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ADDITIONAL INFORMATION
ABOUT OUR ACTIVITIES

CORPORATE GOVERNANCE
Additional Information About Our Activities

Additional Information About Our Activities

The main factors affecting the company performance, significant changes in the environment, policies employed by the company against these changes, the investment and dividend policy employed by the company to boost its performance
The main factors affecting the company performance, significant changes in the environment and policies employed by CCI against these changes are addressed throughout the entire Integrated Annual Report, mainly in Financial Performance Assessment and Principles on Presentation of Financial Charts sections.
Being an growth-oriented company, CCI considers a number of factors in its investments, such as an internal yield rate which is equal to or higher than a certain rate, a repayment period which is usually limited to a certain time depending on the investment, and are turn on invested capital (ROIC) which is higher than the weighted average cost of capital (WACC). In addition to this, Company’s medium- and long-term strategic targets are also evaluated through feasibility studies performed across CCI, which operates in a wide geography, using macroeconomic and demographic indicators. Principles regarding Company’s Profit Distribution, Compensation & Human Resources and Risk Management policies are detailed in the Additional Information on Corporate Governance section.
Company’s financing sources and risk management policies
In oder to finance its investments, CCI uses long-term foreign-currency loans (USD and EUR) from Turkish and foreign banks in addition to the cash and capital created as well as long-term funds from domestic and foreign investors through issuance of Eurobonds and dedicated revenue bonds. Moreover, CCI has along and strong credit relationshipin Central Asia and Pakistan with multilateral development banks, such as the European Bank of Development and Restructuring and the International Finance Corporation.
Group risks are assessed, managed and reported by the “Early Risk Detection Committee” established in accordance with the Turkish Commercial Code, Capital Market Legislation and the Corporate Governance Principles supervised by the CMB.

In addition to the unfavorable operational setting as well as the uncertainty brought by the COVID-19 pandemic, which has been affecting the entire world since the beginning of 2020, some of the priority risks identified by the Group include the instability and security of international policies, currency risks, corporate risks/brand reputation risks, economic fluctuation, legal restrictions and taxes, water management, sustainability and environmental impact of packaging, the shift in channel structure and changing consumer preferences, talent management and development, cybersecurity, environmental risks such as energy efficiency and climate change, economic recession, legal and regulatory risks, and industrial relations.
Legal changes or regulations stipulated by regulatory authorities are not expected to impose a significant impact on Group’s performance or result in legal disputes that would jeopardize the existence or sustainability of the Group.
Financial risks
Main financial instruments of the Group consist of bank loans, issued bonds, cash and short-term deposits. The main purpose of these financial instruments is to finance the business activities executed by the Group. The Group also has other financial instruments, such as trade liabilities and trade receivables as a direct result of its business activities.

The main risks associated with Group financial instruments are interest risks, liquidity risks, foreign currency risks and credit risks. Polices on management of the following risks are reviewed and approved by the Group management and the Board of Directors. The Group also takes the market value risks associated with all financial instruments into account.
(a) Capital management
For capital management, the Group aims to maintain an optimal capital structure in order to provide benefits for partners and reduce the cost of capital, as well as ensuring the sustainability of Corporate activities.

The Group manages and adjusts the capital structure by taking the economic changes into account. In order to regulate and maintain the capital structure, the Group may, if it deems appropriate, determine the amount of dividends payable to shareholders, issue new shares or return the capital to shareholders and sell assets to reduce borrowing.
(b) Interest rate risk
The Group is exposed to an interest risk arising from the impact of the changes in interest rates applicable to assets and liabilities that are subject to interest rates. The Group manages this risk by trying to balance the interest rates applicable to its assets and liabilities, or by modifying the fixed/variable interest weight in its portfolio according to market conditions, if it deems necessary.

Some of the interest rates associated with financial liability are based on the interest rates applicable in the market. Therefore, the Group is affected by changes in interest rates in national and international markets. The Group’s exposure to the market risk caused by changes in interest rates is primarily associated with debt obligations.
(c) Foreign currency risk
The Group is exposed to foreign currency risks arising from its transactions. These risks arise from Group’s buying and selling transactions made in currencies other than its functional currency, borrowing initiatives, use of bank loans and holding of time deposits/call deposits.

The Group manages foreign currency risks by trying to balance its foreign currency assets and liabilities as well as using derivative transactions.

In assets and liabilities management, the weight of strategic foreign currencies may be subject to tactical changes according to market dynamics.
(d) Credit risk
Credit risk is the risk of financial damage that one party is exposed to as a result of the inability of the other party in a mutual relationship to fulfill its obligations in terms of a financial purpose. The Group’s financial instruments that may be subject to a significant credit risk concentration primarily consist of cash and cash equivalents, as well as trade receivables. The financial charts clearly disclose the maximum credit risk that the Group may be exposed to.

The Group holds cash and cash equivalents in a number of reputable financial institutions. The Group manages this risk by constantly evaluating the reliability status of all financial institutions with which it has contact. Credit risk that may arise from trade receivables is limited due to the high volume of customers and a restriction in the amount of loans issued to customers by the Group Management. The Group usually requires collateral to increase the amount of loans issued to its customers, excluding the distributors.
(e) Liquidity risk
Liquidity risk is defined as the risk of becoming unable to meet funding needs as a company.

The Group aims to ensure the durability and volatility of cash inputs through short-term and long-term bank loans, issued bonds, cash and short-term deposit management.
(f) Commodity price risk
The Group is subject to the impact of price changes in certain commodities such as sugar, aluminum and resin. Company operations require a constant purchase of these commodities, therefore a number of risk strategies are implemented by the Company management in order to handle the commodity price risk.

In accordance with the relevant laws and legislation applicable to country operations, the Company engages in derivative transactions directly with suppliers or with financial institutions based on estimated purchase of packaging, sugar and resin for a period of 12-24 months in order to protect itself from commodity price risks.
Research and development activities
Research and development activities are conducted by The Coca-Cola Company (TCCC) and CCI leverages the know-how and expertise from TCCC.
Changes in the Articles of Association during the year and the rationale
Pursuant to the decision by the Company Board of Directors on March 25, 2021, it has been decided to amend the Article 8.2 of the Company Articles of Association, titled “Board of Directors Meetings”, to allow the Board of Directors to hold meetings in electronic environment in accordance with the Article 1527 of the Turkish Commercial Code No. 6102. This decision was approved at the General Assembly held on April 29, 2021.
Nature and amount of capital market instruments issued, if any
No capital market instruments have been issued during the year.
Characteristics of business production units, capacity utilization rates and their improvement, overall capacity utilization rate, developments in the production of goods and services in the field of activity, statements comparing quantity, quality, release and prices to historical figures
Annual production capacity calculations are performed using the standard formula specified by TCCC for all bottlers. Calculations account for the capacity utilization rates (CUR) in plants during the peak season. The maximum number of producible unit cases is established by considering the hourly speed of the production lines in the plants and the allocated number of packages in production per plant. Since the volume of sales and package allocation will vary each year, the annual capacity yield may also vary, even if the number of lines stay the same.
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Potential measures to improve the financial structure of the business
In addition to using long-term loans to fund investments, the Company also uses short- and medium-term loans to fund its working capital. CCI’s priorities consist of diversifying funding resources in order to ensure a financing structure with optimum health, planning the most sensible payment terms according to the purpose of borrowing, diversifying currencies to reduce the currency risk,and closely monitoring markets with constant communication with financial institutions.
Employee and worker movements, collective agreements, rights and benefits offered to employees and workers
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About the Collective Labor Agreement
Negotiations between Coca-Cola İçecek and Tek-Gıda Trade Union on a labor agreement has resulted in a mutual agreement on September 9,2020, as outlined below. The term of the agreement is from 01.01.2020 to 31.12.2021.

According to the agreement;
  • For the first year of the Collective Labor Agreement, the wage increase for union members is a gross amount of 995 TL per month, starting from 01.01.2022. For the second year of the Agreement, gross monthly wages will be increased by CPI + 3%.
  • The annual benefits package will be increased by 16% for the first year, and according to the CPI for the second year.
Information on donations
As defined in the Company Articles of Association, a portion of the pretax profit is allocated to making a donation to Anadolu Foundation for Education and Social Assistance plus a second foundation to be determined by the majority of Group B shares. Established in 1979, Anadolu Foundation for Education and Social Assistance supports education, health and social assistance with more than 50 projects completed to date, including donations to hospitals, health care centers, construction and repair of various buildings for educational institutions as well as construction of sports complexes.

An amount of 18,076,650 TL was donated to Anadolu Foundation for Education and Social Assistance in 2021,as defined in the Article 15 of our Articles of Association. In addition to this, an amount of 1,311,146 TL was also donated to other public-benefit organizations and tax-exempt foundations.
Information about the existence of noncentral organizations
Operating in 11 different countries, CCI has its HQ located in İstanbul. The company has a total of 30 production facilities across all countries of operation, with the exception of Syria. The corresponding shareholding table is available on page 154.
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Clarification on main elements of the Group’s internal audit and risk management systems regarding the preparation process for consolidated financial charts
The Internal Audit Department operates within CCI and conducts audits on all consolidated companies and functions at periodic intervals each year. Department’s business plan is approved by the Audit Committee on an annual basis and revised in accordance with the current events during the year. In all CCI companies subject to consolidation, internal audit is performed according to the standards published by the Institute of Internal Auditors.
Information on conflicts of interest between the Company and institutions providing services such as investment consultancy and rating, and measures taken by the Company to prevent such conflicts of interest:
No conflicts of interest have been raised during the activity year. While outsourcing services such as investment consultancy and rating, we comply with all legislative provisions, including CMB legislation, and take maximum care to avoid any situation that can lead to a conflict of interest by using specifically designed internal procedures and reporting mechanisms and carefully selecting the institutions.
Affiliation Report Results Section
According to the statements and evaluations made in the Affiliation Report for Group Companies as approved by the Coca-Cola İçecekA.Ş. Board of Directors;
There were no transactions undertaken by Coca-Cola İçecek A.Ş. through the controlling company as well as its affiliates under the influence of the controlling company with the intention of obtaining results that will only benefit the controlling company or an affiliated company and no measures were taken or avoided for the sole benefit of the controlling company or an affiliated company and for all transactions made with the controlling company and its affiliates in 2021, a suitable counter-performance was provided in each transaction in accordance with the conditions known to us in order to ensure competitive operation in the current market conditions at the time of such transaction and Coca-Cola İçecek A.Ş. did not take or avoid any measures in away that might harm the company in favor of the controlling company or its affiliates and it was concluded that no actions or measures exist which would require settlement in this context.
Other
The Company does not have its own shares acquired during the year. The Company has not gone through any private audits during the financial year however it has undergone a number of public audits to the extent required by the applicable regulations. There are no lawsuits filed against the Company as of December 31, 2021 which may affect Company’s financial position or activities.
There are no significant administrative or judicial sanctions imposed on either the Company or the members of the Board of Directors arising from non-compliant conduct.No report has been requested that is prepared upon a request from one of the managing body members as stipulated in the fourth paragraph of Article 199 of the Turkish Commercial Code. Decisions taken at the general assembly have been fulfilled. No emergency general assembly meetings have been called during the financial year.

The Company’s financial position is strong and it is not likely that the capital would become unrequited or the Company would go into debt. No legislative changes have occurred in 2021 that could significantly affect Company activities.