SABMiller plc SABMiller Annual Report 2015 SABMiller plc Annual Report 2015 We are in the beer and soft drinks business. We bring refreshment and sociability to millions of people all over the world who enjoy our drinks. We do business in a way that improves livelihoods and helps build communities. We are passionate about brewing and have a long tradition of craftsmanship, making superb beer from high quality natural ingredients. We are local beer experts. We have more than 200 local beers, from which we have carefully selected and nurtured a range of special regional and global brands. Performance highlights Group net producer revenue1 Revenue3 EBITA4 EBITA margin progression -2% -1% -1% 0basis points 2015: US$26,288m 2015: US$22,130m 2015: US$6,367m 2015: 24.2% 2014: US$26,719m 2014: US$22,311m 2014 5: US$6,460m 2014: 24.2% 2 2 2 +5% +6% +6% +30 basis points2 Beverage volumes Profit before tax Adjusted EPS6 Dividends per share7 +2% 0% -1% +8% 2015: 324m hectolitres 2015: US$4,830m 2015: 239.1 US cents 2015: 113.0 US cents 2014: 318m hectolitres 2014: US$4,823m 2014: 242.0 US cents 2014: 105.0 US cents Water usage (beer)8 Net debt9 Free cash flow10 Total shareholder return11 -6% -27% +26% 121% 2015: 3.3 hl/hl 2015: US$10,465m 2015: US$3,233m Peer median: 85% 2014: 3.5 hl/hl 2014: US$14,303m 2014: US$2,563m 1 Group net producer revenue (NPR) is defined on page 188 and includes the group’s 6 A reconciliation of adjusted earnings to the statutory measure of profit attributable to equity attributable share of associates’ and joint ventures’ net producer revenue of shareholders is provided in note 8 to the consolidated financial statements. US$9,754 million (2014: US$10,015 million). 7 The 2015 final dividend is subject to shareholder approval at the annual general meeting. 2 Growth on an organic, constant currency basis. 8 Water usage is defined on page 189. 3 Revenue excludes the group’s attributable share of associates’ and joint ventures’ 9 Net debt comprises gross debt (including borrowings, financing derivative financial revenue but includes excise duties and similar taxes. instruments, overdrafts and finance leases) net of cash and cash equivalents (excluding 4 Note 2 to the consolidated financial statements provides a reconciliation of operating profit overdrafts). An analysis of net debt is provided in note 27c to the consolidated financial to EBITA which is defined as operating profit before exceptional items and amortisation statements. of intangible assets (excluding computer software) and includes the group’s share of 10 Note 27b to the consolidated financial statements provides a reconciliation of net cash associates’ and joint ventures’ operating profit, on a similar basis. As described in the from operating activities to free cash flow. finance review, EBITA is used throughout this report. 11 Total shareholder return (TSR) is shown as the percentage growth in our TSR over the 5 Certain comparative figures have been restated as a result of changes in accounting five years to 31 March 2015. standards implemented in the year. Further details are provided in the finance review. The strategic report and directors’ report have been approved for and on behalf of the board of SABMiller plc Africa p22 on 2 June 2015. Africa’s strong local portfolio, Alan Clark affordable brands and Chief Executive premiumisation helped to deliver impressive results. Strategic report Strategic Contents Latin America p18 What’s inside Strategic report Growth in premium and above mainstream Performance highlights Ifc lager and soft drinks underpinned good Business overview 2 results in Latin America. Chairman’s statement 4 Chief Executive’s review 6 Our business model 12 Market overview 14 Europe p30 Key performance indicators 15 Principal risks 16 Innovation and Operations review improved sales Latin America 18 Governance execution boosted Africa 22 European group Asia Pacifi c 26 NPR despite Europe 30 continued economic North America 34 uncertainty. Finance review 38 Sustainable development 46 North America p34 Valuing and empowering our people 50 Asia Pacifi c p26 Improved group NPR per Governance hectolitre and reduced fi xed Board of directors 52 Premiumisation in China and Australia costs helped offset lower Executive committee 54 helped mitigate economic headwinds volumes in North America. Corporate governance 56 and weaker demand. Audit committee report 70 Directors’ remuneration report 74 statements Financial Directors’ report 97 Financial statements Independent auditors’ report to the members of SABMiller plc 102 Consolidated income statement 107 Consolidated statement of comprehensive income 108 Consolidated balance sheet 109 Consolidated cash fl ow statement 110 Consolidated statement of changes in equity 111 Notes to the consolidated fi nancial statements 112 information Shareholder Balance sheet of SABMiller plc 176 Notes to the company fi nancial statements 177 Five-year fi nancial review 186 Defi nitions 188 Further information Key to further reading: Shareholder information This report covers the fi nancial year Read more on p age referenced Ordinary sharehold ing analyses 190 ended 31 March 2015. It is also available Shareholders’ diary 190 on our website as a downloadable PDF Read more online Administration 191 www.sabmiller.com/annualreport2015 Cautionary statement 192 Read more in the referenced report For more detailed information about SABMiller please refer to our website www.sabmiller.com/investors SABMiller plc Our Approach to Tax 2015 SABMiller plc Annual Report 2015 1 Strategic report Business overview SABMiller by numbers US$6,367m Group EBITA (20141: US$6,460m). 8% Soft drinks volume growth. 72% The proportion of EBITA from developing markets. EBITA by region2 % Latin America 35% US$2,224m Africa 29% US$1,907m 35% ¹ Restated. Asia Pacifi c 12% 2 Before Corporate costs and South Africa: US$768m Absolute reduction in Hotels and Gaming. Europe 11% carbon emissions from 3 Subsidiaries only, excluding home markets, US$700m on a constant currency basis. on-site energy use North America 4 Subsidiaries only, excluding home markets. US$858m 13% between 2008 and 2015. We have a balanced spread of businesses with a signifi cant presence in developing markets Latin America Africa Where we operate Where we operate Regional offi ce: Miami, USA Regional offi ce: Johannesburg, Our primary brewing and beverage South Africa operations cover six countries across On 1 July 2014, SABMiller’s South African South and Central America (Colombia, and African regions were consolidated Ecuador, El Salvador, Honduras, into one region. Our primary brewing Panama and Peru). and beverage operations in Africa cover 17 countries including Botswana, What we do Mozambique, Nigeria, South Africa, • In each of these countries we are the Tanzania, Uganda and Zambia. A further number one brewer by market share. 21 are covered through our associate • We have a brewery in Argentina, and interests in the Castel group’s African we export to Chile and Paraguay. beverage businesses and we also have • We produce soft drinks across the an associated undertaking in Zimbabwe. region including Coca-Cola products in El Salvador and Honduras. What we do • In most of these countries we are the Read more on p age 18 number one brewer by market share. • We produce Coca-Cola products in 23 of our African markets (with Castel in 15 of these markets and through our associated undertaking in Zimbabwe). Read more on p age 22 2 SABMiller plc Annual Report 2015 140,000 94% report Strategic Every minute of every day, more than The proportion of our total #1 140,000 bottles of SABMiller beer are lager volume from markets in enjoyed around the world. which we have no 1. or no. 2 national market share positions. #2 Lager volumes level year on year. Our global brands are Peroni Nastro Azzurro, 69,000 25% Miller Genuine Draft, Pilsner Urquell and Grolsch. EBITA from +16% associates and NPR joint ventures. growth3 SABMiller has almost 69,000 +11% employees and is in more Volume than 80 countries. growth4 Asia Pacifi c Europe North America Where we operate Where we operate Where we operate Regional offi ce: Hong Kong Regional offi ce: Zug, Switzerland Regional offi ce: Chicago, USA Our brewing interests across Asia Pacifi c Our primary brewing operations cover eight MillerCoors is a joint venture with Molson cover four countries: Australia, China, countries – the Czech Republic, Hungary, Coors Brewing Company, which was India and Vietnam. Italy, Poland, Romania, Slovakia, Spain formed in 2008 by bringing together (Canary Islands) and the Netherlands. the US and Puerto Rican operations What we do of both groups. What we do • CR Snow, our partnership of more than • In the majority of these countries we What we do 20 years with China Resources Enterprise, are the number one or two brewer by • MillerCoors is the second largest brewer Limited, is the largest brewer in China. market share. in the USA, with 27% of the beer market. • Carlton & United Breweries (CUB) is • We cover a further 16 countries including • Our wholly-owned Miller Brewing the second largest Australian brewer. Russia, Turkey and Ukraine in a strategic International business is based in • We are the second largest brewer alliance with Anadolu Efes through Milwaukee, USA and exports our brands in India. brewing, soft drinks and export operations. to Canada and Mexico and throughout • We have a brewery in Vietnam, and we • We export signifi cant volumes to a further the Americas. export to numerous markets including seven European markets, of which the South Korea. largest are the UK and Germany. Read more on p age 34 Read more on p age 26 Read more on p age 30 SABMiller plc Annual Report 2015 3 Strategic report Chairman’s statement We are confi dent in our long-term growth strategy and remain highly disciplined about our capital allocation, with a fi rm focus on shareholder returns.” Dear shareholder planning for both management and non- I was delighted to be able to announce in executive directors, long-term growth August that that search, most ably led by In my fi nal letter to you as Chairman, I am prospects and dividend policy.