| Fri 26 Jun 2009, 10:30 | | SAB - SABMiller plc - Annual Financial Report |
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SAB
SOSAB
SAB - SABMiller plc - Annual Financial Report
SABMiller plc
JSEALPHA CODE : SAB
ISSUER CODE : SOSAB
ISIN CODE GB0004835483
26 June 2009
Annual Financial Report
SABMiller plc has today submitted copies of the 2009 Annual Report and
Accounts, Notice of the 2009 Annual General Meeting, Shareholder Proxy Form
(UK) and proposed new Articles of Association to the Financial Services
Authority. These will shortly be available for inspection at the UK Listing
Authority`s Document Viewing Facility which is situated at:
Financial Services Authority
25 The North Colonnade
Canary Wharf
London
E14 5HS
The Annual Report and Notice of Annual General Meeting are also available on
the Company`s website www.sabmiller.com
At the Annual General Meeting on 31 July 2009 it is proposed that the Company
adopts new Articles of Association with effect from 1 October 2009. A summary
of the material differences between the current articles of association and
the proposed new articles of association is set out in the Notice of the
Annual General Meeting. The proposed new Articles of Association are
available for inspection during normal business hours at the offices of the
Company`s solicitors, Lovells LLP, Atlantic House, 50 Holborn Viaduct, London
EC1A 2FG.
A condensed set of SABMiller`s financial statements and information on
important events that have occurred during the financial year and their
impact on the financial statements were included in SABMiller`s preliminary
results announcement released on 14 May 2009. That information, together with
the information set out below, which is extracted from the 2009 Annual
Report, constitute the material required by Disclosure and Transparency Rule
6.3.5 which is required to be communicated to the media in unedited full text
through a Regulatory Information Service. This announcement is not a
substitute for reading the full 2009 Annual Report. Page numbers and cross-
references in the extracted information below refer to references in the 2009
Annual Report.
PRINCIPAL RISKS AND UNCERTAINTIES (page 10)
Principal risks
The principal risks facing the group, which have been considered by the
board, are detailed below. The group`s well developed risk management process
is detailed in the Corporate Governance section and our financial risks are
discussed in the Chief Financial Officer`s review and in note 22 to the
consolidated financial statements.
Risk description Mitigation
The global brewing industry is - Our existing portfolio of
expected to continue to consolidate. businesses which spans six continents
Participation in industry gives the group access to growth
consolidation provides opportunities markets and already provides scale
to enter growth markets, and to benefits.
create value from scale benefits - Potential transactions are subject
including applying the group`s best to rigorous analysis to assess
operating practices. There is a risk potential to create value.
that failure to participate in - Application of proven integration
attractive value-adding transactions processes and procedures are applied
may inhibit our ability to grow and to deliver expected returns.
exploit scale benefits. There is - Programmes to leverage scale,
also a risk that expected benefits including in areas such as
from participating in consolidation procurement, are continuously being
and integrating acquisitions may not enhanced.
be captured or may be inadequate, or
that we may not fully leverage our
scale across business operations.
Our expertise in marketing, together - Ongoing focus on building our
with our strong and growing brand marketing and sales capabilities
portfolios, position us well to through continued roll-out and
benefit from changing consumer enhancement of the Marketing Way.
preferences in both developed and - Continually ensuring that our brand
developing markets. However, markets equities are strong and fresh through
continue to evolve and competitor compelling marketing programmes and
activity is increasing. Should the relevant innovation.
group fail to ensure the relevance - Consistent evaluation of our brand
and attractiveness of its brands, portfolios in every market ensuring
and continuously improve its that they adequately cover current
marketing and related sales and future growth opportunities.
capability, there is the risk that
opportunities for profitable growth
may not be realised.
The group now operates on six - Well developed global strategic
continents and it is essential to people resourcing and talent
develop and retain a global management processes.
management capability. Our global - A strong culture of accountability,
growth potential could be empowerment and personal development.
jeopardised should we fail to - Standardisation of key processes
develop and maintain a sufficient and best practices across the group
cadre of talented management or to through the roll out of the SABMiller
capture shared learnings and Ways.
leverage expertise through effective
management practices.
In many countries, debates continue - Rigorous adherence to the principle
over the need for regulatory of self regulation backed by
constraints and restrictions on appropriate policies and management
alcohol products, taxes and duties. review.
There is a risk that regulatory - Engagement with government and
authorities when making impositions thought leaders on alcohol-related
on beer do not recognise the issues.
positive contribution of our - Investment to expand positively the
businesses, and effective ways of economic impact of our businesses in
addressing health and social local communities in partnership with
concerns. In affected countries, our governments and NGOs.
ability to grow profitably and
contribute to our local communities
could be adversely affected.
The supply of, and demand for, - Contractual agreements with
certain brewing and packaging raw suppliers covering multiple time
materials have been out of balance horizons, combined with an active
during recent years which has hedging programme.
led to supply shortages and price - Programmes to support development
volatility of key raw material of local sourcing for certain key
inputs. Supply pressures have now commodities, such as barley in
eased and prices have fallen, but Africa, India and Latin America.
should the group fail to ensure an
adequate supply of brewing and
packaging raw materials at
competitive prices, there is the
risk that margins could fall.
The global economy is facing a - Preparation of contingency plans
widespread recession with GDP based on various scenarios.
projected to fall in 2009. Consumer - Actions to restructure operations
demand has softened in many in certain countries to reflect the
countries in which we operate, and current and expected deterioration in
in some of these countries currency local economic conditions.
weakness has exacerbated the - Maintaining and extending our local
reduction. The availability of industry leadership positions through
funding in the capital markets is appropriate investments in our
less predictable and more expensive. brands, a focus on local execution
We are responding to the changed and development of commercial
conditions, but given the capability.
uncertainties in the global economic - Increased focus on cash flow
outlook, there is a risk that our management.
plans and responses may not be
adequate.
RELATED PARTY TRANSACTIONS
The following Related Party Transaction is disclosed on page 48 of the
Directors` Report.
On 13 May 2009, the company agreed to acquire the outstanding 28.1% minority
interest in the company`s Polish subsidiary, Kompania Piwowarska S.A., from
Kulczyk Holding S.A. in exchange for 60 million new ordinary shares in the
company. The acquisition was completed on 29 May 2009, and Kulczyk Holding
S.A. now holds
3.82% of the company`s enlarged issued ordinary share capital (excluding
treasury shares). Based upon SABMiller`s closing share price on Wednesday, 13
May 2009, of GBP12.20 per share and an exchange rate of GBP1=US$1.52, the
value of the consideration for the transaction was US$1,110 million. Kulczyk
Holding S.A. was a related party of SABMiller because it is a member of a
group of companies connected to Dr Jan Kulczyk, who at the time the
transaction was entered into was a non-executive director and member of the
supervisory board of Kompania Piwowarska S.A.
Note 32 to the consolidated financial statements on page 138 details the
following related party transactions.
32. Related party transactions
a Parties with significant influence over the group: Altria Group, Inc
(Altria) and Santo Domingo Group (SDG)
During the three months ended 30 June 2008, the Miller Brewing Company
received various services from Altria, which holds 28.5% of the group,
including insurance claims processing, leasehold accommodation and other
administrative services, with an aggregate cost of US$nil (year ended 31
March 2008: US$0.1 million), of which US$nil (2008: US$nil) was outstanding
at 31 March 2009.
The Santo Domingo Group (SDG) is considered to be a related party of the
group by virtue of its 15% equity shareholding in SABMiller plc and of its
power to appoint members of the board of directors. In the current year
provisions for impairment of US$nil (2008: US$1.3 million) were recorded
against receivables owing from companies controlled by the SDG. During the
year, the group made a donation of US$69 million to the Fundacion Mario Santo
Domingo based in Colombia (2008: US$8 million). At 31 March 2009, US$nil
(2008: US$nil) was owing to the SDG.
Bavaria SA is jointly and severally liable with Valorem SA (part of the SDG)
for the pension obligations of Avianca SA (a former part of the SDG which was
sold by the SDG in 2004). The maximum obligation is for US$150 million which
corresponds to the initial actuarial value of the obligation. On 30 December
2008, Valorem discharged the obligations via a trust structured with an
insurance company that will take responsibility for the pensions of Avianca
land personnel. As a consequence, the promissory note and related Bavaria
guarantee are in the process of being cancelled and Bavaria will have to
cancel certain pledges over shares in Valorem companies.
b. Associates and joint ventures
The MillerCoors joint venture is deemed to be a related party from 1 July
2008. Transactions with the MillerCoors joint venture include the sale of
hops and lager to and the purchase of lager from MillerCoors. MillerCoors
have also entered into a distribution agreement with a group company and
carried out contract brewing on behalf of group companies. Further details
relating to transactions with MillerCoors are included within the analysis of
transactions with joint ventures below.
2008 2009
US$m US$m
Purchases from associates1 (251) (214)
Purchases from joint ventures2 (50) -
Sales to associates3 44 22
Sales to joint ventures4 28 -
Dividends received from associates5 151 91
Dividends received from joint ventures6 454 -
Royalties received7 1 -
Management fees8 (2) -
Receipt from sale of distribution rights9 14 -
1 The group purchased canned Coca-Cola products for resale from Coca-Cola
Canners of Southern Africa (Pty) Ltd (Coca-Cola Canners) and purchased
inventory from Distell Group Ltd and Associated Food Processors (Pty) Ltd in
South Africa and Metalforma, SA, Industria Nacional de Plasticos, SA and
Envases del Istmo, SA in Panama.
2 The group purchased lager from MillerCoors.
3 The group made sales of lager to Tsogo Sun Holdings (Pty) Ltd (Tsogo Sun),
Madedeni Beer Wholesaler (Pty) Ltd, Empresa Cervejas De N`Gola SARL and
Societe des Brasseries et Glacieres Internationales/Brasseries
Internationales Holding Ltd (Castel).
4 The group made sales to MillerCoors and Pacific Beverages (Pty) Ltd.
5 The group received dividends from Societe des Brasseries et Glacieres
Internationales and Brasseries Internationales Holding Ltd (Castel) of US$39
million (2008: US$27 million), Kenya Breweries Ltd (Kenya) US$15 million
(2008: US$15 million), Coca-Cola Canners US$4 million (2008: US$4 million),
Distell Group Ltd US$17 million (2008: US$17 million), Tsogo Sun US$73
million (2008: US$28 million) and Grolsch (UK) Ltd of US$3 million (2008:
US$nil).
6 The group received dividends from MillerCoors.
7 The group received royalties from MillerCoors.
8 The group paid management fees to MillerCoors.
9 The group sold distribution rights to MillerCoors.
2008 2009
US$m US$m
Amounts owed by associates1 27 -
Amounts owed by joint ventures2 2 -
Amounts owed to associates3 (25) (20)
Amounts owed to joint ventures4 (29) -
1 Amounts owed by Grolsch (UK) Ltd and Empresa Cervejas De N`Gola SARL.
2 Amounts owed by MillerCoors.
3 Amounts owed to Coca-Cola Canners (Pty) Ltd.
4 Amounts owed to MillerCoors.
c. Transactions with key management
The group has a related party relationship with the directors of the group
and members of the excom as key management. At 31 March 2009, there are 23
members of key management. Key management compensation is provided in note
6c.
DIRECTORS` RESPONSIBILITY STATEMENT IN RESPECT OF THE GROUP CONSOLIDATED
FINANCIAL STATEMENTS (page 66)
The directors are responsible for preparing the group consolidated financial
statements in accordance with applicable law and regulations. Company law
requires the directors to prepare consolidated financial statements for each
financial year. Under that law the directors have prepared the group
financial statements in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union. The group financial
statements are required by law to give a true and fair view of the state of
affairs of the group and of the profit or loss of the group for that year.
In preparing those financial statements, the directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and estimates that are reasonable and prudent;
- state that the financial statements comply with IFRSs as adopted by the
European Union; and
- prepare the group financial statements on the going concern basis, unless
it is inappropriate to presume that the group will continue in business, in
which case there should be supporting assumptions or qualifications as
necessary.
The directors confirm that they have complied with the above requirements in
preparing the financial statements.
The directors are responsible for keeping proper accounting records that
disclose with reasonable accuracy at any time the financial position of the
group and to enable them to ensure that the group consolidated financial
statements comply with the Companies Act 1985 and Article 4 of the IAS
Regulation. They are also responsible for safeguarding the assets of the
company and the group and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
Each of the directors, whose names and functions are listed in the Governance
section of the Annual Report (with the exception of Dr Moyo, who was
appointed to the board after the approval of these group consolidated
financial statements), confirms that, to the best of their knowledge:
- the group financial statements, which have been prepared in accordance with
IFRSs as adopted by the EU, give a true and fair view of the assets,
liabilities, financial position and profit of the group; and
- the directors` report contained in the Governance section of the Annual
Report includes a fair review of the development and performance of the
business and the position of the group, together with a description of the
principal risks and uncertainties that it faces.
In addition, the Companies Act 1985 requires directors to provide the group`s
auditors with every opportunity to take whatever steps and undertake whatever
inspections the auditors consider to be appropriate for the purpose of
enabling them to give their audit report. Each of the directors (with the
exception of Dr Moyo who was appointed to the board after the approval of
these financial statements), having made appropriate enquiries, confirms
that:
- so far as the director is aware, there is no relevant audit information of
which the group`s auditors are unaware; and
- each director has taken all the steps that they ought to have taken as a
director in order to make themselves aware of any relevant audit information
and to establish that the group`s auditors are aware of that information.
The directors have reviewed the group`s budget and cash flow forecasts. On
the basis of this review, and in the light of the current financial position
and existing borrowing facilities, the directors are satisfied that SABMiller
plc is a going concern and have continued to adopt the going concern basis in
preparing the financial statements.
A copy of the financial statements of the group is placed on the company`s
website. The directors are responsible for the maintenance and integrity of
statutory and audited information on the company`s website. Information
published on the internet is accessible in many countries with different
legal requirements. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
John Davidson
General Counsel and Group Company Secretary
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.
Date: 26/06/2009 10:30:01 Produced by the JSE SENS Department.
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