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COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012
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2020 ANNUAL REPORT
Celebrating 117 years of history
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COCA-COLA AMATIL LIMITED ANNUAL REPORT 2012
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ANNUAL
REPORT
2009
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coca-cola amatil limited
ABN 26 004 139 397
Annual Report 20182019 ANNUALREPORT14,000 EMPLOYEES100+ BRANDS0 FACILITIES6 COUNTRIES1 COCA-COLA AMATILMaking progress togetherAnnual Report 2016Coca-Cola Amatil Limited Annual Report 201614,000 EMPLOYEES100+ BRANDS0 FACILITIES6 COUNTRIES1 COCA-COLA AMATILMaking progress togetherAnnual Report 2016Coca-Cola Amatil Limited Annual Report 2016Annual Report 2018
CONTENTS
OUR BUSINESS
1
2
4
6
8
12
Celebrating Our History
Who We Are
Where We Operate
2020: Our Year
Chairman’s & Group Managing Director’s Review
Our Response to 2020
THE VALUE WE CREATE
14
16
18
20
22
Strategy and Long-term Value Creation
Shareholder Value Proposition
Brand Partners
Sustainability Strategy and Governance
2020-2040 Sustainability Strategy
PERFORMANCE
24
29
30
36
40
43
Group Performance
Acquisition by Coca-Cola European Partners
Australia
Pacific
Indonesia & Papua New Guinea
Corporate & Services
GOVERNANCE & RISKS
Corporate Governance
44
Board of Directors
46
48 Group Leadership Team
50
Business and Sustainability Risks
FINANCIAL & STATUTORY REPORTS
54
81
136
Directors’ Report (including Remuneration Report)
Financial Report
Independent Auditor’s Report
OTHER INFORMATION
Shareholder Information
141
143 Five-year Financial History
144 Glossary
145 Corporate Directory
117 YEARS
OF GROWTH
Evolution has been a constant in our business. We’ve grown
from manufacturing Australian tobacco, to manufacturing
snacks and beverages across Europe and the Asia Pacific.
We’ve invested in brands and bottling plants and valued an
enduring relationship with The Coca-Cola Company for over
55 years. We’ve become a leader in sustainable practices and
we’re proud of our achievements in creating a better future.
Operator of Australia’s
first container deposit
scheme in South Australia
Coca-Cola Amatil
continues to be involved
in the operation of all
operational container
deposit schemes (CDS)
across Australia
Fijian-based
packaging
collection
scheme
Mission
Pacific
established
Allied Manufacturing
and Trade Industries
Limited changes its
name to AMATIL Limited
1999
Acquisition
of snack
food brands
and
Coca-Cola
bottling
franchises
in Europe
Mount
Franklin
bottled
spring water
launched
Our origin
British Tobacco
Company
(Australia) Limited
formed to take
over a group of
small tobacco
companies,
including
W.D & H.O. Wills
(Australia)
Listed on
the ASX
1970s
1980s
1990s
1977
1973
1986
1987
Becoming Coca-Cola
Amatil Limited
Shareholders approve a
change of Company
name to Coca-Cola
Amatil Limited along
with a major corporate
reorganisation.
The Coca-Cola
Company becomes our
largest shareholder as
we focus our core
activities on beverages
and snack foods.
Launch of
Kirks as a
national
brand
2000
2002
2003
Officially
entered South
East Asia with
the formation
of joint
ventures with
the Indonesian
Tirtalina Group
and Pan Java
Group
After more than
50 years trading as
British Tobacco, we
changed our name to
Allied Manufacturing
and Trade Industries
Limited, better
reflecting the Group’s
diversified operations
1989
1992
1998
Deep Spring
Acquisition
1994
1970
1963
1904
A new subsidiary,
Associated
Products and
Distribution Pty
Limited (APD), was
established to grow
and diversify
operations in
adjacent categories
beyond tobacco
including snacks
and beverages
1900s
European
bottling
businesses
demerged
Inaugural Coca-Cola
Christmas in the Park
held in Auckland,
New Zealand
2000s
2004
Peats Ridge
& Neverfail
Acquisition
Rio Beverages Ltd
Acquisition
Quirks
Refrigeration
Acquisition
Coca-Cola Australia
Foundation established
In partnership with
Coca-Cola South Pacific,
more than
$16 million
has been donated to
hundreds of charities,
positively impacting
young Australians
Coca-Cola bottling
franchise growth
Coca-Cola Amatil
becomes the
sole licensee of
Coca-Cola
products in Australia
From soft drinks
to alcohol
Entered the beer
and spirits
categories
through joint
venture with SAB
Miller (beer) and
distribution
agreement with
Maxiuum (spirits),
which at the time
included Beam
Investment in
manufacturing
facilities
Introduction of
new production
lines, state-of-
the-art systems
and automated
technologies
across bottling
sites
Inaugural Bali
Beach Clean Up
Collected more than
40,000 tonnes
of waste on Bali’s
coastline since
inception
Launched the
first Coca-Cola
Forest in
Lampung,
Indonesia
The tree planting
and environment
education
program has
since been
extended to
Sumedang,
West Java and
Semarang,
Central Java,
with more
than 300,000
saplings planted
Monster
Distribution
agreements
established in
Australia and
New Zealand
Rekorderlig
Exclusive
distribution
in Australia
Launch of
state-of-the-art
Keri Juice plant
in Auckland,
New Zealand
2020
Sustainability
goals launched
Feral Brewing
Company, WA
Australia
Acquisition
Introduced the
Affordable
Single-Serve
Packaging (ASSP)
production line
in West Cikarang,
West Java with latest
ASSP technology
rollout at Pasuruan,
East Java in 2019
Invested in West
Cikarang’s Solar
Panel Rooftop,
Indonesia
The largest solar
panel roof installation
in a production
facility in South East
Asia, generating
9.6 million kWh of
electricity per annum
Regional Beverages
Powerhouse
Coca-Cola Amatil’s
portfolio re-focused
on beverages with the
sale of SPC Ardmona
and LUMI (a dairy-free
soft serve business
managed by
subsidiary, Perfect
Fruit Company)
All single serve
bottles made
from 100%
recycled plastic
in Australia &
New Zealand
Partnered with
Dynapack Asia
in a joint venture
to build a
state-of-the-art
Recycled PET
facility in
Indonesia
Sustainability
ambitions
launched
with a
commitment
to Net Zero
Carbon by
2040
Established the
Australian
Beer Company,
a joint venture
with the
Casella family
SPC
Ardmona
& Grinders
Coffee
Acquisitions
20O5
2013
2012
World Without
Waste
Aligned with
The Coca-Cola
Company’s
vision of a
World Without
Waste and the
ambitious goal
to achieve
packaging
neutrality
by 2030
2018
2006
20O7
Paradise
Beverages
(Fiji) Limited
Acquisition
Joined The
Coca-Cola
Company’s Drink
in Your Hand
commitment
to reduce
emissions
intensity across
its value chain by
25% by 2020
compared to 2010
Molson Coors
Distribution
agreements
established
in Australia
2000s
2014
2015
2016
2017
Beam Suntory
Partnership
extended
to 2025
TCCC invests
in Amatil Indonesia
The Coca-Cola
Company invests
US$500 million in the
Coca-Cola Bottling
Indonesia PT
(CCAI) Company
for 29.4% equity
ownership
2019
Launch of
Amatil X
Coca-Cola Amatil’s
emerging
possibilities and
corporate
venturing arm
Long-term Value
Proposition
Launch of new
strategic framework
that integrates our
sustainability
framework with our
Shareholder Value
Proposition
2020
2021
COVID-19
Reshaped
business and
supported our
people, customers
and communities
during COVID-19
pandemic
CELEBRATING
OUR HISTORY
2020 marks the final Annual Report for Coca-Cola Amatil
as we move forward with a takeover by way of Scheme of
Arrangement by Coca-Cola European Partners.
To mark this historic moment we’ve taken the opportunity
to reflect on our 117 years of growth.
We’ve enjoyed a diverse history, under many names, in many
places. From Adelaide to Auckland via Austria, manufacturing and
distributing quality products has always been at the heart of our
operations, all while responding to the changing needs of customers,
consumers and communities. We’ve delighted millions with our
unrivalled portfolio of beverages and will continue to do so as we
embark on the next chapter of our history with Coca-Cola
European Partners.
1993
Kisvarda, Hungary
Jakarta, Indonesia
1994
Republic of
Slovenia
1995
Poland
Zagreb, Croatia
Lausanne,
Switzerland
1997
Philippines
(sold in 2001)
1998
South Korea
(sold in 2007)
Coca-Cola Amatil
demerges
European bottling
businesses,
retaining bottling
operations in
Australia, Pacific
and South East
Asia
1989
Landegg, Austria
Steyr, Austria
1986
1990
Adelaide, Australia
Oasis Industries,
New Zealand
Gmenden, Austria
Klangenfurt,
Austria
Dornbirn, Austria
1991
Lae, Papua
New Guinea
Port Moresby,
Papua New Guinea
Salzburg, Austria
Czech Republic
Southern Cross
Beverages – the
major Coca-Cola
bottler in NSW,
Australia
1987
Port Macquarie,
Australia
Modling, Austria
1988
North Queensland,
Australia
Island Bottlers, Fiji
– the sole
Coca-Cola bottler
in the archipelago
Wellington,
New Zealand
St Polten, Austria
COCA-COLA
BOTTLER
FRANCHISE
ACQUISITIONS
1966
Perth, Australia
1968
Geelong, Australia
1972
Brisbane, Australia
1982
Vienna, Austria
Graz, Austria
2005
Northern Territory,
Australia
2021
Coca-Cola
European
Partners to
acquire
Coca-Cola Amatil
1
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WHO WE ARE
PRINCIPAL ACTIVITIES
OUR PURPOSE
Coca-Cola Amatil is one of the largest bottlers and
distributors of non-alcoholic and alcoholic ready-to-
drink beverages in the Asia Pacific region.
As both brand partner and brand owner, we operate across
six countries – Australia, New Zealand, Indonesia, Papua
New Guinea, Fiji and Samoa – to prepare, distribute and sell
an unrivalled range of beverages. With decades of experience,
we do this safely and responsibly, and are proud that our
products delight millions of people every day.
With access to more than 270 million potential consumers
through more than 600,000 active customers, our product range
includes sparkling beverages, water, sports, energy, fruit juices,
iced tea, flavoured milk, coffee, beer, cider and spirits.
We are committed to leading through innovation, and to building
a sustainable future, capturing growth and delivering long-term
value to our Shareholders.
We employ around 11,000 people and create thousands more
jobs in the communities in which we operate. Across this team
we work as one, united by a shared purpose and common values.
We know that our diverse workforce is our greatest strength
and makes us the vibrant company we are today.
EVERY DAY WE CREATE MILLIONS OF MOMENTS
OF HAPPINESS AND POSSIBILITIES
Our future is shaped by our purpose and our values form the
foundation of our culture. Our purpose unites all of us and
focuses our energy. It reflects the scale of our business and the
millions of people we connect with directly and through our
products. It’s about what we do every day and the possibilities
we are creating for the future for Shareholders and society.
OUR VALUES
WE ARE
STRAIGHT-
FORWARD AND
OPEN
WE TAKE THE
INITIATIVE
AND OWN
THE OUTCOME
WE FOCUS
ON TODAY AND
TOMORROW
Our Values are the basis for how we work together and operate.
They guide our behaviours and our decisions, every day.
OUR AMBITION
TO BE A REGIONAL BEVERAGES POWERHOUSE
Our Ambition is to be a Regional Beverages Powerhouse in the
Association of Southeast Asian Nations (ASEAN) and Oceania
regions as we look to grow within categories, across geographies
and along the beverages value chain. We have a clear growth
platform that builds on our expert knowledge of the beverages
market in ASEAN and Oceania, our leading portfolio of brands,
and our track record of delivering innovation.
2
COCA-COLA AMATIL ANNUAL REPORT 2020 OUR GROUP STRATEGY
Our Group strategy is our blueprint for success. It positions us to capture growth and deliver long-term value. We know that our
markets will continue to change. We are confident in our ability to adapt and adjust to capitalise on opportunities and address
challenges as and when they arise. As a Group, we are focused on two overarching objectives – Perform and Grow. The success
of both is built on a foundation of a Strong Organisation.
PERFORM
GROW
The Perform objective is guided by our Shareholder Value Proposition and is
our primary day-to-day focus. The three strategic pillars within this – Lead,
Execute, Partner – were defined as part of our 2014 strategic review and are
the basis on which our businesses structure their plans.
LEAD
Strengthen Category Leadership Position
– Leading brands in each of our major categories in each market
– Up-weighted levels of innovative marketing continually strengthening brand equity
– Evolving portfolio that adapts to changing consumer preferences
EXECUTE
Step Change in Productivity and In-Market Execution
– World-class customer servicing capability
– Route-to-market that provides customer diversification and competitive
advantage
– Effective leverage of our large-scale, low-cost manufacturing, sales and
distribution capability
PARTNER
Better Alignment with The Coca-Cola Company and Our Other Brand Partners
– Shared vision of success and aligned objectives
– Joint plans for growing System profitability
– Balanced share of risk and rewards
We are a strong organisation with a proven ability to adapt and capitalise
on opportunities to further grow our portfolio of brands and businesses.
Our growth agenda positions us to deliver long-term sustainable returns
to our Shareholders.
Our ambition is to be a Regional Beverages Powerhouse. To achieve this,
we are looking to be ‘the leading beverages business in the ASEAN and
Oceania region’.
Our growth agenda seeks to maximise opportunities and position us to
deliver long-term sustainable returns to our Shareholders. We have a
clear growth platform that focuses on:
GROWTH WITHIN CATEGORIES
– Innovation with our brand partners and selective Mergers and Acquisitions
in existing and new beverage categories
– New beverage categories in existing markets
GROWTH ACROSS GEOGRAPHIES
– Entering new geographies in existing beverage categories
– Immediate focus on South East Asia and Oceania based on our current
operations, future growth prospects and potential for synergies
GROWTH ALONG THE VALUE CHAIN
– Vertical integration and extensions of our existing value chain in current
geographies – increasing the role we play in getting our great beverages
into the hands of consumers.
STRONG ORGANISATION
Our ability to deliver our performance and achieve our growth aspirations is underpinned by a Strong Organisation with strong, accountable businesses,
a One Amatil mindset led by the Group Leadership Team and a lean Group centre that safeguards and shapes our future.
A ONE AMATIL MINDSET
We believe the Group Leadership Team has a shared accountability for a One Amatil mindset so we are making decisions that are in the best interests of Amatil overall.
There are many opportunities to share learnings, leverage expertise and share services.
A LEAN GROUP OFFICE
An essential component of our model is a lean Group Office, which provides functional leadership to support our businesses and a One Amatil approach to safeguarding
and shaping our future. This ensures we operate in line with the expectations of our Board, realise our ambition of becoming a Regional Beverages Powerhouse and create
long-term value for Shareholders and for society.
OUR LONG-TERM VALUE PROPOSITION
In 2019 we redefined our approach to how we create long-term, sustainable value in our organisation. We believe that creating
value for society is completely integrated and consistent with the way we deliver value to Shareholders. As we pursue growth,
we do so through the lens of seeking positive impacts for our people, customers, partners, consumers, the environment and our
community. We will continue to refine how we measure our performance against this model so that our Shareholders and
stakeholders can hold us accountable as we fulfil our strategic ambition of being a Regional Beverages Powerhouse.
In 2020, the COVID-19 pandemic has strongly reinforced society’s expectations that businesses should serve the needs of
employees, protect the environment, and deal fairly with partners - at the same time as meeting the interests of Shareholders.
In the current economic conditions, more than ever it is critical that our customers are the central focus of our strategy, aligning
our resources to the activities that they most value and the activities that drive growth.
3
THE VALUE WE CREATEPERFORMANCE GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS WHERE WE
OPERATE
We operate across six countries – Australia, New Zealand,
Indonesia, Papua New Guinea, Fiji and Samoa – to prepare,
distribute and sell an unrivalled range of beverages.
~600,000 CUSTOMERS
11,000+ EMPLOYEES
170+ BRANDS
102 PRODUCTION LINES
41 WAREHOUSES
32 PRODUCTION FACILITIES
1 COCA-COLA AMATIL
INDONESIA
8
37
13
14
460,000
5,500
323,600
AUSTRALIA
INDONESIA
KEY
AUSTRALIA
PRODUCTION FACILITIES
PRODUCTION LINES
BRANDS
WAREHOUSES
CUSTOMERS
EMPLOYEES
COOLERS
100,000
3,100
119,400
13
41
88
13
4
COCA-COLA AMATIL ANNUAL REPORT 2020 PAPUA NEW GUINEA
13,000
2
700
13,000
5
10
5
PAPUA
NEW
GUINEA
FIJI & SAMOA
4,300
800
5,200
4
7
31
5
FIJI &
SAMOA
NEW
ZEALAND
5
12
30
4
NEW
ZEALAND
17,600
1,000
39,900
5
THE VALUE WE CREATEPERFORMANCE GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS 2020:
OUR YEAR
GROUP
PERFORMANCE
BUSINESS
PERFORMANCE
6
6
COCA-COLA AMATIL ANNUAL REPORT 2020
2020 WAS A CHALLENGING YEAR FOR OUR BUSINESS WITH THE AUSTRALIAN
BUSHFIRES EARLY IN THE YEAR FOLLOWED BY FLOODS IN INDONESIA AND
THE OUTBREAK OF COVID-19 ACROSS ALL OF OUR MARKETS. DESPITE THIS,
THE RESILIENCE OF OUR BRANDS WAS EVIDENCED THROUGH VOLUME SHARE
GAINS IN AUSTRALIA, NEW ZEALAND AND INDONESIA.
ONGOING TRADING REVENUE
$4,762.1m
6.1%
ONGOING NET PROFIT AFTER TAX
$340.3m
13.6%
ONGOING EARNINGS PER SHARE
47.0c
13.6%
TOTAL DIVIDEND
27.0c
PER SHARE
ONGOING EARNINGS BEFORE INTEREST & TAX
SAVINGS DELIVERED
$550.7m
13.9%
$140.0m
COCA-COLA TRADEMARK VOLUME GROWTH
AUSTRALIA
1.9%
NEW ZEALAND
1.2%
ALCOHOL VOLUME
AUSTRALIA
4.2%
TRADING REVENUE
AUSTRALIA
$2,936.9m
3.5%
TRADING REVENUE
INDONESIA & PAPUA NEW GUINEA
$955.5m
18% INDONESIA
Trading conditions remain challenging
due to COVID-19 infection rates and
macro-economic impact
TRADING REVENUE
PACIFIC
$812.7m
0.4%
COCA-COLA AMATIL ANNUAL REPORT 2020 SUSTAINABILITY
2020 – 2040 SUSTAINABILITY AMBITIONS
ACHIEVED OUR 2020 GOAL OF MAKING
COVID-19
NET ZERO
CARBON
Commitment by 2040
SUGAR REDUCTION
17.2%
since 2015 in Indonesia
50%
weighted average recycled PET
in our Australian portfolio
LARGEST ROOFTOP SOLAR
IN SOUTH EAST ASIA
8.9k tonnes/year
in 2019 in reduced carbon
emissions when complete
BEST EMPLOYER ACCREDITATION
WATER REPLENISHMENT
5
consecutive years in New Zealand
CARE PACKS
1,250
packs delivered to our
people and their families
in Papua New Guinea
MANUFACTURING HAND SANITISER
25,000L
under production in Fiji for
local communities
486%
estimate of amount of water replenished
in 2020 compared to amount of water in
our non-alcoholic products
MENTAL HEALTH SUPPORT
free customer access to
Coca-Cola Amatil’s Employee
Assistance Program (EAP)
SAFETY SCREENS
provided to our customers
in Indonesia, New Zealand
& Fiji
FOOD SERVICE AGGREGATOR LAUNCHED
for Australian customers pivoting
quickly to online consumer ordering
PRODUCT DONATIONS
across all markets to frontline
health workers, Amatil essential
workers and food charities
7
7
THE VALUE WE CREATEPERFORMANCE GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS CHAIRMAN’S
& GROUP
MANAGING
DIRECTOR’S
REVIEW
THE MOMENTS THAT DEFINE AN ORGANISATION ARE USUALLY
THRUST UPON THEM.
What can be controlled is how organisations respond
in these moments, and 2020 has been a defining
period for Amatil. Through the bushfires in Australia
and severe floods in Indonesia early in the year,
followed by the outbreak of COVID-19 across all our
markets, and the significant disruption these events
caused, we continued to execute on our strategy to
deliver long-term sustainable value for our customers,
people, partners, consumers, the environment and our
Shareholders. Then, in the final quarter of 2020 came
the proposal by Coca-Cola European Partners (CCEP)
to acquire Amatil.
What are you most proud of achieving in 2020?
Ilana: I’m particularly proud of the way our Board,
management and all our people worked through these
extraordinary circumstances, displaying courage, agility
and resilience to deliver on our three immediate priorities:
to ensure the health, safety and wellbeing of our people;
to support the resilience of our customers and stakeholders;
and to safeguard the continuity of our operations and
financial flexibility.
Alison: I’m extremely proud of all our people, and the way
they responded to the challenges of 2020. Their commitment
and dedication to helping each other and our stakeholders
has been inspiring.
We entered 2020 with strong financial foundations in place
and a resilient business model and were able to deal with the
challenges that arose. By reacting swiftly to the rapid escalation
of the COVID-19 pandemic across all our markets, being agile in
our response, and leveraging the strengths of the Coca-Cola
System, we’ve been able to protect what makes our business
strong. Our people have risen to the challenge, knowing we
needed to move fast to adapt to a very different environment.
There were changes to categories and channels, customer
requirements and expectations, and therefore the opportunities
for how we distribute and sell our leading portfolio of beverages.
As a result, we’re well positioned to emerge from the pandemic
crisis stronger and better than before.
How has Amatil performed in 2020?
Alison: Our results showed that through a challenging
period Amatil continued to deliver for our customers and
partners, while supporting our people and our communities,
and delivering Shareholder value. Our overall financial
performance under tough conditions, in particular our strong
cash realisation, reduction in net debt and tight management
of costs, is a testament to the strength of our business and
the tenacity of our people, partners and customers.
Our performance was defined by significant adverse impacts in
the first half of 2020 as a result of widespread outlet closures
and restricted trading, followed by a marked improvement in the
second half, which demonstrated our ability to quickly respond
in markets where COVID-19 infection rates declined and
mobility restrictions were eased. As a result, the business was
able to limit the impacts on financial performance, with Group
revenue for 2020 declining by only 6.1 per cent and volumes
declining by 8.4 per cent.
8
COCA-COLA AMATIL ANNUAL REPORT 2020 Helping to partially offset these declines was the
implementation of our ‘Fighting Fit’ cost optimisation program.
In recognition of the improved trading performance in the
second half, the Board declared a fully franked final ordinary
dividend of 18 cents per share.
From a strategic perspective, a highlight of 2020 was our ability
to achieve market share gains in Australia, New Zealand and
Indonesia – driven by the strong performance of the Coca-Cola
Trademark – reflecting the fact that during challenging times,
consumers turn to their favourite beverage brands. Also
pleasing was our strong trading performance in the all-
important fourth quarter Christmas period in both Australia
and New Zealand.
In keeping with Amatil’s value proposition, how has the
company delivered for its customers and communities?
Ilana: In 2020 the COVID-19 pandemic has strongly reinforced
society’s expectations that businesses should serve the
needs of employees, protect the environment, and deal fairly
with customers and partners - at the same time delivering
value for Shareholders. These are expectations we have of
ourselves, and in responding to the pandemic, it was
important to all of us to do what’s right for our communities
and remain true to our Purpose, Values and Value Proposition.
At the heart of our Value Proposition are our thriving customers.
We deliver quality, reliability, convenience and service to more
than 630,000 customers across our six geographies. For our
many customers, ranging from small and medium-sized
businesses to large grocery chains, the impacts of COVID-19
varied greatly, as did their requirements. It was imperative that
we provided our customers with the support they needed, not
only to survive during the pandemic but to the extent possible,
help them thrive in the medium to long term. Initiatives included:
helping many of our smaller On-The-Go (OTG) customers to
pivot and quickly reshape their businesses, facilitating
e-commerce and food aggregator opportunities to help them
sell online; adapting our logistics network to deliver direct to
stores and locations not typically part of our network; and in
Australia, we established a free 24-hour customer support
service to provide confidential counselling and financial
coaching to all Amatil customers.
Our support for consumers and communities included providing
cash and beverage donations across our markets. For example,
in Australia we worked with Optus Stadium in Perth and the
MCG in Melbourne to donate beverages to food charity groups
OzHarvest and Second Bite. In Indonesia and Fiji, we produced
and donated hand sanitiser to front line workers.
What has Amatil done to keep its people engaged,
safe and supported during 2020?
Alison: Amatil has an unrelenting focus on keeping our people
safe, engaged and supported. In 2020, employee initiatives
included expanding hygiene and safety measures across all our
locations, and rolling out ‘work-from-anywhere’ arrangements.
I’M EXTREMELY PROUD OF ALL
OUR PEOPLE, AND THE WAY THEY
RESPONDED TO THE CHALLENGES
OF 2020. THEIR COMMITMENT AND
DEDICATION TO HELPING EACH OTHER
AND OUR STAKEHOLDERS HAS BEEN
INSPIRING.
Regular communication with our people has been another
critical initiative with programs including the launch of hygiene,
physical distancing awareness and wellbeing campaigns. I’m
pleased to report that in Australia, for example, we had over
4,500 employees attend a range of online health and wellbeing
sessions. And in Papua New Guinea and Samoa we worked
with our local partners to provide our people and their families
with care packs of staple foods to help support them during
this difficult time.
In addition to the health and safety of our people, we also
prioritised job protection through redeployment programs in
Australia and New Zealand. In Australia, for example, during
the peak of the country’s COVID-19 restrictions we redeployed
250 State Immediate Consumption field team members into
our Grocery channel.
From a people perspective it was heartening to achieve an
improvement in our employee engagement scores in 2020
and the beginning of 2021 – a great outcome given the unique
circumstances that COVID-19 presented, with our people
working remotely and redeployment required to address
channel closures when COVID-19 lockdown restrictions
were implemented.
Recent safety results showed that between 2012 and 2020 total
employee injuries across the Group fell by 76 per cent. While we
are pleased with the progress, we know there is always more to
be done.
Sadly, our Indonesian business reported three traffic-related
fatalities in 2020.1 Such loss of life is unacceptable to us. In all
cases, immediate investigations were conducted and corrective
actions applied. We know there is always more to be done and
we continue to share safety learnings across our operations and
geographies. We invest in significant driver training programs
across all countries; but particularly in Indonesia, where we’ve
expanded these beyond our employees and contractors to the
broader community.
Sadly also, there have been four COVID-19-related fatalities
amongst Amatil employees in our Indonesian business in
2020. There were no other COVID-19-related fatalities amongst
employees in other countries.
Our condolences go to the families, colleagues and friends
of those we lost.
1 When reporting on loss of life we include all work-related incidents where employees or contractors have died, or which have occurred on-site;
and all incidents involving members of the public, where, post-investigation, Coca-Cola Amatil or its contractors were found to be at fault.
9
THE VALUE WE CREATEPERFORMANCE GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS CHAIRMAN’S & GROUP MANAGING
DIRECTOR’S REVIEW (CONTINUED)
We are an active member of the Coca-Cola System and a
market leader in core beverage categories; we have a broad
product range and diverse channels to reach customers and
consumers; we operate adaptable infrastructure in each of our
geographies; we employ outstanding and committed people;
and we have a strong balance sheet, ample liquidity and robust
credit ratings. This combination has us well positioned to come
through the other side, stronger and ready to accelerate our
growth ambitions.
On behalf of the Board, thank you to every Amatil team member
for your valuable contribution. Your energy, effort, commitment
and resilience were central to our success in 2020.
Alison: Financially and operationally we are in a strong position.
We have a clear approach in place to ensure we capitalise on
opportunities and build on our strategy, while remaining focused
on our Value Proposition.
In the immediate term we remain focused on driving market
share gains, growing our presence in e-commerce and delivering
our Fighting Fit cost efficiencies. Within these areas a number
of opportunities exist.
Firstly, reshaping our portfolio to meet changing consumer
demand. This includes responding to the move to brands that
people know and trust, the growth of in-home consumption and
entertaining, and an increasing focus on affordability. For us,
this means an exciting opportunity to look at things like our
multi-serve range and pack-size options.
Secondly, driving strong performance in high-demand products,
such as our core range, which includes Coca-Cola low and no
sugar options, as well as our energy category.
The third area of opportunity is amplifying our online presence
and enhancing our product range across e-commerce platforms.
In realising these opportunities, the cornerstones for our
success will be taking a very targeted approach by market and
channel, leveraging our data-driven initiatives, and maintaining
a customer-centric focus across all aspects of our business.
I would like to acknowledge the enormous contribution of our
passionate people. Thank you for your hard work, tenacity and
commitment, particularly in responding to the unprecedented
challenges we faced this year. I also wish to express my
gratitude to our customers, partners and the many other
stakeholders in the Amatil family for your support and
collaboration.
How did the proposal to acquire Amatil evolve?
Ilana: The proposal from CCEP was originally announced on
26 October 2020 via a non-binding indicative proposal. On
4 November 2020, we announced that Amatil had entered into
a Scheme Implementation Deed with CCEP for the acquisition
of all of the issued shares held by independent Shareholders
pursuant to a Scheme of Arrangement (‘Scheme’) at an offer
price of $12.75 (less the 2H 2020 dividend). We also announced
that CCEP had entered into a separate agreement to acquire the
Amatil shares indirectly held by The Coca-Cola Company,
conditional upon implementation of the Scheme.
What progress has Amatil made in advancing
its sustainability commitments?
Ilana: In 2018 Amatil released a set of sustainability strategies
and public goals to be achieved by the end of 2020. Despite the
challenges we faced during the year, sustainability continued to
be a priority and I’m pleased to report we achieved many of our
2020 Sustainability Goals1 including:
— a 10 per cent sugar reduction in Australia; and
— having 50 per cent of recycled PET in our Australian
portfolio.
Highlighting our long-term commitment to sustainability,
we recently launched Amatil’s ‘2020-2040 Sustainability
Ambitions’, comprising a range of 10 bold sustainability
objectives designed to make a distinct and positive contribution
between now and 2040, to the communities and markets in
which we operate. Included in these ambitions is our
commitment to:
— achieving net zero carbon emissions by 2040;
— 100 per cent renewable electricity in Australia and
New Zealand by 2025;
— reducing sugar (grams per 100ml) across our non-alcoholic
beverages portfolio by 35 per cent in Indonesia and 20 per
cent in Australia and New Zealand by 2025 (vs 2015); and
— partnering for pack-to-pack recycling solutions in all
countries where we operate by 2030 and designing for
100 per cent recyclability across all packaging.
How is Amatil positioned to emerge stronger
and better in 2021 and beyond?
Ilana: As we embark on the next chapter of Amatil’s history,
under the stewardship of a new owner, we are uniquely placed
to emerge a stronger, better business. Our strong performance
in 2020 given the challenging circumstances, combined with
the underlying strength of our business and the measures
implemented to enhance our financial flexibility, ensures we
have a good foundation to withstand the ongoing challenges
of COVID-19.
1 Amatil’s 2020 Sustainability Report to be published in May 2021 will include detailed information on performance and progress against the 2020 goals.
10
10
COCA-COLA AMATIL ANNUAL REPORT 2020
COCA-COLA AMATIL ANNUAL REPORT 2020 AMATIL’S EMPLOYEES, CUSTOMERS,
PARTNERS AND MANY OTHER
STAKEHOLDERS CAN LOOK FORWARD
TO THE FUTURE WITH OPTIMISM AND
EXCITEMENT, GIVEN THE INCREASING
POSSIBILITIES FOR MUTUAL SUCCESS
THAT THE TRANSACTION WILL
PROVIDE.
On 15 February 2021, we announced that Amatil had entered
into a revised agreement with CCEP that increased the total
cash consideration that independent Shareholders will receive
under the Scheme, to $13.50 (less the 2H 2020 dividend).
On 16 April 2021 an Amatil Scheme Meeting was held where
independent Shareholders voted to approve the Scheme,
resulting in a change of ownership. We are now going through
the final steps of this process. When it is completed,
Shareholders will be paid and Amatil will delist from the
Australian Securities Exchange. Accordingly, we anticipate this
will be our final Annual Report as an ASX-listed company.
What does the acquisition mean for Amatil?
Alison: Amatil has a strong culture, with tremendous people, a
diverse portfolio of products, and well-established partnerships
and customer relationships, built over many years.
We are confident that the acquisition will only strengthen our
business across each of our operating regions.
CCEP is a leader in one of the largest FMCG sectors in Europe’s
most significant markets. It is the world’s largest independent
Coca-Cola bottler by revenue, with a portfolio of 54 brands,
operating in 13 countries, serving 1 million outlets and over
300 million consumers, and employs around 23,500 people.
Importantly, CCEP is a highly respected and successful
Coca-Cola bottler with strong alignment to Amatil in relation
to culture, commitment to customers and creation of
stakeholder value.
Amatil’s employees, customers, partners and many other
stakeholders can look forward to the future with optimism
and excitement, given the increasing possibilities for mutual
success that the transaction will provide.
ILANA R. ATLAS, AO
Chairman
ALISON WATKINS
Group Managing Director
* Current at time of printing on 16 April 2021.
11
THE VALUE WE CREATEPERFORMANCE GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS OUR RESPONSE
TO 2020
2020 was a year like no other. Not only did it mark the
start of the COVID-19 pandemic which saw changes
to all aspects of life, we also experienced ravaging
bushfires in Australia and devastating floods in
Indonesia and Papua New Guinea.
We responded to these events with resilience, care and an
unwavering focus on safety. Throughout the devastation,
change and uncertainty, our business continued to operate
as an essential service provider, bottling the beverages that
our consumers love and delivering them to customers across
our markets.
BEING THERE WHEN NATURAL DISASTERS STRIKE
— During the December 2019 and January 2020 period
Australia was affected by some of the worst bushfires on
record. We provided immediate support of water and other
Amatil beverages to those fighting and affected by the fires,
donation of funds to aid the recovery effort for affected
communities and financial assistance for our customers
impacted by the fire zones.
Share a Coke with the Firies cans were created exclusively for fire
fighters and other volunteers as an expression of thanks and were
distributed to volunteer fire organisations in fire-affected communities
at no cost.
— The Greater Jakarta Region and several other locations in
Indonesia were hit by severe floods at the start of 2020.
The impact caused by the floods affected not only our
people and our communities, but also their homes and
our facilities, including the flooding of our Cibitung Plant.
— In April, Papua New Guinea was hit with a devastating flood
that left many in the community without vital everyday-living
essentials. Our people donated funds and critical resources
to the Gulf Flood Appeal, supporting local communities
get back on their feet.
Indonesian team preparing product donation for flood support.
12
Our Paradise Beverages team manufacturing hand sanitiser for the Fijian
community.
PUTTING THE HEALTH, SAFETY AND WELLBEING OF OUR PEOPLE,
CUSTOMERS AND COMMUNITY FIRST DURING COVID-19
— In Fiji, Indonesia and Australia we demonstrated our
adaptability and community focus and kept our people and
factories busy by manufacturing thousands of litres of hand
sanitiser to protect vulnerable communities and front-line
workers.
— In Indonesia, New Zealand and Fiji our front-line teams
continued to service customer needs by developing and
delivering safety screens for point-of-sale social distancing
at no cost to the customer.
— In Papua New Guinea, we delivered 1,250 care packs to our
people and their families in remote communities.
— In Australia, our Employee Assistance Program was extended
to all customers to support them as they navigated through
the pandemic.
SUPPORTING OUR CUSTOMERS TO ADAPT AND EVOLVE DURING
THE PANDEMIC
— In Australia, we launched a food-service aggregator which
contained product and bundle images for customers to use
on food-service aggregator apps in order to pivot their
business into the digital world. To support our customers
who were making this transition we created a dedicated
customer service line to assist with enquiries quickly
and efficiently.
— In New Zealand, to support the hospitality industry which
was affected by the lockdown, we developed the ‘First
Coke On Us’ campaign to drive foot traffic into bars and
restaurants by treating Kiwis to a free non-alcoholic
beverage of their choice.
— In Indonesia, we launched an entrepreneurship training
program to support customers and the wider business
community to drive economic recovery.
COCA-COLA AMATIL ANNUAL REPORT 2020 3. Ensuring business continuity and financial flexibility
— Established an appropriate governance structure to
steer us through the pandemic featuring daily business
community and risk reviews involving business leadership
teams and our Board of Directors, along with ongoing
monitoring and adaption of our COVID-19 response plan.
— To reinforce financial flexibility we stress tested our
balance sheet, P&L and liquidity position across a range of
scenarios and withdrew our dividend payout ratio guidance.
Adding to our financial strength, the Company successfully
completed a $200 million 10-year European Medium-Term
Note placement on 6 April 2020.
— Supply chain continuity was a high priority. We reviewed
our supply chain plans regularly and swiftly adapted our
production patterns to manage the shift in portfolio mix.
— Implemented cost saving measures to bring expenditure
in line with the COVID-19 trading environment. Given the
prevailing uncertainty as to the duration of the lockdowns
and the ultimate impact on the broader economies we
operate in, we decided that it was prudent to defer
non-critical projects thereby reducing our capital
expenditure for the 2020 financial year from $300 million
to $210 million. We also identified $140 million of cost
savings for the 2020 financial year through the removal
of marketing and non-essential spend.
OUR RESPONSE TO COVID-19
In April 2020 we activated a focused response to adapt to the
challenges of COVID-19. At the first signs of impact on our
business, we implemented cross-functional business
continuity teams and pandemic plans targeted at three areas:
(1) to ensure the health, safety and wellbeing of our people;
(2) to support the resilience of our customers and stakeholders;
and (3) to safeguard the continuity of our operations and
financial flexibility.
1. Protecting our people
— Expanded hygiene and safety measures across all offices
and facilities, implemented ‘work from home’ arrangements,
and where appropriate, repatriated expatriate employees.
— Regular communication with our people has been a critical
component of our response with various communications
initiatives including the launch of hygiene, social distancing
awareness and wellbeing campaigns.
— In Papua New Guinea and Samoa we worked with our local
partners to provide our people and their families with care
packs of staple foods to support them during the pandemic.
2. Supporting our stakeholders
— Provided our customers with the support they need not only
to survive the pandemic but, to the extent possible, to thrive
in the medium to long term. In addition, we redeployed our
people and resources to better serve and support customers
with high demand, in line with channel mix shifts. Initiatives
included a free 24-hour customer support and counselling
service for Australian customers, facilitating the ability for
our customers to sell online through food aggregators,
repayment plans where appropriate and adapting our
logistics network to deliver direct to stores not typically
part of the network.
— Leveraged global bottler partner learnings to assist with
forecasting and planning.
— Maintained production of high-quality products and
supported our communities through product donations.
For example, in Fiji, our Paradise Beverage distillery was
part of a consortium that obtained approval to produce
over 25,000 litres of hand sanitiser for donation to Fijian
health workers and citizens.
— Shareholders have been updated regularly through
ASX announcements throughout April, May, July and October
2020 and via a full year trading update in January 2021.
13
THE VALUE WE CREATEPERFORMANCE GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS STRATEGY AND
LONG-TERM
VALUE CREATION
At the heart of how we create long-term value are our Thriving
Customers, and delivering quality, reliability, convenience and
service to more than 600,000 customers across our six geographies.
Our ability to do this is underpinned by four other value drivers,
all of them equal and all of them inter-related. These are
Engaged People, Committed Partners, Delighted Consumers
and a Better Environment. Our ability to deliver against each of
these is what determines our success in delivering value to our
Shareholders and society.
ENGAGED PEOPLE
We provide a safe, open, diverse and inclusive
workplace where our people are energised by
what we will achieve together. We know that the
strength of our business and brands can only be
supported through the strength of our people;
and a diverse workforce and building capability
and talent are critical to our ongoing success.
OUR
STRATEGY
PERFORM
• Category leadership
• Outstanding execution
• Deep partnerships
GROW
Across categories,
geographies and along
the beverages value chain
A STRONG ORGANISATION
• Strong accountable businesses
• One Amatil mindset led by the
Group Leadership Team
• Lean Group Office to safeguard
and shape our future
F O R
U E
L
A
V
SHAREHOLDERS
COMMITTED PARTNERS
We work with all our partners to grow
our businesses on a foundation of
collaboration and trust and our
success is dependent on our ability
to work together to deliver against
our shared goals.
ENGAGED
PEOPLE
COMMITTED
PARTNERS
THRIVING
CUSTOMERS
REGIONAL
BEVERAGES
POWERHOUSE
BETTER
ENVIRONMENT
DELIGHTED
CONSUMERS
DELIGHTED CONSUMERS
We provide choice and information across an
unrivalled portfolio for everyone, everywhere,
every day. We are open and responsive to
changing consumer tastes and preferences
and aligned with global health guidelines and
Sustainable Development Goals.
BBETTER
BETTER ENVIRONMENT
We aim to leave a positive legacy and ensure minimal impact on the
environment. This includes striving to meet our commitments on packaging,
water, energy and carbon reduction. We work responsibly in all we do, seeking
to make the right choices now, in a sustainable way, for future generations.
Our commitment is focused where we have the most opportunity to make a
difference: sustainable packaging, water stewardship, energy management
and climate protection, biodiversity and responsible sourcing.
VALUE
C I E T Y
O
S
F O R
14
COCA-COLA AMATIL ANNUAL REPORT 2020 STRATEGY AND
LONG-TERM
VALUE CREATION
At the heart of how we create long-term value are our Thriving
Customers, and delivering quality, reliability, convenience and
service to more than 600,000 customers across our six geographies.
Our ability to do this is underpinned by four other value drivers,
all of them equal and all of them inter-related. These are
Engaged People, Committed Partners, Delighted Consumers
and a Better Environment. Our ability to deliver against each of
these is what determines our success in delivering value to our
Shareholders and society.
ENGAGED PEOPLE
We provide a safe, open, diverse and inclusive
workplace where our people are energised by
what we will achieve together. We know that the
strength of our business and brands can only be
supported through the strength of our people;
and a diverse workforce and building capability
and talent are critical to our ongoing success.
OUR
STRATEGY
PERFORM
GROW
• Category leadership
• Outstanding execution
Across categories,
geographies and along
• Deep partnerships
the beverages value chain
A STRONG ORGANISATION
• Strong accountable businesses
• One Amatil mindset led by the
Group Leadership Team
• Lean Group Office to safeguard
and shape our future
F O R
U E
L
A
V
SHAREHOLDERS
COMMITTED PARTNERS
We work with all our partners to grow
our businesses on a foundation of
collaboration and trust and our
success is dependent on our ability
to work together to deliver against
our shared goals.
ENGAGED
PEOPLE
COMMITTED
PARTNERS
THRIVING
CUSTOMERS
REGIONAL
BEVERAGES
POWERHOUSE
BETTER
ENVIRONMENT
DELIGHTED
CONSUMERS
DELIGHTED CONSUMERS
We provide choice and information across an
unrivalled portfolio for everyone, everywhere,
every day. We are open and responsive to
changing consumer tastes and preferences
and aligned with global health guidelines and
Sustainable Development Goals.
BETTER ENVIRONMENT
BBETTER
We aim to leave a positive legacy and ensure minimal impact on the
environment. This includes striving to meet our commitments on packaging,
water, energy and carbon reduction. We work responsibly in all we do, seeking
to make the right choices now, in a sustainable way, for future generations.
Our commitment is focused where we have the most opportunity to make a
difference: sustainable packaging, water stewardship, energy management
and climate protection, biodiversity and responsible sourcing.
VALUE
C I E T Y
O
S
F O R
B
U
S
I
N
E
S
S
O
U
R
W
E
C
R
E
A
T
E
T
H
E
V
A
L
U
E
15
PERFORMANCE GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATION
SHAREHOLDER
VALUE PROPOSITION
Our Shareholder Value Proposition guides our
approach to the management of our diverse markets
and portfolio, and targets the contribution each part
of our business makes to the overall Group outcome.
It is a tangible demonstration of our commitment to
being accountable to our Shareholders.
It is based on our competitive advantages, defining a
compelling investment case and the components that
will create Shareholder value.
INVESTMENT CASE
Predominantly a Coca-Cola franchisee with leading
brands
Our partnership with The Coca-Cola Company gives us access
to a portfolio of leading brands in a diverse range of categories,
underpinned by decades of best-in-class marketing and
product innovation.
Our portfolio of non-alcoholic ready-to-drink and alcoholic
beverages is also strengthened by other partnerships and by a
small number of our own brands. These partnerships give us
access to other international premium brands which assist us in
securing market-leading positions and creating additional value.
These relationships are described in the section ‘Committed
Partners’.
Route-to-market with scale and reach
We have an established and unrivalled sales and distribution
network serving a wide range of customers.
Our customer base varies between markets, but invariably
includes small and large supermarkets, corner stores, fuel
stations, cafes and restaurants across modern and traditional
trade and increasingly through digital platforms.
This sales and distribution network is one of our success
factors as it gives us an accelerated platform to launch new
products and achieve wide customer reach.
Additionally, the provision of our branded fridges and vending
machines gives us significant shelf space in all the markets in
which we operate.
Large-scale, modern, low-cost infrastructure
We pride ourselves on being a world-class beverages company,
continuously investing in efficiency and capacity for all our
sites and in all our markets.
The scale of our operations and quality of our products makes
us one of the most successful and competitive beverage
suppliers in the Asia-Pacific region.
We benefit from enviable economies of scale that allow us
to produce a wide range of products and serve a large number
of customers.
16
COCA-COLA AMATIL ANNUAL REPORT 2020
SHAREHOLDER VALUE PROPOSITION
Investment case
EBIT drivers
EPS drivers
Shareholder
value creation
Predominantly a Coca-Cola
franchise with leading
brands
Route-to-market with scale
and reach
Large-scale, modern,
low-cost infrastructure
Steady cash flow from core
Australia and New Zealand
franchises
Growth opportunities
including Indonesia
providing upside
Revenue growth plans and continuous
cost focus across the Group
Modest capex for
developed markets
Targeting low
single-digit
EBIT growth
Core developed
market franchises
(Australia and
New Zealand)
+
Targeting
double-digit
EBIT growth
Developing
markets
(Indonesia, Papua
New Guinea and
Fiji) and Alcohol
& Coffee
+
Growth capex for
Indonesia funded
+
Continuous working
capital management
+
Bolt-on acquisitions
Capital management
initiatives
Strong balance sheet
Strong return on capital
employed
B
U
S
I
N
E
S
S
O
U
R
W
E
C
R
E
A
T
E
T
H
E
V
A
L
U
E
Steady cash flow from core Australia and New Zealand
franchises
Our balanced exposure towards developed markets supports
the sustainability of our business model.
Our developed markets – Australia and New Zealand –
generate strong cash flow, supporting the payment of
attractive dividends while maintaining our ability to
reinvest in the business to create an even stronger future.
Growth opportunities including Indonesia and
Alcohol & Coffee portfolio providing upside
Our developed markets are supported by our strong market
position in our Alcohol & Coffee portfolio.
In Indonesia, our geographic and customer reach, combined
with our multi-category approach, makes us unique and
positions us well to capture the growth we expect in this market.
EBIT DRIVERS
Revenue growth and continuous cost focus across
the Group
Revenue growth and continuous cost focus form the
foundations of our business plans. These are two important
building blocks underpinning our ability to grow earnings and
cash flow.
Appropriate EBIT targets
We have set medium-term EBIT targets for each of our
businesses which reflect the market and our position within it.
Our near-term targets take account of our recent performance
and plans.
EPS DRIVERS
Capex
We allocate modest capex for our developed markets with the
view to maximising returns for our Shareholders. Indonesia
remains an exciting growth market and we are investing in this
market to maximise its potential.
Working capital management
Our focus on effective and efficient management of working
capital resources drives strong cash generation particularly
across our Australia and New Zealand businesses.
Bolt-on acquisitions and capital management initiatives
Our priorities for cash are to create value for our Shareholders
by investing in revenue growth plans, operational efficiencies
and selective bolt-on acquisitions in existing and new
beverage categories that strengthen our market leadership
and our portfolio of beverages. Furthermore, we seek
opportunities for vertical integration and extensions across
the value chain.
The Board regularly reviews our capital structure to ensure it
remains appropriate for our business. It is important that we
maximise Shareholder returns while also providing sufficient
funds to support the needs of the business.
SHAREHOLDER VALUE CREATION
Mid-single digit EPS growth
The aggregation of all these elements underpins our
expectation to deliver mid-single digit ongoing EPS growth
over the medium term. Despite the continued impacts of
COVID-19 on our markets, our EPS ambition remains.
Attractive dividends
After investing to support and maintain the long-term
growth prospects of the business, we pay our Shareholders
attractive dividends.
During 2020, we suspended dividend guidance, while
we assessed the impacts of COVID-19 on our markets.
Recognising the importance of dividends to our Shareholders,
in August 2020 our Board declared an interim dividend
of 9 cents per share (57.5 per cent payout ratio).
A final dividend for 2020 of 18 cents per share was declared
in February 2021. The proposed consideration under the
Scheme of Arrangement (Scheme) with CCEP, of $13.50 per
share, is inclusive of the FY20 final dividend. As such the
18cps dividend enables available franking credits to be
distributed to our Shareholders in anticipation of Shareholder
approval to complete the Scheme.
Strong balance sheet and return on capital employed
We expect that our balance sheet will remain conservative
with flexibility to fund future growth opportunities.
We expect to maintain a strong return on capital employed.
17
PERFORMANCE GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATION
BRAND
PARTNERS
We have a long and proud history of working closely
with brand partners to manufacture, sell and distribute
a portfolio of world class brands. We work with each
partner to make sure we grow our businesses together,
on a foundation of collaboration and trust.
Marketing
Coca-Cola Amatil and The Coca-Cola Company’s affiliates
work together on marketing activities on a country by country
basis, with expenditure allocated annually and subject to
revision throughout the year.
OUR RELATIONSHIP WITH THE COCA-COLA COMPANY
Coca-Cola Amatil has a long-standing relationship with The
Coca-Cola Company, which is both a Shareholder and brand
owner. We are proud to have been a Coca-Cola bottler and
distributor since 1965.
Our relationship with The Coca-Cola Company has evolved
over the years, driven by the need for agility, responsiveness
and proximity to the customer and consumer. Our relationship
is marked by a new level of financial and strategic alignment
as well as a shared vision of growth that positions us to win
in increasingly competitive and fast-paced operating
environments.
We prepare, import, sell and distribute a range of products of
The Coca-Cola Company and its affiliates and have a range of
different agreements with them, reflecting the nature of those
products and our role in different markets.
Our relationship with The Coca-Cola Company and its
affiliates is governed in our various markets by bottlers’,
distributors’ and license agreements which set out the
respective rights and responsibilities of Coca-Cola Amatil
and The Coca-Cola Company or its relevant affiliate. These
agreements are typically 10 years in duration and have
consistently been extended or renewed.
Our agreements with The Coca-Cola Company and its
affiliates provide us exclusive rights to prepare, package,
sell or distribute the relevant trademarked products of
The Coca-Cola Company and its affiliate in a territory.
Our agreements contain obligations in relation to production
and marketing requirements of The Coca-Cola Company.
The Coca-Cola Company and its affiliates take overall
responsibility for the consumer marketing of their products,
for product innovation and research and development, and
the supply of proprietary concentrates and beverage bases
to Coca-Cola Amatil.
Coca-Cola Amatil is responsible for determining the pricing
of products offered to customers.
Raw Materials
The raw materials we use in our beverages include
concentrate/beverage base, water, sugar and other
sweeteners, carbon dioxide gas, glass and PET bottles,
aluminium cans, closures and other packaging materials.
Concentrate/beverage base constitutes our largest individual
raw material cost which we purchase from The Coca-Cola
Company. The price of concentrate/beverage base has
historically been determined annually on a country by country
basis. Concentrate/beverage base is priced and paid in the
local currency of each Coca-Cola Amatil territory except in
Papua New Guinea where it is priced in Kina and paid in USD.
18
The Coca-Cola Company’s marketing focuses on consumer
awareness and advertising, while our marketing focuses on
sales and point of sale execution, customer service, and our
range of packaging options. We are also focused on increasing
the number of points of sale through investing in distribution
and cold drink equipment.
Restrictions & Consents
Generally, our arrangements with The Coca-Cola Company
prohibit us from producing, promoting or selling any non-
alcoholic beverage without The Coca-Cola Company’s
consent. However, with The Coca-Cola Company’s consent,
we own outright and distribute the following brands: Mount
Franklin, Kirks, Deep Spring, Bisleri Chinotto, L&P and Pump
(in New Zealand). We are also required to gain consent from
The Coca-Cola Company for distributing or storing any
products, other than those of The Coca-Cola Company, in
vehicles or equipment that has The Coca-Cola Company
branding.
Coca-Cola System Benefits
Over the past years we have worked to broaden and deepen
our relationship with The Coca-Cola Company to unlock many
of the benefits that come with being part of the Coca-Cola
System.
In addition to access to leading iconic beverages such as
Coca-Cola, Sprite and Fanta, we have had access to new
products via a strong innovation pipeline and a strengthened
M&A capability.
Other benefits of being part of the Coca-Cola System include
the opportunity to improve our knowledge and talent sharing
with the bottler community, increase our access to data and
insights, and leverage the work being done across the system
in relation to responsible sourcing.
We gain significant benefits of scale through procurement
across many categories of inputs and arrangements with our
technology partners.
All of this, combined with our unrivalled reach and execution
capability, positions Amatil as a beverages leader with real
competitive advantage.
OUR RELATIONSHIPS WITH ADDITIONAL BRAND PARTNERS
Coca-Cola Amatil has a number of complementary
relationships with other brand partners in the non-alcoholic
ready-to-drink, alcoholic and hot beverages industries. Each
relationship is different, and we work closely with our brand
partners to ensure we grow our businesses together.
Non-alcoholic beverages
Made Group
In October 2018 Coca-Cola Amatil and The Coca-Cola
Company announced a joint acquisition of 45 per cent
minority interest in Australia-based Made Group which
produces a range of brands including Cocobella, Rokeby
Farms, Impressed and NutrientWater.
COCA-COLA AMATIL ANNUAL REPORT 2020 B
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Monster
In May 2016, we entered into agreements with Monster Energy
Company, a subsidiary of Monster Beverage Corporation
of up to 20 years, for Australia, New Zealand, Fiji and Papua
New Guinea. These agreements give us the exclusive right to
produce, distribute and sell energy drinks including Monster
Energy in Australia and New Zealand, Mother in Australia,
New Zealand, Fiji and Samoa, Live+ in New Zealand and BU
in Papua New Guinea. This followed the announcement of
Monster Beverage Corporation’s long-term strategic
partnership with The Coca-Cola Company in June 2015 to
take ownership of The Coca-Cola Company energy brands
at that time, including Mother and BU.
Alcoholic beverages
Beam Suntory
In June 2015 we renewed our agreement with Beam Suntory
to sell and distribute Beam Suntory’s premium spirits
portfolio in Australia and extended the relationship to New
Zealand. The term of the agreement is 10 years in duration.
We have distributed the Beam portfolio since 2006 and have
seen the portfolio broaden significantly in that time.
Molson Coors International
In 2013 we entered into a distribution agreement with
Molson Coors International for Australia. The relationship
was extended to New Zealand in 2015. Following Molson
Coors’ acquisition of the Miller brand in 2016 we replaced
our historical arrangements with a new long-term agreement
under which we have the exclusive right to manufacture,
import and distribute a range of Molson Coors’ products in
Australia. Our agreement with Molson Coors International for
Australia is due for renewal or extension at the end of 2021.
Casella Family Brands and Australian Beer Company
In January 2013, we established a joint venture with Casella
Family Brands to form Australian Beer Company. Australian
Beer Company produces a range of beers and cider products
including Yenda and Pressman’s Cider as well as seasonal
craft beers. Coca-Cola Amatil distributes Australian Beer
Company’s products.
C&C Group
In July 2014, we entered into a distribution agreement
with C&C Group – owner of the Magners brand – for the
distribution of Magners in New Zealand. This was renewed
in 2015 and then, in May 2017, we also entered into a new
long-term agreement for distribution in Australia.
ABRO
In 2014 we brought the Rekorderlig brand into our portfolio
by entering into a long-term sales and distribution agreement
with Chilli Brands. In 2018 we strengthened our relationship
with the brand by entering into a long-term distribution
agreement with Abro, the global brand owner of Rekorderlig
Cider, and assumed full responsibility for the distribution and
marketing of the brand in Australia.
Boston Beer Company
The distribution agreement which brought the Samuel Adams
brand into our portfolio, entered into in August 2013 with
Boston Beer Company, was terminated in November 2020
which the agreement of both parties.
Wellington Beverage Co.
In 2019 we entered into a long-term distribution agreement
with Wellington Beverage Co. to add the Fortunate Favours
craft beer and cider ranges to our New Zealand portfolio.
Coffee
Caffitaly
In 2016 we enhanced our relationship with Caffitaly by
securing the exclusive right to import and sell Caffitaly coffee
machines and a range of our coffee brands in Indonesia.
In 2018 we expanded this relationship by extending the
exclusive Master Supply Agreement to include the sales and
distribution of Caffitaly coffee machines and coffee capsules,
including under the Grinders Café Expresso system in
Australia, New Zealand and Samoa. Amatil’s exclusivity
expired on 31 December 2020 and it continues to sell and
distribute Caffitaly coffee machines and capsules on a
non-exclusive basis.
Rancilio
In 2005, Grinders Coffee commenced a long-term relationship
with Rancilio Group and remains a key trading partner for
Rancilio professional coffee machines in Australia. A leading
coffee equipment manufacturer, Rancilio Group is most widely
acclaimed for technologically advanced coffee machines,
both traditional and fully automatic, as well as instant and
electronic doser grinders.
19
PERFORMANCE GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATION
SUSTAINABILITY STRATEGY
AND GOVERNANCE
Coca-Cola Amatil is committed to making a distinct
and positive contribution to the communities and
markets in which we operate.
This means that with each decision we seek to deliver the
best outcomes and build value for society as well as our
Shareholders. Coca-Cola Amatil’s sustainability strategy is
aligned with, and embedded in, our broader business strategy
and the Coca-Cola Amatil Long-Term Value Proposition,
focusing on five value drivers: Thriving Customers, Engaged
People, Committed Partners, Delighted Consumers and
Better Environment.
FOCUSING ON WHAT IS IMPORTANT
Our sustainability strategy has been developed considering
the expectations of all key stakeholders – our people, our
partners, our communities, our customers and our investors
– focusing on those areas that are the most material and
where we can make the most difference. We regularly review
our sustainability priorities, by conducting a materiality
assessment with internal and external stakeholders.
Recent reviews confirmed that we are focused on areas where
we can have the greatest impact, and we noted increased
stakeholder concerns regarding sustainable packaging,
consumer wellbeing, climate change and human rights
and will continue to prioritise these areas.
In 2018 Coca-Cola Amatil released a set of strategies and
public goals to achieve by the end of 2020. A full progress
report on performance against our 2020 Sustainability Goals
will be provided in our 2020 Sustainability Report and
Factsheets.
In 2020, we further refined and expanded our sustainability
strategy and now have a suite of 10 ambition statements and
supporting strategies to be achieved between 2020 and 2040.
The strategy is being embedded in how we do business and is
underpinned by roadmaps and performance indicators.
An overview of the ambitions, supporting strategies for
our priorities, governance and management approach, is
provided below.
Coca-Cola Amatil Sustainability Materiality Assessment
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Significance of economic, environmental and social impacts
1
Employee health
and safety
2 Marine plastic pollution
3 Sustainable packaging
4 Consumer heaIth
and wellbeing
5 Responsible water sourcing,
use and replenishment
6 Reducing our
carbon footprint
7 Human rights and
ethical labour practices
8 Responsible sourcing
9 Responsible marketing
and information
10 Diversity and inclusion
11 Supporting our
communities
12 Indigenous engagement
and support
13 Social procurement
14 Philanthropy and
foundations
15 Supporting biodiversity
16 Manufacturing waste
and recycling
Engaged People
Delighted Consumers
Better Environment
Committed Partners
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OUR 2020 TO 2040 SUSTAINABILITY AMBITIONS
Coca-Cola Amatil’s 2020-2040 Sustainability Strategy has
been developed with 10 core sustainability ambitions linked
to the drivers of the Amatil Long-Term Value Proposition.
1.
2.
3.
4.
5.
Sustain and improve our current net zero water
operations by being water stewards.
Reduce our total non-alcoholic beverages portfolio
sugar grams per 100ml by 35 per cent in Indonesia, and
20 per cent in Australia and New Zealand, by 2025 (vs
2015), and have wellbeing initiatives in all markets.
Closing the loop on packaging by partnering on
pack-to-pack recycling and re-use solutions in all
countries by 2030.
Achieve net zero carbon emissions (Scope 1 & 2) by
2040, including 100 per cent renewable electricity in
Australia and New Zealand by 2025, and build and
support climate resilient operations and communities.
Deliver positive impacts for our communities by
leveraging our local presence, community investment
and procurement scale.
6.
Achieve a zero-harm workplace.
7.
8.
9.
Achieve diversity in our people that reflects our
communities.
Build stronger brand partnerships with aligned
sustainability ambitions and strategies.
Embed our responsible sourcing commitment in our
supplier partnerships.
10. Partner with our customers on shared sustainability
vision ensuring we are a trusted and valued part of their
supply chain.
PRIORITY AMBITIONS, TIMELINE AND STRATEGIES
The first four of the sustainability ambitions have been
identified as priorities based on stakeholder expectations and
where we know we can make the greatest difference. We aim to
achieve each ambition between 2020 and 2040, setting interim
targets and improving our performance over time. Supporting
strategies for these priority ambitions are detailed below.
Net zero water in 2020
— Sustain our net zero water operations by being water
stewards; only sourcing from sustainable water sources,
also considering community needs, and improving
vulnerability assessments, management plans,
measurement, reporting and transparency for communities
— Together with The Coca-Cola Company we are returning to
nature and communities more than the amount of water
that we use in our drinks. Replenishment projects focus on
our operational areas and communities, including supply
chain/agricultural priority areas, improving water security
for all where needed most
— We use water carefully and efficiently and focus on re-use
opportunities.
Consumer wellbeing in 2025
— Reduce our total non-alcoholic beverages portfolio sugar
grams per 100ml by 35 per cent in Indonesia, and by
20 per cent in Australia and New Zealand, by 2025 (vs 2015)
& have wellbeing initiatives underway in all markets
— Lead across our communities on responsible consumption
(alcohol & non-alcohol) particularly in vulnerable
communities
— We continue to market responsibly, offering choice and
information to help our consumers make decisions, and do
not aim or direct any media marketing activity to children
under the age of 121.
Closing the loop on packaging in 2030
— Pack-to-pack recycling solutions in all countries where
we operate by 2030
— Design for 100 per cent recyclability and support
well-designed infrastructure and initiatives for collection
— 50 per cent average recycled or renewable content
across all packaging by 2030
— Develop the feasibility of using 75 per cent recycled or
renewable plastic in our bottles by 2030.
Net zero carbon emissions in 2040
— Achieve net zero direct carbon emissions (Scope 1 & 2)
by 2040
— 100 per cent renewable electricity in Australia and
New Zealand by 2025
— Other emissions reduction supporting The Coca-Cola
Company’s Science-Based Target of 25 per cent
reduction by 2030 (vs 2015)
— Support climate resilient operations and communities.
GOVERNANCE AND MANAGEMENT OF SUSTAINABILITY
From the Board to the Group Leadership Team, Group
functions to the Businesses, at Coca-Cola Amatil
we are committed to continual improvement and acting
responsibly to support a better future for all our
stakeholders.
The Coca-Cola Amatil Board is committed to achieving
the highest standards of corporate governance and
business conduct. The Board sees this commitment as
fundamental to the sustainability and performance of our
business and to enhancing Shareholder value. The Risk
and Sustainability Committee of the Board reviews the
effectiveness of Coca-Cola Amatil’s controls and strategies
to manage our non-financial and operational risks and
compliance matters by:
— Reviewing and monitoring compliance with our legal and
regulatory responsibilities, internal policies and industry
standards on operational matters
— Approving policies and standards that reflect our
reputation
— Reviewing and monitoring social issues that could
impact our reputation
— Reviewing Coca-Cola Amatil’s non-financial and
operational risks and controls.
Management decisions in relation to sustainability are made
by the Group Managing Director, Group Leadership Team
and individual members of management who have direct
authority. Across the Group functions and within each
Business, our health and safety, supply chain, environment,
people and culture, procurement, and public affairs,
communications and sustainability teams are responsible
for the day-to-day implementation, management, monitoring
and reporting of specific initiatives.
We also remain committed to an enhanced approach
to sustainability reporting with more data and analysis
on the sustainability performance of all our Businesses
referencing the Global Reporting Initiative framework,
the Task Force on Climate Related Financial Disclosures
guidance, and Businesses for Societal Impact (formerly
‘The London Benchmarking Group’) community investment
guidelines. Coca-Cola Amatil’s annual sustainability
reports are available on our website www.ccamatil.com.
In 2020, EY has been engaged to undertake limited
assurance, as defined by the Australian Audit Standards
on performance disclosures covering all ten 2020
Sustainability Goals.
1
In New Zealand the Children and Young People’s Advertising Code requires that advertising for our products must not target children (below the
age of 14) or be placed in any media where children are likely to be a significant proportion of the expected average audience. In Australia no
advertising is directed to children and young people under the age of 15.
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PERFORMANCE GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATION
2020-2040
SUSTAINABILITY STRATEGY
22
Our 2020-2040 Sustainability Strategy has been developed with 10 core sustainability ambitions linked to the drivers of the Amatil Value Proposition. The first four of these have been identified as priorities based on stakeholder expectations and where we know Coca-Cola Amatil can make the greatest difference.2020204020251. Net zero waterSustain our net zero water operations by being water stewardsWe only source from sustainable water sources, also considering community needsTogether with The Coca-Cola Company we are now returning to nature and communities more than the amount of water that we use in our drinks3. Closing the loop on packagingPartnering on pack-to-pack recycling and re-use solutions in all countriesDesign for 100 per cent recyclability by 2030 and support well-designed infrastructure and initiatives for collection50 per cent average recycled or renewable content across all packaging by 2030Develop the feasibility of using 75 per cent recycled or renewable plastic in our bottles by 2030 2. Consumer wellbeingFocused on portfolio sugar reduction and responsible consumptionReduce our total non-alcoholic beverages portfolio sugar grams per 100ml by 35 per cent in Indonesia, and 20 per cent in Australia and New Zealand, by 2025 (vs 2015), and have wellbeing initiatives in all marketsLead across our communities on responsible consumption particularly in vulnerable communities4. Net zero carbonAchieve net zero direct carbon emissions (Scope 1 & 2) by 2040100 per cent renewable electricity in Australia and New Zealand by 2025Other emissions reduction supporting The Coca-Cola Company’s Science-Based Target of 25 per cent reduction by 2030 (vs 2015) Support climate resilient operations and communities5. Community investment Deliver positive impacts for our communities by leveraging our local presence, community investment and procurement scale6. Zero-harm workplaceThe safety, wellbeing and resilience of our people is our top priority7. Diversity in our peopleAchieve diversity in our people that reflects our communities8. Stronger partnershipsBuild stronger brand partnerships with aligned sustainability ambitions and strategies9. Responsible sourcingEmbed our responsible sourcing commitment in our supplier partnerships10. Thriving customersPartner with our customers on shared sustainability vision2030COMMITTED PARTNERSDELIGHTED CONSUMERSENGAGEDPEOPLEBETTERENVIRONMENTTHRIVINGCUSTOMERS VALUE FOR SOCIETY VALUE FOR SHAREHOLDERSCOCA-COLA AMATIL ANNUAL REPORT 2020 B
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Our 2020-2040 Sustainability Strategy has been developed with 10 core sustainability ambitions linked to the drivers of the Amatil Value Proposition. The first four of these have been identified as priorities based on stakeholder expectations and where we know Coca-Cola Amatil can make the greatest difference.2020204020251. Net zero waterSustain our net zero water operations by being water stewardsWe only source from sustainable water sources, also considering community needsTogether with The Coca-Cola Company we are now returning to nature and communities more than the amount of water that we use in our drinks3. Closing the loop on packagingPartnering on pack-to-pack recycling and re-use solutions in all countriesDesign for 100 per cent recyclability by 2030 and support well-designed infrastructure and initiatives for collection50 per cent average recycled or renewable content across all packaging by 2030Develop the feasibility of using 75 per cent recycled or renewable plastic in our bottles by 2030 2. Consumer wellbeingFocused on portfolio sugar reduction and responsible consumptionReduce our total non-alcoholic beverages portfolio sugar grams per 100ml by 35 per cent in Indonesia, and 20 per cent in Australia and New Zealand, by 2025 (vs 2015), and have wellbeing initiatives in all marketsLead across our communities on responsible consumption particularly in vulnerable communities4. Net zero carbonAchieve net zero direct carbon emissions (Scope 1 & 2) by 2040100 per cent renewable electricity in Australia and New Zealand by 2025Other emissions reduction supporting The Coca-Cola Company’s Science-Based Target of 25 per cent reduction by 2030 (vs 2015) Support climate resilient operations and communities5. Community investment Deliver positive impacts for our communities by leveraging our local presence, community investment and procurement scale6. Zero-harm workplaceThe safety, wellbeing and resilience of our people is our top priority7. Diversity in our peopleAchieve diversity in our people that reflects our communities8. Stronger partnershipsBuild stronger brand partnerships with aligned sustainability ambitions and strategies9. Responsible sourcingEmbed our responsible sourcing commitment in our supplier partnerships10. Thriving customersPartner with our customers on shared sustainability vision2030COMMITTED PARTNERSDELIGHTED CONSUMERSENGAGEDPEOPLEBETTERENVIRONMENTTHRIVINGCUSTOMERS VALUE FOR SOCIETY VALUE FOR SHAREHOLDERSPERFORMANCE GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATION
GROUP PERFORMANCE
OVERVIEW
— Full Year 2020 financial performance reflected the impacts
of COVID-19 on all business segments. A significant
improvement in trading performance was seen in Australia
and New Zealand in 4Q20 as lockdown measures eased.
— Group trading revenue1 declined by 6.1 per cent and volumes
declined by 8.4 per cent in full year 2020.
— NPAT1 of $340.3 million, supported by lower net finance
costs.
— Statutory Net Profit After Tax (NPAT) of $179.9 million
down 51.9 per cent inclusive of non-trading items (NTIs).
NTIs largely due to Indonesia impairment of $143.4 million
(after tax).
— EBITDA1 of $898.9 million, down 9.0 per cent, reflecting the
— Strong cash flow generation: free cash flow1 of
margin impact resulting from a change in consumption
patterns during COVID-19 lockdown restrictions, partially
offset by cost savings of $140.0 million in 2020.
— EBIT1 of $550.7 million down 13.9 per cent versus prior
comparable period (pcp), including a $10.8 million
depreciation reduction following the Indonesia impairment
in June 2020.
$661.0 million; cash realisation1 of 124.7 per cent.
— Net debt reduction since 31 December 2019 of
$289.4 million.
— Final dividend of 18.0 cents per share fully franked
(2H19: 26.0 cents per share, unfranked), representing
a full year ongoing payout ratio of 57.5 per cent.
2020
$M
2019
$M
Variance
%
Summarised income statement – ongoing1
Trading revenue
Total revenue
Earnings before interest, tax, depreciation and amortisation (EBITDA)
Earnings before interest and tax (EBIT)
Net finance costs
Income tax expense
Non-controlling interests
4,762.1
4,800.7
5,070.6
5,112.1
898.9
550.7
(62.1)
(140.9)
(7.4)
987.4
639.3
(65.7)
(164.1)
(15.6)
Profit attributable to Coca-Cola Amatil Limited Shareholders – ongoing
340.3
393.9
(6.1)
(6.1)
(9.0)
(13.9)
(5.5)
(14.1)
(52.6)
(13.6)
nm
688.7
nm
(51.9)
42.6
nm
13.6
52.0
8.2
6.2
(25.7)
–
374.4
47.0
4.0
54.4
51.7
9.7
–
(202.7)
42.3
179.9
27.0
–
47.0
24.8
8.9
16.2
867.7
661.0
4.4
18.4
2.2 points
746.0
521.4
(16.3)
(26.8)
4.5
0.1 points
3,090.3
(1,462.1)
3,703.7
(1,751.5)
16.6
16.5
Profit from discontinued operation after income tax
Non-trading items after income tax
Non-controlling interests – non-trading items2
Profit attributable to Coca-Cola Amatil Limited Shareholders
Other Performance Measures
Dividends per share (cents)
Special dividends per share (cents)
EPS – ongoing (cents)
EPS (cents)
EBIT interest cover – ongoing (times)
ROCE – ongoing (%)
Operating cash flows – ongoing ($M)
Free cash flows – ongoing ($M)
Capital expenditure / trading revenue – ongoing (%)
Summarised Balance Sheet
Net assets – operating and investing – ongoing
Less: net debt
Refer to the following page for footnote details.
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Other information
2020
$M
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$M
1,628.2
1,952.2
Variance
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16.6
Interim ordinary dividend per share – unfranked3 (cents)
Interim special dividend per share – unfranked3 (cents)
Final ordinary dividend per share – 2020 fully franked4, 2019 unfranked (cents)
9.0
–
18.0
21.0
4.0
26.0
(57.1)
nm
(30.8)
1 Presented on ongoing basis. Ongoing refers to continuing operations results adjusted to exclude non-trading items.
2 Non-trading items largely due to the impairment of Indonesia in 1H20 and implementation of the Fighting Fit cost initiatives in Australia and
Group Office in 2H20. Refer to Notes 3 and 11 of the Financial Report for further details.
3 Paid 13 October 2020 (2019: 9 October 2019).
4 Record date for the dividend entitlement is 19 April 2021 and is payable 30 April 2021. The Company may need to make changes to the record date
and/or the payment date for the final dividend in the event that the expected date for the Scheme Meeting under the Scheme with CCEP is delayed or
to ensure that the final dividend is paid before the record date for the Scheme. The Company will notify Shareholders of any changes to the record
date or payment date for the final dividend by way of an announcement to the ASX.
CAPITAL EMPLOYED1
Working capital2
Property, plant and equipment (including right of use assets)
Intangible assets
Current and deferred tax liabilities (net)
Derivative liabilities – non-debt related (net)
Other assets (net)3
Capital employed
ROCE4 – ongoing (%)
2020
$M
244.4
1,950.4
1,208.4
(245.7)
(100.4)
33.2
2019
$M
447.5
2,288.6
1,262.7
(290.1)
(27.5)
22.5
Variance
$M
(203.1)
(338.2)
(54.3)
44.4
(72.9)
10.7
3,090.3
3,703.7
(613.4)
16.2
18.4
(2.2) points
1 Capital employed is referred to as Assets and Liabilities – Operating and Investing or segment net assets in the Financial Report.
2 Working capital is defined as current trade and other receivables plus inventories less current trade and other payables.
3 Mainly comprising of non-current assets (and associated liabilities) held for sale, prepayments, investments, defined benefit superannuation plans
assets and liabilities and provisions.
4 Return on capital employed (ROCE) is calculated as ongoing EBIT, divided by the average of capital employed at the beginning and at the end of the
twelve-month period ended as at the balance date.
Capital employed decreased by $613.4 million from 2019 driven by:
— Working capital decreased by $203.1 million, with strong focus on collections and managing bad debt risk in the COVID-19
environment, resulting in lower receivables particularly in Australia, Indonesia and Fiji. Inventory holdings were reduced
mainly in Australia and Indonesia. Payables were higher in Australia and New Zealand in part due to the timing of promotional
pricing rebates payable to major grocery customers in both businesses.
— Property, plant and equipment decreased by $338.2 million due to a lower than normal level of capital expenditure with a
number of capital projects being deferred and the impairment taken in 1H20 on our Indonesian business.
— Intangible assets decreased by $54.3 million due the reduction in the carrying value of our bottling agreement and goodwill
in Indonesia as result of the impairment from 1H20.
— Current and deferred tax liabilities (net) decreased by $44.4 million due to deferred tax assets arising from impairments
taken in 1H20.
— Other assets (net) increased by $10.7 million mainly from a reduction in employee related provisions.
25
GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATION
GROUP PERFORMANCE
(CONTINUED)
FREE CASH FLOW
Ongoing
EBIT
Depreciation and amortisation
EBITDA
Impairment charges
Changes in adjusted working capital1
Net interest and other finance costs paid
Income taxes paid
Movements in other items2
Operating cash flows
Capital expenditure
Proceeds from sale of non-current assets
Payments for additions of other intangible assets
Free cash flows – ongoing
Cash realisation3 – ongoing (%)
2020
$M
550.7
348.2
898.9
3.6
131.5
(72.2)
(83.3)
(10.8)
867.7
(208.7)
3.1
(1.1)
661.0
124.7
2019
$M
Variance
$M
639.3
348.1
987.4
1.5
(86.7)
(57.8)
(99.9)
1.5
746.0
(229.4)
6.1
(1.3)
(88.6)
0.1
(88.5)
2.1
218.2
(14.4)
16.6
(12.3)
121.7
20.7
(3.0)
0.2
521.4
139.6
98.5
26.2 points
1 Working capital is adjusted to exclude the impact of non-cash flow and non-operating items such as foreign exchange translation, impacts of
acquisitions and disposals of businesses and payables relating to additions of property, plant and equipment.
2 Mainly comprising of movements in prepayments and provisions.
3 Operating cash flows divided by profit after tax adding back depreciation and amortisation expenses before tax.
Ongoing free cash flows increased by $139.6 million from 2019
and was mainly due to:
— Working capital was up mainly due to lower receivables and
reduced inventory in Australia and Indonesia, and the timing
benefit from promotional pricing rebates payable to major
grocery customers. The difference between the balance sheet
movement of $203.1 million and the cashflow primarily due to
FX $53.0 million and non-trading items of $20.7 million.
— Net finance costs increased driven by the timing of realisation
of income on hedge contracts.
— Tax payments decreased driven by the timing benefit due to
lower tax installments in Australia.
— Capital expenditure was $20.7 million lower than FY19 and
approximately $95 million below our planned pre-COVID spend.
Ongoing cash realisation increased by 26.2 points from 2019
mainly driven by the decrease in working capital.
26
COCA-COLA AMATIL ANNUAL REPORT 2020
CAPITAL EXPENDITURE1
Australia
Pacific
Indonesia & Papua New Guinea
Corporate & Services
Capital expenditure – ongoing
Capital expenditure/trading revenue – ongoing (%)
Capital expenditure/depreciation & amortisation2 – ongoing (times)
2020
$M
44.7
34.8
87.5
41.7
208.7
4.4
0.6x
2019
$M
58.3
35.3
79.0
56.8
229.4
4.5
0.7x
Variance
$M
(13.6)
(0.5)
8.5
(15.1)
(20.7)
(0.1) points
(0.1) x
1 Capital expenditure (capex) is represented by payments for additions of property, plant and equipment and software development assets.
2 Amortisation of software development assets.
Group capital expenditure was $20.7 million lower than FY19, in line with our revised capital management plan in response to COVID-19.
Australia: Capex included spend predominantly to complete projects initiated in the prior year including upgrades to our Northmead
plant, Solar panel installations and an updated Transport Management System.
Pacific: Capex included the roll-out of additional cold drink equipment across New Zealand and Fiji and commencing installation of a
new can line at Auckland.
Indonesia & Papua New Guinea: Capex included completion of the liquid sugar facility and upgrading our SAP system in Indonesia.
In PNG at our production facility in Lae, construction of a new warehouse was completed and installation of an additional can line was
commenced.
Corporate & Services: Capex was driven mainly by investment in additional cold drink equipment in Australia, information technology
initiatives and human resources systems.
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NET DEBT
Equity
Net debt
Cash assets
Other financial assets at amortised cost1
Loan receivable – interest bearing
Borrowings and other financial liabilities
Derivative assets – debt related (net)
Total net debt
Total capital – financing
Net interest cover2 – ongoing (times)
Net debt/EBITDA3 – ongoing (times)
1 Relates to Papua New Guinean government bonds.
2 Calculated as EBIT divided by net finance costs.
3 Net debt divided by earnings before interest, tax, depreciation and amortisation.
2020
$M
2019
$M
1,628.2
1,952.2
Variance
$M
(324.0)
(1,018.0)
(37.1)
(11.8)
2,578.8
(49.8)
1,462.1
3,090.3
8.9x
1.6
(856.0)
(83.0)
(8.8)
2,798.8
(99.5)
1,751.5
3,703.7
9.7x
1.8
(162.0)
45.9
(3.0)
(220.0)
49.7
(289.4)
(613.4)
(0.8) x
(0.2) x
27
GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATION
GROUP PERFORMANCE
(CONTINUED)
NET DEBT (CONTINUED)
The balance sheet remains in a strong position. Net debt was lower at $1,462.1 million which includes lease liabilities of
$499.5 million. As at 31 December 2020, the Papua New Guinea business had local currency (Kina) denominated cash assets
and funds in held to maturity investments of $129.1 million (PGK 344.4 million); 2019: $213.9 million (PGK 508.2 million). This
amount has decreased by $153.5 million since the peak in June 2018 of $282.6 million reflecting repayments of an intercompany
loan and internal dividend payments. Government-imposed currency controls continue to be in place in Papua New Guinea,
impacting the extent to which the cash held in the country can be remitted for use elsewhere in the Group.
Ongoing EBIT interest cover reduced slightly, from 9.7 times in FY19 to 8.9 times, due to the impact of COVID-19 on EBIT
despite lower finance costs.
Total available debt facilities at period end was $2.6 billion. The average maturity is 5.5 years. The maturity profile is as follows:
Borrowing maturity profile
31 December
2021
%
31 December
2022
%
31 December
2023
%
31 December
2024+
%
Committed and uncommitted facilities maturity
21.4
13.6
17.5
47.5
SEGMENT RESULTS OVERVIEW
Australia
Pacific
Indonesia & Papua New Guinea
Corporate & Services
Total
EBITDA – ongoing
EBIT – ongoing
2020
$M
502.3
181.0
147.6
68.0
898.9
2019
$M
549.9
179.8
195.8
61.9
987.4
Variance
%
(8.7)
0.7
(24.6)
9.9
(9.0)
2020
$M
362.6
130.5
61.3
(3.7)
550.7
2019
$M
424.9
131.7
96.3
(13.6)
639.3
Variance
%
(14.7)
(0.9)
(36.3)
72.8
(13.9)
28
COCA-COLA AMATIL ANNUAL REPORT 2020
ACQUISITION BY COCA-COLA
EUROPEAN PARTNERS
On 4 November 2020, we announced that Coca-Cola
Amatil had entered into an agreement with Coca-Cola
European Partners plc (CCEP) for the acquisition of all
of the issued shares held by independent Shareholders
pursuant to a Scheme of Arrangement (CCEP Scheme
of Arrangement or Scheme).
Under the agreement, independent Shareholders would receive
total cash consideration of $12.75 per share, less any final
dividend in respect of the half year ended 31 December 2020
(2H20) declared and paid to Shareholders before the date of
implementation of any Scheme. We also announced that CCEP
had entered into a separate agreement to acquire the Amatil
shares indirectly held by The Coca-Cola Company, conditional
upon implementation of the Scheme (CCEP/TCCC Transaction).
On 15 February 2021, we announced that Amatil had entered
into a revised agreement with CCEP that increases the total
cash consideration that independent Shareholders will receive
under the Scheme from $12.75 per share to $13.50 cash
per share. Consistent with the initial offer, the total cash
consideration would be reduced by the cash amount of the
final dividend in respect of 2H20. CCEP has declared that this
is its best and final offer. There were no changes to the
CCEP/TCCC Transaction.
Independent Shareholders will have the opportunity to
vote on the Scheme at the upcoming Amatil Scheme Meeting
scheduled to occur in mid-April 2021. A draft scheme booklet
containing relevant information on the Scheme is expected
to be submitted to ASIC on or before 22 February 2021 and
dispatched to independent Shareholders in mid-March 2021.
The Amatil Related Party Committee and Group Managing
Director, Alison Watkins, unanimously recommend that
independent Shareholders vote in favour of the Scheme,
in the absence of a superior proposal and subject to the
independent expert concluding (and continuing to conclude)
that the Scheme is fair and reasonable and in the best
interests of independent Shareholders.
Australian Foreign Investment Review Board approval for the
Scheme was obtained on 29 January 2021. However, the
Scheme remains subject to a number of other conditions
including New Zealand Overseas Investment Office approval,
Independent Shareholder approval and Australian court
approval.
Comments in this report relating to matters such as outlook,
priorities, strategy and risks should be read in the context of
Coca-Cola Amatil continuing to operate as an independent,
publicly-listed company. Furthermore, should Shareholders
vote in favour of the transaction proceeding, resulting in a
change of ownership, the approach and priority given to one or
more of these areas may differ from the way such matters are
presented in this section.
For the latest information related to the Scheme, refer to
the Chairman & Group Managing Director's Review on
pages 8 - 11.
AMATIL ENTERED INTO A REVISED
AGREEMENT WITH CCEP THAT
INCREASES THE TOTAL CASH
CONSIDERATION THAT INDEPENDENT
SHAREHOLDERS WILL RECEIVE UNDER
THE SCHEME FROM $12.75 PER SHARE
TO $13.50 CASH PER SHARE.
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GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATION
AUSTRALIA
OUR AUSTRALIAN BUSINESS PREPARES, SELLS AND DISTRIBUTES
29 NON-ALCOHOL BEVERAGE BRANDS AS WELL AS A PREMIUM
PORTFOLIO OF 59 ALCOHOLIC BRANDS TO APPROXIMATELY
100,000 CUSTOMERS.
OUR BUSINESS
In addition to the Coca-Cola family of products, our
non-alcohol portfolio includes Sprite, Fanta, Lift,
Kirks, Deep Spring, Mount Franklin, Pump, Powerade,
Barista Bros, Fuze Tea, Keri Juice Blenders, Monster
and Mother.
We are also a key player within the hot beverages market.
Grinders Coffee was established in 1962 in Melbourne and
acquired by Coca-Cola Amatil in 2005. Today it is one of
Australia’s premier coffee companies, combining innovation
with heritage to deliver award-winning results.
Separate to our non-alcohol portfolio, our premium alcohol
portfolio includes a mix of established and high-potential
emerging brands that we either own or sell and distribute in
conjunction with global brand partners such as Beam Suntory
and Molson Coors International. Some key brands include
Jim Beam, Canadian Club, Roku, Blue Moon, Molson Coors,
Miller Chill, Feral, Yenda and Rekorderlig Cider.
Headquartered in Sydney and with manufacturing and/or
distribution facilities in every state, our Australian business
has an unrivalled network and sales capability.
We directly employ approximately 3,100 people across
Australia, the majority of whom are in production, distribution,
service and sales. We operate 13 production facilities and
13 warehouses across Australia.
FINANCIAL SUMMARY
Trading revenue
– Trading revenue per unit case ($)
– Volume (million unit cases)1
EBITDA – ongoing
EBIT – ongoing
EBIT margin on trading revenue – ongoing (%)
ROCE – ongoing (%)
1 A unit case is the equivalent of twenty-four 8 US oz (237ml) serves or 5.678 litres.
30
2020
$M
2019
$M
Variance
%
2,936.9
3,044.6
9.05
324.5
502.3
362.6
12.3
21.5
8.99
338.7
549.9
424.9
14.0
27.4
(3.5)
0.7
(4.2)
(8.7)
(14.7)
(1.7) points
(5.9) points
COCA-COLA AMATIL ANNUAL REPORT 2020 B
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Market overview
The non-alcoholic ready to drink (NARTD) beverage industry
in Australia is at a mature stage, increasingly fragmented and
evolving rapidly, marked by consumers embracing new trends.
Current themes shaping the industry include:
— Consumer demand trends and opportunities: healthier
choices, value, convenience, innovation in packaging and
reformulation, technology, environmental and social
sustainability.
— Competition: intensified competition between beverage
companies, and development of private label brands by
retailers.
— Changing trade environment: relationships with retailers,
retail consolidation and growth, stronger non-traditional
channels, technology.
— Changing regulatory environment: container deposit
schemes.
Our route-to-market model
We sell and distribute our products directly to customers
through a segmented execution strategy that leverages
consumer and customer insights to get the right portfolio in
every outlet. We use a range of route-to-market models to
maximise profitability across brand, pack and channel
portfolios. In addition to our traditional sales teams, we utilise
online selling platforms. We offer an efficient and tailor-made
delivery service to our customers, working with logistics and
transport providers.
Our channel segmentation
We have implemented a more tailored approach to channel
segmentation to better recognise outlet characteristics and
drivers. The segmentation process considers several elements
including the ‘shopper mission’, customer type, consumer
type and product range, tailoring customer service packages
accordingly:
— Grocery
— Convenience & Petroleum
— On-The-Go
Ʌ State Immediate Consumption (state operational
accounts, e.g. Takeaway Foodservice, Bakery,
Mixed Business, Newsagents).
Ʌ Hotels, Restaurants & Cafés ‘HORECA’ (e.g. mainstream
cafés, specialty cafés, premium cafés, mainstream
restaurants, contemporary restaurants and premium
restaurants).
Ʌ National On Premise (e.g. national accounts
including Foodservice, Entertainment, Services
and Accommodation).
Ʌ Vending (e.g. Education, Retail and Public Transit
vending machines).
Ʌ Licensed (e.g. on premise, off premise and integrated
venues).
2020 PERFORMANCE
Overview
Our full year 2020 performance reflected the impact of
COVID-19 throughout the year as well as the impact of
bushfires in 1Q20.
Total volumes declined by 4.2 per cent while trading revenue
declined by 3.5 per cent with a more pronounced decline in
ongoing EBITDA which was down 8.7 per cent on the prior
year due to changes in channel and pack mix as consumer
behaviour responded to COVID-19 lockdown measures. Despite
these declines, Amatil was able to gain volume share in the
NARTD market1, with the Coca-Cola Trademark and Monster
brands performing particularly strongly.
Trading revenue per unit case was up 0.7 per cent versus last
year, comprised of a 1.3 per cent uplift due to CDS and a 0.6
per cent decline resulting from changes in channel and pack
mix. COVID-19 led to changes in the way people consumed
our products, with restrictions on consumer mobility,
leading to increased consumption at home and increased sales
via our grocery channels. The 2H20 result was a significant
improvement on 1H20, reflecting strong sales execution and
improved consumer mobility and confidence.
We have experienced significant volatility as a result of
COVID-19 restrictions and the subsequent impact on consumer
mobility. Notably, the On-The-Go channel was significantly
impacted during periods of severe lockdowns, where outlets
were temporarily closed or trading was restricted to takeaway
only while Grocery customers remained open. During these
periods, we also saw an increased demand for multi-serve PET
and multi-pack cans while demand for immediate consumption
offerings decreased. These channel and product shifts resulted
in margin compression in the first half, which improved in the
second half, albeit not yet returning to pre-COVID levels.
Australia delivered EBITDA of $502.3 million, down by 8.7 per
cent compared to last year and EBIT of $362.6 million, down
14.7 per cent compared to last year. The declines from trading
were partially offset by strong cost management initiatives
and the impact of AASB16 - Leases on distribution transport
leasing charges which positively impacted Australia’s
EBITDA result.
1
IRI Scan data, NARTD Australian Weighted Grocery (excluding Aldi and Campbells) and Australian Convenience scan MAT to 03 January 2021.
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GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATION
AUSTRALIA
(CONTINUED)
2020 PERFORMANCE (CONTINUED)
Performance also varied across States, reflecting subsequent
waves of COVID-19 and the ensuing lockdown measures
implemented in response. The hardest hit States were
Victoria, New South Wales and Queensland which were down
8.6 per cent, 7.1 per cent and 0.7 per cent respectively on
FY19. The best performing states were Western Australia and
South Australia, up 1.9 per cent and 1.3 per cent respectively.
In 1H20, we recognised the need to sharpen the focus of the
Accelerated Australian Growth Plan and strengthen the
Australian business through operating model and supply
chain efficiencies. The Australia Fighting Fit program
comprises several initiatives to unlock benefits within
Australia from 2021 and strengthen delivery against the
Accelerated Australian Growth Plan. Key components of this
program include the transformation of the Australia
organisational design, into a fit for purpose, channel-led and
customer focused organisation and optimisation of our small
stores route to market model through our OTG Profit to Serve
program. Streamlining our supply chain encompasses both
targeted initiatives and strategic investment to deliver
efficiency benefits and future proof our network.
CHANNEL
Grocery
The Grocery channel performed well in FY20 due to a shift to
at-home consumption throughout the year. Amatil leveraged
this opportunity through strong in-store execution,
particularly in large take home packs and multi-serve
offerings. The NARTD measured market1 delivered growth of
2.6 per cent in volume, compared to the prior year. Amatil
outperformed the measured market1 in volume, largely driven
by the Coca-Cola Trademark, with an outstanding result from
Coca-Cola No Sugar.
Convenience & Petroleum
The Convenience and Petroleum channel experienced
significant volatility throughout the year due to mobility
restrictions as a result of the bushfires in January and
February followed by the impacts of COVID-19 from March
onwards. This channel recovered quickly once COVID-19
restrictions eased, finishing the year with volume growth of
0.4 per cent versus last year. In FY20, the measured market2
declined in volume and grew in value. Amatil outperformed
the market2 in volume, delivering 1.2 points of share growth
driven by Coca-Cola Trademark and Water, and held flat
share in value.
CHANNEL
NARTD channel volume summary – million unit cases (MUC)
Grocery
Convenience & Petroleum
On-The-Go3
Total
CATEGORY
NARTD category volume summary – million unit cases (MUC)
Sparkling
Cola
Flavours / Adult
Total Sparkling
Frozen
Stills
Water4
Value added Dairy
Energy
Other Stills5
Total Stills
Total
2020
MUC
169.2
24.4
103.2
296.8
2020
MUC
160.9
43.0
203.9
20.4
46.1
2.2
9.6
14.6
72.5
2019
MUC
162.2
24.3
123.4
309.9
Variance
%
4.3
0.4
(16.4)
(4.2)
2019
MUC
Variance
%
157.9
48.0
205.9
24.5
52.8
2.4
8.9
15.4
79.5
1.9
(10.4)
(1.0)
(16.7)
(12.7)
(8.3)
7.9
(5.2)
(8.8)
(4.2)
1
2
3
4
5
IRI Scan data, NARTD Australian Weighted Grocery (excluding Aldi and Campbells) scan MAT to 03 January 2021.
IRI Scan data, NARTD Australian Convenience scan MAT to 03 January 2021.
Includes national on premise, state immediate consumption, HORECA, vending, Neverfail, licensed and other.
Includes Neverfail.
Includes juice, tea, sports and kombucha.
32
296.8
309.9
COCA-COLA AMATIL ANNUAL REPORT 2020 B
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On-The-Go
The On-The-Go channel has experienced significant volatility
in FY20, with clear impacts of COVID-19 restrictions on the
channel. Volumes in On-The-Go declined by 16.4 per cent in
FY20 due to the impact of venue closures and other COVID-19
restrictions. The full year result was a significant improvement
on the 1H20 decline of 21.0 per cent, driven by volume recovery
across higher margin packs which resulted in rate improvement.
The HORECA channel was severely impacted by the closure of
pubs, clubs and hotels, with a decline of 28.9 per cent in FY20.
Since restrictions were lifted, we have observed an
improvement in volume momentum and outlet count in the
State Immediate Consumption and National On Premise
channels. With the support of our Customer aggregator portal,
we have seen an acceleration in volumes sold through online
platforms as consumers adapt to the new trading environment.
NARTD
Amatil’s volumes in the NARTD market declined by 4.2 per
cent versus last year, largely due to the challenges of
bushfires and COVID-19.
The Coca-Cola Trademark performed strongly in FY20, up
1.9 per cent on pcp, led by volume growth of 10.2 per cent in
Coca-Cola No Sugar. Amatil delivered an impressive result
in the cola category in the second half, with volume growth
of 4.1 per cent in Coca-Cola Trademark and 13.1 per cent in
Coca-Cola No Sugar. Amatil’s regular cola products achieved
volume and value share gains in the measured market1, whilst
Amatil delivered volume share gains in the diets/lights cola
category, driven by Coca-Cola No Sugar.
Water volumes declined by 12.7 per cent reflecting the severe
impact of the reduction in consumer mobility during lockdown
periods. Despite this, sparkling water volume grew by 8.2 per
cent. Amatil delivered volume and value share gains1 in the
water category, largely driven by strong flavour innovation in
sparkling water.
The energy category performed strongly, with volume growth
of 7.9 per cent, led by Monster Energy growth of 31.8 per cent.
In the full year, the value-added dairy category saw volume
declines of 8.3 per cent, with Barista Bros declining, reflecting
impact of COVID-19 lockdown measures on Convenience &
Petroleum trading.
The flavours / adult categories experienced a 10.4 per cent
volume decline in FY20, partially offset by 11.3 per cent
volume growth in the Diets/Lights flavours segment.
The sports category recovered well as convenience and
petroleum outlets re-opened, delivering volume growth of
3.0 per cent in the year.
The frozen category volume decline was driven by a reduction
in foot traffic, particularly in venues such as cinemas and
stadiums.
Alcohol & Coffee
Alcohol continued to deliver strong results in 2020, achieving
volume growth of 4.2 per cent within a challenging trading
environment. Both the spirits and premix categories
performed well, delivering volume growth of 15.8 per cent
and 4.7 per cent respectively, reflecting increased at-home
consumption. Amatil grew spirits value share2 in the
categories of vodka, gin and scotch.
Our strong performance in spirits and premix was supported
by our brand partnership with Beam Suntory and execution of
key growth initiatives. Core brands of Jim Beam and Canadian
Club both delivered volume growth, with a focus on amplifying
No Sugar and High Alcohol by Volume offerings. Our core
initiatives closely leveraged data and insights to identify
sources of growth and drive a segmented execution approach.
We also continued to drive category premiumisation through
Makers Mark and Japanese spirits portfolio.
This strong performance in spirits and premix was slightly
offset by a slight decline in beer and cider of 1.6 per cent,
largely due to reduced on-premise activity during COVID-19
restrictions. Beer and cider momentum improved in 2H20,
achieving volume growth of 1.3 per cent driven by targeted
activity and innovation.
Coffee performance was impacted by our mix of on-the-go
business in catering, hospitality, clubs and travel. Despite
this, Amatil outperformed the Grocery Coffee market3,
delivering value share growth of 0.4 points in FY20, driven
by beans and capsules.
IRI Scan data, NARTD Australian Weighted Grocery (excluding Aldi and Campbells) and Australian Convenience scan MAT to 3 January 2021.
1
2 FBS share. Source: IRI, Australia Liquor, Period Ending: 3 January 2021.
3 Coffee. Source: IRI, Australia Grocery Weighted, Period Ending 3 January 2021.
33
GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATION
AUSTRALIA
(CONTINUED)
2021 PRIORITIES
Accelerated Australian Growth Plan
While the shape and pace of recovery from COVID-19 remains
uncertain, we recognise there will be key trends that remain
ongoing in the Australian market in the short-medium term.
In adapting to these prevailing conditions, we have refined
the Accelerated Australian Growth Plan (AGP) prioritisation
to maximise our performance across core categories and
channels, and to drive operational efficiency and flexibility.
This plan combines future proofing the portfolio with an
enhanced and effective route-to-market strategy while taking
a more tailored approach to segmentation. We have identified
opportunities to sharpen our focus, and to ensure we
prioritise the areas that have the greatest benefit to the
business.
From a category perspective, the focus of our Accelerated
Australian Growth Plan will be on the following areas:
— ‘Must Win’ categories are regular cola and flavours where
we are committed to strengthening our market-leader
position in cola and growing share in flavours. In regular
cola we seek to continue volume momentum as we deliver
strong in-store activation and impactful brand campaigns.
— ‘Double Down’ categories are no sugar cola & flavours,
sparkling water and energy. Our strategic approach aims to
increase our presence and accelerate market share in these
high growth categories through best in class execution and
innovation. No sugar cola and flavours are a key business
priority, as we continue to undertake targeted initiatives to
drive growth in these categories. During COVID-19, we
observed increased demand for diets/lights products
including our Coca-Cola No Sugar brand, and we anticipate
this trend to continue to 2021.
— ‘Stabilise’ targets the categories of still water, sports, tea
and ambient juice, all of which play an important role in our
portfolio. We are committed to maintaining our position in
the market within these categories.
— ‘Enter’ categories are value-added dairy and chilled juice,
and our focus is to drive targeted scale across our brands
within this category.
Applying the same categorisation to our distribution channels:
— ‘Must Win’ channels are those in which we can make the
greatest impact on our performance: grocery and
convenience and petroleum. Performance in these channels
is heightened in a COVID-19 environment, and our focus
remains on strong execution, enhanced by our in-house
merchandising services, shopper-led activity and
strengthening customer partnerships.
— ‘Double Down’ channels – state immediate consumption,
regional on-the-go and e-commerce – offer the greatest
potential for growth. We have seen strong recovery
momentum in the state immediate consumption channel
as COVID restrictions have eased and consumer mobility
returned, and we will continue to leverage our ‘Feet on the
Street’ initiative to accelerate growth in this channel.
— ‘Stabilise’ channels are those in which growth is expected
to be limited – national on premise, HORECA, licensed and
vending. We will bring greater focus on alignment and
understanding of our customers’ priorities in these channels.
Our Accelerated Australian Growth Plan is underpinned by
six enablers, refined in-line with the Australian operating
context and strengthened through execution under our
Fighting Fit program:
— Customer-Focused Organisation: Australia’s
organisational design is channel-led, and customer-focused,
operating in service of our frontline. Channel segmented
teams enhance customer experience and the ease of doing
business with Amatil. Our strategic reallocation of resources
has created competitive advantage and ensured the
Australian business is fit for purpose.
— Data Analytics and Insights: Our unrivalled access to data
and insights supports development of segmented execution
strategies across core categories and channels. Data
analytics also enhance our understanding of consumer
behaviour shifts and ability to respond with agility in a
COVID environment.
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WE REMAIN COMMITTED TO
PACKAGING SUSTAINABILITY AND
DRIVING ACHIEVEMENT OF OUR
SUGAR REDUCTION TARGETS.
— Streamlined Supply Chain: Driving production efficiency
and investment to optimise our logistics network is a key
enabler in strengthening the Australian business. Within
this program, key initiatives include portfolio simplification
through reduced SKU count, production line benchmarking
and infrastructure investment to optimise and future-proof
our network.
— Sustainability and Reduced Sugar: We remain committed
to packaging sustainability and driving achievement of our
sugar reduction targets, with strong plans in place to
continue the progress made across our portfolio.
— E-Commerce Capability: We have experienced an
acceleration of the e-commerce opportunity, with a step
change in demand of online grocery and beverages sold
through aggregators. Our share position in Grocery is strong
at 39.4 per cent, and we are overtrading in share1 when
compared to Bricks & Mortar at 34.0 per cent. Aggregators
are a critical enabler in On-The-Go, and our initiatives have
seen growth in meal-bundle execution from 13 per cent to
34 per cent in 2020, with plans to further increase our
presence on these platforms. The relaunch of our MyCCA
web and mobile platforms in February 2021 will enhance
customer experience for our small stores.
— OTG Profit to Serve: Our OTG Profit to Serve program
recognises the need to reset our route to market model
to drive profitability across small stores, through customer
service, logistics and equipment optimisation. Key initiatives
under this program include Product Quadrant Analysis core
range, adherence to minimum order quantities, balancing
delivering days and targeted cooler ranging or rental models.
1 eGrocery value share includes ‘delivery’ and ‘click & collect’ options.
Source: Coles Gateway (MAT to 26 Jan 2021) and Woolworths Quantium
(MAT to 21 Jan 2021).
35
GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATION
PACIFIC
NEW ZEALAND, FIJI & SAMOA
OUR PACIFIC BUSINESSES PREPARE, SELL AND DISTRIBUTE
36 NON-ALCOHOLIC BEVERAGE BRANDS TO APPROXIMATELY
22,000 RETAIL OUTLETS ACROSS THE NEW ZEALAND, FIJI
AND SAMOAN MARKETS.
OUR BUSINESS
The list of products distributed across all markets
includes the iconic Coca-Cola family of products,
as well as Sprite, Fanta, Lift, Schweppes, Powerade,
Mother, Monster, Deep Spring and FUZE Tea brands.
We also produce locally loved brands including L&P, Pump,
Kiwi Blue and Keri Juice in New Zealand and, Frubu and Jucy
in Fiji. Our alcohol portfolio includes recognised brands such
as Jim Beam, Makers Mark and Canadian Club in addition to
local craft beer brand Fortune Favours.
Additionally, our capability in the Pacific region extends to
brewing (Fiji and Samoa), distilling (Fiji), roasting, sales,
marketing and distribution.
With headquarters in Auckland, we directly employ
approximately 1,000 people across New Zealand. Our major
New Zealand manufacturing sites are in Auckland, Putararu
and Christchurch.
Our Fiji NARTD business is headquartered in Suva and
employs around 325 people. Our main manufacturing site is
in Suva with distribution warehouses at Lautoka and Labasa.
In Fiji and Samoa, our Paradise Beverages Business produces
market-leading beers such as Fiji Gold, Fiji Bitter, Vonu
Premium Lager, and Vailima, Paradise Beverages also
produces premium spirits, including the highly acclaimed
Rum Co. of Fiji range, for the local and export markets.
FINANCIAL SUMMARY
Trading revenue
– Trading revenue per unit case ($)
– Volume (million unit cases)
EBITDA – ongoing
EBIT – ongoing
EBIT margin on trading revenue – ongoing (%)
ROCE – ongoing (%)
2020
$M
812.7
9.80
82.9
181.0
130.5
16.1
24.3
2019
$M
809.2
9.52
85.0
179.8
131.7
Variance
%
Variance – constant
currency1 %
0.4
2.9
(2.5)
0.7
(0.9)
1.0
3.6
(2.5)
1.2
(0.4)
16.3
(0.2) points
(0.2) points
24.2
0.1 points
1 The constant currency basis is determined by applying 2019 foreign exchange rates to 2020 local currency results.
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THE NON-ALCOHOLIC READY-TO-DRINK
BEVERAGE INDUSTRY IN FIJI IS IN A
DEVELOPING STAGE AND HAS GROWN
AS CONSUMER DEMAND AND
PREFERENCES EXPAND AND EVOLVE.
Market overview
The non-alcoholic ready-to-drink beverage industry in
New Zealand is at a mature stage and evolving rapidly,
marked by consumers embracing new trends. Current
themes shaping the industry in New Zealand include:
— Consumer demand trends and opportunities: healthier
choices, value, convenience, innovation in packaging and
reformulation, technology and environmental and social
sustainability, growth in ‘boutique’ brands and
fragmentation of the market.
— Increasing competition: between beverage companies
and development of private label brands by retailers.
— Changing trade environment: relationship with retailers,
retail consolidation and growth, stronger non-traditional
channels, technology.
— Changing regulatory environment: container deposit
schemes.
The non-alcoholic ready-to-drink beverage industry in
Fiji is in a developing stage and has grown as consumer
demand and preferences expand and evolve.
Our route-to-market model
In New Zealand, we sell and distribute our products directly to
customers through a segmented execution strategy that
leverages consumer and customer insights to get the right
portfolio in every outlet. We use a range of route-to-market
models to maximise profitability across brand, pack and
channel portfolios. In addition to our traditional sales teams,
we also utilise online selling platforms. In Fiji we offer a
high-touch face-to-face customer service model.
Our channel segmentation
New Zealand
— Grocery
— On-The-Go
Ʌ Petroleum
Ʌ General Route & Banner
Ʌ Food Service
Ʌ RECA
Ʌ QSR
— Others
Fiji
— Grocery
— Convenience & Leisure
— Export
2020 PERFORMANCE
Overview
Despite COVID-19 lockdowns in 2Q20 in New Zealand and a
significant impact resulting from the lack of tourism in Fiji, the
Pacific segment recorded a volume decline of 2.5 per cent
and modest revenue growth of 0.4 per cent (1.0 per cent in
constant currency). EBITDA for the year was $181.0 million,
representing growth of 0.7 per cent on last year (1.2 per cent
in constant currency). The segment recorded an EBIT result
of $130.5 million, down 0.9 per cent on the prior year (0.4 per
cent in constant currency).
New Zealand
The true strength of the New Zealand business was
demonstrated by its FY20 result which delivered flat volumes
and revenue growth of 3.6 per cent versus the prior year
(4.3 per cent in constant currency). Strong revenue growth
management was key to offsetting the impact of On-The-Go
and Licensed customer outlet closures in April and May.
The business was able to deliver relatively stable EBIT
margins and to strengthen its market leadership position
in both sparkling and still beverage categories, delivering
NARTD volume share1 growth of 1.2 points and value share1
growth of 1.5 points.
The Grocery channel benefitted from the channel shift away
from On-The-Go and Petroleum outlets during lockdown
periods, delivering volume growth of 6.6 per cent for the full
year. Conversely, On-The-Go (excluding Petroleum) was
impacted by restricted trading, delivering a volume decline
of 7.3 per cent for the full year. Petroleum volume recovered
well as consumer mobility began to lift, resulting in volume
growth of 2.9 per cent versus the prior year. This was a
significant improvement from the ~50.0 per cent decline
reported in April 2020 during the lockdown period.
The business also observed a category mix shift, with
more demand for at-home consumption offerings such as
multi-serve PET and multi-pack cans, whilst demand for
immediate consumption offerings declined.
1 NARTD share of Grocery and Petroleum. Source: Nielsen MAT to 3 January 2021 scanned data.
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GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATION
PACIFIC
(CONTINUED)
WE ARE DRIVING THE FUNDAMENTALS
FOR SUSTAINABLE AND PROFITABLE
GROWTH BY ENSURING THAT WE OFFER
OUR CUSTOMERS AND CONSUMERS THE
WORLD’S LEADING BEVERAGE BRANDS
ACROSS A BROAD RANGE OF
CATEGORIES AND FORMATS.
2020 PERFORMANCE (CONTINUED)
2021 PRIORITIES
New Zealand
We are focused on maintaining our category leadership
position in sparkling and stills beverages, whilst looking to
secure further growth across the broader portfolio. A key
focus area remains the expansion of our customer base,
particularly across higher-margin small customers.
We are working closely with our brand partners to adapt plans
to the changing environment. We are driving the fundamentals
for sustainable and profitable growth by ensuring that we
offer our customers and consumers the world’s leading
beverage brands across a broad range of categories and
formats.
Fiji
Due to the impact of COVID-19 and its expected restriction on
tourism, we anticipate Fiji’s economy to remain challenged in
2021, or until international travel restrictions are eased. Within
this environment, we will continue to tightly manage our cost
base, focus on our core range and channels, increase our
presence in other Pacific Island territories and enhance
our competitive position by focusing our customer and
stakeholder relationships.
Again, Coca-Cola No Sugar was the stand-out performer,
with double-digit volume and revenue growth versus the prior
year. Classic Coca-Cola delivered modest revenue growth
versus the prior comparative period, demonstrating the
strength and resilience of the Coca-Cola Trademark brands.
Energy also delivered a strong result in FY20, with volume
and revenue growth versus the prior year.
Alcohol delivered an impressive result, with volume growth
and double-digit revenue growth versus the prior year.
Reflecting a strong recovery from the COVID-19 pandemic, the
New Zealand business decided to repay the NZ $7.2 million
government wage subsidy received in 1H20. As a result, 2H20
EBIT includes the reversal of this subsidy such that it has no
impact on the full year trading result. On a normalised basis
(removal of the receipt and subsequent return of the subsidy
from trading in each half), the Pacific segment EBIT declined
19.3 per cent in 1H20 and grew 14.5 per cent in 2H20 against
the respective prior periods. The strong underlying 2H20
result also includes two additional trading days and a
favourable comparative, following price increases in 3Q19.
Fiji & Samoa
Coca-Cola Fiji and Paradise Beverages both reported declines
in volume, revenue and EBIT due to the adverse impacts of
COVID-19 related international travel restrictions on the Fijian
economy. Paradise Beverages’ volume performance in 2H20
improved considerably as a result of the alcohol excise
reduction announced in July 2020.
Impairment
In light of the adverse impact of COVID-19 on trading
performance and the prescribed approach to assessing
carrying values under the accounting standards, Amatil
incurred a non-cash impairment of $16.8 million (post tax,
pre non-controlling interests) of the Paradise Beverages
Fijian and Samoan businesses in 1H20. The impairment was
a non-cash accounting adjustment and classified as a
non-trading item in our financial statements, and we remain
very confident about the long-term prospects for the
Paradise Beverages Fijian and Samoan businesses.
38
COCA-COLA AMATIL ANNUAL REPORT 2020 New Zealand
The New Zealand government is currently considering the
scheme design. The date expected for the implementation
of the scheme is yet to be determined.
AUSTRALIA AND NEW ZEALAND CONTAINER DEPOSIT SCHEMES
Australia
The New South Wales container deposit scheme commenced
on 1 December 2017.
The Australian Capital Territory container deposit scheme
began operating on 30 June 2018.
From 3 February 2020 we increased our Container Deposit
Scheme charge in NSW and the Australian Capital Territory
from 11.82 cents (excluding GST) to 12.82 cents (excluding
GST), due to rising cost base for the NSW container deposit
scheme as the scheme matures.
The Queensland container refund scheme commenced
on 1 November 2018 with the charge per eligible container
currently set at 12.73 cents (excluding GST).
The Western Australian container deposit scheme
commenced on 1 October 2020 with the charge per eligible
container currently set at 11.65 cents (excluding GST).
The Tasmanian container deposit scheme is anticipated
to be rolled out by 2022.
The Victorian container deposit scheme is anticipated
to be rolled out by 2023.
Consistent with our sustainability goals we will continue
to play an active role in the operation of container deposit
schemes and engage with governments and the industry
to continually monitor the impact of container deposit
schemes on our business.
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GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATION
INDONESIA &
PAPUA NEW
GUINEA
OUR INDONESIA & PAPUA NEW GUINEA BUSINESSES PREPARE, SELL, DISTRIBUTE
AND MARKET NON-ALCOHOLIC READY-TO-DRINK PRODUCTS TO HUNDREDS OF
THOUSANDS OF MODERN AND TRADITIONAL TRADE OUTLETS ACROSS THE TWO
REGIONS AS WELL AS SELL, DISTRIBUTE AND MARKET COFFEE MACHINES, CAPSULES
AND BEANS IN INDONESIA.
OUR BUSINESS
In addition to the iconic Coca-Cola family of products,
our portfolio includes Sprite, Fanta, Minute Maid,
Nutriboost, Aquarius and Grinders Coffee. In each
country we also produce locally loved brands including
Frestea and Ades in Indonesia and BU in Papua New
Guinea.
In Indonesia, we operate eight bottling facilities in Bekasi
(two locations), Sumedang, Medan, Lampung, Semarang,
Pasuruan and Mengwi – Bali, two preform facilities in Bekasi
and Pasuran, and 14 distribution warehouses across the
country. We employ a total workforce of around 5,500
full-time employees and around 2,800 contractors and
distribute over a billion litres of refreshing drinks to outlets
across the nation.
FINANCIAL SUMMARY
Trading revenue
– Trading revenue per unit case ($)
– Volume (million unit cases)
EBITDA – ongoing
EBIT – ongoing
EBIT margin on trading revenue – ongoing (%)
ROCE – ongoing (%)
We directly serve approximately 460,000 customers and
indirectly distribute to approximately 1.6 million customers
through a wholesaler network.
Coca-Cola Amatil and The Coca-Cola Company jointly
own the Coca-Cola bottling operations in Indonesia
(‘PT Coca-Cola Bottling Indonesia’ or ‘CCBI’), 70.6 per cent
and 29.4 per cent respectively.
Our Papua New Guinea Business employs around 700 people
and generates employment for workers in related industries
such as transport, sea freight, raw material supply,
consumables, machinery and equipment services. We operate
two bottling facilities in Port Moresby and Lae and five
distribution warehouses across the country. Our range of
products is offered through a network of approximately
13,000 customers in various formats and spread around
the 22 provinces of the country.
2020
$M
955.5
4.55
210.2
147.6
61.3
6.4
8.3
2019
$M
Variance
%
Variance – constant
currency1 %
1,165.4
4.65
250.7
195.8
96.3
(18.0)
(2.2)
(16.2)
(24.6)
(36.3)
(17.0)
(1.1)
(16.2)
(22.7)
(32.6)
8.3
(1.9) points
(1.6) points
11.6
(3.3) points
1 The constant currency basis is determined by applying 2019 foreign exchange rates to 2020 local currency results.
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2020 PERFORMANCE
The Indonesia and Papua New Guinea segment experienced
challenging trading conditions in FY20, with volumes down
16.2 per cent and revenue down 18.0 per cent on pcp (17.0 per
cent on a constant currency basis). Ongoing EBIT was down
36.3 per cent (32.6 per cent on a constant currency basis)
reflecting an EBIT margin decline of 1.9 points for the full
year (1.6 points on a constant currency basis).
Indonesia
Rising COVID-19 infection rates and challenging
macroeconomic conditions impacted the performance
of the Indonesian business in FY20.
Indonesia volume and revenue declined double digits in
FY20 due to the impacts of the pandemic, with the most
severe lockdown period coinciding with the Festive period,
Indonesia’s most important trading period. Volume declined
by 15.0 per cent in the Traditional Trade channel and 25.1 per
cent in the Modern Trade channel as a result of a reduction
in consumer mobility across the country.
Despite the challenging macroeconomic conditions and the
impact of COVID-19 restrictions, the Indonesian business
delivered positive EBIT and a strong cash flow result for the
year, enabled by a focus on tight cost control and operational
efficiencies.
Market overview
The non-alcoholic ready-to-drink beverage industry in
Indonesia offers considerable prospects for growth and we
believe it will become a growth engine for Coca-Cola Amatil.
Our vision for the region is underpinned by the country’s
significant long-term growth potential and favourable
demographics. Current themes shaping the industry in
Indonesia include:
— Strong growth potential: Indonesia is forecast to be the
world’s fourth-largest economy by 2050; nominal gross
domestic product per capita has increased approximately
11 per cent per annum since 2005.
— Demographics: A young population.
— Growing affluence: there is a growing middle class.
Middle-class personal consumption has grown 12 per cent
per annum since 2002 and now represents close to half of
all household consumption in Indonesia1.
— Increasing competition: market is fragmented with many
players, many of whom are single-category focused with
additional minor but growing plays in other categories.
— Consumer spending: short-term challenges with subdued
consumer spending in food and commercial beverages.
The non-alcoholic ready-to-drink beverage industry in
Papua New Guinea is in a developing stage and has grown
as consumer demand and preferences expand and evolve.
Our route-to-market model
In Indonesia, we follow a two-fold distribution strategy that
has generated significant improvements in effectiveness and
efficiency in our route-to-market execution. In addition to our
own distribution network, we have established a network of
Coca-Cola Official Distributors across Indonesia. These
distributors offer better capability to execute the ‘last mile’
delivery significantly increasing our customer reach while
allowing us to maintain the relationships with our customers
securing one of our strongest competitive advantages. We
also have a large local sales team, segmented into the
different market channels.
In Papua New Guinea, we have made significant progress on
our route-to-market strategy as we build a distributor model,
utilising managed third-party partners, in addition to
expanding our own distribution network. A dedicated sales
team and activation strategy has been put in place to manage
our modern trade and key accounts.
Our channel segmentation
Indonesia
Papua New Guinea
— Modern trade:
Hypermarkets,
Supermarkets, Minimarkets
— Modern Trade/Key accounts
(Supermarkets and Mini
Markets)
— Traditional trade: Provision,
Traditional Food Service,
Kiosks, Eating & Drinking,
Education and Wholesalers
— Traditional Informal Ice Box
Vending
— Kaibars (Eating & Drinking)
1 World Bank publication January 2020. ‘Aspiring Indonesia: Expanding the Middle Class’.
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INDONESIA & PAPUA NEW GUINEA
(CONTINUED)
2020 PERFORMANCE (CONTINUED)
Whilst the overall NARTD market1 contracted by 20.4 per cent
in the year, Amatil performed slightly ahead of the overall
market1. Pleasingly the total Sparkling market2 grew as a
portion of the total NARTD market1, with Amatil delivering
sparkling volume share gains of 3.3 points2.
In the Juice market, the Minute Maid Pulpy brand gained
1.7 points in volume share2 following the price reset,
rebranding and new flavours implemented in the first quarter.
During a year of significant volatility, we leveraged the
flexibility of our route to market model to capitalise on the
rapid market changes as demonstrated by our resilient
performance in the Provision channel which benefitted
from consumers shopping in their local areas. Indonesia also
made a significant effort to manage costs in its supply chain
function, which resulted in the reduction of production and
delivery costs despite efficiency losses from lower volume.
Impairment
In light of the adverse impact of COVID-19 on trading
performance and the prescribed approach to assessing
carrying values under the accounting standards, Amatil
incurred a non-cash impairment of $143.4 million (post tax,
pre non-controlling interests) of the Indonesia business in
1H20. The impairment was a non-cash accounting adjustment
and classified as a non-trading item in our financial
statements, and we remain very confident about the
long-term prospects for the Indonesian business.
Papua New Guinea
As a result of the COVID-19 pandemic, Papua New Guinea
faced challenging trading conditions in the year. The business
delivered modest volume and revenue declines in the full year.
The strength of Amatil’s position in that market however
enabled it to trade consistently throughout much of the year
and to compete effectively albeit with some impact on pricing.
Of note in this market during the year was the construction of
a new warehouse and the commencement of the installation
of an additional can line, both of which will strengthen the
business’ position in this market.
1 NARTD data. Source: Nielsen – December 2020.
2 Sparkling and Juice data. Source: Nielsen – December 2020.
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2021 PRIORITIES
Indonesia
In light of the challenges in the operating environment posed
by the COVID-19 pandemic, we intensified our focus on the
areas we can control.
Given the importance of Festive in Indonesia, the business
will be focused on driving sales during the all-important
festive period. In particular, the business will focus on driving
availability of affordable offerings, building on e-commerce
capabilities, promoting the at-home consumption occasion
through our multi-serve range and focusing on segmented
execution across the Modern and Traditional trades.
Improving affordability across our portfolio and the availability
of the affordability packs is a key priority for the business,
particularly in the context of the challenging macro-economic
conditions. Examples of key initiatives include: continue to
drive availability of the 250ml Sparkling pack to continue
recruiting consumers to the category; continued expansion of
the more affordable Minute Maid Pulpy pack, to build on the
share gains of 1.7 points achieved since its relaunch in the
first quarter; continue to drive availability of Frestea Small
Affordable packs through bundling and price promotions.
Furthermore, we will continue to build channel relevance
through segmented route-to-market execution.
Finally, we will take advantage of the market opportunities
presented by the pandemic. In response to the increased
At-Home occasions we will expand availability of our multi-
serve range (Sparkling, Tea, Juice and Water) to build
momentum for the festive period, and we will support our
multi-serve packs with a strong integrated media approach
in order to connect with at-home consumption occasions.
In order to capitalise on the accelerated growth of
e-Commerce we will increase our presence in the
e-Commerce channels by developing our existing B2B
partner relationships and capitalising on partnerships
with key Food Aggregators to incorporate CCODs and
wholesalers into their distribution networks.
Papua New Guinea
The business will continue to increase the efficiency and
effectiveness of how it manages its routes to market, with the
aim to gain more visibility on order placement and execution
to drive sales. It also remains focused on productivity and
efficiency improvements in manufacturing.
While we were able to reduce the cash balance in PNG,
foreign currency remains limited which restricts our ability
to repatriate cash out of this market.
COCA-COLA AMATIL ANNUAL REPORT 2020 B
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S
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CORPORATE
& SERVICES
Our Corporate & Services segment includes a variety of activities, including the Group corporate office functions
and ancillary services such as property and equipment servicing.
Since 2017, Amatil’s Property Division has taken a Group-wide approach to asset management of owned and leased properties,
leading to the sale of sites and facilities that were surplus to requirements, as well as the 2017 sale and leaseback of the
Company’s flagship Richlands site.
The Division has also rolled out a new property management system to provide increased controls and insights across the
portfolio; commenced a review of the property footprint to develop long-term plans for all manufacturing sites; and overhauled
facilities management processes.
FINANCIAL SUMMARY
Trading revenue1
Other revenue
Internal revenue2
Total revenue
Services costs3
Group office costs
EBITDA – ongoing
EBIT – ongoing
ROCE – ongoing (%)
2020
$M
57.0
9.4
123.1
189.5
(78.7)
(42.8)
68.0
(3.7)
(0.9)
2019
$M
51.4
11.9
134.2
197.5
(77.2)
(58.4)
61.9
(13.6)
Variance
%
10.9
(21.0)
(8.3)
(4.1)
1.9
(26.7)
9.9
(72.8)
(2.6)
1.7 points
1 Represents revenue mostly from our recycling business in South Australia.
2 Revenue from the provision of support services to the other businesses. This revenue is eliminated on consolidation to produce the Group’s
financial statements.
3 Represents costs associated with our packaging services and South Australian recycling businesses.
2020 PERFORMANCE
Trading revenue increased due to an increase in external
preform sales and higher revenue from the South Australian
recycling business. Reduction in Other revenue reflects the
decline in coal mining royalties received in 2020.
EBIT loss of $3.7 million improved compared to last year due
to reduced Group Office costs as a result of cost saving
initiatives undertaken in response to COVID-19.
43
GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATION
CORPORATE GOVERNANCE
Coca-Cola Amatil’s approach to corporate governance
goes beyond compliance. Both the Board and all levels of
Management are fully committed to achieving the highest
standards of corporate governance and business conduct.
We see this commitment as fundamental to our vision of
creating millions of moments of happiness and possibilities
every day.
CORPORATE GOVERNANCE STATEMENT
Under ASX Listing Rule 4.10.3, Coca-Cola Amatil is required
to benchmark its corporate governance practices against the
ASX Corporate Governance Council’s Corporate Governance
Principles and Recommendations, 4th edition
(ASX Governance Recommendations).
Coca-Cola Amatil confirms that it has complied with the
ASX Governance Recommendations for the period 1 January
2020 to 31 December 2020, as outlined in our 2020 Corporate
Governance Statement and Appendix 4G, which can be found
at www.ccamatil.com/au/About-us/Corporate-governance.
The Corporate Governance Statement, together with its
accompanying Appendix 4G, has been approved by the Board
and lodged with the ASX.
COCA-COLA AMATIL’S CORPORATE GOVERNANCE FRAMEWORK
The diagram on page 45 illustrates our corporate governance
framework.
THE BOARD AND ITS ROLE
The Board represents and serves the interests of Coca-Cola
Amatil’s Shareholders and is ultimately responsible for
managing our business and affairs to the highest standards
of corporate governance and business conduct. The Board
also strives to protect and optimise Coca-Cola Amatil’s
performance and build sustainable value for all stakeholders,
according to its duties and obligations and within a framework
of prudent and effective controls that enable risks to be
assessed and managed.
The Board’s role and responsibilities, including those of its
Committees, are set out in our Board Charter, which can be
found at www.ccamatil.com/au/About-us/Corporate-
governance.
STRUCTURE AND COMPOSITION OF THE BOARD
Current Board members include one Executive Director
(the Group Managing Director), two Non-Executive Directors
(The Coca-Cola Company Nominee Directors) and five
Independent Non-Executive Directors. Details of their
qualifications and experience are set out on pages 46-47.
The Nominations Committee ensures the Board comprises
Directors who have the skills, experience, knowledge and
diversity needed to support our strategic objectives and fulfil
our legal and regulatory requirements.
The Board Skills Matrix (Skills Matrix) is an important tool in
this process and sets out the key skills and experience that
the Board looks for, together with the details of what each
Director brings to the Board. Each year, this Skills Matrix is
reviewed and amended as appropriate. Each Director then
undertakes a self-assessment against it to identify their skill
44
level against each required skill. These self-assessments are
consolidated and reviewed by the Board. The Board then
determines its position on each Director’s self-assessment
and identifies (a) any skill gaps or opportunities to be targeted
in future Board appointments and (b) professional
development initiatives for Directors.
The result of the FY2020 Skills Matrix review and assessment
process is set out in the Corporate Governance Statement.
PERFORMANCE EVALUATION PROCESS
The performance evaluation process for the Board, its
Committees, individual Directors and Key Management
Personnel (KMP) is set out in the Corporate Governance
Statement. Given their different roles and responsibilities,
Directors’ remuneration policies and practices differ from
those that apply to the Group Managing Director and KMP.
BOARD COMMITTEES
The Board has five standing Board Committees to help
discharge its responsibilities. These are the:
— Audit & Finance Committee;
— Nominations Committee;
— People Committee;
— Risk & Sustainability Committee; and
— Related Party Committee.
These Committees operate principally in a review or advisory
capacity, except in cases where the Board specifically confers
powers on a Committee. Each Committee has a charter,
detailing its purpose, responsibilities and membership criteria.
DIVERSITY AND INCLUSION
At Coca-Cola Amatil, we believe that the diversity of our
business, markets, customers and people is a critical factor
for our growth and ongoing success. Our strategy is built on
the foundation of a strong organisation – and one where we
celebrate the possibilities created by a vibrant, diverse and
inclusive workforce.
This broad approach allows us to build a team of people with
different backgrounds, opinions and experiences who bring
their differences to work every day. Our Diversity and
Inclusion strategy and principles aim to support our diversity
and scale, ensure our people feel engaged and valued, and
deliver business outcomes.
RISK FRAMEWORK
The Board is responsible for ensuring that there are adequate
systems and procedures in place to identify, assess, monitor
and manage risks. During the year, the Risk & Sustainability
Committee reviews reports by Management (and independent
advisers) and, where appropriate, makes recommendations as
to how the Board should respond to the material risks that
Coca-Cola Amatil faces in the markets in which it operates.
Other Committees (such as the Related Party Committee, the
Audit & Finance Committee and the People Committee)
review risk matters in more detail as required by their
respective Charters.
COCA-COLA AMATIL ANNUAL REPORT 2020 BOARD OF
DIRECTORS
Accountability and reporting
The Board delegates powers to the Group Managing Director for all
matters except those reserved for the Board or its Board Committees
INDEPENDENT
ASSURANCE
— Internal Audit
— External Auditors
— Legal &
Professional
Advice
g
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D
GROUP
COMPANY
SECRETARY
Accountability and reporting of
Corporate Governance and Board
related matters
BOARD COMMITTEES
Responsibility for the day-to-day operations
of Coca-Cola Amatil, including for
implementing approved corporate strategy
and business plans, is delegated to the Group
Managing Director who leads the Group
Leadership Team
GROUP
MANAGING
DIRECTOR
g
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p
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D
RELATED
PARTY
COMMITTEE
The purpose of this
Committee is to review
proposed material
transactions between
Coca-Cola Amatil and
its related parties,
including TCCC
PEOPLE
COMMITTEE
NOMINATIONS
COMMITTEE
AUDIT &
FINANCE
COMMITTEE
RISK &
SUSTAINABILITY
COMMITTEE
GROUP
LEADERSHIP
TEAM
Provides assurance on
remuneration components of
half year and full year financial
statements
Provides assurance on
risk components of
half year and full year
financial statements
Sets the direction and
translates our strategy into
clear expectations,
standards of performance
and behaviour for
their teams
The internal and external audit functions, which are separate
and independent of each other, provide an independent and
objective review of the way in which the Group assesses and
manages risk. To preserve this independence, the Group Head
of Risk, who is the head of the internal audit function, has
a direct reporting line to the Chairman of the Audit & Finance
Committee.
The Board’s Risk Management Policy formalises the Group’s
approach to the oversight and management of material
business risks. This policy is implemented through the
establishment of Board-approved risk appetite statements,
as well as a top-down and bottom-up approach to identifying,
assessing, monitoring and managing key risks across Coca-
Cola Amatil’s business units. The principles Coca-Cola Amatil
uses for assessing risk and the effectiveness of controls are
based on the International Standard ISO 31000:2018 Risk
Management – Principles and Guidelines.
Coca-Cola Amatil’s Risk Management Policy was updated
and approved by the Risk & Sustainability Committee in
May 2020.
COCA-COLA AMATIL POLICIES AND PRACTICES
The Coca-Cola Amatil Code of Conduct – ‘How We Do
Business’ (Our Code of Conduct) was updated and approved
by the Board in February 2021. It sets out the way in which
our Directors, employees, contractors, consultants and
third parties are required to conduct themselves every day.
The document articulates our high standards of business
conduct, built on our commitment to act fairly, morally
and lawfully with all stakeholders.
The main Group-level policies relevant to conduct can be
found at www.ccamatil.com/au/About-us/Corporate-
governance.
COMMUNICATIONS WITH SHAREHOLDERS
The rights of Coca-Cola Amatil’s Shareholders are detailed in
Coca-Cola Amatil’s Constitution. Coca-Cola Amatil also has
a Disclosure & Communications Policy, which requires
Coca-Cola Amatil to inform Shareholders about its strategic
objectives and major developments. To allow Shareholders to
effectively exercise these rights, the Board ensures Shareholder
communication is timely, relevant, useful and of high quality.
Coca-Cola Amatil communicates with Shareholders through
ASX announcements, Company publications such as the
Annual Report and the Sustainability Report, webcasting
analyst and media briefings, General Meetings, Coca-Cola
Amatil’s website and through our Investor Relations function.
45
THE VALUE WE CREATEPERFORMANCE GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS
BOARD OF DIRECTORS
ILANA RACHEL
ATLAS, AO
Chairman, Non-Executive
Director (Independent)
Joined the Board in February
2011: Chairman, Related Party
Committee and Nominations
Committee; and Member, People
Committee, Audit & Finance
Committee and Risk &
Sustainability Committee.
Skills and experience: Ms Atlas
has extensive financial and legal
experience and has held
executive and non-executive
roles across many industry
sectors. From 2003 to 2010, she
held senior executive roles within
Westpac Banking Corporation,
including Group Secretary and
General Counsel; and Group
Executive, People where she was
responsible for human resources,
corporate affairs and
sustainability.
Prior to working at Westpac
Banking Corporation, Ms Atlas
was a partner in law firm
Mallesons Stephen Jaques
(now known as King & Wood
Mallesons). In addition to her
practice in corporate law, she
held a number of management
roles in the firm including
Executive Partner, People and
Information, and Managing
Partner.
Degrees/qualifications:
Bachelor of Jurisprudence
(Honours) and Bachelor of Laws
(Honours) (The University of
Western Australia); and Masters
of Laws (The University
of Sydney).
Other listed company boards
in the past 3 years: Director,
Australia and New Zealand
Banking Group Limited; Director,
OneMarket Limited (resigned on
2 December 2019); Former
Director, Westfield Corporation
Limited (retired on 7 June 2018)
and Director, Origin Energy
Limited.
Government and community
involvement: Chairman, Jawun
Pty Ltd; Director, Paul Ramsay
Foundation; Director, Paul
Ramsay Holdings; and Panel
Member, Adara Partners.
Other listed company boards
in the past 3 years: Managing
Director, Virgin Australia
Holdings Limited.
Other boards: Director, Alinta
Energy Pty Ltd; and Director,
Brisbane Airport Corporation
Pty Ltd.
Government and community
involvement: Director of the
Art Gallery of NSW Board of
Trustees; and Director, Charlie
Teo Foundation.
MASSIMO
BORGHETTI, AO
Non-Executive Director
(Independent)
Joined the Board in December
2015: Chairman, People
Committee; and Member,
Audit & Finance Committee,
Related Party Committee
and Nominations Committee.
Skills and experience:
Mr Borghetti was the Chief
Executive Officer and Managing
Director of the Virgin Australia
Airline Group, from 2010 until
2019. He has over 40 years’
experience in aviation, which
also includes a long career
at Qantas.
ALISON MARY
WATKINS
Group Managing Director,
Executive Director
Appointed in March 2014
Skills and experience:
Ms Watkins joined Coca-Cola
Amatil Limited in March 2014 as
Group Managing Director. She
has extensive experience in the
food, beverage, retail and
financial industries including
holding the roles as Managing
Director of GrainCorp Limited
and partner at McKinsey &
Company earlier in her career.
Degrees/qualifications:
Bachelor of Commerce
(University of Tasmania); Fellow,
Australian Institute of Company
Directors; Fellow, Chartered
Accountants Australia and
New Zealand; and Senior Fellow,
Financial Services Institute
of Australasia.
Government and community
involvement: Director, Centre
for Independent Studies and the
Business Council of Australia;
Council Member, Technology
Investment Advisory Council,
and Member, Reserve Bank
of Australia Board.
46
JORGE GARDUÑO
CHAVERO
Non-Executive Director
(Nominee of TCCC)
Joined the Board in May 2018:
Member, Audit & Finance
Committee.
Skills and experience:
Mr Garduño is the President and
Representative Director
of the Japan and South Korea
Operating Unit of The Coca-Cola
Company.
Since 1992, Mr Garduño has
held a range of international
leadership roles for The
Coca-Cola Company across
Latin America, Europe and Asia.
These roles included
responsibility for Franchise
Leadership, Marketing, Key
Accounts, Commercial
Leadership, Planning and
Revenue Growth Management
for Coca-Cola de Mexico,
and subsequently as General
Manager of Coca-Cola
Colombia, the General Manager
of Coca-Cola Thailand and Laos,
then General Manager of
Coca-Cola Chile, then President
of Coca-Cola Iberia (with
responsibility for operations in
Spain, Portugal and Andorra),
and now as President and
Representative Director of
the Japan and South Korea
Operating Unit of The Coca-Cola
Japan Company.
Degrees/qualifications:
Bachelor of Arts (Business
Administration) and Masters
in Management from Tec de
Monterrey Mexico; and Masters
in Business Management for
Executives from the University
of Texas, Austin USA.
COCA-COLA AMATIL ANNUAL REPORT 2020 MARK GRAHAM
JOHNSON
Non-Executive Director
(Independent)
Joined the Board in December
2016: Chairman, Audit & Finance
Committee; and Member, Risk
& Sustainability Committee,
People Committee, Related
Party Committee and
Nominations Committee;
Commissioner, Coca-Cola
Bottling Indonesia and
Coca-Cola Distribution
Indonesia.
Skills and experience:
Mr Johnson was CEO and
Senior Partner of
PricewaterhouseCoopers
(PwC) from July 2008 to June
2012 and held other senior
positions (both internationally
and in Australia) during his
30-year career at PwC, serving
major clients in areas of audit,
accounting, due diligence, fund
raising and risk and governance.
Mark is an experienced company
director in the listed, private
and not-for-profit sectors.
Degrees/qualifications:
Bachelor of Commerce
(The University of New South
Wales); Fellow, Chartered
Accountants Australia and
New Zealand; CPA Australia;
and Fellow, Australian Institute
of Company Directors.
Other listed company boards
in the past 3 years: Chairman,
G8 Education Limited, Westfield
Corporation Limited (retired on
7 June 2018); Director, Goodman
Limited; and Director, Goodman
Funds Management Limited.
Other boards: Director, Aurecon
Group Pty Ltd; and Corrs
Chambers Westgarth.
Government and community
involvement: Chairman,
Hospitals Contribution Fund
of Australia (HCF) and Director,
The Smith Family; and Council
Member, Council of the
University of New South Wales
(UNSW Sydney).
PAUL DOMINIC
O’SULLIVAN
Non-Executive Director
(Independent)
Joined the Board in March
2017: Chairman, Risk &
Sustainability Committee;
and Member, Audit &
Finance Committee, People
Committee and Related
Party Committee.
Skills and experience:
Mr O’Sullivan has extensive
experience in the
telecommunications, banking
and oil & gas sectors, both in
Australia and overseas. He has
held senior executive roles with
Singapore Telecommunications
(Singtel) and was previously the
CEO of Optus. Mr O’Sullivan has
also held management roles
with the Colonial Group and the
Royal Dutch Shell Group in
Canada, the Middle East,
Australia and the United
Kingdom. He is a member of the
Board of Commissioners of
Telkomsel, one of Indonesia’s
largest mobile communications
companies and a former
Director of Bharti Airtel, one of
India’s leading mobile providers.
Degrees/qualifications:
Bachelor of Arts (Economics)
(Trinity College, University of
Dublin); and Graduate of the
Advanced Management
Program (Harvard University).
Other listed company boards
in the past 3 years: Chairman,
Australia and New Zealand
Banking Group Limited; and
Director, Healthscope Limited
(retired on 6 June 2019).
Other boards: Chairman,
Singtel Optus Pty Limited;
Chairman, Western Sydney
Airport Corporation; and Board
of Commissioners, Telkomsel
(Indonesia).
Government and community
involvement: Director,
St George & Sutherland Medical
Research Foundation; and
Director, St. Vincent’s Health
Australia.
KRISHNAKUMAR
THIRUMALAI
Non-Executive Director
(Nominee of TCCC)
Joined the Board in March
2014: Member, Risk &
Sustainability Committee
and People Committee.
Skills and experience:
Mr Thirumalai is the Chairman
of Coca-Cola India. He has
significant experience across
developing and emerging
markets in marketing, sales,
distribution and supply chain,
and more than 30 years’
experience in the fast moving
consumer goods (FMCG) sector,
handling strategy, sales,
marketing and general
management. He was the
Region Director for the India,
Bangladesh, Sri Lanka and
Nepal bottling operations of
The Coca-Cola Company until
April 2017.
Degrees/qualifications:
Bachelor of Engineering
(Electronics and Communication
(Madras University); MBA (Indian
Institute of Management);
and Advanced Management
Program (Wharton Business
School).
Other boards: Chairman,
Coca-Cola (India) Pvt. Ltd; and
Director, KSL Media Limited.
PENELOPE ANN WINN
Non-Executive Director
(Independent)
Joined the Board in December
2019: Member, Risk &
Sustainability Committee and
Related Party Committee.
Skills and experience:
Ms Winn has over 30 years
of experience in retail with a
focus on supply chain, digital
strategy and business
transformation in senior
management roles in Australia
and overseas. These roles
included Director Group Retail
Services with Woolworths
Limited where she was
responsible for leading the
Logistics and Information
Technology divisions, Online
Retailing and the Customer
Engagement teams across the
organisation; Executive Director
of Merchandise and Logistics for
Myer Limited; and Director of
Strategy and Change for
ASDA Walmart UK.
Degrees/qualifications:
Bachelor of Commerce
degree (Australian National
University), a Masters of
Business Administration
(University of Technology
Sydney) and is a graduate
of the Australian Institute
of Company Directors.
Other listed company boards
in the past 3 years: Director,
Ampol Limited; Director,
CSR Limited; Director,
Goodman Group Limited;
and Director, Goodman
Funds Management Limited.
Other boards:. Director,
O’Connell Street Associates
Proprietary Ltd.
Government and community
involvement: Member, Chief
Executive Women; Mentor, Many
Rivers Microfinance; Mentor,
Kilfinan Foundation; and
Director, ANU Foundation.
47
THE VALUE WE CREATEPERFORMANCE GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS GROUP LEADERSHIP TEAM
Victorian President and National
Board Member of the Australian
Institute of Company Directors.
Alison holds a Bachelor of
Commerce (University of
Tasmania), is a Fellow
of the Institute of Chartered
Accountants, the Financial
Services Institute of Australasia,
and the AICD.
Alison is a member of the
Reserve Bank of Australia Board,
The Centre for Independent
Studies and the Business
Council of Australia.
PETER WEST
Managing Director, Australia
Appointed in April 2018
Peter joined Coca-Cola Amatil in
April 2018 from Lion Pty Ltd
where he was Managing Director
of the Dairy and Drinks
business. With more than
30 years of industry experience,
Peter has held several senior
roles at Mars Confectionery and
Arnott’s Biscuits Ltd including
Regional President for
Continental Europe for Mars
Chocolate. He has a deep
understanding of Australian and
international FMCG, and a
proven ability to work with
customers and partners to drive
growth and deliver results.
Peter holds a Bachelor of
Business (Marketing) from
Monash University Caulfield.
ALISON WATKINS
Group Managing Director
Appointed in March 2014
Prior to joining Coca-Cola Amatil,
Alison’s roles included Chief
Executive Officer (CEO) of
agribusiness GrainCorp Limited,
CEO of Berri Limited, the market
leader in Australian juice, and
Managing Director of Regional
Banking at ANZ. Alison spent 10
years at McKinsey & Company
from 1989 to 1999 and became a
partner of the Firm in 1996 before
moving to ANZ as Group General
Manager Strategy, reporting to
the CEO. She has been a
non-executive director of
Australia and New Zealand
Banking Group Limited,
Woolworths Limited and Just
Group Limited; and is a former
KADIR GUNDUZ
Managing Director,
Indonesia & PNG
Appointed in October 2013
Kadir has extensive experience
with the Coca-Cola System
having started his 30-plus year
career with the bottler in his
home country of Turkey. Most
recently, as President and
CEO of Aujan Coca-Cola
Beverages Co. based in Dubai,
Kadir delivered impressive
market and financial results
through both expansion and
organic growth in a number of
markets. Previously Kadir spent
almost three years with
Coca-Cola Hellenic Bottling
Company in Russia as Regional
48
Director for South and Central
Russia, followed by seven years
with Coca-Cola South African
Bottling Company in several
senior leadership positions,
including Country Manager –
Tanzania, Regional Manager –
SWA/Cambodia & Laos, and
Division Director – Asia covering
Vietnam, Cambodia, Laos, Nepal
and Sri Lanka.
Kadir holds a Bachelor degree
in Political Science/Public
Management from Istanbul
University.
As announced on 16 February
2021, Jorge Escudero will
succeed Kadir in the role of
Managing Director, Indonesia
& PNG, effective 1 July 2021.
CHRIS LITCHFIELD
Managing Director,
Pacific
Appointed in July 2014
Chris has 29 years’ experience
with Coca-Cola Amatil. Beginning
his career as a graduate, Chris
held a number of sales and
commercial roles before his
appointment to General Manager
of Sales and Marketing in 2007, a
role he held until 2014. Chris has a
proven track record of strong
business leadership, customer
management, new business
acquisition and commercial
planning. As Managing Director,
Pacific, Chris has led a highly
engaged workforce across
New Zealand, Fiji and Samoa,
achieving the Kincentric Best
Employer (New Zealand)
accreditation for the fifth
consecutive year.
Chris holds a Bachelor of
Commerce from Canterbury
University.
COCA-COLA AMATIL ANNUAL REPORT 2020 BETTY IVANOFF
Group Director,
Legal & Corporate Affairs
Appointed in April 2016
Betty joined Coca-Cola Amatil
Limited in April 2016 as a
member of our executive team,
and leads Amatil’s legal, public
affairs and communications
portfolios.
Prior to joining Coca-Cola
Amatil, Betty was the Group
General Counsel and Company
Secretary for GrainCorp Limited
from 2008 and built the first
legal and compliance team for
the company, leading them
through a period of vast growth
and diversity, spanning many
geographies. Betty previously
held internal corporate counsel
positions with companies
including CSR Limited, Walter
Constructions and Sinclair
Knight Merz.
Betty is the Chairman of
Paradise Beverages (listed on
the Pacific Stock Exchange),
holds directorships with
Women’s Community Shelters
and the UTS Law Advisory
Board, and is a member of the
GC100 (Australian Corporate
Counsel) Executive Committee.
Betty holds a Bachelor of Laws
degree from the University of
Technology, Sydney and has
also completed the Oxford Sa d
Business School Advanced
Management & Leadership
Program.
GREG BARNES
Group Chief
Financial Officer
Appointed in June 2020
Greg joined Coca-Cola Amatil as
Group Chief Financial Officer
(CFO) in June 2020, as a member
of the executive leading the
finance teams across Coca-Cola
Amatil’s markets and operations.
In addition to leading the
Group’s finance functions, Greg
oversees the Group’s Strategy
and M&A, Procurement,
Sustainability and Investor
Relations activities.
Prior to joining Coca-Cola
Amatil, Greg was CFO at Nine
Entertainment (Nine) from 2016
and as a member of the
executive team played a leading
role in Nine’s acquisition of
Fairfax, creating a $3 billion
combined entity. Prior to that,
Greg was CFO at CSR Limited,
and has held Asia Pacific
finance roles with Dyno Nobel,
and various international roles
with De La Rue plc.
Greg holds a Bachelor of
Commerce from the University
of Newcastle and an MBA from
Macquarie Graduate School of
Management. He is a Member
of the Institute of Chartered
Accountants A/NZ and a
Graduate of the Australian
Institute of Company Directors.
lead PMO for major company
transformation initiatives in
Indonesia. Since then, Debbie
has led the introduction and
implementation of IT solutions
covering master data, Enterprise
Resource Planning, business
intelligence and mobile
computing.
Debbie holds a Bachelor of
Industrial Engineering from
Trisakti University and she is
a member of The Coca-Cola
System IT Board, and the
Steering Committee for the
iCIO Community in Indonesia.
DEBBIE NOVA
Group Chief
Information Officer
Appointed in January 2018
Debbie is responsible for the
IT strategy across Coca-Cola
Amatil, along with driving digital
transformation and leveraging
innovation and new technologies
to enable further business
growth.
Debbie has more than 20 years’
experience in the Coca-Cola
system, joining Coca-Cola
Amatil in October 1996 during
the deployment of sales and
distribution systems in
Indonesia. In November 2009
she joined the Indonesia
Executive Team as Information
Technology Director. In addition
to her Information Technology
role, in October 2015 Debbie
was appointed to lead the HR
function for Indonesia and was
KATE MASON
Group Director,
People & Culture
Appointed in March 2018
Kate joined Coca-Cola Amatil
in 2014 as Human Resources
Director and became Chief
Transformation Officer for
the Australian business in
December 2016. In her current
role as Group Director People
and Culture, Kate leads a
regional team of functional
experts across all aspects of
People and Culture, Safety and
Business Resilience.
Prior to Coca-Cola Amatil, Kate
worked offshore for many years
holding leadership roles in
Singapore, London, New York
and Zurich in companies such
as Austrade, TST Learning,
Credit Suisse and Amcor.
Kate is a Board Member of
WithYouWithMe and Good Stuff
Global, and is a former President
of International Women’s Forum
in Australia and Board member
for a variety of not-for-profit
organisations both here in
Australia and internationally.
Kate holds a Bachelor of Arts
Degree (Administration), is a
Graduate of the Australian
Institute of Company Directors
and a Fellow of the Australian
Human Resources Institute.
49
THE VALUE WE CREATEPERFORMANCE GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS BUSINESS AND
SUSTAINABILITY RISKS
Coca-Cola Amatil is exposed to a range of market,
financial, operational, and socio-political risks that
could have an adverse effect on the Group’s future
financial prospects.
The nature and potential impact of these risks can change over
time and vary in degree with what Coca-Cola Amatil can control.
Coca-Cola Amatil has a risk management framework in place
with internal control systems to mitigate these key business risks.
For further information on Coca-Cola Amatil Limited’s risk
management framework, refer to our Corporate Governance
Statement at www.ccamatil.com. This includes discussion of
Coca-Cola Amatil Limited’s approach under Principle 7 of the
ASX Corporate Governance Council’s Corporate Governance
Principles and Recommendations, 4th edition, being
‘Recognise and Manage Risk’.
In the medium to longer term, the direct effects of COVID-19 and
measures introduced by the governments in all of the countries in
which Amatil operates to limit the spread of COVID-19 may have a
materially negative impact on economic growth in these
countries, including the potential for further significant impacts
on capital markets, share prices and the availability of finance.
This is particularly the case in Indonesia given the duration and
severity of the impact of the COVID-19 pandemic to date. It is
expected that the economic consequences of the ongoing
COVID-19 pandemic are unlikely to be fully understood for
some time. For example, the impact of the planned roll-off of the
Australian Government’s COVID-19 related economic stimulus
in March 2021 on bankruptcy rates, business confidence and
employment is uncertain. Similarly, the longer-term effects on the
Fijian economy from severely impacted tourism may not be known
for some time.
THE COCA-COLA COMPANY (TCCC) AND OTHER BRAND
PARTNERS RELATIONSHIP RISK
TCCC Group Relationship Risk
The Amatil Group’s relationship with TCCC Group is key to its
success and forms a fundamental part of the Amatil Group’s core
strategy. TCCC branded products form the majority of Amatil’s
beverage business and are subject to various bottlers,
distributors and license agreements with TCCC Group in the
various markets in which Amatil operates. The Amatil Group’s
bottler’s agreements with TCCC Group set out the respective
rights and responsibilities of the relevant Amatil Group and
TCCC Group entities, including:
— The provision to the Amatil Group of exclusive rights to prepare,
package, sell and distribute the relevant trademarked products
of TCCC in a territory.
— Obligations of the Amatil Group in relation to preparation and
marketing requirements of TCCC.
While the Amatil Group’s bottler’s agreements with TCCC Group
are typically 10 years in duration and have consistently been
extended or renewed, termination of the Amatil Group’s
agreements with TCCC Group, or unfavourable changes in
terms, could adversely affect Amatil’s profitability, share price
and dividends.
In addition, realisation of Amatil’s growth ambition in large part
depends on alignment with TCCC for growth within the non-
alcoholic beverage category (including through mergers and
acquisitions) and growth into new geographies (new TCCC
franchise territories). Therefore, the Amatil Group’s relationship
with TCCC is of particular importance to Amatil’s future
growth strategy.
The Amatil Group and TCCC Group also jointly own the
Coca-Cola bottling operations in Indonesia, 70.6 per cent
and 29.4 per cent respectively, and together own 45 per cent
overall in Australia-based Made Group. Amatil’s ability to
deal with and operate these assets is subject to those joint
ownership arrangements.
Coca-Cola Amatil’s key business risks include, but are not
limited to:
— COVID-19 related risks.
— The Coca-Cola Company (TCCC) and other brand
partners relationship risk.
— Economic and political risks.
— Cyber risk.
— Foreign exchange risk.
— Key personnel risk.
— Beverage industry risk.
— Regulatory risk.
— Corporate social responsibility risk.
— Climate change risk.
— Supply chain risk.
— Litigation and legal disputes risk.
— Malicious product tampering risk.
— Workplace Health & Safety (WHS) risk.
— Business interruption risk.
— Product quality risk.
— Fraud risk.
COVID-19 RELATED RISKS
Uncertainties in relation to the COVID-19 pandemic remain in all
of the Amatil Group’s markets, particularly in Indonesia where, as
at the date of this report, the number of confirmed infections
continues to increase. Progress has been made in controlling the
COVID-19 virus in Australia and New Zealand. However, the risk
of the virus re-emerging in these jurisdictions remains, as
indicated by the recent outbreaks in the Northern Beaches of
Sydney, New South Wales and in Brisbane, Queensland and
resultant Australian state border closures.
The short-term impacts of the COVID-19 pandemic on
Amatil’s business have included or could potentially include the
following risks:
— Low or negative volume and revenue growth, due to customers
being closed or in decline and customers staying at home
across the Amatil Group’s major markets.
— Margin erosion as a result of changes in channel mix due to
social distancing restrictions in Amatil’s major markets, and
specifically the shift to the grocery channel across Amatil’s
markets and the decline in the On-The-Go Channels due to
government-imposed restrictions on gatherings including
sporting events.
50
COCA-COLA AMATIL ANNUAL REPORT 2020 Other brand partners relationship risk
In addition to TCCC Group, the Amatil Group has a number of
relationships with other brand partners in the non-alcoholic
ready-to-drink, alcoholic and hot beverages industries which
are important to Amatil’s success and long-term strategy.
In non-alcoholic beverages, these include agreements with
Monster Energy Company and, in alcoholic beverages, Amatil has
a number of complementary relationships with brand partners
including Beam Suntory to sell and distribute Beam Suntory’s
premium spirits portfolio in Australia and New Zealand.
Amatil has been involved in distributing Beam Suntory products
since 2006.
As with the Amatil Group’s agreement with TCCC Group,
termination of Amatil’s agreements with any of its other brand
partners could also adversely affect Amatil’s profitability, share
price and dividends. However, all of Amatil’s brand partner
relationships are based on delivering mutual benefit to Amatil’s
brand partners and Amatil intends to continue to strive to deliver
value for its brand partners into the future.
ECONOMIC AND POLITICAL RISKS
Aside from the economic risks arising from the COVID-19
pandemic, the longer-term economic outlook presents increased
uncertainty as governments address fiscal deterioration from
their responses to COVID-19, including policies to encourage
economic growth. This could have positive or negative
implications for consumer spending across several areas,
including in relation to food and beverage retailing. Other key
external economic and political factors also have the potential to
specifically impact Amatil including economic instability in Papua
New Guinea and the impact on foreign currency liquidity, tariffs
and protectionism, and geopolitical turbulence in the form of
US-China Trade wars, trade tension between Australia and China,
uncertain trade arrangements due to Brexit and ongoing Middle
East tensions.
Further, in the event that circumstances lead to the PNG
Government requiring assistance from the International Monetary
Fund for the funding of their budget deficit, they could require the
Papua New Guinean Kina to be devalued which could significantly
impact Amatil Group’s balance sheet upon translation of both
deposits and the intercompany loan, with a loss carried in Amatil
Group’s foreign currency translation reserve.
Amatil is implementing a range of strategic initiatives over
2021 to improve its operational efficiency and flexibility in the
markets in which it operates to continue to manage these risks.
The Amatil Group maintains insurance coverage to protect
against certain risks with such scope of coverage and in such
amounts as determined appropriate by the Amatil Board and/or
senior management and managing in the circumstances or to the
AMATIL IS IMPLEMENTING A RANGE
OF STRATEGIC INITIATIVES OVER
2021 TO IMPROVE ITS OPERATIONAL
EFFICIENCY AND FLEXIBILITY...
extent commercially available. However, given global insurance
markets are hardening rapidly (resulting in less insurance
capacity commercially available for Amatil to buy), Amatil’s
insurance policies do not cover all of the potential risks
associated with the Amatil Group’s operations. No assurance can
be given that the Amatil Group will be able to obtain or maintain
insurance coverage at reasonable rates (or at all).
CYBER RISK
Cyber security and information privacy are an increasing risk for
the Amatil Group given the dynamic nature of these threats, and
the importance of safeguarding intellectual property, supply
chain systems, contractual agreements, operational technology
and staff and customer information; and given the majority of
Amatil’s core activities and operations are enabled by technology.
Amatil is heavily reliant on these systems being available, data
integrity being maintained and IT platforms operating effectively
for business operations as well as to support the effective
implementation of strategic plans.
Cyber-attacks on the Amatil Group’s key business partners which
do not directly target Amatil also have the potential to disrupt the
Amatil Group’s operations. Amatil has a cyber security strategy
and framework that is used to identify and address risks
associated with cyber-attacks.
FOREIGN EXCHANGE RISK
The Amatil Group is exposed to foreign exchange risks. Foreign
exchange risk is the risk of exposure to transactions that are
denominated in a currency other than the Australian dollar. The
Amatil Group is exposed to the effect of foreign exchange risk
principally related to exposure to fluctuations in the value of the
Australian dollar versus various currencies in which the Amatil
Group borrows money. The Amatil Group is also exposed to the
effect of foreign exchange risk due to fluctuations in the value of
the Australian dollar, Indonesian Rupiah, Papua New Guinean
Kina and New Zealand Dollar versus foreign currencies with
respect to its commitments to make capital expenditure, the
purchase of raw materials and other expenses, and the
currencies of the other countries in which it maintains assets
offshore and recognises earnings. Further, liquidity in the local
Papua New Guinean currency market is also a risk for the Amatil
Group. Amatil hedges exposure to foreign currency denominated
borrowings (by the use of cross-currency and foreign exchange
swap transactions) and foreign currency raw materials and
capital expenditure exposure (by use of forward foreign exchange
contracts and foreign currency deposits) in accordance with the
Amatil Board approved Treasury Policy. However, there can be no
assurance that the Amatil Group will be successful in eliminating
all such foreign currency risks.
51
THE VALUE WE CREATEPERFORMANCE GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS BUSINESS AND SUSTAINABILITY RISKS (CONTINUED)
KEY PERSONNEL RISK
The Amatil Group’s ability to recruit, retain and engage a talented
and motivated workforce is a key success factor for the Amatil
Group. In particular, a number of key personnel are important to
executing the Amatil Group’s strategy. One or more of these key
employees could leave their employment or cease to actively
participate in the management of the Amatil Group and this may
adversely affect the ability of Amatil to conduct its business and,
accordingly, affect its financial performance and its share price.
If certain key employees leave their employment with the Amatil
Group, there may be a limited number of persons with the
requisite experience and skills to serve in Amatil’s senior
management positions. While Amatil continues to work towards
building a strong employer brand, commits to developing and
retaining talent and has established Company-wide engagement
principles to drive engagement across the Amatil Group, if the
Amatil Group cannot attract, train and retain qualified managers
and other personnel, Amatil may be unable to successfully
manage its operations or otherwise compete effectively.
BEVERAGE INDUSTRY RISK
Fundamental shifts in the beverage and macroeconomic
landscape continue to impact the beverage profit pool across the
Amatil Group. These include changing consumer trends and
preferences (as well as changing industry cycles), a fragmented
and price competitive trading environment, increasing margin
pressure as manufacturer margins are squeezed by major
retailers, digital disruption to supply chain and traditional ‘bricks
and mortar’ retailers, and increased legislation and regulation.
A primary driver is the health and wellness concerns around
sugar and artificiality that are continuing to shift consumer
preferences towards low- and no-kilojoule products, especially
in developed countries.
Amatil seeks to mitigate these risks through working with brand
partners to respond to changing trends as well as diversifying its
growth options through Amatil’s growth ambition as described in
the 2021 priorities for each of Amatil’s businesses. Amatil also
continues to engage with stakeholders to raise awareness of the
impacts of additional regulations and find industry-led initiatives
to achieve public policy objectives. However, if the Amatil Group
fails to drive market growth in established categories and provide
the types of products that some of its consumers prefer, this
could adversely affect the Amatil Group’s business and financial
results, share price and/or future dividend payments.
REGULATORY RISK
The regulatory and political environment in all of the Amatil
Group’s operating jurisdictions continues to add to the
complexity of Amatil’s business. As a result, the Amatil Group is
vulnerable to frequent regulatory interventions, such as taxes on
sugar, plastic and other packaging and waste, restrictions on
marketing activity, additional mandatory product labelling
requirements, evolving and expanding climate change risk
disclosures (as further discussed below) and increased
entitlements for casual workers. Amatil continues to engage
with stakeholders to raise awareness of the impacts of
additional regulations and develop initiatives to achieve
public policy objectives.
CORPORATE SOCIAL RESPONSIBILITY RISKS
Amatil is committed to making a distinct and positive
contribution to the communities and markets in which it
operates, through product innovation to meet consumer demand,
packaging innovation to reduce waste, environmental initiatives
to reduce the Amatil Group’s impact, supporting human rights,
and supporting diversity and inclusion in the workplace. However,
a failure to deliver on Amatil’s consumer, investor and community
expectations in relation to the social and environmental impacts
created by the Amatil Group’s activities could result in damage to
the Amatil Group’s brand, reputation and consumer sentiment.
52
CLIMATE CHANGE RISK
The global climate is changing and will continue to change in
ways that affect the planning and day-to-day operations of
businesses. The manifestations of climate change that have the
potential to impact Coca-Cola Amatil are two-fold:
— Physical consequences relating to the physical changes to
climatic conditions.
— Transitional consequences relating to the shift to a resilient,
low carbon economy through changes in policy, regulation,
technology, market and reputation associated with adaptation
to a new climate paradigm and decarbonisation of the
global economy.
Coca-Cola Amatil recognises the importance of disclosing
climate related risks and opportunities in line with the
recommendations of the Task Force on Climate Related Financial
Disclosures (TCFD), and will continue to improve its assessment,
management and disclosure approach in line with these
recommendations.
Improving our understanding of climate related risks
and opportunities:
In 2019 Coca-Cola Amatil completed a third-party, primarily
qualitative, climate change risk and opportunity assessment out
to 2050. This assessment confirmed that climate change effects
that have the potential to impact Coca-Cola Amatil include
changes in weather patterns such as increased temperatures,
altered rainfall patterns, and more frequent or intense extreme
events such as heatwaves, drought, storms and increased
frequency of natural disasters. These may cause major business
disruption, increased energy costs, and key input scarcity
(such as water, sugar and other agricultural ingredients).
Governance and risk management
In addition to the assessment conducted in 2019, climate change
risk assessment is integrated into the enterprise risk assessment
processes and reporting, including being part of regular reports
to the Risk and Sustainability Committee of the Board on
business risks and controls.
Targets and plans
Coca-Cola Amatil has set a target for net zero carbon emissions
across the Amatil Group by 2040. This net-zero target
covers those emissions under our direct control, being scope
1 & 2 emissions as defined under the Greenhouse Gas Protocol.
Coca-Cola Amatil also supports and is included in The Coca-Cola
Company’s Science-Based Target of 25 per cent reduction by
2030 compared to 2015, which covers value chain scope
1, 2 and 3 emissions.
Coca-Cola Amatil already has management plans in place
for most of the identified risks including business continuity
frameworks which are tested regularly to reduce the impact of
any major disruption. In addition, Coca-Cola Amatil has water
stewardship and efficiency strategies, energy efficiency and
renewable energy initiatives and strong supplier review processes
and relationships. In light of the 2019 assessment Coca-Cola
Amatil is working to improve its understanding of its own
emissions profile, and that of major suppliers, and developing
a comprehensive plan to address the physical and transition
risks identified.
Further climate change disclosure
We provide additional disclosures through our annual
sustainability reporting, our annual CDP (formerly Carbon
Disclosure Project) Climate Change Response, and our annual
CDP Water Response.
SUPPLY CHAIN RISK
Disruptions in Amatil’s supply chain due to the failure of a key
supplier to meet its contractual obligations or obligations under
modern slavery laws have the potential to significantly impact the
COCA-COLA AMATIL ANNUAL REPORT 2020 Amatil Group’s operations. Supply chain risk is most likely to
result from a supplier’s inability to perform contractual supply
obligations; for example, due to unforeseen circumstances or a
labour dispute.
The Amatil Group’s management work with stakeholders across
the Amatil Group’s business to ensure the Amatil Group has the
appropriate supply continuity plans in place for key inputs.
The Amatil Group is also able to transfer some residual supplier
exposure by way of business interruption insurance. Amatil is
committed to working with its suppliers to eradicate modern
slavery from Amatil’s supply chain, and Amatil expects all
suppliers to comply with Amatil’s Code of Conduct. The Amatil
Risk and Sustainability Committee has also approved a Human
Rights Policy which outlines the Amatil Board’s commitment
to supporting human rights.
LITIGATION AND LEGAL DISPUTES RISK
From time to time, the Amatil Group may be party to claims,
disputes and legal proceedings. If the Amatil Group is involved in
such claims, disputes or legal proceedings, this may disrupt the
Amatil Group’s business operations, cause the Amatil Group to
incur significant legal costs and may divert management’s
attention away from the day-to-day operations of the business.
MALICIOUS PRODUCT TAMPERING RISK
The Amatil Group is at risk of malicious product tampering or
material threat of malicious product tampering which may have
an adverse financial impact on the Amatil Group. This may result
from an initial product recall, impacting short-term sales, as well
as a potentially longer-term adverse financial outcome, due to a
loss of brand image and a loss of customer and consumer
confidence in markets where product tampering occurs.
To mitigate this risk, Amatil:
— continues to maintain high quality controls throughout its
supply chain;
— maintains comprehensive product quality audits of suppliers
and testing and batch release procedures;
— actively manages and investigates customer complaints;
— continues to adopt the latest techniques to improve
product security; and
— continues to proactively manage, monitor and enforce
intellectual property breaches.
WORKPLACE HEALTH AND SAFETY RISK
The Amatil Group has a work, health and safety (WHS) framework
which is employed across the Amatil Group. While the Amatil
Group has historically experienced low injury rates, the risk of
serious injury through industrial and traffic accidents remains
in all of the Amatil Group’s markets due to the nature of the
manufacturing and distribution business. Amatil’s WHS
framework is reviewed on a regular basis by management and
audited externally. Additionally, management continues to invest
in initiatives to reduce WHS related risks.
BUSINESS INTERRUPTION RISK
A manufacturing shutdown or disruption to business could have
a major impact on profit and on the Amatil Group’s reputation
with both consumers and customers. The Amatil Group seeks
to mitigate business interruption risk by ensuring that incident
management, crisis response and business continuity
frameworks are in place to address events (for example fire,
explosion, civil unrest, terrorist attack or pandemics) that could
result in a business disruption. Amatil also has appropriate
insurance coverage in place to materially reduce the impact
of significant business disruption due to loss or damage to its
assets. It also has a proven track record in managing the impact
of crises or significant incidents.
PRODUCT QUALITY RISK
The risk of product contamination exists for beverages currently
made or sold by the Amatil Group and particularly in relation to
sensitive beverages. Given the Amatil Group’s large beverage
production volumes, it seeks to address quality issues through
product quality measures, risk management activities and
incident management processes, as well as quality assurance
programs and audits.
FRAUD RISK
While overall losses have been insignificant across the
Amatil Group, fraud activity has the potential to create larger
reputational and cultural impacts. Management has zero
tolerance for any fraud activity regardless of size and remains
vigilant to constantly review frameworks and systems and
activities to reduce the risk of fraudulent activity. Bribery and
corruption risks exist in all the Amatil Group’s markets, and
particularly in our developing markets (Indonesia, PNG and the
Pacific Islands). Amatil has a robust framework in place to
mitigate the risk of bribery and corruption in all markets and to
ensure that payments made to all third parties are transparent.
FURTHER DISCLOSURE
Further information in relation to strategy, prospects for future
financial years and business risks has not been disclosed. In the
opinion of the Directors, such disclosures would unreasonably
prejudice the interests of the Group, by providing competitors
information that Coca-Cola Amatil regards as being commercially
sensitive to the business.
53
THE VALUE WE CREATEPERFORMANCE GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS DIRECTORS’ REPORT
Coca-Cola Amatil Limited and its subsidiaries
In accordance with the Corporations Act 2001, the Directors submit hereunder their Report on Coca-Cola Amatil Limited and its
subsidiaries (referred to as Group), for the year ended 31 December 2020.
The Operating and Financial Review (OFR) on page 2 and the Remuneration Report on page 58 form part of this Directors’ Report.
1 DIRECTORS
The names of the Directors of Coca-Cola Amatil Limited (also referred to as Company) in office during the financial year and until the
date of this Report and each Director’s holdings of shares and share rights in Coca-Cola Amatil Limited are detailed below:
Ilana Rachel Atlas, AO
Alison Mary Watkins
Massimo Borghetti, AO
Jorge Garduño Chavero
Mark Graham Johnson
Paul Dominic O’Sullivan
Krishnakumar Thirumalai
Penelope Ann Winn
Ordinary shares
No.
Long-Term Incentive Plan
(LTIP) share rights1
No.
42,000
367,101
22,494
−
10,000
22,500
8,100
18,300
−
1,002,216
−
−
−
−
−
−
1
Consists of 276,136 vested share rights in the 2018-2020 LTIP and 726,080 of unvested share rights in the 2019-2021 and 2020-2022 LTIP which
represent the maximum available to vest.
2 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 & Finance
Committee1
Risk &
Sustainability
Committee1
People
Committee1
Related Party
Committee1
Due Diligence
Committee2
Nominations
Committee1
Other Board
Sub-Committees3
Eligible
to attend Attended
Eligible
to attend Attended
Eligible
to attend Attended
Eligible
to attend Attended
Eligible
to attend Attended
Eligible
to attend Attended
Eligible
to attend Attended
Eligible
to attend Attended
Current
I.R. Atlas, AO
A.M. Watkins
M. Borghetti, AO
J.G. Chavero
M.G. Johnson
P.D. O’Sullivan
K. Thirumalai
P.A. Winn
12
12
12
12
12
12
12
12
12
12
12
12
11
11
10
12
5
−
5
5
5
5
−
−
5
−
5
5
5
5
−
−
5
−
−
−
5
5
5
5
5
−
−
−
5
5
4
5
6
−
6
−
6
6
6
−
6
−
6
−
6
6
5
−
26
−
26
−
26
26
−
26
26
−
26
−
26
26
−
26
3
3
−
−
3
−
−
3
3
3
−
−
3
−
−
3
2
−
2
−
2
−
−
−
2
−
2
−
2
−
−
−
8
6
−
−
6
−
−
1
8
6
−
−
6
−
−
1
Refer to the Corporate Governance Statement at www.ccamatil.com for further details on committees.
The Due Diligence Committee was established by the Related Party Committee on 3 November 2020 and is responsible for overseeing the
preparation of the scheme booklet in relation to the proposal by Coca-Cola European Partners plc to purchase all of the shares of Amatil’s
independent Shareholders by way of Scheme of Arrangement. The Due Diligence Committee is comprised of Directors, members of Management
and advisers. Director Members of the Due Diligence Committee are I.R. Atlas AO, M.G. Johnson, P.A. Winn and A.M. Watkins.
In any given year, the Board or Committees may decide to form Sub-Committees for the consideration of delegated matters such as potential
transactions – including acquisitions, evaluation stages of joint ventures or other staged initiatives and approving annual reporting content and
other matters.
1
2
3
54
COCA-COLA AMATIL ANNUAL REPORT 2020 INFORMATION ON DIRECTORS
3
Particulars of the qualification, other directorships, experience and special responsibilities of each Director as at the date of this
report are set out on pages 46 to 47 of this Annual Report.
4 COMPANY SECRETARIES
Currently, there are two Company Secretaries of Coca-Cola Amatil Limited. Their qualifications and experience are as follows:
BETTY IVANOFF
Group Director – Legal & Corporate Affairs
Joined Coca-Cola Amatil Limited in April 2016 and leads Amatil’s legal and governance teams, as well as the public affairs and
communications portfolios. She holds a Bachelor of Laws degree from the University of Technology, Sydney and has also completed
the Oxford Advanced Management & Leadership Program. She is the Chairman of Paradise Beverages, listed on the Pacific Stock
Exchange. She has over 20 years’ legal, company secretarial and commercial experience.
RICHARD CONWAY
Deputy Group General Counsel & Group Company Secretary
Joined Coca-Cola Amatil Limited in November 2015 and held a number of legal roles before his role was expanded to include Group
Company Secretary in May 2020. He holds Bachelor of Laws (Honours) and Bachelor of Arts degrees from the Australian National
University. He has over 15 years’ legal, company secretarial and commercial experience.
5 PRINCIPAL ACTIVITIES
Details of principal activities are set out in the OFR on page 2.
There were no significant changes in the nature of the Group’s principal activities during the year.
6 DIRECTORS’ AND OFFICERS’ LIABILITY INSURANCE
The Company has paid premiums for Directors’ and Officers’ liability insurance in respect of Directors and Officers of the Company
and subsidiaries as permitted by the Corporations Act 2001. The terms of the policy prohibit disclosure of details of the insurance
cover and premiums.
INDEMNIFICATION OF AUDITORS
7
To the extent permitted by law, Coca-Cola Amatil Limited has agreed to indemnify its auditor, Ernst & Young (Australia), as part of the
terms of its audit engagement agreement against claims made by third parties arising from the audit. The indemnity does not extend to
any liability resulting from negligent, wrongful or wilful acts or omissions by Ernst & Young (Australia). No payment has been made to
indemnify Ernst & Young (Australia) during, or since the end of, the financial year.
8 DIVIDENDS
Final fully franked dividend declared on ordinary shares for 2020
(not recognised as a liability in 2020)1
Dividends paid on ordinary shares in the financial year:
Final unfranked dividend paid on ordinary shares for 2019
(not recognised as a liability in 2019)
Interim unfranked dividend for 2020
Rate per share
¢
Amount
$M
Date paid
or payable
18.0
130.3
30 April 2021
26.0
9.0
188.2
15 April 2020
65.2
13 October 2020
1
The Company may need to make changes to the payment date for the final dividend in the event that the expected date for the Scheme Meeting
under the Scheme with CCEP is delayed or to ensure that the final dividend is paid before the record date for the Scheme. The Company will notify
Shareholders of any changes to the payment date for the final dividend by way of an announcement to the ASX.
55
THE VALUE WE CREATEPERFORMANCE GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS DIRECTORS’ REPORT (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
9 SHARE RIGHTS
Details of movements in share rights during the financial year are included in Note 18 to the financial statements within the
Financial Report.
10 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 manufacturing and distribution
activities, recognising that the key areas of environmental impact are water and energy use, the lifecycle of our packaging and litter,
and carbon emissions.
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 risk management and compliance system overseen by the Risk & Sustainability 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 addressed as part of routine management, and typically notified to the appropriate regulatory authority as required.
11 SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
In the opinion of the Directors, other than as referred to in the OFR, there have been no significant changes in the state of affairs for
the year.
12 ACQUISITION BY COCA-COLA EUROPEAN PARTNERS
On 4 November 2020, we announced that Coca-Cola Amatil had entered into an agreement with Coca-Cola European Partners plc
(CCEP) for the acquisition of all of the issued shares held by independent Shareholders pursuant to a Scheme of Arrangement
(CCEP Scheme of Arrangement or Scheme). Under the agreement, independent Shareholders would receive total cash consideration
of $12.75 per share, less any final dividend in respect of the half year ended 31 December 2020 (2H 2020) declared and paid to
Shareholders before the date of implementation of any Scheme. We also announced that CCEP had entered into a separate agreement
to acquire the Amatil shares indirectly held by The Coca-Cola Company, conditional upon implementation of the Scheme
(CCEP/TCCC Transaction).
On 15 February 2021, we announced that Amatil had entered into a revised agreement with CCEP that increases the total cash
consideration that independent Shareholders will receive under the Scheme from $12.75 per share to $13.50 cash per share. Consistent
with the initial offer, the total cash consideration would be reduced by the cash amount of the final dividend in respect of 2H 2020.
CCEP has declared that this is its best and final offer. There were no changes to the CCEP/TCCC Transaction.
Independent Shareholders will have the opportunity to vote on the Scheme at the upcoming Amatil Scheme Meeting scheduled to
occur in mid-April 2021. A draft scheme booklet containing relevant information on the Scheme is expected to be submitted to ASIC on
or before 22 February 2021 and dispatched to independent Shareholders in mid-March 2021.
The Amatil Related Party Committee and Group Managing Director, Alison Watkins, unanimously recommend that independent
Shareholders vote in favour of the Scheme, in the absence of a superior proposal and subject to the independent expert concluding
(and continuing to conclude) that the Scheme is fair and reasonable and in the best interests of independent Shareholders.
Australian Foreign Investment Review Board approval for the Scheme was obtained on 29 January 2021. However, the Scheme remains
subject to a number of other conditions including New Zealand Overseas Investment Office approval, independent Shareholder
approval and Australian court approval.
56
COCA-COLA AMATIL ANNUAL REPORT 2020 13 EVENTS AFTER THE BALANCE DATE
Subsequent to the balance sheet date, other than noted in 12 above, 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.
14 ROUNDING
The Company is of a kind referred to in the Australian Securities and Investments Commission Corporations (Rounding in Financial/
Directors’ Reports) Instrument 2016/191, and, accordingly, amounts in this Report and the Financial Report have been rounded off to
the nearest hundred thousand dollars, unless otherwise stated.
15 AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES
Auditor’s Independence Declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 140.
Non-audit services
The following non-audit services were provided by the Company’s auditor, Ernst & Young (Australia). The Directors are satisfied 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 (Australia) received or is due to receive the following amounts for the provision of non-audit services:
Other assurance services
Other services
$345.9 thousands
$115.9 thousands
57
THE VALUE WE CREATEPERFORMANCE GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT
Coca-Cola Amatil Limited and its subsidiaries
2020 remuneration outcomes
When reviewing 2020 remuneration outcomes for KMP Senior
Executives, the Board considered what we set out to achieve at
the beginning of 2020, our response to the COVID-19 pandemic,
each individual’s achievements against their individual scorecard,
and our overarching remuneration accountability framework.
Financial targets for 2020 were set before the COVID-19
pandemic began and were not revised during the year.
The New Zealand business was a standout performer continuing
momentum from 2019 and was the only business to achieve the
financial targets set for 2020.
Short Term Incentive Plan (STIP) outcomes for 2020 range from
30% to 115% of target. These outcomes are significantly lower
than those for previous years. The Board have sought to
recognise the significant contributions each of the KMP Senior
Executives have made to the Group and for you as Shareholders,
through an incredibly challenging year.
The 2018-2020 Long Term Incentive Plan (LTIP) partially vested
(66.7% of maximum) and rewarded our KMP Senior Executives for
the successful completion of our transition period, our strong
focus on cost control and our positive business momentum,
despite the challenges placed on us through the pandemic.
The Board considered the impact of the CCEP Scheme of
Arrangement (Scheme) on our share price in the later part of
2020 and contribution to the vesting outcome. The Board
approved vesting on the basis the LTIP was performing well prior
to the Scheme announcement and was expected to vest. Overall,
the vesting of the LTIP is aligned to the returns management
delivered to Shareholders over the period and rewards for the
work management delivered which generated the momentum
evident in our results.
Looking ahead – the CCEP Scheme of Arrangement
As announced on 4 November 2020, Amatil and CCEP have
entered into a Scheme for the acquisition of issued shares held
by independent Shareholders of Amatil. The Scheme remains
subject to various conditions, including a vote by independent
Shareholders and Australian court approval. Remuneration
arrangements specific to the Scheme will be set out in a
separate scheme booklet which is expected to be dispatched
to Shareholders in mid-March 2021. Necessary changes to
Amatil’s remuneration approach in connection with the
Scheme which apply in the beginning of 2021 are noted in
this Remuneration Report.
I invite you to review the Remuneration Report and trust you will
find it informative. On behalf of the Board I would like to thank
you for your continued support.
MASSIMO BORGHETTI
Chairman, People Committee
Sydney
18 February 2021
REMUNERATION REPORT CONTENTS
1 Who is covered by the Remuneration Report
2 2020 remuneration at a glance
3 2020 performance assessment
4
5
2020 KMP Senior Executive remuneration outcomes
2020 KMP Senior Executive remuneration framework
6 Remuneration governance
7 Non-Executive Director arrangements
8 Statutory disclosures
MESSAGE FROM THE PEOPLE COMMITTEE CHAIR
Dear Shareholder
I am pleased to introduce the Amatil Remuneration Report for
2020. This report sets out the remuneration information for
KMP Senior Executives and Non-Executive Directors, and
describes the Group’s remuneration framework.
2020 was a challenging trading environment impacted by
bushfires on the east coast of Australia, flooding in Indonesia
early in the year and the COVID-19 pandemic through the
remainder of the year. Our strong financial position, continued
focus on cost reduction and strategic momentum from 2019
positioned the Company well to weather the challenges in 2020.
However, despite the improving conditions towards the end of
2020, particularly in Australia and New Zealand, the year saw
volatility and a decline in volumes and trading revenue in most of
our businesses. This has impacted remuneration outcomes for
KMP Senior Executives during the year as outlined in this report.
58
COCA-COLA AMATIL ANNUAL REPORT 2020 CCEP SCHEME OF ARRANGEMENT – REMUNERATION IMPLICATIONS
As announced on 4 November 2020, Coca-Cola Amatil Limited (Amatil, the Company or the Group) and Coca-Cola European
Partners have entered into the Scheme for the acquisition of issued shares held by independent Shareholders of Amatil. Therefore,
the Amatil Board has made necessary changes to Amatil’s usual remuneration approach for 2021 in connection with the Scheme to
recognise the upcoming vote, and Amatil will be delisted from the Australian Stock Exchange (ASX) if the Scheme is implemented.
The changes to Amatil’s remuneration framework as a result of the Scheme are noted below.
KMP Senior Executive remuneration
— 2020 STIP: The 2020 STIP for KMP Senior Executives will be paid in cash with no deferred share component. Per our
approach in previous years, Amatil would normally defer 40% of the STIP for up to two years. This change was made given the
expected timing of the Scheme, subject to various conditions, including the receipt of regulatory approvals, and approval by
independent Shareholders and the Supreme Court of New South Wales.
— 2021-2023 LTIP award and 2021 STIP: Due to the Scheme, no 2021-2023 LTIP awards will be made to KMP Senior
Executives. To reflect that no LTIP will be awarded in 2021, the 2021 STIP will be increased for KMP Senior Executives
(excluding the Group Managing Director). The increase will reflect the value of what is fair and reasonable, taking into account
the performance period of the 2021 STIP in comparison with the 2021-2023 LTIP. In the event the transaction does not
proceed, and depending on timing, the Board may consider alternative arrangements, including reverting to a remuneration
approach for 2021 which is similar to previous years.
— 2021 fixed remuneration: There will be no increases to KMP Senior Executive fixed remuneration for 2021, including the
Group Managing Director.
Non-Executive Director fees
In accordance with Amatil’s constitution and the Scheme Implementation Deed, Amatil Independent Non-Executive Directors,
Mr Mark Graham Johnson and Ms Penelope Ann Winn, will each receive a one-off fee equal to $25,000 plus applicable
superannuation for their attendance and participation in the work of a sub-committee in relation to the scheme booklet.
The relevant fees are payable upon the draft scheme booklet being lodged with ASIC regardless of whether the Scheme
subsequently completes.
1 WHO IS COVERED BY THE REMUNERATION REPORT
This Remuneration Report outlines remuneration strategy, framework and practices of Amatil and its subsidiaries and how these apply
to Key Management Personnel (KMP) in accordance with the requirements of the Corporations Act 2001. In this report, KMP consist
of senior executives (referred to as KMP Senior Executives) and Non-Executive Directors.
For 2020, the KMP are:
Current KMP Senior Executives
A.M. Watkins
G.D. Barnes
K. Gunduz
C.J. Litchfield
P. West
Executive Director and Group Managing Director
Group Chief Financial Officer (commenced 1 June 2020)
Managing Director, Indonesia & Papua New Guinea
Managing Director, Pacific
Managing Director, Australia
Former KMP Senior Executives
M.J. Roberts
Group Chief Financial Officer (ceased employment on 17 April 2020)
Current Non-Executive Directors
I.R. Atlas, AO
M. Borghetti, AO
J.G. Chavero
M.G. Johnson
P.D. O’Sullivan
K. Thirumalai
P.A. Winn
Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
59
THE VALUE WE CREATEPERFORMANCE GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
2 2020 REMUNERATION AT A GLANCE
OUR STRATEGY AND PRINCIPLES
Our KMP Senior Executive remuneration is designed to support and reinforce the Group’s purpose, values, strategy
and our long-term approach to creating value for Shareholders and for society.
PROVIDE COMPETITIVE
REMUNERATION AND
BENEFITS
ENSURE SIGNIFICANT
PROPORTION OF
REMUNERATION AT RISK
REINFORCE AN
OWNERSHIP
MINDSET
HOW WE SET REMUNERATION
The remuneration for KMP Senior Executives is set on appointment to the role and then reviewed annually.
We set both the fixed remuneration and the total remuneration opportunity by considering:
Experience, competence
and performance in
the role
Competitive market
pressures
Relevant market data
Desired focus on fixed
versus at-risk remuneration
Internal equity with
peer roles
OUR FRAMEWORK
VARIABLE (AT RISK)
Fixed remuneration
STIP
LTIP
Market competitive fixed remuneration
which reflects both the external market
and the skills and experience of
the individual.
The STIP rewards KMP Senior
Executives for achieving annual
business and individual performance
targets.
The LTIP is an equity incentive plan used
to align the reward of executives to the
returns generated for Shareholders.
Consists of cash salary and
superannuation contributions.
• Set referencing a range around the
50th percentile for fixed remuneration
and a 75th percentile opportunity,
subject to performance, for total
remuneration relative to comparable
roles in comparable companies.
As a result of the proposed Scheme of
Arrangement with CCEP, the 2020 STIP
will be paid fully in cash.
• Target opportunity of 80% (for the
Group Managing Director) and
60% (other KMP Senior Executives)
of fixed remuneration. Maximum
opportunity is 150% of target.
• Subject to three performance
components: profit (50%), revenue
(20%) and individual objectives (30%).
Rights, with vesting subject to
performance over a three-year period.
• Maximum face value allocation of
160% (for the Group Managing Director)
and 80% (for other KMP Senior
Executives) of fixed remuneration.
• Subject to three equally weighted
performance conditions: absolute
Total Shareholder Return (TSR),
relative TSR and absolute EPS.
MINIMUM SHAREHOLDING REQUIREMENT
The Group Managing Director must hold shares equal to 100% of fixed remuneration, and other KMP Senior Executives
50% of fixed remuneration. A five-year time frame is permitted to attain this holding.
Fixed remuneration
Target STIP
LTIP (maximum face value)
REMUNERATION MIX
100.0
GROUP MANAGING DIRECTOR
30%
23%
47%
OTHER KMP SENIOR EXECUTIVES
42%
25%
33%
A SIGNIFICANT PORTION OF REMUNERATION
IS AT RISK
The Board actively reviews our remuneration
framework and incentive outcomes, and
retains discretion to make necessary
adjustments to ensure remuneration and
incentive outcomes are appropriate and
aligned to the shareholder experience.
60
0
20
40
60
80
100
Coca-Cola Stevia No-Sugar
Keri Fruity Drink Orange
Keri Fruity Drink Apple Blackcurrent
Fanta Grape
Barista Bros. Iced Coffee
Powerade ION4
Schweppes Sparkling Duet Rasberry
Fanta Rasberry
34.1
34.1
29.6
26.6
20.5
19.3
19.3
COCA-COLA AMATIL ANNUAL REPORT 2020 2020 Remuneration outcomes
Group Managing Director
Other KMP Senior Executives
0%
Fixed remuneration increase
in 2020
30%
STIP as % of target
2% to 9%
Fixed remuneration increase
in 2020 (range)
30% to 115%
STIP as % of target
(range)
LTIP vesting (for performance period from 1 January 2018 to 31 December 2020)
100%
100%
0%
66.7%
Amatil absolute TSR performance
Amatil relative TSR performance
Amatil absolute EPS growth
Vesting of 2018-2020 LTIP
When reviewing 2020 remuneration outcomes for KMP Senior Executives, the Board considered what we set out to achieve at the
beginning of 2020, our response to the COVID-19 pandemic, each individual’s achievements against their individual scorecard, and
our overarching remuneration accountability framework. Additionally, the Board considered the guidelines released by ASIC on
executive variable pay for 2020. For 2020, The Board exercised discretion in accordance with our usual process for the STIP and
increased the calculated 2020 STIP outcome for Greg Barnes to reflect the significant personal and professional contribution to the
Scheme. This was the only exercise of Board discretion in relation to incentive outcomes in 2020 for KMP Senior Executives.
GROUP FIVE YEAR FINANCIAL PERFORMANCE
The table below provides an overview of the Group’s short- and long-term performance
outcomes over the last five financial years:
Financial year end 31 December
2016
2017
2018
2019
2020
Profit for the year attributable to
Shareholders of Coca-Cola Amatil Limited
(before non-trading items) ($M)
Profit for the year attributable to
Shareholders of Coca-Cola Amatil Limited
($M)
EPS (before non-trading items) (¢)
EPS (¢)
Dividends per share (¢)
Closing share price as at 31 December ($)
10.12
417.9
416.2
388.31
393.91
340.3
246.1
445.2
279.0
374.4
179.9
54.7
32.2
46.0
55.9
59.8
47.0
8.51
53.61
38.5
47.0
54.41
51.7
47.02
47.0
24.8
27.0
8.19
11.06
12.93
The tables opposite and below show
the link between Amatil’s financial
performance over the past five
financial years (including the 2020
financial year) and KMP Senior
Executive remuneration outcomes.
Financial performance and
remuneration outcomes reflect the
transition period for the Group over
the years up to 2019, with the
pleasing return to growth at the end
of 2019. 2020 has been significantly
impacted by the COVID-19 pandemic,
and is reflected in 2020 STIP
outcomes.
1
2
Excluding the profit after tax attributable to SPC (treated as a discontinued operation in
2019 totaling $6.2 million (2018: loss of $122.5 million)).
Excluding the 4c interim special dividend.
KMP SENIOR EXECUTIVE HISTORIC REMUNERATION OUTCOMES
The table below provides a summary of remuneration outcomes for KMP Senior Executives over the last five financial years:
Group Managing Director STIP outcome
(% of target)
Other KMP Senior Executives STIP outcome
(% of target) – range
LTIP vesting outcome
(% vesting of maximum)
2016
100.5%
2017
72.6%
2018
33.0%
2019
109.5%
2020
30.0%
57.0 – 150.0% 60.5 – 136.5% 28.0 – 135.0% 100.7 – 146.3% 30.0% – 114.9%
0.0%
22.3%
0.0%
22.1%
66.7%
ADJUSTMENTS TO UNVESTED STIP SHARES OR LTIP AWARDS
Each year, the People Committee considers whether any events have occurred (or become apparent) during the year that merit an
increase and/or reduction to unvested STIP shares or LTIP awards. Applying Amatil’s remuneration accountability framework, the
Committee considered the 2020 calendar year and determined that no such adjustment was required for KMP Senior Executives.
61
THE VALUE WE CREATEPERFORMANCE GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
3 2020 PERFORMANCE ASSESSMENT
2020 was a challenging trading environment impacted by bushfires on the east coast of Australia and flooding in Indonesia early in
the year, followed by the COVID-19 pandemic through the remainder of the year. Amatil’s strong financial position, continued focus
on cost reduction and strategic momentum from 2019 set us up well to weather the challenges in 2020. Financial targets were
approved by the Board before the COVID-19 pandemic began and were not revised during the year.
— 2020 STIP: The impact of the COVID-19 pandemic is evident in STIP outcomes for 2020. The negative impact on profit,
and volumes within the year for each business has led to STIP outcomes significantly lower than previous years. The
New Zealand business was the standout performer achieving profit and revenue targets which were set at the beginning
of the year and this is reflected in the STIP outcome for the Managing Director, Pacific.
— 2018 – 2020 LTIP: The LTIP achieved partial vesting (66.7% of maximum) and rewarded our KMP Senior Executives for the
successful completion of our transition period over the last three years, our strong focus on cost control and our positive business
momentum, despite the challenges placed on us through the COVID-19 pandemic in 2020. The impact of the CCEP Scheme of
Arrangement on the LTIP was considered. However, the Board approved vesting given the LTIP was performing well prior to the
announcement and was expected to vest, and the reward to executives is aligned to the returns generated for Shareholders.
2020 STIP
Profit (50%)
Profit for the purposes of the STIP
is measured as profit on an ongoing
basis1. This is to support a primary
focus on ongoing trading performance.
This was a change for 2020 and was
communicated in our 2019
Remuneration Report.
With the exception of the New Zealand
business, profit performance for the
Group and the remaining businesses
was below the targets set by the Board
at the outset of the year and did not
result in a payment under the STIP.
The New Zealand business achieved
above target profit performance which
is an outstanding result and is
reflected in the outcome for the
Managing Director, Pacific.
No adjustments were made to profit
results for incentive purposes for 2020.
Revenue (20%)
Individual objectives (30%)
Revenue is included in the STIP to
reflect the importance of the Group
and businesses in delivering
sustainable revenue growth.
With the exception of the New Zealand
business, revenue performance for the
Group and the remaining businesses
was below the targets set by the Board
at the outset of the year and did not
result in a payment under the STIP.
The New Zealand business achieved
stretch revenue performance reflecting
increases in revenue compared to
2019, despite the challenging trading
conditions presented by the COVID-19
pandemic. The strong revenue
performance for New Zealand is
reflected in the outcome for the
Managing Director, Pacific.
Each year Amatil reviews KMP Senior
Executive performance anchoring on
the individual objectives set and
approved by the People Committee
at the start of the year.
As 2020 turned out to be a very
different year than expected, a reset
of focus was needed, and further
judgement and consideration of
individual performance was necessary
when assessing full-year performance.
The People Committee has sought to
recognise the significant contributions
made by KMP Senior Executives in
responding to the COVID-19 pandemic,
leading the business in challenging
times and maintaining Amatil’s strong
financial position.
1
Being net profit after tax attributable to Shareholders of Coca-Cola Amatil Limited for continuing operations and before non-trading items.
62
COCA-COLA AMATIL ANNUAL REPORT 2020 2018-2020 LTIP
The performance period for the 2018-2020 LTIP commenced on 1 January 2018
and concluded on 31 December 2020.
Performance was assessed at the end of the 2020 calendar year and as a result
of performance over the period, there was partial vesting.
Performance measure
Target
Stretch
Weight
Performance achieved
Absolute TSR
8%
12%
1/3
Relative TSR
51st
percentile
75th
percentile
1/3
100% vesting
(19.4% CAGR)
100% vesting
(81.25th CAGR)
EPS for the 2018-2020 LTIP is measured with
a primary focus on our statutory EPS result.
The People Committee considered the result
and no adjustments were made to EPS used
to calculate LTIP outcomes.
For the purposes of the 2018-2020 LTIP,
EPS was calculated as follows:
Period
Start
EPS
End
EPS
%
2018 vs 2017
59.8¢
38.5¢
(35.6%)
2019 vs 2018
38.5¢
51.7¢
34.3%
2020 vs 2019
51.7¢
24.8¢
(52.0%)
5%
8%
1/3
Nil vesting
3 year average
(17.8%)
Absolute EPS
EPS growth
2019 vs 2020
Average EPS
over 3 years
Must exceed business
plan EPS target of 2.4%
(52.0%) EPS growth
2019 vs 2020
(17.8%)
3-year average
The 2018-2020 LTIP applies our historic
approach of calculating EPS (i.e. statutory
EPS and a simple average). As communicated
last year, this methodology was changed for
the 2020-2022 LTIP.
4 2020 KMP SENIOR EXECUTIVE REMUNERATION OUTCOMES
The following section sets out the value of the remuneration received by current KMP Senior Executives during the year, along with
performance commentary. The figures in the charts below differ from those outlined in the statutory table later in Section 8 mainly
because the statutory table includes an apportioned accounting value for all unvested LTIP grants (which remain subject to the
satisfaction of performance and service conditions and may not ultimately vest).
The values disclosed in the charts, while not in accordance with the accounting standards, are intended to help Shareholders better
understand the linkages between performance and the remuneration realised by the KMP Senior Executives in relation to 2020. The
actual remuneration received for 2020 includes the following:
— Fixed remuneration relates to base salary plus superannuation.
— Benefits relates to leave accruals, non-monetary benefits (product allowance, insurance premiums provided through the Amatil
superannuation plan and annual health check) and other benefits such as car allowance and club membership (Mr Litchfield)
and a recreation allowance and expatriate benefits (Mr Gunduz).
— Cash STIP relates to the 2020 STIP (which is payable in March 2021).
— Vested deferred STIP relates to vesting of the share component of the STIP from prior year incentives. The value represents
the post-tax amount used to purchase Amatil shares.
— Vested LTIP relates to the 2018-2020 LTIP which partially vested in relation to the absolute TSR and relative TSR measures
(valued as at 31 December 2020). Vested share rights will be converted into shares at the next trading window. In any event,
including if there is no share trading window, the Board retains discretion to settle share rights as cash equivalent per the
LTIP plan rules.
— Employee Share Plan relates to the MyAmatil Employee Share Plan (ESP) matching shares that vested during 2020
(value represents the amount used to purchase Amatil shares).
ALISON WATKINS
GROUP MANAGING DIRECTOR
GREG BARNES
GROUP CHIEF FINANCIAL OFFICE
Refer to page 64
Refer to page 65
KADIR GUNDUZ
MANAGING DIRECTOR,
INDONESIA &
PAPUA NEW GUINEA
Refer to page 65
CHRIS LITCHFIELD
MANAGING DIRECTOR, PACIFIC
PETER WEST
MANAGING DIRECTOR, AUSTRALIA
Refer to page 66
Refer to page 66
63
THE VALUE WE CREATEPERFORMANCE GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
4 2020 KMP SENIOR EXECUTIVE REMUNERATION OUTCOMES (CONTINUED)
ALISON WATKINS GROUP MANAGING DIRECTOR
ACTUAL REMUNERATION RECEIVED FOR 2020 ($000)
ACTUAL REMUNERATION
2,200
53
525
265
3,570
6,613
Fixed remuneration
Benefits
Cash STIP
Vested deferred STIP
Vested LTIP
2020 STIP OUTCOME
MEASURE AND COMMENTARY
Group EBIT
WEIGHTING
25%
PERFORMANCE ASSESSMENT
THRESHOLD
50%
$654.6m
TARGET
100%
$670.0m
STRETCH
150%
$685.4m
% OF STIP
TARGET
0%
T
I
F
O
R
P
E
U
N
E
V
E
R
S
E
V
I
T
C
E
J
B
O
L
A
U
D
I
V
I
D
N
I
Group NPAT
Group revenue
$550.7m
$340.3m
$4,762.1m
25%
20%
$403.8m
$413.7m
$423.6m
$5,186.3m
$5,302.0m
$5,359.9m
Individual objectives
Strengthen our focus on long-term
value creation
30% • Adapted quickly to COVID uncertainty with tight financial management and
pleasing outcomes on cashflow and profitability.
• Implemented essential cost savings across the Group, simultaneously
strengthening diversity.
• Substantially achieved all 2020 sustainability goals with commitment
to stretching 2025-2040 goals.
Create value for our brand partners
and customers
Create value for our people
• Market share gains across all markets despite challenging conditions.
• Improved value delivery and ways of working with major brand partners.
• Strong focus on supporting customers contributing to impressive recovery
following removal of restrictions.
• Highly effective COVID crisis response and communications.
• Improved safety metrics, step up on cyber maturity rating.
• Improvements in engagement across the Group, with positive indicators
for safety and communications.
STIP OUTCOME (% OF TARGET)
2020 SHAREHOLDINGS ($000s)
MINIMUM SHAREHOLDING
REQUIREMENT
(AS AT 31 DECEMBER 2020)
UNVESTED LTIP
(MAXIMUM FACE VALUE AT GRANT)
UNVESTED STIP
DEFERRAL
VESTED LTIP AND STIP
DEFERRAL
0%
0%
100%
30%
4,747
2020-2022 LTIP
3,500
2019 STIP deferral (tranche 2) 203
2018-2020 LTIP
3,570
2019-2021 LTIP
3,500
2018 STIP deferral (tranche 2)
62
2019 STIP deferral (tranche 1)
203
Total value
3,835
ACTUAL:
TARGET:
2,200
Meets requirement
64
COCA-COLA AMATIL ANNUAL REPORT 2020
GREG BARNES GROUP CHIEF FINANCIAL OFFICER (COMMENCED 1 JUNE 2020)
ACTUAL REMUNERATION RECEIVED FOR 2020 ($000)
ACTUAL REMUNERATION
499
27 149
675
Fixed remuneration
Benefits
Cash STIP
2020 STIP OUTCOME
PROFIT
(50%)
REVENUE
(20%)
INDIVIDUAL OBJECTIVES
(30%)
Group: Below threshold
Group: Below threshold
• Leadership in driving essential cost savings.
• Integral role in proposed Scheme of Arrangement with CCEP.
• Effective investor and analyst communications.
Board discretion
The Board sought to exercise discretion to increase the calculated 2020 STIP outcome for Greg to reflect the significant personal and professional
contribution to the proposed Scheme of Arrangement with CCEP.
STIP OUTCOME (% OF TARGET)
2020 SHAREHOLDINGS ($000s)
MINIMUM SHAREHOLDING
REQUIREMENT
(AS AT 31 DECEMBER 2020)
ACTUAL:
TARGET:
Nil
425
Compliance required by 1 June 2025
50%
UNVESTED LTIP
(MAXIMUM FACE VALUE AT GRANT)
UNVESTED STIP DEFERRAL
AND ESP
VESTED LTIP, STIP DEFERRAL
AND ESP
2020-2022 LTIP
680
Greg Barnes commenced on
1 June 2020 and has no unvested
STIP deferral or ESP
Greg Barnes commenced on
1 June 2020 and has not received
any vested LTIP, STIP deferral
or ESP
KADIR GUNDUZ MANAGING DIRECTOR, INDONESIA & PAPUA NEW GUINEA
ACTUAL REMUNERATION RECEIVED FOR 2020 ($000)
ACTUAL REMUNERATION
745
743
136
96
589
21
2,330
Fixed remuneration
Benefits
Cash STIP
Vested deferred STIP
Vested LTIP
ESP
2020 STIP OUTCOME
PROFIT
(50%)
REVENUE
(20%)
INDIVIDUAL OBJECTIVES
(30%)
Group: Below threshold
Indonesia & PNG: Below threshold
Indonesia: Below threshold
PNG: Below threshold
• Outstanding COVID crisis management.
• Financial delivery under adverse conditions.
• Gains in priority markets.
STIP OUTCOME (% OF TARGET)
2020 SHAREHOLDINGS ($000s)
MINIMUM SHAREHOLDING
REQUIREMENT
(AS AT 31 DECEMBER 2020)
UNVESTED LTIP
(MAXIMUM FACE VALUE AT GRANT)
UNVESTED STIP DEFERRAL
AND ESP
VESTED LTIP, STIP DEFERRAL
AND ESP
30%
ACTUAL:
TARGET:
361
1,890
2020-2022 LTIP
2019-2021 LTIP
667
617
2019 STIP deferral (tranche 2)
ESP
Meets requirement
78
47
2018-2020 LTIP
589
2018 STIP deferral (tranche 2)
18
2019 STIP deferral (tranche 1)
ESP
Total value
78
21
706
65
THE VALUE WE CREATEPERFORMANCE GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
4 2020 KMP SENIOR EXECUTIVE REMUNERATION OUTCOMES (CONTINUED)
CHRIS LITCHFIELD MANAGING DIRECTOR, PACIFIC
ACTUAL REMUNERATION RECEIVED FOR 2020 ($000)
ACTUAL REMUNERATION
687
63
503
150
503
15
1,921
Fixed remuneration
Benefits
Cash STIP
Vested deferred STIP
Vested LTIP
ESP
2020 STIP OUTCOME
PROFIT
(50%)
Group: Below threshold
NZ: Above target
Pacific: Below threshold
STIP OUTCOME (% OF TARGET)
2020 SHAREHOLDINGS ($000s)
MINIMUM SHAREHOLDING
REQUIREMENT
(AS AT 31 DECEMBER 2020)
REVENUE
(20%)
NZ: At stretch
INDIVIDUAL OBJECTIVES
(30%)
• NZ volume and revenue growth delivery in 2020.
• Customer achievements.
• Market leading levels of engagement.
115%
UNVESTED LTIP
(MAXIMUM FACE VALUE AT GRANT)
UNVESTED STIP DEFERRAL
AND ESP
VESTED LTIP, STIP DEFERRAL
AND ESP
ACTUAL:
TARGET:
363
1,815
2020-2022 LTIP
2019-2021 LTIP
595
543
2019 STIP deferral (tranche 2)
ESP
Meets requirement
PETER WEST MANAGING DIRECTOR, AUSTRALIA
ACTUAL REMUNERATION RECEIVED FOR 2020 ($000)
ACTUAL REMUNERATION
80
37
2018-2020 LTIP
2018 STIP deferral (tranche 2)
2019 STIP deferral (tranche 1)
ESP
Total value
503
70
80
15
668
1,227
14
268
100
939
20 2,568
Fixed remuneration
Benefits
Cash STIP
Vested deferred STIP
Vested LTIP
ESP
2020 STIP OUTCOME
PROFIT
(50%)
Group: Below threshold
Australia: Below threshold
STIP OUTCOME (% OF TARGET)
2020 SHAREHOLDINGS ($000s)
MINIMUM SHAREHOLDING
REQUIREMENT
(AS AT 31 DECEMBER 2020)
ACTUAL:
1,185
TARGET:
621
Meets requirement
66
REVENUE
(20%)
Australia: Below threshold
INDIVIDUAL OBJECTIVES
(30%)
• Outstanding COVID crisis management.
• Leadership in driving organisation change.
• Quality of brand partner relationships.
36%
UNVESTED LTIP
(MAXIMUM FACE VALUE AT GRANT)
UNVESTED STIP DEFERRAL
AND ESP
VESTED LTIP, STIP DEFERRAL
AND ESP
2020-2022 LTIP
2019-2021 LTIP
994
920
2019 STIP deferral (tranche 2)
ESP
74
37
2018-2020 LTIP
939
2018 STIP deferral (tranche 2)
26
2019 STIP deferral (tranche 1)
ESP
Total value
74
20
1,059
COCA-COLA AMATIL ANNUAL REPORT 2020
5 2020 KMP SENIOR EXECUTIVE REMUNERATION FRAMEWORK
2020 STIP
The table below outlines key features of the 2020 STIP for KMP Senior Executives:
Purpose
Opportunity
Performance
measures and
weightings
The STIP is an annual incentive plan which seeks to incentivise strong performance from KMP Senior
Executives. Awards under the STIP are based on performance for the year from 1 January 2020 to
31 December 2020.
Target STIP
Maximum STIP (150% of target)
Group Managing Director
80% of fixed remuneration
120% of fixed remuneration
Other KMP Senior Executives
60% of fixed remuneration
90% of fixed remuneration
The 2020 plan has three performance components as follows:
Measure
Profit1,2
Revenue
(Measured
as trading
revenue)
Weighting
Rationale and application
50%
20%
To reflect the importance of delivering to the expectations of our
Shareholders, profit and revenue are used together in the STIP. The
intention is to ensure an appropriate focus on sustainable revenue growth,
which is also profitable.
The performance of the Group Managing Director and the Group Chief
Financial Officer is measured on the Group results, whereas the managing
directors of individual businesses are assessed predominantly on the
performance of their businesses, with only a small portion assessed
against the Group result.
A threshold, target and stretch are set for Group and each business based
on the business plan and the degree of difficulty the People Committee
and management believe is inherent in the targets. Each individual
business therefore has a different threshold and stretch.
This component is based on the achievement of objectives set at the
beginning of the year. Each objective details a specific goal, and the
related tasks and measures of success. They can include further financial
metrics and qualitative objectives with relevant measures. Weightings are
assigned to each objective to reflect their relative importance to delivery
of the strategy and required focus.
Individual
business
objectives
30%
1
2
For Group: Measured as NPAT and EBIT for the year attributable to Shareholders of Coca-Cola Amatil Limited for
continuing operations and before non-trading items. We believe the use of these two measures together, and weighted
equally, ensures a focus on the profit result generated for Shareholders, and reflects the performance of the
businesses (as better represented by the EBIT result).
For each business: measured as EBIT.
In addition to assessing financial performance and individual business objectives, the People Committee
considers the remuneration accountability framework, any other results through the year (that were not
reflected in the objectives), and how the performance was delivered (through demonstrating strong
leadership aligned with the Amatil values).
Calculation
of awards
STIP awards are calculated as follows:
Profit
(50% of STIP)
Assessed 0% to
150% of target
Revenue
(20% of STIP)
Assessed 0% to
150% of target
Individual
objectives
(30% of STIP)
Assessed 0% to
150% of target
Target
STIP
opportunity
$
=
STIP award
$
67
THE VALUE WE CREATEPERFORMANCE GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
5 KMP SENIOR EXECUTIVE REMUNERATION FRAMEWORK (CONTINUED)
2020 STIP (CONTINUED)
Deferral
As a result of the proposed CCEP Scheme of Arrangement and as outlined earlier in this report,
the 2020 STIP will be paid in cash.
The typical approach that would have applied is 60% of the post-tax award is paid as cash and
40% is delivered in Coca-Cola Amatil Limited shares. Half of the shares are subject to a one-year holding
period and half are subject to a two-year holding period.
2020
2021
2022
one-year performance period
20% shares restricted for one year
Vesting
60% paid as cash
20% shares restricted for two years
Vesting
The shares are purchased on market and held irrespective of whether the KMP Senior Executive is employed
by the Group during this period. The individual receives dividends and voting rights on the shares during this
time. The shares are released to the individual at the end of the holding period.
If an individual is terminated for cause prior to the release date of the shares, the shares are forfeited.
Board discretion
The Board has the discretion to reduce the STIP outcome and/or the number of unvested STIP shares
(including to zero), if it judges such an action appropriate. With the deferred STIP shares, the Board considers
the application of malus before any scheduled release of unvested shares.
2020-2022 LTIP
The table below outlines key features of the 2020-2022 LTIP for KMP Senior Executives:
Purpose
The LTIP is an equity incentive plan used to align the reward of KMP Senior Executives to the returns
generated for Coca-Cola Amatil Limited Shareholders.
Participants
KMP Senior Executives.
Opportunity
Type of award
The maximum face value for the Group Managing Director is 160% of fixed remuneration, and 80% for other
KMP Senior Executives.
Rights – each right entitles the participant to receive one Coca-Cola Amatil Limited share (or cash equivalent
at the Board’s discretion), subject to meeting performance conditions.
There are no dividend entitlements or voting rights attached to the rights awarded. The entitlement to receive
dividends and voting rights only applies if the rights vest and shares are acquired.
Allocation approach
The maximum number of rights granted is determined on a face value basis as follows:
Fixed
remuneration at
the time of grant
$
Maximum
award
opportunity
%
Share price $
(no discount
applied)
=
Number of rights
granted
The share price used is the volume weighted average share price of Coca-Cola Amatil Limited shares over the
30 days preceding the beginning of the performance period. To achieve vesting of the maximum number of
rights, each of the performance conditions must be met in full at their stretch levels of performance.
Performance period
Three years from 1 January 2020 to 31 December 2022.
There is no retesting of performance if performance conditions are not met at the end of the three-year
performance period.
Board discretion
The Board has the discretion to reduce the number of unvested LTIP rights (including to zero), where
appropriate. The Board considers the application of malus before any scheduled release of unvested
LTIP rights.
68
COCA-COLA AMATIL ANNUAL REPORT 2020 Cessation of
employment
Where a participant resigns or is terminated for cause before the end of the performance period, all rights
will lapse immediately.
Unless the Board determines otherwise, if a participant ceases employment before the end of the
performance period for any other reason:
— rights will be pro rated to the date of cessation and tested against the performance conditions at the
end of the performance period if more than one-third of the performance period has elapsed, or
— all rights will lapse immediately if less than one-third of the performance period has elapsed.
In addition to the above, Ms Watkins’ employment contract specifies that on cessation of employment the
minimum one-year service requirement for pro-rata eligibility for existing LTIP grants will not apply.
Change of control
In the event of a change of control prior to the end of the performance period, the Board has retained
discretion to determine the level of vesting of any unvested LTIP awards.
What are the
performance
conditions and why
were they chosen?
LTIP performance
conditions
Absolute TSR
The performance measures have been changed for
the 2020-2022 LTIP grant, and include absolute
TSR, relative TSR and absolute EPS (reintroduced
for the 2020-2022 LTIP).
The three performance measures are each assessed
independently as one-third of the award.
The performance conditions, targets and vesting schedules are
reviewed each year prior to grants being made, to ensure they
align with Group strategy and the interests of Shareholders.
⅓
⅓
Absolute TSR
Relative TSR
Absolute EPS
⅓
Reason for selection
The use of both measures of absolute and relative TSR rewards for both absolute and relative Shareholder
value creation, and the Board believes that the two measures complement each other. The absolute measure
has the key benefit of providing executives with a clear known level of Shareholder return to attain through
delivering on the business strategy and generating share price growth and dividends for Shareholders.
The relative measure provides a direct link between the reward earned and the Shareholder return achieved
relative to Amatil’s ASX peers.
EPS has been reintroduced as a performance measure with targets aligned to our Shareholder
Value Proposition.
Absolute TSR is the percentage increase in a company’s share price plus reinvested dividends during the
performance period. TSR therefore reflects the increase in value delivered to Shareholders over the period.
Approach
The Group’s absolute TSR is measured over the performance period and assessed relative to a target of
8% compound annual growth rate (CAGR) for partial vesting and a target for maximum vesting of 12% CAGR.
Vesting framework
TSR – CAGR
Less than 8%
8%
Vesting %
Nil
50%
Between 8% and 12%
Pro-rata vesting on a straight-line basis between 50% and 100%
12% and above
100%
Calculation of results
TSR outcomes are calculated by an independent provider, Orient Capital.
69
THE VALUE WE CREATEPERFORMANCE GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
5 KMP SENIOR EXECUTIVE REMUNERATION FRAMEWORK (CONTINUED)
2020-2022 LTIP (CONTINUED)
Relative TSR
Relative TSR reflects Amatil’s TSR performance relative to the TSR performance of a group of
selected peers.
Approach
The Group’s Relative TSR is measured over the performance period and assessed against the TSR of the
comparator group over the same period. Coca-Cola Amatil Limited is then given a percentile ranking based
on its comparative TSR performance. The comparator group comprises the ASX 100 (less financial and
mining companies) as defined at the start of the performance period, reflecting a peer group of comparable
top 100 Australian listed companies.
Vesting framework
Peer group ranking
Less than 51st percentile
51st percentile
Vesting %
Nil
50%
Between 51st and 75th percentile
Pro-rata vesting on a straight-line basis between 50% and 100%
75th percentile and above
100%
Calculation of results
TSR outcomes are calculated by an independent provider, Orient Capital.
Absolute EPS
Approach
Profit for the purposes of EPS will be measured based on net profit after tax attributable to Shareholders of
Coca-Cola Amatil Limited for continuing operations and before non-trading items. This was effective for the
2020-2022 LTIP grant.
This will support a primary focus on underlying trading performance. The Board will consider any one-off
items that occur that impact EPS and, where appropriate, hold executives accountable with appropriate
disclosure to Shareholders.
In response to shareholder feedback, the EPS performance measure uses a CAGR target which is assessed
at the end of the three-year performance period. This contrasts with our historic approach to EPS for LTIP
purposes where a simple average was used.
Vesting framework
EPS – CAGR
Less than 5%
5%
Vesting %
Nil
50%
Between 5% and 8%
Pro-rata vesting on a straight-line basis between 50% and 100%
8% and above
100%
70
COCA-COLA AMATIL ANNUAL REPORT 2020 6 REMUNERATION GOVERNANCE
Roles in determining remuneration
The table below sets out the roles of the Board, the People Committee and management in relation to Board and
KMP Senior Executive remuneration:
BOARD
• Accountable for KMP remuneration.
• Approves Group Managing Director remuneration, including the application of the accountability framework.
• Approves Non-Executive Director remuneration (with shareholder approval required for the overall limit).
MANAGEMENT
PEOPLE COMMITTEE
EXTERNAL INDEPENDENT ADVICE
• Prepares recommendations and
information for the Committee’s
consideration and approval.
• Implements the approved
remuneration arrangements.
• Makes recommendations to
the Board on Group Managing
Director and Non-Executive
Director remuneration.
• Approves executive reward
strategy, incentive plans, KMP
Senior Executive remuneration
and application of the
accountability framework.
• Seeks input and advice from
other Committees on matters
that relate to KMP Senior
Executive remuneration
(e.g. risk management, safety
performance etc).
The People Committee also has
access to independent advice. In
2020, the Committee continued to
utilise PricewaterhouseCoopers.
No remuneration recommendations
(as defined by the Corporations Act
2001) were provided in 2020. Advice
was limited to market information
with respect to the Group Managing
Director’s and the Non-Executive
Directors’ remuneration, and
a market insight briefing for
the Committee.
Remuneration accountability framework
In determining remuneration outcomes for KMP Senior Executives, the Board considers not only the financial and individual
performance outcomes, but also the way in which that performance was delivered using an accountability framework. This framework:
— describes the types of incidents that need to be identified and reported (e.g. safety, financial misstatements, breaches of codes
of conduct, poor audit findings, and breaches of post-employment restraints);
— explicitly outlines the consequences of different performance outcomes (e.g. no remuneration review, reduced STIP outcomes,
or applying malus to unvested STIP shares or LTIP awards);
— considers each event on a case-by-case basis, recording precedents, ensuring consistency and reflecting both negative and
positive outcomes;
— typically reserves that decisions will be made at year end regarding the totality of the individual’s contribution throughout the year;
— notes that in serious cases consequences may extend beyond the consideration of remuneration alone (e.g. an individual may be
required to leave Coca-Cola Amatil Limited).
The accountability framework is considered each year when assessing KMP Senior Executive performance. The Group Managing
Director reviews and makes recommendations on the application of the framework for their direct reports. These recommendations
are then considered and approved by the People Committee. For the Group Managing Director, the People Committee considers the
application of the accountability framework and makes recommendations to the Board for approval.
Preventing unintended consequences
The reward framework has design elements that protect against the risk of unintended and unjustifiable outcomes. These include:
— measuring incentive plans across a suite of relevant performance measures, and not placing too much emphasis on one specific
aspect of performance;
— assessing performance through the types of objectives set, the deferred component of the STIP and the time periods over which
performance is measured: one year for the STIP, and three years for the LTIP;
— the STIP deferred shares and LTIP awards, which continue in the plan beyond cessation of employment (subject to the reason
for ceasing employment) and ensure a focus on long-term shareholder value creation;
— a minimum shareholding requirement for KMP Senior Executives to ensure their incentives align with Shareholder interests;
— the Board’s ability to adjust STIP outcomes and reduce unvested STIP deferred shares, as well as unvested LTIP awards.
These provisions are drafted broadly to provide the Board scope to exercise this authority as required.
71
THE VALUE WE CREATEPERFORMANCE GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
7 NON-EXECUTIVE DIRECTOR ARRANGEMENTS
FEE POLICY AND MINIMUM SHAREHOLDING REQUIREMENT
The remuneration of Non-Executive Directors comprises Directors’ fees (Board plus Board Committee fees) and superannuation
contributions. No element of remuneration is performance related.
Based on market information received from external remuneration consultants (via the People Committee), Directors’ fees are set and
approved by the Board. Setting the fees considers the size and complexity of the Group’s operations, the Directors’ associated
workload and their responsibility for the stewardship of Amatil.
The only change made to Non-Executive Director fees during 2020 was to reduce the Indonesia Board of Commissioners fee from
$25,000 to $15,000 in May 2020.
The fees are paid within a maximum director fee limit of $2.8 million per annum, which was approved at the 2016 Annual General
Meeting. This is a maximum limit and current fees fall below this limit.
Directors’ fees
The annual Directors’ fees (excluding superannuation contributions) payable to Non-Executive
Directors for the year ended 31 December 2020 were as follows:
Board
Audit & Finance Committee
Risk & Sustainability Committee
People Committee
Indonesia Board of Commissioners
Chairman fee
$
490,000
35,000
35,000
35,000
Nil
Member fee
$
169,100
17,500
17,500
17,500
15,000
No fees are payable in respect of membership of the Related Party Committee or the Nominations
Committee. The Chairman of the Board does not receive any Committee fees.
In accordance with Amatil’s constitution and the Scheme Implementation Deed, Amatil
Independent Non-Executive Directors, Mr Mark Graham Johnson and Ms Penelope Ann Winn, will
each receive a one-off fee equal to $25,000 plus applicable superannuation for their attendance
and participation in the work of a sub-committee in relation to the scheme booklet. The relevant
fees are payable upon the draft scheme booklet being lodged with ASIC regardless of whether the
Scheme subsequently completes.
Director shareholding
requirement
Non-Executive Directors are required to hold an amount equivalent to:
— 50% of the pre-tax Director base fee within three years of appointment.
— 100% of the pre-tax Director base fee within five years of appointment.
The requirement does not apply to the Coca-Cola Company nominee directors given the
significant shareholding held by TCCC, and their role as representatives of the
Coca-Cola Company.
From time to time, Non-Executive Directors may be restricted from trading in Coca-Cola Amatil
Limited shares given their access to confidential or price sensitive insider information which is not
complete or disclosable under the ASX Listing Rules. This may impact their ability to meet the
minimum shareholding requirement within the five-year time frame. As a result, this time frame
may be extended at the Board’s discretion.
As at 31 December 2020, all Non-Executive Directors were compliant with the minimum
shareholding requirement.
In addition to Director fees, Amatil makes superannuation contributions up to the amount required
by the Superannuation Guarantee legislation. If an exemption applies (such as that introduced by
the recent changes to Superannuation Guarantee legislation impacting Non-Executive Directors
on multiple boards), superannuation contributions will instead be made as cash with the
Director’s fees.
Superannuation
contributions
Other benefits
Non-Executive Directors can access the staff sampling program that provides employees with a
limited amount of Company products for personal consumption.
72
COCA-COLA AMATIL ANNUAL REPORT 2020 STATUTORY REMUNERATION
The following table has been prepared in accordance with section 300A of the Corporations Act 2001 and lists the amounts paid
or payable for services provided by each Non-Executive Director during the year:
Non-Executive Directors
I.R. Atlas, AO
M. Borghetti, AO
J.G. Chavero
M.G. Johnson
P.D. O’Sullivan
K. Thirumalai
P.A. Winn
Commenced 2 December 2019
Former Non-Executive Directors
C.M. Brenner
Retired on 15 May 2019
J.A. Coates
Resigned on 29 November 2019
Total Non-Executive Directors
SHAREHOLDINGS
Non-Executive Directors
I.R. Atlas, AO
M. Borghetti, AO
J.G. Chavero
M.G. Johnson
P.D. O’Sullivan
K. Thirumalai2
P.A. Winn
Short-Term
Post-
employment
Base fees Committee fees
Superannuation
Year
$
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
490,000
490,000
181,139
169,100
169,100
169,100
169,100
169,100
169,100
169,100
169,100
169,100
169,100
14,092
$
–
–
56,238
52,501
17,500
35,000
88,458
78,001
70,000
57,065
35,000
35,000
17,500
1,458
$
Total
$
21,348
511,348
20,726
5,251
20,767
17,727
19,389
510,726
242,628
242,368
204,327
223,489
21,348
278,906
20,767
21,349
20,482
19,389
19,389
17,727
1,477
267,868
260,449
246,647
223,489
223,489
204,327
17,027
2019
63,106
19,593
7,726
90,425
2019
155,008
16,042
16,250
187,300
2020
1,516,639
284,696
124,139
1,925,474
2019
1,567,706
294,660
146,973
2,009,339
Opening
balance1
42,000
15,994
–
10,000
22,500
8,100
–
Movements
Closing balance
–
6,500
–
–
–
–
18,300
42,000
22,494
–
10,000
22,500
8,100
18,300
1
2
Includes existing balances of shares on appointment to Non-Executive Director roles, and any shares held in the legacy Non-Executive Director
retirement plan or Non-Executive Director share plan.
Shares held in the form of American Depositary Receipts.
73
THE VALUE WE CREATEPERFORMANCE GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
8 STATUTORY DISCLOSURES
TOTAL REMUNERATION REPORTED IN 2020 – STATUTORY TABLE
The following table shows the total remuneration for the KMP Senior Executives during the current and previous reporting periods.
The table has been prepared in accordance with the accounting standards. Amounts are calculated from the date the individual
commenced in the KMP position or up to the date the individual ceased to hold the KMP position.
Fixed
Short-term
Salary
$
Leave
accrual
Non-monetary
benefits1
$
$
2,178,652
2,179,234
38,918
123,619
13,218
10,201
Year
2020
2019
KMP Senior Executives
A.M. Watkins
Executive Director and
Group Managing Director
G.D. Barnes (commenced 1 June 2020)
2020
483,236
24,510
2,755
Group Chief Financial Officer
K. Gunduz
Managing Director, Indonesia
& Papua New Guinea
C.J. Litchfield
Managing Director, Pacific
P. West
Managing Director, Australia
Former KMP Senior Executive
M.J. Roberts
(ceased 17 April 2020)
Group Chief Financial Officer
Total KMP Senior Executives
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
724,075
768,765
620,282
582,741
1,205,319
1,129,234
341,757
915,572
5,553,321
5,575,546
–
–
–
4,225
6,120
34,596
–
16,918
69,548
179,358
443,641
566,219
9,849
714
7,502
6,765
1,623
6,335
478,588
590,234
Post- employment
Short-term
Share-based payments
Performance related
At-risk – performance related
Total remuneration
Other
benefits1
$
1,128
–
–
–
299,195
318,767
52,766
52,603
–
–
–
–
353,089
371,370
Superannuation
$
21,348
20,767
16,098
16,098
21,348
20,767
66,340
49,533
21,348
20,767
9,533
20,767
156,015
132,601
LTIP3
ESP matching shares
One-off equity award4
148,750
63,388
STIP2
$
525,000
1,916,250
135,759
548,330
503,090
593,326
268,272
694,830
$
1,110,952
1,232,567
198,524
211,127
176,323
183,804
298,882
349,065
–
(400,978)4
640,455
1,580,871
4,393,191
263,791
1,447,091
2,240,354
$
–
–
–
–
–
21,805
23,063
18,608
16,466
11,448
40,413
84,854
$
–
–
–
–
–
–
–
–
–
–
–
$
3,889,216
5,482,638
738,737
1,844,347
2,457,038
1,447,258
1,483,412
1,807,443
2,964,759
(48,065)
1,875,286
9,678,936
695,625
14,263,133
33,877
695,625
%
42
57
29
18
31
47
52
31
35
–
48
Benefits are:
– non-monetary benefits: product allowance, insurance premiums (Life, Total and Permanent Disablement and Temporary Salary Continuance)
through the Coca-Cola Amatil Superannuation Plan and annual health check; and
– other benefits: cash benefits such as car allowance (Mr Litchfield), club membership (Mr Litchfield), expatriate benefits (Mr Gunduz) and
recreation allowance (Mr Gunduz).
Represents the estimated fair value of Coca-Cola Amatil Limited shares offered in the LTIP. For the absolute TSR and relative TSR components it is
calculated by multiplying the maximum number of rights by the fair value of the shares at grant date and amortised over the performance period.
The EPS component is based on the target number of rights that may vest. Where actual EPS results or management estimates indicate that
EPS components of plans have not vested or will not vest, amortisation ceases, and pre-expensed amounts are reversed.
A one-off equity grant to Mr West vesting on 21 February 2020 was made as a sign-on award to replace a portion of an incentive at his previous
employer which was forfeited when commencing employment with the Group. Further details are disclosed in our 2019 Annual Report (page 98).
This represents the reversal of pre-expensed amounts related to LTIP share rights granted to Mr Roberts which lapsed on resignation.
1
2
3
4
74
COCA-COLA AMATIL ANNUAL REPORT 2020
Post- employment
Short-term
Share-based payments
Performance related
At-risk – performance related
Total remuneration
LTIP3
ESP matching shares
One-off equity award4
$
1,110,952
1,232,567
STIP2
$
525,000
1,916,250
G.D. Barnes (commenced 1 June 2020)
2020
483,236
24,510
2,755
148,750
63,388
135,759
548,330
503,090
593,326
268,272
694,830
198,524
211,127
176,323
183,804
298,882
349,065
–
(400,978)4
640,455
1,580,871
4,393,191
263,791
1,447,091
2,240,354
Leave
accrual
Non-monetary
benefits1
Other
benefits1
Superannuation
2,178,652
2,179,234
38,918
123,619
Year
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
Salary
$
724,075
768,765
620,282
582,741
1,205,319
1,129,234
341,757
915,572
5,553,321
5,575,546
Fixed
Short-term
$
13,218
10,201
443,641
566,219
9,849
714
7,502
6,765
1,623
6,335
478,588
590,234
$
–
–
–
–
4,225
6,120
34,596
16,918
69,548
179,358
1,128
299,195
318,767
52,766
52,603
$
–
–
–
–
–
–
–
353,089
371,370
$
21,348
20,767
16,098
16,098
21,348
20,767
66,340
49,533
21,348
20,767
9,533
20,767
156,015
132,601
KMP Senior Executives
A.M. Watkins
Executive Director and
Group Managing Director
Group Chief Financial Officer
K. Gunduz
Managing Director, Indonesia
& Papua New Guinea
C.J. Litchfield
Managing Director, Pacific
P. West
Managing Director, Australia
Former KMP Senior Executive
M.J. Roberts
(ceased 17 April 2020)
Group Chief Financial Officer
Total KMP Senior Executives
1
Benefits are:
– non-monetary benefits: product allowance, insurance premiums (Life, Total and Permanent Disablement and Temporary Salary Continuance)
through the Coca-Cola Amatil Superannuation Plan and annual health check; and
– other benefits: cash benefits such as car allowance (Mr Litchfield), club membership (Mr Litchfield), expatriate benefits (Mr Gunduz) and
recreation allowance (Mr Gunduz).
2
Represents the estimated fair value of Coca-Cola Amatil Limited shares offered in the LTIP. For the absolute TSR and relative TSR components it is
calculated by multiplying the maximum number of rights by the fair value of the shares at grant date and amortised over the performance period.
The EPS component is based on the target number of rights that may vest. Where actual EPS results or management estimates indicate that
EPS components of plans have not vested or will not vest, amortisation ceases, and pre-expensed amounts are reversed.
3
4
A one-off equity grant to Mr West vesting on 21 February 2020 was made as a sign-on award to replace a portion of an incentive at his previous
employer which was forfeited when commencing employment with the Group. Further details are disclosed in our 2019 Annual Report (page 98).
This represents the reversal of pre-expensed amounts related to LTIP share rights granted to Mr Roberts which lapsed on resignation.
$
–
–
–
21,805
23,063
18,608
16,466
–
33,877
–
11,448
40,413
84,854
$
–
–
–
–
–
–
–
–
695,625
–
–
–
$
3,889,216
5,482,638
738,737
1,844,347
2,457,038
1,447,258
1,483,412
1,807,443
2,964,759
(48,065)
1,875,286
9,678,936
695,625
14,263,133
%
42
57
29
18
31
47
52
31
35
–
48
75
THE VALUE WE CREATEPERFORMANCE GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
8 STATUTORY DISCLOSURES (CONTINUED)
CONTRACTUAL ARRANGEMENTS
Each KMP Senior Executive has a formal employment agreement. The agreements are of a continuing nature and have no set term.
A standardised approach to new executive employment agreements was implemented in 2015. There are variances in the termination
entitlements provided in the legacy contracts as summarised below:
Notice period and severance payments
Notice period
by employer or
executive (months)
Severance
(provided unless executive resigns or is terminated for cause)
Restraint
following termination
(months)
12
6
3
3
6
Not applicable
Not applicable
Notice plus one month per year of service (capped at 12 months)
Notice plus one month per year of service (capped at 12 months)
Not applicable
12
6
6
6
6
A.M. Watkins
G.D. Barnes
K. Gunduz
C.J. Litchfield
P. West
THE REMUNERATION EARNED AND LAPSED FOR KMP SENIOR EXECUTIVES
A.M. Watkins
G.D. Barnes
(commenced 1 June 2020)
K. Gunduz
C.J. Litchfield
P. West
M.J. Roberts
(ceased 17 April 2020)
Plan
2020 STIP
2018-2020 LTIP
2020 STIP
2020 STIP
2018-2020 LTIP
2020 STIP
2018-2020 LTIP
2020 STIP
2018-2020 LTIP
2020 STIP
2018-2020 LTIP
Actual %
of target
30.0
133.3
50.0
30.0
133.3
114.9
133.3
36.0
133.3
–
–
Actual %
of maximum
Forfeited %
of maximum
20.0
66.7
33.3
20.0
66.7
76.6
66.7
24.0
66.7
–
–
80.0
33.3
66.7
80.0
33.3
23.4
33.3
76.0
33.3
100
100
76
COCA-COLA AMATIL ANNUAL REPORT 2020
KMP SENIOR EXECUTIVES SHAREHOLDINGS
As noted earlier, to ensure alignment with Shareholders, a minimum shareholding requirement applies. Subject to any share trading
restrictions that may impact the attainment of these thresholds within the guideline’s time frames, the Group Managing Director is
required to hold an amount equivalent to 100% of fixed remuneration. Other KMP Senior Executives are required to hold 50% of fixed
remuneration in Coca-Cola Amatil Limited shares. A five-year time frame is permitted to attain this holding.
The table below shows the movements in shareholdings for KMP Senior Executives during 2020. These include:
— Purchased and vested shares: either purchased on market or received through a Coca-Cola Amatil Limited share plan and
no longer subject to any restrictions.
— STIP shares: purchased as part of a STIP award that have not yet completed their holding period and remain subject to forfeiture
in specific circumstances.
— ESP: purchased and matching shares that have not yet completed their holding period and remain subject to forfeiture in specific
circumstances. The ESP is open to all full and part-time employees of the Group on a voluntary basis with each participant able to
contribute up to 3% per year of base salary to purchase shares. KMP Senior Executives are restricted to making contributions to
the ESP only during a trading window and must comply with the Policy on Trading in Coca-Cola Amatil Securities. For every share
acquired, a matching share is acquired, which under normal circumstances vests to the employee after a period of two years.
There are no performance conditions.
KMP Senior Executives2
A.M. Watkins
Purchased and vested shares
STIP shares
K. Gunduz
Purchased and vested shares
STIP shares
Employee Share Plan shares
C.J. Litchfield
Purchased and vested shares
STIP shares
Employee Share Plan shares
P. West
Purchased and vested shares
STIP shares
Employee Share Plan shares
Former KMP Senior Executive
M.J. Roberts
Purchased and vested shares
(ceased 17 April 2020) STIP shares
Employee Share Plan shares
Transfers/
others
23,352
(23,352)
–
8,966
(8,351)
(4,632)
Closing
balance
627,369
15,868
643,237
175,674
6,129
9,950
(4,017)
191,753
14,331
165,365
(14,808)
(3,422)
(3,899)
74,974
(9,058)
(4,248)
6,272
7,666
179,303
150,863
5,754
7,612
61,668
164,229
Opening
balance
Purchased,
vested or granted1
327,881
7,483
335,364
121,148
2,221
9,414
132,783
112,122
8,536
7,052
127,710
3,305
3,304
11,354
17,963
59,110
2,584
9,222
70,916
276,136
31,737
307,873
45,560
12,259
5,168
62,987
38,912
12,544
4,036
55,492
72,584
11,508
506
84,598
–
10,607
–
(59,110)
(13,191)
(9,222)
10,607
(81,523)
–
–
–
–
1
2
Includes the purchase of shares, shares granted under various employee ownership plans and share rights which have vested under 2018-2020 LTIP
and which will be converted into shares at the next share trading window. The Board retains discretion to settle share rights as a cash equivalent per
the LTIP plan rules. During 2020, no KMP Senior Executives participated in the Dividend Reinvestment Plan.
Greg Barnes is not included in the table above as he commenced on 1 June 2020 and did not receive any purchased or vested shares through a
Coca-Cola Amatil Limited share plan or participate in the ESP during 2020.
77
THE VALUE WE CREATEPERFORMANCE GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
8 STATUTORY DISCLOSURES (CONTINUED)
SHARE RIGHTS HELD BY KMP SENIOR EXECUTIVES UNDER THE LTIP
The table below summarises the number of current share rights and their movements during the year:
Plan
Grant date
Opening balance
Granted
Vested
Lapsed
Closing balance
Maximum number of share rights1
KMP Senior Executives
A.M. Watkins
2018-20202
16 May 2018
2019-2021
3 June 2019
414,204
414,692
–
–
2020-2022
12 June 2020
–
311,388
(276,136)
(138,068)
–
–
–
–
–
414,692
311,388
828,896
311,388
(276,136)
(138,068)
726,080
G.D. Barnes
2020-2022
12 June 2020
K. Gunduz
2018-20202
16 May 2018
2019-2021
3 June 2019
–
–
68,338
72,684
60,498
60,498
–
–
2020-2022
12 June 2020
–
58,232
–
–
–
60,498
–
60,498
(45,560)
(22,778)
–
–
–
–
–
72,684
58,232
141,022
58,232
(45,560)
(22,778)
130,916
C.J. Litchfield
2018-20202
16 May 2018
2019-2021
3 June 2019
58,370
63,980
–
–
2020-2022
12 June 2020
–
52,769
(38,912)
(19,458)
–
–
–
–
–
63,980
52,769
P. West3
2018-20202
16 May 2018
2019-2021
3 June 2019
108,874
109,004
–
–
2020-2022
12 June 2020
–
88,399
(72,584)
(36,290)
–
–
–
–
–
109,004
88,399
122,350
52,769
(38,912)
(19,458)
116,749
217,878
88,399
(72,584)
(36,290)
197,403
Former KMP Senior Executives
M.J. Roberts
2018-2020
16 May 2018
(ceased 17 April
2020)
2019-2021
3 June 2019
88,646
88,752
177,398
–
–
–
–
–
–
(88,646)
(88,752)
(177,398)
–
–
–
1
2
Numbers are quoted based on maximum potential vesting.
Share rights have vested under the 2018-2020 LTIP and will be converted into shares at the next share trading window. The Board retains discretion
to settle share rights as a cash equivalent per the LTIP plan rules.
3 Mr West’s 2018-2020 opening balance has been restated to reflect the maximum potential value.
78
COCA-COLA AMATIL ANNUAL REPORT 2020
The table below provides a summary of vesting and forfeiture, the future financial years in which vesting may occur, and the estimated
maximum total value of grants that could vest:
Share-based compensation benefits
Year granted
% vested
% forfeited
Financial years
in which rights
may vest
Maximum total value
of grant yet to vest 1
$
A.M. Watkins
G.D. Barnes
(commenced 1 June 2020)
K. Gunduz
C.J. Litchfield
P. West
Former KMP Senior Executives
M.J. Roberts
(ceased 17 April 2020)
2020
2019
2018
2020
2020
2019
2018
2020
2019
2018
2020
2019
2018
2019
2018
–
–
–
–
66.67
33.33
–
–
–
–
–
–
66.67
33.33
–
–
–
–
66.67
33.33
–
–
–
–
66.67
33.33
–
–
100
100
2022
2021
2020
2022
2022
2021
2020
2022
2021
2020
2022
2021
2020
2021
2020
934,856
1,564,771
–
181,628
174,825
274,261
–
158,424
241,418
–
265,393
411,308
–
–
–
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
has been estimated based on the fair value per grant at the maximum achievement of the vesting scale less amounts already expensed at
31 December 2020.
The table below provides the value1 of share rights granted, vested or lapsed during the year:
A.M. Watkins
G.D. Barnes (commenced 1 June 2020)
K. Gunduz
C.J. Litchfield
P. West
Former KMP Senior Executives
M.J. Roberts (ceased 17 April 2020)
2020-2022 plan – granted
2018-2020 plan – vested/lapsed
Maximum
$
At date vested
$
At date lapsed 2
$
1,401,765
1,093,499
1,086,595
272,342
262,141
237,548
397,943
–
–
180,416
179,270
154,093
153,128
287,431
285,609
–
–
–
1
2
All values are calculated in accordance with AASB 2 Share-based Payment. Maximum, vested and lapsed amounts are based on the full number
of rights granted.
Lapsed includes forfeited value and is calculated using the maximum value less the vested amount.
79
THE VALUE WE CREATEPERFORMANCE GOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
8 STATUTORY DISCLOSURES (CONTINUED)
FAIR VALUE ASSUMPTIONS
The table below summarises the key terms of grants to KMP Senior Executives that have vested or lapsed during the year and that
remain unvested as at 31 December 2020:
Grant date
16 May 2018
3 June 2019
12 June 2020
Vesting/
expiry date
Performance
measure
Fair value at grant
date per share right1
$
31 December 2020
Absolute TSR
Relative TSR
Absolute EPS
31 December 2021
Absolute TSR
Relative TSR
31 December 2022
Absolute TSR
Relative TSR
Absolute EPS
3.02
4.90
7.87
3.95
7.37
1.25
4.11
8.15
Performance
achieved2
100%
100%
0%
To be determined
To be determined
To be determined
To be determined
To be determined
1
2
Fair values vary due to differing grant and vesting dates.
The rewards received under the LTIP are dependent on long-term performance; the 2019 and 2020 grants are still to be tested. The percentage
of grants that will vest will be determined based upon the Group’s performance at the end of each performance period.
Loans to KMP and other transactions of KMP and their personally related entities
Neither Coca-Cola Amatil Limited nor its subsidiaries have loans with KMP or were party to any other transactions with
KMP (including their personally related entities).
The Directors’ Report has been signed in accordance with a resolution of the Directors.
Ilana R. Atlas, AO
Chairman
Sydney
18 February 2021
Alison M. Watkins
Group Managing Director
Sydney
18 February 2021
80
COCA-COLA AMATIL ANNUAL REPORT 2020 FINANCIAL REPORT
Coca-Cola Amatil Limited and its subsidiaries for the year ended 31 December 2020
CONTENTS
CONSOLIDATED INCOME STATEMENT
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED BALANCE SHEET
CONSOLIDATED STATEMENT OF CASH FLOWS
NOTES TO THE FINANCIAL STATEMENTS
OVERVIEW
I
OUR RESULTS
1 Segment Reporting
2 Revenue
3 Expenses
4 Dividends
5 Earnings Per Share
II OUR ASSETS AND LIABILITIES – OPERATING AND INVESTING
6 Working Capital
7 Property, Plant and Equipment
8 Leases
9
Intangible Assets
10 CGUs Impairment Testing
11
Income Tax
12 Other Assets (Net)
III OUR CAPITAL – FINANCING
13 Equity
14 Net Debt
IV OUR RISK MANAGEMENT
15 Financial Risk Management
16 Fair Value
V OTHER INFORMATION
17 Related Parties
18 Employee Ownership Plans
19 KMP Disclosures
20 Auditor’s Remuneration
21 Coca-Cola Amatil Limited Disclosures
22 Deed of Cross Guarantee
23 Investments in Subsidiaries
24 Non-controlling interests
25 Contingent liability
26 Acquisition by Coca-Cola European Partners
27 New Standards and Interpretations
28 Events after the Balance Date
DIRECTORS’ DECLARATION
Page
82
83
84
85
86
87
88
90
91
93
94
95
97
98
100
102
105
108
112
114
120
125
126
127
128
129
129
130
132
133
134
134
134
134
135
81
THE VALUE WE CREATEPERFORMANCEGOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS CONSOLIDATED
INCOME STATEMENT
Coca-Cola Amatil Limited and its subsidiaries for the year ended 31 December
Continuing operations
Trading revenue
Cost of goods sold
Delivery
Gross profit
Other revenue
Expenses
Selling1
Warehousing and distribution
Support services and other1,2
Share of profit from equity accounted investments
Earnings before interest and tax
Net finance costs
Finance income
Finance costs
Profit before income tax
Income tax expense2
Profit from continuing operations
Discontinued operation
Profit from discontinued operation, net of tax
Profit for the year
Attributable to:
Shareholders of Coca-Cola Amatil Limited
Non-controlling interests
Profit for the year
Basic and diluted earnings per share attributable
to shareholders of Coca-Cola Amatil Limited
Group
Continuing operations
Note
2020
$M
2019
$M
2
2
3
3
11a
12d
5
5
4,762.1
(2,862.1)
(221.4)
1,678.6
5,070.6
(2,974.7)
(235.9)
1,860.0
38.6
41.5
(593.3)
(174.7)
(669.5)
(623.8)
(177.1)
(503.7)
(1,437.5)
(1,304.6)
0.3
280.0
32.6
(94.7)
(62.1)
217.9
(72.9)
145.0
–
145.0
179.9
(34.9)
145.0
¢
24.8
24.8
1.9
598.8
41.6
(107.3)
(65.7)
533.1
(149.3)
383.8
6.2
390.0
374.4
15.6
390.0
¢
51.7
50.9
1
2
The prior period financial information was restated to increase support services and other by $53.4 million from $450.3 million to $503.7 million and
reduce selling expenses by $53.4 million from $677.2 million to $623.8 million. The restatement was performed to confirm with the current period
presentation.
Includes amounts classified as non-trading items. Refer to Notes 3b and 11a for further details.
Notes appearing on pages 87 to 134 to be read as part of the financial statements.
82
COCA-COLA AMATIL ANNUAL REPORT 2020 CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
Coca-Cola Amatil Limited and its subsidiaries for the year ended 31 December
Profit for the year
Other comprehensive (loss)/income
Items to be reclassified to the income statement in subsequent periods:
Foreign exchange differences on translation of foreign operations
Cash flow hedges
Income tax effect relating to cash flow hedges
Other reserve movements
Income tax effect relating to other reserve movements
Items not to be reclassified to the income statement in subsequent periods:
Actuarial valuation reserve
Income tax effect
Changes in fair value of investments
Other comprehensive (loss)/income
Total comprehensive (loss)/income for the year
Attributable to:
Shareholders of Coca-Cola Amatil Limited
Non-controlling interests
Total comprehensive (loss)/income for the year
Total comprehensive (loss)/income for the year, attributable
to shareholders of Coca-Cola Amatil Limited arising from:
Continuing operations
Discontinued operation
Notes appearing on pages 87 to 134 to be read as part of the financial statements.
2020
$M
145.0
(173.3)
(29.6)
9.4
(17.6)
1.8
(209.3)
(10.8)
2.8
(8.0)
(0.4)
(8.4)
(217.7)
(72.7)
(2.1)
(70.6)
(72.7)
(2.1)
–
(2.1)
2019
$M
390.0
67.1
(7.1)
2.7
1.4
(0.3)
63.8
(0.3)
0.1
(0.2)
–
(0.2)
63.6
453.6
417.9
35.7
453.6
411.7
6.2
417.9
83
THE VALUE WE CREATEPERFORMANCEGOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
Coca-Cola Amatil Limited and its subsidiaries for the year ended 31 December
Attributable to shareholders of Coca-Cola Amatil Limited
Share
capital
$M
Treasury
shares
$M
Reserves
$M
Accumulated
losses
$M
Note
Non-
controlling
interests
$M
Total
$M
Total
equity
$M
At 1 January 2020
1,920.1
(13.0)
373.5
(718.8)
1,561.8
390.4
1,952.2
Total comprehensive
(loss)/income for the year
Transactions with shareholders:
Share-based remuneration
Dividends paid
At 31 December 2020
At 1 January 2019
Total comprehensive
income for the year
Disposal of discontinued
operation
Transactions with shareholders:
Share-based remuneration
Dividends paid
4
4
–
–
–
–
–
(182.0)
179.9
(2.1)
(70.6)
(72.7)
0.3
–
0.3
2.2
–
2.2
–
2.5
(253.4)
(253.4)
(253.4)
(250.9)
–
(0.4)
(0.4)
2.5
(253.8)
(251.3)
1,920.1
(12.7)
193.7
(792.3)
1,308.8
319.4
1,628.2
1,920.1
(12.6)
323.4
(723.0)
1,507.9
355.1
1,863.0
–
–
–
–
–
–
–
(0.4)
–
(0.4)
43.5
374.4
417.9
35.7
453.6
1.0
5.6
–
6.6
(1.0)
–
–
5.2
–
–
–
5.2
(369.2)
(369.2)
(370.2)
(364.0)
(0.4)
(0.4)
(369.6)
(364.4)
At 31 December 2019
1,920.1
(13.0)
373.5
(718.8)
1,561.8
390.4
1,952.2
Notes appearing on pages 87 to 134 to be read as part of the financial statements.
84
COCA-COLA AMATIL ANNUAL REPORT 2020 CONSOLIDATED
BALANCE SHEET
Coca-Cola Amatil Limited and its subsidiaries as at 31 December
Current assets
Cash assets
Trade and other receivables
Inventories
Other financial assets at amortised cost
Derivatives
Current tax assets
Prepayments
Other financial assets
Assets held for sale
Total current assets
Non-current assets
Property, plant and equipment
Right of use assets
Intangible assets
Investments
Defined benefit superannuation plans
Derivatives
Other receivables
Prepayments
Deferred tax assets
Loans receivable interest bearing
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Other financial liabilities
Lease liabilities
Employee benefits provisions
Current tax liabilities
Derivatives
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Employee benefits provisions
Deferred tax liabilities
Defined benefit superannuation plans
Derivatives
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Treasury shares
Reserves
Accumulated losses
Equity attributable to shareholders of Coca-Cola Amatil Limited
Non-controlling interests
Total equity
Notes appearing on pages 87 to 134 to be read as part of the financial statements.
Note
14a
6a
6b
14
14d
11b
14c
7
8a
9
12a
12b
14d
11b
14
6c
14b
14c
14
12c
11b
14d
14b
14
12c
11b
12b
14d
13
13
13
24
2020
$M
2019
$M
1,018.0
963.9
575.5
37.1
21.8
10.3
86.1
30.3
–
2,743.0
1,518.9
431.5
1,208.4
61.2
6.9
115.0
1.0
18.4
8.1
11.8
3,381.2
6,124.2
1,295.0
335.6
81.2
72.6
81.5
33.1
65.3
1,964.3
1,692.8
426.9
11.1
231.0
47.8
122.1
2,531.7
4,496.0
1,628.2
1,920.1
(12.7)
193.7
(792.3)
1,308.8
319.4
1,628.2
856.0
1,047.1
646.4
83.0
27.0
39.5
74.1
–
1.1
2,774.2
1,825.7
462.9
1,262.7
66.5
14.4
129.3
9.0
25.4
–
8.8
3,804.7
6,578.9
1,246.0
306.6
90.3
72.6
109.7
21.2
21.3
1,867.7
1,872.1
457.2
12.1
308.4
46.2
63.0
2,759.0
4,626.7
1,952.2
1,920.1
(13.0)
373.5
(718.8)
1,561.8
390.4
1,952.2
85
THE VALUE WE CREATEPERFORMANCEGOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS CONSOLIDATED
STATEMENT OF CASH FLOWS
Coca-Cola Amatil Limited and its subsidiaries for the year ended 31 December
Note
2020
$M
2019
$M
Inflows/(outflows)
Operating cash flows
Receipts from customers
Payments to suppliers and employees1
Interest income received
Interest and other finance costs paid
Income taxes paid
Net operating cash flows
Investing cash flows
Payments for:
— additions of property, plant and equipment
— additions of software development assets
— additions of other intangible assets
—
investments
Proceeds from:
— disposal of property, plant and equipment2
— disposal of business
— other financial assets at amortised cost
— dividends received from associate
—
return of investment in associate
— disposal of investment in associate
Net investing cash flows
Financing cash flows
Proceeds from borrowings and other financial liabilities
Borrowings repaid
Dividends paid
Dividend paid to non-controlling interests
Loans provided to container deposit scheme coordinators
14a
9
9
12d
4
Net financing cash flows
14a
(476.3)
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents held at the beginning of the year
Effects of exchange rate changes on cash and cash equivalents
203.7
854.4
(42.1)
Cash and cash equivalents held at the end of the year
14a
1,016.0
1
2
Includes $28.1 million (2019: $39.0 million) of cash outflows relating to non-trading items of the respective period.
Includes $3.4 million (2019: $27.6 million) of cash inflows relating to non-trading items of the respective period.
Notes appearing on pages 87 to 134 to be read as part of the financial statements.
86
5,754.3
(4,759.2)
32.4
(104.6)
(83.3)
839.6
(179.6)
(29.1)
(1.1)
(8.2)
6.5
–
45.6
0.2
0.9
5.2
6,199.5
(5,374.1)
42.3
(100.1)
(99.9)
667.7
(204.3)
(29.2)
(1.3)
(5.2)
33.7
39.6
33.3
0.2
–
–
(159.6)
(133.2)
170.5
(390.0)
(253.4)
(0.4)
(3.0)
153.8
(429.2)
(369.2)
(0.4)
(2.3)
(647.3)
(112.8)
935.4
31.8
854.4
COCA-COLA AMATIL ANNUAL REPORT 2020 NOTES TO THE
FINANCIAL STATEMENTS
Coca-Cola Amatil Limited and its subsidiaries
OVERVIEW
Coca-Cola Amatil Limited (also referred to as Company) is a for-profit company limited by shares that is incorporated and domiciled
in Australia, whose shares are publicly traded on the Australian Securities Exchange. The Company’s registered office is located at
Level 13, 40 Mount Street, North Sydney, NSW 2060. Coca-Cola Amatil Limited does not have a parent entity. The nature of the
operations and principal activities of Coca-Cola Amatil Limited and its subsidiaries together (referred to as Group, we or our) are
described in Note 1 Segment Reporting. This Financial Report was authorised for issue in accordance with a resolution of the
Coca-Cola Amatil Limited Board of Directors on 18 February 2021.
BASIS OF PREPARATION
This general purpose financial report:
—
—
—
—
is prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting
Standards Board (AASB) and the Corporations Act 2001;
has been prepared on the basis of historical cost, except for certain financial assets and liabilities which have been measured at
fair value (Note 16);
complies with International Financial Reporting Standards as issued by the International Accounting Standards Board;
is presented in Australian Dollars;
— presents reclassified comparative information where necessary to conform to changes in presentation in the current period; and
—
presents all values as rounded to the nearest hundred thousand dollars under ASIC Corporations (Rounding in Financial/Directors'
Reports) Instrument 2016/191, unless stated otherwise.
NEW ACCOUNTING STANDARDS FOR 2020
AASB 2019-3 AMENDMENTS TO AUSTRALIAN ACCOUNTING STANDARDS – INTEREST RATE BENCHMARK REFORM
The Group has adopted AASB 2019-3 Amendments to Australian Accounting Standards – Interest Rate Benchmark Reform. This
standard applies to annual reporting periods beginning on or after 1 January 2020 and the financial impact of the application of this
standard is not material to the period ended 31 December 2020 financial statements.
This amendment provides temporary relief from applying specific hedge accounting requirements to hedge relationships directly
affected by the Inter-bank offered rates (IBORs) reform. This relief has the effect that IBOR reform should not generally cause hedge
accounting to terminate.
Group’s borrowing and hedging derivative portfolio is primarily set at fixed interest rates and is exposed to Bank Bill Swap benchmark
rates. There are presently no hedge relationships that are linked to IBOR. The extent of the risk exposure for the Group would be the
indirect impact of mark-to-market valuations on its debt related derivatives portfolio. The Group has commenced a project to
incorporate new interest rate benchmark curves on its valuation models.
USE OF ESTIMATES
In applying the Group’s accounting policies, management has made a number of estimates and assumptions concerning the future.
The key estimates and assumptions that are material to the financial statements relate to the following areas:
— estimation of useful lives of property, plant and equipment and intangible assets, refer to Notes 7 and 9;
—
—
impairment testing of goodwill and indefinite life intangible assets, refer to Note 10;
income tax, refer to Note 11; and
— accruals for rebates and promotional allowances, refer to Note 6c.
PRINCIPLES OF CONSOLIDATION
SUBSIDIARIES
The consolidated financial statements of the Group comprise those of the parent entity, Coca-Cola Amatil Limited, and its subsidiaries.
The Group controls an entity when it has power over the entity, is exposed to, and has the rights to, variable returns from its
involvement with that entity and has the ability to affect those returns.
In preparing the consolidated financial statements, the effects of all intra-group 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 are made to bring into line any
dissimilar accounting policies that may exist.
NON-CONTROLLING INTERESTS (NCIs)
The Group measures NCIs at their proportionate share of the subsidiary’s identifiable net assets, results for the year and movements
in reserves. Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of control are accounted for in equity
as transactions with shareholders.
87
THE VALUE WE CREATEPERFORMANCEGOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
OVERVIEW (CONTINUED)
FOREIGN CURRENCY TRANSLATION
Both the functional and presentation currency of Coca-Cola Amatil Limited and its Australian subsidiaries is the Australian Dollar.
Each entity in the Group determines its own functional currency, reflecting the currency of the primary economic environment in which
it operates.
Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rate 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 arising from the application of these procedures are taken to the income statement.
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 rate
at the date when the fair value was determined.
The assets and liabilities of foreign subsidiaries are translated into Australian Dollars by applying the rate ruling at balance date and
revenue and expense items are translated at the average rate calculated for the period. Transactions in equity are translated by applying
the rate ruling on the date of the transaction with no subsequent revaluation. The exchange differences arising from translation of the
financial statements of foreign subsidiaries at these various exchange rates, are recognised in other comprehensive income within the
foreign currency translation reserve. When a foreign operation is sold, the associated exchange differences are reclassified to the
income statement as part of the gain or loss on sale.
I OUR RESULTS
1 SEGMENT REPORTING
We operate in a number of segments, based on results that are reported to the Group Managing Director. The Australia, Pacific
(previously New Zealand & Fiji), and Indonesia & Papua New Guinea segments manufacture, distribute, market and sell sparkling
beverages, other non-alcohol beverages, alcohol and coffee products. The Corporate & Services segment includes other non-
individually reportable businesses and comprises of the corporate office function for the Group, management of key property assets
of Australia and New Zealand and the provision of certain support services to the Group and third-party customer businesses. The
majority of the Group’s revenues are recognised at the point in time at which products are delivered to the customer.
Starting from 1 January 2020 and reflecting a decision to manage all beverage categories in line with geographic responsibilities, the
former Alcohol & Coffee segment has been integrated into each of our geographic segments – Australia, Pacific and Indonesia & Papua
New Guinea. Accordingly, 2019 comparative segment information has been re-presented in accordance with the amended reporting
basis for the new segments outlined above.
The Group’s financial statements are affected by seasonality depending on the timing of certain festivities in the different countries
within which the Group operates. Typically, revenue, earnings and operating cash flows of Australian and New Zealand-based
operations are greater in the second half of the financial year due to the Christmas holiday trading period, which can lead to associated
effects on working capital components. Similarly, the Ramadan period positively impacts the timing of the Indonesian business
financial performance within the financial year.
Segment revenue is evaluated with reference to trading revenue. Segment results are evaluated on an earnings before interest, tax and
non-trading items basis. Segment net assets include Net assets – Operating and Investing amounts (which excludes net debt). Net debt
comprises cash assets, other financial assets at amortised cost, interest bearing receivables, borrowings, debt related derivative assets
and liabilities and other financial and lease liabilities. The Group manages its net debt, net finance costs and income taxes on a Group
basis, and these measures are therefore not reported internally at a segment level. Inter segment transactions are conducted on normal
commercial terms and conditions.
88
COCA-COLA AMATIL ANNUAL REPORT 2020 SEGMENT INFORMATION
Australia
Pacific
Indonesia &
Papua New Guinea
Corporate & Services
Total
Continuing operations
2020
$M
2019
$M
(restated)
2020
$M
2019
$M
(restated)
2020
$M
2019
$M
(restated)
2020
$M
2019
$M
2020
$M
2019
$M
Segment revenue
2,936.9
3,044.6
812.7
809.2
955.5
1,165.4
57.0
51.4
4,762.1
5,070.6
EBITDA before
non-trading items1
Depreciation and
amortisation
expenses
502.3
549.9
181.0
179.8
147.6
195.8
68.0
61.9
898.9
987.4
(139.7)
(125.0)
(50.5)
(48.1)
(86.3)
(99.5)
(71.7)
(75.5)
(348.2)
(348.1)
Segment results
362.6
424.9
130.5
131.7
61.3
96.3
(3.7)
(13.6)
550.7
639.3
Non-trading items2
EBIT1
Other segment information
(270.7)
(40.5)
280.0
598.8
Segment net assets
1,584.6
1,790.3
504.9
568.5
621.3
861.9
379.5
483.0
3,090.3
3,703.7
Net debt3
Net assets
Segment additions
to non-current
assets4
63.0
112.7
37.4
48.7
85.0
81.3
49.0
67.7
234.4
310.4
(1,462.1)
(1,751.5)
1,628.2
1,952.2
1
2
3
4
EBITDA refers to earnings before interest, tax, depreciation and amortisation while EBIT refers to earnings before interest and tax.
Refer to Note 3b for further details.
Refer to Note 14 for further details.
Comprises additions to investments, right of use assets, property, plant and equipment and intangible assets.
GEOGRAPHICAL INFORMATION
Continuing operations
Australia
Pacific
Indonesia & Papua New Guinea
Trading revenue1
Non-current assets2
2020
$M
2,993.9
812.7
955.5
4,762.1
2019
$M
3,096.0
809.3
1,165.3
5,070.6
2020
$M
2,062.2
597.6
560.2
3,220.0
2019
$M
2,180.6
637.4
799.8
3,617.8
1
2
Reflects the customer geographic location of trading revenue earned by the Group.
Comprises property, plant and equipment, right of use assets, intangible assets and investments.
89
THE VALUE WE CREATEPERFORMANCEGOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
I OUR RESULTS (CONTINUED)
2 REVENUE
Trading revenue from continuing operations
Sale of products
Rental of equipment and service fees
Other revenue from continuing operations
Rendering of services1
Miscellaneous income
Sale of scrap materials
Sale of beverage ancillaries
Mining royalty income
Property rental income
Sundry income
2020
$M
2019
$M
4,701.9
60.2
4,762.1
5,012.8
57.8
5,070.6
17.5
17.8
7.2
1.6
1.7
2.4
8.2
21.1
38.6
7.9
0.2
5.0
2.5
8.1
23.7
41.5
4,800.7
5,112.1
1
Includes equipment servicing and contract beverage manufacturing income.
The Group earned 36.5% (2019: 33.7%) of its trading revenue from continuing operations from its top three customers mainly in
Australia, being Woolworths Limited, Coles Group Limited and Metcash Limited.
RECOGNITION AND MEASUREMENT
Sale of products
The Group sells a range of beverage products to wholesale, retail and consumer customers. A sale is recognised when control of the
product has transferred, being when the product is delivered to the customer and there is no unfulfilled obligation that could affect the
customer’s acceptance of the products. Delivery occurs when the product has been shipped to the location specified by the customer
and the customer accepts the product in accordance with agreed arrangements.
Revenue from sales is recognised based on the contract agreed between the customer and the Group. Contracts do not commit
customers to purchasing anything nor commit the Group to deliver the same but set out the terms and conditions that apply between
the parties at the time an order is placed by a customer and accepted by the Group. The terms and conditions cover a range of
conditions including pricing, settlement of liabilities, return policies, provision and servicing of equipment and any other negotiated
performance obligations.
No element of financing is present in the pricing arrangement. Settlement terms range from cash-on-delivery to credit terms ranging
from 7 to 90 days. Terms reflect negotiations with customers, policies, procedures and controls held by each business as it relates to
customer credit risk.
For customers who purchase on credit, a receivable is recognised when the products are delivered as this is the point in time that the
consideration is unconditional because only the passage of time is required before the payment is due.
Rental of equipment and service fees
The Group earns revenue from renting equipment that is used to dispense certain of its beverage products purchased by the customer.
Rental agreements generally range from 12 to 24 months in duration and revenue is recognised on a straight-line basis over the term.
Rental paid in advance is not recognised as revenue until the period the payment relates to has passed.
Service fee revenue mainly arises from container recycling services provided to manufacturers and distributors of eligible containers in
certain Australian jurisdictions. Revenue is based on the volume of containers processed and is recognised as the service is delivered.
Financing components
As the Group does not have any contracts where the period between the transfer of the promised product or services to the customer
and payment by the customer exceeds one year, it does not adjust any of the transaction prices for the time value of money.
90
COCA-COLA AMATIL ANNUAL REPORT 2020 3 EXPENSES
a)
INCOME STATEMENT DISCLOSURE
Profit before income tax from continuing operations includes the following specific expenses
(excluding non-trading items):
Remuneration and on-costs
Defined contribution and defined benefit superannuation expenses
Share-based payments expense
Employee related costs
Finance costs, excluding lease interest expense
Lease interest expense
Depreciation expense
Amortisation expense
b) NON-TRADING ITEMS
2020
$M
2019
$M
704.9
47.9
11.0
763.8
80.1
14.6
309.9
38.3
764.9
50.4
10.4
825.7
92.5
14.8
316.7
31.4
Transactions which are material to the financial statements individually or in aggregate and are either non-recurring or arise from activities
other than those associated with the Group’s ordinary trading activities are classified as non-trading items. Such transactions are included
in the support services and other expenses, net finance costs and income tax expense line items within the income statement.
2020
$M
2019
$M
Profit before income tax1 from continuing operations includes the following expenses,
which are classified as non-trading items:
Australia
Redundancy and related costs
Property, plant and equipment impairment
Equity accounted investment impairments
Gain from property sales
Other net expenses
Indonesia
CGU impairment2
Other net expenses
Paradise Beverages (included in Pacific segment)
CGU impairment3
Other net (gains)/expenses
Refer to the following page for footnote details.
28.9
12.7
7.8
–
6.9
56.3
175.9
2.3
178.2
16.4
(1.3)
15.1
23.2
–
3.9
(14.0)
4.8
17.9
–
–
–
–
5.9
5.9
91
THE VALUE WE CREATEPERFORMANCEGOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
I OUR RESULTS (CONTINUED)
3 EXPENSES (CONTINUED)
b) NON-TRADING ITEMS (CONTINUED)
Corporate & Services
Redundancy and related costs
Equity accounted investment impairments
Profit on sale of investment in associate
Other net expenses
2020
$M
2.9
2.3
(3.2)
19.1
21.1
270.7
2019
$M
3.8
1.7
–
11.2
16.7
40.5
1
2
3
Refer to Note 11a for details of income tax on non-trading items.
Comprises $92.6 million of production and cold drink equipment, $49.4 million of building assets, $9.5 million of software development assets,
$17.1 million of goodwill and $7.3 million of investments into bottlers’ agreements.
Comprises $12.1 million relating to our cash generating units (CGU) level impairment testing (refer to Note 10 for further details); and $4.3 million
for brand assets with a definite life.
The amounts in 2020 have primarily arisen due to:
—
outcome of the CGU level impairment testing undertaken at the half year (refer to Note 10 for further details) and impairment
of equity accounted investments, reflecting a deterioration in performance mainly due to the COVID-19 environment;
— Fighting Fit program in H2 resulting in redundancies, asset impairments/write-offs and related expenses;
—
—
reversal of impairment of investment in associate and profit on sale;
costs incurred in relation to the potential Coca-Cola European Partners (CCEP) transaction (included in other net expenses); and
— other one-off expenses including M&A activities.
The prior year amounts primarily related to asset and investment impairments and cost incurred on M&A activities, partially offset by
profit on sale of remaining lots at Thebarton.
RECOGNITION AND MEASUREMENT
Employee related costs
Employee related costs 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 by, or benefits vest with, the
employee. The Group’s contributions made to defined contribution superannuation plans are recognised as an expense when they
fall due.
For accounting policies on defined benefit superannuation plans, provision for employee benefits and employee ownership plans,
refer to Notes 12b, 12c and 18 respectively.
Finance costs
Finance costs mainly comprise interest costs on borrowings, lease and other financial liabilities and the time value amounts under
the defined benefit superannuation plans.
Interest costs are recorded as expenses in the period in which they are incurred, except where they are included in the costs of
qualifying assets.
92
COCA-COLA AMATIL ANNUAL REPORT 2020 4 DIVIDENDS
2020
$M
2019
$M
a) SUMMARY OF DIVIDENDS PAID DURING THE YEAR
Prior year final dividend
Paid at 26.0¢ per share unfranked (2019: 26.0¢ per share franked to 50%)
188.2
188.2
Current year interim dividend
Paid at 9.0¢ per share unfranked (2019: 21.0¢ per share unfranked)
Special – nil (2019: paid at 4.0¢ per share unfranked)
65.2
–
253.4
152.0
29.0
369.2
b)
DIVIDENDS DECLARED AFTER BALANCE DATE AND NOT RECOGNISED
AS LIABILITIES
Current year final dividend1
Declared at 18.0¢ per share fully franked (2019: 26.0¢ per share unfranked)
130.3
188.2
c) FRANKING BALANCE
Balance at the end of the year
Franking credits/(debits) which will arise from payment/(refund) of income tax provided
for in the financial statements
20.7
16.8
37.5
4.7
(33.0)
(28.3)
1
The ex-dividend and record dates for the final dividend entitlements are 16 April 2021 and 19 April 2021 respectively. The Company may need to
make changes to the record date and/or the payment date for the final dividend in the event that the expected date for the Scheme Meeting under
the Scheme with CCEP is delayed or to ensure that the final dividend is paid before the record date for the Scheme. The Company will notify
Shareholders of any changes to the record date or payment date for the final dividend by way of an announcement to the ASX.
d) DIVIDEND REINVESTMENT PLAN (DRP)
The Board of Coca-Cola Amatil Limited has determined to suspend our DRP in relation to the 2020 final dividend. As a result, our DRP
is not currently available to Shareholders.
93
THE VALUE WE CREATEPERFORMANCEGOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
I OUR RESULTS (CONTINUED)
5 EARNINGS PER SHARE
Basic and diluted earnings per share (EPS) attributable to shareholders
of Coca-Cola Amatil Limited:
Group
Continuing operations
Ongoing1
The following provides share and earnings information used in the
calculation of basic and diluted EPS:
Weighted average number of ordinary shares on issue
Profit for the year attributable to shareholders of Coca-Cola Amatil Limited:
Group
Deduct: profit from discontinued operation, net of tax
Continuing operations
Add back: non-trading items after tax2
Deduct: non-trading items after tax attributable to non-controlling interests
Ongoing
2020
¢
24.8
24.8
47.0
M
724.0
$M
179.9
–
179.9
202.7
(42.3)
340.3
2019
¢
51.7
50.9
54.4
M
724.0
$M
374.4
(6.2)
368.2
25.7
–
393.9
1
2
Ongoing refers to continuing operations results adjusted to exclude non-trading items.
Includes expenses from continuing operations of $270.7 million (2019: $40.5 million) (refer to Note 3b) and tax benefit of $68.0 million
(2019: $14.8 million) (refer to Note 11a).
94
COCA-COLA AMATIL ANNUAL REPORT 2020 II OUR ASSETS AND LIABILITIES – OPERATING AND INVESTING
HOW THE GROUP MANAGES ITS OVERALL FINANCIAL POSITION
We manage the Group’s overall financial position by segregating the balance sheet into two categories: Assets and Liabilities –
Operating and Investing; and Capital – Financing. Assets and Liabilities – Operating and Investing is managed at the Group operations
level while Capital – Financing (refer to Section III) is managed by the Group’s centralised Treasury function.
Details of Assets and Liabilities – Operating and Investing are as follows:
Working capital1
Property, plant and equipment
Right of use assets
Intangible assets
Current and deferred tax liabilities (net)
Derivative liabilities (non-debt related) (net)
Other assets (net)
Capital – Financing
Note
6
7
8
9
11b
14d
12
2020
$M
244.4
1,518.9
431.5
1,208.4
(245.7)
(100.4)
33.2
2019
$M
447.5
1,825.7
462.9
1,262.7
(290.1)
(27.5)
22.5
Section III
3,090.3
3,703.7
1 Working capital is defined as current trade and other receivables plus inventories less current trade and other payables.
6 WORKING CAPITAL
Trade and other receivables
Inventories
Trade and other payables
6a TRADE AND OTHER RECEIVABLES
Trade receivables
Allowance for doubtful receivables
Other receivables
Movement in the allowance for doubtful receivables
At 1 January
Charged to the income statement
Written off against trade receivables
Net foreign currency and other movements
At 31 December
Trade receivables past due but not impaired
Under 30 days
31 – 60 days
61 – 90 days
Over 91 days
Allowance for doubtful receivables/trade receivables past due 60 days
6a
6b
6c
963.9
575.5
(1,295.0)
244.4
890.4
(22.5)
96.0
963.9
(19.5)
(8.8)
5.0
0.8
(22.5)
69.9
18.5
3.1
6.8
%
76.3
1,047.1
646.4
(1,246.0)
447.5
956.1
(19.5)
110.5
1,047.1
(15.7)
(9.0)
5.5
(0.3)
(19.5)
58.6
21.7
4.6
6.5
%
63.7
95
THE VALUE WE CREATEPERFORMANCEGOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
II OUR ASSETS AND LIABILITIES – OPERATING AND INVESTING (CONTINUED)
6a TRADE AND OTHER RECEIVABLES (CONTINUED)
RECOGNITION AND MEASUREMENT
Trade and other receivables are recognised at the face value of amounts due less an allowance for doubtful receivables. Doubtful
receivables are determined using an expected credit loss approach whereby trade and other receivables that share the same or similar
credit risk characteristics and debt ageing are grouped and then assessed for collectability as a whole.
Refer to Note 15b) ii) on credit risk of trade and other receivables.
For details of related party receivables included in trade and other receivables, refer to Note 17.
6b INVENTORIES
Raw materials
Finished goods
Other (work in progress and consumable spare parts)
2020
$M
231.6
236.0
107.9
575.5
2019
$M
264.3
264.9
117.2
646.4
RECOGNITION AND MEASUREMENT
Inventories 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.
6c TRADE AND OTHER PAYABLES
Trade payables
Other payables
Accrued charges
2020
$M
565.7
119.6
609.7
2019
$M
601.3
115.1
529.6
1,295.0
1,246.0
RECOGNITION AND MEASUREMENT
Trade and other payables are carried at amount due. Liabilities are brought to account for amounts payable in relation to goods and
services received, whether or not billed at the reporting date. Accrued charges represent accruals for marketing rebates, promotional
allowances and amounts due for supplies and services received but not invoiced at the reporting date.
For details of related party payables included in trade and other payables, refer to Note 17.
KEY ESTIMATES
The accruals for rebates and promotional allowances that are raised are based on estimates of a range of factors including
anticipated consumer purchases and product mix.
96
COCA-COLA AMATIL ANNUAL REPORT 2020 Buildings and
leasehold
improvements
$M
Plant and
equipment
$M
Property, plant and
equipment under
construction
$M
7 PROPERTY, PLANT AND EQUIPMENT
31 December 2020
Cost
Accumulated depreciation and impairment
Movement:
At 1 January 2020
Additions
Disposals
Depreciation expense
Impairment charges1
Reclassification
Net foreign currency and other movements
At 31 December 2020
31 December 2019
Cost
Accumulated depreciation and impairment
Movement:
At 1 January 2019
Additions
Disposals1
Classified as held for sale
Depreciation expense
Impairment charges1
Reclassification
Net foreign currency and other movements
Land
$M
182.7
–
182.7
186.4
–
–
–
–
2.8
(6.5)
182.7
186.4
–
186.4
183.8
–
(5.8)
(0.9)
–
–
6.5
2.8
524.6
(249.5)
275.1
341.7
2.3
(0.2)
(20.7)
(49.4)
17.3
(15.9)
275.1
535.8
(194.1)
341.7
333.6
0.2
(5.1)
–
(21.1)
–
24.5
9.6
3,264.6
(2,321.1)
943.5
1,023.7
11.5
(4.2)
(206.1)
(113.3)
263.8
(31.9)
943.5
3,215.3
(2,191.6)
1,023.7
1,039.1
4.6
(5.9)
(0.2)
(225.7)
(10.2)
200.8
21.2
At 31 December 2019
186.4
341.7
1,023.7
1 January 2019
Cost
Accumulated depreciation and impairment
183.8
–
183.8
504.3
(170.7)
333.6
3,152.2
(2,113.1)
1,039.1
1
Mainly relates to non-trading items; refer to Note 3b for further details
117.6
–
117.6
273.9
149.5
–
–
–
(283.9)
(21.9)
117.6
273.9
–
273.9
298.5
205.0
–
–
–
–
(231.8)
2.2
273.9
298.5
–
298.5
Total
$M
4,089.5
(2,570.6)
1,518.9
1,825.7
163.3
(4.4)
(226.8)
(162.7)
–
(76.2)
1,518.9
4,211.4
(2,385.7)
1,825.7
1,855.0
209.8
(16.8)
(1.1)
(246.8)
(10.2)
–
35.8
1,825.7
4,138.8
(2,283.8)
1,855.0
97
THE VALUE WE CREATEPERFORMANCEGOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
II OUR ASSETS AND LIABILITIES – OPERATING AND INVESTING (CONTINUED)
7 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
RECOGNITION AND MEASUREMENT
Carrying value and depreciation
Property, plant and equipment assets are stated at cost less accumulated depreciation and impairment. Cost includes the transfer from
equity of gains or losses from cash flow hedges undertaken for the purchases of property, plant and equipment. Subsequent
expenditure is capitalised when it is probable that future economic benefits associated with the expenditure will flow to the Group.
Property, plant and equipment assets, other than land, are depreciated on a straight-line basis over the estimated useful lives of the
assets and are tested for impairment when there is any indication of impairment. Useful life details of these assets were as follows:
Buildings and leasehold improvements
Plant and equipment
20 to 50 years
2 to 25 years
An item of property, plant and equipment is derecognised upon its disposal. Any gain or loss arising on derecognition (calculated by
deducting the carrying amount and costs of disposal from proceeds) is included in the income statement in that financial year.
Impairment
Property, plant and equipment are tested for impairment in accordance with the policy for impairment testing disclosed in Note 10.
An impairment expense is recognised when the carrying amount of property, plant and equipment exceeds its recoverable amount,
which is defined as the greater of an asset’s fair value less costs to sell, or value in use.
KEY ESTIMATES
Useful lives of assets are generally estimated based on historical experience. However, the condition and future utilisation
of assets are reviewed annually and considered against their remaining useful life with adjustments made when deemed
necessary.
Capital expenditure commitments
Estimated aggregate amount of contracts for purchase of property, plant and equipment not
provided for, payable within one year
2020
$M
44.0
2019
$M
52.7
8 LEASES
For a qualifying lease, the Group recognises a right of use asset and lease liability based on the present value of future lease payments
which excludes payments of a variable nature. The nature and structure of our lease portfolio are such that the interest rates implicit
in the leases are not readily determinable. The Group therefore uses Incremental Borrowing Rates (IBRs) to discount the future value
of lease payments. The IBR denotes the rate of interest that a lessee would have to pay to borrow over a similar term, with a similar
security, the funds necessary to purchase an asset of a similar value to the right of use asset in a similar economic environment.
The determination of the lease term is a key judgement exercised by management on a recurring basis. In determining the lease term,
management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not to
exercise a termination option.
Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be
extended (or not terminated).
8a RIGHT OF USE ASSETS
The Group enters non-cancellable leases on properties, motor vehicles, forklifts and other items of plant and equipment. Lease terms
vary in length and generally, when approaching expiry, are either extended at the option of the Group or are renegotiated. Our leases
mainly relate to properties in Australia and New Zealand.
98
COCA-COLA AMATIL ANNUAL REPORT 2020 Cost
Accumulated depreciation
Carrying value at 31 December 2020
Movement:
At 1 January 2020
Additions
Depreciation
Disposals
Net foreign currency and other movements
Carrying value at 31 December 2020
Cost
Accumulated depreciation
Carrying value at 31 December 2019
Movement:
Opening balances arising from adoption of AASB 16 Leases
Additions
Depreciation
Disposals
Classified as held for sale
Net foreign currency and other movements
Carrying value at 31 December 2019
Property
$M
602.6
(246.9)
355.7
379.2
5.2
(45.7)
(0.2)
17.2
355.7
584.3
(205.1)
379.2
401.3
10.2
(45.1)
(0.6)
(1.0)
14.4
379.2
Plant and
equipment
$M
127.1
(51.3)
75.8
83.7
30.1
(37.4)
(2.3)
1.7
75.8
104.0
(20.3)
83.7
52.8
54.7
(23.8)
(1.0)
–
1.0
83.7
Total
$M
729.7
(298.2)
431.5
462.9
35.3
(83.1)
(2.5)
18.9
431.5
688.3
(225.4)
462.9
454.1
64.9
(68.9)
(1.6)
(1.0)
15.4
462.9
8b SHORT-TERM, LOW-VALUE AND VARIABLE LEASES
The Group has elected to apply the recognition exemption to short-term and low-value leases. Short-term leases are those with terms
equal to or less than 12 months and low asset value leases include portable electronic devices and office equipment. Payments of these
leases are recognised on straight-line basis over the lease term. The amounts recognised in EBIT for these leases are:
Lease type
Short-term
Low-value
Variable
2020
$M
3.3
2.3
152.3
2019
$M
20.4
2.9
165.5
Short-term leases
This amount mainly includes the payments in relation to hire of motor vehicles and forklifts for periods equal to or less than 12 months.
Variable leases
This amount mainly consists of the variable component of lease payments made for the product transportation services, whereby these
components are dependent on various factors such as number of cases of product delivered, number of trips and pallets. Generally, the
majority of these contracts are structured in a manner such that payments are dependent or linked to these factors; hence, making
these leases mainly variable in nature.
The total cash outflow for leases (including short-term, low-value and variable leases) was $250.7 million (2019: $261.8 million).
99
THE VALUE WE CREATEPERFORMANCEGOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
II OUR ASSETS AND LIABILITIES – OPERATING AND INVESTING (CONTINUED)
9
INTANGIBLE ASSETS
Indefinite lives
Investments
in bottlers’
agreements
$M
Brand names
and
trademarks
$M
Goodwill
$M
Brand names
and
trademarks
$M
Other
$M
Definite lives
Software
development
and other
assets
$M
Total
$M
31 December 2020
Cost
927.6
150.5
Accumulated amortisation and impairment
–
(20.9)
927.6
129.6
17.3
(1.9)
15.4
2.5
–
2.5
29.0
(24.2)
4.8
382.1
1,509.0
(253.6)
(300.6)
128.5
1,208.4
943.0
153.0
17.8
2.5
9.5
136.9
1,262.7
Movement:
At 1 January 2020
Additions
Disposals
Impairment1
Amortisation expense
Net foreign currency and other movements
–
–
(7.3)
–
(8.1)
–
–
(23.3)
–
(0.1)
At 31 December 2020
927.6
129.6
31 December 2019
Cost
943.0
153.0
Accumulated amortisation and impairment
–
–
943.0
153.0
–
–
(2.1)
–
(0.3)
15.4
17.8
–
17.8
–
–
–
–
–
2.5
2.5
–
2.5
–
–
(4.3)
(0.2)
(0.2)
4.8
30.2
(1.7)
(9.5)
(38.1)
10.7
30.2
(1.7)
(46.5)
(38.3)
2.0
128.5
1,208.4
29.4
(19.9)
348.6
1,494.3
(211.7)
(231.6)
9.5
136.9
1,262.7
939.4
152.9
14.7
2.5
12.8
130.1
1,252.4
–
–
–
–
–
–
–
–
–
3.1
17.8
14.7
–
14.7
–
–
–
–
2.5
2.5
–
2.5
–
–
(0.3)
(3.0)
9.5
32.3
(19.5)
12.8
30.5
(0.3)
(31.1)
7.7
30.5
(0.3)
(31.4)
11.5
136.9
1,262.7
346.6
1,488.4
(216.5)
(236.0)
130.1
1,252.4
Movement:
At 1 January 2019
Additions
Disposals
Amortisation expense
Net foreign currency and other movements
3.6
0.1
At 31 December 2019
943.0
153.0
At 1 January 2019
Cost
939.4
152.9
Accumulated amortisation and impairment
–
–
939.4
152.9
1
Mainly relates to non-trading items; refer to Note 3b for further details.
100
COCA-COLA AMATIL ANNUAL REPORT 2020 RECOGNITION AND MEASUREMENT
Indefinite lives
Indefinite life intangible assets, except for goodwill, are recognised initially at the date of acquisition at their fair value which is deemed
to be cost.
Investments in bottlers’ agreements (IBAs)
We have a number of bottling agreements with The Coca-Cola Company (TCCC) which provide Coca-Cola Amatil Limited with the
exclusive rights to prepare, package, distribute and sell TCCC branded products in each of the six countries in which Coca-Cola Amatil
Limited operates.
The agreements are for mainly 10-year terms and reflect the long and ongoing relationship between the Group and TCCC. No
consideration is payable upon renewal or extension of the agreements.
In assessing the useful life of the agreements, consideration is given to the Group’s history of dealings with TCCC since 1939, their
established international practices and equity interests in the Group, participation of nominees of TCCC on Coca-Cola Amatil Limited’s
Board of Directors and the ongoing profitability of TCCC brands. Accordingly, no factor can be identified that would result in the
agreements not being renewed or extended and therefore the agreements have been assessed as having indefinite useful lives, which
require annual impairment testing.
Goodwill
Goodwill is the excess of the cost of a business acquisition over the fair value of net assets acquired. Goodwill is not amortised but is
tested annually for impairment.
Definite lives
Definite life intangible assets are recognised at cost. Assets acquired in a business acquisition are recognised at the date of acquisition
at fair value, which is deemed to be cost. Following initial recognition, intangible assets are amortised on a straight-line basis over their
useful lives and tested for impairment when there is any indication of impairment. Useful life details for these assets are as follows:
Brand names and trademarks
Software development and other assets
40 to 50 years
3 to 14 years
Any gain or loss arising on derecognition (calculated by deducting the carrying amount and costs of disposal from proceeds) is included
in the income statement in that financial year.
Impairment
Intangible assets are tested for impairment in accordance with the policy for impairment testing assets disclosed in Note 10. In the case
of definite life intangible assets where an impairment indicator exists, an impairment loss is recognised when the carrying amount of
the assets exceeds its recoverable amount, which is defined as the greater of an asset’s fair value less costs to sell, or value in use.
KEY ESTIMATES
Useful lives of assets are generally estimated based on historical experience. However, the condition and future utilisation
of assets are reviewed annually and considered against their remaining useful life with adjustments made when deemed
necessary.
101
THE VALUE WE CREATEPERFORMANCEGOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
II OUR ASSETS AND LIABILITIES – OPERATING AND INVESTING (CONTINUED)
10 CGUs IMPAIRMENT TESTING
RECOGNITION AND MEASUREMENT
At each reporting date, we assess whether there is an indication that an asset may be impaired. Where an indicator of impairment
exists, we make a formal estimate of the recoverable amount. An impairment charge will be recognised in the income statement 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.
Impairment charges for cash generating units (CGUs) are allocated to reduce the carrying amounts firstly for goodwill, with the
remainder then pro rata allocated to the other assets of the CGU, to the extent this amount does not cause individual assets being
reduced below their recoverable amounts (where this can be determined).
Non-financial assets, other than goodwill, that suffered an impairment in prior periods are reviewed for possible reversal of the
impairment at each reporting date.
A post-impairment summary of intangible assets deemed to have indefinite lives is presented below:
31 December 2020
Australia
Pacific
Indonesia & Papua New Guinea
Corporate & Services
31 December 2019
Australia
Pacific
Indonesia & Papua New Guinea
Corporate & Services
IBAs
$M
Goodwill
$M
Brand names
and trademarks
$M
Other
$M
Total
$M
692.0
206.4
29.2
–
927.6
692.0
211.2
39.8
–
943.0
86.5
29.3
–
13.8
129.6
86.5
35.6
17.1
13.8
153.0
3.1
12.3
–
–
15.4
3.1
14.7
–
–
17.8
2.5
–
–
–
2.5
2.5
–
–
–
784.1
248.0
29.2
13.8
1,075.1
784.1
261.5
56.9
13.8
2.5
1,116.3
102
COCA-COLA AMATIL ANNUAL REPORT 2020 KEY ESTIMATES
Methodology
Management uses the ‘value-in-use’ approach to determine the recoverable amount of each CGU. Value-in-use is based on the
net present value of forecast cash flows for a 5-year period plus a terminal value estimation using appropriate perpetuity growth
rates.
The 5-year cash flows forecast is based on:
—
management's latest view of 2020-2022 outcomes, risk adjusted to reflect uncertainty created by COVID-19 and taking
into account historical trends and the level of accuracy of previous forecasts;
— an assessment of sustainable growth for years 4 and 5 post the recovery from the impact of COVID-19; and
— a terminal growth rate based on an assessment of inflation and perpetual growth using market and economic data.
The forecasts also take into consideration the following key inputs:
—
volumes – expected rate of recovery from the COVID-19 crisis with reference to externally sourced non-alcohol ready to
drink market growth and share data, and gross domestic product growth;
— pricing – long-term inflation rates, level of market competitiveness and trends;
— EBIT margin – historic and forecast trends, and management view of long-term sustainable margin;
—
capital expenditure – percentage of forecast sales taking into account capacity requirements and age of assets; and
— working capital movement – percentage of sales adjusted for trends.
Discount rates
Discount rates applied to our forecast cash flows represent the weighted average cost of capital for the Group in relation to
each CGU, risk adjusted where applicable. The local discount rates used compared to December 2019 are provided in the table
below:
Australia
New Zealand
Fiji
Indonesia
Papua New Guinea
Terminal growth rates
The terminal growth rates applied range from 2.0% to 4.5% per annum (2019: 2.0% to 5.0%).
2020
%
7.2
7.1
11.3
11.9
14.6
2019
%
7.2
7.1
11.3
11.9
14.6
103
THE VALUE WE CREATEPERFORMANCEGOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
II OUR ASSETS AND LIABILITIES – OPERATING AND INVESTING (CONTINUED)
10 CGUs IMPAIRMENT TESTING (CONTINUED)
Assessment
In the light of the adverse impact of COVID-19 on trading performance, management has conducted an assessment of the
recoverable amount using the above methodology for each CGU. The conclusion reached was that for all CGUs, except
Indonesia and Paradise Beverages, there are no reasonably possible changes in key assumptions used which could cause
recoverable amount to decline below the carrying amount.
In Indonesia, restrictions imposed, as a result of the COVID-19 pandemic, significantly impacted the business during the peak
festive season and infection rates had yet to peak. This has led to a reduced valuation compared to December 2019 when the
recoverable amount was estimated to be 5% above the carrying amount. As a result, an impairment charge, before tax, of
$175.9 million was recognised at the half year, including $92.6 million of production and cold drink equipment, $49.4 million of
building assets, $9.5 million of software development assets, $17.1 million of goodwill and $7.3 million of IBAs. The valuation has
been re-assessed as part of the normal year-end assessment process, and it has been determined that there has been no
material change in the valuation and the headroom is immaterial, therefore, no write-back or further write-down is required.
Fiji is very dependent on tourism and the closure of the borders has had a significant impact on the Paradise Beverages
business (which forms part of the Pacific segment). With tourism not expected to return to pre-COVID levels in the near future,
the assessment at the half year resulted in an impairment charge, before tax, of $12.1 million, including $6.2 million of goodwill,
$2.1 million of brands and $3.8 million of property, plant and equipment and other assets. The re-assessment at the year-end
has determined that there has been no material change in the valuation and the headroom is immaterial, therefore no write-
back or further write-down is required.
Significant assumptions used in the impairment testing referred to above are inherently subjective and in times of economic
uncertainty the degree of subjectivity is higher than it might otherwise be. Accordingly, it should be noted that the risks and
uncertainties associated with the impacts of the COVID-19 pandemic and the economic environment could cause the actual
results to differ materially from management’s projections used in the assessment. This could lead to significant changes in
the recoverable amount of these CGUs.
Key assumptions and sensitivities
Indonesia
The key assumptions used in the year-end valuation model to determine recoverable amount were:
— annual volume – assumed to return to the level achieved in 2019 in 2023 and grow by 4.0% p.a. by 2025;
—
festive volume – the uplift during the peak festive selling season on a volume per day basis (compared to the period from
1 January to the commencement of the festive period) in 2019 was ~100%, which reduced to ~30% in 2020 and in the model
is assumed to recover to 75% in 2021, which is unchanged from the assumption at the half year;
— pricing – limited price increases are assumed during the COVID-19 recovery period, then improving to 0.8% p.a. by 2025;
— EBIT margin – assumed to gradually improve, reaching 5.6% in 2025; and
—
terminal growth rate – assumed to be 4.5% p.a.
The sensitivity of the valuation to movements in these key assumptions is shown in the table below:
Key assumptions
Volume growth – average over the 5-year valuation period
Price growth – average over the 5-year valuation period
EBIT margin – average over the 5-year valuation period
Discount rate
Terminal growth rate
% change
Valuation impact
$ million
+/- 0.5
+/- 0.5
+/- 0.5
+/- 0.5
+/- 0.5
+/- 42
+/- 83
+/- 45
+/- 25
+/- 21
Paradise Beverages
As disclosed at the half year it has been assumed it will take until 2024 before volume returns to the level achieved in 2019 and
grow at 3.0% p.a. by 2025. Terminal growth is assumed to be 3.0% p.a. If the average volume growth over the 5-year valuation
period changes by +/- 1% or the terminal growth rate changes by +/- 0.5% the valuation will change by approximately
$4.5 million. A change in the discount rate by +/- 0.5% will impact the valuation by approximately $6.0 million.
104
COCA-COLA AMATIL ANNUAL REPORT 2020 11 INCOME TAX
a)
INCOME TAX EXPENSE
i) Total income tax expense:
Current tax expense
Net deferred tax (benefit)/expense
Adjustment to current tax of prior periods
Total income tax expense
Total income tax expense includes:
Income tax benefit from discontinued operation
Income tax benefit on non-trading items
ii) Reconciliation of Coca-Cola Amatil Limited’s applicable (Australian) tax rate to the
effective tax rate:
Profit from continuing operations before income tax
Profit from discontinued operation before income tax
Income tax expense at Australian tax rate of 30%
Adjustment to current tax of prior periods
Overseas tax rates differential1
Overseas withholding tax
Non-assessable income
Non-assessable expenses
Reduction of deferred tax liabilities in Indonesia due to change in tax rates2
Recognition of previously unrecognised tax losses3
Recognition of deferred tax asset in New Zealand4
Derecognition of deferred tax assets3
Impairment of non-current assets3
Other items
Effective tax rate
Effective tax rate – ongoing
Refer to the following page for footnote details.
2020
$M
126.9
(59.6)
5.6
72.9
–
(68.0)
217.9
–
217.9
$M
65.4
3.7
11.2
(4.4)
(2.2)
3.8
(9.3)
(0.8)
(4.4)
–
9.9
–
72.9
%
33.5
28.8
2019
$M
83.7
65.2
(1.2)
147.7
(1.6)
(14.8)
533.1
4.6
537.7
$M
161.3
(0.9)
(10.3)
0.5
(2.1)
4.1
–
(8.0)
–
1.6
2.0
(0.5)
147.7
%
27.5
28.6
105
THE VALUE WE CREATEPERFORMANCEGOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
II OUR ASSETS AND LIABILITIES – OPERATING AND INVESTING (CONTINUED)
11 INCOME TAX (CONTINUED)
a)
INCOME TAX EXPENSE (CONTINUED)
2020
$M
2019
$M
iii) Net deferred tax (benefit)/expense recognised in income tax expense relates to
the following:
Inventories and allowances for current assets
Accrued charges and employee expense obligations
Other deductible items (includes derivatives)
Property, plant and equipment and intangible assets
Right of use assets and lease liabilities
Retained earnings balances of overseas subsidiaries5
Recognition of tax losses
Other taxable items (includes derivatives)
Disposal of previously impaired business6
b) CURRENT AND DEFERRED TAX LIABILITIES (NET)
Current tax assets
Current tax liabilities
Deferred tax assets
Deferred tax liabilities
Net deferred tax liabilities recognised in the balance sheet relate to the following:
Inventories and allowances for current assets
Accrued charges and employee expense obligations
Other deductible items (includes derivatives)
Property, plant and equipment and intangible assets
Right of use assets and lease liabilities
Retained earnings balances of overseas subsidiaries5
Other taxable items (includes derivatives)
(3.8)
2.6
5.3
(49.2)
(1.6)
(4.4)
(6.1)
(2.4)
–
(59.6)
10.3
(33.1)
8.1
(231.0)
(245.7)
4.7
(43.0)
(36.4)
286.8
(20.5)
5.6
25.7
222.9
(0.4)
(6.6)
4.4
–
(3.9)
0.5
2.8
(3.1)
71.5
65.2
39.5
(21.2)
–
(308.4)
(290.1)
6.8
(44.2)
(19.8)
351.5
(20.1)
12.1
22.1
308.4
1
2
The 2020 amount largely reflects amounts classified as non-trading items in Indonesia, where the current tax rate is 22% whereas the Australian
statutory tax rate is 30%.
To assist companies during the COVID-19 pandemic, the Indonesian government reduced the company tax rate from 25% to 22% for the 2020
and 2021 years, with a further reduction to 20% for 2022 onwards. This amount has been classified as a non-trading item.
3 Mainly relates to non-trading items and in 2019 to discontinued operation; refer to Notes 3b and 12c for further details.
4
To assist companies during the COVID-19 pandemic, the New Zealand government reinstated tax depreciation on commercial and industrial
buildings. This amount was classified as a non-trading item.
Represents withholding taxes payable on unremitted earnings of overseas subsidiaries.
In 2019 mainly relates to inventories and property, plant and equipment of disposed business.
5
6
106
COCA-COLA AMATIL ANNUAL REPORT 2020 RECOGNITION AND MEASUREMENT
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.
Deferred tax
Deferred tax balances arise when there are temporary differences between accounting carrying amounts and the tax bases of assets
and liabilities, other than for the following:
—
—
where the difference arises from the initial recognition of an asset or liability in a transaction that is not an acquisition of a
business and affects neither the accounting profit nor taxable profit or loss
where temporary differences relate to investments in subsidiaries to the extent the Group is able to control the timing of the
reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future.
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 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.
Australian tax consolidation
Coca-Cola Amatil Limited has a consolidated group for income tax purposes with each of its wholly-owned Australian subsidiaries.
The entities within the tax consolidated group have entered into a tax funding agreement whereby each subsidiary will compensate
Coca-Cola Amatil Limited for the amount of tax payable that would be calculated as if the subsidiary was a taxpaying entity.
Coca-Cola Amatil Limited, 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 Coca-Cola Amatil Limited via inter-company
balances.
Tax reviews
The Group is subject to regular tax reviews across our jurisdictions and interacts with tax authorities on a range of issues as part of the
ongoing operations of these tax authorities. In Australia, the Australian Taxation Office (ATO) rates the Group as a “key taxpayer” and
is subject to the ATO’s “Top 1000” assurance program using its justified trust methodology. At present, the Group is subject to ATO
audits/reviews of income tax. There are also ongoing audits/reviews in Indonesia and Papua New Guinea by their respective tax
authorities. At present, The Group has not received notification of any material assessments from any tax authority in the jurisdictions
in which it operates. In addition, The Group has responded to increased government and stakeholder focus by publishing an annual
Tax Transparency Report in accordance with the terms of the Australian Voluntary Tax Transparency Code.
KEY ESTIMATES
In determining the Group’s deferred tax assets and liabilities, management is required to make an estimate about the availability
of future taxable profits and cash flows. Changes in circumstances will alter expectations, which may impact the amount of tax
losses and temporary differences not yet recognised.
The details of unrecognised deductible temporary differences are as follows:
Capital losses – no expiry date
Other items – no expiry date
Potential tax benefit
2020
$M
1,283.9
35.4
1,319.3
395.8
2019
$M
1,289.3
35.4
1,324.7
397.4
The Group has determined as at the reporting date that future taxable profits and capital gains to utilise these tax assets are
not sufficiently probable and therefore no deferred tax benefit has been recognised.
107
THE VALUE WE CREATEPERFORMANCEGOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
II OUR ASSETS AND LIABILITIES – OPERATING AND INVESTING (CONTINUED)
12 OTHER ASSETS (NET)
Prepayments – current and non-current
Assets held for sale
Investments
Defined benefit superannuation plans (net)
Other receivables – non-current
Employee benefits provisions – current and non-current
12a INVESTMENTS
Investments accounted using equity method1
Other investments2
Note
12a
12b
12c
2020
$M
104.5
–
61.2
(40.9)
1.0
(92.6)
33.2
2020
$M
51.7
9.5
61.2
2019
$M
99.5
1.1
66.5
(31.8)
9.0
(121.8)
22.5
2019
$M
59.4
7.1
66.5
1
2
Comprises the following investments:
—
—
—
a 50% interest in Australian Beer Company (ABCo). Its principal activity is the manufacture of alcohol beverages. The majority of the carrying
amount of the investment in ABCo is represented by property, plant and equipment assets;
a 50% interest in Container Exchange (Services) Pty Ltd. Its principal activity is to provide a range of services to the organisations responsible
for operating container refund scheme in Queensland and Western Australia;
a stapled 20% interest in Exchange for Change (NSW) Pty Ltd, Exchange for Change (ACT) Pty Ltd and Exchange for Change (Australia) Pty Ltd.
Their principal activities are to act as scheme coordinators, under the NSW and ACT Government’s Container Deposit Scheme legislations;
a 45% interest in Made (Aust) Pty Ltd, Made Manufacturing Pty Ltd and Made Brands Pty Ltd (equivalent to 22.5% of the Made Group). Its
principal activity is to produce and sell a range of non-alcoholic beverages and yoghurts; and
a 50% interest in The Mahija Parahita Nusanara Foundation and PT Amandina Bumi Nusantara. Their principal activity is to operate a recycled
PET plant in Indonesia.
Investments held by Amatil X.
—
—
Opening balance – 1 January
Share of profit from associates
Share of (loss)/profit from joint ventures
Additions
Impairment of investment in joint venture
Disposal of investment in associate
Changes in fair value of investments through other comprehensive income
Capital return from associate
Dividends received from associate
Other
Closing balance – 31 December
108
Note
3b
2020
$M
66.5
0.7
(0.4)
8.2
(10.1)
(2.0)
(0.4)
(0.9)
(0.2)
(0.2)
61.2
2019
$M
65.2
2.1
(0.2)
5.2
(5.6)
–
–
–
(0.2)
–
66.5
COCA-COLA AMATIL ANNUAL REPORT 2020
12b DEFINED BENEFIT SUPERANNUATION PLANS
We sponsor a number of superannuation plans that incorporate defined contribution and defined benefit categories. The defined
benefit plans are the Coca-Cola Amatil Superannuation Plan (CCASP), which is predominantly Australia-based, and the CCBI
Superannuation Plan (CCBISP), which is Indonesia-based (collectively Plans). 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, this takes the form of lump sum payments.
The obligation to contribute to the Plans is covered by a combination of trust deeds, legislation and regulatory requirements. Contributions
are made at levels necessary to ensure 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:
CCASP1
CCBISP2
Total
2020
$M
2019
$M
2020
$M
2019
$M
2020
$M
2019
$M
a)
BALANCES RECOGNISED IN THE BALANCE
SHEET
Present value of defined benefit obligations at the end
of the year
Fair value of plan assets at the end of the year
Net defined benefit (assets)/liabilities
b)
EXPENSE RECOGNISED IN THE INCOME
STATEMENT
Service cost
Interest income on defined benefit superannuation assets
Interest cost on defined benefit superannuation liabilities
c)
AMOUNTS RECOGNISED IN OTHER
COMPREHENSIVE INCOME
Actuarial losses/(gains) – experience
Actuarial losses – financial assumptions
Actuarial losses/(gains) arising during the year
Return on plan assets (greater)/less than discount rate
Remeasurement recognised in other comprehensive
income
d)
MOVEMENT IN DEFINED BENEFIT
OBLIGATIONS
57.0
(63.9)
(6.9)
55.4
(69.8)
(14.4)
47.8
–
47.8
46.2
–
46.2
104.8
101.6
(63.9)
40.9
(69.8)
31.8
2.3
(0.4)
–
1.9
1.1
2.6
3.7
2.0
5.7
2.3
(0.7)
–
1.6
1.1
5.3
6.4
(5.9)
0.5
3.4
–
3.2
6.6
0.9
4.2
5.1
–
5.1
3.1
–
3.5
6.6
(0.2)
–
(0.2)
–
5.7
(0.4)
3.2
8.5
2.0
6.8
8.8
2.0
5.4
(0.7)
3.5
8.2
0.9
5.3
6.2
(5.9)
(0.2)
10.8
0.3
Present value at the beginning of the year
55.4
53.9
46.2
Service cost
Interest cost
Actuarial losses/(gains)
Benefits paid from plan assets or by plan employer
respectively
Net foreign currency and other movements
Present value at the end of the year
Refer to the following page for footnote details.
2.3
1.3
3.7
(5.0)
(0.7)
57.0
2.3
2.2
6.4
(9.0)
(0.4)
55.4
3.4
3.2
5.5
(5.4)
(5.1)
47.8
41.3
3.1
3.5
(0.2)
(3.9)
2.4
101.6
95.2
5.7
4.5
9.2
5.4
5.7
6.2
(10.4)
(5.8)
(12.9)
2.0
46.2
104.8
101.6
109
THE VALUE WE CREATEPERFORMANCEGOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
II OUR ASSETS AND LIABILITIES – OPERATING AND INVESTING (CONTINUED)
12b DEFINED BENEFIT SUPERANNUATION PLANS (CONTINUED)
CCASP1
CCBISP2
Total
2020
$M
2019
$M
2020
$M
2019
$M
2020
$M
2019
$M
e)
MOVEMENT IN PLAN ASSETS
Fair value at the beginning of the year
Interest income
Return less/(greater) than discount rate
Benefits paid
Other movements
(69.8)
(1.7)
2.0
5.0
0.6
(70.6)
(2.9)
(5.9)
9.0
0.6
Fair value at the end of the year
(63.9)
(69.8)
f) PLAN ASSETS
The percentage invested in each asset class at the reporting date was:
Equity instruments
Debt instruments
Real estate
Cash and cash equivalents
Other
g) PRINCIPAL ACTUARIAL ASSUMPTIONS
Used at reporting date to measure defined benefit obligations of each plan (p.a.):
Discount rate
Future salary increases
Future inflation
Future pension increases
–
–
–
–
–
–
–
–
–
–
–
–
(69.8)
(1.7)
2.0
5.0
0.6
(70.6)
(2.9)
(5.9)
9.0
0.6
(63.9)
(69.8)
CCASP1
CCBISP2
2020
%
2019
%
2020
%
2019
%
25.9
16.9
12.2
32.5
12.5
35.1
28.0
4.8
11.4
20.7
100.0
100.0
1.9
2.3
2.0
2.0
2.6
2.3
2.0
2.0
–
–
–
–
–
–
6.0
7.0
3.0
–
–
–
–
–
–
–
7.3
7.0
3.5
–
1
2
CCASP’s assets include no amounts relating to any of Coca-Cola Amatil Limited’s own financial instruments, or any property occupied by, or other
assets used by, Coca-Cola Amatil Limited.
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.
h) EXPECTED FUTURE CONTRIBUTIONS
Coca-Cola Amatil Limited contributions are agreed between the Plan trustees and Coca-Cola Amatil Limited, following advice from the
Plan actuary at least every three years (or more frequently if circumstances require).
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 balance sheet is based on
the projected benefit obligation which represents the present value of employee 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.
110
COCA-COLA AMATIL ANNUAL REPORT 2020 i) MATURITY PROFILE OF DEFINED BENEFIT OBLIGATIONS
The weighted average durations of the defined benefit obligation for CCASP and CCBISP are 7.3 and 7.6 years respectively.
RECOGNITION AND MEASUREMENT
Current and adjusted prior period related service costs are recognised in the income statement as they accrue. Interest is recognised in
the income statement for implied returns on plan assets (interest income), and for changes in the time value of plan obligations (interest
expense), using the applicable discount rate. Revaluation adjustments arising from changes in actuarial assumptions, and differences
between actual and implied returns on plan assets are recognised in other comprehensive income within the actuarial valuation reserve.
12c EMPLOYEE BENEFITS PROVISIONS
Current
Non-current
2020
$M
81.5
11.1
92.6
2019
$M
109.7
12.1
121.8
RECOGNITION AND MEASUREMENT
Employee benefits provisions
Employee benefits provisions represent liabilities for benefits accumulated (including related on-costs) as a result of employees
rendering services up to balance date, in relation to annual, sick, long service and other leave, incentives, termination and other
benefits. These benefits are charged to the income statement when services are provided and to the extent the benefits are expected
to vest with employees. Employee benefits provisions are measured at remuneration rates expected to be applicable to future payments
which settle these liabilities and are discounted back to the reporting date using market yields on corporate bonds with maturities
aligned to the estimated timing of settlement payments.
Termination benefits included in employee benefits provisions are recognised as an expense when the Group is committed to a formal
detailed plan to terminate employees before their normal retirement date, and the Group can no longer withdraw the termination offer.
12d DISCONTINUED OPERATION
SALE OF SPC
On 28 June 2019, the sale of the business was completed for a total consideration of $49.6 million, resulting in a $13.8 million after tax
gain on disposal. The $6.2 million profit after tax for the discontinued operation in the 2019 half year comprised the trading loss of the
business of $7.6 million and the after tax gain on disposal of $13.8 million. Cash flows associated with the discontinued operation were:
Net operating cash flows
Proceeds from disposal of business
Payments for additions of property, plant and equipment
Net investing cash flows
Net increase in cash and cash equivalents generated by the discontinued operation
2019
$M
(28.9)
39.6
(4.1)
35.5
6.6
111
THE VALUE WE CREATEPERFORMANCEGOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
III OUR CAPITAL – FINANCING
HOW THE GROUP MANAGES ITS CAPITAL – FINANCING
We manage our capital to ensure that entities in the Group have continued access to funding to support the business activities and
strategies of the Group while maximising returns to shareholders through optimising net debt and equity balances.
Our capital is equity plus net debt. Net debt is calculated as the sum of borrowings, debt related derivatives and other financial and
lease liabilities, less cash assets and other financial assets at amortised cost.
In order to maintain or adjust our capital structure, the Group may undertake certain activities such as adjusting the amount of
dividends paid to shareholders, return equity to Shareholders, issue new shares or buy back existing shares. The Group continuously
reviews its capital structure to ensure that:
—
—
sufficient finance for the business is maintained at a reasonable cost;
sufficient funds are available for the business to carry out its investing activities, such as purchasing of property, plant and
equipment and acquisitions of businesses;
— distributions to shareholders are within stated dividend policy parameters; and
—
where funds are or will be in excess to that required to enact the Group’s business strategies, the return of equity funds to
Shareholders is considered.
Details of Capital – Financing are as follows:
Equity
Net debt
13 EQUITY
Share capital
Treasury shares
Reserves
Accumulated losses
Non-controlling interests
Net tangible assets per share1
1
Calculated by excluding right of use assets from the assets base.
13a SHARE CAPITAL
The number of fully paid ordinary shares on issue is unchanged from 2019 at 723,999,699.
Note
13
14
Note
13a
13b
13c
2020
$M
1,628.2
1,462.1
3,090.3
2019
$M
1,952.2
1,751.5
3,703.7
2020
$M
2019
$M
1,920.1
1,920.1
(12.7)
193.7
(792.3)
319.4
(13.0)
373.5
(718.8)
390.4
1,628.2
1,952.2
$
(0.46)
$
(0.23)
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 issued. 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.
13b TREASURY SHARES
This account records purchases of Coca-Cola Amatil Limited ordinary shares to satisfy obligations to provide shares to employees in
accordance with the requirements of employee ownership plans. At 31 December 2020, these shares have not vested to employees and
therefore are controlled by the Group. Refer to Notes 13c and 18 for further information on the share-based remuneration reserve and
employee ownership plans respectively.
112
COCA-COLA AMATIL ANNUAL REPORT 2020 13c RESERVES
Foreign currency translation
Share-based remuneration
General
Actuarial valuation
Cash flow hedging
Other
2020
$M
(161.1)
31.8
342.8
21.7
(43.0)
1.5
193.7
2019
$M
(20.7)
29.6
342.7
28.5
(21.0)
14.4
373.5
NATURE AND PURPOSE OF RESERVES
Foreign currency translation
This reserve aggregates the translation differences arising from the translation of the financial statements of foreign subsidiaries as
described in the foreign currency translation policy described in the overview on page 88.
Share-based remuneration
This reserve is used to record obligations to provide employees with Coca-Cola Amatil Limited ordinary shares in accordance with
employee ownership plans (including tax effects). Refer to Notes 13b and 18 for further information regarding treasury shares and
employee ownership plans respectively.
General
This reserve relates to The Coca-Cola Company’s 29.4% investment in Coca-Cola Amatil Limited’s Indonesian business (PT Coca-Cola
Bottling Indonesia), which arose from the 2015 transaction between equity holders of Coca-Cola Amatil Limited.
Actuarial valuation
This reserve is used to record movements in defined benefit superannuation plan assets and liabilities due to revaluations arising from
changes in actuarial assumptions and differences between actual and implied returns on plan assets (including tax effects). Refer to
Note 12a for further information.
Cash flow hedging
This reserve is mainly used to record the revaluation impact of recognising financial assets and liabilities at fair value (including tax
effects) where these instruments are used as cash flow hedges and qualify for hedge accounting. Refer to Note 14d for further
information.
Movements in the reserve were as follows:
Opening balance
Derivative revaluation
Cash revaluation1
Foreign currency translation of intercompany loan
Other movements
Deferred tax effect
Total movements recognised in other comprehensive income
Non-controlling interests
Closing balance
2020
$M
(21.0)
(74.5)
1.7
40.1
3.1
9.4
(20.2)
(1.8)
(43.0)
2019
$M
(16.8)
(0.6)
(3.3)
(1.9)
(1.4)
2.8
(4.4)
0.2
(21.0)
1
Movements in the Australian value of cash held in foreign currencies that are in hedge relationships relating to forecast capital expenditure and raw
material purchases.
113
THE VALUE WE CREATEPERFORMANCEGOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
III OUR CAPITAL – FINANCING (CONTINUED)
13c RESERVES (CONTINUED)
Other
This reserve is used to record currency basis (which is the cost or benefit of exchanging one floating currency for another) of debt
related derivatives hedging foreign currency denominated bonds, credit risk of derivative hedges and the time value portion of options
used to hedge foreign currency and interest related exposures.
Movements in the reserve were as follows:
Opening balance
Currency basis
Credit risk
Time value of options
Forward points
Other movements
Deferred tax effect
Total movement recognised in other comprehensive income
Non-controlling interests
Closing balance
14 NET DEBT
Cash assets
Loans receivable interest bearing
Borrowings – current
Borrowings – non-current
Other financial assets
Other financial liabilities
Other financial assets at amortised cost1
Lease liabilities – current
Lease liabilities – non-current
Derivative assets – debt related (net)
1
Relates to Papua New Guinean government bonds.
14a CASH AND CASH EQUIVALENTS
Cash on hand and at banks
Short-term deposits
Cash assets
Bank overdrafts
114
2020
$M
14.4
(4.3)
(1.7)
–
(11.5)
(0.5)
1.8
(16.2)
3.3
1.5
2020
$M
(1,018.0)
(11.8)
335.6
1,692.8
(30.3)
81.2
(37.1)
72.6
426.9
(49.8)
2019
$M
13.3
(1.0)
1.9
0.3
–
–
(0.1)
1.1
–
14.4
2019
$M
(856.0)
(8.8)
306.6
1,872.1
–
90.3
(83.0)
72.6
457.2
(99.5)
1,462.1
1,751.5
2020
$M
492.0
526.0
1,018.0
(2.0)
1,016.0
2019
$M
498.4
357.6
856.0
(1.6)
854.4
Note
14a
14b
14b
14c
14c
14d
COCA-COLA AMATIL ANNUAL REPORT 2020 RECOGNITION AND MEASUREMENT
Cash assets comprises cash on hand, cash at banks and short-term deposits with a maturity of one year or less that are repayable to
the Group on demand and are subject to an insignificant risk of changes in value.
Cash at bank earns interest at floating rates based on daily bank deposit rates.
Short-term deposits are made for varying periods, depending on the near-term cash requirements of the Group and earn interest at
the respective short-term deposit rates.
RESTRICTIONS ON CASH HELD IN PAPUA NEW GUINEA
As at 31 December 2020, Coca-Cola Amatil’s Papua New Guinea business had local currency (Kina) denominated cash assets and
funds in government bonds of $129.1 million (PGK 344.4 million) (2019: $213.9 million (PGK 508.2 million)). Presently, there are Papua
New Guinean government-imposed currency controls which impact the extent to which the cash held in Papua New Guinea can be
converted into foreign currency and remitted for use elsewhere in the Group.
RECONCILIATION OF EARNINGS BEFORE INTEREST AND TAX (EBIT) TO NET OPERATING CASH FLOWS
EBIT from continuing operations
EBIT from discontinued operation
Adjustments for:
Depreciation and amortisation expenses
Impairment charges1
Changes in adjusted working capital2
Net interest and other finance costs paid
Income taxes paid
Other items (refer below)
Net operating cash flows
Other items comprise the following:
Share of profit from equity accounted investments
Profit from disposal of property, plant and equipment
Profit from disposal of business
Hedging and other reserves
Deferred tax
Movements in:
— prepayments
— provisions
—
sundry items
2020
$M
280.0
–
280.0
348.2
219.7
152.2
(72.2)
(83.3)
(5.0)
559.6
839.6
(0.3)
(0.6)
(3.2)
42.7
(15.3)
(9.8)
(28.4)
9.9
(5.0)
2019
$M
598.8
4.6
603.4
348.8
15.8
(115.5)
(57.8)
(99.9)
(27.1)
64.3
667.7
(1.9)
(19.5)
(13.7)
(6.0)
(0.1)
(16.2)
26.5
3.8
(27.1)
Mainly comprises non-trading items; refer to Note 3b for further details.
1
2 Working capital is adjusted to exclude the impact of non-cash flow and non-operating items such as foreign exchange translation, acquisitions and
disposals of businesses and trade and other payables relating to additions of property, plant and equipment.
115
THE VALUE WE CREATEPERFORMANCEGOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
III OUR CAPITAL – FINANCING (CONTINUED)
14a CASH AND CASH EQUIVALENTS (CONTINUED)
RECONCILIATION OF MOVEMENTS IN LIABILITIES ARISING FROM FINANCING ACTIVITIES TO NET FINANCING
CASH FLOWS
2019
2020
Opening
balance
$M
Cash
flows
$M
Foreign
exchange
$M
Other
movements
$M
Closing
balance
$M
Cash
flows
$M
Foreign
exchange
$M
Other
movements
$M
Closing
balance
$M
Bonds
Bank loans
2,156.0
(17.9)
240.0
(220.0)
1.3
–
Other financial liabilities
and borrowings
72.1
20.7
(2.5)
–
–
17.71
2,157.1
(105.0)
20.0
0.8
(2.9)
(0.8)
90.3
(37.1)
(2.3)
(42.8)1
2,006.4
–
–
20.0
50.9
Derivatives – debt
related (net)
Lease liabilities
Total liabilities from
financing activities
Loan given
Dividends paid
Net financing cash flows
(81.7)
–
–
(58.2)
–
–
(17.8)1
(99.5)
–
588.0
529.8
(78.2)
0.3
(2.2)
49.41
50.1
(49.8)
499.5
2,386.4
(275.4)
(1.2)
587.9
2,697.7
(219.5)
(7.9)
56.7
2,527.0
(2.3)
(369.6)
(647.3)
(3.0)
(253.8)
(476.3)
1
Mainly relates to foreign currency movements attributable to bonds hedged with foreign currency swaps (these swaps are classified as Derivatives
– debt related; refer to Note 14d for further details).
14b BORROWINGS
Current
Unsecured:
Bank loans
Bonds
Bonds (swapped into local currency)1
Bank overdrafts
Non-current
Unsecured:
Bonds
Bonds (swapped into local currency)1
Bank loans
2020
$M
2019
$M
20.0
230.0
83.6
2.0
335.6
968.0
724.8
–
–
305.0
–
1.6
306.6
1,198.0
654.1
20.0
1,692.8
1,872.1
1
Cross currency swaps are used by the Group to swap foreign currency bonds into the required local currency. These swaps are recognised within
derivatives – debt related; refer to Note 14d.
116
COCA-COLA AMATIL ANNUAL REPORT 2020 RECOGNITION AND MEASUREMENT
Borrowings are initially recognised at fair value at settlement date and subsequently at amortised cost using the effective interest
method, net of associated transaction costs. Borrowings are derecognised when the obligation under the liability is discharged,
cancelled or expired.
14c OTHER FINANCIAL ASSETS/LIABILITIES
COLLATERAL
The Group as part of its capital and risk management strategy, uses financial instruments to hedge the Group’s exposure to adverse
fluctuations in market risks. The hedges are marked-to-market, to determine fair value, at regular intervals to test for hedge
effectiveness between the underlying hedged item and the hedging instrument.
Due to changes in the fair value of the hedge contracts and to minimise the impact of credit default, the Group received a net
$50.9 million as cash collateral pledged from external counterparties (2019: $90.3 million (USD 63.0 million)). Coca-Cola Amatil Limited
holds these collaterals under agreements to provide protection against credit risk exposure by its counterparties. As at 31 December
2020, if pledged collaterals were included in the master netting arrangements on the derivative portfolio, net derivative liabilities would
increase to $101.5 million (2019: net impact would reduce the net derivative assets to $18.3 million net derivative liabilities).
RECOGNITION AND MEASUREMENT
Cash collaterals received or paid by the Group is recognised at fair value at settlement date in the statement of cash flows. All other
financial assets are recognised on trade date. A financial asset or liability is derecognised as and when the rights to receive or
obligation to pay cash flows from the asset or liability have expired or the Group has transferred its rights to receive, or obligation
to pay cash flows.
14d DERIVATIVE NET (LIABILITIES)/ASSETS
Balance sheet derivatives comprise:
Assets – current
Assets – non-current
Liabilities – current
Liabilities – non-current
Derivative net (liabilities)/assets
2020
$M
21.8
115.0
(65.3)
(122.1)
(50.6)
2019
$M
27.0
129.3
(21.3)
(63.0)
72.0
117
THE VALUE WE CREATEPERFORMANCEGOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
III OUR CAPITAL – FINANCING (CONTINUED)
14d DERIVATIVE NET (LIABILITIES)/ASSETS (CONTINUED)
Derivative net (liabilities)/assets comprise:
Derivative carrying amounts
Movements in
Movements recognised in
Note
Assets
$M
Liabilities
$M
Net
$M
Derivatives
$M
Underlying
hedged
items
$M
Income
statement
$M
Other
comprehensive
income
$M
2020
Debt related – fair value hedges1
—
cross currency swaps2
86.3
(6.3)
80.0
(16.3)
11.4
(11.4)
(4.9)
Debt related – cash flow hedges3
—
cross currency swaps2
Total debt related
15a) i) & ii)
9.1
95.4
(39.3)
(45.6)
(30.2)
49.8
(33.4)
(49.7)
31.8
43.2
(31.8)
(43.2)
Non-debt related – cash flow
hedges
—
—
—
foreign exchange contracts
interest rate contracts
commodity contracts
Total non-debt related
Total derivatives
2019
Debt related – fair value hedges1
15a) i)
15a) ii)
15a) iii)
3.5
18.7
19.2
(61.5)
(71.4)
(8.9)
(58.0)
(52.7)
10.3
(77.7)
(19.3)
24.1
41.4
(141.8)
(100.4)
(72.9)
77.2
19.3
(24.1)
72.4
136.8
(187.4)
(50.6)
(122.6)
115.6
(0.5)
–
–
(0.5)
(43.7)
(1.6)
(6.5)
(77.2)
(19.3)
24.1
(72.4)
(78.9)
—
cross currency swaps2
97.9
(1.6)
96.3
12.5
(12.1)
12.1
0.4
Debt related – cash flow hedges3
—
cross currency swaps2
14.3
Total debt related
15a) i) & ii)
112.2
(11.1)
(12.7)
3.2
99.5
5.3
17.8
(5.4)
(17.5)
Non-debt related – cash flow
hedges
—
—
—
foreign exchange contracts
interest rate contracts
commodity contracts
Total non-debt related
Total derivatives
15a) i)
15a) ii)
15a) iii)
24.4
14.1
5.6
44.1
156.3
(4.7)
(47.5)
(19.4)
(71.6)
(84.3)
19.7
(33.4)
(13.8)
(27.5)
72.0
(2.2)
(13.7)
15.7
(0.2)
17.6
3.3
13.7
(15.7)
1.3
(16.2)
5.4
17.5
1.1
–
–
1.1
18.6
(0.1)
0.3
(3.3)
(13.7)
15.7
(1.3)
(1.0)
1
2
3
The underlying hedged item represents bonds swapped into local currency. Foreign currency and interest related movements in these bonds
and movements in related hedging derivatives are offset within the income statement. The net effect results in no impact on net debt other than
any hedge ineffectiveness that may arise from credit valuation adjustments and currency basis that does not form a part of the hedge relationship.
The accumulated change in the fair value of the hedged bonds is equal to the carrying amount of the derivative which is $63.8 million (2019:
$66.3 million). The carrying value of the hedged bonds is $362.6 million (2019: $374.7 million).
Includes currency basis adjustment.
Refer to footnote 1, with movements being recognised in other comprehensive income rather than the income statement.
118
COCA-COLA AMATIL ANNUAL REPORT 2020 RECOGNITION AND MEASUREMENT
Derivative financial instruments are used to manage exposures to certain financial risks and are recognised at fair value. On
subsequent revaluation, for example, at trade date, derivatives are carried as assets when their fair value has increased and as liabilities
when their fair value has decreased.
The effectiveness of the hedging relationship is tested at inception and at regular intervals thereafter by means of cumulative dollar
offset effectiveness calculations. The primary objective is to determine if changes to the fair value of the hedged item and the derivative
are highly correlated and thus support the assertion that there will be a high degree of offset in fair value movements achieved by
the hedge.
For all hedges, amounts recognised in equity are transferred to the functional cost areas appropriate to the hedged item, as and when
the hedged item is consumed, except for basis risk adjustments.
Any gain or loss is reclassified to the income statement when the Group exercises, terminates, or revokes designation of the hedge
relationship. Any ineffectiveness that may arise from credit valuation adjustments is recognised in the income statement as finance costs.
The Group designates its derivatives as hedges for either:
—
—
the fair values of certain liabilities (fair value hedges); or
the cash flows associated with assets and liabilities and highly probable forecast transactions (cash flow hedges).
Fair value hedges are used to mitigate the exposure that arises from changes in the fair value of a hedged item such that changes in
the fair value of the hedged item are offset against the changes in the value of the hedging instrument. Where there is a gain or loss
from remeasuring the fair value of the derivative, they are recognised within net finance costs in the income statement.
Cash flow hedges are used to hedge future cash flows or a probable transaction that could affect the income statement. Any gain or
loss on effective portions of the hedging instrument is recognised directly in equity, while any gain or loss on ineffective portions is
recognised in the income statement within net finance costs. If the forecast transaction is revoked or no longer expected to occur,
amounts previously recognised in equity are transferred to the income statement over the remaining life of the underlying exposure.
The Group placed certain amounts of foreign currency on deposit that were used to hedge highly probable forecast purchases of
capital expenditure items and raw materials. Movements in the translation of these deposits are recognised within other comprehensive
income and recycled into the income statement for raw materials or recognised against the asset when the deposits are utilised.
For reporting purposes, the Group categorises its hedges as either debt related or non-debt related.
Debt related
Debt related derivatives apply solely to hedging of the foreign currency principal amounts and fair values of borrowings. During the
financial year, the Group held cross currency swaps to mitigate exposures to changes in the fair value of a portion of the Group’s foreign
currency denominated debt from fluctuations in foreign currency and interest rates. The changes in fair values of the hedged debt
resulting from movements in exchange rates and interest rates are offset against the changes in the values of the cross currency swaps.
The objective of this hedging is to convert foreign currency borrowings to local currency borrowings at inception. No significant portion
of the change in the fair value of the cross currency swap is expected to be ineffective as the amount of the cross currency swap is the
same as that of the underlying debt and all cash flow and reset dates coincide between the borrowing and the swaps.
Non-debt related
Non-debt derivatives relate to all financial instruments other than those that are debt related, being foreign currency, commodity and
interest rate derivatives (as these do not impact the calculation of net debt). These hedges comprise fair value and cash flow hedges.
Refer to Note 15 for further information on the Group’s financial risk management process.
Presentation, offsetting and netting arrangements
The Group presents derivative assets and liabilities on a gross basis. Certain derivative assets and liabilities are subject to enforceable
master netting arrangements with individual counterparties if a default event occurs. If these netting arrangements were to be
applied to the derivative portfolio as at 31 December 2020, derivative assets and liabilities would each reduce by $17.3 million
(2019: $19.1 million).
119
THE VALUE WE CREATEPERFORMANCEGOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
IV OUR RISK MANAGEMENT
15 FINANCIAL RISK MANAGEMENT
HOW THE GROUP MANAGES FINANCIAL RISK
Our financial risk management activities are carried out by the Group’s Treasury function, which is governed by a Board approved
Treasury Policy which strictly prohibits any speculative trading. The Group’s risk management activities seek to reduce the volatility of
financial performance, which assists in the delivery of the Group’s financial targets. This is achieved through a process of identifying,
recording and communicating financial exposures and risks within the Group upon which risk management strategies are applied using
derivatives and hedge accounting practices. Refer to Note 14d for further information on the recognition and measurement of derivatives.
The Group’s financial assets and liabilities originate from, and are used for, operating and investing activities which generate financial assets
and liabilities including cash, trade and other receivables and trade and other payables, and for financing activities, which are used to invest
surplus funds and to raise funds for the Group’s operations and take the form of cash, term deposits, bonds, bank loans and bank overdrafts.
Risk management
Financial assets and liabilities, being primarily derivative or hedging contracts, are used to manage financial risks that arise from the
abovementioned activities. These risks are summarised and described further, in the following sections:
a) market risks relating to:
foreign currencies
i)
ii)
interest rates
iii) commodity prices
b) other financial risks relating to:
liquidity
i)
ii) credit
iii) foreign currency translation.
a) MARKET RISKS
Sensitivity – analyses
The below sensitivity analyses illustrate possible outcomes from the Group’s approach to financial risk management in relation to
market risks. The analyses show the effect on profit and other comprehensive income for the year if market rates had been 10% higher
or lower with all other variables held constant, taking into account existing financial asset and liability exposures and related hedges. A
sensitivity of 10% has been selected as this is considered reasonable given the current level of market prices, the volatility observed on
a historical basis and market expectations for future movements.
Profit for the year
Other comprehensive income
Foreign currency rates
10% increase
10% decrease
Interest rates1
10% increase in variable rates
10% decrease in variable rates
Commodity prices2
10% increase
10% decrease
2020
$M
–
–
(0.6)
0.6
–
–
2019
$M
–
–
(1.4)
1.4
–
–
2020
$M
(38.1)
46.6
0.9
(0.9)
13.6
(13.6)
2019
$M
(37.7)
46.0
0.6
(0.6)
13.1
(13.1)
1
2
10% refers to applying a multiplication factor (rather than addition) to the underlying interest rate.
The table does not show the sensitivity to the Group’s total underlying exposures or the impact of changes in volumes that may arise from an
increase or decrease in commodity prices.
As shown in the table above, a movement in market rates by 10% would have no material impact on profit for the year, reflecting
the Group’s approach to hedging as described in Note 14d. Volatility does arise in other comprehensive income mainly due to the
remeasurement of derivatives to fair value as at the reporting date.
The following sub-section provides additional detail for each market risk.
120
COCA-COLA AMATIL ANNUAL REPORT 2020
Foreign currency risk
i)
Foreign currency risk refers to the risk that 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 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;
cash, term deposits and borrowings denominated in foreign currency; and
translation of the financial statements of Coca-Cola Amatil Limited’s foreign subsidiaries, refer to Note 15b) iii).
The Group’s risk management policy for foreign exchange allows hedging of forecast cost of goods sold related transactions for up
to four years before requiring executive management approval. Foreign currency denominated capital expenditure is generally hedged
upon the making of firm commitments. The policy prescribes a range of minimum and maximum hedging parameters linked to actual
and forecast transactions involving material foreign currency exposures which are progressively increased to a range of 35% to 100%
in the current year.
The Group’s material foreign currency transactions (relative to each subsidiary’s functional currency) are mainly conducted in the
following currencies:
—
Australian Dollars (AUD);
— United States Dollars (USD) – primarily for commodity purchasing, borrowings and capital expenditure;
— New Zealand Dollars (NZD);
—
Japanese Yen (JPY) – primarily for borrowings;
— Euros (EUR) – primarily for capital expenditure; and
— Norwegian Krone (NOK) – primarily for borrowings.
At the reporting date, the Group had exposure to foreign currency risk on the following financial assets and liabilities (due to the items being
denominated in currencies other than the functional currencies) and mitigated that risk with the hedges presented in the following table:
Financial assets and
liabilities (exposures)
Cash assets
Borrowings – bonds
Other financial liabilities
USD
$M
104.4
131.5
–
2020
JPY
$M
–
362.6
–
Other
$M
0.8
314.4
–
Total
$M
105.2
808.5
–
USD
$M
157.5
71.7
90.3
2019
JPY
$M
–
374.7
–
Other
$M
0.3
207.7
–
Hedging derivatives –
net assets/(liabilities)
2020
Carrying
amount
$M
Nominal
amounts1
$M
Hedge ranges as at inception – exchange rates
AUD/USD
AUD/NZD
AUD/JPY
NZD/USD
AUD/NOK
AUD/IDR
Cross currency swaps2
Debt related
(4.5)
(4.5)
772.7
0.61
1.29
85-88
0.83 5.93-6.37
–
Foreign currency forwards3
(58.0)
840.4 0.66-0.75 1.04-1.09
– 0.62-0.71
– 9,552-11,045
Non-debt related
(58.0)
2019
Cross currency swaps2
Debt related
Foreign currency forwards3
Non-debt related
37.4
37.4
19.7
19.7
575.3
–
1.29
85-88
0.83
5.93
–
839.7 0.67-0.81 1.04-1.06
– 0.63-0.74
– 9,925-10,709
1
2
3
Principal amounts converted to AUD at balance date foreign exchange rates.
Carrying amount classified as derivatives – debt related.
Derivatives used for firm commitments and/or highly probable forecast purchases of raw materials and capital expenditure.
Total
$M
157.8
654.1
90.3
Maturity
profile
years
>5
<3
>5
<3
121
THE VALUE WE CREATEPERFORMANCEGOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
IV OUR RISK MANAGEMENT (CONTINUED)
15 FINANCIAL RISK MANAGEMENT (CONTINUED)
a) MARKET RISKS (CONTINUED)
Interest rate risk
ii)
Interest bearing financial assets and liabilities which expose the Group to interest rate risk are predominantly cash assets, borrowings,
held to maturity investments and other financial and lease liabilities.
The Group’s risk management policy for interest rate risk seeks to minimise the effects of interest rate movements on its financial asset
and liability portfolio through management of the exposures. The policy prescribes that the average maturity of the hedging portfolio
must be between one and five years. It is usual practice for the next 12 months’ floating rate exposures to be largely fixed up to a
maximum of 100% of the forecast exposure.
The Group primarily enters interest rate swap and cross currency swap agreements to manage these risks.
At the reporting date, the Group had the following mix of financial assets and liabilities bearing interest and hedges to mitigate interest
rate risk:
Financial assets and liabilities
Cash assets
Other financial assets
at amortised cost
Loans receivable
Bonds
Bank loans, bank overdrafts
and other borrowings
Other net financial liabilities
Lease liabilities
2020
2019
Average
floating
rate
% p.a.
At floating
rates
$M
At fixed
rates
$M
Carrying
amount
$M
Average
floating
rate
% p.a.
At floating
rate
$M
At fixed
rates
$M
Carrying
amount
(exposures)
$M
3.5
1,018.0
–
1,018.0
4.9
856.0
–
856.0
–
–
–
0.8
0.3
–
–
–
–
22.0
50.9
37.1
11.8
37.1
11.8
2,006.4
2,006.4
–
–
22.0
50.9
–
499.5
499.5
–
–
–
1.7
2.0
–
–
–
–
83.0
8.8
83.0
8.8
2,157.1
2,157.1
21.6
90.3
–
–
21.6
90.3
–
529.8
529.8
Hedging derivatives – net assets/
(liabilities)
Carrying
amount
$M
Nominal
amounts1
$M
Hedge
ranges2
% p.a.
Maturity
profile
years
Carrying
amount
$M
Nominal
amounts1
$M
Hedge
ranges2
% p.a.
Maturity
profile
years
Cross currency swaps
Debt related
Interest rate swaps
Cross currency swaps
Non-debt related
292.7
0.5-1.8
453.2
3.1-4.0
480.0
1.6
>5
>5
>5
56.8
56.8
(15.3)
(37.9)
(53.2)
62.1
62.1
(11.2)
(22.2)
(33.4)
292.7
1.4-2.6
453.8
282.6
3.1-4.0
2.6
>5
>5
>5
1
2
Principal amounts converted to AUD at balance date foreign exchange rates.
As at inception.
122
COCA-COLA AMATIL ANNUAL REPORT 2020 iii) Commodity price risk
Commodity price risk is the risk arising from volatility in commodity prices in relation to raw materials (mainly raw sugar, aluminium
ingot, PET resin and coffee) used in the business.
The Group’s risk management policy for commodity price risk allows hedging of forecast transactions for up to four years before
requiring executive management approval. The policy prescribes a range of minimum and maximum hedging levels linked to actual and
forecast transactions involving strategic commodity exposures which are progressively increased to a range of 70% to 100% in the
current year.
The Group primarily enters futures and swap contracts to hedge commodity price risk, with the objective of obtaining lower raw material
prices and a more stable and predictable commodity price outcome. Futures contracts are mainly used to hedge the primary exposures,
being aluminium ingot, raw sugar and resin, which are priced on the London Metal Exchange, Intercontinental Exchange and the
Independent Chemical Information Services respectively. These exposures are designated to be the risk component which are hedged
with futures contracts. These together form a part of the hedge relationship and are designed to be highly effective. Costs associated
with rolling of aluminium cans, refining of raw sugar and any other transaction costs represent other risk components which do not form
part of the hedge relationship but are recognised within cost of goods sold in the income statement.
The Group had exposure to commodity price risk on the following annual usage quantities and mitigated that risk with the hedges
presented in the following table:
Derivatives
Carrying amount
$M
Nominal volume
metric tonnes2
Hedge range –
commodity prices3
Maturity
profile years
Hedging
Futures
Futures
Futures
Futures
Futures
Futures
Futures
Futures
8.5
6.1
0.2
(4.5)
10.3
(1.0)
(3.2)
(1.0)
(8.6)
(13.8)
32,300
1,567.0-1,932.1
323,561
258.6-398.3
1,412
2,356.7-2,960.1
23,643
850.0-1,194.0
29,700
1,718.8-2,075.0
243,801
276.0-425.1
2,041
2,178.2-2,829.6
23,849
1,180.0-1,363.0
<2
<3
<1
<1
<2
<2
<1
<2
Commodity
2020
Aluminium ingot
Raw sugar
Coffee
PET resin
Non-debt related assets
2019
Aluminium ingot
Raw sugar
Coffee
PET resin
Non-debt related liabilities
Exposure
Annual usage
metric tonnes1
32,716
229,377
1,950
66,410
32,968
242,778
3,000
75,656
Groups’ commodity exposures in 2020.
1
2 Metric tonne volumes hedged for future periods.
USD per metric tonne at inception date of hedge.
3
b) OTHER FINANCIAL RISKS
Liquidity risk
i)
Liquidity risk is the risk there will be insufficient funds available to meet the Group’s financial commitments as and when they fall due,
and the risk of unforeseen events which may curtail cash inflows. To help reduce liquidity 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 financial assets and liabilities that are tradeable in liquid markets; and
—
staggers maturities of financial assets and liabilities.
Liquidity risk is measured by using cash flow forecasts and comparing projected debt levels against total committed facilities. The
contractual cash flows and expected timings of the Group’s financial liabilities are shown in the table below. The contractual amounts
represent the net future undiscounted principal and interest cash flows and therefore may not equal to the carrying amounts to the
financial statements.
123
THE VALUE WE CREATEPERFORMANCEGOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
IV OUR RISK MANAGEMENT (CONTINUED)
15 FINANCIAL RISK MANAGEMENT (CONTINUED)
b) OTHER FINANCIAL RISKS (CONTINUED)
i)
Liquidity risk (continued)
Expected timing of contractual cash outflows
Less than 1 year
$M
1 to 2 years
$M
2 to 5 years
$M
Over 5 years
$M
Total
$M
Financial liabilities (exposures)
31 December 2020
Trade and other payables
Borrowings
Other net financial liabilities
Lease liabilities
Derivative liabilities
Carrying
amount
$M
1,295.0
2,028.4
50.9
499.5
187.4
1,295.0
399.1
50.9
85.4
16.2
–
407.0
–
69.9
6.1
Total financial liabilities
4,061.2
1,846.6
483.0
31 December 2019
Trade and other payables
Borrowings
Other financial liabilities
Lease liabilities
Derivative liabilities
1,246.0
2,178.7
90.3
529.8
84.3
1,246.0
381.9
90.3
86.4
2.3
Total financial liabilities
4,129.1
1,806.9
–
397.7
–
78.1
1.9
477.7
The Group had the following financing facilities available at the reporting date:
Bank loan facilities
Total arrangements
Carrying amount – used as at the end of the year
Available facilities as at the end of the year
Bank overdraft facilities
Total arrangements
Carrying amount – used as at the end of the year
Available facilities as at the end of the year
–
325.3
–
160.6
5.0
490.9
–
644.2
–
161.5
–
805.7
–
1,246.7
–
271.3
49.0
1,295.0
2,378.1
50.9
587.2
76.3
1,567.0
4,387.5
–
1,155.2
–
303.3
9.2
1,246.0
2,579.0
90.3
629.3
13.4
1,467.7
4,558.0
2020
$M
2019
$M
650.0
(20.0)
630.0
20.1
(2.0)
18.1
500.0
(20.0)
480.0
19.5
(1.6)
17.9
The available undrawn committed bank loan facilities are sufficient to fund the repayment of all current borrowings of $335.6 million
as at 31 December 2020.
ii) Credit risk
Credit risk is the risk that a contracting entity will not fulfil its obligations under the terms of 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 balance sheet.
To help manage this risk, the Group:
— has a policy for establishing credit limits for the entities it deals with; and
— may require collateral.
124
COCA-COLA AMATIL ANNUAL REPORT 2020 For credit purposes, there is only a credit risk where the contracting entity is liable to pay the Group on settlement. The Treasury Policy
sets limits on the amount of credit exposure to each financial institution. New derivatives, cash and term deposit transactions are
limited to financial institutions that meet minimum credit rating criteria in accordance with the Policy or as approved under the Policy.
These limits are set to minimise the concentration of risk and therefore mitigate the risk of financial loss as a result of a counterparty’s
failure to make a payment.
Customer credit risk is managed by each business subject to established policies, procedures and controls relating to customer risk
management. Credit limits are set for each customer and these are regularly monitored. For information concerning percentage of sales
to the Group’s top three customers and trade receivables past due but not impaired, refer to Notes 2 and 6a respectively.
The Group’s maximum exposure for credit risk is the sum of the carrying amount of all cash assets, other financial assets at amortised
cost, loans receivable, trade and other receivables and derivative asset balances.
iii) Foreign currency translation risk
The financial statements for each of Coca-Cola Amatil Limited’s foreign operations are prepared in their local currency. For the
purposes of preparing the Group’s consolidated financial information, each foreign operation’s financial statements are translated into
Australian Dollars using applicable foreign exchange rates for the reporting period. A translation risk exists on translating the financial
statements of Coca-Cola Amatil Limited’s foreign operations. As a result, volatility in foreign exchange rates can impact the Group’s net
assets, profit and other comprehensive income.
The Group does not as a matter of policy, hedge translation risk. However, there are occasions when it is considered appropriate to
hedge foreign currency denominated earnings and this form of translation risk may be hedged from time to time.
16 FAIR VALUE
The Group applies historical cost accounting, with the exception of financial assets and liabilities. These financial assets and liabilities
and a summary of how fair value accounting is applied, are summarised below:
Financial assets and liabilities
Carrying amount and fair value relationship
Cash, trade and other
receivables and payables
Borrowings – bonds
Values are approximately the same mainly due to their short-term nature.
At 31 December 2020, the carrying and fair values of the Group’s bonds were $2,006.4 million and
$2,251.6 million (2019: $2,157.1 million and $2,272.2 million) respectively. To calculate fair values,
inputs were based on interest rates and yield curves at commonly quoted intervals and credit
spreads (level 2 inputs) that are observable for a similar liability in the market. Bonds pay fixed
interest; difference between the carrying and fair values for bonds is driven by the agreed fixed
interest and level 2 inputs used to calculate the fair value.
Long-term deposits and
borrowings – other than bonds
Values are approximately same, mainly due to the absence of material break costs on early
repayment or cancellation.
Other investments
Comprise early stage or seed investments which are not traded. Fair value is determined using a
range of factors including performance to plan (such as cash usage/generation, growth in
customer base, growth in transaction volume) and share pricing achieved in capital raisings after
initial investment.
Derivatives
Accounted for at fair value using the valuation techniques described below.
DERIVATIVES – VALUATION TECHNIQUES
Fair values of derivatives based on quoted prices in active markets are categorised as level 1. The Group establishes fair value by using
valuation techniques such as discounted cash flow or option pricing models (level 2), using inputs that are observable either directly
(as prices) or indirectly (derived from prices). These include reference to the fair values of recent arm’s length transactions, involving
the same or similar instruments. The classification of derivatives by level is shown in the table below:
Derivative
Assets
Liabilities
Derivative net (liabilities)/assets
2020
2019
Level 1
$M
19.2
(4.4)
14.8
Level 2
$M
117.6
(183.0)
(65.4)
Carrying
amount
$M
136.8
(187.4)
(50.6)
Level 1
$M
5.6
(10.8)
(5.2)
Level 2
$M
150.7
(73.5)
77.2
Carrying
amount
$M
156.3
(84.3)
72.0
125
THE VALUE WE CREATEPERFORMANCEGOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
V OTHER INFORMATION
17 RELATED PARTIES
PARENT ENTITY
Coca-Cola Amatil Limited is the parent entity of the Group.
RELATED ENTITIES
TRANSACTIONS WITH ENTITIES WITH SIGNIFICANT INFLUENCE OVER THE GROUP
As at the end of the financial year and for 2019, The Coca-Cola Company (TCCC) through its subsidiary, Coca-Cola Holdings (Overseas)
Limited, held 30.8% of Coca-Cola Amatil Limited’s fully paid ordinary shares. Further, TCCC owns 29.4% of the shares in PT Coca-Cola
Bottling Indonesia, a subsidiary of the Company (refer below for further details).
TCCC and its subsidiaries
Purchases and other payments
Reimbursements and other receipts
Amounts receivable
Amounts payable
TRANSACTIONS WITH OTHER RELATED ENTITIES
Refer to Note 12a for details of other related entities.
Joint ventures
Purchases and other payments
Reimbursements and other receipts
Amounts receivable
Amounts payable
Associates
Purchases and other payments
Amounts receivable
Amounts payable
Other related parties
Purchases and other payments
Reimbursement and other receipts
Amounts receivable
Amounts payable
Loans receivable – interest bearing
2020
$’000
2019
$’000
687,870.9
791,166.1
18,437.2
44,332.6
33,249.8
38,452.7
115,625.3
133,743.2
2020
$’000
2019
$’000
12,074.0
251.6
677.2
2,998.6
84,484.4
8,135.9
10,548.0
76,784.3
800.0
–
12,298.4
11,809.3
10,868.0
1,705.6
414.7
925.8
69,649.2
9,151.6
3,560.8
67,621.2
555.0
826.3
10,865.1
8,782.8
TERMS AND CONDITIONS OF TRANSACTIONS WITH RELATED PARTIES
All transactions with related parties are conducted under normal commercial terms and conditions. Receivable and payable balances
at year end are unsecured and settlement occurs in cash.
There have been no guarantees provided or received for any related party receivable and no provision has been raised for allowance
for doubtful receivables relating to amounts owed by related parties.
126
COCA-COLA AMATIL ANNUAL REPORT 2020 Transactions with TCCC and its subsidiaries
Purchases and other payments
This represents purchases of concentrates and beverage bases and royalty payments for Coca-Cola trademarked products and
finished goods.
Reimbursements and other receipts
Under a series of arrangements, the Group participates with certain subsidiaries of TCCC to jointly develop the market of 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. Amounts received are either accounted for as an increase to revenue or as a reduction to expense, as appropriate.
KEY MANAGEMENT PERSONNEL (KMP)
Disclosures relating to KMP are set out in Note 19 and in the Directors’ Report.
18 EMPLOYEE OWNERSHIP PLANS
Coca-Cola Amatil Limited has the following plans: the Employees Share Plan, the Long-Term Incentive Plan and the Executive Post-Tax
Share Purchase Plan. Coca-Cola Amatil Limited fully paid ordinary shares issued under these plans rank equally with all other existing
fully paid ordinary shares with respect to voting rights, dividends and future bonus and rights issues.
EMPLOYEES SHARE PLAN (ESP)
The ESP provides all full-time and part-time permanent employees with an opportunity to contribute up to 3% of their base salary to
acquire shares in Coca-Cola Amatil Limited. The ESP is administered by a trustee which acquires and holds shares on behalf of the
participants. These shares are purchased on market at prevailing market prices. Shares forfeited under the terms of the ESP are also
utilised. For every share acquired with amounts contributed by a participant, a matching share is acquired by the trustee, which under
normal circumstances vests with the employee after a period of two years from their date of issue (acquisition or utilisation) with
contributions made by the employing entities. There are no performance conditions. Members of the ESP receive dividends on both
vested and unvested shares held on their behalf by the trustee. As at 31 December 2020, the number of shares in the ESP, both vested
and unvested, was 2,699,155 (2019: 2,642,483). The number of shares vested to employees was 1,361,485 (2019: 1,333,373). All shares
were purchased on market during the year.
LONG-TERM INCENTIVE PLAN (LTIP)
Under Coca-Cola Amatil Limited’s LTIP, senior executives (as approved by the Board) are granted share rights and have the opportunity
to be rewarded with fully paid ordinary shares, providing the LTIP meets minimum pre-determined hurdles covering a three-year period,
as set by the People Committee. These shares are purchased on market or issued to the trustee once the LTIP vests. Vested share
rights will be converted into shares at the next trading window. In any event, including if there is no share trading window, the Board
retains discretion to settle share rights as cash equivalent per the LTIP plan rules.
The LTIP 2020-2022 has three performance conditions, namely earnings per share (EPS), Relative Total Shareholder Return (TSR) and
Absolute TSR. The LTIP 2019-2021 was the only plan that had two performance conditions, namely Relative TSR and Absolute TSR.
Details of the performance and service conditions for the LTIP 2020-2022 are provided in the Remuneration Report.
Dividends are payable to participants of the LTIP only once the rights vest into shares.
The fair value of shares offered in the LTIP was determined by an independent external valuer using an option pricing model with the
following inputs:
Plan
Grant date
Grant date share price
Volatility
Dividend yield per annum
Risk free rate per annum
2020-2022
2019-2021
2018-2020
12 June 2020
3 June 2019
16 May 2018
$9.14
20%-24%
4.6%
0.3%
$9.37
19.0%
5.1%
1.1%
$8.97
20.0%
5.0%
2.1%
127
THE VALUE WE CREATEPERFORMANCEGOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
V OTHER INFORMATION (CONTINUED)
18 EMPLOYEE OWNERSHIP PLANS (CONTINUED)
LONG-TERM INCENTIVE PLAN (LTIP) (CONTINUED)
Set out below are details of share rights granted under the LTIP:
Sub-plan
Grant date
Opening
balance
No.
Granted
No.
Vested
No.
Lapsed and
forfeited
No.
Closing
balance
No.
Weighted
average fair
value $
31 December 2020
2018-2020
2019-2021
2020-2022
31 December 2019
2017-2019
2018-2020
2019-2021
16 May 2018
1,471,288
3 June 2019
1,593,220
–
–
12 June 2020
–
1,216,165
(894,272)
(577,016)
–
–
–
(181,406)
1,411,814
(37,418)
1,178,747
3,064,508
1,216,165
(894,272)
(795,840)
2,590,561
16 May 2017
1,323,768
16 May 2018
1,640,688
–
–
3 June 2019
–
1,741,450
(272,555)
(1,051,213)
–
–
–
(169,400)
1,471,288
(148,230)
1,593,220
2,964,456
1,741,450
(272,555)
(1,368,843)
3,064,508
5.26
5.66
4.50
4.85
5.26
5.66
EXECUTIVE POST-TAX SHARE PURCHASE PLAN
All senior executives are required to have a portion of their short-term incentives deferred as restricted shares. The shares are purchased
on market and trading of these shares by the executives is restricted for 12 months for 50% of the shares, with the remaining 50%
restricted for 24 months. Dividends are payable to the participants of the Plan. Details on the forfeiture conditions of these shares are
provided in the Remuneration Report. As at 31 December 2020, the number of restricted shares in the Plan was 106,818 (2019: 88,419).
RECOGNITION AND MEASUREMENT
The value of services provided by employees to the Group in return for Coca-Cola Amatil Limited’s shares granted under employee
ownership plans, is measured by reference to the fair value of the shares as at the grant date. Fair values are determined as the cost
of shares purchased for employer contributions to the ESP (shares are purchased at grant date) and are determined by an independent
external valuer for shares granted under the LTIP (shares are purchased at vesting date).
The fair value of shares is charged to the income statement over the vesting period, with a matching increase in the share-based
remuneration reserve recognised, representing the obligation to provide these shares on vesting. On vesting, the treasury shares
account and this reserve are reduced.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon a market condition, such
as Relative TSR and Absolute TSR, or subject to service conditions not being fulfilled (as determined by the Board at its absolute discretion).
19 KMP DISCLOSURES
KMP remuneration by category
Short-term
Post-employment
Share-based payments
2020
$’000
2019
$’000
9,877.2
280.1
1,447.1
12,750.7
279.6
3,242.2
11,604.4
16,272.5
Further details are contained in the Directors’ Report.
Loans to KMP
Neither Coca-Cola Amatil Limited nor any other Group company has loans given to KMP.
Other transactions with KMP and their personally related entities
Neither Coca-Cola Amatil Limited nor any other Group company was party to any other transactions with KMP (including their
personally related entities).
128
COCA-COLA AMATIL ANNUAL REPORT 2020 20 AUDITOR’S REMUNERATION
Amounts received, or due and receivable, by:
Coca-Cola Amatil Limited auditor, Ernst & Young (Australia) for:
Auditing the statutory financial report of the parent covering the Group
Auditing the statutory financial reports of any controlled entities
Fees for other assurance and agreed-upon-procedures services under other legislation
or contractual arrangements where there is discretion as to whether the service is provided
by the auditor or another firm
Other services:
Tax compliance
21 COCA-COLA AMATIL LIMITED DISCLOSURES
a) FINANCIAL POSITION
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
Total equity
b) FINANCIAL PERFORMANCE
Profit for the year
Total comprehensive income for the year
c) GUARANTEES
2020
$’000
2019
$’000
3,458.5
1,053.9
4,512.4
3,062.1
965.5
4,027.6
345.9
1,130.2
115.9
4,974.2
118.0
5,275.8
2020
$M
2019
$M
655.8
4,535.5
5,191.3
1,434.4
1,773.8
3,208.2
1,983.1
490.4
4,784.4
5,274.8
1,287.7
1,821.6
3,109.3
2,165.5
1,920.1
1,920.1
2.4
60.6
35.3
210.1
1,983.1
2,165.5
103.8
68.2
319.5
315.9
Subsidiaries’ bonds, bank loans and other guarantees
117.0
142.6
129
THE VALUE WE CREATEPERFORMANCEGOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
V OTHER INFORMATION (CONTINUED)
22 DEED OF CROSS GUARANTEE
Coca-Cola Amatil Limited and certain subsidiaries as indicated in Note 23 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 Corporations (Wholly-owned Companies) Instrument 2016/785,
subsidiaries are relieved from the requirement to prepare financial statements.
Consolidated balance sheet for the closed group
Current assets
Cash assets
Trade and other receivables
Inventories
Derivatives
Prepayments
Current tax assets
Other financial assets
Total current assets
Non-current assets
Property, plant and equipment
Right of use assets
Intangible assets
Investments in securities
Investments
Defined benefit superannuation plans
Derivatives
Other non-current assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Lease liabilities
Other financial liabilities
Employee benefits provisions
Current tax liabilities
Derivatives
Total current liabilities
130
2020
$M
2019
$M
429.0
762.4
303.4
21.5
45.0
–
30.3
185.3
830.1
351.1
17.0
40.4
33.7
–
1,591.6
1,457.6
735.9
366.1
896.9
711.4
54.2
6.9
100.6
27.3
2,899.3
4,490.9
1,222.6
288.7
57.4
81.2
57.2
16.8
27.8
823.0
392.7
893.6
727.3
61.4
14.4
111.1
85.4
3,108.9
4,566.5
1,015.6
305.0
54.7
90.3
78.5
–
20.7
1,751.7
1,564.8
COCA-COLA AMATIL ANNUAL REPORT 2020 Non-current liabilities
Borrowings
Lease liabilities
Employee benefits provisions
Deferred tax liabilities
Derivatives
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Treasury shares
Reserves
Accumulated losses
Total equity
Consolidated income statement for the closed group1
Profit before income tax
Income tax expense
Profit for the year
Accumulated losses at the beginning of the year
Dividends paid
2020
$M
2019
$M
1,627.1
1,755.4
382.6
9.9
137.5
119.9
2,277.0
4,028.7
462.2
405.2
10.5
164.9
49.7
2,385.7
3,950.5
616.0
1,920.1
1,920.1
(12.7)
19.2
(1,464.4)
462.2
195.1
(62.0)
133.1
(1,344.1)
(253.4)
(13.0)
53.0
(1,344.1)
616.0
515.2
(84.1)
431.1
(1,406.0)
(369.2)
Accumulated losses at the end of the year
(1,464.4)
(1,344.1)
1
Total comprehensive income for the year was $96.9 million (2019: $427.5 million), represented by profit for the year of $133.1 million
(2019: $431.1 million) adjusted for a decrease in the hedging reserve of $32.2 million (2019: $3.2 million decrease) and a decrease in the actuarial
valuation reserve of $4.0 million (2019: $0.4 million increase).
131
THE VALUE WE CREATEPERFORMANCEGOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
V OTHER INFORMATION (CONTINUED)
23 INVESTMENTS IN SUBSIDIARIES
Footnote
Country of
incorporation
2
Australia
Equity holding1
2020
%
2019
%
Singapore
Fiji
Fiji
Samoa
Vanuatu
Indonesia
Indonesia
Australia
Papua New Guinea
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
United Kingdom
Australia
Australia
Australia
New Zealand
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100.0
100.0
89.6
93.9
100.0
70.6
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
89.6
93.9
–
70.6
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
9
3
4
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
5
2, 6
2
2, 7
2
2
2
2
2
2
Coca-Cola Amatil Limited
Subsidiaries
Amatil Investments (Singapore) Pte Ltd
— Coca-Cola Amatil (Fiji) Pte Limited
— Paradise Beverages (Fiji) Limited
— Samoa Breweries Limited
— Coca-Cola Amatil Vanuatu Limited
— PT Coca-Cola Bottling Indonesia
— PT Coca-Cola Distribution Indonesia
Associated Products & Distribution Proprietary
— Coca-Cola Amatil (PNG) Limited
AX Ventures Pty Ltd
Brewhouse Investments Pty Ltd
— Feral Brewing Company Pty Ltd
— Brewcorp Pty Ltd
— Brewcorp Unit Trust
C-C Bottlers Limited
Coca-Cola Amatil (Aust) Pty Ltd
— Apand Pty Ltd
— Beverage Bottlers (NQ) Pty Ltd
— Beverage Bottlers (Qld) Limited
— Can Recycling (S.A.) Pty Ltd
— Coca-Cola Amatil (CDE Aust) Pty Ltd
— Coca-Cola Amatil (Holdings) Pty Ltd
— Coca-Cola Amatil (UK) Limited
— Crusta Fruit Juices Pty Ltd
— Quenchy Crusta Sales Pty Ltd
— Perfect Fruit Company Pty Ltd
Coca-Cola Holdings NZ Limited
— Coca-Cola Amatil (N.Z.) Limited
Matila Nominees Pty Ltd
Neverfail Springwater Limited
— Purna Pty Ltd
— Neverfail Bottled Water Co Pty Ltd
— Neverfail SA Pty Ltd
— Neverfail Springwater Co Pty Ltd
— Neverfail Springwater (Vic) Pty Ltd
— Neverfail WA Pty Ltd
— Real Oz Water Supply Co (Qld) Pty Ltd
— Neverfail Springwater Co (Qld) Pty Ltd
Refer to the following page for footnote details.
132
COCA-COLA AMATIL ANNUAL REPORT 2020
Footnote
Country of
incorporation
Equity holding1
2020
%
2019
%
Pacbev Pty Ltd
— CCA Bayswater Pty Ltd
Sale Proprietary Co 1 Limited (formerly SPC Ardmona Limited)
2
2
2
— Sale Proprietary Co 2 Limited (formerly SPC Ardmona Operations Limited) 2
— Sale Proprietary Co 3 Pty Ltd (formerly Austral International Trading
Company Pty Ltd)
— Sale Proprietary Co 4 Pty Ltd (formerly Henry Jones Foods Pty Ltd)
— Sale Proprietary Co 5 Pty Ltd (formerly Hallco No. 39 Pty Ltd)
— Sale Proprietary Co 6 Limited (formerly Ardmona Foods Limited)
2
2
2
2
— Sale Proprietary Co 7 Pty Ltd (formerly Goulburn Valley Canners Pty Ltd) 2
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
— Sale Proprietary Co 8 B.V. (formerly SPC Ardmona (Netherlands) BV)
8
Netherlands
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
–
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Names inset indicate that shares or units are held by the company immediately above the inset. The above subsidiaries carry
on business in their respective countries of incorporation.
1
2
The proportion of ownership interest is equal to the proportion of voting power held.
These companies are parties to a Deed of Cross Guarantee as detailed in Note 22 and are eligible for the benefit of ASIC Corporations
(Wholly-owned Companies) Instrument 2016/785.
Coca-Cola Amatil Limited holds 3.4% of the shares in this company and TCCC holds 29.4% interest in this company.
Coca-Cola Amatil Limited holds 0.01% of the shares and PT Coca-Cola Bottling Indonesia holds 99.99% of the shares in this company.
3
4
5 Matila Nominees Pty Ltd is the trustee company for the Group’s employee ownership plans and also the Trustee to the Deed of Cross Guarantee.
6
7
8
9
Neverfail Springwater Limited holds 40.7% of the shares in Neverfail Bottled Water Co Pty Ltd.
Neverfail Bottled Water Co Pty Ltd holds 1.5% of the shares in Neverfail Springwater (Vic) Pty Ltd.
Sale Proprietary Co 8 B.V. was deregistered on 19 June 2020.
Coca-Cola Amatil Vanuatu Limited was incorporated on 19 November 2020.
24 NON-CONTROLLING INTERESTS
Opening balance
Share of (loss)/profit after tax:
Ongoing
Non-trading items1
Share of movements in reserves2
Total share of comprehensive (loss)/income for the year
Dividends paid
Equity – non-controlling interests
2020
$M
390.4
7.4
(42.3)
(34.9)
(35.7)
(70.6)
(0.4)
319.4
Refer to Note 3b for further details of non-trading items.
1
2 Mainly related to foreign exchange differences on translation of foreign operations.
The Group consolidates the financial statements of businesses that are controlled by Coca-Cola Amatil Ltd, our parent entity.
2019
$M
355.1
15.6
–
15.6
20.1
35.7
(0.4)
390.4
133
THE VALUE WE CREATEPERFORMANCEGOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
V OTHER INFORMATION (CONTINUED)
24 NON-CONTROLLING INTERESTS (CONTINUED)
The following businesses, while controlled by Coca-Cola Amatil Limited, had other non-controlling interest shareholders for all periods
included in this Financial Report and represented by the stated % ownership amounts:
Indonesia – TCCC shareholding
Paradise Beverages (Fiji) Group (consolidating Samoa Breweries Ltd) – numerous investors
Samoa Breweries Limited – numerous investors1
29.4%
10.4%
6.1%
1
In addition to non-controlling interest in Paradise Beverages (Fiji) Group.
The balances included above represent these non-controlling shareholder interests in the noted business's results and movements
in reserves, with most of the total balance being attributable to TCCC's ownership of the Indonesia business.
25 CONTINGENT LIABILITY
On 24 July 2020, Company’s subsidiary, Associated Products & Distribution Proprietary Limited (APD), was joined to proceedings in the
Supreme Court of Queensland between a Glencore mining joint venture and the State of Queensland, whereby APD’s entitlement to
coal royalties, from its sub-surface strata and associated mineral rights, has been challenged by the State of Queensland.
Since 2014, the Group has received approximately $80 million in royalties, which has been recorded as ‘other revenue’ within the
Corporate & Services segment. This includes $5.0 million received in 2019 and $1.7 million in 2020. Thereafter the royalty payments
have been paid directly to court while the proceedings are ongoing which totals to $1.3 million for 2H20.
The Group intends to defend APD’s rights to income, past and future. The proceedings involve numerous factual and legal questions
and will likely take considerable time to resolve. The timetable for the proceedings has not yet been finalised.
Apart from the above, there are no other contingent liabilities.
26 ACQUISITION BY COCA-COLA EUROPEAN PARTNERS
On 4 November 2020, we announced that Coca-Cola Amatil had entered into an agreement with Coca-Cola European Partners plc (CCEP)
for the acquisition of all of the issued shares held by independent Shareholders pursuant to a Scheme of Arrangement (CCEP Scheme of
Arrangement or Scheme). Under the agreement, independent Shareholders would receive total cash consideration of $12.75 per share,
less any final dividend in respect of the half year ended 31 December 2020 (2H 2020) declared and paid to Shareholders before the
date of implementation of any Scheme. We also announced that CCEP had entered into a separate agreement to acquire the Amatil
shares indirectly held by The Coca-Cola Company, conditional upon implementation of the Scheme (CCEP/TCCC Transaction).
On 15 February 2021, we announced that Amatil had entered into a revised agreement with CCEP that increases the total cash
consideration that independent Shareholders will receive under the Scheme from $12.75 per share to $13.50 cash per share. Consistent
with the initial offer, the total cash consideration would be reduced by the cash amount of the final dividend in respect of 2H 2020.
CCEP has declared that this is its best and final offer. There were no changes to the CCEP/TCCC Transaction.
Independent Shareholders will have the opportunity to vote on the Scheme at the upcoming Amatil Scheme Meeting scheduled to
occur in mid-April 2021. A draft scheme booklet containing relevant information on the Scheme is expected to be submitted to ASIC on
or before 22 February 2021 and dispatched to independent Shareholders in mid-March 2021.
The Amatil Related Party Committee and Group Managing Director, Alison Watkins, unanimously recommend that independent
Shareholders vote in favour of the Scheme, in the absence of a superior proposal and subject to the independent expert concluding
(and continuing to conclude) that the Scheme is fair and reasonable and in the best interests of independent Shareholders.
Australian Foreign Investment Review Board approval for the Scheme was obtained on 29 January 2021. However, the Scheme remains
subject to a number of other conditions including New Zealand Overseas Investment Office approval, independent Shareholder
approval and Australian court approval.
27 NEW STANDARDS AND INTERPRETATIONS
The Group has early adopted AASB 2020-4 Amendments to Australian Accounting Standards – COVID-19-Related Rent Concessions.
This standard applies to annual periods beginning on or after 1 June 2020 and the financial impact of the application of this standard
is not material to the period ended 31 December 2020 financial statements. The Group has not early adopted any other new standards,
amendments to standards and interpretations that have been issued or amended but are not yet effective.
28 EVENTS AFTER THE BALANCE DATE
Subsequent to the balance sheet date, other than as noted in 26, no matters or circumstances have arisen 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.
134
COCA-COLA AMATIL ANNUAL REPORT 2020 DIRECTORS’
DECLARATION
Coca-Cola Amatil Limited and its subsidiaries
In accordance with a resolution of the Directors of Coca-Cola Amatil Limited dated 18 February 2021, we state that:
In the opinion of the Directors:
a)
the financial statements, notes and the additional disclosures included in the Directors’ Report of the Group are audited, and
are in accordance with the Corporations Act 2001, including:
i)
giving a true and fair view of the Group’s financial position as at 31 December 2020, and of its performance for the year
ended on that date; and
ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001;
the financial statements and notes also comply with International Financial Reporting Standards as disclosed on page 87 of
the Financial Report;
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
at the date of this declaration, there are reasonable grounds to believe that the Company and the wholly-owned subsidiaries
identified on pages 132 and 133 of the Financial Report as being parties to a Deed of Cross Guarantee with Matila Nominees Pty
Ltd as trustee, will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the Deed.
b)
c)
d)
This declaration has been made after receiving the declarations required to be made to Directors by the Group Managing Director
and Group Chief Financial Officer, in accordance with section 295A of the Corporations Act 2001 for the financial year ended
31 December 2020.
On behalf of the Directors
Ilana R. Atlas, AO
Chairman
Sydney
18 February 2021
Alison M. Watkins
Group Managing Director
Sydney
18 February 2021
135
THE VALUE WE CREATEPERFORMANCEGOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS
INDEPENDENT
AUDITOR’S REPORT
TO THE MEMBERS OF COCA-COLA AMATIL LIMITED
INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF COCA-COLA AMATIL LIMITED
TO THE MEMBERS OF COCA-COLA AMATIL LIMITED
REPORT ON THE AUDIT OF THE FINANCIAL REPORT
REPORT ON THE AUDIT OF THE FINANCIAL REPORT
OPINION
OPINION
We have audited the financial report of Coca-Cola Amatil Limited (the Company) and its subsidiaries (collectively “the Group”), which comprises
We have audited the financial report of Coca-Cola Amatil Limited (the Company) and its subsidiaries (collectively “the
the consolidated balance sheet as at 31 December 2019, the consolidated income statement, the consolidated statement of comprehensive
Group”), which comprises the consolidated balance sheet as at 31 December 2020, the consolidated income statement,
income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes to the financial
the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated
statements, including a summary of significant accounting policies, and the directors' declaration.
statement of cash flows for the year then ended, notes to the financial statements, including a summary of significant
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
accounting policies, and the directors’ declaration.
a) giving a true and fair view of the consolidated financial position of the Group as at 31 December 2019 and of its consolidated financial
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
performance for the year ended on that date; and
a)
b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
giving a true and fair view of the consolidated financial position of the Group as at 31 December 2020 and of its
consolidated financial performance for the year ended on that date; and
b)
BASIS FOR OPINION
complying with Australian Accounting Standards and the Corporations Regulations 2001.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the
BASIS FOR OPINION
Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the
auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in
are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and
the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial
Key Audit Matters
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
current year. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, but
we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided
Key Audit Matters
in that context.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report, including
financial report of the current year. These matters were addressed in the context of our audit of the financial report as a
in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of
whole, and in forming our opinion thereon, but we do not provide a separate opinion on these matters. For each matter
material misstatement of the financial report. The results of our audit procedures, including the procedures performed to address the matters
below, our description of how our audit addressed the matter is provided in that context.
below, provide the basis for our audit opinion on the accompanying financial report.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the Financial Report
section of our report, including in relation to these matters. Accordingly, our audit included the performance of
procedures designed to respond to our assessment of the risks of material misstatement of the financial report. The
results of our audit procedures, including the procedures performed to address the matters below, provide the basis for
our audit opinion on the accompanying financial report.
A member firm of Ernst & Young Global Limited
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Liability limited by a scheme approved under Professional Standards Legislation
136
Coca-Cola Amatil Limited
81
COCA-COLA AMATIL ANNUAL REPORT 2020
INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF COCA-COLA AMATIL LIMITED (CONTINUED)
TO THE MEMBERS OF COCA-COLA AMATIL LIMITED (CONTINUED)
Key Audit Matters (Continued)
Key Audit Matters (Continued)
Why significant
How our audit addressed the key audit matter
Why significant
1. Carrying Value of Indonesian Cash Generating Unit
How our audit addressed the key audit matter
1. Carrying Value of Indonesian Cash Generating Unit
Due to the limited amount by which the recoverable amount of the
Indonesian Cash Generating Unit (CGU) exceeds it’s carrying value, this
The Directors have assessed the Indonesian cash generating
CGU is susceptible to impairment.
unit (CGU) for impairment at 31 December 2020.
As set out in Note 10 to the financial statements, COVID-19
As disclosed in Note 10 to the financial statements, the assessment of
has had an adverse impact on trading on the Indonesian
impairment for the Indonesian CGU, involves critical accounting
business. This has led to an impairment charge of
estimates and significant judgements. Note 10 also demonstrates the
$175.9 million, before tax, being recognised during the year.
amount of change to the revenue, discount rate and terminal growth
rate assumptions which would lead to an impairment charge being
As disclosed within Note 10 to the financial statements, the
required.
assessment of impairment of the Indonesian CGU incorporated
significant judgements and estimates, based upon conditions
This was considered a key audit matter given the limited headroom and
existing as at 31 December 2020, specifically concerning
significant judgment required in performing this assessment.
factors such as forecast cashflows, discount rates and terminal
growth rates. The estimates and assumptions relate to future
performance, market and economic conditions.
At 31 December 2020 the performance of the Indonesian CGU
continues to be impacted by the restrictions and economic
uncertainty resulting from the COVID-19 pandemic. Significant
assumptions used in the impairment testing referred to above
are inherently subjective and in times of economic uncertainty
the degree of subjectivity is higher than it might otherwise be.
Changes in certain assumptions can lead to significant
changes in the recoverable amount of these assets.
2. Accounting for Rebates and Promotional Allowances
In this situation the disclosures in Note 10 to the financial
As disclosed in Note 2 to the financial statements, revenue is
statements provide particularly important information about
recognised when control of the product has transferred, being when
the assumptions made in the impairment testing and the
the product is delivered to the customer and there is no unfulfilled
market conditions at 31 December 2020. As a result, we
obligation that could affect the customer’s acceptance of the product.
consider the impairment testing of the Indonesian CGU and
the related disclosures in the financial report to be particularly
significant to our audit.
Revenue is recognised net of rebates and promotional allowances owed
to customers based on their individual contractual arrangements. The
recognition and measurement of rebates and promotional allowances,
2. Accounting for Rebates and Promotional Allowances
including establishing an appropriate accrual at year end, involves
As disclosed in Note 2 to the financial statements, revenue is
significant judgment and estimate, particularly related to the expected
recognised when control of the product has transferred, being
level of rebate claims by the customers.
when the product is delivered to the customer and there is no
unfulfilled obligation that could affect the customer’s
This was considered a key audit matter given the value of the rebate
acceptance of the product.
and promotional allowances provided to customers, together with the
level of judgment involved in estimating the accrual for promotional
Revenue is recognised net of rebates and promotional
allowances at year end.
allowances owed to customers based on their individual
contractual arrangements. The recognition and measurement
of rebates and promotional allowances, including establishing
an appropriate accrual at year end, involves significant
judgement and estimation, particularly related to the expected
level of rebate claims by customers.
• Assessed whether the methodology used by the Group met the
Our audit procedures included the following:
Our audit procedures included the following in respect of
the Indonesian CGU:
— Assessed whether the impairment testing methodology
used met the requirements of Australian Accounting
Standards
requirements of Australian Accounting Standards
• Tested the mathematical accuracy of the cash flow model
• Assessed whether the carrying value of the CGU used in the
— Tested the mathematical accuracy of the discounted cash
flow model used to determine value in use
impairment test was appropriately determined in accordance with
— Assessed whether the carrying value used in the
the Australian Accounting Standards
impairment test was appropriately determined in
accordance with Australian Accounting Standards
— Assessed the cash flow forecasts by considering the
• Assessed the cash flow forecasts by considering the historical
reliability of the Group’s cash flow forecasts, recent results, and
our knowledge of the business and industry, corroborating this
historical reliability of cash flow forecasts, recent results,
data with external information where possible
and our knowledge of the business and industry,
corroborating this data with external information where
possible
• Evaluated the Group’s analysis of the sensitivity of changes in key
assumptions used in their impairment testing model, by
considering a range of reasonably possible changes in key
— Evaluated the analysis of the sensitivity of changes in key
assumptions
assumptions used in the discounted cash flow model, by
considering a range of reasonably possible changes in key
Involving our business valuation and modelling specialists in the
assumptions
consideration of key assumptions such as, the discount rate, and
terminal growth rates
— Involved our valuation specialists in the consideration of
key assumptions such as, discount rate and terminal
growth rate
• Assessed the adequacy of the financial statement disclosures
•
relating to impairment testing
— Assessed the accuracy of the allocation of the
impairment charge
— Assessed the adequacy of the financial statement
disclosures relating to impairment testing
Our audit procedures included the following:
• Considered the application of Australian Accounting Standards to
the Group’s accounting policies regarding rebates and
promotional allowances
• Evaluated the effectiveness of the Group’s processes to calculate
and record rebates and promotional allowances
• For a sample of contracts and promotional activities, assessed
Our audit procedures included the following:
— Considered the application of Australian Accounting
whether the rebates and promotional allowances were calculated
in accordance with the terms of each contract
Standards to the Group’s accounting policies regarding
rebates and promotional allowances
• Considered the impact of customer claims and payments made
subsequent to year end
— Evaluated the effectiveness of the Group’s processes to
calculate and record rebates and promotional allowances
• Analysed movements, trends and the ageing profile of the
• Performed analysis of write backs to the rebate and promotional
rebates and promotional allowances accrual
— For a sample of contracts and promotional activities,
assessed whether the rebates and promotional
allowances were calculated in accordance with the terms
of each contract
• Enquired of the Group as to the existence of any side
— Considered the impact of customer claims and payments
allowances throughout the year
made subsequent to year end
arrangements or contracts with unusual terms and conditions
• Considered the presentation and disclosure in respect of rebates
— Analysed movements, trends and the ageing profile of
and promotional allowances in the financial statements
the rebates and promotional allowances accrual
— Performed analysis of write backs to the rebate and
This was considered a key audit matter given the value of the
rebate and promotional allowances provided to customers,
together with the level of judgement involved in estimating the
accrual for promotional allowances at year end.
A member firm of Ernst & Young Global Limited
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Liability limited by a scheme approved under Professional Standards Legislation
Coca-Cola Amatil Limited
promotional allowances throughout the year
— Enquired of the Group as to the existence of any side
arrangements or contracts with unusual terms and
conditions
— Considered the presentation and disclosure in respect
of rebates and promotional allowances in the financial
statements
137
82
THE VALUE WE CREATEPERFORMANCEGOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS
INDEPENDENT AUDITOR’S REPORT (CONTINUED)
TO THE MEMBERS OF COCA-COLA AMATIL LIMITED
INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF COCA-COLA AMATIL LIMITED (CONTINUED)
TO THE MEMBERS OF COCA-COLA AMATIL LIMITED (CONTINUED)
Key Audit Matters (Continued)
INFORMATION OTHER THAN THE FINANCIAL REPORT AND AUDITOR’S REPORT THEREON
How our audit addressed the key audit matter
Why significant
1. Carrying Value of Indonesian Cash Generating Unit
The directors are responsible for the other information. The other information comprises the information included in the
Company’s 2020 Annual Report other than the financial report and our auditor’s report thereon. We obtained the Directors’
Report that is to be included in the Annual Report, prior to the date of this auditor’s report, and we expect to obtain the
remaining sections of the Annual Report after the date of this auditor’s report.
Our audit procedures included the following:
Due to the limited amount by which the recoverable amount of the
Indonesian Cash Generating Unit (CGU) exceeds it’s carrying value, this
CGU is susceptible to impairment.
Our opinion on the financial report does not cover the other information and we do not express any form of assurance
conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion.
requirements of Australian Accounting Standards
• Assessed whether the methodology used by the Group met the
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the
audit or otherwise appears to be materially misstated.
impairment test was appropriately determined in accordance with
the Australian Accounting Standards
As disclosed in Note 10 to the financial statements, the assessment of
impairment for the Indonesian CGU, involves critical accounting
estimates and significant judgements. Note 10 also demonstrates the
amount of change to the revenue, discount rate and terminal growth
rate assumptions which would lead to an impairment charge being
required.
If, based on the work we have performed on the other information obtained prior to the date of this auditor’s report, we
conclude that there is a material misstatement of this other information, we are required to report that fact. We have
nothing to report in this regard.
reliability of the Group’s cash flow forecasts, recent results, and
our knowledge of the business and industry, corroborating this
data with external information where possible
This was considered a key audit matter given the limited headroom and
significant judgment required in performing this assessment.
• Tested the mathematical accuracy of the cash flow model
• Assessed whether the carrying value of the CGU used in the
• Assessed the cash flow forecasts by considering the historical
• Evaluated the Group’s analysis of the sensitivity of changes in key
RESPONSIBILITIES OF THE DIRECTORS FOR THE FINANCIAL REPORT
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in
accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the
directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free
from material misstatement, whether due to fraud or error.
assumptions used in their impairment testing model, by
considering a range of reasonably possible changes in key
assumptions
Involving our business valuation and modelling specialists in the
consideration of key assumptions such as, the discount rate, and
terminal growth rates
•
In preparing the financial report, the directors are responsible for assessing the Group’s ability to continue as a going
concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
• Assessed the adequacy of the financial statement disclosures
relating to impairment testing
2. Accounting for Rebates and Promotional Allowances
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL REPORT
Our audit procedures included the following:
• Considered the application of Australian Accounting Standards to
As disclosed in Note 2 to the financial statements, revenue is
recognised when control of the product has transferred, being when
the product is delivered to the customer and there is no unfulfilled
obligation that could affect the customer’s acceptance of the product.
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian
Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
Revenue is recognised net of rebates and promotional allowances owed
economic decisions of users taken on the basis of this financial report.
to customers based on their individual contractual arrangements. The
recognition and measurement of rebates and promotional allowances,
including establishing an appropriate accrual at year end, involves
significant judgment and estimate, particularly related to the expected
level of rebate claims by the customers.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate
to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than
for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
This was considered a key audit matter given the value of the rebate
and promotional allowances provided to customers, together with the
level of judgment involved in estimating the accrual for promotional
allowances at year end.
the Group’s accounting policies regarding rebates and
promotional allowances
and record rebates and promotional allowances
rebates and promotional allowances accrual
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
• Enquired of the Group as to the existence of any side
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s
internal control.
allowances throughout the year
subsequent to year end
—
—
• Analysed movements, trends and the ageing profile of the
whether the rebates and promotional allowances were calculated
in accordance with the terms of each contract
• Evaluated the effectiveness of the Group’s processes to calculate
• Performed analysis of write backs to the rebate and promotional
• Considered the impact of customer claims and payments made
• For a sample of contracts and promotional activities, assessed
arrangements or contracts with unusual terms and conditions
• Considered the presentation and disclosure in respect of rebates
—
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the directors.
and promotional allowances in the financial statements
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
138
Coca-Cola Amatil Limited
82
COCA-COLA AMATIL ANNUAL REPORT 2020
INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF COCA-COLA AMATIL LIMITED (CONTINUED)
TO THE MEMBERS OF COCA-COLA AMATIL LIMITED (CONTINUED)
Key Audit Matters (Continued)
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL REPORT (CONTINUED)
How our audit addressed the key audit matter
Why significant
—
1. Carrying Value of Indonesian Cash Generating Unit
Due to the limited amount by which the recoverable amount of the
Indonesian Cash Generating Unit (CGU) exceeds it’s carrying value, this
CGU is susceptible to impairment.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if
such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a
going concern.
requirements of Australian Accounting Standards
Our audit procedures included the following:
As disclosed in Note 10 to the financial statements, the assessment of
impairment for the Indonesian CGU, involves critical accounting
estimates and significant judgements. Note 10 also demonstrates the
amount of change to the revenue, discount rate and terminal growth
rate assumptions which would lead to an impairment charge being
required.
Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether
the financial report represents the underlying transactions and events in a manner that achieves fair presentation.
impairment test was appropriately determined in accordance with
the Australian Accounting Standards
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and
performance of the Group audit. We remain solely responsible for our audit opinion.
reliability of the Group’s cash flow forecasts, recent results, and
our knowledge of the business and industry, corroborating this
data with external information where possible
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
This was considered a key audit matter given the limited headroom and
significant judgment required in performing this assessment.
• Assessed the cash flow forecasts by considering the historical
• Evaluated the Group’s analysis of the sensitivity of changes in key
• Tested the mathematical accuracy of the cash flow model
• Assessed whether the carrying value of the CGU used in the
• Assessed whether the methodology used by the Group met the
—
—
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear
on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
•
assumptions used in their impairment testing model, by
considering a range of reasonably possible changes in key
assumptions
Involving our business valuation and modelling specialists in the
consideration of key assumptions such as, the discount rate, and
terminal growth rates
From the matters communicated to the directors, we determine those matters that were of most significance in the audit of
the financial report of the current year and are therefore the key audit matters. We describe these matters in our auditor’s
report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
• Assessed the adequacy of the financial statement disclosures
relating to impairment testing
Our audit procedures included the following:
• Considered the application of Australian Accounting Standards to
2. Accounting for Rebates and Promotional Allowances
REPORT ON THE AUDIT OF THE REMUNERATION REPORT
Opinion on the Remuneration Report
As disclosed in Note 2 to the financial statements, revenue is
recognised when control of the product has transferred, being when
the product is delivered to the customer and there is no unfulfilled
obligation that could affect the customer’s acceptance of the product.
We have audited the Remuneration Report included in pages 58 to 80 of the directors' report for the year ended
31 December 2020.
the Group’s accounting policies regarding rebates and
promotional allowances
• Evaluated the effectiveness of the Group’s processes to calculate
In our opinion, the Remuneration Report of Coca-Cola Amatil Limited for the year ended 31 December 2020, complies with
section 300A of the Corporations Act 2001.
• For a sample of contracts and promotional activities, assessed
and record rebates and promotional allowances
Revenue is recognised net of rebates and promotional allowances owed
to customers based on their individual contractual arrangements. The
recognition and measurement of rebates and promotional allowances,
including establishing an appropriate accrual at year end, involves
significant judgment and estimate, particularly related to the expected
level of rebate claims by the customers.
Responsibilities
whether the rebates and promotional allowances were calculated
in accordance with the terms of each contract
• Considered the impact of customer claims and payments made
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.
subsequent to year end
• Analysed movements, trends and the ageing profile of the
rebates and promotional allowances accrual
This was considered a key audit matter given the value of the rebate
and promotional allowances provided to customers, together with the
level of judgment involved in estimating the accrual for promotional
allowances at year end.
• Performed analysis of write backs to the rebate and promotional
allowances throughout the year
• Enquired of the Group as to the existence of any side
arrangements or contracts with unusual terms and conditions
• Considered the presentation and disclosure in respect of rebates
and promotional allowances in the financial statements
Ernst & Young
Katrina Zdrilic
Partner
18 February 2021
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Coca-Cola Amatil Limited
139
82
THE VALUE WE CREATEPERFORMANCEGOVERNANCE & RISKSFINANCIAL & STATUTORY REPORTSOTHER INFORMATIONOUR BUSINESS
AUDITOR’S
INDEPENDENCE DECLARATION
Coca-Cola Amatil Limited and its subsidiaries
INDEPENDENT AUDITOR’S REPORT
AUDITOR’S INDEPENDENCE DECLARATION
TO THE MEMBERS OF COCA-COLA AMATIL LIMITED
TO THE DIRECTORS OF COCA-COLA AMATIL LIMITED
REPORT ON THE AUDIT OF THE FINANCIAL REPORT
no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
As lead auditor for the audit of the financial report of Coca-Cola Amatil Limited for the financial year ended
OPINION
31 December 2020, I declare to the best of my knowledge and belief, there have been:
We have audited the financial report of Coca-Cola Amatil Limited (the Company) and its subsidiaries (collectively “the Group”), which comprises
the consolidated balance sheet as at 31 December 2019, the consolidated income statement, the consolidated statement of comprehensive
a)
income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes to the financial
statements, including a summary of significant accounting policies, and the directors' declaration.
b) no contraventions of any applicable code of professional conduct in relation to the audit.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
This declaration is in respect of Coca-Cola Amatil Limited and the entities it controlled during the financial year.
a) giving a true and fair view of the consolidated financial position of the Group as at 31 December 2019 and of its consolidated financial
performance for the year ended on that date; and
b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
BASIS FOR OPINION
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the
Ernst & Young
Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the
auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
Katrina Zdrilic
Partner
18 February 2021
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the
current year. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, but
we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided
in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report, including
in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the procedures performed to address the matters
below, provide the basis for our audit opinion on the accompanying financial report.
A member firm of Ernst & Young Global Limited
A member firm of Ernst & Young Global Limited
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140
Coca-Cola Amatil Limited
81
COCA-COLA AMATIL ANNUAL REPORT 2020
SHAREHOLDER
INFORMATION
Coca-Cola Amatil Limited and its subsidiaries
Additional information required by Australian Securities Exchange Listing Rules is as follows. This information is current as at
26 March 2021.
Distribution Schedule of Shareholders
Size of Holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Number of
Shareholders
Number of
Ordinary Shares
%
Issued Capital
28,251
12,771
1,744
937
74
9,353,343
28,652,014
12,311,233
19,600,155
654,082,954
43,777
723,999,699
1.29
3.96
1.70
2.71
90.34
100.00
There were 4,095 holders of less than a marketable parcel of 38 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:
Coca-Cola Holdings (Overseas) Limited1
223,049,276
Top 20 Registered Shareholders
Number of Shares
% of Issued Capital
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
COCA-COLA HOLDINGS (OVERSEAS) LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
CS THIRD NOMINEES PTY LIMITED
SOLIUM NOMINEES (AUSTRALIA) PTY LTD
BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD
NATIONAL NOMINEES LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
BNP PARIBAS NOMINEES PTY LTD
BNP PARIBAS NOMS PTY LTD
BNP PARIBAS NOMS PTY LTD
BNP PARIBAS SECURITIES SERVICES
BNP PARIBAS NOMINEES PTY LTD CIC AUSTRALIA
MATILA NOMINEES PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
CITICORP NOMINEES PTY LIMITED
JIKINTA INVESTMENTS PTY LTD
20
ECAPITAL NOMINEES PTY LIMITED
Total
1
Major holdings of The Coca-Cola Company.
223,049,276
157,868,712
120,408,106
63,310,472
11,755,262
10,347,349
9,304,736
6,011,844
4,541,345
4,336,506
4,321,212
4,157,544
3,932,574
3,238,000
3,032,522
2,270,347
2,063,000
1,504,301
1,381,331
1,152,533
30.81
21.81
16.63
8.74
1.62
1.43
1.29
0.83
0.63
0.60
0.60
0.57
0.54
0.45
0.42
0.31
0.28
0.21
0.19
0.16
637,986,972
88.12
141
THE VALUE WE CREATEPERFORMANCEGOVERNANCE & RISKSOUR BUSINESSFINANCIAL & STATUTORY REPORTSOTHER INFORMATION SHAREHOLDER INFORMATION (CONTINUED)
Coca-Cola Amatil Limited and its subsidiaries
LISTINGS
Coca-Cola Amatil’s ordinary shares are quoted under the symbol
CCL on Australian Securities Exchange (ASX) and are traded on
ASX on the issuer sponsored sub-register or under CHESS
(Clearing House Electronic Subregister System).
During FY 2020, Coca-Cola Amatil listed USD$50 million
2.6525% and NOK$750 million 2.75% Senior Secured Notes on
the ASX under the symbol CCLHA. Coca-Cola Amatil’s 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. The ADRs trade over-the-counter under the
symbol CCLAY.
Coca-Cola Amatil has a number of Senior Secured Notes listed
on the Australian, Singapore and Luxembourg Stock Exchanges.
ANNUAL REPORT
Coca-Cola Amatil’s 2020 Annual Report is available at Coca-Cola
Amatil’s website www.ccamatil.com. Printed copies of Annual
Reports are only mailed to those Shareholders who have elected
to receive one.
COMPANY PUBLICATIONS
Each year, Coca-Cola Amatil publishes its Annual Report,
Sustainability Report and Corporate Governance Statement.
Shareholders are encouraged to access Shareholder
communications and information at www.ccamatil.com.
WEBSITE
All material contained in the Annual Report is also available on
Coca-Cola Amatil’s website. In addition, announcements to the
ASX, media releases, and presentations by senior management
are also published on the website. The website address is
www.ccamatil.com.
DIVIDENDS PAID
The sum of dividends paid to Shareholders relating to 2020 was
27.0 cents per share, 42.6% lower than 2019 (excluding the 2019
interim special dividend of 4.0 cents per share). Based on ongoing
operations, this represents a payout ratio of 57.5% for the full
year. Franking levels differed across 2020, with the interim
dividend being unfranked (0%) and the final dividend being fully
franked (100%). Full year free cash flow was sufficient to cover
both interim and final dividend payments.
DIRECT DEPOSIT OF DIVIDENDS
As previously advised to Shareholders, commencing with the final
dividend payment in April 2012, Coca-Cola Amatil introduced a
system of mandatory direct crediting of dividends in Australia.
Commencing with the 2013 final dividend payment in April 2014,
the same mandatory direct crediting was introduced in New
Zealand, and cheques will only be paid to non-New Zealand
overseas Shareholders without an Australian or New Zealand
financial institution account, or in exceptional circumstances.
If you are an Australian or New Zealand resident Shareholder, any
Coca-Cola Amatil dividends will be paid directly into your bank
account on the dividend payment date. Your dividend statement
will be sent by mail or emailed to you on that date.
If you are an Australian or New Zealand Shareholder and have not
provided your Australian or New Zealand 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 (DRP)
The Board of Coca-Cola Amatil Limited has determined to
suspend our DRP in relation to the 2020 final dividend. As
a result, our DRP is not currently available to Shareholders.
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 Coca-Cola Amatil’s website. Changes will
be effective on the date of the announcement. For additional
information and a DRP application form, please contact our
share registry, Link Market Services, on +61 1300 554 474 or
at www.linkmarketservices.com.au.
TAX FILE NUMBERS
Australian taxpayers who do not provide details of their tax file
number will have the unfranked portion of 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
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.
142
COCA-COLA AMATIL ANNUAL REPORT 2020 FIVE-YEAR
FINANCIAL HISTORY
Coca-Cola Amatil Limited and its subsidiaries
Summarised income statement – ongoing1 ($M)
Trading revenue
EBIT
Net finance costs
Income tax expense
Non-controlling interests
Profit attributable to Coca-Cola Amatil Limited
shareholders – ongoing
Profit/(loss) from discontinued operation after income tax
Non-trading items after tax
Profit attributable to Coca-Cola Amatil Limited
shareholders
Other performance measures
Dividends per share (cents)
Final dividend franking per share (%)
Special dividend per share – unfranked (cents)
EPS – ongoing (cents)
EPS (cents)
EBIT interest cover – ongoing (times)
Return on capital employed (ROCE) – ongoing (%)
Operating cash flow – ongoing ($M)
Free cash flow – ongoing ($M)
Capital expenditure/trading revenue – ongoing (%)
Summarised Balance sheet ($M)
Net assets – operating and investing – ongoing
(before lease accounting changes)
Less: net debt
Less: lease liabilities
Net assets
2016
2017
2018
20192
2020
5,077.7
4,933.8
4,752.3
5,070.6
4,762.1
683.4
(73.0)
(181.3)
(11.2)
417.9
–
(171.8)
678.7
(68.8)
(177.9)
(15.8)
416.2
–
29.0
634.5
(72.5)
(160.7)
(13.0)
388.3
(122.5)
13.2
639.3
(65.7)
(164.1)
(15.6)
550.7
(62.1)
(140.9)
(7.4)
393.9
340.3
6.2
(25.7)
–
(160.4)
246.1
445.2
279.0
374.4
179.9
46.0
75.0
–
54.7
32.2
9.4
20.4
774.8
490.5
5.8
47.0
70.0
–
55.9
59.8
9.9
20.9
589.2
429.3
6.3
47.0
50.0
–
53.6
38.5
8.8
20.1
705.6
392.6
6.7
3,267.0
3,217.5
3,227.8
(992.8)
(1,337.2)
(1,327.8)
–
–
–
47.0
–
4.0
54.4
51.7
9.7
18.4
746.0
521.4
4.5
27.0
100.0
–
47.0
24.8
8.9
16.2
867.7
661.0
4.4
3,220.7
483.0
(1,221.7)
(529.8)
2,638.3
452.0
(962.6)
(499.5)
2,274.2
1,880.3
1,900.0
1,952.2
1,628.2
Add: right of use assets, including related deferred tax
–
–
–
1
2
Ongoing refers to continuing operations results adjusted to exclude non-trading items. The SPC business was classified as a discontinued operation
for 2018 and sold in 2019, refer to page 111 of the financial report for further details.
Financial information from 2019 onwards include the impact of AASB 16 – Leases.
143
THE VALUE WE CREATEPERFORMANCEGOVERNANCE & RISKSOUR BUSINESSFINANCIAL & STATUTORY REPORTSOTHER INFORMATION GLOSSARY
BEVERAGES RELATED
Alcohol Ready-To-Drink
Beverages (ARTD)
Non-Alcohol Ready-To-
Drink Beverages (NARTD)
Sparkling & Frozen
Beverages
Still Beverages
Alcohol beverages, including beer and pre-mixed spirit categories.
Non-alcohol beverages, including sparkling and still categories.
Non-alcohol beverages including sugar cola, non-sugar cola, flavours and adult beverages and Frozen
non-alcohol beverages.
Non-alcohol beverages including water (carbonated and non-carbonated), sports, energy, juice,
flavoured milk and tea.
Unit Case
A unit case is the equivalent of twenty-four 8 US oz (237ml) serves or 5.678 litres.
FINANCIAL MEASURES
CAGR
Compound annual growth rate.
Capex or Capital
Expenditure
Cash Realisation
EBIT
EPS
Free Cash Flow
Payments for additions of property, plant and equipment and software development assets less related
grant proceeds received from a government.
Calculated on an ongoing basis as net operating cash flows divided by profit after tax, adding back
non-controlling interest, depreciation and amortisation expenses before tax.
Earnings before interest and tax.
Earnings per share, determined as profit attributable to shareholders of Coca-Cola Amatil Limited
divided by the weighted average number of shares on issue during the year.
Cash flows generated by the business which is available to reinvest in capital expenditure, reduce net
debt or return amounts to Shareholders mainly in the form of dividends and is calculated as net
operating cash flows less capex and payments for other intangible assets and plus proceeds from
disposal of property, plant and equipment.
Net Interest Cover
Ongoing EBIT divided by net finance costs.
Net Tangible Assets
Per Share
Non-Trading Items
NPAT
PET
Return on Capital
Employed or ROCE
Net tangible asset per share is calculated by dividing total equity attributable to the Shareholders of
Coca-Cola Amatil Limited less intangible and right of use assets, by the number of shares at year end.
Transactions which are material to the financial statements individually or in aggregate and are either
non-recurring or arise from activities other than those associated with Coca-Cola Amatil’s ordinary
trading activities.
Profit after tax for the year attributable to shareholders of Coca-Cola Amatil Limited.
Polyethylene Terephthalate. The material used for the Group’s plastic bottles.
Ongoing EBIT, divided by the average of the Assets and Liabilities – Operating and Investing (net assets
of the Group excluding net debt) at the beginning and at the end of the twelve-month period ended as
at the balance date.
rPET
Statutory
Ongoing
OTHERS
Amatil X
Coca-Cola System, Coke
System, Coke Bottling
System
Recycled PET.
Financial measures stated in accordance with accounting standards.
Financial measures stated before (or excluding) non-trading items and on a continuing operations basis.
Amatil X is our emerging possibilities platform, designed to nurture and scale opportunities for growth.
The Coca-Cola Company, its subsidiaries and bottling partners.
TCCC
The Coca-Cola Company.
The Company
Coca-Cola Amatil Limited.
The Group, We, Us or Our
Coca-Cola Amatil Limited and its subsidiaries.
TRIFR
nm
144
Total Recordable Injury Frequency Rate.
Not meaningful.
COCA-COLA AMATIL ANNUAL REPORT 2020 CORPORATE
DIRECTORY
REGISTERED OFFICE
Coca-Cola Amatil Limited
Coca-Cola Place
Level 13, 40 Mount Street
North Sydney NSW 2060
Ph: +61 2 9259 6222
Website: www.ccamatil.com
COMPANY SECRETARY
Richard Conway
AUDITOR
Ernst & Young (Australia)
Ernst & Young Centre
200 George Street
Sydney NSW 2000
SHARE REGISTRY
For enquiries about Coca-Cola Amatil Limited Shares:
Link Market Services Limited
Locked Bag A14
Sydney South NSW 1235
Ph: +61 1300 554 474
Fx: +61 2 9287 0303
Email: cca@linkmarketservices.com.au
Website: www.linkmarketservices.com.au
For enquiries about American Depositary Receipts:
BNY Mellon Shareowner Services
PO Box 505000
Louisville, KY 40233-5000
USA
US Domestic Calls (toll free): 1 888 BNY ADRS or 1888 269 2377
International Calls: +1 201 680 6825
Email: shrrelations@bnymellon.com
Website: www.mybnymdr.com
OTHER ENQUIRIES
Investor enquiries:
Email: investors@ccamatil.com
Sustainability enquiries:
Email: sustainability@ccamatil.com
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This report has been printed on Precision
paper and is PEFC certified.
Australian Paper sources fibrous raw
materials for the manufacturer of Precision
from suppliers who practice sustainable
management of forests in line with strict
international standards.
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