2007 Shareholder Review - Coca-Cola Amatil

2007ShareholderReview

FinancialHighlights470.0238.810.223.0518.3570.6580.5274.3320.5323.5366.321.617.516.319.028.031.532.535.5653.1030405 0607030405 060703 04 05 06 07 03 04 05 0607Earnings beforeinterest and tax($m) 1Net profit($m) 1Return onDividendscapital employedper share(ROCE)(cents)(%) 112.5%increase inearnings13.2%increase innet profitROCEincreased to19.0%9.2%increase individendsper share1 Before significant items and 2003 financial informationhas been prepared under the previous framework ofAustralian Accounting Standards (AGAAP)

Dear Shareholder,In 2007 Coca-Cola Amatil (CCA) achieved a record result driven by the strongperformance of the Australian and New Zealand beverage businesses, an excellent resultfrom Indonesia and a solid contribution from our emerging alcoholic beverage business.The result has been driven by improved pricing and product mix, a number of successfulnew product launches, and the incremental earnings generated by our significant capitalinvestment program and the Trans-Tasman business integration. CCA continues to focus oninnovation and expansion of the brand portfolio, increasing the availability ofits products. In doing so, CCA is able to refresh, hydrate and energise ourconsumers – all day, every day.Terry DavisGroup Managing DirectorCCA Shareholder Review 2007 1

ReviewYear inIn 2007 CCA achieved arecord result, deliveringnet profit after tax of$366.3 million, beforesignificant items, anincrease of $42.8 millionor 13.2% on 2006.CCA’s profit result has beenachieved through the strongperformance of the Australian andNew Zealand beverage businesses,an excellent result from Indonesiaand a solid contribution from ouremerging alcohol business.The result has been driven byimproved pricing and product mix, anumber of successful new productlaunches, and the incrementalearnings generated by oursignificant capital investmentprogram and the Trans-Tasmanbusiness integration.Our strong financial performanceenabled the Board to increase thefinal dividend to 20.0 cents a share,fully franked. This gives a total fullyfranked dividend for the year of35.5 cents a share, a 9.2% increaseon last year, representing a payoutratio of 73.0% of net profit, beforesignificant items.Over the past five years, we havedelivered average net profit after taxgrowth of 12.3% per annum, beforesignificant items, underpinning the13.9% per annum average increasein dividends paid to shareholdersover that period.2 CCA Shareholder Review 2007 Year in Review

2007 has been markedby the delivery on all ofthe primary businessdrivers identified inour strategic reviewin April 2007.1. Expand theproduct portfolioWe have continued to expand ournon-alcoholic beverage portfoliowith a number of successful newproduct launches, includingPumped flavoured water, newPowerade Isotonic flavours,Goulburn Valley premium juice,smoothies and fresh flavouredmilk and the Kirks SugarFree range.2. Develop an alcoholicbeverages businessin Australia andNew ZealandIn alcohol, we launched ourpremium beers – Peroni, PilsnerUrquell and Miller Genuine Draft –in New Zealand. Miller Chill waslaunched in Australia, the firstsignificant beer innovation inAustralia for many years, and wealso successfully launched JimBeam & Zero Sugar Cola.CCA’s rapidly-growing alcoholbusiness generated over $300 millionin revenue 1 in 2007 from the sale ofPacific Beverages’ premium beersand the Maxxium spirits portfolio,delivering solid incremental earningsto CCA.3. Maintain ourcommitment toIndonesia, PNG and FijiAdditional capital investment inIndonesia over the last two yearsin new can, PET and hot-fillproduction capacity continuedto drive profitable growth in themodern food store channel.4. Create a world-classoperating systemThe integration of CCA’s Australianand New Zealand beveragebusinesses delivered savings in2007 of over $10 million fromimproved revenue managementinitiatives and procurement savings.And further opportunities have beenidentified for 2008.The investment in a new technologyplatform across Australia and NewZealand is expected to deliver manyprocess and operating efficienciesto the organisation and will bephased in over the next few years.1 Includes Maxxium revenuewhich is not reported in CCA accountsCCA Shareholder Review 2007 3

Year in Review continuedOperations ReviewCCA’s continuingoperations deliveredEBIT of $648.4 million,an increase of 15.3%on 2006.Australia achieved an excellentresult with EBIT growth of 12.3% onstrong trading revenue and volumegrowth of 9.1% and 2.6%respectively.The result was achieved by CCA’scontinued focus on new productand package innovation and pricerealisation, and was supported bythe emerging alcohol business.15.3%Increase in earningsto $648.4 millionCCA’s continued investment in newhigher value premium products andpackages such as Brand Coke in385ml glass and slim line cans,Powerade Isotonic, and Pumpedflavoured water delivered stronggrowth for the year as consumersresponded positively to CCA’sincreased range of premium brandand pack combinations.New Zealand & Fijirecovered from a difficult 2006trading year to deliver a record EBITgrowth of 19.5% on revenue growthof 9.1% and volume growth of1.5%. This was an excellent resultgiven the business was cycling thesuccessful launch of Coca-ColaZero in New Zealand in the first halfof 2006.Indonesia & PNG – Theregion more than doubled EBIT to$36.8 million, with strong volumegrowth of 7.2% and revenue growthof 4.5% as the economic recoveryin Indonesia that commenced in thesecond half of 2006 continuedthroughout 2007.Food & Services deliveredEBIT growth of 5.1% on revenuegrowth of 5.5%, which was a solidresult and was achieved despite thecontinuing impact on SPC Ardmonaof the drought, increasedcommodity prices and increasedcompetition from importedpackaged fruit and vegetableproducts.Pacific Beverages, CCA’salcoholic beverage JV withSABMiller achieved strongpenetration with its premium beerbrands particularly Peroni NastroAzzurro and Miller Genuine Draft,achieving volume growth of morethan 150% over 2006 when thebrands were under other distributionarrangements.4 CCA Shareholder Review 2007 Year in Review

Acquisition ofBluetongue BreweryOn 5 December 2007, PacificBeverages acquired BluetongueBrewery. Bluetongue’s premiumbeer brands include BluetonguePremium Lager, BluetonguePremium Light, BluetongueTraditional Pilsner, BluetongueAlcoholic Ginger Beer, and BondiBlonde. The acquisition ofBluetongue Brewery adds a fastgrowingand uniquely Australianpremium beer brand to PacificBeverages’ existing portfolio ofimported premium beers and fitsperfectly with CCA’s strategy ofdeveloping a material presence inthe Australian premium beer market.Brewery DevelopmentPacific Beverages intends toestablish a boutique premiumbrewery at Warnervale in New SouthWales in order to further accelerateits premium beer strategy. Thebrewery site, when completed,will enable Pacific Beverages tomaterially increase production ofBluetongue to meet increasednational demand, while alsoproviding capacity for the potentialproduction of other Australianpremium beer brands. The brewery,with a capacity of 500,000hectolitres, is expected to becompleted during 2010 and willbe jointly funded by CCA andSABMiller.Off-MarketShare Buy-BackCCA successfully completed anoff-market share buy-back on29 January 2008. A total of 21.7 millionshares, or approximately 2.9% ofCCA’s issued shares, were boughtback at a price of $7.84, representinga maximum 14% discount to theapplicable market price.Disposal of theSouth Korean BusinessCCA completed the sale of itsSouth Korean business to LGHousehold & Health Care Ltd(LGH&H) on 24 October 2007 for$520 million including net debt. Thefinal loss on disposal after incometax expense was $49.4 million, or$46.3 million on a pre tax basis.This amount has been recognisedas a significant item for 2007.CCA Shareholder Review 2007 5

Year in Review continuedOutlook for 2008CCA’s strategy to focus on organic growth over thelast two years has proven to be the correct path,and our management team is highly focussed ondelivering leading brands to the market. As a result,the Company is in excellent shape to respond tochanges in economic conditions.The priorities for 2008 will be thecontinued expansion of CCA’s nonalcoholicand premium alcoholicbeverage portfolio and furtherrealising the benefits of its Trans-Tasman business integrationprogram. This will be achievedthrough significant capital andtechnology investments in Australiaand New Zealand in cold drinkequipment, automated warehousing,systems infrastructure and increasedbeverage production capacity.We have some exciting new productlaunches in the pipeline for this year,with our major new product for theyear, Glacéau Vitamin Water,launched in Australia in February.Glacéau has been a huge successin the United States where it nowleads the enhanced water category.CCA is on track to continuethe expansion of its multi-beveragestrategy in 2008The consumer spendingenvironment will have challenges in2008 with interest rate rises, higherpetrol prices and higher foodinflation. However, on the plus side,employment in Australia and newdemand remains very strong andthere are income tax cuts legislatedfor July. With the sale of the SouthKorean business, our balance sheetis very strong and the 4.7 timesEBIT interest cover is the highestinterest cover in over 10 years.We expect to be able to delivergood revenue growth in 2008.At this early stage, we remainoptimistic that our strongperformance in 2007 hasestablished a sound platformfor 2008 and that the businessis in excellent shape to respondappropriately to changes ineconomic conditions orconsumer sentiment.6 CCA Shareholder Review 2007 Year in Review

Five Year Financial Summary2007 2006 2005 2004 2003 1Income StatementTrading Revenue $ million 4,393.2 4,353.1 4,021.4 3,450.1 3,357.1EBIT – before significant items $ million 653.1 580.5 570.6 518.3 470.0Net Profit – before significant items $ million 366.3 323.5 320.5 274.3 238.8Significant Items (net of tax) $ million (55.6) (41.1) – 2.3 (44.6)Net Profit $ million 310.7 282.4 320.5 276.6 194.2Balance SheetNet Debt $ million 1,607.3 2,074.6 2,132.7 1,536.8 1,579.5Equity $ million 1,440.7 1,470.7 1,424.8 932.5 2,921.7Capital Employed $ million 3,048.0 3,545.3 3,557.5 2,469.3 4,501.2Key RatiosCapital Expenditure to Revenue 3 % 6.8 6.5 7.5 6.1 4.8Return on Average Capital Employed 2 % 19.0 16.3 17.5 21.6 10.2EBIT Interest Cover 2 times 4.7 4.0 4.1 4.7 4.1Net Debt to Equity % 111.6 141.1 149.7 164.8 54.1Per Share InformationEarnings per Share – before significant items cents 48.6 43.2 43.3 39.0 34.3Earnings per Share cents 41.3 37.7 43.3 39.3 27.9Dividends per Share cents 35.5 32.5 31.5 28.0 23.0Level of Franking – Final % 100 100 100 100 75– Interim % 100 100 100 100 501 2003 financial information has been prepared under the previous framework of Australian Accounting Standards (AGAAP)2 Before significant items3 2004-2007 capital expenditure includes purchases of returnable containers owing to a change in accounting policy in 2004,whereby returnable containers were classified from inventories to property, plant and equipment. 2003 has not beenrestated for this change.CCA Shareholder Review 2007 7

Corporate SocialResponsibilityEnvironmentDuring Australia’s worst drought in100 years, CCA embarked on aplan to save water which hasresulted in a remarkable milestone –becoming the most water efficientnon-alcoholic beverage bottler inour industry in the world. In 2007our Northmead plant in Sydney wasawarded a 5-star rating for watermanagement from Sydney Water –the first for a manufacturing industry.At Northmead, we are building twounderground rainwater harvestingtanks – the size of two Olympicswimming pools – to capture waterfrom the new warehouse roof. Thewater will be piped underneath thehighway to irrigate a neighbourhoodpark.As well, we are saving an extra71 million litres (71 Olympic swimmingpools) of water thanks to “dry-lube”technology being installed on allAustralian production lines.Other significant environmentalachievements include the continued“lightweighting” of beveragecontainers, saving 21,000 tonnesof PET since 2003 and a furtherreduction in the product topackaging ratio by weight from14.8:1 in 2006 to 13.7:1 in 2007.We opened two more public placerecycling stations at Australia Zooin Queensland and Australia Squarein Sydney and turned off the iconicCoke sign in Kings Cross forEarth Hour.For moreinformation onsustainability youcan downloadCitizenship @ CCAfrom our website atwww.ccamatil.com8 CCA Shareholder Review 2007 Corporate Social Responsibility

MarketplaceWe are proud of our NorthernTerritory team’s strategy to helpremote indigenous communitiesimplement healthier lifestyles, mainlyby encouraging indigenous storeowners to sell more water, sugarfreesoft drinks and fruit juice overtraditional sugar soft drinks.This Healthy Community Strategyin the Top End is supported by theCoca-Cola Australia Foundation’sHealthy Bodies Healthy Minds Weekin Tennant Creek and by a $60,000,three-year sponsorship of the AFL’sHealthy Lifestyles carnivals.In New Zealand, a Sprite Zero pilotin conjunction with a health board’sdiabetes campaign resulted in a17% decrease in sugar intakeacross participating McDonald’srestaurants. As a result, Sprite Zerohas replaced Sprite acrossMcDonald’s network nationally.CommunityIn its second “pink lids” yearMount Franklin donated more than$300,000 to the National BreastCancer Foundation, an increaseof $130,000 from 2006. CCA staffdonated $70,000 to charitiesthrough our workplace givingprogram Thirst For Giving, anddonated 2000 books to the “Sharea-Book”library at Tennant Creek.SPC Ardmona committed more than$10 million of initiatives to ensurethe viability of fruit and tomatogrowers in the Goulburn Valleyduring the drought.In PNG we donated 5000 cartons ofbottled water to flood victims and inIndonesia the Cinta Air (Love Water)project in West Java restored safedrinking water to local communitiesand held education sessions onwater, recycling and health.CCA Shareholder Review 2007 9

Shareholder InformationShareholder enquiriesInvestors seeking information about theirshareholding should contact the Company’sShare Registry. Shareholders should have theirSecurity holder Reference Number (SRN) orHolder Identification Number (HIN) availablewhen contacting the Share Registry.Share Registry contact detailsLink 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 about AmericanDepositary Receipts (ADR):BNY – Mellon Shareowner ServicesInvestor ServicesP.O. Box 11258Church Street StationNew York, NY 10286-1258Toll Free (domestic): 1-888-BNY-ADRSInternational: 1 212-815-3700Email: shareowners@bankofny.comWebsite: www.adrbny.comVoting rightsOrdinary shares – entitle the holder to one vote,except on a poll where each share is entitled toone vote.WebsiteThe Annual Report and Shareholder Review areavailable on the website:www.ccamatil.comHow to contact usCoca-Cola Amatil Investor Relations71 Macquarie StreetSydney NSW 2000Ph: 61 2 9259 6159Fx: 61 2 9259 6614Email: aus_investor_relations@anz.ccamatil.comShareholder ReviewThe Shareholder Review has been prepared as ageneral business overview and does not, andshould not be expected to, provide a detailedunderstanding of Coca-Cola Amatil’s financialperformance, financial position or financing orinvesting activities. Financial commentarywithin this review has been derived from theCoca-Cola Amatil Annual Report for the yearending 31 December 2007.You may obtain a copy of the Annual Reportfrom our website.Coca-Cola Amatil LimitedABN 26 004 139 397