| Thu 14 May 2009, 8:15 | | SAB - SAB Miller Plc - Preliminary announcement |
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SAB
SOSAB
SAB - SAB Miller Plc - Preliminary announcement
SAB MILLER PLC
JSEALPHA CODE:SAB
ISSUER CODE: SOSAB
ISIN CODE: GB0004835483
PRELIMINARY ANNOUNCEMENT
14 May 2009
RESILIENT PERFORMANCE REFLECTS OPERATING STRENGTHS
SABMiller plc, one of the world`s leading brewers with operations and
distribution agreements across six continents, reports its preliminary
(unaudited) results for the twelve months to 31 March 2009.
Operational Highlights
- Lager volumes up 2%(1) to 210 million hectolitres (hl); organic lager volumes
level with prior year despite weakened consumer demand; organic soft drinks
volumes up 5%
- Organic, constant currency group revenue growth of 9%, benefiting from strong
pricing
- EBITA(2) up 5%; reported EBITA unchanged, impacted by the strength of the US
dollar
- Latin America delivers 11% EBITA(2) growth despite slowing economies
- Europe organic lager volumes level with prior year in either flat or
declining markets; EBITA(2) down 5%
- North America EBITA(2) up 22%; MillerCoors JV(3) cost synergies ahead of
schedule
- Africa and Asia EBITA(2) up 16%; Africa organic lager volumes up 5%; China`s
Snow brand lager volumes up 19% to 60 million hl
- South Africa lager volumes decline 2%; EBITA(2) down 8% on higher input costs
- Group maintains sound balance sheet with moderate leverage
(1) Following the inception of the MillerCoors joint venture on 1 July 2008 the
group has revised its volume definitions. Further details of these revised
definitions can be found in the Financial review on page 15.
(2) EBITA growth is shown on an organic, constant currency basis.
(3) The MillerCoors joint venture is included, at the group`s share, in EBITA
and group revenue, but is not included in revenue.
2009 2008 %
US$m US$m change
Group revenue (a) 25,302 23,828 6
Revenue (b) (excludes associates` and 18,703 21,410 (13)
joint ventures` revenue)
EBITA (c) 4,129 4,141 -
Adjusted profit before tax (d) 3,405 3,639 (6)
Profit before tax 2,958 3,264 (9)
Adjusted earnings (e) 2,065 2,147 (4)
Adjusted earnings per share (e)
- US cents 137.5 143.1 (4)
- UK pence 79.7 71.2 12
- SA cents 1,218.6 1,021.2 19
Basic earnings per share (US cents) 125.2 134.9 (7)
Dividends per share (US cents) 58.0 58.0 -
(a) Group revenue includes the attributable share of associates` and
joint ventures` revenue of US$6,599 million (i.e. including MillerCoors`
revenue) (2008: US$2,418 million).
(b) Revenue excludes the attributable share of associates` and joint
ventures` revenue. Accordingly 2009 is not comparable with 2008 as
MillerCoors` revenue is not included in 2009 although Miller Brewing
Company revenue is included in 2008.
(c) Note 2 provides a reconciliation of operating profit to EBITA which
is defined as operating profit before exceptional items and amortisation
of intangible assets (excluding software) but includes the group`s share of
associates` and joint ventures` operating profit, on a similar basis. EBITA
is used throughout this preliminary announcement.
(d) Adjusted profit before tax comprises EBITA less adjusted net finance
costs of US$699 million (2008: US$491 million) and share of associates` and
joint ventures` net finance costs of US$25 million (2008: US$11 million).
(e) A reconciliation of adjusted earnings to the statutory measure of
profit attributable to equity shareholders is provided in note 6.
CHIEF EXECUTIVE`S REVIEW
MEYER KAHN, CHAIRMAN OF SABMILLER, SAID:
"The group delivered robust results in the face of multiple challenges
including higher commodity costs, an appreciating US dollar and weakening
consumer spend. Our performance in this difficult environment was driven by
continued adherence to our strategic priorities and the power of our leading
local brands which have been patiently built over many years. Our medium to
long term prospects remain promising because of our proven ability to grow the
beer category and increase its share of total alcohol consumption in developing
markets."
2009 Organic,
constant
EBITA Reported currency
US$m growth growth
% %
Latin America 1,173 10 11
Europe 944 (1) (5)
North America 581 22 22
Africa and Asia 642 13 16
South Africa: Beverages 764 (26) (8)
South Africa: Hotels and Gaming 122 (14) 4
Corporate (97) - -
Group 4,129 - 5
BUSINESS REVIEW
The group delivered resilient underlying results for the year against the
difficult backdrop of the global economic downturn. There was a slight rise
in organic lager volumes in the first half, despite price increases, challenging
comparatives and slowing growth across a number of markets. Demand weakened in
the second half, particularly in the last quarter, and organic lager volumes
declined 1% as the effects of the financial crisis began to be felt more
directly by consumers.
Organic lager volumes for the full year were level with the prior year. Many
of our businesses achieved market share gains reflecting the strength of our
brands and our local marketing and sales capabilities. Aggregated beverage
volumes were up 10% to 359 million hl with aggregated reported lager volumes up
11% to 292 million hl including acquisitions in Europe, Africa and Asia as well
as the inclusion of 100% of volumes from MillerCoors. A 9% increase in group
revenue for the year on an organic, constant currency basis reflected stronger
pricing in most of our markets.
Effective revenue and cost management delivered organic, constant currency
EBITA growth of 5% with better underlying performance in the second half as
cost trends improved, particularly in Latin America, and the contribution from
soft drinks strengthened. However, on a reported basis, the second half
results deteriorated year on year as a result of the significant weakening of
our major operating currencies against the US dollar leaving reported EBITA of
US$4,129 million flat for the full year. EBITA margin declined 110 basis
points (bps) on the prior year to 16.3% reflecting continued increases in
input costs, despite robust pricing and initiatives to reduce fixed costs across
the group. During the second half of the year, the group has re-evaluated
spending in light of the changing consumer environment and is selectively
maintaining investment behind its brands and operations to support future
growth.
Despite EBITA being level with the prior year, adjusted earnings and adjusted
earnings per share declined by 4% due to a significant increase in net finance
costs which was partly offset by a lower effective tax rate of 30.2%.
Net debt at the year end was lower than at the prior year end, despite
significant capital investment especially in the first half year. The groups
leverage remains at a healthy level compared to its sector, with gearing of
54.1%. The Board has recommended a final dividend of 42.0 US cents per share,
which will be paid to shareholders on 28 August 2009. This brings the total
dividend to 58.0 US cents, unchanged from the prior year.
- LATIN AMERICA achieved organic lager volume growth of 1%, with robust
growth in Peru and Ecuador off-set by the impact of the economic slowdown in
Colombia and Central America. The region benefited from strong pricing,
favourable mix and initiatives to reduce fixed costs which resulted in an
improvement of 100 bps in EBITA margin. Innovation to lift the appeal of the
beer category continued, resulting in a rising share of beer within the alcohol
market. EBITA rose by 10% on a reported basis and by 11% on organic, constant
currency basis.
- EUROPE`S organic lager volumes were in line with last year as economic
conditions deteriorated sharply in the second half putting pressure on consumer
disposable income. Against this background, the group achieved good market
share gains in Poland, Romania and the UK, with positive momentum behind key
brands. Despite strong pricing, increased raw material and distribution costs
reduced the EBITA margin. Reported EBITA declined 1% and organic, constant
currency EBITA declined 5%.
- NORTH AMERICA delivered EBITA growth of 22% for the year. MillerCoors, the
combined US and Puerto Rican operations of SABMiller and Molson Coors Brewing
Company, created as a joint venture on 1 July 2008, enjoyed a very successful
start despite challenging economic conditions. Good progress has been made in
the delivery of its US$500 million cost synergy plan, with first year synergies
expected to be delivered ahead of schedule. On a pro forma1 basis, domestic
sales to wholesalers (STWs) were down 1.9% while sales to retailers (STRs) were
down 0.4% for the nine months of MillerCoors` operations. Revenue remained
strong, growing mid-single digits as MillerCoors sustained firm pricing and
reduced price promotion. The robust pricing, combined with accelerated cost
synergies and marketing phasing, more than offset increased commodity costs to
grow EBITA by 29% on a pro forma basis for the nine months of MillerCoors`
operations.
- In AFRICA the strategy to broaden our brand portfolio with premium and
affordable offerings contributed to organic lager volume growth of 5%.Tanzania
delivered lager volume growth of 4% despite infrastructure challenges. In
Angola, both soft drinks and lager performed very well with organic growth of
29% and 17% respectively following significant investment in new capacity.
Mozambique`s lager volumes were marginally ahead of last year. Botswana was
adversely impacted by the introduction of a 30% levy on alcoholic beverages in
November 2008, resulting in an 8% decline in lager volumes for the full year.
A significant capital expenditure programme continues in Africa, with four
breweries scheduled to open in the current financial year. In Asia, the group`s
China associate, CR Snow, acquired a further three breweries while growing lager
volumes organically by 4%. The Snow brand enjoyed growth of 19%, cementing its
position as one of the largest beer brands in the world by volume. India
volumes grew 5% despite continued regulatory issues, particularly in the key
market of Andhra Pradesh.
- In SOUTH AFRICA lager volumes were 2% down on the prior year, adversely
affected by weaker consumer spending, the timing of Easter and constraints on
sales of alcoholic beverages imposed in the Western Cape. Revenue growth of 11%
on a constant currency basis reflected strong pricing in both lager and soft
drinks although this was not enough to offset markedly higher input costs, and
EBITA margin declined. We expanded our product portfolio with the launch of two
premium lager brands and a premium dry apple ale and intensified marketing and
sales initiatives.
- During the year we continued to expand our global portfolio, completing the
acquisition of brewing companies in the Ukraine, Russia and Nigeria as well as
taking full ownership of our Vietnamese associate. We also acquired water
businesses in Ghana and Nigeria. Water interests in Colombia and a soft drinks
business in Bolivia were sold, realising a profit on disposal.
1 MillerCoors pro forma figures are based on results for Miller and Coors` US
and Puerto Rico operations reported under International Financial Reporting
Standards (IFRS) and US GAAP respectively for the nine months ended 31 March
2008. Adjustments have been made to reflect both companies` comparative data on
a similar basis including amortisation of definite-life intangible assets,
depreciation reflecting revisions to property, plant and equipment values and
the exclusion of exceptional items.
- Following the global economic slowdown in the second half of the year, some of
our operations in Latin America and Europe are being integrated and restructured
resulting in charges of US$82 million for the year. Restructuring in these
regions is expected to provide pre tax benefits of approximately US$37 million
per annum from our 2011 financial year. In addition, integration and
restructuring relating to MillerCoors has resulted in charges of US$61 million
during the year.
- Net exceptional charges of US$69 million have been taken against profit before
tax. In addition to the restructuring charges outlined above, this includes
US$526 million of profits on disposal of North American operations to the
MillerCoors joint venture and the sale of two soft drinks businesses in Latin
America. As a result of the deterioration in economic and trading conditions in
the Netherlands and the Ukraine, we have taken impairment charges of US$392
million against the carrying values of Grolsch and our Ukraine operation,
although we remain confident in the strategic and long term potential of both of
these businesses.
- On 13 May 2009, SABMiller plc entered into an agreement to acquire the
outstanding 28.1% minority interest in its Polish subsidiary Kompania Piwowarska
S.A. in exchange for the issue of 60 million ordinary shares of SABMiller plc.
OUTLOOK
The group delivered resilient underlying results, despite the strong headwinds
that we faced. Global economic conditions and consumer demand weakened during
the year and there remains little visibility as to the timing of any recovery.
In the current year we expect commodity cost pressures to continue, given
existing contractual arrangements. In addition, the currency translation effect
of the stronger US dollar will impact our reported results.
However, the group remains confident in its medium term prospects. We are
taking appropriate short-term mitigating actions in certain countries to reduce
costs. Investment plans have been reviewed and curtailed where necessary in the
light of expected economic conditions, but we continue to invest selectively to
support growth. The group remains in a strong financial position, and we are
confident that we will continue to benefit from the strength of our brands and
our globally diversified and well balanced portfolio of businesses.
ENQUIRIES:
SABMiller plc Tel: +44 20 7659 0100
Sue Clark Director of Corporate Affairs Mob: +44 7850 285471
Gary Leibowitz Senior Vice President, Mob: +44 7717 428540
Investor Relations
Nigel Fairbrass Head of Media Relations Mob: +44 7799 894265
A live webcast of the management presentation to analysts will begin at 9.30am
(BST) on 14 May 2009.
This announcement, a copy of the slide presentation and video interviews with
management are available on the SABMiller plc website at www.sabmiller.com.
Video interviews with management can also be found at www.cantos.com.
High resolution images are available for the media to view and download free of
charge from the image library within the News and media section of
www.newscast.co.uk.
Copies of the press release and detailed Preliminary Announcement are available
from the Company Secretary at the Registered Office, or from 2 Jan Smuts Avenue,
Johannesburg, South Africa.
Registered office: SABMiller House, Church Street West, Woking, Surrey GU21 6HS
Incorporated in England and Wales (Registration Number 3528416)
Telephone: +44 1483 264000
Facsimile: +44 1483 264117
OPERATIONAL REVIEW
Following the inception of the MillerCoors joint venture the group has revised
its volume definitions. Further details can be found in the Financial review on
page 15. All volume figures, including comparatives, and growth rates in the
following operational reviews are presented under the new volume definition.
LATIN AMERICA
Financial summary 2009 2008 %
Group revenue (including share of 5,495 5,251 5
associates) (US$m)
EBITA* (US$m) 1,173 1,071 10
EBITA margin (%) 21.4 20.4
Sales volumes** (hl 000)
- Lager 37,138 36,846 1
- Soft drinks 18,509 18,484 -
- Soft drinks organic 18,509 18,140 2
* In 2009 before net exceptional credits of US$45 million (2008: net exceptional
charges of US$61 million) being profits on disposal of the Colombian water
business and the Bolivian soft drinks operations of US$89 million net of
integration and restructuring costs of US$31 million and a US$13 million charge
in respect of litigation.
** Volume figures have been restated for the prior period following the revision
of the group`s volume definitions (see page 15).
LATIN AMERICA`S initiatives to develop increasingly differentiated brand
portfolios and to enhance sales activities resulted in a rising share of
beer within the alcohol market. Our brands demonstrated resilience in tough
consumer and economic environments in Colombia and Central America while
favourable trading conditions and improved market execution in Peru and
Ecuador boosted lager volume performance. Continued robust pricing and
productivity enhancements offset increased commodity costs, resulting in an
improvement in EBITA margin of 100 bps and EBITA growth of 10%. The Brisa
water brand in Colombia and the soft drinks bottling operations in Bolivia
were sold realising a profit of US$89 million. Reduced capital expenditure
across the region improved cash generation. In response to economic conditions,
the region embarked on a number of restructuring programmes during the year.
Following several years of strong growth, lager volumes in COLOMBIA declined
6% reflecting the economic recession in the country, high interest rates and
depressed consumer spending. GDP growth for the quarter to December 2008
slowed sharply to -0.7% from 7.6% in 2007. National retail sales fell by 4%
and industrial output fell by 13% in February versus the prior year. Despite
the volume decline, we gained share of the alcohol market throughout the year
with March reaching a record high of 68%, up 400 bps on the prior year. Poker,
Pilsen and Aguila Light all recorded healthy growth. The Aguila brand benefited
from the introduction of the 225 ml bottle in the northern part of the country.
Premium volumes grew by 12%, driven by 10% growth of Club Colombia and a strong
performance by Redd`s following its launch in late 2007. Marketing expenditure
declined following several years of significant brand renovations and launches
while strong pricing, beneficial mix and cost productivity improved EBITA
margin.
In PERU lager volumes grew 9%, despite a slowdown in the fourth quarter.Market
share ended the fourth quarter 400 bps ahead of the prior year due to the
successful positioning of Pilsen Trujillo as a national economy brand. Our
premium brand Cusquena also performed well with volume growth of 59% and market
share growth of 280 bps. A price increase introduced across most of our brands
in March 2009 reflects the strength of our lager portfolio in a very competitive
market, whilst an earlier 9% increase on Pilsen Trujillo followed our
competitive success in the economy segment. We launched a new brand, Quara,
in March 2009 aimed at female consumers but with potential appeal to all
consumer segments. The second half of the year benefited from improved route to
market and direct store delivery.
Our ECUADOR business continued to perform well benefiting from brand renovation,
improved route to market and sales execution, investment in refrigeration and
the introduction of national pricing. These improvements, together with greater
disposable income following two increases in the national minimum wage, grew
lager volumes by 14%. In the premium segment, the Club brand was repositioned
as more distinctly premium and the pack was extended to include a new 550ml
bottle resulting in premium sector growth of over 100% for the year. Premium
brands now account for 8% of our portfolio. The launch of Conquer, a new
mainstream brand, in the second half of the year had a promising start. The
flagship mainstream brand Pilsener continued to perform well, following its
renovation last year, with growth of 13%.
PANAMA`S lager volumes were level with last year. Strong performance from
Balboa, following its re-launch in 2008, and our super premium brands offset the
softer performance of Atlas. Price increases were taken selectively on lager to
offset increased commodity costs. Soft drinks volumes grew 9% with sparkling
soft drinks up 5%, led by the Schweppes brands and PET growth while non
alcoholic malt beverages grew 37%, supported by upgraded brand imagery and the
introduction of a new PET pack.
Operations in HONDURAS had a challenging year with the US economic slowdown
affecting remittances and local unemployment rising to 28%. Disposable income
has been impacted, particularly in the fourth quarter. Lager volumes were level
with prior year despite good growth in the super premium segment which offset
some volume loss from our Imperial brand. Lager prices were increased on
average by 8% to help absorb commodity price increases. Investment in
refrigeration continued in the second half, embedding the cold beer culture in
the trade. Soft drinks volumes grew 3% driven by 7% growth in Tropical, the
launch of Coca Cola Zero and new Coca Cola multi serve PET packages. Price
increases on soft drinks offset marginally negative mix driven by higher sales
of non-returnable family packs.
In EL SALVADOR we re-launched the mainstream Pilsener brand with more attractive
packaging and a new 330ml returnable bottle. Despite the success of the re-
launch, tight economic conditions led to a decline in lager volumes of 6%. Soft
drinks volumes were level with the prior year.
EUROPE
Financial summary 2009 2008 %
Group revenue (including share of 6,145 5,248 17
associates) (US$m)
EBITA* (US$m) 944 952 (1)
EBITA margin* (%) 15.4 18.1
Sales volumes** (hl 000)
- Lager 47,237 43,826 8
- Lager organic 43,912 43,826 -
* In 2009 before net exceptional costs of US$452 million (2008: US$nil) being
the impairment of non-current assets of US$392 million, integration and
restructuring costs of US$51 million and the unwind of fair value adjustments on
inventory following the acquisition of Grolsch of US$9 million.
** Volume figures have been restated for the prior period following the revision
of the group`s volume definitions (see page 15).
In EUROPE, reported lager volumes grew 8% while organic lager volumes were level
with the prior year. Economic conditions deteriorated sharply in most markets
in the second half which put pressure on consumer spending and constrained beer
volume growth. Our competitive strength allowed us to gain market share by
volume in Poland, Romania and the UK with strong momentum behind key brands. In
the Czech Republic, we consolidated our market leadership with an increase in
value share. In Russia, poor summer weather and high distributor stocks
adversely affected volumes, although recent trends are positive.
Organic constant currency revenue per hectolitre grew 6% as we maintained strong
pricing in most markets. Despite this, significantly higher raw material and
distribution costs negatively impacted the EBITA margin. Marketing expenditure
was selectively reduced but fixed costs rose, particularly in support of growth
in Romania and our new operations in Russia. Reported EBITA declined 1%, while
on an organic, constant currency basis it declined 5%. Action has been taken to
reduce the European cost base by restructuring some businesses.
Impairment charges of US$392 million have been taken of which US$42 million
relates to our investment in Ukraine and US$350 million relates to our Grolsch
acquisition in the Netherlands.
In POLAND, our organic volumes were up 3% in a market which levelled off as
consumer disposable income was impacted by the economic downturn and increasing
unemployment. Market share gains were driven by strong sales execution,
additional fridge placement and trade promotional programmes around the Olympics
and the Euro 2008 soccer championships. Market share improved by 150 bps due to
more focused sales and marketing investment. Volumes of Tyskie and our premium
brand Lech were both up 4%, while Zubr grew 2% and Redd`s and Peroni Nastro
Azzurro showed double-digit growth. A number of innovations were introduced
during the year, including a complete renovation of Tyskie`s packaging and the
introduction of new "sleek "cans for non-alcoholic and flavoured brands.
Revenue per hectolitre grew 6% following three price increases during the year,
helping to offset significant raw material cost increases and a substantial rise
in excise.
In the CZECH REPUBLIC we continued to focus on value leadership with
our premium-biased portfolio, accepting a volume share decline of 60
basis points in a market which declined 4%. The economic slowdown was
reflected in fewer tourists in Prague, lower on premise consumption, and
some down-trading. Our premium brands Pilsner Urquell, Frisco, Master and the
non-alcoholic Birell all performed well. In mainstream, Kozel was up 8%,
becoming the country`s number two national brand, while the volume decline on
Gambrinus was halted in the final quarter by the launch of the higher priced ?11
degree? variant, which already leads in the semi-premium category. Revenue per
hectolitre growth of 5% together with efficiency in marketing investment and
productivity in overheads offset raw material cost increases.
In ROMANIA, strong volume growth of 18% was achieved within market growth of 3%,
but both the economy and the beer market slowed noticeably in the second half.
We increased our market share by 390 basis points for the year. Our improved
performance is due to our strong brand portfolio which covers all price
segments, and increased PET and can availability. Better distribution and
merchandising in the off premise channel also contributed to our strong result.
Our Timisoreana brand has continued to be the key growth driver, consolidating
its leading market position and growing volumes 27%. Ursus, Peroni Nastro
Azzurro and Redd`s all performed well in the premium segment, and benefited from
extended distribution, tailored service packages and increased refrigeration
coverage. Pricing above inflation was achieved and revenue per hectolitre
increased 8%. The recent acquisition of the Azuga brand will underpin our
portfolio in the economy segment.
In RUSSIA, the economy entered into recession in quarter four which, together
with poor weather during summer 2008, resulted in beer industry production
volumes declining 2%, with the Moscow region down by 6%. SABMiller Russia sales
to retailers (STRs) were level with the prior year, while organic sales to
wholesalers (STWs) were 7% down reflecting distributor de-stocking, mainly
during the third quarter. Despite the downturn, our Kozel and Redd`s brands
showed good growth, driven by product and pack innovations, although Zolotaya
Bochka volume fell. Sales of Miller Genuine Draft declined during the year but
showed value share growth in the last quarter, following the launch of Miller
Midnight. Industry pricing was robust and our revenue per hectolitre was up
12%. We have increased sales staff by 10% in preparation for supply from our new
Ulyanovsk brewery in the summer. In June 2008, we acquired LLC Vladpivo in the
Russian far-east region and are nearing completion of the integration process.
In July 2008, CJSC Sarmat in Ukraine was acquired and quality upgrades and brand
repositioning are underway.
In the NETHERLANDS, the beer industry has had to contend with a number of new
challenges. These include a 30% excise increase, a public area smoking ban,
alcohol advertising restrictions and a weak economic environment with low
consumer confidence. The beer market declined 4% with the on premise channel
down 7%. In this context, Grolsch branded volumes were down 4% and market share
remained in line with prior year.
In ITALY, as elsewhere in Western Europe, economic conditions have worsened and
the beer market declined 4%, with a sharp decline in the fourth quarter. In
particular, the on premise channel has suffered from down trading and an
accelerating consumer switch to off trade. Against this background, Birra
Peroni`s branded volumes declined 3% although market share was held for the
year. Sales of brand Peroni were in line with prior year, assisted by national
sports sponsorships including Euro 2008, on-pack promotions, a new 50cl can and
limited edition packs. Prices increased on average by 9% in November 2008 but
due to down trading, revenue per hectolitre was only up 3%. The Bari brewery
has returned to full operation after a major fire in July 2008.
In the UNITED KINGDOM, despite a beer market decline of 6% and an on premise
decline of 10%, our lager volumes grew 20%, with Peroni Nastro Azzurro growth of
39%. Pilsner Urquell performed well in export territories with double digit
growth in the UK and Germany. In Hungary, Slovakia and the Canaries, economic
conditions are severe and the beer markets are in decline. We held market share
in Hungary and retained our leadership position in the Canaries.
NORTH AMERICA
Financial summary 2009 2008 %
Group revenue (including share of joint 5,2271 5,120 2
ventures) (US$m)
EBITA* (US$m) 5811 477 22
EBITA margin* (%) 11.11 9.3
Sales volumes** (hl 000)
- Lager - excluding contract brewing 45,6291 48,211 (5)
- Soft drinks 541 87 (38)
MillerCoors` volumes - 1 July to 31
March
- Lager - excluding contract brewing 30,930 31,5282 (2)
- Sales to retailers (STRs) 31,303 31,4202 -
* In 2009 before a net exceptional credit of US$325 million being the profit on
the deemed disposal of the Miller business of US$437 million and exceptional
costs of US$28 million in relation to the integration and restructuring costs
for MillerCoors, together with the group`s share of MillerCoors` integration and
restructuring costs of US$33 million, the group`s share of the unwind of the
fair value inventory adjustment of US$13 million and the group`s share of the
impairment of the Sparks brand of US$38 million (2008: US$51 million in relation
to retention arrangements and other integration costs relating to MillerCoors).
** Volume figures have been restated for the prior period following the revision
of the group`s volume definitions (see page 15).
NORTH AMERICA delivered strong profit growth for the financial year with a very
good earnings contribution from Miller Brewing Company in the first quarter and
a strong financial performance from MillerCoors since it began combined
operations on 1 July 2008. Lager volumes, excluding contract brewing, declined
5%. The early progress on MillerCoors` integration accelerated the delivery of
synergies which combined with robust pricing helped to deliver a 22% increase in
EBITA1 versus the prior year. The sale of hops which were surplus to Miller`s
requirements and the phasing of marketing spend, enhanced the result.
MILLERCOORS
For the first nine month period of MillerCoors` operations, US domestic sales to
retailers (STRs) were down 0.4% on a pro forma2 basis, while domestic sales to
wholesalers (STWs) were down 1.9% on a pro forma basis largely due to reductions
in distributor inventories since 1 July 2008. On a pro forma basis contract
brewing volumes fell by 6.3%, while profits from contract brewing remained in
line with the prior year.
Pricing remained strong; total net revenue per hectolitre for the nine months
grew by mid single digits on a pro forma basis, driven by strong front line
pricing and reduced promotion and discounts. MillerCoors continues to realise
supply chain related synergies and deliver savings from its cost leadership
programmes, but costs of goods sold per hectolitre increased mid single digits
due to significant commodity cost related increases in brewing and packaging
materials. Marketing, general and administrative costs decreased driven by
timing and management of marketing and sales spending and the accelerated timing
of synergy delivery. EBITA grew by 29% on a pro forma basis driven by increased
revenue as well as the realisation of synergies from the joint venture.
1 Volumes, group revenue, and EBITA presented represent 100% of Miller Brewing
Company performance in the first quarter of the year ended 31 March 2009 and the
group`s 58% share of MillerCoors` performance and the retained wholly owned
Miller Brewing Company business (principally MBI) for the balance of the year.
2 MillerCoors pro forma figures are based on results for Miller and Coors` US
and Puerto Rico operations reported under International Financial Reporting
Standards (IFRS) and US GAAP respectively for the nine months ended 31 March
2008. Adjustments have been made to reflect both companies` comparative data on
a similar basis including amortisation of definite-life intangible assets,
depreciation reflecting revisions to property, plant and equipment values and
the exclusion of exceptional items.
For the nine month period to 31 March 2009, premium light brand STRs were up
slightly versus prior year due to solid growth of Coors Light and acceleration
of MGD 64, despite price increases across the segment. Coors Light was up a low
single digit percentage versus prior year. Miller Lite STRs were down by a mid
single digit percentage although the rate of decline slowed in the final
quarter.
A new marketing campaign for Miller Lite was launched in late March focusing on
the long standing consumer equity associated with the brand`s taste. In
addition, innovative new packaging reinforcing the brand`s taste platform will
be rolled out nationwide during May 2009. MGD 64 volume growth has continued to
accelerate since its national launch in September 2008. In the quarter to 31
March 2009, MGD 64 exceeded Miller Genuine Draft Light volumes and pushed the
MGD franchise into positive growth. Coors Banquet continued to generate good
growth.
The craft and import portfolio rose a mid single digit percentage for the nine
months to 31 March 2009, led by the strong performance of Blue Moon and Peroni
Nastro Azzurro, offset by declines in Pilsner Urquell and Weinhard`s.
The domestic above premium portfolio declined by a double digit percentage due
to lower Miller Chill volume. The Sparks franchise continued to grow following
reformulation of the product.
The below premium portfolio was up by a low single digit percentage compared to
the prior year, as the strong performance of Keystone Light and accelerated
growth of Miller High Life more than offset declines in Milwaukee`s Best and
Icehouse.
The integration of MillerCoors` business processes and systems designed to
enable faster local decision making and streamlining of costs is proceeding
well. The MillerCoors` network optimisation project is ahead of schedule, as
more than 60% of the planned brewing production relocations were completed
within the financial year. Construction of the new MillerCoors` Chicago
corporate headquarters is nearing completion with an expected occupancy date in
mid 2009.
A total of US$78 million in synergy savings has been realised since 1 July 2008,
exceeding MillerCoors` original goal of US$50 million for the first 12 months of
operations. MillerCoors now expects to realise US$128 million of synergies by
30 June 2009.
By the end of calendar year 2009, MillerCoors expects to achieve a total of
US$238 million in synergies, surpassing its original forecast of US$225 million.
While the timing of synergy delivery has accelerated, the US$500 million synergy
goal is unchanged.
AFRICA AND ASIA
Financial summary 2009 2008 %
Group revenue (including share of 4,132 3,367 23
associates and joint ventures) (US$m)
EBITA (US$m) 642 568 13
EBITA margin (%) 15.5 16.9
Sales volumes (hl 000)*
- Lager 54,440 51,256 6
- Lager (organic) 53,423 51,256 4
- Soft drinks 8,352 8,305 1
- Soft drinks (organic) 8,336 7,411 12
- Other alcoholic beverages 4,079 3,210 27
* Volume figures have been restated for the prior period following the revision
of the group`s volume definitions (see page 15).
Africa continued to perform strongly with organic total volume growth of 10% for
the year. Asia organic total volumes grew in the second half of the year ending
4% ahead of the prior year with strong fourth quarter performances in both China
and India. Organic, constant currency revenue grew 26% in Africa reflecting
price increases generally in line with inflation, and 26% in Asia largely as a
result of positive pricing and sales mix trends in China. Combined EBITA grew
16% on an organic, constant currency basis.
AFRICA
Our strategy of broadening the brand portfolio with premium and affordable lager
offerings helped us to achieve organic lager volume growth of 5%. A refocused
approach to other beverage offerings delivered strong soft drinks and
traditional beer growth of 12% and 25% respectively on an organic basis. In the
latter part of the year, we acquired water businesses in Ghana and Nigeria as
well as a brewery in Nigeria to support our full beverage portfolio strategy for
Africa. Markets across the region continued to grow in line with the broader
economies, however momentum slowed in the fourth quarter in many countries.
TANZANIA achieved lager volume growth of 4% despite inconsistent energy supply
and infrastructure challenges which continue to constrain growth. A decline in
volumes in the fourth quarter followed the economic downturn and price increases
which were necessitated by substantial increases in commodity costs. The launch
of Eagle in a 300ml returnable bottle at an affordable price led to strong
growth for the brand. Progress continued on our new brewery in the south where
production is expected to commence in September 2009. This will free up
capacity in our Dar es Salaam brewery, whilst allowing us to reduce distribution
costs in the southern region.
MOZAMBIQUE`S lager volumes were slightly ahead of prior year despite a fourth
quarter decline. The south of the country was affected by reduced tourism while
improved infrastructure led to healthy economic growth in the north, supporting
our decision to open a new brewery in Nampula which will be commissioned in the
second half of our current financial year. Productivity improvements were
achieved following the expansion of the Maputo and Beira breweries. Marketing
spend was increased behind the launch of Laurentina Premium, a local premium
brand which has achieved good initial volumes. Average price increases of 10%
were below inflation but positive mix helped deliver revenue per hl growth of
13%.
BOTSWANA lager and traditional beer volumes slowed dramatically after the
implementation of a 30% levy on alcoholic beverages introduced on 1 November
2008. Since the levy, lager volumes have reduced significantly resulting in a
decline of 8% in the full year. This reduction has been compounded by the
downturn of an economy dependent on diamonds and consequently heavily affected
by the global recession. The returnable bottle pack continued to show good
growth and now represents 25% of volumes. Soft drinks had strong growth of 19%
driven by focused marketing and good weather.
ANGOLA`S economy remained strong with GDP growth of 18% for the year. Soft
drinks volumes had strong growth of 17%. Port congestion is resulting in a long
supply chain and logistics difficulties constraining our ability to meet demand.
Our new 2 million hl soft drinks facility in Luanda is expected to commence
production in the second half of 2009 which will alleviate the reliance on
imported product. In the south, our lager business continued to perform well
with volume growth of 31% following investment in new capacity. In addition we
have commenced construction of a brewery in North Luanda which will allow us to
compete in the fast growing beer market in this part of the country.
Commissioning of this brewery is set for late 2009.
An excise reduction to incentivise local farming led to good growth in the
economy segment in Uganda, albeit at slightly lower margins, while GHANA`S
growth was temporarily constrained by capacity. Zambia volumes were resilient,
despite a challenging economy, assisted by an excise reduction.
Traditional beer continued a year of strong growth with volumes up 25% on the
back of good agricultural harvests in Zambia and Malawi together with
intensified focus across the continent including product launches in additional
markets, greater product affordability and innovative supply chain initiatives.
CASTEL continued to deliver solid performance with organic lager volumes growing
9% and organic soft drinks volumes growing 11% on the back of strong
performances in Angola, Cameroon and Algeria. The growth in Angola follows the
commissioning of new breweries in Luanda and Cabinda, while in Cameroon growth
followed the acquisition of a competitor during the year. Castel has also
acquired new businesses in Guinea, Nigeria and Gambia.
ASIA
CHINA lager volumes benefited from a strong final quarter ending the year 6%
ahead of the prior year. Organic growth of 4% was below recent levels,
adversely affected by the Sichuan earthquake disaster in May 2008, but volumes
showed increasing resilience through the course of the year as consumer
acceptance of new pricing levels improved. Snow brand renovation during the
year, emphasising its local provenance, saw brand sales in excess of 60 million
hl for the first time, 19% ahead of the prior year cementing its position as one
of the largest beer brands in the world by volume. EBITA margin growth was
achieved on the back of improved pricing and brand mix.
INDIA had strong lager growth in the fourth quarter to end the year 5% ahead of
the prior year, despite continued regulatory issues especially in the key market
of Andhra Pradesh. The Haywards 5000 brand gained further market share during
the year, while Foster`s made significant market share gains. A new brand,
Indus Pride, was launched successfully in Rajasthan, exceeding initial
expectations, and a national roll out is planned.
Our joint venture in AUSTRALIA had another successful year with good growth in
the premium segment and overall organic volume growth in excess of 60% with
strong performances by Miller Chill and Bluetongue.
We took full ownership of our associate in VIETNAM during March 2009 which will
allow us to expand the brand portfolio with the intention of growing our market
share.
SOUTH AFRICA: BEVERAGES
Financial summary 2009 2008 %
Group revenue (including share of 3,955 4,446 (11)
associates) (US$m)
EBITA (US$m) 764 1,026 (26)
EBITA margin (%) 19.3 23.1
Sales volumes* (hl 000)
- Lager 25,949 26,526 (2)
- Soft drinks 17,303 16,657 4
- Other alcoholic beverages 1,325 1,176 13
* Volume figures have been restated for the prior period following the revision
of the group`s volume definitions (see page 15).
Consumer spending in South Africa was hampered by high interest rates and high
fuel prices in the first half of the year and by the effects of the global
economic downturn in the second half. Growth in gross domestic product slowed
to 3.1% in the 2008 calendar year from 5.1% in 2007, and fell 1.8% in the
quarter to December 2008. Retail sales for the eleven months to February 2009
were down 0.7% year on year, while sales for the month of February were down
4.5% year on year.
Lager volumes were down 2% on the prior year, affected by a decline in both
premium and flavoured alcoholic beverage volumes. Fourth quarter sales volumes
were further impacted by provincial legislation against the informal retail
liquor trade in the Western Cape and by the timing of Easter. The mainstream
category, which accounts for the bulk of total lager sales, remained in growth
despite robust price increases, supported by strong performances by both Hansa
Pilsener and Castle Lager. As anticipated, the loss of the Amstel brand has
reduced our share of the premium category and we are revitalising our premium
brand portfolio to deliver growth in this competitive environment. Cost
efficiency savings are being made to reinvest in marketing and sales execution
initiatives.
Soft drinks volumes grew by 4% with strong growth in sparkling soft drinks
outweighing a marginal decline in alternative beverages following the
discontinuation of a number of low margin fruit cordial brands. Market share
gains were achieved following the launch of Coca Cola Zero and flavoured
Sparletta brands.
Revenue grew by 11% on a constant currency basis underpinned by two price
increases in each of the beer and soft drinks businesses. Despite the price
increases, EBITA declined by 8% on a constant currency basis due to increased
commodity and energy costs and higher inflation. The weakening of the rand
against key trading currencies compounded the impact of underlying commodity
price increases. Distribution costs increased only marginally due to
distribution efficiencies which offset higher fuel costs. Marketing expenditure
grew by 8% as we intensified our marketing and sales initiatives for competitive
reasons. Increased container depreciation resulted from the company`s
replacement of the mainstream bottle pool which commenced in the prior year and
was completed in September 2008. EBITA was also adversely impacted by fair
value movements on procurement-related foreign currency contracts.
Two premium lager brands, Grolsch and Dreher, were launched in the first half of
the year, together with a new premium dry apple ale, Blakes and Doyle, expanding
our premium and alcoholic fruit beverage brand portfolios. We continued to
focus on generating excitement and appeal around existing brand equities,
introducing new pack designs for Brutal Fruit, upgrading pack designs for Miller
Genuine Draft, introducing new artwork for Castle Milk Stout and aligning Hansa
Marzen Gold and Hansa Pilsener packaging.
APPLETISER volumes were in line with prior year but the loss of the Just Juice
packaging contract put margins under pressure.
DISTELL volumes continued to show strong growth which, combined with robust
pricing and cost efficiency, helped to offset increased commodity costs to
deliver improved profitability.
SOUTH AFRICA: HOTELS AND GAMING
Financial summary 2009 2008 %
Group revenue (share of associate) 348 396 (12)
(US$m)
EBITA* (US$m) 122 141 (14)
EBITA margin* (%) 34.9 35.6
Revenue per available room (Revpar) - 67.4 76.1 (11)
US$
* In 2009 before exceptional costs of US$7 million in relation to the group`s
share of fair value mark to market losses on financial instruments (2008:
US$nil).
SABMiller is a 49% shareholder of the Tsogo Sun group.
The gaming industry in South Africa continued to grow, albeit at a slower rate
than in prior years, reflecting reduced consumer disposable income and the entry
of new competition. Tsogo Sun acquired a 23% share of Gold Reef Resorts
Limited, a listed operator with seven casino licences in South Africa, in
October 2008.
The South Africa hotel industry has been negatively impacted by the economic
downturn, particularly in the second half of the year, with a decline in demand
in the key corporate and leisure markets. Revpar growth of 10% was achieved in
constant currency as room rate increases offset the decline in occupancy.
However due to the strengthening of the dollar compared to the rand, Revpar
declined 11% in US dollars.
FINANCIAL REVIEW
NEW ACCOUNTING STANDARDS AND RESTATEMENTS
The accounting policies followed are the same as those published within the
Annual Report and Accounts for the year ended 31 March 2008 as amended for the
changes set out in note 1, which had no material impact on the group`s results.
The consolidated balance sheet as at 31 March 2008 has been restated for further
adjustments relating to the initial accounting for business combinations,
further details of which are provided in note 11. The Annual Report and
Accounts for the year ended 31 March 2008 is available on the company`s website,
www.sabmiller.com.
SEGMENTAL ANALYSIS
The group`s operating results on a segmental basis are set out in the segmental
analysis of operations, and the disclosures are in accordance with the basis on
which the businesses are managed and according to the differing risk and reward
profiles. SABMiller believes that the reported profit measures - before
exceptional items and amortisation of intangible assets (excluding software),
and including associates and joint ventures on a similar basis (i.e. before
interest, tax and minority interests) - provide to shareholders additional
information on trends and allow for greater comparability between segments.
Segmental performance is reported after the specific apportionment of
attributable head office service costs.
DISCLOSURE OF VOLUMES
Following the inception of the MillerCoors joint venture the group has revised
its volume definitions.
In the determination and disclosure of sales volumes, the group aggregates 100%
of the volumes of all consolidated subsidiaries and its equity accounted
percentage of all associates` and joint ventures` volumes. Contract brewing
volumes are excluded from volumes although revenue from contract brewing is
included within revenue. Volumes exclude intra-group sales volumes. This
measure of volumes is used in the segmental analyses as it more closely aligns
with the consolidated group revenue and EBITA disclosures.
In the determination and disclosure of aggregated sales volumes, the group
aggregates 100% of the volumes of all consolidated subsidiaries, associated
companies and joint ventures. Contract brewing volumes are excluded from
aggregated volumes although revenue from contract brewing is included within
revenue. Aggregated volumes exclude intra-group sales volumes.
ORGANIC, CONSTANT CURRENCY COMPARISONS
The group discloses certain results on an organic, constant currency basis, to
show the effects of acquisitions net of disposals and changes in exchange rates
on the group`s results. See page 38 for the definition.
In relation to the MillerCoors joint venture no adjustments have been made in
the calculation of organic results as the group`s share of the joint venture is
deemed to be comparable with 100% of the Miller business in the comparative
period.
ACQUISITIONS AND DISPOSALS
On 17 June 2008 the group acquired the Russian brewer LLC Vladpivo and on 4 July
2008 it acquired a 99.84% interest in the Ukrainian brewer CJSC Sarmat.
On 19 March 2009 the group acquired the 50% interest in the Vietnamese brewing
business, SABMiller Vietnam JV Company, which it did not already own.
During the year the group acquired an effective 57% interest in Pabod Breweries
in Nigeria and an effective 80% interest in Voltic International Inc, which has
water businesses in Ghana and Nigeria. These acquisitions, together with the
group`s investment in Southern Sudan, have been made on an 80:20 basis with
Castel.
On 30 June 2008, SABMiller and Molson Coors Brewing Company announced that they
had completed the transaction to combine the US and Puerto Rico operations of
their respective subsidiaries, Miller and Coors, in a joint venture,
MillerCoors, which began operating as a combined entity on 1 July 2008.
SABMiller has a 58% economic interest in MillerCoors and Molson Coors has a 42%
economic interest. Voting interests are shared equally between SABMiller and
Molson Coors, and each of SABMiller and Molson Coors has equal board
representation.
On 26 February 2009, the group completed the sale of its Agua Brisa bottled
water business in Colombia and on 26 March 2009 completed the disposal of its
Bolivian soft drinks business.
EXCEPTIONAL ITEMS
Items that are material either by size or incidence are classified as
exceptional items. Further details on the treatment of these items can be found
in note 3 to the financial statements.
Net exceptional charges of US$89 million before finance costs and tax were
reported during the year (2008: US$112 million), including net exceptional
charges of US$91 million (2008: US$nil) related to the group`s share of joint
ventures` and associates` exceptional charges. The net exceptional charge
included US$110 million related to integration restructuring costs in Latin
America, Europe and North America, a charge of US$392 million related to
impairments in Europe, a charge of US$9 million related to the unwinding of fair
value adjustments on inventory related to the acquisition of Grolsch, and a
US$13 million charge in relation to litigation in Latin America, partially
offset by a US$437 million profit on the deemed disposal of 42% of the US and
Puerto Rico operations of Miller and a US$89 million profit on the disposal of
soft drinks businesses in Colombia and Bolivia.
The group`s share of joint ventures` and associates` exceptional items includes
a charge of US$33 million related to the group`s share of MillerCoors`
integration and restructuring costs, US$13 million related to the group`s share
of the unwinding of fair value adjustments on inventory in MillerCoors, a charge
of US$38 million related to the group`s share of the impairment of the Sparks
brand in MillerCoors and a charge of US$7 million related to the group`s share
of fair value mark to market losses on financial instruments in Tsogo Sun.
In addition there was an exceptional gain in the year of US$20 million (2008:
US$nil) within net finance costs related to the early termination of financial
derivatives.
In 2008 net exceptional charges of US$112 million were reported, of which US$129
million related to restructuring costs incurred in Latin America and North
America, partially offset by a net profit of US$17 million on the disposal of
soft drinks businesses in Costa Rica and Colombia.
FINANCE COSTS
Net finance costs increased to US$706 million, a 55% increase on the prior
year`s US$456 million. Finance costs in the year include a net loss of US$27
million (2008: gain of US$35 million) from the mark to market adjustments of
various derivatives on capital items for which hedge accounting cannot be
applied. Finance costs in the year also include a US$20 million gain on the
early termination of financial derivatives. The mark to market loss and the
financial derivative termination gain have been excluded from the determination
of adjusted finance costs and adjusted earnings per share. Adjusted net finance
costs were US$699 million, up 42%. Whilst year end net debt has been favourably
impacted by currency movements over the last quarter, average net debt balances
during the year increased. This reflected funding of capital expenditure and
the timing of the acquisitions of Grolsch, Sarmat and Vladpivo. Interest cover,
as defined on page 38, has decreased to 6.6 times from 9.2 times in the prior
year.
PROFIT BEFORE TAX
Adjusted profit before tax of US$3,405 million decreased by 6% over the prior
year, primarily as a result of higher commodity costs, increased net finance
costs and the impact of the translation of local currency results into US
dollars. On a statutory basis, profit before tax of US$2,958 million was down 9%
including the impact of the exceptional and other adjusting finance items noted
above.
TAXATION
The effective tax rate of 30.2% before amortisation of intangible assets (other
than software), exceptional items and the adjustments to finance costs noted
above, is below that of the prior year (32.5%). The key drivers are a more
favourable geographic profits mix, certain statutory tax rate reductions and
continuing initiatives to seek efficiency in the group`s effective tax rate.
EARNINGS PER SHARE
The group presents adjusted basic earnings per share to exclude the impact of
amortisation of intangible assets (other than software) and other non-recurring
items, which include post-tax exceptional items, in order to present a more
useful comparison for the years shown in the consolidated financial statements.
Adjusted basic earnings per share of 137.5 US cents were down 4% on the prior
year, reflecting the weaker performance noted above. An analysis of earnings
per share is shown in note 6. On a statutory basis, basic earnings per share
were down 7% to 125.2 US cents.
GOODWILL AND INTANGIBLE ASSETS
Goodwill has decreased primarily due to foreign exchange movements and due to
the contribution of the Miller business to the MillerCoors joint venture and the
corresponding deemed disposal of a 42% interest in the Miller business including
the goodwill. The goodwill associated with the joint venture is included within
the investment in the joint venture. Intangible assets have decreased in the
year as a result of the MillerCoors transaction, foreign exchange movements and
amortisation. The prior year comparatives for both goodwill and intangible
assets have been restated to reflect the finalisation of the Grolsch purchase
price allocation exercise.
BORROWINGS AND NET DEBT
Gross debt at 31 March 2009, comprising borrowings together with the fair value
of derivative assets or liabilities held to manage interest rate and foreign
currency risk of borrowings, has decreased to US$9,131 million from US$9,733
million at 31 March 2008. Net debt comprising gross debt net of cash and cash
equivalents has decreased to US$8,722 million from US$9,060 million at 31 March
2008. The level of net debt benefited from the weakening of local currencies in
which net debt is denominated against the US dollar in the last quarter of the
year. An analysis of net debt is provided in note 10b.
The group`s gearing (presented as a ratio of debt/equity) has increased to 54.1%
from 49.7% at 31 March 2008. The weighted average interest rate for the gross
debt portfolio at 31 March 2009 was 7.1% (31 March 2008: 7.3%).
On 17 July 2008, SABMiller plc announced the completion of a US$1,250 million
bond issue. The notes have been issued pursuant to Rule 144A and Regulation S
under the US Securities Act of 1933 (as amended) in two tranches: US$550 million
of 5.5 year notes with a coupon of 5.70% and US$700 million of 10 year notes
with a coupon of 6.50%. The net proceeds of the bond issue have been used to
repay certain existing indebtedness. On 28 July 2008, SABMiller plc announced
the establishment of a US$5,000 million Euro Medium Term Note Programme to allow
the group to further diversify its sources of funding in the future, although no
notes have been issued under the programme at this time. On 15 August 2008
US$600 million 4.25% Guaranteed Notes 2008, originally issued by Miller Brewing
Company but assumed by SABMiller plc on 30 June 2008, matured and were
refinanced in full by a three year committed bank facility.
The maturity date on the US$1,000 million 364 day facility was extended from
October 2008 to 7 October 2009 with a one year term-out option. At 31 March
2009, the group had undrawn committed borrowing facilities of US$2,093 million
(2008: US$1,222 million).
CAPITAL EXPENDITURE
The group has continued to invest in its operations, including brewery
expansions in Poland and Romania and new breweries in Russia, Angola,
Mozambique, Sudan and Tanzania. Capital expenditure for the year was US$2,073
million (2008: US$1,978 million), with the majority of the expenditure in the
first half of the year. With effect from 1 July 2008, the capital expenditure
for the MillerCoors joint venture is excluded from the consolidated capital
expenditure reported.
Capital expenditure including the purchase of intangible assets was US$2,147
million (2008: US$2,037 million).
CASH FLOW
Net cash generated from operations before working capital movements (EBITDA)
decreased by 8% to US$4,164 million compared to the prior year. This decrease
was primarily due to the reduction in EBITDA from North America following the
formation of the MillerCoors joint venture, as EBITDA excludes associates and
joint ventures. Net cash generated from operating activities of US$2,183
million was down 22% reflecting this reduction in EBITDA and an increase in
working capital, due principally to an increase in receivables reflecting higher
pricing, selective extension of credit terms and increased sales to key
accounts, an increase in inventory mainly resulting from higher prices of
commodities and the timing of Easter. In addition net interest paid rose offset
by lower tax payments.
TOTAL EQUITY
Total equity decreased from US$18,244 million (as restated) at 31 March 2008 to
US$16,113 million at 31 March 2009. The decrease arose principally due to
currency translation movements on foreign currency investments and dividend
payments, partly offset by the profit for the year.
CURRENCIES
The rand declined against the US dollar during the year and ended the financial
year at R9.61 to the US dollar, while the weighted average rand/dollar rate
weakened by 20% to R8.87 compared with R7.13 in the prior year. The Colombian
peso (COP) weakened by almost 29% against the US dollar compared to the prior
year and ended the financial year at COP2,561 to the US dollar compared with
COP1,822 at 31 March 2008. The weighted average COP/dollar rate weakened by 3%
to COP2,061 compared to COP1,997 in the prior year.
DIVIDEND
The board has proposed a final dividend of 42.0 US cents per share for the year.
Shareholders will be asked to approve this recommendation at the annual general
meeting, which will be held on Friday 31 July 2009. If approved, the dividend
will be payable on Friday 28 August 2009 to shareholders registered on the
London and Johannesburg registers on Friday 21 August 2009. The ex-dividend
trading dates will be Wednesday 19 August 2009 on the London Stock Exchange
(LSE) and Monday 17 August 2009 on the JSE Limited (JSE). As the group reports
in US dollars, dividends are declared in US dollars. They are payable in South
African rand to shareholders on the Johannesburg register, in US dollars to
shareholders on the London register with a registered address in the United
States (unless mandated otherwise), and in sterling to all remaining
shareholders on the London register.
The rate of exchange applicable on Thursday 30 July 2009 will be used for US
dollar conversion into South African rand and sterling. A currency conversion
announcement will be made on the JSE`s Securities Exchange News Service and on
the LSE`s Regulatory News Service, indicating the rates of exchange to be
applied, on Friday 31 July 2009.
From the commencement of trade on Friday 31 July 2009 until the close of
business on Friday 21 August 2009, no transfers between the London and
Johannesburg registers will be permitted, and from Monday 17 August 2009 until
Friday 21 August 2009, no shares may be dematerialised or rematerialised, both
days inclusive.
ANNUAL REPORT AND ACCOUNTS
The group`s unaudited condensed financial statements and certain significant
explanatory notes follow. The annual report will be mailed to shareholders in
late June 2009 and the annual general meeting of the company will be held at the
Intercontinental Park Lane Hotel in London at 11:00 on Friday 31 July 2009.
SABMiller plc
CONSOLIDATED INCOME STATEMENT
for the year ended 31 March
2009 2008
Unaudited Audited
Notes US$m US$m
REVENUE 2 18,703 21,410
Net operating expenses (15,555) (17,962)
OPERATING PROFIT 2 3,148 3,448
Operating profit before exceptional 3,146 3,560
items
Exceptional items 3 2 (112)
NET FINANCE COSTS 4 (706) (456)
Interest payable and similar charges (1,301) (721)
Interest receivable and similar income 595 265
Share of post-tax results of 2 516 272
associates and joint ventures
PROFIT BEFORE TAXATION 2,958 3,264
Taxation 5 (801) (976)
PROFIT FOR THE FINANCIAL YEAR 2,157 2,288
Profit attributable to minority 276 265
interests
Profit attributable to equity 1,881 2,023
shareholders
2,157 2,288
BASIC EARNINGS PER SHARE (US cents) 6 125.2 134.9
DILUTED EARNINGS PER SHARE (US cents) 6 124.7 134.2
All operations are continuing.
The notes on pages 23 to 37 form an integral part of these condensed
financial statements.
Non-GAAP measure: group revenue
2009 2008
Unaudited Audited
US$m US$m
REVENUE 18,703 21,410
Adjustment for:
Share of associates` and joint 6,5991 2,418
ventures` revenue
GROUP REVENUE 2 25,302 23,828
1 Includes the group`s share of MillerCoors` revenue from 1 July 2008.
SABMiller plc
CONDENSED CONSOLIDATED BALANCE SHEET
at 31 March
2009 2008*
Unaudited Unaudited
Notes US$m US$m
ASSETS
NON-CURRENT ASSETS
Goodwill 8 8,734 15,133
Intangible assets 8 3,729 5,036
Property, plant and equipment 7,404 9,113
Investments in joint ventures 9 5,495 -
Investments in associates 9 1,787 1,826
Available for sale investments 29 53
Derivative financial instruments 695 208
Trade and other receivables 125 237
Deferred tax assets 161 341
28,159 31,947
CURRENT ASSETS
Inventories 1,242 1,362
Trade and other receivables 1,576 1,865
Current tax assets 168 190
Derivative financial instruments 54 45
Available for sale investments 11 -
Cash and cash equivalents 10b 409 673
3,460 4,135
TOTAL ASSETS 31,619 36,082
LIABILITIES
CURRENT LIABILITIES
Derivative financial instruments (35) (34)
Borrowings 10b (2,148) (2,062)
Trade and other payables (2,396) (3,307)
Current tax liabilities (463) (540)
Provisions (299) (314)
(5,341) (6,257)
NON-CURRENT LIABILITIES
Derivative financial instruments (107) (497)
Borrowings 10b (7,470) (7,596)
Trade and other payables (186) (338)
Deferred tax liabilities (2,029) (1,949)
Provisions (373) (1,201)
(10,165) (11,581)
TOTAL LIABILITIES (15,506) (17,838)
NET ASSETS 16,113 18,244
EQUITY
Total shareholders` equity 15,375 17,545
Minority interests 738 699
TOTAL EQUITY 16,113 18,244
* As restated (see note 11).
The notes on pages 23 to 37 form an integral part of these condensed financial
statements.
SABMiller plc
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 March
2009 2008
Unaudited Audited
Notes US$m US$m
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from operations 10a 3,671 4,276
Interest received 275 228
Interest paid (997) (730)
Tax paid (766) (969)
NET CASH FROM OPERATING ACTIVITIES 2,183 2,805
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and (2,073) (1,978)
equipment
Proceeds from sale of property, 75 110
plant and equipment
Purchase of intangible assets (74) (59)
Purchase of available for sale (14) -
investments
Proceeds from disposal of available 4 5
for sale investments
Proceeds from disposal of businesses 119 71
Proceeds from sale of associates - 2
Acquisition of subsidiaries (net of (269) (1,284)
cash acquired)
Overdraft disposed with subsidiaries 2 -
Cash disposed with businesses (4) -
Purchase of shares from minorities (5) (49)
Investments in joint ventures (397) -
Investments in associates (4) (179)
Repayment of investments by 3 -
associates
Dividends received from joint 454 -
ventures
Dividends received from associates 151 91
Dividends received from other 1 1
investments
NET CASH USED IN INVESTING (2,031) (3,269)
ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issue of shares 23 39
Purchase of own shares for share (37) (33)
trusts
Proceeds from borrowings 4,960 6,492
Repayment of borrowings (4,096) (5,038)
Net repayment of capital element of (1) (7)
finance leases
Net cash payments on net investment (12) (16)
hedges
Dividends paid to shareholders of (877) (769)
the parent
Dividends paid to minority interests (217) (197)
NET CASH (USED)/GENERATED IN (257) 471
FINANCING ACTIVITIES
Net cash from operating, investing (105) 7
and financing activities
Effects of exchange rate changes 26 (113)
NET DECREASE IN CASH AND CASH (79) (106)
EQUIVALENTS
Cash and cash equivalents at 1 April 188 294
CASH AND CASH EQUIVALENTS AT 31 10b 109 188
MARCH
The notes on pages 23 to 37 form an integral part of these condensed financial
statements.
SABMiller plc
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
for the year ended 31 March
2009 2008
Unaudited Audited
US$m US$m
Currency translation differences on foreign (3,386) 2,029
currency net investments
Actuarial (losses)/gains on defined benefit (18) 31
plans
Fair value (losses)/gains on available for (8) 2
sale investments
Fair value gains/(losses) on net investment 369 (225)
and cash flow hedges
Transfer to profit on disposal of Miller`s US (4) -
and Puerto Rico business
Tax on items taken directly to equity 125 (8)
Share of associates` and joint ventures` (330) -
losses recognised directly in equity
NET (LOSSES)/GAINS RECOGNISED DIRECTLY IN (3,252) 1,829
EQUITY
Profit for the year 2,157 2,288
TOTAL RECOGNISED (EXPENSE)/INCOME FOR THE (1,095) 4,117
YEAR
- attributable to equity shareholders (1,346) 3,795
- attributable to minority interests 251 322
The notes on pages 23 to 37 form an integral part of these condensed financial
statements.
SABMiller plc
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
The preliminary announcement for the year ended 31 March 2009 has been prepared
in accordance with the International Accounting Standards and International
Financial Reporting Standards (collectively IFRS) and International Financial
Reporting Interpretation Committee (IFRIC) interpretations as adopted by the EU.
The financial information in this preliminary announcement is not audited and
does not constitute statutory accounts within the meaning of s240 of the
Companies Act 1985 (as amended). Group financial statements for 2009 will be
delivered to the Registrar of Companies in due course. The board of directors
approved this financial information on 13 May 2009. Statutory accounts for the
year ended 31 March 2008, which were prepared in accordance with the
International Accounting Standards and International Financial Reporting
Standards (collectively IFRS) and International Financial Reporting
Interpretation Committee (IFRIC) interpretations adopted by the EU, have been
filed with the Registrar of Companies. The auditors` report on those accounts
was unqualified and did not contain a statement made under s237(2) or (3) of the
Companies Act 1985.
ACCOUNTING POLICIES
The financial statements are prepared under the historical cost convention,
except for the revaluation to fair value of certain financial assets and
liabilities, share-based payments, and pension assets and liabilities.
The accounting policies adopted are consistent with those of the previous
financial year except that the group has adopted the following interpretations
of published standards which became mandatory for the first time in the
financial year ended 31 March 2009.
- IFRIC 14, `IAS 19 - the limit on a defined benefit asset, minimum funding
requirements and their interaction`. This interpretation has not had any impact
on the group.
As a result of SABMiller entering into the MillerCoors joint venture, joint
ventures have now become a material part of the group`s financial statements.
This has now meant that the investment in immaterial joint ventures previously
classified as investments in associates have now been reclassified as
investments in joint ventures together with the MillerCoors joint venture.
The group`s accounting policy for joint ventures is as follows:
JOINT VENTURES
Joint ventures are contractual arrangements which the group has entered into
with one or more parties to undertake an economic activity that is subject to
joint control. Joint control is the contractually agreed sharing of control
over an economic activity, and exists only when the strategic, financial and
operating decisions relating to the activity require the unanimous consent of
the parties sharing the control.
The group`s share of the recognised income and expenses of joint ventures is
accounted for using the equity method from the date joint control is achieved to
the date joint control ceases. The date joint control commences is not
necessarily the same as the closing date or any other date named in the
contract.
2. SEGMENTAL INFORMATION (UNAUDITED)
The segmental information presented below includes the reconciliation of GAAP
measures presented on the face of the income statement to non-GAAP measures
which are used by management to analyse the group`s performance.
Segment Share of Group revenue
revenue associates`
and joint
ventures`
revenue
2009 2009 2009
US$m US$m US$m
Latin America 5,484 11 5,495
Europe 6,118 27 6,145
North America 1,553 3,674 5,227
Africa and Asia 2,085 2,047 4,132
South Africa: 3,463 840 4,303
- Beverages 3,463 492 3,955
- Hotels and Gaming - 348 348
Group 18,703 6,599 25,302
Segment Share of Group
associates`
and joint
ventures`
revenue revenue revenue
2008 2008 2008
US$m US$m US$m
Latin America 5,239 12 5,251
Europe 5,242 6 5,248
North America 5,120 - 5,120
Africa and Asia 1,853 1,514 3,367
South Africa: 3,956 886 4,842
- Beverages 3,956 490 4,446
- Hotels and Gaming - 396 396
Group 21,410 2,418 23,828
OPERATING PROFIT
The following table provides a reconciliation of operating profit (segment
result) to operating profit before exceptional items.
Operating Exceptional Operating
profit (gains)/ profit
losses before
exceptional
items
2009 2009 2009
US$m US$m US$m
Latin America 1,102 (45) 1,057
Europe 448 452 900
North America 639 (409) 230
Africa and Asia 352 - 352
South Africa: Beverages 704 - 704
Corporate (97) - (97)
Group 3,148 (2) 3,146
Operating Exceptional Operating
profit losses profit
before
exceptional
items
2008 2008 2008
US$m US$m US$m
Latin America 892 61 953
Europe 947 - 947
North America 411 51 462
Africa and Asia 330 - 330
South Africa: Beverages 962 - 962
Corporate (94) - (94)
Group 3,448 112 3,560
EBITA
This comprises operating profit before exceptional items, amortisation of
intangible assets (excluding software) and includes the group`s share of
associates` and joint ventures` operating profit on a similar basis. The
following table provides a reconciliation of operating profit before exceptional
items to EBITA.
Operating Share of Amortisation EBITA
profit before associates` of intangible
exceptional and joint assets
items ventures` (excluding
operating software) -
profit before group and
exceptional share of
items associates`
and joint
ventures`
2009 2009 2009 2009
US$m US$m US$m US$m
Latin America 1,057 1 115 1,173
Europe 900 4 40 944
North America 230 314 37 581
Africa and Asia 352 283 7 642
South Africa: 704 181 1 886
- Beverages 704 60 - 764
- Hotels and - 121 1 122
Gaming
Corporate (97) - - (97)
Group 3,146 783 200 4,129
Operating Share of Amortisation EBITA
profit before associates` of intangible
exceptional and joint assets
items ventures` (excluding
operating software) -
profit before group and
exceptional share of
items associates`
and joint
ventures`
2008 2008 2008 2008
US$m US$m US$m US$m
Latin America 953 - 118 1,071
Europe 947 1 4 952
North America 462 - 15 477
Africa and Asia 330 231 7 568
South Africa: 962 203 2 1,167
- Beverages 962 64 - 1,026
- Hotels and - 139 2 141
Gaming
Corporate (94) - - (94)
Group 3,560 435 146 4,141
The group`s share of associates` and joint ventures` operating profit is
reconciled to the share of post-tax results of associates and joint ventures in
the income statement as follows:
2009 2008
US$m US$m
Share of associates` and joint ventures` 783 435
operating profit before exceptional items
Share of associates` and joint ventures` (91) -
exceptional items
Share of associates` and joint ventures` (25) (11)
net finance costs
Share of associates` and joint ventures` (113) (120)
tax
Share of associates` and joint ventures` (38) (32)
minority interests
516 272
The following table provides a reconciliation of EBITDA (the net cash inflow
from operations before working capital movements) before cash exceptional items
to EBITDA after cash exceptional items. A reconciliation of profit for the
period for the group to EBITDA after cash exceptional items for the group can be
found in note 10.
EBITDA
before cash Cash
exceptional exceptional
items items EBITDA
2009 2009 2009
US$m US$m US$m
Latin America 1,418 (19) 1,399
Europe 1,239 (6) 1,233
North America* 244 (24) 220
Africa and Asia 441 - 441
South Africa: Beverages 883 - 883
Corporate (12) - (12)
Group 4,213 (49) 4,164
EBITDA
before cash Cash
exceptional exceptional
items items EBITDA
2008 2008 2008
US$m US$m US$m
Latin America 1 319 (17) 1 302
Europe 1 203 - 1 203
North America* 569 (2) 567
Africa and Asia 404 - 404
South Africa: Beverages 1 073 - 1 073
Corporate (31) - (31)
Group 4 537 (19) 4 518
* EBITDA excludes the results of associates and joint ventures and hence the
decline in EBITDA for North America is due to the US and Puerto Rico operations
of the Miller business being contributed into the MillerCoors joint venture
during the period.
Excise duties of US$3,820 million (2008: US$4,353 million) have been incurred
during the year as follows: Latin America US$1,383 million (2008: US$1,334
million); Europe US$1,118 million (2008: US$995 million); North America US$239
million (2008: US$861 million); Africa and Asia US$454 million (2008: US$420
million) and South Africa US$626 million (2008: US$743 million).
Segment Investments Unallocated Total
assets in assets* assets
associates
and joint
ventures
2009 2009 2009 2009
Total assets US$m US$m US$m US$m
Latin America 12,175 3 - 12,178
Europe 6,207 9 - 6,216
North America 326 5,463 - 5,789
Africa and Asia 2,307 1,516 - 3,823
South Africa 2,035 291 - 2,326
Corporate 414 - - 414
Unallocated - - 873 873
assets
Group 23,464 7,282 873 31,619
Total assets Segment Investments Unallocated Total
assets in assets* assets
associates
2008 2008 2008 2008
US$m US$m US$m US$m
Latin America 15,314 2 - 15,316
Europe 7,683 12 - 7,695
North America 6,041 - - 6,041
Africa and Asia 1,906 1,475 - 3,381
South Africa 2,186 337 - 2,523
Corporate 470 - - 470
Unallocated - - 656 656
assets
Group 33,600 1,826 656 36,082
* Unallocated assets include borrowing related derivative financial instrument
assets, current tax and deferred tax assets.
Total liabilities Segment Unallocated Total
liabilities liabilities* liabilities
2009 2009 2009
US$m US$m US$m
Latin America 1,055 - 1,055
Europe 1,055 - 1,055
North America 65 - 65
Africa and Asia 361 - 361
South Africa 491 - 491
Corporate 312 - 312
Unallocated liabilities - 12,167 12,167
Group 3,339 12,167 15,506
Total liabilities Segment Unallocated Total
liabilities liabilities* liabilities
2008 2008 2008
US$m US$m US$m
Latin America 1,400 - 1,400
Europe 1,325 - 1,325
North America 1,341 - 1,341
Africa and Asia 323 - 323
South Africa 569 - 569
Corporate 533 - 533
Unallocated liabilities - 12,347 12,347
Group 5,491 12,347 17,838
*Unallocated liabilities include borrowings (including related derivative
financial instruments), current tax and deferred tax liabilities.
Capital Acquisition Total capital
expenditure activity expenditure*
excluding
acquisitions
2009 2009 2009
Capital expenditure US$m US$m US$m
Latin America 552 - 552
Europe 753 149 902
North America 38 - 38
Africa and Asia 502 40 542
South Africa 285 - 285
Corporate 17 - 17
Group 2,147 189 2,336
Capital Acquisition Total capital
expenditure activity expenditure*
excluding
acquisitions
2008 2008 2008
Capital expenditure US$m US$m US$m
Latin America 730 - 730
Europe 565 1,209 1,774
North America 166 - 166
Africa and Asia 295 - 295
South Africa 279 - 279
Corporate 26 - 26
Group 2,061 1,209 3,270
*Capital expenditure is defined as the acquisition and addition of intangible
assets (excluding goodwill) and property, plant and equipment.
3. EXCEPTIONAL ITEMS
2009 2008
Unaudited Audited
US$m US$m
Exceptional items included in operating
profit:
Impairments (392) -
Integration and restructuring costs (110) (129)
Profit on disposal of businesses 526 17
Unwinding of fair value adjustments on (9) -
inventory
Litigation (13) -
Net exceptional gains/(losses) included 2 (112)
within operating profit
Exceptional items included in net finance
costs
Gain on early termination of financial 20 -
derivatives
Share of associates` and joint ventures`
exceptional items:
Integration and restructuring costs (33) -
Impairment of intangible assets (38) -
Unwinding of fair value adjustments on (13) -
inventory
Fair value losses on financial instruments (7) -
Share of associates` and joint ventures` (91) -
exceptional items
Taxation credits relating to subsidiaries` 56 40
and the group`s share of associates` and
joint ventures` exceptional items:
EXCEPTIONAL ITEMS INCLUDED IN OPERATING PROFIT
IMPAIRMENTS
During 2009, goodwill impairments were recorded in respect of the Grolsch
business and Sarmat in Ukraine of US$350 million and US$14 million respectively.
Other impairments principally related to intangible assets and property, plant
and equipment in Ukraine of US$28 million.
There were no impairments recorded as exceptional items in 2008.
INTEGRATION AND RESTRUCTURING COSTS
During 2009, US$51 million of integration and restructuring costs were incurred
in Grolsch, Poland, the Czech Republic, Russia and Ukraine in Europe. US$31
million of restructuring costs were incurred in Latin America principally in
Colombia. US$28 million of staff retention and certain integration costs were
recorded in North America relating to MillerCoors.
In 2008, in Latin America integration and restructuring costs of US$78 million
associated with the consolidation of Bavaria were incurred and in North America
a charge of US$51 million was recorded related to staff retention arrangements
and for certain integration costs in preparation for the MillerCoors joint
venture.
PROFIT ON DISPOSAL OF BUSINESSES
During 2009, a profit of US$437 million arose in North America on the disposal
of the US and Puerto Rico operations of the Miller business into the MillerCoors
joint venture (see note 11 for further details). In Latin America a net US$89
million profit on disposal was recorded on the disposal of the water business in
Colombia and the soft drinks business in Bolivia.
In 2008, a net US$17 million profit on disposal was recognised on the disposal
of soft drinks businesses in Costa Rica and Colombia.
UNWINDING OF FAIR VALUE ADJUSTMENTS ON INVENTORY
On the acquisition of Grolsch inventory was fair valued to market value. The
uplift is charged to the income statement as the inventory is sold. During
2009, US$9 million was charged to operating profit and treated as an exceptional
item.
There was no unwinding of fair value adjustments on inventory recorded as an
exceptional item in 2008.
LITIGATION
During 2009, a provision has been booked in Latin America related to ongoing
litigation amounting to US$13 million.
EXCEPTIONAL ITEMS INCLUDED IN NET FINANCE COSTS
During 2009, a US$20 million gain arose on the early termination of financial
derivatives (2008: US$nil).
SHARE OF ASSOCIATES` AND JOINT VENTURES` EXCEPTIONAL ITEMS
INTEGRATION AND RESTRUCTURING COSTS
The group`s share of MillerCoors` integration and restructuring costs of US$33
million mainly related to relocation and severance costs.
IMPAIRMENT OF INTANGIBLE ASSETS
This relates to the group`s share of the impairment of the Sparks brand recorded
in MillerCoors.
UNWINDING OF FAIR VALUE ADJUSTMENTS ON INVENTORY
In 2009 the group`s share of MillerCoors` charge to operating profit in the year
related to the unwind of the fair value adjustment to inventory was US$13
million.
FAIR VALUE LOSSES ON FINANCIAL INSTRUMENTS
The group`s share of losses related to fair value mark to market adjustments on
financial instruments at Hotels and Gaming amounted to US$7 million.
TAXATION CREDITS RELATING TO SUBSIDIARIES` AND THE GROUP`S SHARE OF ASSOCIATES`
AND JOINT VENTURES` EXCEPTIONAL ITEMS
In 2009, taxation credits of US$56 million arose in relation to exceptional
items during the year and include US$31 million in relation to MillerCoors
although the tax credit is recognised in Miller Brewing Company (see note 5).
The taxation credits recorded in 2008 arose in relation to the net exceptional
items charged during the year.
4. NET FINANCE COSTS
2009 2008
Unaudited Audited
US$m US$m
A. INTEREST PAYABLE AND SIMILAR CHARGES
Interest payable on bank loans and 515 292
overdrafts*
Interest payable on corporate bonds 406 401
Interest element of finance lease payments 1 1
Net exchange losses/(gains) on financing 288 (39)
activities
Fair value losses on financial instruments:
- Fair value losses on dividend related 12 10
derivatives**
- Fair value losses on standalone 27 23
derivative financial instruments
- Ineffectiveness of net investment 22 -
hedges**
Other finance charges 30 33
TOTAL INTEREST PAYABLE AND SIMILAR CHARGES 1,301 721
B. INTEREST RECEIVABLE
Interest receivable* 267 198
Fair value gains on financial instruments:
- Fair value gains on standalone derivative 291 19
financial instruments
- Ineffectiveness of fair value hedges 10 3
- Ineffectiveness of net investment - 45
hedges**
- Fair value gains on dividend related 7 -
derivatives**
Gain on early termination of financial 20 -
derivatives**
TOTAL INTEREST RECEIVABLE 595 265
NET FINANCE COSTS 706 456
* Interest payable on bank loans and overdrafts and interest receivable include
the interest element of derivatives.
** These items have been excluded from the determination of adjusted earnings
per share. Adjusted net finance costs are therefore US$699 million (2008: US$491
million).
5. TAXATION
2009 2008
Unaudited Audited
US$m US$m
Current taxation 670 926
- Charge for the year (UK corporation tax: 693 935
US$4 million charge (2008: US$nil))
- Adjustments in respect of prior years (23) (9)
Withholding taxes and other remittance 67 64
taxes
Total current taxation 737 990
Deferred taxation 64 (14)
- Charge for the year (UK corporation tax: 81 8
US$nil (2008: US$9 million credit))
- Adjustments in respect of prior years (14) (17)
- Rate change (3) (5)
801 976
Effective tax rate (%) 30.2 32.5
See page 38 for the definition of the effective tax rate. The calculation is on
a basis consistent with that used in prior years and is also consistent with
other group operating metrics.
Although the US and Puerto Rico operations of the Miller business were
contributed into the MillerCoors joint venture during the period, MillerCoors is
not a taxable entity. The tax balances and obligations therefore remain with
Miller Brewing Company as a 100% subsidiary of the group. This subsidiary`s tax
charge will include tax (including deferred tax) on the group`s share of the
MillerCoors` taxable profits.
6. EARNINGS PER SHARE
2009 2008
Unaudited Audited
US cents US cents
Basic earnings per share 125.2 134.9
Diluted earnings per share 124.7 134.2
Headline earnings per share 119.0 133.0
Adjusted basic earnings per share 137.5 143.1
Adjusted diluted earnings per share 136.8 142.4
The weighted average number of shares was:
2009 2008
Unaudited Audited
Millions of Millions of
shares shares
Ordinary shares 1,514 1,504
Treasury shares (7) -
ESOP trust ordinary shares (5) (4)
Basic shares 1,502 1,500
Dilutive ordinary shares from share options 7 8
Diluted shares 1,509 1,508
On 26 February 2009, 77,368,338 non-voting convertible shares were converted
into ordinary shares and then acquired by SABMiller plc to be held as treasury
shares. Whilst the purchase price for each share was GBP10.54, the whole amount
of the consideration was paid between group companies.
ADJUSTED AND HEADLINE EARNINGS
The group presents an adjusted earnings per share figure to exclude the impact
of amortisation of intangible assets (excluding capitalised software) and other
non-recurring items in order to present a more useful comparison for the periods
shown in the consolidated financial statements. Adjusted earnings per share has
been based on adjusted headline earnings for each financial period and on the
same number of weighted average shares in issue as the basic earnings per share
calculation. Headline earnings per share have been calculated in accordance with
the South African Circular 8/2007 entitled "Headline Earnings" which forms part
of the listing requirements for the JSE Ltd (JSE). The adjustments made to
arrive at headline earnings and adjusted earnings were as follows:
2009 2008
Unaudited Audited
US$m US$m
Profit for the financial period 1,881 2,023
attributable to equity holders of the
parent
Headline Adjustments
Impairment of goodwill 364 -
Impairment of intangible assets 14 -
Impairment of property, plant and equipment 16 5
Loss/(profit) on disposal of property, 10 (12)
plant and equipment
Profit on disposal of businesses (526) (17)
Tax effects of the above items (4) (4)
Minority interests` share of the above (1) -
items
Share of joint ventures` and associates` 34 -
headline adjustments, net of tax and
minority interests
Headline earnings 1,788 1,995
Other Adjustments
Integration and restructuring costs 108 129
Net loss/(gain) on fair value movements on 27 (35)
capital items*
Gain on early termination of financial (20) -
derivatives
Unwind of fair value adjustments on 9 -
inventory
Litigation 13
Amortisation of intangible assets 164 141
(excluding capitalised software)
Tax effects of the above items (110) (88)
Minority interests` share of the above (4) -
items
Share of joint ventures` and associates` 90 5
other adjustments, net of tax and minority
interests
Adjusted earnings 2,065 2,147
* This does not include all fair value movements but includes those in relation
to capital items for which hedge accounting cannot be applied.
7. DIVIDENDS
DIVIDENDS PAID WERE AS FOLLOWS:
2009 2008
Unaudited Audited
Equity US$m US$m
2008 Final dividend paid: 42.0 US cents 640 537
(2007: 36.0 US cents) per ordinary share
2009 Interim dividend paid: 16.0 US cents 237 232
(2008: 16.0 US cents) per ordinary share
877 769
In addition, the directors are proposing a final dividend of 42.0 US cents per
share in respect of the financial year ended 31 March 2009, which will absorb an
estimated US$631 million of shareholders` equity. The dividend will be paid on
28 August 2009 to shareholders registered on the London and Johannesburg
registers on 21 August 2009.
8. GOODWILL AND INTANGIBLE ASSETS
Goodwill Intangible
assets
Unaudited Unaudited
US$m US$m
Net book amount
At 1 April 2007 13,250 3,901
Exchange adjustments 1,370 623
Arising on increase in share of subsidiary 27 -
undertakings
Arising on acquisition of subsidiary 486 622
undertakings*
Additions - separately acquired - 60
Amortisation - (190)
Transfers from other assets - 20
At 31 March 2008* 15,133 5,036
Exchange adjustments (2,184) (955)
Arising on increase in share of subsidiary 3 -
undertakings
Arising on acquisition of subsidiary 144 29
undertakings (provisional)
Additions - separately acquired - 73
Contributed to joint ventures (3,998) (232)
Amortisation - (204)
Impairment (364) (14)
Transfers from other assets - 15
Disposals - (19)
At 31 March 2009 8,734 3,729
* As restated (see note 11)
GOODWILL
2009
Provisional goodwill arising on the acquisition of subsidiary undertakings
during the year has resulted from the acquisitions of Vladpivo in Russia, Sarmat
in Ukraine, Pabod in Nigeria, Voltic in Nigeria and Ghana and SABMiller Vietnam
JV Company Limited in Vietnam. The fair value exercises in respect of these
acquisitions have yet to be completed.
Goodwill arising on the formation of the MillerCoors joint venture is recorded
within the investment in joint ventures.
During 2009, goodwill impairments were recorded in respect of the Grolsch
business and Sarmat in Ukraine of US$350 million and US$14 million respectively.
2008
Additional goodwill arose on the acquisitions of Royal Grolsch NV and Browar
Belgia Sp.z.o.o, both of which occurred during the year. The fair value
exercises in respect of these acquisitions are now complete.
INTANGIBLE ASSETS
During 2009, an impairment charge of US$14 million was made in respect of
intangible assets in Ukraine.
9. INVESTMENTS IN JOINT VENTURES AND ASSOCIATES
Investments in Investments in
joint ventures associates
Unaudited Unaudited
US$m US$m
At 1 April 2007 - 1,351
Exchange adjustments - 102
Additions - 179
Increase in investments - 1
Acquired as part of a business - 13
combination
Share of results retained - 272
Dividends received - (91)
Disposals - (1)
At 31 March 2008 - 1,826
Exchange adjustments (10) (142)
Reclassification between joint ventures 30 (30)
and associates
Formation of the MillerCoors joint 5,804 -
venture
Net increase in investments 235 1
Share of results retained 225 291
Share of (losses)/gains recognised in (335) 5
reserves
Dividends received (454) (151)
Transfer to subsidiary undertaking - (13)
At 31 March 2009 5,495 1,787
10A. RECONCILIATION OF PROFIT FOR THE YEAR TO NET CASH GENERATED FROM OPERATIONS
2009 2008
Unaudited Audited
US$m US$m
Profit for the period 2,157 2,288
Taxation 801 976
Share of post-tax results of associates (516) (272)
and joint ventures
Interest receivable (595) (265)
Interest payable and similar charges 1,301 721
Operating profit 3,148 3,448
Depreciation:
Property, plant and equipment 626 633
Containers 203 215
Container breakages, shrinkage and write- 13 27
offs
Loss / (profit) on disposal of property, 10 (12)
plant and equipment
Amortisation of intangible assets 204 190
Impairment of goodwill 364 -
Impairment of intangible assets 14 -
Impairment of property, plant and 16 5
equipment
Unrealised net loss / (gain) from 14 (26)
derivatives
Profit on disposal of businesses (526) (17)
Dividends received from other investments (1) (1)
Charge with respect to share options 79 58
Other non-cash movements - (2)
Net cash generated from operations before 4,164 4,518
working capital movements (EBITDA)
Increase in inventories (249) (337)
Increase in receivables (314) (160)
Increase in payables 66 282
Decrease in provisions (7) (5)
Increase/(decrease) in post-retirement 11 (22)
provisions
Net cash generated from operations 3,671 4,276
Cash generated from operations include cash flows relating to exceptional items
of US$49 million (2008: US$19 million).
10B. ANALYSIS OF NET DEBT (UNAUDITED)
Net debt is analysed as follows:
2009 2008
Unaudited Audited
US$m US$m
Borrowings (9,308) (9,160)
Borrowings-related derivative financial 487 (75)
instruments
Overdrafts (300) (485)
Finance leases (10) (13)
Gross debt (9,131) (9,733)
Cash and cash equivalents (excluding 409 673
overdrafts)
Net debt (8,722) (9,060)
Cash and cash equivalents on the balance sheet are reconciled to cash and cash
equivalents on the cash flow as follows:
2009 2008
Unaudited Audited
US$m US$m
Cash and cash equivalents (balance sheet) 409 673
Overdrafts (300) (485)
Cash and cash equivalents (cash flow) 109 188
The movement in net debt is analysed as follows:
Cash and Overdrafts Borrowings Derivative
cash financial
equivalents instruments
(excluding
overdrafts)
US$m US$m US$m US$m
At 1 April 673 (485) (9,160) (75)
2008
Exchange (38) 64 1,010 -
adjustments
Cash flow (233) 120 (864) 32
Acquisitions 11 (1) (53) -
Disposals (4) 2 - -
Other - - (241) 530
movements
At 31 March 409 (300) (9,308) 487
2009
Finance Total gross Net debt
leases borrowings
US$m US$m US$m
At 1 April 2008 (13) (9,733) (9,060)
Exchange adjustments 2 1,076 1,038
Cash flow 1 (711) (944)
Acquisitions - (54) (43)
Disposals - 2 (2)
Other movements - 289 289
At 31 March 2009 (10) (9,131) (8,722)
The group has sufficient headroom to enable it to conform to covenants on its
existing borrowings. The group has sufficient undrawn financing facilities to
service its operating activities and ongoing capital investment. The group has
the following undrawn committed borrowing facilities available at 31 March 2009
in respect of which all conditions precedent have been met at that date:
2009 2008
Unaudited Audited
US$m US$m
Amounts falling due:
Within one year 716 980
Between one and two years 72 157
Between two and five years 1,272 53
In five years or more 33 32
2,093 1,222
The group`s net debt is denominated in the following currencies:
US SA Euro Colombian Other Total
dollars rand peso currencies
US$m US$m US$m US$m US$m US$m
Total cash and 168 39 84 13 105 409
cash equivalents
Total gross (5,712) (543) (669) (1,301) (906) (9,131)
borrowings
(5,544) (504) (585) (1,288) (801) (8,722)
Cross currency 2,695 (400) (1,232) (400) (663) -
swaps
NET DEBT AT 31 (2,849) (904) (1,817) (1,688) (1,464) (8,722)
MARCH 2009
Total cash and 196 171 43 34 229 673
cash equivalents
Total gross (4,686) (439) (1,888) (1,807) (913) (9,733)
borrowings
(4,490) (268) (1,845) (1,773) (684) (9,060)
Cross currency 1,731 (400) (331) (400) (600) -
swaps
Net debt at 31 (2,759) (668) (2,176) (2,173) (1,284) (9,060)
March 2008
11. BUSINESS COMBINATIONS
INITIAL ACCOUNTING
The initial accounting under IFRS 3, `Business Combinations`, for the Grolsch
and Browar Belgia acquisitions had not been completed as at 31 March 2008.
During the periods ended 11 February 2009 and 7 January 2009, adjustments to
provisional fair values in respect of the Grolsch and Browar Belgia acquisitions
have been made. As a result comparative information for the year ended 31 March
2008 has been presented in this preliminary announcement as if the adjustments
to provisional fair values had been made from the transaction dates of 12
February 2008 and 8 January 2008 respectively. The impact on the prior period
income statement has been reviewed and no material adjustments to the income
statement as a result of the adjustments to provisional fair values were
required. The following table reconciles the impact on the balance sheet
reported for the year ended 31 March 2008 to the comparative balance sheet
presented in this preliminary announcement.
BALANCE SHEET
At 31/3/08 Adjustments At 31/3/08
to As restated
provisional
fair values
Audited Unaudited Unaudited
US$m US$m US$m
ASSETS
NON-CURRENT ASSETS
Goodwill 15,600 (467) 15,133
Intangible assets 4,383 653 5,036
Property, plant and equipment 9,037 76 9,113
Other non-current assets 2,666 (1) 2,665
31,686 261 31,947
CURRENT ASSETS
Inventories 1,350 12 1,362
Trade and other receivables 1,871 (6) 1,865
Other current assets 906 2 908
4,127 8 4,135
TOTAL ASSETS 35,813 269 36,082
LIABILITIES
CURRENT LIABILITIES
Trade and other payables (3,273) (34) (3,307)
Other current liabilities (2,930) (20) (2,950)
(6,203) (54) (6,257)
NON-CURRENT LIABILITIES
Trade and other payables (338) - (338)
Provisions (1,160) (41) (1,201)
Other non-current liabilities (9,868) (174) (10,042)
(11,366) (215) (11,581)
TOTAL LIABILITIES (17,569) (269) (17,838)
NET ASSETS 18,244 - 18,244
TOTAL EQUITY 18,244 - 18,244
ACQUISITIONS
On 17 June 2008, SABMiller plc completed the acquisition of the Russian brewer
LLC Vladpivo and on 4 July 2008 it completed the acquisition of a 99.84%
interest in the Ukrainian brewer CJSC Sarmat. During the year SABMiller plc
acquired an effective 57% interest in a Nigerian brewer Pabod and an effective
80% interest in the Voltic water business in Nigeria and Ghana. On 19 March
2009, SABMiller plc acquired Vietnam Dairy Products Joint Stock Company`s 50%
interest in SABMiller Vietnam JV Company Limited. The investment had previously
been equity accounted as an associate.
DISPOSAL INTO A JOINT VENTURE
On 30 June 2008, SABMiller plc and Molson Coors Brewing Company announced that
they had completed the transaction to combine the US and Puerto Rico operations
of their respective subsidiaries, Miller and Coors, in a joint venture to create
MillerCoors a stronger, brand-led US brewer in the increasingly competitive US
marketplace. MillerCoors began operating as a combined entity on 1 July 2008.
SABMiller has a 58% economic interest in MillerCoors and Molson Coors has a 42%
economic interest. Voting interests are shared equally between SABMiller and
Molson Coors, and each of SABMiller and Molson Coors has equal board
representation. A profit of US$437 million arose on the deemed disposal of the
US and Puerto Rico operations of the Miller business into the MillerCoors joint
venture.
OTHER DISPOSALS
On 26 February 2009, the disposal of the Agua Brisa water business in Colombia
was completed for cash consideration of US$92 million. On 26 March 2009, the
disposal of the Bolivian soft drinks business was completed for cash
consideration of US$27 million.
12. SHARE CAPITAL
During the year ended 31 March 2009 2,219,355 ordinary shares (2008: 3,591,830
ordinary shares) were allotted and issued in accordance with the group`s share
purchase, option and award schemes.
13. POST BALANCE SHEET EVENTS
On 13 May 2009, SABMiller plc entered into an agreement to acquire the
outstanding 28.1% minority interest in its Polish subsidiary Kompania Piwowarska
S.A. in exchange for the issue of 60 million ordinary shares of SABMiller plc.
Based upon SABMiller`s closing price of GBP12.20 on 13 May 2009, the implied
value of the consideration is US$1,110 million.
SABMILLER PLC
FINANCIAL DEFINITIONS
ADJUSTED EARNINGS
Adjusted earnings are calculated by adjusting headline earnings for the
amortisation of intangible assets (excluding software), integration and
restructuring costs, the fair value movements in relation to capital items for
which hedge accounting cannot be applied and other items which have been treated
as exceptional but not included above or as headline earnings adjustments
together with the share of joint ventures` and associates` adjustments for
similar items. The tax and minority interests in respect of these items are
also adjusted.
ADJUSTED NET FINANCE COSTS
This comprises net finance costs excluding fair value movements in relation to
capital items for which hedge accounting cannot be applied and any exceptional
finance charges or income.
ADJUSTED PROFIT BEFORE TAX
This comprises EBITA less adjusted net finance costs and less the group`s share
of associates` and joint ventures` net finance costs on a similar basis.
CONSTANT CURRENCY
Constant currency results have been determined by translating the local currency
denominated results for the year ended 31 March at the exchange rates for the
comparable period in the prior year.
EBITA
This comprises operating profit before exceptional items, amortisation of
intangible assets (excluding software) and includes the group`s share of
associates` and joint ventures` operating profit on a similar basis.
EBITA MARGIN (%)
This is calculated by expressing EBITA as a percentage of group revenue.
EBITDA
This comprises the net cash generated from operations before working capital
movements.
EBITDA MARGIN (%)
This is calculated by expressing EBITDA excluding cash flows related to
exceptional items incurred during the year as a percentage of revenue.
EFFECTIVE TAX RATE (%)
The effective tax rate is calculated by expressing tax before tax on exceptional
items and on amortisation of intangible assets (excluding software), including
the group`s share of associates` and joint ventures` tax on the same basis as a
percentage of adjusted profit before tax.
GROUP REVENUE
This comprises revenue together with the group`s share of revenue from
associates and joint ventures.
HEADLINE EARNINGS
Headline earnings are calculated by adjusting profit for the financial period
attributable to equity holders of the parent for items in accordance with the
South African Circular 8/2007 entitled `Headline Earnings`. Such items include
impairments of non-current assets and profits or losses on disposals of non-
current assets and their related tax and minority interests. This also includes
the group`s share of associates` and joint ventures` adjustments on the same
basis.
INTEREST COVER
This is the ratio of EBITDA plus dividends received from joint ventures to
adjusted net finance costs.
NET DEBT
This comprises gross debt (including borrowings, borrowings-related derivative
financial instruments, overdrafts and finance leases) net of cash and cash
equivalents (excluding overdrafts).
ORGANIC INFORMATION
Organic results and volumes exclude the first twelve months` results and volumes
relating to acquisitions and the last twelve months results` and volumes
relating to disposals.
SALES VOLUMES
In the determination and disclosure of sales volumes, the group aggregates 100%
of the volumes of all consolidated subsidiaries and its equity accounted
percentage of all associates` and joint ventures` volumes. Contract brewing
volumes are excluded from volumes although revenue from contract brewing is
included within revenue. Volumes exclude intra-group sales volumes. This
measure of volumes is used in the segmental analyses as it more closely aligns
with the consolidated group revenue and EBITA disclosures.
In the determination and disclosure of aggregated sales volumes, the group
aggregates 100% of the volumes of all consolidated subsidiaries, associated
companies and joint ventures. Contract brewing volumes are excluded from
aggregated volumes although revenue from contract brewing is included within
revenue. Aggregated volumes exclude intra-group sales volumes.
SABMILLER PLC
FORWARD-LOOKING STATEMENTS
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 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 document. 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.
SABMiller plc
ADMINISTRATION
SABMILLER PLC
(Registration No. 3528416)
GENERAL COUNSEL AND GROUP COMPANY SECRETARY
John Davidson
REGISTERED OFFICE
SABMiller House
Church Street West
Woking
Surrey, England
GU21 6HS
Facsimile +44 1483 264103
Telephone +44 1483 264000
HEAD OFFICE
One Stanhope Gate
London, England
W1K 1AF
Facsimile +44 20 7659 0111
Telephone +44 20 7659 0100
INTERNET ADDRESS
http://www.sabmiller.com
INVESTOR RELATIONS
Telephone +44 20 7659 0100
Email: investor.relations@sabmiller.com
SUSTAINABLE DEVELOPMENT
Telephone +44 1483 264139
Email: sustainable.development@sabmiller.com
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP
1 Embankment Place
London, England
WC2N 6RH
Facsimile +44 20 7822 4652
Telephone +44 20 7583 5000
Registrar (United Kingdom)
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent, England
BR3 4TU
Facsimile +44 20 8658 2342
Telephone +44 20 8639 3399 (outside UK)
Telephone 0871 664 0300 (from UK)
(calls cost 10 per minute plus network extras)
Email: ssd@capitaregistrars.com
www.capitaregistrars.com
REGISTRAR (SOUTH AFRICA)
Computershare Investor Services (Pty) Limited
70 Marshall Street, Johannesburg
PO Box 61051
Marshalltown 2107
South Africa
Facsimile +27 11 370 5487
Telephone +27 11 370 5000
UNITED STATES ADR DEPOSITARY
The Bank of New York Mellon
Shareholder Services
PO Box 358516
Pittsburgh PA 15252-8516
United States of America
Telephone +1 888 269 2377
Telephone +1 888 BNY ADRS (toll free within the USA)
Telephone: +1 201 680 6825 (outside USA)
Email: shrrelations@bnymellon.com
www.adrbnymellon.com
Date: 14/05/2009 08:15:41 Produced by the JSE SENS Department.
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