SABMiller plc JSEALPHA CODE: SAB ISIN CODE: SOSAB ISIN CODE: GB0004835483
Annual Financial Report
SABMiller plc has today submitted a copy of the 2013 Annual Report and Accounts, Notice of the 2013 Annual General Meeting and Shareholder Proxy Form (UK) to the National Storage Mechanism and they will shortly be available for inspection at www.hemscott.com/nsm.do.
The Annual Report and Notice of Annual General Meeting are also available on the Company’s website www.sabmiller.com
SABMiller plc’s Annual General Meeting will be held on Thursday, 25 July 2013 at the InterContinental London Park Lane, One Hamilton Place, Park Lane, London W1J 7QY.
A condensed set of SABMiller’s financial statements and information on important events that have occurred during the financial year and their impact on the financial statements were included in SABMiller’s preliminary results announcement released on 23 May 2013. That information, together with the information set out below, which is extracted from the 2013 Annual Report, constitutes the material required by Disclosure and Transparency Rule 6.3.5 to be communicated to the media in unedited full text through a Regulatory Information Service. This announcement is not a substitute for reading the full 2013 Annual Report. Page numbers and cross-references in the extracted information below refer to page numbers and sections in the 2013 Annual Report.
PRINCIPAL RISKS AND UNCERTAINTIES (page 16 & 17)
Principal risks Focused on managing our risks The principal risks facing the group and considered by the board are detailed below. The group’s well-developed risk management process is described in the corporate governance section while financial risks are discussed in the Chief Financial Officer’s review and in note 22 to the consolidated financial statements.
Principal risk Context Specific risks Possible Mitigation Associated we face impact strategic priorities Industry The global - Failing to Lower growth - Potential - Creating a consolidation brewing and participate in rate, transactions are balanced beverages value-adding profitability subject to rigorous and industry is transactions. and financial analysis. Only attractive expected to - Paying too returns. opportunities with global continue to much to potential to create spread of consolidate. acquire a value are pursued. businesses. There will business. - Proven integration - Constantly continue to be - Not processes, raising the opportunities implementin procedures and profitability
to enter g integration practices are of local attractive plans applied to ensure businesses, growth successfully. delivery of sustainably. markets, to - Failing to expected returns. realise identify and - Activities to deliver synergy develop new synergies and benefits from approaches leverage scale are integration to market in place, and to and category monitored closely leverage our entry. and continuously global scale. enhanced. - Developing non- traditional capabilities to enter and grow profitably in new markets. Change in Consumer - Failing to Market - Ongoing evaluation - Developing consumer tastes and develop and positions of our brand strong, preferences behaviours ensure the come under portfolios in every relevant are constantly strength and pressure, market to ensure brand evolving, and relevance of market that they target portfolios at an our brands opportunities current and future that win in increasingly with are missed, opportunities for the local rapid rate. consumers, lower top line profitable growth. market. Competition shoppers and growth rates - Building our brand - Constantly in the customers. and equities through raising the beverage - Failing to profitability. innovation and profitability industry is continue to compelling of local expanding and improve our marketing businesses, becoming commercial programmes. sustainably. more capabilities - Ensuring we have - Leveraging fragmented, to deliver deep our skills and complex and brand understanding of global scale. sophisticated. propositions changing consumer which and industry respond dynamics in key appropriately markets, enabling to changing us to respond consumer appropriately to preferences. issues which may impact our business performance. - Continued enhancement of the SABMiller Marketing Way which sets out the best practice approach for our
commercial processes. - Focus on monitoring and benchmarking commercial performance and developing the critical commercial capabilities that are required in order to win in local markets. Management We believe - Failing to Lower long- - Further develop - Developing capability that our identify, term the group’s strong, people are develop and profitable leadership talent relevant our enduring retain an growth. pipeline through brand advantage appropriate our Global Talent portfolios and therefore pipeline of Management that win in it is essential talented model and the local that we managers for strategic people market. develop and the present resourcing. - Constantly maintain and future - Sustaining a strong raising the global needs of the culture of profitability management group. accountability, of local capability. empowerment and businesses, personal sustainably. development. - Leveraging - Standardisation of our skills and key processes and global scale. best practices across the group through the roll- out of the SABMiller Ways. Regulatory With the - Regulation Lower growth, - Rigorous - Creating a changes debate over places profitability adherence to the balanced alcohol increasing and reduced principle of self- and consumption restrictions contribution regulation backed attractive intensifying in on the to local by appropriate global many availability communities policies and spread of markets, the and in some management businesses. alcohol marketing of countries. review. - Developing industry is beer. - Constructive strong, coming under - Tax and engagement with relevant increasing excise government and all brand pressure from changes external portfolios national and cause stakeholders on that win in international pressure on alcohol-related the local regulators, pricing. issues and working market. NGOs and with them to - Constantly
local address the raising the governments. harmful use of profitability alcohol. of local - Investment to businesses, improve the sustainably. economic and social impact of our businesses in local communities and working in partnership with local governments and NGOs. Acquisition Following the - Failing to Lower growth - Embedding of the - Creating a of Foster’s Foster’s deliver rates and SABMiller Ways (its balanced acquisition, integration profitability. processes, systems and the group has objectives Damage to the and tools) attractive committed to and group’s throughout the global delivering a commercial reputation for Foster’s business. spread of turnaround and strong - Ongoing businesses. plan with operational commercial monitoring of - Developing specific and excellence capability and progress versus the strong, communicate targets for making integration plan, relevant d financial communicate value-creating including frequent brand value d as part of acquisitions. and regular portfolios creation. the tracking of key that win in turnaround performance the local plan. indicators. market. - Failing to - Constantly achieve the raising the synergy and profitability cost saving of local commitment businesses, s of the sustainably. transaction. - Leveraging our skills and global scale. Delivering The group - Failing to Increased - Senior leadership - Constantly business continues to derive the programme closely involved in raising the transformatio execute a expected costs, delays in monitoring profitability n major benefits from benefit progress and in of local business the projects realisation, making key businesses, capability currently business decisions. sustainably. programme under way. disruption, - Mechanisms in - Leveraging that will - Failing to reduced place to track both our skills and simplify contain competitive costs and benefits. global scale. processes, programme advantage in - Rigorous reduce costs costs or the medium programme and allow ensure term. management and local execution is governance management in line with processes with
teams to planned dedicated focus more timelines. resources and clear closely on accountability. their markets.
RELATED PARTY TRANSACTIONS
Note 32 to the consolidated financial statements on page 160 details the following related party transactions.
32. Related party transactions a. Parties with significant influence over the group: Altria Group, Inc. (Altria) and the Santo Domingo Group (SDG)
Altria is considered to be a related party of the group by virtue of its 26.8% equity shareholding. There were no transactions with Altria during the year.
SDG is considered to be a related party of the group by virtue of its 14.0% equity shareholding in SABMiller plc. There were no transactions with SDG during the year. During the year ended 31 March 2012 the group made donations of US$33 million to the Fundación Mario Santo Domingo, pursuant to the contractual arrangements entered into at the time of the Bavaria transaction in 2005, under which it was agreed that the proceeds of the sale of surplus non-operating property assets owned by Bavaria SA and its subsidiaries would be donated to various charities, including the Fundación Mario Santo Domingo. No donations were made to the Fundación Mario Santo Domingo during the year ended 31 March 2013. At 31 March 2013 US$nil (2012: US$nil) was owing to the SDG. b. Associates and joint ventures
Details relating to transactions with associates and joint ventures are analysed below.
2013 2012 US$m US$m Purchases from associates1 (227) (214) Purchases from joint ventures2 (97) (86) Sales to associates3 46 39 Sales to joint ventures4 25 28 Dividends receivable from associates5 113 150 Dividends received from joint ventures6 886 896 Royalties received from associates7 27 13 Royalties received from joint ventures8 2 2 Management fees, guarantee fees and other recoveries received 17 24 from associates9 (2) (1) Management fees paid to joint ventures10 21 - Sale of associate to joint venture 11
1 The group purchased canned Coca-Cola products for resale from Coca-Cola Canners of Southern Africa (Pty) Limited (Coca-Cola Canners); inventory from Distell Group
Ltd (Distell) and Associated Fruit Processors (Pty) Ltd (AFP); and accommodation from Tsogo Sun Holdings Ltd (Tsogo Sun), all in South Africa. 2 The group purchased lager from MillerCoors LLC (MillerCoors). 3 The group made sales of lager to Tsogo Sun, Delta Corporation Ltd (Delta), Anadolu Efes Biracılık ve Malt Sanayii A¸S (Anadolu Efes), and Distell, and in the prior year also to Empresa Cerve jas De N’Gola SARL (E CN), and Société des Brasseries et Glacieres Internationales and Brasseries Internationales Holding Ltd (Castel) . 4 The group made sales to MillerCoors and in the prior year also to Pacific Beverages Pty Ltd. 5 The group had dividends receivable from Castel of US$21 million (2012: US$60 million), Coca-Cola Canners US$11 million (2012: US$6 million), Distell US$21 million (2012: US$22 million), Tsogo Sun US$33 million (2012: US$41 million), Delta US$12 million (2012: US$3 million), International Trade and Supply Limited $14 million (2012: US$6 million), Grolsch (UK) Ltd US$1 million (2012: US$2 million) and Kenya Breweries Ltd US$nil (2012: US$9 million). 6 The group received dividends from MillerCoors. 7 The group received royalties from Delta, Anadolu Efes and in the prior year also Kenya Breweries Ltd. 8 The group received royalties from MillerCoors. 9 The group received management fees from Delta, guarantee fees from Delta and BIH Brasseries Internationales Holding (Angola) Ltd (BIH Angola), and other recoveries from AFP. In the prior year management fees were also received from ECN. 10 The group paid management fees to MillerCoors. 11 The group sold its interest in Foster’s USA LLC to MillerCoors for cash consideration.
At 31 March 2013 2012 US$m US$m Amounts owed by associates – trade1 68 145 Amounts owed by associates – loans2 - 60 Amounts owed by joint ventures3 5 6 Amounts owed to associates4 (150) (42) Amounts owed to joint ventures5 (14) (17)
1 Amounts owed by AFP, Delta, BIH Angola and Anadolu Efes. 2 Amounts owed by BIH Angola in the prior year. 3 Amounts owed by MillerCoors. 4 Amounts owed to Coca-Cola Canners, Castel and Tsogo Sun. At 31 March 2013 this balance included US$100 million received in compensation for the loan participation deposit relating to the Angolan businesses managed by Castel (see note 17). 5 Amounts owed to MillerCoors.
Guarantees provided in respect of associates’ bank facilities are detailed in note 22. c. Transactions with key management
The group has a related party relationship with the directors of the group and members of the excom as key management. At 31 March 2013 there were 26 (2012: 27) members of key management. Key management compensation is provided in note 6c.
DIRECTORS’ RESPONSIBILITY STATEMENT IN RESPECT OF THE CONSOLIDATED FINANCIAL STATEMENTS (page 86)
The directors are responsible for preparing the consolidated financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare consolidated financial statements for each financial year. The directors have prepared the consolidated financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. The consolidated financial statements are required by law to give a true and fair view of the state of affairs of the group and of the profit or loss of the group for that year.
In preparing those financial statements, the directors are required to:
- select suitable accounting policies and then apply them consistently; - make judgements and estimates that are reasonable and prudent; - state that the financial statements comply with IFRSs as adopted by the European Union; and - prepare the consolidated financial statements on the going concern basis, unless it is inappropriate to presume that the group will continue in business, in which case there should be supporting assumptions or qualifications as necessary.
The directors confirm that they have complied with the above requirements in preparing the financial statements.
The directors are responsible for keeping adequate accounting records that disclose with reasonable accuracy at any time the financial position of the group and to enable them to ensure that the consolidated financial statements comply with the Companies Act 2006 and Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Each of the directors, whose names and functions are listed in the Governance section of the Annual Report, confirms that, to the best of their knowledge:
- the consolidated financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the group; and - the management report incorporated into the directors’ report contained in the Governance section of the Annual Report includes a fair review of the development and performance of the business and the position of the group, together with a description of the principal risks and uncertainties that it faces.
In addition, the Companies Act 2006 requires directors to provide the group’s auditors with every opportunity to take whatever steps and undertake whatever inspections the auditors consider to be appropriate for the purpose of enabling them to give their audit report.
Each of the directors, having made appropriate enquiries, confirms that:
- so far as the director is aware, there is no relevant audit information of which the group’s auditors are unaware; and - each director has taken all the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the group’s auditors are aware of that information.
The directors have reviewed the group’s performance for the year and the principal risks it faces, together with the budget and cash flow forecasts, in particular with reference to the period to the end of September 2014, and the application of reasonably possible sensitivities associated with these forecasts. On the basis of this review, and in the light of the current financial position and existing committed borrowing facilities, the directors are satisfied that the group has adequate resources to continue in operational existence and therefore have continued to adopt the going concern basis in preparing the consolidated financial statements.
A copy of the financial statements of the group is placed on the company’s website. The directors are responsible for the maintenance and integrity of statutory and audited information on the company’s website. Information published on the internet is accessible in many countries with different legal requirements. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
John Davidson General Counsel and Group Company Secretary
24 June 2013
Sponsor: J.P. Morgan Equities South Africa (Pty) Ltd
This announcement does not constitute an offer to sell or issue or the solicitation of an offer to buy or acquire ordinary shares in the capital of SABMiller plc (the “company”) or any other securities of the company in any jurisdiction or an inducement to enter into investment activity.
This announcement is intended to provide information to shareholders. It should not be relied upon by any other party or for any other purpose. This announcement includes ‘forward-looking statements’ with respect to certain of SABMiller plc’s plans, current goals and expectations relating to its future financial condition, performance and results. These statements contain the words ‘anticipate’, ‘believe’, ‘intend’, ‘estimate’, ‘expect’ and words of similar meaning. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding the company’s financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to the company’s products and services) are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the company’s present and future business strategies and the environment in
which the company will operate in the future. These forward-looking statements speak only as at the date of this announcement. Factors which may cause differences between actual results and those expected or implied by the forward-looking statements include, but are not limited to: material adverse changes in the economic and business conditions in the markets which SABMiller operates; increased competition and consolidation within the global brewing and beverages industry; changes in consumer preferences; changes to the regulatory environment; failure to deliver the integration and cost-saving objectives in relation to the Foster’s acquisition; failure to derive the expected benefits from the business capability programme; and fluctuations in foreign currency exchange rates and interest rates. The company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the company’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. The past business and financial performance of SABMiller plc is not to be relied on as an indication of its future performance.