Coca-Cola Amatil 2007 Annual Report
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Financial Review
Coca-Cola Amatil Limited
For the financial year ended 31 December 2007
The following commentary summarises the Company’s debt position,
capital employed, capital expenditure, cash flow position, COGS and
significant items.
Net Debt & Interest Cover
Net debt was significantly reduced during the year primarily as a result
of the continued strong operating cash flow and the receipt of the net
proceeds from the sale of the South Korean business. CCA has total
committed debt facilities of approximately $2,200 million with an
average maturity of 6.5 years, with total net debt of $1,607.3 million
as at 31 December 2007.
Following the sale of the South Korean business, CCA’s financial ratios
have been further strengthened and the Company remains in a very strong
position to continue the development of its multi-beverage strategy in
2008. EBIT1 interest cover increased from 4.0 times at 31 December 2006 to
4.7 times at year end. CCA expects to be able to maintain an EBIT interest
cover of 4.0 to 5.0 times in 2008.
$A million 2007 2006 Chg
Net Debt
1,607.3
111.6%
4.7x
2,074.6 (467.3)
Net debt / equity
141.1% (29.5 pts)
Interest cover
(EBIT1 / net interest)
4.0x 0.7x
Before significant items
Capital Employed
Group capital employed decreased by $497.3 million since December 2006,
primarily due to the reduction in the trading asset base, a result of the
divestment of the South Korean business.
Working capital increased by $98.0 million primarily due to higher trade
receivables resulting from increased trading activity; the inclusion of the
$38.6 million escrow amount in respect of the sale of the South Korean
business as a receivable; and higher inventory levels in Australia and SPC
Ardmona.
Higher inventory levels were carried in November and December in
Australia to provide higher levels of service to CCA’s customers over the
Christmas period. Significant improvements were made in out-of-stocks,
return rates and delivery performance. CCA’s quality score in Australia also
placed the Company in the top ten for Coca-Cola bottlers in the world.
The net reduction in property, plant & equipment (PP&E) of $197.3
million
was driven by the sale of the South Korean business. There was, however,
an increase in Australian PP&E due to the automated warehouse
development and increased beverage production capacity.
Capital Employed ($A million) 2007 2006 $ Chg
Working capital
895.8
1,302.6
1,441.6
(153.3)
15.6
(454.3)
3,048.0
19.0%
797.8 98.0
Property, plant & equipment
1,499.9 (197.3)
IBAs & intangible assets
2,001.3 (559.7)
Deferred tax liabilities
(327.9) 174.6
Derivatives – non-debt
(31.1) 46.7
Other net assets / (liabilities)
(394.7) (59.6)
Capital Employed
3,545.3 (497.3)
Return on average capital
employed (ROCE) %1
16.3% 2.7 pts
1 Before significant items
Other material movements in investments in bottling agreements (IBA) and
other intangible assets, deferred income tax liability, derivatives – non-debt
and other net assets / (liabilities), were as a result of the sale of the South
Korean business in October 2007.
Group ROCE increased by a very strong 2.7 percentage points to 19.0%
from the full year 2006 result of 16.3% primarily due to the strong growth
in earnings and the impact of the part-year reduction in capital employed
as a result of the disposal of the South Korean business.
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