SABMiller plc Annual Report 2003 Annual Report 2003 The difference is clear Highlights in 2002/3 2003 2002 US$m# US$m % change Turnover 9,112 4,364 109 excluding Miller 5,639 4,364 29 EBITA * 1,270 766 66 excluding Miller 1,020 766 33 Profit before tax 770 606 27 Adjusted profit before tax ** 1,107 668 66 Adjusted earnings ** 581 350 66 Adjusted earnings per share ** US cents 54.0 48.7 11 UK pence (up 3%) 34.9 34.0 SA cents (up 9%) 513.0 472.5 Basic earnings per share (US cents) 27.5 40.7 (32) Dividends per share (US cents) 25.0 25.0 – # Includes Miller Brewing Company for nine months, except where indicated. * Earnings before interest, taxation and goodwill amortisation, and before exceptional items. ** Adjusted profit before tax and adjusted earnings exclude exceptional items and goodwill amortisation. • Total beverage volumes up 52% to 151.4 million hectolitres (hls), organic growth of 3.0% • Total lager volumes increase 65% to 115.8 million hls, organic growth of 4.2% • Strong performances and EBITA margin improvement in Beer South Africa, Europe and Africa & Asia • Adjusted earnings per share increase by 11% • Miller Brewing Company acquired and being integrated into the group • Birra Peroni and Shaw Wallace transactions announced 1 The difference is clear 42 Board of Directors 2 SABMiller Today 44 Directors’ Report 4 Geographic Profile 47 Remuneration Report 6 Chairman’s Statement 58 Annual Financial Statements 8 Chief Executive’s Review 124 Five-year Financial Review 22 Review of Operations 126 Definitions 30 Financial Review 127 Shareholders’ Diary 34 Corporate Governance 128 Administration 40 Corporate Accountability Review Front cover: Building market share in the Czech Republic – refer to pages 14 and 15. The front cover of our annual report for 2003 features Petra Biskupova, group brand manager, Plzenvsky´ Prazdroj. SABMiller plc Annual Report 2003 1 When it comes to brewing great beers and building great brands, SABMiller is up there with the very best. With a long heritage in brewing, and brands that touch the lives of hundreds of millions of consumers around the world, the business is unique. The difference is clear in everything the company does. SABMiller employees are driven by the passion for its products, the thirst for hard work and an obsession with getting every detail right. SABMiller strives to achieve commercial success wherever in the world it operates, while recognising the need to make a positive contribution to communities, the environment and to its employees. It’s an approach that has helped export the company’s strengths far beyond its roots in South Africa, to most of Africa, Asia, Europe and Central America, and now to the USA through its acquisition of Miller. SABMiller’s aim is clear – to grow the business and add value in a responsible and sustainable way. 2 SABMiller plc Annual Report 2003 SABMiller’s strategy is to: SABMiller Today • Drive volume and productivity • Optimise and expand its existing positions through acquisition • Seek value-adding opportunities to enhance its position as a global brewer • Grow its brands in the international premium beer segment Achieve profitable growth as a leading player in the global beer market North America Turnover US$3,473m* EBITA US$250m*# Total number of breweries 9 SAB plc acquired 100% of Miller Brewing Company, Total brewing capacity (hls 000s) 63,800 the second largest brewer in the United States of Total volumes sold (hls 000s) America, from Altria Group, Inc. (formerly Philip – Lager 33,852* Morris Companies Inc.) in July 2002. Following this – Carbonated soft drinks (CSDs) 55* acquisition, the group changed its name to Average number of employees 4,559* SABMiller plc. *Nine months #Pre-exceptional items Central America Turnover US$514m EBITA US$56m# Total number of breweries 3 In November 2001, SABMiller formed Bevco with Total number of bottling plants 6 CAB, a holding company for the beverage interests Total brewing capacity (hls 000s) 2,700 of a prominent local family consortium. CAB Total bottling capacity (hls 000s) 12,200 contributed to Bevco its interest in the largest brewer Total volumes sold (hls 000s) and soft drinks bottler (Coca-Cola) in El Salvador. – Lager 1,747 Simultaneously, SABMiller entered the Honduran – CSDs 6,257 market through the acquisition of Cerveceria – Other beverages 2,499 Hondurena, and contributed this to Bevco. Average number of employees 7,374 #Pre-exceptional items Europe Turnover US$1,646m EBITA US$275m Total number of breweries 18 SABMiller entered Europe through its purchase Total number of bottling plants 1 of Dreher in Hungary in 1993, and since then has Total brewing capacity (hls 000s) 35,700 developed through acquisition and organic growth, Total bottling capacity (hls 000s) 200 most recently by taking a majority stake in Birra Peroni Total volumes sold (hls 000s) in June 2003. The group now has operations in – Lager 24,472 eight countries and is one of the largest brewers – Other beverages 137 in Europe. Average number of employees 8,959 Africa Turnover US$1,209m** EBITA US$233m** Total number of breweries 44* SABMiller Africa and the Castel Group entered Total number of bottling plants 10 into a strategic alliance in April 2001 for their Total brewing capacity (hls 000s) 18,900 operations in Africa (excluding South Africa and Total bottling capacity (hls 000s) 5,200 Namibia). This strategic alliance is a long-term Total volumes sold (hls 000s)** relationship, which will enhance the development – Lager 31,332 of both groups’ beer and beverage businesses. – CSDs 4,206 *Includes 30 commercial sorghum breweries. – Other beverages 9,920 Castel breweries not included. Average number of employees** 7,305 **Africa & Asia figures combined SABMiller plc Annual Report 2003 3 Asia Turnover US$1,209m* EBITA US$233m* Total number of breweries 41 SABMiller has operated in China since 1994 through Total number of bottling plants 2 China Resources Breweries (CRB), a joint venture Total brewing capacity (hls 000s) 43,100 agreement with China Resources Enterprise (CRE). Total bottling capacity (hls 000s) 4,000 SABMiller owns 49% and CRE owns 51% of CRB. Total volumes sold (hls 000s)* SABMiller entered India in 2000. In May 2003 it announced – Lager 31,332 a joint venture through its subsidiary Mysore Breweries with – CSDs 4,206 Shaw Wallace and Company Limited. Mysore will hold 50% of – Other beverages 9,920 Shaw Wallace Breweries Limited and exercise management Average number of employees 7,305* control. Shaw Wallace will hold the remaining 50%. *Africa & Asia figures combined Beer South Africa Turnover US$1,270m EBITA US$338m Total number of breweries 7 Established in 1895, The South African Breweries Total brewing capacity (hls 000s) 30,800 Ltd has a long history of success, growing to Total volumes sold (hls 000s) 24,428 become one of South Africa’s leading companies, Average number of employees 5,424 and one that is recognised and admired around the world for its uncompromising commitment to brewing excellence. Other Beverage Interests Turnover US$788m EBITA US$120m Total number of bottling plants 10 Consists of Amalgamated Beverage Industries Total bottling capacity (hls 000s) 17,500 Ltd (ABI), the largest bottler and distributor of Total volumes sold (hls 000s) 12,489 the Coca-Cola range of carbonated products Average number of employees 4,163 within South Africa; Appletiser, the international producer of non-alcoholic sparkling fruit juices; and a 30% equity accounted interest in Distell, the leading South African distributor of wines and spirits. Notes: 1. The above facts provide basic data and figures about the geographical operating areas of SABMiller plc. 2. Current (as at 9 June 2003) figures are shown regarding number of breweries, bottling plants and brewing or bottling capacities. Total volumes sold, average numbers of employees, turnover and EBITA figures are for the financial year ended 31 March 2003. 3. Employee figures exclude employees of associates. 4. Total average number of employees excludes Hotels and Gaming and group employees. Geographic Profile Europe Brands include: Pilsner Urquell, Tyskie, Peroni, Nastro North America Azzurro, Arany Ászok, Brands include: Miller Lite, Debowe, Dorada, Dreher, Miller Genuine Draft, Miller Gambrinus, Lech, Radegast, v High Life, Milwaukee’s Best, Redd’s, Sarisv , Timisoreana, Jack Daniel’s Hard Cola, Tri Bogatyrya, Tropical, Ursus, Skyy Blue, Icehouse, Velkopopovicky Kozel, Leinenkugel’s, Henry Weinhard’s Zolotaya Bochka Central America Brands include: Pilsener Lager, Port Royal, Cristal, Regia Extra, Suprema, Golden Light, Imperial, Salva Vida, Tampico, Paradise Other Beverage Interests Brands include: Appletiser, Coca-Cola*, Fanta*, Grapetiser, Just Juice*, Sprite*, Valpre* (*Produced under licence from The Coca-Cola Company) This map includes the countries where SABMiller has production facilities through wholly owned or part owned subsidiaries, or through associated undertakings. It does not include countries where SABMiller brands are brewed under licence or are imported. SABMiller is a leading international brewer and one of the world’s largest soft drinks bottlers. The company is listed in London and Johannesburg and has, either through majority ownership or associate relationships, a brewing presence in over 40 countries across Europe, North and Central America, Asia, Africa and South Africa. Asia Brands include: Snowflake, Blue Sword, Knock Out, Three Lions, Castle Lager, Haywards, Royal Challenge Africa Brands include: Castle Lager, Castle Milk Stout, 2M, Balimi, Bohlinger’s, Carling Black Label, Chairman’s ESB, Chibuku, Club Pilsener, Eagle Lager, Fusion Ice, Golden Pilsener, Kilimanjaro, Konyagi Ice, Laurentina, Manica, Mosi, N’gola, Nile Special, Redd’s, Rhino, Safari, St Louis, Whiskey Black, Zambezi Beer South Africa Brands include: Castle Lager, Carling Black Label, Hansa Pilsener, Castle Milk Stout, Sterling Light, Redd’s, Brutal Fruit 6 SABMiller plc Annual Report 2003 Chairman’s Statement Dear Shareholder, This has been a year of outstanding growth from our The financial year to 31 March 2003 has been a year businesses in South Africa, Europe and Africa & Asia.