Analysis and Evaluation of Coca-Cola Amatil Limited

This report provides an analysis and evaluation of different aspects of the business of Coca-Cola Amatil Limited, including financial analysis, investment decisions, and corporate governance. It discusses the company's operations, board of directors, key recommendations, and more.

Running head: BUSINESS REPORT
Business Report
Name of the Student
Name of the University
Author’s Note

1BUSINESS REPORT
Table of Contents
Introduction................................................................................................................................2
a. Summary of the Company......................................................................................................2
b. Details of Board of Directors.................................................................................................3
c. Characteristics of the Board...................................................................................................5
d. Important Investment or Financial Decisions........................................................................6
e. Key Recommendations of ASX CGC....................................................................................7
f. Auditing..................................................................................................................................7
g. Key Measures Taken for Incorporating High Ethical Standards...........................................8
h. Top Five Investors..................................................................................................................8
i. Analysis of the Financial Statements......................................................................................9
I. Liquidity..............................................................................................................................9
II. Asset Management Efficiency...........................................................................................9
III. Capital Structure.............................................................................................................10
IV. Profitability....................................................................................................................10
V. Market Value...................................................................................................................10
VI. Cash Flow Management................................................................................................10
VII. Overall Performance and Financial Status...................................................................11
Conclusion................................................................................................................................11
References................................................................................................................................12
Appendix..................................................................................................................................14

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Introduction
The main aim of this report is the analysis and evaluation of different aspects of the
business of Coca-Cola Amatil Limited (Coca-Cola Amatil). Coca-Cola Amatil is
considered as one of the largest bottlers of non-alcoholic ready-to drink beverages. Certain
major purpose of this report are the application of accounting and financial principles,
analysis of the accounting and financial principles, evaluation of the implications of both
short-term and long-term investments, interpretation of the internal and external financial
reports and examination as well as summarization of the key issues regarding accounting and
financial managements (Paul, Yeates and Cadle 2014). There are certain parts in this report
that help in achieving the purposes. This report discusses about the industry, operations and
primary activities of Coca-Cola Amatil. After that, this report also takes into consideration
the analysis of different aspects of the Board of Directors of the firm. This report also sheds
light on the major investment decisions and corporate governance aspects of the company. In
addition, this report discusses about the audit report and ethical considerations of Coca-Cola
Amatil. Lastly, this report undertakes the detailed financial analysis of Coca-Cola Amatil
with the help of ratio analysis.
a. Summary of the Company
Coca-Cola Amatil is a major public company in Australia and it is ranked at 83 out of
the top 2000 Australian companies. The source of the majority of the revenue of the company
is the proceeds from Beverage and Tobacco products manufacturing in the Australian
industry. It needs to be mentioned that the company operates in the beverage industry of
Australia. Coca-Cola Amatil has an employee base of 14000 employees in Australia along
with the subsidiaries under the control of the company (ccamatil.com 2019).
Coca-Cola Amatil has divided their primary activities into three major groups; they
are Non-alcoholic beverages, Alcohol and Coffees, and Corporate, Food and Services. Under
the non-alcoholic beverages, Coca-Cola Amatil is involves in the manufacturing and
distribution of Coca-Cola trademarked and licensed products in Australia, New Zealand,
Samoa. Fiji, Indonesia and Papua New Guinea. Under alcohol and coffees, the firm is
involved in licences manufacturing and marketing of alcoholic beverages in Australia and
other areas of the Asia-Pacific region. Under the corporate, food and services, the company is
involved in the management of their corporate office functions, support services and the

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property division for the Coca-Cola Group. These are the primary business activities of Coca-
Cola Amatil (ccamatil.com 2019).
In the year 2017, Coca-Cola Amatil has registered strong earnings performance in
New Zealand, Fiji, Papua New Guinea and Indonesia. However, the improved business
performance in Australian in second-half of the year, the firm was not able in offsetting the
difficulties at the beginning of the year. The net profit of Coca-Cola Amatil in 2017 was in
line with the revenue in 2016 and there is a 2.8% decrease in the trading revenue in 2017.
Overall, it needs to be mentioned that Coca-Cola Amatil has been able in improving their
performance in the second-half of the year (ccamatil.com 2019).
b. Details of Board of Directors
Name Gend
er
Age Education Career History Remune
ration
($)
Other
Ilana Atlas Femal
e
62 Bachelor of
Jurisprudence
(Honours) and
Bachelor of Laws
(Honours) and
Master of Laws
Has experience in
financial and legal
areas; also played
the role of
executive and non-
executive directors
in the companies
from many
industries
(ccamatil.com
2019)
408,371 Has
experie
nce in
the
areas of
commu
nity
improve
ments
and
sustaina
bility
Alison
Watkins
Femal
e
53 Bachelor of
Commerce;
Fellow,
Australian Instit
ute of Company
Directors;
Fellow,
Chartered
Accountants
Australia and
New Zealand;
and Senior
Fellow, Financial
Services
Institute of
Australasia
Has major
experience in the
industries of food,
retail beverages
and financial along
with the experience
in being Managing
Directors of a listed
company
(ccamatil.com
2019)
4,228,40
8
Has
expertis
e and
experie
nce in
govern
ment
and
commu
nity
involve
ments
John
Borghetti,
AO
Male 61 Not Given Has obtained a 40
years of experience
in the aviation
224,087 Has
experie
nce in

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industry that
includes a long
tenure in Qantas. In
present, the CEO
and Managing
Directors of Virgin
Airlines
govern
ment
and
commu
nity
involve
ment
activitie
s
Catherine
Brenner
Femal
e
45 Bachelor of
Laws and
Bachelor of
Economics and
Master of
Business
Administration
Has obtained major
experience in the
areas of corporate
finance in the
public companies.
Also has
experience in
several senior roles
(ccamatil.com
2019)
254,388 Has
experie
nce in
differed
commu
nity
activitie
s
Julie
Coates
Femal
e
55 Not Given Has obtained
experience in
different senior
roles in major
listed companies
like Woolworths
and others
Involve
d in
differed
commu
nity
improve
ment
activitie
s
Martin
Jansen
Male 48 Bachelor of
Commercial
Economics and
Graduate of the
Executive
Development
Program at
Northwestern
University Kellogg
School of
Management
Has extensive
experience in the
area of financial
investment
management in
large listed
corporations
225,522 Has
experie
nce in
sustaina
bility
activitie
s
Mark
Johnson
Male 58 Bachelor of
Commerce;
Fellow,
Chartered
Accountants
Australia and
New Zealand;
CPA Australia;
and Fellow,
AICD
Has major
experience in the
areas of audit, due
diligence, fund
rising, risk
management and
governance
(ccamatil.com
2019)
238,607 Has
experie
nce in
the
hospital
ity
industry
and
commu
nity
involve

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ment
Paul
O’Sullivan
Male 57 Bachelor of Arts
and Graduate of
the Advanced
Management
Program
Has major
experience in the
industries of
telecommunication,
banking and oil and
gas.
179,601 Has
experie
nce in
the
governa
nce and
commu
nity
involve
ment
activitie
s
Kishnaku
mar
Thirumala
i
Male 57 Bachelor of
Engineering,
MBA and
Advanced
Management
Program
Has significant
experience in
developing and
emerging markets
in marketing
(ccamatil.com
2019)
214,437 Has
experie
nce in
commu
nity
involve
ment
activitie
s
c. Characteristics of the Board
The Board of Directors of Coca-Cola Amatil has the ultimate responsibility for
representing as well as serving the shareholders of the company; and they also have the
responsibility of managing the business of Coca-Cola Amatil. The structure as well as
composition of the Board is considered as an essential aspect when considering the
characteristics of the Board (Johl, Kaur and Cooper 2015). The Board of Directors of Coca-
Cola Amatil presently consists of one Executive Director and two Non-executive Directors
and six Indepdent Non-executive Directors. At the same time, it needs to be mentioned that
the main responsibility of the Nomination Committee is to ensure the Board includes the
Directors possessing the required skills, knowledge, experience and diversity in order to
support the strategic objectives of Coca-Cola Amatil. The committee also has the
responsibility for taking into account the legal and regulatory requirements while conducting
the business operations. In this process, the skill matrix of the Board is considered as an
essential tool for the company’s success. The skill matrix for the Board of Directors of Coca-
Cola Amatil consists of certain strategic themes, general skills and experience list that the
directors of the company must have for discharging their appropriate duties (ccamatil.com
2019).

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There are three major strategic themes in Coca-Cola Amatil for the Board of
Directors; they are Lead, Partner and Execute. The major aspects under these strategic themes
are marketing, innovation, media, regulatory, joint ventures, brand partners, digital
technology and productivity improvements. At the same time, it is needed for the Directors of
Coca-Cola Amatil to possess certain skills in certain areas for managing the vast business
operations of the company; these required skills are in the areas of financial, risk,
governance, strategy development, human resources, leadership, work health safety,
corporate sustainability and retail. At the same time, it can be seen from the earlier part of the
discussion that experience is considered as a major aspect for the appointment of the directors
(Samaha, Khlif and Hussainey 2015). All the directors of Coca-Cola Amatil in the Board
have extensive experience in different businesses and industries such as beverage industry,
retail industry, oil and gas industry, banking industry, telecommunication industry and many
others. At the same time, they have the experience of holding significant higher level
management position in their previous companies. All these aspects indicates towards the fact
that Coca-Cola Amatil puts emphasis on the skill, knowledge and experience of their
directors so that they can satisfy the needs of the shareholders in a better manner
(ccamatil.com 2019).
d. Important Investment or Financial Decisions
Coca-Cola Amatil has made certain investment decisions in the year 2017 and they
are discussed below:
1. Coca-Cola Amatil is highly committed towards their Accelerated Australian Growth
Plan and for this reason, the company has invested $40 million in the aspects like
marketing executing, equipment for cold drink, digital technology and price
(ccamatil.com 2019).
2. Coca-Cola Amatil has underacted certain significant cost optimization and
reinvestment plans during 2017. For this reason, the company has invested an
additional $45 million on cost saving from different initiatives that have focused on
remodelling the supply chain (ccamatil.com 2019).
3. Coca-Cola Amatil has a major aim to expand their distribution network in Fiji with
the help of the roll out of cold drink equipment along with the increase in the number
of outlets in that country. For this reason, the company has made huge investment in
2017 for additional production line as a part of a three-year capital expenditure
program (ccamatil.com 2019).

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4. In the recent year, Coca-Cola Amatil has made a huge investment in bottler’s
agreements with The Coca-Cola Company (TCCC). The main reason for the
investment in this program is to retain the exclusive right for manufacturing,
distributing, marketing and selling products of TCCC brand (ccamatil.com 2019).

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e. Key Recommendations of ASX CGC
Sl. No. Recommendations
1 A listed company is needed to lay sold foundations for management and
oversight
2 A listed company must maintain the correct size, composition, skills and
commitments of the Board (asx.com.au 2019)
3 A company should act in the ethical manner
4 A company must safeguard the integrity in corporate reporting
5 A company must ensure timely and balanced disclosure (asx.com.au 2019)
6 A company must represent the rights of the security holders
7 A company should recognize and manage the risks
8 A company should develop the remuneration framework fairly and responsibly
(asx.com.au 2019)
f. Auditing
According to the 2017 Annual Report of Coca-Cola Amatil, the audit partner of the
company is Ernst & Young (EY) (ccamatil.com 2019).
According to the report of the auditor, Coca-Cola Amatil has prepared and presented
their financial statements in accordance with the standards of Corporations Act 2001. The
report also states that the consolidated financial statements of Coca-Cola Amatil has provided
the true and fair view of the company’s consolidated financial position; the company has
complied with the Australian Accounting Standards and the Corporations Regulations 2001
(Guenin-Paracini, Malsch and Tremblay 2014). However, there are two areas that the
auditors have considered as the Key Audit Matters; they are related to the carrying value of
the intangible assets and accounting for rebates and promotional allowances (ccamatil.com
2019).
For maintaining the necessary auditor’s independence, EY has complied with the
Australian Auditing Standards. In addition, the auditors have conducted the audit of Coca-
Cola Amatil by complying with the auditor’s indepdence requirements in Corporations Act
2001 along with the ethical requirements of the Accounting Professional and Ethical Standard
Board’s APES 110 Codes of Ethics for Professional Accountants (ccamatil.com 2019). It

9BUSINESS REPORT
indicates towards the fact that the auditors of EY have complied with the necessary standards
and regulations for maintaining auditor’s indepdence (Tepalagul and Lin 2015).
g. Key Measures Taken for Incorporating High Ethical Standards
It can be seen from the 2017 Annual Report of Coca-Cola Amatil that the company
has taken certain key measures for incorporating high ethical standards and they are shown
below:
 Coca-Cola Amatil has ensured their compliance with the principles and
recommendations of ASX Corporate Governance Council’s Corporate Governance
Principles and Recommendations so that fraud and errors can be eradicated from
their business operations (Pearson 2017).
 Coca-Cola Amatil has endured the presence of independent as well as non-executive
directors in their Board of Directors for eliminating financial and other manipulation
for the overall betterment of the business.
 Coca-Cola Amatil has developed certain committees for monitoring different
aspects of their business operations in order to prevent ethical violations; they are
Audit and Finance Committee, Nomination Committee, People Committee, Risk
and Sustainability Committee and Related Party Committee (ccamatil.com 2019).
 Coca-Cola Amatil has complied with the regulations and standard of Corporations
Act 2001 for the development of the remuneration framework for company’s
executives (Strobel, Tumasjan and Welpe 2015).
 Coca-Cola Amatil has appointed PricewaterhouseCooper (PwC) for providing the
external assurance and necessary recommendations for the development of
remuneration frameworks. These steps together have assisted Coca-Cola Amatil in
establishing higher ethical standards in the business of Coca-Cola Amatil
(ccamatil.com 2019).
h. Top Five Investors
It can be seen from the 2017 Annual Report of Coca-Cola Amatil that the company
has disclosed their top twenty registered shareholders or investors; and the top five of them
are mentioned below:
1. Coca-Cola Holdings (Overseas) Limited has the highest number of ordinary shares in
Coca-Cola Amatil that is 223,049,276 shares and the percentage of issued capital of
this company in Coca-Cola Amatil is 30.81%.

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2. HSBC Custody Nominees is the second highest investor in Coca-Cola Amatil and the
total number of ordinary shares of the company is 176,629,541 with an issued capital
percentage of 24.40 (ccamatil.com 2019).
3. J P Morgan Nominees Australia Limited is holding the third highest position with the
total number of ordinary shares of 74,989,468 and the percentage of issued capital is
10.36 (ccamatil.com 2019).
4. Citicorp Nominees Pty Ltd is the fourth highest investor in Coca-Cola Amatil due to
the fact that the company is holding a total of 10,561,548 ordinary shares in the
company with an issued capital percentage of 9.75.
5. National Nominees Limited is holding the fifth place as the company has a total of
16,707,222 ordinary shares of Coca-Cola Amatil with an issues capital percentage of
2.31 (ccamatil.com 2019).
i. Analysis of the Financial Statements
I. Liquidity
Particulars 2017 2016
Current Ratio 1.52 1.68
Quick Ratio 1.12 1.30
Both the current and quick ratios help in measuring the ability of the companies in
paying off the current liabilities with current assets. It can be seen from the above table that
both the current and quick ratios decrease in 2017 as compared to 2016. It implies that the
liquidity position of Coca-Cola Amatil decreases in the current year. However, Coca-Cola
Amatil has sufficient quick and current assets to pay off their current liabilities more than one
time (Ehiedu 2014).
II. Asset Management Efficiency
Particulars 2017 2016
Asset Turnover Ratio 0.79 0.77
Inventory Turnover Ratio 4.22 4.17
Asset turnover ratio measures the ability of the companies in using their assets for
generating sales. The above discussion shows increase in this ratio which indicates the
increases efficiency of Coca-Cola Amatil in using their assets for generating sales. Inventory
turnover ratio shows how many times a company has become able in selling their inventories.

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As per the above, this ratio increases in 2017 from 2016 which implies the increased
efficiency of Coca-Cola Amatil in clearing their inventories (Gârleanu and Pedersen 2018).
III. Capital Structure
Particulars 2017 2016
Debt-to-Equity Ratio 2.22 1.85
Interest Coverage Ratio 6.50 5.95
Debt-to-equity ratio compares the total debts of a company to total liabilities. The
above table shows that this ratio increases in 2017 as compared to 2016 which indicates the
increase in debt capital in capital structure and it makes the company highly leveraged.
Interest coverage ratio shows the ability of the companies in making interest payment in a
year. The above table shows the increase in this ratio that indicates the increased ability of
Coca-Cola Amatil in making the interest payments (Robb and Robinson 2014).
IV. Profitability
Particulars 2017 2016
Gross Profit Ratio 37.82% 37.64%
Net Profit Ratio 9.34% 5.07%
Both the gross profit and net profit ratio shows the ability of the companies in
generating profit. It can be seen from the above table that both the gross profit and net profit
of Coca-Cola Amatil increases in 2017 as compared to 2016; and this can be considered as a
favourable financial position for the company due to the increase in profits (Agha 2014).
V. Market Value
Particulars 2017 2016
Price Earnings Ratio 0.14 0.31
Price earnings ratio is a market prospect ratio that measures that what the market is
willing to pay for a share based on the current earnings. The above table shows the decrease
in this ratio in 2017 from 2016 which implies that there is a decrease in the willingness of the
investors to pay more for the shares of Coca-Cola Amatil (Siegel 2016).
VI. Cash Flow Management
Particulars 2017 2016
Operating Cash Flow Ratio 0.32 0.42

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Cash Flow Margin Ratio 11.94% 15.26%
Operating cash flow ratio measures the company’s ability in paying off business
obligations with operating cash flows. The above table shows decrease in this ratio that
implies that the ability of Coca-Cola Amatil in paying off their obligation with operation cash
flows decreases in 2017. Cash flow margin ratio measures the ability of the companies in
translating sales into cash. The above table shows decrease in this ratio which indicates
towards the decreased ability of Coca-Cola Amatil in converting their sales into cash (Kroes
and Manikas 2014).
VII. Overall Performance and Financial Status
As per the 2017 Annual Report of Coca-Cola Amatil, there is massive increase in the
net profit in 2017 from 2016 while sales of the company decreases in the current year. At the
same time, increase in EPS can also be seen (ccamatil.com 2019). However, it can be seen
from the 2017 Annual Report of Coca-Cola Amatil that there is decrease in the net assets of
the company in 2017 from 2016 because of the decrease in total current assets and total
assets. It implies that Coca-Cola Amatil had a mixed performance in the year 2017
(ccamatil.com 2019).
Conclusion
It can be seen from the above discussion that Coca-Cola Amatil developed their
Board in accordance with the principles and recommendations of ASX Corporate
Governance while considering the knowledge, expertise, skills and diversity of the directors.
As per the above discussion, Coca-Cola Amatil has made certain crucial investment decisions
in 2017 such as investment in Fiji business and investment in TCCC. In addition, EY has
provided the necessary assurance that the financial statements of the company have been
prepared in accordance with the correct standards and principles. While considering the
financial performance of Coca-Cola Amatil, the above discussion shows that the company
had mixed financial performance in 2017 where profitability has increased but liquidity
position has decreased. Apart from this, Coca-Cola Amatil has been able in managing their
assets in an effective manner.

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References
Agha, H., 2014. Impact of working capital management on profitability. European Scientific
Journal, ESJ, 10(1).
Asx.com.au. 2019. Corporate Governance Principles and Recommendations. [online]
Available at: https://www.asx.com.au/documents/asx-compliance/cgc-principles-and-
recommendations-3rd-edn.pdf [Accessed 31 Mar. 2019].
Ccamatil.com. 2019. Annual Report 2017. [online] Available at:
https://www.ccamatil.com/-/media/Cca/Corporate/Files/Annual-Reports/2018/Annual-
Report-2017.ashx [Accessed 31 Mar. 2019].
Ccamatil.com. 2019. Our Businesses – Coca Cola Amatil. [online] Available at:
https://www.ccamatil.com/our-businesses-and-brands/our-businesses [Accessed 31 Mar.
2019].
Ccamatil.com. 2019. Our Businesses and Brands – Coca Cola Amatil. [online] Available at:
https://www.ccamatil.com/our-businesses-and-brands [Accessed 31 Mar. 2019].
Ehiedu, V.C., 2014. The impact of liquidity on profitability of some selected companies: the
financial statement analysis (FSA) approach. Research Journal of Finance and
Accounting, 5(5), pp.81-90.
Gârleanu, N. and Pedersen, L.H., 2018. Efficiently inefficient markets for assets and asset
management. The Journal of Finance, 73(4), pp.1663-1712.
Guenin-Paracini, H., Malsch, B. and Tremblay, M.S., 2014. On the operational reality of
auditors' independence: Lessons from the field. Auditing: A Journal of Practice &
Theory, 34(2), pp.201-236.
Johl, S.K., Kaur, S. and Cooper, B.J., 2015. Board characteristics and firm performance:
Evidence from Malaysian public listed firms. Journal of Economics, Business and
Management, 3(2), pp.239-243.
Kroes, J.R. and Manikas, A.S., 2014. Cash flow management and manufacturing firm
financial performance: A longitudinal perspective. International Journal of Production
Economics, 148, pp.37-50.

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Paul, D., Yeates, D. and Cadle, J. eds., 2014. Business analysis. BCS, The Chartered Institute
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review. Journal of Accounting, Auditing & Finance, 30(1), pp.101-121.

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Appendix
Liquidity Ratios
Asset Management Efficiency Ratios
Capital Structure Ratios
Profitability Ratios

16BUSINESS REPORT
Market Value Ratio
Cash Flow Management Ratios