| Wed 23 Jun 2010, 11:00 | | SAB - SABMiller plc - Annual Financial Report |
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SAB
SOSAB
SAB - SABMiller plc - Annual Financial Report
SABMiller plc
JSE ALPHA CODE: SAB
ISIN CODE: SOSAB
ISIN CODE: GB0004835483
23 June 2010
Annual Financial Report
SABMiller plc has today submitted copies of the 2010 Annual Report and Accounts,
Notice of the 2010 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
It is proposed that at the Annual General Meeting on 22 July 2010 the Company
adopts new Articles of Association. 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 2010 Annual General Meeting. The
proposed new Articles of Association will be available for inspection during
normal business hours at the offices of the Company`s solicitors, Hogan Lovells
International LLP, Atlantic House, 50 Holborn Viaduct, London EC1A 2FG from 24
June 2010 until the date of the Annual General Meeting.
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 20 May 2010. That information, together with the
information set out below, which is extracted from the 2010 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 2010 Annual Report. Page numbers and cross-references in the
extracted information below refer to page numbers and sections in the 2010
Annual Report.
PRINCIPAL RISKS AND UNCERTAINTIES (page 24 and 25)
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.
Specific risk Mitigation
Industry consolidation
Context
The global brewing industry is ? Potential transactions are subject
expected to continue to consolidate, to
albeit more slowly, creating rigorous analysis. Only opportunities
opportunities to enter attractive with
growth markets and realise synergy potential to create value are pursued.
benefits from integration and to ? Proven integration processes,
leverage global scale. procedures and practices are
Risk applied to deliver expected returns.
Failure to participate in value-adding ? Activities to deliver synergies and
transactions; overpaying for a leverage scale are in place, monitored
transaction; and failure to implement closely and continuously enhanced.
integration plans successfully after
transactions are completed.
Possible impact
Lower growth rate, profitability and
financial returns.
Associated strategic priorities
? Creating a balanced and attractive
global spread of businesses.
? Constantly raising the profitability
of local businesses, sustainably.
Change in consumer preferences
Context
Consumer tastes and behaviours are ? Ongoing focus on building our
constantly evolving and competitor marketing and sales capabilities
activity is increasing and becoming through continued roll-out and
more sophisticated. Strong brand enhancement of the SABMiller Marketing
portfolios together with excellence in Way.
marketing ? Ensuring that our brand equities
and sales execution are required if we remain strong through relevant
are to meet consumer, shopper and innovation and compelling marketing
customer needs. programmes.
Risk ? Ongoing evaluation of our brand
Failure to ensure the attractiveness portfolios in every market to ensure
of our brands; failure to continuously that they target current and future
improve our marketing and related opportunities for profitable growth.
sales capability to deliver consumer
relevant propositions.
Possible impact
Market positions come under pressure,
lower volume growth rates and
profitability.
Associated strategic priorities:
? Developing strong, relevant brand
portfolios that win in the local
market.
? Constantly raising the profitability
of local businesses, sustainably.
? Leveraging our skills and global
scale.
Management capability impairment
Context
We believe that our people are our ? Effective and well-developed
enduring advantage. It is essential strategic people resourcing and
therefore that we identify, develop talent management processes.
and retain global management ? A strong culture of accountability,
capability. empowerment and personal
Risk development.
Failure to develop and maintain a ? Standardisation of key processes
sufficient cadre of talented and best practices across the
management. group through the roll-out of the
Possible impact SABMiller Ways.
Potential lower long-term profitable
growth.
Associated strategic priorities:
? Developing strong, relevant brand
portfolios that win in the local
market.
? Constantly raising the profitability
of local businesses, sustainably.
? Leveraging our skills and global
scale.
Regulatory changes
Context
The alcohol industry is coming under ? Rigorous adherence to the principle
increasing pressure from regulators, of self-regulation backed by
NGOs and tax authorities as the debate appropriate
over alcohol consumption continues in policies and management review.
many markets. ? Constructive engagement with
Risk government and all external
Regulation places increasing stakeholders on alcohol-related
restrictions on pricing (including issues.
tax), availability and marketing of ? Investment to improve the economic
beer and drives changes in consumption and social impact of our businesses in
behaviour. local communities and working in
Possible impact partnership with governments and NGOs.
Lower profitability growth and reduced
contribution to local communities in
some countries.
Associated strategic priorities
? Creating a balanced and attractive
global spread of businesses.
? Developing strong, relevant brand
portfolios that win in the local
market.
? Constantly raising the profitability
of local businesses, sustainably.
Raw material volatility
Context
Recent volatility in the supply and ? Contractual agreements with
pricing in some of our key raw suppliers covering multiple time
materials. horizons, combined with an active
Risk hedging programme.
Failure to obtain an adequate supply ? Programmes to support development
of brewing and packaging raw materials of local sourcing for certain key
at competitive prices. commodities, such as barley, in
Possible impact Africa,
Lower profitability and occasional India and Latin America.
supply disruption.
Associated strategic priorities
? Constantly raising the profitability
of local businesses, sustainably.
? Leveraging our skills and global
scale.
Economic environment
Context
Recent global recession with weak GDP ? Actions to restructure operations
growth projected in 2010. Uncertain in certain countries to reflect
economic growth and rising current
unemployment have resulted in weak or expected deterioration in local
consumer demand which has, in some economic conditions.
cases, been compounded by currency ? Maintaining and extending our local
weakness. industry leadership positions through
Risk appropriate investments in our brands,
Our marketing, operating and financial focus on local execution and
responses may not be timely or development of commercial capability.
adequate ? Increased emphasis on cash flow
to respond to changing consumer management.
demand.
Possible impact
Lower short-term growth rates and
profitability.
Associated strategic priorities
? Creating a balanced and attractive
global spread of businesses.
? Developing strong, relevant brand
portfolios that win in the local
market.
? Constantly raising the profitability
of local businesses, sustainably.
Delivering transformation
Context
The group has begun executing a major ? Senior leadership closely involved
business capability programme that in
will monitoring progress and in making
simplify processes, reduce costs and key decisions.
allow local management teams to ? Rigorous programme management
enhance focus on their markets. and governance processes with
Risk dedicated resources.
Failure to execute and derive benefits
from the projects currently under way.
Possible impact
Increased project costs, business
disruption and reduced competitive
advantage in the medium term.
Associated strategic priorities
? Constantly raising the profitability
of local businesses, sustainably.
? Leveraging our skills and global
scale.
RELATED PARTY TRANSACTIONS
Note 32 to the consolidated financial statements on page 139 details the
following related party transactions.
32. Related party transactions
a. Parties with significant influence over the group: Altria Group, Inc.
(Altria) and the Santo Domingo Group (SDG)
Altria is considered to be a related party of the group by virtue of its 27.2%
equity shareholding. There were no transactions with Altria during the year.
SDG is considered to be a related party of the group by virtue of its 14.2%
equity shareholding in SABMiller plc. During the year the group made a donation
of US$30 million to the Fundacion Mario Santo Domingo (2009: US$69 million),
pursuant to the contractual arrangements entered into at the time of the Bavaria
transaction in 2005, under which it was agreed that the proceeds of the sale of
surplus non-operating property assets owned by Bavaria SA and its subsidiaries
would be donated to various charities, including the Fundacion Mario Santo
Domingo. At 31 March 2010, US$nil million (2009: US$nil) was owing to the SDG.
b. Associates and joint ventures
The MillerCoors joint venture is deemed to be a related party from 1 July 2008.
Transactions with the MillerCoors joint venture include the sale of hops and
lager to and the purchase of lager from MillerCoors. MillerCoors has also
carried out contract brewing on behalf of group companies. Further details
relating to transactions with MillerCoors are included within the analysis of
transactions with joint ventures below.
2010 2009
US$m US$m
Purchases from associates1 (193) (251)
Purchases from joint ventures2 (72) (50)
Sales to associates3 28 44
Sales to joint ventures4 44 28
Dividends received from associates5 109 151
Dividends received from joint ventures6 707 454
Royalties received7 2 1
Management and guarantee fees8 (1) (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) Limited (Coca-Cola Canners) and purchased
inventory from Distell Group Ltd (Distell) and Associated Fruit Processors (Pty)
Ltd (AFP) in South Africa.
2 The group purchased lager from MillerCoors.
3 The group made sales of lager to Tsogo Sun Holdings (Pty) Ltd (Tsogo Sun),
Empresa Cervejas De N`Gola SARL (ECN), Societe des Brasseries et Glacieres
Internationales and Brasseries Internationales Holding Ltd (Castel), Delta
Corporation Ltd and Distell.
4 The group made sales to MillerCoors and Pacific Beverages (Pty) Ltd.
5 The group received dividends from Castel of US$40 million (2009: US$39
million), Kenya Breweries Ltd US$11 million (2009: US$15 million), Coca-Cola
Canners US$5 million (2009: US$4 million), Distell US$19 million (2009: US$17
million), Tsogo Sun US$28 million (2009: US$73 million), ECN US$3 million (2009:
US$nil) and Grolsch (UK) Ltd of US$3 million (2009: US$3 million).
6 The group received dividends from MillerCoors.
7 The group received royalties from MillerCoors and Pacific Beverages (Pty) Ltd.
8 The group paid management and guarantee fees to MillerCoors.
9 The group sold distribution rights to MillerCoors.
At 31 March 2010 2009
US$m US$m
Amounts owed by associates1 3 27
Amounts owed by joint ventures2 4 2
Amounts owed to associates3 (38) (25)
Amounts owed to joint ventures4 (23) (29)
1 Amounts owed by Grolsch (UK) Ltd, Castel and AFP.
2 Amounts owed by MillerCoors and Pacific Beverages (Pty) Ltd.
3 Amounts owed to Coca-Cola Canners.
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 2010, there were 25 (2009:
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 68)
The directors are responsible for preparing the consolidated financial
statements in accordance with applicable law and regulations. Company law
requires the directors to prepare consolidated financial statements for each
financial year. The directors have prepared the consolidated financial
statements in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European Union. The
consolidated 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 consolidated 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 adequate accounting records that
disclose with reasonable accuracy at any time the financial position of the
group and to enable them to ensure that the consolidated financial statements
comply with the Companies Act 2006 and Article 4 of the IAS Regulation. They are
also responsible for safeguarding the assets of 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, confirms that, to the best of their knowledge:
? the consolidated 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 2006 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, 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: 23/06/2010 11:00:01 Produced by the JSE SENS Department.
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