Thor Erickson - Vice President-Investor Relations John Brock - Chairman & CEO Manik Jhangiani - CFO & SVP Damian Gammell - Chief Operating Officer.

Kevin Grundy - Jefferies Stephen Powers - UBS Bill Schmitz - Deutsche Bank Bonnie Herzog - Wells Fargo Securities Judy Hong - Goldman Sachs Ali Dibadj - Sanford C. Bernstein Caroline Levy - CLSA Pablo Zuanic - SIG Rob Ottenstein - Evercore ISI Mark Swartzberg - Stifel Nicolaus Andrew Holloman - SG.

Good day and welcome to the Coca-Cola Enterprises' First-Half 2016 Conference Call. At the request of Coca-Cola Enterprises, this conference is being recorded for instant replay purposes. At this time, I'd like to turn the conference over to Mr. Thor Erickson, Vice President of Investor Relations. Please go ahead, sir..

Thank you. And thanks to everyone for being on our call today. We appreciate your interest and for joining us to discuss our first half 2016 results and our outlook for 2016. Before we begin, I'd like to remind you of our cautionary statements.

This call will contain forward-looking management comments and other statements reflecting our outlook for future periods.

These comments should be considered in conjunction with the cautionary language contained in this morning's release, as well as the detailed cautionary statements found in our interim financial report which we filed this morning with the UK, US, Dutch and Spanish authorities. A copy of this information is available on our website at www.cokecce.com.

Today's prepared remarks will be made by John Brock, our CEO; and Nik Jhangiani, our CFO. Damian Gammell, our COO is also with us on the call today. Following prepared remarks, we will open the call for your questions.

In order to give as many people as possible the opportunity to ask questions, please limit yourself to one question and we will take follow-up questions if time permits. Now, I'll turn the call over to John Brock..

building shareowner value. So in closing, let me share some key thoughts. First, though the retail environment remains challenging, there are opportunities for meaningful growth in each of our territories. We have a compelling business combination and a clear plan to deliver that growth.

Second, we have seen a return to growth in the third quarter and affirmed our 2016 guidance for mid teens growth in diluted earnings per share. Third, we have a solid strategic partnership with the Coca-Cola Company and a shared vision of the future of our business.

And last, as the leading Coca-Cola bottler and a major European CPG company, Coca-Cola European Partners presents a proven commitment to driving shareowner value, a commitment that was at the very heart of the decision to create this company.

Thanks very much for your time and now I'll turn the call over to Nik for more detail on our financial results as well as our full year outlook. .

delivering increasing levels of shareowner value. Thank you for your time. Now John, Damian and I will be happy to take your questions.

Operator?.

[Operator Instructions] Our first question is from Kevin Grundy with Jefferies. .

Thanks. First question, just to drill down a bit on the guidance. So you talked about some of the one-off factors that hurt the business in the first half. Can you give us an update -- I think, Nik, if I understood you correctly there, are you already up mid-single digits quarter to date through 3Q? If you could just clarify on that.

And then with respect to reaffirming the EPS and OI guidance, is it that productivity and synergies are coming in a bit better despite the fact that the top line has been impacted by the factors that you discussed?.

Nik, go ahead..

Yes sure. So just to clarify, yes we're pretty late into the third quarter.

And what I just indicated was that we would expect modest mid single digit revenue growth in the third quarter and this obviously supports our view in terms of affirming our EPS guidance and operating income guidance and obviously is in line with the revenue growth that we've indicated being flat, reversing the trend being down really in the first half by 1.5%.

And to your point on operating income, as we said the guidance that we had provided was always inclusive of whatever we would see in terms of the synergy benefit which we remain on track to deliver in terms of the €315 million to €340 million.

I won't be able to break out for you today what amount we expect to come through in the second half of the year, because we’re still working through that, and there will be some confrontations, et cetera but we're committed to being able to deliver on those targets by mid 2019. .

Okay, that's helpful. If I could just ask one more. Nik, on cash flow, is there anything more you can give us there for 2016 with respect to cash flow from ops or free cash flow, cash costs you can highlight for us this year and maybe over the next few years? You've indicated CapEx as a percent of sales would be 4% to 5%.

I guess that's the ongoing expectation. Any guidepost you can give us as far as free cash flow conversion getting back to 100%? I think that's the target. Can you lay that timeline out for us? Thanks. .

Yeah, I mean if we look at the conversion, clearly that's going to be coming probably closer to the 2019 period, because we're going to have our restructuring programs that we need to go through and that is going to have a drain on the cash. There are some positives that will offset that but clearly not of that magnitude i.e.

you’ve got some pack NOLs as well as the extra benefits in the US that hopefully will offset some of that but not all the way.

So we’re still targeting to get towards that close to the 100% conversion, it’s probably going to be ’19 and beyond but we'll be able to provide you more details on that over the next months as we continue to lay out all of our programs and look at the timing of some of the accruals and then the cash payout. .

Our next question is from Stephen Powers with UBS. .

Great, thanks. I was hoping we could just get a little bit more color on the Q3 improvement that you called out.

I'm just curious how broad based it's been or if it's focused on any particular markets? And as you talk about that, maybe if you could just highlight any call outs, particularly in Spain and Germany, if you think about Q3 and Q4 in terms of what they may be cycling year over year. .

Let me ask Damian to give some commentary -- color commentary there but I would say the improvement we've seen is across all markets, it's broad based and I think we all have to admit the weather in the second half of the summer for Europe has been much better than the first half which basically didn't exist.

It was a tough -- tough weather summer in the beginning. So that’s made a big difference and it’s broad based but Damian, give a little bit more context. .

Thanks John, thanks Stephen. So as John mentioned we have enjoyed a later summer which obviously affected our second quarter, we're seeing the benefits of that coming in the third quarter.

That's also being supported by a number of marketing initiatives, so we had the euros coming out of Q2 that allowed us to build a lot more displays, inventory and activation in the markets across Europe. We've had the relaunch of zero -- Zero Sugar Coke in GB which is going extremely well, we’re very happy with that.

And broadly across all our markets are seeing the benefits of improved execution at the store level and also some brands performing well, as I mentioned Coke Zero but we’re also seeing energy portfolio continue to hold up well. And our water businesses are doing well.

So it’s a pretty broad based improvement and the good news is as John mentioned it’s across all our markets. .

Thanks. If I could just follow up real quick. Damian, you mentioned energy, and, John, I think you mentioned the rollout of Ultra Zero across your markets going forward. Just any commentary you can give there in terms of the pacing of that rollout, either over time, and then what your expectations of the uptake there by retailers and consumers. .

We've been able to leverage the experience we've had in GB with our energy portfolio, particularly Monster. More recently into markets like Spain and Germany where we've recently taken over the distribution of the Monster franchise. So a key part of that as you highlighted has been the roll of Ultra.

So across all our markets we're seeing a strong uptick of the Ultra format and we're seeing a particularly good business in Germany and Spain as we have been able to leverage the best practice we want to call it that from GB that we've talked a lot about this merger being about being able to take example from one market, migrate it and make it better in another market but I think a real example of that has been what we have been able to do with our energy franchise in Germany in particular and more recently in Spain.

.

Thank you. Our next question is from Bill Schmitz with Deutsche Bank..

Hey, guys, good afternoon. Hey, when does market share start to matter again? I understand there's probably some disruption as the deal got done, and I know you try to down-play some of the Nielsen stuff. But it looks like there's pervasive share losses, at least in carbonated soft drinks in the canned [ph] channel data we look at.

So is that data directionally right, and is there an urgency to reverse that?.

Damian, you want to give a I think a broad based view about how we're seeing market share losses and gains and what we're doing about it, what our perspective is. .

Yeah, it was a bit hard to hear the full question so apologies if I can’t answer everything that was mentioned. But generally on market share, from our perspective we've seen some weakness in GB.

Over a period of time that situation is actually recovering if you look at the latest Nielsen data, we're seeing better share performance out of GB and mainly that was in the Zero sugar or sugar free cola category.

And obviously we feel that the new formula and the new package around Zero Sugars helped to contribute to a stronger performance in GB and across the rest of the markets we continue to hold our share generally in sparkling and in some markets we are actually improving that.

And I think our biggest challenge has been in the GB market and again I think the actions we've taken throughout the summer and going forward are addressing that but it is a focus for us, we don't like to lose share in GB.

Some of that share loss came on the back of very aggressive pricing which we took a good decision not to follow, we believe as it wouldn't be in the right for shareholders or for our retailers and we prefer to address that with a better product and packaging to do at the moment.

So overall in major channels which again we've also talked about, some of our markets accounts for 60% of our total business, and so we want to lead through for a total performance who are generally doing better and away from home but clearly we also focus on growing the category and growing our share and measure them, that’s going to remain a priority for us and when I talk share there, obviously I am talking value shares.

.

And Damian explained that extremely well, I just would add one comment which is if you see us having some slight declines in market share in any of the markets, two things arise, as Damian said, one, it's only reflecting measured channels and two, is generally those are moves that – while we don't like to see market share losses, we’re making a very conscious decisions around value and not chasing price, if competition is going in an area and a direction that doesn't make a lot of sense.

So we're very pleased to see that broadly our share is improving but again I think it's important to recognize most of the kinds of situations you see are ones that we are very actively a part of. .

And then just are you seeing any rebound in on-premise and immediate consumption in France and Belgium, obviously because of the horrible circumstances there was slow but is there coming back at all?.

Those immediate consumption Damian in Belgium. .

I think John and Nik both mentioned it and we’ve had some hopefully one off events in both Belgium and in France at the beginning of the summer which certainly had an impact and if you look at tourism figures and if you look at eating out figures, both of those markets, so for those results, we believe certainly a good weather has come at the right time and people have hopefully moved out.

From that we have seen a pickup in consumption in both of those markets. But obviously it will remain a challenging 2016 for tourism in both France and Belgium given the timing of tragic events but it has improved to the third quarter and obviously it’s welcome not just those of us with the economies of those countries as well. .

Thank you. Our next question is from Bonnie Herzog with Wells Fargo. .

I have a question on your revenue guidance for the year which implies accelerated topline in the second half which you did allude to kind of modest low single digit revenue growth you're expecting in Q3.

So I guess I was hoping you could drill down a bit further on the key topline growth drivers in the second half and then possibly give us a sense of your expectations for price mix and volume. And then maybe even some color on your expectations for these top line drivers in Q3 versus Q4. .

Go ahead, Damian. You’ve talked a bit about some of these value drivers but give a little more color..

So clearly just to reflect on what I said earlier, we have benefit from a late summer in Europe, so that’s certainly been one of the top line drivers of our performance in Q3. We've had a number of strong brand initiatives, again talking mainly about our Zero Sugar Coke relaunch in GB which has gone very well and we're very happy with that.

But across all of our markets since the beginning of the year we've been talking about a number of initiatives.

And obviously they are starting to pay back the evidence for that or fall expansion on the back of Monster on our energy brands and particularly the one in Germany and Spain where we have taken over distribution, whether it’s our ongoing growth with smartwater in GB, we've also just launch Honest Tea into GB which is a brand we're excited about in the think category.

And we've had a number of packaging initiatives. Whether that's from smaller IC pack but also looking at how we can effectively manage our large PET packaging market from a performance perspective, promotions perspective.

But that really applies across all markets, we've had a good experience with our 1.25 liter in Norway which we're very pleased with. So that hopefully gives you a flavor body but it's quite a broad based and revenue growth focus which we've already talked about from category pack and brand. And it's on the back of a very late summer.

So most of our pricing, all of our pricing actually had been in market prior to the summer and we talked about that in earlier calls, so we'd expect those drivers to continue through the rest of the year and that's reflected in the guidance Nik articulated earlier. So hopefully that gives you a bit of a flavor..

Damian, one thing I'd add to that is I think you're seeing your general managers are really doing a terrific job of exchanging best practice -- best practices across the market.

So beyond all the portfolio initially if you just described their number of marketplace execution things that are really beginning to take hold as you look at what's working in Spain in terms of up and down the street and applying that in some of the other markets where you look at the way the German businesses have historically handled this counters and it's expanding that into the other markets.

I think some of the benefits of best practice in marketplace execution really are beginning to take hold and that's a significant part beyond the portfolio that. .

I think one real good example of that John is the Aldi [ph] leasing in Belgium. So we've gone into Aldi with 4 SKUs as an initial listing which generally is not typical for those types of customers and we’ve been able to work across our business, particularly the German team to have leverage insights to help us achieve that.

So a number as I mentioned in the previous call, a number of examples of replication or stealing with pride and leveraging it into the market is happening as we go through the year as well. .

And then I just had one final quick question on Coca-Cola trademark which declined 3.5% in the first half and then in Q2 you did touch on some of the positives like the one brand strategy.

So I'm really trying to understand what's driving the declines -- how much of it is the weakness related to the Britain supply chain disruption? And then maybe give us a sense of what you're doing to improve this trend for the trademark brand?.

So I think if you look at the guidance that we've given for the rest of the year that’s a fair reflection, that obviously doesn’t have any impact on the supply chain challenges that we had in GB which really related to the first part of the year.

So the guidance Nik has given we got to make reflects obviously all our brand’s performance in the second half of the year. On trademark Coke obviously we're particularly happy with the Zero format.

We see also Coke Life and Diet Coke performing slightly better and we see Coke Classic obviously being the more challenged within our cola portfolio but a number of our packaging initiatives and I think the kind of advertising campaign that it just hit Europe this year is certainly helping us to manage that better than we did previously.

But we still see some of those challenges continuing throughout the rest of this year and candidly into 2017. But we are taking steps along with the Coca Cola Company to address that decline and also to continue to diversify our product range. Not just within cola but across labels and other NCDs.

So that all kind of ends up leading to the guidance that Nik talked about. So better performance but candidly we still recognize the challenge we have around the brand. .

Our next question comes from Judy Hong with Goldman Sachs. .

Thank you. Hi, everyone. So the first question is on just drilling down into Germany. It looks like volume was up but price mix was down 2% or 3%, and I know you had called out some packaging changes there.

So can you elaborate on what's going on with that change and when we start to lap that change in that market? And then, Nik, just on the commodity side, obviously you've been seeing pricing coming ahead of cost per case.

And just wanted to get a sense of how that looks going forward with sugar prices potentially coming up, how much are you hedged on that front? And any color just on the broader commodity view. .

Damian, why don’t you take the first one and Nik, the second?.

Yes, thank you, Judy. As you know we have been going through a number of packaging change initiatives within Germany primarily from refillable packaging into more consumer friendly one-way packaging.

That affects our net sales lines predominantly because most of, if not all of one way packaging goes straight into central warehouse, Judy, in Germany and that is reflected obviously within the net sales number as the customer covers the bulk of the logistics costs.

Refillable clearly has traditionally gone through our operations, so the expenses related with logistics were below the net sales line.

So as we continue to migrate out of refillable into one way, and we’re doing that in a very conscious fashion because there is a strong consumer franchise particularly for the one liter refillable pack in Germany in the crate which is a fantastic pack.

But at the moment 1.5 liter and 0.5 liter now are being migrated to one way, and you're seeing that impact on the net sales line. And that's really the biggest impact within Germany on the revenue line. So hopefully that has explained that.

Nik?.

Yes, on commodities, Judy, obviously as you said we’ve seen that continue to trend favourably for us for 2016 particularly as we had our PET exposures open and that benefitted some. So if we look into ’17 the first point I would make to you is that you referred to sugar in particular, the only place where we buy sugar on the world market is Norway.

So that’s a very small part of it and as you realize the EU sugar regime is being changed, dismantled towards the end of 2017, we will have to see how that plays out, but it’s early days. Probably on commodities we're not necessarily seeing anything outlandish or moving up significantly at this point. I wouldn't be able to guide you on that.

Again keep in mind commodities is that circa 30% of our COGS and there’s other elements including concentrated manufacturing efficiencies et cetera that we will be driving through. So we will provide you more color on our next call for 2017, probably towards the end of the year. .

Nik, just a quick follow-up on the tax rate. So year-to-date pro forma, it looks like it's trending at the low end of the 24% to 26% long-term guidance. So wanted to just get a sense of if that's what you're expecting for the full year. And I think if I heard you correctly, I think this year you were commenting on 24% to 28%.

Or is it still 24% to 26% for the full year, and potentially at the low end, just given where we are year to date?.

So 24% to 26%, not 28%, just to clarify and that's our guidance. I wouldn't be able to say anything more towards that. It’s always impacted by timing of profit and lead of counties et cetera. .

Thank you. Our next question comes from Ali Dibadj with Bernstein..

Hey, guys. A couple things. One is, I wanted to ask a little bit more about the change in the COGS trajectory though, especially given, Nik, what you just said about commodities is not changing much. Because it looks like it was negative 1% per case in H1, and plus 1% per case in Q2, gross margins up 40 basis points H1, negative 70 basis points Q2.

So I know you've talked about a couple drivers, but can you be a little bit more specific about what happened and what you think keeps that benefit going forward from a COGS perspective? And in that, Damian, you talked about Germany recyclable's versus returnables from a top line perspective.

Can you talk about it from a cost perspective as well? I understand the short-term costs, but can you articulate and ideally quantify the longer-term benefits? What are the things it doesn't allow you to do? You mentioned a route to market change in Germany, some more detail would be great on those. Thanks. .

Maybe I will take the last question first, Ali and then Nik will come in. So we've seen -- obviously over a number of years we've seen one way packaging formats growing in Germany. There are clearly a number of benefits.

I won't quantify them so basically disappoint you, of course but clearly from a marketing perspective it allows us to vary pack sizes and it allows us doing a lot more promotional activity. And it allows us to collaborate better with consumers as we can go through their logistics network which is clearly something they prefer.

And it allows us to offer a variety of different pack sizes and one of the areas that we're very focused on in Europe not just in Germany is having a broader base packaging offering particularly our Coke Classic.

And so you will continue to see first launch different pack sizes to make sure we're appealing to folder range of consumers and that will both be in cans, obviously which are traditionally and always one way, but also within PETs. So it's really flexibility, there are downstream benefits, it is a simpler supply chain.

It allows us to blow in-house our bottles so you go straight from PET resin right to filling, obviously with refillable to shipping a lot of empty bottles around the crates, you've got to wash them, you've got to put them back to the supply chain. So it is a simplified supply chain that brings benefits.

And obviously productivity on a one way line is significantly higher than our refillable line and again that's just a process, you strip out a lot of sorting, strip out a lot of washing. So there are multiple benefits.

Starting with the consumer working back into our supply chain we are very focused on sustainability and in markets like Germany we get nearly one hundred percent of our PET bottles packed regardless whether they are refillable or not and they are then recycled and put back into the supply chain.

So there is no downside from the sustainability perspective. Arguably you use less water so you could argue there are some benefits. So long answer but clearly we've thought long and hard over a number of years about the migration in Germany.

It started a number of years ago, we're not at the end but certainly we’re probably two thirds of the way through it. Is that clarified? I will ask Nik to talk about -- I think your question was around margin expansion. Maybe you could repeat it – we typically hear the beginning of the –.

Sorry. So it's about COGS in particular, and especially given what you said about commodities not changing very much. It looked like from H1 it was negative 1% per case impact COGS change, and Q2 it looked like it was plus 1% COGS. So a reversal of the benefits. And if it's not commodities, I'm trying to figure out what that is.

Maybe it's Germany route changes, maybe it's something else. But I want to get an understanding of that as you go forward. .

Ali, I am still not clear.

I understand you talk about what we've indicated in terms of H1 being down 1% in COGS per case and you’re saying that’s reversing in H2?.

In Q2, yes. Looks like it's reversing in Q2 or it got worse.

Is that not right?.

So Ali if you remember from what I said on my prepared remarks, we did have some benefits that came through in 2015 in Germany in particular. That came from both route to market changes as well as some sugar contracts. So it's more just the timing and when they flow through as opposed to anything else..

So it's that, okay. And then if I can switch just for a moment to revenues. I get – I get that the volumes from weather are going to get better. I get it's market share tradeoff that you have to deal with.

But as you think longer term, do you need positive price mix to grow your top line? And if so, I think the answer is yes, but if so, what are some of the hurdles? And I guess some are in your control, pack sizes, this type of stuff, some are out your control, whether it be macro, whether it be retailer, and when do you think you'll be able to say look, consistently we can raise price mix in this industry if you're not already there?.

The simple answer to the question is absolutely. We have to and Nik you can add a little more color to that, but for sure we plan to do that and can do that. .

And quite honestly Ali that’s our algorithm, at the end of the day when we’re looking at modest low single digit growth or low single digit growth going forward on the revenue basis we continue to ramp up our efforts.

A lot of the things that Damian talked about be it innovation, be it looking at brands that are out there, looking more closely at our tax strategies, this is going to be a lot of rounds pricing mix that we need to achieve and primarily a lot of mix as well. So that's what we will be focusing on. .

The fact is it's difficult to get pricing in Europe, we understand that in a number of our markets but we have broadly been able to do that and anticipate going forward. I mean it's all about the value added equation that we bring to our customers. And we sit down with them and go through it, it’s challenging.

But it's doable and it's absolutely a part of our strategy going forward. .

Just a final commentary, I think the benefit’s not just through the merger but clearly we are now a business with a bigger portfolio of markets but also products and brands.

So when you look at how we want to manage top line growth obviously on realistic level we will leverage volume price and mix but in certain categories where we have either low share or volume playing a bigger role, in other categories it may be more a mix and price, so we're very focused on managing that equation brand by brand rather than on a generic holistic level because one of the benefits of the portfolio is it allows us to do that in market by brand, I mean in cases by customer and channels.

So it's something we're very focused on and we spend a lot of time making the right decisions around volume and package price mix. .

Thank you. Our next question is from Caroline Levy with CLSA. .

Good morning, everyone. Thank you. Hate to be bringing this one up, but I think it's really important for just to ask for an update on sugar tax regulation as you see it in Great Britain.

Is there this chance do you think that the planned increase in a couple of years actually doesn't happen, and if there's anywhere else in other countries where we should be aware of any things going on? And then to ask you if you think the Coke trademark declines have to do with the consumer -- a growing negative opinion about sugar or if you think it's something else.

.

Hi Caroline, let me make a comment about the Europe in general and that is we’re remaining very vigilant and monitoring what's going on in the world of taxes around our markets, and while there are often conversations and discussions, and rumors about other taxes that could be forthcoming, there are none that are immediate out there.

The principal issue is GB, where there is as you noticed the course on the table, we're just beginning some serious conversations and of course it doesn't take place until 2018 but Damian, you want to add a bit more perspective to that, the issues and the approach we're taking with the Coca Cola Company on this important issue. .

I think we're obviously working on this issue hand in hand with the Coca-Cola Company but also with the rest of the industries. So clearly this tax goes just beyond Coca-Cola or CCEP.

So we have a very active dialogue with the trade around also with retailers because clearly they're affected, all these retailers and also suppliers, and obviously we are taking that into computation with the government and trying to understand how we can help them understand not just air concerns but also why we don't think it's going to work.

And so as you said it's a very active debate at the moment, it's led by the trade not just by us, we think that's critically important because there's a broader issue than just Coca-Cola.

And is it affecting trademark Coke’s performance? I think choice has always been a factor and I think we’re continuing to make choices around beverages, that I think that was the case before this taxes announcement and it’s the case afterwards. I think our challenge is to make sure when they make choices that they choose one of our brands.

That’s what we are focused on. And also they understand the benefits of Coca-Cola which I think the Karma Campaign is bringing more relevance to why having a Coke tastes great. And we're going to continue to do both with the Coke company.

So I'm working on a number of fronts around that issue and as things become clear obviously we will communicate as appropriate. .

Thank you. Our next question is from Pablo Zuanic with SIG..

Thank you. Just, Nik, a question for you. When I think about the synergies of €315 million to €340 million, what assumption just of how much of that will flow to the bottom line embedded into your medium-term EPS growth guidance? I'm getting it's about half, but if you can confirm that.

And related to this, in terms of the guidance for growth in mid-single digits for this year, what assumption about synergy realization there? Is that something that really starts in 2017, or can you capture, some of that in the second half?.

Pablo, on the first question we have indicated and continue to hold the position that €315 million to €340 million of synergies that we have committed to will be delivered to the bottom line.

I'm not sure where your assumption of half of that points of bottom line is coming from but we have always maintained that that will all fall to the bottom line. On your question in relation to the timing of when they would start, we would see some synergies come through in the second half of 2016.

And as I said we're only counting synergies that are coming through post the close of the transaction towards that 315 million to 340 million, I would not be able to give you a number today of what you'd expect to see in 2016 but that is included in our modest mid single digit range of OI growth for 2015..

Thank you. And can I just ask a quick follow up on Germany? Not to harp too much on the second quarter, which I understand there's the moving parts and one-offs. But when we look at what happened in the other markets, France, Spain, it sounds like Germany was up around 4%.

Is that number the underlying number, or is there a distortion there on that growth because of the packaging changes? And related to that, when you're shifting from these refillables or returnables into more one way, in terms of per liter is that no term [ph] to EBIT per liter or is there an effect there? Thank you. .

So I'm not sure what the 4% you're referring to is –.

My point is that when we tried to decipher the volume growth for the individual markets and to reconcile with your minus 1% for the second quarter, I work out that Germany must have been up about 4% in terms of volumes. Correct me if I'm wrong.

But the bigger question is given that Germany was the market that did the best in the second quarter in terms of volume growth, I want to get an idea what was the number, was it around 4%.

And was that number the underlying growth number, or was that distorted because of a packaging shift that you've talked about?.

So firstly, just to be clear while we have not given volume by country you have revenue by country listed in our press release and you can see that Germany was down 0.5% for the second quarter on revenue and also down 0.5% for the six months.

So I'm not sure where that 4% number is coming from in terms of your calculation, so you might want to just take a look at that. .

In terms of the package change just to clarify there is a transitional impact on the move on the MSO line, as I talked about as you move some of your costs above that, because the retailers take the logistics. So that's a factor the number for Germany. On an overall net net level we continue to see the move to one way being beneficial.

And for lot of the reasons I talked about earlier, I think Thor is happy to follow up with you just to understand that 4% question in a bit more detail. .

Thank you. Our next question comes from Rob Ottenstein with Evercore. .

Great, thank you very much.

Realizing that it's very early days in terms of the integration, can you give us any kind of granularity in terms of what you're seeing positive and negative on the integration efforts? And any kind of assurances that the issues that you're having in GB or other sorts of issues like that won't come up through the integration process as you try to you align the various systems?.

Let me just say we've had a team at work some 70 people or so on a full time basis really since we announced the transaction over a year ago as part of the integration management office led by Victor Rufart and they have done a phenomenal job in putting together all of the programs around how to integrate the businesses.

So when we closed on the transaction on May 28, we were ready to go and since then the teams have continued to roll out all the plans and programs to the business units, the business units as well as the functions all know exactly who's in charge of which different program. And they're often running exactly as we expected.

Our view, our confidence in the synergy numbers is higher than ever and we continue to reiterate those and in terms of specific with systems the issue we had in Great Britain clearly was not an integration issue at all. It was a very specific issue dealing with supply chain and software implementation there.

It is now behind us and as we look at systems integration across the whole we don't anticipate any significant issues. There are some projects that have to be done but we think they’re well under control and will continue to roll out in line with what our expectations are. .

So what I'm hearing is that you're pretty confident -- I have a lot of confidence you're going to get the synergy number and bring it to the bottom line. My only concern and it seems that it's been taken care of, is that your actions that you're doing won't have a significant impact on the top line delivery. .

That's certainly our intention. I mean obviously some of the things we're doing have significant change management programs as part of them. But we think we're in a pretty good place to do that.

We think we know what we’re doing and we have all three former business units very committed to working as a team with a combined culture to go make things happen. So we think we've taken the right steps to mitigate the risk. .

Just to add to that, John, I think we are also working on a new level of collaboration with the Coca Cola Company around that revenue growth objective which is clearly their number one priority as well and that's helping us retain a very crystal clear focus on growing our top line across all the countries, the joint business planning which is well underway for 2017 already.

So it's also a big factor in where we are today. .

Thank you. Our next question is from Mark Swartzberg with Stifel Nicolaus..

Thank you. Good morning, gentlemen. Two questions. One on Germany, one on Iberia. Damian, on Germany, at least from where I sit, it seems like there's a big opportunity for aluminum CSDs now that the infrastructure is there to recycle and I know that historically it's been an area of challenge because of taxation.

But when I then see this emphasis on recyclable PET, it just makes me think that is indeed an opportunity you see of size in that particular market.

So a simple binary question, do you think that's a large opportunity? And then on Iberia, could you give us some perspective both category and competitive? I believe you had 3% revenue growth in Iberia in 2015, 1.5% here in the first half, so some perspective on that slowdown.

I've heard what you said about weather, but looking for some added color there. .

Thanks Mark.

So on Germany you are absolutely right, particularly for us as a system cans were not -- we could use within Germany for many years due to the regulation that came in place and the speed at which the retailers and the industry got the recycling system up and running, that’s now behind us and for a number of years now and we have seen cans growing in our mix and actually more recently you've seen us selling cans to [indiscernible] which is a major industry in terms of what’s been added for a very good pack at a very good price and retailers may represent nearly 505 of the market.

So that will continue and pack in terms of size and logistics, and it’s been more of the fastest growing packs for the last couple of years in Germany. On Iberia I think the weather comment, also as you mentioned reflects on Iberia we had a late summer in Iberia.

Overall benefiting throughout the summer and into the third quarter with record tourism numbers in Iberia, so we've seen the tourism market holding well there and we’ve seen again a late summer, so that makes us pretty happy with our Iberia performance on top of the number of very strong years of growth.

So obviously comps in Iberia are somewhat different, I mean they’ve had a couple of years of strong growth. So that’s where we are at with Iberia..

Keep in mind just to add that, the 3% that you referenced to for 2015 as a full year number, and they had a very strong third quarter particularly July with terrific weather there last year. So we will be cycling that as we go into Q3, for Iberia, just to keep that in mind..

And a follow up on the Germany comment.

Aldi Lidl, when did that happen and I presume other retailers you see similar opportunity to make those introductions?.

That’s already happened. .

I know. But when did it happen? I'm trying to get a sense if it was recent or two years ago, just trying to get a sense of –.

It's been happening periodically over the last four years. .

Okay, so it's not a big change. .

These cans have come at the end of the cycle because they were obviously more challenging but they are now existing cans as well. So discounters within the last twelve to eighteen months, the rest of the market it’s been there for quite a while. .

And our last question is from Andrew Holloman with SG..

Hi, thanks for taking the question. Two just very brief ones, mainly aimed at Nik. Just on your indication of purchase price allocation, €36 million annualized. Can I just confirm you're going to treat that as a normal depreciation expense, you're not going to include that as an exceptional? That's my first question.

My second one is you've twice said you're not yet in a position to give any update I guess on the timing of synergies.

When will you know the phasing of synergies, and when you know, will you tell us?.

I will definitely tell you guys, we will definitely tell you guys when we know it. But keep in mind we have to go through consultation periods there and essentially depending on the timing and phasing – timing and phasing will be impacted by that.

So I would say to you we’ll probably have some indication towards the end of the year in terms of what does that look like particularly when we get into 2017. So that’s the first piece.

In terms of your first question in relation to depreciation, yes, and just to give you a little more color when we had to do our very preliminary PPA, as a part of the perspective and reporting the financials we had expected based on asset value and some write-offs et cetera of €41 million favorable depreciation versus historic numbers having now looked at it and we looked at some of the step up in value et cetera that that favourability has now become 5 million and hence you got that delta of 36 which goes into your base and is not an exceptional item going forward.

So that’s in our base numbers for’15 against which will be comparing ourselves going forward. .

So that obviously affects the pro forma if we're doing your numbers on a statutory basis, then that's an incremental number on an annualized basis?.

Correct. And that's what we just indicated, we restated the pro formas for ’15 to make sure that’s reflective of what was appropriate. Again that’s pro formas we’re kind of indicating our view of what that number looks like for CCEP now going forward. End of Q&A.

Thank you. Let me just close then by saying thank you to all of you for joining us today. We appreciate the opportunity to tell you about CCEP and have a great day. Thank you. .

Ladies and gentlemen this concludes today’s conference. Thanks for your participation and have a wonderful day..