2020 Integrated Report and Form 20-F Great People Great Service Great Beverages 2020 Integrated Report and Form 20-F One of the World’S Largest Beverage Companies
Total Page:16
File Type:pdf, Size:1020Kb
COCA‑COLA EUROPEAN PARTNERS PLC EUROPEAN PARTNERS COCA‑COLA 2020 INTEGRATED REPORT AND FORM 20-F 2020 INTEGRATED GREAT PEOPLE GREAT SERVICE GREAT BEVERAGES 2020 INTEGRATED REPORT AND FORM 20-F ONE OF THE WORLD’S LARGEST BEVERAGE COMPANIES. POWERED BY A TEAM OF TALENTED AND ENGAGED PEOPLE. LEADING POSITION WITHIN A LARGE AND VALUABLE CATEGORY. SOLID TRACK RECORD OF PERFORMANCE. RAPID RESPONSE TO COVID‑19 PANDEMIC. CONFIDENT IN OUR FUTURE, LED BY GREEN AND DIGITAL. STRONGLY ALIGNED WITH THE COCA‑COLA COMPANY. Coca-Cola European Partners plc Registered in England & Wales, Company number 09717350 Coca-Cola European Partners plc | 2020 Integrated Report and Form 20-F 1 Strategic Report 2 Performance indicators 4 Our portolio 6 Our operations 8 What we do and how we do it 10 Our stakeholders World’s best Positioned for Unrivalled 13 Section 172(1) statement from the Directors brands continued growth customer 14 Conversation with our Chairman coverage and CEO 18 Succeeding in a changing landscape 20 Our strategy 22 Sustainability 38 Our people 42 Operating with integrity 44 Principal risks 52 Viability statement Investing in key Ambitious Solid balance 53 Non-financial information statement capabilities sustainability plans sheet 54 Business and financial review Governance and Directors’ Report 64 Chairman’s introduction 65 Board of Directors 66 Directors’ biographies 71 Senior management 72 Corporate governance report 82 Nomination Committee Strong, strategic Success driven Supporting Chairman’s letter alignment with by the resilience our 83 Nomination Committee report The Coca-Cola of our people communities 86 Audit Committee Chairman’s letter 87 Audit Committee report Company 92 Directors’ remuneration report 92 Statement from the Remuneration Committee Chairman 95 Overview of remuneration policy 96 Remuneration at a glance 97 Annual report on remuneration 108 Directors’ report 111 Directors’ responsibilities statement Financial Statements 114 Independent Auditor’s reports 128 Consolidated financial statements DRIVING 133 Notes to the consolidated financial statements 175 Company financial statements SUSTAINABLE 179 Notes to the Company financial statements SHAREHOLDER Other Information 188 Risk factors RETURNS 198 Other Group information 216 Form 20-F table of cross references 218 Exhibits 220 Glossary 223 Useful addresses 224 Forward-looking statements LEARN ABOUT WHAT WE DO, HOW WE DO IT READ ABOUT OUR SUSTAINABILITY ACTION None of the websites referred to in this AND OUR STAKEHOLDERS ON PAGES 8–13 PLAN, THIS IS FORWARD, ON PAGES 22–41 Annual Report on Form 20-F for the year ended 31 December 2020 (the Form 20-F), including where a link is provided, nor any of SEE OUR REPORT ONLINE AT IR.COCACOLAEP.COM/FINANCIAL‑REPORTS‑AND‑RESULTS/INTEGRATED‑REPORTS the information contained on such websites, are incorporated by reference in the Form 20-F. 2 Strategic Report Governance and Directors’ Report Financial Statements Other Information Performance indicators Financial Revenue (€BN) Operating profit on a comparable basis* (€BN) Diluted earnings per share (EPS) on a comparable basis* (€) 12.0 1.7 2.53 10.6 1.2 1.80 €10.6BN €1.2BN €1.80 Comparable volumes declined Comparable operating profit Comparable diluted EPS declined by 10% reflecting the adverse declined by 29% reflecting the by 29% driven by the decline in impact of COVID-19, particularly decline in revenue. This impact comparable operating profit. on immediate consumption and was moderated by a reduction This was partially offset by the the away from home channel. in variable expenses given lower return of approximately €130 million This was partially offset by growth volumes, as well as the delivery to shareholders before the suspension in the home channel supported of approximately €260 million in of our €1 billion share buyback by online grocery sales and discretionary operating expenditure programme in March 2020. continued revenue growth (opex) savings as we ensured spend management initiatives. was limited to what was essential. Revenue per unit case declined We leveraged the crisis as a catalyst by 1.5% driven by adverse channel, to accelerate our competitiveness geographic and pack mix as a initiatives as we look for ways to result of COVID-19. become even more efficient and further reduce complexity. Free cash flow* (€BN) Return on capital invested (ROIC)* (%) 1.1 10.3 0.9 7.6 Data legend €0.9BN 7.6% Free cash flow generation continues ROIC declined by 270 basis 2019 2020 to be a core priority of our business. points driven by the decline in Despite the impact of COVID-19 comparable operating profit. and following continued investments This metric remains a high priority in our portfolio, digital capabilities * Please refer to Business for us and we will continue to focus and sustainability initiatives, and financial review on on driving profitable revenue we still delivered free cash flow page 54 for definition and growth and capital efficiencies. of over €900 million, close to reconciliation of non-GAAP our medium-term objective of figures to GAAP figures. generating at least €1 billion a year. This highlights the strength of our free cash flow generation, supported by our disciplined capital expenditure (capex) and working capital improvement initiatives. We launched our new climate Coca-Cola European Partners plc | 2020 Integrated Report and Form 20-F strategy with a clear ambition 3 to reach net zero greenhouse gas emissions by 2040 t igh ghl Key hi Sustainability Lost time incident rate % GHG emissions reduction across % sugar reduction in (number per 100 full time equivalent employees) our value chain since 2010 and 2019 our soft drinks since 2015 1.14 VERSUS 2010 11.1 1.07 37.7 12.9 0.82 15.3 VERSUS 2019(A) 0.82 11.9 15.3% Our people’s mental and physical Consumer habits are continually wellbeing remains our priority 11.9% changing. Working with The during the ongoing COVID-19 Coca-Cola Company (TCCC) and pandemic. By providing our We are committed to reducing other franchisors, we continue to people with a safe and healthy greenhouse gas (GHG) emissions, evolve our business and portfolio work environment, we aim to to limit the global temperature to meet consumers’ demands work towards zero incidents. increase to 1.5°C above pre- for a greater variety of drinks, industrial levels and to protect the including low and no calorie options. In 2020, we continued to upgrade future of our planet. In 2020, we and improve workplace equipment launched our new climate strategy By the end of 2020, the average sugar and infrastructure and we saw our with a clear ambition to reach net per litre in our soft drinks portfolio lost time incident rate fall to 0.82, zero GHG emissions by 2040 and to had fallen by 15.3% compared with a reduction of 23% compared reduce our GHG emissions across 2015. This represents a reduction with the previous year. our value chain by 30% by 2030 of 19.8% since 2010. We’re achieving (versus 2019). these reductions by reformulating our recipes, and by providing In 2020, the GHG emissions within greater choice. our value chain had fallen by 11.9% compared to 2019 and had fallen by 37.7% compared to 2010 (previous target baseline year). Water use ratio % PET from recycled PET (litres of water/litre of product produced) 1.61 27.6 1.60 30.5 Data legend 1.57 41.3 1.57 41.3% 2018 2019 2020 Climate change is altering weather Creating a circular economy for the patterns around the world, causing packaging we use is important in water shortages and droughts in helping to address the world’s plastic some areas and floods in others. waste crisis. We are committed to As water is the main ingredient in ensuring that at least 50% of the the majority of our drinks it’s critical material we use for our PET bottles FOR MORE ABOUT OUR SUSTAINABILITY COMMITMENTS AND PROGRESS, that we use water sustainably and comes from recycled PET (rPET) by SEE PAGES 22–37 protect local water resources 2023, and we’ll aim to reach 100% for future generations. recycled or renewable plastic by the end of the decade. We continue to The amount of water we use to make make progress in increasing recycled our products has reduced by 13.7% (A) 2019 data restated. plastic in our packaging. For more information see page 26. compared with 2010, to 1.57 litres of water per litre of product produced. In 2020, 41.3% of the PET we used to make our PET bottles was rPET, up from 30.5% in 2019. 4 Strategic Report Governance and Directors’ Report Financial Statements Other Information Our portfolio We work closely with our franchise partners to offer consumers a wide range of popular drinks, with or without sugar and in a range of pack sizes and materials. We continue to expand our portfolio into areas we believe will drive significant growth in the coming years. COCA ‑COLA® Our Coca-Cola brands come in a range of variants that offer consumers a great choice of flavours, with or without sugar. This includes Coca-Cola Classic and Coca-Cola Zero Sugar, and Diet Coke/Coca-Cola Light for a lighter and refreshing taste across a number of flavour variants. Coca-Cola Zero Sugar was the number one soft drinks brand for absolute value growth across our markets, according to Nielseniq. FLAVOURS, MIXERS AND ENERGY Flavours, mixers and energy are an important part of our portfolio of drinks. Fanta continued to be a focus in 2020 supported by a significant Halloween marketing campaign and new flavours like raspberry zero sugar. Monster performed strongly in 2020 – with volume growth of 15.5%, supported by new flavours such as Pacific Punch and a broader multi-pack offering in markets such as GB.