings with our European Works representatives to understand business updates for all. The Board takes the lead by recognising stakeholders in decision making. This is a standing Council (EWC). Senior leadership present key from senior leaders – including the CEO – about good practices and driving accountability. agenda item for Board meetings. information on business and other changes at significant matters affecting our people, and to Charlotte reported back to the Board on her these meetings and hear feedback directly from ask questions and give feedback. Charlotte was Our workforce is core to our strategy and is observations and matters raised by employees, employee representatives. All meetings are able to listen to employee representatives about oneofour most important stakeholder groups. ensuring Board deliberations and decision attended by selected members of the senior topics raised by employees and their experience TheCompany’s success largely depends on the making were fully informed. leadership team, depending on subjects covered, of the Company’s approach to the workforce, passion of our people and our ability to attract, including our CEO at our meeting in September. particularly during the last couple of years, retain and develop the best talent. The Board andwas able to bring these insights to the therefore understands the importance of Board’s discussions. engaging with its workforce. The safety of our | workforce continued to be a focus throughout | During 2022, the insights gained from these | | --- | --- | | 2022, ensuring appropriate measures were in | engagement activities continued to be of great | | place so that they could continue in their roles | importance, contributing to the Board’s | | andthat we were supporting a healthy working | decisions in relation to ensuring the appropriate | | environment. Our workforce continued | support and resources for our people, not only | | extraordinary efforts to support and aid our | for their own safety but to aid them in their roles | | customers and consumers during uncertain times | in helping our customers and consumers. | caused by the conflict between Russia and Ukraine. Charlotte also frequently interacted with our Head of Labor Relations Director, who is also responsible for monitoring diversity, equity and inclusion, to better understand the steps that Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 110 Report Governance Statements Reporting Information ### Corporate governance report continued (CCBCE), a leading producer of non‑alcoholic ### Listening to our stakeholders, ## Engaging with ready-to-drink beverages in Egypt. The acquisition ### andmaking a meaningful response, completed on 13 January 2022. It has expanded ### iscrucial for continued success. the Group’s existing footprint on the African ## our stakeholders continent and further increased its exposure to high-growth markets, as it provided access to one ### Description How the Board is kept informed Read more Considering stakeholders of the largest non-alcoholic ready-to-drink Our people To understand what our people needed to work in continually inprincipal decisions markets by volume in Africa. In addition, sharing 38 changing circumstances, the Company conducted in total three ofthe Group’s proven capabilities, experience and all‑employee surveys in2022. There is a designated non‑Executive Russia and Ukraine conflict: best practices with CCBCE, is expected to unlock Director for engagement withour people but the practice, which Putting our people and customers first began during the beginning of the COVID‑19 pandemic, of growth opportunities, creating value for all The Russia-Ukraine conflict created a number presenting survey results tothe full Board continued. The CEO stakeholders. As part of the post‑acquisition ofissues for the Group and in particular for its alsoheld engagement sessions with employees during the year, integration of CCBCE, we have engaged, and including several calls with Q&A sessions. people. We continue to prioritise the safety of our arecontinuing to engage, with a wide range of people, customers, partners and communities Our customers Regular visits, dedicated account teams, joint business planning, stakeholders notably, with the employees, 28 who have been affected by the conflict between jointvalue‑creation initiatives, customer care centres, customer suppliers and customers of the business, with satisfaction surveys. Russia and Ukraine. regulators and the Government in Egypt and with | | | | In February 2022, in Ukraine, we temporarily | local communities, working closely with them as | | --- | --- | --- | --- | --- | | Our | Consumer hotlines, local websites, planttours, research, surveys, | | closed our plant and stopped production for | | | | | 24 | | we plan and implement the integration. | insights, focus groups. consumers safety reasons. In May, we progressively restarted Engagement with stakeholders in Egypt including manufacturing in Ukraine and are currently our active participation in the 27th Annual United distributing and selling beverages where it is safe Nations Climate Change Conference of the Governments Trade Associations, recycling and recovery initiatives, EU Platform 45 to do so. We are providing financial support to our Parties (COP27), which took place in Egypt in for Action on Diet, Physical Activity and Health, foreign investment advisory councils, chambers of commerce. people in Ukraine and continue to work through November 2022. The Coca-Cola Foundation and Red Cross to Similarly, broader stakeholder interests and provide humanitarian relief in the region. We Our Plant visits, community meetings, partnerships on common issues, customer expectations were also considered by 45 sponsorship activities, lectures at universities, training opportunities continuously monitor the situation in Ukraine. communities the Board in the context of the acquisition of ESM and support to young people currently not ineducation, training or Following the decision of The Coca-Cola Effervescent Sodas Management Limited, the employment. | | | | Company on 8 March to suspend its business in | owner of the super-premium adult sparkling | | --- | --- | --- | --- | --- | | NGOs | Dialogue, policy work, partnerships oncommon issues, membership | | | | | | | 45 | Russia, we immediately stopped placing orders | beverage and mixer product line under the Three | of business and industry associations. | | | | forconcentrate in the country and stopped all | Cents brand. The acquisition of Three Cents will | | --- | --- | --- | --- | --- | | | | | investment from the Group. We depleted the | strengthen our premium brand offerings and was | | | | | brands of The Coca-Cola Company in the market | completed in October 2022. | | The Coca-Cola | Day‑to‑day interaction as business partners, joint projects, joint | | | | | | | 18 | and transitioned to a 100%, self‑sufficient | | business planning, functional groups on strategicissues, ‘top‑to‑top’ Company Future stakeholder engagement senior managementmeetings. business in Russia, which is managed by a local The Board regularly reviews the stakeholder team and focused on local brands. This decision engagement activities undertaken both by it and was the best way to protect our people and assets. Our Annual General Meetings, investor roadshows and results briefings, 16 the Group as whole and is satisfied that the webcasts, ongoing dialogue with analysts and investors. | shareholders | | Stakeholder considerations in the | activities outlined above and on pages 16 to 18 | | --- | --- | --- | --- | | | | context of acquisitions | remain effective for the mutual benefit of the | | | | Stakeholder interests and matters were carefully | Company and its stakeholders. Going forward | | Our suppliers | Engagement with our suppliers, consultants and counterparts in | | | 32 considered by the Board in the context of the focus on our people, customers and our relatedindustries. recent acquisition and subsequent integration of communities will remain high in Board’s agenda. the Coca‑Cola Bottling Company of Egypt S.A.E. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 111 Report Governance Statements Reporting Information ### Corporate governance report continued Pursuant to Swiss law and the Articles of ### Shareholder engagement Key investor relations activities in 2022 Association, shareholders annually elect an The Chairman, the Senior Independent Director independent proxy and we have adopted an and the Chair of the Audit and Risk Committee will February November electronic proxy voting system for our Annual be available at the Annual General Meeting of the • Europe & UK Management Roadshow • UK Roadshow General Meetings. Company to answer questions from shareholders. • Jefferies Miami Consumer Conference May The Board encourages shareholders to attend The Company has a dedicated investor relations • BofA Global Research Consumer & Retail • US Management Roadshow asit provides an opportunity to engage with function that reports to the Chief Financial Officer. Conference in Paris theBoard. However, the 2022 Annual General Through the investor relations team, the June • CFO analyst breakfast in London Meeting was not held in the usual format as no Company and Board maintain a dialogue with • Annual General Meeting in Steinhausen shareholders were permitted to attend due to institutional investors and financial analysts on December • dbAccess Global Consumer Conference 2022 pandemic-related considerations. The Chief operational financial performance and strategic • Morgan Stanley Global Consumer & Retail Executive Officer chaired the meeting with a direction items. We engaged with the investment September Conference in NYC number of other Directors, including the community and our shareholders throughout the • Barclays Global Consumer Staples • Citi’s Global Consumer Conference 2022 Chairman, as well as members of the Executive year, as outlined in the diagram below. The Conference Leadership Team and the statutory auditors feedback from shareholders has been regularly • Fixed Income Investors Deal Roadshow participating remotely. considered by the Board and, where necessary, appropriate action to further engage with At the 2022 Annual General Meeting, more than shareholders was taken. 20% of votes were cast against three resolutions being the advisory votes on the UK remuneration report (resolution 7), The Swiss remuneration report (resolution 9), and the re‑election of Charlotte J. Boyle, Chair of the Remuneration Committee (Resolution 4.3). In accordance with Provision 4 of the 2018 UK Corporate Governance | Code, in December 2022 we published an | CFO analyst breakfast in London | | --- | --- | | updateon the key actions that have been taken | On 10 November 2022, our CFO, Ben Almanzar | | bytheBoard of Directors and Remuneration | and the investor relations team hosted a | | Committee in response to this. In addition to | breakfast meeting fortwenty of our financial | | thecomprehensive shareholder consultation | analysts in London. There were insightful | | subsequently undertaken, the Chair of the | questions from analysts and a good discussion | | Remuneration Committee has further engaged | on Q3 results and longer-term strategic issues. | | with shareholders to understand their feedback | The analysts appreciated the opportunity to | | regarding the votes. From this engagement, it is | meet Ben tohear from him first‑hand about | | understood that the significant factor regarding | the opportunities and challenges we face as | | the votes was the adjustment, due to the impact | abusiness. The analyst breakfast was an key | | of COVID, of targets contained in the Company’s | partof the investor relations engagement | | incentive arrangements, in particular the original | programme with this important stakeholder | | targets relating to the 2019 Performance Share | group. Following the meeting, Ben and the | | Plan awards. More information on the actions | investor relations team continued to meet | | taken in response to this vote is included in the | investors inLondon during the Q3 roadshow. | Remuneration Report on page 128. 112 Strategic Report Corporate Governance Financial Statements Sales Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 # Corporate governance report continued ## Board, committee and Director performance evaluation At least annually, on the basis of an assessment conducted by the Nomination Committee, the Board reviews its own performance as well as the performance of each of the Board committees. This review seeks to determine whether the Board and its committees function effectively and efficiently. During the year, the Chairman meets with the Directors to receive feedback on the functioning of the Board and its committees, the boardroom dynamics, and the Group's strategy. Particular focus is given to areas where a Director believes the performance of the Board and its committees could be improved. A report is prepared for the Board on its effectiveness and that of its committees. For the past seven years, the evaluation of the Board's effectiveness has been facilitated by Lintstock, and details of the 2022 Lintstock report are set out on page 113. Lintstock has no other connection to the Company or individual directors. A summary of the Board evaluation findings for 2021, the actions taken in response to improve Board effectiveness in 2022, the Board evaluation findings for 2022, and the resulting priorities for 2023 is as follows: ### 2021 Board evaluation findings - Strengthening the technology expertise on the Board - Undertaking site visits and meeting in person - Understanding of broader stakeholder views ### 2022 Board evaluation findings - Considering macro factors - Managing the conflict between Russia and Ukraine - Prioritising digital agenda - People and talent The independent Directors meet separately at every regular Board meeting to discuss a variety of issues, including the effectiveness of the Board. An evaluation of each Director, other than the Chairman, is conducted by the Chairman and the Senior Independent Director. The Senior Independent Director leads the evaluation of the Chairman in conjunction with the non-Executive Directors, taking into account the views of the Chief Executive Officer, and, as a matter of practice, meets with the other independent non-Executive Directors when each Board meeting is held to discuss issues together, without the Chief Executive Officer or other non-Executive Directors present. The Chairman also holds meetings with the non-Executive Directors without the Chief Executive Officer present. ### Information and training The practices and procedures adopted by our Board ensure that the Directors are supplied on a timely basis with comprehensive information on the business development and financial position of the Company, the form and content of which is expected to enable the Directors to discharge their duties and carry out their responsibilities. All Directors have access to our General Counsel, as well as independent professional advice at the expense of the Company. ### 2022 actions - Reviewing the acquisitions - Oversight of people and talent - Strategic discussions - Monitoring integration process of Egypt - Holding Board meetings in Italy in order to have market visits in the country and meet with local team members ### 2023 priorities - Oversight of risk especially around macro factors - Oversight of people and talent All Directors have full access to the Chief Executive Officer and senior management, as well as the external auditor and internal audit team. The Board has in place an induction programme for new Directors. Generally, it involves meeting with the Chairman, members of the Executive Leadership Team and other senior executives, as well as receiving orientation training in relation to the Group and its corporate governance practices. The induction programme also includes meetings with representatives of our sales force, customers and major shareholders, and visits to our production plants. All Directors are given the opportunity to attend training to ensure that they are kept up to date on relevant legal, accounting and corporate governance developments. The Directors individually attend seminars, forums, conferences and working groups on relevant topics. The Nomination Committee reviews our Director training activities regularly. Finally, as part of the continuing development of the Directors, the Company Secretary ensures that our Board is kept up to date with key corporate governance developments. The Board appoints the Company Secretary, who acts as secretary to the Board. ### Board appointments and succession planning Our Board has in place plans to ensure the progressive renewal of the Board and appropriate succession planning for senior management. These cover the short, medium and long term and these are regularly reviewed. Appointments and succession plans are based on merit and objective criteria to ensure the Company is promoting diversity (including gender), social and ethnic backgrounds, cognitive and personal strengths. Pursuant to our Articles of Association, the Board consists of a minimum of seven and a maximum of 15 members, and the Directors are elected annually for a term of one year by the Company's shareholders, which is also in accordance with the UK Corporate Governance Code. In case of resignation or death of any member of the Board, the Board may elect a permanent guest, whom the Board will propose for election by the shareholders at the next Annual General Meeting. In accordance with the Organisational Regulations, the Board proposes for election at the shareholders' meeting new Directors who have been recommended by the Nomination Committee after consultation with the Chairman. In making such recommendations, the Nomination Committee and the Board must consider objective criteria including the overall balance of skills, experience, independence and knowledge of the Board member, as well as diversity considerations including gender but also social and ethnic backgrounds. Consideration is also given to the overall length of service of the Board as a whole when refreshing its membership. See the Nomination Committee report on page 124 for further information on the role and work of the Nomination Committee, including the Board Diversity Policy. Through this process, the Board is satisfied that the Board and its committees have the appropriate balance of experience and skills, diversity, independence and knowledge of the Company to enable them to discharge their duties and responsibilities effectively, including sufficient time commitment. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 113 Report Governance Statements Reporting Information ### Corporate governance report continued ### Conflicts of interest Lintstock report In accordance with the Organisational Regulations, Directors are required to arrange their personal In 2022, we once again engaged the advisory firm Lintstock to facilitate an evaluation of the performance of the Board. Lintstock specialises in Board and business affairs so as to avoid a conflict of performance reviews and has no other connection with Coca-Cola HBC. interest with the Group. Each Director must disclose to the Chairman the nature and extent of any conflict of interest arising The first stage of the review involved Lintstock • The Board’s understanding of, and • The Board’s exposure to potential successors generally or in relation to any matter to be engaging with the Company Secretary to set the engagement with, key stakeholder groups, for key positions from within the business, and discussed at a Board meeting, as soon as the context for the evaluation, and to tailor survey including shareholders, customers, regulators, the effectiveness of the Company’s talent Director becomes aware of its existence. In the content to the specific circumstances of and suppliers management processes event that the Chairman becomes aware of a Coca‑Cola HBC. The surveys were designed • The effectiveness with which the Board • The Board’s composition in the context of Director’s conflict of interest, the Chairman is tofollow up on and further explore key themes monitors employee sentiment and the culture theCompany’s strategic ambitions, including required to contact that Director promptly and identified in last year’s evaluation, so that throughout the business the skills represented and the diversity discuss with him or her the nature and extent of year-on-year progress can be tracked. amongmembers • The dynamics on the Board, and the extent such a conflict of interest. Subject to exceptional | | The 2022 surveys addressed core aspects of the | towhich the Board provides effective support | | | --- | --- | --- | --- | | circumstances in which the best interests of the | | | The performance of the committees of the | | | Board’s performance, and had a particular focus | and constructive challenge to management | | | Company dictate otherwise, the Director affected | | | Board was also evaluated, as was the | | by a conflict of interest is not permitted to | on the following areas: | • The effectiveness of the Board’s meetings, | performance of the Chairman. The anonymity | | participate in discussions and decision-making | | and the focus in meetings on keystrategic | ofall responses was guaranteed throughout the | • The Board’s oversight of progress with regard involving the interest at stake. areas such as sustainability andtechnology process to promote open and honest feedback. to the Company’s growth pillars, and the • The Board’s oversight of risk management, priorities for successfully delivering Growth including the Company’s response to the Story 2025 challenges associated with the conflict between Russia and Ukraine Lintstock subsequently analysed the results and delivered reports on the performance of the Board, the committees and the Chairman, which were considered at a subsequent Board meeting. The results of the review were positive overall, and the Board was felt to factors; the integration of recent acquisitions; people issues, including have performed effectively and maintained a strong working dynamic, succession planning and talent; strengthening technology expertise on including its response to the Russia‑Ukraine conflict. Other priority the Board; and risk management, including any lessons that can be areas for 2023 were identified as continuing the Board’s focus on: macro learned from the conflict between Russia and Ukraine. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 114 Report Governance Statements Reporting Information ### Corporate governance report continued ## The Executive ## Leadership ## Team | Zoran Bogdanovic | Naya Kalogeraki | Ben Almanzar | Ivo Bjelis | | --- | --- | --- | --- | | Chief Executive Officer, Executive Director | (53) Chief Operating Officer | (48) Chief Financial Officer | (55) Chief Supply Chain Officer | | Appointed: December 2017 | Senior management tenure: Appointed | Senior management tenure: Appointed | Senior management tenure: Appointed | | | July 2016 (6 years), appointed Chief | April 2021 (1 year) | January 2022 (1 year) | Zoran was previously the Company’s Region Operating Officer September 2020 Director responsible for operations in 12 Previous Group roles: None Previous Group roles: Ivo joined the Group countries and has been a member of the Previous Group roles: Chief Customer and in 1996 as Plant Manager in Croatia, while in Previous relevant experience: Ben has a Executive Leadership Team since 2013. He Commercial Officer from 2016 to 2020. 2002 he took over the position of Country proven track record and broad experience joined the Company in 1996 and has held a From 1998, when Naya joined the Company, Supply Chain Manager. Since 2006 Ivo built gained from senior financial positions in the number of senior leadership positions, she built her career assuming roles of his career assuming roles of increased scale global fast-moving consumer goods including as General Manager of the increased scale and scope, including and scope across the board, including industry. This includes 10 years with Mars Company’s operations in Croatia, Marketing Director, Trade Marketing Strategic Initiative Leader for Customer Incorporated, where he was Regional CFO, Switzerland and Greece. Zoran has a track Director, Sales Director and Country Centric Supply Chain, Group Supply Chain Europe & Southern Africa and most recently record of delivering results across our Commercial Director, Greece. She has been Processes and Capabilities Director, Vice President for Financial Planning, territories and demonstrating the values that heavily involved in Group strategic projects Regional Supply Chain Director, Group Analytics and Financial Strategy. Prior to are the foundation of our Company culture. and task forces addressing mission-critical Supply Chain Services Director and Group joining Mars, Ben spent 10 years with Nestlé | | business imperatives. In September 2013, | | Supply Chain Operations Director, leading | | --- | --- | --- | --- | | Nationality: Croatian | | in a variety of finance roles in Europe, | | | | Naya was appointed to the role of General | | the development and the transformation of | including CFO of Nestlé Czech-Slovak, and Manager, Greece and Cyprus. the Supply Chain strategy over the years. CFO for Nestlé Waters in the UK. Previous relevant experience: Naya joined Nationality: Croatian Nationality: Dominican Republic and British the Company in 1998 from The Coca‑Cola Company where she held a number of marketing positions up to Marketing Manager. Nationality: Greek Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 115 Report Governance Statements Reporting Information ### Corporate governance report continued | Sanda Parezanovic | Jan Gustavsson | Marcel Martin | Minas Agelidis | Nikos Kalaitzidakis | | --- | --- | --- | --- | --- | | (58) Chief People and Culture Officer | (57) General Counsel, Company Secretary | (64) Chief Corporate Affairs and | (53) Region Director: Austria, Belarus, Czech | (54) Region Director: Armenia, Bosnia & | | | and Chief Corporate Development Officer | Sustainability Officer | Republic, Estonia, Hungary, Island of Ireland, | Herzegovina, Bulgaria, Croatia, Cyprus, | Senior management tenure: Appointed | | | | Latvia, Lithuania, Poland, Slovakia, | Greece, Moldova, Montenegro, Republic of | | --- | --- | --- | --- | --- | | June 2015 (7 years) | Senior management tenure: Appointed | Senior management tenure: Appointed | | | | | | | Switzerland | North Macedonia, Romania, Serbia, Slovenia, | | | August 2001 (21 years) | Chief Supply Chain Officer January 2015, | | | Previous Group roles: Sanda’s previous Ukraine | | | appointed Chief Corporate Affairs & | Senior management tenure: Appointed | | | --- | --- | --- | --- | --- | | roles in the Group include: Public Affairs & | Previous Group roles: Jan served as Deputy | | | | | | | Sustainability Officer January 2022 (8 years) | April 2019 (3 years) | Senior management tenure: Appointed | | Communications Manager, Serbia and | General Counsel for Coca-Cola Beverages | | | | May 2018 (4 years) Montenegro from 2003 to 2006; Country plc from 1999 to 2001. Previous Group roles: Marcel joined the Previous Group roles: Minas joined the Human Resources and Public Affairs & Group in 1993, holding positions with Group in 1999, holding positions with Previous Group roles: Nikos joined the Previous relevant experience: Jan started Communications Manager, Serbia and increasing responsibility in the supply chain increasing responsibility in the commercial Group in 2006 as Regional Manager for his career in 1993 with the law firm White & Montenegro from 2006 to 2010; and Region and commercial functions. Since 1995, he function in Greece (National Account Northwest Russia and then moved to Case in Stockholm, Sweden. In 1995, he Human Resources Director, Bosnia & has held general management assignments Manager, Athens Region Sales Manager, General Manager roles in Croatia (2008), joined The Coca‑Cola Company as Assistant Herzegovina, Bulgaria, Croatia, Cyprus, in several of our markets, including as National Wholesale Manager, Country Sales Bulgaria (2010), Hungary (2013) and Poland Division Counsel in the Nordic and Northern Greece, Northern Ireland, the Republic of General Manager for Eastern Romania, Director). Since 2008, Minas has held general (2014). Eurasia Division. From 1997 to 1999, Jan was | Ireland, North Macedonia, Moldova, | | Regional Manager Russia, Country General | management assignments in a number of | | | --- | --- | --- | --- | --- | | | Senior Associate in White & Case’s New York | | | Previous relevant experience: Prior to | | Montenegro, Nigeria, Romania, Serbia and | | Manager Ukraine and General Manager | our markets, including those of Country | | | | office, practising securities law and M&A. | | | joining the Group, Nikos spent five years in | | Slovenia from 2010 to 2015. | | Nigeria. He became General Manager of our | General Manager Cyprus, Country General | | technology and telecommunications and Nationality: Swedish | | Irish operations in 2010, Supply Chain | Manager Bulgaria and Country General | | | --- | --- | --- | --- | | Previous relevant experience: Sanda | | | seven years with Phillip Morris International in | | | Director in 2015 and is now our Chief | Manager Hungary. | | | started in 1989 as Market Researcher and | | | various roles and geographies across Europe | Corporate Affairs and Sustainability Officer. later Strategic Planner working for various Previous relevant experience: Prior to and Central Asia. local research and marketing agencies in SFR Nationality: Romanian joining the Group, Minas spent seven years Nationality: Greek | Yugoslavia. She joined Saatchi & Saatchi | at Unilever Greece in managerial positions in | | --- | --- | | Balkans in 1994, holding various senior | sales and marketing including those of Brand | | management positions in several Balkan | Manager, Trade Marketing Manager and | | countries, including Managing Director of | National Account Manager. | two start-up agencies, first in North Nationality: Greek Macedonia and later in Serbia. In 1999 she relocated to London, where she worked for Saatchi & Saatchi and Marketing Drive on a number of pan-European and business development projects before she joined our Group in 2003. Nationality: Serbian Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 116 Report Governance Statements Reporting Information ### Corporate governance report continued Executive Leadership Team genderdiversity Barbara Tönz Vitaliy Novikov Mourad Ajarti Spyros Mello Men (52) Chief Customer and Commercial Officer (43) Digital Commerce Business (46) Chief Digital and Technology Officer (48) Strategy and Transformation Director Women Development Director | Senior management tenure: Appointed | | Senior management tenure: Appointed | Senior management tenure: Appointed | | | --- | --- | --- | --- | --- | | May 2021 (1 year) | Senior management tenure: Appointed | October 2019 (3 years) | November 2021 (1 year) | | | | September 2020 (2 years) | | | Executive Leadership Team tenure | | Previous Group roles: Barbara joined the | | Previous Group roles: None. | Previous Group roles: Spyros served as | | | Group in 1998, building her career first in | Previous Group roles: Vitaliy joined the | | Deputy General Counsel and Chief | (years) | Previous relevant experience: Mourad Switzerland as Trade Marketing Director, Group in 2011 as General Manager of the Compliance Officer from 2010 to 2021. He holds an MSc in Computer Systems | Sales Director and Commercial Director, and | Baltics business unit. Since then, he has held | | was Deputy General Counsel from 2007 to | | | --- | --- | --- | --- | --- | | | | Networking & Tele-communications from | | 1-2 4 | | then in Austria from 2012 as Commercial | General Manager roles in Poland and Italy. | | 2009 and Senior Corporate Counsel from | | L’École Mohammadia d’Ingénieurs. He has 2-3 3 Director and Interim General Manager. 2005 to 2007. Previous relevant experience: Prior to 20 years’ experience with two fast-moving 3-4 1 | Previous relevant experience: In 2016 | joining the Group, Vitaliy spent four years at | consumer goods industry leaders, Procter & | Previous relevant experience: Spyros was | | | --- | --- | --- | --- | --- | | Barbara enriched her experience within the | Johnson & Johnson as Managing Director of | Gamble and L’Oréal. Mourad started with | an associate with the law firm of Sullivan & | 6-7 2 | | Cola-Cola System as Country Director | the Ukrainian operation and prior to this he | Procter & Gamble leading SAP | Cromwell LLP practising securities law and | 7-8 1 | | Sweden for The Coca-Cola Company, with | spent seven years at Henkel in managerial | implementation in Morocco, Saudi Arabia | M&A first in New York from 1999 to 2001 and | | 9-10 1 responsibility expanded to Norway and positions of growing responsibility in Austria and Europe, and later was CIO for different then in London from 2001 to 2004. 21-22 1 Iceland in 2019 before she assumed the role and Ukraine. lines of business. From 2014 to 2019, Nationality: Greek of Commercial Execution Director Europe. Mourad was CIO for the Asia and Pacific Nationality: Ukrainian | Prior to joining the Group in 1998, she held | region for L’Oréal, leading consumer and | | --- | --- | | positions in brand and customer | customer journey transformation and | | development at Unilever. | enabling the use of big data and advanced | analytics. Nationality: Swiss Nationality: British and Moroccan 10 3 Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 117 Report Governance Statements Reporting Information ### Corporate governance report continued Key responsibilities of the Executive Leadership Team Key activities and decisions in 2022 | The key responsibilities and elements of | • setting of annual targets and approval of | Long-term direction setting | Risk, safety and business resilience | | --- | --- | --- | --- | | theExecutive Leadership Team role are: | annual business plans which form the basis | • Supporting the redesign of the Company’s | • Evaluating the Group’s business | | • the day-to-day executive management | of the Group’s performance management, | new leadership model, purpose and values. | resiliencestrategies. | | ofthe Group and its businesses, including | including a comprehensive programme | • Assessing, approving and reviewing key | • Evaluating and strengthening Group’s | | allmatters not reserved for the Board | ofstrategies and targets agreed between | initiatives related to processes and projects | Incident Management and Crisis | | orotherbodies; | theCountry General Managers and the | optimization (project Oxygen). | Resolutioncapabilities. | | • the development of Group strategies and | RegionalDirectors; | | | | | | • Evaluating and evolving our 24/7 portfolio | • Evaluating the Group’s Risk Register of major | | implementation of the strategies approved | • working closely with the Country General | strategy together with our brand partners. | business risks as well as associated risk | | by the Board; | Managers, as set out in the Group’s | | response plans. | • Reviewing Coffee expansion across the • providing adequate head-office support operating framework, in order to capture Group’s markets. • Reviewing the Group’s health & safety foreach of the Group’s countries; benefits of scale, ensuring appropriate • Assessing our sustainability priorities policies andmaterial incidents. governance and compliance, and managing andinitiatives on the way to deliver • Reviewing the corporate audit plan for 2023. performance of the Group; and 2025commitments. Business case reviews andapprovals • leading the Group’s talent and capability • Setting long-term capability building • Reviewing and approving progress of development programmes. priorities and programmes. selected key initiatives – Data, Insights • Approving and reviewing deployment &Analytics (DIA), Digital Commerce, Digital ofmajor automation and digitalisation & Technology, Sustainability, Diversity initiatives. &Inclusion (D&I) and Culture. Business planning • Overseeing the strategic evolution of Supply • Aligning key priorities andinvestment Chain, Human Resources, Commercial, strategy with TCCC. Finance and BSS departments. • Aligning key priorities with strategic partners • Capital expenditure proposals review – Monster Energy, Premium Spirit and andapproval. Coffee partners. Priority projects • Reviewing progress of the aligned priorities, • Oxygen Strategic Projects investments and spending. • Culture – redesign of new company • Reviewing and approving annual business PURPOSE, Values and leadership plans for2023 for all operations and competencies centralfunctions. • Customer Satisfaction (External and internal • Approving Group and country talent, client satisfaction via NPS) capabilities development and • Sustainability initiatives successionplans. • Engagement • Diversity & Inclusion • Cybersecurity • Business Resilience • Venturing • eCommerce tools Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 118 Report Governance Statements Reporting Information ### Corporate governance report continued Emerging risks identified by the Group were ### Dear Stakeholder discussed by the Audit and Risk Committee, ## Monitoring liquidity The Audit and Risk Committee focused including Russia-Ukraine related risks and the its work during 2022 on enhancing and deteriorating macroeconomic environment. strengthening the Group’s existing ## and emerging risks Other areas of focus during 2022 are included in financial controls, risk management and the sections about the work and activities of the | | compliance systems, which the Board | Audit and Risk Committee and the areas of key | | --- | --- | --- | | | recognises as essential components of | significance in the preparation of the Financial | | Letter from the Chair of the Audit and Risk Committee | effective corporate governance. During | Statements in this report. | | | 2022, the Audit and Risk Committee | The Audit and Risk Committee report describes | | | worked closely with the internal audit | inmore detail the work of the Audit and Risk | | | and finance teams in overseeing the | Committee during 2022. In performing its work, | the Committee balances independent oversight Highlights this year implementation of the Group’s internal with support and guidance to management. I am • Risk management response to the control framework and addressing confident to report that the Committee, supported Russia-Ukraine conflict. issues related to the Russia and by senior management and the external auditor, • Integration of Egypt. Ukraineconflict. consistently carried out its duties to a high • Monitoring of Cyber Security Program. standard during the reporting year. Conflict between Russia and Ukraine | Priorities for 2023 | The conflict between Russia and Ukraine continues | | | --- | --- | --- | | • monitoring the developments in | to affect our business in those countries with | | | accounting and regulatory matters, | some continuing impact on our supply chain. In | | | including potential changes to IFRS | March 2022, The Coca-Cola Company announced | | | accounting standards and respective | | William W. (Bill) Douglas III | that it was suspending its business in Russia which disclosures; Committee Chair has had, and will continue to have, a significant • ongoing monitoring of risks as well as impact on our business in Russia. The Group has impairment testing of goodwill and adjusted its Russian business to focus on local intangible assets; brands. The conflict created a number of risks • ongoing monitoring of internal financial forthe Group, including, in particular, health and controls, anti-fraud systems and Code safety risks for our people in Ukraine and increased ofBusiness Conduct compliance; and commodity prices and inflation for our operations • ongoing monitoring of the Group’s in Ukraine and beyond. We expect the geopolitical enterprise risk management and quality environment to remain volatile for some time. assurance, and information system We have monitored and discussed our risk security processes management processes, including our risk profile • overview of the Egypt integration and mitigation but also principal risks and risk processand related controls and risk appetite. The Audit and Risk Committee reviewed management. updates on new auditing standards, accounting developments and regulatory developments, including a public statement by the European Securities Markets Authority (ESMA) promoting transparency about the impact of the conflict between Russia and Ukraine. As a result of the conflict, revisions to the 2022 audit plan were made. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 119 Report Governance Statements Reporting Information ### Corporate governance report continued | Role and responsibilities | • monitoring and reviewing the external | | The Group Chief Financial Officer, as well as the | • the internal control environment, principal risks | | --- | --- | --- | --- | --- | | The Audit and Risk Committee monitors the | auditor’sindependence, quality, adequacy | | General Counsel, external auditor, the Head of | and risk management systems (including the | | effectiveness of our financial reporting, internal | andeffectiveness, taking into consideration the | | Corporate Audit, and the Group Financial | nature and extent of the principal risks resulting | | control and risk management systems, and | requirements of all applicable laws in Switzerland | | Controller, normally attend all meetings of the | from the conflict in Russia and Ukraine), and the | | processes. The role of the Audit and Risk | and the UK, the listing requirements of the | | Audit and Risk Committee. Other officers and | Group’s statement on the effectiveness of its | | Committee is set out in the charter for the | London Stock Exchange and Athens Stock | | employees are invited to attend meetings when | internal controls prior to endorsement by the | | committees of the Board of Directors in Annex C | Exchange, and applicable professional standards. | | appropriate. Two non-Executive Directors, | Board, concluding that management has carried | | to the Company’s Organisational Regulations. | Members Membership status | | Henrique Braun and Christo Leventis were invited | out a robust risk assessment process; | | This is available at https://www.coca-colahellenic. | William W. (Bill) | Member since 2016 | to attend all meetings during 2022. The Head of | • the Viability Statement scenarios and underlying | | com/en/about-us/corporate-governance. The | Douglas-III (Chair) | Chair since 2016 | Corporate Audit, and, separately, the external | assumptions and recommendations to the | | key responsibilities and elements of the Audit and | Olusola (Sola) | | auditor, meet regularly with the Audit and Risk | Board that the Viability Statement be approved, | | Risk Committee’s role are: | David-Borha Member since 2015 | | Committee without the presence of management | including discussion of management’s | | | Alexandra | | to discuss the adequacy of internal controls over | conclusions with respect to Going Concern | • providing advice to the Board on whether the Papalexopoulou Member since 2020 financial reporting and any other matters deemed andthe Viability Statement; Annual Report including the consolidated relevant to the Audit and Risk Committee. The • the external auditor’s report on the Group’s Financial Statements, taken as a whole, is a fair, The Audit and Risk Committee comprises three Chair of the Audit and Risk Committee attended IFRS earnings release for the financial year balanced and understandable assessment of independent non-Executive Directors: Bill Douglas our AGM in June 2022 and regularly interacts with ended 31 December 2021; including the Company’s position and prospects and (Chair), Olusola (Sola) David‑Borha and Alexandra representatives of our shareholders. assessment of the auditor’s enhanced audit provides the information necessary for Papalexopoulou, who were each re-elected for a report and key audit matters and conclusion shareholders to assess the Group’s position Work and activities one‑year term by the shareholders at the Annual that there was nothing that warranted the and performance, including whether there is The Audit and Risk Committee met eight times, General Meeting (AGM) in June 2022. attention of the Board; and review of external consistency throughout the report including the four of which were by video conference call, during The Board remains satisfied that Bill Douglas, auditor’s report on the Group’s interim report financial reporting, whether the report will form 2022 and discharged the responsibilities defined SolaDavid‑Borha and Alexandra Papalexopoulou for the six-month period ended 1 July 2022; a good basis of information for the under Annex C of the Organisational Regulations. possess recent and relevant financial and sector • report on tax audits undertaken during 2022 shareholders, and that important messages are The work of the Audit and Risk Committee during experience in compliance with the UK Corporate inanumber of territories; highlighted appropriately throughout the report; the accounting year included evaluation of and Governance Code. Bill Douglas was formerly • monitoring the quality, fairness and integrity of review of the respective matters, as well as • quarterly reports on internal audit matters across Executive Vice President and Chief Financial the consolidated Financial Statements of the assessment of management’s mitigating actions the Group’s business regions, concluding that no Officer of Coca-Cola Enterprises, Sola David- Group, and reviewing significant financial reporting and response plans, in the areas below: material failings were identified; Borha has held a number of senior financial issues and judgements contained in them; • consideration and discussion of the guidance • the Integrated Annual Report including the positions and Alexandra Papalexopoulou has • reviewing the Group’s internal financial control toFRC’s Practice Aid on audit quality; consolidated Financial Statements and the served as a treasurer. The Board is also satisfied and anti-fraud systems as well as the Group’s full-year results announcement for the year • direct procurement matters and initiatives for that the members of the Committee as a whole broader enterprise risk management and legal ended 31 December 2021 prior to their 2022, including the Group’s commodities risk have competence in the sector in which the and ethical compliance programmes (including submission to the Board for approval, and management initiatives for 2022; Company operates in compliance with the UK computerised information system controls and compliance with Group policies; • regular reports on health and safety, GDPR Corporate Governance Code and UK listing security) with the input of the external auditor compliance, cybersecurity, business continuity, regime requirements. • the interim consolidated Financial Statements and the internal audit department; security, quality assurance, environmental and interim results announcement for the Further details on their experience are set out in • reviewing and evaluating the Group’s major six-month period ended 1 July 2022, prior to protection, asset protection, treasury and their respective biographies on pages 98 to 100. areas of financial risk and the steps taken to their submission to the Board for approval; financial risks, anti-bribery and fraud control, monitor and control such risk, as well as insurance (including placing strategy), • the trading updates for the three-month period guidelines and policies governing risk enterprise risk management processes and ended 1 April 2022 and the nine‑month period assessment; and internal control framework (including any ended 30 September 2022; adjustments to the 2022 schedule and updates • areas of significance in the preparation of the to the controls as a result of the conflict consolidated Financial Statements; between Russia and Ukraine); Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 120 Report Governance Statements Reporting Information ### Corporate governance report continued • progress on internal control assessment and – an update on the tax integration of CCBCE; and knowledge of the Group’s business or understanding • review of the contingencies, legal proceedings, integration of newly acquired CCBCE; – a summary of all open tax audits involving of the underlying transactions entered into. As such, competition law and regulatory procedures, • reports on litigation and regulatory theGroup. the FRC’s review provides no assurance that the including cases involving the national investigations; Group’s reports and accounts are correct in all competition authorities of Greece and litigation • approval of changes to chart of authority material respects andit should not be relied upon matters in Nigeria and Greece, and the impact • matters arising under the Group’s Code of anddelegation for operational activities; by the Group orany third party. of these on the consolidated Financial Business Conduct and the actions taken to • external audit plan and pre-approval of audit Statements and accompanying notes; address any identified issues; Finally, the Board receives and reviews a report fees for 2023; • assessment of management’s judgement on • an external quality assessment of the internal from the Audit and Risk Committee on its • consideration of the external auditor’s relevant areas for additional disclosures, to audit function, in accordance with the Institute activities and discussions at the Board meeting independence, quality, adequacy and address IAS 34 requirement for explanation of of Internal Auditors Attribute Standards 1312; following each Audit and Risk Committee meeting. effectiveness of its audit of the financial significant events in light of the conflict between • an assessment of the skills of the internal statements; and Areas of key significance in the Russia and Ukraine; auditors and the sufficiency of the internal audit • assessed the Company’s external reporting to preparation of the Financial Statements • review of accounting standard IAS 34 that budget, confirming of the Internal Auditor’s ensure it is fair, balanced and understandable The Audit and Risk Committee considered a required an explanation of significant events quality, experience and expertise for the asa result of the Board’s obligation under the number of areas of key significance in the implying that additional disclosure should be business. The Audit & Risk Committee is Corporate Governance Code. The Audit and preparation of the Financial Statements in 2022, made to reflect the financial impact of the satisfied that internal audit has the appropriate Risk Committee was responsible for the review including the following: conflict between Russia and Ukraine and resources for the business; of the 2022 Integrated Annual Report including mitigating measures; • updates on risk management and business • appropriateness of critical accounting the Consolidated Financial Statements | | | judgements and estimates that affect the | • review of guidance provided from the UK | | --- | --- | --- | --- | | resilience, including the Group’s response to the | andassociated reports and information. | | | | | | reported amounts of assets, liabilities, revenues | Financial Conduct Authority and Financial | | conflict between Russia and Ukraine, the | TheCommittee received assurances from | | | | | | and expenses, and the disclosure of contingent | Reporting Council related to areas of focus | | activation and development of Business | management and details on the processes | | | | | | assets and liabilities in the consolidated Financial | forthe 2022/2023 reporting season, including | | Continuity strategies and the streamlining of | underlying the preparation of published | | | | | | Statements (detailed in Notes 5,14,16,22 and | financial reporting, sustainability and climate- | | the Group’s risk management processes. | financialinformation. | | | | | | 30 to the consolidated financial statements), | related disclosures, TCFD disclosures, viability | Review of the Group’s Principal Risks and the Following evaluation of all available information, identified by management; and going concerns, corporate governance Group’s updated Strategic Risk Summary; the Audit and Risk Committee concluded and matters and The European Single Electronic • reports on the Group’s impairment assessment • review of the trading environment and resilience advised the Board that the 2022 Integrated Format standard; processes in connection with the operations of the Group’s business in light of the conflict Annual Report including the Consolidated between Russia and Ukraine and strategic • review of interim judgements performed by affected by the conflict between Russia and Financial Statements is fair, balanced and actions implemented to mitigate risks and management and in alignment with the external Ukraine for the interim financial report; understandable. restructure business operations; auditor, regarding the impairment of indefinite- • regular updates from the external auditor on | | In November 2022 the Group received a request | | lived intangibles in light of the conflict between | | --- | --- | --- | --- | | accounting and regulatory developments. Also, | | • review of impairment testing performed by | | | | for information from the Financial Reporting | | Russia and Ukraine; | | an update on Swiss regulatory developments, | | management and reviewed by the external | | Council (‘FRC’) following their review of the Group’s auditor under IAS 36 as well as the related • assessed management’s work in conducting • tax issues including: annual report and accounts to 31December 2021. sensitivity analysis with confirmation that arobust assessment of the risks that impact – developments with the OECD Pillar 2 project; The FRC asked questions in the areas of impairment management had undertaken a robust the Viability and Going Concern Statements, – reviewing current challenges and risk areas for testing, taxation and contributions from The impairment testing process, relying on both including review of scenarios and the Group, including, the entering into force Coca-Cola Company, to which we have responded internal information, and other publicly available underlyingassumptions; ofsweeping changes to Polish withholding by enhancing our relevant disclosures in the 2022 metrics to perform their assessment; review • recommended to the Board to approve the tax regulations, ongoing tax audits in Russia annual report and accounts. The FRC’s review was key assumptions for specific countries, Viability Statement; and andPoland and an arbitration under the EU concluded in February 2023. The FRC’s review is challenging management drivers of relevant • deemed appropriate that the Group continues Arbitration Convention involving the Romanian intended to consider compliance with reporting deviations and performance to date, as well as to apply the going concern basis for the and Dutch tax authorities; requirements and is conducted by staff who countries WACC rates development vs prior year; preparation of the financial statements. – a review of the tax disputes in Italy, Nigeria havean understanding of the relevant legal and and Romania; accounting framework, however lacking detailed Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 121 Report Governance Statements Reporting Information ### Corporate governance report continued External auditor During the meetings, the appointed PwC signing Non-audit services provided by the Audit fees and all other fees PricewaterhouseCoopers AG, Birchstrasse 160, partners demonstrated their understanding of the Audit fees external auditor CH 8050 Zurich, Switzerland (PwC AG) has been group’s business risks and the consequential The total fees for audit services to PwC and The Audit and Risk Committee considers the elected by the shareholders as the statutory impact on the financial statement risks, especially affiliates were approximately €6.2 million for the independence, in both fact and appearance, of the auditor for the Group’s statutory consolidated and around areas of key significance in the preparation year ended 31 December 2022, compared to external auditor as critical and has long had an standalone Financial Statements. The signing of the Financial Statements including but not approximately €4.8 million for the year ended 31 auditor independence policy providing definitions partner, for the second year, for the statutory limited to the trading environment and resilience December 2021. The total fees for 2022 include of the services that the external auditor may and Financial Statements on behalf of PwC AG is of the Group’s business in light of the conflict fees associated with the annual audit and review may not provide. In line with the relevant FRC Sandra Boehm Uglow, for the year ended 31 between Russia and Ukraine, the annual ofthe Group’s half‑year reports, prepared in Guidance, the policy requires the Audit and Risk December 2022. impairment testing, contingencies and legal accordance with IFRS and local statutory audits. Committee’s pre-approval of all audit and proceedings including taxes. The Audit and Risk Fees for audit services to firms other than PwC permissible non-audit services provided by the The Board, at the recommendation of the Committee took an active role in reviewing the and affiliates were €0.7 million for the year ended external auditor, and only for matters that are Auditand Risk Committee, has retained scope of the audit, the independence, objectivity 31 December 2022 (2021: € nil). clearly trivial to the Company. Such services PricewaterhouseCoopers S.A., 268 Kifissias and effectiveness of PwC, and the negotiations include audit, work directly related to audit, and Avenue – 15232 Halandri, Greece (‘PwC S.A.’), Audit-related fees relating to audit fees. The Audit and Risk certain tax and other services as further explained anaffiliate of PwC AG, to act as the Group’s Fees for audit-related services to PwC and Committee also met with the management team, below. In practice, the Audit and Risk Committee independent registered public accounting firm affiliates for the year ended 31 December 2022 which led the discussions with PwC, including applies the policy restrictively, and approval for forthe purposes of reporting under the UK rules were €1.1 million, compared to €0.7 million for the theHead of Corporate Audit, to review the work other than audit and audit-related services for the year ended 31 December 2022. For the year ended 31 December 2021. performance of PwC without PwC being present. israrely granted. second year, the signing partner, the Financial | | Following this review process, the Audit and Risk | | Tax-related fees | | --- | --- | --- | --- | | Statements (for theyear ended 31 December | | Under the policy, pre-approval may be provided | | | | Committee has recommended to the Board that a | | There were no fees to PwC and affiliates for tax | | 2022) on behalf of PwC S.A. isFotisSmyrnis. | | for work associated with: statutory or other | | | | proposal to reappoint PwC be put to a shareholders’ | | services for the years ended 31 December 2022 | financialaudit work under IFRS or according to The appointment of PwC has been approved by vote at the next Annual General Meeting. and 2021. local statutory requirements; attestation services the shareholders until the next Annual General PwC has acted as the Group’s principal external All other fees not required by statute or regulation; accounting Meeting by way of advisory vote. ‘PwC’ refers auditor since 2003. The Company ran a There were no fees were to PwC or affiliates and financial reporting consultation and research toPwC AG or PwC S.A., as applicable, in this competitive tender for the external auditor fornon‑audit services for the years ended work necessary to comply with generally accepted AnnualReport. services in 2015 which was overseen by the Audit 31December 2022 and 2021. accounting and auditing standards; internal control | During the accounting period, the members of the | and Risk Committee. Following the evaluation | | | | --- | --- | --- | --- | | | | reviews and assistance with internal control | Risk management | | Audit and Risk Committee met on a regular basis | ofthe proposals, the Audit and Risk Committee | | | | | | reporting requirements; review of information | During 2022, the Company continued to revise | | with the appointed PwC signing partners, both | concluded in 2015 that the best interests of the | | | | | | systems security and controls; tax compliance | and strengthen its approach to risk management | | with and without management being present. This | Group and its shareholders would be served by | | | | | | andrelated tax services, excluding any tax services | as described in detail on pages 61-81. The primary | | provided the Audit and Risk Committee with an | retaining PwC as external auditor and made such | | | | | | prohibited by regulatory or other oversight | aim of this framework is to minimise our exposure | | opportunity for open dialogue, to question and be | recommendation to the Board. PwC was | | | | | | authorities; expatriates’ and other individual tax | and ensure that the nature and significance of all | | satisfied as to the quality of the audit work | reappointed by the Board as the Group’s external | | | | | | services; and assistance and consultation on | risks we are facing are properly identified, reviewed, | | performed by PwC and challenge PwC’s | auditor with effect from 11 December 2015. | | | | | | questions raised by regulatory agencies. | managed and, where necessary, escalated. Risk | | professional skepticism. | Currently, the Audit and Risk Committee | | | assessments are conducted and discussed at For each proposed service, the external auditor is anticipates that the audit contract will be put out monthly Senior Leadership Team meetings in all required to provide detailed back-up documentation to tender again in 2025. There are no contractual our business units. These assessments are reviewed at the time of approval to permit the Audit and or other obligations restricting the Group’s choice by regional management teams and theChief Risk Risk Committee to make a determination whether of external auditor. Officer twice a year. In addition, corporate functions the provision of such services would impair the conduct broader risk assessments across the external auditor’s independence. business with the Chief Risk Officer biannually. PwC has complied with the policy for the financial year ended on 31 December 2022. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 122 Report Governance Statements Reporting Information ### Corporate governance report continued TheCompany’s Group Risk and Compliance One of the responsibilities of the internal audit The Board has adopted a chart of authority, The Audit and Risk Committee reviews the results Committee reviews the emerging as well as the function is to provide risk‑based and objective defining financial and other authorisation limits of the internal audit reports during each meeting, identified risks biannually and the emerging and assurance to the Board as to whether the Group’s and setting procedures for approving capital and focusing on the key observations of any reports material risks as well as mitigating actions are framework of risk management, including internal investment expenditure. The Board also approves where processes and controls require presented by the Chief Risk Officer to Executive control framework, is operating effectively. detailed annual budgets. It subsequently reviews improvement. The Audit and Risk Committee was Leadership Team and the Audit and Risk Committee. Forthispurpose, the Head of Corporate Audit quarterly performance against targets set forth also provided with updates on the remediation This process is both top-down and bottom-up makes quarterly presentations to the Audit and inthese plans and budgets. A key focus of the status of management actions of internal audit and is designed to ensure that risks arising from Risk Committee and meets regularly with the financial management strategy is the protection findings and on the internal audit quality assurance business activities are appropriately managed. Audit andRisk Committee without the presence of our earnings stream and management and improvement programme at each meeting. The Audit and Risk Committee confirms that the of ourmanagement. ofourcash flow. A particular focus during 2022 was the robustness risk management and internal control systems In addition, the internal audit function reviews We have conducted an annual review of the of the internal control systems and processes have been in place for the year under review theinternal financial, operational and compliance effectiveness of our risk management system around risk management, in light of the conflict andup to the approval of the annual report and control systems across all the jurisdictions in andinternal control systems in accordance with between Russia and Ukraine. The Audit and Risk accounts. Finally, we have in place third-party which we operate and reports its findings to the UK Corporate Governance Code. The review Committee was kept informed of any changes or insurance to cover residual insurable risk exposure management and the Audit and Risk Committee included bi-annual reviews with the Chief Risk adaptations to ensure full functionality as the such as property damage, business interruption on a regular basis. Officer on the operation of the ERM program, Company continued to operate under the and liability protection, including Directors’ and regular review of our financial operations and circumstances and uncertainties of the conflict officers’ insurance for our Directors and officers, The internal audit function focuses its work on compliance controls and consideration of the between Russia and Ukraine. as well as for the officers and directors of theareas of greatest risk to us, as determined Company’s principal risks. Part of this review certainsubsidiaries. byarisk‑based approach to audit planning. The Group Chief Financial Officer, the Head of involves regular review of our financial, operational Aspartof our commitment to maintaining Finance Operations, Country General Managers Internal control and compliance controls, following which we andstrengthening best practice in corporate and Country Chief Financial Officers have access The Board has ultimate responsibility for ensuring report back to the Board on our work andfindings governance matters, we also consistently seek to the implementation status of the that the Company has adequate systems of as described above. This allowed ustoprovide toenhance our internalcontrol environment recommendations at all times. financial reporting control. Systems of financial positive assurance to the Board to assist it in andriskmanagement capability. reporting control can provide only reasonable making the statements that our risk management Where internal or external circumstances give rise andnot absolute assurance against material The internal audit function carries out work across and internal control systems areeffective, as to an increased level of risk, the audit plan is misstatements or loss. In certain of the countries the Group, providing independent assurance, required by the UK Corporate Governance Code. modified accordingly. Nevertheless, no significant in which we operate, our businesses are exposed advice and insight to help the organisation Further information is set outon pages 96‑97. cases occurred this year. Any changes to the to a heightened risk of loss due to fraud and accomplish its objectives by bringing a systematic, agreed audit plan are presented to and agreed by The key features of the Group’s internal control criminal activity. We review our systems of financial disciplined approach to evaluating and improving the Audit and Risk Committee. As a result of the systems that ensure the accuracy and reliability of control regularly in order to minimise such losses. the effectiveness of risk management, control and conflict between Russia and Ukraine, revisions financial reporting include: clearly defined lines of governance processes. In December 2022, the were made to the audit plan, including freezing Internal audit accountability and delegation of authority; policies Audit and Risk Committee agreed the FY23 audit audit activities in Ukraine, Armenia and Moldova Our internal audit function reports directly to the and procedures that cover financial planning and plan to be undertaken by the internal audit team. and deferring the Russia risk-based audit. Audit and Risk Committee, which reviews and reporting; preparation of monthly management The audit plan coverage is based on risk, strategic approves the internal audit plan for each year. The accounts; and review of the disclosures within the priorities and consideration of the strength of the internal audit function consists of approximately Annual Report from function heads to ensure that control environment. The internal audit function 40 full-time professional audit staff mainly based the disclosures made appropriately reflect the prepares audit reports and recommendations in Athens, Sofia, Moscow and Lagos, covering a developments within the Group in the year and following each audit, and appropriate measures range of disciplines and business expertise. meet the requirement of being fair, balanced are then taken to ensure that all recommendations andunderstandable. are implemented. Significant issues, if any, are raised at once. There were no such issues in 2022. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 123 Report Governance Statements Reporting Information ### Corporate governance report continued Whistleblowing measures For further information please see the Anti‑ Communications received by the Head of Performance reporting Business ethics and anti-corruption Bribery Policy and Code of Business Conduct on Corporate Audit, or directly through the ‘Speak Reports on our annual performance and We seek to grow our business by serving our website: https://www.coca-colahellenic.com/ Up! line’, are kept confidential and, where prospects are presented in the Annual Report customers and consumers, and conduct all en/about-us/corporate-governance/policies. We requested, anonymous. The Head of Corporate following recommendation by the Audit and Risk business activities with integrity and respect. have established grievance mechanisms, including Audit liaises regularly with the General Counsel Committee. In line with UK practice, we have TheBoard is responsible for ensuring appropriate an independently operated whistleblower ‘Speak and communicates all significant allegations to the adopted half-year and full-year reports, and Q1 procedures and processes are in place to enable Up! line’, available in all Coca‑Cola HBC countries Chair of the Audit and Risk Committee. and Q3 trading updates. Internally, our financial our workforce to raise any issues of concern and in local languages to ensure any concerns can be results and key performance indicators are All matters received via the ‘Speak Up Hotline’ or issatisfied that the processes in place are raised. In 2022, we investigated 589 allegations reviewed by the Executive Leadership Team on a any other reporting mechanism are thoroughly appropriate. The Board maintains zero-tolerance (2021: 344) of which 324 (2021: 210) were monthly basis. This information includes investigated. The Audit and Risk Committee regarding breaches of our Code of Business received through the ‘Speak Up Hotline’. All comparisons against business plans, forecasts receives summary reports of escalated incidents Conduct and anti-bribery policies, as well as any allegations involving potential Code of Business and prior-year performance. The Board of and instances of whistleblowing together with the attempts to retaliate against our people who Conduct violations were investigated in Directors receives updates on performance at status of investigations and, where appropriate, report potential violations. accordance with the Group Code of Business each Board meeting, as well as a monthly report management actions to remedy issues identified. Conduct Handling Guidelines. Of those on our business and financial performance. We have mandatory training for all our people, The Committee reports to the Board on such investigated, 219 (2021: 105) matters were including our executive leadership team, so that matters, which reviews and considers those substantiated as code violations of which 20 everyone understands our Code of Business reports at least bi-annually as appropriate. (2021: 15) involved an employee in a managerial Conduct, and we hold additional targeted position or involved a loss greater than €10,000. Disclosure Committee anti-bribery training for employees working in For details concerning the handling of allegations A Disclosure Committee has been established, areas we assess as high risk. A Code of Business received in 2022, see our website. and disclosure controls and procedures have been Conduct and Anti‑Bribery Policy course is available adopted to ensure the accuracy and on-line to all employees and includes a knowledge You can find more on allegations investigated and completeness of our public disclosures. The test, acknowledgement and re-commitment to violations uncovered in our GRI index: https:// Disclosure Committee is composed of the Group compliance with the Code and its related policies. www.coca-colahellenic.com/content/dam/cch/ Chief Financial Officer, the General Counsel, the At the end of last training wave in 2021, 26,319 us/documents/oar/Coca‑Cola‑HBC‑2021‑ Director of Investor Relations and the Group employees passed the course, which was 97.7% GRIContent-Index.pdf.downloadasset.pdf. Financial Controller. | of total active population. Since then, we continued | Through the ‘Speak Up! line’ we receive, retain, | | --- | --- | | to train every newly hired employee. In 2022 n. | investigate and act on employee complaints or | | 9.937 more employees were trained, including | concerns regarding accounting, internal control or | | n.5908 employees in the newly acquired Egypt | ethical matters. This includes any matters | | BU. As in the past, this training will be a regular | regarding the circumvention or attempted | | requirement for all employees. In 2022 our | circumvention of internal controls, including | | communication plan on compliance included | matters that would constitute a violation of our | | several initiatives to continue raising awareness | Code of Business Conduct or matters involving | | onbusiness ethics among our people, like our | fraudulent behaviour by officers or employees of | | annual Ethics and Compliance Week that was | the Group. All such allegations, complaints or | | rolled out across our business units. We have also | concerns may be communicated in a variety of | | an established anti-bribery due diligence process | ways, in local languages and on an anonymous | | for third parties who have contact with public | basis, to our Head of Corporate Audit. | authorities on behalf of our Company. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 124 Report Governance Statements Reporting Information ### Corporate governance report continued ### Dear Stakeholder Role and responsibilities The function of the Nomination Committee is to ## Ensuring business The work of the Nomination Committee establish and maintain a process for appointing has continued to focus on the new Board members, to manage, in consultation composition of the Board and the with the Chairman, the succession of the Chief ## continuity and growth important task of Board and senior Executive Officer and to support the Board in management succession planning. fulfilling its duty to conduct a Board self- assessment. The formal role of the Nomination In 2022, the Committee continued to review the Committee is set out in the charter for the ## Letter from the Chair of the Nomination Committee balance of skills, experience and diversity of the committees of the Board of Directors in Annex C Board and focused on the talent development, of the Company’s Organisational Regulations. employee engagement and gender diversity Thisis available online at https://www.coca‑ initiatives necessary to ensure that the Group colahellenic.com/en/about-us/corporate- hasthe people and skills to deliver on its strategy. Highlights this year governance. TheCommittee also considers the overall length • Succession planning and talent review Key elements of the Nomination Committee’s of service of the Board as a whole as part of its • Sales and Supply Chain capability-building roleare: succession planning and keeps under review the academy need to refresh Board membership. In addition, • reviewing the size and composition of the Board; • Women and leadership the Committee oversaw an externally facilitated • identifying candidates and nominating new self-assessment process. | Priorities for 2023 | | members to the Board; | | --- | --- | --- | | • continuous work on succession plans for | A summary of the Group’s Nomination Policy for | • planning and managing, in consultation with the | | Board and senior management positions; | the recruitment of Board members is available | Chairman, a Board membership succession plan; | | • close monitoring of the Group’s talent | online at: https://www.coca-colahellenic.com/ | • ensuring, together with the Chairman, the | | and development frameworks in order to | content/dam/cch/us/documents/about-us/ | operation of a satisfactory induction | | ensure the continued strength of the | corporate-governance/summary-of-nomination- | programme for new members of the Board and | | current talent pipeline; | policy-for-recruitment-of-board-members.pdf. | a satisfactory ongoing training and education | | • engagement surveys | downloadasset.pdf. The Board Diversity Policy | programme for existing members of the Board | | | isdescribed on page 125. | and its committees as necessary to deliver on | • externally facilitated Board and | committee assessments; and | our strategy; | | --- | --- | | • follow up actions on outcome of 2022 | • setting the criteria for, and overseeing, the | | evaluation assessment. | annual assessment of the performance and | effectiveness of each member of the Board and Reto Francioni each Board committee; Committee Chair • conducting an annual assessment of the performance and effectiveness of the Board, and reporting conclusions and recommendations based on the assessment tothe Board; and • overseeing the employee and management talent development and succession plans oftheGroup. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 125 Report Governance Statements Reporting Information ### Corporate governance report continued | Members Membership status | | • the performance evaluation and annual | The Group believes that diversity at the Board level | 350 companies by the FTSE Women Leaders | | --- | --- | --- | --- | --- | | Reto Francioni | Member since 2016 | assessments of the committees and the Board; | acts as a key driver of Board effectiveness, helps | Review (minimum of 40% of women on the Board | | (Chair) | Chairsince 2016 | • follow up actions arising from Board and | toensure that the Group can achieve its overall | and Leadership teams; and at least one woman | | Charlotte J. Boyle Member since 2017 | | committee evaluations; | business goals especially in light of our geographical | inthe Chair or Senior Independent Director role | | Anna | | | footprint, and is critical in promoting a diverse and | onthe Board and/or one woman in the Chief | • review of the Director induction process and Diamantopoulou Member since 2020 inclusive culture across the whole Group. The Board Executive or Finance Director role by 2025) as well training programmes; and has adopted a formal Board Diversity Policy, which as the reporting requirements of the UK Listing • review of the Group’s D&I Policy. The members of the Nomination Committee guides the Nomination Committee and the Board Rules. The Board currently has 30% female areReto Francioni, Charlotte Boyle and Anna Performance evaluation of the Board inrelation to their approach to diversity in respect representation and also meets the target set by Diamantopoulou. All members of the Nomination The Nomination Committee led the annual ofsuccession planning and the selection process the Parker Review having had a person of colour Committee are independent non-Executive assessment of the performance of the Board and forthe appointment of new Board members. on the Board since 2015. The Board will prioritise Directors. At the Annual General Meeting in June its committees during the year with the support of TheNomination Committee is responsible for improving the Board gender balance and the 2022, Reto Francioni, Charlotte Boyle and Anna Lintstock, an external advisory firm. The key areas implementing this policy and for monitoring Nomination Committee has, and will continue to, Diamantopoulou were re-elected for a one-year included in the assessment were Board structure progress towards the achievement ofits objectives. consider this in the context of its continuous term by the shareholders. and diversity, timeliness and quality of information, workon succession plans for the Board, as well as The requirements and objectives of the Board The Chair of the Nomination Committee attended Board discussions, and effective contributions senior management. The Executive Leadership Diversity Policy, include that the Nomination our AGM in June 2022 and regularly interacts with ofeach Director, the performance of the Board, Team has 23% female representation while 39.5% Committee is required to take into account all representatives of our shareholders. committees, succession planning, risk appetite of our senior leaders are women. Figures showing aspects of diversity, including age, ethnicity, and risk management, and remuneration and Board and senior management gender diversity gender, educational and professional background Work and activities performance. The scores were high overall, and are shown on page 105. The Board is committed and social background when considering The Nomination Committee met four times the results of the evaluation were presented at to appointing the best people with theright skill set, succession planning and new Board appointments; during 2022 and discharged the responsibilities theDecember 2022 Board meeting. Further details regardless of gender, ethnicity, religion or disability, seek a wide pool of candidates, with a broad range defined under Annex C of the Company’s onthe internal Board evaluation are set out and as such does not think itisappropriate to set of previous experience, skills and knowledge; and Organisational Regulations. The Chief Executive onpage 95. specific targets for Boardappointments. give preference to executive search firms that are Officer and the Chief People and Culture Officer As with all employees, the Group offers training accredited under the Enhanced Code of Conduct The Board recognises the importance of diversity regularly attend meetings of the Nomination opportunities to the Board and senior management for Executive Search Firms. Board appointments in its business. It is the Board’s responsibility to Committee. In addition, the Chairman is actively in order to improve their skills, and encourages all are evaluated on merit against objective criteria oversee senior management succession planning involved in the work of the Nomination Committee Board members and senior management to gain with due regard for diversity to ensure that for a diverse pipeline of managers and talent concerning succession planning and the selection relevant experience and knowledge to fulfil their candidates contribute to the balance of skills, identified from the management talent development of key people. In 2022, the General Counsel position’s duties. experience, knowledge and diversity of the Board. programme. This links to our strategy to develop alsomet with the Nomination Committee on The Board also considers the overall length of our people and ensure we attract and retain a several occasions. During 2022, the work of the Diversity service of the Board as a whole when considering diverse talent pool, and is one of the five pillars Nomination Committee included consideration of: The Group continues to have a firm commitment refreshment of the membership. ofour growth strategy. Further information on • succession planning and development of plans to policies promoting diversity, equal opportunity pages 38-42. The Nomination Committee, in and talent development at every level throughout The Board understands the benefits of diversity for the recruitment of new Board members conjunction with the Executive Leadership Team, the organisation, including at Board and ofgender, ethnicity, knowledge and experience, andsenior management and certain members will continue to monitor the proportion of women management level, and is constantly seeking to and this is reflected in the Board Diversity Policy. of the Group’s Executive Leadership Team; at all levels of the Group and ensure that all attract and recruit highly qualified candidates for The objectives of the Board Diversity Policy • composition of the Board, including the appointments are made with a view to having all positions in its business. The Group’s D&I Policy include ensuring female representation on the appropriate balance of skills, knowledge, ahigh level of diversity within the workplace and applies to all people who work for us. Further details Board and as such both the Board and Nomination experience and diversity; inleadership positions. on the Group’s D&I Policy are set out on page 41 Committee are mindful of the target set for FTSE • review of the talent management framework; inthe Strategic Report. Committee at work Succession Board Balance of skills Recruitment Shortlisting Interview Appointment Induction planning composition assessment Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 126 Report Governance Statements Reporting Information ### Corporate governance report continued ### Dear Stakeholder, ## Overseeing the journeytonet zero In light of the tragic events in Ukraine, the company has focused its efforts on supporting our employees and the wider ## Letter from the Chair of the Social Responsibility Committee community. The Company has provided humanitarian support to those affected, in collaboration with the Coca-Cola System and NGOs and through massive Activity highlights 2022 • ongoing updates on plastic packaging levies and product tax developments efforts of employee volunteering. • close oversight of the ‘Earn our licence to | operate, pillar as part of our Growth Story | • active involvement in Annual Stakeholder | TheSocial Responsibility Committee | | --- | --- | --- | | 2025 including progress of public Mission | Forum | hasendorsed the team to take related | | 2025 commitments | | actions and has regularly monitored | Priorities for 2023 • review of the actions, initiatives, and theimplementation of these actions. • progress public Mission 2025 commitments progress versus the roadmap of with a focus on NetZeroby40, biodiversity and In 2022, the Social Responsibility Committee NetZeroby40, the Company’s commitment packaging initiatives continued its focus on the implementation of the to reaching net zero greenhouse gas • outcomes from the implementation of the Mission 2025 sustainability commitments and the emissions by 2040, combined with science- first two steps of the Science-Based Targets overall integration of sustainability in the business based carbon reduction targets by 2030 for Network (SBTN) methodology, namely strategy, with a core focus on Net Zero performance • endorsement of the first Group biodiversity biodiversity mapping of the value chain, including a roadmap for in-house rPET production commitment – to achieve a net positive identification of the nature hotspots and and progress against the recently introduced impact on biodiversity in critical areas in our quantifying their impacts Global Reuse pledge of The Coca-Cola Company. direct operations and supply chain by 2040 • partnerships for innovation in the area of ESG, and eliminate deforestation in our supply The Committee reviewed the progress across both with customers and startups chain by 2030, and adoption of the updated sustainable packaging areas – the proposed • implementation of 2023 roadmap related to Biodiversity Statement solutions of returnable glass bottles and 2030 science-based carbon reduction targets • endorsement of the food loss and food packageless beverages, exploration of reusable • continue our social impact programmes with vessels for dispensed solutions, the pilots for waste internal goal particular focus on supporting employees and Freestyle Compact® machines and reusable • deep review of sustainable packaging communities in Ukraine bottle returning services. Special attention has progress, including status of in-house • plans for calorie reduction and added sugar been paid to the results of the first Sustainability recycled PET (rPET) production, move of reduction across beverage categories Challenge with startups, where potential future portfolio in three countries to 100% rPET, • stakeholder outreach activities partnerships will be considered for sustainable approach to packageless and refillables, and packaging and collection. packaging collection models • reviewing and streamlining Company • endorsement of humanitarian support to disclosure and reporting standards based on The Committee has monitored regulatory Ukraine and related volunteering activities EU Taxonomy, Corporate Social Responsibility changes in the domain of sustainability, including Directive (CSRD), European Sustainability the EU Green Deal, the updated EU Packaging • deep-dive analysis of Group results in Reporting Standards (ESRS) and standards andPackaging Waste Directive with its new reuse various environmental, social and corporate issued by the International Sustainability targets, and all other developments related to governance (ESG) benchmarks Standards Board (ISSB) thecircular economy, deposit return systems, • update of the Climate Change Policy and • ongoing activities related to ESG evolvednutrition labelling, instruments to environmental policy benchmarking activities, plastic packaging reduceenergy consumption and price caps, • monitor innovation projects and levies and product tax developments andsustainabilityreporting. partnerships that support our ESG agenda Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 127 Report Governance Statements Reporting Information ### Corporate governance report continued | We are very proud that during 2022 the Company | Role and responsibilities | Members Membership status | | • diversity, equity, and inclusion topics; | | --- | --- | --- | --- | --- | | achieved its highest ever score of 94 (out of 100) | The Social Responsibility Committee is | Anastasios I. | Member since 2016 | • employee assistance programme; | | at the S&P Global Corporate Sustainability | responsible for the development and supervision | Leventis (Chair) | Chairsince 2016 | | • social impact community programmes such Assessment (a base for the DJSI membership), an of procedures and systems to ensure the pursuit Anna as#YouthEmpowered programmes and improvement of seven percentage points of the Company’s social and environmental goals, Diamantopoulou Member since June 2020 curriculum, Water Stewardship projects, and compared to 2021. Coca‑Cola HBC has been as set out in the charter for the committees of the Bruno Pietracci Member since June 2021 Youth Sport Games; among the top-rated companies globally in the Board of Directors Annex C to the Company’s • materiality assessment process and results S&P Corporate Sustainability Assessment (DJSI) Work and activities Organisational Regulations. ofthe annual materiality survey; for over 12 years. The Company continues to have The Social Responsibility Committee met four times Key areas of responsibility are: • Egyptian operations sustainability plans and leading scores in MSCI ESG rating, ISS ESG, V.E., during 2022. Along with Committee members, reporting; FTSE4Good, and received an A‑ (Leadership) in its • establishing the principles governing the those meetings were attended by other members of the Board, namely Charlotte J. Boyle and Ryan • review of stakeholder engagement plan and the CDP Climate and Water submissions. Group’s policies on social responsibility and the Rudolph, the CEO, the Chief Corporate Affairs & feedback from the Annual Stakeholder Forum; environment to guide management’s decisions During the year we reviewed the approach to step Sustainability Officer, and additional senior leaders and and actions; up our customer partnerships in sustainability that subject to the discussion topics. • ESG reporting frameworks and benchmarks • overseeing the development and supervision will accelerate our sustainability agenda and drive such as GRI Universal Standards, UN SDGs, ofprocedures and systems to ensure the During 2022, the Social Responsibility Committee value at scale, and also we reviewed our integrated Dow Jones Sustainability Indices, CDP Climate achievement of the Group’s social responsibility reviewed and provided guidance and insights to capabilities plan, aimed to equip our frontliners and & Water, Task Force on Climate-related and environmental goals; advance the Group’s sustainability approach in the overall organisation with sustainability knowledge Financial Disclosures (TCFD), and the in a tailored, engaging and simple way. • establishing and operating a council responsible following areas: Sustainability Accounting Standards Board for developing and implementing policies and Going forward in 2023, the Committee will ensure • progress and the action plans made against the (SASB). strategies to achieve the Company’s social that the business strategy is fully aligned with the 17 publicly communicated 2025 sustainability responsibility and environmental goals (in all Company’s ESG agenda and that the Company commitments and their six focus areas; ESG pillars, such as climate change, water continues to create value for employees, • biodiversity net positive goal‑setting and joined stewardship, packaging and waste, sustainable communities, society and the environment. Corporate Engagement Programme of the sourcing, health and nutrition, and our people Biodiversity, the EU Taxonomy, the requirements Science Based Target Network (SBTN); and communities), and ensuring Group‑wide of the Corporate Sustainability Reporting Directive • sustainable packaging cross-functional team capabilities to execute such policies and (CSRD), initiatives to support the Company’s agenda and progress towards more sustainable strategies; Packaging Mix of the Future journey, human rights, packaging (rPET, packageless, refillables, and • ensuring the necessary and appropriate our social agenda and impact, customer other), and packaging collection and recovery; transparency and openness in the Group’s partnerships in sustainability as well as the full ESG • detailed plans and initiatives for delivery of business conduct in pursuit of its social integration of the Egyptian operations, will be science-based carbon reduction targets and responsibility and environmental goals; among the focus areas in 2023. NetZeroby40 commitment; • ensuring and overseeing the Group’s • innovative opportunities related to green interactions with stakeholders in relation to its hydrogen, rPET in-house production, potential social responsibility and environmental policies, enzymatic recycling of packaging etc.; goals and achievements, including the level of compliance with internationally accepted • low-sugar and zero-sugar products and Anastasios I. Leventis standards; and reformulations as part of the Group’s Committee Chair commitment to reduce calories, and added • reviewing Group policies on environmental sugar reduction and nutrition strategy; issues, human rights, and other topics as they relate to social responsibility. • supporting activities for our employees and communities in Ukraine; • volunteering activities across our BUs; 128 Strategic Report Corporate Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 # Directors' remuneration report # Maintaining our performance focus during a challenging year # Highlights this year # Our People - Higher merit increases than originally budgeted in order to mitigate inflation trends - Two pay increases across the board during the year with a special focus on frontline workers - One-off additional energy bonus to non-managerial employees - Financial education and well-being support sessions - Enhanced flexible working # Our Company - Business performance surpassed expectations - Acquisitions to support future growth - Rated the world's most sustainable beverage company in the Dow Jones Sustainability Index for the 6th time - In May 2022, received the top "AAA" rating from MSCI ESG for the eighth year in a row. MSCI ESG rates companies across the world based on their exposure to industry-specific ESG risks and their ability to manage those risks relative to peers. # Our Community - Contributions and support provided to employees and to the humanitarian effort in Ukraine - Via our #YouthEmpowered sessions, we increased employability of young people - Invested approximately €7.4 million in local community initiatives - €100k Sustainability Challenge- a startup challenge designed to identify the most innovative packaging and packaging recovery technologies in the consumer packaged goods space. # Our Shareholders - Dividends of €0.78 per share proposed, an increase of 9.9% versus previous year - Proposed dividend will represent a pay-out ratio of 46%, within our target pay-out ratio of 40% to 50% of comparable EPS - Delivered strong financial performance in 2022, with organic revenue up 14.2% and reported revenue up 28.3% # Our Customers & Suppliers - Remained the number one contributor, to revenue growth within fast moving consumer goods across our retail customers - Spent circa €5 billion with local suppliers and contractors - Increased the frequency of our customer engagement, providing customers with the best support # Our Environment - Investing behind our Mission 2025 sustainability commitments and our goal to achieve net zero emissions across our value chain by 2040 - Invested €45 million to date in-house rPET facilities - Issued our first green bond for €500 million in 2022, to be allocated towards eligible green projects that accelerate towards our sustainability goals Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 129 Report Governance Statements Reporting Information ### Directors’ remuneration report continued We have seized opportunities such as investments ### Dear Shareholder, ## Letter from the Chair in Egypt, in digital commerce and data capabilities Free cash flow (€m) 2022 was a year in which we continued ## of the Remuneration and accelerated the sustainability agenda with our ## 645.1 | | tomake clear progress in our vision to | first green bond and the opening of another rPet | | | --- | --- | --- | --- | | Committee | | | (2021: 601.3) | | | beThe Leading 24/7 Beverage Partner. | facility. Throughout 2022 our people have remained | | | | We delivered excellent results reflecting | our priority, especially as we faced the unimaginable | | | | | consequences of war. | Comparable EBIT (€m) | the strength of our business, our culture, and our team spirit despite the challenges The Remuneration Committee’s decisions during ## 929.7 of the war. Our Growth Story 2025 the year were considered in the context of the (2021: 831.0) remuneration of all our employees and reflect the priorities continued to drive performance importance of incentivising and rewarding those in 2022. Thestrength of our portfolio most critical employees on the front lines serving NSR (Net sales revenue) (€m) and capabilities ensures we continue to our customers. ## win in our markets. Our continued focus 9,198.4 As the Chair of the Remuneration Committee, on our customers at the heart of what (2021: 7,168.4) Iam pleased to present our Directors’ Remuneration we do has led to us remaining thenumber Report for the year ended 31 December 2022. one contributor to revenue growth Ourprimary listing is on the London Stock Exchange, Comparable EPS (€) within fast moving consumer goods and our Company is domiciled inSwitzerland. ## 1.706 across our retail customers in 2022. Wetherefore ensure, that we comply with UK regulations, except where these conflict with (2021: 1.584) Wehavenavigated through record high Swiss law. Theformat of this year’s Remuneration inflationwhile delivering strong financial Report isconsistent with the format of last year’s performance: record levels of comparable ROIC as there were no significant changes in relevant EBIT, excellent ROIC and astrong ## regulations. As always, I welcome your feedback 14.1% balance sheet. and suggestions regarding anything we can do (2021: 14.8%) toimprove the report. The Group’s remuneration philosophy and policiesare designed to attract, motivate and retain the talented people we need to meet the Company’s strategic objectives, and to give them due recognition. To this end, the Remuneration Committee has worked to ensure that the remuneration policy remains fair, transparent, and competitive Included in MIP Included in PSP incomparison with our peers, and that remuneration helps drive our growth strategy andsustainable performance. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 130 Report Governance Statements Reporting Information ### Directors’ remuneration report continued • Comparable EBIT up 11.9% to €929.7 million To navigate the limited supply of rPET, we to provide retention and incentivisation to the ### Remuneration in context with organic EBIT up 1.3% as pricing, mix and invested in a new rPET facility in Italy and are workforce. I would like to thank them for taking the As shown in our full year results, successful cost discipline drove profits despite the working with stakeholders in a number of markets time to meet with me and provide their feedback execution of our Growth Story 2025 strategy challenging inflationary backdrop; to launch well-designed, industry-led, deposit both on the approach to Executive Director delivered strong performance, with organic • Another year delivering record free cash flow return or collection schemes. remuneration as well as the important topic revenue excluding Russia and Ukraine up 22.7%. and an increased dividend with: ofourapproach to the wider workforce. We implemented price increases and mix initiatives To combat youth unemployment in our markets – Comparable EPS up 7.7%, across our markets, expanding revenue per and address inequalities in education, we continued In terms of the shareholder experience, our – Free cash flow increased by €43.8 million caseand mitigating inflation. These results were to develop and expand our #YouthEmpowered investors have benefited from recent and to€645.1 million, due to improved profit achieved alongside continued market share gains, programme. By the end of 2022, we had reached historical strong financial performance. We have generation and effective working capital and we remain the number one contributor to 790,000 young people since the programme’s returned €4.5 billion to shareholders since 2001 management revenue growth within fast moving consumer inception in 2017. with a progressive dividend policy complemented – Proposed ordinary dividend of €0.78 per goods across our retail customers. by extraordinary returns through special dividends. Participants benefit from in-person and online share, up 9.9% year on year and representing In 2022, we paid the 2021 dividend of €0.71 per The overall business has remained resilient despite training as well as networking and mentoring a 46% pay‑out. share, an11% increase. This represented a payout | the impact of COVID‑19 and the Russia‑Ukraine | | sessions alongside Coca‑Cola HBC senior | | | --- | --- | --- | --- | | | Our financial results reflect our success in creating | | ratio of45%, in line with our target of 40‑50%, and | | war and this is testament to the leadership and | | managers. While many aspects of the programme | | | | value for all of our stakeholders-from our customers | | was proposed to ensure we rewarded | | commitment of the management team and all | | moved online during the pandemic, the | | | | to the communities where we operate. Despite | | shareholders and maintained our commitment to | | ofour talented people. We have made the right | | commitment of our people remained steadfast. | | | | logistical challenges posed by the pandemic and | | a progressive dividend. While there is continued | decisions with investments in our core strategic the Russia‑Ukraine war, wecontinued to provide geopolitical turmoil and macroeconomic ### capabilities, digital commerce, data insights and Stakeholder experience extraordinary service to our customers, as uncertainty, based on our business’s resilience analytics, route-to- market and revenue growth demonstrated by our net promoter score which Our shareholders and future opportunities, the Board has proposed management, with effective execution and focus increased 5 percentage points in 2022 compared The Committee acknowledges that although, a dividend of €0.78 per share for 2022, a 9.9% on categories and channels where we can drive with the prior year. atour 2022 Annual General Meeting (AGM) all increase compared with last year. We have the best growth. resolutions were successfully passed with the committed to continue to make progressive We also continued to deliver on our ambitious We continue to invest in opportunities that position requisite majority, there were nevertheless dividend payments in the future. environmental objectives, continuing to reduce us well for the future, with the goal of delivering significant minority votes against Resolutions emissions from our direct operations and making Our employees and their remuneration sustainable growth and creating shareholder value. 7and 9, the advisory votes to approve the UK further progress on packaging: Our absolute focus during 2022 was to keep our This includes making progress on our environmental Remuneration Report and the Swiss Remuneration people safe during the turbulent geopolitical goals, now furthered with the issuance of our first • Cumulatively, our absolute score 1 and 2 Report. Each was passed with the support of events that ensued during the year as well as ever green bond in 2022. emissions have been reduced by 21% in 2022 67.2% of the votes cast. continuing initiatives to support the workforce, vs. our baseline year of 2017. Our key financial highlights include: Following the AGM, we extended our engagement building on feedback from our regular employee • We made new commitments to achieve a net with shareholders and their proxy advisers on surveys. A clear indicator of our success is that • Organic revenue up 14.2% and reported positive impact on biodiversity in critical areas remuneration issues. We reached out to the top engagement levels continued to remain high at revenue up 28.3%. Excluding Russia and inour operations and supply chain by 2040 majority and minority shareholders as well as all 85%. We listen closely to our people and act on Ukraine, organic revenue up 22.7%; andeliminate deforestation in our supply | | | those who had contacted the Board to express | their feedback, simplifying processes and | | --- | --- | --- | --- | | • Organic volume growth was 8.1% excluding | chainby 2030. | | | | | | their views, particularly with regard to the | investing in the capabilities necessary to achieve | Russia and Ukraine; • As part of a pack/price architecture adjustment, | | | adjustment of targets for the 2019 Performance | our Growth Story 2025 strategy. We continued | | --- | --- | --- | --- | | • Organic revenue per case up 15.9%, benefiting | we launched our entire Swiss product portfolio | | | | | | Share Plan awards. I was pleased to have the | our efforts to build an inclusive workplace and a | | from pricing and targeted actions to improve | in recycled PET (rPET) packaging, and are | | | | | | opportunity to meet shareholders and hear their | diverse workforce to reflect our customer base | | mix throughout the year; | moving forward with additional rPET launches | | | | | | views on actions the Committee might consider | and communities. | inadditional markets in 2023. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 131 Report Governance Statements Reporting Information ### Directors’ remuneration report continued Our strategy starts from retention, complemented Inaddition to these increases, we paid a special Performance against the stretching EPS and ROIC In addition to share price performance between | by external hiring to create a gender-balanced | one-off bonus to assist our non-managerial | targets over the period 2020 to 2022 resulted in a | grant and the end of the performance period | | --- | --- | --- | --- | | organisation and we’ve committed to have at | population (approximately 30,000 employees) | formulaic vesting level of 48% of the maximum PSP | (equivalent to CAGR of 9.5%), the Committee | | least50% of manager positions held by women | across the Group to manage the rising energy | (performance share plan) award granted in 2020, | reflected on the trend in long-term performance | | by2025. The entire Executive Leadership | costs, with an exceptional higher one-off payment | | from the management team over the course of | As noted earlier in my letter, the complex nature Teamvolunteered to sponsor participants of our for our employees in Ukraine. the performance period, and given the consistent of the Group’s operations, and the impact of Women in Leadership programmes, which involve delivery of exceptional business performance over Full details of how we cultivated the potential external events, has meant that the Committee sponsors helping participants navigate common the performance period, including: ofour people in 2022 can be found on pages 38‑42. felt it appropriate to exercise discretion in the past careerbarriers. to adjust the level of vesting under the • Organic revenue growth of 14.2%; Incentive outcomes I continue to attend the majority of the Works performance share plan to ensure the targets • Comparable EPS growth of 7.7%; The formulaic MIP (management incentive plan) Council meetings and plenary during the remained relevant and appropriately stretching • Cumulative free cash flow of €645.1 million, outcome for the CEO was 77.5% of the maximum year,which covers approximately half of our and that the overall outcome was reflective of the with2022 representing another year of record opportunity, with both the performance targets employeepopulation. I speak with the employee underlying performance of the Group. free cash flow; and actual performance determined excluding representatives to discuss their thoughts on the Russia and Ukraine given the ongoing war. The Committee considered whether an exercise • All in the context of delivering on our ambitious Company’s relationship with them. The discussions TheCommittee agreed it was appropriate to of positive discretion would be appropriate for environment objectives, with absolute CO 2 and outcomes are shared in the Remuneration remove the impact of Russia and Ukraine both in awards made to the CEO in relation to the emissions down by 6% Committee meetings as input for taking wider the targets and performance of the business given performance period ending in 2022, and raised decisions related to remuneration for the workforce the Committee did not consider the share price the announcement by The Coca-Cola Company this with shareholders before making any final and executives. Much of the discussions in 2022 increase to be excessive, but commensurate with to suspend its business operations in Russia. decisions. Whilst the Committee felt that such an focused around the rising cost of living and underlying business performance. As such, the Theoutcome reflects record levels of revenue, exercise of discretion might be appropriate to employee work‑life balance. As a Committee, we Committee determined not to apply an adjustment | | comparable EBIT and free cash flow, which the | ensure that the overall level of pay-out was | | | --- | --- | --- | --- | | were alert to these concerns, and ensured we were | | | to the level of vesting. | | | 2022 MIP was based on, against a challenging | reflective of the business performance, reflecting | | kept informed regarding the Company-driven backdrop when set. on feedback received from shareholders, the ### initiatives to address them. Looking ahead Committee has decided not to exercise positive When determining performance, the Committee Our remuneration structure was designed to discretion in relation to the PSP awards for the CEO. The Remuneration Committee will continue to took into account the strong results and business applyto all our employees, not just the Executive keep policies under review so as to ensure that context highlighted above, including; the handling The Committee also assessed whether there had Director, which is a material factor in defining plans and programmes relating to remuneration of the challenges posed by the Russia-Ukraine been any perceived ‘windfall gains’ for this award andshaping the policy and implementation of the support the Company’s strategy and objectives war, including the humanitarian support provided to as part of the wider performance in the round policy. With inflationary pressure high in 2022, our and are closely linked to shareholders’ interests. Ukraine, overall exceptional business performance, assessment. As part of this, the Committee noted intention was to protect our frontline workers who the successful acquisition of Egypt, engagement that recent PSP awards have been made at varying We will continue to review the wider workforce were most impacted. of our employees and overall progress towards share prices and this has resulted in a level of remuneration arrangements with a special focus In reviewing our wider workforce remuneration our sustainability goals.Taking this performance variation in the number of shares granted (in some on our frontline and specifically our business practices and to reward performance and inthe round, the Committee determined that this cases more shares are granted and other cases developers’ salaries and incentives. We will look recognise the challenging circumstances faced outcome is a fair reflection of wider performance, fewer shares are granted). The Committee also tothe remuneration strategy for our talents byour employees, we provided salary increases 50% of the MIP pay‑out will be deferred into shares factored in share price performance and noted andbig bet capabilities and continue our journey across the majority of our markets above for three years, ensuring further shareholder that the share price has not followed a typical indiversity, equity, and inclusion (DEI) by ensuring theoriginal plan. We did this by providing alignment. Details ofthe targets, performance V-shape or U-shape recovery that other companies balance in our pay equity practices and flexible disproportionately higher increases to our against them and theplan outcomes are set out have experienced, with our share price performance workarrangements. business developers and line operators and by on pages 148‑149. impacted by a series of external events over the The Committee is mindful of the evolution in providing a second pay increase during the year past three years, including but not limited to corporate governance requirements and will inthe majority of our markets to the frontline. COVID‑19 and the Ukraine‑Russia war. continue to review the application of these as itrelates to aspects of remuneration. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 132 Report Governance Statements Reporting Information ### Directors’ remuneration report continued Whilst the Remuneration Committee believes that • Comparable EPS growth of 7.7% in 2022, with In line with our existing Remuneration Policy and The role of the Remuneration the Remuneration Policy approved by shareholders comparable EPS having grown by c.40% since inorder to appropriately incentivise the CEO to Committee at the AGM in June 2022 remains appropriate and his appointment continue the exceptional performance of the The main responsibilities of the Remuneration carefully balances alignment with the Company’s • Record free cash flow in 2022 of €645.1m business and address the challenges the business Committee are to establish the remuneration business strategy and our response to evolving (+7.3% YoY), with free cash flow having grown will need to address in the medium term, the strategy for the Group and to approve corporate governance requirements, the by over 50% since his appointment Remuneration Committee is proposing a PSP compensation packages for Directors and senior | Committee intends to keep the Remuneration | | award of 450% of base salary for 2023 which will | | | --- | --- | --- | --- | | | • Dividend pay‑out in 2022 of 46% (+9.9% YoY | | management. Further, the Committee reviews | | Policy under review to ensure that it remains fit | | be subject to stretching long‑term performance | | | | ondividend per share), with an average of | | wider workforce remuneration policies at | | forpurpose both in driving business performance | | targets. The proposed award level is within the | | | | c.46%dividend pay‑out since his appointment | | Coca‑Cola HBC and the alignment of incentives | | being an appropriate motivation and retention tool | | range allowable under the PSP in our Directors’ | | | | (excluding the extraordinary dividend in 2019). | | and rewards with strategy and culture, taking | | for the senior management team over the coming | | Remuneration Policy, as approved by shareholders. | | | | The total dividend paid to shareholders since | | these into account when setting the remuneration | | year. We welcome feedback and are committed | | Whilst market positioning is not a primary reference | | | | hisappointment amounts to approx. €2.1bn. | | policy. The Remuneration Committee operates | | tocontinuing engagement with shareholders on | | point, even once the increased award level is | | under the Charter for the Committees of the To recognise the CEO’s exceptional efforts, this important topic during the year. factored in, the overall remuneration opportunity Board of the Company set forth in Annex C to leadership, commitment and continued delivery for the CEO will be positioned around median vs In light of the current macro-economic environment, theOrganisational Regulations of the Company, ofstrong business performance, in spite of the the FTSE 100. 2023 salary increase levels for employees have available on the Group’s website at: challenging external environment, the Committee not yet been finalized. It is anticipated that the The targets for the 2023 award, have been set https://www.coca-colahellenic.com/en/about-us/ felt it was appropriate to review the overall Chief Executive Officer’s increase will not be atvery stretching levels commensurate with corporate-governance. remuneration opportunity for the CEO for 2023. higher than the increases provided for the wider theaward opportunity, taking into account our Members Membership status The Committee considered a number of options workforce. Theincrease will be effective 1 May long‑term business plan (guided by the 2025 Charlotte J. Boyle Member since 2017 available to it within the remuneration policy 2023 and will be communicated in the following Growth Story Commitments), market practice (Chair) Chair since June 2020 agreed with shareholders. It concluded that an Directors’ remuneration report. inlisted peers, and external expectations of Reto Francioni Appointed June 2016 increase in the PSP award in 2023 was the optimal performance (adjusted to remove the impact As in 2022, for the purposes of the 2023 MIP Anna solution in part for its simplicity but importantly ofRussia and Ukraine, over the next three years, business performance will be measured based on Diamantopoulou Appointed June 2020 asit creates direct shareholder alignment. The which is in line with what we did with the 2022 award). performance against three KPIs: revenue (40% awards will be delivered in shares and only where In accordance with the UK Corporate Governance weighting), comparable EBIT (40% weighting) and Threshold Maximum stretch long-term performance against EPS, Code, the Remuneration Committee consists free cash flow (20% weighting). There will be no Comparable EPS (EUR) 1.40 1.63 ROICand reduction in CO 2 emissions targets are ofthree independent non‑ Executive Directors: change to the maximum MIP opportunity for 2023. ROIC 11.0% 12.9% delivered. These targets are aligned to the delivery Charlotte J. Boyle (Chair), Reto Francioni and of our 2025 Growth Story Commitments. Meeting Reduction in CO 2 To achieve our growth ambitions and to deliver AnnaDiamantopoulou, who were each last these commitments will require, amongst other emissions (kilotonnes) 4,037 3,851 continued financial performance that creates the elected by the shareholders for a one-year term desired returns, the Committee believes strongly things, an acceleration in the Group’s business A maximum Comparable EPS (excluding Russia on 22 June2022. that we must continue to retain and incentivise performance in our largest markets, a rebalancing and Ukraine) of 1.63EUR in 2025 represents The Remuneration Committee met four times in the management team in a fair manner. of the business priorities of the Group following significant growth of c.39% on 2022 (adjusted to 2022; in March, June, September and December. the war between Russia and Ukraine, and an In particular, we considered the performance of exclude Russia and Ukraine so that the base year is Please refer to the Corporate Governance Report increased focus on the successful integration of the CEO over the last year, his performance since on a comparable basis to year end measurement). on page 105 for details of the Remuneration Egypt within the Group as well as growing market his appointment as CEO in 2017 and his pivotal The ROIC targets have been set to reflect the drive Committee meetings. share opportunities in the region. | role in leading the company to achieve our 2025 | in earnings growth whilst reflecting the planned | | | --- | --- | --- | | Growth Story Commitments. Key achievements | capital investments over the period, including the | | | for our CEO between 2017 and 2022 include: | Egypt acquisition and its integration; and a | | | | substantial reduction in CO | 2 emissions to 3,851 | • Net Sales Revenue (NSR) growth of 28.3% kilotonnes is required for a maximum pay-out. (YoY), with NSR having grown by over 40% since his appointment Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 133 Report Governance Statements Reporting Information ### Directors’ remuneration report continued safeguards to ensure the revised targets led to keypriority of the Company, evidenced by the outcomes which were fair for all employees and well-being framework for all employees, the considered the broader stakeholder environment. support provided to employees and their families in We understand that some of our shareholders did Ukraine and special sessions focusing on work-life not support this adjustment as was evident in the balance, stress, burnout and financial well-being. vote at the Annual General Meeting. With the To support the employees with their inflationary business performing at levels exceeding those of concerns, there was an additional pay increase the pre-pandemic period, the Remuneration during the year and a one-time energy bonus to Committee took this decision to ensure the allnon‑managerial employees. targets were still fair, meaningful and achievable. The Committee applied the same treatment Q: Why did the Committee decide to tothe 2019 PSP for all employees, with no award an increased PSP grant in 2023 preference given to any population. As set out tothe CEO? inmy letter, following the AGM, we met with A: This increased PSP grant takes into account shareholders and proxy advisers to discuss their our growth ambitions over the next three-year concerns on the decisions made in relation to period and the performance of the Company 2019. Reflecting on the feedback received, the These selected metrics directly align with and andCEO since appointment. Further detail on Committee agreed that whilst the underlying incentivise delivery of the Company’s ESG therationale and the targets is set out in the ## Q&A performance of the Group in a challenging objectives, particularly our ambitious goal to Remuneration Committee Chair’s letter. environment may support an exercise of discretion achieve net zero emissions across our entire ### Chair of the Remuneration in relation to the 2020 PSP, this would not be Q: Is the Committee satisfied with value chain by 2040. appropriate for the CEO. theuse of ESG metrics in its executive ### Committee The achievement of ESG metrics has an impact incentives? Q: Did the Committee make any on the overall MIP opportunity and account for A: The Company has used ESG metrics for either 15% of the PSP opportunity. The Committee is adjustments to the CEO’s incentive short-term or long-term incentives for a number satisfied that this is sufficient focus in order to outcomes for2022? of years, reflecting our approach to responsible, achieve our ambitious sustainability targets, A: No, we have not made any adjustments to the long-term management and the importance of without diluting focus on financial and CEO’s incentive outcomes in respect of 2022. Q: What was the reason behind the ensuring our licence to operate. The CEO’s growthobjectives. Further context is provided in the Remuneration significant minority vote against the individual performance is measured in key Committee Chair’s letter. strategic areas, including ESG benchmarks, and remuneration report last year and these are taken into account for the MIP. | what has the Committee done to | Q: How does the Committee engage | | | | | | --- | --- | --- | --- | --- | --- | | address anyissues? | with the workforce? | In 2022, the Company received the highest scores | | | Charlotte J. Boyle | | A: We adjusted the PSP targets that impacted | A: In my role as designated director for the | in 8 of the 10 most recognised ESG benchmarks, | | | Chair of the Remuneration Committee | | the vesting of the 2019‑2021 plan as these | workforce I attend the European Works Council | including DJSI, MSCI ESG, V.E., ISS ESG, and | | | | | targets were set prior to the onset of COVID. | (EWC) meetings which gives me the opportunity | FTSE4GOOD. The PSP contains metrics linked to | | | | | Inorder to ensure the PSP continued to be | to interact and discuss the issues raised by | a reduction in CO | | 2 emissions. | | | effective in its core purpose – to motivate and | employees. I also take the opportunity to meet | | | | | | | | The CO | 2 emissions target in the PSP implicitly | | | | retain employees (including executives) over | with employees during the year outside of the | | | | | captures reduction inplastics, which was a key along period – the Committee decided to board calendar. At the most recent EWC the driver of its selection asa metric. adjust the targets to maintain relevancy. topics discussed concerned work-life balance Indoing so, the Committee put in place andinflation. The well‑being of employees is a Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 134 Report Governance Statements Reporting Information ### Directors’ remuneration report continued Remuneration throughout the organisation – a snapshot Clarity We believe that our policy provides transparency for Executives Remuneration arrangements andshareholders about what performance we are looking for across should be transparent and our portfolio. Attracting Retaining promote effective The Remuneration Committee has aimed to incorporate simplicity and Finding the people we want Continuing to attract the best talent engagement with transparency into the design and delivery of our Remuneration Policy. andneed shareholders and workforce. We aim for disclosure of the policy and how it is implemented to be in Recognising Motivating aclear and succinct format. Adopting behaviours that produce Achieving business, financial Simplicity Our remuneration arrangements for executive directors are exceptional performance andnon-financial targets Remuneration structures purposefully simple, comprising fixed pay (salary, benefits, pension), should avoid complexity and ashort‑term incentive plan (Management Incentive Plan) and a their rationale and operation long‑term incentive plan (Performance Share Plan). should be easy to The remuneration structure is simple to understand for both understand. participants and shareholders and is aligned to the strategic priorities of the business. ### Reward strategy and objective Risk The Remuneration Policy includes a number of points to mitigate The objective of the Group’s remuneration philosophy is to attract, retain and motivate employees who Remuneration arrangements potential risks: are curious, agile and committed to high performance. Our reward strategy seeks to promote a growth should ensure reputational • There are defined limits on the maximum opportunity levels under mindset and reinforce desirable behaviours, ensuring that employees arefairly rewarded and that their and other risks from incentive plans. individual contributions are linked to the success oftheCompany. excessive rewards, and • Performance targets are calibrated appropriately, ensuring they are behavioural risks that can Variable pay is an important element of our reward philosophy. A significant proportion of total adequately stretching but sustainable. arise from target-based remuneration for top managers (including the Chief Executive Officer and the members of the • The Remuneration Committee considers formulaic incentive incentive plans, are identified Executive Leadership Team) is tied to the achievement of our business objectives. These objectives outcomes and determines whether to make any adjustments, and mitigated. aredefined by key business metrics that are consistent with our growth strategy and will deliver including to take into account the experience of wider stakeholders long-term shareholder value. The variable pay element increases or decreases based on the achieved such as employees and shareholders. business performance. • Incentive plans include provisions to allow malus and clawback to be Through equity-related long-term compensation, we seek to ensure that the financial interests of the applied, where appropriate. The use of deferral, holding periods, Chief Executive Officer, the members of the Executive Leadership Team and senior managers are in-employment and post-employment shareholding requirements aligned with those of shareholders. ensures that there is an alignment of interests between the ChiefExecutive and shareholders and encourages sustainable All of our remuneration plans, both fixed and variable, are designed to be cost‑effective, taking into performance. account market practice, business performance, and individual performance and experience where relevant. We pay close attention to our shareholders’ views in reviewing our remuneration policy Predictability We aim for our disclosure to be clear to allow shareholders to andprogrammes. The range of possible values understand the range of potential values which may be earned under of rewards to individual the remuneration arrangements. Our Remuneration Policy clearly sets In line with the UK Corporate Governance Code, the following factors, which align well with our directors and any other limits out relevant limits and potential for discretion. objectives, were also considered: or discretions should be identified and explained at the time of approving policy. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 135 Report Governance Statements Reporting Information ### Directors’ remuneration report continued Proportionality We believe that the link between individual awards, the delivery of Alignment to culture We want our Executives to make decisions that support the long-term The link between individual strategy and the long-term performance of the Company is clearly Incentive schemes should performance and health of the business. The incentive arrangements awards, delivery of strategy explained in this report and that our approach ensures proportionate drive behaviours consistent and the performance measures used are strongly aligned to those that and long-term performance pay outcomes that do not reward poor performance. A significant part with company purpose, the Board considers when determining the success of the of the company should be of the CEO’s reward is linked to performance with a clear line of sight values and strategy. implementation of the Company’s purpose, values and strategy. clear. Outcomes should not between business performance and the delivery of shareholder value. reward poor performance. The Remuneration Committee may adjust formulaic outcomes of incentive arrangements if they do not appropriately align with performance achieved or the experience of wider stakeholders such as employees and shareholders. ### How we implement our reward strategy The chart below illustrates how we put our reward strategy into practice, with the different remuneration arrangements that apply to different employee groups. We regularly review our reward strategy to ensure it remains relevant and effective in meeting the needs of our employees, especially our frontline workers. During 2022 we provided higher increases toour business developers and line operators in comparison to other employees. In addition, in the majority of our markets we provided increases twice during the year to our frontline workers. Chief Executive Officer and Chief Executive Officer, Selected middle and All management All employees Executive Leadership Team ExecutiveLeadership Team and seniormanagement selected senior management | Shareholding guidelines | Performance Share Plan | Long-Term IncentivePlan | Management Incentive Plan | Employee Share Purchase Plan | | --- | --- | --- | --- | --- | | Support the alignment with | Performance share awards vest over | Cash long-term incentive awards vest | Management employees may be | (dependent on country practice) | | shareholder interests ensuring | three years. PSP awards are cascaded | over three years. LTIP awards are | eligible to receive an award under the | The Employee Share Purchase Plan | | sustainable performance: Chief | down to select senior managers, | cascaded down to select middle and | annual bonus scheme that promotes | encourages share ownership and | | Executive Officer – required to hold | promoting a focus on long-term | senior management to reinforce | a high-performance culture. | aligns the interests of our employees | | shares in the Company equal in value | performance and aligning them to | long-term performance and ensure | Performance conditions are bespoke | with those of shareholders. | | to 300% of annual base salary within a | shareholders’ interests, | retention of our talents. | to each role and business unit. | | Fixed pay and benefits (base salary, five-year period and a post- retirement and other benefits – employment shareholding dependent on country practice) requirement applying from this year. Base salaries may reflect the market | Executive Leadership Team – required | value of each role as well as the | | --- | --- | | to hold shares in the Company equal in | individual’s performance and potential. | | value to 100% of annual base salary | Retirement and other benefits are | | within a five-year period. | subject to local market practice. | Note: Participants in the Performance Share Plan are not eligible to participate in the Long-Term Incentive Plan. 136 Strategic Report Corporate Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 # Directors' remuneration report continued Remuneration arrangements for the Chief Executive Officer – at a glance | Base salary | Retirement benefits | Other benefits | ESPP | + | MIP | PSP | = | Total compensation | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Fixed pay | | | | Variable pay subject to performance | | | | | The table below summarises the remuneration arrangements in place for our Chief Executive Officer. See page 148 for total compensation figures. | Pay element | Detail | | --- | --- | | Base salary | The base salary of the Chief Executive Officer is €840,000. 2023 salary increase levels for employees have not been finalized at the date of this report. It is anticipated that the Chief Executive Officer's increase will not be higher than the increases provided for the wider workforce and will be effective from 1 May 2023. | | Retirement benefits | The Chief Executive Officer participates in a defined benefit pension plan under Swiss law. Employer contributions are 15% of annual base salary. Normal retirement age for the Chief Executive Officer's plan is 65 years. In case of early retirement, which is possible from the age of 58, the Chief Executive Officer is entitled to receive the amount accrued under the plan as a lump sum. | | Other benefits | Other benefits include (but are not limited to) medical insurance, housing allowance, company car/allowance, cost of living adjustment, trip allowance, partner allowance, exchange rate protection, tax equalisation and tax filing support and advice. Benefit levels vary each year depending on need. | | ESPP (Employee Share Purchase Plan) | The Chief Executive Officer may participate in the Company's Employee Share Purchase Plan. As a scheme participant, the Chief Executive Officer has the opportunity to invest a portion of his base salary and/or MIP payments in shares. The Company matches employee contributions on a one-to-one basis up to 3% of base salary and/or MIP payout. Awards are subject to potential application of malus and clawback provisions. | | MIP (Management Incentive Plan) | The MIP consists of a maximum annual bonus opportunity of up to 140% of base salary. Payout is based on business performance targets and individual performance. The business performance element will result in an outcome between 0% and 200% of the target MIP and the individual performance element will result in an outcome of up to 100%, with the overall payout as a percentage of salary being based on the multiplication of these two figures. For 2023, business performance will be measured based on performance against three KPIs: revenue (40% weighting), comparable EBIT (40% weighting) and free cash flow (20% weighting). 50% of any MIP payout will be deferred into shares for a further three-year period. Payments are subject to potential application of malus and clawback provisions. | | --- | --- | | PSP (Performance Share Plan) | The PSP is an annual share award which vests after three years. For the award in 2023, vesting will be based on performance conditions measured over a three-year period against: (i) comparable earnings per share (EPS) (42.5% weighting); (ii) return on invested capital (ROIC) (42.5% weighting); (iii) reduction of CO₂ emissions (15% weighting). An additional two-year holding period will apply following vesting. Awards are subject to potential application of malus and clawback provisions. As explained in the Chair letter, in 2023 it is intended to make a one-off award (within shareholder-approved Policy limits) of 450% of salary. | Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 137 Report Governance Statements Reporting Information ### Directors’ remuneration report continued ### Remuneration policy Policy table – Chief Executive Officer The Company currently has a single Executive Director, being the Chief Executive Officer. Introduction Therefore,for simplicity, this section refers only tothe Chief Executive Officer. This remuneration policy The following section (pages 137‑140) sets out our Directors’ remuneration policy as approved would, however, apply for any new Executive Director role, in the event that one was created during the byshareholders at the Annual General Meeting in June 2022. No changes are being proposed to the term of this remuneration policy. Inthatcase, references in this section to the ChiefExecutive Officer policy this year and the 2022 policy will continue to apply. should be read as being toeach Executive Director. As a Swiss‑incorporated company, we are not required to put forward our remuneration policy for ashareholder vote, but we intend to do so voluntarily at least every three years (or when there are changes). We continue to endeavour tomake sure that our disclosure complies with UKregulations, except where these conflict withSwiss law. Fixed Base salary Retirement benefits Purpose and link to strategy Purpose and link to strategy To provide a fixed level of compensation appropriate to the requirements of the role of Chief Executive To provide competitive, cost-effective post-retirement benefits. Officer and to support the attraction and retention of the talent able to deliver the Group’s strategy. Operation Operation The Chief Executive Officer participates in a defined benefit pension plan. However, we have adjusted Salary is reviewed annually, with salary changes normally effective on 1 May each year. the pension scheme to be co-contributory, in line with the pension scheme for the wider Swiss workforce, for new Executive Directors’ appointments from 2020 onwards. The following parameters are considered when reviewing the base salary level: Normal retirement age for the Chief Executive Officer’s plan is 65 years. In case of early retirement, • the Chief Executive Officer’s performance, skills and responsibilities; which is possible from the age of 58, the Chief Executive Officer is entitled to receive the amount • economic conditions and performance trends; accrued under the plan as a lump sum. • experience of the Chief Executive Officer; Malus and clawback provisions do not apply to retirement benefits. • pay increases for other employees; and • external comparisons based on factors such as: the industry of the business, revenue, Maximum opportunity marketcapitalisation, headcount, geographical footprint, stock exchange listing (FTSE) The contributions to the pension plan are calculated as a percentage of annual base salary andotherEuropean companies. (excludingany incentive payments or other allowance/benefits provided) based on age brackets asdefined by Federal Swiss legislation. Malus and clawback provisions do not apply to base salary. This percentage is currently 15% of base salary and increases to 18% above age 55. Maximum opportunity Whilst there is no maximum salary level, any increases awarded to the Chief Executive Officer Performance metrics willnormally be broadly aligned with the broader employee population. None. The salary increase made to the Chief Executive Officer may exceed the average salary increase under certain circumstances at the Remuneration Committee’s discretion. These circumstances may include: business and individual performance; material changes to the business; internal promotions; accrual of experience; changes to the role; or other material factors. Performance metrics Individual and business performance are key factors when determining any base salary changes. The annual base salary for the Chief Executive Officer is set out on page 136. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 138 Report Governance Statements Reporting Information ### Directors’ remuneration report continued Fixed continued Other benefits ESPP (Employee Share Purchase Plan) Purpose and link to strategy Purpose and link to strategy To provide benefits to the Chief Executive Officer which are consistent with market practice. The ESPP is an Employee Share Purchase Plan, encouraging broader share ownership, and is intended to align the interests of employees including the Chief Executive Officer with those of the shareholders. Operation Benefit provisions are reviewed by the Remuneration Committee which has the discretion Operation torecommend the introduction of additional benefits where appropriate. This is a voluntary share purchase scheme across many of the Group’s countries. The Chief Executive Officer as a scheme participant has the opportunity to invest from 1% to 15% of his base salary and/ Typical provisions for the Chief Executive Officer include benefits related to relocation such as or MIP payout to purchase the Company’s shares by contributing to the plan on a monthly basis. housing allowance, company car/ allowance, cost of living adjustment, trip allowance, partner allowance, exchange rate protection, tax equalisation and tax filing support and advice. For all benefits, The Company matches the Chief Executive Officer’s contributions on a one-to-one basis up to the Company will bear any income tax and social security contributions arising from such payments. 3%ofthe employee’s base salary and/or MIP payout. Matching contributions are used to purchase shares one year after the purchase of shares by employees. Matching shares are immediately vested. Malus and clawback provisions do not apply to benefits. Dividends received in respect of shares held under the ESPP are used to purchase additional shares Maximum opportunity and are immediately vested. The Chief Executive Officer is eligible to participate in the ESPP operated There is no defined maximum as the cost to the Company of providing such benefits will vary from by the Company on the same basis as other employees. year to year. Malus and clawback provisions apply. Further details may be found in the Additional notes to the Performance metrics Executive Director’s remuneration policy table section on page 141. None. Maximum opportunity Maximum investment is 15% of gross base salary and MIP payout. The Company matches contributions up to 3% of gross base salary and MIP payout. Matching contributions are used to purchase shares one year after the matching. Matching shares are immediately vested. Performance metrics The value is directly linked to the share price performance. It is therefore not affected by other performance criteria. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 139 Report Governance Statements Reporting Information ### Directors’ remuneration report continued Variable pay MIP (Management Incentive Plan) PSP (Performance Share Plan) Purpose and link to strategy Purpose and link to strategy To support profitable growth and reward annually for contribution to business performance. The plan To align the Chief Executive Officer’s interests with the interests of shareholders, and increase aims to promote a high-performance culture with stretching business and individual targets linked to theability of the Group to attract and reward individuals with exceptional skills. our key strategies. Operation Operation The Chief Executive Officer is granted conditional awards of shares which vest after three years, Annual cash bonus awarded under the MIP is subject to business and individual performance metrics subject to the achievement of performance metrics and continued service. Grants take place and is non-pensionable. annually, normally every March. The Chief Executive Officer’s individual objectives are regularly reviewed to ensure relevance to Performance metrics and the associated targets are reviewed and determined around the beginning business strategy and are set and approved annually by the Chair of the Remuneration Committee of each performance period to ensure that they support the long‑term strategy and objectives and Chairman of the Board of Directors. oftheGroup and are aligned with shareholders’ interests. Stretching targets for business performance are set annually, based on the business plan of the Dividends may be paid on vested shares where the performance metrics are achieved at the end Group as approved by the Board of Directors. The Remuneration Committee will determine the ofthe three‑year period. business performance metrics and weightings on an annual basis. Malus and clawback provisions apply. Further details may be found in the Additional notes Performance against these targets and bonus outcomes is assessed by the Remuneration totheExecutive Director’s remuneration policy table section on page 141. Committee, which may recommend an adjustment to the payout level where it considers the overall Maximum opportunity performance of the Company or the individual’s contribution warrants a higher or lower outcome. Awards (normally) have a face value up to 330% of base salary. Malus and clawback provisions apply. Further details may be found in the Additional notes to the In exceptional circumstances only, the Remuneration Committee has the discretion to grant awards Executive Director’s remuneration policy table section on page 141. up to 450% of base salary. Maximum opportunity The Chief Executive Officer’s maximum MIP opportunity is set at 140% of annual base salary. Thebusiness performance element will result in an outcome between 0% and 200% of the target MIP and the individual performance element will result in an outcome of up to 100%, with the overall payout as a percentage of salary being based on the multiplication of these two figures. Threshold, target and maximum achievement for the Business Performance element will result in anoutcome as follows: • Threshold: 0% of base salary • Target: 70% of base salary • Maximum: 140% of base salary • The maximum opportunity level will therefore only pay out for both a stretch level of business performance and full achievement of the individual performance element. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 140 Report Governance Statements Reporting Information ### Directors’ remuneration report continued Variable pay continued MIP (Management Incentive Plan) PSP (Performance Share Plan) Performance metrics Performance metrics The MIP awards are based on business metrics linked to our business strategy. These may include, Vesting of awards is subject to the three‑year Group performance metrics. For each award, the butare not limited to, measures of revenue, profit, profit margins and operating efficiencies. Remuneration Committee will determine the applicable metrics, weightings and target calibration Theweighting of individual performance metrics shall be determined by the Remuneration making up the performance condition. Committee around the beginning of the MIP performance period. Following the end of the three-year period, the Remuneration Committee will determine the extent Details related to the key performance indicators can be found in the Annual Report on to which performance metrics have been met and, in turn, the level of vesting. Participants may Remuneration on page 148. receive vested awards in the form of shares or a cash equivalent. Deferral of MIP For each performance metric, achieving threshold performance results in vesting of 25% of the 50% of any MIP award is to be deferred into shares which will be made available after a three‑year award and maximum performance results in vesting of 100% of the award. There will be a straight‑ deferral period which commences on the first day of the fiscal year in which the deferred share line vesting between these performance levels. awardis made. Performance share awards will lapse if the Remuneration Committee determines that the Deferred shares may be subject to malus and clawback (for a period of two years following this incentive performance metrics have not been met. The Remuneration Committee will have discretion award) to the extent deemed appropriate by the Remuneration Committee, in line with best practice. toreduce or negate PSP award vesting, in the case of significant adverse environmental, social orgovernance impacts regarding the Company’s activities. Holding period Any vested award (net of shares sold to cover tax liability) is subject to a further two‑year holding period following the end of the three-year performance period. During this two-year period, these beneficially owned shares are subject to a no‑sale commitment. Any shares subject to the holding period count towards the shareholding requirement. Adjustments In the event of an equity restructuring, the Remuneration Committee may make an equitable adjustment to the terms of the performance share award by adjusting the number and kind of shares which have been granted or may be granted and/or making provision for payment of cash in respect ofany outstanding performance share award. Where exceptional circumstances exist such that the original targets no longer meet the intent at the time of grant, the Committee will have the discretion to adjust targets in a manner that is considered to be no less stretching than the original performance condition. Where any such adjustment is made, the details will be fully disclosed in the following Remuneration Report. Change of control In the event of change of control, unvested performance share awards held by participants vest immediately on a pro-rated basis if the Remuneration Committee determines that the performance metrics have been satisfied or would have been likely to be satisfied at the end of the performance period, unless the Remuneration Committee determines that substitute performance share awards may be used in place of the previous awards. For vested shares subject to the additional holding period, the holding period will lapse and the participants are no longer subject to the no‑sale commitment. Strategic Report Projectors Financial Statements Semi-Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 141 # Directors' remuneration report continued ## Additional notes to the Executive Director's remuneration policy table ### Chief Executive Officer's remuneration policy illustration The graph below provides estimates of the potential reward opportunity for the Chief Executive Officer and the split between the different elements of remuneration under three different performance scenarios: Minimum', 'Target' and 'Maximum'. In line with the reporting regulations, a scenario assuming 50% share price growth over the three-year PSP performance period is also shown below. The assumptions used for these charts are set out in the table below (€ 000s). ![img-3.jpeg](img-3.jpeg) | Minimum performance | Fixed remuneration only, i.e. base salary, pension and other benefits (including ESPP participation). No payout under the MIP or PSP. | | --- | --- | | Target performance | Fixed remuneration. MIP payout of 70% of base salary. PSP vesting at 270% of base salary. | | Maximum performance | Fixed remuneration. MIP payout of 140% of base salary. PSP vesting at 450% of base salary. | | Maximum performance + 50% share price growth | Fixed remuneration. MIP payout of 140% of base salary. PSP vesting at 450% of base salary. 50% assumed share price growth over three-year PSP performance period. | Other than in the 'Maximum performance + 50% share price growth' scenario, no share price growth or dividend assumptions have been included in the charts above. | | Component | Minimum (€ 000s) | Target (€ 000s) | Maximum (€ 000s) | Maximum performance + 50% share price growth (€ 000s) | | --- | --- | --- | --- | --- | --- | | Fixed | Base salary^{1} | €840 | €840 | €840 | €840 | | | Pension | €126 | €126 | €126 | €126 | | | Cash and non-cash benefits^{2} | €486 | €503 | €521 | €521 | | Variable | MIP | – | €588 | €1,176 | €1,176 | | | PSP | – | €2,268 | €3,780 | €3,780 | | | PSP – 50% share price appreciation | – | – | – | €1,890 | | Total | | €1,452 | €4,325 | €6,443 | €8,333 | 1. Represents the annual base salary as at the last review in May 2022. 2. ESPP employee contributions may vary depending on the MIP payout provided that the Chief Executive Officer decides to contribute a portion of the MIP towards the ESPP. The figures provided have been calculated on the basis of the applicable MIP payout and the Chief Executive Officer deciding to contribute 5% to the ESPP. 142 Strategic Report Projectors Financial Statements Sales Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 # Directors' remuneration report continued ## ESOP (Employee Stock Option Plan) The ESOP was replaced by the PSP in 2015 and the last grant under the ESOP took place in December 2014. Although the Remuneration Committee does not intend to award under the ESOP going forward, there are still outstanding stock option awards which may be exercised in future years. Awards vest in one-third increments each year for three years and can be exercised for up to 10 years from the date of the award. ## Malus and clawback provision for variable pay plans The MIP, PSP, ESOP and ESPP plans include malus provisions which give the Remuneration Committee and/or the Board discretion to judge that an award should lapse wholly or partly in event of a material misstatement of financial results and/or misconduct, significant reputational risk and corporate failure. The Remuneration Committee and/or Board also has the discretion to determine that clawback should be applied to awards under the MIP, PSP, ESOP and ESPP plans for the Chief Executive Officer and members of the Executive Leadership Team. Clawback can potentially be applied to payments or vested awards for up to a two-year period following payment or vesting. ## Shareholding guidelines In order to strengthen the link with shareholders' interests, the Chief Executive Officer is required to hold shares in the Company equal in value to 300% of annual base salary. Members of the Executive Leadership Team are required to hold 100% of annual base salary. The Chief Executive Officer has five years from appointment to accumulate shares equal to 300% of annual base salary (with shares acquired from PSP awards and shares resulting from the deferral of the 50% of the MIP counting towards fulfilment of the shareholding requirement). The Committee continues to review the potential need for stronger shareholding requirements in the long term and this is subject to further review in the future. The Policy contains a post-employment shareholding requirement whereby the Chief Executive Officer would, if leaving the Company, be required to hold shares equivalent to 200% of base salary (or actual shareholding at termination date if lower than this) for a period of two years after leaving employment. ## Remuneration arrangements across the Group The remuneration approach for the Chief Executive Officer, the members of the Executive Leadership Team and senior management is similar. The Chief Executive Officer's total remuneration has a significantly higher proportion of variable pay in comparison with the rest of our employees. The Chief Executive Officer's remuneration will increase or decrease in line with business performance, aligning it with shareholders' interests. The structure of the remuneration package for the wider employee population takes into account local market practice and is intended to attract and retain the right talent, be competitive and remunerate employees for promoting a growth mindset while contributing to the Group's performance. As part of the Performance for Growth framework introduced in 2019, we revised and updated the remuneration framework with features such as each business unit having more flexibility on target positioning, managers having the flexibility to retain key talent, and guidance provided for increased awards for high-potential and/or exceptional performance. ## Policy table – non-Executive Directors ### Base fees #### Purpose and link to strategy To provide a fixed level of compensation appropriate to the requirements of the role of non-Executive Director and to attract and retain high-quality non-Executive Directors with the right talent, values and skills necessary to provide oversight and support to management to grow the business, support the Company's strategic framework and maximise shareholder value. #### Operation Non-Executive Directors' fees are set at a level that will not call into question the objectivity of the Board. When considering market levels, comparable companies typically include those in the FTSE index with similar positioning as the Company, other Swiss companies with similar market capitalisation and/or revenues, and other relevant European listed companies. #### Maximum opportunity Fee levels for non-Executive Directors include an annual fixed fee plus additional fees for membership of Board committees when applicable, as summarised below for the period from the AGM June 2022 to AGM May 2023: - Base Chairman's fee: €150,000 - Base non-Executive Director's fee: €82,000 - Senior Independent Director's fee: €18,000 - Audit and Risk Committee Chair fee: €32,000 - Audit and Risk Committee member fee: €16,000 - Remuneration, Nomination and Social Responsibility Committee Chair fees: €13,000 - Remuneration, Nomination and Social Responsibility Committee member fees: €6,500 Fee levels are subject to periodic review and approval by the Chairman of the Board and the Chief Executive Officer. #### Other benefits Non-Executive Directors do not receive any benefits in cash or in kind. They are not entitled to severance payments in the event of termination of their appointment. They are entitled to reimbursement of all reasonable expenses incurred in the interests of the Group. #### Variable remuneration Non-Executive Directors do not receive any form of variable compensation. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 143 Report Governance Statements Reporting Information ### Directors’ remuneration report continued ### Legacy arrangements Non-Executive Directors It is expected that non-Executive Directors appointed during the remuneration policy period will receive For the avoidance of doubt, it is noted that the Company will honour any commitments entered into the same basic fee and, as appropriate, committee fee or fees as existing non-Executive Directors that have previously been disclosed to shareholders. andwill be entitled to reimbursement of all reasonable expenses incurred in the interests of the Group. It is expected that non-Executive Directors appointed during the remuneration policy period will be ### Policy on recruitment/appointment appointed on a one-year term of appointment, in the same manner as existing non-Executive Directors. Executive Directors The Company does not compensate new non-Executive Directors for any forfeited share awards Annual base salary arrangements for the appointment of an Executive Director will be set considering inprevious employment. market relevance, skills, experience, internal comparisons and cost. The Remuneration Committee mayrecommend an appropriate initial annual base salary below relevant market levels. In such Termination payments situations, the Remuneration Committee may make a recommendation to realign the level of base The Swiss corporate rules regarding the Compensations in Listed Companies limits the authority of salary in the following years. As highlighted above, annual base salary ‘gaps’ may result in higher rates theRemuneration Committee and the Board to determine compensation. Limitations include the ofsalary increase in the short term, subject to an individual’s performance. The discretion is retained prohibition of certain types of severance compensation. tooffer an annual base salary necessary to meet the individual circumstances of the recruited Executive Our governance framework ensures that the Group uses the right channels to support reward Director and to enable the hiring of an individual with the necessary skills and expertise. decisions. In the case of early termination, the non-Executive Directors would be entitled to their fees The maximum level of variable pay that may be offered will follow the rules of the MIP and is capped at accrued as of the date of termination, but are not entitled to any additional compensation. The Chief 140% of the relevant individual’s annual base salary. The maximum level of equity‑related pay that may Executive Officer’s employment contract does not contain any provisions for payments on termination. be offered will follow the PSP rules and is capped at 450% of the relevant individual’s annual base salary. Notice periods are set for up to six months and non-compete clauses are 12 months. The notice period The typical award is not expected to surpass 330% of base salary. Different performance measures anticipates that up to six months’ paid garden leave may be provided. Similarly, up to 12 months of base may be set initially for the annual bonus taking into consideration the point in the financial year that a salary may be paid out in relation to the non-compete period. new Executive Director joins. The above limits do not include the value of any buyout arrangements. In case of future terminations, payments will be made in accordance with the termination policy Benefits will be provided in line with the Group’s policy for other employees. If an Executive Director onpage144. isrequired to relocate, benefits may be provided as per the Group’s international transfer policy which may include transfer allowance, tax equalisation, tax advice and support, and housing, cost of living, schooling, travel and relocation costs. The Remuneration Committee may consider recommending the buying out of incentive awards that anindividual would forfeit by accepting the appointment up to an equivalent value in shares or in cash. Inthe case of a share award, the Remuneration Committee may approve a grant of shares under thePSP. When deciding on a potential incentive award buyout and in particular the level and value thereof, the Remuneration Committee will be informed of the time and performance pro-rated level ofanyforfeited award. It is expected that Executive Directors appointed during the remuneration policy period will be appointed on similar notice provisions to the Chief Executive Officer, allowing for termination of office by either party on six months’ notice. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 144 Report Governance Statements Reporting Information ### Directors’ remuneration report continued Good leaver | | (retirement at 55 or later/at least 10 years’ | Good leaver | Bad leaver | | --- | --- | --- | --- | | Pay element | continuedservice) | (injury, disability) | (resignation, dismissal) Death in service | | Base salary and other | Payment in lieu of notice is not permissible. The Company could ask the Chief Executive Officer to be on paid garden leave for up to six months. | | | benefits / non-Executive Directors’ fees ESPP Unvested cash allocations held in the ESPP will vest upon termination. Unvested cash allocations under the ESPP Available ESPP shares will be transferred are forfeited. toheirs. MIP A pro‑rated payout as of the date of A pro‑rated payout as of the date of leaving In the event of resignation or dismissal, as A pro‑rated payout will be applied and will be retirement will be applied. will be applied. per Swiss law the Chief Executive Officer paid immediately to heirs, basedon the isentitled to a pro‑rated MIP payout. latest rolling estimate. Deferred shares will continue to vest Deferred shares will continue to vest asnormal. asnormal. Any outstanding deferred shares will lapse. Deferred shares will continue to vest asnormal. PSP/ESOP All unvested options and performance All unvested options and performance All unvested options and performance All unvested options and performance share awards continue to vest as normal share awards immediately vest to the share awards immediately lapse without any share awards immediately vest subject to subject to time pro‑rating and are subject extent that the Remuneration Committee compensation. time and performance pro-rating. to the additional holding period. determines that the performance In the event of resignation, all vested Any options that vest are exercisable within conditions have been met, or are likely to be For vested shares that are subject to the options must be exercised within six 12 months from the date of termination. met at the end of the three-year additional holding period, they will continue months from the date of termination. performance period, and are subject to the For vested shares that are subject to the to be subject to the no‑sale commitment additional holding period. Upon dismissal, all vested options must additional holding period, the no-sale until the end of the relevant two-year period. beexercised within 30 days from the date commitment will cease immediately. Any options that vest are exercisable within Under Swiss law, share awards are of termination. 12 months from the date of termination. Under Swiss law, share awards are considered annual compensation and as | | | For vested shares that are subject to the | considered annual compensation. | | --- | --- | --- | --- | | such when time pro-rating is required, the | For vested shares that are subject to the | | | | | | additional holding period, they will continue | Whentime pro‑rating is required, the year | | year of grant (12 months) and not the | additional holding period, they will continue | | | | | | to be subject to the no‑sale commitment | of grant (12 months) and not the vesting | | vesting period (36 months) for time | to be subject to the no‑sale commitment | | | | | | until the end of the relevant two-year period. | period (36 months) is considered for time | | pro-rating calculations is considered. | until the end of the relevant two-year period. | | | pro-rating calculations. Corporate events In the event of a change of control, unvested performance share awards held by participants vest In the event of an equity restructuring, the Remuneration Committee may make an equitable immediately on a pro-rated basis if the Remuneration Committee determines that the performance adjustment to the terms of the performance share award by adjusting the number and kind of shares conditions have been satisfied or would have been likely to be satisfied at the endofthe performance that have been granted or may be granted and/or making provision for payment of cash in respect period, unless the Remuneration Committee determines that substitute performance share awards ofany outstanding performance share award. may be used in place of the previous awards. Strategic Report Corporate Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 145 # Directors' remuneration report continued ## Service contracts Zoran Bogdanovic, the Chief Executive Officer, has a service contract with the Company with a six-month notice period. As noted in the Termination payments section on page 143, the Chief Executive Officer's employment contract does not include any termination benefits, other than as mandated by Swiss law. The Swiss Code of Obligations requires employers to pay severance when an employment relationship ends with an employee of at least 50 years of age after 20 years or more of service. The Chief Executive Officer is also entitled to reimbursement of all reasonable expenses incurred in the interests of the Company. In accordance with the Swiss Ordinance against Excessive Compensation in Listed Companies, there are no sign-on policies/provisions for the appointment of the Chief Executive Officer. The table below provides details of the current service contracts and terms of appointment for the Chief Executive Officer and other Directors. | Name | Title | Date originally appointed to the Board of the Company | Date appointed to the Board of the Company | Unexpired term of service contract in appointment as non-Executive Director | | --- | --- | --- | --- | --- | | Anastasius G. David | Chairman and non-Executive Director | 27 July 2006 | 21 June 2022 | One year | | Zoran Bogdanovic | Chief Executive Officer | 11 June 2018 | 21 June 2022 | Indefinite, terminable on six months' notice | | Charlotte J. Boyle | Non-Executive Director | 20 June 2017 | 21 June 2022 | One year | | Henrique Braun | Non-Executive Director | 22 June 2021 | 21 June 2022 | One year | | Olusola (Sola) David-Borha | Non-Executive Director | 24 June 2015 | 21 June 2022 | One year | | Anna Diamantopoulou | Non-Executive Director | 16 June 2020 | 21 June 2022 | One year | | William W. (Bill Douglas III) | Non-Executive Director | 21 June 2016 | 21 June 2022 | One year | | Reto Francioni | Senior Independent non-Executive Director | 21 June 2016 | 21 June 2022 | One year | | Anastasius I. Leventis | Non-Executive Director | 25 June 2014 | 21 June 2022 | One year | | Christo Leventis | Non-Executive Director | 25 June 2014 | 21 June 2022 | One year | | Alexandra Papalexopoulou | Non-Executive Director | 24 June 2015 | 21 June 2022 | One year | | Bruno Pietracci | Non-Executive Director | 22 June 2021 | 21 June 2022 | One year | | Ryan Rudolph | Non-Executive Director | 21 June 2016 | 21 June 2022 | One year | The Chief Executive Officer's service contract and the terms and conditions of appointment of the non-Executive Directors are available for inspection by the public at the registered office of the Group. ## Consideration of employee views The remuneration structure has been designed to apply to all Group employees, not just the Executive Directors, which is a material factor in defining and shaping the policy and implementation of the policy. The Remuneration Committee does not currently consult specifically with employees on policy for the remuneration of the Chief Executive Officer. Pay movement for the wider employment group is considered when making pay decisions for the Chief Executive Officer. The Chair of the Remuneration Committee is also the designated non-Executive Director for workforce engagement. As such, she attends meetings of our European Works Council and meets with elected employee representatives from our businesses in EU countries. She then reports back to the Board on her observations and matters raised by employees, ensuring Board and Remuneration Committee deliberations and decision-making are fully informed. Our engagement levels continue to remain high at 85%. ## Consideration of shareholder views Shareholder views and the achievement of the Group's overall business strategies have been taken into account in formulating the remuneration policy. Following shareholder feedback before and after the Annual General Meeting, the Remuneration Committee and the Board consult with shareholders and meet with institutional investors to gather feedback on the Company's remuneration strategy and corporate governance. The Company would be happy to engage with shareholders in the future to discuss the outcomes of the remuneration policy. In reviewing and determining remuneration, the Remuneration Committee takes into account the following: - the business strategies and needs of the Company; - the views of shareholders on Group policies and programmes of remuneration; - the alignment of remuneration policy with the principles of clarity, simplicity, risk, predictability, proportionality and alignment with culture; - market comparisons and the positioning of the Group's remuneration relative to other comparable companies; - input from employees regarding our remuneration programmes; - the need for similar, performance-related principles for the determination of executive remuneration and the remuneration of other employees; and - the need for objectivity, Board members, the Chief Executive Officer and Executive Leadership Team member's play no part in determining their own remuneration. The Chair of the Remuneration Committee and the Chief Executive Officer are not present when the Remuneration Committee and the Board discuss matters that pertain to their remuneration. This ensures that the same performance-setting principles are applied for Executive remuneration and for other employees in the organisation. 146 Strategic Report Project Financial Statements Sales Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 # Directors' remuneration report continued ## Annual Report on Remuneration ### Introduction This section of the report provides detail on how we have implemented our remuneration policy in 2022 which, in accordance with the UK remuneration reporting regulations, will be subject to an advisory shareholder vote at our 2023 Annual General Meeting. ### Activities of the Remuneration Committee during 2022 During 2022, the key Remuneration Committee activities were to: - undertake extensive shareholder consultation to understand different views on our remuneration approach and explain the Committee's decisions; - review and sign off the 2021 Directors' Remuneration Report; - review the 2022 base salary for the Chief Executive Officer; - review and approve the 2022 base salaries for the Executive Leadership Team members and general managers; - review and approve the 2021 MIP payout for the Chief Executive Officer; - review and approve payout levels for the 2021 MIP in relation to Executive Leadership Team members and general managers; - review and approve the performance achievement of the 2019 PSP award, number of shares vesting and dividend equivalents; - set and approve 2022 PSP targets; - review award levels for 2022 PSP awards; - review short- and long-term incentive arrangements for the wider workforce; - review the assets of the Company's Irish defined benefit pension plans; - review pay evolution for the wider workforce including actions taken to deal with inflation; and - meet with our shareholders for remuneration related matters. ### Advisers to the Remuneration Committee The Chief People and Culture Officer, the Head of Rewards and the General Counsel regularly attend meetings of the Remuneration Committee. While the Remuneration Committee does not have external advisers, in 2022 it authorised management to work with external consultancy firms Willis Towers Watson and Deloitte which provided independent advice on a/hor; remuneration issues during the year. These services are considered to have been independent, objective and relevant to the market. Other than employee engagement benchmarking services, Willis Towers Watson does not provide any other services to the Company or to any individual director. Deloitte provides tax advisory and payroll services to the Company. The total cost in connection with Willis Towers Watson's work was €41,540 and for Deloitte €9,355, invoiced on a time spent basis. Willis Towers Watson and Deloitte are members of the Remuneration Consultants Group and provide advice in line with its Code of Business Conduct. Considering this, and the level and nature of the service received, the Committee remains satisfied that the advice is objective and independent. ![img-4.jpeg](img-4.jpeg) ![img-5.jpeg](img-5.jpeg) Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 147 Report Governance Statements Reporting Information ### Directors’ remuneration report continued Non-Executive Directors’ remuneration for the years ended 31 December 2022 and 2021 | | | Audit and Risk | | Remuneration | | | | Social Responsibility | | | Senior Independent | | | Social security | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Committee | | Committee | | Nomination Committee | | | Committee | | | Director | | contributions | 2 | Total | | Financial year Base fee | 1 (€) | | (€) | | (€) | | (€) | | | (€) | | | (€) | | (€) | (€) | Anastassis G. David FY2022 150,000 – – – – – – 150,000 FY2021 73,500 – – – – – – 73,500 Charlotte J. Boyle FY2022 82,000 – 13,000 6,500 – – – 101,500 FY2021 73,500 – 11,600 5,800 – – – 90,900 3 Henrique Braun FY2022 82,000 – – – – – 6,586 88,586 FY2021 36,750 – – – – – 2,988 39,738 Olusola (Sola) David-Borha FY2022 82,000 16,000 – – – – 7,871 105,871 FY2021 73,500 14,500 – – – – 7,156 95,156 Anna Diamantopoulou FY2022 82,000 – 6,500 6,500 6,500 – 8,152 109,652 FY2021 73,500 – 5,800 5,800 5,800 – 7,392 98,292 William W. (Bill) Douglas lll FY2022 82,000 32,000 – – – – – 114,000 FY2021 73,500 28,900 – – – – – 102,400 Reto Francioni FY2022 82,000 – 6,500 13,000 – 18,000 7,123 126,623 FY2021 73,500 – 5,800 11,600 – 15,800 6,399 113,099 Anastasios I. Leventis FY2022 82,000 – – – 13,000 – – 95,000 FY2021 73,500 – – – 11,600 – – 85,100 Christo Leventis FY2022 82,000 – – – – – – 82,000 FY2021 73,500 – – – – – – 73,500 Alexandra Papalexopoulou FY2022 82,000 16,000 – – – – – 98,000 FY2021 73,500 14,500 – – – – – 88,000 4 Bruno Pietracci FY2022 82,000 – – – 6,500 – 7,108 95,608 FY2021 36,750 – – – 2,900 – 3,224 42,874 5 José Octavio Reyes FY2022 – – – – – – – – FY2021 36,750 – – – 2,900 – 2,249 41,899 6 Alfredo Rivera FY2022 – – – – – – – – FY2021 36,750 – – – – – – 36,750 Ryan Rudolph FY2022 82,000 – – – – – 6,586 88,586 FY2021 73,500 – – – – – 5,977 79,477 1. Non-Executive Director fees for 2022 were in line with the fees that were revised in 2022. 2. Social security employer contributions as required by Swiss legislation. 3. Henrique Braun was appointed to the Board of Directors on 22 June 2021. The Group applied a half‑year period base fee. 4. Bruno Pietracci was appointed to the Board of Directors on 22 June 2021. The Group applied a half-year period base fee. 5. José Octavio Reyes retired from the Board of Directors on 22 June 2021. The Group applied a half-year period base fee. 6. Alfredo Rivera retired from the Board of Directors on 22 June 2021. The Group applied a half‑year period base fee. Non-Executive Directors do not participate in any of the Group’s incentive plans, nor do they receive any retirement or other taxable benefits. Fee levels in the table above were last reviewed in 2022. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 148 Report Governance Statements Reporting Information ### Directors’ remuneration report continued Single figure table Single total figure of remuneration for the Chief Executive Officer for the years ended 31 December 2022 and 2021. | | | Cash and non-cash | | | | | | Employee Share | | | | | | | | | | | Total variable | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Base pay | 1 | | benefits | 2 | Annual bonus | | 3 | PurchasePlan | | 4 | Long-term incentives | | 5 | Retirement benefits | | 6 | Total fixed remuneration | | remuneration | Total single figure | | | € 000s | | | € 000s | | | € 000s | | | € 000s | | | € 000s | | | € 000s | | | € 000s | € 000s | | € 000s | 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 Zoran Bogdanovic 832 807 461 853 911 1,038 41 30 1,684 1,342 144 133 1,437 1,793 2,636 2,410 4,073 4,203 1. Base pay’ includes the monthly instalments linked to the base salary for 2022 and 2021. 2. ‘Cash and non‑cash benefits’ includes the value of all benefits paid during 2022. These are outlined in the ‘Cash and non‑cash benefits’ section below and include any gross‑ups for the tax benefits. 3. Annual bonus fr 2022 includes the MIP payout, receivable early in 2023 for the 2022 performance year, including the amount deferred in shares. Refer to ‘MIP performance outcomes‑2022’ for details. 4. ‘Employee Share Purchase Plan’ reflects the value of Company matching share contributions under the ESPP. 5. ‘Long‑term incentives’ for 2022 reflects the 2020 awards made under the Performance Share Plan and the dividend equivalent shares paid on PSP shares that will vest in early 2023. The number of shares due to vest to the Chief Executive Officer for the 2020 award is 70,044. TheChief Executive Officer will also get 5,733 shares representing the dividend equivalents for the awarded shares for 2020, 2021 and 2022. The value reflects the number of shares multiplied by the average market price over the last three months of the financial year. Thefigure will be restated in next year’s report based on the share price at vesting (as has been done for the 2019 award in the 2021 figure above). €329,512 of the €1,683,647 total vested value of the 2020 award was due to increase in share price since date of grant. 6. ‘Retirement benefits’ includes the pension plan under Swiss law. Employer contributions are 15% of annual base salary. The disclosed figure also includes risk and administration costs of €18,911. 7. No malus and clawback was operated. Fixed pay for 2022 Cash and non-cash benefits Base salary Zoran Bogdanovic received additional benefits during 2022. These included cost of living and foreign In 2022, Zoran Bogdanovic’s salary was increased to €840,000 representing an increase of 3.1% exchange rate adjustment (€330,151), private medical insurance (€5,255), partner allowance (€1,000), effective May 2022. Following the freeze in 2021, the Committee believed that as the Company home trip allowance (€2,600), tax support (€10,772), company car (€21,425), housing allowance emerged from the COVID‑19 pandemic, an increase for the CEO in line with other employees was (€105,952), Company matching contribution related to the ESPP (€40,525 – reflecting the appropriate. The average increase for our employees was 4.4%. maximummatch of 3% under the plan), tax equalisation (€‑146,188), and the value of social security contributions(€129,567). Retirement benefits Zoran Bogdanovic receives an annual retirement benefit of 15% of base salary, aligning to the ### Variable pay for 2022 retirement benefit provided under Swiss law and based on the age brackets defined by federal Swiss legislation. During the year, €143,661 of retirement benefit was received inclusive of €18,911 for risk MIP performance outcomes – 2022 and administration costs. The Business Performance element for the 2022 MIP was based on the following metrics: Normal retirement age for the Chief Executive Officer’s plan is 65 years. In case of early retirement, • Net Sales Revenue, with an opportunity of 56% of salary for maximum performance (28% of salary which is possible from the age of 58, the Chief Executive Officer is entitled to receive the amount for target performance). accrued under the plan as a lump sum. • Comparable EBIT, with an opportunity of 56% of salary for maximum performance (28% of salary fortarget performance). • Free cash flow, with an opportunity level of 28% of salary for maximum performance (14% of salary for target performance). The outcome of the business performance element is multiplied by the outcome for the individual performance element. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 149 Report Governance Statements Reporting Information ### Directors’ remuneration report continued The CEO’s individual performance metrics were measured versus the following priorities in 2022. The Remuneration Committee considered the above formulaic outcome to ensure that it was both fair and appropriate given the wider stakeholder experience described above and the wider performance Priorities Achievement assessment as set out in the Remuneration Committee Chair’s letter earlier on in this report. The annual Business Increase volume Volume increased 12.3% versus 2021 bonus award in respect of the 2022 financial year for the Chief Executive Officer was therefore €911,400 Performance Increase organic revenue Organic revenue growth 14.2% increase, excluding and 108.5% of salary. The Committee judged that this outcome was appropriate and did not apply growth by 6% Russia and Ukraine it is 22.7% adiscretionary adjustment. Increase comparable EBIT Comparable EBIT 11.9% increase and 1.3% organic | New | Acquisition of Egypt | Successful completion of the acquisition of Egypt | In accordance with the terms of the MIP, 50% of the award will be paid out in March 2023 and the | | --- | --- | --- | --- | | acquisitions | Acquisition of Three Cents | and Three Cents | remaining 50% will be deferred into shares for a period of three years. MIP payouts are not driven by | | Employee | Maintain or increase employee | Employee engagement remained stable at 85% | share price appreciation. | | Engagement | engagement versus prior year | versus prior year | | Performance Share Plan (PSP) awards–2022 Sustainability Reduction in CO 2 and increase Energy efficient coolers from 49% in 2022 versus The PSP is the Company’s primary long-term incentive vehicle. In March 2022, the Chief Executive Commitments energy efficient coolers 42% in 2021 Officer was granted a performance share award over 140,502 shares under the PSP, representing Progress towards World 48% primary packaging collected for recycling 330% of base salary at date of grant. without waste versus 46% in 2021 The award is subject to a three‑year performance period, aligned to the Company’s financial year, with Increase in number of women Overall women in management increased from performance measured to the end of financial year 2024, and vesting anticipated in March 2025. These in management 39,2% to 39.6% and women in Senior leader vested shares will then be subject to a further two‑year holding period, and the Chief Executive Officer positions increased from 36.5% to 39.5% agrees to a no-sale commitment during this time. Increase the number that have Over 790,000 young people from 2017 to 2022 have access to #YouthEmpowered access versus 548,000 in 2021 The Committee was mindful of share price volatility at the time of grant and will retain the right to appropriately apply discretion to the share award outcome at the time of vesting, if the level of The Remuneration Committee took into account the following additional achievements during 2022. vestingand value delivered is not considered to be appropriate taking into account an assessment • Handling of the challenges posed by the Russia‑Ukraine war and the humanitarian support to Ukraine ofperformance. during the war. The following table sets out the details of the performance share award made to the Chief Executive • Firstever green bond issued (500m EUR). Officer under the PSP for 2022. • Number one contributor to revenue growth for our retail customers. Performance share award over 140,502 shares, • Recognised in the DJSI as leading Beverage company and top scores in S&P Global Sustainability Yearbook. Type of award made receivable for nil cost Due to the onset of the war in Ukraine, we have taken the decision to exclude Ukraine and Russia from Share price at date of grant €19.14 (£15.98) both the targets as well as the actuals in calculating the payout. None of our business units have Date of grant 16 March 2022 received government aid in 2022. Performance period 1 January 2022 to 31 December 2024 The CEO’s individual financial metrics were measured as follows: Face value of the award €2,689,208 (The maximum number of shares that would vest if Performance level (payout % of Target opportunity) Payout (% of allperformance measures and targets are met, Metric Achievement basesalary)Threshold (0%) Target (100%) Maximum (200%) multiplied by the share price at the date of grant) Net Sales Revenue (€m) 6,348.5 6,900.5 7,452.6 7,857.3 56.0% Face value of the award as a % of annual base salary 330% Percentage that would be distributed if threshold 25% of maximum award performance was achieved in both PSP key Comparable EBIT (€m) 643.9 699.9 755.9 692.4 24.5% performance indicators | | Percentage that would be distributed if threshold | 10.625% (EPS or ROIC) / 3.75% | | | --- | --- | --- | --- | | | performance was achieved only in one PSP key | (reduction inCO | 2 emissions) | | Free Cash Flow (€m) 411.5 447.2 492.0 503.7 28.0% | performance indicator | of maximum award | | Total (business performance multiplied by individual performance) 108.5% Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 150 Report Governance Statements Reporting Information ### Directors’ remuneration report continued Similar to the award made in March 2021, the 2022award was subject to comparable earnings per share Performance Share Plan (PSP) outcomes of the 2020‑2022 award (EPS) and return on invested capital (ROIC) and reduction in CO 2 emissions targets asoutlined below. The table below summarises performance against the applicable targets for PSP awards made in 2020, which are due to vest in March 2023. The financial measures are key measures ofbusiness performance. The reduction in greenhouse gas emissions metric was selected todirectly align with and incentivise delivery of theCompany’s ESG Total Threshold Maximum Actual (% of max) objectives, particularly our ambitious goal to achieve net zero emissions across our entire value chain by | | | Measure Weighting | Target Vesting Target Vesting Achievement Vesting | | | --- | --- | --- | --- | --- | | 2040. The CO | 2 emissions target in the PSP implicitly captures reduction in plastics, which was a key | | | | | | | Comparable EPS 50% 1.79p 25% 1.98p 100% 1.70p 0% | | 48% | driver of its selection as a metric. ROIC 50% 13.9% 25% 15.9% 100% 15.8% 96% In light of the heightened uncertainty as a result of the Russia-Ukraine war, the Committee temporarily postponed target setting at the date of grant in March 2022 as the Group had significant operations in Based on performance against the targets, the formulaic outcome was a vesting level of 48%. both countries ROIC and EPS. The targets summarised below were disclosed via the London Stock In light of the external challenges facing the business, the Committee believed that the financial outcomes Exchange’s regulatory news service (RNS) in September 2022. These targets exclude Russia and Ukraine. achieved reflected strong performance and that the vesting outcome was appropriate. It therefore Threshold Maximum determined not to make any adjustment to the formulaic outcome. The above results include Russia Vesting Vesting (% and Ukraine but exclude Egypt as at the time that targets were set in March 2020, Egypt was not part of Measure Description Weighting Target (% of max) Target of max) the Group. Further detail and additional context is provided in the Remuneration Committee Chair’s letter. | Comparable EPS Calculated by dividing the | | 42.5% 1.38p 25% 1.62p 100% | | | --- | --- | --- | --- | | | comparable net profit attributable | | Dilution limit | | | to the owners of the parent by | | Usage of shares under all share plans and executive share plans adheres to the dilution limits set by | | | theweighted average number | | theInvestment Association Principles of Remuneration (10% for all share plans and 5% for all executive | | | ofoutstanding shares during | | share plans, in any 10‑year period). | theperiod. Implementation of policy in 2023 Return on invested ROIC is the percentage return that 42.5% 11.5% 25% 13.4% 100% For 2023, we will continue to apply the remuneration policy approved by shareholders in 2022, as outlined capital (ROIC) a company makes on its invested on pages 137 to 140. capital. More specifically, we defineROIC as the percentage of comparable net profit excluding net finance costs divided by the capital employed. Capital employed is calculated as the average of net debt and shareholders’ equity attributable to the owners of the parent through the year. Reduction in CO 2 This target supports the 15% 2,921 25% 2,720 100% emissions Company’s ambitious goal to achieve net zero emissions across its entire value chain by 2040. 1.5 degree Celsius scenarios approved by the Science Based Targets initiative (SBTi) and calculated as thousand tonnes of CO 2 emissions equivalent. The vesting schedule for PSP performance conditions is a straight line between the threshold and maximum performance levels. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 151 Report Governance Statements Reporting Information ### Directors’ remuneration report continued Base salary and fees It is intended that, as in past years, the three-year performance conditions applicable to the award will 2023 salary increase levels for employees have not been finalised at the date of this report. It is anticipated continue to be based on ROIC and EPS as well as the reduction of CO 2 emissions metric which was first that the Chief Executive Officer’s increase will not be higher than the increases provided for the introduced in 2021. widerworkforce. The weightings will be 42.5% for ROIC, 42.5% forEPS and 15% for reduction of CO 2 emissions. Revised Chairman and Board fees effective June 2022 were approved during the AGM 2022. The new Theseare unchanged from 2021 and 2022. Further detail on the rationale for the increased award and fees were disclosed in the 2021 IAR. They are as follows: the stretch of the targets is provided in the Remuneration Committee Chair’s letter. Non-Executive Directors’ fees Current fees The targets for the 2023 PSP award are as follows: Chairman fee €150,000 PSP 2023-2025 | Basic fee €82,000 | | Threshold Stretch | | | | --- | --- | --- | --- | --- | | Senior Independent Director €18,000 | | | Vesting | Vesting | | | Measure Description Weighting | Target | (% of max) Target | (% of max) | Audit and Risk Committee Chair €32,000 EPS Calculated by dividing the comparable Audit and Risk Committee member €16,000 net profit attributable to the owners Remuneration/Nomination/Social Responsibility Committee Chair €13,000 ofthe parent by the weighted average Remuneration/Nomination/Social Responsibility Committee member €6,500 number of outstanding shares during the period. 42.5% 1.40 25.00% 1.63 100% The increase of fees for the Chairman better reflects the time commitment required for the role and ROIC ROIC is the percentage return that a the Committee notes that the new fees remain below market levels. company makes on its invested capital. Management Incentive Plan (MIP) More specifically, we define ROIC as the The MIP operates on a multiplicative basis. The outcome will be determined by business performance percentage of comparable net profit multiplied by individual performance, which means that unless the business performance targets are excluding net finance costs divided by achieved no bonus will be payable. the capital employed. Capital employed Business performance is measured based on performance against three KPIs: revenue (40% weighting), is calculated as the average of net debt comparable EBIT (40% weighting) and free cash flow (20% weighting). Targets are considered to be and shareholders’ equity attributable commercially sensitive but will be disclosed on a retrospective basis in next year’s remuneration report. tothe owners of the parent through For target performance against this element the outcome will be 70%, rising to 140% for maximum theyear. 42.5% 11.00% 25.00% 12.90% 100% performance. For the CEO, individual performance will be assessed based on the achievement of defined Reduction This target supports the Company’s strategic objectives. Based on the Remuneration Committee’s assessment of performance against ofCO 2 ambitious goal to achieve net zero these strategic objectives, the outcome for the individual performance element may be up to 100%. Emissions emissions across its entire value chain by 2040. Aligned with science and 1.5 The maximum opportunity level (which would reflect both a stretch level of business performance degree Celsius scenarios and approved andfull achievement of the individual strategic objectives) for the CEO will be 140% of base salary, by the Science Based Targets initiative which is unchanged from 2022. (SBTi) and calculated as thousand Performance Share Plan (PSP) tonnes of CO 2 emissions equivalent. 15.0% 4,037 25.00% 3,851 100% Taking account of our growth ambitions over the next three-year period, and the performance of the The performance period for 2023 awards will be the three years to the end of December 2025 and Company and CEO since appointment, we are proposing to grant a one-off higher performance share vesting will occur in March 2026. These vested shares will then be subject to a further two‑year holding award to the CEO in 2023, representing 450% of base salary. period, and the Chief Executive Officer agrees to a no-sale commitment during this time. The proposed award level is in line with the maximum opportunity allowable under the PSP in our Directors’ Remuneration Policy, as approved by shareholders (where a maximum award of 450% of salary is permitted in any financial year). Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 152 Report Governance Statements Reporting Information ### Directors’ remuneration report continued Annual percentage change in remuneration of Directors and employees CEO pay ratio The following table sets out the percentage change in remuneration for each Director and average Coca‑Cola HBC is domiciled in Switzerland. We are therefore not required to report a CEO pay percentage change of employees on an annual basis. ratiounder UK regulations; however, we are voluntarily disclosing ratios below. We have chosen to makeacomparison with employees in Switzerland as this is the market in which our CEO is based. Salary/fees Taxable benefits Annual bonus | 2021 to | | | | 2021 to | | | | | | Theinternational nature of our business means that we operate in countries with a significant range | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2020 to | 2019 to | | | 2020 to | 2019 to | 2021 to | 2020 to | 2019 to | | | 2022 | 2021 | 2020 | 2 | 2022 | 2021 | 2020 | 2022 | 2021 | 2020 | | interms of market practice for levels of remuneration and cost of living. | | % | % | % | % | % | % | | % | % | % | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | 4 | | | | | Switzerland, for example, has a substantially higher cost of living and employment remuneration | | All Employees 4.39 4.59 0.00 16.34 4.19 -18.57 | | | | | | | 96.50 ‑14.79 9.12 | | | | | | Director | | | | | | | | | | | compared to other countries. For this reason, comparisons with our Swiss workforce are likely to be | | Anastassis | | | | | | | | | | | more informative about the pay distribution of our workforce. | 1 G.David 104.08 – – – – – – – – The table below compares the 2022 single figure of remuneration for the CEO with that of the employees 3 Zoran Bogdanovic 3.10 3.20 0.00 -36.53 24.25 34.63 155.21 -28.87 23.00 who are paid at the 25th percentile (lower quartile), 50th percentile (median) and 75th percentile (upper Charlotte J.Boyle 11.66 – – – – – – – – quartile) of the Company’s workforce based in Switzerland, ranked based on total remuneration. Henrique Braun 11.46 – – – – – – – – 25 th percentile Median 75 th percentile Olusola (Sola) Year Method pay ratio (P1) pay ratio (P2) pay ratio (P3) David-Borha 11.26 – – – – – – – – 2022 Option A 46:1 37:1 31:1 Anna 2021 Option A 65:1 52:1 42:1 Diamantopoulou 11.56 – – – – – – – – 2020 Option A 39:1 33:1 26:1 William W. (Bill) 2019 Option A 33:1 29:1 23:1 Douglas lll 11.33 – – – – – – – – Reto Francioni 11.96 – – – – – – – – Option A is based on a sample of full‑time Swiss employees. Their pay and benefits is calculated, and Anastasios every Swiss employee is ranked to determine P25, P50 and P75. Several Swiss employees around each I.Leventis 11.63 – – – – – – – – percentile were identified to ensure that they accurately represent the relevant percentile ranking. Christo Leventis 11.56 – – – – – – – – The methodology used to identify the lower quartile, median and upper quartile employees was to rank Alexandra all employees of the Swiss workforce on total remuneration (for employees who were in employment Papalexopoulou 11.36 – – – – – – – – for the full calendar year). Twoemployees around each percentile were identified to ensure they accurately Bruno Pietracci 11.50 – – – – – – – – represent the relevant percentile ranking. The total remuneration for each of these employees was then Jose Octavio calculated consistent with the methodology applied for deriving the CEO’s single figure remuneration. 5 Reyes – – – – – – – – – 5 | Alfredo Rivera | – – – – – – – – – | The table below sets out the total pay and benefits for the lower quartile, median and upper quartile: | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Ryan Rudolph 11.46 – – – – – – – – | | | th | | | | th | | | | | | 25 percentile | | Median | | 75 percentile | | | | | | | in € | | in € | | in € | 1. Change in Chairman’s fee has been disclosed in the 2021 Remuneration Report as part of the policy for 2022 and approved in the June 2022 AGM. Last change to the Chairman’s fee took place in 2018. The fee is well below the FTSE 100 median. Annual base salary 76,229 76,854 87,478 2. There were no salary increases in 2020 due to the COVID pandemic. Total remuneration 88,694 110,524 133,480 3. The decrease in taxable benefits for the Chief Executive Officer was due to tax equalization. 4. The decrease in the employee benefits figure in 2020 was due to the impact of COVID and related to the provision of office-based benefits which were not taken up due to the increase in remote working. 5. Jose Octavio Reyes and Alfredo Rivera retired from the Board of Directors on 22 June 2021. Strategic Report Corporate Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 153 # Directors' remuneration report continued Total remuneration of Swiss employees includes base salary, annual bonuses, other cash compensation (e.g. overtime), other cash and non-cash benefits (e.g. company car, tax support, relocation etc.), pension employer contributions and employer social security contributions during 2022. We are satisfied that the pay ratios reported this year are consistent with our wider pay, reward and progression policies for employees. As described on page 137, we have an overall remuneration philosophy that operates throughout the Group, ensuring that employees are fairly rewarded and that their individual contributions are linked to the success of the Company. Variable pay is an important element of our reward philosophy and a significant proportion of total remuneration for top managers (including the CEO) is tied to the achievement of our business objectives. As employees advance through the Company there will be the opportunity to receive higher rewards commensurate with increased accountability and market practice. The CEO's total remuneration has a significantly higher proportion of variable pay in comparison with the rest of our employees. The CEO's remuneration will therefore increase or decrease in line with business performance, aligning it with shareholders' interests. ## Chief Executive Officer pay and performance comparison The graph below shows the Total Shareholder Return (TSR) of the Company compared with the FTSE 100 Index over a 10-year period to 31 December 2022, based on an initial investment of £100. The Remuneration Committee believes that the FTSE 100 Index is the most appropriate index to use for historic performance due to the size of the Company and our listing location. Total Shareholder Return versus FTSE 100 ![img-6.jpeg](img-6.jpeg) | | 2013 | 2014 | 2015 | 2016 | 2017 | | 2018 | 2019 | 2020 | 2021 | 2022 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Dimitris Lois | Dimitris Lois | Dimitris Lois | Dimitris Lois | Dimitris Lois | Zoran Bogdanovic | Zoran Bogdanovic | Zoran Bogdanovic | Zoran Bogdanovic | Zoran Bogdanovic | Zoran Bogdanovic | | Total remuneration – single figure (€ 000s) | 1,928 | 1,918 | 3,012 | 2,923 | 15,378 | 410 | 3,710 | 2,499 | 3,340 | 4,203 | 4,073 | | MP (% of maximum) | 49% | 45% | 75% | 55% | 53% | 5% | 48% | 56% | 40% | 91% | 78% | | PSP (% of maximum) | – | – | – | – | 80% | – | 100% | 75% | 50% | 75% | 48% | Dimitris Lois sadly passed away on 2 October 2017. The 2017 total remuneration values above reflect the period 1 January 2017 to 2 October 2017. The total remuneration value for Zoran Bogdanovic reflects the period from his appointment as Chief Executive Officer to the end of the financial year, 7 December 2017 to 31 December 2017. 154 Strategic Report Provisional Statements Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 # Directors' remuneration report continued # Relative importance of spend on pay (0%) The graphic below presents the year-on-year change in total expenditure for all employees across the Group and distributions made to shareholders in the form of dividends, share buy-backs and/or capital returns. ![img-7.jpeg](img-7.jpeg) Compared with the prior year, the total staff costs have increased by 14.5%, while dividends distributed to shareholders have increased by 11.4%. # Shareholder voting outcomes The table below sets out the result of the vote on the remuneration-related resolutions at the Annual General Meeting held in June 2022. | Resolution | Votes for | Votes against | Abstentions | Total votes cast | Voting rights represented | | --- | --- | --- | --- | --- | --- | | Advisory vote on the UK Remuneration Report | 181,440,565 | 88,630,436 | 17,699 | 270,088,670 | 73.71% | | | 67.17% | 32.82% | 0.01% | | | | Advisory vote on the Swiss Remuneration Report | 181,440,565 | 88,630,436 | 17,699 | 270,088,670 | 73.71% | | | 67.17% | 32.82% | 0.01% | | | | Advisory vote on the remuneration policy | 259,376,517 | 10,695,685 | 16,668 | 270,088,670 | 73.71% | | | 96.03% | 3.96% | 0.01% | | | | Approval of the maximum aggregate amount of remuneration for the Board until the next Annual General Meeting | 269,821,962 | 204,088 | 62,620 | 270,088,670 | 73.71% | | | 99.92% | 0.08% | n.a | | | | Approval of the maximum aggregate amount of remuneration for the Executive Leadership Team for the next financial year | 267,013,278 | 2,998,680 | 76,712 | 270,088,670 | 73.71% | | | 98.89% | 1.11% | n.a. | | | In reaction to the 67% in favour vote, the Committee decided to conduct an extensive shareholder consultation, reaching out to many shareholders and engaging with all shareholders who expressed concerns. We value our ongoing dialogue with shareholders and welcome any views on this report. # Payments to past Directors and payments for loss of office There were no payments made to past Directors of the Group or loss of office payments made during the year. # Payments to appointed Directors There were no payments made to appointed Directors during the year. # Outside appointments for the Chief Executive Officer Zoran Bogdanovic does not hold any appointments outside the Company. # Total Directors' and Executive Leadership Team members' remuneration The table below outlines the aggregated total remuneration figures for Directors and Executive Leadership Team members in the year. | | 2022 € million | 2021 € million | | --- | --- | --- | | Total remuneration paid to or accrued for Directors, the Executive Leadership Team and the Chief Executive Officer | 28.3 | 23.6 | | Salaries and other short-term benefits | 19.3 | 16.3 | | Amount accrued for performance share awards | 8.0 | 6.4 | | Pension and post-employment benefits for Directors, the Executive Leadership Team and the Chief Executive Officer | 1.0 | 0.9 | # Credits and loans granted to governing bodies In 2022, no credits or loans were granted to active or former members of the Company's Board, members of the Executive Leadership Team or any related persons. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 155 Report Governance Statements Reporting Information ### Directors’ remuneration report continued Share ownership The table below summarises the total shareholding as at 17 March 2023, including any outstanding shares awarded through our incentive plans, for the ChiefExecutive Officer and other Directors. With performance measures Without performance measures PSP ESOP ESPP | | | | | Unvested and | | | | | | Number of | | Current | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | subject to | | | | outstanding shares | | shareholding as % of | | | | | | | Share | Performance shares | | performance | | Number ofstock | Vesting at the end of | | | held as at 31 | | base | | Shareholding | | | Name | interests | | granted in 2022 | | conditions Vested | options outstanding Fully vested | | 2022 | December 2022 Beneficially owned | | | salary | 1 | guideline met | 1 | 2 Zoran Bogdanovic Yes 144,826 380,685 69,759 132,743 132,743 – 60,711 299,614 797% Yes 3 Anastassis G. David – – – – – – – – – – Charlotte J. Boyle Yes – – – – – – – 1,017 – – Henrique Braun – – – – – – – – – – Olusola (Sola) David‑Borha – – – – – – – – – – Anna Diamantopoulou – – – – – – – – – – William W. (Bill) Douglas III Yes – – – – – – – 10,000 – – Reto Francioni Yes – – – – – – – 7,000 – – 4 Anastasios I. Leventis – – – – – – – – – – 5 Christo Leventis – – – – – – – – – – Alexandra Papalexopoulou – – – – – – – – – – Bruno Pietracci – – – – – – – – – – José Octavio Reyes – – – – – – – – – – Alfredo Rivera – – – – – – – – – – Ryan Rudolph – – – – – – – – – – 1. The shareholding requirement was introduced from the date of the 2015 PSP award, 10 December 2015 and was updated to 300% in 2020. 2. During 2022, Zoran Bogdanovic exercised 29,734 options under the ESOP due to upcoming expiration. 3. Anastassis G. David is a beneficiary of: (a) a private discretionary trust, for the primary benefit of present and future members of the family of the late Anastasios George Leventis, that has an indirect interest with respect to 85,355,019 shares held by Kar‑Tess Holding and (b) a further private discretionary trust, for the primary benefit of present and future members of the family of the late Anastasios George Leventis, that has an indirect interest with respect to 832,268 shares held by Ari Holdings Limited. 4. Anastasios I. Leventis is a beneficiary of: (a) a private discretionary trust, for the primary benefit of present and future members of the family of the late Anastasios George Leventis, that has an indirect interest with respect to 85,355,019 shares held by Kar‑Tess Holding and (b) a further private discretionary trust, for the primary benefit of present and future members of the family of the late Anastasios George Leventis, that has an indirect interest with respect to 286,880 shares held by its trustee, Selene Treuhand AG and (c) a further private discretionary trust, for the primary benefit of present and future members of the family of the late Avgie Leventis, that has an indirect interest with respect to 2,138,277 shares held by Carlcan Holding Limited. 5. Christo Leventis is a beneficiary of: (a) a private discretionary trust, for the primary benefit of present and future members of the family of the late Anastasios George Leventis, that has an indirect interest with respect to 85,355,019 shares held by Kar‑Tess Holding and (b) a further private discretionary trust, for the primary benefit of present and future members of the family of the late Anastasios George Leventis, that has an indirect interest with respect to 482,228 shares held by its trustee, Selene Treuhand AG and (c) a further private discretionary trust, for the primary benefit of present and future members of the family of the late Avgie Leventis, that has an indirect interest with respect to 2,138,277 shares held by Carlcan Holding Limited. Approval of the Directors’ Remuneration Report The Directors’ Remuneration Report set out on pages 128 to 155 was approved by the Board of Directors on 17 March 2023 and signed on its behalf by Charlotte J. Boyle, Chair of the Remuneration Committee. Charlotte J. Boyle Chair of the Remuneration Committee 17 March 2023 156 Strategic Report Project Financial Statements Semi-Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 ## 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 98-100, 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 12-92). In addition, Notes 25 'Financial risk management and financial instruments', 36 'Net debt', and 27 '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 82. 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 March 2023 ## Disclosure of information required under Listing Rule 9.8.4R For the purposes of Listing Rule 9.8.4CR, the information required to be disclosed by premium listed companies in the United Kingdom is as follows: | Listing Rule | Information to be included | Reference in report | | --- | --- | --- | | 9.8.4(1) | Interest capitalised by the Group and an indication of the amount and treatment of any associated tax relief | Not applicable | | 9.8.4(2) | Details of any unaudited financial information required by LR 9.2.18 | Not applicable | | 9.8.4(4) | Details of any long-term incentive scheme described in LR 9.4.3 | Not applicable | | 9.8.4(5) | Details of any arrangement under which a Director has waived any emoluments | Not applicable | | 9.8.4(6) | Details of any arrangement under which a Director has agreed to waive future emoluments | Not applicable | | 9.8.4(7) | Details of any allotments of shares by the Company for cash not previously authorised by shareholders | Not applicable | | 9.8.4(8) | Details of any allotments of shares for cash by a major subsidiary of the Company | Not applicable | | 9.8.4(9) | Details of the participation by the Company in any placing made by its parent company | Not applicable | | 9.8.4(10) | Details of any contracts of significance involving a Director | Not applicable | | 9.8.4(11) | Details of any contract for the provision of services to the Company by a controlling shareholder | Not applicable | | 9.8.4(12) | Details of any arrangement under which a shareholder has waived or agreed to waive any dividends | Not applicable | | 9.8.4(13) | Details of any arrangement under which a shareholder has agreed to waive future dividends | Not applicable | | 9.8.4(14) | Agreements with a controlling shareholder | Not applicable | Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 157 Report Governance Statements Reporting Information ### Contents | Independent auditor’s report to | | Operating assets and liabilities | | | --- | --- | --- | --- | | Coca‑ColaHBC AG | | 181 14. Intangible assets | | | 158 Independent auditor’s report | | 184 15. Property, plant and equipment | | | Consolidated financial statements | | 186 16. Interests in other entities | | | 166 Consolidated income statement | | 190 17. Leases | | | 166 Consolidated statement of | | 192 18. Inventories | | | | comprehensive income | 192 19. Trade, other receivables and assets | | | 167 Consolidated balance sheet | | 194 20. Assets classified as held for sale | | | 168 Consolidated statement of changes | | 194 21. Trade and other payables | | | | inequity | 195 22. Provisions and employee benefits | | | 169 Consolidated cash flow statement | | 199 23. Offsetting financial assets | | | Notes to the consolidated financial | | | andliabilities | | statements | | 200 24. Business combinations | | | Basis of reporting | | Risk management and capital structure | | | 170 1. Description of business | | 203 25. Financial risk management | | | 170 2. Basis of preparation and consolidation | | | andfinancial instruments | | 171 3. Foreign currency and translation | | 212 26. Net debt | | | 171 4. Accounting pronouncements | | 215 27. Equity | | | 171 5. Critical accounting estimates | | Other financial information | | andjudgements 217 28. Related party transactions 172 6. Russia-Ukraine conflict impact 219 29. Share-based payments Results for the year 220 30. Contingencies 174 7. Segmental analysis 221 31. Commitments 176 8. Net sales revenue 221 32. Post balance sheet events 177 9. Operating expenses 178 10. Finance costs, net 178 11. Taxation 180 12. Earnings per share 181 13. Components of other comprehensiveincome ## FINANCIAL ## STATEMENTS 158 Strategic Report Corporate Governance Financial Statements Semi-Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 # Independent auditor's report to Coca-Cola HBC AG ## Report on the audit of the consolidated financial statements ### Our opinion In our opinion: - Coca-Cola HBC AG's ('Coca-Cola HBC' or the 'Group') consolidated financial statements (the 'financial statements') give a true and fair view of the state of the Group's affairs as at 31 December 2022 and of its profit and cash flows for the year then ended; and - the financial statements have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union ('EU'). We have audited the financial statements, included within the 2022 Integrated Annual Report (the 'Annual Report'), which comprise: the consolidated balance sheet as at 31 December 2022; the consolidated income statement, the consolidated statement of comprehensive income, the consolidated cash flow statement, and the consolidated statement of changes in equity for the year then ended; and the notes to the financial statements, which include a description of the significant accounting policies. Our opinion is consistent with our reporting to the Audit & Risk Committee. ### Basis for opinion We conducted our audit in accordance with International Standards on Auditing issued by the International Auditing and Assurance Standards Board (ISAs). Our responsibilities under ISAs are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. ### Independence We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements, which include the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants ('IESBA Code'), and the FRC's Ethical Standard, as applicable to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. To the best of our knowledge and belief, we declare that non-audit services prohibited by the IESBA Code, the FRC's Ethical Standard and other applicable laws and regulations were not provided to the Group. Other than those disclosed in Note 9 'Operating expenses' of the financial statements, we have provided no non-audit services to the Group in the period from 1 January 2022 to 31 December 2022. ### Our audit approach #### Overview | **Audit scope** | - We performed full scope audit procedures on the financial information of 17 subsidiary undertakings in 15 countries spread across all of the Group's reportable segments. - We also conducted procedures around specific account balances and transactions and analytical review procedures for other subsidiary undertakings and Group functions. - Taken together, the undertakings which were in scope for the purpose of our audit accounted for 83% of consolidated net sales revenue, 87% of consolidated profit before tax and 87% of consolidated total assets of the Group. | | --- | --- | | **Key audit matters** | - Goodwill and indefinite-lived intangible assets impairment assessment. - Geopolitical events in Russia and Ukraine. - Uncertain tax positions. | | **Materiality** | - Overall materiality: €41.1 million based on 5% of adjusted profit before tax (2021: €36.7 million based on 5% of profit before tax). - Performance materiality: €30.8 million (2021: €27.5 million) | ### The scope of our audit As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. #### Key audit matters We attended each of the eight Audit & Risk Committee meetings held during the year. Certain meetings involved a private discussion without management being present. We also met with the Chair of the Audit & Risk Committee on an ad-hoc basis. During these various conversations we discussed our observations on a variety of matters, for example the implications of the geopolitical events involving Russia and Ukraine, business combinations and PwC Russia's separation from the PwC Network. In September and December 2022, the Audit & Risk Committee discussed and challenged the audit plan. The plan included our key Audit Matters (as set out below) and other information on our audit approach such as our approach to specific balances and transactions and where the latest technology would be used to obtain better quality audit evidence. Key audit matters are those matters that, in the auditor's professional judgement, were of most significance in the audit of the financial statements of the current year and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit. 'Geopolitical events in Russia and Ukraine' is a new key audit matter this year. Otherwise, the key audit matters below are consistent with last year. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 159 Report Governance Statements Reporting Information ### Independent auditor’s report to Coca-Cola HBC AG continued Key audit matter How our audit addressed the key audit matter Key audit matter How our audit addressed the key audit matter Goodwill and indefinite-lived intangible assets Geopolitical events in Russia and Ukraine impairment assessment We evaluated the appropriateness of management’s Refer to Note 6 ‘Russia‑Ukraine conflict impact’ In relation to the Multon Partners and Ukraine Refer to Note 14 ‘Intangible assets’. identification of the Group’s CGUs, related control and Note 24 ‘Business combinations’. CGUs’ impairment assessment, we followed the activities and the process by which management procedures described in the Key Audit Matter Goodwill and indefinite-lived intangible assets as The geopolitical developments involving Russia prepared the CGUs’ value-in-use calculations. ‘Goodwill and indefinite‑lived intangible assets at31 December 2022 amount to €1,926.0 million and Ukraine alongside The Coca-Cola Company’s impairment assessment’. and €612.4 million, respectively. We tested the mathematical accuracy of the (‘TCCC’) decision to suspend its business in Russia CGUs’ value-in-use calculations and compared are indications of potential impairment of the For the tangible assets, we understood the The above amounts have been allocated to thecash flow projections included therein to the operations in both countries where the Group process that management followed for Multon individual cash‑generating units (‘CGUs’), which financial budgets, approved by the directors, operates in accordance with IAS 36. Partners’ impairment exercises. We worked closely inaccordance with International Accounting covering a one-year period, and management’s with the component auditors in Russia to test the Standard 36 ‘Impairment of Assets’ (‘IAS 36’) The Russia based operations consisted of the projections for the subsequent four years. mathematical accuracy of the tangible assets require the performance of an impairment Group’s subsidiary undertaking ‘Multon Partners’ Inaddition, we assessed management’s past impairment assessment and challenge assessment at least annually or whenever there and one joint venture ‘Multon AO group of forecasting accuracy by comparing key elements management on the assumptions used in light of isan indication of impairment. The impairment companies’ (‘Multon JV’) accounted for under the of the prior year projections with actual results. TCCC’s suspension of the business and sanctions assessment involves the determination of the equity method. In August 2022, TCCC unilaterally imposed. Furthermore, we leveraged the work recoverable amount of the CGU, being the higher We challenged management’s cash flow waived certain of its governance rights in performed for the discount, growth and foreign of the value-in-use and the fair value less costs projections in relation to the assumptions applied connection with its 50% interest in Multon JV. exchange rates as described in the Key audit ofdisposal. to the value-in-use calculations, taking into Asaresult, the Group gained control of Multon matter ‘Goodwill and indefinite‑lived intangible account the elevated inflationary environment. JVin accordance with International Financial This area was a key matter for our audit due to assets impairment assessment’. Reporting Framework 10 ‘Consolidated financial thesize of goodwill and indefinite‑lived intangible With the support of our valuation specialists, we statements’ (‘IFRS 10’). With regards to the Multon JV, we assessed, assets balances and because the determination assessed the appropriateness of the methodology withthe support of our valuation specialists, ofwhether elements of goodwill and of indefinite‑ and valuation techniques used as well as certain The Group performed impairment exercises on theappropriateness of the methodology, the lived intangible assets are impaired involves assumptions including discount, annual revenue itsRussia and Ukraine based operations for both valuationtechniques and the assumptions used complex and subjective estimates made by growth, perpetuity revenue growth and foreign interim and year-end financial reporting purposes. bymanagement as well as the mathematical management about the future results of the exchange rates. As a result of the above, Multon Partners incurred accuracy of their impairment model. CGUs. These estimates include assumptions We also evaluated management’s assessment impairment losses of €13.7 million for goodwill and surrounding revenue growth rates, costs, foreign Based on our work, we found that the conclusions | | ofthe potential effect of climate change risks, such | of €60.9 million for tangible assets. In addition, the | | | --- | --- | --- | --- | | exchange rates and discount rates. | | | reached by management in relation to their | | | as the cost of water, carbon emissions and | Multon JV was impaired by €52.8 million. | | impairment assessments were supported by Management has identified the Egypt CGU to be exposure to extreme weather events. No impairment losses were identified for the assumptions within reasonable ranges. Moreover, sensitive to reasonably possible changes in the We performed our independent sensitivity Ukrainian CGU. we verified the appropriateness of the Multon JV’s assumptions used, which could result in the analyses on the key drivers of the value-in-use change ofcontrol accounting treatment and its calculated recoverable amount being lower in Given the significance of the events described calculations for the CGUs with significant balances financial impact. future periods than the carrying value of the CGU. above as well as the related financial impact on the of goodwill and indefinite-lived intangible assets. Additional sensitivity disclosure has been included Group’s financial statements, we concluded that We evaluated the related disclosures provided in in the financial statements in respect of this CGU. As a result of our work, we found that the this area is a key audit matter. the financial statements in Note 6 ‘Russia‑Ukraine conclusions reached by management in relation to conflict impact’ and Note 24 ‘Business combinations’ As a result of the above assessments, the impairment testing of goodwill and indefinite- and concluded that these are appropriate. management did not identify any impairments for lived intangible assets were supported by goodwill and indefinite-lived assets, other than the assumptions within reasonable ranges. impairment charge €13.7 million recognised for the Russia based operations that is discussed in We evaluated the related disclosures provided in the Key Audit Matter ‘Geopolitical events in Russia the financial statements in Note 14 ‘Intangible and Ukraine. assets’ and concluded that these are appropriate. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 160 Report Governance Statements Reporting Information ### Independent auditor’s report to Coca-Cola HBC AG continued ### Key audit matter How our audit addressed the key audit matter How we tailored the audit scope Uncertain tax positions We tailored the scope of our audit to ensure that we performed sufficient work to be able to provide Refer to Note 11 ‘Taxation’ and Note 30 In order to understand and evaluate anopinion on the financial statements as a whole, taking into account the operating structure of ‘Contingencies’. management’s judgement, we considered the theGroup, the accounting processes and controls, and the industry in which the Group operates. status of current tax authority inspections and The Group operates in numerous tax jurisdictions enquiries, the outcome of previous tax authority The Group operates through its trading subsidiary undertakings in Nigeria, Egypt and 27 countries in and is subject to periodic tax inspections, in the inspections, judgemental positions taken in tax Europe, as set out in Note 1 ‘Description of business’ and Note 7 ‘Segmental analysis’ of the financial normal course of business, by local tax authorities returns and current year estimates as well as statements. The processing of the accounting records for these subsidiary undertakings is largely on a range of tax matters in relation to corporate recent developments in the tax jurisdictions in centralised in a shared services centre in Bulgaria, except for the subsidiary undertakings in Armenia, tax, transfer pricing and indirect taxes. As at 31 which the Group operates. Belarus, Egypt, Moldova, North Macedonia, Russia and Ukraine which process their accounting records December 2022, the Group has current tax locally. The Group also operates centralised treasury functions in the Netherlands and in Greece and liabilities of €114.4 million, while provisions for We evaluated the group’s monitoring process of acentralised procurement function for key raw materials in the Netherlands. uncertain tax positions amount to €67.5 million. the current tax authority inspections and challenged management’s estimates, particularly Based on their significance to the financial statements and in light of the key audit matters as noted The impact of changes in local tax regulations and in respect of cases where there had been above, we identified 17 subsidiary undertakings in 15 countries spread across all of the Group’s ongoing inspections by local tax authorities, could significant developments with tax authorities. reportable segments (including the significant trading subsidiary undertakings in Russia, Italy, Nigeria, materially impact the amounts recorded in the Poland, Romania and Switzerland) which, based on our scoping analysis, required a full scope audit of financial statements. Our component audit teams, through the use of their financial information. In addition, audit procedures were performed with respect to the centralised tax specialists with local knowledge and relevant Where the amount of tax payable is uncertain, the treasury functions by the group engagement team and with respect to the centralised procurement expertise, assessed the tax positions taken by the Group establishes provisions based on function by the component audit team in the Netherlands. The group engagement team also subsidiary undertakings in scope, in the context of management’s estimates with respect to the performed analytical review and other procedures on balances and transactions of subsidiary applying local tax laws and evaluating the local tax likelihood of material tax exposures crystallising undertakings not covered by the procedures described above. assessments. Additionally, with our group and the probable amount of the resultant liability. engagement team tax specialists we further The undertakings which were in scope for the purpose of our audit accounted for 83% of consolidated We consider this area as a key audit matter given evaluated management’s estimation of tax net sales revenue, 87% of consolidated profit before tax and 87% of consolidated total assets of the the level of judgement and uncertainty involved exposures and contingencies in order to assess Group. This, together with the additional procedures performed at Group level, gave us appropriate inestimating tax provisions and the complexities the adequacy of the Group’s tax provisions. audit evidence for our opinion on the financial statements. of dealing with tax rules and regulations in We held meetings with Group and local At the planning phase of the audit process, we held a one‑day virtual audit planning workshop focusing numerous jurisdictions. management to discuss the individual tax positions on planning and risk assessment activities, fraud assessment, auditor independence, accounting and of the in-scope subsidiary undertakings and auditing developments, climate change considerations, geopolitical events involving Russia and Ukraine assessed with the support of our group engagement and centralised testing procedures. This audit planning workshop was attended by all audit teams, tax team the Group’s overall tax exposure. including those responsible for the Group’s subsidiary undertakings that are subject only to a statutory audit. The group engagement team was also responsible for planning, designing and overseeing the From the evidence obtained we consider the audit procedures performed at the shared services centres in Bulgaria and Greece. In addition, we provisions in relation to uncertain tax positions as performed work centrally on IT general controls and cybersecurity risks and shared audit comfort with at 31 December 2022 to be reasonable. the component teams. The group engagement team performed audit procedures with respect to We also evaluated the related disclosures provided theGroup consolidation, financial statements disclosures and a number of other areas that involve in the financial statements in Note 11 ‘Taxation’ significant judgement and estimates, including goodwill and intangible assets and the Group’s overall and Note 30 ‘Contingencies’ and concluded that going concern assessment. these are appropriate. Strategic^{}[] Report Corporate^{}[] Governance Financial^{}[] Statements Sales Statutory^{}[] Reporting Supplementary^{}[] Information Coca-Cola HBC Integrated Annual Report 2022 161 ## Independent auditor's report to Coca-Cola HBC AG *continued* We issued formal, written instructions to the component teams setting out the work to be performed by each of them. We were in active dialogue throughout the year with the teams that conducted these component audits. In addition to holding formal periodic meetings, the group engagement team had ongoing informal interactions with the component audit teams to be continuously updated and to monitor their progress and the results of their procedures. Furthermore, the group engagement team reviewed component auditor working papers and undertook other forms of interaction as considered necessary, depending on the significance of the component and the extent of accounting and audit issues arising. We evaluated the sufficiency of the audit evidence obtained through discussions with each team and a review of the audit working papers. When travel restrictions eased, senior team members performed site visits in Bulgaria, Egypt, Italy, Poland, Romania, Switzerland and the Netherlands. These visits gave us an opportunity to meet with the local audit teams and management to discuss the business performance and outlook, regulations and taxation, and any specific accounting and auditing matters identified, including fraud and internal controls. Where physical attendance was not undertaken, senior team members participated in the final audit meetings for the trading subsidiary undertakings in Russia and Nigeria via video conference. As part of our audit, we also made enquiries of management to understand the process adopted to assess the extent of the potential impact of climate change risk on the financial statements and support the disclosures made. In addition, we read the minutes of the governance processes in place to assess climate risk and the additional reporting made by the entity on climate. Management considers that climate change does not give rise to a potential material financial statement impact. We used our knowledge of the Group to evaluate management's assessment. We particularly considered how climate change risks would impact the assumptions made in the forecasts prepared by management used in their impairment analyses and going concern assessment. Our procedures did not identify any material impact on the financial statements for the year ended 31 December 2022. Where climate risk relates to a key audit matter our audit response is given in the key audit matters section of our audit report. We considered the consistency of the disclosures in relation to climate change made in the other information within the annual report with the financial statements and knowledge from our audit. We discussed with management and the Audit & Risk Committee the ways in which climate change disclosures should continue to evolve as greater understanding of the actual and potential impacts on the Group's business is obtained. ### Materiality The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and to evaluate the effect of misstatements, both individually and in aggregate, on the financial statements as a whole. Based on our professional judgement, we determined materiality for the financial statements as a whole, as follows: | **Overall group materiality** | €41.1 million (2021: €36.7 million) | | --- | --- | | **How we determined it** | 5% of adjusted profit before tax (2021: 5% of profit before tax) | | **Rationale for benchmark applied** | Our approach has changed from the previous year, where we used the reported profit before tax as the benchmark for determining overall materiality. We consider that the reported profit before tax still remains the principal measure used by the shareholders in assessing the underlying performance of the Group and is a generally accepted benchmark. However, we have adjusted this benchmark by items which, in our view, are considered unusual and infrequently occurring in nature driven by the geopolitical events involving Russia and Ukraine. An approach to materiality based on 5% of the adjusted profit before tax is within the range of acceptable quantitative materiality thresholds in generally accepted auditing practice. | For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The range of materiality allocated across components was from €3.0 million to €1.8.0 million. When planning the audit, we considered if multiple misstatements may exist which, when aggregated, could exceed our overall materiality level. In order to reduce the risk of multiple misstatements which could aggregate to this amount we used a lower level of materiality, known as performance materiality to identify the individual balances, classes of transactions and disclosures that were subject to audit. Our performance materiality was 75% of overall materiality, amounting to €30.8 million (2021: €27.5 million). In determining the performance materiality, we considered a number of factors – the history of misstatements, risk assessment and aggregation risk and the effectiveness of controls – and concluded that an amount at the upper end of our normal range was appropriate. Where the audit identified any items that were not reflected appropriately in the financial information, we considered these items carefully to assess if they were individually or in aggregate material. We agreed with the Audit & Risk Committee that we would report to them misstatements identified exceeding €2.0 million (2021: €1.5 million) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons. ![img-8.jpeg](img-8.jpeg) Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 162 Report Governance Statements Reporting Information ### Independent auditor’s report to Coca-Cola HBC AG continued ### Conclusions relating to going concern Reporting on other information Our evaluation of the directors’ assessment of the Group’s ability to continue to adopt the going The other information comprises all of the information in the Annual Report other than the financial concern basis of accounting included: statements, our auditor’s report thereon and the Swiss statutory reporting, which we obtained prior tothe date of this auditor’s report. The directors are responsible for the other information. Our opinion • Verification that the cash flow projections used in the goodwill impairment, going concern and viability onthe financial statements does not cover the other information and, accordingly, we do not express assessments were consistent; an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of • Review of management’s assessment supporting the Group’s ability to continue to adopt the going assurancethereon. concern basis of accounting, ensuring that appropriate severe but plausible downside scenarios, including the potential impact from the geopolitical events involving Russia and Ukraine, were considered; In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with • Assessment of the reasonableness of management’s assumptions used in the cash flow projections. thefinancial statements or our knowledge obtained in the audit, or otherwise appears to be materially • Testing of the mathematical integrity of the cash flow forecasts and reconciliation with the Board misstated. If we identify an apparent material inconsistency or material misstatement, we are required approved budget and management’s projections for the subsequent periods; to perform procedures to conclude whether there is a material misstatement of the financial statements • Evaluation of the Group’s liquidity for the period under assessment by considering the Group’s or a material misstatement of the other information. If, based on the work we have performed, we available cash resources, committed undrawn credit facilities and other debt instruments in place conclude that there is a material misstatement of this other information, we are required to report that aswell as the maturity profile of the Group’s debt. We confirmed the outstanding amounts of the fact. We have nothing to report based on these responsibilities. financing facilities and verified their nature, terms and conditions; • Consideration of whether climate change is expected to have any significant impact during the period ### Corporate governance statement of the going concern assessment; and The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term • Evaluation of the appropriateness of the related disclosures provided in the financial statements viability and that part of the corporate governance statement relating to the Group’s compliance with inNote 2 ‘Basis of preparation and consolidation’. the provisions of the UK Corporate Governance Code, which the Listing Rules of the Financial Conduct Based on the work performed, we have not identified any material uncertainties relating to events or Authority specify for review by auditors of premium listed companies. Our additional responsibilities with conditions that, individually or collectively, may cast significant doubt on the Group’s ability to continue respect to the corporate governance statement as other information, are described in the Reporting as a going concern for a period of at least twelve months from when the financial statements are onother information section of this report. authorised for issue. Based on the work undertaken as part of our audit, we have concluded that each of the following In auditing the financial statements, we have concluded that the directors’ use of the going concern elements of the corporate governance statement is materially consistent with the financial statements basis of accounting in the preparation of the financial statements is appropriate. However, because and our knowledge obtained during the audit, and we have nothing material to add or draw attention notall future events or conditions can be predicted, this conclusion is not a guarantee as to the Group’s toin relation to: ability to continue as a going concern. • The directors’ confirmation that they have carried out a robust assessment of the emerging and In relation to the Group’s reporting on how they have applied the UK Corporate Governance Code, we principal risks; have nothing material to add or draw attention to in relation to the directors’ statement in the financial • The disclosures in the Annual Report that describe those principal risks, what procedures are in place statements about whether the directors considered it appropriate to adopt the going concern basis to identify emerging risks and an explanation of how these are being managed or mitigated; ofaccounting. • The directors’ statement in the financial statements about whether they considered it appropriate Our responsibilities and the responsibilities of the directors with respect to going concern are described toadopt the going concern basis of accounting in preparing them, and their identification of any in the relevant sections of this report. material uncertainties relating to the Group’s ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements; • The directors’ explanation as to their assessment of the Group’s prospects, the period this assessment covers and why the period is appropriate; and • The directors’ statement as to whether they have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the period of its assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 163 Report Governance Statements Reporting Information ### Independent auditor’s report to Coca-Cola HBC AG continued Our review of the directors’ statement regarding the longer-term viability of the Group was substantially Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design less in scope than an audit and only consisted of making inquiries and considering the directors’ process procedures in line with our responsibilities, outlined above, to detect material misstatements in respect supporting their statement; checking that the statement is in alignment with the relevant provisions of of irregularities, including fraud. The extent to which our procedures are capable of detecting the UK Corporate Governance Code; and considering whether the statement is consistent with the irregularities, including fraud, is detailed below. financial statements and our knowledge and understanding of the Group and its environment obtained Based on our understanding of the Group and the industry in which it operates, we considered the in the course of the audit. extent to which non-compliance with applicable laws and regulations may have a material effect on the In addition, based on the work undertaken as part of our audit, we have concluded that each of the financial statements, including, but not limited to, the corporate regulations arising from its listings on following elements of the corporate governance statement is materially consistent with the financial the London Stock Exchange and Athens Exchange, tax laws and regulations applicable to Coca‑Cola statements and our knowledge obtained during the audit: HBC and its subsidiaries and regulations relating to unethical and prohibited business practices. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial • The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and statements (including the risk of override of controls), and where management made subjective understandable, and provides the information necessary for the members to assess the Group’s judgements in respect of significant accounting estimates that involved making assumptions and position, performance, business model and strategy; considering future events that are inherently uncertain. The group engagement team shared this risk • The section of the Annual Report that describes the review of effectiveness of risk management and assessment with the component auditors so that they could include appropriate audit procedures in internal control systems; and response to such risks in their work. Audit procedures performed by the group engagement team and/ • The section of the Annual Report describing the work of the Audit & Risk Committee. or component auditors included among others: We have nothing to report in respect of our responsibility to report when the directors’ statement • Discussions with management, internal audit, internal legal counsel, management’s experts and relating to the Group’s compliance with the Code does not properly disclose a departure from a external legal advisors, where relevant, including consideration of known or suspected instances of relevant provision of the Code specified under the Listing Rules for review by the auditors. non-compliance with laws and regulation and fraud; • Reviewing correspondence with regulators; ### Responsibilities for the financial statements and the audit • Evaluation and testing of the operating effectiveness of management’s controls designed to prevent Responsibilities of the directors for the financial statements and detect irregularities; As explained more fully in the Statement of Directors’ Responsibilities in the Annual Report, the • Assessment of matters reported on the Group’s whistleblowing helpline and the results of directors are responsible for the preparation of the financial statements in accordance with the management’s investigation of such matters; applicable framework and for being satisfied that they give a true and fair view. The directors are also • Reading the minutes of Board meetings to identify any inconsistencies with other information responsible for such internal control as they determine is necessary to enable the preparation of provided by management; financial statements that are free from material misstatement, whether due to fraud or error. • Challenging assumptions and judgements made by management in significant accounting estimates, In preparing the financial statements, the directors are responsible for assessing the Group’s ability to in particular in relation to the key audit matters; continue as a going concern, disclosing as applicable matters related to going concern and using the • inspecting correspondence with legal advisors and internal audit reports in so far as they related to going concern basis of accounting unless the directors either intend to liquidate the Group or to cease the financial statements; operations, or have no realistic alternative but to do so. • Identifying and testing journal entries, in particular any entries posted with unusual account combinations, journal entries posted by senior management and consolidation entries. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole There are inherent limitations in the audit procedures described above. We are less likely to become are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report aware of instances of non-compliance with laws and regulations that are not closely related to thatincludes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that eventsand transactions reflected in the financial statements. Also, the risk of not detecting a material an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, mayinvolve deliberate concealment by, for example, forgery or intentional misrepresentations, they could reasonably be expected to influence the economic decisions of users taken on the basis orthroughcollusion. ofthese financial statements. 164 Strategic Report Corporate Governance Financial Statements Semi-Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 ### Independent auditor's report to Coca-Cola HBC AG continued Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected. As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: - Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. - Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control. - Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. - Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern. - Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. - Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Those charged with governance are responsible for overseeing the Group's financial reporting process. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current year and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. ### Use of this report This report, including the opinions, has been prepared for and only for Coca-Cola HBC AG for the purpose of compliance with the Disclosure Guidance and Transparency Rules sourcebook and the Listing Rules of the FCA and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come, save where expressly agreed by our prior consent in writing. ### Other required reporting #### Appointment We have been the Group's auditors since 2003 and following a tender process that the Group conducted in 2015, at the recommendation of the Audit & Risk Committee, we were reappointed by the directors on 11 December 2015 to audit the financial statements for the year ended 31 December 2016 and subsequent financial periods. #### Assurance Report on the European Single Electronic Format pursuant to the Athens Exchange listing requirements We have examined the digital files of Coca-Cola HBC, which were compiled in accordance with the European Single Electronic Format (ESEF) defined by the Commission Delegated Regulation (EU) 2019/835, as amended by Regulation (EU) 2020/1989 (hereinafter 'ESEF Regulation'), and which include the consolidated financial statements of the Group for the year ended 31 December 2022, in XHTML format 549300EFP3TNG7JGV/E49-2022-12-31-en.xhtml, as well as the provided XBRL file 549300EFP3TNG7JGV/E49-2022-12-31-en.zip with the appropriate marking up, on the aforementioned consolidated financial statements, including the other explanatory information (notes to the financial statements). #### Regulatory framework The digital files of the European Single Electronic Format are compiled in accordance with ESEF Regulation and 2020/C 379/01 Interpretative Communication of the European Commission of 10 November 2020, as provided by the Greek Law 3556/2007 and the relevant announcements of the Hellenic Capital Market Commission and the Athens Exchange ('ESEF Regulatory Framework'). Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 165 ## Independent auditor's report to Coca-Cola HBC AG continued In summary, this Framework includes the following requirements: - All annual financial reports should be prepared in XHTML format. - For consolidated financial statements in accordance with International Financial Reporting Standards, the financial information stated the consolidated balance sheet, the consolidated income statement, the consolidated statement of comprehensive income, the consolidated cash flow statement and the consolidated statement of changes in equity, as well as the financial information included in the other explanatory information, should be marked-up with XBRL 'tags' and 'block tag', according to the ESEF Taxonomy, as in force. The technical specifications for ESEF, including the relevant classification, are set out in the ESEF Regulatory Technical Standards. The requirements set out in the current ESEF Regulatory Framework are suitable criteria for formulating a reasonable assurance conclusion. ### Responsibilities of the management and those charged with governance Management is responsible for the preparation and submission of the consolidated financial statements of the Group, for the year ended 31 December 2022 in accordance with the requirements set by the ESEF Regulatory Framework, as well as for those internal controls that management determines as necessary, to enable the compilation of digital files free of material error due to either fraud or error. ### Auditor's responsibilities Our responsibility is to plan and carry out this assurance work, in accordance with no. 214/4/11-02-2022 Decision of the Board of Directors of the Hellenic Accounting and Auditing Standards Oversight Board (HAASOB) and the 'Guidelines in relation to the work and the assurance report of the Certified Public Accountants on the European Single Electronic Format (ESEF) of issuers with securities listed on a regulated market in Greece' as issued by the Board of Certified Auditors on 14/02/2022 (hereinafter 'ESEF Guidelines'), providing reasonable assurance that the consolidated financial statements of the Group prepared by management in accordance with ESEF comply in all material respects with the applicable ESEF Regulatory Framework. Our work was carried out in accordance with the Code of Ethics for Professional Accountants of the International Ethics Standard Board for Accountants (IESBA Code). The assurance work we conducted is limited to the procedures provided by the ESEF Guidelines and was carried out in accordance with International Standard on Assurance Engagements 3000, 'Assurance Engagements other than Audits or Reviews of Historical Financial Information'. Reasonable assurance is a high level of assurance, but it is not a guarantee that this work will always detect a material misstatement regarding non-compliance with the requirements of the ESEF Regulation. ### Conclusion Based on the procedures performed and the evidence obtained, we conclude that the consolidated financial statements of the Group for the year ended 31 December 2022, in XHTML file format 549300EFF3TNG7JGV4-2022-12-31-en.xhtml, as well as the provided XBRL file 549300EFF3TNG7JGV4-2022-12-31-en.zip with the appropriate markings, on the aforementioned consolidated financial statements, including the other explanatory information, have been prepared, in all material respects, in accordance with the requirements of the ESEF Regulatory Framework. ## Other matters ### Swiss statutory reporting requirements PwC Switzerland has reported separately on the Group and Company financial statements of Coca-Cola HBC AG for the year ended 31 December 2022 for Swiss statutory purposes. The reports are available in pages 223 and 228. ### ESEF Regulatory Technical Standard pursuant to the London Stock Exchange listing requirements As required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these financial statements form part of the ESEF-prepared annual financial report filed on the National Storage Mechanism of the Financial Conduct Authority in accordance with the ESEF Regulatory Technical Standard (ESEF RTS). This auditors' report provides no assurance over whether the annual financial report has been prepared using the single electronic format specified in the ESEF RTS which may differ from the ESEF as defined in section 'Other required reporting' above. Felis Smyrnis the Certified Auditor, Reg. No. 52861 for and on behalf of PricewaterhouseCoopers S.A. Certified Auditors, Reg. No. 113 Athens, Greece 20 March 2023 ### Notes: - a. The maintenance and integrity of the Coca-Cola HBC AG website is the responsibility of the directors, the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website. - b. Legislation in the UK, Greece and Switzerland governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 166 Report Governance Statements Reporting Information ### Consolidated financial statements | Consolidated income statement | | | | | Consolidated statement of comprehensive income | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | For the year ended 31 December | | | | | For the year ended 31 December | | | | | | | | | 2022 | 2021 | | | | 2022 | 2021 | | | Note | € million | | € million | | Note | € million | | € million | | Net sales revenue 7,8 9,198.4 7,168.4 | | | | | Profit after tax 415.6 547.5 | | | | | | Cost of goods sold (6,054.2) (4,570.2) | | | | | Other comprehensive income: | | | | | | Gross profit 3,144.2 2,598.2 | | | | | Items that may be subsequently reclassified | | | | | toincomestatement: Operating expenses (excluding exceptional items related to Cost of hedging 25 (3.5) (2.7) Russia‑Ukraine conflict) 9 (2,354.6) (1,833.3) Net gain on cash flow hedges 25 34.6 69.5 Exceptional items related to Russia-Ukraine conflict 6 (127.4) – Foreign currency translation (losses)/gains 13 (252.6) 73.6 | Operating expenses 9 (2,482.0) (1,833.3) | Share of other comprehensive income of equity | | --- | --- | | Share of results of integral equity method investments 16 41.6 34.4 | methodinvestments 13, 16 34.2 14.6 | | Operating profit 7 703.8 799.3 | Reclassification of share of other comprehensive income of | equity method investments to the income statement, arising | Finance income 13.2 5.3 | from business combination 24 145.2 – | | | --- | --- | --- | | Finance costs (95.9) (72.9) | Income tax relating to items that may be subsequently | | | Finance costs, net 10 (82.7) (67.6) | reclassified to income statement 13 (3.9) (9.5) | | | Share of results of non-integral equity method investments 16 2.5 3.2 | | (46.0) 145.5 | | Profit before tax 623.6 734.9 | Items that will not be subsequently reclassified | | toincomestatement: Tax 11 (208.0) (187.4) Valuation loss on equity investments at fair value through Profit after tax 415.6 547.5 other comprehensive income (0.1) – Actuarial gains 26.0 16.1 | Attributable to: | | Income tax relating to items that will not be subsequently | | | --- | --- | --- | --- | | Owners of the parent 415.4 547.2 | | reclassified to income statement 13 1.8 (6.1) | | | Non-controlling interests 0.2 0.3 | | | 27.7 10.0 | | | 415.6 547.5 | Other comprehensive (loss)/income for the year, netoftax 13 (18.3) 155.5 | | Total comprehensive income for the year 397.3 703.0 Basic earnings per share (€) 12 1.13 1.50 Diluted earnings per share (€) 12 1.13 1.49 Total comprehensive income attributable to: Owners of the parent 406.1 702.7 Non-controlling interests (8.8) 0.3 397.3 703.0 The accompanying notes form an integral part of these consolidated financial statements. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 167 Report Governance Statements Reporting Information ### Consolidated financial statements continued ## Consolidated balance sheet As at 31 December | | | | 2022 | 2021 | | | | 2022 | 2021 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Note | € million | | € million | | Note | € million | | € million | | Assets | | | | | Liabilities | | | | | | Intangible assets 14 2,542.5 2,043.3 | | | | | Borrowings 26 337.0 381.7 | | | | | | Property, plant and equipment 15 3,266.3 2,830.9 | | | | | Other financial liabilities 25 41.9 11.6 | | | | | | Equity method investments 16 205.6 365.8 | | | | | Trade and other payables 21 2,331.9 1,885.8 | | | | | | Other financial assets 25 9.4 16.6 | | | | | Provisions and employee benefits 22 181.5 157.2 | | | | | | Deferred tax assets 11 37.5 31.0 | | | | | Current tax liabilities 114.4 80.1 | | | | | | Other non-current assets 19 78.2 69.8 | | | | | Total current liabilities 3,006.7 2,516.4 | | | | | Total non-current assets 6,139.5 5,357.4 Borrowings 26 3,082.9 2,555.7 | Inventories 18 770.0 519.8 | | Other financial liabilities 25 3.7 3.0 | | --- | --- | --- | | Trade, other receivables and assets 19 1,147.9 948.6 | | Deferred tax liabilities 11 264.6 197.7 | | Other financial assets 25, 26 1,063.8 878.9 | | Provisions and employee benefits 22 106.9 118.8 | | Current tax assets 14.5 26.7 | | Other non-current liabilities 5.3 5.6 | | Cash and cash equivalents 26 719.9 782.8 | | Total non-current liabilities 3,463.4 2,880.8 | | | 3,716.1 3,156.8 | Total liabilities 6,470.1 5,397.2 | Assets classified as held for sale 20 0.1 0.1 Total current assets 3,716.2 3,156.9 Equity Total assets 9,855.7 8,514.3 Share capital 27 2,024.3 2,022.3 Share premium 27 2,837.4 3,097.3 Group reorganisation reserve 27 (6,472.1) (6,472.1) Treasury shares 27 (131.2) (146.6) Exchange equalisation reserve 27 (1,218.2) (1,154.0) Other reserves 27 292.5 310.2 Retained earnings 5,949.6 5,457.4 Equity attributable to owners of the parent 3,282.3 3,114.5 Non-controlling interests 103.3 2.6 Total equity 3,385.6 3,117.1 Total equity and liabilities 9,855.7 8,514.3 The accompanying notes form an integral part of these consolidated financial statements. 168 Strategic Report Corporate Governance Financial Statements Semi-Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 # Consolidated financial statements continued # Consolidated statement of changes in equity | | Attributable to owners of the parent | | | | | | | | | Non-controlling interests € million | Total equity € million | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Share capital € million | Share premium € million | Group reorganisation reserve € million | Treasury shares € million | Exchange equalisation reserve € million | Other reserves € million | Retained earnings € million | Total € million | | | | | Balance as at 1 January 2021 | 2,014.4 | 3,321.4 | (6,472.1) | (155.5) | (1,242.1) | 266.7 | 4,897.9 | 2,630.7 | | 2.6 | 2,633.3 | | Shares issued to employees exercising stock options | 7.9 | 11.7 | - | - | - | - | - | 19.6 | | - | 19.6 | | Share-based compensation: | | | | | | | | | | | | | Performance shares | - | - | - | - | - | 15.1 | - | 15.1 | | - | 15.1 | | Movement in shares held for equity compensation plan | - | - | - | - | - | (0.1) | - | (0.1) | | - | (0.1) | | Appropriation of reserves | - | - | - | 8.9 | - | (9.0) | 0.1 | - | | - | - | | Dividends | - | (235.8) | - | - | - | - | 2.2 | (233.6) | | (0.3) | (233.9) | | Transfer of cash flow hedge reserve, including cost of hedging to inventories, net of tax¹ | - | - | - | - | - | (19.9) | - | (19.9) | | - | (19.9) | | | 2,022.3 | 3,097.3 | (6,472.1) | (146.6) | (1,242.1) | 252.8 | 4,900.2 | 2,411.8 | | 2.3 | 2,414.1 | | Profit for the year, net of tax | - | - | - | - | - | - | 547.2 | 547.2 | | 0.5 | 547.5 | | Other comprehensive income for the year, net of tax | - | - | - | - | 88.1 | 57.4 | 10.0 | 155.5 | | - | 155.5 | | Total comprehensive income for the year, net of tax¹ | - | - | - | - | 88.1 | 57.4 | 557.2 | 702.7 | | 0.5 | 703.0 | | Balance as at 31 December 2021 | 2,022.3 | 3,097.3 | (6,472.1) | (146.6) | (1,154.0) | 310.2 | 5,457.4 | 3,114.5 | | 2.6 | 3,117.1 | | Shares issued to employees exercising stock options | 2.0 | 2.7 | - | - | - | - | - | 4.7 | | - | 4.7 | | Share-based compensation: | | | | | | | | | | | | | Performance shares | - | - | - | - | - | 16.6 | - | 16.6 | | - | 16.6 | | Movement in shares held for equity compensation plan | - | - | - | - | - | 1.2 | - | 1.2 | | - | 1.2 | | Appropriation of reserves | - | - | - | 15.4 | - | (21.1) | 5.7 | - | | - | - | | Non-controlling interests on business combinations | - | - | - | - | - | - | - | - | | 259.6 | 259.6 | | Purchase of shares held by non-controlling interests | - | - | - | - | - | - | 40.9 | 40.9 | | (149.8) | (108.9) | | Dividends | - | (262.6) | - | - | - | - | 2.4 | (260.2) | | (0.3) | (260.5) | | Transfer of cash flow hedge reserve, including cost of hedging to inventories, net of tax¹ | - | - | - | - | - | (41.5) | - | (41.5) | | - | (41.5) | | | 2,024.3 | 2,837.4 | (6,472.1) | (131.2) | (1,154.0) | 265.4 | 5,506.4 | 2,876.2 | | 112.1 | 2,988.3 | | Profit for the year, net of tax | - | - | - | - | - | - | 415.4 | 415.4 | | 0.2 | 415.6 | | Other comprehensive loss for the year, net of tax | - | - | - | - | (64.2) | 27.1 | 27.8 | (9.3) | | (9.0) | (18.3) | | Total comprehensive income for the year, net of tax¹ | - | - | - | - | (64.2) | 27.1 | 443.2 | 406.1 | | (9.8) | 397.3 | | Balance as at 31 December 2022 | 2,024.3 | 2,837.4 | (6,472.1) | (131.2) | (1,218.2) | 292.5 | 5,549.6 | 3,282.5 | | 103.3 | 3,385.6 | 1. The amount included in other reserves of €19.9 million gain for 2021 represents the cash flow hedge reserve, including cost of hedging, transferred to inventories of €24.0 million gain, and the deferred tax expense thereof amounting to €4.1 million. 2. The amount included in the exchange equalisation reserve of €88.1 million gain for 2021 represents the exchange gain attributable to owners of the parent, including €14.1 million gain relating to the share of other comprehensive income of equity method investments. The amount of other comprehensive income, net of tax included in other reserves of €57.4 million gain for 2021 consists of cash flow hedges gain of €68.8 million, share of other comprehensive income of equity method investments of €0.1 million gain and the deferred tax expense thereof amounting to €9.1 million. The amount of €357.2 million gain attributable to owners of the parent comprises profit for the year, net of tax of €347.2 million, actuarial gains of €16.1 million and deferred tax expense thereof amounting to €0.1 million. The amount of €0.5 million gain included in non-controlling interests for 2021 represents the share of non-controlling interests in profit for the year, net of tax. 3. The amount included in other reserves of €41.5 million gain for 2022 represents the cash flow hedge reserve, including cost of hedging, transferred to inventories of €51.4 million gain, and the deferred tax expense thereof amounting to €9.9 million. 4. The amount included in the exchange equalisation reserve of €64.2 million loss for 2022 represents the exchange loss attributable to owners of the parent, including €14.8 million gain relating to the share of other comprehensive income of equity method investments and €14.6 million relating to reclassification of share of other comprehensive loss of equity method investments to the income statement arising from business combination. The amount of other comprehensive income, net of tax included in other reserves of €37.1 million gain for 2022 consists of cash flow hedges gain of €31.1 million, share of other comprehensive income of equity method investments of €0.8 million loss, valuation losses of €0.1 million on equity investments at fair value through other comprehensive income. €0.6 million gain relating to reclassification of share of other comprehensive income of equity method investments to the income statement arising from business combination, and the deferred tax expense thereof amounting to €3.9 million. The amount of €443.2 million gain attributable to owners of the parent comprises profit for the year, net of tax of €415.4 million, actuarial gains of €26.0 million and the deferred tax income thereof amounting to €1.8 million. The amount of €0.8 million loss included in non-controlling interests for 2022 represents the exchange loss attributed to the non-controlling interests of €9.0 million, and the share of non-controlling interests in profit for the year, net of tax of €0.2 million. For further details, refer to Note 13 'Components of other comprehensive income', Note 25 'Financial risk management and financial instruments', Note 27 'Equity', Note 24 'Business combinations and Note 29 'Share-based payments'. The accompanying notes form an integral part of these consolidated financial statements. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 169 Report Governance Statements Reporting Information ### Consolidated financial statements continued ## Consolidated cash flow statement For the year ended 31 December | | | | 2022 | 2021 | | | | 2022 | 2021 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Note | € million | | € million | | Note | € million | | € million | | Operating activities | | | | | Investing activities | | | | | | Profit after tax 415.6 547.5 | | | | | Payments for purchases of property, plant and equipment (523.4) (506.5) | | | | | | Finance costs, net 10 82.7 67.6 | | | | | Proceeds from sales of property, plant and equipment 7.5 35.8 | | | | | | Share of results of non-integral equity method investments 16 (2.5) (3.2) | | | | | Payment for business combinations, net of cash acquired 24 (399.2) (5.6) | | | | | | Tax charged to the income statement 11 208.0 187.4 | | | | | Proceeds from settlement of derivatives relating to | | | | | | Depreciation of property, plant and equipment including | | | | | businesscombination 24 13.0 – | | | | | | right-of-use assets 15,17 403.4 330.3 | | | | | Payment for acquisition of joint operation – (0.9) | | | | | | Impairment of property, plant and equipment 15 81.5 6.0 | | | | | Payment for integral equity method investment 16,28 (4.0) – | | | | | | Employee performance shares 16.5 14.9 | | | | | Receipts from integral equity method investments 28 9.7 47.8 | | | | | | Amortisation of intangible assets 14 1.4 1.0 | | | | | Payments for non-integral equity method investments 16 (6.5) (87.0) | | | | | | Impairment of intangible assets 14 13.7 – | | | | | Receipts from non-integral equity method investments 28 1.8 1.9 | | | | | | Impairment of equity method investments 6 52.8 – | | | | | Net payments for investments in financial assets at | | | | | | Other non-cash items 24 70.5 – | | | | | amortisedcost (333.4) (102.8) | | | | | | | | 1,343.6 1,151.5 | | | Net proceeds from/(payments for) investments in financial | | | | | | Share of results of integral equity method investments 16 (41.6) (34.4) | | | | | assets at fair value through profit or loss 142.6 (640.6) | | | | | | Loss/(Gain) on disposals of non‑current assets 9 1.5 (28.4) | | | | | Loans to related parties (0.4) (0.9) | | | | | | Increase in inventories (241.1) (114.5) | | | | | Repayments of loans by related parties 2.0 – | | | | | | Increase in trade and other receivables (104.7) (109.0) | | | | | Interest received/(paid) 7.2 (0.3) | | | | | | Increase in trade and other payables 472.6 419.3 | | | | | Net cash outflow from investing activities (1,083.1) (1,259.1) | | | | | Tax paid (195.7) (142.3) Net cash inflow from operating activities 1,234.6 1,142.2 Financing activities Proceeds from shares issued to employees exercising stockoptions 27 4.7 19.6 Purchase of shares from non-controlling interests 24 (108.9) – Proceeds from borrowings 26 650.0 129.3 Repayments of borrowings 26 (358.6) (133.8) Principal repayments of lease obligations 26 (65.2) (63.1) Dividends paid to owners of the parent 27 (260.2) (233.6) Dividends paid to non-controlling interests (0.2) (0.2) Proceeds from settlement of derivatives regarding financingactivities 26 0.1 4.9 Interest paid 26 (60.4) (45.5) Net cash outflow from financing activities (198.7) (322.4) Net decrease in cash and cash equivalents (47.2) (439.3) Movement in cash and cash equivalents Cash and cash equivalents at 1 January 782.8 1,215.8 Net decrease in cash and cash equivalents (47.2) (439.3) The accompanying notes form an integral part of these consolidated financial statements Effect of changes in exchange rates (15.7) 6.3 Cash and cash equivalents at 31 December 26 719.9 782.8 170 Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 # Notes to the consolidated financial statements # Notes to the consolidated financial statements ## 1. Description of business Coca-Cola HBC AG and its subsidiaries (the 'Group' or 'Coca-Cola HBC' or 'the Company') are principally engaged in the production, sales and distribution of primarily non-alcoholic ready-to-drink beverages, under franchise from The Coca-Cola Company. The Company distributes its products in Nigeria, Egypt, and 27 countries in Europe. Information on the Company's operations by segment is included in Note 7. On 11 October 2012, Coca-Cola HBC, a Swiss stock corporation (Aktiengesellschaft / Société Anonyme) incorporated by Kar-Tess Holding (a related party of the Group, refer to Note 28), announced a voluntary share exchange offer to acquire all outstanding ordinary registered shares and all American depositary shares of Coca-Cola Hellenic Bottling Company S.A. As a result of the successful completion of this offer, on 25 April 2013 Coca-Cola HBC acquired 96.85% of the issued Coca-Cola Hellenic Bottling Company S.A. shares, including shares represented by American depositary shares, and became the new parent company of the Group. On 17 June 2013, Coca-Cola HBC completed its statutory buy-out of the remaining shares of Coca-Cola Hellenic Bottling Company S.A. that it did not acquire upon completion of its voluntary share exchange offer. Consequently, Coca-Cola HBC acquired 100% of Coca-Cola Hellenic Bottling Company S.A. which was eventually delisted from the Athens Exchange, from the London Stock Exchange where it had a secondary listing and from the New York Stock Exchange where American depositary shares were listed. The shares of Coca-Cola HBC started trading in the premium segment of the London Stock Exchange (Ticker symbol: CCH) and on the Athens Exchange (Ticker symbol: EEE) and regular way trading in Coca-Cola HBC American depositary shares commenced on the New York Stock Exchange (Ticker symbol: CCH) on 29 April 2013. On 24 July 2014 the Group proceeded to the delisting of its American depositary shares from the New York Stock Exchange and terminated its reporting obligations under the US Securities Exchange Act of 1934. The deregistration of Coca-Cola HBC shares under the US Securities Exchange Act of 1934 and the termination of its reporting obligations became effective on 3 November 2014. ## 2. Basis of preparation and consolidation ### Basis of preparation The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and in compliance with Swiss law. These consolidated financial statements were approved for issue by the Board of Directors on 17 March 2023 and are expected to be verified at the Annual General Meeting to be held on 17 May 2023. ### Going concern The financial statements have been prepared on a going concern basis. In adopting the going concern basis for the preparation of these consolidated financial statements, management has considered the Group's financial performance in the year, the expected extension of the bottlers' agreements with The Coca-Cola Company beyond 31 December 2023, as well as a quantitative viability exercise linked to the Group's principal risks, including those relating to climate change and the geopolitical events involving Russia and Ukraine. Management has reviewed the financial forecasts and funding requirements with consideration given to the potential impact of severe but plausible downside scenarios. Even under these scenarios, the Group's cash position is still expected to remain strong over the period of the financial forecasts, considering also that there are mitigating actions the Group could take, should they be required, by making adjustments to its operating plans within the normal course of business. After assessing the Group's current strong balance sheet and liquidity position, the committed funding facilities and the financial forecasts, management confirms the Group's ability to generate cash for a period of 12 months from the date of approval of these consolidated financial statements and beyond. Therefore, it is deemed appropriate that the Group continues to adopt the going concern basis for the preparation of the consolidated financial statements under the historical cost convention, as modified by the revaluation of financial assets at fair value through profit or loss, investments in equity instruments classified at fair value through other comprehensive income and derivative financial instruments. ### Basis of consolidation Subsidiary undertakings are those companies over which the Group, directly or indirectly, has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through power over the entity. Subsidiary undertakings are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant acquired share of the carrying value of net assets of the subsidiary is recorded in equity. Inter-company transactions and balances between Group companies are eliminated. The subsidiaries' accounting policies are consistent with policies adopted by the Group. When the Group ceases to have control, any retained interest in the entity is remeasured to its fair value at the date when such control is lost, with the change in carrying amount recognised in the income statement. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This means that amounts previously recognised in other comprehensive income, if any, are reclassified to the income statement. Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 171 # Notes to the consolidated financial statements continued ### 3. Foreign currency and translation The individual financial statements of each Group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purposes of the consolidated financial statements, the results and financial position of each entity are expressed in Euro, which is the presentation currency for the consolidated financial statements. The assets and liabilities of foreign subsidiaries are translated into Euro at the exchange rate prevailing at the balance sheet date. The results of foreign subsidiaries are translated into Euro using the average monthly exchange rate (being a reasonable approximation of the rates prevailing on the transaction dates). The exchange differences arising on translation are recognised in other comprehensive income. On disposal of a foreign entity, accumulated exchange differences are recognised as a component of the gain or loss on disposal. Transactions in foreign currencies are recorded at the rate ruling at the date of transaction. Monetary assets and liabilities denominated in foreign currencies are remeasured at the rate of exchange ruling at the balance sheet date. All gains and losses arising on remeasurement are included in the income statement, except for exchange differences arising on assets and liabilities classified as cash flow hedges, which are deferred in equity until the occurrence of the hedged transaction, at which time they are recognised in the income statement. Share capital denominated in a currency other than the functional currency is initially stated at the spot rate of the date of issue but is not retranslated. The principal exchange rates used for translation purposes in respect of one Euro are: | | Average 2022 | Average 2021 | Closing 2022 | Closing 2021 | | --- | --- | --- | --- | --- | | US Dollar | 1.05 | 1.18 | 1.06 | 1.13 | | UK Sterling | 0.85 | 0.86 | 0.88 | 0.84 | | Polish Zloty | 4.68 | 4.56 | 4.69 | 4.60 | | Nigerian Naira | 448.99 | 484.31 | 493.61 | 481.32 | | Hungarian Forint | 390.36 | 358.49 | 401.54 | 370.08 | | Swiss Franc | 1.01 | 1.08 | 0.99 | 1.04 | | Russian Rouble | 74.01 | 87.23 | 79.23 | 83.87 | | Romanian Leu | 4.93 | 4.92 | 4.94 | 4.95 | | Ukrainian Hryvnia | 33.92 | 32.30 | 38.94 | 30.78 | | Czech Koruna | 24.56 | 25.64 | 24.21 | 24.95 | | Serbian Dinar | 117.47 | 117.57 | 117.30 | 117.56 | | Egyptian Pound | 20.09 | - | 26.35 | - | ### 4. Accounting pronouncements #### a) Accounting pronouncements adopted in 2022 The Group has adopted the following amendments which were endorsed by the EU that are relevant to its operations and effective for accounting periods beginning on 1 January 2022: - Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16 - Onerous Contracts – Cost of Fulfilling a Contract – Amendments to IAS 37 - Reference to the Conceptual Framework – Amendments to IFRS 3 - Annual Improvements to IFRS Standards 2018 – 2020; and - COVID-19-Related Rent Concessions beyond 30 June 2021 – Amendments to IFRS 16 The adoption of these amendments did not have a material impact on the consolidated financial statements of the Group. #### b) Accounting pronouncements not yet adopted At the date of approval of these consolidated financial statements, the following amendments relevant to the Group's operations were issued but not yet effective and not early-adopted: - Classification of Liabilities as Current or Non-current – Amendments to IAS 1 (not endorsed by the EU) - Disclosure of Accounting Policies – Amendments to IAS 1 - Definition of Accounting Estimates – Amendments to IAS 8 - Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendments to IAS 12 - Lease Liability in a Sale and Leaseback – Amendments to IFRS 16 (not endorsed by the EU); and - Non-current Liabilities with Covenants – Amendments to IAS 1 (not endorsed by the EU). The above amendments are not expected to have a material impact on the consolidated financial statements of the Group. ### 5. Critical accounting estimates and judgements In conformity with IFRS, the preparation of the consolidated financial statements for Coca-Cola HBC requires management to make estimates and judgements that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities in the consolidated financial statements and accompanying notes. Although these estimates and judgements are based on management's knowledge of current events and actions that may be undertaken in the future, actual results may ultimately differ from estimates. #### Estimates The key items concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below: - Impairment of goodwill and indefinite-lived intangible assets (refer to Note 14); and - Employee benefits – defined benefit pension plans (refer to Note 22) #### Judgements In the process of applying the Group's accounting policies, management has made the following judgements, apart from those involving estimations as described above, which have the most significant effect on the amounts recognised in the consolidated financial statements: - Joint arrangements (refer to Note 16) 172 Strategic Report Corporate Governance Financial Statements Semi-Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 # Notes to the consolidated financial statements continued ## 6. Russia-Ukraine conflict impact ### 6.1. Exceptional items related to Russia-Ukraine conflict The conflict between Russia and Ukraine has affected the Group's business in those countries resulting in significant non-recurring costs. More specifically, the Group has incurred significant net impairment losses for property, plant and equipment, intangible assets and equity method investments in Russia. These items have been presented in a separate line: Exceptional items related to Russia-Ukraine conflict in the consolidated income statement, to provide users with enhanced visibility over these items, considering their materiality. The exceptional items related to the Russia-Ukraine conflict for 2022 can be summarised as follows: | | Impairment losses £ million | Recoverable of impairment losses £ million | Net impairment losses £ million | | --- | --- | --- | --- | | Recoverability of individual assets in Russia | 102.1 | (42.8) | 59.3 | | Recoverability of the Russian cash-generating unit: | | | | | Goodwill | 13.7 | - | 13.7 | | Property, plant and equipment | 15.0 | (13.4) | 1.6 | | Recoverability of equity method investments | 52.8 | - | 52.8 | | Exceptional items related to Russia-Ukraine conflict | 183.6 | (56.2) | 127.4 | 1. References to Russia, Russian operation in Russian cash-generating unit in this Note relate to Milton Partners LLC (formerly LLC Coca-Cola HBC Europe), the Group's bottom in Russia. #### a) Operations in Russia ##### Recoverability of individual assets in Russia The Coca-Cola Company announced in March 2022 the suspension of its business in Russia, following the Russia-Ukraine conflict. In response to this decision, the Group implemented a restructuring plan in connection with its Russian operation and transitioned to a self-sufficient business model focusing on local brands. This resulted in pre-tax impairment losses related to buildings, production and cold drink equipment of €102.1 million during the first half of 2022, that were recorded based on a value-in-use exercise, reported in line 'Exceptional items related to Russia-Ukraine conflict' of the condensed consolidated interim income statement and included under Emerging markets for segmental reporting purposes. Following June 2022, whilst uncertainty levels remain high in Russia, the Group experienced more stable market conditions and demand than initially anticipated. As a result, an updated value-in-use exercise was performed for the Russian operation's property, plant and equipment, which resulted in a partial reversal of pre-tax impairment losses recognised during the first half of 2022, amounting to €42.8 million, considering also foreign currency translation impact. Net impairment losses amounted to €59.3 million for 2022, relating to buildings, production and cold drink equipment, which were reported in line 'Exceptional items related to Russia-Ukraine conflict' of the consolidated income statement and included under Emerging markets for segmental reporting purposes. Following this, property, plant and equipment of the Russian operation, represented approximately 8% of the Group's total property, plant and equipment as at 31 December 2022. ##### Recoverability of the Russian cash-generating unit During the first half of 2022, the Group experienced worsening macroeconomic factors in Russia, as sanctions and other regulations had an adverse impact in the country's economic environment, resulting in a material deterioration of the discount rate used to determine the recoverable amount of the Group's Russian cash-generating unit. The Group performed an interim impairment test of the Russian cash-generating unit's recoverable amount, including goodwill, in June 2022 as part of its condensed consolidated interim financial statements. As part of that exercise, the recoverable amount was determined based on value-in-use calculations consistent with those performed under the 2021 annual impairment test methodology, updated to consider management's revised best estimates of cash flow forecasts and a higher discount rate, reflective of the macroeconomic uncertainty in Russia. This exercise resulted in pre-tax impairment losses for goodwill and property, plant and equipment of €13.7 million and €15.0 million respectively, which were recorded in line 'Exceptional items related to Russia-Ukraine conflict' of the condensed consolidated interim income statement and included under Emerging markets for segmental reporting purposes. Considering the relevant uncertainty in connection with its new business model in Russia and volatility in the market, the Group updated the impairment test of its Russian cash-generating unit's recoverable amount based on value-in-use calculations consistent with its 2022 annual impairment test methodology (refer to Note 14), using management's updated best estimates of cash flow forecasts taking into account the actual performance of the new business in the year and relevant market developments as described above. The recoverable amount of the Russian cash-generating unit, resulting from this exercise amounted to approximately €1.1 billion as at 31 December 2022. In the context of this exercise, it was identified that the recoverable amount exceeded the carrying amount of the Russian cash-generating unit, resulting in the reversal of €13.4 million of pre-tax impairment losses of property, plant and equipment recognised in June 2022, considering also foreign currency translation impact. The reversal of the impairment charge was accordingly recorded in line 'Exceptional items related to Russia-Ukraine conflict' in the consolidated income statement and included under Emerging markets for segmental reporting purposes. The following table sets out the key assumptions used in the impairment assessment of the Russian cash-generating unit for 2022 and 2021, as well as 2022 interim results: | | 2022 | 2022 Interim | 2021 | | --- | --- | --- | --- | | Growth rate in perpetuity | 4.0% | 4.0% | 3.0% | | Post-tax discount rate | 14.9% | 26.5% | 6.5% | Growth rate in perpetuity is in line with management's expectation regarding industry growth in the country. The Group applied post-tax discount rates to post-tax cash flows, as the valuation calculated using this method closely approximates to applying pre-tax discount rates to pre-tax cash flows. Relevant pre-tax discount rates are presented below: | | 2022 | 2022 Interim | 2021 | | --- | --- | --- | --- | | Pre-tax discount rate | 18.3% | 29.2% | 7.7% | Strategic Report Corporate Governance Financial Statements Semi-Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 173 # Notes to the consolidated financial statements continued ## 6. Russia-Ukraine conflict impact continued The increase in discount rate used in the 2022 interim results compared to 2021, was mainly driven by higher bond yield spreads due to fears of potential default of Russia's debt, on the back of the imposed sanctions, which subsided in the second half of the year, thus resulting in a lower discount rate for 2022 compared to the first half of the year; however, still higher than 2021. ### Recoverability of equity method investments The impact of the Russia-Ukraine conflict on the macroeconomic environment of Russia as described above, was also considered an impairment indicator by the Group under IAS 36 'Impairment of assets', in connection with its integral joint venture investment in Multon A.O. group of companies ('Multon'). Multon is engaged in the production and distribution of juices in Russia and was jointly controlled by the Group and The Coca-Cola Company. The Group performed an interim impairment test in connection with its investment in Multon in June 2022 as part of its condensed consolidated interim financial statements. The recoverable amount of the investment was determined based on a fair value exercise, considering management's best estimates of cash flow forecasts for a discrete period of five years. Cash flows beyond the five-year period were extrapolated using the following estimated growth and discount rates: | | 2022 Interim | | --- | --- | | Growth rate in perpetuity | 4.0% | | Post-tax rate | 28.6% | The recoverable amount of the Group's investment in Multon resulting from this exercise, which was classified as a Level 3 fair value measurement, amounted to €174.2 million. This resulted in a pre-tax impairment loss of €52.8 million, which was recorded in line 'Exceptional items related to Russia-Ukraine conflict' in the consolidated income statement and included under Emerging markets for segmental reporting purposes. In August 2022, The Coca-Cola Company unilaterally waived certain of its governance rights in connection with its 50% interest in Multon. Following this waiver and considering the criteria set out in IFRS 10 'Consolidated financial statements', the Group has concluded that it controls Multon and has been accordingly consolidating its financial performance effective from 11 August 2022 (refer to Note 24). ### b) Operations in Ukraine As a result of the Russia-Ukraine conflict, operations of the Group's Ukrainian subsidiary were temporarily suspended for the period March-April 2022. During May 2022, the Group resumed production and distribution of products in Ukraine, where safe to do so. Non-current assets of Ukraine represented approximately 3% of the Group's total non-current assets as at 31 December 2022. An impairment test of the Ukrainian cash-generating unit, based on a value-in-use exercise consistent with the Group's annual impairment testing methodology was performed both for the purposes of the Group's condensed consolidated interim financial statements and consolidated financial statements for 2022, as it was considered that, whilst operations have resumed, significant changes in the relevant market with an adverse effect on the cash-generating unit had taken place during the period. No impairment was identified as a result of this impairment testing. The Group's carrying amount of goodwill and other indefinite-lived intangibles for its Ukrainian cash-generating unit was €nll as at 31 December 2022 and 2021. An amount of €4.4 million losses directly attributable to the Russia-Ukraine conflict, primarily related to inventory and property, plant and equipment write-offs, have been incurred by the Group's Ukrainian subsidiary during 2022, of which €3.3 million have been recorded in line 'Operating expenses (excluding exceptional items related to Russia-Ukraine conflict)' and €1.1 million in line 'Cost of goods sold' of the consolidated income statement. ## 6.2. Foreign-currency risk The Group is exposed to the effect of foreign currency risk on future transactions, recognised monetary assets and liabilities that are denominated in currencies other than the local entity's functional currency, as well as net investments in foreign operations. The Group actively manages its foreign currency risk as described in Note 23 'Financial risk management and financial instruments'. The Russia-Ukraine conflict has, among other things, resulted in increased volatility in currency markets, especially in connection with the Russian Rouble. The following tables present details of the Group's sensitivity to reasonably possible increases and decreases in the Euro and US Dollar against the Russian Rouble and Ukrainian Hryvnia. In determining reasonably possible changes, the historical volatility over a 12-month period of the respective foreign currencies in relation to the Euro and US Dollar has been considered. The sensitivity analysis determines the potential gains and losses in the income statement or equity arising from the Group's foreign exchange positions as a result of the corresponding percentage increases and decreases in the Group's main foreign currencies relative to the Euro and the US Dollar. The sensitivity analysis includes outstanding foreign-currency-denominated monetary items, external loans and loans between operations within the Group where the denomination of the loan is in a currency other than the functional currency of the local entity. 2022 exchange risk sensitivity to reasonably possible changes in Euro against Russian Rouble and Ukrainian Hryvnia | | Euro strengthens against local currency | | | Euro weakens against local currency | | | --- | --- | --- | --- | --- | --- | | | % historical volatility over a 12-month period | Gain/loss in income statement € million | Gain/loss in equity € million | Loss/gain in income statement € million | Loss/gain in equity € million | | Russian Rouble | 54.5% | (9.4) | (0.1) | 31.9 | 0.2 | | Ukrainian Hryvnia | 12.5% | 2.9 | - | (3.8) | - | 2022 exchange risk sensitivity to reasonably possible changes in US Dollar against Russian Rouble and Ukrainian Hryvnia | | US Dollar strengthens against local currency | | | US Dollar weakens against local currency | | | --- | --- | --- | --- | --- | --- | | | % historical volatility over a 12-month period | Gain/loss in income statement € million | Gain/loss in equity € million | Loss/gain in income statement € million | Loss/gain in equity € million | | Russian Rouble | 53.0% | (18.7) | - | 61.0 | - | | Ukrainian Hryvnia | 4.1% | (0.1) | - | 0.1 | - | 174 Strategic Report Corporate Governance Financial Statements Basic Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 # Notes to the consolidated financial statements continued ## 6. Russia-Ukraine conflict impact continued ### 6.3. Other topics As a result of sanctions and other regulations implemented in 2022, there have been changes in required regulatory approvals, potentially impacting the transfer and usage of cash outside of Russia. Cash and cash equivalents held by the Group's operations in Russia (including Multon) amounted to €155,3 million equivalent in Russian Rouble, US Dollar and Euro as at 31 December 2022. The aforementioned changes restrict the usage of cash held in Russia outside the country, however they are not expected to have a material impact on the Group's liquidity, as the cash and cash equivalents held in Russia are expected to be used in the forthcoming financial periods primarily for working capital purposes in the Russian operations. The Group is continuously monitoring performance of its Russian and Ukrainian operations as well as the developments in the region, to ensure timely actions and initiatives are undertaken to minimise potential adverse impact for the Group. ## 7. Segmental analysis The Group has essentially one business, being the production, sale and distribution of ready-to-drink, primarily non-alcoholic, beverages. The Group operates in 29 countries, which are aggregated in reportable segments as follows: ![img-9.jpeg](img-9.jpeg) # Established markets Austria, Cyprus, Greece, Italy, Northern Ireland, the 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, Egypt, Moldova, Montenegro, Nigeria, North Macedonia, Romania, the Russian Federation, Serbia (including the Republic of Kosovo) and Ukraine. The Group's operations in each of the three reportable segments have been aggregated on the basis of their similar economic characteristics, assessed by reference to their net sales revenue per unit case as well as disposable income per capita, exposure to political and economic volatility, regulatory environments, customers and distribution infrastructures. The accounting policies of the reportable segments are the same as those adopted by the Group. The Group's chief operating decision maker is its Executive Leadership Team, which evaluates performance and allocates resources based on volume, net sales revenue and operating profit. # a) Volume and net sales revenue The Group's sales volume in million unit cases¹ for the years ended 31 December was as follows: | | 2022 | 2021 | | --- | --- | --- | | Established | 643.9 | 589.9 | | Developing | 478.8 | 415.5 | | Emerging | 1,589.1 | 1,407.3 | | Total volume | 2,711.8 | 2,412.7 | 1 One unit case corresponds to approximately 5.678 litres or 24 servings, being atypically used measure of volume. For premium spirits volume, one unit case also corresponds to 5.678 litres. For biscuits volume, one unit case corresponds to 1 kilogram. For coffee volume, one unit case corresponds to 0.5 kilograms or 3.678 litres. Volume data is derived from unaudited operational data. Net sales revenue per reportable segment for the years ended 31 December is presented in the graphs below: 2022 €9,198.4 million ![img-10.jpeg](img-10.jpeg) Established Developing Emerging €2,974.1m €1,718.7m €4,506.6m 2021 €7,168.4 million ![img-11.jpeg](img-11.jpeg) Established Developing Emerging €2,479.0m €1,565.6m €3,525.8m Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 175 # Notes to the consolidated financial statements continued # 7. Segmental analysis continued Sales or transfers between the Group's segments are not material, nor are there any customers who represent more than 10% of net sales revenue for the Group. In addition to non-alcoholic, ready-to-drink beverages and coffee (NARTD), the Group sells and distributes premium spirits. An analysis of volume and net sales revenue per product type for the years ended 31 December is presented below: | Volume in million unit cases^{1} | 2022 | 2021 | | --- | --- | --- | | NARTD | 2,708.4 | 2,409.3 | | Premium spirits | 3.4 | 3.4 | | **Total volume** | **2,711.8** | **2,412.7** | | Net sales revenue in € million: | | | | NARTD | 8,956.0 | 6,944.5 | | Premium spirits | 242.4 | 223.9 | | **Total net sales revenue** | **9,198.4** | **7,168.4** | 1 One unit case corresponds to approximately 6.678 litres or 24 servings, being a typically used measure of volume. For premium spirits volume, one unit case also corresponds to 5.678 litres. For biscuits volume, one unit case corresponds to 1 kilogram. For coffee volume, one unit case corresponds to 0.3 kilograms or 5.678 litres. Volume data is derived from unaudited operational data. Net sales revenue from external customers attributed to Switzerland (the Group's country of domicile), the Russian Federation, Italy and Nigeria was as follows for the years ended 31 December: | | 2022 € million | 2021 € million | | --- | --- | --- | | Switzerland | 426.7 | 354.3 | | Russian Federation^{1} | 1,103.2 | 953.3 | | Italy | 1,096.1 | 901.6 | | Nigeria | 989.4 | 702.0 | | All countries other than Switzerland, the Russian Federation, Italy and Nigeria | 5,583.0 | 4,257.2 | | **Total net sales revenue from external customers** | **9,198.4** | **7,168.4** | 2 Net sales revenue from external customers for 2022 includes Multon, the Group's juice business in Russia, for the period from 1.1 August 2022 to 31 December 2022 (refer to Note 24). # b) Other income statement items | Year ended 31 December | Note | 2022 € million | 2021 € million | | --- | --- | --- | --- | | Operating profit: | | | | | Established | | 310.4 | 285.6 | | Developing | | 113.1 | 104.7 | | Emerging | | 280.3 | 409.0 | | **Total operating profit** | | **703.8** | **799.3** | | Finance costs: | | | | | Established | | (15.6) | (17.7) | | Developing | | (18.1) | (7.9) | | Emerging | | (55.0) | (15.0) | | Corporate^{2} | | (118.7) | (120.1) | | Inter-segment finance cost | | 111.5 | 87.8 | | **Total finance costs** | 10 | **(95.9)** | **(72.9)** | | Finance income: | | | | | Established | | 2.4 | 1.2 | | Developing | | 1.0 | 0.5 | | Emerging | | 19.0 | 9.7 | | Corporate^{2} | | 102.3 | 81.7 | | Inter-segment finance income | | (111.5) | (87.8) | | **Total finance income** | 10 | **13.2** | **5.3** | | Income tax expense: | | | | | Established | | (75.7) | (57.6) | | Developing | | (28.5) | (10.6) | | Emerging | | (80.5) | (91.1) | | Corporate^{2} | | (23.3) | (28.1) | | **Total income tax expense** | 11 | **(208.0)** | **(187.4)** | | Reconciling items: | | | | | Share of results of non-integral equity method investments | 16 | 2.5 | 3.2 | | **Profit after tax** | | **415.6** | **547.5** | 1 Corporate refers to holding, finance and other non-operating subsidiaries of the Group. 176 Strategic Report Corporate Governance Financial Statements Semi-Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 # Notes to the consolidated financial statements continued ### 7. Segmental analysis continued Depreciation and impairment of property, plant and equipment and amortisation and impairment of intangible assets included in the measure of operating profit are as follows: | | Note | 2022 € million | 2021 € million | | --- | --- | --- | --- | | Depreciation and impairment of property, plant and equipment: | | | | | Established | | (96.4) | (92.1) | | Developing | | (57.8) | (54.1) | | Emerging | | (330.7) | (190.1) | | Total depreciation and impairment of property, plant and equipment | 15 | (484.9) | (336.3) | | Amortisation and impairment of intangible assets: | | | | | Developing | | (0.6) | (0.3) | | Emerging | | (14.5) | (0.7) | | Total amortisation and impairment of intangible assets | 14 | (15.1) | (1.0) | # c) Other items The balance of non-current assets¹ attributed to Switzerland (the Group's country of domicile), Egypt, Italy and Nigeria was as follows for the years ended 31 December: | | 2022 € million | 2021 € million | | --- | --- | --- | | Switzerland | 596.0 | 557.5 | | Egypt | 615.7 | – | | Italy | 1,137.4 | 1,082.3 | | Nigeria | 744.7 | 642.1 | | All countries other than Switzerland, Egypt, Italy and Nigeria | 2,946.0 | 2,984.8 | | Total non-current assets² | 6,039.8 | 5,266.7 | 1 Excluding other financial assets, deferred tax assets, pension plan assets and trade and loans receivable Expenditure on property, plant and equipment per reportable segment was as follows for the years ended 31 December: | | 2022 € million | 2021 € million | | --- | --- | --- | | Established | 154.1 | 104.7 | | Developing | 75.7 | 89.5 | | Emerging³ | 302.0 | 319.4 | | Total expenditure on property, plant and equipment | 531.8 | 513.6 | 2 Expenditure on property, plant and equipment for 2022 includes €8.8 million (2021: €7.1 million) relating to repayment of borrowings undertaken to finance the purchase of production equipment by the Group's subsidiary in Nigeria, classified as 'Repayment of borrowings' in the consolidated cash flow statement. ### 8. Net sales revenue # Accounting policy The Group essentially produces, sells and distributes ready-to-drink, primarily non-alcoholic beverages. Under IFRS 15 'Revenue from contracts with customers' the Group recognises revenue when control of the products is transferred, being when the products are delivered to the customer. Net sales revenue is measured at the fair value of the consideration received or receivable and is stated net of sales discounts and consideration paid to customers. These mainly take the form of promotional incentives and are amortised over the terms of the related contracts as a deduction in revenue. The Group provides volume rebates to customers once the quantity of goods purchased during the period exceeds a threshold specified in the contract. To estimate the variable consideration for the expected future rebates the Group uses the most likely amount method and the amount is recognised in net sales revenue only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur when the uncertainty associated with the variable consideration is subsequently resolved. A contract liability is recognised if a payment is received or a payment is due (whichever is earlier) from a customer before the Group transfers the related goods. Contract liabilities are recognised as revenue when the Group performs under the contract (i.e., transfers control of the related goods to the customer). Net sales revenue includes excise and other duties where the Group acts as a principal but excludes amounts collected by third parties such as value-added taxes as these are not included in the transaction price. The Group assesses these taxes and duties on a jurisdiction-by-jurisdiction basis to conclude on the appropriate accounting treatment. Revenue recognised in 2022 that was included in the contract liability balance at the beginning of the year amounted to €11.6 million (2021: €10.4 million). For contract liabilities as at 31 December 2022 and 2021, refer to Note 21. For an analysis of net sales revenue per reportable segment, refer to Note 7. For the contributions received from The Coca-Cola Company, which are offset against consideration paid to customers, refer to Note 28. Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 177 # Notes to the consolidated financial statements *continued* ## 9. Operating expenses Operating expenses for the year ended 31 December comprised: | | 2022 € million | 2021 € million | | --- | --- | --- | | Selling expenses | 1,045.7 | 879.1 | | Delivery expenses | 698.8 | 533.0 | | Administrative expenses | 518.5 | 385.7 | | Restructuring expenses | 11.9 | 21.2 | | Acquisition and integration costs (refer to Note 24) | 79.7 | 14.3 | | **Operating expenses (excluding exceptional items related to Russia-Ukraine conflict)** | **2,354.6** | **1,833.3** | | Exceptional items related to Russia-Ukraine conflict (refer to Note 6) | 127.4 | — | | **Operating expenses** | **2,482.0** | **1,833.3** | In 2022, operating expenses included a net loss on disposals of non-current assets of €1.5 million (2021: €28.4 million net gain). For the contributions received from The Coca-Cola Company, which are offset against expenses for general marketing programs, refer to Note 28. ### a) Restructuring expenses #### Accounting policy Restructuring expenses are recorded in a separate line item within operating expenses and comprise costs arising from significant changes in the way the Group conducts its business such as significant supply chain infrastructure changes, outsourcing of activities and centralisation of processes. Restructuring provisions are recognised only when the Group has a present constructive obligation, which is when a detailed formal plan identifies the business or part of the business concerned, the location, function and number of employees affected, a detailed estimate of the associated costs, and an appropriate timeline, as well as when the employees affected have been notified of the plan's main features. As part of the effort to optimise its cost base and sustain competitiveness in the marketplace, the Company undertakes restructuring initiatives. The restructuring expenses consist mainly of employees' termination benefits. Restructuring expenses per reportable segment for the years ended 31 December are presented below: | | 2022 € million | 2021 € million | | --- | --- | --- | | Established | (6.1) | 14.7 | | Developing | (1.5) | 3.4 | | Emerging | 19.5 | 5.1 | | **Total restructuring expenses** | **11.9** | **21.2** | ### b) Employee costs Employee costs for the years ended 31 December comprised: | | 2022 € million | 2021 € million | | --- | --- | --- | | Wages and salaries | 877.6 | 724.7 | | Social security costs | 163.6 | 138.3 | | Pension and other employee benefits | 147.6 | 132.3 | | Termination benefits | 15.1 | 19.9 | | **Total employee costs** | **1,203.9** | **1,015.2** | The average number of full-time equivalent employees in 2022 was 33,043 (2021: 26,787). Employee costs for 2022 included in operating expenses and cost of goods sold amounted to €906.9 million and €297.0 million respectively (2021: €766.7 million and €248.5 million respectively). ### c) Directors' and senior management's remuneration The total remuneration paid or accrued for Directors and the senior management team for the years ended 31 December comprised: | | 2022 € million | 2021 € million | | --- | --- | --- | | Salaries and other short-term benefits | 19.3 | 16.3 | | Performance share awards | 8.0 | 6.4 | | Pension and post-employment benefits | 1.0 | 0.9 | | **Total remuneration** | **28.3** | **23.6** | ### d) Auditor fees Audit and other fees charged in the income statement concerning the auditor of the consolidated financial statements, PricewaterhouseCoopers S.A. and affiliates, were as follows, for the years ended 31 December: | | 2022 € million | 2021 € million | | --- | --- | --- | | Audit fees | 5.1 | 4.8 | | Audit-related fees | 1.1 | 0.7 | | **Total audit and audit-related fees** | **6.2** | **5.5** | Fees for audit services to firms other than PricewaterhouseCoopers S.A. and affiliates were €0.7 million for the year ended 31 December 2022 (2021: €nil). 178 Strategic Report Corporate Governance Financial Statements Sales Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 # Notes to the consolidated financial statements continued ## 10. Finance costs, net # Accounting policy Interest income and interest expense are recognised using the effective interest rate method, and are recorded in the income statement within 'Finance income' and 'Finance cost' respectively. Interest expense includes finance charges with respect to leases, amortisation of the loss on the forward starting swaps and the net impact from swaptions recorded in other comprehensive income (refer to Note 25). Finance costs, net for the years ended 31 December comprised: | | 2022 £ million | 2021 £ million | | --- | --- | --- | | Finance income | 13.2 | 5.3 | | Interest expense | (77.8) | (67.1) | | Other finance costs | (2.1) | (1.7) | | Net foreign exchange remeasurement losses | (16.0) | (4.1) | | Finance costs | (95.9) | (72.9) | | Finance costs, net | (62.7) | (67.6) | Finance income for 2022 and 2021 relates to interest income. Other finance costs include commitment fees on loan facilities (for the part not yet drawn down) and other similar fees. For the interest expense incurred with respect to leases, refer to Note 17. ## 11. Taxation # Accounting policy Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or in equity. In this case, the tax is recognised in other comprehensive income or directly in equity. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Group operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate, on the basis of amounts expected to be paid to the tax authorities. Deferred tax is provided using the liability method for all temporary differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes. However, the deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Tax rates enacted or substantively enacted at the balance sheet date are those that are expected to apply when the deferred tax asset is realised or deferred tax liability is settled. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred tax assets are recognised for tax losses carried forward to the extent that realisation of the related tax benefit through the reduction of the future taxes is probable. Deferred tax is provided on temporary differences arising on investments in subsidiaries, associates and joint ventures, except where the timing of the reversal of the temporary difference can be controlled by the Group, and it is probable that the temporary difference will not reverse in the foreseeable future. This includes taxation in respect of the retained earnings of overseas subsidiaries only to the extent that, at the balance sheet date, dividends have been accrued as receivable or a binding agreement to distribute past earnings in future periods has been entered into by the subsidiary. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to offset current tax assets against current income tax liabilities and the deferred taxes relate to the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis. The income tax charge for the years ended 31 December was as follows: | | 2022 £ million | 2021 £ million | | --- | --- | --- | | Current tax expense | 235.6 | 183.5 | | Deferred tax (income) / expense | (27.6) | 3.9 | | Income tax expense | 208.0 | 187.4 | Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 179 # Notes to the consolidated financial statements continued # 11. Taxation continued The tax on the Group's profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities as follows: | | 2022 € million | 2021 € million | | --- | --- | --- | | Profit before tax | **623.6** | 734.9 | | Tax calculated at domestic tax rates applicable to profits in the respective countries | **162.1** | 155.7 | | Additional local taxes in foreign jurisdictions | **18.8** | 13.0 | | Tax holidays in foreign jurisdictions | **(0.2)** | (5.8) | | Expenses non-deductible for tax purposes | **28.6** | 17.5 | | Income not subject to tax | **(3.6)** | (2.5) | | Changes in tax laws and rates | **0.4** | 3.1 | | Movement of accumulated tax losses | **2.9** | 3.2 | | Movement of deferred tax asset not recognised | **0.1** | (0.6) | | Other | **(1.1)** | 3.8 | | **Income tax expense** | **208.0** | **187.4** | Non-deductible expenses for tax purposes include marketing and advertising expenses, service fees, loss allowances on trade receivables, entertainment expenses, certain employee benefits and other items that, partially or in full, are not deductible for tax purposes in certain of the Group's jurisdictions. The Group is subject to income taxes in numerous jurisdictions. There are many transactions and calculations for which the ultimate tax determination cannot be assessed with certainty in the ordinary course of business. The Group recognises a provision for potential cases that might arise in the foreseeable future based on assessment of the probabilities as to whether additional taxes will be due. Where the final tax outcome on these matters is different from the amounts that were initially recorded, such differences will impact the income tax provision in the period in which such determination is made, however, based on past experience, management expects that any such differences in the next financial year will be immaterial for the Group. The income tax provision amounted to €67.5 million as at 31 December 2022 (2021: €52.6 million), of which €67.2 million (2021: €52.6 million) are classified in line 'Current tax liabilities' and €0.3 million (2021: €nil) in line 'Current tax assets' of the consolidated balance sheet. The income tax provision per reportable segment for the years ended 31 December was as follows: | | 2022 € million | 2021 € million | | --- | --- | --- | | Established | **18.2** | 16.8 | | Developing | **14.3** | 4.9 | | Emerging | **25.4** | 21.5 | | Corporate^{1} | **9.6** | 9.4 | | **Total income tax provision** | **67.5** | **52.6** | 1. Corporate refers to holding, finance and other non-operating subsidiaries of the Group. Deferred tax assets and liabilities presented in the consolidated balance sheet as at 31 December can be further analysed as follows: | | 2022 € million | 2021 € million | | --- | --- | --- | | **Deferred tax assets:** | | | | To be recovered after 12 months | **62.6** | 32.9 | | To be recovered within 12 months | **73.7** | 71.5 | | **Gross deferred tax assets** | **136.3** | **104.4** | | Offset of deferred tax | **(98.8)** | (73.4) | | **Net deferred tax assets** | **37.5** | **31.0** | | | 2022 € million | 2021 € million | | --- | --- | --- | | **Deferred tax liabilities:** | | | | To be recovered after 12 months | **(339.6)** | (255.0) | | To be recovered within 12 months | **(23.8)** | (16.1) | | **Gross deferred tax liabilities** | **(363.4)** | **(271.1)** | | Offset of deferred tax | **98.8** | 73.4 | | **Net deferred tax liabilities** | **(264.6)** | **(197.7)** | A reconciliation of net deferred tax is presented below: | | 2022 € million | 2021 € million | | --- | --- | --- | | As at 1 January | **(166.7)** | (147.4) | | Taken to the income statement | **27.6** | (3.9) | | Arising from business combinations (refer to Note 24) | **(128.1)** | — | | Taken to other comprehensive income | **(2.1)** | (15.6) | | Taken directly to equity | **9.9** | 4.1 | | Foreign currency translation | **32.3** | (3.9) | | **As at 31 December** | **(227.1)** | **(166.7)** | 180 Strategic Report Corporate Governance Financial Statements Sales Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 ## Notes to the consolidated financial statements *continued* ### 11. Taxation *continued* The movements in deferred tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction where applicable, are as follows: | | Provisions € million | Pensions and benefits plans € million | Tax losses carry-forward € million | Book-in excess of tax depreciation € million | Loading € million | Other deferred tax assets € million | Total € million | | --- | --- | --- | --- | --- | --- | --- | --- | | **Deferred tax assets** | | | | | | | | | As at 1 January 2021 | 28.4 | 16.1 | 1.9 | 5.7 | 26.5 | 23.6 | **102.2** | | Taken to the income statement | 4.4 | (5.5) | (0.1) | (0.6) | (2.8) | 7.4 | **2.8** | | Taken to other comprehensive income | – | 0.6 | – | – | – | (0.5) | **0.1** | | Transfers between assets/liabilities | – | – | – | (1.7) | – | – | **(1.7)** | | Foreign currency translation | 0.7 | 0.1 | – | – | 0.1 | 0.1 | **1.0** | | **As at 31 December 2021** | **33.5** | **11.3** | **1.8** | **3.4** | **23.8** | **30.6** | **104.4** | | Taken to the income statement | 7.8 | 1.5 | 10.0 | 2.5 | 6.6 | 6.8 | **35.2** | | Arising from business combinations (refer to Note 24) | 0.1 | – | – | – | 0.5 | 10.6 | **11.2** | | Taken to other comprehensive income | – | (2.0) | – | – | – | 0.7 | **(1.3)** | | Transfers between assets/liabilities | – | 0.1 | – | – | – | (5.1) | **(5.0)** | | Foreign currency translation | (0.6) | (0.1) | (5.2) | (0.4) | (0.3) | (1.6) | **(8.2)** | | **As at 31 December 2022** | **40.8** | **10.8** | **6.6** | **5.5** | **30.6** | **42.0** | **136.3** | | | Tax in excess of tax in depreciation € million | Devisable instruments € million | Other deferred tax liabilities € million | Total € million | | --- | --- | --- | --- | --- | | **Deferred tax liabilities** | | | | | | As at 1 January 2021 | (232.8) | (1.4) | (15.4) | **(249.6)** | | Taken to the income statement | (14.5) | 2.1 | 5.7 | **(6.7)** | | Taken to other comprehensive income | – | (9.0) | (6.7) | **(15.7)** | | Taken directly to equity | – | 4.1 | – | **4.1** | | Transfers between assets/liabilities | 1.7 | – | – | **1.7** | | Foreign currency translation | (3.8) | – | (1.1) | **(4.9)** | | **As at 31 December 2021** | **(249.4)** | **(4.2)** | **(17.5)** | **(271.1)** | | Taken to the income statement | 19.8 | (3.3) | (24.1) | **(7.6)** | | Arising from business combinations (refer to Note 24) | (137.7) | (0.7) | (0.9) | **(139.3)** | | Taken to other comprehensive income | – | (4.6) | 3.8 | **(0.8)** | | Taken directly to equity | – | 9.9 | – | **9.9** | | Transfers between assets/liabilities | – | – | 5.0 | **5.0** | | Foreign currency translation | 34.5 | (0.1) | 6.1 | **40.5** | | **As at 31 December 2022** | **(332.8)** | **(3.0)** | **(27.6)** | **(363.4)** | Deferred tax assets recognised for tax losses carry-forward in accordance with the relevant local rules applying in the Group's jurisdictions can be analysed as follows: | | 2022 € million | 2021 € million | | --- | --- | --- | | Attributable to tax losses that expire within five years | **2.1** | 0.5 | | Attributable to tax losses that can be carried forward indefinitely | **4.5** | 1.3 | | **Recognised deferred tax assets attributable to tax losses** | **6.6** | **1.8** | The Group has unrecognised deferred tax assets attributable to tax losses that are available to carry-forward against future taxable income of €29.1 million (2021: €28.1 million). These are analysed as follows: | | 2022 € million | 2021 € million | | --- | --- | --- | | Attributable to tax losses that expire within five years | **18.7** | 19.5 | | Attributable to tax losses that expire after five years | **10.4** | 8.6 | | **Unrecognised deferred tax assets attributable to tax losses** | **29.1** | **28.1** | The aggregate amount of distributable reserves arising from the realised earnings of the Group's operations was €3,574.8 million in 2022 (2021: €3,111.0 million). No deferred tax liabilities have been recognised on such reserves given that their distribution is controlled by the Group or, in the event of plans to remit overseas earnings of subsidiaries, such distribution would not give rise to a tax liability. ### 12. Earnings per share #### Accounting policy Basic earnings per share is calculated by dividing the net profit attributable to the owners of the parent by the weighted average number of ordinary shares outstanding during the year. The weighted average number of ordinary shares outstanding during the year is the number of ordinary shares outstanding at the beginning of the year, adjusted by the number of ordinary shares bought back or issued during the year multiplied by a time-weighting factor. Diluted earnings per share incorporates stock options for which the average share price for the year is in excess of the exercise price of the stock option and which create a dilutive effect. The calculation of the basic and diluted earnings per share attributable to the owners of the parent entity is based on the following data: | | 2022 | 2021 | | --- | --- | --- | | Net profit attributable to the owners of the parent (€ million) | **415.4** | 547.2 | | Weighted average number of ordinary shares for the purposes of basic earnings per share (million) | **366.4** | 365.0 | | Effect of dilutive stock options on number of shares (million) | **0.5** | 1.3 | | Weighted average number of ordinary shares for the purposes of diluted earnings per share (million) | **366.9** | 366.3 | | **Basic earnings per share (€)** | **1.13** | **1.50** | | **Diluted earnings per share (€)** | **1.13** | **1.49** | Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola MBC Integrated Annual Report 2022 181 ## Notes to the consolidated financial statements *continued* ### 13. Components of other comprehensive income The components of other comprehensive income for the years ended 31 December comprise: | | 2022 | | | 2021 | | | | --- | --- | --- | --- | --- | --- | --- | | | Before tax € million | Income tax € million | Net of tax € million | Before tax € million | Income tax € million | Net of tax € million | | Cost of hedging (refer to Note 25) | (3.5) | – | (3.5) | (2.7) | – | (2.7) | | Cash flow hedges (refer to Note 25) | 34.6 | (3.9) | 30.7 | 69.5 | (9.5) | 60.0 | | Foreign currency translation losses/gains | (252.6) | – | (252.6) | 73.6 | – | 73.6 | | Valuation loss on equity investments at fair value through other comprehensive income | (0.1) | – | (0.1) | – | – | – | | Actuarial gains | 26.0 | 1.8 | 27.8 | 16.1 | (6.1) | 10.0 | | Share of other comprehensive income of equity method investments | 34.2 | – | 34.2 | 14.6 | – | 14.6 | | Reclassification of share of other comprehensive income of equity method investments to the income statement, arising from business combination (refer to Note 24) | 145.2 | – | 145.2 | – | – | – | | **Other comprehensive (loss) / income** | **(16.2)** | **(2.1)** | **(18.3)** | **171.1** | **(15.6)** | **155.5** | The foreign currency translation losses for 2022 primarily related to the Egyptian Pound and the Russian Rouble, while the gains from the foreign currency translation for 2021 primarily related to the Russian Rouble and the Swiss Franc. ### 14. Intangible assets #### Accounting policy Intangible assets consist of goodwill, franchise agreements, trademarks and water rights. Goodwill and other indefinite-lived intangible assets are carried at cost less accumulated impairment losses, while intangible assets with finite lives are amortised over their useful economic lives. The useful lives, both finite and indefinite, assigned to intangible assets are evaluated on an annual basis. #### Intangible assets with indefinite lives ('not subject to amortisation') Intangible assets not subject to amortisation consist of goodwill, franchise agreements and trademarks. Goodwill is the excess of the consideration transferred over the fair value of the share of net assets acquired. Goodwill and fair value adjustments arising on the acquisition of subsidiaries are treated as the assets and liabilities of those subsidiaries. These balances are denominated in the functional currency of the subsidiary and are translated to Euro on a basis consistent with the other assets and liabilities of the subsidiary. The useful life of franchise agreements is usually based on the term of the respective franchise agreements. The Coca-Cola Company does not grant perpetual franchise rights outside the United States. However, given the Group's strategic relationship with The Coca-Cola Company and consistent with past experience, the Group believes that franchise agreements will continue to be renewed at each expiration date with no significant costs. The Group has concluded that the franchise agreements are perpetual in nature and they have therefore been assigned indefinite useful lives. The Group's trademarks are assigned an indefinite useful life when they have an established sales history in the applicable region. It is the intention of the Group to receive a benefit from them indefinitely and there is no indication that this will not be the case. Goodwill and other indefinite-lived intangible assets are tested for impairment annually and whenever there is an indication of impairment. For the purpose of impairment testing, goodwill is allocated to each of the Group's cash-generating units expected to benefit from the business combination in which the goodwill arose. Other indefinite-lived intangible assets are also allocated to the Group's cash-generating units expected to benefit from those intangibles. The cash-generating units ('unit') to which goodwill and other indefinite-lived intangible assets have been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount (i.e. the higher of the value-in-use and fair value less costs to sell) of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then pro-rata to the other assets of the unit on the basis of the carrying amount of each asset in the unit. Impairment losses recognised against goodwill are not reversed in subsequent periods. #### Intangible assets with finite lives Intangible assets with finite lives mainly consist of water rights and certain brands, are amortised over their useful economic lives and are carried at cost less accumulated amortisation and impairment losses. Intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. #### Critical accounting estimates Determining whether goodwill or indefinite-lived intangible assets are impaired requires an estimation of the value-in-use of the cash-generating units to which they have been allocated in order to determine the recoverable amount of the cash-generating units. The value-in-use calculation requires the Group to estimate the future cash flows expected to arise from the cash-generating unit, discounted at an appropriate rate. Estimating the discounted future cash flows involves a significant degree of uncertainty. The value-in-use estimation is sensitive to the discount rate used as well as the perpetuity growth rate used for extrapolation purposes. The key assumptions used to determine the recoverable amount for the different cash-generating units, including a sensitivity analysis where possible changes to these key assumptions could eliminate the remaining headroom, are disclosed and further explained below under 'Annual impairment test for goodwill and other indefinite-lived intangible assets' section. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 182 Report Governance Statements Reporting Information ### Notes to the consolidated financial statements continued Intangible assets not subject to amortisation amounted to €2,529.7 million (2021: €2,028.9 million), ### 14. Intangible assets continued and are presented in the charts below: The movements in intangible assets by classes of assets during the year are as follows: Other | | | | | | | 2022 | 2021 | | --- | --- | --- | --- | --- | --- | --- | --- | | | Franchise | | | intangible | | | | | Goodwill | agreements | Trademarks | | assets | Total | | | | € million | € million | | € million | € million | € million | €2,529.7 million | €2,028.9 million | Cost As at 1 January 2021 1,886.6 144.8 137.3 14.8 2,183.5 Additions (refer to Note 16) 16.4 – – – 16.4 Arising from business combinations 1.0 – – 3.1 4.1 Foreign currency translation 37.7 – – – 37.7 As at 31 December 2021 1,941.7 144.8 137.3 17.9 2,241.7 Amortisation As at 1 January 2021 182.4 – 7.2 7.8 197.4 Charge for the year – – 0.4 0.6 1.0 As at 31 December 2021 182.4 – 7.6 8.4 198.4 Net book value as at 1 January 2021 1,704.2 144.8 130.1 7.0 1,986.1 Goodwill €1,926.0 Goodwill €1,759.3 Net book value as at 31 December 2021 1,759.3 144.8 129.7 9.5 2,043.3 Franchise agreements €395.8 Franchise agreements €144.8 Cost Trademarks €207.9 Trademarks €124.8 As at 1 January 2022 1,941.7 144.8 137.3 17.9 2,241.7 Arising from business combinations (refer The carrying value of intangible assets subject to amortisation amounted to €12.8 million (2021: to Note 24) 220.1 367.7 83.4 – 671.2 €14.4 million) and comprised water rights of €6.0 million, trademarks of €4.2 million and other intangible Impairment (refer to Note 6) (13.7) – – – (13.7) assets of €2.6 million (2021: €6.4 million water rights, €4.9 million trademarks and €3.1 million other Foreign currency translation (39.7) (116.7) (0.5) – (156.9) intangible assets). As at 31 December 2022 2,108.4 395.8 220.2 17.9 2,742.3 Amortisation As at 1 January 2022 182.4 – 7.6 8.4 198.4 Charge for the year – – 0.5 0.9 1.4 As at 31 December 2022 182.4 – 8.1 9.3 199.8 Net book value as at 1 January 2022 1,759.3 144.8 129.7 9.5 2,043.3 Net book value as at 31 December 2022 1,926.0 395.8 212.1 8.6 2,542.5 Additions of goodwill in 2021 were attributable to the demerger of the Group’s mineral water and adult sparkling beverages integral joint venture in Italy as well as the formation of a joint operation in Romania, amounting to €15.6 million and €0.8 million respectively (refer to Note 16). Goodwill and other intangible assets of €1.0 million and €3.1 million respectively, arising from business combinations in 2021, related to the acquisition by the Group of a self-serve coffee-vending business in its developing markets segment (the ’Costa Express Business’), which was integrated into the Group’s operations. Impairment losses of €13.7 million relate to the impairment of goodwill of the Group’s Russian cash‑generating unit recognised as part of 2022 interim results (refer to Note 6). millio n million million million million million Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 183 Report Governance Statements Reporting Information ### Notes to the consolidated financial statements continued The following chart and accompanying table set forth the percentage and carrying value respectively of goodwill and other indefinite‑lived intangible assets for those cash‑generating units whose carrying value is greater or equal to 9% of the total, as at 31 December 2022. Franchise | Intangible assets not subject to | | Goodwill | agreements | | Trademarks | | Total | | --- | --- | --- | --- | --- | --- | --- | --- | | amortisation as at 31 December 2022 | | € million | | € million | | € million | € million | | (%) | Italy 640.9 126.9 – 767.8 | | | | | | | Switzerland 467.3 – – 467.3 The Republic of Ireland and Northern Ireland 241.5 – – 241.5 Egypt 141.9 251.2 – 393.1 Koncern Bambi a.d. Požarevac 115.2 – 118.5 233.7 All other cash‑ generating units 319.2 17.7 89.4 426.3 Total 1,926.0 395.8 207.9 2,529.7 Italy Switzerland The Republic of Ireland and Northern Ireland Egypt Koncern Bambi a.d. Požarevac Other The key assumptions for these cash-generating units are presented below: Growth rate in perpetuity Post-tax discount rate Pre-tax discount rate (%) (%) (%) 2022 2021 2022 2021 2022 2021 Egypt 5.0 – 15.2 – 17.8 – Italy 2.0 1.5 8.6 6.5 11.4 8.7 Switzerland 0.8 0.9 6.7 5.7 8.0 6.7 The Republic of Ireland and Northern Ireland 4.0 4.0 6.6 5.6 7.1 6.0 Koncern Bambi a.d. Požarevac 4.5 4.5 10.9 6.6 11.9 6.9 For the cash-generating units of the Republic of Ireland and Northern Ireland and Koncern Bambi a.d. Požarevac, the growth rate in perpetuity as estimated by management was higher than that expected for the industry in general. This is attributable to the strength of the Group’s brand portfolio, which is amongst the strongest and broadest in the industry. The Group has historically achieved higher revenue growth than the industry leveraging the strength of its portfolio, while it continually invests in brand-related innovations to remain relevant, be able to cater to all consumption occasions and increase market share. 30% 18% 10% 16% 9% 17% 14. Intangible assets continued Annual impairment test for goodwill and other indefinite-lived intangible assets The recoverable amount of each cash-generating unit was determined through a value-in-use calculation. This calculation uses cash flow forecasts based on financial budgets approved by the Board of Directors covering a one-year period and cash flow forecasts for four additional years. Cash flows for years two to five are forecasted by management based on operation and market-specific assumptions including growth rates, forecast selling prices, direct costs and operating expenses. Management determined gross margins based on past performance, expectations for the development of the market and expectations about raw material costs. Cash flows for the subsequent years after the forecast period are extrapolated using perpetuity growth rates which reflect management’s best estimate of industry growth, considering long-term inflation and gross domestic product forecasts specific to the countries of operation. The discount rates used by management represent the current market assessment of the risks specific to each cash-generating unit, taking into consideration the time value of money and are derived from the weighted average cost of capital. The Group applies post-tax discount rates to post-tax cash flows as the valuation calculated using this method closely approximates to applying pre-tax discount rates to pre-tax cash flows. Management also considered the potential adverse impact to future cash flows arising from climate change risk, under different scenarios. These scenarios included the increased capital expenditure required to mitigate climate-related risks and focused on the impact from disruptions to production and distribution due to extreme weather as well as the increased cost of water and carbon emissions. The Group will continue to refine its approach on climate-related risks and opportunities in the impairment assessment, as greater understanding of the potential impacts on the Group’s business is obtained. No impairment of goodwill and other indefinite-lived assets was identified during the annual impairment test of 2022, or that of 2021. 184 Strategic Report Corporate Governance Financial Statements Semi-Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 # Notes to the consolidated financial statements continued # 14. Intangible assets continued # Sensitivity analysis In the cash-generating unit of Egypt, which as at 31 December 2022 held €141.9 million and €251.2 million of goodwill and franchise agreements respectively, reasonably possible changes in key assumptions of the 2022 impairment test would remove the remaining headroom. As at 31 December 2022, the recoverable amount of the Egyptian cash-generating unit calculated based on value-in-use exceeded its carrying value by €83.7 million; changes per key assumption that would eliminate remaining headroom are summarised in the table below: | | Growth rate in perpetuity | Discount rate | | --- | --- | --- | | Egypt | 170bps | 120bps | As at 31 December 2022, the recoverable amount of the Italian cash-generating unit calculated based on value-in-use significantly exceeded its carrying value. As a result, the key assumptions of the Italian cash-generating unit's 2022 impairment test are not sensitive to possible changes that would eliminate the remaining headroom. The Group will continue to closely monitor these cash-generating units in order to ensure that timely actions and initiatives are undertaken to minimise potential adverse impact on their expected performance. # 15. Property, plant and equipment # Accounting policy All property, plant and equipment is initially recorded at cost and subsequently measured at cost less accumulated depreciation and impairment losses. Subsequent expenditure is added to the carrying value of the asset when it is probable that future economic benefits, in excess of the original assessed standard of performance of the existing asset, will flow to the operation and the costs can be measured reliably. All other subsequent expenditure is expensed in the period in which it is incurred. Assets under construction are recorded as part of property, plant and equipment and depreciation on these assets commences when the assets are made available for use. Depreciation is calculated on a straight-line basis to allocate the depreciable amount over the estimated useful life of the asset as follows: | Freehold buildings and improvements | 40 years | | --- | --- | | Leasehold buildings and improvements | Over the lease term, up to 40 years | | Production equipment | 4 to 20 years | | Vehicles | 5 to 8 years | | Computer hardware and software | 3 to 10 years | | Marketing equipment | 3 to 10 years | | Fixtures and fittings | 8 years | | Returnable containers | 3 to 12 years | Freehold land is not depreciated as it is considered to have an indefinite life. Deposits received for returnable containers by customers are accounted for as deposit liabilities (refer to Note 21). Residual values and useful lives of assets are reviewed and adjusted if appropriate at each balance sheet date. Property, plant and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of the asset's fair value less cost to sell and its value-in-use. For the purposes of assessing impairment, assets are grouped at the lowest level of separately identifiable cash flows. For accounting policy regarding right-of-use assets, refer to Note 17 'Leases'. Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola MBC Integrated Annual Report 2022 185 # Notes to the consolidated financial statements continued # 15. Property, plant and equipment continued The movements of property, plant and equipment by class of assets are as follows: | | Land and buildings € million | Plant and equipment € million | Returnable containers € million | Assets under construction € million | Total € million | | --- | --- | --- | --- | --- | --- | | **Cost** | | | | | | | As at 1 January 2021 | 1,412.7 | 3,597.0 | 420.7 | 199.8 | **5,630.2** | | Additions^{1} | 7.6 | 137.0 | 40.9 | 297.1 | **482.6** | | Arising from business combinations | – | 1.3 | – | – | **1.3** | | Disposals | (9.2) | (166.8) | (12.3) | (0.1) | **(188.4)** | | Reclassified to assets held for sale (refer to Note 20) | – | (1.8) | – | – | **(1.8)** | | Reclassifications | 90.8 | 247.7 | – | (338.5) | – | | Foreign currency translation | 28.1 | 76.2 | 1.6 | 0.8 | **106.7** | | **As at 31 December 2021** | **1,530.0** | **3,890.6** | **450.9** | **159.1** | **6,030.6** | | **Depreciation and impairment** | | | | | | | As at 1 January 2021 | 498.6 | 2,440.8 | 255.1 | 1.2 | **3,195.7** | | Charge for the year | 42.9 | 206.5 | 27.6 | – | **277.0** | | Impairment | 1.0 | 4.0 | 0.5 | 0.5 | **6.0** | | Disposals | (2.1) | (165.4) | (9.7) | – | **(177.2)** | | Reclassified to assets held for sale (refer to Note 20) | – | (1.7) | – | – | **(1.7)** | | Foreign currency translation | 11.8 | 50.1 | 0.6 | – | **62.5** | | **As at 31 December 2021** | **552.2** | **2,534.3** | **274.1** | **1.7** | **3,362.3** | | **Net book value as at 31 December 2021 excluding right-of-use assets** | **977.8** | **1,356.3** | **176.8** | **157.4** | **2,668.3** | | **Net book value of right-of-use assets as at 31 December 2021** | **63.2** | **99.4** | **–** | **–** | **162.6** | | **Net book value as at 31 December 2021** | **1,041.0** | **1,455.7** | **176.8** | **157.4** | **2,830.9** | 1. Additions line for 2021 includes €13.8 million on a net book value basis relating to the impact from the demerger of the Group's mineral water and adult sparkling beverages integral joint venture in Italy (refer to Note 15). | | Land and buildings € million | Plant and equipment € million | Returnable containers € million | Assets under construction € million | Total € million | | --- | --- | --- | --- | --- | --- | | **Cost** | | | | | | | As at 1 January 2022 | 1,530.0 | 3,890.6 | 450.9 | 159.1 | **6,030.6** | | Additions | 4.1 | 143.6 | 59.8 | 373.2 | **380.7** | | Arising from business combinations (refer to Note 24) | 198.5 | 125.9 | 4.5 | 13.5 | **342.4** | | Disposals | (5.7) | (141.7) | (10.8) | (1.2) | **(159.4)** | | Reclassified from right-of-use assets^{1} | 4.2 | 12.1 | – | – | **16.3** | | Reclassified to assets held for sale (refer to Note 20) | – | (0.6) | – | – | **(0.6)** | | Reclassifications | 84.5 | 205.2 | – | (289.7) | – | | Foreign currency translation | (63.3) | (66.7) | (7.4) | (5.8) | **(143.2)** | | **As at 31 December 2022** | **1,752.3** | **4,168.4** | **497.0** | **249.1** | **6,666.8** | | **Depreciation and impairment** | | | | | | | As at 1 January 2022 | 552.2 | 2,534.3 | 274.1 | 1.7 | **3,362.3** | | Charge for the year | 49.9 | 252.4 | 38.9 | – | **341.2** | | Impairment | 19.0 | 61.0 | 0.7 | 0.8 | **81.3** | | Disposals | (4.5) | (134.0) | (6.6) | (0.2) | **(145.3)** | | Reclassified from right-of-use assets^{1} | 1.5 | 2.3 | – | – | **3.8** | | Reclassified to assets held for sale (refer to Note 20) | – | (0.5) | – | – | **(0.5)** | | Foreign currency translation | (5.2) | (30.2) | (3.2) | – | **(38.6)** | | **As at 31 December 2022** | **612.9** | **2,685.3** | **303.9** | **2.3** | **3,604.4** | | **Net book value as at 31 December 2022 excluding right-of-use assets** | **1,139.4** | **1,483.1** | **193.1** | **246.8** | **3,062.4** | | **Net book value of right-of-use assets as at 31 December 2022** | **82.7** | **121.2** | **–** | **–** | **203.9** | | **Net book value as at 31 December 2022** | **1,222.1** | **1,604.3** | **193.1** | **246.8** | **3,266.3** | 2. Line 'Reclassified from right-of-use assets' for 2022 relates to the reclassification from right-of-use assets to land and buildings and plant and equipment of €12.5 million on a net book value basis, following the exercise of purchase options included in the lease contracts. Assets under construction at 31 December 2022 include advances for equipment purchases of €63.2 million (2021: €41.8 million). The depreciation charge for the year, including that for right-of-use assets (refer to Note 17), recognised in operating expenses and cost of goods sold amounted to €209.6 million (2021: €181.4 million) and €193.8 million (2021: €148.9 million) respectively. 186 Strategic Report Corporate Governance Financial Statements Semi-Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 # Notes to the consolidated financial statements continued ### 15. Property, plant and equipment continued # Impairment of property, plant and equipment In 2021 the Group recorded impairment losses of €3.7 million, €0.9 million and €3.8 million and reversals of impairment of €0.2 million, €0.3 million and €1.9 million relating to property, plant and equipment in the Established, Developing and Emerging segments respectively. The impaired assets, being mainly buildings and production equipment, were written down based mainly on value-in-use calculations. In 2022 the Group recorded impairment losses of €1.6 million, €0.9 million and €81.4 million and reversals of impairment of €0.6 million, €0.2 million and €1.6 million relating to property, plant and equipment in the Established, Developing and Emerging segments respectively. Net impairment losses of €60.9 million, relating to property, plant and equipment in the Emerging segment are included in the exceptional items related to Russia-Ukraine conflict (refer to Note 6). The impaired assets, being mainly buildings, production and cold-drink equipment, were written down based mainly on value-in-use calculations. ### 16. Interests in other entities # List of principal subsidiaries The following are the principal subsidiaries of the Group as at 31 December: | | Country of registration | % of voting rights | | % ownership | | | --- | --- | --- | --- | --- | --- | | | | 2022 | 2021 | 2022 | 2021 | | Adelink Ltd^{1} | Cyprus | 50.0% | 50.0% | 50.0% | 50.0% | | AS Coca-Cola HBC Eesti | Estonia | 100.0% | 100.0% | 100.0% | 100.0% | | CCB Management Services GmbH | Austria | 100.0% | 100.0% | 100.0% | 100.0% | | CCHBC Armenia CJSC | Armenia | 100.0% | 100.0% | 100.0% | 100.0% | | CCHBC Bulgaria AD | Bulgaria | 99.4% | 99.4% | 99.4% | 99.4% | | CCHBC IT Services Limited | Bulgaria | 100.0% | 100.0% | 100.0% | 100.0% | | CCHBC Reinsurance Designated Activity Company | Republic of Ireland | 100.0% | 100.0% | 100.0% | 100.0% | | CCN CirculaRPET S.r.l. | Italy | 100.0% | 100.0% | 100.0% | 100.0% | | Coca-Cola HBC Austria GmbH | Austria | 100.0% | 100.0% | 100.0% | 100.0% | | Coca-Cola Beverages Belorussiya | Belarus | 100.0% | 100.0% | 100.0% | 100.0% | | Coca-Cola Beverages Ukraine Ltd | Ukraine | 100.0% | 100.0% | 100.0% | 100.0% | | Coca-Cola Imbutelere Chisinau SRL | Moldova | 100.0% | 100.0% | 100.0% | 100.0% | | Coca-Cola HBC B-H d.o.o. Sarajevo | Bosnia and Herzegovina | 100.0% | 100.0% | 100.0% | 100.0% | | Coca-Cola HBC Česko a Slovensko, s.r.o. | Czech Republic | 100.0% | 100.0% | 100.0% | 100.0% | | Coca-Cola HBC Česko a Slovensko, s.r.o. – organizačná zložka | Slovakia | 100.0% | 100.0% | 100.0% | 100.0% | | CC Beverages Holdings II B.V. | The Netherlands | 100.0% | 100.0% | 100.0% | 100.0% | | Coca-Cola Bottling Company of Egypt (S.A.E.)^{2} | Egypt | 94.7% | – | 94.7% | – | | Coca-Cola HBC Cyprus Ltd | Cyprus | 100.0% | 100.0% | 100.0% | 100.0% | | Coca-Cola HBC Finance B.V. | The Netherlands | 100.0% | 100.0% | 100.0% | 100.0% | | | Country of registration | % of voting rights | | % ownership | | | --- | --- | --- | --- | --- | --- | | | | 2022 | 2021 | 2022 | 2021 | | Coca-Cola HBC Greece S.A.I.C. | Greece | 100.0% | 100.0% | 100.0% | 100.0% | | Coca-Cola HBC Holdings B.V. | The Netherlands | 100.0% | 100.0% | 100.0% | 100.0% | | Coca-Cola HBC Hrvatska d.o.o. | Croatia | 100.0% | 100.0% | 100.0% | 100.0% | | Coca-Cola HBC Hungary Ltd | Hungary | 100.0% | 100.0% | 100.0% | 100.0% | | Coca-Cola HBC Ireland Limited | Republic of Ireland | 100.0% | 100.0% | 100.0% | 100.0% | | Coca-Cola HBC Italia S.r.l. | Italy | 100.0% | 100.0% | 100.0% | 100.0% | | Coca-Cola HBC Kosovo L.L.C. | Kosovo | 100.0% | 100.0% | 100.0% | 100.0% | | Coca-Cola HBC Northern Ireland Limited | Northern Ireland | 100.0% | 100.0% | 100.0% | 100.0% | | Coca-Cola HBC Polska sp. z o.o. | Poland | 100.0% | 100.0% | 100.0% | 100.0% | | Coca-Cola HBC Romania Ltd | Romania | 100.0% | 100.0% | 100.0% | 100.0% | | Coca-Cola HBC Services MERS | Greece | 100.0% | 100.0% | 100.0% | 100.0% | | Coca-Cola HBC Slovenia d.o.o. | Slovenia | 100.0% | 100.0% | 100.0% | 100.0% | | Coca-Cola HBC Sourcing B.V. | The Netherlands | 100.0% | 100.0% | 100.0% | 100.0% | | Coca-Cola HBC Switzerland Ltd | Switzerland | 99.9% | 99.9% | 99.9% | 99.9% | | Coca-Cola HBC Srbija d.o.o. | Serbia | 100.0% | 100.0% | 100.0% | 100.0% | | Coca-Cola Hellenic Bottling Company- Crna Gora d.o.o., Podgorica | Montenegro | 100.0% | 100.0% | 100.0% | 100.0% | | Coca-Cola Hellenic Business Service Organisation | Bulgaria | 100.0% | 100.0% | 100.0% | 100.0% | | Coca-Cola Hellenic Procurement GmbH | Austria | 100.0% | 100.0% | 100.0% | 100.0% | | ESM Effervescent Sodas Management Limited^{3} | Cyprus | 100.0% | – | 100.0% | – | | Koncern Bambra d. Požarevac | Serbia | 100.0% | 100.0% | 100.0% | 100.0% | | Multon AG^{1} | Russia | 50.0% | 50.0% | 50.0% | 50.0% | | Multon Partners LLC^{1} | Russia | 100.0% | 100.0% | 100.0% | 100.0% | | Nigerian Bottling Company Ltd | Nigeria | 100.0% | 100.0% | 100.0% | 100.0% | | SIA Coca-Cola HBC Latvia | Latvia | 100.0% | 100.0% | 100.0% | 100.0% | | Three Cents Hellas Single Member S.A.^{3} | Greece | 100.0% | – | 100.0% | – | | UAB Coca-Cola HBC Lietuva | Lithuania | 100.0% | 100.0% | 100.0% | 100.0% | 1. Following unilateral waiver by The Coca-Cola Company of certain of its governance rights, Coca-Cola HBC acquired control of Multon AG Group of companies effective 11 August 2022 (refer to Note 24). 2. Coca-Cola Bottling Company of Egypt (S.A.E.) was acquired on 15 January 2022 (refer to Note 24). 3. ESM Effervescent Sodas Management Limited and its subsidiary Three Cents Hellas Single Member S.A. were acquired on 21 October 2022 (refer to Note 24). 4. LLC Coca-Cola HBC Eurasia was renamed to Multon Partners LLC as of 29 July 2022. Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 187 # Notes to the consolidated financial statements *continued* ## 16. Interests in other entities *continued* ### Equity method investments #### Accounting policies Equity method investments comprise investments in associates and joint arrangements and are classified into integral and non-integral on the basis of whether they are considered part of the Group's core operations and strategy. #### Investments in associates Investments in associated undertakings are accounted for by the equity method of accounting. Associated undertakings are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% to 50% of the voting rights. The equity method of accounting involves recognising the Group's share of the associates' post-acquisition profit or loss and movements in other comprehensive income for the period in the income statement and other comprehensive income respectively. Unrealised gains and losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the associate. The Group's interest in each associate is carried in the balance sheet at an amount that reflects its share of the net assets of the associate and includes goodwill on acquisition. When the Group's share of losses in an associate equals or exceeds its interest in the associate, the Group does not recognise further losses, unless the Group has incurred obligations or made payments on behalf of the associate. #### Investments in joint arrangements Joint arrangements are arrangements in which the Group has contractually agreed sharing of control, which exists only when decisions about the relevant activities require unanimous consent. Joint arrangements are classified as joint ventures or joint operations depending upon the rights and obligations arising from the joint arrangement. The Group classifies a joint arrangement as a joint venture when the Group has rights to the net assets of the arrangement. The Group accounts for its interests in joint ventures using the equity method of accounting as described in the section above. The Group classifies a joint arrangement as a joint operation when the Group has the rights to the assets, and obligations for the liabilities, of the arrangement and accounts for each of its assets, liabilities, revenues and expenses, including its share of those held or incurred jointly, in relation to the joint operation. If facts and circumstances change, the Group reassesses whether it still has joint control and whether the type of joint arrangement in which it is involved has changed. #### Critical accounting judgements The Group participates in several joint arrangements. Judgement is required in order to determine their classification as a joint venture where the Group has rights to the net assets of the arrangement, or a joint operation where the Group has rights to the assets and obligations for the liabilities of the arrangement. In making this judgement, consideration is given to the legal form of the arrangement, and the contractual terms and conditions, as well as other facts and circumstances (including the economic rationale of the arrangement and the impact of the legal framework). Changes in the carrying amounts of equity method investments for 2021 and 2022 are as follows: | | Joint ventures € million | Associates € million | Total € million | | --- | --- | --- | --- | | As at 1 January 2021 | 284.1 | 29.6 | 313.7 | | Additions | – | 88.0 | 88.0 | | Decrease | (34.6) | – | (34.6) | | Share of results of equity method investments | 34.4 | 3.2 | 37.6 | | Share of other comprehensive income of equity method investments | 14.6 | – | 14.6 | | Share of total comprehensive income | 49.0 | 3.2 | 52.2 | | Return of capital | (6.1) | – | (6.1) | | Dividends | (45.5) | (1.9) | (47.4) | | **As at 31 December 2021** | **246.9** | **118.9** | **365.8** | | Impairment (refer to Note 6) | (52.8) | – | (52.8) | | Gain on remeasurement of previously held equity interest arising from business combination | 70.8 | – | 70.8 | | Deemed disposal arising from business combination (refer to Note 24) | (249.9) | – | (249.9) | | Capital increase | 4.0 | 7.0 | 11.0 | | Share of results of equity method investments | 42.1 | 2.0 | 44.1 | | Share of other comprehensive income of equity method investments | 34.6 | (0.4) | 34.2 | | Share of total comprehensive income | 76.7 | 1.6 | 78.3 | | Dividends | (9.7) | (7.9) | (17.6) | | **As at 31 December 2022** | **86.0** | **119.6** | **205.6** | 188 Strategic Report Corporate Governance Financial Statements Basic Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 # Notes to the consolidated financial statements continued ## 16. Interests in other entities continued The carrying amount of equity method investments as at 31 December 2022 comprises integral and non-integral equity method investments as follows: | | Joint ventures € million | Associates € million | Total € million | | --- | --- | --- | --- | | Integral equity method investments | 81.9 | – | 81.9 | | Non-integral equity method investments | 4.1 | 119.6 | 123.7 | | Total equity method investments | 86.0 | 119.6 | 205.6 | ### a) Investments in joint ventures In January 2021, a demerger of Acque Mineral S.r.l., our mineral water and adult sparkling beverages integral joint venture with The Coca-Cola Company in Italy, was completed. As part of the demerger, certain operating activities were transferred to the Group, resulting in the recognition of €15.6 million of goodwill and €14.0 million of property, plant and equipment, including right-of-use assets, as part of the Group's Italian cash-generating unit (refer to Note 14 and Note 15 respectively) and the decrease of equity method investments by €34.6 million, presented in line 'Decrease' of the table on page 187 regarding 2021 changes in the carrying amounts of equity method investments. There was no significant impact to the Group's net assets or income statement from this transaction. Also, there was no cash flow impact for the Group as a result of the transaction. The Group has a 50% interest in Multon AIO Group of companies ('Multon'), which is engaged in the production and distribution of juices in Russia and was jointly controlled by the Group and The Coca-Cola Company. The joint arrangement was classified as a joint venture, as its structure provided the Group with rights to its net assets. In March 2022, in response to the Russia-Ukraine conflict, The Coca-Cola Company announced that it was suspending its business in Russia. In August 2022, The Coca-Cola Company unilaterally waived certain of its governance rights in connection with its 50% interest in Multon, which were accordingly assumed by the Group, while retaining consent rights in respect of certain limited board and shareholder reserved matters that are protective in nature. As a result, considering the criteria set out in IFRS 10 'Consolidated financial statements', the Group has concluded that, effective 11 August 2022, it controls Multon (refer to Note 24). As a result of the change in control of Multon described above, on 11 August 2022 the Group remeasured the previously held equity interest in Multon at its fair value (refer to Note 24), which resulted in a gain of €70.8 million, which was presented in line 'Gain on remeasurement of previously held equity interest arising from business combination' of the table on page 187, regarding 2022 changes in the carrying amount of equity method investments. The Group then proceeded to derecognise the resulting carrying amount of Multon investment of approximately €250 million, against the fair value of the identifiable net assets recognised (refer to Note 24), which was presented in line 'Deemed disposal arising from business combination' of the table on page 187 regarding 2022 changes in the carrying amount of equity method investments. Apart from Multon, the Group has a significant joint venture with Heineken, through its 50% interest in AIO Pisara Skopje which is engaged in the bottling and distribution of soft drinks and beer in North Macedonia. The structure of the joint venture provides the Group with rights to its net assets. Summarised financial information of the Group's significant joint ventures is presented below. This information reflects the amounts presented in the IFRS financial statements of the joint venture, amended to reflect adjustments made when using the equity method, including fair value adjustments and not the Group's share in these amounts. | Multon A.O. Group of companies | 2021 € million | | --- | --- | | Summarised balance sheet¹⁾: | | | Non-current loans to related parties | 9.1 | | Other non-current assets | 137.9 | | Non-current assets | 143.0 | | Cash and cash equivalents | 9.0 | | Current loans to related parties | 54.1 | | Other current assets | 131.5 | | Total current assets | 194.6 | | Other current liabilities (including trade payables) | (76.0) | | Total current liabilities | (76.0) | | Total non-current liabilities | (7.4) | | Net assets | 254.2 | | | 2022 € million | 2021 € million | | --- | --- | --- | | Summarised statement of comprehensive income²⁾: | | | | Revenue | 307.3 | 417.0 | | Depreciation | (3.4) | (5.4) | | Interest income | 6.6 | 7.7 | | Interest expense | (1.1) | (1.5) | | Profit before tax | 80.5 | 65.0 | | Income tax expense | (15.9) | (12.6) | | Profit after tax | 64.6 | 52.4 | | Other comprehensive income | 69.8 | 29.0 | | Total comprehensive income | 134.4 | 81.4 | | Dividends received and capital returns | – | 34.8 | | | 2021 € million | | --- | --- | | Reconciliation of net assets to carrying amount: | | | Closing net assets | 254.2 | | Interest in joint venture at 50% | 127.1 | | Goodwill | 37.6 | | Carrying value | 164.7 | 1. Further to the Group obtaining control over Multon, the latter's balance sheet as at 31 December 2022 has been consolidated. The summarised statement of comprehensive income presented for 2022 reflects the period up to 11 August 2022, during which Multon was classified as a joint venture. Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 189 # **Notes to the consolidated financial statements** *continued* # **16. Interests in other entities** *continued* | | 2022 € million | 2021 € million | | --- | --- | --- | | **AD Pivara Skopje** | | | | **Summarised balance sheet:** | | | | **Non-current assets** | **66.1** | 56.7 | | Cash and cash equivalents | 0.5 | 0.2 | | Other current assets | 14.4 | 13.6 | | **Total current assets** | **14.9** | **13.8** | | Borrowings | (3.6) | (2.2) | | Other current liabilities (including trade payables) | (20.8) | (18.5) | | **Total current liabilities** | **(24.4)** | **(20.7)** | | Borrowings | (7.0) | (6.1) | | Other non-current liabilities | (0.3) | (0.6) | | **Total non-current liabilities** | **(7.3)** | **(0.7)** | | **Net assets** | **49.3** | **49.1** | | **Summarised statement of comprehensive income:** | | | | Revenue | 91.8 | 79.3 | | Depreciation | (5.7) | (5.3) | | Profit before tax | 17.9 | 17.2 | | Income tax expense | (2.1) | (2.0) | | Profit after tax | 15.8 | 15.2 | | **Total comprehensive income** | **15.8** | **15.2** | | **Dividends received** | **7.7** | **13.0** | | **Reconciliation of net assets to carrying amount:** | | | | Closing net assets | 49.3 | 49.1 | | Interest in joint venture at 50% | 24.7 | 24.6 | | Goodwill | 16.9 | 16.9 | | Non-controlling interest | (1.6) | (1.6) | | **Carrying value** | **40.0** | **39.9** | Summarised financial information of the Group's investment in other joint ventures is as follows: | | 2022 € million | 2021 € million | | --- | --- | --- | | Carrying amount | 46.0 | 42.3 | | Share of profit | 1.9 | 0.6 | | Share of other comprehensive income | (0.3) | 0.1 | | **Share of total comprehensive income** | **1.6** | **(0.7)** | # **b) Investments in associates** On 7 October 2021, the Group acquired a 30% equity shareholding in Casa Del Caffè Vergnano S.p.A. ('Caffè Vergnano'), a premium Italian coffee company. The Group also entered into an exclusive distribution agreement for Caffè Vergnano's products in all its territories outside of Italy. The corresponding investment was classified as an associate in accordance with the requirements of IAS 28 'Investments in Associates and Joint Ventures' since the terms of the transaction gave the Group significant influence over the investee. The investment is accounted for using the equity method and was further classified as a non-integral equity method investment in the consolidated financial statements of the Group, considering that the distribution agreement was separate to the shareholding. The total consideration paid in 2021 amounted to €87.0 million, including acquisition costs of €0.1 million. Total acquisition costs incurred in 2021 amounted to €1.1 million, out of which €0.8 million were paid in 2022. Consideration including acquisition costs paid was presented in line 'Payments for non-integral equity method investments' of the consolidated cash flow statement, in 2021 and 2022 accordingly. Total consideration and acquisition costs were presented in line 'Additions' of the table on page 187 regarding 2021 changes in the carrying amount of equity method investments. The information below reflects the amounts presented in the financial statements of Caffè Vergnano under Italian law, amended to reflect adjustments made by the Group when using the equity method, including fair value adjustments and not the Group's share in these amounts. | | 2022 € million | 2021 € million | | --- | --- | --- | | **Caffè Vergnano** | | | | **Summarised balance sheet:** | | | | **Non-current assets** | **125.2** | 122.6 | | Cash and cash equivalents | 1.0 | 5.2 | | Other current assets | 54.5 | 52.7 | | **Total current assets** | **55.5** | **57.9** | | Borrowings | (19.6) | (16.2) | | Other current liabilities (including trade payables) | (30.6) | (33.0) | | **Total current liabilities** | **(50.2)** | **(49.2)** | | Borrowings | (2.4) | (1.8) | | Other non-current liabilities | (27.5) | (28.1) | | **Total non-current liabilities** | **(29.9)** | **(29.9)** | | **Net assets** | **100.6** | **101.4** | 190 Strategic Report Corporate Governance Financial Statements Semi-Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 # Notes to the consolidated financial statements continued # 16. Interests in other entities continued | | 2022 £ million | 2021 £ million | | --- | --- | --- | | Summarised statement of comprehensive income^{1)}: | | | | Revenue | 105.1 | 22.3 | | Depreciation | (7.6) | (1.7) | | (Loss) / profit before tax | (3.6) | 0.3 | | Income tax | 0.3 | (0.3) | | (Loss) / profit after tax | (3.3) | – | | Total comprehensive income | (3.3) | | | Reconciliation of net assets to carrying amount: | | | | Closing net assets | 100.6 | 101.3 | | Interest in associate at 30% | 30.2 | 30.4 | | Acquisition costs | 1.1 | 1.1 | | Goodwill | 56.5 | 56.5 | | Carrying value | 87.8 | 88.0 | 1) Summarised statement of comprehensive income for 2021 relates to the period following acquisition of the associate Summarised financial information of the Group's investment in other associates is as follows: | | 2022 £ million | 2021 £ million | | --- | --- | --- | | Carrying amount | 31.8 | 30.9 | | Share of profit | 3.0 | 3.2 | | Share of other comprehensive income | (0.4) | – | | Share of total comprehensive income | 2.6 | 3.2 | Frigoglass Industries (Nigeria) Limited, a non-integral associate in which the Group holds an effective interest of 23.9% (2021: 23.9%) through its subsidiary Nigerian Bottling Company Ltd, is guarantor under the amended banking facilities and notes issued by the Frigoglass Group, as part of the debt restructuring of the latter. The Group has no direct exposure arising from this guarantee arrangement, but the Group's investment in this associate, which stood at €21.1 million as at 31 December 2022 (31 December 2021: €25.2 million), would be at potential risk if there was a default under the terms of the amended banking facilities or the notes and the Frigoglass Group (including the guarantor) was unable to meet its obligations thereunder. # c) Joint operations Other joint operations of the Group with The Coca-Cola Company comprise mainly a 50% interest in each of the water businesses listed below, which are engaged in the production and distribution of water in the respective countries. | Country | Joint operation | Country | Joint operation | | --- | --- | --- | --- | | Austria | Römerquelle | Poland | Multivita | | Italy | Fonti del Vulture | Switzerland | Valser | | Romania | Dorna | Serbia | Vlasinka | | Baltics | Neptuno Vandenys | | | In addition, in April 2021 the Group acquired a 50% interest in Stockday S.R.L., an online business-to-business platform and distributor in Romania, which was up until that point wholly owned by Heneken Romania S.A. The transaction resulted in the two shareholders jointly controlling Stockday S.R.L. The joint arrangement was classified as a joint operation in accordance with the requirements of IFRS 11 'Joint arrangements', as it provides the shareholders with rights to the assets and obligations for the liabilities of the joint arrangement. As a result of the above transaction, goodwill of €0.8 million was recognised as part of the Group's Emerging segment (refer to Note 14). # 17. Leases # Accounting policy Leases for which the Group is in a lessee position are recognised as a right-of-use asset and a corresponding lease liability at the date at which the lease asset is available for use by the Group. Assets and liabilities arising from a lease are initially measured on a net-present-value basis and are recognised as part of 'Property, plant and equipment', 'Current borrowings' and 'Non-current borrowings' in the consolidated balance sheet, respectively. Lease contracts may contain both lease and non-lease components. The Group allocates the consideration in the contract to the lease and non-lease components as appropriate. Consideration relevant to the non-lease component is recognised as an expense in the consolidated income statement over the period of the lease. Lease liabilities include the net present value of the following lease payments: - a) fixed payments (including in-substance fixed payments) over the lease term, less any lease incentives receivable; - b) variable lease payments that are based on an index or a rate; - c) amounts expected to be payable by the lessee under residual value guarantees; - d) the exercise price of a purchase option if the Group is reasonably certain it will exercise that option; and - e) payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option. Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 191 # Notes to the consolidated financial statements continued # 17. Leases continued # Accounting policy continued When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset. Variable lease payments that do not depend on an index or a rate are recognised as an expense in the period in which the event or condition that triggers the payment occurs. The lease payments are discounted using the interest rate implicit in the lease (if that rate can be determined), or the incremental borrowing rate of the lease, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms, security and conditions. In determining the incremental borrowing rate to be used, the Group applies judgement to establish the suitable reference rate and credit spread. Each lease payment is allocated between the liability (principal) and finance cost. The interest expense is charged to the consolidated income statement as part of 'Finance costs' over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Right-of-use assets are measured at cost comprising the following: - a) the amount of the initial measurement of lease liability; - b) any lease payments made at or before the commencement date less any lease incentives received; - c) any initial direct costs; and - d) any restoration costs. The right-of-use assets are depreciated over the shorter of the assets' useful life and the lease term on a straight-line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset's useful life. The Group utilises a number of practical expedients permitted by the standard, namely: - 1) applying the recognition exemption to short-term leases (i.e. leases with a term of 12 months or less) that do not contain a purchase option; and - 2) applying the recognition exemption to leases of underlying assets with a low value, which mainly comprise IT equipment. Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in the consolidated income statement. In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). The assessment is revised if a significant event or a significant change in circumstances occurs, which affects this assessment and which is within the control of the lessee. Lease payments are presented as follows in the consolidated cash flow statement: - short-term lease payments, payments for leases of low-value assets and variable lease payments that are not included in the measurement of the lease liabilities are presented within cash flows from operating activities; - payments for the interest element of recognised lease liabilities are included in 'Interest paid' within cash flows from financing activities; and - payments for the principal element of recognised lease liabilities are presented within cash flows from financing activities. # Leasing activities The leases which are recorded on the consolidated balance sheet are principally in respect of vehicles and buildings. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. Extension and termination options are included in a number of leases across the Group. These are used to maximise operational flexibility in terms of managing the assets used in the Group's operations. Extension options considered reasonably certain to be exercised relate to both buildings and motor vehicles and do not exceed three years. Most termination options have not been considered reasonably certain to be exercised. The Group's carrying amount of lease liability is presented below as at 31 December: | | 2022 € million | 2021 € million | | --- | --- | --- | | Current lease liability | 53.9 | 50.9 | | Non-current lease liability | 152.1 | 109.4 | | **Total lease liability (refer to Note 26)** | **206.0** | **160.3** | For the carrying amount of right-of-use assets per class of underlying asset, refer to Note 15. The Group's additions to right-of-use assets for the years ended 31 December are as follows: | | 2022 € million | 2021 € million | | --- | --- | --- | | Land and buildings | 32.0 | 10.4 | | Plant and equipment | 59.2 | 31.6 | | **Total additions** | **91.2** | **42.0** | Right-of-use assets arising on business combinations in 2022 amounted to €40.1 million (2021: €nil). The consolidated income statement includes the following amounts relating to depreciation of right-of-use assets: | | 2022 € million | 2021 € million | | --- | --- | --- | | Land and buildings | 21.4 | 19.5 | | Plant and equipment | 40.8 | 33.8 | | **Total depreciation charge** | **62.2** | **53.3** | 192 Strategic Report Corporate Governance Financial Statements Semi-Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 # Notes to the consolidated financial statements continued # 17. Leases continued The following expenses have been included in cost of goods sold and operating expenses: | | 2022 € million | 2021 € million | | --- | --- | --- | | Expense relating to short-term leases | 22.7 | 15.1 | | Expense relating to leases of low-value assets | 2.5 | 1.4 | | Expense relating to variable lease payments | 10.8 | 7.4 | Interest expense on leases in 2022 was €16.4 million (2021: €9.9 million) and is recorded within 'Finance costs' in the consolidated income statement (refer to Note 10). The total cash outflow for leases in 2022 was €103.6 million (2021: €91.0 million). Expenses relating to short-term leases in 2022 and 2021 comprise consideration for leases with a term of 12 months or less used to cover seasonal business needs. # 18. Inventories # Accounting policy Inventories are stated at the lower of cost and net realisable value. Cost for raw materials and consumables is determined on a weighted average basis. Cost for work in progress and finished goods comprises the cost of direct materials and labour plus attributable overhead costs. Cost of inventories includes all costs incurred to bring the product to its present location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs necessary to complete and sell the inventory. Inventories consisted of the following as at 31 December: | | 2022 € million | 2021 € million | | --- | --- | --- | | Finished goods | 331.1 | 244.0 | | Raw materials and work in progress | 329.3 | 208.0 | | Consumables | 109.6 | 67.8 | | Total inventories | 770.0 | 519.8 | The amount of inventories recognised as an expense during 2022 was €4,509.6 million (2021: €3,420.4 million). This includes €1.1 million of write-offs related to the Russia-Ukraine conflict (refer to Note 6). During 2022 provision for obsolete inventories recognised as an expense amounted to €19.2 million (2021: €16.2 million), whereas provision reversed in the year amounted to €0.4 million (2021: €0.6 million). # 19. Trade, other receivables and assets # Accounting policies Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. They are initially recognised at fair value and subsequently measured at amortised cost using the effective interest rate method. The normal credit terms are between 7-90 days upon delivery. The Group applies the IFRS 9 simplified approach for trade and other receivables and follows an Expected Credit Losses ('ECLs') approach for measuring the allowance of its trade receivables. The expected loss rate is assessed on the basis of historical credit losses of 24 months before the year end and adjusted to reflect current and forward-looking information. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive. The carrying amount of the receivable is reduced by the loss allowance, which is recognised as part of operating expenses. If a trade receivable ultimately becomes uncollectible, it is written off initially against any loss allowance made in respect of that receivable with any excess recognised as part of operating expenses. Subsequent recoveries of amounts previously written off or loss allowance no longer required are credited against operating expenses. The Group has entered into a contract that provides insurance coverage against defaulted trade receivables. This contract meets the definition of a financial guarantee contract, which is in substance part of the contract terms (that is, integral to the trade receivables) and is not recognised separately. Therefore, the expected cash flows from the credit insurance are included in the measurement of ECLs of trade receivables. Loans are initially recognised at the fair value net of transaction costs incurred. After initial recognition, all interest-bearing loans are subsequently measured at amortised cost. Amortised cost is calculated using the effective interest rate method whereby any discount, premium or transaction costs associated with a loan are amortised to the income statement over the lending period. Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 193 # Notes to the consolidated financial statements continued # 19. Trade, other receivables and assets continued Trade, other receivables and assets consisted of the following as at 31 December: | | Current assets | | Non-current assets | | | --- | --- | --- | --- | --- | | | 2022 € million | 2021 € million | 2022 € million | 2021 € million | | Trade receivables | **804.8** | 705.5 | **0.1** | 0.1 | | Receivables from related parties (refer to Note 28) | **56.5** | 60.4 | — | — | | Loans receivable | **1.1** | 0.5 | **0.8** | 1.0 | | Receivables from sale of property, plant and equipment | **0.4** | 0.5 | — | — | | Loans and advances to employees | **10.1** | 6.0 | — | — | | Other receivables | **144.1** | 89.3 | **1.4** | — | | **Total trade and other receivables** | **1,017.0** | **862.2** | **2.3** | **1.1** | | Prepayments | **88.6** | 69.4 | **14.3** | 10.4 | | Pension plan assets (refer to Note 22) | — | — | **51.9** | 42.0 | | Non-current income tax receivable | — | — | **9.7** | 16.3 | | VAT and other taxes receivable | **42.3** | 17.0 | — | — | | **Total other assets** | **130.9** | **86.4** | **75.9** | **68.7** | | **Total trade, other receivables and assets** | **1,147.9** | **948.6** | **78.2** | **69.8** | An amount of €50.0 million (2021: €43.9 million) included in 'Other receivables' relates to receivables from brand partners in the sale and distribution of premium spirits and energy drinks. Non-current trade receivables relate to renegotiated receivables, which are expected to be settled within the new contractual due date. For offsetting impact on trade receivables, refer to Note 23. # Trade receivables Trade receivables classified as current assets consisted of the following as at 31 December: | | 2022 € million | 2021 € million | | --- | --- | --- | | Trade receivables | **880.6** | 781.6 | | Less: Loss allowance | **(75.8)** | (76.1) | | **Total trade receivables** | **804.8** | **705.5** | The ageing analysis of trade receivables classified as current assets is as follows: | | 2022 € million | | | 2021 € million | | | | --- | --- | --- | --- | --- | --- | --- | | | Gross carrying amount | Loss allowance | Trade receivables | Gross carrying amount | Loss allowance | Trade receivables | | Within due date | **720.2** | (1.1) | **719.1** | 636.7 | (2.9) | 633.8 | | Past due – Up to three months | **70.5** | (0.5) | **70.0** | 54.2 | (1.2) | 53.0 | | Past due – Three to six months | **7.0** | (1.2) | **5.8** | 6.9 | (1.0) | 5.9 | | Past due – Six to nine months | **3.6** | (1.3) | **2.3** | 3.3 | (1.0) | 2.3 | | Past due – More than nine months | **79.3** | (71.7) | **7.6** | 80.5 | (70.0) | 10.5 | | **Total trade receivables** | **880.6** | **(75.8)** | **804.8** | 781.6 | (76.1) | 705.5 | The movement in the loss allowance during the year is as follows: | | 2022 € million | 2021 € million | | --- | --- | --- | | As at 1 January | **(76.1)** | (87.8) | | Amounts written off during the year | **1.7** | 14.7 | | Amounts recovered during the year | **7.3** | 3.7 | | Increase in allowance recognised in income statement | **(13.6)** | (6.1) | | Foreign currency translation | **4.9** | (0.6) | | **As at 31 December** | **(75.8)** | **(76.1)** | # Receivables from related parties The related party receivables, net of the loss allowance, are as follows: | | 2022 € million | 2021 € million | | --- | --- | --- | | Within due date | **50.9** | 57.3 | | Past due | **5.7** | 3.3 | | Less: Loss allowance | **(0.1)** | (0.2) | | **Total related party receivables** | **56.5** | **60.4** | The ageing analysis of these receivables is as follows: | | 2022 € million | 2021 € million | | --- | --- | --- | | Within due date | **50.8** | 57.2 | | Past due – Up to three months | **1.8** | 2.6 | | Past due – Three to six months | **3.6** | 0.4 | | Past due – More than nine months | **0.3** | 0.2 | | **Total** | **56.5** | **60.4** | 194 Strategic Report Corporate Governance Financial Statements Semi-Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 ## Notes to the consolidated financial statements *continued* ### 19. Trade, other receivables and assets *continued* #### Net impairment Net impairment loss on trade and other receivables recognised in the income statement is analysed as follows: | | 2022 £ million | 2021 £ million | | --- | --- | --- | | Trade receivables | 6.2 | 5.7 | | Other receivables and assets | 2.8 | 1.4 | | **Net impairment loss** | **9.0** | **5.1** | ### 20. Assets classified as held for sale #### Accounting policy Non-current assets and disposal groups are classified as held for sale if it is considered highly probable that their carrying amount will be principally recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. In order for a sale to be considered highly probable, management must be committed to a plan to sell the asset, an active programme to locate a buyer and complete the plan must have been initiated, and the sale should be expected to be completed within one year from the date of classification. In the event that the criteria for continued classification as held for sale are no longer met, the assets are reclassified to property, plant and equipment and the depreciation charge is adjusted for the depreciation that would have been recognised had the assets not been classified as held for sale. Non-current assets and disposal groups classified as held for sale are measured at the lower of the individual assets' previous carrying amount and their fair value less costs to sell. As at 31 December 2022, the Group's assets classified as held for sale amounted to €0.1 million, comprising the net book value of plant and equipment in the Group's Established segment (2021: €0.1 million in our Emerging segment), that has been written down to fair value less costs to sell (refer to Note 15). The fair value of assets classified as held for sale was determined through the use of a sales comparison approach and is a non-recurring fair value measurement within level 3 of the fair value hierarchy. Assets classified as held for sale in 2021 were disposed of during 2022. ### 21. Trade and other payables #### Accounting policy Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method. Trade and other payables consisted of the following at 31 December: | | 2022 £ million | 2021 £ million | | --- | --- | --- | | Trade payables | 947.2 | 678.3 | | Accrued liabilities | 727.9 | 565.6 | | Payables to related parties (refer to Note 28) | 268.6 | 326.1 | | Deposit liabilities | 112.6 | 92.6 | | Other tax and social security liabilities | 159.2 | 126.0 | | Salaries and employee-related payables | 69.2 | 56.9 | | Contract liabilities (refer to Note 8) | 14.7 | 11.8 | | Other payables | 32.5 | 28.5 | | **Total trade and other payables** | **2,331.9** | **1,885.8** | The Group facilitates a supply chain financing programme under which the supplier can elect on an invoice-by-invoice basis to either receive a discounted early payment from the partner bank, or continue to be paid in line with the agreed payment terms, in either case the value and due date of the liability payable by the Group remain unchanged and as such the liability remains classified as trade and other payables. At 31 December 2022 invoices included in the programme amounted to €175.3 million (2021: €139.9 million). Accrued liabilities regarding volume, marketing and promotional incentives as well as listing fees and other incentives provided to customers as at 31 December 2022 amounted to €287.3 million (2021: €239.9 million). Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 195 # Notes to the consolidated financial statements continued # 22. Provisions and employee benefits Provisions and employee benefits consisted of the following as at 31 December: | | 2022 € million | 2021 € million | | --- | --- | --- | | Current: | | | | Employee benefits | 131.5 | 115.2 | | Restructuring provisions | 3.2 | 23.6 | | Other provisions | 46.8 | 18.4 | | **Total current provisions and employee benefits** | **181.5** | **157.2** | | Non-current: | | | | Employee benefits | 103.8 | 115.5 | | Restructuring provisions | 1.1 | 1.2 | | Other provisions | 2.0 | 2.1 | | **Total non-current provisions and employee benefits** | **106.9** | **118.8** | | **Total provisions and employee benefits** | **288.4** | **276.0** | # a) Provisions # Accounting policy Provisions are recognised when: the Group has a present obligation (legal or constructive) as a result of a past event; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and a reliable estimate can be made of the amount of the obligation. Where the Group expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset only when such reimbursement is virtually certain. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Termination benefits are payable whenever an employee's employment is terminated before the normal retirement date or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits at the earlier of the following dates: a) when the Group can no longer withdraw the offer of those benefits and b) when the Group recognises costs for a restructuring that is within the scope of IAS 37 Provisions, contingent liabilities and contingent assets; and involves the payment of termination benefits (refer to Note 9). In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. The movements in restructuring and other provisions comprise: | | 2022 € million | | 2021 € million | | | --- | --- | --- | --- | --- | | | Restructuring provision | Other provisions | Restructuring provision | Other provisions | | As at 1 January | 24.8 | 20.5 | 26.0 | 9.9 | | Arising during the year | 19.3 | 22.5 | 21.7 | 13.5 | | Utilised during the year | (32.1) | (1.4) | (21.5) | (2.8) | | Unused amount reversed | (7.8) | (3.1) | (1.4) | (0.1) | | Arising from business combinations | 0.1 | 15.1 | — | — | | Foreign currency translation | — | (4.8) | — | — | | **As at 31 December** | **4.3** | **48.8** | **24.8** | **20.5** | During 2022 a restructuring provision of €3.9 million was recognised in connection with the new business model in Russia, following the Russia-Ukraine conflict (refer to Note 6), which was utilised during the year. Other provisions primarily comprise provisions in relation to employee litigation, legal and other tax provisions. # b) Employee benefits # Accounting policies The Group operates a number of defined benefit and defined contribution pension plans in its territories. The defined benefit plans are made up of both funded and unfunded pension plans and employee leaving indemnities. The assets of funded plans are generally held in separate trustee-administered funds and are financed by payments from employees and/or the relevant Group companies. The liability recognised in the balance sheet in respect of defined benefit plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of the plan assets. For defined benefit pension plans, pension costs are assessed using the projected unit credit method. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise. Such actuarial gains and losses are not reclassified to the income statement in subsequent periods. The defined benefit obligations are measured at the present value of the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms approximating to the terms of the related obligation. In countries where there is no deep market in such bonds, the market rates on government bonds are used. Past service cost is recognised immediately in the income statement. A number of the Group's operations have other long-service benefits in the form of jubilee plans. These plans are measured at the present value of the estimated future cash outflows with immediate recognition of actuarial gains and losses in the income statement. The Group's contributions to the defined contribution pension plans are charged to the income statement in the period to which the contributions relate. 196 Strategic Report Corporate Governance Financial Statements Sales Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 # Notes to the consolidated financial statements continued ## 22. Provisions and employee benefits continued ### b) Employee benefits continued Critical accounting estimates The Group provides defined benefit pension plans as an employee benefit in certain territories. Determining the value of these plans requires several actuarial assumptions and estimates that may differ from actual developments in the future. These include the determination of the discount rates, rate of compensation increases, rate of pension increases and life expectancy of pensioners at the age of 65. Due to the long-term nature of these plans, such estimates are subject to significant uncertainty. Details on the key assumptions used and a sensitivity analysis regarding the impact of reasonably possible changes in key assumptions on the defined benefit obligation are further presented below. Employee benefits consisted of the following as at 31 December: | | 2022 € million | 2021 € million | | --- | --- | --- | | Defined benefit plans: | | | | Employee leaving indemnities | 67.9 | 78.9 | | Pension plans | 3.4 | 6.2 | | Long-service benefits (jubilee plans) and other benefits | 13.2 | 12.1 | | Total defined benefit plans | 84.5 | 97.2 | | Other employee benefits: | | | | Annual leave | 7.6 | 9.7 | | Other employee benefits | 143.2 | 123.8 | | Total other employee benefits | 150.8 | 133.5 | | Total employee benefits obligations | 235.3 | 230.7 | Other employee benefits are primarily comprised of employee bonuses which are linked to business and individual performance metrics. Employees of Coca-Cola HBC's subsidiaries in Austria, Bulgaria, Croatia, Greece, Italy, Montenegro, Nigeria, Poland, Romania, Serbia and Slovenia are entitled to employee leaving indemnities, generally based on each employee's length of service, employment category and remuneration. These are unfunded plans where the Company meets the payment obligation as it falls due. Coca-Cola HBC's subsidiaries in Austria, Northern Ireland, the Republic of Ireland and Switzerland sponsor defined benefit pension plans. Of the three plans in the Republic of Ireland, two have plan assets, as do the two plans in Northern Ireland, and one plan out of the three in Switzerland. The Austrian plans do not have plan assets and the Company meets the payment obligation as it falls due. The defined benefit plans in Austria, Republic of Ireland and Northern Ireland are closed to new members. Coca-Cola HBC provides long-service benefits in the form of jubilee plans to its employees in Austria, Croatia, Nigeria, Poland, Serbia, Slovenia and Switzerland. Defined benefit obligation by segment is as follows for the years ended 31 December: ![img-12.jpeg](img-12.jpeg) The average duration of the defined benefit obligations is 14 years and the total employer contributions expected to be paid in 2023 are €11.6 million. Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 197 # Notes to the consolidated financial statements continued # 22. Provisions and employee benefits continued The reconciliation of plan assets and plan liabilities for the years ended 31 December is as follows: | | Plan assets € million | Plan liabilities € million | Net (deficit) / surplus € million | | --- | --- | --- | --- | | **As at 1 January 2021** | **481.3** | **(538.1)** | **(56.8)** | | Current service cost | – | (10.8) | (10.8) | | Past service cost | – | (1.6) | (1.6) | | Administrative expenses | (0.3) | – | (0.3) | | Curtailment/settlement | (16.4) | 14.2 | (2.2) | | Interest income/(expense) | 2.3 | (4.0) | (1.7) | | Actuarial gains | – | 0.6 | 0.6 | | **Total expense recognised in income statement** | **(14.4)** | **(1.6)** | **(16.0)** | | Gains from change in demographic assumptions | – | 1.4 | 1.4 | | Gains from change in financial assumptions | – | 16.0 | 16.0 | | Experience adjustments | – | (2.4) | (2.4) | | Return on plan assets excluding interest income | 34.6 | – | 34.6 | | **Total remeasurements recognised in other comprehensive income** | **34.6** | **15.0** | **49.6** | | Benefits paid | (23.1) | 23.1 | – | | Employer's contributions | 16.4 | – | 16.4 | | Participants' contributions | 4.6 | (4.6) | – | | Net increase in defined benefit obligation from other movements | – | (0.7) | (0.7) | | Foreign currency translation | 20.0 | (19.4) | 0.6 | | **As at 31 December 2021** | **519.4** | **(526.3)** | **(6.9)** | | | Plan assets € million | Plan liabilities € million | Net (deficit) / surplus € million | | --- | --- | --- | --- | | **As at 1 January 2022** | **519.4** | **(526.3)** | **(6.9)** | | Current service cost | – | (11.8) | (11.8) | | Past service cost | – | (3.0) | (3.0) | | Administrative expenses | (0.3) | – | (0.3) | | Curtailment/settlement | (2.9) | 2.8 | (0.1) | | Interest income/(expense) | 4.4 | (6.1) | (1.7) | | Actuarial gains | – | 2.0 | 2.0 | | **Total income/(expense) recognised in income statement** | **1.2** | **(16.1)** | **(14.9)** | | Loss from change in demographic assumptions | – | (2.9) | (2.9) | | Gains from change in financial assumptions | – | 145.2 | 145.2 | | Experience adjustments | – | (8.7) | (8.7) | | Return on plan assets excluding interest income | (91.9) | – | (91.9) | | **Total remeasurements recognised in other comprehensive income** | **(91.9)** | **133.6** | **41.7** | | Benefits paid | (22.4) | 22.4 | – | | Employer's contributions | 13.1 | – | 13.1 | | Participants' contributions | 4.8 | (4.8) | – | | Net increase in defined benefit obligation from other movements | – | (0.8) | (0.8) | | Foreign currency translation | 7.7 | (6.5) | 1.2 | | **As at 31 December 2022** | **431.9** | **(398.5)** | **33.4** | 198 Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 # Notes to the consolidated financial statements continued ## 22. Provisions and employee benefits continued The effect of the asset ceiling on plan assets and net deficit for the years ended 31 December is as follows: | | 2022 £ million | 2021 £ million | | --- | --- | --- | | Fair value of plan assets at 31 December excluding asset ceiling | 431.9 | 519.4 | | Opening unrecognised asset due to the asset ceiling | (48.3) | (14.1) | | Change in asset ceiling recognised in other comprehensive income | (15.7) | (33.5) | | Exchange rate gain | (1.8) | (0.7) | | Interest income on unrecognised asset recognised in income statement | (0.2) | – | | Fair value of plan assets at 31 December including asset ceiling | 365.9 | 471.1 | | | 2022 £ million | 2021 £ million | | Present value of funded obligations | 316.6 | 454.1 | | Fair value of plan assets | (431.9) | (519.4) | | Defined benefit obligations of funded plans | (115.3) | (85.3) | | Present value of unfunded obligations | 81.9 | 92.2 | | Unrecognised asset due to asset ceiling | 66.0 | 48.3 | | Defined benefit obligations | 32.6 | 55.2 | | Plus: Amounts recognised within non-current assets (refer to Note 19) | 51.9 | 42.0 | | Total defined benefit obligations | 84.5 | 97.2 | Funding levels are monitored in conjunction with the agreed contribution rate. The funding level of the funded plans as at 31 December 2022 was 116% (2021: 109%). Five of the plans have funded status surplus totalling €61.9 million as at 31 December 2022 (2021: five plans, totalling €42.0 million) that is recognised as an asset on the basis that the Group has an unconditional right to future economic benefits either via a refund or a reduction in future contributions. Defined benefit plan expense is included in employee costs and presented in cost of goods sold and operating expenses. The assumptions (weighted average for the Group) used in computing the defined benefit obligation comprised the following for the years ended 31 December: | | 2022 % | 2021 % | | --- | --- | --- | | Discount rate | 3.6 | 1.2 | | Rate of compensation increase | 2.8 | 2.5 | | Rate of pension increase | 0.9 | 1.0 | | Life expectancy for pensioners at the age of 65 in years: | | | | Male | 22 | 22 | | Female | 24 | 24 | Asset liability matching: Plan assets allocated to growth assets are monitored regularly to ensure they remain appropriate and in line with the Group's long-term strategy to manage the plans. As the plans mature, the level of investment risk will be reduced by investing more in assets such as bonds that better match the liabilities. Pension plan assets are invested in different asset classes in order to maintain a balance between risk and return. Investments are well diversified to limit the financial effect of the failure of any individual investment. Through its defined benefit plans the Group is exposed to a number of risks, as outlined below: - Asset volatility: The liabilities are calculated using a discount rate set with reference to corporate bond yields; if assets underperform this yield, a deficit will be created. The Northern Ireland, the Republic of Ireland and Swiss plans hold a significant proportion of growth assets (equities), which are expected to outperform corporate bonds in the long term while being subject to volatility and risk in the short term. - Changes in bond yields: A decrease in corporate bond yields will increase the plan liabilities, although this will be partially offset by an increase in the value of the plans' bond holdings. Conversely an increase in corporate bond yields will decrease the plan liabilities, although this will be partially offset by a decrease in the value of the plans' bond holdings. - Inflation: The Northern Ireland, the Republic of Ireland and Swiss plans' benefit obligations are linked to inflation, which is used as a basis to determine the rate of compensation increases. As a result, higher inflation will lead to higher liabilities, although, in most cases, caps on the level of inflationary increases are in place to protect against extreme inflation. The majority of the assets are either unaffected by or only loosely correlated with inflation, meaning that an increase in inflation will also increase the deficit. - Life expectancy: The majority of the pension plans' obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the liabilities. The sensitivity analysis presented below is based on a change in a single assumption while all other assumptions remain constant. | | Change in assumption | Impact on defined benefit obligation (%) | | | | | --- | --- | --- | --- | --- | --- | | | | Increase in assumption | | Decrease in assumption | | | | | 2022 | 2021 | 2022 | 2021 | | Discount rate | 0.50% | (5.5%) | (8.2%) | 7.1% | 9.4% | | Rate of compensation increase | 0.50% | 1.5% | 1.8% | (1.4%) | (1.5%) | | Rate of pension increase | 0.50% | 3.8% | 5.2% | (3.8%) | (4.9%) | | Life expectancy | 1 year | 2.4% | 2.8% | (2.4%) | (2.8%) | Strategic Report Corporate Governance Financial Statements Sales Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 199 # Notes to the consolidated financial statements continued ## 22. Provisions and employee benefits continued Plan assets are invested as follows Assets category 2022 (%) ![img-13.jpeg](img-13.jpeg) | Equity securities – Eurasone | 2% | | --- | --- | | Equity securities – Non-Eurasone | 10% | | Government bonds – Eurasone | 17% | | Government bonds – Non-Eurasone | 12% | | Corporate bonds – Eurasone | 11% | | Corporate bonds – Non-Eurasone | 12% | | Real estate | 13% | | Cash | 2% | | Other | 12% | Assets category 2021 (%) ![img-14.jpeg](img-14.jpeg) | Equity securities – Eurasone | 2% | | --- | --- | | Equity securities – Non-Eurasone | 22% | | Government bonds – Eurasone | 30% | | Corporate bonds – Eurasone | 10% | | Corporate bonds – Non-Eurasone | 10% | | Real estate | 11% | | Cash | 1% | | Other | 13% | The assets of funded plans are generally held in separately administered trusts, either as specific assets or as a proportion of a general fund, or are insurance contracts. Plan assets held in trust are governed by local regulations and practice in each country. The category 'Other' mainly includes investments in funds holding a portfolio of assets. Plan assets relate predominantly to quoted financial instruments. Equity securities were not invested in ordinary shares of the Company as at 31 December 2022 or 31 December 2021. ### Defined contribution plans The expense recognised in the income statement in 2022 for the defined contribution plans is €22.5 million (2021: €19.4 million). This is included in employee costs and recorded in cost of goods sold and operating expenses. ## 23. Offsetting financial assets and financial liabilities ### Accounting policy The Group offsets financial assets and financial liabilities to the net amount reported in the balance sheet when it currently has a legally enforceable right to offset the recognised amounts and it intends to settle on a net basis or to realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty. The Group enters into derivative transactions under International Swaps and Derivatives Association (ISDA) master netting agreements or other similar agreements. In general, under such agreements the counterparties can elect to settle as one single net amount the aggregated amounts owed by each counterparty on a single day with respect to all outstanding transactions of the same currency and the same type of derivative. In the event of default or early termination all outstanding transactions under the agreement are terminated and subject to any set-off. These agreements do not meet all of the IAS 32 criteria for offsetting in the balance sheet as the Group does not have any current legally enforceable right to offset amounts since the right can only be applied if elected by both counterparties. The financial assets and financial liabilities presented below are subject to offsetting, enforceable master netting or similar agreements. The column 'Net amount' shows the impact on the Group's balance sheet if all set-off rights were exercised. Financial liabilities offset against trade receivables mainly relate to accrued customer rebates. ### a) Financial assets As at 31 December 2022 | | Gross amounts of recognised financial assets € million | Gross amounts of recognised financial liabilities set off in the balance sheet € million | Net amounts of financial assets presented in the balance sheet € million | Related amounts net set off in the balance sheet Financial instruments € million | Net amount € million | | --- | --- | --- | --- | --- | --- | | Derivative financial assets | 36.1 | – | 36.1 | (16.7) | 19.4 | | Trade receivables | 876.1 | (71.3) | 804.8 | – | 804.8 | | Total | 912.2 | (71.3) | 840.9 | (16.7) | 824.2 | 200 Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 # Notes to the consolidated financial statements continued # 23. Offsetting financial assets and financial liabilities continued As at 31 December 2021 | | Gross amounts of recognised financial assets € million | Gross amounts of recognised financial liabilities set off in the balance sheet € million | Net amounts of financial assets presented in the balance sheet € million | Related amounts not set off in the balance sheet Financial instruments € million | Net amount € million | | --- | --- | --- | --- | --- | --- | | Derivative financial assets | 48.2 | – | 48.2 | (8.1) | 40.1 | | Trade receivables | 764.0 | (58.5) | 705.5 | – | 705.5 | | **Total** | **812.2** | **(58.5)** | **753.7** | **(8.1)** | **745.6** | # b) Financial liabilities As at 31 December 2022 | | Gross amounts of recognised financial liabilities € million | Gross amounts of recognised financial assets set off in the balance sheet € million | Net amounts of financial liabilities presented in the balance sheet € million | Related amounts not set off in the balance sheet Financial instruments € million | Net amount € million | | --- | --- | --- | --- | --- | --- | | Derivative financial liabilities | 45.6 | – | 45.6 | (16.7) | 28.9 | | Trade payables | 1,018.5 | (71.3) | 947.2 | – | 947.2 | | **Total** | **1,064.1** | **(71.3)** | **992.8** | **(16.7)** | **976.1** | As at 31 December 2021 | | Gross amounts of recognised financial liabilities € million | Gross amounts of recognised financial assets set off in the balance sheet € million | Net amounts of financial liabilities presented in the balance sheet € million | Related amounts not set off in the balance sheet Financial instruments € million | Net amount € million | | --- | --- | --- | --- | --- | --- | | Derivative financial liabilities | 14.6 | – | 14.6 | (8.1) | 6.5 | | Trade payables | 736.8 | (58.5) | 678.3 | – | 678.3 | | **Total** | **751.4** | **(58.5)** | **692.9** | **(8.1)** | **684.8** | # 24. Business combinations # Accounting policy The acquisition method of accounting is used to account for business combinations. The consideration transferred is the fair value of any asset transferred, shares issued and liabilities assumed. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed are measured initially at their fair values at the acquisition date. The excess of the consideration transferred and the fair value of non-controlling interest over the net assets acquired and liabilities assumed is recorded as goodwill. In a business combination achieved without the transfer of consideration, the acquisition-date fair value of the previously held interest in the acquiree is used in place of the acquisition-date fair value of the consideration transferred to measure goodwill or a gain on a bargain purchase. Acquisition costs comprise costs incurred to effect a business combination such as finder's, advisory, legal, accounting, valuation and other professional or consulting fees. Integration costs comprise direct incremental costs necessary for the acquiree to operate within the Group. All acquisition and integration-related costs are expensed as incurred. For each business combination, the Group elects to measure the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree's identifiable net assets. If the business combination is achieved in stages, the acquisition date carrying value of the previously held equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains or losses arising from such remeasurement are recognised in profit or loss, within operating expenses in line 'Acquisition and integration costs'. Any accumulated amounts regarding the Group's share of other comprehensive income of the previously held equity interest are reclassified to the income statement, within operating expenses in line 'Acquisition and integration costs'. The Group has also elected to present gains on bargain purchase within operating expenses in line 'Acquisition and integration costs'. Refer also to Note 2 for accounting policy regarding basis of consolidation. # Acquisition of Coca-Cola Bottling Company of Egypt S.A.E. On 12 August 2021, the Group entered into a sale and purchase agreement to acquire approximately 52.7% of Coca-Cola Bottling Company of Egypt S.A.E. (CCBCE), the bottling partner of The Coca-Cola Company in Egypt, from MAC Beverages Limited and certain of its affiliated entities (MBL acquisition). The MBL acquisition was completed on 13 January 2022 and resulted in the Group obtaining control over CCBCE. The acquisition of CCBCE expands the Group's existing footprint on the African continent and further increases its exposure to high-growth markets, as it provides access to one of the largest non-alcoholic ready-to-drink markets by volume in Africa. In addition, sharing of the Group's proven capabilities, experience and best practices with CCBCE is expected to unlock growth opportunities, creating value for all stakeholders. The operating results and assets and liabilities of CCBCE have been consolidated from 14 January 2022. ![img-15.jpeg](img-15.jpeg) Strategic Report Corporate Governance Financial Statements Semi-Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 201 # Notes to the consolidated financial statements continued ## 24. Business combinations continued The fair value of the consideration for the MBL acquisition consisted of US Dollar 303.7 million (€264.9 million), which was transferred on acquisition, and an additional payment of US Dollar 124.0 million (€119.1 million), based on CCBCE's past performance, net financial position and working capital movement, which was transferred in October 2022. Foreign exchange loss arising on settlement of the consideration payable for the MBL acquisition amounted to €11.3 million and was presented in line 'Payment for business combinations, net of cash acquired' of the consolidated cash flow statement, while proceeds from settlement of derivatives used to hedge the relevant foreign currency risk amounted to €13.0 million and were presented in line 'Proceeds from settlement of derivatives relating to business combination' of the consolidated cash flow statement. As part of the MBL acquisition completion, a convertible loan which had been granted to CCBCE from a wholly-owned affiliate of TCCC, one of its major shareholders, was also transferred to the Group for a consideration of €19.1 million, which was presented in line 'Repayments of borrowings' in the consolidated cash flow statement. The consideration was equal to the outstanding principal amount of the convertible loan and any unpaid interest at the time of its transfer. The loan was convertible at its original maturity in March 2022 into new CCBCE shares at fair market value and was eliminated upon consolidation of CCBCE. The conversion option was not subsequently exercised. Details of the MBL acquisition with regard to the determined fair values of the net assets acquired, non-controlling interests and goodwill are presented in the below table. | | Fair value € million | | --- | --- | | Franchise agreements | 307.7 | | Property, plant and equipment | 318.7 | | Inventories | 59.3 | | Trade, other receivables and assets | 64.5 | | Cash and cash equivalents | 15.9 | | Borrowings | (217.0) | | Trade and other payables | (129.6) | | Net deferred tax liabilities | (122.7) | | Net identifiable assets acquired | 356.8 | | Less: Non-controlling interests | (168.9) | | Add: Goodwill arising on acquisition | 196.1 | | Net assets acquired | 384.0 | No significant changes to net identifiable assets acquired have been identified compared to the relevant amounts disclosed as part of the Group's 2021 Integrated Annual Report. The goodwill is attributable to CCBCE's strong market position and growth potential. The line 'Borrowings' in the above table includes the convertible loan as well as third-party loans of €122.7 million, which have been repaid and replaced with intra-group borrowings. The Group has chosen to recognise the non-controlling interests at their proportional share of the fair value of CCBCE's net identifiable assets acquired. The Group incurred acquisition and integration costs of €8.8 million in 2022 (2021: €13.9 million) regarding the acquisition of CCBCE, which were included in operating expenses. On 12 August 2021, the Group entered into an additional sale and purchase agreement to acquire approximately 42% of CCBCE, from a wholly-owned affiliate of TCCC ('TCCC acquisition'). The TCCC acquisition was completed on 25 January 2022. The fair value of the consideration paid for the TCCC acquisition amounted to US Dollar 122.7 million (€108.9 million). The transaction was treated as separate to the MBL acquisition, considering that whilst the transactions above were entered into at the same time and in contemplation of each other, they are separate from a commercial and contractual perspective. The TCCC acquisition was accordingly accounted for as an equity transaction. Following the completion of both the transactions, the Group holds a 94.7% interest in CCBCE. The acquired business contributed revenue of €483.5 million to the Group for the period from 14 January 2022 to 31 December 2022, while it recorded a total net loss of €17.0 million for the same period. If the acquisition had occurred on 1 January 2022, consolidated revenue for 2022 would have been higher by €18.8 million, while net loss recorded would not have been significantly different. The fair value of trade, other receivables and assets acquired includes trade receivables with a fair value of €28.3 million. The gross contractual amount for trade receivables acquired was €42.0 million, of which €13.7 million was considered to be uncollectible. ### Multon A.O. group of companies ('Multon') The Group holds a 50% interest in Multon, which is engaged in the production and distribution of juices in Russia and was jointly controlled by the Group and TCCC. On 8 March 2022, as a result of the Russia-Ukraine conflict, TCCC announced that it was suspending its business in Russia. On 10 August 2022, TCCC unilaterally waived certain of its governance rights in connection with its 50% interest in Multon, while retaining consent rights in respect of certain limited board and shareholder reserved matters that are protective in nature (the 'Waiver'). The waived rights include, among others, TCCC's appointment rights over Multon's board and management, TCCC's approval rights over Multon's financial budgets and rights to receive any dividends or other distributions declared or paid by Multon, which were accordingly assumed by the Group. The Waiver is irrevocable for a two-year period, while there was no consideration transferred in connection with the Waiver. For the duration of the Waiver period, TCCC waives any rights to receive any dividends or other distributions declared or paid by Multon. Given that TCCC waived the aforementioned rights, the Group has power over Multon, exposure to variable returns and the ability to use its power to affect its returns from Multon. Moreover, the irrevocable period of the Waiver is considered long enough so as not to prevent control by the Group. Hence, considering the criteria set out in IFRS 10 'Consolidated financial statements', the Group concluded that, effective 11 August 2022, it controlled Multon. The change in control of Multon was accounted for as a business combination achieved in stages in line with IFRS 3 'Business combinations' requirements. 202 Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coco-Cole-HBC Integrated Annual Report 2022 ## Notes to the consolidated financial statements *continued* ### 24. Business combinations *continued* The fair value of the Group's previously held equity interest in Multon, following TCCC unilaterally waiving certain of its governance rights, amounted to approximately €250 million and was estimated based on discounted forecasted cash flows of the business, using a discount rate of 27.8%. As a result of the change in control of Multon, a gain on remeasurement of the previously held equity interest to fair value amounting to €70.8 million and a loss regarding the reclassification to the income statement of the Group's share of Multon's other comprehensive income amounting to €145.2 million were recognised in 2022. The arising net loss of €74.4 million was recognised within 'Operating expenses' line of the consolidated income statement, included under Emerging markets for segmental reporting purposes and within 'Other non-cash items' line of the consolidated cash flow statement. The Group incurred acquisition costs of €0.1 million in 2022 regarding the change in control of Multon, which were included in operating expenses. Information on the fair values of the net assets acquired, non-controlling interests and gain from bargain purchase arising on the business combination is presented in the below table. | | Fair value € million | | --- | --- | | Trademarks | 60.8 | | Property, plant and equipment | 63.6 | | Inventories | 37.5 | | Trade, other receivables and assets | 212.4 | | Cash and cash equivalents | 24.2 | | Borrowings | (1.2) | | Trade and other payables | (50.1) | | Net deferred tax liability | (2.7) | | **Net identifiable assets acquired** | **344.5** | | Less: Non-controlling interests | (90.7) | | Less: Gain from bargain purchase arising on business combination | (3.9) | | **Net assets acquired** | **249.9** | The cash and cash equivalents acquired amounting to €24.2 million was presented in line 'Payment for business combinations, net of cash acquired' in the consolidated cash flow statement. Trade balances between the Group and Multon were effectively settled on acquisition, with no gain or loss recognised on the settlement, as the balances were effectively settled at the recorded amount. The gain from bargain purchase arises mainly due to the deferred tax asset recognised on the economic obsolescence attributed to Multon's machinery and equipment and was presented in line 'Operating expenses' in the consolidated income statement and line 'Other non-cash items' in the consolidated cash flow statement. More specifically, the business enterprise value, which was estimated based on discounted forecasted cash flows of the business, was lower than the estimated fair value of the net identifiable assets acquired, using the cost of depreciated replacement to new methodology for the machinery and equipment of Multon. The Group considered that a market participant would not be willing to buy the net assets of the business at the estimated fair value, as described above, if the utility of the same, measured by the discounted forecasted cash flows of the business is smaller. Therefore, a downward adjustment of €39.8 million was made on the fair value of the identifiable assets as economic obsolescence in connection with Multon's machinery and equipment, representing the difference between the business enterprise value and the fair value of net identifiable assets. This in turn resulted in the recognition of a deferred tax asset, which is considered recoverable based on the future economic performance of Multon and was included in the value of net identifiable assets acquired. The Group has chosen to recognise the non-controlling interests in Multon (TCCC's 50% share) at their fair value. This was determined based on discounted forecasted cash flows of the business and a scenario-based approach altering the potential dates at which TCCC could potentially reinstate its rights in Multon, based on the terms of the unilateral Waiver described above. The discount rate used in discounting the forecasted cash flows was 27.8%. More specifically, the Group has considered the following scenarios: - a Waiver ranging from two years to eight years with an exit (of the agreement) in each of the years; and In addition to the exit-year range for the revocability of the Waiver, the Group assigned a set of probabilities to each of the years within this range in which the Waiver could be revoked, including a probability for the indefinite Waiver scenario. Both the range for the revocability of the Waiver and the associated probabilities assigned were established based on management's best estimate regarding TCCC resuming its business in Russia, considering also the outcomes of historical cases of sanctions. As described above, following the Waiver TCCC effectively has no entitlement over Multon's profit or loss generated in the ordinary course of business as it has contractually waived its rights over dividend or other distributions made by Multon. As a result Multon's net profit or loss will not be allocated to non-controlling interests during the period of the Waiver. Net sales revenue and profit after tax contributed by Multon to the Group for the period from 11 August 2022 to 31 December 2022 amounted to €271.8 million and €77.7 million respectively. If the business combination had occurred on 1 January 2022, consolidated net sales revenue for the year ended 31 December 2022 would have been higher by €307.3 million, while net profit recorded would have been higher by €32.3 million. ### Acquisition of Three Cents On 21 October 2022, the Group acquired 100% of the issued shares of ESM Effervescent Sodas Management Limited and its subsidiary 'Three Cents' Hellas Single Member S.A. (together 'Three Cents'), the owner of the super-premium adult sparkling beverage and mixer product line under the Three Cents brand, for a consideration of €45.9 million. The acquisition complements and further preemtimes the Group's existing adult sparkling beverage portfolio and will better position the Group to address a wider range of consumer tastes and segments. Strategic Report Corporate Governance Financial Statements Sales Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 203 ## Notes to the consolidated financial statements *continued* ### 24. Business combinations *continued* Details of the acquisition with regard to the provisionally determined fair values of the net assets acquired and goodwill are presented in the table below: | | Fair value £ million | | --- | --- | | Trademarks | 22.6 | | Property, plant and equipment | 0.2 | | Trade, other receivables and assets | 1.9 | | Cash and cash equivalents | 1.9 | | Borrowings | (0.3) | | Trade and other payables | (1.9) | | Net deferred tax liabilities | (2.7) | | **Net identifiable assets acquired** | **21.9** | | Add: Goodwill arising on acquisition | 24.0 | | **Net assets acquired** | **45.9** | The acquisition resulted in the Group recording €24.0 million of goodwill and €22.6 million of trademarks in its Established segment. The goodwill arising is attributable to the brand's growth potential across the Group's markets. Acquisition-related costs of €0.3 million were included in the 2022 operating expenses, as a result of the above acquisition. The fair value of trade, other receivables and assets acquired includes trade receivables with a fair value of €0.8 million, while there was no significant amount of trade receivables acquired considered to be uncollectible. Net sales revenue and loss after tax contributed by Three Cents to the Group for the period from 21 October 2022 to 31 December 2022, amounted to €0.9 million and €2.3 million respectively. If the business combination had occurred on 1 January 2022, consolidated net sales revenue for the year ended 31 December 2022 would have been higher by €9.2 million, while net profit recorded would have been higher by €0.8 million. ### 25. Financial risk management and financial instruments #### Accounting policies ##### Financial assets On initial recognition financial assets are recorded at fair value plus, in the case of financial assets not at fair value through profit or loss (FVTPL), any directly attributable transaction costs. Transaction costs of financial assets at FVTPL are expensed. Financial assets are classified into three categories: a) Financial assets at amortised cost (debt instruments) The classification of debt instruments at amortised cost depends on two criteria: a) the Group's business model for managing assets and b) whether the instruments' contractual cash flows represent solely payments for principal and interest on the principal amount outstanding (the 'SPR criterion'). If both criteria are met the financial assets of the Group are subsequently measured at amortised cost whereby any interest income is recognised using the effective interest method. This category includes trade receivables, treasury bills and time deposits. The accounting policy for trade receivables is described in Note 19. b) Financial assets through other comprehensive income (FVOCI) The Group also has investments in financial assets at FVOCI. These include equity investments that are not of a trading nature and which are subsequently recorded at fair value. The Group intends to hold these equity instruments for the foreseeable future and has irrevocably elected to classify them as financial assets at FVOCI upon initial recognition. Upon derecognition of these financial assets, there is no recycling of gains or losses to the income statement. c) Financial assets through profit or loss (FVTPL) The Group also has investments in financial assets at FVTPL, which are subsequently measured at fair value and where changes in fair value are recognised in the income statement. Financial assets at FVTPL mainly comprise money market funds. For those financial assets that are not subsequently held at fair value, the Group assesses whether there is evidence of impairment at each balance sheet date. ##### Derivative financial instruments The Group uses derivative financial instruments, including currency, commodity and interest rate derivatives, to manage currency, commodity price and interest rate risk associated with the Group's underlying business activities. The Group does not enter into derivative financial instruments for trading activity purposes. All derivative financial instruments are initially recognised on the balance sheet at fair value and are subsequently remeasured at their fair value. Changes in the fair value of derivative financial instruments are recognised at each reporting date either in the income statement or in equity, depending on whether the derivative financial instrument qualifies for hedge accounting as a cash flow hedge. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 204 Report Governance Statements Reporting Information ### Notes to the consolidated financial statements continued 25. Financial risk management and financial instruments continued Embedded derivatives in financial host contracts are recorded at fair value through profit or loss together with the host contracts. All derivative financial instruments that are not part of an effective hedging relationship (undesignated hedges) are classified as assets or liabilities at fair value through profit or loss. At the inception of a hedge transaction the Group documents the relationship between the hedging instrument and the hedged item, as well as its risk management objective and strategy for undertaking the hedge transaction. This process includes linking the derivative financial instrument designated as a hedging instrument to the specific asset, liability, firm commitment or forecast transaction. The Group has established a hedge ratio of 1:1 for the hedging relationships as the underlying risks of the hedging instruments are identical to the hedged risks component. The economic relationship between the hedged item and the hedging instrument is assessed on an ongoing basis. Ineffectiveness may arise if the timing or the notional value of the forecast transaction changes, or if the credit risk changes impacting the fair value movements of the hedging instruments. Changes in the fair value of derivative financial instruments (both the intrinsic value and the aligned time value) that are designated and effective as hedges of future cash flows are recognised directly in other comprehensive income and the ineffective portion is recognised immediately in the income statement. Amounts accumulated in equity are recycled to the income statement as the related hedged asset acquired or liability assumed affects the income statement. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, exercised, or no longer qualifies for hedge accounting. At that time, any cumulative gain or loss on the hedging instrument recognised in equity is retained in equity until the forecast transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred to the income statement. Derivatives embedded in non-financial host contracts are accounted for as separate derivatives and recorded at fair value if: • their economic characteristics and risks are not closely related to those of the host contracts; • the host contracts are not designated as at fair value through profit or loss; and • a separate instrument with the same terms as the embedded derivative meets the definition of a derivative. These embedded derivatives are measured at fair value with changes in fair value recognised in profit or loss. Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required or a reclassification of a financial asset out of the fair value through profit or loss category. Regular purchases and sales of investments are recognised on the trade date, which is the day the Group commits to purchase or sell. The investments are recognised initially at fair value plus transaction costs, except in the case of FVTPL. For investments traded in active markets, fair value is determined by reference to stock exchange quoted bid prices. For other investments, fair value is estimated by reference to the current market value of similar instruments or by reference to the discounted cash flows of the underlying net assets. Financial risk factors The Group’s activities expose it to a variety of financial risks: market risk (including foreign currency risk, commodity price risk and interest rate risk), credit risk, liquidity risk and capital risk. The Group’s overall risk management programme focuses on the volatility of financial markets and seeks to minimise potential adverse effects on the Group’s cash flows. The Group uses derivative financial instruments to hedge certain risk exposures. Risk management is carried out by Group Treasury in a controlled manner, consistent with the Board of Directors’ approved policies. Group Treasury identifies, evaluates and hedges financial risks in close co‑operation with the Group’s subsidiaries. The Board of Directors has approved the Treasury Policy which provides the control framework for all treasury and treasury‑related transactions. Market risk a) Foreign currency risk The Group is exposed to the effect of foreign currency risk on future transactions, recognised monetary assets and liabilities that are denominated in currencies other than the local entity’s functional currency, as well as net investments in foreign operations. Foreign currency forward, option and futures contracts are used to hedge a portion of the Group’s foreign currency risk. The majority of the foreign currency forward, option and futures contracts have maturities of less than one year after the balance sheet date. Management has set up a policy that requires Group companies to manage their foreign exchange risk against their functional currency. To manage their foreign exchange risk arising from future transactions and recognised monetary assets and liabilities, entities in the Group use foreign currency forward, option and futures contracts transacted by Group Treasury. Group Treasury’s risk management policy is to hedge, on an average coverage ratio basis, between 25% and 80% of anticipated cash flows for the next 12 months by using a layer strategy and 100% of balance sheet remeasurement risk in each major foreign currency for which hedging is applicable. Each subsidiary designates contracts with Group Treasury as fair value hedges or cash flow hedges, as appropriate. External foreign exchange contracts are designated at Group level as hedges of foreign exchange risk on specific monetary assets, monetary liabilities or future transactions on a gross basis. The following tables present details of the Group’s sensitivity to reasonably possible increases and decreases in the Euro and US Dollar against the relevant foreign currencies. In determining reasonably possible changes, the historical volatility over a 12-month period of the respective foreign currencies in relation to the Euro and the US Dollar has been considered. The sensitivity analysis determines the potential gains and losses in the income statement or equity arising from the Group’s foreign exchange positions as a result of the corresponding percentage increases and decreases in the Group’s main foreign currencies relative to the Euro and the US Dollar. The sensitivity analysis includes outstanding foreign-currency denominated monetary items, external loans and loans between operations within the Group where the denomination of the loan is in a currency other than the functional currency of the local entity. Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 205 # **Notes to the consolidated financial statements** *continued* # **25. Financial risk management and financial instruments** *continued* # **2022 exchange risk sensitivity to reasonably possible changes in the Euro against relevant other currencies** | | Euro strengthens against local currency | | | Euro weakens against local currency | | | --- | --- | --- | --- | --- | --- | | | % historical volatility over a 12-month period | Loss/(gain) in income statement € million | Loss/(gain) in equity € million | (Gain)/loss in income statement € million | (Gain)/loss in equity € million | | Egyptian Pound | 23.35% | 4.0 | 15.7 | (6.4) | (25.3) | | Nigerian Naira | 15.54% | 12.9 | – | (17.6) | – | | Russian Rouble | 54.49% | (9.4) | (0.1) | 31.9 | 0.2 | | UK Sterling | 7.74% | (1.1) | (0.4) | 1.2 | 0.2 | | Ukrainian Hryvnia | 12.52% | 2.9 | – | (3.8) | – | | Other | – | 2.3 | (4.4) | (3.1) | 5.1 | | **Total** | | **11.6** | **10.8** | **2.2** | **(19.8)** | # **2022 exchange risk sensitivity to reasonably possible changes in the US Dollar against relevant other currencies** | | US Dollar strengthens against local currency | | | US Dollar weakens against local currency | | | --- | --- | --- | --- | --- | --- | | | % historical volatility over a 12-month period | (Gain)/loss in income statement € million | (Gain)/loss in equity € million | Loss/(gain) in income statement € million | Loss/(gain) in equity € million | | Euro | 10.06% | (7.2) | – | 8.8 | – | | Egyptian Pound | 22.23% | 9.9 | – | (15.6) | – | | Nigerian Naira | 5.94% | 11.0 | – | (12.4) | – | | Russian Rouble | 52.99% | (18.7) | – | 61.0 | – | | Ukrainian Hryvnia | 4.15% | (0.1) | – | 0.1 | – | | Other | – | (0.4) | – | 0.3 | – | | **Total** | | **(5.5)** | **–** | **42.2** | **–** | # **2021 exchange risk sensitivity to reasonably possible changes in the Euro against relevant other currencies** | | Euro strengthens against local currency | | | Euro weakens against local currency | | | --- | --- | --- | --- | --- | --- | | | % historical volatility over a 12-month period | Loss/(gain) in income statement € million | (Gain)/loss in equity € million | (Gain)/loss in income statement € million | Loss/(gain) in equity € million | | Nigerian Naira | 16.03% | 6.2 | – | (8.5) | – | | Russian Rouble | 9.90% | (0.7) | (0.2) | 0.9 | 0.3 | | UK Sterling | 5.23% | 0.9 | – | (1.0) | – | | Ukrainian Hryvnia | 6.80% | 0.3 | – | (0.2) | – | | Other | – | (0.2) | (1.5) | (0.2) | 1.7 | | **Total** | | **6.5** | **(1.7)** | **(9.0)** | **2.0** | # **2021 exchange risk sensitivity to reasonably possible changes in the US Dollar against relevant other currencies** | | US Dollar strengthens against local currency | | | US Dollar weakens against local currency | | | --- | --- | --- | --- | --- | --- | | | % historical volatility over a 12-month period | (Gain)/loss in income statement € million | (Gain)/loss in equity € million | Loss/(gain) in income statement € million | Loss/(gain) in equity € million | | Euro | 5.72% | (1.8) | – | 2.0 | – | | Nigerian Naira | 5.89% | 0.6 | – | (0.5) | – | | Russian Rouble | 9.86% | 0.1 | (3.2) | (0.1) | 3.9 | | Other | – | (0.4) | – | 0.4 | – | | **Total** | | **(1.5)** | **(3.2)** | **1.8** | **3.9** | # **b) Commodity price risk** The Group is affected by the volatility of certain commodity prices (being mainly sugar, aluminium, aluminium premium, plastic and gas oil) in relation to certain raw materials necessary for the production of the Group's products. Due to the significantly increased volatility of commodity prices, the Group's Board of Directors has developed and enacted a risk management strategy regarding commodity price risk and its mitigation. Although the Group continues to contract prices with suppliers in advance, to reduce its exposure to the effect of short-term changes in the price of sugar, aluminium, aluminium premium, gas oil and plastic the Group hedges the market price of these commodities using commodity swap contracts based on a rolling forecast for a period up to 36 months. Group Treasury's Risk management policy is to hedge a minimum of 25% and a maximum of 80% of commodity exposure for the next 12 months with the exception of certain types of plastic for which lower compliance ratios apply. The following table presents details of the Group's income statement and equity sensitivity to increases and decreases in sugar, aluminium, aluminium premium, plastic and gas oil prices. The table does not show the sensitivity to the Group's total underlying commodity exposure or the impact of changes in volumes that may arise from increase or decrease in the respective commodity prices. The sensitivity analysis determines the potential effect on profit or loss and equity arising from the Group's commodity swap contract positions as a result of the reasonably possible increases or decreases of the respective commodity price. 206 Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 # Notes to the consolidated financial statements continued # 25. Financial risk management and financial instruments continued 2022 commodity price risk sensitivity to reasonably possible changes in the commodity price of relevant commodities | | % historical volatility over a 12-month period per contract maturity | Commodity price increases with all other variables held constant | | Commodity price decreases with all other variables held constant | | | --- | --- | --- | --- | --- | --- | | | | ISaAHI loss in income statement € million | ISaAHI loss in equity € million | Loss/IgaHI in income statement € million | Loss/IgaHI in equity € million | | Sugar | 14.3% | (0.9) | (19.8) | 0.9 | 19.8 | | Aluminum | 32.3% | (2.1) | (34.3) | 2.1 | 34.3 | | Aluminum premium | 70.6% | (0.2) | (5.7) | 0.2 | 5.7 | | Gas oil | 72.5% | – | (15.4) | – | 15.4 | | Plastic | 28.1% | (8.9) | – | 8.9 | – | | **Total** | | **(12.1)** | **(75.2)** | **12.1** | **75.2** | 2021 commodity price risk sensitivity to reasonably possible changes in the commodity price of relevant commodities | | % historical volatility over a 12-month period per contract maturity | Commodity price increases with all other variables held constant | | Commodity price decreases with all other variables held constant | | | --- | --- | --- | --- | --- | --- | | | | ISaAHI loss in income statement € million | ISaAHI loss in equity € million | Loss/IgaHI in income statement € million | Loss/IgaHI in equity € million | | Sugar | 20.8% | (0.4) | (22.6) | 0.4 | 22.6 | | Aluminum | 24.1% | (0.8) | (19.8) | 0.8 | 19.8 | | Aluminum premium | 46.1% | (0.2) | (3.0) | 0.2 | 3.0 | | Gas oil | 31.3% | – | (5.6) | – | 5.6 | | Plastic | 27.0% | (25.7) | – | 25.7 | – | | **Total** | | **(27.1)** | **(51.0)** | **27.1** | **51.0** | # c) Interest rate risk The sensitivity analysis in the following table has been determined based on exposure to interest rates of both derivative and non-derivative instruments existing at the balance sheet date and assuming constant foreign exchange rates. For floating rate liabilities, the analysis is prepared assuming the amount of liability outstanding at the balance sheet date was outstanding for the whole year. A 50 basis point increase or decrease for 2022 (2021: 50 basis point) represents management's assessment of a reasonably possible change in interest rates. # Interest rate risk sensitivity to reasonably possible changes in interest rates | | Loss / IgaHI in income statement | | | --- | --- | --- | | | 2022 € million | 2021 € million | | Increase in basis points | 0.3 | 0.2 | | Decrease in basis points | (0.3) | (0.2) | # Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its obligations under the contract or arrangement. The Group has limited concentration of credit risk across trade and financial counterparties. Credit policies are in place and the exposure to credit risk is monitored on an ongoing basis. The Group's maximum exposure to credit risk in the event that counterparties fail to meet their obligations at 31 December 2022 in relation to each class of recognised financial asset is the carrying amount of those assets as indicated on the balance sheet. Under the credit policies, before accepting any new credit customers, the Group investigates the potential customer's credit quality, using either external agencies and in some cases bank references and/or historic experience, and defines credit limits for each customer. Customers that fail to meet the Group's benchmark credit quality may transact with the Group only on a prepayment or cash basis. Customers are reviewed on an ongoing basis and credit limits are adjusted accordingly. There is no significant concentration of credit risk with regard to loans, trade and other receivables as the Group has a large number of customers which are geographically dispersed. The Group has policies that limit the amount of credit exposure to any single financial institution. The Group only undertakes investment and derivative transactions with banks and financial institutions that have a minimum credit rating of BBB- from Standard & Poor's and 'Baa3' from Moody's, unless the investment is in countries where the Sovereign Credit Rating is below the BBB-/Baa3'. The Group also uses Credit Default Swaps of a counterparty in order to measure in a timeier way the creditworthiness of a counterparty and set up its counterparties in tiers in order to assign maximum exposure and tenor per tier. If the Credit Default Swaps of a certain counterparty exceed 400 basis points the Group will stop trading derivatives with that counterparty and will try to cancel any deposits on a best-afford basis. In addition, the Group regularly makes use of time deposits, treasury bills and money market funds to invest excess cash balances and to diversify its counterparty risk. As at 31 December 2022, an amount of €529.5 million (2021: €423.9 million) is invested in time deposits; €16 in treasury bills (2021: €6.2 million) and €497.2 million (2021: €538.8 million) in money market funds. # Liquidity risk The Group actively manages liquidity risk to ensure there are sufficient funds available for any short-term and long-term commitments. Bank overdrafts and bank facilities, both committed and uncommitted, are used to manage this risk. The Group manages liquidity risk by maintaining adequate cash reserves and committed banking facilities, access to the debt and equity capital markets, and by continuously monitoring forecast and actual cash flows. In Note 26, the undrawn facilities that the Group has at its disposal to manage liquidity risk are discussed under the headings 'Commercial paper programme', 'Committed credit facilities', and 'Uncommitted loan agreement'. As at 31 December 2022, the Group has a net debt of €1.7 billion (refer to Note 26). There are no bond maturities until November 2024. In addition, the Group has an undrawn revolving credit facility of €800 million available, €0.8 billion available out of the €1.0 billion commercial paper facility, as well as undrawn uncommitted loan agreement of €200 million. The following tables detail the Group's remaining contractual maturities for its financial liabilities. The tables include both interest and principal undiscounted cash flows, assuming that interest rates remain constant from 31 December 2022. ![img-16.jpeg](img-16.jpeg) Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 207 # Notes to the consolidated financial statements continued # 25. Financial risk management and financial instruments continued | | Up to one year € million | One to two years € million | Two to five years € million | Over five years € million | Total € million | | --- | --- | --- | --- | --- | --- | | Borrowings | 314.4 | 657.9 | 1,310.1 | 1,145.3 | 3,427.7 | | Derivative liabilities | 41.9 | 3.5 | 0.2 | – | 45.6 | | Trade and other payables (excluding other tax & social security and contract liabilities) | 2,158.0 | 0.4 | 1.1 | 3.8 | 2,163.3 | | Leases | 67.2 | 55.5 | 85.6 | 49.1 | 257.4 | | **As at 31 December 2022** | **2,581.5** | **717.3** | **1,397.0** | **1,198.2** | **5,894.0** | | | Up to one year € million | One to two years € million | Two to five years € million | Over five years € million | Total € million | | --- | --- | --- | --- | --- | --- | | Borrowings | 365.2 | 48.4 | 707.3 | 1,875.2 | 2,996.1 | | Derivative liabilities | 11.6 | 3.0 | – | – | 14.6 | | Trade and other payables (excluding other tax & social security and contract liabilities) | 1,748.0 | 0.4 | 1.1 | 4.1 | 1,753.6 | | Leases | 58.9 | 43.2 | 62.9 | 29.6 | 194.6 | | **As at 31 December 2021** | **2,183.7** | **95.0** | **771.3** | **1,908.9** | **4,958.9** | # Capital risk The Group monitors its financial capacity and credit ratings by reference to a number of key financial ratios including net debt to comparable adjusted EBITDA, which provides a framework within which the Group's capital base is managed. This ratio is calculated as net debt divided by comparable adjusted EBITDA. Adjusted EBITDA is calculated by adding back to operating profit the depreciation and impairment of property, plant and equipment, the amortisation and impairment of intangible assets, the employee performance share costs, the impairment of equity method investments and other non-cash items, if any. Comparable adjusted EBITDA refers to adjusted EBITDA excluding restructuring expenses, the Russia-Ukraine conflict impact, acquisition and integration costs and the unrealised gains or losses resulting from the mark-to-market valuation of derivatives and embedded derivatives related to commodity hedging. Refer to Note 26 for definition of net debt. The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may increase or decrease debt, issue or buy back shares, adjust the amount of dividends paid to shareholders, or return capital to shareholders. The Group's goal is to maintain a conservative financial profile. This is evidenced by the credit ratings maintained with Standard and Poor's and Moody's, which were reaffirmed in 2022, with the exception of Standard and Poor's outlook, which was negative in 2022 compared to stable in 2021. | Rating agency | Publication date | Long-term debt | Outlook | Short-term debt | | --- | --- | --- | --- | --- | | Standard and Poor's | March 2022 | BBB+ | Negative | A2 | | Moody's | May 2022 | Baa1 | Stable | P2 | The Group's medium to long-term target is to maintain the net debt to comparable adjusted EBITDA ratio within a 1.5 to 2.0 range. The ratios as at 31 December were as follows: | | 2022 € million | 2021 € million | | --- | --- | --- | | **Net debt (refer to Note 26)** | **1,673.3** | **1,319.7** | | Operating profit | 703.8 | 799.3 | | Depreciation and impairment of property, plant and equipment, including right-of-use assets | 484.9 | 336.3 | | Amortisation and impairment of intangible assets | 15.1 | 1.0 | | Employee performance shares | 16.5 | 14.9 | | Impairment of equity method investments | 52.8 | – | | Other non-cash items | 70.5 | – | | **Adjusted EBITDA** | **1,343.6** | **1,151.5** | | Other restructuring expenses (primarily redundancy costs) | 11.8 | 21.0 | | Unrealised loss/(gain) on commodity derivatives | 2.5 | (3.8) | | Russia-Ukraine conflict impact (refer to Note 6.1b) | 4.4 | – | | Acquisition and integration costs | 9.2 | 14.3 | | **Total comparable adjusted EBITDA** | **1,371.3** | **1,183.0** | | **Net debt/comparable adjusted EBITDA ratio** | **1.22** | **1.12** | Other non-cash items for 2022 relate to the net loss recognised in the income statement from the remeasurement to fair value of the Group's previously held equity interest, the reclassification to the income statement of the Group's share of other comprehensive income and the gain from bargain purchase in connection with the change in control of Multon Z.A.O. group of companies (refer to Note 24). These non-cash items were classified as part of acquisition and integration costs within operating expenses. The reconciliation of other restructuring expenses to total restructuring expenses for the years ended 31 December was as follows: | | 2022 € million | 2021 € million | | --- | --- | --- | | Total restructuring expenses included in operating expenses (refer to Note 9) | 11.9 | 21.2 | | Less: Impairment of property, plant and equipment | (0.1) | (0.2) | | **Other restructuring expenses (primarily redundancy costs)** | **11.8** | **21.0** | 208 Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 # Notes to the consolidated financial statements *continued* # **25. Financial risk management and financial instruments *continued*** # **Hedging activity** The carrying amounts of the derivative financial instruments are included in lines 'Other financial assets' and 'Other financial liabilities' of the consolidated balance sheet. # **a) Cash flow hedges** The impact of the hedging instruments on the consolidated balance sheet was: | As at 31 December 2022 | Notional amount € million | Carrying amount € million | Period of maturity date | | --- | --- | --- | --- | | **Contracts with positive fair values** | **172.6** | **19.2** | | | Non-current | 24.1 | 0.8 | | | Commodity swap contracts | 24.1 | 0.8 | Jan24 – Feb25 | | **Current** | **148.5** | **18.4** | | | Foreign currency forward contracts | 61.6 | 0.4 | Jan23 – Sep23 | | Commodity swap contracts | 86.9 | 18.0 | Jan23 – Dec23 | | **Contracts with negative fair values** | **221.3** | **(14.4)** | | | Non-current | 54.7 | (3.6) | | | Commodity swap contracts | 54.7 | (3.6) | Jan24 – Nov25 | | **Current** | **166.6** | **(10.8)** | | | Foreign currency forward contracts | 66.6 | (0.8) | Jan23 – Jun23 | | Commodity swap contracts | 100.0 | (10.0) | Jan23 – Dec23 | | As at 31 December 2021 | Notional amount € million | Carrying amount € million | Period of maturity date | | **Contracts with positive fair values** | **182.6** | **40.4** | | | Non-current | 26.8 | 9.0 | | | Commodity swap contracts | 26.8 | 9.0 | Jan23 – Nov23 | | **Current** | **155.8** | **31.4** | | | Foreign currency forward contracts | 48.3 | 1.3 | Jan22 – Aug22 | | Commodity swap contracts | 107.5 | 30.1 | Jan22 – Dec22 | | **Contracts with negative fair values** | **59.3** | **(1.2)** | | | Non-current | 2.5 | (0.1) | | | Commodity swap contracts | 2.5 | (0.1) | Jan23 – Nov23 | | **Current** | **56.8** | **(1.1)** | | | Foreign currency forward contracts | 37.9 | (0.6) | Jan22 – Dec22 | | Commodity swap contracts | 18.9 | (0.5) | Jan22 – Nov22 | The impact on the hedging reserve as a result of applying cash flow hedge accounting was: | | Spot component of foreign currency forward contracts € million | Cost of hedging reserve of currency deviations € million | Commodity swap contracts € million | Interest rate swap contracts € million | Total € million | | --- | --- | --- | --- | --- | --- | | **Opening balance 1 January 2021** | **(1.6)** | **0.7** | **6.5** | **(32.5)** | **(26.9)** | | **Net gain of cash flow hedges** | **1.0** | **–** | **60.8** | **7.7** | **69.5** | | Change in fair value of hedging instruments recognised in OCI | 1.0 | – | 60.8 | – | 61.8 | | Reclassified to income statement | – | – | – | 7.7 | 7.7 | | Cost of hedging recognised in OCI | – | (2.7) | – | – | (2.7) | | Reclassified to inventories cost | (0.8) | 2.4 | (25.6) | – | (24.0) | | **Closing balance 31 December 2021** | **(1.4)** | **0.4** | **41.7** | **(24.8)** | **15.9** | | **Net gain of cash flow hedges** | **4.8** | **–** | **17.4** | **12.4** | **34.6** | | Change in fair value of hedging instruments recognised in OCI | 4.8 | – | 20.6 | 5.1 | 30.5 | | Reclassified to income statement | – | – | (3.2) | 7.3 | 4.1 | | **Cost of hedging recognised in OCI** | **–** | **(1.8)** | **–** | **(1.7)** | **(3.5)** | | **Reclassified to inventories cost** | **(5.1)** | **1.8** | **(48.1)** | **–** | **(51.4)** | | **Closing balance 31 December 2022** | **(1.7)** | **0.4** | **11.0** | **(14.1)** | **(4.4)** | The effect of the cash flow hedges in the consolidated income statement was: | | 2022 ($Jan21) per € million | 2021 Loss/(Gain) € million | | --- | --- | --- | | Net amount reclassified from other comprehensive income to cost of goods sold | (3.2) | – | | Net amount reclassified from other comprehensive income to finance costs | 7.3 | 7.7 | | **Total** | **4.1** | **7.7** | The ineffectiveness on the cash flow hedges for the year ended 31 December 2022 was €2.6 million loss, recorded within cost of goods sold, while there was no significant ineffectiveness on the cash flow hedges in 2021. Strategic Report Corporate Governance Financial Statements Basic Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 209 # Notes to the consolidated financial statements continued ## 25. Financial risk management and financial instruments continued ### b) Undesignated hedges The fair values of derivative financial instruments as at 31 December which economically hedge the Group's risks and for which hedge accounting has not been applied were: | As at 31 December 2022 | National amount € million | Canopy amount € million | Period of maturity date | | --- | --- | --- | --- | | Contracts with positive fair values | 276.4 | 16.9 | | | Current | 276.4 | 16.9 | | | Foreign currency futures contracts | 146.8 | 3.9 | Jan23 – Nov23 | | Foreign currency forward contracts | 117.9 | 10.7 | Jan23 – Dec23 | | Commodity swap contracts | 11.7 | 2.3 | Oct23 – Dec23 | | Contracts with negative fair values | 552.8 | (31.2) | | | --- | --- | --- | --- | | Non-current | 3.6 | (0.1) | | | Commodity swap contracts | 3.6 | (0.1) | Jun24 – Sep 25 | | Current | 549.2 | (31.1) | | | Foreign currency futures contracts | 84.1 | (2.5) | Apr23 – Dec23 | | Foreign currency forward contracts | 433.8 | (21.9) | Jan23 – Dec23 | | Commodity swap contracts | 31.3 | (6.7) | Feb23 – Nov23 | | As at 31 December 2021 | National amount € million | Canopy amount € million | Period of maturity date | | --- | --- | --- | --- | | Contracts with positive fair values | 203.2 | 7.8 | | | Current | 203.2 | 7.8 | | | Embedded derivatives | 4.9 | 0.1 | Jan22–Aug22 | | Foreign currency forward contracts | 165.3 | 1.1 | Jan22–Nov22 | | Commodity swap contracts | 33.0 | 6.6 | Jan22–Dec22 | | Contracts with negative fair values | 431.3 | (13.4) | | | --- | --- | --- | --- | | Non-current | 33.4 | (2.9) | | | Foreign currency futures contracts | 13.9 | (0.6) | Jan23 | | Commodity swap contracts | 19.5 | (2.3) | Jan23–Nov23 | | Current | 397.9 | (10.5) | | | Foreign currency futures contracts | 94.7 | (3.3) | Apr22–Oct22 | | Foreign currency forward contracts | 248.5 | (2.6) | Jan22–Nov22 | | Commodity swap contracts | 56.7 | (4.6) | Jan22–Nov22 | The effect of the undesignated hedges in the consolidated income statement was: | | 2022 (Gain)/loss € million | 2021 (Gain)/loss € million | | --- | --- | --- | | Net amount recognised in cost of goods sold | (34.9) | (14.1) | | Net amount recognised in operating expenses | (26.0) | (4.4) | | Total | (60.9) | (18.5) | ## Financial instruments' categories Categories of financial instruments as at 31 December were as follows (in € million): 2022 | Assets | Debt financial assets at amortised cost | Assets at FVTPL | Derivatives designated as hedging instruments | Equity financial assets at FVDD | Total current and non-current | Analysis of total assets | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | Current | Non-current | | Investments including loans to related parties | 534.8 | 498.7 | - | 3.6 | 1,037.1 | 1,028.5 | 8.6 | | Derivative financial instruments | - | 16.9 | 19.2 | - | 36.1 | 35.3 | 0.8 | | Trade and other receivables | 1,019.3 | - | - | - | 1,019.3 | 1,017.0 | 2.3 | | Cash and cash equivalents | 719.9 | - | - | - | 719.9 | 719.9 | - | | Total | 2,274.0 | 515.6 | 19.2 | 3.6 | 2,812.4 | 2,800.7 | 11.7 | | Liabilities | Liabilities held at amortised cost | Liabilities at FVTPL | Derivatives designated as hedging instruments | Total current and non-current | Analysis of total liabilities | | | --- | --- | --- | --- | --- | --- | --- | | | | | | | Current | Non-current | | Trade and other payables (excluding other tax & social security and contract liabilities) | 2,163.3 | - | - | 2,163.3 | 2,158.0 | 5.3 | | Borrowings | 3,419.9 | - | - | 3,419.9 | 337.0 | 3,082.9 | | Derivative financial instruments | - | 31.2 | 14.4 | 45.6 | 41.9 | 3.7 | | Total | 5,583.2 | 31.2 | 14.4 | 5,628.8 | 2,336.9 | 3,091.9 | 210 Strategic^{}[] Report Corporate^{}[] Governance Financial^{}[] Statements Sales Statutory^{}[] Reporting Supplementary^{}[] Information Coca-Cola HBC Integrated Annual Report 2022 ## Notes to the consolidated financial statements *continued* ### 25. Financial risk management and financial instruments *continued* | Assets | Debt financial assets at amortised cost | Assets at FVTPL | Derivatives designated as hedging instruments | Equity financial assets at FVOCI | Total current and non-current | Analysis of total assets | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | Current | Non-current | | Investments including loans to related parties | 204.9 | 638.8 | – | 3.6 | 847.3 | 839.7 | 7.6 | | Derivative financial instruments | – | 7.8 | 40.4 | – | 48.2 | 39.2 | 9.0 | | Trade and other receivables | 863.3 | – | – | – | 863.3 | 862.2 | 1.1 | | Cash and cash equivalents | 782.8 | – | – | – | 782.8 | 782.8 | – | | **Total** | **1,851.0** | **646.6** | **40.4** | **3.6** | **2,541.6** | **2,323.9** | **17.7** | | Liabilities | Liabilities held at amortised cost | Liabilities at FVTPL | Derivatives designated as hedging instruments | Total current and non-current | Analysis of total liabilities | | | --- | --- | --- | --- | --- | --- | --- | | | | | | | Current | Non-current | | Trade and other payables (excluding other tax & social security and contract liabilities) | 1,753.6 | – | – | 1,753.6 | 1,748.0 | 5.6 | | Borrowings | 2,937.4 | – | – | 2,937.4 | 381.7 | 2,555.7 | | Derivative financial instruments | – | 13.4 | 1.2 | 14.6 | 11.6 | 5.0 | | **Total** | **4,691.0** | **13.4** | **1.2** | **4,705.6** | **2,141.3** | **2,564.3** | #### Interest rate swap contracts The Group entered into forward starting swap contracts of €500.0 million in 2014 to hedge the interest rate risk related to its Euro-denominated forecast issuance of fixed rate debt in March 2016. In August 2015 the Group entered into additional forward starting swap contracts of €100.0 million. In March 2016 the forward starting swap contracts were settled and at the same time the new note was issued. The accumulated loss of €55.4 million recorded in other comprehensive income is being amortised to the income statement over the term of the new note (refer to Note 26). The Group entered into swaption contracts of €350.0 million in 2018 and €1,050.0 million in 2019 to hedge the interest rate risk related to its Euro-denominated forecast issuance of fixed rate debt in 2019 and formally designated them as cash flow hedges. In May and November 2019 the swaption contracts were settled and, at the same time, the new notes were issued. The accumulated loss of €9.6 million recorded in other comprehensive income is being amortised to the income statement over the relevant period. The Group entered into swaption contracts of €180.0 million in 2022 to hedge the interest rate risk related to its Euro-denominated forecast issuance of fixed rate debt in 2022 and formally designated them as cash flow hedges. In September 2022 the swaption contracts were settled and, at the same time, the new notes were issued. The accumulated gain of €3.4 million recorded in other comprehensive income is being amortised to the income statement over the relevant period. #### Embedded derivatives During 2015 the Group recognised embedded derivatives whose risks and economic characteristics were not considered to be closely related to the commodity contract in which they were embedded. The fair value of the embedded derivatives as at 31 December 2022 amounted to a financial asset of €1 mil (2021: €0.1 million). #### Fair values of financial assets and liabilities For financial instruments such as cash, deposits, debtors and creditors, investments, loans payable to related parties, short-term borrowings (excluding the current portion of bonds and notes payable) and other financial liabilities (other than bonds and notes payable), carrying values are a reasonable approximation of their fair values. According to the fair value hierarchy, the financial instruments measured at fair value are classified as follows: ##### Level 1 The fair value of FVOCI listed equity securities as well as FVTPL securities is based on quoted market prices at the reported date. The fair value of bonds is based on quoted market prices at the reported date. ##### Level 2 The fair value of foreign currency forward, option and futures contracts, commodity swap contracts, bonds and notes payable, interest rate option and swap contracts, cross-currency swap contracts and embedded foreign currency derivatives is determined by using valuation techniques. These valuation techniques maximise the use of observable market data. The fair value of the foreign currency forward, option and futures contracts, commodity swap contracts, embedded foreign currency derivatives and cross-currency swap contracts is calculated by reference to quoted forward exchange and deposit rates and forward rate curves of the underlying commodity at the reported date for contracts with similar maturity dates. The fair value of interest rate option contracts is calculated by reference to the Black-Scholes valuation model and implied volatilities. The fair value of interest rate swap contracts is determined as the difference in the present value of the future interest cash inflows and outflows based on observable yield curves. ##### Level 3 The fair value of FVOCI unlisted equity securities as well as convertible promissory note, certain undesignated derivatives and foreign currency contracts is determined through the use of estimated discounted cash flows or other valuation techniques. These valuation techniques estimate the fair value of undesignated derivatives using settlement and forward prices received from counterparty banks and subscription-based publications and the fair value of foreign currency contracts by using adjusted quoted prices. Transfers between levels of the fair value hierarchy are deemed to have occurred at the date of the event or change in circumstances that caused the transfer. Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 211 # Notes to the consolidated financial statements *continued* # **25. Financial risk management and financial instruments *continued*** The following table provides the fair value hierarchy levels into which fair value measurements are categorised for assets and liabilities measured at fair value as at 31 December 2022: | | Level 1 € million | Level 2 € million | Level 3 € million | Total € million | | --- | --- | --- | --- | --- | | **Financial assets at FVTPL** | | | | | | Foreign currency forward contracts | – | 10.7 | – | 10.7 | | Foreign currency futures contracts | – | – | 3.9 | 3.9 | | Commodity swap contracts | – | 0.2 | 2.1 | 2.3 | | Money market funds | 497.2 | – | – | 497.2 | | Convertible promissory note | – | – | 1.5 | 1.5 | | **Derivative financial assets used for hedging** | | | | | | Cash flow hedges | | | | | | Foreign currency forward contracts | – | 0.4 | – | 0.4 | | Commodity swap contracts | – | 18.8 | – | 18.8 | | **Assets at FVOCI** | | | | | | Equity securities | 0.7 | – | 2.9 | 3.6 | | **Total financial assets** | **497.9** | **30.1** | **10.4** | **538.4** | | **Financial liabilities at FVTPL** | | | | | | Foreign currency forward contracts | – | (18.2) | (3.7) | (21.9) | | Foreign currency futures contracts | – | – | (2.5) | (2.5) | | Commodity swap contracts | – | (0.9) | (5.9) | (6.8) | | **Derivative financial liabilities used for hedging** | | | | | | Cash flow hedges | | | | | | Foreign currency forward contracts | – | (0.8) | – | (0.8) | | Commodity swap contracts | – | (13.6) | – | (13.6) | | **Total financial liabilities** | **–** | **(33.5)** | **(12.1)** | **(45.6)** | There were no transfers between Level 1, Level 2 and Level 3 in the year. The following table provides the fair value hierarchy levels into which fair value measurements are categorised for assets and liabilities measured at fair value as at 31 December 2021: | | Level 1 € million | Level 2 € million | Level 3 € million | Total € million | | --- | --- | --- | --- | --- | | **Financial assets at FVTPL** | | | | | | Foreign currency forward contracts | – | 1.1 | – | 1.1 | | Embedded derivatives | – | 0.1 | – | 0.1 | | Commodity swap contracts | – | 0.6 | 6.0 | 6.6 | | Money market funds | 638.8 | – | – | 638.8 | | **Derivative financial assets used for hedging** | | | | | | Cash flow hedges | | | | | | Foreign currency forward contracts | – | 1.3 | – | 1.3 | | Commodity swap contracts | – | 39.1 | – | 39.1 | | **Assets at FVOCI** | | | | | | Equity securities | 0.7 | – | 2.9 | 3.6 | | **Total financial assets** | **639.5** | **42.2** | **8.9** | **690.6** | | **Financial liabilities at FVTPL** | | | | | | Foreign currency forward contracts | – | (2.6) | – | (2.6) | | Foreign currency futures contracts | – | – | (3.9) | (3.9) | | Commodity swap contracts | – | – | (6.9) | (6.9) | | **Derivative financial liabilities used for hedging** | | | | | | Cash flow hedges | | | | | | Foreign currency forward contracts | – | (0.6) | – | (0.6) | | Commodity swap contracts | – | (0.6) | – | (0.6) | | **Total financial liabilities** | **–** | **(3.8)** | **(10.8)** | **(14.6)** | There were no transfers between Level 1, Level 2 and Level 3 in 2021. The following table presents the changes in Level 3 items for the years ended 31 December 2022 and 31 December 2021: | | Commodity swap contracts € million | Foreign currency contracts € million | Equity securities € million | Convertible promissory note € million | Total € million | | --- | --- | --- | --- | --- | --- | | **Balance as at 1 January 2021** | **(5.8)** | **4.9** | **2.8** | **–** | **1.9** | | Gains recognised in income statement | 13.6 | 0.4 | – | – | 14.0 | | Proceeds from settlement of derivatives | (8.7) | (9.2) | – | – | (17.9) | | Gains recognised in other comprehensive income | – | – | 0.1 | – | 0.1 | | **Balance as at 31 December 2021** | **(0.9)** | **(3.9)** | **2.9** | **–** | **(1.9)** | | Gains/(losses) recognised in income statement | 19.1 | (1.7) | – | – | 17.4 | | (Proceeds from)/payments for settlement of derivatives | (22.0) | 3.3 | – | – | (18.7) | | Addition of financial assets at FVTPL | – | – | – | 1.5 | 1.5 | | **Balance as at 31 December 2022** | **(3.8)** | **(2.3)** | **2.9** | **1.5** | **(1.7)** | 212 Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 # **Notes to the consolidated financial statements** *continued* # **26. Net debt** # **Accounting policy** Borrowings are initially recognised at the fair value net of transaction costs incurred. After initial recognition, all interest-bearing borrowings are subsequently measured at amortised cost. Amortised cost is calculated using the effective interest rate method whereby any discount, premium or transaction costs associated with a borrowing are amortised to the income statement over the borrowing period. Refer also to Note 17 for accounting policy on leases. Cash and cash equivalents comprise cash balances and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to insignificant risk of change in value. Bank overdrafts are classified as short-term borrowings in the balance sheet and for the purpose of the cash flow statement. Time deposits and treasury bills which do not meet the definition of cash and cash equivalents are classified as short-term investments at amortised cost. Money market funds are classified as short-term investments at fair value through profit or loss. The Group has elected to report cash receipts and payments regarding investments at amortised cost and fair value through profit or loss respectively, on a net basis in the consolidated cash flow statement, considering that the relevant amounts are large, turnover is quick and maturities are short. These investments are expected to be continually renewed, taking into account market returns and cash generation by the Group. Net debt is defined as current borrowings plus non-current borrowings less cash and cash equivalents, and certain other financial assets. Net debt for the year ended 31 December comprised: | | 2022 € million | 2021 € million | | --- | --- | --- | | Current borrowings | 337.0 | 381.7 | | Non-current borrowings | 3,082.9 | 2,555.7 | | Less: Cash and cash equivalents | (719.9) | (782.8) | | • Financial assets at amortised cost | (929.5) | (196.1) | | • Financial assets at fair value through profit or loss | (497.2) | (638.8) | | Less: Other financial assets | (1,026.7) | (834.9) | | **Net debt** | **1,673.3** | **1,319.7** | The financial assets at amortised cost include time deposits amounting to €529.5 million (31 December 2021: €189.9 million) as well as Nigerian treasury bills of €nil (31 December 2021: €6.2 million). The financial assets at fair value through profit or loss in 2022 relate to money market funds. The line item 'Other financial assets' of the consolidated balance sheet includes derivative financial instruments of €35.3 million (31 December 2021: €39.2 million) and related party loans receivable of €1.8 million (31 December 2021: €4.8 million). # **a) Borrowings** The Group held the following borrowings as at 31 December: | | 2022 € million | 2021 € million | | --- | --- | --- | | Commercial paper | 167.5 | 235.0 | | Loans payable to related parties (refer to Note 28) | – | 58.1 | | Other borrowings | 115.6 | 37.7 | | | **283.1** | **330.8** | | Obligations under leases falling due within one year | 53.9 | 90.9 | | **Total borrowings falling due within one year** | **337.0** | **381.7** | | Borrowings falling due within one to two years | – | – | | Bonds, bills and unsecured notes | 599.0 | – | | Loans payable to related parties (refer to Note 28) | – | 5.1 | | Borrowings falling due within two to five years | – | – | | Bonds, bills and unsecured notes | 1,192.5 | 598.5 | | Borrowings falling due in more than five years | – | – | | Bonds, bills and unsecured notes | 1,091.9 | 1,787.2 | | Other borrowings | 47.4 | 55.5 | | | **2,930.8** | **2,446.3** | | Obligations under leases falling due in more than one year | 152.1 | 109.4 | | **Total borrowings falling due after one year** | **3,082.9** | **2,555.7** | | **Total borrowings** | **3,419.9** | **2,937.4** | Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 213 # Notes to the consolidated financial statements continued # 26. Net debt continued Reconciliation of liabilities to cash flows arising from financing activities: | | Borrowings | | Leases | | Derivative assets/ (liabilities) € million | Total € million | | --- | --- | --- | --- | --- | --- | --- | | | Due within one year € million | Due in more than one year € million | Due within one year € million | Due in more than one year € million | | | | **Balance as at 1 January 2021** | **260.4** | **2,480.9** | **54.8** | **129.4** | — | **2,925.5** | | Cash flows | | | | | | | | Proceeds from borrowings | 77.0 | 52.3 | — | — | — | 129.3 | | Repayments of borrowings | (102.6) | (31.2) | — | — | — | (133.8) | | Principal repayments of lease obligations | — | — | (63.1) | — | — | (63.1) | | Interest paid | (36.2) | — | (9.5) | — | — | (45.5) | | Proceeds from/(payments for) settlement of derivatives regarding financing activities | — | — | — | — | 4.9 | 4.9 | | **Total cash flows** | **(61.8)** | **21.1** | **(72.4)** | — | **4.9** | **(108.2)** | | Leases increase | — | — | 0.8 | 41.2 | — | 42.0 | | Effect of changes in exchange rates | 0.2 | 0.2 | 0.4 | 1.0 | — | 1.8 | | Other non-cash movements | 132.0 | (55.9) | 67.3 | (62.2) | (2.6) | 78.6 | | **Balance as at 31 December 2021** | **330.8** | **2,446.3** | **50.9** | **109.4** | **2.3** | **2,939.7** | | Cash flows | | | | | | | | Proceeds from borrowings | 150.0 | 500.0 | — | — | — | 650.0 | | Repayments of borrowings | (358.2) | (0.4) | — | — | — | (358.6) | | Principal repayments of lease obligations | — | — | (65.2) | — | — | (65.2) | | Interest paid | (40.9) | (5.2) | (14.3) | — | — | (60.4) | | Proceeds from/settlement of derivatives regarding financing activities | — | — | — | — | 0.1 | 0.1 | | **Total cash flows** | **(249.1)** | **494.4** | **(79.5)** | — | **0.1** | **165.9** | | Leases increase | — | — | 0.9 | 90.3 | — | 91.2 | | Arising from business combinations | 179.3 | — | 5.0 | 34.0 | — | 218.3 | | Effect of changes in exchange rates | (15.5) | (0.9) | (1.6) | (12.0) | — | (30.0) | | Other non-cash movements | 37.6 | (9.0) | 78.2 | (69.6) | (5.7) | 31.5 | | **Balance as at 31 December 2022** | **283.1** | **2,930.8** | **53.9** | **152.1** | **(3.3)** | **3,416.6** | The 'Other non-cash movements' primarily include transfers from long-term to short-term liabilities and interest incurred as well as the decrease to borrowings in 2022, resulting from the change in control of Multon (refer to Note 16). # Commercial paper programme In October 2011 the Group established a €1.0 billion Euro-commercial paper programme (the 'CP programme'), which was updated in September 2014, in May 2017 and then in May 2020, to further diversify its short-term funding sources. The Euro-commercial paper notes may be issued either as non-interest-bearing notes sold at a discount or as interest-bearing notes at a fixed or floating rate. All commercial paper issued under the CP programme must be repaid within 7 to 364 days. The CP programme has been granted the Short Term Euro Paper label (STEP) and commercial paper is issued through Coca-Cola HBC's fully owned subsidiary Coca-Cola HBC Finance B.V. and is fully, unconditionally and irrevocably guaranteed by Coca-Cola HBC AG. The outstanding amount under the CP programme as at 31 December 2022 was €167.5 million (2021: €255.0 million). # Committed credit facilities In April 2019, the Group updated its then-existing €500.0 million syndicated revolving credit facility, which was set to expire in June 2021. The updated syndicated revolving credit facility has been increased to €800.0 million and has been extended to April 2024 with the option to be extended up to two more years until April 2026. In March 2020, the Company exercised its extension option and the facility was extended to April 2025. In April 2021, the Company exercised its second option to further extend the maturity of the syndicated loan facility to April 2026. This facility can be used for general corporate purposes and carries a floating interest rate over EURIBOR. No amounts have been drawn under the syndicated revolving credit facility since inception. The borrower in the syndicated revolving credit facility is Coca-Cola HBC's fully owned subsidiary Coca-Cola HBC Finance B.V. and any amounts drawn under the facility are fully, unconditionally and irrevocably guaranteed by Coca-Cola HBC AG. In December 2019 the Group established a loan facility of US Dollar 85.0 million to finance the purchase of production equipment by the Group's subsidiary in Nigeria. The facility has been drawn down by Nigerian Bottling Company (NBC) over the course of 2020 and 2021 maturing in 2027. The obligations under this facility are guaranteed by Coca-Cola HBC AG. As at 31 December 2022, the outstanding liability amounted to €59.3 million (2021: €63.2 million). # Uncommitted loan agreement In August 2022, the Group established an uncommitted money market loan agreement of €250.0 million which was subsequently reduced to €200.0 million from October 2022 onwards. The loan agreement can be used for general corporate purposes. No amounts have been drawn under the money market loan agreement since its inception. The borrower in the money market loan agreement is Coca-Cola HBC's fully owned subsidiary Coca-Cola HBC Finance B.V. 214 Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 # Notes to the consolidated financial statements continued ## 26. Net debt continued ### Euro medium-term note programme In June 2013, the Group established a new €3.0 billion Euro medium-term note programme (the 'EMTN programme'). The EMTN programme was updated in September 2014, September 2015, April 2019, when it was increased to €5.0 billion, April 2020, September 2021 and then September 2022. Notes are issued under the EMTN programme through Coca-Cola HBC's fully-owned subsidiary Coca-Cola HBC Finance B.V. and are fully, unconditionally and irrevocably guaranteed by Coca-Cola HBC AG. In March 2016, Coca-Cola HBC Finance B.V. completed the issue of a €600 million Euro-denominated fixed rate bond maturing in November 2024. The coupon rate of the bond is 1.875%, which, including the amortisation of the loss on the forward starting swap contracts over the term of the fixed rate bond, results in an effective interest rate of 2.99%. The net proceeds of the new issue were used to partially repay €214.6 million of the 4.25%, €600 million seven-year fixed rate notes due in November 2016. The remaining €385.4 million was repaid in November 2016 upon its maturity. In May 2019, Coca-Cola HBC Finance B.V. completed the issue of a €700 million Euro-denominated fixed rate bond maturing in May 2027 with a coupon rate of 1% and the issue of a €600 million Euro-denominated fixed rate bond maturing in May 2031 with a coupon rate of 1.625%. The net proceeds of the new issue were used to partially repay €236.6 million of the 2.375%, €800 million seven-year fixed rate bond due in June 2020, while the remaining €563.4 million was repaid in June 2020 upon its maturity. In November 2019, Coca-Cola HBC Finance B.V. completed the issue of a €500 million Euro-denominated fixed rate bond maturing in November 2029 with a coupon rate of 0.625%. In September 2022, Coca-Cola HBC Finance B.V. completed the issue of a €500 million Euro-denominated fixed rate green bond maturing in September 2025 with a coupon rate of 2.75%. As at 31 December 2022, a total of €2.9 billion in notes issued under the EMTN programme were outstanding. Summary of notes outstanding as at 31 December | Note (in million) | Start date | Maturity date | Fixed coupon | Bond value | | Fair value | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | 2022 € million | 2021 € million | 2022 € million | 2021 € million | | €600 | 10 March 2016 | 11 November 2024 | 1.875% | 599.0 | 598.5 | 582.0 | 631.8 | | €700 | 14 May 2019 | 14 May 2027 | 1.000% | 697.1 | 696.5 | 626.6 | 717.8 | | €800 | 14 May 2019 | 14 May 2031 | 1.625% | 596.5 | 596.0 | 497.1 | 640.7 | | €500 | 21 November 2019 | 21 November 2029 | 0.625% | 495.4 | 494.7 | 403.9 | 496.2 | | €500 | 23 September 2022 | 23 September 2025 | 2.750% | 495.4 | — | 486.0 | — | | Total | | | | 2,883.4 | 2,385.7 | 2,595.6 | 2,486.5 | The weighted average effective interest rate of the Euro-denominated fixed rate bonds is 1.89% and the weighted average maturity is 4.9 years. The fair values are within Level 1 of the value hierarchy. None of our debt facilities are subject to any financial covenants that would impact the Group's liquidity or access to capital. Total borrowings at 31 December were held in the following currencies: | | Current | | Non-current | | | --- | --- | --- | --- | --- | | | 2022 € million | 2021 € million | 2022 € million | 2021 € million | | Euro | 237.6 | 289.5 | 2,946.6 | 2,438.8 | | US Dollar | 34.3 | 13.7 | 64.4 | 73.5 | | Egyptian Pound | 39.3 | — | 23.5 | — | | Nigerian Naira | 9.6 | 7.5 | 23.3 | 15.5 | | Swiss Franc | 4.5 | 4.6 | 4.7 | 4.4 | | Bulgarian Lev | 2.6 | 2.2 | 4.6 | 5.0 | | Russian Rouble | 2.2 | 57.6 | 4.8 | 5.0 | | UK Sterling | 1.7 | 2.1 | 2.4 | 4.4 | | Czech Koruna | 1.3 | 1.5 | 2.6 | 5.3 | | Polish Zloty | 1.2 | 0.8 | 2.6 | 0.8 | | Romanian Lau | 1.4 | 0.9 | 1.5 | 0.7 | | Hungarian Forint | 0.5 | 0.6 | 0.5 | 0.4 | | Belarusian Rouble | 0.1 | — | 0.8 | 0.8 | | Bosnian Mark | 0.3 | 0.4 | — | 0.3 | | Croatian Kuna | 0.1 | 0.1 | — | — | | Other | 0.3 | 0.2 | 0.6 | 0.8 | | Total borrowings | 337.0 | 381.7 | 3,082.9 | 2,555.7 | The carrying amounts of interest-bearing borrowings held at fixed and floating interest rates as at 31 December 2022 were as follows: | | Fixed Interest rate € million | Floating Interest rate € million | Total € million | | --- | --- | --- | --- | | Euro | 3,144.1 | 40.1 | 3,184.2 | | US Dollar | 78.6 | 20.1 | 98.7 | | Egyptian Pound | 62.8 | — | 62.8 | | Nigerian Naira | 32.9 | — | 32.9 | | Swiss Franc | 9.2 | — | 9.2 | | Bulgarian Lev | 7.2 | — | 7.2 | | Russian Rouble | 7.0 | — | 7.0 | | UK Sterling | 0.5 | 3.6 | 4.1 | | Czech Koruna | 3.9 | — | 3.9 | | Polish Zloty | 3.8 | — | 3.8 | | Romanian Lau | 2.3 | 0.6 | 2.9 | | Hungarian Forint | 1.0 | — | 1.0 | | Belarusian Rouble | 0.9 | — | 0.9 | | Bosnian Mark | 0.3 | — | 0.3 | | Croatian Kuna | 0.1 | — | 0.1 | | Other | 0.9 | — | 0.9 | | Total interest-bearing borrowings | 3,355.5 | 64.4 | 3,419.9 | Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 215 ## Notes to the consolidated financial statements *continued* ### 26. Net debt *continued* #### b) Cash and cash equivalents Cash and cash equivalents as at 31 December comprise the following: | | 2022 € million | 2021 € million | | --- | --- | --- | | Cash at bank, in transit and in hand | 426.4 | 548.8 | | Short-term deposits | 293.3 | 234.0 | | **Total cash and cash equivalents** | **719.9** | **782.8** | Cash and cash equivalents are held in the following currencies: | | 2022 € million | 2021 € million | | --- | --- | --- | | Euro | 348.9 | 518.4 | | Nigerian Naira | 120.9 | 161.4 | | Russian Rouble | 96.4 | 9.5 | | US Dollar | 51.9 | 8.4 | | Swiss Franc | 16.6 | 7.3 | | Polish Zloty | 14.6 | 28.1 | | Romanian Lieu | 9.2 | 6.0 | | Moldovan Lieu | 8.8 | 6.5 | | Belarusian Rouble | 8.3 | 5.8 | | Serbian Dinar | 7.0 | 5.8 | | Ukrainian Hryvnia | 6.6 | 7.2 | | Egyptian Pound | 6.1 | — | | Croatian Kuna | 4.4 | 0.7 | | Bosnian Mark | 4.1 | 3.3 | | UK Sterling | 2.6 | 2.2 | | Czech Koruna | 2.3 | 0.8 | | Hungarian Forint | 0.6 | 6.5 | | Other | 10.6 | 4.9 | | **Total cash and cash equivalents** | **719.9** | **782.8** | As at 31 December 2022, time deposits of €529.5 million (2021: €189.9 million), which do not meet the definition of cash and cash equivalents, and investment in Nigerian Treasury Bills of €nil (2021: €6.2 million), which relates to the outstanding balance held for the repayment of Nigerian Bottling Company former minority shareholders following the 2011 acquisition of non-controlling interests, are recorded as other financial assets. Cash and cash equivalents of €120.9 million (2021: €161.4 million) equivalent in Nigerian Naira include an amount of €10.6 million (2021: €8.9 million), which relates to the outstanding balance held for the repayment of Nigerian Bottling Company former minority shareholders, following the 2011 acquisition of non-controlling interests. The amount of dividends payable to the Company by its operating subsidiaries is subject to, among other restrictions, general limitations imposed by the corporate laws and exchange control restrictions of the respective jurisdictions where those subsidiaries are organised and operate. Also, there are fund transfer restrictions in certain countries in which we operate, in particular Belarus, Nigeria, Serbia and Ukraine, however these restrictions do not have a material impact on the Group's liquidity, as the amounts of cash and cash equivalents held in such countries are generally retained for capital expenditure, working capital and dividend distribution purposes. Intra-group dividends paid by certain of our subsidiaries are also subject to withholding taxes. As a result of sanctions and other regulations implemented in 2022, there have been changes in required regulatory approvals, potentially impacting the transfer and usage of cash outside of Russia. Cash and cash equivalents held by the Group's operations in Russia amounted to €155.3 million equivalent in Russian Rouble, US Dollar and Euro as at 31 December 2022. The aforementioned changes restrict the usage of cash held in Russia outside the country, however they are not expected to have a material impact on the Group's liquidity, as the cash and cash equivalents held in Russia are expected to be used in the forthcoming financial periods primarily for working capital purposes by the Russian operations. ### 27. Equity #### Accounting policies ##### Share capital Coca-Cola HBC has only one class of shares, ordinary shares. When new shares are issued, they are recorded in share capital at their par value. The excess of the issue price over the par value is recorded in the share premium reserve. Incremental external costs directly attributable to the issue of new shares or to the process of returning capital to shareholders are recorded in equity as a deduction, net of tax, in the share premium reserve. ##### Dividends Dividends are recorded in the Group's consolidated financial statements, against the relevant equity component, in the period in which they are approved by the Group's shareholders. 216 Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 # Notes to the consolidated financial statements *continued* # 27. Equity *continued* # a) Share capital, share premium and Group reorganisation reserve | | Number of shares (authorised and issued) | Share capital € million | Share premium € million | Group reorganisation reserve € million | | --- | --- | --- | --- | --- | | Balance as at 1 January 2021 | 370,512,597 | 2,014.4 | 3,321.4 | (6,472.1) | | Shares issued to employees exercising stock options (refer to Note 29) | 1,282,821 | 7.9 | 11.7 | – | | Dividends | – | – | (235.8) | – | | **Balance as at 31 December 2021** | **371,795,418** | **2,022.3** | **3,097.3** | **(6,472.1)** | | Shares issued to employees exercising stock options (refer to Note 29) | 290,677 | 2.0 | 2.7 | – | | Dividends | – | – | (262.6) | – | | **Balance as at 31 December 2022** | **372,086,095** | **2,024.3** | **2,837.4** | **(6,472.1)** | The Group reorganisation reserve relates to the impact from adjusting share capital, share premium and treasury shares to reflect the respective statutory amounts of Coca-Cola HBC on 25 April 2013, together with the transaction costs incurred by the latter, relating primarily to the re-domiciliation of the Group and its admission to listing in the premium segment of the London Stock Exchange, following successful completion of the voluntary share exchange offer (refer also to Note 1). These transactions were treated as a reorganisation of an existing entity that has not changed the substance of the reporting entity. In 2022, the share capital of Coca-Cola HBC increased by the issue of 290,677 (2021: 1,282,821) 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 €4.7 million (2021: €19.6 million). Following the above changes, on 31 December 2022 the share capital of the Group amounted to €2,024.3 million and comprised 372,086,095 shares with a nominal value of CHF 6.70 each. # b) Dividends On 22 June 2021, the shareholders of Coca-Cola HBC AG at the Annual General Meeting approved a dividend distribution of €0.64 per share. The total dividend amounted to €235.8 million and was paid on 3 August 2021. Of this an amount of €2.2 million related to shares held by the Group. The shareholders of Coca-Cola HBC AG approved a dividend distribution of €0.71 per share at the Annual General Meeting held on 21 June 2022. The total dividend amounted to €262.6 million and was paid on 2 August 2022. Of this an amount of €2.4 million related to shares held by the Group. The Board of Directors of Coca-Cola HBC AG has proposed a €0.78 dividend per share in respect of 2022. If approved by the shareholders of Coca-Cola HBC AG, this dividend will be paid in 2023. # c) Treasury shares and reserves The reserves of the Group at 31 December were as follows: | | 2022 € million | 2021 € million | | --- | --- | --- | | **Treasury shares** | **(131.2)** | **(146.6)** | | **Exchange equalisation reserve** | **(1,218.2)** | **(1,154.0)** | | **Other reserves** | | | | Hedging reserve, net | (4.4) | 9.9 | | Tax-free reserve | 163.8 | 163.8 | | Statutory reserves | 22.6 | 28.3 | | Stock option, performance share and deferred management incentive share reserve | 87.5 | 86.3 | | Financial assets at fair value through other comprehensive income reserve, net | 0.5 | 0.6 | | Other | 22.5 | 21.3 | | **Total other reserves** | **292.5** | **310.2** | | **Total reserves** | **(1,056.9)** | **(990.4)** | # Treasury shares Treasury shares held by the Group represent shares acquired following approval of share buy-back programmes, forfeited shares under the equity compensation plan operated by the Group, as well as shares representing the initial ordinary shares of Coca-Cola HBC acquired from Kar-Tess Holding. An amount of €15.4 million in 2022 (2021: €8.9 million) relates to treasury shares provided to employees in connection with vested performance share awards under the Group's employee incentive scheme, which was reflected as an appropriation of reserves between 'Treasury shares' and 'Other reserves', more specifically the 'Stock option, performance share and deferred management incentive share reserve' in the consolidated statement of changes in equity. As at 31 December 2022, 5,386,717 (2021: 5,894,583) treasury shares were held by the Group. # Exchange equalisation reserve The exchange equalisation reserve comprises all foreign exchange differences arising from the translation of the financial statements of Group entities with functional currencies other than the Euro. # Other reserves # Hedging reserve The hedging reserve reflects changes in the fair values of derivatives accounted for as cash flow hedges, net of the deferred tax related to such balances. # Tax-free and statutory reserves The tax-free reserve includes investment amounts exempt from tax according to incentive legislation, other tax-free income or income taxed at source. Statutory reserves are particular to the various countries in which the Group operates. The amount of statutory reserves of the parent entity, Coca-Cola HBC AG, is €nil. During 2022, a net amount of €5.7 million was reclassified from statutory reserves to retained earnings relating to the net release of additional reserves by the Group's subsidiaries. Strategic Report Corporate Governance Financial Statements Semi-Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 217 # Notes to the consolidated financial statements continued ### 27. Equity continued # Stock option, performance share and deferred management incentive share reserve The stock option, performance share and deferred management incentive share reserve represents the cumulative charge to the income statement for employee stock option, performance share and deferred management incentive share awards less the vested performance share and deferred management incentive share awards. # Other Other reserves are particular to the various countries in which the Group operates and include shares held for the Group's employee share purchase plan, which is an equity compensation plan in which eligible employees may participate as well as the Group's share of changes in other reserves of equity method investments. ### 28. Related party transactions # a) The Coca-Cola Company As at 31 December 2022, The Coca-Cola Company indirectly owned 21.0% (2021: 21.0%) of the issued share capital of Coca-Cola HBC. The Coca-Cola Company considers Coca-Cola HBC to be a 'key bottler' and has entered into bottlers' agreements with Coca-Cola HBC in respect of each of the Group's territories. All the bottlers' agreements entered into by The Coca-Cola Company and Coca-Cola HBC are Standard International Bottlers' (SIB) agreements. The terms of the bottlers' agreements grant Coca-Cola HBC the right to produce and the exclusive right to sell and distribute the beverages of The Coca-Cola Company in each of the countries in which the Group operates. Consequently, Coca-Cola HBC is obliged to purchase all concentrate for The Coca-Cola Company's beverages from The Coca-Cola Company, or its designee, in the ordinary course of business. On 10 October 2012, The Coca-Cola Company agreed to extend the term of the bottlers' agreements for a further ten years until 2023. The Coca-Cola Company owns or has applied for the trademarks that identify its beverages in each of the countries in which the Group operates. The Coca-Cola Company has authorised Coca-Cola HBC and certain of its subsidiaries to use the trademark 'Coca-Cola' in their corporate names. # Accounting policy # Contributions from The Coca-Cola Company The Coca-Cola Company participates at its discretion in shared marketing programmes with the Group to promote the sale of The Coca-Cola Company products. Where such co-operative arrangements are entered into, the Group receives contributions from The Coca-Cola Company to offset the cost it has incurred for price support and marketing and promotional campaigns in respect of specific customers as well as general marketing programmes. These contributions from The Coca-Cola Company are classified as other income and are accrued and matched to the expenditure to which they relate, in line with the substance of the arrangement with The Coca-Cola Company as described above. These contributions are presented as follows: - to the extent that they relate to compensation for costs incurred by the Group for price support and marketing and promotional campaigns in respect of specific customers, which have been treated as a deduction from revenue from contracts with customers, they are presented as an offset against such deductions from revenue and accordingly, included within net sales revenue in the consolidated income statement; - to the extent that they relate to compensation for expenditure incurred by the Group in connection with general marketing programmes, they are presented as an offset against this expenditure and accordingly, included within operating expenses in the consolidated income statement. The below table summarises transactions with The Coca-Cola Company and its subsidiaries: | | 2022 £ million | 2021 £ million | | --- | --- | --- | | Purchases of concentrate, finished products and other items | 1,808.7 | 1,598.8 | | Net contributions received for marketing and promotional incentives | 108.6 | 83.1 | | Sales of finished goods and raw materials | 4.2 | 4.5 | | Other income | 8.6 | 2.8 | | Other expenses | 4.7 | 4.2 | Contributions received from The Coca-Cola Company for marketing and promotional incentives during the year amounted to €108.6 million (2021: €83.1 million); contributions made by The Coca-Cola Company to Coca-Cola HBC for price support and marketing and promotional campaigns in respect of specific customers in 2022 totalled €59.9 million (2021: €52.6 million) and were recognised as an offset against the relevant incentives provided to those customers within net sales revenue (refer to Note 8), while contributions made by The Coca-Cola Company to Coca-Cola HBC for general marketing programmes in 2022 totalled €48.7 million (2021: €30.5 million) and were recognised against the relevant cost incurred within operating expenses (refer to Note 9). The Coca-Cola Company has also customarily made additional payments for marketing and advertising directly to suppliers as part of the shared marketing arrangements. The proportion of direct and indirect payments, made at The Coca-Cola Company's discretion, will not necessarily be the same from year to year. 218 Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 # Notes to the consolidated financial statements *continued* ## 28. Related party transactions *continued* As at 31 December 2022, the Group had a total amount due from The Coca-Cola Company of €45.3 million (2021: €52.8 million), and a total amount due to The Coca-Cola Company of €226.9 million (2021: €223.1 million). Also, refer to Note 24 regarding consideration paid to The Coca-Cola Company during 2022 for the purchase of a convertible loan and shares held by non-controlling interests in connection with the acquisition of Coca-Cola Bottling Company of Egypt S.A.E. In 2021, the Group paid a total consideration of €5.6 million to The Coca-Cola Company for the acquisition of Costa Express business. ### b) Frigoglass S.A. ('Frigoglass'), Kar-Tess Holding and AG Leventis (Nigeria) Ltd Truad Verwaltungs AG currently indirectly owns 48.4% of Frigoglass and 99.3% of AG Leventis (Nigeria) Ltd (2021: 48.6% and 99.3% respectively) and also indirectly controls Kar-Tess Holding, which holds approximately 23.0% (2021: 23.0%) of Coca-Cola HBC's total issued share capital. The below table summarises transactions with the above entities: | Frigoglass and subsidiaries | 2022 € million | 2021 € million | | --- | --- | --- | | Purchases of coolers, cooler parts, glass bottles, crowns and raw and other materials | 112.3 | 117.6 | | Maintenance and other expenses | 33.1 | 28.6 | | **AG Leventis (Nigeria) Ltd** | | | | Purchases of finished goods and other items | 3.6 | 9.3 | | Other expenses | 0.1 | 0.1 | Frigoglass, a company listed on the Athens Exchange, is a manufacturer of coolers, cooler parts, glass bottles, crowns and plastics. Frigoglass has a controlling interest in Frigoglass Industries (Nigeria) Limited, a company in which the Group has a 23.9% effective interest, through its investment in Nigerian Bottling Company Ltd. The Group entered into a supply agreement with Frigoglass for the purchase of cooling equipment in 1999. The supply agreement was extended in 2004, 2008, 2013, 2018 and, most recently, in 2021, on substantially similar terms. The current agreement expires on 31 December 2025. As at 31 December 2022, Coca-Cola HBC owed €30.9 million (2021: €14.9 million) to and was owed €4.4 million (2021: €0.8 million), including dividend receivable of €3.7 million (2021: €nil) by Frigoglass and its subsidiaries. During 2022, the Group received dividends of €1.2 million (2021: €1.4 million) from Frigoglass Industries (Nigeria) Limited, which are included in line 'Receipts from non-integral equity method investments' of the consolidated cash flow statement. As at 31 December 2022, the Group owed €2.7 million (2021: €0.9 million) and had a lease liability of €4.2 million (2021: €6.0 million) to AG Leventis (Nigeria) Ltd. Capital commitments to Frigoglass and its subsidiaries as at 31 December 2022 amounted to €25.5 million (€33.5 million as at 31 December 2021) including the Group's share of its joint ventures' capital commitments to Frigoglass. ### c) Other related parties The below table summarises transactions with other related parties: | | 2022 € million | 2021 € million | | --- | --- | --- | | Purchases | 8.5 | 1.5 | | Other expenses | 15.5 | 15.1 | During 2022, the Group incurred subsequent expenditure for fixed assets of €3.0 million (2021: €1.5 million) and purchased inventories of €5.5 million (2021: €nil) from other related parties. Furthermore, during 2022, the Group incurred expenses of €15.5 million (2021: €15.1 million) mainly related to maintenance services for cold drink equipment and installations of coolers, fountains, vending and merchandising equipment from other related parties. As at 31 December 2022, the Group had a total amount due to other related parties of €3.7 million (2021: €0.6 million) and a total amount of dividend and loans receivable of €1.5 million and €nil respectively (2021: €nil and €0.9 million respectively). During 2022, the Group received dividends of €0.6 million from non-integral associates (2021: €0.5 million), which are included in line 'Receipts from non-integral equity method investments' of the consolidated cash flow statement and paid €5.7 million (2021: €nil) in connection with capital increase of non-integral associates, which are included in line 'Payments for non-integral equity method investments' of the consolidated cash flows statement. Furthermore, during 2022, €1.3 million regarding loans receivable from non-integral associates were converted to equity. ### d) Joint ventures During 2022, the Group purchased €26.0 million of finished goods (2021: €5.2 million) from joint ventures. In addition, during 2022 the Group recorded sales of finished goods and raw materials of €9.2 million (2021: €4.8 million) to joint ventures. Furthermore, the Group recorded other income of €15.8 million (2021: €16.2 million) from joint ventures and other expenses of €15.7 million (2021: €13.4 million) including €7.8 million (2021: €7.3 million) of interest charges from loans with joint ventures. As at 31 December 2022, the Group owed €4.4 million including loans payable of €nil (2021: €149.8 million including loans payable of €63.2 million) to, and was owed €9.6 million including loans receivable of €4.3 million (2021: €13.9 million including loans receivable of €7.1 million) by joint ventures. During 2022, the Group received dividends of €9.7 million from integral joint ventures (2021: dividends and capital returns of €47.8 million), which are included in line 'Receipts from integral equity method investments' in the consolidated cash flow statement. Furthermore, during 2022, the Group paid €4.0 million (2021: €nil) in connection with capital increase of integral joint venture which is included in line 'Payment for integral equity method investment' in the consolidated cash flow statement. ### e) Directors and senior management There have been no transactions between Coca-Cola HBC and the Directors and senior management except for remuneration (refer to Note 9). Strategic Report Corporate Governance Financial Statements Semi-Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 219 # Notes to the consolidated financial statements continued ## 29. Share-based payments ### Accounting policies #### Stock option, performance share award and deferred management incentive share plan Coca-Cola HBC provides equity-settled share-based payments to its senior managers in the form of an employee stock option, performance share award and deferred management incentive share plan (the 'Plan'). Stock options under the Plan are measured at fair value at the date of grant. Fair value reflects the parameters of the compensation plan, the risk-free interest rate, the expected volatility, the dividend yield and the early exercise experience under the Plan. Expected volatility is determined by calculating the historical volatility of Coca-Cola HBC's share price over previous years. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period. The Plan offers a specified number of performance share awards and deferred management incentive plan shares that vest three years after the grant. The fair value is determined at the grant date and reflects the parameters of the compensation plan, the dividend yield and the closing share price on the date of grant. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period. At the end of each reporting period the Group revises its estimates of the number of shares that are expected to vest based on non-market conditions, and recognises the impact of the revision to original estimates, if any, in the income statement with a corresponding adjustment to equity. When the terms of an equity-settled award are modified, the minimum expense recognised is the grant date fair value of the unmodified award, provided the original vesting terms of the award are met. An additional expense, measured as at the date of modification, is recognised for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee. #### Employee Share Purchase Plan The Group operates an employee share purchase plan (the 'ESPP'), an equity compensation plan in which eligible employees can participate. The Group makes contributions to the plan for participating employees and recognises expenses over the vesting period of the contributions. The change included in employee costs regarding share-based payments for the years ended 31 December is analysed as follows: | | 2022 £ million | 2021 £ million | | --- | --- | --- | | Performance share awards and deferred MIP shares | 15.5 | 14.6 | | Employee Share Purchase Plan | 6.1 | 5.5 | | Total share-based payments charge | 21.6 | 20.1 | ### Terms and conditions #### Stock option, performance share award and deferred management incentive share plan Based on Plan rules, senior managers are granted awards of stock options, based on performance, potentiality and level of responsibility. Options are granted at an exercise price equal to the closing price of the Company's shares trading on the London Stock Exchange on the day of the grant. Options vest in one-third increments each year for three years and can be exercised for up to 10 years from the date of award. When the options are exercised, the proceeds received by the Group, net of any transaction costs, are credited to share capital (at the nominal value) and share premium. The Group has not issued any new stock options since 2014. Since 2015 performance shares are the primary long-term award. Senior managers are granted performance share awards, which have a three-year vesting period and are linked to Group-specific key performance indicators. The closing price of the Company's shares trading on the London Stock Exchange on the day of the grant is used to determine the number of performance share awards granted. In 2018 the Group modified the performance share plan, in order for eligible employees to receive upon vesting, additionally to the specific number of shares, the value of dividends corresponding to the years from grant till vest date, subject to the approval of the Remuneration Committee. Furthermore, 50% of the Chief Executive Officer's annual bonus awarded under the terms of the management incentive plan is deferred into shares (the 'deferred MIP shares') which vest over a three-year period, subject to service conditions. No dividend-equivalent shares corresponding to the years from grant till vest date are provided, in connection with the deferred shares granted. #### Employee Share Purchase Plan The Employee Share Purchase Plan is administered by a Plan Administrator. Under the terms of this plan, employees have the opportunity to invest 3% to 15% of their salary in ordinary Coca-Cola HBC shares by contributing to the plan through a payroll deduction. Employee deductions are used monthly to purchase ordinary Coca-Cola HBC shares in the open market (London Stock Exchange). Coca-Cola HBC will match employee contributions up to a maximum of 3% of the employee's salary. Employer matching cash contributions vest one year after the grant, at which time they are used to purchase matching shares on the open market that are immediately vested. Dividends received in respect of shares held under this plan are used to purchase additional shares at the time of dividend distribution. Shares are held under the Plan Administrator. For employees resident in Greece, Coca-Cola HBC matches the employee's contribution with an annual employer contribution of up to 5% of the employee's salary that vests annually in December of each year. 220 Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 ## Notes to the consolidated financial statements *continued* ### 29. Share-based payments *continued* #### Stock option activity The outstanding stock options are fully vested and are exercisable until 2025. A summary of stock option activity in 2022 under all grants is as follows: | | Number of stock options 2022 | Weighted average exercise price 2022 (EUR) | Weighted average exercise price 2022 (GBP) | | --- | --- | --- | --- | | Outstanding at 1 January | 2,338,855 | 18.08 | 15.21 | | Exercised | (290,677) | 16.05 | 14.17 | | Expired | (350,448) | 24.01 | 21.20 | | **Outstanding at 31 December** | **1,697,730** | **16.02** | **14.15** | | **Exercisable at 31 December** | **1,697,730** | **16.02** | **14.15** | A summary of stock option activity in 2021 under all grants is as follows: | | Number of stock options 2021 | Weighted average exercise price 2021 (EUR) | Weighted average exercise price 2021 (GBP) | | --- | --- | --- | --- | | Outstanding at 1 January | 3,621,676 | 15.97 | 14.49 | | Exercised | (1,282,821) | 15.66 | 13.17 | | **Outstanding at 31 December** | **2,338,855** | **18.08** | **15.21** | | **Exercisable at 31 December** | **2,338,855** | **18.08** | **15.21** | 1. For convenience purposes, the prices are translated at the closing exchange rate. Total proceeds from the issuance of the shares under the stock option plan in 2022 amounted to €4.7 million (2021: €19.6 million). The weighted average remaining contractual life of stock options outstanding at 31 December 2022 was 1.9 years (2021: 2.5 years). #### Performance shares and deferred MIP shares activity A summary of performance shares and deferred MIP shares activity is as follows: | | Number of shares 2022 | Number of shares 2021 | | --- | --- | --- | | Outstanding at 1 January | 2,475,367 | 2,294,478 | | Granted^{1} | 1,301,669 | 833,477 | | Vested | (516,156) | (294,832) | | Forfeited/cancelled | (284,679) | (359,756) | | **Outstanding at 31 December** | **2,976,201** | **2,475,367** | 2. Includes dividend-equivalent shares. The weighted average remaining contractual life of performance shares and deferred MIP shares outstanding at 31 December 2022 was 1.3 years (2021: 1.3 years, regarding performance shares). The weighted average fair value for the 2022 performance share and deferred MIP share plan was €15.95 per share (2021: €23.80, regarding performance shares). Relevant inputs into the valuation were as follows: | | 2022 | 2021 | | --- | --- | --- | | Weighted average share price | €15.98 | €23.80 | | Dividend yield^{1} | nil | nil | | Weighted average exercise period | 3 years | 3 years | 3. Dividend yield in connection with the valuation of the deferred MIP shares granted during 2022 was 1.2%. ### 30. Contingencies In relation to the Greek Competition Authority's decision of 25 January 2002, one of Coca-Cola Hellenic Bottling Company S.A.'s competitors had filed a lawsuit against Coca-Cola Hellenic Bottling Company S.A. claiming damages in an amount of €7.7 million. The court of first instance heard the case on 21 January 2009 and subsequently rejected the lawsuit. The plaintiff appealed the judgement and on 9 December 2013 the Athens Court of Appeals rejected the plaintiff's appeal. On 19 April 2014, the same plaintiff filed a new lawsuit against Coca-Cola Hellenic Bottling Company S.A. (following the spin-off, Coca-Cola HBC Greece S.A.I.C.) claiming payment of €7.5 million as compensation for losses and moral damages for alleged anti-competitive commercial practices of Coca-Cola Hellenic Bottling Company S.A. between 1994 and 2013. On 21 December 2018, the plaintiff served their withdrawal from the lawsuit. However, on 20 June 2019, the same plaintiff filed a new lawsuit against Coca-Cola HBC Greece S.A.I.C. claiming payment of €10.1 million as compensation for losses and moral damages again for alleged anti-competitive commercial practices of Coca-Cola Hellenic Bottling Company S.A. for the same period between 1994 and 2013. On 16 July 2021, the Athens Multimember Court of First Instance issued its judgement number 1929/2021 (hereinafter the 'Judgement'), which adjudicates that Coca-Cola HBC Greece S.A.I.C. is obliged to pay to the plaintiff an amount of circa €0.9 million plus interest as of 31 December 2003. Both Coca-Cola HBC Greece S.A.I.C. and the plaintiff have appealed against this decision to the court of appeals. Both appeals were heard on 19 January 2023. The decision is pending to be issued. Management believes that any liability to the Group that may arise as a result of these pending legal proceedings will not have a material adverse effect on the results of operations, cash flows, or the financial position of the Group taken as a whole. With respect to the investigation of the Greek Competition Commission initiated on 6 September 2016, regarding Coca-Cola HBC Greece S.A.I.C.'s operations in certain commercial practices in the non-alcoholic beverages market, the Rapporteur of the Greek Competition Commission appointed for this case issued her Statement of Objections on 5 July 2021, alleging that Coca-Cola HBC Greece S.A.I.C. undertook a series of anti-competitive practices in the market of instant consumption for cola and non-cola carbonated soft drinks, thereby excluding competitors and limiting their growth potential. Strategic Report Corporate Governance Financial Statements Semi-Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 221 ## Notes to the consolidated financial statements *continued* ### 30. Contingencies *continued* Coca-Cola HBC Greece S.A.I.C. has vigorously defended its commercial practices, in rebuttal of the allegations set out in the Statement of Objections. The hearing of the case, before the plenary session of the Greek Competition Commission, was concluded on 29 November 2021 and the supplementary briefs of the parties were submitted on 16 December 2021. On 3 November 2022, the Hellenic Competition Commission notified Coca-Cola HBC Greece S.A.I.C. of its ruling on the case, according to which Coca-Cola HBC Greece S.A.I.C. allegedly abused its dominant position in the Greek immediate consumption market segment for cola and non-cola carbonated soft drinks. The Hellenic Competition Commission ruling imposed on Coca-Cola HBC Greece S.A.I.C. a fine of €10.3 million, as well as a behavioural remedy in relation to beverage coolers valid until end of 2024. Coca-Cola HBC Greece S.A.I.C. has fully provided for the amount of the fine. Coca-Cola HBC Greece S.A.I.C. strongly disagrees with this ruling and has challenged it before the competent Court of Appeal. The hearing date of the case is not yet set. In 1992, our subsidiary NBC acquired a manufacturing facility in Nigeria from Vacunak, a Nigerian company. In 1994, Vacunak filed a lawsuit against NBC, alleging that a representative of NBC had orally agreed to rescind the sale agreement and instead enter into a lease agreement with Vacunak. As part of its lawsuit, Vacunak sought compensation for rent and loss of business opportunities. NBC discontinued all use of the facility in 1995. On 19 August 2013, NBC received the written judgement of the Nigerian court of first instance issued on 28 June 2012 providing for damages of approximately €16.7 million. The Appeal Court dismissed NBC's appeal and Vacunak's cross-appeal and affirmed the judgement of the first instance court in 2023. NBC has filed an appeal against the judgement before the Supreme Court. Based on advice from NBC's outside legal counsel, we believe that it is unlikely that NBC will suffer material financial losses from this case. We have consequently not provided for any losses in relation to this case. In May 2021, the European Commission sent CCH a questionnaire, initiating a preliminary investigation into a possible infringement by a CCH subsidiary. Coca-Cola European Partners and The Coca-Cola Company of EU competition rules through the granting of conditional rebates to 'off-trade' customers capable of foreclosing competition from other suppliers. On 28 February 2023, the European Commission publicly announced that it has decided to end this preliminary investigation and as a result this case has closed. The tax filings of the Group and its subsidiaries are routinely subjected to audit by tax authorities in most of the jurisdictions in which the Group conducts business. These audits may result in assessments of additional taxes. The Group provides for additional tax in relation to the outcome of such tax assessments, to the extent that a liability is probable and estimable. The Group is also involved in various other legal proceedings. Management believes that any liability to the Group that may arise as a result of these pending legal proceedings will not have a material adverse effect on the results of operations, cash flows, or the financial position of the Group taken as a whole. Considering the above, there have been no significant adverse changes in contingencies since 31 December 2021 (as described in our 2021 Integrated Annual Report available on the Coca-Cola HBC's web site: www.coca-colahellenic.com). ### 31. Commitments #### Capital commitments As at 31 December 2022, the Group had capital commitments for property, plant and equipment amounting to €210.5 million (2021: €166.1 million). Of this, €0.5 million are related to the Group's share of the commitments arising from joint ventures (2021: €9.0 million). Capital commitments for 2022 include total/future minimum lease payments under leases not yet commenced to which the Group was committed at 31 December 2022 of €28.8 million (2021: €18.1 million). ### 32. Post balance sheet events During 2023 the Egyptian Pound has depreciated against the Euro by approximately 24%. This has resulted in a foreign exchange loss of approximately €6 million for the Group. We are continuously monitoring the situation to ensure that timely actions are undertaken as needed to minimise any adverse impact from the devaluation to the business in Egypt. On 17 March 2023, the Remuneration Committee granted performance share and deferred MIP share awards of €24.8 million equivalent, under the performance share award and deferred management incentive share plan, which have a three-year vesting period. The number of shares granted is calculated by dividing the value of the grant with the closing share price as of the date of the approval of the grant. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 222 Report Governance Statements Reporting Information ### Contents Swiss Statutory Reporting 223 Report of the statutory auditor on ## SWISS Coca-Cola HBC AG’s consolidated financial statements 228 Report of the statutory auditor on Coca-Cola HBC AG’s financial statements ## STATUTORY 230 Coca-Cola HBC AG’s financial statements 240 Report of the statutory auditor on theStatutory Remuneration Report 242 Statutory Remuneration Report ## REPORTING Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 223 # Report on the audit of the consolidated financial statements Report of the statutory auditor to the General Meeting of Coca-Cola HBC AG Steinhausen (Zug) # Report on the audit of the consolidated financial statements # Opinion We have audited the consolidated financial statements of Coca-Cola HBC AG and its subsidiaries (the Group), which comprise the consolidated income statement and consolidated statement of comprehensive income for the year ended 31 December 2022, the consolidated balance sheet as at 31 December 2022 and the consolidated statement of changes in equity and consolidated cash flow statement for the year then ended, including the notes to the consolidated financial statements and a summary of significant accounting policies. In our opinion, the consolidated financial statements (pages 166 to 221) give a true and fair view of the consolidated financial position of the Group as at 31 December 2022 and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and comply with Swiss law. # Basis for opinion We conducted our audit in accordance with Swiss law, International Standards on Auditing (ISAs) and Swiss Standards on Auditing (SA-CH). Our responsibilities under those provisions and standards are further described in the 'Auditor's responsibilities for the audit of the consolidated financial statements' section of our report. We are independent of the Group in accordance with the provisions of Swiss law and the requirements of the Swiss audit profession, as well as the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. # Our audit approach # Overview | Overall Group materiality: | EUR 41'100'000 | | --- | --- | | Audit scope | We conducted full scope audit procedures on the financial information of 17 subsidiaries in 15 countries spread across all of the Group's reportable segments. We also conducted procedures around specific account balances and transactions and analytical review procedures for other subsidiaries and Group functions. Our audit scope addressed 85% of consolidated net sales revenue, 87% of consolidated profit before tax and 87% of consolidated total assets of the Group. | | Key audit matters | As key audit matters the following areas of focus have been identified: • Goodwill and indefinite-lived intangible assets impairment assessment • Geopolitical events in Russia and Ukraine • Uncertain tax positions | # Materiality The scope of our audit was influenced by our application of materiality. Our audit opinion aims to provide reasonable assurance that the consolidated financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated financial statements. Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall Group materiality for the consolidated financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate, on the consolidated financial statements as a whole. | Overall Group materiality | EUR 41'100'000 | | --- | --- | | Benchmark applied | Adjusted profit before tax | | Rationale for the materiality benchmark applied | Our approach has changed from the previous year, where we used the reported profit before tax as the benchmark for determining overall materiality. We consider that the reported profit before tax still remains the principal measure used by the shareholders in assessing the underlying performance of the Group and is a generally accepted benchmark. However, we have adjusted this benchmark by items which, in our view, are considered unusual and infrequently occurring in nature driven by the geopolitical events involving Russia and Ukraine. | We agreed with the Audit and Risk Committee that we would report to them misstatements above EUR 2'000'000 identified during our audit as well as any misstatements below that amount which, in our view, warranted reporting for qualitative reasons. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 224 Report Governance Statements Reporting Information ### Report on the audit of the consolidated financial statements continued ### Audit scope As the Swiss statutory auditor, we held frequent virtual meetings to oversee the work performed by the group engagement and component audit teams. We attended such meetings for Italy, Russia (including We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion Multon), Nigeria, Romania, Switzerland, Austria, Bulgaria, Greece, Hungary, Northern Ireland, Poland, on the consolidated financial statements as a whole, taking into account the structure of the Group, the Serbia, the Netherlands, and Egypt. As the Swiss statutory auditor, we also held physical meetings and accounting processes and controls, and the industry in which the Group operates. discussions with the management of the trading subsidiaries in Italy and Switzerland to discuss business The Group operates through its trading subsidiaries in Nigeria, Egypt and 27 countries in Europe, as set performance and outlook, matters relating to regulation and taxation, as well as any specific accounting out in Notes 1 and 7 to the consolidated financial statements. The processing of the accounting and auditing matters identified, including fraud and internal controls. records for these subsidiaries is largely centralised in a shared services centre in Bulgaria, except for the Based on the above, the subsidiaries which were in the scope for the purposes of the group audit subsidiaries in Armenia, Belarus, Egypt, Moldova, North Macedonia, Russia and Ukraine, which process accounted for 83% of consolidated net sales revenue, 87% of consolidated profit before tax and 87% their accounting records locally. The Group also operates centralised treasury functions in the of consolidated total assets of the Group. This, together with the additional procedures performed at Netherlands and in Greece and a centralised procurement function for key raw materials in the Group level, provided us with sufficient appropriate evidence for our audit opinion on the consolidated Netherlands. financial statements. Based on their significance to the consolidated financial statements and in light of the key audit matters as noted below, we identified 17 subsidiaries in 15 countries spread across all of the Group’s reportable ### Key audit matters segments (including the trading subsidiaries in Russia, Italy, Nigeria, Poland, Romania, and Switzerland) Key audit matters are those matters that, in our professional judgement, were of most significance in which, based on our scoping analysis, required a full scope audit of their financial information. In addition, our audit of the consolidated financial statements of the current period. These matters were addressed audit procedures were performed with respect to the centralised treasury functions by the group in the context of our audit of the consolidated financial statements as a whole, and in forming our engagement team in Greece and with respect to the centralised procurement function by the opinion thereon, and we do not provide a separate opinion on these matters. component audit team in the Netherlands. The group engagement team also performed analytical review and other procedures on balances and transactions of subsidiaries not covered by the procedures described above. As the Swiss statutory auditor, we issued group audit instructions to PwC Greece, who has the responsibility as the group engagement team for the Company’s reporting requirements for the London and Athens Stock Exchange. These instructions covered the scope of our group audit to enable us to fulfil our responsibilities under Swiss law. As the Swiss statutory auditor, we had ongoing interactions with the group engagement team in Greece to be continuously updated and to monitor their progress and the results of their procedures. We reviewed the instructions which PwC Greece issued to component audit teams including centralised audit procedures performed at the shared services centres in Bulgaria and Greece and shared audit comfort with component teams as it relates to IT general controls and cybersecurity risks. We reviewed working papers and undertook additional interactions as considered necessary depending on the significance of the accounting and audit matters. The Group consolidation, financial statement disclosures and a number of other areas that involve significant judgement and estimates, including goodwill and intangible assets and the Group’s overall going concern assessment, were audited by the Swiss statutory auditor and the group engagement team of PwC Greece. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 225 Report Governance Statements Reporting Information ### Report on the audit of the consolidated financial statements continued ### Goodwill and indefinite-lived intangible assets impairment assessment Geopolitical events in Russia and Ukraine Key audit matter How our audit addressed the key audit matter Key audit matter How our audit addressed the key audit matter Refer to Note 14 ‘Intangible assets’. We evaluated the appropriateness of management’s Refer to Note 6 ‘Russia‑Ukraine conflict impact’ In relation to the Multon Partners and Ukraine identification of the Group’s CGUs, related control and Note 24 ‘Business combinations’. CGUs’ impairment assessment, we followed the Goodwill and indefinite-lived intangible assets as at activities and the process by which management procedures described in the Key Audit Matter 31 December 2022 amount to EUR 1,926.0 million The geopolitical developments involving Russia prepared the CGUs’ value-in-use calculations. ‘Goodwill and indefinite‑lived intangible assets and EUR 612.4 million, respectively. and Ukraine alongside The Coca-Cola Company’s impairment assessment’. We tested the mathematical accuracy of the CGUs’ (‘TCCC’) decision to suspend its business in Russia The above amounts have been allocated to value-in-use calculations and compared the cash are indications of potential impairment of the For the tangible assets, we understood the individual cash‑generating units (‘CGUs’), which flow projections included therein to the financial operations in both countries where the Group process that management followed for Multon inaccordance with International Accounting budgets, approved by the Board of Directors, operates in accordance with IAS 36. Partners’ impairment exercises. We worked closely Standard 36 ‘Impairment of Assets’ (‘IAS 36’) covering a one-year period, and management’s with the component auditors in Russia to test require the performance of an impairment The Russia based operations consisted of the projections for the subsequent four years. themathematical accuracy of the tangible assets assessment at least annually or whenever there Group’s subsidiary ‘Multon Partners’ and one joint Inaddition, we assessed management’s past impairment assessment and challenge management isan indication of impairment. The impairment venture ‘Multon AO group of companies’ (‘Multon forecasting accuracy by comparing key elements on the assumptions used in light of TCCC’s assessment involves the determination of the JV’) accounted for under the equity method. of theprior year projections with actual results. suspension of the business and sanctions imposed. recoverable amount of the CGU, being the higher In August 2022, TCCC unilaterally waived certain of the value-in-use and the fair value less costs We challenged management’s cash flow Furthermore, we leveraged the work performed of its governance rights in connection with its 50% ofdisposal. projections in relation to the assumptions applied for the discount, growth and foreign exchange interest in Multon JV. As a result, the Group gained to the value-in-use calculations, taking into rates as described in the Key audit matter ‘Goodwill This area was a key matter for our audit due to control of Multon JV in accordance with account the elevated inflationary environment. and indefinite-lived intangible assets impairment thesize of goodwill and indefinite‑lived intangible International Financial Reporting Framework 10 assessment’. assets balances and because the determination With the support of our valuation specialists, we ‘Consolidated financial statements’ (‘IFRS 10’). ofwhether elements of goodwill and of indefinite‑ assessed the appropriateness of the methodology With regards to the Multon JV, we assessed, The Group performed impairment exercises on lived intangible assets are impaired involves and valuation techniques used as well as certain withthe support of our valuation specialists, the itsRussia and Ukraine based operations for both complex and subjective estimates made by assumptions including discount, annual revenue appropriateness of the methodology, the valuation interim and year-end financial reporting purposes. | management about the future results of the | growth, perpetuity revenue growth and foreign | | techniques and the assumptions used by | | --- | --- | --- | --- | | CGUs. These estimates include assumptions | exchange rates. | As a result of the above, Multon Partners incurred | management as well as the mathematical | | surrounding revenue growth rates, costs, foreign | | impairment losses of EUR 13.7 million for goodwill | accuracy of their impairment model. | We performed our independent sensitivity exchange rates and discount rates. and of EUR 60.9 million for tangible assets. In addition, analyses on the key drivers of the value-in-use Based on our work, we found that the conclusions the Multon JV was impaired by EUR 52.8 million. Management has identified the Egypt CGU to be calculations for the CGUs with significant balances reached by management in relation to their sensitive to reasonably possible changes in the of goodwill and indefinite-lived intangible assets. No impairment losses were identified for the impairment assessment were supported by assumptions used, which could result in the Ukrainian CGU. assumptions within reasonable ranges. Moreover, As a result of our work, we found that the calculated recoverable amount being lower in Given the significance of the events described we verified the appropriateness of the Multon JV’s conclusions reached by management in relation to future periods than the carrying value of the CGU. above as well as the related financial impact on the change ofcontrol accounting treatment and its the impairment testing of goodwill and indefinite- Additional sensitivity disclosure has been included Group’s financial statements, we concluded that financial impact. lived intangible assets were supported by in the financial statements in respect of this CGU. this area is a key audit matter. assumptions within reasonable ranges. We evaluated the related disclosures provided in As a result of the above assessments, the financial statements in Note 6 ‘Russia‑Ukraine We evaluated the related disclosures provided in management did not identify any impairments for conflict impact’ and Note 24 ‘Business combinations’ the financial statements in Note 14 ‘Intangible goodwill and indefinite-lived assets, other than the and concluded that these are appropriate. assets’ and concluded that these are appropriate. impairment charge of EUR 13.7 million recognised for the Russia based operations that is discussed in the Key Audit Matter ‘Geopolitical events in Russia and Ukraine’. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 226 Report Governance Statements Reporting Information ### Report on the audit of the consolidated financial statements continued ### Uncertain tax positions Other information The Board of Directors is responsible for the other information. The other information comprises the Key audit matter How our audit addressed the key audit matter information included in the annual report, but does not include the financial statements, the Refer to Note 11 ‘Taxation’ and Note 30 In order to understand and evaluate consolidated financial statements, the statutory remuneration report and our auditor’s reports thereon. ‘Contingencies’. management’s judgement, we considered the status of current tax authority inspections and Our opinion on the consolidated financial statements does not cover the other information and we do The Group operates in numerous tax jurisdictions enquiries, the outcome of previous tax authority not express any form of assurance conclusion thereon. and is subject to periodic tax inspections, in the inspections, judgemental positions taken in tax normal course of business, by local tax authorities In connection with our audit of the consolidated financial statements, our responsibility is to read the returns and current year estimates as well as on a range of tax matters in relation to corporate other information and, in doing so, consider whether the other information is materially inconsistent recent developments in the tax jurisdictions in tax, transfer pricing and indirect taxes. As at 31 with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears which the Group operates. December 2022, the Group has current tax to be materially misstated. liabilities of EUR 114.4 million, while provisions for We evaluated the Group’s monitoring process of If, based on the work we have performed, we conclude that there is a material misstatement of this uncertain tax positions amount to EUR 67.5 million. the current tax authority inspections and other information, we are required to report that fact. We have nothing to report in this regard. challenged management’s estimates, particularly The impact of changes in local tax regulations and in respect of cases where there had been ongoing inspections by local tax authorities, could ### Board of Directors’ responsibilities for the consolidated financial significant developments with tax authorities. materially impact the amounts recorded in the ### statements financial statements. Our component audit teams, through the use of tax specialists with local knowledge and relevant The Board of Directors is responsible for the preparation of the consolidated financial statements, Where the amount of tax payable is uncertain, the expertise, assessed the tax positions taken by the which give a true and fair view in accordance with IFRS as adopted by the EU and the provisions of Swiss Group establishes provisions based on subsidiary in scope, in the context of applying local law, and for such internal control as the Board of Directors determines is necessary to enable the management’s estimates with respect to the tax laws and evaluating the local tax assessments. preparation of consolidated financial statements that are free from material misstatement, whether likelihood of material tax exposures crystallising Additionally, with our group engagement team tax due to fraud or error. and the probable amount of the resultant liability. specialists we further evaluated management’s In preparing the consolidated financial statements, the Board of Directors is responsible for assessing We consider this area as a key audit matter given estimation of tax exposures and contingencies the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going the level of judgement and uncertainty involved in inorder to assess the adequacy of the Group’s concern and using the going concern basis of accounting unless the Board of Directors either intends estimating tax provisions and the complexities of taxprovisions. to liquidate the Group or to cease operations, or has no realistic alternative but to do so. dealing with tax rules and regulations in numerous We held meetings with Group and local jurisdictions. management to discuss the individual tax positions of the subsidiary in scope and assessed with the support of our group engagement tax team the Group’s overall tax exposure. From the evidence obtained we consider the provisions in relation to uncertain tax positions as at 31 December 2022 to be reasonable. We also evaluated the related disclosures provided in the financial statements in Note 11 ‘Taxation’ and Note 30 ‘Contingencies’ and concluded that these are appropriate. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 227 Report Governance Statements Reporting Information ### Report on the audit of the consolidated financial statements continued ### Auditor’s responsibilities for the audit of the consolidated ### financialstatements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but isnot a guarantee that an audit conducted in accordance with Swiss law, ISAs and SA‑CH will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. A further description of our responsibilities for the audit of the consolidated financial statements islocated on EXPERTsuisse’s website: http://www.expertsuisse.ch/en/audit‑report. This description forms an integral part of our report. ### Report on other legal and regulatory requirements In accordance with article 728a paragraph 1 item 3 CO and PS‑CH 890, we confirm that an internal control system exists which has been designed for the preparation of the consolidated financial statements according to the instructions of the Board of Directors. We recommend that the consolidated financial statements submitted to you be approved. PricewaterhouseCoopers AG Sandra Boehm Uglow Tobias Handschin Licensed audit expert Licensed audit expert Auditor in charge Zurich, 20 March 2023 Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 228 Report Governance Statements Reporting Information ### Report on the audit of the financial statements ### Our audit approach Materiality The scope of our audit was influenced by our application of materiality. Our audit opinion aims to provide reasonable assurance that the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if, individually or in Report of the statutory auditor aggregate, they could reasonably be expected to influence the economic decisions of users taken to the General Meeting of onthe basis of the financial statements. Coca‑Cola HBC AG Steinhausen (Zug) Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall materiality for the financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the Report on the audit of the financial statements nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate, on the financial statements as a whole. ### Opinion Overall materiality CHF 29’577’000 We have audited the financial statements of Coca‑Cola HBC AG (the Company), which comprise Benchmark applied Net assets thebalance sheet as at 31 December 2022, and the statement of income, the cash flow statement Rationale for the materiality We chose net assets as the benchmark because, in our view, it is the forthe year then ended, and notes to the financial statements, including a summary of significant benchmark applied benchmark which reflects the actual substance of the entity. This is a accounting policies. generally accepted benchmark for ultimate holding companies. In our opinion, the financial statements (pages 230 to 238) comply with Swiss law and the company’s We agreed with the Audit and Risk Committee that we would report to them misstatements above CHF articles of incorporation. 1’478’850 identified during our audit as well as any misstatements below that amount which, in our view, warranted reporting for qualitative reasons. ### Basis for opinion ### We conducted our audit in accordance with Swiss law and Swiss Standards on Auditing (SA‑CH). Audit scope Ourresponsibilities under those provisions and standards are further described in the ‘Auditor’s We designed our audit by determining materiality and assessing the risks of material misstatement in responsibilities for the audit of the financial statements’ section of our report. We are independent the financial statements. In particular, we considered where subjective judgements were made; for ofthe Company in accordance with the provisions of Swiss law and the requirements of the Swiss example, in respect of significant accounting estimates that involved making assumptions and auditprofession, and we have fulfilled our other ethical responsibilities in accordance with these considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk requirements. of management override of internal controls, including among other matters consideration of whether We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis there was evidence of bias that represented a risk of material misstatement due to fraud. forour opinion. We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the financial statements as a whole, taking into account the structure of the Company, the accounting processes and controls, and the industry in which the Company operates. ### Key audit matters We have determined that there are no key audit matters to communicate in our report. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 229 Report Governance Statements Reporting Information ### Report on the audit of the financial statements continued ### Other information Report on other legal and regulatory requirements The Board of Directors is responsible for the other information. The other information comprises In accordance with article 728a paragraph 1 item 3 CO and PS‑CH 890, we confirm that an internal theinformation included in the annual report, but does not include the financial statements, the control system exists which has been designed for the preparation of the financial statements consolidated financial statements, the statutory remuneration report and our auditor’s reports thereon. according to the instructions of the Board of Directors. Our opinion on the financial statements does not cover the other information and we do not express We further confirm that the proposed repayment of reserves from capital contributions and carry any form of assurance conclusion thereon. forward of the accumulated losses complies with Swiss law and the company’s articles of incorporation. We recommend that the financial statements submitted to you be approved. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial PricewaterhouseCoopers AG statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. ### Board of Directors’ responsibilities for the financial statements Sandra Boehm Uglow Tobias Handschin The Board of Directors is responsible for the preparation of the financial statements in accordance with Licensed audit expert Licensed audit expert the provisions of Swiss law and the company’s articles of incorporation, and for such internal control as Auditor in charge the Board of Directors determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Zurich, 20 March 2023 In preparing the financial statements, the Board of Directors is 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 Board of Directors either intends to liquidate theCompany or to cease operations, or has no realistic alternative but to do so. ### Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Swiss law and SA‑CH will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually orin the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. A further description of our responsibilities for the audit of the financial statements is located onEXPERT‑suisse’s website: http://www.expertsuisse.ch/en/audit‑report. This description forms anintegral part of our report. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 230 Report Governance Statements Reporting Information ### Swiss statutory reporting | Coca‑Cola HBC AG, Steinhausen (Zug) | | Coca‑Cola HBC AG, Steinhausen (Zug) | | | | | --- | --- | --- | --- | --- | --- | | Balance sheet | | Statement of income | | | | | | As at 31 December | | | Year ended 31 December | | | | CHF thousands | | | | CHF thousands | | ASSETS Note 2022 2021 | | | Note 2022 2021 | | | | Cash and cash equivalents 261 2,026 | | Dividend income 265,445 256,081 | | | | | Short-term receivables from direct and indirect participations 2.1 12,311 12,047 | | Other operating income 2.10 36,106 38,320 | | | | | Receivables from related parties 2.2 1,430 338 | | Total operating income 301,551 294,401 | | | | Short-term receivables from third parties 2,356 1,491 | Total current assets 16,358 15,902 | Employee costs 2.11 (37,837) (48,278) | | --- | --- | | Investments in subsidiaries 2.3 6,444,931 6,710,376 | Other operating expenses 2.12 (16,809) (16,585) | | Property, plant and equipment (incl. right‑of‑use assets) 6,699 4,936 | Write down of investments 2.3 (265,445) (256,081) | | Total non-current assets 6,451,630 6,715,312 | Depreciation on property, plant and equipment | | Total assets 6,467,988 6,731,214 | (incl. right‑of‑use assets) (875) (743) | Total operating expenses (320,966) (321,687) LIABILITIES AND SHAREHOLDERS’ EQUITY Other payables 2,108 1,713 Operating loss (19,415) (27,286) Short-term liabilities to direct and indirect participations 2.4 2,592 3,149 Short-term lease liabilities 556 704 Finance costs (4,239) (6,403) Accrued expenses 2.4 59,242 47,743 Total short-term liabilities 64,498 53,309 Loss before tax (23,654) (33,689) Long-term interest-bearing liabilities to indirect participations 2.5 200,326 204,482 Direct taxes (195) (163) Long-term lease liabilities 1,685 2,127 Provisions 2.6 11,542 15,987 Loss for the year (23,849) (33,852) Total long-term liabilities 213,553 222,596 Share capital 2.7 2,492,977 2,491,029 Legal capital reserves Reserves from capital contributions 3,721,117 3,982,078 Reserves for treasury shares 2.8 85,298 85,298 Retained earnings Results carried forward (15,592) 18,260 Loss for the year (23,849) (33,852) Treasury shares 2.8 (70,014) (87,504) Total shareholders’ equity 2.9 6,189,937 6,455,309 Total liabilities and shareholders’ equity 6,467,988 6,731,214 Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 231 # **Swiss statutory reporting** *continued* # **Coca-Cola HBC AG, Steinhausen (Zug)** Cash flow statement | | Note | Year ended 31 December CHF thousands | | | --- | --- | --- | --- | | | | 2022 | 2021 | | Loss for the year | | **(23,849)** | (33,852) | | Depreciation of property, plant and equipment, including right-of-use assets | | **875** | 743 | | Finance costs | | **4,239** | 6,403 | | Write down of investments | 2.3 | **265,445** | 256,081 | | Net change related to employee performance share plan | | **19,041** | 22,376 | | | | **265,751** | 251,751 | | Decrease/(increase) in receivables | | **(2,221)** | 2,972 | | Decrease in investments in subsidiaries | 2.3 | **(265,445)** | (256,081) | | Increase/(decrease) in short-term liabilities (excl. financial liabilities) | | **13** | (631) | | Increase in accrued expenses | | **5,044** | 12,416 | | Increase in provisions | | **665** | 160 | | Proceeds from dividends received from subsidiaries | 2.3 | **265,445** | 256,081 | | Tax paid | | **(193)** | (181) | | **Net cash inflow from operating activities** | | **269,059** | **266,487** | | Payments for purchases of property, plant and equipment | | **(2,505)** | (1,471) | | **Cash outflow from investing activities** | | **(2,505)** | **(1,471)** | | Principal repayments of lease obligations | | **(722)** | (405) | | Proceeds from long-term financial liabilities | | **11,140** | 5,708 | | Repayments of long-term financial liabilities | | **(15,297)** | (24,894) | | Dividends paid to owners of the Company | | **(263,551)** | (260,250) | | Proceeds from shares issued to employees exercising stock options | | **4,538** | 21,303 | | Interest paid | | **(4,413)** | (6,244) | | **Net cash outflow from financing activities** | | **(268,305)** | **(264,782)** | | **Net (decrease) / increase in cash and cash equivalents** | | **(1,751)** | **234** | | Movement in cash and cash equivalents | | | | | Cash and cash equivalents at 1 January | | **2,026** | 1,880 | | Net (decrease) / increase in cash and cash equivalents | | **(1,751)** | 234 | | Effect of changes in exchange rates | | **(14)** | (88) | | **Cash and cash equivalents at 31 December** | | **261** | **2,026** | 232 Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 # Swiss statutory reporting continued # Notes to the financial statements of Coca-Cola HBC AG, Steinhausen (Zug) # Introduction Coca-Cola HBC AG ('the Company') was incorporated on 19 September 2012 by Kar-Tess Holding. On 11 October 2012, the Company announced a voluntary share exchange offer to acquire all outstanding ordinary registered shares and all American depositary shares of Coca-Cola Hellenic Bottling Company S.A., Maroussi (GR) ('CCHBC SA'). As a result of the successful completion of this offer, on 25 April 2013 the Company acquired 96.85% of the issued CCHBC SA shares, including shares represented by American depositary shares, and became the new parent company of the Group (the Company and its direct and indirect subsidiaries). On 17 June 2015, the Company 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. # 1. Accounting principles # Accounting principles applied in the preparation of the financial statements These financial statements have been prepared in accordance with the provisions of commercial accounting as set out in the Swiss Code of Obligations (Art. 957 to 963b CO). From 1 January 2021, the Company has prepared its consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) in accordance with Art. 963b CO due to a requirement from the Athens Exchange. Its primary listing in the EU. In accordance with Art. 961 para 2. CO, the Company is presenting a cash flow statement. Significant accounting and valuation principles are described below: # Dividend income Dividend income is recognised when the right to receive payment is established. # Other operating income The Company provides management services to its principal subsidiaries and acts as guarantor to its principal subsidiary, Coca-Cola HBC Finance B.V. The income from these services is recognised in the accounting period in which the service is provided. # Exchange rates and translation The accounting records of the Company are retained in Euro and translated to Swiss Franc (CHF) for presentation purposes. Except for investments in subsidiaries, property, plant and equipment, long-term liabilities and equity, which are translated at historical rates, all assets and liabilities denominated in foreign currencies are translated into CHF using the closing exchange rate as at 31 December 2022. Income and expenses are translated into CHF at the average exchange rate of the reporting year except for dividend income and related write-down of investments (see Note 2.3) which are valued at the transaction date exchange rate. Net unrealised exchange losses are recorded in the income statement, while net unrealised exchange gains are deferred within accrued expenses. The principal exchange rates used are: | Exchange rates | Balance sheet as at | | Income statement for the year ended | | | --- | --- | --- | --- | --- | | | 31 December 2022 | 31 December 2021 | 31 December 2022 | 31 December 2021 | | EUR | 0.99 | 1.04 | 1.00 | 1.08 | | USD | 0.93 | 0.91 | – | – | | GBP | 1.12 | 1.23 | – | – | # Leasing disclosure Management has applied an economic-view approach to the disclosure of lease contracts considering the underlying usage rights. Right-of-use assets are presented within property, plant and equipment and depreciated over their useful life. The short- and long-term lease liabilities are adjusted for interest and lease payments. # Investments in subsidiaries Investments in subsidiaries are valued at historical cost and evaluated for impairment if identified triggering events occur. # Property, plant and equipment Right-of-use assets are included within property, plant and equipment. Depreciation is calculated on the basis of the following useful lives and in accordance with the following methods: | Property, plant and equipment | Useful life | Method | | --- | --- | --- | | Leasehold improvement (building) | 20 years | 5% linear | | Leasehold improvement (office infrastructure) | 10 years | 10% linear | | Building infrastructure | 12 years | 8.33% linear | | Right-of-use buildings and Company cars | Shorter of useful life and lease term | Linear | | Furniture and fixtures, office equipment and other tangible fixed assets | 8 years | 12.5% linear | | Telephony infrastructure | 7 years | 14.29% linear | | Communication equipment, computers and PCs | 4 years | 25% linear | | Tablets | 3 years | 33.33% linear | # Treasury shares Treasury shares are recognised at acquisition cost and deducted from shareholders' equity at the time of acquisition. If treasury shares are sold, the gain or loss arising is recognised in the income statement as finance income or finance cost as appropriate. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 233 Report Governance Statements Reporting Information ### Swiss statutory reporting continued As at 31 December ### 2. Information relating to the balance sheet and statement of income CHF thousands 2.1 Short-term receivables from direct and indirect participations Name of participation 2022 2021 The short-term receivables from direct and indirect participations do not bear interest. CCB Management Services GmbH, Vienna 1,162 1,724 Coca‑Cola Hellenic Business Service Organisation, Sofia 60 74 As at 31 December | | CHF thousands | Coca‑Cola HBC Switzerland Ltd 5 4 | | --- | --- | --- | | Name of participation 2022 2021 | | Coca‑Cola HBC Finance B.V., Amsterdam 1,346 1,338 | | CC Beverages Holdings II B.V., Amsterdam – 14 | | Coca‑Cola HBC Northern Ireland Limited, Lisburn 1 – | | CCB Management Services GmbH, Vienna 11,518 11,221 | | Coca‑Cola HBC Services MEPE, Athens 9 9 | | Coca‑Cola HBC Finance B.V., Amsterdam 663 606 | | Coca‑Cola HBC Hrvatska d.o.o, Zagreb 9 – | | Coca‑Cola HBC Holdings B.V., Amsterdam – 11 | | Total short-term liabilities to direct and indirect participations 2,592 3,149 | Coca‑Cola Hellenic Business Service Organisation, Sofia 130 195 As at 31 December Short-term receivables from direct and indirect participations 12,311 12,047 CHF thousands Accrued expenses 2022 2021 2.2 Receivables from related parties Direct taxes 195 188 Management incentive plan and Performance Share Plan for Receivables from related parties consist of receivables from international assignees arising mainly from ownemployees 16,590 15,871 advances paid to tax authorities. Employee‑related costs (social security and insurance, payroll taxes) 5,741 4,553 2.3 Investments in subsidiaries Provision for acquiring treasury shares to satisfy subsidiaries’ Performance Share Plan rights 11,774 7,542 As at 31 December Other accrued expenses 6,881 7,291 CHF thousands Direct subsidiary Share of capital Share of votes 2022 2021 Net unrealised gains from foreign currency translation 18,061 12,298 Coca‑Cola HBC Holdings B.V., Total accrued expenses 59,242 47,743 1 Amsterdam 100% 100% 6,710,376 6,966,457 Following the publication of circular letter 37a by the Swiss Federal Tax Administration in May 2018, the Write down of investment (265,445) (256,081) Company recognised a provision of CHF 13,636 thousand (2021: CHF 13,563 thousand) that relates Investments in subsidiaries 100% 100% 6,444,931 6,710,376 tothe Company’s employee Performance Share Plan, of which CHF 9,182 thousand (2021: CHF 6,975 1. Coca‑Cola HBC Holdings B.V., Amsterdam was incorporated on 26 June 2013. thousand) is short‑term and is disclosed in the line item ‘Management incentive plan and Performance Share Plan for own employees’; while CHF 4,454 thousand (2021: CHF 6,588 thousand) is long‑term In 2015 the Company adopted a practice of reducing the value of its investment in Coca‑Cola HBC and disclosed in Note 2.6 ‘Provisions’. The provision for acquiring treasury shares to satisfy subsidiaries’ Holdings B.V. by an amount equal to the dividend received from that subsidiary. The amount of the Performance Share Plan rights amounts to CHF 17,533 thousand (2021: CHF 16,177 thousand) of which writedown in 2022 is equal to the dividend received in 2022 from Coca‑Cola HBC Holdings B.V. ofCHF CHF 11,774 thousand (2021: CHF 7,542 thousand) is short‑term and disclosed in accrued expenses while 265,445 thousand (2021: CHF 256,081 thousand). CHF 5,759 thousand (2021: CHF 8,575 thousand) is long‑term and disclosed in Note 2.6 ‘Provisions’. The principal direct and indirect participations of the Company are disclosed in Note 16 to the consolidated financial statements. 2.4 Short-term liabilities to direct and indirect participations and accrued expenses The short-term liabilities to the direct and indirect participations do not bear interest except for the liability to Coca‑Cola HBC Finance B.V., which is interest‑bearing. 234 Strategic Report Corporate Governance Financial Statements Banks Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 # Swiss statutory reporting continued # 2. Information relating to the balance sheet and statement of income continued # 2.5 Long-term interest-bearing liabilities | | As at 31 December | | | --- | --- | --- | | | CHF thousands | 2022 | | Coca-Cola HBC Finance B.V. Amsterdam | 200,326 | 204,482 | | **Long-term interest-bearing liabilities** | **200,326** | **204,482** | Long-term interest-bearing liabilities comprise loans from Coca-Cola HBC Finance B.V. received in 2019, 2020, 2021 and 2022 of CHF 169,007 thousand (2021: CHF 184,637 thousand) maturing on 8 November 2024, and CHF 31,319 thousand (2021: CHF 19,846 thousand) maturing on 21 November 2029. # 2.6 Provisions | | As at 31 December | | | --- | --- | --- | | | CHF thousands | 2022 | | Long-term Incentive Plan | 547 | 330 | | Provision for acquiring treasury shares to satisfy subsidiaries^{1} | | | | Performance Share Plan rights (refer to Note 2.4) | 5,759 | 8,575 | | Performance and Management incentive share plan – Coca-Cola HBC AG employees (refer to Note 2.4) | 4,902 | 6,588 | | Provision for social security costs of Performance Share Plan | 334 | 494 | | **Provisions** | **11,542** | **15,987** | # 2.7 Share capital | | Number of shares | Nominal value | Total | | --- | --- | --- | --- | | | | CHF | CHF thousands | | Share capital as at 1 January 2021 | 370,512,597 | 6.70 | 2,482,434 | | Shares issued to employees exercising stock options | 1,282,821 | 6.70 | 8,595 | | **Share capital as at 31 December 2021** | **371,795,418** | **6.70** | **2,491,029** | | | Number of shares | Nominal value | Total | | | | CHF | CHF thousands | | Share capital as at 1 January 2022 | 371,795,418 | 6.70 | 2,491,029 | | Shares issued to employees exercising stock options | 290,677 | 6.70 | 1,948 | | **Share capital as at 31 December 2022** | **372,086,095** | **6.70** | **2,492,977** | # 2.8 Treasury shares The number of treasury shares held by Coca-Cola HBC AG and its subsidiaries qualifying under article 659b Swiss Code of Obligations and their movements are as follows: | Treasury shares (held by subsidiaries) | Number of shares | Acquisition cost per share | Total | | --- | --- | --- | --- | | | | CHF | CHF thousands | | Total treasury shares as at 31 December 2021 | 3,430,135 | 24.8673 | 85,298 | | **Total treasury shares as at 31 December 2022** | **3,430,135** | **24.8673** | **85,298** | | Treasury shares held by the Company | Number of shares | Acquisition cost per share | Total | | | | CHF | CHF thousands | | **Treasury shares held by the Company as at 1 January 2021** | **2,759,280** | **35.4115** | **(97,710)** | | Vested PSP shares^{1} | (294,832) | 34.6160 | 10,206 | | **Treasury shares held by the Company as at 31 December 2021** | **2,464,448** | **35.5066** | **(87,504)** | | Treasury shares held by the Company as at 1 January 2022 | 2,464,448 | 35.5066 | (87,504) | | Vested PSP and MIP shares^{2} | (507,866) | 34.4375 | 17,490 | | **Treasury shares held by the Company as at 31 December 2022** | **1,956,582** | **35.7836** | **(70,014)** | 1. In April 2021, following the vesting of the 2018 PSP plan, 294,832 treasury shares were transferred to relevant participants. 2. In January 2022, following the vesting of the 2019 MIP plan, 7,717 treasury shares were transferred to the relevant participant. In April 2022, following the vesting of the 2019 PSP plan, 500,149 treasury shares were transferred to relevant participants. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 235 Report Governance Statements Reporting Information ### Swiss statutory reporting continued Management fees relate to service income earned from services provided to the Company’s direct ### 2. Information relating to the balance sheet and statement of income andindirect participations, whereof CHF 2,729 thousand (2021: CHF 3,431 thousand) is true‑up from ### continued prior year. 2.9 Shareholders’ equity Guarantee fee is the income the Company receives for the services provided as guarantor to Coca-Cola Retained HBC Finance B.V. and Nigerian Bottling Company Ltd. earnings / (accumulated Treasury 2.11 Employee costs | | Share capital Legal capital reserves | | | | | | losses) | shares Total | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Reserves from | | Reserves for | | | | | | 2022 2021 | | | | | capital | | treasury | | | | | | | | | | | | | 1 | | | | CHF thousands | | | | contributions | | | shares | | | | | | | | | | | | CHF thousands | | | | Wages and salaries 17,287 21,422 | | | Balance as at | | | | | | | | | Social security costs 2,705 3,172 | | | 1January2021 2,482,434 4,229,620 85,298 18,260 (97,710) 6,717,902 | | | | | | | | | Pensions and employee benefits 17,845 23,684 | | | Shares issued to | | | | | | | | | Total employee costs 37,837 48,278 | | employees exercising Pension and employee benefits include Performance Share Plan expenses for CCHBC AG employees in stock options 8,595 12,708 – – – 21,303 the amount of CHF 7,121 thousand (2021: CHF 18,999 thousand). Refer to Note 2.4 for more information. Dividends – (260,250) – – – (260,250) Vested PSP shares – – – – 10,206 10,206 2.12 Other operating expenses Loss for the year – – – (33,852) – (33,852) Other operating expenses amounting to CHF 16,809 thousand for 2022 (2021: CHF 16,585 thousand) Balance as at 31 mainly include CHF 11,506 thousand (2021: CHF 14,352 thousand) for management fees to CCB December 2021 2,491,029 3,982,078 85,298 (15,592) (87,504) 6,455,309 Management Services GmbH, whereof CHF 220 thousand (2021: 1,121 thousand) is true‑up fromprioryear. Balance as at ### 1January2022 2,491,029 3,982,078 85,298 (15,592) (87,504) 6,455,309 3. Other information Shares issued to 3.1 Net release of hidden reserves employees exercising No hidden reserves were released for the years ended 31 December 2022 or 31 December 2021. stock options 1,948 2,590 – – – 4,538 2 | Dividends | – (263,551) – – – (263,551) | 3.2 Number of employees | | --- | --- | --- | | Vested PSP and MIP | | In 2022 and 2021 on an annual average basis, the number of full-time-equivalent employees | | shares – – – – 17,490 17,490 | | didnotexceed 50. | Loss for the year – – – (23,849) – (23,849) 3.3 Contingent liabilities Balance as at Euro medium-term note programme 31December 2022 2,492,977 3,721,117 85,298 (39,441) (70,014) 6,189,937 In June 2013, the Group established a new €3.0 billion Euro medium‑term note programme (the ‘EMTN 1. Represents the book value of treasury shares held by subsidiaries. programme’). The EMTN programme was updated in September 2014, September 2015 and April 2. On 21 June 2022 the shareholders of the Company at the Annual General Meeting approved the distribution of a gross dividend 2019, when it was increased to €5.0 billion. The EMTN programme was further updated in April 2020, of€0.71 (2021: €0.64) on each ordinary registered share. The dividend was paid on 2 August 2022 and amounted to CHF 263,551 thousand (2021: CHF 260,250 thousand, paid 3 August 2021). September 2021 and September 2022. Notes are issued under the EMTN programme through the Company’s wholly‑owned subsidiary Coca‑Cola HBC Finance B.V., a private limited liability company 2.10 Other operating income established under the laws of the Netherlands, and are fully, unconditionally and irrevocably guaranteed 2022 2021 by the Company. CHF thousands In March 2016, Coca‑Cola HBC Finance B.V. issued €600 million, 1.875% Euro‑denominated notes due Management fees 33,348 35,488 inNovember 2024, which are guaranteed by the Company. Guarantee fee 2,758 2,832 Total other operating income 36,106 38,320 236 Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 ## Swiss statutory reporting continued ### 3. Other information continued In May 2019, Coca-Cola HBC Finance B.V. issued €700 million, 1%, Euro-denominated notes due in May 2027 and also issued €600 million, 1.625%, Euro-denominated notes due in May 2031, which are guaranteed by the Company. In November 2019, Coca-Cola HBC Finance B.V. completed the issue of a €500 million, Euro-denominated fixed rate bond maturing in November 2029, with a coupon rate of 0.625%, which is guaranteed by the Company. In September 2022, Coca-Cola HBC Finance B.V. issued €500 million, 2.75%, green Euro-denominated notes due in September 2025, which are guaranteed by the Company. As at 31 December 2022, a total of €2.9 billion (2021: €2.4 billion) in notes issued under the EMTN programme were outstanding. #### Committed credit facilities In April 2019, the Group updated its then-existing €500.0 million syndicated revolving credit facility (the 'RCF'), which was set to expire in June 2021. The updated RCF was increased to €800.0 million and extended to April 2024 with the option to be further extended for up to two years until April 2026. Coca-Cola HBC Finance B.V. exercised its extension option and the RCF has been extended to April 2026. The RCF can be used for general corporate purposes and carries floating interest rates. No amounts have been drawn under the RCF since its inception. The borrower under the RCF is the Company's wholly-owned subsidiary Coca-Cola HBC Finance B.V. and any amounts drawn under the RCF are fully, unconditionally and irrevocably guaranteed by the Company. #### Commercial paper programme In October 2013 the Group established a new €1.0 billion Euro commercial paper programme (the 'ECP Programme'). The ECP Programme was updated in September 2014, May 2017 and May 2020. Notes are issued under the ECP Programme by Coca-Cola HBC Finance B.V. and guaranteed by the Company. The outstanding amount under the ECP Programme was €168 million as at 31 December 2022 (2021: €235 million). #### Nigerian Bottling Company Ltd In December 2019 the Group established an amortising loan facility of US Dollar 85 million with maturity in December 2027. The purpose of the facility is to finance the purchase of production equipment by Nigerian Bottling Company Ltd., the Group's subsidiary in Nigeria. Over the course of 2020 and 2021, the facility has been drawn down for approximately US Dollar 78 million. The obligations under this facility are guaranteed by the Company. The outstanding amount under the loan facility was €59 million as at 31 December 2022 (2021: €63 million). #### Credit support provider On 18 July 2013, the Company signed as credit support provider to J.P. Morgan Securities plc, Credit Suisse International, Credit Suisse AG, ING Bank N.V., Societe Generale, Merrill Lynch International and The Royal Bank of Scotland plc in favour of Coca-Cola HBC Finance B.V. for the obligations as defined in the ISDA Master Agreements.¹ On 24 July 2013, the Company signed as credit support provider to the Governor and Company of the Bank of Ireland, in favour of Coca-Cola HBC Finance B.V. for the obligations as defined in the ISDA Master Agreement.¹ On 8 August 2013, the Company signed as credit support provider to Citibank N.A. in favour of CCHBC Bulgaria AD for the obligations as defined in the ISDA Master Agreement.¹ On 8 August 2013, the Company signed as credit support provider to Citibank N.A. in favour of Coca-Cola HBC Finance B.V. for the obligations as defined in the ISDA Master Agreement.¹ On 24 June 2014, the Company signed as credit support provider to Intesa Sanpaolo S.p.A. in favour of Coca-Cola HBC Finance B.V. for the obligations as defined in the ISDA Master Agreement.¹ On 5 October 2015, the Company signed as credit support provider to Macquarie Bank International Limited in favour of Coca-Cola HBC Finance B.V. for the obligations as defined in the ISDA Master Agreement.¹ On 22 June 2016, the Company signed as credit support provider to UniCredit Bank AG in favour of Coca-Cola HBC Finance B.V. for the obligations as defined in the ISDA Master Agreement.¹ On 31 August 2016, the Company signed as credit support provider to BNP Paribas in favour of Coca-Cola HBC Finance B.V. for the obligations as defined in the ISDA Master Agreement.¹ On 1 November 2017, the Company signed as credit support provider to Goldman Sachs Global International in favour of Coca-Cola HBC Finance B.V. for the obligations as defined in the ISDA Master Agreement.¹ On 22 December 2017, the Company signed as credit support provider to Citigroup Global Markets Limited in favour of Coca-Cola HBC Finance B.V. for the obligations as defined in the ISDA Master Agreement.¹ On 14 February 2018, the Company signed as credit support provider to Morgan Stanley & Co. International PLC in favour of Coca-Cola HBC Finance B.V. for the obligations as defined in the ISDA Master Agreement.¹ On 25 March 2019, the Company signed as credit support provider to Citigroup Global Markets Europe AG in favour of Coca-Cola HBC Finance B.V. for the obligations as defined in the ISDA Master Agreement.¹ On 1 July 2019, the Company signed as credit support provider to Credit Suisse Securities, Sociedad de Valores, S.A. in favour of Coca-Cola HBC Finance B.V. for the obligations as defined in the ISDA Master Agreement.¹ On 10 July 2019, the Company signed as credit support provider to Macquarie Bank Limited (London Branch) in favour of Coca-Cola HBC Finance B.V. for the obligations as defined in the ISDA Master Agreement.¹ ![img-17.jpeg](img-17.jpeg) Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 237 Report Governance Statements Reporting Information ### Swiss statutory reporting continued ### 3. Other information continued 3.5 Shareholdings, conversion and option rights The table below sets out a comparison of the interests in the Company’s total issued share capital that On 12 November 2019, the Company signed as credit support provider to UBS AG in favour 1 the members of the Board of Directors (‘Directors’) and Executive Leadership Team hold (all of which, ofCoca‑Cola HBC Finance B.V. for the obligations as defined in the ISDA Master Agreement. unless otherwise stated, are beneficial interests or are interests of a person connected with a Director On 2 November 2020, the Company signed as credit support provider to J.P. Morgan AG in favour of or a member of the Executive Leadership Team) and the interests in the Company’s share capital. 1 Coca‑Cola HBC Finance B.V. for the obligations as defined in the ISDA Master Agreement. 31.12.2022 31.12.2021 | On 13 November 2020, the Company signed as credit support provider to Goldman Sachs Bank Europe | | | | | Percentage of | | | Percentage of | | | | Percentage of | | | Percentage of | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 1 | | Number of | | issued share | | | outstanding | | Number of | | issued share | | | outstanding | | | SE in favour of Coca‑Cola HBC Finance B.V. for the obligations as defined in the ISDA Master Agreement. | | | | | | | 1 | | 2 | | | | | 1 | | 2 | | | | | | shares | | capital | | share capital | | | shares | | capital | | share capital | | | On 5 May 2022 and then on 26 September 2022, the Company signed as credit support provider to | | Directors | | | | | | | | | | | | | | | 3 Citibank Nigeria Limited in favour ofNigerian Bottling Company Ltd for the obligations as defined in the Anastassis G. David – – – – – – 2 Treasury Master Agreement. Zoran Bogdanovic 299,614 0.08% 0.08% 193,729 0.05% 0.05% 1. The ISDA (International Swap Dealers Association) Master Agreement is a standardised form issued by the International Swap Charlotte J. Boyle 1,017 0.00% 0.00% 1,017 0.00% 0.00% Dealers Association Inc. to be used for credit support transactions. Henrique Braun – – – – – – 2. The Treasury Master Agreement is an agreement between Nigerian Bottling Company Ltd and Citibank Nigeria describing general terms and conditions regulating their relationship in regard to foreign currency transactions. Olusola (Sola) David-Borha – – – – – – 3.4 Significant shareholders Anna Diamantopoulou – – – – – – As at 31 December 2022 and 2021, there were two shareholders exceeding the threshold of 5% voting William W. (Bill) Douglas III 10,000 0.00% 0.00% 10,000 0.00% 0.00% rights in the Company’s share capital. Reto Francioni 7,000 0.00% 0.00% 7,000 0.00% 0.00% | Percentage of | Percentage of | | 4 | | | --- | --- | --- | --- | --- | | | | Anastasios I. Leventis | | – – – – – – | | issued share | issued share | | | | 5 | | Date Number of shares | capital | 1 | capital | 2 | Christo Leventis | | – – – – – – | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Total Kar‑Tess Holding 31.12.2021 85,355,019 23.0% 23.3% | | | | | | Alexandra | | | | | | | | | Total Kar‑Tess Holding 31.12.2022 85,355,019 22.9% 23.3% | | | | | | Papalexopoulou – – – – – – | | | | | | | | | Total shareholdings related to | | | | | | Bruno Pietracci – – – – – – | | | | | | | | | TheCoca‑Cola Company 31.12.2021 78,252,731 21.0% 21.4% | | | | | | Ryan Rudolph – – – – – – | | | | | | | | | Total shareholdings related to | | | | | | | | | Percentage of | Percentage of | | Percentage of | Percentage of | | | | | | | | | Number of | | issued share | outstanding | Number of | issued share | outstanding | TheCoca‑Cola Company 31.12.2022 78,252,731 21.0% 21.3% shares capital 1 share capital 2 shares capital 1 share capital 2 1. Basis: total issued share capital including treasury shares. Share basis 372,086,095 as at 31 December 2022 (2021:371,795,418). Executive Leadership 2. Basis: total issued share capital excluding treasury shares. Share basis 366,699,378 as at December 2022 (2021: 365,900,835). Team Minas Agelidis 66,836 0.02% 0.02% 50,112 0.01% 0.01% Mourad Ajarti 16,858 0.00% 0.00% 12,496 0.00% 0.00% Ben Almanzar 11,482 0.00% 0.00% 636 0.00% 0.00% 6 Ivo Bjelis 38,508 0.01% 0.01% – – – Jan Gustavsson 196,868 0.05% 0.05% 169,298 0.05% 0.05% Nikos Kalaitzidakis 62,587 0.02% 0.02% 44,286 0.01% 0.01% Naya Kalogeraki 69,301 0.02% 0.02% 49,127 0.01% 0.01% Martin Marcel 128,434 0.03% 0.04% 102,403 0.03% 0.03% Spyros Mello 47,638 0.01% 0.01% 37,055 0.01% 0.01% Vitaliy Novikov 47,488 0.01% 0.01% 29,818 0.01% 0.01% 7 Sean O’Neil – – – 3,132 0.00% 0.00% Sanda Parezanovic 98,285 0.03% 0.03% 80,442 0.02% 0.02% Barbara Tönz 4,176 0.00% 0.00% 3,020 0.00% 0.00% Footnotes are presented at the end of Note 3.5. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 238 Report Governance Statements Reporting Information ### Swiss statutory reporting continued ### 3. Other information continued 3.6 Fees paid to the auditor The audit and other fees paid to the auditor are disclosed in Note 9 to the consolidated The following table sets out information regarding the stock options and performance shares held by financialstatements. members of the Executive Leadership Team as at 31 December 2022: 3.7 Conditional capital Stock options (‘ESOP’) Performance shares (‘PSP’) Unvested and On 25 April 2013, the shareholders’ meeting agreed to the creation of conditional capital in the subject to maximum amount of CHF 245,601 thousand, through issuance of a maximum of 36,657 thousand fully | | | | Number of | | Vesting at the | Granted in | | performance | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | stock options Already vested | | end of 2022 | | 2022 | conditions Vested | paid‑in registered shares with a par value of CHF 6.70 each upon exercise of options issued to members | | | | | | | | 8 | | | | | | | of the Board of Directors, members of the management, employees or advisers of the Company, its | | | | | | Zoran Bogdanovic | | | 132,743 132,743 – 144,826 380,685 69,759 | | | | | | | | | | | | Minas Agelidis – – – 28,807 74,108 13,808 | | | | | | | | | subsidiaries and other affiliated companies. The share capital of CHF 2,492,977 thousand as disclosed | | | | | | Mourad Ajarti – – – 21,988 58,317 – | | | | | | | | | in the balance sheet differs from the share capital in the commercial register of CHF 2,491,029 | | | | | | Ben Almanzar – – – 36,724 71,818 7,612 | | | | | | | | | thousand as at 31 December 2022 due to the exercise of management options in the course of | | | | | | | 6 | | | | | | | | financial year 2022. | | | | | | Ivo Bjelis | | | | – – – 25,327 50,767 7,472 | | | | | | | | | | | Jan Gustavsson 199,658 199,658 – 37,357 98,372 18,639 | | | | | | | | | | Number | Book value per | | Total CHF | | | | | | | | | | | Conditional capital | ofshares | | share CHF | thousand | Nikos Kalaitzidakis 11,680 11,680 – 28,807 75,676 13,808 Agreed conditional capital as per shareholders’ meeting Naya Kalogeraki 37,166 37,166 – 57,256 128,638 15,782 on25April 2013 36,656,843 6.70 245,601 Martin Marcel 7,103 7,103 – 32,591 85,250 16,098 Shares issued to employees exercising stock options until Spyros Mello – – – 20,624 47,322 8,076 31December 2016 (3,149,493) 6.70 (21,102) Vitaliy Novikov 15,927 15,927 – 28,158 68,140 10,652 7 Shares issued to employees exercising stock options in 2017 (4,122,401) 6.70 (27,620) Sean O’Neil – – – 601 – 9,721 Shares issued to employees exercising stock options in 2018 (1,064,190) 6.70 (7,130) Sanda Parezanovic 10,618 10,618 – 29,878 78,490 14,795 Shares issued to employees exercising stock options in 2019 (1,352,731) 6.70 (9,063) Barbara Tönz – – – 23,769 23,769 – Shares issued to employees exercising stock options in 2020 (582,440) 6.70 (3,902) 1. Basis: total issued share capital including treasury shares. Share basis 372,086,095 as at 31 December 2022 (2021: 371,795,418). Shares issued to employees exercising stock options in 2021 (1,282,821) 6.70 (8,595) 2. Basis: total issued share capital excluding treasury shares. Share basis 366,699,378 as at 31 December 2022 (2021: 365,900,835). 3. Anastassis G. David is a beneficiary of: Remaining conditional capital as at 31 December 2021 25,102,767 6.70 168,189 (a) a private discretionary trust, for the primary benefit of present and future members of the family of the late Anastasios George Shares issued to employees exercising stock options in 2022 (290,677) 6.70 (1,948) Leventis, that has an indirect interest with respect to 85,355,019 shares held by Kar‑Tess Holding and (b) a further private discretionary trust, for the primary benefit of present and future members of the family of the late Anastasios Remaining conditional capital as at 31 December 2022 24,812,090 6.70 166,241 George Leventis, that has an indirect interest with respect to 832,268 shares held by Ari Holdings Limited. 4. Anastasios I. Leventis is a beneficiary of: (a) a private discretionary trust, for the primary benefit of present and future members of the family of the late Anastasios George ### 4. Subsequent events Leventis, that has an indirect interest with respect to 85,355,019 shares held by Kar‑Tess Holding and (b) a further private discretionary trust, for the primary benefit of present and future members of the family of the late Anastasios The subsequent events in relation to financial year ended 31 December 2022 are disclosed in Note 32 George Leventis, that has an indirect interest with respect to 286,880 shares held by its trustee, Selene Treuhand AG and to the consolidated financial statements. (c) a further private discretionary trust, for the primary benefit of present and future members of the family of the late Avgie Leventis, that has an indirect interest with respect to 2,138,277 shares held by Carlcan Holding Limited. 5. Christo Leventis is a beneficiary of: (a) a private discretionary trust, for the primary benefit of present and future members of the family of the late Anastasios George Leventis, that has an indirect interest with respect to 85,355,019 shares held by Kar‑Tess Holding and (b) a further private discretionary trust, for the primary benefit of present and future members of the family of the late Anastasios George Leventis, that has an indirect interest with respect to 482,228 shares held by its trustee, Selene Treuhand AG and (c) a further private discretionary trust, for the primary benefit of present and future members of the family of the late Avgie Leventis, that has an indirect interest with respect to 2,138,277 shares held by Carlcan Holding Limited. 6. Mr. Ivo Bjelis joined the Executive Leadership Team on 1 January 2022. 7. Mr. Sean O’Neil’ s employment ceased on 31 March 2022. 8. The Remuneration Committee determined at its meeting in 17 March 2023 that, in line with the terms of the PSP, PSP awards granted to Zoran Bogdanovic in 2020 vested over in aggregate 75,777 shares (including the dividend equivalent shares paid on PSP shares that vested in 2023). Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 239 Swiss statutory reporting continued ## Proposed appropriation of available earnings and reserves/declaration of dividend ### 1. Total available reserves | Available earnings and reserves | CHF thousands | | --- | --- | | Balance brought forward from previous years | (15,592) | | Net loss for the year | (23,849) | | **Total accumulated losses to be carried forward** | **(39,441)** | | Reserves from capital contributions before distribution | 3,721,117 | | --- | --- | | **Total available reserves** | **3,681,676** | | --- | --- | ### 2. Proposed declaration of dividend from reserves The Board of Directors proposes to declare a gross dividend of €0.78 on each ordinary registered share with a par value of CHF 6.70 from the general capital contribution reserve. Own shares held directly by the Company are not entitled to dividends. The total aggregate amount of the dividends shall be capped at an amount of CHF 300,000 thousand (the 'Cap'), and thus will reduce the general capital contribution reserve of CHF 3,721,117 thousand, as shown in the financial statements as at 31 December 2022, by a maximum of CHF 300,000 thousand. To the extent that the dividend calculated on €0.78 per share would exceed the Cap on the day of the Annual General Meeting, due to the exchange rate determined by the Board of Directors in its reasonable opinion, the Euro per share amount of the dividend shall be reduced on a pro-rata basis so that the aggregate amount of all dividends paid does not exceed the Cap. Payment of the dividend shall be made at such time and with such record date as shall be determined by the Annual General Meeting and the Board of Directors. ### 3. Proposed appropriation of reserves/declaration of dividend #### Variant 1: Dividend of €0.78 at current exchange rate | As of 31 December 2022 | CHF thousands | | --- | --- | | Reserves from capital contributions before distribution | 3,721,117 | | Proposed dividend of €0.78^{2} | (288,701) | | **Reserves from capital contributions after distribution** | **3,432,416** | #### Variant 2: Dividend if Cap is triggered | As of 31 December 2022 | CHF thousands | | --- | --- | | Reserves from capital contributions before distribution | 3,721,117 | | (Maximum) dividend if cap is triggered^{2} | (300,000) | | **(Minimum) Reserves from capital contributions after distribution** | **3,421,117** | 1. Buttrative at an exchange rate of CHF 1.00 per EUR. Assumes that the shares entitled to a dividend amount to $70,128,513. 2. Dividend is capped at a total aggregate amount of CHF 300,000 thousand. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 240 Report Governance Statements Reporting Information ### Report on the audit of the remuneration report 2022 In connection with our audit of the remuneration report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the audited financial information in the remuneration report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this Report of the statutory auditor other information, we are required to report that fact. We have nothing to report in this regard. to the General Meeting of Coca‑Cola HBC AG ### Board of Directors’ responsibilities for the remuneration report Steinhausen (Zug) The Board of Directors is responsible for the preparation of a remuneration report in accordance with the provisions of Swiss law and the company’s articles of incorporation, and for such internal control Report on the audit of the remuneration report 2022 asthe Board of Directors determines is necessary to enable the preparation of a remuneration report that is free from material misstatement, whether due to fraud or error. The Board of Directors is also responsible for designing the remuneration system and defining individual remuneration packages. ### Opinion We have audited the remuneration report of Coca‑Cola HBC AG (the Company) for the year ended ### Auditor’s responsibilities for the audit of the remuneration report 31December 2022. The audit was limited to the information on remuneration, loans and advances pursuant to Art. 14 to 16 of the Ordinance against Excessive Remuneration in Listed Companies Our objectives are to obtain reasonable assurance about whether the information on remuneration, Limited by Shares (Ordinance) on pages 242 to 244 of the remuneration report. loans and advances pursuant to article 14 to 16 of the Ordinance is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable In our opinion, the information on remuneration, loans and advances in the remuneration report assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with complies with Swiss law and article 14 to 16 of the Ordinance. Swiss law and SA‑CH will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably Basis for opinion be expected to influence the economic decisions of users taken on the basis of this remuneration report. We conducted our audit in accordance with Swiss law and Swiss Standards on Auditing (SA‑CH). As part of an audit in accordance with Swiss law and SA‑CH, we exercise professional judgment and Ourresponsibilities under those provisions and standards are further described in the ‘Auditor’s maintain professional scepticism throughout the audit. We also: responsibilities for the audit of the remuneration report’ section of our report. We are independent of • Identify and assess the risks of material misstatement in the remuneration report, whether due the Company in accordance with the provisions of Swiss law and the requirements of the Swiss audit tofraud or error, design and perform audit procedures responsive to those risks, and obtain audit profession, and we have fulfilled our other ethical responsibilities in accordance with these evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting requirements. a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. forour opinion. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the ### Other information effectiveness of the Company’s internal control. The Board of Directors is responsible for the other information. The other information comprises • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting theinformation included in the annual report, but does not include the statutory remuneration report, estimates and related disclosures made. the consolidated financial statements, the financial statements and our auditor’s reports thereon. Our opinion on the remuneration report does not cover the other information and we do not express any form of assurance conclusion thereon. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 241 Report Governance Statements Reporting Information ### Report on the audit of the remuneration report 2022 continued We communicate with the Board of Directors or its relevant committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the Board of Directors or its relevant committee with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them allrelationships and other matters that may reasonably be thought to bear on our independence, andwhere applicable, actions taken to eliminate threats or safeguards applied. PricewaterhouseCoopers AG Sandra Boehm Uglow Tobias Handschin Licensed audit expert Licensed audit expert Auditor in charge Zurich, 20 March 2023 Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 242 Report Governance Statements Reporting Information ### Swiss statutory reporting continued ## Statutory Remuneration Report Remuneration of the Board of Directors 2022 CHF Pension Total fair ### Additional disclosures regarding the Statutory Remuneration Report Cash and Cash andpost- valueof stock non-cash performance employment options at the Total The section below is in line with the Ordinance against Excessive Compensation in Listed Stock Fees benefits 1 incentives benefits date granted compensation Companies, which requires disclosure of the elements of compensation paid to the Company’s Board Anastassis G. David 151,215 – – – – 151,215 of Directors and the Executive Leadership Team (formerly known as the Operating Committee). The 2 Zoran Bogdanovic – – – – – – amounts relate to the calendar years of 2022 and 2021. In the information presented below, the Charlotte J. Boyle 102,322 – – – – 102,322 exchange rate used for conversion of 2022 remuneration data from Euro to CHF is 1/1.0081 and the 3 Henrique Braun 82,664 – – – – 82,664 exchange rate used for conversion of 2021 remuneration data from Euro to CHF is 1/1.0833. Olusola (Sola) As the Company is headquartered in Switzerland, it is required for statutory purposes to present 4 | | David-Borha | | 98,794 – – – – 98,794 | | --- | --- | --- | --- | | compensation data for two consecutive years, 2022 and 2021. The applicable methodology used to | | 5 | | | | Anna Diamantopoulou | | 102,322 – – – – 102,322 | calculate the value of stock option and performance shares follows Swiss Standards. In 2022 and 2021, William W. (Bill) Douglas III 114,923 – – – – 114,923 the fair value of performance shares from the 2022 and 2021 grants is calculated based on the 6 Reto Francioni 120,468 – – – – 120,468 performance share awards that are expected to vest. Below is the relevant information for Swiss Anastasios I. Leventis 95,770 – – – – 95,770 statutory purposes. Christo Leventis 82,664 – – – – 82,664 The Statutory Remuneration Report should be read in conjunction with the Directors’ remuneration Alexandra report presented in the Integrated Annual Report as the qualitative aspects of remuneration policy are Papalexopoulou 98,794 – – – – 98,794 7 described therein. Bruno Pietracci 89,217 – – – – 89,217 8 Ryan Rudolph 82,664 – – – – 82,664 Total Board of Directors 1,221,817 – – – – 1,221,817 ### Remuneration for acting members of governing bodies The Company’s Directors believe that the level of remuneration offered to Directors and the members 1. Cash and non-cash benefits consist of cost-of-living allowance, housing support, Employee Stock Purchase Plan, Private Medical Insurance, Relocation Expenses, Home Trip Allowance, lump sum expenses and similar allowances. of the Executive Leadership Team should reflect their experience and responsibility as determined by, 2. Zoran Bogdanovic’s compensation was based on his role as CEO, member of the Executive Leadership Team, and his employment among other factors, a comparison with similar multinational companies and should be sufficient to agreement. Zoran Bogdanovic was not entitled to and did not receive additional compensation as a Director. 3. For Henrique Braun, on top of his fees, the Group paid CHF 6,639 in social security contributions as required by Swiss legislation. attract and retain high-calibre Directors who will lead the Group successfully. In line with the Group’s 4. For Olusola (Sola) David‑Borha, on top of her fees, the Group paid CHF 7,935 in social security contributions as required commitment to maximise shareholder value, its policy is to link a significant proportion of remuneration bySwisslegislation. for its Executive Leadership Team to the performance of the business through short- and long-term 5. For Anna Diamantopoulou, on top of her fees, the Group paid CHF 8,218 in social security contributions as required bySwisslegislation. incentives. Therefore, the Executive Leadership Team members’ financial interests are closely aligned 6. For Reto Francioni, on top of his fees, the Group paid CHF 7,180 in social security contributions as required by Swiss legislation. with those of the Company’s shareholders through the equity-related long-term compensation plan. 7. For Bruno Pietracci, on top of his fees, the Group paid CHF 7,166 in social security contributions as required by Swiss legislation. 8. For Ryan Rudolph, on top of his fees, the Group paid CHF 6,639 in social security contributions as required by Swiss legislation. The total remuneration of the Directors and members of the Executive Leadership Team of the Non-Executive Directors do not participate in any of the Group’s incentive plans, nor do they receive Company, including performance share grants, during 2022 amounted to CHF 24.5 million (2021: any retirement benefits. CHF27.6 million). Out of this, the amount relating to the expected value of performance share awards granted in relation to 2022 was CHF 5.4 million (2021: CHF 5.5 million). Pension and post‑employment benefits for Directors and the Executive Leadership Team of the Company during 2022 amounted to CHF 1.0 million (2021: CHF 1.0 million). Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 243 Report Governance Statements Reporting Information ### Swiss statutory reporting continued | Remuneration of the Board of Directors | | | | Remuneration of the Executive Leadership Team | | --- | --- | --- | --- | --- | | | 2021 CHF | | | The total remuneration of the Executive Leadership Team for 2022 amounted to CHF 23.3 million. | | | | Pension | Total fair | | 2022 CHF | | | Cash and | | | Cash | andpost‑ | valueof stock | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | non-cash | | performance | | employment | options at the | | Total | | | | | | | Pension | Total fair value | | | | | | Fees | benefits | 1 | incentives | | benefits | date granted | compensation | | | | Cash and | | | | andpost- | of performance | | | | | | | | | | | | | | | | | non-cash | | | employment | | shares at the | | | Total | | Anastassis G. David 79,623 – – – – 79,623 | | | | | | | | | | | 1 | | 2 | 3 | | | 4 | 5 | | | | | | | | | | | | | | Base salary | | benefits | Annual bonus | | | benefits | date granted | | remuneration | | 2 Zoran Bogdanovic – – – – – – Zoran Bogdanovic, | Charlotte J. Boyle 98,472 – – – – 98,472 | | | ChiefExecutive Officer 838,403 505,119 782,074 151,642 1,491,207 3,768,445 | | | | | --- | --- | --- | --- | --- | --- | --- | | | 3 | | | | 6 | | | Henrique Braun | | 39,811 – – – – 39,811 | Other current members | | | 5,048,967 4,958,833 3,878,814 798,359 3,860,787 18,545,760 | | Olusola (Sola) | | | | 7 | | | | | | | Former members | | | 591,015 351,225 0 17,319 – 959,559 | 4 David-Borha 95,330 – – – – 95,330 Total Executive 5 Anna Diamantopoulou 98,472 – – – – 98,472 Leadership Team 6,478,385 5,815,177 4,660,888 967,320 5,351,994 23,273,764 William W. (Bill) Douglas III 110,930 – – – – 110,930 6 1. Base salary includes non-compete payments in 2022 to former members of the Executive Leadership Team. Reto Francioni 115,588 – – – – 115,588 2. Cash and non-cash benefits consist of cost-of-living allowance, housing support, schooling, employee share purchase plan, private Anastasios I. Leventis 92,189 – – – – 92,189 medical insurance, relocation expenses, home trip allowance, employer social security contributions, lump sum expenses, all paid and unpaid sign-on bonuses, equalisation amounts and similar allowances. Christo Leventis 79,623 – – – – 79,623 3. The annual bonus for 2022 includes the accrued Management Incentive Plan (MIP) payout, receivable early in 2023 for the 2022 Alexandra business performance, including amounts deferred in shares, employer social security contributions and gross-up for the tax benefit, of CHF 4,660,888. The monetary value that was paid in 2022 under the MIP reflecting the 2021 business performance is Papalexopoulou 95,330 – – – – 95,330 approx. CHF 5,897,852. 7 | Bruno Pietracci | | | 42,953 – – – – 42,953 | 4. Members of the Executive Leadership Team participate in the pension plan of their employing entity, as appropriate. | | --- | --- | --- | --- | --- | | | | 8 | | 5. Values under long-term incentives represent the fair value of performance shares that are expected to vest for the 2022 grant | | José Octavio Reyes | | | 42,953 – – – – 42,953 | | | | 9 | | | inorder to comply with Swiss reporting guidelines. | | Alfredo Rivera | | | 39,811 – – – – 39,811 | | 6. Ivo Bjelis was appointed to the role of Chief Supply Chain Officer on 1 January 2022. 10 7. Sean O’Neil’ s employment ceased on 31 March 2022. Ryan Rudolph 79,623 – – – – 79,623 Total Board of Directors 1,110,708 – – – – 1,110,708 1. Cash and non-cash benefits consist of cost-of-living allowance, housing support, Employee Stock Purchase Plan, Private Medical Insurance, Relocation Expenses, Home Trip Allowance, lump sum expenses and similar allowances. 2. Zoran Bogdanovic’s compensation was based on his role as CEO, member of the Executive Leadership Team, and his employment agreement. Zoran Bogdanovic was not entitled to and did not receive additional compensation as a Director. 3. Henrique Braun was appointed to the Board of Directors on 22 June 2021. The Group has applied a half‑year period fee of CHF39,811. On top of his fees, the Group paid CHF 3,237 in social security contributions as required by Swiss legislation. 4. For Olusola (Sola) David‑Borha, on top of her fees, the Group paid CHF 7,752 in social security contributions as required bySwisslegislation. 5. For Anna Diamantopoulou, on top of her fees, the Group paid CHF 8,008 in social security contributions as required bySwisslegislation. 6. For Reto Francioni, on top of his fees, the Group paid CHF 6,932 in social security contributions as required by Swiss legislation. 7. For Bruno Pietracci was appointed to the Board of Directors on 22 June 2021. The Group has applied a half-year period fee ofCHF42,953. On top of his fees, the Group paid CHF 3,493 in social security contributions as required by Swiss legislation. 8. José Octavio Reyes retired from the Board of Directors on 22 June 2021. The Group has applied a half-year period base fee ofCHF42,953. On top of his fees, the Group paid CHF 2,436 in social security contributions as required by Swiss legislation. 9. Alfredo Rivera retired from the Board of Directors on 22 June 2021. The Group has applied a half‑year period base fee ofCHF39,811. 10. For Ryan Rudolph, on top of his fees, the Group paid CHF 6,475 in social security contributions as required by Swiss legislation. Non-Executive Directors do not participate in any of the Group’s incentive plans, nor do they receive any retirement benefits. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 244 Report Governance Statements Reporting Information ### Swiss statutory reporting continued ### Remuneration of the Executive Leadership Team The total remuneration of the Executive Leadership Team for 2021 amounted to CHF 26.4 million. 2021 CHF | | | | | | | Pension | | Total fair value | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Cash and | | | | andpost‑ | | of performance | | | | | | | non-cash | | | employment | | | shares at the | | | Total | | Base salary | 1 | benefits | 2 Annual bonus | 3 | | benefits | 4 | date granted | 5 | remuneration | | Zoran Bogdanovic, ChiefExecutive Officer 873,862 956,346 992,326 150,796 1,553,290 4,526,620 6 Other current members 4,745,415 6,881,649 4,324,931 814,544 3,973,231 20,739,770 7 Former members 581,082 281,445 263,227 51,623 – 1,177,377 Total Executive Leadership Team 6,200,359 8,119,440 5,580,484 1,016,963 5,526,521 26,443,767 1. Base salary includes non-compete payments in 2021 to former members of the Executive Leadership Team. 2. Cash and non-cash benefits consist of cost-of-living allowance, housing support, schooling, employee share purchase plan, private medical insurance, relocation expenses, home trip allowance, employer social security contributions, lump sum expenses, all paid and unpaid sign-on bonuses, equalisation amounts and similar allowances. 3. The annual bonus for 2021 includes the accrued Management Incentive Plan (MIP) payout, receivable early in 2022 for the 2021 business performance, including amounts deferred in shares, employer social security contributions and gross‑up for thetax benefit, of CHF 5,580,484. The monetary value that was paid in 2021 under the MIP reflecting the 2020 business performance is approx. CHF 2,139,756. 4. Members of the Executive Leadership Team participate in the pension plan of their employing entity, as appropriate. 5. Values under long-term incentives represent the fair value of performance shares that are expected to vest for the 2021 grant in order to comply with Swiss reporting guidelines. 6. Ben Almanzar was appointed to the role of Chief Financial Officer on 1 February 2021. Barbara Tönz was appointed to the role of Chief Customer and Commercial Officer on 1 May 2021. Spyros Mello was appointed to the role of Strategy and Transformation Director on 1 November 2021. 7. Michalis Imellos’ s employment ceased on 30 June 2021. ### Credits and loans granted to governing bodies In 2022, similar to 2021, there were no credits or loans granted to active or former members of the Company’s Board of Directors, members of the Executive Leadership Team or to any related persons. There are no outstanding credits or loans. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 245 Report Governance Statements Reporting Information ### Alternative performance measures 3. Acquisition, integration and divestment‑related costs or gains ## Definitions and reconciliations of Acquisition costs comprise costs incurred to effect a business combination such as finder’s fees, Alternative Performance Measures (APMs) advisory, legal, accounting, valuation and other professional or consulting fees as well as changes in thefair value of contingent consideration recognised in the income statement. They also include any 1 gain from bargain purchase arising from business combinations, as well as any gain or loss recognised ### 1. Comparable APMs inthe income statement from the remeasurement to fair value of previously held interests and the In discussing the performance of the Group, ‘comparable’ measures are used. In 2022, the Group reclassification to the income statement of items of other comprehensive income resulting from updated the definitions of items which are deducted from the directly reconcilable IFRS measures to stepacquisitions. Integration costs comprise direct incremental costs necessary for the acquiree to calculate comparable APMs so as to provide users more relevant information on its financial performance, operate within the Group. Divestment-related costs comprise transaction expenses, including advisory, considering the impact of one-off events in the year as well as reporting by its peer group. More specifically, consulting, and other professional fees to effect the disposal of a subsidiary or equity method investment, comparable measures are calculated by deducting from the directly reconcilable IFRS measures the any impairment losses or write-downs to fair value less costs to sell recognised in the income statement impact of the Group’s restructuring costs, the mark-to-market valuation of the commodity hedging upon classification as held for sale and any relevant disposal gains or losses or reversals of impairment activity, the acquisition, integration and divestment-related costs, the Russia-Ukraine conflict impact recognised in the income statement upon disposal. These costs or gains are included within the income and certain other tax items, which are collectively considered as items impacting comparability, due to statement line ‘Operating expenses’, however, to the extent that they relate to business combinations their nature. More specifically the following items are considered as items that impact comparability: or divestments that have been completed or are expected to be completed, they are excluded from thecomparable results so that the users can obtain a better understanding of the Group’s operating 1. Restructuring costs and financial performance achieved from underlying activity. Restructuring costs comprise costs arising from significant changes in the way the Group conducts business, such as significant supply chain infrastructure changes, outsourcing of activities and 4. Russia‑Ukraine conflict impact centralisation of processes. These costs are included within the income statement line ‘Operating As a result of the conflict between Russia and Ukraine, the Group recognised net impairment losses for expenses’; however, they are excluded from the comparable results so that the users can obtain a property, plant and equipment, intangible assets and equity method investments as well as restructuring better understanding of the Group’s operating and financial performance achieved from underlying costs, in connection with the new business model in Russia and adverse changes to the economic activity. Restructuring costs resulting from initiatives driven by the Russia-Ukraine conflict are presented environment. The Group also recognised incremental allowance for expected credit losses and under the ‘Russia‑Ukraine conflict impact’ item, to provide users complete information on the financial write-offs of inventory and property, plant and equipment resulting from the Russia-Ukraine conflict. implications of the conflict. The aforementioned net impairment losses are included within the income statement line ‘Exceptional items related to Russia-Ukraine conflict’ so as to provide users with enhanced visibility over these 2. Commodity hedging itemsconsidering their materiality, while remaining costs are included within ‘Operating expenses’ and The Group has entered into certain commodity derivative transactions in order to hedge its exposure ‘Cost of goods sold’ lines of the income statement accordingly. Net impairment losses and other costs to commodity price risk. Although these transactions are economic hedging activities that aim to manage directly attributable to the Russia-Ukraine conflict are excluded from the comparable results so that our exposure to sugar, aluminium, gas oil and plastics price volatility, hedge accounting has not been theuserscan obtain a better understanding of the Group’s operating and financial performance from applied in all cases. In addition, the Group recognises certain derivatives embedded within commodity underlying activity. purchase contracts that have been accounted for as stand-alone derivatives and do not qualify for hedge accounting. The fair value gains or losses on the derivatives and embedded derivatives are 5. Other tax items immediately recognised in the income statement in the cost of goods sold and operating expenses line Other tax items represent the tax impact of (a) changes in income tax rates affecting the opening items. The Group’s comparable results exclude the gains or losses resulting from the mark-to-market balance of deferred tax arising during the year and (b) certain tax related matters selected based on valuation of these derivatives to which hedge accounting has not been applied (primarily plastics) and their nature. Both (a) and (b) are excluded from comparable after‑tax results so that the users can embedded derivatives. These gains or losses are reflected in the comparable results in the period when obtain a better understanding of the Group’s underlying financial performance. the underlying transactions occur, to match the profit or loss to that of the corresponding underlying transactions. We believe this adjustment provides useful information related to the impact of our economic risk management activities. 1. Comparable APMs refer to comparable cost of goods sold, comparable gross profit, comparable operating expenses, comparable EBIT, comparable EBIT margin, comparable Adjusted EBITDA, comparable profit before tax, comparable tax, comparable net profit andcomparable EPS. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 246 Report Governance Statements Reporting Information ### Alternative performance measures continued 2021 ### 1. Comparable APMs continued Established Developing Emerging Consolidated The Group discloses comparable performance measures to enable users to focus on the EBIT 286 105 409 799 underlyingperformance of the business on a basis which is common to both periods for which these Restructuring costs 15 3 3 21 measuresarepresented. Commodity hedging (3) (4) 3 (4) The reconciliation of comparable measures to the directly related measures calculated in accordance Acquisition costs 3 3 8 14 with IFRS is as follows: Comparable EBIT 301 107 424 831 Reconciliation of comparable financial indicators (numbers in € million except Figures are rounded. pershare data) ### 2. Organic APMs 2022 Cost of Gross Operating Adjusted Profit Net Organic growth goods sold profit expenses EBIT EBITDA before tax Tax profit 1 EPS (€) As of 1 January 2022 the Group moved its reporting to organic growth APMs. This was to enable a better As reported (6,054) 3,144 (2,355) 704 1,344 624 (208) 415 1.134 understanding of underlying business performance that is more consistent with how Coca‑Cola HBC’s Restructuring costs – – 8 8 8 8 (2) 6 0.017 peer group reports. Commodity hedging 2 2 – 2 2 2 – 2 0.005 Organic growth enables users to focus on the operating performance of the business on a basis which Russia-Ukraine is not affected by changes in foreign currency exchange rates from year to year or changes in the conflict impact 1 1 7 136 8 136 (14) 122 0.333 Group’s scope of consolidation (‘consolidation perimeter’) i.e. acquisitions, divestments and reorganisations Acquisition and resulting in equity method accounting. Thus, organic growth is designed to assist users in better integration costs – – 80 80 9 80 – 80 0.218 understanding the Group’s underlying performance. Other tax items – – – – – – – – (0.001) Comparable (6,051) 3,148 (2,260) 930 1,372 849 (224) 625 1.706 More specifically, the following items are adjusted from the Group‘s volume, net sales revenue and comparable EBIT in order to derive organic growth metrics: 2021 | | Cost of | Gross | Operating | Adjusted | | Profit | Net | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | 1 | | (a) Foreign currency impact | | | goods sold | profit | expenses EBIT | EBITDA | before tax Tax | | profit | | EPS (€) | | | As reported (4,570) 2,598 (1,833) 799 1,152 735 (187) 547 1.499 | | | | | | | | | | Foreign currency impact in the organic growth calculation reflects the adjustment of prior‑year net | | Restructuring costs – – 21 21 21 21 (5) 17 0.045 | | | | | | | | | | sales revenue and comparable EBIT metrics for the impact of changes in exchange rates applicable to | | Commodity hedging (4) (4) – (4) (4) (4) 1 (3) (0.008) | | | | | | | | | | the current year. | Acquisition costs – – 14 14 14 14 – 14 0.039 (b) Consolidation perimeter impact Other tax items – – – – – – 3 3 0.009 Current year volume, net sales revenue and comparable EBIT metrics are each adjusted for the impact Comparable (4,574) 2,594 (1,798) 831 1,183 767 (188) 578 1.584 of changes in the consolidation perimeter. More specifically adjustments are performed as follows: Figures are rounded. i. Acquisitions: 1. Net profit and comparable net profit refer to net profit and comparable net profit respectively after tax attributable to owners of theparent. For current year acquisitions, the results generated in the current year by the acquired entities are not Reconciliation of comparable EBIT per reportable segment (numbers in € million) included in the organic growth calculation. For prior year acquisitions, the results generated in the current year over the period during which the acquired entities were not consolidated in the prior year, 2022 are not included in the organic growth calculation. Established Developing Emerging Consolidated EBIT 310 113 280 704 For current year step acquisitions where the Group obtains control of a) entities over which it previously Restructuring costs (6) (2) 16 8 held either joint control or significant influence and which were accounted for under the equity method, Commodity hedging 3 4 (3) 2 or b) entities which were carried at fair value either through profit or loss or other comprehensive Acquisition and integration costs – – 79 80 income, the results generated in the current year by the relevant entities over the period during which Russia-Ukraine conflict impact – – 136 136 these entities are consolidated, are not included in the organic growth calculation. For such step Comparable EBIT 307 115 507 930 acquisitions of entities previously accounted for under the equity method the share of results for the respective period described above, is included in the organic growth calculation of the current year. Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 247 ## Alternative performance measures continued ### 2. Organic APMs continued For such step acquisitions of entities previously accounted for at fair value through profit or loss any fair value gains or losses for the respective period described above, are included in the organic growth calculation. For such step acquisitions in the prior year, the results generated in the current year by the relevant entities over the period during which these entities were not consolidated in the prior year, are not included in the organic growth calculation. However, the share of results or gains or losses from fair value changes of the respective entities, based on their accounting treatment prior to the step acquisition, for the current-year period during which these entities were not consolidated in the prior year are included in the organic growth calculation. #### ii. Divestments: For current year divestments, the results generated in the prior year by the divested entities over the period during which the divested entities are no longer consolidated in the current year, are included in the current year's results for the purpose of the organic growth calculation. For prior-year divestments, the results generated in the prior year by the divested entities over the period during which the divested entities were consolidated, are included in the current year's results for the purpose of the organic growth calculation. #### iii. Reorganisations resulting in equity method accounting: For current year reorganisations where the Group maintains either joint control or significant influence over the relevant entities so that they are reclassified from subsidiaries or joint operations to joint ventures or associates and accounted for under the equity method, the results generated in the current year by the relevant entities over the period during which these entities are no longer consolidated, are included in the current year's results for the purpose of the organic growth calculation. For such reorganisations in the prior year, the results generated in the current year by the relevant entities over the period during which these entities were consolidated in the prior year, are included in the current year's results for the purpose of the organic growth calculation. In addition, the share of results in the current year of the relevant entities, for the respective period as described above, is excluded from the organic growth calculation for such reorganisations. The calculations of the organic growth and the reconciliation to the most directly related measures calculated in accordance with IFRS are presented in the below tables. Organic growth (%) is calculated by dividing the amount in the row titled 'Organic movement' by the amount in the associated row titled '2021 reported' or, where presented, '2021 adjusted'. Organic growth for comparable EBIT margin is the organic movement expressed in basis points. #### Reconciliation of organic measures | Volume (munit) ceased | Full year 2022 | | | | | --- | --- | --- | --- | --- | | | Established | Developing | Emerging | Consolidated | | 2021 reported | 590 | 416 | 1,407 | 2,413 | | Consolidation perimeter impact | – | – | 335 | 335 | | Organic movement | 54 | 83 | (153) | (36) | | **2022 reported** | **644** | **479** | **1,589** | **2,712** | | **Organic growth (%)** | **9.1%** | **15.2%** | **(10.9)%** | **(1.5)%** | | Net sales revenue (€ m) | Full year 2022 | | | | | --- | --- | --- | --- | --- | | | Established | Developing | Emerging | Consolidated | | 2021 reported | 2,479 | 1,366 | 3,324 | 7,168 | | Foreign currency impact | 28 | (32) | 230 | 225 | | 2021 adjusted | 2,507 | 1,333 | 3,553 | 7,394 | | Consolidation perimeter impact | 1 | – | 755 | 756 | | Organic movement | 466 | 387 | 196 | 1,048 | | **2022 reported** | **2,974** | **1,720** | **4,505** | **9,198** | | **Organic growth (%)** | **18.6%** | **29.0%** | **5.5%** | **14.2%** | | Net sales revenue per unit case (€) | Full year 2022 | | | | | --- | --- | --- | --- | --- | | | Established | Developing | Emerging | Consolidated | | 2021 reported | 4.20 | 3.29 | 2.36 | 2.97 | | Foreign currency impact | 0.05 | (0.08) | 0.16 | 0.09 | | 2021 adjusted | 4.25 | 3.21 | 2.52 | 3.06 | | Consolidation perimeter impact | – | – | (0.15) | (0.16) | | Organic movement | 0.37 | 0.38 | 0.46 | 0.49 | | **2022 reported** | **4.62** | **3.59** | **2.83** | **3.39** | | **Organic growth (%)** | **8.6%** | **11.9%** | **18.4%** | **15.9%** | | Comparable EBIT (€ m) | Full year 2022 | | | | | --- | --- | --- | --- | --- | | | Established | Developing | Emerging | Consolidated | | 2021 reported | 301 | 107 | 424 | 831 | | Foreign currency impact | 5 | (4) | 38 | 38 | | 2021 adjusted | 306 | 102 | 461 | 869 | | Consolidation perimeter impact | (3) | – | 52 | 49 | | Organic movement | 4 | 13 | (5) | 12 | | **2022 reported** | **307** | **115** | **508** | **930** | | **Organic growth (%)** | **1.3%** | **12.7%** | **(1.1)%** | **1.3%** | | Comparable EBIT margin (%)^{1} | Full year 2022 | | | | | --- | --- | --- | --- | --- | | | Established | Developing | Emerging | Consolidated | | 2021 reported | 12.1% | 7.8% | 12.7% | 11.6% | | Foreign currency impact | 0.1% | (0.1)% | 0.2% | 0.2% | | 2021 adjusted | 12.2% | 7.7% | 13.0% | 11.8% | | Consolidation perimeter impact | (0.1)% | – | (0.9)% | (0.3)% | | Organic movement | (1.8)% | (1.0)% | (0.8)% | (1.3)% | | **2022 reported** | **10.3%** | **6.7%** | **11.3%** | **10.1%** | | **Organic growth (%)** | **-180bps** | **-100bps** | **-80bps** | **-130bps** | Figures are rounded. 1. Certain differences in calculations are due to rounding. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 248 Report Governance Statements Reporting Information ### Alternative performance measures continued Free cash flow is not a measure of cash generation under IFRS and has limitations, some of which are ### 3. Other APMs asfollows: free cash flow does not represent the Group’s residual cash flow available for discretionary Adjusted EBITDA expenditures since the Group has debt payment obligations that are not deducted from the measure; Adjusted EBITDA is calculated by adding back to operating profit the depreciation and net impairment free cash flow does not deduct cash flows used by the Group in other investing and financing activities; of property, plant and equipment, the amortisation and impairment of intangible assets, the net and free cash flow does not deduct certain items settled in cash. Other companies in the industry in impairment of equity method investments, the employee share option and performance share costs which the Group operates may calculate free cash flow differently, limiting its usefulness as a and items, if any, reported in line ‘Other non‑cash items’ of the consolidated cash flow statement. comparative measure. Adjusted EBITDA is intended to provide useful information to analyse the Group’s operating performance excluding the impact of operating non-cash items as defined above. The Group also uses Capital expenditure comparable Adjusted EBITDA, which is calculated by deducting from Adjusted EBITDA the impact of: Capital expenditure is defined as payments for purchases of property, plant and equipment less the Group’s restructuring costs, the acquisition, integration and divestment-related costs or gains, the proceeds from sales of property, plant and equipment plus principal repayments of lease obligations. mark-to-market valuation of the commodity hedging activity and the impact from the Russia-Ukraine The Group uses capital expenditure as an APM to ensure that the cash spending is in line with its overall conflict. Comparable Adjusted EBITDA is intended to measure the level of financial leverage of the strategy for the use of cash. Group by comparing comparable Adjusted EBITDA to Net debt. The following table illustrates how Adjusted EBITDA, free cash flow and capital expenditure are calculated: Adjusted EBITDA and comparable Adjusted EBITDA are not measures of profitability and liquidity under 2022 2021 IFRS and have limitations, some of which are as follows: Adjusted EBITDA and comparable Adjusted € million € million EBITDA do not reflect our cash expenditures, or future requirements for capital expenditures or Operating profit (EBIT) 704 799 contractual commitments; Adjusted EBITDA and comparable Adjusted EBITDA do not reflect changes Depreciation and impairment of property, plant and equipment, in, or cash requirements for, our working capital needs; although depreciation and amortisation are non- including right-of-use assets 485 336 cash charges, the assets being depreciated and amortised will often have to be replaced in the future, Amortisation and impairment of intangible assets 15 1 and Adjusted EBITDA and comparable Adjusted EBITDA do not reflect any cash requirements for such Employee performance shares 17 15 replacements. Because of these limitations, Adjusted EBITDA and comparable Adjusted EBITDA should Impairment of equity method investments 53 – | not be considered as measures of discretionary cash available to us and should be used only as | | 1 | | | --- | --- | --- | --- | | | Other non-cash items included in operating profit | | 71 – | | supplementary APMs. | Adjusted EBITDA 1,344 1,152 | | | Free cash flow Share of results of integral equity method investments (42) (34) Free cash flow is an APM used by the Group and defined as cash generated by operating activities after Loss / (Gain) on disposals of non‑current assets 1 (28) payments for purchases of property, plant and equipment net of proceeds from sales of property, plant Cash generated from working capital movements 127 196 and equipment and including principal repayments of lease obligations. Free cash flow is intended to Tax paid (196) (142) measure the cash generation from the Group’s business, based on operating activities, including the Net cash from operating activities 1,235 1,142 efficient use of working capital and taking into account its net payments for purchases of property, plant and equipment. The Group considers the purchase and disposal of property, plant and equipment as 2 ultimately non-discretionary since ongoing investment in plant, machinery, technology and marketing Payments for purchases of property, plant and equipment (532) (514) equipment, including coolers, is required to support the day to day operations and the Group’s growth Principal repayments of lease obligations (65) (63) prospects. The Group presents free cash flow because it believes the measure assists users of the Proceeds from sales of property, plant and equipment 8 36 financial statements in understanding the Group’s cash generating performance as well as availability Capital expenditure (589) (541) for interest payment, dividend distribution and own retention. The free cash flow measure is used by Free cash flow 645 601 management for its own planning and reporting purposes since it provides information on operating Figures are rounded. cash flows, working capital changes and net capital expenditure that local managers are most directly able to influence. 1. Other non‑cash items included in operating profit for 2022 relate to the net loss recognised in the income statement from theremeasurement to fair value of the previously held equity interest, the reclassification to the income statement of the Group’s share of other comprehensive income and the gain from bargain purchase in connection with the change in control of Multon Z.A.O. group of companies (‘Multon’), For more details, refer to Note 24 of the consolidated financial statements for the year ended 31 December 2022. 2. Payments for purchases of property, plant and equipment for 2022 include €8.4 million (2021: €7.1 million) relating to repayment ofborrowings undertaken to finance the purchase of production equipment by the Group’s subsidiary in Nigeria, classified as ‘Repayments ofborrowings’ in the consolidated cash flow statement. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 249 Report Governance Statements Reporting Information ### Alternative performance measures continued 1. Refer to ‘Comparable APMs’ section above. ### 3. Other APMs continued 2. Refer to the consolidated income statement. 3. Tax shield is calculated as comparable effective tax rate times finance costs, net, as illustrated below: Net debt Year ended Net debt is an APM used by management to evaluate the Group’s capital structure and leverage. Net | | | | 31 December 2022 | | | 31 December 2021 | | | --- | --- | --- | --- | --- | --- | --- | --- | | debt is defined as current borrowings plus non-current borrowings less cash and cash equivalents and | | | | € million | | | € million | | | Finance costs, net | 2 | | | 83 68 | | | financial assets (time deposits, treasury bills and money market funds), as illustrated below: | | | | Comparable effective tax rate (%) | 4 | | 26% 25% | | | --- | --- | --- | --- | --- | --- | --- | --- | | | As at 31 December | | Tax shield 22 17 | | | | | | | 2022 | 2021 | | | | | | | | € million | € million | Figures are rounded. | | | | | | Current borrowings 337 382 | | | 4. Comparable effective tax rate is calculated as comparable tax divided by comparable profit before tax, as illustrated below: | | | | | | Non-current borrowings 3,083 2,556 | | | | | | Year ended | | | | | | | | 31 December 2022 | | 31 December 2021 | Other financial assets (1,027) (835) | | | | | € million | | € million | | --- | --- | --- | --- | --- | --- | --- | | Cash and cash equivalents (720) (783) | Comparable tax | 1 | | | 224 188 | | | Net debt 1,673 1,320 | Comparable profit before tax | | 1 | | 849 767 | | Comparable effective tax rate (%) 26% 25% Figures are rounded. Figures are rounded. Return on invested capital (‘ROIC’) 5. Refer to ‘Net debt’ section above for definition of net debt. ROIC is an APM used by management to assess the return obtained from the Group’s asset base and is 6. Equity attributable to owners of the parent is defined as total equity less non-controlling interests. | defined as the percentage of comparable net profit excluding net finance costs divided by the five- | 7. Five-quarter average net debt and equity attributable to owners of the parent are calculated as presented below: | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | quarter average capital invested in the business (‘capital employed’). Capital employed is defined as the | | Q4 2021 | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Average | | | 2022 | € million | € million | € million | € million | € million | € million | five-quarter average net debt and shareholders’ equity attributable to the owners of the parent, as Net debt 1,320 1,882 1,584 1,417 1,673 1,575 illustrated below. The Group presents ROIC because it believes the measure assists users ofthe Equity attributable to owners of the parent 3,115 3,204 3,276 3,626 3,282 3,300 financial statements in understanding the Group’s capital efficiency. | | | | | | | Q4 2020 | Q1 2021 | Q2 2021 | Q3 2021 | Q4 2021 | Average | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Year ended | | | 2021 | € million | € million | € million | € million | € million | € million | | 31 December 2022 | | | 31 December 2021 | | Net debt 1,617 1,643 1,348 1,173 1,320 1,420 | | | | | | | | | € million | | | € million | | | | | | | | Equity attributable to owners of the parent 2,631 2,717 2,713 2,992 3,115 2,834 1 | Comparable operating profit | | 930 831 | | | | --- | --- | --- | --- | --- | | | 2 | | | Figures are rounded. | | Plus: Share of results of non-integral equity method investments | | | 2 3 | | 1 Less: Comparable tax (224) (188) 3 Tax shield (22) (17) Comparable net profit excl. finance costs, net (a) 686 629 5,7 Average net debt 1,575 1,420 6,7 Plus: Average equity attributable to owners of the parent 3,300 2,834 Capital employed (b) 4,875 4,254 Return on invested capital (a/b) 14.1% 14.8% Figures are rounded. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 250 Report Governance Statements Reporting Information ### Assurance statement ### Scope of assurance, standards, and criteria used ## Independent assurance statement for the 2022 We have fulfilled our responsibilities to provide appropriate assurance that the information in the Report ## Integrated Annual Report is free from material misstatements. We planned and carried out our work based on the GRI Universal Standards (2021) and the AA1000 Series of Standards. We used the criteria in AA1000AS (AA1000 To the management and stakeholders of Coca‑Cola HBC AG: Assurance Standard v3) to perform a Type 2 engagement and to provide a high level of assurance regarding the nature and extent of the Company’s adherence to the principles of impact, inclusivity, denkstatt GmbH was commissioned by Coca‑Cola HBC AG (hereinafter referred to as “the Company”) materiality, and responsiveness. The Company has chosen to report in accordance with the GRI Universal to provide independent third-party assurance for the printed and downloadable pdf versions of the Standards (2021) and the assurance verified this accordingly. Company’s 2022 Integrated Annual Report (hereinafter referred to as “the Report”) in accordance with the AA1000 Assurance Standard as well as the Global Reporting Initiative (GRI) Universal Standards 2021. We have reviewed sustainability-related data and content in the Report and in the 2022 GRI Methodology, approach, limitations and scope of work Content Index. Financial data were not reviewed as part of this engagement. The assurance engagement We planned and carried out our work in order to obtain all evidence, information, and explanations that covered the nature and extent of the Company’s application of the principles of inclusivity, materiality, we considered necessary to fulfil our responsibilities. We completed a wide range of activities in order responsiveness, and impact, as described in the AA1000 Series of Standards (AA1000AP, 2018). togather necessary evidence, including: Theapplication level “in accordance with” of the GRI Universal Standards 2021 was verified. • Gathering information regarding the Company’s adherence to the principles of impact, due diligence, denkstatt is an independent professional services company. Our team of experts has extensive inclusivity, materiality, sustainability context, completeness, and responsiveness as required by the professional experience in assurance engagements related to non-financial information and sustainability GRI and AA1000, and conducting interviews with members of the management, staff from the People management, meaning it is qualified to conduct this independent assurance engagement. denkstatt and Culture Department, the Legal Affairs Department (including the Risk team), the Internal Control has implemented a certified quality and environmental management system which complies with the Department, the Commercial Department, the Supply Chain Department (including the Procurement requirements of ISO 9001:2015 and ISO 14001:2015, and accordingly maintains a comprehensive team, the Product Quality, Safety and Environment team, the Fleet team and the Cold Drink Equipment quality control system. team), Investor Relations department and the Corporate Affairs and Sustainability Department as well as managers from other Group functions. In particular, we verified the management commitment Management responsibilities to the above-mentioned principles, and whether they are embedded at market level, as well as whether systems and procedures are in place to support compliance with these principles. The Company’s management (Management) is responsible for preparing the Report, statements withinit, and related online content. Management is also responsible for identifying stakeholders and • Key topics in the interviews conducted at Group level related to the materiality analysis, i.e. health material issues, defining commitments with respect to sustainability performance, and establishing and andnutrition; responsible marketing; employee wellbeing and engagement; vehicle fleets; corporate maintaining appropriate performance management and internal control systems, from which reported governance; business ethics; compliance and anti-corruption; sourcing; product quality and integrity, information is derived. and food safety; energy, emissions and climate change; cold drink equipment (coolers); TCFD and climate risk assessment; packaging; recycling and waste management; water stewardship; the World Additionally, Management is responsible for establishing data collection and internal control systems to Without Waste initiative; #YouthEmpowered and other community programmes (including community ensure reliable reporting, for specifying acceptable reporting criteria, and for selecting data to be collected investments); human rights and diversity; business risks and opportunities; and social impact. for the purposes of the Report. Management responsibilities also extend to preparing the Report • Conducting interviews at country headquarters in Austria, Hungary, Poland, Bulgaria, North inaccordance with the GRI Universal Standards (2021). Macedonia, Nigeria, Serbia and Egypt in order to assure that the information required for the engagement was complete. ### Assurance provider’s responsibilities • Performing audits in eight manufacturing plants, the majority of which were located in emerging Our responsibilities are to: markets: Edelstal (Austria), Dunaharaszti (Hungary), Radzymin (Poland), Bankya (Bulgaria), Skopje (North Macedonia), Challawa (Nigeria), Rosa (Serbia) and Sadat (Egypt). • express our conclusions and make recommendations regarding the nature and extent of the Company’s adherence to the AA1000 Accountability Principles (2018), and • Making enquiries and conducting spot checks to assess the implementation of Company policies (atplant, market (BU) and Group level). • express our conclusions on the reliability of the information in the Report, and whether it is in accordance with the criteria in the GRI Universal Standards (2021). • Making enquiries and conducting spot checks regarding necessary documentation for assessing thecurrent data collection systems, and the procedures in place to ensure reliable and consistent We did not perform any tasks or services for the Company or other clients in 2022 which would lead reporting from the plants to Group level. toaconflict of interest. We were not responsible for the preparation of any part of the Report. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 251 Report Governance Statements Reporting Information ### Assurance statement continued • Verifying all three inventory scopes (Scopes 1, 2 and 3) as defined by the GHG Protocol (Corporate • The Company demonstrates a very strong commitment to its goals. Most operations have a strong Standard), including progress against emission reduction targets, reported changes in emissions track record of collecting and documenting sustainability data. Data traceability has significantly compared with the baseline year (2010 and 2017) and the figures for absolute emissions and emissions improved over recent years, due to well-structured monitoring and reporting processes at plant, intensity in 2022. market, and Group level, as well as specialised software. • Verifying the materiality process and materiality assessment as defined by the GRI Universal • The Company fully understands the links between business risks and sustainability issues. An advanced Standards (2021). risk management system has been developed in recent years. The detailed quantitative analysis • Verifying the GRI Content Index, which was published in a separate section of the Company website, ofclimate‑related water risks (physical and transitional) performed by the Company in 2021, using to ensure consistency with the requirements for reporting in accordance with the GRI Universal established tools, can be considered an example of best-practice. In 2022 the impact of extreme Standards (2021). weather events on the production sites was quantified. Also, reporting the connection between risk management and sustainability topics has been improved and enhanced. Procedures for identifying • Conducting additional interviews with four external stakeholders representing different stakeholder and mitigating risks comprehensively cover sustainability-related risks, e.g. by integrating the climate groups (i.e., business partners, suppliers, investors, and non‑governmental organisations) during the risk management process in enterprise risk management in line with the TCFD recommendations. Annual Stakeholder Forum event held in December 2022. Specific plans for further progress in aligning with the TCFD recommendations in the coming years, The scope of assurance covers all information relevant to sustainability in the Report and focuses such as further quantitative climate risk assessments, demonstrate clear commitment to the issue. onCompany systems and activities during the reporting period. However, the following chapter were • The Company has put great effort into developing the #YouthEmpowered programme by increasing not covered in the sustainability assurance process: numbers of participants as well as establishing a data monitoring and reporting system with a high • Financial Statements and Swiss Statutory Reporting. level of maturity. #YouthEmpowered is the flagship social programme of the Company’s Mission 2025 sustainability commitments. It aims to support young people and increase their employability In‑person audits were conducted in the following countries: Austria, Bulgaria, Egypt, Hungary, North byproviding modular education opportunities in soft and/or business skills. The reboot of the training Macedonia, Poland and Serbia. Due to political risks, the audit in Nigeria was conducted virtually, whereby programme in 2023 is focusing on skills closer to the business model including those connected with video conferencing technology was used to facilitate virtual tours of manufacturing plants. hotel, restaurant and café (HORECA) operations, as well as customer and sales training topics. The facilities and operations in Belarus, Russia and Ukraine were included in the assurance work, • The Company started a pilot project on supplier‑specific emission factors as a joint initiative with although in-person audits at local level were not conducted for these countries. theCoca‑Cola System to mirror efforts towards decarbonisation being made in the supply chain. • In 2022, the Company issued its first green bond to support and enhance its efforts towards achieving ### Conclusions its sustainability targets. The Company is also working to expand partnerships and collaboration On the basis of our work, we found nothing to suggest that the information in the 2022 Integrated Annual networks, to collectively work on achieving its NetZeroby40 and Mission 2025 commitments. Report and in the 2022 GRI Content Index is inaccurate or contains material misstatements. Any errors or misstatements identified during the engagement were corrected prior to the Report being published. ### Findings and conclusions regarding adherence to the AA1000 ### principles of inclusivity, materiality, responsiveness, impact, ### Positive developments ### andspecific performance‑related information: • Sustainability is deeply embedded in the Company culture. This is evident in well-structured, easily accessible guidelines which ensure proper implementation of Company-wide standards, e.g. the ### Inclusivity Code of Business Conduct, the Inclusion and Diversity Policy, the Mission 2025 Guidebook, Health • Group level: The Company has implemented a comprehensive and efficient stakeholder engagement and Safety Whitebook, and HR Whitebook. It is also reflected in the organisational structure and process at Group level. Its cornerstones are the annual internal and external materiality survey and across all functions, with a clear set of responsibilities for sustainability strategy, from factory-level the Annual Stakeholder Forum (held online in December 2022). tosenior management. • Market and plant level: Stakeholder engagement activities at market and plant level are in greater • During the reporting period the Company published its new biodiversity commitment, pledging to evidence. The Company is well aware of stakeholder concerns, and it consistently integrates the achieve a net positive impact on biodiversity in critical areas by 2040 and to eliminate deforestation views of stakeholders at all levels. inthe supply chain by 2030. The commitment underlines the importance of the topic and the strong implementation and integration of biodiversity in the Company’s strategy. • Overall, the whole stakeholder engagement process is professional and of high quality. A strong commitment to the process was evident across the various country audits. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 252 Report Governance Statements Reporting Information ### Assurance statement continued • As part of the Mission 2025 strategy, the Company has published a strong set of commitments with ### Materiality along‑term perspective, covering a wide range of environmental and social impact areas along the • Group level: A robust process for defining topics material for the Company is in place. The materiality value chain. In particular, the Company’s commitment to NetZeroby40 demonstrates its ambitious assessment process considers stakeholder expectations with regard to relevant topics. This year environmental roadmap. theCompany also conducted its own impact assessment, analysing how significantly each material topic impacts society and the environment, based on the scale of the impact, severity, likelihood. ### Additional conclusions and recommendations Theresultswere used to confirm the impact assessment results from the stakeholder survey. Byusing the categories impact, severity and likelihood, the Company is preparing itself for the upcoming • The Company grew its business by acquiring further companies such as bottling plants in Egypt, Lurisia requirements of the Corporate Sustainability Reporting Directive (CSRD). The material topics identified in Italy, and Teplice in the Czech Republic, as well as a preform producer. The Company has started during the assessment in 2022 provided the basis for the sustainability strategy and reporting. integrating them into their group strategy and reporting. Nevertheless, this integration process is not • Market and plant level: As various markets are publishing sustainability reports in combination with complete. Going forward, a strong emphasis should be placed on incorporating these new acquisitions socio-economic impact studies, formalised processes for carrying out the materiality assessment into the company vision, guidelines and policies, as well as data monitoring and reporting. have been more strongly implemented throughout the organisation. • The Company demonstrates excellent engagement and know-how in relation to packaging waste • It is recommended to continue using the ‘double materiality’ concept (also used in the CSRD) as well management, reflecting its ambitious targets in this area. However, efforts need to be increased, as to continue work to combine the two perspectives of¬ financial materiality, and environmental since the Company’s 2025 targets for use of recycled PET and/or PET from renewables, as well as andsocial materiality ¬with a risks and opportunities assessment from both the financial and packaging collection for recycling, do not currently appear to be within reach. Therefore, our non-financial perspectives. recommendation is to develop a solid and clear strategy as well as long-term goals in regard to this topic with a continued focus on refillable and package-less systems. • The product portfolio is under development, with the integration and growth of new product and service segments such as coffee drinks, snacks, and premium spirits. The majority of the social and • Although the Company has heavily invested in achieving its safety ambitions, it has to continue environmental impacts of these new segments have already been included in the scope of ESG exploring ways of increasing awareness of behavioural-based safety and strengthen the safety assessment. We recommend further assessment and even greater integration of these new product culture to reverse the trend of the rising lost time accident rate. Additionally, the Company should segments into the Company’s sustainability management approach including the development and further strengthen workplace accountability practices within its operations, especially in emerging adaptation of guidelines and policies. markets, with a focus on third-party contractors. • The Company has set already commitments beyond 2025 (related to the Science‑based carbon reduction targets by 2030, NetZeroby40, food waste and loss, and biodiversity), and we recommend ### Responsiveness the work on updating its sustainability strategy and targets to continue as the Mission 2025 goals will • The Company demonstrated a fast and professional response to the Russia-Ukraine war in its be realised very soon. support for local employees and communities via product donations, financial contributions and volunteering activities. • Support for external stakeholders in regard to COVID‑19 in form of product donations and financial contribution continued in 2022. • Operations in Russia transitioned to a local, self-sufficient business, which is managed by a local team and focused on local brands. Willibald Kaltenbrunner Lead Auditor ### Impact denkstatt GmbH • Group level: The Company has robust processes in place for understanding, assessing, and managing Advisory for Sustainable Development its impacts, including risk management and strategy development. This year the company placed a Vienna, 10 March 2023 strong emphasis on linking together risk assessment, materiality assessment and sustainability topics. • Market level: Sound socio-economic impact studies are conducted in individual markets on a regularbasis, to measure the organisational impact on communities. Results from these studies are summarised at Group level to disclose the organisation’s impact on stakeholders, the society and onthe Company itself. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 253 Report Governance Statements Reporting Information ### Shareholder information We take great pride in being regarded as a ATHEX: EEE 2022 2021 2020 Geographic concentration (%) | transparent and accessible company in all our | In € per share | | --- | --- | | communications with investment communities | Close 22.60 30.26 26.42 | | around the world. We engage with key financial | High 31.97 32.80 34.24 | | audiences, including institutional investors, | Low 17.995 24.18 16.99 | | sell‑side analysts andfinancial journalists, aswell | Market capitalisation (€ million) 8,287 11,071 9,625 | as our Company’s shareholders. Theinvestor Source: Bloomberg relations department manages the interaction withthese audiences by attending ad hoc Share capital meetings and investor conferences throughout In 2022, the share capital of Coca‑Cola HBC increased by the issue of 290,677 new ordinary shares the year, in addition to the regular meetings and following the exercise of stock options pursuant to the Group’s employee stock option plan. Total presentations held at the time of our results proceeds from the issuance of the shares under the stock option plan amounted to €4.7 million. announcements. North America Following the above changes, and including 5,386,717 ordinary shares held as treasury shares, Western Europe on31December 2022 the share capital of the Group amounted to €2,024.3 million and comprised UK 372,086,095 shares with a nominal value of CHF 6.70 each. Nordic Other Major shareholders The principal shareholders of the Group are Kar‑Tess Holding (aLuxembourg company), which holds Listings approximately 23%, and TheCoca‑Cola Company, which indirectly holds approximately 21% of the Coca‑Cola HBC AG (LSE: CCH) was admitted to the premium listing segment of the Official List of the Group’s issued share capital. UK Listing Authority and to trading on the London Stock Exchange’s main market for listed securities Dividends on29 April 2013. With effect from 29 April 2013, Coca‑Cola HBC AG’s shares are also admitted on the For 2022, the Board of Directors has proposed a €0.78 dividend per share, up 9.9% year on year Athens Exchange (ATHEX: EEE). Coca‑Cola HBC AG has been included as a constituent of the FTSE representing a 46% pay‑out ratio. Dividend pay‑out ratio target is 40‑50%, 100 and FTSE All‑Share Indices from 20 September 2013. This compares with a dividend payment of €0.71 per share in 2021. Formore information on our London Stock Exchange Athens Exchange dividend policy and dividend history, please visit our website at www.coca-colahellenic.com Ticker symbol: CCH Ticker symbol: EEE Financial calendar ISIN: CH019 825 1305 ISIN: CH019 825 1305 SEDOL: B9895B7 Reuters: EEEr.AT 3 May 2023 First quarter trading update Reuters: CCH.L Bloomberg: EEE GA 17 May 2023 Annual General Meeting Bloomberg: CCH LN 9 August 2023 Half‑year financial results 2 November 2023 Third quarter trading update Credit rating Standard & Poor’s: L/T BBB+, S/T A2, negative outlook Corporate website Moody’s: L/T Baa1, S/T P2, stable outlook www,coca-colahellenic.com Share price performance Shareholder and analyst information LSE: CCH 2022 2021 2020 Shareholders and financial analysts can obtain further information bycontacting: In £ per share Investor Relations Close 19.73 25.55 23.77 Tel: +30 210 618 3100 High 26.87 27.84 28.83 Email: investor.relations@cchellenic.com Low 14.605 21.60 14.94 IR website: www.coca-colahellenic.com Market capitalisation (£ million) 7,235 9,348 8,660 27% 25% 34% 7% 8% 254 Strategic Report Corporate Governance Financial Statements Semi-Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 # 2022 SASB Index # 2022 SASB Index The majority of the information required by the Sustainability Accounting Standards Board (SASB) framework is included in the 2022 Integrated Annual Report (IAR) and 2022 GRI Content Index. Part of the information refers to our public website https://www.coca-colahellenic.com/ The Coca-Cola HBC AG 2022 IAR has been prepared in accordance with the Global Reporting Initiative Standards (GRI Universal Standards 2021). It has been independently assured by denkstatt GmbH. The independent assurance statement is on pages 250-252 of the 2022 IAR. All the numbers refer to total CCHBC markets excluding Egypt unless otherwise stated. Table 1. Sustainability disclosure topics & accounting metrics | Topic | Accounting metric | Category | Unit of measure | Code | Response | | --- | --- | --- | --- | --- | --- | | **Fleet fuel management** | Fleet fuel consumed | Quantitative | Gigajoules (GJ) | FB-NB-130a.1 | 887 | | | Percentage renewable | | Percentage (%) | | 0% | | **Energy management** | Operational energy consumed | Quantitative | Gigajoules (GJ) | FB-NB-130a.1 | 6,478 | | | Percentage grid electricity | | Percentage (%) | | 64% | | | Percentage renewable | | Percentage (%) | | 20% | | **Water management** | Total water withdrawn | Quantitative | Thousand cubic metres (m³) | FB-NB-140a.1 | 25,946 | | | Total water consumed | | Thousand cubic metres (m³) | | 16,080 | | | and percentage of each in regions with High or Extremely High Baseline Water Stress | | Percentage (%) | | 36% | | | Description of water management risks and discussion of strategies and practices to mitigate those risks | Discussion and analysis | n/a | FB-NB-140a.2 | 2022 IAR, Water stewardship (page 52), and Risk sections (pages 59-81). 2022 GRI Content Index (GRI 303, Water and Effluents). CCHBC website_Sustainability section_Water stewardship | | **Health & nutrition** | Revenue from: zero- and low-calorie beverages | Quantitative | EUR | FB-NB-260a.1 | €1,526.1 million only from Sparkling soft drinks (SSDI portfolio). 24.8% of total SSD revenue. | | | no added sugar beverages | | EUR | | Not reported; we report towards our Mission 2025 commitment for calorie reduction per 100ml sparkling soft drinks by 25% (2025 vs. 2013). In 2022 we reduced the calories in our sparkling soft drinks by 17% vs. 2015. | | | artificially sweetened beverages | | EUR | | CCHBC website_Sustainability section_Nutrition Not reported | Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 255 Report Governance Statements Reporting Information ### 2022 SASB Index continued Table 1. Sustainability disclosure topics & accounting metrics continued Topic Accounting metric Category Unit of measure Code Response Percentage of advertising impressions (1) made on children Percentage (%) Not reported. As a member of both the Coca‑Cola System and UNESDA, we and (2) made on children promoting products that meet dietary abide by their respective responsible marketing guidelines. In addition, we have guidelines a responsible marketing policy for alcoholic beverages, while our strategic approach towards marketing to children is covered by our health and wellness Quantitative FB-NB-270a.1 policy. https://www.unesda.eu/advertising-marketing-practices/ Health and Wellness Policy | | Revenue from products labelled as (1) containing genetically | | Reporting currency | | (1) None – we don’t produce/sell GMO products. | | --- | --- | --- | --- | --- | --- | | Product labelling & | modified organisms (GMOs) and (2) non‑GMO | | | | | | | | Quantitative | | FB-NB-270a.2 | (2) non‑GMO: €9,198.4 million (100% of the portfolio). | marketing CCHBC website_GMO Policy Number of incidents of non-compliance with industry or Number Three incidents of non‑compliance with regulatory labelling (with zero fines) regulatory labelling and/or marketing codes and five with industry marketing codes in 2022, with mitigation plans in place for Quantitative FB-NB-270a.3 all of the above incidents. Refer to the 2022 GRI Content Index (417‑2 and 417‑3). Total amount of monetary losses as a result of legal Reporting currency Total amount of monetary losses: €0 in 2022. proceedings associated with marketing and/or labelling Quantitative FB-NB-270a.4 Refer to the 2022 GRI Content Index (417‑2 and 417‑3). practices Total weight of packaging Metric tonnes (t) 786,889 (2) percentage made fromrecycled and/or renewable materials Percentage (%) 10.5% rPET (placed on the market); 33% recycled glass; 49% recycled Quantitative aluminium Packaging lifecycle FB-NB-410a.1 (3) percentage that is recyclable, reusable, Percentage (%) 100% of primary packaging (recyclable by design) management and/or compostable Discussion of strategies to reduce the environmental impact of Discussion n/a CCHBC website_Sustainability section_World without waste FB-NB-410a.2 packaging throughout its lifecycle andanalysis Suppliers’ social and environmental responsibility audit: Rate 2022 GRI Content Index (2‑6, 308‑1,308‑2, 407‑1, 408‑1, 409‑1, 414‑1) non-conformance rate and associated corrective action rate Environmental & social CCHBC website_Sustainable sourcing andOur suppliers sections for (a) major and (b) minor non‑conformances impacts ofingredient supply Quantitative FB-NB-430a.1 CCHBC website_Sustainability section_Sourcing chain CCHBC website_Supplier Guiding Principles | Percentage of beverage ingredients sourced from regions with | | Percentage (%) by cost | | 0.8% of ingredients supplier spend is in high water risk areas as per our | | --- | --- | --- | --- | --- | | High or Extremely High Baseline Water Stress | | | | assessment by using WWF Water Risk Filter (excluding Egypt). | | | Quantitative | | FB-NB-440a.1 | | 3.7% of ingredients supplier locations are in high water risk areas as per our assessment by using WWF Water Risk Filter (excluding Egypt). Ingredient sourcing List of priority beverage ingredients and description ofsourcing n/a CCHBC website_Sustainability section_Sourcing risks due to environmental and social considerations Discussion FB-NB-440a.2 2022 GRI Content Index (2‑6, 308‑1, 308‑2, 407‑1, 408‑1, 409‑1, 414‑1) and analysis CCHBC website_Sustainable sourcing andOur suppliers sections Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 256 Report Governance Statements Reporting Information ### 2022 SASB Index continued Table 2. Activity metrics Activity metric Category Unit of measure Code Response Volume of products sold Quantitative Millions of hectolitres (Mhl) FB‑NB‑000.A 14,434.28 (excluding Egypt, which was acquired in January 2022 and the transition process is ongoing). 14,981.38 (including Egypt). Number of production facilities Quantitative Number FB-NB-000.B 55 production facilities for non‑alcoholic beverages (excluding Egypt). 60 production facilities for non‑alcoholic beverages (including Egypt). Total fleet road miles travelled Quantitative Kilometres FB-NB-000.C 321,223,574 Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 257 Report Governance Statements Reporting Information ### Glossary | AI | CO | 2 eq; CO | 2 e | | | | Comparable operating profit (EBIT) | Emissions (Scope 1 and 2) or GHG emissions | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Artificial Intelligence. | A carbon dioxide equivalent or CO | | | | | 2 equivalent, | Comparable operating profit (EBIT) refers to profit | (Scope 1 and 2) | | | | abbreviated as CO | | | 2 eq or CO | 2 e is a metric | | before tax excluding finance income/ (costs) and | Emissions of CO | 2 and other greenhouse gases | B2B measure used to compare the emissions from share of results of non-integral equity-method from fuel combustion and energy use in Business-to-business. various greenhouse gases (GHG) on the basis of investments, adjusted for restructuring costs, Coca‑Cola HBC’s own operations in bottling, Baltics; Baltic States their global‑warming potential (GWP), by converting acquisition and integration costs, the impact from storage, distribution and in offices. Estonia, Latvia and Lithuania. amounts of other gases to the equivalent amount Russia-Ukrainian conflict and the mark to market Emissions (Scope 1, 2 and 3) or GHG emissions Basis points (bps) of carbon dioxide with the same global warming. valuation of commodity hedging activity. Refer (Scope 1, 2 and 3) | One hundredth of one percentage point | | also to ‘Alternative performance measures’ section. | | | | --- | --- | --- | --- | --- | | | Coca-Cola HBC; CCHBC; CCH | | Global emissions of CO | 2 and other greenhouse | | (usedchiefly in expressing differences). | Coca‑Cola HBC AG, and, as the context may | Comparable operating expenditure | gases from Coca‑Cola HBC’s wider value chain | | | Bottlers | require, its subsidiaries and joint ventures; also, | Comparable operating expenditure refers to | (raw materials, product cooling, etc.). | | | Business entities that sell, manufacture, and | theGroup, the Company. | operating expenditure adjusted for restructuring | | | ESG distribute beverages of The Coca-Cola Company costs, acquisition and integration costs, the Coca-Cola System Environment, Social and Governance, referring to under a franchise agreement. impact from Russia-Ukraine conflict and the mark The Coca-Cola Company and its bottling partners. the three key factors affecting the sustainability to market valuation of certain commodity hedging Bottling plant and ethical impact of a business or company. Cold drink equipment (CDE) activity. Refer also to ‘Alternative performance A beverage production facility, including A generic term encompassing point‑of‑sale FMCG measures’ section. associated warehouses, workshops, and other equipment such as coolers (refrigerators), vending Fast-moving consumer goods. on-site buildings and installations. Concentrate machines and post-mix machines. Base of a beverage, to which water and other FTE CAGR Comparable adjusted EBITDA Full time equivalent, referring to a unit to measure ingredients are added to produce beverages. Compound annual growth rate. We define comparable adjusted EBITDA employed people in a way that makes them Itmay contain concentrated plant extracts, Capital expenditure; CapEx; Capex; CAPEX asoperating profit before deductions for fruitjuices, colourings and other components. comparable, even though they may work different Gross CapEx is defined as payments for purchases depreciation and impairment of property, plant hours each week. Consumer of property, plant and equipment. Net CapEx is and equipment (included both in cost of goods Person who drinks Coca‑Cola HBC products. GDP defined as payments for purchases of property, sold and in operating expenses), amortisation and Gross domestic product. plant and equipment less proceeds from sales impairment of intangible assets, impairment of Customer equity method investments, employee share Retail outlet, restaurant or other operation that GHGs ofproperty, plant and equipment plus principal option and performance shares compensation sells or serves Coca‑Cola HBC products directly Greenhouse gases. The major GHGs are carbon repayments of lease obligations. Refer also to and other non‑cash items, if any; further adjusted to consumers. dioxide (CO 2 ), methane (CH 4 ) and nitrous ‘Alternative performance measures’ section. | | for restructuring costs, acquisition and integration | | oxide(N | 2 0). | | --- | --- | --- | --- | --- | | COGS | | Dividend policy | | | | | costs, the impact from the Russia-Ukraine conflict | | GRI | | | Cost of Goods Sold. | | Our Board of Directors approved a dividend policy, | | | | | and the mark to market valuation of commodity | | Global Reporting Initiative, a global standard for | | effective from 2022, aiming to increase dividend Combined Heat and Power (CHP) unit hedging activity. Refer also to ‘Alternative sustainability reporting. payments progressively with a medium-term target Also called tri‑generation units, these can produce performance measures’ section. pay‑out ratio of 40‑50% on comparable net profits. HoReCa | power, heat, cooling and CO | 2 in a combined | | | | | --- | --- | --- | --- | --- | | | | Comparable net profit | | Distribution channel encompassing hotels, | | process that is up to 40 percent more efficient | | | Energy use ratio | | | | | Refers to net profit after tax attributable to | | restaurants and cafés. | | than separate processes. | | | The KPI used by Coca‑Cola HBC to measure | | owners of the parent adjusted for restructuring energy consumption in the bottling plants, IASB CO 2 costs, acquisition and integration costs, the expressed in megajoules of energy consumed International Accounting Standards Board. Carbon dioxide, a greenhouse gas. impact from Russia-Ukraine conflict, the mark to perlitre of produced beverage (MJ/lpb). market valuation of commodity hedging activity IFRS and certain other tax items. Refer also to ELT International Financial Reporting Standards, issued ‘Alternative performance measures’ section. Executive Leadership Team. by the International Accounting Standards Board. Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 258 Report Governance Statements Reporting Information ### Glossary continued | IIRC | NetZeroby40 | ROIC | Sparkling beverages | | --- | --- | --- | --- | | The International Integrated Reporting Council, | Long-term commitment to achieving net zero | Return on invested capital. ROIC is the percentage | Non-alcoholic carbonated beverages containing | | aglobal coalition of regulators, investors, | emissions across our entire value chain (Scope 1, | return that a company makes over its invested | flavourings and sweeteners, but excluding, among | | companies, standard-setters, the accounting | 2 and 3) by 2040. The commitment is endorsed | capital. We define ROIC as the percentage of | others, waters and flavoured waters, juices and juice | | profession and NGOs. The coalition is promoting | bythe “We Mean Business” coalition and was | comparable net profit excluding net finance | drinks, sports and energy drinks, teas and coffee. | | communication about value creation as the next | published in October 2021. More details on our | costsdivided by the five‑quarter capital employed. | | Still and water beverages step in the evolution of corporate reporting. Scope 1, 2 and 3 emissions are disclosed in the Capital employed is calculated as the five-quarter Non-alcoholic beverages without carbonation 2022 GRI Content Index. Please see also our 2022 average net debt and shareholders’ equity IMCR including, but not limited to, waters and flavoured CDP Climate response: https://www.coca- attributable to the owners of the parent. Refer also Incident Management and Crisis Resolution. waters, juices and juice drinks, sports and energy colahellenic.com/content/dam/cch/us/ to ‘Alternative performance measures’ section. drinks, teas and coffee. Ireland documents/a-more-sustainable-future/ rPET The Republic of Ireland and Northern Ireland. mission‑2025/CDP‑RESPONSE‑2022_ Socio-economic impact Recycled PET refers to any PET material that COCACOLA‑HBC‑AG_CLIMATE_CHANGE.pdf. In conducting socio-economic studies, we use Italy comes from a recycled source rather than the downloadasset.pdf. input-output modelling to generate estimates Territory in Italy served by Coca‑Cola HBC original, unprocessed petrochemical feedstock. ofjobs supported and economic value added. | (excludes Sicily). | NetZeroby40 information from our website: | | | | --- | --- | --- | --- | | | | SAP | Data we use in this process includes our financial | | KeelClip™ | https://www.coca-colahellenic.com/ | A powerful software platform that enables us to | information (revenues, expenses, taxes, sales | | Paper packaging for multipack cans with a central | en/a-more-sustainable-future/netzeroby40 | standardise key business processes and systems. | volume and profits) as well as some data from | | ‘keel’, like on a boat, that secures the pack. | | | TheCoca‑Cola Company. While rigorous, the | | | NARTD | SBTN | | process involves statistical modelling, which KPIs Non-alcoholic ready-to-drink. The Science Based Targets Network is a should be considered when interpreting and using Key Performance Indicators. collaboration of leading global non-profits and NGOs the results from the studies. Modelling enables an mission-driven organisations working together Litre of produced beverage (lpb) Non-governmental organisations. assessment of three key dimensions of impact: toequip companies as well as cities with the Unit of reference to show environmental PET guidance to set science-based targets for all • direct: immediate effect in terms of performance relative to production volume. Polyethylene terephthalate, a form of polyester ofEarth’s systems. employment, wages and output Market used in the manufacturing of beverage bottles. • indirect: subsequent effect in the supply chain SDG When used in reference to geographic areas, a Per-capita consumption UN Sustainable Development Goals. On 25 • induced: effect caused by staff spend on goods country in which Coca‑Cola HBC does business. Average number of servings consumed per September 2015, countries adopted a set of or services Mission 2025 person per year in a specific market. Coca Cola 17goals to end poverty, protect the planet and We do not conduct socio-economic studies for all 2025 sustainability commitments with 17 goals. HBC’s per capita consumption is calculated by ensure prosperity for all as part of a new sustainable of our markets every year; studies are conducted Developed in late 2018, the goals are based on our multiplying our unit case volume by 24 and dividing development agenda. Each goal has specific for each market on a rolling basis. In 2022, we stakeholder materiality matrix and aligned with the by the population. targets to be achieved by 2030. updated the studies for ten markets, adding this United Nations Sustainable Development Goals Premium sparkling Senior leaders; senior management information to the aggregate results from all (SDGs) and their targets. The six key focus areas Includes Trademark Coca-Cola, Fanta, Sprite, Our top 300 business leaders, whichincludes socio-economic impact studies for the period reflect our value chain: reducing emissions; water Schweppes, Tuborg and Kinley sparkling country function heads, Group sub-function 2018-2022. reduction and stewardship; packaging (World | | beverages. | heads and the Executive Leadership Team (ELT), | | | --- | --- | --- | --- | | Without Waste); ingredient sourcing; nutrition; | | | Notes to the socio-economic contributions | | | Ready‑to‑drink (RTD) | including the CEO. | | | andour people and communities. | | | presented on page 15 of this report: | | | Drinks that are pre-mixed and packaged, ready | Serving | | | Multon | | | • Numbers presented are aggregated based on | | | tobe consumed immediately with no further | 237ml or 8oz of beverage, equivalent to 1/24 | | | Multon refers to Multon Partners, our operation | | | the local socio-economic studies from | | | preparation. | ofaunit case. | | | inRussia since 5 August 2022. More details on | | | Coca‑Cola HBC markets published between | | theregulatory news release can be found on | | | 2018 and 2022, except for North Macedonia | | company’s website. | | | where the report is from 2017. | Strategic Corporate Financial Swiss Statutory Supplementary Coca-Cola HBC Integrated Annual Report 2022 ### 259 Report Governance Statements Reporting Information ### Glossary continued • All KPIs represent annual impact. Waste ratio • Where applicable and relevant in local The KPI used by Coca‑Cola HBC to measure socioeconomic studies, the impact of other waste generation in its bottling plants, expressed entities of the Coca-Cola System is included in grammes of waste generated per litre of produced beverage (g/lpb). SSD Sparkling soft drinks. Waste recycling The KPI used by Coca‑Cola HBC to measure the TCCC percentage of production waste at bottling plants The Coca-Cola Company and, as the context may that is recycled or recovered. require, its subsidiaries. Water footprint TCFD A measure of the impact of water use, in Task Force on Climate-related Financial operations or beyond, as defined by the Water Disclosures. Footprint Network methodology. UNESDA Water use ratio Union of European Soft Drinks Associations. The KPI used by Coca‑Cola HBC to measure Unit case (u.c.) water use in its bottling plants, expressed in litres Approximately 5.678 litres or 24 servings, a typical of water used per litre of produced beverage (l/lpb). volume measurement unit. For Bambi volume, one Working capital unit case corresponds to 1 kilogram. Operating current assets minus operating UN Global Compact (UNGC) currentliabilities excluding financing and The world’s largest corporate citizenship initiative investment activities. which provides a framework for businesses to #YouthEmpowered (#YE) align strategies with its 10 principles promoting Flagship programme from our Mission 2025 labour rights, human rights, environmental sustainability commitments, which aims to protection and anti-corruption. support young people and increase their Volume employability by providing modular education Amount of physical product produced and sold, ofsoft and/or business skills. It is delivered via measured in unit cases. classroom sessions, virtual training, self e-learning modules, mentoring sessions and other channels Value share handled locally by our markets. Percentage of total consumer spend within adefined category or industry. 260 Strategic Report Corporate Governance Financial Statements Swiss Statutory Reporting Supplementary Information Coca-Cola HBC Integrated Annual Report 2022 ### Special note regarding forward-looking statements This document contains forward-looking statements that involve risks and uncertainties. These statements may generally, but not always, be identified by the use of words such as 'believe', 'outlook', 'guidance', 'intent', 'expect', 'anticipate', 'plan', 'target', 'seek', 'estimates', 'potential' and similar expressions to identify forward-looking statements. All statements other than statements of historical fact, including, among others, statements regarding the future financial position and results; Coca-Cola HBC's outlook for 2021 and future years; business strategy and the effects of the global economic slowdown; the impact of the sovereign debt crisis, currency volatility, Coca-Cola HBC's recent acquisitions, and restructuring initiatives on Coca-Cola HBC's business and financial condition; Coca-Cola HBC's future dealings with The Coca-Cola Company; budgets; projected levels of consumption and production; projected raw material and other costs; estimates of capital expenditure; free cash flow; and effective tax rates and plans and objectives of management for future operations; are forward-looking statements. You should not place undue reliance on such forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they reflect Coca-Cola HBC's current expectations and assumptions about future events and circumstances that may not prove accurate. Forward-looking statements speak only as of the date they are made. Coca-Cola HBC's actual results and events could differ materially from those anticipated in the forward-looking statements for many reasons, including the risks described in the Risk and materiality section. Although Coca-Cola HBC believes that, as of the date of this document, the expectations reflected in the forward-looking statements are reasonable, Coca-Cola HBC cannot assure that Coca-Cola HBC's future results, level of activity, performance or achievements will meet these expectations. Moreover, neither Coca-Cola HBC, nor its Directors, employees, advisers nor any other person assumes responsibility for the accuracy and completeness of any forward-looking statements. After the date of this Integrated Annual Report, unless Coca-Cola HBC is required by law or the rules of the UK Financial Conduct Authority to update these forward-looking statements, Coca-Cola HBC makes no commitment to update any of these forward-looking statements to conform them either to actual results or to changes in Coca-Cola HBC's expectations. ### About our report The 2022 Integrated Annual Report (the 'Annual Report') consolidates Coca-Cola HBC AG's (also referred to as 'Coca-Cola HBC') or the 'Company' or the 'Group' IUK and Swiss disclosure requirements, while meeting the disclosure requirements for its secondary listing on the Athens Exchange. In addition, the Annual Report aims to deliver against the expectations of the Company's stakeholders and sustainability reporting standards, providing a transparent overview of the Group's performance and progress in sustainable development for 2022. Our strategy is designed to deliver, sustainable and profitable growth. This strategy is grounded in our purpose to open up moments that refresh us all. Our purpose is directly linked to our strategy and the five growth pillars that guide us as we pursue our objectives and targets. Those growth pillars are: 1. Leverage our unique 247T portfolio; 2. Win in the marketplace; 3. Fuel growth through competitiveness and investments; 4. Cultivate the potential of our people; 5. Earn our license to operate. The initiatives we implemented within each of these pillars forms the basis of the narrative of the Integrated Annual Report, which is structured around these five pillars. The Annual Report is for the year ended 31 December 2022, and its focus is on the primary core business of non-alcoholic ready-to-drink beverages across the 29 countries in which we operate. Our website and any other website referred to in the Annual Report are not incorporated by reference and do not form part of the Annual Report. The consolidated financial statements of the Group, included on pages 164-167, have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Coca-Cola HBC AG's statutory financial statements, included on pages 230-232, have been prepared in accordance with the Swiss Code of Obligations. Unless otherwise indicated or required by context, all financial information contained in this document has been prepared in accordance with IFRS. For Swiss law purposes, the annual management report consists of the sections entitled 'Strategic Report', 'Corporate Governance' (without the sub-section 'Director's Remuneration Report'), 'Supplementary Information' and 'Glossary'. The Group uses certain Alternative performance measures (APMs) which provide additional insights and understanding to the Group's underlying operating and financial performance, financial condition and cash flows. A full list of these APMs, their definition and reconciliation to the respective IFRS measures can be found on pages 245-249. This report has been prepared in accordance with the GRI Standards (2022). In addition, the sustainability aspects of this Annual Report comply with the AA1000AS Assurance Standard, and the requirements for communication on progress against the 10 Principles of the United Nations Global Compact (UNGCI). In addition, the report is aligned with the principles and elements of the International Integrated Reporting Council's (IRIC) framework. Greenhouse gas emissions are calculated using the GHG Protocol Corporate Accounting and Reporting Standard methodology. Furthermore, Coca-Cola HBC supports the Task Force on Climate-related Financial Disclosures (TCFD) and reports to the Sustainability Accounting Standards Board (SASB) framework. The sustainability aspects of the Integrated Annual Report have been verified by an independent professional assurance provider as dictated by the Company's Executive Leadership Team (ELT), and you can find the relevant assurance statement on pages 250-252. As with the rest of the information provided, the sustainability aspects of this Annual Report are for the full year ended 31 December 2022 and the related information presented is based on an annual reporting cycle. Scope of the report 2022: environmental and social data includes North Macedonia joint venture, Ukraine and Russia, unless otherwise stated. Snacks manufacturing operations are not included in the environmental and social reporting, unless otherwise stated (due to their very small impact, less than the internal materiality threshold). Relevant impact areas from coffee and premium spirits categories are included in the environmental and social data. As the recently acquired Egyptian operations are still under transition, only a very few of their environmental and social data are part of our sustainability data, and it is clearly stated. We remain committed to strong corporate governance and leadership as well as transparency in our disclosures. We will continue to review our reporting approach and routines, to ensure they meet best practice reporting standards and the expectations of our stakeholders, and provide visibility on how we create sustainable value for the communities we serve. ## Visit us ### www.coca-colahellenic.com Write to us The Group site features all the latest news We have dedicated email addresses which and stories from around our business and you canusetocommunicate with us: communities, as well as an interactive investor.relations@cchellenic.com online version of this report. sustainability@cchellenic.com Coca-Cola HBC Integrated Annual Report 2022 Coca-Cola HBC AG Turmstrasse 26, CH-6312 Steinhausen, Switzerland www.coca-colahellenic.com investor.relations@cchellenic.com sustainability@cchellenic.com The paper used in this report is FSC® certified. Theprinter is ISO 14001 accredited. Under the framework of ISO 14001 a structured approach is takenby the company to measure, improve and audit their environmental status on an ongoing basis. FSC® ensures there is an audited chain of custody fromthe tree in the well-managed forest through to the finished documentin the printing factory. Designed and produced by Black Sun Plc