SPC Ardmona

131 Pages·2007·1.63 MB·English

a new formula for success
CCA Annual Report 2006
Annual General Meeting
Annual General Meeting will be held on Tuesday, 8 May 2007 at 10am at the
City Recital Hall, Angel Place (Pitt Street entrance), Sydney.
Coca-Cola Amatil Limited
ABN 26 004 139 397
1 About CCA 20 Business Review
2 Carbonated Beverages 25 Mission and Values
3 Non-Carbonated Beverages 26 CCA People
4 Premium Alcoholic Beverages 29 Senior Management
5 Packaged Fruit and Vegetables 30 Board of Directors
6 Chairman’s Report 32 Corporate Governance
8 Group Managing Director’s 37 Financial and Statutory Reports
Review of Operations
121 Shareholder Information
11 Five Year Financial Performance Summary
123 Glossary
12 Key Business Drivers
124 Company Directories
18 CCA at a Glance
125 Calendar of Events 2007
In 2006, Coca-Cola Amatil (CCA) delivered a solid
result driven by a strong second half trading
performance and successful new product launches.
CCA continues to focus on innovation and expansion
of the brand portfolio, increasing the availability of
products while striving to become the supplier of
choice every time to our customers. In doing so,
CCA is able to refresh, energise and nourish our
consumers – all day every day.
About CCA
SOUTH
CCA is the largest non-alcoholic beverage
KOREA
company in the Asia-Pacific region and one
of the world’s top five Coca-Cola bottlers.
CCA operates across 6 countries – Australia,
New Zealand, Indonesia, South Korea, Fiji and
Papua New Guinea. In the past 5 years CCA
has diversified its portfolio of products to PAPUA NEW GUINEA
include water, sports drinks, fruit juices, coffee,
ready-to-drink teas and packaged ready-to-eat
fruit and vegetable products. In August 2006,
FIJI
CCA established a joint venture with SABMiller, INDONESIA
the world’s second largest brewer, to distribute
SABMiller’s premium beer brands into Australia.
AUSTRALIA
CCA will also sell and distribute the brands of
premium spirits distributor Maxxium from
April 2007.
NEW
ZEALAND
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CCA Annual Report 2006 About CCA
Carbonated
Beverages
Brand Portfolio
Carbonated beverages represent 77% of CCA’s volumes, with major
brands including Coca-Cola, Diet Coke, Coca-Cola Zero, Fanta, Sprite
and Deep Spring. In 2006, CCA launched Coca-Cola Zero which has been
a phenomenal success capturing 13% of the Australian cola category in
just 12 months, establishing a major new segment in the Australian
beverage marketplace.
Increase in Australian Coca-Cola
trademark revenue
9%
In 2006, trademark Coca-Cola revenue grew by 9% in Australia,
driven by the success of Coca-Cola Zero. Market share of the
cola category in foodstores grew from 75% to 77%.
Shift to non-sugar Coca-Cola (Australian volume)
Non-sugar Sugar
20%
34%
66%
80%
2001 2006
2
CCA Annual Report 2006 Carbonated Beverages
Non-Carbonated
Beverages
Brand Portfolio
Non-carbonated beverages represent 23% of CCA’s volumes and have been
growing strongly as consumers increasingly demand a greater choice of
healthier beverage options. In 2006, CCA launched a number of major new
products including Powerade Isotonic, Pumped, Goulburn Valley juice and
Minute Maid flavour extensions.
Increase in non-carbonated
beverage volume in Australia
9%
CCA’s non-carbonated expansion strategy continues to gain
momentum with volumes growing 9% in Australia in 2006 and
now accounting for 23% of total beverage volumes.
Mix shift to non-carbonated beverages (volume)
Carbonated Beverages Non-carbonated Beverages
10%
23%
90% 77%
2001 2006
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CCA Annual Report 2006 Non-carbonated Beverages
Premium Alcoholic
Beverages
Brand Portfolio
CCA has expanded its beverage portfolio into premium alcoholic beverages
with exclusive sales and distribution agreements with SABMiller and
Maxxium Australia.The major brands include premium imported beers –
Peroni Nastro Azzurro, Miller Genuine Draft and Pilsner Urquell – and
premium imported spirits – Jim Beam, Canadian Club, Remy Martin,
Cointreau,The Famous Grouse and ABSOLUT VODKA.
Jim Beam, a 200 year old American ABSOLUT VODKA
bourbon, is the world’s best-selling is Australia’s most
bourbon. It is the preferred vodka
no. 1 spirit brand.
brand in Australia, with
9.5% volume share.
Peroni Nastro Azzurro has been
brewed in Italy to the original recipe,
since 1963.
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CCA Annual Report 2006 Premium Alcoholic Beverages
Packaged Fruit
and Vegetables
Brand Portfolio
CCA’s product range includes the premium packaged fruit and vegetable
brands SPC,Ardmona, Goulburn Valley, IXL and Taylors.The core product
range is deciduous fruit (pears, peaches, apricots, plums and apples),
baked beans and spaghetti, tomatoes and spreads. Continued investment
in product innovation and marketing ensures that the rich tradition behind
these brands is maintained.
IXL launched IXL Spreadables – Goulburn Valley 220gm Fruit Snacks
spreads made from real with Spoon Singles were launched
vegetables. into the convenience and petroleum
channel, and are now available in
1600 outlets.
Packaging innovation in our tomato
range included the introduction of
Ardmona Rich & Thick pizza sauce
in a squeezable bottle, and
4 new
SPC brand tomato products
in tetra packs.
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CCA Annual Report 2006 Packaged Fruit and Vegetables
Chairman’s Report
Coca-Cola Amatil delivered a solid net profit result for 2006, a year of
significant increases in commodity driven input costs. Over the past four
years, CCA has delivered average net profit after tax growth of 12.0%
per annum (before significant items), underpinning the 15.1% per annum
average increase in dividends paid to shareholders over that period.
CCA delivered a net profit this year of $323.5 million,before Corporate Governance
significant items,up 0.9% on last year.Total trading revenue
CCA has an ongoing commitment to transparency and good
grew 8.2% to $4,353.1 million and earnings before interest and
corporate governance.The Annual Report includes a number of
tax (EBIT) grew 1.7% to $580.5 million,before significant items.
statements on the robust corporate governance structure and
This was a solid financial result in a challenging year for CCA
risk management framework prevailing throughout CCA.CCA
where increases in commodity input costs drove the cost of
has always maintained a high level of corporate governance
goods sold in the beverage business up by an unprecedented
and we continue to refine our practices in this area each year.
$151.9 million.
The Coca-Cola Company
The highlight for 2006 was the strong recovery in trading
in the second half of the year.While the business recorded The Board is pleased with the strengthening of the
an earnings decline in the first half of the year,it regained relationship between CCA and The Coca-Cola Company
momentum in the second half to deliver second half EBIT (TCCC).TCCC holds 32% of the shares in CCA,and nominates
growth of 8.6%,before significant items.The improvement was two Non-Executive Directors of the current eight member
delivered across the board with strong trading performances Board.CCA’s Related Party Committee,comprising the
in Australia,New Zealand and Indonesia as strong revenue Independent Directors,reviewed all material transactions
management and promotional discipline enabled the business between CCA and TCCC in 2006 and is an important forum
to recover the commodity driven cost increases. for dealing with governance issues.
The business has also delivered another year of strong
Corporate Social Responsibility
cash flow with free cash flow increasing by $130.3 million to
$271.6 million.The significant increase was due to the strong CCA strongly supports social and environmental activities
operating performance in the second half which,combined through its community and environmental programs.
with the proceeds from the sale of assets,more than offset the These programs help to sustain business performance
increased investment in capital projects as we develop our by strengthening the communities in which we operate,
automated distribution facilities in Australia and New Zealand. improving business efficiency and developing relationships
with stakeholders,and ultimately leading to increased
Details of CCA’s 2006 performance and comments on future
shareholder returns.In 2006 we released our first sustainability
prospects are included in the reports that follow.I encourage
report,Citizenship@CCA,measuring our achievements under
you to read these reports.
four pillars – Environment,Marketplace,Workplace and
Community.I encourage you to read this report which is
Dividend
available on our website www.ccamatil.com.
Our strong financial performance,combined with the
confidence that CCA will continue to grow,enabled the Employees
Board to increase the final dividend to 18 cents a share,fully
One of the underlying strengths of the Group is the quality of
franked.This gives a total fully franked dividend for the year
its people.Their commitment to CCA’s core values underpins
of 32.5 cents a share,a 3.2% increase on last year,representing
the results achieved this year.
a payout ratio of 75.4% of net profit,before significant items.
On behalf of the Board,I would like to thank all employees for
their special efforts and contributions in 2006.
David Gonski, AO
Chairman
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CCA Annual Report 2006 Chairman’s Report
David Gonski, AO
Chairman
1 Compound annual growth rate.
2 All 2002-2003 numbers prepared under the previous framework of Australian Accounting
Standards (AGAAP). All 2004-2006 numbers prepared under Australian equivalents to
International Financial Reporting Standards (AIFRS).
Year ended 31 December 2006 2005 Change
Trading revenue – beverages and food ($ million) 4,353.1 4,021.4 8.2%
Earnings before interest and tax, before significant items ($ million) 580.5 570.6 1.7%
EBIT margin (%) 13.3 14.2 -0.9pts
Net profit, before significant items ($ million) 323.5 320.5 0.9%
Net profit ($ million) 282.4 320.5 -11.9%
Operating cash flow ($ million) 468.4 436.7 7.3%
Return on average capital employed (%) 16.3 17.5 -1.2pts
Total capital employed ($ million) 3,545.3 3,557.5 -0.3%
Net debt to book equity (%) 141.1 149.7 -8.6pts
Capital expenditure to revenue (%) 6.5 7.5 -1.0pts
Earnings per share, before significant items (cents) 43.2 43.3 -0.2%
Earnings per share (cents) 37.7 43.3 -12.9%
Dividends per share (cents) 32.5 31.5 3.2%
Earnings before Net Return on capital Dividends
interest and tax2 profit2 employed2 per share
1.7% 0.9% 1.2pts 3.2%
421.9 470.0 518.3 570.6 580.5 5.5 238.8 274.3 320.5 323.5 21.6 17.5 16.3 23.0 28.0 31.5 32.5
0
2 2
8 0. 5
8. 1 8.
1
02 03 04 05 06 02 03 04 05 06 02 03 04 05 06 02 03 04 05 06
EBIT ($M) increased by Net profit ($M) grew 0.9% ROCE (%) declined from Annual dividends per
1.7% to $580.5 million in to $323.5 million in 2006 17.5% in 2005 to 16.3% share (cents) have grown
2006 and has grown at and has grown at an in 2006. by 75.7% since 2002, or
an average of 8.3%1 average of 12.0%1per an average of 15.1%1
Before significant items
per annum since 2002. annum since 2002. per annum.
Before significant items Before significant items
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CCA Annual Report 2006 Chairman’s Report
Group Managing Director’s
Review of Operations
In 2006, CCA continued to invest in its non-alcoholic beverage portfolio
through product and package innovation, backed by up-weighted marketing
programmes, to further strengthen its consumer franchise and brand
leadership during this period of increased commodity input costs.
The highlight for the year has been the outstanding success 2006 Review
of several new product launches led by Coca-Cola Zero,which
CCA’s 2006 profit result has benefited from improved
has been the biggest beverage launch for CCA in 22 years,and
operational performance in the second half where EBIT
an exceptional opportunity for the business to develop a major
grew by 8.6%.The second half trading was driven
new segment.
by the continued strong uptake of new products,pricing
In the 12 months since its Australian launch,Coca-Cola Zero improvements as well as market share gains,particularly
has captured 13% of the cola category,with CCA’s total in Australia.
cola market share growing from 75% to 77% in foodstores.
Australiaachieved annual volume growth of 3.0% with solid
Coca-Cola Zero is already tracking above 75% of Diet Coke
revenue growth of 7.7%,driven by the successful launch of
monthly volumes,which is well ahead of expectations.
Coca-Cola Zero,Powerade Isotonic,Pumped and Goulburn
Coca-Cola trademark products have been supported by the Valley juice as well as the continued growth of water brands
introduction of slim line cans and the 385ml screw top glass Mount Franklin and Pump.The second half performance
bottle into the route trade,helping boost overall brand was particularly pleasing and a significant improvement on
Coca-Cola revenue by 9% in 2006. the first half with revenue growth of 8.9%,a result of solid
price recovery and a stronger market position.A $25.5 million
New product launches in the non-carbonated beverage
write down was taken on assets including IT systems and
segment,including Powerade Isotonic,Pumped and
vending machines in the second half,in order to drive faster
Goulburn Valley juice have all exceeded expectations and have
execution of strategic priorities for the business in 2007.This
established a very solid platform for volume and value growth
reduced second half EBIT growth from 16.7% to 5.0%.
in 2007.
New Zealand & Fiji –In local currency,New Zealand EBIT was
broadly flat for the year.After an earnings decline in the first
half,second half trading improved significantly with local
currency EBIT increasing by close to 15%.Coca-Cola Zero
continues to perform well,outselling Diet Coke since
Share price – relative performance
Coca-Cola Amatil S&P ASX 100 Industrials
220 CCA’s share price and
the S&P ASX 100
200
Industrials Index have
180 been indexed to 100 from
1 January 2001 to
160
28 February 2007 to allow
140
meaningful comparison.
120
100
80
60
2001 2002 2003 2004 2005 2006 2007
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CCA Annual Report 2006 Group Managing Director’s Review of Operations