CCAs Capital Management Framework John Wartig Chief Financial - - PDF document

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October 2005

CCA’s Capital Management Framework

John Wartig Chief Financial Officer

13 October 2005

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October 2005

Agenda

Capital expenditure Acquisitions Interest cover & gearing Cash flow Dividend policy Financial Scorecard Commodities Outlook

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October 2005 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 1997 1998 1999 2000 2001 2002 2003 2004 2005F Capex / Sales

Infrastructure & Other Cold Drink Equipment

Capital Expenditure.. lower levels and a shift from building manufacturing capacity to a step up in cold drink equipment rollout

Average 1992-2000 14.5%

Manufacturing Capacity Focus Cold Drink Equipment Focus

• Excluding Returnable Containers

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October 2005

Capex Outlook 2006-2008: Target range 6-9% of sales

• Growth & efficiency focus: 2-3% infrastructure

spend over 3 years Automated warehousing – Sydney & Auckland ($200-250m) Warehouse consolidation – SPCA (~$15m pa) Some capacity investment eg: Sydney PET line

• Base capex focus: 4-6% maintainable base capex

level Maintain acceleration of cold drink equipment placement

Base Capex 4 - 6% Growth & Efficiency 2 - 3%

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October 2005

Acquisitions.. ‘Bolt ons’ to continue in 2006-2008

Strategy: develop sustainable geographic and core NARTD category positions Size: “rule of thumb” 10% of capital employed (per acquisition) Financials: EPS accretive and achieve country WACC in first full year.. (or a compelling strategic rationale for lower initial returns) What to expect: $50-150m total investment pa Overall: will be disciplined and focus on the highest return geographies and segments

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October 2005

Balance Sheet Strength Provides Flexibility

Net debt to increase due to up-weighted capex and bolt on acquisitions Long-term interest cover target range of 3.0 – 4.0x Comfortable with current 4.3x interest cover given low interest rate environment ROCE

Maintain ~20% level over time Expect some short-term dilution

Net Debt & Interest Cover

• 500

1,000 1,500 2,000 2001 2002 2003 2004 H1 05

• 1.0

2.0 3.0 4.0 5.0 $m times

AUD

Net Debt Interest Cover

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October 2005

Cash Flow – Cash is King

Expect continuing strong

• perating cash flows with

first half seasonally low due to SPCA Free cash flow will be impacted by up-weighted capex Aim to maintain beverages working capital at current 12% to sales level

Operating Cash Flow

$0 $100 $200 $300 $400 $500 2001 2002 2003 2004 H1 2005

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October 2005

7c 8c 10c 13c 14c 7c 11c 13c 16c 2001 2002 2003 2004 2005

Strong cash provides strong dividend yield momentum

70-80% target payout range Current payout ratio = 72% Aim to grow dividend at least in line with NPAT growth Expect 100% franking for at least the next 2 years At ~4%, fully franked dividend yield is strong

Dividends per share

14c 29c

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October 2005

Financial Scorecard – Key Metrics 2006-2008

Reduce ~ 60% Working Capital / Sales – Food (FY) Maintain 12% Working Capital / Sales – Beverages Range – 6-9% 4.9% Capex / sales Cash Flow Range 3.0-4.0x 4.3x Interest cover Financial Health Target band 70-80% 71% Dividend payout ratio Maintain and grow over time 19.9% ROCE Returns Internal targets 11.9% Group EPS growth Internal targets 10.2% Group EBIT growth Maintain - grow 12.1% EBIT margin – Food Maintain - grow 15.4% EBIT margin – Beverages Requirements H1 2005 Performance

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October 2005

Key Commodity Outlook

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October 2005

Key commodity inputs keep rising… PET Resin

800 850 900 950 1,000 1,050 1,100 1,150 1,200 1,250 2000 2001 2002 2003 2004 2005 USD/MT PET - USD Last 5yrs Avg PET Resin - Far East

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October 2005

Key commodity inputs keep rising… Raw Sugar

6.00 7.00 8.00 9.00 10.00 11.00 12.00 2000 2001 2002 2003 2004 2005 2006 2007 2008 USc/lb SUGAR - USD Last 5yrs Avg

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October 2005

Key commodity inputs keep rising… Aluminium

1,300 1,400 1,500 1,600 1,700 1,800 1,900 2,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 USD/MT ALUMINIUM - USD Last 5yrs Avg

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October 2005

Key commodity inputs keep rising… Tin Plate

400 500 600 700 800 900 1000 2000 2001 2002 2003 2004 2005

USD/MT

Tin Plate US$ Last 5yrs Avg

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October 2005

Key commodity inputs keep rising… Summary

Continuing short-term price volatility for aluminium, sugar and PET resin Demand and supply fundamentals not alone in driving volatility, adverse impact of

• Oil
• China demand
• Hurricanes
• Speculation

Effectively fully priced and hedged for sugar and aluminium for the balance of 2005 Partial cover in place for 2006 Expecting COGS to increase around 5-7% in 2006