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COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 01
Directors’ report (continueD) COCA-COL A AMATIL LIMITED FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012 annuaL report
2012
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Coca-Cola Amatil limited ABN 26 004 139 397 www.ccamatil.com
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 001
Directors’ report (continueD) COCA-COL A AMATIL LIMITED FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
contents
Chairman’s Review 1
Managing Director’s Review 2
Financial Commentary 4
Board of Directors 5
Senior Management 7
Corporate Governance Statement 8
Financial and Statutory Reports 15
Directors’ Report 15
Financial Report 45
Income Statement 45
Statement of Comprehensive Income 46
Statement of Financial Position 47
Statement of Cash Flows 48
Statement of Changes in Equity 49
Notes to the Financial Statements 50
1. Summary of Significant Accounting Policies 50
2. Segment Reporting 57
3. Revenue 59
4. Income Statement Disclosures 59
5. Income Tax Expense 61
6. Cash and Cash Equivalents 62
7. Trade and Other Receivables 63
8. Inventories 64
9. Other Financial Assets 64
10. Investment in Joint Venture Entity 65
11. Investments in Bottlers’ Agreements 65
12. Property, Plant and Equipment 66
13. Intangible Assets 67
14. Impairment Testing of Investments in 68 Bottlers’ Agreements and Intangible Assets with Indefinite Lives
15. Trade and Other Payables 70
16. Interest Bearing Liabilities 71
17. Provisions 72
18. Deferred Tax Liabilities 73
19. Defined Benefit Superannuation Plans 74
20. Share Capital 77
21. Shares Held by Equity Compensation Plans 77
22. Reserves 78
23. Employee Ownership Plans 79
24. Dividends 82
25. Earnings Per Share (EPS) 82
26. Commitments 83
27. Contingencies 83
28. Auditors’ Remuneration 83
29. Business Combinations 84
30. Key Management Personnel Disclosures 85
31. Derivatives and Net Debt Reconciliation 88
32. Capital and Financial Risk Management 89
33. Related Parties 101
34. CCA Entity Disclosures 102
35. Deed of Cross Guarantee 103
36. Investments in Subsidiaries 104
37. Events After the Balance Date 105
Directors’ Declaration 106
Independent Auditor’s Report 107
Shareholder Information 108
Company Directories 110
Share Registry and Other Enquiries 110
Calendar of Events 2013 111
AnnuAl GEnERAl MEEtInG
the Annual General Meeting will be held on tuesday, 7th May 2013 at 10am in the James Cook Ballroom, InterContinental Sydney, cnr Bridge and Philip Streets, Sydney, nSW.
COCA-COlA AMAtIl lIMItED ABn 26 004 139 397
COCA-COLA AMATIL LIMITED ANNUAL REPORT 20121
chairMan’s review
Coca-Cola Amatil (CCA) reported net profi t after tax of $558.4 million and before signifi cant items, an increase of 5.0% on the 2011 full year result. the increase in earnings and strong cash fl ow generation has once again supported an increase in dividends.
CCA’s record 2012 profi t result was driven by strong performances from the Indonesian & PNG business and the Australian beverage operations with disappointing performances from New Zealand and SPC Ardmona. The ongoing impact of the high Australian dollar on the competitiveness of SPC Ardmona has led to a write-down of assets and goodwill in the business which was recognised as a signifi cant item in the accounts.
After including the impact of signifi cant items, reported net profi t after tax declined by 22.3%, with a net signifi cant write-down of $98.5 million this year cycling a $59.8 million signifi cant gain in 2011.
StROnG CASH FlOW & BAlAnCE SHEEt
Cash fl ow generation for the business continues to improve. Operating cash fl ow before signifi cant items increased by $128.1 million to $794.3 million and was suffi cient to fully fund CCA’s 2012 dividend payments and the signifi cant investments made in our business during the year. The balance sheet continues to be very strong, with interest cover increasing from 6.8 times to 8.0 times for the year before signifi cant items with the refi nancing of all maturing debt up to late 2014 completed by January 2013.
tOtAl DIVIDEnDS uP 13.3% FOR 2012
Solid earnings growth, strengthening of the balance sheet and strong cash fl ow generation has supported the 6.7% increase in full year ordinary dividends. The fi nal dividend of 32.5 cents for the year was franked to 75% and a special unfranked dividend of 3.5 cents per share has been declared to broadly supplement the fi nancial impact of the less than 100% franked fi nal dividend, taking full year dividends to shareholders to 59.5 cents per share, an increase of 13.3%.
The dividend payout ratio for full year ordinary dividends has increased from 74.9% to 76.4%. Given the continued strength of the balance sheet and fi nancial ratios, we would expect to target the dividend payout ratio to the middle of our 70-80% target payout level for 2013.
OuR EMPlOYEES
The 2012 results arose in major part from the quality of our people and their passion for servicing our customers. On behalf of the Board, I congratulate and thank all of CCA’s employees for their special efforts and contributions in 2012.
CORPORAtE GOVERnAnCE
CCA has an ongoing commitment to transparency and best practice corporate governance and continues to refi ne its practices in this area. The diversity strategy, which is detailed on page 12, centres on attraction, inclusion and retention of a diverse range of talent and has resulted in a marked progress towards achievement of our gender diversity and indigenous employment targets. The belief that a truly diverse culture not only drives better business outcomes but enables innovation and change, is led from the top of the organisation and embraced by all employees.
CCA’S RElAtIOnSHIP WItH tHE COCA-COlA COMPAnY The CCA Board continues to have a strong and constructive relationship with The Coca-Cola Company (TCCC), both as a shareholder and as the major supplier of ingredients for the majority of our non-alcoholic beverage products. As at 31 December 2012, TCCC held 29.3% of the shares in CCA and nominates two Non-Executive Directors to the current nine-member Board.
In 2012, CCA’s Related Party Committee, comprising the Independent Non-Executive Directors, met on seven occasions and reviewed all material transactions between CCA and TCCC ensuring that they are all at arm’s length. The Related Party Committee remains an important forum for dealing with all related party governance issues.
CORPORAtE SOCIAl RESPOnSIBIlItY
CCA believes in and strongly supports social and environmental activities through its community and environmental programs. These programs help to sustain business performance by strengthening the communities in which the Company operates, improving business effi ciency and developing strong relationships with stakeholders, ultimately leading to increased shareholder returns. CCA’s sustainability report, “Sustainability@CCA”, measures the Company’s achievements under four pillars – Environment, Marketplace, Workplace and Community.
I encourage you to read this report which is available on our website, www.ccamatil.com.
COnCluSIOn
CCA has delivered another excellent result in what was a challenging year for the business. The Board thanks all of the Group’s stakeholders in assisting CCA in this success.
David M. Gonski, AC Chairman
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 2
Managing Director’s review
OVERVIEW
CCA has delivered another excellent result with 5.0% growth in net profit to $558.4 million (before significant items). The standout performer was once again Indonesia & PNG with double-digit volume and earnings growth while Australia delivered solid volume and earnings growth and increased market share despite a difficult trading environment. Earnings growth was moderated by disappointing performances from New Zealand and SPC Ardmona.
Material progress has been made in developing the alcoholic beverages platform for growth in anticipation of our re-entry into the Australian beer market in December 2013, and with the multi-year investment in developing the manufacturing and technology platform nearing completion, the business has commenced a major operational efficiency programme to target $30-40 million of additional annual efficiency gains and cost out initiatives to be delivered progressively over the next three years.
REVIEW OF OPERAtIOnS
Australia
Volume and EBIT (earnings before interest, tax and significant items) growth of 3.3% was delivered against the backdrop of a weak consumer spending environment and very poor weather in the first quarter. Despite sustained aggressive competitor discounting in the second half, market share increased in sparkling beverages and EBIT margins were maintained above 20%.
Coke Zero was the standout performer with volumes growing by 12%. Mount Franklin grew strongly driven by successful promotional programs supporting the McGrath foundation while the launch of the colourful Jennifer Hawkins’ “Cozi” range grew lightly sparkling volumes by over 50%. The launch of Powerade Zero drove volume growth of around 5% in sports drinks, while the Grinders coffee business also delivered solid volume growth.
new Zealand & Fiji
The New Zealand business delivered a disappointing result with a decline in volume and earnings. The business experienced a very poor start to 2012 as New Zealand recorded one of the coolest and wettest summers on record and the economy and consumer confidence remained very soft throughout the year.
The energy category has continued to grow in New Zealand, with Mother growing volumes by over 5.0% driven by the successful “Mother made me do it” campaign and the Grinders coffee business also continued to grow driven by the expansion of its customer base.
Indonesia & PnG
The volume increase of 10.3% and EBIT growth of 16.8% was driven by increased demand for commercial ready-to-drink beverages, brand and package innovation and the continued strong growth of Minute Maid Pulpy juice and sparkling beverages.
In Indonesia, all of our major brands performed well, with highlights including the strong growth in trademark Coca-Cola brands (Coke, Sprite and Fanta) and Frestea. There were a number of new product launches including Minute Maid Pulpy Lemon and Burn Energy Drink, as well as new packaging launches in the fast-growing tea and juice categories.
In 2012, the business made significant investments in production capacity to support the ongoing growth of the business and in anticipation of a substantial new product and package pipeline for 2013.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 20123
Alcohol, Food & Services
Alcohol, Food & Services earnings increased by 2.0% before signifi cant items, due to a solid result from spirits and alcoholic ready-to-drink beverages, partly offset by a decline in SPC Ardmona (SPCA) earnings.
Beam earnings were driven by the success of Canadian Club, the introduction of new fl avour extensions in the Beam range (Jim Beam Honey, Black Cherry and Devil’s Cut), with Beam’s value share of the Spirits category increasing by close to one percentage point.
The ongoing impact of the high Australian dollar on the competitiveness of the SPCA business, the signifi cant defl ation of fresh fruit prices and the growth of imported grocery private label packaged fruit and vegetables has necessitated a second half signifi cant write-down in SPCA assets and goodwill.
Material progress made in positioning the alcoholic beverages platform for growth
CCA is the leading non-alcoholic beverages and spirits partner for the licenced trade in Australia. Signifi cant progress was made in strengthening its brand portfolio including an agreement to form a beer manufacturing joint venture with Casella commencing December 2013, and a long-term exclusive agreement to distribute Rekorderlig cider in Australia from January 2014.
Internationally, CCA acquired the Foster’s Fiji brewery and distillery and the commenced distribution of premium beer for Grupo Modelo, Carlsberg and Molson Coors in Fiji, Papua New Guinea and the Pacifi c Islands.
Commencement of major operational effi ciency programme
As the investment in the technology platform and the self-manufacture of PET bottles nears completion, the next phase of Project Zero initiatives will extend into driving productivity gains across the business.
We will seek to fully leverage the functionality of the new manufacturing and technology platforms which have been installed across the business over the past three years.
At this stage we are targeting $30-40 million of annual effi ciency gains and cost out initiatives to be delivered progressively over the next three years, with a particular focus on further reducing the cost base of the under-performing SPC Ardmona business and the New Zealand beverage operations.
PRIORItIES & OutlOOk FOR 2013
trading outlook
The Australian business expects to again deliver revenue and earnings growth in 2013. In addition, we believe productivity and effi ciency gains from the Project Zero investment programme will make a good contribution to earnings growth. We do however remain concerned by the generally weak consumer spending environment which has persisted for the last two years.
The strong momentum in Indonesia & PNG is expected to continue. The outlook for growth continues to be positive with revenue expected to exceed $1 billion for the fi rst time in 2013. The successful completion of a number of large investments in manufacturing and distribution has materially increased our production capacity and will support the ongoing growth of the business and the strong pipeline of new products and packs that will be launched in 2013.
Medium term capital spend to reduce to $350-420 million pa
Based on current forecasts, capital expenditure is expected to reduce from the 2012 peak levels to an average of $350-420 million per annum over the next three years, with 2013 capex expected to be around $420 million.
The delivery of consistently strong results from Indonesia & PNG will drive a shift in the weighting of capex to this region. For 2013 we expect capital expenditure in this region to increase to around $200 million, which we expect will deliver a 45% increase in our one-way-pack production capacity in Indonesia and the placement of around 55,000 new cold drink cooler doors, representing a 20% increase in cooler doors in Indonesia by the end of the year.
terry Davis Group Managing Director
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 4
FinanciaL coMMentarY
The following commentary summarises the Company’s performance regarding capital employed, cash flow, net debt and interest cover position, capital expenditure and significant items.
CAPItAl EMPlOYED
Capital employed decreased by $66.1 million to $3.71 billion with Group ROIC (before significant items) remaining very strong at 17.1%. Property, plant & equipment increased by $221.7 million, a result of CCA’s up-weighted Project Zero capital investment program and accelerated investment in Indonesia & PNG. The increase in IBAs and intangible assets of $26.7 million is mainly due to the continuing development and roll-out of the OAisys platform across the Group and goodwill arising from acquisitions less the write-down of goodwill in the SPCA business. Non-debt derivative assets declined by $18.6 million reflecting year-end market valuations of commodity contracts, foreign exchange contracts and the interest rate portion of cross currency swaps. Other net liabilities increased by $278.0 million, reflecting the sale of CCA’s 50% joint venture interest in Pacific Beverages to SABMiller in December 2011 for $288.6 million.
CASH FlOW
CCA generated a strong cash flow of $629.6 million, an increase of $345.4 million, which includes net proceeds from the sale of CCA’s joint venture interest in Pacific Beverages. Operating cash flow, before significant items, increased by $128.1 million to $794.3 million primarily due to improvements in earnings, working capital as well as lower interest and tax payments. Capital expenditure increased by $103.6 million reflecting the acceleration of high-returning Project Zero investments and accelerated investment in manufacturing capacity and cold drink coolers in the fast-growing Indonesia & PNG business. The $6.0 million net cash inflow from significant items comprises $34.2 million in after tax proceeds received from SABMiller for not proceeding with the acquisition of the Foster’s Australian spirits business, net of $28.2 million in net cash costs relating to current and prior year significant items.
nEt DEBt & IntERESt COVER
The balance sheet remains in a very strong position with net debt reducing by $110.4 million to $1.63 billion and EBIT interest cover increasing strongly, from 6.8x to 8.0x, before significant items. Net cash on hand and on deposit increased $663.1 million with CCA holding funds on deposit with major Australian banks from the pre-funding of all debt maturing until late 2014 with deposit margins exceeding the cost of funds.
CCA had total available debt facilities of approximately $3.0 billion with an average maturity of 4.1 years as at 31 December 2012. During 2012, CCA raised $580 million in domestic and offshore debt to prefund 2014 debt maturities. In January 2013, an additional $100 million was raised in the Euro Medium Term Note market to prefund 2014 debt maturities. As a result, 2014 debt maturities have been fully funded to November 2014.
$A million 2012 2011 $ Change Working capital1 842.7 856.7 (14.0) Property, plant & equipment 1,993.8 1,772.1 221.7 IBAs & intangible assets 1,533.9 1,507.2 26.7 Deferred tax liabilities (157.7) (153.8) (3.9) Derivatives – non-debt (63.9) (45.3) (18.6) Other net assets/(liabilities) (437.7) (159.7) (278.0) Capital employed 3,711.1 3,777.2 (66.1) ROIC2 % 17.1% 17.1% 0.0 pts
$A million 2012 2011 $ Change EBIT (before significant items) 895.5 868.9 26.6 Depreciation & amortisation 233.4 205.2 28.2 Change in working capital 33.2 (36.7) 69.9 Net interest paid (104.0) (118.4) 14.4 Taxation paid (167.0) (206.2) 39.2 Other (96.8) (46.6) (50.2) Operating cash flow (before significant items) 794.3 666.2 128.1 Capital expenditure (464.8) (361.2) (103.6) Cash impact of significant items 6.0 (24.4) 30.4 Other 5.5 3.6 1.9 Free cash flow 341.0 284.2 56.8 Net proceeds from sale of JV interest 288.6 – 288.6 Cash flow 629.6 284.2 345.4
$A million 2012 2011
$ Change Net Debt
Interest bearing liabilities 2,787.2 2,309.2 478.0 Debt related derivatives – liabilities 173.3 123.1 50.2 Long-term deposits (150.0) – (150.0) Trade & other receivables* – (24.5) 24.5 Less: Cash assets (1,178.0) (664.9) (513.1)
net Debt 1,632.5 1,742.9 (110.4) EBIT interest cover (before significant items) 8.0x 6.8x 1.2x
1. 2011 working capital excludes $24.5 million loan to Pacific Beverages. 2. Before significant items.
* Loan to Pacific Beverages
COCA-COLA AMATIL LIMITED ANNUAL REPORT 20125
CAPItAl EXPEnDItuRE
Capital expenditure increased by $103.6 million to $464.8 million. The major areas of capital expenditure included Project Zero initiatives across the Group, an acceleration of high-returning PET bottle self-manufacture investments in Australia, manufacturing capacity expansion and cold drink cooler investment in Indonesia & PNG and the continued rollout of cold drink coolers.
Project Zero continues to deliver efficiency gains with expenditure on Project Zero initiatives exceeding $270 million. The investment in PET bottle self-manufacture lines across the Group continued with five production lines completed in Australia, two in New Zealand and three lines in Indonesia. In addition, the business commissioned a PET bottle preform and bottle closure injection moulding plant at the Eastern Creek facility in NSW.
$120 million was invested in cold drink equipment across the Group. CCA’s cooler investment continues to be an important driver of cold drink market share gains in Australia with up-weighted investment in Indonesia & PNG significantly increasing the penetration of coolers in these countries.
SIGnIFICAnt ItEMS
CCA recorded a net $98.5 million after tax significant item expense for 2012. Significant items comprise:
- $34.2 million in after tax cash proceeds from SABMiller for not proceeding with the acquisition of the Foster’s Australian spirits business;
- $13.3 million in after tax cash gain from The Coca-Cola Company for agreeing to replace the Kirks brand in the licensed channel with the Cascade brand;
- The ongoing impact of the high Australian dollar on the competitiveness of the SPCA business, the significant deflation of fresh fruit prices and the growth of imported grocery private label packaged fruit and vegetables has necessitated a non-cash write-down of goodwill in the business of $48.0 million; and
- $98.0 million of largely non-cash expenses relating to inventory and other asset write-downs and other business restructuring costs primarily associated with the ongoing transformation of SPCA.
$A million 2012 2011 Change Australia* 281.4 229.1 52.3 New Zealand & Fiji* 43.0 31.3 11.7 Indonesia & PNG* 140.4 100.8 39.6
Capital expenditure 464.8 361.2 103.6 Capital expenditure/trading revenue 9.1% 7.5% 1.6 pts Capital expenditure/depreciation & amortisation 2.0x 1.8x 0.2x
* Geographic breakdown
BoarD oF Directors
DAVID GOnSkI, AC Chairman, non-Executive Director (Independent) – Age 59
Joined the Board in October 1997 – Chairman of the Related Party Committee and Nominations Committee and member of Audit & Risk Committee, Compensation Committee and Compliance & Social Responsibility Committee.
Background: Solicitor for 10 years with the law firm of Freehills and thereafter a corporate adviser in the firm of Wentworth Associates cofounded by him, now part of the Investec group. He is presently Chairman of Investec Bank Australia Ltd.
Degrees: B Com; LLB (UNSW); FAICD (Life), FCPA.
Other Listed Company Boards: Director, Singapore Telecommunications Limited (SingTel) (appointed 1 March 2013).
Other Listed Company Directorships held in the last three years: Westfield Group (resigned 2011); ASX Limited (resigned March 2012); and Singapore Airlines Limited (resigned August 2012).
Government & Community Involvement : Chancellor of the University of New South Wales; Chairman, the Future Fund, UNSW Foundation Limited, National E-Health Transition Authority and Sydney Theatre Company; Chair of the Federal Government Review of the Funding of Schools in Australia; Director, Infrastructure NSW and the Lowy Institute for International Policy; Member, ASIC External Advisory Panel; and Patron of the Australian Indigenous Education Fund.
tERRY DAVIS Group Managing Director, Executive Director – Age 55
Appointed in November 2001.
Background: Joined CCA in November 2001 as Group Managing Director after 14 years in the global wine industry with most recent appointment as the Managing Director of Beringer Blass (the wine division of Foster’s Group Ltd).
Other Listed Company Boards: Seven Group Holdings Limited, Chairman of SGH Related Party Committee.
Government & Community Involvement : Council Member, University of New South Wales Council (since 2006).
IlAnA AtlAS non-Executive Director (Independent) – Age 58
Joined the Board in February 2011 – Member of the Compensation Committee, Audit & Risk Committee, Related Party Committee and Nominations Committee.
Background: Ms Atlas has extensive experience in business and has held executive and non-executive roles across many industry sectors. From 2003 to 2010 Ms Atlas held senior executive roles within Westpac Banking Corporation. She has been a practising lawyer for 22 years and is a former partner of Mallesons Stephen Jaques.
Degrees: Master of Laws (University of Sydney); Bachelor of Laws (Hons); Bachelor Jurisprudence (Hons) (University of Western Australia).
Other Listed Company Boards: Suncorp Group Limited and Westfield Holdings Limited.
Government & Community Involvement : Chair of the Bell Shakespeare Company, Director of Human Rights Law Centre Limited and Pro-Chancellor of the Australian National University.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 6
BoarD oF Directors (continueD)
CAtHERInE BREnnER non-Executive Director (Independent) – Age 42
Joined the Board in April 2008 – Chair of the Compliance & Social Responsibility Committee and Member of the Compensation Committee, Related Party Committee and Nominations Committee.
Background: Ms Brenner is a former senior investment banker. Prior to this, Ms Brenner was a corporate lawyer.
Degrees: BEc; LLB (Macquarie University); MBA (Australian Graduate School of Management, UNSW).
Other Listed Company Boards: AMP Limited and Boral Limited.
Other Listed Company Directorships held in the last three years: Centennial Coal Company Limited (resigned 2010).
Government & Community Involvement : Trustee of Sydney Opera House Trust, Council Member of Chief Executive Women.
AntHOnY (tOnY) FROGGAtt non-Executive Director (Independent) – Age 64
Joined the Board in December 2010 – Chairman of the Compensation Committee, Member of the Audit & Risk Committee, Related Party Committee and Nominations Committee.
Background: Mr Froggatt is a former Chief Executive Officer of Scottish & Newcastle plc, a global brewing company based in Edinburgh, UK. Prior to that, he held various senior management positions in Seagram Spirits & Wine Group, Diageo plc, H J Heinz and The Gillette Company. He is experienced in global business and brand development in both mature and developing markets, as well as having extensive marketing and distribution knowledge, particularly in the international food and beverages sector.
Degrees: Bachelor of Laws degree from Queen Mary College, London; MBA from Columbia Business School, New York.
Other Listed Company Boards: Non-Executive Director, Brambles Limited and Billabong International Limited.
Other Listed Company Directorships held in the last three years: AXA Asia Pacific Holdings Limited (from 16 April 2008 to March 2011).
MARtIn JAnSEn non-Executive Director (nominee of tCCC) – Age 54
Joined the Board in December 2009 – Member of the Audit & Risk Committee.
Background: Martin Jansen is the Regional Director, Bottling Investments Group for China, Singapore and Malaysia and Chief Executive Officer for Coca-Cola China Industries Ltd and, as such, is responsible for The Coca-Cola Company’s Bottling Investment interests in China, Singapore and Malaysia. Mr Jansen joined the Coca-Cola system in 1998 when he was appointed Chief Operating Officer for Coca-Cola Sabco. In 2001, he was appointed Chief Executive Officer leading an anchor bottler with operations in 12 countries in Africa and Asia.
Degree: Bachelor of Commercial Economics (HEAO Groningen, Netherlands); Graduate of the Executive Development Program at Northwestern University Kellogg School of Management.
Other Listed Company Boards: Director, Haad Thip Public Company Limited (Thailand bottling partner).
Government & Community Involvement : Director, The Coca-Cola Company African Foundation.
GEOFFREY kEllY non-Executive Director (nominee of tCCC) – Age 68
Joined the Board in April 2004 – (having previously been a Director between 1996 and 2001). Member of Compensation Committee.
Background: Joined The Coca-Cola Company in 1970 and has held legal positions with TCCC in the US, Asia and Europe. Mr Kelly retired as Senior Vice President and General Counsel, Chief Legal Officer of The Coca-Cola Company on 1 March 2012. He continues to provide consultancy services to that Company.
Degree: LLB (University of Sydney).
Government & Community Involvement : Director, Leadership Council for Legal Diversity and the University of Sydney USA Foundation; Advisory Board Director, YKK Americas; Past Chairman, Japan America Society of Georgia.
WAl kInG, AO non-Executive Director (Independent) – Age 68
Joined the Board in February 2002 – Member of the Related Party Committee, Nominations Committee and Compliance & Social Responsibility Committee.
Background: Mr King has worked in the construction industry for over 40 years and was Chief Executive Officer of Leighton Holdings Limited, a company with substantial operations in Australia, Asia and the Middle East, from 1987 until his retirement on 31 December 2010. He remains as a Consultant.
Degrees: B Eng; M EngSc and Honorary Doctor of Science (UNSW).
Other Listed Company Boards: Ausdrill Limited (Non-Executive Director and Deputy Chairman).
Other Listed Company Directorships held in the last three years: Leighton Holdings Limited (retired 31 December 2010).
Government & Community Involvement : Deputy Chairman, University of New South Wales Foundation Limited; Director, Kimberley Foundation Australia Limited and Garvan Research Foundation and Council Member, University of New South Wales (to June 2012).
DAVID MEIklEJOHn, AM non-Executive Director (Independent) – Age 71
Joined the Board in February 2005 – Chairman of the Audit & Risk Committee, and Member of the Nominations Committee, Related Party Committee and Compliance & Social Responsibility Committee.
Background: Strong experience in finance and financial management and as a Company Director. Chief Financial Officer of Amcor Limited for 19 years until retirement in June 2000.
Degree: B Com; Dip Ed (University of Queensland); FAIM, FAICD, FCPA.
Other Listed Company Boards: Australia and New Zealand Banking Group Ltd and Mirrabooka Investments Limited.
Other Listed Company Directorships held in the last three years: PaperlinX Limited (retired August 2011).
Government & Community Involvement : Chairman of the Board of Governance of the Manningham Aged Care Centre.
GEnERAl COunSEl AnD COMPAnY SECREtARY George Forster – Age 58
Mr Forster joined CCA in April 2005 as General Counsel. He was appointed Company Secretary in February 2007. Mr Forster holds Bachelor of Laws and Bachelor of Commerce degrees from the University of New South Wales and has extensive experience of over thirty years as a corporate and commercial lawyer, including having been a partner of Freehills in Sydney.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 20127
GEORGE ADAMS Managing Director – new Zealand & Fiji – Age 46
Appointed in December 2003 until April 2013
Background: George joined CCA New Zealand on 1 December 2003 and will complete his assignment no later than June 2013. George has 17 years’ experience in the Coca-Cola bottling system having previously spent 10 years with Coca-Cola Hellenic Bottling Company in a number of senior Finance, Commercial and IT roles in Europe.
PEtER kEllY Managing Director – SPCA – Age 48
Appointed in April 2013
Background: Peter has spent 25 years with the Coca-Cola system, having joined The Coca-Cola Company in 1988 and then CCA in 1993. He has a strong track record of success in a cross section of business functions and has demonstrated breadth and depth of capability having held a number of key positions, including General Manager Grocery and Director of Operations and Logistics in CCA’s Australian business before taking on the role of Regional Director for Asia with accountability for the Indonesian & PNG business units. Since early 2012 he has held the position of Managing Director, Business Services (commercialisation of projects and Mergers & Acquisitions), before being appointed SPCA MD in April 2013.
BARRY O’COnnEll Managing Director – new Zealand & Fiji – Age 46
Appointed in April 2013
Background: Barry has a proven track record of success and joins CCA after 20 years with Coca-Cola Hellenic (CCHBC) where he has held senior positions with increasing responsibility. Having started his career in a marketing role in Ireland, Barry went on to work in the startup of the CCHBC Russian franchise in 1997 before holding sales and marketing director’s roles in both Ireland and Switzerland. He was then appointed to his current role of General Manager for Austria & Slovenia, in 2009. Under Barry’s leadership, the Austrian business has been one of the best performing markets in CCHBC, delivering double digit EBIT growth and significant market share gains over the last three years.
nESSA O’SullIVAn Group Chief Financial Officer – Age 48
Appointed in September 2010
Background: A Fellow of the Institute of Chartered Accountants in Ireland and a graduate of University College Dublin. Nessa joined CCA in May 2005 as CFO for the Australian Beverage business. Prior to joining CCA Nessa held the role of CFO and VP for the Australia/ New Zealand region of Yum! Restaurants International. She spent 12 years with Yum! in senior roles in Finance, Strategic Planning and IT. Nessa holds dual Irish and Australian citizenship and has worked in Europe, the United States and Australia.
senior ManageMent
VInCE PInnERI Managing Director – SPCA – Age 54
Appointed in July 2010 until April 2013
Background: Vince has worked within the Coca-Cola system for over 27 years and has gained great experience across many countries during his time. In 2008 Vince became General Manager Strategy for Non-Alcoholic Beverages and then General Manager of Immediate Consumption and Convenience & Petroleum before becoming Managing Director of SPCA in July 2010.
From April 2013 he has been appointed as Director of New Ventures for CCA Australian Beverages.
ERICH REY President Director – Indonesia – Age 51
Appointed in November 2011
Background: Erich first joined the Coca-Cola system in 1996, as the General Manager for one of the bottlers of Panamco Colombia and worked in a variety of roles across Panamco’s Colombia and Latin American operations. He was Femsa’s Director of Operations in 2003 in Nicaragua and was the General Manager for Ecuador Bottling Company prior to joining CCA. Erich was appointed to the position of President Director – Indonesia in November 2011.
WARWICk WHItE Managing Director – Australasia – Age 51
Appointed in November 2002
Background: Warwick has over 31 years in the Coca-Cola System and re-joined Coca-Cola Amatil in November 2002 as the Managing Director for the CCA Australian beverages business.
Prior to that, Warwick held marketing and general management roles within the Coca-Cola System. Immediately prior to joining CCA, Warwick was the Regional Director for Coca-Cola Hellenic Bottling Company with responsibility for Ireland, Poland, Hungary, Czech Republic and Slovakia. This was preceded by 14 years in Great Britain, Europe and Ireland in progressively more senior roles within the Coca-Cola System.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 8
corporate governance stateMent
At Coca-Cola Amatil (CCA), the Board of Directors is committed to achieving the highest standards in the areas of corporate governance and business conduct. This Corporate Governance Statement reports on the corporate governance principles and practices followed by CCA for the period 1 January 2012 to 31 December 2012 as required by the ASX Listing Rules.
The Company has followed all of the recommendations established in the ASX Corporate Governance Council’s Principles and Recommendations, 2nd Edition.
The Policies and Board Committee Charters referred to in this Report may be accessed on the Company’s website at www.ccamatil.com.
PRInCIPlE 1 – lAY SOlID FOunDAtIOnS FOR MAnAGEMEnt AnD OVERSIGHt
the Role of the Board
The Board represents shareholders and has the ultimate responsibility for managing CCA’s business and affairs to the highest standards of corporate governance and business conduct. The Board continues to operate on the principle that all significant matters are dealt with by the full Board and has specifically reserved the following matters for its decisions:
• the strategic direction of the Company; • approving budgets and other performance indicators,
reviewing performance against them and initiating corrective action when required;
• ensuring that there are adequate structures to provide for compliance with applicable laws;
• ensuring that there are adequate systems and procedures to identify, assess and manage risks;
• ensuring that there are appropriate policies and systems in place to ensure compliance;
• monitoring the Board structure and composition; • appointing the Group Managing Director and evaluating his or her
ongoing performance against predetermined criteria; • approving the remuneration of the Group Managing Director and
remuneration policy and succession plans for the Group Managing Director and senior management;
• ensuring that there is an appropriate focus on the interests of all stakeholders; and
• representing the interests of and being accountable to the Company’s shareholders.
To assist in its deliberations, the Board has established five main committees which, apart from routine matters, act primarily in a review or advisory capacity on the matters set out in their respective Charters. These are the Related Party Committee; Nominations Committee; Compliance & Social Responsibility Committee; Audit & Risk Committee; and Compensation Committee. The Charters of each Committee are summarised in this report. The delegation of responsibilities to these Committees will only occur provided that sufficient systems are in place to ensure that the Board is meeting its responsibilities.
Role of Group Managing Director
The responsibility for implementing the approved business plans and for the day-to-day operations of CCA is delegated to the Group Managing Director who, with the management team, is accountable to the Board. The Board approves the Executive Chart of Authority which sets out the authority limits for the Group Managing Director and senior management.
Senior Executives’ Performance Evaluation Across all of CCA’s Business Units, there is a strong performance management discipline together with competitive reward and incentive programs. The Company’s approach in recent years is to move to have a greater component of at-risk remuneration for senior executives.
Detailed business plans are prepared and approved by the CCA Board prior to the start of the calendar year. The senior executives are then measured against the achievement of these plans during and at the completion of the calendar year, and their annual at-risk remuneration reflects their business plan achievements. An evaluation of performance has been undertaken for all senior managers for 2012, and this has been in accordance with the above process.
PRInCIPlE 2 – StRuCtuRE tHE BOARD tO ADD VAluE
Composition of the Board
The composition of the Board is based on the following factors:
• the Chairman is a Non-Executive Director and is independent from The Coca-Cola Company;
• the Group Managing Director is the Executive Director; • The Coca-Cola Company has nominated two Non-Executive Directors
(currently Geoffrey Kelly and Martin Jansen); • the majority of the Non-Executive Directors are independent; • one-third of the Board (other than the Group Managing Director) is
required to retire at each Annual General Meeting and may stand for re-election. The Directors to retire shall be those who have been longest in office since their last election; and
• a Director who has been appointed by the Board to fill a casual vacancy is required to be considered for re-election by the shareholders at the next Annual General Meeting.
The Board is comprised of the following nine members:
name Position Independent Appointed
David Gonski, AC Chairman, Non-Executive Director
Yes 1997
Ilana Atlas Non-Executive Director Yes 2011
Catherine Brenner Non-Executive Director Yes 2008
Anthony (Tony) Froggatt Non-Executive Director Yes 2010
Wal King, AO Non-Executive Director Yes 2002
David Meiklejohn, AM Non-Executive Director Yes 2005
Martin Jansen* Non-Executive Director No 2009
Geoffrey Kelly* Non-Executive Director No 2004
Terry Davis Executive Director and Group Managing Director
No 2001
* Nominated by The Coca-Cola Company
Details of the skills, experience and expertise of each Director are set out on page 6 of this Report. Attendance at Board and Committee meetings and the names of Committee members are included in the Directors’ Report on pages 16 and 17.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 20129
Directors – Independence
The majority of the Board are independent Directors. A Director is considered independent provided he or she is free of any business or other relationship with CCA or a related party which could reasonably be perceived to materially interfere with the exercise of their unfettered and independent judgement. A related party for this purpose would include The Coca-Cola Company.
When a potential conflict of interest arises, the Director concerned withdraws from the Board meeting while such matters are considered. Accordingly, the Director concerned neither takes part in discussions nor exercises any influence over the Board if a potential conflict of interest exists. Transactions with The Coca-Cola Company are reviewed by the Related Party Committee. Related party transactions are disclosed in Note 33 to the financial statements.
Directors – Selection
The Board’s Nominations Committee regularly reviews the composition of the Board to ensure that there is an appropriate mix of abilities, experience and diversity to serve the interests of all shareholders. Any recommendations are presented to the full Board.
The process of appointing a Director is that when a vacancy exists, or is expected, the Nominations Committee identifies candidates with the appropriate expertise and experience having regard to the skills that the candidate would bring to the Board and the balance of skills that the existing Directors hold. The Board reviews the candidates and the most suitable person is either appointed by the Board and comes up for re-election at the next Annual General Meeting or is recommended to shareholders for election at a shareholders’ meeting.
Related Party Committee
The Related Party Committee is comprised of all the independent Non-Executive Directors (and does not include any Directors who are or have been associated with a related party). The Group Managing Director and the Group Chief Financial Officer attend meetings by invitation.
The Committee reviews transactions between CCA and parties who may not be at arm’s length (“related parties”) to ensure that the terms of such transactions are no more favourable than would reasonably be expected of transactions negotiated on an arm’s length basis. It meets prior to each scheduled Board meeting to review all material transactions of CCA in which The Coca-Cola Company, or any other related party, is involved.
Nominations Committee
The Nominations Committee is comprised of all the independent Non-Executive Directors (it does not include any Directors who are or have been associated with a related party).
The Committee reviews the Board’s composition to ensure that it comprises Directors with the right mix of skills, experience, expertise and diversity to enable it to fulfil its responsibilities to shareholders. The Committee also reviews Board succession policy and identifies suitable candidates for appointment to the Board and reviews general matters of corporate governance. The Committee has also been given responsibility for reviewing the Company’s standards of corporate governance.
Directors – Induction and Education
On appointment, each Non-Executive Director is required to acknowledge the terms of appointment as set out in their letter of appointment. The appointment letter covers, inter alia, the term of appointment, duties, remuneration including superannuation and expenses, rights of access to information, other directorships, dealing in CCA’s shares, disclosure of Director’s interests, insurance and indemnity and termination. The Director is provided with the Company’s policies and Board Committee charters and briefed on the content by the Company Secretary.
An induction program is made available to newly appointed Directors covering such topics as the Board’s role, Board composition and conduct, and the risks and responsibilities of company directors, to ensure that they are fully informed on current governance issues. The program also includes briefings on the culture and values of the Company, the roles and responsibilities of senior executives and the Company’s financial, strategic, operational and risk management position.
Independent Professional Advice
For the purposes of the proper performance of their duties, Directors are entitled to seek independent professional advice at CCA’s expense. Before doing so, a Director must notify the Chairman (or the Group Managing Director in the Chairman’s absence) and must make a copy of the advice available to all Directors.
Directors – Performance Review
A review of the Directors performance is undertaken at least every two years. If a majority of Directors considers a Director’s performance falls below the predetermined criteria required, then the Director has agreed to retire at the next Annual General Meeting and a resolution will be put to shareholders to vote on the re-election of that Director.
The Board has, in late 2012, commissioned an independent external review of the Board to take place in the first half of 2013. This review has commenced.
The last external performance review was in 2009. In 2011, the Board resolved that an internal review be undertaken by the Chairman with each Director individually and members of senior management to discuss the operation and composition of the Board. The process of Board performance will remain under continuous review.
Company Secretary
The Company Secretary is appointed by the Board and is accountable to the Board, through the Chairman, on all governance matters.
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Compliance & Social Responsibility Committee
The Compliance & Social Responsibility Committee comprises at least three Non-Executive Directors. The Committee regularly reviews and reports to the Board on compliance with laws including occupational health and safety, environmental protection, product safety and trade practices.
The Committee also reviews policies reflecting on the Company’s reputation, including quality standards, dealing in the Company’s securities and disclosure. Its responsibilities include – Diversity: recommend to the Board measurable objectives to be set in accordance with the Diversity Policy and review and report to the Board, on an annual basis, on the effectiveness of the Diversity Policy; Social responsibility: review reports and make recommendations to the Board, where appropriate, in respect of political donations, community sponsorship and support and relevant social issues such as obesity, environmentally sustainable initiatives, and CCA’s carbon footprint and other social issues that may be relevant to the Company.
PRInCIPlE 3: PROMOtE EtHICAl AnD RESPOnSIBlE DECISIOn-MAkInG
Code of Business Conduct
The Board recognises the need to observe the highest standards of corporate practice and business conduct. The Code of Business Conduct is reviewed regularly to ensure that the standards set in the Code reflect CCA’s values, acknowledge our responsibilities to our stakeholders and to each other, and ensure that management and employees know what is expected of them and apply high ethical standards in all of CCA’s activities.
The Audit & Risk Committee is responsible for ensuring that effective compliance policies exist to ensure compliance with the requirements established in the Code of Business Conduct. The Code contains procedures for identifying and reporting any departures from the required standards. CCA has also established a system for distribution of the Code at appropriate intervals to employees and for them to acknowledge its receipt.
The Code sets standards of behaviour expected from everyone who performs work for CCA – Directors, employees and individual contractors. It is also expected that CCA’s suppliers will enforce a similar set of standards with their employees. The code is available on our website at www.ccamatil.com.
Interests of Stakeholders
CCA acknowledges the importance of its relationships with its shareholders and other stakeholders including employees, contractors and the wider community. CCA believes that being a good corporate citizen is an essential part of business and pursues this goal in all the markets in which it operates. CCA publishes Sustainability@CCA Reports which focus on four pillars of commitment – Environment, Marketplace, Workplace and Community. These Reports can be viewed on the CCA website at www.ccamatil.com.
The Compliance & Social Responsibility Committee assists the Board in determining whether the systems of control, which management has established, effectively safeguard against contraventions of the Company’s statutory responsibilities and there are policies and controls to protect the Company’s reputation as a responsible corporate citizen.
Share Ownership and Dealings
Details of the shareholdings of Directors in the Company are set out in the Directors’ Report on page 15. The Non-Executive Directors Share Plan was suspended on 1 September 2009 due to the change in taxation arrangements of share plans announced by the Australian Government during 2009.
Non-Executive Directors are encouraged to hold CCA shares, with shareholding guidelines introduced during 2010, based on length of time served as a CCA Director. See page X of the Remuneration Report for details.
Policy on trading in CCA Shares
Directors are subject to the Corporations Act 2001 which restricts their buying, selling or trading securities in CCA if they are in possession of inside information.
The Board has adopted a formal policy for share dealings by Directors and senior management. Under the policy, trading of CCA shares by Directors and Senior Management is prohibited at all times except for the four weeks commencing on the day after the release of the Half Year and Full Year results and the holding of the Annual General Meeting, unless exceptional circumstances apply. The policy prohibits speculative transactions involving CCA shares, the granting of security over CCA shares or entering into margin lending arrangements involving CCA Shares and reinforces the prohibition on insider trading contained in the Corporations Act 2001.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201211
Diversity Report – CCA’s Progress to Date
CCA values diversity and believes that embracing the inherent differences in our people will result in better business outcomes. A truly diverse culture leads to an inclusive workplace which is an enabler for innovation, effective decision making and ultimately a more engaged and productive workforce.
CCA first established the Diversity Policy in August 2010. It clearly articulates the company’s commitments, expectations and responsibilities and aims to create a fair and respectful workplace where equality of opportunity exists throughout all phases of the employment lifecycle.
The core theme of the Diversity Strategy since 2010 has been “embracing difference” in the areas of gender, indigenous employment, disability, ethnic background and age. Whilst various programmes have been initiated across the CCA group, the ability to attract, develop and retain women has been identified as a key opportunity and therefore gender diversity has become the main priority.
CCA has fully adopted the ASX Corporate Governance Council’s recommendations on gender diversity and its efforts reflect the spirit and intent.
The CCA Board completely endorses and supports CCA’s diversity strategy. The Chair of the Board, David Gonski, is a recognised champion of gender equality and his passion and belief in the business benefits of diversity is reflected throughout the Board.
Objectives, which are tracked and reviewed by the Board annually, have been established for achieving gender diversity, including gender targets for female non-executive directors and senior executives. In addition, responsibility for tracking progress of gender initiatives on a more frequent basis has been delegated to the Compliance and Social Responsibility Committee of the Board. An annual pay parity report is also prepared and reviewed by the Compensation Committee to minimise the risk of unconscious gender bias in remuneration.
The gender agenda is steered from the top of the organisation and CCA’s Group Managing Director, Terry Davis, has led by example with female executives comprising 50% of his sole direct reports. Mr Davis has also been an active public advocate of gender diversity, participating as a guest speaker and panel member for UN Women on International Women’s Day and for the Gender Equality Commission (formerly EOWA) at the launch of the 2012 Census of Women in Leadership.
Country specific short and long term diversity targets have been identified for executive, management and non-management positions, which more closely reflect the consumers, customers and cultures of the communities in which we operate. These targets are monitored using a Scorecard which has been created and tested by the Australian business and, in addition to gender balance by function, tracks graduate intake statistics and participation in training and development activities. The Scorecard results are reviewed at the Australian Executive Team meeting on a quarterly basis to ensure performance against objectives is on target and actions against variances agreed. This scorecard approach will be rolled out across the CCA Group in 2013.
All managers in CCA have responsibility for assisting in the achievement of the diversity goals. The Human Resources function is responsible for the development and maintenance of the policy, education and training, and monitoring of relevant gender statistics. In 2012 a Diversity and Inclusion Manager was appointed, this new position was created to ensure the relevant level of expertise and capabilities are available internally and provide appropriate focus. This manager is also responsible for reviewing external best practice and adopting key learnings across the CCA Group.
Gender Diversity Targets
Diversity targets and Progress to Date for the CCA Board and Senior Executives
Female % non-Executive Directors 2011 Actual 25 2012 Actual 25 2014 Target 30 2016 Target 33 Senior Executives 2011 Actual 16 2012 Actual *21 2014 Target 19 2016 Target 22
Diversity targets for CCA Group total CCA
Group %
Australia & new
Zealand %
Indonesia, PnG
& Fiji %
Female Managers 2011 Actual 26 28 21 2012 Actual 27 30 22 2014 Target 29 31 22 2016 Target 32 34 24
total CCA
Group %
Australia & new
Zealand %
Indonesia, PnG
& Fiji %
Female All Employees
2011 Actual 17 29 8
2012 Actual 17 29 9
2014 Target 18 31 8
2016 Target 19 34 8
* A calibration exercise which resulted in the regrading of a number of management positions in this small group is the main contributor to the increased of female Senior Executives in 2012.
In order to achieve the 2016 target CCA is required to retain the existing female managers and appoint an additional 119 females into positions in this management group. Given the relatively low levels of turnover, and CCA’s commitment to make selection decisions based purely on merit, this target is considered both aspirational and stretching.
The developing markets of Indonesia, PNG & Fiji have a large combined workforce which includes a high manual labour component, resulting in a strong orientation to male employees in these countries.
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corporate governance stateMent (continueD)
The CCA Diversity Strategy
The CCA Diversity Strategy, originally developed in Australia, has been appropriately adopted across the Group. The strategy is based around three core pillars, detailed below, and country specific initiatives have been designed and implemented locally.
1. Sourcing – Attracting and actively searching for the best and most diverse range of talent in the market.
2. Inclusion – Creating an environment that recognises and celebrates difference, a viable CCA community.
3. Retention – Doing the right and fair thing, retaining our best talent, becoming an Employer of Choice.
Sourcing:
Various initiatives have been adopted which focus on sourcing talent for roles at all levels of the organisation. Recruitment processes have been reviewed and updated where necessary to eliminate bias and ensure the criteria for selection are based purely on suitability to perform the role. Some examples of progress include:
- In Australia, CCA’s online recruitment process was refined in 2012, including the introduction of four voluntary diversity questions to the online application process. As a result of this change, CCA can now monitor online application rates by four demographic categories including gender and indigenous cultural identity. A baseline has been established from the 2012 data which will be monitored to maintain CCA’s focus on achieving high quality and diverse recruitment shortlists.
- Performance measures for all recruitment specialists in Australia were introduced to ensure that gender diverse shortlists are generated for vacancies. In addition, approximately 60 Human Resources and recruitment specialists attended “unconscious bias and equitable recruitment” training and are responsible for supporting line managers in making objective hiring decisions. In 2012, approximately 42% of all external hires were female, a 9% increase on the previous year.
- Graduate programmes have been a very successful vehicle for attracting high potential female employees to the organisation. Since 2010, Indonesia has recruited 219 graduates into the Trainee Programme, 54% of which have been female. In New Zealand, 66% of the most recent graduate intake was female and the NZ team have successfully supported females in securing permanent positions and pursuing CCA careers in traditionally male oriented roles on completion of the graduate trainee programme.
- CCA New Zealand is a long standing sponsor of the First Foundation Scholarship, a charitable programme which awards scholarships to high potential students from the Polynesian and Maori communities. The support takes the form of financial assistance towards University fees, paid work experience and access to mentoring throughout the scholars’ time at University. The two most recent students awarded the scholarship by CCA New Zealand are both female.
Inclusion:
In 2012, CCA continued to invest in diversity education programmes. Diversity awareness is included in management induction programmes and initiatives have been targeted at creating an environment which encourages all employees to provide feedback to the business and participate in development activities.
- The “Women’s Mentoring Program” in CCA Australia, which is aimed at strengthening the pipeline of future female leaders, was extended, with 77 females participating in the program nationally. A complementary male program “Mastering Gender Leadership” was piloted in Victoria with 24 male managers, and feedback from the both the Women’s Mentoring Program and Mastering Gender Leadership programs will be used to develop new customised CCA training material in 2013.
- CCA Australia also implemented gender leadership and unconscious bias training to approximately 95 Sales and Customer Service managers. This function was prioritised because it had historically experienced lower levels of female participation and results are already evident with the highest annual increase in female participation being recorded in 2012. The training will continue to be rolled out to other areas of the business during 2013.
- Addressing cultural attitudes to women in the workplace has also been area of focus within the inclusion pillar of the strategy. A large range of initiatives have been executed, including establishment of an Internal Women’s Empowerment Committee in New Zealand, chaired by a recently appointed female member of the Executive Team. This committee’s work is supported by an Intranet Networking Group. In Fiji, a senior female executive hosts a series of focus groups within the business to gather feedback and suggestions from female employees on how to improve the Fiji business as a great place to work for women. The outcomes are shared with the Human Resources Manager and form the basis of the local diversity initiatives.
Retention:
Retaining female employees is a critical factor in ensuring the business benefits of gender diversity are achieved. Opportunities for career development and training are available to all employees and progress is monitored through the Organisation Capability Review (OCR). This process is core to CCA’s talent management practices and ensures that internal promotions are based on merit and objective assessment is used in succession planning.
- The OCR process enables local teams to track statistics of high potential employees and ensures programs are put in place to improve and maintain diversity in leadership. This enables CCA to predict future success by ensuring succession pools accurately reflect diversity targets.
- Throughout 2012 CCA Australia’s national Embracing Difference Council continued to guide the execution of the diversity strategy, and in recognition of the importance of diversity to CCA’s progress, the council will be chaired in 2013 by CCA’s Australian Beverages Managing Director.
- CCA Indonesia have focused on retention of employees recruited through the Graduate Trainee Programme and have succeeded in retaining 88% of females graduates from intakes over the last three years. This compares to a retention rate of 79% of male graduates for the same period.
- One key theme identified from employee feedback was a desire to balance work and family commitments, as well as tailoring employee benefits. As a result of this feedback, CCA Australia undertook a review of employee benefits and in late 2012 introduced a new Corporate Family Programme. This includes two online information portals; one aimed at supporting new parents and parents with childcare responsibilities, and the other focussed on providing support to employees who are considering retirement or have caring responsibilities for elderly family members. The utilisation of these and other benefits will be monitored throughout 2013, and further refinements may be made to ensure that CCA continues to provide meaningful and attractive employee benefits which fit with the overall Diversity Strategy.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201213
Indigenous Employment Program
In 2011 CCA joined the Australian Employment Covenant and committed to place 150 Aborigines into jobs. As part of that ongoing commitment, in March 2012 CCA engaged former Wallaby rugby star Glen Ella in the newly created position of National Indigenous Program Manager. Mr Ella is responsible for raising the profile of CCA’s Indigenous Program as well as strengthening ties with communities and indigenous organisations.
Under the Program, four new traineeship positions across CCA’s Human Resources and Finance departments were introduced; CCA advertised job vacancies on the Australian Employment Covenant website and established a national network of indigenous employment partners. CCA also further developed relationships with indigenous organisations and schools.
In total 29 new Indigenous employees commenced work with CCA in 2012.
For more information on CCA’s full Indigenous strategy which includes the Coca-Cola Australia Foundation’s partnerships with indigenous education organisations and CCA’s Remote Communities Strategy, a sales program aimed at increasing the take up of low or no sugar beverages and spring water in Indigenous communities, can be found in CCA’s corporate responsibility report, Sustainability@CCA on the company website.
Audit & Risk Committee
The Audit & Risk Committee comprises at least three Non-Executive Directors, the majority of whom are Independent. The Group Managing Director and Group Chief Financial Officer attend meetings by invitation.
The key responsibilities of the Committee are: Financial Reporting – review Financial Statements to ensure the appropriateness of accounting policies, and compliance with accounting policies and standards, compliance with statutory requirements and the adequacy of disclosure; Risk Management – ensure CCA has effective policies in place covering key risks including, but not limited to, overall business risk in CCA’s operations, treasury risk (including currency and borrowing risk), procurement, insurance, taxation and litigation; Audit – review of the auditor’s performance, the professional independence of the auditor, audit policies, procedures and reports, as a direct link between the Board and the auditor.
The Committee approves the policies, processes and framework for identifying, analysing and addressing complaints (including whistleblowing) and reviews material complaints and their resolution.
PRInCIPlE 4: SAFEGuARD IntEGRItY In FInAnCIAl REPORtInG
The Board has an Audit & Risk Committee which meets four times a year and reports to the Board on any matters relevant to the Committee’s role and responsibilities. A summary of the Committee’s formal Charter is set out below.
PRInCIPlE 5: MAkE tIMElY AnD BAlAnCED DISClOSuRE
CCA has a Disclosure & Communication Policy which includes the following principles, consistent with the continuous disclosure obligations under ASX Listing Rules that govern CCA’s communication:
• CCA will, in accordance with ASX Listing Rules, immediately issue to ASX any information that a reasonable person would expect to have a material effect on the price or value of CCA’s securities;
• CCA’s Disclosure Committee manages the day-to-day continuous disclosure issues and operates flexibly and informally. It is responsible for compliance, coordinating disclosure and educating employees about CCA’s communication policy; and
• all material information issued to the ASX, the Annual Reports, full year and half year results and presentation material given to analysts, is published on CCA’s website (www.ccamatil.com). Any person wishing to receive advice by email of CCA’s ASX announcements can register at www.ccamatil.com.
The Company Secretary is the primary person responsible for communication with ASX. In the absence of the Company Secretary, the Investor Relations Manager is the contact. Only authorised spokespersons can communicate on behalf of the Company with shareholders, the media or the investment community.
PRInCIPlE 6: RESPECt tHE RIGHtS OF SHAREHOlDERS
The rights of CCA’s shareholders are detailed in CCA’s Constitution. Those rights include electing the members of the Board. In addition, shareholders have the right to vote on important matters which have an impact on CCA. To allow shareholders to effectively exercise these rights, the Board is committed to improving the communication to shareholders of high quality, relevant and useful information in a timely manner.
CCA’s Disclosure & Communication Policy requires that shareholders be informed about strategic objectives and major developments. CCA is committed to keeping shareholders informed and improving accessibility to shareholders through:
• Australian Securities Exchange (ASX) announcements; • company publications (including the Annual Report and
Shareholder News); • webcasting analyst and media briefings; • the Annual General Meeting; • the Company website (www.ccamatil.com); • the investor relations contact number (61 2 9259 6159); and • a suggestion box on the website.
CCA’s shareholders are encouraged to make their views known to the Company and to directly raise matters of concern. From time to time, CCA requests meetings with its shareholders and shareholder interest groups to share views on matters of interest. The views of those parties are shared with the Board on a regular basis, both by the Chairman and management.
Shareholders are encouraged to attend CCA’s Annual General Meeting and use this opportunity to ask questions. The Annual General Meeting will remain the main opportunity each year for the majority of shareholders to comment and to question CCA’s Board and management. The external auditor attends the Annual General Meeting and is available to answer shareholder questions about the conduct of the audit and the preparation and content of the auditor’s report.
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PRInCIPlE 7: RECOGnISE AnD MAnAGE RISk
The Board has established a Risk Management Policy which formalises CCA’s approach to the oversight and management of material business risks. The policy is implemented through a top down and bottom up approach to identifying, assessing, monitoring and managing key risks across CCA’s business units. Risks, and the effectiveness of their management, are reviewed and reported regularly to relevant management, the Audit & Risk Committee and the Board. Management has reported to the Board that the Company’s risk management and internal compliance and control system is operating efficiently and effectively in all material respects.
The Board is responsible for ensuring that there are adequate systems and procedures in place to identify, assess, monitor and manage risks. CCA’s Audit & Risk Committee reviews reports by members of the management team (and independent advisers, where appropriate) during the year and, where appropriate, makes recommendations to the Board in respect of:
• overall business risk in CCA’s countries of operation; • treasury risk (including currency and borrowing risks); • procurement; • insurance; • taxation; • litigation; • fraud and code of conduct violations; and • other matters as it deems appropriate.
The internal and external audit functions, which are separate and independent of each other, also review CCA’s risk assessment and risk management.
In addition to the risk management duties of the Audit & Risk Committee, the Board has retained responsibility for approving the strategic direction of CCA and ensuring the maintenance of the highest standards of quality. This extends beyond product quality to encompass all ways in which CCA’s reputation and its products are measured. The Board monitors this responsibility through the receipt of regular risk reports and management presentations.
Financial Reporting
In accordance with section 295A of the Corporations Act 2001, the Group Managing Director and Chief Financial Officer have provided a written Certificate to the Board that the Statutory Accounts of the Company comply with the relevant Accounting Standards and other mandatory reporting requirements in all material respects, that they give a true and fair view, in all material respects, of the financial position and performance of the Company, and that management’s risk management and internal controls over financial reporting, which implement the policies and procedures adopted by the Board, are operating effectively and efficiently, in all material respects.
PRInCIPlE 8: REMunERAtE FAIRlY AnD RESPOnSIBlY
On an annual basis, the Compensation Committee reviews the nature and amount of the remuneration of the Group Managing Director and senior management and, where appropriate, makes recommendations to the Board. As noted in the Remuneration Report on page 36, the Committee draws on a range of services from external consultants to provide information, data and advice where appropriate in relation to remuneration quantum & structure and market practice. Where a consultant is providing a recommendation in accordance with the Corporations Act 2001, CCA has developed practices to select and engage a consultant -
• on how CCA is to receive the advice; • on how to ensure independence from management; and • on how the consultant interacts with management.
CCA recognises the importance of ensuring that any recommendations given in relation to the remuneration of KMP provided by remuneration consultants are provided independently of those to whom the recommendations relate.
OtHER BOARD COMMIttEES
To assist in its deliberations, the Board has established a further two committees, the Administration Committee and the Securities Committee. These Committees are comprised of any two Directors or a Director and the Group Chief Financial Officer and meet as required. The Administration Committee‘s powers, while not limited, will generally be applied to matters of administration on behalf of the Board, including the execution of documents in the normal course of business. The Securities Committee attends to routine matters relating to the allotment of securities.
Compensation Committee
The Compensation Committee comprises at least three Non-Executive Directors, the majority of whom are independent Directors. The Group Managing Director attends by invitation. Appropriate periods of time are set aside for only Committee members to be in attendance.
The Committee reviews matters relating to the remuneration of the Executive Director, senior management and Non-Executive Directors. It also reviews senior management succession planning, country retirement plans and remuneration by gender and considers diversity in the context of succession planning. The Committee obtains advice from external remuneration consultants to ensure that CCA’s remuneration practices are in line with market conditions. On at least an annual basis, the Committee reviews the succession plans for the Group Managing Director and senior executives.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201215
Directors’ report COCA-COL A AMATIL LIMITED FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
The Directors submit hereunder their Report for the financial year ended 31 December 2012.
nAMES AnD PARtICulARS OF DIRECtORS
The names of the Directors of Coca-Cola Amatil Limited (Company, CCA or CCA Entity) in office during the financial year and until the date of this Report and each Director’s holdings of shares and share rights in the Company are detailed below –
Particulars of the qualifications, other directorships, experience and special responsibilities of each Director are set out on pages 5 and 6 of the Annual Report.
DIVIDEnDS
Ordinary Shares
no.
long term Incentive Share Rights Plan (ltISRP)
share rights1
no. David Michael Gonski, AC 393,380 – Ilana Rachel Atlas 5,000 – Catherine Michelle Brenner 14,083 – Terry James Davis 524,071 613,785 Anthony Grant Froggatt 38,928 – Martin Jansen 10,173 – Geoffrey James Kelly 22,460 – Wallace Macarthur King, AO 55,516 – David Edward Meiklejohn, AM 25,497 –
Rate per share ¢
Amount $M
Date paid or payable
Dividends declared on ordinary shares for 2012 (not recognised as liabilities) – Final dividend (franked to 75%) 32.0 243.9 2 April 2013 Special dividend (unfranked) 3.5 26.7 2 April 2013
Dividends paid on ordinary shares in the financial year – Final dividend for 2011 (franked to 100%) 30.5 231.7 3 April 2012 Interim dividend for 2012 (franked to 100%) 24.0 182.7 2 October 2012
1. Consists of vested share rights for the 2010-2012 plan plus the maximum number of unvested share rights in the 2011-2013 and 2012-2014 plans.
OPERAtInG AnD FInAnCIAl REVIEW
Principal activities and operations
The principal activities of Coca-Cola Amatil Limited and its subsidiaries (Group or CCA Group) during the financial year ended 31 December 2012 were –
• the manufacture, distribution and marketing of carbonated soft drinks, still and mineral waters, fruit juices, coffee and other alcohol free beverages; • the processing and marketing of fruits, vegetables and other food products; and • the manufacture and distribution of alcohol ready-to-drink products, and the distribution of premium spirits and beer brands.
The Group’s principal operations were in Australia, New Zealand, Fiji, Indonesia and Papua New Guinea (PNG).
Financial results
The Group’s net profit attributable to members of the Company was $459.9 million, compared with $591.8 million in 2011. The net profit attributable to members includes a net significant item loss of $98.5 million after income tax, relating to a gain on discontinuation of a business acquisition, gain on Cascade related transactions and restructuring expenses attributable to the alcohol strategy and ongoing restructure of the SPC Ardmona (SPCA) business. The corresponding period in 2011 includes a net significant item gain of $59.8 million after income tax, relating to a revaluation gain to fair value of CCA’s 50% interest in Pacific Beverages Pty Ltd (Pacific Beverages) and certain expenses that are directly attributable to the sale, the separation of the Pacific Beverages business from CCA and the resulting strategic restructure of CCA, and expenses arising from the SPCA business restructure. Refer to Notes 4c) and 5 to the financial statements for further details.
The Group’s trading revenue for the financial year increased by 6.2% to $5,097.4 million, compared with $4,801.2 million for 2011. The Group’s earnings before interest and tax (EBIT) and significant items for the financial year increased by 3.1% to $895.5 million, compared with $868.9 million for 2011.
Operating cash flow increased by 15.6% to $741.9 million, compared with $641.8 million in 2011.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 16
Directors’ report (continueD) COCA-COL A AMATIL LIMITED FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
OPERAtInG AnD FInAnCIAl REVIEW (CONTINuED)
Review of operations
Segment result (defined as earnings before interest, tax and significant items) for each operating segment was as follows –
• Non-Alcohol Beverage business – Australia increased by 3.3% to $627.4 million, compared with $607.2 million in 2011; New Zealand & Fiji was $70.1 million, compared with $79.5 million in 2011; Indonesia & PNG increased by 16.8% to $102.9 million, compared with $88.1 million in 2011; and
• Alcohol, Food & Services business increased by 2.0% to $95.1 million, compared with $93.2 million in 2011.
Further details of the operations of the Group during the financial year are set out on pages 1 to 5 of the Annual Report.
Significant changes in the state of affairs
In August 2012, CCA lent $24.4 million to the Australian Beer Company, part of the Casella group. The loan will convert into an equity interest in the Australian Beer Company after the expiration of CCA’s restraint on selling beer in Australia on 16 December 2013.
In September 2012, CCA acquired an 89.6% shareholding of Paradise Beverages (Fiji) Ltd (formerly known as Foster’s Group Pacific Limited) for a purchase consideration of approximately $59.7 million.
During the financial year, CCA also acquired various individually immaterial businesses within the beverage industry.
In the opinion of the Directors, there have been no other significant changes in the Group’s state of affairs or principal activities during the 12 months to 31 December 2012.
Future developments
Information on the future developments of the Group and its business strategies are included in the front section of the Annual Report.
While the Company continues to meet its obligations in respect of continuous disclosure, further information of likely developments, business strategies and prospects has not been included here because, in the opinion of the Directors, such disclosure would unreasonably prejudice the interests of the Group.
Environmental regulation and performance
Management of environmental issues is a core component of operational management within the Group’s businesses. The Group is committed to understanding and minimising any adverse environmental impacts of its beverage and food manufacturing activities, recognising that the key areas of environmental impact are water use, energy use and post-sale to consumer waste.
Group policy is to ensure all environmental laws and permit conditions are observed. The Group monitors its environmental issues at an operational level, overlaid with a compliance system overseen by the Compliance & Social Responsibility Committee. Although the Group’s various operations involve relatively low inherent environmental risks, matters of non compliance are identified from time to time and are corrected as part of routine management, and typically notified to the appropriate regulatory authority.
DIRECtORS’ MEEtInGS
The number of Directors’ meetings (including meetings of Committees of Directors) and the number of meetings attended by each of the Directors of the Company during the financial year are detailed below –
Board of Directors Audit & Risk Committee1
Compliance & Social
Responsibility Committee2
Compensation Committee3
Related Party Committee4
nominations Committee5
Other Committees6
Meetings held while a Director
No. of meetings attended
Meetings held while a member
No. of meetings attended
Meetings held while a member
No. of meetings attended
Meetings held while a member
No. of meetings attended
Meetings held while a member
No. of meetings attended
Meetings held while a member
No. of meetings attended
No. of meetings attended
D.M. Gonski, AC 6 6 4 4 4 4 4 4 7 7 1 1 –
I.R. Atlas 6 6 4 4 – – 4 4 7 7 1 1 –
C.M. Brenner 6 6 – – 4 4 4 4 7 7 1 1 –
T.J. Davis 6 6 4* 4* 4* 4* 4* 4* 7* 7* 1* 1* 6
A.G. Froggatt 6 6 4 4 – – 4 4 7 7 1 1 –
M. Jansen7 6 6 4 4 – – – – – – – – –
G.J. Kelly7 6 6 – – – – 4 4 – – – – –
W.M. King, AO 6 5 – – 4 3 – – 7 6 1 1 –
D.E. Meiklejohn, AM 6 6 4 4 4 4 – – 7 7 1 1 –
1. The Audit & Risk Committee reviews matters relevant to control systems so as to effectively safeguard the Company’s assets, accounting records held to comply with statutory requirements and other financial information. It consists of five Non-Executive Directors. Refer to the Corporate Governance Statement on page 8 of the Annual Report for further details on this and other Committees.
2. The Compliance & Social Responsibility Committee reviews systems of control so as to effectively safeguard against contraventions of the Company’s statutory responsibilities and to ensure there are policies and procedures in place to protect the Company’s reputation as a responsible corporate citizen. It consists of four Non-Executive Directors.
3. The Compensation Committee reviews matters relevant to the remuneration of Executive Directors and senior Company executives. It consists of five Non Executive Directors. 4. The Related Party Committee reviews agreements and business transactions with related parties. It consists of all the Non-Executive Directors who are not associated with a related party. 5. The Nominations Committee reviews the composition of the Board, including identifying suitable candidates for appointment to the Board, and reviews general matters of corporate governance.
It consists of all the independent Non-Executive Directors. 6. Committees were created to attend to allotments of securities and administrative matters on behalf of the Board. A quorum for these Committees was any two Directors, or any one Director and the Group Chief Financial Officer.
7. Non-residents of Australia. * Mr T.J. Davis attended by invitation.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201217
Audit & Risk Compliance & Social Responsibility Compensation Related Party nominations
D.E. Meiklejohn, AM1 C.M. Brenner1 A.G. Froggatt1 D.M. Gonski, AC1 D.M. Gonski, AC1
I.R. Atlas D.M. Gonski, AC I.R. Atlas I.R. Atlas I.R. Atlas A.G. Froggatt W.M. King, AO C.M. Brenner C.M. Brenner C.M. Brenner D.M. Gonski, AC D.E. Meiklejohn, AM D.M. Gonski, AC A.G. Froggatt A.J. Froggatt M. Jansen G.J. Kelly W.M. King, AO W.M. King, AO
D.E. Meiklejohn, AM D.E. Meiklejohn, AM
DIRECtORS’ AnD OFFICERS’ lIABIlItY InSuRAnCE
The Company has paid the premium for Directors’ and officers’ liability insurance in respect of Directors and executive officers of the Company and its subsidiaries as permitted by the Corporations Act 2001. The terms of the policy prohibit disclosure of details of the insurance cover and premium.
SHARE RIGHtS
Details of movements in share rights during the financial year are included in Note 23 to the financial statements.
EVEntS AFtER tHE BAlAnCE DAtE
No matters or circumstances have arisen since the end of the financial year that have significantly affected, or may significantly affect, the operations, the results of those operations or the state of affairs of the Group in subsequent financial periods.
ROunDInG
The Company is of a kind referred to in the Australian Securities and Investments Commission (ASIC) Class Order No. 98/100 and, in accordance with this Class Order, amounts in this Report and the financial statements have been rounded off to the nearest tenth of a million dollars, unless otherwise stated.
COMMIttEE MEMBERSHIP
As at the date of this Report, the Company had an Audit & Risk Committee, a Compliance & Social Responsibility Committee, a Compensation Committee, a Related Party Committee and a Nominations Committee of the Board.
Members acting on the Committees of the Board during the financial year were –
1. Chairman of the relevant Committee.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 18
Directors’ report (continueD) COCA-COL A AMATIL LIMITED FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
There were no other changes to KMP during the reporting period, or after the reporting date up to the date the financial report was authorised for issue.
On 17 January 2013, agreement was reached that Mr Adams’ employment with CCA would cease by no later than 30 June 2013. Mr Barry O’Connell has been appointed to replace him and takes up his role in early April 2013.
The information contained in this remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001. Refer to the audit opinion on page 107.
The remuneration report is in six sections as follows –
A. Remuneration Strategy
B. Remuneration Structure
a) Fixed Remuneration
b) Variable/At Risk Remuneration i) Short Term Incentive Plan (STIP) ii) Executive Retention Share Plan (ERSP) iii) Long Term Incentive Share Rights Plan (LTISRP)
c) Performance of CCA and the Link to Reward
d) Remuneration Consultants
C. Summary of Employment Contracts
D. Statutory Remuneration of Executives
E. Remuneration of Non-Executive Directors
F. Policy on Trading in CCA’s Shares.
REMunERAtIOn REPORt
This remuneration report outlines CCA’s remuneration philosophy and practices together with details of the specific remuneration arrangements that apply to key management personnel (KMP) in accordance with the requirements of the Corporations Act 2001.
For the purpose of this report, KMP of the Group are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and the Group, directly or indirectly, including any Director (whether executive or otherwise) of the Company. For the purpose of this report, the term “executive” encompasses the Group Managing Director, senior executives, general managers and secretaries of the Company and the Group.
CCA’s KMP for 2012 are –
kMP non-Executive Directors D.M. Gonski, AC Chairman I.R. Atlas Director C.M. Brenner Director A.G. Froggatt Director M. Jansen Director G.J. Kelly Director W.M. King, AO Director D.E. Meiklejohn, AM Director
kMP Executives T.J. Davis Executive Director and Group Managing Director G. Adams Managing Director, New Zealand & Fiji J. Murphy Managing Director, Australian Beverages Appointed 1 July 2012 N.I. O’Sullivan Group Chief Financial Officer V. Pinneri Managing Director, SPCA E. Rey Managing Director, Indonesia & PNG W.G. White Managing Director, Australasia.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201219
REMunERAtIOn REPORt (CONTINuED)
A. Remuneration Strategy
The Compensation Committee (Committee) is responsible for reviewing the nature and amount of the Group Managing Director’s and senior executives’ remuneration. The Board (on the recommendations of the Committee) has set a remuneration strategy that supports and drives the achievement of CCA’s strategic objectives. By establishing a remuneration structure that motivates and rewards executives for achieving key targets linked to CCA’s business objectives, the Board is confident that its remuneration strategy focuses CCA’s people on creating superior shareholder wealth, in line with CCA’s strategic intent.
The following diagram illustrates how CCA’s remuneration strategy and the structure the Board has implemented to achieve this strategy align with CCA’s business objectives –
CCA’s Strategic Business Objectives
Continue to provide sustainable returns that are superior to those of CCA’s competition.
To invest in CCA capacity and encourage business growth.
Conduct business and operate within the community as a good corporate citizen.
CCA’s Renumeration Strategy
Attract, motivate, retain and reward top calibre executives to deliver superior performance by:
• providing competitive remuneration, linked to the value executives will bring to CCA (with total remuneration for the Group Managing Director and senior executives targeted at the 75th percentile of comparable positions in comparable companies) given the achievement of stretching targets; and
• providing executives with the opportunity to achieve further incentives based on individual performance and the achievement of demanding and stretching targets.
Align executive rewards to CCA’s performance and shareholder interests by:
• assessing incentives against multiple financial and non-financial business measures that are aligned with CCA’s strategy; and
• making significant components of total remuneration dependent on CCA’s performance (with the proportion of equity-based at risk component of remuneration increasing as an executive’s potential impact on the performance of the business increases).
Remuneration Components
Base (Fixed) Remuneration
• Base level of reward; • Set at a competitive market level and
reviewed annually in light of data sourced from external remuneration suppliers and/ or recommendations from remuneration consultants; and
• Dependent on employee’s experience, knowledge, skills, level of responsibility and general performance.
Short term Incentive
• Determined by reference to achievement of pre-determined business performance and individual performance measures;
• Business performance measures include volume (that aligns to trading revenue) and EBIT or net profit after tax (NPAT);
• Individual performance measures focus on team performance and individual contributions; and
• Delivered in cash annually if pre-determined stretching targets are met, with a proportion deferred into CCA shares for a specified period.
long term Incentives
Long Term Incentive Share Rights Plan • Set by reference to CCA’s peer group of
companies in the external market; • Determined by CCA’s performance against financial performance measures of total shareholder return (TSR) and earnings per share (EPS);
• No value derived unless CCA meets or exceeds performance measures – greater rewards available for exceeding the minimum performance threshold; and
• Delivered in equity to align shareholder and executive interests.
Executive Retention Share Plan • Award of shares offered to small number
of key executives to incentivise continued employment with CCA; and
• Shares vest if participating executives remain employed for a set number of years from grant date (normally three years).
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 20
Directors’ report (continueD) COCA-COL A AMATIL LIMITED FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
REMunERAtIOn REPORt (CONTINuED)
A. Remuneration Strategy (continued)
There are a number of principles which underpin CCA’s remuneration strategy –
• remuneration will be competitively set to attract, motivate and retain top calibre executives;
• remuneration will incorporate, to a significant degree, variable pay elements for short term and long term performance, which will: − link executive reward with the strategic goals and performance
of the Group; − align the interests of executives with those of shareholders; − reward the Group Managing Director and senior executives for
Group, business unit (where applicable) and individual performance against appropriate benchmarks and targets; and − ensure total remuneration is competitive by market standards;
• remuneration will be reviewed annually by the Committee through a process that considers Group, business unit (where applicable) and individual performance. The Committee will also consider and will take into account market comparisons for similar roles, together with the level of responsibility of the individual, particularly as CCA is in a unique position in Asia/Pacific of having to compete for senior talent within the global Coca-Cola system;
• remuneration systems will complement and reinforce the Company’s Code of Business Conduct and succession planning; and
• remuneration and terms and conditions of employment will be specified in an individual letter of employment and signed by the Company and the executive. The relationship between remuneration and potential annual and long term incentive payments is established for each level of executive management by the Committee. For executives, potential incentive payments as a proportion of total potential remuneration increase with seniority and responsibility within the organisation.
The Committee’s Charter is available on CCA’s website at www.ccamatil.com.
B. Remuneration Structure
As depicted above, CCA’s executive remuneration is structured as a mixture of fixed remuneration (which includes base salary and benefits such as superannuation) and variable remuneration, through at risk short term incentive plan (STIP) and long term incentive (LTI) components (Long Term Incentive Share Rights Plan or LTISRP and Executive Retention Share Plan or ERSP).
While the fixed remuneration is designed to provide for predictable base levels of remuneration, the STIP and LTI components reward executives when certain pre-determined stretching performance conditions and/or service conditions are met or exceeded.
The Company’s remuneration structure is designed to provide flexibility to individual remuneration packages for the Group Managing Director and executives based on their importance to the success of the business and the extent to which they are in a position to influence Company performance.
In 2012, there were no significant changes to the remuneration structure, nor were there significant changes to the quantum of on-target fixed remuneration, STIP and LTISRP for key executives, given the consistent successful performance of the CCA Group detailed on page 29.
CCA continues to review and adapt its remuneration approach to comply with all current legislation, and aims to be at the forefront of corporate governance in contemporary remuneration practices and taking into account any feedback from stakeholders, particularly shareholders. To that end, changes took place in 2012 to increase the amount of shares held under a deferred STIP arrangement and also to increase the holding of CCA shares by senior executives, both of which are detailed in the following sections.
The Group Managing Director’s and senior executives’ total remuneration is targeted at the 75th percentile of comparable positions in comparable companies, which is achieved when individual and Company performance targets are met. CCA’s individual and company performance targets are considered by the Board to be consistently demanding and achieving these challenging targets requires high calibre executives to be attracted to and retained within CCA, as well as being appropriately rewarded, hence the targeting at the 75th percentile.
Comparable companies historically have included companies broadly between half and twice the scale of CCA, having regard to enterprises with comparable revenues, market capitalisation, operating profit, total assets and net assets. These comparator definitions have thus resulted in comparator groups for the Group Managing Director remuneration review being defined as companies ranked on the Australian Securities Exchange (ASX) by market capitalisation in the ASX 50, with a sub peer group of ASX companies ranked between number 15 and 40. An alternate peer group that was utilised in the 2012 review was ASX 100 companies with revenues between 50% to 200% of those of CCA.
The Company’s approach in recent years is to have a greater component of at risk remuneration for executives and senior executives represented by CCA shares. At risk remuneration as a percentage of total remuneration is broadly dependent on the importance of the individual to the success of the business and their potential to impact business performance.
CCA executives are also encouraged to hold CCA shares to further align their interests with those of the Company and its shareholders, with the following shareholding guidelines based on length of employment.
From 1 January 2013, these amounts increased as follows (with amounts prior to 1 January 2013 shown in brackets) –
• upon reaching five years of employment, to hold equivalent of at least 40% of annual base salary in CCA shares (was 30%);
• upon reaching 10 years of employment, to hold equivalent of at least 60% of annual base salary in CCA shares (was 50%); and
• upon reaching 15 years of employment, to hold equivalent of at least 100% of annual base salary in CCA shares (was 75% and over 20 years 100%).
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201221
REMunERAtIOn REPORt (CONTINuED)
B. Remuneration Structure (continued)
The remuneration mix (i.e. the relative proportions of total remuneration received as fixed and variable/at risk remuneration) for those executives with ongoing employment at the end of 2012 are set out in the following table –
name Position
Fixed remuneration
%
Variable remuneration1
% kMP Executives T.J. Davis Executive Director and Group Managing Director 47 53 G. Adams Managing Director, New Zealand & Fiji 56 44 J. Murphy Managing Director, Australian Beverages 55 45 N.I. O’Sullivan Group Chief Financial Officer 46 54 V. Pinneri Managing Director, SPCA 49 51 E. Rey Managing Director, Indonesia & PNG 652 35 W.G. White Managing Director, Australasia 48 52
1. The percentage of each component of remuneration is calculated with reference to “target” performance outcomes in both STIP and LTISRP measures – for more information on performance measurement levels, see the following sections on the STIP and LTISRP.
2. Fixed remuneration for Mr Rey, whilst in Asia, includes expatriate costs.
a) Fixed Remuneration
Components of fixed remuneration Fixed remuneration comprising base salary, benefits (including superannuation) and applicable fringe benefits tax (reflecting CCA’s total cost to the Company approach) is determined on an individual basis, considering the size and scope of the role, the importance of the role to the Company and the demand for the role in the market place. It may also include deferred remuneration, which is either a once off payment in cash or a once off award of CCA shares made at the completion of a specified employment period.
Base salary is reviewed annually through a process that ensures an executive’s fixed remuneration remains competitive in the market place and reflects their skills, knowledge, accountability and general performance. This process involves market based reviews, externally benchmarked to equivalent and comparable companies in Australia and where applicable other markets where CCA operates.
Review of fixed remuneration Fixed remuneration does not vary over the course of a year due to performance. Remuneration packages (including fixed and variable components and benefits) are reviewed annually and no component is guaranteed to increase.
Benchmarks for setting fixed remuneration
The Committee obtains data from external remuneration consultants on the comparable level of fixed remuneration, and considers international and local market practices and market comparisons for similar roles, together with the level of responsibility, performance and potential of the executive (for further detail on how this data is obtained, refer to the section on Remuneration Consultants on page 36.
b) Variable /At Risk Remuneration
At risk remuneration, which comprises both short (annual) and long term incentives, is an integral part of CCA’s approach to providing competitive performance based remuneration. The at risk components of the Group Managing Director’s and senior executives’ remuneration are intended to ensure that an appropriate proportion of their remuneration is linked to growth in shareholder value and the achievement of key operational targets and are described further below.
i) STIP
Overview The STIP provides the opportunity for executives to earn an annual incentive upon the achievement of targets set at the beginning of the financial year, which is delivered to senior executives as a combination of cash and deferred shares. The Board annually invites the Group Managing Director and senior executives to participate in the STIP. The on-target STIP amounts are set by reference to companies comparable to CCA. The incentives are included in the executive’s remuneration package at an on-target value, which assumes 100% achievement of the targets. Company performance targets are reviewed and approved by the Committee prior to the start of the financial year, and are clearly defined, measurable and stretching taking into account both prior year achievements and prevailing market conditions.
Objective The STIP’s key objectives are set each year to emphasise team performance and to identify and reward individual contributions.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 22
Directors’ report (continueD) COCA-COL A AMATIL LIMITED FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
REMunERAtIOn REPORt (CONTINuED)
B. Remuneration Structure (continued)
b) Variable /At Risk Remuneration (continued)
i) STIP (continued)
Performance conditions Payments from the STIP are based on the performance of the Group or business unit (BU) and the individual’s performance over the past financial year. The calculation of the STIP award is as follows –
• business performance is weighted at 70% of the award. Group business performance is based on achievement of key performance drivers of volume and NPAT before significant items targets against budget (with achievement against prior year also taken into account), based on a pre-determined formula, with volume achievement weighted at 40% and NPAT achievement weighted at 60%. Individual beverage business units are assessed on their business unit specific volume and EBIT targets and are also weighted at between 40% and 50% for volume and 50% and 60% for EBIT.
The combination of volume and NPAT/EBIT achievement against stretch targets are direct measurements of the company performance, which if achieved will in turn provide shareholders with increased returns on their investment.
SPCA is based 70% on achieving EBIT targets, 20% on growing snacking trading revenue and 10% for achieving delivery in full and on time (DIFOT) targets. Growing snacking trading revenue is a more relevant measure for SPCA given recent restructuring and DIFOT is a core customer satisfaction measure, and both will assist in achieving long term profit growth for SPCA.
A minimum of 90% of budgeted EBIT or NPAT (and volume where applicable) must be achieved for an award to be made (unless the Board determines otherwise), and 100% achievement will result in the target award, with awards increasing for out-performance.
Country Managing Directors are assessed 80% on their country or business unit results and 20% on the Group results;
• individual performance is weighted at 30% of the award based on achievement of pre-determined key performance indicators (KPIs). KPIs relate to the achievement of various financial and non-financial measures that vary by country and individual. Financial measures can include KPIs such as return on invested capital, trading revenue growth and indirect expense management. Other KPI measures can include growth in customer numbers, customer relationship management, cold drink equipment placement and new product development. Employee metrics, including employee engagement, occupational health and safety, diversity, and turnover and adherence to risk and compliance policies are also commonly used as measures across all countries.
The selection and weighting of each metric are based on the business objectives of each country or business unit and correlate to the growth targets for that country or business unit. The selection of the metrics and the achievement of the metrics (that are specific to each country and market) are commercially sensitive, and the overall assessments for each of the KMP are not disclosed. Full achievement of all KPIs will result in a maximum 30% being awarded; and
• an individual performance factor of between 0% to 130% is then applied to the total of the two components above; that is an assessment of how an executive achieved their KPIs, that takes into account adherence to CCA’s core values and behaviours, with the average of the individual performance factors for all executives in the plan balancing to 100%.
For the Group Managing Director and senior executives, the 2012 STIP weightings for each performance condition are summarised as follows –
name
Group nPAt
%
Bu EBIt
%
Volume Bu
other1
%
Individual perfor- mance
% Group
% Bu
% kMP Executives T.J. Davis 42 – 28 – – 30 G. Adams 8 34 6 22 – 30 J. Murphy 8 34 6 22 – 30 N.I. O’Sullivan 42 – 28 – – 30 V. Pinneri 8 39 6 – 17 30 E. Rey 8 28 6 28 – 30 W.G. White 8 34 6 22 – 30
1. Snacking revenue and customer satisfaction metric.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201223
REMunERAtIOn REPORt (CONTINuED)
B. Remuneration Structure (continued)
b) Variable /At Risk Remuneration (continued)
i) STIP (continued)
Performance conditions (continued)
For the Group Managing Director and senior executives, the current STIP ranges (as a percentage of base pay) are set out in the table below –
name Position
On-target StIP award as
a percentage of base pay
%
Maximum StIP award as
a percentage of base pay
% kMP Executives
T.J. Davis Executive Director and Group Managing Director 88 157
G. Adams Managing Director, New Zealand & Fiji 70 125 J. Murphy Managing Director, Australian Beverages 41 73 N.I. O’Sullivan Group Chief Financial Officer 67 119 V. Pinneri Managing Director, SPCA 80 144 E. Rey Managing Director, Indonesia & PNG 50 91 W.G. White Managing Director, Australasia 102 182
Process of assessing performance conditions
The Committee approved performance measures are designed to align executives’ rewards to the key performance drivers of the Company. The Committee annually reviews the ongoing appropriateness of the STIP, its rules and the degree of difficulty in meeting targets. The Committee reviews actual performance against targets, considers individual performance and takes into account relevant factors affecting the business, and approves all incentive payments prior to payment being made in March of the following year.
At the completion of the financial year, the Committee relies on audited financial results for calculating the business performance conditions and payments in accordance with the STIP rules.
The individual performance and individual performance factors are assessed by the executives’ manager, who is considered the best informed and placed to make this assessment, with these assessments being approved by the Country Managing Director or Group Managing Director as appropriate. The individual performance factor takes account of the executive demonstrating adherence to CCA’s values and behaviours during the period.
The Group Managing Director’s individual performance and individual performance factor are assessed by the Chairman and approved by the Board.
The Committee believes these methods of assessment provide an appropriate and objective assessment of performance.
Mandatory senior executive deferral into CCA shares – Executive Post-tax Share Purchase Plan
For STIP awards from 2012 onwards for a group of approximately 30 senior executives across the CCA Group (including the Group Managing Director and Group Chief Financial Officer), 15% of any pre-tax actual incentive is deducted from their post-tax incentive payment and allocated to an Executive Post-tax Share Purchase Plan (EPTSPP) for the purpose of acquiring shares in the Company. For Australian executives at the top marginal tax rate, this will equate to approximately 28% of their post-tax incentive being deducted from the short term incentive (STI) award in order to purchase shares in the Company. The shares are purchased on market and held in trust for 12 months, irrespective of whether the executive is employed by CCA during this holding period. This assists in increasing the shareholding by senior executives and better aligning the executives to the Company.
The shares will transfer to the executive at the end of the 12 month holding period except if the executive’s employment is terminated for cause (or if the executive has already left CCA’s employment, had breached the Company’s Code of Business Conduct and that would have resulted in the same outcome), in which case all shares will be forfeited.
The shares are also subject to an exercise of discretion by the Board relating to forfeiture and release and additional limited forfeiture conditions apply, including not taking up employment with a material competitor, supplier or customer of the Company.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 24
Directors’ report (continueD) COCA-COL A AMATIL LIMITED FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
REMunERAtIOn REPORt (CONTINuED)
B. Remuneration Structure (continued)
b) Variable /At Risk Remuneration (continued)
i) STIP (continued)
Mandatory senior manager deferral into CCA shares
For Australian senior managers not participating in the above EPTSPP, a portion of the incentive is deferred, with 20% of the pre-tax actual incentive paid (up to target – and 100% of over target) to a maximum of $5,000 sacrificed into CCA shares. These shares are required to be held in trust for a period of 17 months, or until the executive leaves the employment of CCA. For executives outside of Australia, there is no deferral into shares.
In both STI deferral plans above where shares are purchased from earned STI, dividends are payable to the executive or manager.
CCA’s ERSP and LTISRP constitute the primary LTI components of executive at risk remuneration.
ii) ERSP
Overview The ERSP complements the LTISRP and is intended to encourage and motivate retention of key executives. The ERSP offers an award of shares at the end of a three year period to a small number of key executives who are critical to retain in their particular business unit with no performance hurdles attached, so as to guarantee an award to executives who remain employed by the Company at the end of this period.
Whilst it is recognised that this award alone does not guarantee retention and that senior executive retention varies among individuals for many diverse and complex reasons (including, among other things, meaningful career paths, succession planning and employee engagement), offering a tangible reward in the form of CCA shares does provide a direct incentive for participants to remain employed with the Group until vesting date. Once the shares vest, there is no holding restriction.
Dividends are paid to participants on unvested shares, with dividends required to be reinvested into CCA shares via the Dividend Reinvestment Plan (DRP) and for the 2010-2012 ERSP, if the ERSP shares were forfeited, the executive retained the dividends.
The Committee has approved a change for any new participants in a retention share plan for 2013 onwards that shares purchased from dividends reinvested via the DRP are held under holding restriction, and if any unvested ERSP shares are forfeited, then the shares purchased from the dividends paid to the executive on these unvested ERSP shares would also be forfeited.
Participation in ERSP for the 2010-2012 plan
The Board approved the establishment of the ERSP in 2007 and invited 70 key senior executives to participate during 2007 to 2009. Given the successful retention rate for the 2007 plan and in an industry that was undergoing considerable change of ownership resulting in strong competition for talented staff, the Board approved a further award to 43 key senior executives in early 2010 for the 2010-2012 plan.
The Group Managing Director was not eligible to participate without shareholder approval and was not invited to participate in the 2010 2012 ERSP. The retention of these 43 executives was viewed as crucial to the success of their respective CCA business units over the three year period, especially given that there is a shortage of suitable senior executive talent in most of the markets in which CCA operates at this time. The individual awards offered in 2010 were calculated at an annual value of up to 12% of each relevant executive’s remuneration package.
For the 2010-2012 ERSP, the 43 executives were awarded 239,050 shares with vesting dates in 2013. Of this group of 43 executives, 41 executives have a vesting date in February 2013, and the other two executives have a vesting date in July and December 2013 respectively.
As at 31 December 2012, five of the 43 executives in the 2010-2012 ERSP had left the employment of the CCA Group and their awards were forfeited.
ERSP awards in 2012 One senior executive (J. Murphy, Managing Director, Australian Beverages) was offered a two year retention award at the beginning of 2012, with 16,493 CCA shares being purchased and held in trust on his behalf until these shares vest in February 2014.
Future ERSP awards With relatively high executive retention in Australia and New Zealand at present, there are no plans to make retention share awards to a group of executives to participate in a new plan in 2013, when the 2010-2012 ERSP completes.
Any awards in 2013 will be on a case by case basis in order to retain an individual key executive who is viewed as material to the success of the business unit.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201225
REMunERAtIOn REPORt (CONTINuED)
B. Remuneration Structure (continued)
b) Variable /At Risk Remuneration (continued)
iii) LTISRP
Overview The LTISRP offers participating executives a right to an ordinary share in the Company, subject to the achievement of applicable performance measures or hurdles. On-target total remuneration for an executive is premised on achieving the threshold performance (i.e. 51st percentile for TSR and for the 2012-2014 LTISRP achieving at least 7% average annual growth per annum in EPS).
The minimum EPS performance hurdle of achieving at least 7% average annual growth per annum in EPS for the 2012-2014 LTISRP was set at the beginning of the plan period in early 2012, and took account of the prevailing market and economic conditions at the time. The Board considered it to be a stretching but achievable minimum hurdle for the three year period. No award is made for this hurdle under the plan if less than the 7% average annual growth per annum is achieved over the three year period.
For each performance hurdle, an appropriate vesting scale rewards a greater number of shares for over-achievement of the minimum threshold. (Details of the vesting scale for the most recent plan are set out below). Both threshold and maximum LTISRP amounts are set by reference to CCA’s peer group of companies in the external market (these companies are listed below).
Any awards under the LTISRP are made in accordance with the LTISRP rules. The shares are offered to the executives at no cost. At the end of the performance period, subject to the satisfaction of the performance hurdles, any shares allocated will be acquired by the LTISRP trustee by purchasing shares on the ASX at the prevailing market price or by subscribing for new shares at no cost to the executive. To date, all awards of shares earned by executives have been purchased on market. This generally occurs in February of the following year for any awards that vest.
Participation The Board annually invites the Group Managing Director and executives to participate in the LTISRP. Pursuant to ASX Listing Rule 10.14, the practice has been that approval is sought from shareholders every year at the Annual General Meeting to allow Mr Davis in his role as Group Managing Director to participate, and as an Executive Director of the Company, in the LTISRP.
Objectives The LTISRP provides a mechanism for executives to increase their holding of CCA shares. This ensures better alignment between executives’ and shareholders’ interests by creating a direct link between the Company’s financial performance, the value created for shareholders and the reward earned by key executives. In addition, the LTISRP assists in retaining senior executives.
Performance conditions With respect to the 2010-2012, 2011-2013 and 2012-2014 performance periods, half of the awards are subject to a relative TSR measure and half of the awards are subject to the achievement of an average annual growth in EPS over the performance period.
The dual group wide performance conditions of TSR and EPS have been in place since the 2007-2009 plan. The Board considers the combination of a relative hurdle requiring an above median performance (TSR) and achieving minimum absolute hurdle (EPS) to be an appropriate combination of stretch financial hurdles and they are relevant direct measurements of the company performance. If these performance conditions are achieved over a three year period in turn shareholders will be provided with increased returns on their investment over the corresponding period. The Board also believes that a return on invested capital measure is more appropriate to be considered on a country by country basis and taken into account over a shorter time period within the STIP assessment. Hurdles and vesting scales are reviewed each year prior to that year’s grants being made, to ensure that the performance conditions applying to a grant are appropriate and continue to effectively incentivise executives.
TSR performance condition
The TSR performance condition is subject to the measurement of CCA’s TSR for a three year period, and the performance condition applies to two peer groups detailed on page 28. Half of the TSR performance will be measured against peer group 1 and half will be measured against peer group 2. TSR represents the change in the value of CCA’s share price over a period, plus reinvested dividends, expressed as a percentage of the opening value of the share. TSR has been chosen as a performance hurdle because, in the opinion of the Committee, it provides the most direct link to shareholder return.
Two peer groups have been adopted to measure TSR performance (each weighted equally), with peer group 1 reflecting comparable ASX 100 companies listed on the ASX (excluding banking and mining stocks) and peer group 2 representing selected consumer staples and food and beverages companies. Both peer groups are considered appropriate to benchmark CCA’s relative performance, given CCA’s size and position within both the ASX 100 and the consumer staples peer groups.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 26
Directors’ report (continueD) COCA-COL A AMATIL LIMITED FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
REMunERAtIOn REPORt (CONTINuED)
B. Remuneration Structure (continued)
b) Variable /At Risk Remuneration (continued)
iii) LTISRP (continued)
Performance conditions (continued)
EPS performance condition
The EPS performance condition is subject to the measurement of CCA’s average annual growth in EPS for a three year period. Basic EPS is determined by dividing CCA’s NPAT before significant items by the weighted average number of CCA’s ordinary shares on issue during the financial year. Growth in EPS will be measured by comparing the EPS in the year of issue and the measurement year. The EPS hurdle is a stretching and “line of sight” hurdle for Plan participants, as the achievement of the hurdle directly correlates to improved shareholder value and the Committee considers it a most appropriate key indicator of the financial success of the business. Achieving the EPS target will have a positive impact on TSR.
The performance rights generally vest after three years provided the vesting conditions are met (the TSR performance criteria are subject to a retest in the fourth year for the 2010-2012 plan). Due to the regular nature of the LTISRP awards, retesting will not apply for the 2011-2013 plan and all subsequent plans to the 2011-2013 plan.
Process for assessing performance conditions
At the completion of the relevant plan period, an external consultant performs the TSR calculations to ensure independence in accordance with a pre-determined TSR methodology and the LTISRP rules. For those plans subject to an EPS performance measure, the Committee relies on audited financial results and the award of shares is calculated in accordance with the LTISRP rules. The Committee reviews the calculations and approves all awards prior to any vesting of shares to Plan participants. The calculation and awards to KMP have been audited.
The Committee believes this method of assessment provides an appropriate and objective assessment of performance.
treatment of awards on cessation and change of control
If a participating executive ceases to be employed before the end of the performance period by reason of death, disablement, retirement or redundancy, or for any other reason approved by the Board, shares offered to the executive in respect of that performance period will be allocated in the following proportions, subject to the Board’s discretion –
• if more than one-third of the performance period has elapsed, the number of shares to be allocated will be pro-rated over the performance period and the performance condition will apply as at the end of the performance period; or
• where less than one-third of the performance period has elapsed, no shares will be allocated.
In the event of a change of control of the Company prior to the end of a performance period, the threshold number of shares offered to the executive in respect of the performance period will be allocated to the executive irrespective of whether either of the performance conditions is satisfied.
Due to the change by the Australian Government in the taxation of share plans, no restriction exists for the participants in the selling of vested shares in the 2010-2012 LTISRP and all subsequent plans to the 2010-2012 plan, apart from those employees covered under the Policy on Trading in CCA’s Shares, detailed in Section F.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201227
REMunERAtIOn REPORt (CONTINuED)
B. Remuneration Structure (continued)
b) Variable /At Risk Remuneration (continued)
iii) LTISRP (continued)
Details of the 2012 offering The 2012-2014 LTISRP award for the Group Managing Director was approved at the CCA Annual General meeting on 15 May 2012.
Vesting scale
One vesting scale is in place for this particular plan, with the same scale applying to the Group Managing Director and for executives. The same scale applied to the 2011-2013 LTISRP.
The vesting scale is as follows –
The above vesting scale was introduced for the 2011-2013 LTISRP, and provides for a graduated scale awarding a greater proportion of the maximum award once the minimum thresholds have been achieved and a lesser proportion closer to the maximum. The Board considers this graduated scale to be appropriate to motivate and reward.
Retesting
For the 2012-2014 LTISRP TSR performance criteria, there is no retesting (TSR performance criteria are subject to a retest in the fourth year for only the 2010-2012 plan). There is no retesting of the EPS performance measure.
% of the maximum award
Component A – relative TSR, for each of peer group 1 and/or 2 – • no portion will vest if performance is below the 51st percentile 0 • at 51st percentile, 100.0% of threshold or target award will vest 51 • at 55th percentile, 127.5% will vest 65 • at 60th percentile, 156.9% will vest 80 • at 65th percentile, 176.5% will vest 90 • at 70th percentile, 186.3% will vest and 95 • at 75th percentile and above, 196.1% will vest 100
(pro-rata vesting between two points occurs on a straight line basis). Component B – average annual growth in EPS, over the performance period – • no portion will vest if EPS average annual growth is less than 7.0% per annum 0 • at 7.0% average annual growth, 100.0% of threshold or target award will vest 51 • at 8.0% average annual growth, 117.6% will vest 60 • at 8.5% average annual growth, 127.5% will vest 65 • at 9.5% average annual growth, 147.1% will vest 75 • at 13.5% average annual growth, 186.3% will vest 95 • at 15.5% average annual growth, 195.1% will vest and 99.5 • at 16.0% average annual growth and above, 196.1% will vest 100
(pro-rata vesting between two points occurs on a straight line basis).
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 28
Directors’ report (continueD) COCA-COL A AMATIL LIMITED FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
REMunERAtIOn REPORt (CONTINuED)
B. Remuneration Structure (continued)
b) Variable /At Risk Remuneration (continued)
iii) LTISRP (continued)
tSR peer group for 2012 offering
Two peer groups have been adopted to measure TSR performance (each weighted equally), with peer group 1 reflecting comparable ASX 100 companies listed on the ASX and peer group 2 representing selected consumer staples and food and beverages companies.
Details of the 2013-2015 plan The 2013-2015 LTISRP award will be made on a similar basis to the 2012-2014 LTISRP with one change compared to the 2012-2014 LTISRP, relating to the Component B average annual growth in EPS. For the 2013-2015 LTISRP, the minimum EPS hurdle changes from 7.0% average annual growth per annum in the 2012-2014 LTISRP to 6.0%, and all other amounts in the vesting scale remain unchanged. This change reflects a more realistic stretch target for the 2013-2015 period, given the current economic conditions, and the reduction to 6% is in line with 2013 forecasts for the Industrials sector (that excludes resources, banking and property trusts).
Peer group 2 comprises the following companies –
AAQ Holdings Limited Gage Roads Brewing Co Limited Tandou Limited
Australian Agricultural Company Limited
Goodman Fielder Limited Tassal Group Limited
Australian Vintage Limited GrainCorp Limited Treasury Wine Estates Limited
Bega Cheese Limited Little World Beverages Limited TW Holdings Limited
Buderim Ginger Limited MSF Sugar Limited Viterra Inc
Clean Seas Tuna Limited Metcash Limited Warrnambool Cheese and Butter Factory Company Holdings Limited
Coca-Cola Amatil Limited Oz Brewing Limited Webster Limited
Elders Limited Patties Foods Ltd Wesfarmers Limited
Farm Pride Foods Limited PrimeAg Australia Limited Woolworths Limited.
FFI Holdings Limited Ridley Corporation Limited
Freedom Foods Group Limited Select Harvests Limited
Peer group 1 comprises the following companies –
AGL Energy Limited David Jones Limited Qantas Airways Limited
Amcor Limited Downer EDI Limited Ramsay Health Care Limited
Ansell Limited Duet Group Seek Limited
APA Group Echo Entertainment Group Limited Seven West Media Limited
Asciano Limited Fairfax Media Limited Sims Metal Management Limited
BlueScope Steel Limited Harvey Norman Holdings Limited Sonic Healthcare Limited
Boart Longyear Limited Incitec Pivot Limited Spark Infrastructure Group
Boral Limited James Hardie Industries Plc Sydney Airport
Brambles Limited JB Hi-Fi Limited Tabcorp Holdings Limited
Caltex Australia Limited Leighton Holdings Limited Tatts Group Limited
Campbell Brothers Limited Monadelphous Group Limited Telstra Corporation Limited
Coca-Cola Amatil Limited Myer Holdings Limited Toll Holdings Limited
Cochlear Limited News Corporation Transfield Services Limited
Computershare Limited OneSteel Limited Transurban Group
Crown Limited Orica Limited UGL Limited
CSL Limited Primary Health Care Limited WorleyParsons Limited.
CSR Limited QR National Limited
The company listings are as at the commencement of the plan.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201229
REMunERAtIOn REPORt (CONTINuED)
B. Remuneration Structure (continued)
c) Performance of CCA and the Link to Reward
The following details the link between CCA’s performance and the rewards granted to executives under the STIP and the LTISRP.
STIP
As discussed above, the STIP operates to create a clear connection between executives’ and CCA’s annual performance, motivating and rewarding executives for high performance during the financial year. The two key financial indicators for the Beverage business used to assess performance under the STIP are volume that aligns to trading revenue and CCA’s NPAT. The table below shows CCA Group performance against these two criteria over the past five years –
Financial year end 31 December 2008 2009 2010 2011 2012 Trading revenue ($M) 4,091.4 4,436.0 4,490.3 4,801.2 5,097.4 Volume (million unit cases) 534.1 555.1 550.8 564.4 591.3 NPAT ($M) – before significant items 404.3 449.0 506.6 532.0 558.4 Closing share price ($) 9.19 11.53 10.86 11.51 13.45
In accordance with the STIP rules, the following results have been achieved – CCA Group STIP business performance (as per STIP performance conditions) (%) 110 132 112 100 105
The Group business performance factors for the STIP are a result of the actual achievements of the Group against the pre-determined volume and NPAT targets and the corresponding payment due in relation to the payment scale.
As can be seen from the table above, despite the challenging global economic climate, CCA’s financial performance has consistently improved over the last five years. CCA’s above-market performance over this period has been reflected in the awards granted to executives.
Overall for 2012, CCA again performed well despite a difficult external environment in many of the markets that CCA operates in.
The combined business performance and after taking into consideration individual performance for STIP this has resulted in an average incentive payment in relation to the on-target award for KMP and executives as follows –
The relative proportions of available STIP cash bonuses received and forfeited by executives is shown in the table below. Specific details of the value of these awards can be found in the table of remuneration details on page 41. To the extent that STIP cash bonuses become payable, they are generally paid in March of the following year.
2012 Average %
2011 Average %
• CCA Group 108 103
• Australia 44 89
• New Zealand nil 80 • Fiji 77 59 • Indonesia 117 101 • PNG 84 132 • SPCA nil 15
2012 bonus maximum award
name % vested % forfeited kMP Executives
T.J. Davis 67 33
G. Adams nil 100
J. Murphy 28 72 N.I. O’Sullivan 61 39 V. Pinneri nil 100 E. Rey 64 36 W.G. White 31 69
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 30
Directors’ report (continueD) COCA-COL A AMATIL LIMITED FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
REMunERAtIOn REPORt (CONTINuED)
B. Remuneration Structure (continued)
c) Performance of CCA and the Link to Reward (continued)
LTISRP
Remuneration outcomes under the LTISRP are directly linked to the value created for CCA shareholders, based on two measures: TSR and the average annual growth in EPS. This operates as a means of rewarding executives for achieving sustainable long term growth.
CCA’s TSR is assessed relative to CCA’s peer group of companies. The graph below follows CCA’s TSR over the past five years against the average TSR of Australia’s top 100 companies by market capitalisation (S&P/ASX 100) –
As this graph indicates, over the past five years, CCA’s TSR performance has significantly improved relative to other ASX 100 companies. CCA’s TSR has increased by 75.2% compared to the ASX 100 TSR which decreased by 6.0% over the same period.
— CCA total shareholder return
— S&P/ASX 100 total shareholder return
CC A
to ta
l s ha
re ho
ld er
re tu
rn v
s A
SX 10
0 to
ta l s
ha re
ho ld
er re
tu rn
(% )
Data Source: Bloomberg
-6.0% 31 December 2012
Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12
75.2% 31 December 2012
100
80
60
40
20
0
-20
-40
-60
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201231
1. Before significant items. 2. Excludes special dividend.
REMunERAtIOn REPORt (CONTINuED)
B. Remuneration Structure (continued)
c) Performance of CCA and the Link to Reward (continued)
LTISRP (continued)
Over the period beginning from 2008, CCA’s EPS and dividends per share (DPS) compound annual growth rate (CAGR) has also consistently increased, as shown in the graphs below –
1. 2012 results for ASX 100 companies are not yet available for comparison.
The earnings data used in preparation of the above excludes significant items and has been adjusted for comparative companies to align with a December year end, if applicable.
As the graph indicates, over the five years, CCA’s accumulated EPS growth has increased 62.5% compared to the ASX 100 EPS which increased 6.3% over the same period.
However, CCA’s average annual growth in EPS for the 2010-2012 period of 6.7% is below the 2010-2012 LTISRP minimum EPS hurdle of 7.5%, and therefore half of the 2010-2012 LTISRP award that relates to the EPS hurdle did not vest.
The graph below compares CCA’s accumulated EPS growth over the five year period 2007-2011 against that of the ASX 100 companies –
20 08
Ea rn
in gs
p er
s ha
re (c
en ts
)
EPS ¹ CA
GR u p 7.5
% fr om 2
008 to 20
12
20 09
20 10
20 11
20 12
54.9
60.5
67.3 70.2
73.4
70%
60%
50%
40%
30%
20%
10%
0%
-10%
-20%
CC A
a cc
um ul
at ed
E PS
g ro
w th
v s
A SX
1 00
ac
cu m
ul at
ed E
PS g
ro w
th (%
)
Data Source: Macquarie Research
Dec-11Dec-10Dec-09Dec-08Dec-07Dec-06
62.5% 31 December 2011
6.3% 31 December 2011¹
— CCA accumulated EPS growth — ASX 100% EPS growth
20 08
Full year
DPS CAG
R up 9.5%
from 200
8 to 2012
20 09
20 10
20 11
20 12
17.0 18.5 20.5
22.0 24.0
22.0
Interim Final
25.0
28.0 30.5
32.0
39.0 43.5
48.5 52.5
56.0²
D iv
de nd
s pe
r s ha
re (c
en ts
)
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 32
Directors’ report (continueD) COCA-COL A AMATIL LIMITED FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
Plan Hurdles Retest period Status
Overall payout of
maximum award1
%tSR nPAt/EPS Growth
2003-20052 TSR only 1 year Complete 30th percentile Did not vest
n/a –
2004-20062 TSR and NPAT growth (minimum = 10.0%)
1 year Complete 46th percentile Did not vest
10.1% average, Vested at 67.3%
33.7
2005-20072 TSR and NPAT growth (minimum = 8.0%)
2 years Complete After retests – 82nd percentile Vested at 100.0%
10.3 % average, Vested at 72.4%
97.7
2006-20082 TSR (2 peer groups) and NPAT growth (minimum = 8.0%)
1 year Complete Peer group 1 = 89th percentile Peer group 2 = 81st percentile Combined vested at 100.0%
9.3% average, Vested at 89.2%
94.6
2007-2009 TSR (2 peer groups) and EPS growth (minimum = 8.2%)
1 year Complete Peer group 1 = 94th percentile Peer group 2 = 100th percentile Combined vested at 100.0%
13.1% average, Vested at 94.8%
97.4
2008-2010 TSR (2 peer groups) and EPS growth (minimum = 8.2%)
1 year Complete Peer group 1 = 100th percentile Peer group 2 = 95th percentile Combined vested at 100.0%
11.3% average, Vested at 73.9%
87.0
2009-2011 TSR (2 peer groups) and EPS growth (minimum = 7.0%)
1 year Complete Peer group 1 = 88th percentile Peer group 2 = 71st percentile Combined vested at 95.8%
8.6% average, Vested at 58.2%
77.0
2010-2012 TSR (2 peer groups) and EPS growth (minimum = 7.5%)
1 year Complete Peer group 1 = 75th percentile Peer group 2 = 71st percentile Combined vested at 95.3%
6.7% average, EPS hurdle did not vest
47.6
REMunERAtIOn REPORt (CONTINuED)
B. Remuneration Structure (continued)
c) Performance of CCA and the Link to Reward (continued)
LTISRP (continued)
The following table outlines the performance of each of the completed LTISRPs since 2003, correlating to the performance of the share price and TSR, as detailed above –
1. The percentage of this payment that was not achieved (and was therefore forfeited) was 100% less the percentage shown in this column. For further information on the 2010-2012 LTISRP, refer to the table showing share based compensation benefits on page 35.
2. The above table excludes the Component C awards offered only to Mr Davis for 2003 to 2006 inclusive. Details of these awards can be found in the remuneration reports for those years.
Performance (% of maximum)
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201233
name Grant date Vesting date Expiry date Performance
achieved
% vested of
maximum award
Performance measure
Fair value at grant date
per share or right1
$ ltISRP T.J. Davis 14 May 2010 31 Dec 2012 31 Dec 2012 EPS 10.05 6.7% cumulative
average growth –
TSR – peer group 1 7.56 75th percentile 99.0 TSR – peer group 2 8.29 71st percentile 91.6
4 May 2011 31 Dec 2013 31 Dec 2013 EPS 10.49 To be determined n/a TSR – peer group 1 7.58 To be determined n/a TSR – peer group 2 7.87 To be determined n/a
15 May 2012 31 Dec 2014 31 Dec 2014 EPS 11.50 To be determined n/a TSR – peer group 1 7.61 To be determined n/a TSR – peer group 2 8.94 To be determined n/a
Other Executives
1 Mar 2010 31 Dec 2012 31 Dec 2012 EPS 10.08 6.7% cumulative average growth
–
TSR – peer group 1 7.76 75th percentile 99.0 TSR – peer group 2 8.25 71st percentile 91.6
1 Mar 2011 31 Dec 2013 31 Dec 2013 EPS 10.41 To be determined n/a TSR – peer group 1 7.24 To be determined n/a TSR – peer group 2 7.70 To be determined n/a
1 Mar 2012 31 Dec 2014 31 Dec 2014 EPS 10.51 To be determined n/a TSR – peer group 1 6.10 To be determined n/a TSR – peer group 2 7.94 To be determined n/a
ERSP J. Murphy 22 Feb 2012 23 Feb 2014 n/a 2 years service 12.13 To be determined n/a
N.I. O’Sullivan 1 Jan 2010 31 Dec 2012 n/a 3 years service 11.07 Service period completed 100
N.I. O’Sullivan 1 Jan 2011 31 Dec 2013 n/a 3 years service 10.86 To be determined n/a
V. Pinneri 1 Mar 2010 28 Feb 2013 n/a 3 years service 11.07 To be determined n/a
W.G. White 1 Jul 2010 30 Jun 2013 n/a 3 years service 11.90 To be determined n/a
REMunERAtIOn REPORt (CONTINuED)
B. Remuneration Structure (continued)
c) Performance of CCA and the Link to Reward (continued)
LTI
A summary of the terms of each grant of shares or share rights affecting remuneration in the current or a future reporting period is set out below –
1. Fair values vary due to differing dates of grants.
As the rewards received under the LTISRP are dependent on long term performance, these grants are still to be tested. The percentage of grants that will vest will be determined based upon CCA’s long term performance at the end of each performance period.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 34
Directors’ report (continueD) COCA-COL A AMATIL LIMITED FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
REMunERAtIOn REPORt (CONTINuED)
B. Remuneration Structure (continued)
c) Performance of CCA and the Link to Reward (continued)
LTI (continued)
Further details of the Group Managing Director’s and senior executives’ right to allocations of shares under the LTISRP are outlined in the table below –
The share rights are offered to the executives at no cost. Share rights do not carry any voting or dividend rights and will automatically be exercised once the vesting conditions have been met. Vested shares will be acquired by the LTISRP trustee by purchasing shares at no cost to the executive. This generally occurs in February of the following year for any awards that vest.
The values attributed to movements in share rights during the year are as follows –
Value of share rights 2012-2014 plan 2010-2012 plan
name At grant date
$ Maximum
$ At date vested
$ At date lapsed1
$ kMP Executives
T.J. Davis 1,752,254 2,450,557 934,245 1,293,253
G. Adams 97,630 138,230 74,702 102,604
J. Murphy 226,359 320,528 52,291 71,824
N.I. O’Sullivan 389,606 551,680 118,030 162,106
V. Pinneri 157,792 223,416 59,758 82,081
E. Rey 219,875 311,354 – –
W.G. White 631,459 894,114 287,047 394,241
1. Lapsed value is calculated using the maximum value less the vested amount.
All values are calculated in accordance with AASB 2 Share-based Payment. The value assumes a performance achievement at the maximum level, other than the value at grant date.
number of share rights
name Plan Grant date Maximum Vested
amount lapsed amount
unvested (maximum)
kMP Executives T.J. Davis 2010-2012 14 May 2010 247,844 118,097 129,747 –
2011-2013 4 May 2011 247,844 – – 247,844 2012-2014 15 May 2012 247,844 – – 247,844
G. Adams 2010-2012 1 Mar 2010 19,608 9,343 10,265 – 2011-2013 1 Mar 2011 15,771 – – 15,771 2012-2014 1 Mar 2012 15,771 – – 15,771
J. Murphy 2010-2012 1 Mar 2010 13,726 6,540 7,186 – 2011-2013 1 Mar 2011 22,078 – – 22,078 2012-2014 1 Mar 2012 36,569 – – 36,569
N.I. O’Sullivan 2010-2012 1 Mar 2010 30,980 14,762 16,218 – 2011-2013 1 Mar 2011 52,353 – – 52,353 2012-2014 1 Mar 2012 62,941 – – 62,941
V. Pinneri 2010-2012 1 Mar 2010 15,686 7,474 8,212 – 2011-2013 1 Mar 2011 25,490 – – 25,490 2012-2014 1 Mar 2012 25,490 – – 25,490
E. Rey 2011-2013 1 Mar 2011 26,471 – – 26,471 2012-2014 1 Mar 2012 35,522 – – 35,522
W.G. White 2010-2012 1 Mar 2010 75,343 35,901 39,442 – 2011-2013 1 Mar 2011 75,343 – – 75,343 2012-2014 1 Mar 2012 102,010 – – 102,010
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201235
Share based compensation benefits
name Year granted % vested % forfeited
Financial years in which
rights may vest
Maximum total value of
grant yet to vest
$1
kMP Executives T.J. Davis 2012 – – 2014 1,866,472
2011 – – 2013 1,177,061 2010 47.6 52.4 2012 –
G. Adams 2012 – – 2014 105,687 2011 – – 2013 73,805 2010 47.6 52.4 2012 –
J. Murphy 2012 – – 2014 245,064 2011 – – 2013 103,334 2010 47.6 52.4 2012 –
J. Murphy – ERSP 2012 – – 2014 116,6652
N.I. O’Sullivan 2012 – – 2014 421,811 2011 – – 2013 245,033 2010 47.6 52.4 2012 –
N.I. O’Sullivan – ERSP 2011 – – 2013 93,0502
2010 100.0 – 2012 – V. Pinneri 2012 – – 2014 170,830
2011 – – 2013 119,303 2010 47.6 52.4 2012 –
V. Pinneri – ERSP 2010 – – 2013 3,0752
E. Rey 2012 – – 2014 238,052 2011 – – 2013 123,889
W.G. White 2012 – – 2014 683,639 2011 – – 2013 352,632 2010 47.6 52.4 2012 –
W.G. White – ERSP 2010 – – 2013 128,6762
REMunERAtIOn REPORt (CONTINuED)
B. Remuneration Structure (continued)
c) Performance of CCA and the Link to Reward (continued)
LTI (continued)
The years in which vesting will occur and the maximum total value of the grant that may vest if executives achieve optimum performance are contained in the table below –
1. No grants will vest if the performance conditions are not satisfied, hence the minimum value of the grants yet to vest is nil. The maximum value of grants yet to vest has been estimated based on the fair value per grant at the maximum achievement of the vesting scale less amounts already expensed.
2. The minimum value of the grant is nil as no shares will vest if the service criteria are not met. The maximum value of the grant yet to vest has been estimated based on the fair value per grant less amounts already expensed.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 36
Directors’ report (continueD) COCA-COL A AMATIL LIMITED FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
REMunERAtIOn REPORt (CONTINuED)
B. Remuneration Structure (continued)
d) Remuneration Consultants
The Committee draws on a range of services from external consultants to provide information, data and advice where appropriate in relation to remuneration quantum, structure and market practice.
Following amendments made to the Corporations Act 2001 involving recommendations by “remuneration consultants” which came into force on 1 July 2011, where a consultant is providing a recommendation, CCA has developed practices –
• to select and engage a consultant; • on how CCA is to receive the advice; • on how to ensure independence from management; and • how the consultant interacts with management.
CCA recognises the importance of ensuring that any recommendations given in relation to the remuneration of KMP provided by remuneration consultants are provided independently of those to whom the recommendations relate.
The Committee has directly engaged PricewaterhouseCoopers (PwC) independent of management to advise the Committee on the Group Managing Director’s and the Non-Executive Directors’ remuneration data and benchmarking, effective from 1 January 2012, and also to review contemporary remuneration market practices in ASX 50 companies that may impact KMP.
PwC reported directly to the Board through the Committee. PwC was permitted to speak with management throughout the engagement to understand CCA’s processes, practices and other business issues and to obtain CCA’s management perspective. However, PwC was not permitted to provide any member of management with a copy of their draft or final report that contained remuneration recommendations.
Under the terms of the engagement, PwC provided remuneration recommendations as defined in section 9B of the Corporations Act 2001 and was paid $33,000 (including GST) for the 2012 year for these services. In addition to providing remuneration recommendations, PwC provided advice on a range of other matters for the 2012 year, including internal audit consulting, accounting and expatriate tax advice, and in total PwC was paid $1,672,423 (including GST) for their services to CCA, in addition to the payment for the remuneration recommendations.
PwC has confirmed that the recommendations relating to remuneration have been made free from undue influence by the member(s) of KMP to whom the recommendation relates.
As a consequence of the above, the Board is satisfied that the remuneration recommendations that were made by PwC were free from any undue influence from any member of KMP.
Management also appoints external firms from time to time to assist with remuneration benchmarking, data provision and the like; however, PwC is the only remuneration consultant appointed by the Committee. No other remuneration consultant provided remuneration recommendations during the financial year in relation to KMP.
Listed below are the primary consultants in preparation of proposals for the Committee –
Consultants Services provided type of service PwC Group Managing Director remuneration data and benchmarking Providing remuneration recommendation
Non-Executive Director remuneration data and benchmarking Providing remuneration recommendation Review of contemporary remuneration market practices in ASX 50 companies Providing remuneration recommendation
Mercers Executive and employee remuneration – market data Providing factual data only LTISRP (TSR reporting and peer group detail) Providing factual data only
Hay Executive and employee remuneration – market data Providing factual data only
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201237
REMunERAtIOn REPORt (CONTINuED)
C. Summary of Employment Contracts
The following are the principal details of the employment contracts for KMP executives as at 31 December 2012 –
T.J. Davis – Group Managing Director
The following discussion and table set out the principal details of the Group Managing Director’s employment contract with CCA, as at 31 December 2012.
Mr Davis commenced employment with CCA on 12 November 2001. Given the outstanding success of CCA during Mr Davis’ tenure, his remuneration package has increased during this period to be broadly in line with CCA’s agreed remuneration position of the 75th percentile. His standard fixed remuneration elements increased by 3.5% on 1 January 2012, in line with the market movement.
Revised terms and conditions agreed upon in November 2009 removed the concept that Mr Davis’ employment would expire at the end of a fixed period, with his term of contract classified as open ended. CCA is required to provide 12 months notice in writing or payment in lieu of notice and Mr Davis must give CCA 12 months notice to terminate his employment.
In accordance with the terms of his contract of employment, Mr Davis received a payment of $385,000 for remaining in employment with CCA on 30 November 2012.
term of contract Open ended
termination Termination by CCA
Other than in circumstances of termination for cause, the Company may end Mr Davis’ role as Group Managing Director after 30 November 2011 by giving 12 months notice in writing or payment in lieu of notice, calculated in a manner which is consistent with what was previously required to end Mr Davis’ role as Group Managing Director prior to 30 November 2011 (i.e. the highest remuneration earned in a complete calendar year by Mr Davis over the most recent three calendar year periods).
Mr Davis is only entitled to a payment in lieu of notice if CCA terminates his employment and it is not for cause and he does not work for part or all of the notice period.
At this point, CCA could see no reason why Mr Davis would not work for all of his notice period given his lengthy tenure and strong performance over a number of years.
Termination by Mr Davis
Mr Davis must give CCA 12 months notice in writing to terminate his employment as Group Managing Director.
If Mr Davis chooses to resign or retire and gives 12 months notice and continues in the Group Managing Director role for all of that time, then there are no payments made to him in lieu of notice.
Obligations and entitlements on completion of employment
LTISRP awards where testing or retesting has not completed
The Board will be able to allocate shares (or make a cash payment in lieu of such shares) in circumstances where it would otherwise be unfair not to allocate shares.
Where Mr Davis’ employment ceases prior to the completion of the testing (or retesting for the 2010-2012 LTISRP) of awards in the LTISRP, the Board will be able to allocate shares (or make a cash payment in lieu of such shares) in circumstances where it would otherwise be unfair not to do so. If his employment ceases during an uncompleted three year performance period, other than where a capital event has occurred, and provided that the Board considers it fair to do so, the Board may grant to Mr Davis the right to a pro-rata award (or a cash payment in lieu of such award). Such an award will be made at the higher of –
• the number of threshold shares offered; or
• the number that would have been allocated under the actual performance condition, based on the most recent quarterly testing of the TSR and annual testing of the EPS hurdle respectively.
Restraints following completion of employment
Upon completion of his role as Group Managing Director (unless a capital event occurs before the date), Mr Davis will be paid $150,000 per annum for a three year period providing he does not work, consult, or take up board positions with pre-determined competitor companies in Australia.
At the end of this period, Mr Davis will be entitled to any accrued but untaken annual and long service leave; however, the payment in respect of his long service leave accrual will be calculated as at the date his role as Group Managing Director ends.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 38
Directors’ report (continueD) COCA-COL A AMATIL LIMITED FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
Fundamental change in role Consistent with arrangements that apply to chief executive officers in other listed entities, if, within six months of a change of control, there is a material change in Mr Davis’ responsibilities (including where he is no longer regarded as being the most senior executive in the CCA Group), and upon being informed of such change the Board does not rectify the situation, Mr Davis will be entitled to resign from his position as Group Managing Director but will receive benefits as if his role as Group Managing Director had been ended by the Company.
Primary benefits Vehicle benefits, car parking, leave loading, Company products, health assessment, home assistance allowance.
As part of the arrangement for Mr Davis to join CCA in November 2001, he was offered a company superannuation benefit that is payable at a rate of 20% on base salary, 20% on any actual STIP earned and 20% on the cash equivalent of any LTISRP that vested during a year. It was agreed with Mr Davis in late 2010 that the superannuation benefit for the LTISRP would cease from the 2011-2013 LTISRP onwards. Mr Davis can elect to have the superannuation benefit paid into a superannuation fund of his choice, or receive the benefit as taxable income, as long as the Superannuation Guarantee (SG) obligations are met. This superannuation benefit is taken into account in Mr Davis’ remuneration package and the amounts relating to the current year are disclosed on page 41.
REMunERAtIOn REPORt (CONTINuED)
C. Summary of Employment Contracts (continued)
T.J. Davis – Group Managing Director (continued)
Other senior executives
All CCA senior executives have agreements in place which set out the basic terms and conditions of employment. The following table provides a summary of some of the key terms of these agreements –
term of contract termination by CCA
termination by employee
Other payments related to service
Restraint following termination Change of control
G. Adams Managing Director, New Zealand & Fiji Open ended 1 month notice
If terminated (without cause1) and no suitable alternative position is available, 10 months fixed remuneration in lieu of notice and severance.2
1 month notice – – If there is a change of control of CCA, CCA may terminate Mr Adams’ employment by providing not less than 12 months fixed remuneration, inclusive of notice and severance.
J. Murphy Managing Director, Australian Beverages Open ended 1 month notice
If the Company terminates Mr Murphy’s employment (other than for cause1), Mr Murphy will receive 4 months of fixed remuneration in lieu of notice and severance.2 If terminated (without cause1) before 24 February 2014, Mr Murphy will receive the award of ERSP shares that would have vested on this date.
1 month notice Will receive 16,493 ERSP shares (valued at $200,000 at time of acquisition in 2012),if employed by CCA as at 24 February 2014. Mr Murphy is entitled to receive dividends on those ERSP shares prior to vesting.
6 months3 –
Refer to the following page for footnote details.
notice period and termination payments
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201239
term of contract termination by CCA
termination by employee
Other payments related to service
Restraint following termination Change of control
n.I. O’Sullivan Group Chief Financial Of ficer Open ended 2 months notice
If terminated (without cause1) and no suitable alternative position is available, an amount based on 10 months of Ms O’Sullivan’s fixed remuneration in lieu of notice and severance.2 If terminated (without cause1) before 1 January 2013 and 1 January 2014 respectively, Ms O’Sullivan will receive the relevant award of ERSP shares that would have vested on these dates.
2 months notice If employed by CCA on 1 January 2013, Ms O’Sullivan will receive 21,683 ERSP shares (valued at $250,000 at time of acquisition in 2010). If employed by CCA on 1 January 2014, Ms O’Sullivan will receive 23,020 ERSP shares (also valued at $250,000 at time of granting in 2011). Ms O’Sullivan is entitled to receive dividends on those ERSP shares prior to vesting.
6 months3 If, on a change of control of CCA, there is a fundamental change4 in Ms O’Sullivan’s role, she will be entitled to resign but will receive benefits as if her role had been terminated by CCA.
V. Pinneri Managing Director, SPCA Open ended 1 month notice
If terminated (without cause1) and no suitable alternative position is available, 12 months fixed remuneration in lieu of notice and severance2.
1 month notice – 6 months3 If, on a change of control of CCA, there is a fundamental change4 in Mr Pinneri’s role, he will be entitled to resign but will receive benefits as if his role had been terminated by CCA.
E. Rey Managing Director, Indonesia & PNG Open ended 1 month notice
If terminated (without cause1) and no suitable alternative position is available, 3 months fixed remuneration in lieu of notice and severance.2
1 month notice – 6 months3 –
W.G. White Managing Director, Australasia Open ended 4 months notice
If the Company terminates Mr White’s employment (other than for cause1), Mr White will receive a maximum of 12 months of fixed remuneration in lieu of notice and severance.2 If terminated (without cause1) before 1 July 2013, Mr White will receive the ERSP award of shares that would have vested on this date.
4 months notice Will receive 64,867 ERSP shares (valued at $774,000 at time of acquisition in 2010), if employed by CCA as at 1 July 2013. Mr White is entitled to receive dividends on those ERSP shares prior to vesting.
6 months3 If, on a change of control of CCA, there is a fundamental change4 in Mr White’s role, he will be entitled to resign but will receive benefits as if his role had been terminated by CCA.
1. Where termination is in circumstances other than those related to fraud, dishonesty, serious misconduct or unacceptable performance and where no suitable alternative position is available. 2. Calculated at CCA’s current policy of one month severance for every year of completed service with CCA to a maximum of 12 months inclusive of both notice and severance. 3. Restriction from competing with the CCA Group and/or soliciting the CCA Group’s customers and suppliers to cease or reduce the amount of business undertaken with CCA. 4 . This applies if, within six months of a change of control, there is a material change in the relevant executive’s responsibilities and upon being informed of such a change, the Board does not rectify the situation.
notice period and termination payments
REMunERAtIOn REPORt (CONTINuED)
C. Summary of Employment Contracts (continued)
Other senior executives (continued)
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 40
Directors’ report (continueD) COCA-COL A AMATIL LIMITED FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
REMunERAtIOn REPORt (CONTINuED)
C. Summary of Employment Contracts (continued)
Other senior executives (continued)
Senior executive receive superannuation contributions and other benefits under the terms of their employment and these are summarised in the table below. The benefits are accounted for in the calculation of the executives’ fixed remuneration. For Australian executives, superannuation can be “cashed down” to not less than 10% of base or the SG maximum contribution limit.
G. Adams J. Murphy n.I. O’Sullivan V. Pinneri E. Rey W.G. White Super- annuation1 14%
9% (to SG max for base salary)
14% (to SG max for base salary) 14% 14% 14%
Primary benefits2
Standard benefits, medical insurance, partial subsidy for home leave.
Company products and superannuation insurance.
Standard benefits, allowance to cover car parking, health assessment, home assistance allowance.
Standard benefits, health assessment.
Standard benefits, expatriate benefits.3
Standard benefits, car parking, leave loading, health assessment, home assistance allowance.
1. Superannuation refers to company superannuation. The amount of superannuation paid to executives is calculated as a percentage of base salary and actual STIP earned up to target, and for Australian based executives, any over-target incentive has company superannuation at the SG rate of 9%. For Mr Murphy and Ms O’Sullivan, their superannuation on base salary is capped to the SG maximum contribution rate.
2. Standard benefits include Company products, club membership, vehicle benefits, superannuation insurance and participation in Employees Share Plan (ESP). The ESP is open to all full and part time employees of the CCA Group on a voluntary basis, with the employee contributing up to 3% of base salary, and the company matching in shares with the shares vesting if they have been held for two years (or earlier for qualifying reasons of death, total and permanent disability, retirement or redundancy).
3. Expatriate benefits include medical insurance, subsidised housing and utilities, home leave, school fees, host country or cost of living allowance and environmental or hardship allowance.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201241
1. Non-monetary benefits includes the value of vehicle benefits, club membership, Company product and where applicable expatriate benefits. 2. Represents the estimated present value of accrued benefits payable under the employment contract terms for Mr Davis less amounts accrued in prior periods. 3. Superannuation benefits are provided through an accumulation superannuation plan. 4. The minimum STIP value is nil and the maximum value is what was actually paid. The STIP in 2011 does not include that portion compulsorily salary sacrificed in shares of the Company. Australian based executives, excluding Mr Davis, were required to sacrifice up to a maximum of $5,000 of the total amount.
5. Superannuation on annual cash incentive and shares purchased for the LTISRP (for more detail, refer page 38). 6. Represents the estimated fair value of CCA shares offered in the LTISRP calculated by multiplying the threshold number of shares by the fair value of the shares at grant date and amortised over the performance period. 7. ESP/ERSP include the following –
• ESP amounts represent the Company’s matching contribution; • shares purchased for the ERSP are amortised over the vesting period. The expense recognised in the current financial year for the relevant KMP was Mr Murphy $83,334 (2011: nil), Ms O’Sullivan $200,137 (2011: $163,351), Mr Pinneri $18,452 (2011: $18,452) and Mr White $257,356 (2011: $257,356); and • shares purchased as part of the compulsory salary sacrifice by Australian executives. The expense recognised in the prior financial year was $5,000 on behalf of Mr Murphy, Ms O’Sullivan and Mr White.
8. Amounts are calculated from 1 January 2012 and not the date of appointment to a key management role to ensure consistency between reporting periods. Mr Murphy was reported in 2011 as being one of the five highest paid executives of the Company and Group as required to be disclosed under the Corporations Act 2001.
9. Amounts are calculated from the date the individual was appointed to the executive position or up to the date the individual ceased to hold the executive position. Mr Rey was appointed as a KMP on 1 November 2011 and Mr Kelly ceased to be a KMP on 31 October 2011.
REMunERAtIOn REPORt (CONTINuED)
D. Statutory Remuneration of Executives
The following table has been prepared in accordance with section 300A of the Corporations Act 2001; amounts are paid or payable for services provided during the financial year. Details of each executive’s remuneration during the financial year are set out below –
Fixed Variable – performance related total remuneration
Shor t term
Post employ-
ment Shor t term Share
based payments
Per for- mance related
LTISRP related
Year Salary
$
Non- monetary benefits1
$ Other2
$
Super- annuation
on base3
$
Sub total fixed $
STIP4
$
Super- annuation
on STIP $
LTISRP6
$
ESP/ ERSP 7
$ $ % %
kMP Executives
T.J. Davis Executive Director and Group Managing Director
2012 2011
2,343,383 2,228,400
283,399 214,151
352,300 385,000
462,260 445,680
3,441,342 3,273,231
2,423,800 2,162,600
947,5625
949,4665 1,143,939 1,554,679
– –
7,956,643 7,939,976
57 59
14 20
G. Adams Managing Director, New Zealand & Fiji
2012 2011
298,176 280,502
82,587 62,113
– –
41,745 39,270
422,508 381,885
– 170,385
– 23,854
67,996
118,204 8,946 8,415
499,450 702,743
15 46
14 17
J. Murphy8
Managing Director, Australian Beverages
2012 2011
792,692 722,625
550 7,636
– –
16,123 15,487
809,365 745,748
161,700 332,600
22,638 30,384
123,787 72,518
83,334 5,000
1,200,824 1,186,250
33 37
10 6
N.I. O’Sullivan Group Chief Financial Officer
2012 2011
816,667 700,000
92,080 90,586
– –
16,123 15,487
924,870 806,073
606,200 507,000
82,488 67,907
244,317 242,775
224,637 189,351
2,082,512 1,813,106
56 56
12 13
V. Pinneri Managing Director, SPCA
2012 2011
356,083 346,000
45,150 45,150
– –
49,852 48,440
451,085 439,590
– –
– –
108,371 107,521
29,135 28,832
588,591 575,943
23 24
18 19
E. Rey9
Managing Director, Indonesia & PNG
2012 2011
393,823 63,271
411,339 74,291
– –
55,135 8,858
860,297 146,420
270,300 42,800
37,842 5,250
129,671 9,397
11,815 1,898
1,309,925 205,765
34 29
10 5
W.G. White Managing Director, Australasia
2012 2011
671,400 649,233
205,810 176,714
– –
93,996 90,893
971,206 916,840
381,000 591,800
53,340 83,552
378,112 485,592
277,498 281,833
2,061,156 2,359,617
53 61
18 21
Former kMP Executives P.N. Kelly9 2011 349,419 686,621
– 83,861 1,119,901 285,833 68,600 159,797 10,483 1,644,614 32 10
total kMP Executives 2012 5,672,224 1,120,915 352,300 735,234 7,880,673 3,843,000 1,143,870 2,196,193 635,365 15,699,101
Total KMP Executives 2011 5,339,450 1,357,262 385,000 747,976 7,829,688 4,093,018 1,229,013 2,750,483 525,812 16,428,014
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 42
Directors’ report (continueD) COCA-COL A AMATIL LIMITED FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
REMunERAtIOn REPORt (CONTINuED)
E. Remuneration of non-Executive Directors
The remuneration of Non-Executive Directors takes into account the size and complexity of CCA’s operations, their responsibility for the stewardship of the Company and their workloads. It comprises Directors’ fees (base plus Board Committee fees), superannuation contributions and retirement benefits.
a) Directors’ fees
Total fees are not to exceed the annual limit of $2.3 million as previously approved by shareholders in May 2011. Based on advice received from external remuneration consultants (via the Compensation Committee), Non-Executive Director fees are set and approved by the Executive Director. No element of remuneration is performance related.
The average increase in Director base fees for the last four years has been 3.4% per annum. As a consequence, the base fee has fallen below the median, and it is the Board’s intention to apply above average increases over a similar time period going forward, to bring the Director base fee closer to the median.
The annual Directors’ fees (excluding superannuation contributions) payable to Non-Executive Directors for the financial year ended 31 December 2012 were as follows –
$
Chairman 436,100 Director (base fee) 150,500 Audit & Risk Committee – Chairman 30,000 Audit & Risk Committee – member 17,300 Compliance & Social Responsibility Committee – Chairman 23,100 Compliance & Social Responsibility Committee – member 13,900 Compensation Committee – Chairman 23,100 Compensation Committee – member 13,900
No fees are payable in respect of membership of any other Board Committees. The Chairman does not receive any Committee fees.
b) Non-executive directors share plan
In prior years, Non-Executive Directors agreed to apply a minimum of 25% of their fees to purchase ordinary shares in the Company. The trustee of the Non-Executive Directors Share Plan will hold the shares until the beneficiary ceases to be a Director of the Company. From 1 September 2009, the Plan was suspended due to the change in taxation arrangements of share plans announced by the Australian Government during 2009.
c) Superannuation contributions
Contributions required under SG legislation are made on behalf of Non-Executive Directors.
d) Retirement benefits
There is no current scheme for the payment of retirement benefits. On 3 May 2006, shareholders agreed to the accrued benefits under the prior scheme being used to purchase shares in the Company. The shares are held by the trustee of the Non-Executive Directors’ Retirement Share Trust for Messrs Gonski and King until they cease to be a Director of CCA. In accordance with the terms of the prior scheme, these Non-Executive Directors will not have their shares transferred to them until the time of their retirement. Further details on these shares are included in Note 23 to the financial statements.
e) CCA shareholding guidelines
Non-Executive Directors are encouraged to hold CCA shares, with the following shareholding guideline introduced during 2010, based on length of time served as a Director –
• upon reaching five years, to hold equivalent of at least 20% of annual Director fees in CCA shares; • upon reaching 10 years, to hold equivalent of at least 40% of annual Director fees in CCA shares; and • upon reaching 15 years, to hold equivalent of at least 60% of annual Director fees in CCA shares.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201243
REMunERAtIOn REPORt (CONTINuED)
E. Remuneration of non-Executive Directors (continued)
The following table has been prepared in accordance with section 300A of the Corporations Act 2001; amounts are paid or payable for services provided during the financial year –
F) Policy on trading in CCA’s Shares
Under CCA’s Policy on Trading in CCA’s Shares, Directors, executives and nominated senior managers are prohibited from short term or speculative trading in the Company’s shares and transactions in the derivative markets.
The prohibition on short term or speculative trading includes direct dealings in the Company’s shares and transactions in the derivative markets involving exchange traded options, share warrants and similar instruments.
The entering into of all types of “protection arrangements” for any CCA shares (or CCA products in the derivative markets) that are held directly or indirectly by Directors, executives or nominated senior managers (including both in respect of vested and unvested shares in any Director or employee share plan) are prohibited at any time, irrespective of whether such protection arrangements are entered into during trading windows or otherwise.
The entering into of any margin lending arrangement involving CCA shares, during or outside a trading window, is also prohibited.
The Policy has been formally circulated to all Directors, executives and nominated senior managers. Failure to comply with the Policy will be regarded as a breach of the CCA Code of Business Conduct and will attract a penalty that may include termination of employment depending on the severity of the breach.
The movement of shares during the reporting period held directly, indirectly or beneficially, by the Group Managing Director is disclosed in Note 30 to the financial statements.
Short term Post employment total
Year Base fees
$ Committee fees
$ Superannuation
$ $
kMP non-Executive Directors D.M. Gonski, AC Chairman
2012 2011
436,100 411,400
– –
16,123 15,487
452,223 426,887
I.R. Atlas1 2012 150,500 31,200 16,064 197,764 2011 120,700 19,363 12,606 152,669
C.M. Brenner 2012 150,500 37,000 16,123 203,623 2011 142,000 30,378 15,372 187,750
A.G. Froggatt 2012 150,500 40,400 16,123 207,023 2011 142,000 25,060 14,821 181,881
M. Jansen 2012 150,500 17,300 15,102 182,902 2011 142,000 16,300 14,247 172,547
G.J. Kelly 2012 150,500 13,900 14,796 179,196 2011 142,000 13,100 13,959 169,059
W.M. King, AO 2012 150,500 13,900 14,796 179,196 2011 142,000 13,100 13,959 169,059
D.E. Meiklejohn, AM2 2012 150,500 43,900 16,123 210,523 2011 142,000 40,300 15,487 197,787
total kMP non-Executive Directors 2012 1,489,600 197,600 125,250 1,812,450 Total KMP Non-Executive Directors 2011 1,384,100 157,601 115,938 1,657,639
1. Amounts are calculated from the date the individual was appointed as a Non-Executive Director, or up to the date the individual ceased, to hold the Non Executive Director position. Ms Atlas was appointed as a KMP on 23 February 2011.
2. Mr Meiklejohn can elect to have the superannuation benefit paid into a superannuation fund of his choice, or receive the benefit as taxable income, as long as the Superannuation Guarantee obligations are met. In 2012, Mr Meiklejohn elected to receive part of his superannuation as taxable income.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 44
Directors’ report (continueD) COCA-COL A AMATIL LIMITED FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
AuDItOR InDEPEnDEnCE AnD nOn-AuDIt SERVICES
Auditor independence
The following independence declaration has been obtained from the Company’s auditor, Ernst & Young –
Auditor’s independence declaration to the Directors of Coca-Cola Amatil limited
In relation to our audit of the fi nancial report of Coca-Cola Amatil Limited for the fi nancial year ended 31 December 2012, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.
non-audit services
The following non-audit services were provided by the Company’s auditor, Ernst & Young (Australia). The Directors are satisfi ed that the provision of non audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The nature and scope of each type of non-audit service provided mean that auditor independence was not compromised.
Ernst & Young received or is due to receive the following amounts for the provision of non-audit services –
Other assurance services $215,000 Tax compliance services $5,000
Liability limited by a scheme approved under Professional Standards Legislation
Ernst & Young
David M. Gonski, AG Chairman Sydney 19 February 2013
Michael Wright Partner Sydney 19 February 2013
terry J. Davis Group Managing Director Sydney 19 February 2013
Ernst & Young Centre 680 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555 Fax: +61 2 9248 5959 www.ey.com/au
Signed in accordance with a resolution of the Directors.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201245
incoMe stateMent COCA-COL A AMATIL LIMITED AND ITS SuBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
Refer Note
2012 $M
2011 $ M
Revenue, excluding finance income Trading revenue 5,097.4 4,801.2 Other revenue 41.8 54.9
3 5,139.2 4,856.1
Other income1 4 53.2 212.8
Expenses, excluding finance costs Cost of goods sold (2,839.3) (2,684.3) Selling (692.0) (651.7) Warehousing and distribution (390.8) (362.3) Administration and other1 (509.3) (501.0)
(4,431.4) (4,199.3)
Share of net profit of joint venture entity accounted for using the equity method 10 – 0.9
Earnings before interest and tax 761.0 870.5
net finance costs Finance income 3 35.8 11.8 Finance costs 4 (147.7) (139.6)
(111.9) (127.8)
Profit before income tax 4 649.1 742.7
Income tax expense1 5 (189.0) (150.9)
Profit after income tax 460.1 591.8
Profit after income tax attributable to non-controlling interests (0.2) – Profit after income tax attributable to members of the Company 459.9 591.8
¢ ¢ Earnings per share (EPS) for profit attributable to members of the Company Basic and diluted EPS 25 60.4 78.1
1. Includes amounts classified as significant items. Refer to Notes 4c) and 5 respectively for further details.
Notes appearing on pages 50 to 105 to be read as part of the financial statements.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 46
stateMent oF coMprehensive incoMe COCA-COL A AMATIL LIMITED AND ITS SuBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
Refer Note
2012 $M
2011 $M
Profit after income tax 460.1 591.8
Other comprehensive income Foreign exchange differences on translation of foreign operations 22 (16.4) 17.2
Transfer to the income statement 22 – 0.2 Cash flow hedges1 22 (17.9) (59.9) Other comprehensive income, after income tax (34.3) (42.5) total comprehensive income 425.8 549.3
Total comprehensive income attributable to non-controlling interests (0.2) – total comprehensive income attributable to members of the Company 425.6 549.3
1. Stated net of $7.9 million deferred tax (2011: $26.2 million).
Notes appearing on pages 50 to 105 to be read as part of the financial statements.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201247
stateMent oF FinanciaL position COCA-COL A AMATIL LIMITED AND ITS SuBSIDIARIES AS AT 31 DECEMBER 2012
Refer Note
2012 $M
2011 $M
Current assets
Cash assets 6 1,178.0 664.9 Trade and other receivables 7 959.5 864.4 Inventories 8 689.5 752.4
Prepayments 94.6 59.3 Derivatives 31 9.5 14.7 Other financial assets 9 – 288.6 total current assets 2,931.1 2,644.3
non-current assets Long term deposits 150.0 – Other receivables 7 3.6 6.6 Investments in bottlers’ agreements 11 905.2 899.6 Property, plant and equipment 12 1,993.8 1,772.1 Intangible assets 13 628.7 607.6 Prepayments 19.8 10.6 Defined benefit superannuation plans 19 15.0 14.5 Derivatives 31 50.4 73.7 Other financial assets 9 24.4 – total non-current assets 3,790.9 3,384.7 total assets 6,722.0 6,029.0 Current liabilities Trade and other payables 15 806.3 735.6 Interest bearing liabilities 16 351.4 107.5 Current tax liabilities 54.5 44.8 Provisions 17 82.2 100.3 Accrued charges 412.6 351.7 Derivatives 31 42.2 48.5 total current liabilities 1,749.2 1,388.4 non-current liabilities Other payables 15 2.0 – Interest bearing liabilities 16 2,435.8 2,201.7 Provisions 17 13.3 12.2 Deferred tax liabilities 18 157.7 153.8 Defined benefit superannuation plans 19 30.5 30.3 Derivatives 31 254.9 208.3 total non-current liabilities 2,894.2 2,606.3 total liabilities 4,643.4 3,994.7 net assets 2,078.6 2,034.3 Equity Share capital 20 2,250.0 2,218.2 Shares held by equity compensation plans 21 (17.4) (16.5) Reserves 22 (128.8) (91.5) Accumulated losses (30.4) (75.9) Equity attributable to members of the Company 2,073.4 2,034.3 Non-controlling interests 5.2 – total equity 2,078.6 2,034.3
Notes appearing on pages 50 to 105 to be read as part of the financial statements.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 48
stateMent oF cash FLows COCA-COL A AMATIL LIMITED AND ITS SuBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
Refer Note
2012 $M
2011 $M
Inflows/(outflows) Cash flows from operating activities Receipts from customers (inclusive of goods and services taxes) 5,747.2 5,389.0 Payments to suppliers, governments and employees (inclusive of goods and services taxes) (4,734.3) (4,422.6) Interest income received 35.6 11.8 Interest and other finance costs paid (139.6) (130.2) Income taxes paid (167.0) (206.2) net cash flows from operating activities 6 741.9 641.8 Cash flows from investing activities Proceeds from –
disposal of – property, plant and equipment 5.8 3.6 trademarks 4&13 5.2 – rights to sell certain CCA branded products 4 19.0 – other financial assets 9 288.6 –
discontinuation of business acquisition 4 34.2 – repayment of loan by joint venture entity 24.5 6.0
Payments for – additions of –
property, plant and equipment (423.3) (334.7) customer lists (0.3) – software development assets (41.5) (26.5) other financial assets (24.4) –
acquisitions of entities and operations (net) 29 (116.0) (11.6) investments in long term deposits (150.0) – loan made to joint venture entity – (11.5)
net cash flows used in investing activities (378.2) (374.7) Cash flows from financing activities Proceeds from issue of shares 20 – 3.1 Proceeds from borrowings 685.9 671.4 Borrowings repaid (155.9) (322.3) Dividends paid 24 (382.6) (343.7) net cash flows from financing activities 147.4 8.5 Net increase in cash and cash equivalents 511.1 275.6 Cash and cash equivalents held at the beginning of the financial year 664.9 381.6 Effects of exchange rate changes on cash and cash equivalents 1.3 7.7 Cash and cash equivalents held at the end of the financial year 6 1,177.3 664.9
Notes appearing on pages 50 to 105 to be read as part of the financial statements.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201249
stateMent oF changes in equitY COCA-COL A AMATIL LIMITED AND ITS SuBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
Notes appearing on pages 50 to 105 to be read as part of the financial statements.
Equity attributable to members of the Company
Refer Note
Share capital
$M
Shares held by equity
compensation plans
$M Reserves1
$M
Accumulated losses
$M total
$M
non- controlling
interests $M
total equity
$M At 1 January 2012 2,218.2 (16.5) (91.5) (75.9) 2,034.3 – 2,034.3 Profit – – – 459.9 459.9 0.2 460.1 Other comprehensive income – – (34.3) – (34.3) – (34.3) total comprehensive income – – (34.3) 459.9 425.6 0.2 425.8 Transactions with equity holders – Movements in ordinary shares 20 31.8 – – – 31.8 – 31.8 Share based remuneration obligations 21&22 – (0.9) (3.0) – (3.9) – (3.9) Dividends appropriated 24 – – – (414.4) (414.4) – (414.4) Non-controlling interests on business combinations – – – – – 5.0 5.0 total of transactions with equity holders 31.8 (0.9) (3.0) (414.4) (386.5) 5.0 (381.5) At 31 December 2012 2,250.0 (17.4) (128.8) (30.4) 2,073.4 5.2 2,078.6
At 1 January 2011 2,180.2 (17.9) (39.8) (289.1) 1,833.4 – 1,833.4 Profit – – – 591.8 591.8 – 591.8 Other comprehensive income – – (42.5) – (42.5) – (42.5) total comprehensive income – – (42.5) 591.8 549.3 – 549.3 Transactions with equity holders – Movements in ordinary shares 20 38.0 – – – 38.0 – 38.0 Share based remuneration obligations 21&22 – 1.4 (9.2) – (7.8) – (7.8) Dividends appropriated 24 – – – (378.6) (378.6) – (378.6) total of transactions with equity holders 38.0 1.4 (9.2) (378.6) (348.4) – (348.4) At 31 December 2011 2,218.2 (16.5) (91.5) (75.9) 2,034.3 – 2,034.3
1. Refer to Note 22.
50
notes to the FinanciaL stateMents COCA-COL A AMATIL LIMITED AND ITS SuBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
1. SuMMARY OF SIGnIFICAnt ACCOuntInG POlICIES
This consolidated financial report was authorised for issue in accordance with a resolution of the Coca-Cola Amatil Limited Board of Directors on 19 February 2013.
Coca-Cola Amatil Limited is a company limited by shares that is incorporated and domiciled in Australia, whose shares are publicly traded on the ASX. The Company does not have a parent entity.
a) Basis of financial report preparation
This general purpose financial report has been prepared in accordance with the Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.
This financial report has been prepared on the basis of historical cost, except for financial assets and liabilities (including derivative financial instruments) which have been measured at fair value through the income statement.
This financial report is presented in Australian Dollars and all values are rounded to the nearest tenth of a million dollars, unless otherwise stated under the option available to the Company under ASIC Class Order No. 98/100. The Company is an entity to which the Class Order applies.
b) Statement of compliance
This financial report complies with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.
The Group has adopted all consequential amendments to Australian Accounting Standards which became applicable on 1 January 2012. There has been no effect on the financial statements of the Group.
CCA has amended the reporting of receipts from customers within the statement of cash flows to be inclusive of goods and services taxes, duties and excise taxes. This change has been made to be consistent with the generally accepted interpretation of AASB 107 Statement of Cash Flows requirements. The change adopted does not impact the net cash flows from operating activities.
In 2011, the Coca-Cola Amatil Limited Board of Directors made a formal written election to early adopt the following new and amended Australian Accounting Standards in the preparation of the Group’s 2011 and 2012 financial statements –
AASB 10 Consolidated Financial Statements AASB 11 Joint Arrangements AASB 12 Disclosures of Interests in Other Entities AASB 127 Separate Financial Statements AASB 128 Investments in Associates and Joint Ventures AASB 2011-7 Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards
Excluding the above mentioned standards, other Australian Accounting Standards and Interpretations that have been issued or amended but are not yet effective have not been early adopted by the Company or the Group for the financial year ended 31 December 2012. These are outlined in the table below –
Reference title Summary
Application date of standard1
Impact on the Group’s financial report
Application date for the Group
AASB 9 Financial Instruments Adjusts the classification and measurement of financial assets and liabilities.
1 Jan 2015 The impact of the standard is yet to be assessed.
1 Jan 2015
AASB 13 Fair Value Measurement New guidance on fair value measurement and disclosure requirements.
1 Jan 2013 The impact of the standard is yet to be assessed.
1 Jan 2013
AASB 119 Employee Benefits Changes the accounting for and presentation of pensions and other post-employment benefits.
1 Jan 2013 Approximately $11.4 million after tax decrease to equity (on transition) and immaterial net impact on income statement.
1 Jan 2013
AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements
Removal of key management personnel disclosure requirements from AASB 124 Related Party Disclosures.
1 Jul 2013 Disclosure changes only. 1 Jan 2014
Refer to the following page for footnote details.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012
51
c) use of estimates
The preparation of the financial statements requires management to make estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, revenues and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about the carrying values of assets and liabilities. Actual results may ultimately differ from estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.
The key estimates and assumptions that have or could have the most significant effect on the amounts recognised in the financial statements relate to the following areas –
i) Impairment testing of investments in bottlers’ agreements and intangible assets with indefinite lives
The Group determines whether investments in bottlers’ agreements and intangible assets with indefinite lives are impaired at each balance date. These calculations involve an estimation of the recoverable amount of the cash generating unit to which investments in bottlers’ agreements and intangible assets with indefinite lives are allocated;
ii) Estimation of useful lives of assets
The estimation of useful lives of assets has been based on historical experience. In addition, the condition of assets is assessed at least annually and considered against the remaining useful life. Adjustments to useful lives are made when considered necessary;
iii) Share-based payments
As disclosed in Note 1v), the Group measures the cost of equity settled transactions by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by an external valuer using the Monte Carlo simulation methodology and the Black Scholes model; and
iv) Income taxes
The Group is subject to income taxes in Australia and other jurisdictions in which CCA operates. Significant judgement is required in determining the Group’s current tax assets and liabilities. Judgement is also required in assessing whether deferred tax assets and liabilities are recognised in the statement of financial position. Assumptions about the generation of future taxable profits depend on management’s estimates of future cash flows. Changes in circumstances will alter expectations, which may impact the amount of tax losses and temporary differences not yet recognised.
Reference title Summary
Application date of standard1
Impact on the Group’s financial report
Application date for the Group
AASB 2011-9 Amendments to Australian Accounting Standards – Presentation of Items of Other Comprehensive Income
Changes to presentation of the statement of comprehensive income.
1 Jul 2012 Disclosure changes only. 1 Jan 2013
AASB 2012-2 Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial Assets and Financial Liabilities
New guidance on the disclosure for netting arrangements.
1 Jan 2013 Disclosure changes only. 1 Jan 2013
AASB 2012-3 Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial Liabilities
New guidance to address inconsistencies identified in applying some of the offsetting criteria of AASB 132 Financial Instruments: Presentation.
1 Jan 2014 Disclosure changes only. 1 Jan 2014
1. SuMMARY OF SIGnIFICAnt ACCOuntInG POlICIES (CONTINuED)
b) Statement of compliance (continued)
1. Application date for the annual reporting periods beginning on or after the date shown in the above table.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 52
notes to the FinanciaL stateMents (continueD) COCA-COL A AMATIL LIMITED AND ITS SuBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
1. SuMMARY OF SIGnIFICAnt ACCOuntInG POlICIES (CONTINuED)
d) Principles of consolidation
Subsidiaries
The consolidated financial statements of the Group comprise those of the parent entity, Coca-Cola Amatil Limited, and its subsidiaries. Subsidiaries are all those entities over which the Group has the power to govern financial and operating policies so as to obtain benefits from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.
The financial statements include the information and results of each subsidiary from the date on which the Company obtains control and until such time as the Company ceases to control the entity.
Investments in subsidiaries are measured initially at cost and subsequently at cost less impairment.
In preparing the consolidated financial statements, the effects of all transactions, balances and unrealised gains and losses on transactions between entities in the Group have been eliminated.
The financial statements of subsidiaries have been prepared for the same reporting period as that of the parent entity, using consistent accounting policies. Adjustments have been made to bring into line any dissimilar accounting policies that may exist across the Group.
e) Segment reporting
An operating segment is a component of the Group –
• that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the Group); and
• whose operating results are regularly reviewed by the Group’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance.
f) Foreign currency translation
i) Functional and presentation currency
Both the functional and presentation currency of Coca-Cola Amatil Limited and its Australian subsidiaries is Australian Dollars. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.
ii) Transactions and balances
Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the reporting date. Exchange rate gains or losses are brought to account in determining the net profit or loss in the period in which they arise, as are exchange gains or losses relating to cross currency swap transactions on monetary items.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.
On consolidation, the assets and liabilities of foreign subsidiaries are translated by applying the rate ruling at balance date and revenue and expense items are translated at the average rate calculated for the period. The exchange differences arising on the retranslation are taken directly to equity within the foreign currency translation reserve. On disposal of a foreign subsidiary, accumulated exchange differences are recognised in the income statement as a component of the gain or loss on disposal.
g) Revenue
Revenue is recognised and measured at the fair value of the consideration received or receivable to the extent that it is probable that economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is recognised net of discounts, allowances and applicable amounts of value added taxes such as the Australian goods and services tax. The following specific recognition criteria must also be met before revenue is recognised –
i) Sale of goods and materials
Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and the amount of revenue can be measured reliably. Risks and rewards of ownership are considered passed to the buyer at the time of delivery of the goods to customers;
ii) Rendering of services
Revenue from installation and maintenance of equipment is recognised when the services have been performed and the amount can be measured reliably;
iii) Interest income
Interest income is recognised as the interest accrues, using the effective interest method; and
iv) Rental income
Rental income arising from equipment hire is accounted for on a straight line basis over the term of the rental contract.
h) Finance costs
Finance costs are recognised as expenses in the period in which they are incurred, except where they are included in the costs of qualifying assets.
i) Income tax
i) Current tax
Current tax asset or liability represents amounts receivable or payable in relation to income taxes attributable to taxable profits of the current or prior financial years, less instalments of income tax paid. The tax rates and laws used to compute current taxes are those that are enacted or substantially enacted as at the reporting date.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201253
1. SuMMARY OF SIGnIFICAnt ACCOuntInG POlICIES (CONTINuED)
i) Income tax (continued)
ii) Deferred tax
Deferred tax is provided using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for taxation purposes, using the tax rates which are enacted or substantially enacted as at the reporting date.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Deferred tax liabilities are recognised for all taxable temporary differences except for those arising from the initial recognition of assets and liabilities that affect neither accounting nor taxable profits and those temporary differences relating to investments in subsidiaries where the timing of the reversal can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset only when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
iii) Tax consolidation
The Company and its wholly owned Australian resident subsidiaries have formed a tax consolidated group. CCA is the head entity of the tax consolidated group. Details relating to the tax funding agreements are set out in Note 5.
j) Cash assets
Cash assets comprise cash on hand, deposits held at call with financial institutions and other short term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
k) trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less allowance for doubtful receivables.
Collectibility of trade receivables is reviewed on an ongoing basis. The carrying amount of trade receivables is reduced through the use of an allowance account and the amount of the loss is recognised in the income statement.
l) Inventories
Inventories including raw materials, work in progress and finished goods are stated at the lower of cost (including fixed and variable factory overheads where applicable) and net realisable value. Cost is determined on the basis of first-in-first-out, average or standard, whichever is the most appropriate in each case.
Net realisable value is the estimated selling price in the ordinary course of business, less the cost of completion and selling expenses.
Costs of inventories include the transfer from equity of gains or losses on qualifying cash flow hedges relating to inventory purchases.
m) Business combinations
Business acquisitions are accounted for using the acquisition method. The cost of acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value, and the amount of any non-controlling interest in the acquiree. For each business acquisition, the acquirer measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition related costs are expensed as incurred.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the gain is recognised in the income statement.
n) Financial assets
The Group classifies its financial assets as either “financial assets at fair value through the income statement” or as “loans and receivables”. The classification depends on the purpose for which the financial asset was acquired.
When financial assets are recognised initially, they are measured at fair value. In the case of financial assets not measured at fair value, they are taken through the income statement, along with directly attributable transaction costs.
Recognition and derecognition
All regular purchases and sales of financial assets are recognised on the trade date, that is the date the Group commits to purchase the asset. Regular purchases and sales of financial assets under contracts that require delivery of the assets within the period are established generally by regulation or convention in the market place. Financial assets are derecognised when the right to receive cash flows from the financial assets has expired or been transferred.
i) Financial assets at fair value through the income statement
Financial assets at fair value through the income statement are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are classified as held for trading unless they are designated as hedges. Assets in this category are classified as current assets.
ii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortised cost using the effective interest method. Loans and receivables are included in trade and other receivables in the statement of financial position. Loans and receivables are classified as current assets, except for those with maturities greater than 12 months after the balance date which are classified as non-current assets.
The fair value of all financial assets is based on an active market price. If the market for a financial asset is not active, the Group establishes fair value by using valuation techniques such as discounted cash flow analysis and option pricing models. These include reference to the fair values of recent arm’s length transactions, involving the same instruments or other instruments that are substantially the same.
o) Investments in bottlers’ agreements
Investments in bottlers’ agreements are carried at cost.
Investments in bottlers’ agreements are not amortised as they are considered to have an indefinite life but are tested annually for any impairment in the carrying amount. Refer to Note 14 for details of impairment testing of investments in bottlers’ agreements.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 54
notes to the FinanciaL stateMents (continueD) COCA-COL A AMATIL LIMITED AND ITS SuBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
1. SuMMARY OF SIGnIFICAnt ACCOuntInG POlICIES (CONTINuED)
p) Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Subsequent expenditure is added to the carrying value of the asset when it is probable that future economic benefits, in excess of the originally assessed standard of performance of the existing asset, will flow to the Group. All other subsequent expenditure is expensed in the period in which it is incurred.
Property, plant and equipment, other than freehold land, is depreciated or amortised on a straight line basis at various rates dependent upon the estimated average useful life for that asset to the Group. The estimated useful lives of each class of asset for the current and prior year are as follows –
Freehold and leasehold buildings 20 to 50 years Plant and equipment 3 to 15 years
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the income statement in the financial year the item is derecognised.
q) leased assets
Leases are classified at their inception as either finance or operating leases based on the economic substance of the arrangement so as to reflect the risks and benefits incidental to ownership.
Finance leases are those which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to ownership of the leased property. There are no material finance leases within the Group.
Operating leases are those where the lessor effectively retains substantially all the risks and benefits incidental to ownership of the leased property. Operating lease payments are charged to the income statement on a straight line basis over the lease term. Refer to Note 4 for further details. Lease income from operating leases is recognised as income on a straight line basis over the lease term. Refer to Note 3 for further details.
r) Intangible assets
i) Identifiable intangible assets
Intangible assets acquired separately are capitalised at cost and from a business combination are capitalised at fair value as at the date of acquisition. Following initial recognition, the cost model is applied to each class of intangible asset. The useful lives of these intangible assets are assessed to be either finite or indefinite. Where amortisation is charged on assets with finite lives, this expense is taken to the income statement and charged on a straight line basis.
Intangible assets with indefinite lives are tested for impairment at least annually at the cash generating unit level. Useful lives are also examined on an annual basis and adjustments, where applicable, are made on a prospective basis.
Intangible assets, excluding software development assets, created within the business are not capitalised and costs are taken to the income statement when incurred.
Software development costs incurred on an individual project are carried forward when future recoverability can reasonably be assured. Following the initial recognition of software development assets, the cost model is applied requiring the asset to be carried at cost less any accumulated amortisation and impairment. Any costs carried forward are amortised over the assets’ useful lives.
The carrying value of software development assets is reviewed for impairment annually when an asset is not in use or more frequently when an indicator of impairment arises during a reporting period indicating that the carrying value may not be recoverable.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the income statement when the asset is derecognised.
The estimated useful lives of existing finite lived intangible assets for the current and prior year are as follows –
Customer lists 5 years Brand names 40 to 50 years Software development assets 3 to 10 years
ii) Goodwill
Goodwill is the excess of the cost of an acquisition over the fair value of the net assets acquired. Goodwill is not amortised but will be tested annually or more frequently if required, for any impairment in the carrying amount. Impairment is determined by assessing the recoverable amount of the cash generating unit to which the goodwill relates.
Goodwill arising on the acquisition of subsidiaries is treated as an asset of the subsidiary. These balances are denominated in the currency of the subsidiary and are translated to Australian Dollars on a consistent basis with the other assets and liabilities held by the subsidiary.
Goodwill is allocated to cash generating units for the purpose of impairment testing. Refer to Note 14 for details.
s) Impairment of assets
At each reporting date, the Group assesses whether there is an indication that an asset may be impaired. Where an indicator of impairment exists or where annual impairment testing for an asset is required, the Group makes a formal estimate of the recoverable amount. An impairment loss is recognised for the amount by which the carrying amount of an asset exceeds the recoverable amount, which is defined as the greater of an asset’s fair value less costs to sell, or value in use. For the purpose of assessing impairment, assets are grouped at the level for which there are separately identifiable cash flows.
An impairment loss is recognised in the income statement. Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.
t) trade and other payables
Trade and other payables are carried at amortised cost. Liabilities are brought to account for amounts payable in relation to goods received and services rendered, whether or not billed at the reporting date.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201255
1. SuMMARY OF SIGnIFICAnt ACCOuntInG POlICIES (CONTINuED)
u) Provisions
Provisions are recognised when a present legal or constructive obligation has arisen as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where there is an expectation that a provision is to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the reporting date. Where material, the effect of the time value of money is taken into account in measuring provisions by discounting the expected future cash flows at a rate which reflects both the risks specific to the liability, and current market assessments of the time value of money.
v) Employee benefits
i) Wages and salaries, annual leave, sick leave and other benefits
Liabilities are raised for employee benefits accumulated as a result of employees rendering services up to balance date including related on costs. The benefits include wages and salaries, annual leave, sick leave, incentives, compensated absences and other benefits, which are charged against profit in their respective expense categories when services are provided or benefits vest with the employee. The provision for employee benefits is measured at the remuneration rates expected to be paid when the liability is settled.
ii) Long service leave
The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields on high quality corporate bonds (at the reporting date) with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. In the absence of a deep market in such bonds, the market yields on government bonds are used.
iii) Pensions and post-retirement benefits
The Group operates a number of defined benefit and defined contribution superannuation plans. The defined benefit plans are made up of both funded and unfunded plans. The assets of funded schemes are held in separate trustee-administered funds and are financed by payments from the relevant subsidiaries. Contributions to defined benefit plans are based on regular advice from independent qualified actuaries.
For defined contribution plans, the relevant subsidiaries pay contributions to the plans on a mandatory or contractual basis.
For defined benefit plans, pension costs are assessed using the projected unit credit method. Under the “corridor” approach, actuarial gains and losses are recognised as income or expense, when the cumulative unrecognised actuarial gains or losses for each individual plan exceed 10% of the defined benefit obligation or the fair value of plan assets, in accordance with the valuations made by qualified actuaries. The defined benefit obligations are measured at the present value of the estimated future cash flows using interest rates on government guaranteed securities with similar due dates to these expected cash flows. Actuarial gains and losses arising from experience adjustments or changes in assumptions are recognised over the average remaining service lives of employees. Past service cost is recognised immediately to the extent that benefits are already vested and otherwise are amortised over the average remaining service lives of the employees. Refer to Note 19 for further details of the Group’s defined benefit plans.
The Group’s contributions made to defined contribution plans are recognised as an expense when they fall due.
iv) Equity compensation plans
Employer contributions to the Employees Share Plan are charged as an expense over the vesting period. Any amounts of unvested shares held by the related trust are controlled by the Group until they vest and are recorded at cost in the statement of financial position within equity as shares held by equity compensation plans until they vest. The amounts relating to the unvested obligation are recorded at reporting date within the share based remuneration reserve until they vest. No gain or loss is recognised in the income statement on the purchase, sale, issue or cancellation of CCA’s own equity instruments.
Shares granted by CCA to employees of subsidiaries are recognised in the Company’s financial records as an additional investment in the subsidiary with a corresponding credit to the share based remuneration reserve. As a result, the expense recognised by CCA in relation to equity settled awards only represents the expense associated with grants to employees of the Company. The expense recognised by the Group is the total expense associated with all such awards.
Shares granted under the Long Term Incentive Share Rights Plan are measured by reference to the fair value of the shares at the date at which they are granted. The fair value is determined by an external valuer using the Monte Carlo simulation methodology (for shares with a total shareholder return performance condition) and the Black Scholes model (for shares with an earnings per share performance condition). The fair value of shares is charged as a share based remuneration expense over the vesting period together with a corresponding increase in the share based remuneration reserve, ending on the date on which the relevant employees become entitled to the award. Refer to Note 23 for further details of the Long Term Incentive Share Rights Plan.
The cumulative expense recognised for equity settled transactions at each reporting date until vesting date reflects the extent to which the vesting period has expired and CCA’s best estimate of the number of equity instruments that will ultimately vest. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. The income statement charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon a market condition.
w) Derivative financial instruments
The Group seeks to actively manage its exposures to foreign exchange, commodities and interest rates by using derivative financial instruments to hedge these risks arising from its operating, investing and financing activities. This is achieved through a process of identifying, recording and communicating all financial exposures and risk in the Group which forms the basis for any decision to implement risk management strategies.
The Group at inception, documents the transaction and the relationship between the hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The process includes linking all derivative financial instruments designated to specific firm commitments or forecast transactions. The Group also assesses both at the hedge inception and on an ongoing basis, whether the derivative financial instruments that are used in hedge accounting are highly effective in offsetting changes in fair value or cash flows of hedged items.
Derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured to fair value. On subsequent revaluation, the derivatives are carried as assets when their fair value is positive and as liabilities when their fair value is negative.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 56
notes to the FinanciaL stateMents (continueD) COCA-COL A AMATIL LIMITED AND ITS SuBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
1. SuMMARY OF SIGnIFICAnt ACCOuntInG POlICIES (CONTINuED)
w) Derivative financial instruments (continued)
The Group designates its derivatives as either –
• hedges for fair value of recognised assets and liabilities (fair value hedges); or
• hedges for interest rate, foreign currency and commodity risks associated with recognised assets and liabilities or highly probable forecast transactions (cash flow hedges).
Fair value hedges
During the financial year, the Group held cross currency swaps to mitigate exposures to changes in the fair value of foreign currency denominated debt from fluctuations in foreign currency and interest rates. The hedged items designated were a portion of the Group’s foreign currency denominated borrowings. The changes in fair values of the hedged items resulting from movements in exchange rates and interest rates are offset against the changes in the value of the cross currency swaps. The objective of this hedging is to convert foreign currency borrowings to local currency borrowings. Hence, at inception, no significant portion of the change in fair value of the cross currency swap is expected to be ineffective.
Gains or losses from remeasuring the fair value of the hedge instruments are recognised within net finance costs in the income statement and are offset with the gains and losses from the hedged item where those gains or losses relate to the hedged risks. The hedge relationship is expected to be highly effective because the notional amount of the cross currency swaps coincides with that of the underlying debt, and all cash flow and reset dates coincide between the borrowing and the swaps.
The effectiveness of the hedging relationship is tested prospectively and retrospectively by means of cumulative dollar offset effectiveness calculations. The primary objective is to determine if changes to the hedged item and the derivative are highly correlated and, thus supportive of the assertion that there will be a high degree of offset in fair values achieved by the hedge.
Cash flow hedges
Cash flow hedges are used to hedge future cash flows or a probable transaction that could affect the gain or loss in the income statement relating to the Group’s ongoing business activities. The gain or loss on effective portions of the hedging instrument is recognised directly in equity, while the ineffective portion is recognised in the income statement. Amounts recognised in equity are transferred to the income statement as and when the asset is consumed. If the forecast transaction is revoked or no longer expected to occur, amounts previously recognised in equity are immediately transferred to the income statement. The derivative financial instruments are in a hedge relationship and are initially recognised in equity. Any gain or loss is reclassified to the income statement when the Group exercises, terminates, or revokes designation of the hedge relationship.
x) Interest bearing liabilities
Interest bearing liabilities are initially recognised at fair value of the consideration received, net of transaction costs associated with the borrowing.
After initial recognition, interest bearing liabilities are subsequently measured at amortised cost using the effective interest method. Amortised cost is calculated by taking into account any issue costs, and any discount or premium on settlement.
Fair value hedging is applied to certain interest bearing liabilities (refer to Note 1w)). In such instances, the resulting fair value adjustments mean that the carrying value differs from amortised cost.
Interest bearing liabilities are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.
y) Comparative figures
Where necessary, comparative figures have been adjusted to conform to changes in presentation in the current year.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201257
2. SEGMEnt REPORtInG
The Group operates in four reportable segments, based on a combination of factors including geography, products and services. The Australia, New Zealand & Fiji and Indonesia & PNG segments derive their revenues from the manufacture, distribution and marketing of carbonated soft drinks and other alcohol free beverages.
The Alcohol, Food & Services segment manufactures and distributes premium spirits and beers, processes and markets fruit and other food products, and provides certain support services to the Group and third party customers.
The Group manages its net finance costs and income taxes on a Group basis. Segment performance (segment result) is evaluated on an earnings before interest, tax and significant items basis.
The accounting policies of each operating segment are the same as those described in Note 1. Inter-segment transactions are conducted on normal commercial terms and conditions.
Additions of non-current assets relating to CCA’s Packaging Services business (included in Alcohol, Food & Services) are reported within the respective non-alcohol beverage business by country. Non-current assets, once available for use, are transferred to the respective Packaging Services business, where depreciation is also then recognised and reported.
The Group earned approximately 38.8% (2011: 37.0%) of its trading revenue from its top three customers, being Metcash Limited, Wesfarmers Limited and Woolworths Limited. These customers operated within the Australia, New Zealand & Fiji and Alcohol, Food & Services segments.
2012 $M
2011 $M
2012 $M
2011 $M
2012 $M
2011 $M
trading revenue1 Other revenue total revenue,
excluding finance income non-Alcohol Beverage business
Australia 3,027.9 2,880.7 11.5 29.9 3,039.4 2,910.6 New Zealand & Fiji 402.8 415.8 9.2 10.5 412.0 426.3 Indonesia & PNG 948.2 845.5 1.6 1.0 949.8 846.5
Alcohol, Food & Services business 718.5 659.2 19.5 13.5 738.0 672.7 total CCA Group 5,097.4 4,801.2 41.8 54.9 5,139.2 4,856.1
Segment result non-Alcohol Beverage business
Australia 627.4 607.2 New Zealand & Fiji 70.1 79.5 Indonesia & PNG 102.9 88.1
Alcohol, Food & Services business 95.1 93.2 total operating segments 895.5 868.0 Share of net profit of joint venture entity – 0.9 total CCA Group 895.5 868.9
The reconciliation of segment result to CCA Group profit after income tax is shown below –
CCA Group Segment result 895.5 868.9 Significant items2 (134.5) 1.6 Earnings before interest and tax 761.0 870.5 Net finance costs3 (111.9) (127.8) Profit before income tax 649.1 742.7 Income tax expense3 (189.0) (150.9) Profit after income tax 460.1 591.8 Profit after income tax attributable to non-controlling interests (0.2) – Profit after tax attributable to members of the Company 459.9 591.8 Refer to the following page for footnote details.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 58
notes to the FinanciaL stateMents (continueD) COCA-COL A AMATIL LIMITED AND ITS SuBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
2. SEGMEnt REPORtInG (CONTINuED)
2012 $M
2011 $M
2012 $M
2011 $M
2012 $M
2011 $M
Assets5 liabilities5 net assets5
non-Alcohol Beverage business Australia 2,498.6 2,392.8 978.6 934.4 1,520.0 1,458.4 New Zealand & Fiji 558.5 542.8 107.0 112.3 451.5 430.5 Indonesia & PNG 643.2 550.9 268.8 218.9 374.4 332.0
Alcohol, Food & Services business 1,669.3 1,559.8 328.5 292.1 1,340.8 1,267.7 total operating segments 5,369.6 5,046.3 1,682.9 1,557.7 3,686.7 3,488.6 Other financial assets 24.4 288.6 – – 24.4 288.6 Capital employed 5,394.0 5,334.9 1,682.9 1,557.7 3,711.1 3,777.2 Net debt4 1,328.0 694.1 2,960.5 2,437.0 (1,632.5) (1,742.9) total CCA Group 6,722.0 6,029.0 4,643.4 3,994.7 2,078.6 2,034.3
Depreciation and amortisation expenses
Additions of non-current assets6
non-Alcohol Beverage business Australia 79.3 73.2 236.8 174.2 New Zealand & Fiji 20.3 18.0 38.3 36.1 Indonesia & PNG 39.5 40.3 163.8 68.5
Alcohol, Food & Services business 94.3 73.7 172.2 136.8 total CCA Group 233.4 205.2 611.1 415.6
trading revenue by geography7
non-current assets by geography6
Australia 3,730.0 3,539.9 2,552.9 2,455.4 New Zealand & Fiji 419.1 415.8 462.3 380.0 Indonesia & PNG 948.3 845.5 536.9 443.9 total CCA Group 5,097.4 4,801.2 3,552.1 3,279.3
1. Details of the Group’s trading revenue can be found in Note 3. 2. Refer to Note 4c) for further details of significant items. 3. Net finance costs and income tax are managed on a Group basis and are not reported internally at a segment level. 4. Cash assets, debt related derivative assets and liabilities, loans and interest bearing liabilities are not included as part of segment assets and liabilities as they are managed on a Group basis. 5. Certain comparative amounts have been restated arising from a review of the classification of intercompany balances carried out during the financial year. There was no impact on Group totals arising from
the restatement. 6. This disclosure comprises investments in bottlers’ agreements, property, plant and equipment, intangible assets and other non-current financial assets. 7. The trading revenue recorded reflects the customer geographic location of revenue earned by the Group.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201259
Refer Note
2012 $M
2011 $M
3. REVEnuE
trading revenue Sales of products 5,007.9 4,719.7 Rental of equipment and processing fees 89.5 81.5 total trading revenue 5,097.4 4,801.2
Other revenue Rendering of services 21.5 34.3 Miscellaneous rental and sundry income1 20.3 20.6 total other revenue 41.8 54.9 total revenue, excluding finance income 5,139.2 4,856.1 Interest income from –
related parties 33 0.1 1.7 non-related parties 35.7 10.1
total finance income 35.8 11.8 total revenue 5,175.0 4,867.9
4. InCOME StAtEMEnt DISClOSuRES Profit before income tax includes the following specific expenses –
a) Finance costs Interest costs from non-related parties 152.6 142.8 Other finance gains (0.6) (0.8) Total finance costs 152.0 142.0 Amounts capitalised (4.3) (2.4) total finance costs expensed 147.7 139.6
b) Income statement disclosures (by nature) Depreciation expense 12 211.8 185.2 Amortisation expense 13 21.6 20.0 Rentals – operating leases 83.0 78.8 Defined benefit superannuation plan expense 19b) 9.8 10.7 Defined contribution superannuation plan expense 57.3 52.1 Share based remuneration expense 22b) 14.5 14.8 Employee benefits expense 77.9 74.9 Net foreign exchange losses1 10.8 9.9
1. Sundry income mainly relates to sales of materials and consumables and scrap sales.
1. These amounts are principally included in cost of goods sold. Cost of goods sold also includes compensating amounts relating to commodity pricing and hedging outcomes.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 60
notes to the FinanciaL stateMents (continueD) COCA-COL A AMATIL LIMITED AND ITS SuBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
4. InCOME StAtEMEnt DISClOSuRES (CONTINuED)
Refer Note
2012 $M
2011 $M
c) Significant items Alcohol strategy
Following CCA’s due diligence review of Foster’s Australian spirits business, CCA elected not to proceed with the acquisition of this business and under the terms of CCA’s Pacific Beverages sale agreement with SABMiller plc (SABMiller), CCA has received a payment of $34.2 million from SABMiller. CCA has also recognised further restructuring expenses that are directly attributable to the alcohol strategy.
Transactions with The Coca-Cola Company (TCCC)
During the financial year, CCA sold certain of the Foster’s non-alcoholic assets, including the Cascade trademark in relation to non-alcoholic products (as acquired by CCA from Foster’s, also during 2012) to a subsidiary of TCCC. CCA has also agreed with TCCC to sell Cascade branded products in place of other existing CCA products in certain trade channels. Consequently, CCA received proceeds of $24.2 million from a subsidiary of TCCC and incurred certain expenses that are directly attributable to the transactions.
SPCA business restructure
During the financial year, CCA continued to assess the appropriate structure of SPCA and the net realisable value of its inventories as part of the ongoing restructure of the business, as a consequence of the stronger Australian Dollar resulting in SPCA being non-competitive in many export markets, the movement of domestic grocery private label contracts to imported products and fresh fruit price deflation. This assessment has resulted in recognition of a write down of inventories and other assets and restructuring costs. As a result of CCA’s impairment testing, an impairment charge of $48.0 million against goodwill has also been recognised.
As a result of the above transactions, CCA has recognised the following amounts in the income statement during the financial year – Gain on discontinuation of business acquisition 34.2 – Revaluation to fair value of 50% interest in Pacific Beverages 9 – 213.0 Transfer from foreign currency translation reserve 22b) – (0.2) Gain on Cascade related transactions 19.0 –
53.2 212.8 Impairment charge on SPCA’s goodwill (48.0) – Write down of inventories to net realisable value (100.4) (108.3) Write down of other assets, restructuring and other costs (39.3) (102.9) total net significant item (losses)/gains (134.5) 1.6
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201261
Refer Note
2012 $M
2011 $M
a) Income tax expense Current tax expense 188.8 234.0 Deferred tax expense/(benefit) 18d) 3.8 (71.5) Adjustments to current tax of prior periods (3.6) (11.6) total income tax expense 189.0 150.9
Total income tax expense includes – Income tax benefit on significant items1 (36.0) (58.2)
b) Reconciliation of CCA’s applicable (Australian) tax rate to the effective tax rate % %
Applicable (Australian) tax rate 30.0 30.0
Adjustments to current tax of prior periods (0.6) (1.6) Adjustments to deferred tax assets – tax losses1 (1.6) (8.2) Impairment of goodwill 2.2 – Non-allowable expenses 0.7 0.4 Overseas tax rates differential (0.9) (0.7) Overseas withholding tax (0.7) (0.1) Other – 0.5 Effective tax rate 29.1 20.3
Effective tax rate (before significant items) 28.7 28.2
5. InCOME tAX EXPEnSE
1. Relates mainly to deferred tax assets arising from recognition of CCA’s previously unrecognised capital losses, to the extent required to offset the capital gain arising from the gains on the 2012 discontinuation of a business acquisition, and the 2011 revaluation to fair value of CCA’s 50% interest in Pacific Beverages respectively. These gains have been classified as significant items. Refer to Notes 4c), 9 and 18d) for further details.
1. Refer to Note 5b) for further details.
c) Australian tax consolidation
CCA has formed a consolidated group for income tax purposes with each of its wholly owned Australian resident subsidiaries. The entities within the tax consolidated group have entered a tax funding agreement whereby each subsidiary will compensate CCA for the amount of tax payable that would be calculated as if the subsidiary was a tax paying entity.
CCA, as the head entity, and the subsidiaries in the tax consolidated group continue to account for their own current and deferred tax amounts. The amounts are measured as if each entity in the tax consolidated group continues to be a stand-alone taxpayer in its own right. The current tax balances are then transferred to CCA (being the head entity) via intercompany balances.
The method used to measure current and deferred tax amounts is summarised in Note 1i).
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 62
notes to the FinanciaL stateMents (continueD) COCA-COL A AMATIL LIMITED AND ITS SuBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
Refer Note
2012 $M
2011 $M
Cash on hand and in banks 848.1 391.3 Short term deposits 329.9 273.6 total cash assets 1,178.0 664.9
Cash at bank earns interest at floating rates based on daily bank deposit rates. The carrying amounts of cash and cash equivalents represents fair value.
Short term deposits are made for varying periods, depending on the immediate cash requirements of the Group, and earn interest at the respective short term deposit rates.
a) Reconciliation to cash and cash equivalents at the end of the financial year The above figures are reconciled to cash and cash equivalents at the end of the financial year as shown in the statement of cash flows as follows – Cash assets 1,178.0 664.9 Bank overdrafts 16 (0.7) – Cash and cash equivalents held at the end of the financial year 1,177.3 664.9
b) non-cash investing and financing activities Dividends satisfied by the issue of shares under the Dividend Reinvestment Plan 24a) 31.8 34.9
c) Reconciliation of profit after income tax to net cash flows from operating activities Profit after income tax 460.1 591.8 Depreciation and amortisation expense 233.4 205.2 Impairment and amounts set aside to allowances and provisions 191.7 166.3 Share of net profit of joint venture entity – (0.9) Share based remuneration (6.3) (9.8) Fair value adjustments to derivatives (1.9) 2.2 Revaluation to fair value of other financial assets 4c) – (212.8) (Profit)/loss from –
disposal of property, plant and equipment (0.6) 0.1 discontinuation of business acquisition 4c) (34.2) – Cascade related transactions 4c) (19.0) –
(Increase)/decrease in – trade and other receivables (119.9) (72.0) inventories 50.6 (49.4) prepayments (39.1) (15.9) defined benefit superannuation plans assets (5.0) (4.4)
Increase/(decrease) in – trade and other payables 53.1 120.7 tax liabilities 22.2 (55.3) provisions (95.2) (76.9) accrued charges 59.3 65.6 derivatives (5.4) (11.1) defined benefit superannuation plans liabilities (1.9) (1.6)
net cash flows from operating activities 741.9 641.8
6. CASH AnD CASH EquIVAlEntS
d) Risk exposure
CCA Group’s exposure to interest rate risk is disclosed in Note 32. The maximum exposure to credit risk at the reporting date is the carrying amount of each class of cash and cash equivalents.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201263
Refer Note
2012 $M
2011 $M
Current Trade receivables 887.2 776.0 Allowance for doubtful receivables 7a) (6.7) (4.1)
880.5 771.9
Amounts due from related entities (trade) 33 6.8 12.4 Amounts due from related entities (non-trade) 33 20.0 46.9 Other receivables 52.3 33.4 Allowance for doubtful receivables (0.1) (0.2)
79.0 92.5 total trade and other receivables (current) 959.5 864.4
non-current Amounts due from related entities (non-trade) 33 0.6 0.9 Other receivables 3.0 5.7 total other receivables (non-current) 3.6 6.6
a) Impaired trade and other receivables Movements in the allowance for trade receivables are as follows – At 1 January (4.1) (5.3) Charge (4.8) (2.7) Written off 2.3 4.0 Acquisitions of entities and operations (0.1) – Net foreign currency movements – (0.1)
(6.7) (4.1)
7. tRADE AnD OtHER RECEIVABlES
b) Analysis of receivables
As at 31 December 2012, the analysis of trade receivables (net of allowance) that were past due but not impaired is as follows –
As at 31 December 2012, trade receivables of $102.4 million (2011: $67.0 million) were past due but not impaired. These amounts relate to a number of independent customers for whom there is no recent history of material defaults.
All other receivables do not contain impaired assets and are not past due. Based on the credit history of these other receivables, it is expected that these amounts will be received when due.
Refer to Note 32 on credit risk of trade and other receivables.
c) Related party receivables
For terms and conditions relating to related party receivables, refer to Note 33.
Past due but not impaired
neither past due nor
impaired $M
less than 30 days
overdue $M
More than 30 but less
than 90 days overdue
$M
More than 90 days
overdue $M
total $M
2012 778.1 59.7 33.1 9.6 880.5
2011 704.9 39.2 20.7 7.1 771.9
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 64
notes to the FinanciaL stateMents (continueD) COCA-COL A AMATIL LIMITED AND ITS SuBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
Refer Note
2012 $M
2011 $M
8. InVEntORIES
Raw materials at cost 255.1 261.3 Raw materials at net realisable value 4.5 4.1
259.6 265.4 Finished goods at cost 344.7 391.1 Finished goods at net realisable value 11.1 30.5
355.8 421.6 Other inventories at cost1 65.7 58.7 Other inventories at net realisable value1 8.4 6.7
74.1 65.4 total inventories 689.5 752.4
9. OtHER FInAnCIAl ASSEtS
Current On 16 December 2011, CCA lost joint control of Pacific Beverages and discontinued equity accounting as at the date of loss of control. The 50% interest in Pacific Beverages as at the end of the 2011 financial year was classified as a current financial asset and was revalued to fair value through the income statement. Fair value was determined as being the sale price SABMiller paid to CCA for the 50% interest in Pacific Beverages on 13 January 2012.
Prior to 16 December 2011, this investment was classified as an equity accounted investment in joint venture entity by the Group. Refer to Note 10 for further details.
Balance at the beginning of the financial year 288.6 – Reclassification from investment in joint venture entity – 75.6 Revaluation to fair value of 50% interest in Pacific Beverages 4c) – 213.0 Disposal (288.6) – Total movements (288.6) 288.6 Balance at the end of the financial year – 288.6
non-current In August 2012, CCA lent $24.4 million to the Australian Beer Company, part of the Casella group. The loan will convert into an equity interest in the Australian Beer Company after the expiration of CCA’s restraint on selling beer in Australia on 16 December 2013.
Convertible notes 24.4 –
1. Other inventories include work in progress and spare parts (manufacturing and cold drink equipment).
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201265
2012 $M
2011 $M
10. InVEStMEnt In JOInt VEntuRE EntItY
Carrying amount of investment in Pacific Beverages Pty ltd1 – –
The Company had a 50% interest in Pacific Beverages Pty Ltd. The principal activities of Pacific Beverages were the manufacture, importation and distribution of alcoholic beverages.
CCA lost joint control of Pacific Beverages on 16 December 2011 and discontinued equity accounting on that date. Prior to this date, the interest in Pacific Beverages was accounted for using the equity method of accounting. Information relating to the joint venture entity is set out below –
CCA Group’s share of Pacific Beverages’ revenue, expenses and results1
Revenue2 – 48.3 Expenses – (47.8) Profit after income tax – 0.9
11. InVEStMEntS In BOttlERS’ AGREEMEntS
Balance at the beginning of the financial year 899.6 898.2 Net foreign currency movements 5.6 1.4 Balance at the end of the financial year 905.2 899.6
1. The amount was reclassified to other financial assets upon the discontinuation of equity accounting on 16 December 2011. Refer to Note 9 for further details.
1. The comparative amounts are for the period to 16 December 2011. 2. Beer sales revenue, excluding duties and excise taxes.
The bottlers’ agreements reflect a long and ongoing relationship between the Group and The Coca-Cola Company (TCCC). As at 31 December 2012, there were agreements for the five territories in place throughout the Group, at varying stages of their, mainly, 10 year terms. These agreements are all on substantially the same terms and conditions, with performance obligations relating to manufacture, distribution and marketing.
All of the Group’s present bottlers’ agreements, the first of which was issued in 1939, that have expired have been renewed or extended at the expiry of their legal terms. No consideration is payable upon renewal or extension.
In assessing the useful life of bottlers’ agreements, due consideration is given to the Group’s history of dealing with TCCC, established international practice of that company, TCCC’s equity in the Group, the participation of nominees of TCCC on the Company’s Board of Directors and the ongoing strength of TCCC brands. In light of these considerations, no factor can be identified that would result in the agreements not being renewed or extended and accordingly bottlers’ agreements have been assessed as having an indefinite useful life.
Bottlers’ agreements acquired from a business combination are capitalised at fair value as at the date of acquisition. Following initial recognition, the cost less impairment model is utilised for measurement.
All bottlers’ agreements were tested for impairment and no impairment losses were expensed for the financial year. A description of management’s approach to ensuring each investment in bottlers’ agreement is not recognised above its recoverable amount is disclosed in Note 14.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 66
notes to the FinanciaL stateMents (continueD) COCA-COL A AMATIL LIMITED AND ITS SuBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
Refer Note
Freehold and leasehold
land $M
Freehold and leasehold buildings1
$M
Plant and equipment
$M
Property, plant and
equipment under
construction $M
total property, plant and
equipment $M
At 1 January 2012 Cost (gross carrying amount) 186.0 334.8 2,554.9 225.1 3,300.8 Accumulated depreciation and impairment – (72.0) (1,456.7) – (1,528.7) net carrying amount 186.0 262.8 1,098.2 225.1 1,772.1
Year ended 31 December 2012 At 1 January 2012, net of accumulated depreciation and impairment 186.0 262.8 1,098.2 225.1 1,772.1 Additions – – 7.0 433.6 440.6 Acquisition of entities and operations 29 15.4 14.0 25.1 0.9 55.4 Disposals (0.1) (0.5) (4.6) – (5.2) Depreciation expense 4b) – (14.2) (197.6) – (211.8) Impairment charge2 – (11.6) (11.7) – (23.3) Net foreign currency movements (1.3) (2.4) (19.4) (3.7) (26.8) Transfer out of property, plant and equipment under construction and reclassifications 1.9 40.7 382.2 (424.8) – Other – (0.1) (0.5) (6.6) (7.2) At 31 December 2012, net of accumulated depreciation and impairment 201.9 288.7 1,278.7 224.5 1,993.8
At 31 December 2012 Cost (gross carrying amount) 201.9 388.3 2,846.8 224.5 3,661.5 Accumulated depreciation and impairment – (99.6) (1,568.1) – (1,667.7) net carrying amount 201.9 288.7 1,278.7 224.5 1,993.8
At 1 January 2011 Cost (gross carrying amount) 185.0 306.0 2,334.4 139.1 2,964.5 Accumulated depreciation and impairment – (60.0) (1,309.2) – (1,369.2) Net carrying amount 185.0 246.0 1,025.2 139.1 1,595.3
Year ended 31 December 2011 At 1 January 2011, net of accumulated depreciation and impairment 185.0 246.0 1,025.2 139.1 1,595.3 Additions – 0.8 23.5 353.5 377.8 Disposals – (0.1) (3.5) – (3.6) Depreciation expense 4b) – (12.7) (172.5) – (185.2) Net foreign currency movements 0.2 0.5 3.1 1.2 5.0 Transfer out of property, plant and equipment under construction and reclassifications 0.8 28.3 240.7 (269.8) – Other – – (18.3) 1.1 (17.2) At 31 December 2011, net of accumulated depreciation and impairment 186.0 262.8 1,098.2 225.1 1,772.1
At 31 December 2011 Cost (gross carrying amount) 186.0 334.8 2,554.9 225.1 3,300.8 Accumulated depreciation and impairment – (72.0) (1,456.7) – (1,528.7) Net carrying amount 186.0 262.8 1,098.2 225.1 1,772.1
12. PROPERtY, PlAnt AnD EquIPMEnt
1. Freehold and leasehold buildings include improvements made to buildings. 2. Relates mainly to impairment charges on SPCA’s freehold and leasehold buildings and plant and equipment. Refer to Note 4c) for further details of significant items. Through management’s ongoing assessment of the recoverable amount of the above, these impairment charges have been identified.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201267
Refer Note
Customer lists1& 2
$M
Brand names and
trademarks1
$M
Software development
assets $M
Goodwill1
$M Other
$M
total intangible
assets $M
At 1 January 2012 Cost (gross carrying amount) 8.7 120.1 157.5 396.4 – 682.7 Accumulated amortisation and impairment (7.3) (8.2) (59.6) – – (75.1) net carrying amount 1.4 111.9 97.9 396.4 – 607.6
Year ended 31 December 2012 At 1 January 2012, net of accumulated depreciation and impairment 1.4 111.9 97.9 396.4 – 607.6 Additions 0.3 – 41.5 – – 41.8 Disposals3 – (5.2) – – – (5.2) Acquisitions of entities and operations 3.2 5.5 0.1 38.1 2.0 48.9 Amortisation expense 4b) (0.8) (0.3) (20.5) – – (21.6) Impairment charge4 – – – (48.0) – (48.0) Net foreign currency movements – 0.3 – (2.0) – (1.7) Other – – 6.9 – – 6.9 At 31 December 2012, net of accumulated amortisation and impairment 4.1 112.2 125.9 384.5 2.0 628.7
At 31 December 2012 Cost (gross carrying amount) 12.2 120.8 205.3 432.5 2.0 772.8 Accumulated amortisation and impairment (8.1) (8.6) (79.4) (48.0) – (144.1) net carrying amount 4.1 112.2 125.9 384.5 2.0 628.7
At 1 January 2011 Cost (gross carrying amount) 7.6 120.1 132.3 387.5 – 647.5 Accumulated depreciation and impairment (6.0) (7.8) (43.2) – – (57.0) Net carrying amount 1.6 112.3 89.1 387.5 – 590.5
Year ended 31 December 2011 At 1 January 2011, net of accumulated amortisation and impairment 1.6 112.3 89.1 387.5 – 590.5 Additions – – 26.5 – – 26.5 Disposals – – (0.1) – – (0.1) Acquisitions of entities and operations 1.1 – – 9.1 – 10.2 Amortisation expense 4b) (1.3) (0.3) (18.4) – – (20.0) Net foreign currency movements – (0.1) (0.1) (0.2) – (0.4) Other – – 0.9 – – 0.9 At 31 December 2011, net of accumulated amortisation and impairment 1.4 111.9 97.9 396.4 – 607.6
At 31 December 2011 Cost (gross carrying amount) 8.7 120.1 157.5 396.4 – 682.7 Accumulated amortisation and impairment (7.3) (8.2) (59.6) – – (75.1) Net carrying amount 1.4 111.9 97.9 396.4 – 607.6
13. IntAnGIBlE ASSEtS
1. Acquired in business combinations. Refer to Note 29. 2. Asset purchases. 3. Represents the carrying value of the Cascade and other trademarks disposed, refer to Note 4c) for further details. 4. Relates to the impairment charge on SPCA’s goodwill. Refer to Note 4c) for further details of significant items.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 68
notes to the FinanciaL stateMents (continueD) COCA-COL A AMATIL LIMITED AND ITS SuBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
13. IntAnGIBlE ASSEtS (CONTINuED)
The useful life of customer lists is finite and amortisation is on a straight line basis.
In assessing the useful life of SPCA brand names, due consideration is given to the existing longevity of SPCA brands, the indefinite life cycle of the industry in which SPCA operates and the expected usage of the brand names in the future. In light of these considerations, no factor could be identified that would result in the brand names having a finite useful life and accordingly SPCA brand names have been assessed as having an indefinite useful life.
Other brand names have been assessed as having finite useful lives and are amortised on a straight line basis.
Software development assets represent internally generated intangible assets with finite useful lives and are amortised on a straight line basis.
All intangible assets with finite useful lives were assessed for indicators of impairment and all intangible assets with indefinite useful lives were tested for impairment at 31 December 2012. Refer to Note 14 for further details of impairment testing of intangible assets with indefinite lives.
14. IMPAIRMEnt tEStInG OF InVEStMEntS In BOttlERS’ AGREEMEntS AnD IntAnGIBlE ASSEtS WItH InDEFInItE lIVES
Investments in bottlers’ agreements (IBAs) and intangible assets deemed to have indefinite lives have been identified for each of the Group’s cash generating units (CGUs).
A segment level summary of IBAs and intangible assets deemed to have indefinite lives is presented below –
a) Impairment testing methodology
Impairment testing is carried out by CCA by comparing an asset’s recoverable amount to its carrying amount. The recoverable amount is determined as the greater of fair value less costs to sell, and value in use.
Investments in bottlers’ agreements and goodwill
Generally, CCA performs its impairment testing on a value in use basis. However, in addition to value in use, it assesses fair value less costs to sell to ensure that the higher value arising from either basis is in excess of the asset’s carrying amount. Value in use is calculated using a discounted cash flow methodology covering a 15 year period with an appropriate residual value at the end of that period, for each CGU. The methodology utilises cash flow forecasts longer than five years in order to minimise reliance on residual values and is based primarily on business plans presented to and approved by the Board.
IBAs $M
Brand names
$M Goodwill
$M
total IBAs and intangible assets
with indefinite lives
$M Year ended 31 December 2012
non-Alcoholic Beverage business Australia 691.9 – 46.1 738.0 New Zealand & Fiji 173.1 – 7.5 180.6 Indonesia & PNG 40.2 – 16.3 56.5
Alcohol, Food & Services business – 98.3 314.6 412.9 total 905.2 98.3 384.5 1,388.0
Year ended 31 December 2011 non-Alcoholic Beverage business
Australia 691.9 – 32.3 724.2 New Zealand & Fiji 165.0 – 7.1 172.1 Indonesia & PNG 42.7 – 18.1 60.8
Alcohol, Food & Services business – 98.3 338.9 437.2 total 899.6 98.3 396.4 1,394.3
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201269
14. IMPAIRMEnt tEStInG OF InVEStMEntS In BOttlERS’ AGREEMEntS AnD IntAnGIBlE ASSEtS WItH InDEFInItE lIVES (CONTINuED)
a) Impairment testing methodology (continued)
Brand names with indefinite useful lives
Value in use is calculated using a “relief from royalty” discounted cash flow methodology covering a 10 year period with an appropriate residual value at the end of that period. The methodology utilises notional after tax royalty cash flows longer than five years in order to minimise reliance on residual values and is based primarily on three year business plans prepared by management.
b) Impairment testing key assumptions
The key assumptions on which management has based its cash flow forecasts to undertake impairment testing are described below. These assumptions have been risk weighted where appropriate to support base valuations as the most likely outcome.
Investments in bottlers’ agreements and goodwill
i) EBIT margins
EBIT margins are based primarily on three year business plans presented to and reviewed by the Board. Beyond those periods, margins have been adjusted to reflect management’s views of sustainable long term EBIT margins;
ii) Volumes
Volumes are based on three year business plans presented to and reviewed by the Board. Beyond those periods, volumes are adjusted based on forecast per capita consumption, population growth rates and market share assumptions which are benchmarked against external sources;
iii) Pricing
Pricing is based on three year business plans presented to and reviewed by the Board. Beyond those periods, pricing is determined with reference to long term inflation forecasts;
iv) Capital expenditure
Capital expenditure is based on three year business plans presented to and reviewed by the Board. Beyond those periods, capital expenditure is determined as a percentage of sales revenue consistent with historical expenditure;
Brand names with indefinite useful lives
i) Sales
Sales are based on three year business plans reviewed by management. Beyond those periods, sales are projected based on business plan targets and management expectations;
ii) Royalty rates
Royalty rates are based on market rates for comparable brands adjusted for costs associated with maintaining the brand;
Discount and forecast terminal growth rates
i) Discount rates
Discount rates used are the weighted average cost of capital (after tax) for the Group in each CGU, risk adjusted where applicable. The local currency discount rates used for Australia, New Zealand, Fiji, Indonesia & PNG based CGUs are 7.2%, 7.1%, 10.6%, 10.3% and 11.6% (2011: 8.0% 7.6%, 10.6%, 11.4% and 11.6%) per annum respectively; and
ii) Forecast terminal growth rates
Forecast terminal growth rates are used in the calculation of the terminal value of each CGU and brand names with indefinite useful lives. For the purpose of impairment testing, real annual growth rates of nil to 2.0% (2011: nil to 2.0%) have been used.
c) Sensitivity to changes in assumptions
Following the $48.0 million impairment to SPCA’s goodwill recognised during the financial year, the carrying value of the business is now equal to the estimated recoverable amount. Any change in key assumptions in the future could result in the requirement to recognise a further impairment (where material).
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 70
notes to the FinanciaL stateMents (continueD) COCA-COL A AMATIL LIMITED AND ITS SuBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
Refer Note
2012 $M
2011 $M
Current Trade payables 553.1 497.0 Amounts due to related entities (trade) 33 99.4 96.5 Amounts due to related entities (non-trade) 33 – 27.5 Other payables 153.8 114.6 total trade and other payables (current) 806.3 735.6
non-current Other payables 2.0 –
Related party payables
For terms and conditions relating to related party payables, refer to Note 33.
15. tRADE AnD OtHER PAYABlES
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201271
16. IntERESt BEARInG lIABIlItIES
The following table sets out significant terms of the major components of interest bearing liabilities –
Interest rate p.a.
type of interest bearing liability/country 2012
$M 2011 $M
2012 %
2011 % Denomination
Maturity date
Current Unsecured Bonds
Australia 171.0 48.1 3.5 4.7 Australian Dollar Mar to June 13 Australia 123.0 25.3 0.8 1.9 Japanese Yen Sep 13
294.0 73.4
Loans Australia 0.9 0.6 6.9 6.9 Australian Dollar Dec 13
Bank loans Indonesia 55.8 33.5 6.4 7.1 Indonesian Rupiah Jan to Mar 13
Bank overdrafts 0.7 – 9.5 – Samoan Tala – total interest bearing liabilities (current) 351.4 107.5
non-current Unsecured Bonds
Australia 1,336.3 927.1 4.6 5.4 Australian Dollar May 14 to Jul 22 Australia 145.2 303.4 3.8 2.4 Japanese Yen Aug 21 to June 36 Australia 650.1 663.8 4.1 4.1 United States Dollar Nov 14 to Apr 16 New Zealand 39.5 37.7 4.0 4.0 New Zealand Dollar Aug 18 New Zealand 45.0 45.0 6.7 6.7 Australian Dollar Jul 21 New Zealand 48.2 49.1 4.3 4.3 United States Dollar Sep 23
2,264.3 2,026.1
Loans Australia 3.3 3.7 6.9 6.9 Australian Dollar Aug 14 to Apr 18
Bank loans New Zealand 84.6 79.1 3.1 3.2 New Zealand Dollar Nov 15 Indonesia 83.6 92.8 8.5 8.5 Indonesian Rupiah Jul 15
168.2 171.9 total interest bearing liabilities (non-current) 2,435.8 2,201.7
a) Interest rate, foreign exchange and liquidity risk
Further details regarding interest rate, foreign exchange and liquidity risk are disclosed in Note 32.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 72
notes to the FinanciaL stateMents (continueD) COCA-COL A AMATIL LIMITED AND ITS SuBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
2012 $M
2011 $M
i) Bank loan facilities Total arrangements 257.9 239.3 Used as at the end of the financial year (224.0) (205.4) Unused as at the end of the financial year 33.9 33.9
ii) Overdraft facilities Total arrangements 6.2 5.0 Used as at the end of the financial year (0.7) – Unused as at the end of the financial year 5.5 5.0
d) Defaults or breaches
During the current and prior financial year, there were no defaults or breaches to the terms and conditions of any of the Group’s borrowings.
17. PROVISIOnS
Current Employee benefits 75.8 87.7 Onerous contracts1 6.4 12.6 total provisions (current) 82.2 100.3
non-current Employee benefits 13.3 12.2 total provisions (non-current) 13.3 12.2
16. IntERESt BEARInG lIABIlItIES (CONTINuED)
b) Fair value
Details regarding the fair value of interest bearing liabilities are disclosed in Note 32.
c) Financing facilities
The following financing facilities are available as at balance date –
1. The comparative amount relates to restructuring costs classified as significant items. Refer to Note 4c) for further details.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201273
Refer Note
2012 $M
2011 $M
a) Deferred taxes
Deferred tax liabilities (157.7) (153.8)
b) Movements in net deferred tax liabilities for the financial year Balance at the beginning of the financial year (153.8) (189.6) (Charged)/credited to the income statement as deferred tax (expense)/benefit 18d) (3.8) 71.5 Credited to equity 22c) 10.2 28.1 Acquisitions of entities and operations (3.1) (0.3) Net foreign currency movements 1.8 (0.3) Other1 (9.0) (63.2) Balance at the end of the financial year (157.7) (153.8)
c) Deferred taxes are attributable to the following Allowances for current assets 13.5 15.5 Accrued charges and employee expense obligations 39.8 48.5 Other deductible items 41.0 20.0 Investments in bottlers’ agreements (130.1) (130.7) Property, plant and equipment and intangible assets (70.4) (72.6) Retained earnings balances of overseas subsidiaries1 (16.0) (21.4) Other taxable items (35.5) (13.1) net deferred tax liabilities (157.7) (153.8)
d) Movements in deferred taxes, reflected in deferred tax (benefit)/expense, are attributable to the following
Allowances for current assets 1.8 (11.8) Accrued charges and employee expense obligations 10.0 (6.6) Other deductible items 1.2 (7.4) Property, plant and equipment and intangible assets 3.8 13.0 Retained earnings balances of overseas subsidiaries (5.1) (0.7) Tax losses1 (9.8) (61.6) Other taxable items 1.9 3.6 net deferred tax expense/(benefit) 18b) 3.8 (71.5)
e) Deductible temporary differences not recognised, as realisation of the benefits represented by these balances is not considered to be probable
Capital losses – no expiry date 716.3 748.4 Tax losses – no expiry date 2.4 2.0 Tax losses – 2024 to 2026 expiry 5.2 5.3 Other items – no expiry date 31.7 41.1 Deductible temporary differences not recognised 755.6 796.8 Potential tax benefit 226.7 239.0
18. DEFERRED tAX lIABIlItIES
1. Current and prior year amounts relate to transfers to current tax liabilities of capital losses recognised in deferred tax benefit to offset the capital gains arising from significant items. Refer to Notes 5b) and 18d) for further details.
1. Relates to capital and other tax losses recognised and derecognised respectively as part of the significant items. Refer to Notes 4c) and 5b) for further details.
1. Represents withholding taxes payable on unremitted retained earnings of overseas subsidiaries.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 74
notes to the FinanciaL stateMents (continueD) COCA-COL A AMATIL LIMITED AND ITS SuBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
19. DEFInED BEnEFIt SuPERAnnuAtIOn PlAnS
The Group sponsors a number of superannuation plans that incorporate defined contribution and defined benefit categories. The defined benefit plans are the CCA Superannuation Plan (CCASP), which is predominantly Australian based, and the CCBI Superannuation Plan (CCBISP), which is Indonesian based (Plans). The assets and liabilities of the CCA Group Superannuation Plan (CCAGSP) were transferred to the CCASP during the 2011 financial year. The defined benefit category for the CCASP is closed to new entrants. The Plans provide benefits for employees or their dependants on retirement, resignation or death, in the majority of cases in the form of lump sum payments.
The obligation to contribute to the various Plans is covered by a combination of trust deeds, legislation and regulatory requirements. Contributions to the Plans are made at levels necessary to ensure that the Plans have sufficient assets to meet their vested benefit obligations. The rate of contribution is based on a percentage of employees’ salaries and wages and is regularly reviewed and adjusted based on actuarial advice.
The following sets out details in respect of the defined benefit superannuation plans only –
CCASP CCBISP CCA Group Refer Note
2012 $M
2011 $M
2012 $M
2011 $M
2012 $M
2011 $M
a) Balances recognised in the statement of financial position
Present value of funded defined benefit obligations at the end of the financial year 19c) 137.4 127.9 38.2 35.9 175.6 163.8 Fair value of plan assets at the end of the financial year 19d) (139.4) (128.8) – – (139.4) (128.8)
(2.0) (0.9) 38.2 35.9 36.2 35.0 Unrecognised past service cost – – (1.3) (1.6) (1.3) (1.6) Unrecognised losses (13.0) (13.6) (6.4) (4.0) (19.4) (17.6) net defined benefit (assets)/liabilities (15.0) (14.5) 30.5 30.3 15.5 15.8
These amounts are disclosed as –
Defined benefit liabilities – – 30.5 30.3 30.5 30.3 Defined benefit assets (15.0) (14.5) – – (15.0) (14.5) net defined benefit (assets)/liabilities (15.0) (14.5) 30.5 30.3 15.5 15.8
b) Expense recognised in the income statement Current service cost 7.6 7.3 2.7 2.3 10.3 9.6 Interest cost 4.6 5.8 2.3 2.7 6.9 8.5 Expected return on plan assets (7.8) (7.5) – – (7.8) (7.5) Actuarial losses 0.1 – – – 0.1 – Amortisation of previous period reported actuarial gains – (0.1) 0.1 – 0.1 (0.1) Past service cost – – 0.2 0.2 0.2 0.2 Expense recognised in the income statement 4.5 5.5 5.3 5.2 9.8 10.7
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201275
19. DEFInED BEnEFIt SuPERAnnuAtIOn PlAnS (CONTINuED)
CCASP CCBISP1
2012 $M
2011 $M
2012 $M
2011 $M
c) Movements of the present value of defined benefit obligations
Present value of defined benefit obligations at the beginning of the financial year 127.9 108.0 35.9 29.0
Current service cost 7.6 7.3 2.7 2.3 Interest cost 4.6 5.8 2.3 2.7 Actuarial losses 3.6 15.0 3.0 3.6 Benefits paid (6.3) (8.2) (1.9) (1.6) Net foreign currency movements – – (3.8) (0.1) Present value of defined benefit obligations at the end of the financial year 137.4 127.9 38.2 35.9
d) Movements of the fair value of plan assets Fair value of plan assets at the beginning of the financial year 128.8 128.7 – – Expected return on plan assets 7.8 7.5 – – Actuarial gains/(losses) 4.1 (3.5) – – Employer contributions 5.0 4.3 – – Benefits paid (6.3) (8.2) – – Fair value of plan assets at the end of the financial year 139.4 128.8 – –
% % % % e) Plan assets The percentage invested in each asset class at the reporting date (including pension assets) was – Australian equities 17.0 17.0 – – Overseas equities 14.0 15.0 – – Fixed interest securities 38.0 40.0 – – Property 4.0 4.0 – – Other 27.0 24.0 – –
f) Principal actuarial assumptions The following table sets out the principal actuarial assumptions used as at the reporting date in measuring the defined benefit obligations of each plan (per annum basis) – Discount rate 3.4 3.8 6.5 7.0 Expected return on plan assets – 6.2 – – Future salary increases 3.8 4.0 5.0 5.0 Future inflation 2.5 2.8 5.5 6.0 Future pension increases 2.5 2.8 – –
1. The CCBISP has no plan assets. PT Coca-Cola Bottling Indonesia and PT Coca-Cola Distribution Indonesia, in total, accrue CCBISP’s liabilities as per the actuarial assessment applying the “corridor” approach.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 76
notes to the FinanciaL stateMents (continueD) COCA-COL A AMATIL LIMITED AND ITS SuBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
19. DEFInED BEnEFIt SuPERAnnuAtIOn PlAnS (CONTINuED)
f) Principal actuarial assumptions (continued) The present value of defined benefit obligations is determined by discounting the estimated future cash flows using a discount rate based on government guaranteed securities with similar due dates to these expected cash flows. For the Australian based plans, the 10 year Australian Government bond rate is used as it has the closest term obtainable from the Australian bond market to match the terms of the defined benefit obligations.
g) Fair values of the Plans’ assets
The fair values of the Plans’ assets include no amounts relating to –
• any of the Company’s own financial instruments; and • any property occupied by, or other assets used by, the Company.
h) Expected rate of return on the Plans’ assets
The expected returns on the Plans’ assets assumptions are determined by weighting the expected long term return for each asset class by the target allocation of assets to each class. The returns used for each class are net of investment tax and investment fees.
i) Historical information
CCAGSP CCASP 2010 $M
2009 $M
2008 $M
2012 $M
2011 $M
2010 $M
2009 $M
2008 $M
Present value of defined benefit obligations 33.6 29.5 39.4 137.4 127.9 74.4 66.2 85.3 Fair value of plan assets (36.5) (33.7) (28.3) (139.4) (128.8) (92.2) (86.4) (69.3) (Surplus)/deficit in plan (2.9) (4.2) 11.1 (2.0) (0.9) (17.8) (20.2) 16.0 Experience adjustments – plan liabilities (0.4) 2.5 (1.6) (1.0) 2.7 (0.2) 0.6 (4.6) Experience adjustments – plan assets 0.2 2.2 (6.5) 4.1 (3.5) (0.3) 6.9 (24.2)
CCBISP 2012
$M 2011 $M
2010 $M
2009 $M
2008 $M
Present value of defined benefit obligations 38.2 35.9 29.0 28.4 25.7
CCASP 2012
$M 2011 $M
j) Actual return on plan assets Actual return on plan assets 11.9 4.0
k) Expected future contributions 2013 $M
2012 $M
Expected future contributions 5.9 6.5
While expected employer contributions are based on a percentage of employees’ salaries and wages, CCA’s funding policy is intended to ensure that the levels of the Australian based plans’ assets are sufficient to meet their vested benefit obligations. The amount of contributions may vary to that expected, due to material changes in economic assumptions and conditions, based on regular actuarial advice.
Vested benefit obligations represent the estimated total amount that the Plans would be required to pay if all defined benefit members were to voluntarily leave the Plans on the particular valuation date. However, the liability recognised in the statement of financial position is based on the projected benefit obligation which represents the present value of employees’ benefits accrued to date assuming that employees will continue to work and be members of the Plans until their exit. The projected benefit obligation takes into account future increases in an employee’s salary and provides a longer term view of the financial position of the Plans.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201277
20. SHARE CAPItAl
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding-up of the Company in proportion to the number of shares held. Every ordinary shareholder present at a meeting of the Company, in person or by proxy, is entitled to one vote, and upon a poll each ordinary share is entitled to one vote.
Ordinary shares have no par value.
All options in the CCA Executive Option Plan were either exercised or lapsed during the financial year ended 31 December 2011. Refer to Note 23 for further details.
b) Dividend Reinvestment Plan
CCA’s Dividend Reinvestment Plan (DRP) continues to be available to eligible shareholders. The DRP provides shareholders with the opportunity to receive fully paid ordinary shares, in lieu of cash dividends, at the price calculated using the daily volume weighted average market price of CCA shares during the 10 trading days commencing on the second trading day after the record date for the dividends. The record date for the dividend entitlements is 28 February 2013.
Details of shares issued under the DRP during the financial year are as follows –
c) Earnings per share (EPS)
Details of the Company’s consolidated EPS, including details of the weighted average number of shares used to calculate EPS, can be found in Note 25.
21. SHARES HElD BY EquItY COMPEnSAtIOn PlAnS
Refer Note
2012 no.
2011 No.
2012 $M
2011 $M
a) Issued capital
Fully paid ordinary shares Balance at the beginning of the financial year 759,567,552 756,003,067 2,218.2 2,180.2
Shares issued in respect of – Dividend Reinvestment Plan 20b) 2,565,862 2,993,585 31.8 34.9 Executive Option Plan 23 – 570,900 – 3.1
Total movements 2,565,862 3,564,485 31.8 38.0 Balance at the end of the financial year 762,133,414 759,567,552 2,250.0 2,218.2
2012 $M
2011 $M
Balance at the beginning of the financial year (16.5) (17.9) Movements in unvested CCA ordinary shares held by –
Employees Share Plan (0.4) 1.1 other plans (0.5) 0.3
Total movements (0.9) 1.4 Balance at the end of the financial year (17.4) (16.5)
2012 2011 Shares issued
no. Issue price
$ Proceeds
$M Shares issued
No. Issue price
$ Proceeds
$M Prior year final dividend 1,751,455 11.85 20.7 1,707,129 11.59 19.8 Current year interim dividend 814,407 13.62 11.1 1,286,456 11.75 15.1 total 2,565,862 31.8 2,993,585 34.9
The shares held by equity compensation plans account is used to record the balance of CCA ordinary shares which as at the end of the financial year have not vested to Group employees, and therefore are controlled by the Group. The majority of these shares are held by the Employees Share Plan, with the remainder held by other CCA share plans.
Refer to Note 23 for further information of CCA share plans.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 78
notes to the FinanciaL stateMents (continueD) COCA-COL A AMATIL LIMITED AND ITS SuBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
Refer Note
2012 $M
2011 $M
a) Reserves at the end of the financial year Foreign currency translation reserve (107.3) (90.9) Share based remuneration reserve 22.9 25.9 Cash flow hedging reserve (44.4) (26.5) total reserves (128.8) (91.5)
b) Movements
Foreign currency translation reserve Balance at the beginning of the financial year (90.9) (108.3) Translation of financial statements of foreign operations (16.4) 17.2 Transfer to the income statement 4c) – 0.2 Total movements (16.4) 17.4 Balance at the end of the financial year (107.3) (90.9)
The foreign currency translation reserve is used to record foreign exchange differences arising from translation of the financial statements of foreign operations.
Share based remuneration reserve Balance at the beginning of the financial year 25.9 35.1 Expense recognised 14.5 14.8 Deferred tax adjustment 22c) 2.3 1.9 Movements in unvested CCA ordinary shares held by –
Employees Share Plan (6.4) (5.5) other plans – (0.3)
Share based payments1 (13.4) (14.4) Other – (5.7) Total movements (3.0) (9.2) Balance at the end of the financial year 22.9 25.9
22. RESERVES
The share based remuneration reserve is used to record the following share based remuneration obligations to employees and other amounts in relation to CCA ordinary shares –
• as held by the Employees Share Plan, which have not vested to employees as at the end of the financial year; • to be purchased by the Long Term Incentive Share Rights Plan with respect to unvested incentives for senior executives, and for completed plans
where awards conditional upon a market condition have not been met; and • as held by the Executive Retention Share Plan, which have not vested to senior executives as at the end of the financial year.
Refer to Note 23 for further information of CCA share plans.
1. Shares purchased on market.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201279
Refer Note
2012 $M
2011 $M
b) Movements (continued) Cash flow hedging reserve Balance at the beginning of the financial year (26.5) 33.4 Revaluation of cash flow hedges to fair value (26.5) (87.1) Transfer to the income statement 0.7 1.0 Deferred tax adjustment 22c) 7.9 26.2 Total movements (17.9) (59.9) Balance at the end of the financial year (44.4) (26.5)
The cash flow hedging reserve is used to record adjustments to revalue cash flow hedges to fair or market value, where the derivative financial instruments qualify for hedge accounting. Upon realisation of the underlying hedged transactions in future financial years, these revaluation adjustments are reversed from the cash flow hedging reserve and taken to the income statement.
c) Reserve movements attributable to deferred taxes Share based remuneration reserve 22b) 2.3 1.9 Cash flow hedging reserve 22b) 7.9 26.2 total 18b) 10.2 28.1
22. RESERVES (CONTINuED)
23. EMPlOYEE OWnERSHIP PlAnS
The Company has seven share and option plans for employees and Directors of the Group: the Employees Share Plan, the Long Term Incentive Share Rights Plan, the Executive Salary Sacrifice Share Plan and the Executive Retention Share Plan which are active; and the Non-Executive Directors Share Plan, the Non Executive Directors’ Retirement Share Trust and the Executive Option Plan which are inactive. All options in the CCA Executive Option Plan have either been exercised or have lapsed.
Fully paid ordinary shares issued under these Plans rank equally with all other existing fully paid ordinary shares, in respect of voting rights and dividends and future bonus and rights issues.
Employees Share Plan
The Employees Share Plan (ESP) provides employees with an opportunity to contribute up to 3% of their base salary to acquire shares in the Company. The Plan is administered by a trustee which acquires (and holds in trust) shares for the benefit of participants. These shares are acquired through issues of shares to the trustee (the issue price is the weighted average price of a specified five day period prior to issue) or are purchased on market at the prevailing market price. Shares that have been forfeited under the terms of the Plan are also utilised. For every share acquired with amounts contributed by each participant, a matching share is acquired by the trustee. These matching shares, which under normal circumstances vest with the employee after a period of two years from their date of issue (acquisition or utilisation), are acquired with contributions made by the employing entities. Vesting of matching shares with employees does not involve any performance hurdles.
Members of the Plan receive dividends on both vested and unvested shares held on their behalf by the trustee.
As at the end of the financial year, the total number of employees eligible to participate in the Plan was 15,154 (2011: 15,278).
As at the end of the financial year, the number of shares in the ESP was 6,088,937 (2011: 7,136,271). The number of shares vested to employees was 4,805,564 (2011: 5,853,711).
All shares were purchased on market during the financial year. No shares were issued under the Plan during the financial year.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 80
notes to the FinanciaL stateMents (continueD) COCA-COL A AMATIL LIMITED AND ITS SuBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
23. EMPlOYEE OWnERSHIP PlAnS (CONTINuED)
long term Incentive Share Rights Plan
The Long Term Incentive Share Rights Plan (LTISRP) provides senior executives with the opportunity to be rewarded with fully paid ordinary shares, providing the Plan meets minimum pre-determined hurdles, as an incentive to create long term growth in value for CCA shareholders. The Plan is administered by a trustee which acquires (and holds in trust) shares for the benefit of participants. These shares are purchased on market or issued to the trustee once the Plan vests.
Senior executives are invited to participate in the Plan at the invitation of the Compensation Committee. The Committee specifies the performance criteria, covering a three year period, for each annual plan.
Half the grant is subject to a TSR performance condition and the other half is subject to an EPS performance condition. Employees must also meet the service condition of being employed at the end of the three year plan period unless the employment ceased because of death, total and permanent disability, retirement or redundancy or any other reason as determined by the Board in its absolute discretion. In such cases, for employees who have been employed for a period of 12 months or greater within the performance period, there can be a pro-rata award based on the number of completed months employed during the performance period, with the final award being determined at the completion of the performance period. Any unvested share rights are forfeited. No dividends are received on the share rights during the performance period.
The estimated fair value of shares offered in the LTISRP is calculated by multiplying the threshold number of shares by the fair value of the shares at grant date and expensed over the performance period.
For the financial year, the inputs used for valuing the share rights offered under the 2012-2014 plan were: $11.99 share price for the share rights offered on 1 March 2012 and $12.87 share price for the share rights offered on 15 May 2012; risk-free rate of 3.7% for the share rights offered on 1 March 2012 and 2.6% for the share rights offered on 15 May 2012 based on Australian Government bond yields for periods matching the expected life of the plan (as at offer date); expected volatility of 18.0% based on the rolling one year historical volatility of CCA’s share price and volatility implied in the pricing of traded options; and dividend yield of 4.74% for the share rights offered on 1 March 2012 and 4.38% for the share rights offered on 15 May 2012 based on the consensus broker forecasts divided by the share price at grant date.
Dividends are payable to participants of the Plan only once the rights vest into shares.
Set out below are details of share rights granted under the Plan –
Sub-plan Grant date Opening balance Granted Vested
lapsed and forfeited
Closing balance
Weighted average
fair value $
For the year ended 31 December 2012 2010-2012 1 March 2010 1,501,718 – (650,176) (851,542) – 8.401
2010-2012 14 May 2010 247,844 – (118,097) (129,747) – 8.321
2011-2013 1 March 2011 1,492,983 – – (132,138) 1,360,845 8.94 2011-2013 4 May 2011 247,844 – – – 247,844 9.11 2012-2014 1 March 2012 – 1,530,530 – (61,500) 1,469,030 8.77 2012-2014 15 May 2012 – 247,844 – – 247,844 9.89
3,490,389 1,778,374 (768,273) (1,174,927) 3,325,563
For the year ended 31 December 2011 2009-2011 1 March 2009 1,300,110 – (835,378) (464,732) – 7.841
2009-2011 22 May 2009 247,844 – (190,826) (57,018) – 6.291
2010-2012 1 March 2010 1,614,875 – – (113,157) 1,501,718 9.04 2010-2012 14 May 2010 247,844 – – – 247,844 8.99 2011-2013 1 March 2011 – 1,561,308 – (68,325) 1,492,983 8.94 2011-2013 4 May 2011 – 247,844 – – 247,844 9.11
3,410,673 1,809,152 (1,026,204) (703,232) 3,490,389
Executive Salary Sacrifice Share Plan
The Executive Salary Sacrifice Share Plan provides senior executives with the opportunity to sacrifice earned cash incentives into shares in the Company. The trustee of the Plan acquires shares to the value of the sacrificed amount and holds those shares for the benefit of the participant until the shares are withdrawn.
The sacrificed amount is contributed towards the Plan for the acquisition of shares by the trustee. The trustee holds these shares for the benefit of participants in proportion to their benefits sacrificed.
1. Represents fair values of vested shares.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201281
23. EMPlOYEE OWnERSHIP PlAnS (CONTINuED)
Executive Salary Sacrifice Share Plan (continued) For Australian senior managers not participating in the Executive Post-tax Share Purchase Plan (detailed in the remuneration report), a portion of the incentive is deferred, with 20% of the pre-tax actual incentive paid (up to target – and 100% of over target) to a maximum of $5,000 sacrificed into CCA shares. These shares are required to be held in trust for a period of 17 months, or until the executive leaves the employment of CCA. For executives outside of Australia, there is no deferral into shares.
As the shares are purchased from earned cash incentives, dividends are payable to the participants of the Plan.
As at the end of the financial year, the number of shares in the Plan was 268,528 (2011: 321,908).
Executive Retention Share Plan
Key senior executives are invited to participate in the Executive Retention Share Plan (ERSP). The Group Managing Director is not eligible to participate without shareholder approval and was not invited to participate in the Plan. The ERSP complements the LTISRP and offers an award of shares at the end of a three year period with no performance hurdles attached, providing the executive is still employed by the Company. This Plan vests mainly in 2013.
All shares in relation to this Plan have been purchased on market and the costs are amortised over the three year vesting period. Forfeited shares are utilised by the Employees Share Plan. Dividends are payable to participants of the Plan on both vested and unvested shares.
As at the end of the financial year, the number of shares in all issues of the Plan was 345,779 (2011: 345,060).
non-Executive Directors Share Plan
The Non-Executive Directors Share Plan was suspended in September 2009.
The Plan is administered by a trustee which acquired (and holds in trust) shares for the benefit of participants, until the participant ceases to be a Director of CCA. Dividends are payable to participants of the Plan.
As at the end of the financial year, there were five Non-Executive Directors participating in the Plan and the number of shares in the Plan was 292,767 (2011: 292,767).
non-Executive Directors’ Retirement Share trust
The Non-Executive Directors’ Retirement Share Trust holds shares in the Company purchased pursuant to applicable Non-Executive Directors’ Retirement Allowance Agreements. The participating Directors are entitled to receive dividends or other distributions relating to the shares; however, each applicable Non-Executive Director has agreed to reinvest all dividends receivable on the relevant shares under the Company’s Dividend Reinvestment Plan. All consequent shares will be held by the trustee of the Non Executive Directors’ Retirement Share Trust and the Directors have agreed that they will not require the trustee to transfer those shares to them until the time of their retirement.
The Trust is administered by a trustee which acquired (and holds in trust) shares for the benefit of participants until the participant ceases to be a Director of CCA.
As at the end of the financial year, there are two applicable Non-Executive Directors participating in the Trust and the number of shares in the Trust was 119,348 (2011: 114,339).
Executive Option Plan
For the 2011 financial year, 570,900 options with an exercise price of $5.44 were exercised and 123,050 options expired, leaving no remaining options on issue under this Plan.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 82
notes to the FinanciaL stateMents (continueD) COCA-COL A AMATIL LIMITED AND ITS SuBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
Refer Note
2012 $M
2011 $M
24. DIVIDEnDS
a) Summary of dividends appropriated during the financial year Prior year final dividend1 231.7 211.8 Current year interim dividend2 182.7 166.8 total dividends appropriated 414.4 378.6 Dividends satisfied by issue of shares under the Dividend Reinvestment Plan 6b) (31.8) (34.9) Dividends paid as per the statement of cash flows 382.6 343.7
b) Dividends declared and not recognised as liabilities Since the end of the financial year, the Directors have declared the following dividends on ordinary shares – Current year final dividend3 243.9 231.7 Current year special dividend4 26.7 – total 270.6 231.7
c) Franking credits Balance of the franking account at the end of the financial year 32.3 91.1 Franking credits which will arise from payment of income tax provided for in the financial statements 29.1 20.1 total franking credits 61.4 111.2
25. EARnInGS PER SHARE (EPS) 2012 2011
¢ ¢ Basic and diluted EPS 60.4 78.1 Before significant items –
Basic and diluted EPS 73.4 70.2
The following reflects the share and earnings information used in the calculation of basic and diluted EPS –
no. M
No. M
Weighted average number of ordinary shares on issue used to calculate basic EPS 761.1 757.9 Effect of dilutive securities – share options – 0.2 Adjusted weighted average number of ordinary shares on issue used to calculate diluted EPS
761.1 758.1
$M $M Earnings used to calculate basic and diluted EPS – Profit after income tax attributable to members of the Company 459.9 591.8 Adjustment for significant items1 98.5 (59.8) Earnings used to calculate basic and diluted EPS before significant items 558.4 532.0
1. Paid at 30.5¢ per share franked to 100% (2011: 28.0¢ per share franked to 100%). 2. Paid at 24.0¢ per share franked to 100% (2011: 22.0¢ per share franked to 100%). 3. Declared at 32.0¢ per share franked to 75% (2011: 30.5¢ per share franked to 100%). 4. Declared at 3.5¢ per share unfranked (2011: nil).
1. Amounts classified as significant items consist of a net loss of $134.5 million before income tax and an income tax benefit of $36.0 million, or $98.5 million loss after income tax for 2012 (2011: a net gain of $1.6 million before income tax and an income tax benefit of $58.2 million, or $59.8 million gain after income tax). Refer to Notes 4c) and 5 respectively for further details.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201283
2012 $M
2011 $M
26. COMMItMEntS
a) Capital expenditure commitments Estimated aggregate amount of contracts for purchase of property, plant and equipment not provided for, payable –
within one year 97.1 88.9 later than one year but not later than five years 14.3 19.2
111.4 108.1
b) Operating lease commitments Lease commitments for non-cancellable operating leases with terms of more than one year, payable –
within one year 70.4 69.2 later than one year but not later than five years 164.7 153.9 later than five years 111.9 140.8
347.0 363.9
The Group has entered into commercial non-cancellable operating leases on certain properties, motor vehicles and other items of plant and equipment. Leases vary in contract period depending on the asset involved. Renewal terms are included in certain contracts, whereby renewal is at the option of the specific entity that holds the lease. On renewal, the terms of the leases are usually renegotiated.
27. COntInGEnCIES Contingent liabilities existed at the end of the financial year in respect of –
termination payments under employment contracts1 10.2 9.5 other guarantees 0.7 0.6
10.9 10.1
The Directors are of the opinion that provisions are not required in respect of the matters disclosed above, as it is not probable that a future sacrifice of economic benefits will be required.
28. AuDItORS’ REMunERAtIOn Amounts received, or due and receivable, by – CCA auditor, Ernst & Young (Australia) for – audit or half year review of the financial reports 1.600 1.596 other services –
assurance related 0.215 0.322 tax compliance 0.005 0.116
0.220 0.438 1.820 2.034
Member firms of Ernst & Young in relation to subsidiaries of CCA for – audit or half year review of the financial reports 0.479 0.376 other services –
assurance related – 0.001 tax compliance 0.005 0.001
0.005 0.002 0.484 0.378
Other firms in relation to subsidiaries of CCA for – audit or half year review of the financial reports 0.090 0.106 other services –
assurance related 0.160 0.020 tax compliance 0.019 0.067
0.179 0.087 0.269 0.193
total auditors’ remuneration 2.573 2.605
1. Refer to the remuneration report found in the Directors’ Report for further details.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 84
notes to the FinanciaL stateMents (continueD) COCA-COL A AMATIL LIMITED AND ITS SuBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
$M Purchase consideration – cash paid 59.7 Less: Fair value of net identifiable assets acquired (refer to c)) 35.5 Goodwill 24.2
Other acquisitions
Other acquisitions include various individually immaterial acquisitions within the beverages industry. Details of the fair value of assets and liabilities acquired are as follows – Purchase consideration – cash paid 58.3 Less: Fair value of net identifiable assets acquired (refer to c)) 47.6 net1 10.7
The revenue and profit contribution to the Group has not been disclosed as the structure of these businesses has changed since acquisition, and are immaterial to CCA.
Total goodwill recognised on acquisition for the financial year was $38.1 million (2011: $9.1 million).
2012 $M
20111
$M b) Purchase consideration The net cash outflow on acquisition is as follows – Cash paid (118.0) (11.6) Net cash acquired 2.0 – net cash outflow (116.0) (11.6)
29. BuSInESS COMBInAtIOnS
a) Summary of acquisitions
Acquisition of a majority share of Paradise Beverages (Fiji) ltd (formerly known as Foster’s Group Pacific limited)
As part of its overall alcohol strategy, CCA acquired an 89.6% shareholding in Paradise Beverages (Fiji) Ltd (Paradise Beverages) on 7 September 2012, for a purchase consideration of $59.7 million.
Details of the fair value of the assets and liabilities of Paradise Beverages acquired and goodwill are as follows –
1. Consists of goodwill acquired of $13.9 million and discount on acquisition of $3.2 million recognised in the income statement. Other acquisition related costs of $3.2 million have also been recognised in the income statement.
1. Acquisition of a vending business.
Paradise Beverages
Recognised on acquisition
$M
Other acquisitions Recognised
on acquisition $M
total Recognised
on acquisition $M
Current assets 23.1 8.5 31.6 Non-current assets1 25.2 41.5 66.7 total assets 48.3 50.0 98.3
Current liabilities 5.3 0.1 5.4 Non-current liabilities 2.5 2.3 4.8 total liabilities 7.8 2.4 10.2
net identifiable assets acquired 40.5 47.6 88.1 less: non-controlling interests (5.0) – (5.0) CCA Group’s share of net identifiable assets acquired 35.5 47.6 83.1
c) Assets and liabilities acquired
The fair value of the identifiable assets and liabilities of each acquisition as at the respective dates of acquisition are –
The amounts recognised on acquisition above represent provisional assessments of the fair values of assets and liabilities acquired. These amounts will be finalised within 12 months from the respective date of each acquisition.
1. Includes property, plant and equipment acquired of $55.4 million. Refer to Note 12 for further details.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201285
Remuneration by category 2012
$ 2011 $
Short term 12,675,639 11,653,570 Post employment 2,004,354 2,047,056 Share based payments 2,831,558 3,198,777
17,511,551 16,899,403
b) Shareholdings of individuals whilst acting in the capacity of kMP
2012 number of ordinary shares held
Opening balance1 Additions2
Issued/ awarded as
remuneration3
Shares withdrawn
or sold Closing balance
Directors in office at the end of the financial year D.M. Gonski, AC 380,288 13,092 – – 393,380 I.R. Atlas – 5,000 – – 5,000
C.M. Brenner 13,492 591 – – 14,083 T.J. Davis4&5 528,593 14,652 190,826 (210,000) 524,071 A.G. Froggatt6 49,000 – – (10,072) 38,928 M. Jansen 10,173 – – – 10,173 G.J. Kelly 22,387 73 – – 22,460 W.M. King, AO 55,162 354 – – 55,516 D.E. Meiklejohn, AM 25,275 222 – – 25,497
Executives G. Adams5 33,608 2,734 15,097 (20,000) 31,439 J. Murphy5&7 417 1,148 – – 1,565 N.I. O’Sullivan5 91,507 6,067 23,098 (57,094) 63,578 V. Pinneri5 6,168 1,812 7,548 (9,551) 5,977 E. Rey 468 1,120 – – 1,588 W.G. White5 146,275 13,659 58,010 (135,537) 82,407
30. kEY MAnAGEMEnt PERSOnnEl DISClOSuRES
a) total remuneration for kMP
1. Includes existing balances of shares on appointment to KMP roles. 2. Includes the purchase of ordinary shares and shares issued under the Employees Share Plan, Dividend Reinvestment Plan, Executive Salary Sacrifice Share Plan and Executive Retention Share Plan. The additions to the
shareholdings were at arm’s length. 3. Shares awarded under the 2009-2011 LTISRP. 4. The closing balance includes beneficial interest in 373,944 shares held by the LTISRP, which are subject to the conditions of the Plan. 5. Subsequent to 31 December 2012, the following awards under the 2010-2012 LTISRP were made to individuals classified as ongoing KMP as at the end of the financial year –
Mr Davis 118,097 Ms O’Sullivan 14,762 Mr Adams 9,343 Mr Pinneri 7,474 Mr Murphy 6,540 Mr White 35,901
6. Indirect interest in 19,777 shares as an executor of a will, and in 19,151 shares under an enduring power of attorney. 7. Appointed to KMP role on 1 July 2012.
Further details are contained in the remuneration report found in the Directors’ Report.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 86
notes to the FinanciaL stateMents (continueD) COCA-COL A AMATIL LIMITED AND ITS SuBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
2011 Number of ordinary shares held
Opening balance1 Additions2
Issued/ awarded as
remuneration3
Shares withdrawn
or sold4 Closing balance
Directors in office at the end of the financial year D.M. Gonski, AC 367,529 12,759 – – 380,288 I.R. Atlas5 – – – – – C.M. Brenner 12,932 560 – – 13,492 T.J. Davis6 399,774 – 215,500 (86,681) 528,593 A.G. Froggatt7 49,000 – – – 49,000 M. Jansen 10,173 – – – 10,173 G.J. Kelly 22,317 70 – – 22,387 W.M. King, AO 54,827 335 – – 55,162 D.E. Meiklejohn, AM 25,275 – – – 25,275
Executives G. Adams 34,097 3,484 16,027 (20,000) 33,608 P.N. Kelly8 149,081 1,446 27,280 (177,807) – N.I. O’Sullivan 60,739 4,681 26,087 – 91,507 V. Pinneri 3,837 2,331 – – 6,168 E. Rey9 – 468 – – 468 W.G. White 325,649 19,916 65,515 (264,805) 146,275
30. kEY MAnAGEMEnt PERSOnnEl DISClOSuRES (CONTINuED)
b) Shareholdings of individuals whilst acting in the capacity of kMP (continued)
1. Includes existing balances of shares on appointment to KMP roles. 2. Includes the purchase of ordinary shares and shares issued under the Employees Share Plan, Dividend Reinvestment Plan, Executive Salary Sacrifice Share Plan and Executive Retention Share Plan.
The additions to the shareholdings were at arm’s length. 3. Shares awarded under the 2008-2010 LTISRP. 4. Includes movements attributable to cessation of individuals in KMP roles. 5. Appointed 23 February 2011. 6. The closing balance includes beneficial interest in 378,466 shares held by the LTISRP, which are subject to the conditions of the Plan. 7. Indirect interest in 25,000 shares as an executor of a will, and in 24,000 shares under an enduring power of attorney. 8. Ceased to be a KMP on 31 October 2011. 9. Appointed 1 November 2011.
c) ltISRP awards to individuals whilst acting in the capacity of kMP
Details of share rights provided as remuneration and subsequent vesting, together with terms and conditions of the share rights, can be found in the remuneration report on pages 33 to 34.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201287
number of share rights held1 Opening balance2 Granted Vested
lapsed and forfeited3
Closing balance
2012
Director in office at the end of the financial year T.J. Davis 495,688 247,844 (118,097) (129,747) 495,688
Executives G. Adams 35,379 15,771 (9,343) (10,265) 31,542 J. Murphy 35,804 36,569 (6,540) (7,186) 58,647 N.I. O’Sullivan 83,333 62,941 (14,762) (16,218) 115,294 V. Pinneri 41,176 25,490 (7,474) (8,212) 50,980 E. Rey 26,471 35,522 – – 61,993 W.G. White 150,686 102,010 (35,901) (39,442) 177,353
2011
Director in office at the end of the financial year T.J. Davis 495,688 247,844 (190,826) (57,018) 495,688
Executives G. Adams 39,216 15,771 (15,097) (4,511) 35,379 P. N. Kelly 62,746 26,471 (24,155) (65,062) – N.I. O’Sullivan 60,980 52,353 (23,098) (6,902) 83,333 V. Pinneri 25,490 25,490 (7,548) (2,256) 41,176 E. Rey – 26,471 – – 26,471 W.G. White 150,686 75,343 (58,010) (17,333) 150,686
30. kEY MAnAGEMEnt PERSOnnEl DISClOSuRES (CONTINuED)
c) ltISRP awards to individuals whilst acting in the capacity of kMP (continued)
Movements in share rights under LTISRP during the financial year were as follows –
d) loans to kMP
Neither CCA nor any other Group company has loans with KMP.
e) Other transactions of kMP and their personally related entities
Neither CCA nor any other Group company was party to any other transactions with KMP (including their personally related entities).
1. Numbers are quoted on the basis of maximum potential vesting. 2. Includes existing balances of share rights on appointment to KMP roles. 3. Includes movements attributable to cessation of individuals in KMP roles.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 88
notes to the FinanciaL stateMents (continueD) COCA-COL A AMATIL LIMITED AND ITS SuBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
Refer Note
2012 $M
2011 $M
a) Derivatives as per the statement of financial position Derivative assets – current 32b) (9.5) (14.7) Derivative assets – non-current 32b) (50.4) (73.7) Derivative liabilities – current 32b) 42.2 48.5 Derivative liabilities – non-current 32b) 254.9 208.3 total net derivative liabilities 237.2 168.4
Net derivative liabilities comprises – debt related 173.3 123.1 non-debt related 63.9 45.3
total net derivative liabilities 237.2 168.4
b) net debt reconciliation Cash assets 6 (1,178.0) (664.9) Receivables – current1 – (24.5) Long term deposits (150.0) – Net derivative liabilities – debt related 173.3 123.1 Interest bearing liabilities – current 16 351.4 107.5 Interest bearing liabilities – non-current 16 2,435.8 2,201.7 total net debt 1,632.5 1,742.9
31. DERIVAtIVES AnD nEt DEBt RECOnCIlIAtIOn
1. Loan to joint venture entity.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201289
32. CAPItAl AnD FInAnCIAl RISk MAnAGEMEnt
Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising returns to shareholders through the optimisation of net debt and total equity balances.
The capital structure of Group entities is monitored using the gearing ratio. This ratio is calculated as net debt divided by total equity. Net debt is calculated as total interest bearing liabilities and debt related derivatives less cash assets, interest bearing receivables and long term deposits. Total capital employed is calculated as net debt plus total equity.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return equity to shareholders, issue new shares or sell assets to reduce debt. The Group continuously reviews the capital structure to ensure –
• sufficient finance for the business is maintained at a reasonable cost; • sufficient funds are available for the business to implement its capital expenditure and business acquisition strategies; • distributions to shareholders are maintained within stated dividend policy requirements; and • where excess funds arise with respect to the funds required to enact the Group’s business strategies, consideration is given to possible returns of
equity to shareholders.
CCA has a dividend payout policy of 70% to 80% of net profit, subject to the ongoing cash needs of the business.
The table below details the calculation of the Group’s gearing ratio – Refer Note
2012 $M
2011 $M
Net debt 31 1,632.5 1,742.9
Total equity 2,078.6 2,034.3
total capital employed 3,711.1 3,777.2
% %
Gearing ratio 78.5 85.7
Financial risk management
The Group’s principal financial instruments, other than derivatives, comprise cash, short and long term deposits, bank loans and capital markets issues. The main purpose of financial instruments is to manage liquidity and hedge the Group’s exposure to financial risks namely –
• interest rate risk; • foreign currency risk; • commodity price risk; • credit risk; and • liquidity risk.
The Group uses derivatives in accordance with Board approved policies to reduce the Group’s exposure to adverse fluctuations in interest rates, foreign exchange rates and certain raw material commodity prices. These derivatives create an obligation or a right that effectively transfers one or more of the risks associated with an underlying financial instrument, asset or obligation. Derivative financial instruments that the Group uses to hedge risks such as interest rate, foreign currency and commodity price movements include –
• interest rate swaps; • foreign currency contracts; • cross currency swaps; • futures contracts (commodity); • commodity swaps; and • option contracts (interest rate, currency and commodity).
The Group’s risk management activities are carried out centrally by CCA’s Group Treasury function which is governed by a Board approved Treasury Policy.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 90
notes to the FinanciaL stateMents (continueD) COCA-COL A AMATIL LIMITED AND ITS SuBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
32. CAPItAl AnD FInAnCIAl RISk MAnAGEMEnt (CONTINuED)
Financial risk management (continued)
a) Risk factors
i) Interest rate risk
Interest rate risk arises from interest bearing financial assets and liabilities that the Group utilises. Non-derivative interest bearing financial instruments are predominantly short term liquid assets and long term debt issued at fixed rates which exposes the Group to fair value interest rate risk. The Group’s borrowings which have a variable interest rate give rise to cash flow interest rate risk.
The Group’s risk management policy for interest rate risk seeks to minimise the effects of interest rate movements on its asset and liability portfolio through active management of the exposures. The policy prescribes that the duration of the portfolio must be three years plus or minus two years and it is usual practise for the next 12 months floating rate exposures to be largely fixed or capped up to a maximum 85% of the forecast exposure.
The Group maintains a mix of offshore and local currency fixed rate and variable rate debt, as well as a mix of long term and short term debt. The Group primarily enters into interest rate swap, interest rate option and cross currency swap agreements to manage these risks. The Group hedges the interest rate and currency risk on all foreign currency borrowings by entering into cross currency swaps, which have the economic effect of converting foreign currency borrowings to local currency borrowings. The derivative contracts are carried at fair value, being the market value as quoted in an active market.
The derivative financial instruments and details of hedging activities contained in section b) of this Note provide further information in this area. At balance date, the Group had the following mix of financial assets and financial liabilities exposed to floating and fixed interest rate risk –
Refer Note
Average floating
interest rate p.a.
%
Floating rate
$M
Fixed rate $M
non- interest bearing
$M total
$M As at 31 December 2012 Financial assets Cash assets 6 3.5 998.0 180.0 – 1,178.0 Long term deposits 3.5 150.0 – – 150.0 Trade and other receivables 7 – – – 963.1 963.1 Derivative assets 31 – – – 59.9 59.9 Other financial assets 9 – – – 24.4 24.4
1,148.0 180.0 1,047.4 2,375.4 Financial liabilities Trade and other payables 15 – – – 808.3 808.3 Bonds 16 3.4 809.7 1,748.6 – 2,558.3 Loans 16 – – 4.2 – 4.2 Bank loans 16 3.1 140.4 83.6 – 224.0 Bank overdraft 16 – – 0.7 – 0.7 Derivative liabilities 31 – – – 297.1 297.1
950.1 1,837.1 1,105.4 3,892.6
As at 31 December 2011 Financial assets Cash assets 6 4.2 664.9 – – 664.9 Trade and other receivables 7 7.9 24.5 – 846.5 871.0 Derivative assets 31 – – – 88.4 88.4 Other financial assets 9 – – – 288.6 288.6
689.4 – 1,223.5 1,912.9 Financial liabilities Trade and other payables 15 – – – 735.6 735.6 Bonds 16 4.2 872.0 1,227.5 – 2,099.5 Loans 16 – – 4.3 – 4.3 Bank loans 16 4.3 112.6 92.8 – 205.4 Derivative liabilities 31 – – – 256.8 256.8
984.6 1,324.6 992.4 3,301.6
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201291
net profit
Equity (cash flow hedging reserve)
As at 31 December 2012
$M 2011 $M
2012 $M
2011 $M
If interest rates were 10% higher with all other variables held constant – increase/(decrease) 0.5 0.9 10.5 16.0
If interest rates were 10% lower with all other variables held constant – increase/(decrease) (0.6) (0.9) (10.6) (16.3)
32. CAPItAl AnD FInAnCIAl RISk MAnAGEMEnt (CONTINuED)
Financial risk management (continued)
a) Risk factors (continued)
i) Interest rate risk (continued)
Sensitivity analysis
The sensitivity analysis on interest rate risk below shows the effect on net profit and equity after income tax if interest rates at balance date had been 10% higher or lower with all other variables held constant, taking into account underlying exposures and related hedges. Concurrent movements in interest rates in the yield curves are assumed.
A sensitivity of 10% has been selected as this is considered a reasonable possible change over the financial year based on historical interest rate movements and also given the current level of both short term and long term Australian interest rates. In 2012, 88.0% (2011: 85.0%) of the Group’s debt was effectively held in Australian Dollars. This includes Australian dollar denominated debt and foreign currency denominated debt which has been swapped into Australian dollars using cross-currency swaps.
Based on the sensitivity analysis, if interest rates were 10% higher/lower, the impact on the Group during the year would be –
ii) Foreign currency risk
Foreign currency risk refers to the risk that the value or the cash flows arising from a financial commitment, or recognised asset or liability will fluctuate due to changes in foreign currency rates. The Group’s foreign currency exchange risk arises primarily from –
• firm commitments and/or highly probable forecast transactions for receipts and payments settled in foreign currencies and prices dependent on foreign currencies respectively;
• borrowings denominated in foreign currency; and • translation of the financial statements of CCA’s foreign subsidiaries.
The Group’s risk management policy for foreign exchange is to be able to hedge forecast transactions for up to four years into the future before requiring executive management approval. The policy only permits hedging of the Group’s underlying foreign exchange exposures. The policy prescribes minimum and maximum hedging parameters linked to actual and forecast transactions involving foreign currencies.
Forward foreign exchange and options contracts are used to hedge a portion of the Group’s anticipated non-debt related foreign currency risks. These contracts have maturities of less than four years after the reporting date and consequently the net fair value of the gains and losses on these contracts will be transferred from the cash flow hedging reserve to the income statement at various dates during the period when the underlying exposure impacts earnings. The derivative contracts are carried at fair value, being the market value as quoted in an active market.
The Group formally assesses both at inception and at least monthly thereafter, whether the financial instruments that are used in hedging transactions are effective at offsetting changes in either the fair value or cash flows of the related underlying exposure. Because of the high degree of effectiveness between the hedging instrument and the underlying exposure being hedged, fluctuations in the value of the derivative financial instruments are generally offset by changes in the fair values or cash flows of the underlying exposures being hedged. Any ineffective portion of a financial instrument’s change in fair value is immediately recognised in the income statement and this is mainly attributable to financial instruments in a fair value hedge relationship. Also refer to section b) of this Note for further details.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 92
notes to the FinanciaL stateMents (continueD) COCA-COL A AMATIL LIMITED AND ITS SuBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
32. CAPItAl AnD FInAnCIAl RISk MAnAGEMEnt (CONTINuED)
Financial risk management (continued)
a) Risk factors (continued)
ii) Foreign currency risk (continued)
The Group’s exposure to foreign currency risk at the reporting date was as follows (all amounts are denominated in Australian Dollars) –
united States
Dollars $M
new Zealand Dollars
$M
Fijian Dollars
$M
Indonesian Rupiah
$M
Papua new Guinean
kina $M
Other $M
total $M
For the year ended 31 December 2012 Financial assets Cash assets 1.2 21.9 5.7 5.4 54.6 0.9 89.7 Trade and other receivables 2.2 82.1 9.7 73.2 32.1 9.3 208.6 Derivatives financial instruments
interest rate derivative contracts – 160.1 – – – – 160.1 foreign exchange derivative contracts1 1,072.0 5.9 – – – 304.1 1,382.0 commodity derivative contracts 3.2 – – – – – 3.2
1,078.6 270.0 15.4 78.6 86.7 314.3 1,843.6 Financial liabilities Trade and other payables 9.1 42.7 5.1 78.4 59.2 4.9 199.4 Interest bearing liabilities1 698.3 124.1 0.7 139.4 – 268.3 1,230.8 Derivative financial instruments
interest rate derivative contracts – 161.7 – – – – 161.7 foreign exchange derivative contracts 8.4 158.2 3.9 44.5 23.6 11.2 249.8 commodity derivative contracts 3.4 – – – – – 3.4
719.2 486.7 9.7 262.3 82.8 284.4 1,845.1
For the year ended 31 December 2011 Financial assets Cash assets 0.3 18.9 4.8 3.9 52.5 4.2 84.6 Trade and other receivables 3.6 84.5 4.1 76.8 22.8 5.9 197.7 Derivatives financial instruments
interest rate derivative contracts – 153.4 – – – – 153.4 foreign exchange derivative contracts1 1,200.2 10.4 – – – 386.5 1,597.1 commodity derivative contracts 28.6 – – – – – 28.6
1,232.7 267.2 8.9 80.7 75.3 396.6 2,061.4 Financial liabilities Trade and other payables 41.0 38.6 1.4 58.7 17.9 2.5 160.1 Interest bearing liabilities1 712.9 116.8 – 126.3 – 328.7 1,284.7 Derivative financial instruments
interest rate derivative contracts – 158.1 – – – – 158.1 foreign exchange derivative contracts 0.3 172.0 5.6 76.3 15.6 5.5 275.3 commodity derivative contracts 20.5 – – – – – 20.5
774.7 485.5 7.0 261.3 33.5 336.7 1,898.7
1. Other comprises mainly of Japanese Yen.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201293
32. CAPItAl AnD FInAnCIAl RISk MAnAGEMEnt (CONTINuED)
Financial risk management (continued)
a) Risk factors (continued)
ii) Foreign currency risk (continued)
Sensitivity analysis
The sensitivity analysis on foreign currency risk below shows the effect on net profit and equity after income tax as at balance date from a 10% favourable/adverse movement in exchange rates at that date on a total derivative portfolio basis with all other variables held constant, taking into account all underlying exposures and related hedges.
A sensitivity of 10% has been selected as this is considered reasonable given the current level of exchange rates and the volatility observed both on a historical basis and market expectations for future movement.
The foreign currency risk from the Group’s long term borrowings denominated in foreign currency has no significant impact on profit from foreign currency movements as they are hedged into local currency. The table below shows the sensitivities for the movements in exchange rates.
net profit
Equity (cash flow hedging reserve)
As at 31 December 2012
$M 2011 $M
2012 $M
2011 $M
If the Australian dollar appreciated by 10% with all other variables held constant – increase/(decrease) (0.2) – (16.7) (25.5)
If the Australian dollar depreciated by 10% with all other variables held constant – increase/(decrease) 1.3 1.4 22.3 29.4
net profit
Equity (foreign currency
translation reserve) As at 31 December
2012 $M
2011 $M
2012 $M
2011 $M
If the Australian dollar appreciated by 10% with all other variables held constant – increase/(decrease) (11.8) (10.2) (55.9) (46.5)
If the Australian dollar depreciated by 10% with all other variables held constant – increase/(decrease) 14.4 12.4 68.2 56.8
Translation risk
The financial statements for each of CCA’s foreign operations are prepared in local currency. For the purpose of preparing the Group’s consolidated financial information, each foreign operation’s financial statements are translated into Australian Dollars using the applicable foreign exchange rates as at the reporting date or the monthly average for the reporting period. A translation risk therefore exists on translating the financial statements of CCA’s foreign operations into Australian Dollars for the purpose of reporting the Group’s consolidated financial information. As a result, volatility in foreign exchange rates can impact the Group’s net assets, net profit and the foreign currency translation reserve.
In regards to translation risk, the table below presents the impact on net profit and equity after income tax as at balance date from a 10% favourable/adverse movement in exchange rates for the financial year, and as at balance date on the net assets of CCA’s foreign operations with all other variables held constant –
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 94
notes to the FinanciaL stateMents (continueD) COCA-COL A AMATIL LIMITED AND ITS SuBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
32. CAPItAl AnD FInAnCIAl RISk MAnAGEMEnt (CONTINuED)
Financial risk management (continued)
a) Risk factors (continued)
iii) Commodity price risk
Commodity price risk is the risk arising from volatility in commodity prices in relation to certain raw materials (mainly sugar and aluminium) used in the business.
The Group’s risk management policy for commodity price risk is to be able to hedge forecast transactions for up to four years into the future before requiring executive management approval. The Treasury Policy permits hedging of price and volume exposure arising from the raw materials used in the Group’s manufacturing of finished goods. The Policy also prescribes minimum and maximum hedging parameters linked to the forecast purchase transactions.
The Group enters into futures, swaps and option contracts to hedge commodity price risk with the objective of obtaining lower raw material prices and a more stable and predictable commodity price outcome. The derivative contracts are carried at fair value, being the market value as quoted in an active market or derived using valuation techniques where no active market exists.
Sensitivity analysis
The sensitivity analysis on commodity price risk table below shows the effect on net profit and equity after income tax as at balance date from a 10% favourable/adverse movement in commodity prices at that date on a total derivative portfolio basis with all other variables held constant. The table does not show the sensitivity to the Group’s total underlying commodities exposure or the impact of changes in volumes that may arise from an increase or decrease in commodity prices.
A sensitivity of 10% has been selected as this is considered reasonable given the current level of commodity prices and the volatility observed both on a historical basis and market expectations for future movement.
iv) Credit risk
Credit risk is the risk that a contracting entity will not complete its obligations under a financial instrument and will cause the Group to make a financial loss. The Group has exposure to credit risk on all financial assets included in the Group’s statement of financial position. To help manage this risk, the Group –
• has a policy for establishing credit limits for the entities it deals with; • may require collateral where appropriate; and • manages exposures to individual entities it either transacts with or enters into derivative contracts with (through a system of credit limits).
The Group is exposed to credit risk on derivative financial instruments. For credit purposes, there is only a credit risk where the contracting entity is liable to pay the Group in the event of a closeout. The Group has policies that set limits as to the amount of credit exposure to each financial institution. New derivatives and cash transactions are limited to financial institutions that meet minimum credit rating criteria in accordance with the Group’s policy requirements.
Customer credit risk is managed by each business unit subject to established policy, procedures and controls relating to customer risk management. Credit limits are set for each customer and these are regularly monitored. Outstanding receivables are regularly monitored and the requirement for impairment is analysed each reporting period.
The Group’s credit risk is mainly concentrated across a number of customers and financial institutions. The Group does not have any significant credit risk exposure to a single or group of customer(s) or individual institution(s). Approximately 68.1% (2011: 62.6%) of the trade receivables balance as at balance date is reflected by the total of each operation’s top five customers.
net profit
Equity (cash flow hedging reserve)
As at 31 December
2012 $M
2011 $M
2012 $M
2011 $M
If there was a 10% increase in commodity prices with all other variables held constant – increase/(decrease) 0.3 0.4 15.9 18.0
If there was a 10% decrease in commodity prices with all other variables held constant – increase/(decrease) – 0.1 (16.1) (18.7)
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201295
32. CAPItAl AnD FInAnCIAl RISk MAnAGEMEnt (CONTINuED)
Financial risk management (continued)
a) Risk factors (continued)
iv) Credit risk (continued)
The financial assets that are exposed to credit risk are detailed in the table below –
v) Liquidity risk
Liquidity risk is associated with ensuring that there are sufficient funds available to meet the Group’s financial commitments as and when they fall due and planning for any unforeseen events which may curtail cash flows.
Liquidity risk is measured by comparing projected debt levels against total committed facilities, where the projected net debt levels take the following into account –
• cash assets; • existing debt; • budgeted free cash flows generated by business operations; and • any proposed acquisitions or divestments.
To help reduce this risk, the Group –
• has a liquidity policy which targets a minimum level of committed facilities relative to net debt; • has readily accessible funding arrangements in place; • generally utilises instruments that are tradeable in liquid markets; and • staggers maturities of financial instruments.
The Group monitors rolling forecasts of liquidity reserves on the basis of expected cash flow. The objective is to maintain a balance between continuity of funding and flexibility through the use of liquid instruments, borrowings and committed available credit lines.
Refer Note
2012 $M
2011 $M
Cash assets 6 1,178.0 664.9 Long term deposits 150.0 – Trade and other receivables 7 963.1 871.0 Derivative assets 31 59.9 88.4 Other financial assets 9 24.4 288.6 total CCA Group 2,375.4 1,912.9
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 96
notes to the FinanciaL stateMents (continueD) COCA-COL A AMATIL LIMITED AND ITS SuBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
32. CAPItAl AnD FInAnCIAl RISk MAnAGEMEnt (CONTINuED)
Financial risk management (continued)
a) Risk factors (continued)
v) Liquidity risk (continued)
The contractual cash flows of the Group’s financial liabilities are shown in the table below. The contractual amounts represent the future undiscounted principal and interest cash flows and therefore do not equate to the carrying values. The expected timing of cash outflows are set out below –
Expected timing of contractual cash outflows
Refer Note
Carrying value
$M
total contractual
cash outflows
$M
less than
1 year $M
1 to 2 year(s)
$M
2 to 5 years
$M
Over 5 years
$M For the year ended 31 December 2012 Financial liabilities Trade and other payables 15 808.3 808.3 806.3 2.0 – – Interest bearing liabilities 16 2,787.2 3,214.8 455.4 739.2 1,240.0 780.2 Derivative financial instruments
interest rate derivative contracts1&2 85.0 84.0 35.6 22.7 22.4 3.3 foreign exchange derivative contracts3 198.3 342.1 28.5 83.8 122.8 107.0 commodity derivative contracts 13.8 3.8 3.5 0.3 – –
3,892.6 4,453.0 1,329.3 848.0 1,385.2 890.5
For the year ended 31 December 2011 Financial liabilities Trade and other payables 15 735.6 735.6 735.6 – – – Interest bearing liabilities 16 2,309.2 2,541.6 236.2 385.7 1,427.4 492.3 Derivative financial instruments
interest rate derivative contracts1&2 73.4 66.3 24.7 23.6 18.0 – foreign exchange derivative contracts3 170.7 385.7 54.0 25.0 196.0 110.7 commodity derivative contracts 12.7 1.0 1.0 – – –
3,301.6 3,730.2 1,051.5 434.3 1,641.4 603.0
1. For floating rate instruments, the amount disclosed is determined by reference to the interest rate at the last repricing date. 2. Net amount for interest rate swaps for which net cash flows are exchanged. 3. Contractual amounts to be exchanged, represent gross cash flows.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201297
32. CAPItAl AnD FInAnCIAl RISk MAnAGEMEnt (CONTINuED)
Financial risk management (continued)
a) Risk factors (continued)
vi) Fair value
All financial assets and financial liabilities are recognised at fair value as at the reporting date without any deduction for transaction costs.
As noted in Note 1 Summary of Significant Accounting Policies, derivative financial instruments are initially recognised in the statement of financial position at cost and subsequently remeasured to their fair value. Accordingly, there is no difference between the carrying value and fair value of derivative financial instruments at reporting date.
The carrying amounts and estimated fair value of all the Group’s financial assets and liabilities recognised in the financial statements are as follows –
Refer Note
2012 $M
2011 $M
Financial assets Cash assets 6 1,178.0 664.9 Long term deposits 150.0 – Trade and other receivables 7 963.1 871.0 Derivatives – fair value through the income statement 5.2 6.7 Derivatives – hedge accounted through equity 54.7 81.7 Other financial assets 9 24.4 288.6 total financial assets 2,375.4 1,912.9
Financial assets Trade and other payables 15 808.3 735.6 Interest bearing liabilities
Bonds – fair value through the income statement1 16 280.3 302.0 Bonds – at amortised cost2&3 16 2,278.0 1,797.5 Loans – at amortised cost 16 4.2 4.3 Bank loans – at amortised cost 16 224.0 205.4 Bank overdrafts 16 0.7 –
Derivatives – fair value through the income statement 178.8 134.7 Derivatives – hedge accounted through equity 118.3 122.1 total financial liabilities 3,892.6 3,301.6
1. Represents bonds with effective fair value hedge relationships. 2. Includes bonds carried at historical cost, and bonds with effective cash flow hedge relationships. 3. The fair value of bonds at amortised cost for CCA Group was $1,818.0 million (2011: $1,536.0 million).
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 98
notes to the FinanciaL stateMents (continueD) COCA-COL A AMATIL LIMITED AND ITS SuBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
32. CAPItAl AnD FInAnCIAl RISk MAnAGEMEnt (CONTINuED)
Financial risk management (continued)
a) Risk factors (continued)
vi) Fair value (continued)
The above mentioned remeasurement is based on quoted market prices. For financial instruments not quoted in active markets, the Group uses valuation techniques such as present value, comparison to similar instruments for which market observable prices exist and other relevant models used by market participants. These valuation techniques use both observable and unobservable market inputs.
Certain long dated derivative contracts where there are no observable forward prices in the market are classified as Level 2 as the unobservable inputs are not considered significant to the overall value of the contract.
The Group uses two different methods in estimating the fair value of a financial instrument. The methods comprise –
• Level 1 – the fair value is calculated using quoted prices in active markets; and • Level 2 – the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either
directly (as prices) or indirectly (derived from prices).
The fair value of the financial instruments, as well as the methods used to estimate the fair value are summarised in the table below –
Valuation technique
quoted market price
(level 1) $M
Market observable
inputs (level 2)
$M total
$M For the year ended 31 December 2012 Derivative assets Derivatives – fair value through the income statement – 5.2 5.2 Derivatives – hedge accounted through equity 1.0 53.7 54.7 total derivative assets 1.0 58.9 59.9
Derivative liabilities Derivatives – fair value through the income statement – 178.8 178.8 Derivatives – hedge accounted through equity 24.8 93.5 118.3 total derivative liabilities 24.8 272.3 297.1
For the year ended 31 December 2011 Derivative assets Derivatives – fair value through the income statement – 6.7 6.7 Derivatives – hedge accounted through equity 2.3 79.4 81.7 total derivative assets 2.3 86.1 88.4
Derivative liabilities Derivatives – fair value through the income statement – 134.7 134.7 Derivatives – hedge accounted through equity 38.0 84.1 122.1 total derivative liabilities 38.0 218.8 256.8
COCA-COLA AMATIL LIMITED ANNUAL REPORT 201299
32. CAPItAl AnD FInAnCIAl RISk MAnAGEMEnt (CONTINuED)
Financial risk management (continued)
b) Hedge accounting
The Group’s hedging strategy seeks to actively manage its exposures to interest rates, foreign exchange and commodities. This is achieved through a process of identifying, recording and communicating all financial exposures and risk in the Group which forms the basis for any decision to implement risk management strategies.
The following table provides details of the Group’s derivative financial instruments and hedges that are used for financial risk management –
Refer Note
2012 $M
2011 $M
Derivative assets – current The fair values of derivative financial instruments (non-debt related) at the end of the financial year designated as cash flow hedges are –
foreign exchange derivative contracts 0.9 1.4 commodity derivative contracts 3.4 13.1
The fair values of derivative financial instruments (non-debt related) at the end of the financial year for which hedge accounting has not been applied are –
interest rate derivative contracts 5.1 0.1 foreign exchange derivative contracts 0.1 0.1
total derivative assets – current (non-debt related) 31a) 9.5 14.7
Derivative assets – non-current The fair values of derivative financial instruments (debt related) at the end of the financial year designated as fair value hedges are –
foreign exchange derivative contracts – 4.7 total derivative assets – non-current (debt related) – 4.7
The fair values of derivative financial instruments (non-debt related) at the end of the financial year designated as cash flow hedges are –
interest rate derivative contracts 45.3 45.6 foreign exchange derivative contracts 0.1 1.0 commodity derivative contracts 5.0 15.9
The fair values of derivative financial instruments (non-debt related) at the end of the financial year for which hedge accounting has not been applied are –
interest rate derivative contracts – 6.4 foreign exchange derivative contracts – 0.1
total derivative assets – non-current (non-debt related) 50.4 69.0 total derivative assets – non-current 31a) 50.4 73.7
notes to the FinanciaL stateMents (continueD) COCA-COL A AMATIL LIMITED AND ITS SuBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
100
32. CAPItAl AnD FInAnCIAl RISk MAnAGEMEnt (CONTINuED)
Financial risk management (continued)
b) Hedge accounting (continued)
Refer Note
2012 $M
2011 $M
Derivative liabilities – current The fair values of derivative financial instruments (debt related) at the end of the financial year designated as fair value hedges are –
foreign exchange derivative contracts 3.1 3.7 total derivative liabilities – current (debt related) 3.1 3.7
The fair values of derivative financial instruments (non-debt related) at the end of the financial year designated as fair value hedges are –
interest rate derivative contracts 6.0 7.3 foreign exchange derivative contracts 17.2 30.4 commodity derivative contracts 10.4 6.8
The fair values of derivative financial instruments (non-debt related) at the end of the financial year for which hedge accounting has not been applied are –
interest rate derivative contracts 5.3 0.1 foreign exchange derivative contracts 0.2 0.2
total derivative liabilities – current (non-debt related) 39.1 44.8 total derivative liabilities – current 31a) 42.2 48.5
Derivative liabilities – non-current The fair values of derivative financial instruments (debt related) at the end of the financial year designated as fair value hedges are –
foreign exchange derivative contracts 170.2 124.1 total derivative liabilities – non-current (debt related) 170.2 124.1
The fair values of derivative financial instruments (non-debt related) at the end of the financial year designated as cash flow hedges are –
interest rate derivative contracts 73.7 59.4 foreign exchange derivative contracts 7.6 12.2 commodity derivative contracts 3.4 5.9
The fair values of derivative financial instruments (non-debt related) at the end of the financial year for which hedge accounting has not been applied are –
interest rate derivative contracts – 6.6
The fair values of derivative financial instruments (non-debt related) at the end of the financial year for which hedge accounting has not been applied are –
foreign exchange derivative contracts – 0.1 total derivative liabilities – non-current (non-debt related) 84.7 84.2 total derivative liabilities – non-current 31a) 254.9 208.3
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012
101
33. RElAtED PARtIES
Parent entity
Coca-Cola Amatil Limited is the parent entity of the Group.
key management personnel
Disclosures relating to KMP are set out in Note 30, and in the Directors’ Report.
Related entities
The Cola-Cola Company (TCCC), through its subsidiary, Coca-Cola Holdings (Overseas) Limited, holds 29.3% (2011: 29.4%) of the Company’s fully paid ordinary shares.
CCA had a 50% interest in Pacific Beverages, but lost joint control of Pacific Beverages on 16 December 2011. Refer to Note 9 for further details.
transactions with related parties
2012 $M
2011 $M
Reimbursements and other revenues from – Entities with significant influence over the Group TCCC and its subsidiaries1&2 58.1 38.0 Joint venture entity
Service fee3 0.2 4.5 Finance income 0.1 1.7
Purchases and other expenses from – Entities with significant influence over the Group TCCC and its subsidiaries4 772.9 726.5 Other related parties 16.9 6.1
Amounts owed by – Entities with significant influence over the Group TCCC and its subsidiaries 27.4 16.5 Joint venture entity – 43.7
Amounts owed to – Entities with significant influence over the Group TCCC and its subsidiaries 98.4 95.7 Joint venture entity – 27.5 Other related parties 1.0 0.8
1. Under a series of arrangements, the Group participates with certain subsidiaries of TCCC under which they jointly contribute to the development of the market in the territories in which the Group operates. These arrangements include a regular shared marketing expenses program, under which the Group contributes to certain TCCC incurred marketing expenditure and TCCC contributes to certain marketing expenditure incurred by the Group. Certain subsidiaries of TCCC provide marketing support to the Group, which is in addition to the usual contribution to shared marketing initiatives. This is designed to assist the Group with the necessary development of certain territories. Amounts received are either accounted for as a credit to revenue or as a reduction to expense, as appropriate.
2. Includes the $24.2 million received from TCCC in relation to the Cascade related transactions. Refer to Note 4c) for further details. 3. Represents the services provided to Pacific Beverages under certain agreements and arrangements agreed between CCA and Pacific Beverages. The sale of CCA’s 50% interest in Pacific Beverages to SABMiller was
completed on 13 January 2012. Refer to Note 9 for further details. 4. Represents purchases of concentrates and beverage base for Coca-Cola trademarked products, and finished goods.
terms and conditions of transactions with related parties
All of the above transactions were conducted under normal commercial terms and conditions.
Outstanding balances at year end are unsecured and settlement occurs in cash.
There have been no guarantees provided or received for any related party receivables. For the financial year ended 31 December 2012, the Group has not raised any allowance for doubtful receivables relating to amounts owed by related parties (2011: nil).
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012
34. CCA EntItY DISClOSuRES
The financial information disclosed in this Note relates to the Company.
CCA Entity 2012
$M 2011 $M
a) Financial position Current assets 1,114.6 842.0 Non-current assets 4,546.9 4,518.8 total assets 5,661.5 5,360.8
Current liabilities 779.8 461.2 Non-current liabilities 2,361.7 2,083.4 total liabilities 3,141.5 2,544.6 net assets 2,520.0 2,816.2
Equity Share capital 2,250.0 2,218.2 Reserves
share based remuneration 20.5 24.3 cash flow hedging (46.1) (24.7) other (16.7) (15.8)
Total reserves (42.3) (16.2) Retained earnings 312.3 614.2 total equity 2,520.0 2,816.2
b) Financial performance Profit after income tax 112.5 730.5 Total comprehensive income 91.1 669.3
c) Guarantees entered into by the CCA Entity in relation to the debts of its subsidiaries Guarantees1 356.7 337.2
d) Contingencies Contingent liabilities existed at the end of the financial year in respect of termination payments under employment contracts1 10.2 9.5
1. No liability has been recognised in relation to these guarantees as the fair value of the guarantees is immaterial.
1. Refer to the remuneration report found in the Directors’ Report for further details.
102COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012
notes to the FinanciaL stateMents (continueD) COCA-COL A AMATIL LIMITED AND ITS SuBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
35. DEED OF CROSS GuARAntEE
Coca-Cola Amatil Limited and certain subsidiaries as indicated in Note 36 have entered into a Deed of Cross Guarantee which provides that all parties to the Deed will guarantee to each creditor, payment in full of any debt of each company participating in the Deed on winding-up of that company. In addition, as a result of ASIC Class Order No. 98/1418, subsidiaries are relieved from the requirement to prepare financial statements.
Consolidated statement of financial position for the closed group 2012
$M 2011 $M
Current assets Cash assets 1,089.3 581.9 Trade and other receivables 765.7 682.8 Inventories 513.4 593.4 Prepayments 76.0 42.8 Derivatives 9.1 14.1 Other financial assets – 288.6 total current assets 2,453.5 2,203.6 non-current assets Long term deposits 150.0 – Other receivables 2.4 6.0 Investments in securities 592.2 529.1 Investments in bottlers’ agreements 691.9 691.9 Property, plant and equipment 1,281.6 1,200.0 Intangible assets 554.9 562.9 Prepayments 19.3 8.7 Defined benefit superannuation plans 15.0 14.5 Derivatives 45.5 63.4 Other financial assets 24.4 – total non-current assets 3,377.2 3,076.5 total assets 5,830.7 5,280.1 Current liabilities Trade and other payables 672.3 619.4 Interest bearing liabilities 295.0 73.9 Current tax liabilities 29.1 20.1 Provisions 62.1 83.3 Accrued charges 351.7 302.0 Derivatives 39.2 41.7 total current liabilities 1,449.4 1,140.4 non-current liabilities Other payables 1.2 – Interest bearing liabilities 2,135.0 1,897.9 Provisions 13.1 11.5 Deferred tax liabilities 97.8 94.8 Derivatives 253.8 206.3 total non-current liabilities 2,500.9 2,210.5 total liabilities 3,950.3 3,350.9 net assets 1,880.4 1,929.2 Equity Share capital 2,250.0 2,218.2 Shares held by equity compensation plans (17.4) (16.5) Reserves (24.5) 0.3 Accumulated losses (327.7) (272.8) total equity 1,880.4 1,929.2
Consolidated income statement for the closed group1
Profit before income tax 500.9 620.3 Income tax expense (141.4) (104.5) Profit after income tax 359.5 515.8 Accumulated losses at the beginning of the financial year (272.8) (410.0) Dividends appropriated (414.4) (378.6) Accumulated losses at the end of the financial year (327.7) (272.8)
103 COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012
1. Total comprehensive income for the financial year was $338.1 million (2011: $454.6 million) represented by consolidated profit after income tax for the closed group of $359.5 million (2011: $515.8 million) adjusted for movements in the cash flow hedging reserve of $21.4 million decrease (2011: $61.2 million decrease).
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 104
notes to the FinanciaL stateMents (continueD) COCA-COL A AMATIL LIMITED AND ITS SuBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012
36. InVEStMEntS In SuBSIDIARIES
Equity holding†
Footnote Country of
incorporation 2012
% 2011
% Coca-Cola Amatil limited 1 Australia Subsidiaries AIST Pty Ltd 1 Australia 100 100 Amatil Investments (Singapore) Pte Ltd Singapore 100 100
Coca-Cola Amatil (Fiji) Ltd Fiji 100 100 Paradise Beverages (Fiji) Ltd (formerly known as Foster’s Group Pacific Limited) Fiji 89.6 –
Samoa Breweries Ltd Samoa 93.9 –
PT Coca-Cola Bottling Indonesia 2 Indonesia 100 100 PT Coca-Cola Distribution Indonesia Indonesia 100 100
Associated Nominees Pty Ltd 3 Australia 100 100 Associated Products & Distribution Proprietary 1 Australia 100 100
Coca-Cola Amatil (PNG) Ltd Papua New Guinea 100 100 CCA PST Pty Limited 3 Australia 100 100 CCA Superannuation Pty Ltd 3 Australia 100 100 C-C Bottlers Limited 1 Australia 100 100
Beverage Bottlers (Sales) Ltd 1 Australia 100 100 CCKBC Holdings Ltd Cyprus 100 100 Coca-Cola Amatil (Aust) Pty Ltd 1 Australia 100 100
Apand Pty Ltd Australia 100 100 Baymar Pty Ltd Australia 100 100 Beverage Bottlers (NQ) Pty Ltd Australia 100 100 Beverage Bottlers (Qld) Ltd 1 Australia 100 100 Can Recycling (S.A.) Pty Ltd 1 Australia 100 100 Coca-Cola Amatil (Holdings) Pty Limited Australia 100 100 Crusta Fruit Juices Proprietary Limited 1 Australia 100 100
Quenchy Crusta Sales Pty Ltd Australia 100 100 Quirks Australia Pty Ltd 1 Australia 100 100
Coca-Cola Holdings NZ Ltd New Zealand 100 100 Coca-Cola Amatil (N.Z.) Limited New Zealand 100 100
Amatil Beverages (New Zealand) Ltd New Zealand – 100 Kovok Spirits Limited New Zealand 100 – Vending Management Services Ltd New Zealand 100 100
Johns River Pty Ltd Australia 100 100 Matila Nominees Pty Limited 4 Australia 100 100 Neverfail Springwater Limited 1&5 Australia 100 100
Neverfail Cooler Company Pty Limited Australia 100 100 Purna Pty Ltd Australia 100 100
Neverfail Bottled Water Co Pty Limited 1&6 Australia 100 100 Neverfail SA Pty Limited Australia 100 100
Piccadilly Distribution Services Pty Ltd Australia 100 100 Neverfail Springwater Co Pty Ltd 1 Australia 100 100
Neverfail Springwater (Vic) Pty Limited 1 Australia 100 100 Neverfail WA Pty Limited 1 Australia 100 100 Piccadilly Natural Springs Pty Ltd Australia 100 100 Real Oz Water Supply Co (Qld) Pty Limited Australia 100 100
Neverfail Springwater Co (Qld) Pty Limited 1 Australia 100 100 Pacbev Pty Ltd 1 Australia 100 100
CCA Bayswater Pty Ltd 1 Australia 100 100
Refer to the following page for footnote details.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012105
Equity holding†
Footnote Country of
incorporation 2012
% 2011
% Subsidiaries (continued) SPC Ardmona Limited 1&7 Australia 100 100
Ardmona Foods Limited 1 Australia 100 100 Australian Canned Fruit (I.M.O.) Pty Ltd Australia 100 100 Digital Signal Processing Systems Pty Ltd Australia 100 100 Goulburn Valley Canners Pty Ltd Australia 100 100 Goulburn Valley Food Canneries Proprietary Limited Australia 100 100
Henry Jones Foods Pty Ltd Australia 100 100 Hallco No. 39 Pty Ltd Australia 100 100
SPC Ardmona (Netherlands) BV Netherlands 100 100 SPC Ardmona (Germany) GmbH (in liquidation) Germany 100 100 SPC Ardmona (Spain), S.L.U. Spain 100 100
SPC Ardmona Operations Limited 1 Australia 100 100 Austral International Trading Company Pty Ltd 1 Australia 100 100 Cherry Berry Fine Foods Pty Ltd Australia 100 100
SPC Nature’s Finest Ltd United Kingdom 100 100
37. EVEntS AFtER tHE BAlAnCE DAtE
No matters or circumstances have arisen since the end of the financial year that have significantly affected, or may significantly affect, the operations, the results of those operations or the state of affairs of the Group in subsequent financial periods.
Names inset indicate that shares are held by the company immediately above the inset. The above companies carry on business in their respective countries of incorporation. † The proportion of ownership interest is equal to the proportion of voting power held.
Footnotes 1. These companies are parties to a Deed of Cross Guarantee as detailed in Note 35 and are eligible for the benefit of ASIC Class Order No. 98/1418. 2. CCA holds 4.84% of the shares in this company. 3. Associated Nominees Pty Ltd, CCA PST Pty Limited and CCA Superannuation Pty Ltd were trustees of in-house CCA superannuation funds. These superannuation funds were transferred to the AMP SignatureSuper
Master Trust in 2007. 4. Matila Nominees Pty Limited is the trustee company for the Employees Share Plan, the Long Term Incentive Share Rights Plan, the Executive Salary Sacrifice Share Plan, the Executive Retention Share Plan, the Non-Executive Directors Share Plan and the Non-Executive Directors’ Retirement Share Trust. 5. Neverfail Springwater Limited holds 40.7% of the shareholding in Neverfail Bottled Water Co Pty Limited. 6. Neverfail Bottled Water Co Pty Limited holds 1.5% of the shareholding in Neverfail Springwater (Vic) Pty Limited. 7. SPC Ardmona Limited holds 50% of the shares in Australian Canned Fruit (I.M.O.) Pty Ltd.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 106
Directors DecLaration COCA-COL A AMATIL LIMITED AND ITS SuBSIDIARIES
In accordance with a resolution of the Directors of Coca-Cola Amatil Limited dated 19 February 2013, we state that –
In the opinion of the Directors –
a) the fi nancial statements, notes and the additional disclosures included in the Directors’ Report designated as audited, of the consolidated entity, are in accordance with the Corporations Act 2001, including –
i) giving a true and fair view of the consolidated entity’s fi nancial position as at 31 December 2012, and of its performance for the year ended on that date; and ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
b) the fi nancial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 1b);
c) at the date of this declaration, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; and
d) at the date of this declaration, there are reasonable grounds to believe that the Company and the wholly owned subsidiaries identifi ed in Note 36 to the fi nancial statements as being parties to a Deed of Cross Guarantee with Matila Nominees Pty Limited as trustee, will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the Deed.
This declaration has been made after receiving the declarations required to be made to Directors by the Group Managing Director and Group Chief Financial Offi cer, in accordance with section 295A of the Corporations Act 2001 for the fi nancial year ended 31 December 2012.
On behalf of the Directors
David M. Gonski, AC Chairman Sydney 19 February 2013
terry J. Davis Group Managing Director Sydney 19 February 2013
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012107
Report on the fi nancial report
We have audited the accompanying fi nancial report of Coca-Cola Amatil Limited (the Company), which comprises the statement of fi nancial position as at 31 December 2012, the income statement, the statement of comprehensive income, the statement of changes in equity and the statement of cash fl ows for the year then ended, notes comprising a summary of signifi cant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising the Company and the entities it controlled at the year’s end or from time to time during the fi nancial year.
Directors’ responsibility for the fi nancial report
The directors of the Company are responsible for the preparation of the fi nancial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal controls as the directors determine are necessary to enable the preparation of the fi nancial report that is free from material misstatement, whether due to fraud or error. In Note 1b), the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the fi nancial statements comply with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the fi nancial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial report. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the fi nancial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity’s preparation and fair presentation of the fi nancial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the fi nancial report.
We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Independence
In conducting our audit we have complied with the independence requirements of the Corporations Act 2001. We have given to the directors of the Company a written Auditor’s Independence Declaration, a copy of which is included in the directors’ report.
Opinion
In our opinion:
a. the fi nancial report of Coca-Cola Amatil Limited is in accordance with the Corporations Act 2001, including: i. giving a true and fair view of the consolidated entity’s fi nancial position as at 31 December 2012 and of its performance for the year ended on that date; and ii. complying with Australian Accounting Standards and the Corporations Regulations 2001; and b. the fi nancial report also complies with International Financial Reporting Standards as disclosed in Note 1b).
Report on the remuneration report
We have audited the Remuneration Report included in pages 18 to 43 of the directors’ report for the year ended 31 December 2012. The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of Coca-Cola Amatil Limited for the year ended 31 December 2012, complies with section 300A of the Corporations Act 2001.
Liability limited by a scheme approved under Professional Standards Legislation
Ernst & Young Michael Wright Partner Sydney 19 February 2013
inDepenDent auDitor’s report to the MeMBers oF coca-coLa aMatiL LiMiteD
Ernst & Young Centre 680 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555 Fax: +61 2 9248 5959 www.ey.com/au
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 108
sharehoLDer inForMation
Additional information required by Australian Securities Exchange Listing Rules is as follows. This information is current as at 28 February 2013.
DIStRIButIOn SCHEDulE OF SHAREHOlDERS
BuSInESS ACtIVItIES
CCA is one of the largest bottlers of non-alcoholic ready-to-drink beverages in the Asia-Pacific region and one of the world’s five major Coca-Cola bottlers. CCA operates in six countries - Australia, New Zealand, Indonesia, Papua New Guinea, Fiji and Samoa. CCA’s diversified portfolio of products includes carbonated soft drinks, spring water, sports and energy drinks, fruit juices, iced tea, flavoured milk, coffee, tea and SPC Ardmona and Goulburn Valley packaged ready-to-eat fruit and vegetable snacks and products.
CCA produces the Australian market’s number one cola brand, Coca-Cola, the number one bottled water brand, Mount Franklin and the number one sports beverage, Powerade isotonic, and is market leader in non-sugar
Holders no.
Ordinary Shares no
1 – 1,000 35,498 15,119,847 1,001 – 5,000 24,371 54,691,713 5,001 – 10,000 3,166 22,486,704 10,001 – 100,000 1,578 34,290,084 100,001 and over 136 635,545,066 total 64,749 762,133,414
top twenty Registered Shareholders Ordinary
Shares no. % Coca-Cola Holdings (Overseas) Limited 223,049,276 29.27 HSBC Custody Nominees (Australia) Limited 134,508,946 17.65 J P Morgan Nominees Australia Limited 101,545,712 13.32 National Nominees Limited 73,856,913 9.69 Citicorp Nominees Pty Limited 28,584,770 3.75 Matila Nominees Pty Limited 9,097,993 1.19 BNP Paribas Noms Pty Limited 7,139,786 0.94 Australian Foundation Investment Company Limited 5,160,000 0.68 Questor Financial Services Limited 3,376,831 0.44 HSBC Custody Nominees (Australia) Limited 3,277,916 0.43 Accumulation Chess Entrepot Bainpro Nominees Pty Limited 2,581,356 0.34 AMP Life Limited 2,344,318 0.31 Argo Investments Limited 2,200,733 0.29 RBC Dexia Investor Services Australia Nominees Pty Limited 1,642,967 0.22 UBS Wealth Management Australia Nominees Pty Limited 1,501,830 0.20 UBS Nominees Pty Limited 1,464,811 0.19 BNP Paribas Nominees Pty Limited 1,400,000 0.18 Jikinta Investments Pty Limited 1,381,331 0.18 The Senior Master of the Supreme Court (Common Fund No.3 A/C) 1,381,162 0.18 Milton Corporation Limited 1,367,184 0.18 tOtAl 606,863,835 79.63
Coca-Cola Holdings (Overseas) Limited1 223,049,276 The Capital Group Companies, Inc. 47,063,740
There were 3,768 holders of less than a marketable parcel of 35 ordinary shares.
SuBStAntIAl SHAREHOlDERS
The names of substantial shareholders of the Company’s ordinary shares (holding not less than 5%) who have notified the Company in accordance with section 671B of the Corporations Act 2001 are –
1. Major holdings of The Coca-Cola Company
colas, with diet Coke and Coca-Cola Zero. Low and no-sugar beverages are a high growth part of the CCA portfolio, growing at more than three times the rate of sugar-sweetened beverages in 2012.
CCA sells and distributes a range of Beam Global premium spirits including Jim Beam, Canadian Club, Makers Mark and The Macallan. CCA also manufactures and distributes the best-selling ready-to-drink alcoholic beverages, Jim Beam & Cola. CCA owns breweries in Fiji and Samoa and a distillery in Fiji, making Fiji Bitter, Vailima beer and Bounty Rum. In December 2013, CCA will re-enter the premium beer market in Australia with a joint venture with the Casella group.
CCA employs 15,900 people across the Group and has access to 270 million consumers through more than 600,000 active customers.
109 COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012
AnnuAl GEnERAl MEEtInG
CCA’s Annual General Meeting will be held on Tuesday, 7 May 2013 in the James Cook Ballroom, InterContinental Sydney, Cnr Bridge and Philip Streets, Sydney, NSW at 10am.
CCA is committed to improving the efficiency of it’s Annual General Meetings and encourages participation of shareholders through:
• the prior collection of shareholder questions for answering during the meeting. Questions can be submitted either by completing the relevant form accompanying the notice of meeting or by emailing CCA at [email protected]. Questions that have been lodged, and their answers, are posted on the Company’s website at the FAQ section;
• providing a process to ensure that shareholders are considerate of each other’s right to participate;
• providing an opportunity after each Annual General Meeting to discuss matters with the Board and management; and posting copies of the speeches delivered at the meeting to the website after delivery.
VOtInG RIGHtS
Shareholders are encouraged to attend the Annual General Meeting, however, when this is not possible, they are encouraged to vote online at www.linkmarketservices.com.au or lodge a direct vote or appoint a proxy using the Shareholder Voting Form to register their vote. Every member present personally or by proxy, attorney or representative shall on a show of hands have one vote and on a poll have one vote for every share held.
lIStInGS
CCA shares are quoted under the symbol CCL on Australian Securities Exchange (ASX). The securities of the Company are traded on ASX on the issuer sponsored sub-register or under CHESS (Clearing House Electronic Sub-register System).
CCA ordinary shares are traded in the United States in the form of American Depositary Receipts (ADRs) issued by The Bank of New York, Mellon as Depositary. Each ADR represents two ordinary shares. The ADRs trade over-the-counter under the symbol CCLAY.
AnnuAl REPORtS
The CCA Annual Report is available at CCA’s website www.ccamatil.com. Printed copies of Annual Reports are only mailed to those shareholders who elect to receive a printed copy. CCA encourages shareholders to receive notification of all shareholder communications by email and have internet access to documents including Company Announcements, Dividend Statements and Notices of Shareholder Meetings. In this way, shareholders receive prompt information and have the convenience and security of electronic delivery, which is not only cost effective but environmentally friendly.
COMPAnY PuBlICAtIOnS
Other than the Annual Report, CCA publishes Shareholder News, a newsletter sent to shareholders with the interim and final dividend advices, and a Fact Book.
Shareholders are encouraged to access shareholder communications and information online. This has the advantage of receiving prompt information together with the convenience and security of electronic delivery.
SHARE BuY-PACk
The Company is not currently undertaking an on-market share buy-back.
WEBSItE
All material contained in this report is also available on the Company’s website. In addition, earnings announcements to ASX, media releases, presentations by senior management and dividend history are also published on the website. The address is www.ccamatil.com.au.
DIVIDEnDS PAID
In 2012, CCA paid fully franked dividends and has a payout policy of 70% to 80% of net profit, subject to the ongoing cash needs of the business. There was no Conduit Foreign Income attributed to dividends paid in 2012.
DIRECt DEPOSIt OF DIVIDEnDS
As previously advised to shareholders, commencing with the final dividend payment in April 2012, CCA introduced a system of mandatory direct crediting of dividends, and cheques will only be paid to overseas shareholders without an Australian financial institution account, or in exceptional circumstances.
If you are an Australian resident shareholder, any CCA dividends will be paid directly into your bank account on the dividend payment date. Your Dividend Payment Statement will be sent by mail or emailed to you on that date.
If you have not provided your Australian bank account details you will not receive your dividend until you do so. You can provide your bank account details by contacting the share registry. Link Market Services.
DIVIDEnD REInVEStMEnt PlAn
Participation in the Dividend Reinvestment Plan (DRP) is optional and available to all shareholders, except those who are resident in the United States, or in any place in which, in the opinion of the Directors, participation in the Plan is or would be illegal or impracticable. Shareholders may elect to participate for all or only some of their shares. Shares are currently issued under the DRP at the market price of CCA ordinary shares calculated at each dividend payment, being the weighted average price of all ordinary CCA shares sold on ASX during the 10 trading days commencing on the second trading day after the record date for the dividend. There is no brokerage, stamp duty or other transaction costs payable by participants. The DRP discount was reduced from 2.0% to nil, with effect from the 2010 interim dividend payment.
The DRP rules may be modified, suspended or terminated by the Directors at any time by way of an announcement to the ASX and placed on CCA’s website. Changes will be effective on the date of the announcement. For additional information and an application form, please contact our share registry, Link Market Services on 61 2 8280 7121.
tAX FIlE nuMBERS
Australian tax payers who do not provide details of their tax file number will have dividends subjected to the top marginal personal tax rate plus Medicare levy. It may be in the interests of shareholders to ensure that tax file numbers have been supplied to the share registry. Forms are available from the share registry should you wish to notify the registry of your tax file number or tax exemption details.
CHAnGE OF ADDRESS
It is important for shareholders to notify the share registry in writing promptly of any change of address. As a security measure, the old address should also be quoted as well as your shareholder reference number (SRN). You may also update your details online at www.linkmarketservices.com.au/public/forms/change-details.html.
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 110
coMpanY Directories
share registrY anD other enquires
CHAIRMAn
David Gonski, AC
CORPORAtE OFFICE
terry Davis Group Managing Director
nessa O’Sullivan Group Chief Financial Officer
George Forster General Counsel and Company Secretary
libbi Wilson Group HR Director
Barry Simpson Chief Information Officer
Sally loane Director, Media & Public Affairs
kristina Devon Head of Investor Relations
For enquiries about the operations of the company:
Investor Relations Coca-Cola Place L14, 40 Mount Street North Sydney NSW 2060
Ph: 61 2 9259 6159 Fx: 61 2 9259 6614
Email: [email protected] Website: www.ccamatil.com
For enquiries about American Depository Receipts (ADR):
BnY Mellon Share owner Services P.O. Box 358016 Pittsburgh, PA 15252-8016
Toll Free (domestic): 1 888 BNY ADRS Or (1-888-269-2377) International: 1 201 680 6825
Email: [email protected] Website: www.bnymellon.com/shareowner
For enquiries about CCA Shares:
link Market Services limited Locked Bag A14 Sydney South NSW 1235
Ph: 61 2 8280 7121 Fx: 61 2 9287 0303
Email: [email protected] Website: www.linkmarketservices.com.au
REGIStERED OFFICE
Coca-Cola Amatil Limited Coca-Cola Place L14, 40 Mount Street North Sydney NSW 2060 Ph: +61 132 653
new Zealand
The Oasis, Mt Wellington, Auckland Ph: +64 9 970 8000
Indonesia
Wisma Pondok Indah 2, 14th Floor Jalan Sultan Iskanda Muda Kav. V-TA, Pondok Indah Jakarta 12310, Indonesia Ph: +62 21 8832 2222
Papua new Guinea
Erica Street Lae, Morobe Province Ph: 675 472 1033
Fiji - nAB
Ratu Dovi Road, Laucala Beach Estate Ph: +679 394 333
Paradise Beverages
122-164 Foster Road, Walu Bay, Suva, Fiji Ph: +679 3315811
SPC Ardmona
50 Camberwell Road Hawthorn East VIC 3123 Ph: +61 3 9861 8900
AuDItOR
Ernst & Young
Ernst & Young Centre 680 George Street Sydney NSW 2000
SEnIOR OPERAtIOnS MAnAGEMEnt
Warwick White Managing Director, Australasia
John Murphy Managing Director, Australian Beverages
Joaquin Gil Chief Financial Officer, Australia
Barry O’Connell Managing Director, New Zealand & Fiji
Bruce McEwen Chief Financial Officer, New Zealand & Fiji
Erich Rey President Director, Indonesia
Stuart Comino Finance Director, Indonesia
Peter Carey General Manager, PNG
Colin Sands Chief Financial Officer, PNG
Jaime Martinez General Manager, Fiji NAB
neil Searancke Chief Financial Officer, Fiji NAB
tony Scanlan General Manager, Paradise Beverages
Vinish Singh Acting Chief Financial Officer, Paradise Beverages
Peter kelly Managing Director, SPCA
C/O Joaquin Gil Chief Financial Officer, SPCA
111 COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012
caLenDar oF events 2013
Date event
tuesday, 19 February 2012 full year results announcement
Friday, 22 February Ex-dividend date (final dividend)
thursday, 28 February Record date for dividend entitlements
tuesday, 2 April 2012 final ordinary dividend paid
tuesday, 7 May Annual General Meeting
tuesday, 20 August 2013 half year results announcement
Friday, 23 August Ex-dividend date (interim dividend)
thursday, 29 August Record date for dividend entitlements
tuesday, 1 October 2013 interim ordinary dividend paid
112COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012
tHIS PAGE IS lEFt IntEntIOnAllY BlAnk
For more information on Coca-Cola Amatil please visit our website at
www.ccaMatiL.coM
COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012 01
Directors’ report (continueD) COCA-COL A AMATIL LIMITED FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012 annual report
2012
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Coca-Cola Amatil Limited ABN 26 004 139 397 www.ccamatil.com
