2009 Shareholder Review - Coca-Cola Amatil

SHAREHOLDERREVIEW2009

570.6580.5653.1713.8787.3EARNINGS BEFOREINTEREST & TAX$A million10.3%INCREASE IN EBIT 105 06 07 08 09$A million320.5323.5366.3404.3449.005 06 07 08 09NET PROFIT11.1%INCREASE INNET PROFIT 1percent (%)17.516.319.022.424.005 06 07 08 09RETURN ON AVERAGECAPITAL EMPLOYED24.0%INCREASE IN ROCEOF 1.6 POINTS 12cents per share31.532.535.539.043.505 06 07 08 09DIVIDENDS PER SHARE11.5%INCREASE IN DIVIDENDSPER SHARE1. Before significant items.

DEARSHAREHOLDER,2009 was another successful year for Coca-Cola Amatil (CCA)in which the Company achieved a record profit resultin challenging trading conditions.The significant investments made by the Company overthe last three years in production capacity, operationalcapability and cold drink coolers, as well as successful newproduct launches and innovative new packaging, continuesto distinguish the performance of CCA from its food andbeverage peer group.THE HIGHLIGHTS OF THERESULT INCLUDED STRONGPERFORMANCES BY THEAUSTRALIAN, INDONESIAN &PNG BEVERAGE BUSINESSESAND STRONG EARNINGSGROWTH OF MORE THAN 20%FROM THE FOOD & SERVICESDIVISION.The Australian beverage business result was driven bysuccessful new product and package innovation, increasedcold drink availability and higher levels of customer service,while in Indonesia the continued growth in higher valueone-way packs (PET bottles and aluminium cans) helped thebusiness deliver strong volume, revenue and earnings growth.The decision to maintain CCA’s up-weighted capitalinvestment program through the global financial crisis in orderto reduce operating costs and materially improve customerservice levels has again provided the platform for increasedbusiness, leading to higher returns for CCA’s shareholders.CCA’s strong earnings performance is confirmation that theCompany’s organic growth strategy is on track and thatdemand for our products remains robust.The Company will continue to innovate, expand its premiumbrand portfolio and to increase product availability. In doingso, CCA will aim to further extend its market-leading positionin each of its markets, by refreshing, hydrating and energisingits consumers – all day, every day.Terry J. DavisGroup Managing Director3

YEAR INREVIEWIN 2009, CCA DELIVERED A RECORD NET PROFITAFTER TAX OF $449.0 MILLION, AN INCREASEOF $44.7 MILLION OR 11.1% ON 2008 1 . FORTHE PAST FIVE YEARS, CCA HAS DELIVEREDAVERAGE GROWTH IN NET PROFIT AFTER TAXOF 10.4% PER ANNUM 1 , WHILE EARNINGS PERSHARE HAS INCREASED BY AN AVERAGE OF9.2% PER ANNUM 1 .Improved pricing and product mix, successful new productlaunches and the continued realisation of cost savings andcustomer service improvements from CCA’s major infrastructureand supply chain capital investment program, “Project Zero”,all contributed to the record result.The strong operating performance has enabled theBoard to increase the final dividend from 22.0 cents to25.0 cents per share fully franked, representing an increaseof 13.6%. For the full year, the total fully franked dividend was43.5 cents a share, an 11.5% increase on 2008, representing apayout ratio of 72.3% of net profit 1 .1. Before significant items.4

2009 BUSINESS PRIORITIESIN 2009, CCA CONTINUED TO DELIVER ON ITSKEY BUSINESS PRIORITIES. THESE WERE AS FOLLOWS:To continue to grow CCA’s shareof non-alcoholic beverages ineach of its marketsInnovation in new products remainsa fundamental part of CCA’s businessmodel and further extends theCompany’s market leadership innon-alcoholic beverages andstrengthens its relationship with itscustomers. 2009 was another yearof successful new product launches.In Australia, Mother energy drinkmore than doubled in size due tocontinued strong single-serve growthand the successful launch of MotherSurge in July, while Goulburn Valleyflavoured milk was also successfullylaunched on the east coast ofAustralia in September.To accelerate CCA’s cold drinkcooler placement program inorder to grow share of the colddrink marketCCA spent over $113 million, orapproximately 36% of total Groupcapital expenditure, on cold drinkcoolers in 2009 in order to increasethe availability of higher margin,single-serve beverages. In Indonesia,for example, higher demand forone-way packs supported byaccelerated cold drink coolerplacement resulted in strong volumegrowth of over 30% in the modernfood store channel and an increasein cold drink shelf space in Indonesiaby almost 30%.To deliver significant cost savingsand efficiency gains through“Project Zero”CCA’s major infrastructure capitalinvestment program, Project Zero,continued to deliver on its costsavings and customer serviceimprovement targets in 2009.Major projects completed duringthe year included the EasternCreek automated distributioncentre in NSW, as well as variousmanufacturing efficiency projectsin Australia and New Zealand.Cost savings from Project Zerodelivered 22% of Australia’s 2009earnings growth.To step-change CCA’s technologyoperating platform through thesuccessful delivery of “ProjectOAisys”The second phase of Project OAisys(One Amatil Information System)was successfully delivered inAustralia with the implementationof key systems including finance,human resources, call centre,equipment service, payroll anddemand planning systems. Inaddition, CCA’s major AustralianSupply Chain manufacturing anddistribution execution systems wentlive during August without anynegative impact on customer servicelevels. The OAisys technologyplatform is already providingsignificantly enhanced internal andexternal customer service capability.To continue to rapidly grow theIndonesian businessIn Indonesia, capital expenditurewas directed toward the completionof a number of major capacity andinfrastructure projects includingnew production lines for aluminiumcans and PET bottles and a plantin Jakarta for the self-manufactureof carbon dioxide, as well asthe continued roll-out of colddrink coolers and ice chests. Theexpansion of the brand portfoliocontinued to deliver strong marketshare gains in both carbonated andnon-carbonated beverages, with thehighlight for the year being the verystrong volume growth of over25% in non-carbonated beverages,led by Frestea and Minute MaidPulpy Orange Juice.To increase CCA’s market sharein premium beer in Australia andNew ZealandPacific Beverages continued to investin building its brands and growingits market share of the Australianand New Zealand premium alcoholicbeverages market. Pacific Beverages’beer brands delivered strong volumegrowth of almost 50% and nowaccount for over 9% of the Australianpremium packaged beer market byvolume and value. Pacific Beverages’annual volume growth rate is nowthree times that of the Australianpremium beer market. The newBluetongue Brewery in NSW is dueto be commissioned during Mayand will provide Pacific Beverageswith a significant increase in localproduction capacity and capability fordraught and packaged beer.5

2009 OPERATIONSREVIEWCCA DELIVERED EARNINGS BEFORE INTEREST AND TAX (EBIT)OF $787.3 MILLION, AN INCREASE OF $73.5 MILLION, OR10.3% 1 , ON 2008 WHILE CCA’S RETURN ON AVERAGE CAPITALEMPLOYED (ROCE) CONTINUED TO IMPROVE, INCREASINGFROM 22.4% IN 2008 TO 24.0% 1 .9.5%INCREASEAUSTRALIAN EBITAUSTRALIA delivered a recordresult with full year EBIT growth of9.5% to $549.9 million on strongvolume growth of 3.3%. Thebusiness continued to benefit fromsuccessful new product and packageinnovation, increased availabilityand higher levels of customerservice. CCA’s premium alcoholicbeverages business, together withthe cost savings from Project Zero,contributed over 30% of Australia’sfull year earnings growth.NEW ZEALAND & FIJI deliveredan improved result in the secondhalf, with the New Zealand businessachieving local currency earningsgrowth of 9.5% in the second halfas the economy started to recoverafter a prolonged period of negativeGDP growth. Fiji delivered solidvolume growth and local currencyearnings growth for the year, whichwas a significant achievementgiven the continued economic andpolitical uncertainty.INDONESIA & PNG achieved arecord result, with EBIT increasingby 22.1% to $61.8 million on strongrevenue growth of 21.9% andvolume growth of 9.2%. Indonesiacontinued to focus on targeting moreaffluent consumers with a widerrange of beverages available inone-way-packs while also continuingto invest in growing its moretraditional returnable glass bottlebusiness. PNG also delivered astrong result due to the increasedplacement of cold drink coolers andice chests.FOOD & SERVICES delivered anexcellent result, with EBIT 1 growthof 23.6% on trading revenue growthof 3.6%. SPC Ardmona deliveredstrong full year earnings growthas a result of increased sales ofhigher margin branded packagedfruit and vegetable products and therealisation of the cost savings fromthe restructure of the manufacturingoperations in the Goulburn Valley.22.1%INCREASEINDONESIA & PNG EBIT1. Before significant items.6

10.3%INCREASEGROUP EBIT 123.6%INCREASEFOOD & SERVICES EBIT 150%INCREASEVOLUME GROWTHPACIFIC BEVERAGESPACIFIC BEVERAGES JVcontinued to invest in buildingconsumer preference for its brandsand growing its market share ofthe Australian premium alcoholicbeverages market. Pacific Beverages’beer brands delivered strong volumegrowth of almost 50% for the year,and now account for over 9% of theAustralian premium packaged beermarket by volume and value. Thenew Bluetongue Brewery in NSW isdue to be commissioned during Mayand will provide Pacific Beverageswith a significant increase in localproduction capacity and capabilityfor draught and packaged beer.STRONG FINANCIAL POSITIONThe Company remains in a verystrong financial position with theratings agencies, Moody’s andStandard & Poors both reaffirmingCCA’s credit ratings at A3 andA- respectively.As at 31 December 2009, CCA’snet debt was over $1.6 billion andthe Company had total committeddebt facilities of approximately$2.8 billion with an average maturityof 4.7 years. This includes thepre-funding for around $600 millionof debt maturing in 2010. CCA is nowfully funded for all of its debt due tomature in 2010 and has minimal debtto refinance in 2011 and 2012. Inaddition, CCA’s EBIT interest cover 1increased from 4.7 times last year to5.9 times for 2009.1. Before significant items.7

OUTLOOKFOR 2010CCA FINISHED 2009 IN A STRONG FINANCIAL ANDMARKET POSITION AND IS WELL PLACED TO CONTINUEITS CONSISTENT OPERATING PERFORMANCE IN 2010.The key drivers of the business thatdelivered the strong 2009 results willagain drive CCA’s growth in 2010.These include: Further expansion of CCA’snon-alcoholic beverage portfoliothrough new product and packageinnovation and the accelerationof the cold drink coolerreplenishment program; To deliver further operatingefficiencies and customer servicebenefits through Project Zero andthe OAisys technology platform; To continue to rapidly grow theIndonesian business; and To increase CCA’s market sharein premium beer in Australia andNew Zealand.CCA expects to maintain its focuson organic growth in each of itsmarkets. The decision to maintainour up-weighted capital investmentprogram through the global financialcrisis in order to reduce operatingcosts and materially improvecustomer service levels has againprovided the platform for increasedbusiness, leading to higher returnsfor our shareholders.For 2010, the business has identifieda strong pipeline of revenuegenerating and cost saving capitalprojects to be implemented overthe next three years. All of theseprojects will drive CCA’s short andmedium term earnings growth.Capital expenditure is expected toincrease to between 8 and 9% ofnet sales revenue. The major capitalprojects will include: Additional one-way packproduction capacity andinfrastructure in Indonesia; Various Project Zero productioncapability and efficiency projectsin Australia and New Zealand; PET bottle self-manufacture inAustralia and Indonesia; Phase three of the OAisystechnology platform roll-out forAustralia and the commencementof the implementation for NewZealand and Pacific Beverages;and Acceleration of the cold drinkcooler placement program acrossthe Group.8

CCA GROUP FIVE YEARFINANCIAL SUMMARY2009 2008 2007 2006 2005INCOME STATEMENT 1Trading Revenue $ million 4,403.8 4,091.4 4,393.2 4,353.1 4,021.4EBIT - before significant items $ million 787.3 713.8 653.1 580.5 570.6Net Profit - before significant items $ million 449.0 404.3 366.3 323.5 320.5Significant items (net of tax) $ million – (18.7) (55.6) (41.1) –Net Profit $ million 449.0 385.6 310.7 282.4 320.5BALANCE SHEET 1Net Debt $ million 1,648.0 1,939.4 1,607.3 2,074.6 2,132.7Equity $ million 1,600.1 1,372.0 1,440.7 1,470.7 1,424.8Capital Employed $ million 3,248.1 3,311.4 3,048.0 3,545.3 3,557.5KEY RATIOSCapital expenditure to revenue % 7.0% 6.8% 6.8% 6.5% 7.5%Return on Average Capital Employed 2 % 24.0% 22.4% 19.0% 16.3% 17.5%EBIT Interest Cover 2 times 5.9x 4.7x 4.7x 4.0x 4.1xNet Debt to Equity % 103.0% 141.4% 111.6% 141.1% 149.7%PER SHARE INFORMATIONEarnings per Share - before significant items cents 60.5 54.9 48.6 43.2 43.3Earnings per Share cents 60.5 52.4 41.3 37.7 43.3Dividends per Share cents 43.5 39.0 35.5 32.5 31.5Level of Franking - Final % 100.0 100.0 100.0 100.0 100.0- Interim % 100.0 100.0 100.0 100.0 100.01 2005 - 2007 includes results from the South Korean business, which was sold on 24 October 2007.2 Before significant items.9

SUSTAINABILITY@CCAIN 2009, DURING THE GLOBAL FINANCIAL CRISIS (GFC), CCA’SMAJOR PRIORITY WAS ITS PEOPLE. UNDER THE “KEEP YOUR MATESIN A JOB” CAMPAIGN INITIATED IN EARLY 2009, CCA PLEDGED THATNO EMPLOYEE WOULD LOSE THEIR JOB BECAUSE OF THE EXTERNALECONOMIC ENVIRONMENT – CCA IS PROUD TO ANNOUNCE THAT ITKEPT THIS PROMISE.10CCA’s people responded with acommitment to work leaner andsmarter in order to deliver evenbetter results to CCA’s customersso they, in turn, were also able tocontinue to grow their businessesduring the GFC.CCA also continued to invest in anumber of major capital projectsdesigned to further save water,raw materials and energy in ouroperations and production processesand to build on the sustainabilityachievements already made.ENVIRONMENTCCA is investing $45 million in“blow-fill” technology which willenable the company to design andmanufacture its own PET bottleson the production lines, not onlysaving transport costs, but alsoenabling CCA to make the lightestPET bottles in Australia. In the firstyear of operation in Northmead,NSW, the company expects tosave approximately 1000 tonnes ofPET resin.Pacific Beverages’ new BluetongueBrewery has been fitted out witha $6.5 million water treatmentplant that will enable the re-useof all water while also providingrenewable energy to the brewery.We are partnering with ourmajor customers on public placerecycling projects. In 2009,Federal Environment MinisterPeter Garrett launched a jointWestfield, Coca-Cola and PackagingStewardship Forum project whichwill see 600 tonnes of beveragecontainers recycled in Westfieldshopping centres across Australia.In Indonesia CCA’s inaugural BaliCoastal Clean-up event is now adaily beach-cleaning operationwhere the iconic beaches of Kuta,Legian, Seminyak, Jimbaran andKedonganan are cleaned withCoke tractors (pictured opposite),three garbage trucks and 60 beachclean-up crew.We’re also tackling the pollutedJakarta canals. Partnering withlocal organisation, called “GreenMonster”, CCA has created theJakarta Waterways project toeducate the community on how tocorrectly dispose of or recycle waste.We’ve harnessed solar energy.In what is one of the largest solarroof-top installations of its kindin Australia, CCA’s Eastern CreekDistribution Centre is being poweredby 670 solar panels on its roof(pictured opposite), supplying148 mega-watts of clean, renewableenergy each year, or more than15% of the DC’s needs.MARKETPLACE ANDWORKPLACESustainability September@CCA, anational event to drive sustainablepractices and innovation inthe workplace, was even moresuccessful in 2009, its second yearof operation. Staff participated inthree national activities includingan E-waste drive which collected9.5 tonnes of old equipment and acooler maintenance program wheremore than 3,000 employees cleaned4,500 fridges saving 400 tonnesof greenhouse gas emissions. Inpartnership with Landcare Australia,staff also planted more than3,000 trees in NSW, Queensland,South Australia and Victoria. In2009 New Zealand undertook its

SUSTAINABILITYSEPTEMBER@CCA, ANATIONAL EVENT TODRIVE SUSTAINABLEPRACTICES ANDINNOVATION IN THEWORKPLACE, WAS EVENMORE SUCCESSFUL IN2009, ITS SECOND YEAROF OPERATION.first Sustainability Septemberprogram. Our people at all sitesparticipated in activities includingKeep New Zealand Beautiful CleanUp campaigns and at the Aucklandsite we offered lunchtime seminarson safety in the home, personalbudgeting and climate change.Our Auckland employees alsoparticipated in free diabetes andbreast checks.CCA’s long-term RemoteCommunities strategy, which isaimed at encouraging healthierlifestyles, has been rolled out acrossNorth Queensland, with IndigenousNRL star Matt Bowen urgingcommunities to “Choose Water”.The program is now being rolledout in Western Australia. Salesfigures are showing that people areincreasingly choosing low-kilojoulebeverages and water for theirhealth and hydration. For example,Northern Territory sales of CCA’snon-sugar range has increased by18% and bottled water by 19% andQueensland sales of CCA’s non-sugarrange has increased by 46% andbottled water by 74%.COMMUNITYCCA continues to be a significentdonor of food and beverages inthe wake of natural disasters likebushfires and floods. We also supplylarge quantities of bottled waterto state emergency services andvarious government departments inthe event of water contaminationor weather events. Mount Franklincontinues its great work in providingawareness and funding for breastcancer research, with donationsto the National Breast CancerFoundation reaching $1 millionin 2009.Coca-Cola Foundations in Australia,Indonesia and Papua New Guineacontinue to fund a broad range ofcommunity projects and charities.For more detailed informationsee the 2010 Sustainability@CCAReport at www.ccamatil.com11

SHAREHOLDERINFORMATIONSHAREHOLDER ENQUIRIESInvestors seeking informationabout their shareholdingshould contact the Company’sShare Registry. Shareholdersshould have their SecurityHolder Reference Number(SRN) or Holder IdentificationNumber (HIN) available whencontacting the Share Registry.SHARE REGISTRY CONTACTDETAILSLink Market Services LimitedLocked Bag A14Sydney South NSW 1235Ph: 61 2 8280 7121Fx: 61 2 9287 0303Email: registrars@linkmarketservices.com.auWebsite: www.linkmarketservices.com.auFOR ENQUIRIES ABOUTAMERICAN DEPOSITARYRECEIPTS (ADR)BNY Mellon ShareownerServicesP.O. Box 358016Pittsburgh, PA, 15252-8016Toll Free (domestic):1 888 BNY ADRS or(1-888-269-2377)International: 1 201 680 6825Email: shrrelations@bnymellon.comWebsite: www.bnymellon.com/shareownerVOTING RIGHTSOrdinary shares entitle theholder to one vote, except ona poll where each share isentitled to one vote.WEBSITEThe Annual Report andShareholder Review areavailable on the website:www.ccamatil.comHOW TO CONTACT USCoca-Cola Amatil InvestorRelations71 Macquarie StreetSydney NSW 2000Ph: 61 2 9259 6159Fx: 61 2 9259 6614Email: aus_investor_relations@anz.ccamatil.comWebsite: www.ccamatil.comSHAREHOLDER REVIEWThe Shareholder Review has been prepared as a general business overview and does not, andshould not be expected to, provide a detailed understanding of Coca-Cola Amatil’s financialperformance, financial position or financing or investing activities. Financial commentary withinthis review has been derived from the Coca-Cola Amatil Annual Report for the year ended31 December 2009.YOU MAY OBTAIN A COPY OF THE ANNUAL REPORTFROM CCA’S WEBSITE:WWW.CCAMATIL.COM