Coca-Cola Hellenic Bottling Co SA Results for the Three Months Ended 2 April 2010
First Quarter 2010 Highlights
- Free Cash Flow of EUR65 million for the first quarter of 2010, an
increase of EUR56 million compared to the prior year period.
- Volume of 431 million unit cases, 2% below the first quarter of 2009.
Net sales revenue of EUR1,377 million, stable compared to the prior
year period.
- On a comparable basis, operating profit (EBIT) of EUR52 million, 26%
above the prior year period.
- On a comparable basis, net profit of EUR25 million, compared to
EUR7 million in the prior year period, and earnings per share of
EUR0.07, compared to EUR0.02 in the prior year period.
Note: For the definition of comparable basis refer to 'Reconciliation of Reported to Comparable Financial Indicators' below.
Doros Constantinou, Chief Executive Officer of Coca-Cola Hellenic, commented:
"We improved profitability in the quarter, primarily reflecting the benefit from earlier cost cutting programmes and the favourable effect of currency movements. This result was achieved amidst a challenging economic environment, with weak consumer sentiment and uncertain financial markets continuing to adversely affect consumer spending across several of our markets. This led to a further volume decline in the quarter, however, the rate of decline slowed compared with the prior quarter.
We are encouraged by some early signs of stabilisation in key countries, particularly across our emerging and developing markets. We remain cautious, however, given that the first quarter is seasonally less significant for our business and economic conditions continue to deteriorate in some countries.
Our focus on cash flows continues to yield results for our business, while ongoing financial discipline is expected to support profitability over the balance of the year. While we expect the pace of recovery across our markets to be uneven, we remain confident in our ability to effectively execute our strategy in the market place for long-term growth."
Reconciliation of Reported to Comparable Financial Indicators
Group Financial First quarter 2010 First quarter 2009
Results
(numbers in EUR EBIT(1) Net EPS EBIT(1) Net EPS
million except profit(2) profit(2)
per share data)
Reported 51.9 25.4 0.07 36.8 1.9 0.01
Restructuring costs - - - 9.6 7.7 0.02
Other items - - - (5.2) (2.4) (0.01)
Comparable 51.9 25.4 0.07 41.2 7.2 0.02
(1) Operating profit or EBIT refers to profit before tax excluding
finance income/(costs) and share of results of equity method
investments.
(2) Profit after tax attributable to owners of the parent.
In order to enhance the comparability and understanding of our financial information, items of an exceptional nature are eliminated from reported financial indicators to arrive at a comparable basis. Financial indicators presented on a comparable basis exclude the recognition of restructuring costs incurred in 2009 and the insurance payments received in 2009 in respect of damage sustained at our Nigerian operation in 2008.
Group Operational Review
Coca-Cola Hellenic Bottling Company S.A. ('Coca-Cola Hellenic' or 'we' or the 'Group') achieved comparable earnings per share of EUR0.07 in the first quarter of 2010, compared to EUR0.02 in the prior year period. Unit case volume declined 2% in the quarter, representing a volume improvement compared with the fourth quarter of 2009 where volumes declined by 8%. The earlier timing of promotional activity ahead of the Easter holiday period had a positive impact on sales volumes in the first quarter.
In the first quarter, despite signs of economic stabilisation in a few markets, the non-alcoholic ready-to-drink category continued to be adversely impacted by depressed consumer confidence, high levels of unemployment, ongoing tight credit market conditions and the introduction of government-imposed austerity measures in several countries.
In terms of category performance, sparkling beverages volumes declined by 2% in the quarter, with a 1% increase in sales of Coca-Cola trademarked products more than offset by volume declines of Fanta and Sprite branded products. Strong outlet-level activation and promotional activities contributed to 5% volume growth of our Coke Zero brand in the quarter. Volume in the combined water and still beverage category declined 4% in the quarter, with a low-single digit percentage decline in water and low-double digit declines in ready-to-drink tea and juices. We continue to address changing consumers' preferences and tastes with the introduction of new products, flavours and packaging variants. In the quarter, we launched a range of new flavours and packages under the Fanta, Nestea, Romerquelle Emotion and Rich brands. We continued to maintain or gain share of the non-alcoholic ready-to-drink category in several of our key markets, supported by increased marketing investment in the quarter. With consumer incomes remaining under pressure in several markets, we continue to witness challenging trading conditions across our immediate consumption channels. This contributed to a decline in sales of higher margin single-serve packages of 5% in the quarter.
Net sales revenue was stable in the quarter, with a 2% decline in volumes offset by a 2% benefit from foreign exchange rate movements, primarily reflecting the strengthening of the Polish zloty, Hungarian forint, Romanian leu and Russian rouble against our reporting currency, the euro. In the quarter, comparable operating income increased by 26%, as lower volumes, higher marketing spend and negative channel and package mix were more than offset by favourable currency movements, increased pricing, lower commodity costs and the benefit of prior year cost savings. This led to an increase in comparable operating profit margins from 3.0% to 3.8% in the quarter.
In the quarter, Coca-Cola Hellenic's profitability benefited from earlier cost saving and restructuring initiatives. We continue to identify further cost saving opportunities that we expect will support the long-term competitiveness and efficiency of our operations. In addition, increased operating profit and reduced capital expenditure contributed to strong free cash flow of EUR65 million in the first quarter of 2010, representing an increase of EUR56 million compared with the prior year quarter.
On 1 January 2010, our SAP 'Wave 2' initiative was successfully rolled-out in Italy, Greece, Bulgaria and Cyprus. This follows the implementation of a pilot SAP programme in the Czech Republic and Slovakia at the beginning of 2008. The roll-out of SAP is a multi-year project and is expected to offer us enduring competitive advantages by facilitating closer functional integration, enhance our commercial capabilities and improve overall customer service levels.
Operational Review by Reporting Segments
Established markets
First First %
quarter quarter
2010 2009 Change
Volume (million unit cases) 155.4 164.3 -5%
Net sales revenue
(EUR million) 624.2 653.6 -4%
Operating profit
(EBIT in EUR million) 43.4 36.3 20%
Comparable operating profit
(EBIT in EUR million) 43.4 43.2 -
- Unit case volume in the established markets segment declined by 5% in
the quarter, cycling organic 1% growth in the comparable prior year
period.
- Volume in Greece declined by mid-teen percentage points in the first
quarter as consumer confidence and spending declined following the
announcement of another set of planned government austerity measures in
response to the deepening economic crisis in the country. We expect the
trading environment in Greece to remain highly challenging throughout
2010 with declining real wages and high unemployment expected to impede
spending in the non-alcoholic ready-to-drink category.
- Volume in Italy declined by mid-single digit percentage points
following reduced consumer spending in the immediate consumption
channels and a different phasing of promotional activities compared
with the first quarter of 2009, which adversely impacted volumes sold
to larger-format retail outlets. As a result of this predominately
timing-related volume impact, we expect our performance in the country
to normalise through the balance of year. We achieved solid profit
growth in Italy in the quarter, as we realised further benefits from
our acquisition of the Socib business.
- Volume in Ireland declined by mid-single digit percentage points in
the first quarter. Economic conditions remain highly challenging in
the country, with the recent austerity measures introduced by the
government leading to reduced discretionary spending by consumers.
However, the benefit of earlier cost saving initiatives and
restructuring activities undertaken in the country supported higher
profitability in Ireland in the first quarter.
- In Switzerland, volume growth was in the mid-single digits in the
first quarter, reflecting a more stable economic environment and the
successful listing of our Cola-Cola branded products in the largest
supermarket chain in the country. This contributed to a notable
increase in our share of the sparkling beverage category in the
quarter.
- The established markets segment contributed EUR43 million to the
Group's comparable EBIT for the first quarter of 2010, which was flat
compared to the prior year period. The benefits of increased pricing,
the realisation of previous cost savings and lower raw material costs
offset negative package and channel mix.
Operational Review by Reporting Segments (continued)
Developing markets
First First %
quarter quarter
2010 2009 Change
Volume (million unit cases) 79.8 78.6 2%
Net sales revenue
(EUR million) 230.6 225.3 2%
Operating profit / (loss)
(EBIT in EUR million) 0.9 (8.0) >100%
Comparable operating profit /
(loss) (EBIT in EUR million) 0.9 (7.2) >100%
- Unit case volume in the developing markets segment increased by 2%
in the first quarter of 2010, cycling growth of 2% in the comparable
prior year period.
- Net sales revenue increased 2% in the quarter as the benefit of
higher volumes and a positive foreign currency impact were partially
offset by negative product and channel mix.
- Volume growth in Poland was in the low-single digits in the first
quarter, cycling high-single digit growth in the comparable prior year
period. This volume performance was driven by mid-single digit growth
in the sparkling beverage category following the successful
implementation of promotional activity for Coca-Cola branded products
leading up to the Easter holiday period.
- Volume growth in Hungary was in the low-single digits in the first
quarter, cycling a low-single digits decline in the comparable prior
year period. The volume performance in the quarter benefited slightly
from the earlier phasing of promotional activities leading up to the
Easter holiday period. Consumer spending in the immediate consumption
channel continued to be adversely impacted in the quarter by the
difficult economic environment. With economic forecasts for further
GDP contraction in 2010 in Hungary and unemployment remaining at high
levels, we expect trading conditions to remain challenging.
- Volume growth in the Czech Republic was in the low-single digits in the
first quarter, representing a significant sequential improvement from
the fourth quarter of 2009 where volumes in percentage terms declined
in the low teens. The volume performance was driven by mid-single digit
growth in the sparkling beverage category, led by double-digit growth
of brand Coca-Cola which benefited from strong outlet activation and
promotional support.
- The developing markets segment contributed EUR1 million to the Group's
comparable EBIT for the first quarter of 2010 compared with a loss of
EUR7 million in the prior year period. The improved operating profit
in the quarter reflects the combined benefits of higher volumes,
positive currency movements and a reduction in operating expenses and
commodity costs, which were only partly offset by negative package and
category mix.
Operational Review by Reporting Segments (continued)
Emerging markets
First First %
quarter quarter
2010 2009 change
Volume (million unit cases) 195.9 197.9 -1%
Net sales revenue (EUR million) 522.2 495.4 5%
Operating profit
(EBIT in EUR million) 7.6 8.5 -11%
Comparable operating profit
(EBIT in EUR million) 7.6 5.2 46%
- Unit case volume in the emerging markets segment declined by 1% in the
first quarter of 2010, cycling a decline of 2% in the comparable
prior year period.
- Net sales revenue increased by 5% in the first quarter as higher
pricing and a positive currency impact was only partly offset by
negative product and channel mix.
- Volume in Russia declined by low-single digits percentage points in
the first quarter, cycling a decline in the mid-teens in the
comparable prior year period. This performance reflects a significant
sequential unit case volume improvement from the fourth quarter of
2009. In the quarter, we introduced new packaging and flavour
innovations for the Coca-Cola, Fanta and Rich brands as we invest
together with The Coca-Cola Company to secure our long-term growth in
Russia. We believe that such innovation combined with our
traditionally strong outlet execution enabled us to further extend
our leadership in the non-alcoholic ready-to-drink category
in the quarter, versus our nearest competitor.
- Volume growth in Nigeria was in the mid-single digits in the first
quarter, cycling double-digit growth in the prior year period. Our
volumes in the quarter benefited from new packaging innovation,
increased outlet coverage and a more stable political environment in
Nigeria. In the quarter, volume in the sparkling beverage and water
categories increased by mid-single digit percentage points and juice
achieved significant growth from increased capacity and innovation in
the category.
- Volume in Romania declined by low-single digit percentage points in the
first quarter, representing a strong sequential volume improvement
versus the fourth quarter of 2009. The economic environment in
Romania continues to remain highly challenging with unemployment
rising. This has resulted in continued volume pressure in the immediate
consumption channel. Sales in the future consumption channel were
supported by above-the-line marketing investment and increased
promotional support for Coca-Cola trademarked products.
- Volume growth in Ukraine was in the low-single digits in the quarter.
Sparkling beverage growth was supported by the successful
introduction of a new slim can package for Coca-Cola, Fanta and Sprite
branded products in the quarter, while juice achieved another solid
quarter of double-digit growth following increased distribution and new
flavour innovations under the Rich brand.
- The emerging markets segment contributed EUR8 million to the Group's
comparable EBIT for the first quarter of 2010, which was 46% above
the comparable prior year period. The benefit of higher pricing and a
slight positive currency impact more than offset lower volumes,
increased commodity costs, and negative channel and package mix.
Business Outlook
In the first quarter, we continued to witness difficult trading conditions across several of our markets, reflecting the ongoing challenging economic environment. With the underlying health of economies across our country portfolio varying, we expect that the timing and degree of economic recovery will differ across our markets. While consensus estimates that indicate economic growth may return in many European countries in 2010, we expect growth in the non-alcoholic ready-to-drink category to lag this GDP growth. Although we are encouraged by some early signs of economic stabilisation in a few of our markets, we still expect our overall trading performance over the next few quarters to be impacted by high prevailing unemployment levels and low consumer confidence in some of our key countries. In particular, we are concerned about the deteriorating economic environment in Greece and are closely monitoring developments in the country. As communicated previously, based on anticipated economic developments across our territory, we expect our volume and comparable operating profit results to be more weighted towards the second half of the year.
Our focus on effective brand marketing, promotional programmes and quality outlet execution will continue to support our goal of achieving further share gains in the non-alcoholic ready-to-drink beverage category. Our business strategy remains focused on delivering improved operational effectiveness and building customer-centric capabilities to extend our market leadership positions. In particular, we plan to roll-out the SAP 'Wave 2' technology in other Group countries, which is expected to offer a significant competitive advantage for Coca-Cola Hellenic in the long-run.
As a result of the recent weakening of the euro versus the US dollar and higher oil prices, we now expect a slight increase in the cost of raw materials (price and currency impact combined) versus our earlier expectation for commodities to remain broadly stable.
The anticipated appreciation of local currencies (versus our euro reporting currency) across several of our developing and emerging markets in 2010 is now expected to provide a significant foreign exchange benefit to our operating results in 2010 (versus our earlier guidance for a slight positive benefit).
We will continue to maintain a tight focus on driving productivity improvements and reducing operating costs. In addition, we expect an incremental benefit to our operating profit in 2010 and in future years of approximately EUR30 million from restructuring initiatives already undertaken in 2009. With an ongoing commitment to managing the business for growth, we plan to increase our level of marketing spend over the next three years.
An ongoing Group-wide focus on better working capital management, the availability of sufficient production capacity over the medium-term and planned improvement in operating profit is expected to support continued strong cash flow generation over the current three-year business planning cycle. In the three-year period ending 2012, cumulative net capital expenditure is expected to be approximately EUR1.4 billion and free cash flow (operating cash flow net of capital expenditure) is expected to be approximately EUR1.5 billion. In addition, Coca-Cola Hellenic continues to benefit from a robust capital structure and good liquidity with no bond refinancing commitments until 2011.
Group Financial Review
First quarter
2010 2009
EUR EUR
million million % Change
Volume in unit cases (in millions) 431.1 440.8 -2%
Net sales revenue 1,377.0 1,374.3 -
Cost of goods sold (842.0) (860.9) -2%
Gross profit 535.0 513.4 4%
Total operating expenses (483.1) (476.6) 1%
Comparable operating expenses1 (483.1) (472.2) 2%
Operating profit (EBIT) 51.9 36.8 41%
Comparable operating profit (EBIT)(1) 51.9 41.2 26%
Adjusted EBITDA(2) 144.6 130.8 11%
Comparable Adjusted EBITDA(1,2) 144.6 133.1 9%
Net profit attributable to owners
of the parent 25.4 1.9 >100%
Comparable net profit attributable
to owners of the parent(1) 25.4 7.2 >100%
Basic earnings per share (in euro) 0.07 0.01 >100%
Comparable basic earnings per
share (in euro)(1) 0.07 0.02 >100%
(1) Refer to the 'Reconciliation of Reported to Comparable Financial
Indicators' section above.
(2) We define Adjusted EBITDA as operating profit before deductions for
depreciation and impairment of property, plant and equipment
(included both in cost of goods sold and in operating expenses),
amortisation and impairment of and adjustments to intangible assets,
stock option compensation and other non-cash items.
Net sales revenue
Net sales revenue per unit case increased by approximately 2% in the first quarter of 2010 compared to the prior year period. On a currency neutral basis, net sales revenue per unit case for the Group remained stable in the first quarter of 2010, compared to the prior year period. Net sales revenue per unit case for the established markets remained stable, whereas for the developing markets decreased by approximately 8% and for the emerging markets increased by approximately 4%, in each case on a currency neutral basis.
Cost of goods sold
Cost of goods sold decreased by approximately 2% in the first quarter of 2010, versus the prior year period. Cost of goods sold per unit case remained stable during the first quarter of 2010, versus the comparable prior year period, reflecting the benefit of earlier production cost efficiency initiatives and the foreign currency effects of a weaker euro during the quarter, compared to the prior year period.
Gross profit
Gross profit margins increased from 37.4% in the first quarter of 2009 to 38.9% in the first quarter of 2010. On a unit case basis, gross profit increased by approximately 7% in the first quarter of 2010, versus the prior year period. On a currency neutral basis, gross profit per unit case increased by approximately 3% in the first quarter of 2010, versus the prior year period.
Operating expenses
Total comparable operating expenses increased marginally by 2% in the first quarter of 2010, versus the prior year period. The increase in comparable operating expenses reflects an increase in marketing, warehouse and distribution costs and the impact of foreign exchange movements which was only partly offset by cost decreases achieved through earlier cost saving initiatives.
Operating profit (EBIT)
Comparable operating profit increased by 26% to EUR52 million in 2010 versus EUR41 million in the first quarter of 2009. Positive pricing along with reduced input costs and foreign currency benefits were partially offset by negative volume and channel and package mix and higher operating expenses, compared to the prior year period. The Group's comparable operating margin increased by approximately 80 basis points in the first quarter of 2010 compared to the prior year period.
Group Financial Review (continued)
Tax
On a comparable basis, Coca-Cola Hellenic's effective tax rate for the first quarter of 2010 was approximately 21% versus 30% in the prior year period. The Group's effective tax rate varies quarterly based on the mix of taxable profits, non-deductibility of certain expenses, non-taxable income and other one off tax items across its territories.
Net profit
On a comparable basis, net profit was EUR25 million in the first quarter of 2010, compared to EUR7 million the prior year period, driven by lower finance costs.
Cash flow
Cash flow generated from operating activities decreased marginally by EUR7 million to EUR132 million in the first quarter of 2010, versus EUR139 million in the prior year period. Cash flow from operating activities net of capital expenditure was EUR65 million for the first quarter of 2010, compared to EUR9 million in the comparable prior year period.
Capital expenditure
Coca-Cola Hellenic's capital expenditure, net of receipts from the disposal of assets, including principal repayments of finance lease obligations and excluding any insurance receipts in respect of fire damage at the Nigerian operation in 2008, amounted to EUR67 million in the first quarter of 2010, compared to EUR130 million in the prior year period.
Supplementary Information
The financial measures EBIT, Adjusted EBITDA, Capital Expenditure and
Free Cash Flow are comprised of the following reported amounts in the
condensed consolidated interim financial statements, as follows:
First quarter
2010 2009
EUR million EUR million
Profit after tax 27.6 6.5
Tax charged to the income statement 7.5 4.3
Finance costs, net 17.0 25.3
Share of results of equity method investments (0.2) 0.7
EBIT 51.9 36.8
Depreciation of property, plant and equipment 90.3 90.9
Amortisation and adjustments to intangible assets 0.9 1.3
Employee share options 1.5 1.8
Adjusted EBITDA 144.6 130.8
Losses on disposal of non-current assets 1.2 2.6
Decrease in working capital 15.4 15.5
Tax paid (29.5) (10.3)
Net cash from operating activities 131.7 138.6
Payments for purchases of property, plant
and equipment (52.6) (108.2)
Principal repayments of finance lease
obligations (18.4) (24.2)
Proceeds from sale of property, plant and
equipment 3.8 2.6
Capital Expenditure (67.2) (129.8)
Net cash from operating activities 131.7 138.6
Capital expenditure (67.2) (129.8)
Free Cash Flow 64.5 8.8
Coca-Cola Hellenic
Coca-Cola Hellenic is one of the world's largest bottlers of products of The Coca-Cola Company with annual sales of more than 2 billion unit cases. It has broad geographic reach with operations in 28 countries serving a population of approximately 560 million people. Coca-Cola Hellenic offers a diverse range of ready-to-drink non-alcoholic beverages in the sparkling, juice, water, sport, energy, tea and coffee categories. Coca-Cola Hellenic is committed to promoting sustainable development in order to create value for its business and for society. This includes providing products that meet the beverage needs of consumers, fostering an open and inclusive work environment, conducting our business in ways that protect and preserve the environment and contribute to the socio-economic development of our local communities.
Coca-Cola Hellenic's shares are listed on the Athens Exchange (ATHEX: EEEK), with a secondary listing on the London (LSE: CCB) stock exchange. Coca-Cola Hellenic's American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE: CCH). Coca-Cola Hellenic is included in the Dow Jones Sustainability and FTSE4Good Indexes. For more information, please visit http://www.coca-colahellenic.com.
Financial information in this announcement is presented on the basis of International Financial Reporting Standards ('IFRS').
Conference call
Coca-Cola Hellenic will host a conference call with financial analysts to discuss the first quarter of 2010 financial results on 29 April 2010 at 4:00 pm, Athens time (2:00 pm, London time and 9:00 am, New York time). Interested parties can access the live, audio webcast of the call through Coca-Cola Hellenic's website (http://www.coca-colahellenic.com).
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This document contains forward-looking statements that involve risks and uncertainties. These statements may generally, but not always, be identified by the use of words such as 'believe', 'outlook', 'guidance', 'intend', 'expect', 'anticipate', 'plan', 'target' and similar expressions to identify forward-looking statements. All statements other than statements of historical facts, including, among others, statements regarding our future financial position and results, our outlook for 2010 and future years, business strategy and the effects of our recent acquisitions, and restructuring initiatives on our business and financial condition, our future dealings with The Coca-Cola Company, budgets, projected levels of consumption and production, projected raw material and other costs, estimates of capital expenditure and plans and objectives of management for future operations, are forward-looking statements. You should not place undue reliance on such forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they reflect our current expectations and assumptions as to future events and circumstances that may not prove accurate. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons, including the risks described in our annual report on Form 20-F filed with the U.S. Securities and Exchange Commission (File No 1-31466).
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot assure you that our future results, level of activity, performance or achievements will meet these expectations. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. After the date of the consolidated financial statements included in this document, unless we are required by law to update these forward-looking statements, we will not necessarily update any of these forward-looking statements to conform them either to actual results or to changes in our expectations.
Condensed consolidated interim balance sheet (unaudited)
As at As at
2 April 2010 31 December 2009
Note EUR million EUR million
Assets
Intangible assets 4 1,905.4 1,874.1
Property, plant and equipment 4 3,034.9 2,961.3
Other non-current assets 236.8 212.9
Total non-current assets 5,177.1 5,048.3
Inventories 516.2 425.1
Trade and other receivables 1,111.6 1,091.4
Cash and cash equivalents 5 284.5 232.0
Total current assets 1,912.3 1,748.5
Total assets 3 7,089.4 6,796.8
Liabilities
Short-term borrowings 5 320.9 307.0
Other current liabilities 1,440.7 1,335.6
Total current liabilities 1,761.6 1,642.6
Long-term borrowings 5 2,137.8 2,100.6
Other non-current liabilities 419.0 457.7
Total non-current liabilities 2,556.8 2,558.3
Equity
Owners of the parent 2,664.8 2,493.2
Non-controlling interests 106.2 102.7
Total equity 2,771.0 2,595.9
Total equity and liabilities 7,089.4 6,796.8
Condensed consolidated interim income statement (unaudited)
Three months to Three months to
2 April 2010 3 April 2009
Note EUR million EUR million
Net sales revenue 3 1,377.0 1,374.3
Cost of goods sold (842.0) (860.9)
Gross profit 535.0 513.4
Operating expenses (483.1) (472.2)
Restructuring costs 6 - (9.6)
Other items 6 - 5.2
Total operating expenses (483.1) (476.6)
Operating profit 3 51.9 36.8
Finance income 1.3 4.1
Finance costs (18.3) (29.4)
Finance costs, net 7 (17.0) (25.3)
Share of results of equity
method investments 0.2 (0.7)
Profit before tax 35.1 10.8
Tax 8 (7.5) (4.3)
Profit after tax 27.6 6.5
Attributable to:
Owners of the parent 25.4 1.9
Non-controlling interests 2.2 4.6
27.6 6.5
Basic and diluted earnings per
share (EUR) 9 0.07 0.01
Condensed consolidated interim statement of comprehensive income
(unaudited)
Three Three
months to months to
2 April 2010 3 April 2009
EUR million EUR million
Profit after tax for the period 27.6 6.5
Other comprehensive income:
Available-for-sale financial assets:
Valuation (losses) / gains during the
period (0.2) 0.1
Cash flow hedges:
Amounts of losses during the period (1.4) (10.0)
Amounts of losses / (gains)
reclassified to
profit and loss for the period 1.4 (3.5)
Foreign currency translation 153.5 (144.3)
Share of other comprehensive income of
equity method investments 1.0 (0.3)
Income tax relating to components of
other comprehensive income 0.1 2.7
Other comprehensive income for the
period, net of tax 154.4 (155.3)
Total comprehensive income for the
period 182.0 (148.8)
Total comprehensive income attributable
to:
Owners of the parent 177.0 (154.7)
Non-controlling interests 5.0 5.9
182.0 (148.8)
Condensed consolidated interim statement of changes in equity
(unaudited)
Attributable to owners of the parent
Exchange
Share Share Treasury equalisation Other
capital premium shares reserve reserves
EUR EUR EUR EUR EUR
million million million million million
Balance as at
1 January 2009 182.7 1,665.0 - (191.9) 366.7
Share-based
compensation:
Options - - - - 1.8
Movement in
treasury
shares - - - - (0.9)
Adoption of
euro by
Slovakia - - - (9.5) -
Appropriation
of reserves - - - - 0.6
Dividends - - - - -
Total
comprehensive
income for the
period, net of
tax(1) - - - (145.9) (10.7)
Balance as at
3 April 2009 182.7 1,665.0 - (347.3) 357.5
Shares issued
to employees
exercising
stock options 0.1 1.7 - - -
Share-based
compensation:
Options - - - - 4.6
Movement in
treasury shares - - - - 0.9
Shares
repurchased - - (16.6) - -
Capitalisation
of share
premium reserve 548.1 (548.1) - - -
Expenses relating
to the share
capital increase
(net of tax of
EUR1.2m) - (4.8) - - -
Return of
capital to
shareholders (548.1) - 1.7 - -
Exchange
equalisation
reserve recycled
to retained earnings - - - (30.1) -
Appropriation
of reserves - - - - 1.6
Statutory minimum
dividend - - - - -
Dividends - - - - -
Total
comprehensive
income for the
period, net of
tax - - - 68.3 4.2
Balance as at
31 December 2009 182.8 1,113.8 (14.9) (309.1) 368.8
Shares issued
to employees
exercising
stock options 0.1 1.4 - - -
Share-based
compensation:
Options - - - - 1.6
Movement in
treasury shares - - - - (0.1)
Shares
repurchased - - (8.4) - -
Dividends - - - - -
Total
comprehensive
income for the
period, net of
tax(2) - - - 151.7 (0.1)
Balance as at
2 April 2010 182.9 1,115.2 (23.3) (157.4) 370.2
Table Continued...
Condensed consolidated interim statement of changes in equity
(unaudited) (continued)
Attributable to owners
of the parent
Non-
Retained controlling Total
earnings Total interests equity
EUR million EUR million EUR million EUR million
Balance as at
1 January 2009 818.2 2,840.7 90.1 2,930.8
Share-based
compensation:
Options - 1.8 - 1.8
Movement in
treasury shares - (0.9) - (0.9)
Adoption of
euro by Slovakia 9.5 - - -
Appropriation
of reserves (0.6) - - -
Dividends - - (2.2) (2.2)
Total
comprehensive
income for the
period, net of
tax(2) 1.9 (154.7) 5.9 (148.8)
Balance as at
3 April 2009 829.0 2,686.9 93.8 2,780.7
Shares issued
to employees
exercising
stock options - 1.8 - 1.8
Share-based
compensation:
Options - 4.6 - 4.6
Movement in
treasury shares - 0.9 - 0.9
Shares
repurchased - (16.6) - (16.6)
Capitalisation of
share premium
reserve - - - -
Expenses
relating to
the share capital
increase (net
of tax of EUR1.2m) - (4.8) - (4.8)
Return of capital to
shareholders - (546.4) - (546.4)
Exchange
equalisation
reserve recycled
to retained
earnings 30.1 - - -
Appropriation
of reserves (1.6) - - -
Statutory
minimum dividend (41.6) (41.6) - (41.6)
Dividends (61.4) (61.4) (5.0) (66.4)
Total
comprehensive
income for the
period, net of tax 397.3 469.8 13.9 483.7
Balance as at
31 December 2009 1,151.8 2,493.2 102.7 2,595.9
Shares issued
to employees
exercising
stock options - 1.5 - 1.5
Share-based
compensation:
Options - 1.6 - 1.6
Movement in
treasury shares - (0.1) - (0.1)
Shares repurchased - (8.4) - (8.4)
Dividends - - (1.5) (1.5)
Total
comprehensive
income for the
period, net of
tax(2) 25.4 177.0 5.0 182.0
Balance as at
2 April 2010 1,177.2 2,664.8 106.2 2,771.0
---------------------------------
(1) The amount included in the exchange equalisation reserve of
EUR145.9 million loss for the first quarter of 2009 represents the
exchange loss attributed to the owners of the parent of EUR145.6
million plus the share of equity method investments of EUR0.3 million
loss.
The amount charged to other reserves of EUR10.7 million loss for the
first quarter of 2009 consists of gains on valuation of
available-for-sale financial assets of EUR0.1 million (representing
valuation gains for the period), losses on cash flow hedges of
EUR13.5 million (of which EUR10.0 million represents revaluation
losses for the period and EUR3.5 million represents revaluation gains
reclassified to profit and loss for the period) and the deferred
income tax credit thereof amounting to EUR2.7 million.
The amount of EUR5.9 million income included in non-controlling
interests for the first quarter of 2009 represents the share of
non-controlling interests in the exchange equalisation reserve of
EUR1.3 million gain and in the retained earnings of EUR4.6 million
income.
(2) The amount included in the exchange equalisation reserve of
EUR151.7 million gain for the first quarter of 2010 represents the
exchange gain attributed to the owners of the parent of EUR150.7
million plus the share of equity method investments of EUR1.0 million
gain.
The amount charged to other reserves of EUR0.1 million loss for
the first quarter of 2010 consists of losses on valuation of
available-for-sale financial assets of EUR0.2 million (representing
valuation losses for the period), cash flow hedges movement of nil
(of which EUR1.4 million represents revaluation losses for the
period and EUR1.4 million represents revaluation losses reclassified
to profit and loss for the period) and the deferred income tax credit
thereof amounting to EUR0.1 million.
The amount of EUR5.0 million income included in non-controlling
interests for the first quarter of 2010 represents the share of
non-controlling interests in the exchange equalisation reserve of
EUR2.8 million gain and in the retained earnings of EUR2.2 million
income.
Condensed consolidated interim cash flow statement (unaudited)
Three months to Three months to
2 April 2010 3 April 2009
Note EUR million EUR million
Operating activities
Profit after tax 27.6 6.5
Finance costs, net 7 17.0 25.3
Share of results of equity method
investments (0.2) 0.7
Tax charged to the income statement 7.5 4.3
Depreciation of property, plant
and equipment 4 90.3 90.9
Employee share options 1.5 1.8
Amortisation and adjustments to
intangible assets 4 0.9 1.3
144.6 130.8
Losses on disposal of non-current
assets 1.2 2.6
Increase in inventories (64.8) (52.3)
(Increase)/decrease in trade
and other receivables (1.1) 94.0
Increase/(decrease) in trade
and other payables 81.3 (26.2)
Tax paid (29.5) (10.3)
Net cash from operating activities 131.7 138.6
Investing activities
Payments for purchases of property,
plant and equipment (52.6) (108.2)
Payments for purchases of
intangible assets - (0.5)
Proceeds from sales of property,
plant and equipment 3.8 2.6
Net receipts from investments 1.1 -
Interest received 1.3 4.9
Net receipts from acquisitions - 8.8
Net cash used in investing activities (46.4) (92.4)
Financing activities
Share buy-back payments (8.4) -
Proceeds from shares issued to
employees exercising stock options 1.5 -
Dividends paid (3.5) (0.3)
Net increase/(decrease) in borrowings 16.7 (443.1)
Principal repayments of finance
lease obligations (18.4) (24.2)
Interest paid (24.0) (29.3)
Net cash used in financing activities (36.1) (496.9)
Increase/(decrease) in cash and
cash equivalents 49.2 (450.7)
Movement in cash and cash equivalents
Cash and cash equivalents at 1 January 232.0 724.6
Increase/(decrease) in cash and
cash equivalents 49.2 (450.7)
Effect of changes in exchange rates 3.3 (4.0)
Cash and cash equivalents at the end
of the period 284.5 269.9
Selected explanatory notes to the condensed consolidated interim financial statements (unaudited)
1. Accounting policies
The accounting policies used in the preparation of the condensed consolidated interim financial statements of Coca-Cola Hellenic Bottling Company S.A. ('Coca-Cola Hellenic' or the 'Group') are consistent with those used in the annual financial statements for the year ended 31 December 2009, except for the following new or revised accounting standards and interpretations that have been implemented in 2010: International Financial Reporting Standard ('IFRS') 3, Business Combinations; IFRS 8, Operating Segments; International Accounting Standard ('IAS') 27, Consolidated and Separate Financial Statements; IAS 36, Impairment of Assets; IAS 38, Intangible Assets and International Financial Reporting Interpretations Committee ('IFRIC') Interpretation 17, Distribution of Non-cash Assets to Owners. None of these new or revised accounting standards and interpretations had a material impact on the current or prior periods.
Operating results for the first quarter of 2010 are not indicative of the results that may be expected for the year ended 31 December 2010 because of business seasonality. Business seasonality results from higher unit sales of the Group's products in the warmer months of the year. The Group's methods of accounting for fixed costs such as depreciation and interest expense are not significantly affected by business seasonality.
Costs that are incurred unevenly during the financial year are anticipated or deferred in the interim report only if it would also be appropriate to anticipate or defer such costs at the end of the financial year.
These condensed consolidated interim financial statements have been prepared in accordance with IFRS as issued by the International Accounting Standards Board ('IASB') and IFRS as adopted by the European Union ('EU') applicable to Interim Financial Reporting ('IAS 34'). IFRS as adopted by the EU differs in certain respects from IFRS as issued by the IASB. However, the differences have no impact on the Group's condensed consolidated financial statements for the periods presented. These condensed consolidated financial statements should be read in conjunction with the 2009 annual financial statements, which include a full description of the Group's accounting policies.
Certain comparative figures have been reclassified to conform to the current period presentation.
2. Exchange rates
The Group's reporting currency is the euro (EUR). Coca-Cola Hellenic translates the income statements of subsidiary operations to the euro at average exchange rates and the balance sheet at the closing exchange rate for the period.
The principal exchange rates used for transaction and translation purposes in respect of one euro were:
Average for the period ended Closing as at
2 April 3 April 2 April 31 December
2010 2009 2010 2009
US dollar 1.37 1.31 1.35 1.44
UK sterling 0.88 0.91 0.90 0.90
Polish zloty 3.99 4.54 3.88 4.15
Nigerian naira 203.53 193.21 200.49 213.71
Hungarian forint 269.54 296.80 265.53 272.70
Swiss franc 1.46 1.50 1.43 1.49
Russian rouble 40.90 45.18 39.75 43.33
Romanian leu 4.11 4.24 4.07 4.21
Ukrainian hryvnia 10.93 10.08 10.68 11.47
3. Segmental analysis
The Group has one business, being the production, distribution and sale of alcohol-free, ready-to-drink beverages. The Group operates in 28 countries and its financial results are reported in the following three reportable segments:
Established: Austria, Cyprus, Greece, Italy, Northern Ireland, Republic
of Ireland and Switzerland.
Developing: Croatia, Czech Republic, Estonia, Hungary, Latvia,
Lithuania, Poland, Slovakia and Slovenia.
Emerging: Armenia, Belarus, Bosnia and Herzegovina, Bulgaria, FYROM,
Moldova, Montenegro, Nigeria, Romania, Russia, Serbia and
Ukraine.
Information on the Group's segments is as follows:
Three months ended
2 April 2010 3 April 2009
Volume in unit cases (million)
Established 155.4 164.3
Developing 79.8 78.6
Emerging 195.9 197.9
Total volume 431.1 440.8
Net sales revenue (EUR million)
Established 624.2 653.6
Developing 230.6 225.3
Emerging 522.2 495.4
Total net sales revenue 1,377.0 1,374.3
Adjusted EBITDA (EUR million)
Established 74.1 67.6
Developing 18.9 9.6
Emerging 51.6 53.6
Total Adjusted EBITDA 144.6 130.8
EBIT (EUR million)
Established 43.4 36.3
Developing 0.9 (8.0)
Emerging 7.6 8.5
Total EBIT 51.9 36.8
Reconciling items (EUR million)
Finance costs, net (17.0) (25.3)
Share of results of equity method investments 0.2 (0.7)
Tax (7.5) (4.3)
Non-controlling interests (2.2) (4.6)
Profit after tax attributable to owners of the 25.4 1.9
parent
3. Segmental analysis (continued)
As at
2 April 2010 31 December 2009
Total assets (EUR million)
Established 3,554.0 3,512.1
Developing 1,110.6 1,059.1
Emerging 2,532.5 2,421.2
Corporate / inter-segment receivables (107.7) (195.6)
Total assets 7,089.4 6,796.8
4. Tangible and intangible assets
Property,
plant Intangible
and equipment assets
EUR million EUR million
Opening net book value as at 1 January 2010 2,961.3 1,874.1
Additions 55.9 -
Disposals (5.3) -
Depreciation / amortisation (90.3) (0.9)
Foreign exchange differences 113.3 32.2
Closing net book value as at 2 April 2010 3,034.9 1,905.4
5. Net debt
As at
2 April 2010 31 December 2009
EUR million EUR million
Long-term borrowings 2,137.8 2,100.6
Short-term borrowings 320.9 307.0
Cash and cash equivalents (284.5) (232.0)
Net debt 2,174.2 2,175.6
The Group's net debt position was stable compared to 31 December 2009. Long-term and short-term borrowings increased by a combined total of EUR51.1 million, largely due to the currency translation impact of US dollar borrowings, while at the same time the Group's cash position increased by EUR52.5 million mainly due to positive cash flow from operating activities during the period.
6. Restructuring costs and other items
Restructuring costs during the first quarter of 2009 amounted to EUR9.6 million before tax, of which EUR7.0 million, EUR0.8 million and EUR1.8 million related to the Group's established, developing and emerging markets, respectively.
On 19 December 2008, it was announced that a production plant in Benin City, Nigeria, which was owned by the Nigerian Bottling Company plc in which the Group has a 66% interest, had been substantially damaged by fire. During the first quarter of 2009, EUR5.2 million was received as an interim payment from the Group's insurers. During the full year of 2009, a total of EUR32.8 million was received. There were no such amounts received in the first quarter of 2010.
7. Finance costs, net
Three months ended
2 April 2010 3 April 2009
EUR million EUR million
Interest expense 18.6 27.0
Net foreign exchange (gains) / losses (0.3) 2.4
Interest income (1.3) (4.1)
Finance costs, net 17.0 25.3
8. Tax
The Group's effective tax rate can differ from the Greek statutory tax rate (24% for 2010) as a consequence of a number of factors, the most significant of which are: non-deductibility of certain expenses, non-taxable income and other one off tax items. This is mainly because the statutory tax rates of the countries in which the Group operates range from 0%-31% and thus differ significantly from the Greek statutory tax rate.
A new tax law was introduced in Greece and enacted on 23 April 2010. The Group is currently assessing the impact of the new tax law on its effective tax rate for 2010.
9. Earnings per share
Basic earnings per share is calculated by dividing the net profit attributable to the owners of the parent by the weighted average number of shares in issue during the period (first quarter of 2010: 364,323,930; first quarter of 2009: 365,402,097). Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares arising from exercising employee stock options.
10. Share capital
During 2009, the Board of Directors resolved to increase Coca-Cola Hellenic's share capital by issuing 5,751 and 131,227 new ordinary shares on 28 August and 23 November 2009 respectively, following the exercise of stock options by option holders pursuant to the Coca-Cola Hellenic stock option plan. Total proceeds from the issue of the shares were EUR1.8 million.
During the first quarter of 2010, the Board of Directors resolved to increase Coca-Cola Hellenic's share capital by issuing 163,354 new ordinary shares on 26 February 2010, following the exercise of stock options by option holders pursuant to the Coca-Cola Hellenic stock option plan. Total proceeds from the issue of the shares were EUR1.5 million.
10. Share capital (continued)
After the above changes, the share capital amounts to EUR182.9 million and is comprised of 365,702,429 shares with a nominal value of EUR0.50 each.
Recapitalisation (Capital return)
On 18 September 2009, Coca-Cola Hellenic announced proposals for a recapitalisation, which resulted in a capital return of approximately EUR548.1 million to its shareholders, i.e. EUR1.50 per share. At an Extraordinary General Meeting held on 16 October 2009, shareholders approved an increase of Coca-Cola Hellenic's share capital by EUR548.1 million, through the capitalization of share premium and an increase in the nominal value of each share by EUR1.50 per share. As a result, the nominal value of each share was increased from EUR0.50 to EUR2.00.
At the same Extraordinary General Meeting, the shareholders also approved the decrease of Coca-Cola Hellenic's share capital by EUR548.1 million, through a reduction of the nominal value of the shares by EUR1.50 per share. As a result, the nominal value of the shares was decreased from EUR2.00 to EUR0.50 per share, and an equal amount of capital was returned to the shareholders in cash. Following shareholder and regulatory approval, Coca-Cola Hellenic realised the capital return on 2 December 2009. The capital return was financed through a combination of accumulated cash and new debt.
Share buy-back programme
On 30 April 2009, the Board of Directors of Coca-Cola Hellenic Bottling Company S.A. resolved to buy-back a maximum of 5% of its paid-in share capital during the period that is 24 months from the date of the Extraordinary General Meeting of 27 April 2009 which approved a share buy-back programme pursuant to Article 16 of Codified Law 2190/1920 (i.e. until 26 April 2011). Based on the Coca-Cola Hellenic's capitalisation at that time, the maximum amount that may be bought back pursuant to the programme is 18,270,104 shares. Purchases under the programme are subject to a minimum purchase price of EUR1.00 per share and a maximum purchase price of EUR20.00 per share.
Applicable law does not require any actual use of such approved share buy-back programmes. Coca-Cola Hellenic may therefore, at its sole discretion, decide not to buy back any shares or to buy fewer shares than the maximum permissible number approved under the programme. The purchase of shares pursuant to the share buy-back programme is dependent upon a number of factors including, without limitation, the relative attractiveness of alternative investment opportunities and the availability of funds. As at 2 April 2010, 1,565,760 shares had been purchased pursuant to the share buy-back programme for a total value of EUR25.0 million, bringing the shares in circulation to 364,136,669. No further shares were purchased up to 29 April 2010.
11. Dividends
The Board of Directors proposed a dividend of EUR0.30 per share (totalling EUR109.7 million, based on the number of shares outstanding as at 31 December 2009) for the year ended 31 December 2009. The proposed dividend will be submitted for formal approval at the Annual General Meeting to be held on 21 June 2010.
Under Greek corporate legislation, companies are required to declare dividends annually of at least 35% of unconsolidated adjusted after-tax IFRS profits. The statutory minimum dividend recognised for 2009 amounted to EUR41.6 million and was recorded as part of 'other current liabilities' in the consolidated balance sheet. The remaining estimated dividend of EUR68.1 million will be recorded in shareholders' equity, as an appropriation of retained earnings, upon approval at the Annual General Meeting to be held on 21 June 2010.
12. Contingencies
There have been no significant changes in contingencies since 31 December 2009 (as described in the 2009 Annual Report available on the Coca-Cola Hellenic's web site: http://www.coca-colahellenic.com).
13. Employee numbers
The average number of full-time equivalent employees in the first quarter of 2010 was 42,164 (45,027 for the first quarter of 2009).
14. Related party transactions
a) The Coca-Cola Company
As at 2 April 2010, The Coca-Cola Company and its subsidiaries (collectively, 'TCCC') indirectly owned 23.3% (2009: 23.3%) of the issued share capital of Coca-Cola Hellenic.
Total purchases of concentrate, finished products and other materials from TCCC during the first quarter amounted to EUR297.7 million (EUR297.9 million in the prior-year period) and total net contributions received from TCCC for marketing and promotional incentives during the same period amounted to EUR7.9 million (EUR10.9 million in the prior-year period). In the first quarter of 2010, the Group did not record any gain or loss from sales of items of property, plant and equipment to TCCC (EUR0.2 million gain in the prior-year period). During the first quarter of 2010, the Group sold EUR8.2 million of finished goods and raw materials to TCCC (EUR5.0 million in the prior-year period). During the first quarter of 2010, other income from TCCC was EUR6.4 million (EUR2.0 million in the prior-year period) and there were no other expenses incurred (EUR1.1 million in the prior-year period).
As at 2 April 2010, the Group had a total amount of EUR56.8 million (EUR64.2 million as at 31 December 2009) due from TCCC, and had a total amount of EUR153.7 million (EUR125.1 million as at 31 December 2009) due to TCCC.
b) Frigoglass S.A. ('Frigoglass')
Frigoglass, a company listed on the Athens Stock Exchange, is a manufacturer of coolers, glass bottles and crowns. Frigoglass is related to Coca-Cola Hellenic by way of 44% ownership by the parent of Kar-Tess Holding S.A. Frigoglass has a controlling interest in Frigoglass Industries Limited, a company in which Coca-Cola Hellenic has a 16% effective interest, through its investment in Nigerian Bottling Company plc.
During the first quarter of 2010, the Group made purchases of EUR19.4 million (EUR14.1 million in the prior-year period) of coolers, raw materials and containers from Frigoglass and its subsidiaries and incurred maintenance and other expenses of EUR1.2 million (EUR1.2 million in the prior-year period). Other income from Frigoglass during the first quarter of 2010 was EUR0.1 million (nil in the prior-year period). As at 2 April 2010, Coca-Cola Hellenic owed EUR11.8 million (EUR3.6 million as at 31 December 2009) to, and was owed EUR0.6 million (EUR4.7 million as at 31 December 2009) by Frigoglass.
14. Related party transactions (continued)
c) Other related parties
During the first quarter of 2010, the Group purchased EUR18.8 million of raw materials and finished goods (EUR22.2 million in the prior-year period) and made no purchases of fixed assets from other related parties (EUR0.4 million in the prior-year period). Furthermore, during the first quarter of 2010, the Group incurred other expenses of EUR0.7 million (EUR1.8 million in the prior-year period) and recorded income of EUR0.3 from other related parties (EUR0.3 million in the prior-year period). As at 2 April 2010, the Group owed EUR15.4 million (EUR4.5 million as at 31 December 2009) to, and was owed EUR1.6 million (EUR1.8 million as at 31 December 2009) by other related parties.
There were no transactions between Coca-Cola Hellenic and its directors and senior management except for remuneration for the period ended 2 April 2010.
There were no other significant transactions with related parties for the period ended 2 April 2010.
SOURCE Coca Cola Hellenic Bottling Co SA
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