20-F 1 a2017ccepannualreport.htm 20-F Document

United States
Securities and Exchange Commission
Washington, D.C. 20549

FORM 20-F

(MarkOne)
¨ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2017
OR
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
¨ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-37791

COCA-COLA EUROPEAN PARTNERS PLC
(Exact name of Registrant as specified in its charter)

England and Wales
(Jurisdiction of incorporation or organization)

Bakers Road, Uxbridge, UB8 1EZ, United Kingdom
(Address of principal executive offices)

Contact
(+44 (0)1895 231 313, Secretariat@ccep.com, Bakers Road, Uxbridge, UB8 1EZ, United Kingdom)




Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class
 
Name on each exchange on which registered
Ordinary Shares of €0.01 each
 
New York Stock Exchange
Securities registered or to be registered pursuant to Section 12(g) of the Act: None.
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None.
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 484,586,428 Ordinary Shares of €0.01 each
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act    Yes  ☒    No  ☐
If this Report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934    Yes  ☐    No  ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of large accelerated filer,"accelerated filer, and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer
Non-accelerated filer

 
 
 
 
Emerging growth company


Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing.
U.S. GAAP
International Financial Reporting Standards as issued by the International Accounting Standards Board
Other
If “Other” has been checked to the previous question indicate by check mark which financial statement item the registrant has elected to follow:    Item 17  ☐    Item 18  ☐
If this is an annual report, indicated by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒




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TABLE OF CONTENTS
 
 
 
 
 
INTRODUCTION
AT A GLANCE
STRATEGIC REPORT
 
 
CHAIRMAN’S LETTER
 
CEO’S LETTER
 
STRATEGY
 
PERFORMANCE INDICATORS
 
BUSINESS MODEL
 
BUSINESS AND FINANCIAL REVIEW
 
SUSTAINABILITY
 
PRINCIPAL RISKS
 
RISK FACTORS
 
VIABILITY STATEMENT
 
 
 
 
GOVERNANCE AND DIRECTORS’ REPORT
 
 
CHAIRMAN’S INTRODUCTION TO GOVERNANCE AND DIRECTORS’ REPORT
 
BOARD OF DIRECTORS
 
SENIOR MANAGEMENT
 
CORPORATE GOVERNANCE REPORT
 
NOMINATION COMMITTEE CHAIRMAN’S LETTER
 
NOMINATION COMMITTEE REPORT
 
AUDIT COMMITTEE CHAIRMAN’S LETTER
 
AUDIT COMMITTEE REPORT
 
DIRECTORS’ REMUNERATION REPORT
 
 
 
STATEMENT FROM THE REMUNERATION COMMITTEE CHAIRMAN
 
 
OVERVIEW OF THE REMUNERATION POLICY
 
 
2017 REMUNERATION AT A GLANCE
 
 
ANNUAL REPORT ON REMUNERATION
 
DIRECTORS’ REPORT
 
DIRECTORS’ RESPONSIBILITIES STATEMENT
 
 
 
 
FINANCIAL STATEMENTS
 
 
INDEPENDENT AUDITORS’ REPORTS
 
CONSOLIDATED FINANCIAL STATEMENTS
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 
COMPANY FINANCIAL STATEMENTS
 
NOTES TO THE COMPANY FINANCIAL STATEMENTS
 
 
 
 
OTHER INFORMATION
 
 
OTHER GROUP INFORMATION
 
FORM 20-F TABLE OF CROSS REFERENCES
 
EXHIBITS
 
GLOSSARY
 
USEFUL ADDRESSES

None of the websites referred to in this Annual Report on Form 20-F for the year ended 31 December 2017 (the Form 20-F), including where a link is provided, nor any of the information contained on such websites is incorporated by reference in the Form 20-F.


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Welcome to the Coca-Cola European Partners plc 2017 Annual Report

DELIGHTING CUSTOMERS AND CONSUMERS
Coca-Cola European Partners is a leading consumer goods company and the world’s largest independent Coca-Cola bottler by revenue, operating in 13 countries and employing around 23,500 people. We are proud of our strong heritage in Western Europe and, as Coca-Cola European Partners, we are establishing a compelling track record and platform for profitable growth through our combined experience, scale and reach.
Over 300 million people can enjoy our drinks in Western Europe and, working together with The Coca-Cola Company, we are leading the way in our markets, offering consumers a greater choice of drinks with reduced or no sugar, holding ourselves accountable for our packaging and expanding the contribution we make to society. We are taking action on sustainability to build a better future, for people and for the planet. We work closely with customers to understand their needs and priorities and develop tailored strategies to deliver shared value.
In our first 18 months, we have become a leading consumer goods company capable of delivering long-term growth, and we are on a journey to be the world’s most sustainable and valuable Coca-Cola bottler creating increased shareholder value.


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GREAT BEVERAGES, SERVICE AND PEOPLE
We are the world’s largest independent Coca-Cola bottler and one of Europe’s leading consumer goods companies
At our core, we provide customers and consumers with great beverages and great service, creating shared and sustainable value.
We look at our business through two lenses: consumer categories and customer channels.
In each category, we are meeting changing consumer preferences by expanding our offering and re-shaping our portfolio to offer a wider range of drinks including more low/no-sugar brands and more innovative packages.
 
In each channel, we are collaborating with customers to drive joint value creation through unparalleled execution, having the right product available at the right price across more outlets and occasions.
We are focused on delivering world-class customer service to existing customers and expanding the range of customers we serve. This will include building new relationships in the e-commerce and leisure channels and with institutions.





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Achieving sustainable growth
Our goal is to deliver long-term and sustainable growth and create shared value. To do this, we are:
Investing in our existing portfolio and launching new brands with scale and impact to offer a drink for every taste and occasion
Working closely with existing and new customers to reach more consumers in more outlets
Improving our route to market so our products are more available and visible to consumers
Our growth culture
Focus on customers & front line
We do everything we can to help the front line team develop our business and delight our customers.
Passion for growth
We show our determination to grow the business, take accountability and develop ourselves.
Listening & caring
We listen to what our colleagues, customers, consumers and communities tell us – seeking to understand and take the right actions.
Empowered to win together
We work together to win, encouraging diverse ideas and supporting people at every level to make decisions.
Execute with speed & agility
We move quickly, find ways to remove barriers and make things happen.


 
Our relationship with The Coca-Cola Company (TCCC)
Over the last year we have strengthened our relationship with TCCC, developing a shared long-term plan to create value and a joint sustainability action plan for Western Europe.
TCCC makes and sells concentrates, beverage bases and syrups to bottling operations, owns the brands and is responsible for consumer brand marketing. We license these brands and purchase the concentrate to sell, make and distribute the packaged beverages to our customers and vending partners, who then retail our products to consumers. We work closely with our customers to execute localised strategies based on a vision for growth that is shared with TCCC.








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CHAIRMAN’S LETTER
I am proud of what we have achieved in our first 18 months. We have delivered consistent profitable growth and shared value for Coca-Cola European Partners (CCEP), our customers, partners, employees and shareholders.
In 2017, CCEP has established itself as a leading consumer goods company and made great progress in setting the foundations for long-term sustainable growth.
Western Europe remains a dynamic market, with ongoing political, social and economic changes. 2017 has ushered in new governments in some of the countries in which we operate, increased governance requirements for businesses, and, in our own industry, an evolved retail landscape through customer mergers, increased regulation and changes in shoppers’ habits.
While our business is realistic about these challenges, CCEP is well positioned to take advantage of the opportunities that come with change.
Footprint for growth
We have made clear choices about CCEP’s strategy and operating model, putting the customer at the heart of everything we do and focusing on the front line where we can have the greatest impact in the market.
We have increased investment in key areas of the business. This includes putting the best coolers in the right places so consumers can enjoy our drinks wherever they are. Our production and distribution network has also been improved to support our growing range of products.
We continued to invest in our sales force to make sure it remains a powerful competitive strength, particularly through harnessing new technology. We have improved our route to market so our products are more visible and available and deepened relationships with world class customer management.
 
We are working closely with our partners, particularly The Coca-Cola Company, to be a total beverage company, offering consumers a drink for every occasion including low and no-sugar options. Last year, this included the launch of new brands, such as Royal Bliss, as well as innovations that helped grow existing strong brands, like trademark Coca-Cola, Fanta and Monster. In premium water and tea, we introduced new brands and will expand existing brands geographically, including Honest and GLACÉAU Smartwater.
Sustainable future
We are also working hard with our partners to make and sell our brands in a responsible and sustainable way. In November, CCEP and The Coca-Cola Company in Western Europe launched an ambitious new sustainability action plan, This is Forward. You can read the plan in full at www.ccep.com/pages/thisisforward. I am proud of the plan which sets out a clear direction of how we intend to work together, using the strength of our businesses and our brands to build a better future.
The plan is based on three priority actions on drinks, packaging and society, which are underpinned by three supporting actions that are core to our business operations: climate, water and supply chain. There are 21 goals, each one identified and developed in the context of the global challenges that face our communities, our society and our business today.
While ambitious, our action plan builds upon 10 years of focused work on sustainability across Western Europe. Importantly, our sustainability action plan, is the result of listening to our stakeholders - including governments, Non-Governmental Organisations, customers, suppliers - as well as thousands of consumers and employees, to ensure we deliver the changes that matter most to all of us.



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Strength in people
CCEP’s employees continue a proud legacy in Western Europe and combine expert, local knowledge with a passion for our brands and business. I am grateful for their dedication and all they do every day to serve our customers and communities.
I would also like to thank my fellow Directors who have brought their wisdom and leadership to bear on all aspects of our business. I would particularly like to express my gratitude to Francisco Ruiz de la Torre Esporrín and Sandy Douglas, both of whom are stepping down to dedicate more time to their other roles. Francisco brought a fresh perspective and Sandy a wealth of experience of the Coca-Cola system, particularly drawing from the North American bottling business. I am pleased to welcome Álvaro Gómez-Trénor Aguilar and Francisco Crespo Benítez to the Board.
With the Board, I have had the opportunity to visit plants and markets in Spain, Great Britain and Germany. I have also enjoyed taking part in an Accelerate Performance programme for all our leaders, which has been designed to embed our new culture and strategy with company leaders. I have also been on the panel at major diversity network events in Great Britain and France. I have been consistently impressed with the quality and engagement of our people and the progress we are making together.
We are committed to being a company where people are proud to work and where success is strengthened through mutual growth. I believe we have the right team in place to do this. Under the leadership of Damian Gammell and his executive team, we are creating a culture that is agile and flexible, and values diversity and inclusion.
Finally, I would like to thank all of our shareholders for their support. 2018 will build on the strong progress we have made as CCEP. We will continue to listen to and work closely with all our partners and stakeholders to ensure we can accelerate our performance and the value we create together.
Sol Daurella
Chairman
 
“I am proud of what we have achieved in our first 18 months. We have delivered consistent profitable growth and shared value for CCEP, our customers, partners, employees and shareholders.”


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CEO’S LETTER
This is an exciting time to be a leader in the non-alcoholic ready to drink category in Western Europe. The demand for innovation in great tasting drinks, packages and brands has never been greater, and Coca-Cola European Partners (CCEP) is ready to meet the consumer challenges and opportunities.
Our goal is clear: to work closely with new and existing customers to make even more great beverages available to more consumers, creating long-term sustainable and profitable growth. We made good progress in 2017, delivering comparable revenue growth of 1.5%.
With the creation of CCEP, we are uniquely positioned to do this through our local footprint and unrivalled sales force. We are able to operate with scale across 13 countries where we make, sell and distribute our products. At the same time, we support a wide range of customer outlets across Western Europe.
Our success is built on three fundamental elements: our portfolio of great brands, the great service and execution we provide to our customers, and our great people who make this happen every day.
A drink for every taste and occasion
Together with our partners at The Coca-Cola Company, our goal is to create a portfolio of beverages that caters for every taste and occasion. We are delivering on this through innovation and growth in leading brands, including Coca-Cola trademark brands, while also bringing new beverages to market.
2017 demonstrates this strategy is creating value.    Coca-Cola Zero Sugar continues to be popular with consumers, with volume growth of approximately 15% in 2017. We are also giving consumers more choice across a range of popular brands by introducing new flavours, low or no-sugar variants, and contemporary and sustainable packaging in a variety of sizes.
 
In May 2017, we relaunched Fanta with a new logo, new recipe and new bottle. We built on a successful launch with a fun and engaging Halloween campaign, limited edition packaging and in-store execution. Sparkling flavours and energy grew 4% in volume in 2017, driven in part by Fanta’s success.
Our presence in energy and emerging drinks segments, such as ready to drink tea, is also growing. Monster, supported by the exciting partnership with Lewis Hamilton, contributed to 16% volume growth in energy in the final quarter of 2017. We also are increasing our presence in adult sparkling drinks, with the launch of Royal Bliss in Spain, the Finley brand in several markets, and the relaunch of Schweppes in Great Britain.
In 2018, we will continue this strategy, supporting the growth of our core brands and further new product development, including the expansion of the Honest and GLACÉAU Smartwater brands in our markets, and the launch of Fuze tea and AdeZ - a plant based smoothie with nuts, seeds and fruit.
Winning with customers
Our focus on value creation starts with our customers, who we put at the heart of every aspect of our business. CCEP will be known for world class customer management and we have a relentless focus on great execution store by store and street by street.
At the forefront of this is our 6,000 strong sales force, which now visits 12 outlets a day on average. In 2017, our focus has been on empowering our sales force to create more value from each visit, through new technology and merchandising. We placed an additional 138,000 coolers into more outlets and increased our coverage of important channels outside grocery, including hotels, restaurants, cafes, institutions and offices.



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This will continue in 2018, as will efforts to improve our route to market, by working more closely with wholesalers and other partners to better support the growth of all our customers. We are also working with new digital platforms, such as online ordering and customer portals, to improve service and availability.
Delivering sustainable growth
I am confident that the people who work for CCEP and the entrepreneurial culture that is emerging will accelerate our performance. We have invested in developing the capabilities and behaviours that are fundamental to our future success. Our focus is on instilling agile ways of working, creating an environment where people are empowered to win together, and inspiring a passion for growth.
Our stakeholders also have big expectations of how we do business and we are holding ourselves accountable for the impact we have on society. Together with The Coca-Cola Company in Western Europe, our new sustainability action plan advances the progress we are making to reduce sugar in our drinks, recover and recycle our packaging, and be a force for good in our communities.
Our performance in 2017 demonstrates that we are making the right strategic choices. We delivered against all key metrics set out in our financial framework to generate profitable growth and create value for shareholders. This is made possible by our close alignment with The Coca-Cola Company and the support from our experienced leadership team and Board of Directors.
With a solid strategy for long-term growth and a great team, our focus for 2018 is to maintain this momentum, continuing to give customers and consumers the great service and great beverages they want.
Thank you for investing in CCEP. I look forward to continuing our journey with you in 2018.
Damian Gammell
Chief Executive Officer
 
“Our success is built on three fundamental elements: our portfolio of great brands, the great service and execution we provide to our customers, and our great people who make this happen.”

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STRATEGY
We are making clear choices to increase our focus on the customer and expand our portfolio to become a total beverage company. This is central to our journey to becoming a great company and the world’s best bottler and key to our ultimate objective: long-term and sustainable growth.
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Great beverages
We are committed to delivering sustainable revenue growth from our Coca-Cola trademark drinks, through new flavours, mini cans and premium glass bottles. In 2017 we relaunched Fanta with a new logo, a new recipe and new flavours and we will do the same for Sprite in 2018. We will also continue to expand our portfolio into new categories, launching products - like Fuze and AdeZ - with scale and impact.
Great service
We work closely with existing customers, creating    long-term plans for shared value creation. At the same time, we will continue to grow the number of customers and outlets we reach so our great products are always within reach of consumers. That also means improving our route to market by working with wholesalers and developing new ways of bringing our products to the consumer.
Great people
Central to achieving our ambitions is the creation of a culture and environment that empowers everyone in our business to be successful. We will harness efficiencies and share best practice across Coca-Cola European Partners but we are locally led and will always cater for the specific demands of our markets.
 
We will move quickly and focus on progress over perfection. We will encourage diverse ideas and support people in every part of the business to make decisions. We will listen to what customers, consumers, colleagues and communities tell us so we can take the right actions.
Action on sustainability
This is Forward is our sustainability action plan and a critical part of our long-term business strategy. It has been developed jointly with The Coca-Cola Company in Western Europe. It sets out how we will grow our business in a responsible and sustainable way and how we intend to play a meaningful role in helping to address many of the key societal issues that people are most concerned about. We have made bold leadership commitments on drinks, packaging and society and supporting commitments on water, supply chain and climate.


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PERFORMANCE INDICATORS
Tracking our performance in 2017






Revenue*
 
 
€11.1 billion
 
 
 
 
 
 
 
Operating profit*
 
Free cash flow*
 
Diluted earnings per share*
€1.5 billion
on a comparable basis
 
€1.0 billion
  
 
€2.12
on a comparable basis
 
 
 
 
 
Lost time incident rate
 
Water use ratio
 
Energy use ratio
1.23
Calculations based upon number of lost time incidents in 2017 per 100 full time equivalent employees.




 
1.61
litres of water used/litre of product produced

Calculations based upon total water usage of our manufacturing sites, based upon site invoice data, divided by the total number of litres produced in 2017.
 
0.32
MJ/litre of product produced

Calculations based upon total energy usage of our manufacturing sites, based upon monthly site invoice and meter data, divided by the total number of litres of product produced in 2017.






*Refer to page 21 for a reconciliation of GAAP to non-GAAP figures


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BUSINESS MODEL
We create long-term and sustainable value by making, distributing and selling the world’s most loved drinks and delivering excellent service to our customers. Our success is made possible by our culture and the passion and commitment of our employees.
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We source raw materials...
We use raw materials such as water, sugar beet, coffee, juices and syrup to make our drinks.
We also rely on packaging materials like PET, pulp and paper to make our packaging.
We require all our suppliers to meet our strict targets around workplace policies and practices, health and safety, ethics and human rights, environmental protection and business integrity.
As part of our sustainability action plan we’ll make sure 100% of our main agricultural ingredients and raw materials come from sustainable sources by 2020.
...to make the great tasting drinks consumers want
Our manufacturing sites make and bottle our wide range of drinks. We are constantly improving our manufacturing facilities and investing in new technologies to make them more efficient and safer for our employees. 93% of the drinks we sell are produced and marketed in the country in which they are consumed.
We make sure our drinks get to customers when they need them
Working with logistics partners and our own logistics and distribution teams to get our products to customers in the most efficient and sustainable way possible.
We work closely with our customers who sell our drinks to consumers
We work with a huge range of customers – from small local shops to sports stadiums and your favourite bar – so consumers can enjoy one of our great products wherever they are and whenever they want. We also provide coolers and vending machines so people can find our drinks on the go. We work closely with large retail chains, like supermarkets and wholesalers.
We work with local and national partners to collect our packaging
Although all of our bottles and cans are 100% recyclable – they don’t always end up being recycled.
We are determined to do more and lead the way towards a circular economy where 100% of our packaging can be collected, reused or recycled, and where none of it ends up as litter or in the oceans.
 
The resources and relationships we rely on
Our customers
We strive to be our customers’ preferred partner and create value together through our response to changing consumer and shopper preferences and retail trends. We are uniquely close to our customers, with thousands of our employees calling on our customers every day. Our operating model is customer-centric and focused on the front line, and we aim to deliver the strongest execution and reach a broad range of outlets in the marketplace, all the while making it easier to do business with us.
Our employees
Our success depends on our people – growth for our business goes hand in hand with growth for our employees. We respect each other and support a workplace where people with different perspectives belong, are heard and have equal opportunity. We build the engagement and development of our employees into our business plans, enabling a diverse and local workforce that contributes to the communities where we operate. We also make long-term investments in technology and facilities that equip our people for success.
Our franchisors
We conduct our business primarily under agreements with The Coca-Cola Company 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 have shared long-term growth plans that enable us to create value together.
Our suppliers
Our suppliers are critical partners for our business. We believe collaboration and innovation throughout our supply chain are essential in advancing our sustainable growth. We work with a network of about 19,000 suppliers across our markets, covering commodities and services such as ingredients, packaging, energy, equipment, building and facilities, fleet and logistics services, sales and marketing services, IT and telecoms, general administration and professional services.
Our communities
We recognise the economic, social and environmental impact our business has on our communities, and we seek to make a positive contribution to society building on our strong local heritage and presence. Continued success is critical for the people who work for us and the communities in which we operate. We work with them to find solutions and create opportunities for the future.


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BUSINESS AND FINANCIAL REVIEW
Our business
Coca-Cola European Partners plc (CCEP) is the largest independent Coca-Cola bottler by revenue, operating in 13 countries and employing around 23,500 people. We are proud of our strong heritage in Western Europe, and as CCEP, we are establishing a compelling track record and platform for profitable growth through our combined experience, scale and reach.
CCEP was created on 28 May 2016 through the Merger of Coca-Cola Enterprises, Inc., (CCE), Coca-Cola Erfrischungsgetränke A.G. (CCEG) and Coca-Cola Iberian Partners, S.L.U. (CCIP). CCEP is a publicly traded UK domiciled company listed on Euronext Amsterdam, New York Stock Exchange, Euronext London and the continuous market of the Spanish Stock exchange (ticker symbol: CCE).
Over 300 million people can enjoy our drinks in Western Europe, and working together with The Coca-Cola Company, we are leading the way in our markets, offering consumers a greater choice of drinks with reduced or no sugar, holding ourselves accountable for our packaging and expanding the contribution we make to society. We are taking action on sustainability by using our business to build a better future, for people and for the planet. We work closely with customers to understand their needs and priorities and develop tailored strategies to deliver shared value.
In our first 18 months, we have become a leading consumer goods company capable of delivering long-term growth, and we are on a journey to be the world’s most sustainable and valuable Coca-Cola bottler creating increased shareholder value.
Note regarding the presentation of non-GAAP financial information
We use certain alternative performance measures (non-GAAP performance measures) to make financial, operating and planning decisions and to evaluate and report performance. We believe these measures provide useful information to investors, and as such, where clearly identified, we have included certain alternative performance measures in this document to allow investors to better analyse our business performance and allow for greater comparability. To do so, where indicated, we have given effect to the Merger as if it had occurred at the beginning of 2016, thereby including the financial results of CCE, CCEG (Germany) and CCIP (Iberia) along with other adjustments as described below. We have also excluded items affecting the comparability of period-over-period financial performance as described in the tables below. The alternative performance measures included herein should be read in conjunction with and do not replace the directly reconcilable GAAP measure.
Additionally, we provide certain forward-looking non-GAAP financial Information, which management uses for planning and measuring performance. We are not able to reconcile forward looking non-GAAP measures to reported measures without unreasonable efforts because it is not possible to predict with a reasonable degree of certainty the actual impact or exact timing of items that may impact comparability throughout 2018.
For purposes of this document, the following terms are defined:
As reported’ includes the financial results of CCE only, as the accounting predecessor, for all periods prior to 27 May 2016 and combined CCEP (CCE, Germany and Iberia) for the period from 28 May 2016 for all periods presented after that date.
Comparable’ represents results excluding items impacting comparability during the periods presented. Items impacting comparability include restructuring charges, merger and integration related costs, out of period mark-to-market impact of hedges, litigation provisions and net tax items relating to rate and law changes. Such items are excluded from our comparable results in order to provide a better understanding of business performance and allow for greater comparability. Additionally, for periods prior to 27 May 2016, comparable includes the results of CCE, Germany and Iberia as if the Merger had occurred at the beginning of 2016 along with acquisition accounting and the additional debt financing costs incurred by CCEP in connection with the Merger. Comparable volume is also adjusted for selling days.
Fx-neutral’ represents the comparable results excluding the impact of foreign exchange rate changes during the periods presented. Foreign exchange impact is calculated by recasting current year results at prior year exchange rates.
Free cash flow’ is defined as net cash flows from operations, less capital expenditures and interest paid, plus proceeds from capital disposals. Management utilises free cash flow as a measure of the Group’s cash generation from operating activities, taking into account investments in property, plant and equipment and non-discretionary interest payments.


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Adjusted EBITDA’ is defined as profit after tax plus taxes, net finance costs, non-operating items, depreciation, amortisation and adjusted for items impacting comparability. Management utilises Adjusted EBITDA and the ratio of net debt to Adjusted EBITDA to evaluate operating performance in the context of the Group’s targeted financial leverage.
Key financial measures(A)
Unaudited, fx impact calculated by recasting current year results at prior year rates
Year Ended 31 December 2017
€ million
 
% change vs. prior year
As Reported
 
Comparable
 
Fx-Impact

 
As Reported

 
Comparable

 
Fx-Impact

 
Comparable fx‑neutral

Revenue
11,062
 
11,055
 
(142
)
 
21.0
 %
 
1.5
 %
 
(1.5
)%
 
3.0
 %
Cost of sales
6,772
 
6,739
 
(85
)
 
21.5
 %
 
2.0
 %
 
(1.5
)%
 
3.5
 %
Operating expenses
3,030
 
2,838
 
(31
)
 
12.5
 %
 
(2.5
)%
 
(1.0
)%
 
(1.5
)%
Operating profit
1,260
 
1,478
 
(26
)
 
48.0
 %
 
9.0
 %
 
(1.5
)%
 
10.5
 %
Profit after taxes
688
 
1,035
 
(19
)
 
25.5
 %
 
13.0
 %
 
(2.0
)%
 
15.0
 %
Diluted earnings per share (€)
1.41
 
2.12
 
(0.04
)
 
(0.5
)%
 
13.0
 %
 
(2.0
)%
 
15.0
 %
(A) See page 21 for reconciliation of As Reported to Comparable financial information

Financial highlights
Full-year diluted earnings per share were €1.41 on a reported basis or €2.12 on a comparable basis, including a negative currency translation impact of €0.04.
Full-year reported revenue totalled €11.1 billion, up 21.0%, or up 3.0% on a comparable and fx-neutral basis. Volume was up 0.5% on a comparable basis.
Full-year reported operating profit totalled €1.3 billion, or €1.5 billion on a comparable basis, up 9.0%, or up 10.5% on a comparable and fx-neutral basis.
Net cash flows from operating activities were €1.6 billion. Full-year free cash flow was €1.0 billion.* 
We remain on track to achieve pre-tax savings of €315 million to €340 million through synergies by mid-2019.
*Refer to page 19 for a reconciliation between net cash flows from operating activities and free cash flow.
Operational review
In our first full year as Coca-Cola European Partners, we have started to realise the growth opportunities created by the Merger and, importantly, exceeded our initial guidance for revenue, operating profit, diluted earnings per share, and free cash flow. Our strong performance in 2017 enabled us to accelerate investment behind our brand portfolio, our field sales teams, our route-to-market and our digital capabilities. We are confident of making further progress, underpinned by a number of exciting growth opportunities ahead of us and continued investments in our business.
Key operating factors for the year included solid revenue growth driven by revenue per case growth coupled with 0.5% volume growth. Operating margins improved as we maintained gross margin and as we continue to realise post-Merger synergy benefits. We benefited from growth in our sugar-free portfolio, a strong innovation pipeline and a focus on driving joint value for our customers across all channels.
Full-year 2017 diluted earnings per share were €1.41 on a reported basis, or €2.12 on a comparable basis. Currency translation had a negative impact of €0.04 on comparable diluted earnings per share for the year ended 31 December 2017. Full-year reported operating profit totalled €1.3 billion, up 48.0%, driven by the inclusion of Germany, Iberia and Iceland. Comparable operating profit was €1.5 billion, up 9.0%, or up 10.5% on a comparable and fx-neutral basis.
Revenue
Full-year 2017 reported revenue totalled €11.1 billion, up 21.0%, or up 3.0% on a comparable and fx-neutral basis. Revenue per unit case grew 2.5% on a comparable and fx-neutral basis and volume increased 0.5% on a comparable basis.


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Revenue
In millions of €, except per case data which is calculated prior to rounding
 
Year ended
 
 
 
31 December 2017

 
31 December 2016

 
% Change

As reported
 
11,062

 
9,133

 
21.0
 %
Adjust: Total items impacting comparability(A)
 
(7
)
 
1,732

 
(100.5
)%
Comparable
 
11,055

 
10,865

 
1.5
 %
Adjust: Impact of fx changes
 
142

 
n/a

 
(1.5
)%
Comparable & fx-neutral
 
11,197

 
10,865

 
3.0
 %
Revenue per unit case
 
4.46

 
4.35

 
2.5
 %
(A) 
Amounts include items impacting comparability during the periods presented. Additionally, for periods prior to 27 May 2016, amounts include the results of Germany and Iberia as if the Merger had occurred at the beginning of the presented period.
On a territory basis for full-year 2017, Iberia revenues were up 3.0%, and revenue in Germany was up 2.5%. Revenue in Great Britain grew 4.5% on an fx-neutral basis, and on a reported basis, revenue declined 2.5%, driven by a decline of the British pound versus the euro. Revenue in France was up 0.5% for the year, and revenue in the Northern European territories (Belgium, Luxembourg, the Netherlands, Norway, Sweden and Iceland) was up 4.5%, led by Belgium/Luxembourg and the Netherlands.
 
 
 
Year ended
 
 
 
Revenue by geography
Comparable
 
31 December 2017

% of Total

 
31 December 2016

% of Total

 
Revenue % Change

 
 
Spain/Portugal/Andorra(A)
 
24.5
%
 
24.0
%
 
3.0
 %
 
Germany
 
20.0
%
 
20.0
%
 
2.5
 %
 
Great Britain
 
18.5
%
 
19.0
%
 
(2.5
)%
 
France/Monaco
 
16.5
%
 
16.5
%
 
0.5
 %
 
Belgium/Luxembourg/Netherlands
 
13.0
%
 
13.0
%
 
2.0
 %
 
Norway
 
3.5
%
 
4.0
%
 
1.5
 %
 
Sweden
 
3.0
%
 
3.0
%
 
1.0
 %
 
Iceland(B)
 
1.0
%
 
0.5
%
 
150.5
 %
 
Total
 
100.0
%
 
100.0
%
 
1.5
 %
(A) 
Spain/Portugal/Andorra is also referred to as Iberia.
(B) 
Iceland was acquired in July 2016.
Comparable volume - selling day shift
In millions of unit cases, prior period volume recast using current year selling days(A)
 
Year ended
 
 
 
31 December 2017

 
31 December 2016

 
% Change

Volume
 
2,510

 
2,502

 
0.5%

Impact of selling day shift
 
n/a

 
(7
)
 
n/a

Pro forma comparable volume
 
2,510

 
2,495

 
0.5
%
(A) 
A unit case equals approximately 5.678 litres or 24 8-ounce servings, a typical volume measure used in our industry.
On a brand basis for full-year 2017, volume for sparkling brands was up 0.5%. Coca-Cola trademark brands decreased 0.5%, with growth of approximately 15.0% in Coca-Cola Zero Sugar offset by declines in other trademark brands. Sparkling flavours and energy grew 4.0% with continued strong growth in energy and solid growth in Fanta, Vio and Royal Bliss. Still brands increased 1.0%,with increases in juice, isotonics and other of 2.5% being offset by water brands being down 1.5%.
 
 
 
Year ended
 
 
 
Comparable volume by brand category
Adjusted for selling day shift
 
31 December 2017

% of Total

 
31 December 2016

% of Total

 
% Change

 
 
Sparkling
 
85.0
%
 
85.5
%
 
0.5
 %
 
Coca-Cola trademark
 
63.5
%
 
64.5
%
 
(0.5
)%
 
Sparkling flavours and energy
 
21.5
%
 
21.0
%
 
4.0
 %
 
Stills
 
15.0
%
 
14.5
%
 
1.0
 %
 
Juice, isotonics and other
 
8.0
%
 
7.5
%
 
2.5
 %
 
Water
 
7.0
%
 
7.0
%
 
(1.5
)%
 
Total
 
100.0
%
 
100.0
%
 
0.5
 %


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Cost of sales
Full-year 2017 reported cost of sales were €6.8 billion, up 21.5%, driven by the inclusion of Germany, Iberia and Iceland. Comparable cost of sales was €6.7 billion, up 2.0%, or up 3.5% on a comparable and fx-neutral basis. Full-year cost of sales per unit case increased 3.0% on a comparable and fx-neutral basis, driven by channel, brand and package mix, and manufacturing costs, as well as year-over-year cost increases in key inputs, principally concentrate and sweetener. This was partially offset by benefits from our synergy programmes.
Cost of sales
In millions of €, except per case data which is calculated prior to rounding
 
Year ended
 
 
 
31 December 2017

 
31 December 2016

 
% Change

As reported
 
6,772

 
5,584

 
21.5
 %
Adjust: Total items impacting comparability(A)
 
(33
)
 
1,011

 
(103.5
)%
Comparable
 
6,739

 
6,595

 
2.0
 %
Adjust: Impact of fx changes
 
85

 
n/a


 
(1.5
)%
Comparable & fx-neutral
 
6,824

 
6,595

 
3.5
 %
Cost of sales per unit case
 
2.72

 
2.64

 
3.0
 %
(A) 
Amounts include items impacting comparability during the periods presented. Additionally, for periods prior to 27 May 2016, amounts include the results of Germany and Iberia as if the Merger had occurred at the beginning of the presented period.
Operating expenses
Full-year 2017 reported operating expenses were €3.0 billion, up 12.5%, driven by the inclusion of Germany, Iberia and Iceland. Comparable operating expenses were €2.8 billion, down 2.5%, or down 1.5% on a comparable and fx-neutral basis, primarily driven by synergy benefits and a continued focus on managing expenses.
Operating expenses
In millions of € except % change
 
Year ended
 
 
 
31 December 2017

 
31 December 2016

 
% Change

As reported
 
3,030

 
2,698

 
12.5
 %
Adjust: Total items impacting comparability(A)
 
(192
)
 
213

 
(190.0
)%
Comparable

 
2,838

 
2,911

 
(2.5
)%
Adjust: Impact of fx changes

 
31

 
n/a

 
(1.0
)%
Comparable & fx-neutral

 
2,869

 
2,911

 
(1.5
)%
(A) 
Amounts include items impacting comparability during the periods presented. Additionally, for periods prior to 27 May 2016, amounts include the results of Germany and Iberia as if the Merger had occurred at the beginning of the presented period.
Restructuring and synergy programme
During the full-year 2017, we recognised restructuring charges totalling €235 million. These charges principally related to proposed restructuring activities under our Integration and Synergy Programme including those related to supply chain improvements such as network optimisation, productivity initiatives, continued facility rationalisation in Germany, end to end supply chain organisational design, and cold drink operational practices and facilities. Our proposed restructuring activities also include the transfer of Germany and Iberia transactional related activities to our shared services centre in Sofia, Bulgaria, streamlining of our HR organisation, and other central function initiatives. Since the Merger we have recognised restructuring charges totalling €495 million.
We remain on track to achieve pre-tax run rate savings of €315 million to €340 million through synergies by mid-2019. Since the Merger, we have achieved €155 million in synergies and expect to have realised approximately 75% of our total target by year-end 2018. Restructuring cash costs to achieve these synergies are expected to be approximately 2 1/4 times expected savings and includes cash costs associated with pre-transaction close accruals.
US tax reform
The US Tax Cuts and Jobs Act (the US Tax Act) was enacted on 22 December 2017 and represents a significant change to the US tax code. While CCEP is a UK listed and tax resident entity, it has a number of subsidiaries outside the UK, including a US incorporated holding company that is wholly owned by Coca-Cola European Partners plc. Based on the applicable provisions of the US Tax Act, during the fourth quarter of 2017, we recorded a non-recurring book tax expense of €320 million, which included an estimated book tax expense of approximately €125 million related to the transition from a worldwide to territorial tax system and a reduction in deferred tax assets of approximately €195 million primarily due to the elimination of foreign tax credits. We do not currently expect an increase in cash taxes as a result of any provision of the US Tax Act and while we continue to assess the situation, at this stage, we do not anticipate any impact on our effective tax rate going forward.


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Financial position

In millions of €
 
As at
 
31 December 2017

 
31 December 2016

Assets
 
 
 
 
Non-current assets
 
14,880

 
15,143

Current assets
 
3,314

 
3,425

Total assets
 
18,194

 
18,568

Liabilities
 
 
 
 
Non-current liabilities
 
8,222

 
8,355

Current liabilities
 
3,287

 
3,752

Total liabilities
 
11,509

 
12,107

Total equity
 
6,685

 
6,461

Total equity and liabilities
 
18,194

 
18,568

Total non-current assets decreased €263 million, or 1.5%, from €15.1 billion at 31 December 2016 to €14.9 billion at 31 December 2017. This change was partially driven by a decrease in deferred tax assets of €218 million mainly related to US tax law changes enacted prior to year-end. Property, plant and equipment reduced by €156 million which was offset by increases in intangible assets and goodwill of €40 million and €93 million, respectively, relating primarily to the finalisation of acquisition accounting for Germany and Iberia and currency effects during the period.
Total current assets decreased €111 million, or 3.0%, from €3.4 billion at 31 December 2016 to €3.3 billion at 31 December 2017. This change was primarily driven by a decrease of €23 million in inventories and €128 million in trade accounts receivable resulting from working capital initiatives.
Total non-current liabilities decreased by €133 million, or 1.5%, from €8.4 billion at 31 December 2016 to €8.2 billion at 31 December 2017. This change was mainly driven by a reduction of €116 million in employee benefit liabilities primarily due to the actual return on underlying assets exceeding actuarial estimates, a reduction in non-current borrowings of €88 million reflecting early repayments on a term loan of €300 million, foreign exchange movements on our US denominated debt and issuance of €350 million floating-rate notes, offset by an increase in our derivative liabilities of €92 million, relating to US denominated debt.
Total current liabilities decreased €465 million, or 12.5%, from €3.8 billion at 31 December 2016 to €3.3 billion at 31 December 2017. This change was primarily driven by the repayment of €300 million Eurobond notes in November 2017 and €500 million floating rate notes in December 2017, offset by commercial paper issuances of €250 million. This reduction was offset by an increase in trade and other payables of €115 million, primarily due to working capital initiatives.
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 operations, public and private issuances of debt securities and bank borrowings. We believe our operating cash flow, cash on hand and available short-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. Counterparties and instruments used to hold cash and cash equivalents are continuously assessed, with a focus on preservation of capital and liquidity.
We have amounts available for borrowing under a €1.5 billion multi-currency credit facility with a syndicate of 10 banks. This credit facility matures in 2021 and is for general corporate purposes and supporting our working capital needs. Based on information that is currently available, there is no indication that the financial institutions participating in this facility would be unable to fulfil their commitments to CCEP as at the date of this report. Our current credit facility contains no financial covenants that would impact our liquidity or access to capital. As at 31 December 2017, we had no amounts drawn under this credit facility.
Free cash flow generation was strong during 2017, with €1.0 billion generated in the year. This reflects our dedicated efforts to improve working capital where we have improved our total cash conversion cycle by over 10 days and have achieved over €250 million of working capital benefits throughout 2017. We also maintained our prudent capex approach and continued to challenge ourselves when managing restructuring costs.


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Free cash flow(A)
In millions of €
 
Year Ended
 
31 December 2017

Net cash flows from operating activities
 
1,623

Less: Purchases of property, plant and equipment
 
(484
)
Less: Purchases of capitalised software
 
(36
)
Less: Interest paid
 
(94
)
Add: Disposals of property, plant and equipment
 
32

Free cash flow
 
1,041

(A) 
Free cash flow is defined as net cash flows from operations, less capital expenditures and interest paid, plus proceeds from capital disposals.
Capital management
The primary objective of our capital management strategy is to ensure strong credit ratings and to maintain appropriate capital ratios in order to support our business and maximise shareholder value. Our credit ratings are periodically reviewed by rating agencies. Currently, our long-term ratings from Moody’s and Standard & Poor’s (S&P) are A3 and BBB+ respectively. The ratings outlook from Moody’s and S&P are stable. Changes in the operating results, cash flows or financial position could impact the ratings assigned by the various 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 2017

 
As of 14 March 2018
Moody’s
Standard & Poor’s
Total borrowings
 
5,748

 
Long-term rating
A3
BBB+
Add: Fx impact of non-EUR borrowings
 
66

 
Outlook
Stable
Stable
Adjusted total borrowings
 
5,814

 
Note: 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.

Less: Cash and cash equivalents
 
(360
)
 
Net debt
 
5,454

 
The ratio of net debt to Adjusted EBITDA is used by investors, analysts and credit rating agencies to analyse our operating performance in the context of targeted financial leverage, and as such, 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 and is calculated as being the net of cash and cash equivalents and currency adjusted borrowings. Adjusted EBITDA is calculated as EBITDA, before adding back items impacting the comparability of year-over-year financial performance.
Adjusted EBITDA does not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments. Further, Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs, and although depreciation and amortisation are non-cash charges, the assets being depreciated and amortised are likely to be replaced in the future and Adjusted EBITDA does not reflect cash requirements for such replacements.


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Net debt to Adjusted EBITDA
Adjusted EBITDA
In millions of €
 
Year Ended
 
31 December 2017

Reported profit after tax
 
688

Taxes
 
471

Finance costs, net
 
100

Non-operating items
 
1

Reported operating profit
 
1,260

Depreciation and amortisation
 
490

Reported EBITDA
 
1,750

Items impacting comparability:
 
 
Merger effects(A)
 
(20
)
Mark-to-market effects(B)
 
(6
)
Restructuring Charges(C)
 
218

Merger and Integration Related Costs(D)
 
4

Litigation provision(E)
 
5

Adjusted EBITDA
 
1,951

Net debt to EBITDA
 
3.1
Net debt to Adjusted EBITDA
 
2.8
(A) 
Adjustments to reflect Germany and Iberia financial results as if the Merger had occurred at the beginning of each period (if applicable), the impact of acquisition accounting including final fair values of the acquired inventory, property, plant, and equipment and intangibles from Germany and Iberia, final acquisition accounting related adjustments and associated impact on depreciation and amortisation expense, and additional debt financing cost incurred by CCEP in connection with the Merger.
(B) 
Amounts represent the net out-of-period mark-to-market impact of non-designated commodity hedges.
(C) 
Amounts represent restructuring charges related to business transformation activities, excluding accelerated depreciation included in the depreciation and amortisation line.
(D) 
Amounts represent costs associated with the Merger to form CCEP.
(E) 
Amount represents a provision recorded for ongoing litigation.
Dividends
In March 2017, the Board increased our quarterly dividend by more than 20% to €0.21 per share. For the full year 2017, our dividend per share represented approximately 40% of our comparable diluted earnings per share. In February 2018, the Board declared a further increase in the quarterly dividend to €0.26 per share, equivalent to an annualised dividend of €1.04 per share. This is in line with our commitment to deliver long-term value to shareholders.
Looking forward
For 2018, we expect revenue growth in a low single-digit range, with both operating profit and earnings per share growth of between 6% and 7%. Each of these growth figures is on a comparable and fx-neutral basis when compared to 2017 comparable results. This revenue growth guidance excludes the accounting impact of incremental soft drinks industry taxes. These taxes are expected to add approximately 2% to 3% to revenue growth and approximately 4% to cost of goods growth. At recent rates, currency translation would have a negligible impact on 2018 full-year diluted earnings per share.
We expect 2018 free cash flow* in the range of €850 million to €900 million, including the expected benefit from improved working capital offset by the impact of restructuring and integration costs. Capital expenditures are expected to be approximately €525 million to €575 million, including approximately €75 million of capital expenditures related to synergies. Weighted-average cost of debt is expected to be approximately 2%. The comparable effective tax rate for 2018 is expected to be approximately 25%.
We remain on track to achieve pre-tax run-rate savings of €315 million to €340 million through synergies by mid-2019. Further, we expect to have realised approximately 75% of the target by year-end 2018. Restructuring cash costs to achieve these synergies are expected to be approximately 2 1/4 times expected savings and includes cash costs associated with pre-transaction close accruals. Given these factors, currency exchange rates, and our outlook for 2018, we expect year-end net debt to Adjusted EBITDA* for 2018 to be towards the low-end of our target range of 2.5 to 3 times. As a result, during 2018, we expect to continue to evaluate returning incremental cash to shareholders.
*Refer to note regarding the presentation of non-GAAP financial information.


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Supplementary financial information – income statement full year
The following provides a summary reconciliation of CCEP’s reported and comparable results for the full year ended 31 December 2017 and 31 December 2016:
Full-year 2017
Unaudited, in millions of € except per share data which is calculated prior to rounding
As Reported

 
Items Impacting Comparability
 
Comparable

 
 
Merger effects(A)
Mark-to-market effects(B)
Restructuring charges(C)
Merger and integration related costs(D)
Litigation provision(E)
Net tax items(F)
 
CCEP

Revenue
11,062

 
(7
)





 
11,055

Cost of sales
6,772

 
27

6

(66
)



 
6,739

Gross profit
4,290

 
(34
)
(6
)
66




 
4,316

Operating expenses
3,030

 
(14
)

(169
)
(4
)
(5
)

 
2,838

Operating profit
1,260

 
(20
)
(6
)
235

4

5


 
1,478

Total finance costs, net
100

 




(1
)

 
99

Non-operating items
1

 






 
1

Profit before taxes
1,159

 
(20
)
(6
)
235

4

6


 
1,378

Taxes
471

 
(4
)
(2
)
70

1

1

(194
)
 
343

Profit after taxes
688

 
(16
)
(4
)
165

3

5

194

 
1,035

 
 
 
 
 
 
 
 
 
 
 
Diluted earnings per share (€)
1.41

 
 
 
 
 
 
 
 
2.12

 
 
 
Diluted shares outstanding
 
 
489

Full-year 2016
Unaudited, in millions € except per share data which is calculated prior to rounding
As Reported

 
Items Impacting Comparability
 
Comparable

 
 
Merger effects(A)
Mark-to-market effects(B)
Restructuring charges(C)
Merger and integration related costs(D)
Net tax items(F)
 
CCEP

Revenue
9,133

 
1,732





 
10,865

Cost of sales
5,584

 
1,006

18

(13
)


 
6,595

Gross profit
3,549

 
726

(18
)
13



 
4,270

Operating expenses
2,698

 
911

17

(547
)
(168
)

 
2,911

Operating profit
851

 
(185
)
(35
)
560

168


 
1,359

Total finance costs, net
123

 
12



(5
)

 
130

Non-operating items
9

 
(1
)




 
8

Profit before taxes
719

 
(196
)
(35
)
560

173


 
1,221

Taxes
170

 
(29
)
(9
)
156

39

(23
)
 
304

Profit after taxes
549

 
(167
)
(26
)
404

134

23

 
917

 
 
 
 
 
 
 
 
 
 
Diluted earnings per share (€)
1.42

 
 
 
 
 
 
 
1.88

 
 
 
Reported diluted shares outstanding
 
 
385

Adjust: Capital structure share impact related to the Merger
 
 
103

Comparable diluted shares outstanding
 
 
488

(A) 
Adjustments to reflect Germany and Iberia financial results as if the Merger had occurred at the beginning of each period (if applicable), the impact of acquisition accounting including final fair values of the acquired inventory, property, plant, and equipment and intangibles from Germany and Iberia, final acquisition accounting related adjustments and associated impact on depreciation and amortisation expense, and additional debt financing cost incurred by CCEP in connection with the Merger.
(B) 
Amounts represent the net out-of-period mark-to-market impact of non-designated commodity hedges.
(C) 
Amounts represent restructuring charges related to business transformation activities.
(D) 
Amounts represent costs associated with the Merger to form CCEP.
(E) 
Amount represents a provision recorded for ongoing litigation.
(F) 
Amounts represent the deferred tax impact related to income tax rate and law changes. The amount in 2017 principally represents the net book tax impact of US tax reform.


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SUSTAINABILITY
Action on sustainability
In 2017, together with The Coca-Cola Company in Western Europe, we launched This is Forward - our joint sustainability action plan. This is Forward builds upon many years of work in sustainability and is a critical part of Coca-Cola European Partners’ (CCEP) long-term business strategy. It sets out how we will grow our business in a responsible and sustainable way and how we intend to play a meaningful role in addressing key societal issues.
This is Forward has been developed following extensive consultation with over 100 of our key stakeholders - including governments, Non-Governmental Organisations (NGOs), customers, suppliers, as well as 12,000 consumers across six countries and over 1,000 of our own employees.
Our plan outlines the actions that we are taking on major societal issues - including health and nutrition, packaging and economic development; as well as continuing to address climate change and water scarcity and drive sustainability within our supply chain.
Reporting and transparency
Being accountable and transparent is central to the way in which we operate. We report our progress against our sustainability action plan in our annual Stakeholder Progress Report, which will be published in May 2018, and will be available at https://www.ccep.com/pages/thisisforward. Our Stakeholder Progress Report is being produced in accordance with the GRI Standards: Core Option.
The following are some of the highlights of our progress in 2017:
Action on Drinks
Together with The Coca-Cola Company, we are evolving our business to be a total beverage company, in line with changing consumer tastes, lifestyles and shopping habits. In order to offer consumers an even greater choice of drinks with reduced sugar, we are working with The Coca-Cola Company, and other brand owners, to introduce recipes that reduce the sugar across many of our existing brands, and are introducing new low and no-sugar variants of both existing and new brands. For example, we are introducing drinks such as Honest Tea, and purified water, such as GLACÉAU Smartwater, across our territories.
 
We aim to reduce the sugar in our soft drinks by 10% between 2015 and 2020. In 2017, we reduced the sugar in our soft drinks by 4.2% from our 2015 baseline, and by 9.3% since 2010.
Action on Packaging
We are taking Action on Packaging and are determined to lead the way towards a circular economy where 100% of our packaging can be collected, reused or recycled, and where none of it ends up as litter or in the oceans. In particular, together with The Coca-Cola Company we aim to ensure that all of our packaging is recyclable or reusable. In addition, we want to make sure that at least 50% of the material we use for our PET bottles comes from recycled plastic (rPET) by 2025. In Great Britain, we aim to achieve this rPET target by 2020. We have also begun to engage with local and national partners to ensure that 100% of our packaging can be collected by 2025. In all of our markets in Western Europe, we are partners in local household collection or deposit return schemes and we aim to lead the way in driving a step-change in packaging collection, especially in markets where recycling rates have stalled. This includes work with organisations such as Valpak in Great Britain, Citeo in France and FostPlus in Belgium.
Action on Society

Community
In 2017, we continued to act as a force for good in our communities by supporting initiatives across our territories that help young people gain the employability, skills and confidence they need to succeed. These include programmes such as the GIRA programme in Spain, where for the past five years, we have supported the social skills and employability of young people and women; as well as the Passport to Employment programme in France, which provides interview training and mentoring support for young people from underprivileged backgrounds.
Diversity and equal opportunities employment
We aim to foster a diverse and inclusive culture in our business, and focus our efforts across all areas of diversity, including gender, generations, cultural diversity, disability and sexual orientation. One of our key This is Forward actions will be to aim for women to hold at least 40% of our management positions by 2025. In 2017, 32.6% of management positions were held by women.


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thisisforward.jpg
CCEP is an equal opportunities employer and decisions on recruitment, development, training and promotion and other employment related issues are made solely on the grounds of individual ability, achievement, expertise and conduct. We act in line with these principles on a non-discriminatory basis, without regard to race, colour, nationality, culture, ethnic origin, religion, belief, gender, sexual orientation, age, disability or any other reason not related to job performance or prohibited by applicable law. In cases where employees are injured or disabled during employment with the Group, support is provided to those employees and workplace adjustments are made as appropriate in respect of their duties and working environment, supporting recovery and continued employment.
Table 1 indicates our workforce diversity, as of 31 December 2017.
 
Table 1: Workforce diversity
 
Men
Women
Total Employees (including part-time employees and employees on leave of absence)
18,076
76.8%
5,475
23.2%
Leadership (including ELT - Senior Manager Grade)(A)(B)
1,336
67.4%
645
32.6%
Board of Directors
14
82.4%
3
17.6%
Directors of Subsidiary Companies(B)
53
79.1%
14
20.9%
(A) 
Does not include Iceland.
(B) 
12 female and 43 male directors of subsidiary companies are also included in the workforce diversity figures for leadership.


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Action on Water
We aim to handle water with the care it deserves across our business and value chain. In 2017, 100% of our manufacturing operations had Source Water Protection Plans in place, and we have made significant progress against our target to reduce our water use in manufacturing by 20% by 2025. In 2017, we reduced our water use by 11.78% versus a 2010 baseline, through the use of water-saving technologies and processes, resulting in a water use ratio of 1.61 litres/litre of product sold. Together with The Coca-Cola Company, we have also continued to replenish the water we use in areas of water stress, by partnering with organisations such as WWF.
Action on Supply Chain
We are working to source our main ingredients and raw materials sustainably and responsibly - so that 100% of our main agricultural ingredients and raw materials come from sustainable sources by 2020. We track our progress through our suppliers’ compliance with our Supplier Guiding Principles (SGPs) and our Sustainable Agriculture Guiding Principles (SAGPs). We are also working to embed sustainability, ethics and human rights within our supply chain. Respect for human rights is fundamental to the sustainability of CCEP and the communities in which we operate. CCEP’s Human Rights Policy is guided by international human rights principles encompassed in the Universal Declaration of Human Rights, the International Labour Organisation’s Declaration on Fundamental Principles and Rights at Work, the United Nations Global Compact and the United Nations Guiding Principles on Business and Human Rights.
In 2017, we published our first response to the UK Modern Slavery Act, and will publish further updates on our progress on embedding human rights and sustainability in our supply chain in our 2017 Stakeholder Progress Report.
Action on Climate
We aim to halve our direct carbon emissions by 2025 and purchase 100% renewable electricity by 2020. We also aim to reduce our GHG emissions across our value chain. Our new carbon reduction targets have been validated by the Science-Based Targets Initiative (SBTI) as being aligned with the expectations of climate science and the Paris Climate Agreement.
In 2017, we reduced the carbon footprint of our core business operations (which includes our manufacturing,
 
distribution and cold drink equipment) by 45.3% versus 2010, and 4.09% versus 2016. In 2017, 87.5% of the electricity that we purchased was from renewable sources, and we used 0.32 megajoules of energy per litre of product produced.
CCEP’s Corporate Social Responsibility Committee of the Board has responsibility for sustainability matters, including climate change. Risks related to climate change, water scarcity, marine litter and resource scarcity have been identified as one of CCEP’s risk factors (as disclosed in the Strategic Report on page 31) and the responsibility for overseeing CCEP’s response to these risks has been integrated into CCEP’s overall Enterprise Risk Management framework.
Greenhouse gas emissions - core business operations (scope 1, 2 and 3)
Details of the scope 1, scope 2, and scope 3 greenhouse gas (GHG) emissions in tonnes of CO2 equivalent from activities for which the Group is responsible during the calendar year ended 31 December 2017 are set out in table 2. These are calculated in accordance with the WRI/WBCSD Greenhouse Gas Protocol, using an operational consolidation approach to determine organisational boundaries.
We disclose the scope 1, 2, and 3 emissions which make up our core business operations. We consider our core business operations to include our manufacturing, cold drink equipment and transportation. More details about our GHG emissions, including the GHG emissions in our value chain (including our ingredients and packaging), will be contained in CCEP’s Stakeholder Report, to be published in May 2018. Additional scope 3 figures will also be included in our 2018 CDP response.
In 2017, we achieved a 7.5% reduction in our scope 1 and 2 carbon emissions versus those in 2016; and a 57.8% reduction versus our 2010 baseline, using a market based scope 2 approach.
Intensity ratios
GHG emissions (scope 1 & 2) per litre of product produced (market based scope 2 approach): 19.64 g/litre of product produced.
GHG emissions (scope 1 & 2) per euro of revenue (market based scope 2 approach): 22.46 g/euro of revenue.
Table 2: GHG emissions
 
Emission sources
2016

2017

Scope 1
(tonnes CO2e)
Direct emissions (e.g. fuel used in manufacturing, own vehicle fleet, as well as process and fugitive emissions)
240,233

229,657

Scope 2 (location based)
(tonnes CO2e)
Indirect emissions (e.g. electricity)
190,310

191,046

Scope 2 (market based)
(tonnes CO2e)
28,399

18,829

Scope 3
(tonnes CO2e)
Third party emissions included in our core business operations, including those related to our cold-drink equipment, third party transportation and distribution, and business travel
1,149,130

1,111,261



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Note on sources of data and calculation methodologies
Under the WRI/WBCSD Greenhouse Gas (GHG) Protocol, we measure our emissions in three ‘scopes’, except for CO2e emissions from biologically sequestered carbon, which is reported separately. Please note that prior year data for 2016 in table 2 above has been restated from last year due to more accurate data coming available.
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 part of our operational carbon footprint, including natural gas and purchased electricity data, refrigerant gas losses, CO2 fugitive gas losses and transport fuel, water supply, waste water and waste management. We use emission factors relevant to the source data including UK Department for Business, Environment and Industrial Strategy (BEIS) 2017 and IEA 2015 emission factors.
Scope 1 figures include: direct sources of emissions such as the fuel we use for manufacturing and our own vehicles plus our process and fugitive emissions.
Scope 2 figures include: indirect sources of emissions such as the purchased electricity we use at our sites. We report against this on both a location based and a market based approach.
Scope 3 figures include: indirect sources associated with the electricity used by our cold drinks and coffee equipment at our customers’ premises, our employee business travel by rail and air, emissions related to the supply of water and treatment of wastewater, emissions from the treatment of waste, fuel used by our third party distributors, and other energy related emissions not already accounted for under scope 1 and 2 (e.g. emissions from well-to-tank and transmission and distribution). Additional scope 3 figures from our ingredients and packaging will be reflected in our 2017 Stakeholder Progress Report, and will also be included in our 2018 CDP response.
Approximately 1.55% of our operational carbon footprint is based on estimated emissions (e.g. leased offices where energy invoices are not available). Our scope 1 and 2 emissions are independent of any greenhouse gas trades.
The figures for 2017 in table 2, along with selected information in CCEP’s forthcoming Stakeholder Report, 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 in CCEP’s 2017 Stakeholder Progress Report.
 
Recognition
Coca-Cola European Partners is rated against a number of major sustainability benchmarks, and we are committed to being a leader in sustainability in the beverage industry. In 2017, we were proud to have been listed on the Dow Jones Sustainability Index (DJSI) World and DJSI European Indices, and to have been named as a member of the CDP Climate and Water A-Lists. We are also members of other sustainability indices, including FTSE4Good and Corporate Knights 100 Most Sustainable Corporations.
Anti corruption and anti bribery
CCEP’s ethics and compliance programme is based upon our commitment to conduct our operations in a lawful and ethical manner, upon the integrity of each of our employees. Our ethics and compliance programme is overseen by CCEP’s Audit Committee, and is applicable to our employees, our officers and our directors. It also supports how we work with our customers, suppliers and third parties. In 2017, our Board approved a new CCEP Code of Conduct (CoC), which aligns to applicable key regulations and legislations. The CoC covers items including share dealing, anti corruption, data protection, environmental regulation and managing gifts and hospitality. Our CoC will apply to all employees, following consultation with works councils in each of the countries where we operate. Following the launch of the CoC in each country, employees will also receive training on the CoC, and may receive specific training on certain topics, for example, share dealing, anti corruption, data privacy, if applicable to their role. We also expect our customers and suppliers to respect the business principles in our CoC, and we reflect and communicate these principles to our suppliers through our Supplier Guiding Principles. In 2017, we received no fines for CoC violations.
At CCEP, retaliation for whistleblowing is prohibited. In each of our territories, we have established a way for employees to raise concerns about breaches to their local CoCs. This includes processes for employees to contact a line manager, and provides information through a dedicated complaints channel. Potential violations of our CoC are dealt with by local CoC Committees, chaired by the VP Legal for each Business Unit. CCEP’s Chief Compliance Officer has Company wide oversight of all potential CoC violations, provided through monthly local CoC Committee updates. An overview of all reported incidents is also provided to the Audit Committee. We also disclose reported violations of our CoC, by type, including on any issues of bribery and corruption, in our annual Stakeholder Progress Report.


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PRINCIPAL RISKS
Effective management of risk is essential to the execution of our strategy, achievement of shareholder value, protection of brand reputation and good governance.
Our approach to risk
The Directors recognise that our risk management programme is essential to understand the nature, scope, potential likelihood and impact of enterprise wide risks and to manage them effectively, responding appropriately to the changing risk profile of our operating environment. The Directors believe a strong risk culture with a well-defined risk management programme within Coca-Cola European Partners (CCEP) will ensure risk informed business decisions are taken and risks are actively managed throughout our business.
To ensure that the Directors have sufficient visibility of the principal risks that could have an impact on CCEP’s strategic priorities and how they are being monitored and managed, CCEP has an enterprise wide risk management programme. The approach has two complementary elements: a top down strategic view of risk at the enterprise level and a bottom up tactical view of risk at the operational level. Our risk governance framework includes a Compliance and Risk Committee comprised of members of our Executive Leadership Team (ELT) and other senior leaders where risks are reported and reviewed. Sub-committees at the local Business Unit (BU) level are in place to manage local operational risks. In 2018, other elements of our Enterprise Risk Management are being developed and the risk management programme is being integrated providing a holistic view on the total risk landscape at CCEP.
Our ELT completed a horizon scanning exercise to identify material loss and incident scenarios (Black Swans and Grey Rhinos). This will be an exercise completed regularly at this level. The results of this exercise are reflected in our Principal Risks.
Our Enterprise Risk Management function is led by the Chief Compliance Officer who reports to the General Counsel and Company Secretary. They provide support and expertise to all Business Units and functions across the organisation. The Chief Compliance Officer also manages incident management, business continuity, ethics and compliance and security so has a holistic view of risk management across our business.
 
Our strategic enterprise wide risk assessment has resulted in identification of CCEP’s enterprise risks and an understanding of how they are being managed. The most impactful of the identified risks form the Principal Risks detailed below. As part of the strategic enterprise Risk Assessment process a risk survey is issued to our top leaders to obtain their feedback, then Board and Audit Committee members and members of the ELT are interviewed. The results of the Strategic Risk Assessment and the Principal Risks were reviewed by the Audit Committee and the Board of Directors in December 2017.
This year, to complement the top down strategic risk view, bottom up risk assessments have been performed to understand operational risks within each of our Business Units and functions. Each Business Unit has a local Compliance and Risk Committee reporting to its leadership team to review risks and incidents and to ensure risk management is incorporated into day to day business operations.
The Board considers the level of risk it is prepared to accept in order to deliver CCEP’s strategic objectives. This will be documented in our internal risk appetite statement which will describe both our current and our desired levels of acceptable risk. The Company engaged external risk management expertise to support the design, implementation and execution of our risk management programme.
Principal Risks
The summary of our Principal Risks is based on the information obtained from the 2018 Strategic Enterprise Risk Assessment.
CCEP now has a prior year benchmark against which to compare, therefore commentary has been included on whether each risk exposure has increased, decreased or remained unchanged.
Set out on the following pages are the principal risks and uncertainties that could materially and adversely affect our business or could cause our actual results to differ materially from the results contemplated by the forward-looking statements contained in this report and other public statements we make. The Directors have carried out a robust assessment of the principal risks facing CCEP; however the list on the following pages is not intended to include all risks that could ultimately impact our business and is presented in no particular order.



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Principal Risk
Definition and impact
Key mitigation
Change in risk
Changing Consumer Preferences and the Health Impact of Soft Drinks
We distribute products containing sugar, alternative sweeteners and other ingredients which are increasingly viewed negatively by consumers, public health and government officials, and Non-Governmental Organisations (NGOs) as a result of factors such as healthy lifestyle campaigns, increased media scrutiny and greater awareness through social media. This exposes us to the risk that we will be unable to counteract this negative category perception effectively or evolve our product portfolio quickly enough to satisfy changes in consumer preferences. As a result, consumer preferences may continue to shift towards less valuable beverage segments and we could experience sustained decline in sales volume which could impact our financial results and business performance.
Reducing calorie content of our products, through:
Increasing
 
°
Product and pack innovation and reformulation
 
°
Managing our product mix in favour of no and low calorie products
 
 
EU wide soft drink industry calorie reduction commitment within trade association Union of European Soft Drinks Associations
Dialogue with government representatives, NGOs, local communities and customers
Employee communication and education
On-pack communication of product and nutritional information
Responsible sales and marketing
Legal and Regulatory Intervention
Our products contain certain ingredients (e.g. sugar and alternative sweeteners) and packaging components and are distributed through various channels that are subject to governmental oversight. This exposes us to the risk of regulatory changes that may adversely impact our business. As a result, we could face new or higher taxes, stricter sales and marketing controls, or other punitive actions from regulators or legislative bodies that negatively impact our licence to operate.
Continued packaging sustainability programme focusing on:
Stayed the same
 
°
Continued drive towards higher collection and recycling rates
 
°
Use of recycled and renewable materials
Continuous monitoring and implementation

Measures set out above in relation to changing consumer preferences and the health impact of soft drinks
Business Integration and Synergy Savings
We have a business integration agenda, synergy savings commitment, cultural integration and other initiatives to generate growth, which exposes us to the risk of ineffective implementation, a diversion of management's focus away from our core business, not delivering the full benefits of a single organisation and declining employee engagement. As a result, we may not realise value creation from these initiatives or execute our business plans effectively, and we may experience damage to our corporate reputation, a decline in our share price, industrial action and disruption to our operations.
Dedicated integration management office with leads in all BUs and Functions
Stayed the same
Continuation of governance routines
Regular integration review ensuring effective steering, high visibility and quick decision making
Effective project management methodology
Regular ELT and Board reviews and approvals

Cyber and Social Engineering Attacks
We rely upon a complex IT landscape, using both internally and externally provided systems which are potentially vulnerable to the increasing prevalence of security and cyber threats, as well as user behaviour. This threat profile is dynamically changing as potential attackers’ skill and tools advance. This exposes us to the risk of unauthorised data access, compromised data accuracy and confidentiality, and the loss of system operation. As a result, we could experience disruption to operations, regulatory intervention, or damage to our Company reputation.
Proactive monitoring of cyber threats, performing risk assessments and implementing preventive measures
Increasing
Business awareness and training on information security
Business continuity and disaster recovery programmes
A programme to find and resolve vulnerabilities is in place
Market
Our success in the market is impacted by a number of factors including the actions taken by our competitors and our ability to build strong customer relationships and to realise price increases. This exposes us to the risk that market forces may limit our ability to execute our business plans effectively. As a result, we may be unable to expand margins, increase market share, or negotiate with customers effectively.
Shopper insights and price elasticity assessments
Stayed the same
Pack and product innovation
Promotional strategy
Commercial policy
Collaborative category planning with customers
Growth centric customer investment policies
Aligned customer and CCEP business development plans
Diversification of portfolio and customer base
Realistic budgeting routines and targets
Investment in key account development and category planning


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Principal Risk
Definition and impact
Key mitigation
Change in risk
Economic and Political Conditions
We operate in the fast moving consumer goods industry that is sensitive to market conditions, such as commodity price volatility, inflation, and political instability, which exposes us to the risk of an adverse impact on CCEP and our consumers, driving a reduction of spend within our category. As a result, we could experience reduced demand for our products, fail to meet our growth priorities and our reputation could be adversely impacted.
Diversified product portfolio and the geographic diversity of our operations assist in mitigating the Group’s exposure to any localised economic risk
Stayed the same
Our flexible business model allows us to adapt our portfolio to suit our customers’ changing needs during economic downturns
We regularly update our forecast of business results and cash flows and, where necessary, rebalance capital investments
Relationship with TCCC and Other Franchisors
We conduct our business primarily under agreements with The Coca-Cola Company (TCCC) and other franchisors, which exposes us to the risk of misaligned incentives or strategy, particularly during periods of low category growth. As a result, TCCC or other franchisors could act adversely to our interests with respect to our business relationship.
TCCC and bottler agreements
Decreasing
Incidence pricing agreement
Aligned long range planning and annual business planning processes
Ongoing pan-European and local routines between CCEP and franchise partners
Positive relationships at all levels
Product Quality
We must adhere to strict food safety requirements to ensure our beverages are safe for consumption, while at the same time producing a wide range of products, which exposes us to the risk of failing to meet, or being perceived as failing to meet, the necessary standards resulting in compromised product quality. As a result, we could experience damage to our brand reputation and witness declining consumer sentiment towards our products.
TCCC standards and audits
Stayed the same
Hygiene regimes at plants
Total quality monitoring programme
Robust management systems
ISO certification
Internal governance audits
Quality monitoring plan
Customer and consumer monitoring and feedback
Incident management and crisis resolution
These are our Principal Risks. However we are aware of our other operational risks, such as health and safety of our employees, which are regularly monitored, mitigated and addressed as part of our daily routines. A detailed discussion of the principal and other risks follows on pages 29 to 38.
Internal control procedures and risk management
The Board has overall responsibility for the Company’s system of internal control and for reviewing its adequacy and effectiveness. Such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and aims to provide reasonable but not absolute assurance against material misstatement. In order to discharge that responsibility in a manner that ensures compliance with laws and regulations and promote effective and efficient operations, the Board has established an organisational structure with clear operating procedures, lines of responsibility and delegated authority.
The Audit Committee reviews the adequacy and effectiveness of the Company’s internal control policies and procedures for the identification, assessment and reporting of risks.
 

The Company’s internal control procedures include Board approval for significant projects, transactions and corporate actions. All major expenditures require either senior management or Board approval at the appropriate stages of each transaction. A system of regular reporting covering both technical progress of such matters and the state of the Company’s financial affairs provides appropriate information to management to facilitate control. The Board reviews, identifies, evaluates and manages the significant risks that face the Company.
The Company has developed a Group wide approach to risk management and internal control activities and the reporting of them. The principal risks and uncertainties that could impact the Group’s strategic priorities are set out above, together with a discussion on the following pages of risk factors that the Group takes into account and the Company’s Viability Statement.



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RISK FACTORS
Set out below is a more detailed discussion of the principal risks and other risks facing our business which could adversely impact us. Additional risks not currently known to us or that we currently deem to be immaterial may also adversely affect our business and financial condition.

Risks Relating to Changing Consumer Preferences and the Health Impact of Soft Drinks
Concerns about health and wellness, including obesity, could have an adverse effect on demand for some of the products of Coca-Cola European Partners (CCEP), and consequently on CCEP’s financial performance.
CCEP is dependent on consumer demand for its products and brands, and changes in consumer preferences toward products or brands not carried by CCEP can negatively affect CCEP’s sales. Consumers and public health and government officials are highly concerned about the public health consequences of obesity, particularly among young people. In this regard, the EU Commission and EU Member States are driving the food and drinks industry to reduce the amount of sugar in products. In February 2017, the Union of European Soft Drinks Associations announced a further commitment to reduce by another 10% sugar in soft drinks from 2015 to 2020. Some researchers, health advocates, and dietary guidelines are suggesting that consumption of sugar-sweetened beverages is a primary cause of increased obesity rates and are encouraging consumers to reduce or eliminate consumption of such products. Increasing public concern about obesity and additional governmental regulations concerning the marketing, labelling, packaging, or sale of sugar-sweetened beverages may reduce demand for, or increase the cost of, CCEP’s sugar-sweetened beverages.
Health and wellness trends have resulted in an increased desire for more low calorie soft drinks, water, enhanced water, isotonics, energy drinks, teas, and beverages with natural sweeteners. CCEP’s failure to provide a sufficient range of these types of products or otherwise satisfy changing consumer preferences relating to non-alcoholic beverages could adversely affect CCEP’s business and financial results.
 
Risks Relating to Legal and Regulatory Intervention
Legislative or regulatory changes (including changes to tax laws) that affect CCEP’s products, distribution, or packaging could reduce demand for its products or increase CCEP’s costs.
CCEP’s business model depends on the availability of its various products and packages in multiple channels and locations to satisfy the needs and preferences of its customers and consumers.
Laws that restrict CCEP’s ability to distribute products in certain channels and locations, as well as laws that require deposits for certain types of packages, or those that limit CCEP’s ability to design new packages or market certain packages, could negatively impact CCEP’s financial results. In addition, taxes or other charges imposed on the sale of certain of CCEP’s products could increase costs or cause consumers to purchase fewer of CCEP’s products. Many countries in Europe, including territories in which CCEP operates, are evaluating the implementation of, or increase in, such taxes. For example, Belgium, Portugal and Norway all increased the excise taxes on certain of CCEP’s products effective 1 January 2018. We will see a levy on sugared soft drinks in the UK from April 2018, and a new tax modulated by sugar levels on our products in France from July 2018. Scotland has also announced that it will introduce a deposit return system (DRS) for beverage packaging in the coming years and the Netherlands are considering the extension of their existing DRS to cover small sized drinks packaging. Consultations on DRS in the rest of GB and France are also underway or planned.
Additional taxes levied on CCEP could harm CCEP’s financial results.
CCEP’s tax filings for various periods will be subject to audit by tax authorities in most jurisdictions in which CCEP does business. These audits may result in assessments of additional taxes, as well as interest and/or penalties, and could affect CCEP’s financial results.


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Changes in tax laws, regulations, court rulings, related interpretations, and tax accounting standards in countries in which CCEP operates may adversely affect CCEP’s financial results.
Additionally, amounts CCEP may need to repatriate for the payment of dividends, share repurchases, 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, corporate criminal offence, General Data Protection Regulation (GDPR) and regulations and economic sanctions programmes.
The Company and its subsidiaries are required to comply with the laws and regulations of the various jurisdictions in which they conduct business, as well as certain laws of other jurisdictions, including the US. In particular, CCEP’s operations are subject to anti corruption laws and other key regulations, such as, among others, the US Foreign Corrupt Practices Act of 1977 (the FCPA), the United Kingdom Bribery Act of 2010 (the Bribery Act), the new Corporate Criminal Offence provisions, GDPR and economic sanctions programmes, including those administered by the United Nations, the EU and the Office of Foreign Assets Control of the US Department of the Treasury (OFAC), and regulations set forth under the US Comprehensive Iran Accountability Divestment Act.
Data Protection is in the spotlight because of the upcoming European GDPR. CCEP is currently preparing for the GDPR requirements that will come into force on 25 May 2018. We believe that the existing data privacy compliance programmes in the countries where we operate are updated where needed to comply with the GDPR as well with the local data privacy laws.
A GDPR data breach could lead to fines of up to 4% of CCEP’s global annual turnover and in addition have an impact on CCEP’s reputation.
The FCPA prohibits providing anything of value to foreign officials for the purposes of obtaining or retaining business or securing any improper business advantage. CCEP may deal with both governments and state owned business enterprises, the employees of which are considered foreign officials for purposes of the FCPA. The provisions of the Bribery Act extend beyond bribery of foreign public officials, cover both public and private sector bribery and are more onerous than the FCPA in a number of respects, including jurisdiction, non-exemption of facilitation payments and penalties. While CCEP does not currently operate in jurisdictions that are subject to territorial sanctions imposed by OFAC or other relevant sanctions authorities, such economic sanctions programmes will restrict CCEP’s ability to engage or confirm business dealings with certain sanctioned countries and with sanctioned parties.
 
Violations of the above and more generally all applicable anti corruption and sanctions laws and regulations are punishable by civil penalties, including fines, denial of export privileges, injunctions, asset seizures, debarment from government contracts (and termination of existing contracts) and revocations or restrictions of licences, as well as criminal fines and imprisonment.
In addition, any major violations could have an impact on CCEP’s reputation and consequently on its ability to win future business.
The Company and its subsidiaries have been working on harmonising, improving and updating their anti corruption compliance programme including policies, processes and procedures to ensure compliance, to continuously improve systems of internal controls and remedy any weaknesses identified. There can be no assurance, however, that the policies and procedures will be followed at all times, or effectively detect and prevent violations of the applicable laws by CCEP’s employees, consultants, agents or partners. As a result of any such violation, CCEP could be subject to penalties and material adverse consequences on its business, financial condition or results of operations.
Changes in law could affect CCEP’s status as a foreign corporation for US federal income tax purposes or limit the US tax benefits from CCEP engaging in certain transactions.
A corporation generally is considered a tax resident in the jurisdiction of its organisation or incorporation for US federal income tax purposes. Because CCEP is incorporated under the laws of England and Wales, it would generally be classified as a non-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 (the IRC), provides an exception under which a non-US incorporated entity may, in certain circumstances, be treated 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 promulgated thereunder could adversely affect CCEP’s status as a foreign corporation for US federal tax purposes, and any such changes 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 currently contemplated as a non-US corporation.


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Future changes to US, UK and other tax laws to which CCEP is subject could adversely affect CCEP.
The US Congress, HMRC, the Organisation for Economic Co-operation and Development and other government agencies in jurisdictions where CCEP and its affiliates will conduct business have had an extended focus on issues related to the taxation of multinational corporations. One example is in the area of “base erosion and profit shifting”, including situations where payments are made between affiliates from a jurisdiction with high tax rates to a jurisdiction with lower tax rates. As a result, the tax laws in the US, the UK and other countries in which CCEP and its affiliates do business could change on a prospective or retroactive basis. Any such changes could adversely affect CCEP and its affiliates and there is no assurance that CCEP will be able to maintain any particular worldwide effective corporate tax rate.
CCEP 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 were applicable, CCEP could be treated as having received a distribution as a result 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 United Kingdom-United States Tax Treaty. CCEP does not believe that such regulations apply under the particular facts and circumstances of the Merger. There can be no assurance, however, that the US Internal Revenue Service will not take a contrary view.
US federal income tax reform could adversely affect us.
On 22 December 2017, the US enacted the Tax Cuts and Jobs Act (the US Tax Act) which implements a broad range of changes to the IRC. The US Tax Act, among other things, includes changes to US federal tax rates, imposes significant additional limitations on the deductibility of interest and net operating losses, allows for the expensing of certain capital expenditures, and puts into effect a number of changes impacting operations outside the US including, but not limited to, the imposition of a one-time tax on accumulated post-1986 deferred foreign income that has not previously been subject to tax, and modifications to the treatment of certain intercompany transactions.
While CCEP is a UK listed and tax resident entity, we have a number of subsidiaries outside the UK, including a US incorporated holding company that is wholly owned by the Company. CCEP has analysed and accounted for the effects of this new legislation in its 2017 consolidated financial statements. However, the amounts recorded are based on the most recently available information and the impact of the tax legislation may ultimately differ from these amounts, possibly materially, due to, among other things, changes in interpretations and assumptions made, additional guidance that may be issued and future actions taken by CCEP as a result of the tax legislation.
 
Refer to Note 19 of the consolidated financial statements for further details about the accounting impacts of the US Tax Act.
CCEP may be affected by legal and regulatory responses to global issues such as resource scarcity, marine litter, water scarcity, and climate change.
Political and scientific consensus indicates that increased concentrations of carbon dioxide and other greenhouse gases (GHG), which can be attributed in part to the emissions generated from businesses such as CCEP’s, are leading to gradual rises in global average temperatures. This is influencing global weather patterns and extreme weather conditions around the world. Climate change may also exacerbate water scarcity and cause a further deterioration of water quality in affected regions. Decreased agricultural productivity in certain regions of the world as a result of changing weather patterns may limit the availability, or increase the cost, of key raw materials that CCEP uses to produce its products. Additionally, increased frequency of extreme weather events linked to climate change such as storms or floods in CCEP’s territories could have adverse impacts on CCEP’s facilities and distribution network, leading to an increased risk of business disruption.
Concern over climate change, including global warming, has led to legislative and regulatory initiatives directed at limiting GHG emissions. The territories in which CCEP operates have in place a variety of voluntary commitments to reduce GHG emissions in which CCEP participates. Proposals that would impose mandatory requirements on GHG emissions and reduction and reporting continue to be considered by policy makers. Furthermore, climate laws that, directly or indirectly, affect CCEP’s production, distribution, packaging, cost of raw materials, fuel, ingredients, and water could impact CCEP’s business and financial results.
Population growth and increased consumption of goods and services places heightened pressure on the world’s finite natural resources - such as oil, coal and gas - and has also led to a significant increase in waste and pollution, including from plastic and packaging. Although the vast majority of our bottles and cans are fully recyclable, they are not always collected for recycling across our territories, and can end up as litter or marine litter. Concern over the issues of resource scarcity, litter, and marine litter has led to the development of legislative and regulatory initiatives which aim to increase recycling and reuse and reduce packaging waste in our territories. Failure to engage sufficiently with stakeholders to address concerns about packaging and recycling could result in higher costs through packaging taxes, damage to corporate reputation or investor confidence and a reduction of consumer acceptance of our products and/or packaging.


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Water, which is the primary ingredient in all of CCEP’s products, is vital to its manufacturing processes and is needed to produce the agricultural ingredients that are essential to its business. While water is generally regarded as abundant in Europe, it is a limited resource in many parts of the world, affected by overexploitation, growing population, increasing demand for food products, increasing pollution, poor management, and the effects of climate change. Water scarcity and a deterioration in the quality of available water sources in CCEP’s territories, or its supply chain, even if temporary, may result in increased production costs or capacity constraints, which could adversely affect its ability to produce and sell its beverages and increase its costs.
In November 2017, in partnership with The Coca-Cola Company, CCEP released a new sustainability action plan, This is Forward, including targets to reduce GHG emissions and water impacts across our operations and our value chain. Our GHG emissions targets have been confirmed as being aligned with the expectations of climate science. These targets will be delivered through a variety of initiatives that are already in progress, including initiatives to drive energy and water efficiency, use renewable electricity and low-carbon technologies at our manufacturing sites, and reduce the energy use of our cold drink equipment. CCEP also set new targets on packaging to ensure that at least 50% of the material we use for our PET bottles comes from recycled plastic, to ensure that all of our packaging is recyclable or reusable, and to collect 100% of our packaging by 2025.
Commitments to reduce GHG emissions related to its business operations and potential forthcoming regulatory requirements and stakeholder expectations will necessitate CCEP’s investment in technologies that improve the energy efficiency of its operations and reduce the GHG emissions related to its packaging, cold drinks equipment and transportation. In general, the cost of these types of investments is greater than investments in less energy efficient technologies, and the period of return is often longer. Although CCEP believes these investments will provide long-term benefits, there is a risk that CCEP may not achieve its desired returns.
Risks Relating to Business Integration and Synergy Savings
CCEP may not realise the cost savings, synergies and other benefits expected from the integration. In addition, the integration could cause business disruption.
Since its creation in May 2016, CCEP has been devoting significant management attention and resources to integrating its business practices and operations. The remaining stages of the integration programme to 2019 may disrupt the business of CCEP and, even if implemented successfully, could preclude realisation of the full benefits expected. The failure of CCEP to meet the challenges involved in successfully integrating its operations could cause an interruption of some of the activities of CCEP and could have a material adverse effect on its operations. In addition, the ongoing
 
integration programme may result in material unanticipated problems, expenses, liabilities, competitive responses, loss of customer relationships, and diversion of management’s attention, and may cause CCEP’s stock price to decline. The risks associated with the integration programme include, among others:
Managing a significantly larger company
Coordinating geographically separate organisations
The potential diversion of management focus and resources from other strategic opportunities and from operational matters
Maintaining employee morale
The possibility of assumptions underlying expectations regarding the integration process proving to be incorrect
Issues in achieving anticipated operating efficiencies, business opportunities and growth prospects
Changes in applicable laws and regulations
Changes in tax laws (including under applicable tax treaties) and regulations or to the interpretation of such tax laws or regulations by the governmental authorities
Managing costs or inefficiencies associated with integrating the operations of CCEP
Unforeseen expenses or delays associated with the integration
Industrial action in territories where change is being implemented, our Marseille site, in France, has had strikes and as a result significant work stoppage
CCEP may have difficulty attracting, motivating and retaining executives and other key employees.
CCEP’s success depends in part upon its ability to retain people who were key employees of Coca-Cola Enterprises, Inc. (CCE), Coca-Cola Iberian Partners, S.A. (CCIP) and Coca-Cola Erfrischungsgetränke GmbH (CCEG). If there is an unexpected departure of key employees, CCEP’s business may be harmed and the integration may be more difficult. Furthermore, CCEP may have to incur significant costs in identifying, hiring and retaining replacements for departing employees and may lose significant expertise and talent relating to the business, and CCEP’s ability to realise the anticipated benefits of the Merger may be adversely affected. In addition, there could be disruptions to, or distractions for, the workforce and management associated with activities of labour unions or works councils or integrating employees into CCEP. Accordingly, no assurance can be given that CCEP will be able to attract or retain its employees to the same extent that CCE, CCIP and CCEG were able to attract or retain their own employees in the past, or that CCEP will have the benefit of the ongoing employment of current employees following the integration.


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There are significant costs involved to realise the synergies.
CCEP continues to incur fees and costs related to formulating and implementing integration plans, including facilities and systems’ consolidation costs and employment related costs. CCEP tracks and reports in detail these costs highlighting variances to original plans. The variances to the planned incurrence of these costs may impact CCEP’s business, financial condition and results of operations.
Miscalculation of CCEP’s need for infrastructure investment could impact its financial results.
Projected requirements of CCEP’s infrastructure investments, including cold drink equipment, fleet, technology, and production equipment, may differ from actual levels if CCEP’s volume growth or product demands are not as anticipated. CCEP’s infrastructure investments are anticipated to be long-term in nature, and it is possible that investments may not generate the expected return due to future changes in the marketplace. Significant changes from CCEP’s expected need for and/or returns on these infrastructure investments could adversely affect CCEP’s financial results.
Technology failures could disrupt CCEP’s operations and negatively impact CCEP’s business.
CCEP relies extensively on information technology systems to process, transmit, store and protect electronic information. For example, CCEP’s production and distribution facilities and inventory management all utilise information technology to maximise efficiencies and minimise costs.
Furthermore, a significant portion of the communications between CCEP’s personnel, customers, and suppliers depends on information technology. CCEP’s information technology systems may be vulnerable to a variety of interruptions due to events that may be beyond CCEP’s control including, but not limited to, natural disasters, telecommunications failures, additional security issues, and other technology failures. The technology and information security processes and disaster recovery plans that CCEP have in place may not be adequate or implemented properly to ensure that CCEP’s operations are not disrupted. In addition, a miscalculation of the level of investment needed to ensure CCEP’s technology solutions are current and up to date as technology advances and evolves could result in disruptions in CCEP’s business should the software, hardware, or maintenance of such items become out-of-date or obsolete. Furthermore, when CCEP implements new systems and/or upgrades existing system modules (e.g. SAP), there is a risk that CCEP’s business may be temporarily disrupted during the period of implementation.
 
Risks Relating to Cyber and Social Engineering Attacks
The occurrence of cyber incidents, or a deficiency in CCEP’s cyber-security, could negatively impact its business by causing a disruption to its operations, a compromise or corruption of its confidential information, and/or damage to its brand image, all of which could negatively impact its financial results.
A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity, or availability of our data or information systems. More specifically, a cyber incident is an intentional attack or an unintentional event that can include gaining unauthorised access to systems to disrupt operations, corrupt data, or steal confidential information through terrorist attacks, computer viruses and hackers. As reliance on technology increases, so will the risks posed to CCEP’s systems, both internal and those it may outsource to a third party provider. CCEP’s three primary risks that could result from the occurrence of a cyber incident include operational interruption, damage to brand image, and private data exposure.
Risks Relating to the Market
CCEP may not be able to respond successfully to changes in the marketplace.
CCEP operates in the highly competitive beverage industry and faces strong competition from other general and speciality beverage companies. CCEP’s response to continued and increased competitor and customer consolidations and marketplace competition may result in lower than expected net pricing of its products.
Changes in CCEP’s relationships with large customers may adversely impact CCEP’s financial results.
A significant amount of CCEP’s volume is sold through large retail chains, including supermarkets and wholesalers, many of which are becoming more consolidated and may, at times, seek to use their purchasing power to improve their profitability through lower prices, increased emphasis on generic and other private label brands, and/or increased promotional programmes. Additionally, competition from hard-discount retailers and online retailers continue to challenge traditional retail outlets, which can increase the pressure on all customer margins, which may then be reflected in pressure on suppliers such as CCEP. In addition, at times, a customer may choose to temporarily stop selling certain CCEP products as a result of a dispute CCEP may be having with that customer. These factors, as well as others, could have a negative impact on the availability of CCEP’s products, as well as its profitability.


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Risks Relating to Economic and Political Conditions
The deterioration of global and local economic conditions could adversely affect CCEP’s business and/or the market price of the Company’s Shares.
The performance of CCEP is closely linked to the economic cycle in the countries, regions and cities where we operate. Normally, robust economic growth in the areas in which CCEP operates results in greater demand for products, while slow economic growth or economic contraction adversely affects demand for certain products and otherwise adversely affect CCEP’s sales. For example, economic forces may cause consumers to purchase more private label brands, which are generally sold at a price point lower than CCEP’s products, or to defer or forego purchases of beverage products altogether. Additionally, consumers that do purchase CCEP’s products may choose to shift away from purchasing higher margin products and packages. Adverse economic conditions could also increase the likelihood of customer delinquencies and bankruptcies, which would increase the risk of uncollectability of certain accounts. Each of these factors could adversely affect CCEP’s revenue, price realisation, gross margins, and/or CCEP’s overall financial condition and operating results and/or the market price of the Company’s Shares.
Economic growth, globally and in the EU, has recovered since the 2008 financial crisis but concerns remain about future interest rate increases, and there is continuing uncertainty about the ultimate resolution of the Eurozone crisis. Sovereign debt concerns, whether real or perceived, could result in limitation of the availability of capital in impacted territories, which may restrict CCEP’s liquidity and negatively impact its financial results. Continuing disruptions in the global economy and in the global markets may, therefore, have a material adverse effect on CCEP’s business, results of operations and financial condition and/or the market price of the Company’s Shares.
Moreover, even in the absence of a market downturn, CCEP will be exposed to substantial risk stemming from volatility in areas such as consumer spending and capital markets conditions, which affect the business and economic environment and, consequently, may affect the size and profitability of CCEP’s business and/or the market price of the Company’s Shares.
In addition to the international economic situation, political uncertainty could also affect CCEP. Growth of anti EU political parties, as well as emerging political forces in member states of the EU with alternative economic policies and priorities, and concerns about independence movements within the EU, could affect the economic situation in the Eurozone and could have a material adverse effect on CCEP’s business, results of operations, financial condition and cash flows.
 
Increases in costs, limitation of supplies, or lower than expected quality, of raw materials could harm CCEP’s financial results.
If there are increases in the costs of raw materials, ingredients, or packaging materials, such as aluminium, steel, sugar, PET (plastic), fuel, or other cost items, and CCEP is unable to pass the increased costs on to its customers in the form of higher prices, CCEP’s financial results could be adversely affected. CCEP uses supplier pricing agreements and derivative financial instruments to manage volatility and market risk with respect to certain commodities. Generally, these hedging instruments establish the purchase price for these commodities in advance of the time of delivery. These pricing positions are taken in line with the Board’s agreed risk policy and the impact of these positions are known and forecasted in CCEP’s financial results. This may lock CCEP into prices that are ultimately greater or lower than the actual market price at the time of delivery.
Due to the increased volatility in commodity prices and tightness of the capital and credit markets, certain of CCEP’s suppliers have restricted CCEP’s ability to hedge prices through supplier agreements. As a result, CCEP has expanded, and expects it will continue to expand, its non-designated hedging programmes.
If suppliers of raw materials, ingredients, packaging materials, or other cost items are affected by strikes, adverse weather conditions, speculation, abnormally high demand, governmental controls, new taxes, national emergencies, natural disasters, insolvency, or other events, and CCEP is unable to obtain the materials from an alternate source, CCEP’s cost of sales, revenues, and ability to manufacture and distribute product could be adversely affected.
Additionally, lower than expected quality of delivered raw materials, ingredients, packaging materials, or finished goods could lead to a disruption in CCEP’s operations as CCEP seeks to substitute these items for ones that conform to its established standards or if CCEP is required to replace under-performing suppliers.
Changes in interest rates or CCEP’s debt rating could harm CCEP’s financial results and financial position.
CCEP is subject to interest rate risk, and changes in CCEP’s debt rating could have a material adverse effect on interest costs and debt financing sources. CCEP’s debt rating can be materially influenced by factors, including its financial performance, acquisitions, and investment decisions, as well as capital management activities of The Coca-Cola Company (TCCC) and/or changes in the debt rating of TCCC.


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Changes in the stability of the euro could significantly impact CCEP’s financial results and ultimately hinder its competitiveness in the marketplace.
There are concerns regarding the short and long-term stability of the euro and its ability to serve as a single currency for a number of individual countries. These concerns could lead individual countries to revert, or threaten to revert, to local currencies, or, in more extreme circumstances, to exit from the EU, and the Eurozone may be dissolved entirely. Should this occur, the assets CCEP holds in a country that reintroduces local currency could be subject to significant changes in value when expressed in euro. Furthermore, the full or partial dissolution of the euro, the exit of one or more EU member states from the EU or the full dissolution of the EU could cause significant volatility and disruption to the global economy, which could impact CCEP’s financial results, including its ability to access capital at acceptable financing costs, the availability of supplies and materials, and the demand for CCEP’s products. Finally, if it becomes necessary for CCEP to conduct its business in additional currencies, it would be subjected to additional earnings volatility as amounts in these currencies are translated into euros.
The UK’s exit from the EU could impact CCEP’s profits.
CCEP faces potential risks associated with the UK’s vote to leave the European Union and its negotiations of the terms of its leaving. This action could materially and adversely affect the operational, regulatory, currency, insurance and tax regime to which CCEP is currently subject. It could also result in prolonged uncertainty regarding aspects of the UK economy and damage customers’ and investors’ confidence. The effect of these risks, were they to materialise, could be to increase operating costs for CCEP, restrict the movement of capital and the mobility of personnel, and may also materially affect CCEP’s tax position or business, results of operation and financial position.
Political instability in Catalonia and Spain could impact CCEP’s operations and profits.
CCEP is exposed to risks associated with political instability in Catalonia and potential impact on the Spanish economy.
In October 2017, the local Catalan government declared unilaterally the independence to initiate the separation from Spain. As a consequence, the central Spanish government has ceased the power of the Catalan government and called for elections in Catalonia in December 2017. The elections were held and as a consequence the parties in favour of the independence will form the government in Catalonia again.
The situation could continue to result in prolonged political, social, economic and operational uncertainty for CCEP, its customers and consumers. Areas with potential impact are tourism, private consumption and regulation.
 
Although unlikely, activities like strikes and continuous demonstrations could trigger the interruption or delay of CCEP´s production and distribution of products.
Default by or failure of one or more of CCEP’s counterparty financial institutions could cause CCEP to incur losses.
CCEP is exposed to the risk of default by, or failure of, counterparty financial institutions with which it will do business. This risk may be heightened during economic downturns and periods of uncertainty in the financial markets. If one of CCEP’s counterparties were to become insolvent or file for bankruptcy, its ability to recover amounts owed from or held in accounts with such counterparty may be limited. In the event of default by or failure of one or more of its counterparties, CCEP could incur losses, which could negatively impact its results of operations and financial condition.
Risks Relating to the Relationship with TCCC and Other Franchisors
CCEP’s business success, including its financial results, depends upon CCEP’s relationship with TCCC and other franchisors.
More than 90% of our revenue for the year ended 31 December 2017 was derived from the distribution of beverages under agreements with TCCC. We sell, make and distribute products of TCCC through fixed term bottling agreements with TCCC, which typically include the following terms:
CCEP purchases its 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 at prices, terms of payment, and other terms and conditions of supply determined from time to time by TCCC at its sole discretion.
There are no limits on the prices that TCCC may charge for concentrate, except 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 that CCEP receives from TCCC is at TCCC’s discretion. Programmes may contain requirements, or be subject to conditions, established by TCCC that CCEP may not be able to achieve or satisfy. The terms of most of the marketing programmes do not and will not contain an express obligation for TCCC to participate in future programmes or continue past levels of payments into the future.


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CCEP’s 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. A decision by TCCC not to renew a fixed term bottling agreement at the end of its term could substantially and adversely affect CCEP’s financial results.
CCEP is obligated to maintain sound financial capacity to perform its duties, as required and determined by TCCC at its sole discretion. These duties include, but are not limited to, making certain investments in marketing activities to stimulate the demand for products in CCEP’s territories and making infrastructure improvements to ensure CCEP’s facilities and distribution network are capable of handling the demand for these beverages.
Disagreements with TCCC concerning business issues may lead TCCC to act adversely to CCEP’s interests with respect to the relationships described above.
Risks Relating to Product Quality
If CCEP, TCCC or other licensors and bottlers of products CCEP distributes are unable to maintain a positive brand image or if product liability claims or product recalls are brought against CCEP, TCCC, or other licensors and bottlers of products CCEP distributes, CCEP’s business, financial results, and brand image may be negatively affected.
CCEP’s success will depend on its, TCCC’s and other licensors’ products having a positive brand image with customers and consumers. Product quality issues, real or perceived, or allegations of product contamination, even if false or unfounded, could tarnish the image of the affected brands and cause customers and consumers to choose other products. CCEP could be liable if the consumption of its products causes injury or illness. CCEP could also be required to recall products if they become or are perceived to become contaminated or are damaged or mislabelled. A significant product liability or other product related legal judgement against CCEP or a widespread recall of its products could negatively impact CCEP’s business, financial results, and brand image.
Additionally, adverse publicity surrounding health and wellness concerns, water usage, customer disputes, labour relations, product ingredients, packaging recovery and the environmental impact of products could negatively affect CCEP’s overall reputation and its products’ acceptance by its customers and consumers, even when the publicity results from actions occurring outside CCEP’s territory or control. Similarly, if product quality related issues arise from products not manufactured by CCEP but imported into a CCEP territory, CCEP’s reputation and consumer goodwill could be damaged.
 
Furthermore, through the increased use of social media, individuals and Non-Governmental Organisations will have the ability to disseminate their opinions regarding the safety or healthiness of CCEP’s products or CCEP’s financial or tax position to an increasingly wide audience at a faster pace. CCEP’s failure to effectively respond to any negative opinions in a timely manner could harm the perception of its brands and damage its reputation, regardless of the validity of the statements.
Other Risks
CCEP’s business is vulnerable to products being imported from outside its territories, which adversely affect CCEP’s sales.
The territories in which CCEP operates are susceptible to the import of products manufactured by bottlers from countries outside CCEP’s territories where prices and costs are lower. In the case of such imports from members of the European Economic Area (EEA), CCEP will generally be prohibited from taking actions to stop such imports.
Adverse weather conditions could limit the demand for CCEP’s products.
CCEP’s sales are significantly influenced by weather conditions in the markets in which CCEP operates. In particular, due to the seasonality of CCEP’s business, cold or wet weather during the summer months may have a negative impact on the demand for CCEP’s products and contribute to lower sales, which could have an adverse effect on CCEP’s financial results.
Global or regional catastrophic events could impact CCEP’s business and financial results.
CCEP’s business may be affected by major natural disasters, large scale terrorist acts, especially those occurring in CCEP’s territories or other major industrialised countries, loss of key employees, the outbreak or escalation of armed hostilities or widespread outbreaks of infectious disease. Such events in the geographic regions in which CCEP does business could have a material impact on CCEP’s sales volume, cost of sales, earnings, and overall financial condition.
Legal judgements obtained, or claims made, against CCEP’s vendors or suppliers could impact their ability to provide CCEP with agreed upon products and services, which could negatively impact CCEP’s business and financial results.
Many of CCEP’s outside vendors will supply services, information, processes, software, or other deliverables that rely on certain intellectual property rights or other proprietary information. To the extent these vendors face legal claims brought by other third parties challenging those rights or information, CCEP’s vendors could be required to pay significant settlements or even discontinue use of the deliverables furnished to CCEP. These outcomes could require CCEP to change vendors or develop replacement solutions, which could result in significant inefficiencies within CCEP’s business, or higher costs, and ultimately could negatively impact CCEP’s financial results.


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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. It evaluates these litigation claims and legal proceedings to assess the likelihood of unfavourable outcomes and to estimate, if possible, the amount of potential losses. Based on these assessments and estimates, CCEP establishes reserves and/or discloses the relevant litigation claims or legal proceedings, as appropriate. These assessments and estimates are based on the information available to management at the time and involve a significant amount of management judgement. As a result, actual outcomes or losses may differ materially from those envisioned by management’s current assessments and estimates. In addition, CCEP has bottling and other business operations in markets with strong legal compliance environments. CCEP’s policies and procedures require strict compliance with all laws and regulations applicable to its business operations, including those prohibiting improper payments to government officials. Those policies are supported by leadership and tone from the top, a compliance culture and training. Nonetheless, CCEP cannot guarantee that its policies, procedures and related training programmes will always ensure full compliance by its personnel with all applicable legal requirements. Improper conduct by CCEP’s personnel could damage its reputation or lead to litigation or legal proceedings that could result in civil or criminal penalties, including substantial monetary fines as well as disgorgement of profits.
Increases in the cost of employee benefits, including pension retirement benefits, could impact CCEP’s financial results and cash flow.
Unfavourable changes in the cost of CCEP’s employee benefits, including pension retirement benefits and employee healthcare, could materially impact CCEP’s financial condition or results of operations. CCEP sponsors a number of defined benefit pension plans. Estimates of the amount and timing of CCEP’s future funding obligations for defined benefit pension plans are based upon various assumptions, including discount rates, mortality assumptions and long-term asset returns. In addition, the amount and timing of pension funding can be influenced by funding requirements, negotiations with pension trustee boards or action of other governing bodies.
 
If CCEP is unable to renew existing labour bargaining agreements on satisfactory terms, if CCEP experiences employee strikes or work stoppages, or if changes are made to employment laws or regulations, CCEP’s business and financial results could be negatively impacted.
The majority of CCEP’s employees are covered by collectively bargained labour agreements in the countries in which it currently operates. Most of these agreements do not expire. However, wage rates must be renegotiated at various dates through 2018. CCEP currently believes that it will be able to renegotiate subsequent agreements on satisfactory terms.
If CCEP is unable to maintain labour bargaining agreements on satisfactory terms, or if it experiences major employee strikes or work stoppages, or if changes are made to employment laws or regulations, its financial results could be negatively impacted. The terms and conditions of existing or renegotiated agreements could also increase the cost to CCEP of fully implementing any operations changes, or otherwise affect its ability to do so.
In the last three years, CCEP’s operations in Spain have experienced labour unrest and work stoppages that have had a negative impact on its operations. After a long legal process, the matter is now closed from a legal perspective. There are still some small labour unrests but they are generally limited only to the Fuenlabrada site.
The maintenance of multiple exchange listings may adversely affect liquidity in the market for the Company’s Shares.
The multiple listings of the Shares on the New York Stock Exchange, Euronext Amsterdam and Euronext London and on the Spanish Stock Exchanges may split trading between exchanges, which may adversely affect the liquidity of the shares in one or more markets.


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TCCC and Olive Partners, S.A. (Olive Partners) hold a significant interest in CCEP and their interests may differ from or conflict with those of CCEP’s public shareholders.
Approximately 18% and 34% of the Company’s Shares are owned by European Refreshments (a wholly-owned subsidiary of TCCC) and Olive Partners respectively, and each of TCCC and Olive Partners possesses sufficient voting power to have a significant influence over all matters requiring shareholder approval. As a result, the Company’s public shareholders have more limited influence over matters presented to the Company’s shareholders for approval, including, subject to the Articles of Association of the Company and the Shareholders’ Agreement, election and removal of directors, and change in control transactions. The interests of TCCC and/or Olive Partners may not always align with the interests of other CCEP shareholders. If the shares owned by European Refreshments and Olive Partners were voted in the same manner on any shareholder proposal, they would control the outcome on any proposal that requires a simple majority vote of the Company’s shareholders and, whether or not they vote in the same manner on a shareholder proposal, other shareholders will have more limited influence over proposals that require a shareholder vote and proposals that require approval of Board members appointed under the terms of the Shareholders’ Agreement. A majority of the members of the Board are independent and the Board understands its duties to all shareholders.


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VIABILITY STATEMENT
In accordance with provision C2.2 of the UK Corporate Governance Code (the Code), the Directors assessed the viability of the Group over a period of three years, which corresponds to the Group’s long-range planning cycle.
The assessment conducted 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 committed 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 performance, solvency, and liquidity.
Stress testing was performed 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:
Changing consumer preferences and the health impact of soft drinks
Regulatory intervention such as sugar taxes
The risk of a significant product quality issue or recall
The Group’s ability to successfully integrate and deliver synergy savings
 
Based on the Group’s current financial position, stable cash generation, and access to liquidity, the Directors concluded that the Group is well positioned effectively to manage its principal risk and potential downside impact of such risk 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 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.
Based upon the assessment performed, the Directors confirm that they have a reasonable expectation the Group will be able to continue in operation and meet all its liabilities as they fall due over the three year period covered by this assessment.












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CHAIRMAN’S INTRODUCTION
I am pleased to present our Governance and Directors’ Report for 2017.
I strongly believe that a robust governance framework is essential to managing a business successfully and your Board is committed to complying with the high standards of corporate governance set out in the UK Corporate Governance Code (the Code). This report explains how Coca-Cola European Partners (CCEP) applies the principles of the Code.
Your Board
As Chairman of the Board, it is my responsibility to lead and create conditions for the Board and its Committees to be effective. I consider self-assessment to be essential to this process, both in building an effective Board that works well together, and to draw the best from each Director.
Our first effectiveness review took place in March 2017 and, led by Tom Johnson, our Senior Independent Director, the Directors readily participated in an open and constructive dialogue focusing on how the Directors work together, identifying ways to improve the Board’s performance and key goals for the future.
The Directors were very much aligned in their assessment last year. They agreed that very good progress had been made in bringing together the directors from three organisations with the two additional Independent Non-executive Directors (INEDs) into a well-functioning single Board. You can read more about the results of the Board assessment in the Corporate Governance Report on pages 60 to 61.
We have asked an independent, external facilitator to assist us with the 2018 effectiveness review and intend to do so again at least every three years in future.
With the help of the Company Secretary, we kept a keen focus on what is important, making effective use of Board Committees and pre-read materials in order to maximise the Directors’ discussion time in Board meetings. In addition, I ensure each Director is able to voice their views. Harnessing the cognitive diversity of the Directors results in better decisions.
While still a relatively new Board, it is clear that there is genuine respect between the Directors, helping the Board to find an effective way of working together faster than expected, enabling the Board rapidly to become efficient and effective.
Governance in practice
During the year, the Board worked hard in finalising a clear strategy aligned to CCEP’s business model, underpinned by strong business plans and a rapid transformation programme. The Board also maintained focus on good governance and the management or mitigation of risks to ensure delivery of value to our shareholders.
 
The Directors held an off-site strategy session in July 2017 when they assessed the longer term enterprise level strategy as well as scrutinising and debating more detailed proposals for the near term. Damian Gammell, our Chief Executive Officer, discusses the key growth imperatives which resulted from these discussions on pages 8 to 9 and there is further detail about our Group strategy in the Strategy section on page 10.
The Board believes long-term sustainability is essential to our business and agreed a long-term sustainability action plan, This is Forward, outlined on pages 22 to 25. We also approved CCEP’s Remuneration Policy, a summary of which is set out on page 76, set ourselves targets to drive talent and diversity and rolled out CCEP’s new purpose and culture initiative, which I discuss further below.
As well as focusing on strategy, the Board also ensured that the structures and frameworks introduced last year were strengthened and tested and developed practices to comply with new legislative and regulatory requirements. These included our statement of compliance with the UK’s Modern Slavery Act 2015, adoption of CCEP’s Code of Conduct, the Group’s tax strategy and our statement on gender pay, all of which may be viewed on our website www.ccep.com.
Within the organisation, we have tested and improved our enterprise risk management programme, agreed Group policies, reviewed and monitored practices relating to the health and safety of our people, identified our stakeholders and, in particular, considered the right way to ensure the voice of our people is heard by the Board.
We continue to strengthen our corporate governance but are pleased that our efforts in putting a robust governance framework in place were recognised by the Institute of Chartered Secretaries & Administrators at the end of 2017.
Succession
During the year, there was a possibility that we might need to find a replacement for one of our INEDs and we engaged JCA, external recruitment consultants, to identify a pool of potential candidates. With the assistance of the Company Secretary and the Nomination Committee, we will use an agreed skills matrix for the Board evaluation in 2018 to underpin our succession planning. The skills matrix will be reviewed annually.
We are also building a strong internal and external pipeline to ensure effective succession management for our most critical leadership positions, by mapping candidates against our success profile and undertaking detailed reviews of the suitability, readiness and development required for internal candidates for both the CEO and Executive Leadership Team (ELT) roles. We have selected Korn Ferry to support us with this initiative.


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Culture
We aim to grow our business by understanding our customers better and by enabling our people to execute new ideas to increase performance and engagement. We plan to do this by creating an inclusive culture to attract, motivate and retain a highly diverse workforce reflective of the communities we operate in, while enabling our people to reach their full potential to achieve the best results. With this aim in mind, we rolled out the Accelerate Performance programme to the top 500 leaders of the Group. The programme emphasises the importance of aligning culture to the Company’s purpose and embedding a passion for delivering growth. Participants are briefed on the Company’s strategy and the behaviours required to develop the desired culture. We are also galvanising our leaders to action, supported by awareness and capability training, as well as strong internal engagement.
Diversity
Our customers, employees and other stakeholders represent a cross section of the communities in which we operate and are infinitely varied. As a result, the Board was deliberately formed of individuals with diversity of thought and perspectives, as well as a broad range of capabilities and experience identified as prerequisites for their roles. Please see page 44 for details.
The Board has spent time considering with management how best to drive an inclusive culture and the appropriate targets to encourage diversity. Our ultimate goal for gender diversity is gender parity. As an interim target to achieving this goal, we intend to have women make up 33% of the Board by 2020. We also intend that by 2025 women should represent 40% of our senior managers, compared to 32.6% at the end of 2017. To achieve these ambitious targets, we are promoting a diverse and inclusive culture throughout the organisation.
Stakeholders
CCEP’s wider societal responsibilities mean it is attentive to a broad set of stakeholders. The Board regularly considers views of key stakeholders and encourages the development of strong relationships with them. We consider this to be important to maintaining our licence to operate.
The Board ensures that, both directly and through its Committees, it is aware of the position of relevant stakeholders.



“I strongly believe that a robust governance framework is essential to managing a business successfully”

 
Please refer to www.ccep.com to understand the ways in which we communicate with our stakeholders and for details of initiatives being undertaken to meet our corporate responsibilities.
Outlook
Looking ahead to 2018, your Board will monitor changes in corporate governance requirements and consider how to improve our governance for the benefit of CCEP and its stakeholders.
Sol Daurella
Chairman
15 March 2018

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Board of Directors
DIVERSE, EXPERIENCED AND KNOWLEDGEABLE

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DIRECTORS’ BIOGRAPHIES
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Sol Daurella
Chairman
N Member AT Member
Damian Gammell
Chief Executive Officer
Date appointed to the Board:
May 2016
Date appointed to the Board:
December 2016
Independent:
No
Independent:
No
Key strengths/experience: 
Experienced director of public companies operating in an international environment
A deep understanding of FMCG and our markets
Extensive experience at Coca-Cola bottling companies
Strong international strategic and commercial skills
Key strengths/experience: 
Strategy development and execution experience
Vision, customer focus and transformational leadership
Developing people and teams
25 years of leadership experience and in-depth understanding of the NARTD industry and within the Coca-Cola system
Key external commitments:
Co-Chairman and member of the Executive Committee of Cobega, S.A., Executive Chairman of Olive Partners, S.A., Co-Chairman of Grupo Cacaolat, S.L., director of Equatorial Bottling Company, S.L., director and a member of the Appointments and Remuneration Committees of Banco Santander
Key external commitments:
None

Previous roles:
Various roles at the Daurella family’s Coca-Cola bottling business, director of Banco de Sabadell, Ebro Foods and Acciona
Previous roles:
A number of senior executive roles in the Coca-Cola system, also Managing Director and Group President of Efes Soft Drinks, and President and CEO of Anadolu Efes S.K.














Full biographies are available on ccep.com            
Key
Affiliated Transaction Committee
AT
Audit Committee
A
Corporate Social Responsibility Committee
C
Nomination Committee
N
Remuneration Committee
R
Committee Chairman
 


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Jan Bennink
Non-executive Director
AT Chairman N Member
José Ignacio Comenge Sánchez-Real
Non-executive Director
AT Member
Date appointed to the Board:
May 2016
Date appointed to the Board:
May 2016
Independent:
Yes
Independent:
No
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 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 strategy drawn from leadership roles in varied sectors
Key external commitments:
None
Key external commitments:
Director of Olive Partners, S.A., ENCE Energía y Celulosa, S.A., Companía Vinícola del Norte de Espana, S.A., Ebro Foods S.A., Barbosa & Almeida SGPS, S.A., Azora, S.A., Mendibea 2002, S.L. and Rexam Beverage Can Iberica, S.L.
Previous roles:
CEO of Royal Numico N.V., Executive Chairman of Sara Lee Corporation, Chairman and CEO of DE Masterblenders 1753 N.V., director of Boots Company plc, Dalli-Werke GmbH & Co KG and Kraft Foods Inc. and a member of the Advisory Board of ABN Amro Bank
Previous roles:
Senior roles in the Coca-Cola system, AXA, S.A., Aguila and Heineken Spain, Vice-Chairman and CEO of MMA Insurance
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Francisco Crespo Benítez
Non-executive Director
C Member
Christine Cross
Non-executive Director
A Member R Chairman
Date appointed to the Board:
March 2018
Date appointed to the Board:
May 2016

Independent:
No
Independent:
Yes

Key strengths/experience:
Extensive experience of working in the Coca-Cola system
Deep understanding of integrated global marketing and corporate strategy
Proven track record of leading customer and commercial teams
Possesses a strong network at The Coca-Cola Company (TCCC)
Key strengths/experience:
In-depth experience working in the food and beverage industry
Consults on international business strategy, marketing and business development
Global perspective on CCEP’s activities
Experience of chairing remuneration committees
Key external commitments:
Senior Vice President and Chief Growth Officer of TCCC
Key external commitments:
Director of Christine Cross Ltd, Sonae - SGPS, S.A., Hilton Food Group plc, Pollen Estate and Fenwick Limited

Previous roles:
Involvement with Coca-Cola system throughout his career, including as President of TCCC’s Mexico and South Latin business units, President of the Coca-Cola Foundation in Chile, Director and Vice President respectively of the American Chambers in Chile and Argentina, and also served on the boards of Zurich and Zurich Compañía de Seguros, S.A. in Mexico.
Previous roles:
Director of Brambles Limited, Kathmandu Holdings Limited,
Tesco PLC, Next plc, Woolworths (Au) plc, Sobeys (Ca) plc, Plantasgen, Fairmont Hotels Group plc, Premier Foods plc, Taylor Wimpey plc


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Javier Ferrán
Non-executive Director
A Member AT Member
Irial Finan
Non-executive Director
N Member R Member
Date appointed to the Board:
May 2016
Date appointed to the Board:
April 2016
Independent:
Yes
Independent:
No
Key strengths/experience:
Extensive experience in consumer brands and sales and marketing within the beverage industry
Broad strategic understanding of the sector
Deep experience of international commercial matters
Financial and operational background
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 TCCC
Key external commitments:
Partner at Lion Capital LLP, Chairman of Diageo plc and director of Associated British Foods plc
Key external commitments:
Director Coca-Cola Bottlers Japan Inc. and the Smurfit Kappa Group plc
Previous roles:
President and CEO of Bacardi Limited and director of SABMiller plc, William Grant & Sons Ltd and Desigual, S.L.U.
Previous roles:
Director and senior roles in the Coca-Cola system throughout his career including as CEO of Coca-Cola HBC AG, President of Bottling Investments Group, Executive Vice President of TCCC and director of Coca-Cola FEMSA and G2G Trading
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Álvaro Gómez-Trénor Aguilar
Non-executive Director
L. Phillip Humann
Non-executive Director
N Chairman
Date appointed to the Board:
March 2018
Date appointed to the Board:
May 2016
Independent:
No
Independent:
Yes
Key strengths/experience:
Broad knowledge of working in the food and beverage industry
Extensive understanding of the Coca-Cola system, particularly in Iberia
Expertise in finance and investment banking
Strategic and investment advisor to businesses in varied sectors
Key strengths/experience: 
Extensive experience as a director of major companies both within and outside the Coca-Cola system
Expertise in banking and finance
Leadership and consensus-building skills
Understanding of the consumer goods and services industries
Key external commitments:
Director of Olive Partners, S.A., Global Omnium (Aguas de Valencia, S.A.) and Sinensis Seed Capital SCR de RC, S.A.
Key external commitments:
Equifax Inc., and Haverty Furniture Companies, Inc.
Previous roles:
Various board appointments in the Coca-Cola system, including as President of Begano, S.A., director and chairman of the audit committee of Coca-Cola Iberian Partners, S.A., as well as key executive roles in Grupo Pas and Garcon Vallvé & Contreras
Previous roles:
Director of Coca-Cola Enterprises, Inc. and Chairman of the Board of SunTrust Banks, Inc.


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Orrin H. Ingram II
Non-executive Director
A Member N Member
Thomas H. Johnson
Non-executive Director and Senior Independent Director
C Member  R Member
Date appointed to the Board:
May 2016
Date appointed to the Board:
May 2016
Independent:
Yes
Independent:
Yes
Key strengths/experience:
Executive experience in the wholesale, distribution, consumer goods and transportation services industries
A broad perspective on CCEP’s operations
Former director of a global distributor
Strong strategic understanding
Key strengths/experience:
Chair and CEO of international public companies
Manufacturing and distribution expertise
Extensive international management experience in Europe
Investment experience
Key external commitments:
President and Chief Executive Officer of Ingram Industries Inc. and Ingram Marine Group
Key external commitments:
Chief Executive Officer of the Taffrail Group, LLP and director of Universal Corporation
Previous roles:
Various positions with Ingram Materials Company, Ingram Barge Company and Co-President of Ingram Industries, a director of Ingram Micro Inc. and Coca-Cola Enterprises, Inc. and FirstBank
Previous roles:
Chairman and CEO of Chesapeake Corporation, director of
Coca-Cola Enterprises, Inc., GenOn Corporation, Mirant Corporation, ModusLink Global Solutions, Inc., Superior Essex Inc. and Tumi, Inc.
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Alfonso Líbano Daurella
Non-executive Director
C Chairman
Véronique Morali
Non-executive Director
A Member C Member
Date appointed to the Board:
May 2016
Date appointed to the Board:
May 2016
Independent:
No
Independent:
Yes
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 committee chair
Key strengths/experience:
Commercial, governmental and political insights, including in France where CCEP has significant operations
Extensive international financial services experience
Proven commitment to the diversity agenda
Key external commitments:
Co-Vice Chairman and member of the Executive Committee of Cobega, S.A., director of Olive Partners, S.A. and Cobega Invest, S.L., Chairman of Equatorial Coca-Cola Bottling Company, S.L., Daba, S.A., Grupo Cacaolat, S.L., Vice-Chairman of MECC Soft Drinks DMCC and President of GEEF European Family Business
Key external commitments:
Chairman of Fimalac Développement, Chief Officer of WEBEDIA, director and Vice-Chairman of the Fitch Group, Inc., director of Publicis Groupe and the Rothschild Group
Previous roles:
Various roles at the Daurella family’s Coca-Cola bottling business, Director and Chairman of the Quality & CRS Committee of Coca-Cola Iberian Partners, S.A., a member of the Board of the American Chamber of Commerce in Spain
Previous roles:
Director of Coca-Cola Enterprises, Inc., CEO of Alcatel-Lucent, director of SNCF and Tesco PLC, Inspector General of the Ministry of Finance of the French Civil Service


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Mario Rotllant Solá
Non-executive Director
R Member
Garry Watts
Non-executive Director
A  Chairman R Member
Date appointed to the Board:
May 2016
Date appointed to the Board:
April 2016
Independent:
No
Independent:
Yes
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 committee
Key strengths/experience:
Extensive business experience in Western Europe and the UK
Served as executive and non-executive director in a broad variety of sectors
Financial expertise, experience and skills
Previously chaired the audit committee of a sizeable company
Key external commitments:
Vice-Chairman of Olive Partners, S.A., Co-Chairman and member of the Executive Committee of Cobega, S.A., Chairman of the North Africa Bottling Company, Chairman of the Advisory Board of Banco Santander, S.A. in Catalonia and a director of Equatorial Coca-Cola Bottling Company, S.L. and Copesco Sefrisa
Key external commitments:
Chairman of Spire Healthcare Group plc, BTG plc and Foxtons Group plc
Previous roles:
Second Vice-Chairman and member of the Executive Committee and Chairman of the Appointment & Remuneration Committee of
Coca-Cola Iberian Partners, S.A.
Previous roles:
Audit partner at KPMG LLP, CFO of Medeva plc, CEO of SSL International, director of Coca-Cola Enterprises, Inc., Deputy Chairman and Audit Committee Chairman of Stagecoach Group plc
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Other Board members during the year were:
Francisco Ruiz de la Torre Esporrín, resigned on 7 March 2018
J. Alexander (Sandy) M. Douglas Jr, resigned on 7 March 2018

Curtis R. Welling
Non-executive Director
AT Member  C Member
 
Date appointed to the Board:
May 2016
&#