Capital Markets Day & Pre-close Briefing · Shift of 3% of portfolio Retail Value since 2013 Our...

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Capital Markets Day & Pre-close Briefing

13th January 2017 Hong Kong

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Agenda

Welcome by Swire Pacific Chairman John Slosar

An overview of Swire Beverages Pat Healy

Financial highlights Keith Fung

USA Expansion Jack Pelo

Mainland China Expansion Karen So

Supply chain management and sustainability Peter Mills

Closing remarks on Swire Beverages Pat Healy

Q&A – Beverages

Swire Pacific group update Martin Cubbon

Q&A – Group

2

Chairman, Swire Pacific

John Slosar

Opening Remarks

Managing Director, Swire Beverages

Pat Healy

Beverages Overview

5

Swire and Coca-Cola: A 50 Year Partnership

6

The First Step: Acquiring The Coca-Cola Hong Kong Franchise

1965

Hong Kong’s Shatin Facility is the World’s Tallest Bottler

1991 Shatin plant

7

Entry into USA

1978 Salt Lake City, US.

8

By 2013, Serving 6.2m Consumers Across 11 US States

9

Entered Mainland China in the Early 1990s

10

1990s

1990s

Seven Mainland Provinces Plus Hong Kong and Taiwan

11

Rapid Growth Throughout 1990s and 2000s

1995 – 2015 Sales Volume

12

35 47 88 112 136 147 160 171 200 237 287

349 415

500 600

700 718 788 784 807 816 836

36 38 41 39

43 42 44 45 45

46 46

48

50

55

58

61 60

65 65 65 65 65

30 31 36

38 45 40 40 42

46 44

45

48

42

46

58

61 62

61 58 56 55

56

57 59 61

63 65 68 74 76

79 79

77

78

84

86

86

82 82

82 84 85 108 126

158 174 225

252 288 296 319 334

370 406

456

523

590

687

802

904 923

995 991 1,013 1,045

1,083

200

400

600

800

1,000

1,200

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Mainland China Hong Kong Taiwan USA

(Million Unit Cases)


By 2013, Grounded in Our Core Strengths, Poised for the Future

1. Operational Excellence

Investing over the long term

Execution capability across a global footprint

Recognised by Coca-Cola as a key strategic partner

13 13


Focused on Developing Local Talent and Leaders

14

2. Team Long term people development

Skilled and stable management team

Strong leadership pipeline in China and U.S.


Underpinned by a Mutually Beneficial Strategic Partnership

3. Partnership Coca-Cola committed to working with strong regional

strategic partners

Swire contributing local knowledge and connected to local communities

Sophisticated global system, diverse product portfolio

15


Investing in Future Potential

4. Opportunity for Growth

China shift to consumer economy spells growing per capita consumption

U.S. revenue growth driven by package innovation and stills expansion

16


2013: Aligned and Ready for Strategic Investment

Swire Pacific appetite to deploy additional capital into a core business, matching:

The Coca-Cola Company’s intention to reduce ownership of global bottling franchises

Strong alignment of strategic intention between Swire Beverages and The Coca-Cola Company

17

Expansion in China and USA

Pre Post Increase in Scale

Consumers served 449m 708m +58%

Unit cases 1B 1.6B +60%

Employees 20,000 31,000 +55%

Revenues HKD24Bn HKD40Bn +67%

Greater China USA

Note: all figures are with reference to 2015 actuals

18

Expanding Territory Within an Optimised System

19

Bigger +

Better within an

Optimised Franchise System

Finance Director, Swire Beverages

Keith Fung

Financial Highlights

Current Corporate Structure

Swire’s Current Franchise Territories

21

Swire Beverages Limited

Legacy Territories

Utah, Idaho, part of some other states including Arizona, Nevada, Colorado, Washington, Oregon, Wyoming, Nebraska

Expanded Territories

Colorado Springs, Denver, southern part of Arizona, and Albuquerque (2013-16)

100%

100% 87.5% 100%

41 – 100%

Guangdong

Zhejiang

Jiangsu

Anhui

Henan

Shaanxi

Fujian

Swire Pacific Limited

Taiwan Hong Kong USA Mainland China

12.86 – 20%

2015 Financial Performance

Note: Total excluding Central Costs Source: Swire Pacific Annual Report 2015

22

77%

6%

5%

12%

Sales Volume

Mainland China HK Taiwan USA

43%

23%

4%

30%

Attributable Profit

Mainland China HK Taiwan USA

US Expansion Timeline

23

Acquisition Distribution Assets Production Assets

Mile High (Colorado) May 2014

Arizona & New Mexico July 2016

Pacific Northwest - Washington February 2017 February 2017

Pacific Northwest - Oregon April 2017 April 2017

Arizona & New Mexico August 2017

Mile High (Colorado) October 2017

USA Expansion

24

Consideration Payable for US Expansion Upfront USD462m

Sub-bottler fees USD123m

Other assets acquired USD39m

Total USD624m

Funding External debt USD300m

Balance be funded by internal funding from Swire Pacific

Expected Rate of Return Exceed the internal WACC

Potential upside from synergies

USA Expansion

25

Source: internal company data

Pre and post based on 31 Dec 2015

Pre Post

Franchise population (million) 6.4 +331%

Net assets (HK$m) 2,209 +141%

Revenue (HK$m) 5,965 +114%

China Expansion Timeline

Signing for Non-Auction Transactions

SPAC Announcement (18th Nov 2016)

Eve

nt

Pay

me

nt

17th Nov 2016 Mid Dec

Auction winning bidder announced

Signing for Auction Transactions

SPAC Announcement

Auction Transactions

(20% deposit)

Auction and Non-Auction Transactions government approvals obtained

Auction Transactions

(Second payment)

Closing of Auction and Non-Auction Transactions and KO Minority Sale

SPAC Announcement

Auction and Non-Auction Transactions and KO Minority Sale (Final payment)

Feb – May 2017

RMB 424m RMB 870m RMB 4.6bn

2017 2016

30th Dec 2016

26

China Expansion

27

Consideration Payable for PRC Expansion Total RMB5.8 billion approximately. Final consideration is subject to closing

adjustments.

The valuation of the China Expansion is comparable to the acquisition of Citic’s equity interests in Swire’s bottling plants in 2015.

Funding Funded by internal funding from Swire Pacific

Expected Rate of Return Exceed the internal WACC

Potential upside from synergies

Pre & Post China Structure

Swire’s effective shareholdings in the bottling plants in PRC after realignment

28

Territories Effective Shareholdings

Legacy After CITIC After Realignment

Guangxi Nil Nil 100.00% Yunnan Nil Nil 95.10%

Hubei Nil Nil 79.00%

Shanghai Nil Nil 54.00%

Hainan Nil Nil 100.00%

Jiangxi Nil Nil 100.00% Zhanjiang/Maoming Nil Nil 100.00%

Guangdong 44.63% 44.63% 70.00% Zhejiang 44.63% 53.63% 80.00%

Anhui 59.50% 91.50% 100.00%

Jiangsu 44.63% 53.63% 80.00% Fujian 93.63% 93.63% 100.00%

Shaanxi 74.38% 89.38% Nil Henan 60.68% 85.78% 94.44%

China Expansion

29

Pre and post based on 31 Dec 2015

Pre Post

Franchise population (million) 418 +55%

Net assets (HK$m) 2,650 +76%

Revenue (HK$m) 16,547 +46%

President / CEO, Swire Coca-Cola, USA

Jack Pelo

USA Expansion

http://www.google.com.hk/url?sa=i&rct=j&q=&esrc=s&source=imgres&cd=&cad=rja&uact=8&ved=0ahUKEwjZ_Zf68rvRAhXMppQKHSe6BjgQjRwIBw&url=http%3A%2F%2Fwww.frbsf.org%2Four-district%2Fpress%2Fnews-releases%2F2013%2Fpelo-membership-economic-advisory-council%2F&psig=AFQjCNEOwSAHX05-iMqBN33YqGTPlEWiGA&ust=1484286155686887

Swire Coca-Cola, USA in 2017

31

Bottling Plant

Sales Center

3rd largest independent bottler in the United States

13 states across the Western U.S.

7 divisions

47 sales centers

6 production facilities

6,000 employees

Produces, distributes and sells Coca-Cola, Dr Pepper, and Monster products

Swire Coca-Cola USA, Growing Through Acquisition

32

Pacific Northwest

(Q1/Q2 2017)

Arizona / New Mexico

(Q3 2016)

Mile High (Q2 2014)

*Territory boundaries are approximate

Legacy MH AZ & NM PNW Total

Increase in Scale

Population 6.4 4.4 7.3 9.5 27.6 331%

Sales Volume (million unit cases)

87 39 87 72 285 228%

Sales Centers 28 4 8 7 47 68%

Production Centers 2 1 1 2 6 200%

Employees 1,951 871 1,422 1,758 6,002 208%

Total


3,025 3,294 3,512 3,560 3,587 3,723 3,824 3,877

4,948

5,965

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

HK$M


USA

Source: Internal Company Data

Turnover (HK$M)

239267

252 255 253230

178

217 208

273

0

50

100

150

200

250

300

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

HK$M

Attributable Profits (1) (HK$M)

Volume by Category (proportion %)

12%13% 13%

11%12%

11%

8%

10%

8%

11%

0%

4%

8%

12%

16%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Return on Capital Employed (2)

(%)

Notes 1. Restated due to HKAS19 (revised). 2. Profit before interest after tax divided by capital employed.

79% 79% 77% 72% 73%

69%

1% 1% 1% 3%

3%3%

10% 10%12% 14%

12%

15%

1% 1% 2% 2%

2%

2%

9% 9% 8% 9%

10%

11%

0

20

40

60

80

100

120

140

2010 2011 2012 2013 2014 2015

Water

Tea

OtherStills

Juice

Sparkling

Volume by Category (Million unit cases)

82 81 84 85

108

126

(Million unit cases)

33

Key Metrics

Brand Clusters

Advantaged Routes to Market

World Class Key Account Management Teams

Customer Culture Capability

5

2

4

1

3

INCIDENCE REVENUE TRANSACTIONS

MARGIN GROWTH VALUE SHARE

SPARKLING PREMIUM STILLS

FARM TO TABLE ENERGY (outsourced)

DSD CHILLED FOODSERVICE

RETAIL SALES FOODSERVICE & ON PREMISE

CREATE

Customer Value

BUILD

One Swire Culture

DRIVE

Capability

TO SUSTAIN AND REPEAT

US Strategy Evolving to Meet Consumer Preferences

34

Source: Nielsen

Market Share (2011-2016)

Key Metrics

Growth in Sparkling Continues – Improving Trends in Energy and Ready to Drink Tea Key Metrics

1

35


-1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

Revenue Growing Faster Than Industry Average

36

Revenue vs. U.S. Retail Value Growth

2 2 2

1

2% 4%

3%

2014 – 2016 Est CAGR

Consistent Market Share Gains3

2011 2013 2016

Sparkling

Still

Total

Swire NARTD Retail Value

1%

4% 2%

2016 Estimated

1

+9 pts

+4 pts

+1 pts

Share Growth Over the Last 5 Years

Total US CPG Retail Value

Total US CPG Retail Value

NARTD Retail Value

Swire

Sources: 1Neilsen reported data, Swire Legacy 2Nielsen; total US CPG Retail Value includes all beverage and non-beverage categories 3Nielsen Supers/Drug/CR/Kmart/Target; note: not structurally adjusted (includes Monster)

Sources: KO reported data Nielsen; total US CPG Retail Value includes all beverage and non-beverage categories Nielsen Supers/Drug/CR/Kmart/Target; note: not structurally adjusted (includes Monster)

Key Metrics

1


Contributed >2/3 of our Retail Value creation1

Accounts for >40% of our Retail Value2

Shift of 3% of portfolio Retail Value since 2013

Our Still Brands Represent a Growing Share of Our Portfolio

37

Sparkling

Stills

$1B Retail Value Growth

Sources: Nielsen AMC Retail Value; 2013 - 2016 YTD through Q3-16 (excludes Monster) Nielsen AMC Retail Value; 2016 YTD through Q3-16 (excludes Monster)

Brand Clusters

2

Coca-Cola US Retail Value Creation 2013 – 2016 YTD

Stills Portfolio

30%

70%


Innovation in Sparkling Packaging to Meet Changing Consumer Demand

38 38

Nielsen All Measured Channels - Total Sparkling YTD 2016

$ /

Occ

asio

n (

serv

ing)

7.5 oz 8.5 oz 1.25L 6 pk 500 mL

12 oz 12 oz 8 pk 12 oz

2L 8 oz

2012 2014 2016 YTD

Value Growth % of Value

Transaction All Other

Transaction Core

Transaction Core

Source: Nielsen Swire AMC, Dollar Volume, YTD through 12/03/16

Brand Clusters

2

-3% -3%

9%

2015

-3%

11%

2014

9%

-3%

12%

-3%

2016 YTD 2013


Venturing and Emerging Brands Driving Stills Portfolio Expansion

39

Transparency/Claims

Premium Ingredients

Sustainability/Social Purpose

Improved Experience/Convenience

39

Brand Clusters

2

A Great Time to Invest in the USA

Attractive investment case Expertise

Scale

Management capability

Opportunity for growth Transition track record

40

Executive Director, China Operations Swire Beverages

Karen So

Mainland China Expansion

Swire Beverages Biggest Bottler in China by Revenue

42

Source: Company Internal Information as at 2015

Revenue RMB 16,547m

Volume 836m unit cases

Customers 1,114,000

Provinces 7

Bottling plants 11

No. of Brands 18

Employees 15,800

Population 418m

0

300

600

900

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Water

Tea

Other Stills

Juice

Sparkling

6,901 8,817

11,340 12,702 13,465

16,765 16,242 16,939 17,043 16,547

0

3,000

6,000

9,000

12,000

15,000

18,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

HK$M


Mainland China

Source: Internal Company Data

Turnover (1)

(HK$M)

109 113169

274

203

265

207

415 395 391

0

60

120

180

240

300

360

420

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

HK$M

Volume by Category (Million unit cases)

18% 19% 19%

23%

17%19%

14%

21%

31%

23%

0%

5%

10%

15%

20%

25%

30%

35%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Return on Capital Employed (2)

(%)

719 788 783 807 816 836

Notes: 1. Including revenues from jointly-controlled companies but excluding revenues from Coca-Cola Bottlers Manufacturing Holdings Ltd. (CCBMH), an associate of the company. 2. Profit before interest after tax divided by capital employed. Capital employed equals net assets employed less investment costs in Mainland China jointly controlled entities. Goodwill is

included in net assets based on the original value at the time of the investment. 3. Excluding a non-recurring profit on remeasurement of an associate, attributable profit for 2013 was HK$346 million.

Attributable Profits (3) (HK$M)

Million unit cases

43

3-year CAGR: +1% 3-year CAGR: +2%

600 700

500 415

74% 72% 68% 64% 59% 59% 58% 59% 59% 61%

19% 22% 23% 19% 19% 17% 15%

18% 16%

13%

14% 20% 19% 20% 22% 14% 12%

9%

Exciting Industry With Huge Untapped Potential

44

Market Size: 19.9 billion unit cases (3-year CAGR: +6.8%)

2015 Non-Alcoholic Ready to Drink Landscape

45 Sensitive

Exciting Industry With Huge Untapped Potential

Data Source: Category Size & CAGR: Canadean, 2015 Report; NARTD without White Milk & Bulk Water; Other Still include Herbal, Soy, Plant Protein, Flavoured Milk and Yogurt Drinks Volume Share: Nielsen Retail Audit, YTD Nov-16, SBL markets

2015 Non-Alcoholic Ready to Drink Landscape


Annual disposable income per

household (RMB)

CAGR 2015-2025

Affluent > 222,000

New Mainstream 103,000 – 222,000

Mass 37,000 – 103,000

Poor < 37,000

New Mainstream Consumers Driving Revenue Growth

A growing middle-class sector with high disposable income Open to change and experimentation

Willing to trade up for quality

Higher tendency to shop on-line

Sensitive

7

3

2005 2025E

28

2

2015 4

1

Source: McKinsey China Macroeconomic model (update)

-6.2

-3.2

8.5

15.7

47

Expanding Product Profile in China

48 Sensitive

Sparkling Juice

Water Dairy Hydration Coffee Energy Drinks

Leadership

Expanding into fast growing high value products Accelerating Presence in Stills

http://www.google.com.hk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwiToYigyLTRAhWMNpQKHQaJB6wQjRwIBw&url=http://www.houseease.com/goods.php?id%3D1011&psig=AFQjCNEfvrufJdRu13bi5HlJmOMDCU_Zew&ust=1484034163516237

http://www.google.com.hk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwj44JL5tbXRAhUEFZQKHfslC3UQjRwIBw&url=http://news.iyaxin.com/content/2016-02/19/content_10023361.htm&psig=AFQjCNG6XAqwpWDhuPq8Yf5ZdlsglLb2Hg&ust=1484063608143812

49

Our China Vision

We will achieve Sustainable Profit Growth by creating the World’s best Route-To-Market and In-Store Execution Capabilities

50

China Strategies

1 Commercial

Strategies

1

Route-to-

Market

2

In-Store

Execution

3

Tools &

Technology

4

Capabilities

5

Key Metrics: Revenue, Profit, Market Share, In-Outlet Execution, Outlet Coverage

51

China Strategies

Key Metrics: Revenue, Profit, Market Share, In-Outlet Execution, Outlet Coverage

Commercial

Strategies 1

Expand Product Portfolio Expand Package Portfolio Executing Channel

Picture of Success

Route-to-Market 2

Expand Outlet Coverage Suite of Route-to-Market Solution Direct-Serve Distribution Delivery Partners 2nd Platform

1

In-Store

Execution 3

Continuous Improvement in Execution

Tools &

Technology 4

eCommerce Technology

Capabilities 5

Training



http://www.google.com.hk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjyicyQnebQAhXEG5QKHbhtDE0QjRwIBw&url=http://www.businesswire.com/news/home/20160418006691/en/Coca-Cola-Reveals-%E2%80%9COne-Brand%E2%80%9D-Packaging&psig=AFQjCNFcLz3T6NXuP_7SqGfyKm1HKqGkaQ&ust=1481342531723745

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http://www.google.com.hk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwid3MTdsaXRAhUDHpQKHRhPC3UQjRwIBw&url=http://finance.ifeng.com/a/20140208/11609993_0.shtml&psig=AFQjCNG3qJue2HCEJgyH68hFaIx861bcWQ&ust=1483512723592375

http://www.google.com.hk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwia7vGetKXRAhXCNJQKHYPeAT8QjRwIBw&url=http://www.dyzdy.cn/dyzdys/NDflpKrlj6TmsYc.html&psig=AFQjCNFiQX8mgtLkqNkuhTHBHr6TAqpuGA&ust=1483513403464944


Sensitive

Expanding into Still Categories and High Value Products

Schweppes +C Sparkling Drinks

fortified with Vitamin C

2013 2014 2015 2016 2017

Shui Dong Le Enhanced Hydration Chun Yue Mainstream Water

with 2x Retail Price

Georgia Coffee entrances

with World No. 1 Ready-to-Drink Coffee brand

Minute Maid Essential Delight Minute Maid

expand into High Content Juice

Zico First ever e-

commerce only brand

52

Monster Enter into Energy

Drinks (No. 1 Energy Drinks Brand in US)

Premium Juice Sparkling Extension

Commercial

Strategies 1

http://www.google.com.hk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwi-n-eo2bTRAhVSNpQKHTS-AMMQjRwIBw&url=http://www.foodszs.com/200601/0_545807_1.htm&psig=AFQjCNEQ0scCl6gfk1k1BDEaUcqu-FG89Q&ust=1484038625239491




Package Portfolio Capturing All Consumption Occasions

53 Sensitive

1.5L Retail Price (RMB/bottle) 6.0 7.0 3.0

2L 500/

600ml 300ml

Sleek CAN

3.0 2.0

1L

5.0

680ml

4.0 5.0

1.25L One-Way

Glass

4.0

9.9/13.8/18 5.0 6.0 2.7 Retail Price (RMB/bottle) 9.9

1.25L 2L Multi-Pack

Normal CAN 4/6/8

500/ 600ml

1L+ 1.25M

M Sleek CAN

2.8

680ml

3.8 6.5

2L +

11.5

2L*2 SPK 300ml Full case

19.9

300ml

1.7

Multi-Pack Mini-Can 8/10/12

15.2/18/21

Aluminum Bottle

8.0

General Trade

Modern Trade

HORECA

Commercial

Strategies 1



54

China Strategies

Route-to-Market 2


Commercial

Strategies 1


Picture of Success

1

In-Store

Execution 3


Tools &

Technology 4


Capabilities 5

Training








Expanding Outlet Coverage via Segmented Route-to-Market Strategy

This will be supported by robust customer data, new technology for frontline sales and commitment to invest number of people serving our customers

Target to service 90%

of outlets in urban cities

Target to service 60% of outlets in rural markets

Sensitive

Route-to-

Market 2

55

http://www.google.com.hk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjX_ZSxr6XRAhUJkpQKHTO4CkQQjRwIBw&url=http://tieba.baidu.com/p/702819013&psig=AFQjCNGaFD08oh6pOlW8ccJEWHuO8WOyag&ust=1483512091734375

http://www.google.com.hk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwi42sXqr6XRAhXHkJQKHYhAB4cQjRwIBw&url=http://www.ipivot.cn/Wealth/82/2030.aspx&psig=AFQjCNEu8A5iZhyMQYtOSl-GQ3Y3mOQndw&ust=1483512194411369

http://www.google.com.hk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjbweWxsaXRAhWBMZQKHTYbC8MQjRwIBw&url=http://cwd233.lofter.com/post/39a2ab_7f562f0&psig=AFQjCNFCaWQbo7NN7TdV4gOHlbk7pTZ4mQ&ust=1483512603678069

http://www.google.com.hk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwidr669saXRAhXGJpQKHRFUB-sQjRwIBw&url=http://blog.sina.com.cn/s/blog_4d05a4d00102veyf.html&psig=AFQjCNFCaWQbo7NN7TdV4gOHlbk7pTZ4mQ&ust=1483512603678069


http://www.google.com.hk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwiT07mrs6XRAhXJo5QKHT5fCkkQjRwIBw&url=http://www.zgjtb.com/content/2009-04/07/content_127733.htm&psig=AFQjCNFu3TysEiCDfWrVUezon-2_1ANgBw&ust=1483513104698765


http://www.mahoooo.com/detail/57875e760cf28f7ea1d3d371

56 Sensitive

Suite of Route-to-Market Solutions

Urban Rural Channel Specific Consumer/

Portfolio Specific

Direct Distribution Distribution Partners Specialised Partners Specialised Sales Team

Route-to-

Market 2




http://www.google.com.hk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwiE0_jL-rjRAhVKO7wKHUuFBboQjRwIBw&url=http://blog.udn.com/article/article_print.jsp?uid%3Dkalaok%26f_ART_ID%3D8104915&psig=AFQjCNEpro7YOQqn0HUJB8p1qSc0U6-gng&ust=1484185089764265

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57

China Strategies

Route-to-Market 2


Commercial

Strategies 1


Picture of Success

1

In-Store

Execution 3


Tools &

Technology 4


Capabilities 5

Training








Continuous Improvement in In-Store Execution Capability

50.3 52.1

54.7 56.6

60.6

63.8

66.7

69.3

71.8

Mar 14 Dec 14 Dec 15 Nov 16 2017 2018 2019 2020 2021

+1.8

+2.5

+1.9 +4.0

+3.2

+2.9

+2.7

+2.5

Index of National Execution (INE) score

In-Store

Execution 3

58

59

China Strategies

Route-to-Market 2


Commercial

Strategies 1


Picture of Success

1

In-Store

Execution 3


Tools &

Technology 4


Capabilities 5

Training








Features 2006 -2010 2008 – 2016 2017 and beyond

Create/ Modify/ Cancel Order

KPI Achievement

Pitch Book (new products/ activities)

Route Book/ Create/ Modify Cust Info/ eApproval/ eContract (TOP)

Place/ Withdraw Asset/ Asset Tracking

In-Store Execution

Photo Recognition

Business Intelligence / Survey/ Instant Messaging

Leveraging Technology as Competitive Advantage

60

Tools 4


Leveraging Technology as Competitive Advantage

61 Sensitive

Cashless and Online Vending Machine

Benefits Easy to shop via Cashless payment Consumer Interactive programs via QR code Remote management for operation and delivery efficiency Asset tracking

Tools 4


Capture E-Commerce Trend with a Holistic Approach

62 Sensitive

Pilot, Experience

Data Analysis

Play Strategy

Play Space

Recruit Online Shoppers

@Scale

Recruit Online Consumers

@Scale

Recruit 100 MILLION e-shoppers

by 2020 Vision

Coke e-Store Platforms O2O

e-Commerce 4

63

China Strategies

Route-to-Market 2


Commercial

Strategies 1


Picture of Success

1

In-Store

Execution 3


Tools &

Technology 4


Capabilities 5

Training







Current China System

64 Sensitive

COFCO

SBHL

KO BIG

Individual Bottler

Xinjiang

Tibet

Qinghai

Yunnan

Inner Mongolia

Ningxia

Taiwan

Hainan

Zhuhai

Shanghai

Macau Hong Kong

Guangxi Guangdong

Fujian

Sichuan Hubei

Guizhou

Zhejiang

Anhui

Jiangsu

Beijing

Hebei

Liaoning

Jilin

Heilongjiang

Tianjin

Shanxi

Gansu Shaanxi Henan

Shandong

Chongqing

Hunan Jiangxi

Realigned China System

COFCO

SBHL

Individual Bottler

Xinjiang

Tibet

Qinghai

Yunnan

Inner Mongolia

Ningxia

Taiwan

Hainan

Zhuhai

Shanghai

Macau Hong Kong

Guangxi

Fujian

Sichuan Hubei

Chongqing

Guizhou

Anhui

Beijing

Heber

Liaoning

Jilin

Heilongjiang

Tianjin

Shanxi

Gansu Shaanxi Henan

Shandong

65 Sensitive

Hunan Jiangxi

Guangdong

Zhejiang

Jiangsu

66 Sensitive

Pre Post Increase in Scale

Population (million) 418 649 55%

Sales Volume (million unit cases) 836 1,277 53%

Sales Centers 536 691 29%

Production Lines 51 84 65%

Employees 13,900 20,900 50%

A Unique Opportunity to Transform Our Bottling Business in China


Supported by State-of-the-Art Front Line Technology across all territories

Replicate Best-in-Class Practices Across Acquired Territories

51.7

56.6

44.2

51.6

Index of National Execution (INE) score

Sensitive

Rest of China

67

Sensitive

Source 1. Volume Share: Nielsen Retail Audit, YTD Nov-16

Replicate Best-in-Class Practices across Acquired Territories

Coca-Cola Sparkling Brands Volume % Share

68

Drive Per Capita Consumption and Per Case Revenue via Portfolio Leadership across categories

Data Source: 1. KO Per Cap Sales: Company Internal Information, FY 2015 2. Ex-factory Price Index: Company Internal Information, YTD Sep-15

Replicate Best-in-Class Practices across Acquired Territories

Ex-factory Price Index

69


Unique Acquisition Creating Synergies and Long Term Growth

Revenue Growth: fast track revenue growth via enhancement of execution,

market share and pricing

Speed to Market: becoming more competitive and nimble with higher level of control

Innovation: accelerated decision making process for new category and

innovation

Customer Service: empowered customer management group

Talent: recruit best talent for Swire and opportunity for our talent to develop in

an expanded scope of operation

Supply Chain: opportunities from contiguous territories

70 Sensitive

http://www.google.com.hk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjHvenk8LTRAhWKk5QKHcR3BwwQjRwIBw&url=http://www.ndtv.com/world-news/mexico-indigenous-group-sees-racism-in-coca-cola-ad-1250442&psig=AFQjCNEZDyAHlN8X9yrBr-n_ZbySCfWWSw&ust=1484044964222654

Executive Director, Supply Chain Swire Beverages

Peter Mills

Supply Chain Management and Sustainability

Mainland China – Supply Chain Before and After Realignment

Pre

12 manufacturing plants

51 production lines

141 distribution centres

4,390 supply chain employees

1.14 million customers

72

Post

19 manufacturing plants

84 production lines

190 distribution centres

6,820 supply chain employees

1.62 million customers

Supply Chain Mission and Vision

Safety, Quality &

Environment

Flexible & Efficient Supply

Network & Operations

Superior Customer

Service

Performance Excellence

Build World Class Capability

“Learn from the Best to Become the Best” – “Autonomous Continuous Improvement”

Mission

Generate Customer Value through Flexible & Efficient Supply Chain

Vis

ion

73

Safety – Our First Priority

74% drop in Lost Time Injury (LTI) vs 2010

There were 0.32 injuries per 100 full time

employee (FTE) in 2016 Ongoing and future – leading indicators

Our Safety Culture Journey

Lost Time Injury Rate

Leadership Commitment

2013

Caring Walk Incident

Reporting & Investigation

LTIR Reporting Safety Sharing

Safety Culture

2015

Safety Maturity Assessment

Employee Engagement

Vehicle and Road Safety

2011

Defensive Driving Programme

Helmets Distribution

Management Philosophy: Safety First

2012

2016

Safety Maturity Assessment

QSE Red Lines Vehicle and Road

Safety

Safety Culture

74

Water Stewardship

Our water conservation goal is to return to communities and nature an amount of water equivalent to what we use in all of our beverages and their production.

Working with external partners, we are committed to support programs to ensure healthy watersheds and sustainable community water with a goal to balance the water used in our finished beverages

We are committed to wastewater treatment standards which require returning all water that is used in our manufacturing processes to the environment at a level that supports healthy aquatic life

We are committed to achieving World Class water use performance in each of our Manufacturing locations

REDUCE

RECYCLE

REPLENISH

75

Water Stewardship – Reduce

Swire Beverages Mainland China Water Use Ratio

Water Use Ratio (L/L)

76

Best Practice Reference

The Coca-Cola System 2015 Global Average 1.98

Coca-Cola China 2015 System Average 1.82

The Coca-Cola System 2020 Goal 1.70

Manufacturing water use ratio reduced by 45%

Water Stewardship – Recycle and Replenish

RECYCLE 100% Compliance with the PRC Wastewater Discharge National Standard

100% facility alignment with The Coca-Cola Company wastewater treatment standards

In 2015, 385 million liters wastewater treated and replenished to environment (100% of discharge)

REPLENISH Reclaimed Water Use Reclaimed water from Swire Coca-Cola Beverages Zhengzhou is transferred to the Lianhu Park for sustaining the wetland ecosystem Mini-Wetland Project To control source water pollution in rural areas generated by agric-tourism through the construction of mini-wetlands Sustainable Agriculture To improve water efficiency by optimizing irrigation facilities and methods in sugarcane growing in Guangxi Province.

Programme Examples

77

World Class Operations

1 2 3 4 5

Practices drive sustainable performance World Class Operations journey in Supply Chain since 2009

Stragglers

Back of the pack

Can't go the distance (Not Sustainable)

Contenders

Promising (Lacking Business Focus)

X

Y

Practices

Perf

orm

an

ce

World Class

78

Mainland China World Class Operations – 2009 to 2016

Bottlers Cost Productivity Service Productivity Growth Productivity

Zhejiang Anhui Henan Guangdong Fujian Jiangsu Shaanxi

Manufacturing Conversion Cost

RMB / case 30% reduction

Logistics Cost – Warehouse and Delivery RMB / case 3% reduction

DIFOT * 84 % to 92%

Case Fill Rate

72 % to 93% Quality

96 % to 97% Inventory Days

15 to 12 days

Capacity investment avoidance

Line Utilisation

68% to 80% People Turnover

14% to less than 10%

Multi-Skilled

Frontline 38% to 62%

WCO Practice Implementation * Progressed from 1.2 to 3.6 (scale 1 – 5)

* DIFOT = Delivered In Full On Time * WCO Practice – External Maturity Assessment

World Class Operations Programme delivering sustainable improvements

79

Best Practice – Voice Picking System

Project Goal

Improve picking accuracy and efficiency

Prepare warehouse operations to handle increase complexity

Solution

Re-design picking area with racking

Voice picking of pallets

Results

Picking Efficiency: 900-1,000 cases/hr

Roll-out

2015-16: 11 DCs; 2017: 6 DCs

Re-Application of Swire Coca-Cola, USA Best Practice

80

Re-Application of Coca-Cola European Partners Best Practice

工厂总览

集团总览

Best Practice – Line View Real Time Monitoring

Real Time Line Status

Project Goal

Pressure on line efficiency due to high customer and consumer demands

Solution

Sustaining and improving Production Line Utilisation leveraging Big Data

Results

Delivers 5% improvement in Line Utilisation

Roll-out

2016 to 2018 on 84 production lines

81

Productivity Improvement Projects (PIP)

649 Projects, Saving RMB 45m

Continuous Improvement – PIP Programme

82

Golden Ideas Programme

In 2016, frontline teams submitted 5,538 Golden Ideas – over 90% implemented

Global Procurement Approach

Leveraging global scale, knowledge and capability through procurement consortiums

83

CEPG

Idea Scoping Preliminary

Business Case Full

Development Launch

Preparation Market

Execution

Continuous Innovation Process

Gate 1 Decision

To Charter

Gate 2 Decision To

Develop

Gate 3 Decision To

Launch

Gate 4 Decision To

Produce

The Coca-Cola Company Stage and Gate Process

In each of our markets we partner with The Coca-Cola System to deliver a stage and gate innovation process and routine.

For Mainland China we are applying best practice from Swire Coca-Cola, USA and global best practice – Japan – to deliver a process to capture the portfolio growth opportunities.

G1 G2 G3 G4

84

Realignment Synergy Opportunities in Mainland China

Sustainability

World Class Operations (WCO)

Infrastructure Planning

Strategic Procurement

Innovation Process

85

86

Managing Director, Swire Beverages

Pat Healy

Closing Remarks

In Summary

A great time to be increasing our footprint

Future opportunities are significant in China and USA

We have a clear revenue growth strategy and are investing heavily in capability development

87

工厂总览

Corporate Development & Finance Director Swire Pacific

Martin Cubbon

Swire Pacific Group Update

Key Themes in 2016

Economic weakness

Real GDP growth falls to HK 1.5% (vs 2.4%), China 6.7% (vs 6.9%) and

USA 1.6% (vs 2.6%)

Impacts CX passenger yield and load factors, China Beverages and HK retail sales (T&I) & HK retail rentals (Properties)

Continued low oil prices

CX fuel surcharge suspensions / continuing hedge losses

SPO weak utilisation/day rates, vessels in cold stack and need for significant impairments

Continued weakening of RMB / strong USD

Lower $ yields in CX

Air China debt

Translation losses in Properties & Beverages

89

Key Themes in 2016 (continued)

Exceptional items impacting 2016

SAESL gain on sale +HK$604m

HAECO Americas impairment –HK$211m

SPO impairment –HK$2,310m

Altus loss on sale –HK$120m

Expansion in activities to drive future shareholder returns

Brickell City Centre Miami

HKRI Taikoo Hui Shanghai (and full year operation of Taikoo Li Chengdu)

Arizona & New Mexico addition to Beverages

China Cold Storage

Outstanding minorities in Qinyuan Bakery acquired

No sign of sentiment improving in early 2017

China real GDP growth forecast to decline further to 6.5% (6.7%) and RMB forecast to depreciate to 7.15-7.50 (6.95)

$ benchmark interest rates expected to rise c0.5%

90

Key Themes in 2017

Growth opportunities

Positive office rental reversions, partially offset by weaker HK retail rentals

BCC and HKRI Taikoo Hui revenue offset by Techno Centres demolition and Cityplaza governmentt exchange

Property trading profits realised on ALASSIO

CX ATK growth, lower hedge losses

General increase in HAECO air frame man-hours demand

Digesting Beverages expansion

But Continued difficult market conditions for SPO

Rising interest charges

No significant capital profits or losses are expected for 2017

Continued Significant capital projects:

One Taikoo Place and Qiantan JV

CX investment in A350’s

Beverages Pacific North West and China refranchising

91

Uncertainties continue into 2017

Weak consumer confidence China Beverages sales

HK Retail sales

CX Cargo & passenger demand

Competition

Continued CX passenger yield decline in face of overcapacity

SPO

Further activity decline (only 60% of budgeted revenue secured)

92

2017 Priorities Successful Execution of New Business Development

HAECO Americas seats

Assimilating new Beverage expansions

Cold Storage

Qinyuan New Bakery expansion

93

Capital Markets Day & Pre-close Briefing · Shift of 3% of portfolio Retail Value since 2013 Our...

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