SABMiller plcAnnualReport2011 Contents What’s inside Overview 1 Performancehighlights 2 Fiveminuteread 4 Groupataglance Financialandoperational highlightsoftheyear,an overviewofthegroup and a descriptionofour businessactivities Business review 6 Chairman’sstatement 22 Operationsreview 10 Globalbeermarkettrends 22 LatinAmerica 11 SABMiller’smarketpositions 24 Europe StatementsfromourChairman 13 ChiefExecutive’sreview 26 NorthAmerica andexecutivedirectors,an 18 Strategicpriorities 28 Africa overviewofourmarkets, 19 Keyperformanceindicators 30 Asia strategy,ourbusinessmodel, 20 Principalrisks 32 SouthAfrica:Beverages thewaywemanagerisk,how 34 SouthAfrica:HotelsandGaming ouroperationsperformedand 36 ChiefFinancialOfficer’sreview ourapproachto sustainable 44 Sustainabledevelopment developmentandpeople 48 People Governance 50 Boardofdirectors 52 Executivecommittee 53 Directors’report Anintroductiontotheboard 57 Corporategovernance andexecutivecommitteeand 65 Remunerationreport detailsofthegroup’sapproach tocorporategovernanceand remuneration Financial 76S tatementofdirectors’responsibilities 82 Consolidatedstatementofchangesinequity inrespectoftheconsolidatedfinancial 83 Notestotheconsolidatedfinancialstatements statements statements 153S tatementofdirectors’responsibilitiesin 77I ndependentauditors’reporttothe respectofthecompanyfinancialstatements membersofSABMillerplconthe 154I ndependentauditors’reporttothemembers Auditedfinancialstatements, consolidatedfinancialstatements ofSABMillerplconthecompanyfinancial notesandotherkeydata,and 78 Consolidatedincomestatement statements definitionsofterms 79 Consolidatedstatementof 155 BalancesheetofSABMillerplc comprehensiveincome 156 Notestothecompanyfinancialstatements 80 Consolidatedbalancesheet 166 Five-yearfinancialreview 81 Consolidatedcashflowstatement 168 Definitions Shareholder 170 Ordinaryshareholdinganalyses 171 Shareholders’diary information 172 Administration IBC Cautionarystatement Information,datesandcontact detailsforshareholders SABMiller plc Annual Report 2011 1 Performance highlights Delivering excellent fi nancial performance a Group revenue includes the Overview a b c Group revenue Revenue EBITA attributable share of associates’ and joint ventures’ revenue of US$8,903 million (2010: US$8,330 million). +7% +8% +15% b Revenue excludes the attributable share of associates’ and joint 2011: US$28,311m 2011: US$19,408m 2011: US$5,044m ventures’ revenue. 2010: US$26,350m 2010: US$18,020m 2010: US$4,381m c Note 2 to the consolidated fi nancial statements provides a reconciliation of operating profi t to EBITA which is defi ned as operating profi t before exceptional items and amortisation of intangible assets (excluding Dividends per shared Profi t before tax Adjusted EPSe software) and includes the group’s Business review share of associates’ and joint ventures’ operating profi t, on a similar basis. As described in the Chief Financial Offi cer’s review, +19% +24% +19% EBITA is used throughout this report. 2011: 81.0 US cents 2011: US$3,626m 2011: 191.5 US cents d 2011 fi nal dividend is subject to 2010: 68.0 US cents 2010: US$2,929m 2010: 161.1 US cents shareholder approval at the annual general meeting. e A reconciliation of adjusted earnings to the statutory measure of profi t attributable to equity shareholders is provided in note 8 to the consolidated Governance f Net debt Lager volumes Water to lager ratio fi nancial statements. f Net debt comprises gross debt (including borrowings, borrowings-related derivative -16% +2% -3% fi nancial instruments, overdrafts and fi nance leases) net of cash 2011: US$7,091m 2011: 218m hectolitres 2011: 4.2 hl/hl and cash equivalents (excluding 2010: US$8,398m 2010: 213m hectolitres 2010: 4.3 hl/hl overdrafts). An analysis of net debt is provided in note 28c to the consolidated fi nancial statements. Financial statements Further information Go online for more details Shareholder information This report covers the fi nancial year ended 31 March 2011. For more detailed information about SABMiller It is also available on our website as a downloadable PDF please refer to our website www.sabmiller.com/annualreport www.sabmiller.com/investors 50518_TEXT_pgs1-5.indd 1 07/06/2011 19:07 2 SABMiller plcAnnualReport2011 Five minute read Our business in brief SABMillerisoneoftheworld’sleadingbrewers,withmorethan200beer brandsandsome70,000employeesinover75countries.Wearealso oneoftheworld’slargestbottlersofCoca-Colaproducts. Our strategic direction Our brands and business We’ve grown through a culture of operational We’ve become a global leader by excelling excellence, delivering high-quality products, locally – nurturing strong, local brands and innovation and sustainability. building brand portfolios that meet the needs of consumers in each of our markets. Oursuccessisbuiltonaclearstrategicdirectionandashared Theattentionwegivetobuildinglocalbusinessesandlocalbrand commitmenttothecompany’svision,missionandvalues. portfoliosmakesus,webelieve,themostlocaloftheglobalbrewers. Our vision: Local brands • Tobethemostadmiredcompanyintheglobalbeerindustry Beerisalocalbusinessinthatbeerbrandsaredeeplyrootedinlocal communitiesandoftenhavetheirownrichhistoriesandheritage. Our mission: AtSABMillerwerespectandnurturethesequalitiesandallowour • Toownandnurturelocalandinternationalbrandsthatarethe businessesahighdegreeofautonomyinmeetinglocalneeds. first choiceoftheconsumer Webringdeepconsumerinsighttothebuildingofbrandsinlocal markets. Our values: • Ourpeopleareourenduringadvantage Global brands • Accountabilityisclearandpersonal Ourfourglobalbrandsallhavetheirowndistinctcharacteristics– • Weworkandwininteams fromtheItalianstyleofPeroniNastroAzzurrototheuniqueheritageof • Weunderstandandrespectourcustomersandconsumers theworld’sfirstgoldenbeer,theCzech-brewedPilsnerUrquell;from • Ourreputationisindivisible theNorthernEuropeanprovenanceofGrolschtotheAmericanurban coolofMillerGenuineDraft. Our strategic priorities: • Creatingabalancedandattractiveglobalspreadofbusinesses For more information on the performance of our brands, • Developingstrong,relevantbrandportfoliosthatwininthelocal see pages 22 to 33. market • Constantlyraisingtheprofitabilityoflocalbusinesses,sustainably • Leveragingourskillsandglobalscale For more information on our strategic priorities and how we measure against them, see pages 18 and 19. 50518_TEXT_pgs1-5.indd 2 07/06/2011 10:05 SABMiller plcAnnualReport2011 3 Peroni Nastro Azzurro Anintenselycrispandrefreshing lagerwithanunmistakabletouch ofItalianstyle,PeroniNastroAzzurro isapremiumlagerbrewedtothe originalrecipesince1963. Origin: Italy Firstbrewed: 1963 www.peroniitaly.com Overview Our performance in 2011 How we manage our business Business review Our strong financial performance in 2011 Our vision to be the most admired company Governance reflects contributions from all parts of the in the global beer industry requires us to business and the benefits of a rigorous, demonstrate the highest standards of sustained focus on the group’s strategic transparency, ethics and corporate governance. priorities. Ourlagervolumeswereupby2%withreportedgrouprevenuerising Becauseourbusinessisnotseparatefromsocietybutembedded 7%,whileEBITAmarginincreasedto17.8%. withinit,thesuccessofSABMillerisinextricablylinkedtothewell- beingofthewidercommunity. Operational highlights • ReportedEBITAgrew15%,withorganic,constantcurrencyEBITA Sustainable development increasing12%: Sustainabledevelopmentisfundamentaltoourbusinesssuccess. – LatinAmericaEBITA1grewby11%duetopricing,lowerraw Everywhereweoperate,we’reworkingtobuildastronglocal Financial materialcostsandfixed-costproductivity business whilealsosupportinglocaleconomicdevelopment. – EuropeEBITA1grewby4%,benefitingfromlowercostsdespite Our clear,well-embeddedapproachtosustainabledevelopment reducedvolumes bringstangiblebenefitsbothtoourbusinessandtothe statements – Disciplinedrevenuemanagement,synergiesandcostsavings communities inwhichwework. increasedNorthAmericaEBITAby20% – Strongvolumegrowth,firmpricingandcapacityexpansion For more information on our approach to sustainable development, droveAfrica’sEBITA1growthof20% see pages 44 to 47. – AsiaEBITA1increasedby33%withrobustvolumegrowth in ChinaandIndia Governance – SouthAfrica:BeveragesEBITA1grew11%duetovolume Indischargingitsstewardshipresponsibilities,theSABMillerboard growth andpricing iscommittedtothehigheststandardsofcorporategovernance. Our directorsprovidetheleadership,controlsandstrategicoversight For more information on our financial performance, toensurewedelivervaluetoallthecompany’sshareholders. Shareholder see pages 36 to 42. For more information on our approach to governance, see pages 57 to 64. information Risk Thegroup’sriskmanagementsystemisdesignedtomanage,rather thaneliminate,theriskoffailingtoachievebusinessobjectives.The systemisregularlyreviewedtoensurethatbusinessriskismanaged inaconsistentandsustainedway,todeliverbusinessopportunities. 1 EBITAgrowthisshownonanorganic,constantcurrencybasis. For more information on our approach to risk, see pages 63 and 64. 50518_TEXT_pgs1-5.indd 3 07/06/2011 10:05 4 SABMiller plcAnnualReport2011 Group at a glance Our operations around the world We’vecreatedleadingpositionsinbothemerginganddevelopedmarkets acrosstheworld.Ourportfolioofbusinessesspanssixregionswhichtogether brewedover200differentbrandsandsold218millionhectolitresoflagerlastyear. Latin America Europe North America Africa Asia South Africa ContributiontogroupEBITA12011 ContributiontogroupEBITA12011 ContributiontogroupEBITA12011