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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM 20-F

(Mark One)    

o

 

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

ý

 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: 31 December 2013

OR

o

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                        to                         

OR

o

 

SHELL COMPANY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report:

Commission file number: 1-35891



Coca-Cola HBC AG
(Exact name of Registrant as specified in its charter)

COCA-COLA HBC AG
(Translation of Registrant's name into English)

SWITZERLAND
(Jurisdiction of incorporation or organisation)

Coca-Cola HBC AG
Turmstrasse 26
CH-6300 Zug
Switzerland
+41 41 726 0110
(Address of principal executive offices)

Jan Gustavsson, +41 (0) 41 726 01 37, jan.gustavsson@cchellenic.com,
Turmstrasse 26, CH-6300 Zug, Switzerland
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)



           Securities registered or to be registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Ordinary shares of nominal value CHF 6.70 per ordinary share   New York Stock Exchange*
American Depositary Shares (ADSs), each ADS representing one ordinary share   New York Stock Exchange

*
Not for trading, but only in connection with the listing of the ADSs, pursuant to the requirements of the New York Stock Exchange

           Securities registered or to be registered pursuant to Section 12(g) of the Securities Exchange Act of 1934: None

           Securities for which there is a reporting obligation pursuant to Section 15(d) of the Securities Exchange Act of 1934: None

           Indicate the number of outstanding shares of each of the Registrant's classes of capital or common stock as at 31 December 2013, the close of the period covered by the annual report: 367,690,225 ordinary shares (including 3,445,060 treasury shares) of nominal value CHF 6.70 per ordinary share

           Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act Yes ý    No o

           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 o    No ý

           Note—Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

           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 ý    No o

           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 o    No o

           Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ý   Accelerated filer o   Non-accelerated filer o

           Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in the filing.

           US GAAP o        International Financial Reporting Standards as issued by                    Other o
the International Accounting Standards Board ý

           If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17 o                Item 18 o

           If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o                No ý


**
This requirement does not apply to the registrant until the Commission determines otherwise.


Table of Contents


TABLE OF CONTENTS

INTRODUCTION

    6  

Information about this report

   
6
 

Special note regarding forward-looking statements

    6  

Presentation of financial and other information

    7  

Exchange rate information

    8  

PERFORMANCE SUMMARY

   
9
 

Selected financial data

   
9
 

Chairman's statement

    12  

CEO statement

    14  

INFORMATION ON THE CCHBC GROUP

   
17
 

Historical information

   
17
 

Share Exchange Offer

    18  

Other recent transactions

    19  

Organisational structure

    21  

Business overview

    23  

Business and products

    23  

Markets

    24  

Strengths

    25  

Strategy

    26  

Distribution

    30  

Production

    32  

Property, plant and equipment

    33  

Products

    37  

The CCHBC Group's operations

    39  

Established Markets

    41  

Developing Markets

    45  

Emerging Markets

    46  

Sales and marketing

    49  

Seasonality

    52  

Raw and packaging materials

    52  

Competition

    54  

Regulation

    54  

Information technology

    56  

Employees

    58  

Employee benefit obligations

    60  

Risk factors

    60  

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

   
85
 

Overview

   
85
 

The CCHBC Group's business

    85  

Key financial results

    86  

Critical accounting judgements and estimates

    89  

Principal factors affecting the CCHBC Group's results of operations

    90  

CCHBC Group operating results

    97  

Year ended 31 December 2013 compared to the year ended 31 December 2012

    97  

Year ended 31 December 2012 compared to the year ended 31 December 2011

    102  

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Reporting segments

    106  

Year ended 31 December 2013 compared to the year ended 31 December 2012

    106  

Year ended 31 December 2012 compared to year ended 31 December 2011

    109  

Liquidity and capital resources

    112  

Cash flows from operating activities

    113  

Cash flows used in investing activities

    113  

Cash flows used in financing activities

    115  

Working capital

    116  

Holding company structure

    117  

Borrowings and funding sources

    117  

Financial risk management

    124  

Outlook

    128  

Future development plans

    129  

Off-balance sheet arrangements

    129  

Tabular disclosure of contractual obligations

    130  

CORPORATE GOVERNANCE

   
131
 

Chairman's Letter

   
131
 

Application of Corporate Governance Codes

    132  

UK Corporate Governance Code

    132  

Certain differences between CCHBC's corporate governance practices and the UK Corporate Governance Code

    132  

Certain differences between the Group's corporate governance practices and the NYSE listing standards

    133  

NYSE Corporate Governance Statement

    133  

Director Independence

    133  

Board Committees

    133  

Corporate Governance Guidelines

    133  

Code of Ethics

    134  

Shareholder Approval of Equity-compensation Plans

    134  

Other corporate governance codes

    134  

Leadership and Effectiveness

    135  

The Board of Directors

    135  

Composition

    135  

Listing rules

    140  

Independence

    140  

Succession planning

    141  

How the Board operates

    142  

Board meetings and attendance

    142  

Operation of the Board

    142  

Matters reserved to the Board

    145  

Roles of Chairman, CEO, Vice-Chairman, Senior Independent Director, non-executive Directors and Company Secretary

    145  

Outside appointments

    148  

Conflicts of interest

    149  

Information and training

    149  

Board, committee and Director performance evaluation

    149  

Operating Committee

    150  

Operating Committee Functions

    153  

Board committees

    153  

Audit Committee

    153  

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Role and responsibilities

    153  

Composition

    154  

Work and activities

    154  

External auditors

    157  

The provision of non-audit services by the external auditors

    158  

Audit Fees and All Other Fees

    158  

Audit fees

    158  

Audit related fees

    158  

Tax fees

    159  

All other fees

    159  

Controls and procedures

    159  

Code of ethics

    160  

Risk management

    160  

Internal control

    161  

Internal audit

    161  

Whistleblowing measures

    162  

Disclosure Committee

    162  

Performance reporting

    162  

Nomination Committee

    162  

Composition

    162  

Role and responsibilities

    162  

Work and activities

    163  

Remuneration Committee

    164  

Social Responsibility Committee

    164  

Composition

    164  

Role and responsibilities

    164  

Work and activities

    165  

Relation with Shareholders

    165  

REMUNERATION REPORT

   
166
 

Chairman's Letter

   
166
 

Remuneration Policy

    168  

Remuneration objectives

    168  

Non-executive Directors' fees

    169  

Directors' service contracts and terms of appointment

    170  

Remuneration structure for the CEO

    170  

Illustration of application of remuneration policy for the CEO

    174  

CEO service contract and payments on termination

    175  

MIP

    175  

ESOP

    175  

ESPP

    178  

LTIP

    179  

Pension Plan

    179  

Implementation of Remuneration

    179  

Remuneration Committee

    179  

CEO remuneration for the year ended 31 December 2013

    181  

Non-executive Directors' remuneration for the year ended 31 December 2013

    183  

Directors' and Senior Management's shareholdings and share interests

    184  

Performance review

    185  

CEO remuneration for period of TSR

    185  

Relative importance of spend on pay

    186  

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Total Director's and Senior management remuneration

    186  

Implementation of remuneration policy in 2014

    187  

SHAREHOLDER INFORMATION

   
188
 

Dividends and dividend policy

   
188
 

Share Capital

    188  

Shareholder taxation information

    193  

Offer and listing details

    204  

Fees and Charges Payable by a Holder of CCHBC ADSs

    209  

Fees and Other Direct and Indirect Payments made by the ADS Depositary to CCHBC

    211  

Documents on display

    211  

Memorandum and articles of association

    211  

Description of Selected Provisions of the Swiss Code of Obligations and other applicable Swiss Law

    222  

MAJOR SHAREHOLDERS

   
227
 

ADDITIONAL DISCLOSURES

   
229
 

Legal Proceedings

   
229
 

Related Party Transactions

    230  

Material Contracts

    240  

Exchange Controls

    240  

STATEMENTS OF DIRECTORS' RESPONSIBILITIES

   
242
 

EXHIBITS

   
243
 

CROSS REFERENCE ON FORM 20-F

   
246
 

FINANCIAL STATEMENTS

   
F-1
 

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INTRODUCTION

Information about this report

        Subject to certain differences, this document constitutes the Annual Financial Report in accordance with UK requirements (the "U.K. Annual Financial Report") and the Annual Report on Form 20-F in accordance with the US Securities Exchange Act of 1934 (the "Annual Report on Form 20-F" and, together with the U.K. Annual Financial Report, the "annual report") for Coca-Cola HBC AG ("CCHBC" or the "Company") for the year ended 31 December 2013. A cross reference to Form 20-F requirements is available in the section entitled "Cross Reference to Form 20-F".

        Unless the context requires otherwise, the "CCHBC Group" or the "Group" refers, for the time period prior to 25 April 2013, to Coca-Cola Hellenic Bottling Company S.A. and its subsidiaries and, for the time period on and after 25 April 2013, to CCHBC and its subsidiaries. Similarly and unless the context requires otherwise, the "Board" and the "Operating Committee" mean, for the time period prior to 25 April 2013, the board of directors and the operating committee, respectively, of Coca-Cola Hellenic Bottling Company S.A. and, for the time period on and after 25 April 2013, the board of directors and the operating committee, respectively, of CCHBC. Furthermore, references to shareholders (or, synonymously, owners of the parent), any or all Board committees, and the auditors, each in relation to CCHBC, the CCHBC Group or the Group, refer, for the time period prior to 25 April 2013, to the shareholders, Board committees and the auditors, respectively, of Coca-Cola Hellenic Bottling Company S.A. and, for the time period on and after 25 April 2013, to the shareholders, Board committees and the auditors, respectively, of CCHBC. See the section entitled "Information on the CCHBC Group—Share Exchange Offer" for information on the Group's reorganisation and re-listing.

        Accordingly, the financial and operating data or other information included in this report reflect the financial position, financial performance, cash flows and historical information of Coca-Cola Hellenic Bottling Company S.A and its subsidiaries until 25 April 2013 and of CCHBC and its subsidiaries after the Group's reorganisation effective on 25 April 2013.

        The Statement of Directors' Responsibilities does not form part of CCHBC's Annual Report on Form 20-F as filed with the SEC.


Special note regarding forward-looking statements

        This document contains forward-looking statements that involve risks and uncertainties. These statements may generally, but not always, be identified by the use of words such as "believe", "outlook", "guidance", "intend", "expect", "anticipate", "plan", "target" and similar expressions to identify forward-looking statements. All statements other than statements of historical facts, including, among others, statements regarding the future financial position and results, CCHBC Group's outlook for 2014 and future years, business strategy and the effects of the global economic slowdown, the impact of the sovereign debt crisis, currency volatility, CCHBC Group's recent acquisitions, and restructuring initiatives on CCHBC Group's business and financial condition, CCHBC Group's future dealings with The Coca-Cola Company, budgets, projected levels of consumption and production, projected raw material and other costs, estimates of capital expenditure, free cash flow, effective tax rates and plans and objectives of management for future operations, are forward-looking statements. You should not place undue reliance on such forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they reflect the CCHBC Group's current expectations and assumptions as to future events and circumstances that may not prove accurate. The CCHBC Group's actual results and events could differ materially from those anticipated in the forward-looking statements for many reasons, including the risks described under the section entitled "Information on the CCHBC Group—Risk factors".

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        Although the CCHBC Group believes that, as of the date of this document, the expectations reflected in the forward-looking statements are reasonable, the CCHBC Group cannot assure that the CCHBC Group's future results, level of activity, performance or achievements will meet these expectations. Moreover, neither the CCHBC Group, nor its directors, employees, advisors nor any other person assumes responsibility for the accuracy and completeness of any forward-looking statements. After the date of this annual report, unless CCHBC Group is required by law or the rules of the UK Financial Conduct Authority and the United States Securities and Exchange Commission to update these forward-looking statements, the CCHBC Group will not necessarily update any of these forward-looking statements to conform them either to actual results or to changes in the CCHBC Group's expectations.


Presentation of financial and other information

        The CCHBC Group's financial year is 1 January to 31 December. The CCHBC Group prepares its financial statements in accordance with the International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board, or IASB. This annual report includes the CCHBC Group's audited consolidated balance sheets as at 31 December 2013 and 2012, and the related consolidated statements of income, of other comprehensive income, of changes in equity, and of cash flows for the periods ended 31 December 2013, 2012 and 2011.

        Unless otherwise indicated, all references in this annual report to "euro" and "€" are to the official currency of the member states of the European Union that adopted the single currency in accordance with the Treaty Establishing the European Economic Community (signed in Rome on 25 March 1957), as amended by the Treaty of European Union signed in Maastricht on 7 February 1992. The following countries in which the CCHBC Group operates have also adopted the euro as their official currency: Austria, Cyprus, Greece, Italy, Montenegro, the Republic of Ireland, Slovakia, Slovenia, Estonia and, effective 1 January 2014, Latvia. Additionally, the currencies of five countries in which the CCHBC Group operates are pegged to the euro. The euro-pegged currencies of Lithuania, the Former Yugoslav Republic of Macedonia (referred to as "FYROM"), and prior to 1 January 2014, Latvia, are permitted to fluctuate in relation to the euro within certain parameters whereas the currencies of Bosnia and Herzegovina and Bulgaria are not permitted to fluctuate.

        All references to "US dollar" and "$" are to the lawful currency of the United States. You should read the section entitled "Introduction, Exchange Rate Information" for historical information regarding the exchange rates between the euro and the US dollar based on the Noon Buying Rate for cable transfers as certified by the Federal Reserve Board of New York (the "Noon Buying Rate"). No representation is made that euro or US dollar amounts referred to in this annual report have been, could have been or could be converted into US dollars or euro at these particular rates or at any rates at all. Solely for convenience, this annual report contains translations of certain euro balances into US dollars at specified rates. These are simply translations, and you should not expect that a euro amount actually represents a stated US dollar amount or that it could be converted into US dollars at specified rates. In this annual report, unless otherwise specified, the translations of euro into US dollars have been made at a rate of €1.00 = $1.3924, being the Noon Buying Rate between the euro and the US dollar on 14 March 2014.

        All references in this annual report to "British pounds" or "GBP" are to the lawful currency of the United Kingdom. All references in this annual report to "Swiss Francs" or "CHF" are to the lawful currency of Switzerland.

        Unless otherwise specified, sales volume is measured in terms of unit cases sold. A unit case equals 5.678 litres or 24 servings of 8 US fluid ounces each. The unit case is the typical volume measure used in the CCHBC Group's industry.

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Table of Contents

        "Sparkling" beverages refers to the Group's core sparkling and ready-to-drink beverages, excluding sparkling water. "Still" beverages refer to non-sparkling non-alcoholic ready-to-drink beverages, excluding water. "Water" beverages refer to various water beverages.

        Unless the context requires otherwise, references to "TCCC" refer to The Coca-Cola Company and its subsidiaries.

        "Territories" means those countries where the CCHBC Group does business and currently include Armenia, Austria, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Estonia, FYROM (through an equity investment), Greece, Hungary, Italy (excluding the island of Sicily), Latvia, Lithuania, Moldova, Montenegro, Nigeria, Northern Ireland, Poland, the Republic of Ireland, Romania, the Russian Federation, Serbia (including the Republic of Kosovo), Slovakia, Slovenia, Switzerland, the Czech Republic and Ukraine. "Established Markets" refers to Austria, Cyprus, Greece, Italy, Northern Ireland, the Republic of Ireland and Switzerland. "Developing Markets" refers to Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia. "Emerging Markets" refers to Armenia, Belarus, Bosnia and Herzegovina, Bulgaria, FYROM (through an equity investment), Moldova, Montenegro, Nigeria, Romania, the Russian Federation, Serbia (including the Republic of Kosovo) and Ukraine.

        Information on or accessible through the CCHBC Group's corporate website, www.coca-colahellenic.com, does not form part of and is not incorporated into this document.


Exchange rate information

        The table below shows the low, high, average and period-end Noon Buying Rates between the euro and the US dollar for the years ended 31 December 2013, 2012, 2011, 2010 and 2009.

Year ended 31 December
  Low   High   Average*   End of
period
 

2009

    1.25     1.51     1.40     1.43  

2010

    1.20     1.45     1.32     1.33  

2011

    1.29     1.49     1.39     1.30  

2012

    1.21     1.35     1.29     1.32  

2013

    1.28     1.38     1.33     1.38  

        The table below shows the low, high, average and period-end Noon Buying Rates between the euro and the US dollar for each month during the six months prior to the date of this annual report. The Noon Buying Rate between the euro and the US dollar on 14 March 2014 was €1.00 = $1.3924.

Month
  Low   High   Average*   End of
Period
 

September 2013

    1.31     1.35     1.34     1.35  

October 2013

    1.35     1.38     1.36     1.36  

November 2013

    1.34     1.36     1.35     1.36  

December 2013

    1.35     1.38     1.37     1.38  

January 2014

    1.35     1.37     1.36     1.35  

February 2014

    1.35     1.38     1.37     1.38  

March 2014 (through 14 March 2014)

    1.37     1.39     1.38     1.39  

*
The average of the Noon Buying Rates between the euro and the US dollar on the last business day of each month during the period or, in the case of monthly averages, the average of all business days in the month.

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PERFORMANCE SUMMARY

Selected financial data

        The summary financial information (statement of income, cash flow, balance sheet and share and per share data) set forth below for the five year period ended 31 December 2013 has been derived from the CCHBC Group's audited consolidated financial statements prepared in accordance with IFRS. The CCHBC Group's consolidated balance sheets as at 31 December 2013 and 2012, and the related consolidated statements of income, comprehensive income, changes in equity and cash flow for the years ended 31 December 2013, 2012 and 2011 are included elsewhere in this annual report and the historical information for the years ended 31 December 2010 and 2009 is derived from the audited financial statements which are not included in this annual report, but are included in the CCHBC Group's 2010 Annual Report on Form 20-F filed with the SEC on 29 March 2011. Historical information for the year ended 31 December 2009 has not been adjusted for the adoption of IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interest in Other Entities.

        You should read the following summarised financial information together with "Operating and Financial Review and Prospects" and the CCHBC Group's audited consolidated financial statements and the related notes included in this annual report.

 
  As at and for the year ended  
 
  31 December
2013(1)
  31 December
2013
  31 December
2012
  31 December
2011(2)
  31 December
2010(2)
  31 December
2009(2)
 
 
  (amounts in millions of euro or US dollars, as indicated, except for sales volume data in
millions of unit cases, per share data in euro or US dollars, as indicated, number of
ordinary shares outstanding and percentages)

 

Statement of income data:

                                     

Net sales revenue

  $ 9,571.4   6,874.0   7,044.7   6,824.3   6,761.6   6,543.6  

Cost of goods sold

    (6,180.2 )   (4,438.5 )   (4,522.2 )   (4,254.7 )   (4,042.7 )   (3,904.7 )

Gross profit

    3,391.2     2,435.5     2,522.5     2,569.6     2,718.9     2,638.9  

Operating expenses

    (2,793.6 )   (2,006.3 )   (2,078.1 )   (2,048.2 )   (2,048.4 )   (1,953.7 )

Restructuring costs

    (77.3 )   (55.5 )   (106.7 )   (71.1 )   (36.5 )   (44.9 )

Operating profit

    520.3     373.7     337.7     450.3     634.0     640.3  

Profit after tax attributable to owners of the parent

    308.0     221.2     190.4     264.4     421.0     400.3  

Cash flow data:

                                     

Net cash provided by operating activities

  $ 1,092.9   784.9   753.6   828.3   970.4   997.2  

Net cash used in investing activities

    (460.6 )   (330.8 )   (403.7 )   (371.8 )   (356.7 )   (342.9 )

Net cash used in financing activities

    (215.3 )   (154.6 )   (358.5 )   (309.8 )   (512.8 )   (1,143.3 )

Free cash flow(3)

    574.6     412.7     341.3     427.2     536.9     546.2  

Balance sheet data:

                                     

Intangible assets

  $ 2,675.2   1,921.3   1,944.6   1,935.4   1,954.6   1,874.1  

Share capital(4),(5)

    2,781.2     1,997.4     370.2     549.8     183.1     182.8  

Total assets

    10,129.4     7,274.8     7,250.1     7,243.5     7,185.0     6,787.8  

Net assets

    4,131.7     2,967.3     3,006.5     2,920.2     3,031.1     2,555.1  

Long-term borrowings, less current portion

    2,581.0     1,853.6     1,604.7     1,939.8     1,662.8     2,100.7  

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  As at and for the year ended  
 
  31 December
2013(1)
  31 December
2013
  31 December
2012
  31 December
2011(2)
  31 December
2010(2)
  31 December
2009(2)
 
 
  (amounts in millions of euro or US dollars, as indicated, except for sales volume data in
millions of unit cases, per share data in euro or US dollars, as indicated, number of
ordinary shares outstanding and percentages)

 

Share and per share data:

                                     

Average ordinary shares outstanding(5)

    363,551,433     363,551,433     363,867,871     363,010,078     363,320,142     364,868,713  

Cumulative treasury shares(5)

    3,445,060     3,445,060     3,430,135     3,430,135     3,430,135     1,111,781  

Profit after tax attributable to owners of the parent per ordinary share: basic(5)

  $ 0.85   0.61   0.52   0.73   1.16   1.10  

Profit after tax attributable to owners of the parent per ordinary share: diluted(5)

  $ 0.85   0.61   0.52   0.73   1.16   1.09  

Cash dividends declared per ordinary share(6)

  $ 0.47   0.34               0.30  

Capital return per ordinary share(7)

          0.34   0.50       1.50  

Other operating data:

                                     

Unit cases volume

    2,060.5     2,060.5     2,084.7     2,087.4     2,105.0     2,069.3  

Operating expenses as a percentage of net sales revenue(8)

    29.2 %   29.2 %   29.5 %   30.0 %   30.3 %   29.9 %

(1)
Convenience translation figures are translated at the 14 March 2014 Noon Buying Rate for euro of €1.00 = $1.3924. The translation to US dollars has been provided solely for the purposes of convenience and should not be construed as a representation that the amounts represent, or have been or could be converted into US dollars at that or any other rate.

(2)
Historical information for the year ended 31 December 2009 has not been adjusted for the adoption of IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interest in Other Entities.

(3)
Free cash flow is a non-IFRS measure used by the CCHBC Group that is defined as the cash generated by operating activities after payments for purchases of property, plant and equipment net of proceeds from sales of property, plant and equipment and after principal repayments of finance lease obligations. For a reconciliation of free cash flow see the section "Key Financial Results—Free Cash Flow".

(4)
These components of equity reflect the capital structure of Coca-Cola Hellenic Bottling Company S.A. for the period from 1 January 2012 to 25 April 2013 and the capital structure of CCHBC following the Group's reorganisation.

(5)
On 30 April 2009, Coca-Cola Hellenic Bottling Company S.A. resolved to buy-back a maximum of 5% of its paid-in share capital during the period that is 24 months from the date of the extraordinary general meeting of 27 April 2009, which approved a share buy-back programme pursuant to Article 16 of Greek Codified Law 2190/1920 (until 26 April 2011). Based on Coca-Cola Hellenic Bottling Company S.A.'s capitalisation at that time, the maximum amount that might have been bought back pursuant to the programme was 18,270,104 Coca-Cola Hellenic Bottling Company S.A. ordinary shares ("Coca-Cola Hellenic Shares"). Purchases under the programme were subject to a minimum purchase price of €1.00 per share and a maximum purchase price of €20.00 per Coca-Cola Hellenic Share. Applicable law does not specify the extent of implementation of such approved share buy-back programmes. The buy-back programme expired on 26 April 2011. During the period from 30 April 2009 to 26 April 2011, Coca-Cola Hellenic Bottling Company S.A. purchased 3,430,135 Coca-Cola Hellenic Shares pursuant to the share buy-back programme. Additionally, in order to eliminate any corresponding dilution of the tendering holders of ordinary shares of CCHBC ("CCHBC Ordinary Shares") and American depositary shares of CCHBC ("CCHBC ADSs"), after settlement of the Share Exchange Offer, 14,925 shares, representing CCHBC's initial share capital, were purchased from the former sole shareholder of CCHBC, Kar-Tess Holding, bringing the CCHBC Ordinary Shares

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    that are held by the CCHBC Group as treasury shares to 3,445,060.
    On 25 April 2013, CCHBC acquired 96.85% (355,009,014 shares) of the issued Coca-Cola Hellenic Shares, including shares represented by American depositary shares ("Coca-Cola Hellenic ADSs"), following the successful completion of the Share Exchange Offer and became the new parent company of the CCHBC Group.
    On 17 June 2013, CCHBC completed its statutory buy-out of the remaining Coca-Cola Hellenic Shares that it did not acquire upon completion of the Share Exchange Offer. Consequently, Coca-Cola Hellenic Bottling Company S.A. became a wholly owned subsidiary of CCHBC. Out of the remaining 3.15% interest acquired in Coca-Cola Hellenic Bottling Company S.A., representing 11,544,493 Coca-Cola Hellenic Shares, 11,467,206 Coca-Cola Hellenic Shares were exchanged for an equal number of CCHBC Ordinary Shares and 77,287 Coca-Cola Hellenic Shares were acquired for an aggregate cash consideration of €1.0 million.
    In 2013, the share capital of CCHBC increased by the issue of 1,199,080 new CCHBC Ordinary Shares following the exercise of stock options pursuant to the CCHBC's employees' stock option plan (the "ESOP"). Total proceeds from the issuance of the shares under the ESOP amounted to €16.4 million.
    Following the above changes, and including the 3,445,060 CCHBC Ordinary Shares that are held by the CCHBC Group as treasury shares, on 31 December 2013 the share capital of the Group amounted to €1,997.4 million and comprised 367,690,225 CCHBC Ordinary Shares with a nominal value of CHF 6.70 each.

(6)
On 19 June 2013, the extraordinary general meeting of CCHBC approved the distribution of a €0.34 dividend per CCHBC Ordinary Shares. The total dividend amounted to €124.7 million and was paid on 23 July 2013.

(7)
On 18 September 2009, Coca-Cola Hellenic Bottling Company S.A. announced a proposal for a re-capitalisation which resulted in a capital return of €548.1 million to its shareholders (or €1.50 per Coca-Cola Hellenic Shares). At the extraordinary general meeting held on 16 October 2009, the shareholders approved an increase of Coca-Cola Hellenic Bottling Company S.A.'s share capital by €548.1 million, through capitalisation of share premium and an increase in the nominal value of each Coca-Cola Hellenic Shares by €1.50 per share. At the same extraordinary general meeting, Coca-Cola Hellenic Bottling Company S.A.'s shareholders also approved the decrease of its share capital by €548.1 million, through a reduction of the nominal value of the Coca-Cola Hellenic Shares by €1.50 per share and an equal amount of capital was returned to Coca-Cola Hellenic Bottling Company S.A.'s shareholders in cash. Following shareholder and regulatory approval, Coca-Cola Hellenic Bottling Company S.A. realised the capital return on 2 December 2009. The capital return was financed through a combination of accumulated cash and a new €300 million 7-year bond issue. Coca-Cola Hellenic Bottling Company S.A. issued this bond in November 2009, through its 100% owned subsidiary Coca-Cola HBC Finance B.V. in an aggregate principal amount of €300 million due in 2016.

On 6 May 2011, the annual general meeting of the shareholders resolved to reorganise Coca-Cola Hellenic Bottling Company S.A.'s share capital. Coca-Cola Hellenic Bottling Company S.A.'s share capital increased by an amount equal to €549.7 million. The increase was performed by capitalising share premium reserves and increasing the nominal value of each share from €0.50 to €2.00. Coca-Cola Hellenic Bottling Company S.A.'s share capital was subsequently decreased by an amount equal to €183.2 million by decreasing the nominal value of each Coca-Cola Hellenic Share from €2.00 to €1.50, and distributing such €0.50 per share difference to Coca-Cola Hellenic Bottling Company S.A.'s shareholders in cash.

On 25 June 2012, the annual general meeting of the shareholders resolved to decrease Coca-Cola Hellenic Bottling Company S.A.'s share capital by an amount equal to €124.6 million by decreasing the nominal value of each Coca-Cola Hellenic Share by €0.34 per share, from €1.50 to €1.16 per share, and to distribute such €0.34 per share difference to Coca-Cola Hellenic Bottling Company S.A.'s shareholders in cash. Furthermore, on the same date, it was resolved to decrease the share capital of Coca-Cola Hellenic Bottling Company S.A. by an amount equal to €55.0 million by decreasing the nominal value of the Coca-Cola Hellenic Shares by €0.15 per share, from €1.16 to €1.01 per share, in order to extinguish accumulated losses reflected in the unconsolidated financial statements of Coca-Cola Hellenic Bottling Company S.A. in an equal amount.

(8)
Operating expenses as a percentage of net sales revenue is defined as total operating expenses divided by total net sales revenue.

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Chairman's statement

Dear Shareholder

        Although 2013 remained a challenging year in most of our markets, we remained focused on our four strategic priorities: community trust, customer preference, consumer relevance and cost leadership.

        As a result, our initiatives in the marketplace delivered encouraging results and allowed us to gain or maintain volume share in sparkling beverages and value share in the non-alcoholic ready-to-drink beverages categories in the majority of our markets. This outcome, especially against the backdrop of economic difficulties and volatility in our territories reaffirmed my confidence that we will continue to capture growth opportunities as they emerge.

        In 2013, we continued to drive efficiency and cost reduction by leveraging the scale and geographic footprint of our business. We are centralising business services in low-cost environments and investing in cross-border manufacturing and logistics. Furthermore, we are exploiting the flexibility of our business strategy to respond to market trends so as to offer value to both customers and consumers. Our winning at the point of sale strategy has made us a leader in the sparkling beverages category in all of our 28 markets.

        Our admission to premium listing on the London Stock Exchange in 2013 represented a major milestone. Later in the year, we were also included in the FTSE 100 and FTSE All-Share indices. We expect this to benefit our shareholders through enhanced trading liquidity and to allow our company access to a wider pool of institutional investors.

        We believe strong governance is critical to the long-term creation of shareholder value. In preparation for our premium listing on the London Stock Exchange, and in light of the UK Corporate Governance Code, we reviewed and refreshed our corporate governance practices. We also increased the number of independent non-executive directors and introduced annual elections to the Board by our shareholders. With the retirement of Kent Atkinson, we appointed two new independent non-executive directors in 2013: Stefan F. Heidenreich and Susan Kilsby. I would like to extend my sincerest thanks to Kent for his contributions over many years and welcome Stefan and Susan to the Board.

        In challenging times, sustainability programmes are more important than ever in maintaining trust in our business. Now in their second decade, our environmental projects focus on three key areas: water stewardship, energy and emissions, and packaging, waste and recycling. To help promote sustainability and corporate responsibility, we support local networks of the United Nations Global Compact and other business initiatives. In 2013, our Romanian plant in Ploiesti received the first European Water Stewardship Standard Gold Medal.

        Obesity remains a critical challenge in the markets we serve. To safeguard our future growth, we are renewing our efforts to help address this issue, encouraging active lifestyles, offering low and no-calorie beverages and promoting understanding of the calorie content and ingredients of our beverages.

        Our listings in sustainability indices are an important measure of trust in our business. Our score on the Dow Jones Sustainability Indices (Europe and World) showed further improvement in 2013, the sixth consecutive year we have maintained our listing. Among beverage companies, CCHBC was ranked first in Europe and second in the world for sustainability.

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        We are cautiously optimistic about the year ahead, despite continuing volatility across our territories. By continuing to deliver on our strategic commitments, we will drive operational performance and create value for our shareowners and our communities. To that end, the Board has recommended a dividend of €0.354 per share for approval by shareholders.

        Finally, I would like to thank all our employees for their contribution throughout the year. I look forward to seeing you at our Annual General Meeting.

GRAPHIC

George A. David
Chairman of the Board

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CEO statement

Chief Executive's Review

Dear Shareholder

        We achieved a significant milestone in 2013 as we reorganised the Group under a new Swiss holding company with a premium listing on the London Stock Exchange (LSE) and were included in the FTSE 100 and FTSE All-Shares indices. This provides enhanced visibility with the global institutional investor community and helps optimise our borrowing costs and capital structure.

        During the year, we made good progress in improving our operating performance despite persistent challenging trading conditions in a number of our markets. We are implementing our 'Play to Win' strategy to achieve sustainable growth and to capture significant opportunities available across our well-balanced portfolio of countries.

        A critical part of our strategy is to build a solid foundation for future growth by acting responsibly and over the years we have gained public recognition for our accomplishments. Our inclusion in the Dow Jones Sustainability Indices and the FTSE4Good index reflects our commitment to earn the trust of the communities in which we operate and to make our social and environmental responsibilities an integral part of our daily operations.


2013 in review

        In 2013, adverse economic conditions and volatility in the majority of our markets led to downward pressure on our sales volume. Despite these challenges, we managed to improve our operating profit through more efficient management of operating expenses. In particular, we were able to leverage the scale and footprint of our operations by centralising business services in low cost environments and investing in opportunities for cross-border manufacturing and logistics. As a result of these initiatives, our operating margin increased after several years of decline. We also made good progress towards improving our working capital position, delivering negative working capital for the first time ever and improving our free cash flow.


Winning in the marketplace

        During the year, we continued to deliver on our long-term commitment to meet our consumers' beverage needs with our portfolio of premium brands, carefully selecting the appropriate package and channel for each brand and leveraging our OBPPC (occasion-based brand, package, price and channel) strategy. Our consumer initiatives, such as our 'Connect—Share a Coke' campaign also contributed to increased sales of single-serve packages.

        Sparkling beverages remain our priority category, spearheaded by trademark Coca-Cola, and in 2013 we achieved all-time high volume shares in 15 of our markets. We also grew or maintained our overall NARTD value share in the majority of our markets.

        Looking ahead, I am optimistic that the new offerings that we introduced during the year, including Cappy Pulpy, will yield positive results in 2014 and beyond.


Cost Optimisation

        We have set three core targets: to improve and optimise our infrastructure; to leverage our scale and to exploit our SAP Wave 2 platform across the business. During 2013 we achieved success in each of these objectives.

        We continued to build our Business Services Organisation in Bulgaria with a view to streamlining and centralising many of our finance and HR processes and improving customer service and internal

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controls. We also continued to consolidate our procurement processes in order to leverage our scale to secure competitive input pricing.

        Since 2008, we have reduced the number of manufacturing plants in Established and Developing Markets by 32%, and the distribution centres and warehouses in our total footprint, by 16% and by 9% respectively. We have also invested in new, state of the art facilities, with an emphasis on cross border consolidation. In 2013, for example, we opened an innovative new juice drink production facility in Romania to service our operations in Bosnia & Herzegovina, Bulgaria, Croatia, Czech Republic, Hungary, Romania and Slovakia.

        With the recent implementation in Nigeria, almost 100% of the Group is now sharing SAP Wave 2, representing one of our greatest initiatives to improve operating efficiencies.


Our people

        We continue to focus on the skills and capabilities of our more than 38,000 employees. In 2013, a core focus was maintaining and strengthening our talent pipeline ensuring that we have the right people in the right positions. As a result of our efforts, 90% of new general managers and more than 80% of function heads were promoted from within the Group. We also hired more than 200 management trainees, 50% more than in 2012. Our accomplishments were recognised through our employee surveys, which showed a 6% improvement in both engagement and values scores, despite significant austerity measures in many of our countries. The engagement levels of our top 300 leaders exceeded benchmarks against other fast moving consumer goods companies.


A positive impact

        Acting responsibly and maintaining trust in our business is a cornerstone for our sustainable development and future growth. In 2013, we supported Youth Development initiatives in many countries particularly those most impacted by the economic downturn. In Bulgaria, in conjunction with Sofia Technical University and the English Language Faculty of Engineering, company employees voluntarily gave lectures to students to enhance their business skills. Similarly we have Graduate Trainee Schemes in many operations, offering young and talented individuals the opportunity to build a career within our organisation. In 2013, we more than doubled participation with 400 graduates taking part. Both of these programmes will be run again during 2014.

        We continue to build on our strong partnership with the Red Cross/Red Crescent societies particularly in disaster relief preparedness, community care, health training and fund raising. During 2013, we provided help and supply of almost 200,000 litres of beverages to rescue workers, volunteers and flood victims, as well as emergency funding in Austria, Czech Republic, Slovakia and Hungary.

        Active lifestyle programmes to get young people and their families to move more and be physically active are becoming increasingly important, and in 2013 more than 2.1 million people participated in these programmes across Coca-Cola HBC territories.

        Other initiatives included supporting International Danube Day, the world's largest river festival and working with The Coca-Cola Company's 5by20 programme to empower women in Nigeria, with 32,000 outlets now managed by women entrepreneurs.

        Our CO2 emissions initiatives focused on improving energy efficiency and switching to cleaner energy sources, reducing our energy consumption, working with suppliers to reduce indirect emissions, developing and promoting low-carbon technologies and rolling-out Hydrofluorocarbon-free (HFC-free) coolers.

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Looking Forward

        Looking ahead, economic conditions in most of our markets will remain weak in 2014 and we expect macroeconomic and currency exchange headwinds. We have built strong foundations to capture opportunities for future growth. In our emerging markets, average per capita consumption of sparkling beverages is less than one third of the per capita consumption in the UK and less than a quarter of the per capita consumption in Germany. We believe that over time, convergence to these higher consumption levels represents an attractive growth opportunity for Coca-Cola HBC.

        We also have important growth opportunities in working closely with our current customers to create joint value. Across many of our markets local and private brands still account for a significant share of the NARTD beverage category. We believe that our portfolio of brands combined with our proven ability to win at the point of sale, positions us well to capture growth for the long term.

        Last but not least, we will continue to drive operating efficiencies to enhance our competitiveness. For 2014, our objective is to further improve the efficiency of our production infrastructure, continue to optimise our logistics and route-to-market, make strategic revenue-generating investments and maintain tight cost control.

GRAPHIC

Dimitris Lois
Chief Executive Officer

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INFORMATION ON THE CCHBC GROUP

Historical information

        The CCHBC Group was formed through the combination of Hellenic Bottling Company S.A. and Coca-Cola Beverages plc on 9 August 2000.

        Hellenic Bottling Company S.A., a corporation incorporated under the laws of Greece in 1969, was headquartered in Athens. In 1981, Kar-Tess Holding acquired a 99.9% interest in Hellenic Bottling Company S.A. The shares of Hellenic Bottling Company S.A. were listed on the Athens Exchange in July 1991 and it became the largest non-financial company listed on the Athens Exchange. The Kar-Tess Group held an interest of approximately 68.6% in Hellenic Bottling Company S.A. immediately prior to its acquisition of Coca-Cola Beverages plc in August 2000.

        Hellenic Bottling Company S.A.'s original territory was Greece, where TCCC granted it bottling rights in 1969. After 1981, Hellenic Bottling Company S.A. expanded its business through acquisitions and, immediately prior to the acquisition of Coca-Cola Beverages plc, operated bottling plants in 11 countries having an aggregate population of approximately 200 million. Hellenic Bottling Company S.A. had operations in Greece, Bulgaria, Armenia, FYROM (through an equity investment), Serbia, Montenegro, Northern Ireland, the Republic of Ireland, Nigeria, part of Romania, Moldova and part of the Russian Federation (through an equity investment).

        In July 1998, Coca-Cola Amatil Limited, an Australian-based bottler of the products of TCCC, de-merged its European operations, resulting in the formation of Coca-Cola Beverages plc. The Territories served by Coca-Cola Beverages plc consisted of Austria, Switzerland, Croatia, the Czech Republic, Hungary, Poland, Slovakia, Slovenia, Belarus, Bosnia and Herzegovina, part of Romania and Ukraine. Coca-Cola Beverages plc also acquired the Northern and Central Italian bottling operations of TCCC As a result, immediately prior to its acquisition by Hellenic Bottling Company S.A., Coca-Cola Beverages plc had bottling operations in 13 countries with an aggregate population of approximately 200 million. Coca-Cola Beverages plc was incorporated under the laws of England and Wales and was listed on the London Stock Exchange ("LSE"), with a secondary listing on the Australian Stock Exchange. Immediately prior to Coca-Cola Beverages plc's acquisition by Hellenic Bottling Company S.A, TCCC held, directly and indirectly, a 50.5% interest in Coca-Cola Beverages plc, The Olayan Group, a diversified multinational Saudi Arabian group which holds an interest in the bottler of products of TCCC for Saudi Arabia, held a 10.8% interest, while the remainder of Coca-Cola Beverages plc's shares were publicly held.

        Following the acquisition of Coca-Cola Beverages plc, Hellenic Bottling Company S.A. was renamed Coca-Cola Hellenic Bottling Company S.A. and became the second largest bottler of products of TCCC in the world at that time, based on sales volume. The CCHBC Group retained its headquarters in Athens and Coca-Cola Hellenic Bottling Company S.A.'s shares were listed on the Athens Exchange, with secondary listings on the LSE and the Australian Stock Exchange.

        On 23 November 2001, the CCHBC Group purchased from TCCC all of its wholly-owned and majority-owned bottling operations in the Russian Federation through the purchase of the Cyprus holding company, Star Bottling Limited and LLC Coca-Cola Stavropolye Bottlers. The Russian operating subsidiary of Star Bottling Limited is LLC Coca-Cola HBC Eurasia following the merger of LLC Coca-Cola Vladivostok Bottlers in 2005. In addition, on the same date the CCHBC Group also purchased TCCC's 40% interest in Coca-Cola Molino Beverages Limited, a company in which the CCHBC Group already held the remaining 60%. As a result of this acquisition, the CCHBC Group gained the exclusive rights to sell and distribute products of TCCC throughout the Russian Federation. On 2 January 2002, the CCHBC Group completed the acquisition from TCCC of its bottling operations in the Baltic countries of Lithuania, Estonia and Latvia.

        Coca-Cola Hellenic Bottling Company S.A. listed its ADSs on the NYSE on 10 October 2002.

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        Since 2002, the CCHBC Group have expanded their presence in the combined Still and Water beverages category. The CCHBC Group acquired Römerquelle GmbH, an Austrian mineral water company (December 2003), Gotalka d.o.o., a Croatian mineral water company (January 2004), Bankya Mineral Waters Bottling Company EOOD, a Bulgarian mineral water company (June 2005). The CCHBC Group developed the NaturAqua mineral water brand in Hungary (November 2002) and the Olimpja water brand in Bosnia (August 2004).

        The CCHBC Group acquired, jointly with TCCC, Valser Mineralquellen AG, a Swiss mineral water company (September 2002), Dorna Apemin S.A., Romania's premier sparkling mineral water company (December 2002), Multivita sp. z o.o., a Polish mineral water company (October 2003), Vlasinka d.o.o., a Serbian mineral water company (April 2005), the Multon Z.A.O. group, a leading Russian fruit juice producer (April 2005), Fresh & Co, a leading juice company in Serbia (March 2006) and Fonti del Vulture S.r.l., a producer of high quality mineral water in Italy with significant water reserves (July 2006).

        The CCHBC Group also acquired a hot beverages vending operator in Hungary, Yoppi Kft. (August 2006), a direct full service vending company in Italy, Eurmatik S.r.l. (May 2007) and a company owning a newly constructed production facility in the Russian Federation, OOO Aqua Vision (September 2007). Eurmatik S.r.l. was subsequently sold in February 2011.

        On 5 April 2006, the CCHBC Group successfully completed the tender offer for the outstanding share capital of Lanitis Bros Public Limited (subsequently renamed Lanitis Bros Limited), a beverage company in Cyprus, with a strong portfolio of products, including those of TCCC, as well as its own juice and dairy products. Following completion of the tender offer, the CCHBC Group acquired 95.4% of the share capital of Lanitis Bros Limited. Following completion of the tender offer, the CCHBC Group initiated a mandatory buy-out process in accordance with Cypriot law for the purposes of acquiring the remaining shares in Lanitis Bros Limited which was subsequently delisted from the Cyprus Stock Exchange. Subsequent to the date of acquisition and up to 31 December 2006, the CCHBC Group acquired an additional 11,218,735 shares representing 4.5% of the share capital of Lanitis Bros Limited for a total consideration of €3.4 million, bringing the CCHBC Group's equity ownership to 99.9%. Effective 28 March 2008, the CCHBC Group sold the "Lanitis" juice trademarks to TCCC. In December 2008, the CCHBC Group acquired the remaining share capital of Lanitis Bros Limited, bringing its equity ownership to 100%.

        On 11 December 2008, the CCHBC Group acquired 100% of Socib S.p.A. and related entities, the second largest Coca-Cola bottler in Italy. The territory of Socib S.p.A. covered the southern Italian mainland plus Sardinia. The total consideration for the transaction was €209.3 million (excluding acquisition costs), which included the assumption of debt of €38.9 million.

        During 2011, the CCHBC Group acquired the remaining non-controlling interests in Nigerian Bottling Company plc and Coca-Cola HBC—Srbija d.o.o., bringing the CCHBC Group's interest in these subsidiaries to 100%.


Share Exchange Offer

        On 11 October 2012, CCHBC announced a share exchange offer to acquire all of the outstanding Coca-Cola Hellenic Shares, including those represented by Coca-Cola Hellenic ADSs, in exchange for CCHBC Ordinary Shares or CCHBC ADSs on a one-for-one basis (the "Share Exchange Offer"). The purpose of the Share Exchange Offer was to facilitate a premium listing on the LSE of the CCHBC Group under a new Swiss holding company along with a parallel listing of the CCHBC Ordinary Shares on the Athens Exchange and a listing of the CCHBC ADSs on the New York Stock Exchange (the "NYSE").

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        On 25 April 2013, CCHBC acquired 96.85% of the issued Coca-Cola Hellenic Bottling Company S.A. shares (representing 355,009,014 shares), including shares represented by ADSs, following the successful completion of the Share Exchange Offer and became the new parent company of the Group. Trading in CCHBC Ordinary Shares commenced on the LSE and the Athens Exchange and regular way trading in CCHBC ADSs commenced on the NYSE on 29 April 2013.

        On 17 June 2013, CCHBC completed the statutory buy-out under Greek law of the remaining shares of Coca-Cola Hellenic Bottling Company S.A. that it did not acquire upon completion of the Share Exchange Offer. Consequently, Coca-Cola Hellenic Bottling Company S.A. became a wholly owned subsidiary of CCHBC. Out of the remaining 3.15% interest acquired in Coca-Cola Hellenic Bottling Company S.A., representing 11,544,493 shares, 11,467,206 shares were exchanged for equal number of CCHBC Ordinary Shares and 77,287 shares were acquired for an aggregate cash consideration of €1.0 million.

        CCHBC's registered seat is in Steinhausen, Switzerland, and the address of its registered office is Turmstrasse 26, CH-6300 Zug, Switzerland. CCHBC's telephone number is +41 (0) 41 726 01 10. CCHBC has appointed CT Corporation System, located at 111 Eighth Avenue, 13th Floor, New York, NY 10011, USA, as its agent for service of process in any suit, action or proceeding with respect to CCHBC Ordinary Shares or CCHBC ADSs and for actions under US federal or state securities laws brought in any US federal or state court located in The City of New York, Borough of Manhattan, and it has submitted to the jurisdiction of such courts.


Other recent transactions

Share buy-back (2012 and 2011)

        On 30 April 2009, Coca-Cola Hellenic Bottling Company S.A.'s board of directors authorised a buy-back programme for a maximum of up to 5% of its paid-in share capital during the 24-month period from the date of the extraordinary general meeting of 27 April 2009 which approved a share buy-back programme pursuant to Article 16 of Greek Codified Law 2190/1920 (i.e. until 26 April 2011). Based on Coca-Cola Hellenic Bottling Company S.A.'s capitalisation at that date, the maximum amount that might have been bought back pursuant to the programme was 18,270,104 shares. Purchases under the programme were subject to a minimum purchase price of €1.0 per share and a maximum purchase price of €20.0 per share. Applicable law does not specify the extent of implementation of such approved share buy-back programmes. The buy-back programme expired on 26 April 2011. During the period from 30 April 2009 to 26 April 2011, Coca-Cola Hellenic Bottling Company S.A. purchased 3,430,135 Coca-Cola Hellenic Shares pursuant to the share buy-back programme.

        On 25 June 2012, the annual general meeting of Coca-Cola Hellenic Bottling Company S.A.'s shareholders approved a share buy-back programme for a maximum of up to 5% of its paid-in share capital during the 24-month period following the meeting pursuant to Article 16 of Greek Codified Law 2190/1920. Based on Coca-Cola Hellenic Bottling Company S.A.'s capitalisation at that date, the maximum amount that could be bought back pursuant to the programme was 18,327,367 shares. Any purchases under the programme were subject to a minimum purchase price of €1.0 per share and a maximum purchase price of €30.0 per share. No shares were purchased pursuant to this programme.


Summary of recent acquisitions/disposals

        In recent years, the CCHBC Group has selectively broadened its portfolio of brands in its combined Still and Water beverages category through the acquisition of natural mineral water and juice businesses, in order to capture sales opportunities through its local distribution and marketing capabilities. While the CCHBC Group also remains open to the possibility of expanding into new

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Territories over time, if such an opportunity arises, this does not currently form part of its core business strategy.

 
  Effective date
of acquisition
  Primary focus   Business
segment
  Location   Consideration  
 
   
   
   
   
  (euro in
millions)

 

Acquired business

                       

MS Foods UAB

  20 April 2011   Juice   Emerging   Belarus     2.5  

Acquired non-controlling interests

                       

Nigerian Bottling Company plc

  29 August 2011   Non-alcoholic ready-to-drink beverages   Emerging   Nigeria     100.2  

Coca-Cola HBC—Srbija d.o.o. 

  From 5 January 2011 to 19 August 2011   Non-alcoholic ready-to-drink beverages   Emerging   Serbia     17.7  

CCHBC Bulgaria AD. 

  14 January 2013   Non-alcoholic ready-to-drink beverages   Emerging   Bulgaria     13.3  

Disposed business

                       

Eurmatik S.r.l. 

  2 February 2011   Vending machines   Established   Italy     13.5  


Acquisition of non-controlling interest in CCHBC Bulgaria AD (2013)

        On 14 January 2013, the Group acquired 14.0% of CCHBC Bulgaria AD, bringing the Group's interest in the subsidiary to 99.39%. The consideration paid for the acquisition of non controlling interests acquired was €13.3 million and the carrying value of the additional interest acquired was €8.2 million, the difference between the consideration and the carrying value of the interest acquired has been recognized in retained earnings.


Acquisition of non-controlling interest in Nigerian Bottling Company plc ("NBC") (2011)

        On 8 June 2011, the board of directors of NBC, a subsidiary of CCHBC resolved to propose a scheme of arrangement between NBC and its non-controlling interests, involving the cancellation of part of the share capital of NBC. The transaction was approved by the board of directors and general assembly of NBC on 8 June 2011 and 22 July 2011, respectively, and resulted in the acquisition of the remaining 33.6% voting shares of NBC, bringing the interest of CCHBC in NBC to 100%. The transaction was completed in September 2011 and NBC was de-listed from the Nigerian Stock Exchange. The consideration for the acquisition of non-controlling interests was €100.2 million, including transaction costs of €1.8 million. The difference between the consideration and the carrying value of the interest acquired amounting to €60.1 million has been recognised in retained earnings while the accumulated components recognised in other comprehensive income have been reallocated within the equity of the CCHBC Group.


Acquisition of MS Foods UAB (2011)

        On 20 April 2011, the CCHBC Group, along with TCCC, acquired through Multon Z.A.O., the Russian juice joint arrangement, all outstanding shares of MS Foods UAB, a company that owns 100% of the equity of Vlanpak FE ("Vlanpak"), a fruit juice and nectar producer in Belarus. The CCHBC Group's share of the acquisition consideration was €3.9 million including an assumption of debt of €1.4 million. The acquisition has resulted in the CCHBC Group recording of intangible assets of €2.9 million in its Emerging Markets segment. Acquisition related costs recognised as an expense in income statement, under operating expenses, amounted to €0.3 million.

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Acquisition of non-controlling interest in Coca-Cola HBC—Srbija d.o.o. ("CCH Serbia") (2011 and 2010)

        On 25 June 2010, the CCHBC Group initiated a tender offer to purchase all remaining shares of the non-controlling interest in CCH Serbia. The tender offer was completed on 2 August 2010 and resulted in the CCHBC Group increasing its stake in CCH Serbia to 91.2% as at 31 December 2010. In 2011, the CCHBC Group acquired all the remaining interest in the subsidiary. The consideration paid for the acquisition of non-controlling interest acquired in 2011 was €17.7 million, including transaction costs of €0.4 million and the carrying value of the additional interest acquired was €11.4 million. The difference between the consideration and the carrying value of the interest acquired has been recognised in retained earnings.


Sale of Eurmatik S.r.l. (2011)

        In February 2011, the CCHBC Group sold all its interests in Eurmatik S.r.l., the vending operator in Italy. The consideration was €13.5 million and the cash and cash equivalents disposed were €0.4 million. The disposal resulted in the CCHBC Group derecognising €12.0 million of intangible assets and €12.7 million of net assets. The disposal of Eurmatik S.r.l resulted in a gain of €0.8 million in the Established Markets segment.


Organisational structure

        The table below sets forth a list of the CCHBC Group's principal companies, their country of registration and the CCHBC Group's effective ownership interest in such subsidiaries as at 14 March 2014.

Principal Companies
  Country of registration   % ownership at
14 March 2014
 

3E (Cyprus) Limited(10)

  Cyprus     100.0 %

AS Coca-Cola HBC Eesti

  Estonia     100.0 %

Bankya Mineral Waters Bottling Company EOOD

  Bulgaria     100.0 %

Brewinvest S.A. Group(1)

  Greece     50.0 %

BrewTech B.V. Group(1)(4)

  The Netherlands     50.0 %

CC Beverages Holdings II B.V. 

  The Netherlands     100.0 %

CCB Management Services GmbH

  Austria     100.0 %

CCHBC Armenia CJSC

  Armenia     90.0 %

CCHBC Bulgaria AD

  Bulgaria     99.4 %

CCHBC Insurance (Guernsey) Limited

  Guernsey     100.0 %

CCHBC IT Services Limited

  Bulgaria     100.0 %

Coca-Cola Beverages Austria GmbH

  Austria     100.0 %

Coca-Cola Beverages Belorussiya

  Belarus     100.0 %

Coca-Cola Beverages Ceska republika, s.r.o. 

  Czech Republic     100.0 %

Coca-Cola Beverages Ukraine Ltd

  Ukraine     100.0 %

Coca-Cola Bottlers Chisinau S.R.L. 

  Moldova     100.0 %

Coca-Cola Bottlers Iasi Srl

  Romania     99.2 %

Coca-Cola Bottling Company (Dublin) Limited

  Republic of Ireland     100.0 %

Coca-Cola HBC-Srbija d.o.o.(9)

  Serbia     100.0 %

Coca-Cola HBC B-H d.o.o. Sarajevo

  Bosnia and Herzegovina     100.0 %

Coca-Cola HBC Finance B.V. 

  The Netherlands     100.0 %

Coca-Cola HBC Finance plc

  England and Wales     100.0 %

Coca-Cola HBC Greece S.A.I.C.(6)

  Greece     100.0 %

Coca-Cola HBC Holdings B.V.(8)

  The Netherlands     100.0 %

Coca-Cola HBC Hrvatska d.o.o. 

  Croatia     100.0 %

Coca-Cola HBC Hungary Ltd

  Hungary     100.0 %

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Principal Companies
  Country of registration   % ownership at
14 March 2014
 

Coca-Cola HBC Ireland Limited

  Republic of Ireland     100.0 %

Coca-Cola HBC Italia S.r.l. 

  Italy     100.0 %

Coca-Cola HBC Kosovo L.L.C. 

  Kosovo     100.0 %

Coca-Cola HBC Northern Ireland Limited

  Northern Ireland     100.0 %

Coca-Cola HBC Polska sp. z o.o. 

  Poland     100.0 %

Coca-Cola HBC Romania Ltd

  Romania     100.0 %

Coca-Cola HBC Slovenija d.o.o. 

  Slovenia     100.0 %

Coca-Cola HBC Slovenska republika, s.r.o. 

  Slovakia     100.0 %

Coca-Cola HBC Switzerland Ltd(2)

  Switzerland     99.9 %

Coca-Cola Hellenic B.V.(8)

  The Netherlands     100.0 %

Coca-Cola Hellenic Bottling Company-Crna Gora d.o.o., Podgorica

  Montenegro     100.0 %

Coca-Cola Hellenic Business Service Organisation(3)

  Bulgaria     100.0 %

Coca-Cola Hellenic Procurement GmbH

  Austria     100.0 %

Deepwaters Investments Ltd

  Cyprus     50.0 %

Lanitis Bros Ltd

  Cyprus     100.0 %

LLC Coca-Cola HBC Eurasia

  Russia     100.0 %

MTV West Kishinev Bottling Company S.A. 

  Moldova     100.0 %

Multon Z.A.O. Group(1)(7)

  Russia     50.0 %

Nigerian Bottling Company Ltd(5)

  Nigeria     100.0 %

SIA Coca-Cola HBC Latvia

  Latvia     100.0 %

Star Bottling Limited

  Cyprus     100.0 %

Star Bottling Services Corp. 

  British Virgin Islands     100.0 %

Tsakiris S.A. 

  Greece     100.0 %

UAB Coca-Cola HBC Lietuva

  Lithuania     100.0 %

Valser Services AG(3)

  Switzerland     99.9 %

Yoppi Hungary Kft. 

  Hungary     100.0 %

(1)
Joint arrangements (see note 6 to the CCHBC Group's consolidated financial statements for further information).

(2)
During 2010, Coca-Cola Beverages AG was renamed to Coca-Cola HBC Switzerland Ltd.

(3)
Incorporated during 2011.

(4)
The BrewTech B.V. Group of companies is engaged in the bottling and distribution of soft drinks and beer in FYROM. Prior to April 2012, the Brewtech B.V. Group formed part of the Brewinvest S.A. Group.

(5)
On 8 June 2011, the board of directors of Coca-Cola Hellenic Bottling Company S.A.'s subsidiary Nigerian Bottling Company plc ("NBC") resolved to propose a scheme of arrangement between NBC and its minority shareholders, involving the cancellation of part of the share capital of NBC. The transaction was approved by the board of directors and general assembly of NBC on 8 June 2011 and 22 July 2011, respectively, and resulted in the CCHBC Group to acquire all of the remaining 33.6% of the voting shares of NBC bringing the CCHBC Group's interest in the subsidiary to 100%. The transaction was completed in September 2011, see note 27 to the CCHBC Group's consolidated financial statements included elsewhere in this annual report for further information.

(6)
Effective from 1 August 2012, Elxym S.A. was renamed Coca-Cola HBC Greece S.A.I.C. On 25 June 2012, CCH's annual general meeting of shareholders approved the transfer of Coca-Cola

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    Hellenic Bottling Company S.A.'s operating assets and liabilities to Coca-Cola HBC Greece S.A.I.C, in accordance with Greek Law 2166/1993.

(7)
On 20 April 2011, the CCHBC Group, along with TCCC, acquired through Multon Z.A.O., MS Foods UAB, a company that owns 100% of the equity of Vlanpak FE, a fruit juice and nectar producer in Belarus.

(8)
Incorporated on 26 June 2013.

(9)
On 25 June 2010, the CCHBC Group initiated a tender offer to purchase all of remaining shares of the non-controlling interest in CCH Serbia. The tender offer was completed on 2 August 2010 and resulted in the CCHBC Group incresing its stake in CCH Serbia to 91.2% as of 31 December 2010. In 2011, the CCHBC Group acquired all of the remaining interests in the subsidiary. See note 27 to the CCHBC Group's consolidated financial statements included elsewhere in this annual report for further information.

(10)
On 29 November 2013, Coca-Cola Hellenic Bottling Company S.A. merged with and into 3E (Cyprus) Limited, a wholly-owned subsidiary of CCHBC and the surviving entity, in connection with an internal reorganisation of the CCHBC Group.


Business overview

Business and products

        The CCHBC Group owns, controls and operates a network of independent bottling plants and warehousing and distribution systems. The CCHBC Group operates 68 plants and 312 filling lines and maintains 252 distribution centers and 72 warehouses throughout the Territories. The CCHBC Group principally produces, sells and distributes non-alcoholic ready-to-drink beverages under bottlers' agreements and franchise arrangements with third parties and under its own brand names. The CCHBC Group also distributes beer and third party premium spirits in certain of its countries. The scale and reach of the CCHBC Group's distribution network and production capacity is a key element in its ability to deliver on its commercial objectives of developing and growing the range and penetration of its portfolio of products in each of the Territories.

        The CCHBC Group produces, sells and distributes an extensive portfolio of non-alcoholic ready-to-drink beverages. The CCHBC Group's business is principally engaged in producing, selling and distributing non-alcoholic ready-to-drink beverages under bottlers' agreements with TCCC. In some Territories the CCHBC Group also produces, sells, distributes and markets its own brands of juice and water beverages. In addition, the CCHBC Group bottles and distributes beer in Bulgaria and FYROM and the CCHBC Group distributes a selected number of third party premium spirit brands in certain of its countries. The CCHBC Group is one of the largest bottlers of non-alcoholic ready-to-drink beverages in Europe, operating in 28 countries with a total population of approximately 585 million people (including the CCHBC Group's equity investment in Brewinvest S.A., a business engaged in the bottling and distribution of beer in Bulgaria and BrewTech B.V., a business engaged in the bottling and distribution of beer and non-alcoholic ready-to-drink beverages in FYROM). In the year ended 31 December 2013, the CCHBC Group sold 2.1 billion unit cases (2.1 billion unit cases in 2012), generating net sales revenue of €6.9 billion (€7.0 billion in 2012). The products that the CCHBC Group produces, sells and distributes include Sparkling beverages and Still and Water beverages. The combined Still and Water beverages category includes juices, waters, sports and energy drinks and other ready-to-drink beverages such as teas and coffees. In the year ended 31 December 2013, the Sparkling beverages category accounted for 70% and the combined Still and Water beverages category accounted for 30% of the CCHBC Group's sales volume, as compared, respectively, to 69% and 31% in the year ended 31 December 2012. The CCHBC Group sells, produces and distributes products in a range of flavours and package combinations which vary from country to country.

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        The CCHBC Group is one of TCCC's key bottlers. TCCC considers the CCHBC Group to be a strategic partner, based on factors such as size, geographic diversification and financial and management resources, in which TCCC has a significant equity interest. In their day-to-day business relationship, TCCC and the CCHBC Group work closely together to maximise the success of TCCC's brand-related business. Whereas TCCC's focus is on general consumer marketing and brand promotion of TCCC's products (involving, for example, building brand equity for TCCC-owned brands, analysing consumer preferences and formulating general strategies and media advertising plans), the CCHBC Group has primary responsibility for, and controls, the customer relationships and route to market in each of its relevant Territories and develops and implements its own sales and marketing strategy in each of its relevant Territories.

        The CCHBC Group has entered into bottlers' agreements with TCCC for each of the Territories under which the CCHBC Group has the right to exclusively produce and, subject to certain limitations, sell and distribute products of TCCC in each of these Territories. Sales of products of TCCC (including trademarked beverages of joint ventures to which TCCC is a party) represented 97% of the CCHBC Group's total sales volume in the year ended 31 December 2013, with sales of products under the Coca-Cola brand, the world's most recognised brand, representing 42% of the CCHBC Group's total sales volume in that period. In addition to the Coca-Cola brand, the CCHBC Group's other core brands include Fanta, Sprite, Coca-Cola light (which the CCHBC Group sells in some of its Territories under the Diet Coke trademark) and Coca-Cola Zero. The CCHBC Group's core brands together accounted for 65% of its total sales volume in the year ended 31 December 2013. The CCHBC Group also produces, sells and distributes a broad range of brands of other Sparkling, Still and Water beverages which varies from country to country. It also distributes third party premium spirits which also vary from country to country. The CCHBC Group is committed to exploring new growth opportunities in the Sparkling, Still and Water beverages categories with TCCC by introducing new products and packages that satisfy the changing demands and preferences of consumers for those products in the CCHBC Group's markets. The CCHBC Group is also committed to expanding its distribution of third party premium spirits.

        For further information on the CCHBC Group's relationships with the TCCC and affiliated entities, see the section entitled "Additional Disclosures—Related Party Transactions—Relationship with The Coca-Cola Company".


Markets

        The CCHBC Group divides its Territories into three reporting segments. The Territories included in each segment share similar socio-economic characteristics, consumer habits, per capita Sparkling beverage consumption levels, as well as regulatory environments, growth opportunities, customers and distribution infrastructures. The CCHBC Group's three reporting segments are as follows:

    "Established Markets" which are Italy, Greece, Austria, the Republic of Ireland, Northern Ireland, Switzerland and Cyprus;

    "Developing Markets" which are Poland, Hungary, the Czech Republic, Croatia, Lithuania, Latvia, Estonia, Slovakia and Slovenia; and

    "Emerging Markets" which are the Russian Federation, Romania, Nigeria, Ukraine, Bulgaria, Serbia (including the Republic of Kosovo), Montenegro, Belarus, Bosnia and Herzegovina, Armenia, Moldova and FYROM (through an equity investment).

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Strengths

World's leading brands

        The CCHBC Group produces, sells and distributes Coca-Cola, the world's leading brand of non-alcoholic ready-to-drink beverages in terms of sales volume and the world's most recognised brand. The other brands licensed to the CCHBC Group by TCCC are also among the leading brands in their market categories. In particular, Coca-Cola light (which the CCHBC Group sells in some of its Territories under the Diet Coke trademark), Sprite and Fanta, together with Coca-Cola, are four of the world's five best-selling non-alcoholic ready-to-drink beverages in terms of sales volume.


Key bottler of TCCC

        The CCHBC Group is the second largest independent bottler of products of TCCC in the world in terms of net sales revenue and the second largest in terms of volume, reflecting its strategic importance within the Coca-Cola bottling system. The CCHBC Group works closely with TCCC, utilising their respective skills and assets to maximise the opportunities to increase sales in the CCHBC Group's Territories and, ultimately, increase value to the CCHBC Group's shareholders over the long term.


Balanced portfolio of markets

        The CCHBC Group has a balanced mix of markets, including more mature markets in its Established and Developing Markets and markets with high growth potential in its Emerging Markets. This balance allows the CCHBC Group to minimise external financing of its long-term growth and limit its exposure to the effects of potential economic or political instability in some of the CCHBC Group's Territories.


Significant markets with high growth potential

        The CCHBC Group believes that many of its Developing and Emerging Markets are underdeveloped in terms of Sparkling, Still, and Water beverage consumption as indicated by per capita non-alcoholic ready-to-drink beverages' consumption levels. As the beverage of choice in the Emerging and Developing Markets continues to evolve from tap water and homemade drinks towards branded, premium Sparkling, Still and Water beverages, the CCHBC Group believes that it is well positioned to capture a substantial share of this market growth. Not only is there an opportunity for sales revenue growth in these Territories through increased market penetration, but Territories such as Nigeria generally have a more favourable demographic profile for Sparkling beverages consumption since there are higher numbers of young people who generally consume more Sparkling beverages and the population growth rate in Nigeria is much higher than in the Established and Developing Markets.


Developed production and distribution capability

        Since 2002, the CCHBC Group has invested approximately €5.2 billion in property, plant and equipment to modernise its plant infrastructure and to expand the availability of cold drink equipment such as coolers. The CCHBC Group also maintains 252 distribution centres and 72 warehouses and it operates 68 plants and 312 filling lines throughout the Territories. As a result, the CCHBC Group believes that it has the production capacity and distribution infrastructure to meet volume growth at a relatively low incremental capital cost and to expand the availability of its products, especially the more profitable single-serve packages.

        In many of the Territories in which the CCHBC Group operates, it believes its distribution network is the most extensive in the Sparkling, Still, and Water beverages sectors.

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Large and skilled sales force

        The CCHBC Group believes that it has one of the largest and best-trained sales forces in the non-alcoholic ready-to-drink beverages industry in each of its Territories, amongst its 38,089 employees (on a full-time equivalent basis) across its operations for the year ended 31 December 2013. This allows the CCHBC Group to work closely and develop strong relationships with its customers.


Substantial scale benefits

        The CCHBC Group's scale offers significant opportunities arising from the sharing of knowledge and best practices across its Territories, procurement savings, and coordination and optimisation of investment planning, including capital expenditure.


Experienced management

        The CCHBC Group's senior management team has extensive experience in the non-alcoholic ready-to-drink beverages industry. This provides the CCHBC Group with strong knowledge of the industry, familiarity with its customers, and understanding of the development, manufacturing and sale of its products.


Strategy

        The CCHBC Group's strategic objective is to maximise shareholder value over time. The CCHBC Group's management uses the following key measures to evaluate the CCHBC Group's performance: volume, market share, net sales revenue per unit case, operating profit, free cash flow and operating expenses as a percentage of net sales revenue. For further details on the CCHBC Group's calculation of free cash flow and operating expenses as a percentage of net sales revenue, see the section entitled "Operating and Financial Review and Prospects".

        In order to achieve this objective, the CCHBC Group has devised a framework called the "Play to Win" strategic framework which defines four strategic pillars:

    Community Trust: caring for the communities in which the CCHBC Group operates by adding value, which helps the CCHBC Group win their trust, loyalty and build a long-lasting reputation for its business;

    Consumer Relevance: refreshing the consumers of the CCHBC Group's products and catering to their evolving needs and preferences;

    Customer Preference: developing the CCHBC Group's markets by delivering superior services to its customers; and

    Cost Leadership: improving efficiency and optimising use of capital, while driving overall cost efficiency throughout the organisation.

        A key enabler of the CCHBC Group's four strategic initiatives is building people capabilities, ensuring that the CCHBC Group has talent in key positions throughout the organisation and investing in the CCHBC Group's people to drive a high performance mindset now and in the future. The CCHBC Group consistently focuses on building the capabilities of its employees and works to enhance employee engagement and be a desirable employer. The CCHBC Group seeks to engage the heart and mind of its employees through its purpose statement, to inspire them to contribute to the business and the wider community. To act as a reference point to guide its initiatives, actions and strategy, the CCHBC Group has defined a set of six core values: authenticity, excellence, learning, caring for our people, performing as one, and winning with customers.

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Caring for the communities in which the CCHBC Group operates

        The CCHBC Group understands that the sustainable growth of its business goes hand in hand with sustainable development of its communities. The CCHBC Group is deeply committed to creating value for these communities and building its reputation as a trusted partner and a force for positive change.

        The CCHBC Group's activities in this area are focused on three initiatives: resource conservation & sustainability, promoting active healthy lifestyle and community development. The CCHBC Group remains committed to leading initiatives aimed at wastewater treatment, energy efficiency and climate protection and efforts aimed at reducing the amount of raw materials used in the CCHBC Group's packaging. At the same time, the CCHBC Group continues to promote active lifestyles, encourage community and volunteer work and support road safety. Many of these activities are undertaken in collaboration with customers, business associates, non-profit organisations, and government bodies to enhance their effectiveness.


Refreshing the consumers of the CCHBC Group's products and catering to their evolving needs and preferences

        Consumer needs and demands are constantly evolving throughout the CCHBC Group's markets. In order to remain relevant to the consumers of the CCHBC Group's products, the CCHBC Group establishes clear category and brand priorities and defines focused objectives. The CCHBC Group drives innovation by continuously building on its strong family of brands and introducing new flavours and packages, launching existing brands in new markets and re-launching or reinvigorating existing brands where appropriate. For example, in many of the CCHBC Group's markets where adults are a growing segment of the consumer base, the CCHBC Group has launched several product innovations to ensure it meets their expectations. The CCHBC Group sells Coke Zero, a full-flavour no-calorie Coca-Cola beverage that is popular among adult consumers, in 21 out of its 28 markets. In addition, by undertaking the distribution of a select number of premium spirit brands, the CCHBC Group is well-placed to capitalise on an increasingly important consumption opportunity: the attractiveness of the CCHBC Group's products as mixers with premium spirits in restaurants and on other "immediate consumption" occasions.

        The CCHBC Group's blueprint for ensuring ongoing consumer relevance can be summarised in a simple formula: availability, affordability, acceptability, activation and attitude.

        Availability means placing the CCHBC Group's range of products within easy reach of consumers in the "right" package, in the "right" location, at the "right" time. The CCHBC Group focuses on developing strong relationships with its customers in order to ensure that the "right" products are in stock, highly visible and readily accessible wherever and whenever consumers may desire a non-alcoholic ready to drink beverage.

        Affordability means offering a wide variety of desirable, premium quality products, in packages appropriate for the occasion, at the "right" price. In doing so, the CCHBC Group aims to reach as many consumers as possible while taking into account the differing levels of purchasing power in the Territories in which it operates.

        Acceptability means supplying an extensive and growing range of products that meet the highest quality standards in each country, enhancing their acceptability to consumers. The CCHBC Group's experience in quality control, customer service and efficient distribution, combined with a detailed understanding of consumer needs and access to the most effective communications channels, allows it to reach out to customers and consumers in each of the CCHBC Group's markets and meet their demands.

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        Activation means motivating consumers to choose the CCHBC Group's products by improving product availability and attractiveness at the point of purchase and by building brand strength in its local markets. The CCHBC Group achieves this in close cooperation with its customers through the placement of cold drink equipment, such as coolers and vending machines, the provision of signage and other point of sale materials and the implementation of local marketing and promotional initiatives.

        Attitude is about the way the CCHBC Group's sales representatives and its people behave every day in their interactions with customers ensuring that the CCHBC Group meets their needs with an objective to become a preferred supplier.

        The CCHBC Group has clear category priorities in pursuing its strategy in the marketplace. The CCHBC Group continues to focus on growing volume and value shares in the Sparkling beverages and energy categories. In the juice category, the CCHBC Group focuses on volume and value share growth and aims to enhance consumer appeal with package and product innovations, such as Cappy Pulpy. In the Water category, the CCHBC Group strategy is to continue to rationalise the Group's distinctive offerings while growing value ahead of volume. In ready-to-drink tea, the CCHBC Group maintains a selective approach, focusing on immediate consumption and profitable future consumption opportunities.


Developing the CCHBC Group's markets by delivering superior services to its customers

        The retail environment for beverages continues to transform rapidly, with the shift towards modern, large-scale and discount retail formats expanding to more of the CCHBC Group's markets. The CCHBC Group's response has been to re-emphasise "customer preference" as a key focus of its business. This means building true partnerships that create sustainable value and profitable growth for the CCHBC Group's business and its customers across all key channels. By finding new ways to win together in the marketplace, the CCHBC Group aims to be the preferred supplier to all of its customers. To achieve this, the CCHBC Group has adopted a comprehensive set of initiatives designed to build collaborative customer relationships and ensure excellent execution.

        In order to ensure that the CCHBC Group is executing in ways that drive consumer relevance and revenue growth, the CCHBC Group has developed a strategic tool that is called "OBPPC" (Occasion, Brand, Price, Package, Channel), which the CCHBC Group has turned into an integral part of its business: for each consumption occasion, the CCHBC Group offers relevant brands in appropriate packages, at the right price, in the target channel for the relevant occasion. This strategic tool, when backed by rigorous market research and innovative in-store execution, is a powerful way of identifying and capturing untapped opportunity in the markets that the CCHBC Group serves. The CCHBC Group begins by conducting a detailed analysis of the shopping experience: the different occasions that motivate consumers to shop, the retail customer environment and the product offering in a market outlet. From this, the CCHBC Group gains insights about brand, package and price offers that best suit the consumer's specific needs and, based on those, it develops in-store executions for that channel that will grow revenue both for the CCHBC Group's customers and for its business. Finally, the CCHBC Group assesses the results and adjusts execution strategies accordingly.

        In addition, over the last few years the CCHBC Group introduced the concept of joint value creation with key customers, which is built on the premise that beverages offer significant growth not only for the CCHBC Group, but also for its retail customers. The CCHBC Group has also established customer care centres that provide a single and efficient point of contact between customers and the CCHBC Group leading to improved satisfaction scores. The CCHBC Group is undertaking "route to market" improvement projects in various markets to enhance customer service by understanding customers' evolving needs and providing segmented service.

        Finally, the CCHBC Group's execution in the marketplace is enhanced through its "Hellenic Good Morning Meeting" initiative whereby the CCHBC Group's sales force teams in each country meet

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physically or virtually on a regular basis, set key targets, review results, recognise best performers and share best practices.

        The level of the CCHBC Group's execution success in the market is monitored and improved through a 360 degree process which consists of creating the plan of success for each channel, defining the standards for execution excellence, tracking actual performance through market surveys and then coaching the sales force while rewarding successful performance.


Improving efficiency and optimising use of capital, while at the same time driving cost efficiency throughout the CCHBC Group

        The CCHBC Group has benefited from the increase in its size over the past years:

    by centralising the CCHBC Group's strategic procurement function for direct and indirect materials, it has been able to optimise its cost of raw materials, packaging material, indirect material and services; and

    by implementing best practices across the CCHBC Group, it has been able to improve its manufacturing, sales and distribution systems.

        The CCHBC Group intends to continue taking advantage of these benefits of scale to improve the efficiency of its operations. In 2011, the CCHBC Group's shared services project, the Coca-Cola Hellenic Business Services Organisation ("BSO"), commenced operations in Sofia, Bulgaria. The objective of the BSO is to standardise, encourage partnership in, and simplify key finance and human resources processes, which in turn, is expected to improve productivity, efficiency, internal controls and governance within the CCHBC Group's country operations at a reduced cost. The CCHBC Group's finance and human resources transactional processes have been transitioned selectively in a phased approach. From 2011 to 2013, 22 of the CCHBC Group's Territories and three corporate offices transitioned certain finance and human resources processes. The CCHBC Group intends to integrate more countries and processes in the BSO over the next 12-36 months. The CCHBC Group will continue to balance investment in new production and distribution infrastructure with improved utilisation of existing capacity.

        As part of the CCHBC Group's effort to optimise its cost base and sustain competitiveness in the marketplace, the CCHBC Group has undertaken and expects to continue to undertake restructuring initiatives, which are expected to deliver benefits in the form of reduced costs in cost of goods sold and operating expenses, as well as improved cash flows. Such restructuring initiatives mainly concern reducing employee costs, outsourcing of certain functions, as well as optimising the supply chain infrastructure. The CCHBC Group is also engaged in an ongoing process of adjusting and restructuring its distribution systems in order to improve customer service, reduce costs and inventory levels and increase asset utilisation.

        At the same time, the CCHBC Group continues to manage its capital expenditure carefully by focusing its investment on more profitable areas of its business, such as cold drink equipment for use in its immediate consumption channels, such as restaurants and cafés, bars, kiosks, grocery stores, gas stations, sports and leisure venues and hotels. Products sold in the immediate consumption channels typically generate higher margins, albeit on lower volume per retail outlet than future consumption channels. Consumption in these channels also helps enhance brand recognition for the CCHBC Group's products. Through the careful management of its capital expenditure, the efficient deployment of its assets, including cold drink equipment and distribution infrastructure, across the CCHBC Group's Territories and the use of appropriate financing arrangements, the CCHBC Group aims to optimise the utilisation of its capital.

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        Besides managing the allocation of its capital resources, the CCHBC Group constantly monitors its prevailing cost base and seeks to manage its operating expenses, a critical element for its long-term strategy for market leadership and sustainable growth. At the heart of this strategy are the CCHBC Group's ongoing efforts to create a cost management mindset and to nurture a culture of cost ownership throughout the organisation. Encouraging all of the CCHBC Group's people to "act like owners" of the business is an important element in creating a cost base that will not only be competitive in the context of the CCHBC Group's industry, but also sustainable in the long term.

        A key enabler for the customer service and cost saving initiatives discussed above has been business system standardisation across the group under a common software platform, SAP Wave 2 ("Wave 2"), which has been rolled out to 27 out of 28 of the CCHBC Group's Territories, and the last roll-out, FYROM, is scheduled for January 2015. This uniform business system enables sales force automation, with state of the art technology support for sales personnel; an end-to-end process approach; quick replication of best practices; and increased efficiency in business processes, through standardisation, automation and centralisation.


Distribution

Distribution channels

        The CCHBC Group classifies its broad range of customers into two distribution channels based on the consumer need that each channel meets:

    future (mainly at home) consumption, where consumers buy beverages in either multi-serve packages (typically one litre or more) or multi-packs of single-serve packages (typically 0.5 litre or smaller) for consumption at a later time; and

    immediate or impulse (mainly away from home) consumption, where consumers buy beverages in chilled single-serve packages (typically 0.5 litre or smaller) and fountain products for immediate consumption.

        The CCHBC Group then segments these two broad channels further into specific channels, such as hypermarkets, supermarkets, discount stores, grocery stores, wholesalers, hotels, restaurants and cafés, entertainment centres and offices in order to collate data and develop marketing plans specific to each channel. Some of these channels, such as grocery stores, fall into both consumption channels. For all channels and consumption occasions, the CCHBC Group strives to offer consumers the appropriate choice of beverage categories and brands to address their refreshment and hydration needs. At the same time, the CCHBC Group also strives to satisfy its customers' service and business needs.


Future consumption

        The CCHBC Group's principal future consumption channels are comprised of traditional grocery stores, supermarkets, hypermarkets and discount stores. Products sold in the CCHBC Group's future consumption channel typically generate higher volume and lower margins per retail outlet than those sold in its immediate consumption channel.

        The CCHBC Group believes that one key to success in its future consumption channel is working effectively with customers by driving total category growth in order to achieve favourable product placement at the point of sale. Key account managers are an important part of this strategy.

        The CCHBC Group seeks to develop and implement marketing and promotional programmes to profitably increase volume in its future consumption channel. Examples include price promotions on multi-serve multi-packs, offering gifts for multiple purchases, running prize competitions, product sampling events and launch of multi-packs of single-serve packages.

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        The CCHBC Group has begun to coordinate with its customers on optimising its supply chain through data exchange and other initiatives that help the CCHBC Group avoid out-of-stock events, while streamlining inventory management.

        Since the early 1990s, major retailers such as hypermarket and supermarket chains, have grown and consolidated significantly in many of the Territories in which the CCHBC Group operates. Such retailers are increasing their market share within the retail sector and account for a growing proportion of retail sales. The most international among them have also built powerful information systems which allow them to analyse their purchases across countries and compare prices and the profitability of the CCHBC Group's products. Some have also created international buying offices or participate in international buying groups that seek to establish agreements with suppliers at an international level. In addition, in some Territories, hypermarket and supermarket chains have developed or may develop their own private label products that compete directly with products of the CCHBC Group.


Immediate consumption

        The CCHBC Group's immediate consumption channel includes restaurants and cafés, bars, kiosks, gas stations, sports and leisure venues, hotels and offices, among others. Products sold in the CCHBC Group's immediate consumption channel typically generate lower volume and higher margins per retail outlet than those sold in its future consumption channel.

        The CCHBC Group believes that consumers generally prefer consuming its beverages chilled. Accordingly, a key strategy to increase sales in the immediate consumption channel is to ensure that products are available at the right temperature by making the CCHBC Group's products available in cold drink equipments, such as coolers. This type of investment also expands the CCHBC Group's marketplace for impulse consumption by reaching consumers in areas not served by traditional retail outlets, such as offices.

        The CCHBC Group's focus in its Territories, such as Poland, Ukraine, the Russian Federation and Italy, is to build a basic cold drink infrastructure through the placement of cold drink equipment; The CCHBC Group believes that this will enable it to capitalise on opportunities from the expected long-term development of retail outlets in the immediate consumption channel.

        As in the CCHBC Group's future consumption channel, key account management is also necessary in the CCHBC Group's immediate consumption channel, such as national or international quick-service restaurants.


Distribution infrastructure

        The CCHBC Group operates a mixed distribution system under which it delivers its products to the ultimate point of sale directly or indirectly through wholesalers and independent distributors.

        The CCHBC Group delivers its products to the point of sale directly using its own fleet of vehicles or dedicated independent third party carriers where appropriate, based on the structure of the local retail sector and other local considerations. By establishing a dedicated direct delivery capability in certain of its Territories, the CCHBC Group has been able to reach customers in areas where few adequate alternative distribution systems are available. In these Territories, the CCHBC Group believes that direct delivery to customers represents a significant competitive advantage by enabling closer customer relationships and greater influence over how the CCHBC Group's products are presented to consumers. Direct delivery facilitates relevant local marketing and allows the CCHBC Group to analyse and respond to retail demand and consumer purchasing patterns through merchandising and in-store execution.

        In all of its Territories, the CCHBC Group coordinates and monitors its deliveries through its own warehouse and distribution network and control centres. The CCHBC Group's direct delivery system

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covers a significant portion of its customers across its Territories through 252 distribution centres. Deliveries are generally made between 24 and 48 hours from the time an order is taken. The CCHBC Group is engaged in an ongoing process of adjusting and restructuring its distribution systems in order to improve customer service, reduce costs and inventory levels and increase asset utilisation.

        Wholesalers fulfil an important role in the distribution of most retail product categories. The CCHBC Group is working to develop closer relationships with its key wholesalers to ensure that all elements of its sales and marketing efforts are implemented as effectively as possible and that appropriate customer service levels are met.


Production

        The CCHBC Group produces its Sparkling beverages by mixing treated water, concentrate and sweetener. The CCHBC Group carbonates the mixture and fills it into refillable or non-refillable containers on automated filling lines and then packages the containers into plastic cases, cardboard cartons or encases them in plastic film on automated packaging lines.

        For example, the CCHBC Group's processed table waters, Eva and Bonaqua, are produced by purifying water, subsequently filled into glass and plastic packages for distribution. The CCHBC Group adds a certain mix and quantity of minerals supplied by TCCC to Bonaqua water as part of the production process. The CCHBC Group also adds carbon dioxide to carbonated Bonaqua products. For the purposes of its Bonaqua production in Slovakia only, the CCHBC Group extracts and bottles natural spring water from a water source. The majority of the CCHBC Group's water products, other than Bonaqua and Eva, are natural spring or mineral waters. The CCHBC Group produces them by bottling water drawn directly from a water source or well using automated filling lines.

        The CCHBC Group's non-carbonated products are produced by mixing treated water with, depending on the product, concentrated juice and/or concentrate flavours and sugar. They are then pasteurised and filled, in one of three ways: aseptically into multi-layer cardboard or plastic packages; by way of hot-filling and sealing in glass or aluminium packages; or by pasteurising the product in glass or aluminium packages after it is filled and sealed in the container.

        The CCHBC Group's dairy products are produced from fresh milk to which it applies a separation process to remove the cream. The cream is then added back into the milk at various percentages depending on requirements for the final product and the final product is subsequently pasteurised. Surplus cream is then transferred to another line, which is used only for cream pasteurisation. The final products are filled into plastic bottles and distributed to the marketplace in chilled storage.

        Sealed cans and bottles are imprinted with date codes that allow the CCHBC Group to fully trace the product's point of origin, including the production line on which it was produced, the production batch and the time of filling. This allows the CCHBC Group to identify the ingredients, production parameters and primary packaging used to manufacture each product. The date codes also permit the CCHBC Group to track products in the trade and to monitor and replace inventory in order to provide fresh products. The CCHBC Group purchases all of the packages for its products from third parties, except in the case of polyethylene terephthalate ("PET") bottles which, in many of its production facilities, the CCHBC Group manufactures itself from preforms or resin.


Quality assurance and food safety

        The CCHBC Group believes that ensuring its products are safe and of a high quality is critical to the success of its business. The CCHBC Group is fully committed to maintaining the highest standards in each of its Territories with respect to the purity of water, the quality of its other raw materials and ingredients and the integrity of its packaging.

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        The CCHBC Group continuously monitors the production process for compliance with these standards. The CCHBC Group has sophisticated control equipment for the key areas of its processes to ensure that it complies with applicable specifications. The CCHBC Group manages these control systems through formalised quality management systems compliant with the ISO 9001 standard. As part of the CCHBC Group's infrastructure optimisation process, three production facilities were closed by 31 December 2013. Reflecting these changes, 67 of 68 production sites had achieved ISO 9001 certification by 31 December 2013. The CCHBC Group has implemented Hazard and Critical Control Points food safety programmes to ensure the safety and hygiene of its products. By 31 December 2013, 67 of 68 plants are certified to ISO 22000. This programme will expand to the remaining manufacturing facility in 2014. Throughout 2013, the CCHBC Group continued to enhance its food safety management systems by achieving one additional certification to FSSC 22000, the Global Food Safety Initiative endorsed food safety management system, resulting in 67 of 68 plants being certified to this standard. Independent quality audits are also performed regularly to confirm that the CCHBC Group complies with quality standards, to assess the effectiveness of its quality and food safety management systems and to assure that all of its key controls are independently validated. During 2013, 84 quality system and 87 food safety system audits were conducted by independent agencies. In addition, 24 compliance audits were conducted on behalf of TCCC. These audits were performed in the CCHBC Group's production facilities comprising Sparkling beverages and/or juice plants, milk and mineral water plants, including the production facilities of the CCHBC Group's joint venture operations.

        The CCHBC Group maintains a quality control laboratory at each production facility for the testing of raw materials, packaging and finished products to ensure that they comply with local regulatory requirements and the strict quality standards stipulated in the CCHBC Group's bottlers' agreements with TCCC. The CCHBC Group is also required to obtain supplies of raw materials (ingredients and packaging) exclusively from suppliers approved by TCCC.

        In addition, the CCHBC Group regularly undertakes quality audits in its distribution channels to check compliance with package and product specifications. This process involves taking regular random samples of beverages from various channels and testing them against established quality criteria and conducting age surveys of product in the trade.


Property, plant and equipment

Production

        The CCHBC Group operated 68 plants as at 31 December 2013 (excluding the snack food plant). A number of the CCHBC Group's Territories work together with third party contract packers, which manufacture products on behalf of the CCHBC Group. Those third party contract packers account for a very small proportion of the CCHBC Group's overall production, but are particularly useful in respect of new and small product categories (such as aseptic PET products, coffee and juices) and for contingency reasons.

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        The following table sets forth the number of the CCHBC Group's plants and filling lines for each segment and each country within that segment as at 31 December 2013.

 
  Number of
plants(1)
  Number of
filling lines(2)
 

Established Markets:

             

Austria(3)

    1     10  

Cyprus

    2     6  

Greece

    4     25  

Italy

    6     26  

The Republic of Ireland and Northern Ireland

    1     8  

Switzerland

    3     9  
           

Total Established Markets

    17     84  
           

Developing Markets:

             

Estonia(4)

         

Latvia(4)

         

Lithuania(4)

    1     3  

Croatia

    1     4  

Czech Republic

    1     5  

Hungary

    2     10  

Poland

    3     14  

Slovakia

    1     3  

Slovenia(5)

         
           

Total Developing Markets

    9     39  
           

Emerging Markets:

             

Armenia

    1     2  

Belarus

    1     4  

Belarus-Multon(9)

    1     3  

Bosnia and Herzegovina

    1     4  

Bulgaria

    2     10  

FYROM(6)

    1     8  

Moldova

    1     1  

Nigeria

    13     42  

Romania

    3     15  

Russian Federation

    12     45  

Russian Federation-Multon(7)

    2     28  

Serbia and Montenegro(8)

    3     15  

Ukraine

    1     12  
           

Total Emerging Markets

    42     189  
           

Total

    68     312  
           
           

(1)
Excludes the snack food plant in Greece.

(2)
Excludes snack food production lines.

(3)
The enlarged plant in Edelstal was put in full operation in the second quarter of 2013 after the closure of the plant in Vienna in 2012.

(4)
The CCHBC Group produces the majority of products for the Estonian and Latvian markets in Lithuania.

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(5)
The CCHBC Group produces products for the Slovenian market in Austria, Croatia, Czech Republic, Hungary and Italy.

(6)
Includes plants and filling lines of AD Pivara Skopje of which the CCHBC Group owns 49.3%. AD Pivara Skopje is engaged in the bottling and distribution of the CCHBC Group's products in FYROM.

(7)
Includes plants and filling lines of Multon Z.A.O. group, a joint venture of which the CCHBC Group owns 50% and which is engaged in the bottling and distribution of the CCHBC Group's juice products in the Russian Federation.

(8)
Includes plants and filling lines of Fresh & Co d.o.o Subotica. and Vlasinka d.o.o. Beograd-Zemun, joint ventures of which the CCHBC Group owns 50% and which are engaged in the bottling of the CCHBC Group's juice and water products in Serbia and Montenegro.

(9)
Includes Vlanpak juice plant and its two Brik lines that are owned by Multon Z.A.O group, our 50-50 joint venture (see note 7 above), and are engaged in bottling operations.

        As part of the CCHBC Group's infrastructure optimisation process, three production plants were closed in 2013: Malia plant (Greece), Gotalka plant (Croatia) and Cagliari plant (Italy). The Edelstal plant in Austria was put into full operation in the second quarter of 2013, providing efficient and modern capacity for both Water and Sparkling beverages. Several numbers of production lines were closed, replaced, reallocated and installed across the CCHBC Territories to maintain optimised production capacity as required per local market demand development. The CCHBC Group has made in the last years substantial investments to develop modern, highly automated production facilities throughout its Territories. In certain cases, this has also entailed establishing plants on greenfield sites and installing the CCHBC Group's own infrastructure where necessary to ensure consistency and quality of supply of electricity and raw materials, such as water.

        The CCHBC Group uses computer modeling techniques to optimise its supply chain infrastructure network on a country-by-country and regional basis. The CCHBC Group's system seeks to optimise the location and capacity of its production and distribution facilities based upon present and future estimated market demand and improved cost structure.

        The CCHBC Group believes that it has a modern and technologically advanced mix of production facilities and equipment that is sufficient to satisfy current and estimated future demand. The CCHBC Group also believes that its production facilities and equipment give it the ability to further increase its production capacity at a relatively low incremental capital cost. The CCHBC Group aims to continually improve the utilisation of its asset base and carefully manage its capital expenditure.


Distribution

        The CCHBC Group's distribution centers are strategically located centers through which its products may transit on their route to the customers and where the CCHBC Group's products are stored for a limited period of time, typically three to five days. The CCHBC Group's central warehouses are part of its bottling plants' infrastructure to store larger quantities of its products for a longer period of time (typically seven to ten days) than the CCHBC Group's distribution centers. The CCHBC Group maintains a flexible logistic footprint, consolidating its distribution operation by transferring into efficient cross-dock operations in certain markets and adapting it according to demand and customer service requirements.

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        The following table sets forth the number of the CCHBC Group's distribution centers and warehouses for each segment and each country within that segment as at 31 December 2013.

 
  Number of
distribution
centers
  Number of
warehouses
 

Established Markets:

             

Austria

    6     1  

Cyprus

    2     2  

Greece

    7     4  

Italy

    8     6  

The Republic of Ireland and Northern Ireland

    1     1  

Switzerland

    4     4  
           

Total Established Markets

    28     18  
           

Developing Markets:

             

Estonia

    1      

Latvia

    1     1  

Lithuania

    1     1  

Croatia

    6     1  

Czech Republic

    1     1  

Hungary

    6     2  

Poland

    17     3  

Slovakia

        1  

Slovenia

        1  
           

Total Developing Markets

    33     11  
           

Emerging Markets:

             

Armenia(1)

    1     1  

Belarus

    6     1  

Belarus-Multon

        1  

Bosnia and Herzegovina

    2     1  

Bulgaria

    2     2  

FYROM

    10     2  

Moldova

        1  

Nigeria

    57     13  

Romania

    18     3  

Russian Federation

    80     12  

Russian Federation-Multon

    2     2  

Serbia and Montenegro

    7     3  

Ukraine

    6     1  
           

Total Emerging Markets

    191     43  
           

Total

    252     72  
           
           

(1)
There are an additional 28 wholesalers storing some quantity of CCHBC finished goods in their facilities.

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Products

        The CCHBC Group produces, sells and distributes Sparkling, Still and Water beverages under the brands of TCCC in all of its Territories. The CCHBC Group also produces, sells and distributes Sparkling beverages under the brands that TCCC acquired for certain Territories from Cadbury Schweppes plc in 1999. Schweppes Holdings Limited, a wholly-owned subsidiary of The Coca-Cola Company, has granted to the CCHBC Group the rights to produce, sell and distribute these beverages in Greece, the Republic of Ireland, Northern Ireland, Nigeria, the Russian Federation, Bulgaria, Bosnia and Herzegovina, Croatia, Ukraine, FYROM, Slovenia, Serbia and Montenegro, Estonia, Lithuania and Latvia. In some of its Territories, the CCHBC Group produces, sells and distributes Still and Water beverages (including ready-to-drink tea) licensed by Beverage Partners Worldwide, a joint venture between TCCC and Nestlé S.A. TCCC owns the trademarks for all of the beverages of TCCC that the CCHBC Group produces, sells and distributes in each country in which the CCHBC Group operates. As a result, the CCHBC Group relies on TCCC to protect its brands in the CCHBC Group's markets.

        In some of its Territories, the CCHBC Group also produces, sells, distributes and markets its own brands. These include the CCHBC Group's range of Amita juices in Greece and Italy, its mineral water, Avra, in Greece and Cyprus, the CCHBC Group's Deep River Rock packaged water and Fruice juices in the Republic of Ireland and Northern Ireland, and the CCHBC Group's Lanitis dairy products in Cyprus. The CCHBC Group also distributes certain Sparkling, Still and Water beverages and other products which it purchases from other companies unaffiliated with TCCC in some of the CCHBC Group's Territories. The CCHBC Group also distributes certain third party premium spirits in some of its Territories.

        In the year ended 31 December 2013, Sparkling beverages of TCCC accounted for 70% of the CCHBC Group's sales volume, Still and Water beverages of TCCC, principally Bonaqua, Dorna and Valser waters, Cappy juices and Powerade, together with Nestea, licensed to the CCHBC Group by Beverage Partners Worldwide, accounted for 27% of the CCHBC Group's sales volume. In the year ended 31 December 2013, other beverages, principally its Amita juices and Avra waters, accounted for 3% of the CCHBC Group's sales volume. The following table sets forth the CCHBC Group's top five brands in the year ended 31 December 2013 in terms of sales volume as a percentage of its total sales volume:

 
  Sales volume in the year
ended 31 December 2013
as a percentage of
total sales volume
 

Coca-Cola

    41.9 %

Fanta

    10.4 %

Sprite

    6.7 %

Bonaqua/Bonaqa

    4.4 %

Nestea

    4.4 %
       

Total

    67.8 %
       
       

        The CCHBC Group offers its beverages in both refillable and non-refillable packages and in a range of flavours designed to meet the demands of the consumers. The main packaging materials for the CCHBC Group's beverages are PET, glass and cans. In addition, the CCHBC Group provides fast food restaurants and other immediate consumption outlets with fountain products. Fountains consist of dispensing equipment that mixes the fountain syrup with carbonated or still water, enabling fountain retailers to sell finished Sparkling, Still and Water beverages to consumers in cups or glasses. The following table sets forth some of the CCHBC Group's products, including: products that TCCC and

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third parties have licensed to the CCHBC Group; products that the CCHBC Group owns; and third party products that it distributes.

Products licensed from
TCCC
(Sparkling)
  Products licensed from
TCCC
(Still and Water)
  Products licensed
from third parties
  The CCHBC Group's
own products
  Third party products
distributed by
the CCHBC Group

Coca-Cola/Coke

 

Bankia

 

Almdudler

 

Amita

 

Amstel(9)

Coca-Cola light/Coke

 

Bistra

 

illyissimo(4)

 

Avra

 

Appletiser

light/Diet Coke

 

Bonaqa/Bonaqua/

 

Joy

 

Deep River Rock

 

Asti Martini(10)

Coca-Cola Zero/Coke

 

Bon-Acqua

 

Magic Summer

 

Fruice

 

Bacardi(10)

Zero

 

botaniQ(1)

 

Nestea(5)

 

Frulite

 

Bacardi Breezer(10)

Cherry Coca-Cola/

 

Cappy

 

RIO

 

Lanitis Milk

 

Bombay Sapphire(10)

Cherry Coke

 

Dobry/Dobriy

 

Sens

 

Lyttos

 

Canada Dry

Coca-Cola light with

 

Dobriy Mors

 

Tuborg Soda(6)

 

Next(8)

 

Brugal(13)

lemon/Diet Coke

 

Dorna

 

Tuborg Tonic Water(6)

 

Su-Voce(8)

 

Chambord(12)

with lemon

 

Eva

     

Tanora

 

Cointreau(3)

Vanilla Coke

 

Felicia(2)

     

Zelita

 

Cutty Sark(13)

Fanta

 

Five Alive

     

Tsakiris snacks

 

Dekaraki(15)

Fanta light

 

Kropla Beskidu

     

Kykkos

 

Early Times(12)

Fanta Zero

 

Lanitis Juice

         

el Jimador(12)

Sprite

 

Lilia(2)

         

Famous Grouse(13)

Sprite light

 

Lilia Frizzante(2)

         

Feldschlösschen(14)

Sprite Zero

 

Matúsov Pramen

         

Finlandia(12)

Ali

 

Cappy Mickey Mouse

         

Gentleman Jack(12)

Burn

 

Minute Maid

         

Heineken(9)(14)

BPM

 

Multivita

         

Highland Park(13)

Dr. Pepper

 

NaturAqua

         

Herradura(12)

Frisco

 

Oasis

         

Jack Daniel's(12)

Fruktime

 

Olimpija

         

Kaiser(9)

Gladiator

 

Poiana Negri

         

Louis XIII(3)

Kinley

 

Powerade

         

Martini(10)

Krushka & Bochka

 

Rich

         

Master(9)

Kvass

 

Römerquelle

         

Maximus(12)

Lift

 

Rosa

         

MB Pils(9)

Lilt

 

Solaria(2)

         

Metaxa(3)

Limca

 

Sveva(2)

         

Monster(7)

Linnuse

 

Toka(2)

         

Ouzo Plomariou Isidoros

Mezzo Mix

 

Valser

         

Arvanitis(15)

Pilskalna

 

Cappy Pulpy

         

Adolo Ouzo Plomariou

Relentless

 

Kia Ora

         

Isidoros Arvanitis(15)

Schweppers

             

Ouzo Matarelli(15)

Ultra

             

Ouzo Sans Rival(16)

Viva

             

Pago

Coca-Cola caffeine free

             

Pepe Lopez(12)

Coca-Cola light caffeine

             

Pittas Dairy(17)

free

             

Rivella(14)

Burbulinadas

             

Remy Martin(3)

             

Rezangyal(11)

             

Schlossgold(9)

             

Southern Comfort(12)

             

Southern Comfort and

             

Lime(12)

             

St Remy(3)

             

The Macallan(13)

             

Vittel

             

Woodford Reserve(12)


(1)
The CCHBC Group acquired the "botaniQ" trademark as part of the acquisition of OOO Aqua Vision on 4 September 2007. The trademark was sold on 29 February 2008 to the Multon Z.A.O. group, a joint venture operated by TCCC and the CCHBC Group.

(2)
These brands were originally owned by Fonti del Vulture S.r.l., a water company in Italy which the CCHBC Group purchased jointly with TCCC in July 2006. In October 2008, the brands of Fonti del Vulture S.r.l were transferred to TCCC.

(3)
The CCHBC Group distributes Remy Cointreau products in Bosnia, Croatia and Serbia and Montenegro pursuant to a distribution agreement entered into in April 2012.

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(4)
The CCHBC Group sells and distributes premium ready-to-drink coffee under the "illyissimo" brand across several of its Territories under distribution agreements with Ilko Coffee International Srl.

(5)
The CCHBC Group produces, sells and distributes Nestea under a bottlers' agreement with Beverage Partners Worldwide.

(6)
The CCHBC Group produces, sells and distributes Tuborg Soda and Tonic Water under a licence from Carlsberg Breweries A/S.

(7)
The CCHBC Group distributes Monster products in Estonia, Austria, Bulgaria, Czech Republic, Greece, Hungary, Poland, Slovakia, Switzerland, Cyprus, Latvia and Lithuania pursuant to a distribution agreement effective as of July 2012.

(8)
These brands are owned by Fresh & Co, a juice company in Serbia, which the CCHBC Group purchased jointly with TCCC in March 2006.

(9)
The CCHBC Group distributes Heineken products in the south-west region of the Republic of Ireland and FYROM. In March 2008, the CCHBC Group entered into an agreement with Heineken to distribute Amstel, Heineken, Master, MB Pils, Kaiser and Schlossgold products in Serbia and Montenegro.

(10)
The CCHBC Group distributes Bacardi Limited products in Hungary, pursuant to a distribution agreement entered into in June 2008.

(11)
The CCHBC Group distributes Rezangyal products in Hungary pursuant to a distribution agreement signed in June 2010.

(12)
The CCHBC Group distributes Brown-Forman products in Hungary, Ukraine, Serbia, Croatia, the Russian Federation, Bulgaria and Greece pursuant to distribution agreements entered into in January 2006, April 2008, August 2009, October 2010 and January 2013, respectively.

(13)
The CCHBC Group distributes The Edrington Group products in Serbia, Croatia, Hungary and Ukraine pursuant to distribution agreements entered into in March 2010, in Bosnia, pursuant to distribution agreements entered into in June 2011 and in Greece, pursuant to distribution agreements entered into in September 2013.

(14)
The CCHBC Group distributes Rivella and Heineken beer brands (Heineken and Feldschlösschen) via the Swiss Home Delivery Channel.

(15)
The CCHBC Group distributes the PLOMARI OUZO DISTILLERY ISIDOROS ARVANITIS SA products in Greece pursuant to a distribution agreement entered into in October 2012.

(16)
The CCHBC Group distributes Thomopoulos SA products in Greece as of April 2013.

(17)
The CCHBC Group distributes PITTAS DAIRY INDUSTRIES LTD products in Cyprus as of March 2013.


The CCHBC Group's operations

        The Territories encompass whole countries except Italy, where the CCHBC Group's Territory excludes Sicily, and Northern Ireland, which is the only region of the United Kingdom in which the CCHBC Group operates.

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        The following table illustrates certain key economic indicators for the Territories within each segment for the year ended 31 December 2013.

 
  The CCHBC
Group's total
(Sparkling and
non-Sparkling)
volume (million
unit cases) for the
year ended
31 December 2013
  Country (or, if
different, Territory)
population (million)
for the year ended
31 December 2013
  GDP per capita ($) for
the year ended
31 December 2013(3)
 

Established:

                   

Italy (excl. Sicily)(1)(2)(3)

    289.8     56.0     31,105.6  

Greece

    97.9     11.3     21,617.4  

Austria

    91.6     8.5     49,255.6  

Switzerland

    83.0     8.1     80,275.8  

The Republic of Ireland and Northern Ireland

    72.5     6.4     45,391.5  

Cyprus

    15.8     0.9     24,705.9  
               

Established Markets(4)

    650.6     91.2     36,928.5  
               

Developing:

                   

Poland

    167.0     38.5     13,333.6  

Hungary

    77.9     9.9     13,172.0  

Czech Republic

    55.3     10.5     18,868.3  

Croatia

    26.0     4.4     13,312.3  

Slovakia

    22.9     5.4     17,929.2  

Lithuania

    9.8     3.0     15,632.6  

Latvia

    8.8     2.0     14,924.0  

Slovenia

    6.4     2.1     22,718.6  

Estonia

    6.9     1.3     18,127.3  
               

Developing Markets(4)

    381.0     77.1     14,854.4  
               

Emerging:

                   

Russian Federation

    388.0     141.4     14,973.5  

Nigeria

    202.5     169.3     1,725.1  

Romania

    148.5     21.3     8,630.2  

Ukraine

    78.6     45.5     3,861.7  

Serbia (including the Republic of Kosovo) and Montenegro

    82.6     9.7     5,619.0  

Bulgaria

    55.7     7.2     7,411.2  

Belarus

    42.7     9.3     7,413.8  

Bosnia and Herzegovina

    16.6     3.9     4,865.6  

FYROM

        2.1     5,073.3  

Armenia

    7.8     3.3     3,176.3  

Moldova

    5.9     3.6     2,214.5  
               

Emerging Markets(4)

    1,028.9     416.6     7,186.1  
               

All Territories(4)

    2,060.5     584.9     12,834.5  
               
               

Sources: Information on country or Territory population and GDP per capita has been obtained from The World Economic Outlook Database, International Monetary Fund, October 2013, except for the population of the CCHBC Group's Italian Territory (see footnote 2 below) and Northern Ireland. Population data for Northern Ireland has been obtained from the Northern Ireland Statistics and Research Agency. Information on the population and the GDP per capita for the Republic of Kosovo has been obtained from the World Bank.

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(1)
The total volume for Italy represents the volume in respect of both distribution of products of TCCC in the CCHBC Group's Territory of total Italy (excluding the island of Sicily) and the distribution of the water products of Fonti del Vulture S.r.l across the whole of Italy.

(2)
The population figure provided for Italy is based on information obtained from The World Economic Outlook Database, International Monetary Fund, October 2013, which is then adjusted by the CCHBC Group to exclude the island of Sicily, which does not form part of its Italian Territory.

(3)
The GDP per capita of Italy represents the GDP per capita of Italy as a whole. The GDP per capita reported for Ireland reflects a population-weighted average of the GDP per capita for the Republic of Ireland and Northern Ireland (as based on the GDP for the United Kingdom).

(4)
Population-weighted average for all Territories in the category was used for the GDP per capita calculation.


Established Markets

Introduction

        The CCHBC Group's Established Markets are Italy, Greece, Austria, the Republic of Ireland, Northern Ireland, Switzerland and Cyprus. These countries have traditionally enjoyed a relatively high degree of political and economic stability and have broadly similar economic characteristics. Further, they typically exhibit higher levels of disposable income per capita relative to the Developing and Emerging Markets, which enhances the affordability of the CCHBC Group's products, especially its more profitable single-serve packages designed for immediate consumption.

        Macroeconomic and trading conditions have deteriorated in some of the Established Markets in the last three years, particularly in Greece, the Republic of Ireland, Italy and Cyprus. The ongoing sovereign debt crisis in the European Union and particularly in the Eurozone has resulted in a slowdown and, in certain cases, a contraction in the real GDP of the Established Markets. At the same time, deteriorating consumer confidence and rising unemployment had an adverse impact on consumer demand.

        Established Markets are generally characterised by high consumer sophistication. The most important trend generally affecting the future consumption channel in the Established Markets is an increasing concentration of the retail sector. This is further accentuated by a shift in demand towards at-home consumption, in recent years reflecting the reduction of disposable income in most Territories in the segment. Activation at final points of sale is also a key focus of the CCHBC Group's sales and marketing efforts in these Territories.

        The CCHBC Group sells its products in its Established Markets through a combination of wholesalers and the CCHBC Group's direct delivery system. The CCHBC Group has taken certain initiatives to consolidate its production network by rationalising facilities, through consolidation, relocation of manufacturing lines, and streamlining of warehouses. The Established Markets that have principally benefited from such initiatives include the Republic of Ireland and Northern Ireland, Austria, Italy and Greece.

        Net sales revenue in the Established Markets amounted to €2,539.6 million in the year ended 31 December 2013, €2,701.8 million in the year ended 31 December 2012 and €2,834.8 million in the year ended 31 December 2011 which accounted for 36.9%, 38.4% and 41.5% of its total net sales revenue in the years ended 31 December 2013, 2012 and 2011, respectively.

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Italy

        The CCHBC Group's business in Italy encompasses the manufacture and distribution of the products of TCCC, as well as water products of Fonti del Vulture S.r.l. across all of Italy, excluding the island of Sicily. Fonti del Vulture S.r.l. was acquired jointly with TCCC in July 2006. In December 2008, the CCHBC Group acquired Socib S.p.A., the second largest Coca-Cola bottler in Italy, with a franchise territory consisting of southern Italy and the island of Sardinia, which together include approximately 24% of the Italian population. The CCHBC Group's Territory in Italy encompasses over 90% of the Italian population. In February 2011, the CCHBC Group sold Eurmatik S.r.l., a direct full service vending company acquired in May 2007. The CCHBC Group believes that it is one of the largest bottlers of non-alcoholic ready-to-drink beverages in the Territory and the leader in the Sparkling beverages category in terms of sales volume and value.

        In the year ended 31 December 2013, the CCHBC Group achieved a sales volume of 289.8 million unit cases, a decrease of 6.2% compared to the year ended 31 December 2012. Sparkling beverages category volume declined by 3.2% and combined Still and Water beverages category volume declined by 13.3%. The underlying macroeconomic and trading environment in Italy remains challenging, with unemployment reaching a new record in November 2013 at 12.7%, negatively impacting disposable income and consumer confidence. At the end of 2011, after the Italian sovereign debt was downgraded by the main rating agencies and the spread between Italian and German Treasury bonds reached the highest figure since the introduction of the Euro, the Italian government introduced a significant austerity bill. As a result, value added tax ("VAT") increased by 1% to 21% at the end of 2011 and increased by an additional 1% in October 2013, and new or increased direct taxes were implemented, with the intention of fulfilling Italy's European commitment to balance the budget in 2014. Looking ahead, the CCHBC Group remains cautious and expects 2014 to be another challenging year for Italy, particularly in view of the record high unemployment and the continued pressures to disposable income, which is expected to decline further.


Greece

        The CCHBC Group has operated in Greece since 1969 and believes that it is the largest bottler of non-alcoholic ready-to-drink beverages and the leader in the Sparkling beverages category in Greece in terms of sales volume and value. The CCHBC Group's strength in the Greek Sparkling beverages category has been complemented by its success in the Greek combined Still and Water beverages category, where the CCHBC Group believes it is the leading producer of fruit juices with its Amita and Frulite brands in terms of sales volume and value, and of water with the Avra mineral water brand. During 2013, the CCHBC Group initiated the distribution of the Ouzo Plomari brand and the premium spirits brands of Brown-Forman and The Edrington Group.

        Points of sale in the immediate consumption channel, including those associated with the tourism industry, are particularly important for the CCHBC Group's business in Greece. The Greek market is very fragmented and thus the CCHBC Group continues to sell the majority of its products to wholesalers and distributors, which distribute the CCHBC Group's products to small outlets. Direct delivery is limited to certain customers, including supermarket chains and other key accounts.

        The CCHBC Group achieved a sales volume of 97.9 million unit cases in the year ended 31 December 2013 down 9.9% compared to the year ended 31 December 2012, with the rate of decline decelerating compared to previous years. Sparkling beverages were more resilient and declined by 5.8% compared to the year ended 31 December 2012. The Water category declined by 18.2% compared to the year ended 31 December 2012, following the CCHBC Group's decision to delist Lyttos and Water Blue products and to focus on the Avra mineral water brand. The Juice category declined by 9.5% over the same period. During 2013, Greek GDP registered a moderating decline of 3.7%, and unemployment remained at the historically high levels of 28%, leading to a significant decrease in

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private consumption. Looking ahead, Greek macroeconomic forecasts remain negative for Greece with disposable income expected to further decline in 2014, while unemployment is expected to peak. However, the CCHBC Group continues to maintain its long-term focus for the Territory, while adapting its business to the new economic environment.


Austria

        The CCHBC Group believes that it is the largest bottler of non-alcoholic ready-to-drink beverages and the leader in the Sparkling beverages category in Austria in terms of sales volume and value. In addition to the core brands of TCCC, the CCHBC Group's Sparkling beverages portfolio includes Mezzo Mix and Almdudler, a popular national sparkling beverage, as well as the energy drinks Burn and Monster, which were launched in Austria at the end of 2008 and 2010, respectively. In addition, the CCHBC Group believes that Römerquelle is the third largest water brand in Austria and constitutes nearly 23% of the CCHBC Group's sales volume in Austria.

        The CCHBC Group believes that the Austrian retail market is highly concentrated with two major retailers holding the majority of the fast-moving consumer goods market share. The retail trade has accounted for most of the CCHBC Group's growth over the past three years. Since June 2012, the CCHBC Group's products have been listed with the largest discounter in Austria. For sales in the immediate consumption channel, the CCHBC Group relies on a combined direct and indirect service system with two key wholesalers servicing half of the CCHBC Group's Austrian hotel, restaurant and café customers. In-line with the CCHBC Group's route-to-market strategy, it has continuously increased its efforts to activate all of its direct, as well as indirect accounts to improve quality and availability in the more profitable immediate consumption channel.

        In the year ended 31 December 2013, the CCHBC Group achieved a sales volume of 91.6 million unit cases, a decrease of 1.1% compared to 2012. This volume decline was primarily driven by decreased exports. While the CCHBC Group believes that total Austrian non-alcoholic ready-to-drink beverages market has declined in volume in all categories except energy drinks, the CCHBC Group believes it increased its non-alcoholic ready-to-drink beverages volume share compared to 2012, including an increase in Sparkling category beverage volume share.

        In 2012 the CCHBC Group reviewed its production and logistic infrastructure in Austria and decided to combine its two production sites into one plant. As a result the CCHBC Group invested €48.0 million over the course of 2012 and 2013 to enlarge the Römerquelle site in Edelstal to cover all the production and warehouse needs of the Territory. Also, the CCHBC Group outsourced its logistics in all areas except Vienna. The new consolidated production and warehouse facility is expected to increase efficiency, improve production line utilisation and significantly reduce the production and warehouse costs. In December 2013, the CCHBC Group sold the Vienna and Asten facilities to optimise its asset base in the Territory.


Switzerland

        The CCHBC Group believes that it is the largest bottler of non-alcoholic ready-to-drink beverages in Switzerland in terms of sales volume. In addition to the core Sparkling beverage brands of TCCC, the CCHBC Group's Sparkling beverage brands include Ali and Kinley, its Still and Water category beverages brands include Valser mineral water, Nestea ice teas, Minute Maid juices, Powerade sports drinks and Monster in the energy sub-category. The CCHBC Group believes that its mix of Sparkling, Still and Water beverages provides the CCHBC Group with flexibility to address the preferences and tastes of Swiss consumers. In the hotel, restaurant and café channel, representing nearly 38% of the Swiss volume, the distribution system for non-alcoholic ready-to-drink beverages relies primarily on wholesalers that are highly concentrated. As a result, the CCHBC Group's relationship with its key wholesalers is particularly important to the CCHBC Group. In 2013, the CCHBC Group expanded the

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wholesaler partner model, which has significantly improved the manner in which the CCHBC Group interacts with key customers. This partnership model is instrumental in providing the CCHBC Group with better access to its customers and data transparency at the outlet level, which ultimately improves the CCHBC Group's understanding of the end consumer.

        The CCHBC Group achieved sales volume of 83.0 million unit cases in the year ended 31 December 2013, an increase of 0.7% compared to the year ended 31 December 2012, despite the market slow-down, impacted by the strong Swiss franc relative to the euro that continued to adversely affect tourism and exports. In the retail channel, the CCHBC Group grew its sales as a result of the introduction of its products in one of the important discounters in Switzerland during 2012, where the CCHBC Group is listed with the Coca-Cola brands. The CCHBC Group has also expanded its training and development programme to all target groups in the commercial department and has invested strongly in new marketing programmes and materials for marketplace activation. Among other factors, this contributed to an improvement in household penetration of Coca-Cola and Nestea brands in the year ended 31 December 2013. In addition, the CCHBC Group enhanced sales focus on its Coca-Cola brands through the use of new outlet activation standards. The CCHBC Group also continued to drive distribution of its Water and Nestea range of products and further expanded the sales force coverage of the workplace channel, where the CCHBC Group believes that there is good growth potential. The CCHBC Group believes that all of these activities contributed to an increase in the market share of Coca-Cola brands and of the Nestea range of products in the year ended 31 December 2013.


The Republic of Ireland and Northern Ireland

        The CCHBC Group believes it is the largest bottler of non-alcoholic ready-to-drink beverages in the Republic of Ireland and Northern Ireland and the leader in the Sparkling beverages category in terms of sales volume and value. The CCHBC Group's strategy has been to build on its strength of Sparkling and to diversify its portfolio of Still and Water beverages. The brands distributed by the CCHBC Group in the juice category include Fruice, Pure juice and Oasis. In July 2013, the CCHBC Group started distributing Kia-Ora dilutes, a TCCC-owned brand. The primary water brand, Deep River Rock, is a CCHBC Group owned brand. In the Republic of Ireland and Northern Ireland, the CCHBC Group sells the majority of its products to independent wholesalers and distributors that then distribute its products to smaller outlets, and the CCHBC Group delivers its products directly to certain key customers, including supermarket chains. In January 2013, a new marketing framework was launched to develop a stronger strategy to reach consumers with the right occasion, brand, price, pack and channel. CCHBC Group believes it will enhance its portfolio, commercial capabilities and increase its margins through differentiation.

        In the year ended 31 December 2013, the CCHBC Group achieved sales volume of 72.5 million unit cases in Ireland, an increase of 2.3% compared to the year ended 31 December 2012, driven by strong sales in the summer and winter holiday months. Sparkling beverages sales volume increased by 3.3% compared to the year ended 31 December 2012, with both volume and value shares increasing, while the total market declined. Water category volume also increased by 2.5% compared to the year ended 31 December 2012. Juice category declined by 9.3% compared to the year ended 31 December 2012, continuing the trend of the past five years. The CCHBC Group expects that the overall non-alcoholic ready-to-drink beverages market in the Republic of Ireland and Northern Ireland will remain challenging in 2014 despite certain improvements in economic conditions, as the combination of tax increases and fiscal measures continue to negatively affect consumers' disposable income.

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Developing Markets

Introduction

        The CCHBC Group's Developing Markets are Poland, Hungary, the Czech Republic, Croatia, Lithuania, Latvia, Estonia, Slovakia and Slovenia. All of the Developing Markets joined the European Union on 1 May 2004, except for Croatia that joined the European Union on 1 July 2013. All of the Developing Markets have market-oriented economies. The CCHBC Group's Developing Markets generally have lower disposable income per capita than its Established Markets and continue to be exposed to economic volatility from time to time.

        Macroeconomic conditions had been positive in the Developing Markets in the years prior to 2008, with all Territories experiencing positive real GDP growth. However, economic growth has slowed or reversed in the last three years as a result of the global financial crisis and credit crunch. Currency fluctuations can have an impact on the CCHBC Group's net sales revenue in the Developing Markets, particularly in times of high economic volatility. The entry of all of the Developing Markets into the European Union, has resulted in increased political stability due to their gradual alignment with the principles, objectives and regulations of the European Union.

        The CCHBC Group's Developing Markets are typically characterised by lower net sales revenue per unit case than its Established Markets. TCCC's products were introduced in the early 1990s in most of the Developing Markets, where they have since become established premium brands. Consumers in some Developing Markets continue to move away from tap water and homemade drinks to branded products as beverages of choice. In addition, consumers in these markets have shown an increasing interest in branded beverages associated with well-being and fitness, such as water and juices.

        The non-alcoholic ready-to-drink beverages market tends to be fragmented in the Developing Markets, with no single market participant typically holding a leading share in more than one market category. In addition, consumers tend to be more price-sensitive in the Developing Markets than in its Established Markets. Consequently, the CCHBC Group's products often face competition from local non-premium brands, which, in a number of cases, have been present in the market for many years and remain popular with consumers.

        The CCHBC Group believes that its Developing Markets offer significant growth opportunities for both its Sparkling, Still and Water beverages and the CCHBC Group is committed to maximising these opportunities by introducing existing and new products, flavours and packages in both the future consumption and the immediate consumption channels. The CCHBC Group plans to support the increased presence of its products across both the future and immediate consumption channels with its route-to-market systems and the increased availability of coolers and other cold drink equipment.

        Net sales revenue in the Developing Markets amounted to €1,105.6 million in the year ended 31 December 2013, €1,148.1 million in the year ended 31 December 2012 and €1,161.5 million in the year ended 31 December 2011, which accounted for 16.1%, 16.3% and 17.0% of its total net sales revenue in the years ended 31 December 2013, 2012 and 2011, respectively.


Poland

        Poland is the CCHBC Group's largest Developing Country both in terms of population and sales volume. The CCHBC Group believes it is the largest bottler of non-alcoholic ready-to-drink beverages in Poland in terms of sales volume. Poland's low urbanisation and large population represent a growth opportunity for the CCHBC Group's business. In addition to the core brands of TCCC, the CCHBC Group's Sparkling beverages brands include Lift. The CCHBC Group's portfolio of Water brands in Poland includes Kropla Beskidu and Multivita Kropla Mineralow, whilst its portfolio of energy brands has been enlarged with the addition of the Monster brand. The CCHBC Group continued to face a

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significant shift towards modern trade channels in Poland with fast growing discounters. The CCHBC Group continuously adapts its local business model to address this transition.

        The CCHBC Group has invested in cold drink equipment, an upgrade of its aseptic line to improve production reliability and reduce costs, a new environmentally friendly water bottle and new Sparkling beverages packages. The CCHBC Group has also continued investment in extending the Radzymin plant infrastructure, which is expected to be a platform for future capacity growth and logistics efficiency increase. During 2013, the CCHBC Group upgraded and concentrated its production infrastructure in its plant in Radzymin.

        In the year ended 31 December 2013, the CCHBC Group achieved sales volume of 167.0 million unit cases in Poland, which represents a decrease of 3.2% compared to the year ended 31 December 2012, mainly due to the decline in fragmented trade that was only partially offset by the strong growth in the discounters channel. The CCHBC Group's Sparkling beverages volume decreased by 2.4%, while Juice grew by 24.2% supported by the introduction of new 1 litre PET bottle. Water and Tea categories also declined by 7.4% and 9.8%, respectively, compared to the year ended 31 December 2012.


Hungary

        The CCHBC Group believes that it is the largest bottler of non-alcoholic ready-to-drink beverages in Hungary in terms of sales volume and value. Hungary has one of the most developed sparkling beverages markets in Central and Eastern Europe. In addition to the core brands of TCCC, the CCHBC Group's Sparkling beverages brands in Hungary also include Kinley and Lift, while its Still and Water beverages brands include Naturaqua mineral water and Naturaqua Emotion (flavoured water). Other brands include the range of Nestea ice teas, Cappy juices, Cappy Icefruit juice drinks, Burn and Monster energy drinks and Powerade sports drinks. The CCHBC Group also distributes a portfolio of premium spirits, including Brown-Forman and Bacardi Martini products, and a Hungarian spirit called Rézangyal, as well as certain products of The Edrington Group.

        In 2013, the CCHBC Group achieved sales volume of 77.9 million unit cases, which represents a decrease of 6.4% compared to the year ended 31 December 2012, as economic conditions in the country remained challenging and consumer confidence was among the lowest in Europe despite a modest GDP growth of 1% in the second half of the year. CCHBC Group's Sparkling beverages volume declined by 6.9% mainly impacted by adverse weather conditions in the beginning of the year and the difficult trading environment. Our Water category volume declined by 3.1% compared to the year ended 31 December 2012, driven by strong market competition and a general decline in consumption. Tea and Juice categories also declined by 13.1% and 3.9%, respectively, compared to the year ended 31 December 2012.


Emerging Markets

Introduction

        The CCHBC Group's Emerging Markets are the Russian Federation, Romania, Nigeria, Ukraine, Bulgaria, Serbia (including the Republic of Kosovo), Montenegro, Belarus, Bosnia and Herzegovina, Armenia, Moldova and FYROM. These Territories are exposed to greater political and economic volatility and have lower per capita GDP than the Developing or Established Markets. As a result, consumer demand in the Emerging Markets is especially price sensitive, making the affordability of the CCHBC Group's products even more important. The global financial crisis has exacerbated such structural issues in the Emerging Markets. The CCHBC Group seeks to promote its products through a strategic combination of revenue growth management, packaging and promotional programmes taking into account local economic conditions.

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        The CCHBC Group's Emerging Markets were among the first to be affected by the global financial crisis of 2008. Since then, the CCHBC Group has not experienced concrete and sustained evidence of recovery. Even though GDP appears to have stabilised and in some cases returned to growth in 2012 and 2013 in some of these Territories, unemployment remained at relatively high levels and currencies were quite volatile during the period.

        Most of the Emerging Markets are characterised on average by lower net sales revenue per unit case than the Established and Developing Markets. Consumers in some emerging markets are moving away from tap water and homemade drinks as their principal beverages and have shown an increasing interest in branded beverages. In some of the CCHBC Group Emerging Markets, consumers are showing particular interest in juices and branded waters.

        In general, the Emerging Markets have a relatively underdeveloped distribution infrastructure and a fragmented retail sector. In order to expand the availability of products, the CCHBC Group's priority has been to establish reliable distribution networks through a combination of its own direct delivery system and independent distributors and wholesalers wherever this is economically more efficient. The CCHBC Group also focuses on improving the availability of chilled products by placing coolers and other cold drink equipment in the market.

        The CCHBC Group believes that its Emerging Markets provide significant growth opportunities. Some of the factors that influence these growth opportunities include relatively low per capita consumption levels, population size (especially in the Russian Federation, Nigeria and Ukraine) and favourable demographic characteristics, notably the large proportion of young people in Territories such as Nigeria who typically consume a higher amount of Sparkling beverages.

        Net sales revenue in the Emerging Markets amounted to €3,228.8 million in the year ended 31 December 2013, €3,194.8 million in the year ended 31 December 2012 and €2,828.0 million in the year ended 31 December 2011, which accounted for 47.0%, 45.4% and 41.4% of its total net sales revenue in the years ended 31 December 2013, 2012 and 2011, respectively.


Russian Federation

        The CCHBC Group is the exclusive bottler of the products of TCCC across the Russian Federation and the CCHBC Group believes it is the largest bottler of Sparkling beverages in this country in terms of sales volume. In addition to the core brands of TCCC, the CCHBC Group produces and sells in the Russian Federation other products of TCCC, such as Schweppes-branded mixer products. The CCHBC Group has in its portfolio a traditional malted beverage called "Kvass" (under "Kruzhka i Bochka" brand), which is very popular among Russian consumers. The CCHBC Group's juice brands in the Russian Federation include Rich and Dobry, which comprise the product portfolio of the Multon Z.A.O. group, the largest juice producer in Russia in terms of volume in the second half of 2013, which the CCHBC Group jointly acquired with TCCC in April 2005. The main non-Sparkling brands distributed by the CCHBC Group are Bonaqua water and Nestea ice teas. The CCHBC Group also sells and distributes energy drinks (Burn, Gladiator) and the range of Powerade sports drinks. In October 2010, the CCHBC Group entered into an agreement with Brown- Forman to distribute its spirits beverages (whiskey, premium vodka and tequila).

        In the year ended 31 December 2013, the CCHBC Group achieved sales volume of 388.0 million unit cases in the Russian Frederation, which represents an increase of 4.6% compared to the year ended 31 December 2012. Sales volumes in all key categories, except Water, increased compared to the year ended 31 December 2012. In the Water category, sales volume declined by 9.1% in line with our strategy to grow value ahead of volume. Sparkling beverages sales volume increased by 6.3% compared to the year ended 31 December 2012, driven mainly by the CCHBC Group's focus on supporting its flagship brand Coca-Cola regular in the run-up to the 2014 Sochi Winter Olympics, for which TCCC was a global sponsor. Tea category sales volumes increased by 6.0% compared to the year ended

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31 December 2012 and Energy category sales volume grew by 19.3%, driven by our newly launched brand Gladiator and new packaging of the existing brand, Burn. Also, Juice category sales volume increased by 10.8% compared to the year ended 31 December 2012, with double-digit growth of both of the CCHBC Group's key brands (Dobry and Rich), and synergy gains which arose from the integration of sales and distribution systems with Multon Z.A.O. group, between 2010 and 2011. Spirits volumes, produced by Brown-Forman and distributed by the CCHBC Group in the year 2013, grew by 28.6% versus the prior year.

        The CCHBC Group continues to invest in its manufacturing facilities, sales equipment and distribution infrastructure in the Russian Federation. In the year ended 31 December 2013, the CCHBC Group's investment in these assets exceeded €110.0 million. The CCHBC Group distributes its products primarily through its direct delivery system, but also through wholesalers and independent distributors. The CCHBC Group believes that it has one of the largest direct distribution networks in the Russian Federation, comprising over 70 distribution centers in all regions of the country. The CCHBC Group continues to implement its distribution strategy for improving the availability of its products, in particular of its single-serve packages, across the country. The CCHBC Group continued to invest in business standardisation technologies across countries; thus, SAP Wave 2 was launched in Russia which went live on 1 January 2013. The CCHBC Group believes that its SAP Wave 2 system has enhanced its commercial capabilities and increased customer satisfaction levels.


Nigeria

        The CCHBC Group believes it is the largest bottler of non-alcoholic ready-to-drink beverages in Nigeria and that its Still and Water beverages are the leading brands in their respective categories. Together with its corporate predecessors, the CCHBC Group has bottled products of TCCC in Nigeria since 1953. The CCHBC Group now owns 100% of NBC following the successful completion of a scheme of arrangement in September 2011. In addition to the core brands of TCCC, the CCHBC Group's Sparkling beverage brands in Nigeria include a range of Schweppes products and Limca, a lemon-lime product. The CCHBC Group's Still beverages category brands include Eva bottled water, which the CCHBC Group believes is the leading bottled water brand in Nigeria in terms of sales volume, while the CCHBC Group believes that its flagship juice brand, Five Alive, is the number two brand in the juice category.

        Nigeria is the most populous country in Africa, with an estimated 169 million inhabitants, and has a warm climate and a young population that offer growth opportunities for the CCHBC Group's Sparkling, Still and Water beverage products. The GDP of Nigeria grew by approximately 6.5% in the year ended 31 December 2013, with an expected growth of 6.1% in 2014. The Nigerian retail sector remains highly fragmented despite the modest growth of modern trade channels. The CCHBC Group manages its distribution either directly or through wholesalers and third party distributors. The CCHBC Group's products are made available in more than 500,000 outlets spread all over the country. To make distribution more efficient, the CCHBC Group continues to expand its pre-selling system for high-volume outlets, adding third-party distributors and directly delivering to emerging key accounts. More than 80% of the CCHBC Group's sales are now generated through its pre-selling system. In addition, the CCHBC Group continues to expand its dealer base in selected areas and is working on improving merchandising standards, while expanding the availability of chilled products. Due to the low availability of electricity in Nigeria, the CCHBC Group also manufactures and distributes ice to support the supply of cold drinks in the immediate consumption channel.

        In the year ended 31 December 2013, the CCHBC Group's total volume in Nigeria was 202.5 million unit cases, which represented an 11.3% increase compared to the year ended 31 December 2012, attributable to a larger size of the market, increased marketing activities, and continuous improvement in execution and product availability.

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        Sparkling beverages and the Water category grew by 11.5% and 13.8% respectively, in the year ended 31 December 2013, compared to the year ended 31 December 2012, while the Juice category declined by 4.7% year on year.

        As at December 2013, all the CCHBC Group's production facilities have fully functional wastewater treatment plants. While ensuring that the CCHBC Group uses the highest water quality for beverage production, the CCHBC Group continues to seek avenues to protect local water sources by improving its water use efficiency, reducing absolute water use and treating wastewater from its operations before discharge. With 70% of Nigeria's population under the age of 18 years, the youth population remains a critical segment of the nation's consumer base. The CCHBC Group continues to engage with this segment of population by spearheading and supporting programmes that are designed to improve the quality of their development. In 2013, the CCHBC Group continued its partnership with state governments to invest in educational infrastructure benefiting thousands of pre-college students across several communities. The CCHBC Group continues to provide skills development and job opportunities through its Technical Training school and the National Diploma recruitment scheme.


Romania

        The CCHBC Group believes that it is the largest bottler of non-alcoholic ready-to-drink beverages in Romania in terms of sales volume with a total volume of 148.5 million unit cases in the year ended 31 December 2013, of which 65.8% related to Sparkling beverages. The CCHBC Group also believes it is the leader in the Sparkling beverages category in terms of sales volume. In addition to the core brands of TCCC, the CCHBC Group also distributes Dorna water, Schweppes-branded mixer products, Cappy juices and Nestea ice tea, Burn energy drinks and illy cafe.

        In the year ended 31 December 2013, the CCHBC Group's total volume in Romania was 148.5 million unit cases, a decrease of 8.8% compared to the year ended 31 December 2012. Throughout the year, performance was adversely impacted by the difficult macroeconomic and trading environment as well as competitive promotional pressures. Volume in the Sparkling beverages category decreased by 8.1% compared to the year ended 31 December 2012. This is mainly attributable to the negative market trend and the unfavourable weather conditions during the summer months. The volume in the combined Still and Water beverages category declined by 9.4% compared to the year ended 31 December 2012, which was mainly attributable to an overall decline in the Water market.

        The CCHBC Group regularly reviews its infrastructure footprint with the aim of growing its business with borderless solutions, while taking advantage of its scale and geography. On 30 October 2013, together with TCCC, the CCHBC Group inaugurated a €22 million aseptic bottling line in Ploiesti. As a result, Romania will become a regional production hub exporting Cappy Pulpy to six territories of the CCHBC Group across Central and Eastern Europe.


Sales and marketing

Brand and market development

        In all of the CCHBC Group's Territories, and particularly in its Emerging and Developing Markets, the CCHBC Group believes that significant opportunities exist to promote increased consumption of Sparkling, Still and Water beverages. The CCHBC Group develops these opportunities by ensuring the CCHBC Group's brands are available in broad distribution across all relevant channels, in the right pack size to suit each channel or occasion, at the right price, and further supported by the appropriate brand-specific promotions and quality merchandising. These efforts combined are designed to develop consumer preference for the CCHBC Group's brands, increase its consumer base and drive purchasing frequency.

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        Whereas TCCC's focus is on general consumer marketing and brand promotion of TCCC's brand-related products (involving, for example, building brand equity, analysing consumer preferences and formulating brand marketing strategies and media advertising plans), the CCHBC Group has primary responsibility for, and controls, the customer relationships and route to market in each of its relevant Territories and develops and implements its own sales and trade marketing strategy in each of its relevant Territories. The CCHBC Group, together with TCCC, conducts market analyses to better understand unique shoppers and purchase occasions in different trade channels. The principal focus of TCCC has traditionally been on the core Sparkling brands: Coca-Cola, Coca-Cola light, Coca-Cola Zero, Fanta and Sprite. Additionally, the CCHBC Group is working closely with TCCC to leverage its portfolio of brands beyond the core Sparkling range; including the Still drink categories of ready-to-drink tea, energy, juice, sport drinks and water. This full portfolio of products provides consumers of the CCHBC Group with a range of choices to meet their refreshment, well-being, health and fitness needs. The CCHBC Group recognises changing preferences in favour of products in its combined Still and Water beverages category and is working to satisfy this increasing demand and maximise its growth potential. The CCHBC Group plans to achieve this by developing existing brands, such as Cappy, Nestea, Burn and Powerade, as well as by launching or acquiring new brands, as the CCHBC Group has done in the past with Dobry, Nico and Rich in the Russian Federation, Bankia in Bulgaria, Rosa, Next and Su-Voce in Serbia, and Lilia and Lilia Frizzante in Italy.

        In practice, the CCHBC Group and TCCC discuss on an annual basis the long-term strategic direction of how the TCCC's brand-related products are to develop in particular Territories. The mutually agreed upon objectives shape the level of marketing and promotional investments that may become necessary to attain these goals. The mutually agreed marketing and promotional investments are in turn segregated into consumer-driven (such as building TCCC brand equity, analysing consumer preferences, formulating brand marketing strategies and media advertising plans), which are TCCC's responsibility, and customer-driven (such as customer discounts and marketing and promotional materials at a customer level) which are the CCHBC Group's responsibility.

        The CCHBC Group develops its fully-owned brands (Amita, Avra, RiverRock, Tsakiris snacks, Lanitis dairy products and others) with the same criteria as above.

        The CCHBC Group develops strong relationships with its customers by combining market, consumer and shopper insights with excellent execution at the point of sale. The CCHBC Group supports such market execution by conducting regular customer satisfaction surveys which assess its competence using a variety of measures, from supply chain reliability, sales force effectiveness, delivery of strong product and marketing promotions, through to overall responsiveness and issues resolution. Finally, the CCHBC Group also works closely with TCCC to execute coordinated brand and commercial strategies for each of its Established, Developing and Emerging Markets.

        The CCHBC Group sponsors significant sporting, cultural and community activities across all of its Territories in partnership with TCCC, a major supporter of important international events and programmes. The CCHBC Group seeks to integrate consumer marketing and sponsorship activities with its retail promotions. In conjunction with the global sponsorship of the Olympic Games by TCCC, which dates back to 1928 and were most recently seen in the 2014 Sochi Winter Olympics, the CCHBC Group engages in a range of promotions. TCCC's association with international sporting events such as the Olympic Games, the European Football Cup and the World Football Cup also enables the CCHBC Group to realise significant benefits from the unique marketing opportunities of some of the largest and most prestigious sporting events in the world.

        The CCHBC Group's partnership with TCCC extends beyond sports and includes other popular sponsorship-related marketing initiatives. At the same time, these sponsorship initiatives complement the CCHBC Group's local initiatives, which involve active participation in a broad range of events,

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ranging from musical and entertainment promotions to cultural and festive occasions, including a wide variety of national celebrations.


Revenue growth initiative

        As part of the CCHBC Group's effort to engage successfully in what it calls its "revenue growth initiative", the CCHBC Group seeks to optimise its product prices relative to value, identify the best mix of brands, packages and channels, drive packaging innovation and emphasise customer management. As a result of this approach, the CCHBC Group has introduced new packages to attract new consumers in each of its product categories, developed immediate consumption channels in each of its Territories by investing in cold drink equipment and has put in place an employee training programme together with TCCC, in which the CCHBC Group emphasises revenue growth initiative principles. The CCHBC Group also seeks to identify good revenue growth practices in its Territories based on actual results which it shares with the other Territories across its group.


Sales and marketing organisation

        In each of its Territories, the CCHBC Group sales and trade marketing strategy is implemented by its local sales force and is tailored to reflect the level of development and local customs in the marketplaces. The CCHBC Group ensures that those closest to the market, its national and regional sales and marketing organisations, are responsible and accountable for successfully implementing that strategy. The CCHBC Group believes that local sales forces are in the best position to evaluate the particular circumstances of each market and address its specific needs. Accordingly, the CCHBC Group seeks to encourage responsibility, flexibility and innovation at a local level.

        The CCHBC Group's key sales and marketing personnel typically include:

    the commercial director, who has overall responsibility for country specific sales and marketing activities;

    the marketing manager, who has overall responsibility for the development of channel-specific plans and programmes, understanding of local consumer insights, marketing analysis and company-owned brand plans;

    the national sales manager, who leads the sales organisation; and

    the key account managers, who are responsible for developing customer- specific plans and programmes.

        The CCHBC Group usually divides a country into different sales areas, each with a region manager who has responsibility for implementing national strategies at the local level and who leads a team of representatives responsible for sales, customer relations, merchandising and individual account management. The CCHBC Group's teams work closely with the relevant marketing teams of TCCC in developing and executing their sales and marketing plan.


Key account management

        The CCHBC Group uses collaborative key account management principles to build strong and long-term relationships with its major customers. The CCHBC Group's key account managers work together with major customers to improve their respective profit margins by increasing volume and revenue growth while reducing distribution costs. The CCHBC Group's key account managers also negotiate the terms of the CCHBC Group's commercial cooperation arrangements with its major customers, including marketing activities and promotional events. To ensure that its key account managers have the right skills, the CCHBC Group organises on a regular basis training programmes for them on how to manage large customers.

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Seasonality

        Product sales in all of the CCHBC Group's Territories are generally higher during the warmer months of the year, which are also periods of increased tourist activity in many of the CCHBC Group's Territories, as well as during religious holiday periods such as Christmas and Easter. The CCHBC Group typically experiences its best results of operations during the second and third quarters. In 2013, for example, the CCHBC Group realised 20.7% of its sales volume in the first quarter, 28.0% in the second quarter, 27.9% in the third quarter and 23.4% in the fourth quarter.


Raw and packaging materials

        The CCHBC Group's principal raw material, in terms of volume, is water, and all of its beverages production facilities are equipped with water treatment systems to provide treated water that meets all local regulatory requirements and the strict standards of TCCC. The CCHBC Group's facilities also treat waste water, with either on-site treatment systems or using municipal systems, to standards that meet local regulatory requirements and the standards of TCCC. The CCHBC Group's second key ingredient is concentrate, which the CCHBC Group purchases from companies designated by TCCC. The CCHBC Group's other major raw materials include sugar and other sweeteners, juice concentrates, carbon dioxide, glass, labels, PET resin, closures, plastic crates, aluminium cans, aseptic carton packages and other packaging materials.

        Expenditure for concentrate for TCCC's products constitutes a significant element of the CCHBC Group's raw material cost, representing approximately 44.0% of its total raw material costs in the year ended 31 December 2013. Under the CCHBC Group's bottlers' agreements with TCCC, it is required to purchase concentrate for all of TCCC's beverages exclusively from companies designated by TCCC. TCCC also determines the price of concentrate for all of TCCC's brands for each Territory. In practice, however, TCCC normally sets concentrate prices only after discussions with the CCHBC Group so as to reflect trading conditions in the relevant country and so as to ensure that such prices are in line with the CCHBC Group's and TCCC's respective sales and marketing objectives for particular TCCC brand-related products and particular Territories. TCCC generally uses an incidence-based pricing model in relation to the CCHBC Group, which generally tracks a percentage of the CCHBC Group's net sales revenue agreed from time to time, otherwise called the incidence rate.

        The CCHBC Group's principal sweetener is beet sugar, which it purchases from multiple suppliers in Europe. The CCHBC Group also purchases cane sugar for some of its Territories, which is then refined into white sugar by third party refiners. In some cases, the CCHBC Group purchases high fructose syrup, which is used either alone or in combination with sugar. The CCHBC Group does not purchase low-calorie or artificial sweeteners because they are part of the beverage concentrate supplied to it by TCCC for its low-calorie products. Supply contracts for sugar run typically for periods of 12 to 36 months. The CCHBC Group's Armenian, Bosnian, FYROM, Nigerian and Russian operations are exposed to the world sugar market. All of the CCHBC Group's EU markets and Switzerland (indirectly) operate within the EU sugar regime. This means that the minimum selling price for sugar is the EU intervention price plus the cost of raw material (beet), the cost of production and transport and profit margin. In the recent years, the European sugar market became increasingly volatile and the cost of these sweeteners has increased considerably due to internal supply and demand imbalances. The European Union has a structural deficit in sugar and, to meet demand, relies on imports from nations with preferential market access. World market price pressures and negative climatic effects on cane crops have been partly responsible for a considerable drop in forecasted imports from these countries. This has led to a drawdown in strategic stocks, increased market tightness and price rises. Nevertheless the strategic stocks have increased in recent months in light of the European Commission's decision to allow more imports into the EU. The CCHBC Group's non-EU markets may be exposed to other local government regulations, which normally restrict imports of sugar below local market prices. Following its strategy to support local businesses, the CCHBC Group is increasing the usage of locally produced

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sugar from sugar beet; for example, in the Russian Federation, the CCHBC Group has increased the share of beet sugar from 30% in 2011 to 48% in 2012 and 50% in 2013.

        CCHBC Group is sourcing PET resin both locally and worldwide in order to take advantage of benefits offered by low cost countries. PET resin cost decreased by 9.4% in 2013 compared to 2012. Although the prices in the first quarter of 2013 were at relatively high levels, within the following three quarters they started to reduce due to growing PET production capacity, relatively low demand in the entire polyester value chain and favorable US dollar /euro exchange rates.

        In 2013, the European Commission abolished some of the anti-dumping duties applicable to PET imports from several Asian countries into the EU, which in turn stimulated competition in the European PET market thereby reducing prices.

        The CCHBC Group uses recycled PET resin ("rPET") in several CCHBC countries as part of its commitment towards sustainability. In some markets, the CCHBC Group produces PET bottles with up to 50% rPET content. In 2013 the CCHBC Group worked very actively with the local supplier base to increase rPET availability and quality. At the same time the CCHBC Group successfully introduced a plant-based bottle (made up of 30% of plant-based material) in two markets, Serbia and Bulgaria, with an intention to extend that concept into several other Territories of the CCHBC Group in the upcoming years.

        The cost of the CCHBC Group's cans decreased in the year ended 31 December 2013, driven by lower input costs, mainly aluminium, which was locked in line with the CCHBC Group's risk management strategy at more favourable hedging rates as compared to the year ended 31 December 2012. In compliance with the quality standards prescribed by the CCHBC Group's bottlers' agreements with TCCC, the CCHBC Group purchases all containers, closures, cases, aseptic packages and other packaging materials and labels from TCCC-approved manufacturers. The CCHBC Group also purchases cold drink equipment, such as coolers, from approved third party suppliers.

        The CCHBC Group's major cold drink equipment supplier is Frigoglass S.A. In the year ended 31 December 2013, the CCHBC Group made purchases of coolers, coolers parts, glass bottles, crowns and plastics from Frigoglass S.A., totalling €118.9 million, compared to €137.9 million and €147.7 million in the years ended 31 December 2012 and 2011, respectively. In the year ended 31 December 2013, the CCHBC Group incurred maintenance and other expenses from Frigoglass S.A. and its subsidiaries of €10.6 million compared to €9.8 million and €6.3 million in the years ended 31 December 2012 and 2011, respectively.

        The purchases of coolers from Frigoglass S.A. in the year ended 31 December 2013 represented 97.5% of the CCHBC Group's total cooler requirements. Under the terms of a supply agreement that the CCHBC Group entered into with Frigoglass S.A. in 1999, initially set to expire on 31 December 2004, but extended on substantially similar terms in June 2004, then in December 2008 and most recently in April 2013 to 31 December 2018, the CCHBC Group has the status of a non-exclusive most favoured client of Frigoglass S.A. The CCHBC Group is required to obtain at least 60% of its annual requirements of coolers from Frigoglass S.A., in order to maintain its status as a non-exclusive most favoured client. The CCHBC Group has entered into all its supply agreements with Frigoglass S.A. on an arm's length basis. Frigoglass S.A. is related to the CCHBC Group. For further information on the CCHBC Group's relationships with Kar-Tess Holding and Frigoglass, see the section entitled "Additional Disclosures-Related Party Transactions-Relationship with Kar-Tess Group".

        The CCHBC Group seeks to ensure the reliability of its supplies by using, where possible, a number of alternate suppliers and transportation contractors. The majority of the CCHBC Group's procurement operations, other than those relating to TCCC's concentrate, are centrally managed by the CCHBC Group's central procurement department. During 2008, the CCHBC Group began integrating

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all its procurement activities into a specialised company, Coca-Cola Hellenic Procurement GmbH, located in Vienna, Austria.

        The CCHBC Group believes that it presently has sufficient access to materials and supplies, although strikes, weather conditions, customs duty regulations or other governmental controls or national emergency situations could adversely affect the supply of specific materials in particular Territories. Decreasing global demand may result in financing difficulties and excess capacity reductions with respect to certain of the CCHBC Group's suppliers, although these risks were successfully managed during 2012, during which period the CCHBC Group did not lose any key suppliers due to such issues. For further information on the risk of prices increases and shortages of raw materials on the CCHBC Group's results of operators, see "Operating and Financial Review and Prospects".


Competition

        The non-alcoholic ready-to-drink beverages industry is highly competitive in each of the CCHBC Group's Territories. Non-alcoholic ready-to-drink beverages are offered by a wide range of competitors, including major international, European, local and regional beverage companies and hypermarket and supermarket chains through their own private labels. In particular, the CCHBC Group faces intense price competition from local non-premium brand producers and distributors, which typically produce, market and sell Sparkling beverages and other non-alcoholic ready-to-drink beverages at prices lower than prices of the CCHBC Group, especially during the summer months. In some of its Territories, the CCHBC Group is also exposed to the effect of imports from adjacent countries of lower priced products, including, in some cases, trademarked products of TCCC bottled by other bottlers in the Coca-Cola bottling system.

        In most of its Territories, the CCHBC Group faces greater competition in its combined Still and Water beverages category, where its business is typically less developed and its brands are less established than in its core Sparkling beverages category, and there are often significant national and international competitors with established brands and strong market positions. However, the CCHBC Group intends to continue to develop its Still and Water beverages business and believes that its extensive capabilities in the sale, marketing and distribution of non-alcoholic ready-to-drink beverages, combined with its substantial business infrastructure and strong customer relationships, will allow the CCHBC Group to improve its competitive position in this category of its business.

        The CCHBC Group competes primarily on the basis of brand awareness, product quality, pricing, advertising, distribution channels, customer service, retail space management, customer marketing and customer point of access, local consumer promotions, package innovations and new products. One of the most significant factors affecting the CCHBC Group's competitive position is the consumer and customer goodwill associated with the trademarks of its products. TCCC plays a central role in the global marketing and brand building of its products. The CCHBC Group relies on TCCC to enhance the awareness of TCCC's brands against other non-alcoholic ready-to-drink international and local beverage brands.

        The diversity in consumer tastes, distribution channels and economic conditions in the different Territories in which the CCHBC Group operates, and even among the different regions of these Territories, is one of the main challenges of its business. The CCHBC Group adjusts its competitive strategy to local market conditions so that its products remain attractive, widely available and affordable to local consumers.


Regulation

        The production, packaging, transportation, safety, advertising, labelling and ingredients of the CCHBC Group's products are each subject to various EU, national and local regulations. In particular, EU regulation remains important to the CCHBC Group as approximately 55.9% of its sales volume in

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the year ended 31 December 2013 was generated from its Territories that are members of the European Union.

        The principal areas of regulation to which the CCHBC Group is subject are environmental matters and trade regulation. Other regulatory issues involve food laws and food safety, excise taxes and VAT.


Environmental matters

        The CCHBC Group is subject to different environmental legislation and controls in each of its Territories. In addition, the CCHBC Group has initiated its own environmental standards, performance indicators and internal reporting. These controls and standards are often stricter than those required by the local laws of the Territories in which the CCHBC Group's facilities are located and address specific issues that impact its business. To this end, the CCHBC Group is implementing the ISO 14001 environmental management systems in its facilities. As part of the CCHBC Group's infrastructure optimisation process, three production facilities were closed in the year ended 31 December 2013. Reflecting these changes, by 31 December 2013, 66 of the CCHBC Group's 68 production facilities had been certified to the ISO 14001 standard by internationally recognised audit bodies. The CCHBC Group anticipates two further certifications in 2014 in line with its plans to certify all of its plants over the next few years. The CCHBC Group plans to achieve certification of newly acquired or commissioned plants within two years.

        During the year ended 31 December 2013, 68 environmental systems audits and 15 compliance audits conducted on behalf of TCCC were carried out by independent agencies in the CCHBC Group's production facilities, comprising Sparkling beverages and/or juice, milk and mineral water facilities, including the facilities of its joint ventures. All of these audits were performed for purposes of establishing key performance indicators and internal reporting processes so as to monitor compliance with environmental standards going forward. During the course of 2013, the CCHBC Group conducted training sessions to enhance the capabilities of the country environmental coordinators. These individuals work closely with the Group dedicated environment manager to maintain environmental management systems, advance environmental impact reduction initiatives as well as to collect and report country-specific data to the CCHBC Group for tracking performance improvement and external reporting to stakeholders. This team of environmental professionals maintains communication routines on a regular basis to share best practices in order to improve the CCHBC Group's environmental management and control processes across the CCHBC Group.

        In addition, the CCHBC Group has implemented waste minimisation and environmental management programmes with respect to several aspects of its business, including usage of raw materials, energy consumption and water discharge. The CCHBC Group also cooperates with packaging suppliers to reduce the potential impact of packaging materials on global warming in accordance with international guidelines and standards.

        Achieving compliance with applicable standards and legislation may require facility modifications and capital expenditure, such as the installation of waste water treatment plants. The CCHBC Group has put in place an active programme to ensure that it fully complies with any such requirements. Laws and regulations may also restrict noise levels and the discharge of waste products, as well as impose waste treatment and disposal requirements. All of the jurisdictions in which the CCHBC Group operates have laws and regulations, which require polluters or site owners or occupants to remediate contamination.

        EU legislation requires each member state and accession candidate to implement the EU directive on packaging and packaging waste at the national law level, set waste recovery and recycling targets and require manufacturers and retailers, including the CCHBC Group and its customers, to implement the applicable standards. The EU packaging directive relates to all types of packaging and its primary objective is the minimisation of packaging and packaging waste, by requiring an increase in recycling

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and re-usage of packaging waste, the promotion of other forms of recovery for packaging waste and, as a result, a reduction of the quantity of disposed packaging waste.

        In particular, the directive sets targets for both the recovery and recycling of waste and for the reduction in the quantity of packaging waste for disposal. The directive of 1994, as amended in 2004, required that these targets be achieved by the end of 2008 (2011 for Greece, the Republic of Ireland and Portugal). All new member states had 18 months, until August 2005, to enact national laws to implement the new directive. New member states of the European Union were required to comply by the end of 2012 (2013 for Malta, 2014 for Poland and 2015 for Latvia). The directives set forth certain requirements for packaging and authorise member states to introduce national economic instruments (taxes and levies) to achieve the directives' objectives within the regulatory framework of a functioning internal market without obstacles to trade and competition distortions. The EU packaging and packaging waste legislation is going through an amendment process. The EU Commission is reviewing the packaging and packaging waste legislation and is expected to promulgate amendments to enhance the diversion of disposing waste in landfills and enhance the collection and recycling of PET, among other packaging materials. The EU Parliament has concluded that the performance of the post-consumer PET collection and recycling is very weak and approved a green paper on how to enhance the plastic recycling performance. Also, toward the end of 2013, the EU Commission and representatives of 21 Mediterranean Countries concluded discussions in Istanbul to establish a road map to address the increasing issue of marine litter. Both of these matters are expected to be addressed in the upcoming legislation changes. The CCHBC Group continues to work closely with governments and other industry participants to implement packaging collection schemes. These schemes have either been implemented or are in the process of being implemented in all of the CCHBC Group's EU Territories, including its Developing Markets.


Trade regulation

        The CCHBC Group's business, as the bottler of beverages of TCCC and other producers within specified geographic countries, is subject to competition laws of general applicability. In particular, the Treaty of Rome, which established the European Economic Community (now the European Union), precludes restrictions on the free movement of goods among the member states. As a result, unlike the CCHBC Group's international bottlers' agreements, its EU bottlers' agreements grant exclusive bottling Territories to the CCHBC Group subject to the exception that the EU and/or EEA bottlers of TCCC's beverages can, in response to unsolicited orders, sell such products in any EU and/or EEA country. You should read the section entitled "Additional Disclosures—Related Party Transactions—Relationship with The Coca-Cola Company—Bottlers' agreements," for additional information on the provisions of the CCHBC Group's international and EU bottlers' agreements.


Information technology

        Information technology ("IT") systems are critical to the CCHBC Group's ability to manage its business. The CCHBC Group's IT systems enable it to coordinate its operations, from planning, production scheduling and raw material ordering to order-taking, truck loading, routing, customer delivery, invoicing, customer relationship management and decision support. The CCHBC Group takes various actions with the aim of minimising potential technology disruptions, such as engaging SAP and a third party partner, Atos, to do pre go-live assessments, redundancy of systems alongside a robust disaster recovery environment and the establishment of a dedicated performance team. From a security perspective, the CCHBC Group conducts annual intrusion detection through independent companies, proceeding with internal and external security assessments and reviewing risk management processes. In the year ended 31 December 2013, the CCHBC Group did not experience any significant IT incidents or disruptions that had a material impact on the CCHBC Group's operations.

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        The CCHBC Group's main IT platform is SAP, an integrated system of software applications. In 2006, an enhanced version was developed called Wave 2, which, as the CCHBC Group continues to implement it, is providing advanced capabilities to address customer-centric activities in the areas of customer relationship management, promotion management, equipment management, field sales execution, truck management and yard management. The CCHBC Group successfully rolled out the enhanced Wave 2, in 27 of its 28 Territories. The roll-out is considered by SAP to be the biggest in Europe, encompassing more than 32,600 users and 2.7 million customers without any business disruption, and has been identified as a key enabler for the fast implementation of the CCHBC Group's strategic vision. The CCHBC Group's plan is to complete deployment throughout its geographic footprint by including FYROM by January 2015. The projected investment for the entire programme is estimated to total to approximately €360 million.


Information technology personnel

        All of the CCHBC Group's IT and business process personnel are managed as one functional organisation across the entire group, the Business Solutions and Systems, which is intended to complement the CCHBC Group's strategy of deploying SAP template based solutions, including applications, data, and hardware, in support of best practice standards. Accountability for all IT activities, personnel and budgets has been concentrated with a central IT leadership team. This organisational structure has proved instrumental in driving standardisation, best practice deployment and operating efficiencies across the CCHBC Group's Territories. Following the establishment of an IT shared services organisation in Sofia, Bulgaria, the CCHBC Group continues to transition country-based IT activities and services to this more efficient and cost-effective centre, while focusing its country capabilities on account management and service management skills, as well as, specialisation in key business processes.

        The CCHBC Group continues to reap the benefits of this reorganisation from a cost, responsiveness and capability perspective, backed by an ISO 9000 certification by Lloyds Register Quality Assurance.


Information technology infrastructure

        The CCHBC Group continues to implement infrastructure optimisation programmes to upgrade, consolidate and outsource elements of its IT infrastructure, including desktops, laptops, servers, printers and user support processes.

        The CCHBC Group continued to assess technology trends and risks and embraced consumerisation opportunities. During the year ended 31 December 2013, after a successful Group pilot of the Apple iPad version of its sales force mobile solution, Apple iPads have been rolled out across selected Territories. The CCHBC Group also leverages cloud technology for infrastructure optimisation and integrated services such as Skype and the CCHBC Group's network for free conference services to lower its IT costs in line with its cost leadership strategic pillar.


Green IT

        The Green IT programme, a core element of the CCHBC Group's IT strategy, is well established as part of the CCHBC Group's plan to reduce its carbon footprint. The CCHBC Group designs its IT activities with close consideration of the power saving opportunities that they offer. As a result, in the year ended 31 December 2013, the CCHBC Group's Green IT programme led to a total reduction of 6,683 tons of CO2 emissions which is the CCHBC Group's best result since 2007. By further promoting and enhancing audio, web and video conferencing as alternatives to travelling, 5,895 tons of CO2 emissions were saved in the year ended 31 December 2013. In addition, projects such as server

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consolidation, paper-savings, usage of multi-function devices and LCD technology contributed to a saving of 788 tons of CO2 were saved in the year ended 31 December 2013.


Employees

        The following table provides a breakdown by activity and by segment of the average number of full-time employees of the CCHBC Group on a full-time equivalent basis, including the employees of its subsidiaries, in the years ended 31 December 2013, 2012 and 2011.

 
  Average number of employees
in the year ended
31 December
 
 
  2013   2012   2011  

By Activity

                   

Production and Warehousing

    13,418     15,150     14,870  

Sales and Marketing

    15,463     15,785     18,066  

Administration

    4,252     4,303     4,778  

Distribution

    4,956     4,499     3,577  
               

Total

    38,089     39,736     41,291  
               
               

By Segment

   
 
   
 
   
 
 

Established Markets

    7,349     7,372     8,572  

Developing Markets

    5,948     6,155     7,128  

Emerging Markets

    24,792     26,209     25,591  
               

Total

    38,089     39,736     41,291  
               
               

        In order to meet the increased demand for the CCHBC Group's products in the summer months, it supplements its workforce with temporary employees during peak season. On average, in 2013, the CCHBC Group employed approximately 1,632 temporary full-time equivalent employees, around 4.3% of the CCHBC Group's total workforce.


Employee relations

        Approximately 25% of the CCHBC Group's employees were members of the 45 independent trade unions operating in its business as of 31 December 2013. Trade union participation varies within the CCHBC Group's unionised countries. For example, in Nigeria, nearly 98% of its nearly 4,799 employees are union members, whereas in Romania 17% of its nearly 1,701 employees are union members. Part of the CCHBC Group's workforce in Austria, Bosnia, Bulgaria, Croatia, Cyprus, Greece, the Republic of Ireland, Northern Ireland, Italy, Poland, the Russian Federation, Slovenia, Serbia and Montenegro and Ukraine is also unionised. Furthermore, over 50% of the CCHBC Group's employees are covered by collective labour agreements. Typically, these agreements cover procedural and substantive issues including terms and conditions of employment, employment benefits, access to training, grievance and disciplinary procedures, rights of appeal and health and safety in the workplace.

        The CCHBC Group has formal communication protocols with each trade union and works council to ensure regular and open dialogue and consultation. A unionised labour environment carries a risk of industrial action. However, the CCHBC Group considers its relationship with its workforce to be good. In 2013, working time lost due to strikes and industrial disputes was insignificant.

        In the following five countries, neither unions nor work councils exist: Moldova, Armenia, Belarus, FYROM and Hungary. In these cases, the CCHBC Group typically recommends the establishment of employee bodies for the purposes of information and consultation. For example, there is an employee-elected social committee in Hungary, while in Belarus there is a specific internal procedure to promote

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and encourage employee rights and duties protection, as well as the employer's responsibilities, such as health and safety work conditions creation and maintenance.

        The CCHBC Group is committed to communicating directly with all employees, whether unionised or not, about major change initiatives. In the event of redundancies, the CCHBC Group complies with local legislation in relation to information, and consults with employees and their representatives on the reasons for the change, the impact and the implications for affected employees. In 2013, there were 1,811 redundancies due to operational changes. Comprehensive severance packages meet and, in the majority of cases, substantially exceed statutory requirements. Aside from some minor labour actions of short duration in Greece and Nigeria, the restructuring in 2013 took place without incident and there was no disruption to supply as a result. As with any major organisational change, the CCHBC Group develops plans in consultation with unions and works councils where relevant. The CCHBC Group also liaises with the Select Committee of its European Works Council ("EWC"), and engages in regular dialogue with local works councils and town hall meetings attended by all employees.

        The CCHBC Group's EWC was established in 2002 under the European Works Council Directive 94/95/EU. This forum previously comprised of employee and management representatives from Austria, Greece, Italy, Northern Ireland and the Republic of Ireland. In 2005, representation was expanded to include operations from the CCHBC Group's Territories that joined the European Union in 2004, namely the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia. In 2007, the CCHBC Group's EWC was enlarged to include representatives from recently admitted members of the European Union, Bulgaria and Romania, as well as Cyprus which became one of the territories in 2006. The CCHBC Group's EWC is comprised of representatives of management and representatives of employees from all EU countries. It provides an annual forum for information and consultation on transnational matters affecting more than one of the CCHBC Group's Territories in the European Union. Under the terms of the agreement, the parties undertake to participate in the council in a spirit of co-operation, good faith and mutual trust. The operation of the EWC does not affect the exclusive right of management to make business, financial, commercial and technological decisions. In 2012, the CCHBC Group began discussions with the EWC select committee for the renewal of the EWC agreement. The amended EWC agreement was formally signed in May 2013.


Health and safety

        The health, safety and welfare of the CCHBC Group's employees are paramount, and the CCHBC Group is committed to achieving the most stringent standards of workplace safety and health. The Occupational Health and Safety Policy was adopted in 2004 and a group-wide initiative was launched to introduce the Occupational Health and Safety Assessment Series ("OHSAS"), 18001 across all Territories. The health and safety programme is designed to enhance both performance and conformance by implementing independently certificated and standardised OHSAS 18001 systems. Compliance with national occupational health and safety standards, the CCHBC Group's previous standard, still remains the minimum requirement in all operations. By 31 December 2013, 67 of the CCHBC Group's 68 plants had achieved certification to OHSAS 18001. A comprehensive plan is in place to achieve full certification of all plants, including new acquisitions. In 2013, an additional two manufacturing plants achieved certification, in line with the CCHBC Group's plans to certify all of its plants over the next few years.

        During the year ended 31 December 2013, 71 health and safety systems audits and 18 compliance audits on behalf of TCCC were conducted by independent agencies in 67 of the CCHBC Group's 68 production facilities, comprising Sparkling beverages and/or juice, milk and mineral water facilities, including the facilities of its joint ventures. All of these audits were performed for purposes of establishing key performance indicators and internal reporting processes to monitor compliance with health and safety standards.

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Employee benefit obligations

Statutory termination benefits and pension benefits for employees

        Employees of the CCHBC Group's subsidiaries in Austria, Bulgaria, Croatia, Greece, Italy, Montenegro, Nigeria, Poland, Romania, Serbia and Slovenia are entitled to employee leaving indemnities, generally based on each employee's length of service, employment category and remuneration. These are unfunded plans where CCHBC meets the payment obligation as it falls due.

        The CCHBC Group's subsidiaries in Austria, Greece, Northern Ireland, the Republic of Ireland and Switzerland sponsor defined benefit pension plans. Of the three plans in the Republic of Ireland, two have plan assets as do the two plans in Northern Ireland, the plan in Greece and one plan in Switzerland. The Austrian plans do not have plan assets and CCHBC meets the payment obligation as it falls due. The defined benefit plans in Austria, Greece, Republic of Ireland and Northern Ireland are closed to new members.

        The total amounts set aside or accrued for the provision of statutory termination benefits for employees as at 31 December 2013, 2012 and 2011 were €86.2 million, €94.0 million and €95.0 million, respectively. The total amounts set aside or accrued for defined benefit pension plans for employees as at 31 December 2013, 2012 and 2011 were €20.7 million, €42.4 million and €41.4 million, respectively.


Jubilee plans

        The CCHBC Group provides long service benefits in the form of jubilee plans to its employees in Austria, Croatia, Nigeria, Poland, Slovenia and Switzerland.

        The total amounts set aside or accrued for jubilee plans for employees as at 31 December 2013, 2012 and 2011 were €7.8 million, €8.2 million and €7.9 million, respectively.


Defined contribution plans

        The CCHBC Group also sponsors defined contribution plans covering employees of a number of its subsidiaries. The CCHBC Group's contributions to these plans were €20.9 million for the year ended 31 December 2013, €20.9 million for the year ended 31 December 2012 and €20.5 million for the year ended 31 December 2011.


Risk factors

        You should carefully consider the risks and uncertainties described below. You should also refer to the other information set out in this annual report, including the CCHBC Group's audited consolidated financial statements and the related notes. The risks and uncertainties described below may materially affect CCHBC and any investment you make in CCHBC. If these events occur, the trading price of CCHBC Ordinary Shares and CCHBC ADSs could decline. Additional risks and uncertainties that do not currently exist, or that the CCHBC Group is unaware of, may also become important factors that adversely affect CCHBC and your investment.

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Risks Relating to the CCHBC Group's Relationship with The Coca-Cola Company, Kar-Tess Holding and Nestlé S.A.

If The Coca-Cola Company exercises its right to terminate the bottlers' agreements with the CCHBC Group, upon the occurrence of certain events, or is unwilling to renew these agreements upon expiry in 2023, the CCHBC Group's net sales revenue may decline dramatically. In addition, if The Coca-Cola Company is unwilling to renew the bottlers' agreements with the CCHBC Group on terms at least as favourable to the CCHBC Group as the current terms, the CCHBC Group's net sales revenue could also be adversely affected.

        The CCHBC Group's business relationship with TCCC is mainly governed by the bottlers' agreements with TCCC, which are an important element of the CCHBC Group's business. The trademarked beverages of TCCC (including trademarked beverages of joint ventures to which TCCC is a party) represented approximately 97% of the CCHBC Group's total sales volume in the year ended 31 December 2013. The CCHBC Group produces, sells and distributes TCCC's trademarked beverages pursuant to standard bottlers' agreements with TCCC covering each of the Territories. The bottlers' agreements include limitations on the CCHBC Group's degree of exclusivity in each of the Territories and, to the extent permitted by law, on its ability to market competing brands not owned by TCCC in the CCHBC Group's Territories outside the European Economic Area. The European Economic Area comprises the member states of the European Union as well as Norway, Iceland and Liechtenstein.

        The CCHBC Group enters into bottlers' agreements with TCCC for each of the Territories. Each of the CCHBC Group's bottlers' agreements has a fixed initial term. These agreements, the terms of which were extended with effect as at 1 January 2004 and most of which were due to expire in December 2013, have been extended until 2023, and may be further renewed, at TCCC's discretion. Although TCCC has agreed to extend the term of the bottlers' agreements for each of the Territories until 2023 and historically the bottlers' agreements entered into with TCCC by the CCHBC Group and its predecessors have been renewed at expiry, the CCHBC Group's business depends to a large extent on TCCC's willingness to renew the CCHBC Group's bottlers' agreements when they expire. If TCCC is unwilling to renew these agreements upon expiry in 2023, the CCHBC Group's net sales revenue will decline dramatically. In addition, if TCCC is unwilling to renew the CCHBC Group's bottlers' agreements on terms at least as favourable to the CCHBC Group as the current terms, the CCHBC Group's business could also be adversely affected.

        In addition, TCCC has the right to terminate the CCHBC Group's bottlers' agreements upon the occurrence of certain events of default, including limitations on the change in ownership or control of CCHBC and assignment or transfer of the bottlers' agreements. Although TCCC has never terminated a bottlers' agreement with the CCHBC Group due to non-performance, if TCCC exercises its right to terminate the bottlers' agreements upon the occurrence of certain events of default, the CCHBC Group's net sales revenue will decline dramatically and the CCHBC Group's business will be adversely affected. You should read the section entitled "Additional Disclosures—Related Party Transactions—Relationship with The Coca-Cola Company" for a description of the circumstances under which TCCC may terminate its bottlers' agreements with the CCHBC Group.

The Coca-Cola Company could exercise its rights under the bottlers' agreements with the CCHBC Group in a manner that would make it difficult for the CCHBC Group to achieve its financial goals.

        The CCHBC Group's bottlers' agreements govern the CCHBC Group's purchases of concentrate, which represents a significant raw materials cost. TCCC determines the price that the CCHBC Group pays for concentrate at its discretion. In practice, TCCC normally sets concentrate prices only after discussions with the CCHBC Group so as to reflect trading conditions in the relevant Territories and to ensure that such prices are in-line with the CCHBC Group's and TCCC's mutually agreed marketing objectives for particular TCCC brand-related products and particular Territories of the CCHBC Group. TCCC's right to set the CCHBC Group's concentrate prices could give TCCC considerable influence

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over the CCHBC Group's profit margins, business, results of operations and financial condition. TCCC has other important rights under the bottlers' agreements with the CCHBC Group, including the right to approve, in its sole discretion, the form and attributes of the packaging for TCCC's brand-related products and to designate authorised suppliers of certain packaging and other raw materials.

        There can be no assurance that TCCC's objectives when exercising its rights under the bottlers' agreements with the CCHBC Group will in all cases be fully aligned with the CCHBC Group's objective to realise profitable volume growth. It is therefore possible that TCCC could exercise its rights under the bottlers' agreements with the CCHBC Group to determine concentrate prices and to approve only certain of the CCHBC Group's suppliers, in a manner that would make it difficult for the CCHBC Group to achieve its financial goals.

Kar-Tess Holding and The Coca-Cola Company have substantial influence over the conduct of the CCHBC Group's business and their interests may differ from the interests of other shareholders.

        Kar-Tess Holding currently owns approximately 23.2% and TCCC currently owns approximately 23.1% of CCHBC's outstanding share capital. On 6 December 2010, Kar-Tess Holding transferred 22,453,254 shares representing 6.13% of CCHBC's outstanding shares by transferring its wholly owned subsidiaries under the trade names "Sammy LLC", "Lucky 70 LLC", "Zoe 20 LLC", "Kooky LLC", "Utopia Business Company Ltd.", "Harmonia Commercial S.A.", "Ice Cold Holdings Limited" and "Red & White Holdings Limited", to entities and individuals, who were either ultimate beneficial owners of Kar-Tess Holding or who were nominated by such ultimate beneficial owners of Kar-Tess Holding. No such entity or individual owns individually more than 2% of CCHBC's outstanding share capital.

        In connection with the acquisition of Coca-Cola Beverages plc in August 2000, Kar-Tess Group, of which Kar-Tess Holding is the sole member holding CCHBC Ordinary Shares, and TCCC through its affiliates (the "TCCC Entities"), entered into a shareholders' agreement which governed their respective shareholdings in CCHBC (the "Coca-Cola Hellenic Bottling Company S.A. Shareholders' Agreement") until such agreement was terminated with effect on settlement of the Share Exchange Offer on 25 April 2013. On 29 August 2000, in connection with the listing of the Coca-Cola Hellenic Shares on the LSE, Coca-Cola Hellenic Bottling Company S.A., Kar-Tess Group and the TCCC Entities entered into the Coca-Cola Hellenic Bottling Company S.A. Relationship Agreement in accordance with Rule 3.12 of the Listing Rules of the Financial Conduct Authority (the "Listing Rules"). The Coca-Cola Hellenic Bottling Company S.A. Relationship Agreement was terminated with effect on the settlement of the Share Exchange Offer on 25 April 2013. For further discussion of the Coca-Cola Hellenic Bottling Company S.A. Relationship Agreement, see the section entitled "Major Shareholders".

        Out of the thirteen members of CCHBC's Board of Directors (each, a "Director" and, collectively, the "Board of Directors" or the "Board"), Mr. George A. David, Mr. Anastasios P. Leventis, Mr. Anastassis G. David and Mr. Haralambos K. Leventis have been recommended by Kar-Tess Holding, and were originally nominated to Coca-Cola Hellenic Bottling Company S.A.'s board of directors by Kar-Tess Holding pursuant to the Coca-Cola Hellenic Bottling Company S.A. Shareholders' Agreement. Mr. Irial Finan and Mr. John Hunter were also originally nominated to Coca-Cola Hellenic Bottling Company S.A.'s board of directors by the TCCC Entities, pursuant to the Coca-Cola Hellenic Bottling Company S.A. Agreement. Following termination of the Coca-Cola Hellenic Bottling Company S.A. Shareholder's Agreement, neither Kar-Tess Holding nor TCCC or its affiliates have any special rights in relation to the appointment or re-election of nominee directors, and those Directors who were originally nominees of TCCC or its affiliates or Kar-Tess Holding on Coca-Cola Hellenic Bottling Company S.A.'s board of directors will be required to stand for re-election on an annual basis in the same way as the other Directors. Furthermore, the Nomination Committee is responsible for identifying and nominating prospective Directors for election to the Board of Directors by CCHBC

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Ordinary Shareholders on an annual basis. However, for so long as such Directors who were originally nominees of TCCC or its affiliates or Kar-Tess Holding on Coca-Cola Hellenic Bottling Company S.A.'s board of directors remain on the Board of Directors, these historic board nomination arrangements are expected to enable each of TCCC or its affiliates and Kar-Tess Holding to exercise influence over the conduct of the CCHBC Group's business through their respective representation on the Board of Directors. As the Board of Directors comprises at least thirteen Directors, neither Kar-Tess Holding nor TCCC and its affiliates, acting individually, will be in a position to control (positively or negatively) decisions of the Board of Directors that are subject to simple majority approval; however, decisions of the Board of Directors that are subject to the special quorum provisions and supermajority requirements contained in the CCHBC Articles of Association (the "Articles"), in practice, require the support of Directors originally nominated by at least one of either TCCC and its affiliates or Kar-Tess Holding in order to be approved. In addition, based on their current shareholdings, neither Kar-Tess Holding nor TCCC (through CCHBC Grouping Inc.), acting individually, will be in a position to control a decision of the shareholders (positively or negatively), except to block a resolution to wind-up or dissolve CCHBC or to amend the supermajority voting requirements for such resolutions in the Articles, each of which require the approval of 80% of CCHBC Ordinary Shareholders, where all CCHBC Ordinary Shareholders are represented and voting, and other matters requiring supermajority shareholder approval, depending on the attendance levels at general meetings of CCHBC Ordinary Shareholders. The respective interests of Kar-Tess Holding and TCCC may differ from each other and from those of other CCHBC Ordinary Shareholders.

The CCHBC Group's success depends in part on The Coca-Cola Company's success in marketing and product development activities.

        The CCHBC Group derives the majority of its revenues from the production, sale and distribution of the trademarked beverages of TCCC. Whereas TCCC owns the trademarks of these products and is focused on overall consumer marketing and brand promotion of TCCC's products, the CCHBC Group develops and implements the sales and trade marketing at the country level and has primary responsibility for customer relationships. The profitable growth of the CCHBC Group's business depends in part on the success of TCCC's brand-related business, which in turn, depends in part on TCCC's consumer marketing activities, including TCCC's discretionary contributions to the CCHBC Group's annual marketing plan. Although the CCHBC Group's growth plans include product offerings in non-TCCC branded products, the expansion of the CCHBC Group's family of brands depends to a considerable extent on TCCC's product expansion strategy, particularly with respect to new brands. If TCCC were to reduce its marketing activities, the level of its contributions to the CCHBC Group's annual marketing plan or its commitment to the development or acquisition of new products, particularly new Still and Water beverages, these reductions could lead to a decrease in the consumption of trademarked beverages of TCCC in the Territories in which the CCHBC Group operates. This would, in turn, lead to a decline in the CCHBC Group's share of the non-alcoholic ready-to-drink beverages market and sales volume and adversely affect the CCHBC Group's growth prospects.

The CCHBC Group depends on The Coca-Cola Company to protect the trademarks of The Coca-Cola Company's products.

        Brand recognition is critical in attracting consumers to the CCHBC Group's products. In each country in which the CCHBC Group operates, TCCC owns the trademarks of all of the TCCC products which the CCHBC Group produces, distributes and sells. The CCHBC Group relies on TCCC to protect TCCC's trademarks in the Territories where the CCHBC Group operates, which include some countries that offer less comprehensive intellectual property protection than the United States or the European Union. The trademarked beverages of TCCC (including trademarked beverages of joint ventures to which TCCC is a party) represented approximately 97% of the CCHBC Group's total sales

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volume in the year ended 31 December 2013. If TCCC fails to protect its proprietary rights against infringement or misappropriation, this could undermine the competitive position of the products of TCCC and lead to a significant decrease in the volume of the CCHBC Group's sales of trademarked beverages of TCCC, which would materially and adversely affect the CCHBC Group's results of operations.

The Beverage Partners Worldwide joint venture between The Coca-Cola Company and Nestlé S.A. could be dissolved or altered in a manner that adversely affects the CCHBC Group's business.

        Beverage Partners Worldwide is a joint venture between TCCC and Nestlé S.A. On 10 December 2012, Beverage Partners Worldwide agreed to renew the bottlers' and/or distribution agreements (as applicable) in relation to the Nestea brand with the relevant subsidiaries of the CCHBC Group on substantially the same terms as the existing agreements for a term of 10 years with effect from 1 January 2014. The CCHBC Group's efforts to expand its presence in the combined Still and Water beverages category have focused, in part, on products for which Beverage Partners Worldwide owns the trademarks. Sales of Nestea ready-to-drink tea products comprised approximately 4% of total sales volume in the year ended 31 December 2013. The CCHBC Group depends on TCCC to protect its interests associated with Beverage Partners Worldwide. If Beverage Partners Worldwide is dissolved or altered in a manner that adversely affects the CCHBC Group's business, then its net sales revenue derived from the combined Still and Water beverages category may decline significantly and the CCHBC Group's ability to successfully implement its strategy to expand its Still and Water beverages business could also be materially and adversely affected. There can be no assurances that the CCHBC Group would be able to replace any Beverage Partners Worldwide products that are removed from its product portfolio as a result of such dissolution or alteration.


Risks Relating to the Non-Alcoholic Ready-to-Drink Beverages Industry

Weaker consumer demand for Sparkling beverages could harm the CCHBC Group's revenues and profitability.

        At the present time, the CCHBC Group's revenues and profitability remain substantially dependent upon sales of its Sparkling beverages. The CCHBC Group's Sparkling beverages business, particularly in its Established Markets, has witnessed a decrease in per capita consumption in recent years. This weakening of consumer demand for Sparkling beverages can be explained, in part, by demographic trends. Teenagers and young people account for the majority of Sparkling beverages consumption in the Established Markets. Currently these Territories are experiencing declining birth rates and ageing populations, which reduce the number of people in those age groups that traditionally are most likely to consume Sparkling beverages.

        Another trend adversely affecting growth in Sparkling beverages consumption in the Established Markets is the increased consumer focus on well-being, health and fitness, as well as concerns about obesity. Some consumers perceive Still and Water beverages such as juices, waters, ready-to-drink teas and sports and energy drinks to be more closely associated with a healthier lifestyle. Consequently, consumption of some of these alternative beverages is growing at a faster rate than consumption of Sparkling beverages. While this trend is most pronounced in the Established Markets, it also exists to some extent in the Developing and Emerging Markets. If this trend towards alternative beverages becomes more prevalent in the Developing and Emerging Markets, it could materially and adversely affect the CCHBC Group's prospects for future profitable growth in the Sparkling beverages category.

        If any of these trends impedes profitable growth in consumption of the CCHBC Group's core Sparkling beverages brands, its business and prospects would be severely impacted and the CCHBC Group may not be able to offset a decline in the Sparkling beverages category through increased sales in Still and Water beverages.

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The CCHBC Group's growth prospects may be harmed if it is unable to expand successfully in the combined non-Sparkling beverages category.

        The CCHBC Group believes that there is significant growth potential for non-Sparkling beverages. The CCHBC Group intends to continue to expand its product offerings in this category, which includes juices, waters, sports and energy drinks and other ready-to-drink beverages, such as tea or coffees, as well as expand its distribution of third-party premium spirits. To the extent that the CCHBC Group intends to expand its presence in the highly competitive Still and Water beverages category with TCCC, such expansion will require TCCC to invest significantly in consumer marketing, brand promotion and/or brand acquisition and the CCHBC Group to invest significantly in production, sales, distribution development and/or business acquisitions. There is no assurance that TCCC will successfully develop and promote new Still and Water beverage brands or that the CCHBC Group will be able to increase its sales of new Still and Water products. Further, the CCHBC Group intends to expand its product offerings and its distribution of third-party premium spirits. Expanding the CCHBC Group's presence in this highly competitive market will also require significant investment from the CCHBC Group and there can be no assurances that the CCHBC Group will be able to successfully implement its plans to expand its distribution of third party premium spirits. If the CCHBC Group is unable to continue to expand in the combined Still and Water beverages category or to implement its plans to expand its own product offerings, then its growth prospects may be materially and adversely affected.


Risks Related to Emerging and Developing Markets

The lack of institutional continuity and safeguards in the Emerging and Developing Markets could adversely affect the CCHBC Group's competitive position, increase its cost of regulatory compliance and/or expose it to a heightened risk of loss due to fraud and criminal activity.

        While some of the Emerging and Developing Markets are in the process of transitioning to market economies, stable political institutions and comprehensive regulatory systems, some of them lack the institutional continuity and strong procedural and regulatory safeguards typical in the Established Markets. These risks are particularly relevant to the CCHBC Group's business and similar businesses in the fast moving consumer goods sector, which depend to a large extent on disposable income and discretionary spending by consumers. In addition, these risks are prevalent in the Russian Federation, Nigeria and Romania, which are the largest of the Territories in its Emerging Markets reporting segment in terms of volume. As a result, in the Emerging and Developing Markets, and, in particular, the Russian Federation, Nigeria and Romania, the CCHBC Group is exposed to regulatory uncertainty in certain areas, which could increase its cost of regulatory compliance, and may result in less comprehensive protection for some of its rights, including intellectual property rights, which could undermine its competitive position, thereby reducing the profitability of the CCHBC Group's operations, and limiting its growth prospects in these Emerging and Developing Markets.

        The lack of institutional continuity also exacerbates the effect of political uncertainty in the Emerging and Developing Markets, which, in turn, could adversely affect the orderly operation of markets, consumer confidence and consumer purchasing power. Institutional uncertainty is a risk that is particularly pertinent to the Russian Federation and Nigeria, and could impact these Territories of the CCHBC Group disproportionately compared to the CCHBC Group's other Territories. In addition, in countries with a large and complicated structure of government and administration, such as the Russian Federation, national, regional, local and other governmental bodies may issue inconsistent decisions and opinions that could increase the cost of regulatory compliance, which in turn, could reduce the profitability of the CCHBC Group's operations in such Territories.

        Finally, the CCHBC Group operates in some emerging and developing Territories where corruption can create a difficult business environment. It is the CCHBC Group's policy to comply with the US Foreign Corrupt Practices Act and similar regulations. This compliance may put the CCHBC

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Group at a competitive disadvantage against competitors that are not subject to, or do not comply with, the same regulations, thereby limiting its growth prospects in such Territories. In addition, in some of the environments in which the CCHBC Group operates, businesses like the CCHBC Group are exposed to a heightened risk of loss due to fraud and criminal activity, even though the CCHBC Group reviews its financial systems regularly in order to minimise such losses.

The CCHBC Group is exposed to Emerging and Developing Markets' risks.

        A substantial proportion of the CCHBC Group's operations, representing 63.1% of net sales revenue and 76.3% of operating profit in the year ended 31 December 2013, is carried out in its Emerging and Developing Markets. The CCHBC Group's operations in these markets are subject to the customary risks of operating in emerging and developing markets, which include potential political and economic uncertainty, government debt crises, application of exchange controls, reliance on foreign investment, nationalisation or expropriation, crime and lack of law enforcement, political insurrection, terrorism, religious unrest, external interference, currency fluctuations and changes in government policy. These risks are particularly relevant to the CCHBC Group's business and similar businesses in the fast moving consumer goods sector, which depend to a large extent on the reliable and cost-effective delivery of products to end-customers, as well as on consumer confidence. Such factors could affect the CCHBC Group's results by causing interruptions to operations, by increasing the costs of operating in those Territories or by limiting the ability to repatriate profits from those Territories. Financial risks of operating in Emerging and Developing Markets also include risks of liquidity, inflation, devaluation, price volatility, volatile energy prices, currency convertibility and transferability, country default and austerity measures resulting from significant deficits as well as other factors. These circumstances could adversely impact the CCHBC Group's business, results of operations and financial condition. Currency volatility resulting from financial and political instability in certain of the Emerging and Developing Markets have materially impacted the CCHBC Group's results over the past years. Each of the Russian Federation, including as a result of the recent geopolitical events, Nigeria and Romania, which are the largest Territories in the Emerging Markets reporting segment in terms of volume, have experienced significant currency fluctuations that have impacted and may continue to impact the CCHBC Group's results disproportionately to the CCHBC Group's other Territories. Due to its specific exposure, these factors could affect the CCHBC Group more than its competitors with less exposure to such Emerging and Developing Markets, and any general decline in Emerging and Developing Markets as a whole could impact the CCHBC Group disproportionately compared to its competitors.

        Furthermore, geopolitical events involving Ukraine and Russia have recently affected and may further impact economic conditions in the region. See "—Recent events involving Ukraine and The Russian Federation could adversely affect the CCHBC Group's business, results of operations and financial condition." Nigeria has recently experienced political instability, violence, religious unrest and terrorism and suffers from a lack of infrastructure, such as roads and power supply. In both Nigeria and the Russian Federation the economy is dependent on, and subject to fluctuations in, energy prices. In addition, Romania has adopted austerity measures in response to its financial crisis and as a result of measures required by the International Monetary Fund. All of these and further circumstances may result in difficult economic conditions and negatively impact consumer demand and, in turn, materially impact the CCHBC Group's business, results of operations and financial performance in these Territories.

Recent events involving Ukraine and the Russian Federation have adversely affected and could further affect the CCHBC Group's business, results of operations and financial condition.

        The recent events involving Ukraine and the Russian Federation, including in relation to the Crimean peninsula, have, among other things, caused the devaluation of the Ukrainian hryvnia and the

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fall of the Russian ruble, adversely affected worldwide and regional financial markets, raised inflationary pressures and led the United States and the European Union to adopt targeted sanctions against designated persons and entities. Further developments could lead to prolonged geopolitical instability, additional and more extensive trade and economic sanctions, deteriorating macroeconomic conditions, pronounced civil unrest or even armed conflict in the region, or the threat thereof, and may precipitate change in global and regional economic conditions or cycles. Devaluation and fall in currencies have a direct adverse impact on the CCHBC Group as it translates its financial results from the Russian Federation and Ukraine in euro and its operations in these Territories are exposed to transactional effect, particularly when sourcing raw materials in other currencies than the Russian ruble or the Ukraine hryvnia, as applicable. From January 2014 until 25 March 2014, the Russian ruble and the Ukrainian hryvnia depreciated 8.4% and 29.4% respectively against the Euro compared to the 31 December 2013 exchange rates. For more information about the impact of a devaluation and fall in currencies on the CCHBC Group, see note 29 (Financial risk management) and note 36 (Post balance sheet events) to the consolidated financial statements. In addition, the events described above may have a material adverse effect on consumer demand for the CCHBC Group's products and materially impact the CCHBC Group's business, results of operations and financial position. In the year ended 31 December 2013, sales volumes and net sales revenue from external customers in the Russian Federation accounted for 18.9% and 21.8%, respectively, of the CCHBC Group's total sales volumes and total net sales revenue from external customers. In Ukraine, sales volumes and net sales revenue from external customers accounted for 3.8% and 3.1% respectively, of the CCHBC Group's total sales volumes and total net sales revenue from external customers. Non-current assets for Russia and Ukraine represented 15.6% and 2.5% of the consolidated non-current assets respectively as of December 2013. The Russian Federation and Ukraine form a major part of the Emerging Markets, which represented 47% of the Group's net sales revenue and 66.5% of its operating profit in the year ended 31 December 2013 and where the Group has anticipated significant growth, which may be adversely impacted as a result of the recent and future geopolitical events. For more information about the CCHBC Group's operations in Russia and Ukraine, see the section "The CCHBC Group's operations—Emerging Markets" in this annual report and note 3 (Segmental analysis) to the consolidated financial statements. For more information on risks to which the Group is exposed in Emerging and Developing Markets, see "—The CCHBC Group is exposed to Emerging and Developing Markets' risks".

The sustainability of the CCHBC Group's growth in its Developing and Emerging Markets depends partly on its ability to attract and retain a sufficient number of qualified and experienced personnel for which there is strong demand.

        In recent years, the CCHBC Group has experienced significant growth in a number of its Developing and Emerging Markets. As its business continues to grow and the level of its investment in such Territories increases, the CCHBC Group is faced with the challenge of being able to attract and retain a sufficient number of qualified and experienced personnel in an increasingly competitive labour market. The CCHBC Group's ability to sustain its growth in these Territories may be hindered if it is unable to successfully meet this challenge.


Risks Related to Competition

Competition law enforcement by the EU and national authorities may have a significant adverse effect on the CCHBC Group's competitiveness and results of operations.

        The CCHBC Group's business is subject to the competition laws of the Territories in which it operates and, with respect to the CCHBC Group's activities affecting the European Union, is also subject to EU competition law. The admission in 2004, 2007 and 2013 to the European Union of twelve

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of the European Territories in which the CCHBC Group operates has increased the impact of EU competition law on its business.

        The CCHBC Group cannot predict if competition law enforcement by the EU or national competition authorities will result in significant fines being imposed upon it or result in adverse publicity, or require it to change its commercial practices or whether related private lawsuits could require the CCHBC Group to pay significant amounts in damages. Any change in the competition laws to which the CCHBC Group's activities are subject or any enforcement action taken by competition authorities could adversely affect the CCHBC Group's operating results.

        You should read the section entitled "Additional Disclosures—Legal Proceedings," for additional information.

The CCHBC Group is engaged in a highly competitive business. Adverse actions by its competitors or other changes in the competitive environment may adversely affect its results of operations.

        The non-alcoholic ready-to-drink beverages market is highly competitive in each of the CCHBC Group's Territories. The CCHBC Group competes with, among others, bottlers of other international or regional brands of non-alcoholic ready-to-drink beverages, some of which are aggressively expanding in some of the Territories. The CCHBC Group also faces significant competition from private label brands of large retail groups. A change in the number of competitors, the level of marketing or investment undertaken by its competitors, or other changes in the competitive environment in its markets may cause a reduction in the consumption of the CCHBC Group's products and in its market share, and may lead to a decline in its revenues and/or an increase in its marketing or investment expenditures, which may materially and adversely affect its results of operations. Competitive pressure may also cause channel and product mix to shift away from the CCHBC Group's more profitable packages and channels, for example, the immediate consumption channel.

        In particular, the CCHBC Group faces intense price competition, especially in its Emerging and Developing Markets, from producers of local non-premium non-alcoholic, ready-to-drink beverage brands which are typically sold at prices lower than similar products of the CCHBC Group. In addition, the CCHBC Group faces increasing price competition from certain large retailers that sell private label products in their outlets at prices that are lower than prices of the CCHBC Group, especially in Territories with a highly concentrated retail sector. In some of the CCHBC Group's Territories, the CCHBC Group is also exposed to the effect of imports from adjacent countries of lower priced products, including, in some cases, trademarked products of TCCC bottled by other bottlers in the Coca-Cola bottling system. The entry into the European Union of all but one of the Developing Markets, as well as that of Romania and Bulgaria, has increased the exposure of such countries to such imports from other EU countries. In addition, the further enlargement of the European Union could lead to increased imports by wholesalers and large retailers of products produced and sold by the CCHBC Group in any of these countries for resale at lower prices in the CCHBC Group's other Territories, particularly its Established Markets, where the prices of its products are generally higher than in most of its Developing Markets. While this practice would not affect the CCHBC Group's sales volume overall, it could put pressure on its pricing in the Territories that receive such imports of lower priced products.

        If there is a change in the CCHBC Group's competitors' pricing policies, an increase in the volume of cheaper competing products imported into the CCHBC Group's Territories or the introduction of new competing products or brands, including private label brands, and if the CCHBC Group fails to effectively respond to such actions, the CCHBC Group may lose customers and market share and/or the implementation of its pricing strategy may be restricted, in which case its results of operations will be adversely affected.

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The increasing concentration of retailers and independent wholesalers, on which the CCHBC Group depends to distribute its products in certain Territories, could lower the CCHBC Group's profitability and harm its ability to compete.

        The CCHBC Group derives, particularly in its Established Markets, a large and increasing proportion of its revenue from sales of its products either directly to large retailers, including supermarkets and hypermarkets, or to wholesalers for resale to smaller retail outlets. The CCHBC Group expects such sales to continue to represent a significant portion of its revenue. Most of the CCHBC Group's Territories are experiencing increased concentration in the retail and wholesale sectors, either because large retailers and wholesalers are expanding their share in the relevant market, or as a result of increased consolidation among large retailers and wholesalers.

        The CCHBC Group believes that such concentration increases the bargaining power of large retailers and wholesalers. The CCHBC Group's products compete with other non-alcoholic ready-to-drink beverage brands for shelf space in retail stores and with other fast moving consumer goods for preferential in-store placement. The CCHBC Group's large retail and independent wholesaler customers also offer other products, sometimes including their own brands that compete directly with the CCHBC Group's products. These large retailers and wholesalers could use their increasing market power in a way that could lower the CCHBC Group's profitability and harm the CCHBC Group's ability to compete.

Changes in how significant customers market or promote the CCHBC Group's products could reduce sales volumes.

        The CCHBC Group's revenue is impacted by how large retailers, such as supermarkets, hypermarket chains and independent wholesalers, market or promote the CCHBC Group's products. Revenue may, for example, be negatively impacted by unfavourable product placement at points of sale or less aggressive price promotions by large retailers or independent wholesalers, particularly in future consumption channels. Brand image may be negatively affected by aggressive price positioning close to that of non-premium products and private labels. Although the CCHBC Group seeks to engage its large retail and independent wholesale customers to achieve favourable product placement and in the development and implementation of marketing and promotional programmes, the CCHBC Group's sales volume, revenue and profitability may be adversely impacted by the manner in which large retailers or independent wholesalers engage in the marketing or promotion of its products. In addition, there can be no assurances that the CCHBC Group's large retail and independent wholesale customers, who often act for the CCHBC Group, the CCHBC Group's competitors and themselves, will not give the CCHBC Group's competitors, or their products, higher priority, thereby reducing their efforts to sell the CCHBC Group's products.


Risks Related to Prevailing Economic Conditions

Negative financial and economic conditions could lead to reduced demand for the CCHBC Group's products.

        Negative financial and economic conditions in many countries in which the CCHBC Group operates have led and could continue to lead to reduced demand for the CCHBC Group's products, or an increase in price discount activity, or both, which would have a negative impact on the CCHBC Group's financial position, results of operations and cash flows. Governments have been facing greater pressure on public finances, leading to risk of increased taxation and therefore to a reduction in consumers' disposable income. These factors may also lead to intensified competition for market share as well as reduced tourist activity, with consequential potential adverse effects on volumes. Negative financial and economic conditions may have a negative impact on the CCHBC Group's customers and other parties with whom the CCHBC Group does, or may do, business.

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        Consumers' disposable income has come under pressure in several of the CCHBC Group's key markets as a result of price increases for fuel and food, among other things. Such price increases, along with local economic disruptions and economic uncertainty more generally, have also adversely affected consumer sentiment, which may further dampen discretionary spending over time. To the extent that this proves to be the case, sales volumes and pricing strategies in certain of the CCHBC Group's key markets may be adversely affected for an indeterminate period of time.

Increased taxation on the CCHBC Group's business may reduce the CCHBC Group's profitability.

        The CCHBC Group is subject to multiple taxes across each of the jurisdictions in which it operates. The imposition of new taxes, or increases in taxes on the CCHBC Group's products, may have a material adverse effect on the CCHBC Group's business, financial condition, prospects and results of operations. The severe fiscal crises currently impacting many of the CCHBC Group's Territories have resulted in increased taxation on the CCHBC Group's business. For example, pursuant to Article 5 of Law 3845/2010, the Greek government imposed in May 2010 an "Extraordinary Contribution of Social Responsibility" on net income for the fiscal year ended 31 December 2009. The amount of the "Extraordinary Contribution of Social Responsibility" assessed for 2009 was €21.2 million, which the CCHBC Group recorded as a tax charge in 2010.

        Further fiscal measures may continue to result in increased taxation on the CCHBC Group's business, which would reduce the CCHBC Group's profits. Governments may also enact or increase taxes that apply to the sale, or production, of the CCHBC Group's products. In Greece, effective from 1 September 2011, VAT on non-alcoholic beverages and juices, except for mineral water, increased from 13% to 23%. At the end of 2011, in Italy, VAT increased by 1% to 21%, and an additional increase of 1% was implemented in October 2013. In Ireland effective from January 2012, VAT increased by 2% to 23%. In Cyprus, effective from January 2014, VAT increased by 1% to 19%. Furthermore, the standard VAT rate increased from 20% to 21% in the Czech Republic (January 2013) and from 20% to 22% in Slovenia (July 2013).

        On the other hand, in 2011, Hungary introduced a tax on consumption of beverages with sugar and caffeine content higher than a specified amount, which affects the cost to consumers for some of the CCHBC Group's products. Higher taxes on the sale of the CCHBC Group's products, in the form of excise or other consumption taxes, could lead to increased prices, which in turn may adversely affect the sale and consumption of the CCHBC Group's products and reduce the CCHBC Group's revenues and profitability. Government imposed deposits or taxes on glass and/or metal packaging material, and/or other materials used in the CCHBC Group's business, would also reduce the CCHBC Group's profitability.

The global financial and credit crisis and the Eurozone sovereign debt crisis, including the Greek government debt crisis, may have an impact on the CCHBC Group's financial condition and business prospects that currently cannot be predicted, and increasing interest rates may affect the CCHBC Group's financial results and ability to obtain credit.

        The credit crisis and related turmoil in the global financial system, as well as the Eurozone sovereign debt crisis, may have a material impact on the CCHBC Group's financial condition and business prospects, and the CCHBC Group may ultimately face major challenges if conditions do not improve. If the capital and credit markets continue to experience volatility and the availability of funds in the capital and credit markets becomes limited, then the CCHBC Group may face increased interest rates and incur other costs associated with future debt financings and its ability to access the capital markets or borrow money in the future may become restricted at a time when the CCHBC Group would like, or need, to raise funds, which could have an adverse impact on the CCHBC Group's flexibility to react to changing economic and business conditions, as well as on the CCHBC Group's ability to fund its operations and capital expenditure in the future, on its growth rate and on

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shareholder returns. In addition, if the global financial crisis results in decreases in yield on, or a fall in the value of, investments held by CCHBC Group's funded pension plans, the CCHBC Group may have to increase its funding levels of such pension plans from its current funding requirements, which could adversely affect the CCHBC Group's results of operations and financial condition. Furthermore, changes in the CCHBC Group's credit rating could have a material adverse effect on its interest costs and, in the longer term, on its financing sources. The CCHBC Group's credit rating can be materially influenced by a number of factors including, but not limited to, acquisitions, investment decisions, and capital management activities as well as the trading and economic environment, including the global financial and credit crisis and the Eurozone sovereign debt crisis. While the ultimate outcome and impact of the current crises cannot be predicted, they may have a material adverse effect on the CCHBC Group's future financial condition and business prospects.

        Countries in which the CCHBC Group operates also face difficult economic conditions as a result of restrictive fiscal measures imposed in response to the Eurozone sovereign debt crisis. Italy accounted for 14.1% of unit sales volume and 14.5% of net sales revenue in the year ended 31 December 2013. In May 2010 and August 2011, the Italian government announced significant reductions in public expenditure, designed to reduce the fiscal deficit to 3% or less of gross domestic product by 2012. According to Oxford Economics, Italy has been in a recession since 2011, recording negative GDP growth for 2012 and 2013 and, in November 2013, the Italian unemployment rate hit a record high of 12.7%, whereas disposable income is expected to decline further in 2014 following six consecutive years of decline. Greece, which accounted for 4.7% of unit sales volume and 5.9% of net sales revenue for the year ended 31 December 2013, still faces an economic crisis resulting from significant government fiscal deficits and high levels of government borrowing. As a condition of the second European Monetary Union/International Monetary Fund rescue package announced on 20 February 2012, Greece committed to further aggressive and wide-ranging fiscal retrenchment during 2013, including increases in taxation. By way of example, Greek law 4110/2013 which was enacted on 23 January 2013, increased the general corporate income tax rate applicable to Greek tax-resident legal entities from 20% to 26%. According to Oxford Economics, the sustained economic and budgetary challenges that the Greek government faces with respect to its high public debt burden are reflected in the last six consecutive years of recorded negative GDP growth and a record high unemployment rate (28% in November 2013). Greece's weakening economic prospects led to sequential downgrades during 2010, 2011 and 2012 by Standard & Poor's Ratings Services of Greece's sovereign credit ratings to SD (selective default). In March 2012, Moody's Ratings Services downgraded Greece's sovereign credit rating to C. In November 2013 Moody's Ratings Services upgraded Greece's rating to Caa3. These negative trends are expected to continue during 2014, although at a decelerating trend, impacting disposable income and spending, which has had and will continue to have a material adverse effect on the CCHBC Group's business, including increased taxation. In addition, the possibility that Greece could default on its sovereign debt obligations, and the consequent effect on its ability to remain part of the Eurozone, cannot be entirely ruled out. Such an event could have severe adverse consequences for the Greek economy, the magnitude of which is difficult to predict. The Republic of Ireland accounted for 2.0% of the CCHBC Group's sales volume in 2013. In November 2010, the Irish government agreed a rescue package with the European Union, the International Monetary Fund and the European Central Bank. According to Oxford Economics, these measures negatively impacted disposable income which has been on a declining trend since 2010. In December 2013, Ireland officially exited the bailout programme and in January 2014 it became the first country among those that received a rescue package to successfully complete a sovereign debt auction. Furthermore, in October 2013 Serbia's government proposed austerity measures, including tax increases and cuts in public sector wages and subsidies to state companies, in an effort to reduce high public debt and budget deficit.

        The foregoing consequences have resulted and may continue to result in reduced demand for the CCHBC Group's products. As a result, the sovereign debt crisis, the measures aimed at addressing such

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crisis and the consequences thereof could adversely affect the results of the CCHBC Group's local operations and the results of the CCHBC Group on a consolidated basis.

        These measures may also lead to a deterioration in the financial condition of certain of the CCHBC Group's suppliers. Damage or disruption to the production or distribution capabilities of the CCHBC Group due to social unrest, political instability, the financial and/or operational instability of key suppliers, distributors, warehousing and transportation providers or brokers, or other reasons could impair the CCHBC Group's ability to manufacture or sell its products. Further, government fiscal measures in the Territories have resulted and may continue to result in increased taxation on the CCHBC Group's business, which would reduce the CCHBC Group's profits. The Eurozone sovereign debt crisis has created in the past and may create in the future downward pressure on the euro, resulting in an increase in the prices that the CCHBC Group must pay for certain raw and packaging materials that are priced in other currencies (principally US dollars). Any such pressure in the future could depress the CCHBC Group's profit margins if it were unable to recover these additional operating costs from its customers through market based activities. Any one or a combination of these factors may have a material adverse effect on the CCHBC Group's results of operations and financial condition.


Risks Related to the CCHBC Group's Business

The CCHBC Group relies on the reputation of the CCHBC Group's brands.

        The CCHBC Group's success depends on its ability to maintain and enhance the image and reputation of its existing products and to develop a favourable image and reputation for new products. An event, or series of events, that materially damages the reputation of one or more of the CCHBC Group's brands could have an adverse effect on the value of those brands and subsequent revenues from those brands or businesses.

Contamination or deterioration of the CCHBC Group's products could hurt its reputation and depress its revenues.

        The contamination or deterioration of the CCHBC Group's products, whether actual or alleged, deliberate or accidental, could harm its reputation and business. A risk of contamination or deterioration exists during each stage of the production cycle, including during the production and delivery of raw materials, the bottling and packaging of the products, the stocking and delivery of products to retailers and wholesalers, and the storage and shelving of its products at the final points of sale. Any such contamination or deterioration could result in a recall of the CCHBC Group's products and/or criminal or civil liability, which could restrict the CCHBC Group's ability to sell its products and, in turn, could have a material adverse effect on its business and prospects. Similar incidents involving other bottlers of TCCC's products, could also materially and adversely impact the competitiveness and revenues of the CCHBC Group by harming the reputation of TCCC's brands globally.

Adverse weather conditions and reduced tourist activity could reduce demand for the CCHBC Group's products.

        Demand for the CCHBC Group's products is affected by weather conditions in the Territories in which the CCHBC Group operates. Consumption is particularly strong during the second and third quarters when demand rises due to warmer weather and, in some of the CCHBC Group's Territories, increased tourist activity. As a result, unseasonably cool temperatures in the Territories in which the CCHBC Group operates or reduced tourist activity in certain Territories during the summer season could adversely affect its sales volume and the results of its operations for the year.

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Climate change may negatively affect the CCHBC Group's business.

        There is increasing concern that a gradual increase in global average temperatures due to higher concentration of carbon dioxide and other greenhouse gases in the atmosphere will cause significant changes in weather patterns around the globe and an increase in the frequency and severity of natural disasters. Decreased agricultural productivity in certain regions as a result of changing weather patterns may limit availability or increase the cost of key agricultural commodities, such as sugarcane, corn, beets, citrus, coffee and tea, which are important ingredients for the CCHBC Group's products. The increased frequency or duration of extreme weather conditions could also impair production capabilities, disrupt the CCHBC Group's supply chain or impact demand for the CCHBC Group's products. Climate change may also exacerbate water scarcity and cause a further deterioration of water quality in affected regions, which could limit water availability for the CCHBC Group's operations. In addition, public expectations for reductions in greenhouse gas emissions could result in increased energy, transportation and raw material costs and may require the CCHBC Group to make additional investments in facilities and equipment. As a result, the effects of climate change could have a long-term adverse impact on the CCHBC Group's business and results of operations.

Miscalculation of infrastructure investment needs could impact the CCHBC Group's financial results.

        The CCHBC Group's projected requirements for infrastructure investments may differ from actual levels if anticipated sales volume growth does not materialise. The CCHBC Group has, in the past, invested substantially in production capacity and sales and distribution infrastructure, particularly in the CCHBC Group's key Emerging Markets. Such infrastructure investments are generally long-term in nature and it is possible that investments may not generate the expected returns due to changes in the marketplace. Significant changes from the CCHBC Group's expected returns on cold drink equipment, fleet, technology and supply chain infrastructure investments could adversely affect the CCHBC Group's financial results.

Information technology failures could disrupt the CCHBC Group's operations and negatively impact its business.

        IT systems are critical to the CCHBC Group's ability to manage its business and, in turn, to maximise efficiencies and minimise costs. The CCHBC Group's IT systems enable it to coordinate its operations, from planning, production scheduling and raw material ordering, to order-taking, truck loading, routing, customer delivery, invoicing, customer relationship management and decision support. The CCHBC Group's main IT platform is SAP, an integrated system of software applications. An enhanced version of SAP, called "Wave 2", was developed for the CCHBC Group in 2006 and since that time has been implemented in 27 of the Territories. Wave 2 is designed to provide advanced capabilities to address customer-centric activities in the areas of customer relationship management, promotion management, equipment management, field sales execution, truck management and yard management. In 2011, the CCHBC Group implemented its shared services project, which is intended to standardise and simplify key finance and human resources processes and, in turn, intended to improve productivity and efficiency within the CCHBC Group's country operations, all at a reduced cost.

        If the CCHBC Group does not allocate and effectively manage the resources necessary to build and sustain a proper IT infrastructure, the CCHBC Group could be subject to transaction errors, processing inefficiencies, customer service disruptions and, in some instances, loss of customers. Challenges relating to the building of new IT structures can also subject the CCHBC Group to certain errors, inefficiencies, disruptions and, in some instances, loss of customers. The CCHBC Group's IT systems, and the systems of its third party IT service providers may also be vulnerable to a variety of interruptions due to events beyond the CCHBC Group's control, including, but not limited to, natural disasters, terrorist attacks, telecommunications failures, computer viruses, hackers and other security issues. Although the CCHBC Group has security initiatives and disaster recovery plans in place to

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mitigate its risk to these vulnerabilities, such measures may not have been effectively implemented or may not be adequate to ensure that its operations are not disrupted. IT interruptions and system failures could have a material and adverse effect on the CCHBC Group's ability to realise the anticipated improvements in productivity and efficiency relating to, or cost reductions in respect of, the CCHBC Group's implementation of Wave 2 and its shared services project.

Disruptions to the CCHBC Group's supply or distribution infrastructure could adversely affect its business.

        The CCHBC Group depends on effective supply and distribution networks to obtain necessary inputs for its production processes and to deliver its products to its customers. Damage or disruption to such supply or distribution capabilities due to weather, natural disaster, fire, loss of water or power supply, terrorism, political instability, military conflict, pandemic, strikes, the financial and/or operational instability of key suppliers, distributors, warehousing and transportation providers or brokers, or other reasons, could impair the CCHBC Group's ability to manufacture or sell its products.

        Although the risk of such disruptions is particularly acute in the Emerging Markets where distribution infrastructure is relatively undeveloped, its operations in Developed and Established Markets are also subject to such risks. In Greece, for example, which is one of the CCHBC Group's key markets, general transportation strikes in 2010 limited the CCHBC Group's ability to fulfil customer orders for several weeks, particularly in its higher margin immediate consumption channels. The current economic crisis in Greece may result in similar events.

        To the extent that the CCHBC Group is unable to effectively manage such events if they occur, or cannot financially mitigate the likelihood or potential impact of such events, there could be a materially adverse effect on the CCHBC Group's business and results of operations.

Price increases in, and shortages of, raw materials and packaging materials could materially and adversely affect the CCHBC Group's results of operations.

        The CCHBC Group's results of operations may be affected by the availability and pricing of raw materials and packaging materials, including water, sugar and other sweeteners, juice concentrates, glass, labels, plastic resin, closures, plastic crates, aluminium, aseptic packages and other packaging products and ingredients, some of which are priced in currencies other than the functional currencies of the CCHBC Group's operating companies.

        Water, in particular, is the main ingredient in substantially all of the CCHBC Group's products. As demand for water continues to increase around the world and as the quality of available water deteriorates, the CCHBC Group may incur increasing production costs or face capacity constraints. Sugar is also a primary ingredient in many of the CCHBC Group's products and has recently experienced significant price increases and volatility.

        The supply and price of raw materials and packaging materials used for the production of the CCHBC Group's products can be affected by a number of factors beyond its control, including the level of crop production around the world, global supply and demand, export demand, market fluctuations, speculative movements in the raw materials or commodities markets, exchange rates, currency controls, government regulations and legislation affecting agriculture, adverse weather conditions, economic factors affecting growth decisions, various plant diseases and pests.

        The CCHBC Group cannot predict future availability, or prices, of the raw materials or commodities required for its products. The markets for certain raw materials or commodities have experienced, and will continue to experience, shortages and significant price fluctuations. Such factors may affect the price and availability of ingredients that the CCHBC Group uses to manufacture its products, as well as the cans and bottles in which its products are packaged.

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        In addition, changes in global supply and demand, market fluctuations, weather conditions, government controls, exchange rates, currency controls and other factors may substantially affect the price of both raw and packaging materials. A substantial increase in the prices of these materials will increase the CCHBC Group's operating costs, which will depress its profit margins if it is unable to recover these additional operating costs from its customers. Although supply agreements and derivative financial instruments can protect against increases in raw material and commodities costs, they cannot provide complete protection over the longer term. Moreover, since hedging instruments establish a purchase price for the applicable commodities in advance of the time of delivery, it is possible that the CCHBC Group may become locked into prices that are ultimately higher than the actual market price at the time of delivery.

        A sustained interruption in the supply of raw materials and packaging materials could also lead to a significant increase in the price of such materials or could impede the CCHBC Group's production process if the CCHBC Group is unable to find suitable substitutes. In each case, this could have a materially adverse effect on the CCHBC Group's results of operations. You should read sections entitled "Information on the CCHBC Group—Raw and Packaging Materials" and "Operating and Financial Review and Prospects—Principal Factors Affecting the CCHBC Group's Results of Operations—Raw material costs," for additional information on the CCHBC Group's procurement of packaging and raw materials and the cost of raw materials.

Increases in the cost of energy could affect the CCHBC Group's profitability.

        The CCHBC Group uses a significant amount of electricity, natural gas and other energy sources to operate its bottling plants and, in some of its Territories, to operate fleets of motor vehicles. Due to the nature of its business, the CCHBC Group is particularly reliant on energy and a substantial increase in the price of fuel and other energy sources would increase the CCHBC Group's costs and, therefore, could negatively impact its profitability. The CCHBC Group is particularly reliant on natural gas exports from the Russian Federation and would be particularly affected by any restriction of natural gas exports from that country.

Fluctuations in exchange rates may adversely affect the CCHBC Group's results of operations and financial condition.

        The CCHBC Group derives a portion of its revenue from Territories that have functional currencies other than its reporting currency, the euro. As a result, any fluctuations in the values of these currencies against the euro impacts the CCHBC Group's income statement and balance sheet when its results are translated into the euro. If the euro appreciates in relation to these currencies, then the euro value of the contribution of these operating companies to the CCHBC Group's consolidated results and financial position will decrease.

        The CCHBC Group incurs currency transaction risks whenever one of its operating companies enters into either a purchase or sale transaction using a currency other than its functional currency. In particular, the CCHBC Group purchases raw materials which are priced predominantly in euro and US dollars, while the CCHBC Group currently sells its products in Territories other than Austria, Cyprus, Estonia, Greece, Italy, Montenegro, the Republic of Ireland, Slovakia and Slovenia, in local currencies. Although the CCHBC Group uses financial instruments to attempt to reduce its net exposure to currency fluctuations, there can be no assurances that it will be able to successfully hedge against the effects of this foreign exchange exposure, particularly over the long-term. The CCHBC Group attempts to reduce its currency transaction risk, where possible, by matching currency sales revenue and operating costs. Given the volatility of currency exchange rates, the CCHBC Group cannot assure that it will be able to manage its currency transaction risks effectively or that any volatility in currency exchange rates will not have a material and adverse effect on its financial condition or results of operations.

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The CCHBC Group is exposed to the impact of exchange controls, which may adversely affect its profitability or its ability to repatriate profits.

        The currencies of Nigeria, Ukraine, Belarus, Cyprus and Moldova can only be converted or transferred in limited amounts or for specified purposes established by their governments. These Territories represented 16.8% of unit sales volume and 14.4% of net sales revenue for the year ended 31 December 2013. In addition, it is possible that if any country in which the CCHBC Group operates or is established ceases to use the euro as its currency, that country would apply exchange controls. In Territories where the local currency is, or may become, convertible or transferable only within prescribed limits or for specified purposes, it may be necessary for the CCHBC Group to comply with exchange control formalities and to ensure that all relevant permits are obtained before it can repatriate profits of its subsidiaries in these Territories. Such controls may have a material adverse effect on the CCHBC Group's profitability or on its ability to repatriate profits that it earns out of these Territories or otherwise have a negative impact on the capital markets of such Territories.

The CCHBC Group's operations are subject to extensive regulation, including resource recovery, environmental and health and safety standards. Changes in the regulatory environment may cause the CCHBC Group to incur liabilities or additional costs or limit its business activities.

        The CCHBC Group's production, sales and distribution operations are subject to a broad range of regulations, including environmental, trade, labour, production, food safety, advertising and other regulations. Governments may also enact or increase taxes that apply to the sale of the CCHBC Group's products. More restrictive regulations or higher taxes could lead to increasing prices, which in turn may adversely affect the sale and consumption of the CCHBC Group's products and reduce its revenue and profitability. You should read the section entitled "Information on the CCHBC Group—Regulation", for additional information on the regulations to which the CCHBC Group is subject.

        Some environmental laws and regulations may result in significant additional costs or diminish the CCHBC Group's ability to formulate and implement marketing strategies that it believes could be more effective, such as the use of a particular packaging material or method. A number of governmental authorities in the Territories in which the CCHBC Group operates have adopted, considered or are expected to consider legislation aimed at reducing the amount of discarded waste. Such programmes have included, for example, requiring the achievement of certain quotas for recycling and/or the use of recycled materials, imposing deposits or taxes on plastic, glass or metal packaging material and/or requiring retailers or manufacturers to take back packaging used for their products. Such legislation, as well as voluntary initiatives similarly aimed at reducing the level of waste, could require the CCHBC Group to incur greater costs for packaging and set higher wholesale prices to cover these incremental costs, which could be passed on to consumers and negatively affect the CCHBC Group's sales. In addition, such legislation could prevent the CCHBC Group from promoting certain forms of profitable non-returnable packages or could otherwise adversely impact its business and prospects. For additional information, see the section entitled "Information on the CCHBC Group—Regulation—Environmental matters".

        The CCHBC Group is subject to a broad range of environmental, health and safety laws and regulations in each of the Territories in which it operates. They relate to, among other things, waste water discharges, air emissions from solvents used in coatings, inks and compounds, the use and handling of hazardous materials and waste disposal practices. If the CCHBC Group fails to comply with applicable environmental standards, it may face liabilities. In the event of gradual pollution, potential liabilities could be greater for which insurance policies are not readily available in the insurance market. However, the CCHBC Group holds insurance coverage restricted to third party bodily injury and/or property damage in respect of sudden, identifiable, unintended and unexpected incidents.

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        Environmental regulations are becoming more stringent in many of the Territories in which the CCHBC Group operates. In particular, governments and public interest groups are becoming increasingly aware of and concerned about the public health and environmental consequences of carbon dioxide emissions. The introduction of regulation seeking to restrict carbon dioxide emissions, as well as the CCHBC Group's own commitment to social and environmental responsibility, might require increased investment in energy conservation and emissions reduction technologies, both at the production stage and with respect to the CCHBC Group's cooler infrastructure, which may result in increased capital expenditure, greater operating costs, or both.

        In addition, the trend toward increased consumer focus on health and fitness, as well as public concerns about obesity, have in recent years led to the consideration by governments of new taxes on certain food and beverage products, including sugar-sweetened beverages. In 2011, Hungary introduced a tax on the consumption of beverages with sugar or caffeine content higher than a specified amount, which increased the cost to consumers for some of the CCHBC Group's products. Possible new taxes on sugar-sweetened or caffeinated beverages in the Territories in which the CCHBC Group operates may reduce demand for its products, which could affect its profitability.

Changes in Swiss law may affect the CCHBC Group's ability to attract and retain top executives.

        Over the past few years there has been a debate in Switzerland in relation to executive compensation that is perceived as "excessive" and the means of legally regulating such compensation. On 3 March 2013, Swiss voters adopted the so-called initiative "against the rip-off" (also known as the Minder initiative), an initiative for the amendment of the Swiss federal constitution on executive compensation. The constitutional amendment has been implemented by the Ordinance against Excessive Compensation in Listed Companies which entered into force on 1 January 2014, subject to various transitional rules and will be valid until the implementing legislation by the Swiss parliament has been enacted. The new rules require among other things, that the general meeting of shareholders approve the aggregate remuneration payable to the Board of Directors, management and any committees thereof. They also require that a company's articles of association contain provisions on loans, pensions, bonus schemes, option and stock ownership plans, the term of employment agreements and the number of external board memberships of the directors and members of management (thus subject to a shareholders' decision). The new rules further prohibit certain payments to directors and members of management, including, among others, termination payments (such as "golden parachutes"), advance payments (such as "golden hellos"), payments of premiums for an acquisition or sale of a firm and additional adviser's fees or employee compensation within the group. The Ordinance against Excessive Compensation in Listed Companies applies to companies having their seat in Switzerland and their shares listed in Switzerland or abroad. The rules are backed by criminal sanctions. The terms of employment of the members of the Operating Committee need to be revisited in light of these new rules.

        The ability of CCHBC to determine the remuneration of its Directors and executive officers may be restricted, which, in turn, could adversely affect CCHBC's ability to attract and retain top executives.

Although CCHBC has been admitted to the premium segment of the Official List of the UK Listing Authority (the "Official List"), there can be no guarantee that CCHBC will be able to maintain a premium listing if certain proposed changes to the Listing Rules come into effect and it is determined (at that time or in the future) that such changes apply in respect of CCHBC and its two major shareholders, unless CCHBC and/or its two major shareholders comply with the requirements pursuant to such changes.

        In October 2012, the Financial Services Authority (the predecessor of the Financial Conduct Authority ("FCA")) published a consultation paper ("CP12/25") proposing a number of changes to the

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Listing Rules, including the introduction of additional eligibility requirements and continuing obligations for premium listed issuers with a controlling shareholder.

        On 5 November 2013, the FCA published Consultation Paper 13/15 (the "New Consultation") which contains its feedback statement on the Original Consultation together with near-final rules constituting an updated package of measures that has been revised in certain areas.

        In summary, the proposals are intended to provide minority shareholders of issuers with a "controlling shareholder" (being a person who, on their own or together with any of their associates or concert parties, exercises or controls 30% or more of the votes able to be cast on all or substantially all matters at general meetings) with additional protections against such controlling shareholder exercising disproportionate influence on the business of that issuer by:

    imposing a requirement for such companies to enter into a relationship agreement (containing certain mandatory terms) with any controlling shareholder;

    providing additional voting power for minority shareholders of such companies when electing independent directors (requiring such appointments to be approved by a separate resolution of independent shareholders as well as by shareholders as a whole); and

    enhancing the voting power of minority shareholders in such companies where (in certain circumstances) CCHBC wants to cancel its listing.

        The proposed "controlling shareholder" provisions of the New Consultation are still in draft form, are subject to consultation by the United Kingdom Listing Authority and may change. There is also little guidance on how the United Kingdom Listing Authority will apply the proposed "controlling shareholder" provisions set out in the New Consultation to the extent that the proposed changes to the Listing Rules are implemented.

        At this time, neither of CCHBC's major shareholders individually control 30% or more of the voting rights. Further, TCCC, the TCCC Entities and Kar-Tess Holding have informed CCHBC that they do not consider that they are acting in concert and that no agreement or understanding (formal or informal) exists between TCCC or any of the TCCC Entities on the one hand, and Kar-Tess Holding, on the other hand, in relation to the future governance or control of CCHBC. As such, CCHBC is of the view that its two major shareholders are not acting in concert in relation to CCHBC and, accordingly, CCHBC does not expect the proposed "controlling shareholder" provisions of the New Consultation in their current form to apply to it and its two major shareholders.

        To the extent that the proposed "controlling shareholder" amendments to the Listing Rules in the New Consultation are implemented and are deemed to apply to CCHBC and its two major shareholders or any other future shareholder of CCHBC, there can be no guarantee that CCHBC will be able to maintain a premium listing, and accordingly, that the benefits associated with a premium listing, including the enhanced provisions of the Listing Rules applicable to premium listed companies, such as shareholder approval of related party transactions and significant transactions, will be available to CCHBC's shareholders or that the benefits associated with FTSE UK Index Series inclusion will continue to be available to CCHBC, which, in turn could adversely affect the trading liquidity and market price of the CCHBC Ordinary Shares, unless CCHBC and its two major shareholders are able to, and agree to, comply with the requirements pursuant to such amendments.

CCHBC is not subject to corporate governance requirements under NYSE Corporate Governance Rules ("NYSE Rules").

        CCHBC's ADSs are listed on the NYSE. However, as a Swiss company, CCHBC is not subject to the corporate governance provisions of the NYSE Rules that are applicable to a US company. As CCHBC's main listing is on the LSE, the CCHBC Group adheres to the UK Corporate Governance

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Code. The UK Corporate Governance Code requires at least half of the Board (excluding the Chairman) to be independent. The NYSE Rules contain different tests from the UK Corporate Governance Code for determining whether a Director is independent. The CCHBC Group follows the UK Corporate Governance Code's recommendations. The independence of our non-executive Directors is reviewed by the Board on an annual basis and it takes into account the guidance in the UK Corporate Governance Code.

CCHBC's status as a Swiss corporation may cause CCHBC to be unable to make distributions without subjecting CCHBC Ordinary Shareholders to Swiss Withholding Tax.

        Under Swiss law as currently in effect, a Swiss corporation may pay dividends only if the corporation has sufficient distributable profits, or if the corporation has distributable reserves, each as evidenced by its audited and approved unconsolidated statutory balance sheet. For tax purposes, certain distributable reserves may be recorded as "Qualifying Reserves" (contributions received from shareholders) in the "reserve from capital contributions", as part of the general legal reserves (allgemeine gesetzliche Reserven), and notified to the Swiss Federal Tax Administration. In particular, share premium may be booked into a Qualifying Reserve. The general legal reserves of holding companies, including the Qualifying Reserve, are commonly regarded as being freely distributable if they exceed 20% of the share capital. In contrast, distributions out of registered share capital may be made only by way of a capital reduction. Generally, Swiss Withholding Tax of 35% is due on dividends and similar distributions to CCHBC Ordinary Shareholders, regardless of the place of residency of such CCHBC Ordinary Shareholder, unless the distribution is made to CCHBC Ordinary Shareholders out of a reduction of par value or, assuming certain conditions are met, Qualifying Reserves accumulated on or after 1 January 1997. Shareholders that qualify for benefits under the applicable treaty for the avoidance of double taxation with respect to taxes on income, generally may apply for a partial or full credit and/or refund of the portion of tax withheld.

        CCHBC has an aggregate amount of Qualifying Reserves and of registered share capital equal to CHF 8,897.4 (euro 7,215.4) million. The aggregate of these amounts (less the minimum registered share capital of CHF 100,000 plus CHF 20,000 for undistributable general reserves) represents the theoretical maximum amount available for future dividends (through repayment of Qualifying Reserves) or capital reductions free of Swiss Withholding Tax. CCHBC is not able to pay dividends or make other distributions to CCHBC Ordinary Shareholders on a Swiss Withholding Tax free basis in excess of that amount unless CCHBC increases its share capital or its Qualifying Reserves. CCHBC is also able to pay dividends out of distributable profits or freely distributable reserves but such dividends are subject to Swiss Withholding Tax. There can be no assurances that CCHBC will have sufficient distributable profit and reserves, reserves from capital contributions or registered share capital to pay a dividend or effect a capital reduction, that CCHBC Ordinary Shareholders will approve dividends or capital reductions proposed by CCHBC, or that CCHBC will be able to meet the other legal requirements for dividend payments or distributions as a result of capital reductions.

        Furthermore, with regard to distributions on a Swiss Withholding Tax-free basis, there is no assurance that CCHBC will have sufficient distributable Qualifying Reserves or share capital which can be reduced in order to pay dividends free from Swiss withholding tax. In addition, there can be no assurance that the current Swiss law with respect to distributions out of Qualifying Reserves will not be changed or that a change in Swiss law will not adversely affect CCHBC or the CCHBC Ordinary Shareholders, in particular as a result of distributions out of Qualifying Reserves becoming subject to additional corporate law or other restrictions or no longer being exempt from Swiss Withholding Tax.

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As CCHBC is a holding company, its operating results, financial condition and ability to pay dividends in the future is entirely dependent on dividends and other distributions received from its subsidiaries.

        As CCHBC is a holding company, its operating results and financial condition are entirely dependent on the performance of its subsidiaries. Additionally, CCHBC's ability to pay dividends in the future will depend on the level of dividends and other distributions, if any, received from CCHBC's operating subsidiaries. The ability of CCHBC's operating subsidiaries to make loans or distributions to CCHBC may, from time to time, be restricted as a result of several factors, including restrictions in its financing agreements, capital controls or other foreign exchange limitations, the requirements of applicable law and regulatory and fiscal or other restrictions (including, for example, the application of a dividend withholding tax and the ability to use any double tax treaty to mitigate such tax) in the CCHBC Group's Territories or if such operating subsidiaries were unable to make loans or distributions to CCHBC either directly or indirectly. If earnings and cash flow from CCHBC's operating subsidiaries were substantially reduced for a sufficient length of time, CCHBC may not be in a position in the longer term to make distributions to CCHBC Ordinary Shareholders in line with any future announced proposals or at all.


Other Risks Related to an Investment in CCHBC Ordinary Shares.

Sales of substantial amounts of CCHBC Ordinary Shares by Kar-Tess Holding or The Coca-Cola Company Entities or the perception that such sales could occur, could adversely affect the market value of CCHBC Ordinary Shares or CCHBC ADSs.

        Because of the termination on 25 April 2013 of the Coca-Cola Hellenic Bottling Company S.A. Shareholders' Agreement between Kar-Tess Holding and the TCCC Entities, The Coca-Cola Company Entities and Kar-Tess Holding are no longer required to obtain each other's consent in order to sell, transfer or otherwise dispose of any of their CCHBC Ordinary Shares.

        Sales of substantial amounts of CCHBC Ordinary Shares in the public market by Kar-Tess Holding or any of the TCCC Entities, or the perception that such sales could occur, could adversely affect the market price of CCHBC Ordinary Shares or CCHBC ADSs and, as a result, could also adversely affect CCHBC's ability to raise capital through future capital increases.

Exchange rate fluctuations may adversely affect the foreign currency value of CCHBC Ordinary Shares or CCHBC ADSs and any dividends or other cash distributions.

        The CCHBC Ordinary Shares are quoted in British pounds on the LSE. The CCHBC Group's consolidated financial statements are, however, prepared in euros. In contrast, CCHBC's unconsolidated statutory financial statements are prepared in Swiss Francs and dividends or other cash distributions in respect of the CCHBC Ordinary Shares are declared in Swiss Francs. As a result, fluctuations in the exchange rate between the Swiss Franc and British pound, as well as between euro and the British pound and euro and the Swiss Franc will affect, amongst other matters, the British pound value of CCHBC Ordinary Shares and the euro value of any dividend or other cash distribution paid in Swiss Francs.

        Further, movements in the British pound/US dollar exchange rate may affect the US dollar price of the CCHBC ADSs and US dollar equivalent of the price of CCHBC Ordinary Shares. Exchange rate movements between the US dollar and the Swiss Franc and euro, and between the euro and the Swiss Franc, will affect the US dollar amount of dividends that you will receive from the ADS Depositary if you hold CCHBC ADSs.

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The value of CCHBC Ordinary Shares may decrease.

        The price of CCHBC Ordinary Shares and CCHBC ADSs will likely fluctuate and may not always accurately reflect the underlying value of the CCHBC Group's business. The value of CCHBC Ordinary Shares and CCHBC ADSs may decrease and the price that investors may realise for their holdings of CCHBC Ordinary Shares or CCHBC ADSs, when they are able to do so, may be influenced by a large number of factors, including the possibility that the market for CCHBC Ordinary Shares or CCHBC ADSs is less liquid than for other equity securities and that the price of the CCHBC Ordinary Shares or CCHBC ADSs is relatively volatile.

        In addition, stock markets have in the recent past experienced extreme price and volume fluctuations, which, as well as general economic and political conditions, could have an adverse effect on the market price of the CCHBC Ordinary Shares or CCHBC ADSs.

Swiss corporate law and the Articles may not grant you certain of the rights and protections generally afforded to shareholders of US corporations under US federal and state laws, to shareholders of an English company listed on the LSE under the laws of England and Wales or of a Swiss company listed in Switzerland

        CCHBC is a stock corporation incorporated under the laws of Switzerland. The rights provided to holders of CCHBC Ordinary Shares (including CCHBC Ordinary Shares represented by CCHBC ADSs) under Swiss corporate law and CCHBC's articles of association differ in certain respects from the rights that would typically be enjoyed by a shareholder of a corporation incorporated in the United States, of an English company listed in the United Kingdom and traded on the LSE or of a Swiss company listed in Switzerland.

        In particular, Swiss corporate law limits the ability of a shareholder to challenge resolutions or actions of the board of directors in court. Under Swiss law, shareholders generally cannot bring a suit to reverse a decision by directors but may seek damages for breaches of fiduciary duty. Furthermore, remedies against transactions involving conflicts of interest or other procedural flaws may be limited if a claimant cannot prove that the benefits inuring to CCHBC are manifestly disproportionate to the consideration rendered in return and to CCHBC's economic situation. In addition, Swiss law generally does not provide for US style class action lawsuits. Furthermore, the general meeting of shareholders of CCHBC may release a director or officer from his or her liability in relation to disclosed facts with respect to CCHBC, those shareholders who approved the release or who have since acquired their shares in full knowledge of the resolution and those shareholders who do not bring action within six months after the resolution, including if such director has acted in bad faith or has breached his or her duty of loyalty. The directors, officers and principal shareholders of CCHBC will also be exempt from the reporting and the short-swing profit recovery provisions contained in Section 16 of the US Securities Exchange Act of 1934. However, these persons are and will continue to be required to comply with applicable legislation prohibiting insider dealing. Finally, Swiss corporate law also provides for certain protections of creditors and other stakeholders, and thus may be less shareholder-friendly, eg, in respect to corporate distributions or in connection with takeovers or corporate restructurings.

        Swiss law and English law provide for certain rules and protections of shareholders of domestic listed companies. Due to CCHBC's structure, however, several of these rules do not apply to CCHBC. In particular, the rules of the Swiss Stock Exchange Act on disclosure of shareholdings and tender offer rules, including mandatory tender offer requirements and regulations of voluntary tender offers, which are typically available in relation to Swiss companies listed in Switzerland, will not apply to CCHBC as it is not be listed in Switzerland.

        In addition, the United Kingdom's City Code on Takeovers and Mergers (the "City Code") does not apply to CCHBC by operation of law, as CCHBC is not incorporated under English law. The Articles include specific provisions designed to prevent any person acquiring shares carrying 30% or more of the voting rights (taken together with any interest in shares held or acquired by the acquirer or

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persons acting in concert with the acquirer) except if (subject to certain exceptions) such acquisition would not have been prohibited by the City Code or if such acquisition is made through an offer conducted in accordance with the City Code. Accordingly, certain transactions may only be permitted if either an offer is made (and not subsequently withdrawn) in accordance with the mandatory bid provisions of Rule 9 of the City Code (with such amendments as the board of directors may consent to) or an offer is made in accordance with certain rules of the City Code applicable to voluntary tender offers. If a shareholder does not comply with these provisions in the Articles, such shareholder will not be registered in the share register as a shareholder with voting rights exceeding 30%, and, to the extent already registered, the voting rights of his or her shares exceeding 30% of the voting rights will be suspended. Swiss law, however, prevents CCHBC from forcing a holder of CCHBC Ordinary Shares to launch a mandatory tender offer, and the restriction on registration referred to above might provide limited protection. As a result, although the Articles contain certain takeover protections, these will not provide the full protections afforded by the City Code and for so long as the United Kingdom ("UK") Panel on Takeovers and Mergers (the "Panel"), considers that CCHBC is not subject to the provisions of the City Code, the Panel will not assume responsibility for ensuring compliance with the City Code in relation to CCHBC. Instead, compliance with the provisions relating to takeover protections that CCHBC has incorporated into the Articles, will be a matter for its Board of Directors to determine, exercising its discretion in light of prevailing circumstances and in a manner consistent with its obligations and any specific provisions included in the Articles. Neither the validity of the provisions of the City Code, nor of the specific provisions that CCHBC has incorporated into the Articles that are similar to certain provisions of the City Code, have been determined by any Swiss court, and there can be no assurance that any such provisions would be upheld or enforced by a Swiss court in any or all respects or, if upheld and enforced, that a Swiss court would construe these provisions in the same manner as an English court, or the Panel.

        For additional information on these and other aspects of Swiss corporate law and the Articles, you should read Shareholder Information—"Share Capital" and "Shareholder Information—Memorandum and Articles of Association".

        As a result of these differences between Swiss corporate law and the Articles, and US and English laws, in certain instances a holder of CCHBC Ordinary Shares (including CCHBC Ordinary Shares represented by CCHBC ADSs) could receive less protection as a holder of CCHBC Ordinary Shares than would be the case as a shareholder of a US corporation, of an English company under the laws of England and Wales listed on the LSE or of a Swiss company listed in Switzerland.

CCHBC Ordinary Shares may not have an active trading market, which may have an adverse impact on the value of the CCHBC Ordinary Shares.

        CCHBC has been admitted to the Official List and to trading on the main market of the LSE for listed securities. Additionally, the ADSs have been listed on the NYSE and CCHBC has obtained a secondary listing of CCHBC Ordinary Shares on the Athens Exchange. However, there can be no assurances that a liquid market will continue to exist at any time or at all for CCHBC Ordinary Shares, that holders of CCHBC Ordinary Shares will be able to sell their CCHBC Ordinary Shares or that such holders will be able to sell their CCHBC Ordinary Shares for a price that reflects their value.

There is no guarantee that the CCHBC Ordinary Shares will remain in market indices as a foreign admitted company trading on the main market of the LSE or that the related benefits will be realised.

        Although CCHBC Ordinary Shares have been included in the FTSE UK Index Series, there are no assurances that they will continue to be a component of this index series. For example, FTSE may publish new guidance regarding non-UK incorporated companies that could effectively remove CCHBC Ordinary Shares from the FTSE UK Index Series or that the benefits associated with FTSE UK Index Services. In addition, there are no assurances that inclusion will be available to CCHBC.

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Other Risks Related to an Investment in CCHBC ADSs

You may not be able to enforce judgements against CCHBC or some of its directors or officers.

        CCHBC is incorporated under the laws of Switzerland. Substantially all of the CCHBC Group's assets are located outside the United States. In addition, the majority of CCHBC's officers and directors are residents of countries other than the United States. As a result, you may not be able to effect service of process within the United States upon these persons or enforce a US court judgment based on civil liabilities under the US federal securities laws against CCHBC or these persons. Courts outside the United States, including in Switzerland, may decide not to impose civil liability on CCHBC, its Directors or its officers for a violation of the federal securities laws of the United States. In addition, there is uncertainty as to the enforceability in Switzerland of judgements of United States courts because a judgement obtained in courts outside of Switzerland can only be recognised and enforced in the courts of Switzerland in accordance with, and subject to the requirements of, either applicable international treaties or the Swiss Private International Law Act. With respect to the United Kingdom, judgements in civil and commercial matters may generally be recognised or enforced in Switzerland based on the Convention on Jurisdiction and Enforcement of Judgements in Civil and Commercial Matters dated 30 October 2007 (the "Lugano Convention"), provided that the conditions for recognition and enforceability, respectively, under the Lugano Convention are met.

Pre-emptive rights may not be available to US holders of CCHBC Ordinary Shares or CCHBC ADSs and, as a result, their investment could be diluted.

        Under Swiss law, in the case of a capital increase, shareholders generally have subscription rights in proportion to their existing participation and, in the case of convertible capital, the shareholders have advance subscription rights to convertible bonds or options. A resolution by the general meeting to increase the share capital, however, may suspend these subscription rights for important reasons (eg, acquisitions, the participation of employees in the share capital or the placement of shares at market prices in the international capital markets), or authorise the board of directors to do so. US holders of CCHBC ADSs or CCHBC Ordinary Shares may not be able to exercise pre-emptive rights for new CCHBC Ordinary Shares unless a registration statement under the US Securities Act of 1933 is effective with respect to such rights and new ordinary shares, or an exemption from the registration requirements is available. CCHBC's decision to file a registration statement will depend on the costs and potential liabilities associated with any such registration statement, the perceived benefits to CCHBC of enabling US holders of CCHBC ADSs or CCHBC Ordinary Shares to exercise their pre-emptive rights and any other facts, which CCHBC considers appropriate at the time. To the extent that US holders of CCHBC ADSs or CCHBC Ordinary Shares are not able to exercise pre-emptive rights granted in connection with an issue of the CCHBC Ordinary Shares, their proportional shareholding in CCHBC would be diluted.

CCHBC ADS holders may not be able to exercise voting rights or receive distributions as readily as holders of CCHBC Ordinary Shares.

        Holders of CCHBC ADSs who would like to vote their underlying shares at the general meetings of CCHBC must instruct Citibank N.A. as ADS Depositary on how to vote these underlying shares. Neither CCHBC nor Citibank N.A. as ADS Depositary can guarantee that you will receive the notice for the general meeting or any voting materials provided by Citibank N.A. in time to ensure that you instruct Citibank N.A. to vote CCHBC Ordinary Shares underlying your CCHBC ADSs. In addition, Citibank N.A. and its agents are not responsible for failure to carry out voting instructions or for the manner of carrying out voting instructions. Therefore, there is a risk that your vote may not be carried out in the manner intended and, in such instance, there is no recourse. In addition, you may not receive the distributions made by CCHBC on CCHBC Ordinary Shares or any value for them if it is illegal or impracticable for Citibank N.A. to make them available to you.

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Risks relating to the CREST Depositary Interests ("CDIs")

Subject to CCHBC's arrangements with CREST Depository Limited (the "CDI Depositary"), holders of CDIs ("CCHBC CDI Holders") must rely on the CDI Depositary or its custodian, CREST International Nominees Limited, to exercise rights attaching to the underlying CCHBC Ordinary Shares for the benefit of the CCHBC CDI Holders.

        The rights of CCHBC CDI Holders are governed by, among other things, the relevant provisions of the CREST Manual and the CREST Terms and Conditions issued by Euroclear UK & Ireland. CCHBC CDI Holders are not able to directly exercise any voting or other rights attaching to CCHBC Ordinary Shares underlying their CDIs. Instead, the CDI Depositary or its custodian, CREST International Nominees Limited, hold the voting and other rights conferred by Swiss law and the Articles for the benefit of the relevant CCHBC CDI Holder. Consequently, the CCHBC CDI Holders must rely on the CDI Depositary or its custodian to exercise such rights for the benefit of the CCHBC CDI Holders. CCHBC has entered into arrangements whereby Euroclear UK & Ireland will make a copy of the register of the names and addresses of CCHBC CDI Holders available to CCHBC (and/or its registrar) to enable CCHBC (and/or its registrar) to send out notices of shareholder meetings and proxy forms to CCHBC CDI Holders. In addition, CCHBC and Euroclear UK & Ireland have also established omnibus proxy arrangements, whereby CREST International Nominees Limited (as the CDI Depositary's custodian of CCHBC Ordinary Shares underlying the CDIs) will, subject to certain conditions, give CCHBC CDI Holders (acting as beneficial owners or upon the instructions of the beneficial owners of the CCHBC CDIs) and beneficial owners of CCHBC CDIs the right to vote directly in respect of such CCHBC CDI Holder's or beneficial owner's underlying CCHBC Ordinary Shares. However, there can be no assurances that such information, and consequently, all such rights and entitlements, will at all times be duly and timely passed on or that such proxy arrangements will be effective.

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OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Overview

        The following Operating and Financial Review and Prospects section is intended to help the reader understand the CCHBC Group. This section is provided as a supplement to, and should be read in conjunction with, the CCHBC Group's audited financial statements and the other financial information contained elsewhere in this annual report. The CCHBC Group's financial statements have been prepared in accordance with IFRS, as issued by the IASB. The Operating and Financial Review and Prospects includes the following sections:

    The CCHBC Group's business, a general description of the CCHBC Group's business;

    Key financial results, a presentation of the most critical financial measures the CCHBC Group uses to track its operating and financial performance;

    Application of critical accounting policies, a discussion of accounting policies that require critical judgements and estimates;

    Principal factors affecting the CCHBC Group's results of operations, a discussion of the primary factors that have a significant impact on the CCHBC Group's operating and financial performance;

    CCHBC Group operating results, an analysis of the CCHBC Group's consolidated results of operations during the three years presented in its financial statements. The analysis is presented both on a consolidated basis, and by business segment through to operating profit;

    Liquidity and capital resources, an analysis of cash flows, sources and uses of cash;

    Market risk, an analysis of treasury policies and objectives, operating parameters, derivative instruments, interest rate risk, foreign exchange risk, commodity price risk and credit risk;

    Outlook and trend information, a review of the outlook for, and trends affecting, the CCHBC Group's business;

    Off-balance sheet arrangements, a discussion relating to the off-balance sheet arrangements of the CCHBC Group; and

        Tabular disclosure of contractual obligations, a discussion of the CCHBC Group's contractual obligations as at 31 December 2013.


The CCHBC Group's business

        The CCHBC Group's business consists of producing, selling and distributing ready-to-drink beverages, primarily non-alcoholic beverages, including products of TCCC, which, together with trademarked beverages of joint ventures to which TCCC is a party, accounted for approximately 97% of the CCHBC Group's sales volume in the year ended 31 December 2013 and 96% in the year ended 31 December 2012. The CCHBC Group operates in 28 Territories, serving a population of approximately 585 million people (including through the CCHBC Group's equity investments in Brewinvest S.A., a business engaged in the bottling and distribution of beer in Bulgaria and BrewTech B.V., a business engaged in the bottling and distribution of beer and non-alcoholic ready-to-drink beverages in FYROM).The CCHBC Group aggregates these 28 Territories into three business segments. The Territories included in each segment share similar levels of political and economic stability and development, regulatory environments, growth opportunities, customers and distribution infrastructures. The CCHBC Group's three business segments are as follows:

    Established Markets, which are Italy, Greece, Austria, the Republic of Ireland, Northern Ireland, Switzerland and Cyprus;

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    Developing Markets, which are Poland, Hungary, the Czech Republic, Croatia, Lithuania, Latvia, Estonia, Slovakia and Slovenia; and

    Emerging Markets, which are the Russian Federation, Romania, Nigeria, Ukraine, Bulgaria, Serbia (including the Republic of Kosovo), Montenegro, Belarus, Bosnia and Herzegovina, Armenia, Moldova and FYROM.

        The CCHBC Group reviews these country groupings annually to determine whether they continue to represent the most meaningful segmentation of its business. In undertaking this review, the CCHBC Group considers a variety of factors including disposable income per capita, exposure to economic volatility and net sales revenue per unit case. Since the CCHBC Group was formed, the performance of the countries within each segment have reflected similar states of economic development in terms of disposable income per capita. Thus the rationale for maintaining those three segments, as the means of measuring Group performance against our key measures has been consistently demonstrated. Based on the most recent review, the CCHBC Group continues to believe that its three business segments provide the most accurate basis on which to analyse its business.

        The CCHBC Group's products consist of Sparkling beverages, Still beverages and Water, including juices, sports and energy drinks, and other ready-to-drink beverages such as teas and coffees. In the year ended 31 December 2013, the CCHBC Group's Sparkling beverages category accounted for 70%, and its combined Still beverages and Water category accounted for 30%, of the CCHBC Group's sales volume, respectively. The CCHBC Group's core Sparkling beverage brands are Coca-Cola, Fanta, Sprite, Coca-Cola light (which the CCHBC Group sells in some of its Territories, under the Diet Coke trademark) and Coca-Cola Zero, which together accounted for approximately 65% of its total sales volume in the year ended 31 December 2013.


Key financial results

        The CCHBC Group considers the key performance measures for the growth and profitability of its business to be volume, operating profit, free cash flow and operating expenses as a percentage of net sales revenue. The CCHBC Group's calculation of free cash flow and operating expenses as a percentage of net sales revenue is discussed in detail below. The following table shows the CCHBC Group's results with respect to these key performance measures for each of the years ended 31 December 2013, 2012 and 2011, as well as in each case, the year-on-year change in percentage terms, or basis points if applicable:

Key performance measures:
  Year ended
31 December
2013
  change   Year ended
31 December
2012
  change   Year ended
31 December
2011
 

Unit case volume (in millions)

    2,060.5     (1.2 )%   2,084.7     (0.1 )%   2,087.4  

Operating profit (euro in millions)

    373.7     10.7 %   337.7     (25.0 )%   450.3  

Free cash flow(euro in millions)

    412.7     20.9 %   341.3     (20.1 )%   427.2  

Operating expenses as a percentage of net sales revenue

    29.2 %   (30) basis points     29.5 %   (50) basis points     30.0 %


Unit case volume

        The CCHBC Group measures its sales volume in unit cases. A unit case equals 5.678 litres or 24 servings of 8 US fluid ounces each. The unit case is a typical volume measure used in the CCHBC Group's industry.

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        In the year ended 31 December 2013, total volume decreased by 1.2% compared to the year ended 31 December 2012. Volume in Emerging Markets increased by 1.7%, but this increase was offset by declines of 4.2% and 3.2% in Established and Developing Markets, respectively.

        In the year ended 31 December 2012, total volume remained at the same levels for the year ended 31 December 2011, despite the very challenging trading conditions in most of the CCHBC Group's markets throughout the year. Volume in Emerging Markets increased by 3.9% offset by declines of 4.8% and 1.6% in Established and Developing Markets, respectively.


Operating profit

        In the year ended 31 December 2013, operating profit increased by €36.0 million, or 10.7% compared to the year ended 31 December 2012, as lower net sales revenue (driven by lower sales volume and unfavourable foreign currency fluctuations, offsetting the benefits of revenue growth initiatives), higher raw material costs in absolute terms and unfavourable foreign currency fluctuations were more than offset by lower sales, warehousing and distribution expenses as well as lower restructuring charges. By market segment, operating profit declined by 4.2% in the Established Markets in the year ended 31 December 2013 compared to the corresponding period in 2012, the CCHBC Group recorded an operating profit of €36.6 million in 2013 compared to an operating loss of €8.7 million in 2012 in the Developing Markets and operating profit decreased by 2.1% in its Emerging Markets in the year ended 31 December 2013 compared to the corresponding period in 2012.

        In the year ended 31 December 2012, operating profit decreased by €112.6 million, or 25.0% compared to the year ended 31 December 2011, mainly as a result of increased raw material costs, unfavourable foreign currency fluctuations and higher operating expenses. Operating profit declined by 54.1% in the Established Markets in the year ended 31 December 2012 compared to the corresponding period in 2011, the CCHBC Group recorded an operating loss of €8.7 million in 2012 compared to an operating profit of €58.4 million in 2011 in the Developing Markets and operating profit increased by 33.3% in its Emerging Markets in the year ended 31 December 2012 compared to the corresponding period in 2011.


Free cash flow

        Free cash flow is a non-IFRS measure used by the CCHBC Group and defined as cash generated by operating activities after payments for purchases of property, plant and equipment net of proceeds from sales of property, plant and equipment and including principal repayments of finance lease obligations. Free cash flow is intended to measure the liquidity of the Group's business, based on operating activities, including the efficient use of working capital and taking into account its net payments for purchases of property, plant and equipment. The Group's management regards the purchase and disposal of property, plant and equipment as ultimately non-discretionary since ongoing investment in plant, machinery, technology and marketing equipment, including coolers, is required to support the day-to-day operations and the CCHBC Group's growth potential. The CCHBC Group's management presents free cash flow because it believes the measure assists users of the financial statements in understanding the Group's cash generating performance. The free cash flow measure is used by management for their own planning and reporting purposes since it provides information on operating cash flows, working capital changes and net capital expenditure that local managers are most directly able to influence.

        Free cash flow is not a measure of liquidity under IFRS and has limitations, some of which are as follows: Free cash flow does not represent the Group's residual cash flow available for discretionary expenditures since the Group has debt payment obligations that are not deducted from the measure; free cash flow does not deduct cash flows used by the Group in other investing and financing activities and free cash flow does not deduct certain items settled in cash. Other companies in the industry in

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which the Group operates may calculate free cash flow differently, limiting its usefulness as a comparative measure.

        Since 2008, when the economic crisis started, the CCHBC Group has managed to consistently generate strong free cash flow, which is illustrated in the following table presenting free cash flow for the three years ended 31 December 2013:

 
  Year ended 31 December  
 
  2013   2012   2011  
 
  (euro in millions)
 

Net cash from operating activities

    784.9     753.6     828.3  

Payments for purchases of property, plant and equipment

    (380.2 )   (395.5 )   (363.9 )

Proceeds from sale of property, plant and equipment

    24.5     5.0     10.9  

Principal repayments of finance lease obligations

    (16.5 )   (21.8 )   (48.1 )
               

Free cash flow

    412.7     341.3     427.2  
               
               

        CCHBC generated free cash flow of €412.7 million in the year ended 31 December 2013 compared to €341.3 million in the year ended 31 December 2012. The increase of €71.4 million is primarily attributable to increased operating profit, improvements in working capital, driven mainly by improved receivables management, reduced payments for taxes and lower capital expenditure coupled with increased proceeds from asset disposals.

        For the year ended 31 December 2012 CCHBC generated €85.9 million less free cash flow compared to the year ended 2011 mainly due to decreased operating profit that was only partially offset by an improvement in working capital driven mainly by improved receivables management.

        Cash flows from operating activities for the year ended 31 December 2013 was €784.9 million, and for the years ended 31 December 2012 and 31 December 2011 were €753.6 million and €828.3 million, respectively. CCHBC had cash outflows used in investing activities for the years ended 31 December 2013, 31 December 2012 and 31 December 2011, with such numbers being negative €330.8 million, negative €403.7 million and negative €371.8 million, respectively. Furthermore, CCHBC had cash outflows used in financing activities for the years ended 31 December 2013, 31 December 2012 and 31 December 2011, with such numbers being negative €154.6 million, negative €358.5 million and negative €309.8 million, respectively. For additional information see the section entitled "Operating and Financial Review and Prospects—Liquidity and Capital Resources".


Operating expenses as a percentage of net sales revenue

        Operating expenses as a percentage of net sales revenue is defined as total operating expenses divided by total net sales revenues. The CCHBC Group's management presents operating expenses as a percentage of net sales revenue because it believes that the measure assists users of the CCHBC Group's financial statements by quantifying the impact of operating costs in relation to the growth of the CCHBC Group's business. This measure is used by management for their own planning, reporting and incentive purposes and allows management to track the impact and efficiency of restructuring and cost containment initiatives.

        Operating expenses as a percentage of net sales revenue should not be considered in isolation. This ratio has limitations. Among other things, the ratio does not reflect the impact of restructuring costs

        Operating expenses stood at 29.2% of total net sales revenue in the year ended 31 December 2013, compared to 29.5% of net sales revenue in the year ended 31 December 2012, showing a 30 basis points improvement. This demonstrates our ongoing commitment to improve operating efficiency across our business and is mainly attributable to our restructuring efforts as well as our "Route to Market"

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initiatives, which reduced sales, warehousing and distribution expenses as percentage of net sales revenues.

        Operating expenses stood at 29.5% of total net sales revenue in the year ended 31 December 2012, compared to 30.0% of net sales revenue in the year ended 31 December 2011, showing a 50 basis points improvement mainly attributable to our restructuring efforts as well as our route to market initiatives, which reduced sales and warehousing expenses as percentage of net sales revenues.


Critical accounting judgements and estimates

        In conformity with generally accepted accounting principles, the preparation of the CCHBC Group's consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities in the consolidated financial statements and accompanying notes. Although these estimates are based on management's knowledge of current events and actions that may be undertaken in the future, actual results may ultimately differ from these estimates.


Income taxes

        The CCHBC Group is subject to income taxes in numerous jurisdictions. There are many transactions and calculations for which the ultimate tax determination cannot be assessed with certainty in the ordinary course of business. The CCHBC Group recognises a provision for potential liabilities that may arise as a result of tax audit issues based on assessment of the probabilities as to whether additional taxes will be due. Where the final tax outcome on these matters is different from the amounts that were initially recorded, such differences will impact the income tax provision in the period in which such determination is made. The CCHBC Group anticipates that were the final tax outcome, on the judgement areas, to differ from management's estimates by up to 10%, the CCHBC Group's consolidated tax expense would increase (or decrease) by approximately €4 million.


Impairment of goodwill and indefinite-lived intangible assets

        Determining whether goodwill or indefinite-lived intangible assets are impaired requires an estimation of the value-in-use of the cash-generating units to which they have been allocated in order to determine the recoverable amount of the cash generating units. The value-in-use calculation requires that the CCHBC Group estimates the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. These assumptions and a discussion of how they are established are described in note 4 to the CCHBC Group's consolidated financial statements.


Employee Benefits—Defined Benefit Pension Plans

        The CCHBC Group provides defined benefit pension plans as an employee benefit in certain Territories. Determining the value of these plans requires several actuarial assumptions and estimates about discount rates, future salary increases and future pension increases. Due to the long-term nature of these plans, such estimates are subject to significant uncertainty. Details of assumptions used, including a sensitivity analysis are given in note 17 to the CCHBC group's consolidated financial statements included elsewhere in this annual report.


Joint Arrangements

        The CCHBC Group participates in several joint arrangements. Judgement is required in order to determine their classification as a joint venture where the CCHBC Group has rights to the net assets of the arrangement or a joint operation where the CCHBC Group has rights to the assets and obligations for the liabilities of the arrangement. In making this judgement, consideration is given to the legal form

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of the arrangement, the contractual terms and conditions as well as other facts and circumstances (including the economic rationale of the arrangement and the impact of the legal framework in which the arrangement operates). The CCHBC Group's joint arrangements are further discussed in note 6 to the CCHBC Group's consolidated financial statements included elsewhere in this annual report.


Principal factors affecting the CCHBC Group's results of operations

The CCHBC Group's relationship with The Coca-Cola Company

General

        The CCHBC Group is a producer, distributor and seller primarily of the products of TCCC. TCCC controls the global product development and marketing of its brands. TCCC's ability to perform these functions successfully has a direct effect on the CCHBC Group's sales volume and results of operations. The CCHBC Group produces the beverages of TCCC, engages in local marketing and promotional activities, establishes business relationships with local customers, develops local distribution channels and distributes the products of TCCC to customers either directly or indirectly through independent distributors and wholesalers. The CCHBC Group's business relationship with TCCC is mainly governed by bottlers' agreements entered into between TCCC and the CCHBC Group. You should read the section entitled "Additional Disclosures—Related Party Transactions—Relationship with The Coca-Cola Company" for additional information on the CCHBC Group's relationship with TCCC and a detailed description of the terms of the bottlers' agreements.


Purchase of concentrate

        Expenditure for concentrate constitutes the CCHBC Group's largest individual raw material cost. The CCHBC Group expects amounts of concentrate purchased from TCCC to track its sales volume growth over time, among other factors.

        The cost of concentrate purchased from TCCC during the year ended 31 December 2013 amounted to €1,410.6 million, as compared to €1,255.0 million and €1,244.8 million for the years ended 31 December 2012 and 2011, respectively. Concentrate purchased from TCCC represented 31.8% of the CCHBC Group's total cost of goods sold in the year ended 31 December 2013, compared with 27.8% in the year ended 31 December 2012 and 29.3% in the years ended 31 December 2011. Under its bottlers' agreements, the CCHBC Group is required to purchase concentrate for all beverages of TCCC from companies designated by TCCC. TCCC is entitled under the bottlers' agreements to determine the price the CCHBC Group pays for concentrate at its sole discretion. In practice, TCCC normally sets prices only after discussions with the CCHBC Group so as to reflect trading conditions in the relevant Territories and so as to ensure that such prices are in line with the CCHBC Group's and TCCC's respective sales and marketing objectives for particular TCCC brand-related products and particular Territories.


Pricing

        The CCHBC Group's operating companies are entitled to set the price of products sold to retailers. In practice, the CCHBC Group works closely with TCCC to determine the pricing strategy in light of the trading conditions prevailing at the relevant time in each of these countries.


Marketing and promotional support

        TCCC makes contributions to the CCHBC Group in respect of marketing and promotional support programmes to promote the sale of its products in the Territories. Total net contributions received from TCCC for marketing and promotional support programmes amounted to €99.2 million, €70.6 million and €76.5 million for the years ended 31 December 2013, 2012 and 2011, respectively.

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These contributions, if related to payments the CCHBC Group makes to specific customers for marketing and promotional incentives, are recognised as a reduction of the CCHBC Group's payments to customers. These payments to customers, net of contributions received from TCCC, are deducted from sales revenue and totalled €69.9 million, €51.2 million and €49.0 million in the years ended 31 December 2013, 2012 and 2011, respectively. Payments for marketing programmes not specifically attributable to a particular customer are recognised as a reduction of selling expenses and amounted to €31.0 million, €20.1 million and €21.9 million in the years ended 31 December 2013, 2012 and 2011, respectively. The levels of support programmes are jointly determined annually on a Territory-by-Territory basis to reflect the mutually agreed annual marketing plan for that Territory and expected sales volume for the year. TCCC is under no obligation to participate in the programmes or continue past levels of funding into the future. Given the CCHBC Group's relationship with TCCC to date, there is no reason to believe that such support will be reduced or withdrawn in the future.


Other transactions with The Coca-Cola Company

        Other income primarily comprises rent, facility and other costs and was €1.6 million, €1.2 million and €1.2 million in the years ended 31 December 2013, 2012 and 2011, respectively, and a toll-filling relationship in Poland of €19.0 million, €18.0 million and €13.8 million in the years ended 31 December 2013, 2012 and 2011, respectively. Other expenses related to facility costs charged by TCCC and shared costs were €2.8 million, €1.5 million and €4.0 million in the years ended 31 December 2013, 2012 and 2011, respectively, included in operating expenses.

        In addition to concentrate, the CCHBC Group purchases from TCCC finished goods and other materials. The cost of these purchases amounted to €22.1 million, €50.4 million and €56.0 million in the years ended 31 December 2013, 2012 and 2011, respectively. The CCHBC Group also purchases concentrate from Beverage Partners Worldwide, a joint venture between TCCC and Nestlé S.A. Purchases of concentrate from Beverage Partners Worldwide amounted to €89.1 million, €101.5 million and €99.6 million in the years ended 31 December 2013, 2012 and 2011, respectively. These amounts are included in the CCHBC Group's cost of goods sold.

        The CCHBC Group sold finished goods and raw materials to TCCC in amounts of €28.2 million, €25.1 million and €32.8 million in the years ended 31 December 2013, 2012 and 2011, respectively.

        All transactions with TCCC are conducted on an arm's length basis.


Amounts payable to and receivable from The Coca-Cola Company

        As at 31 December 2013, TCCC owed the CCHBC Group €73.6 million compared to €49.6 million as at 31 December 2012. The CCHBC Group owed TCCC a total amount of trade payables of € 215.4 million and €154.0 million as at 31 December 2013 and 2012, respectively.


Economic conditions

        Challenging economic and financial conditions continued to play a major role in the CCHBC Group's operating performance and financial results in 2012 and 2013. The CCHBC Group has witnessed a continued impact from austerity measures implemented in several Territories, including Greece, Italy, the Republic of Ireland and Northern Ireland, Hungary, Czech Republic, Cyprus and Serbia. Disposable income, consumer confidence and purchasing power remained challenging throughout this period across most of the Territories. Consumer confidence posted some improving trends but remained in negative territory, while disposable income continued its decline in key countries such as the Czech Republic, Greece, Italy, and Bulgaria or deteriorated in key countries such as Romania and Austria. GDP growth slowed down and unemployment rates increased significantly across the Territories during 2012 and 2013. The sustained economic and budgetary challenges that the Greek government faces with respect to its high public debt burden are reflected in the last six

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consecutive years of recorded negative GDP growth (Source: Oxford Economics) and a record high unemployment rate of 28% in November 2013 (Source: Hellenic Statistical Authority) The CCHBC Group experienced a negative impact from adverse movements in exchange rates in 2013 and 2012, and the sustained sovereign debt crisis in the Eurozone continued to contribute to currency volatility across the Territories, which impacted the CCHBC Group's financial results in the years ended 31 December 2013 and 2012.

        In 2013 and 2012, efforts by major western countries to respond to the world economic crisis by taking further fiscal measures designed to reduce national fiscal deficits and ultimately restore confidence continued. However, the CCHBC Group has not experienced any concrete evidence of recovery. Not all countries have been affected to the same extent by the crisis. Some countries began taking steps to reduce their fiscal deficits in 2009; others have done so in more recent years. Towards the end of 2009, the economic crisis created downward pressure on the euro, resulting in an increase in the prices the CCHBC Group must pay for certain raw and packaging materials which are priced in other currencies (principally US dollars). Higher prices for these raw and packing materials have persisted through 2013, though at a lower pace compared to recent years. A decline in the value of the euro depresses the CCHBC Group's profit margins if it is unable to recover these additional operating costs from its customers.

        Greece faces increasing pressures for more aggressive and wide-ranging fiscal retrenchment. A new austerity package that was part of government's multiyear fiscal consolidation programme under the new European Monetary Union/International Monetary Fund agreement was introduced in late 2012, and since then has depressed Greece's medium-term economic growth prospects. Further, two rounds of general elections in Greece in 2012 and a weakening of the Government coalition in 2013 increased socio-economic and political volatility and put further pressure on consumer sentiment.

        In early 2012, after the Italian sovereign debt was downgraded by the main rating agencies and the spread between Italian and German Treasury bonds reached a new peak, the Italian government introduced a significant austerity bill, coupled with further austerity measures, including a VAT increase by 1%. An additional 1% VAT increase became effective in October 2013. Such measures are likely to negatively impact gross domestic product and employment in Italy in the short and medium term, which could adversely affect the CCHBC Group's results of operations. Furthermore, the Irish government's 2012 budget sought savings and incremental revenues, including an increase in the VAT rate of 2%, from 21% to 23%, effective from January 2012. In addition, at the end of 2013, the Serbian government introduced new austerity measures, including higher taxes, VAT increases, restructuring of public companies and reduction of State subsidies. Such measures are likely to negatively impact gross domestic product and employment.

        The economic crisis, the measures aimed at addressing such crisis and the consequences thereof could adversely affect the results of the CCHBC Group's local operations and on a consolidated basis.


Channel mix

        The CCHBC Group sells its products through two broadly defined distribution channels: future consumption channels, including hypermarkets, supermarkets, discount stores and grocery stores, where consumers either buy beverages in multi-serve packages (one litre and above) or multi-packs of single-serve packages for future (at home) consumption; and immediate consumption channels, including restaurants and cafés, grocery stores, gas stations, sports and leisure venues, hotels and offices, where consumers typically buy beverages in chilled single-serve packages (0.5 litre or smaller) and fountain products for immediate consumption. Single-serve packages sold through immediate consumption channels typically generate higher margins than multi-serve packages sold through future consumption channels. This is primarily due to consumers' willingness to pay a premium to consume the CCHBC Group's products chilled at a convenient location. In addition, this is also influenced by the price

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sensitivity and bargaining power of large retailers and wholesalers that represent the CCHBC Group's principal customers in the future consumption channel.

        The retail environment for beverages continues to transform rapidly, with the shift towards modern, large-scale and discount retail formats expanding to more of the CCHBC Group's markets. The CCHBC Group response has been to make "customer preference" a core value of its business. "Customer preference" means building true collaboration and partnerships that create sustainable value and profitable growth for the CCHBC Group's business and its customers across all key channels through a comprehensive set of initiatives, including joint value creation, customer care centres, projects with key customers, and the CCHBC Group's 360° review process for measuring and improving in-market execution.

        Channel mix refers to the relative percentages of the CCHBC Group's sales volume comprising chilled single-serve packages sold for immediate consumption and multi-serve and multi-pack or single-serve packages sold for future consumption. A favourable channel mix occurs when sales of the CCHBC Group's higher margin single-serve packages increase through immediate consumption channels relative to sales of multi-serve packages sold through future consumption channels, while an unfavourable channel mix occurs when the CCHBC Group's volume shifts toward more multi-serve packages sold through future consumption channels that generate lower margins. One of the strategies the CCHBC Group uses to improve channel mix is to invest in cold drink equipment, such as coolers, which the CCHBC Group makes available to retail outlets. This represents a significant portion of the CCHBC Group's capital expenditure. During 2013, for example, approximately 19.4% of the CCHBC Group's additions of property, plant and equipment were for coolers. Another strategy of the CCHBC Group is to drive consumer relevance and revenue growth through its OBPPC strategic tools, which the CCHBC Group has turned into an integral part of its business, and to offer consumers the option to purchase multi-packs of single-serve packages more often from future consumption channels.


Raw material costs

        Raw material costs, including concentrate, represented 76.3% of the CCHBC Group's total cost of goods sold in the year ended 31 December 2013, as compared to 76.4% and 76.0% in the years ended 31 December 2012 and 2011, respectively. The CCHBC Group's major raw materials, other than water and concentrate, are sugar and other sweeteners, carbon dioxide, juice concentrates, glass, labels, plastic resin, closures, plastic crates, aluminium cans, aseptic packages and other packaging materials. The entry into the European Union in recent years of eleven of the CCHBC Group's Territories has led to an increase in the cost of sugar. For additional information, see below "Operating and Financial Review and Prospects—Principal factors affecting the CCHBC Group's results of operations—Impact of governmental, economic, fiscal, monetary and political policies—EU regulations".

        The CCHBC Group's major cold drink equipment supplier is Frigoglass S.A. Under the terms of a supply agreement that the CCHBC Group entered into with Frigoglass S.A. in 1999, initially set to expire on 31 December 2004 but subsequently extended, on substantially similar terms in June 2004, then in December 2008 and again in April 2013 to 31 December 2018, the CCHBC Group has the status of a non-exclusive most favoured client of Frigoglass S.A. The CCHBC Group is required to obtain at least 60% of its annual requirements of coolers from Frigoglass S.A., in order to maintain its status as a non-exclusive most favoured client. The prices at which the CCHBC Group purchases these products are agreed between the CCHBC Group and Frigoglass S.A. at the beginning of each year. If an agreement is not reached, the applicable prices will be determined based on the average prices of other non-exclusive primary European suppliers to TCCC's European bottlers.

        In the year ended 31 December 2013, the CCHBC Group made purchases of coolers, cooler parts, glass bottles, crowns and plastics from Frigoglass S.A. and its subsidiaries totalling €118.9 million, compared to €137.9 million in the year ended 31 December 2012 and €147.7 million in the year ended

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31 December 2011. Further, the CCHBC Group incurred maintenance and other expenses of €10.6 million in the year ended 31 December 2013, as compared to €9.8 million and €6.3 million in the years ended 31 December 2012 and 2011, respectively. Frigoglass S.A. is related to the CCHBC Group. You should read the section entitled "Additional Disclosures—Related Party Transactions—Relationship with Kar-Tess Group—Supply agreement with Frigoglass S.A." for additional information on the CCHBC Group's relationship with Frigoglass S.A.


Weather conditions

        Weather conditions directly affect consumption of all of the CCHBC Group's products. High temperatures and prolonged periods of warm weather favour increased consumption of the CCHBC Group's products, while unseasonably cool weather, especially during the spring and summer months, adversely affects the CCHBC Group's sales volume and consequently, net sales revenue.


Seasonality

        Product sales in all of the CCHBC Group's Territories are generally higher during the warmer months of the year, which are also periods of increased tourist activity in many of these Territories, as well as during holiday periods such as Christmas and Easter. The CCHBC Group typically experiences its best results of operations during the second and third quarters. In 2013, for example, the CCHBC Group realised 20.7% of its sales volume in the first quarter, 28.0% in the second quarter, 27.9% in the third quarter and 23.4% in the fourth quarter.


Foreign currency

        The CCHBC Group's results of operations are affected by foreign exchange exposures, which arise primarily from adverse changes in exchange rates in its Emerging and Developing Markets. In particular:

    The CCHBC Group's operating companies, other than those in Italy, Greece, Austria, the Republic of Ireland, Cyprus, Estonia, Slovenia, Slovakia and Montenegro, have functional currencies other than the CCHBC Group's reporting currency, the euro. As a result, any change in the exchange rates between these functional currencies and the euro affects the CCHBC Group's statement of income and balance sheet when the results of those operating companies are translated into euro;

    Raw materials purchased in currencies such as the US dollar or the euro can lead to higher cost of goods sold in Territories with weaker functional currencies which, if not recovered through local price increases, will lead to reduced gross profit margins. As at 31 December 2013, all of the CCHBC Group's concentrate, which represents 46.8% of its raw material costs, was sourced through supply agreements denominated in euro for operating companies having euro as functional currency and for other operating companies in euro, US dollar or the local currency of each of its operating companies. Sugar, PET and aluminium, which represent 17.6%, 10.1% and 6.7%, respectively, of the CCHBC Group's raw material costs in the year ended 31 December 2013, were sourced through supply agreements denominated mainly in euro and US dollars; and

    Currency fluctuations impact the CCHBC Group's foreign currency denominated balances, such as interest expense on borrowings denominated in foreign currencies.


Taxation

        The Swiss statutory tax rate for holding companies is 8.5% (corresponding to a tax rate of approximately 7.83% based on profit before tax), not taking into consideration the participation relief

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for dividend income that constitutes the main source of income of CCHBC. This Swiss statutory rate is applicable to CCHBC, the CCHBC Group's ultimate parent company, for 2013. The tax rate in 2012 and 2011 was 20%, as the top holding company was previously resident in Greece. The statutory income tax rates in the Territories in which the CCHBC Group operates range from 0% to 30%. The CCHBC Group's effective tax rate was 24.8% for the year ended 31 December 2013, 25.2% for the year ended 31 December 2012 and 27.1% for the year ended 31 December 2011. The level CCHBC Group's effective tax rate is mainly impacted by changes in the relative contribution of each country to the CCHBC Group's overall profitability as a result of the differing tax rates applicable in the Territories in which the CCHBC Group operates, changes in the tax rates affecting the deferred tax asset and deferred tax liability recognised in previous periods, the non-deductibility of certain expenses and one-off tax items.

        CCHBC Group's effective tax rate in the year ended 31 December 2013 was nearly flat compared to the year ended 31 December 2012. The decrease of the CCHBC Group's effective tax rate in the year ended 31 December 2012 compared to the year ended 31 December 2011 is mainly attributable to the change in tax rates which impacted the deferred tax asset or deferred tax liability recognised in previous periods, the utilisation of losses not previously recognised for tax purposes, increased tax incentives in specific jurisdictions and other one-off tax items.


Amortisation and impairment of intangible assets

        Intangible assets comprise a significant portion of the CCHBC Group's balance sheet. The CCHBC Group considers that 99.5% of the intangible assets totalling €1,912.3 million recorded on its balance sheet as at 31 December 2013 relates to assets that have indefinite useful lives.

        The CCHBC Group conducts tests for impairment of goodwill and indefinite-lived intangible assets in accordance with IAS 36, Impairment of assets, annually and whenever there is an indication of impairment. No impairment resulted from the impairment tests of 2013, 2012 and 2011.


Impact of governmental, economic, fiscal, monetary and political policies

EU regulations

        On 1 May 2004, nine Territories in which the CCHBC Group operates entered the European Union. These are Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia. Bulgaria and Romania entered the European Union on 1 January 2007. As of 31 December 2012 the CCHBC Group operated in 17 EU countries. In addition, Croatia became an EU member state in 2013. These countries have implemented extensive reforms to facilitate their transition to market economies and have adopted strict fiscal and monetary policies to converge with the fiscal and monetary standards set by the European Union. The CCHBC Group believes that, overall, it benefits from the increased economic and political stability in these countries as a result of their gradual alignment with the principles, objectives, economic standards and regulations of the European Union. Conversely, the application of EU labour, tax, accounting and environmental regulations, increases the cost and complexity of compliance, at least in the short-term, and the implementation of the EU packaging directive in the new EU countries has further restricted the CCHBC Group's ability to use certain packaging materials or methods.

        The CCHBC Group's Territories in the European Union have adopted the EU sugar regime, which means that the minimum selling price for sugar has become the EU intervention price plus the cost of transport and profit margin. This has generally meant a significant rise in sweetener costs in these Territories, although the ongoing reform of the EU sugar regime could help to counteract inflationary pressure caused by recent increases in energy and transport costs.

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EU competition law

        The CCHBC Group's business activities affecting the European Union are subject to EU competition law. In 2005, the European Commission ended an investigation into various commercial practices of TCCC and certain Coca-Cola bottlers in Austria, Belgium, Denmark, Germany and Great Britain regarding possible abuse of dominant position. Together with TCCC and other Coca-Cola bottlers, the CCHBC Group undertook to address all such practices in the European Union. The undertaking potentially applied in the member states of the European Economic Area, covering those channels of distribution where TCCC-branded Sparkling beverages account for over 40% of the national sales and twice the nearest competitor's share. The commitments related broadly to exclusivity, percentage- based purchasing commitments, transparency, target rebates, tying, assortment or range commitments and agreements concerning products of other suppliers. In addition to these commitments, the undertaking applied to shelf space commitments in agreements with take-home customers, to financing and availability agreements in the on-premise channel and to commercial arrangements concerning the installation and use of technical equipment, such as coolers, fountain equipment, and vending machines. The CCHBC Group believes that its compliance with the undertaking has not had a material adverse effect on its business and financial results. The undertaking expired on 31 December 2010.


Greek economic crisis and EU response

        Greece, which accounted for approximately 4.7% of the CCHBC Group's sales volume in the year ended 31 December 2013, is currently facing a severe economic crisis resulting from long standing government fiscal deficits and high levels of government borrowing. The current political, economic and budgetary challenges that the Greek government faces with respect to its high public debt burden and Greece's weakening economic growth prospects have led to the introduction of wide-ranging fiscal measures, including increases in taxation, and further measures may become necessary. Other Territories in Europe in which the CCHBC Group operates, such as Ireland, Italy, Romania and Hungary, are facing difficult economic conditions and have announced fiscal austerity measures. The economic crisis, the measures aimed at addressing the situation, the consequences thereof or a combination of the aforementioned could adversely affect the results of the CCHBC Group's local operations and on a consolidated basis.

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CCHBC Group operating results

Year ended 31 December 2013 compared to the year ended 31 December 2012

        The following table shows certain consolidated income statement and other financial data, as well as the change in percentage terms, for the year ended 31 December 2013 compared to the year ended 31 December 2012.

 
  Year ended
31 December
   
 
 
  %
Change
 
 
  2013   2012  
 
  (euro in millions
except unit case
volume in millions)

   
 

Net sales revenue

    6,874.0     7,044.7     (2.4 )

Cost of goods sold

    (4,438.5 )   (4,522.2 )   (1.9 )
               

Gross profit

    2,435.5     2,522.5     (3.4 )

Operating expenses

    (2,006.3 )   (2,078.1 )   (3.5 )

Restructuring costs

    (55.5 )   (106.7 )   (48.0 )

Operating profit

    373.7     337.7     10.7  
               

Finance income

    10.0     10.4     (3.8 )

Finance costs

    (98.8 )   (98.0 )   0.8  

Loss on net monetary position

    (2.7 )   (3.1 )   (12.9 )
               

Finance costs (net)

    (91.5 )   (90.7 )   0.9  

Share of results of equity method investments

    11.9     11.6     2.6  
               

Profit before tax

    294.1     258.6     13.7  

Tax

    (72.9 )   (65.2 )   11.8  
               

Profit after tax

    221.2     193.4     14.4  
               
               

Attributable to:

                   

Non-controlling interests

        3.0     (100.0 )

Owners of the parent

    221.2     190.4     16.2  
               

    221.2     193.4     14.4  
               
               

Unit case volume

    2,060.5     2,084.7     (1.2 )

        The following table shows certain income statement and other financial data for the year ended 31 December 2013 compared to the year ended 31 December 2012, expressed in each case as a percentage of net sales revenue.

 
  Year ended
31 December
 
 
  2013   2012  
 
  %
 

Net sales revenue

    100.0     100.0  

Cost of goods sold

    (64.6 )   (64.2 )

Gross profit

    35.4     35.8  

Operating expenses and restructuring costs

    (30.0 )   (31.0 )

Operating profit

    5.4     4.8  


Volume

        The CCHBC Group's sales volume for the year ended 31 December 2013 decreased by 1.2% compared to the year ended 31 December 2012. Year-on-year, Established and Developing Markets

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made a negative contribution of 28.8 million unit cases and 12.5 million unit cases, respectively, whereas the Emerging Markets made a positive contribution of 17.1 million unit cases.

        In the Established Markets segment, unit case volume decreased by 28.8 million, or 4.2%, during the year ended 31 December 2013, compared to the year ended 31 December 2012. In Italy, volume declined by 19.2 million unit cases, or 6.2%. The underlying macroeconomic and trading environment remains under pressure, with unemployment reaching a new record high in November 2013 of 12.7%, negatively affecting disposable income and consumer confidence. In Greece, volume declined by 10.7 million unit cases, or 9.9%, with the rate of decline decelerating compared to previous years. The macroeconomic environment remained extremely challenging, with the Greek GDP registering a moderating decline of 3.7%, and unemployment remaining at the historically high levels of 28%, leading to a significant decrease in private consumption in the period under review. Volume in the Republic of Ireland and Northern Ireland increased by 1.6 million unit cases, or 2.3%, driven by strong summer and Christmas sales. Volume in Switzerland increased by 0.6 million unit cases, or 0.7% despite the market slow-down, impacted by the strong Swiss franc relative to the euro that continued to negatively affect tourism and exports.

        In the Developing Markets segment, unit case volume decreased by 12.5 million, or 3.2%, in the year ended 31 December 2013 from the year ended 31 December 2012. Volume in Poland decreased by 5.6 million unit cases, or 3.3%, mainly due to the decline in small outlets that was only partially offset by the strong growth in the discounters channel. In Hungary, volume decreased by 5.3 million unit cases, or 6.4%, as economic conditions in the country remained challenging and consumer confidence declined to be among the lowest in Europe in spite of a modest GDP growth of 1% in the second half of the year. Volume in the Czech Republic decreased by 0.7 million unit cases, or 1.2%, in the year ended 31 December 2013 as economic and political conditions remain volatile in the country, with early elections having taken place in October 2013.

        In the Emerging Markets segment, unit case volume increased by 17.1 million, or 1.7%, in the year ended 31 December 2013, compared to the year ended 31 December 2012. Volume in the Russian Federation increased by 4.6%, or 17.0 million unit cases compared to the year ended 31 December 2012 with all key categories registering sales volume increases except for the Water category, where sales volume declined by 9.1% in line with the CCHBC Group's strategy to grow margins by prioritising value ahead of volume. The sales volume was supported by strong activation relating to the sponsorship of the Sochi Winter Olympic Games and our OBPPC initiatives. Unit case volume in Nigeria increased by 20.6 million unit cases, or 11.3%, in the year ended 31 December 2013, attributable to an increase in market size, increased marketing activities, and continuous improvement in execution and product availability. Unit case volume in Romania decreased by 14.2 million unit cases, or 8.7%, in the year ended 31 December 2013, with sales volume being negatively impacted by the difficult macroeconomic and trading environment as well as competitive promotional pressures.


Net sales revenue

        The CCHBC Group recognises net sales revenue at the time it delivers products to its customers. Revenues are recognised when all of the following conditions are met: evidence of a binding arrangement exists (generally purchase orders), products have been delivered and there is no future performance required, amounts are collectible under normal payment terms and both revenue and associated costs can be measured reliably.

        Net sales revenue decreased by €170.7 million, or 2.4%, for the year ended 31 December 2013, compared to the year ended 31 December 2012 as a result of the volume decline and the impact of currency fluctuations, amidst an increasingly volatile and challenging economic environment, which were only partially offset by our revenue growth initiatives. Net sales revenue per unit case decreased by 1.3% in the year ended 31 December 2013 as compared to the year ended 31 December 2012.

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        In the year ended 31 December 2013, the net sales revenue of the Established Markets decreased by €162.2 million or 6.0% compared to the year ended 31 December 2012. This decrease was mainly attributable to reduced sales volumes as well as the adverse price, package mix and the unfavourable currency movements. Net sales revenue in Greece and Italy decreased by €43.3 million and €100.1 million or by 9.6% and 9.1% respectively over the same period.

        In the Developing Markets segment, net sales revenue decreased by €42.5 million, or 3.7% in the year ended 31 December 2013, compared to the year ended 31 December 2012, as the benefits of revenue growth initiatives were more than offset by lower volume, adverse package mix and unfavourable currency movements. Net sales revenue in Czech Republic and Poland decreased by €13.3 million and €20.5 million, or by 7.6% and 4.4% respectively, over the same period.

        In the Emerging Markets segment, net sales revenue increased by €34.0 million in year ended 31 December 2013 compared to the year ended 31 December 2012 mainly as a result of the implementation of revenue growth initiatives, as well as higher volume that more than offset the adverse impact from unfavourable currency movements. Net sales revenue in the Russian Federation and Nigeria increased by €35.8 million and €29.9 million or by 2.5% and 5.5% respectively over the same period.


Cost of goods sold

        The CCHBC Group's cost of goods sold consists of raw materials, inward freight and warehousing, labour and manufacturing costs. The CCHBC Group's cost of goods sold decreased to €4,438.5 million in the year ended 31 December 2013 from €4,522.2 million in the year ended 31 December 2012. The cost of goods sold per unit case decreased by 0.7% to €2.15 in the year ended 31 December 2013 as compared to €2.17 in the year ended 31 December 2012. Commodity costs were in line with our expectations and more specifically sugar and aluminium cost decreased compared to the year ended 31 December 2012 while PET costs increased. The cost of concentrate purchased from TCCC, the CCHBC Group's most important raw material, increased to 21.7% of net sales revenue in the year ended 31 December 2013 compared to 21.5% in the year ended 31 December 2012 mainly due to the increased contribution of more costly product categories in the total cost of goods sold compared to year ended 31 December 2012. Depreciation and impairment included in the cost of goods sold decreased to €188.1 million in the year ended 31 December 2013 from €192.3 million in the year ended 31 December 2012.


Gross profit

        The CCHBC Group's gross profit margin decreased to 35.4% in the year ended 31 December 2013 from 35.8% in the year ended 31 December 2012. On a unit case basis, gross profit in the year ended 31 December 2013 decreased by approximately 2.3% compared to the year ended 31 December 2012.


Operating expenses

        The CCHBC Group's selling expenses include the cost of the sales force, direct marketing expenses and expenses relating to cold drink equipment. Delivery expenses consist primarily of the cost of the CCHBC Group's fleet of vehicles, distribution centres and warehouses through which it distributes a significant portion of its products, as well as fees charged by third party shipping agents. Also included in selling, delivery and administrative expenses is depreciation, which relates mainly to depreciation of coolers, vehicles, distribution centres, warehouses and other non-production related items. The most significant component of the CCHBC Group's operating expenses is the cost of the sales force.

        The CCHBC Group's operating expenses decreased by 3.5% to €2,006.3 million in the year ended 31 December 2013 from €2,078.1 million in the year ended 31 December 2012 mainly driven by the

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CCHBC Group's restructing and Route-to-Market initiatives which reduced sales, warehouse and distribution expenses. Selling expenses (including depreciation and impairment of €92.7 million) amounted to €941.6 million in the year ended 31 December 2013, as compared to €995.6 million for the year ended 31 December 2012. The ratio of selling expenses to net sales revenue decreased to 13.7% in the year ended 31 December 2013 from 14.1% in the year ended 31 December 2012.

        Delivery expenses (including depreciation and impairment of €32.9 million) decreased to €615.2 million in the year ended 31 December 2013 from €649.6 million in the year ended 31 December 2012.

        Administrative expenses (including depreciation and impairment of €47.6 million) amounted to €442.2 million in the year ended 31 December 2013 and €423.6 million in the year ended 31 December 2012. Administrative expenses increased as a percentage of net sales revenue at 6.4% in the year ended 31 December 2013 from 6.0% in the year ended 31 December 2012.

        Stock option expenses remained flat in the year ended 31 December 2013, as compared to the year ended 31 December 2012 at €6.3 million. Amortisation of intangible assets, recorded in operating expenses, decreased to €1.0 million in the year ended 31 December 2013 from €3.0 million in the year ended 31 December 2012.

        As part of the CCHBC Group's effort to optimise its cost base and sustain competitiveness in the marketplace, the CCHBC Group has undertaken and expects to continue to undertake restructuring initiatives, which are expected to deliver benefits in the form of reduced costs in cost of goods sold and operating expenses, as well as improved cash flows. Such restructuring initiatives mainly concern reducing employee costs, outsourcing of certain functions, as well as optimising the supply chain infrastructure. The CCHBC Group is also engaged in an ongoing process of adjusting and restructuring its distribution systems in order to improve customer service, reduce costs and inventory levels and increase asset utilisation. In the year ended 31 December 2013, the cost of these restructuring initiatives amounted to €55.5 million before taxes compared to €106.7 million in the year ended 31 December 2012. Out of this amount, €35.9 million comprised employee redundancy costs and €19.6 million related to other restructuring expenses for the year ended 31 December 2013 compared to €68.8 million of employee redundancy costs and €37.9 million of other restructuring expenses for the year ended 31 December 2012. The CCHBC Group recorded restructuring charges of €52.9 million, €0.7 million and €1.9 million in the year ended 31 December 2013 in its Established, Developing and Emerging Markets, respectively, compared to €65.8 million, €34.8 million and €6.1 million in the year ended 31 December 2012.


Operating profit

        Operating profit increased by 10.7% to €373.7 million in the year ended 31 December 2013 compared to €337.7 million in the year ended 31 December 2012. The increase was mainly attributable to lower operating expenses, in particular lower restructuring charges, which more than offset the impact of lower volume, increased raw material costs and unfavourable foreign currency movements.


Finance income

        Finance income decreased by 3.8% to €10.0 million for the year ended 31 December 2013 from €10.4 million for the year ended 31 December 2012.


Finance costs

        Finance costs were €98.8 million for the year ended 31 December 2013 broadly flat compared to €98.0 million for the year ended 31 December 2012. The benefits from the successful refinancing in June 2013 at improved rates are expected to be captured in 2014. For more information, see the section entitled "Liquidity and Capital Resources—Borrowings and funding sources—Euro medium-term note programmes".

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Loss on net monetary position

        Belarus has been considered a hyperinflationary economy since the fourth quarter of 2011, as three-year cumulative inflation in Belarus exceeded 100%, and was therefore consolidated in terms of the measuring unit as at 31 December 2013 and translated at the closing exchange rate. The restatement was based on conversion factors derived from the Belarus Consumer Price Index (CPI) as compiled by the National Statistical Committee of the Republic of Belarus. The conversion factor used for December 2013 was 1.136 which resulted in a net monetary loss for 2013 of €2.7 million.


Share of results of equity method investments

        The CCHBC Group's share of results of equity method investments increased to a gain of €11.9 million in the year ended 31 December 2013 from a gain of €11.6 million in the year ended 31 December 2012.

        Share of results of equity method investments includes the results of Frigoglass Industries Limited, in which the CCHBC Group's Nigerian operating company, the Nigerian Bottling Company plc, holds a 23.9% equity stake. In September 2011, the CCHBC Group purchased the remaining 33.6% non-controlling interest in Nigerian Bottling Company plc, bringing the CCHBC Group's interest to 100%. As a result, the CCHBC Group held an indirect equity interest of 23.9% in Frigoglass Industries Limited as at 31 December 2013.

        In addition, the CCHBC Group's share of results of equity method investments reflects the results of Fresh & Co, a leading juice company in Serbia and the results of the joint venture with Heineken that is conducted through a number of legal entities, being the Brewinvest S.A. Group of companies and the BrewTech B.V. Group of companies. The Brewinvest S.A. Group of companies is engaged in the bottling and distribution of beer in Bulgaria. Brewinvest S.A. is incorporated in Greece and the CCHBC Group owns 50% of its share capital. The BrewTech B.V. Group of companies is engaged in the bottling and distribution of soft drinks and beer in FYROM through its subsidiary A.D. Pivara Skopje. From 2010 until April 2012 BrewTech B.V. Group formed part of the Brewinvest S.A. Group. BrewTech B.V. is incorporated in the Netherlands and the CCHBC Group owns 50% of its share capital.


Tax

        The CCHBC Group's effective tax rate was 24.8% for the year ended 31 December 2013 compared to 25.2% for the year ended 31 December 2012. The level of the CCHBC Group's effective tax rate is mainly impacted by changes in the relative contribution of each country to the CCHBC Group's overall profitability as a result of the differing tax rates applicable in the Territories in which the CCHBC Group operates, changes in the tax rates affecting the deferred tax asset and deferred tax liability recognised in previous periods, the non-deductibility of certain expenses and one-off tax items.


Profit after tax attributable to non-controlling interests

        The CCHBC Group's profit after tax attributable to non-controlling interests was nil in the year ended 31 December 2013 compared to €3.0 million in the year ended 31 December 2012. The decrease was mainly attributed to the purchase of minority interests in CCHBC Group's subsidiary, CCHBC Bulgaria AD.


Profit after tax attributable to owners of the parent

        Profit after tax attributable to owners of the parent was €221.2 million in the year ended 31 December 2013, as compared to €190.4 million in the year ended 31 December 2012. The increase

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of €30.8 million, or 16.2%, primarily reflects the net impact of increased operating profit that was only partially offset by increased taxes.


Year ended 31 December 2012 compared to the year ended 31 December 2011

        The following table shows certain consolidated income statement and other financial data, as well as the change in percentage terms, for the year ended 31 December 2012 compared to the year ended 31 December 2011.

 
  Year ended 31 December   %  
 
  2012   2011   Change  
 
  (euro in millions
except unit case
volume in millions)

   
 

Net sales revenue

    7,044.7     6,824.3     3.2  

Cost of goods sold

    (4,522.2 )   (4,254.7 )   6.3  
               

Gross profit

    2,522.5     2,569.6     (1.8 )

Operating expenses

    (2,078.1 )   (2,048.2 )   1.5  

Restructuring costs

    (106.7 )   (71.1 )   50.1  

Operating profit

    337.7     450.3     (25.0 )