an anchor bottler in the Coca-Cola System

80 Pages·2004·0.9 MB·English

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2Coca-Cola Amatil Limited ACN formis enclosed. notice ofmeeting and proxy willbe presented. Aseparate 10.00am,where this Report Sydneyon1April1998 at Hotel, 199 George Street, Floor, The Regent ofSydney heldin the Ballroom, Ground ofCoca-Cola Amatil will be The Annual General Meeting Corporate Directory . . . . . . .7 and Locations . . . . . . . . . . .7 Operational Management Financial Statements . . . . . .3 Financial Summary . . . . . .3 Eight Year Portfolio of Businesses . . . . .3 Corporate Governance . . . . .3 The Directors . . . . . . . . . . . . .2 Europe . . . . . . . . . . . . . . . . .2 AsiaPacific . . . . . . . . . . . . .2 Philippines . . . . . . . . . . . . .2
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bytheir strong financial and management resources and commitment to long term growth. strategic goals are aligned with those of TheCoca-Cola Company, and who are distinguish “Anchor bottlers” are select business partners in the worldwide Coca-Cola System whose profitability andreturn on investment. toitsshareholders bybalancing growth enhance the value of the Company CCA’s prime long term objective is to alcohol-free beverages. mineraland bottled watersand other with aportfolio ofsoft drinks, population ofover 450million people EasternEurope. We serve a consumer South-East Asia and Central and in18countries throughoutAustralasia, inthe Coca-Cola System. CCAoperates Coca-Cola Amatil is an anchor bottler*
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Unfranked. Comparative figures have been adjusted to reflect change in accounting classification of p Attributable to ordinary shareholders of Coca-Cola Amatil Limited. Trading Profit before depreciation and amortisation. ividend Amount 132.9($ millions) 19.0ividends per Share (cents)(4) 6.1eturn on Equity (%) ebt/Equity Ratio 35.8(%) 3.5nterest Cover(times) CA Shareholders’ Equity5,344.8($ millions) 9,466.3otal Assets($ millions) 777.9apital Expenditure ($ millions) arnings per Share 31.5(cents) 242.2et Profit($ millions)(2) rading Profit528.0($ millions) 784.7ash Operating Profit($ millions)(1) ales Revenue4,828.4($ millions) 1997 inancial Highlights nthe world. orank as the second largest bottler and distribut n 1997, CCA achieved sales of 6.3 billion litres (1 hisamalgamation increased the Company’s asse hrough the amalgamation of Coca-Cola Bottlers peratedin 1996, and achieved a substantial boo
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are dividends and capital (AASB 103 99.134.1 19.0 6.2 56.9 2.8 2,569.8108.0 6,091.755.4 679.514.5 27.415.0 139.973.1 316.866.7 501.356.5 3,704.830.3 1996Chan(3) oca-Cola products illion unit cases), 5 per cent. ines, Inc. with CCA. et operating profit
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impact was created by currency depreciations approximately 10per cent higher. The majority of the CCA’s 1997 net operating profit would have been ofcurrency depreciations on translated earnings, strengths of CCA’s businesses, without the impact As a further demonstration of the fundamental increase in net operating profit in 1997. that it operated in 1996, CCA recorded a 5.1 per cent 73.1percent, to $242.2 million. In the businesses CCA boosted net operating profit for 1997 by in Europe and Asia, with the amalgamation of CCBPI Despite the considerable impact of currency translations thatpositions CCA for the future In a challenging environment, a performance during 1997. First, let me refer to the Company’s performance of CCA in 1989. Company has been operating since the reorganisation thebroad strategic framework within which the I would like to take this opportunity to review Coca-Cola System. totransform CCA into an anchor bottler within the ofaplan put in place by the Board eight years earlier inJuly was the latest step in the progressive roll out Inc. (CCBPI). Shareholder approval for this transaction amalgamation with Coca-Cola Bottlers Philippines, asubstantial boost in net operating profit through that it operated at this time last year, and achieved CCA both increased the profitability of the businesses I am pleased to be able to report that during 1997 Dear Shareholder,
a range of countries, some with established, profitable Company (TCCC). Operations were tobe spread across soft drinks industry in partnership with The Coca-Cola The Board’s plan was to focus on the carbonated “balanced growth”. market share and profit”. The key words were shareholders through balanced growth of volume, objective was “to create long term value for When CCA was reorganised in 1989, its primary valuefor shareholders CCA’s primary objective: to create sustainable and a robust balance sheet. Overall, CCA finished 1997 with strong cash flows, of the soft drink culture. competition and a slower than expected development disappointing as a result of continuing intense In Europe, volume growth and margins were returned to solid profit growth. and achieved strong volume growth, and New Zealand growth. In Asia Pacific, Indonesia maintained margins strong and the business recorded excellent volume profit was strong. In the Philippines, margins remained margins, Australia’s contribution to net operating discussed on pages 20 to 26. In brief, with expanding Australia, the Philippines, Asia Pacific and Europe, is The performance of CCA’s four operating segments, of the total impact on CCA’s earnings. second half accounted for approximately $7.0 million The impact of currency depreciations in Asia in the has since returned to profitability. experienced in Romania in the first half. This market
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ifferent stages of soft drink market dev ercapita consumption across countries CAhas demonstrated a capacity to gro lignment with the worldwide Coca-Cola CocaCoaadassocatedtadeas
elopment. atvery w annual System. adou
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withannual consumption per person in excess of whichthe soft drink culture is well entrenched, “Established” countries are defined as those in and on the opposite side, Austria and Switzerland. on one side of the world, Australia and New Zealand endof1996, four were categorised as “established” – Of the 17 countries in which we operated at the CCA’sportfolio of countries Experience leads to a desire to rebalance long term investment strategy. short term cash flow performance and to underpin the countries was desirable in order to deliver improved Eastern Europe, some rebalancing of the portfolioof that, as a result of the experience gained in Central and Towards the end of 1996, it had become apparent ofthe businesses in each country. could be managed, given the sound fundamentals ofeconomic development, and one we were confident business in a spread of countries at different stages movements was recognised as a function of doing The consequent exposure to regional currency regions of operation, each with awide spread ofmarkets. strategy also resulted in two distinct geographical inthe Asia Pacific region to include Indonesia. The countries and extending the Company’s operations operating in 12 Central and Eastern European Implementation of this strategy resulted in CCA long term growth. high levels of investment, but with strong prospects for andothers at an early stage of development, requiring soft drink businesses, providing strong cash flows, 199419951996199719931992199119900 50 100
had in place the necessary plant and associated San Miguel Corporation (SMC) had ensured that CCBPI drinkers. The previous partnership between TCCCand highest proportions of consumers who are daily In addition, the Philippines has one of the world’s December 1997, this had increased to129 8 oz serves). at the time of the amalgamation (by the end of per person of Coca-Cola products was 117 8 oz serves In the Philippines, the average annual consumption Asian region. over 50 per cent, and to double CCA’s assets in the with CCA. This was to increase CCA’s total assets by weannounced the proposed amalgamation of CCBPI strongcash flows and trading profits, and in April amoredeveloped soft drink culture, generating expand its operations into another country, with Early in 1997, the Board resolved that CCA should Balance achieved through amalgamation withCCBPI less than 50 8 oz serves per person. annual consumption of Coca-Cola products generally culture is at an early stage of development, with Anemerging market is one in which the soft drink threein Central and Eastern Europe and one in Asia. Four countries were classified as “emerging” – low proportion of consumers who are dailydrinkers. generally between 50 and 150 serves, with a relatively consumption per person of Coca-Cola products is Pacific – had “developing” soft drink cultures. Annual seven in Central and Eastern Europe and two in the Nine of the other countries in which CCA operated – 1508oz (237 ml)serves of Coca-Cola products. 010 cents 20 cents 30 cents1993 and 1994 bonus issues yjp
long term value for shareholders. Our confidence is confidence in the ability of these markets to generate the Indonesian rupiah. However, your Directors have amongst other currencies, the Philippines peso and Instability in Asian currency markets has affected, Short term outlook for Asian economies depending on market circumstances. management on any one of these drivers may vary, within individual countries, the emphasis placed by It is important to recognise that at any point in time, key drivers of value: volume, market share and profit. achieving a balance, through time, between the three In essence, shareholder value will be created by CCA Generating sustainable shareholder value the Philippines), and 37 per cent inEurope. Fiji and Papua New Guinea, as well asIndonesia and (broadly defined here to includeAustralia,NewZealand, of CCA’s 1997 sales revenue was generated in Asia Following the amalgamation with CCBPI, 63 per cent and growth in shareholder value. adequate cash flows to sustain both future investment different stages of market development, could deliver aportfolio of countries in which the balance, across region” character of CCA’s operations, but delivered This amalgamation further emphasised the “two ofsoft drinks is growing strongly. the Philippines is a market in which consumption 60per cent of the population under 25 years of age, Witha high rate of population growth and close to infrastructure to develop and service this market.
softdrink culture. willbe influenced by the strength of a country’s growth and the growth of soft drink consumption However, the strength of the link between economic inasustained slow down in soft drink consumption. ineconomic growth does not necessarily result most recently in Mexico, indicates that a slow down Evidence from elsewhere in the world, for example, population growth. experiencing amongst the world’s fastest rates of populations. CCA’s territories in Asia include countries most rapidly in countries with expanding and youthful Experience shows that soft drink consumption grows In 1998, focus on securing future growth stability in core earnings. Australasian businesses will continue to provide portfolio of countries. Over the next few years, the businesses are fundamentally sound, in a balanced Australian dollars. However, as I noted earlier, CCA’s onCCA’s earnings for 1998 when translated into Weaker currencies will have an adverse impact the second half and 14 per cent over the full year. maintained, withvolumes growing by 9 per cent in drought and forest fires, strong margins were InIndonesia, faced with currency depreciation, isevidence of the strength of this business. power of the currency depreciation and drought, Philippines in 1997, despite the impact on purchasing The strong growth in volumes achieved in the businesses in the Philippines and Indonesia. based on the sound fundamentals of CCA’s existing
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Effective 19 December 1997, Mr Neville Isdell, from the Company and the Board. Executive Director, Corporate Development, resigned Effective 30 October 1997, Mr John Priest , formerly 3February 1998. Mr K.C. Kuok, who resigned from the Board, effective KerryBeverages Limited, Hong Kong. Mr Liu replaces ofKerry Holdings Limited and Chairman of a Director of the Company. MrLiu is Vice Chairman Effective 3February 1998, MrT.F. Liu was appointed experience as a company director. legaland commercial skill to the Board as well as 1October 1997. Mr Gonski brings considerable Mr David Gonski was appointed as a Director on deliberations. experience that these Directors contribute toBoard is benefiting greatly from the industry and regional agreement for amalgamation with CCBPI. The Board appointed Directors of CCA in accordance with the Treasurer of SMC, and Mr Rafael Alunan III, were Executive Vice President and Chief Finance Officer- Executive Officer of SMC, Mr Delfin Gonzalez, Jr, In July, Mr Andrés Soriano III, Chairman and Chief Board changes since April 1997 theseopportunities. toensurethat the Company is in a position to meet CCA will continue to invest, and to work with TCCC, critical todelivering sustainable shareholder value. eachof the countries in which we operate will be forgrowth presented by the soft drink industry in CCA’s ability to meet the long term opportunities
5 February 1998 Dean Wills , ChairmanAO Yours sincerely, shareholders for their continuing support. On behalf of my fellow Directors, I thank progress during 1997. employees for their contribution to the Company’s I would like to express my thanks to all CCA My thanks to employees and shareholders manufacturing, distribution and finance. andconsumer marketing, business development, MrKennedy brings significant skills in customer With 18 years’ experience in the Coca-Cola Syste warmestwelcome. offerofappointment and extend to him our pleasedthatMrKennedy accepted the Company’s My fellow Directors and I are extremely Managing Director of CCA, effective 5March 1998 Company’s fountain business, has been appointed of Coca-Cola USA and the head of The Coca-Cola MrDavid Kennedy, formerly Executive Vice Preside Appointment of new Managing Director on4March 1998. ChiefExecutive Officer, ceased to be employed Mr Norb Cole, formerly Managing Director and resigned from the Board. Senior Vice President of TheCoca-Cola Company,
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