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 Coca-Cola European Partners plc | 2020 Integrated Report and Form 20-F 1 Strategic Report ONE OF THE WORLD’S LARGEST 2 Performance indicators 4 Our portolio 6 Our operations 8 What we do and how we do it BEVERAGE COMPANIES. 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 POWERED BY A TEAM OF TALENTED 20 Our strategy 22 Sustainability 38 Our people 42 Operating with integrity AND ENGAGED PEOPLE. 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 LEADING POSITION WITHIN A Governance and Directors’ Report 64 Chairman’s introduction 65 Board of Directors 66 Directors’ biographies LARGE AND VALUABLE CATEGORY. 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 SOLID TRACK RECORD 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 OF PERFORMANCE. the Remuneration Committee Chairman 95 Overview of remuneration policy 96 Remuneration at a glance 97 Annual report on remuneration 108 Directors’ report RAPID RESPONSE 111 Directors’ responsibilities statement Financial Statements TO COVID-19 PANDEMIC. 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 CONFIDENT IN OUR FUTURE, statements SHAREHOLDER Other Information LED BY GREEN AND DIGITAL. 188 Risk factors RETURNS 198 Other Group information 216 Form 20-F table of cross references 218 Exhibits 220 Glossary 223 Useful addresses STRONGLY ALIGNED WITH 224 Forward-looking statements THE COCA-COLA COMPANY. 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, Coca-Cola European Partners plc Registered in England & Wales, Company number 09717350 are incorporated by reference in the Form 20-F. We launched our new climate 2 Coca-Cola European Partners plc | 2020 Integrated Report and Form 20-F 3 Strategic Report Governance and Directors’ Report Financial Statements Other Information strategy with a clear ambition to reach net zero greenhouse Performance gas emissions by 2040 t igh ghl indicators Key hi Financial Sustainability Revenue (€BN) Operating profit on a comparable basis* (€BN) Diluted earnings per share (EPS) Lost time incident rate % GHG emissions reduction across % sugar reduction in on a comparable basis* (€) (number per 100 full time equivalent employees) our value chain since 2010 and 2019 our soft drinks since 2015 12.0 1.7 2.53 1.14 VERSUS 2010 11.1 10.6 1.2 1.80 1.07 37.7 12.9 0.82 15.3 €10.6BN €1.2BN €1.80 VERSUS 2019(A) 11.9 Comparable volumes declined Comparable operating profit Comparable diluted EPS declined 0.82 15.3% by 10% reflecting the adverse declined by 29% reflecting the by 29% driven by the decline in Our people’s mental and physical Consumer habits are continually impact of COVID-19, particularly decline in revenue. This impact comparable operating profit. wellbeing remains our priority 11.9% changing. Working with The on immediate consumption and was moderated by a reduction This was partially offset by the during the ongoing COVID-19 Coca-Cola Company (TCCC) and the away from home channel. in variable expenses given lower return of approximately €130 million pandemic. By providing our We are committed to reducing other franchisors, we continue to This was partially offset by growth volumes, as well as the delivery to shareholders before the suspension people with a safe and healthy greenhouse gas (GHG) emissions, evolve our business and portfolio in the home channel supported of approximately €260 million in of our €1 billion share buyback work environment, we aim to to limit the global temperature to meet consumers’ demands by online grocery sales and discretionary operating expenditure programme in March 2020. work towards zero incidents. increase to 1.5°C above pre- for a greater variety of drinks, continued revenue growth (opex) savings as we ensured spend industrial levels and to protect the including low and no calorie options. In 2020, we continued to upgrade management initiatives. was limited to what was essential. future of our planet. In 2020, we and improve workplace equipment launched our new climate strategy By the end of 2020, the average sugar Revenue per unit case declined We leveraged the crisis as a catalyst and infrastructure and we saw our with a clear ambition to reach net per litre in our soft drinks portfolio by 1.5% driven by adverse channel, to accelerate our competitiveness lost time incident rate fall to 0.82, zero GHG emissions by 2040 and to had fallen by 15.3% compared with geographic and pack mix as a initiatives as we look for ways to a reduction of 23% compared reduce our GHG emissions across 2015. This represents a reduction result of COVID-19. become even more efficient and with the previous year. our value chain by 30% by 2030 of 19.8% since 2010. We’re achieving further reduce complexity. (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). Free cash flow* (€BN) Return on capital invested Water use ratio % PET from recycled PET (ROIC)* (%) (litres of water/litre of product produced) 1.1 10.3 1.61 27.6 0.9 7.6 Data legend 1.60 30.5 Data legend 1.57 41.3 €0.9BN 7.6% 2018 2019 Free cash flow generation continues ROIC declined by 270 basis 2019 2020 1.57 41.3% 2020 to be a core priority of our business. points driven by the decline in Climate change is altering weather Creating a circular economy for the Despite the impact of COVID-19 comparable operating profit. patterns around the world, causing packaging we use is important in and following continued investments This metric remains a high priority water shortages and droughts in helping to address the world’s plastic in our portfolio, digital capabilities * Please refer to Business for us and we will continue to focus some areas and floods in others. waste crisis. We are committed to and sustainability initiatives, and financial review on on driving profitable revenue As water is the main ingredient in ensuring that at least 50% of the we still delivered free cash flow page 54 for definition and FOR MORE ABOUT OUR SUSTAINABILITY growth and capital efficiencies. the majority of our drinks it’s critical material we use for our PET bottles of over €900 million, close to reconciliation of non-GAAP COMMITMENTS AND PROGRESS, that we use water sustainably and comes from recycled PET (rPET) by SEE PAGES 22–37 our medium-term objective of figures to GAAP figures. protect local water resources 2023, and we’ll aim to reach 100% generating at least €1 billion a year. for future generations. recycled or renewable plastic by the This highlights the strength of end of the decade. We continue to The amount of water we use to make make progress in increasing recycled our free cash flow generation, our products has reduced by 13.7% (A) 2019 data restated. plastic in our packaging. For more information see page 26. supported by our disciplined capital compared with 2010, to 1.57 litres of expenditure (capex) and working water per litre of product produced. In 2020, 41.3% of the PET we used capital improvement initiatives. to make our PET bottles was rPET, up from 30.5% in 2019. 4 Coca-Cola European Partners plc | 2020 Integrated Report and Form 20-F 5 Strategic Report Governance and Directors’ Report Financial Statements Other Information Our portfolio HYDRATION We work closely with our franchise partners to offer The hydration category is typically heavily consumers a wide range of popular drinks, with or reliant on immediate consumption – with consumers buying and consuming our without sugar and in a range of pack sizes and materials. hydration brands on the go. As a result of We continue to expand our portfolio into areas we COVID-19 restrictions and less immediate believe will drive significant growth in the coming years. consumption, 2020 saw a 34% volume decline. 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 RTD TEAS, RTD COFFEES, to Nielseniq.