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Sabmiller Plc Annual Report 2012

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Sabmiller Plc Annual Report 2012 SABMiller plc Annual Report 2012 Contents What’s inside Overview 1 Performance highlights Financial and operational highlights 2 Five minute read 4 Group at a glance of the year, an overview of the group and a description of our business activities Business review 7 Chairman’s statement Statements from our Chairman and 12 Global beer market trends 14 Chief Executive’s review executive directors, an overview of 15 Business model our markets, strategy, our business 20 Strategic priorities model, the way we manage risk, 21 Key performance indicators 22 Principal risks how our operations performed 25 Operations review and our approach to sustainable 25 Latin America development and people 27 Europe 29 North America 30 Africa 32 Asia Pacific 34 South Africa: Beverages 35 South Africa: Hotels and Gaming 37 Chief Financial Officer’s review 46 Sustainable development 50 People Governance 52 Board of directors An introduction to the board and 54 Executive committee 55 Directors’ report executive committee and details of 59 Corporate governance the group’s approach to corporate 68 Directors’ remuneration report governance and remuneration Financial statements 84 Statement of directors’ responsibilities in respect of the Audited financial statements, notes consolidated financial statements 85 Independent auditors’ report to the members of SABMiller plc and other key data, and definitions on the consolidated financial statements of terms 86 Consolidated income statement 87 Consolidated statement of comprehensive income 88 Consolidated balance sheet 89 Consolidated cash flow statement 90 Consolidated statement of changes in equity 91 Notes to the consolidated financial statements 165 Statement of directors’ responsibilities in respect of the company financial statements 166 Independent auditors’ report to the members of SABMiller plc on the company financial statements 167 Balance sheet of SABMiller plc 168 Notes to the company financial statements 178 Five-year financial review 180 Definitions Shareholder information 182 Ordinary shareholding analyses Information, dates and contact 183 Shareholders’ diary 184 Administration details for shareholders IBC Cautionary statement SABMiller plc Annual Report 2012 21 Leinenkugel’s Summer Shandy Origin: USA Key performance indicators First brewed: 2007 Measuring our progress www.leinie.com Brewed with an adventurous blend of select malted wheat and barley, lemonade flavour and a hint of Wisconsin honey, Leinenkugel’s Summer Shandy has delivered summertime refreshment to US beer drinkers since 2007. The key performance indicators (KPIs) outlined Overview below are used to monitor progress against our overall financial goal and our four strategic priorities. Further detail is contained in the Chief Executive’s review, the Chief Financial Officer’s review and the Sustainable Development review. Detailed definitions are on page 181. Business review Business Financial goal What we measure Why we measure How we have performed 2012 2011 2010 To deliver a higher return to Total Shareholder Return in excess Monitor the value created for our 89% 73% 52% our shareholders than our peer of the median of our peer group over shareholders over the longer term three-year periods relative to alternative investments group over the longer term in the drinks industry Growth in adjusted earnings per share Determine the improvement in 12% 19% 17% underlying earnings per share for our shareholders Free cash flow Track cash generated to pay down US$3,048m US$2,488m US$2,028m debt, return to our shareholders and invest in acquisitions Governance Strategic priority What we measure Why we measure How we have performed Creating a balanced and The wide geographic spread of our operations allows us to benefit from growth The proportion of our total lager volume Gain an overall picture of the relative 93% 94% 94% attractive global spread in volumes and value in beer markets around the world. We continue to look for from markets in which we have No.1 or strength of our market positions opportunities to strengthen our geographic footprint in both developing and No.2 national market share positions of businesses developed markets through greenfield entries, alliances, mergers and acquisitions. The proportion of group EBITA from Assess the balance of our earnings 76% 79% 78% developing and emerging economies exposure between regions of the world economy with highest growth potential and more mature regions Financial statements Financial Developing strong, relevant We seek to develop attractive brand portfolios that meet consumers’ needs in each of Organic growth in lager volumes Track underlying growth of our 3% 2% 0% brand portfolios that win our markets. This includes expanding our offerings to address new consumer segments core business and drinking occasions, strengthening our mainstream brands, building a differentiated in the local market portfolio of global and local premium brands and channelling the right brands to the Group revenue growth Assess the underlying rate of growth 7% 5% 4% right outlets at the right time and price. (organic, constant currency) in sales value of our brand portfolios Revenue growth in premium brands Monitor progress in building our portfolio 14% 7% 7% (constant currency) of global and local premium brands Constantly raising the profitability Our aim is to keep enhancing our operational performance through top-line growth and EBITA growth Track our underlying operational 8% 12% 6% of local businesses, sustainably continuous improvement in costs and productivity. It’s also important that we maintain (organic, constant currency) profit growth and advance our reputation, protect our licence to trade and develop our businesses sustainably for the benefit of our stakeholders. EBITA margin Monitor our underlying operational 17.9% 17.8% 16.6% profitability Hectolitres of water used at our breweries Gauge our progress in reducing the 4.0 hl/hl 4.2 hl/hl 4.3 hl/hl per hectolitre of lager produced amount of water used in our breweries Fossil fuel emissions from energy Assess progress towards reducing 12.4 kg 13.8 kg 14.2 kg use at our breweries per hectolitre fossil fuel emissions at our breweries CO2e/hl CO2e/hl CO2e/hl of lager produced information Shareholder Leveraging our skills Our global spread presents increasing opportunities to gain value from the scale and skills Cumulative financial benefits from Track the payback from our investment in US$890m US$620m US$350m and global scale of the group, not least by leveraging our scale and expertise in procurement, standardising our business capability programme the group business capability programme our back-office functions and integrating our front-office systems. We are also benefiting from ongoing collaboration and the sharing of skills between our businesses. 22 SABMiller plc Annual Report 2012 Principal risks Monitoring and managing the risks we face The principal risks facing the group and considered by the board are detailed below. The group’s comprehensive 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 23 to the consolidated financial statements. Principal risk Context Specific risks we face Possible impact Mitigation Associated strategic priorities Industry consolidation The global brewing and beverages industry is • Failing to participate in value-adding transactions. Lower growth rate, profitability • Potential transactions are subject to rigorous analysis. • Creating a balanced and attractive expected to continue to consolidate. There will • Paying too much to acquire a business. and financial returns. Only opportunities with potential to create value are pursued. global spread of businesses. continue to be opportunities to enter attractive • Not implementing integration plans successfully. • Proven integration processes, procedures and practices • Constantly raising the profitability growth markets, to realise synergy benefits from are applied to ensure delivery of expected returns. of local businesses, sustainably. integration and to leverage our global scale. • Activities to deliver synergies and leverage scale are in place, monitored closely and continuously enhanced. • Develop non-traditional capabilities to enter and grow profitably in new markets. Change in consumer Consumer tastes and behaviours are constantly • Failing to ensure the strength and relevance Market positions come under • Ongoing evaluation of our brand portfolios in every market to ensure • Developing strong, relevant preferences evolving, and at an increasingly rapid rate. of our brands with consumers and customers. pressure, lower top-line growth that they target current and future opportunities for profitable growth. brand portfolios that win in Competition in the beverage industry is • Failing to respond in an adequate and timely rates and profitability. • Building our brand equities through innovation and compelling the local market. expanding and becoming more fragmented, manner to rapidly changing consumer marketing programmes. • Constantly raising the profitability complex and sophisticated. preferences and behaviours. • Ensuring we have deep understanding of changing consumer of local businesses, sustainably. • Failing to continue to improve our commercial and industry dynamics in key markets, enabling us to respond • Leveraging our skills and capabilities to deliver brand propositions that appropriately to issues which may impact our business
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