Governance

How did we do?

The record year 2022 meant over 471 million litres of beverages had been produced. Of this 441 million litres were produced at the production facility in Praha-Kyje and 30 million litres in Teplice nad Metují. Some of the production is exported and some of the beverages sold are imported from other CCHBC countries. We sold a record 480 million litres of beverages in the Czech Republic and Slovakia this year. We sold 21.5 million cups of coffee and 611,000 litres of premium alcoholic beverages.

Corporate governance and ownership structure

Our Company is a subsidiary of Coca-Cola HBC AG, a joint stock company based in Zug, Switzerland. The shares are traded on the London and Athens stock exchanges. In 2021 the Company paid dividends of EUR 0.78 per share to shareholders. In total the Company has paid out EUR 4.5 billion to shareholders since 2001. The value of share prices in 2022 was noticeably affected by the start of the war in Ukraine. However, the Company’s performance still managed to balance the fluctuations during the year and, from a fall in share value to GBP 14.61/piece, the price rose to GBP 19/piece by the end of the year. The rise in share value then continues in 2023, with the highest traded share price coming within less than a pound of the peak in early 2022.

Coca-Cola HBC AG’s shares are 21% owned by The Coca-Cola Company, 23% by the founding company Kar-Tess and 56% are freely traded by other retail owners. More information is available in the Investor Centre here.

Company strategy

Risk management

The ERS is followed by the IMCR – Incident Management and Crisis Resolution programme, which is a set of rules for anticipating, monitoring, communicating and resolving crisis situations affecting our society. Training of IMCR officers and validation of the team’s readiness was also conducted in 2022,

and 2 important risks were also addressed within the IMCR. As a preventive measure regular meetings of the IMCR team were held and databases of potential situations that could result in an IMCR incident were monitored.

From a risk management perspective, we also monitor the impact of environmental and social aspects on our business. Among the most important risks monitored within the framework of the integrated system are: crisis associated with employees and management of the Company, security, availability of inputs for production and logistics, legislative risks and regulations, behaviour of competitors on the market, quality control and others. The most important economic trends that need to be addressed by adjusting the Company-wide strategy are gathered at group level by the Treasury Department.

Innovation and quality

We have already invested over CZK 2.5 billion in our development and innovation between 2017 and 2022. All these innovations are aimed at greater efficiency, competitiveness, environmental friendliness and superior quality of our products. In 2022, among other things, we innovated the refills of carbonated soft drinks into PET bottles in 1.5 l and 2.0 l for EUR 880,000. The modification to enable the use of non-removable caps on PET bottles cost EUR 200,000. For EUR 120,000 we purchased new label applicators for packages and pallets. We invested EUR 340,000 in a new empty glass bottle inspector machine, and EUR 45,000 was spent on a laser PET bottle printer for the production facility in Teplice nad Metují.

Packaging innovations were primarily aimed at more sustainable solutions, including the introduction of the KeelClip paper can holder, preparation for the introduction of non-removable caps for PET bottles, lighter design of packaging and the transfer of Sprite to a transparent PET bottle. It is the transparent PET bottles that can be recycled to produce slightly cloudy, once again transparent PET bottles. They can also be used in the production of coloured PET bottles. The green PETs will always be green or blue. The blue ones will always remain blue.

Calories and product labelling

The category of low-calorie and no-calorie soft drinks played a significant role in our business trading. In the carbonated soft drinks segment, low-calorie variants such as Coca-Cola Zero accounted for 22.5% of beverage volume sold, up one percentage point from 2021. Zero were almost all the newcomers in this category in 2022.

In the Czech Republic the average calorie per 100 ml of carbonated soft drinks fell year-on-year from 31.63 kcal / 100 ml to 31.14 kcal / 100 ml. In Slovakia, it was a decrease from 33.7 kcal / 100 ml to 33.09 kcal / 100 ml.

We behave ethically

Employees can report violations of the Code of Conduct using the online form, the Legal Department or HR Department. In addition there is an anonymous Speak-up! help line for them. There were 4 incidents reported on this line in 2022. All of them were investigated in detail, but none was found to have violated the Code.

In 2022 there was 1 lawsuit in Slovakia and 1 in the Czech Republic involving our Company. Both of these disputes remained unresolved at the end of the year.

Personal data is maintained in our Company in accordance with the GDPR and we have a standard operating procedure in place in the event of a data breach. Information on the handling of employees’ personal data is available to our people on our intranet. There were no data protection incidents in 2022. Compliance with GDPR principles is the subject of regularly updated training.

We act responsibly towards children

Our suppliers

An important group are the suppliers of our ingredients such as CO₂ and Ni food gasses, sweeteners such as sugar, dextrose and glucose-fructose syrup (HFCS). All ingredient suppliers are subject to approval by The Coca-Cola Company for the specific manufacturing facility and product. The product must meet the technical specification according to KORE, the quality requirements of The Coca-Cola Company and receive an LoA – Letter of Authorisation. Ingredient suppliers must have FSSC 22000, ISO 14001, GMP certification.

The purchase of packaging material is managed in accordance with the Purchasing Policy issued by the Purchasing Department at Group level. Packaging is divided into primary and secondary. Again, primary packaging suppliers must meet KORE requirements, have authorisation from The Coca-Cola Company and LoA including FSSC 22000, GMP and ISO 14001. Suppliers are selected on the basis of tenders, which are carried out every 3 years. They are regularly assessed. The selection criteria are quality, price, delivery conditions and sustainability.

Communication with stakeholders

In the local communities around our manufacturing facilities we are in regular contact with associations and non-profit organisations, as well as with local government leaders. We get direct feedback on activities that directly affect our neighbours and can help them in their efforts to build sustainable communities. In our communication with the Prague 14 municipality, we mainly use the Council for Public Involvement, where we are represented, and in Teplice nad Metují we communicate directly with town management.

The public can contact our Company via e-mail [email protected] for the Czech Republic and [email protected] for Slovakia or via telephone on +420 283 015 801 for the Czech Republic and +421 249 494 944 for Slovakia. Investors and potential investors can contact us via our e-mail address: [email protected].

Audits and reporting

In terms of financial audits, in 2022 we underwent a comprehensive external audit by PWC, an internal audit by COBC – compliance and anti-corruption, a comprehensive internal group process audit and a series of quarterly internal reviews. We successfully completed all of these audits with no findings of violations of the monitored rules. Risks identified during audits are continuously addressed by authorised employees so that they do not develop into problems in the following periods.

For non-financial reporting, in addition to audits to ISO standards and other external quality and sustainability standards mentioned in the social and environmental pillar sections above , we conduct a number of internal quality audits of the Coca-Cola system. Among the most extensive audits is the so-called GAO audit. Our inputs to the group Integrated Annual Report are also audited on a regular basis. This summarises ESG issues at group level and for 2022 can be viewed here.

For internal reporting we use the integrated Power BI system, which provides up-to-date dashboards with the results of both financial and non-financial indicators. In this way the current results can be evaluated regularly and clearly. For example, the Company’s community activities are also reported on a monthly basis.

ISO and other norms connected to this area:

• ISO 9001 – Quality management system
• ISO 22000 – Food safety management
• FSSC – Food quality certification