BUSINESS & SUSTAINABILITY REVIEW2011

www.fostersgroup.com

Foster’s Group usesNational CarbonOffset StandardCertified ENVI Recycled 50/50Carbon Neutral Paper An Australian Government Initiative

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FOSTER’S BRANDS

AuSTRAliAN icONS

VBFoster’s LagerCarlton DraughtCarlton DryCarlton Dry Fusion LimeCarlton Dry Fusion LemonCarlton Dry Fusion Black Carlton ColdMelbourne Bitter

REDucED AlcOhOl BEERS

Carlton MidVB GoldFoster’s LightIcePure Blonde NakedCascade Premium LightPower’s Gold

iNTERNATiONAl BRANDS

Asahi Super DryCarlsbergCorona ExtraHoegaardenKronenbourg 1664Leffe BlondeStella Artois

REgiONAl BEERS

Cascade DraughtCascade BitterGreat Northern Brewing Co. Crisp LagerSheaf StoutPower’s BitterReschsAbbotsford Invalid StoutKB

PREmium AuSTRAliAN BEERS

Crown LagerPure BlondePure Blonde WhiteCascade Pale AleCascade BlondeCascade StoutCascade PureCascade Premium LagerCascade First Harvest

cRAFT BEERS

Matilda Bay RedbackMatilda Bay Beez NeezMatilda Bay Bohemian PilsnerMatilda Bay Dog Bolter Dark LagerMatilda Bay Alpha Pale AleMatilda Bay Fat YakMatilda Bay Big Helga

ciDERS

Strongbow OriginalStrongbow SweetStrongbow DryStrongbow ClearStrongbow PearMercury OriginalMercury SweetMercury DryBulmers OriginalBulmers PearMatilda Bay Dirty Granny

SPiRiTS

Black Douglas ScotchCougar BourbonKarloff VodkaContinental Liqueurs

NON AlcOhOl

Torquay Spring WaterCascade Apple IsleCascade Ginger BeerCascade Real JuicesCascade Traditional Soft DrinksCascade Ultra CPerrier Mineral Water

285ML

FULL STRENGTH

4.8% ALC./VOL

BEER30ML

HIGH STRENGTH

40% ALC./VOL

SPIRITS375ML

FULL STRENGTH

5% ALC./VOL

SPIRIT PRE-MIX

RESPONSiBlE ENJOYmENT OF AlcOhOl WHAT IS A STANDARD DRINK?

We’re united by the bond only a beer can create and a belief that if a whole lot more people raised a beer in friendship, the world would be a better place.

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Foster’s has unveiled a new brand identity For its iconic

australian beer business

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FroM the chairMan and chieF eXecutive oFFicer

Foster’s is an iconic Australian company with market leadership positions across its portfolio of quality brands.

In a difficult economic environment, we are pleased to report on the achievements over the past year and reflect upon the solid foundation that is being laid for the future.

With the demerger of Treasury Wine Estates overwhelmingly supported by shareholders, fiscal 2011 took us back to beer and cider, where the Company has had a proud record of performance over its 150 year history.

We have strengthened the capability and depth of our management team and that team has put in place a robust strategy to bring Foster’s to its full potential.

Our phased program of cost reduction is building on our existing cost leadership.

Foster’s record of delivering excellent cash flow continued in fiscal 2011. With our low level of net debt we have the flexibility to invest for further growth and conduct disciplined capital management.

Shareholders have received strong dividend returns and we expect the dividend payout ratio to remain at least 80% of net profit before material items.

We concluded the long running Ashwick tax litigation which will deliver a significant cash benefit to shareholders.

We have relaunched and rebranded our Australian business as Carlton United Brewers (CUB). In fiscal 2011 we stabilised market share, strengthened our customer relationships and increased confidence in our brands from our trade partners and within our own team.

Overall we are pleased to report the turnaround of our business is on track.

overwhelMing support For the deMerger

The demerger was approved at the Scheme Meeting held on 29 April 2011 with 99.7 per cent of shareholder votes in favour.

The transition to separate beer and wine operations occurred with minimal business disruption.

ManageMent with deep sector knowledge and global eXperience

Foster’s has assembled a talented and experienced leadership team.

The team has decades of relevant expertise in the beverage business in Australia and internationally. Several key management appointments have deepened our technical skills and global experience, and reaffirmed the Company’s commitment to investing to drive growth.

25.25Total dividends for the 2011 fiscal year

(cents per share)

DAvID A CrAWFOrD Chairman

JOhn POllAErS Chief Executive Officer

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99.7%Votes in favour of the demerger

The business turnaround is on track and we are now able to dedicate all of the Company’s considerable financial resources and industry expertise to beer and cider.

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Financial Foundation laid For the Future

In the face of economic uncertainty and unusual weather patterns, it is a credit to the character and hard work of the team at Foster’s that we navigated a difficult market in fiscal 2011 and have emerged in stronger shape.

The hard work of the past year is not yet fully reflected in the financial results, but we have the foundation for improved performance in the years ahead.

The results of Foster’s continuing operations EBIT in 2011 was $816.7 million before material items. The continuing operations net profit after tax but before material items was $494.9 million. This result translates into earnings per share of 25.6 cents.

Foster’s continued its excellent cash flow generation in fiscal 2011. From continuing operations the Company generated $872.7 million of net operating cash flow prior to interest, tax and material items.

We are confident the Company can maintain its strong cash flow in future years.

a new look and Feel

As part of Foster’s commitment to reinvest in its brands and to emphasise beer’s historic position at the heart of Australian life, in July 2011 Foster’s relaunched its beer business as ‘Carlton United Brewers’.

The new name and new brand identity – ‘raised in Friendship’ – reflect the importance of people to our business and our heritage. The changes are appropriate for a business with a renewed focus as a dedicated, world class brewer celebrating beer’s ability to bring people together.

The feedback on this new identity from customers, trade partners and employees has been extremely positive.

successFul conclusion to taX litigation

An important event for Foster’s in fiscal 2011 was the announcement on 9 May that the Company had successfully concluded its long-running Ashwick tax litigation. The case related to historic operations of Foster’s in the 1980s and 1990s. Importantly, the resolution of Ashwick will result in a total cash benefit to shareholders of approximately $835 million (via a combination of the cash refunds and interest received, and receivable, from the Commissioner of Taxation and reduced income tax payments in future years).

returns to shareholders

Foster’s declared an unfranked final dividend of 13.25 cents per share, taking total dividends for the 2011 fiscal year to 25.25 cents per share. This represents an 83% payout ratio on net profit after discontinued operations but before material items.

Proceeds from the successful Ashwick litigation combined with Foster’s strong credit profile and cash generation capacity led the Board to announce on 23 August 2011 that at least $500 million will be returned to shareholders through capital management initiatives in fiscal 2012, subject to market conditions.

Options being considered include a capital reduction, which involves a ruling from the Australian Taxation Office and is subject to the approval of shareholders and an on-market share buyback.F

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sabMiller proposal

On 21 June 2011, Foster’s announced it had received an unsolicited, incomplete, non-binding and conditional proposal from SABMiller plc to acquire all of the shares in Foster’s via a scheme of arrangement at a price of $4.90 per share in cash. Your Board rejected that proposal.

Subsequently, on 17 August 2011, SABMiller announced its intention to make a takeover offer for all the shares in Foster’s at a price of $4.90 per share in cash reduced by the amount of any dividend or distribution paid or declared by Foster’s after 17 August 2011. Foster’s declared a dividend of 13.25 cents per share on 23 August 2011, therefore SABMiller’s offer price is now only $4.7675 per share.

Your Board believes the offer significantly undervalues your company. The offer is also highly conditional and subject to significant uncertainty.

Accordingly, your Board unanimously recommends you reject SABMiller’s offer.

Your Board will always act in the best interests of shareholders and will therefore give due consideration to any bona fide offers it receives.

outlook

looking to the future, it is important to remind ourselves of the strength of our extraordinary portfolio.

Foster’s is an iconic Australian beverages company with market leadership positions in both the beer and cider categories. Foster’s has an outstanding portfolio of brands, including victoria Bitter (number one regular beer), Carlton Draught (number one draught beer), Crown lager (number one domestic premium beer), Corona (number one imported beer) and Strongbow (number one cider brand).

The domestic beer portfolio also includes Cascade and Pure Blonde and our international portfolio includes beers such as Asahi, Carlsberg and Stella Artois. We have outstanding craft beers such as Matilda Bay’s Fat Yak and Big helga, as well as Australia’s other leading cider brands Mercury and Bulmers.

We are committed to investing to grow these brands.

The long-term fundamentals of the beer and cider categories in Australia remain strong, and once through the current period of economic uncertainty we are confident that the beer category will return to its long-term trend of modest growth.

The market decline has begun to moderate in recent months and we expect continued improvement.

The cider category is expected to remain in strong growth and craft beer and international premium beer are likely to lead the beer category and continue positive mix trends.

Beer remains the most popular alcohol category in the market, and we see opportunities for beer and cider to become even more popular.

Our revitalised CUB with strong market share is well positioned to lead that move.

In fiscal 2012, Foster’s will move further to bring the business to its full potential. Our strategy involves five imperatives: focusing on the core business; targeting further cost leadership; achieving consumer-led growth; out-investing and out-executing the competition; and leading industry evolution. We have a very strong balance sheet and outstanding cash flow that enable us to both reinvest for growth and return capital to shareholders in the future.

It is an ambitious but achievable strategy which we are confident will deliver significant benefits to you in the future as we continue to build on 150 years of tradition.

In conclusion, we wish to thank you, our shareholders, for your support over the past year and we recommit to doing everything possible to act in your best interests in the coming year.

DAvID A CrAWFOrD

JOhn POllAErS

We have an ambitious and achievable strategy to maximise returns for shareholders.

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a proudhistory

CUB’s history goes back as far as 1824 when Cascade Brewery was founded in Hobart. VB founder Thomas Aitken opened for business in 1854 and the Carlton Brewery arrived 10 years later with a working team of Clydesdales – a tradition maintained to this day.

The company has since become Australia’s largest brewer with market-leading brands such as vB, Carlton Draught, Crown lager and Pure Blonde. From regional and craft beers to the three highest selling cider brands, CUB covers the breadth of taste and occasions that reflect modern Australia.

Workers at the Carlton Brewery – circa 1900

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From regional and craFt beers

to the three highest selling

cider brands, cUb covers

the breadth oF taste and

occasions that reFlect modern

aUstralia

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the neXt chapter For cub

1900

1948

2011

1906

1958

1911

1968

1918

1970

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the syMbol

The raised ‘U’ emphasises the ‘UnITED’ element of the brand. This ‘raised in friendship’ mark represents the moment of raising your glass in a gesture of friendship towards another.

It celebrates all our beers, beliefs and most importantly, our vision for CUB.

the shape

Part of our brand story is our iconic logo shape. This shape will continue to contain the CUB motif.

Whether up in lights, on a bottle or stamped on a keg – this shape is a sign of quality in everything we do.

the colour

The blue blazer is part of CUB folklore. For over 25 years whenever the people of CUB represented the brewery at official functions they wore the blue blazer.

The blue is a reminder that we are all united by CUB and our story.

our naMe

The new brand name ‘Carlton United Brewers’ recognises that beer is at the heart of everything we do. From boardroom to brewery, this acknowledges that we are the people in the business of making beer.

1924 1928 1935

1970 2001 2004

1935

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Financial overview

2007 2007 2007

685.3

2,209.3

746.2

2,287.3

887.42,395.4 860.9

2,346.3

2008 2008 20082009 2009 20092010 2010 20102011 2011 2011

ebit ($m) BEFOrE MATErIAl ITEMS

net sales revenue ($m) net proFit aFter taX ($m) BEFOrE MATErIAl ITEMS

354.3

541.9

816.7

2,274.8

494.9

5 YEAR PERFORMANCE – CONTINUING OPERATIONS

2011 suMMary

In 2011, Foster’s continuing operations net profit (before material items), which excludes the impact of discontinued wine operations and material items, declined 8.7% to $494.9 million, continuing operations earnings per share (before material items) was 25.6 cents per share.

The key driver of financial performance during the year was a 6% decline in Australian beer category volume. Economic uncertainty, lower household disposable income and exceptional weather conditions reduced consumer demand for beer during the year.

Carlton United Brewers’ (CUB) earnings (before interest and tax) fell 6.2%, in line with the decline in the Australian beer category. however, improved cost efficiency mitigated the impact on CUB earnings and allowed CUB to increase advertising and promotion by more than 4%.

Strong cash flow generation remains a feature of Foster’s business with continuing business cash conversion at 100.4% of EBITDA. Cash flow before dividends and material items was $376.6 million.

capital Management

leveraging the company’s strong credit profile and cash generation capacity, along with proceeds from the successful Ashwick tax litigation, Foster’s announced in August 2011 plans to return at least $500 million to shareholders through capital management initiatives in fiscal 2012, subject to market conditions.

Options include an on-market buy back or a capital reduction, which involves a ruling from the Australian Taxation Office and is subject to shareholder approval.

428.4

519.9

Foster’s announced that at least $500 million will be returned to shareholders through capital management initiatives in fiscal 2012.

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25.25cents

total dividends

Foster’s declared an unfranked final dividend of 13.25 cents per share, taking total dividends for the 2011 fiscal year to 25.25 cents per share. This represents an 83% payout ratio on net profit after discontinued operations but before material items.

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In 2011 CUB continues as the leader in the highly competitive Australian beer market. VB remains the highest selling beer, Carlton Draught has completed its 10th year of growth and Crown Lager is Australia’s most popular premium brand. CUB’s portfolio spans the breadth of consumer tastes, with Fat Yak, Pure Blonde, Corona Extra and Carlton Dry having great success with the 20–30 year old age group.

Of course, CUB is more than just a brewer. It produces and distributes Australia’s leading cider brands including Strongbow, Bulmers and Mercury, and spirits including Cougar Bourbon and Black Douglas. CUB also imports Perrier Mineral Water and produces Cascade juices.

With new leadership comes a fresh strategy for CUB as a dedicated beer and cider business. With its proud Australian heritage, CUB is returning beer to the heart of its business and culture – building the next horizon of growth on strong trade relationships, great brands and passionate people.

In Australia, CUB runs four breweries and the country’s largest cider production site, with more breweries and distilleries in operation throughout the Pacific.

carlton draught – brewery Fresh

Carlton Draught has completed 10 years of consecutive volume growth, cementing its place as the number one draught beer and one of the largest brands in Australia.

It is a traditional, full-strength lager well known for the highly successful “Made from Beer” campaign. The latest commercial in the series “Slow Mo” was awarded the highly coveted Gold lion at the 2011 Cannes International Advertising Awards.

carlton dry – dry tasting lager

Carlton Dry, an easy drinking dry lager with lower carbohydrates, continues to be one of Australia’s fastest growing beers, with double digit growth in 2011.

vb – australia’s Favourite beer

vB is the highest selling beer brand in Australia. A true icon, vB pioneered many of the innovations we now take for granted. For example, it was the first beer in a can in Australia.

To celebrate, vB recently released the 1958 heritage can which is already a collector’s item.

historic breweries, iconic and new brands

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Matilda bay – gutsy, hairy and approachable

Matilda Bay began in 1984 at the famed Sail and Anchor hotel in Fremantle, Western Australia, with the release of two beers, redback and Dogbolter.

Through the 1990s Matilda Bay continued to develop their range of unique specialty beers, which now includes Alpha Pale Ale, Fat Yak, Beez neez, Big helga and new cider Dirty Granny.

Matilda Bay received 10 medals at the 2011 Australian International Beer Awards across seven categories.

crown lager & crown ambassador reserve

When it was first brewed in 1919, Crown lager was only available to an exclusive group of individuals such as diplomats and visiting dignitaries. In 1954, to celebrate the coronation of Queen Elizabeth II, Crown lager was launched to the Australian consumer.

First released in 2008, Crown Ambassador reserve lager pioneered a new luxury style of beer never seen or tasted in Australia. Following the success of the first two vintages, the highly sought-after 2010 Crown Ambassador reserve was released on 2 August 2010.

Bottle 0001 of every Crown Ambassador reserve vintage is sent to Queen Elizabeth II on the anniversary of her coronation.

great northern

Great northern Brewing Co. is the quintessential Queensland brew, one that complements the Queensland adventure of sun, sand and fishing.

The first batch of Great northern Brewing Co. rolled off the production line at Yatala Brewery in October 2010 and demand exceeded expectations.

pure blonde

Pure Blonde was the first beer in Australia to be marketed as low-carbohydrate. It’s a light, crisp, aromatic lager with 70% less carbohydrates than a regular beer.

Pure Blonde is a past award winner at the Australian liquor Industry Awards (2009) and continues as one of the great brand success stories of the past decade. The range extended to include Pure Blonde naked in 2008, a mid-strength version available in Queensland and new South Wales.

cascade brewer’s nose – iphone app

Cascade Brewer’s nose is a free iPhone app that brings together people of all palates, ages and stages in the beer community. Since its release in november 2010, almost 27,000 beers have been scanned and more than 3,000 tasting notes submitted by beer fans on a database of 600 Australian and international beers.

The app is the world’s first beer focussed iPhone app to use barcode scanning technology, allowing users to scan their beer using the iPhone camera, read and submit tasting notes, watch videos, and keep a log of the brews they’ve tried.

Custodians of one of the most enviable collections of brands, beer and cider is expertly crafted in historic breweries in multiple regions.

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pear: new to cider

A glass of cider over ice on a hot day is the quintessential summer drink in the UK and Europe and is growing in popularity in Australia. Cider is the fastest growing alcohol segment. Demand for cider in Australia has grown by 20% in volume terms in the past 12 months.

Strongbow Summer Pear Cider, a new, naturally refreshing cider, was launched in the middle of winter 2010.

It has a delicious pear aroma, fruity flavour and well-balanced sweetness with a slightly toasty pear character aftertaste – the perfect introduction to cider for those who’ve yet to discover it.

To mark the launch, Strongbow Summer Pear Cider partnered with renowned DJ night Purple Sneakers to present a one-off, exclusive DJ set by Darwin Deez at The Gaelic in Sydney.

Made from the finest pressed pear fruit, Bulmers Pear is a premium cider made from 100%

pears and fermented with a

sparkling wine yeast. It has a clean,

noticeable pear character, well-

balanced fruit and acidity and a

crisp, dry finish.

cascade First harvest 10th anniversary

The first weeks of autumn mark

the annual hop harvest and the

brewing of the vintage Cascade

First harvest. This very special beer

for Cascade is handcrafted using

traditional brewing principles,

focusing on quality ingredients

and traditional techniques

to create a unique brew.

Ahead of its time, Cascade

First harvest was the first beer

produced in Australia to use freshly

harvested “green” hops. 2011 marks

the 10th annual release of this

special ale.

The limited release ale uses

only the first hops and barley

of the season. Each year’s First

harvest Ale features experimental

hops developed by Tasmania’s

internationally renowned hop

pioneers at Bushy Park Estates,

established as a hop farm in 1867.

abbotsford brewery

Abbotsford Brewery, in Melbourne,

victoria, has brewing, packaging

and distribution facilities for

kegs, cans and bottles of beer.

It is the home of the world’s first

commercial hop extraction plant

and was the largest brewery in

the Southern hemisphere from

the 1970s to the 1990s.

yatala brewery

Yatala Brewery, located in Queensland, represents the state of the art in brewing and packaging technology. Opened in 1983, Yatala is renowned for its reduced environmental footprint and together with Abbotsford produces just under one half of the nation’s beer.

Cascade Brewery – Australia’s oldest operating brewery.

Bulmers Pear matched with smoked salmon.

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cascade brewery

Cascade Brewery is set against the majestic back-drop of Mt. Wellington in hobart, Tasmania. Founder Peter Degraves vowed in 1824 to produce beers of the finest quality. nearly 190 years later, as Australia’s oldest operating brewery, Cascade still brews and packs kegs, cans and bottles. Cascade is the only brewery in Australia which operates its own maltings, producing over 24 products of beer and cider and a diverse range of juices, cordials and soft drinks.

the garage

The Garage Brewery was opened by Matilda Bay in 2005 in Dandenong, victoria. The move from Fremantle, Western Australia renewed the Brewery’s passion for beer exploration. The Garage is the ideal place for experiments across the full spectrum of flavours and styles of craft beer.

Demand for cider in Australia has grown by 20% in the past 12 months.

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Five year suMMary

2007 2008 2009 2010 2011

incoMe stateMent $ million (unless otherwise stated)

net sales revenue 2,209.3 2,287.3 2,346.3 2,395.4 2,274.8

Continuing EBIT from operations (prior to material items)– CUB and rest of World 736.8 793.8 885.3 922.1 865.8

– Corporate (51.5) (47.6) (24.4) (34.7) (49.1)

EBIT (Continuing business) 685.3 746.2 860.9 887.4 816.7

net interest (187.1) (144.7) (146.6) (118.8) (119.8)

Income tax expense1 (139.7) (168.7) (191 .1) (226.3) (201.6)

Minority interest (4.2) (4.4) (3.3) (0.4) (0.4)

Material items (after tax) 107.8 - - 10.7 551.6

Discontinued operations – trading (after tax)1 334.4 286.2 205.6 156.4 99.3

Discontinued operations – material items (after tax) 169.7 (602.9) (287.2) (1,173.4) (1,234.8)

net proFit aFter taX 966.2 1 1 1 . 7 438.3 (464.4) (89.0)

Average shares outstanding (million) 2,012.7 1,937.3 1,923.3 1,929.6 1,934.7

Average dilutive shares outstanding (million) 2,013.5 1,938.3 1,925.2 1,930.1 1,934.8

Earnings per share 17.6 22.1 27.0 28.1 25.6

reported basic earnings per share (cents) 48.0 5.8 22.8 (24.1) (4.6)

reported diluted earnings per share (cents) 48.0 5.8 22.8 (24.1) (4.6)

cash Flow2

Operating cash flow 747.3 669.9 884.9 934.7 749.5

Asset sales and other 770.4 92.1 9.4 73.9 15.8

Capital expenditure (195.2) (139.3) (162.6) (105.0) (112.3)

Intangibles and other assets (1.4) - (23.7) (58.8) (43.9)

Dividend payments (620.2) (601.9) (476.2) (525.6) (469.9)

Share buy-back/new issues (124.6) (180.3) (2.5) (1.8) -

Outside equity interest (3.1) (0.7) - (0.8) -

Financial strength

net debt (EOP) 2,568.6 2,402.7 2,611.4 2,184.6 1,513.5

Total shareholders' equity 4,633.2 3,850.7 3,757.4 2,715.4 399.6

Book value per share ($) 2.3 2.0 1.9 1.4 0.2

net tangible assets per share ($) 0.6 0.6 0.5 0.5 (0.2)

EBIT/Interest paid cover (times) 3.7 5.2 5.9 7.5 6.8

shareholder returns

Dividend (cents per share)3 23.75 26.25 27.25 27.25 25.25

Dividend cover (times) 2.0 0.2 0.8 (0.9) (0.2)

Franking (%) 100.0 100.0 100.0 100.0 47.5

return on equity (%) 20.9 2.9 1 1 .7 (17.1) (22.3)

Share prices ($)

- Close 6.38 5.07 5.15 5.65 5.15

- Year high 7.14 6.90 6.17 6.01 5.25

- Year low 5.26 4.82 4.26 4.93 4.23

1 Income tax expense and Discontinued operations – trading (after tax) have been derived

based on each year’s effective tax rates.

2 Includes contribution from discontinued operations.

3 Dividends in 2010 includes the October 2010 dividend declared of 15.25 cents per share.

The 2011 dividend includes the August 2011 final declared dividend of 13.25 cents per share.

Foster’s continues to deliver excellent cash conversion at just over 100% of EBITDA.

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2007 2008 2009 2010 2011

incoMe stateMent $ million (unless otherwise stated)

net sales revenue 2,209.3 2,287.3 2,346.3 2,395.4 2,274.8

Continuing EBIT from operations (prior to material items)– CUB and rest of World 736.8 793.8 885.3 922.1 865.8

– Corporate (51.5) (47.6) (24.4) (34.7) (49.1)

EBIT (Continuing business) 685.3 746.2 860.9 887.4 816.7

net interest (187.1) (144.7) (146.6) (118.8) (119.8)

Income tax expense1 (139.7) (168.7) (191 .1) (226.3) (201.6)

Minority interest (4.2) (4.4) (3.3) (0.4) (0.4)

Material items (after tax) 107.8 - - 10.7 551.6

Discontinued operations – trading (after tax)1 334.4 286.2 205.6 156.4 99.3

Discontinued operations – material items (after tax) 169.7 (602.9) (287.2) (1,173.4) (1,234.8)

net proFit aFter taX 966.2 1 1 1 . 7 438.3 (464.4) (89.0)

Average shares outstanding (million) 2,012.7 1,937.3 1,923.3 1,929.6 1,934.7

Average dilutive shares outstanding (million) 2,013.5 1,938.3 1,925.2 1,930.1 1,934.8

Earnings per share 17.6 22.1 27.0 28.1 25.6

reported basic earnings per share (cents) 48.0 5.8 22.8 (24.1) (4.6)

reported diluted earnings per share (cents) 48.0 5.8 22.8 (24.1) (4.6)

cash Flow2

Operating cash flow 747.3 669.9 884.9 934.7 749.5

Asset sales and other 770.4 92.1 9.4 73.9 15.8

Capital expenditure (195.2) (139.3) (162.6) (105.0) (112.3)

Intangibles and other assets (1.4) - (23.7) (58.8) (43.9)

Dividend payments (620.2) (601.9) (476.2) (525.6) (469.9)

Share buy-back/new issues (124.6) (180.3) (2.5) (1.8) -

Outside equity interest (3.1) (0.7) - (0.8) -

Financial strength

net debt (EOP) 2,568.6 2,402.7 2,611.4 2,184.6 1,513.5

Total shareholders' equity 4,633.2 3,850.7 3,757.4 2,715.4 399.6

Book value per share ($) 2.3 2.0 1.9 1.4 0.2

net tangible assets per share ($) 0.6 0.6 0.5 0.5 (0.2)

EBIT/Interest paid cover (times) 3.7 5.2 5.9 7.5 6.8

shareholder returns

Dividend (cents per share)3 23.75 26.25 27.25 27.25 25.25

Dividend cover (times) 2.0 0.2 0.8 (0.9) (0.2)

Franking (%) 100.0 100.0 100.0 100.0 47.5

return on equity (%) 20.9 2.9 1 1 .7 (17.1) (22.3)

Share prices ($)

- Close 6.38 5.07 5.15 5.65 5.15

- Year high 7.14 6.90 6.17 6.01 5.25

- Year low 5.26 4.82 4.26 4.93 4.23

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david a crawFord ao, b.com., llb, Fca, Fcpa

Chairman, non-Executive Director

Member of the Board since August 2001, Chairman since november 2007, Mr Crawford is an independent Director. Mr Crawford has extensive experience in risk management and business reorganisation, having worked with governments and major corporations. he is a former partner and national Chairman of KPMG and is on the Advisory Boards of Allens Arthur robinson and Bank of America Merrill lynch Australia. Mr Crawford is a Director of BhP Billiton limited and Chairman of lend lease Corporation.

John pollaers b.eng., b.c.s., Mba

Chief Executive Officer, Executive Director

Member of the Board since May 2011, Mr Pollaers was appointed Chief Executive Officer of Foster’s Group limited in May 2011, after serving as Managing Director of Carlton & United Breweries from April 2010. Prior to joining Foster’s, Mr Pollaers had extensive experience in the international drink sector –

senior executive roles at Diageo,

including President, Asia Pacific

and Managing Director, Australasia

and a member of the Diageo

Group Executive Committee.

he has a strong finance and

consumer products background

as Finance Director for Diageo’s

largest subsidiary company in the

UK and held Sales and General

Management roles across the UK

and Asia Pacific. Mr Pollaers is

Director of the Australian national

Breast Cancer Foundation and

Chair of its Finance and risk

Committee and was previously

Chairman of the Distilled Spirit

Industry Council and Chairman of

the Industry and Community group

that founded Drinkwise Australia.

Mr Pollaers spent nine years in

the Australian navy.

paul clinton business administration dipit

non-Executive Director

Member of the Board since

March 2008, Mr Clinton is an

independent Director. Mr Clinton

has extensive experience with

distribution systems in the United

States and Canada. From 1988

he held a number of senior roles

with the Diageo Group, and its

predecessors, culminating in

2000 with his appointment as

President and CEO of Diageo

north America. Prior to his

retirement in 2003, Mr Clinton

also sat on the Board of Directors

of the Distilled Spirits Council of

the United States.

paula dwyer b.com, Fca, Faicd, F.Fin

non-Executive Director

Member of the Board since May

2011, Ms Dwyer is an independent

Director. Ms Dwyer is an

experienced company Director.

She is currently the Chairman of

Tabcorp holdings limited and a

Director of Suncorp Group limited

and Astro Japan Property Group

limited. Ms Dwyer was a former

Director of healthscope limited,

Promina Group limited, David

Jones limited and rACv limited.

She has had an extensive career

in finance holding senior positions

in investment management and

investment banking. Ms Dwyer

is a Member of the Takeovers

Panel and Deputy Chairman of

the Baker IDI heart and Diabetes

research Institute.

board oFdirectors

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Judith swales bsc Microbiology and virology

non-Executive Director

Member of the Board since May 2011, Ms Swales is an independent Director. Ms Swales has been appointed Managing Director of heinz Australia effective 19 September 2011. Ms Swales has more than 20 years’ experience in high profile, global, consumer facing companies in commercial and managerial roles. Prior to joining Foster’s, Ms Swales was the Chief Executive Officer and Managing Director for Goodyear & Dunlop Tyres AnZ. Ms Swales is also a former Managing Director of Angus & robertson and has held positions at UK retailers Wh Smith plc and Marks & Spencer plc. She is currently a Director of Dulux Group limited.

Michael ullMer b.sc. (Maths) (hons), Fca, sF Fin.

non-Executive Director

Member of the Board since July 2008, Mr Ullmer is an independent Director. Mr Ullmer has strategic, financial and management experience developed over a 30 year career in international banking and finance. he is a former Finance Director of the national Australia Bank and was the Bank’s Deputy Group Chief Executive Officer until 31 August 2011. From 1972 until 1992 Mr Ullmer worked with KPMG in london, the US and Australia and then joined Coopers and lybrand to lead their Asia Pacific Financial Services Group. In 1997 he joined the Commonwealth Bank of Australia as Group Chief Financial Officer and then Group Executive with responsibility for Institutional and Business Banking. Until 31 August 2011, Mr Ullmer was a Director of national Australia Bank.

Michael wesslink bsc (chem eng) syd, Mba

non-Executive Director

Member of the Board since May 2011, Mr Wesslink is an independent Director. Mr Wesslink has over 35 years’ experience in the liquor industry, most recently as Chief Executive of AlM, the liquor Division of Metcash limited. he also served as an executive director on the Metcash Board. Mr Wesslink previously held the Chief Executive position at Tooheys limited and The Swan Brewery Company limited. he has held senior positions at lion nathan, Castlemaine Perkins and Wynn Winegrowers and is a former Managing Director of Amcor Containers Packaging Asia.

The beer company loved by Australians.

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reMuneration oF directors & kMp eXecutives

short-terM beneFits

$

share-based payMents

$

post-eMployMent beneFits

$

total

$

current non-eXecutive directors

D Crawford 478,181 - 15,199 493,380

P Clinton 228,643 - 14,943 243,586

P Dwyer 25,181 - 2,266 27,447

J Swales 23,437 - 2,109 25,546

M Ullmer 205,319 - 15,199 220,518

M Wesslink 23,970 - 2,157 26,127

Current Executive Director

J Pollaers 1,142,638 226,133 63,903 1,432,674

Sub-total of Current Directors 2,127,369 226,133 115,776 2,469,278

current kMp eXecutives

P Cantwell 130,465 6,177 4,831 141 ,473

S Matthews 234,436 49,451 6,969 290,856

G Peck 200,600 34,813 4,164 239,577

Sub-total of Current KMP Executives 565,501 90,441 15,964 671,906

ForMer non-eXecutive directors

M Cattermole 188,632 - - 188,632

C nixon 31,583 - 8,292 39,875

M Ould 182,225 - 13,221 195,446

Sub-total of Former Directors 402,440 - 21,513 423,953

ForMer kMp eXecutives

I Johnston 1,667,478 464,636 1,635,057 3,767,171

S Brauer 782,988 (26,357) - 756,631

P Conroy 454,434 (27,133) 33,463 460,764

D Dearie 625,033 (32,423) - 592,610

A leyden 236,101 (78,154) 475,149 633,096

A McKay 199,1 19 (411,750) 22,143 (190,488)

A reeves 359,535 - 35,341 394,876

Sub-total of Former KMP Executives 4,324,688 (111 ,181) 2,201,153 6,414,660

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short-terM beneFits

$

share-based payMents

$

post-eMployMent beneFits

$

total

$

current non-eXecutive directors

D Crawford 478,181 - 15,199 493,380

P Clinton 228,643 - 14,943 243,586

P Dwyer 25,181 - 2,266 27,447

J Swales 23,437 - 2,109 25,546

M Ullmer 205,319 - 15,199 220,518

M Wesslink 23,970 - 2,157 26,127

Current Executive Director

J Pollaers 1,142,638 226,133 63,903 1,432,674

Sub-total of Current Directors 2,127,369 226,133 115,776 2,469,278

current kMp eXecutives

P Cantwell 130,465 6,177 4,831 141 ,473

S Matthews 234,436 49,451 6,969 290,856

G Peck 200,600 34,813 4,164 239,577

Sub-total of Current KMP Executives 565,501 90,441 15,964 671,906

ForMer non-eXecutive directors

M Cattermole 188,632 - - 188,632

C nixon 31,583 - 8,292 39,875

M Ould 182,225 - 13,221 195,446

Sub-total of Former Directors 402,440 - 21,513 423,953

ForMer kMp eXecutives

I Johnston 1,667,478 464,636 1,635,057 3,767,171

S Brauer 782,988 (26,357) - 756,631

P Conroy 454,434 (27,133) 33,463 460,764

D Dearie 625,033 (32,423) - 592,610

A leyden 236,101 (78,154) 475,149 633,096

A McKay 199,1 19 (411,750) 22,143 (190,488)

A reeves 359,535 - 35,341 394,876

Sub-total of Former KMP Executives 4,324,688 (111 ,181) 2,201,153 6,414,660

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reMuneration overview

The Foster’s Board is committed to ensuring that our remuneration strategy drives a culture of performance and ensures executives are rewarded for the delivery of results and the achievement of Foster’s short-term business objectives and long-term strategy, ultimately generating satisfactory returns for our shareholders.

A detailed annual remuneration report and copies of policies and codes mentioned below are available on the Foster’s website at www.fostersgroup.com. Details of the short-term, share-based, post-employment and termination benefits for executives and Directors are summarised in the remuneration overview table on page 20–21 of this review.

non-eXecutive directors’ reMuneration

non-Executive Directors are remunerated by way of cash fees and superannuation. They do not participate in the Company’s incentive plans but are encouraged to acquire an ongoing share ownership in the Company.

eXecutive reMuneration policy and structure

Foster’s executive remuneration policy ensures that remuneration levels properly reflect the duties and responsibilities of executives. Policies and practices are benchmarked using information and advice from external independent consultants.

remuneration packages are structured to ensure a significant

portion of each executive’s remuneration is at-risk and depends on achieving business objectives and generating returns for shareholders. The Board also considers it important that executives have ongoing share ownership in the Company.

FiXed reMuneration

The level of fixed remuneration for executives is set by reference to the market median and is determined by the scope of the role and the level of knowledge, skill and experience required of the individual.

Fixed remuneration is reviewed annually to reflect each executive’s performance over the previous year, as assessed through the Company’s Performance Management program.

short terM incentive plan

Executives participate in the Foster’s Senior Management Short Term Incentive Plan (STIP) which rewards executives for performance against a pre-determined scorecard of measures linked to Foster’s short-term business performance (12 months) and individual performance. The specific performance measures may vary from year to year depending on the business’ objectives but are chosen on the basis that they will increase financial performance, market share, and shareholder returns.

long terM incentive plan

The Foster’s long Term Incentive Plan (lTIP) links executive reward to Foster’s long-term performance and shareholder returns. Eligible executives are granted rights (Performance rights) to acquire Foster’s shares subject to satisfying certain performance conditions. Upon vesting, each Performance right entitles the participant to acquire one Share.

The current performance measures are absolute TSr and EBIT, and performance is generally measured over three years.

eXecutive director’s reMuneration

The remuneration of the CEO, John Pollaers, is outlined on page 20–21.

For the first time in a decade, we stabilised market share, our customer relationships were stronger, and we increased confidence in our brands.

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governance overview

Foster’s is committed to delivering best practice in corporate governance and transparency in reporting. A detailed Corporate Governance Statement and copies of supporting policies and codes are available from www.fostersgroup.com

board oF directors

The Foster’s Board is responsible for the overall corporate governance of the Company. The Board seeks to optimise company performance and shareholder value and recognise the Company’s legal and stakeholder obligations. The Board, comprising a majority of independent non-executive Directors, appoints the Chief Executive Officer, and ratifies the appointment of members of the Group Executive.

board coMposition and succession

The composition, diversity and size of the Board is reviewed regularly, with desired competencies, expertise and qualifications decided by the Board’s Succession Committee. External consultants conduct a review of the effectiveness of the Board, its Committees and Directors at least every two years. The next external review is scheduled in the 2012 financial year.

code oF conduct

Foster’s has a Code of Conduct that commits its Directors, employees, contractors and consultants to not only comply with the law, but to conduct business in accordance with the highest ethical standards.

share trading policy

Foster’s Share Trading Policy prohibits insider trading in accordance with the Corporations Act and prescribes certain requirements for dealing in Company Shares. The policy applies to all Directors and employees of Foster’s.

whistleblower policy

The Whistleblower Policy encourages all employees to report any matter or behaviour that may contravene the Company’s Code of Conduct, policies or the law. It provides that all reports will be thoroughly investigated, and where applicable, feedback on the outcome of the investigation will be provided to the person making the report. Any person who makes a report will not be discriminated against or disadvantaged in their employment with the Group.

corporate sustainability

Foster’s adopts an integrated approach to corporate sustainability. The Group is committed to continuously improving its business practices to maximise positive and minimise negative social, environmental and economic impacts. This enhances employee engagement and retention, manages risk and protects the Company’s social licence to operate.

integrity in Financial reporting

The Chief Executive Officer and the Chief Financial Officer provide a written declaration to the Board that the Company’s financial records have been

properly maintained, and that the Company’s financial statements and notes give a true and fair view and comply with the accounting standards. This declaration also confirms that it is founded on a sound system of risk management and internal control which is operating effectively in all material respects in relation to financial reporting risks. Foster’s financial statements are audited by an independent auditor.

tiMely and balanced disclosure

Foster’s Disclosure Policy details the procedures and requirements expected of all employees relating to the Company’s compliance with disclosure obligations under the ASX listing rules and the Corporations Act. Foster’s website contains recent ASX announcements, Annual reports, financial report announcements, relevant speeches and support material provided to the media and investment market.

Managing risk

Foster’s operates an enterprise wide risk management system to enable the identification, management and reporting of risk throughout the business.

political donations

Foster’s has in place a policy prohibiting donations, whether in cash or kind, to any political party or organisation, politician or candidate for public office in any country in which it operates.

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sustainability review 2011

sustainability governance

Foster’s places considerable importance on sustainability practices. The new identity and values of Carlton United Brewers complements the Company’s long held value in sustainability management, highlighting a culture that prioritises improving connections with stakeholders

and environments in which our company operates. This report focuses on, primarily, the results of Foster’s continuing operations in beer and cider to align with our future targets.

Our facilities range from

Australia’s oldest brewery,

Cascade in Tasmania, to modern

brewery, cidery, packaging

and logistics facilities. We have

employees across many different

areas and our customers and

consumers represent a cross-

section of many communities.

We renew and refocus our

approach to Sustainability

annually based on consultation with

our stakeholders. We are guided by

eight sustainability priorities that

reflect the social and environmental

issues most relevant to Foster’s. The

following priorities form the basis

for our approach to sustainability

and our reporting on it. These are

endorsed by the Foster’s Executive

leadership Team and Board.

Sustainability governance•

responsible consumption•

People and safety•

Energy, water and climate change•

Operational waste•

Product stewardship•

Community contribution•

leadership and advocacy•

We have sustainability subject matter experts embedded in our business that give life to these priorities. They are responsible for managing and delivering specific

programs. The Foster’s Executive

leadership Team own and champion these priorities.

benchMarking sustainability

Sustainability has been a focus at

Foster’s for many years with extensive action on water and energy use minimisation and this is the sixth year of providing a comprehensive report on our performance. We did not participate in the Corporate responsibility Index this year due to the demerger of our wine business, but we intend to participate again in the coming year.

delivering results

In a difficult year with many challenges posed by the demerger of the wine business, we continued to concentrate on sustainability improvement. There were many achievements in the areas of people, environment and the community. We furthered our investment in initiatives focussed on encouraging responsible consumption of our products. We partnered with DrinkWise to work towards changing the information on our products to more effectively inform consumers of the issues surrounding consumption of alcohol and continued to emphasis our responsible Enjoyment of Alcohol for Employees policy.

We continued to improve our health and safety performance with the recordable Case Injury Frequency rate and the lost Time Injury Frequency rate further improving during 2011. There were no deaths or permanently disabling injuries for the year.

Our focus on water and energy efficiency continued to drive improvement, with many projects saving both energy, greenhouse gas, and water. Our Cascade brewery saw the realisation of its boiler upgrade. The conversion to natural gas contributed towards reducing site greenhouse gas

emissions by up to 50%. Foster’s improved its water efficiency by

The new identity and values of CUB complements the business’ long held value in sustainability.

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6.17% from 2010, but energy

efficiency declined by 0.39%

over the year. Since 2007 our

cumulative water efficiency

performance increased by 11.66%

against a target of 10% and our

cumulative energy efficiency

performance improved by 5.13%

against a 10% target.

The Foster’s Procurement

Sustainability Program continued

to focus on the Sustainability

of our suppliers. All potential

suppliers must now pre-qualify

against sustainability criteria built

into Foster’s ArIBA procurement

tool. A satisfactory standard must

be reached by all suppliers on

criteria covering their activities

on greenhouse gas, energy and

water use minimisation as well

as their approach to the ethical

and social issues in their own and

their suppliers operations. Any

supplier that does not pre-qualify

is not eligible to participate in

any sourcing activity for the

Company. Foster’s continued to

support Greenfleet on a voluntary

basis with all emissions resulting

from corporate air travel and the

operation of our corporate vehicle

fleet offset through the planting of native vegetation to sequester greenhouse gas emissions.

Foster’s continued its community investment program during 2011 with more than $7.1m invested in Communities through community grants and other activities.

stakeholder engageMent

Foster’s major stakeholders comprise investors, employees, customers, consumers, non-government organisations, suppliers, commercial partners, regulators, governments, and the communities we operate in. We continued our dialogue with these groups over the year and their views have been represented in the way we have structured our report.

looking Forward

During the coming year we will continue our work on energy and water efficiency as well as further enhancing our Procurement Sustainability Program and community investment activity. We will also focus on re-calibrating our sustainability program to ensure it is re-energised and comprehensive enough to carry us forward over the next few years.

50% 6.17%

Greenhouse gas emissions at Cascade reduced by up to

Water efficiency performance improved

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people & saFety

strategy/approach

Our people strategy focuses on identifying and developing talent and on building the capability of our people, focussing in particular in areas which drive competitive advantage.

As a belief-driven organisation we believe all employees are capable of delivering exceptional performance through appropriate reward and recognition.

2011 highlights

Upgraded our talent at senior levels•

Built commercial capability•

Built the employee story through enhancing the careers website•

Improved our gender diversity•

Building an organisational structure to support the business requirements•

All packaging machines that were risk assessed to pose a significant hazard have either been replaced •

or upgraded to meet Australian Standards

A series of “best practice” Ammonia Management Guidelines were developed by a cross-section •

of subject matter experts from across the business

A full review of traffic management across the business commenced with the completion of a comprehensive •

risk assessment survey aimed at identifying the key hazards present at each production facility

key indicators

2012 action plan

Implement program to embed new CUB identity and values•

Deliver Performance Diagnostic program to build high performance culture•

realign incentive programs to drive high performance outcomes•

Build targeted talent management, development and retention programs to build succession•

Implement comprehensive Sales Capability program across all sales functions•

Complete the mechanical and/or electrical upgrades of remaining packing machines across the business•

Continue the implantation of the FGl “best practice” Ammonia Management Guidelines •

Implementation of action plans across the business to control the key traffic management hazards •

associated with mobile plant/pedestrian interaction and track loading/unloading activities

Development of a more centralised wellbeing program for implementation across the business•

Improvement in recordable Case Injury Frequency rate (CUB production):

Employee turnover:

11% 18.2%

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high perForMance culture

Our focus on building a high

performance culture leads us

naturally to examine the values

inherent in such cultures and

the relationships teams have

with each other, their leaders and

the Company. We believe in the

power of bonds and that through

people being bound by a

common belief, we will achieve

exceptional performance.

We encourage our leaders to be

brave enough to have the tough

conversations and make difficult

decisions, to think big and act

in new ways. For all employees

we seek to reinforce the

expectations of the Foster’s

culture and values. We desire

our employees to act with performance resolve, to see what needs to be done and act on it.

We believe it is important to examine ourselves against factors that are proven to strengthen our capacity to deliver.

Over a number of months, across some of our major locations, we instigated in-depth discussions with our people, which helped establish our new

Foster’s values. In keeping with driving a ‘performance focused’ organisation, a performance diagnostic survey was rolled out across the organisation in February 2011. Following this in-depth survey, discussions have been

rolled out across Foster’s focused on addressing the survey results.

deMographics

agreeMent type global teaM

non Award employees 59.80%

Award employees 40.20%

• Headcount exldues Fiji and Samoa

gender proFile by region

region FeMale Male

Asia 40% 60%

Australia 20.4% 79.6%

Europe, Middle East & Africa 40% 60%

• Gender profile excludes Fiji and Samoa

turnover rates

region 2008 2009 2010 2011

Australia 14% 11.50% 11.20% 18%

Our focus for the coming year is

to drive and measure performance

management, supported by

diagnostic tools and action plans.

talent

We are creating an integrated

approach to talent and

performance, connecting

approaches in remuneration

through to development that

rewards people for giving their

best every day in a way that builds

long lasting friendships, and gives

people the opportunity to have a

fulfilling career during their time

with Foster’s.

Being clear about what success

means for our Company enables

us to select a diverse and talented

group of people, and engage and

develop our own internal talent

for future success.

Our approach will have an

immediate impact, however it will

take two to three years to come

to full fruition and we are confident

of the enduring influence it will

have on this great Company.

Foster’s is focussed on attracting,

appointing and engaging the very

best people in the market aligned

to Foster’s strategic objectives

and values. Our talent strategy

in 2012 is to develop a nimble, high

calibre team that is well integrated

into the business. Enhanced

business knowledge will enable

our team to adopt more flexible

and innovative sourcing strategies

tailored to the individual needs

of the business.

1,972Global Foster’s employees

Foster’s is focussed on attracting, appointing and engaging the very best people in the market.

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Our aim is to improve the quality of hire, drive consistency, build greater brand awareness, improve the candidate experience, and reduce costs; thereby delivering value to the business. Aligned to the organisational objective of Cost leadership, the recruitment budget has been centralised to ensure greater control over recruitment spend and the establishment of a panel of preferred suppliers with global reach.

In 2011, we launched a refreshed careers website following internal and external focus groups designed to unlock what it means to be the Best in Foster’s and the value working here provides to prospective individuals.

In fiscal 2012, our plans include creating an integrated talent and performance approach, reviewing our Employer value Proposition, establishing Diversity targets and measureable objectives, and focusing our efforts in the identification and development of talent.

reward and recognition

At Foster’s we believe in rewarding and recognising individuals for performance excellence as well as offering all employees a range of benefits to help support their wellbeing.

We reward high performance through our performance based reward schemes and our Employee recognition program for those individuals and teams who go the extra distance to achieve excellent results.

We also recognise and reward loyalty via our Employee Service Awards.

Employee Benefits and rewards over and above legislative requirements include:

Super/retirement•

Employee Assistance Program•

Manager Assistance Program•

health insurance•

Maternity leave•

Paternity leave•

Product Benefit •

Car Parking •

(provided or purchased)

Motor vehicles (role dependent)•

learning and developMent

As a fast moving consumer goods company (FMCG), Foster’s is continually seeking to be the best in our industry for sales and marketing. Aligned to key business priorities, a sales capability program was developed and progressively rolled out in 2011. This program has represented a solid step forward in building sales capability by determining the right skills and knowledge required by our sales professionals, building a consistent approach to sales calls and clearly defining the on boarding process for new customer facing sales staff.

We took a decision to focus our development on building sales capability and preparing our most senior executives for their new responsibilities as a listed company. As a consequence, we did not roll out leadership pipeline programs to our employees this year. We continued to develop the ‘Foster’s Academy’ with a

focus on revisiting our core competencies and aligning our development activity around these competencies.

In 2011, Foster’s delivered sales capability programs such as ‘Wave based’ training aligned to Urgent Agenda priorities, including Performance Based Terms (P4G), Wholesale rebasing and Win in Store initiatives and ‘Skills’ training aimed at building execution, selling and sales coaching skills across sales through programs such as ‘Path to Purchase’, the ‘CUB Way of Selling’ and ‘Breakthrough Sales Coaching’ programs.

In 2012, we aim to drive sales capability, reporting on progress and measuring return on investment, focus our development activity on areas which will provide us competitive advantage, focus on quality development plans linked to our 2012 strategic imperatives, refine our talent and leadership development programs and equip our leaders with breakthrough coaching skills.

code oF conduct

We recognise that our reputation is one of our most valuable assets and is founded largely on the ethical behaviours of the people who represent Foster’s. Our Code of Conduct sets out expectations related to:

honesty and fairness•

Employment practices•

Seeking assistance•

Compliance with •

appropriate policies

11%

Recordable Case Injury Frequency Rate improved (CUB production)

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Foster’s tracks incidents and monitors compliance with our human resources policies and programs through:

Our confidential •

Whistleblower hotline

human resources department•

local Contact Officers•

Biannual Compliance reporting •

presented to the Board

Diversity continues to be a significant focus for Foster’s in 2011. We value and respect the diversity of our employees and are committed to creating an inspiring and inclusive workplace where everyone is treated equally and fairly.

We are committed to equal employment opportunity, formalised by our merit based recruitment and selection and EEO – Diversity, Inclusion and Anti-harassment policies. Our remuneration framework is underpinned by performance and equity.

We are also a member of the Un Global Compact and recognises the Universal Declaration of human rights and the International labour Organisation (IlO)’s Declaration on Fundamental Principles and rights at Work.

In 2011, we were declared compliant by the Equal Opportunity for Women in the Workplace Agency (EOWA).

health and saFety perForMance

Under the direction of the OhS Council, we are pleased to report that the positive trend in OhS performance displayed over the past several years has continued through 2011.

During the course of the year there was a renewed focus on controlling our significant hazards, as well as reducing the overall frequency of incidents through a strong incident investigation process.

In addition, the demerger allowed the business to better concentrate available resources on beer as a stand-alone business. This fact, combined with a renewed focus on the businesses’ specific hazards, has resulted in a significant improvement in both recordable Case Injury Frequency rate (rCIFr) and lost Time Injury Frequency rate (lTIFr) – the two key indicators that Foster’s uses to measure OhS performance.

Based upon a comprehensive risk assessment process of packaging equipment across the business, all equipment that was assessed to pose a significant hazard has now been either replaced or upgraded to meet the Australian Standard. During 2012, the second stage of this project will continue, focusing on the remaining packaging machines that require some type of minor mechanical and/or electrical upgrade to bring them up to “best practice” standard. In conjunction with these works, operator training and competency will be verified for all personnel who interact with these machines.

To address the hazards associated with the use of Ammonia refrigerant, a series of “best practice” Ammonia Management Guidelines were developed by a cross-section of subject matter experts from across the business. The implementation of these guidelines commenced in 2011 and will continue through 2012 with the focus shifting from procedural improvements to mechanical upgrades.

In F11, a full review of traffic management across the business commenced with the completion of a comprehensive risk assessment survey aimed at identifying the key hazards present at each production facility. During F12, these surveys will form the basis for localised action plans designed to mitigate the risk associated with any high to significant hazards that were identified through the risk assessment process.

As a result of the demerger, there is now the scope to develop a more centralised Employee Wellbeing Program for implementation across the group. This program will continue to focus on a variety of key priority health areas, as well as be expanded to include several additional initiates aimed at addressing the hazards associated with an aging workforce. Through a more concentrated program, focussed on the specific issues faced by Foster’s, significant gains can be achieved in controlling the frequency and severity of workplace injuries.

the 2011 Foster’s ohs awards

Introduced in 2009 to recognise above and beyond OhS contributions, the OhS Awards program was run again in 2011. Following review by the OhS Council, one candidate stood out for their exceptional contribution to the Traffic Management review process carried out at the Yatala Brewery. This candidate will be presented with the 2011 OhS Award during an upcoming FGl Board Meeting.

Foster’s is continually seeking to be the best in our industry for sales and marketing.

Foster’s Group Limited Business & Sustainability Review 2011 | 29

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responsible consuMption

Foster’s advertising subjected to pre-vetting:

number of upheld complaints against Foster’s advertising:

Investment in responsible consumption:

580 2 $1.95m

strategy/approach

Foster’s actively promotes a culture of responsible alcohol consumption through informing, educating and supporting our community. Our activities are guided by Foster’s Alcohol In the Community Policy, ensuring the promotion of responsible consumption is central to the marketing and selling of our products.

Marketing activities adhere strictly to the laws, standards and voluntary codes that apply in each region and messages are included on all packaging and advertising materials. responsible consumption and the Enjoy Responsibly program are part of our training and induction programs for all new employees.

We invest in programs and activities that promote a cultural shift in community attitudes to alcohol consumption and we contribute directly to organisations and initiatives that mitigate the potential negative impacts of alcohol misuse.

Foster’s continues to develop, launch and promote a range of lower alcohol products across our portfolio, providing greater choice to consumers.

We are committed to:

Being a responsible producer and marketer of alcohol beverages•

Promoting the responsible consumption and service of alcohol•

Minimising potential harm to consumers and our community as a result of consumption of our products •

A process of continuous improvement towards these goals•

2011 highlights

Developed awareness and education programs with our sporting partners•

launched ‘Know When To Declare’ campaign in partnership with Cricket Australia•

replaced the Enjoy responsibly logo with the DrinkWise logo, directing consumers to the DrinkWise website •

Continued to invest in the development and promotion of lower alcohol, calorie and carbohydrate products•

Continued to support alcohol harm minimisation initiatives through direct grants to community•

key indicators

2012 action plan

Continue engagement and support of DrinkWise Australia•

Maintain responsible marketing standards, ensuring all advertising and marketing materials reflect •

relevant codes and prevailing community standards

Develop appropriate awareness and education campaigns with our sporting partners•

Continue innovation in lower alcohol, calorie and carbohydrate products•

30 | Foster’s Group Limited Business & Sustainability Review 2011

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being a responsible producer and marketer

Foster’s product stewardship policies, standards and manuals cover the management of health, safety and environmental aspects associated with our products – including manufacturing sites, suppliers, storage and transport.

investMent in responsible consuMption

All Foster’s marketing accords with the mandatory and voluntary codes that exist in the markets where Foster’s brands are sold, and our marketing seeks to comply with the cultural, legal and ethical standards of the communities in which we operate. Foster’s ‘responsible Marketing’ key performance indicators are an integral part of our brand marketers’ roles.

Our responsibilities are shared by the external advertising and public relations agencies we engage on our advertising and promotions. An internal marketing approval process covers all consumer-facing materials (including sponsorship, packaging, point of sale, on-pack promotions, state specific promotions, etc). Performance evaluation is linked to compliance with all relevant codes.

In Australia, Foster’s complies with the self-regulatory Alcohol Beverages Advertising Code (ABAC). The Code includes clear prohibitions on marketing to minors and the depiction of excessive and irresponsible drinking. Copies of the ABAC and relevant Foster’s policies are available from www.fostersgroup.com. Foster’s frequently seeks guidance from the pre-vetters on early concepts to ensure campaigns meet community standards. Foster’s and its agency staff work closely with ABAC representatives to maintain an open dialogue and swiftly address any issues, routinely amending materials to incorporate pre-vetters’ feedback. Members of the Australian public made 10 complaints regarding Foster’s advertising in the year, two of these were upheld by the independent Advertising Standards Board or ABAC complaints process.

$ A

UD

(m

illio

ns)

2009 2010 2011

2,1

19,7

85

1,9

48

,05

3

2,2

89

,76

2

0

0.5

1.0

1.5

2.0

2.5

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promoting cultural change

DrinkWise – Building a safer drinking culture

Foster’s is the largest supporter of DrinkWise Australia, a not- for-profit, independent social change agency. Through social marketing campaigns and community based programs, DrinkWise is dedicated to building a safer drinking culture in Australia.

DrinkWise Australia’s activities are governed by a Constitution, with a Board consisting of six community representatives (drawn from health, law enforcement, communications and public policy fields) and six industry representatives. Under the Constitution, the Chair and the DrinkWise Australia Executive are required to be independent of the alcohol industry. Foster’s is represented on the DrinkWise Board by Foster’s Managing Director John Pollaers.

DrinkWise Australia has recently joined with The Sport Australia hall of Fame to develop the Under Your Influence campaign, focusing on the crucial role parents and other influential adults play as role models.

www.drinkwise.org.au

promoting responsible consumption and service of alcohol

Foster’s Enjoy Responsibly program has been in place since 2003. The program outlines a set of policies and behaviours that aim to ensure that all alcohol consumption is legal, informed and considered.

Legal – means within the law. This includes being of legal drinking age and abiding by any other applicable laws, for example having a blood alcohol content below the relevant limit when driving.

Informed – means informing yourself about the effects alcohol consumption may have on you. This includes understanding what constitutes a standard drink. It also means noting the information provided on the labels of the drinks you consume and monitoring your alcohol intake.

Considered – means asking yourself, “Is this really the right time for me to drink alcohol?” Considered drinking requires thinking carefully about the appropriateness of drinking. This could include taking account of your personal circumstances, obligations and commitments.

responsible enjoyment of alcohol is about balancing the enjoyment and benefits of drinking alcohol with the potential risks and harm that may arise from it – especially when it is misused.

For more information, see www.enjoy-responsibly.com

Standardised ‘unit content’ logos are also included on the Australian portfolio, making it easier for consumers to find alcohol content information and manage their alcohol consumption. The suite of logos was endorsed by all Australian governments through the Ministerial Council on Drugs Strategy.

responsible consumption and our people

In 2010, Foster’s introduced an updated responsible Enjoyment of Alcohol Policy for Australian employees. Building on the current training and education, the Policy sets high expectations on the behaviour of employees both at work and in their own time with regards to alcohol. Key messages around alcohol responsibility are regularly communicated to staff and are now embedded in the various health and well-being fairs held across our operations and offices.

responsible Service of Alcohol courses are available to sales, marketing and sponsorship staff who are provided with ongoing training and support to ensure compliance with advertising and other marketing related requirements. hospitality employees have implemented Enjoy responsibly recommendations and responsible Service of Alcohol guidelines into their standard event management practices.

responsible consumption and our sporting partners

All external partners commit to presenting alcohol in a mature, balanced and responsible manner. In particular, Foster’s has worked with the management of partner Australian sporting codes to ensure responsible alcohol consumption is communicated to teams and players through professional and amateur club structures. This is now reflected in our sports sponsorship agreements.

Foster’s & cricket australia ‘know when to declare’

This year Foster’s, together with its long-term sporting partner Cricket Australia, launched the ‘Know When to Declare’ campaign during the Boxing Day Test match in Melbourne.

All external partners commit to presenting alcohol in a mature, balanced and responsible manner.

32 | Foster’s Group Limited Business & Sustainability Review 2011

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DrinkWise Australia and its producer members have worked collaboratively to deliver a new consumer information initiative. The initiative has been developed to prompt consumers to think about their drinking and encourage them to ‘Get the Facts’ from the DrinkWise website which provides evidence-based information on alcohol.

The messages on the labels include:

‘Get the Facts’ •

‘Kids and alcohol don’t mix’•

‘Is your drinking harming yourself or others?’•

‘It is safest not to drink while pregnant’ •

Foster’s is updating its product labels with the DrinkWise logo and consumer information messages. The change began in July with Carlton Draught and Carlton Dry, and will replace the Enjoy responsibly logo as new packaging material is printed.

The label messages will be supported by a retail point-of-sale campaign, with educational materials provided to consumers in outlets where alcohol is purchased.

The labels link to the successful print and Tv campaigns run by DrinkWise making the new labels part of a multi-faceted education initiative.

Getting together for a beer is proud, positive part of our culture and these messages are another important step towards considered, informed consumption.

The campaign, recognised by the Federal Government in 2010 as an example of voluntary and collaborative responsible consumption promotion, reminds young Australians to take responsibility for their actions and not to be known as ‘that guy’ who is left embarrassed for having one too many with his mates.

The campaign included a 30 second Tv community service announcement featuring Australian fast bowler Mitchell Johnson and Channel 9 commentators Michael Slater and Tony Greig, together with outdoor billboards and direct communication from Cricket Australia to community cricket captains around the country, encouraging them to demonstrate the benefits of making the right decisions on and off the field.

The Know When To Declare message is clear – by all means enjoy a drink, but know your limits and know when to declare.

product innovation

Foster’s continued to deliver products to market that are lower in alcohol, carbohydrates and calories. We have backed this innovation with focused advertising and promotions behind products including vB Gold (mid-strength), Carlton MID (mid-strength) and Pure Blonde naked (low carbohydrate, mid-strength).

DRINKWISE LABELING INITIATIVE MESSAGE ON A BOTTLE

Case Study

Midstrengths VB Gold and Carlton MID

Foster’s Group Limited Business & Sustainability Review 2011 | 33

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energy, water & cliMate change

strategy/approach

Foster’s is reliant on a variety of natural resources and raw materials to produce our great beers, and we fully appreciate our responsibility to efficiently procure our inputs and effectively manage our outputs. In line with our Global Environment Policy commitments, we endeavour to embed environmental considerations into all we do.

Our environment strategy is based on five key elements:

Analysis of our key stakeholders and their needs•

Embedding environmental capability throughout our organisation•

Developing systems and processes to execute our strategic plan•

Articulating environmental goals that are relevant to our business•

Implementing objectives, projects and initiatives that deliver results•

2011 highlights

Foster’s Environmental Policy carried forward through the demerger and has maintained and initiated •

processes to consistently deliver Foster’s environmental objectives

Cascade Brewery’s main energy source transitioned from coal to natural gas, which resulted in •

a 31.95% improvement in efficiency in production

Our four year Energy and Water Efficiency Project was completed. In 2011, Abbotsford Brewery •

achieved an 8.28% improvement in water efficiency in production and Campbelltown achieved a 12.71% improvement in energy efficiency in production

Development of a new environmental training package, due for rollout in 2012•

key indicators

2012 action plan

Formalise and commence resource Efficiency Program to supercede Energy and Water Efficiency Project•

Adopt new performance targets for water, energy and greenhouse gas efficiency for 2012 and beyond•

roll out role specific, relevant environmental awareness training for employees•

Undertake a site based biodiversity evaluation•

Cumulative water efficiency performance against 10% reduction target: 2007 BASElInE

Cumulative energy efficiency performance against 10% reduction target: 2007 BASElInE

11.66% 5.13%year on year water efficiency improvement – 6.17%

year on year energy efficiency improvement – 0.39%

34 | Foster’s Group Limited Business & Sustainability Review 2011

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energy, water and cliMate change ManageMent

Foster’s takes an integrated approach to the management of energy, water and climate change considerations. We acknowledge the challenge posed by climate change and the need for action to avoid increasing the greenhouse gases in the earth’s atmosphere.

We have taken a number of steps to understand the full life cycle impacts of our products from a greenhouse gas perspective and implemented a number of steps to reduce our overall footprint. Our internal Energy and Water Efficiency Project Team works in conjunction with our site based health, Safety and Environment representatives to map our impacts and prioritise actions.

Continually improving the ways

in which we use our resources is

key to our approach to managing

operations. A continued focus on

energy and water management

and reducing carbon emissions

have resulted in a number of

achievements. In 2007 we set a

target to reduce energy and water

used in production of beer by

10% by 2011 on a per unit basis.

The target ensured we focused

on efficiency improvements within

our breweries and beverage plants.

In 2011, our energy efficiency

declined by 0.39% whilst water

efficiency improved by 6.17%.

We achieved a 5.13% and 11.66%

improvement for energy and water

efficiency respectively in the four

years since 2007. CUB’s Cameron Levick

and Tom Robinson.

Continually improving the ways in which we use our resources is key to our approach to managing operations.

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GH

G e

mis

sio

ns

(to

nn

es

CO

2e)

absolute greenhouse gas eMissions

13

12

10

8

6

4

2

0

2009 2010 2011

45,537

Beer & Beverages Scope 1

Beer & Beverages Scope 2

Absolute greenhouse emissions (All beer/beverages excl. Pacific and Bulmers)

note regarding exclusions. Our Pacific operations were still calibrating regular environmental reporting in 2011. As a result we are unable to include these sites for consistency purposes.

greenhouse gas

81,890

80,548

74,797

127,427

123,337

111,991

42,78937,194

5.13%Energy efficiency improvement achieved

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energy used by source in (gJ)

267,63527%

9,1450.9%

677,87070%

20,5242%

9250.1%

Electricity (GJ)

Natural Gas (Stationary & Mobile) (GJ)

Coal (GJ)

Diesel (Stationary) (GJ)

Other (LPG stationary & mobile, Petrol mobile) (GJ)

Total energy used in GJ

976,098

energy

This outcome has been achieved

in the face of declining production

volumes and already highly efficient

processes. Future efficiency gains,

particularly in water, are expected

to be marginal.

In 2012, we will develop new

environmental goals, objectives

and targets that build on our

prior achievement, reflect the

challenges facing our business

and continue to extend our

operations towards world class

environmental achievement.

biodiversity

Areas surrounding the beer businesses are deemed to be low risk from a biodiversity perspective. Our sites will undergo further evaluation to determine whether potential biodiversity impacts have been fully considered.

Accu

mu

late

d (

%)

vari

ati

on

perForMance against 2007 baseline

0

2008 2009 2010 2011

2

4

6

10

8

12

(excl. Pacific and Bulmers)

11.11%

4.56%

5.50% 5.13%

113.758

En

erg

y/u

nit

of

pro

du

cti

on

(M

J/L

)

cub energy eFFiciency

0

2008 2009 2010 2011

30

60

90

120

150

(excl. Pacific and Bulmers)

113.319106.587

114.443

In 2012, we will develop new environmental goals and targets that build on our prior achievements.

Foster’s Group Limited Business & Sustainability Review 2011 | 37

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perForMance against 2007 baseline

Accu

mu

late

d (

%)

vari

ati

on

0

2008 2009 2010 2011

3

6

9

15

12

18

(excl. Pacific and Bulmers)

14.83%

5.64%5.85%

11.66%

Wate

r/u

nit

of

pro

du

cti

on

(L

/L)

Foster’s water eFFiciency

2008 2009 2010 20110

1.6

1.2

0.8

0.4

2.0

2.4

2.8

3.2

(excl. Pacific and Bulmers)

2.602

2.882 2.8762.699

water used by source in (Fl)

water

Mains/Municipal

Surface Water – Rivers/Creeks

Groundwater Bore/Well

Total water used in ML

2,213,91395.8%

6.0650.2%

95.5464%

2,315,524

In October 2010, Cascade replaced two coal and two standby diesel fired boilers with three natural gas boilers, halving the site’s emissions.

38 | Foster’s Group Limited Business & Sustainability Review 2011

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CASCADE’S CONTINUING ENVIRONMENTAL JOURNEY

Case Study

In 2008, Cascade Brewery established itself as a world leader in environmentally responsible brewing by launching Cascade Green, a 100% carbon offset beer. Now known as Cascade Pure, the ongoing work to maintain Australian Government carbon neutral certification requires a focus on emissions reduction efforts throughout the beer making process.

In October 2010, Cascade replaced two coal and two standby diesel fired boilers with three natural gas boilers, approximately halving the site’s emissions. Other benefits include:

reduction in the effluent discharge and therefore in water •

usage by eight megalitres to the sewer system due to no longer washing the coal ash.

reduction in road wear and tear and carbon emissions by •

elimination of road transport for coal: estimated at 60,000km pa travelled by 30 tonne coal trucks.

Elimination of coal ash waste and the transportation of waste •

for disposal.

The capacity to use biogas, a renewable energy source produced •

from our planned waste water treatment facility.

co2 discharge to the atmosphere

In november 2010, a 12 tonne liquid carbon dioxide storage •

tank was installed which allowed the additional collection of five tonnes of liquid carbon dioxide above our old storage capacity. A total of 77 tonnes has been collected since the tank was commissioned in December 2010. The carbon dioxide was previously vented to atmosphere.

Our aim is for the Brewery to recover 100% of the carbon •

dioxide produced during the fermentation process, which will eliminate the need to purchase additional carbon dioxide and improve our carbon footprint.

To achieve this increase, we are upgrading our CO• 2 collection system.

effluent

Foster’s is planning the installation of a day holding tank to •

neutralise trade waste before discharge to the sewerage system, which will provide Cascade Brewery with a valuable renewable energy source. Our planned waste water treatment facility will enable biogas generation on site via the new natural gas/biogas boilers. It has been estimated that between 10–15% of Cascade’s energy requirements may be supplied from biogas.

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strategy/approach

We continually look to eliminate wastes from our operations, in line with our Global Environment Policy that was launched in 2009. Additionally, we are committed to reducing the generation of wastes from across our value chain through active discussions with our supplier base and working to reduce the impact our post-consumer packaging waste has on the environment through continued involvement with various industry bodies that play an active role in addressing these issues.

2010 highlights

More accurate collection of waste data across production sites•

Commenced inclusion of waste management requirements in selected supplier agreements•

key indicators

operational waste

2012 action plan

Adopt performance targets to operational waste for the 2012 financial year and beyond•

Develop a Waste Management Program for all Foster’s sites•

Total operational waste (‘000 tonnes):

Waste recycled or reused:

Waste to landfill:

103.65 94.46% 5.54%

Good waste management is an integral component of a comprehensive environmental management system and often leads to significant cost savings and efficiency gains.

40 | Foster’s Group Limited Business & Sustainability Review 2011

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waste types

Foster’s has categorised 22

different waste streams, 16 of

which can be recycled or re-

used. In 2011, we increased the

percentage of waste we reused

or recycled at our Australian

operational sites to 94.46%.

The Foster’s waste streams

are grouped as follows:

disposal

General Waste to landfill•

Septic Waste•

Sludges, grease trap, biosolids, •

activated carbon

hazardous Waste (to disposal)•

Fluorescent lights•

Process Waste•

organic to reuse or recycle

Spent Grain•

Spent Yeast•

Spent Fruit•

general reuse or recycle

Co-Mingled recycling•

Glass•

Wood•

Paper/Cardboard•

Steel•

Aluminium•

PET Plastic•

hDPE Plastic•

lPDE Plastic•

Mixed Plastics•

Batteries•

hazardous Waste (to recycling)•

Good waste management is an integral component of a comprehensive environmental management system and often leads to significant cost savings and efficiency gains. While we continue to dispose of our wastes responsibly, we are also focused on eliminating waste generated.

post consumer waste

We have continued our commitment to the Australian Packaging Covenant, working with industry to reduce post consumer waste. The Covenant establishes a framework for the effective life cycle management of consumer packaging and paper products that will be delivered through a collaborative approach.

Companies, Government Agencies and Industry Associations which sign the Covenant commit to responsibilities that contribute to achieving the Covenant Performance Goals and KPIs. Foster’s is also further integrating the APCs Sustainable Packaging Guidelines into our new product development process and progress on reducing post consumer waste will continue in 2012. F

or p

erso

nal u

se o

nly

product stewardship

strategy/approach

Foster’s has a comprehensive approach to the environmental, quality, health and safety aspects of its product range.

This covers all of our manufacturing sites, suppliers, storage and transport and is overseen by the Company’s Environmental, Quality, Supply and Procurement management teams.

The following policies, standards and manuals cover the management of these areas:

Procurement Sustainability• Program

health and Safety Policy•

Environment Policy•

Food Safety and Quality Management System (FSQMS)•

Food Safety and Quality Manual (FSQM)•

Customer Supply Chain Manual•

2011 highlights

Obtaining a satisfactory sustainability standard across criteria covering greenhouse gas, energy, •

water, and production waste was made a pre-condition for supplying to Foster’s

Environmental life Cycle Assessment via PIQET was incorporated into many of the packaging nPD •

proposals considered via the Packman packaging reduction project

The comprehensive assessment of sites against compliance with the FSQM continued•

key indicators

2012 action plan

Further develop the Procurement Sustainability• program to attempt to establish the carbon intensity of our top suppliers and co-develop a program to mitigate this intensity

To fully implement the requirements of Foster’s SPG plan and assess all existing packaging against •

the SPG and improve the nPD process to ensure the same happens for all new packaging proposals

Continue to monitor and report on product quality targets•

reduction in Product Complaints in year:

reduction in Product Complaints: 2008 BASElInE

All Foster’s Sites Audited against FSQM:

Increase in packaging per product ratio in 2010 year:

24.3% 38.9% 2%

42 | Foster’s Group Limited Business & Sustainability Review 2011

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Food and saFety Quality

The Food Safety and Quality Manual (FSQM), launched in 2008, continues to advise the management of product health, safety and quality. The manual sets out expectations for our sites to ensure we deliver safe, high quality and best value products.

In 2011, Foster’s introduced a new ‘Food Safety & hygiene’ training program. The program was rolled out across Foster’s sites in Fiji and Samoa.

product liFestyle

Product stewardship refers to the integration and active management of the health, safety, quality and environmental impacts of product lifecycles. We assess these impacts and our compliance to standards via our own Food Safety and Quality Management System (FSQMS), Procurement Sustainability Program, and Customer Supply Chain Manual. Monitoring and reporting of product quality targets was undertaken regularly by the Supply Management team.

our suppliers

Foster’s seeks to embed sustainability in supplier management as follows:

Strategic sourcing/request •

for Proposal (rFPs)

Category management•

Foster’s Ethical Procurement Code•

strategic sourcing

In 2011, sustainability criteria were built into Foster’s new procurement system, ArIBA. All suppliers now have to pre-qualify in ArIBA before being considered to tender.

Foster’s also requires each request for Tender include sustainability related criteria tailored to the goods and services of each potential supplier. These criteria build on the those included in ArIBA but still pertain to reducing greenhouse gas emissions, energy

use, water use, waste production and in complying with the Foster’s Ethical Procurement Code. These additional sustainability criteria are weighted at approximately 10% to 11% of the total score available to a supplier in a selection process.

category Management

Foster’s Procurement Category Managers are expected to incorporate discussions on sustainability with suppliers about activities being undertaken to minimise greenhouse gasses, energy use, water use, waste production and their compliance with Foster’s Ethical Procurement Code standards.

A trial was also held in 2011 with four major suppliers to attempt to determine their greenhouse gas, energy, water and production waste footprints per unit of production.

ethical procurement code

Foster’s Ethical Procurement Code, used in the selection and management of its suppliers, covers:

non-use of forced and •

child labour;

ensuring employee health •

and safety;

making sure working conditions, •

hours and benefits comply with international standards; and

freedom of association and •

an environment free from discrimination.

The Code also requires suppliers to have environmental management systems in place.

custoMer satisFaction

We measure two types of complaints – critical and non-critical. ‘Critical’ include product defects or issues that have the potential to cause harm or injury to people or risks to Foster’s business. ‘non-critical’ are those that are not deemed to be reportable but still measured and reported.

ALL FOSTER’S SUPPLIERS PRE-qUALIFIED ON SUSTAINABILITY CRITERIA

Case Study

Over the last year, Foster’s implemented the electronic ARIBA procurement tool. As part of this project, sustainability criteria covering greenhouse gas emissions, energy, water, production waste and supply chain social standards were built into ARIBA.

All suppliers now have to pre-qualify in ArIBA against these criteria before being considered as suitable to tender for any of Foster’s supply requirements. This process means that no company can supply to Foster’s unless they obtain a satisfactory standard against the ArIBA sustainability criteria.

packaging

Foster’s has been a signatory of the national Packaging Covenant (nPC) for nPC1 and nPC2. In 2011, we continued our involvement in packaging stewardship by beginning implementation of the Australian Packaging Covenant (APC) Sustainable Packaging Guidelines (SPG), in particular examining how to embed the PIQET life Cycle Assessment into Australian new Product Development process.

In compliance with its APC obligations Foster’s submitted an interim plan (pre-demerger) covering the manner in which it would implement the SPG which included further integration of PIQET assessment of packaging.

Foster’s Group Limited Business & Sustainability Review 2011 | 43

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coMMunity contribution

strategy/approach

At Foster’s, we believe beer holds a unique place in our communities, as ordinary people come together to raise a beer in hope, in shared values and in friendship.

We recognise that beer is a low alcohol drink and a great part of our Australian way of life.

We also believe in contributing to communities throughout Australia, in particular communities close to where we live and work and those experiencing social disadvantage and financial hardship.

This year our in-kind support has enabled many grassroots organisations to achieve their fundraising goals. Our financial contributions have enabled charity groups to achieve positive social impacts and our people have demonstrated our community values by giving their time and energy to charitable causes.

2011 highlights

launch of Cascade Walking Track in hobart, Tasmania•

vB raise A Glass Appeal raised $1.2million, for rSl and legacy welfare programs•

Continuation of long-term partnership with red Dust role Models•

Concluding round of community grants, delivering $900,000 to community projects•

key indicators

2012 action plan

Sustained employee engagement in the community •

Ongoing commitment to develop wellness and responsible consumption initiatives •

Development of consumer-facing community initiatives•

Total Community Investment:

Employee volunteer hours:

Community contribution directed to wellness programs:

$7.1m 1,266 85%

44 | Foster’s Group Limited Business & Sustainability Review 2011

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coMMunity engageMent

cascade walking track

The Cascade Brewery’s Walking Track was officially launched in February 2011 by the lord Mayor of hobart, rob valentine. Built on land located behind the Brewery and Cascade visitor’s Centre, the 2.2km track is a collaboration with Conservation volunteers (CvA) and the hobart City Council.

The track enables the continuation of existing tracks and trails in hobart, giving locals and visitors the opportunity to walk from hobart’s waterfront to the summit of Mt Wellington. As part of this innovative partnership, Foster’s invested $91,000 in the track’s development over two years.

The track includes a stone bridge, dedicated to Cascade founder Peter Degraves. Conservation volunteers coordinated more than 7,000 volunteer hours to construct the track, which has been designed to give walkers the best experience while conserving the track’s natural and pristine environment.

The Cascade Walking Track launch with Cascade’s Max Burslem, volunteer Sabine Borfis and Hobart Lord Mayor Rob Valentine.

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red dust role Models

This year, Foster’s continued to

build on its seven year partnership

with red Dust role Models – a

health promotion charity operating

in remote indigenous communities

in the northern Territory. nineteen

Foster’s employees visited the

remote community of Kintore over

a period of 6 months to volunteer

in the school, the broader

community and to take part in a

cultural exchange program.

In collaboration with red Dust, Foster’s also funded the filming of the stories of the Pintubi people of Kintore. The film, which recognises the importance of community and cultural diversity, will be launched in late 2011 and serve as an educational resource for the Kintore community.

vb raise a glass appeal

In its third year, the vB raise A Glass Appeal raised $1.2 million on Anzac Day 2011 in support

of serving and ex-service men and women of the Australian Defence Forces (ADF) and their families.

Developed in 2009 by the rSl national Executive, the legacy Coordinating Council and vB, the Appeal provides funding for practical and emotional assistance to serving and ex-service men and women and their families.

The 2011 Appeal was led by Corporal Mark Donaldson vC. Donaldson, a former Junior legatee, pledged his support to the raise A Glass Appeal by sharing his story. The son of a veteran and family beneficiary of legacy, Donaldson understood firsthand the ability of the raise A Glass Appeal to make a difference.

A series of television commercials featuring Corporal Mark Donaldson vC were launched to raise awareness of the Appeal and to encourage the public to donate to the cause. Many pubs, clubs and liquor stores around Australia showed their support for the Appeal, with vB installing donation boxes at hundreds of venues around Australia.

Community engagement

responsible consumption

Employee involvement

$000 AUD 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000

coMMunity investMent by activity – year-on-year

0

$4,519,490

4,500

$1,948,053

$238,344

A game of hockey with Red Dust visitors.

2009 2010 2011

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total coMMunity investMent (InC. MAnAGEMEnT COSTS)

0

1,000

2009 2010 2011

$7,

08

7,5

92

$7,

109

,57

1

$6

,53

5,1

40

$0

00

AU

D 2,000

3,000

4,000

5,000

6,000

7,000

8,000

$1,948,05329%

$238,3444%

$4,519,49067%

coMMunity investMent by activity 2011

vB kick started the fundraising

by contributing $1 million to the

Appeal, with one hundred per

cent of the money raised going

to the rSl and legacy. A social

return on investment study on

the 2009 raise A Glass program

demonstrated the Appeal

provided a community return

of $3.75 for every $1 invested.

Flood, sweat and cheers

Foster’s donated 4000 cartons of Great northern beer to hard working State Emergency Service (SES) and rural Fire Service volunteers to say thank you for their efforts in helping Queenslanders throughout the 2011 flood disaster.

Foster’s also despatched 9,000 cartons of Torquay water (216,000 bottles) to the flood-affected

communities west of Brisbane, which were left without drinking water at the height of the flood.

Overall Foster’s committed $500,000 to support Queensland and victorian flood relief efforts, including direct support to affected employees, customer assistance, product donation and a contribution to the Premier’s Appeal and the red Cross.

Community engagement Responsible consumption Employee involvementIncludes community program delivery costs (2011: $403,683)

The VB ‘Raise A Glass’ Appeal raised $1.2 million on Anzac Day 2011.

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strategy/approach

We recognise the importance of engaging suppliers, customers, employees and other stakeholders to promote a more sustainable future. Achieving real improvement in the sustainability of our business takes more than just improving our own activities.

Through issue and industry leadership, by advocating change and by working with the many stakeholders who form part of our broader operating environment, we strive to improve overall sustainability outcomes.

We look to influence change by engaging and motivating our people, working with our suppliers to drive improvements, and understanding and influencing our marketplace, our customers and peers.

2011 highlights

relaunched our first carbon neutral beer ‘Cascade Pure’ under the new national Carbon Offset Standard, •

an Australian Government initiative

Championed the DrinkWise consumer messaging campaign, commencing a roll out to all drink containers•

Elevated sustainability criteria to pre-qualifier status for all suppliers•

Maintained Foster’s position as a leader in corporate responsibility•

Increased knowledge sharing and participation in external sustainability forums•

key indicators

leadership & advocacy

2012 action plan

Identify appropriate corporate responsibility benchmarking program for future reference•

Increase knowledge sharing and participation in external sustainability forums•

renew and improve Foster’s sustainability strategy•

Shared Knowledge with industry partners:

Maintained inclusion on FTSE 4Good Index:

Continued voluntary offset of tools of trade vehicles and air travel:

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a sustainable workplace and supply chain

Building on efforts from previous years, in 2011 we continued to provide specific training for employees on key areas of sustainability. The process is managed by functional and subject matter experts responsible for the policy, management and delivery of programs and priorities.

Importantly, our own internal standards are now being extended to our suppliers. Covered in more detail in the Product Stewardship section of this report, our approach to suppliers now includes compulsory consideration of financial, capability and sustainability criteria along with the requirements of our Ethical Procurement code.

sharing our knowledge and resources with industry partners and not-For-proFit organisations

We are an active contributor to, or participant on, a number of relevant industry bodies, including:

The Australian Packaging •

Covenant (signatory)

The Sustainable Agricultural •

Initiative Platform, Australia (Foster’s President in 2011)

DrinkWise•

The london Benchmarking •

Group on community investment, Australia (Foster’s Chair in 2011)

State and federal branches of •

the Australian hotel Associations

The Brewers Association of •

Australia and new Zealand

greenFleet

Foster’s contributed $95,027 to Greenfleet in 2011, with a total of $356,732 since we began supporting them in 2006. Our contribution has resulted in the planting of 125,953 trees, which was mitigated 35,004 tonnes of CO2e.

$95,027Foster’s contribution to GreenFleet in 2011

BIRCHIP CROPPING GROUP

Case Study

Foster’s, via its association with SAI Platform Australia, part funded social research into the resilience of farming families in dealing with the effects of climate risk. It follows previous work undertaken in 2007 and 2008, and will significantly extend the knowledge of social issues over time.

Through interviews with 60 farm families the research will identify factors to enhance resilience and social sustainability for agricultural and rural families and communities. If the critical drivers (internal and external) are known, it supports those with an interest in social sustainability in better targeting their programs to enhance effectiveness. The identification of drivers of resilience and social sustainability will inform initiatives to strengthen farm families and communities.

The research will explore the experiences, decisions, adaptation efforts, resilience and needs of farming families in the Wimmera Southern Mallee region (victoria).

We look to influence change by engaging and motivating our people.

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priority action

PEOPLE & SAFETY re-launch CUB and implement program to embed new CUB identity and values.

Deliver Performance Diagnostic program to build high performance culture.

realign incentive programs to drive high performance outcomes.

Build targeted talent management, development and retention programs to build succession.

Implement comprehensive Sales Capability program across all sales functions.

Complete the mechanical and/or electrical upgrade of remaining packing machines across the business.

Continuation of the implementation of Foster’s “best practice” Ammonia Management Guidelines.

Implementation of action plans across the business to control the key traffic management hazards associated with mobile plant/pedestrian interaction and truck loading/un-loading activities.

Development of a more centralised Wellbeing Program for implementation across the business.

RESPONSIBLE CONSUMPTION

Continue engagement and support of DrinkWise Australia.

Maintain responsible Marketing standards, ensuring all advertising and marketing materials reflect relevant codes and prevailing community standards.

Develop appropriate awareness and education campaigns with our sporting partners.

Continue innovation in lower alcohol, calorie and carbohydrate products.

ENERGY, WATER & CLIMATE CHANGE

Formalise and commence resource Efficiency Program to supersede Energy and Water Efficiency Project.

Adopt new performance targets for water, energy and greenhouse gas efficiency for 2012 and beyond.

roll out role specific, relevant environmental awareness training for employees.

Undertake a site based biodiversity evaluation.

OPERATIONAL WASTE

Adopt performance targets to operational waste for the 2012 financial year and beyond.

Develop a waste management program for all Foster’s sites.

PRODUCT STEWARDSHIP

Further develop the Procurement Sustainability Program to attempt to establish the carbon intensity or our top suppliers and co-develop a program to mitigate this intensity.

To fully implement the requirements of Foster’s Sustainable Packaging Guidelines (SPG) plan and assess all existing packaging against the SPG and improve the nPD process to ensure the same happens for all new packaging proposals.

Continue to monitor and report on product quality targets.

COMMUNITY CONTRIBUTION

Sustained employee engagement in the community.

Ongoing commitment to develop wellness and responsible consumption initiatives.

Development of consumer-facing community initiatives.

LEADERSHIP & ADVOCACY

Identify appropriate corporate responsibility benchmarking program for future reference.

Increase knowledge sharing and participation in external sustainability forums.

renew and improve Foster’s Sustainability Strategy.

2012 action plan

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gri indeX

The Global reporting Initiative (GrI) provides applicable guidelines that set out economic, social, and environmental indicators for organisations to report against. Foster’s has prepared the 2011 Sustainability report in line with these guidelines. This year Foster’s has reported against many of the core GrI indicators, and a number of additional indicators that are material to our business. The disclosures we make in the report are in line with GrI’s “B” application level. The table below provides the page reference for each of the performance indicators that have been used to prepare this year’s report. A complete index of the guidelines G3.1 including the Profile Disclosures, Management Disclosures and an explanation of the core indicators not reported against can be found at www.fostersgroup.com

report section gri indicator group gri indicators page reFerence

SUSTAINABILITY DATA AND POLICY SNAPSHOT

Economic Indicators EC1 10 & 21 & 22

labour Practices and

Decent Work Indicators

lA13 26-29

GOVERNANCE Social Indicators SO5 23

RESPONSIBLE CONSUMPTION

Economic Indicators EC8 44-47

Social Indicators SO1 26-29 & 30-33 &

44-47

Product responsibility

Indicators

Pr1, Pr2, Pr3,

Pr6, Pr7

30-31 & 42-43, 30,

30-31, 30-31, 30

PEOPLE & SAFETY Economic Indicators EC3 28

labour Practices and

Decent Work Indicators

lA1, lA2, lA3,

lA4, lA7, lA8,

lA11, lA13

26-27, 26-27, 28,

26-27, 26,28, 28,

26-27

human rights Indicators hr5, hr6, hr7 42-43,42-43,42-43

Social Indicators SO3 23 & 28-29

ENERGY, WATER & CLIMATE CHANGE

Economic Indicators EC2 35

Environmental Indicators En3, En4, En5,

En6, En8, En14,

En16, En17,

En18, En26

37, 37, 37, 34-35,

34-37, 36, 36, 34-37

OPERATIONAL WASTE

Environmental Indicators En22, En27 40-41, 42-43

PRODUCT STEWARDSHIP

Economic Indicators EC9 44-47 & 48-49

Environmental Indicators En26, En27 34-37 & 40-41 &

42-43, 42-43

human rights Indicators hr2 43

Product responsibility

Indicators

Pr1, Pr3, Pr5 30-31 & 42-43,

30-31, 42

COMMUNITY CONTRIBUTION

Economic Indicators EC8 44-47 & 48-49

Environmental Indicators En13 45

Social Indicators SO1 44-47

LEADERSHIP & ADVOCACY

Social Indicators SO5 48-49

Foster’s has prepared the 2011 Sustainability Report in line with the GRI guidelines.

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annual general Meeting

The Annual General Meeting of Foster’s Group limited will be held on Tuesday 25 October at 10:30am at the Sydney recital Centre.

internet

www.fostersgroup.com

2011 business and sustainability review

This Business and Sustainability review has been prepared as a general business overview and does not, and should not be expected to, provide a detailed understanding of Foster’s Group limited’s financial performance, financial position or financing or investing activities. Financial commentary within this review has been derived from the Foster’s Group limited Annual report for the year ended 30 June 2011.

A copy of the Foster’s Group limited Annual report is available from the Foster’s website at: www.fostersgroup.com or please contact: investor.relations@fostersgroup.com or the registered office via the address details provided.

registered oFFice

australia and new Zealand

Foster’s Group Limited 77 Southbank Boulevard Southbank victoria 3006

Tel +61 3 8626 2000 Fax +61 3 8626 2002

ABn: 49 007 620 886

inForMation & contacts

annUal report2011

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FOSTER’S BRANDS

AuSTRAliAN icONS

VBFoster’s LagerCarlton DraughtCarlton DryCarlton Dry Fusion LimeCarlton Dry Fusion LemonCarlton Dry Fusion Black Carlton ColdMelbourne Bitter

REDucED AlcOhOl BEERS

Carlton MidVB GoldFoster’s LightIcePure Blonde NakedCascade Premium LightPower’s Gold

iNTERNATiONAl BRANDS

Asahi Super DryCarlsbergCorona ExtraHoegaardenKronenbourg 1664Leffe BlondeStella Artois

REgiONAl BEERS

Cascade DraughtCascade BitterGreat Northern Brewing Co. Crisp LagerSheaf StoutPower’s BitterReschsAbbotsford Invalid StoutKB

PREmium AuSTRAliAN BEERS

Crown LagerPure BlondePure Blonde WhiteCascade Pale AleCascade BlondeCascade StoutCascade PureCascade Premium LagerCascade First Harvest

cRAFT BEERS

Matilda Bay RedbackMatilda Bay Beez NeezMatilda Bay Bohemian PilsnerMatilda Bay Dog Bolter Dark LagerMatilda Bay Alpha Pale AleMatilda Bay Fat YakMatilda Bay Big Helga

ciDERS

Strongbow OriginalStrongbow SweetStrongbow DryStrongbow ClearStrongbow PearMercury OriginalMercury SweetMercury DryBulmers OriginalBulmers PearMatilda Bay Dirty Granny

SPiRiTS

Black Douglas ScotchCougar BourbonKarloff VodkaContinental Liqueurs

NON AlcOhOl

Torquay Spring WaterCascade Apple IsleCascade Ginger BeerCascade Real JuicesCascade Traditional Soft DrinksCascade Ultra CPerrier Mineral Water

285ML

FULL STRENGTH

4.8% ALC./VOL

BEER30ML

HIGH STRENGTH

40% ALC./VOL

SPIRITS375ML

FULL STRENGTH

5% ALC./VOL

SPIRIT PRE-MIX

RESPONSiBlE ENJOYmENT OF AlcOhOl WHAT IS A STANDARD DRINK?

We’re united by the bond only a beer can create and a belief that if a whole lot more people raised a beer in friendship, the world would be a better place.

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BUSINESS & SUSTAINABILITY REVIEW2011

www.fostersgroup.com

Foster’s Group usesNational CarbonOffset StandardCertified ENVI Recycled 50/50Carbon Neutral Paper An Australian Government Initiative

BU

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ES

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SU

STA

INA

BIL

ITY

RE

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FO

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’S G

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LTD

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