GREAT PEOPLE
GREAT SERVICE
GREAT BEVERAGES
2020 INTEGRATED REPORT AND FORM 20-F
ONE OF THE WORLD’S LARGEST
BEVERAGE COMPANIES.
POWERED BY A TEAM OF TALENTED
AND ENGAGED PEOPLE.
LEADING POSITION WITHIN A
LARGE AND VALUABLE CATEGORY.
SOLID TRACK RECORD
OF PERFORMANCE.
RAPID RESPONSE
TO COVID‑19 PANDEMIC.
CONFIDENT IN OUR FUTURE,
LED BY GREEN AND DIGITAL.
STRONGLY ALIGNED WITH
THE COCA‑COLA COMPANY.
Coca-Cola European Paners plc Registered in England & Wales, Company number 09717350
Strategic Repo
2 Peormance indicators
4 Our poolio
6 Our operations
8 What we do and how we do it
10 Our stakeholders
13 Section 172(1) statement
from the Directors
14 Conversation with our Chairman
and CEO
18 Succeeding in a changing landscape
20 Our strategy
22 Sustainability
38 Our people
42 Operating with integrity
44 Principal risks
52 Viability statement
53 Non-financial information statement
54 Business and financial review
Governance and Directors’ Repo
64 Chairman’s introduction
65 Board of Directors
66 Directors’ biographies
71 Senior management
72 Corporate governance repo
82 Nomination Commiee
Chairman’s leer
83 Nomination Commiee repo
86 Audit Commiee Chairman’s leer
87 Audit Commiee repo
92 Directors’ remuneration repo
92 Statement from
the Remuneration
Commiee Chairman
95 Overview of remuneration policy
96 Remuneration at a glance
97 Annual repo on remuneration
108 Directors’ repo
111 Directors’ responsibilities statement
Financial Statements
114 Independent Auditor’s repos
128 Consolidated financial statements
133 Notes to the consolidated
financial statements
175 Company financial statements
179 Notes to the Company financial
statements
Other Information
188 Risk factors
198 Other Group information
216 Form 20-F table of cross references
218 Exhibits
220 Glossary
223 Useful addresses
224 Forward-looking statements
LEARN ABOUT WHAT WE DO, HOW WE DO IT
AND OUR STAKEHOLDERS ON PAGES 8–13
READ ABOUT OUR SUSTAINABILITY ACTION
PLAN, THIS IS FORWARD, ON PAGES 22–41
SEE OUR REPORT ONLINE AT IR.COCACOLAEP.COM/FINANCIAL‑REPORTS‑AND‑RESULTS/INTEGRATED‑REPORTS
1Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
None of the websites referred to in this
Annual Repo on Form 20-F for the year
ended 31 December 2020 (the Form 20-F),
including where a link is provided, nor any of
the information contained on such websites,
are incorporated by reference in the Form 20-F.
DRIVING
SUSTAINABLE
SHAREHOLDER
RETURNS
World’s best
brands
Positioned for
continued growth
Unrivalled
customer
coverage
Investing in key
capabilities
Ambitious
sustainability plans
Solid balance
sheet
Strong, strategic
alignment with
The Coca-Cola
Company
Success driven
by the resilience
of our people
Suppoing
our
communities
Peormance
indicators
Financial
Revenue (€BN) Operating profit on a comparable basis* (€BN) Diluted earnings per share (EPS)
on a comparable basis* (€)
12.0
10.6
1.7
1.2
1.80
2.53
€10.6BN €1.2BN €1.80
Comparable volumes declined
by 10% reflecting the adverse
impact of COVID-19, paicularly
on immediate consumption and
the away from home channel.
This was paially offset by growth
in the home channel suppoed
by online grocery sales and
continued revenue growth
management initiatives.
Revenue per unit case declined
by 1.5% driven by adverse channel,
geographic and pack mix as a
result of COVID-19.
Comparable operating profit
declined by 29% reflecting the
decline in revenue. This impact
was moderated by a reduction
in variable expenses given lower
volumes, as well as the delivery
of approximately €260 million in
discretionary operating expenditure
(opex) savings as we ensured spend
was limited to what was essential.
We leveraged the crisis as a catalyst
to accelerate our competitiveness
initiatives as we look for ways to
become even more efficient and
fuher reduce complexity.
Comparable diluted EPS declined
by 29% driven by the decline in
comparable operating profit.
This was paially offset by the
return of approximately €130 million
to shareholders before the suspension
of our €1 billion share buyback
programme in March 2020.
Free cash flow* (€BN) Return on capital invested
(ROIC)* (%)
1.1
0.9
10.3
7.6
Data legend
2019 2020
* Please refer to Business
and financial review on
page 54 for definition and
reconciliation of non-GAAP
figures to GAAP figures.
€0.9BN 7.6 %
Free cash flow generation continues
to be a core priority of our business.
Despite the impact of COVID-19
and following continued investments
in our poolio, digital capabilities
and sustainability initiatives,
we still delivered free cash flow
of over €900 million, close to
our medium-term objective of
generating at least €1 billion a year.
This highlights the strength of
our free cash flow generation,
suppoed by our disciplined capital
expenditure (capex) and working
capital improvement initiatives.
ROIC declined by 270 basis
points driven by the decline in
comparable operating profit.
This metric remains a high priority
for us and we will continue to focus
on driving profitable revenue
growth and capital efficiencies.
2
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
Sustainability
Lost time incident rate
(number per 100 full time equivalent employees)
% GHG emissions reduction across
our value chain since 2010 and 2019
% sugar reduction in
our so drinks since 2015
0.82
1.14
1.07
VERSUS 2010
37.7
11.9
VERSUS 2019
(A)
11.9%
We are commied to reducing
greenhouse gas (GHG) emissions,
to limit the global temperature
increase to 1.5°C above pre-
industrial levels and to protect the
future of our planet. In 2020, we
launched our new climate strategy
with a clear ambition to reach net
zero GHG emissions by 2040 and to
reduce our GHG emissions across
our value chain by 30% by 2030
(versus 2019).
In 2020, the GHG emissions within
our value chain had fallen by 11.9%
compared to 2019 and had fallen
by 37.7% compared to 2010
(previous target baseline year).
15.3
12.9
11.1
0.82 15.3%
Our people’s mental and physical
wellbeing remains our priority
during the ongoing COVID-19
pandemic. By providing our
people with a safe and healthy
work environment, we aim to
work towards zero incidents.
In 2020, we continued to upgrade
and improve workplace equipment
and infrastructure and we saw our
lost time incident rate fall to 0.82,
a reduction of 23% compared
with the previous year.
Consumer habits are continually
changing. Working with The
Coca-Cola Company (TCCC) and
other franchisors, we continue to
evolve our business and poolio
to meet consumers’ demands
for a greater variety of drinks,
including low and no calorie options.
By the end of 2020, the average sugar
per litre in our so drinks poolio
had fallen by 15.3% compared with
2015. This represents a reduction
of 19.8% since 2010. We’re achieving
these reductions by reformulating
our recipes, and by providing
greater choice.
Water use ratio
(litres of water/litre of product produced)
% PET from recycled PET
1.57
1.60
1.61
41.3
30.5
27.6
Data legend
2020
2018 2019
FOR MORE ABOUT OUR SUSTAINABILITY
COMMITMENTS AND PROGRESS,
SEE PAGES 22–37
1.57 41.3%
Climate change is altering weather
paerns around the world, causing
water shoages and droughts in
some areas and floods in others.
As water is the main ingredient in
the majority of our drinks it’s critical
that we use water sustainably and
protect local water resources
for future generations.
The amount of water we use to make
our products has reduced by 13.7%
compared with 2010, to 1.57 litres of
water per litre of product produced.
Creating a circular economy for the
packaging we use is impoant in
helping to address the world’s plastic
waste crisis. We are commied to
ensuring that at least 50% of the
material we use for our PET boles
comes from recycled PET (rPET) by
2023, and we’ll aim to reach 100%
recycled or renewable plastic by the
end of the decade. We continue to
make progress in increasing recycled
plastic in our packaging.
In 2020, 41.3% of the PET we used
to make our PET boles was rPET,
up from 30.5% in 2019.
We launched our new climate
strategy with a clear ambition
to reach net zero greenhouse
gas emissions by 2040
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3Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
(A) 2019 data restated.
For more information see page 26.
Our poolio
We work closely with our franchise paners to offer
consumers a wide range of popular drinks, with or
without sugar and in a range of pack sizes and materials.
We continue to expand our poolio into areas we
believe will drive significant growth in the coming years.
66.0%
COCA‑COLA®
22.5%
FLAVOURS, MIXERS AND ENERGY
COCA‑COLA®
Our Coca-Cola brands come in a range of
variants that offer consumers a great choice
of flavours, with or without sugar. This includes
Coca-Cola Classic and Coca-Cola Zero Sugar,
and Diet Coke/Coca-Cola Light for a lighter
and refreshing taste across a number of
flavour variants. Coca-Cola Zero Sugar was
the number one so drinks brand for absolute
value growth across our markets, according
to Nielseniq.
FLAVOURS, MIXERS AND ENERGY
Flavours, mixers and energy are an impoant pa
of our poolio of drinks. Fanta continued to be a
focus in 2020 suppoed by a significant Halloween
marketing campaign and new flavours like raspberry
zero sugar.
Monster peormed strongly in 2020 – with
volume growth of 15.5%, suppoed by new
flavours such as Pacific Punch and a broader
multi-pack offering in markets such as GB.
Monster is now the number one energy brand
in Spain and Pougal. We also introduced a
new cherry variant for Coca-Cola Energy.
We’re building our poolio of adult mixers, led by
Schweppes
(A)
, Royal Bliss and Coca-Cola Signature
Mixers. In 2020, Schweppes gained value share in a
competitive GB market.
(A) In Great Britain (GB) only.
(B) We repo comparable volumes for our Coca-Cola trademark
drinks; flavours, mixers and energy drinks; hydration; and RTD teas,
RTD coffees, juices and other drinks.
4
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
6.5%
HYDRATION
HYDRATION
The hydration category is typically heavily
reliant on immediate consumption – with
consumers buying and consuming our
hydration brands on the go. As a result of
COVID-19 restrictions and less immediate
consumption, 2020 saw a 34% volume decline.
RTD TEAS, RTD COFFEES,
JUICES AND OTHER DRINKS
2020 saw the expansion of Costa Coffee to Germany,
following the introduction of Costa Coffee ready
to drink (RTD) in GB in 2019. We also created a
dedicated team, led by a new senior leadership
role in Coca-Cola European Paners (CCEP),
to oversee our expansion into coffee.
We continue to invest in Fuze Tea, with new flavours
and pack sizes coming in 2021 to drive momentum.
In the fouh quaer of the year, Capri-Sun saw solid
growth in GB and France.
In panership with TCCC, we introduced Topo Chico
hard seltzer – Coca-Cola’s first brand in the alcohol
category in Europe.
2020 BRAND CATEGORY
VOLUME (ROUNDED)
(B)
5.0%
RTD TEAS, RTD COFFEES,
JUICES AND OTHER DRINKS
5Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
A
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C
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I
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9
Map legend
Production facility
2
2x Production facilities
Shared service centre
Where we operate
SEE OUR INTERACTIVE MAP ON
WWW.COCACOLAEP.COM
/ABOUT‑US/PLACES
Our operations
We are a local business. We invest, employ, manufacture
and distribute locally. We want to create a great
experience for everyone we interact with – whether they
are a customer, paner, supplier, stakeholder, member
of our local community or pa of our great team.
We are investing in key areas of our business,
to make the experiences we provide even beer.
REVENUE BY GEOGRAPHY
(A)
NO. OF EMPLOYEES
(B)
1
Iberia (Spain, Pougal and Andorra)
20.5% 4,012
2
Germany
21.5% 7,061
3
Great Britain
21.0% 3,329
4
France (France and Monaco)
16.0% 2,570
5
Belgium and Luxembourg
8.5% 2,135
6
Netherlands
5.0% 765
7
Norway
4.0% 549
8
Sweden
3.0% 679
9
Iceland
0.5% 164
10
Bulgaria
842
(A) Revenue shown is percentage of total revenue as at 31 December 2020.
(B) Number shown is number of employees as at 31 December 2020.
READ MORE ABOUT HOW WE ARE SUCCEEDING IN A CHANGING
LANDSCAPE ON PAGES 18–19
6
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
Bulgaria
2
2
1
2
3
4
5
6
7
8
K
e
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h
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l
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t
Sweden became our first 100%
rPET market in 2020 and the
first in the Coca-Cola system
7Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Work with TCCC and other franchisors
TCCC and other franchisors make and sell
concentrates, beverage bases and syrups,
own the brands and are responsible for
consumer brand marketing.
We operate under boler agreements
with TCCC and other franchisors and
purchase the concentrates, beverage
bases and syrups to make, sell and
distribute packaged beverages to
our customers and vending paners.
Source raw materials
We use ingredients such as water,
sugar, coffee, juices and syrup to make
our drinks. We also rely on materials like
glass, aluminium, PET, pulp and paper
to produce packaging. We require all
our suppliers to meet strict targets
around workplace policies and practices,
health and safety, ethics and human
rights, environmental protection and
business integrity.
Powered by our people
What we do
and how we do it
GREAT PEOPLE
●
A great place to work, where people
can grow, be happy and be well
through Me@CCEP
●
Winning capabilities and peormance
●
Following our Code of Conduct (CoC)
GREAT SERVICE
●
Easy to do business with
●
Known for world class execution
●
Agile and flexible
●
Decision making close to the customer
DONE SUSTAINABLY
●
Force for good
●
Transitioning to a low-carbon,
zero waste, circular business
●
Focused on the areas that
maer most to our business and
stakeholders: climate, society, drinks,
packaging, water and supply chain
GREAT BEVERAGES
●
Category leadership with great tasting
drinks and brands consumers love
●
Top quality and right every time
●
Bring brands to life in the market
through poweul panerships with
brand owners
FIND OUT MORE ABOUT WHERE OUR PEOPLE
WORK ON PAGE 6
FIND OUT MORE ABOUT OUR PORTFOLIO OF
DRINKS ON PAGES 4–5
SEE OUR THIS IS FORWARD SUSTAINABILITY
ACTION PLAN ON PAGES 22–37
8
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
Make great tasting drinks
Our production facilities make and bole
our wide range of drinks. We’re continually
improving our production facilities. We
produce safe, high quality products for our
customers and consumers. Over 92% of the
drinks we sell are produced in the country in
which they are consumed.
Distribute to
our customers
We distribute our products
to customers and vending
paners by working closely
with logistics paners.
Work closely with customers
who sell to consumers
Our nearly 6,000 strong sales
force works with a huge range of
customers – from small local shops,
supermarkets and wholesalers to
restaurants, bars and spos stadiums
– so consumers can enjoy our great
products wherever they are and
whenever they want. We also provide
cold drink equipment (CDE) and
supply vending machines so people
can find our drinks on the go.
FOR A BETTER
SHARED FUTURE
●
Creating value for all our
customers – big and small
●
Contributing to local
economies
●
Suppoing our communities
●
Trusted by shareowners and
stakeholders
Work with paners, aiming to
collect 100% of our packaging
Although 98% of our boles and cans
are recyclable, they don’t always end
up being recycled. That needs to change.
We’re determined to lead the way towards
a circular economy for our packaging where
100% of our packaging is collected, reused
or recycled, so that none of it ends up as
lier or in the oceans.
We employ around 22,000 people across our business. They make
and sell our great beverages and help our customers grow by
providing great service. They work with our communities as we seek
to work sustainably and help them thrive.
9Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Our stakeholders
Our stakeholders are pa of our business and play a vital
role in our success at every stage in our value chain.
From the suppliers who provide our raw materials, to the
communities where we operate and the people who make
and sell our products, we seek to work together to refresh
our markets and make a difference.
OUR PEOPLE
Our business depends on the great
people who make, sell and distribute our
products every day. We foster a diverse,
inclusive and safe working environment,
where everyone’s individuality is valued
and where everyone has the training,
tools and oppounity to succeed.
We invest in our people’s training and
development (around €9 million in
2020) as well as compensating them
and providing additional benefits.
How we engage
We make sure our people have
oppounities to share their views, for
example, through town hall meetings
(held viually in 2020, as a result of the
COVID-19 pandemic) and engagement
surveys. We share information through
our intranet and other communication
channels. Our management meets
regularly with works councils and trade
unions that represent our people. We
have a number of channels through
which our people can seek advice and
raise concerns in line with our CoC.
What the Board did
Designated Directors
Two Non-executive Directors (NEDs),
the chairmen of the Remuneration
and Nomination Commiees, have
responsibility for ensuring the views
and concerns of the workforce are
taken into account by the Board and
for repoing to the Board on employee
related maers. During the year, the
Nomination Commiee requested
regular feedback from management
in relation to employee wellbeing and
progress towards our inclusion and
diversity (I&D) plan. The Remuneration
Commiee considered employee
incentives in light of COVID-19, including
the need for a fair and consistent
approach across our workforce.
Consultation
2020 saw the first exceptional meetings
of the CCEP European Employee Works
Council, established in November 2019,
to consult on CCEP’s proposed
Accelerate Competitiveness
programme. The Chief Executive Officer
(CEO) presented and took questions
in a viual environment and the
conversation was translated into local
languages to enable full paicipation.
Communication
To create an open and honest culture
at CCEP, regular communications
to our people from the CEO and
other senior leaders is key. The CEO
provides a regular cadence of updates
regarding the Group’s results and other
developments within the business, to
ensure our people are kept informed
about the maers that affect them
as employees. The Board endorsed
management’s approach to increasing
senior leadership visibility and frequency
of communications in response to
COVID-19, noting the positive impacts
of clear leadership and direction on
confidence and productivity.
Employee town hall
To ensure the safety of our people, we
adhered to prevailing COVID-19 public
health guidance and held an employee
town hall with the Board, viually. Over
2,000 of our people were invited to
aend an online session and to submit
questions to be answered by a panel
of Directors. They challenged the
panel with tough questions covering
sustainability, commercial decisions
and mergers and acquisitions (M&A).
READ MORE ABOUT OUR PEOPLE
AND CULTURE ON PAGES 38–41
10
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
OUR INVESTORS
Our investors provide the equity
capital for our business and hold
management to account, not only
on financial peormance but also by
discussing key environmental, social
and governance issues.
In 2020, we paid dividends totalling
€386 million to shareholders.
How we engage
We have a comprehensive programme
of investor engagement covering
the Annual General Meeting
(AGM), investor roadshows, investor
conferences including key note
webcast presentations, analyst
meetings, proxy advisor engagement,
half yearly earnings releases alongside
presentations and trading updates with
webcast conference calls. Much of our
interaction in 2020 was viual as a result
of the COVID-19 pandemic.
What the Board did
M&A
During the year, the Board considered
the oppounity to acquire Coca-Cola
Amatil Limited (CCL), one of the
largest bolers of RTD beverages
and coffee in the Asia Pacific region.
The Board invested significant time
in understanding CCL’s business and
markets and how the acquisition aligns
with CCEP’s long-term growth ambition.
Annual General Meeting
This year, the AGM was held as a
closed meeting in line with prevailing
COVID-19 guidelines and in accordance
with CCEP’s Aicles of Association.
Shareholders were given the
oppounity to put questions to the
Board ahead of the meeting via the
Company’s website.
OUR FRANCHISORS
We conduct our business primarily
under agreements with TCCC and a
limited number of other franchisors.
These agreements generally give us
the exclusive right to sell, distribute,
and, in most cases, make beverages
in approved packaging in specified
territories.
We drive sales to customers so that our
franchisors’ brands are available where
and when consumers want them.
How we engage
CCEP has long-term growth plans
to create value together with our
franchisors. To ensure ongoing
discussion, our management regularly
meets them to consider both functional,
and sales and marketing maers.
We invite TCCC to present at our
Board meetings on a regular basis.
What the Board did
Collaboration
CCEP works closely with our franchise
paners to develop and market the
brands we sell and to set the tone of
our engagement with consumers. The
Affiliated Transaction Commiee (ATC)
oversaw the peormance of franchisor
relationships in 2020, including new
product development and trends in
innovation.
OUR SUPPLIERS
We work with a network of about
15,000 suppliers across our markets.
They supply us with a wide range
of commodities and services such
as ingredients, packaging, energy,
equipment, building and facilities,
fleet and logistics services, sales
and marketing services, information
technology (IT) and telecoms and
general administration.
Panering and collaboration with our
suppliers on sustainability is helping
drive progress on delivering our This is
Forward commitments while sustainable
sourcing ensures security of supply
of all the commodities and services
needed to make, sell and distribute our
drinks. For example, the suppo of our
suppliers is key to achieving our 2030
GHG emissions reduction target.
Around 87% of our spend in 2020
(excluding concentrate and juices
purchased from TCCC and other
franchisors) was with suppliers in
our countries of operation.
How we engage
Through our supplier relationship
management process, our procurement
teams engage regularly with suppliers
so we can build long-term relationships
and work together on common
objectives. This includes addressing
key sustainability issues in areas such
as reducing packaging waste and
responsible ingredient sourcing.
What the Board did
Annual supplier day
The CEO and other senior management
representatives aended a viual event
aended by more than 200 unique
suppliers.
Digital tools
A demonstration of the digital tools
used by CCEP’s procurement team
was given on request to one member
of the Board.
Supplier Guiding Principles
As pa of operating with integrity, we
have guidelines approved at Board
level seing out expectations and
requirements of our suppliers in relation
to expected conduct, for example, in
relation to human rights, health and
safety and other maers.
READ ABOUT OUR SOURCES AND
USES OF CASH ON PAGES 59–60
READ ABOUT OUR RELATIONSHIP WITH TCCC
AND OTHER FRANCHISORS ON PAGES 195–196
READ MORE ABOUT ACTION WE’RE TAKING
ON OUR SUPPLY CHAIN ON PAGES 36–37
11Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
WE ENGAGE WITH OUR
STAKEHOLDERS REGULARLY TO
UNDERSTAND THEIR VIEWS ON THE
ISSUES THAT MATTER MOST TO THEM
AND HOW BEST TO WORK TOGETHER
TOWARDS OUR COMMON GOALS. BY
LISTENING CLOSELY TO OUR
STAKEHOLDERS, WE ENSURE THEIR
INSIGHTS SHAPE OUR BUSINESS
STRATEGY.
OUR CUSTOMERS
We strive to be our customers’ preferred
paner and create value together by
responding to changing consumer
preferences and retail trends. Our
operating model is customer centric
and focused on the front line. We aim
to deliver the strongest execution and
reach a broad range of outlets in the
marketplace, all while making it easier to
do business with us. In 2020, the revenue
we generated for our grocery customers
grew by €488 million compared to 2019.
(A)
How we engage
We are focused on our customers, with
thousands of our people calling on them
every day (subject to local restrictions).
General Managers regularly engage with
customers, along with senior members
of the sales teams. We also engage
with customers at an international
level through TCCC’s Global Customer
Governance Board where ceain
international customers request this
single point of contact within the
Coca-Cola system. This engagement
is limited to our markets under strict
legal protocols.
What the Board did
Market visits
The Directors remain commied to
understanding our markets and our
customers. Viual market visits were
arranged in 2020, to mitigate the health
and safety risks of in person visits from
COVID-19. The Directors received
insights on maers including field sales
activation, marketing and adding value
for retailers.
Voice of the customer
Senior leadership from Carrefour
France were invited to present to
the Board about Carrefour’s approach
to its customers. The Directors
asked questions and discussed the
future of retail more widely from
a consumer focus.
CONSUMERS
Consumers buy our great products
from our customers. They drive demand
for a range of drinks. We work with our
customers to ensure that the drinks
reaching consumers are high quality,
safe and taste great.
How we engage
Generally, our franchisors own the
relationship with consumers. We
work closely with our franchisors and
customers to understand consumer
wants and needs. We receive direct
feedback from consumers via the
consumer care line provided on
all our packaging.
What the Board did
Our poolio
Our ATC oversees CCEP’s relationships
with our franchise paners, through
which we are able to keep focus on
development and diversification of
our poolio.
OUR COMMUNITIES
We have a strong local heritage and
presence. We seek to make a positive
difference, helping to address the
challenges our communities face by
suppoing local panerships and
grassroots initiatives.
We recognise the economic, social
and environmental interaction between
our business and our communities.
Our people live in our local communities
and we use local resources, such as
water and transpo systems, to make,
sell and distribute our products.
How we engage
We invest in charitable and community
causes in all of our markets and
our people regularly take pa in
volunteering activities to suppo
social initiatives in our communities.
What the Board did
This is Forward
The Corporate Social Responsibility
(CSR) Commiee oversaw development
of, and progress against, our sustainability
action plan, taking into consideration
market guidance on sustainability and
stewardship. The Board aended a
session giving an external perspective
on the global climate challenge, in the
context of CCEP’s action on climate.
Climate strategy
In December 2020, CCEP announced
a new 2030 science based emissions
reduction target and an ambition
to reach net zero emissions by 2040.
We continue to invest proactively in
our sustainability ambitions to create
a beer future for the communities
we serve.
READ ABOUT OUR GHG EMISSIONS
TARGETS ON PAGES 24–26
Our stakeholders continued
(A) Source: Nielseniq ScanTrack (Nielsen Strategic Planner Data) for the year 2020 to week ending 27 December 2020.
Countries included are Belgium, France, Germany, GB, the Netherlands, Norway, Spain, Sweden and Pougal.
CCEP is defined as TCCC and Monster Energy excluding Innocent. Grocery customers here generally includes
hypermarkets, supermarkets and discounters, although there are slight variations by market.
12
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
CASE STUDY
COVID‑19
In response to the COVID-19 pandemic, the Board
empowered management to take immediate actions
to protect our people, suppo our customers and
communities, and safeguard the long-term future
of our business.
COVID-19 required us to adapt quickly to a challenging
and rapidly evolving environment. During the initial peak of
the pandemic, weekly meetings were established between
the Directors and senior management to ensure the
right actions could be taken at the right times. We took
decisions with a view to balancing the immediate needs
of our stakeholders with our commitment to a sustainable
recovery over the long term. Some examples of how
this worked in practice are set out below:
Our people
We made a commitment early in the year to prioritise
our people’s health, safety and wellbeing. Pulse surveys
were undeaken during the summer, to understand our
people’s experiences of the pandemic and their responses
to leadership decisions. The results directly informed
development of our people strategy, notably our wellbeing
and future ways of working initiatives, with oversight by the
Nomination Commiee.
READ ABOUT THE STEPS WE TOOK IN RELATION TO
OUR PEOPLE IN ACTION ON SOCIETY ON PAGE 27
Customers
Our commercial management teams have provided case
by case suppo to our customers during what has been a
difficult and challenging time. The Board endorsed a
flexible and collaborative approach to speed recovery,
which saw adjustments to production to ensure our
customers were receiving the products in demand,
and redeployment of our people to suppo a strained
grocery sector.
Communities
Commitment to suppoing the local communities where
we operate is a pa of CCEP’s sustainability strategy.
We are proud that the strong links we have established
with local communities have helped CCEP to have a
meaningful and positive impact across our territories
in response to the pandemic. Our contributions have
included €3 million in product donations, ongoing
volunteering by our people and working closely with TCCC
and the Coca-Cola Foundation to provide substantial
financial aid to fund the fight against COVID-19.
READ ABOUT SUPPORT FOR COMMUNITIES AND
CUSTOMERS ON PAGES 28–29
We have fuhered our commitment to making a
positive difference by signing the Uniting Business and
Governments to Recover Beer business statement,
which calls upon businesses and governments to
prioritise science based climate actions as pa of
their COVID-19 recovery plans.
READ ABOUT OUR PLANS FOR A GREEN RECOVERY ON PAGES 24–26
Investors
Due to the significant macroeconomic unceainty arising
from the pandemic, we took the decision in the sho term
to defer consideration of a 2020 dividend payment to
shareholders until later in the year, to preserve maximum
flexibility during a challenging period. Management
maintained regular and open dialogue with investors and
provided timely updates to the Board on market sentiment
and confidence in our business. The Directors recognise the
impoance of cash returns to shareholders and declared
a full-year dividend for 2020 in October, once visibility
over peormance had improved.
READ MORE ABOUT OUR STRATEGIC RESPONSE TO COVID-19 IN THE
CONVERSATION WITH OUR CHAIRMAN AND CEO ON PAGES 15–17
Consumers
The Board received regular updates from management
regarding consumer buying behaviour and changes to the
daily routines of consumers. Emerging trends in consumer
behaviour have helped inform our strategic route to
market decisions, to ensure we can deliver our beverages
to the places and in the ways our consumers want.
During 2020, the Board acted in good faith
to promote the long‑term success of CCEP
In accordance with the directors’ duties set out in
section 172 of the UK Companies Act 2006 (the
Companies Act), the Board supervises the profitable
operation and development of CCEP to maximise its
equity value over the long term, without regard to the
individual interests of any shareholder. A minority of
our NEDs were appointed by major shareholders of
CCEP. However, each of the Directors understands his or
her responsibility under the Companies Act to act fairly
as between members of the Company. We acknowledge
that all of our decisions may affect CCEP’s shareholders
through their impact on the future success of the
business and confirm our due regard in this respect.
We recognise that to deliver our strategy in a sustainable
way, we must consider the commercial, social and
environmental impacts of our business. During the year,
we have monitored, assessed and challenged CCEP’s
progress against our annual business plan and
sustainability targets.
When taking decisions of strategic impoance, we
endeavour to balance the interests of our stakeholders
in ways that are compatible with CCEP’s long-term,
sustainable growth. The Board gains stakeholder
perspectives to inform its decision making through
direct engagement, where feasible, and regular
communication with senior management. We identified
our key stakeholder groups as those which have
significant interactions with our business model and that
we impact in the course of our business operations.
Ensuring our business operates responsibly is
fundamental to our long-term success. The Board
oversees a robust corporate governance framework
that enables the right people to take the right decisions
at the right time.
READ HOW OUR CORPORATE GOVERNANCE FRAMEWORK WORKS
IN PRACTICE ON PAGES 74–81
HOW THE DIRECTORS, AND CCEP MORE WIDELY, HAVE ENGAGED WITH
OUR KEY STAKEHOLDERS THIS YEAR IS SET OUT ON PAGES 10–13
13Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Conversation with
our Chairman and CEO
Damian Gammell,
Chief Executive Officer (le)
Sol Daurella, Chairman (right)
FURTHER…
K
e
y
h
i
g
h
l
i
g
h
t
We donated more than
600,000 unit cases
(3.3 million litres)
of our products
to foodbanks, medical
and key workers
14
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Financial StatementsStrategic Repo Governance and Directors’ Repo
14
How did CCEP fare during 2020
and the COVID‑19 pandemic?
Sol
2020 was an unprecedented
and challenging year for us all and
I’d firstly like to extend my sincere
gratitude to everyone at CCEP for
their incredible commitment and
hard work, as well as to all of those
who have been keeping us safe
throughout the pandemic.
In 2020, we prioritised the wellbeing
of our people and the continuity of
service to our customers. We worked
closely with all our paners to
suppo our customers and everyone
they serve. Together with TCCC,
we provided substantial aid to
the Red Cross and other local
non-governmental organisations
(NGOs). In addition to providing
protective equipment, we donated
more than 600,000 unit cases of
our products to foodbanks, medical
and key workers.
And from a governance perspective,
we increased the cadence of
leadership reviews with our teams,
our Board and TCCC, while also
learning from other bolers across
the Coca-Cola system.
Damian
Our results demonstrate
the resilience of our business and
our ability to operate with agility in
such a rapidly changing environment.
I am paicularly proud of how our
colleagues worked tirelessly to
suppo our customers, consumers,
communities and each other
throughout such a challenging year,
while at the same time protecting
the long-term health of our business.
We entered 2020 with good
momentum but the COVID-19
pandemic had a significant impact
on immediate consumption and the
away from home channel given
widespread outlet closures.
R…
As a result, we placed greater
emphasis on our core brands and the
home channel, including the growth
in online and future consumption.
I am pleased that we still gained
overall market share during the year.
We also took bold actions to protect
our peormance and focus on
business continuity. All opex was
limited to what was essential and we
deferred non-critical capex. These
discretionary opex and capex savings
of approximately €260 million and
€200 million respectively helped us
generate strong free cash flow of
€924 million which, suppoed by a
strong balance sheet, enabled us to
maintain a full year dividend payout
ratio of approximately 50%.
2020 also strengthened our
determination to go fuher and
faster on our sustainability action
plan, This is Forward. In December,
we set out a bold ambition to reach
net zero GHG emissions by 2040,
which we’ll talk more about later.
What is the rationale behind the
acquisition of Coca‑Cola Amatil?
Damian
In October, we announced
plans to acquire Coca-Cola Amatil,
one of the largest bolers and
distributors of RTD beverages and
coffee in the Asia Pacific region. The
transaction will solidify our position as
the largest Coca-Cola boler by
revenue and create a plaorm for
accelerated growth and returns.
Four years on from the creation of
CCEP, this is the right time to take
our proven playbook in Western
Europe and apply its success into new
markets. Australia and New Zealand
are complementary developed
markets with aractive long-term
macro growth fundamentals.
We will also gain exposure to
Indonesia, one of the world’s
most populous and aractive
emerging markets.
This is a unique and exciting
oppounity to double our consumer
reach to 600 million. This will enable
us to scale up faster than ever before,
with even more aligned and
ambitious growth plans with TCCC
and our other brand paners.
Sol
This coming together of
two of the world’s best Coca-Cola
bolers is truly exciting. We expect
to drive more sustainable and faster
growth by combining the talent,
learning and best practices of two
great companies, both with a strong
shared sustainability focus. A more
diverse and inclusive culture will
translate into new thinking and new
ideas and our people will have even
more oppounity to grow and
develop. We also look forward to
leveraging CCEP’s experienced
leadership in emerging markets.
We believe in the power of the
Coca-Cola system to generate value
for shareholders, demonstrated by
the creation of CCEP four years ago,
and now through the acquisition of
these great franchises and markets.
We have created significant value for
our shareholders in recent years and
we look forward to continuing on
that trajectory.
“ WE ARE CONFIDENT THAT
WE WILL EMERGE FROM
THE PANDEMIC AS AN
EVEN MORE EFFICIENT AND
SUSTAINABLE BUSINESS”
Damian Gammell, Chief Executive Officer
15Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-FCoca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F 15
Conversation with our Chairman and CEO continued
How are you building a future
ready culture within CCEP?
Damian
We fundamentally believe
that a great employee experience
will create a strong and positive
future.
Our people strategy sets out how
we are building a winning culture
that suppos personal growth,
builds the right skills such as agility
and resilience and benefits from
a diverse range of talents.
We’re commied to building a more
inclusive, representative and equal
workplace, by going fuher and
faster to bring meaningful change.
We’ve been working hard to create
a workplace where everyone feels
welcome to contribute and be at
their best, and we want to make
a difference to society and grow
sustainably – together.
We continue to provide physical,
mental and emotional wellbeing
suppo to all colleagues. This has
been paicularly impoant during
the pandemic and included the
rollout of online wellbeing training
modules which proved very popular,
and were aended by over 5,000
colleagues during the year.
In November, we appointed
Véronique Vuillod as the new Chief
People and Culture Officer at CCEP.
Véronique worked previously as
the Vice President of People and
Culture for CCEP France and has
a comprehensive understanding
of our business having worked
with CCEP since 1996. Véronique’s
appointment underscores our
commitment to developing talent
within CCEP, and I am confident that
her leadership will suppo the growth
of our business and people in the
coming years.
We want to create an environment
that empowers everyone to thrive,
where everyone can contribute to
the growth of CCEP and where
everyone feels respected and able
to share their ideas and perspectives.
Sol
Together with all the people
in CCEP who are driving our success,
paicularly Damian and his
leadership team, I’m grateful to my
fellow Directors for their contribution
over the year. I’d like to take this
oppounity to thank Francisco
Crespo Benítez, Orrin H. Ingram and
Javier Ferrán, who stepped down
from the Board during 2020, for
their excellent contributions to our
business. And I was very pleased to
welcome our new Directors, Dessi
Temperley, Brian Smith and John
Bryant. In addition to their wide
business expeise, Dessi brings
strong financial and commercial
insight, Brian is a deeply experienced
Coca-Cola leader, with more than
20 years of experience working in
the Coca-Cola system and John
brings over 30 years’ experience
in consumer goods, with paicular
expeise in strategy and M&A.
How is CCEP developing
its digital capabilities?
Sol
Our world has changed due to
the pandemic, and we will embrace
the oppounity digital represents for
our consumers, customers and
colleagues and in suppoing us to
become a more sustainable business.
Our response to COVID-19 has shown
that we can adapt to remote working,
and still collaborate with colleagues
and deliver work successfully. We will
continue to look for ways of using
digital solutions to bring us closer
together and work faster and more
effectively. For example, Redline,
CCEP’s internal communication
plaorm, continues to grow and has
provided a real sense of community
throughout the pandemic.
Damian
The pandemic has caused
huge behavioural shis in society
and people are now living, shopping
and working very differently. As
consumers move to digital solutions
in larger numbers, we’re working
closely with customers to make sure
our products are as easy to find online
as they are in store. At the same time,
other online shopping channels
like food aggregators and direct to
consumer propositions offer us a new
way of geing our great products
to consumers.
We’ve also been accelerating our
business to business (B2B) plaorms
to make it even easier for our
customers and wholesalers to do
business with us. We have a winning
poal with My.CCEP.com, now
available in nine of our markets,
with functionality that continues to
improve and fuher customer reach.
We currently have around 31,000
customers using the plaorm, four
times more than at the beginning
of the year, and this number
continues to grow.
Using technology will help us
manage our costs and develop ways
to become more efficient. Becoming
a more data driven business – using
real time insights – will enable us to
make the right decisions to suppo
our customers and grow our business.
We will also be able to use data
analytics to improve our demand
and supply chain planning, enabling
us to make the drinks consumers
want, when they want them.
Sol
We will also continue to work
on developing new digital routes
to market. In 2020, our innovation
investment programme, CCEP
Ventures, panered with sta ups
Foodl and StarStock, to identify new
ways of geing our products to
consumers. We also launched our
first ever direct to consumer sales
plaorm in GB as a pilot – Your
Coca-Cola. This plaorm allows
consumers to stock up on their
favourite drinks brands as well
as those popular, harder to find
products like Diet Coke Caffeine
Free, oen in slightly larger packs
than are currently available through
traditional retail channels.
What progress has CCEP made with
its sustainability commitments?
Damian
Sustainability remains a key
priority for our business and I am
pleased that we continued to make
fuher progress in 2020. In paicular,
we took an impoant step in our
journey by seing a new ambition to
reach net zero emissions by 2040.
This means we need to dramatically
reduce GHG emissions from our own
business and our entire value chain
(Scope 1, 2 and 3 emissions) – from
the raw ingredients we source and
the packaging we use, to the drinks
we sell.
16
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
To suppo this ambition we have
set a target to reduce absolute
GHG emissions by 30% by 2030
(versus 2019) – aligned with a
pathway to limit global warming
to 1.5°C – the goal of the Paris
Agreement.
Packaging is central to our carbon
reduction goals. Crucial to this is
accelerating our ambition to use
zero virgin oil based PET in our plastic
boles. As we continue working
towards a circular economy for
packaging, I am proud that Sweden
became our first 100% rPET market
in 2020 and the first in the Coca-Cola
system. We also invested in new
solutions like CanCollar® and
KeelClip, and we continue to explore
innovative solutions in refillable
packaging and dispensed
technology.
Our sustainability ambition will
be suppoed by a €250 million
investment over three years. This will
enable us to go even fuher and
faster to help tackle climate change
and create a beer future. We have
a responsibility to the communities
we serve to keep taking this action
on climate. We know it will be a long
and challenging journey – there
are no quick fixes – but we are
determined to drive this change as
fast as we can and to play our pa
in helping and influencing others.
We’ve made significant progress
so far, and looking ahead, we will
continue to help lead the transition
to a low-carbon future by puing the
environmental impact at the hea of
our decision making. I know that our
people want it to be truly embedded
within our culture at CCEP.
Sol
We are commied to creating
and driving a green future. It’s a
core pa of our effo to become
a stronger business, suppoing
our customers, consumers and
communities and returning value
to our shareholders. This is reflected
in our decision to integrate a
carbon reduction metric into our
management’s Long-Term Incentive
Plan (LTIP) for the first time in
2020, making us an early adopter
in this space.
I am also proud that we continue to
be recognised for our sustainability
effos. We are one of just four
beverage companies to be included
in the Dow Jones Sustainability
World and European indices and
for the fih year in a row, CCEP was
included in the Climate Disclosure
Project (CDP) Climate and Water
A Lists for 2020.
Our communities are counting on us.
CCEP has been proactive in drawing
aention to the impoance of
securing a “green” recovery and a
more inclusive society – which has
a critical role to play in suppoing
communities, economic growth,
employment and development.
Sustainability is a subject that I
personally feel very strongly about
and I’m thankful to our colleagues,
paners, suppliers and stakeholders
for suppoing us on this journey.
Together, we can make a difference.
READ MORE ABOUT OUR SUSTAINABILITY PLAN AND OUR
PROGRESS AGAINST OUR TARGETS ON PAGES 22–37
How is CCEP’s relationship
with TCCC developing?
Damian
CCEP has always been
closely aligned with TCCC
strategically and this has been clearly
demonstrated through our agile
collaboration and decision making
during the pandemic. Together we
ensured the continuity of supply of
the products our consumers wanted
to buy by prioritising core brands
and packs. We also launched new
brands into our markets such as
Costa and Topo Chico, which we look
forward to scaling up fuher in 2021.
TCCC’s suppo for the proposed
acquisition of CCL is fuher
endorsement of the strong
alignment we have built since the
formation of CCEP.
Sol
As the COVID-19 crisis began,
we worked closely with TCCC and the
Coca-Cola Foundation to provide
substantial aid to fund the fight
against COVID-19, channelled
through the Red Cross and local
NGOs. Many colleagues continue to
be personally involved in suppoing
the most vulnerable people in their
local areas and we’re really proud of
them. As we move through this crisis,
we are continuing to work with TCCC
in helping our communities recover
in a sustainable way and ensuring
businesses and governments
prioritise science based climate
action. Impoantly, our sustainability
strategy and our ambitious plans to
work towards a net zero future
are fully aligned with TCCC’s
global World Without Waste
and climate strategies.
How is CCEP positioned for
growth in 2021 and beyond?
Damian
While there remains some
unceainty about the duration and
impact of the pandemic, the rollout
of COVID-19 vaccines brings new
optimism. We are confident that we
will emerge from the pandemic as an
even more efficient and sustainable
business, underpinned by three key
pillars: great people, great service
and great beverages.
Our category is robust, resilient and
set to keep growing in the long term.
Our focus must be on outpeorming
the market – growing faster and
expanding share. We will continue
to adapt to changes in consumer
behaviour by focusing on the brands
that our consumers love while
extending into exciting new areas
such as coffee and hard seltzers.
To suppo our ambitious growth
plans, we will continue to invest but
in a more targeted way, focused on
the biggest oppounities – the
capabilities and technology that our
people need to win. This will require
us to manage our costs, making
choices about our spending and
developing ways to be more efficient
and reduce complexity. This has been
a long-term priority for CCEP, and
with the sustained unceainty and
changes to consumer behaviours
that COVID-19 is creating, we must
accelerate these effos. In fact, the
pandemic has strengthened our
determination to go fuher and
faster in building a greener and more
digital future for our business.
Sol
The COVID-19 crisis has had
an unprecedented impact on our
business and the communities we
serve, but we face the future with
hope, optimism and confidence.
The speed at which our business
reacted to the pandemic gives us
confidence that we will emerge from
the pandemic as an even more agile
and efficient business. We have
a strong team of dedicated,
talented and engaged colleagues.
We will continue to put our bold
sustainability commitments at the
hea of our business as we help our
customers and communities rebuild
and recover in 2021 and beyond.
The acquisition of CCL is also truly
exciting, and I’d like to thank all
our colleagues, stakeholders and
investors for continuing to be a pa
of our journey.
Sol Daurella, Chairman
Damian Gammell, Chief Executive Officer
17Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Macro trend
DIGITAL COMMERCE
In 2020, we saw significant behavioural shis in society driven
by COVID-19 with people living, shopping, and working very
differently. Digital technology has become increasingly ingrained
in consumers’ lives, with more people choosing to buy their
groceries or order a takeaway online. Our customers are also
moving more towards digital plaorms and other technologies.
Macro trend
TECHNOLOGY
Technology is not only shaping the way that our consumers
and customers interact with us, but also how we operate as a
business. It is becoming increasingly impoant to modernise
the way that people connect and communicate with each other
in a more digital workplace. The pandemic was a catalyst for
more flexible working and increasingly employees need access
to documents, systems, and collaboration tools from wherever
they may be located.
Macro trend
SUSTAINABILITY
We are listening to feedback from our stakeholders
and responding to concerns from consumers, governments and
NGOs on key sustainability issues. This includes feedback about
climate change, water, plastic, packaging and concerns about
health and obesity.
Macro trend
EVOLVING
CONSUMER TRENDS
Consumers’ drinking motivations and occasions are becoming
more varied. Today, consumers want different drinks to suit
a range of moments and occasions, and we’re seeing the
impoance of premium products too – with people looking for
a treat or indulgence. Last year the pandemic shied consumer
occasions towards at home consumption. As people work and
spend time at home, they’re also looking to bring the cinema
or bar experience into their homes.
Macro trend
TRANSPARENCY
Governments and regulators are demanding increasing
transparency from companies, both through packaging labelling
and repoing. At the same time consumers are becoming more
health conscious, so they’re asking for more information about
the drinks they consume.
From macroeconomic impacts to changing drinking habits,
our business is affected by a range of market trends.
We have a business model and culture that enable
us to adapt and thrive in this changing environment.
Succeeding in a
changing landscape
18
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
Capturing the growth in digital commerce has been an
impoant area of focus and investment for us. We have
leveraged the growth in e-commerce by suppoing
our customers with unique online price/pack offers,
upweighted marketing and dedicated digital teams
in each of our markets. We’ve also continued to invest in
our B2B plaorm (My.CCEP.com), launched our first direct
to consumer sales plaorm in GB, and formed new
panerships through CCEP Ventures.
In 2020, our innovation investment programme,
CCEP Ventures, panered with two new sta ups,
Foodl and StarStock, to identify new ways of geing
our products to consumers. We are working with Foodl
to provide an enhanced digital customer experience
for the hotel, restaurant and cafe (HoReCa) channel
customers in the Netherlands. Together with StarStock,
we are suppoing the development of innovative new
e-commerce solutions for the licensed trade in the UK.
With digital capabilities and ways of working becoming
the norm, we have continued to invest in technology
to beer serve our employees, drive efficiencies and
become a more digitally enabled business. This also
includes enhancing our digital capabilities in areas
such as demand and supply planning, master data
and business analytics.
Redline, CCEP’s internal digital communication channel,
was launched in August 2019 and enables our colleagues
to stay connected to each other, including our people
in the field and across our supply chain. The application’s
social media like experience and auto translation feature
help to make content more engaging, relevant and
shareable. This has proved invaluable during COVID-19,
as it provides employees with direct access to our leaders
and real time news.
In December 2020, we took another impoant step
in our sustainability journey by seing an ambition to
reach net zero GHG emissions by 2040. This means we
need to dramatically reduce emissions across our entire
value chain – from the raw ingredients we source and
the packaging we use, to the drinks we sell.
As pa of our journey to reach net zero emissions
by 2040, we also announced our intention to reduce
absolute GHG emissions by 30% by 2030 (versus 2019)
– aligned with a pathway to limit global warming to
1.5°C – the goal of the Paris Agreement. This ambition
is underpinned by the inclusion of a GHG emissions
reduction target in our LTIP and will be suppoed by
a €250 million investment over three years. This will
help us go even fuher and faster to help tackle
climate change and create a beer future.
We have a great poolio of the world’s best brands
and we continue to diversify our drinks poolio and
packaging to suit the changing needs of our consumers.
As well as prioritising the supply of our core brands and
packs, we’re also expanding our presence in exciting new
areas such as hard seltzers and hot coffee.
We wnt to build  plorm for growth in coffee.
Cost Coffee hs  sclble plorm cross multiple
formts nd chnnels – from the Cost Express
vending system to RTD products. Following the lunch
of the RTD rnge in B in 2019, Cost Coffee lunched
in ermny in September 2020, sting in Berlin nd
Cologne, nd we re excited to continue this roll out
cross more of our mrets in 2021.
We publish informtion bout us nd our peormnce
through regulr disclosures, including this repo. Cler
nd trnsprent communiction to ll steholders
hs been piculrly impont during the pndemic.
We’re lso commied to providing trnsprent product
informtion on our pcging, s well s on our website.
We upweighted our communiction to ll steholders
throughout 2020. This included viul town hlls
for our employees to ensure they understood the
suppo vilble to them, s well s regulr investor
presenttions. To suppo the lunch of our new climte
strtegy, we rn dedicted sessions for suppliers nd
externl steholders which were well received.
Our response
Example
K
e
y
h
i
g
h
l
i
g
h
t
We’re moving into exciting new
areas such as hard seltzers
with Topo Chico and
hot coffee with Costa
19Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Our strategy
Growth plaorm
03
Double our energy
business (Monster and
Coca-Cola Energy)
05
World class revenue growth
management (RGM)
to drive mix and profit
07
Unrivalled execution
and customer service
02
Build share where we
don’t lead (e.g. Sprite,
Fuze and Tropico)
04
Build a plaorm for
growth in coffee (Costa)
06
Winning channel strategy
and outlet coverage
01
Grow the sparkling
category and our share
where we lead (e.g.
Coca-Cola® and Fanta)
K
e
y
h
i
g
h
l
i
g
h
t
Our investments in digital
continue – My.CCEP.com
is now being used by around
31,000 customers
We’re a leader in a so drinks category that is woh
nearly €100 billion, with brands that are so popular and
so widely consumed that we serve millions of people,
businesses and communities in our markets every
day. Our category is robust, resilient and set to keep
growing in the long term. Our goal is to outpeorm
the market – growing faster and building share.
We have a track record of creating value
for our customers – helping them become
more profitable businesses with world
class execution. This strong plaorm for
growth needs to be suppoed by the right
choices and a clear focus on priorities to
enable us to win.
20
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
ULTIMATELY
DRIVING
SUSTAINABLE
RETURNS
FOR ALL
STAKEHOLDERS
Suppoed by
ACCELERATE
COMPETITIVENESS
●
Manage our cash
●
Targeted approach to investment
●
Competitive cost base
●
Reduce complexity
FUTURE READY
CULTURE
●
Challenge status quo
●
Inclusion, diversity and equality
●
Enhanced wellbeing
●
Agility and peormance mindset
DIGITAL FUTURE
●
Advance digital and online revenue
●
Empower sales force
●
Leverage analytics and aificial
intelligence
●
Enable future workplace
GREEN FUTURE
●
Accelerate This is Forward
●
Science based and measurable
carbon reduction targets
21Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Sustainability
We are taking action on sustainability by using
our business and brands to build a beer future.
For people. For the planet.
The COVID-19 pandemic has laid bare the urgency
behind a range of environmental and social concerns.
We believe that we can – and must – recover in ways that
suppo our communities, our economies and our planet.
We have put a green future at the hea of our vision for
the business and our sustainability strategy. We want to
grow our business in a way that manages our social and
environmental impacts and contributes to a beer future.
We are doing this through our Group wide sustainability
action plan – This is Forward – created with TCCC, and
developed through continual consultation with our
stakeholders across all our territories.
Through This is Forward, we are taking action on six key
social and environmental areas where we know we have
significant impact, and which our stakeholders want us
to prioritise.
In each of these areas we have made a number of
commitments that align with the targets underpinning
the United Nations (UN) Sustainable Development Goals
(SDGs). Together, they provide a clear direction of how
we intend to work with paners across our value chain
to build a beer and greener future.
There is no going back. This is Forward.
READ MORE IN OUR CORPORATE
GOVERNANCE REPORT ON PAGES 72–81
FIND OUT MORE AT
WWW.COCACOLAEP.COM/SUSTAINABILITY
22
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
OUR COMMITMENTS
CLIMATE
WE’LL AIM TO REACH NET ZERO BY 2040
AND REDUCE OUR EMISSIONS BY 30%
BY 2030.
PACKAGING
WE’LL COLLECT ALL OF OUR PACKAGING
SO THAT NONE OF IT ENDS UP AS LITTER
OR IN THE OCEANS.
DRINKS
WE’LL BE A TOTAL BEVERAGE COMPANY,
OFFERING CONSUMERS AN EVEN GREATER
CHOICE OF DRINKS WITH REDUCED SUGAR.
● We’ll aim to reach net zero GHG
emissions across our entire value
chain by 2040.
(A)
● We’ll cut GHG emissions by 30%
across our entire value chain by
2030, versus 2019.
(B)
● We’ll aim for 100% of our strategic
suppliers to set their own science
based targets and transition
to 100% renewable electricity
by 2023.
● We’ll continue to purchase 100%
renewable electricity.
● We’ll make sure that 100% of our
primary packaging is recyclable
or reusable.
● We’ll work with local and national
paners to collect 100% of our
packaging in Western Europe,
including suppo for well
designed deposit return schemes
where a proven alternative does
not exist.
(C)
● We’ll remove all unnecessary or
hard to recycle packaging from
our poolio.
(C)
● We’ll make sure that at least 50%
of the material we use for our
PET boles comes from rPET by
2023 and we’ll aim to reach 100%
recycled or renewable plastic by
the end of the decade.
(C)
● We’ll use the reach of our brands
to inspire everyone to recycle.
● We’ll lead the way in pioneering
sustainable packaging –
including renewable materials
and sma new ways to reduce
packaging waste.
● We’ll reduce the sugar in our so
drinks by 10% between 2015 and
2020, and that’s in addition to
the 5% reduction achieved in
the previous five years.
(D)
● We’ll aim for 50% of our sales
to come from low or no calorie
drinks.
(E)
● We’ll continuously evolve our
recipes and poolio to offer
a greater choice of drinks.
● We’ll make it easier for consumers
to cut down on sugar with
straighorward product
information and smaller pack sizes.
● We’ll make sure we don’t adveise
to children under 12 and that
our sales and marketing
practices evolve in line with
external expectations.
SOCIETY
WE’LL BE A FORCE FOR GOOD BY
CHAMPIONING INCLUSION AND ECONOMIC
DEVELOPMENT IN SOCIETY — WITH OUR
EMPLOYEES AND OUR COMMUNITIES.
WATER
WE’LL HANDLE WATER WITH THE CARE
IT DESERVES ACROSS OUR BUSINESS
AND OUR VALUE CHAIN.
SUPPLY CHAIN
WE’LL SOURCE OUR MAIN INGREDIENTS
AND RAW MATERIALS SUSTAINABLY
AND RESPONSIBLY.
● We’ll foster a diverse and inclusive
culture in our business and make
sure that women hold at least 40%
of our management positions.
● We’ll expand the contribution
we make to society by increasing
our employee volunteering and
suppoing local community
panerships.
● We’ll suppo initiatives which
help young people gain the
employability, skills and
confidence they need to succeed.
● We’ll protect the sustainability
of the water sources we use for
future generations.
● We’ll reduce the water we use in
manufacturing by 20% – and
address water impacts in our
supply chain.
(F)
● We’ll replenish 100% of the water
we use in areas of water stress.
● We’ll make sure 100% of our main
agricultural ingredients and raw
materials come from sustainable
sources.
● We’ll continue to embed
sustainability, ethics and human
rights into our supply chain.
(G)
Baseline is 2010 and target date is 2025 unless otherwise stated
(A) Value chain covers Scope 1, 2 and 3 emissions. (B) In addition to a 30.5% absolute reduction already achieved between 2010 and 2019. (C) 2019 enhanced Action on
packaging commitments. (D) Sparkling so drinks and non-carbonated so drinks only. Does not include water or juice. This commitment is for CCEP and TCCC
Western European Business Unit. Baseline is 2010 and includes historical, consolidated data for Coca-Cola Enterprises, Coca-Cola Iberian Paners, S.A. and Coca-Cola
Erischungsgetränke AG that was recalculated aer the Merger. (E) Total CCEP sales. Does not include coffee, alcohol, beer or freestyle. Low calorie beverages ≤
20kcal/100ml.
Zero calorie beverages <4kcal/100ml. (F) Water use ratio, litres of water per litre of finished product produced. (G) We’ll do this through our global Supplier Guiding Principles
and Human Rights Policies.
Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F 23
The world is at a critical point
and we must all play our pa to
cut GHG emissions, to limit global
temperature increase to 1.5°C in
line with the Paris Agreement, and
protect the future of our planet.
We’ve made strong progress over
the last decade, reducing GHG
emissions across our entire value
chain by 37.7% since 2010. However,
much more needs to be done.
That is why we launched a new
climate strategy in December 2020,
including an ambition to reach
net zero GHG emissions by 2040
and a target to reduce our absolute
GHG emissions across our value
chain by 30% by 2030 (versus 2019).
Our GHG reduction target has
been approved by the Science
Based Targets initiative (SBTi) as
being in line with a 1.5˚C reduction
pathway, as recommended by the
Intergovernmental Panel on
Climate Change.
Over 90% of our value chain GHG
emissions come from our supply
chain. This is why we have also
commied to suppo our strategic
suppliers to set their own science
based carbon reduction targets,
and to shi to 100% renewable
electricity by 2023.
We are focused on reducing our
GHG emissions as far as possible.
When we can’t reduce emissions any
fuher we’ll focus our investment in
projects which remove carbon from
the atmosphere, or verified carbon
offset projects, to achieve our net
zero 2040 ambition.
Our ambition is suppoed by a
three year €250 million investment
which will provide targeted financial
suppo to decarbonise our business
between 2020 and 2022. We have
also integrated a full value chain
carbon reduction target into our
LTIP, incentivising our management
team to deliver a reduction in GHG
emissions across our value chain.
The carbon reduction metric has
a 15% weighting and sits alongside
traditional financial metrics,
including EPS and ROIC.
Suppoing a green recovery
As a leading business, we will use
our voice to influence public policy
which will help drive the transition
to a low-carbon future and suppo
a green recovery following the
COVID-19 pandemic. Along with the
launch of our new climate ambition,
we joined more than 20 other
companies in signing The Climate
Pledge. The pledge brings together
companies which are commied
to reaching net zero GHG emissions
by 2040 – 10 years ahead of the
Paris Agreement deadline.
We are a proud member of the
We Mean Business coalition, as well
as a member of The Climate Group’s
RE100 initiative, and achieved
our target of purchasing 100%
renewable electricity in 2018.
We have also joined The Climate
Group’s EV100 initiative, commiing
to accelerate our transition
to electric vehicles by 2030.
In May 2020, we joined 150 other
companies in signing the Recover
Beer business statement, a call
to action for business leaders and
governments around the world to
prioritise science based climate
action in their recovery effos,
convened by the SBTi, the UN Global
Compact and We Mean Business.
As a member of the Corporate
Leaders Group, we have been active
in suppoing European Union (EU)
policymakers in their work to
increase the EU’s GHG emissions
reduction targets for 2030, in line
with the EU’s goal to become
CLIMATE
CCEP’s commitment to SDGs
AFFORDABLE AND
CLEAN ENERGY
CLIMATE ACTION
“CCEP IS SHOWING CLEAR LEADERSHIP BY ALIGNING
THEIR DEVELOPMENT STRATEGY WITH THE
1.5°
C PATHWAY AND THE PARIS AGREEMENT. THEY
ARE ENSURING THEIR BUSINESS IS READY TO EXCEL
IN THE TRANSITION TO A ZERO CARBON ECONOMY.”
María Mendiluce, CEO, We Mean Business coalition
24
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
carbon neutral by 2050. We signed
the Corporate Leaders Group CEO
statement, which urges EU leaders
to set a target to reduce emissions
by at least 55% by 2030. Together
with TCCC and Coca-Cola Hellenic,
we joined the Green Recovery
Initiative, a Europe wide alliance of
businesses, political decision makers,
and NGOs calling for action to
suppo sustainable investments in a
green recovery.
We have also taken local action.
In Belgium, we signed the Belgian
Alliance for Climate Action Pledge,
together with TCCC. The pledge
underscores our commitment to
achieving the objectives of the Paris
Agreement. In Pougal, together
with 200 signatories, we signed
the European Green Capital 2020
commitment to help make capital
cities sustainable by the end of 2030.
Taking action now
We are working hard to reduce GHG
emissions across our entire value
chain, from the ingredients we
source and packaging we use, to the
drinks we sell. The lessons we learn
during this process will help us to
achieve our net zero 2040 ambition.
Our immediate plan includes a focus
on activities such as eliminating
virgin oil based PET from packaging
and switching to recycled plastic,
reducing the weight of our
packaging, and innovating in
refillable packaging and dispensed
technology.
We’ll continue to make our
distribution networks more efficient,
transpo more of our products by
train, and use more electric vehicles.
For example, in 2020 we switched
to freight trains to transpo our
1 litre Coca-Cola returnable
glass boles from our production
facility in Deizisau, Germany to
three warehouses in the noh
of the country.
We’ll work to make many of our
production facilities fossil fuel free.
In the next three years, six of our
production facilities are piloting a
carbon neutral sites initiative, where
they will work to become PAS 2060
carbon neutral ceified by 2023.
This builds on work we have already
done in 2020, including signing an
agreement to expand the solar park
for our Wakefield production facility.
The 25 year agreement will suppo
investment in next generation solar
panels and leading edge energy
storage equipment.
We will also continue to improve
the energy efficiency of our CDE,
by investing in new, more energy
efficient equipment. This reduced
the energy use per unit by 1.9%
versus 2019. Due to the impact
of COVID-19 on our customers,
our fleet reduced in size by 3.9%,
while the total energy consumption
of our CDE fleet dropped by 5.7%
compared with 2019.
Alignment to the TCFD
recommendations
In 2019, together with TCCC, we
completed a climate risk scenario
assessment, in line with guidance
from the Task Force on Climate-
related Financial Disclosures (TCFD).
The assessment identified the
physical and transition risks we could
face as a result of climate change.
In 2020, we voluntarily published
our first disclosure against the
recommendations of TCFD and we
will continue to do this on an annual
basis. In 2021, we will carry out the
work to assess how our business may
be impacted in the longer term
from climate related risks, with a
paicular focus on our production
facilities and the availability of key
ingredients in our value chain.
This work was planned for 2020
but the timetable was delayed
due to COVID-19.
SEE OUR WEBSITE FOR OUR DISCLOSURE
AGAINST THE RECOMMENDATIONS OF TCFD
WWW.COCACOLAEP.COM/SUSTAINABILITY/
DOWNLOAD‑CENTRE
CASE STUDY
Autonomous
truck pilot
in Sweden
We continue to explore
oppounities to use
innovative technologies to
reduce the carbon footprint
of our transpoation
activities. In Sweden, we’ve
teamed up with autonomous
transpo company Einride
and food retailer Axfood to
trial a self driving, electric
vehicle between our
production facility in Jordbro
and Axfood’s warehouse.
Einride’s solution, based on
digitalisation, electrification
and automation, has the
potential to reduce CO
2
emissions by 90%.
READ MORE AT WWW.COCACOLAEP.COM/SUSTAINABILITY/THIS‑IS‑FORWARD/
ACTION‑ON‑CLIMATE
Our progress
Energy use ratio (MJ/litre of product produced)
0.309
0.317
Electricity purchased from renewable sources
100%
100%
2019 2020
25Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
GHG emissions (Scope 1, 2 and 3)
Details of our Scope 1, 2 and 3
GHG emissions in tonnes of CO
2
equivalent (stated as CO
2
e) during 2020
are set out in table 1. Our Scope 1 and 2
emissions are independent of any GHG
trades, and our Scope 2 emissions are
repoed using both a location based
and a market based approach.
Details about our Scope 3 GHG emissions
in our value chain (including emissions
related to our ingredients, packaging,
CDE and third pay transpoation),
are also repoed below. Additional
Scope 3 figures will also be included
in our 2020 CDP response.
Our carbon footprint is calculated in
accordance with the WRI/WBCSD GHG
Protocol Corporate Standard, using
an operational control approach to
determine organisational boundaries.
In 2020, our Scope 1 and 2 emissions
decreased by 14.4% compared to 2019.
Our total Scope 1, 2 and 3 GHG emissions
(full value chain) have reduced by 11.9%
versus 2019 and by 37.7% versus 2010.
Intensity ratios
CCEP
GHG emissions (Scope 1 and 2) per litre
of product produced (market based
Scope 2 approach): 17.22g CO
2
e/litre of
product produced.
GHG emissions (Scope 1 and 2) per
euro of revenue (market based Scope 2
approach): 19.03g CO
2
e/euro of revenue.
UK and UK offshore
GHG emissions (Scope 1 and 2) per
euro of revenue (market based Scope 2
approach): 15.96g CO
2
e/euro of revenue.
Note on sources of data and
calculation methodologies
Under the WRI/WBCSD GHG Protocol,
we measure our emissions in three
scopes, except for CO
2
e emissions from
biologically sequestered carbon, which
we repo separately outside these
scopes. Our baseline year has been
updated to 2019, following approval of
our new science based GHG emissions
reduction target, at the end of 2020.
Our baseline figures for 2019 have been
restated to include new emission sources
and more accurate data.
Data is consolidated from a number
of sources across our business and is
analysed centrally. We use a variety of
methodologies to gather our emissions
data and measure each pa of our
operational carbon footprint, including
natural gas and purchased electricity
data, refrigerant gas losses, CO
2
fugitive
gas losses and transpo fuel, water
supply, wastewater and waste
management. We use emission factors
relevant to the source data including UK
Depament for Business, Environment
and Industrial Strategy (BEIS) 2020 and
International Energy Agency (IEA) 2018
emission factors.
Scope 1 figures include direct sources
of emissions such as the fuel we use
for manufacturing and our own vehicles
plus our fugitive emissions of CO
2
.
Scope 2 figures include indirect sources
from the generation of electricity we
use at our sites. We repo against this
on both a location based and a market
based approach. Commitments and
key peormance indicators are tracked
using the market based approach.
Scope 3 figures include emissions
from purchased goods and services
(specifically the packaging we put on the
market and the ingredients we use in
our products); fuel and energy related
activities not already included in Scope 1
and 2 (e.g. emissions from well-to-tank
and transmission and distribution);
upstream transpoation and distribution;
waste generated in operations; business
travel (including employee business
travel by rail and air); upstream leased
assets (including the home charging of
company vehicles); use of sold products
(including CO
2
emissions released by
consumers); end of life treatment of sold
products; and downstream leased assets
(including the electricity used by our
hot and cold drink equipment at our
customers’ premises). This accounts
for over 90% of our Scope 3 emissions.
Additional Scope 3 emissions, from capital
goods, employee commuting and the
use of sold products, are not included in
our value chain figures below, and we will
repo on these separately as pa of our
2020 CDP response. All other Scope 3
categories are not currently applicable
to CCEP.
Emission factors used include industry
and supplier data, Defra/BEIS 2020 and
IEA 2018 emission factors. 0.35% of our
value chain carbon footprint is based on
estimated emissions (e.g. leased offices
where energy invoices or the square
metre footage size of the site is not
available). The figures for 2020 in table 1,
along with selected information on our
website, are subject to independent
assurance by DNV GL in accordance
with the ISAE 3000 standard. The full
assurance statement with DNV GL’s
scope of work, and basis of conclusion,
will be published on our website in
May 2021.
Table 1
CCEP – TOTAL
Tonnes of CO
2
e 2020 2019
Scope 1 Direct emissions (e.g. fuel used in
manufacturing, own vehicle fleet, as well as
process and fugitive emissions)
196,919 229,713
(A)
Scope 2 (market
based approach)
Indirect emissions (e.g. electricity)
4,815 6,051
(A)
Scope 2 (location
based approach)
144,011 170,245
(A)
Scope 3 Third pay emissions, including those related
to our ingredients, packaging, CDE, third
pay transpoation and distribution, waste
in our operations and business travel
3,144,035 3,561,980
(A)
GHG emissions Scope 1, 2
(B)
and 3 (Full value chain) 3,345,769 3,797,744
(A)
Energy use
Direct energy consumption (Scope 1) (kWh) 708,998,235 804,677,475
Direct energy consumption (Scope 2) (kWh) 575,929,963 644,114,285
CCEP – UK and UK offshore
Tonnes of CO
2
e 2020 2019
Scope 1 Direct emissions (e.g. fuel used in
manufacturing, own vehicle fleet, as well as
process and fugitive emissions)
35,152 36,193
Scope 2 (market
based approach)
Indirect emissions (e.g. electricity)
12 37
Scope 2 (location
based approach)
16,906 22,213
GHG emissions Scope 1, 2
(B)
35,164 36,230
Energy use
Direct energy consumption (Scope 1) (kWh) 153,638,384 145,299,499
Direct energy consumption (Scope 2) (kWh) 78,464,328 94,622,150
(A) Restated – as described above.
(B) Market based approach only.
Action on climate continued
26
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
We’re determined to make a
positive difference both in our
workplaces and in our local
communities. Ensuring our people’s
and our communities’ wellbeing
and safety is our priority.
Our people
Our business depends on the great
people who make, sell and distribute
our products every day and we are
determined to make a positive
difference in society. When
COVID-19 swept across Western
Europe in 2020, we immediately
prioritised the wellbeing of our
people. Throughout the crisis, our
incident management team and
central business continuity and
resilience (BCR) team have been
working full time to protect the
health of our people and secure the
continuity of our business. We kept
in touch with all our employees,
ensuring they were safe and aware
of our plans to address the situation.
Suppoing wellbeing
Amid the stress and disruption
caused by the COVID-19 pandemic,
it’s more impoant than ever that
we look aer our wellbeing and
mental health.
During the year we strengthened
our wellbeing programme for all
our people. We created an online
Coronavirus Suppo Hub, giving our
people access to a range of suppo
tools and guidance. These include
stress management webinars, tips
on self-care and coping strategies,
and advice about how to maintain
an inclusive team environment.
We also launched wellbeing training
modules, such as the Wellbeing First
Aider initiative to build an internal
suppo network for mental health.
We’ve also done more to promote
our Employee Assistance
Programme (EAP), a 24/7 suppo
line for our people. Through our
Don’t Bole it Up campaign, we’ve
shared some of our colleagues’
experiences of how the EAP has
suppoed them, to encourage
others to do the same if they feel
they need help.
Ensuring our people can work safely
When it comes to our people, safety
is our top priority. We’ve taken a
number of steps to ensure our
people can work safely, including
creating new work protocols and
expanding teleworking capabilities
to enable more employees to work
from home.
Many of our colleagues – especially
those working in our production
facilities or in the field – have jobs
that can’t be done remotely, and
have continued to work tirelessly
throughout the crisis to get
products safely to retail paners
and consumers. For those people,
we’ve invested in equipment to
check their temperatures on arrival
at our offices and production
facilities. We’ve also introduced
rigorous additional cleaning and
sanitisation routines, as well as
reinforcing hygiene guidelines.
Looking ahead, we are
implementing new hygiene and
social distancing measures in our
offices in line with local and national
legislation to make sure our people
can safely return to their workplaces.
READ MORE ABOUT OUR SUPPORT FOR OUR PEOPLE
IN OUR PEOPLE SECTION ON PAGES 38–41
SOCIETY
READ MORE AT WWW.COCACOLAEP.COM/SUSTAINABILITY/THIS‑IS‑FORWARD/
ACTION‑ON‑SOCIETY‑OUR‑PEOPLE
CCEP’s commitment to SDGs
NO POVERTY
QUALITY
EDUCATION
GENDER
EQUALITY
DECENT WORK
AND ECONOMIC
GROWTH
SUSTAINABLE
CITIES AND
COMMUNITIES
27Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Our communities
We’ve been an integral pa of
our communities for generations.
In 2020, we’ve been using those
strong local links to help communities
and vulnerable groups – especially
people from disadvantaged
backgrounds – who have been hit
hard by the pandemic. Suppoing
our communities has never been
so impoant.
Emergency relief
During the first weeks of lockdown
across Europe, we worked closely
with TCCC and the Coca-Cola
Foundation to distribute financial
suppo to provide substantial
financial aid to emergency relief in
our territories. This formed pa of
a contribution of over $120 million
globally to suppo COVID-19 relief
effos in affected communities.
We suppoed TCCC in defining the
beneficiaries of the fund, channelled
through the Red Cross and local
NGOs, and we also donated more
than 600,000 unit cases of products
to hospitals, NGOs, government
institutions, foodbanks and those
working in front line response.
Where possible, we made our
logistics and transpoation services
available to suppo emergency
relief work. We also continued to
encourage our people to volunteer
their time to suppo the most
vulnerable people in their local areas
through our employee volunteering
programme. In 2020, our people
dedicated 9,061 hours of
volunteering time.
A team of colleagues from TCCC’s
Brussels based research and
development facility produced their
first batch of liquid hand sanitisers
to the World Health Organization
specifications. These were
distributed to the Belgian
healthcare sector, as well as to
colleagues at our production
facilities, helping to reduce the
heavy demand on market supply.
Suppo for home schooling
Online lessons have become the
norm for many young people in
these challenging times, but not
everyone has a laptop or computer
at home. To help ensure no one falls
behind, with TCCC we donated
more than 900 used laptops and IT
materials to DigitalForYouth.be, a
charity in Belgium commied to
collecting laptops for secondary
education. In addition, through our
panership with Resto du Coeur, a
charity helping people facing social
and financial challenges to find their
place in society, we were able to
offer more than 1,250 families
essential school equipment for
their children.
“ IT HAS BEEN A CHALLENGING
TIME FOR VULNERABLE YOUTHS
DUE TO COVID‑19. THROUGH OUR
LONG STANDING PARTNERSHIP
WITH CCEP WE HAVE BEEN ABLE
TO IDENTIFY AND FUND NEW
WAYS OF SUPPORTING THOSE
WHO NEED IT THE MOST.”
Amela Ljubuncic, Key Account Manager
Strategic Panerships, Red Cross Norway
Action on society continued
28
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
Oppounities for young people
Young people are key to our
economic recovery but the
pandemic has hit their career
prospects hard. That’s paicularly
true for those from vulnerable
backgrounds, many of whom have
been deprived access to the
suppo networks and education
oppounities that are vital for their
development. In these times, our
programmes and panerships to
suppo disadvantaged young
people are more impoant
than ever.
Panerships across our territories
include our work with Eloquentia
and the newly created programme
FIER.E.S in France, the German
Foundation for Integration with Geh
Deinen Weg in Germany, UK Youth’s
Reach Up programme in GB, JINC
in the Netherlands, Mentor Sverige
and Fryshuset in Sweden and the
Red Cross in Norway and Iceland. In
Spain, our GIRA Jóvenes programme
continues to help young people
develop the confidence and skills
they need to find work.
Suppoing our customers
Since the sta of the COVID-19
pandemic, we’ve been working hard
to ensure our products continue to
be delivered safely to our customers,
while doing everything we can to
suppo their businesses.
2020 has been an exceptionally
tough year for the hospitality
sector. Across our territories we’ve
launched initiatives to suppo these
businesses and encourage people
to return to their favourite bars,
restaurants and cafes, in line with
COVID-19 restrictions and social
distancing guidelines.
For example, in France we panered
with social entrepreneurship NGO
Groupe SOS to suppo 1,000 cafés,
an initiative to help revitalise rural
communities with fewer than 3,500
inhabitants by opening or taking
over cafés as a place for the
community to meet.
In the Netherlands we joined forces
with NGO LINDA.foundation to
provide 4,300 disadvantaged
families with free dinner vouchers.
In Sweden, we’ve encouraged
consumers to eat and drink out by
providing restaurants and bars with
up to 200,000 free drinks, which
guests can enjoy in exchange for
a digital voucher.
In GB, we created the Coca-Cola
Community Pub Fund to reward
the winners of the Great British
Pub Awards. Through the fund,
we made grants of £10,000 to each
of the 15 winning Pub Heroes
enabling them to fund a business
improvement or to put money
towards a community project.
We also funded a fuher £1,000
donation to a local charity or good
cause chosen by each winner.
Our €9.4 million community contribution
Total cash
59%
Total in kind
34%
Total volunteer time
3.5%
Total management costs (cash and time)
3.5%
READ MORE AT WWW.COCACOLAEP.COM/SUSTAINABILITY/THIS‑IS‑FORWARD/
ACTION‑ON‑SOCIETY‑OUR‑COMMUNITY
#HORECA
COMEBACK
29Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Reducing the impact our packaging
has on the environment is at the
hea of our packaging strategy.
We are on a path to zero – zero
waste and net zero GHG emissions.
Our packaging represents
approximately 40% of our total value
chain carbon footprint. Reducing
the footprint of our packaging will
be a critical pa in our journey to
reach net zero GHG emissions
by 2040.
Our strategy is simple: use less
packaging where we can and, for
the packaging we do use, our focus
is on driving the circularity of that
packaging. We aim to achieve this
through the key strategic pillars of
our packaging strategy: removing
unnecessary packaging; innovating
in refillable and dispensed solutions;
encouraging 100% collection so that
we can recycle and reuse packaging
material again; and increasing the
recycled content of our packaging.
Our Coca-Cola system Sustainable
Packaging Office (SPO) streamlines
all the technical and exploratory
sustainable packaging work across
our geographies, accelerates our
innovation and suppos progress
towards our goals.
Remove and reduce
In 2020, we continued to work
with our suppliers on innovative
solutions to remove single use
plastic. For example, in the Balearic
Islands in Spain, in collaboration
with WestRock, we introduced
CanCollar® paperboard can rings,
replacing hard to recycle shrink
wrap with 100% sustainably sourced,
recyclable cardboard for multi
pack cans. This project, along with
our other shrink to board initiatives
for our multi pack cans, enabled us
to remove around 1,000 tonnes of
hard to recycle plastic from our
secondary packaging in 2020. This is
a smaller amount than previously
planned due to COVID-19 related
delays. We are continuing with our
plans and aim to remove 4,000
tonnes of hard to recycle plastic
from our secondary packaging
by the end of 2021.
In addition, we continued to invest
in refillable and dispensed solutions
that give consumers new and
convenient ways to enjoy our drinks,
while eliminating packaging waste.
For example, through CCEP
Ventures we invested in Innovative
Tap Solutions to introduce self-pour
dispense technology to our
customers in Western Europe.
PACKAGING
“IT IS OUR AMBITION TO CREATE AN ENERGY EFFICIENT
SOLUTION FOR CIRCULAR PRODUCT TO PRODUCT
RECYCLING OF POLYESTER. THE SUPPORT OF CCEP
VENTURES WILL ENABLE US TO START WITH DIFFICULT
TO RECYCLE FOOD GRADE PET AND TAKE THE FIRST
STEP TOWARDS OUR ULTIMATE VISION OF RECYCLING
ALL POLYESTER AGAIN AND AGAIN.”
Josse Kunst, Chief Commercial Officer, CuRe Technology
CCEP’s commitment to SDGs
RESPONSIBLE
CONSUMPTION
AND PRODUCTION
LIFE BELOW
WATER
30
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
Driving circularity
We have ambitious targets to make
sure that at least 50% of the material
we use for our PET boles comes
from rPET by 2023, with the aim to
reach 100% recycled or renewable
plastic by the end of the decade.
In 2020, we continued to make
progress in increasing rPET content
in our packaging. In Belgium, GB and
Luxembourg we reached our target
of 50% rPET across our poolio.
We’ve already moved to 100% rPET
boles for all of our brands made in
Sweden and we’re doing the same
in the Netherlands, Iceland and
Norway. In addition, all our Honest,
GLACÉAU Smawater, ViO and
Chaudfontaine boles are made
from 100% recycled plastic.
To achieve our goal to collect
100% of our packaging and to
ensure it is either recycled or
refilled, we suppo policymakers in
implementing well designed deposit
return schemes (DRS). We also
encourage consumers to recycle
our packaging by including a clear
“recycle me” message on pack.
As pa of the move to 100% rPET
boles in Sweden, we introduced
limited edition labels for our PET
boles with a clear message to
encourage consumers to “Recycle
me again. I’m 100% recycled plastic”.
In Spain, we continue to promote
our Mares Circulares programme,
and in 2020 more than 250 tonnes
of waste was collected as a result
of this initiative.
Driving innovation
CCEP Ventures, our innovation
investment fund, suppos the SPO
by providing early stage funding to
technologically advanced companies
and sta ups that, among other
things, enable us to explore new
ways to bring sustainable packaging
innovation to life.
We want to be a pioneer in
sustainable packaging and that is
why, in 2020, CCEP Ventures invested
in CuRe Technology, Lavit
and Innovative Tap
Solutions.
In panership with Lavit,
a leading maker of multi
beverage, counteop
dispensing machines,
we are testing and
exploring dispensed
delivery solutions that
let consumers make
and pour their drink
at the push of a buon.
CASE STUDY
CuRe: giving
plastic waste
a new lease
of life
CCEP Ventures has invested
in CuRe Technology – a sta
up developing new ways to
rejuvenate hard to recycle
plastic waste. The funding will
enable CuRe to accelerate
its polyester rejuvenation
technology from pilot plant
to commercial readiness.
Once the technology is
commercialised, CCEP will
receive the majority of the
output from a
CuRe licensed,
new build plant.
READ MORE AT WWW.COCACOLAEP.COM/SUSTAINABILITY/THIS‑IS‑FORWARD/
ACTION‑ON‑PACKAGING
Our progress
Primary packaging that is recyclable or reusable
98.0%
98.3%
Recycled plastic as percentage of total PET we used
41.3%
30.5%
2019 2020
31Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
We want to make it easier for
people to manage their sugar
consumption. By evolving our
poolio to offer people a wider
variety of great tasting drinks,
we’re helping consumers cut down
on sugar and make more informed
choices about their diets.
Consumer habits and preferences
are continually evolving. To meet a
greater range of moments and
occasions, people are looking for a
broader variety of drinks, including
those with low and no calories.
Working with TCCC and other
franchisors, we continue to evolve
our business and poolio in line
with these changes.
We’re rethinking many of our recipes
to reduce sugar across our brands.
At the same time, we’re expanding
our poolio to include many other
types of drinks like juices and RTD
teas and coffees. We’re commied
to ensuring that 50% of our sales
come from low and no calorie drinks
by 2025. We’re also making it easier
for consumers to cut down on sugar
by providing easy to understand
product information, and by making
smaller and more convenient pack
sizes more readily available.
We’re shiing our marketing spend
to make people more aware of our
low and no sugar options, while
being commied to not adveising
to children under 12.
Great taste, less sugar
We reduced the sugar in our so
drinks by 15.3% between 2015 and
2020 – 5.3% above our target.
We’re continuing to reduce sugar
across our poolio. We do this by
reformulating our recipes without
compromising on taste and by
introducing more low and no calorie
drinks. In 2020, we launched 96 low
and no calorie drinks to the market.
These included the introduction
of a new Fanta Orange formula
in Germany with reduced sugar.
We launched three new flavours
of Fuze Tea, an infusion of tea
leaves blended with fruit juice
and botanicals and ceified by
Rainforest Alliance, across our
territories. We also launched
a new no calorie Fanta drink,
#WhatTheFanta, in France, GB, the
Netherlands, Norway and Sweden,
available in three flavours: Apple
and Lychee; Cactus and Lemon;
Banana and Watermelon.
To ensure that 50% of our sales
come from low and no calorie drinks
by 2025, we actively encourage
consumers to reduce their daily
sugar intake by raising awareness
of our low and no sugar drinks
through our point of sales
communications. We’re also helping
consumers control the amount of
sugar and calories they consume
by offering small pack sizes to enjoy
at home as well as on the go. Today,
3.7% of our sparkling so drinks
are sold in packs of 250ml or less.
DRINKS
CCEP’s commitment to SDGs
GOOD HEALTH
AND WELLBEING
“ WITH OUR CONTINUED FOCUS
ON PROVIDING CHOICE FOR OUR
CUSTOMERS, CCEP IS TAKING
ACTION TOWARDS A STRONGER
STRATEGIC ALIGNMENT MAINLY
FOCUSING ON HEALTHIER
CHOICES WITH A SUGAR
REDUCED ASSORTMENT AND
SUSTAINABLE PACKAGING.”
Charloe Brohez, Category Manager Drinks, Delhaize
32
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
Providing clear nutritional
information
To help consumers make informed
choices, we’re commied to
providing clear and transparent
nutritional information about our
drinks, including information about
sugar and calorie content. Since 2017,
our boles have featured a labelling
icon highlighting the number of
poions per multi serve pack.
We suppo schemes that promote
a consistent approach to labelling
across our markets and align with EU
legislation. We’re encouraged to see
growing suppo for colour based
interpretive labelling across the EU.
Responsible marketing
We have clear policies and
guidelines in place to ensure we
market our products responsibly.
In paicular, we are commied
to not marketing our products
directly to children under 12.
In 2020, we rolled out a toolkit
to suppo our marketing and
commercial teams in their
conversations with customers about
our drinks and ingredients. TCCC
also launched a new global policy
that aims to ensure we market
alcohol brands responsibly.
Giving consumers more choice
To meet our consumers’ preferences
and expectations, we continually
invest in our wide poolio which
includes some of the world’s most
popular drinks. From Coca-Cola
trademark so drinks to water and
RTD teas and coffees, we offer
drinks to provide people with more
choice across a wider range of
categories with and without sugar,
still or sparkling, as well as organic,
Fairade and Rainforest Alliance
ceified drinks.
In 2020, we expanded our existing
Monster Energy poolio with the
launch of Reign Total Body Fuel,
a high peormance spos drink,
in GB, Germany, Iceland, Norway,
Spain and Sweden, aimed at fitness
conscious consumers. In Sweden,
we launched Monster Mule, a no
sugar ginger flavoured energy
drink in a 500ml can.
In November 2020, we panered
with TCCC to launch Topo Chico
hard seltzer in GB and the
Netherlands. It is a sparkling water
with alcohol and natural flavours,
and our first global drinks brand in
the alcohol category. The drink will
be available in 330ml cans in three
flavours: Tangy Lemon Lime, Tropical
Mango and Cherry Acai. It will be
rolled out across our markets in 2021,
and will be accompanied by an
integrated responsible marketing
campaign specifically aimed at
consumers older than the legal
drinking age.
Our progress
Reduction in average sugar per litre in our so drinks poolio since 2015
12.9%
15.3%
Reduction in average sugar per litre in our so drinks poolio since 2010
17.6%
19.8%
Products sold that are low or no calorie
46.0%
47.7%
2019 2020
CASE STUDY
Costa Coffee
launches in
Germany
Coffee is an impoant
category for our business
and Costa Coffee is the
leading brand in GB.
In 2020, we launched Costa
in Germany, as pa of our
long-term strategy to grow
this exciting brand.
Consumers are able to enjoy
freshly brewed Costa Coffee
on the go, served by either
one of our away from home
paners or from one of
our innovative Sma Café
machines. From 2021, we
will begin rolling out the
launch to other territories.
READ MORE AT WWW.COCACOLAEP.COM/SUSTAINABILITY/THIS‑IS‑FORWARD/
ACTION‑ON‑DRINKS
33Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Water is an essential resource –
both for our own business and
across our value chain. We treat
water with the care it deserves,
aiming to reduce our water
consumption on a continual
basis and protect local water
sources for future generations.
Global water crises such as water
scarcity are ranked among the
highest risks to the economy
and society.
CCEP depends on a sustainable and
high quality supply of water. Not only
is water the main ingredient in many
of our products, it’s also essential
for our manufacturing processes,
and for growing the agricultural
ingredients we depend upon.
To address water scarcity challenges
and take care of our water resources,
we adopt a value chain approach to
water management. We’re focused
on reducing the water we use in our
production facilities, including the
safe return to nature of 100% of
our wastewater. We’re also working
with a number of community based
panerships to replenish 100%
of the water we use in areas of
water stress.
A new water security strategy
To strengthen our approach to water
stewardship, we have aligned with
TCCC’s new 2030 water security
strategy. The strategy adopts a
context based approach to water
security, allowing us to prioritise
local areas which are most at risk
from water stress.
As pa of the new strategy, we
are taking a closer look at water
stress risks directly linked to our
production facilities. In 2020,
we carried out Facility Water
Vulnerability Assessments (FAWVAs)
across all of our production facilities
to map local water stress risks and
vulnerabilities. These assessments
complemented a global enterprise
water risk assessment carried out in
2019, which found that 23 of our 46
production facilities are in areas of
high baseline water stress.
The FAWVAs are suppoed by
source vulnerability assessments
(SVAs), which are undeaken at a
local level every five years and are
aligned to the Alliance for Water
Stewardship Standard. The FAWVAs
and SVAs feed into our site water
management plans (WMPs), which
suppo context based target
management, climate resilience,
data sharing and repoing. In 2020,
all of our production facilities had
SVAs and WMPs in place.
WATER
CCEP’s commitment to SDGs
CLEAN WATER
AND SANITATION
“ OUR RIVERS AND CHALK
STREAMS FACE COUNTLESS
THREATS. THROUGH ITS
SUPPORT, CCEP IS HELPING
TO MAKE A REAL DIFFERENCE
TO OUR UNIQUE WATER
HABITATS, AND THE WILDLIFE
AND COMMUNITIES THAT RELY
ON THEM.”
Mark Lloyd, CEO, The Rivers Trust
34
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
02
Panerships for water management
Effective conservation of water
resources depends upon
panerships and collaboration.
During 2020, we continued to work
closely with NGOs, local authorities,
other businesses and communities
to improve our water efficiency and
protect the health of the watersheds
we rely upon.
In Dongen, the Netherlands, we held
discussions with local water supplier
Brabant Water on reduction, reuse
and replenishment oppounities.
At our production facilities in
Antwerp and Ghent in Belgium,
we consulted with the Flemish
government on our water saving
effos and replenishment projects.
We also met with a representative
of the French government to
discuss water allowances at
our site in Dunkirk.
In 2020, we managed 15 community
based water replenishment projects.
As a result, we were able to replenish
275% of the water we sourced to
make our drinks in areas affected by
water stress
(A)
. For example, in 2020,
together with The Rivers Trust
and the Coca-Cola Foundation
we launched a new three year
programme which will help clean
some of GB’s most polluted rivers,
reduce flood risk, and create new
wetland habitats in both rural and
urban locations across the country.
We also launched “Plantar Água”
in Pougal, a project in panership
with Associacao Natureza
Pougal, World Wildlife Fund and
the Coca-Cola Foundation. Through
the project we will be able to
replenish close to 250 million litres of
water a year, in a region devastated
by wildfires and water scarcity.
Reducing our water use
Effective water management
practices are critical to addressing
Europe’s growing water risks and
to improving our resilience to
the impacts of climate change.
We’re commied to reducing
our water use – and to do this,
we make our manufacturing
and cleaning processes as
water efficient as possible.
In 2020, we continued to invest in
water saving systems. For example,
in our production facility in Ghent,
Belgium, our evaporative cooling
towers were replaced by dry cooling
towers, saving 10,670m³ of water
annually. In our production facility
in Dongen, the Netherlands, we
staed reusing the rinse water from
our glass boles for rinsing crates.
As a result, we are able to save
700m³ of water a year.
We measure peormance through
our water use ratio, which is the
average amount of water we need
to produce a litre of product.
In 2020, our water use ratio was
1.57 litres of water per litre of
product produced – a reduction
of 13.7% since 2010.
Our progress
Water use ratio (litres of water/litre of product produced)
1.57
1.60
Amount of replenished water we used in our drinks, sourced from areas of water stress
(A)
275%
160%
2019 2020
CASE STUDY
Standing up
for Europe’s
freshwater
Freshwater is essential for
businesses to operate and
nature to thrive.
In 2020, together with TCCC,
Coca-Cola Hellenic and 20
other companies, we signed
a joint statement to suppo
and protect the EU Water
Framework Directive.
The Directive provides a
framework to ensure that
freshwater ecosystems in
Europe are protected and
restored and water is
sustainably managed,
in line with the UN SDGs.
READ MORE AT WWW.COCACOLAEP.COM/SUSTAINABILITY/THIS‑IS‑FORWARD/
ACTION‑ON‑WATER
(A) Based upon production volumes from 19 sites assessed as being in areas of water stress via our enterprise water risk assessment.
35Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Our supply chains are under
increasing pressure from
population growth, increased
demand for food products and
climate change. That’s why we’re
sourcing all our agricultural
ingredients and raw materials
sustainably and responsibly.
We rely on a global supply chain
to make, sell and distribute our
products. We source ingredients for
our drinks such as water, sugar beet,
sugar cane, coffee, tea and fruit
juices, and we also purchase raw
materials for our packaging such
as glass, aluminium, PET and paper.
Together with TCCC, we work
collaboratively with our suppliers
to respect and protect the human
rights of everyone working across
our entire supply chain. We aim to
ensure our suppliers respect our
CoC and make a positive impact
on society, in line with the United
Nations’ Guiding Principles on
Business and Human Rights, the
International Labour Organization’s
Declaration on Fundamental
Principles and Rights at Work and
the United Nations’ Global Compact.
Measuring compliance
We source products from around
15,000 suppliers, and on average,
87% of our spend (excluding
concentrate and juices purchased
from TCCC and other franchisors)
is with suppliers based in our
countries of operations.
Together with TCCC, we’re
commied to ensuring that our
priority agricultural ingredients
and raw materials are sourced
sustainably. We have developed
two sets of principles to measure
compliance and track progress
in this area: our Supplier Guiding
Principles (SGPs) and our
Sustainable Agriculture
Guiding Principles (SAGPs).
Our SGPs apply to all our suppliers
and set out the minimum
requirements we expect of our
suppliers in areas related to labour
conditions and business integrity,
including health and safety and
human rights. Our SAGPs apply
to our suppliers of key agricultural
ingredients and raw materials,
and cover social, economic
and environmental criteria for
sustainable farm management.
Independent audits are
commissioned by TCCC to monitor
supplier compliance with our SGPs
and SAGPs. In 2020, 97% of our
spend was with suppliers which are
covered by our SGPs. In addition,
100% of the coffee in our Honest
coffee brand, 100% of our paper
and pulp and, for the first time,
100% of our sugar were sourced
sustainably from suppliers that
comply with our SAGPs.
We evaluate the peormance and
sustainability of our suppliers on
an ongoing basis. For our key Tier 1
suppliers, we carry out a number
of detailed evaluations including a
financial assessment and an annual
supply risk analysis along with
regular meetings to discuss issues
such as peormance, innovation
and sustainability.
The sustainability peormance of
our suppliers is rated by EcoVadis,
an independent evaluation
company, which evaluates suppliers
against criteria such as environment,
carbon management, human rights
and fair business practices. In 2020,
our suppliers had an average overall
score of 57.4 and we aim for our
suppliers to achieve an average
overall score of 65 by 2025. Suppliers
that have a low score are asked to
develop an action plan and improve
their peormance.
SUPPLY CHAIN
CCEP’s commitment to SDGs
ZERO
HUNGER
DECENT WORK
AND ECONOMIC
GROWTH
REDUCED
INEQUALITIES
36
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Financial StatementsStrategic Repo Governance and Directors’ Repo
Respecting and protecting
human rights
Human rights are fundamental to
how we run our day to day business
and the communities in which we
operate. We are commied to
ensuring that everyone working
throughout our operations and
within our supply chain is treated
with dignity and respect.
In 2020, we provided human rights
training to all our procurement
employees and production facility
managers.
We are currently reviewing a
range of options to help improve
the validation and proactive
management of our supplier base in
a number of key areas, paicularly
human rights and modern slavery.
This includes fuher investment
with EcoVadis, via IQ and other
digital providers, which will enhance
our robust risk management
processes.
FOR MORE INFORMATION ABOUT
OUR APPROACH TO RESPECTING AND
PROTECTING HUMAN RIGHTS SEE PAGE 43
COVID‑19 and our supply chain
The COVID-19 pandemic has had a
major impact not only for our own
operations but also for businesses
in our supply chain.
At the sta of the pandemic, we
carried out a risk assessment to
understand the impact of the crisis
and adjust to changing production
paerns. We used our existing
supply chain finance programme to
help suppliers in need of financial
suppo, and worked with suppliers
in heavily impacted sectors such as
CDE and trade marketing to help
mitigate the impact.
We also helped suppliers by
offering suppo to secure
sufficient transpoation to help
keep their business operating.
Thanks to the agility and flexibility
of our suppliers, we’ve been able to
adapt our supply chains successfully
during the crisis to ensure that
key raw materials and ingredients
remained available.
CASE STUDY
Towards net
zero: Supplier
Day 2020
Achieving our net zero 2040
ambition requires close
collaboration with our
suppliers. To raise awareness
of our new climate strategy
among suppliers, we held
a viual Supplier Day event
in October 2020.
During the discussion we
focused on the impoance of
collaboration to achieve our
ambition, as well as sharing
experience and insights on
carbon reduction solutions.
This includes suppoing our
suppliers to set their own
science based GHG emissions
reduction targets by 2023,
as well as helping them to
transition to using 100%
renewable electricity across
their operations and share
their carbon footprint data
with CCEP.
“ KRONES AND CCEP HAVE
ACHIEVED GREAT SUCCESS WITH
SOCIAL AND ENVIRONMENTAL
INITIATIVES OVER THE YEARS.
WE’RE EXCITED TO SUPPORT
CCEP’S NEW CLIMATE STRATEGY
AND LOOK FORWARD TO
WORKING TOWARDS THE NET
ZERO AMBITION TOGETHER.”
Christoph Klenk, CEO, Krones
READ MORE AT WWW.COCACOLAEP.COM/SUSTAINABILITY/THIS‑IS‑FORWARD/
ACTION‑ON‑SUPPLY‑CHAIN
Our progress
Our spend with suppliers that are covered by our SGPs
97%
97%
Sugar sourced from suppliers that comply with our SAGPs
100%
96%
2019 2020
37Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Our people
Our success is determined by the hard work and passion of the
people who work at CCEP and we are grateful for everything they
do. We provide a suppoive, inclusive, safe and healthy working
environment where diversity is valued and people at every level
are empowered to succeed.
Being valued
We believe that diversity of thinking
and experience leads to beer ways
of working, increased innovation
and beer business results. We are
commied to building a diverse
workforce with an inclusive and
suppoive culture, where
everybody’s welcome to be
themselves, be valued and belong.
With this commitment in mind, we
have established an I&D Centre of
Expeise (CoE), led by senior
management, to develop action
plans aligned with CCEP’s wider
strategy and track the progress of
our initiatives against each of our
I&D focus areas: gender, culture
and heritage, multi generations,
LGBT+ and disability.
To accelerate progress on I&D we
have built a framework underpinned
by our philosophy, “Everyone’s
Welcome: to be themselves, be
valued and belong”. We have
identified sponsors from our senior
leadership team for each of our I&D
focus areas, to lead engagement
with our people and accelerate
meaningful actions to remove
barriers to I&D. In 2020, the sponsors
held “In Your Shoes” listening
sessions where employees shared
their experiences of working
at CCEP.
As signatories of the Valuable
500 pledge, we are commied to
puing disability on the business
leadership agenda. To accelerate
disability inclusion, we have placed
increased focus on advocacy by
our senior leadership team,
understanding the lived experiences
of our employees through listening
sessions, and are identifying
changes to our ways of working
to improve accessibility.
38
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Financial StatementsStrategic Repo Governance and Directors’ Repo
ME@CCEP
ME@CCEP DEFINES
THE EXPERIENCE WE
WANT OUR PEOPLE TO
HAVE AT CCEP. IT IS
ABOUT SIX BEINGS:
BEING WELL
The safety and wellbeing of our
people is vitally impoant. We want
everyone to feel happy and healthy,
and to work with integrity and
respect so we can all thrive at
work and at home.
BEING CONNECTED
We’re poweul when we work
as pa of a winning team –
championing communication,
connection and collaboration.
BEING VALUED
We are at our best when we can
be ourselves at work. When we
are able to share our perspectives
and insights, and build upon
our strengths.
BEING DEVELOPED
Our experiences make us stronger
and we suppo our people in
exploring oppounities to
develop – providing possibilities to
continually learn, grow in their role
and get to where they want to be.
BEING REWARDED
All our people have a pa to play
in CCEP’s growth and we recognise,
reward and celebrate the great
work they do every day. We do this
in ways that are simple, transparent
and consistent.
BEING INSPIRED
We strive to be a force for good
– for people and for the planet.
We‘re passionate about what
we do and what we stand for,
and our people are empowered
to make a difference.
39Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Our people continued
A key target of our sustainability
action plan, This is Forward, is to
ensure that at least 40% of our
management positions (senior
management and above) are held
by women by 2025. In 2020, 35.6%
of leadership positions were held
by women, up from 35.5% in 2019.
During the year, CCEP reinforced its
commitment to gender equality by
applying to join the United Nations
Women’s Empowerment Principles
and for inclusion in the Bloomberg
Gender-Equality Index. Confirmation
of acceptance and inclusion in
each was received in early 2021.
CCEP is an equal oppounities
employer. We make decisions about
recruitment, promotion, training and
other employment maers solely
on the grounds of individual ability,
achievement, expeise and
conduct. We don’t discriminate on
the basis of gender, gender identity,
race, colour, religion, ethnicity,
cultural heritage, age, social
background, mental or physical
ability or disability, national origin,
sexual orientation or any other
reason not related to job
peormance or prohibited
by applicable law.
READ MORE ABOUT INCLUSION AND
DIVERSITY AT CCEP ON PAGE 85
Being developed
Across our business, we have a
number of training programmes
and systems to suppo our people
and develop talent at every level
of our organisation.
We offered training during the year,
using our digital plaorms to enable
our people to access training
materials wherever possible.
Two new training modules were
developed and launched in 2020,
to assist leaders when discussing
mental health and wellbeing with
their teams, and individuals to
beer manage their personal
wellbeing and energy levels.
Being rewarded
Along with a regular salary in line
with market rates, benefits are
available to all our people. These
vary according to their country and
level in the organisation. Benefits
include medical or dental insurance,
life insurance, eyecare vouchers,
holiday time and leave packages
to cover sickness, the bih of a child,
bereavement or a long-term illness
in the family. Depending on the
country, level and grade, pension
plans and share purchase plans
are also offered.
Around two thirds of our employees
paicipate in annual variable
remuneration plans. We offer a
consistent annual bonus plan to
around 5,400 people across the
organisation (around 24% of the
total population).
In addition, sales incentives plans
are operated for around 18% of our
people and a fuher 29% paicipate
in local incentive plans. We operate
an LTIP for around 280 people who
occupy the most senior roles in
the business.
READ OUR DIRECTORS’ REMUNERATION
REPORT ON PAGES 97–107
Employee share ownership
Some of our employees paicipate
in incentive programmes or share
ownership schemes that are linked
to CCEP’s peormance and give
them an oppounity to paicipate
in the Group’s peormance.
In GB, we offer an Employee Share
Plan (ESP). This is a tax efficient
oppounity for employees to
become shareholders through
salary sacrifice arrangements.
Around 75% of eligible employees
were paicipating in the ESP on
31 December 2020.
Being connected
Good communication is an essential
pa of building a motivated,
engaged workforce. We’re
commied to communicating
clearly and transparently with our
people and their representatives.
The circumstances surrounding
COVID-19 have led to an increase in
remote working across our business.
This, combined with an increase
in the level of unpredictability in
our working environment, makes
it more impoant than ever for
our management and leadership
teams to be visible and available
to our people.
In 2020, we rolled out a new internal
communications plaorm, Redline,
which can be downloaded as an app
to our people’s personal devices,
giving everyone the oppounity
to stay connected and informed,
wherever they work. Redline
contains real time news from across
the business and provides a means
of two way communication with
colleagues, including management.
Everyone at CCEP has access to
news and information about us in
local languages through intranet
sites and printed materials. CCEP
management gives updates
about CCEP’s overall, and local,
peormance through these
channels, as well as through
our published results. In 2020,
management held regular, informal
sessions to present updates on
business peormance and the
evolving COVID-19 situation, along
with wellbeing and other initiatives.
READ MORE ABOUT HOW WE HAVE ADAPTED
OUR WAYS OF WORKING THIS YEAR ON PAGE 27
CCEP meets regularly with
European, national and local works
councils and trade unions that
represent our people. When
required, we consult with our people
and their representatives to discuss
proposed measures before making
decisions. We encourage constructive
and meaningful dialogue with our
people. During consultation, our
employee representatives have the
oppounity to ask questions, share
views and propose alternatives to
proposals before management
makes a final decision.
READ MORE ABOUT HOW THE DIRECTORS, AND CCEP,
ENGAGE WITH OUR PEOPLE ON PAGES 10–13
Being well
We’re commied to providing our
people with a safe and healthy work
environment that safeguards their
mental and physical wellbeing.
To suppo this objective, we
implement a strong health and
safety programme which includes
a target to reduce our lost time
incident level to below 0.50 by 2025.
In 2020, our lost time incident rate
was 0.82 per 100 full time equivalent
employees. Zero fatalities occurred
during the year. Fuher information
about our safety peormance and
incident rates will be available on
our website from May 2021.
40
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
In cases where our people are
injured or suffer any mental or
physical health issues while
employed by CCEP, we endeavour
to make any reasonable adjustments
to their duties and working
environment to suppo their
recovery and continued
employment.
READ THE FULL DETAILS AT
WWW.COCACOLAEP.COM/SUSTAINABILITY/THIS‑
IS‑FORWARD/ACTION‑ON‑SOCIETY‑OUR‑PEOPLE
READ ABOUT OUR HEALTH AND SAFETY RESPONSE
TO COVID-19 ON PAGE 27
Being inspired
As pa of suppoing our local
communities, we encourage our
people to take pa in a wide range
of volunteering activities connected
to our sustainability commitments,
such as lier pick ups and charity
fundraising events. Our volunteering
policy enables all employees to
spend up to two paid working days
each year volunteering for a charity
or cause of their choice. Following
the introduction of government
restrictions across our territories in
response to COVID-19, our people
had fewer oppounities to volunteer
during the year. We continued to
offer our people oppounities to
volunteer, where possible and safe
to do so, and in 2020, our people
dedicated 9,061 hours of
volunteering time.
READ MORE ABOUT OUR SUPPORT FOR OUR
LOCAL COMMUNITIES ON PAGES 28–29
Workforce diversity in 2020
Total employees
(including pa time employees)
75% 25%
5,522 16,584
Board of Directors
70.6% 29.4%
5 12
Leadership
(senior management grade
including Executive Leadership
Team)
(A) (B)
64.4% 35.6%
854 1,545
Directors of subsidiary companies
(A)
76.5% 23.5%
20 65
Female Male
(A) 16 female and 38 male directors
of subsidiary companies are also
included in the workforce diversity
figures under leadership.
(B) The members of the Executive
Leadership Team (ELT) and their
direct repos consists of 46 female
and 72 male employees.
We created an online
Coronavirus Suppo Hub, giving
our people access to a range of
suppo tools and guidance
K
e
y
h
i
g
h
l
i
g
h
t
41Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Operating with integrity
We live up to our responsibilities as a business by being
accountable, ethical and aware of the risks in everything we do.
Corporate governance
We hold ourselves accountable to
the highest standards of corporate
governance and public access to
information about CCEP.
CCEP has a strong governance
framework with a Board of Directors
overseeing the interests of all
stakeholders. Five commiees
suppo the Board. These include
the CSR Commiee, which is
responsible for overseeing CCEP’s
sustainability strategy and progress
and all related policy issues and risks,
including climate change, and the
Audit Commiee, which, among
other things, oversees enterprise
risk management (ERM).
Management has also established
a compliance and risk commiee
that, among other things, advises
the ethics and compliance
(E&C) function and provides
management input regarding
the E&C programme.
FOR MORE ABOUT OUR APPROACH TO RISK,
SEE PAGE 44
FOR MORE ABOUT OUR CORPORATE GOVERNANCE,
SEE PAGES 72–81
FOR DETAILS ABOUT SUSTAINABILITY GOVERNANCE,
VISIT WWW.COCACOLAEP.COM/SUSTAINABILITY
Ethics and compliance
Our E&C programme ensures
we are conducting our operations
in a lawful and ethical manner.
The programme is applicable
to our people, officers and
Directors. It also suppos how
we work with our customers,
suppliers and third paies.
Code of Conduct
Our CoC seeks to ensure that we
act with integrity and accountability
in all of our business dealings and
relationships, in compliance with
all applicable laws, regulations
and policies.
We expect everyone working at
CCEP to adhere to the CoC. We also
expect all third paies who work
on our behalf to act in an ethical
manner consistent with our CoC
and to comply with our SGPs.
The CoC has been formally adopted
in all the territories in which we
operate, as well as our shared service
centres in Bulgaria. All employees
are required to undergo CoC
training, and this is pa of the
induction process for new
employees. Training on specific
topics related to their roles is also
provided where needed. All people
managers receive a CoC guide
that addresses their responsibilities.
This includes a matrix to help with
decision making and guidance
on situations such as bullying
and harassment.
Preventing bribery and corruption
We aim to prevent all forms of
bribery and corruption in our
business dealings. Our CoC sets
out our principles and standards
to prevent bribery and corruption,
including conflicts of interest
and the exchange of gis and
enteainment.
Our Anti-bribery, Gis and
Enteainment Policy and our
Conflicts of Interest Policy apply
to all employees. They are
accompanied by mandatory
training for a targeted audience.
SEE THE COC AT WWW.CCEPCOKE.ONLINE/
CODE‑OF‑CONDUCT‑POLICY
42
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Financial StatementsStrategic Repo Governance and Directors’ Repo
Raising concerns
Any employee who wishes to raise
concerns about wrongdoing at
CCEP can do so in a number of
different ways, including contacting
a line manager or through our
dedicated Speak Up channels.
When any employee voices concerns
in relation to the CoC, CCEP
will promptly and appropriately
conduct an investigation.
FOR MORE DETAIL, SEE OUR AUDIT
COMMITTEE REPORT ON PAGES 87–91
Respect for human rights
We consider human and workplace
rights to be inviolable and
fundamental to our sustainability
as a business. We are commied
to ensuring that everyone working
throughout our operations and
within our supply chain is treated
with dignity and respect.
Our principles regarding human
rights are set out in our SGPs
and fuher detail is provided in
our Human Rights Policy, which
is aligned with accepted
international standards such
as the UN Guiding Principles
on Business and Human Rights.
We have a zero tolerance approach
to modern slavery of any kind,
including forced labour, and any
form of human trafficking within
our operations and supply chain.
In 2017, we published our first
Modern Slavery Statement, and
continue to update this annually.
In 2019, we conducted an internal
human rights risk assessment with
paicipation from senior leaders
across our business. We also sought
input and advice from key external
stakeholders, including the Institute
of Employers, KnowTheChain, UN
OHCHR and many industry peers.
We identified nine key areas as
posing the greatest risk to people
in our own operations and across
our value chain. We initially focused
on the first four priority issues
to ensure full compliance and
that action is taken: health,
safety and security; equality and
non-discrimination; working hours;
and migrant and temporary workers.
In 2020, we developed action plans
for the issues related to freedom
of association, right to privacy
and data protection.
However, due to COVID-19 we took
additional measures to ensure the
health and safety of our people
and others working for CCEP.
This included COVID-19 risk
assessments, implementation of
guides on working from home, social
distancing, cleaning and disinfection
programmes, and additional
measures for our employees within
sales and supply chain functions.
This has pushed back our timetables
on the remaining actions, on forced
labour and wages, to 2021.
In 2020, we refreshed our human
rights training including a specific
focus on modern slavery for all
procurement managers who
interact with suppliers and for
supply chain teams.
On Human Rights Day in December
2020, we shared our progress with
our employees and stakeholders.
FIND MORE INFORMATION ABOUT OUR
APPROACH TO HUMAN RIGHTS AT
WWW.COCACOLAEP.COM/SUSTAINABILITY/
HUMAN‑RIGHTS
SEE OUR MODERN SLAVERY STATEMENT AT
WWW.COCACOLAEP.COM/SUSTAINABILITY/
DOWNLOAD‑CENTRE
Code of Conduct repos by type
Number %
(A)
Avoiding conflicts of interest
2 3
Creating an inclusive and respecul workplace
29 40
Delivering high quality products
2 3
Integrity of our business records
(B)
15 21
Preventing bribery and corruption
1 1
Dealing fairly with customers, business paners and suppliers
3 4
Environmental sustainability
1 1
Using our assets responsibly – non-financial
13 19
Working in a safe and healthy environment
6 8
Grand total
72 100
Number of employees resigned or dismissed
33
Number of disciplined employees still employed
(C)
26
(A) Percentage versus overall repos.
(B) Not limited only to our financial records. Business
records include records such as payroll, timecards,
travel and expense repos, job applications, quality
repos, field sales measures, customer
agreements, and inventory and sales repos.
(C) Some cases involve more than one employee.
43Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Principal risks
This section looks at the principal risks we face
as a business and how we manage them.
Our approach to risk
Our decisions are informed by an understanding
of the risks we face as a business. Through our ERM
programme, we identify, measure and manage risk,
and embed a strong risk culture across our business.
CCEP’s risk management framework looks at both risks
we face and how we can capitalise on oppounities
we have.
Since the creation of CCEP, we have continually matured
our risk management capabilities through seamless
collaboration across the business. This has resulted in the
creation of the one risk office, which helps us to manage
risks and respond rapidly through established processes
like incident management, business continuity plans
(BCP) and risk transfer mechanisms.
During the COVID-19 pandemic, the framework allowed
us to respond rapidly to a fast changing environment.
As a result, we were able to capture learnings and
developed a comprehensive pandemic handbook that
allowed us to respond well to the second wave and
ensure that the impacts from COVID-19 were minimised.
We are leveraging learnings from the current situation
to fuher strengthen our risk management framework
and prepare ourselves even beer for future challenges.
The risk and internal control systems have continually
improved since CCEP was created and are developed
to address the changing risk environment and to
adopt best practice in how to manage them.
Assessing risk
To gain an understanding of the risks CCEP faces,
we assess risk top down and boom up.
Our annual enterprise risk assessment (ERA) gives us a
top down, strategic view of risk at the enterprise level.
During this assessment we carry out a risk survey with
our top leaders, followed by interviews with Board and
Audit Commiee members and members of our ELT
to identify both current and emerging risks. This risk
assessment is reviewed and updated periodically. In
2020, we received feedback from our top 100 leaders.
To gain a boom up view of risk from an operational
perspective, we carry out risk assessments at a business
unit (BU), functional and project level. Each BU has
established local compliance and risk review processes,
undeaken by its local leadership team. The local
leadership teams review and update risk assessments,
ensuring that risk management is incorporated into day
to day business routines.
This work is overseen by the Group compliance and risk
commiee, which is chaired by the Chief Compliance
Officer. Every quaer, the commiee holds a meeting
in which local risk owners are invited to share updates
on key risks and how they are being managed. In 2020,
these included updates on business continuity
management, COVID-19, key suppliers, training culture,
packaging, human rights, policy changes, data privacy
and cybersecurity.
In 2020, we continued to include CCEP’s functions in
our risk assessment process, and covered areas such
as health and safety of our employees, food safety,
legal and tax. These functional risk assessments are
integrated into our annual business planning routine.
We also completed deep dives in the areas of new
legislation and water scarcity.
Targeted risk assessment and management projects
for topical issues such as Brexit and COVID-19 were
also completed. An overview of key ERM activities
is provided on page 45.
Measuring and managing risk
Once risks have been identified, we analyse them
to understand their likelihood and potential impact.
We also consider how we are managing the risks
with the right action in place, and impact scales
are reviewed on an annual basis; in 2020, these
were reassessed with a focus on financial impact.
In addition to likelihood and impact, our risk
management methodology now considers velocity.
This addresses the speed at which a risk may impact
our business.
In 2020, we developed risk appetite statements
to suppo business decision making in line with our
strategic objectives. We completed the definition of risk
appetite statements for the majority of our enterprise
risks. This exercise was conducted with input from the
ELT and the Audit Commiee.
44
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Financial StatementsStrategic Repo Governance and Directors’ Repo
These statements are defined top down in line with
our strategic objectives and structured according to
our enterprise risks. We determined the risk appetite
per risk category at one of five levels: low, low-medium,
medium, medium-high and high. In addition, a
qualitative statement for each category provides
context for the risk appetite level. The statements
are designed to provide management with guidance
for business decision making.
The risk appetite statements, which determine our
target risk profile, are reviewed annually during the
first quaer, following the annual top down ERA,
which provides us with the current risk profile.
We are working now to adapt the risk appetite
statements to suit our operations through the definition
of key risk indicators for each statement with our risk
owners. The management of the key risk indicators will
be done via our risk and compliance governance tool,
Riskonnect. Adverse trends and breaches of thresholds
will be repoed to the compliance and risk commiee
following a defined escalation protocol (see figure
below for our annual risk management plan).
In 2020, we conducted fuher scenario analysis and
planning to understand how key risks such as water
scarcity impact us. In 2021, we will develop action
plans for how we would respond to these scenarios
through in depth workshops.
We manage risk through the framework, our processes
and policies. Our annual policy review ensures the
policies and related policy guidance within CCEP
are valid. Changes within the documents have been
approved by the compliance and risk commiee.
New policies, for example, the CCEP wide CCTV policy
and the IT disaster recovery policy, have been approved
by the Board and the compliance and risk commiee.
In 2020, the CCEP policy governance and management
programme was externally reviewed and we received
a rating indicating the programme was close to
best practice.
The following pages set out a summary of our principal
risks based on the findings of our most recent ERA.
The Directors have carried out a robust assessment
of these principal risks. However, this summary is not
intended to include all risks that could ultimately
impact our business and the risks are presented
in no paicular order.
Beyond our principal risks, CCEP faces other operational
risks that we manage as pa of our daily routines,
such as employee health, safety and wellbeing, and
human rights.
READ ABOUT OUR RISK FACTORS ON PAGES 188–197
Q2
Assess and review sub risks with risk owners
Q3Q1
Risk appetite review
Q4
Enterprise risk assessment
Process stas again
Annual top down enterprise
risk assessment
Interviews and surveys with Board
members and ELT members and
selected subject maers expes
to determine CCEP’s current
risk profile (informs Integrated
Repo, risk appetite, audit plan
and business planning).
ERA dras risk input for the
Integrated Repo (Principal
risks and Risk factors).
Process stas again.
Annual risk appetite review and update
Based on the current risk profile
the Board and ELT define the
target risk appetite for the
enterprise risks to enable beer
decision making and so drive
growth.
Risk owners provide input to
Principal risk and Risk factors
sections in the Integrated
Repo.
Assess and review sub risks and oppounities
with risk owners with focus on mitigation and
financial valuation
ERM team works with risk owners to
elaborate on the underlying risks, suppos
risk owners to provide a financial valuation
for key risks, and drives mapping of risks
to business planning initiatives at BU
and functional level to integrate risk
management in business activities.
Overview of key ERM activities through the year
(ERM activities link top down and boom up)
45Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Principal risks continued
1
LIKELIHOOD (OVER NEXT 5 YEARS)
Major
Significant
Moderate
Minor
PRINCIPAL RISKS
1
Business continuity and resilience
2
Packaging
3
Cyber and social engineering aacks and IT
infrastructure
4
Economic and political conditions
5
Market
6
Legal, regulatory and tax change
7
Climate change and water
8
Perceived health impact of our beverages and
ingredients, and changing consumer buying trends
9
Competitiveness, business transformation
and integration
10
People and wellbeing
11
Relationships with TCCC and other franchisors
12
Product quality
Principal risk map
(A) (B)
IMPACT
Unlikely Possible Likely Highly likely
1
3
11
9
8
2
4
5
7
6
External
External oppounities and risks, such
as macroeconomic, socio/political and
competition risks, that could fundamentally
impact business strategy. Typically managed
by teams that respond to significant shis
in government relations, consumer or
supplier behaviour.
Strategic
Internal oppounities and risks that could
impede the achievement of strategic
objectives and targets, such as poor resource
allocation or decision making. Typically
managed by senior leaders responsible for
delivering strategic initiatives set by the Board.
Operational
Oppounities and risks that could impact day
to day operations in areas such as production,
logistics or sales. Managed across all business
areas through controls embedded in processes
and procedures.
Extreme events
Oppounities and risks that would have an
extreme impact on the business (such as
cyber aack, global financial crisis, natural
disasters, etc). These can materialise in any
pa of the business and may coincide with
other risks in paicular scenarios.
Note: extreme events could occur in any
principal risk and are, therefore, not allocated
to any single specific category.
Very rapid (Less than one month)
VELOCITY SCALE (SPEED OF IMPACT)
Rapid (Less than one year)
Moderate (One to three years) Slow (Greater than three years)
12
10
(A) Risk map is based on latest enterprise risk assessment results
(B) See pages 47-50 for full summary of principal risks
46
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
Table 1
(A)(B)
The table below shows our principal risks
Principal risk Definition and impact Key mitigation Change
1
Business
continuity and
resilience
Our business is vulnerable to a range of risks
that may materialise and cause disruption. These
include threats and risks such as physical aacks
(e.g. terrorism) and cyber aacks, IT system outages
and supplier failure as well as natural hazards such as
fire, flood, severe weather and pandemics. Working
with teams across the business, we develop business
continuity plans and resilience arrangements to
ensure the delivery of our products and services
no maer what the cause of disruption. This is to
protect our people, our environment, our reputation
and our overall financial condition. In some cases,
such as the current COVID-19 pandemic, health,
economic and legal effects could have a direct
or indirect impact on our ability to operate.
PLEASE REFER TO OUR CASE STUDY ON PAGE 51 FOR FUTHER DETAILS
• Continually updating our response to the situation and our
people’s needs
• Customers: working closely with suppliers, paners and TCCC to
ensure we best serve our customers and respond to their needs
• Communities: working closely with TCCC to suppo our
communities
• Governance: strong frameworks, business continuity plans, incident
management teams, strategic business continuity scenario testing,
risk reassessments used in business planning, increased frequency
of reviews with country leadership teams, Board and TCCC
incorporating learnings from the Coca-Cola system
• Effective management of liquidity, costs and discretionary spend
• Operational, technology and strategic resilience towers developed
as pa of our newly created business continuity and resilience
strategy to enable fuher resilience and risk mitigation for CCEP
• Training and awareness to build BCR capabilities throughout CCEP
to improve buy in and skills when it comes to preparing for and
responding to incidents
• Business impact analysis (BIA) to analyse and identify critical
people (roles), propey, technology, equipment and suppliers
(value chain) across CCEP and their associated maximum
acceptable outages, recovery time objectives and recovery
point objectives
• Scenario planning exercise with stakeholders across facilities
and functions to determine scenarios that could lead to the
unavailability of critical dependencies identified in the BIA
and the associated impacts if the scenarios were to occur
• BCP development with colleagues across the business to mitigate
risks identified during the BIA, scenario planning and risk
assessment and having them available to use in following waves
• Risk assessments to identify the likelihood and impact of identified
scenarios occurring, enabling BCPs to be developed in a targeted,
meaningful way
• Testing and exercising to validate BCPs are effective, giving teams
capabilities to respond to incidents that may occur, through table
top and live simulated exercises with stakeholders across CCEP,
within sites and functions
2
Packaging
Due to our concerns, and those of our stakeholders,
about the environmental impacts of lier and
GHG emissions, our packaging (especially single
use plastic packaging) is under increasing scrutiny
from regulators, consumers, customers, and NGOs.
As a result, we may have to change our packaging
strategy and mix over both the sho and long term.
This could result in a reduction in the use of single
use plastic packaging and the introduction of
new pack formats such as dispensed and refillable
packaging, and we may be liable for increased
costs related to the design, collection, recycling
and liering of our packaging. We may be unable
to respond in a cost effective manner and our
reputation may be adversely impacted.
• Continued sustainability action plan focused on packaging,
including our commitments to:
– Ensure that 100% of our primary packaging is recyclable
or refillable
– Drive higher collection rates, aiming to ensure that 100%
of our packaging is collected for reuse or recycling
– Ensure that by 2023 at least half of the material we use
for our PET boles comes from recycled plastic, achieving
100% by 2030
• Work with TCCC to explore alternative sources of rPET and
innovative new packaging materials
• Work with TCCC to encourage consumers to recycle their
packaging using existing collection infrastructure
• Cross functional SPO with a dedicated focus on packaging
collection and to ensure all sustainable packaging strategies
are implemented on time
• Suppo for well designed DRS across our markets as a route
to 100% collection and increased availability of rPET
• Work to expand delivery mechanisms that do not rely on single
use packaging, for example refillable packaging and dispensed
delivery
• Investment in enhanced recycling technology
• We continue to develop the business models for packaging-less
solutions (such as Freestyle) to provide an alternative offering
for customers who do not want to use packaging
• We also continue to develop the business models for refillable
packaging to provide an alternative offering for customers
who want fully circular alternatives to single use packaging
• Increase use of recycled content in films
• Moving from hard to recycle plastic shrink to sustainable board
for multi packs
(A) Changes in risk are as against the Principal risks section of CCEP’s Integrated Repo/Annual Repo on Form 20-F for the year ended 31 December 2019, as updated and
supplemented in CCEP’s Results for the six months ended 26 June 2020 and COVID-19 update.
(B) Some risk ratings have changed as a result of a change in our risk rating methodology and review of impact scales.
47Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Principal risks continued
Principal risk Definition and impact Key mitigation Change
3
Cyber and social
engineering
aacks and IT
infrastructure
We rely on a complex IT landscape, using both
internal and external systems, including some
systems that are outside our direct control where
employees work from home. These systems are
potentially vulnerable to adversarial and accidental
security and cyber threats, and user behaviour.
This threat profile is dynamically changing, including
as a result of the COVID-19 pandemic, as potential
aackers’ skills and tools advance. This exposes us to
the risk of unauthorised data access, compromised
data accuracy and confidentiality, the loss of system
operation or fraud. As a result, we could experience
disruption to operations, financial loss, regulatory
intervention, or damage to our reputation.
• Proactive monitoring of cyber threats and implementing
preventive measures
• Business awareness and training on information security and data
privacy
• Business continuity and disaster recovery programmes
• A programme to identify and resolve vulnerabilities
• Third pay risk assessments
• Corporate security business intelligence
• Appropriate investment in updating systems
• Hardware lifecycle process in place
4
Economic and
political
conditions
Our industry is sensitive to economic conditions such
as commodity and currency price volatility, inflation,
political instability, lack of liquidity and funding
resources, widening of credit risk premiums,
unemployment and furlough, and consumer
confidence or the impact of the widespread
outbreak of infectious disease such as COVID-19.
This exposes us to the risk of an adverse impact
on CCEP and our consumers, driving a reduction
of spend within our category or a change in
consumption channels and packs. As a result, we
could experience reduced demand for our products,
fail to meet our growth priorities and our reputation
could be adversely impacted. Adverse economic
conditions could also lead to increased customer
and supplier delinquencies and bankruptcies, while
restrictions on the movement of goods in response
to economic, political or other conditions, such as
COVID-19, could affect our supply chain.
• Diversified product poolio and the geographic diversity of
our operations assist in mitigating our exposure to any localised
economic risk
• Our flexible business model allows us to adapt our poolio to
suit our customers’ changing needs during economic downturns
• We regularly review our business results and cash flows and,
where necessary, rebalance capital investments
• Following the Brexit deal on the 24 December 2020, which
took effect from 11pm GMT on 31 December 2020, we continue
to monitor developments to ensure the business is prepared
to manage emerging situations
• Monitoring of societal developments
• Hedging programmes
5
Market
Our success in the market depends on a number
of factors. These include actions taken by our
competitors, route to market, our ability to build
strong customer relationships and create value
together (which could be affected by customer
consolidation, buying groups, and the changing
customer landscape) and government actions,
including those introduced as a result of COVID-19
such as social distancing, the forced closure of some
of our customer channels, restricted tourism and
restrictions on large gatherings. This exposes us to
the risk that market forces may limit our ability to
execute our business plans effectively. As a result,
it may be more challenging to expand margins,
increase market share, or negotiate with customers
effectively, and COVID-19 may also fuher adversely
impact the market in previously unforeseen ways.
• Shopper insights and price elasticity assessments
• Pack and product innovation
• Promotional strategy
• Commercial policy
• Collaborative category planning with customers
• Growth centric customer investment policies
• Business development plans aligned with our customers
• Diversification of poolio and customer base
• Realistic budgeting routines and targets
• Investment in key account development and category planning
• Continuous evaluation and updating of mitigation plans
• Responded to COVID-19 by developing and investing in new
routes to market, for example, online channel, so our products
remain available to consumers
6
Legal,
regulatory
and tax
Our daily operations are subject to a broad range
of regulations at EU and national level. These
include regulations covering manufacturing, the
use of ceain ingredients, packaging, labelling
requirements, and the distribution and sale of
our products. This exposes us to the risk of legal,
regulatory or tax changes that may adversely impact
our business. As a result, we could face new or higher
taxes, higher labour and other costs, stricter sales
and marketing controls, or punitive or other actions
from regulators or legislative bodies that negatively
impact our financial results, business peormance
or licence to operate. COVID-19 has resulted in both
sho-term and long-term changes to legislation
and regulation. It may also lead to future increases
in taxes to finance the cost of government responses
to COVID-19. In addition to the changes that took
immediate effect from 11pm GMT on 31 December
2020, we expect Brexit could, over time, lead to
increased diversity of regulation and consequent
costs of compliance including inability to or
difficulties in standardising product and process
between the UK and CCEP’s other markets.
• Continuous monitoring of new or changing regulations and
appropriate implementation of adequate mitigations
• Dialogue with government representatives and input to public
consultations on new or changing regulations
• Effective compliance programmes and training for employees
• Measures set out elsewhere in this table in relation to legal,
regulatory and tax changes with respect to any of the other
principal risks, and in paicular in relation to packaging, perceived
health impact of our beverages and ingredients, and changing
consumer preferences
• Increasing recycled content level in specific countries to mitigate
tax impact
48
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
Principal risk Definition and impact Key mitigation Change
7
Climate change
and water
Political and scientific consensus indicates that
increased concentrations of carbon dioxide and
other GHGs are causing climate change and
exacerbating water scarcity. Such GHG emissions
occur across our entire value chain including our
production facilities, cold drink equipment and
transpoation. GHG emissions also occur as a result
of the packaging we use and ingredients we rely on.
Our ingredients and production facilities also rely
heavily on the availability of water. This exposes us to
the risk of negative impacts related to our ability to
produce or distribute our products, or the availability
and price of agricultural ingredients and raw
materials as a result of increased water scarcity.
Failure to address these risks may cause damage to
our corporate reputation or investor confidence, a
reduction in consumer acceptance of our products
and potential disruption to our operations.
• Set science based carbon reduction targets for our core business
operations and our value chain
• Carbon reduction plans for our production facilities, distribution
and CDE
• Supplier carbon footprint reduction programme launched in
suppo of CCEP’s 2040 net zero ambition with focus on suppliers
seing SBTi targets and using 100% renewable electricity by 2023
• Transition to 100% renewable electricity
• External policy leadership and advocacy to suppo a transition
to a low-carbon economy
• Life cycle analysis to assess carbon footprint of packaging
formats
• Use of recycled materials for our packaging, which have a lower
carbon footprint
• SVAs to protect future sustainability of local water sources
and FAWVA and water management plans
• Supplier engagement on carbon reduction and sustainable
water use
• Assessment on climate related risks and future climate scenario
planning
• Comprehensive disclosure of GHG emissions across our value
chain in line with GHG Protocol
8
Perceived
health impact
of our beverages
and ingredients,
and changing
consumer
buying trends
We make and distribute products containing sugar
and alternative sweeteners. Healthy lifestyle
campaigns, increased media scrutiny and social
media have led to an increasingly negative
perception of these ingredients among consumers.
This exposes us to the risk that we will be unable to
evolve our product and packaging choices quickly
enough to satisfy changes in consumer preferences.
We will also face new pressure from the EU
Commission with the Farm to Fork Strategy, at the
hea of the European Green Deal, aiming to make
food systems fair, healthy and environmentally
friendly. As a result, we could experience sustained
decline in sales volume, which could impact our
financial results and business peormance.
• Reducing the sugar content of our so drinks, through:
– Product and pack innovation and reformulation
– Managing our product mix to increase low and no calorie
products
• Making it easier for consumers to cut down on sugar by providing
straighorward product information and smaller pack sizes
• EU wide so drink industry calorie reduction commitment
with the Union of European So Drinks Associations (UNESDA)
• Adopting calorie and sugar reduction commitments at
country level
• Dialogue with government representatives, NGOs, local
communities and customers
• Employee communication and education
• Responsible sales and marketing codes
• Proactive introduction of colour coded front of pack guideline
daily amount labelling as a fact based and non-discriminatory
way of informing consumers in an understandable way
• Provide a serious alternative to other labelling schemes, including
the French NutriScore scheme, encouraging the European
Commission to evaluate and develop EU harmonised guidance,
to address potential unfair targeting of the sparkling so drinks
industry
• Work with International Sweeteners Association to promote
and protect the reputation of alternative sweeteners and,
through UNESDA, working with the European food safety
authority on their opinions that will inform EU and national
government action
9
Competitiveness,
business
transformation
and integration
We are continuing our strategy of assessing potential
oppounities for continual improvements that would
enable us to stay competitive in the future. The
impact of COVID-19 has accelerated the urgency for
assessing potential oppounities and taking
appropriate action. This includes technology
transformation, including to suppo increased
working from home, continuous supply chain
improvements and improvements in the way we
work with our paners and franchisors, and more
recently our proposed acquisition of CCL. This
exposes us to the risk of ineffective coordination
between BUs and central functions, change fatigue
in our people and social unrest. As a result, we may
not create the expected value from these initiatives
or execute our business plans effectively. We may
also experience damage to our corporate reputation,
a decline in our share price, industrial action and
disruption to our operations.
• Regular competitiveness reviews ensuring effective steering,
high visibility and quick decision making
• Dedicated programme management office and effective
project management methodology
• Continuation and strengthening of governance routines
• Regular ELT and Board reviews and approvals of progress and
issue resolution
• Analysis and review of acquisition related activities such as
integration and business peormance risk indicators and capital
allocation risk reviews
• Suppo our employees with wellbeing initiatives to manage
change fatigue
SEE PEOPLE AND WELLBEING PRINCIPAL RISK FOR FURTHER DETAILS ON PAGE 50
49Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Internal control procedures and risk management
CCEP’s internal controls are designed to manage rather
than eliminate risk, and aim to provide reasonable but
not absolute assurance against material misstatement.
The Board has overall responsibility for the Company’s
system of internal controls and for reviewing its adequacy
and effectiveness. To discharge its responsibility in a
manner that complies with law and regulation and
promotes effective and efficient operation, the Board
has established clear operating procedures, lines of
responsibility and delegated authority.
The Audit Commiee has specific responsibility
for reviewing the internal control policies and
procedures associated with the identification,
assessment and repoing of risks to check they
are adequate and effective.
Our internal control processes include:
• Board approval for significant projects, transaction
and corporate actions
• Either senior management or Board approval for
all major expenditure at the appropriate stages
of each transaction
• Regular repoing covering both technical progress
and our financial affairs
• Board review, identification, evaluation and
management of significant risks
READ MORE ABOUT OUR APPROACH TO INTERNAL CONTROL AND
RISK MANAGEMENT IN THE AUDIT COMMITTEE REPORT ON PAGE 91
Principal risk Definition and impact Key mitigation Change
10
People and
wellbeing
The direct and indirect effects of COVID-19 may
add to the impact on our people, their health and
wellbeing and working conditions. Our response may
affect the perception of CCEP as an employer and
our ability to aract, retain and motivate existing
and future employees, which exposes us to the risk
of not having the right talent, required technical
skillset, or expected levels of productivity. As a result,
we could fail to achieve our strategic objectives
and could experience a decline in employee
engagement, industrial action, suffer from
reputational damage or litigation. CCEP is
commied to ensuring that everyone working
throughout our operations and within our supply
chain is treated with dignity and respect.
• CCEP CoC
• Regular communication
• EAP
• Flexible working
• Working from home
• Safety measures
• Appropriate incentivisation
• Talent reviews
• Tools for employees to take ownership of careers
• People related training and reskilling, risk assessments, action
plans and compliance
• Manager training to help identify stress
• Wellbeing material available to managers and employees via
CCEP plaorms to suppo our employees
• Human rights policy
11
Relationships
with TCCC
and other
franchisors
We conduct our business primarily under
agreements with TCCC and other franchisors.
This exposes us to the risk of misaligned incentives
or strategy, paicularly during periods of low
category growth or crisis, such as COVID-19.
As a result, TCCC or other franchisors could
act adversely to our interests with respect
to our business relationship.
• Clear agreements govern the relationships
• Incidence pricing agreement with TCCC
• Aligned long range planning and annual business planning
processes
• Ongoing pan-European and local routines between CCEP and
franchise paners
• Increased frequency of meetings and maintenance of positive
relationships at all levels
• Regular contact and best practice sharing across the Coca-Cola
system
• Improve visibility and ways of working with TCCC
12
Product quality
We produce a wide range of products, all of which
must adhere to strict food safety requirements. This
exposes us to the risk of failing to meet, or being
perceived as failing to meet, the necessary
standards, which could lead to compromised product
quality. As a result, our brand reputation could be
damaged and our products could become less
popular with consumers.
• TCCC standards and audits
• Hygiene regimes at production facilities
• Total quality management programme
• Robust management systems
• ISO ceification
• Internal governance audits
• Quality monitoring programme
• Customer and consumer monitoring and feedback
• Incident management and crisis resolution
• Every CCEP production facility has:
– a hazard analysis critical control points assessment and
mitigation plan in place
– a quality monitoring plan based on risk and requirements
– a food fraud vulnerability assessment and mitigation plan
based on risk and requirements
– a food defence threat assessment and mitigation plan based on
risk and requirements
Principal risks continued
50
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
COVID-19
RESPONSE
Strategic and
operational business
continuity plans
Local and EU
level incident
management
teams
System wide boler
information sharing and
TCCC alignment
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CASE STUDY
Business continuity and
our response to COVID‑19
When the COVID-19 pandemic struck in
Western Europe, we immediately instigated our
business continuity and resilience processes. One of
the first steps was to establish the TCCC and CCEP
wide incident and crisis management response
teams, which worked seamlessly throughout the
first wave. This was a complex process as national
data and new government legislation was
analysed to create one aligned response across
our territories. At the height of the pandemic, the
teams met on a daily basis and our open lines of
communication with senior management meant
that decisions were made quickly and effectively.
We were also able to learn from other Coca-Cola
system teams in Asia, which helped us in the early
stages to develop key processes and procedures.
In January 2020, we held a simulation test at our
Wakefield production facility in GB, which helped
us to establish new procedures such as shi
paerns, social distancing measures and cleaning
regimes. We also developed guidelines for the
appropriate use of PPE for our sales force to
suppo their visits to our customers. In addition,
we helped our people working from home with
cyber training and guidelines on data privacy, as
well as ensuring they had the correct equipment
to work safely, including the provision of monitors
and other IT equipment.
As a result, we have developed a CCEP wide
pandemic handbook, a state of the a document,
with hot links, which contains all the relevant
processes, procedures and communications
guidelines to assist our corporate functions and
local business leaders. We continue to monitor
the situation and brief senior managers on
a regular basis.
The BCR team was awarded European Resilience
Team of the Year 2020 by the Business Continuity
Institute and the Director of BCR won Global
Business Continuity Manager of the Year 2020 from
the Continuity Insurance and Risk professional
body. Both institutions are world renowned and
represent resilience professionals across the globe.
51Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Viability statement
In accordance with provision 31 of the 2018 UK Corporate Governance Code
(the UKCGC), the Directors have assessed the prospects for the Group. The Directors
have made this assessment over a period of three years, which corresponds to the
Group’s planning cycle.
The assessment considered the Group’s prospects
related to revenue, operating profit, EBITDA and free
cash flow. The Directors considered the maturity dates
for the Group’s debt obligations and its access to public
and private debt markets, including its commied
multi currency credit facility. The Directors also carried
out a robust review and analysis of the principal risks
facing the Group, including those risks that could
materially and adversely affect the Group’s business
model, future peormance, solvency and liquidity.
Stress testing was peormed on a number of scenarios,
including different estimates for operating income
and free cash flow. Among other considerations, these
scenarios incorporated the potential downside impact
of the Group’s principal risks, including those related to:
• Continued or new lockdowns/restrictions, and the
impact on the away from home channel
• Changing consumer preferences and the health
impact of so drinks
• Legal and regulatory intervention, including in
relation to plastic packaging
• The risk of cyber and social engineering aacks
• Adverse changes in relationships with large customers
Based on the Group’s current financial position,
stable cash generation and access to liquidity, the
Directors concluded that the Group is well positioned
to manage principal risks and potential downside
impacts of such risks materialising to ensure solvency
and liquidity over the assessment period. From
a qualitative perspective, the Directors also took
into consideration the Group’s past experience of
managing through adverse conditions and the Group’s
strong relationship and position within the Coca-Cola
system. The Directors considered the extreme measures
the Group could take in the event of a crisis, including
decreasing or stopping non-essential capital investment,
decreasing or stopping shareholder dividends,
renegotiating commercial terms with customers
and suppliers or selling non-essential assets.
The proposed acquisition of CCL, if approved, would
occur within the period covered by the viability
assessment. We have considered this scenario and
concluded that there is no material impact to viability
for the Group over the three year period of this
assessment.
Based upon the assessment peormed, the Directors
confirm that they have a reasonable expectation the
Group will be able to continue in operation and meet
all liabilities as they fall due over the three year period
covered by this assessment.
52
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
Non‑financial information
statement
This Integrated Repo contains a combination of financial and non-financial
repoing throughout. As required by sections 414CA and 414CB of the
Companies Act 2006 (the Companies Act), the following non-financial information
can be found in the pages of this Strategic Repo stated in the table. These pages
contain, where appropriate, details of our policies and approach to each maer.
Non‑financial information Pages
Environmental maers Action on climate on pages 24–26, Action on packaging on pages 30–31 and Action on
water on pages 34–35
Employee maers Our stakeholders on pages 10–13 and Our people on pages 38–41
Social maers Action on society on pages 27–29
Human rights Operating with integrity on page 43
Anti-corruption and anti-bribery maers Operating with integrity on pages 42–43
Our business model What we do and how we do it on pages 8–9
Risk and principal risks Principal risks on pages 44–51 and Risk factors on pages 188–197
Non-financial peormance indicators Peormance indicators on page 3
53Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
54
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
Our business
CCEP is the world’s largest independent Coca-Cola boler by revenue, operating in 13 countries in Western Europe
and employing around 22,000 people. We are proud of our solid track record of peormance and, during 2020,
we responded rapidly to COVID-19, demonstrating the agility and resilience of our people and business. We remain
confident in our future, led by green and digital, and believe we will emerge from this crisis as an even more efficient
and sustainable business.
Note regarding the presentation of non‑GAAP financial information
We use ceain alternative peormance measures (non-GAAP peormance measures) to make financial, operating
and planning decisions and to evaluate and repo peormance. We believe these measures provide useful
information to investors and as such, where clearly identified, we have included ceain alternative peormance
measures in this document to allow investors to beer analyse our business peormance and allow for greater
comparability. To do so, we have excluded items affecting the comparability of period over period financial
peormance as described below. The alternative peormance measures included herein should be read in
conjunction with and do not replace the directly reconcilable GAAP measure.
For purposes of this document, the following terms are defined:
‘‘As repoed’’ are results extracted from our consolidated financial statements.
‘‘Comparable’’ is defined as results excluding items impacting comparability, such as restructuring charges, out of
period mark-to-market impact of hedges and net tax items relating to rate and law changes. Comparable volume
is also adjusted for selling days.
‘‘Fx‑neutral’’ is defined as comparable results excluding the impact of foreign exchange rate changes. Foreign
exchange impact is calculated by recasting current year results at prior year exchange rates.
‘‘Capex’’ or “Capital expenditures’’ is defined as purchases of propey, plant and equipment and capitalised
soware, plus payments of principal on lease obligations, less proceeds from disposals of propey, plant and
equipment. Capex is used as a measure to ensure that cash spending on capital investment is in line with the
Group’s overall strategy for the use of cash.
‘‘Free cash flow’’ is defined as net cash flows from operating activities less capital expenditures (as defined above)
and interest paid. Free cash flow is used as a measure of the Group’s cash generation from operating activities,
taking into account investments in propey, plant and equipment and non-discretionary lease and interest payments.
Free cash flow is not intended to represent residual cash flow available for discretionary expenditures.
‘‘Adjusted EBITDA’’ is calculated as Earnings Before Interest, Tax, Depreciation and Amoisation (EBITDA), aer
adding back items impacting the comparability of year over year financial peormance. Adjusted EBITDA does
not reflect cash expenditures, or future requirements for capital expenditures or contractual commitments.
Fuher, adjusted EBITDA does not reflect changes in, or cash requirements for, working capital needs, and although
depreciation and amoisation are non-cash charges, the assets being depreciated and amoised are likely
to be replaced in the future and adjusted EBITDA does not reflect cash requirements for such replacements.
‘‘Net debt’’ is defined as the net of cash and cash equivalents less currency adjusted borrowing. We believe that
repoing net debt is useful as it reflects a metric used by the Group to assess cash management and leverage.
In addition, the ratio of net debt to adjusted EBITDA is used by investors, analysts and credit rating agencies
to analyse our operating peormance in the context of targeted financial leverage.
‘‘ROIC’’ is defined as comparable operating profit aer tax divided by the average of opening and closing invested
capital for the year. Invested capital is calculated as the addition of borrowings and equity less cash and cash
equivalents. ROIC is used as a measure of capital efficiency and reflects how well the Group generates comparable
operating profit relative to the capital invested in the business.
‘‘Dividend payout ratio’’ is defined as dividends as a propoion of comparable profit aer tax.
Business and
financial review
55Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Additionally, within this repo, we provide ceain forward-looking non-GAAP financial information, which
management uses for planning and measuring peormance. We are not able to reconcile forward-looking
non-GAAP measures to repoed measures without unreasonable effos because it is not possible to predict
with a reasonable degree of ceainty the actual impact or exact timing of items that may impact comparability
throughout the year.
Unless otherwise stated, percent amounts are rounded to the nearest 0.5%.
Key financial measures
(A)
Unaudited, fx impact calculated by recasting
current year results at prior year rates
Year ended 31 December 2020
€ million % change vs prior year
As repoed Comparable Fx impact As repoed Comparable Fx impact
Comparable
fx‑neutral
Revenue 10,606 10,606 (75) (11.5)% (11.5)% (0.5)% (11.0)%
Cost of sales 6,871 6,809 (54) (7.5)% (8.5)% (1.0)% (7.5)%
Operating expenses 2,922 2,603 (16) (4.0)% (11.0)% (1.0)% (10.0)%
Operating profit 813 1,194 (5) (47.5)% (29.0)% (0.5)% (28.5)%
Profit aer taxes 498 821 (4) (54.5)% (30.5)% —% (30.5)%
Diluted earnings per share (€) 1.09 1.80 (0.01) (53.0)% (29.0)% (0.5)% (28.5)%
(A) See Supplementary financial information – Income Statement section for reconciliation of As repoed to Comparable financial information.
Financial highlights
COVID-19 and related response measures have had, and will continue to have, a significant adverse effect on our
business, significantly reducing consumption in the away from home channel, which is our most profitable channel.
Our response to COVID-19, however, was rapid, and we took meaningful actions to protect our peormance.
We adjusted our cost base to a new reality, implementing significant cost mitigation plans and announcing an
Accelerate Competitiveness efficiency programme, ending the year with strong free cash flow and increased
liquidity. This enabled us to continue to return cash to shareholders, as evidenced by the dividend paid in December.
The net impact of COVID-19 on our key financial measures can be summarised as follows:
• Repoed revenue totalled €10.6 billion, down 11.5% on a repoed basis and 11.0% on an fx-neutral basis.
• Volume decreased 9.5% on a repoed basis. Comparable volume decreased 10.0% and revenue per unit case
decreased 1.5%.
• Repoed operating profit was €0.8 billion, down 47.5%. Comparable operating profit was €1.2 billion, down 29.0%.
• Repoed diluted earnings per share were €1.09 or €1.80 on a comparable basis, down 28.5% on a comparable and
fx-neutral basis.
• Net cash flows from operating activities were €1.5 billion. Full year free cash flow* was €0.9 billion.
* See Liquidity and capital management section for a reconciliation between net cash flows from operating activities and free cash flow.
Operational review
Repoed revenue declined by 11.5%, driven by a 10.0% comparable volume decline reflecting the impact of COVID-19.
Revenue per unit case was down 1.5% on an fx-neutral basis with positive momentum in the first and third quaer,
offset by the second and fouh quaer, reflecting the varying extent of restrictions during the year. Our cost of sales
per unit case increased 2.5% on a comparable and fx-neutral basis, mainly driven by an under-recovery of our fixed
costs given the lower volumes, combined with adverse mix. This was paially offset by a reduction in discretionary
operating expenses and resulted in comparable operating profit of €1.2 billion, down 28.5% on a comparable and
fx-neutral basis.
Revenue
Revenue totalled €10.6 billion, down 11.5% versus prior year on a repoed basis, and 11.0% on an fx-neutral basis.
Revenue per unit case declined by 1.5% in 2020, on a comparable and fx-neutral basis.
Revenue
In millions of €, except per case data which is calculated prior to rounding.
Fx impact calculated by recasting current year results at prior year rates.
Year ended
31 December 2020
31 December 2019 % change
As repoed
10,606 12,017 (11.5)%
Adjust: Total items impacting comparability — — —%
Comparable 10,606 12,017 (11.5)%
Adjust: Impact of fx changes 75 n/a (0.5)%
Comparable and fx‑neutral
10,681 12,017 (11.0)%
Revenue per unit case 4.69 4.77 (1.5)%
The decline in revenue per unit case reflected negative geographic, channel and package mix during the year
driven by the impact of COVID-19 across our business. This was paly offset by revenue growth management
initiatives, such as optimising our promotional efficiency, stock keeping unit (SKU) rationalisation, and the reallocation
of field sales teams into the home channel. These initiatives also helped us to improve our value market share during
the year, both in store and online.
56
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
Business and financial review continued
Year ended
Revenue by geography
31 December 2020
% of total
31 December 2019
% of total
Revenue
% change
Iberia (Spain, Pougal and Andorra)
20.5% 23.0% (22.0)%
Germany 21.5% 20.5% (6.5)%
Great Britain 21.0% 20.0% (8.5)%
France (France and Monaco) 16.0% 16.0% (10.0)%
Belgium/Luxembourg
8.5% 8.5% (11.0)%
Netherlands 5.0% 5.0% (12.0)%
Norway 4.0% 3.5% (3.0)%
Sweden 3.0% 3.0% (8.0)%
Iceland 0.5% 0.5% (17.5)%
Total 100.0% 100.0% (11.5)%
On a territory basis in 2020, repoed revenue in Iberia was down 22.0% versus 2019. This was mainly driven by
a decrease in volume due to significant exposure to the away from home channel and lower tourism. Additionally,
revenue per case growth was negatively impacted by channel mix given the closure of HoReCa outlets
for a significant poion of the year in addition to negative package mix, including a 48% decrease in glass
package volume.
Repoed revenue in Germany was down 6.5% versus 2019. This was mainly driven by a decrease in volume due to
away from home outlet closures, paially offset by additional Danish border trade business. Coca-Cola Zero Sugar
and Monster grew volume, while ViO and Apollinaris declined in volume given the brands’ exposure to away from
home and immediate consumption. Additionally, revenue per case growth was driven by growth in cans, increased
promotional efficiency in the home channel and favourable brand mix. This was paially offset by adverse channel
mix and package mix given the overpeormance of future consumption packages.
Repoed revenue in Great Britain was down 8.5% versus 2019. Foreign exchange translation negatively impacted
revenue growth by 1.0%. The additional decrease in revenue was mainly driven by a decrease in volume due to
restrictive measures and outlet closures. Lower volume in the away from home channel was paially offset by home
channel volume growth, both online and in store. Additionally, revenue per case growth was negatively impacted by
the volume increase in the home channel and, in paicular, the growth in future consumption packages, including
growth of 5.0% in large PET and 23.0% in multi pack cans, alongside lower immediate consumption in both channels.
Repoed revenue in France was down 10.0% versus 2019. This was mainly driven by a decrease in volume due to
away from home outlet closures and lower volumes in hypermarkets reflecting lower foot traffic given government
restrictions. However, the decline in volume was paly offset during the second half of the year when away from
home outlets reopened and consumer mobility increased, aided by favourable weather. Additionally, revenue per
case growth was negatively impacted by channel mix given away from home outlet closures and package mix due
to lower immediate consumption, paially offset by lower promotions.
Repoed revenue in the Nohern European territories (Belgium, Luxembourg, the Netherlands, Norway, Sweden
and Iceland) was down 9.5% versus 2019. Foreign exchange translation negatively impacted revenue growth by
1.5%. The additional decrease in revenue was mainly driven by negative away from home volumes reflecting outlet
closures, paially offset by growth in the home channel led by Norway and the Netherlands. Additionally, revenue
per case grew modestly due to positive country and brand mix, offset by adverse channel mix.
Comparable volume – selling day shi
In millions of unit cases, prior period volume recast using current year selling days
(A)
Year ended
31 December 2020
31 December 2019 % change
Volume 2,277 2,521 (9.5)%
Impact of selling day shi n/a 8 n/a
Comparable volume – selling day shi adjusted 2,277 2,529 (10.0)%
(A) A unit case equals approximately 5.678 litres or 24 eight ounce servings, a typical volume measure used in our industry.
Volumes were down 9.5% on a repoed and 10.0% on a comparable basis. The most significant impact was in the away
from home channel where volumes declined by 27.5% for the year, which included a decline of 50% in the first half
of the year. We experienced marked sequential improvement in volumes over the summer months, reflecting the
easing of initial lockdown measures and favourable weather, but volumes were again negatively impacted during
the fouh quaer due to renewed restrictions across our territories. Trading in the home channel was more stable
throughout the year with full year volume growth of 1.5%, driven by our continued revenue growth management
initiatives as well as the growth in the online channel. The resolution of a customer dispute also suppoed home
volumes in the second half of the year, paicularly in France and Germany. From a package perspective, on the
go immediate consumption was negatively impacted across both channels with volumes down 24.5%. The volume
of future consumption packs such as large PET and multi pack cans grew during the year, paicularly in the
home channel.
57Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Year ended
Comparable volume by brand category
Adjusted for selling day shi
31 December 2020
% of total
31 December 2019
% of total
Volume
% change
Sparkling
88.5% 86.0% (7.0)%
Coca-Cola trademark 66.0% 63.5% (6.5)%
Flavours, mixers and energy 22.5% 22.5% (9.0)%
Stills 11.5% 14.0% (27.0)%
Hydration 6.5% 8.5% (34.0)%
RTD teas, RTD coffees, juices and other drinks 5.0% 5.5% (17.0)%
Total 100.0% 100.0% (10.0)%
On a brand category basis in 2020, Coca-Cola trademark volume decreased by 6.5% versus 2019 reflecting the decline
in immediate consumption due to COVID-19. Coca-Cola Classic was down 9.0%. Lights volumes decreased by 2.5%,
driven by resilient peormance of Coca-Cola Zero Sugar, up 2.0%.
Flavours, mixers and energy volume decreased by 9.0% versus 2019. This mainly reflects a 13.0% decline in Fanta driven
by the impact of COVID-19 on the away from home channel. Energy volumes were up 13.0% reflecting growth in both
channels. In paicular, Monster volume increased by 15.5% driven by paicularly strong growth in Monster multi packs,
which increased 33.5%.
Hydration volume decreased by 34.0% versus 2019. This decline was indicative of the ongoing impact of COVID-19
and the exposure to immediate consumption across both channels. In paicular, water was down 39.5% with lower
volumes across all brands.
RTD teas, RTD coffees, juices and other drinks volume decreased by 17.0% versus 2019. Fuze tea volume decreased
by 13.0% and juice drinks were down 16.5% due to exposure to on the go occasions. Costa Coffee RTD distribution
increased in Great Britain, resulting in 72.0% volume growth following the initial launch in June 2019. Tropico volumes
were up 7.0% driven by solid peormance in France. In December, we also launched Topo Chico Hard Seltzer in three
flavours in Great Britain and the Netherlands. Although initial volumes are small, we plan to increase distribution
in 2021.
Cost of sales
Repoed cost of sales was €6.9 billion, down 7.5%. Comparable cost of sales was €6.8 billion, down 8.5% on
a comparable basis and 7.5% on a comparable and fx-neutral basis. Cost of sales per unit case increased by 2.5%
on a comparable and fx-neutral basis. This reflects the impact of the under-recovery of fixed manufacturing costs
given lower volumes and adverse mix due to higher demand for cans, offset by the decline in revenue per unit case
driving lower concentrate costs.
Cost of sales
In millions of €, except per case data which is calculated prior to rounding.
Fx impact calculated by recasting current year results at prior year rates.
Year ended
31 December 2020
31 December 2019 % change
As repoed
6,871 7,424 (7.5)%
Adjust: Total items impacting comparability
(A)
(62) (1) (1.0)%
Comparable 6,809 7,423 (8.5)%
Adjust: Impact of fx changes
54 n/a (1.0)%
Comparable and fx‑neutral
6,863 7,423 (7.5)%
Cost of sales per unit case
3.01 2.94 2.5%
(A) See Supplementary financial information – Income Statement.
Operating expenses
Repoed operating expenses were €2.9 billion, down 4.0%, or €123 million. This includes restructuring charges
totalling €368 million, which include €202 million related to Accelerate Competitiveness proposals announced
in October 2020.
Comparable operating expenses were €2.6 billion, down 11.0%, or €315 million, on a comparable basis and 10.0%
on a comparable and fx-neutral basis. Lower volumes resulted in a reduction of variable expenses, such as logistics
costs. Operating expenses also reduced versus prior year due to a reduction in discretionary spend of approximately
€260 million, mainly in trade marketing expenses, seasonal labour, incentives, travel and meetings, and other services.
This reduction in operating expenses was paly offset by one-off costs such as bad debts, inventory write offs
and personal protective equipment, as well as by our continued investments for the future in areas such as our
digital capabilities.
58
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
Business and financial review continued
Operating expenses
In millions of €. Fx impact calculated by recasting current year results at prior year rates.
Year ended
31 December 2020
31 December 2019 % change
As repoed
2,922 3,045 (4.0)%
Adjust: Total items impacting comparability
(A)
(319) (127) (7.0)%
Comparable 2,603 2,918 (11.0)%
Adjust: Impact of fx changes 16 n/a (1.0)%
Comparable and fx‑neutral
2,619 2,918 (10.0)%
(A) See Supplementary financial information – Income Statement.
Restructuring
During 2020, we recognised restructuring charges of €368 million. These charges were principally related to
Accelerate Competitiveness, site closures in Germany in January 2020 and the transformation of our cold drink
operations.
Accelerate Competitiveness relates to initiatives across Europe aimed at improving productivity through the
use of technology enabled solutions. Included in these proposals were the closure of ceain production facilities
in Germany and Iberia. These proposals continue the focus on network optimisation and site rationalisation of
the Group. The proposals are also expected to impact a number of functions across the Group, including business
process technology, customer service, sales and marketing and finance, as the Group seeks to reduce complexity
and increase the use of technology. Charges in the year include €202 million related to severance and accelerated
depreciation.
Site closures in Germany relate to the closure of five distribution centres during the course of 2020 and a commercial
restructuring initiative relating to vending operations and sales functions. Charges in the year include €78 million
related to severance and accelerated depreciation.
Effective tax rate
The effective tax rate was 28% and 25% for the years ended 31 December 2020 and 31 December 2019, respectively.
The increase in the effective tax rate to 28% from 2019 is largely due to the remeasurement of deferred tax positions
following tax rate changes in the UK and the Netherlands, offset by changes in profit mix and the impact of lower
corporate income tax rates in France and Belgium.
The comparable effective tax rate was 24% and 25% for the years ended 31 December 2020 and 31 December 2019,
respectively.
Return on invested capital
ROIC is used as a measure of capital efficiency and reflects how well the Group generates comparable operating
profit relative to the capital invested in the business. For the year ended 31 December 2020, ROIC decreased by
270 basis points, to 7.6%, versus 2019, reflecting the decline in comparable operating profit, more than offseing
the reduction in our borrowings less cash and cash equivalents and the impact of our announced dividend paid
per share.
ROIC
In millions of €
Year ended
31 December 2020
31 December 2019
Comparable operating profit
(A)
1,194 1,676
Taxes
(B)
(286) (421)
Comparable operating profit aer tax 908 1,255
Opening borrowings less cash and cash equivalents
6,105 5,631
Opening equity 6,156 6,564
Opening invested capital 12,261 12,195
Closing borrowings less cash and cash equivalents 5,664 6,105
Closing equity 6,025 6,156
Closing invested capital 11,689 12,261
Average invested capital 11,975 12,228
ROIC 7.6% 10.3%
(A) Reconciliation from repoed operating profit to comparable operating profit is included in the Supplementary financial information – Income
Statement.
(B) Tax rate used is the comparable effective tax rate for the year (2020: 23.9%; 2019: 25.1%).
59Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Liquidity and capital management
Liquidity
Liquidity risk is actively managed to ensure we have sufficient funds to satisfy our commitments as they fall due.
Our sources of capital include, but are not limited to, cash flows from operating activities, public and private issuances
of debt securities and bank borrowings. We believe our operating cash flow, cash on hand and available sho-term
and long-term capital resources are sufficient to fund our working capital requirements, scheduled borrowing
payments, interest payments, capital expenditures, benefit plan contributions, income tax obligations and dividends
to shareholders. Counterpaies and instruments used to hold cash and cash equivalents are continuously assessed,
with a focus on preservation of capital and liquidity.
The Group has amounts available for borrowing under a €1.5 billion multi currency credit facility with a syndicate
of 10 banks. This credit facility matures in 2025 and is for general corporate purposes and suppoing the Group’s
working capital needs. Based on information currently available, there is no indication that the financial institutions
paicipating in this facility would be unable to fulfil their commitments to the Group as at the date of this repo.
The Group’s current credit facility contains no financial covenants that would impact its liquidity or access to capital.
As at 31 December 2020, the Group had no amounts drawn under this credit facility.
Net cash flows from operating activities were €1,490 million in 2020, a decrease of 22.0%, or €414 million, from
€1,904 million in 2019, reflecting the impact of COVID-19. These cash flows were primarily generated from our
operations and included restructuring cash oulows of €205 million.
We continue to invest in our capital expenditure programmes, although due to the impact of COVID-19, 2020 capital
expenditure was reduced by approximately a third by deferring non-critical projects. Our 2020 capital spend on
propey, plant and equipment and capitalised soware as pa of our business capability programme was €408 million,
compared to €602 million in 2019.
Free cash flow generation for the year was strong, totalling €924 million, a slight reduction relative to our 2019 total of
€1,099 million. Despite the impact of COVID-19 on net cash flows from operating activities, we were able to mitigate
the impact on free cash flow through improved working capital and disciplined capital expenditures.
Free cash flow
In millions of €
Year ended
31 December 2020
31 December 2019
Net cash flows from operating activities
1,490 1,904
Less: Purchases of propey, plant and equipment (348) (506)
Less: Purchases of capitalised soware (60) (96)
Less: Interest paid, net (91) (86)
Add: Proceeds from sales of propey, plant and equipment 49 11
Less: Payments of principal on lease obligations (116) (128)
Free cash flow 924 1,099
In 2020, total borrowings increased by €766 million. This was driven by new issue proceeds of €1.6 billion, enhancing
the liquidity position to face the significant unceainty created by COVID-19. This consists of the issuance of
€600 million 1.75% notes due in 2026, €250 million 1.5% notes due in 2027 and €750 million 0.2% notes due in 2028,
paially offset by payments in the period of €910 million, consisting mainly of €470 million related to repaying in full
$525 million notes due during the year, and early payments of €52 million on the 3.25% $250 million notes due in 2021
and €47 million on the $300 million notes due in 2021, in addition to net repayments of sho-term borrowings of
€221 million.
Capital management
The primary objective of our capital management strategy is to ensure strong ratings and to maintain appropriate
capital ratios to suppo our business and maximise shareholder value. Our credit ratings are periodically reviewed
by rating agencies. We regularly assess debt and equity capital levels against our stated policy for capital structure.
Our capital structure is managed and, as appropriate, adjusted in light of changes in economic conditions and our
financial policy.
Net debt
In millions of €
As at Credit ratings
31 December 2020
31 December 2019 As of 11 March 2021 Moody’s Standard & Poor’s
Total borrowings 7,187 6,421 Long-term rating A3 BBB+
Add: fx impact of non-euro borrowings 36 6 Outlook Stable Stable
Adjusted total borrowings 7,223 6,427
Note: Rating outlooks were updated to reflect the
proposed acquisition of Coca-Cola Amatil Limited.
Our credit ratings can be materially influenced by
a number of factors including, but not limited to,
acquisitions, investment decisions and working capital
management activities of TCCC and/or changes in
the credit rating of TCCC. A credit rating is not a
recommendation to buy, sell or hold securities and
may be subject to revision or withdrawal at any time.
Less: cash and cash equivalents
(1,523) (316)
Net debt 5,700 6,111
60
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
Business and financial review continued
The ratio of net debt to adjusted EBITDA is used by investors, analysts and credit rating agencies to analyse our
operating peormance in the context of targeted financial leverage, and so we provide a reconciliation of this
measure. Net debt enables investors to see the economic effect of total borrowings, related foreign exchange
impact and cash and cash equivalents in total. Adjusted EBITDA is calculated as EBITDA aer adding back items
impacting the comparability of year over year financial peormance.
Adjusted EBITDA does not reflect our cash expenditures, or future requirements for capital expenditures or
contractual commitments. Fuher, adjusted EBITDA does not reflect changes in, or cash requirements for,
our working capital needs and, although depreciation and amoisation are non-cash charges, the assets
being depreciated and amoised are likely to be replaced in the future and adjusted EBITDA does not reflect
cash requirements for such replacements.
Net debt to adjusted EBITDA
Adjusted EBITDA
In millions of €
Year ended
31 December 2020
31 December 2019
Repoed profit aer tax
498 1,090
Taxes 197 364
Finance costs, net 111 96
Non-operating items 7 (2)
Repoed operating profit 813 1,548
Depreciation and amoisation 727 639
Repoed EBITDA 1,540 2 ,1 87
Items impacting comparability:
Mark-to-market effects
(A)
2 (2)
Restructuring charges
(B)
247 92
Adjusted EBITDA
1,789 2,277
Net debt to EBITDA 3.70 2.79
Net debt to adjusted EBITDA 3.19 2.68
(A) Amounts represent the net out of period mark-to-market impact of non-designated commodity hedges.
(B) Amounts represent restructuring charges related to business transformation activities, excluding accelerated depreciation included in the
depreciation and amoisation line.
Adjusted EBITDA has fallen in 2020 relative to 2019 by €488 million, primarily driven by repoed profit aer tax, which
has fallen by €592 million, which in turn was driven by the impact of COVID-19 on the away from home channel.
Dividends
In line with our commitments to deliver long-term value to shareholders, we paid a full year dividend of €0.85 per
share in December, maintaining a payout ratio of approximately 50% in line with our dividend policy. For the year
ended 31 December 2020, dividend payments totalled €386 million (2019: €574 million).
Share buyback
During the first quaer of 2020, we returned approximately €130 million to shareholders, in connection with the
€1 billion share buyback programme announced in February 2020. On 23 March 2020, in response to COVID-19,
the Board took the decision to suspend the share buyback programme. No fuher Shares have been purchased
under this programme in the period through to 31 December 2020.
Proposed acquisition of Coca-Cola Amatil Limited
In connection with the proposed acquisition of CCL, the Group has arranged a term loan facility of up to €4.4 billion
with a syndicate of 13 banks. This term loan facility matures in December 2021, with options to extend to December
2022, and can only be used to effect the proposed acquisition. The facility was undrawn at 31 December 2020.
Subject to the remaining conditions of the acquisition being satisfied, CCEP is currently expecting to pay cash
consideration of between A$7.4bn and A$9.0bn to CCL shareholders, depending on the election to acquire TCCC’s
remaining 20% shareholding in CCL. CCEP intends to fund the proposed acquisition through a combination of new
external borrowings and existing cash and hence our net debt will be impacted. We do not expect this change in the
net debt to have a material negative impact on our liquidity or capital resources going forward. In addition, following
completion of the acquisition CCEP will be exposed to greater currency exchange risk. Refer to Note 1 of the
consolidated financial statements for fuher information.
61Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Supplementary financial information – Income Statement
The following provides a summary reconciliation of CCEP’s repoed and comparable results for the full years ended
31 December 2020 and 31 December 2019:
Full year 2020
Unaudited, in millions of € except
per share data which is calculated
prior to rounding
As repoed Items impacting comparability Comparable
CCEP
Mark‑to‑
market
effects
(A)
Restructuring
charges
(B)
Acquisition
related
costs
(C)
Net tax
items
(D)
CCEP
Revenue 10,606 — — — — 10,606
Cost of sales 6,871 — (62) — — 6,809
Gross profit 3,735 — 62 — — 3,797
Operating expenses 2,922 (2) (306) (11) — 2,603
Operating profit 813 2 368 11 — 1,194
Total finance costs, net 111 — — (3) — 108
Non-operating items 7 — — — — 7
Profit before taxes 695 2 368 14 — 1,079
Taxes 197 — 103 3 (45) 258
Profit aer taxes 498 2 265 11 45 821
Diluted earnings per share (€) 1.09 — 0.58 0.03 0.10 1.80
Diluted weighted average Shares outstanding 456
Full year 2019
Unaudited, in millions of € except
per share data which is calculated
prior to rounding
As repoed Items impacting comparability Comparable
CCEP
Mark‑to‑
market
effects
(A)
Restructuring
charges
(B)
Net tax
items
(D)
CCEP
Revenue 12,017 — — 12,017
Cost of sales 7,424 (1) — 7,423
Gross profit 4,593 1 — — 4,594
Operating expenses 3,045 3 (130) — 2,918
Operating profit 1,548 (2) 130 — 1,676
Total finance costs, net 96 — — — 96
Non-operating items (2) — — — (2)
Profit before taxes 1,454 (2) 130 — 1,582
Taxes 364 (1) 36 (2) 397
Profit aer taxes 1,090 (1) 94 2 1,185
Diluted earnings per share (€) 2.32 — 0.21 — 2.53
Diluted weighted average Shares outstanding 469
(A) Amounts represent the net out of period mark-to-market impact of non-designated commodity hedges.
(B) During the full year 2020, we recognised restructuring charges totalling €368 million, which include €202 million related to Accelerate Competitiveness
proposals announced in October 2020. These proposals are aimed at reshaping CCEP using technology enabled solutions to improve productivity and
include the closure of ceain production sites in Germany and Iberia.
(C) Amounts represent costs associated with the proposed acquisition of CCL.
(D) Amounts include the deferred tax impact related to income tax rate and law changes.
The Company’s Strategic Repo is set out on pages 2–61. The Strategic Repo was approved by the Board on
12 March 2021 and signed on its behalf by
Damian Gammell, Chief Executive Officer
Governance and
Directors’ Repo
IN THIS SECTION
64 Chairman’s introduction
65 Board of Directors
66 Directors’ biographies
71 Senior management
72 Corporate governance repo
82 Nomination Commiee Chairman’s leer
83 Nomination Commiee repo
86 Audit Commiee Chairman’s leer
87 Audit Commiee repo
92 Directors’ remuneration repo
92 Statement from the Remuneration
Commiee Chairman
95 Overview of remuneration policy
96 Remuneration at a glance
97 Annual repo on remuneration
108 Directors’ repo
111 Directors’ responsibilities statement
62
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
63Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
64
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
Chairman’s introduction
Dear Shareholder
As I look back on 2020 and how Coca-Cola European
Paners (CCEP) responded to the COVID-19 pandemic,
I am proud to be Chairman of CCEP. We prioritised
protecting the wellbeing of our people, we suppoed
our customers and we provided help
and relief to our communities.
Strong governance underpins a healthy
culture and good corporate behaviour,
which CCEP has demonstrated in our
response to the crisis.
Throughout the COVID-19 pandemic,
we kept our focus on our sustainability
ambitions. Our Group wide
sustainability action plan, This is
Forward, is key to our return to growth
and to preserve the long-term future
of our business.
The Board devoted additional time to
COVID-19 and met weekly through the
peak of the pandemic. There is a brief
summary of the Board’s activities during 2020 in table 1
on page 76, with some more details on specific activities
elsewhere in this repo. This year, as well as our normal
agenda we focused on:
• Our response to COVID-19 and its impact on our
stakeholders
• Protecting the safety and wellbeing of our people
• Implementing our inclusion and diversity policy
• Training the Board on a range of topics to give the
Directors a deeper knowledge of the business and the
context in which we operate
• The proposed acquisition of Coca-Cola Amatil Limited
(CCL)
Our governance framework
The 2018 UK Corporate Governance Code (the UKCGC)
applies to accounting periods beginning on or aer
1 January 2019. We continued to apply the UKCGC
voluntarily on a comply or explain basis during 2020.
Our governance framework on page 74 aims to embed
good corporate governance throughout CCEP. As best
practice for corporate governance continues to evolve,
we continue to enhance our governance practices.
Looking to the future
The Board is responsible for leading CCEP and
overseeing the Group’s governance, by seing its
culture, values and standards, while keeping our
stakeholders’ interests front of mind. Along with its
regular schedule of topics, the Board has the following
activities planned for 2021:
Our people
As we embark on new ways of working due to COVID-19,
the wellbeing of our people is paramount. With the
Nomination Commiee we will continue to focus on
making CCEP more inclusive and promoting a strong
and positive culture.
Growth
We will suppo management in
establishing a strong strategy to
enable CCEP to return to growth
and become a greener and more
digital business.
Coca-Cola Amatil
At CCEP we have a robust
governance framework and we
are commied to sustainability.
As the business grows organically
and inorganically, we will continue
to ensure our strong governance
processes and sustainability
pillars suppo the business. In my conversation with
Damian on pages 14 to 17 you can read about the
proposed acquisition of CCL.
Sol Daurella, Chairman
12 March 2021
“ STRONG GOVERNANCE
UNDERPINS A HEALTHY
CULTURE AND GOOD
CORPORATE BEHAVIOUR,
WHICH CCEP HAS
DEMONSTRATED IN
OUR RESPONSE TO
THE CRISIS.”
Our Board of Directors is diverse, experienced and
knowledgeable, bringing together the skills needed
for our long-term success in line with our skills matrix.
Directors’ skills and experience
(A)
Ethnicity/nationality of Directors on the Board
(A)
B
o
l
i
n
g
i
n
d
u
s
t
r
y
09
M
a
r
k
e
t
i
n
g
/
P
R
/
c
o
n
s
u
m
e
r
14
S
t
r
a
t
e
g
y
17
P
e
o
p
l
e
13
S
u
s
t
a
i
n
a
b
i
l
i
t
y
12
A
u
d
i
t
/
r
i
s
k
/
f
i
n
a
n
c
e
08
C
o
c
a
-
C
o
l
a
s
y
s
t
e
m
09
C
u
s
t
o
m
e
r
/
r
e
t
a
i
l
15
D
i
g
i
t
a
l
t
e
c
h
n
o
l
o
g
y
04
White European White American White Australian/American
Women on the Board
(A)
05
17
OF
Independent Directors
on the Board
(A)
(excluding the Chairman)
09
16
OF
(A) Numbers shown are
number of Directors.
82%
14
17
12%
02
17
6%
01
17
65Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Board of Directors
66
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
Directors’ biographies
Sol Daurella, Chairman
Date appointed to the Board: May 2016 | Independent: No
Key strengths/experience:
• Experienced director of public companies operating
in an international environment
• A deep understanding of fast moving consumer goods (FMCG)
and our markets
• Extensive experience at Coca-Cola boling companies
• Strong international strategic and commercial skills
Key external commitments: Co-Chairman and member of the Executive
Commiee of Cobega, S.A., Executive Chairman of Olive Paners, S.A.,
Co-Chairman of Grupo Cacaolat, S.L., director of Equatorial Coca-Cola
Boling Company, S.L., director and a member of the Appointments,
Remuneration and Responsible Banking, Sustainability and Culture
Commiees of Banco Santander
Previous roles: Various roles at the Daurella family’s Coca-Cola boling
business, director of Banco de Sabadell, Ebro Foods and Acciona
Damian Gammell, Chief Executive Officer (CEO)
Date appointed to the Board: December 2016 | Independent: No
Key strengths/experience:
• Strategy, risk management, development and execution experience
• Vision, customer focus and transformational leadership
• Developing people and teams and promoting sustainability
• Over 25 years of leadership experience and in depth understanding
of the non-alcoholic ready to drink (NARTD) industry and within the
Coca-Cola system
Key external commitments: N/A
Previous roles: A number of senior executive roles in the Coca-Cola
system including Australia and Russia, also Managing Director
and Group President of Efes So Drinks, and President and CEO
of Anadolu Efes S.K.
Key
C
Corporate Social Responsibility Commiee
N
Nomination Commiee
AT
Affiliated Transaction Commiee
A
Audit Commiee
R
Remuneration Commiee
Commiee Chairman
AT N
67Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
AT C
José Ignacio Comenge, Non‑executive Director
Date appointed to the Board: May 2016 | Independent: No
Key strengths/experience:
• Extensive experience of the Coca-Cola system
• Broad board experience across industries and sectors
• Knowledgeable about the industry in our key market of Iberia
• Insights in formulating sustainable strategy drawn from leadership
roles in varied sectors
Key external commitments: Director of Olive Paners, S.A., ENCE Energía y
Celulosa, S.A., Compañía Vinícola del Noe de España, S.A., Ebro Foods
S.A., Barbosa & Almeida SGPS, S.A., and Ball Beverage Can Ibérica, S.L.
Previous roles: Senior roles in the Coca-Cola system, AXA, S.A., Aguila and
Heineken Spain, Vice-Chairman and CEO of MMA Insurance
AT
John Bryant, Non‑executive Director
Date appointed to the Board:
January 2021 | Independent: Yes
Key strengths/experience:
• Chairman/CEO of a multinational public company
• Expe in strategy, mergers and acquisitions, restructuring
and poolio transformation
• 30 years’ experience in consumer goods
• Strong track record of finance and operational leadership
Key external commitments: Non-executive director of Ball Corporation,
Compass Group plc and Macy’s Inc.
Previous roles: Executive Chairman and CEO of Kellogg Company and
other senior roles in the Kellogg Company including Chief Financial
Officer (CFO), Chief Operating Officer (COO), President America
and President International, and strategy advisor at A.T. Kearney
and Marakon Associates
AT A
Christine Cross, Non‑executive Director
Date appointed to the Board: May 2016 | Independent: Yes
Key strengths/experience:
• In depth experience working in the food and beverage industry
• Consults on international business strategy, marketing and
sustainable business development
• Global perspective on CCEP’s activities
• Experience of chairing remuneration commiees
Key external commitments: Director of Christine Cross Ltd, Hilton Food
Group plc, Clipper Logistics plc and Pollen Estate, member of the
Supervisory Board of Zooplus AG and Chairman of Oddbox Delivery Ltd
Previous roles: Director of Brambles Limited, Fenwick Limited,
Kathmandu Holdings Limited, Next plc, Woolwohs (Au) plc, Sobeys
(Ca) plc, Plantasgen, Fairmont Hotels Group plc, Sonae – SGPS, S.A.,
Premier Foods plc and Taylor Wimpey plc
N R
Jan Bennink, Non‑executive Director
Date appointed to the Board:
May 2016 | Independent: Yes
Key strengths/experience:
• Chairman/CEO of multinational public companies
• Extensive experience in FMCG, including the food and beverage
industry
• Thorough understanding of global and Western European markets
• Strong strategic, marketing and sales experience relevant to the
beverage industry
Key external commitments: Chairman of the Bennink Foundation, director
of Wondelow B.V. and IEFIC1, Executive Paner at Xn, and Advisor to
Aisan Paners
Previous roles: Executive Chairman of Sara Lee Corporation, CEO of
Royal Numico N.V., Chairman and CEO of DE Masterblenders 1753 N.V.,
director of Kra Foods Inc., Boots Company plc and Dalli-Werke GmbH
& Co KG and a member of the Advisory Board of ABN Amro Bank
68
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
N R
Directors’ biographies continued
Álvaro Gómez‑Trénor Aguilar, Non‑executive Director
Date appointed to the Board: March 2018 | Independent: No
Key strengths/experience:
• Broad knowledge of working in the food and beverage industry
• Extensive understanding of the Coca-Cola system, paicularly
in Iberia
• Expeise in finance and investment banking
• Strategic and investment advisor to businesses in varied sectors
Key external commitments: Director of Olive Paners, S.A., Global Omnium
(Aguas de Valencia, S.A.) and Sinensis Seed Capital SCR de RC, S.A.
Previous roles: Various board appointments in the Coca-Cola system,
including as President of Begano, S.A., director and Chairman of the
Audit Commiee of Coca-Cola Iberian Paners, S.A., as well as key
executive roles in Grupo Pas and Garcon Vallvé & Contreras
Thomas H. Johnson, Non‑executive Director
and Senior Independent Director (SID)
Date appointed to the Board: May 2016 | Independent: Yes
Key strengths/experience:
• Chairman/CEO of international public companies
• Manufacturing and distribution expeise
• Extensive international management experience in Europe
• Investment and finance experience
Key external commitments: CEO of The Taffrail Group, LLC and director
of Universal Corporation
Previous roles: Chairman and CEO of Chesapeake Corporation, President
and CEO of Riverwood International Corporation, director of Coca-Cola
Enterprises, Inc., GenOn Corporation, Mirant Corporation, ModusLink
Global Solutions, Inc., Superior Essex Inc. and Tumi, Inc.
Irial Finan, Non‑executive Director
Date appointed to the Board: April 2016 | Independent: No
Key strengths/experience:
• Extensive international management experience
• Strong track record of growing businesses
• Extensive experience of working in the Coca-Cola system
• International strategy
• Possesses a strong network at The Coca-Cola Company (TCCC)
Key external commitments: Director of Coca-Cola Bolers Japan Holdings
Inc., Foune Brands Home & Security, Inc. and the Smuit Kappa
Group plc
Previous roles: Director and senior roles in the Coca-Cola system
throughout his career including as CEO of Coca-Cola HBC AG,
President of Boling Investments Group, Executive Vice President of
TCCC and director of Coca-Cola Amatil, Coca-Cola Enterprises, Inc.,
G2G Trading, Coca-Cola East Japan and Coca-Cola FEMSA
N R
Nathalie Gaveau, Non‑executive Director
Date appointed to the Board: January 2019 | Independent: Yes
Key strengths/experience:
• Successful tech entrepreneur
• Expe in e-commerce and digital transformation, mobile,
data and social marketing
• Strong financial background
• International consumer goods experience
Key external commitments: Senior Advisor to BCG Digital Ventures,
director of Calida Group and President and director of
Tailwind International Acquisition Corp
Previous roles: Founder and CEO of Shopcade, Interactive Business
Director of the TBWA Tequila Group, Asia Pacific E-business and
CRM Manager for Club Med, co-founder and Managing Director of
Priceminister, Financial Analyst for Lazard and director of HEC Paris
C
69Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Mario Rotllant Solá, Non‑executive Director
Date appointed to the Board: May 2016 | Independent: No
Key strengths/experience:
• Deep understanding of the Coca-Cola system
• Extensive international experience in the food and beverage industry
• Experience of dealing with regulatory and political bodies
• Experience of chairing a remuneration commiee
Key external commitments: Vice-Chairman of Olive Paners, S.A.,
Co-Chairman and member of the Executive Commiee of Cobega,
S.A., Chairman of the Noh Africa Boling Company, Chairman of the
Advisory Board of Banco Santander, S.A. in Catalonia and a director of
Equatorial Coca-Cola Boling Company, S.L.
Previous roles: Second Vice-Chairman and member of the Executive
Commiee and Chairman of the Appointment and Remuneration
Commiee of Coca-Cola Iberian Paners, S.A.
R
Mark Price, Non‑executive Director
Date appointed to the Board: May 2019 | Independent: Yes
Key strengths/experience:
• Extensive experience in the retail industry
• A deep understanding of international trade and markets
• Strong strategic, digital and sustainable development skills
Key external commitments: Member of the House of Lords, Founder of
WorkL, Member of Council at Lancaster University, Chair of Trustees
of the Fairade Foundation UK and President and Chairman of the
Chaered Management Institute
Previous roles: Managing Director of Waitrose and Deputy Chairman
John Lewis Panership, Non-executive Director and Deputy Chairman
of Channel 4 TV and Minister of State for Trade and Investment and
Trade Policy, Chair of Business in the Community and The Prince’s
Countryside Fund
C N
AT A
Alfonso Líbano Daurella, Non‑executive Director
Date appointed to the Board: May 2016 | Independent: No
Key strengths/experience:
• Developed the Daurella family’s association with the Coca-Cola system
• Detailed knowledge of the Coca-Cola system
• Insight to CCEP’s impact on communities from experience as trustee
or director of charitable and public organisations
• Experienced corporate social responsibility (CSR) commiee chair
Key external commitments: Vice Chairman and member of the Executive
Commiee of Cobega, S.A., director of Olive Paners, S.A., Chairman
of Equatorial Coca-Cola Boling Company, S.L., director of Grupo
Cacaolat, S.L., Vice-Chairman of MECC So Drinks JLT, director of
The Coca-Cola Boling Company of Egypt, S.A.E, Chair of the Polaris
Commiee and member of the Ambassadors’ Circle of the Family
Business Network and member of the board of the American Chamber
of Commerce in Spain
Previous roles: Various roles at the Daurella family’s Coca-Cola boling
business, director and Chairman of the Quality & CRS Commiee of
Coca-Cola Iberian Paners, S.A.
C
Dagmar Kollmann, Non‑executive Director
Date appointed to the Board: May 2019 | Independent: Yes
Key strengths/experience:
• Expe in finance and international listed groups
• Thorough understanding of capital markets and mergers
and acquisitions
• Extensive commercial and investor relations experience
• Strong executive and senior leadership experience in global
businesses
• Risk oversight and corporate governance expeise
Key external commitments: Deputy Chairman of the Supervisory Board
of Deutsche Pfandbriefbank, a non-executive director of
Unibail-Rodamco-Wesield SE, Deutsche Telekom and KfW IPEX
Bank, and Commissioner in the German Monopolies Commission
Previous roles: CEO and Country Head in Germany and Austria for Morgan
Stanley, member of the board of Morgan Stanley International Ltd in
London and Associate Director of UBS in London
70
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
●
Orrin Ingram, resigned
effective 27 May 2020
●
Francisco Crespo Benítez,
resigned effective 9 July 2020
●
Javier Ferrán, resigned
effective 31 December 2020
Board members that
stepped down during
the year
C A
Brian Smith, Non‑executive Director
Date appointed to the Board:
July 2020 | Independent: No
Key strengths/experience:
• Extensive experience of working in the Coca-Cola system
• Deep understanding of in market executional leadership
• Strong talent development and deployment skills
• Broad knowledge of global field operations at TCCC
Key external commitments: President and COO at TCCC
Previous roles: President of TCCC’s Europe, Middle East and Africa group,
President of TCCC’s Latin America group, Executive Assistant to TCCC’s
COO and Vice Chairman, President of Brazil division, President of the
Mexico division and also Latin America group manager for mergers
and acquisitions at TCCC
Dessi Temperley, Non‑executive Director
Date appointed to the Board:
May 2020 | Independent: Yes
Key strengths/experience:
• Financial and technical accounting expeise
• Strong commercial insights and knowledge of European markets
• International consumer brands experience
• Skilled in technology
Key external commitments: Group CFO of Beiersdo and member of the
Supervisory Board of Tesa SE
Previous roles: Head of Investor Relations at Nestlé, CFO of Nestlé Purina
Europe, Middle East and Noh Africa and CFO of Nestlé South East
Europe and finance roles at Cable & Wireless plc and Royal Dutch
Shell plc
Garry Was, Non-executive Director
Date appointed to the Board: April 2016 | Independent: Yes
Key strengths/experience:
• Extensive business experience in Western Europe and the UK,
including as CEO of a global consumer goods business
• Served as executive and non-executive director in a broad
variety of sectors and previously chaired the Audit Commiee
of a sizeable company
• Financial expeise, experience and skills
• Formerly an auditor
Key external commitments: Chairman of Spire Healthcare Group plc and
Senior Independent Director of Circassia Pharmaceuticals plc
Previous roles: Audit paner at KPMG LLP, CFO of Medeva plc, CEO of SSL
International, director of Coca-Cola Enterprises, Inc., Deputy Chairman
and Audit Commiee Chairman of Stagecoach Group plc and
Protherics plc and Chairman of BTG plc and Foxtons Group plc
A R
Directors’ biographies continued
71Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Senior
management
The senior management and Damian Gammell
together constitute the members of the
Executive Leadership Team (ELT).
Nik Jhangiani, Chief Financial Officer
Appointed May 2016
Nik has more than 25 years of finance experience, including 20 years
within the Coca-Cola system, laerly as Senior Vice President and
CFO for Coca-Cola Enterprises, Inc.. Nik staed his career in New York
at accountancy firm Deloie & Touche before spending two years at
Bristol-Myers Squibb as International Senior Internal Auditor. He then
joined the Colgate-Palmolive Company in New York where he was
appointed Group Financial Director for the Nigerian operations,
before moving to TCCC in Atlanta. He is a Ceified Public Accountant.
Clare Wardle, General Counsel and Company Secretary
Appointed July 2016
Clare leads legal, risk, compliance, security and company secretariat.
Prior to joining CCEP, she was Group General Counsel at Kingfisher plc,
Commercial Director, General Counsel and Company Secretary at
Tube Lines and held senior roles at the Royal Mail Group. She began
her career as a barrister before moving to Hogan Lovells. Clare is a
non-executive director of The City of London Investment Trust plc and
senior independent director of Modern Pentathlon GB.
José Antonio Echeverría, Chief Customer and Supply Chain Officer
Appointed September 2019
José Antonio leads CCEP’s end to end supply chain. He is focused on
creating a superior experience for our customers, while delivering an
expanded and sustainable poolio of drinks and packaging. He has
been a pa of the Coca-Cola system since 2005, serving as Vice
President of Strategy and Transformational Projects for the Iberia
business unit, and Vice President, Strategy and Coordination for
supply chain across CCEP.
Peter Brickley, Chief Information Officer (CIO)
Appointed November 2016
Peter leads business solutions, suppo services and technology
infrastructure at CCEP, including steering CCEP’s investments in
technology solutions. Peter has over 20 years’ experience leading
technology for global businesses including Heineken, Centrica and BAT.
More recently, he was Global CIO and Managing Director of Global
Business Services at SABMiller. Peter is also non-executive chairman
of Newbury Building Society and a trustee of the Brain and Spine
Foundation.
Lauren Sayeski, Chief Public Affairs, Communications
and Sustainability Officer
Appointed May 2016
Lauren leads CCEP’s strategic engagement with media, policymakers,
civil society and community stakeholders. Lauren has worked in the
Coca-Cola system for over 17 years in roles across the spectrum of
public affairs, communications and sustainability.
Victor Rufa, Chief Strategy Officer
Appointed October 2016
Victor leads business strategy and business transformation. Prior
to joining CCEP, he was CEO of Coca-Cola Iberian Paners, S.A.
and spent 25 years at Cobega, S.A.. While with Cobega, S.A.,
he held a number of senior roles including Director of New Business,
Head of Finance, advisor in the formation of the Equatorial Coca-Cola
Boling Company and Head of Tax Planning.
Véronique Vuillod, Chief People and Culture Officer
Appointed November 2020
Véronique heads CCEP’s people and culture function. Having joined
the Coca-Cola system more than 20 years ago, she has worked in senior
human resources (HR) positions across business units, commercial
and supply chain functions overseeing HR strategy and panering
with business leaders. Most recently, Véronique was Vice President,
People and Culture in France. She began her career as a management
consultant with PricewaterhouseCoopers. She suppos the promotion
of diversity, HR best practices and innovations networks.
Leende den Hollander, General Manager, Nohern Europe
Business Unit
Appointed September 2020
Leende is responsible for CCEP’s business unit in Nohern Europe,
including Belgium, Luxembourg, the Netherlands, Sweden, Norway
and Iceland. Previously, he was general manager of Great Britain (GB).
Prior to Coca-Cola, Leende was CEO of Young’s Seafood and
Managing Director at Findus Group Ltd. Earlier in his career, Leende
spent 15 years at Procter & Gamble in senior marketing positions.
Frank Molthan, General Manager, Germany Business Unit
Appointed May 2016
Frank leads CCEP’s business unit in Germany and has over 30 years’
experience in Germany’s Coca-Cola system. He staed his career
at Coca-Cola boling operations in Schleswig-Holstein and
Noh Rhine-Westphalia. He has held a range of regional and
commercial leadership roles, laerly as HR Director for Coca-Cola
Germany. He was also Managing Director of Coca-Cola Deutschland
Verkauf GmbH and Co. KG.
Francesc Cosano, General Manager, Iberia Business Unit
Appointed May 2016
Francesc leads CCEP’s business unit in Spain, Pougal and Andorra.
He was previously the Operations Director then Managing Director
of Coca-Cola Iberian Paners, S.A.. Francesc has been pa of the
Coca-Cola system for over 30 years, and involved in a number of sales
management positions, ultimately as Sales Director then Deputy
General Manager. He has also worked as Regional Director for the
Leche Pascual, S.A. group, in Anglo Española de Distribución, S.A..
François Gay-Bellile, General Manager, France Business Unit
Appointed July 2020
François is responsible for CCEP’s business unit in France. His career
began at Pernod-Ricard as a brand manager in Germany and France.
François joined TCCC in France in 1996. Over his 23 years at TCCC
he held roles of increasing responsibility in marketing, commercial
and general management in the US, Japan, Asia and Europe.
Before joining CCEP, François was general manager of France for
TCCC. He is a director of the French So Drinks Association (Boissons
Rafraîchissantes de France) and of the French Food and Beverage
Association (Association Nationale de l’Industrie Alimentaire).
Stephen Moorhouse, General Manager, Great Britain
Business Unit
Appointed September 2020
Stephen is responsible for CCEP’s business unit in GB. He has 25 years’
experience in the Coca-Cola system, leading business operations and
supply chain. Stephen has held a number of other senior executive
roles throughout Europe, most recently as general manager of
Nohern Europe. Prior to joining, he worked overseas for the
Swire Group in the US and Asia Pacific region. Stephen is a member
of the British So Drinks Association.
72
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
Corporate governance repo
Statement of compliance
The governance framework of the Company is set out
in its Aicles of Association (the Aicles) and the
Shareholders’ Agreement. These provide a high level
framework for the Company’s affairs, governance and
relationship with its stakeholders and its shareholders.
The Aicles and information about the governance
framework are available on the Company’s website at
www.cocacolaep.com/about-us/governance.
Statement of compliance with the UK Corporate Governance Code
We follow the UKCGC on a comply or explain basis.
CCEP is not subject to the UKCGC as it only has a
standard listing of ordinary shares on the Official List.
However, we have chosen to apply the UKCGC to
demonstrate our commitment to good governance as
an integral pa of our culture. This Corporate
governance repo explains how we have applied the
UKCGC during the year ended 31 December 2020.
The instances where CCEP’s practices vary from the
principles and provisions of the UKCGC are set out
below. Save as set out below, CCEP complies with
the UKCGC.
A copy of the UKCGC is available on the Financial
Repoing Council’s (FRC) website: www.frc.org.uk/
directors/corporate-governance-and-stewardship/
uk-corporate-governance-code.
Chairman
UKCGC provision 9
The Chairman, Sol Daurella, was not independent on
either her appointment or election, within the meaning
of the UKCGC. However, we benefit from her vast
knowledge of, and long-term commitment to, the
Coca-Cola system and her extensive experience and
leadership skills, gained from her roles as director and
CEO of large public and private institutions across many
different sectors.
Annual re‑election
UKCGC provision 18
Sol Daurella, the Chairman, will not be subject to
re-election during her nine year tenure following the
completion of the Merger. Her extended term
recognises the impoance of her extensive experience
and knowledge of the beverage industry, and the
significant shareholding of Olive Paners, S.A.
(Olive Paners) in the Company.
To provide stability, none of the Independent
Non-executive Directors (INEDs) were put up for
election at an Annual General Meeting (AGM) before
the AGM in 2019 when three INEDs were put up
for election. At the AGM in 2020, three INEDs were
put up for election and three INEDs were put up for
re-election. Three additional INEDs will be put up for
election at the AGM in 2021. Therefore, in total all nine
INEDs will be put up for election or re-election at the
2021 AGM (Jan Bennink, John Bryant, Christine Cross,
Nathalie Gaveau, Thomas H. Johnson, Dagmar Kollmann,
Mark Price, Dessi Temperley and Garry Was). From the
point of their first election at an AGM, an INED will be
subject to annual re-election. This arrangement was
in place to ensure effective representation of public
shareholders and to retain INEDs’ influence over the
Company’s strategic direction and operation, following
the completion of the Merger.
Remuneration
UKCGC provision 32
The Remuneration Commiee is not comprised solely
of INEDs, although it is comprised of a majority of
INEDs. The Shareholders’ Agreement requires that
the Remuneration Commiee comprises at least
one Director nominated by:
• Olive Paners, for as long as it owns at least 15%
of the Company
• European Refreshments (ER), a subsidiary of TCCC,
for as long as it owns at least 10% of the Company
The Remuneration Commiee, and its independent
chairman, benefit from the nominated Directors’
extensive understanding of the Group’s market.
Remuneration
UKCGC provision 33
The Remuneration Commiee is not solely responsible
for seing the remuneration of the Chairman, CEO and
Non-executive Directors (NEDs). Instead, the Board
(excluding any Director whose remuneration is linked
to the decision) determines their remuneration on the
recommendation of the Remuneration Commiee
and following rigorous analysis and debate. To date,
the Board has followed all of the Remuneration
Commiee’s recommendations.
73Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Differences between the UKCGC and the New York Stock Exchange
(NYSE) corporate governance rules (the NYSE Rules)
The Company is classed as a Foreign Private Issuer (FPI).
It is therefore exempt from most of the NYSE Rules
that apply to domestic US listed companies, because
of its voluntary compliance with the UKCGC. However,
under the NYSE Rules, the Company is required to
provide an annual wrien affirmation to the NYSE and
disclose significant differences between its corporate
governance practices and those followed by domestic
US companies listed on the NYSE. The significant
differences are summarised below.
Director independence
The NYSE Rules require a majority of the Board to be
independent. The UKCGC requires at least half of the
Board (excluding the Chairman) to be independent.
The NYSE Rules contain different tests from the UKCGC
for determining whether a director is independent.
The independence of CCEP’s NEDs is reviewed by
the Board on an annual basis, taking into account
the guidance contained in the UKCGC and criteria
established by the Board. It has been determined
that a majority of the Board is independent, without
explicitly taking into consideration the independence
requirements outlined in the NYSE Rules.
Board Commiees
CCEP has a number of Commiees whose purpose
and composition are broadly comparable in purpose
and composition to those required by the NYSE Rules
for domestic US companies. However, other than the
Audit Commiee, the Commiee members are not
all INEDs, although in all cases the majority are. Each
Commiee has its own terms of reference (broadly
equivalent to a chaer document) which can be found
on our website at www.cocacolaep.com/about-us/
governance/commiees. A summary of the terms of
reference, roles and activities of the Audit Commiee
and the Remuneration Commiee can be found in the
Commiees’ respective repos. The Remuneration
Commiee’s terms of reference include responsibility
for maers relating to remuneration policy, share-based
incentive plans, employee benefit plans and
implementation of the remuneration policy.
Audit Commiee
More information about the Audit Commiee is
set out in its repo, including compliance with the
requirements of Rule 10A-3 under the US Securities
Exchange Act of 1934, as amended, and Section
303A.06 of the NYSE Rules. The Audit Commiee is
comprised only of INEDs (complying with the NYSE
Rules). However, the responsibilities of the Audit
Commiee (except for applicable mandatory
responsibilities under the Sarbanes-Oxley Act (SOX))
follow the UKCGC’s recommendations rather than the
NYSE Rules, although they are broadly comparable.
One of the NYSE’s similar requirements for the Audit
Commiee states that at least one member of the
Audit Commiee should have accounting or related
financial management expeise. The Board has
determined that John Bryant, Dagmar Kollmann,
Dessi Temperley and Garry Was possess such expeise
and are therefore deemed the audit commiee
financial expe as defined in Item 16A of Form 20-F.
Corporate governance guidelines
The NYSE Rules require relevant domestic US
companies to adopt and disclose corporate governance
guidelines. There is no equivalent recommendation
in the UKCGC. However, the Nomination Commiee
reviews the Board’s governance guidelines, as required
by its terms of reference.
Shareholder approval of equity compensation plans
The NYSE Rules for domestic US companies require
that shareholders must be given the oppounity to
vote on all equity compensation plans and material
revisions to those plans. CCEP complies with UK
requirements that are similar to those of the
NYSE Rules. However, the Board does not explicitly
take into consideration the NYSE’s detailed definition
of “material revisions”.
Code of Conduct
The NYSE Rules require relevant domestic US
companies to adopt and disclose a code of business
conduct and ethics for their directors, officers and
employees. CCEP has a Code of Conduct (CoC) that
currently applies to all Directors and the senior financial
officers of the Group. If the Board amends or waives
the provisions of the CoC, details of the amendment
or waiver will appear on the website. No such waiver
or amendment has been made or given to date.
SEE OUR COC AT WWW.CCEPCOKE.ONLINE/CODE‑OF‑CONDUCT‑POLICY
Our CoC applies to all our people. We also expect all
third paies who work on our behalf, such as suppliers,
vendors, contractors, consultants, distributors and
agents, to act in an ethical manner consistent
with our CoC and in compliance with our Supplier
Guiding Principles.
The CoC covers issues such as share dealing,
anti-bribery, data protection, environmental regulation,
human rights, health, safety, wellbeing and respect for
others. It aligns with the UN Global Compact, the
US Foreign Corrupt Practices Act, the UK Bribery Act,
the UKCGC, the EU General Data Protection Regulation,
the Spanish and Pouguese Criminal Codes and Sapin II.
CCEP considers that the CoC and related policies
address the NYSE Rules on the codes of conduct for
relevant domestic US companies. We received no fines
for CoC violations in 2020.
SEE DETAILS OF COC REPORTING ON PAGE 43
NED meetings
The NYSE Rules require NEDs to meet regularly without
management and independent directors to meet
separately at least once a year. The UKCGC requires
NEDs to meet without the Chairman present at least
once annually to appraise the Chairman’s peormance.
The NEDs have regular meetings without management
present. There are also meetings of the INEDs as
required and at least once a year.
74
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
Governance framework
Our corporate governance framework is summarised below with fuher detail provided on the following pages.
Corporate governance repo continued
BOARD OF
DIRECTORS
Provides overall
leadership,
independent
oversight of
peormance and is
accountable to
shareholders for
the Group’s
long-term success
ACCOUNTABILITY
Affiliated Transaction Commiee (ATC)
Has oversight of transactions with affiliates and makes recommendations to the Board
(affiliates are holders of 5% or more of the securities or other ownership interests of CCEP).
Audit Commiee
Monitors the integrity of the Group’s financial statements and results announcements,
the effectiveness of internal controls and risk management, as well as managing the
external auditor relationship.
SEE PAGES 86–91 FOR MORE DETAILS
Corporate Social Responsibility (CSR) Commiee
Oversees peormance against CCEP’s strategy and goals for CSR, reviews CSR risks facing
CCEP, including health and safety and climate change risks, and the practices by which
these risks are managed and mitigated, approves sustainability commitments and targets,
and monitors and reviews public policy issues that could affect CCEP.
SEE PAGES 22–37 FOR MORE DETAILS
Full sustainability peormance data for 2020 will be published on our website in May 2021
Nomination Commiee
Sets selection criteria and recommends candidates for appointment as INEDs, reviews
Directors’ suitability for election/re-election by shareholders, considers Directors’
potential conflicts of interest, oversees development of a diverse pipeline for senior
management and Director succession, and oversees wider people maers for the Group,
including culture, diversity, succession, talent and leadership.
SEE PAGES 82–85 FOR MORE DETAILS
Remuneration Commiee
Recommends remuneration policy and framework to the Board and shareholders,
recommends remuneration packages for members of the Board to the Board, approves
remuneration packages for senior management, reviews workforce remuneration and
related policies and principles, and governs employee share schemes.
SEE PAGES 92–107 FOR MORE DETAILS
Additional Director led Commiees
• Disclosure Commiee
• Capital Allocation Framework Commiee
DELEGATION
Our people
CEO: Empowered by authority of the
Board to put agreed strategy into effect
and run CCEP on a day to day basis
Values
INCLUDED IN OUR CODE OF CONDUCT,
WAYS OF WORKING AND OUR CULTURE
ELT: Members repo to and suppo
the CEO within their defined areas
of responsibility
Our Strategy
GUIDED BY OUR GROWTH PLATFORM TO
ENSURE WE GENERATE SUSTAINABLE
SHAREHOLDER RETURNS
STAKEHOLDERS
INCLUDING OUR PEOPLE, CUSTOMERS, SUPPLIERS, FRANCHISORS,
INVESTORS, CONSUMERS AND COMMUNITIES
75Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Board leadership and company purpose
Role of the Board
The Board is primarily responsible for the Group’s
strategic plan, risk appetite, systems of internal control
and corporate governance policies, to ensure the
long-term success of the Group, underpinned by
sustainability. To retain control of key decisions and
ensure there is a clear division of responsibilities, there
is a formal schedule of maers reserved to the Board,
which sets out the structure under which the Board
manages its responsibilities, and provides guidance
on how it discharges its authority and manages its
activities. Key maers include:
• Strategic decisions
• Approval of annual and long-term business plans
• Suspension, cessation or abandonment of any material
activity of the Group
• Material acquisitions and disposals
• Approvals relating to listings
• Change of the Company’s country of incorporation
• Amendment or repeal of the constitution of the
Company
• Material commitment or arrangement of the Group
outside the normal course of business and/or not
specifically identified in the annual business plan
The Board, through the Nomination Commiee,
assesses and monitors the Group’s culture to ensure
it aligns with the Group’s purpose, values and strategy
set by the Board.
READ MORE ABOUT OUR STRATEGY ON PAGES 20–21
SEE OUR NOMINATION COMMITTEE’S REPORT ON PAGES 82–85
Stakeholders
The Board recognises the impoance of stakeholders
to CCEP – both their inputs to our business and our
impact on them. We use a matrix, which the Board
reviews annually, to help ensure it has the right
engagement and information to enable it to consider
stakeholders’ interests in its decision making.
Regular engagement with both existing and potential
shareholders is impoant to the Board. On behalf of
the Board, our CEO, CFO and the investor relations
team engage with investors and analysts throughout
the year, this year viually. The Board receives regular
updates on the views of shareholders and the investor
relations programme.
The terms of reference and remit of the Remuneration
Commiee includes remuneration policy and strategy
at all levels across the Group. The Nomination
Commiee’s terms of reference and remit include key
people issues such as culture, succession planning and
diversity. The Chairmen of these two Commiees are
responsible for championing and repoing back to
the Board on these maers and sit on each other’s
Commiees to ensure seamless coverage of the full
range of people maers. The Board also takes the
oppounity to engage with our people directly.
READ MORE IN THE NOMINATION COMMITTEE REPORT ON PAGES 82–85
Our people are able to raise any concerns they have
online or by telephone in confidence through Speak Up,
CCEP’s whistleblowing hotline. The Audit Commiee
repos to the Board on whistleblowing arrangements,
repos and investigations.
READ MORE IN THE AUDIT COMMITTEE REPORT ON PAGES 86–91
SEE A SUMMARY OF OUR STAKEHOLDER ENGAGEMENT ON PAGES 10–13
Board activities during the year
The Chairman sets the Board agenda, which consists
of the following discussion maers:
• Updates from the CEO, the CFO and other key senior
executives on the business peormance and key
business initiatives
• Governance maers
• Strategy, diversity, sustainability, material expenditure
and other Group maers
The key areas of focus for the Board’s activities and
topics discussed during the year are set out in table 1
on page 76.
Strategy remained a key focus for the Board
during 2020. The Board met regularly during the peak
of the COVID-19 pandemic to consider our sho-term
strategy in response to the crisis. Throughout the
course of the year, the Board received briefings from
management on the potential acquisition of CCL.
It also considered and debated our future strategy
with a focus on competitiveness and capital allocation.
Training and development
Training and development oppounities are regularly
provided to Directors following their induction to
ensure they continue to provide constructive challenge
to management. Following feedback from the Board
evaluation, the training programme for Directors was
enhanced this year to include viual training on a wide
range of topical areas. The programme for 2020 is set
out in table 2 on page 76.
Conflicts of interest
The UK Companies Act 2006 (the Companies Act), the
Aicles and the Shareholders’ Agreement allow the
Directors to manage situational conflicts (situations
where a Director has an interest that conflicts, or may
conflict, with our interests). The Nomination Commiee
considers issues involving potential situational conflicts
of interest of Directors. Each Director is required to
declare any interests that may give rise to a situational
conflict of interest with CCEP on appointment and
subsequently as they arise. Directors are required to
review and confirm their interests annually.
The Board is satisfied that the systems for the repoing
of situational conflicts are operating effectively.
76
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
Table 1
Board activities in 2020
Area of focus Discussion topics
Growth plaorm • COVID-19: protecting our people, serving our customers, suppoing our communities and preserving the long-term
future of the business
• Increasing consumer choice by innovating on flavours and growing our poolio of products and monitoring
peormance of innovations
• Route to market development
• Front line sales strategy
• Retail environments and customer challenges
• Customer capabilities and world class key account management
Accelerate
competitiveness
• Assessing acquisition oppounities
• The 2020 and 2021 annual business plans, including strategic priorities
• Long-range planning
• Transformation and competitiveness initiatives
• Capital allocation and expenditure
• Share buyback programme
• Treasury maers including delegations of authority to management
• Competitor review and analysis
Future ready culture
• Enterprise risk management, including risk appetite and risk assessment
• CCEP Ventures, our innovation investment fund
• Engagement with CCEP’s key and other stakeholders
• Brexit planning
• Approval of 2019 Modern Slavery Statement, published in May 2020
• Approval of tax strategy
• Investor engagement plan
• Relationship with TCCC
• People strategy including peormance acceleration, employee engagement, talent, learning and development
• Purpose and culture and their role in suppoing the strategy
• Inclusion, diversity and equality
• Enhanced wellbeing with a focus on mental health and disability
• Wider workforce remuneration
• Aendance at viual employee town hall
Digital future
• Progress of the digital transformation programme
• Digital recovery
• Cybersecurity and risk mitigation
Green future
• Green recovery
• Sustainable packaging strategy
• Climate strategy and carbon reduction commitments
Corporate governance
• Approval of financial results and associated viability and going concern statements
• Approval of trading updates
• Approval of interim dividend payment
• Approval of Integrated Repo and Form 20-F for 2019, subject to final sign off by a sub commiee
• Approval of Notice of AGM, subject to final sign off by a sub commiee
• Board evaluation feedback and action plan
• Reviewing and updating the governance guidelines for our Board
• Consideration of public policy and regulatory developments affecting CCEP
• Succession planning for the Board
• Approval of revised policies, including quality, environment, safety and health
• Approval of new INED appointments: Dessi Temperley and John Bryant
• Approval of the updated global cha of authority
Table 2
Director training and development programme
Form of training Purpose Subject
Briefings Focused on in depth studies
of maers of topical interest
to CCEP as well as on relevant
commercial, legal and
regulatory developments
Separate deep dives regarding:
• People and culture
• Investor relations
• Voice of the customer
Development sessions To address requests from
Directors
• TCCC boling system: the relationship between the boler and TCCC
• Governance and stakeholders in a COVID-19 world
• The remuneration policy
• CO
2
targets
• Cybersecurity
Site visits Visits to Group businesses,
factories and commercial outlets
to enhance knowledge of CCEP
operations and meet employees,
suppliers and customers
• Viual market tours: France, GB, Germany, Sweden and Spain
• Oppounity to aend annual kick off meetings in business units and supply chain
taken up by some Directors
External speakers To receive insights from expes
and engage with stakeholders
• Tim Bre, President of TCCC’s Western Europe business unit
• Walter Susini, Senior Vice President for Marketing, TCCC
• James Quincey, Chairman and CEO, TCCC
• Roland Turnill, Paner, Slaughter & May
• Paddy McGuiness, Senior Advisor, Brunswick Group
• Keith Tuffley, Global Co-Head, Sustainability & Corporate Transitions, Citi Group
• Bill Cohen, Paner, Global Employer Services, Deloie
• James Harris, Director, Executive Compensation Services, Deloie
• Rami Baitieh, Executive Director France, Carrefour
Corporate governance repo continued
77Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Division of responsibilities
Governance structure
The Board, led by the Chairman, is responsible for the
management of the Group. While both the Executive
Director and NEDs have the same duties and
constraints, they have different roles on the Board
(see table 3). There is a clear, wrien division of
responsibilities between the Chairman and the CEO.
The Board has approved a framework of delegated
authority to ensure an appropriate level of Board
contribution to, and oversight of, key decisions and the
management of daily business that suppo its
long-term sustainable success. This framework has
been designed to enable the delivery of the Company’s
strategy and is outlined in our governance framework
on page 74.
The Board delegates ceain maers to its Commiees.
Each of the five Commiees has its own wrien terms
of reference, which are reviewed annually. These are
available at www.cocacolaep.com/about-us/
governance/commiees.
The CEO with the ELT manages the day to day business.
All decisions are made in accordance with our cha
of authority, which defines our decision approval
requirements and ensures that all relevant paies
are notified of decisions impacting their area of
responsibility. The cha of authority was reviewed
and updated during the year to ensure it remained
fit for purpose.
The NED terms of appointment are available for
inspection at the Company’s registered office and at
each AGM. Among other maers, these set out the
time commitment expected of NEDs. On appointment,
the Board took into account the other demands on the
time of John Bryant, Brian Smith and Dessi Temperley.
The Board has delegated authority to the Chairman
and the Company Secretary to approve changes
to Directors’ external appointments. The Board is
satisfied that the other commitments of all Directors
do not inteere with their ability to peorm their
duties effectively.
SEE THE SIGNIFICANT COMMITMENTS OF OUR
DIRECTORS IN THEIR BIOGRAPHIES ON PAGES 66–70
Board and Commiee meetings
The Board held six formal meetings during 2020, with
additional ad hoc meetings with Board and Commiee
members held in line with business needs. The Board
met informally weekly during the peak of the COVID-19
pandemic to stay connected as the situation evolved.
Directors and Commiee members are expected to
aend every meeting. If a Director is unable to aend a
meeting, the relevant meeting papers are provided to
that Director in advance of the relevant meeting so that
comments can be given to the Chairman or Commiee
Chairman, as applicable, who relays them at the
meeting. Aer the meeting, the Chairman or
Commiee Chairman, as applicable, also briefs the
Director on the maers discussed.
Aendance during 2020 is set out in table 4 on page 79.
The Chairman aends most Commiee meetings.
The Chairman of the Audit Commiee sits on
the Remuneration Commiee. This helps ensure
remuneration outcomes align with the underlying
peormance of CCEP. The Chairman of the Nomination
Commiee sits on the Remuneration Commiee and
the Chairman of the Remuneration Commiee sits on
the Nomination Commiee. This reflects CCEP’s joined
up approach to investing in and rewarding our people.
Cross membership between Commiees enables
active collaboration and liaison across Commiees.
Commiee cross membership is set out on the
Company’s website at www.cocacolaep.com/about-us/
governance/commiees.
At the end of most Board meetings, two sessions
are held: one that all Directors aend, without
management present, and the other that all the NEDs
aend, without management or the CEO present.
Directors may raise any maer they wish for discussion
at these sessions.
Table 3
Roles on the Board
Role Responsibilities
Chairman • Operating, leading and governing the Board
• Seing meeting agendas, managing meeting timetables
• Promoting a culture of open debate between Directors and encouraging effective communication
during meetings
• Creating the conditions for overall Board and individual Director effectiveness
CEO
• Leading the business
• Implementing strategy approved by the Board
• Overseeing the operation of the internal control framework
SID
• Advising and suppoing the Chairman by acting as an alternative contact for shareholders and
as an intermediary to NEDs
NEDs • Providing constructive challenge, strategic guidance, external insight and specialist advice to the
Board and its Commiees
• Hold management to account
• Offering their extensive experience and business knowledge from other sectors and industries
Company Secretary
• Assisting the Chairman by ensuring that all Directors have full and timely access to relevant information
• Advising the Board on legal, compliance and corporate governance maers
• Organising the induction and ongoing training of Directors
78
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
Board suppo
Board meetings are scheduled at least one year in
advance, with ad hoc meetings arranged to suit
business needs. These meetings are normally held
in a variety of locations, reflecting our engagement
with all aspects of our international business. Due to
the COVID-19 pandemic, the Directors were unable
to meet in person during lockdown and Board and
Commiee meetings were held viually.
The agenda of Board meetings follows our annual
Board programme. This sets out the standing items
at each meeting, such as periodic activities (including
results and AGM documentation), business plan and
the assessment of Board evaluation results.
Before the Board meeting, the Chairman, CEO and
Company Secretary agree the final agenda. This covers
discussion items such as the status of ongoing projects
and stakeholder considerations. Comprehensive
briefing papers are circulated electronically to all
Directors, to allow time to review the maers which
are to be discussed.
Throughout the year Directors have access to the
advice and services of the Company Secretary
and independent professional advice, at the
Company’s expense.
Independence of Non-executive Directors
The Board reviewed the independence of all the
NEDs against the UKCGC and also considered the
requirements of SEC Rule 10A-3 in relation to the
Audit Commiee. It determined that Jan Bennink,
John Bryant (from his appointment), Christine Cross,
Javier Ferrán (until his resignation), Nathalie Gaveau,
Orrin Ingram (until his resignation), Thomas H. Johnson,
Dagmar Kollmann, Mark Price, Dessi Temperley (from
her appointment) and Garry Was are independent
and continue to make effective contributions. The
Board recognises that seven of CCEP’s NEDs, including
the Chairman, cannot be considered independent.
However, they continue to demonstrate effective
judgement when carrying out their roles and are clear
on their obligations as Directors, including under
section 172 of the Companies Act.
Our CEO, Damian Gammell, is not considered
independent because of his executive responsibilities
to the Group.
Consequently, the majority of the Directors and the
NEDs are independent.
Composition, succession and evaluation
Board diversity and composition
The composition of the Board and its Commiees
is set out in table 4 on page 79. This includes details
of appointments and resignations during 2020.
As their biographies on pages 66–70 show, our
Board members have a range of backgrounds,
skills, experiences and nationalities, demonstrating
a rich cognitive diversity beyond gender.
SEE AN OVERVIEW OF OUR DIRECTORS’ SKILLS AND EXPERIENCE ON PAGE 65
Our commitment to diversity begins at the top, with
clear leadership from our Board, and is embedded
at every level of our business through our Inclusion
and Diversity Policy, This is Forward and the CoC.
Our Board took steps towards women making up 33%
of its Directors in 2020. The Nomination Commiee
is commied to overseeing a diverse pipeline for
senior management and Director positions.
READ MORE ABOUT SUCCESSION PLANNING ON PAGE 83
SEE THE BOARD’S DIVERSITY POLICY IN THE CRITERIA FOR SELECTION
OF INEDS AT
WWW.COCACOLAEP.COM/ABOUT‑US/GOVERNANCE
READ MORE ABOUT THE GROUP’S APPROACH TO DIVERSITY ON PAGES 38–41
Board evaluation
The Board determined that a concise evaluation
process was appropriate in 2020. The Board appointed
Lintstock to suppo a questionnaire based exercise,
alongside interviews of all Directors by the SID.
Lintstock has no other connection with CCEP
or any individual Director.
The questionnaire and interview responses were
collated and repos produced on the peormance and
effectiveness of the Board, each Commiee and the
Directors. The Board discussed the results openly and
constructively. The Board confirmed that it continued
to work effectively and overall scores had improved
versus 2019. Board composition, stakeholder oversight
and Board dynamics were highly rated but some areas
for fuher improvement were identified. These are set
out in table 5 on page 80.
In line with best practice, we conduct an external Board
evaluation at least once every three years. This has been
recommended to the Board by the Nomination
Commiee for 2021.
Corporate governance repo continued
79Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Table 4
Meeting aendance by Board and Commiee members
(A)
Independent or
nominated by
Olive Paners or ER
(B)
Board of
Directors
Affiliated
Transaction
Commiee
Audit
Commiee CSR Commiee
Nomination
Commiee
Remuneration
Commiee
Chairman
Sol Daurella Nominated by
Olive Paners
6 (6) 5 (5) 4 (5)
(I)
Executive Director
Damian Gammell CEO 6 (6)
Non‑executive
Directors
Jan Bennink Independent 6 (6) 5 (5)
(G)
5 (5)
José Ignacio
Comenge
Nominated by
Olive Paners
6 (6) 5 (5)
Francisco
Crespo Benítez
(C)
Nominated by ER 2 (2) 2 (2)
Christine Cross Independent 6 (6) 5 (5) 6 (6)
(G)
Javier Ferrán
(D)
Independent 6 (6) 4 (5)
(H)
6 (7)
(H)
Irial Finan Nominated by ER 6 (6) 5 (5) 6 (6)
Nathalie Gaveau Independent 6 (6) 5 (5)
Álvaro Gómez-Trénor
Aguilar
Nominated by
Olive Paners
6 (6)
Orrin H. Ingram II
(E)
Independent 2 (2) 4 (4)
Thomas H. Johnson SID 6 (6) 5 (5)
(G)
6 (6)
Dagmar Kollmann Independent 6 (6) 5 (5) 7 (7)
Alfonso Líbano
Daurella
Nominated by
Olive Paners
6 (6) 5 (5)
(G)
Mark Price Independent 6 (6) 5 (5) 5 (5)
Mario Rotllant Solà Nominated by
Olive Paners
6 (6) 6 (6)
Brian Smith
(C)
Nominated by ER 4 (4) 3 (3)
Dessi Temperley
(F)
Independent 4 (4) 3 (3)
Garry Was Independent 6 (6) 7 (7)
(G)
6 (6)
(A) The maximum number of scheduled meetings in the period during which the individual was a Board or Commiee member is shown in brackets.
John Bryant, an INED, joined the Board on 1 January 2021 and so did not aend any meetings as a Board or Commiee member in 2020. He joined
the December 2020 Board meeting to observe as pa of his induction.
(B) Nominated pursuant to the Aicles of Association and terms of the Shareholders’ Agreement.
(C) Brian Smith was appointed as a Director by ER when Francisco Crespo Benítez stepped down on 9 July 2020.
(D) Javier Ferrán stepped down as an INED on 31 December 2020.
(E) Orrin Ingram stepped down as an INED on 27 May 2020.
(F) Dessi Temperley was appointed as an INED on 27 May 2020.
(G) Chairman of the Commiee.
(H) Javier Ferrán missed one meeting of the Audit Commiee and ATC in October 2020 due to a prior engagement and appointed Garry Was
as his alternate.
(I) Sol Daurella missed one meeting of the Nomination Commiee in October 2020 due to an unforeseen urgent engagement.
80
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Table 5
2020 Board evaluation findings and actions
Board focus Governance Induction
2020 findings Improve Board oversight of
Commiees
Skills and knowledge gap to be
reviewed to ensure effective succession
planning
Enhance training programme for
Directors on various topics
Actions undeaken
in 2020
• Directors invited to aend
Commiees to beer understand
the dynamic of the Commiee
• Increase awareness of access to all
Commiee briefing papers
• Review and update the Board skills
matrix to reflect additional
competencies
• Nomination Commiee and CEO to
keep Board informed regarding
management succession planning
• Regular Board training sessions
scheduled
• Induction of new Directors to include
introduction to the Coca-Cola system
from a bolers’ perspective
Table 6
Disclosure of compliance with provisions of the Audit, risk and internal control and Remuneration sections of the UKCGC
Items located elsewhere in the 2020 Integrated Repo Page(s)
Directors’ responsibilities statement 111
Directors’ statement that they consider the Integrated Repo and financial statements, taken as a whole, to be fair,
balanced and understandable
111
Going concern statement 110
Assessment of the Group’s principal risks 44–51
Viability statement 52
Risk management and internal control systems and the Board’s review of their effectiveness 50
Audit Commiee repo 86–91
Directors’ remuneration repo 92–107
Election and re-election of Directors
The Board has determined that the Directors, subject
to continued satisfactory peormance, shall stand
for election and re-election at each AGM with the
exception of the Chairman as explained on page 72.
All Directors appointed by Olive Paners (other than
the Chairman) plus Jan Bennink, Damian Gammell,
Nathalie Gaveau, Thomas H.Johnson, Dagmar Kollmann,
Mark Price and Dessi Temperley will submit themselves
for re-election at the 2021 AGM. INEDs John Bryant,
Christine Cross and Garry Was will stand for election
at the 2021 AGM along with ER nominated Director
Brian Smith. Following its peormance assessments
of Directors, the Board is confident that each continuing
Director will carry on peorming their duties effectively
and remain commied to CCEP.
Audit, risk and internal control and Remuneration
Disclosures of compliance with provisions of the Audit,
risk and internal control and Remuneration sections of
the UKCGC are located elsewhere in this Integrated
Repo. These disclosures include descriptions of
the main features of CCEP’s internal control and risk
management systems as required by rule 7 of the
Disclosure Guidance and Transparency Rules (DTRs).
Table 6 sets out where each respective disclosure
can be found.
Corporate governance repo continued
81Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Annual General Meeting
The AGM continues to be a key date in our annual
shareholder engagement programme. Due to public
health guidance from the UK Government prohibiting
gatherings of more than two people and non-essential
travel during the COVID-19 pandemic, CCEP’s 2020 AGM
was conducted as a closed meeting.
We were pleased that all resolutions were passed by
more than 80% of those voting.
If allowed, the 2021 AGM of the Company will be held
in May at Pembeon House, Bakers Road, Uxbridge,
UB8 1EZ, United Kingdom. Otherwise, we will make
alternative arrangements for the AGM as we did in 2020.
The Notice of AGM will set out a full description of the
business to be conducted at the meeting. This will be
available on our website from the time of its posting
to shareholders in April 2021.
The Chairman, SID, and Commiee Chairmen are
available to shareholders for discussion throughout
the year to discuss any maers under their areas of
responsibility, by contacting the Company Secretary.
READ MORE ABOUT OUR ENGAGEMENT WITH INVESTORS ON PAGE 11
Sol Daurella, Chairman
12 March 2021
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Nomination Commiee
Chairman’s leer
Dear Shareholder
I am pleased to repo on the work of the Nomination
Commiee during this challenging year.
As our Chairman explains in her
introduction to the Governance and
Directors’ Repo, since the beginning
of the COVID-19 crisis, the priority for
management and the Board has been
protecting our people. Therefore, this
year our activities have focused on the
health and wellbeing of our people.
We also focused on INED, ELT and
senior management succession to
ensure we have the right mix of skills on the Board and
in management to lead CCEP today and in the future
as we emerge from the COVID-19 crisis.
A brief summary of these activities is provided in
table 1 on page 84. We give more details about
some of these activities throughout the rest of the
Nomination Commiee repo.
Protecting the wellbeing of our people
Last year, we commied to dedicate time to promote
diversity, succession and talent policies and practices
that were in line with our purpose and values and
suppoed our desired culture.
On behalf of the Board, we have monitored the actions
by management who have acted to create a culture
that promotes health and wellbeing.
I am proud of the resilience that our people have shown,
whether that be adapting to home working, managing
COVID-19 risk in our production facilities or front line
sales teams responding to the change in market
conditions.
I believe, like our Chairman, that strong governance
underpins a healthy culture and good corporate
behaviour and I am also proud that the Nomination
Commiee has played its pa in suppoing that
culture.
Looking forward to 2021
We will continue to dedicate time to:
• Advocate diversity, succession and talent policies and
practices that are in line with our purpose and values
and suppo our desired culture
• Oversee the development of a diverse pipeline for
senior management positions as well as the Board
• Assess and monitor the operationalisation of our
approach to talent and
succession
• Ensure an inclusive culture is
embedded throughout CCEP
on behalf of the Board
• Oversee investment into the
capabilities we need to lead
our recovery and growth with
confidence
• Promote actionable insights
from our people repoing framework
• Encourage the Board to hear, understand and
consider the voice of our people in its decision making
• Promote accountability and good governance
Availability to shareholders
I am available to shareholders throughout the year to
answer any questions about the work of the Commiee.
Thomas H. Johnson, Chairman of the Nomination Commiee
12 March 2021
“ OUR ACTIVITIES HAVE
FOCUSED ON THE
HEALTH AND WELLBEING
OF OUR PEOPLE.”
83Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Nomination Commiee repo
Nomination Commiee role and membership
The key duties and responsibilities of the Nomination
Commiee are set out in its terms of reference.
These are available at www.cocacolaep.com/about-us/
governance/commiees. They cover the following areas:
• Corporate governance
• Director selection, re-election and review
• Potential conflicts of interest
• Evaluations of the Board and succession planning
• Culture and workforce
The Nomination Commiee has five members.
SEE NOMINATION COMMITTEE MEMBERSHIP ON PAGE 79
Activities of the Nomination Commiee during the year
The Nomination Commiee has a process for planning
its future meeting agendas and topics to be considered.
Table 1 on page 84 sets out the maers considered by
the Commiee during 2020. More detail about some
of these maers is provided in the rest of this repo.
The Commiee formally met five times during the year,
with two additional ad hoc meetings in line with
business needs.
SEE DETAILS OF ATTENDANCE AT MEETINGS ON PAGE 79
Succession
Independent Non‑executive Director succession
We continue to focus on maintaining a well balanced
Board with the right mix of individuals who can apply
their wider business knowledge and experience to
overseeing and guiding the delivery of the Group’s
strategy. To suppo this, we use a matrix of skills
required on the Board to suppo the Group’s future
plans. The skills matrix was reviewed and updated
during the year. The review identified that all skills
remained appropriately represented. Also, our INED
selection criteria reflect the impoance of selecting
candidates who can give voice to stakeholder interests
effectively, paicularly to help discharge the Board’s
duties under section 172 of the Companies Act 2006.
SEE OUR CRITERIA FOR THE SELECTION OF INEDS AT
WWW.COCACOLAEP.COM/ABOUT‑US/GOVERNANCE
To ensure we maintain the right balance of skills and
experience on the Board, we continue to plan for the
managed succession of INEDs. We have drawn up INED
candidate specifications based on our existing selection
criteria, our stated diversity targets and the gaps
identified through our skills matrix. Following our
review of the skills matrix during the year, we were able
to identify the likely skills that could be lost through
Board refreshment.
We engaged MWM Consulting, a firm of external
recruitment consultants, to identify potential INED
candidates with the skills set identified while also
having in mind the desirability of increasing diversity.
From the initial list of potential candidates, a sholist
was identified for interview by members of the
Commiee, the Chairman and other Board members.
They were assessed objectively against the candidate
specifications.
John Bryant was appointed to succeed Javier Ferrán
with effect from 1 January 2021. John brings a wealth of
strategic and operational experience to the Board and
over 30 years’ experience in consumer goods. John
serves as an Audit Commiee member for three other
listed companies and succeeds Javier as an Audit
Commiee member. The Board is satisfied that John’s
external Audit Commiee memberships will not impair
his ability to serve as an effective member of the Board
or Audit Commiee.
MWM Consulting suppoed some of CCEP’s specialist
recruitment activities in 2017. It has no other connection
to CCEP and has no connection to any individual
Director. It is a signatory to the UK’s Standard Voluntary
Code of Conduct for Executive Search Firms and is one
of the firms accredited under the Enhanced Code for
its leading work on promoting board diversity.
Appointments during the year
Dessi Temperley was appointed to succeed Orrin H.
Ingram with effect from 27 May 2020. She brings
valuable deep financial expeise, commercial insight
and knowledge of European markets. In July 2020,
in accordance with the Company’s Aicles and the
Shareholders’ Agreement, ER nominated Brian Smith
to replace Francisco Crespo Benítez.
84
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Financial StatementsStrategic Repo Governance and Directors’ Repo
Induction
All new Directors receive a suite of induction materials
explaining:
• Their role and responsibilities
• Aributes of an effective board
• Their legal duties and responsibilities, including
in relation to section 172 of the Companies Act
• The calendar of Board and Commiee meetings
• Governance documents, policies and procedures
• Commiee terms of reference
• Our CoC
• Our share dealing code
• Background information about the Group
Established Directors mentor new Directors. Meetings
with members of the Board and the ELT and site visits in
a number of our markets are also arranged. Dessi, Brian
and John each undeook a comprehensive induction
programme. This was tailored to their individual
requirements and phased to allow feedback and fuher
customisation of meetings and other development
activities.
Executive Leadership Team
During 2020 we considered succession plans for the
Group’s ELT. Ben Lambrecht depaed as General
Manager France at the end of August 2020.
François Gay-Bellile was appointed to succeed him.
In September 2020, Leende Den Hollander and
Stephen Moorhouse switched roles. Leende became
General Manager for Nohern Europe and Stephen
became General Manager for GB. Nick Wall retired
as Chief People and Culture Officer at the end of
October 2020. Véronique Vuillod was appointed to
succeed him. As pa of Véronique’s recruitment
process, she was interviewed by members of the Board.
Evaluation
We recommend the process to be used to evaluate
the peormance of the Board and its Commiees.
We recommended to the Board that a more in depth
evaluation process be undeaken in early 2021, similar
to that undeaken in 2018. The Board accepted our
recommendation and appointed Ffion Hague of
Independent Board Evaluation to carry out an
externally facilitated Board evaluation.
READ MORE ABOUT THE 2020 EVALUATION EXERCISE ON PAGE 78
Diversity
Diversity on the Board
Cognitive diversity is impoant to good decision
making, and we have paid paicular aention to this
in our succession planning. This is driven by diversity of
background, including gender and ethnic diversity. It is
pa of the INED selection criteria and diversity is a key
factor in considering potential INED candidates.
Gender diversity is going in the right direction. In 2020,
female representation on the Board increased to 29.4%
compared to 23.5% in 2019. We have not yet reached the
33% target set by the Board and our INED selection
criteria. In addition, our INED selection criteria states
our ambition to appoint at least one Director from an
ethnic minority to the Board, which we have not
reached. We take meeting these targets seriously and
are pleased to see movement in the right direction.
Neveheless, we have more to do and we continue to
be commied to paying aention to gender and ethnic
diversity in our succession planning and pipeline.
Nomination Commiee repo continued
Table 1
Maers considered by the Nomination Commiee during 2020
Meeting date Key agenda items
February 2020 • Director succession, paicularly INEDs
• Succession planning for ELT and senior management
March 2020
• Wellbeing of our people
• Director succession, paicularly INEDs
• Director skills matrix
• Commiee evaluation
• Succession planning for ELT and senior management
May 2020
• Director succession, paicularly INEDs
• Culture development and people strategy
• Succession planning for ELT and senior management
• Review of the Board’s governance guidelines
July 2020
• Succession planning for ELT and senior management
• Senior leadership assessment
• Our people: engagement, wellbeing, inclusion and diversity and
commercial capability
• Director skills matrix
September 2020
• Director succession, paicularly INEDs
• Succession planning for ELT and senior management
October 2020
• Inclusion and diversity: focusing on disability
• New ways of working
• Director succession, paicularly INEDs
December 2020
• Building the right leaders and the right leadership for CCEP
• Transformation and competitiveness initiatives
• Director succession, paicularly INEDs
• Inclusion and diversity: 2020 conclusions and 2021 plans
85Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Inclusion and diversity
We are commied to fostering an inclusive
environment and building diverse talent within the
Group as set out in our Inclusion and Diversity (I&D)
Policy. In 2020, the I&D Policy was translated into an
I&D framework to embed an inclusive culture, promote
accountability, empower our people to be drivers of
change and establish a diverse leadership and pipeline.
We received updates on the progress of I&D initiatives
and the actions being taken to accelerate the
“Everyone’s Welcome” philosophy across CCEP.
We provided challenge and feedback on those
actions and initiatives.
We monitor progress towards I&D objectives in the
business, in paicular the target to have 40% of our
management positions held by women by 2025.
READ MORE ABOUT OUR APPROACH TO DIVERSITY ON PAGES 38–41
Our people
We oversee the approach to culture, succession
planning and talent management, including diversity,
for the whole Group. We regularly receive data and
insights about our people through the people and
culture repoing dashboard. Metrics include female
leadership headcount, annual voluntary turnover,
engagement score, safety peormance and promotion
rate. The metrics were chosen based on external
benchmarks, best practice, business relevance
and availability of accurate data.
Engagement
In 2020, we conducted a pulse engagement survey with
a focus on wellbeing. We considered the results and
action plans with management. The survey helped us
to understand the experiences of our people during
the COVID-19 pandemic.
Our people appreciated how CCEP had communicated
and made decisions during the pandemic. Results also
demonstrated how people were adjusting to new ways
of working and indicated increased levels of stress and
feelings of unceainty. The responses informed our
wellbeing strategy that was launched in 2020. Initiatives
included the roll out of wellbeing training, training of
mental health first aiders and awareness campaigns.
R EAD MORE ABOUT HOW WE ENGAGE WITH OUR PEOPLE ON PAGE 10
Capability and talent
We believe that our people are the key to delivering
our growth strategy and future ready culture.
We operationalise our approach to talent and
succession by regularly reviewing employee potential,
identifying critical roles, updating succession plans
and nuuring emerging leaders.
In 2020, learning has been organised into a single
framework, the CCEP capability development
framework, categorised into three development areas:
• Core skills for everyone
• Targeted training aimed at specific groups to develop
technical and functional skills
• Strategic initiatives to shape strategy and culture
We continue to believe that building our leadership
capability is a key differentiator for peormance.
Since 2017, our top 500 leaders have taken pa in our
leadership development programme and training to
accelerate peormance. A leadership development
series was launched viually in November 2020.
During 2020, we have fuher invested in the capabilities
we need to lead our recovery and growth with
confidence. Key account managers have been through
a comprehensive assessment centre to gauge their
capabilities. They then undeook targeted leadership
and commercial training.
In 2020, our top 120 leaders also took pa in inclusive
leadership training.
Independence
SEE THE LIST OF NON-EXECUTIVE DIRECTORS DETERMINED TO BE INDEPENDENT ON PAGE 78
Thomas H. Johnson, Chairman of the Nomination Commiee
12 March 2021
86
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
Audit Commiee
Chairman’s leer
Dear Shareholder
I am pleased to present the repo of the Audit
Commiee for 2020. During the year, we carried out
our responsibilities in accordance with the UKCGC and
continued to provide suppo and advice to the Board
on the maers set out in the Commiee’s terms of
reference, and on other maers at the request of
the Board. Fuher information on the Commiee’s
role and responsibilities is set out on page 87.
The COVID-19 pandemic presented a unique set of
challenges for the Commiee this year. We have seen
large scale changes to our people’s ways of working,
with the introduction of additional workplace health
and safety measures, travel restrictions across our
territories and a widespread shi to working from
home. The Commiee worked closely with senior
management to ensure the associated risks of such
changes were duly assessed, and that our internal
control procedures continued to operate as intended.
Work undeaken in prior years to optimise and
automate our internal controls, paicularly for
Sarbanes-Oxley Act (SOX) compliance, as it applies
to CCEP as a US FPI, has proven beneficial and we
are confident that CCEP’s material control processes,
including the audits of these processes, remain
robust and fit for purpose.
We continued to oversee the Group’s internal control
and risk management framework and, suppoed by
our external audit team, to monitor and review the
integrity of the Group’s financial statements. We have
challenged management’s accounting treatment
and judgements during the year, along with EY’s
conclusions, to ensure clarity, fairness and completeness
of our financial disclosures, paicularly in consideration
of the impact of COVID-19. Fuher information
about the Commiee’s involvement in respect of
our internal control systems is available in the Audit
Commiee repo.
Our 2020 agenda covered a range of topics, with a
focus on accounting and repoing, risk and internal
controls, internal and external audits, ethics
and compliance, business continuity management,
enterprise risk management (ERM) and information
technology and cybersecurity.
We dedicated significant time during the year to
overseeing CCEP’s information and operational
technology and cybersecurity programmes, from
a risk and control perspective. We received regular
repos from senior management on their continued
assessment of the risks associated with the use of
ceain technologies, supplemented by repos from
our internal and external audit teams. Looking forward
to 2021, CCEP continues to embrace new digital
capabilities and technology will continue to feature on
the Audit Commiee agenda as pa of our oversight
of business continuity and ERM.
Availability to shareholders
I am available to shareholders throughout the year to
answer any questions on the work of the Commiee.
Garry Was, Chairman of the Audit Commiee
12 March 2021
“ WE ARE CONFIDENT THAT CCEP’S
MATERIAL CONTROL PROCESSES,
INCLUDING THE AUDITS OF THESE
PROCESSES, REMAIN ROBUST
AND FIT FOR PURPOSE.”
87Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Audit Commiee repo
Main responsibilities of the Audit Commiee
The role and responsibilities of the Audit Commiee
are set out in its terms of reference, which are available
on the Company’s website at www.cocacolaep.com/
about-us/governance/commiees. Key responsibilities
include:
• Monitoring the integrity of the Group’s annual audited
financial statements and other periodic financial
statements and reviewing any key judgements
contained in them
• Reviewing the adequacy and effectiveness of the
Group’s internal control processes
• Oversight of the Group’s compliance, operational
and financial risk assessments as pa of the broader
ERM programme
• Review and assessment of the scope, operation and
effectiveness of the internal audit function
• Making recommendations to the Board regarding
appointment, reappointment or removal of the
external auditor
• External auditor terms of engagement, remuneration
and independence
• Suppoing the Board in relation to specific maers
including oversight of the annual and long-term
business plans, dividend and capital structure and
capital expenditure
The Commiee Chairman provided regular updates to
the Board on the Commiee’s activities during the year.
Composition of the Audit Commiee
The Group follows UK corporate governance practices,
as allowed by the NYSE Rules for FPIs. In accordance
with the UKCGC, the Commiee comprised four NEDs
in 2020, each of whom the Board has deemed to be
independent. The Board is satisfied that each member
of the Commiee has competence relevant to the
fast moving consumer goods sector, in which the
Group operates.
In accordance with SEC Rules, as applicable to FPIs, the
Group’s Audit Commiee must fulfil the independence
requirements set out in SEC Rule 10-3A. The Board has
determined that the Audit Commiee satisfies these
requirements and that Garry Was, John Bryant,
Dagmar Kollmann and Dessi Temperley may each
be regarded as an audit commiee financial expe,
as defined in Item 16A of Form 20-F.
READ MORE ABOUT THE AUDIT COMMITTEE MEMBERS
ON PAGES 66–70
Maers considered by the Audit Commiee during 2020
The Commiee met seven times during the year.
Repos from the internal and external auditors
were presented as standing agenda items, along
with repos from senior management on the
following topics in the Commiee’s remit:
• Accounting and repoing maers
• Legal maers
• Ethics and compliance maers, including
whistleblowing and CoC breaches
• Business continuity management
• ERM
• Capital projects review and approval
The Commiee’s interactions with the internal audit
function and the external auditor during the year are
discussed in more detail later in this repo. A summary
of key maers considered by the Audit Commiee in
2020, in addition to standing items, is set out in table 1
on page 88.
SEE DETAILS OF ATTENDANCE AT MEETINGS ON PAGE 79
Financial repoing, significant financial
issues and material judgements
As a result of COVID-19, the Commiee met regularly
with management to understand and assess the key
accounting impacts and considerations for the Group.
The Commiee specifically considered several
accounting maers, including:
• Potential goodwill and intangible asset impairments
arising as a result of the significant impact on the
away from home channel
• Expected credit losses arising due to the closure
of outlets in the away from home channel and a
corresponding allowance for future losses on
trade receivables
• Net realisable value of inventory specific to the
away from home channel
The Commiee met with management prior to each
market announcement to consider the significant
accounting judgements and estimates made, and
their appropriateness. Details regarding the significant
repoing maers identified and the related Commiee
considerations, including its consideration of the
potential goodwill and intangible asset impairments,
is set out in table 2 on page 89.
For the remaining maers, the Commiee agreed
with management that the appropriate accounting
considerations had been given and the impact
of each item was not material to the Group’s
financial statements.
SEE OUR VIABILITY STATEMENT ON PAGE 52
88
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
Audit Commiee repo continued
Table 1
Maers considered by the Audit Commiee during 2020
Meeting date Key maers considered in addition to standing agenda items
(A)
February 2020 • 2019 preliminary Q4 and full year results, including significant estimates and judgements
• Pay for peormance
• IAS 36, “Impairment”
• Tax maers
March 2020
• 2019 Integrated Repo, including the viability and going concern statements, accounting policies and related
significant judgements and estimates, and consideration of pandemic risk (paicularly COVID-19) and associated
disclosures
• IFRS 16, “Leases” update
• Sarbanes-Oxley Act (SOX) section 404 (s404) compliance
• Group risk appetite framework
• 2020 internal audit plan
• Updated global cha of authority
• Reappointment of the external auditor
• Treasury maers
• Audit Commiee evaluation
April 2020
• 2020 Q1 trading update
• Dividend payments
May 2020 • Accounting considerations
• Business continuity
• Capital allocation and expenditure
• IT/cybersecurity update
• Insurance and credit risk update
• Tax strategy
• External audit process and procedures
July 2020
• 2020 half year results, including significant estimates and judgements
• Pay for peormance
• SOX s404 compliance and internal controls
• Group risk appetite framework
• Capital allocation and expenditure
• Tax update
• Treasury maers
October 2020
• Q3 trading update
• SOX s404 compliance and internal controls
• Operational technology and cybersecurity
• External quality assessment of the internal audit function
December 2020
• Pay for peormance
• IAS 36, “Impairment”
• SOX s404 compliance
• Operational technology and cybersecurity
(A) During February and March 2021, the Commiee discussed maers regarding the year ended 31 December 2020, which included:
• Reviewing the 2020 preliminary Q4 and full year results and the 2020 Integrated Repo, including its significant estimates and judgements,
accounting policies, viability and going concern statements
• Advising the Board on whether, in the Commiee’s opinion, the 2020 Integrated Repo is fair, balanced and understandable
• Independent auditor’s repo on the 2020 full year results
• Approval of this Audit Commiee repo
• Transition to IFRS for the 2020 Company financial statements
Audit Commiee assessment of the 2020 Integrated Repo
The Commiee undeook a review of a developed
dra of the 2020 Integrated Repo and provided
its feedback, which was applied.
The Commiee considered whether the Group’s
position, strategic approach and peormance during
the year were accurately and consistently porayed
throughout the 2020 Integrated Repo. As pa of its
review, the Commiee referred to the management
repos it had received and considered during the year,
together with the findings and judgements of the
internal and external auditors.
The estimates and judgements made on the significant
financial repoing maers regarding financial
statements are summarised in table 2 on page 89.
The Commiee reviewed these in depth, along with
management’s assessment of the Group as a going
concern and the statement of long-term viability
contained in the Strategic Repo. The Commiee
concluded that they are appropriate and acceptable in
light of the risks facing the business and all significant
maers brought to the Commiee’s aention during
the year. The 2020 Integrated Repo is, in the opinion
of the Commiee, fair, balanced and understandable
and provides the information necessary for
shareholders to assess CCEP’s peormance,
business model and strategy.
89Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Table 2
Significant repoing maers in relation to financial statements considered by the Audit Commiee during 2020
Accounting area Key financial impacts Audit Commiee considerations
Deductions from
revenue and sales
incentives
Cost of customer marketing
programmes in 2020:
€3.2 billion
Accrual at 31 December
2020:
€775 million
The Group paicipates in various programmes and arrangements with customers designed
to increase the sale of products. Among the programmes are arrangements under which
allowances can be earned by customers for aaining agreed upon sales levels, or for
paicipating in specific marketing programmes. For customer incentives that must be
earned, management must make estimates related to the contractual terms, customer
peormance and sales volume to determine the total amounts earned. Under IFRS 15,
these types of variable consideration are deducted from revenue. There are significant
estimates used at each repoing date to ensure an accurate deduction from revenue has
been recorded. Actual amounts ultimately paid may be different from these estimates. At
each repoing date, the Commiee received information regarding the amount of
customer marketing spend of the Group along with period end accruals. The Commiee
also discussed and challenged management on key judgements and estimates applied
during the period with a specific focus on the impact of COVID-19 on customer activities
and peormance.
Tax accounting
and repoing
2020 book tax expense:
€197 million
2020 cash taxes:
€273 million
2020 effective tax rate:
28.3%
The Group evaluated a number of tax maers during the year, including legislative
developments across tax jurisdictions, risks related to direct and indirect tax provisions
in all jurisdictions, the deferred tax inventory and potential transfer pricing exposure.
Throughout the year, the Commiee received information from management on the
critical aspects of tax maers affecting the Group, considered the information received,
and gained an understanding of the level of risk involved with each significant conclusion.
The Commiee also considered and provided input on the Group’s disclosures regarding
tax maers, including the balance sheet classification of unceain tax positions.
Asset impairment
analysis
Franchise intangible assets
with indefinite lives:
€8.1 billion
Goodwill:
€2.5 billion
The Group peorms an annual impairment test of goodwill and intangible assets with
indefinite lives, or more frequently if impairment indicators are present. The testing is
peormed at a cash generating unit (CGU) level, which for the Group are based on
geography and generally represent the individual territories in which the Group operates.
COVID-19 was an impairment indicator for the Group, which resulted in an interim impairment
test in July 2020, based on adjusting the cash flow projections used in the Group’s 2019
impairment testing to reflect the estimated impact of COVID-19 using a range of potential
downside scenarios. The Group peormed its impairment test in the last quaer of 2020,
based upon updated cash flow projections and assumptions. The Group did not record any
impairment charges as a result of the tests conducted in 2020.
The Commiee received information from management on the impairment tests
peormed, focusing on the most critical assumptions such as the terminal growth rate, the
discount rate and operating margin, as well as changes from the prior year. The Commiee
reviewed and challenged sensitivity analyses provided by management to understand the
impact of changes in these critical assumptions. The Commiee also discussed the key
judgements and estimates for the Iberia CGU given the extensive COVID-19 impact on the
away from home channel.
The Commiee was satisfied with the assumptions utilised by the Group and also considered
and reviewed the Group’s disclosures about its impairment testing.
Restructuring
accounting
Restructuring cost
recorded in 2020:
€368 million
Restructuring provision
at 31 December 2020:
€208 million
During 2020, the Group commenced new restructuring initiatives, including the Accelerate
Competitiveness programme aimed at reshaping CCEP using technology to improve
productivity. Included in these proposals was the closure of ceain production facilities
in Germany and Iberia. The Commiee was regularly updated by management on the
nature of such initiatives and key assumptions underpinning the related provision in
the financial statements.
The Commiee reviewed the Group’s restructuring provision balance as at 31 December 2020
and continued to agree that it does not contain significant unceainty.
The Commiee was satisfied with the appropriateness of the restructuring accounting
during the year and the disclosures included in the financial statements.
90
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
Audit Commiee repo continued
External audit
Effectiveness of the external audit process
The Commiee has responsibility and oversight of
the Group’s relationship with its external auditor, Ernst
& Young LLP (EY), and for assessing the effectiveness
of the external audit process. EY was appointed as
the external auditor in 2016 and the lead audit paner
is Karl Havers. In accordance with UK and SEC auditor
independence rules, on completion of the 2020 audit,
Karl Havers stepped down as CCEP’s lead audit paner
and Sarah Kokot was appointed to replace him for
CCEP’s 2021 audit. The Commiee confirms voluntary
compliance with the provisions of the Statutory Audit
Services for Large Companies Market Investigation
(Mandatory Use of Competitive Tender Processes
and Audit Commiee Responsibilities) Order 2014, as
published by the UK Competition and Markets Authority.
In 2020, the Commiee agreed the approach and
scope of the audit work to be undeaken by EY
for the financial year. It also reviewed EY’s terms of
engagement and agreed the appropriate level of fees
payable in respect of audit and non-audit services.
SEE DETAILS OF THE AMOUNTS PAID TO THE EXTERNAL AUDITOR
IN NOTE 17 TO THE CONSOLIDATED ACCOUNTS ON PAGE 160
EY provided the Commiee with regular repos on the
status of the audit, its assessment of the agreed areas
of audit focus and findings, and conclusions to date.
In response to the COVID-19 pandemic, EY had regular
discussions with management to identify the potential
business and financial risks for CCEP and ensure that
correct accounting treatment was adopted in response.
Updates on this progress were included in EY’s repos
to the Commiee, along with regular updates on
the practical impacts of COVID-19 on the external
audit process.
The Commiee reviewed the experience and expeise
of the audit team, the fulfilment of the agreed audit
plan and any variations to it, feedback from the
Group’s businesses and the contents of the external
audit repo. The Commiee confirmed its satisfaction
with the effectiveness of the external auditor.
External auditor independence
The continued independence of the external auditor
is impoant for an effective audit. The Commiee has
developed and implemented policies that govern the
use of the external audit firm for non-audit services
and limit the nature of the non-audit work that may
be undeaken. The external auditor may, only with
pre-approval from the Commiee, undeake specific
work for which its expeise and knowledge of CCEP are
impoant. It is precluded from undeaking any work
that may compromise its independence or is otherwise
prohibited by any law or regulation. During the year,
the Commiee updated the Policy Governing
Independence of the Public Accounting Firm, to ensure
continued compliance with the Financial Repoing
Council’s Revised Ethical Standard 2019.
The Commiee received a statement of independence
from EY in March 2021 confirming that, in its
professional judgement, it is independent and has
complied with the relevant ethical requirements
regarding independence in the provision of its services.
The repo described EY’s arrangements to identify,
manage and safeguard against conflicts of interest.
The Commiee reviewed the scope of the non-audit
services proposed by EY during the year, to ensure
there was no impairment of judgement or objectivity,
and subsequently monitored the non-audit work
peormed to ensure it remained within the agreed
policy guidelines. It also considered the extent of
non-audit services provided to the Group. The
Commiee determined, based on its evaluation,
that the external auditor was independent.
Reappointment of the external auditor
The Commiee has responsibility for making a
recommendation to the Board regarding the
reappointment of the external auditor. Based on its
continued satisfaction with the audit work peormed
to date and EY’s continued independence, the
Commiee has recommended to the Board, and
the Board has approved, that EY be proposed for
reappointment by shareholders as the Group’s
external auditor at CCEP’s 2021 AGM.
Internal audit
The internal audit function provides an independent
and objective assessment of the adequacy and
effectiveness of the Group’s integrated internal
control framework, which combines risk management,
governance and compliance systems. The internal audit
function repos directly to the Audit Commiee and
comprises approximately 25 full time, professional
audit staff based in London, Berlin, Madrid and Sofia,
with a range of business expeise working across
multiple disciplines.
Effectiveness of the internal audit function
At the sta of the year, the Commiee reviewed the
internal audit plan for 2020 and agreed its scope,
budget and resource requirements for the year.
Through regular management repos containing key
internal audit observations, proposed improvement
measures and related timeframes agreed with
management, the Commiee monitored the
effectiveness of the internal audit function against the
approved internal audit plan. As the year progressed,
amendments were made to ensure compatibility of
internal audits with prevailing public health guidance in
relation to COVID-19. This included the introduction of
remotely conducted audits. The Chief Audit Executive
aended the scheduled meetings of the Commiee
during 2020 to raise any key maers with the Directors.
In accordance with CCEP’s Internal Audit Chaer, and in
line with the Chaered Institute of Internal Auditors’
Code of Practice, an independent third pay (KPMG),
was engaged in 2020, to assess the internal audit
function’s conformance to applicable standards,
namely, the International Standards for the Professional
Practice of Internal Auditing (the IIA Standards) and
International Professional Practices Framework (IPPF).
The Commiee reviewed and considered the findings
91Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
of KPMG’s evaluation, which concluded that the internal
audit function overall “generally conformed” with the
IIA Standards and IPPF. Minor improvements suggested
by KPMG during the evaluation process were noted
and would, where appropriate, inform the future
development of the internal audit function.
The Chief Audit Executive confirmed to the Commiee
that there was no known impairment to the internal
audit function’s independence or objectivity in
undeaking the internal audit work peormed
during 2020.
Internal control and risk management
The Group depends on robust internal controls and an
effective risk management framework to successfully
deliver its strategy. The Audit Commiee is responsible
for monitoring the adequacy and effectiveness of the
Group’s internal control systems, which includes its
compliance with relevant sections of the UKCGC
and the requirements of SOX, specifically sections
302 and 404, as it applies to US FPIs.
Effectiveness of the internal control and risk
management systems
Regular repos were presented to the Commiee on
the Group’s internal audit assessments of the adequacy
and effectiveness of CCEP’s integrated internal control
framework, risk management, governance and
compliance functions. The Commiee was asked to
consider the internal control framework and the
remediation of any identified control deficiencies
during the year.
The Commiee was given regular updates on the
implementation of the Group’s business continuity
plans, including the implications of COVID-19 and
resulting adaptations and risk mitigation actions
to be taken by management.
In 2020, management undeook a top down
assessment of business unit (BU) and functional risk
systems. This included an assessment of the Group’s
risk appetite across identified enterprise risks, to gauge
and promote alignment of risk appetite with CCEP’s
long range plan. The Commiee reviewed the findings,
approved changes to the enterprise risk management
rankings and concluded that management’s approach
to risk and to risk appetite was satisfactory.
The Group’s material controls were deemed to be
designed and operating effectively during the year.
FURTHER INFORMATION ABOUT HOW WE MEASURE
AND MANAGE RISK IS SET OUT ON PAGES 44–45
Raising concerns
In each of our territories, we have established ways
for our people to raise concerns in relation to possible
wrongdoing in financial repoing, suspected
misconduct, or other potential breaches of our CoC.
These include options to contact a line manager,
or people and culture representative, in confidence,
or to share information through our dedicated,
independent and confidential “Speak Up” channels.
The Commiee is responsible for reviewing the
adequacy and security of these arrangements and
ensuring they allow appropriate follow up action.
In accordance with our CoC, retaliation against
anyone for making a genuine repo, or for
cooperating in an investigation, is prohibited.
The Commiee receives and considers repos from
management regarding concerns raised by our people
and provides the Board with key information for its
consideration as appropriate.
Investigations into potential breaches of our CoC
are overseen in each BU by the BU’s CoC commiee,
chaired by the BU’s Vice President, Legal. All potential
CoC breaches and corrective actions are overseen by
the Group CoC commiee, which is a sub commiee
of the Group compliance and risk commiee and is
chaired by the Chief Compliance Officer. The Group
CoC commiee also:
• Ensures that all repoed breaches have been
recorded, investigated in a timely manner and
a conclusion reached
• Evaluates trends
• Ensures consistent application of the CoC across CCEP
As required under the Spanish Criminal Code, the
Iberia BU has an ethics commiee formed of members
of the Iberia BU leadership team. It is responsible
for any ethics and compliance activities, including
overseeing the local crime prevention model.
It repos to the board of the Iberia BU and the
Chief Compliance Officer.
There were no whistleblowing maers that required
Commiee or Board aention in 2020.
Garry Was, Chairman of the Audit Commiee
12 March 2021
Statement from the Remuneration
Commiee Chairman
In respect of business peormance, despite the impact
of COVID-19 we remained agile and showed resilience,
which is reflected in our financial and sustainability
peormance indicators.
SEE OUR KEY PERFORMANCE INDICATORS (KPI) ON PAGES 2–3
Our objective was to protect the sho term without
compromising the long term. Discretionary operating
expenditure (opex) and capital expenditure (capex)
savings of €260 million and around €200 million
respectively helped us generate strong free cash flow
of €924 million which, suppoed by a solid balance
sheet, enabled us to maintain our full year dividend
payout ratio for shareholders, who also benefied from
resilient share price peormance. Continued investment,
especially in digital, sustainability and our poolio,
put us in a stronger position as we move into 2021.
Aligning remuneration to peormance
For the Remuneration Commiee, a key challenge was
to ensure that remuneration outcomes for our people
continued to reflect our underlying philosophy. In
paicular, incentive schemes should deliver outcomes
which align with business peormance (in the context
of COVID-19) and appropriately reflect the experiences
of shareholders and wider stakeholders, whilst also
continuing to act as an incentive to engage our
people to deliver the best possible results.
All of our incentive schemes utilise stretching
peormance targets, set at the sta of the relevant
period, and are designed to drive peormance in the
context of prevailing expectations for the business.
At the same time, in line with best practice, our schemes
all include discretionary provisions which allow the
Commiee to adjust the formulaic result to ensure
that the outcome delivered to paicipants is a fair and
appropriate reflection of peormance over the period.
To date, the Commiee has used these discretionary
provisions to reduce incentive outcomes below the
formulaic result, reducing the CEO’s bonus outcome
in two of the three financial years since CCEP’s listing
(as shown in the cha on the next page).
Dear Shareholder
On behalf of the Board, I am pleased to present the
Directors’ Remuneration Repo for CCEP (or the Group)
for the year ended 31 December 2020. This includes a
summary of our remuneration policy (page 95) which
was approved by over 99% of our shareholders at the
2020 AGM and our Annual repo on remuneration
(ARR), which sets out how we implemented the policy
during 2020 and how we intend to do so in 2021, and
will be subject to an advisory vote at our 2021 AGM.
Resilience in the face of COVID‑19
Like all businesses, 2020 was an extraordinary year
for CCEP which presented a number of challenges.
Throughout the pandemic we prioritised the wellbeing
and safety of our people and the continuity of service
to our customers. This included pulse surveys to beer
understand people’s experiences and needs, the launch
of the Coronavirus Suppo Hub to provide tools
and guidance to suppo their wellbeing as well
as implementing wellbeing training, which reached
over 5,300 employees.
We continued to implement salary increases for
employees in 2020 and the vast majority of employees
remained on full pay throughout the year, with
government suppo schemes only used in countries
where it was in line with local legislation and general
market practice to do so (e.g. no UK Government
suppo was received). Incentive schemes for front line
workers remained in place and continued to pay out.
92
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Financial StatementsStrategic Repo Governance and Directors’ Repo
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2017 2018 2019 2020
Final bonus outcome
2020 bonus outcome
Downward adjustment
Annual bonus outcome (% of max)
Examples of previous Remuneration Commiee discretion
In respect of 2020, the Commiee has again exercised
discretion to ensure the outcomes provided a fairer
reflection of peormance delivered. This required
an upward adjustment to the formulaic outcomes.
While the Commiee believes this is the right thing
to do in respect of the paicipants of these incentive
programmes, we recognise it is relatively unusual and
have therefore set out our thinking in detail in this
leer and in fuher detail in the remainder of the ARR.
This fulsome disclosure also reflects the feedback
we received from shareholders and proxy advisors
we consulted in early 2021 on the principle of
applying discretion to these incentive outcomes.
Remuneration outcomes for 2020
Annual bonus
For our front line employees, incentive arrangements
continued to operate and pay out across the year
as normal.
For our management incentive programme (applicable
to around 5,400 colleagues), it became apparent that in
the context of the impact of the pandemic, the 2020
annual bonus plan was no longer acting as an effective
incentive as the peormance targets were no longer
relevant. For these paicipants (excluding the CEO)
we developed and launched the Accelerate Profit
Peormance Plan (APPP) to focus and incentivise
paicipants on delivering strong business peormance
and value for shareholders during the second half of
the year. This replaced the original 2020 annual bonus.
Under the APPP, target oppounities were initially
reduced by 50%, reflecting the half yearly nature of the
scheme, followed by a fuher reduction in the maximum
Business Peormance Factor (BPF) from 2.0x to 1.5x.
Peormance was simplified to focus on stretching
operating profit targets with a revenue underpin aligned
with business priorities for the second half. The plan was
successful in engaging and motivating colleagues to
deliver the strong second half peormance as the
business navigated the fallout from the pandemic.
In respect of the CEO, the Commiee gave careful
consideration to the extent to which any discretionary
bonus payment should be made taking into account
a wide range of factors which included:
• The pay out level for the 5,400 paicipants in the
APPP and the key principle of CCEP’s remuneration
philosophy that a consistent and aligned policy should
operate across the management team and the wider
organisation
• The overall financial, operational and strategic
peormance of the business, including the response
to COVID-19
• The shareholder and wider stakeholder experiences
throughout the year
• The principles we had applied when exercising
negative discretion in respect of bonus pay outs
in two of the previous three years
• The exceptional leadership and individual
peormance of the CEO over the year, reflecting
current business needs and strategic planning
including acquisitions
Taking all these factors into account (fuher details
of which are provided on pages 98–99 of the ARR),
the Commiee determined a pay out for the CEO of
35% of maximum which is an appropriate reflection of
peormance over the period, directly aligned to the
pay out received by the other 5,400 employees under
the APPP and is the lowest outcome achieved since
our listing in 2016.
2018 Long-Term Incentive Plan (LTIP)
The 2018 LTIP award, granted in March 2018, was subject
to EPS and ROIC peormance targets over the three
year period to 31 December 2020. Around 200 senior
executives and management paicipated in the scheme,
including the CEO.
Based on the strong peormance delivered by the
business in 2018 and 2019, the vesting of this award had
been tracking at 110% of target. However, due to the
impact of COVID-19 in 2020, the original stretching
peormance targets could no longer be met over
the full three year period and the formulaic result
was zero vesting.
Given the strong peormance for over two thirds of
the peormance period and the unanticipated impact
of the pandemic being largely outside management’s
control, the Commiee decided to undeake a holistic
assessment of overall peormance over the three year
period to determine an appropriate vesting level
for all paicipants. The range of reference points
considered included:
• Peormance of the business in 2018 and 2019,
against the original targets and in a broader sense
• Financial, operational and strategic achievements
of the business over the three year period
• Overall shareholder and stakeholder experiences over
the three year peormance period, including
dividends and share price
Taking all these factors into account, which are explained
in more detail on pages 99–100 of the ARR, the
Commiee exercised discretion to determine a final
vesting level of 37% of maximum. This was determined
by applying the peormance achieved for 2018 and 2019
(55% of maximum) on a pro rata basis and 0% vesting
in respect of the final year of the peormance period.
The Commiee concluded that this fairly reflected
overall peormance over the three year period and
incorporated no benefit in respect of 2020 peormance.
This outcome was applied consistently to all paicipants,
including the CEO.
93Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Significant reduction in CEO single figure
In 2019, the CEO’s single figure of remuneration
was disclosed as £10.0 million (restated this year to
£7.8 million to reflect the actual value of the 2017 LTIP
received at the date of vesting). This year’s single
figure of £5.1 million is significantly lower, reflecting the
material year on year reduction in the pay out level of
both the bonus and the LTIP. The Commiee believes
this overall outcome is a fair and appropriate reflection
of peormance of the business and the CEO over both
the sho and long term.
0
2,000
4,000
6,000
8,000
10,000
2019 2020
Fixed Annual bonus LTIP
LTIP restatement
Single figure of remuneration (£000)
Significant year on year reduction in total remuneration received
LTIP sustainability targets
Sustainability is a key pa of our long-term strategy and
it is considered impoant that long-term management
incentives are aligned with this ambition. For 2020 LTIP
awards we therefore introduced a sustainability metric
focusing on reduction of GHG emissions (CO
2
e)
across CCEP’s entire value chain.
SEE PAGE 26 FOR FURTHER DETAILS IN RESPECT OF THE LINK
BETWEEN CHANGES IN OUR PACKAGING AND REDUCTION IN CO
2
E
These targets were finalised during the year to be
aligned to our revised long-term ambitions to keep the
global temperature rise to within 1.5°C, with verified
science based targets. Given the continued unceainty
in respect of volumes over the next three years the
targets are neutral to any changes in respect of volume
and are set on a relative, rather than an absolute, basis.
Fuher details can be found on page 100 of the ARR.
Implementation of remuneration policy in 2021
Despite the continuing challenges of COVID-19 we
consider that our overall remuneration framework
remains fit for purpose and will implement our
remuneration policy broadly unchanged for 2021.
However, in considering the remuneration framework for
2021 we have also taken account of the proposed CCL
acquisition (discussed on page 15 of the Integrated
Repo), to ensure that remuneration arrangements
remain appropriate over both the sho and long term
should the acquisition complete as planned.
2021 salaries – There will be no annual cycle salary
increases in 2021 for the executive leadership team.
2021 annual bonus – Targets for operating profit,
revenue and operating free cash flow will be set in
the normal manner. However, should the acquisition
complete during the year, the targets will be reviewed
at that point to consider if any adjustments should
be made to recognise the overall peormance of the
combined entity for the remainder of the financial
year (see pages 105–106 of ARR for fuher details).
2021 LTIP – Given the long-term focus of the LTIP, it is
considered appropriate that the 2021 LTIP awards that
would usually be made in March are delayed until aer
the acquisition has completed. This will enable targets to
be set for the combined entity for the full peormance
period. The Commiee may also introduce an element
of the award based on specific integration targets, if
appropriate. The targets will be disclosed in full when
the award is granted and in next year’s remuneration
repo (see page 106 of ARR for fuher details).
Looking ahead
We recognise that some of the decisions made this year
are unusual and we therefore proactively engaged with
major shareholders on the principles of our approach.
We believe the decisions are fair and the right ones
for both management and shareholders but always
welcome feedback and hope we can rely on your
suppo at our fohcoming AGM.
We also remain commied to shareholder engagement
and will consult with shareholders fuher if any
changes are required to our remuneration policy
or implementation for 2021 in the context of the
proposed CCL acquisition.
Christine Cross, Chairman of the Remuneration Commiee
12 March 2021
94
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
Our remuneration policy
Summary of remuneration policy table
Overview of the remuneration policy
OUR REMUNERATION POLICY WAS APPROVED BY OVER 99% OF OUR SHAREHOLDERS AND IS BASED ON THE FOLLOWING PRINCIPLES
Fixed pay Annual bonus LTIP
Key features Key features Key features
Base salary: Annual increases will normally take
into account business peormance and increases
awarded to the general workforce
Benefits: A range of benefits may be provided in
line with market practice
Pension:
• Can paicipate in the UK pension plan or receive
a cash allowance on the same basis as all other
employees
• Maximum employer contribution is £30k
• Target bonus oppounity is 150% of salary
• Bonus calculated by multiplying the target bonus by
a Business Peormance Factor (BPF) (0-200%) and
an Individual Peormance Factor (IPF) (0-120%)
• Business and Individual peormance targets are set
in the context of the strategic plan
• Malus and clawback provisions may apply to awards
• Discretion to adjust the formulaic outcome up or
down taking into account all relevant factors
• Based on peormance measures aligned to the
strategic plan and measured over at least three
financial years
• Target LTIP award is 250% of salary (500% of salary
maximum)
• Malus and clawback provisions may apply to
awards
• Two year holding period applied aer vesting
• Discretion to adjust the formulaic vesting
outcome up or down taking into account all
relevant factors
Link to strategy Link to strategy Link to strategy
Suppos recruitment and retention of
Executive Directors of the calibre required
for the long-term success of the business
• Incentivises delivery of the business plan
on an annual basis
• Rewards peormance against key indicators which
are critical to the delivery of the strategy
• Focused on delivery of Group peormance over
the long term
• Delivered in shares to provide alignment with
shareholders’ interests
A FULL COPY OF THE REMUNERATION POLICY CAN BE FOUND ON PAGES 89‑96 OF THE 2019 INTEGRATED REPORT, IN THE
REPORTS & RESULTS SECTION OF THE INVESTOR SECTION OF OUR WEBSITE AT WWW.COCACOLAEP.COM/INVESTORS
Simple, transparent and aligning
the interests of management
and shareholders
Able to be cascaded through
the organisation and applicable
to the wider workforce
Variable remuneration should
be peormance related
against stretching targets
Annual bonus and LTIP measures
aligned to the KPIs of the business
Focused on delivering
our business strategy
The same remuneration framework
is applied to all members of the ELT
(but with lower incentive levels)
Targets are set at stretching levels in
the context of the business plan and
external forecasts
• Target peormance linked
to business plan
• Maximum payout requires
peormance above consensus
Annual bonus metrics
Operating profit (50%)
Revenue (30%)
Operating free
cash flow (20%)
LTIP metrics
EPS (42.5%)
ROIC (42.5%)
CO
₂
e (15%)
See ARR for definitions
CEO pay mix linked to peormance at target
• Only two simple incentive plans operated
• Strong focus on pay for peormance
• Majority of remuneration package
delivered in shares
• Significant shareholding requirement
of three times salary
• CEO pension aligned to wider workforce
Fixed pay
Annual
bonus
LTIP
29%
Annual
bonus
49%
LTIP
22%
Fixed
pay
KEY
PRINCIPLE
APPLICATION
TO POLICY
CURRENT
IMPLEMENTATION
95Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
300% of salary
602% of salary
Remuneration at a glance
60
50
40
30
20
31 Dec 2019
31 Dec 2020
€2.30
€2.53
€1.80
9.9%
10.3%
7.6%
Comparable EPS ROIC
Overview of 2021 CEO remuneration framework
All references to revenue, operating profit,
operating free cash flow, EPS and ROIC
targets refer to those measures that are
defined within the ARR.
Overview of 2020 remuneration peormance
Repoed long-term KPIsRepoed annual KPIs
Bonus pay out = 35% of maximum based on discretionary
assessment of peormance
2018 2019 2020
CCEP share price
US$
2020 CEO single figure CEO shareholding
Fixed pay Annual bonus LTIP
Current shareholding Shareholding requirement by 31/12/2021
2020
TOTAL VALUE
£5.1M
AS AT
31/12/2020
TARGET
Fixed pay Annual bonus LTIP
Base salary
No change for 2021
Benefits
• Car allowance
• Private medical
• School fees
• Financial planning
£1.18m
Pension
Cash in lieu aligned
to wider workforce
£30k
0x–1.2x
Individual multiplier
Operating profit
Revenue
Operating free cash flow
ROIC
EPS
Reduction in CO
2
e
Target
Maximum
Target
Maximum
360%
150%
£1.33m
(26%)
£2.24m
(44%)
£1.49m
(30%)
€1.2BN €10.6BN €0.9BN
Comparable
operating profit
Revenue Free cash flow
READ MORE IN THE ANNUAL REPORT ON REMUNERATION FROM PAGE 97
READ MORE IN THE ANNUAL REPORT ON REMUNERATION FROM PAGE 97
50%
30%
20%
42.5%
42.5%
15%
500%
250%
96
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
Annual repo on
remuneration
Remuneration outcomes for 2020
The following pages set out details of the remuneration received by Directors for the financial year ending
31 December 2020. Prior year figures have also been shown. Audited sections of the repo have been identified.
The Directors’ remuneration in 2020 was awarded in line with the remuneration policy which was approved by
shareholders at the AGM in May 2020.
Single figure table for Executive Directors (audited)
Individual Year
Salary
(£000)
Taxable
benefits
(£000)
Pension
(£000)
Fixed pay
(£000)
Annual bonus
(£000)
Long‑term
incentives
(£000)
Variable
remuneration
Total
remuneration
(£000)
Damian
Gammell
2020 1,174 134 26 1,334 1,490 2,242
(A)
3,732 5,066
2019 1,151 127 26 1,304 1,806 4,729
(B)
6,535 7,839
(C)
(A) Estimated value based on three month average share price and exchange rate to 31 December 2020 of £32.00. Number will be restated in next year’s
single figure table to show the final value on the vesting date of 13 March 2021. Value includes estimated value of Shares and estimated £163,000 cash
payment in respect of dividend equivalents to be paid on the vested Shares.
(B) Restated from £6,894,000 in last year’s single figure table to reflect actual share price on vesting date of £27.06 on 27 March 2020 applied to 157,766
vested Shares and £459,000 cash payment in respect of dividend equivalents paid on the vested Shares.
(C) Restated in line with the actual vest date value of long-term incentives, as explained in (B) above.
Notes to the single figure table for Executive Directors (audited)
Base salary
Damian Gammell received a base salary increase of 1.8% from £1,157,944 to £1,178,787 effective from 1 April 2020. This
increase was lower than the average increase provided to the wider UK workforce (2.5%).
Taxable benefits
During the year, Damian Gammell received the following main benefits: car allowance (£14,000), financial planning
allowance (£10,000), schooling allowance (£75,000 net) and family private medical coverage (£7,000).
Pension
The pension provisions that apply to Damian Gammell are aligned to all other GB employees. Damian Gammell
elected to receive a cash allowance in lieu of paicipation in the pension scheme. This equates to a payment of
£30,000 from CCEP inclusive of employer National Insurance contributions (i.e. the actual benefit received by Damian
is less than £30,000 per year).
Annual bonus
Overview of CCEP’s annual bonus design
The 2020 CCEP annual bonus plan was designed prior to the impact of COVID-19 to incentivise the delivery of the
business strategy and comprised the following elements:
Business Peormance Factor (BPF) – provides alignment with our core objectives to deliver strong financial
peormance against our main financial peormance indicators of operating profit (50%), revenue (30%) and
operating free cash flow (20%).
REFER TO PAGE 105 FOR DEFINITIONS
Individual Peormance Factor (IPF) – individual objectives were also set for Damian Gammell focused on a number
of areas which are aligned to key longer-term strategic objectives of the business.
Target bonus
(150% of base salary)
BPF
(0x to 2.0x)
IPF
(0x to 1.2x)
Final bonus outcome
(0% salary to 360% salary)
97Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
2020 annual bonus outcome
Financial peormance in 2020 was heavily influenced by the impact of COVID-19, with the original 2020 annual bonus
targets for operating profit, revenue and operating free cash flow no longer being relevant.
Aer careful consideration and an initial consultation with major shareholders on the principles of applying discretion,
the Commiee determined it appropriate to exercise the discretion provided to it under the remuneration policy to
award a cash bonus payment of 35% of the CEO’s maximum bonus oppounity, in line with the policy.
In exercising its discretion, the Commiee took a wide range of factors into account, as set out below:
Our people, customers and communities
• Our rapid response to COVID-19 prioritised our people’s health,
safety and wellbeing. Pulse surveys were undeaken to
understand our people’s experiences and we implemented
a Coronavirus Suppo Hub, to provide tools and guidance
to suppo employee's wellbeing.
• We continued to implement salary increases for employees in
1 April 2020 and the vast majority of employees remained on full
pay throughout the year, with government suppo schemes
only used in countries where it was in line with local legislation
and practices (e.g. no UK Government suppo was provided).
Incentive schemes for front line workers remained in place and
continued to pay out.
• We provided case by case suppo to our customers and suppoed
our local communities, which included €3 million in product
donations, ongoing volunteering by our people and working
closely with TCCC and the Coca-Cola Foundation to provide
substantial financial aid to fund the fight against COVID-19.
Overall financial peormance
Due to the adverse impact of COVID-19, resulting in the closures
in the away from home channel, operating profit and revenue
declined year on year. However, we took bold actions to protect
our overall peormance and focus on business continuity.
• The impact on operating profit was moderated by the delivery
of approximately €260 million in discretionary opex savings as
we ensured spend was limited.
• Our agile response to the pandemic and our belief in continuing
to invest in our core brands served us well as we gained share
both in the home channel (+40bps) and online (+140bps).
• We continued to generate €924 million of free cash flow, close
to our medium-term objective of €1 billion a year, despite the
challenging backdrop and aer continuing to make significant
investments in our poolio, digital and sustainability agendas.
• We ended the year with a strong balance sheet, enabling us to
pay a full year dividend in line with our policy as discussed in the
shareholder experience section below.
Alignment with wider workforce
• When it became apparent that the original annual bonus targets
were no longer relevant a revised plan was put in place for the
5,400 paicipants in respect of the second half of the year to
ensure employees remained incentivised to deliver strong
peormance.
• Taking into account the half yearly nature of the scheme, target
oppounities were reduced by 50% and the maximum BPF was
reduced from 2.0x to 1.5x. Peormance targets were simplified
and set in respect of operating profit only with a revenue underpin
to reflect the priorities of the business for the remainder of 2020.
• Despite the continued impact of COVID-19 during the second half
of the year, the business delivered full year comparable operating
profit of around €1.2 billion which was above expectations at the
time the plan was put in place. This peormance delivered a BPF
of 1.48x.
• A fundamental principle of our remuneration policy is to apply a
consistent remuneration framework across the whole management
team. The outcome proposed for the CEO is aligned with the pay
out he would have received if he had paicipated in the revised
scheme on the same basis as all other 5,400 paicipants.
Revised
target bonus
(75% of base salary)
BPF
(1.48x)
IPF
(1.15x)
Final bonus outcome
(127% salary)
Track record of using discretion to deliver fair outcomes
• In respect of both the 2017 and 2018 annual bonus, the Commiee
exercised downward discretion to ensure that the final bonus
outcome was a true reflection of underlying business peormance.
20%
40%
60%
80%
100%
Final bonus outcome
2020 bonus outcome
Downward adjustment
Annual bonus outcome (% of max)
Examples of previous Remuneration Commiee discretion
0%
2017 2018 2019 2020
• Given discretion has been used in the past to ensure a fair
outcome that is reflective of peormance within management's
control, the Commiee considered it reasonable to apply the
same principles for 2020.
Shareholder experience
• Share price peormance over the year remained highly resilient,
recovering well aer the initial impact from COVID-19, and
outpeorming a number of our peers and equity indices
(such as the FTSE 100 and Euronext 100).
• Continued to pay dividends – full year dividend of €0.85 per share
announced in Q3, maintaining annualised dividend payout ratio
of approximately 50%, in line with our dividend policy.
Sustainability
Our response to COVID-19 was also a sustainable one.
• In 2020, we launched our new climate strategy with a clear
ambition to reach net zero GHG emissions by 2040 and to reduce
our GHG emissions across our value chain by 30% by 2030 (versus
2019). In 2020, the GHG emissions within our value chain fell by
11.9% compared to 2019 and by 37.7% compared to 2010 (previous
target baseline year).
• In 2020, 41.3% of the PET we used to make our PET boles was
recycled PET (rPET), up from 30.5% in 2019, making significant
progress to our commitment of ensuring that at least 50% of the
material we use for our PET boles comes from rPET by 2023.
Annual repo on remuneration continued
98
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
Individual peormance of CEO
The individual peormance of the CEO was very strong over the year, providing exceptional leadership of the
business as we navigated the response to the COVID-19 pandemic for the benefit of all stakeholders. He delivered
against a number of his original individual objectives, and adapted the business in response to the pandemic whilst
continuing to develop growth and value creation oppounities for the business through the proposed CCL
acquisition.
In addition to his strong leadership on all of the areas of business peormance set above, fuher achievements
to note included the following:
• Engagement: Improved customer engagement scores across the markets despite the impact of the AgeCore
dispute and COVID-19
• Inclusion and diversity: Improved the percentage of women in senior manager and above roles towards our
2025 target of 40%. Expanded focus of diversity across five key areas (disability, culture and heritage, LGBT+,
gender and multigenerational) consistently across CCEP
• Talent development and succession: Strong ELT development with two new appointments during 2020,
including an internal promotion. Launch of a number of development centres to enhance commercial
leadership capabilities
• Growth and value creation: Developing growth and value creation oppounities for the business through
the proposed CCL acquisition
• CCEP Ventures continued to bring new innovative solutions into the business with five new investment
panerships in early stage e-commerce, packaging free and recycling technology businesses
• Direct to consumer plaorm launched
Taking all these factors into account, the Commiee determined that his IPF should be set at 1.15x, reflecting
exceptional peormance. This IPF was used to calculate the bonus outcome on the same basis as all other employees.
Long-term incentives
Awards vesting for peormance in respect of 2020
The 2018 LTIP award was subject to EPS and ROIC peormance targets measured over the three year peormance
period from 1 January 2018 to 31 December 2020.
Peormance targets
Measure Weighting
Threshold
(25% vesting)
Target
(100% vesting)
Maximum
(200% vesting)
EPS 50% 4.0% p.a. 7.5% p.a. 11.0% p.a.
ROIC 50% 9.5% 11.0% 12.5%
Peormance in 2018 and 2019 was strong against both metrics with the overall vesting level tracking at 110% of target
before the impact of COVID-19:
Measure
Forecast outcomes as
at end of February 2020
EPS .3% p.a .
ROIC 11.4%
However, financial peormance in 2020 was heavily influenced by the impact of COVID-19, which resulted in the three
year threshold targets not being met and a formulaic outcome of zero.
Given the final outcome was due to factors outside management’s control, the Commiee considered it appropriate
to undeake a holistic assessment of peormance over the full three year peormance period to consider the
extent to which any discretion should be exercised in respect of the final vesting level for all LTIP paicipants,
including the CEO.
99Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
The Commiee took into account a wide range of factors of peormance across the full peormance period, which
included:
Measure Considerations
Shareholder experience • CCEP’s total shareholder return (TSR) over the three year peormance period was +28%, above that for
the Euronext 100 (+15%) and the FTSE 100 (-2%)
• Over the three year period, our TSR peormance of +28% was commensurate with upper quaile levels
of peormance against other major European FMCG companies
• Share price of above $50 (as at 12 March 2021), around 25% above the grant date share price of $41.78
• Delivered a cumulative dividend of $3.63 per share to our shareholders over the peormance period
(including a $1.00 dividend in 2020)
• In total over €3 billion of value was delivered to shareholders over the three year peormance period
(€1,473 million in dividends and €1,636 million in share buybacks)
Overall business peormance
• Strong peormance in 2018 and 2019 which was on track to deliver above target peormance
• Overall 2020 peormance relatively strong in the context of COVID-19, in paicular in the second
half of the year
• NARTD value share growth in 2019 (+110bps) and 2020 (+40bps)
Wider employee experience
• Revised annual bonus plan put in place to continue to reward around 5,400 employees for delivering
strong peormance in the second half of 2020
• 2020 pay increases continued to be implemented with effect from 1 April 2020
• Incentive schemes for front line workers continued to operate and pay out
• Limited use of Government suppo schemes during the crisis (including no receipt of funding from UK
furlough scheme) and vast majority of employees remained on full pay
• Significant focus on employee wellbeing throughout 2020, providing extensive emotional and mental
wellbeing suppo
• Some planned restructuring accelerated due to the COVID-19 pandemic
Sustainability
• Reduction in lost time incident rate 2017-2020 from 1.23 to 0.82
• 37.7% GHG reduction across our value chain since 2010 and 11.9% since 2019
• Reduction in water use ratio 2017-2020 from 1.61 to 1.57
• 41.3% of the PET used to make our PET boles was rPET (vs. 24.6% in 2017)
Other stakeholder experience
• Donated over 600,000 unit cases of product to our communities in 2020
• Panered with TCCC to provide substantial financial aid through the Red Cross and other local non
government organisations
• Unrivalled customer coverage with whom we jointly create value, with more than €1.5 billion added to the
FMCG industry since 2017
Based on this analysis, the Commiee considered it appropriate to exercise discretion in respect of the LTIP vesting
level to recognise the strong peormance of the management team in 2018 and 2019 which continued through the
COVID-19 crisis despite the significant challenges being faced which were outside management’s control.
A vesting level of 37% of maximum was determined, by applying the peormance achieved for 2018 and 2019
(55% of maximum) on a pro rata basis and 0% vesting in respect of the final year of the peormance period.
This vesting level will apply to all paicipants, including the CEO.
Awards granted in 2020
A conditional award of peormance share units (PSUs) was granted under the CCEP LTIP to Damian Gammell on
17 March 2020, with a target value of 250% of salary. Fuher details are set out below:
Individual Date of award
Maximum number
of Shares
under award
Target number of
Shares under
award
Closing Share
price at date
of award
(A)
Face value
Peormance
period
Normal
vesting date
Damian Gammell 17/03/2020 156,264 78,132 $32.96 $5,150,461 1 Jan 2020 -
31 Dec 2022
17/03/2023
(A) Number of Shares awarded calculated using 10-day average share price of $47.71.
The vesting of awards is subject to the achievement of the following peormance targets:
Vesting level
(C)
(% of target)
Measure Definition Weighting 25% 100% 200%
EPS
(A)
Compound annual growth over the three year
period to FY 2022
42.5% 5.0% p.a. 9.1% p.a. 12.0% p.a.
ROIC
(B)
ROIC achieved in the final year of the
peormance period (FY 2022)
42.5% 11.0% 12.0% 12.6%
CO
2
e reduction Relative reduction in total value chain GHG
emissions since 2019 (gCO
2
e/litre)
15% 6.0% per litre 8.0% per litre 10.0% per litre
(A) Comparable and on a tax and currency neutral basis. Targets include the impact of share buybacks to provide greater alignment with external
expectations. The targets have been set based on current assumptions in respect of share buybacks over the peormance period. The final
peormance targets will be adjusted to reflect the actual value of share buybacks made during the peormance period to neutralise any variances
and will be fully disclosed at the time of vesting.
(B) ROIC calculated as comparable operating profit aer tax, on a tax and currency neutral basis, divided by the average of opening and closing invested
capital for the year. Invested capital is calculated as the addition of borrowings and equity less cash and cash equivalents.
(C) Straight-line vesting between each vesting level (shown).
100
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
Annual repo on remuneration continued
Any award vesting will be subject to a two year holding period.
The 2020 LTIP awards introduced a peormance measure, with a 15% weighting, focused on the reduction of GHG
(CO
2
e) across CCEP’s entire value chain. The targets for the CO
2
e metric were set in line with our revised long-term
ambitions to keep the global temperature rise to within 1.5°C, with verified science based targets, and are based on
our three year and long-term roadmap for reduction in CO
2
e emissions across the entire CCEP value chain, as
disclosed above. Given the continued unceainty in respect of volumes over the next three years the targets are
neutral to any changes in respect of volume and are set on a relative, rather than an absolute, basis. This will ensure
that management continues to be incentivised to increase volumes and ensures that there are no windfall gains if
volumes decline. The Commiee believes these targets to be appropriately stretching and that they will drive the
correct management behaviours.
Following the announcement of the proposed acquisition of CCL, the Commiee will review EPS and ROIC targets in
light of the acquisition as soon as possible following completion. Given the significant nature of the transaction, it will
be impoant to ensure our colleagues are appropriately incentivised and that targets take into account the profile of
the ongoing business. Reduction in CO
2
emissions targets will remain subject to the original CCEP targets. The
Commiee will consult with shareholders, as appropriate, and full details of the Commiee's decisions on the 2020
LTIP will be disclosed following any changes.
Historical TSR peormance and CEO remuneration outcomes
The cha below compares the TSR peormance of CCEP from Admission up until 31 December 2020 with the TSR of
the Euronext 100, the FTSE 100 and the S&P 500. These indices have been chosen as recognised equity market
indices of companies of a similar size, complexity and global reach as CCEP.
30 trading day average data: against S&P 500, Euronext 100 and FTSE 100
50
100
150
200
CCEP
May 2016 December 2016 December 2018December 2017 December 2020December 2019
S&P 500 Euronext 100 FTSE 100
The following table summarises the historical CEO’s single figure of total remuneration and annual bonus pay out as
a percentage of the maximum oppounity over this period:
2016
(A)
John Brock
2016
(A)
Damian Gammell
2017
Damian Gammell
2018
Damian Gammell
2019
Damian Gammell
2020
Damian Gammell
CEO single figure of remuneration
(‘000)
$3,890 £27 £3,716 £3,821 £7,839
(B)
£5,066
Annual bonus pay out (as a % of
maximum oppounity)
31.23% 40.6% 60.7% 63.1% 43.7% 35.3%
LTI vesting (as a % of maximum
oppounity)
N/A N/A N/A N/A 59.0% 36.5%
(A) The figures for 2016 are in respect of the period for which each individual served as CEO during the year. John Brock served as CEO from 29 May to
28 December 2016. Damian Gammell served as CEO from 29 December to 31 December 2016.
(B) Restated from last year’s single figure to reflect the actual share price on vesting date for the 2017 LTIP.
101Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Percentage change in CEO and Director remuneration
The table below shows the percentage change in CEO and Director remuneration from 2019 to 2020 compared to
the average percentage change in remuneration for all employees of the parent company, in line with the revised
repoing regulations.
Comparator Base salary / fee Taxable benefits
(F)
Annual bonus
CEO 2.0% 5.5% (17.5%)
All employees 2.7% 0.2% (21.9%)
Other Directors
Sol Daurella 0.5% 0.0% n/a
Jan Bennink 0.0% (66.7%) n/a
José Ignacio Comenge Sánchez-Real 1.0% (80.0%) n/a
Francisco Crespo Benítez
(A)
(47.8%) (100.0%) n/a
Christine Cross (1.5%) (75.0%) n/a
Javier Ferrán 0.0% (100.0%) n/a
Irial Finan 0.0% (62.5%) n/a
Nathalie Gaveau 0.0% (66.7%) n/a
Álvaro Gómez-Trénor Aguilar 0.0% (71.4%) n/a
Orrin H. Ingram II
(B)
(61.8%) (100.0%) n/a
Thomas H. Johnson 3.5% (100.0%) n/a
Dagmar Kollmann
(C)
71.2% (83.3%) n/a
Alfonso Líbano Daurella 1.0% (100.0%) n/a
Mark Price
(C)
71.7% (50.0%) n/a
Mario Rotllant Solá 1.0% (80.0%) n/a
Brian Smith
(D)
n/a n/a n/a
Dessi Temperley
(E)
n/a n/a n/a
Garry Was 0.8% (100.0%) n/a
(A) Resigned from the Board on 9 July 2020. Change in fee and taxable benefits reflects pa year of service in 2020.
(B) Resigned from the Board on 27 May 2020. Change in fee and taxable benefits reflects pa year of service in 2020.
(C) Increase in fee reflects pa year of service in 2019.
(D) Appointed to the Board on 9 July 2020.
(E) Appointed to the Board on 27 May 2020.
(F) Reduction in taxable benefits reflects the impact of travel restrictions during the year.
Relative impoance of spend on pay
The table below shows a summary of distributions to shareholders by way of dividends and share buyback as well as
total employee expenditure for 2019 and 2020, along with the percentage change of each.
2020 2019 % change
Total employee expenditure €1,655m €1,771m (6.5%)
Dividends
(A)
€386m €574m (32.8%)
Share buybacks
(B)
€129m €1,005m (87.2%)
(A) Annualised dividend payout ratio maintained for 2020 at approximately 50%, in line with our policy.
(B) Decrease in share buybacks reflects suspension of programme in March to keep CCEP well positioned and preserve maximum flexibility during the
COVID-19 pandemic.
Annual repo on remuneration continued
102
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
CEO pay ratio
The table below shows the ratio of the CEO’s single figure of remuneration for 2020 to the 25th percentile, median
and 75th percentile total remuneration of full time equivalent GB employees. The ratio is heavily influenced by the
fact that the CEO paicipates in the LTIP. If the LTIP is excluded from the calculation then the median ratio would be
54:1. The main reason for the reduction in the ratio is the CEO's lower bonus and LTIP value in 2020.
Year Method 25th percentile ratio
(A)
Median ratio
(B)
75th percentile ratio
(C)
2020
Option B
161:1 97:1 76:1
2019
(D)
250:1 169:1 111:1
(A) The individual used in this calculation received total pay and benefits of £31,000 (of which £30,000 was salary).
(B) The individual used in this calculation received total pay and benefits of £52,000 (of which £38,000 was salary).
(C) The individual used in this calculation received total pay and benefits of £66,000 (of which £48,000 was salary).
(D) Figures updated to reflect final vesting value as disclosed in the single figure table.
The Commiee has chosen Option B (hourly gender pay gap information as at 5 April 2020) to determine the ratios,
as that data was already available and provides a clear methodology to calculate full time equivalent earnings. No
component of pay and benefits has been omied for the purposes of the calculations.
The Commiee is satisfied that the individuals whose remuneration is used in the above calculations are reasonably
representative of employees at the three percentile points, having also reviewed the remuneration for individuals
immediately above and below each of these points and noted that the spread of ratios was acceptable. No
adjustments were made to the three reference points selected.
The Commiee believes the median ratio is consistent with the pay and reward policies for CCEP’s GB employees.
CCEP is commied to offering an aractive package for all our employees. Salaries are set with reference to factors
such as skills, experience and peormance of the individual, as well as market competitiveness. All employees receive
a wide range of employee benefits and a large number are eligible for an annual bonus. Our LTIP is designed to link
remuneration to the delivery of long-term strategic objectives and therefore paicipation is typically offered to
senior employees who have the ability to influence these outcomes. The 25th percentile, median and 75th percentile
employees identified in the above calculation do not paicipate in the LTIP. As the CEO paicipates in the LTIP, the
ratio will be influenced by vesting outcomes and will likely vary year on year.
Payments to past Directors (audited)
There were no payments to past Directors during the year.
Payments for loss of office (audited)
There were no payments for loss of office during the year.
Statement of Directors’ share ownership and share interests (audited)
Interests of the CEO
The CEO is required to hold 300% of his base salary in Shares. The guideline is expected to be met within five years of
appointment. Until the guideline is met, 50% of any vested Shares from incentive awards (aer tax) must be retained.
The guideline continues to apply for one year following termination of employment.
Share ownership requirements and the number of Shares held by Damian Gammell are set out in the table below.
Interests in Shares at
31 December 2020
Interests in share
incentive schemes
subject to
peormance
conditions at
31 December 2020
(A)(B)(C)
Interests in
share option
schemes
(A)(B)
Share ownership
requirement as a
% of salary
Share ownership
as a % of salary
achieved at
31 December 2020
(D)
Shareholding
guideline met
Damian Gammell 260,378 490,272 324,643 300% 602%
✓
(A) For fuher details of these interests, please refer to footnote (C) of the outstanding awards table below.
(B) Do not count towards achievement of the share ownership guideline.
(C) The CEO has no interests in share incentive schemes not subject to peormance conditions at 31 December 2020.
(D) Our share ownership policy stipulates that the Commiee will translate the percentage of base salary requirement (300%) into a number of Shares,
using base salary (£1.1 million), average of the high and low share price on the NYSE ($31.97), and the currency exchange rate (GBP/USD exchange rate
of 1:1.25604) on 1 December 2016. This results in a share ownership requirement for Damian Gammell of 129,651 Shares.
103
Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Details of the CEO’s share awards are set out in the table below.
Director and
grant date
Form of
award
Exercise
price
Number of
Shares
subject to
awards at
31 December
2019
Granted
during the
year
Vested
during the
year
Exercised
during the
year
Lapsed
during the
year
Number of
Shares
subject to
awards at
31 December
2020
End of
peormance
period
Vesting
date
Damian Gammell
(A)
27.03.17 PSU
(B)
N/A 267,400 — 157,766 N/A 109,634 — 31.12.19 27.03.20
12.03.18 PSU
(C)
N/A 178,000 — — N/A — 178,000 31.12.20 13.03.21
01.03.19 PSU
(C)
N/A 156,008 — — N/A — 156,008 31.12.21 01.03.22
17.03.20 PSU
(C)
N/A — 156,264 — N/A — 156,264 31.12.22 17.03.23
(A) In addition, the CEO has 324,643 vested but unexercised options with an expiry date of 5 November 2025 and an exercise price of $39.00. No options
were exercised by the CEO during the year.
(B) The peormance condition was satisfied at 59% of maximum on 31 December 2019. Award vested on 27 March 2020.
(C) The number of Shares shown is the maximum number of Shares that may vest if the peormance targets are met in full.
Interests of other Directors
The table below gives details of the Share interests of each NED either through direct ownership or connected
persons.
Interests in Shares at
31 December 2020
Sol Daurella
(A)
32,744,161
Jan Bennink 27,200
José Ignacio Comenge Sánchez-Real
(A)
7,833,662
Francisco Crespo Benítez
(B)
—
Christine Cross —
Javier Ferrán —
Irial Finan —
Nathalie Gaveau —
Álvaro Gómez-Trénor Aguilar
(A)
3,140,347
Orrin H. Ingram II
(C)
10,000
Thomas H. Johnson 10,000
Dagmar Kollmann —
Alfonso Líbano Daurella
(A)
6,572,771
Mark Price —
Mario Rotllant Solá —
Brian Smith —
Dessi Temperley —
Garry Was 10,000
(A) Shares held indirectly through Olive Paners. The numbers of Shares increased slightly during the year as a result of a reduction in Olive Paners’
share capital.
(B) Resigned from the Board on 9 July 2020. Share interests stated are as at the date of resignation.
(C) Resigned from the Board on 27 May 2020. Share interests stated are as at the date of resignation.
No changes occurred to the Directors’ direct beneficial interests in Shares between 31 December 2020 and
12 March 2021.
Dilution levels
The terms of the Company’s share plans set limits on the number of newly issued Shares that may be issued to satisfy
awards. In accordance with guidance from the Investment Association, these limits restrict overall dilution under all
plans to under 10% of the Company’s issued share capital over a 10 year period in relation to the Company’s issued
share capital, with a fuher limitation of 5% in any 10 year period on discretionary plans.
Annual repo on remuneration continued
104
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
Single figure table for NEDs (audited)
The following table sets out the total fees and taxable benefits received by the Chairman and NEDs for the year
ended 31 December 2020. Prior year figures are also shown.
2020 (£’000) 2019 (£’000)
Individual Base fee
Chairman/
Commiee
fees
Taxable
benefits
(A)
Total fees
Base fee
Chairman/
Commiee
fees
Taxable
benefits
(A)
Total fees
Sol Daurella
564 26 1 591 561 26 1 588
Jan Bennink
82 46 2 130 82 46 6 134
José Ignacio Comenge
Sánchez-Real
82 16 1 99 82 15 5 102
Francisco Crespo Benítez
(B)
43 5 — 48 82 10 9 101
Christine Cross
82 46 1 129 82 48 4 134
Javier Ferrán
82 31 — 113 82 31 2 115
Irial Finan
82 26 3 111 82 26 8 116
Nathalie Gaveau
82 10 1 93 82 10 3 95
Álvaro Gómez-Trénor Aguilar
82 – 2 84 82 – 7 89
Orrin H. Ingram II
(C)
33 6 — 39 82 20 10 112
Thomas H. Johnson
113 36 — 149 112 32 15 159
Dagmar Kollmann
82 31 1 114 48 18 6 72
Alfonso Líbano Daurella
82
21 — 103
82 20 3 105
Mark Price
82 21 2 105 48 12 4 64
Mario Rotllant Solá
82 16 1 99 82 15 5 102
Brian Smith
(D)
39 5 — 44 – – – –
Dessi Temperley
(E)
49 9 — 58 – – – –
Garry Was
82 52 — 134 82 51 1 134
(A) Taxable benefits mainly relate to travel and accommodation costs in respect of aendance at Board meetings with fx rates used as at the date of the
transaction.
(B) Resigned from the Board on 9 July 2020.
(C) Resigned from the Board on 27 May 2020.
(D) Appointed to the Board on 9 July 2020.
(E) Appointed to the Board on 27 May 2020.
Implementation of remuneration policy for 2021
Base salary
Damian Gammell will not receive a salary increase for 2021.
Individual 2020 salary
2021 salary
(effective from 1 April) % increase
Damian Gammell £1,178,787 £1,178,787 0%
Taxable benefits
No significant changes to the provision of benefits are proposed for 2021. The main benefits for Damian Gammell will
continue to include allowances in respect of: a car, financial planning, schooling and private healthcare.
Pension
No changes are proposed in respect of the pension provision for Damian Gammell. He will continue to receive a cash
allowance of £30,000 (inclusive of employer National Insurance contributions) in lieu of paicipation in the pension
scheme.
Annual bonus
No changes have been made to the structure of the annual bonus plan for 2021 and the oppounity for Damian
Gammell will remain unchanged at 150% of salary for target peormance and 360% for maximum peormance.
Peormance will continue to be assessed against financial and individual peormance measures on a multiplicative
basis as set out on page 97. The financial measures and relative weightings will also remain unchanged.
Measure Definition Weighting
Operating profit Comparable operating profit on a currency neutral basis 50%
Revenue Revenue on a currency neutral basis 30%
Operating free cash flow Comparable operating profit before depreciation and amoisation and adjusting for capital
expenditures, restructuring cash expenditures and changes in operating working capital, on a
currency neutral basis
20%
105Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
In determining the IPF for Damian Gammell for 2021, he will be assessed against a number of areas of focus which
are aligned to the key longer-term strategic objectives of the business, which include:
Area of focus Weighting Objectives include
Growth plaorm 20% • Finalising the CCL acquisition and develop strategic plan
• Rollout of Topo Chico and Costa across our markets
• Grow share in sparkling
Accelerate competitiveness 20%
• Deliver savings from ongoing plan and CCL acquisition
Future ready culture 20%
• Continued progress on workforce engagement, safety and wellbeing
• Leadership for achievement of our inclusion and diversity goals
Digital future 20%
• Deliver revenue growth from digital poal
• Enhancement of systems, data, automation and analytics
• Trial digital plaorms using CCEP Ventures
Green future and stakeholder
engagement
20%
• Progress towards This is Forward commitments
• Successful stakeholder management and engagement
The actual financial targets are not disclosed prospectively as they are deemed commercially sensitive. We intend to
disclose them in next year’s ARR. A description of individual peormance including specific quantitative measures
(where appropriate) will also be disclosed in next year’s ARR. Given the timing of the CCL acquisition the Commiee
intends to review the targets that are set following completion to ensure they continue to remain appropriate for the
combined business.
Long-term incentive
Damian Gammell’s long-term incentive oppounity for 2021 will be aligned with the limits set out in the
remuneration policy. He will be made a target award of 250% of salary and may receive up to two times this target
award if the maximum peormance targets are achieved. Given the timing of the CCL acquisition and to enable
targets to be set for the combined business, the Commiee has decided to delay granting the award until aer
completion. The current measures of EPS, ROIC and reduction in CO
2
emissions will remain, however the Commiee
may introduce an element of the award based on specific integration targets, if appropriate, following completion of
the transaction. Full details of the targets will be disclosed at the point of grant and in next year's ARR.
Following the end of the peormance period, awards will be subject to an additional two year holding period.
Chairman and NED fees
NED fees were set with effect from 1 April 2019 and no fuher changes are proposed for 2021.
Role Current fees
Chairman £564,250
NED basic fee £82,000
Additional fee for Senior Independent Director £30,750
Additional fee for Commiee Chairman: Audit, Remuneration and Affiliated Transaction Commiees £36,000
Nomination and CSR Commiees £20,500
Additional fee for Commiee membership: Audit, Remuneration and Affiliated Transaction Commiees £15,500
Nomination and CSR Commiees £10,250
The Remuneration Commiee
The entire Board determines the terms of the compensation of the CEO and fees for the NEDs and Chairman as well
as approving the remuneration policy, all on the Commiee’s recommendation. The Commiee is also responsible
for seing the remuneration for each member of the ELT repoing to the CEO.
THE TERMS OF REFERENCE CAN BE FOUND ON OUR WEBSITE AT
WWW.COCACOLAEP.COM/ABOUT‑US/GOVERNANCE/COMMITTEES
Annual repo on remuneration continued
106
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
Remuneration Commiee members and aendance
In line with the Shareholders’ Agreement, the Commiee has five members, as set out on pages 66–70.
They are three independent NEDs, one Director nominated by Olive Paners and one Director nominated by ER.
The Commiee formally met six times during the year, with one additional ad hoc meeting in line with business
needs. Aendance is set out in the table on page 79 of the Corporate governance repo.
Remuneration Commiee key activities
The table below gives an overview of the key agenda items discussed at each meeting of the Commiee during 2020:
Meeting date Key agenda items
February 2020 • Approval of 2019 annual bonus outcome for the ELT • Approval of final vesting outcome for 2017 LTIP
March 2020
• Approval of ELT 2020 annual bonus targets, individual
objectives and oppounities
• Approval of ELT 2020 LTIP financial targets and
oppounities
• Review of 2019 Remuneration Repo
• Annual base salary review for the ELT
• Review of Commiee peormance evaluation
May 2020
• Review of market remuneration trends
• Advisor review
• AGM voting update
July 2020
• Wider workforce review
• Approval of 2020 LTIP sustainability target
• Approval of 2020 APPP incentive, targets and oppounities
• Progress repo on ELT shareholding requirements
September 2020
• Review of 2020 Remuneration arrangements
• Consideration of approach to shareholder consultation
• Approval of Chief People and Culture Officer remuneration
October 2020
• Peormance update for 2020 APPP
• Review of 2021 incentive peormance measures
• Review of outstanding LTIP awards
December 2020
• Review of first dra of the 2020 Remuneration Repo
• Peormance update for 2020 APPP
• Review of outstanding LTIP awards
• Base pay design for 2021
• Incentive design for 2021
As described in the remuneration policy, the Commiee receives an annual repo in respect of wider workforce
remuneration including pay and reward policies, which informs its decisions on executive pay. The Commiee does
not engage directly with employees on the issue of executive pay, however, within CCEP, employee groups are
regularly consulted about maers affecting employees including our strategy, Company peormance, culture and
approach to reward, and this feedback informs decisions on people maers and other activities.
Suppo for the Remuneration Commiee
Deloie was appointed by the Remuneration Commiee in 2016 following a selection process. During the year,
Deloie provided the Commiee with external advice on executive remuneration. Deloie is a member of the
Remuneration Consultants Group and has voluntarily signed up to the Remuneration Consultants’ Code of Conduct
relating to executive remuneration consulting in the UK. The Commiee is satisfied that the engagement paner
and team that provide advice to the Commiee do not have connections with CCEP or individual Directors that may
impair their independence. During 2020, the wider Deloie firm also provided CCEP with unrelated tax (including
employment tax), digital transformation, access security and consultancy services.
Total fees received by Deloie in relation to the remuneration advice provided to the Commiee during the year
amounted to £68,800 based on the required time commitment.
The Chairman, the CEO, the CFO, and the Chief People and Culture Officer aended meetings by invitation of the
Commiee to provide it with additional context or information, except where their own remuneration was discussed.
Summary of voting outcomes
The table below shows how shareholders voted in respect of the ARR and the remuneration policy at the AGM held
on 27 May 2020:
Resolution
Votes
For (%)
Votes
Against (%)
Number of votes
Withheld
Approval of the ARR 99.15% 0.85% 241,940
Approval of the remuneration policy 99.48% 0.52% 56,633
This Directors’ Remuneration Repo is approved by the Board and signed on its behalf by
Christine Cross, Chairman of the Remuneration Commiee
12 March 2021
107Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
This Directors’ Repo has been prepared in accordance
with the applicable disclosure requirements of the
following:
• Companies Act
• Listing Rules (LRs) and DTRs
• Statutory Audit Services for Large Companies Market
Investigation (Mandatory Use of Competitive Tender
Processes and Audit Commiee Responsibilities)
Order 2014, as published by the UK Competition and
Markets Authority (with which the Company complies
voluntarily)
• Rules promulgated by the US Securities and Exchange
Commission
Additional information and disclosures, as required
by the Companies Act, LRs and DTRs, are included
elsewhere in this Integrated Repo and are
incorporated into this Directors’ Repo by reference
in table 1.
This Directors’ Repo, together with the Strategic
Repo on pages 2–61, represents the management
repo for the purpose of compliance with DTR 4.1.5R(2)
and 4.1.8R.
Directors
Appointment and replacement of Directors
The Aicles set out ceain rules that govern the
appointment and replacement of the Company’s
Directors. These are summarised as follows:
• A Director may be appointed by either an ordinary
resolution of shareholders or by the Board
• Olive Paners and ER may each appoint a specified
number of Directors, up to a set maximum, in
accordance with their respective equity holding
propoions in the Company
• Replacement INEDs must be recommended
to the Board by the Nomination Commiee
• The Board shall consist of a majority of INEDs
• Directors (other than the initial Chairman, CEO and
INEDs) must retire at each AGM, and may, if eligible,
offer themselves for re-election
• The minimum number of Directors (disregarding
alternate directors) is two
READ MORE ABOUT THE ELECTION AND RE-ELECTION OF DIRECTORS
IN THE CORPORATE GOVERNANCE REPORT ON PAGE 80
Directors’ repo
The Directors present their repo, together with the audited consolidated
financial statements of the Group, and of the Company, for the year ended
31 December 2020.
Table 1
Information and disclosures included elsewhere in this repo
Disclosure Section of repo Page(s)
Names of Directors during the year Board of Directors
66–70
Review of peormance, financial position and likely
future developments
Strategic Repo
2–61
Dividends Business and financial review and Note 16 to the consolidated financial
statements
60 and 158
Principal risks Principal risks section of the Strategic Repo
44–50
Information on share capital relating to share classes,
rights and obligations
Note 16 to the consolidated financial statements, and the Share capital section
in Other Group information
157–158 and
199–200
Financial instruments and financial risk management Notes 12 and 24 to the consolidated financial statements
146–149 and
168–170
Cash balances and borrowings Notes 10 and 13 to the consolidated financial statements
145 and 150–151
Significant events aer the repoing period Note 26 to the consolidated financial statements
172
Information on employment of disabled persons Our people
38 and 40
Workforce engagement Our stakeholders and Our people
10–13 and 38–41
Business relationships with suppliers, customers
and others
Our stakeholders, Operating with integrity and Action on supply chain
10–13, 42–43
and 36–37
Greenhouse gas emissions Action on climate
24–26
Responsibility statement Directors’ responsibilities statement
111
108
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
Powers of Directors
The Directors may exercise all powers of the Company,
in accordance with, and subject to, the Company’s
Aicles and any applicable legislation.
READ MORE ABOUT THE ROLES AND RESPONSIBILITIES OF THE BOARD AND THE MAIN
COMMITTEES OF THE BOARD IN THE FOLLOWING SECTIONS: CORPORATE GOVERNANCE REPORT
(PAGES 74-75), NOMINATION COMMITTEE REPORT (FROM PAGE 82), AUDIT COMMITTEE
REPORT (FROM PAGE 86), DIRECTORS’ REMUNERATION REPORT (FROM PAGE 92).
Directors’ indemnity arrangements
Qualifying third pay indemnities were in place
throughout 2020, and remain in place as at the date
of this Integrated Repo. Under these indemnities,
the Company has agreed to indemnify the Directors
of the Company, to the extent permied by law,
against losses and liabilities that may be incurred
in executing the powers and duties of their office.
Amendment of Aicles
The Aicles may only be amended by a special
resolution of the Company’s shareholders in accordance
with the Companies Act. Ceain provisions of the
Aicles are entrenched and may only be amended
or repealed with the prior consent of Olive Paners,
ER or a majority of the INEDs (as applicable). In paicular,
the requirement under the Aicles that the Board shall,
at all times, contain a majority of INEDs may only be
amended or repealed with the prior consent of a
majority of the INEDs. The Aicles are available at
www.cocacolaep.com/about-us/governance.
Political donations
The Group made no political donations or contributions
during 2020 (2019: nil). It is our policy not to make
political donations or incur political expenditure in the
EU. However, there may be unceainty as to whether
some normal business activities fall under the wide
definitions of political donations, organisations and
expenditure used in the Companies Act. We will
therefore continue to seek shareholder approval to
make political donations or incur expenditure within
the EU as a precaution to avoid any inadveent breach
of the Companies Act.
Shares
Rights and obligations
The rights and obligations relating to the Company’s
Shares (in addition to those set out by law) are
contained in the Aicles.
Restrictions on transfer of securities
Olive Paners and TCCC are both subject to ceain
restrictions relating to the acquisition or disposal
of Shares under the terms of the Shareholders’
Agreement. Other than those set out in the
Shareholders’ Agreement, we are not aware of any
agreements between shareholders that may result
in a restriction of the transfer of securities or voting
rights in the Company.
Employee share schemes
Shares issued under the Company’s employee share
schemes rank pari passu with the existing Shares of
the Company. Voting rights aached to Shares held
on trust on behalf of paicipants in the GB Employee
Share Plan are exercised by the trustee as directed
by the paicipants.
Significant shareholdings
In accordance with the DTRs, table 2 shows the
significant interests in Shares of which the Company
has been notified as at 31 December 2020, and the
date of this repo. The shareholders identified have
the same voting rights as all other shareholders.
Share buyback programme
The Company announced a share buyback programme
on 13 February 2020, under which it proposed to reduce
share capital by up to €1 billion through the purchase
and cancellation of its own Shares (the Buyback
Programme). Share purchases for the Buyback
Programme were undeaken pursuant to shareholder
authority granted at the 2019 AGM.
In light of the significant and unprecedented
macroeconomic unceainty brought about by the
outbreak of COVID-19, on 23 March 2020, the Company
announced a suspension of the Buyback Programme.
To maintain flexibility, the shareholder authority to
purchase Shares was renewed at the 2020 AGM, under
which the Company may purchase up to 45,415,617
Shares, representing 10% of the Company’s issued
share capital at 13 April 2020, reduced by the number of
Shares purchased or agreed to be purchased between
13 April and 27 May 2020. No Shares were purchased
under this authority in 2020.
We intend to seek to renew the authority to purchase
Shares at the 2021 AGM.
See table 3 for a summary of Shares purchased in 2020.
All purchased Shares were cancelled immediately.
FOR MORE DETAILS, SEE THE SHARE BUYBACK PROGRAMME
SECTION IN OTHER GROUP INFORMATION ON PAGE 200
Table 2
Interests in Shares of which the Company has been notified
Shareholder
Percentage of total
voting rights notified
to the Company as at
the year end
(C)
Number of voting
rights notified
to the Company as at
the year end
Percentage of total
voting rights notified
to the Company as at
the date of this repo
(C)
Number of voting
rights notified
to the Company as at
the date of this repo
Cobega, S.A.
(A)
36.1% 166,128,987 36.1% 166,128,987
TCCC
(B)
19.01% 87,950,640 19.01% 87,950,640
(A) Held indirectly through its 56.36% owned subsidiary, Olive Paners.
(B) Held indirectly through European Refreshments.
(C) Percentage interests disclosed calculated as at the date on which the relevant disclosure was made. These have not been updated to reflect changes
in the total voting rights since notification and so may not represent the percentage interest as at 31 December 2020 or the date of this repo.
109Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Directors’ repo continued
Change of control
There are no agreements in place which provide
compensation for loss of office or employment to any
Director in the event of a takeover, except for ceain
provisions under the employee share plans, which may
provide that ceain outstanding awards may vest early
in such an event.
The Board considers that a change of control might
have an impact on the following significant
agreements:
• Boling agreements between the Group and TCCC
• A bank credit facility agreement, under which the
maximum amount available at 31 December 2020
was €1.5 billion
• A term loan facility agreement, in connection with
the proposed acquisition of CCL, under which the
maximum amount available at 31 December 2020
was €4.4 billion
READ MORE ABOUT THE PROPOSED ACQUISITION OF CCL IN THE BUSINESS AND FINANCIAL
REVIEW ON PAGE 60 AND CONVERSATION WITH OUR CHAIRMAN AND CEO ON PAGE 15
Research and development
The Company invests in and undeakes ceain
activities for the development of innovative solutions,
digital capabilities and advanced analytics to drive
the simplification of applications and plaorms,
and to suppo and grow its business.
Independent auditor
Disclosure of information to auditors
Each of the Directors in office as at the date of this
Integrated Repo, confirms that:
• so far as he or she is aware, there is no relevant
audit information (as defined by section 418 of the
Companies Act) of which the Company’s auditor
is unaware; and
• he or she has taken all the reasonable steps that he or
she ought to have taken as a Director to make himself
or herself aware of any relevant audit information and
to establish that the Company’s auditor is aware of
that information.
Auditor reappointment
EY has expressed willingness to continue in its capacity
as independent auditor of the Company. The Directors
plan to recommend a resolution to reappoint EY at the
next AGM.
Going concern
As pa of the Directors’ consideration of the
appropriateness of adopting the going concern basis
in preparing the consolidated financial statements, a
review was peormed on a range of potential COVID-19
scenarios, including but not limited to, the severity
and duration of potential fuher lockdowns including
restrictions on trading in the away from home channel,
movement of people, and social distancing. The
Directors also considered the Group’s response to
the COVID-19 disruption during 2020 and the ability
to continue to generate strong operating cashflows.
In addition, the Group also expects to complete the
proposed acquisition of Coca-Cola Amatil Limited
during the first half of 2021 subject to ceain approvals,
which is expected to be funded primarily through the
issue of new external borrowings. Fuher detail of
the proposed acquisition is included in Note 1 of the
Group’s consolidated financial statements. In making
their going concern assessment, the Directors have
therefore considered scenarios for the combined
Group, including the repayment obligations for external
borrowings of the combined Group.
The Directors have taken into account the Group’s
current cash position, its access to a €1.5 billion
undrawn commied credit facility and a €4.4 billion
commied term loan facility in connection with the
proposed acquisition which can be extended to
December 2022 at the option of the Group to cover
any funding needs until new long term debt is in place,
and have also considered the range of mitigating
actions available to the Group if required, such as
reducing discretionary spend.
On the basis of these reviews, the Directors have
a reasonable expectation that the Company has
adequate resources to continue in operational
existence for a period of 12 months from the date
of signing these accounts.
This Directors’ Repo has been approved by the Board
and signed on its behalf by
Clare Wardle, Company Secretary
12 March 2021
Coca-Cola European Paners plc
09717350
Table 3
Share purchases
Period
Number of
Shares
purchased
Nominal value
of Shares
purchased
(€)
Amount paid
for the Shares
(€ millions)
Percentage of
called
up share
capital
represented by
purchased
Shares
(A)
2020
3,065,200 30,652 128 0.67%
(A) Calculated as a percentage of the called up issued share capital
immediately before the Buyback Programme staed, which was
456,612,020 Shares.
110
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
Directors’ responsibilities
statement
Responsibility for preparing financial statements
The Directors are responsible for preparing the
Integrated Repo and the financial statements
in accordance with applicable United Kingdom (UK)
law and regulations.
UK company law requires the Directors to prepare
financial statements for each financial year. Under
that law, the Directors have prepared group and parent
company financial statements in accordance with
international accounting standards, in conformity with
the Companies Act. They have elected to prepare the
parent company financial statements in accordance
with International Financial Repoing Standards (IFRS)
in conformity with the Companies Act. Under the DTRs,
group financial statements are required to be
prepared in accordance with IFRS adopted pursuant
to Regulation (EC) No 1606/2002 as it applies in the
European Union.
Under section 393 of the Companies Act, the Directors
must not approve the financial statements unless they
are satisfied that they give a true and fair view of the
state of affairs of the Company and of the Group and
of the profit or loss of the Company and of the Group
for that period.
In preparing the Company financial statements, the
Directors are required to:
• Select suitable accounting policies and apply them
consistently
• Make judgements and accounting estimates that
are reasonable and prudent
• Follow international accounting standards in conformity
with the requirements of the Companies Act
(except where any depaures from this requirement
are explained in the notes to the company financial
statements)
• Prepare the financial statements on the going
concern basis unless it is inappropriate to presume
that the Company will continue in business
In preparing the Group financial statements the
Directors are required to:
• Select suitable accounting policies and apply them
consistently
• State whether international accounting standards
in conformity with the requirements of the
Companies Act (and IFRS adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the
European Union) have been followed, subject to any
material depaures disclosed and explained in the
financial statements
• Present information, including accounting policies,
in a manner that provides relevant, reliable,
comparable and understandable information
• Provide additional disclosures when compliance with
the specific requirements in IFRS are insufficient to
enable users to understand the impact of paicular
transactions, other events and conditions on the
entity’s financial peormance
• Make an assessment of the Group’s ability to continue
as a going concern
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Company’s transactions and disclose with
reasonable accuracy at any time the financial position
of the Company and enable them to ensure that the
financial statements comply with the Companies Act.
They are responsible for safeguarding the assets
of the Company and hence for taking reasonable
steps for the prevention and detection of fraud and
other irregularities.
They are also responsible for the maintenance and
integrity of the corporate and financial information
included on the Company’s website.
Legislation, regulation and practice in the UK governing
the preparation and dissemination of financial
statements may differ from legislation, regulation
and practice in other jurisdictions.
Responsibility statement
The Directors, whose names and functions are set
out on pages 66–70, confirm that to the best of
their knowledge:
• The consolidated financial statements, prepared in
accordance with international accounting standards
in conformity with the requirements of the Companies
Act (and IFRS adopted pursuant to Regulation (EC)
No 1606/2002 as it applies in the European Union)
give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company
and the undeakings included in the consolidation
taken as a whole
• The management repo includes a fair review of the
development and peormance of the business and
the position of the Company and the undeakings
included in the consolidation taken as a whole,
together with a description of the principal risks
and unceainties they face
• The Integrated Repo and financial statements, taken
as a whole, are fair, balanced and understandable and
provide the information necessary for shareholders
to assess the Company’s position and peormance,
business model and strategy
By order of the Board
Clare Wardle, Company Secretary
12 March 2021
111Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Financial Statements
IN THIS SECTION
114 Independent Auditor’s repos
128 Consolidated financial statements
133 Notes to the consolidated financial statements
175 Company financial statements
179 Notes to the Company financial statements
112
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
113Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Independent auditor’s report to the
members of Coca-Cola European
Partners plc
Opinion
In our opinion:
• Coca-Cola European Partners plc’s Group financial statements and Parent Company financial statements
(thefinancial statements) give a true and fair view of the state of the Group’s and of the Parent Company’s
affairs as at 31December2020 and of the Group’s and the Parent Company’s profit for the year then ended;
• the financial statements have been properly prepared in accordance with International Accounting Standards (IAS)
in conformity with the requirements of the UK Companies Act 2006 (the Companies Act) and, as regards the Group
financial statements, International Financial Reporting Standards (IFRS) adopted pursuant to Regulation (EC)
No. 1606/2002 as it applies in the European Union (EU); and
• the financial statements have been prepared in accordance with the requirements of the Companies Act.
We have audited the financial statements of Coca-Cola European Partners plc (the Parent Company) and its
subsidiaries (the Group) for the year ended 31 December 2020 which comprise:
Group Parent Company
Consolidated income statement for the year ended 31December2020 Statement of comprehensive income for the yearended 31 December
2020
Consolidated statement of comprehensive income for the year
thenended
Statement of financial position as at 31December2020
Consolidated statement of financial position as at 31December2020 Statement of cash flows for the year then ended
Consolidated statement of cash flows for the year then ended Statement of changes in equity for the year then ended
Consolidated statement of changes in equity for the year then ended
Related notes 1 to 11 to the financial statements including a summary
of significant accounting policies
Related notes 1 to 27 to the financial statements including a summaryof
significant accounting policies
The financial reporting framework that has been applied in their preparation is applicable law and IAS in conformity
with the requirements of the Companies Act and, as regards the Group financial statements, IFRS adopted pursuant
to Regulation (EC) No. 1606/2002 as it applies in the EU and, as explained in note 1 to the Group financial statements,
the Group, in addition to complying with its legal obligation to apply IFRS as adopted by the EU, has also applied IFRS
as issued by the International Accounting Standards Board (IASB).
In our opinion, the Group financial statements give a true and fair view of the consolidated financial position of the
Group as at 31 December 2020 and of its consolidated financial performance and its consolidated cash flows for the
year then ended in accordance with IFRS as issued by the IASB.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law.Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit
of the financial statements section of our report below. We are independent of the Group and Parent Company
in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK,
including the Financial Reporting Council’s (FRC) Ethical Standard as applied to listed public interest entities, 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.
114
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Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment
of the Group and Parent company’s ability to continue to adopt the going concern basis of accounting included:
• In conjunction with our walkthrough of the Group’s financial close process, we confirmed our understanding of
management’s going concern assessment process. We also engaged with management early to ensure we
understood the process undertaken to evaluate the operational and economic impacts of COVID-19 on the Group
and to reflect these in the Group’s forecasts and ensure that all key factors we thought were significant were
considered in their assessment;
• We confirmed the cash balance of €1.5 billion as at 31 December 2020 and verified the cash flows from operating
activities of €1.5billion in the year;
• We reviewed the debt maturity ladder and challenged management in relation to how debt payments due in the
next 18 months had been considered in the going concern assessment;
• We obtained management’s going concern assessment, including the cash forecast for the going concern period
which covers a year from the date of signing this audit opinion, and considered significant events falling due shortly
after. The Group has modelled various adverse scenarios in their cash forecasts in order to incorporate unexpected
changes to the forecasted liquidity of the Group;
• We have tested the clerical accuracy of the model used to prepare the Group’s going concern assessment;
• We understood and verified the factors and assumptions included in each modelled scenario for the cash forecast
and tested the impact of COVID-19 had been included in the forecasted scenarios;
• We considered the appropriateness of the methods used to calculate the cash forecasts and determined through
inspection and testing of the methodology and calculations that the methods utilised were appropriately
sophisticated to be able to make an assessment for the entity;
• We considered whether the Group’s forecasts used in the going concern assessment were consistent with other
forecasts used by the Group in its accounting estimates, including impairment.;
• We considered the mitigating factors (e.g. reduced levels of restructuring activities) included in the cash forecasts
that are within control of the Group. This includes review of the Group’s non-operating cash outflows (e.g.
reduction in dividend payments) and evaluating the Company’s ability to control these outflows as mitigating
actions if required. We also obtained evidence of the Group’s €1.5 billion Revolving Credit Facility agreement
through to 2025, noting no associated covenants;
• We have performed reverse stress testing in order to identify what factors would lead to the Group utilising all
liquidity during the going concern period. We also considered whether the likelihood of extended periods of future
lockdowns in all markets is considered remote given vaccine roll out and expected government policy;
• We considered the acquisition of Coca-Cola Amatil (CCL), including the likelihood of securing long term debt
financing to fund the acquisition. We also obtained evidence of the term loan facility that has been secured to fund
the acquisition, should the Group fail to secure long term debt funding;
• We reviewed the Group’s going concern disclosures included in the Integrated Report in order to assess that the
disclosures were appropriate and in conformity with the reporting standards.
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the Group and Parent Company’s ability to
continue as a going concern for a period of 12 months from when the financial statements are authorised for issue.
In relation to the Group and Parent Company’s reporting on how they have applied the UK Corporate Governance
Code, we have nothing material to add or draw attention to in relation to the directors’ statement in the financial
statements about whether the directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the
relevant sections of this report. However, because not all future events or conditions can be predicted, this
statement is not a guarantee as to the Group’s ability to continue as a going concern.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 115
This page does not form part of the Coca-Cola European Partners plc Annual Report on Form 20-F for the year ended 31 December 2020 as filed with the SEC.
Overview of our audit approach
Audit scope •We performed an audit of the complete financial information of six components, audit procedures on specific balances
for three components and specified audit procedures for a further five components
•The components where we performed full, specific or specified audit procedures accounted for 101% of profit before
taxation, 98% of revenue and 98% of total assets
Key audit matters •Aspects of revenue recognition: completeness and measurement of programmes and arrangements with customers
recorded as deductions from revenue
•Carrying value of goodwill and indefinite lived intangibles
•Taxation: accounting for uncertain tax positions and related disclosures
Materiality
•Overall Group materiality of €56million which represents 5% of normalised profit before taxation
An overview of the scope of our audit
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine
our audit scope for each entity within the Group. Taken together, this enables us to form an opinion on the
consolidated financial statements. We take into account size, risk profile, the organisation of the Group and
effectiveness of Group-wide controls, changes in the business environment and other factors such as recent internal
audit results when assessing thelevel of work to be performed at each entity.
In assessing the risk of material misstatement to the Group financial statements, and to ensure we had adequate
quantitative coverage of significant accounts in the financial statements, of the 54 reporting components of the
Group (12 of which are trading components), we selected 14 components covering entities within Great Britain,
Spain, Germany, France, Belgium, the Netherlands, Luxembourg, Norway, Sweden and the United States of America
covering four corporate entities and 10trading components which represent the principal business units within the
Group.
Of the 14 components selected, we performed an audit of the complete financial information of six components (full
scope components) which were selected based on their size or risk characteristics. For the remaining three specific
scope and five specified procedures components, we performed audit procedures on specific accounts within that
component that we considered had the potential for the greatest impact on the significant accounts in the financial
statements either because of the size of these accounts or their risk profile.
The table below illustrates the coverage obtained from the work performed by our audit teams.
Number % Group profit before tax % Group revenue % Total assets
2020 2019 2020 2019 2020 2019 2020 2019 See Notes
Full scope 6 6 103% 99% 78% 78% 87% 90%
(A) (D)
Specific scope 3 4 (7) % 3% 13% 13% 5% 6%
(B) (C) (E)
Specified procedures 5 5 5% 3% 7% 7% 6% 3%
(C) (E)
Coverage 14 15 101% 105% 98% 98% 98% 99%
Remaining components 40 38 (1) % (5) % 2% 2% 2% 1%
(F)
Total Reporting components 54 53 100% 100% 100% 100% 100% 100%
Notes
(A) The Group audit risk in relation to tax was subject to audit procedures at each of the full scoped locations.
(B) The specific scope components relate to three trading components.
(C) The Group audit risk in relation to aspects of revenue recognition: completeness and measurement of programmes and arrangements with customers recorded as
deductions from revenue was subject to full audit procedures in eight components and specified procedures at two components.
(D) The Group audit risk in relation to carrying value of goodwill and intangible assets was subject to audit procedures across the Group performed by the Group audit team.
(E) The audit scope of these components may not have included testing of all significant accounts of the component but will have contributed to the coverage of significant
accounts tested for the Group. Significant accounts that were not subject to the specific or specified procedures scope audit were subjected to testing of Group-wide
controls and analytical review.
(F) Of the remaining 40 components that together represent (1)% of the Group’s profit before tax, none are individually greater than 5% of the Group’s profit before tax. These
components primarily record administrative expenses across the Group, thus there is an aggregated (1)% impact on profit before tax. For the remaining components in this
category, we performed other procedures, including testing of Group-wide controls, analytical review procedures, testing of consolidation journals, and intercompany
eliminations to respond to any potential risks of material misstatement to the Group financial statements.
116
This page does not form part of the Coca-Cola European Partners plc Annual Report on Form 20-F for the year ended 31 December 2020 as filed with the SEC.
Changes from the prior year
The change in the total number of reporting components from 53 to 54 represents the set up of one new
component during 2020.
For our 2020 audit, we have changed the scope of a component previously audited as Specific scope to Specified
procedures scope. This change was made to focus our audit procedures on the only material balance within this
entity. In addition, one component which was assigned Specified procedures scope in prior year is now subject to
other procedures. This change was made as the component does not hold any material balances.
Involvement with component teams
In establishing our overall approach to the Group audit, we determined the type of work that needed to be
undertaken at each of the components by us, as the Group audit engagement team, or by component auditors from
other EY global network firms operating under our instruction. Of the six full scope components, audit procedures
were performed on five of these directly by the component audit teams. Of the eight specific and specified scope
components, five represented work performed directly by component auditors. For those audit procedures
performed directly by component audit teams, we engaged the appropriate level of involvement to enable us to
determine that sufficient audit evidence had been obtained as a basis for our opinion on the Group as a whole.
During the current audit cycle, our planned visits to component teams were cancelled due to the travel restrictions
arising from the COVID-19 pandemic. We performed alternative procedures, including virtual visits and live reviews of
our component audit teams’ working papers.
The Group audit team followed a programme that had been designed to ensure that the Senior Statutory Auditor
virtually visited all full scope audit locations at least once in the year, meeting with both EY component teams and
local management. During the current year’s audit cycle, virtual visits were undertaken by the Group audit team to
the component teams in Great Britain, France, Belgium, Spain and Germany. We also virtually visited the team in
Bulgaria, which is the shared service centre location, which contributed to the audits of a number of components.
The virtual visits used video technology and our global audit software to meet with our component teams to discuss
and direct their audit approach, reviewing relevant working papers and understanding the significant audit findings
in response to the risk areas including aspects of revenue recognition and taxation, holding meetings with local
management, and obtaining updates on local regulatory matters including tax, pensions, restructuring and legal. The
Group audit team interacted regularly with the component teams where appropriate during various stages of the
audit, reviewed relevant working papers and were responsible for the scope and direction of the audit process. This,
together with the additional procedures performed at Group level, gave us appropriate evidence for our opinion on
the Group financial statements. The Group audit team virtually attended all component audit closing meetings.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 117
This page does not form part of the Coca-Cola European Partners plc Annual Report on Form 20-F for the year ended 31 December 2020 as filed with the SEC.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified. These matters included 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 were addressed in the context of our audit of the financial statements as a whole, and in our opinion
thereon, and we do not provide a separate opinion on these matters.
Risk Our response to the risk
Key observations
communicated to the
AuditCommittee
Aspects of revenue recognition:
completeness and measurement of
programmes and arrangements with
customers recorded as deductions
fromrevenue
Refer to the Audit Committee Report
(page 87); Accounting policies (page 135).
The Group participates in various
programmes and arrangements with
customers referred to as “promotional
programmes”, which are recorded as
deductions from revenue. These totalled
€3.2billion for the year ended
31December2020 (2019:€3.2billion). The
types of programmes are more fully
described in Note 3 to the consolidated
financial statements with details about
accruals for the Group’s promotional
programmes disclosed in Note 14 to the
consolidated financial statements.
Auditing the completeness and
measurement of the accrued customer
marketing costs is judgemental, as
management makes estimates of sales
levels related to certain promotions to
determine the liability. The cost of these
promotional programmes is recognised as a
deduction from revenue.
In addition, we identified a fraud risk related
to manipulation of revenues through
manual and unusual adjustments to
revenue.
We performed full audit procedures over this matter in
sevencomponents which covered 88% of the Group balance.
We obtained an understanding, evaluated the design and tested the
operating effectiveness of controls, including IT controls, that address the
risks of material misstatement relating to the completeness and
measurement of the promotional programmes. We tested controls over
management’s determination of the accrued customer marketing costs,
as well as management’s determination of the accrued balances prior to
settling balances due to customers.
To test the completeness and measurement of deductions from revenue
and the associated unpaid accrued customer marketing costs, our
procedures included, among others, reviewing post-period end
settlements. We also performed an historical analysis of prior period
balance sheet amounts to amounts settled. We tested settlement of
promotional programmes balances throughout the year on a sample
basis.
To evaluate the specific estimations that are inherent in the calculation of
the accruals, we evaluated assumptions inherent in the calculation of the
accrual by comparing promotional programmes accruals to settlements
and to executed contracts. We tested the assumptions utilised in the
calculations, including consideration of any changes in the business
environment, such as the impact of COVID-19, that would warrant
changes in the methodology. We performed specific analytical
procedures around per unit rates to identify any potential outliers. We
also tested completeness and accuracy of the underlying data, including
the sales details.
We performed correlation analysis between revenue, accounts receivable,
and cash utilising journal data. Using the correlation, we tested that the
flow of transactions is in line with our expectations and identified and
tested unusual and unexpected journals which could be evidence of
management override of controls. We also performed correlation analysis
between promotional programmes expense, promotional programmes
accrual and settlements utilising testing of the flow of transactions and
unusual and unexpected journals. We obtained and inspected
documentation for any material unusual or unexpected journals which
were made.
We assessed management’s disclosure in respect of deductions from
revenue and sales incentives amounts recorded in the income statement
and statement of financial position.
Promotional programmes
are appropriately
recognised in the
consolidated income
statement and
consolidated statement of
financial position, and the
related disclosures
included in the financial
statements are
appropriate.
We concluded that
revenue was appropriately
recognised by the Group.
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Risk Our response to the risk
Key observations
communicated to the
AuditCommittee
Carrying value of goodwill and indefinite
lived intangibles
Refer to the Audit Committee Report
(page 87); Accounting policies (page 135).
At 31December2020, the carrying value of
the Group’s goodwill and indefinite lived
intangibles was €10.6billion
(2019:€10.7billion).
As discussed in Note 6 of the Consolidated
Financial Statements, goodwill and
indefinite lived intangibles are tested for
impairment at least annually, in the fourth
quarter or whenever there is an indication of
impairment. Goodwill is tested for
impairment at the Cash Generating
Unit(CGU) level.
Auditing management’s annual impairment
test was complex and judgemental as the
Directors’ assessment of value in use of the
Group’s CGUs involves judgement about the
future results of the business, including the
expected recovery from the impact of
COVID-19 during the projection period,
growth rates, operating profit margin, and
the discount rates applied to future cash
flow forecasts.
In particular, management’s impairment
models used to calculate the value in use
estimate were most sensitive to the
assumptions around discount rate across all
CGUs and the prospective financial
information for the Iberia and Germany
CGUs which were identified as high risk
CGUs.
The estimation uncertainty was primarily
due to the sensitivity of the underlying
assumptions which were applied by
management in the prospective financial
information for these CGUs, including the
projected expectations of the Group’s
ability to return to pre COVID-19 growth
levels. The significant assumptions used to
estimate the value of the identified
intangible assets included operating profit
margins, growth rates, and discount rates.
For the high risk CGUs the significant
assumptions also included revenue and
operating margin.
The risk has increased in the current year in
light of the COVID-19 pandemic and
greater uncertainty around prospective
financial information for those impacted
CGUs.
We obtained an understanding, evaluated the design and tested the
operating effectiveness of controls, including IT controls, in place within
the impairment review process. This included evaluating controls over the
Company’s budgetary and forecasting process used to develop the
estimated future earnings and cash flows used in estimating the fair value
of CGUs, including the impacts of COVID-19. We also tested controls over
management’s determination of the data used in their valuation models
and determination of the significant assumptions such as estimation of
discount rates, operating profit margin, and growth rates.
We performed audit procedures on the impairment models assessing the
methodologies, testing the assumptions used to develop the estimates of
future earnings and cash flows, particularly around the recovery from the
current year impact of COVID-19, and testing the completeness and
accuracy of the underlying data. We compared the assumptions used by
management to develop the discount rate and growth rate to current
industry and economic trends, and other guideline companies within the
same industry.
We involved our valuation specialists to assist in evaluating the valuation
methodology and testing the discount rates and growth rates and to
perform sensitivity analyses of these value-in-use calculations using the
discount rates at the highest end of our range.
We assessed the historical accuracy of management’s estimates and
forecasts and performed sensitivity analyses on the growth rates,
operating profit margin, and discount rates within the value in use
calculations for each CGU.
We performed further testing on the Iberia and Germany CGUs based on
size and lower headroom and because Iberia was most impacted by the
COVID-19 pandemic. For these CGUs we performed additional
procedures and sensitivity analyses on the projected financial information
to assess the impact on the headroom if there were changes in certain
assumptions, particularly the assumptions around management’s
expectations of the Company’s ability to return to pre COVID-19
operating profit margin levels, the discount rate, and the growth rate. We
also compared the projections within the discrete cash flow period to
external economic sources of information.
For Iberia we also assessed the breakeven point by evaluating a
combination of changes to the growth rate, the operating margin, and
discount rate. We assessed the related disclosures provided in the
consolidated financial statements on changes in certain variables that
could eliminate existing headroom.
We consider
management’s estimates
of value-in-use to be within
an acceptable range.
We agree with
management’s conclusion
that the value-in-use for
each CGU exceeds the
carrying values as of the
impairment testing date
and as of year end. An
assumption of the
economy returning to
normal is supported by
current economic
forecasts and is therefore
reasonable. Historic
performance in Iberia
shows the business should
return to normal.
An impairment would only
occur if the economy fails
to recover to
pre-pandemic levels.
We conclude that the
goodwill and indefinite
lived intangibles
disclosures in the notes to
the financial statements
are appropriate.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 119
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Risk Our response to the risk
Key observations
communicated to the
AuditCommittee
Taxation: accounting for uncertain
taxpositions
Refer to the Audit Committee Report
(page 87); Accounting policies (page 135).
The Group is subject to income tax in
numerous jurisdictions and is routinely
under audit by taxing authorities in the
ordinary course of business as described in
Note 20 and Note 22 of the consolidated
financial statements.
The potential outcomes of proceedings by
the taxing authorities is assessed by the
Group at the end of each reporting period
and adjustments are made based on any
new facts and circumstances that the
Group believes will affect the outcome of
the tax audit.
Auditing the uncertain tax positions,
including the potential tax associated with
the purchase of concentrate, was
challenging because the significant
estimation of the provision is based on
changing facts and circumstances and
involves a certain level of uncertainty that
may produce a number of different
outcomes or ranges of outcomes.
We obtained an understanding, evaluated the design and tested the
operating effectiveness of controls, including IT controls, in place to
evaluate the risks within the uncertain tax provision process.
To test the Company’s measurement of tax positions related to uncertain
tax positions:
•we involved tax teams with local knowledge to test the tax positions
taken by the Group in each significant jurisdiction in the context of local
tax law and significant tax assessments.
•we also verified our understanding of the relevant facts by reading and
evaluating the Group’s correspondence with the relevant tax authorities
and third-party advice and communication obtained by the Group.
•we also considered whether the Group’s tax risks had been resolved in
other EU jurisdictions with similar tax laws to those being reviewed in
CCEP’s territories.
We further assessed management’s positions by obtaining management’s
assessment of risk from legal proceedings in relation to the tax position
and obtained tax authorities correspondence where available to support
its position.
We virtually met and discussed key tax issues with the Group’s tax team,
component tax team and EY tax team in each jurisdiction where the
Group is subject to audit by tax authorities.
In evaluating the Group’s tax provisions, we developed our own range of
acceptable provisions for the Group’s tax exposures, based on evidence
we obtained. We then compared the Group’s provisions to our
independently determined range.
We also evaluated the related disclosures provided in the Group financial
statements.
We concluded that the
uncertain tax position
balances are appropriately
recognised by the Group.
We concluded that the
taxdisclosures provided in
the consolidated financial
statements are
appropriate.
There have been no changes to key audit matters since the prior year.
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified
misstatements on the audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic decisions
of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures.
We determined materiality for the Group to be €56.0 million (2019: €72.7 million), which is 5% of normalised profit
before taxation (2019: 5% of profit before taxation). We believe that profit before taxation provides us with the most
relevant performance measure to the stakeholders of Coca-Cola European Partners plc. The decrease of
€16.7million (23%) in Group materiality since 2019 reflects the reduction in profit before taxation driven principally by
the impact of COVID-19. We updated our approach to calculating materiality, moving to a normalised measure, to
reflect the volatility in the Group arising from the impact of COVID-19. We calculated normalised profits by
averaging the last three years of profit, which reflects the impact of COVID-19 whilst recognising the expected
return to more normal trading levels once lockdown restrictions are lifted.
We determined materiality for the Parent Company to be €151.9 million (2019: €149.5 million), which is 1% of
shareholders’ equity (2019: 1% of shareholders’ equity).
During the course of our audit, we reassessed initial materiality and adjusted the materiality based on actual results.
Had we used the same basis as 2019 our materiality would have been €34.8million.
Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the probability
that the aggregate of uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our
judgement was that performance materiality was 75% (2019: 75%) of our planning materiality, namely €42million
(2019: €54.5million). We reviewed any misstatements identified in our 2019 Group audit to assess their potential
recurrence in 2020 (which would affect the percentage of Group performance materiality we utilised to determine
the extent of our audit procedures). Based on the nature of the adjustments identified last year and the stabilised
structure of the finance environment within the Group, we concluded the likelihood of material misstatements would
remain low in the current year and, hence, we set performance materiality at 75%.
Audit work at component locations for the purpose of obtaining audit coverage over significant financial statement
accounts is undertaken based on a percentage of total performance materiality. The performance materiality set for
each component is based on the relative scale and risk of the component to the Group as a whole and our
assessment of the risk of misstatement at that component. In the current year, the range of performance materiality
allocated to components was €8.6million to €21.5million (2019: €10.2 million to €25.5 million).
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Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of
€2.8million (2019: €3.6million), which is set at 5% of planning materiality, as well as differences below that threshold
that, in our view, warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above
and in light of other relevant qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the annual report, including Strategic Report set out on
pages 1-61, Governance and Directors` report set out on pages 62-111, Other Group Information set out on
pages186-224, other than the financial statements and our auditor’s report thereon. The directors are responsible for
the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise
explicitly stated in this report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or
otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material misstatement in the financial statements
themselves. If, based on the work we have performed, we conclude that there is a material misstatement of the
other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared
inaccordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
• The information given in the strategic report and the directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
• The strategic report and the directors’ report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the Parent company and its environment
obtained in the course of the audit, we have not identified material misstatements in the strategic report or the
directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires
us to report to you if, in our opinion:
• Adequate accounting records have not been kept by the Parent company, or returns adequate for our audit have
not been received from branches not visited by us; or
• The parent company financial statements and the part of the Directors’ Remuneration Report to be audited are
not in agreement with the accounting records and returns; or
• Certain disclosures of directors’ remuneration specified by law are not made; or
• We have not received all the information and explanations we require for our audit
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 121
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Corporate governance statement
The Listing Rules require us to review the directors’ statement in relation to going concern, longer-term viability and
that part of the Corporate Governance Statement relating to the Group and Company’s compliance with the
provisions of the UK Corporate Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
Corporate Governance Statement is materially consistent with the financial statements or our knowledge obtained
during the audit:
• Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and
any material uncertainties identified set out on page 110;
• Directors’ explanation as to its assessment of the company’s prospects, the period this assessment covers and why
the period is appropriate set out on page 52;
• Directors’ statement on fair, balanced and understandable set out on page 111;
• Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on
page44;
• The section of the annual report that describes the review of effectiveness of risk management and internal
control systems set out on page 91; and;
• The section describing the work of the audit committee set out on pages 86-91.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 111, the directors are responsible
for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to enable the preparation of financial statements thatare
free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group and parent company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Group or the parent company or to
cease operations, or have 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
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud orerror and
are considered material if, individually or in the aggregate, they could reasonably be expected toinfluence the
economic decisions of users taken on the basis of these financial statements.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in
line with our responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a
material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may
involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
Theextent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
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However, the primary responsibility for the prevention and detection of fraud rests with both those charged with
governance of the company and management.
• We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and
determined that the most significant are:
– Those that relate to the reporting framework: International Financial Reporting Standards (IFRS),
International Accounting Standards in conformity with the requirements of the Companies Act 2006, the
UK Companies Act 2006 and the UK Corporate Governance Code;
– Those that relate to the accrual or recognition of expenses for taxation such as various country specific tax
codes in which the Group has operations; and
– Those that relate to the accrual or recognition of expenses for pension costs, as well as the treatment of its
employees, such as labour agreements in countries where the Group operates.
• We understood how the Group is complying with those frameworks by making enquiries of management, internal
audit, those responsible for legal and compliance procedures and the company secretary. We corroborated our
enquiries through our review of board minutes and papers provided to the Audit Committee and attendance at all
meetings of the Audit Committee, as well as consideration of the results of our audit procedures across the Group.
• Based on this understanding we designed our audit procedures to identify non-compliance with such laws and
regulations, including specific instructions to full and specific scope component audit teams. At a Group level, our
procedures involved: enquiries of Group management and those charged with governance, legal counsel and
internal audit. At a component level, our full and specific scope component audit team’s procedures included
enquiries of component management; journal entry testing; and focused testing, including as referred to in the
“Aspects of Revenue Recognition: completeness and measurement of programmes and arrangements with
customers recorded as deductions from revenue” key audit matters section above.
• We assessed the susceptibility of the Group’s financial statements to material misstatement including how fraud
may occur. We did this by meeting with management from various parts of the business to understand where they
considered there to be susceptibility to fraud; and assessing whistleblowing incidences for those with a potential
financial reporting impact. We also considered performance targets and their propensity to influence on efforts
made by management to manage revenue and earnings. We considered the controls framework that the Group
has established to address risks identified and how management monitors these controls. Where the risk was
considered to be higher, we performed audit procedures to address identified risks of material misstatement.
These procedures included those on “Aspects of Revenue Recognition: completeness and measurement of
programmes and arrangements with customers recorded as deductions from revenue” detailed above and testing
manual journals. Our procedures were designed to provide reasonable assurance that the financial statements are
free from material misstatements, whether due to fraud or error.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’sreport.
Other matters we are required to address
• Following the recommendation from the audit committee we were appointed by the company on 22 June 2016 to
audit the financial statements for the year ending 31 December 2016 and subsequent financial periods.
• The period of total uninterrupted engagement including previous renewals and reappointments is five years,
covering the years ending 31December2016 to 31December2020.
• The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or the Parent
Company and we remain independent of the Group and the Parent Company in conducting the audit.
• The audit opinion is consistent with the additional report to the Audit Committee.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members
thosematters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s
members as a body, for our audit work, for this report, or for the opinions we have formed.
Karl Havers (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
12 March 2021
Notes
(A) The maintenance and integrity of the Coca-Cola European Partners plc web site 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 web site.
(B) Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 123
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Report of independent registered
publicaccountingfirm
To the Shareholders and the Board of Directors of Coca-Cola European Partners plc
Opinion on the financial statements
We have audited the accompanying consolidated statements of financial position of Coca-Cola European Partners
plc (the Company) as of 31 December 2020 and 2019, the related consolidated statements of income,
comprehensive income, statement of changes in equity and cash flows for each of the three years in the period
ended 31 December 2020 and the related notes (collectively referred to as the consolidated financial statements).
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of
the Company at 31 December 2020 and 2019, and the results of its operations and its cash flows for each of the
three years in the period ended 31 December 2020, in conformity with International Financial Reporting Standards
as issued by the International Accounting Standards Board.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(UnitedStates) (PCAOB), the Company's internal control over financial reporting as of 31 December 2020, based on
criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (2013 framework) and our report dated 12 March 2021 expressed an unqualified
opinion thereon.
Basis for opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our opinion.
Critical audit matters
The critical audit matters communicated below are matters arising from the current period audit of the financial
statements that were communicated or required to be communicated to the audit committee and that: (1)relate
to accounts or disclosures that are material to the financial statements and (2)involved our especially challenging,
subjective or complex judgements. The communication of critical audit matters does not alter in any way our
opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical
audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to
which they relate.
124
Completeness and measurement of programmes and arrangements with customers recorded as deductions
fromrevenue
Description of the matter The Company participates in various programmes and arrangements with customers, referred to as “promotional
programmes”, which are recorded as deductions from revenue. These totalled €3.2 billion for the year ended
31December2020. The types of promotional programmes are more fully described in Note 3 to the consolidated
financial statements with details about accruals for the Company’s customer marketing costs disclosed in Note 14 to
the consolidated financial statements.
Auditing the completeness and measurement of the accrued marketing costs was judgemental due to the level of
subjectivity and uncertainty involved in management’s estimates of sales levels related to certain promotions that are
used to determine the liability. The cost of these promotional programmes was recognised as a deduction from
revenue.
How we addressed the
matter in our audit
We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls, including IT
controls, that address the risks of material misstatement relating to the completeness and measurement of the
promotional programmes. For example, we tested controls over management’s determination of the accrued
customer marketing costs, including sales estimates, and management’s determination of the accrued balances prior
to settling balances due to customers.
To test the completeness and measurement of deductions from revenue and the associated unpaid accrued
customer marketing costs, our audit procedures included, among others, comparing post current period end
settlements to the accrual. We also performed an historical analysis of prior period balance sheet amounts to
amounts subsequently settled. We also tested settlement of promotional programme balances throughout the year
on a sample basis.
To evaluate the specific estimations that are inherent in the calculation of the accruals, we compared accrued
customer marketing costs to settlements and to executed contracts. We tested the assumptions utilised in the
calculations, including consideration of any changes in the business environment, such as the impact of COVID-19,
that would warrant changes in the methodology. We performed specific analytical procedures around per unit rates
to identify any potential outliers. We tested completeness and accuracy of the underlying data, including the sales
details. We also evaluated the related disclosures provided in the consolidated financial statements related to these
promotional programmes.
Carrying value of goodwill and indefinite lived intangibles
Description of the matter At 31 December 2020, the carrying value of the Company’s goodwill and indefinite lived intangibles was
€10,595million. As discussed in Note 6 of the consolidated financial statements, goodwill and indefinite lived
intangibles are tested for impairment at least annually, in the fourth quarter or whenever there is an indication of
impairment. Goodwill is tested for impairment at the Cash Generating Unit (CGU) level.
Auditing management’s annual impairment test was complex and judgemental as the Directors’ assessment of value
in use of the Company’s CGUs involves judgement about the future results of the business, including the expected
recovery from the impact of COVID-19 during the projection period, growth rates, operating profit margin, and the
discount rates applied to future cash flow forecasts. In particular, management’s impairment models used to
calculate the value in use estimate were most sensitive to the assumption around the extent and duration of the
impact of the COVID-19 pandemic on the Company’s operations. For those CGUs with lower headroom between the
value in use and the carrying value, the determination of projections and these applicable rates were considered to be
more judgemental.
How we addressed the
matter in our audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls, including IT
controls, in place within the impairment review process. This included evaluating controls over the Company’s
budgetary and forecasting process used to develop the estimated future earnings and cash flows used in estimating
the fair value of CGUs, including the impacts of COVID-19. We also tested controls over management’s determination
of the data used in their valuation models and determination of the significant assumptions such as estimation of
discount rates, operating profit margin and growth rates.
We performed audit procedures on the impairment models such as assessing the methodologies, testing the
assumptions discussed above used to develop the estimates of future earnings and cash flows, particularly around the
recovery from the current year impact of COVID-19, and testing the completeness and accuracy of the underlying
data. We compared the assumptions used by management to develop the discount rate and growth rate to current
industry and economic trends, and other guideline companies within the same industry. We involved our valuation
specialists to assist in evaluating the valuation methodology and testing the discount rates and growth rates, and to
perform sensitivity analysis of these value in use calculations using the discount rates at the highest end of our range.
We assessed the historical accuracy of management’s estimates and forecasts and performed sensitivity analyses on
the growth rates, operating profit margin, and discount rates within the value in use calculations for each CGU.
We performed further testing on the Iberia and Germany CGUs, based on size and lower headroom, and because the
Iberia CGU was most impacted by the COVID-19 pandemic. For these CGUs we performed additional procedures and
sensitivity analyses on the projected financial information to assess the impact on the headroom if there were
changes in certain assumptions, particularly the assumptions around management’s expectations of the Company’s
ability to return to pre COVID-19 operating profit margin levels, the discount rate, and the growth rate. We also
compared the projections within the discrete cash flow period to external economic sources of information. For Iberia
we also assessed the breakeven point by evaluating a combination of changes to the growth rate, the operating
profit margin, and discount rate. We assessed the related disclosures provided in the consolidated financial
statements on changes in certain variables that could eliminate existing headroom.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 125
Accounting for uncertain tax positions and related disclosures
Description of the matter The Company is subject to income tax in numerous jurisdictions and is routinely under audit by taxing authorities in
the ordinary course of business as described in Note 20 and Note 22 of the consolidated financial statements. The
potential outcomes of proceedings by the taxing authorities are assessed by the Company at the end of each
reporting period and adjustments are made based on any new facts and circumstances that the Company believes
will affect the outcome of the tax audit.
Auditing the uncertain tax positions, including the potential tax associated with the purchase of concentrate, was
challenging because the significant estimation of the provision is based on changing facts and circumstances and
involves a certain level of uncertainty that may produce a number of different outcomes or ranges of outcomes.
How we addressed the
matter in our audit
We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls in place to
evaluate the risks within the uncertain tax provision process.
To test the Company’s measurement of tax positions, we involved tax professionals with local knowledge to assess the
tax positions taken by the Company in each significant jurisdiction in the context of local tax law and significant tax
assessments. We also obtained an understanding of relevant facts by reading and evaluating the Company’s
correspondence with the relevant tax authorities and third party advice and communication obtained by the
Company. We also considered whether the Company’s tax risks had been resolved in other EU jurisdictions with similar
tax laws to those being reviewed in the Company’s territories.
In evaluating the Company’s tax provisions, we developed our own range of acceptable provisions for the Company’s
tax exposures, based on evidence we obtained. We then compared the Company’s provisions to our independently
determined range. We also evaluated the related disclosures provided in the consolidated financial statements
related to these tax matters.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2016.
London, United Kingdom
12 March 2021
126
Report of independent registered
publicaccountingfirm
To the Shareholders and the Board of Directors of Coca-Cola European Partners plc
Opinion on internal control over financial reporting
We have audited Coca-Cola European Partners plc’s internal control over financial reporting as of
31December2020, based on criteria established in Internal Control-Integrated Framework issued by the
Committeeof Sponsoring Organizations of the Treadway Commission (2013 framework), (the COSO criteria).
Inour opinion, Coca-Cola European Partners plc (the Company) maintained, in all material respects, effective
internal control over financial reporting as of 31December2020, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board(United
States) (PCAOB), the consolidated statement of financial position of the Company as of 31December2020 and
2019, the related consolidated statements of income, comprehensive income, statement ofchanges in equity and
cash flows for each of the three years in the period ended 31December2020 and the related notes and our report
dated 12March2021 expressed an unqualified opinion thereon.
Basis for opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and
for its assessment of the effectiveness of internal control over financial reporting included in the accompanying
Management’s report on internal control over financial reporting. Our responsibility is to express an opinion on the
Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered
with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting
was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on
the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.
Definition and limitations of internal control over financial reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes
inaccordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1)pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2)provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorisations of management and directors of the company; and (3)provide reasonable
assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition ofthe company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
/s/ Ernst & Young LLP
London, United Kingdom
12 March 2021
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 127
Consolidated income statement
Year ended
31December2020 31December2019 31December2018
Note € million € million € million
Revenue
10,606 12,017 11,518
Cost of sales 17 (6,871) (7,424) (7,060)
Gross profit 3,735 4,593 4,458
Selling and distribution expenses 17 (1,939) (2,258) (2,178)
Administrative expenses 17 (983) (787) (980)
Operating profit 813 1,548 1,300
Finance income 18 33 49 47
Finance costs 18 (144) (145) (140)
Total finance costs, net (111) (96) (93)
Non-operating items (7) 2 (2)
Profit before taxes 695 1,454 1,205
Taxes 20 (197) (364) (296)
Profit after taxes 498 1,090 909
Basic earnings per share (€) 5 1.09 2.34 1.88
Diluted earnings per share (€) 5 1.09 2.32 1.86
The accompanying notes are an integral part of these consolidated financial statements.
128
Consolidated statement of
comprehensiveincome
Year ended
31December2020 31December2019 31December2018
Note € million € million € million
Profit after taxes 498 1,090 909
Components of other comprehensive income (loss):
Items that may be subsequently reclassified to the income statement:
Foreign currency translations:
Pretax activity, net
(125) 94 (35)
Tax effect
— — —
Foreign currency translation, net of tax (125) 94 (35)
Cash flow hedges:
Pretax activity, net
33 11 (17)
Tax effect
4 (2) 3
Cash flow hedges, net of tax 12, 20 37 9 (14)
(88) 103 (49)
Items that will not be subsequently reclassified to the income statement:
Pension plan remeasurements:
Pretax activity, net
(71) (79) 2
Tax effect
16 12 —
Pension plan remeasurements, net of tax 15, 20 (55) (67) 2
(55) (67) 2
Other comprehensive (loss)/ income for the period, net of tax (143) 36 (47)
Comprehensive income for the period 355 1,126 862
The accompanying notes are an integral part of these consolidated financial statements.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 129
Consolidated statement
of financial position
31December2020 31December2019
Note € million € million
ASSETS
Non-current:
Intangible assets 6 8,414 8,506
Goodwill 6 2,517 2,520
Property, plant and equipment 7 3,860 4,205
Non-current derivative assets 12 6 3
Deferred tax assets
20
27 27
Other non-current assets 23
337 321
Total non-current assets 15,161 15,582
Current:
Current derivative assets 12 40 12
Current tax assets 20 19 18
Inventories 8 681 723
Amounts receivable from related parties 19 150 106
Trade accounts receivable 9 1,439 1,669
Other current assets 23 224 259
Cash and cash equivalents 10 1,523 316
Total current assets 4,076 3,103
Total assets 19,237 18,685
LIABILITIES
Non-current:
Borrowings, less current portion 13 6,382 5,622
Employee benefit liabilities 15 283 221
Non-current provisions 22 83 54
Non-current derivative liabilities 12 15 13
Deferred tax liabilities 20 2,134 2,203
Non-current tax liabilities 20 131 254
Other non-current liabilities 44 47
Total non-current liabilities 9,072 8,414
Current:
Current portion of borrowings 13 805 799
Current portion of employee benefit liabilities 15 13 17
Current provisions 22 154 142
Current derivative liabilities 12 62 28
Current tax liabilities 20 171 95
Amounts payable to related parties 19 181 249
Trade and other payables 14 2,754 2,785
Total current liabilities 4,140 4,115
Total liabilities 13,212 12,529
EQUITY
Share capital 16 5 5
Share premium 16 192 178
Merger reserves 16 287 287
Other reserves 16 (537) (449)
Retained earnings 6,078 6,135
Total equity 6,025 6,156
Total equity and liabilities 19,237 18,685
The accompanying notes are an integral part of these consolidated financial statements.
The financial statements were approved by the Board of Directors and authorised for issue on 12 March 2021.
Theywere signed on its behalf by:
Damian Gammell, Chief Executive Officer
12 March 2021
130
Consolidated statement of cash flows
Year ended
31December2020 31December2019 31December2018
Note € million € million € million
Cash flows from operating activities:
Profit before taxes
695 1,454 1,205
Adjustments to reconcile profit before tax to net cash flows from operating
activities:
Depreciation
7
665 587 461
Amortisation of intangible assets
6
62 52 51
Share-based payment expense
21
14 15 17
Finance costs, net
18
111 96 93
Income taxes paid (273) (270) (263)
Changes in assets and liabilities:
Decrease in trade and other receivables
208 5 72
Decrease/(increase) in inventories
34 (25) (45)
Increase/(decrease) in trade and other payables
53 (63) 297
(Decrease)/increase in net payable receivable from related parties
(112) 59 (20)
Increase/(decrease) in provisions
43 (57) 9
Change in other operating assets and liabilities
(10) 51 (71)
Net cash flows from operating activities
1,490 1,904 1,806
Cash flows from investing activities:
Purchases of property, plant and equipment
(348) (506) (525)
Purchases of capitalised software
(60) (96) (75)
Proceeds from sales of property, plant and equipment
49 11 4
Investments in equity instruments
(11) (8) —
Net cash flows used in investing activities
(370) (599) (596)
Cash flows from financing activities:
Proceeds from borrowings, net
13
1,598 987 398
Changes in short-term borrowings
13
(221) 101 (131)
Repayments on third party borrowings
13
(569) (625) (426)
Payments of principal on lease obligations
13
(116) (128) (18)
Interest paid, net
(91) (86) (81)
Dividends paid
16
(386) (574) (513)
Purchase of own shares under share buyback programme
16
(129) (1,005) (502)
Exercise of employee share options
14 26 25
Other financing activities, net
— 2 (11)
Net cash flows used in financing activities
100 (1,302) (1,259)
Net change in cash and cash equivalents
1,220 3 (49)
Net effect of currency exchange rate changes on cash and cash equivalents
(13) 4 (2)
Cash and cash equivalents at beginning of period
10
316 309 360
Cash and cash equivalents at end of period
10
1,523 316 309
The accompanying notes are an integral part of these consolidated financial statements.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 131
Consolidated statement
of changes in equity
Share
capital
Share
premium
Merger
reserves
Other
reserves
Retained
earnings
Total
equity
Note
€ million € million € million € million € million € million
As at 1 January 2018 5 127 287 (503) 6,769 6,685
Profit after taxes — — — — 909 909
Other comprehensive (expense)/income — — — (49) 2 (47)
Total comprehensive income — — — (49) 911 862
Issue of shares during the year 16 — 25 — — — 25
Equity-settled share-based payment expense 21 — — — — 16 16
Share-based payment tax benefits 20 — — — — (7) (7)
Dividends 16 — — — — (515) (515)
Own shares purchased under share buyback programme — — — — (502) (502)
As at 31 December 2018 5 152 287 (552) 6,672 6,564
Profit after taxes — — — — 1,090 1,090
Other comprehensive income/(expense) — — — 103 (67) 36
Total comprehensive income — — — 103 1,023 1,126
Issue of shares during the year 16 — 26 — — — 26
Equity-settled share-based payment expense 21 — — — — 13 13
Share-based payment tax effects 20 — — — — 6 6
Dividends 16 — — — — (574) (574)
Own shares purchased under share buyback programme — — — — (1,005) (1,005)
As at 31 December 2019 5 178 287 (449) 6,135 6,156
Profit after taxes — — — — 498 498
Other comprehensive expense — — — (88) (55) (143)
Total comprehensive income — — — (88) 443 355
Issue of shares during the year 16 — 14 — — — 14
Equity-settled share-based payment expense 21 — — — — 14 14
Share-based payment tax effects 20 — — — — 2 2
Dividends 16 — — — — (387) (387)
Own shares purchased under share buyback programme 16 — — — — (129) (129)
As at 31 December 2020 5 192 287 (537) 6,078 6,025
The accompanying notes are an integral part of these consolidated financial statements.
132
Notes to the consolidated
financialstatements
Note 1
General information and basis of preparation
Coca-ColaEuropeanPartnersplc (the Company or Parent Company) was created through the merger on
28May2016 of the businesses of Coca-ColaEnterprises,Inc. (CCE), Coca-ColaIberianPartners,S.A. (CCIP) and
Coca-ColaErfrischungsgetränkeGmbH (CCEG) (the Merger). The Company and its subsidiaries (together CCEP,
orthe Group) are a leading consumer goods group in Western Europe, making, selling and distributing an extensive
range of non-alcoholic ready to drink beverages. The Group is the world’s largest independent Coca-Cola bottler
based on revenue. CCEP serves a consumer population of over 300 million across Western Europe, including
Andorra, Belgium, continental France, Germany, Great Britain, Iceland, Luxembourg, Monaco, theNetherlands,
Norway, Portugal, Spain and Sweden.
The Company has ordinary shares with a nominal value of €0.01pershare (Shares). CCEP is a public company limited
by shares, incorporated under the laws of England and Wales with the registered number in England of9717350.
TheGroup’s Shares are listed and traded on Euronext Amsterdam, the New York Stock Exchange, London Stock
Exchange and on the Spanish Stock Exchanges. The address of the Company’s registered office
isPembertonHouse, BakersRoad, Uxbridge, UB81EZ, United Kingdom.
The consolidated financial statements of the Group for the year ended 31December2020 were approved
andsigned by DamianGammell, ChiefExecutiveOfficer on 12 March 2021 having been duly authorised to do so by
the Board of Directors.
Impact of COVID-19 pandemic
The COVID-19 pandemic and related response measures have had and may continue to have an adverse effect on
global economic conditions, as well as our business, results of operations, cash flows and financial condition. At this
time, we cannot predict the degree to which, or the time period over which, our business will continue to be affected
by COVID-19 and the related response measures. These impacts limit the comparability ofthese consolidated
financial statements with prior periods.
In addition, as part of the preparation of these consolidated financial statements, we have considered the impact
ofCOVID-19 on our accounting policies and judgements and estimates. The key accounting impacts and
considerations for the Group are included in the relevant notes herein.
Proposed acquisition of Coca-Cola Amatil Limited
In November 2020, CCEP and Coca-Cola Amatil Limited (CCL) entered into a binding Scheme Implementation
Deed (the Scheme) for the acquisition of 69.2% of the entire existing issued share capital of CCL, which is held
byshareholders other than The Coca-Cola Company (TCCC). CCL is one of the largest bottlers and distributors
ofready to drink non-alcoholic and alcoholic beverages and coffee in the Asia Pacific region and is the authorised
bottler and distributor of TCCC's beverage brands in Australia, New Zealand, Fiji, Indonesia, Papua New Guinea
andSamoa. Based on a best and final offer made by CCEP in February 2021, the independent shareholders of CCL
will be entitled to receive A$13.50 per share in cash, upon implementation of the Scheme. CCEP has also entered
into a Co-operation and Sale Deed with TCCC with respect to the acquisition of TCCC's 30.8% interest in CCL
(the Co-operation agreement), conditional upon the implementation of the Scheme. Under the Co-operation
agreement CCEP will acquire 10.8% of CCL shares from TCCC for A$9.57 per share in cash and the remaining 20%
shareholding for A$10.75 per share, either in cash or a combination of cash and the issue of CCEP shares at an
agreed conversion ratio that will be determined no later than 14 days before the meeting of shareholders of CCL
toapprove the Scheme. The Scheme remains subject to customary conditions, including CCL's independent
shareholder approval, court approval and regulatory approval.
The Scheme approval meeting is expected to take place during April 2021 and, if approved, the implementation
date is expected during May 2021. Upon implementation CCEP will be required to pay cash consideration of
between A$7.4bn and A$9.0bn to CCL shareholders, depending on the election to acquire TCCC’s remaining 20%
shareholding in CCL. CCEP intends to fund the proposed acquisition through a combination of new external
borrowings and existing cash. To mitigate the currency risk exposure, the Group has entered into anumber of deal
contingent foreign currency forwards as detailed further in Note 12.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 133
Basis of preparation
These consolidated financial statements reflect the following:
• They have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board(IASB), IFRS as adopted pursuant to Regulation (EC) No 1606/2002 as it
applies within the European Union (EU) and in accordance with international accounting standards in conformity
with the provisions of the UKCompaniesAct2006 (the Companies Act). There are no differences between IFRS as
adopted pursuant to Regulation (EC) No 1606/2002 as it applies within the EU and IFRS as issued by the IASB that
have an impact for the years presented.
• They have been prepared under the historical cost convention, except for certain items measured at fair value.
Those accounting policies have been applied consistently in all periods, except for the adoption of new standards
and amendments as of 1January2020, as described below under accounting policies.
• They are presented in euros, which is also the Parent Company’s functional currency and all values are rounded
tothe nearest € million except where otherwise indicated.
• They have been prepared on a going concern basis (refer to page 110).
Basis of consolidation
The consolidated financial statements comprise the financial statements of the Group and its subsidiaries.
Allsubsidiaries have accounting years ended 31 December and apply consistent accounting policies for the purpose
of the consolidated financial statements.
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. The Group controls an entity when
it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect
those returns through the Group’s power to direct the activities of the entity. All intercompany accounts and
transactions are eliminated on consolidation.
Associates are all entities over which the Group has significant influence but not control, generally accompanying
ashareholding of between 20% to 50% of voting rights. Investments in associates are accounted for using the equity
method of accounting, after initially being recognised at cost.
Foreign currency
The individual financial statements of each subsidiary are presented in the currency of the primary economic
environment in which the subsidiary operates (its functional currency). For the purpose of the consolidated financial
statements, the results and financial position of each subsidiary are expressed in euros.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing atthe
dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are remeasured to the
functional currency of the entity at the rate of exchange in effect at the statement of financial position date with
the resulting gain or loss recorded in the consolidated income statement. The consolidated income statement
includes non-operating items which are primarily made up of remeasurement gains and losses related to currency
exchange rate fluctuations on financing transactions denominated in a currency other than the subsidiary’s
functional currency. Non-operating items are shown on a net basis and reflect the impact of any derivative
instruments utilised to hedge the foreign currency movements of the underlying financing transactions.
The assets and liabilities of the Group's foreign operations are translated from local currencies to the euro reporting
currency at currency exchange rates in effect at the end of each reporting period. Revenues and expenses are
translated at average monthly currency exchange rates, with average rates being a reasonable approximation of
therates prevailing on the transaction dates. Gains and losses from translation are included inother comprehensive
income. On disposal of a foreign operation, accumulated exchange differences are recognised as a component
ofthe gain or loss on disposal.
134
The principal exchange rates used for translation purposes in respect of one Euro were:
Average for the year ended Closing as at
31December2020 31December2019 31December2018 31December2020 31December2019
UK Sterling 1.13 1.14 1.13 1.11 1.18
US Dollar 0.88 0.89 0.85 0.81 0.89
Norwegian Krone 0.09 0.10 0.10 0.10 0.10
Swedish Krone 0.10 0.09 0.10 0.10 0.10
Icelandic Krone 0.01 0.01 0.01 0.01 0.01
Reporting periods
In these consolidated financial statements, the Group is reporting the financial results for the years ended
31December2020, 31December2019 and 31December2018.
Typically, sales of the Group’s products are seasonal, with the second and third quarters accounting for higher
unitsales of theGroup’s products than the first and fourth quarters. The seasonality of the Group’s sales volume,
combined with the accounting for fixed costs such as depreciation, amortisation, rent and interest expense, impacts
the Group’s reported results for the first and second halves of the year. Additionally, year over year shifts in holidays,
selling days and weather patterns can impact the Group’s results on an annual or half yearly basis.
During 2020, COVID-19 and related response measures, particularly during the second quarter, significantly
impacted the normal seasonality of our business.
The following table summarises the number of selling days for the years ended 31December2020,
31December2019 and 31December2018 (based on a standard five day selling week):
First Half Second Half Full Year
2020 128 134 262
2019
129 132 261
2018
130 131 261
Note 2
Accounting policies
The accounting policies applied by the Group are included in the relevant notes herein. Effective 1January2020, the
Group implemented the following new accounting policies, following changes in the related accounting standards.
Refer to Note 25 for other significant accounting policies.
Amendments to IFRS 7, IFRS 9 and IAS 39: Interest Rate Benchmark Reform
The amendments to IFRS 9 and IAS 39, “Financial Instruments: Recognition and Measurement” provide temporary
relief from applying specific hedge accounting requirements to hedging relationships directly affected by interest
rate benchmark reform. A hedging relationship is affected if the reform gives rise to uncertainty about the timing
and/or amount of benchmark-based cash flows of the hedged item or the hedging instrument.
These amendments had no impact on the consolidated financial statements of the Group.
Amendments to IFRS 16: COVID-19-Related Rent Concessions
On 28 May 2020, the IASB issued “COVID-19-Related Rent Concessions”, which amended IFRS 16, “Leases”.
Theamendment permits lessees, as a practical expedient, not to assess whether particular rent concessions
occurring as a direct consequence of COVID-19 are lease modifications and instead to account for those rent
concessions asif they are not lease modifications. The amendment applied to annual reporting periods beginning
on or after 1June 2020, however earlier application was permitted.
These amendments had no impact on the consolidated financial statements of the Group as the Group did not
receive any rent concessions as a direct consequence of COVID-19.
Definition of Material: Amendments to IAS 1 and IAS 8
The IASB has made amendments to IAS 1 “Presentation of Financial Statements” and IAS 8 “Accounting Policies,
Changes in Accounting Estimates and Errors”, effective 1 January 2020, which use a consistent definition of
materiality throughout International Financial Reporting Standards and the Conceptual Framework for Financial
Reporting, clarify when information is material and incorporate some of the guidance in IAS 1 about immaterial
information.
The amendments to the definition of material did not have a significant impact on the Group’s consolidated
financial statements.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 135
Amendments to IFRS 3: Definition of a Business
The amended definition of a business, effective 1 January 2020, requires an acquisition to include an input and
asubstantive process that together significantly contribute to the ability to create outputs. The definition of the
term “outputs” is amended to focus on goods and services provided to customers, generating investment income
and other income, and it excludes returns in the form of lower costs and other economic benefits.
This amendment had no impact on the consolidated financial statements of the Group, but may impact future
periods should the Group enter into any business combinations.
Note 3
Significant judgements and estimates
The preparation of these consolidated financial statements requires management to make judgements, estimates
and assumptions that affect the application of accounting policies and the reported amounts of assets and
liabilities, income and expense. Actual results may differ from these estimates. The significant judgements made
inapplying the Group’s accounting policies were applied consistently across the annual periods. The significant
judgements and key sources of estimation uncertainty that have a significant effect on the amounts recognised
inthese financial statements are outlined below.
Significant estimates
Deductions from revenue and sales incentives
The Group participates in various promotional programmes with customers designed to increase the sale of
products. Among the programmes are arrangements under which rebates, refunds, price concessions or similar
items can be earned by customers for attaining agreed upon sales levels, or for participating in specific marketing
programmes. Those promotional programmes do not give rise to a separate performance obligation. Where the
consideration the Group is entitled to varies because of such programmes, the amount payable is deemed to
bevariable consideration. Management makes estimates on an ongoing basis for each individual promotion
toassessthe value of the variable consideration based upon historical customer experience, expected customer
performance and/or estimated sales volumes. The related accruals are recognised as a deduction from revenue
andare not considered distinct from the sale of products to the customer. Refer to Note 14 for further details.
Income tax
The Group is subject to income taxes in numerous jurisdictions and there are many transactions for which the
ultimate tax determination cannot be assessed with certainty in the ordinary course of business. The Group
recognises a provision for situations that might arise in the foreseeable future based on an assessment of
theprobabilities as to whether additional taxes will be due. In addition, the Group is involved in various legal
proceedings and tax matters. Where an outflow of funds is believed to be probable and a reliable estimate of the
outcome of the dispute can be made, management provides for its best estimate of the liability. Where the final
outcome on these matters is different from the amounts that were initially recorded, such differences impact
thetax provision in the period in which such determination is made. These estimates are subject to potential
changeover time as new facts emerge and each circumstance progresses. The evaluation of deferred tax asset
recoverability requires estimates to be made regarding the availability of future taxable income in the jurisdiction
giving rise to the deferred tax asset. Refer to Note 20 for further details regarding income taxes.
Intangible assets and goodwill
Determining whether goodwill and intangible assets with indefinite lives are impaired requires an estimation of the
value in use or the fair value less costs to sell of the cash generating unit (CGU) to which the goodwill or intangible
asset has been allocated. The value in use calculation requires management’s estimation of the future cash flows
expected to arise from the CGU, including the impact of COVID-19. Refer to Note 6 for the sensitivity analysis of the
assumptions used in the impairment analysis of goodwill and intangible assets with indefinite lives.
Defined benefit plans
The determination of pension benefit costs and obligations are estimated based on assumptions determined with
the assistance of external actuarial advice. The key assumptions impacting the valuations are the discount rate,
salary rate of inflation and mortality rates. Refer to Note 15 for further details about the Group’s defined benefit
pension plan costs and obligations.
Significant judgements
Intangible assets and goodwill
The Group has assigned indefinite lives to its bottling agreements with TCCC. This judgement has been made after
evaluating the contractual provisions of the bottling agreements, the Group’s mutually beneficial relationship with
TCCC and the history of renewals for bottling agreements. Refer to Note 6 forfurther details on the judgement
regarding the lives of bottling agreements.
136
Note 4
Segment information
Description of segment and principal activities
The Group evaluates its segmental reporting under IFRS8, “Operating Segments”. The Group derives its revenues
through a single business activity, which is making, selling and distributing non-alcoholic ready to drink beverages.
The Group operates solely in developed markets in WesternEurope and has a homogenous product portfolio across
its geographic territories. Based on the governance structure of the Group, including decision making authority and
oversight, the Group has determined that the Board is its Chief Operating Decision Maker (CODM). The Board, as
the CODM, allocates resources and evaluates performance at a consolidated level and, therefore, theGroup has one
operating segment.
No single customer accounted for more than 10% of the Group’s revenue during the years ended 31December2020,
31December2019 and 31December2018.
Revenue by geography
The following table summarises revenue from external customers by geography, which is based on the origin
ofthe sale:
Year ended
31December2020 31December2019 31December2018
Revenue: € million € million € million
Iberia
(A)
2,173 2,784 2,670
Germany 2,270 2,432 2,335
Great Britain 2,203 2,412 2,280
France
(B)
1,709 1,897 1,775
Belgium/Luxembourg 892 1,002 983
Netherlands 529 602 580
Norway 423 437 439
Sweden 337 366 365
Iceland 70 85 91
Total 10,606 12,017 11,518
(A) Iberia refers to Spain, Portugal and Andorra.
(B) France refers to continental France and Monaco.
Assets by geography
Assets are allocated based on operations and physical location. The following table summarises non-current assets,
other than financial instruments and deferred tax assets, by geography:
31December2020 31December2019
Assets: € million € million
Iberia
(A)
6,696 6,797
Germany 3,138 3,216
Great Britain 2,432 2,587
France
(B)
920 922
Belgium/Luxembourg 621 656
Netherlands 441 457
Sweden 396 396
Norway 233 261
Iceland 31 36
Other unallocated 220 224
Total 15,128 15,552
(A) Iberia refers to Spain, Portugal and Andorra.
(B) France refers to continental France and Monaco.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 137
Note 5
Earnings per share
Basic earnings per share is calculated by dividing profit after taxes by the weighted average number of Shares in
issue and outstanding during the period. Diluted earnings per share is calculated in a similar manner, but includes
the effect of dilutive securities, principally share options, restricted stock units and performance share units.
Share‑based payment awards that are contingently issuable upon the achievement of specified market and/or
performance conditions are included in the diluted earnings per share calculation based on the number of Shares
that would be issuable if the end of the period was the end of the contingency period.
The following table summarises basic and diluted earnings per share calculations for the years presented:
Year ended
31December2020 31December2019 31December2018
Profit after taxes attributable to equity shareholders (€ million) 498 1,090 909
Basic weighted average number of Shares in issue
(A)
(million) 455 466 484
Effect of dilutive potential Shares
(B)
(million) 1 3 4
Diluted weighted average number of Shares in issue
(A)
(million) 456 469 488
Basic earnings per share (€) 1.09 2.34 1.88
Diluted earnings per share (€) 1.09 2.32 1.86
(A) As at 31December2020, 31December2019 and 31December2018 the Group had 454,645,510, 456,399,877 and 474,920,066 Shares, respectively, in issue and outstanding.
(B) For the year ended 31December2020, 31December2019 and 31December2018 no options to purchase Shares were excluded from the diluted earnings per share
calculation. The dilutive impact of all outstanding options, unvested restricted stock units and unvested performance share units was included in the effect of dilutive
securities.
Note 6
Intangible assets and goodwill
Intangible assets with indefinite lives
Intangible assets with indefinite lives acquired through business combination transactions are measured at fair value
at the date of acquisition. These assets are not subject to amortisation but are tested for impairment annually at the
CGU level or more frequently if facts and circumstances indicate an impairment may exist. In addition to the annual
impairment test, the assessment of indefinite lives is also reviewed annually.
Franchise intangible assets
The Group’s bottling agreements contain performance requirements and convey the rights to distribute and
sellproducts within specified territories. The Group’s agreements with TCCC for each of its territories have terms
of10years and expire on 28 May 2026, with each containing the right for the Group to request a 10 year renewal.
While these agreements contain no automatic right of renewal beyond that date, the Group believes that its
interdependent relationship with TCCC and the substantial cost and disruption to TCCC that would be caused by
non-renewal ensure that these agreements will continue to be renewed and, therefore, are essentially perpetual.
The Group has never had a bottling agreement with TCCC terminated due to non-performance of the terms of the
agreement or due to a decision by TCCC to terminate an agreement at the expiration of a term. After evaluating
the contractual provisions of bottling agreements, the Group’s mutually beneficial relationship with TCCC and
history of renewals, indefinite lives have been assigned to all of the Group’s franchise intangible assets.
Goodwill
Goodwill is initially measured as the excess of the total consideration transferred over the amount recognised for
net identifiable assets acquired and liabilities assumed in a business combination. If the fair value of the net assets
acquired is in excess of the aggregate consideration transferred, the gain is recognised in the consolidated income
statement as a bargain purchase. Goodwill is not subject to amortisation. It is tested annually for impairment atthe
CGU level or more frequently if events or changes in circumstances indicate that it might be impaired. Goodwill
acquired in a business combination is allocated to the CGU that is expected to benefit from the synergies of the
combination irrespective of whether a CGU is part of the business combination.
138
Intangible assets with finite lives
Intangible assets with finite lives are measured at cost of acquisition or production and are amortised using the
straight-line method over their respective estimated useful lives. Finite lived intangible assets are assessed for
impairment whenever there is an indication that they may be impaired. The amortisation period and method
arereviewed annually.
Internally generated software
The Group capitalises certain development costs associated with internally developed software, including external
direct costs of materials and services and payroll costs for employees devoting time to a software project and any
such software acquired as part of a business combination. Development expenditure is recognised as an intangible
asset only after its technical feasibility and commercial viability can be demonstrated. When capitalised software
isnot integral to related hardware it is treated as an intangible asset; otherwise it is included within property, plant
and equipment. The estimated useful life of capitalised software is between five and seven years. Amortisation
expense for capitalised software is included within administrative expenses and was €54 million, €44 million and
€43 million for the years ended 31December2020, 31December 2019 and 31December2018, respectively.
Customer relationships
The Group acquired certain customer relationships in connection with the acquisitions of the Norway and Sweden
bottling operations from TCCC in 2010 and the Merger with CCIP and CCEG in 2016. These customer relationships
were recorded at their fair values on the date of acquisition, and they are amortised over an estimated economic life
of 20 years. The fair values were determined using a “with and without” valuation technique, which compares the
revenues with all assets of the business in place, to a “without” scenario, which assumes the customer relationship
asset and related revenues do not exist and must be rebuilt over time. Amortisation expense for these assets is
included within administrative expenses and was €8 million, €8 million and €8 million for the years ended
31December2020, 31December2019 and 31 December 2018, respectively.
Balances and movements in intangible assets and goodwill
The following table summarises the movements in the carrying amounts of intangible assets and goodwill for the
periods presented:
Franchise
intangible Software
Customer
relationships
Assets under
construction
Total
intangibles Goodwill
€ million € million € million € million € million € million
Cost:
As at 31 December 2018 8,084 300 162 52 8,598 2,518
Additions 1 30 — 64 95 —
Disposals — (14) (1) — (15) —
Transfers and reclassifications — 12 — (12) — —
Currency translation adjustments 80 5 — — 85 2
As at 31 December 2019 8,165 333 161 104 8,763 2,520
Additions — 34 — 26 60 —
Disposals — (34) — — (34) —
Transfers and reclassifications — 61 — (61) — —
Currency translation adjustments (87) (12) — — (99) (3)
As at 31 December 2020 8,078 382 161 69 8,690 2,517
Accumulated amortisation:
As at 31 December 2018 — (187) (27) — (214) —
Amortisation expense — (44) (8) — (52) —
Disposals — 13 1 — 14 —
Currency translation adjustments — (4) (1) — (5) —
As at 31 December 2019 — (222) (35) — (257) —
Amortisation expense — (54) (8) — (62) —
Disposals — 34 — — 34 —
Currency translation adjustments — 9 — — 9 —
As at 31 December 2020 — (233) (43) — (276) —
Net book value:
As at 31 December 2018 8,084 113 135 52 8,384 2,518
As at 31 December 2019 8,165 111 126 104 8,506 2,520
As at 31 December 2020 8,078 149 118 69 8,414 2,517
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 139
Impairment testing
Each CGU is tested for impairment annually in the fourth quarter or whenever there is an indication of impairment.
The recoverable amount of each CGU is determined through a value in use calculation. To determine value in usefor
a CGU, estimated future cash flows are discounted to their present values using a pre-tax discount rate reflective of
the current market conditions and risks specific to each CGU. If the carrying value of a CGU exceeds its recoverable
amount, the carrying value of the CGU is reduced to its recoverable amount and impairment charges are recognised
immediately within the consolidated income statement. Impairment charges other than those related to goodwill
may be reversed in future periods if a subsequent test indicates that the recoverable amount has increased. Such
recoveries may not exceed a CGU’s original carrying value less any depreciation that would have been recognised
ifno impairment charges were previously recorded.
The Group’s CGUs are based on geography and generally represent the individual territories in which the Group
operates. For the purposes of allocating intangibles, each franchise intangible asset is allocated to the geographic
region to which the agreement relates and goodwill is allocated to each of the CGUs expected to benefit from a
business combination, irrespective of whether other assets and liabilities of the acquired businesses are assigned
tothe CGUs. The following table identifies the carrying value of goodwill and indefinite-lived intangible assets
attributable to each significant CGU of the Group. In addition to the significant CGUs of the Group, as at
31December2020 the Group had other CGUs with total franchise intangible assets of €1,105 million and goodwill
of€294 million.
31December2020 31December2019
Franchise
intangible Goodwill
Franchise
intangible Goodwill
Cash generating unit € million € million € million € million
Iberia 4,289 1,275 4,289 1,275
Great Britain 1,624 200 1,716 200
Germany 1,060 748 1,060 748
The recoverable amounts of each CGU were determined through a value in use calculation, which uses cash flow
projections for a five year period. The key assumptions used in projecting these cash flows were as follows:
• Growth rate and operating margins: Cash flows were projected over five years to reflect the expected recovery in
operating margins to pre COVID-19 levels. Projected cash flows for the first year were based on management’s
best estimate of the extent and duration of COVID-19 and its impact on operations, expected government
response measures regarding restrictions on trading in the away from home channel and movement of people.
Cash flows for years two through four were projected based on expectations of the Group’s ability to return to pre
COVID-19 growth levels based on past experience and external sources of information. Cash flows for the fifth
year and beyond were projected using a long-term terminal growth rate of 2%.
• Discount rate: A weighted average cost of capital was applied specific to each CGU as a hurdle rate to discount
cash flows. The discount rates represent the current market assessment of the risks specific to each CGU, taking
into consideration the time value of money and individual risks of the underlying assets that have not been
incorporated in the cash flow estimates. The following table summarises the pre-tax discount rate attributable
toeach significant CGU.
31December2020 31December2019
Pre-tax discount
rate
Pre-tax discount
rate
Cash generating unit % %
Iberia 9 9
Great Britain
9 10
Germany
9 9
The Group did not record any impairment charges as a result of the tests conducted in 2020 and 2019.
The Group’s Great Britain CGU continues to have substantial headroom when comparing the estimated value inuse
calculation of the CGU versus the CGU’s carrying value.
For the Group’s Iberia and Germany CGUs, the headroom in the 2020 impairment analysis was approximately 25%
(2019: 50%) and 90% (2019: 110%) of carrying value, respectively. These CGUs continue to have the lowest relative
headroom due to the fact that the net assets of Iberia and Germany were subject to acquisition accounting and
fairvalued based upon operating plans and macroeconomic conditions present at the time of the Merger in 2016.
For the Germany CGU, the Group estimates that a 5.0% reduction in terminal growth rate or a 4.0% increase in the
discount rate, each in isolation, would eliminate existing headroom.
140
Iberia CGU sensitivity
The headroom reduction since 2019 has been most significant for the Iberia CGU given the significant exposure
tothe away from home channel and lower tourism during 2020. Whilst we expect the impact of COVID-19 to be
temporary and for the Iberia CGU to return to pre COVID-19 profitability levels in the near term, should operating
results or macroeconomic conditions deteriorate versus those utilised in the value in use calculation, including those
estimates regarding the severity and duration of potential further restrictions, structural market or channel changes,
scale and pace of market recovery, ordiscount rates, an impairment charge for these assets could arise in the future.
The calculation of value in use is most sensitive to the discount rate and long-term terminal growth rate
assumptions. For the Iberia CGU, the Group estimates that a 1.6% reduction in the terminal growth rate or a
meaningful reduction in the long-term operating margin for the CGU, each in isolation, would eliminate headroom.
In considering these sensitivities, the Group estimates that the Spanish economy would need to experience a
significant period of prolonged restrictions along with longer-term structural changes in the away from home
market for either of them to materialise. Headroom would also be eliminated if the discount rate increased
by more than 1.2%.
Note 7
Property, plant and equipment
Property, plant and equipment is recorded at cost, net of accumulated depreciation and accumulated impairment
losses, where cost is the amount of cash or cash equivalents paid to acquire an asset at the time of its acquisition
orconstruction. Major property additions, replacements and improvements are capitalised, while maintenance and
repairs that do not extend the useful life of an asset or add new functionality are expensed as incurred. Land is not
depreciated, as it is considered to have an indefinite life. For all property, plant and equipment, other than land,
depreciation is recorded using the straight-line method over the respective estimated useful lives as follows:
Useful life (years)
Category Low High
Buildings and improvements 10 40
Machinery, equipment and containers 3 20
Cold drink equipment 4 12
Vehicle fleet 3 12
Furniture and office equipment 4 10
Gains or losses arising on the disposal or retirement of an asset are determined as the difference between the
carrying amount of the asset and any proceeds from its sale. Leasehold improvements are amortised using the
straight-line method over the shorter of the remaining lease term or the estimated useful life of the improvement.
The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any
indication exists, an impairment test is performed to estimate the potential loss of value that may reduce the
recoverable amount of the asset to below its carrying amount. Any impairment loss is recognised within the
consolidated income statement by the amount which the carrying amount exceeds the recoverable amount.
Usefullives and residual amounts are reviewed annually and adjustments are made prospectively as required.
For property, plant and equipment, the Group assesses annually whether there is an indication that previously
recognised impairment losses no longer exist or have decreased. If such indication exists, a previously recognised
impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s
recoverable amount since the last impairment loss was recognised and only up to the recoverable amount
or the original carrying amount net of depreciation that would have been incurred had no impairment losses
beenrecognised.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 141
The following table summarises the movement in net book value for property, plant and equipment for the
periodspresented:
Land
Buildings and
improvements
Machinery,
equipment
and
containers
Cold drink
equipment Vehicle fleet
Furniture
and office
equipment
Assets under
construction Total
€ million € million € million € million € million € million € million € million
Cost:
As at 31 December 2018 317 1,488 2,533 1,214 129 183 339 6,203
Adjustment for adoption of IFRS 16
(A)
— 183 — — 107 32 — 322
Additions 2 67 158 119 66 29 187 628
Disposals (6) (49) (102) (137) (14) (14) — (322)
Transfers and reclassifications — 51 191 — 1 2 (245) —
Currency translation adjustments 3 15 25 14 2 2 (2) 59
As at 31 December 2019 316 1,755 2,805 1,210 291 234 279 6,890
Additions 18 89 112 46 64 16 77 422
Disposals (12) (32) (81) (86) (69) (107) (1) (388)
Transfers and reclassifications 1 49 173 — — 4 (227) —
Currency translation adjustments (6) (15) (34) (15) (3) (3) (3) (79)
As at 31 December 2020 317 1,846 2,975 1,155 283 144 125 6,845
Accumulated depreciation:
As at 31 December 2018 — (467) (978) (670) (84) (116) — (2,315)
Depreciation expense — (106) (223) (158) (64) (36) — (587)
Disposals — 14 72 136 6 13 — 241
Currency translation adjustments — 2 (6) (17) (1) (2) — (24)
As at 31 December 2019 — (557) (1,135) (709) (143) (141) — (2,685)
Depreciation expense — (117) (297) (159) (62) (30) — (665)
Disposals — 15 79 86 63 84 — 327
Currency translation adjustments — 8 16 10 1 3 — 38
As at 31 December 2020 — (651) (1,337) (772) (141) (84) — (2,985)
Net book value:
As at 31 December 2018 317 1,021 1,555 544 45 67 339 3,888
As at 31 December 2019 316 1,198 1,670 501 148 93 279 4,205
As at 31 December 2020 317 1,195 1,638 383 142 60 125 3,860
(A) The Group adopted IFRS 16, “Leases” on a modified retrospective basis. The Group has not restated its 2018 financial statements as permitted under the specific
transitional provisions in the standard. The impact from the new leasing standard is therefore recognised in the opening balance sheet on 1 January 2019.
Right of use assets
The Group leases land, office and warehouse space, computer hardware, machinery and equipment and vehicles
under non-cancellable lease agreements most of which expire at various dates through to 2030. Since the adoption
of IFRS 16, “Leases”, effective 1 January 2019, the Group includes right of use assets within property, plantand
equipment.
Right of use assets are initially measured at cost, comprising the initial measurement of the lease liability, plus any
direct costs and an estimate of asset retirement obligations, less lease incentives. Subsequently, right of use assets
are measured at cost, less accumulated depreciation and any accumulated impairment losses. Depreciation is
calculated on a straight-line basis over the term of the lease.
The Group does not separate lease from non-lease components for each of its lease categories, except for property
leases. For property leases, only base rent is included in the calculation of the right of use asset. All low value leases
with total minimum lease payments under €5,000 are expensed on a straight-line basis.
Extension and termination options are included in a number of property and equipment leases across the
Groupand are used to maximise operational flexibility in terms of managing contracts. Extension options
(orperiods after termination options) are only included in the lease term if the Group has an enforceable right
toextend orterminate the lease and is reasonably certain to do so. The assessment is reviewed if a significant
eventor asignificant change in circumstances occurs which affects this assessment and that is within the control
ofthe lessee. Some lease agreements contain standard renewal provisions that allow for renewal at rates equivalent
to fair market value at the end of the lease term.
In adopting IFRS 16, “Leases” on 1 January 2019, the following expedients were applied on transition:
• The right of use asset was measured at the value of the lease liability, adjusted for any prepaid or accrued
lease payments.
• A single discount rate applied to a portfolio of leases with reasonably similar characteristics.
• Hindsight was used in determining lease term.
• Short-term lease exemption applied to machinery and equipment and IT asset classes for leases expiring within
12months of 1 January 2019.
142
The following table summarises the net book value of right of use assets included within property, plant and
equipment:
31December2020 31December2019
€ million € million
Buildings and improvements 202 188
Vehicle fleet 137 140
Machinery, equipment and containers 19 23
Furniture and office equipment 6 33
Total 364 384
Total additions to right of use assets during 2020 were €134 million (2019: €127million).
The following table summarises depreciation charges relating to right of use assets for the periods presented:
31December2020 31December2019
€ million € million
Buildings and improvements 37 39
Vehicle fleet 61 62
Machinery, equipment and containers 8 5
Furniture and office equipment 11 18
Total 117 124
During the years ended 31December2020 and 31December 2019, the total expense relating to low value and short-
term leases was €18 million and €10million, respectively, which is primarily included in administrative expenses on
the consolidated income statement.
The Group does not have any residual value guarantees in relation to its leases. The Group did not engage in any
sale and leaseback transactions for the year ended 31December2020.
The Group’s activities as a lessor are not material and hence the Group determines there is no significant impact
onits consolidated financial statements.
As at 31December2020 the total value of lease extension and termination options included within right of use
assets was €18 million.
Refer to Note 13 for further disclosure regarding lease liabilities.
Note 8
Inventories
Inventories are valued at the lower of cost or net realisable value and cost is determined using the first-in, first-out
(FIFO) method. Inventories consist of raw materials, supplies (primarily including concentrate, other ingredients
andpackaging) and finished goods, which also include direct labour, indirect production and overhead costs. Cost
includes all costs incurred to bring inventories to their present location and condition. Spare parts are recorded
asassets at the time of purchase and are expensed as utilised. Net realisable value is the estimated selling price
inthe ordinary course of business, less the estimated costs necessary to complete and sell the inventory.
The following table summarises the inventory outstanding in the consolidated statement of financial position
as at the dates presented:
31December2020 31December2019
€ million € million
Finished goods 389 408
Raw materials and supplies 210 232
Spare parts 82 83
Total inventories 681 723
Write downs of inventories to net realisable value totalled €29 million and €25 million for the years ended
31December2020 and 31December2019 respectively. Included in 2020 were finished good write downs of
approximately €17 million related to COVID-19. These write downs, which were principally related to bag in box
andglass packages, were included in cost of sales on the consolidated income statement. None of the write downs
for inventory that has been destroyed or provided for at the year end were subsequently reversed.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 143
Note 9
Trade accounts receivable
The Group sells its products to retailers, wholesalers and other customers and extends credit, generally without
requiring collateral, based on an evaluation of the customer’s financial condition. While the Group has a
concentration of credit risk in the retail sector, this risk is mitigated due to the diverse nature of the customers
theGroup serves, including, but not limited to, their type, geographic location, size and beverage channel.
Trade accounts receivable are initially recognised at fair value and subsequently measured at amortised cost less
provision for impairment. Typically, accounts receivable have terms of 30 to 60 days and do not bear interest.
TheGroup applies an expected credit loss reserve methodology to assess possible impairments. Balances are
considered for impairment on an individual basis rather than by reference to the extent that they become overdue.
The Group considers factors such as delinquency in payment, financial difficulties, payment history of the debtor
aswell as certain forward-looking macroeconomic indicators. The carrying amount of trade accounts receivable
isreduced through the use of an allowance account and the amount of the loss is recognised in the consolidated
income statement. Credit insurance on a portion of the accounts receivable balance is also carried. Refer to Note 24
for further details on credit risk management.
As a result of COVID-19, the Group supplemented its existing credit loss reserve methodology to include an
incremental loss allowance for those receivable balances that were deemed to be higher risk in the current
environment. The incremental allowance is included within allowance for doubtful accounts below, as at
31December2020.
The following table summarises the trade accounts receivable outstanding in the consolidated statement of financial
position as at the dates presented:
31December2020 31December2019
€ million € million
Trade accounts receivable, gross 1,478 1,687
Allowance for doubtful accounts (39) (18)
Total trade accounts receivable 1,439 1,669
The following table summarises the ageing of trade accounts receivable, net of allowance for doubtful accounts,
inthe consolidated statement of financial position as at the dates presented:
31December2020 31December2019
€ million € million
Not past due 1,389 1,560
Past due 1 - 30 days 23 54
Past due 31 - 60 days 3 5
Past due 61 - 90 days 4 8
Past due 91 - 120 days 1 4
Past due 121+ days 19 38
Total 1,439 1,669
The following table summarises the change in the allowance for doubtful accounts for the periods presented:
Allowance for
doubtful accounts
€ million
As at 31 December 2018 (16)
Provision for impairment recognised during the year (6)
Receivables written off during the year as uncollectible 4
As at 31 December 2019 (18)
Provision for impairment recognised during the year (25)
Receivables written off during the year as uncollectible 4
As at 31 December 2020 (39)
144
Note 10
Cash and cash equivalents
Cash and cash equivalents include cash and short-term, highly liquid investments with maturity dates of less than
three months when acquired that are readily convertible to cash and which are subject to an insignificant risk
ofchanges in value. Counterparties and instruments used to hold the Group’s cash and cash equivalents are
continually assessed, with a focus on preservation of capital and liquidity.
The following table summarises the cash and cash equivalents outstanding in the consolidated statement of
financial position as at the dates presented:
31December2020 31December2019
€ million € million
Cash at banks and on hand 643 170
Short-term deposits and securities 880 146
Total cash and cash equivalents 1,523 316
Cash and cash equivalents are held in the following currencies as at the dates presented:
31December2020 31December2019
€ million € million
Euro 950 88
British pound 424 124
US dollar 32 27
Norwegian krone 70 44
Swedish krona 33 21
Other 14 12
Total cash and cash equivalents 1,523 316
There are no material restrictions on the Group’s cash and cash equivalents.
Note 11
Fair values
Fair value measurements
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised
within the fair value hierarchy. This is described as one of the following, based on the lowest level input that
issignificant to the fair value measurement as a whole:
• Level 1 – Quoted prices in active markets for identical assets or liabilities.
• Level 2 – Observable inputs other than quoted prices included in Level 1. The Group values assets and liabilities
included in this level using dealer and broker quotations, certain pricing models, bid prices, quoted prices for
similar assets and liabilities in active markets or other inputs that are observable or can be corroborated by
observable market data.
• Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the
fairvalue of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies
andsimilar techniques that use significant unobservable inputs.
The fair values of the Group’s cash and cash equivalents, trade accounts receivable, amounts receivable from related
parties, trade and other payables and amounts payable to related parties approximate their carrying amounts due
to their short-term nature.
The fair values of the Group’s borrowings are estimated based on borrowings with similar maturities and credit
quality and current market interest rates. These are categorised within Level 2 of the fair value hierarchy as the
Group uses certain pricing models and quoted prices for similar liabilities in active markets in assessing their fair
values. Refer to Note 13 for further details regarding the Group’s borrowings.
The following table summarises the book value and fair value of the Group’s borrowings as at the dates presented:
31December2020 31December2019
€ million € million
Fair value of borrowings 7,585 6,720
Book value of borrowings (Note 13) 7,187 6,421
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 145
The Group’s derivative assets and liabilities are carried at fair value, which is determined using a variety of valuation
techniques, depending on the specific characteristics of the hedging instrument, taking into account credit risk.
Thefair value of its derivative contracts (including forwards, options, cross currency swaps and interest rate swaps)
isdetermined using standard valuation models. The significant inputs used in these models are readily available
inpublic markets or can be derived from observable market transactions and, therefore, the derivative contracts
have been classified as Level 2. Inputs used in these standard valuation models include the applicable spot, forward
and discount rates. The standard valuation model for the option contracts also includes implied volatility, which is
specific to individual options and is based on rates quoted from a widely used third party resource. Refer to Note 12
for further details about the Group’s derivatives.
The following table summarises the fair value of the derivative assets and liabilities as at the dates presented:
31December2020 31December2019
€ million € million
Assets at fair value:
Derivatives (Note 12) 46 15
Liabilities at fair value:
Derivatives (Note 12)
77 41
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines
whether transfers have occurred between levels in the hierarchy by reassessing categorisation at the end of each
reporting period. There have been no transfers between levels during the periods presented.
Note 12
Hedging activities
Derivative financial instruments
The Group utilises derivative financial instruments to mitigate its exposure to certain market risks associated withits
ongoing operations. The primary risks that it seeks to manage through the use of derivative financial instruments
include currency exchange risk, commodity price risk and interest rate risk. All derivative financial instrument assets
and liabilities are recorded at fair value on the consolidated statement of financial position. TheGroup does not use
derivative financial instruments for trading or speculative purposes and all hedge ratios are on a 1:1 basis. 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 forecasted transaction. Further information on the Group’s risk management strategy
and objective can be found in Note 24. Both at the hedge inception and on an ongoing basis, the Group assesses
and documents whether the derivative financial instrument used in the hedging transaction is highly effective in
maintaining the risk management objective. Where critical terms match, the Group uses a qualitative assessment
toensure initial and ongoing effectiveness criteria. Hedge accounting isdiscontinued 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 isretained in equity until the forecasted transaction
occurs. If the hedged transaction is no longer expected tooccur, the net cumulative gain or loss recognised
inequity is transferred to the income statement.
While certain derivative financial instruments are designated as hedging instruments, the Group also enters into
derivative financial instruments that are designed to hedge a risk but are not designated as hedging instruments
(referred to as an economic hedge or a non-designated hedge). The decision regarding whether or not to designate
a hedge for hedge accounting is made by management considering the size, purpose and tenure of the hedge,
aswell as the anticipated ability to achieve and maintain the Group’s risk management objective.
The Group is exposed to counterparty credit risk on all of its derivative financial instruments. It has established and
maintained strict counterparty credit guidelines and enters into hedges only with financial institutions that are
investment grade or better. It continuously monitors counterparty credit risk and utilises numerous counterparties
to minimise its exposure to potential defaults. It does not require collateral under these agreements.
146
The following table summarises the fair value of the assets and liabilities related to derivative financial instruments
and the respective line items in which they were recorded in the consolidated statement of financial position as at
the dates presented. All derivative instruments are classified as Level 2 within the fair value hierarchy.Discussion of
the Group’s other financial assets and liabilities is contained elsewhere in these financial statements. Refer to Note 9
for trade accounts receivable, Note 14 for trade and other payables, Note 13 for borrowings and Note 19 for
amounts receivable and payable with related parties.
31December2020 31December2019
Hedging instrument Location – statement of financial position € million € million
Assets:
Derivatives designated as hedging instruments:
Commodity contracts Non-current derivative assets
6 3
Deal contingent forward Current derivative assets 24 —
Foreign currency contracts Current derivative assets 3 6
Commodity contracts Current derivative assets 13 4
Total
46 13
Derivatives not designated as hedging instruments:
Commodity contracts Current derivative assets
— 2
Total
— 2
Total assets 46 15
Liabilities:
Derivatives designated as hedging instruments:
Foreign currency contracts Non-current derivative liabilities
6 9
Commodity contracts Non-current derivative liabilities 9 4
Foreign currency contracts Current derivative liabilities 38 10
Commodity contracts Current derivative liabilities 24 17
Total
77 40
Derivatives not designated as hedging instruments:
Foreign currency contracts Current derivative liabilities
— 1
Total
— 1
Total liabilities 77 41
Cash flow hedges
The Group uses cash flow hedges to mitigate its exposure to changes in cash flows attributable to currency
fluctuations and commodity price fluctuations associated with certain forecasted transactions, including purchases
of raw materials, finished goods and services denominated in non-functional currencies, the receipt ofinterest
andprincipal on intercompany loans denominated in non-functional currencies and the payment of interest and
principal on debt issuances in non-functional currencies. Effective changes in the fair value of these cash flow
hedging instruments are recognised as a component of other reserves on the consolidated statement of financial
position. The effective changes are then recognised within the line item on the consolidated income statement
thatis consistent with the nature of the underlying hedged item in the period that the forecasted purchases
orpayments impact earnings. Any changes in the fair value of these cash flow hedges that are the result of
ineffectiveness are recognised immediately in the line item on the consolidated income statement that is consistent
with the nature of the underlying hedged item. Historically, the Group has not experienced, nor does itexpect to
experience, material hedge ineffectiveness with the value of the hedged instrument equalling that ofthe hedged
item.
As at 31December2020, the Group has entered into deal contingent foreign currency forwards with a total notional
amount of €3.0 billion (A$4.80billion) to mitigate the foreign currency risk arising from the proposed acquisition of
CCL. These instruments have been recorded as cash flow hedges. Refer to Note 1 for further information regarding
the proposed acquisition.
The net notional amount of the other outstanding currency related cash flow hedges was €0.7 billion as at
31December2020 and €1.2 billion as at 31December2019. The net notional amount of outstanding commodity
related cash flow hedges was €0.7 billion as at 31December2020 and €0.5 billion as at 31December2019.
Outstanding cash flow hedges as at 31December2020 are expected to settle and affect profit or loss between
2021and 2023.
The following table summarises the Group’s outstanding cash flow hedges by risk category as at the dates
presented (all contracts denominated in a foreign currency have been converted into euros using the respective
year end spot rate):
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 147
Notional maturity profile
Total
Less than 1
year 1 to 3 years 3 to 5 years
Cash flow hedges
€ million € million € million € million
Foreign currency 1,255 227 1,028 —
Commodity 237 212 25 —
As at 31 December 2018 1,492 439 1,053 —
Foreign currency 1,211 643 568 —
Commodity 459 246 213 —
As at 31 December 2019 1,670 889 781 —
Deal contingent foreign currency forwards
3,000 3,000 — —
Foreign currency 706 570 136 —
Commodity 677 403 274 —
As at 31 December 2020 4,383 3,973 410 —
The Group recognised within other comprehensive income net gains of €25 million, €10 million and €33 million for
the years ended 31December2020, 31December2019 and 31December2018, respectively, related to changes in
the fair values of outstanding cash flow hedges. The amount of ineffectiveness associated withthese cash flow
hedges was not material during any year presented within these financial statements.
The following table summarises the net of tax effect for cash flow hedges that settled for the periods presented
within the consolidated income statement:
Amount of (gain)/loss reclassified
from the hedging reserve into profit
31December2020 31December2019 31December2018
Cash flow hedging instruments Location – income statement € million € million € million
Foreign currency contracts Cost of sales 1 — 4
Commodity contracts Cost of sales (33) (17) —
Commodity contracts Selling and distribution expenses (3) — —
Foreign currency contracts
(A)
Non-operating items 23 18 43
Total (12) 1 47
(A) The (gain)/loss recognised on these currency contracts is offset by the (gain)/loss recognised on the remeasurement of the underlying debt instruments; therefore,
thereis a minimal consolidated net effect in non-operating items on the consolidated income statement.
Non-designated hedges
The Group periodically enters into derivative instruments that are designed to hedge various risks but are not
designated as hedging instruments. These hedged risks include those related to commodity price fluctuations
associated with forecasted purchases of aluminium, sugar, components of PET (plastic), and vehicle fuel. At times,
italso enters into other short-term non-designated hedges to mitigate its exposure to changes in cash flows
attributable to currency fluctuations associated with short-term intercompany loans and certain cash equivalents
denominated in non-functional currencies. Changes in the fair value of outstanding non-designated hedges
arerecognised each reporting period in the line item on the consolidated income statement that is consistent
withthe nature of the hedged risk.
There were no outstanding non-designated commodity hedges as at 31December2020. The notional amount
ofnon-designated commodity hedges as at 31December2019 was €30 million.
There were no outstanding non-designated short-term foreign currency contracts associated with intercompany
loans and trade payables denominated in non-functional currencies as at 31December2020. The notional amount
of non-designated short-term foreign currency contracts associated with intercompany loans and trade payables
denominated in non-functional currencies as at 31December2019 was €11 million.
148
The following table summarises the gains (losses) recognised from non-designated derivative financial instruments
in the consolidated income statement for the years presented:
31December2020 31December2019 31December2018
Non-designated hedging instruments Location – income statement € million € million € million
Commodity contracts Cost of sales — — 1
Commodity contracts Selling and distribution expenses (12) 5 —
Foreign currency contracts
(A)
Non-operating items (4) (2) (4)
Total (16) 3 (3)
(A) The gain/(loss) recognised on these currency contracts is offset by the gain/(loss) recognised on the remeasurement of the underlying hedged items; therefore,
there is a minimal consolidated net effect in non-operating items on the consolidated income statement.
Net investment hedges
The Group had no net investment hedges in place as at 31December2020 or 31December2019, however it
continues to monitor its exposure to currency exchange rates and may enter into future net investment hedges
asa result of volatility in the functional currencies of certain of its subsidiaries.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 149
Note 13
Borrowings and leases
Borrowings
Borrowings are initially recognised at fair value, net of issuance costs incurred. After initial recognition, borrowings
aresubsequently measured at amortised cost using the effective interest rate method. Amortisation of transaction
costs, premiums and discounts is recognised as part of finance costs within the consolidated income statement.
Leases
Since the adoption of IFRS 16, “Leases”, effective 1 January 2019, lease liabilities are included within Borrowings
inour consolidated statement of financial position.
The lease liability is measured at the present value of lease payments, discounted using the Group’s incremental
borrowing rate (IBR). The lease term comprises the non-cancellable period of the contract, together with periods
covered by an option to extend the lease whenever the Group is reasonably certain to exercise that option and
hasan enforceable right to do so. Subsequently, the lease liability is measured by increasing the carrying amount
toreflect interest on the lease liability and reducing it by lease payments made.
Borrowings outstanding
The following table summarises the carrying value of the Group’s borrowings as at the dates presented:
31December2020 31December2019
€ million € million
Non-current:
US$250 million 3.25% Notes 2021 — 221
US$300 million 4.50% Notes 2021 — 266
€350 million Floating Rate Note 2021
(A)
— 350
€700 million 0.75% Notes 2022 699 698
€350 million 2.63% Notes 2023 349 348
€500 million 1.13% Notes 2024 497 496
€350 million 2.38% Notes 2025 347 347
€250million 2.75% Notes 2026 248 248
€600 million 1.75% Notes 2026
(B)
592 —
€400 million 1.50% Notes 2027 396 396
€250 million 1.50% Notes 2027
(C)
263 —
€500 million 1.75% Notes 2028 494 493
€750 million 0.20% Notes 2028
(D)
742 —
€500 million 1.13% Notes 2029 494 493
€500 million 1.88% Notes 2030 496 495
€500 million 0.70% Notes 2031 496 495
Lease obligations 269 276
Total non-current borrowings 6,382 5,622
Current:
US$250million 3.25% Notes 2021
(E)
156 —
US$300million 4.50% Notes 2021
(E)
203 —
€350million Floating Rate Note 2021
(A)
350 —
US$525million 3.50% Notes 2020
(F)
— 467
EUR commercial paper — 221
Lease obligations 96 111
Total current borrowings 805 799
(A) 3 months EURIBOR plus 18 basis points with a minimum 0%.
(B) In March 2020, the Group issued €600million 1.75% Notes due 2026.
(C) In June 2020, the Group issued additional Notes for the principal amount of €250million which consolidated with the existing €400million Notes issued in November 2018
form a single series amounting to €650 million. All other terms and conditions relating to the existing €400million Notes were unchanged.
(D) In December 2020, the Group issued €750million 0.20% Notes due 2028.
(E) In February 2020, the Group repaid prior to maturity $255million of outstanding USD borrowings.
(F) Between February and September 2020, the $525 million 3.50% Notes were fully repaid.
Borrowings are stated net of unamortised financing fees of €26 million and €23 million, as at 31December2020
and31December2019, respectively.
As at 31 December 2020, the total interest expense recognised on lease liabilities was €4 million.
The maturity analysis of lease liabilities is disclosed in Note 24.
The Group’s exposure arising from leases not yet commenced to which the Group is committed is disclosed in
Note 22.
150
Credit facilities
The Group has amounts available for borrowing under a €1.5 billion multi currency credit facility with a syndicate
of10banks. This credit facility matures in 2025 and is for general corporate purposes and supporting the Group’s
working capital needs. Based on information currently available, there is no indication that the financial institutions
participating in this facility would be unable to fulfil their commitments to the Group as at the date of these
consolidated financial statements. The Group’s current credit facility contains no financial covenants that would
impact its liquidity or access to capital. As at 31December2020, the Group had no amounts drawn under this credit
facility.
In connection with the proposed acquisition of CCL, the Group has arranged a term loan facility of up to €4.4billion
with a syndicate of 13 banks. This term loan facility matures in December 2021, with options to extend to December
2022, and canonly be used to effect the proposed acquisition. The facility is undrawn at 31 December 2020.
Cash flows from financing activities
The following table provides a reconciliation of movements of liabilities to cash flows arising from financing activities:
Current portion of
borrowings
Borrowings, less
current portion Total
€ million € million € million
As at 31 December 2018 491 5,127 5,618
Changes from financing cash flows
Proceeds from third party borrowings, net
— 987 987
Changes in short-term borrowings
101 — 101
Repayments on third party borrowings
(350) (275) (625)
Payment of principal and interest on lease obligations
(A)
(132) — (132)
Other non-cash changes
Amortisation of discount, premium and issue costs
1 9 10
Lease additions
20 102 122
Lease operating liability recognised as at 1 January 2019
(B)
92 230 322
Currency translation
9 9 18
Reclassifications
567 (567) —
Total changes 308 495 803
As at 31 December 2019 799 5,622 6,421
Changes from financing cash flows
Proceeds from third party borrowings, net
— 1,598 1,598
Changes in short-term borrowings
(221) — (221)
Repayments on third party borrowings
(C)
(467) (102) (569)
Payment of principal and interest on lease obligations
(A)
(120) — (120)
Other non-cash changes
Amortisation of discount, premium and issue costs
— 8 8
Lease additions and other non-cash movements
(7) 108 101
Currency translation
— (31) (31)
Reclassifications
821 (821) —
Total changes 6 760 766
As at 31 December 2020 805 6,382 7,187
(A) As a result of the adoption of IFRS 16 on 1 January 2019, the majority of the Group’s lease obligations are now presented on the balance sheet as right of use (ROU)
assets in property, plant and equipment. Cash outflows relating to operating leases had previously been presented in net cash flows from operating activities and,
from1January 2019, these equivalent cash flows are included as cash flows from financing activities. During the year ended 31December2020, total cash outflows from
lease payments are payments of principal on lease obligations for €116 million and payments of interest charged on lease obligation for €4 million.
(B) Adjustment for the adoption of IFRS 16, “Leases” on 1 January 2019.
(C) This line item includes the impact of the cross currency swap hedge from USD to EUR.
Cash flows from financing activities includes €24 million, €36 million and €34 million of cash received related
toincome on a cross currency swap for 2020, 2019 and 2018, respectively.
Total cash outflows for leases were €120 million and €132million for the year ended 31December2020 and
31December2019, respectively.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 151
Note 14
Trade and other payables
Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of the
reporting period, which are unpaid. Trade and other payables are presented as current liabilities unless payment is
not due within 12 months after the reporting period. Trade and other payables are recognised initially at fair value
and subsequently measured at amortised cost using the effective interest rate method. Trade payables are
non-interest bearing and are normally settled between 30 to 60 days.
The Group participates in various programmes and arrangements with customers designed to increase the sale of
our products. The costs of these programmes are recorded as deductions from revenue. Among the programmes
are arrangements under which allowances can be earned by customers for attaining agreed upon sales levels or for
participating in specific marketing programmes. When these allowances are paid in arrears, the Group accrues the
estimated amount to be paid based upon historical customer experience, the programme’s contractual terms,
expected customer performance and/or estimated sales volume. The costs of these off-invoice customer
marketing costs totalled €3.2 billion, €3.2 billion and €3.0 billion for 2020, 2019 and 2018, respectively.
The following table summarises trade and other payables as at the dates presented:
31December2020 31December2019
€ million € million
Trade accounts payable
(A)
1,124 1,138
Accrued customer marketing costs 775 701
Accrued deposits 246 274
Accrued compensation and benefits 217 234
Accrued taxes 193 251
Other accrued expenses 199 187
Total trade and other payables 2,754 2,785
(A) Includes €219 million of invoices (2019: €217 million) which are part of a supply chain finance programme facilitated by the Group. The programme permits suppliers to
elect on an invoice-by-invoice basis to receive a discounted payment from the partner bank earlier than the agreed payment terms with the Group. If a supplier makes
thiselection, the value and the due date of the invoice payable by the Group remains unchanged.
Note 15
Post-employment benefits
The cost of providing benefits is determined using the projected unit credit method with actuarial valuations being
carried out at the end of each annual reporting period. All remeasurements of the defined benefit obligation, such
as actuarial gains and losses and return on plan assets, are recognised directly in other comprehensive income.
Remeasurements recognised in other comprehensive income are reflected immediately in retained earnings and
are not reclassified to profit or loss. Service costs are presented within cost of sales, selling and distribution expenses
and administrative expenses in the consolidated income statement. Past service costs are recognised immediately
within cost of sales, selling and distribution expenses and administrative expenses in the consolidated income
statement. The net interest cost is calculated by applying the discount rate to the net balance of the defined
benefit obligation and the fair value of plan assets. Net interest cost is presented within finance costs or finance
income, as applicable, in the consolidated income statement. The defined benefit obligation recognised in the
consolidated statement of financial position represents the present value of the estimated future cash outflows,
using interest rates of high quality corporate bonds which have terms to maturity approximating the terms of the
related liability.
For termination benefits the Group recognises termination benefits at the earlier of the following dates: (1) when
the Group can no longer withdraw the offer of those benefits and (2) 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. 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. 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 those benefits.
The following table summarises our non-current employee benefit liabilities as at the dates presented:
31December2020 31December2019
€ million € million
Retirement benefit obligation 251 178
Other employee benefit liabilities 32 43
Total non-current employee benefit liabilities 283 221
152
Defined benefit plans
The Group sponsors a number of defined benefit pension plans in Belgium, France, Germany, Great Britain,
Luxembourg and Norway, of which the Great Britain plan (GB Scheme) and Germany plans (Pension Plan 1
andPension Plan 2) are the most significant.
The GB Scheme’s defined benefit obligation includes benefits for current employees, former employees and
currentpensioners. The level of benefits provided (funded final salary pension) depends on the member’s length
ofservice and salary at retirement age. Part of the pension may be exchanged for a tax free cash lump sum.
The GB Scheme was closed to new members with effect from 1October2005 and is administered by a separate
board of trustees, which is legally separate from the Group. The board of trustees is composed of representatives
ofboth the employer and employees. The board of trustees is required by law to act in the interest of all relevant
beneficiaries and is responsible for the investment policy with regard to the assets plus the day to day
administration of the benefits.
A full actuarial valuation of the GB Scheme occurs on a triennial basis by a qualified external actuary, which is
usedasthe basis of determining the Group’s future contributions to the plan. The latest triennial valuation was
carried out as at 5April2019 and has been updated to 31December2020 to reflect our defined benefit obligation,
for known events and changes in market conditions as allowed under IAS19, “Employee Benefits”. Following the
2019triennial actuarial results and in light of the funding status of the plan, it was agreed between the Group and
the trustees of the GB Scheme that the annual additional £13 million funding requirement, which had previously
been determined as an outcome of the 2016triennial valuation, will be discontinued.
On 8 October 2020, the Group announced a proposal to close the GB Scheme to future accrual on 31 March 2021
with affected employees being offered enrolment in the Group’s defined contribution scheme. The proposal,
ifimplemented, would result in members moving from active to deferred status, with pension increases to
retirement from that date being based on the GB Scheme’s deferred revaluation rates which are linked to the
consumer price index (CPI). As at 31 December 2020, the consultation period with employee representatives was still
open without a final agreement and therefore no prior service cost has been recognised in these consolidated
financial statements.
Germany’s defined benefit pension plans are open to existing members but closed to new entrants. The defined
benefit includes benefits for current employees, former employees and current pensioners. Pension Plan 1 has
elements of a final salary pension for past service and a career average formula for new accruals. It is funded
through a support fund administered by an insurance company. Pension Plan 2 is administered by the Group with
the plan being covered by a contractual trust arrangement (CTA) and a single reinsurance contract. The Group
isresponsible for paying obligations. There is no external board of trustees. The insurer shares some responsibility
for plan assets, investment policy and administration. The latest annual valuation for Plan 1 was 31December2019
updated to the balance sheet date of these consolidated financial statements and for Plan 2 it was
31December2020.
Risks
The Group’s defined benefit pension schemes expose the Group to a number of risks, including:
• Asset volatility – the plan liabilities are calculated using a discount rate set with reference to corporate bond
yields; if assets underperform this yield, a deficit would occur. Some of our plans hold a significant proportion of
growth assets (equities and property) which, though expected to outperform corporate bonds in the long term,
create volatility and risk in the short term. The allocation to growth assets is monitored to ensure it remains
appropriate given each scheme’s long-term objectives.
• Changes in bond yields – a decrease in corporate bond yields will increase the defined benefit liability, although
this will be partially offset by an increase in the value of the plan’s bond holdings.
• Inflation risk – a significant proportion of our benefit obligations are linked to inflation and 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 our plans have an obligation to provide benefits for the life of the member,
so increases in life expectancy will result in an increase in the defined benefit liabilities.
Benefit costs
The following table summarises the expense related to pension plans recognised in the consolidated income
statement for the years presented:
31December2020 31December2019 31December2018
€ million € million € million
Service cost 52 46 52
Past service cost — 3 —
Net interest cost 2 1 1
Administrative expenses
2 2 2
Total cost 56 52 55
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 153
Other comprehensive income
The following table summarises the changes in other comprehensive income related to our pension plans for the
years presented:
31December2020 31December2019 31December2018
€ million € million € million
Actuarial (gain)/loss on defined benefit obligation arising during the period 160 282 (120)
Return on plan assets (greater)/less than discount rate (89) (203) 118
Net charge to other comprehensive income 71 79 (2)
Benefit obligation and fair value of plan assets
The following table summarises the changes in the pension plan benefit obligation and the fair value of plan assets
for the periods presented:
31December2020 31December2019
€ million € million
Reconciliation of benefit obligation:
Benefit obligation at beginning of plan year 2,236 1,872
Service cost 52 46
Past service cost — 3
Interest costs on defined benefit obligation 34 44
Plan participants contribution 71 26
Actuarial loss/(gain) - experience (7) (13)
Actuarial loss/(gain) - demographic assumptions — 11
Actuarial loss/(gain) - financial assumptions 169 284
Benefit payments (121) (111)
Administrative expenses 2 2
Currency translation adjustments (96) 72
Benefit obligation at end of plan year 2,340 2,236
Reconciliation of fair value of plan assets:
Fair value of plan assets at beginning of plan year 2,096 1,804
Interest income on plan assets 32 43
Return on plan assets greater/(less) than discount rate 89 203
Plan participants contributions 71 26
Employer contributions 52 61
Benefit payments (121) (111)
Currency translation adjustment (87) 70
Fair value of plan assets at end of plan year 2,132 2,096
Timing of benefit payments
The weighted average duration of the defined benefit plan obligation as at 31December2020 is 21 years, including
23 years for the GB Scheme and 16 years for Germany plans.
Retirement benefit status
The following table summarises the retirement benefit status of pension plans as at the dates presented:
31December2020 31December2019
€ million € million
Net benefit status:
Present value of obligation (2,340) (2,236)
Fair value of assets 2,132 2,096
Net benefit status: (208) (140)
Retirement benefit surplus 43 38
Retirement benefit obligation (251) (178)
The GB Scheme and Germany plans represented approximately 74.1% and 15.9% of the present value of the
obligation and 73.6% and 18.0% of the fair value of assets as at 31December2020, respectively.
The surplus for 2020 and 2019, which is primarily related to Germany Pension Plan 2, is recognised on the balance
sheet on the basis that the Group is entitled to a refund of any remaining assets once all members have left the
plan. Refer to Note 23.
154
Actuarial assumptions
The following tables summarise the weighted average actuarial assumptions used to determine the benefit
obligations of pension plans as at the dates presented:
31December2020 31December2019
Financial assumptions % %
Discount rate 1.3 1.7
Rate of compensation increase 2.7 2.9
Rate of price inflation 2.6 2.7
Demographic assumptions (weighted average)
(A)
31December2020 31December2019
Retiring at the end of the reporting period
Male 21.3 21.2
Female 24.0 23.8
Retiring 15 years after the end of the reporting period
Male 22.4 22.2
Female 25.1 24.9
(A) These assumptions translate into an average life expectancy in years, post-retirement, for an employee retiring at age 65.
The following table summarises the sensitivity of the defined benefit obligation to changes in the weighted average
principal assumptions for the periods presented:
Change in
assumption
Impact on defined benefit obligation (%)
Increase in assumption Decrease in assumption
Principal assumptions 2020 2019 2020 2019
Discount rate 0.5% (9.1) (9.3) 10.4 10.6
Rate of compensation increase 0.5% 2.3 2.4 (2.1) (2.2)
Rate of price inflation 0.5% 7.3 7.6 (7.9) (8.5)
Mortality rates 1 year 3.4 3.4 (3.5) (3.5)
The sensitivity analyses have been determined based on a method that extrapolates the impact on the defined
benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period.
The sensitivity analyses are based on a change in a significant assumption, keeping all other assumptions constant.
The sensitivity analyses may not be representative of an actual change in the defined benefit obligation as it is
unlikely that changes in assumptions would occur in isolation of one another.
Pension plan assets
There are formal investment policies for the assets associated with our pension plans. Policy objectives include
(1)maximising long-term return at acceptable risk levels; (2)diversifying among asset classes, if appropriate, and
among investment managers; and (3)establishing relevant risk parameters within each asset class. Investment
policies reflect the unique circumstances of the respective plans and include requirements designed to mitigate
risk, including quality and diversification standards. Asset allocation targets are based on periodic asset liability and/
or risk budgeting study results, which help determine the appropriate investment strategies for acceptable risk
levels. The investment policies permit variances from the targets within certain parameters.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 155
The following tables summarise pension plan assets measured at fair value as at the dates presented:
€ million € million € million
Equity securities
(A)
186 186 —
Fixed-income securities:
(B)
Corporate bonds and notes
80 51 29
Government bonds
1,196 1,196 —
Cash and other short-term investments
(C)
114 112 2
Other investments:
Real estate funds
(D)
312 31 281
Insurance contracts
(E)
230 — 230
Derivatives
(F)
14 — 14
Total 2,132 1,576 556
Total
31 December 2019
€ million € million € million
Equity securities
(A)
1,024 1,024 —
Fixed-income securities:
(B)
Corporate bonds and notes
75 48 27
Government bonds
445 445 —
Cash and other short-term investments
(C)
20 20 —
Other investments:
Real estate funds
(D)
329 34 295
Insurance contracts
(E)
203 — 203
Total 2,096 1,571 525
(A) Equity securities are comprised of the following investment types: (1)ordinary shares; (2)preference shares; and (3)common trust funds and collective funds. Investments
in ordinary and preference shares are valued using quoted market prices multiplied by the number of shares owned. Investments in common trust funds and collective
funds are valued at the net asset value per share, which is calculated based on the underlying quoted investments market price, multiplied by the number of shares held
asof the measurement date.
(B) Investments other than those held in common trust funds and collective funds are valued using a market approach. The value of such assets is primarily sourced from
broker quotes in active markets. Bonds are held mainly in the currency of the geography of the plan.
(C) Cash and other short-term investments are valued at €1.00/unit, which approximates fair value. Amounts are generally invested in cash, actively managed common trust
funds or interest bearing accounts.
(D) Real estate funds, mainly related to the GB Scheme, are valued at the net asset value per share. For quoted funds, the calculation is based on the underlying quoted
investments market price, multiplied by the number of shares held as of the measurement date. For unquoted funds, this is calculated using the most recent partnership
financial reports, adjusted, as appropriate, for any lag between the date of the financial reports and the measurement date (as at 31December2020, it is not probable
thatthese investments will be sold at an amount other than net asset value).
(E) Insurance contracts exactly match the amount and timing of certain benefits, therefore the fair value of these insurance policies is deemed to be the present value
ofthe related obligations. The significant majority of these are reinsurance contracts relating to benefit arrangements in Germany.
(F) Derivatives are comprised of 1) futures valued using daily quoted prices and 2) total return swaps valued using mostly observable market data inputs.
Contributions
To support a long-term funding arrangement, during 2019 the Group entered into a partnership agreement with
theGB Scheme, the CCEP Scottish Limited Partnership (the Partnership). Certain property assets in Great Britain,
with a market value of £171 million were transferred into the Partnership and subsequently leased back to the
Group’s operating subsidiary in Great Britain. The GB Scheme receives semi-annual distributions from the
Partnership, increasing each year at a fixed cumulative rate of 3% through to 2034. The Group exercises control over
the Partnership and as such it is fully consolidated in these consolidated financial statements. Under IAS 19, the
investment held by the GB Scheme in the Partnership does not represent a plan asset for the purposes of these
consolidated financial statements. Similarly, the associated liability is not included in the consolidated statement
offinancial position, rather the distributions are recognised when paid as a contribution to the plan assets of the
scheme.
Contributions to pension plans totalled €52 million, €61 million and €56 million during the years ended
31December2020, 31December2019 and 31December2018, respectively. Included within the 2020 contribution
is€9.6million relating to the Partnership agreement. The Group expects to make contributions of €49 million
forthe full year ending 31December2021.
Other employee benefit liabilities
In certain territories, the Group has an early retirement programme designed to create an incentive for employees,
within a certain age group, to transition from (full or part time) employment into retirement beforetheir legal
retirement age. Furthermore, the Group also sponsors deferred compensation plans in other territories. The current
portion of these liabilities totalled €13 million and €17 million as at 31December2020 and31December2019,
respectively, and is included within the current portion of employee benefit liabilities. Thenon-current portion
ofthese liabilities totalled €32 million and €43 million as at 31December2020 and 31December2019, respectively,
and is included within employee benefit liabilities.
156
Defined contribution plans
The Group sponsors a number of defined contribution plans across its territories. Contributions payable for the
period are charged to the consolidated income statement as an operating expense for defined contribution plans.
Contributions to these plans totalled €34 million for each of the years ended 31 December 2020, 31December2019
and 31December 2018.
Note 16
Equity
Share capital
As at 31December2020, the Company has issued and fully paid 454,645,510 Shares. Shares in issue have one voting
right each and no restrictions related to dividends or return of capital.
Number of
Shares Share capital
millions € million
As at 1 January 2018 485 5
Issuances of Shares 3 —
Cancellation of Shares (13) —
As at 31 December 2018
475 5
Issuance of Shares 2 —
Cancellation of Shares (21) —
As at 31 December 2019
456 5
Issuance of Shares
2 —
Cancellation of Shares (3) —
As at 31 December 2020 455 5
The share capital increased in 2020, 2019 and 2018 from the issue of 1,310,833, 2,092,404 and 2,763,238 Shares,
respectively, following the exercise of share-based payment awards.
In connection with the Company’s share buyback programmes, 3,065,200, 20,612,593 and 12,429,600 Shares were
cancelled in 2020, 2019 and 2018, respectively.
Share premium
The share premium account increased by cash received for the exercise of options by €14 million for 2020,
€26 million for 2019 and €25million for 2018.
Merger reserves
The consideration transferred to acquire CCIP and CCEG qualified for merger relief under the Companies Act.
Assuch, the excess consideration transferred over nominal value was required to be excluded from the share
premium account and recorded to merger reserves.
Share buyback programme
In connection with the €1 billion share buyback programme announced in February 2020, the Company entered
intoagreements to purchase its own Shares. 3,065,200 Shares were repurchased by the Company and
cancelled.Thetotal cost of the repurchased Shares of €129 million, including €1 million of directly attributable
taxcosts, was deducted from retained earnings.
On 23 March 2020, in response to COVID-19, the Board took the decision to suspend the share buyback programme.
No further Shares were purchased under this programme in the period through to 31December2020.
Other reserves
The following table summarises the balances in other reserves (net of tax) as at the dates presented:
31December2020 31December2019 31December2018
€ million € million € million
Cash flow hedge reserve 20 (17) (26)
Net investment hedge reserve 197 197 197
Foreign currency translation adjustment reserve (754) (629) (723)
Total other reserves (537) (449) (552)
Movements, including the tax effects, in these accounts through to 31December2020 are included in the
consolidated statement of comprehensive income.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 157
Dividends
Dividends are recorded within the Group’s consolidated financial statements in the period in which they are paid.
On1 December 2020, the Group paid a full year dividend of €0.85 per Share.
31December2020 31December2019 31December2018
€ million € million € million
First half dividend
(A)
— 290 252
Second half dividend
(B)
386 284 261
Total dividend on ordinary shares paid 386 574 513
(A) Dividend of €0.62 per Share was paid in first half of 2019. Dividends of €0.26 per Share were paid in both first and second quarters of 2018.
(B) Dividend of €0.62 per Share was paid in second half of 2019. Dividends of€0.26 and€0.28 per Share were paid in the third and fourth quarters of 2018, respectively.
Dividends attributable to restricted stock units and performance share units that are unvested at the period end
date are accrued accordingly. During the year an incremental dividend accrual of €1 million has been recognised
(2019: nil, 2018: €2 million).
Note 17
Total operating costs
The following tables summarise the significant cost items by nature within operating costs for the years presented:
31December2020 31December2019 31December2018
€ million € million € million
Cost of inventory recognised as an expense 4,626 5,147 4,901
Write down of inventories (Note 8) 29 25 23
Logistics costs
(A)
763 900 907
Depreciation of property, plant and equipment, excluding restructuring 544 549 446
Amortisation of intangible assets (Note 6) 62 52 51
Acquisition related costs 14 — —
Out of period mark-to-market effects on undesignated derivatives 2 (2) 8
Restructuring charges, including accelerated depreciation
(B)
368 130 274
(A) Logistics costs include warehousing and delivery costs to the final customer destination. They exclude depreciation and amortisation.
31December2020 31December2019 31December2018
Employee costs € million € million € million
Wages and salaries 1,253 1,370 1,360
Social security costs 283 289 290
Pension and other employee benefits 119 112 118
Total employee costs
1,655 1,771 1,768
Directors’ remuneration information is disclosed in the Directors’ Remuneration Report.
The average number of persons employed by the Group (including Directors) for the periods presented were
asfollows:
2020 2019 2018
No. in thousands No. in thousands No. in thousands
Commercial 7.3 7.6 7.7
Supply chain 12.4 13.1 13.1
Support functions 2.5 2.6 2.7
Total average staff employed
22.2 23.3 23.5
31December2020 31December2019 31December2018
(B)
Restructuring € million € million € million
Increase in provision for restructuring programmes (Note 22) 242 80 236
Amount of provision unused (Note 22) (7) (15) (23)
Accelerated depreciation and non-cash costs 121 39 22
Other cash costs
(A)
12 26 39
Total restructuring costs
368 130 274
(A) Other cash costs primarily relate to professional fees, which include consultancy costs, legal fees and other costs directly associated with restructuring.
158
Restructuring costs charged in arriving at operating profit for the years presented include restructuring costs arising
under the following programmes and initiatives:
Accelerate Competitiveness
In October 2020, the Group announced a number of proposals aimed at improving productivity through the use of
technology enabled solutions. Included in these proposals was the closure of certain production facilities, including
Liederbach and Sodenthaler in Germany and Malaga in Iberia. These proposals continue the focus on network
optimisation and site rationalisation of the Group, with the majority of the impacted activities to be transferred
within our network of facilities in each respective territory.
The proposals are also expected to impact a number of functions across the Group, including business process
technology, customer service, sales and marketing, and finance as the Group seeks to reduce complexity, improve
efficiency and increase the use of technology.
During the year ended 31December2020, the Group has incurred restructuring charges related to this programme
of €202million, primarily made up of expected severance costs and accelerated depreciation. Thetotal expenditure
over the life of the programme is expected to be approximately €380million. It is expected to be substantially
complete by 31 December 2022.
Site closures in Germany
In January 2020, the Group announced proposals in Germany to close five distribution centres during the course
of2020 and a new commercial restructuring initiative relating to vending operations and sales functions. During the
year ended 31December2020, restructuring charges of €78million were recognised in connection with these
proposals, primarily relating to severance costs and accelerated depreciation.
Transformation of cold drink operations
During 2019, the Group commenced a transformation project relating to our cold drink operations aimed at
delivering a modern, differentiated and versatile equipment fleet to optimise net cooler placements throughout
our markets. As part of this strategy, capital expenditure on cold drink equipment will focus on the introduction of
anew, more cost effective cooler, whilst reducing maintenance and refurbishment support spending on our older
equipment. As a result of the operational impact of the strategic changes, a restructuring charge was recognised
forthe year ended 31December2020 of €44million (2019: €53million), primarily relating to the write down and
accelerated depreciation of aged cold drink equipment assets.
Supply chain site closure in Iberia
In 2016, as required by a Supreme Court ruling, CCIP created a new logistics centre (COIL) in Fuenlabrada, Spain and
re-employed many of the workers who had been subject to a 2014 collective dismissal process at the same location.
Following subsequent discussions with employee representatives, in November 2018 a COIL shutdown agreement
was signed which effected the closure of the facility. For the year ended 31December2018, the Group recorded a
related restructuring expense of €112 million, primarily related to severance costs. No further expenses were
recognised in 2019 or 2020.
Supply chain site closure in GB
In January 2018, as part of productivity initiatives in Great Britain, the Group announced proposals to close its
production facility in Milton Keynes and distribution centre in Northampton. The closures occurred during 2019.
During the years ended 31December2019 and 31December2018, the Group recorded total expense of
€20 million, primarily related to severance costs and accelerated depreciation, partially offset by a gain on the sale
of the production facility in Milton Keynes. As at 31December2019 the programme was substantially complete.
Commercial restructuring initiatives
In 2018, commercial restructuring initiatives were announced in Germany relating to the full service vending
business, and in 2019, commercial and supply chain restructuring initiatives were initiated relating to operational
productivity. During the year ended 31December2019, the Group recorded expenses of €24million in Germany
forthese initiatives, primarily related to severance costs. As at 31 December 2020 the programme is substantially
complete.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 159
Auditor’s remuneration
Audit and other fees charged in the income statement concerning the statutory auditor of the consolidated
financial statements, Ernst & Young LLP, were as follows:
31December2020 31December2019 31December2018
€ thousand € thousand € thousand
Audit of Parent Company and consolidated financial statements
(A)
3,149 2,737 2,401
Audit of the Company’s subsidiaries 3,046 3,430 3,719
Total audit 6,195 6,167 6,120
Audit-related assurance services
(B)
909 1,106 976
Other assurance services 279 236 101
Total audit and audit-related assurance services 7,383 7,509 7,197
All other services
(C)
30 123 1,180
Total non-audit or non-audit-related assurance services 30 123 1,180
Total audit and all other fees 7,413 7,632 8,377
(A) Fees in respect of the audit of the accounts of the Company, including the Group's consolidated financial statements.
(B) Includes professional fees for interim reviews, reporting on internal financial controls, services related to the transaction entered into with CCE, TCCC, CCIP and CCEG,
issuance of comfort letters for debt issuances, regulatory inspections, certain accounting consultations and other attest engagements.
(C) Represents fees for all other allowable services.
Note 18
Finance costs
Finance costs are recognised in the consolidated income statement in the period in which they are incurred,
withthe exception of general and specific borrowing costs directly attributable to the acquisition, construction
orproduction of qualifying assets. Qualifying assets are assets that necessarily take a substantial period of time
toget ready for their intended use or sale. Borrowing costs are added to the cost of those assets, until such time
asthe assets are substantially ready for their intended use or sale. All other borrowing costs are recognised within
the consolidated income statement in the period in which they are incurred based upon the effective interest rate
method. Interest income is recognised using the effective interest rate method.
The following table summarises net finance costs for the years presented:
31December2020 31December2019 31December2018
€ million € million € million
Interest income
(A)
33 49 47
Interest expense on external debt
(A)
(132) (137) (134)
Other finance costs
(B)
(12) (8) (6)
Total finance costs, net
(111) (96) (93)
(A) Includes interest income and expense amounts, as applicable, on cross currency swaps used to hedge USD debt. Interest swap income amounts to €24 million, €36 million
and €34 million for 2020, 2019 and 2018, respectively. Refer to Note 12 for further details.
(B) Other finance costs principally include amortisation of the discount on external debt and interest on leases.
Note 19
Related party transactions
For the purpose of these consolidated financial statements, transactions with related parties mainly comprise
transactions between subsidiaries of the Group and the related parties of the Group.
Transactions with TCCC
TCCC exerts significant influence over the Group, as defined by IAS 24, “Related Party Disclosures”. As at
31December2020, 19.3% of the total outstanding Shares in the Group were owned by European Refreshments,
awholly owned subsidiary of TCCC. The Group is a key bottler of TCCC products and has entered into bottling
agreements with TCCC to make, sell and distribute products of TCCC within the Group’s territories. The Group
purchases concentrate from TCCC and also receives marketing funding to help promote the sale of TCCC products.
Bottling agreements with TCCC for each of the Group’s territories extend through to 28 May 2026, withterms
of 10 years, with each containing the right for the Group to request a 10 year renewal. Additionally, twoof the
Group’s 17 Directors are nominated by TCCC.
The Group and TCCC engage in a variety of marketing programmes to promote the sale of TCCC products in
territories in which the Group operates. The Group and TCCC operate under an incidence based concentrate pricing
model and funding programme, the terms of which are tied to the terms of our bottling agreements.
TCCC makes discretionary marketing contributions under shared marketing agreements to CCEP’s operating
subsidiaries. Amounts to be paid to the Group by TCCC under the programmes are generally determined annually
and are periodically reassessed as the programmes progress. Under the bottling agreements, TCCC is under no
obligation to participate in the programmes or continue past levels of funding in the future. The amounts paid
andterms of similar programmes with other franchises may differ.
160
Marketing support funding programmes granted to the Group provide financial support principally based on
product sales or on the completion of stated requirements and are intended to offset a portion of the costs
of the programmes.
Payments from TCCC for marketing programmes to promote the sale of products are classified as a reduction
incost of sales, unless the presumption that the payment is a reduction in the price of the franchisors’ products
canbe overcome. Payments for marketing programmes are recognised as product is sold.
The following table summarises the transactions with TCCC that directly impacted the consolidated income
statement for the years presented:
31December2020 31December2019 31December2018
€ million € million € million
Amounts affecting revenue
(A)
50 66 59
Amounts affecting cost of sales
(B)
(2,555) (2,962) (2,860)
Amounts affecting operating expenses
(C)
8 (22) (18)
Total net amount affecting the consolidated income statement
(2,497) (2,918) (2,819)
(A) Amounts principally relate to fountain syrup and packaged product sales.
(B) Amounts principally relate to the purchase of concentrate, syrup, mineral water and juice, as well as funding for marketing programmes.
(C) Amounts principally relate to certain costs associated with new product development initiatives. In 2020, amounts also include the reimbursement of certain marketing
expenses.
The following table summarises the transactions with TCCC that impacted the consolidated statement of financial
position for the periods presented:
31December2020 31December2019
€ million € million
Amounts due from TCCC 146 103
Amounts payable to TCCC 167 233
Terms and conditions of transactions with TCCC
Outstanding balances on transactions with TCCC are unsecured, interest free and generally settled in cash.
Receivables from TCCC are considered to be fully recoverable.
Refer to Note 1 for further information regarding the proposed acquisition of CCL, which includes the Co-operation
agreement with TCCC with respect to the acquisition of TCCC’s 30.8% interest in CCL.
Transactions with Cobega companies
Cobega, S.A. (Cobega) exhibits significant influence over the Group, as defined by IAS 24, “Related Party
Disclosures”. As a result of the consummation of the Merger, Cobega, which previously owned 56% of CCIP, indirectly
owned 20.6% of the total outstanding Shares in the Group as at 31December2020 through its ownership interest
inOlive Partners, S.A.. Additionally, five of the Group’s 17 Directors, including the Chairman, are nominated by
OlivePartners, three of whom are affiliated with Cobega.
The principal transactions with Cobega are for the purchase of packaging materials, juice concentrate and
maintenance services for vending machines. The following table summarises the transactions with Cobega
thatdirectly impacted the consolidated income statement for the years presented:
31December2020 31December2019 31December2018
€ million € million € million
Amounts affecting revenue
(A)
1 1 3
Amounts affecting cost of sales
(B)
(43) (68) (85)
Amounts affecting operating expenses
(C)
(8) (10) (14)
Total net amount affecting the consolidated income statement (50) (77) (96)
(A) Amounts principally relate to packaged product sales.
(B) Amounts principally relate to the purchase of packaging materials and concentrate.
(C) Amounts principally relate to certain costs associated with maintenance and repair services.
The following table summarises the transactions with Cobega that impacted the consolidated statement of
financial position for the periods presented:
31December2020 31December2019
€ million € million
Amounts due from Cobega 4 3
Amounts payable to Cobega 14 16
There are no significant transactions with other related parties in the periods presented.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 161
Transactions with key management personnel
Key management personnel are the members of the Board of Directors and the members of the Executive
Leadership Team. The following table summarises the total remuneration paid or accrued during the reporting
period related to key management personnel:
31December2020 31December2019 31December2018
€ million € million € million
Salaries and other short-term employee benefits
(A)
20 35 23
Post-employment benefits 1 1 1
Share-based payments 6 9 9
Termination benefits 5 — —
Total 32 45 33
(A) Short-term employee benefits include wages, salaries and social security contributions, paid annual leave and paid sick leave, paid bonuses and non-monetary benefits.
The Group did not have any loans with key management personnel and was not party to any other transactions with
key management personnel during the periods presented.
Note 20
Income taxes
Current income tax
Current income tax for the period includes amounts expected to be payable on taxable income in the period
together with any adjustments to taxes payable in respect of previous periods, and is determined based on 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
Deferred tax is determined by identifying the temporary differences between the tax bases of assets and liabilities
and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax for the period
includes origination and reversal of temporary differences, remeasurements of deferred tax balances and
adjustments in respect of prior periods.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
• When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction
that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor
taxable profit or loss; or
• In respect of taxable temporary differences associated with investments in subsidiaries, branches and associates
and interests in joint ventures, when the timing of the reversal of the temporary differences can be controlled
bythe Group and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and
unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible
temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised, except:
• When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of
an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects
neither the accounting profit nor taxable profit or loss; or
• In respect of deductible temporary differences associated with investments in subsidiaries, branches and
associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable
that the temporary differences will reverse in the foreseeable future and taxable profit will be available against
which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is
no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be
utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent
that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the
asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively
enacted at the reporting date.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current
taxassets against current income tax liabilities and the deferred taxes relate to the same taxation authority
oneither the same taxable entity or different taxable entities where there is an intention to settle the balances
ona net basis.
162
Income tax is recognised in the consolidated income statement. Income tax is recognised in other comprehensive
income or directly in equity to the extent that it relates to items recognised in other comprehensive income
or in equity.
2020, 2019 and 2018 results
The following table summarises the major components of income tax expense for the periods presented:
31December2020 31December2019 31December2018
€ million € million € million
Current income tax:
Current income tax charge
230 330 315
Adjustment in respect of current income tax from prior periods
3 (20) 4
Total current tax 233 310 319
Deferred tax:
Relating to the origination and reversal of temporary differences
(73) 45 21
Adjustment in respect of deferred income tax from prior periods
(6) 6 (6)
Relating to changes in tax rates or the imposition of new taxes
43 3 (38)
Total deferred tax (36) 54 (23)
Income tax charge per the consolidated income statement 197 364 296
The following table summarises the taxes on items recognised in other comprehensive income (OCI) and directly
within equity for the periods presented:
31December2020 31December2019 31December2018
€ million € million € million
Taxes charged/(credited) to OCI:
Deferred tax on net gain/loss on revaluation of cash flow hedges
(4) 2 (3)
Deferred tax on net gain/loss on net investment hedges
— — (41)
Current tax on net gain/loss on net investment hedges
— — 41
Deferred tax on net gain/loss on pension plan remeasurements
(16) (12) —
Total taxes charged/(credited) to OCI (20) (10) (3)
Taxes charged/(credited) to equity:
Deferred tax charge/(credit): share-based compensation
1 (2) 12
Current tax charge/(credit): share-based compensation
(3) (4) (5)
Total taxes charged/(credited) to equity (2) (6) 7
The effective tax rate was 28.3%, 25.0% and 24.6% for the years ended 31December2020, 31December2019 and
31December2018, respectively. The parent company of the Group is a UK company. Accordingly, the following
tables provide reconciliations of the Group’s income tax expense at the UK statutory tax rate to the actual income
tax expense for the periods presented:
31December2020 31December2019 31December2018
€ million € million € million
Accounting profit before tax from continuing operations 695 1,454 1,205
Tax expense at the UK statutory rate 132 276 229
Taxation of foreign operations, net
(A)
23 89 81
Non-deductible expense items for tax purposes 6 4 30
Rate and law change impact, net
(B)(C)(D)(E)(F)
43 3 (38)
Deferred taxes not recognised (4) 6 (4)
Adjustment in respect of prior periods (3) (14) (2)
Total provision for income taxes 197 364 296
(A) This reflects the impact, net of income tax contingencies, of having operations outside the UK, which are taxed at rates other than the statutory UK rate of
19%(2019:19%,2018:19%), as well as the benefit of some income being fully or partially exempt from income taxes due to various operating and financing activities.
(B) In 2020, the UK enacted a law change that retained the rate of 19% from 2020 reversing a previously enacted decrease to 17%. The Group recognised a deferred tax
expense of €37million to reflect the impact of this change.
(C) In 2020, the Netherlands enacted a law change which held the tax rate at 25% with effect from 2021. This reverses the previously enacted reduction to 21.7% from 2021.
TheGroup recognised a deferred tax expense of €6 million to reflect the impact of this amendment. In 2018, the Netherlands enacted a staggered reduction in the tax
rate from 25% in 2018 to 20.5% in 2021 and deferred tax balances were adjusted accordingly. The Group recognised a deferred tax benefit of €9million to reflect the
impact of the rate reduction. In 2019, the ultimate level to which the rate will reduce was increased to 21.7%. The Group recognised a deferred tax expense of €2 million
toreflect the impact of this amendment.
(D) In 2019, France enacted two law changes that decelerated the trajectory of the rate reduction from 33.33% to 25% effective for tax years beginning on or after
1 January 2019. The Group recognised a net deferred tax expense of €1million to reflect the impact of these changes.
(E) In 2018, the Basque territory enacted a law change which reduced the rate of tax from 28% in prior years, to 26% in 2018 and 24% from 2019. Additionally, the rules relating
to the use of tax credits changed. The Group recognised a deferred tax benefit of €23 million to reflect the impact of this change.
(F) In 2018, Sweden enacted an incremental corporate income tax rate reduction from 22%, ultimately reaching 20.6%, effective 1 January 2021. As a result, the Group
recognised a deferred tax benefit of €5 million to reflect the impact of this change.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 163
Deferred income taxes
The following table summarises the movements in the carrying amounts of deferred tax liabilities and assets by
significant component during the periods presented:
Franchise
and other
intangible
assets
Property,
plant and
equipment
Financial
assets and
liabilities Tax losses
Employee
and retiree
benefit
accruals Tax credits Other, net Total, net
€ million € million € million € million € million € million € million € million
As at 31 December 2018 1,949 212 15 (4) (81) (12) 41 2,120
Amount charged/(credited) to income
statement (excluding effect of tax rate
changes) 2 10 (10) — 36 9 4 51
Effect of tax rate changes on income
statement 2 1 — — — — — 3
Amounts charged/(credited) directly to OCI — — 2 — (12) — — (10)
Amount charged/(credited) to equity — — — — (2) — — (2)
Effect of movements in foreign exchange 13 1 — — — — — 14
As at 31 December 2019 1,966 224 7 (4) (59) (3) 45 2,176
Amount charged/(credited) to income
statement (excluding effect of tax rate
changes) (9) (40) (8) (2) (14) (7) 1 (79)
Effect of tax rate changes on income
statement 39 4 — — (1) — 1 43
Amounts charged/(credited) directly to OCI — — (4) — (16) — — (20)
Amount charged/(credited) to equity — — — — 1 — — 1
Effect of movements in foreign exchange (14) (1) (1) — — — 2 (14)
As at 31 December 2020 1,982 187 (6) (6) (89) (10) 49 2,107
The total net deferred tax liability of €2,107 million at 31December2020 is presented in the consolidated statement
of financial position as deferred tax assets of €27 million and deferred tax liabilities of €2,134 million. Other net
deferred tax liabilities as at 31December2020 include a €39 million liability arising on assets capitalised under
IFRSbut expensed for tax, and a €22 million liability related to purchase accounting on earlier transactions inan
acquired entity.
Unrecognised tax items
The utilisation of tax losses and temporary differences carried forward, for which no deferred tax asset is currently
recognised, is subject to the resolution of tax authority enquiries and the achievement of positive income in periods
which are beyond the Group’s current business plan, and therefore this utilisation is uncertain. In respect ofunused
tax losses and other attributes carried forward, deferred tax assets of €463 million, €493 million and €544 million
have not been recognised as at 31December2020, 31December2019 and 31December2018, respectively. As at
31December2020, the net recognised tax losses carried forward totalled €6 million. Of these, €4 million expire
between 2026 and 2029. As at 31December2020, the Group recognised tax credits carried forward totalling
€10 million, which expire between 2043 and 2050.
As at 31December2020, no deferred tax liability has been recognised in respect of €139million of unremitted
earnings in subsidiaries, associates and joint ventures.
Tax provisions
The Group is routinely under audit by tax authorities in the ordinary course of business. Due to their nature, such
proceedings and tax matters involve inherent uncertainties including, but not limited to, court rulings, settlements
between affected parties and/or governmental actions. The probability of outcome is assessed and accrued as
aliability and/or disclosed, as appropriate. The Group maintains provisions for uncertainty relating to these tax
matters that it believes appropriately reflect its risk. As at 31December2020, €136million of these provisions is
included in current tax liabilities and the remainder is included in non-current tax liabilities.
The Group reviews the adequacy of these provisions at the end of each reporting period and adjusts them based
on changing facts and circumstances. Due to the uncertainty associated with tax matters, it is possible that at
some future date, liabilities resulting from audits or litigation could vary significantly from the Group’s provisions.
The Group has received tax assessments in certain jurisdictions for potential tax related to the Group’s purchases
of concentrate. The value of the Group’s concentrate purchases is significant, and therefore, the tax assessments
are substantial. The Group strongly believes the application of tax has no technical merit based on applicable tax
law, and its tax position would be sustained. Accordingly, the Group has not recorded a tax liability for these
assessments, and is vigorously defending its position against these assessments.
164
Note 21
Share-based payment plans
The Group has established share-based payment plans that provide for the granting of share options and restricted
stock units, some with performance and/or market conditions, to certain executive and management level
employees. These awards are designed to align the interests of its employees with the interests of its shareholders.
The Group recognises compensation expense equal to the grant date fair value for all share-based payment awards
that are expected to vest. Expense is generally recorded on a straight-line basis over the requisite service period for
each separately vesting portion of the award.
During the years ended 31December2020, 31December2019 and 31December2018, compensation expense
related to our share-based payment plans totalled €14 million, €15 million and €17 million, respectively.
Share options
Share options (1)are granted with exercise prices equal to or greater than the fair value of the Group’s stock on
thedate of grant, (2)generally vest in three annual tranches over a period of 36 months and (3)expire 10 years
fromthe date of grant. Generally, when options are exercised, new Shares will be issued rather than issuing treasury
Shares, if available. No options were granted during the years ended 31December2020, 31December2019 and
31December2018. All options outstanding as at 31December2020, 31December 2019 and31December2018
werevalued and had exercise prices in US dollars.
The following table summarises our share option activity for the periods presented:
2020 2019 2018
Shares
Average
exerciseprice Shares
Average
exerciseprice Shares
Average
exerciseprice
thousands US$ thousands US$ thousands US$
Outstanding at beginning of year 4,815 29.8 6,542 26.51 8,579 23.58
Granted
— — — — — —
Exercised
(761) 19.79 (1,722) 17.33 (2,037) 14.16
Forfeited, expired or cancelled
(3) 31.97 (5) 19.23 — —
Outstanding at end of year 4,051 31.68 4,815 29.8 6,542 26.51
Options exercisable at end of year 4,051 31.68 4,815 29.8 6,542 26.51
The weighted average Share price during the years ended 31December2020, 31December2019 and
31December2018 was US$42.71, US$52.73 and US$41.91, respectively.
The following table summarises the weighted average remaining life of options outstanding for the periods
presented:
2020 2019 2018
Range of exercise prices
Options
outstanding
Weighted
average
remaining life
Options
outstanding
Weighted
average
remaining life
Options
outstanding
Weighted
average
remaining life
US$ thousands years thousands years thousands years
5.00 to 15.00 — — — — 713 0.84
15.01 to 25.00 931 1.75 1,681 2.31 2,459 2.94
25.01 to 40.00 3,120 3.85 3,134 4.59 3,370 5.84
Total 4,051 3.37 4,815 3.79 6,542 4.21
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 165
Restricted Stock Units (RSUs) and Performance Share Units (PSUs)
RSU awards entitle the participant to accrue dividends, which are paid in cash only if the RSUs vest. They do not
givevoting rights. Upon vesting, the participant is granted one Share for each RSU. They generally vest subject
tocontinued employment for a period of at least 36 months. Unvested RSUs are restricted as to disposition and
subject to forfeiture.
There were 0.2 million, 0.3 million and 0.3 million unvested RSUs outstanding with a weighted average grant date
fairvalue of US$41.77, US$42.06 and US$39.51 as at 31December2020, 31December2019 and 31December 2018,
respectively.
PSU awards entitle the participant to the same benefits as RSUs. They generally vest subject to continued
employment for a period of at least 36 months and the attainment of certain performance targets. There were
1.1 million, 1.2 million and 1.2 million of unvested PSUs with weighted average grant date fair values of US$40.45,
US$42.53 and US$42.66 outstanding as at 31December2020, 31December2019 and 31December2018, respectively.
The PSUs granted in 2018, 2019 and 2020vest after three years and are subject to two equally weighted
performance conditions: compound annual growth rate of earnings per share, and return on invested capital (ROIC),
both measured over a three year period. For the PSUs granted in 2020 an additional sustainability metric, focused on
the reduction of greenhouse gas emissions (CO
2
e) across our entire value chain, was included, with a15% weighting.
Key assumptions for grant date fair value
The following table summarises the weighted average grant date fair values per unit:
Restricted Stock Units and Performance Share Units 2020 2019
Grant date fair value - service conditions (US$) 34.45 48.60
Grant date fair value - service and performance conditions (US$) 33.46 47.74
Note 22
Provisions, contingencies and commitments
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. When some or all of a provision isexpected to
be reimbursed, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually
certain. The expense relating to a provision is presented in the consolidated income statement, net of any
reimbursement.
Asset retirement obligations are estimated at the inception of a lease or contract, for which a liability isrecognised.
A corresponding asset is also created and depreciated.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that
reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision
due to the passage of time is recognised as a finance cost.
Provisions
The following table summarises the movement in each class of provision for the periods presented:
Restructuring
provision
Decommissioning
provision
Other
provisions
(A)
Total
€ million € million € million € million
As at 31 December 2018 223 16 13 252
Charged/(credited) to profit or loss:
Additional provisions recognised
80 2 1 83
Unused amounts reversed
(15) — (2) (17)
Utilised during the period (121) (1) (1) (123)
Translation 1 — — 1
As at 31 December 2019 168 17 11 196
Charged/(credited) to profit or loss:
Additional provisions recognised
242 — 4 246
Unused amounts reversed
(7) — — (7)
Utilised during the period (193) — (1) (194)
Translation (2) (2) — (4)
As at 31 December 2020 208 15 14 237
Non-current 63 15 5 83
Current 145 — 9 154
As at 31 December 2020 208 15 14 237
(A) Other provisions primarily relate to property tax assessment provisions and legal reserves and are not considered material to the consolidated financial statements.
166
Restructuring provision
Restructuring provisions are recognised only when the Group has a constructive obligation, which is when a detailed
formal plan identifies the business or part of the business concerned, the location and number of employees
affected, a detailed estimate of the associated costs and an appropriate timeline, and the employees affected have
been notified of the plan’s main features. These provisions are expected to be resolved by the time the related
programme is substantively complete.
Refer to Note 17 for further details regarding our restructuring programmes, including expected completion date,
total costs incurred and expected costs to be incurred.
Decommissioning provisions
Decommissioning liabilities relate to contractual or legal obligations to pay for asset retirement costs. The liabilities
represent both the reinstatement obligations when the Group is contractually obligated to pay for thecost of
retiring leased buildings and the costs for collection, treatment, reuse, recovery and environmentally sound disposal
of cold drink equipment. Specific to cold drink equipment obligations, the Group is subject to,andoperates in
accordance with, the EU Directive on Waste Electrical and Electronic Equipment (WEEE). Underthe WEEE,
companies that put electrical and electronic equipment (such as cold drink equipment) on the EU market are
responsible for the costs of collection, treatment, recovery and disposal of their own products. Where applicable,
theWEEE provision estimate is calculated using assumptions including disposal cost per unit, average equipment
age and the inflation rate, to determine the appropriate accrual amount.
The period over which the decommissioning liabilities on leased buildings and cold drink equipment will be settled
ranges from 1 to 30 years and 4 to 9 years, respectively.
Contingencies
Legal proceedings and tax matters
The Group is involved in various legal proceedings and tax matters and is routinely under audit by tax authorities
inthe ordinary course of business. Due to their nature, such legal proceedings and tax matters involve inherent
uncertainties including, but not limited to, court rulings, settlements between affected parties and/or governmental
actions. The probability of loss for such contingencies is assessed and accrued as a liability and/or disclosed,
asappropriate.
Guarantees
In connection with ongoing litigation in certain territories, guarantees of approximately €310 million have been
issued to the authorities. The Group was required to issue these guarantees to satisfy potential obligations arising
from such litigation. In addition, we have approximately €45 million of guarantees issued to third parties through the
normal course of business. The guarantees have various terms, and the amounts represent the maximum potential
future payments that we could be required to make under the guarantees. No significant additional liabilities in the
accompanying consolidated financial statements are expected to arise from guarantees issued.
Commitments
Commitments beyond 31December2020 are disclosed herein but not accrued for within the consolidated
statement of financial position.
Purchase agreements
Total purchase commitments were €0.2 billion as at 31December2020. This amount represents non-cancellable
purchase agreements with various suppliers that are enforceable and legally binding, and that specify a fixed or
minimum quantity that we must purchase. All purchases made under these agreements have standard quality
andperformance criteria. In addition to these amounts, the Group has outstanding capital expenditure purchase
orders of approximately €50 million as at 31December2020. The Group also has other purchase orders raised
inthe ordinary course of business which are settled in a reasonably short period of time.
Lease agreements
As at 31December2020, the Group had committed to a number of lease agreements that have not yet
commenced. The minimum lease payments for these lease agreements totalled €18 million.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 167
Note 23
Other assets
The following table summarises the Group’s other current assets as at the dates presented:
31December2020 31December2019
Other current assets € million € million
Prepayments 61 65
VAT receivables 34 44
Miscellaneous receivables 109 132
Assets held for sale 20 18
Total other current assets 224 259
The following table summarises the Group’s other non-current assets as at the dates presented:
31December2020 31December2019
Other non-current assets € million € million
VAT receivables 208 201
Retirement benefit surplus (Note 15) 43 38
Other 86 82
Total other non-current assets 337 321
VAT receivables
As at 31December2020, included within other non-current assets, the Group has a VAT receivable of €208 million,
relating to the dispute that began in 2014 between the Spanish tax authorities and the regional tax authorities
ofBizkaia (Basque Region) as to the responsibility for refunding the VAT to CCEP.
Under relevant tax laws in Spain, conflicts between jurisdictions are ruled by a special Arbitration Board and the
refund of the VAT is mandated following the resolution of the issue at the Arbitration Board. However, to date,
theArbitration Board has not ruled on the issue and Spanish legislation offers limited mechanisms for a taxpayer
toforce the expedition of matters before the Arbitration Board. The outstanding VAT receivable as at
31December2020 remains classified as non-current due to the continued delay in the resolution of the matter
bythe Arbitration Board. We believe it remains a certainty that the amount due plus interest will be refunded
toCCEP once the Arbitration Board rules.
Note 24
Financial risk management
Financial risk factors, objectives and policies
The Group’s activities expose it to several financial risks including market risk, credit risk and liquidity risk.
Financialrisk activities are governed by appropriate policies and procedures to minimise the uncertainties
theserisks create on the Group’s future cash flows. Such policies are developed and approved by the Group’s
treasury and commodities risk committee, through the authority delegated to it by the Board.
Market risk
Market risk represents the risk that the fair value of future cash flows of a financial instrument will fluctuate due to
changes in market prices and includes interest rate risk, currency risk and other price risk such as commodity price
risk. Market risk affects outstanding borrowings, as well as derivative financial instruments.
Interest rates
The Group is subject to interest rate risk for its outstanding borrowings. To manage interest rate risk, the Group
maintains a significant proportion of its borrowings at fixed rates. Approximately 95% and 91% of the Group’s
interest bearing borrowings were comprised of fixed rate borrowings at 31December2020 and 31December2019,
respectively. The Group has not entered into any interest rate swap agreements or other such instruments to hedge
its interest rate risk during the periods presented.
If interest rates on the Group’s floating rate debt were adjusted by 1% for the years ended 31December2020,
31December 2019 and 31December2018, the Group’s finance costs and pre-tax equity would change on an annual
basis by approximately €2 million, €4 million and €6 million, respectively. This amount is determined by calculating
the effect of a hypothetical interest rate change on the Group’s floating rate debt. This estimate does not include
the effects of other actions to mitigate this risk or changes in the Group’s financial structure.
Currency exchange rates
The Group’s exposure to the risk of changes in currency exchange rates relates primarily to its operating activities
denominated in currencies other than the functional currency, euro. To manage currency exchange risk arising from
future commercial transactions and recognised monetary assets and liabilities, foreign currency forward and option
contracts with external third parties are used. Typically, up to 80% of anticipated cash flow exposures in each major
foreign currency for the next calendar year are hedged using a combination of forward and option contracts with
third parties.
168
The Group is also exposed to the risk of changes in currency exchange rates between US dollar and euro relating to
its US denominated borrowings. The following table demonstrates the sensitivity of the Group’s profit before
income taxes and pre-tax equity as a result of changes in the value of outstanding debt instruments due to
reasonable movements in the US dollar against the euro, with all other variables held constant. This does not take
into account the effects of derivative instruments used to manage exposure to this risk. Movements in foreign
currencies related to the Group’s other financial instruments do not have a material impact on profit before income
taxes or pre-tax equity.
Change in
currency rate
€ strengthens
against US$
€ weakens
againstUS$
Effect on profit before tax and pre-tax equity % € million € million
Year ended 31 December 2020 10 33 (36)
Year ended 31 December 2019 10 87 (95)
Year ended 31 December 2018 10 85 (93)
Commodity price risk
The competitive marketplace in which the Group operates may limit its ability to recover increased costs through
higher prices. As such, the Group is subject to market risk with respect to commodity price fluctuations, principally
related to its purchases of aluminium, PET (plastic, including recycled PET), steel, sugar and vehicle fuel. When
possible, exposure to this risk is managed primarily through the use of supplier pricing agreements, which enable the
Group to establish the purchase price for certain commodities. Certain suppliers restrict the Group’s ability to hedge
prices through supplier agreements. As a result, commodity hedging programmes are entered into and generally
designated as hedging instruments. Refer to Note 12 for more information. Typically, up to 80% ofthe anticipated
commodity transaction exposures for the next calendar year are hedged using a combination offorward and
optioncontracts executed with third parties. The Group estimates that a 10% change in the market price of
thesecommodities over the current market prices would affect operating profit during the next 12 months by
approximately €47 million. This does not take into account the effects of derivative instruments used to manage
exposure to this risk or pricing agreements in place.
Credit risk
The Group is exposed to counterparty credit risk on all of its derivative financial instruments. Strict counterparty
credit guidelines are maintained and only financial institutions that are investment grade or better are acceptable
counterparties. Counterparty credit risk is continuously monitored and numerous counterparties are used to
minimise exposure to potential defaults. Collateral is not required under these agreements. The maximum credit
risk exposure for each derivative financial instrument is the carrying amount of the derivative.
Credit is extended in the form of payment terms for trade to customers of the Group, consisting of retailers,
wholesalers and other customers, generally without requiring collateral, based on an evaluation of the customer’s
financial condition. While the Group has a concentration of credit risk in the retail sector, this risk is mitigated due to
the diverse nature of the customers the Group serves, including, but not limited to, their type, geographic location,
size and beverage channel. Depending on the risk profile of certain customers, we may also seek bank guarantees.
Collections of receivables are dependent on each individual customer’s financial condition and sales adjustments
granted. Trade accounts receivable are carried at net realisable value. Typically, accounts receivable have terms of
30 to 60 days and do not bear interest. Exposure to losses on receivables is monitored, and allowances for potential
losses or adjustments are maintained. Allowances are determined by: (1)evaluating the ageing of receivables;
(2)analysing the history of adjustments; and (3)reviewing high risk customers. Past due receivable balances are
written off when the Group’s efforts have been unsuccessful in collecting the amount due. Credit insurance on
aportion of the accounts receivable balance is also carried.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 169
Liquidity risk
Liquidity risk is actively managed to ensure that the Group has sufficient funds to satisfy its commitments. The
Group’s sources of capital include, but are not limited to, cash flows from operations, public and private issuances
ofdebt and equity securities and bank borrowings. The Group believes its operating cash flow, cash on hand and
available short-term and long-term capital resources are sufficient to fund its working capital requirements,
scheduled borrowing payments, interest payments, capital expenditures, benefit plan contributions, income
taxobligations and dividends to its shareholders. Counterparties and instruments used to hold cash and cash
equivalents are continuously assessed, with a focus on preservation of capital and liquidity. Based on information
currently available, the Group does not believe it is at significant risk of default by its counterparties.
The Group has amounts available for borrowing under a €1.5 billion multi currency credit facility with a syndicate of
10 banks. This credit facility matures in 2025 and is for general corporate purposes, including serving as a backstop to
its commercial paper programme and supporting the Group’s working capital needs. Based on information currently
available, the Group has no indication that the financial institutions participating in this facility would be unable to
fulfil their commitments as at the date of these financial statements. The current credit facility contains no financial
covenants that would impact the Group’s liquidity or access to capital. As at 31December2020, the Group had no
amounts drawn under this credit facility.
The table below analyses the Group’s non-derivative financial liabilities and net settled derivative financial liabilities
into relevant maturity groupings based on the remaining period at the statement of financial position date to the
contractual maturity date. Derivative financial liabilities are included in the analysis if their contractual maturities are
essential for an understanding of the timing of the cash flows. The amounts disclosed in the table are the
contractual undiscounted cash flows:
Total
Less than
1year 1 to 3 years 3 to 5 years
More than
5years
Financial liabilities € million € million € million € million € million
31December2020
Trade accounts payable 2,356 2,356 — — —
Amounts payable to related parties 181 181 — — —
Borrowings 7,323 798 1,207 970 4,348
Derivatives 77 62 15 — —
Lease liabilities 383 100 128 56 99
Total financial liabilities 10,320 3,497 1,350 1,026 4,447
31December2019
Trade accounts payable 2,332 2,332 — — —
Amounts payable to related parties 249 249 — — —
Borrowings 6,530 772 1,676 957 3,125
Derivatives 41 28 13 — —
Lease liabilities 396 115 152 62 67
Total financial liabilities 9,548 3,496 1,841 1,019 3,192
Capital management
The primary objective of the Group’s capital management is to ensure a strong credit rating and appropriate capital
ratios are maintained to support the Group’s business and maximise shareholder value. The Group’s credit ratings
are periodically reviewed by rating agencies. Currently, the Group’s long-term ratings from Moody’s andStandard &
Poor’s (S&P) are A3 and BBB+, respectively. The ratings outlook for Moody’s is on review for downgrade and for S&P
on credit watch negative, which follows the Group’s announced intention to fund the acquisition of CCL fully or
partially with debt. Changes in the operating results, cash flows or financial position could impact the ratings
assigned by the various rating agencies. The credit rating can be materially influenced by a number of factors
including, but not limited to, acquisitions, investment decisions, capital management activities of TCCC and/or
changes in the credit rating of TCCC. Should the credit ratings be adjusted downward, the Group may incur higher
costs to borrow, which could have a material impact on the financial condition and results of operations.
The capital structure is managed and, as appropriate, adjustments are made in light of changes in economic
conditions and the Group’s financial policy. The Group monitors its operating performance in the context of
targeted financial leverage by comparing the ratio of net debt with adjusted EBITDA. Net debt is calculated
asbeing the net of cash and cash equivalents and currency adjusted borrowings. Adjusted EBITDA is calculated
asEBITDA and adjusting for items impacting comparability.
Refer to Note 11 for the presentation of fair values for each class of financial assets and financial liabilities andNote
12 for an outline of how the Group utilises derivative financial instruments to mitigate its exposure tocertain market
risks associated with its ongoing operations.
Refer to the Strategic Report included within this Integrated Report for disclosure of strategic, commercial
andoperational risk relevant to the Group.
170
Note 25
Other significant accounting policies
IFRS15 “Revenue recognition and deductions from revenue”
The Group derives its revenues by making, selling and distributing ready to drink beverages. The revenue from the
sale of products is recognised at the point in time at which control passes to a customer, typically when products
aredelivered to a customer. A receivable is recognised by the Group at the point in time at which the right to
consideration becomes unconditional.
The Group uses various promotional programmes under which rebates, refunds, price concessions or similar items
can be earned by customers for attaining agreed upon sales levels or for participating in specific marketing
programmes. Those promotional programmes do not give rise to a separate performance obligation. Where
theconsideration the Group is entitled to varies because of such programmes, it is deemed to be variable
consideration. The related accruals are recognised as a deduction from revenue and are not considered distinct
from the sale of products to the customer. Variable consideration is only included to the extent that it is highly
probable that the inclusion will not result in a significant revenue reversal in the future normal commercial terms.
Financing elements are not deemed present in our contracts with customers as the sales are made with credit terms
not exceeding normal commercial terms. Taxes on sugared soft drinks, excise taxes and taxes on packaging are
recorded on a gross basis (i.e. included in revenue) where the Group is the principal in the arrangement. Value
added taxes are recorded on a net basis (i.e. excluded from revenue). The Group assesses these taxes and duties
ona jurisdiction by jurisdiction basis to conclude on the appropriate accounting treatment.
Standards issued but not yet effective
Certain new accounting standards and interpretations have been published that are not mandatory for
31December2020 reporting periods and have not been early adopted by the Group. These standards are not
expected to have a material impact on the entity in the current or future reporting periods and on foreseeable
future transactions.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 171
Note 26
Significant events after the reporting period
In connection with the proposed closure of the GB defined benefit plan to future accrual, in January 2021
consultation with the employee representatives was finalised. The Group has subsequently announced that the plan
will close to future accrual as of 31 March 2021. The related prior service cost/gain will be recognised in the year
ended 31 December 2021 and is not expected to be material.
The UK Budget 2021 announcements on 3 March 2021 included a proposal to increase the UK corporation tax rate
from 19% to 25%, effective from 1 April 2023. This change was not substantively enacted as at the balance sheet
date and hence has not been reflected in the measurement of deferred tax balances at the period end. If the
Group’s deferred tax balances as at 31 December 2020 were remeasured at 25% this would result in a deferred tax
charge of approximately €100 million.
Note 27
Group companies
In accordance with section 409 of the Companies Act 2006, a full list of the Company’s subsidiaries, partnerships,
associates, joint ventures and joint arrangements as at 31December2020 is disclosed below, along with the country
of incorporation, the registered address and the effective percentage of equity owned at that date. Unless
otherwise stated, each entity has a share capital comprising a single class of ordinary shares and is wholly owned and
indirectly held by CCEP plc.
Name
Country of
incorporation
% equity
interest Registered address
Agua De La Vega Del Codorno, S.L.U. Spain 100% C/ Ribera del loira, 20-22, 2ª Planta - 28042, Madrid
Aguas De Cospeito, S.L.U. Spain 100% Crta. Pino km. 1 - 2, 27377, Cospeito, Lugo, Spain
Aguas De Santolin, S.L.U. Spain 100% C/ Real, s/n 09246, Quintanaurria, Burgos
Aguas Del Maestrazgo, S.L.U. Spain 100% C/ Monasterio de las huelgas, 7, Pol.ind.Alcalde Caballero,
50014, Zaragoza
Aguas Del Toscal, S.A.U. Spain 100% Ctra. de la Pasadilla, km. 3- 35250, ingenio, Gran Canaria
Aguas Vilas Del Turbon, S.L.U. Spain 100% C/ Monasterio de las huelgas, 7, Pol.ind.Alcalde Caballero,
50014, Zaragoza
Amalgamated Beverages Great Britain Limited United Kingdom 100%
(D)
Pemberton House, Bakers Road, Uxbridge, UB8 1EZ
BBH Investment Ireland Limited Ireland 100% 6th Floor, 2 Grand Canal Square, Dublin 2
Bebidas Gaseosas Del Noroeste, S.L.U. Spain 100% Avda. Alcalde Alfonso Molina, s/n- 15007, A Coruña
Beganet, S.L.U. Spain 100% Avda. Paisos Catalans, 32 – 08950, Esplugues de Llobregat
BH Holdings Lux Commandite SCS Luxembourg 100%
(B)
2, Rue des Joncs, L-1818, Howald
BH Holdings Luxembourg SARL Luxembourg 100% 2, Rue des Joncs, L-1818, Howald
BH Luxembourg SARL Luxembourg 100% 2, Rue des Joncs, L-1818, Howald
BH SARL Luxembourg 100% 2, Rue des Joncs, L-1818, Howald
Birtingahúsið ehf. Iceland 34.5% Laugavegur 174, 105, Reykjavík
BL Bottling Holdings UK Limited United Kingdom 100% Pemberton House, Bakers Road, Uxbridge, UB8 1EZ
Bottling Great Britain Limited United Kingdom 100%
(D)
Pemberton House, Bakers Road, Uxbridge, UB8 1EZ
Bottling Holdings (Luxembourg) SARL Luxembourg 100% 2, Rue des Joncs, L-1818, Howald
Bottling Holdings (Netherlands) B.V. Netherlands 100% Watermanweg 30, 3067 GG, Rotterdam
Bottling Holdings Europe Limited United Kingdom 100%
(A)(E)
Pemberton House, Bakers Road, Uxbridge, UB8 1EZ
Bottling Holding France SAS France 100% 9, chemin de Bretagne, 92784, Issy-les-Moulineaux
CC Digital GmbH Germany 50% Stralauer Allee 4, 10245, Berlin
CC Erfrischungsgetränke Oldenburg
VerwaltungsGmbH
Germany 100% Stralauer Allee 4, 10245, Berlin
CC Iberian Partners Gestion S.L. Spain 100% C/ Ribera del loira, 20-22, 2ª Planta - 28042, Madrid
CC Verpackungsgesellschaft mit
beschraenkterHaftung
Germany 100% Schieferstraße 20 06126 Halle, Saale
CCEP Australia Pty Ltd Australia 100% Level 17, 8 Chifley, 8 - 12 Chifley Square, Sydney NSW 2000
CCEP Finance (Ireland) Designated Activity Company Ireland 100% 6th Floor, 2 Grand Canal Square, Dublin 2, Ireland
CCEP Group Services Limited United Kingdom 100% Pemberton House, Bakers Road, Uxbridge, UB8 1EZ
CCEPHoldings(Australia)Limited United Kingdom 100%
(A)(D)
Pemberton House, Bakers Road, Uxbridge, UB8 1EZ
CCEPHoldings(Australia)PtyLtd Australia 100%
(A)
Level 17, 8 Chifley, 8 - 12 Chifley Square, Sydney NSW 2000
CCEP Holdings Norge AS Norway 100% Robsrudskogen 5, 1470, Lørenskog
CCEP Holdings Sverige AB Sweden 100% Dryckesvägen 2 C, 136 87, Haninge
172
Name
Country of
incorporation
% equity
interest Registered address
CCEP Holdings UK Limited United Kingdom 100% Pemberton House, Bakers Road, Uxbridge, UB8 1EZ
CCEPScottishLimitedPartnership United Kingdom 100% 52 Milton Road, East Kilbride, Glasgow, Scotland, G74 5DJ
CCEP Ventures Europe Limited United Kingdom 100%
(A)
Pemberton House, Bakers Road, Uxbridge, UB8 1EZ
CCEP Ventures UK Limited United Kingdom 100%
(A)
Pemberton House, Bakers Road, Uxbridge, UB8 1EZ
CCIP Soporte, S.L.U. Spain 100% C/ Ribera del loira, 20-22, 2ª Planta - 28042, Madrid
Classic Brand (Europe) Designated Activity Company Ireland 100% 4th Floor, 25-28 Adelaide Road, D02 RY98, Dublin 2
Cobega Embotellador, S.L.U. Spain 100% Avda Paisos Catalans, 32 - 08950, Esplugues de Llobregat
Coca-Cola European Partners (Initial LP) Limited United Kingdom 100% Pemberton House, Bakers Road, Uxbridge, UB8 1EZ
Coca-Cola European Partners (Scotland) Limited United Kingdom 100% 52 Milton Road, College Milton, East Kilbride, Scotland,
G745DJ
Coca-Cola European Partners Belgium SPRL Belgium 100% Chaussée de Mons 1424, 1070, Brussels
Coca-Cola European Partners Deutschland GmbH Germany 100%
(F)
Stralauer Allee 4, 10245, Berlin
Coca-Cola European Partners France SAS France 100%
(G)
9, chemin de Bretagne, 92784, Issy-les-Moulineaux
Coca-Cola European Partners Great Britain Limited United Kingdom 100% Pemberton House, Bakers Road, Uxbridge, UB8 1EZ
Coca-Cola European Partners Holdings Great Britain
Limited
United Kingdom 100% Pemberton House, Bakers Road, Uxbridge, UB8 1EZ
Coca-Cola European Partners Holdings US, Inc. United States 100%
(A)(D)
Corporation Trust Center, 1209 Orange Street, Wilmington
19801, Delaware
Coca-Cola European Partners Iberia, S.L.U. Spain 100% C/ Ribera del loira, 20-22, 2ª Planta - 28042, Madrid
Coca-Cola European Partners Ísland ehf. Iceland 100% Studlahals 1, 110, Reykjavik
Coca-Cola European Partners Luxembourg SARL Luxembourg 100% 2, Rue des Joncs, L-1818, Howald
Coca-Cola European Partners Nederland B.V. Netherlands 100% Watermanweg 30, 3067 GG, Rotterdam
Coca-Cola European Partners Norge AS Norway 100% Robsrudskogen 5, 1470, Lørenskog
Coca-Cola European Partners Pension Scheme
Trustees Limited
United Kingdom 100% Pemberton House, Bakers Road, Uxbridge, UB8 1EZ
Coca-Cola European Partners Portugal
Unipessoal,LDA
Portugal 100% Quinta da Salmoura - Cabanas, 2929- 509, Azeitão, Setúbal
Coca-Cola European Partners Services Bulgaria EOOD Bulgaria 100% 48, Sitnyakovo Blvd, Serdika Center, Office Building, floor 5,
1505, Sofia
Coca-Cola European Partners Services
EuropeLimited
United Kingdom 100% Pemberton House, Bakers Road, Uxbridge, UB8 1EZ
Coca-Cola European Partners Services SPRL Belgium 100%
(C)
Chaussée de Mons 1424, 1070, Brussels
Coca-Cola European Partners Sverige AB Sweden 100% Dryckesvägen 2 C, 136 87, Haninge
Coca-Cola European Partners US II, LLC United States 100% Corporation Trust Center, 1209 Orange Street, Wilmington
19801, Delaware
Coca-Cola European Partners US, LLC United States 100% Corporation Trust Center, 1209 Orange Street, Wilmington
19801, Delaware
Coca-Cola Immobilier SCI France 100%
(G)
9, chemin de Bretagne, 92784, Issy-les-Moulineaux
Coca-Cola Production SAS France 100% Zone d’entreprises de Bergues, Commune de Socx, 59380,
Bergues
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 173
Name
Country of
incorporation
% equity
interest Registered address
Compañía Asturiana De Bebidas Gaseosas, S.L.U. Spain 100% C/ Nava, 18-3ª (Granda) Siero - 33006, Oviedo
Compañía Castellana De Bebidas Gaseosas, S.L. Spain 100% C/ Ribera del loira, 20-22, 2ª Planta - 28042, Madrid
Compañía Levantina De Bebidas Gaseosas, S.L.U. Spain 100% Av. Real Monasterio de Sta. María de Poblet, 36, 46930,
Quart de Poblet
Compañía Norteña De Bebidas Gaseosas, S.L.U. Spain 100% C/ Ibaizábal, 57 - 48960 Galdakao, Bizkaia
Compañía Para La Comunicación De Bebidas Sin
Alcohol, S.L.U.
Spain 100% C/ Ribera del loira, 20-22, 2ª Planta - 28042, Madrid
Conversia IT, S.L.U. Spain 100% C/ Ribera del loira, 20-22, 2ª Planta - 28042, Madrid
Developed System Logistics, S.L.U. Spain 100% Av. Henry Ford, 25, Manzana 19, Complejo Pq. Ind. Juan
Carlos I , 46220 Picassent, Valencia
Foodl B.V. Netherlands 33% HNK Utrecht West, V.08, Weg der Verenigde Naties 1, 3527
KT Utrecht
GBH Investment Ireland Limited Ireland 100% 6th Floor, 2 Grand Canal Square, Dublin 2
GR Bottling Holdings UK Limited United Kingdom 100%
(A)
Pemberton House, Bakers Road, Uxbridge, UB8 1EZ
Infineo Recyclage SAS France 49%
(H)
Sainte Marie la Blanche – 21200, Dijon
Innovative tap solutions inc. United States 26% 310 North Wolf Road, Wheeling, IL 60090, USA
Instelling voor Bedrijfspensioenvoorziening Coca-Cola
European Partners Belgium/Coca-Cola European
Partners Services – Bedienden-Arbeiders OFP
Belgium 100% Bergensesteenweg 1424 – 1070, Brussels
Instelling voor Bedrijfspensioenvoorziening Coca-Cola
European Partners Belgium/Coca-Cola European
Partners Services – Kaderleden OFP
Belgium 100% Bergensesteenweg 1424 – 1070, Brussels
Iparbal, 99 S.L. Spain 100% C/ Ibaizábal, 57 – 48960 Galdakao, Bizkaia
Iparsoft, 2004 S.L. Spain 100% C/ Ibaizábal, 57 – 48960 Galdakao, Bizkaia
KOL SAS France 25% 12 rue d'Anselme, 93400 Paris, France
Kollex GmbH Germany 25% Genthiner Straße 32, 10785, Berlin
Lusobega, S.L. Spain 100% C/ Ibaizábal, 57 – 48960 Galdakao, Bizkaia
Madrid Ecoplatform, S.L.U. Spain 100% C/Pedro Lara, 8 Pq. Tecnológico de Leganes- 28919,
Leganes
Peña Umbria, S.L.U. Spain 100% Av. Real Monasterio de Sta. María de Poblet, 36- 46930,
Quart de Poblet
Refecon Aguas - Sociedade Industrial De Bebidas,
Unipessoal, LDA
Portugal 100% Quinta da Salmoura - Cabanas-2925-362 Azeitão, Setúbal
Refrescos Envasados Del Sur, S.L.U. Spain 100% Autovía del Sur A-IV, km.528- 41309 La Rinconada, Sevilla
Refrige SGPS, Unipessoal, LDA Portugal 100% Quinta da Salmoura - Cabanas-2925-362 Azeitão, Setúbal
Roalba, S.L.U. Spain 100% C/ Ibaizábal, 57 – 48960 Galdakao, Bizkaia
Solares y Edificios Norteños, S.L.U. Spain 100% C/ Ibaizábal, 57 – 48960 Galdakao, Bizkaia
StarStock Ltd United Kingdom 26% Dane Mill, Broadhurst Lane, Congleton, Cheshire, England,
CW12 1LA
Svenska Brettbolaget AB Sweden 19.6% Greg Turegatan 9, 114 46, Stockholm
WB Investment Ireland 2 Limited Ireland 100% 6th Floor, 2 Grand Canal Square, Dublin 2
WBH Holdings Luxembourg SCS Luxembourg 100% 2, Rue des Joncs, L-1818, Howald
WBH Luxembourg SARL Luxembourg 100% 2, Rue des Joncs, L-1818, Howald
WIH UK Limited United Kingdom 100%
(A)
Pemberton House, Bakers Road, Uxbridge, UB8 1EZ
Wir Sind Coca-Cola GmbH Germany 100% Stralauer Allee 4, 10245, Berlin
(A) 100% equity interest directly held by Coca-Cola European Partners plc.
(B) Class A and B ordinary shares.
(C) Class A, B and C ordinary shares.
(D) Including preference shares issued to the Group.
(E) 38.3% equity interest directly held by Coca-Cola European Partners plc (100% of A ordinary shares in issue).
(F) 10% equity interest directly held by Coca-Cola European Partners plc.
(G) Group shareholding of 99.99% or greater.
(H) Class A and B shares. The Group holds 49% of Class B shares.
174
Coca-ColaEuropeanPartnersplc
Companyfinancialstatements
Statement of comprehensive income
Year ended
31December2020 31December2019
Note € million € million
Revenue from management fees
44 28
Dividend income 3 775 20
Administrative expenses (73) (58)
Operating profit 746 (10)
Finance income 4 24 36
Finance costs 4 (111) (109)
Total finance costs, net (87) (73)
Non-operating items 50 1
Profit before taxes 709 (82)
Taxes 1 —
Profit after taxes 710 (82)
Components of other comprehensive income:
Cash flow hedges that may be subsequently reclassified to the income statement:
Pretax activity, net
7 20
Tax effect
(1) (3)
Other comprehensive income for the period, net of tax 6 17
Comprehensive income for the period 716 (65)
The accompanying notes are an integral part of these Company financial statements.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 175
This page does not form part of the Coca-Cola European Partners plc Annual Report on Form 20-F for the year ended 31 December 2020 as filed with the SEC.
Statement of financial position
31 December 2020 31 December 2019 31 December 2018
Note € million € million € million
ASSETS
Non-current:
Investments 5
22,284
21,856 21,849
Amounts receivable from related parties 6
—
350 350
Other non-current assets
19
46 9
Total non-current assets 22,303 22,252 22,208
Current:
Amounts receivable from related parties 6
3,437
20 68
Other current assets
15
10 7
Total current assets 3,452 30 75
Total assets 25,755 22,282 22,283
LIABILITIES
Non-current:
Borrowings, less current portion 7
6,194
5,367 4,696
Amounts payable to related parties 6
—
97 223
Other non-current liabilities
—
8 51
Total non-current liabilities 6,194 5,472 4,970
Current:
Amounts payable to related parties 6
3,531
1,190 195
Current portion of borrowings 7
714
574 470
Trade and other payables
95
83 85
Current derivative liabilities 9
35
5 —
Total current liabilities 4,375 1,852 750
Total liabilities 10,569 7,324 5,720
EQUITY
Share capital 8
5
5 5
Share premium 8
190
177 151
Merger reserves 8
8,466
8,466 8,466
Retained earnings 8
6,525
6,310 7,941
Total equity 15,186 14,958 16,563
Total equity and liabilities 25,755 22,282 22,283
The accompanying notes are an integral part of these Company financial statements.
The financial statements were approved by the Board of Directors and authorised for issue on 12 March 2021.
Theywere signed on its behalf by:
Damian Gammell, Chief Executive Officer
12 March 2021
176
This page does not form part of the Coca-Cola European Partners plc Annual Report on Form 20-F for the year ended 31 December 2020 as filed with the SEC.
Statement of cash flows
Year ended
31December2020 31December2019
Note € million € million
Cash flows from operating activities:
Profit before taxes
709 (82)
Adjustments to reconcile profit before tax to net cash flows from operating activities:
Dividend income
3
(775) (20)
Depreciation
12 18
Amortisation of intangible assets
1 1
Share-based payment expense
14 15
Finance costs, net
36 72
Change in operating assets/liabilities
(38) 35
Net cash flows from operating activities
(41) 39
Cash flows from investing activities:
Investment in subsidiaries, net
5
(428) (7)
Dividend received
3
775 20
Interest received
4 8
Proceeds from sale of property, plant and equipment
17 3
Purchases of property, plant and equipment
— (57)
Purchase of capitalised software
(3) (7)
Net cash flows used in investing activities
365 (40)
Cash flows from financing activities:
Proceeds from borrowings, net
1,952 2,159
Repayments on borrowings
(1,646) (474)
Payments of principal on lease obligations
(10) (17)
Interest paid, net
(113) (100)
Dividends paid
8
(387) (576)
Purchase of own Shares under share buyback programme
8
(128) (1,005)
Exercise of employee share options
13 27
Other financing activities, net
(5) (13)
Net cash flows used in financing activities
(324) 1
Net change in cash and cash equivalents
— —
Cash and cash equivalents at beginning of period
— —
Cash and cash equivalents at end of period
— —
The accompanying notes are an integral part of these Company financial statements.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 177
This page does not form part of the Coca-Cola European Partners plc Annual Report on Form 20-F for the year ended 31 December 2020 as filed with the SEC.
Statement of changes in equity
Share capital Share premium Merger reserves Retained earnings Total equity
€ million € million € million € million € million
As at 31 December 2018 5 151 8,466 7,941 16,563
Issue of Shares during the year — 26 — — 26
Equity-settled share-based payment expense — — — 15 15
Own Shares purchased under share buyback programme — — — (1,005) (1,005)
Total comprehensive income for the period — — — (65) (65)
Dividends — — — (576) (576)
As at 31 December 2019 5 177 8,466 6,310 14,958
Issue of Shares during the year — 13 — — 13
Equity-settled share-based payment expense — — — 14 14
Own Shares purchased under share buyback programme — — — (128) (128)
Total comprehensive income for the period — — — 716 716
Dividends — — — (387) (387)
As at 31 December 2020 5 190 8,466 6,525 15,186
The accompanying notes are an integral part of these Company financial statements.
178
This page does not form part of the Coca-Cola European Partners plc Annual Report on Form 20-F for the year ended 31 December 2020 as filed with the SEC.
Notes to the Company financial
statements
Note 1
General information and basis of preparation
Coca-Cola European Partners plc (the Company) acts as a holding company for investments in subsidiaries, as well
as providing various intragroup services. In addition the Company engages in general corporate activities such as
third party borrowings.
The financial statements of the Company have been prepared in accordance with the International Financial
Reporting Standards (IFRS) in conformity with the requirements of the Companies Act 2006. The financial
statements were approved and signed by Damian Gammell, Chief Executive Officer on 12 March 2021 having been
duly authorised to do so by the Board of Directors.
As described in the accounting policies in Note 2, the financial statements have been prepared under the historical
cost convention except for certain items measured at fair value. Those accounting policies have been applied
consistently in all periods. The functional currency of the Company is euros.
Prior to 2020, the Company prepared financial statements under FRS 101 “Reduced Disclosure Framework”.
TheCompany elected to adopt IFRS in conformity with the requirements of the Companies Act 2006 for its 2020
financial statements in order to meet certain EU reporting requirements in 2021. The IFRS opening balance sheet as
of the first day of transition, which is 1 January 2019, is included in the statement of financial position. There are no
measurement or reclassification changes arising from the adoption of IFRS. Additional IFRS disclosures are included
in the notes to the financial statements.
Note 2
Significant accounting policies
The preparation of these financial statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities,
income and expense. Actual results may differ from these estimates. The significant judgements made in applying
the Company’s accounting policies were applied consistently across the annual periods.
Investments
Investments in subsidiaries are initially recognised at cost and carried net of any impairment. Investments are tested
for impairment whenever events or changes in circumstances indicate that the carrying amounts of those
investments may not berecoverable. An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value
less costs to sell and itsvalue in use and is determined for an individual asset, unless the asset does not generate
cash inflows that arelargely independent of those from other assets or groups of assets. Where the carrying amount
of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable
amount. Impairment losses on continuing operations are recognised in the income statement in those expense
categories consistent with the function of the impaired asset.
For assets where an impairment loss subsequently reverses, the carrying amount of the asset or CGU is increased to
the revised estimate of its recoverable amount, not to exceed the carrying amount that would have been
determined, net of depreciation, had no impairment losses been recognised for the asset or CGU in prior years.
Areversal of impairment loss is recognised immediately in the income statement, unless the asset is carried
at a revalued amount when it is treated as a revaluation increase.
Share-based payments
The Company has established share-based payment plans that provide for the granting of share options and
restricted stock units, some with performance and/or market conditions, to certain executive and management
level employees that are employed by the Company and its subsidiaries. These awards are designed to align the
interests of its employees with the interests of its shareholders.
The Company recognises compensation expense equal to the grant date fair value for all share-based payment
awards that are expected to vest. As per IAS 27 the Company equity settles share-based payments for employees of
subsidiary entities and accounts for the settlement as an addition to the cost of its investment in the employing
subsidiary. Upon vesting, the Company recharges the costs of the share based awards to the employing subsidiary
and records a reduction of the investment.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 179
This page does not form part of the Coca-Cola European Partners plc Annual Report on Form 20-F for the year ended 31 December 2020 as filed with the SEC.
Financial instruments
(i) Financial assets
Initial recognition and measurement
Financial assets within the scope of IFRS 9, “Financial Instruments” are classified as financial assets at fair value
through profit or loss, loans and receivables, or as derivatives designated as hedging instruments in an effective
hedge, as appropriate. The Company determines the classification of its financial assets at initial recognition.
All financial assets are recognised initially at fair value plus, in the case of investments not at fair value through
profitor loss, directly attributable transaction costs.
The Company’s financial assets include cash and short-term deposits, trade and other receivables, loan notes,
andderivative financial instruments.
Subsequent measurement
The subsequent measurement of financial assets depends on their classification as follows:
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for trading and financial assets
designated upon initial recognition at fair value through profit or loss. Financial assets are classified as held for
trading if they are acquired for the purpose of selling in the near term. This category includes derivative financial
instruments entered into by the Company that are not designated as hedging instruments in hedge relationships
asdefined by IAS 39. The Company has not designated any financial assets upon initial recognition as at fair value
through profit or loss.
Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are
designated as effective hedging instruments.
Financial assets at fair value through profit and loss are carried in the statement of financial position at fair value
with changes in fair value recognised in finance revenue or finance expense in the income statement.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market. Such assets are initially recognised at fair value and subsequently measured at amortised
costusing the effective interest rate (EIR) method, less impairment. Amortised cost is calculated by taking into
account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR
amortisation is included in finance revenue in the income statement. Losses arising from impairment are recognised
in the income statement in other operating expenses.
(ii) Financial liabilities
Initial recognition and measurement
Financial liabilities within the scope of IFRS 9 are classified as financial liabilities at fair value through profit or loss,
loans and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
TheCompany determines the classification of its financial liabilities at initial recognition. All financial liabilities are
recognised initially at fair value and, in the case of loans and borrowings, plus directly attributable transaction costs.
Subsequent measurement
The measurement of financial liabilities depends on their classification as follows:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss includes financial liabilities held for trading and financial
liabilities designated upon initial recognition as at fair value through profit or loss.
Interest bearing loans and borrowings
Obligations for loans and borrowings are recognised when the Company becomes party to the related contracts
and are measured initially at the fair value of consideration received less directly attributable transaction costs.
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using
the effective interest method.
Gains and losses arising on the repurchase, settlement or other cancellation of liabilities are recognised respectively
in finance revenue and finance cost.
Trade and other payables
Trade and other payable amounts represent liabilities for goods and services provided prior to the end of the
reporting period which are unpaid as of the balance sheet date. Trade and other payables are presented as current
liabilities unless payment is not due within 12 months after the reporting period. Trade and other payables are
recognised initially at fair value and subsequently measured at amortised cost using the effective interest method,
as applicable.
Management fees
As the ultimate parent entity of the Group, the Company is involved in the provision of intragroup services to certain
subsidiaries. Specifically, the Company’s employees are above-market roles, who provide services related but not
limited to strategy, people and culture, finance, legal, and business process and technology. In addition, certain
intragroup services are charged to the Company by its subsidiaries. Management fees for intragroup services
provided to subsidiaries is recorded in revenue and management fee charges for services provided by subsidiaries
isrecorded in administrative expenses in the statement of comprehensive income.
180
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Note 3
Dividend income
Dividends are recognised on a paid basis. During the year the Company has received the following dividends:
2020 2019
€ million € million
Bottling Holdings Europe Limited
262
—
WIH UK Ltd Limited
245
—
Coca-Cola European Partners Holdings US Inc
242
—
Coca-Cola European Partners Deutschland GmbH
14
20
GR Bottling Holdings UK Limited
12
—
Total
775 20
Note 4
Finance income/(costs)
2020 2019
€ million € million
Interest income
24
36
Total finance income 24 36
Interest expense
(108)
(106)
Amortisation of debt discount
(3)
(3)
Total finance costs
(111) (109)
Note 5
Investments
2020 2019 2018
€ million € million € million
Balance at 1 January 21,856 21,849 21,834
Subsequent investment in subsidiaries
432
12 27
Capitalised/vested share-based payments, net
(4)
(5) (12)
Balance at 31 December
22,284 21,856 21,849
During the year, the Company subscribed for €400 million ordinary shares in CCEP Holdings (Australia) Limited, a
new wholly owned subsidiary formed in connection with the proposed acquisition of CCL. Refer to Note 1 in the
Group's consolidated financial statements for further information on the proposed acquisition.
In addition, the Company made additional investments in CCEP Ventures Europe Limited for €29 million and CCEP
Ventures UK limited for €3 million.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 181
This page does not form part of the Coca-Cola European Partners plc Annual Report on Form 20-F for the year ended 31 December 2020 as filed with the SEC.
Note 6
Amounts receivable from/payable to related parties
31 December 2020 31 December 2019 31 December 2019
€ million € million € million
Non-current amounts receivable from related parties:
Loans — 350 350
Total non-current amounts receivable from related parties — 350 350
Current amounts receivable from related parties:
Financial receivables
(A)
3,085 — —
Loans
(B)
350 — —
Trade receivables 2 20 68
Total current amounts receivable from related parties 3,437 20 68
Total amounts receivable from related parties 3,437 370 418
Non-current amounts payable to related parties:
Borrowings — 97 223
Total non-current amounts payable to related parties — 97 223
Current amounts payable to related parties:
Borrowings
(C)
3,440 130 —
Cash pool payables
(D)
79 1,035 151
Trade and other payables 12 25 44
Total current amounts payable to related parties 3,531 1,190 195
Total amounts payable to related parties 3,531 1,287 418
(A) During the year, the Company acquired A$ denominated preference shares in CCEP Holdings (Australia) Limited, a new subsidiary formed in connection with the
proposed acquisition of CCL and the mitigation of foreign currency risk. Refer to Note 1 in the Group's consolidated financial statements for further information
on the proposed acquisition. In accordance with IFRS 9 the Company has recorded the financial asset at fair value. Management has concluded that the financial asset
meets the criteria ofIFRS 9 para 42.11 as it meets the solely payment of principal and interest (SPPI) test and is therefore subsequently held at amortised cost.
(B) Back to back intercompany loan with Bottling Holdings Netherlands.
(C) Interest bearing euro denominated loan notes issued in relation to the subscription of €400 million ordinary shares and €3,040 million preference shares of CCEP Holdings
(Australia) Limited.
(D) The Company participates in a cash pooling structure in which its available cash is swept to a cash pool header (Bottling Holdings Luxembourg Sarl). Pooling allows the
Company to deposit and withdraw cash on a daily basis to meet its working capital needs.
The foreign exchange gains or losses resulting from the remeasurement of the preference shares have been
recorded within non-operating items in the statement of comprehensive income.
Transactions with key management personnel
Key management personnel are the members of the Board of Directors and the members of the Executive
Leadership Team that are employed by the Company. The following table summarises the total remuneration
paidor accrued during the reporting period related to key management personnel:
2020 2019
€ million € million
Salaries and other short-term employee benefits
(A)
13
14
Share-based payments
5
8
Termination benefits 1 —
Total 19 22
(A) Short-term employee benefits include wages, salaries and social security contributions, paid annual leave and paid sick leave, paid bonuses and non-monetary benefits.
Please refer to the Directors’ Remuneration Report for details of the remuneration of the Company’s Directors.
Employee costs
The following table summarises the total employee costs of the Company during the reporting period:
2020 2019
€ million € million
Wages and salaries
10
11
Social security costs 3 3
Total employee costs 13 14
The average number of persons employed by the Company during the year was 10 (2019: 11).
182
This page does not form part of the Coca-Cola European Partners plc Annual Report on Form 20-F for the year ended 31 December 2020 as filed with the SEC.
Note 7
Borrowings
31 December 2020 31 December 2019 31 December 2018
€ million € million € million
Non-current borrowings:
Loan notes 6,186 5,343 4,696
Lease obligations 8 24 —
Total non-current borrowings 6,194 5,367 4,696
Current borrowings:
Loan notes 709 337 350
Commercial paper — 221 120
Lease obligations 5 16 —
Total current borrowings 714 574 470
Total borrowings 6,908 5,941 5,166
The loan notes as at 31 December 2020 are due between August 2021 and September 2031. The principal amounts
due are €6,859 million (2019: €5,292 million) and the applicable interest rates are between 0% and 4.5%. The loan
notes are stated net of unamortised financing fees of €26 million (2019: €23 million).
Trade and other payables includes interest payable on the borrowings of €52 million (2019: €47 million).
Lease obligations represent the present value of the Company’s lease obligations in respect of right of use assets.
The Company has amounts available for borrowing under a €1.5 billion multi currency credit facility with a syndicate
of 10 banks. This credit facility matures in 2025 and is for general corporate purposes and supporting the working
capital needs. Based on information currently available, there is no indication that the financial institutions
participating in this facility would be unable to fulfil their commitments to the Company as at the date of these
financial statements. The Company’s current credit facility contains no financial covenants that would impact its
liquidity or access to capital. As at 31 December 2020, the Company had no amounts drawn under this credit facility.
In connection with the proposed acquisition of CCL, the Company has arranged a term loan facility of up to
€4.4billion with a syndicate of 13 banks. This term loan facility matures in December 2021, with options to extend to
December 2022, and can only be used to effect the proposed acquisition. The facility is undrawn at
31December2020.
Note 8
Equity
Share capital
As at 31 December 2020, the Company has issued and fully paid 454,645,510 (2019: 456,399,877) ordinary shares with
a nominal value of€0.01 per share. Shares in issue have one voting right each and no restrictions related to dividends
or return oncapital. For more details please refer to Note 16 in the consolidated financial statements.
In connection with the €1 billion share buyback programme announced in February 2020, the Company entered into
agreements to purchase its own Shares. 3,065,200 Shares were repurchased by the Company in 2020 and cancelled
(2019: 20,612,593).
Share premium
The balance in share premium as at 31 December 2020 represents the excess over nominal value of €0.01 for
the228,244,244 Shares issued to CCE shareholders on 28 May 2016 based on the adjusted closing stock price of
CCEordinary Shares of €33.33 at the time of the CCEP Merger. The balance also includes €86 million excess over
nominal value of share-based payment awarded through to 31 December 2020.
Merger reserves
The Company determined that the consideration transferred to acquire CCIP and CCEG qualified for merger
reliefunder the Companies Act. Therefore, the excess consideration transferred over nominal value is excluded
from share premium. The cumulative balance of €8.5 billion includes the consideration transferred in excess of
nominal value of €0.01 for CCIP and CCEG of €5.5 billion and €2.9 billion, respectively.
Retained earnings
The balance in retained earnings represents the opening balance on 1 January 2020, combined with the result
forthe period and the share-based payment reserve.
Dividends
Dividends are recorded within the financial statements in the period in which they are paid. Please refer to Note 16
in the consolidated financial statements.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 183
This page does not form part of the Coca-Cola European Partners plc Annual Report on Form 20-F for the year ended 31 December 2020 as filed with the SEC.
Note 9
Financial risk management
Financial risk factors, objectives and policies
The Company’s activities expose it to several financial risks, market risk and liquidity risk. Financial risk activities are
governed by appropriate policies and procedures to minimise the uncertainties these risks create on the Company’s
future cash flows. Such policies are developed and approved by the Group’s treasury and commodities risk
committee, through the authority delegated to it by the Board.
Market risk
Market risk represents the risk that the fair value of future cash flows of a financial instrument will fluctuate due to
changes in market prices and includes interest rate risk, currency risk and other price risk such as commodity price
risk. Market risk affects outstanding borrowings, as well as derivative financial instruments.
Interest rates
The Company is subject to interest rate risk for its outstanding borrowings. To manage interest rate risk, the
Company maintains a significant proportion of its borrowings at fixed rates. The Company has not entered into
anyinterest rate swap agreements or other such instruments to hedge its interest rate risk during the periods
presented.
Currency exchange rates
The Company’s exposure to the risk of changes in currency exchange rates relates primarily to its operating
activities denominated in currencies other than the functional currency, euro. To manage currency exchange risk
arising from future commercial transactions and recognised monetary assets and liabilities, foreign currency forward
and option contracts with external third parties are used. Such cash flow exposures are hedged using a combination
of forward and option contracts with third parties.
The Company is exposed to the risk of changes in currency exchange rates between US dollar and euro relating to
its US denominated borrowings.
In the statement of financial position, current derivative liabilities represent the fair value (level 2) of the cross
currency swap of the USD denominated debt to EUR.
Liquidity risk
Liquidity risk is actively managed to ensure that the Company has sufficient funds to satisfy its commitments.
TheCompany’s sources of capital include, but are not limited to, dividend income, public and private issuances
ofdebt and equity securities and bank borrowings. The Company believes its operating cash flow, cash on hand
andavailable short-term and long-term capital resources are sufficient to fund its working capital requirements,
scheduled borrowing payments, interest payments, capital expenditures, benefit plan contributions, income
taxobligations and dividends to its shareholders. Counterparties and instruments used to hold cash and cash
equivalents are continuously assessed, with a focus on preservation of capital and liquidity. Based on information
currently available, the Company does not believe it is at significant risk of default by its counterparties.
184
This page does not form part of the Coca-Cola European Partners plc Annual Report on Form 20-F for the year ended 31 December 2020 as filed with the SEC.
Note 10
Auditor’s remuneration
Please refer to Note 17 of the consolidated financial statements for details of the remuneration of the Company’s
auditor.
Note 11
Significant events after the reporting period
After the balance sheet date, the Company acquired additional A$ denominated preference shares in
CCEPHoldings (Australia) Limited. As consideration for the preference shares, interest bearing euro denominated
loan notes of €1,754million have been issued by the Company.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 185
This page does not form part of the Coca-Cola European Partners plc Annual Report on Form 20-F for the year ended 31 December 2020 as filed with the SEC.
Other information
186
IN THIS SECTION
188 Risk factors
198 Other Group information
216 Form 20-F table of cross references
218 Exhibits
220 Glossary
223 Useful addresses
224 Forward-looking statements
Other Information
Financial StatementsStrategic Repo Governance and Directors’ Repo
187Coca-Cola European Paners plc | 2020 Integrated Repo and Form 20-F
Risk factors
This section examines the risks Coca-Cola European
Partners (CCEP) faces as a business. These risks may
change over time.
Business continuity and resilience
COVID-19 could adversely impact our business and financial
results.
Global or regional health pandemics impact our
business and financial results. COVID-19 is a global stress
event that is impacting the entire CCEP value chain,
causing disruption that requires well thought out
business continuity plans and response strategies.
COVID-19 can cause high levels of employee absence,
and requires employees to be flexible with working
fromhome when lockdowns are announced in our
territories. In addition, there could be widespread
supplier issues, including risks of access to raw materials,
specialist parts and labour being impacted due to cross
border restrictions on travel and movement of goods
and services; the closure of entire customer sectors
(e.g.leisure, restaurants, pubs and bars); and changing
consumer habits.
Such events could have a material adverse impact on
our sales volume, cost of sales, earnings, and overall
financial condition.
Global or regional catastrophic events could negatively impact
our business and financial results.
Our business may be affected by major information
technology (IT) outages, large scale natural disasters
orterrorist acts, specially those occurring in our
territories or other major industrialised countries.
Othercatastrophic events that could affect our
business include the loss of senior employees, shortages
of key raw materials, the outbreak or escalation of
armed hostilities or widespread outbreaks of infectious
disease such as COVID-19.
Such events in the geographic regions where we do
business could have a material adverse impact on
oursales volume, cost of sales, earnings, and overall
financial condition.
Packaging
Waste and pollution, and the legal and regulatory responses
to these issues, could adversely impact our business.
Waste and pollution, particularly plastic and packaging
waste, is a global issue affecting our business. Although
the vast majority of our packaging is fully recyclable, it is
not always collected for recycling across our territories,
and can end up as land or marine litter. Concern about
this, and the environmental impacts of our packaging
has led to laws and regulations that aim to increase the
collection and recycling of our packs, reduce packaging,
through limiting the use of single use plastic, introduce
quotas for refillable packaging, reduce waste and
littering, and introduce specific packaging design
requirements. For example, circular economy legislation
has been introduced in France that requires a 50%
reduction in the number of single use plastic bottles by
2030 and the phasing out of single use plastic packaging
entirely by 2040, and in Great Britain (GB) there are
various regulatory proposals related to packaging,
including the introduction of deposit return schemes
(DRS) and a move towards extended producer
responsibility.
If we fail to engage sufficiently with stakeholders
toaddress concerns about packaging and recycling, or
we are not able to adapt our business to new legislation
and regulation, it could result in higher costs through
packaging taxes, producer responsibility reform,
damage to corporate reputation or investor confidence
and a reduction of consumer acceptance of our
products and packaging.
New recycling technologies may not work or may not be
developed quickly enough.
We are exploring innovative ways to achieve the
packaging targets that we have set ourselves and those
imposed by legislation and regulation, for example by
using plastic that has been recycled via enhanced/
chemical recycling technologies. There is a risk that
these new technologies may not be developed quickly
enough or may not work as well as intended, which could
limit our ability to mitigate the impact of restrictions
onsingle use plastics. Also, these technologies may be
more expensive than current solutions, potentially
reducing our profitability.
188
Cyber and social engineering attacks
and IT infrastructure
Cyber attacks, or a deficiency in CCEP’s cybersecurity
or a customer’s or supplier’s cybersecurity, could
negatively impact our business.
As our reliance on IT increases, so will the risks
posedtoour internal and third party systems from
cyberincidents.
A cyber incident is considered to be any adverse
event that threatens the confidentiality, integrity,
oravailability of our data or information systems.
Itcould involve gaining unauthorised access to
systems, either unintentionally or through an
intentional attack (such as a criminal attack, hacking
or a computer virus), to disrupt operations, corrupt
data, steal confidential information, achieve financial
gain or threaten our Company or employees.
Our business processes require high levels of integration
between our IT systems and the systems of third parties
(suppliers, customers, business partners). A cyber
incident at any of those third parties can either spread
to CCEP’s systems or indirectly have a negative impact
on CCEP’s ability to operate.
Companies that CCEP invests in, or that CCEP
acquires,add to the risk exposure for cyber and social
engineering attacks of our Company. Any cyber incident
at those organisations can have a negative impact
(operationally, financially, reputationally) on CCEP.
A cyber incident could disrupt our operations,
compromise or corrupt data, or damage our brand
image. Like many companies, hackers target us, our
customers and suppliers with social engineering
attacks. While we have procedures and training in
place to protect us against these types of attacks,
they can be successful, which could also disrupt our
operations, compromise or corrupt data, or damage
our brand reputation. All of these outcomes could
negatively impact our financial results.
Economic and political conditions
The deterioration of global and local economic conditions
could adversely affect CCEP’s business performance and
share price.
Our performance is closely linked to the economic
cycle in the countries, regions and cities where we
operate. Normally, strong economic growth in these
areas results in greater demand for our products,
whileslow economic growth or economic contraction
decreases demand and drives down sales.
For example, adverse economic conditions decrease
individuals’ disposable income and propensity to
consume, leading to the purchase of cheaper private
label brands, or avoiding buying beverage products
altogether. Those consumers who do continue to buy
our products may shift away from higher margin
products and packages. A weak economic climate
could also increase the likelihood of customer
delinquencies and bankruptcies, which would increase
the risk of accounts being deemed uncollectable. For
these reasons a slowing economy would likely adversely
impact our business, operational results, financial
condition and share price.
Economic growth, globally and in the EU, faces a
slowdown and markets continue to be volatile.
Adownward trend of growth started in 2019, with
Germany narrowly avoiding recession, and accelerated
as the global spread of COVID-19 caused significant
declines in global gross domestic product growth.
Concerns remain about future interest rate changes and
there is continuing uncertainty around how major
economies recover fromCOVID-19, and how central
banks reduce their significant monetary stimulus. These
factors could directly impact our business, operational
results, financial conditions and share price. Central bank
support in funding deficits could, if not carefully
unwound, result in sovereign debt concern in certain
territories. Whether real or perceived, this could result
inthe availability of capital being limited, which may
restrict our liquidity.
Even in the absence of a market downturn, CCEP is
exposed to substantial risk from volatility in areas such
as consumer spending and capital markets conditions,
which may adversely affect the business and economic
environment. This in turn may adversely affect our
business performance and share price.
Beyond the international economic situation, there is
political risk stemming from increased polarisation,
andthe emergence of nationalist/left wing parties in
certain regions that have alternative economic priorities
regarding EU unity compared to their incumbent
governments. While this risk has decreased in the
past12 months, it does remain and could affect the
economic situation in the EU, which could negatively
impact our business and financial results.
Increases in costs, limitation of supplies, or lower
thanexpected quality of raw materials could harm
ourfinancial results.
The cost of our raw materials, ingredients or packaging
materials could increase over time. If that happens, and
if we are unable to pass the increased costs on to our
customers in the form of higher prices, our financial
results could be adversely affected.
We use supplier pricing agreements and derivative
financial instruments to manage volatility and market
risk for certain commodities. Generally, these hedging
instruments establish the purchase price for these
commodities before the time of delivery. These pricing
positions are taken in line with the Board’s agreed risk
policy and the impact of these positions is known and
forecasted in our financial results. This may lock CCEP
into prices that are ultimately greater or lower than the
actual market price at the time of delivery.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 189
We continue to experience volatility in commodity
prices mainly driven by political uncertainty, increased
protectionist policies and volatility impacts of capital
markets.
Our suppliers could be adversely affected by a number
of external events. These could include strikes, adverse
weather conditions, speculation, abnormally high
demand, governmental controls, new taxes, national
emergencies, natural disasters, health crises, such as a
pandemic, and insolvency. If this happens, and we are
unable to find an alternative source for our materials,
our cost of sales, revenues, and ability to manufacture
and distribute products could be adversely affected.
The quality of the materials or finished goods delivered
to us could be lower than expected. If this happens, we
may need to substitute those items for ones that meet
our standards, or replace underperforming suppliers.
This could disrupt our operations and adversely affect
our business. We continue to sign long-term supply
agreements with suppliers meeting our specifications
and put contingency plans in place.
Changes in interest rates or our debt rating could harm
our financial results and financial position.
CCEP is subject to interest rate risk, and changes
inourdebt rating could have a material adverse
effectoninterest costs and debt financing sources.
Our debt rating can be materially influenced by a
range offactors, including our financial performance,
acquisitions, and investment decisions, as well as
thecapital management activities of The Coca-Cola
Company (TCCC) and changes in the debt rating
ofTCCC.
The deterioration in political unity within the EU could
significantly impact our financial results and reduce our
competitiveness in the marketplace.
There are concerns regarding the short and long-term
stability of the euro and pound sterling and the euro’s
ability to serve as a single currency for a number
ofindividual countries. These concerns could lead
individual countries to revert, or threaten to revert,
tolocal currencies. In more extreme circumstances,
they could exit from the EU, and the Eurozone could
be dissolved entirely.
Should this occur, the assets we hold in a country
thatreintroduces local currency could be subject to
significant changes in value when expressed in euros.
Furthermore, the full or partial dissolution of the euro,
the exit of one or more EU member states from the
EUor the full dissolution of the EU could cause
significant volatility and disruption to the global
economy. This could affect our ability to access
capitalat acceptable financing costs, the availability of
supplies and materials, and demand for our products,
all of which could adversely impact our financial results.
If it becomes necessary for us to conduct our business
inadditional currencies, we would be subjected to
additional earnings volatility as amounts in these
currencies are translated into euros. The intended
acquisition of Coca-Cola Amatil Limited (CCL) will
significantly increase the amount of foreign exchange
translation risk that CCEP carries.
The UK’s exit from the EU could impact our profits.
On 24 December 2020, the EU and the United Kingdom
(UK) reached agreement on an EU-UK Trade and
Cooperation Agreement (TCA). The TCA will govern
thefuture relationship between the EU and the UK
following the end of the transition period and consists
of a free trade agreement, a partnership for citizens’
security and a horizontal agreement on governance.
Besides trade in goods and services, the TCA also covers
a broad range of areas, such as investment, competition,
state aid, tax transparency, air and road transport,
energy and sustainability, data protection, and social
security coordination. Separately, the EU and the UK
agreed a nuclear cooperation agreement and an
agreement on security procedures for exchanging and
protecting classified information. The TCA provides that
the EU and the UK may agree to additional agreements
covering other areas of cooperation in the future.
The EU will provisionally apply the TCA from 1 January
until 28 February 2021, while it is awaiting endorsement
by the European Parliament and ratification. The UK
Parliament overwhelmingly voted in favour of the deal
on 30 December 2020 and it received Royal Assent.
The near and medium-term impact of Brexit is unclear
and there's uncertainty about the future relationship
between the UK and the EU. However, we continue
tomanage the practical changes, working with both
customers and suppliers as well as internally continuing
to execute the necessary changes to our process to
manage any administrative impact, including border
and customs requirements.
Political instability could negatively impact
ouroperations and profits.
We continue to be exposed to risks associated with
political instability in different parts of our territories.
For example, the instability in Catalonia impacting
theSpanish economy. While this risk may be dormant,
the situation could quickly deteriorate, leading to
major instability.
Such instability could result in prolonged political,
economic and operational uncertainty for our
business, our customers and consumers, with potential
impacts on tourism, private consumption and
regulation.
Default by or failure of one or more of our counterparty
financial institutions could cause us to incur losses.
We are exposed to the risk of default by, or failure
of,counterparty financial institutions with which we
dobusiness. This risk may be heightened during
economic downturns and periods of uncertainty
in the financial markets.
If one of our counterparties became insolvent or filed
for bankruptcy, our ability to recover amounts owed
from or held in accounts with the counterparty may be
limited. In this event we could incur losses, which could
negatively impact our results and financial condition.
190
Market
We may not be able to respond successfully
tochanges in the marketplace.
CCEP operates in the highly competitive beverage
industry and faces strong competition from other
general and speciality beverage companies. Our
response to continued and increased competitor
andcustomer consolidations and marketplace
competition may result in lower than expected net
pricing of our products. In addition, external factors
such as the widespread outbreak of infectious disease
(e.g. COVID-19) may adversely affect the market.
Changes in our relationships with large customers may
adversely impact our financial results.
A significant amount of our volume is sold through
large retail chains, including supermarkets and
wholesalers. Many of these customers are becoming
more consolidated, or forming buying groups, which
increases their purchasing power. They may, at times,
seek to use this to improve their profitability through
lower prices, increased emphasis on generic and other
private label brands, or increased promotional
programmes and payment of rebates.
Competition from hard discount retailers and online
retailers continues to challenge traditional retail
outlets. This can increase the pressure on all customer
margins, which may then be reflected in pressure
onsuppliers such as CCEP.
In addition, from time to time a customer or customers
choose(s) to temporarily stop selling some of our
products as a result of disputes we may have with them.
These factors, as well as others, can have a negative
impact on the availability of CCEP’s products, and
ourprofitability.
Legal, regulatory and tax
Legislative or regulatory changes (including changes to tax
laws) that affect our products, distribution, or packaging
could reduce demand for our products or increase our costs.
CCEP’s business model depends on making our
products and packages available in multiple channels
and locations. Laws that restrict our ability to do this
could negatively impact our financial results. These
include laws affecting the promotion and distribution
ofour products, laws that require deposit return
schemes (DRS) to be introduced for certain types of
packages, or laws that limit our ability to design new
packages or market certain packages. The packaging
and climate change and waterrisk factors discuss global
issues such as climate change, resource scarcity, marine
litter and water scarcity further.
In addition, taxes or other charges imposed on the sale
of our products could increase costs or cause consumers
to purchase fewer of them. Many countries in Europe,
including countries in which CCEP operates, are looking
to implement or increase such taxes. These may relate,
for example, to the use of non-recycled plastic
inbeverage packaging, or the use of sugar or other
sweeteners in our beverages (see also the risk factors
regarding packaging and perceived health impact of
our beverages and ingredients, and changing consumer
buying trends).
On a European level the regulation adopted in
December 2020 laying down the EU’s multi annual
financial framework for 2021-2027 includes an “own
resource”, applicable as from 1 January 2021, which
consists of the application of a uniform call rate to
theweight of plastic packaging waste generated in
each member state that is not recycled. The uniform call
rate will be €0.80 per kilogram. Every EU member state
decides how to collect the money needed to fulfil its
contribution. However, we expect some member states
to install some sort of recoupment mechanism (a tax)
atnational level to retrieve the outlays made to the EU.
Spain has already proposed a unique plastic tax to be
implemented in 2021, and GB is expected to introduce a
plastic tax independent of the European levy by April
2022.
EU member states are in the process of adopting
implementing regulations to comply with the
obligations of the Single Use Plastics Directive. The
obligations include a 90% collection target for plastic
bottles by 2029, a requirement that plastic bottles
contain at least 30% recycled content by 2030 and a
requirement for plastic beverage bottles to include
tethered closures by 2024. The deadline for transposing
the Single Use Plastics Directive into national law is
3 July 2021. Some member states go further than the
minimum requirements of the Directive and have
adopted stricter regulations. For example, circular
economy legislation has been introduced in France,
which requires a 50% reduction in the number of
singleuse plastic bottles by 2030 and the phasing
out of single use plastic packaging entirely by 2040.
In addition to legislative initiatives at EU level, several
countries in which we operate also have or are planning
other legislative or regulatory measures to reduce the
use of single use plastics, including plastic beverage
bottles, and/or to increase plastic collection and
recycling. Such measures may include implementing
aDRS under which a deposit fee is added to the
consumer price, which is refunded to them if and when
the bottle is returned. Other measures may include rules
on recycled content, individual collection or recycling
targets, or a ”plastic tax”. In GB, as part of our producer
responsibility obligations, we are required to purchase
Packaging Recovery Notes (PRN) to show that we meet
our responsibilities for recycling and recovery of
packaging waste. While we have processes in place to
manage our PRN exposure, we are subject to price
volatility in PRN, which could increase costs for our
business in the future.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 191
DRS for plastic beverage bottles currently exist in some
of the countries in which we do business, such as in
Norway (which is part of the European Economic Area
(EEA) but is not an EU member state), the Netherlands
(which has recently extended its DRS to cover all PET
bottles from July 2021), Germany and Sweden. Other
countries have recently adopted regulations for DRS
forbeverage packaging (such as Scotland where DRS
will start in July 2022 that includes PET plastic, cans
andglass) or have adopted legislation paving the
wayfor DRS (such as Portugal, England and Wales,
andrecently Belgium).
In addition to the regulations on packaging, plastic
andwaste in general, concern over climate change has
led to more environmental legislative and regulatory
initiatives at an EU and national level. These include
areas such as greenhouse gas (GHG) emissions, water
use and energy efficiency. At the EU level, as part of
theEU Green Deal, the proposed European Climate law
provides for a significant increase in the EU GHG
emissions reduction target for 2030, in line withthe EU’s
goal of becoming carbon neutral by 2050. Also, at a
national level, we have seen a number of countries in
which we operate introduce, or start the process of
introducing, legislation and regulation.
Additional taxes levied on CCEP could harm
ourfinancial results.
CCEP’s tax filings for various periods are or may be
subject to current or future audit by tax authorities.
These audits may result, or have resulted, in
assessments of additional taxes, as well as interest
and/or penalties, and could adversely affect our
financial results.
For example, the US Internal Revenue Service (IRS)
mayseek to examine the Merger between Coca-Cola
Enterprises, Inc. (CCE), Coca-Cola Iberian Partners, S.A.
(CCIP) and Coca-Cola Erfrischungsgetränke GmbH
(CCEG), and may not agree with our positions,
potentially causing material adverse tax consequences.
The US tax returns for that period were filed in 2017 and
generally, the IRS have a three year period to enquire
into the submitted tax returns, however the three year
statute could be extended due to specific facts and
circumstances. Although we believe our positions with
respect to the Merger are consistent with relevant
authorities, there can be no assurance that the IRS
willnot take a contrary view.
Changes in tax laws, regulations, court rulings, related
interpretations, and tax accounting standards in
countries in which we operate, or if we are unsuccessful
in defending our tax positions, may adversely affect
our financial results.
Additionally, amounts we may need to repatriate for the
payment of dividends, share buybacks, interest on debt,
salaries and other costs may be subject to additional
taxation when repatriated.
CCEP may be exposed to risks in relation to compliance with
anti-corruption laws and other key regulations and economic
sanctions programmes.
CCEP and its subsidiaries are required to comply with
the laws and regulations of the various countries in
which they conduct business, as well as certain laws
ofother countries, including the US. In particular, our
operations are subject to anti-corruption laws such
asthe US Foreign Corrupt Practices Act of 1977 (the
FCPA), the UK Bribery Act 2010 (UKBA), the Spanish
andPortuguese Criminal Codes and Sapin II and other
key regulations such as the corporate criminal offence
provisions of the UK Criminal Finances Act 2017 and the
General Data Protection Regulation (GDPR). We are
also subject to economic sanction programmes,
including those administered by the United Nations,
theEU and the Office of Foreign Assets Control of the
USDepartment of the Treasury (OFAC), and regulations
set forth under the US Comprehensive Iran
Accountability Divestment Act.
A GDPR violation could lead to fines of up to 4% of
ourglobal annual turnover, as well as negatively
affectour reputation. Since the recent European
Court of Justice Schrems II ruling, EU personal data
transfers tothird countries are subject to new
compliance requirements, including risk assessments
of foreign government surveillance, execution
ofstandard contractual clauses with third parties
andpotential supplemental measures. These
requirements will also apply to transfers of EU
personal data to the UK, in case the European
Commission does not find the level of protection of
personal data (adequacy finding) offered by the UK
as suitable, at the end of the extension period (four
months from 1 January 2021 – extendible to six
months). Non-compliance with suchtransfer
requirements would result in a GDPR violation.
The FCPA prohibits providing anything of value to
foreign officials for the purposes of obtaining or
retaining business or securing any improper business
advantage (active bribery). In our business dealings
we may deal with both governments and state
ownedbusiness enterprises, the employees of which
are considered foreign officials for the purposes
ofthe FCPA.
The provisions of the UKBA extend beyond bribery
offoreign public officials, covering both public and
private sector bribery. They are more onerous than the
FCPA in a number of respects, including jurisdiction,
non-exemption of facilitation payments, the receipt
ofbribery (passive bribery), penalties and in some
cases imprisonment.
We do not currently operate in jurisdictions that are
subject to territorial sanction imposed by OFAC or
other relevant sanction authorities. However, such
economic sanction programmes will restrict our ability
to engage or confirm business dealings with certain
sanctioned countries and with sanctioned parties.
192
Violations of the above, including anti-corruption, GDPR,
economic sanctions, competition law or other applicable
laws and regulations are punishable by civil and
sometimes criminal penalties for individuals and
companies. These penalties can vary from fines, denial
of export privileges, injunctions, asset seizures,
debarment from government contracts (and
termination of existing contracts) to revocations or
restrictions of licences, as well as criminal fines and
imprisonment. Potentially any violation within one of
these compliance risk areas could have a negative
impact on our reputation and consequently on our
ability to win future business.
Having effective compliance programmes in place
cannever give the assurance that related policies
orprocedures will be followed at all times, or always
detect and prevent violations of the applicable laws
byour employees, consultants, agents or partners.
Legal changes could affect our status as a foreign
corporation for US federal income tax purposes, or limit
the US tax benefits we receive from engaging in certain
transactions.
In general, for US federal income tax purposes,
acorporation is considered a tax resident in the
jurisdiction of its organisation or incorporation.
Because CCEP is incorporated under the laws of
England and Wales, it would generally be classified
asanon-US corporation (and therefore a non-US tax
resident) under these rules. However, section 7874 of
the US Internal Revenue Code of 1986, as amended
(IRC), provides an exception under which a non-US
incorporated entity may, in certain circumstances,
betreated as a US corporation for US federal income
tax purposes.
Under current law, CCEP expects to be treated as a
non-US corporation for US federal income tax purposes.
However, section 7874 of the IRC and the related US
Treasury regulations are complex and there is limited
guidance as to their application. In addition, changes to
section 7874 of the IRC or the US Treasury Regulations
could adversely affect CCEP’s status as a foreign
corporation for US federal tax purposes, and any
suchchanges could have prospective or retroactive
application. If CCEP were to be treated as a US
corporation for US federal income tax purposes,
it could be subject to materially greater US tax liability
than as a non-US corporation.
Future changes to US, UK and other tax laws to which CCEP
issubject could adversely affect our business.
In the US, the UK and other countries in which CCEP and
its affiliates do business, government agencies such as
the US Congress and HM Revenue & Customs (HMRC)
are looking into a number of issues related to the
taxation of multinational corporations. One key area
offocus is “base erosion and profit shifting”, where
multinational groups artificially shift profits from a
higher tax jurisdiction to a lower tax jurisdiction. As a
result, tax laws in these countries could change on a
prospective or retroactive basis. Any such changes could
adversely affect our business and its affiliates, and there
is no assurance that we would be able to maintain any
particular worldwide effective corporate tax rate.
Our business may be subject to US federal tax
withholding as a result of the subscription for CCEP
Shares in exchange for property.
If certain US Treasury regulations applied, our business
could be treated as having received a distribution as
aresult of the subscription for CCEP Shares by a US
company. The amount of such deemed distribution
could be substantial, and would be subject to US
withholding tax (at a rate of 5%) under the Treaty.
We do not believe that such regulations apply under
the particular facts and circumstances of the Merger.
However, there can be no assurance that the USIRS
will not take a contrary view.
Climate change and water
Global issues such as climate change, resource and water
scarcity, and the legal and regulatory responses to these
issues, could adversely impact our business.
Climate change – caused by GHG emissions, in part
from businesses such as ours – is resulting in global
average temperature increases and extreme weather
conditions around the world. This has an adverse impact
on our business. CCEP’s products rely heavily on water,
and climate change may exacerbate water scarcity and
cause a deterioration of water quality in affected
regions. It could also decrease agricultural productivity
in certain regions of the world, which could limit the
availability or increase the cost of key raw materials
thatwe use to produce our products. More frequent
extreme weather events, such as storms or floods in our
territories, could disrupt our facilities and distribution
network, further impacting our business.
Concern over climate change has led to legislative and
regulatory initiatives aimed at limiting GHG emissions.
Policy makers continue to consider proposals that
could impose mandatory requirements on GHG
emissions reduction and reporting. Other climate laws
could affect other areas of our business, such as
production, distribution, packaging or the cost of raw
materials. This in turn could negatively impact our
business and financial results.
Water is the primary ingredient in most of our products.
Itis also vital to our manufacturing processes and is
needed to produce the agricultural ingredients that
areessential to our business. Water scarcity and a
deterioration in the quality of available water sources in
our territories or to our supply chain, even if temporary,
may result in increased production costs or capacity
constraints. This could adversely affect our ability to
produce and sell our beverages, and increase our costs.
As part of our commitment to addressing our climate
change impacts, we are investing in technologies that
improve the energy efficiency of our operations and
reduce GHG emissions related to our packaging,
colddrink equipment (CDE) and transportation.
Ingeneral, the cost of these investments is greater
thaninvestments in less energy efficient technologies,
and the period of return is often longer. Although
webelievethese investments will provide long-term
benefits, there is a risk that we may not always achieve
our desired returns.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 193
Perceived health impact of our beverages and
ingredients, and changing consumer buying trends
Health concerns could reduce consumer demand for some
of our products, impacting our financial performance.
There is continued public concern about the public
health consequences of obesity, particularly among
young people. Health advocates and dietary guidelines
suggest that consumption of sugar sweetened
beverages is a cause of increased obesity rates, and
areencouraging consumers to reduce or eliminate
consumption of such products. In addition,
governments have introduced stronger regulations
around the marketing, labelling, packaging, or sale
ofsugar sweetened beverages. These concerns and
regulations could reduce demand for, or increase the
cost of, our sugar sweetened beverages.
Health and wellness trends among consumers have also
led to an increased demand for low calorie soft drinks,
water, enhanced water, isotonics, energy drinks, teas,
coffees and beverages with natural sweeteners. If we
fail to meet this demand by not providing a broad
enough range of products, this could adversely affect
our business and financial results.
Competitiveness, business transformation and
integration
The proposed acquisition of CCL may not complete successfully
or on a timely basis and may cause a negative reaction from
our stakeholders.
In November 2020 we made a binding offer, which we
revised in February 2021, to acquire the entire existing
issued share capital of CCL from TCCC, under the terms
of a Co-operation and Sale Deed, and from shareholders
other than TCCC, to be effected by means of a scheme
of arrangement (the Proposed Acquisition). Summaries
of the related contracts can be found in the Material
contracts section on page 203. The Proposed
Acquisition is subject to certain customary conditions,
including the absence of a superior proposal and an
independent expert concluding, and continuing to
conclude, that the scheme is fair and reasonable and in
the best interests of shareholders other than TCCC.
There is a risk that the Proposed Acquisition may not
close or do so on a timely basis, may divert resources
and focus of our management team and employees,
and may cause uncertainty and negative reaction on the
part of our customers, employees, suppliers,
shareholders and/or other stakeholders. If the Proposed
Acquisition does not close, it could have a material
adverse effect on our reputation and there is a risk that
we suffer a negative reaction from financial markets.
There is no assurance that the Proposed Acquisition will
proceed, that it will be approved by the shareholders of
CCL or, if it takes place, that the combination of both
companies will support the growth of CCEP, achieve the
intended return or be beneficial to our shareholders.
There is no assurance that, further to the Proposed
Acquisition, CCL will be integrated successfully. The
integration may not proceed as anticipated. It may be
more difficult, time consuming or costly than expected,
which could result in additional demands on CCEP’s
resources, systems, procedures and controls, disruption
of its ongoing business and diversion of management’s
attention from other business concerns. There is also
the risk of loss of time spent on an unsuccessful business
combination. It is also possible that certain assumptions
with respect to CCL or the Proposed Acquisition could
prove to be inaccurate.
Any failure to receive, delays in the receipt of, or
unacceptable or burdensome conditions imposed in
connection with the Proposed Acquisition and failure to
receive or delays in the receipt of all required regulatory
approvals, shareholder approvals and the satisfaction of
closing conditions to the Proposed Acquisition could
lead to higher than expected acquisition costs or could
mean that the Proposed Acquisition does not proceed.
Further, the Proposed Acquisition may involve
unexpected liabilities for which there is no indemnity.
Any failure to retain key employees of CCEP and CCL
asa result of the Proposed Acquisition or during
integration of the businesses and disruptions resulting
from the Proposed Acquisition could potentially
adversely affect our business and make it more difficult
to maintain business relationships.
Further, there is the risk of litigation arising out of the
Proposed Acquisition.
CCEP may not identify sufficient initiatives to realise its cost
saving goals to stay competitive.
Following the completion of our integration plan and
delivery of the committed synergy savings, we continue
to assess potential opportunities for improvements as
part of the ongoing business strategy. The strategic
objective is to ensure our competitiveness in the
futureand encompasses three areas: technology
transformation, supply chain and commercial
improvements, and working efficiently with our
partners and franchisors. The focus of these initiatives
is to offset potential future increases in costs, such
asmaterial or headcount, and to allow investment
inpotential growth areas.
The initiatives are complex due to their multi functional
and multi country nature, which cover many parts of
ourbusiness. Ineffective coordination and control over
single initiatives and interdependent initiatives could
result in us failing to realise the expected benefits.
Continual change might trigger change fatigue among
our people or social unrest in the event that such
changes result in industrial action.
194
Restructuring could cause labour and union unrest.
We have implemented restructuring across all countries
and functions since CCEP was established, resulting in a
combination of redeployment and redundancies. While
we continue to look at potential opportunities to enable
CCEP to maintain and improve its position within the
market, this might have a negative impact on our
relationship with our employee representatives and
social partners, and could cause labour and union unrest.
In the past, we have aimed to keep union unrest to a
minimum through constructive social dialogue which
has not impacted our ability to meet our objectives. We
would look to ensure that any subsequent industrial
unrest wasmitigated through the same process and,
where appropriate, subject to resource planning for the
future.
Miscalculation of CCEP’s need for infrastructure
investment could impact its financial results.
To support revenue growth we are investing in our
infrastructure, including CDE, fleet, technology, sales
force, digital capability and production equipment.
There is a risk that these investments do not generate
the projected returns, either because of market or
technological changes, ineffective adoption of
capabilities, or because the projected requirements
ofthese investments may differ from actual levels if
product demands do not develop as anticipated.
Our infrastructure investments are anticipated to be
long term in nature, and it is possible that they may not
generate the expected return due to future changes
inthe marketplace. This could adversely affect CCEP’s
financial results.
Technology failures could disrupt our operations and
negatively impact our business.
CCEP relies extensively on IT systems to process,
transmit, store and protect electronic information.
Forexample, our production and distribution facilities
and inventory management all use IT to maximise
efficiencies and minimise costs. Communication
between our employees, customers, and suppliers
alsodepends, to a large extent, on IT.
Our IT systems may be vulnerable to interruptions
dueto events that may be beyond our control or in
connection with our proposed acquisition of CCL.
These include, but are not limited to, natural disasters,
telecommunications failures, power outages, hardware
failures, human error and security issues. We have IT
security processes and disaster recovery plans in place,
but they may not be adequate or implemented
effectively enough to ensure that our operations are
not disrupted.
We continually invest in IT to ensure our technology
solutions are current and up to date. If we miscalculate
the level of investment needed, our software, hardware
and maintenance practices could become out of date,
and this could result in disruptions to our business.
In addition, when we implement new systems or
system upgrades (such as SAP and its modules), there
is a risk that our business may be temporarily disrupted
during the implementation period. Centralisation of IT
systems might increase the impact of a failure of
information technology or applications.
When investments in or acquisitions of companies
areundertaken, the integration of IT systems and
applications for those entities will increase the
complexity and, therefore, the risk level of our IT
infrastructure.
We may not be able to execute our strategy to pursue
suitable acquisitions or may have difficulty integrating
acquired businesses.
Our strategy involves, in part, pursuing disciplined and
attractive investments, which are intended to create a
positive net present value for total shareholder return.
Our efforts to execute this strategy may be affected
byour ability to identify suitable acquisition targets
andnegotiate and close acquisition and development
transactions. Further, to the extent that we are able
toidentify suitable investments, there are risks that
integration of those investments does not proceed as
anticipated or that management attention is diverted
by such opportunities, and there is no guarantee that
these investments will support the growth of CCEP
orachieve the intended return.
People and wellbeing
Increases in the cost of wages and employee benefits,
including pension retirement benefits, could impact
ourfinancial results and cash flow.
The 2020 collective bargaining agreements were
negotiated and concluded within budget. Wage
increases and other employee benefit costs above
whathas been budgeted for would be detrimental
toour operating income.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 195
Relationship with TCCC and other franchisors
Our business success, including our financial results, depends
on our relationship with TCCC and other franchisors.
Around 90% of our revenue for the year ended
31December 2020 was derived from the distribution
ofbeverages under agreements with TCCC. We make,
sell and distribute products of TCCC through fixed term
bottling agreements with TCCC, which typically include
the following terms:
• We purchase our entire requirement of concentrates
and syrups for Coca-Cola trademark beverages
(sparkling beverages bearing the trademark
“Coca-Cola” or the “Coke” brand name) and allied
beverages (beverages of TCCC or its subsidiaries that
are sparkling beverages, but not Coca-Cola trademark
beverages or energy drinks) from TCCC. Prices, terms
of payment, and other terms and conditions of supply
are determined from time to time by TCCC at its sole
discretion.
• There are no limits on the prices that TCCC may
charge for concentrate. TCCC maintains current
effective concentrate incidence at the same levels
that CCE, CCIP and CCEG had in place before the
Merger, provided certain specific mutually agreed
metrics are achieved.
• Much of the marketing and promotional support
thatwe receive from TCCC is at its discretion.
Programmes may contain requirements, or be subject
to conditions, established by TCCC that we may not
beable to achieve or satisfy. The terms of most of the
marketing programmes do not and will not contain
anexpress obligation for TCCC to participate in future
programmes or continue past levels of payments into
the future.
• Our bottling agreements with TCCC are for fixed
terms, and most of them are renewable only at the
discretion of TCCC at the conclusion of their terms.
Adecision by TCCC not to renew a fixed term bottling
agreement at the end of its term could substantially
and adversely affect our financial results.
• We are obligated to maintain sound financial capacity
to perform our duties, as required and determined
byTCCC at its sole discretion. These duties include,
butare not limited to, making certain investments
inmarketing activities to stimulate the demand for
products in our territories and making infrastructure
improvements to ensure our facilities and distribution
network are capable of handling the demand for
thesebeverages.
Disagreements with TCCC concerning business issues
may lead TCCC to act adversely to our interests with
respect to these relationships.
Product quality
Our business could be adversely affected if CCEP, TCCC or
other franchisors and manufacturers of the products we
distribute are unable to maintain a positive brand image
as a result of product quality issues.
Our success depends on our products, and those of
TCCC and other franchisors, having a positive brand
image among customers and consumers. Product
quality issues, whether real or perceived, or allegations
of product contamination, even if false or unfounded,
could tarnish the image of our products and result in
customers and consumers choosing other products.
Product liability claims or product recalls could also
negatively impact our brand image and business results.
We could be liable if the consumption of our products
causes injury or illness. We could also be required to
recall products if they become unsafe to consume
through contamination, damage or because of labelling
errors such as the failure to declare an allergen.
Adverse publicity around health and wellness concerns,
water usage, customer disputes, labour relations,
product ingredients, packaging recovery, and the
environmental impact of products could negatively
affect our overall reputation and our products’
acceptance by our customers and consumers. This
couldhappen even when the publicity results from
actions occurring outside our territory or control.
Similarly, ifproduct quality issues arise from products
not manufactured by us but imported into one of our
territories, our reputation and consumer goodwill could
be damaged.
Opinions about our business, including opinions about
the health and safety of our products, can spread
quickly through social media. If we fail to respond
toany negative opinions effectively and in a timely
manner, this could harm the perception of our
brandsand damage our reputation, regardless of the
validity of the statements, and negatively impact our
financial results.
Other risks
Our business is vulnerable to products being imported from
outside our territories, which adversely affects our sales.
The territories in which we operate are susceptible to
the import of products manufactured by bottlers from
countries outside our territories. When these imports
come from members of the EEA, we are generally
prohibited from taking action to stop such imports.
Adverse weather conditions could limit the demand
for our products.
Our sales are significantly influenced by weather
conditions in the countries in which we operate. In
particular, due to the seasonality of our business, cold
or wet weather during the summer months may have a
negative impact on the demand for our products and
contribute to lower sales. This could have an adverse
effect on our financial results.
196
Legal claims against our vendors could affect their ability
toprovide us with products and services, which could
negatively impact our financial results.
Many of our vendors supply us with products and
services that rely on certain intellectual property rights
or other proprietary information, and are subject to
other third party rights, laws and regulations. If these
vendors face legal claims brought by third parties or
regulatory authorities, they could be required to pay
large settlements or even cease providing us with
products and services as well as exposing CCEP to risk.
These outcomes could require us to change vendors or
develop replacement solutions or be subject to third
party claims. This could result in business inefficiencies
or higher costs, which could negatively impact CCEP’s
financial results.
Litigation or legal proceedings could expose us to
significant liabilities and damage our reputation.
CCEP is a party to various litigation claims and legal
proceedings. We evaluate these claims and proceedings
to assess the likelihood of unfavourable outcomes and
to estimate, if possible, the amount of potential losses.
Based on these assessments and estimates, we establish
reserves or disclose the relevant claims or proceedings,
as appropriate.
These assessments and estimates are based on the
information available to management at the time
andinvolve a significant amount of management
judgement. As a result, actual outcomes or losses may
differ materially from those in the current assessments
and estimates.
We have bottling and other business operations in
markets with strong legal compliance environments.
Our policies and procedures require strict compliance
with all laws and regulations that apply to our business
operations, including those prohibiting improper
payments to government officials. Those policies are
supported by leadership and are ingrained in our
business through our compliance culture and training.
Nonetheless, we cannot guarantee that our employees
will always ensure full compliance with all applicable
legal requirements.
Improper conduct by our employees could damage
ourreputation or lead to litigation or legal proceedings
that could result in civil or criminal penalties, including
substantial monetary fines as well as disgorgement
ofprofits.
TCCC and Olive Partners, S.A. (Olive Partners) hold significant
shareholdings in CCEP and their views may differ from those
ofour public shareholders.
Around 19% and 36% of CCEP’s Shares are owned by
European Refreshments (ER, a wholly owned subsidiary
of TCCC) and Olive Partners respectively. As a result
oftheir shareholdings, TCCC and Olive Partners can
influence (or, potentially, control the outcome of)
matters requiring shareholder approval, subject to
ourArticles of Association and the Shareholders’
Agreement. The views of TCCC and Olive Partners
maynot always align with each other or our other
shareholders.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 197
Other Group information
Shareholder information
The Company was incorporated in England and Wales
on 4August 2015, as a private company under the
Companies Act 2006 (the Companies Act). On
4May2016, the Company was reregistered as a public
company limited by shares and changed its name from
Coca-Cola European Partners Limited to Coca-Cola
European Partners plc. It is registered at Companies
House, Cardiff, under company number 9717350. The
business address for Directors and senior management
is Pemberton House, Bakers Road, Uxbridge, UB8 1EZ,
England.
The Company is resident in the UK for tax purposes.
Itsprimary objective is to make, sell and distribute ready
to drink beverages.
Annual General Meeting
It is intended that the Company’s 2021 Annual General
Meeting (AGM) will be held at Pemberton House, Bakers
Road, Uxbridge, UB81EZ in May 2021. However, at the
date of this report, there is continued uncertainty
regarding COVID-19 and the Company may be required
to make alternative arrangements.
Registered shareholders will be sent a Notice of AGM, or
notice of availability of the Notice of AGM, closer to the
time of the AGM, and will be notified of any change
affecting the AGM through an appropriate channel.
Investor calendar
Ex-dividend date for interim H1 dividend
(A)
13 May 2021
Record date for interim H1 dividend
(A)
14 May 2021
Interim H1 dividend payment date
(A)
27 May 2021
AGM 27 May 2021
Ex-dividend date for H2 interim dividend
(A)
18 November 2021
Record date for interim H2 dividend
(A)
19 November 2021
Interim H2 dividend payment date
(A)
6 December 2021
(A) Subject to Board approval.
Directors and senior management
Biographies of the Board of Directors and senior
management are set out on pages 66 to 70. Sol Daurella
and Alfonso Líbano Daurella are first cousins.
Service contracts and loss of office arrangements
It is the Remuneration Committee’s policy that there
should be no element of reward for failure. When
considering payments in the event of a loss of office, it
takes account of the individual circumstances, including
the reason for the loss of office, Group and individual
performance, contractual obligations of both parties
aswell as share and pension plan rules.
Service contracts for Executive Directors provide for a
notice period of not more than 12months from CCEP
and not more than 12months from the individual.
Thestandard Executive Director service contract does
not confer any right to additional payments in the event
of termination. However, it does reserve the right for
the Group to impose garden leave (i.e. leave with pay)
on the Executive Director during any notice period.
Inthe event of redundancy, benefits would be paid
according to CCEP’s redundancy guidelines for GB
prevailing at that time. Executive Directors may be
eligible for a pro rata bonus for the period served,
subject to performance, but no bonus will be paid in the
event of gross misconduct. The treatment of unvested
long-term incentive awards is governed by the rules of
the relevant plan and depends on the reasons for
leaving. The cost of legal fees spent on reviewing a
settlement agreement on departure may be provided
where appropriate. The Company also reserves the right
to pay for outplacement services as appropriate.
The Non-executive Directors (NEDs), including the
Chairman of the Board, do not have service contracts
but have letters of appointment. NEDs are not entitled
to compensation on leaving the Board.
Directors and senior management interest in shares
Other than Sol Daurella, Alfonso Líbano Daurella and
José Ignacio Comenge Sánchez-Real, who indirectly
owned 7.2%(32,743,624 Shares), 1.4% (6,572,771 Shares),
and 1.7% (7,833,662 Shares) of the Shares outstanding
asof 26 February2021, respectively, no Director or
member of senior management individually owned
more than 1% of the Company’s Shares as of
26February2021.
Table 1 shows the number of share options held by
Directors and other members of senior management
asat 26February2021, including the applicable
exerciseprice and the date when the applicable
exercise period ends.
Other employee related matters
Note 17 to the consolidated financial statements
provides a breakdown of employees by main category
of activity. As at 31December2020, we had around
22,000 employees, of whom none were located in the
US. A number of our employees in Europe are covered
by collectively bargained labour agreements, most of
which do not expire. However, wage rates must be
renegotiated at various dates throughout 2021. We
believe we will be able to renegotiate these wage rates
with satisfactory terms.
198
Table 1
Share options held by Directors and other members of senior management as at 26 February 2021
Name Grant date Expiry date Exercise price
Total number of Shares subject
to outstanding options including
exercisable and unvested options
Damian Gammell 5 November 2015 5 November 2025 $39.00 324,643
Stephen Moorhouse 3 November 2011 3 November 2021 $19.68 17,155
Stephen Moorhouse 31 October 2013 31 October 2023 $31.46 11,446
Stephen Moorhouse 30 October 2014 30 October 2024 $32.51 1,476
Stephen Moorhouse 30 October 2014 30 October 2024 $32.51 9,598
Lauren Sayeski 31 October 2013 31 October 2023 $31.46 1,517
Lauren Sayeski 31 October 2013 31 October 2023 $31.46 1,661
Veronique Vuillod 5 November 2012 5 November 2022 $23.21 2,069
Veronique Vuillod 31 October 2013 31 October 2023 $31.46 1,777
Veronique Vuillod 30 October 2014 30 October 2024 $32.51 3,200
Nature of trading market
The Company has one class of ordinary shares. These
shares are traded on the New York Stock Exchange
(NYSE), London Stock Exchange (LSE), Euronext
Amsterdam (AEX) and the Spanish Stock Exchanges
(ofwhich the lead exchange is Madrid (MADX)).
Listing information
Ticker symbol (all exchanges) CCEP
ISIN code GB00BDCPN049
Legal entity identifier 549300LTH67W4GWMRF57
CUSIP G25839104
SEDOL number (NYSE) BYQQ3P5
SEDOL number (LSE) BDCPN04
SEDOL number (AEX) BD4D942
SEDOL number (MADX) BYSXXS7
Share capital
The Articles of Association of the Company (the
Articles) contain no upper limit on the authorised share
capital of the Company. Subject to certain limitations
under the Shareholders’ Agreement, the Board has the
authority to offer, allot, grant options over or otherwise
deal with or dispose of shares to such persons, at such
times, for such consideration and upon such terms as
the Board may decide, only if approved by ordinary
resolution of our shareholders.
As of 31December2020 the Company had 454,645,510
Shares issued and fully paid. As of 26February2021, the
Company had 454,973,601 Shares issued and fully paid.
Under the Shareholders’ Agreement and the Articles,
the Company is permitted to issue, or grant to any
person rights to be issued, securities, in one or a series of
related transactions, in each case representing 20% or
more of our issued share capital, only if approved in
advance by special resolution of our shareholders.
Pursuant to this authority, our shareholders have
passedresolutions allowing a maximum of a further
312,634,782 Shares (as of 26February2021) to be
allotted and issued, subject to the restrictions set
outbelow:
1. pursuant to a shareholder resolution passed on
26May2016, the Board is authorised to grant rights
to subscribe for or to convert any security into, and/or
allot and issue, shares up to an aggregate maximum
of 18,000,000 Shares in connection with the
assumption or replacement by the Company of
equity awards granted under certain CCE share
plans,of which 8,136,004 have been issued
as of 26February2021;
2. pursuant to a shareholder resolution passed on
27May2020 regarding the authority to allot new
shares, the Board is authorised to allot shares and to
grant rights to subscribe for or convert any security
into shares:
a. up to a nominal amount of €1,513,853.93
(representing 151,385,393 Shares; such amount
tobe reduced by any allotments or grants made
under paragraph 2(b) below in excess of such
sum); and
b. comprising equity securities (as defined in the
Companies Act) up to a nominal amount of
€3,027,707.86 (representing 302,770,786 Shares;
such amount to be reduced by any allotments or
grants made under paragraph 2(a) above) in
connection with an offer by way of a rights issue:
i. to ordinary shareholders in proportion (as nearly
as may be practicable) to their existing holdings;
and
ii. to holders of other equity securities as required
by the rights of those securities or as the Board
otherwise considers necessary,
and so that the Board may impose any limits or
restrictions and make any arrangements which it
considers necessary or appropriate to deal with
treasury shares, fractional entitlements, record
dates, legal, regulatory or practical problems in,
orunder the laws of, any territory or any other
matter; and
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 199
3. pursuant to a shareholder resolution passed on
27May2020 regarding authority to disapply
pre-emption rights, the Board is authorised to allot
equity securities (as defined in the Companies Act)
for cash under the authority given by the shareholder
resolution described in paragraph 2 above and/or
tosell shares held by the Company as treasury shares
for cash as if section 561 of the Companies Act did
not apply to any such allotment or sale, such power
tobe limited:
a. to the allotment of equity securities and sale of
treasury shares in connection with an offer of, or
invitation to apply for, equity securities (but in the
case of the authority granted under paragraph
2(b) above, by way of a rights issue only):
i. to ordinary shareholders in proportion (as nearly
as may be practicable) to their existing holdings;
and
ii. to holders of other equity securities, as required
by the rights of those securities, or as the Board
otherwise considers necessary,
and so that the Board may impose any limits or
restrictions and make any arrangements which it
considers necessary or appropriate to deal with
treasury shares, fractional entitlements, record
dates, legal, regulatory or practical problems in, or
under the laws of, any territory or any other matter;
and
b. in the case of the authority granted under
paragraph 2(a) above and/or in the case of any
sale of treasury shares, to the allotment of equity
securities or sale of treasury shares (otherwise than
under paragraph 3(a) above) up to a nominal
amount of €227,078.08 (representing 22,707,808
Shares).
Shares not representing capital
None.
Shares held by CCEP
We are not permitted under English law to hold our own
Shares unless they are repurchased by us and held in
treasury. At our 2020 AGM, our shareholders passed a
special resolution that allows us to buy back our own
Shares in the market as permitted by the Companies
Act. On 13 February 2020, the Board announced a share
buyback programme of up to €1billion. All Shares
repurchased as part of the buyback programme have
been cancelled. Details of the Shares bought back are
provided under Share buyback programme below.
Inlight of macroeconomic uncertainty brought about
by the outbreak of COVID-19, on 23 March 2020, the
Company announced the suspension of the buyback
programme until further notice.
Share-based payment awards
Table 2 on page 201 shows the share-based
paymentawards outstanding under each of the
CCE2010 Incentive Award Plan (2010 Plan) and the
Long-Term Incentive Plan 2016 (CCEP LTIP) as at
31December2020 and 26February2021. For more
details about the share plans and awards granted, see
Note 21 to the consolidated financial statements on
pages 165 to 166 .
History of share capital
Table 3 on page 202 sets out the history of our share
capital for the period from 1January2018 until
26February2021.
Share buyback programme
Table 4 on page 202 sets out details of our share
buyback programme from 1January2020 until
26February2021.
US shareholders
To the knowledge of the Company, 213 holders of
record with an address in the US held a total of
454,899,767 Shares (or 99% of the total number of
issued Shares outstanding) as at 26February2021.
However, some Shares are registered in the names of
nominees, meaning that the number of shareholders
with registered addresses in the US may not be
representative of the number of beneficial owners
ofShares resident in the US.
200
Table 2
Outstanding share-based payment awards
Plan
Date of award
(dd/mm/yy)
Type of
award
(A)
Total number of Shares awarded
to employees outstanding as at
31December2020
Total number of Shares awarded
to employees outstanding as at
26February2021
(B)
Price per Share
payable on exercise/
transfer ($)
Expiration date
(dd/mm/yy)
2010 Plan 03/11/11 Option 79,051 64,092 19.68 03/11/21
14/11/11 Option 9,240 5,093 19.82 14/05/21
05/11/12 Option 842,390 590,321 23.21 05/11/22
31/10/13 Option 6,835 — 31.46 15/01/21
31/10/13 Option 382 — 31.46 30/06/21
31/10/13 Option 910,879 882,911 31.46 31/10/23
30/10/14 Option 6,920 — 32.51 15/01/21
30/10/14 Option 769 — 32.51 30/06/21
30/10/14 Option 1,184,461 1,170,419 32.51 30/10/24
05/11/15 Option 1,009,881 1,009,881 39.00 05/11/25
CCEP LTIP 12/03/18 PSU 284,949 208,089 — 13/03/21
12/03/18 RSU 74,727 74,703 — 13/03/21
15/06/18 PSU 2,614 1,911 — 13/03/21
15/06/18 RSU 2,614 2,614 — 13/03/21
01/03/19 PSU 393,914 393,795 — 01/03/22
01/03/19 RSU 37,182 37,063 — 01/03/22
11/12/19 PSU 13,654 13,482 — 01/03/22
11/12/19 RSU 10,538 10,538 — 12/03/21
11/12/19 RSU 6,125 5,953 — 01/03/22
17/03/20 PSU 415,401 414,951 — 17/03/23
17/03/20 RSU 42,190 41,740 — 17/03/23
30/06/20 RSU 655 655 — 12/03/21
30/06/20 RSU 1,334 1,334 — 01/03/22
14/12/20 PSU 15,440 15,440 — 17/03/23
14/12/20 RSU 4,680 4,680 — 17/03/23
(A) PSU is performance share unit. RSU is restricted stock unit.
(B) When an employee leaves CCEP, the expiration date of their options is shortened so options with a new expiration date may appear between the year end and the later
reporting date. These are not new options but options that have been moved from another row in the table.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 201
Table 3
Share capital history
Period Nature of Share issuance
Number of
Shares Consideration
Cumulative balance of issued
Shares at end of period
1 January 2018 Opening balance 484,586,428 N/A 484,586,428
1 January to
31December2018
Shares issued in connection with the
exercise of stock options
2,022,729 Exercise price per Share ranging
from $5.09 to $39.00
486,609,157
1 January to
31December2018
Shares issued in connection with the
fulfilment of RSU and PSU
share-based payment awards
740,509 Nil 487,349,666
1 January to
31December2018
Shares cancelled as part of buyback
programme
(12,429,600) €500 million 474,920,066
1 January to
31December2019
Shares issued in connection with the
exercise of stock options
1,741,820 Exercise price per Share ranging
from $9.89 to $39.00
476,661,886
1 January to
31December2019
Shares issued in connection with the
fulfilment of RSU and PSU
share-based payment awards
350,584 Nil 477,012,470
1 January to
31December2019
Shares cancelled as part of buyback
programme
(20,612,593) €1 billion 456,399,877
1 January to
31December 2020
Shares issued in connection with the
exercise of stock options
763,103 Exercise price per Share ranging
from $18.40 to $32.51
457,162,980
1 January to
31December 2020
Shares issued in connection with the
fulfilment of RSU and PSU
share-based payment awards
547,730 Nil 457,710,710
1 January to
31December 2020
Shares cancelled as part of buyback
programme
(3,065,200) €128 million 454,645,510
1 January to
26February 2021
Shares issued in connection with the
exercise of stock options
328,091 Exercise price per Share ranging
from $19.68 to $32.51
454,973,601
1 January to
26February 2021
Shares issued in connection with the
fulfilment of RSU and PSU
share-based payment awards
— — 454,973,601
1 January to
26February 2021
Shares cancelled as part of buyback
programme
— — 454,973,601
Table 4
Share buyback programmes
Period
(a) Total number of Shares
purchased
(b) Average price paid per
Share (€)
(c) Total number of Shares
purchased as part of publicly
announced plans or
programmes
(A)
(d) Approximate value of
Shares that may yet be
purchased under the plans or
programmes
(A)
(€ million)
1 to 31 January 2020 —
—
33,042,193
—
1 to 28 February 2020 976,900
50.224742
34,019,093
951
1 to 20 March 2020 2,088,300 37.741472 36,107,393 872
(A) On 13 February 2020, the Company announced a share buyback programme of up to €1 billion to reduce the Company’s share capital. The total number of Shares
purchased under this buyback programme in 2020 was 3,065,200. The share buyback programme was carried out in accordance with the authorities granted by
shareholders at the 2019 AGM. The maximum number of Shares authorised for purchase at the 2020 AGM was 45,415,617 Shares, representing 10% of the issued Shares at
14 April 2020, reduced by the number of Shares purchased, or agreed to be purchased, between 14 April and 27 May 2020. No Shares have been purchased under the 2020
shareholder authority as at the date of this report. The existing authority to buy back Shares will expire at the 2021 AGM. We intend to seek shareholder approval to renew
the authority to buy back Shares.
202
Marketing
CCEP relies extensively on advertising and sales
promotions to market its products. TCCC and other
franchisors advertise in all major media to promote sales
in the local areas we serve. We also benefit from
regional, local and global advertising programmes
conducted by TCCC and other franchisors. Certain
advertising expenditures by TCCC and other franchisors
are made pursuant to annual arrangements.
CCEP and TCCC engage in a variety of marketing
programmes to promote the sale of TCCC’s products in
territories in which we operate. The amounts to be paid
to us by TCCC under the programmes are determined
annually and are periodically reassessed as the
programmes progress. Marketing support funding
programmes entered into with TCCC provide financial
support, principally based on our product sales or on the
completion of stated requirements, to offset a portion
of the cost of our marketing programmes. Except in
certain limited circumstances, TCCC has no specified
contractual obligation to participate in expenditures
foradvertising, marketing and other support in our
territories. The terms of similar programmes TCCC
mayhave with other licensees and the amounts paid
byTCCC under them could differ from CCEP’s
arrangements.
We take part in various programmes and arrangements
with customers to increase the sale of products. These
include arrangements under which allowances can be
earned by customers for attaining agreed sales levels
orfor participating in specific marketing programmes.
Dependence on franchisors
As a franchise business, CCEP’s business success,
including its financial results, depends upon its
relationships with TCCC and its other franchisors.
Formore about our relationships with franchisors,
seethe Risk factors on page 196.
Competition
CCEP competes mainly in the manufacturing, sale and
distribution of non-alcoholic ready to drink (NARTD)
beverages industry and adjacencies, including squashes/
cordials, hot beverages and premium spirits. CCEP
competes in the Western Europe segment, and
primarily manufactures, sells and distributes the
products of TCCC, as well as those of other franchisors
such as Monster Energy and Capri Sun AG.
CCEP competes mainly with:
• NARTD and non-alcoholic, non-ready to drink
(forexample squashes/cordials and hot beverages)
brand and private label manufacturers, sellers and
distributors
• Alcoholic beverage manufacturers, sellers and
distributors – in the sense that some of their products
may be considered to be substitutes to CCEP’s own
products for certain consumer occasions
A small number of such companies may also be
contracted by CCEP as manufacturers (e.g. co-packers)
or commercial partners (e.g. on behalf of which CCEP
sells and/or distributes, or which sells and/or distributes
on CCEP’s behalf).
CCEP sells and distributes to a wide range of customers,
including both physical and online food and beverage
retailers, wholesalers and out of retail customers. The
market is highly competitive and all CCEP customers
and consumers may choose freely between products
ofCCEP and its competitors. Many of CCEP’s customers
are under increasing competitive pressure, including
with the increasing market share of discounters, the
growth of e-commerce food and beverage players,
andcustomer consolidation.
CCEP competes with respect to a wide range of
commercial factors, including brand awareness,
productand packaging innovations, supply chain
efficacy, customer service, sales strategy, marketing,
and pricing and promotions.
The level of competition faced by CCEP may be
affected by, for example, changing customer and
consumer product, brand, and packaging preferences;
shifts in customers’ industries; competitor strategy
shifts; new competitor entrants; supplier dynamics; the
weather; and social, economic, political or other external
landscape shifts.
Key factors affecting CCEP’s competitive strength
include, for example, CCEP’s strategic choices;
investments; partnerships (e.g. with customers,
franchisors and suppliers); people management;
assetbase (e.g. property, plant, fleet, and equipment);
technological sophistication; and processes
andsystems.
Impact of governmental regulation
Our business is sensitive to the economic and political
action and conditions in our countries of operation.
Therisks this can pose to our business are set out in our
Principal risks on pages 44 to 50 and in our Risk factors
on pages 188 to 197. By responding to these challenges
positively we can gain a competitive advantage.
Material contracts
There have been no material contracts outside the
ordinary course of business to which the Company
orany of its subsidiaries is a party in the last two years
other than as set out below.
The Company and certain of its subsidiaries have
entered into certain material agreements in relation
tothe acquisition of CCL as set out below.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 203
The Scheme Implementation Deed
The Scheme Implementation Deed, dated
4 November 2020, and amended on 14 February 2021, by
and among the Company, CCL and CCEP Australia Pty
Ltd (CCEP Australia), provides for the implementation
of the scheme of arrangement for the acquisition by
CCEP Australia of all of the issued shares of CCL (other
than shares of CCL held by TCCC) held bycertain
independent shareholders (CCL Scheme Shareholders),
on the terms and conditions set forth inAttachment 2
to the Scheme Implementation Deed (Scheme),
including the provisions relating to the consideration to
be provided by CCEP Australia for the transfer of the
shares of CCL held by the CCL Scheme Shareholders
equal to AUD $13.50 per share, subject to the
adjustments set out therein. The Scheme is subject to
approval by CCL Scheme Shareholders, the Australian
courts, regulatory approvals and other customary
conditions as set out in exhibit 4.7 to this Annual Report
on Form 20-F.
The Co-operation and Sale Deed
The Co-operation and Sale Deed dated
4November2020, by and among the Company, CCEP
Australia, TCCC, and Coca-Cola Holdings Overseas
Limited, provides for the acquisition by CCEP Australia
of the shares of CCL indirectly held by TCCC. The sale
and purchase obligations set out under the
Co-operation and Sale Deed are conditional, and will
become binding, on the Scheme becoming effective.
The Co-operation and Sale Deed provides for customary
terms and conditions as set out in exhibit 4.8 to this
Annual Report on Form 20-F.
Copies of material contracts
For further details regarding the Scheme
Implementation Deed and the Co-operation and Sale
Deed, please refer to the Company’s exhibits to the
2020 Annual Report on Form 20-F filed with the SEC.
Articles of Association
For a summary of certain principal provisions of the
Company’s Articles of Association (the Articles), see
Other Information – Other Group information – Articles
of Association of the 2018 Annual Report on Form20-F,
filed on 14March2019. A copy of the Company’s Articles
has been filed as Exhibit 1 to this Form 20-F.
Documents on display
CCEP is subject to the information requirements of
theUS Securities Exchange Act of 1934, as amended
(the Exchange Act), applicable to FPIs. In accordance
with these requirements, we file our Annual Report
onForm20-F and other related documents with the
USSecurities and Exchange Commission (SEC). It is
possible to read and copy documents that we have filed
with the SEC at the SEC’s office. Filings with the SEC are
also available to the public from commercial document
retrieval services, and from the website maintained by
the SEC at www.sec.gov.
Our Annual Report on Form 20-F is also available on our
website at www.cocacolaep.com/about-us/governance.
Shareholders may also order a hard copy, free of charge
– see Useful addresses on page 223.
Exchange controls
Other than those individuals and entities subject to
economic sanctions that may be in force from time
totime, we are not aware of any other legislative or
legal provision currently in force in the UK, the US,
theNetherlands or Spain restricting remittances to
non-resident holders of CCEP’s Shares or affecting
theimport or export of capital for the Company’s use.
Taxation information for shareholders
US federal income taxation
US federal income tax consequences to US holders of the ownership and
disposition of CCEP Shares
This section summarises the material US federal income
tax consequences of owning Shares as capital assets
fortax purposes. It is not, however, a comprehensive
analysis of all the potential US tax consequences
forsuch holders, and it does not discuss the tax
consequences of members of special classes of holders
which may be subject to other rules, including, but not
limited to: tax exempt entities, life insurance companies,
dealers in securities, traders in securities that elect a
mark-to-market method of accounting for securities
holdings, holders liable for alternative minimum tax,
holders that, directly or indirectly, hold 10% or more
(byvote or by value) of the Company’s stock, holders
that hold Shares as part of a straddle or a hedging or
conversion transaction, holders that purchase or sell
Shares as part of a wash sale for US federal income tax
purposes, or holders whose functional currency is not
the US dollar. In addition, if a partnership holds Shares,
the US federal income tax treatment of a partner will
generally depend on the status of the partner and
thetax treatment of the partnership and may not be
described fully below. This summary does not address
any aspect of US taxation other than US federal taxation
(such as the estate and gift tax, the Medicare tax on net
investment income or US state or local tax).
Investors should consult their tax advisors regarding the
US federal, state, local and other tax consequences of
owning and disposing of Shares in their particular
circumstances.
This section is based on the IRC, its legislative history,
existing and proposed regulations, published rulings and
court decisions, and on the United Kingdom-United
States Tax Treaty (the Treaty), all of which are subject to
change, possibly on a retroactive basis.
A US holder is a beneficial owner of Shares that is, for US
federal income tax purposes, (i)a citizen or individual
resident of the US, (ii)a US domestic corporation,
(iii)anestate whose income is subject to US federal
income taxation regardless of its source, or (iv)a trust if
a US court can exercise primary supervision over the
trust’s administration and one or more US persons are
authorised to control all substantial decisions of the
trust. A non-US holder is a beneficial owner of Shares
that is neither a US holder nor a partnership for US
federal income tax purposes.
204
Taxation of dividends
Subject to the passive foreign investment company
(PFIC) rules discussed below, a US holder is subject to
US federal income taxation on the gross amount of any
dividend paid by CCEP out of the Company’s current or
accumulated earnings and profits (as determined for
USfederal income tax purposes). Dividends paid to a
non-corporate US holder will generally constitute
“qualified dividend income” and be taxable to the holder
at a preferential rate, provided that (i) CCEP is eligible
for the benefits of the Treaty, (ii) CCEP is not a PFIC
(asdiscussed below) for either its taxable year in which
the dividend is paid or the preceding taxable year
and(iii) certain minimum holding period and other
requirements are met. CCEP currently believes that
dividends paid with respect to its Shares should
constitute qualified dividend income for US federal
income tax purposes if CCEP was not, in the year prior
to the year in which the dividend was paid, and is not,
inthe year in which the dividend is paid, a PFIC for US
federal income tax purposes and provided that the
certain minimum holding period is met. US holders
should consult their own tax advisors regarding the
availability of the preferential dividend tax rate on
dividends paid by CCEP.
For US federal income tax purposes, a dividend must
beincluded in income when the US holder actually or
constructively receives the dividend. Dividends paid
byCCEP to corporate US holders will generally not
beeligible for the dividends received deduction.
Forforeign tax credit purposes, dividends will
generallybe income from sources outside the US
andwill generally, be “passive” or “general” income for
purposes of computing the foreign tax credit allowable
to a US holder.
The amount of a dividend distribution (including any
UKwithholding tax) on Shares that is paid in a currency
other than the US dollar will generally be included in
ordinary income in an amount equal to the US dollar
value of the currency received on the date such
dividend distribution is includible in income, regardless
of whether the payment is, in fact, converted into US
dollars on such date. Generally, any gain or loss resulting
from currency exchange fluctuations during the period
from the date the dividend payment is includible in
income to the date the payment is converted into US
dollars will be treated as ordinary income or loss and will
not be eligible for the preferential tax rate on qualified
dividend income. Generally, the gain or loss will be
income or loss from sources within the US for foreign
tax credit purposes.
Distributions in excess of CCEP’s earnings and profits, as
determined for US federal income tax purposes, will be
treated as a return of capital to the extent of the US
holder’s basis in its Shares and thereafter as capital gain,
subject to taxation as described below.
Taxation of capital gains
Subject to the PFIC rules discussed below, a US holder
will generally recognise gain or loss on any sale,
exchange, redemption or other taxable disposition of
Shares in an amount equal to the difference between
the US dollar value of the amount realised on the
disposition and the US holder’s tax basis, determined in
US dollars, in the Shares. Any such capital gain or loss will
generally be a long-term gain or loss, subject to tax at a
preferential rate for a non-corporate US holder, if the
US holder’s holding period for such Shares exceeds one
year. Any gain or loss recognised by a US holder on the
sale or exchange of Shares will generally be treated as
income or loss from sources within the US for foreign
tax credit limitation purposes. The deductibility of
capital losses is subject to limitations.
PFIC status
A non-US corporation is a PFIC in any taxable year in
which, after taking into account the income and assets
of certain subsidiaries, either (i) at least 75% of its gross
income is passive income or (ii) at least 50% of the
quarterly average of its assets is attributable to
assetsthat produce or are held to produce passive
income. Currently, we do not believe that CCEP Shares
will be treated as stock of a PFIC for US federal income
tax purposes. However, we review this annually, and
therefore this conclusion is subject to change. If CCEP
was to be treated as a PFIC, unless a US holder elects
tobe taxed annually on a mark-to-market basis with
respect to its Shares, any gain realised on the sale
orexchange of such Shares would in general not be
treated as a capital gain. Instead, a US holder would be
treated as if he or she had realised such gain rateably
over the holding period for Shares and generally would
be taxed at the highest tax rate in effect for each
suchyear to which the gain was allocated. In this case,
an interest charge in respect of the tax attributable to
each such year would apply. Certain distributions would
be similarly treated if CCEP were treated as a PFIC.
Inaddition, each US person that is a shareholder
of a PFIC may be required to file an annual report
disclosingits ownership of shares in a PFIC and certain
other information.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 205
Information reporting and backup withholding
In general, information reporting requirements will
apply to dividends received by US holders of Shares,
andthe proceeds received on the disposition of Shares
effected within the US (and, in certain cases, outside the
US), in each case, other than US holders that are exempt
recipients (such as corporations).
Backup withholding may apply to such amounts if
theUS holder fails to provide an accurate taxpayer
identification number (generally on an IRS Form W-9
provided to the paying agent or the US holder’s broker)
or is otherwise subject to backup withholding.
Dividends with respect to Shares and proceeds from the
sale or other disposition of Shares received in the US or
through certain US related financial intermediaries by a
non-US holder, may be subject to information reporting
and backup withholding unless such non-US holder
provides to the applicable withholding agent the
required certification showing its non-US status, such
asa valid IRS Form W-8BEN, IRSForm W-8BEN-E or IRS
Form W-8ECI, or otherwise establishes an exemption,
and otherwise complies with the applicable
requirements of the backup withholding rules.
Backup withholding is not an additional tax. Any
amounts withheld under the backup withholding
rulesmay be allowed as a refund or credit against
aholder’s US federal income tax liability, if any,
providedthe required information is given to the
IRS on a timely basis.
US federal income tax consequences to non-US holders
of the ownership and disposition of CCEP Shares
In general, a non-US holder of Shares will not be subject
to US federal income tax or, subject to the discussion
above under Information reporting and backup
withholding, US federal withholding tax on any dividends
received on Shares or any gain recognised on a sale or
other disposition of Shares including any distribution to
the extent it exceeds the adjusted basis in the non-US
holder’s Shares unless:
• the dividend or gain is effectively connected with
suchnon-US holder’s conduct of a trade or business
inthe US (and, if required by an applicable tax treaty,
is attributable to a permanent establishment
maintained by the non-US holder in the US); or
• in the case of gain only, such non-US holder is a
non-resident alien individual present in the US for
183days or more during the taxable year of the sale
ordisposition, and certain other requirements are met.
Special rules may apply to a non-US holder who was
previously a US holder and who again becomes a US
holder in a later year.
A non-US holder that is a corporation may also be
subject to a branch profits tax at a rate of 30% (or such
lower rate specified by an applicable tax treaty) on
itseffectively connected earnings and profits for the
taxable year, as adjusted for certain items.
Certain US holders may be required to report to the IRS
on Form 8938 information relating to their ownership
offoreign financial assets, such as the Shares, subject
tocertain exceptions (including an exception for
Sharesheld in accounts maintained by certain financial
institutions). US holders should consult their tax advisors
regarding the effect, if any, of these rules on their
obligations to file information reports with respect
tothe Shares.
206
UK taxation consequences for US holders
The following summarises certain UK tax consequences
of the ownership and disposition of Shares for US
holders who are not resident in the UK for tax purposes
and to whom split year treatment does not apply, who
do not carry on a trade, profession or vocation through
apermanent establishment or branch or agency in the
UK, and who are the absolute beneficial owners of their
Shares and hold such Shares as a capital investment.
This information is a general discussion based on UK tax
law and what is understood to be the practice of HMRC,
all as in effect on the date of publication, and all of
which are subject to differing interpretations and
change at any time, possibly with retroactive effect.
It is not a complete analysis of all potential UK tax
considerations that may apply to a US holder. In
addition, this discussion neither addresses all aspects of
UK tax law that may be relevant to particular US holders
nor takes into account the individual facts and
circumstances of any particular US holder. Accordingly,
it is not intended to be, and should not be construed
as,tax advice.
Distributions on Shares
No UK tax is required to be withheld from cash
distributions on Shares paid to US holders. In addition,
US holders will not be subject to UK tax in respect of
their receipt of cash distributions on their Shares.
Sale, exchange, redemption or other dispositions of Shares
US holders will not be subject to UK tax on capital gains
in respect of any gain realised by such US holders on a
sale, exchange, redemption or other disposition of their
Shares. Special rules may apply to individual US holders
who have ceased to be resident in the UK for tax
purposes and who make a disposition of their Shares
before becoming once again resident in the UK for
taxpurposes.
While Shares are held within the DTC clearance system,
and provided that DTC satisfies various conditions
specified in UK legislation, electronic book entry
transfers of such Shares should not be subject to UK
stamp duty, and agreements to transfer such Shares
should not be subject to Stamp Duty Reserve Tax
(SDRT). Confirmation of this position was obtained by
way of formal clearance by HMRC. Likewise, transfers of,
or agreements to transfer, such Shares from the DTC
clearance system into another clearance system (or into
a depositary receipt system) should not, provided that
the other clearance system or depositary receipt system
satisfies various conditions specified in UK legislation,
besubject to UK stamp duty or SDRT.
In the event that Shares have left the DTC clearance
system, other than into another clearance system or
depositary receipt system, any subsequent transfer
of,or agreement to transfer, such Shares may, subject
to any available exemption or relief, be subject
to UK stamp duty or SDRT at a rate of 0.5% of the
consideration for such transfer or agreement (in the
case of UK stamp duty, rounded up to the next multiple
of £5). Any such UK stamp duty or SDRT will generally be
payable by the transferee and must be paid (and any
relevant transfer document duly stamped by HMRC)
before the transfer can be registered in the books of
the Company. In the event that Shares that have left
theDTC clearance system, other than into another
clearance system or depositary receipt system,
aresubsequently transferred back into a clearance
system or depositary receipt system, such transfer or
agreement may, subject to any available exemption or
relief, be subject to UK stamp duty or SDRT at a rate of
1.5% of the consideration for such transfer (or, where
there is no such consideration, 1.5% of the value of such
Shares). Notwithstanding the foregoing provisions of
this paragraph, a transfer of securities may in certain
circumstances be subject to UK stamp duty or SDRT
based on the value of the relevant securities if this is
higher than the amount of the consideration for the
relevant transfer.
THIS SUMMARY IS NOT EXHAUSTIVE OF ALL POSSIBLE
TAX CONSEQUENCES. IT IS NOT INTENDED AS LEGAL
OR TAX ADVICE TO ANY PARTICULAR HOLDER OF
SHARES AND SHOULD NOT BE SO CONSTRUED.
HOLDERS OF SHARES SHOULD CONSULT THEIR OWN
TAX ADVISOR WITH RESPECT TO THE TAX
CONSEQUENCES APPLICABLE TO THEM IN THEIR OWN
PARTICULAR CIRCUMSTANCES.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 207
Selected financial data
The following selected financial data has been extracted from, and should be read in conjunction with, the
consolidated financial statements of the Group and their accompanying notes.
Coca-Cola European Partners plc was created through the Merger on 28 May 2016 of the businesses of CCE, CCIP
and CCEG. As part of the Merger, in July 2016, the Company completed the acquisition of Vifilfell hf., the Coca-Cola
bottler in Iceland. Upon the consummation of the Merger, the historical consolidated financial statements of CCE
became CCEP’s historical financial statements as CCE was deemed to be the predecessor to CCEP. Therefore, the
financial results presented here for the period from 1 January 2016 to 27May2016 refer to CCE and its consolidated
subsidiaries, and the periods subsequent to 28 May 2016 refer to the combined financial results of CCEP.
The financial information presented here has been prepared in accordance with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board(IASB), IFRS as adopted pursuant to
Regulation (EC) No 1606/2002 as it applies within the European Union (EU) and in accordance with international
accounting standards in conformity with the provisions ofthe UKCompaniesAct2006 (the Companies Act). There
are no differences between IFRS as adopted pursuant to Regulation (EC) No 1606/2002 as it applies within the EU
and IFRS as issued by the IASB that have an impact for the years presented.
2020 2019 2018 2017 2016
Income statement € million € million € million € million € million
Revenue
10,606 12,017 11,518 11,062 9,133
Cost of sales (6,871) (7,424) (7,060) (6,772) (5,584)
Gross profit 3,735 4,593 4,458 4,290 3,549
Selling and distribution expenses (1,939) (2,258) (2,178) (2,124) (1,615)
Administrative expenses (983) (787) (980) (906) (1,083)
Operating profit 813 1,548 1,300 1,260 851
Finance income 33 49 47 48 31
Finance costs (144) (145) (140) (148) (154)
Total finance costs, net (111) (96) (93) (100) (123)
Non-operating items (7) 2 (2) (1) (9)
Profit before taxes 695 1,454 1,205 1,159 719
Taxes (197) (364) (296) (471) (170)
Profit after taxes 498 1,090 909 688 549
208
2020 2019 2018 2017 2016
Statement of financial position € million € million € million € million € million
Non-current assets 15,161 15,582 15,225 14,880 15,143
Current assets 4,076 3,103 2,991 3,314 3,425
Total assets
19,237 18,685 18,216 18,194 18,568
Non-current liabilities
9,072 8,414 7,860 8,222 8,355
Current liabilities 4,140 4,115 3,792 3,287 3,752
Total liabilities
13,212 12,529 11,652 11,509 12,107
Total equity 6,025 6,156 6,564 6,685 6,461
Total equity and liabilities 19,237 18,685 18,216 18,194 18,568
Capital stock data
Number of shares (in millions) 455 456 475 485 483
Share capital (in € million) 5 5 5 5 5
Share premium (in € million) 192 178 152 127 114
Per share data
Basic earnings per share (€) 1.09 2.34 1.88 1.42 1.45
Diluted earnings per share (€) 1.09 2.32 1.86 1.41 1.42
Dividends declared per share (€)
(A)
0.85 1.24 1.06 0.84 0.86
Dividends declared per share ($)
(A)
n/a n/a n/a n/a 0.97
(A) As a result of the Merger, dividends declared in 2016 may be viewed in two separate categories: dividends declared by CCEP in euros and dividends declared by CCE in
USdollars. Dividends declared by CCE in 2016 in US dollars have been converted to euros from US dollars to provide an annualised dividend amount for 2016 using the
average exchange rate for the respective period. Similarly, dividends declared by CCEP in euros in 2016 have been converted to US dollars to provide an annualised
dividend amount for 2016 using the average exchange rate for the respective period.
Operations review
Revenue
Revenue decreased by €1.4 billion, or 11.5%, from €12.0 billion in 2019 to €10.6 billion in 2020. Refer to the Business
and financial review for a discussion of significant factors that impacted revenue in 2020, as compared to 2019.
2019 vs 2018
Refer to Other Information – Other Group information – Operations review of the 2019 Annual Report on Form 20-F,
filed on 16March2020.
Volume
Refer to the Business and financial review for a discussion of significant factors that impacted volume in 2020,
ascompared to 2019.
2019 vs 2018
Refer to Other Information – Other Group information – Operations review of the 2019 Annual Report on Form 20-F,
filed on 16March2020.
Cost of sales
On a reported basis, cost of sales decreased 7.5%, from €7.4 billion in 2019 to €6.9 billion in 2020. Refer to the
Business and financial review for a discussion of significant factors that impacted cost of sales in 2020, as compared
to 2019.
2019 vs 2018
Refer to Other Information – Other Group information – Operations review of the 2019 Annual Report on Form 20-F,
filed on 16March2020.
Selling and distribution expenses and administrative expenses
The following table presents selling and distribution expenses and administrative expenses for the periods
presented:
2020 2019
€ million € million
Selling and distribution expenses 1,939 2,258
Administrative expenses 983 787
Total
2,922 3,045
On a reported basis, total operating expenses decreased by 4.0% from €3.0 billion in 2019 to €2.9 billion in 2020,
including restructuring costs.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 209
Selling and distribution expenses decreased by €319 million, or 14.0%, versus 2019, primarily driven by a reduction in
variable expenses such as logistic costs due to COVID-19 and reduction in trade marketing expenses and seasonal
labour.
Administrative expenses increased by €196 million, or 25.0%, versus 2019 mainly reflecting the higher restructuring
activity in 2020 primarily related to the Accelerate Competitiveness programme and site rationalisation in Germany.
2019 vs 2018
Refer to Other Information – Other Group information – Operations review of the 2019 Annual Report on Form 20-F,
filed on 16March2020.
Finance costs, net
Finance costs, net totalled €111 million and €96 million in 2020 and 2019, respectively. The following table summarises
the primary items impacting our interest expense during the periods presented:
2020 2019
Average outstanding debt balance (€ million) 6,978 6,399
Weighted average cost of debt during the year 1.4% 1.5%
Fixed rate debt (% of portfolio) 95% 91%
Floating rate debt (% of portfolio) 5% 9%
Other non-operating items
Other non-operating items represented an expense of €7 million in 2020 and an income of €2 million in 2019.
Ourother non-operating expense is primarily made up of remeasurement gains and losses related to currency
exchange rate fluctuations on financing transactions denominated in a currency other than the subsidiary’s
functional currency. Non-operating items are shown on a net basis and reflect the impact of any derivative
instruments utilised to hedge the foreign currency movements of the underlying financing transactions.
Tax expense
In 2020, our reported effective tax rate was 28.3%. This includes a €43 million deferred tax expense due to the
enactment of corporate income tax rate increases in the UK and the Netherlands. These increases reverse previously
enacted rate reductions.
In 2019, our reported effective tax rate was 25.0%. This includes the impact of a €3 million deferred tax expense
dueto the enactment of deceleration of corporate tax rate reductions in France and the Netherlands.
Cash flow and liquidity review
Liquidity and capital resources
Our sources of capital include, but are not limited to, cash flows from operating activities, public and private
issuances of debt and equity securities and bank borrowings. Based on information currently available, we do not
believe we are at significant risk of default by our counterparties.
The Group satisfies seasonal working capital needs and other financing requirements with operating cash flow, cash
on hand, short-term borrowings and a line of credit. During the year, the Group has accessed the capital markets,
issuing €1.6 billion of long-term borrowings to finance maturing debt and to ensure the Group had sufficient
liquidity. At 31December2020, the Group had €709 million in third party debt maturities in the next 12 months,
€350million of which was in the form of euro denominated notes and €359million of US dollar denominated notes.
In addition to using operating cash flow and cash in hand, the Group may repay its short-term obligations by issuing
more debt, which may take the form of commercial paper and/or longer-term debt. Further details regarding the
level of borrowings at the year end are provided in Note 13 of the consolidated financial statements.
In line with our commitments to deliver long-term value to shareholders, in October 2020 the Board declared a full
year dividend of €0.85 per Share, maintaining a dividend payout ratio of c.50%. For the year ended 31 December
2020, dividend payments totalled €386 million (2019: €574 million).
On 23 March 2020, in response to COVID-19, the Board took the decision to suspend the share buyback programme.
During the first quarter of 2020, 3,065,200 Shares were repurchased by the Company and cancelled under this
programme. The total cost of the repurchased Shares of €129 million, including €1 million of directly attributable tax
costs, was deducted from retained earnings. No further Shares have been purchased under this programme in the
period through to 31December2020. For further details of the share buyback programme refer to Note 16 of the
consolidated financial statements.
210
Credit ratings and covenants
The Group’s credit ratings are periodically reviewed by rating agencies. The ratings outlook from Moody’s is
onreview for downgrade and for S&P on credit watch negative, which follows the Group’s intention to acquire
CCL. Changes in the operating results, cash flows or financial position could impact the ratings assigned by the
various rating agencies. The credit rating can be materially influenced by a number of factors including, but not
limited to, acquisitions, investment decisions, and capital management activities of TCCC, and/or changes in the
credit rating of TCCC. Should the credit ratings be adjusted downward, the Group may incur higher costs to borrow,
which could have a material impact on the financial condition and results of operations.
Summary of cash flow activities
2020
During 2020, our primary sources of cash included: (1) €1,490 million from operating activities, net of cash payments
related to restructuring programmes of €205 million and contributions to our defined benefit pension plans of
€52 million; and (2)proceeds of €1.6 billion from the issuance of €600 million 1.75% notes due in 2026, €250 million
1.5% notes due in 2027 and €750 million 0.2% notes due in 2028.
Our primary uses of cash were: (1) repayments on borrowings of €790 million, repayments of principal on lease
obligations of €116million (refer to Financing activities below) and net interest payments of €91 million; (2)dividend
payments of €386 million; (3) purchases of Shares under our share buyback programme of €129 million; and
(4) spend on property, plant and equipment of €348 million and software of €60 million.
2019
During 2019, our primary sources of cash included: (1) €1,904 million from operating activities, net of cash payments
related to restructuring programmes of €147 million and contributions to our defined benefit pension plans of
€61million and cash receipts of €126 million relating to the ongoing VAT dispute with the Spanish tax authorities
andthe regional tax authorities of Bizkaia (Basque Region); and (2) proceeds of €1,089 million from the issuance
of€493 million 1.125% notes due in 2029, €495 million 0.7% notes due in 2031 and €101 million net issuances of
short-term borrowings.
Our primary uses of cash were: (1) repayments on borrowings of €753 million (refer to Financing activities below)
and net interest payments of €86 million; (2)dividend payments of €574 million; (3) purchases of Shares under our
share buyback programme of €1,005 million; and (4) spend on property, plant and equipment of €506 million and
software of €96 million.
The discussion of our 2018 cash flow activities has not been included as this can be found under Other Information –
Other Group information – Cash flow and liquidity review of the 2018 Annual Report on Form20-F, filed on
14March2019.
Operating activities
2020 vs 2019
Our cash derived from operating activities totalled €1,490 million in 2020 versus €1,904 million in 2019. This decrease
was primarily due to the impact of COVID-19, and an increase in restructuring charges of €238 million relative to
2019.
2019 vs 2018
Refer to Other Information – Other Group information – Cash flow and liquidity review of the 2019 Annual Report
onForm20-F, filed on 16March2020.
Investing activities
2020 vs 2019
Capital asset investments represent a primary use of cash for our investing activities.
The following table summarises the capital investments for the periods presented:
2020 2019
€ million € million
Supply chain infrastructure 283 382
Cold drink equipment 57 120
Fleet and other 8 4
Total capital asset investments
348 506
Investments in supply chain infrastructure relate to investments in our manufacturing and distribution facilities.
In addition, during 2020 the Group spent €60 million (2019: €96 million) on capitalised development activity,
primarily in relation to the business capability programme. No significant other investing activities took place during
the years ended 31 December 2020 and 2019.
During 2021, we expect our capital expenditures to be invested in similar categories as those listed in the table
above. Whilst the level of capital expenditure is uncertain, we expect our operating cash flow, cash in hand and
available short-term capital resources will be sufficient to fund future capital expenditures.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 211
2019 vs 2018
Refer to Other Information – Other Group information – Cash flow and liquidity review of the 2019 Annual Report on
Form20-F, filed on 16March2020.
Financing activities
2020 vs 2019
Our net cash used in financing activities totalled €100 million in 2020, versus €1,302 million in 2019.
The following table summarises our financing activities related to the issuances of and payments on debt for the
periods presented (in € millions):
Issuances of debt Maturity date Rate 2020 2019
€600 million notes
March 2026
1.75% 600 —
€250 million notes
November 2027
1.50% 250 —
€750 million notes
December 2028
0.20% 750 —
€500 million notes
April 2029
1.13% — 493
€500 million notes
September 2031
0.70% — 495
Net issuances of short-term borrowings —
(A)
—
101
Total issuances of debt, net of issuance costs
1,600 1,089
Payments on debt Maturity date Rate 2020 2019
$525 million September 2020 3.5% (470) —
$250 million August 2021 3.3% (52) —
$300 million September 2021 4.5% (47) —
Term loan May 2018-2021 floating — (275)
€350 million notes December 2019 2.0% — (350)
Lease obligations — — (116) (128)
Repayments on third-part borrowings, less short-term borrowings
(685) (753)
Net payments of short-term borrowings — (A)
(221) —
Total payments on debt
(906) (753)
(A) These amounts represent short-term euro commercial paper with varying interest rates.
Our financing activities during 2020 included dividend payments totalling €386 million, based on a dividend rate
of€0.85 per Share. In 2019, dividend payments totalled €574 million.
The total payments under the share buyback programme in 2020 were €129 million (including €1 million of directly
attributable tax costs). This compares to total payments of €1,005 million relating to Shares that were repurchased
in 2019.
During March 2020, €400 million was drawn against our credit facility, of which €300 million was repaid during March
2020 and €100 million was repaid during April 2020. No other amounts were drawn under this facility during 2020 and
the facility was undrawn at 31 December 2020. During 2019, €60 million was drawn against the credit facility and
subsequently repaid prior to 31 December 2019.
Lease obligations
During the year ended 31 December 2020 and 31 December 2019, total cash outflows from payments of principal
onlease obligations were €116million and €128million, respectively.
2019 vs 2018
Refer to Other Information – Other Group information – Cash flow and liquidity review of the 2019 Annual Report
onForm20-F, filed on 16March2020.
212
Raw materials
CCEP purchases concentrates and syrups from TCCC and other franchisors to manufacture products. In addition,
the Group purchases sweeteners, juices, coffee, mineral waters, finished product, carbon dioxide, fuel, PET (plastic)
preforms, glass, aluminium and plastic bottles, aluminium and steel cans, pouches, closures, post-mix and packaging
materials. The Group generally purchases raw materials, other than concentrates, syrups and mineral waters, from
multiple suppliers. The product licensing and bottling agreements with TCCC and agreements with some of our
other franchisors provide that all authorised containers, closures, cases, cartons and other packages, and labels
fortheir products must be purchased from manufacturers approved by the respective franchisor. The principal
sweetener we use is sugar derived from sugar beets. Our sugar purchases are made from multiple suppliers. The
Group does not separately purchase low-calorie sweeteners because sweeteners for low-calorie beverage products
are contained in the concentrates or syrups we purchase.
The Group produces most of its plastic bottle requirements within the production facilities using preforms
purchased from multiple suppliers. The Group believes the self manufacture of certain packages serves to ensure
supply and to reduce or manage costs. The Group does not use any materials or supplies that are currently in short
supply, although the supply and price of specific materials or supplies are, at times, adversely affected by strikes,
weather conditions, speculation, abnormally high demand, governmental controls, new taxes, national emergencies,
natural disasters, price or supply fluctuations of their raw material components, and currency fluctuations.
Off-balance sheet arrangements
The Group does not have any off-balance sheet arrangements, as defined by the SEC in Item 5.E of Form 20-F,
thathave or are reasonably likely to have a current or future effect on the Group's financial condition, changes in
financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources
that is material to investors.
Contractual obligations
The following table reflects the Group's contractual obligations as at 31December2020:
Total Less than 1 year 1 to 3 years 3 to 5 years More than 5 years
€ million € million € million € million € million
Borrowings
(A)
6,822 709 1,048 844 4,221
Lease obligations
(B)
402 121 136 58 87
Interest obligations
(C)
503 90 159 126 128
Purchase agreements
(D)
175 67 93 3 12
7,902 987 1,436 1,031 4,448
(A) These amounts represent the Group’s scheduled debt maturities, excluding lease obligations. Refer to Note 13 of the consolidated financial statements for further details
about the borrowings of CCEP.
(B) These amounts represent the Group’s minimum lease payments (including amounts representing interest), obligations related to lease agreements committed to but not
yet commenced and lease payments due under non-cancellable short-term or low value lease agreements.
(C) These amounts represent estimated interest payments related to the Group’s long-term debt obligations, excluding leases. Interest on fixed rate debt has been
calculated based on applicable rates and payment dates. Interest on variable rate debt has been calculated using the forward interest rate curve. Refer to Note 24 of the
consolidated financial statements for further details about financial risk management within CCEP.
(D) These amounts represent non-cancellable purchase agreements with various suppliers that are enforceable and legally binding and that specify a fixed or minimum
quantity that we must purchase. All purchases made under these agreements have standard quality and performance criteria. In addition to these amounts, the Group has
outstanding capital expenditure purchase orders of approximately €50 million as at 31December2020.The Group also has other purchase orders raised in the ordinary
course of business which are settled in a reasonably short period of time. These are excluded from the table above. The Group expects that the net cash flows generated
from operating activities will be able to meet these liabilities as they fall due.
The above table does not reflect the impact of derivatives and hedging instruments, other than for long-term debt,
which are discussed in Note 24 of the consolidated financial statements. Furthermore, the exact timing of our tax
provisions is not certain and these have been excluded from the above table. Refer to Note 20 of the consolidated
financial statements for further information.
The above table also does not reflect employee benefit liabilities of €296 million, which include current liabilities of
€13 million and non-current liabilities of €283 million as at 31December2020. Refer to Note 15 of the consolidated
financial statements for further information.
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 213
Properties
The Group’s principal properties include production facilities, distribution and logistics centres, shared service
centres, business unit headquarter offices and corporate offices.
The table below summarises the main properties which the Group uses as at 31December2020:
Great
Britain France
Belgium/
Luxembourg Netherlands Norway Sweden Germany Iberia Iceland Total
Production facilities
(A)
Leased — — — — — — 2 1 — 3
Owned 5 5 3 1 1 1 16 10 2 44
Total 5 5 3 1 1 1 18 11 2 47
Distribution and logistics facilities
Leased 1 — 3 — — — 21 5 — 30
Owned — — — — — — 8 4 — 12
Total 1 — 3 — — — 29 9 — 42
Corporate offices and business unit headquarters
Leased 2 1 1 1 — — 1 3 — 9
Owned — — — — — — — — — —
Total 2 1 1 1 — — 1 3 — 9
(A) All production facilities are a combination of production and warehouse facilities.
The Group uses two shared service centres, both located in Bulgaria.
The Group’s principal properties cover approximately 4.6 million square metres in the aggregate of which 0.5 million
square metres is leased and 4.1 million square metres is owned. The Group believes that its facilities are adequately
utilised and sufficient to meet its present operating needs.
At 31December2020, the Group operated approximately 12 thousand vehicles of various types, the majority
ofwhich are leased.The Group also owned approximately 1.1 million pieces of cold drink equipment, principally
coolers and vending machines.
Disclosure controls and procedures
Evaluation of disclosure controls and procedures
The Group maintains “disclosure controls and procedures”, as defined in Rule 13a-15(e) under the Exchange Act,
which are designed to ensure that information required to be disclosed in reports filed or submitted under the
Exchange Act is recorded, processed, summarised and reported within the time periods specified in the US SEC’s
rules and forms, and that such information is accumulated and communicated to the Group’s management,
including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), as appropriate to allow timely
decisions regarding required disclosure. The Group’s management, with the participation of the CEO and CFO, has
evaluated the effectiveness of the Group’s disclosure controls and procedures pursuant to Exchange Act Rule
13a-15(b) as at 31December2020. Based on that evaluation, the Group’s CEO and CFO have concluded that the
Group’s disclosure controls and procedures were effective.
Management’s report on internal control over financial reporting
The Group’s management is responsible for establishing and maintaining adequate internal control over financial
reporting for the Group, as defined in Rule 13a-15(f) under the Exchange Act. Internal control over financial
reporting is a process designed under the supervision of the principal executive and financial officers to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of the Group’s consolidated
financial statements for external reporting purposes in accordance with IFRS issued by the IASB. The Group’s
internal control over financial reporting includes policies and procedures that (1) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the Group’s transactions and dispositions of assets;
(2)are designed to provide reasonable assurance that transactions are recorded as necessary to permit the
preparation of the Group’s consolidated financial statements in accordance with IFRS, and that receipts and
expenditures are being made only in accordance with authorisations of management and the Directors of the
Group; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition,
use or disposition of the Group’s assets that could have a material effect on the Group’s consolidated financial
statements. Internal control systems, no matter how well designed, have inherent limitations and may not prevent
ordetect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk
that internal controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
214
Management, with the participation of the Chief Executive Officer and Chief Financial Officer, assessed the
effectiveness of the Group’s internal control over financial reporting as at 31December2020, using the criteria set
forth in the Internal Control-Integrated Framework issued by The Committee of Sponsoring Organizations of the
Treadway Commission. Based on this assessment, management has determined that the Group’s internal control
over financial reporting as at 31December2020 was effective. Ernst & Young LLP (EY), the Group’s independent
registered public accounting firm, has issued an attestation report on the Group’s internal control over financial
reporting as at 31December2020, which is set out on page 127.
Changes in internal control over financial reporting
There has been no change in the Group’s internal control over financial reporting (as defined in Rule 13a-15(f) under
the Exchange Act) during 2020 that has materially affected, or is reasonably likely to materially affect, the Group’s
internal control over financial reporting.
Principal accountants’ fees and services
The Audit Committee has established policies and procedures for the engagement of the independent registered
public accounting firm, EY, to render audit and certain assurance and tax services. The policies provide for pre-
approval by the Audit Committee of specifically defined audit, audit-related, tax and other services that are not
prohibited by regulatory or other professional requirements. EY is engaged for these services when itsexpertise
andexperience of CCEP are important. Most of this work is of an audit nature.
Under the policy, pre-approval is given for specific services within the following categories: advice on accounting,
auditing and financial reporting matters; internal accounting and risk management control reviews (excluding any
services relating to information systems design and implementation); non-statutory audit; project assurance and
advice on business and accounting process improvement (excluding any services relating to information systems
design and implementation relating to CCEP’s financial statements or accounting records); due diligence in
connection with acquisitions, disposals and arrangements in which two or more parties have joint control(excluding
valuation or involvement in prospective financial information); income tax and indirect tax compliance and advisory
services; employee tax services (excluding tax services that could impair independence); provision of, or access to,
EY publications, workshops, seminars and other training materials; provision of reports from data gathered on
non-financial policies and information; and assistance with understanding non-financial regulatory requirements.
The Audit Committee has delegated authority to the Chairman of the Audit Committee to approve permitted
services provided that the Chairman reports any decisions to the Committee at its next scheduled meeting. Any
proposed service not included in the approved service list must be approved in advance by the Audit Committee
Chairman and reported to the Committee, or approved by the full Audit Committee in advance of commencement
of the engagement.
The Audit Committee evaluates the performance of the auditor each year. The Committee keeps under review the
scope and results of audit work and the independence and objectivity of the auditor. The audit fees payable to EY
are reviewed by the Committee for cost effectiveness each year. External regulation and CCEP policy requires the
auditor to rotate its lead audit partner every five years. (See Note 17 of the consolidated financial statements for
details of fees for services provided by the auditor.)
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 215
Form 20-F table of cross references
Page
Part 1
Item 1 Identity of Directors, Senior Management and Advisors n/a
Item 2 Offer Statistics and Expected Timetable n/a
Item 3 Key Information
A - Selected financial data. 208-209
B - Capitalization and indebtedness. n/a
C - Reasons for the offer and use of proceeds. n/a
D - Risk factors. 188-197
Item 4 Information on the Company
A - History and development of the company. 133, 198, 203-204, 211-212, 223
B - Business overview.
4-9, 11, 54-61, 134-135, 137, 196, 203, 213
C - Organizational structure.
172-174
D - Property, plants and equipment.
141, 211-212, 213
Item 4A Unresolved Staff Comments n/a
Item 5 Operating and Financial Review and Prospects
A - Operating results.
54-61, 133, 137, 158-160, 172, 188-197,
209-210
B - Liquidity and capital resources.
59-60, 146-149, 150-151, 210-212, 213
C - Research and development, patents and licences, etc. 138-141
D - Trend information.
54-61, 172
E - Off-balance sheet arrangements.
213
F - Tabular disclosure of contractual obligations.
213
G - Safe harbor.
224
Item 6 Directors, Senior Management and Employees
A - Directors and senior management.
65-71, 198-199
B - Compensation.
92-107, 152-157, 162
C - Board practices.
65-81, 86-91, 92-107
D - Employees.
38-41, 158, 195
E - Share ownership.
40, 103-104, 198-200
Item 7 Major Shareholders and Related Party Transactions
A - Major shareholders.
109
B - Related party transactions.
160-162
C - Interests of experts and counsel n/a
Item 8 Financial Information
A - Consolidated Statements and Other Financial Information.
60, 128-174, 208-215
B - Significant Changes. 172
Item 9 The Offer and Listing.
A - Offer and listing details.
198-199
B - Plan of distribution.
n/a
C - Markets.
199
D - Selling shareholders.
n/a
E - Dilution.
n/a
F - Expenses of the issue.
n/a
216
Page
Item 10 Additional Information.
A - Share capital. 199-202
B - Memorandum and articles of association. 204
C - Material contracts. 203-204
D - Exchange controls. 204
E - Taxation. 204-207
F - Dividends and paying agents. n/a
G - Statement by experts.
n/a
H - Documents on display. 204
I - Subsidiary Information. 172-174
Item 11 Quantitative and Qualitative Disclosures about Market Risk. 146-149, 168-170
Item 12 Description of Securities Other than Equity Securities.
A - Debt Securities.
n/a
B - Warrants and Rights.
n/a
C - Other Securities.
n/a
D - American Depository Shares.
n/a
Part II
Item 13 Defaults, Dividend Arrearages and Delinquencies.
n/a
Item 14 Material Modifications to the Rights of Security Holders and Use of Proceeds.
n/a
Item 15 Controls and Procedures. 127, 214-215
Item 16A Audit committee financial expert. 73, 87
Item 16B Code of Ethics. 72-73
Item 16C Principal Accountant Fees and Services. 90, 160, 215
Item 16D Exemptions from the Listing Standards for Audit Committees.
n/a
Item 16E Purchases of Equity Securities by the Issuer and Affiliated Purchasers. 109, 200, 202
Item 16F Change in Registrant’s Certifying Accountant. n/a
Item 16G Corporate Governance. 73
Item 16H Mine Safety Disclosure n/a
Part III
Item 17 Financial Statements. 128-174
Item 18 Financial Statements. n/a
Item 19 Exhibits. 218
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 217
Exhibits
The following documents, which form a part of this Annual Report on Form 20-F, have been filed with the US
Securities and Exchange Commission (SEC) via its EDGAR system and can be viewed on the SEC’s website at
www.sec.gov.
Exhibit 1 Articles of Association of CCEP (incorporated by reference to Exhibit 99.1 to CCEP’s Form 6-K filed with the SEC on May 30,
2019).
Exhibit 2 Description of rights attached to each class of CCEP securities registered under Section 12 of the Exchange Act as at
31December 2020.
Exhibit 3 Shareholders’ Agreement by and among the Company, Olive Partners, S.A., European Refreshments, Coca-Cola GmbH and
Vivaqa Beteiligungs GmbH & Co. KG (incorporated by reference to Annex C to the proxy statement/prospectus contained
in CCEP’s Form F-4/A registration statement filed with the SEC on April 11, 2016).
Exhibit 4.1 Form of Bottler’s Agreement entered into between The Coca-Cola Company and the bottling subsidiaries of CCEP
(incorporated by reference to Exhibit 10.7 to the Company’s Form F-4/A registration statement filed with the SEC on
April7,2016).
Exhibit 4.2 Coca-Cola European Partners plc Long-Term Incentive Plan 2016 (incorporated by reference to Exhibit 4.1 to CCEP’s Form
S-8 registration statement filed with the SEC on June 1, 2016).
Exhibit 4.3 Rules of the Coca-Cola Enterprises Belgium/Coca-Cola Enterprises Services Belgian and Luxembourg Share Savings Plan
(incorporated by reference to Exhibit 4.3 to CCEP’s Form S-8 registration statement filed with the SEC on June1,2016).
Exhibit 4.4 Trust Deed and Rules of Coca-Cola Enterprises UK Share Plan (incorporated by reference to Exhibit 4.2 to the Company’s
Form S-8 registration statement filed with the SEC on June 1, 2016).
Exhibit 4.5
The Coca-Cola Enterprises, Inc. 2010 Incentive Award Plan (As Amended Effective February7, 2012) (incorporated by
reference to Exhibit 99.1 to Coca-Cola Enterprises, Inc.’s Current Report on Form 8-K filed on February9, 2012).
Exhibit 4.6 Deed of Assumption and Replacement relating to Equity Awards of Coca-Cola Enterprises, Inc. (incorporated by reference
to Exhibit 4.3 to the Company’s Post-Effective Amendment No. 1 on Form S-8 to Form F-4 registration statement filed with
the SEC on June 1, 2016).
Exhibit 4.7 The Scheme Implementation Deed by and among the Company, Coca-Cola Amatil Limited and CCEP Australia Pty Ltd,
dated 4 November 2020.
Exhibit 4.8 The Co-operation and Sale Deed by and between the Company, The Coca-Cola Company, CCEP Australia Pty Ltd and
Coca-Cola Holdings Overseas Limited, dated 4 November 2020
Exhibit 8 List of Subsidiaries of the Company (included in Note 27 of the consolidated financial statements in this Annual Report on
Form 20-F).
Exhibit 12.1 Rule 13a-14(a) Certification of Damian Gammell
Exhibit 12.2 Rule 13a-14(a) Certification of Nik Jhangiani
Exhibit 13 Rule 13a-14(b) Certifications
Exhibit 15.1 Consent of Ernst & Young LLP, UK
Exhibit 101.INS
XBRL Instance Document
Exhibit 101.SCH
XBRL Taxonomy Extension Schema Document
Exhibit 101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
Exhibit 101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
Exhibit 101.LAB
XBRL Taxonomy Extension Label Linkbase Document
Exhibit 101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
The total amount of long-term debt securities of the Company and its subsidiaries authorised under any one
instrument does not exceed 10% of the total assets of the Company and its subsidiaries on a consolidated basis. The
Company agrees to furnish copies of any or all such instruments to the SEC on request.
218
Signatures
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly
caused and authorised the undersigned to sign the Annual Report on Form 20-F on its behalf.
Coca-Cola European Partners plc
/s/ Damian Gammell
Damian Gammell
Chief Executive Officer
12 March 2021
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 219
Glossary
Unless the context otherwise requires, the following terms have the meanings shown below.
2010 Plan CCE 2010 Incentive Award Plan
Accelerate Competitiveness proposals announced in October 2020 aimed at reshaping CCEP using technology enabled
solutions to improve productivity and include the closure of certain production sites in
Germany and Iberia
Admission the date of the Company’s admission to the UK market (28May2016)
AGM Annual General Meeting
APPP Accelerate Profit Performance Plan
ARR Annual report on remuneration
Articles Articles of Association of Coca-Cola European Partners plc
ATC Affiliated Transaction Committee
B2B business to business
BCP business continuity planning
BCR business continuity and resilience
BEIS UK Department for Business, Environment and Industrial Strategy
BIA business impact analysis
Board Board of Directors of Coca-Cola European Partners plc
BPF Business Performance Factor
Brexit the departure of the UK from the EU
BU a business unit of the Group
capex capital expenditure
CCE or Coca-Cola Enterprises Coca-Cola Enterprises, Inc.
CCEG or Coca-Cola Erfrischungsgetränke Coca-Cola Erfrischungsgetränke GmbH (which changed its name to Coca-Cola European
Partners DeutschlandGmbH from 22August2016)
CCEP or the Group Coca-Cola European Partners plc (registered in England and Wales number 9717350) and its
subsidiaries and subsidiary undertakings from time to time
CCEP LTIP CCEP Long-Term Incentive Plan 2016
CCIP or Coca-Cola Iberian Partners Coca-Cola Iberian Partners, S.A. (which changed its name to Coca-Cola European Partners
Iberia S.L.U. from 1January2017)
CCL Coca-Cola Amatil Limited
CDE cold drink equipment
CDP Climate Disclosure Project, formerly known as the Carbon Disclosure Project
CEO Chief Executive Officer (of Coca-Cola European Partners plc)
CFO Chief Financial Officer (of Coca-Cola European Partners plc)
CIO Chief Information Officer (of Coca-Cola European Partners plc)
CGU cash generating unit
Chairman the Chairman of Coca-Cola European Partners plc
Cobega Cobega, S.A.
Coca-Cola system comprises The Coca-Cola Company and around 225 bottling partners worldwide
CoC Code of Conduct
CODM chief operating decision maker
Committee(s) the five committees with delegated authority from the Board: the Audit, Remuneration,
Nomination, Corporate Social Responsibility and Affiliated Transaction Committees
Committee Chairman/Chairmen the Chairman/Chairmen of the Committee(s)
Committee member(s) member(s) of the Committees
Companies Act the UK Companies Act 2006, as amended
Company or Parent Company Coca-Cola European Partners plc
Company Secretary Company Secretary (of Coca-Cola European Partners plc)
COVID-19 or coronavirus the coronavirus pandemic 2020-2021
CSR Corporate Social Responsibility
Deloitte Deloitte LLP
Director(s) a (the) director(s) of Coca-Cola European Partners plc
DNV GL international accredited registrar and classification society
DRS deposit return scheme(s)
DTC Depository Trust Company
DTRs the Disclosure Guidance and Transparency Rules of the UK Financial Conduct Authority
EBITDA earnings before interest, tax, depreciation and amortisation
220
EEA European Economic Area
EAP Employee Assistance Programme
EIR effective interest rate
EPS earnings per share
ERA enterprise risk assessment
ERM enterprise risk management
EY
Ernst & Young LLP
ESP GB Employee Share Plan
EU European Union
European Refreshments or ER European Refreshments, a wholly-owned subsidiary of TCCC
Exchange Act the US Securities Exchange Act of 1934
Executive Leadership Team or ELT the CEO and his direct senior leadership reports
E&C ethics and compliance
FAWVA facility water vulnerability assessment
FCPA US Foreign Corrupt Practices Act of 1977
FIFO first-in, first-out method
FMCG fast moving consumer goods
FPI foreign private issuer, a term that applies to a company under the rules of the New York Stock
Exchange that is not a domestic US company
FRC the Financial Reporting Council
FRS Financial Reporting Standards
FTSE4Good a series of ethical investment stock market indices launched in 2001 by the FTSE Group
GAAP Generally Accepted Accounting Principles
GB Scheme the Great Britain defined benefit pension plan
GHG greenhouse gas
GHG Protocol or WRI/WBCSD GHG Protocol the GHG Protocol is the internationally recognised, standard framework for measuring
greenhouse gas (GHG) emissions from private and public sector operations and their value
chains
Group or CCEP Cola-Cola European Partners plc and its subsidiaries and subsidiary undertakings from time to
time
HMRC Her Majesty’s Revenue and Customs, the UK’s tax authority
HoReCa hotels, restaurant and cafes
HR human resources
I&D inclusion and diversity
IAS International Accounting Standards
IASB International Accounting Standards Board
IAS Regulations International Accounting Standards (IAS) Regulations relate to the harmonisation of the
financial information presented by issuers of securities in the European Union
IBR incremental borrowing rate
IEA International Energy Agency
IFRIC International Financial Reporting Interpretations Committee
IFRS International Financial Reporting Standards
INEDs Independent Non-executive Directors of Coca-Cola European Partners plc
IPF Individual Performance Factor
IRC the US Internal Revenue Code of 1986, as amended
IRS US Internal Revenue Service
ISAE 3000 International Standard on Assurance Engagements 3000
ISO International Organization for Standardisation
IT information technology
KPI key performance indicator
LGBT+ pertaining collectively to people who identify as lesbian, gay, bisexual, or transgender, and to
people with gender expressions outside traditional norms, including nonbinary, intersex, and
other queer people (and those questioning their gender identity or sexual orientation), along
with their allies
Listing Rules or LRs the Listing Rules of the UK Financial Conduct Authority
LSE London Stock Exchange
LTI long-term incentive
LTIP Long-Term Incentive Plan
M&A merger and acquisition(s)
Merger the formation of Coca-Cola European Partners plc on 28May2016 through the combination
of the businesses of Coca-Cola Enterprises, Inc., Coca-Cola Iberian Partners, S.A. and Coca-Cola
Erfrischungsgetränke GmbH
NARTD non-alcoholic ready to drink
NEDs Non-executive Directors of Coca-Cola European Partners plc
NGO non-governmental organisation
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 221
NYSE New York Stock Exchange
NYSE Rules the corporate governance rules of the NYSE
OCI other comprehensive income
OFAC Office of Foreign Assets Control of the US Department of the Treasury
Official List the Official List is the list maintained by the Financial Conduct Authority of securities issued by
companies for the purpose of those securities being traded on a UK regulated market such as
London Stock Exchange
Olive Partners Olive Partners, S.A.
opex operating expenditure
Parent Company or Company Coca-Cola European Partners plc
Paris Agreement the agreement on climate change resulting from UN COP21, the UN Climate Change
Conference, also known as the 2015 Paris Climate Conference
Partnership the partnership agreement entered into between the Group, the GB Scheme and CCEP
Scottish Limited Partnership to support a long-term funding arrangement
Pension Plan 1 and Pension Plan 2 the Germany defined benefit pension plans
PET polyethylene terephthalate
PFIC passive foreign investment company
PR public relations
PRN Packaging Recovery Notes
PSU performance share unit
Remuneration policy the remuneration policy as approved by shareholders at the Company’s AGM held on
22June2017
rPET recycled PET
RTD ready to drink
ROIC return on invested capital
ROU right of use
RSU restricted stock unit
SAGP Sustainable Agriculture Guiding Principles
SBTi Science Based Targets initiative
SDRT stamp duty reserve tax
SDG UN Sustainable Development Goals
SEC Securities Exchange Commission of the US
SGP Supplier Guiding Principles
Shareholders’ Agreement the shareholders’ agreement dated 28 May 2016 between Coca-Cola European Partners plc
and Olive Partners, S.A., European Refreshments, Coca-Cola GmbH and Vivaqa Beteiligungs
Gmbh & Co. KG
Shares ordinary shares of €0.01 each of Coca-Cola European Partners plc
SID Senior Independent Director
SOX or the Sarbanes-Oxley Act the US Sarbanes-Oxley Act of 2002
S&P Standard & Poor’s
the Spanish Stock Exchanges the Barcelona, Bilbao, Madrid and Valencia Stock Exchanges
SPO Sustainable Packaging Office
SVA source water vulnerability assessment
TCA EU-UK Trade and Cooperation Agreement
TCCC The Coca-Cola Company
TCFD Task Force on Climate-related Financial Disclosures
the Proposed Acquisition the binding offer made in November 2020, and revised in February 2021, to acquire the entire
existing issued share capital of Coca-Cola Amatil Limited from The Coca-Cola Company, under
the terms of a Co-operation and Sale Deed, and from shareholders other than The Coca-Cola
Company, to be effected by means of a scheme of arrangement
TSR total shareholder return
UK Accounting Standards Financial Reporting Standards issued by the Accounting Standards Board
UKBA UK Bribery Act 2010
UKCGC UK Corporate Governance Code 2018
UNESDA Union of European Soft Drinks Associations
UN OHCHR United Nations Office of the High Commission on Human Rights
unit case approximately 5.678 litres or 24 eight ounce servings, a typical volume measurement unit
VAT value added tax
WEEE EU Directive on Waste Electrical and Electronic Equipment
WMP water management plan
WRI/WBCSD GHG Protocol or GHG Protocol the GHG Protocol is the internationally recognised, standard framework for measuring
greenhouse gas (GHG) emissions from private and public sector operations and their value
chains
222
Useful addresses
Registered office
Coca-Cola European Partners plc
Pemberton House
Bakers Road
Uxbridge
UB8 1EZ
Registered in England and Wales
Company number: 9717350
+44 (0)1895 231313
Share registration
US shareholders: Shareholders in Europe and outside the US:
Computershare
462 South 4th Street
Suite 1600
Louisville
KY 40202
1-800-418-4223
Computershare
The Pavilions
Bridgwater Road
Bristol
BS99 6ZZ
+44 (0)370 702 0003
Report ordering
Shareholders who would like a paper copy of the Integrated Report, which will be despatched from around
15April2021, can make their request by post to the Company Secretary, Pemberton House, Bakers Road,
Uxbridge UB8 1EZ, United Kingdom or by making a request via www.cocacolaep.com/financial-reports-and-
results/integrated-reports or by sending an email to sendmaterial@proxyvote.com or by making a request via
www.proxyvote.com or by phoning (in the US) 1-800-579-1639 or (outside the US) +1-800-579-1639.
Agent for service of process in the US
TheCorporationTrustCompany
CorporationTrustCenter
1209OrangeStreet
Wilmington,DE19801
Coca-Cola European Partners plc / 2020 Integrated Report and Form 20-F 223
Forward-looking statements
This document contains statements, estimates or projections that constitute “forward-looking statements”
concerning the financial condition, performance, results, strategy and objectives of Coca-Cola European Partners
plc and its subsidiaries (together “CCEP” or the “Group”), CCEP's proposed acquisition (the "Acquisition") of
Coca-Cola Amatil Limited and its subsidiaries (together "CCL") and the integration of CCL into CCEP. Generally, the
words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “plan,” “seek,” “may,” “could,” “would,” “should,”
“might,” “will,” “forecast,” “outlook,” “guidance,” “possible,” “potential,” “predict,” “objective” and similar expressions
identify forward-looking statements, which generally are not historical in nature.
Forward-looking statements are subject to certain risks that could cause actual results to differ materially from
CCEP’s and CCL’s historical experience and present expectations or projections, including with respect to the
Acquisition. As a result, undue reliance should not be placed on forward-looking statements, which speak only as of
the date on which they are made. These risks include but are not limited to:
1. those set forth in the “Risk Factors” section of this 2020 Annual Report on Form 20-F, including the statements
under the following headings: Business continuity and resilience (such as the adverse impact that the COVID-19
pandemic and related government restrictions and social distancing measures implemented in many of our
markets, and any associated economic downturn, may have on our financial results, operations, workforce and
demand for our products); Packaging (such as refillables and recycled plastics); Cyber and social engineering
attacks and IT infrastructure; Economic and political conditions (such as the UK’s exit from the EU, the EU-UK Trade
and Cooperation Agreement, and uncertainty about the future relationship between the UK and EU); Market (such
as disruption due to customer negotiations, customer consolidation and route to market); Legal, regulatory and tax
(such as the development of regulations regarding packaging, taxes and deposit return schemes); Climate change
and water (such as net zero emission legislation and regulation, and resource scarcity); Perceived health impact of
our beverages and ingredients, and changing consumer buying trends (such as sugar alternatives and other
ingredients); Competitiveness, business transformation and integration; People and wellbeing; Relationship with
TCCC and other franchisors; Product quality; and Other risks; and
2. risks and uncertainties relating to the Acquisition, including the risk that the businesses will not be integrated
successfully or such integration may be more difficult, time consuming or costly than expected, which could result in
additional demands on CCEP’s resources, systems, procedures and controls, disruption of its ongoing business and
diversion of management’s attention from other business concerns; the possibility that certain assumptions with
respect to CCL or the Acquisition could prove to be inaccurate; the failure to receive, delays in the receipt of, or
unacceptable or burdensome conditions imposed in connection with, all required regulatory approvals, shareholder
approvals and the satisfaction of closing conditions to the Acquisition; ability to raise financing; the potential that
the Acquisition may involve unexpected liabilities for which there is no indemnity; the potential failure to retain key
employees of CCEP and CCL as a result of the proposed Acquisition or during integration of the businesses and
disruptions resulting from the proposed Acquisition, making it more difficult to maintain business relationships; the
potential if the Acquisition is not completed in a timely manner or at all for (i) negative reaction from financial
markets, customers, regulators, employees and other stakeholders, (ii) loss of time spent on an unsuccessful
Acquisition, and (iii) litigation related to the Acquisition.
The full extent to which the COVID-19 pandemic will negatively affect CCEP and/or CCL and the results of their
operations, financial condition and cash flows will depend on future developments that are highly uncertain and
cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental
authorities and other third parties in response to the pandemic.
Due to these risks, CCEP’s actual future results, dividend payments, and capital and leverage ratios may differ
materially from the plans, goals, expectations and guidance set out in forward-looking statements (including those
issued by CCL prior to the Acquisition). These risks may also adversely affect CCEP’s share price. Additional risks that
may impact CCEP’s future financial condition and performance are identified in filings with the SEC which are
available on the SEC’s website at www.sec.gov. CCEP does not undertake any obligation to publicly update or revise
any forward-looking statements, whether as a result of new information, future events, or otherwise, except as
required under applicable rules, laws and regulations. Furthermore, CCEP assumes no responsibility for the accuracy
and completeness of any forward-looking statements. Any or all of the forward-looking statements contained in this
filing and in any other of CCEP’s public statements (whether prior or subsequent to the Acquisition) may prove to
be incorrect.
224
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COCA‑COLA EUROPEAN
PARTNERS PLC
Registered office
Pembeon House
Bakers Road
Uxbridge UB8 1EZ
Registered in England and Wales
Company number: 09717350
www.cocacolaep.com
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