| Thu 24 May 2012, 8:00 | | SAB - SABMiller plc - Preliminary Announcement |
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SAB
SOSAB
SAB - SABMiller plc - Preliminary Announcement
SABMILLER plc
JSE ALPHA CODE: SAB
ISIN CODE: SOSAB
ISIN CODE: GB0004835483
PRELIMINARY ANNOUNCEMENT
Release date: 24 May 2012
SABMiller drives strong results in developing markets
SABMiller plc, one of the world`s leading brewers, reports its preliminary
(unaudited) results for the twelve months to 31 March 2012.
Operational Highlights
- Lager volumes of 229 million hectolitres (hl), 3% ahead of the prior year on
an organic basis with particularly strong growth delivered in Latin America
and Africa. Soft drinks volumes of 49 million hectolitres, 7% ahead of the
prior year on an organic basis
- Reported group revenue up 11%, with organic, constant currency group revenue
growth of 7%
- Reported EBITA up 12%, with organic, constant currency EBITA growth of 8%:
- Latin America EBITA1 up by 14% as a result of volume growth, pricing and mix
- Europe EBITA1 decline of 9% due to lower volumes, adverse mix and increased
raw material costs
- Strong pricing and favourable mix increases North America EBITA1 by 2%
despite lower volumes
- Volume growth, strong pricing and mix drives Africa EBITA1 up 16%
- Asia Pacific EBITA1 up 30% with good growth in both China and India
- South Africa: Beverages EBITA1 up by 14% due to price and mix benefits and
focus on cost productivity
- EBITA margin increases by 10 basis points (bps) to 17.9%
- Foster`s contributes to results from mid December 2011; integration
proceeding well
- Adjusted earnings up by 13%, with adjusted EPS up 12% to 214.8 US cents per
share
- Continued strong improvement in free cash flow2, up 23% to US$3,048 million
- Full year dividends per share up 12% to 91.0 US cents
1 Segmental EBITA growth is shown on an organic, constant currency basis.
2 As defined in the financial definitions section. See also note 11b.
Financial highlights 2012 2011 %
US$m US$m Change
Group revenuea 31,388 28,311 11
Revenueb 21,760 19,408 12
EBITAc 5,634 5,044 12
Adjusted profit before taxd 5,062 4,491 13
Profit before taxe 5,603 3,626 55
Profit attributable to owners of the 4,221 2,408 75
parent
Adjusted earningsf 3,400 3,018 13
Adjusted earnings per share
- US cents 214.8 191.5 12
- UK pence 134.4 123.4 9
- SA cents 1,607.0 1,369.6 17
Basic earnings per share (US cents) 266.6 152.8 74
Dividends per share (US cents) 91.0 81.0 12
Free cash flow 3,048 2,488 23
a Group revenue includes the attributable share of associates` and joint
ventures` revenue of US$9,628 million (2011: US$8,903 million).
b Revenue excludes the attributable share of associates` and joint ventures`
revenue.
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$542 million (2011: US$518 million) and share of associates` and joint
ventures` net finance costs of US$30 million (2011: US$35 million).
e Profit before tax includes exceptional credits of US$1,015 million (2011:
charges of US$467 million). Exceptional items are explained in note 3.
f A reconciliation of adjusted earnings to the statutory measure of profit
attributable to owners of the parent is provided in note 6.
CHIEF EXECUTIVE`S REVIEW
Meyer Kahn, Chairman of SABMiller, said:
"I am delighted to report another year of significant progress and strong
results. Through our successful marketing, portfolio development and
commercial execution we continued to build on our position in the world`s
developing consumer economies. Strong profit growth continued, driven by an
organic total volume increase of 4% and complemented by favourable mix and
pricing. We continued to expand our global footprint with the acquisition of
Foster`s, the merger of our Russian and Ukrainian businesses with Anadolu Efes
in exchange for a stake in the enlarged business, and the further development
of our alliance with Castel."
Segmental EBITA performance 2012 Reported Organic,
EBITA growth constant
US$m % currency
growth
%
Latin America 1,865 15 14
Europe 836 (6) (9)
North America 756 2 2
Africa 743 15 16
Asia Pacific 321 247 30
South Africa: Beverages 1,168 9 14
South Africa: Hotels and Gaming 135 (2) 3
Corporate (190)
Group 5,634 12 8
Business review
The group delivered a strong financial performance. Group revenue grew by 11%
(7% on an organic, constant currency basis) as a result of the higher volumes,
selective price increases and higher growth in premium brands. Total beverage
volumes of 286 million hl were 4% ahead of the prior year on an organic basis,
with lager volumes up 3%, soft drinks volumes up 7% and other alcoholic
beverages up 4%. Successful development of our brand portfolios and
intensified sales execution, together with rising consumer spending drove
strong performance in most of our developing markets. Latin America and Africa
were particularly notable, while South Africa and the Asia Pacific region also
generated significant, profitable growth. Despite strong results in a number
of its markets, Europe`s financial performance was affected by volume declines
in Poland and Romania and significant increases in raw material input costs.
EBITA increased by 12% on a reported basis (8% on an organic, constant
currency basis), with all beverage divisions except for Europe contributing to
EBITA growth. EBITA margin was 10 bps ahead of the prior year at 17.9%. Group
revenue growth (up 4% on an organic, constant currency per hl basis) offset
increases in raw material costs (up low single digits on a constant currency
per hl basis). Marketing investment rose in line with revenue, while fixed
costs increased as a result of expenditure on sales and systems capabilities
across our operations and in the corporate centre.
Adjusted earnings were 13% higher as a result of the increased EBITA. Adjusted
net finance costs were 5% higher than in the prior year, and the effective tax
rate was 27.5%. Adjusted earnings per share were 12% higher at 214.8 US cents.
The group`s free cash flow was US$3,048 million, an increase of US$560 million
compared with the prior year. Working capital cash flows of US$258 million
continued recent positive trends, and reflected ongoing benefits of the
group`s business capability programmes. Capital expenditure was US$1,639
million, an increase of US$324 million compared with the prior year, with
higher spend particularly to increase production capacity in Africa. Net debt
at 31 March 2012 was US$17,862 million, up from US$7,091 million at the end of
the previous financial year primarily due to the financing of the Foster`s
acquisition. The Board has recommended a final dividend of 69.5 US cents per
share which will be paid to shareholders on 17 August 2012. This brings the
total dividend for the year to 91 US cents per share, an increase of 10 US
cents (12%) over the prior year.
On 16 December 2011 the group completed the acquisition of Foster`s Group
Limited (Foster`s) in Australia. The acquisition provides us with exposure to
Australia`s strong economic growth prospects, a leading position in the stable
and profitable Australian beer industry, and the opportunity to apply our
capabilities and scale to improve Foster`s financial and operating
performance. The integration of the Foster`s business has progressed very well
to date despite the loss of some brand licences, which was a known risk at the
time of acquisition. With effect from 1 January 2012, together with Castel we
implemented a number of organisational changes in our African operations as
part of our strategic alliance agreement. Operational management of the
Nigerian businesses is now with SABMiller and the Angolan businesses with
Castel. On 6 March 2012 we completed our strategic alliance with Anadolu Group
and Anadolu Efes Biracilik ve Malt Sanayii AS (Anadolu Efes), exchanging our
Russia and Ukraine beer businesses for a 24% equity stake in the enlarged
Anadolu Efes group. Anadolu Efes is now the vehicle for both groups`
investments in Turkey, Russia, the CIS, Central Asia and the Middle East.
- In LATIN AMERICA EBITA grew by 15% (14% on an organic, constant currency
basis). Lager volumes increased by 8% on an organic basis, and soft drinks by
10% on the same basis. Strong revenue growth, reflecting a combination of
higher volumes, selective price increases and favourable mix, was partly
offset by higher commodity costs, although we benefited from manufacturing
efficiencies. Increased brand and marketing investment was funded by ongoing
fixed cost productivity. We continued to benefit from our focus on improving
the affordability of certain key lager brands in a number of markets, our
differentiated brand portfolios and the expansion of our premium segment, and
from the economic growth across the region.
- In EUROPE EBITA declined by 6% (9% on an organic, constant currency basis),
while lager volumes fell by 1% on an organic basis. Financial performance in
Poland and Romania was impacted by volume declines, adverse sales mix as a
result of consumer downtrading and discounting, as well as planned destocking
in our wholesalers. The other markets in the region generally saw stronger
financial performance, assisted by good growth in the super premium and
premium segments, and selective brand and product innovations. Across the
region, EBITA was impacted by significant increases in raw material costs,
although our global procurement and regional manufacturing projects continued
to deliver mitigating cost efficiencies. The Anadolu Efes transaction was
completed on 6 March 2012 and had no material impact on trading performance
for the year.
- In NORTH AMERICA EBITA grew by 2%. MillerCoors` sales to wholesalers (STWs)
fell by 3%, with sales to retailers (STRs) down 2% as economic pressures
continued to impact key consumer demographics. The Tenth and Blake crafts and
imports division saw double digit growth, although volume declines were
experienced in both the premium light and below premium segments. The growth
in EBITA was mainly a result of revenue growth from pricing and favourable
brand mix, continuous cost savings, partly offset by higher raw material and
distribution costs, and systems investments.
- AFRICA lager volumes increased by 13% on an organic basis, despite capacity
constraints in a number of markets. Increased sales and marketing activity,
expanded local geographic footprints and differentiated brand portfolios drove
performance, underpinned by favourable economic conditions. Soft drinks
volumes grew by 11% on an organic basis. EBITA grew by 15% (16% on an organic,
constant currency basis), mainly as a result of volume growth, pricing and mix
benefits, our cost initiatives and the raw material cost benefits of local
agricultural programmes. These were partly offset by higher sales and
marketing investment, inflationary pressures and currency weakness.
- ASIA PACIFIC lager volumes increased by 4% on an organic basis, with
reported volumes significantly higher as a result both of the inclusion of
Foster`s since 16 December 2011 and of acquisitions in China. Reported EBITA
grew by 247% mainly due to the addition of Foster`s. On an organic, constant
currency basis, EBITA grew by 30% with good growth in both China and India.
Lager volumes grew by 4% on an organic basis in China with reported volumes up
9% boosted by acquisitions, and EBITA also grew strongly. India lager volumes
grew by 3%. In Australia, our Pacific Beverages joint venture delivered strong
volume growth on an organic basis up to January 2012 when the business was
integrated into the newly acquired Foster`s. On a pro forma(1) basis, CUB(1)
full year lager volumes in Australia were 4% below the prior year, largely due
to subdued consumer sentiment. EBITA also declined on a pro forma basis as a
result of the lower volumes and increased commercial investment.
- SOUTH AFRICA: BEVERAGES saw lager volumes grow by 2%, with particularly good
performance in the peak season. Sustained brand investment and improvements in
retail execution and customer service ensured market share gains by the end of
the year, and ongoing growth in the premium segment. Soft drinks volumes also
increased by 2%, benefiting from focused channel plans and better weather.
Reported EBITA grew by 9% (14% on a constant currency basis) with EBITA margin
expansion of 100 bps, benefiting from price and mix favourability, and with
supply chain productivity offsetting the impact of increasing raw material
costs. Continuing focus on reducing operating costs enabled the business to
fund higher market-facing investments to support brands.
- We have seen further progress in our BUSINESS CAPABILITY PROGRAMME,
particularly in the area of procurement. Net operating benefits from the
programme again exceeded our expectations reaching US$159 million for the year
with the most significant contributions from Trinity (global procurement),
European regional manufacturing and sales and distribution systems in Latin
America. The programme`s working capital objective of US$350 million
accumulated inflow was exceeded by over US$100 million in the prior year and
these benefits have been sustained and extended through the year to 31 March
2012. Based on plans to extend the scope and depth of globally-managed
procurement in particular, the group expects that net operating benefits will
reach US$250 million in the year to 31 March 2013 (previous guidance US$200
million) and US$400 million in the financial year ending 31 March 2014
(previous guidance US$300 million), reaching a run rate of approximately
US$450 million by the end of that year.
The global IS solution has been further developed during the year and was
deployed in Ecuador in November 2011, covering back, middle and front office
processes. The next full scope deployment will be in one of our largest and
most sophisticated businesses, Poland. Refocusing of our IS resources on
development work for core sales and distribution business models has led to
the acceleration of some programme spend. Exceptional costs were US$235
million in the year and are expected to fall to around US$140 million in the
year to 31 March 2013, with a further reduction in the year to 31 March 2014,
the final year of the programme.
(1) CUB pro forma volumes and financial information are based on results for
CUB reported under IFRS for the period from 1 April 2010 to 31 March 2011.
Adjustments have been made to reflect SABMiller group accounting policies. CUB
(Carlton and United Breweries) is the Australian beverage business of the
recently acquired Foster`s group.
Outlook
Trading conditions are expected to be broadly unchanged with further growth in
our developing markets but no more than modest improvements in consumer
spending in some more developed economies. We will continue to develop and
differentiate our brand portfolios, taking opportunities to improve sales mix
and raise prices selectively. Unit input costs are expected to rise in mid-
single digits in constant currency terms. Focus will be maintained on cost
effectiveness, including synergy delivery in Australia, and on expanding our
globally-managed procurement programmes. While healthy cash generation will
again be a priority, targeted investments in production capacity, marketing
and sales capability and business systems will continue in order to drive
medium term growth.
Enquiries:
SABMiller plc Tel: +44 20 7659 0100
Sue Clark Director of Corporate Affairs Tel: +44 20 7659 0184
Gary Leibowitz Senior Vice President, Tel: +44 20 7659 0119
Investor Relations
Nigel Fairbrass Head of Global Communications Mob: +44 77 9989 4265
A live audiocast of the management presentation to the investment community
will begin at 9.30am (BST) on 24 May 2012.
Access details for this audiocast, video interviews with management and copies
of this announcement and the slide presentation are
available on the SABMiller plc website at http://www.sabmiller.com
Images: Our media image library has a large selection of images for use in
print and digital media.
Visit www.sabmiller.com/imagelibrary
Broadcast footage: Our broadcast footage library has stock footage for media
organisations to view and download for use in TV programmes or news websites.
Visit www.sabmiller.com/broadcastfootage
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.
Operational review
Latin America
Financial summary 2012 2011 %
Group revenue (including share of 7,158 6,335 13
associates) (US$m)
EBITA (US$m) 1,865 1,620 15
EBITA margin (%) 26.1 25.6
Sales volumes (hl 000)
- Lager 41,596 38,266 9
- Lager (organic) 41,264 38,266 8
- Soft drinks 17,418 15,809 10
In 2012 before exceptional charges of US$119 million being business
capability programme costs of US$85 million and integration and restructuring
costs of US$34 million (2011: US$106 million being business capability
programme costs).
LATIN AMERICA delivered a strong performance with lager volume growth of 9%
(8% on an organic basis) and soft drinks volumes improving by 10%. This is
attributable to our focus on the affordability of lager in a number of our
markets, differentiated brand portfolios and the expansion of our premium
segment, in the context of economic growth across the region. Volume growth,
combined with selective price increases and mix benefits, increased group
revenue by 13%. Higher commodity costs were partly offset by improved
manufacturing efficiencies and continued distribution productivity gains.
Increased investment behind our brands was funded through ongoing fixed cost
productivity improvements. EBITA grew 15% and EBITA margin improved 50 bps (up
70 bps on an organic, constant currency basis).
In COLOMBIA lager volumes grew by 7% reflecting healthy consumer spending, the
implementation of new marketing campaigns and our strategy of price restraint
in mainstream brands. Our share of the alcohol market improved in the last
quarter, ending the year in line with the prior year, benefiting from
increased marketing support and the narrowing of the relative prices between
lager and spirits. The light beer category saw continued growth with Aguila
Light volumes up 44%. Our premium brands also grew robustly, with the local
premium brand franchise, Club Colombia, improving volumes by 30% and new
variants attracting consumers to the category. Our non-alcoholic malt products
saw double digit volume growth following the successful introduction of a
smaller pack for our brand, Pony Malta, and the addition of our new more
refreshing malt brand, Maltizz.
PERU had another good year aided by healthy economic growth. Lager volumes
rose 10% as consumers continued to trade up from the informal alcohol sector.
The roll-out last year of our business capability programme enabled direct
sales service model allowed us to capture growth opportunities while
generating operational efficiencies and differentiated value propositions to
our customers. As a consequence, lager market share grew in both volume and
value share terms to 93% and 95% respectively. Our flagship mainstream brand,
Cristal, increased volumes by 22% reflecting the strong resonance of this
brand underpinned by its support of national soccer. Our premium portfolio
also performed well with volume growth of 22%, and the Cusquena brand extended
its appeal through a number of seasonal variants and its association with
Peruvian heritage and the centenary of the rediscovery of Machu Picchu. In the
soft drinks category we saw volume growth of 34%, as our non-alcoholic malt
brand, Maltin Power, benefited from campaigns highlighting its nutritional
attributes.
ECUADOR saw lager volume growth of 7% as the expanded direct service model
assisted with the capture of new growth opportunities. Lager market share of
alcohol rose to above 50%. In addition to cycling the Sunday trading ban of
June 2010, growth was driven by improved product availability of cold beer at
the point of sale and continuing expansion of our presence in festivals and
events. Our upper mainstream offering, Pilsener Light, saw volume growth of
87%, supported by the introduction of a larger pack. Our local premium brand,
Club, further strengthened its position as the leading premium lager brand in
Ecuador with volume growth of 15% through new activations and upsizing of the
bottle. The non-alcoholic malt brand, Pony Malta, continued its success with
its PET and smaller packs performing well, resulting in volume growth of 38%.
In HONDURAS lager volumes were up 9% versus the prior year. Growth was
underpinned by our affordability strategy, in the traditional trade with a
larger multiserve bottle, and in the modern trade with affordable can pricing,
for both mainstream brands, Imperial and Salva Vida. The super premium
category saw healthy growth, with Miller Lite doubling its volumes. Our
alcohol market share continued to increase reaching a historic high of 53%.
Soft drinks volumes grew by 7% boosted by further cooler penetration and brand
activations and the success of multiserve packs. During the year we launched
Actimalta in the non-alcoholic malt category with good acceptance from our
target consumers. The juices and tea categories introduced last year saw
volume growth of over 40%.
In PANAMA our lager volume growth of 2% and revenue mix benefited from the
performance of premium brands, with Miller Lite and Miller Genuine Draft (MGD)
showing strong acceptance amongst targeted consumers. MGD has established
itself as the leader in the super premium segment and Miller Lite the leader
in the premium segment. Mainstream brands Atlas and Balboa benefited from
investment behind new brand campaigns and improved in-outlet execution. Soft
drinks volumes grew by 4% boosted by the milk category and a strong
performance from sparkling soft drinks, through increased availability of cold
products at the point of sale.
In EL SALVADOR domestic lager volumes saw double digit volume growth, driven
by the more affordable bulk pack of our flagship mainstream brand, Pilsener.
Our local premium brand, Suprema, also saw healthy volume growth of 30%, which
together with the repositioning of Golden Light in the upper mainstream
segment, significantly improved revenue mix. As a consequence, our alcohol
market share increased to 35%. Soft drinks volumes grew by 7%, mainly due to
the success of multiserve packs. In January 2012 we expanded into the non-
alcoholic malt category with our brand Actimalta.
In ARGENTINA we saw healthy volume growth of our mainstream brand Isenbeck,
which on a full year comparative basis grew by 13%. The integration and
upgrading of our capabilities in Argentina is progressing.
Europe
Financial summary 2012 2011 %
Group revenue (including share of 5,482 5,394 2
associates) (US$m)
EBITA (US$m) 836 887 (6)
EBITA margin (%) 15.3 16.4
Sales volumes (hl 000)
- Lager 43,951 44,193 (1)
- Lager (organic) 43,157 43,519 (1)
- Soft drinks 533 82 549
- Soft drinks (organic) 97 81 19
In 2012 before net exceptional gains of US$1,135 million being net profit on
disposal of businesses of US$1,181 million, a refund of a previous anti-trust
fine of US$42 million and business capability programme costs of US$88 million
(2011: exceptional charges of US$261 million being impairments of US$98
million, integration and restructuring costs of US$52 million and business
capability programme costs of US$111 million).
In Europe, full year lager volumes declined by 1% on both a reported and an
organic basis. Volumes in our businesses in Poland and Romania fell by 4% and
8% respectively, although other markets generally saw improved volume trends.
Beer markets continued to be affected by consumer downtrading and industry
focus on economy brands and packs, together with growth in modern trade and
discounter channels, and declining on-premise channels. In the second half,
planned destocking of wholesaler inventories was carried out in Poland and
Romania, impacting our lager volume performance. Organic information includes
11 months of trading for Russia and Ukraine prior to the conclusion of the
transaction with Anadolu Efes and excludes our share of the enlarged Anadolu
Efes group for the period since the transaction. Reported results include our
share of March trading for Anadolu Efes.
Reported EBITA declined by 6% overall with EBITA down in Poland and Romania.
Profitability across the region was impacted by significant increases in raw
material costs and negative brand mix, with reductions in group revenue per hl
in Poland and Romania mainly due to adverse sales mix. Overall Europe`s group
revenue per hl grew 1% on both a reported and an organic, constant currency
basis, reflecting selective price increases and against a backdrop of
structural shifts to the economy segment and the modern trade channel in
certain markets. Operational cost efficiencies including those from our global
procurement and regional manufacturing projects continued to deliver benefits.
Marketing expenditure was marginally below the prior year which included the
2010 FIFA World Cup activations. Reported EBITA was helped by the weakening of
the US dollar against central and eastern European currencies compared with
the prior year. On an organic, constant currency basis EBITA was down 9% with
a margin decline of 160 bps.
In POLAND lager volumes were down 4% impacted by competitor price reductions
and promotional activities along with planned destocking of wholesaler
inventories. The beer market has been increasingly characterised by
downtrading together with continued development of the modern trade,
especially discounters, resulting in growth of the economy segment. In this
environment our economy brand Wojak has performed well and gained market share
however key mainstream brands and the premium segment have been negatively
affected. Group revenue per hl declined by 1% on a constant currency basis
which, combined with the adverse volume performance, resulted in a decline in
EBITA.
In the CZECH REPUBLIC lager volumes were level with the prior year despite
ongoing weakness in the on-premise channel and a drop in consumer sentiment
during the year. Our super premium and premium segments have performed well
with Pilsner Urquell growing despite its on-premise bias, benefiting from
strengthening brand equity, successful trade activities and expanded tank beer
distribution. Premium segment performance was boosted by Kozel 11, with
particularly strong performance in the on-premise channel as a result of
outlet expansion. While the mainstream segment remains under pressure, the
introduction of PET packaging for key brands has enabled an improvement in the
segment`s trends. Group revenue per hl was in line with the prior year on a
constant currency basis due to the strong performance of super premium and
premium brands, despite ongoing price pressure and channel mix shifting in
favour of off-premise. EBITA on a constant currency basis was in line with the
prior year as raw material cost increases were offset by operational cost
efficiencies.
In ROMANIA lager volumes declined by 8% in a market in which consumers have
downtraded. This emphasis on the economy segment and bulk packs has involved
heavy discounting and led to adverse brand and pack mix. Our performance was
also impacted by planned wholesaler destocking in the second half of the year.
Our mainstream brand Timisoreana has been most significantly impacted in this
environment, although the rate of decline slowed in the second half supported
by effective promotional activity. The premium segment has also been affected
by competitor activities. Our economy brand Ciucas has grown slightly with
strong performance of the recently launched 2.5L PET pack. Group revenue per
hl declined by 3% on a constant currency basis which together with the volume
decline resulted in lower EBITA.
Lager volumes were up 2% in RUSSIA on an organic basis, with growth in the
super premium segment as Essa performed particularly well benefiting from a
successful can launch. In the premium segment our local brand Zolotaya Bochka
remained under pressure, however Kozel continued to grow despite strong
competition in the Czech beer segment. Local economy brands performed ahead of
the market driving overall growth of our economy segment, and we successfully
launched a new mainstream offering, Zwei Meister. Organic, constant currency
group revenue per hl grew by 6% which, along with volume performance, resulted
in EBITA ahead of the prior year, despite increased raw material costs.
In UKRAINE lager volumes grew 42% on an organic basis, as a result of the
continued good performance of the core brand Sarmat, Zolotaya Bochka and the
introduction of mainstream brand Amsterdam.
Domestic lager volumes were level with the prior year in ITALY despite the
impact of a deteriorating economic outlook. Declines in the first half of the
year were recovered in a stronger second half supported by increased
promotional activity. Peroni grew ahead of the prior year benefiting from
expansion of draught volumes. EBITA benefited from fixed cost efficiencies. On
13 June 2011 we disposed of our Italian distribution operation.
In the UNITED KINGDOM the continued growth of Peroni Nastro Azzurro through
expansion in the on-premise channel has resulted in lager volume growth of 8%.
This was achieved despite a decline in the beer market and lower MGD volumes
as distribution was refocused on key regions. EBITA grew strongly supported by
good revenue per hl growth in the on-premise channel.
In the NETHERLANDS domestic lager volumes were level with the prior year in a
competitive environment characterised by discounting and promotional activity
in the highly consolidated off-premise channel and reflecting the impact of
economic uncertainty on consumer confidence. EBITA was ahead of the prior
year, benefiting from restructuring, despite a slight decline in group revenue
per hl.
In HUNGARY, lager volumes were up 5% boosted by strong promotional support due
to the Arany Aszok `Golden Friday` on-premise activation. Our economy brands
took advantage of downtrading trends, while our super premium brands performed
well, led by Pilsner Urquell. In the CANARIES, the trading environment
remained challenging with improved performance during the summer in the
tourist areas leading to total volume growth of 1%. Lager volumes in SLOVAKIA
grew by 2% supported by particularly strong performance in the modern trade
channel and in the super premium segment with a number of successful
promotions for Pilsner Urquell.
North America
Financial summary 2012 2011 %
Group revenue (including share of joint 5,250 5,223 1
ventures) (US$m)
EBITA (US$m) 756 741 2
EBITA margin (%) 14.4 14.2
Sales volumes (hl 000)
- Lager - excluding contract brewing 41,346 42,336 (2)
- Lager - excluding contract brewing (organic) 41,341 42,336 (2)
MillerCoors` volumes
- Lager - excluding contract brewing 39,848 40,949 (3)
- Lager - excluding contract brewing (organic) 39,843 40,949 (3)
- Sales to retailers (STRs) 39,760 40,757 (2)
- Contract brewing 4,549 4,458 2
In 2012 before exceptional charges of US$35 million being the group`s share
of MillerCoors` impairment of the Sparks brand (2011: US$5 million being the
group`s share of MillerCoors` integration and restructuring costs).
The North America segment includes the group`s 58% share in MillerCoors and
100% of Miller Brewing International. Total North America EBITA increased by
2%, driven by strong revenue management and focused sales and marketing
execution, in a market where consumer sentiment remained cautious.
MillerCoors
For the year ended 31 March 2012 MillerCoors` US volume STRs declined by 2%,
as the mainstream beer segment continues to be impacted by economic pressure
on key consumer demographics. Domestic STWs were down by 3%. EBITA increased
as revenue growth more than offset lower volumes, increased costs of goods
sold and higher fixed costs.
Premium light brand volumes declined by low single digits, with growth in
Coors Light offset by a decline in Miller Lite. MillerCoors` Tenth and Blake
division saw double digit growth driven particularly by the continued success
of Blue Moon and Leinenkugel`s and their seasonal variants, together with
Peroni Nastro Azzurro. The below premium segment was down by mid single
digits, as consumers continue to trade up to other segments.
MillerCoors` group revenue per hl grew by 3%, due to front line pricing and
aided by favourable brand mix. Cost of goods sold per hl increased moderately,
despite the ongoing benefit of synergies and cost savings, due to higher
freight costs, packaging innovations, brand mix and rising commodity prices.
Marketing, general and administrative costs were in line with the prior year,
as higher fixed costs were offset by the rephasing of certain marketing
programmes into the new financial year.
MillerCoors delivered US$18 million of incremental integration synergies,
mainly through savings from brewery and procurement related projects and
freight optimisation as the integration synergies programme completed on 30
June 2011. In the year to 31 March 2012 other cost savings of US$88 million
were realised, driven by various initiatives, primarily in the integrated
supply chain function. The integration of The Crispin Cider Company and its
affiliate Fox Barrel Cider Company is progressing well.
Total annualised integration synergies and other cost savings of US$790
million have been realised since the inception of the joint venture on 1 July
2008. This consists of synergies of US$546 million and other cost savings of
US$244 million. MillerCoors exceeded the target of US$750 million in total
annualised synergies and other cost savings one year earlier than originally
planned.
Africa
Financial summary 2012 2011 %
Group revenue (including share of 3,686 3,254 13
associates) (US$m)
EBITA (US$m) 743 647 15
EBITA margin (%) 20.2 19.9
Sales volumes (hl 000)
- Lager 17,374 15,288 14
- Lager (organic) 17,033 15,016 13
- Soft drinks 13,475 12,373 9
- Soft drinks (organic) 13,039 11,785 11
- Other alcoholic beverages 5,330 5,080 5
- Other alcoholic beverages (organic) 5,283 5,080 4
In 2012 before net exceptional gains of US$185 million being profit on
disposal of business of US$67 million, profit on disposal of investment in
associate of US$103 million and the group`s share of the profits on
transactions in associates of US$23 million, net of US$8m business capability
programme costs (2011: US$4 million being business capability programme
costs).
Africa delivered another strong full year performance with lager volume growth
of 14% (13% on an organic basis), despite experiencing capacity constraints in
a number of markets. Projects are currently underway in Uganda, Tanzania,
Zambia, Ghana and South Sudan to increase capacity. Volume growth was achieved
through increased investment in sales and marketing to support differentiated
brand portfolios and an expansion of our local geographic footprint,
underpinned by broadly favourable economic conditions. The Castle portfolio
continues to grow strongly across the region, with volumes up 27%. Keen focus
has been given to our affordable products with the introduction of draught
formats, smaller pack offerings and innovative products like Impala, a cassava-
based beer. Soft drinks volumes grew by 9% (11% on an organic basis) driven by
good performances in Ghana, South Sudan and Zambia as well as by our
associates Castel and Delta in Zimbabwe.
Volume growth translated into EBITA growth of 15% (16% on an organic, constant
currency basis). Group revenue per hl benefited from strong growth of the
premium segment as well as price increases, at levels typically somewhat below
inflation. EBITA margin consequently improved by 30 bps despite the expansion
of sales and marketing capability, rising inflation and weaker local
currencies. Margin improvement was achieved through a continued cost focus and
our local agricultural programmes, which helped to partly cushion the impact
of rising international commodity prices.
Despite cycling a strong comparative, lager volumes in TANZANIA grew by 15%
attributable to the successful mainstream brand renovations of Safari and
Kilimanjaro, as well as strong premium segment growth driven by Castle Lite.
Our Mbeya brewery continues to serve the incremental growth in the south while
an enhanced sales force, as well as increased cooler penetration, have led to
market share gains. Grand Malt, a non-alcoholic offering, has performed
particularly well.
In MOZAMBIQUE robust mainstream growth driven by a packaging upgrade for 2M
and the continued expansion of our footprint in the north enabled by our
Nampula Brewery helped grow lager volumes by 9%. A key focus area for this
year was the expansion of affordable offerings with the launch of Manica
draught and the innovative cassava-based Impala.
Improved availability, a wider geographical distribution reach and healthy
economic conditions enabled ZAMBIA lager volume growth of 17% despite
production capacity constraints. Our key mainstream brands, Mosi and Castle
Lager, have continued to perform well while the premium Castle Lite
experienced very strong growth. Construction of the new brewery at Ndola is
well underway and commissioning is anticipated in the second half of the new
financial year. Soft drinks volumes grew by 10%.
Lager volumes in UGANDA grew by 19% supported by an enhanced distribution
network into western Uganda, rigorous in-trade execution and a strong
mainstream and affordable portfolio. Our mainstream brands, Nile Special and
Club Pilsener, both continued to perform well. The rate of growth slowed in
the second half of the year as a result of capacity constraints, to be
addressed by our new greenfield brewery located in Mbarara, western Uganda,
which is currently under construction.
The consistent growth of GHANA`S Club Lager helped drive further volume gains
while soft drinks volume growth remained buoyant. SOUTH SUDAN delivered strong
lager and soft drinks volume growth while the capacity expansion project
announced early in 2011 is on track for completion in the first quarter of the
new financial year.
Delta Corporation, our associate in ZIMBABWE, experienced strong double digit
growth across all beverage categories, which was achieved by improved
availability assisted by previous capacity upgrades. Lager volumes have now
exceeded the historical peak levels experienced in the 1990s. During the year,
we purchased additional shares in Delta, bringing our shareholding to 40% (25%
group effective economic interest).
With effect from 1 January 2012, together with Castel we implemented a number
of organisational changes in our African operations as part of our strategic
alliance agreement. Operational management of the Nigerian business is now
with SABMiller and the Angolan businesses with Castel. Castel acquired Star
Breweries in Madagascar in the second quarter of the year. CASTEL`s full year
lager volumes, excluding the successful management combination of our Angola
businesses and their Madagascar acquisition, grew by 11% with good volume
performances in Cameroon, the Democratic Republic of Congo, Ethiopia and
Tunisia.
Asia Pacific
Financial summary 2012 2011 %
Group revenue (including share of
associates
and joint ventures) (US$m) 3,510 2,026 73
EBITA (US$m) 321 92 247
EBITA margin (%) 9.1 4.6
Sales volumes (hl 000)
- Lager 58,121 51,270 13
- Lager (organic) 53,292 51,240 4
In 2012 before net exceptional charges of US$70 million being transaction-
related costs of US$109 million, integration and restructuring costs of US$26
million, business capability programme costs of US$1 million and a gain on
remeasurement of existing interest in joint venture on acquisition of US$66
million (2011: US$ nil).
In Asia Pacific lager volumes for the full year increased by 4% on an organic
basis, with reported volume growth of 13% enhanced by the inclusion of
Foster`s and regional acquisitions in China. Reported EBITA more than trebled
and group revenue per hl grew by 53% due to the inclusion of Foster`s. EBITA
increased by 30%, on an organic, constant currency basis, driven by favourable
growth in both China and India. Group revenue per hl on the same basis
improved by 14% compared with the prior year, with good increases in China and
India. EBITA margin increased by 450 bps on a reported basis (50 bps on an
organic, constant currency basis).
In CHINA, lager volumes grew 9% (4% on an organic basis) with acquisitions
enhancing market share, as CR Snow sold in excess of 100 million hectolitres
in a 12 month period for the first time. Volumes grew in all regions with CR
Snow`s newly acquired breweries in Jiangsu, Liaoning, Henan and Shanghai,
together with new breweries commissioned in the year, contributing positively
to the reported volume growth.
Overall CR Snow continued to expand its market share although organic growth
was affected by heavy and prolonged rains that affected certain key provinces.
Good market share increases were delivered in Anhui, Zhejiang, Jiangsu,
Tianjin, Liaoning, Guizhou, Shanghai and Heilongjiang, although market share
was lost in Sichuan.
Group revenue per hl increased by 13%, benefiting from high single digit price
increases implemented towards the end of the previous financial year to
recover cost increases, as well as significant positive brand mix. CR Snow
continued to expand its presence in the premium segment through the expansion
of Snow Draft in particular.
Investment in brand marketing and sales capability together with rising costs
of raw materials, higher labour costs and adverse changes to consumption tax
legislation have increased operating costs but EBITA margin slightly increased
on an organic basis. Loss-making acquisitions reduced reported EBITA margins.
INDIA`S lager volumes grew 3%. Volumes declined in the first half of the year
affected by dampened consumer demand, following substantial excise increases
in key states, and certain trading restrictions imposed in Andhra Pradesh
which were subsequently removed in September 2011. In the second half of the
year volumes grew at a more robust 16%. Market share increases were achieved
in the key high margin focus states of Haryana and Pondicherry.
Revenue per hl increased by 8% (13% on a constant currency basis), reflecting
price increases and focus on higher margin brands, packs and states as well as
new product launches including Miller High Life, the introduction of PET
containers and additional variants of Foster`s and Royal Challenge. Although
marketing investment increased to support these launches, EBITA more than
doubled compared with the prior year.
Lager volumes in VIETNAM were below the prior year, but revenue increased
reflecting a focus on higher margin brands, channels and geographies.
Gambrinus was launched as a premium brand and Peroni Nastro Azzurro as a super
premium brand during the year in support of this strategy.
In AUSTRALIA Pacific Beverages delivered strong volume growth in the period
leading up to the acquisition of the remaining 50% interest in the joint
venture in January 2012. This was achieved through greater penetration of the
on-premise channel, with our key premium brand Peroni Nastro Azzurro, as well
as continued growth in the off-premise channel nationally. Following the
acquisition of the remaining interest, Pacific Beverages was integrated into
the newly acquired Foster`s business, realising immediate operating and
commercial synergies.
As a result of the Foster`s acquisition, certain licence and import
arrangements with a combined annual volume base of approximately 915,000 hl
were terminated towards the end of the financial year. The loss of these
rights was a known risk at the time of the acquisition.
CUB(1) lager volumes in Australia were 4% below the prior year on a pro
forma(1) full year basis, reflecting continued subdued consumer sentiment. CUB
continued to grow its presence in the expanding New World regular mainstream
segment with robust growth of Carlton Dry and the successful launch of the
Great Northern Brewing Co brand. The traditional regular mainstream segment,
which includes Victoria Bitter, declined at a higher rate than the market,
however Carlton Draught managed to consolidate share. Premium volumes
performed more strongly, with encouraging results from focused execution and
expansion of the owned premium portfolio including Crown Lager. Volume
improvements in the rapidly expanding craft segment were driven by Matilda Bay
Fat Yak Pale Ale.
Group revenue per hl increased by 3% in the last quarter on a pro forma basis,
benefiting from focused revenue management across the brand portfolio
following a period of low price realisation. On a pro forma basis EBITA
declined due to the lower volumes and increased commercial investment in the
market. Results benefited from the early delivery of synergies of US$6 million
with an estimated annualised run-rate of US$40 million. Overall operating
profit synergies of AUD180 million are anticipated by year 4. Integration
costs over this period are expected to be below AUD220 million, of which
AUD150 million is expected to impact the income statement.
(1) CUB pro forma volumes and financial information are based on results for
CUB reported under IFRS for the period from 1 April 2010 to 31 March 2011
(full year) or 1 January 2011 to 31 March 2011 (quarter). Adjustments have
been made to reflect SABMiller group accounting policies. CUB (Carlton and
United Breweries) is the Australian beverage business of the recently acquired
Foster`s group.
South Africa: Beverages
Financial summary 2012 2011 %
Group revenue (including share of 5,815 5,598 4
associates) (US$m)
EBITA (US$m) 1,168 1,067 9
EBITA margin (%) 20.1 19.1
Sales volumes (hl 000)
- Lager 26,859 26,306 2
- Soft drinks 17,979 17,574 2
- Other alcoholic beverages 1,565 1,467 7
In 2012 before net exceptional charges of US$41 million being Broad-Based
Black Economic Empowerment scheme costs of US$29 million and business
capability programme charges of US$12 million (2011: US$188 million being
business capability programme costs of US$39 million and charges incurred in
relation to the Broad-Based Black Economic Empowerment scheme of US$149
million).
Our South Africa beverages business delivered strong EBITA and EBITA margin
growth as the business strategy launched in 2009 continued to deliver good
results. This was achieved despite a consumer and economic environment which
remained difficult, although the business benefited from the timing of the
Easter peak trading period.
South Africa lager volumes returned to growth in the second half of the year,
resulting in full year lager growth of 2%. We outpaced the industry and had
gained market share by the end of the year, as a result of sustained brand
investment, improved retail execution and better customer service. Our
targeted brand investments included product and packaging innovations and
actions to meet the demands of specific market segments. The investment in
market-facing activities was funded largely by cost efficiencies. Lager volume
growth was further supported by the expanded distribution footprint and
effective supply chain management.
Continued intensive through-the-line marketing investment behind the core
brands drove good performance from both premium and mainstream segments.
Castle Lite, the fastest growing scale brand in South Africa, strengthened its
leadership position as the country`s most popular premium brand driven by the
continued communication of its `Extra Cold` proposition. The premium category
also benefited from Castle Milk Stout`s good growth following its
repositioning as a local premium brand during the year. Castle Lager`s volume
growth accelerated to double digits during the second half, propelled by the
success of the `It all comes together with a Castle` campaign. Carling Black
Label further slowed its decline, with volumes level with the prior year
during the second half of the year. The brand`s improved performance was
supported by its recognition as an award-winning champion beer, drawing
attention to its quality credentials.
In addition to the continued extensive social responsibility efforts, two
significant new initiatives were launched during the year. These were the
`Responsible Trader Programme` where more than 16,500 traders were trained;
and a programme to tackle underage drinking, called `You Decide`, which was
rolled out to almost 300 schools reaching more than 187,000 teenagers.
Soft drinks volumes grew by 2% for the full year, as the second half saw
benefits from the continued execution of focused channel plans, improved
customer service and better weather conditions. Sparkling soft drinks volumes
benefited from good performance of two litre PET packs and several growth
initiatives, particularly those targeted at restoring the 1.25 litre
returnable glass bottle to growth. Growth in still drinks exceeded that of the
total soft drinks portfolio, reflecting strong gains in the Glaceau and
Powerade brands.
Appletiser volumes benefited from the introduction of new PET packs, driving
strong revenue growth and an improved EBITA performance.
Our associate Distell`s international and domestic volumes continued to
exhibit good performance particularly from ciders and ready-to-drink brands,
with slower growth in the wine portfolio and spirits volumes remaining level.
The higher volumes resulted in group revenue and EBITA growth and margins
expanded further as foreign currency conversion gains offset increases in
certain raw materials and excise duties.
Group revenue for our South Africa beverages business grew by 9% on a constant
currency basis with group revenue per hl up by 6% on the same basis. This was
as a result of price increases to recover beer excise increases, as well as
the strong performance of the local premium brands.
Across the business, productivity continued to improve and we continued to
focus on reducing operating costs, in order to fund increased market and
consumer-facing investments, as well as expanding our EBITA margin. The soft
drinks business managed to more than offset the effect of increasing commodity
costs, specifically increases in sugar and resin prices, through productivity
gains from improvements in its supply chain and packaging redesigns. Reported
EBITA grew by 9% and by 14% in constant currency, as EBITA margin rose to
20.1%, an improvement of 100 bps compared with the prior year.
South Africa: Hotels and Gaming
Financial summary 2012 2011 %
Group revenue (share of associates) (US$m) 487 481 1
EBITA (US$m) 135 137 (2)
EBITA margin (%) 27.7 28.5
Revenue per available room (Revpar) - US$ 69.39 73.74 (6)
In 2012 before exceptional gains of US$23 million being the group`s share of
profits on transactions in associates (2011: US$26 million being the group`s
share of the loss on the merger transaction).
SABMiller is a 39.7% shareholder in the Tsogo Sun Group, which is listed on
the Johannesburg Stock Exchange. The full year results reflect our share of
the enlarged group following the merger with Gold Reef Resorts Ltd at the end
of the previous financial year.
Our share of Tsogo Sun`s reported revenue grew by 1% over the prior year, with
constant currency growth of 6%. Revenue growth was adversely impacted by a
strong prior year performance, boosted by the 2010 FIFA World Cup. The
operations of Tsogo Sun remain highly geared towards the South African
consumer in gaming and towards the corporate market in hotels, with both
sectors experiencing difficult trading conditions.
The gaming industry in South Africa experienced a satisfactory first half year
with a more robust second half assisting full year growth of 7%. The biggest
gaming province, Gauteng, grew by 6% compared with 2% in the prior year with
the KwaZulu-Natal region growing by 8% over the 5% reported in 2011. Tsogo Sun
improved market share in both Gauteng and KwaZulu-Natal.
The South African hotel industry remained under pressure during the early part
of the year, with trading in the second half reflecting signs of improvement.
South African market occupancies averaged 57% in the year compared with 58%
for the prior year including the impact of the FIFA World Cup. Group-wide
occupancies ended the year at 62% against prior year occupancy rates of 59%.
US dollar revenue per available room (revpar) declined by 6% and by 2% on a
constant currency basis, as a result of higher rates achieved during the FIFA
World Cup in the prior year.
EBITA ended 2% down on the prior year but grew by 3% on a constant currency
basis. EBITA margin declined as a result of utility price increases which
together with other cost increases, outstripped the rate of revenue growth.
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 2011. The consolidated
balance sheet as at 31 March 2011 has been restated for further adjustments
relating to the initial accounting for business combinations, details of which
are provided in note 13. The Annual Report and Accounts for the year ended 31
March 2011 are 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. Following the acquisition of Foster`s Group
Ltd (Foster`s) in December 2011 the Asia segment was renamed Asia Pacific.
SABMiller uses group revenue and EBITA (as defined in the financial
definitions section) to evaluate performance and believes these measures
provide stakeholders with additional information on trends and allow for
greater comparability between segments. Segmental performance is reported
after the specific apportionment of attributable head office costs.
Disclosure of 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 group revenue. Volumes exclude intra-group sales volumes. This
measure of volumes is used in the segmental analyses as it closely aligns with
the consolidated group revenue and EBITA disclosures.
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 the financial definitions section for the
definition.
In relation to the merger of the Tsogo Sun Group with Gold Reef Resorts Ltd
(GRR) no adjustments have been made in the calculation of organic results as
the group`s share of the enlarged group is deemed to be comparable with the
group`s share of the Tsogo Sun Group in the comparative period.
Adjusted EBITDA
The group uses an adjusted EBITDA measure of cash generation which adjusts
EBITDA (as defined in the financial definitions section) to exclude cash flows
relating to exceptional items and to include the dividends received from the
MillerCoors joint venture. Given the significance of the MillerCoors business
and the access to its cash generation, inclusion of the dividends from
MillerCoors (which approximate the group`s share of its EBITDA) provides a
useful measure of the group`s overall cash generation. Excluding the cash
impact of exceptionals allows the level and underlying trend of cash
generation to be understood.
Business combinations and similar transactions
On 16 December 2011 the group acquired a 100% interest in Foster`s in
Australia at an enterprise value of US$11,786 million, comprising cash
consideration of US$10,598 million, together with acquired net debt and non-
controlling interests, less a net present value attributed to cash receivable
for historical tax losses. The acquisition provides the group with exposure to
Australia`s strong economic growth prospects; a leading position in the stable
and profitable Australian beer industry; and the opportunity to apply the
group`s capabilities and scale to improve Foster`s financial and operating
performance.
With effect from 1 January 2012 the group and Castel implemented a number of
organisational changes in their African operations as part of their strategic
alliance agreement. As a result the operational management of the group`s
Angolan businesses was combined with the Angolan businesses of its associate,
Castel, with all of the Angolan businesses, in which the group retains an
associate interest, being managed from that date by Castel. Further the group
acquired a 65% interest (effective 33% interest) in International Breweries
Ltd in Nigeria, from Brasseries Internationales Holding Ltd (BIH), part of the
Castel group, in exchange for cash and a dilution in the group`s effective
interests in its existing Nigerian businesses, Pabod Breweries Ltd and Voltic
Nigeria Ltd.
Following the Foster`s acquisition, on 13 January 2012 the group acquired the
remaining 50% interest which it did not already own in Pacific Beverages (Pty)
Ltd (Pacific Beverages) in Australia from Coca-Cola Amatil Limited (CCA) for
cash consideration of US$343 million. The acquisition took the group`s
effective interest in Pacific Beverages to 100%.
On 6 March 2012 the group completed its strategic alliance with Anadolu Group
and Anadolu Efes Biracilik ve Malt Sanayii AS (Anadolu Efes). The group`s
Russian beer business, SABMiller RUS LLC, and Ukrainian beer business, PJSC
Miller Brands Ukraine, were contributed to Anadolu Efes in exchange for a 24%
equity stake in the enlarged Anadolu Efes group. Anadolu Efes is now the
vehicle for both group`s investments in Turkey, Russia, the CIS, Central Asia
and the Middle East. The alliance will result in the enlarged Anadolu Efes
strengthening its market position in the large Russian beer market; it is the
leading beverage producer in Turkey; and has leading market positions in the
growth beer markets of Kazakhstan, Moldova and Georgia.
During the year the group increased its direct interest in Delta Corporation
Limited in Zimbabwe from 36.75% to 40%.
In January 2012 the group acquired an additional 2.9% effective interest in
Tanzania Breweries Ltd following a public offer through the Dar-es-Salaam
Stock Exchange. This increased the group`s effective interest to 36%.
Disposals
On 13 June 2011 the group completed the disposal of its distribution business
in Italy, which was classified as a disposal group held for sale at 31 March
2011, and which generated a US$14 million exceptional loss on disposal,
primarily being the recycling of the foreign currency translation reserve
associated with this business.
On 25 November 2011 the group disposed of its 12% effective interest in its
associate, Kenya Breweries Limited, for cash consideration of US$205 million.
Effective 1 January 2012 the group combined the operational management of its
Angolan businesses, in Africa, with the Angolan businesses of its associate,
Castel, with all of the Angolan businesses, in which the group retains an
associate interest, being managed from that date by Castel.
On 6 March 2012 the group disposed of its Russian beer business, SABMiller RUS
LLC, and its Ukrainian beer business, PJSC Miller Brands Ukraine, in exchange
for a 24% interest in the enlarged Anadolu Efes group.
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 credits of US$1,037 million before finance costs and tax were
reported during the year (2011: net exceptional charges of US$467 million),
including net exceptional credits of US$11 million (2011: charges of US$31
million) related to the group`s share of associates` and joint ventures`
exceptional items. The net exceptional credits included:
- a net profit on disposal of businesses of US$1,248 million primarily related
to the disposal of the group`s Russian and Ukrainian businesses in exchange
for a 24% interest in the enlarged Anadolu Efes group;
- a profit of US$103 million on the disposal of the group`s investment in its
associate in Kenya;
- a gain of US$66 million on the remeasurement of the group`s existing 50%
interest in the Australian joint venture on the acquisition of the remaining
50% interest;
- a credit of US$42 million relating to the refund of a fine in Europe;
- a charge of US$235 million (2011: US$296 million) related to business
capability programme costs in Latin America, Europe, Africa, Asia Pacific,
South Africa: Beverages and Corporate;
- a charge of US$109 million for transaction-related costs associated with the
acquisition of Foster`s in Asia Pacific;
- US$60 million of integration and restructuring costs relating to the
integration of Foster`s together with various integration and restructuring
projects in Latin America; and
- US$29 million (2011: US$149 million) in respect of the Broad-Based Black
Economic Empowerment scheme in South Africa.
The group`s share of associates` and joint ventures` exceptional items
included profits of US$46 million on transactions in associates including the
profit on the disposal of a subsidiary by Castel in Africa, the gain on the
remeasurement of Tsogo Sun Holdings Ltd`s (Tsogo Sun) existing interest in an
associate on the acquisition of the remaining interest and the release of
deferred consideration relating to a prior acquisition by Tsogo Sun; partly
offset by a charge of US$35 million related to the group`s share of the
impairment of the Sparks brand in MillerCoors.
Within net finance costs there was a net exceptional charge of US$22 million
comprised US$26 million of transaction-related net finance costs and US$4
million of interest income on the repayment of the fine in Europe.
In addition to the amounts noted above, the net exceptional charge in 2011
included impairment charges of US$98 million following the classification of
the in-house distribution business in Italy as held for sale and the closure
of the Cluj brewery in Romania; integration and restructuring charges of US$52
million related to restructuring costs in Europe; and a profit of US$159
million on the partial disposal of the group`s shareholding in Tsogo Sun as
part of the Tsogo Sun/GRR merger. The group`s share of associates` and joint
ventures` exceptional items included US$26 million being the impairment loss
on Tsogo Sun`s existing holding in GRR as a result of the merger transaction
and US$5 million of MillerCoors` integration and restructuring costs.
Finance costs
Net finance costs were US$562 million, a 7% increase on the prior year`s
US$525 million, mainly as a result of the increase in borrowings following the
Foster`s acquisition. Finance costs in the current year include a net gain of
US$2 million (2011: loss of US$7 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 included exceptional finance costs of
US$22 million (2011: US$nil) comprised US$26 million of transaction-related
net finance costs partially offset by US$4 million of exceptional interest
income, as described above. The mark to market gain and the exceptional net
finance costs have been excluded from the determination of adjusted net
finance costs and adjusted earnings per share. Adjusted net finance costs were
US$542 million, up 5%.
Interest cover, as defined in the financial definitions section, has increased
to 11.4 times from 10.8 times in the prior year.
Profit before tax
Adjusted profit before tax of US$5,062 million increased by 13% over the prior
year, primarily as a result of higher volumes, price increases and the effect
of premiumisation partially offset by increases in raw material costs and
expenditure on sales, marketing and systems capabilities.
Profit before tax was US$5,603 million, up 55% on the prior year, including
the impact of the exceptional and other adjusting finance items noted above.
The principal differences between the reported and adjusted profit before tax
relate to exceptional items, with net exceptional credits of US$1,015 million
in the year compared with net exceptional charges of US$467 million in the
prior year.
Taxation
The effective rate of tax for the year before amortisation of intangible
assets (excluding software) and exceptional items is 27.5% compared with a
rate of 28.2% in the prior year. The group has benefited from a combination of
events, notably the successful conclusion of our Russian Court proceedings,
reorganisation gains, changes in tax legislation and the resolution of various
uncertain tax positions.
Earnings per share
The group presents adjusted basic earnings per share, which excludes the
impact of amortisation of intangible assets (excluding software), certain non-
recurring items and post-tax exceptional items, in order to present an
additional measure of performance for the years shown in the consolidated
financial statements. Adjusted basic earnings per share of 214.8 US cents were
up 12% on the prior year, owing to higher adjusted profit before tax and a
reduction in the effective tax rate. An analysis of earnings per share is
shown in note 6. On a statutory basis, basic earnings per share were higher by
74% at 266.6 US cents (2011: 152.8 US cents), primarily due to the net
exceptional credits in the year compared with net exceptional charges in the
prior year.
Cash flow and capital expenditure
Net cash generated from operations before working capital movements (EBITDA)
of US$4,979 million increased by 11% compared with the prior year (2011:
US$4,502 million). This increase was primarily due to higher operating results
including the impact of the acquisition of Foster`s. Dividends received from
the MillerCoors joint venture (reported within cash flows from investing
activities) amounted to US$896 million (2011: US$822 million).
Adjusted EBITDA of US$6,183 million (comprising EBITDA before cash flows from
exceptional items of US$308 million plus dividends received from MillerCoors
of US$896 million) increased by 10% compared with the prior year (2011:
US$5,617 million), reflecting the strong EBITDA performance and higher
dividends from MillerCoors.
Net cash generated from operating activities of US$3,937 million was up US$894
million primarily reflecting improved EBITDA, positive cash inflow from
working capital, and lower net interest paid. The level of cash inflows from
working capital increased compared with the prior year assisted by extension
of supplier payment terms as contracts are renegotiated by the group`s
procurement organisation.
Capital expenditure on property, plant and equipment for the year of US$1,473
million has increased compared with the prior year (2011: US$1,189 million).
The group has continued to invest in its operations selectively maintaining
investment to support future growth, especially in Africa where capacity
constraints have been experienced. New breweries are currently being
constructed in Nigeria, Uganda and Zambia and there has been capacity
expansion in Peru and South Sudan, together with distribution expansion in
Colombia. Capital expenditure including the purchase of intangible assets was
US$1,639 million (2011: US$1,315 million).
Free cash flow improved by 23% to US$3,048 million, reflecting higher cash
generated from operating activities partially offset by higher capital
expenditure and investments in joint ventures. Free cash flow is detailed in
note 11b, and defined in the financial definitions section.
Borrowings and net debt
Gross debt at 31 March 2012, comprising borrowings together with the fair
value of derivative assets or liabilities held to manage interest rate and
foreign currency risk of borrowings, increased to US$18,607 million from
US$8,162 million at 31 March 2011, primarily as a result of the acquisition of
Foster`s. Net debt, comprising gross debt net of cash and cash equivalents,
increased to US$17,862 million from US$7,091 million at 31 March 2011. An
analysis of net debt is provided in note 11c.
The group`s gearing (presented as a ratio of net debt/equity) has increased to
68.7% from 31.2% at 31 March 2011 owing to the debt taken on to finance the
Foster`s acquisition. The weighted average interest rate for the gross debt
portfolio at 31 March 2012 was 4.9% (2011: 5.9%).
On 7 April 2011 SABMiller plc entered into a five-year US$2,500 million
committed syndicated facility, with the option of two one-year extensions.
Subsequently the facility was extended in part such that US$2,236 million is
now due to mature in April 2017. This facility replaced the existing US$2,000
million and US$600 million committed syndicated facilities, which were both
voluntarily cancelled.
On 1 July 2011 the US$600 million 6.2% Notes due 2011 matured and were repaid
from existing cash.
On 9 September 2011 SABMiller Holdings Inc, a wholly owned indirect subsidiary
of SABMiller plc, entered into a US$12,500 million committed syndicated
facility to finance the acquisition of Foster`s and related purposes. The
facility consisted of four tranches; a US$8,000 million one-year term facility
with the option of two six-month extensions; a US$2,500 million three-year
term facility; a US$1,000 million five-year term facility; and a US$1,000
million five-year revolving credit facility. In December 2011 the group drew
US$7,850 million under the one-year term facility; AUD 2,000 million
(approximately US$2,021 million) and US$100 million under the three-year term
facility and US$750 million under the five-year term facility. The undrawn
balance of those facilities was cancelled and the amount of the revolving
credit facility was reduced to US$500 million.
On 17 January 2012 SABMiller Holdings Inc issued bonds to the value US$7,000
million, in four tranches: US$1,000 million 1.85% Notes due January 2015;
US$2,000 million 2.45% Notes due January 2017; US$2,500 million 3.75% Notes
due January 2022; and US$1,500 million 4.950% Notes due January 2042,
guaranteed by SABMiller plc. The proceeds of the bonds were used to repay
US$7,000 million under the one-year term facility.
In March 2012 SABMiller Holdings Inc repaid the remaining US$850 million
balance outstanding on the one-year term facility, which was then cancelled.
At 31 March 2012, the group had undrawn committed borrowing facilities of
US$3,810 million (2011: US$3,164 million).
Total equity
Total equity increased from US$22,759 million (restated - see note 13) at 31
March 2011 to US$26,013 million at 31 March 2012. The increase was primarily
owing to profit for the year partly offset by dividend payments.
Goodwill and intangible assets
Goodwill increased to US$20,128 million (2011: US$11,954 million) primarily
due to goodwill arising on the acquisition of Foster`s. Intangible assets
increased in the year to US$9,901 million (2011: US$4,364 million) as a result
of intangibles recognised in relation to Foster`s. The comparatives for
goodwill and intangible assets have been restated to reflect adjustments to
provisional fair values of business combinations, further details of which are
provided in note 13.
Currencies
The exchange rates to the US dollar used in preparing the consolidated
financial statements are detailed in the table below, with most of the major
currencies in which we operate strengthening against the US dollar.
Year ended Appreciation/
31 March (depreciation)
2012 2011 %
Average rate
Australian dollar (AUD) 0.95 1.06 12
South African rand (ZAR) 7.48 7.15 (4)
Colombian peso (COP) 1,831 1,881 3
Euro (Euro) 0.72 0.76 5
Czech koruna (CZK) 17.65 19.04 8
Peruvian nuevo sol (PEN) 2.73 2.81 3
Polish zloty (PLN) 2.99 3.01 1
Closing rate
Australian dollar (AUD) 0.97 0.97 -
South African rand (ZAR) 7.67 6.77 (12)
Colombian peso (COP) 1,792 1,879 5
Euro (Euro) 0.75 0.71 (6)
Czech koruna (CZK) 18.52 17.27 (7)
Peruvian nuevo sol (PEN) 2.67 2.80 5
Polish zloty (PLN) 3.13 2.84 (9)
Dividend
The board has proposed a final dividend of 69.5 US cents per share for the
year, an increase of 13%. Shareholders will be asked to approve this
recommendation at the annual general meeting, which will be held on Thursday
26 July 2012. If approved, the dividend will be payable on Friday 17 August
2012 to shareholders registered on the London and Johannesburg registers on
Friday 10 August 2012. The ex-dividend trading dates will be Wednesday 8
August 2012 on the London Stock Exchange (LSE) and Friday 3 August 2012 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. Further
details relating to dividends are provided in note 7.
The rate of exchange applicable on Wednesday 25 July 2012 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 Thursday 26 July 2012.
Since the introduction on 1 April 2012 of a new dividend withholding tax in
South Africa, the JSE Listings Requirements require disclosure of additional
information in relation to any dividend payments. Shareholders registered on
the Johannesburg register are therefore advised that the new dividend
withholding tax will be withheld from the gross final dividend amount of 69.5
US cents per share (as converted into South African rand in accordance with
the paragraphs above) at a rate of 15%, unless a shareholder qualifies for an
exemption; shareholders registered on the Johannesburg register will therefore
receive a net dividend of 59.075 US cents per share (as converted into South
African rand in accordance with the paragraphs above). The company, as a non
resident of South Africa, was not subject to the secondary tax on companies
(STC) applicable before 1 April 2012, and accordingly, no STC credits are
available for set-off against the dividend withholding tax liability on the
final net dividend amount. The dividend is payable in cash as a `Dividend` (as
defined in the South African Income Tax Act, 58 of 1962, as amended) by way of
a reduction of income reserves. The dividend withholding tax and the
information contained in this paragraph is only of direct application to
shareholders registered on the Johannesburg register, who should direct any
questions about the application of the new dividend withholding tax to
Computershare Investor Services (Pty) Limited, Tel: +27 11 373-0004.
From the commencement of trading on Thursday 26 July 2012 until the close of
business on Friday 10 August 2012, no transfers between the London and
Johannesburg registers will be permitted, and from Friday 3 August 2012 until
Friday 10 August 2012, no shares may be dematerialised or rematerialised, both
days inclusive.
Annual report and accounts
The group`s unaudited condensed consolidated financial statements follow. The
annual report will be mailed to shareholders in late June 2012 and the annual
general meeting of the company will be held at the Pennyhill Park Hotel,
Bagshot, Surrey at 11:00 on Thursday 26 July 2012.
SABMiller plc
CONSOLIDATED INCOME STATEMENT
for the year ended 31 March
2012 2011
Unaudited Audited
Notes US$m US$m
Revenue 2 21,760 19,408
Net operating expenses (16,747) (16,281)
Operating profit 2 5,013 3,127
Operating profit before exceptional items 3,987 3,563
Exceptional items 3 1,026 (436)
Net finance costs 4 (562) (525)
Interest payable and similar charges (1,093) (883)
Interest receivable and similar income 531 358
Share of post-tax results of associates 2 1,152 1,024
and joint ventures
Profit before taxation 5,603 3,626
Taxation 5 (1,126) (1,069)
Profit for the year 4,477 2,557
Profit attributable to non-controlling 256 149
interests
Profit attributable to owners of the 4,221 2,408
parent
4,477 2,557
Basic earnings per share (US cents) 6 266.6 152.8
Diluted earnings per share (US cents) 6 263.8 151.8
All operations are continuing.
The notes form an integral part of these condensed consolidated financial
statements.
?
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March
Notes 2012 2011
Unaudited Audited
US$m US$m
Profit for the year 4,477 2,557
Other comprehensive income:
Currency translation differences on foreign 136 644
currency net investments
- Increase in foreign currency translation 153 644
reserve during the year
- Recycling of foreign currency translation (17)
reserve on disposals
Net actuarial losses on defined benefit (9) (28)
plans
Net investment hedges:
- Fair value losses arising during the year (1) (137)
Cash flow hedges: 6 39
- Fair value gains arising during the year - 16
- Fair value losses transferred to 2 2
inventory
- Fair value losses transferred to profit 4 21
or loss
Tax on items included in other 5 101 22
comprehensive income
Share of associates` and joint ventures` 9, 10 (256) (50)
losses included in other comprehensive
income
Other comprehensive income for the year, (23) 490
net of tax
Total comprehensive income for the year 4,454 3,047
Attributable to:
Owners of the parent 4,199 2,904
Non-controlling interests 255 143
Total comprehensive income for the year 4,454 3,047
The notes form an integral part of these condensed consolidated financial
statements.
CONSOLIDATED BALANCE SHEET
at 31 March
Notes 2012 2011
Unaudited Unaudited
US$m US$m
Assets
Non-current assets
Goodwill 8 20,128 11,954
Intangible assets 8 9,901 4,364
Property, plant and equipment 9,299 9,331
Investments in joint ventures 9 5,520 5,813
Investments in associates 10 4,946 2,719
Available for sale investments 30 35
Derivative financial instruments 732 330
Trade and other receivables 136 140
Deferred tax assets 117 184
Loan participation deposit 100 -
50,909 34,870
Current assets
Inventories 1,255 1,256
Trade and other receivables 2,156 1,687
Current tax assets 482 152
Derivative financial instruments 24 16
Available for sale investments 1 -
Cash and cash equivalents 11c 745 1,067
4,663 4,178
Assets of disposal group classified as 79 66
held for sale
4,742 4,244
Total assets 55,651 39,114
Liabilities
Current liabilities
Derivative financial instruments (40) (50)
Borrowings 11c (1,062) (1,345)
Trade and other payables (4,054) (3,487)
Current tax liabilities (910) (658)
Provisions (717) (412)
(6,783) (5,952)
Liabilities of disposal group classified (7) (66)
as held for sale
(6,790) (6,018)
Non-current liabilities
Derivative financial instruments (69) (85)
Borrowings 11c (18,164) (7,115)
Trade and other payables (112) (98)
Deferred tax liabilities (3,917) (2,578)
Provisions (586) (461)
(22,848) (10,337)
Total liabilities (29,638) (16,355)
Net assets 26,013 22,759
Equity
Share capital 166 166
Share premium 6,480 6,384
Merger relief reserve 4,586 4,586
Other reserves 1,978 1,881
Retained earnings 11,863 8,991
Total shareholders` equity 25,073 22,008
Non-controlling interests 940 751
Total equity 26,013 22,759
As restated (see note 13).
The notes form an integral part of these condensed consolidated financial
statements.
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 March
Notes 2012 2011
Unaudited Audited
US$m US$m
Cash flows from operating activities
Cash generated from operations 11a 5,237 4,568
Interest received 516 293
Interest paid (923) (933)
Tax paid (893) (885)
Net cash generated from operating 11b 3,937 3,043
activities
Cash flows from investing activities
Purchase of property, plant and (1,473) (1,189)
equipment
Proceeds from sale of property, plant 116 73
and equipment
Purchase of intangible assets (166) (126)
Purchase of available for sale (1) (3)
investments
Proceeds from disposal of available for 2 -
sale investments
Proceeds from disposal of associates 205 -
Proceeds from disposal of businesses (23) -
(net of cash disposed)
Acquisition of businesses (net of cash (10,951) (60)
acquired)
Investments in joint ventures (288) (186)
Investments in associates (52) (5)
Repayment of investments by associates 14 68
Dividends received from joint ventures 9 896 822
Dividends received from associates 120 88
Dividends received from other 1 1
investments
Net cash used in investing activities (11,600) (517)
Cash flows from financing activities
Proceeds from the issue of shares 96 73
Proceeds from the issue of shares in 107 34
subsidiaries to non-controlling
interests
Purchase of own shares for share trusts (52) -
Purchase of shares from non-controlling (27) (12)
interests
Proceeds from borrowings 19,000 1,608
Repayment of borrowings (10,139) (2,767)
Capital element of finance lease (5) (5)
payments
Net cash payments on derivative (52) (43)
financial instruments
Dividends paid to shareholders of the (1,324) (1,113)
parent
Dividends paid to non-controlling (109) (102)
interests
Net cash generated from/(used in) 7,495 (2,327)
financing activities
Net cash (outflow)/inflow from (168) 199
operating, investing and financing
activities
Effects of exchange rate changes (39) 25
Net (decrease)/increase in cash and cash (207) 224
equivalents
Cash and cash equivalents at 1 April 11c 813 589
Cash and cash equivalents at 31 March 11c 606 813
The notes form an integral part of these condensed consolidated financial
statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March
Called up Share Merger Other
share premium relief reserves
capital account reserve
US$m US$m US$m US$m
At 1 April 2010 (audited) 165 6,312 4,586 1,322
Total comprehensive income - - - 559
Profit for the year - - - -
Other comprehensive income - - - 559
Dividends paid - - - -
Issue of SABMiller plc 1 72 - -
ordinary shares
Proceeds from the issue of
shares in subsidiaries to
non-controlling interests - - - -
Buyout of non-controlling - - - -
interests
Credit entry relating to - - - -
share-based payments
At 31 March 2011 (audited) 166 6,384 4,586 1,881
Total comprehensive income - - - 97
Profit for the year - - - -
Other comprehensive income - - - 97
Dividends paid - - - -
Issue of SABMiller plc - 96 - -
ordinary shares
Proceeds from the issue of
shares in subsidiaries to
non-controlling interests - - - -
Non-controlling interests
disposed of via business
disposal - - - -
Arising on business - - - -
combinations
Dilution of non-controlling - - - -
interests
Payment for purchase of own - - - -
shares for share trusts
Buyout of non-controlling - - - -
interests
Credit entry relating to - - - -
share-based payments
At 31 March 2012 (unaudited) 166 6,480 4,586 1,978
Retained Total Non- Total
earnings shareholders` controlling equity
equity interests
US$m US$m US$m US$m
At 1 April 2010 (audited) 7,525 19,910 683 20,593
Total comprehensive 2,345 2,904 143 3,047
income
Profit for the year 2,408 2,408 149 2,557
Other comprehensive (63) 496 (6) 490
income
Dividends paid (1,115) (1,115) (106) (1,221)
Issue of SABMiller plc - 73 - 73
ordinary shares
Proceeds from the issue - - 34 34
of shares in subsidiaries
to non-controlling
interests
Buyout of non-controlling (10) (10) (3) (13)
interests
Credit entry relating to 246 246 - 246
share-based payments
At 31 March 2011 8,991 22,008 751 22,759
(audited)
Total comprehensive 4,102 4,199 255 4,454
income
Profit for the year 4,221 4,221 256 4,477
Other comprehensive (119) (22) (1) (23)
income
Dividends paid (1,324) (1,324) (159) (1,483)
Issue of SABMiller plc - 96 - 96
ordinary shares
Proceeds from the issue - - 107 107
of shares in subsidiaries
to non-controlling
interests
Non-controlling interests
disposed of via business
disposal - - (64) (64)
Arising on business - - 65 65
combinations
Dilution of non- (5) (5) 5 -
controlling interests
Payment for purchase of
own shares for share
trusts (52) (52) - (52)
Buyout of non-controlling (7) (7) (20) (27)
interests
Credit entry relating to 158 158 - 158
share-based payments
At 31 March 2012 11,863 25,073 940 26,013
(unaudited)
The notes form an integral part of these condensed consolidated financial
statements.
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of preparation
The preliminary announcement for the year ended 31 March 2012 has been
prepared in accordance with the International Accounting Standards and
International Financial Reporting Standards (collectively IFRS) and IFRS
Interpretations 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 s434 of the
Companies Act 2006. Group financial statements for 2012 will be delivered to
the Registrar of Companies in due course. The board of directors approved this
financial information on 23 May 2012. The annual financial statements for the
year ended 31 March 2011, approved by the board of directors on 3 June 2011,
which represent the statutory accounts for that year, have been filed with the
Registrar of Companies. The auditors` report on those accounts was unqualified
and did not contain a statement made under s498(2) or (3) of the Companies Act
2006.
Items included in the financial information of each of the group`s entities
are measured using the currency of the primary economic environment in which
the entity operates (the functional currency). The consolidated financial
information is presented in US dollars which is the group`s presentational
currency.
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, and post-retirement assets and liabilities. The accounts have
been prepared on a going concern basis.
The accounting policies adopted are consistent with those of the previous
financial year except for those standards, interpretations and amendments
adopted by the group since 1 April 2011, which had no significant impact on
the group`s consolidated results or financial position.
The following standards, interpretations and amendments to existing standards
have been published and are mandatory for the group`s accounting periods
beginning on or after 1 April 2012 or later periods, but which have not been
early adopted by the group and in relation to which the group is yet to assess
the full impact:
- Amendment to IAS 19, `Employee benefits` is effective from 1 January 20131.
- IFRS 9, `Financial Instruments`, is effective from 1 January 2015.
- IFRS 10, `Consolidated Financial Statements`, is effective from 1 January
2013.
- IFRS 11, `Joint Arrangements`, is effective from 1 January 2013.
- IFRS 12, `Disclosures of Interests in Other Entities` is effective from 1
January 2013.
- IFRS 13, `Fair Value Measurement`, is effective from 1 January 2013.
Not yet endorsed by the EU.
There are no other standards, interpretations and amendments to existing
standards that are not yet effective that would be expected to have a material
impact on the consolidated results of operations or financial position of the
group.
2. Segmental information
Operating segments reflect the management structure of the group and the way
performance is evaluated and resources allocated based on group revenue and
EBITA by the group`s chief operating decision maker, defined as the executive
directors. The group is focussed geographically and, while not meeting the
definition of reportable segments, the group reports separately as segments
South Africa: Hotels and Gaming and Corporate as this provides useful
additional information.
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.
Income statement
Group EBITA Group EBITA
revenue 2012 revenue 2011
2012 Unaudited 2011 Audited
Unaudited US$m Audited US$m
US$m US$m
Latin America 7,158 1,865 6,335 1,620
Europe 5,482 836 5,394 887
North America 5,250 756 5,223 741
Africa 3,686 743 3,254 647
Asia Pacific 3,510 321 2,026 92
South Africa: 6,302 1,303 6,079 1,204
- Beverages 5,815 1,168 5,598 1,067
- Hotels and Gaming 487 135 481 137
Corporate - (190) - (147)
Group 31,388 5,634 28,311 5,044
Amortisation of intangible assets (264) (209)
(excluding software) - group and share
of associates` and joint ventures`
Exceptional items - group and share of 1,015 (467)
associates` and joint ventures`
Net finance costs - group and share of (570) (560)
associates` and joint ventures`
(excluding exceptional items)
Share of associates` and joint (170) (139)
ventures` taxation
Share of associates` and joint (42) (43)
ventures` non-controlling interests
Profit before tax 5,603 3,626
Group revenue (including associates and joint ventures)
With the exception of South Africa: Hotels and Gaming, all reportable segments
derive their revenues from the sale of beverages. Revenues are derived from a
large number of customers which are internationally dispersed, with no
customers being individually material.
Revenue Share of Group
2012 associates` revenue
Unaudited and joint Unaudited
US$m ventures` US$m
revenue
2012
Unaudited
US$m
Latin America 7,148 10 7,158
Europe 5,347 135 5,482
North America 134 5,116 5,250
Africa 2,299 1,387 3,686
Asia Pacific 1,682 1,828 3,510
South Africa: 5,150 1,152 6,302
- Beverages 5,150 665 5,815
- Hotels and Gaming - 487 487
Group 21,760 9,628 31,388
Revenue Share of Group
2011 associates` revenue
Audited and joint 2011
US$m ventures` Audited
revenue US$m
2011
Audited
Latin America 6,324 11 6,335
Europe 5,379 15 5,394
North America 117 5,106 5,223
Africa 2,059 1,195 3,254
Asia Pacific 564 1,462 2,026
South Africa: 4,965 1,114 6,079
- Beverages 4,965 633 5,598
- Hotels and Gaming - 481 481
Group 19,408 8,903 28,311
Operating profit
The following table provides a reconciliation of operating profit to operating
profit before exceptional items.
Operating Exceptional Operating
profit items profit
2012 2012 before
Unaudited Unaudited exceptional
US$m US$m items
2012
Unaudited
US$m
Latin America 1,617 119 1,736
Europe 1,939 (1,135) 804
North America - - -
Africa 584 (162) 422
Asia Pacific 54 70 124
South Africa: Beverages 1,050 41 1,091
Corporate (231) 41 (190)
Group 5,013 (1,026) 3,987
Operating Exceptional Operating
profit items profit
2011 2011 before
Audited Audited exceptional
US$m US$m items
2011
Audited
US$m
Latin America 1,391 106 1,497
Europe 596 261 857
North America 16 - 16
Africa 361 4 365
Asia Pacific (22) - (22)
South Africa: Beverages 809 188 997
Corporate (24) (123) (147)
Group 3,127 436 3,563
EBITA (segment result)
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 associates` of 2012
before and joint intangible Unaudited
exceptional ventures` assets US$m
items operating (excluding
2012 profit software) -
Unaudited before group and
US$m exceptional share of
items associates`
2012 and joint
Unaudited ventures`
US$m 2012
Unaudited
US$m
Latin America 1,736 - 129 1,865
Europe 804 11 21 836
North America - 711 45 756
Africa 422 318 3 743
Asia Pacific 124 132 65 321
South Africa: 1,091 211 1 1,303
- Beverages 1,091 77 - 1,168
- Hotels and Gaming - 134 1 135
Corporate (190) - - (190)
Group 3,987 1,383 264 5,634
Operating Share of Amortisation EBITA
profit associates` of 2011
before and joint intangible Audited
exceptional ventures` assets US$m
items operating (excluding
2011 profit software) -
Audited before group and
US$m exceptional share of
items associates`
2011 and joint
Audited ventures`
US$m 2011
Audited
US$m
Latin America 1,497 - 123 1,620
Europe 857 2 28 887
North America 16 679 46 741
Africa 365 277 5 647
Asia Pacific (22) 108 6 92
South Africa: 997 206 1 1,204
- Beverages 997 70 - 1,067
- Hotels and Gaming - 136 1 137
Corporate (147) - - (147)
Group 3,563 1,272 209 5,044
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.
2012 2011
Unaudited Audited
US$m US$m
Share of associates` and joint ventures` 1,383 1,272
operating profit (before exceptional items)
Share of associates` and joint ventures` 11 (31)
exceptional items
Share of associates` and joint ventures` net (30) (35)
finance costs
Share of associates` and joint ventures` (170) (139)
taxation
Share of associates` and joint ventures` non- (42) (43)
controlling interests
Share of post-tax results of associates and 1,152 1,024
joint ventures
Excise duties of US$5,047 million (2011: US$4,263 million) have been incurred
during the year as follows: Latin America US$1,843 million (2011: US$1,639
million); Europe US$1,204 million (2011: US$1,160 million); North America US$3
million (2011: US$2 million); Africa US$408 million (2011: US$324 million);
Asia Pacific US$626 million (2011: US$219 million) and South Africa US$963
million (2011: US$919 million). The group`s share of MillerCoors` excise
duties incurred during the year was US$703 million (2011: US$719 million).
EBITDA
The following table provides a reconciliation of EBITDA (the net cash
generated from operations before working capital movements) to adjusted
EBITDA. A reconciliation of profit for the year for the group to EBITDA after
cash exceptional items for the group can be found in note 11a.
EBITDA Cash Dividends Adjusted
2012 exceptional received EBITDA
Unaudited items from 2012
US$m 2012 MillerCoors Unaudited
Unaudited 2012 US$m
US$m Unaudited
US$m
Latin America 2,068 112 - 2,180
Europe 1,067 58 - 1,125
North America 22 - 896 918
Africa 564 13 - 577
Asia Pacific 159 88 - 247
South Africa: Beverages 1,267 13 - 1,280
Corporate (168) 24 - (144)
Group 4,979 308 896 6,183
EBITDA Cash Dividends Adjusted
2011 exceptional received EBITDA
Audited items from 2011
US$m 2011 MillerCoors Unaudited
US$m 2011 US$m
Audited
US$m
Latin America 1,853 103 - 1,956
Europe 1,021 125 - 1,146
North America 27 - 822 849
Africa 517 4 - 521
Asia Pacific 17 - -
17
South Africa: Beverages 1,143 42 - 1,185
Corporate (76) 19 - (57)
Group 4,502 293 822 5,617
Other segmental information
Capital expenditure Capital Investment Total
expenditure activitySquared 2012
excluding 2012 Unaudited
investment Unaudited US$m
activity1 US$m
2012
Unaudited
US$m
Latin America 522 (34) 488
Europe 324 17 341
North America - 288 288
Africa 398 (82) 316
Asia Pacific 69 10,931 11,000
South Africa: 284 - 284
- Beverages 284 - 284
- Hotels and Gaming - - -
Corporate 42 1 43
Group 1,639 11,121 12,760
Capital expenditure Capital Investment Total
Expenditure activitySquared 2011
excluding 2011 Audited
investment Audited US$m
activity1 US$m
2011
Audited
US$m
Latin America 438 55 493
Europe 265 (2) 263
North America - 171 171
Africa 211 24 235
Asia Pacific 54 15 69
South Africa: 275 (68) 207
- Beverages 275 - 275
- Hotels and Gaming - (68) (68)
Corporate 72 3 75
Group 1,315 198 1,513
Capital expenditure includes additions of intangible assets (excluding
goodwill) and property, plant and equipment.
2 Investment activity includes acquisitions and disposals of businesses, net
investments in associates and joint ventures, purchases of shares in non-
controlling interests and purchases and disposals of available for sale
investments.
3. Exceptional items
2012 2011
Unaudited Audited
US$m US$m
Exceptional items included in operating profit:
Net profit on disposal of businesses 1,248 -
Profit on disposal of investment in associate 103 159
Gain on remeasurement of existing interest in 66 -
joint venture on acquisition
Litigation 42 -
Business capability programme costs (235) (296)
Transaction-related costs (109) -
Integration and restructuring costs (60) (52)
Broad-Based Black Economic Empowerment scheme (29) (149)
costs
Impairments - (98)
Net exceptional gains/(losses) included within 1,026 (436)
operating profit
Exceptional items included in net finance costs:
Litigation-related interest income 4 -
Transaction-related net costs (26) -
Net exceptional losses included within net (22) -
finance costs
Share of associates` and joint ventures`
exceptional items:
Profits/(losses) on transactions in associates 46 (26)
Impairments (35) -
Integration and restructuring costs - (5)
Share of associates` and joint ventures` 11 (31)
exceptional gains/(losses)
Net taxation credits relating to subsidiaries` 24 2
and the group`s share of associates` and joint
ventures` exceptional items
Exceptional items included in operating profit
Net profit on disposal of businesses
During 2012, a profit of US$1,195 million arose in Europe on the disposal of
the group`s Russian and Ukrainian businesses in exchange for a 24% interest in
the enlarged Anadolu Efes group; a profit of US$67 million arose in Africa on
the combination of the operational management of the group`s Angolan
operations with the Angolan businesses of its associate, Castel; partially
offset by a loss of US$14 million incurred in Europe primarily in relation to
the recycling of the foreign currency translation reserve on the disposal of
the distribution business in Italy.
Profit on disposal of investment in associate
During 2012, a profit of US$103 million was realised on the disposal of the
group`s investment in its associate, Kenya Breweries Ltd, in Africa.
In 2011, a profit of US$159 million arose on the partial disposal of the
group`s shareholding in Tsogo Sun Holdings (Pty) Ltd (Tsogo Sun) as part of
the Tsogo Sun/GRR merger.
Gain on remeasurement of existing interest in joint venture on acquisition
During 2012, the group acquired the remaining 50% interest which it did not
already own in Pacific Beverages (Pty) Ltd (Pacific Beverages) from Coca-Cola
Amatil Limited. This resulted in a US$66 million gain arising on the
remeasurement to fair value of the group`s existing interest.
Litigation
During 2012, in Europe a US$42 million anti-trust fine paid by Grolsch prior
to its acquisition by SABMiller plc was annulled by the EU General Court and
the payment refunded.
Business capability programme costs
The business capability programme will streamline finance, human resources and
procurement activities through the deployment of global systems and introduce
common sales, distribution and supply chain management systems. Costs of
US$235 million have been incurred in the year (2011: US$296 million).
Transaction-related costs
During 2012, costs of US$109 million were incurred in relation to the Foster`s
transaction.
Integration and restructuring costs
During 2012, US$34 million of restructuring costs were incurred in Latin
America, principally in Ecuador, Peru and the regional office, and US$26
million of integration costs were incurred in Asia Pacific following the
Foster`s and Pacific Beverages acquisitions.
In 2011, in Europe US$52 million of restructuring costs were incurred in
Romania, the Netherlands, the Canary Islands and Italy.
Broad-Based Black Economic Empowerment scheme costs
US$29 million (2011: US$149 million) of costs have been incurred in relation
to the Broad-Based Black Economic Empowerment (BBBEE) scheme in South Africa.
This represents the ongoing IFRS 2 share-based payment charge in respect of
the employee element of the scheme and in the prior year also, the one-off
IFRS 2 charge in respect of the retailer element, together with the costs
associated with the transaction.
Impairments
In 2011, impairment charges of US$98 million were incurred in Europe including
charges following the classification of the in-house distribution business in
Italy as held for sale and the closure of the Cluj brewery in Romania.
Exceptional items included in net finance costs
Litigation-related interest income
During 2012, US$4 million of interest was received in relation to the refund
of the anti-trust fine in Europe.
Transaction-related net costs
During 2012, net costs of US$26 million were incurred primarily related to the
Foster`s transaction and included fees relating to financing facilities and
premiums on derivative instruments which were partially offset by mark to
market gains on derivative financial instruments taken out in anticipation of
the transaction and where hedge accounting could not be applied.
Share of associates` and joint ventures` exceptional items
Profits/(losses) on transactions in associates
During 2012, Tsogo Sun released deferred consideration relating to a prior
acquisition of which the group`s share was US$13 million; US$10 million profit
arose on Tsogo Sun`s fair value accounting on the change in control on the
acquisition of the outstanding stake in the Formula 1 chain; and a US$23
million profit arose in Africa being the group`s share of Castel`s profit on
disposal of its subsidiary in Nigeria.
In 2011, the group`s share of the impairment loss on Tsogo Sun`s existing
holding in GRR as a result of the merger transaction between these two
businesses and costs associated with the transaction was US$26 million.
Impairments
During 2012, the group`s share of MillerCoors` impairment of the Sparks brand
amounted to US$35 million.
Integration and restructuring costs
In 2011, the group`s share of MillerCoors` integration and restructuring costs
was US$5 million primarily related to severance costs.
Net taxation credits relating to subsidiaries` and the group`s share of
associates` and joint ventures` exceptional items
Net taxation credits of US$24 million (2011: US$2 million) arose in relation
to exceptional items during the year and include US$13 million (2011: US$2
million) in relation to MillerCoors although the tax credit is recognised in
Miller Brewing Company (see note 5).
4. Net finance costs
2012 2011
Unaudited Audited
US$m US$m
a. Interest payable and similar charges
Interest payable on bank loans and overdrafts 170 123
Interest payable on derivatives 156 163
Interest payable on corporate bonds 463 408
Interest element of finance leases payments 1 1
Net exchange losses/(gains) on financing 13 (14)
activities
Net exchange losses on dividends - 9
Fair value losses on financial instruments:
- Fair value losses on standalone derivative 144 153
financial instruments
- Ineffectiveness of net investment hedges 4 4
Exceptional interest payable and similar 96 -
charges
Other finance charges 46 36
Total interest payable and similar charges 1,093 883
b. Interest receivable and similar income
Interest receivable 55 48
Interest receivable on derivatives 226 212
Fair value gains on financial instruments:
- Fair value gains on standalone derivative 170 92
financial instruments
- Fair value gains on dividend-related 3 6
derivatives
Net exchange gains on dividends 3 -
Exceptional interest receivable and similar 74 -
income
Total interest receivable and similar income 531 358
Net finance costs 562 525
These items have been excluded from the determination of adjusted earnings
per share. Adjusted net finance costs are therefore US$542 million (2011:
US$518 million).
5. Taxation
2012 2011
Unaudited Audited
US$m US$m
Current taxation 957 808
- Charge for the year (UK corporation tax: 986 817
US$39 million (2011: US$11 million))
- Adjustments in respect of prior years (29) (9)
Withholding taxes and other remittance taxes 137 101
Total current taxation 1,094 909
Deferred taxation 32 160
- Charge for the year (UK corporation tax 60 183
credit: US$24 million (2011: US$nil))
- Adjustments in respect of prior years (3) (16)
- Rate change (25) (7)
Taxation expense 1,126 1,069
Tax credit relating to components of other
comprehensive income is as follows:
Deferred tax credit on actuarial gains and (71) (36)
losses
Deferred tax (credit)/charge on financial (30) 14
instruments
(101) (22)
Effective tax rate (%) 27.5 28.2
See the financial definitions section 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. Tax on amortisation
of intangible assets (excluding software) was US$72 million (2011: US$58
million).
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 includes tax (including deferred tax) on
the group`s share of the taxable profits of MillerCoors and includes tax in
other comprehensive income on the group`s share of MillerCoors` taxable items
included within other comprehensive income.
6. Earnings per share
2012 2011
Unaudited Audited
US cents US cents
Basic earnings per share 266.6 152.8
Diluted earnings per share 263.8 151.8
Headline earnings per share 179.8 150.8
Adjusted basic earnings per share 214.8 191.5
Adjusted diluted earnings per share 212.5 190.3
The weighted average number of shares was:
2012 2011
Unaudited Audited
Millions Millions
of shares of shares
Ordinary shares 1,661 1,656
Treasury shares (72) (72)
EBT ordinary shares (6) (8)
Basic shares 1,583 1,576
Dilutive ordinary shares 17 10
Diluted shares 1,600 1,586
The calculation of diluted earnings per share excludes 8,362,920 (2011:
9,045,847) share options that were non-dilutive for the year because the
exercise price of the option exceeded the fair value of the shares during the
year, 14,799,716 (2011: 12,842,609) share awards that were non-dilutive for
the year because the performance conditions attached to the share awards have
not been met and nil (2011: 732,869) shares in relation to the employee
component of the BBBEE scheme that were non-dilutive for the year. These share
incentives could potentially dilute earnings per share in the future.
Adjusted and headline earnings
The group presents an adjusted earnings per share figure which excludes the
impact of amortisation of intangible assets (excluding software), certain non-
recurring items and post-tax exceptional items in order to present an
additional measure of performance for the years shown in the consolidated
financial statements. Adjusted earnings per share has been based on adjusted
earnings for each financial year and on the same number of weighted average
shares in issue as the basic earnings per share calculation. Headline earnings
per share has been calculated in accordance with the South African Circular
3/2009 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 are as follows.
2012 2011
Unaudited Audited
US$m US$m
Profit for the year attributable to owners of 4,221 2,408
the parent
Headline adjustments
Impairment of business held for sale - 53
Impairment of intangible assets - 14
Impairment of property, plant and equipment - 31
Net profit on disposal of businesses (1,242) -
Profit on disposal of investment in associate (103) (159)
Gain on remeasurement of existing interest in (66) -
joint venture on acquisition
Profit on disposal of property, plant and (15) (5)
equipment
Tax effects of these items 12 14
Non-controlling interests` share of the above 40 1
items
Share of joint ventures` and associates` - 20
headline adjustments, net of tax and non-
controlling interests
Headline earnings 2,847 2,377
Business capability programme costs 235 296
Broad-Based Black Economic Empowerment scheme 29 149
costs
Integration and restructuring costs 60 52
Transaction-related costs 109 -
Litigation (42) -
Litigation-related interest income (4) -
Net (gain)/loss on fair value movements on (2) 7
capital items
Transaction-related net finance costs 26 -
Amortisation of intangible assets (excluding 218 158
software)
Tax effects of the above items (101) (71)
Non-controlling interests` share of the above (7) (10)
items
Share of joint ventures` and associates` other 32 60
adjustments, net of tax and non-controlling
interests
Adjusted earnings 3,400 3,018
This does not include all fair value movements but includes those in relation
to capital items for which hedge accounting cannot be applied.
7. Dividends
Dividends paid were as follows.
Equity 2012 2011
Unaudited Audited
US$m US$m
2011 Final dividend paid: 61.5 US cents (2010: 973 806
51.0 US cents) per ordinary share
2012 Interim dividend paid: 21.5 US cents (2011: 351 309
19.5 US cents) per ordinary share
1,324 1,115
In addition, the directors are proposing a final dividend of 69.5 US cents per
share in respect of the financial year ended 31 March 2012, which will absorb
an estimated US$1,103 million of shareholders` funds. If approved by
shareholders, the dividend will be paid on 17 August 2012 to shareholders
registered on the London and Johannesburg registers on 10 August 2012.
8. Goodwill and intangible assets
Goodwill Intangible
Unaudited assets
US$m Unaudited
US$m
Net book amount
At 1 April 2010 (audited) 11,579 4,354
Exchange adjustments 332 101
Additions - separately acquired - 126
Acquisitions - through business combinations 43 10
Amortisation - (220)
Disposals - (1)
Impairment - (14)
Transfers from property, plant and equipment - 8
At 31 March 2011 (unaudited) 11,954 4,364
Exchange adjustments 207 279
Additions - separately acquired - 171
Acquisitions - through business combinations 8,049 5,371
Amortisation - (273)
Disposals (53) (14)
Transfers to disposal group classified as (29) -
held for sale
Transfers from property, plant and equipment - 3
At 31 March 2012 (unaudited) 20,128 9,901
As restated (see note 13).
Goodwill
2012
Provisional goodwill arose on the acquisition through business combinations in
the year of Foster`s Group Ltd and Pacific Beverages (Pty) Ltd in Australia
and International Breweries Ltd in Nigeria (see note 12). The fair value
exercises in respect of these business combinations have yet to be completed.
2011
Goodwill arose on the acquisition through business combinations of Cerveceria
Argentina SA Isenbeck (CASA Isenbeck) in Argentina and Crown Beverages Ltd
(previously Crown Foods Ltd) in Kenya. The fair value exercises in respect of
these business combinations are now complete.
9. Investments in joint ventures
US$m
At 1 April 2010 (audited) 5,822
Exchange adjustments 12
Investments in joint ventures 186
Share of results retained 667
Share of losses recognised in other comprehensive income (52)
Dividends received (822)
At 31 March 2011 (audited) 5,813
Investments in joint ventures 288
Transfer to subsidiary undertaking (100)
Share of results retained 671
Share of losses recognised in other comprehensive income (256)
Dividends received (896)
At 31 March 2012 (unaudited) 5,520
On 13 January 2012, the remaining 50% interest in Pacific Beverages (Pty) Ltd
was purchased and from this date the company has been accounted for as a
subsidiary.
10. Investments in associates
US$m
At 1 April 2010 (audited) 2,213
Exchange adjustments 136
Investments in associates 168
Repayment of investments by associates (68)
Share of results retained 357
Share of gains recognised in other comprehensive income 2
Dividends receivable (89)
At 31 March 2011 (audited) 2,719
Exchange adjustments (107)
Investments in associates 2,056
Repayment of investments by associates (14)
Acquisitions - through business combinations 65
Disposal of investments in associates (104)
Share of results retained 481
Dividends receivable (150)
At 31 March 2012 (unaudited) 4,946
On 1 January 2012 the group combined the operational management of its Angolan
businesses with the Angolan businesses of its associate, Castel, with all of
the Angolan businesses, in which the group retains an associate interest,
being managed from that date by Castel.
On 6 March 2012 the group completed its strategic alliance with Anadolu Efes.
The group`s Russian business, SABMiller RUS LLC, and Ukrainian business, PJSC
Miller Brands Ukraine, were contributed to Anadolu Efes, in exchange for a 24%
equity stake in the enlarged Anadolu Efes group.
On 25 November 2011 the group disposed of its effective 12% investment in
Kenya Breweries Ltd, generating a profit of US$103 million.
11a. Reconciliation of profit for the year to net cash generated from
operations
2012 2011
Unaudited Audited
US$m US$m
Profit for the year 4,477 2,557
Taxation 1,126 1,069
Share of post-tax results of associates and (1,152) (1,024)
joint ventures
Interest receivable and similar income (531) (358)
Interest payable and similar charges 1,093 883
Operating profit 5,013 3,127
Depreciation:
- Property, plant and equipment 672 665
- Containers 237 239
Container breakages, shrinkages and write- 34 24
offs
Profit on disposal of businesses (1,258) -
Gain on remeasurement of existing interest (66) -
in joint venture on acquisition
Profit on disposal of investment in (103) (159)
associate
Profit on disposal of property, plant and (15) (5)
equipment
Amortisation of intangible assets 273 220
Impairment of intangible assets - 14
Impairment of property, plant and equipment - 31
Impairment of working capital balances 16 82
Amortisation of advances to customers 24 28
Unrealised net (gain)/loss from fair value (20) 1
hedges
Dividends received from other investments (1) (1)
Charge with respect to share options 132 99
Charge with respect to Broad-Based Black 29 147
Economic Empowerment scheme
Other non-cash movements 12 (10)
Net cash generated from operations before 4 979 4,502
working capital movements (EBITDA)
(Increase)/decrease in inventories (45) 26
Increase in receivables (25) (147)
Increase in payables 374 161
(Decrease)/increase in provisions (46) 18
Increase in post-retirement provisions - 8
Net cash generated from operations 5,237 4,568
Profit for the year and cash generated from operations before working capital
movements includes cash flows relating to exceptional items of US$308 million
(2011: US$293 million), comprising US$228 million (2011: US$283 million) in
respect of business capability programme costs, US$72 million (2011: US$nil)
in respect of transaction-related costs, US$50 million (2011: US$8 million) in
respect of integration and restructuring costs, US$nil (2011: US$2 million) in
respect of Broad-Based Black Economic Empowerment scheme costs, partially
offset by US$42 million (2011: US$nil) in respect of a litigation-related
credit.
The following table provides a reconciliation of EBITDA to adjusted EBITDA.
2012 2011
Unaudited Audited
US$m US$m
EBITDA 4,979 4,502
Cash exceptional items 308 293
Dividends received from MillerCoors 896 822
Adjusted EBITDA 6,183 5,617
11b. Reconciliation of net cash generated from operating activities to free
cash flow
2012 2011
Unaudited Audited
US$m US$m
Net cash generated from operating activities 3,937 3,043
Purchase of property, plant and equipment (1,473) (1,189)
Proceeds from sale of property, plant and 116 73
equipment
Purchase of intangible assets (166) (126)
Investments in joint ventures (288) (186)
Investments in associates - (4)
Repayment of investments by associates 14 68
Dividends received from joint ventures 896 822
Dividends received from associates 120 88
Dividends received from other investments 1 1
Dividends paid to non-controlling interests (109) (102)
Free cash flow 3,048 2,488
11c. Analysis of net debt
Cash and cash equivalents on the balance sheet are reconciled to cash and cash
equivalents on the cash flow statement as follows.
2012 2011
Unaudited Audited
US$m US$m
Cash and cash equivalents (balance sheet) 745 1,067
Cash and cash equivalents of disposal group - 4
classified as held for sale
745 1,071
Overdrafts (138) (258)
Overdrafts of disposal group classified as (1) -
held for sale
Cash and cash equivalents (cash flow 606 813
statement)
Net debt is analysed as follows.
2012 2011
Unaudited Audited
US$m US$m
Borrowings (19,067) (8,193)
Borrowings-related derivative financial 620 298
instruments
Overdrafts (139) (258)
Finance leases (21) (9)
Gross debt (18,607) (8,162)
Cash and cash equivalents (excluding 745 1,071
overdrafts)
Net debt (17,862) (7,091)
The movement in net debt is analysed as follows.
Cash and Overdrafts Borrowings Derivative
cash US$m US$m financial
equivalents instruments
(excluding US$m
overdrafts)
US$m
At 1 April 2011 1,071 (258) (8,193) 298
(audited)
Exchange adjustments 10 (49) (38) 9
Cash flow (246) 157 (8,861) (43)
Acquisitions 12 - (1,844) 259
Disposals (102) 11 98 -
Other movements - - (229) 97
At 31 March 2012 745 (139) (19,067) 620
(unaudited)
Finance Total Net debt
leases gross US$m
US$m borrowings
US$m
At 1 April 2011 (9) (8,162) (7,091)
(audited)
Exchange adjustments - (78) (68)
Cash flow 5 (8,742) (8,988)
Acquisitions (2) (1,587) (1,575)
Disposals - 109 7
Other movements (15) (147) (147)
At 31 March 2012 (21) (18,607) (17,862)
(unaudited)
The group has sufficient headroom to enable it to comply with all covenants on
its existing borrowings. The group has sufficient undrawn financing facilities
to service its operating activities and ongoing capital investment and thus
the directors have continued to adopt the going concern basis of accounting.
The group had the following undrawn committed borrowing facilities available
at 31 March 2012 in respect of which all conditions precedent had been met at
that date.
2012 2011
Unaudited Audited
US$m US$m
Amounts expiring:
Within one year 774 967
Between one and two years 12 2,118
Between two and five years 788 79
In five years or more 2,236 -
3,810 3,164
In April 2011, the group entered into a five-year US$2,500 million committed
syndicated facility, with the option of two one-year extensions. In March
2012, the maturity of US$2,236 million of this facility was extended to April
2017. This facility replaced the US$2,000 million and US$600 million committed
syndicated facilities, which were both voluntarily cancelled and which are
shown in the comparatives in the table above as expiring between one and two
years and within one year respectively.
The group`s net debt is denominated in the following currencies:
US SA Australian Euro
dollars rand dollars US$m
US$m US$m US$m
Total cash and cash 346 37 49 41
equivalents
Total gross borrowing (13,043) (228) (2,190) (1,306)
(including overdrafts)
(12,697) (191) (2,141) (1,265)
Cross currency swaps 2,211 (183) (1,528) (361)
At 31 March 2012 (10,486) (374) (3,669) (1,626)
(unaudited)
Total cash and cash 609 30 - 111
equivalents
Total gross borrowing (4,334) (290) (18) (1,482)
(including overdrafts)
(3,725) (260) (18) (1,371)
Cross currency swaps 1,089 (413) - (116)
At 31 March 2011 (audited) (2,636) (673) (18) (1,487)
Colombian Other Total
peso currencies US$m
US$m US$m
Total cash and cash equivalents 81 191 745
Total gross borrowing (including (1,239) (601) (18,607)
overdrafts)
(1,158) (410) (17,862)
Cross currency swaps - (139) -
At 31 March 2012 (unaudited) (1,158) (549) (17,862)
Total cash and cash equivalents 96 225 1,071
Total gross borrowing (including (1,202) (836) (8,162)
overdrafts)
(1,106) (611) (7,091)
Cross currency swaps - (560) -
At 31 March 2011 (audited) (1,106) (1,171) (7,091)
12. Business combinations and similar transactions
Acquisitions
The following business combinations took effect during the year:
On 16 December 2011 the group acquired a 100% interest in Foster`s Group Ltd
for cash consideration of US$10,598 million.
On 1 January 2012 the group combined the operational management of its Angolan
businesses, and its interest in its associate Empresa Cervejas De N`Gola SARL
with the Angolan businesses of its associate, Castel, with all of the Angolan
businesses, in which the group retains an associate interest, being managed
from that date by Castel. Further the group acquired a 65% interest (effective
33% interest) in International Breweries Ltd in Nigeria from Castel in
exchange for cash and a dilution in the group`s effective interests in its
existing Nigerian businesses.
On 13 January 2012 the group acquired the remaining 50% interest in Pacific
Beverages (Pty) Ltd (Pacific Beverages) from Coca-Cola Amatil Limited for cash
consideration of US$343 million. The acquisition took the group`s effective
interest in Pacific Beverages to 100%.
On 6 March 2012 the group completed its strategic alliance with Anadolu Group
and Anadolu Efes Biracilik ve Malt Sanayii AS (Anadolu Efes). The group`s
Russian beer business, SABMiller RUS LLC, and Ukrainian beer business, PJSC
Miller Brands Ukraine, were contributed to Anadolu Efes in exchange for a 24%
equity stake in the enlarged Anadolu Efes group.
The goodwill arising on the above business combinations of US$8,049 million
represents, amongst other things, tangible and intangible assets yet to be
recognised separately from goodwill as the fair value exercises are still in
progress.
Disposals
The following disposals occurred during the year:
On 13 June 2011 the group completed the disposal of its distribution business
in Italy, which was classified as a disposal group held for sale at 31 March
2011, and which generated a US$14 million exceptional loss on disposal,
primarily being the recycling of the foreign currency translation reserve
associated with this business.
On 25 November 2011 the group disposed of its 12% effective interest in its
associate, Kenya Breweries Limited, for cash consideration of US$205 million.
Effective 1 January 2012 the group combined the operational management of its
Angolan businesses in Africa with the Angolan businesses of its associate,
Castel, with all of the Angolan businesses, in which the group retains an
associate interest, being managed from that date by Castel.
On 6 March 2012 the group disposed of its Russian beer business, SABMiller RUS
LLC, and its Ukrainian beer business, PJSC Miller Brands Ukraine, in exchange
for a 24% interest in the enlarged Anadolu Efes group.
13. Balance sheet restatements
The initial accounting under IFRS 3, `Business Combinations`, for the CASA
Isenbeck and Crown Beverages Ltd (previously Crown Foods Ltd) acquisitions had
not been completed as at 31 March 2011. During the year ended 31 March 2012,
adjustments to provisional fair values in respect of these acquisitions were
made which resulted in goodwill increasing by US$2 million to US$11,954
million, intangible assets increasing by US$3 million to US$4,364 million,
property, plant and equipment increasing by US$1 million to US$9,331 million,
current trade and other payables increasing by US$3 million to US$3,487
million, current provisions increasing by US$2 million to US$412 million and
non-current provisions increasing by US$1 million to US$461 million. As a
result comparative information for the year ended 31 March 2011 has been
presented in the consolidated financial statements as if the adjustments to
provisional fair values had been made from the respective transaction dates.
The impact on the prior year income statement has been reviewed and no
adjustments to the income statement are required as a result of the
adjustments to provisional fair values.
14. Share capital
During the year ended 31 March 2012 5,283,469 ordinary shares (2011: 4,290,162
ordinary shares) were allotted and issued in accordance with the group`s share
purchase, option and award schemes.
?
FINANCIAL DEFINITIONS
Adjusted earnings
Adjusted earnings are calculated by adjusting headline earnings (as defined
below) 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 group`s share of associates` and joint
ventures` adjustments for similar items. The tax and non-controlling interests
in respect of these items are also adjusted.
Adjusted EBITDA
This comprises EBITDA (as defined below) before cash flows from exceptional
items and includes dividends received from our joint venture, MillerCoors.
Dividends received from MillerCoors approximate to the group`s share of the
EBITDA of the MillerCoors joint venture.
Adjusted EBITDA margin
This is calculated by expressing adjusted EBITDA as a percentage of revenue
plus the group`s share of MillerCoors` revenue.
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 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. This includes cash flows relating to exceptional items incurred in
the year.
EBITDA margin (%)
This is calculated by expressing EBITDA 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.
Free cash flow
This comprises net cash generated from operating activities less cash paid for
the purchase of property, plant and equipment, and intangible assets, net
investments in existing associates and joint ventures (in both cases only
where there is no change in the group`s effective ownership percentage) and
dividends paid to non-controlling interests plus cash received from the sale
of property, plant and equipment and intangible assets and dividends received.
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 owners of the parent for items in accordance with the South
African Circular 3/2009 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 non-controlling 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 adjusted EBITDA 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 12 months` results and volumes
relating to acquisitions and the last 12 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 group revenue. Volumes exclude intra-group sales volumes. This
measure of volumes is used for lager volumes, soft drinks volumes, other
alcoholic beverage volumes and beverage volumes and is used in the segmental
analyses as it more closely aligns with the consolidated group revenue and
EBITA disclosures.
?
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 is intended to provide information to shareholders. It
should not be relied upon by any other party or for any other purpose. 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
announcement. 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.
ADMINISTRATION
SABMiller plc
Incorporated in England and Wales (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 264134
Email: sustainable.development@sabmiller.com
Independent auditors
PricewaterhouseCoopers LLP
1 Embankment Place
London, England
WC2N 6RH
Facsimile +44 20 7212 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 10p per minute plus network
extras, lines are open 8.30am-5.30pm Mon-Fri)
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 11 688 5248
Telephone +27 11 370 5000
United States ADR Depositary
BNY 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: 24/05/2012 08:00:03 Produced by the JSE SENS Department.
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