Wrap Text
SAB - SABMiller Plc - Preliminary Announcement
SABMiller Plc
JSEALPHA CODE : SAB
ISSUER CODE : SOSAB
ISIN CODE GB0004835483
PRELIMINARY ANNOUNCEMENT
19 May 2011
SABMiller delivers an excellent financial performance
SABMiller plc, one of the world`s leading brewers with operations and
distribution agreements across six continents, reports its preliminary
(unaudited) results for the twelve months to 31 March 2011.
Operational Highlights
- Lager volumes of 218 million hectolitres (hl), 2% ahead of the prior year
on an organic basis with particularly good growth in Africa, South Africa
and Asia
- Reported group revenue up 7%, with organic, constant currency group
revenue growth of 5%
- EBITA margin increases by 120 basis points (bps) to 17.8%
- Reported EBITA up 15%, with organic, constant currency EBITA growth of
12%:
- Latin America EBITA1 growth of 11% due to pricing, lower raw material
costs and fixed cost productivity
- Europe EBITA1 grows by 4% benefiting from lower costs, despite reduced
volumes
- Disciplined revenue management, synergies and cost savings increase North
America EBITA by 20%
- Strong volume growth, firm pricing and capacity expansion drive Africa`s
EBITA1 growth of 20%
- Asia EBITA1 increases by 33% with robust volume growth in China and India
- South Africa: Beverages EBITA1 growth of 11% due to volume growth and
pricing
- Adjusted earnings grow by 20%, with adjusted EPS up 19% to 191.5 US cents
per share
- Further improvement in free cash flow2, up 23% to US$2,488 million
- Full year dividends per share up 19% to 81.0 US cents
1EBITA growth is shown on an organic, constant currency basis.
2As defined in the financial definitions section. See also note 10b.
Financial highlights 2011 2010 %
US$m US$m change
Group revenuea 28,311 26,350 7
Revenueb (excludes associates` and 19,408 18,020 8
joint ventures` revenue)
EBITAc 5,044 4,381 15
Adjusted profit before taxd 4,491 3,803 18
Profit before taxe 3,626 2,929 24
Adjusted earningsf 3,018 2,509 20
Adjusted earnings per share
- US cents 191.5 161.1 19
- UK pence 123.4 100.6 23
- SA cents 1,369.6 1,253.8 9
Basic earnings per share (US cents) 152.8 122.6 25
Dividends per share (US cents) 81.0 68.0 19
Free cash flow 2,488 2,028 23
a Group revenue includes the attributable share of associates` and joint
ventures` revenue of US$8,903 million (2010: US$8,330 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$518 million (2010: US$538 million) and share of associates`
and joint ventures` net finance costs of US$35 million (2010: US$40
million).
e Profit before tax includes exceptional charges of US$467 million (2010:
US$507 million). Exceptional items are explained in note 3.
f A reconciliation of adjusted earnings to the statutory measure of
profit attributable to equity shareholders is provided in note 6.
Meyer Kahn, Chairman of SABMiller, said:
"SABMiller`s financial performance for the year was very strong, benefiting
from our sustained focus on our strategic priorities right across the
business. Brand equities and sales execution drove profitable volume growth,
and while we maintained focus on cost management, we continued to increase
investment behind our local and international brand portfolios."
Segmental EBITA performance
2011 Reported Organic,
EBITA growth constant
currency
growth
US$m % %
Latin America 1,620 17 11
Europe 887 2 4
North America 741 20 20
Africa 647 15 20
Asia 92 31 33
South Africa: Beverages 1,067 21 11
South Africa: Hotels and Gaming 137 12 3
Corporate (147) - -
Group 5,044 15 12
Business review
The group delivered very strong financial results. Trading conditions across
the group were mixed with improvements in most of our emerging markets,
although constraints on consumer demand impacted performance in Europe and
North America. Total beverage volumes of 270 million hl were 3% ahead of the
prior year on an organic basis, with lager volumes up 2%, soft drinks
volumes up 3% and other alcoholic beverages up 22%. Volume growth was also
accompanied by share gains in a number of markets. Group revenue grew by 7%
(5% on an organic, constant currency basis), driven by the higher volumes,
selective price increases in the current and prior year, as well as
favourable brand mix, all reflecting the strength of our brands.
EBITA grew by 15% on a reported basis (12% on an organic, constant currency
basis) driven by EBITA growth from all divisions and assisted by the
strength of key operating currencies against the US dollar compared to the
prior year. EBITA margin was 120 bps higher, benefiting from both the growth
in revenue and a marginal reduction in raw material costs (on a constant
currency, per hl basis), although both brewing and soft drinks raw material
costs saw moderate increases in the second half of the year. We continued to
invest in order to support and further develop our brands as trading
conditions improved in a number of key markets during the year. In real
terms fixed costs (on a constant currency basis, per hl basis) were level
with the prior year, with increased expenditure behind sales and in support
of expansion in Africa being offset by cost productivity.
Adjusted earnings were 20% higher as a result of the increase in EBITA and
lower finance costs, with an effective tax rate of 28.2%. Adjusted earnings
per share were up 19% to 191.5 US cents.
The group generated US$2,488 million of free cash flow, an increase over the
prior year of US$460 million. Cash inflows from working capital of US$66
million continued the positive trend of the previous year, albeit at a lower
rate. Capital expenditure was US$1,315 million, US$213 million lower than
the prior year, following the completion of a number of key capacity
expansion projects. Cash flows from associates and joint ventures were
favourable primarily due to higher profits in the MillerCoors joint venture
and lower funding requirements than in the prior year.
Net debt decreased by US$1,307 million to US$7,091 million, primarily as a
result of the robust cash inflows. The group`s gearing ratio fell to 31.2%
from 40.8% in the prior year. The Board has recommended a final dividend of
61.5 US cents per share which will be paid to shareholders on 12 August
2011. This brings the total dividend for the year to 81 US cents, an
increase of 13 US cents (19%) over the prior year.
- LATIN AMERICA delivered EBITA growth of 17% (11% on an organic, constant
currency basis) despite lager volumes being level with the prior year on an
organic basis. EBITA growth resulted from selective price increases, mainly
in the second half of the prior year, lower raw material costs and an
ongoing focus on the reduction of fixed costs. We continued to increase the
appeal of the beer category, focusing on new consumer segments and
consumption occasions and further developing our brand portfolios, while
also improving our routes to market and sales reach. In Colombia full year
lager volumes declined by 6% as a result of increased consumer prices in
response to the emergency VAT increase levied specifically on the beer
category in February 2010 as well as exceptional widespread flooding. Peru`s
full year lager volume growth of 10% was boosted by the country`s continued
strong economic recovery and our ongoing brand development initiatives.
- In EUROPE, EBITA increased by 2% (4% on a constant currency basis),
despite lager volumes falling by 3% for the year amid difficult economic and
industry conditions, including competitor discounting. The first half of the
year was particularly challenging as a result of significant excise
increases in Russia and the Czech Republic as well as extensive flooding and
the mourning period following the death of the president in Poland. The
second half of the year saw improving volume trends across most markets,
albeit compared to a relatively weak prior year base. While lower volumes
and downtrading impacted profitability, lower raw material costs and cost
efficiencies more than offset this, driving the increase in EBITA.
- In NORTH AMERICA, EBITA grew by 20% for the year, with MillerCoors` EBITA
up 20%. MillerCoors` sales to wholesalers (STWs) and sales to retailers
(STRs) were down 3% as the US beer market remained challenging, with high
unemployment among key beer consumer groups. However, trends improved
through the year in the key premium light segment, and the Tenth and Blake
crafts and imports division continued its double digit volume growth. EBITA
benefited from revenue growth due to price increases and favourable sales
mix, complemented by the ongoing realisation of synergies and other cost
savings. During the year, incremental synergies and cost savings of US$275
million were achieved, generating total annualised synergies and cost
savings of
US$684 million. MillerCoors remains on track to deliver US$750 million in
total annualised synergies and other cost savings by the end of the calendar
year 2012.
- AFRICA lager volumes grew by 13% on an organic basis, and by 9% excluding
Zimbabwe1. Uganda, Zambia, Mozambique and Angola all delivered robust lager
volume growth as a result of capacity expansion, improved routes to market,
brand development initiatives and good economic growth. Tanzania also saw
good lager volume growth despite the prior year including other licensed
brands which have now been withdrawn. Soft drinks volumes grew by 8% on an
organic basis (4% excluding Zimbabwe). EBITA grew by 15% (20% on an organic,
constant currency basis). Growth came from higher volumes and price
increases, partially offset by the impact on commodity costs of weaker local
currencies relative to the US dollar, as well as increased sales and
marketing investment and increased fixed costs from recent capacity
expansions.
- In ASIA, lager volumes grew 10% on an organic basis, driven mainly by
volume growth in China (also up 10%), with EBITA up 31% (33% on an organic,
constant currency basis). In China, our associate CR Snow continued to
expand ahead of the market and gain share, with marketing investment
increasing and premium variants of the Snow brand seeing good growth. Lager
volumes in India also grew by 10% despite continuing regulatory constraints
in Andhra Pradesh.
- In SOUTH AFRICA, lager volumes grew by 2% despite the absence of a peak
Easter trading period in the financial year, also assisted by a cautious
improvement in consumer confidence and improved volumes around the time of
the 2010 FIFA World Cup. Our increased brand and market facing investment
continued to strengthen our core brand portfolio and helped to stabilise our
market share in the second half of the year. Soft drinks volumes grew by 3%
reflecting the early success of the soft drinks` growth strategy. EBITA grew
by 21% (11% on a constant currency basis) assisted by the strengthening of
the rand during the year. Revenue increased due to volume growth and price
benefits, with raw material input costs slightly favourable as lower brewing
costs were largely offset by an increase in soft drinks raw material costs.
Marketing and fixed costs both increased primarily due to investments in
sales force and marketing capability.
- Progress continues across all aspects of the BUSINESS CAPABILITY
PROGRAMME. Net operating benefits in the year exceeded US$60 million,
somewhat ahead of expectations, with the strongest contributions from our
global procurement programme and the implementation of a regional
manufacturing organisation in Europe. Working capital benefits realised
since the start of the programme continued to exceed our original objective
of US$350 million by the end of 2012 and by the end of the year were over
US$450 million on an accumulated basis. Working capital has been helped by
the implementation of customer management systems, supply chain programmes
and improved management of payables. Costs were broadly in line with the
expectations communicated at mid year, with exceptional charges of US$296
million taken in the year. These primarily relate to the design, build and
implementation of major systems platforms. The major milestones during the
year have been the implementation of sales and distribution systems in Peru
and Colombia and a new back office platform in South Africa.
1We have included our share of Delta, our associate in Zimbabwe, within our
results effective 1 April 2010 following the effective `dollarisation` of
the economy in 2009, the end of hyperinflation and the stabilisation of the
local economy.
Outlook
While consumer demand is likely to continue growing in most developing
markets, there are uncertainties in the outlook for inflation and the pace
of recovery in Europe and North America. Pricing will be considered
selectively, country by country, taking account of an expected moderate
increase in our raw material input costs, the competitive context and our
intention to achieve growth through affordability in some markets. In line
with our established strategic priorities, we plan to drive growth by
further strengthening and extending our brand portfolios and channel
management capabilities while maintaining our focus on cost control and
productivity.
Enquiries:
SABMiller plc Tel: +44 20 7659 0100
Sue Clark Director of Corporate Tel: +44 20 7659 0184
Affairs
Gary Leibowitz Senior Vice President, Tel: +44 20 7659 0119
Investor Relations
Nigel Fairbrass Head of Media Relations Mob: +44 77 9989 4265
A live audiocast of the management presentation to the investment community
will begin at 9.30am (BST) on 19 May 2011.
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 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 2011 2010 %
Group revenue (including share of 6,335 5,905 7
associates) (US$m)
EBITA (US$m) 1,620 1,386 17
EBITA margin (%) 25.6 23.5
Sales volumes (hl 000)
- Lager 38,266 38,075 1
- Lager (organic) 38,022 38,075 -
- Soft drinks 15,809 15,895 (1)
In 2011 before exceptional charges of US$106 million being business
capability programme costs (2010: US$156 million being business capability
programme costs of US$97 million, restructuring and integration costs of
US$14 million and impairments of US$45 million).
Our Latin American business ended the year with EBITA growth of 17% (11% on
an organic constant currency basis). Lager volumes were level with the prior
year on an organic basis, following growth of 1% in the fourth quarter.
Volume performance was driven by the improving economic conditions across
the region as well as our commercial efforts to overcome trade restrictions
and the impact on consumer prices of higher product taxes imposed in a
number of countries. Financial performance was driven by revenue growth from
selective price increases, lower raw material input costs and the continued
focus on fixed cost productivity. Marketing investment increased moderately
and most of our operations have continued to achieve beer and total alcohol
market share gains. EBITA margin reflected a 210 bps increase to 25.6%.
In COLOMBIA lager volumes declined by 6% principally due to the emergency
VAT increase levied on the beer category in February 2010, however volumes
returned to growth after cycling the increase. Lager volumes were also
impacted by exceptional rainfall with widespread flooding in a number of
regions impacting consumer demand and our product distribution, as well as a
number of `dry days` around elections. Our share of the total alcohol market
declined from 66% to 62% as the aguardiente sector benefited from the impact
of the VAT increase for beer. Strategies to develop further our beer brand
portfolio and to improve affordability of beer are in place, and more
favourable market share trends emerged in the last quarter. We have enhanced
our brand mix by growing our upper mainstream segment, with Aguila Light up
by over 50% and the successful introduction of Poker Ligera, a functional
light beer, and Club Colombia Roja, a local premium brand, while seeding
Miller Genuine Draft as a premium brand in high end outlets in a number of
major cities. Redd`s, which has been attracting a wider female following,
grew by 6%. We continued to enhance the availability of cold beer and have
placed a further 19,000 fridges in the market. Our soft drinks brand, Pony
Malta, benefited from expansion of availability and the launch of a new
small pack size, the Pony Mini. Fixed costs benefited from the restructuring
projects undertaken in the prior year, including the closure of the Bogota
brewery, as well as our ongoing cost productivity initiatives.
Our PERU operations performed strongly on the back of robust GDP growth of
8.8% and our ongoing brand portfolio upgrade, with lager volume growth of
10%. We have continued to grow beer market share by volume to 92% (prior
year 90%) and achieved a higher value share. Our brand portfolio was
enhanced through the repositioning of Pilsen Callao, which grew by 18%, as
an upper mainstream brand at a higher price point. Miller Genuine Draft was
launched, while our local premium brand Cusquena gained further outlet
penetration as a new seasonal variant was launched selling at a higher price
point. Pilsen Trujillo continued to provide an effective defence against
competitor economy brands and took volume from the informal alcohol segment.
Our strategy of profitable revenue growth included selective price increases
during the year, as well as improved brand and pack mix. Further capital
investments were made to meet capacity requirements, given the high level of
growth, while production grid efficiency was enhanced with the closure of
the Trujillo plant and the transfer of this capacity to the Motupe and Ate
plants.
ECUADOR achieved lager volume growth of 1% with improved product
availability and increased sales coverage helping to offset government
restrictions on alcohol sales, particularly a ban on Sunday alcohol trading
introduced in June 2010. We have expanded our presence in consumption
occasions such as festivals and events which now represent approximately 6%
of volume mix, up from less than 2% a year ago. Premium brands performed
well, led by our local premium brand Club, with volumes up 5%. The segment
now reflects 10% of our mix (up 100 bps) and included the launch of Miller
Genuine Draft in key cities. The new 225ml Pilsener offering launched in
January 2010 saw strong performance and helped enhance sales mix. Direct
order taking was increased by another 10% to 63% of total volumes while
distributor consolidation continued, improving productivity. These actions
helped lift our share of the alcohol market which ended at 46%, up from 44%
in the prior year. A court ruling relating to a labour dispute pre-dating
SABMiller`s investment in Ecuador affected trading for two weeks in December
2010. The dispute is ongoing and not yet resolved and we are contesting the
claims.
Our operations in HONDURAS delivered strong share gains in both lager and
soft drinks while strengthening margins, despite a challenging social
environment with increased violence and the highest rainfall in the last 30
years. Lager volumes ended the year up 1%, with double digit growth in the
last quarter. Growth was assisted by efforts to make beer more accessible to
low income consumers with entry packs in the traditional trade and price
optimisation initiatives in the modern trade. Our alcohol market share
improved from 49% to a historical high of 50%. Soft drinks saw a significant
positive trend in the second half of the year, with our share of sparkling
soft drinks increasing to 58%, up from 56% in the prior year. However
volumes remained below the prior year due to price increases taken to
recover an excise tax increase. Two new categories of soft drinks were also
introduced with the launch of the Jugos Del Valle juice brand and Nestea.
In PANAMA total volumes increased by 2%, with lager volumes level with the
prior year amid an increasingly competitive environment where our beer
market share declined marginally. Mix improvements were encouraging, boosted
in the last quarter by the introduction of Miller Lite in the premium
segment. Our portfolio of soft drinks grew by 3%, supported by a solid
performance of Malta Vigor and increases in outlet coverage.
In EL SALVADOR domestic lager volumes were in line with the prior year while
soft drinks declined by 5%. Volumes suffered from challenging economic
conditions, an increase in social unrest, poor weather and two increases in
beer taxes. Soft drinks volumes were also impacted by our strategy to cut
back on non-core brands, and our share of sparkling soft drinks fell from
55% to 54%.
In November 2010, we entered ARGENTINA with the acquisition of Cerveceria
Argentina S.A. Isenbeck (CASA Isenbeck), a brewery near Buenos Aires, which
has Isenbeck and Warsteiner as its principal brands. This acquisition
provides an interesting low cost entry point into the country as well as a
platform for supply into neighbouring countries.
EUROPE
Financial summary 2011 2010 %
Group revenue (including share of 5,394 5,577 (3)
associates) (US$m)
EBITA (US$m) 887 872 2
EBITA margin (%) 16.4 15.6
Sales volumes (hl 000)
- Lager 44,193 45,513 (3)
In 2011 before 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 (2010:
US$202 million being US$64 million of integration and restructuring costs
and US$138 million of business capability programme costs).
In EUROPE lager volumes declined 3% as the beer market continued to reflect
generally difficult economic conditions for consumers across the region.
Widespread price weakness and competitor discounting are persistent
features. The first half was particularly challenging, following excise
increases in the final quarter of the prior year which were passed onto
consumers through substantial price increases. The second half saw improved
trends in nearly all markets in the region.
Reported revenue per hectolitre was level with the prior year, however on a
constant currency basis it grew by 3%. This largely reflected prior year
excise-related price increases, with selective inflationary price increases
and mix benefits offset by discounting. Profitability was negatively
impacted by volume declines in the first half of the year and ongoing
downtrading. However cost efficiencies driven in part by our regional
manufacturing project which is focused on consistent world class
manufacturing and reduced commodity costs resulted in EBITA growth of 2% (4%
on a constant currency basis) and EBITA margin expansion of
80 bps. Marketing expenditure was ahead of the prior year on a constant
currency basis and included 2010 FIFA World Cup activations. Reported
results were impacted by the weakening of central and eastern European
currencies against the US dollar compared to the prior year, although this
predominantly occurred in the first half of the year.
In POLAND lager volumes were down 4% as the beer market continued to suffer
with a particularly challenging first half affected by widespread flooding
and alcohol sales restrictions during a nine day national mourning period
following the death of the president. Macro economic conditions and
consequently consumer confidence improved through the year, however the beer
market has been affected by a recent shift in consumer spending patterns
towards durable white goods with lower growth in the food and beverage
sectors. Competitor activity focused on price reductions and discounting has
led to downtrading and growth in the economy segment. In this context we
have driven defensive growth of the economy brand Wojak which has doubled
volumes during the year. Other major brands, including Tyskie, have lost
share in this environment however Lech has held its position well in a
declining premium segment. Zubr performed particularly well in the fourth
quarter responding to strong promotional support which improved the second
half volume trend. Despite downtrading in the market, revenue per hectolitre
was broadly in line with the prior year in constant currency terms, although
reported EBITA declined reflecting the reduced volumes.
In the CZECH REPUBLIC lager volumes declined by 6% as the market continued
to be impacted by weakness in the on-premise channel, downtrading and the
effect of the January 2010 excise increase. Consumer confidence has been
severely impacted by high unemployment, low real wage growth and higher
taxation resulting in a double digit volume decline in the on-premise
channel. Our premium brands outperformed the market. Despite its on-premise
channel bias Pilsner Urquell performed well, helped by strong brand equity
and expanded tank beer distribution. Our premium variant Kozel 11 also
continued to grow with increased distribution in the on-premise channel. Our
mainstream brand, Gambrinus, continues to be under pressure partly due to
its significant exposure to the on-premise channel, however encouraging
results have been seen in the second half following significant brand
investment. The off-premise channel has declined at a lower rate than the on-
premise driven by an expanding convenience sub-segment and we have gained
share in this channel by successfully refocusing our can and convenience
offerings at mainstream and economy price points. As a result of these
activities, volume trends have improved and in the fourth quarter volumes
rose 2%. Revenue per hectolitre fell by 2% (up 1% at constant currency), and
reported EBITA declined mainly due to reduced volumes.
Volumes in RUSSIA grew 1%, despite a slow start to the year after the
significant January 2010 excise increase, then assisted by an exceptionally
warm summer and an improving trend in the second half of the year as the
economy showed signs of recovery and consumer sentiment strengthened. In a
market characterised by significant downtrading we have held share. In the
premium segment our local brand Zolotaya Bochka has been affected by
competitor price reductions to which we have responded with a continued
focus on value, supported by brand investment. Kozel enjoyed another strong
year growing in a declining segment, and the decline in Miller Genuine Draft
slowed due to a revitalised `It`s Miller time` marketing campaign. We have
driven economy segment growth led by Tri Bogatyrya, particularly as a result
of a new 3 litre PET pack. Growth in our regional portfolio, including
Simbirskoe in the Ulyanovsk region and the Vladpivo brands, has offset
volume declines in the Moscow area. Reported revenue per hectolitre growth
reflects prior year excise related price increases. Despite downtrading,
focus on production efficiencies and fixed cost productivity resulted in an
improvement in EBITA. In Ukraine volumes grew 21% benefiting from economic
improvement along with the success of the Sarmat variant Zhigulivskoe and a
1.25 litre PET pack, while recently introduced premium brands have also
boosted growth.
In ROMANIA lager volumes declined by 8% in an economy which has been slow to
recover. Consumer confidence has been severely impacted by government
austerity measures including a 5% increase in VAT in July 2010 and a decline
in real wages. Until these measures were implemented, the mainstream
category had held its own, capturing downtrading from the premium segment.
Since July 2010 the economy segment has seen accelerated downtrading from
the mainstream segment and our mainstream brand Timisoreana declined despite
performing well within its segment. Our economy brands Ciucas and Azuga
gained share in the growing economy segment. Ciucas growth followed a brand
relaunch in the second half with a new pack offering supported by effective
trade and consumer communication. In this market context, we announced the
closure of the Cluj brewery in November and are also in the process of
restructuring our commercial operations.
In ITALY economic conditions remain depressed resulting in a continued
decline in the beer market particularly in the on-premise channel. Birra
Peroni domestic volumes declined 4% with our value strategy resulting in
constant currency revenue per hectolitre growth of 4% benefiting from
improved channel mix and strong pricing. Effective revenue management along
with focused marketing investment behind core brands and fixed cost
productivity resulted in a strong improvement in EBITA. In line with our
strategy to improve value in this market we are in discussions to dispose of
our in-house distribution operation in Italy which has resulted in a charge
for impairment and associated costs.
Domestic lager volumes in the NETHERLANDS declined by 2%, in line with the
beer market, and we maintained share predominantly driven by off-premise
performance. We launched Pilsner Urquell and Peroni Nastro Azzurro in the
premium segment. We have recently announced further restructuring in both
brewery and commercial operations.
In the UNITED KINGDOM lager volumes grew 23% in a premium segment which
expanded only marginally. Peroni Nastro Azzurro continued its strong
performance growing volume 21% with significant expansion of draught sales.
Premium portfolio volumes were strong across the board and particularly
healthy in Miller Genuine Draft, Pilsner Urquell and Tyskie.
In HUNGARY and SLOVAKIA difficult economic conditions continued resulting in
depressed beer markets but with improving trends in the second half. In
Hungary volumes declined 5%, however our market share improved reflecting in-
trade execution focused on capturing uptrading into the premium segment
alongside the more significant down-trading into economy brands. Volumes
declined in Slovakia by 7% but the focus on premium occasions successfully
drove growth in Pilsner Urquell and on-premise share growth. While trading
was challenging in the CANARIES, the recent gradual return of tourists
resulted in level volume performance and we have started rationalising our
distribution route to market.
NORTH AMERICA
Financial summary 2011 2010 %
Group revenue (including share of 5,223 5,228 -
joint ventures) (US$m)
EBITA (US$m) 741 619 20
EBITA margin (%) 14.2 11.8
Sales volumes (hl 000)
- Lager - excluding contract 42,336 43,472 (3)
brewing
MillerCoors` volumes
- Lager - excluding contract 40,949 42,100 (3)
brewing
- Sales to retailers (STRs) 40,757 41,865 (3)
- Contract brewing 4,458 4,558 (2)
In 2011 before exceptional charges of US$5 million being the group`s share
of MillerCoors` integration and restructuring costs (2010: US$18 million
being the group`s share of MillerCoors` integration and restructuring costs
of US$14 million and the group`s share of the unwind of the fair value
inventory adjustment of US$4 million).
The North America segment includes the group`s 58% share in MillerCoors and
100% of Miller Brewing International. In a market which remained challenging
through the year, robust revenue management and strong cost management,
including MillerCoors` continued delivery of committed synergies and cost
savings, drove total North America EBITA up 20%.
MILLERCOORS
For the year ended 31 March 2011 MillerCoors` US domestic volume STRs were
down 3%, as the US beer market remained under pressure from high levels of
unemployment amid a slow economic recovery. Domestic STWs also fell by 3%,
in line with the STRs. Revenue growth was driven by pricing and favourable
brand mix from uptrading and product innovation. These factors more than
offset the impact on EBITA of the decline in volumes.
Premium light brand volumes were down low single digits, with growth in
Coors Light and an improving performance for Miller Lite. MillerCoors` Tenth
and Blake craft and import brand portfolio saw continued double digit growth
driven by Blue Moon and Leinenkugel`s (including their associated seasonal
craft brand extensions) as well as Peroni Nastro Azzurro. The below premium
segment declined in mid single digits, with both Keystone and Miller High
Life volumes down as consumers began to trade up to other categories.
MillerCoors` revenue per hectolitre grew by 2% as a result of disciplined
revenue management with selected price increases, including the narrowing of
the price gaps between the below premium and premium brands, which resulted
in consumers trading up and mix improving.
Cost of goods sold per hectolitre were marginally higher despite the ongoing
benefit of synergies and cost savings, due to higher freight and carrier
rates and the increased product costs of more premium brands.
Marketing, general and administrative costs decreased mainly due to synergy
realisation and as a result of other cost savings initiatives.
In the full year MillerCoors delivered an incremental US$202 million of
synergy savings. Synergies were driven mainly by marketing and media
savings, brewing and packaging material cost reductions, and lower
distribution costs. Other cost savings of US$73 million came mainly from a
number of other supply chain initiatives.
Total annualised synergies and other cost savings of US$684 million have
been realised since the inception of the joint venture on 1 July 2008. This
consists of synergies of US$528 million and other cost savings of US$156
million. MillerCoors achieved the original three year US$500 million synergy
target six months earlier than expected, and remains on track to achieve
US$750 million in total annualised synergies and other cost savings by the
end of the calendar year 2012.
AFRICA
Financial summary 2011 2010 %
Group revenue (including share of 3,254 2,716 20
associates) (US$m)
EBITA (US$m) 647 565 15
EBITA margin (%) 19.9 20.8
Sales volumes (hl 000)
- Lager 15,288 13,476 13
- Lager (organic) 15,223 13,476 13
- Soft drinks 12,373 10,442 18
- Soft drinks (organic) 11,314 10,442 8
- Other alcoholic beverages 5,080 3,922 30
In 2011 before net exceptional charges of US$4 million being business
capability programme costs (2010: US$3 million).
AFRICA delivered a strong full year performance with lager volume growth of
13% including Zimbabwe1, and 9% excluding Zimbabwe, on an organic basis.
This performance is largely attributable to greater focus on route to market
activities, the improved and differentiated brand portfolios as well as the
continued economic growth across the region. Regional premium brands
maintained robust growth, with Castle Lager up by 20%, excluding the
incremental Zimbabwe volumes. Local premium volumes continued to grow very
strongly, while in the affordable segment we expanded our geographic
footprint and our Eagle brand performed well. Soft drinks volumes grew 8%
organically (4% excluding Zimbabwe) and 18% on a reported basis as we cycled
the acquisitions of the prior year. The category is performing well with
solid growth in Uganda, Ghana, Nigeria, Zambia and particularly Zimbabwe.
Super Maheu continues to grow with expansion into new markets. Traditional
beer pilot plants were established in a number of new territories and have
performed to expectation, with full production to follow. Local farming
initiatives are gaining momentum with Zambia now self-sufficient in barley.
Our investments in capacity in the last two years are building impetus and
creating profitable growth opportunities in new geographies.
Despite increased investment in sales and marketing EBITA grew by 15% (20%
on an organic, constant currency basis), driven by volume growth and price
increases. The start up operations in Ethiopia, Southern Sudan and Nigeria
performed to expectation. EBITA margin for the full year declined by 90 bps
to 19.9%, impacted by weaker local currencies relative to the US dollar
which affected raw material input costs and the increased cost base due to
the expansion projects commissioned in the prior year. However EBITA margin
improved in the second half, gaining 30 bps over the same period in the
prior year.
In UGANDA lager volumes grew by 20% supported by improved distribution,
retail execution and a strong brand portfolio that was able to leverage the
prior year capacity expansion. Eagle continues to record exceptional growth
in the affordable segment while Nile Gold, and Castle Lite, which was
launched earlier this year, are progressing well in the premium segment.
Lager volumes in TANZANIA grew by 5% for the full year, having been level at
the half year. Prior year volumes included licensed brand production for
East African Breweries Limited (EABL) - if the impact of these volumes are
excluded, our own lager brands grew 19% in the year, with the total beverage
portfolio up 23%. This growth is directly attributable to increased brand
and market focus, with Castle Lager, Castle Lite and Ndovu Special Malt
outperforming in the premium sector and Kilimanjaro and Safari lager
performing well in the mainstream sector following recent brand renovation
programmes. The far south region grew strongly following the commissioning
of the Mbeya brewery which has also saved distribution costs.
Lager volume growth of 7% was achieved in MOZAMBIQUE as a result of improved
availability of product and focused sales and distribution in the north
enabled by the opening of the Nampula brewery at the end of the prior year.
The main contributors were Laurentina Preta, a local premium brand, with
growth of 46% and Manica, a mainstream brand, with volume growth of 21%.
Although volumes of the 2M brand declined for the year, they grew in the
final quarter with a revitalised marketing campaign and the launch of a new
bottle.
In ZAMBIA lager volume growth for the year was 28% driven by more effective
distribution, better availability of product following the brewery upgrade
at Ndola and the continued consumer price benefit of the excise reduction in
March 2010. Castle Lager and Mosi have both shown strong growth in the year.
Traditional beer grew by 11% as a result of improved distribution channels
and availability.
In ANGOLA soft drinks ended the year in line with the prior year despite a
slowdown in the economy resulting in lower disposable income and consumer
demand. Lager volumes grew 26% following the successful commissioning of the
new brewery in Luanda.
Delta Corporation, our associate in ZIMBABWE1, is slowly returning to
normality with lager volumes approaching their previous highs. During the
year capital investments to improve the standard of the breweries in
Zimbabwe were undertaken, including a new lager packaging line in Bulawayo
which was commissioned in the latter part of the year.
CASTEL delivered lager volume growth of 4% with good growth in Nigeria, the
Democratic Republic of the Congo, Benin and Chad. Soft drinks volumes grew
by 8% year on year.
We have included our share of Delta, our associate in Zimbabwe, within our
results effective 1 April 2010 following the effective `dollarisation` of
the economy in 2009, the end of hyperinflation and the stabilisation of the
local economy.
ASIA
Financial summary 2011 2010 %
Group revenue (including share of
associates
and joint ventures) (US$m) 2,026 1,741 16
EBITA (US$m) 92 71 31
EBITA margin (%) 4.6 4.1
Sales volumes (hl 000)
- Lager 51,270 46,279 11
- Lager (organic) 50,848 46,279 10
In ASIA lager volumes grew 10% on an organic basis, with strong growth in
China, supported by India and Vietnam. EBITA increased 31% (33% on an
organic, constant currency basis), with all of the region`s operations
showing improvement and particularly pleasing growth in India and China.
EBITA margin increased by 50 bps.
In CHINA lager volumes grew by 11% (10% on an organic basis), in a market
which grew at an estimated 6%. The north-east and central regions
contributed the majority of the increase in volume as they continued to grow
strongly, but results in the south-east were also good.
Revenue per hectolitre increased by 4% both on a reported and an organic,
constant currency basis. CR Snow continued to grow its presence in the
premium segment through brand extensions including Snow Draft and Brave the
World, while in more recent months CR Snow has increased its average selling
prices in order to cover higher costs. In addition, EBITA has been adversely
affected by changes to consumption tax legislation for foreign invested
enterprises in China with effect from
1 December 2010.
CR Snow further increased its sales and marketing activities to grow market
share, with good increases in share achieved in Jiangsu, Shanghai, Shanxi,
Zhejiang, Inner Mongolia, Heilongjiang, Liaoning, and Guizhou. Aggressive
competition in the lower segments of the market led to share loss in Sichuan
and Tianjin, although in Sichuan this has been stemmed in more recent
months.
CR Snow continues to expand its footprint with capacity of six million
hectolitres added in the year. This included the acquisition of three
breweries in Heilongjiang, Jiangsu and Henan and two newly built breweries
in Shandong and Shanxi. In addition, a number of projects were initiated
during the year to further increase capacity.
INDIA delivered volume growth of 10% and a substantial improvement in EBITA.
In all of the key states - Karnataka, Andhra Pradesh, Pondicherry, Uttar
Pradesh, Haryana, Maharashtra and Madhya Pradesh - we increased volumes,
although in Andhra Pradesh these were constrained from July 2010 with
regulatory issues limiting our market share in the state. Increased revenue
per hectolitre, favourable mix and cost control, including the introduction
of embossed proprietary bottles in key states, further enhanced results.
Volumes in VIETNAM increased over the prior year although both domestic and
export performance has been more subdued in the latter part of the year.
Volume performance in our joint venture in AUSTRALIA was soft with increased
competition in the premium segment, and the market suffered from
particularly poor weather and the impacts of flooding in the second half of
the year. The commissioning of a new brewery in June 2010 has enabled
improved availability of draught offerings in the on-premise channel. EBITA
improved as a result of favourable mix, some pricing benefits and lower
costs from local production.
SOUTH AFRICA: BEVERAGES
Financial summary 2011 2010 %
Group revenue (including share of 5,598 4,777 17
associates) (US$m)
EBITA (US$m) 1,067 885 21
EBITA margin (%) 19.1 18.5
Sales volumes (hl 000)
- Lager 26,306 25,761 2
- Soft drinks 17,574 17,044 3
- Other alcoholic beverages 1,467 1,404 5
In 2011 before net exceptional charges of 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
(2010: US$53 million being business capability programme costs of US$42
million and costs associated with the establishment of the Broad-Based Black
Economic Empowerment transaction of US$11 million).
The South African economy strengthened during the year with both GDP and
retail sales returning to growth after a decline in the previous year.
However, the recovery in consumer demand has been tentative as consumers
were impacted by higher food and energy prices.
Lager volumes returned to growth, at 2% - a strong performance given that
the year under review had no Easter. Our beer business intensified
investment behind our core brands and further enhanced sales execution with
retailers. The increase in market-facing investment was principally funded
through cost reduction. Product and packaging innovation built on the
momentum created by intensive through the line marketing campaigns. Retail
execution reach and intensity at the point of sale were significantly
improved through our focus on key classes of trade. Encouragingly, our
market share stabilised over the second half of the year.
Castle Lite, South Africa`s largest premium beer, accelerated its growth,
supported by the communication of its `Extra cold` characteristics and
selective placement in the trade of specialised refrigeration equipment.
Mainstream brands in total returned to growth. Castle Lager benefited
further from its association with sport and continued to build on the gains
it made during the 2010 FIFA World Cup. Hansa Pilsener continued to grow
steadily from its large base while Carling Black Label, South Africa`s best-
selling beer, declined more slowly.
Soft drinks volumes grew by 3% driven by the emphasis on immediate
consumption packs, a greater sophistication in channel specific trade
execution and enhanced customer service, while cost competitiveness was also
strengthened. Sparkling soft drinks growth of 2% included growth in
returnable glass bottles and immediate consumption packs in particular. Good
growth in Powerade, coupled with the successful launch of Glaceau during the
year, drove growth of 15% in alternative beverages.
Group revenue grew by 17%, (8% on a constant currency basis), assisted by
the strong volume growth and price benefits in both the beer and soft drinks
businesses. Group revenue per hectolitre grew by 14%, (5% on a constant
currency basis). Year on year beer raw material costs declined in constant
currency per hectolitre terms, benefiting from lower brewing input costs and
favourable forward exchange contracts. Soft drinks raw material cost
increases were marginally ahead of inflation.
EBITA grew by 21% (11% on a constant currency basis), benefiting from the
strengthening of the rand over the year relative to the US dollar. Full year
EBITA margin of 19.1% reflected a 60 bps improvement on the prior year.
APPLETISER delivered solid revenue growth and a strong EBITA performance.
Our associate Distell increased volumes and revenue, with cider and ready-to-
drink growth partially offset by a decline in wines and spirits,
predominantly in the domestic market. Although EBITA grew, margins were
adversely impacted by the negative sales mix and adverse transactional
exchange rate impacts.
The offer of shares in the company`s Broad-Based Black Economic Empowerment
transaction attracted over 33,000 applications and was 29% oversubscribed
when it closed in June 2010. A total of 46.2 million new shares in The South
African Breweries Limited (SAB), representing 8.45% of SAB`s enlarged issued
share capital, have been issued. During the year we distributed an interim
dividend to the participating employee and retailer shareholders of US$3
million, and subsequent to year end the final dividend has been declared,
covering the second half of the year and our peak trading period, which will
result in a further
US$6 million being distributed.
SOUTH AFRICA: HOTELS AND GAMING
Financial summary 2011 2010 %
Group revenue (share of associates) 481 406 18
(US$m)
EBITA (US$m) 137 122 12
EBITA margin (%) 28.5 30.0
Revenue per available room (Revpar) - 73.74 65.33 13
US$
In 2011 before exceptional charges of US$26 million being the group`s share
of the loss on the merger transaction (2010: US$nil).
In February 2011, the Tsogo Sun Group merged with Gold Reef Resorts Ltd
(GRR), a Johannesburg Stock Exchange listed company, through an all share
merger. The transaction was effected through the acquisition by GRR of the
group`s entire 49% shareholding in Tsogo Sun Holdings (Pty) Ltd in exchange
for a 39.68% shareholding in the listed enlarged entity.
Despite the improvement in the wider South African economy, the Tsogo Sun
Group continued to be impacted by softer consumer demand in both the gaming
market and the hospitality industry. Results were however assisted by the
2010 FIFA World Cup held in June and July. Our share of Tsogo Sun Group`s
reported revenue grew by 18% over the prior year, with organic constant
currency growth of 8%. Revenue per available room (revpar) was up 13% (4% on
a constant currency basis).
The gaming industry in South Africa grew in low to mid single digits. The
biggest gaming province, Gauteng, grew by 2% versus a prior year decline of
3%, and the KwaZulu-Natal region grew by 5%. The Tsogo Sun Group improved
market share in Gauteng and held share in KwaZulu-Natal.
The South African hotel industry remained under pressure throughout the
year, except during the FIFA 2010 World Cup period, particularly in the key
corporate and government segments. Hotel occupancies peaked at 72% for the
month in June 2010 and averaged 58% for the year, ending relatively
unchanged against last year. Group-wide occupancies ended the year at 59%.
EBITA grew by 12% (3% on a constant currency basis) with EBITA margin
declining due to high utility price increases together with other
inflationary cost increases outstripping 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 2010 as amended for
the changes set out in note 1, which have had no material impact on group
results. The consolidated balance sheet as at 31 March 2010 has been
restated for further adjustments relating to the initial accounting for
business combinations, details of which are provided in note 12. The Annual
Report and Accounts for the year ended 31 March 2010 is available on the
company`s website: www.sabmiller.com.
SEGMENTAL ANALYSIS
The group`s operating results on a segmental basis are set out in the
segmental analysis of operations.
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 24 November 2010 the group acquired a 100% interest in Cerveceria
Argentina S.A. Isenbeck (CASA Isenbeck) for cash. The acquisition provides a
low cost entry point into the country as well as a platform for supply into
neighbouring countries.
On 30 November 2010 the group completed the cash acquisition of an 80%
effective interest in Crown Foods Limited, a mineral water and juice
business, in Kenya. This business combination has been made in partnership
with Castel, with the effective interest stated after taking account of
Castel`s interest, and aligns with the group`s full beverage portfolio
strategy in Africa.
On 24 February 2011, the Tsogo Sun Group merged with GRR, a Johannesburg
Stock Exchange listed company, through an all share merger. The transaction
was effected through the acquisition by GRR of the group`s entire 49%
shareholding in Tsogo Sun Holdings (Pty) Ltd (Tsogo Sun) in exchange for a
39.68% shareholding in the listed enlarged entity.
RECOMMENCEMENT OF REPORTING OF ZIMBABWE OPERATIONS
Following the effective `dollarisation` of the Zimbabwean economy in 2009,
the end of hyperinflation and the stabilisation of the Zimbabwean economy,
the group has included its share of the volumes and the results of its
Zimbabwean associate, Delta Corporation Limited, with effect from 1 April
2010.
EXCEPTIONAL ITEMS
Items that are material either by size or incidence are classified as
exceptional items. Further details on the treatment of these items can be
found in note 3 to the financial statements.
Net exceptional charges of US$467 million before finance costs and tax were
reported during the year (2010: US$490 million), including net exceptional
charges of US$31 million (2010: US$18 million) related to the group`s share
of joint ventures` and associates` exceptional charges. The net exceptional
charge included US$296 million (2010: US$325 million) related to business
capability programme costs in Latin America, Europe, Africa, South Africa
Beverages and Corporate.
US$98 million (2010: US$45 million) related to impairment 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. A charge of US$149
million (2010: US$11 million) has been recognised in respect of the Broad-
Based Black Economic Empowerment scheme in South Africa; this includes the
one-off IFRS 2 `Share-based Payment Transactions` charge in respect of the
retailer element of the transaction and the ongoing IFRS 2 charge in respect
of the employee element, together with the costs of the transaction. A
profit of US$159 million related to the partial disposal of the group`s
shareholding in Tsogo Sun as part of the Tsogo Sun/GRR merger. A charge of
US$52 million (2010: US$78 million) related to restructuring costs in
Europe.
The group`s share of joint ventures` and associates` exceptional items
included a charge of US$5 million (2010: US$14 million) related to the
group`s share of MillerCoors` integration and restructuring costs and US$26
million related to the group`s share of the loss on the merger transaction
in Hotels and Gaming.
In addition to the amounts noted above, the net exceptional charge in 2010
included US$13 million related to transaction costs in Corporate; the
group`s share of joint ventures` and associates` exceptional items included
a charge of US$4 million related to the group`s share of the unwinding of
fair value adjustments on inventory in MillerCoors; and in addition, within
net finance costs, there was an exceptional charge in the year of US$17
million related to the business capability programme.
FINANCE COSTS
Net finance costs were US$525 million, a 7% decrease on the prior year`s
US$563 million, mainly as a result of the reduction in net debt. Finance
costs in the current year include a net loss of US$7 million (2010:
US$8 million) from the mark to market adjustments of various derivatives on
capital items for which hedge accounting cannot be applied. Finance costs in
the prior year also included an exceptional charge of
US$17 million resulting from a change in valuation methodology of financial
instruments as part of the business capability programme. The mark to market
adjustments, and in the prior year the charge resulting from the change in
valuation, have been excluded from the determination of adjusted finance
costs and adjusted earnings per share. Adjusted net finance costs were
US$518 million, down 4%.
Interest cover, as defined in the financial definitions section, has
increased to 10.8 times from 9.3 times in the prior year.
PROFIT BEFORE TAX
Adjusted profit before tax of US$4,491 million increased by 18% over the
prior year, primarily as a result of stronger pricing, cost efficiencies and
lower finance costs.
Profit before tax was US$3,626 million, up 24% 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 charges of US$467
million in the year compared to
US$507 million in the prior year.
TAXATION
The effective rate of tax for the year before amortisation of intangible
assets (other than software) and exceptional items is 28.2% compared to a
rate of 28.5% in the prior year. This reduction in the rate results from a
combination of factors including a more beneficial geographic mix of
earnings, changes in tax legislation within our Europe division countries,
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 191.5 US cents
were up 19% on the prior year, benefiting from improved profit before tax.
An analysis of earnings per share is shown in note 6. On a statutory basis,
basic earnings per share were higher by 25% at 152.8 US cents (2010: 122.6
US cents).
CASH FLOW AND CAPITAL EXPENDITURE
Net cash generated from operations before working capital movements (EBITDA)
of US$4,502 million increased by 13% compared with the prior year (2010:
US$3,974 million). This increase was primarily due to improved pricing and
cost efficiencies. Dividends received from the MillerCoors joint venture
(reported within cash flows from investing activities) amounted to US$822
million (2010: US$707 million).
Adjusted EBITDA of US$5,617 million (comprising EBITDA before cash flows
from exceptional items of US$293 million plus dividends received from
MillerCoors of US$822 million) increased by 12% compared with the prior year
(2010: US$5,020 million), reflecting principally the higher EBITDA.
Net cash generated from operating activities of US$3,043 million was down
US$234 million primarily reflecting lower working capital inflows and higher
tax paid. The level of cash inflows from working capital reduced compared
with the prior year which included significant one-off working capital
benefits from the business capability programme.
As expected, capital expenditure for the year of US$1,189 million reduced
compared to the prior year (2010: US$1,436 million). The group has continued
to invest in its operations, selectively maintaining investment to support
future growth including the brewery and soft drinks plant in Angola,
capacity extensions in Peru and Uganda, on fridges across Latin America and
in South Africa, and on containers. Capital expenditure including the
purchase of intangible assets was US$1,315 million (2010: US$1,528 million).
Free cash flow improved by 23% to US$2,488 million, reflecting lower capital
expenditure, lower investments in associates and joint ventures, increased
EBITDA, higher dividends from MillerCoors and a reduction in dividends paid
to non-controlling interests following the acquisition of the non-
controlling interests in our Polish business in May 2009. Free cash flow is
detailed in note 10b, and defined in the financial definitions section.
BORROWINGS AND NET DEBT
Gross debt at 31 March 2011, comprising borrowings together with the fair
value of derivative assets or liabilities held to manage interest rate and
foreign currency risk of borrowings, decreased to US$8,162 million from
US$9,177 million at 31 March 2010, primarily as a result of cash generation
during the year. Net debt, comprising gross debt net of cash and cash
equivalents decreased to US$7,091 million from
US$8,398 million at 31 March 2010. An analysis of net debt is provided in
note 10c.
The group`s gearing (presented as a ratio of net debt/equity) has decreased
to 31.2% from 40.8% at 31 March 2010. The weighted average interest rate for
the gross debt portfolio at 31 March 2011 was 5.9% (2010: 5.7%).
On 10 September 2010 a consent solicitation relating to SABMiller plc`s
US$300 million 6.625% Guaranteed Notes due August 2033 was successfully
completed. As a result, MillerCoors was released from its guarantee of
payment of principal and interest on the Notes and certain financial
thresholds were amended to align with the terms of recently issued SABMiller
plc notes.
In October 2010 the US$515 million 364 day facility expired and was not
renewed.
On 29 March 2011, the group`s Colombian subsidiary, Bavaria S.A. established
a COP2,500,000 million bond and commercial paper programme, to be used
primarily to refinance Bavaria S.A.`s existing COP1,910,320 million bonds by
means of an exchange offer under which bondholders would be offered new
securities in exchange for the existing bonds. The exchange offer was
accepted by bondholders representing approximately 93% of the aggregate face
amount of the existing bonds and, on 31 March 2011, Bavaria S.A. issued new
securities with an aggregate face amount of COP1,881,191 million. The new
securities have been registered for trading in the secondary market of the
Colombian Stock Exchange and admitted to the official list of the Cayman
Islands Stock Exchange.
Subsequent to the financial year end, on 7 April 2011 the group entered into
a five year US$2,500 million committed syndicated facility, with the option
of two one-year extensions. This facility replaced the existing US$2,000
million and US$600 million committed syndicated facilities, which were both
voluntarily cancelled.
At 31 March 2011, the group had undrawn committed borrowing facilities of
US$3,164 million (2010: US$3,579 million).
TOTAL EQUITY
Total equity increased from US$20,593 million (restated - see note 12) at 31
March 2010 to US$22,759 million at 31 March 2011. The increase was primarily
due to currency translation movements on foreign currency investments and
profit for the year, partly offset by dividend payments.
GOODWILL AND INTANGIBLE ASSETS
Goodwill increased to US$11,952 million (2010: US$11,579 million) due to
foreign exchange movements and goodwill arising on acquisitions in the year.
Intangible assets increased in the year to US$4,361 million (2010: US$4,354
million) as a result of foreign exchange movements and additions, primarily
related to the business capability programme, partially offset by
amortisation. The prior year comparative for goodwill has been restated to
reflect adjustments to provisional fair values of business combinations,
further details of which are provided in note 12.
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)
2011 2010 %
Average rate
South African rand (ZAR) 7.15 7.78 8
Colombian peso (COP) 1,881 2,031 7
Euro (Euro) 0.76 0.71 7
Czech koruna (CZK) 19.04 18.45 (3)
Peruvian nuevo sol (PEN) 2.81 2.92 4
Polish zloty (PLN) 3.01 2.99 (1)
Closing rate
South African rand (ZAR) 6.77 7.30 7
Colombian peso (COP) 1,879 1,929 3
Euro (Euro) 0.71 0.74 (5)
Czech koruna (CZK) 17.27 18.87 8
Peruvian nuevo sol (PEN) 2.80 2.84 1
Polish zloty (PLN) 2.84 2.86 1
DIVIDEND
The board has proposed a final dividend of 61.5 US cents per share for the
year. Shareholders will be asked to approve this recommendation at the
annual general meeting, which will be held on Thursday 21 July 2011. If
approved, the dividend will be payable on Friday 12 August 2011 to
shareholders registered on the London and Johannesburg registers on Friday 5
August 2011. The ex-dividend trading dates will be Wednesday 3 August 2011
on the London Stock Exchange (LSE) and Monday 1 August 2011 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 20 July 2011 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 21 July 2011.
From the commencement of trading on Thursday 21 July 2011 until the close of
business on Friday 5 August 2011, no transfers between the London and
Johannesburg registers will be permitted, and from Monday
1 August 2011 until Friday 5 August 2011, no shares may be dematerialised or
rematerialised, both days inclusive.
ANNUAL REPORT AND ACCOUNTS
The group`s unaudited consolidated financial statements and certain
significant explanatory notes follow. The annual report will be mailed to
shareholders in late June 2011 and the annual general meeting of the company
will be held at the Intercontinental Park Lane Hotel in London at 11:00 on
Thursday 21 July 2011.
SABMiller plc
CONSOLIDATED INCOME STATEMENT
for the year ended 31 March
2011 2010
Unaudited Audited
Notes US$m US$m
US$m
Revenue 2 19,408 18,020
Net operating expenses (16,281) (15,401)
Operating profit 2 3,127 2,619
Operating profit before exceptional items 3,563 3,091
Exceptional items 3 (436) (472)
Net finance costs 4 (525) (563)
Interest payable and similar charges (883) (879)
Interest receivable and similar income 358 316
Share of post-tax results of associates 2 1,024 873
and joint ventures
Profit before taxation 3,626 2,929
Taxation 5 (1,069) (848)
Profit for the year 2,557 2,081
Profit attributable to non-controlling 149 171
interests
Profit attributable to equity 2,408 1,910
shareholders
2,557 2,081
Basic earnings per share (US cents) 6 152.8 122.6
Diluted earnings per share (US cents) 6 151.8 122.1
All operations are continuing.
The notes on pages 26 to 37 form an integral part of these consolidated
financial statements.
SABMiller plc
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March
2011 2010
Unaudited Audited
Notes US$m US$m
Profit for the year 2,557 2,081
Other comprehensive income:
Currency translation differences on 644 2,431
foreign currency net investments
Actuarial losses on defined benefit plans (28) (15)
Available for sale investments: - 2
- Fair value gains arising during the - 4
year
- Fair value gains transferred to profit - (2)
or loss
Net investment hedges:
- Fair value losses arising during the (137) (310)
year
Cash flow hedges: 39 (59)
- Fair value gains/(losses) arising 16 (48)
during the year
- Fair value losses/(gains) transferred 2 (17)
to inventory
- Fair value gains transferred to - (1)
property, plant and equipment
- Fair value losses transferred to profit 21 7
or loss
Tax on items included in other 5 22 (36)
comprehensive income
Share of associates` and joint ventures` 9 (50) 136
(losses)/gains included in other
comprehensive income
Other comprehensive income for the year, 490 2,149
net of tax
Total comprehensive income for the year 3,047 4,230
Attributable to:
Equity shareholders 2,904 4,075
Non-controlling interests 143 155
Total comprehensive income for the year 3,047 4,230
The notes on pages 26 to 37 form an integral part of these consolidated
financial statements.
SABMiller plc
CONSOLIDATED BALANCE SHEET
at 31 March
2011 2010
Unaudited Unaudited
Notes US$m US$m
Assets
Non-current assets
Goodwill 8 11,952 11,579
Intangible assets 8 4,361 4,354
Property, plant and equipment 9,330 8,915
Investments in joint ventures 9 5,813 5,822
Investments in associates 9 2,719 2,213
Available for sale investments 35 31
Derivative financial instruments 330 409
Trade and other receivables 140 117
Deferred tax assets 184 164
34,864 33,604
Current assets
Inventories 1,256 1,295
Trade and other receivables 1,687 1,665
Current tax assets 152 135
Derivative financial instruments 16 20
Available for sale investments - 1
Cash and cash equivalents 10c 1,067 779
4,178 3,895
Assets of disposal group classified as 66 -
held for sale
4,244 3,895
Total assets 39,108 37,499
Liabilities
Current liabilities
Derivative financial instruments (50) (174)
Borrowings 10c (1,345) (1,605)
Trade and other payables (3,484) (3,228)
Current tax liabilities (658) (616)
Provisions (410) (355)
(5,947) (5,978)
Liabilities of disposal group classified (66) -
as held for sale
(6,013) (5,978)
Non-current liabilities
Derivative financial instruments (85) (147)
Borrowings 10c (7,115) (7,809)
Trade and other payables (98) (145)
Deferred tax liabilities (2,578) (2,374)
Provisions (460) (453)
(10,336) (10,928)
Total liabilities (16,349) (16,906)
Net assets 22,759 20,593
Equity
Share capital 166 165
Share premium 6,384 6,312
Merger relief reserve 4,586 4,586
Other reserves 1,881 1,322
Retained earnings 8,991 7,525
Total shareholders` equity 22,008 19,910
Non-controlling interests 751 683
Total equity 22,759 20,593
As restated (see note 12).
The notes on pages 26 to 37 form an integral part of these consolidated
financial statements.
SABMiller plc
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 March
2011 2010
Unaudited Audited
Notes US$m US$m
Cash flows from operating activities
Cash generated from operations 10a 4,568 4,537
Interest received 293 317
Interest paid (933) (957)
Tax paid (885) (620)
Net cash generated from operating 10b 3,043 3,277
activities
Cash flows from investing activities
Purchase of property, plant and equipment (1,189) (1,436)
Proceeds from sale of property, plant and 73 37
equipment
Purchase of intangible assets (126) (92)
Purchase of available for sale investments (3) (6)
Proceeds from disposal of available for - 14
sale investments
Acquisition of businesses (net of cash (60) (78)
acquired)
Investments in joint ventures (186) (353)
Investments in associates (5) (76)
Repayment of investments by associates 68 3
Dividends received from joint ventures 9 822 707
Dividends received from associates 88 106
Dividends received from other investments 1 2
Net cash used in investing activities (517) (1,172)
Cash flows from financing activities
Proceeds from the issue of shares 73 114
Proceeds from the issue of shares in 34 -
subsidiaries to non-controlling interests
Purchase of own shares for share trusts - (8)
Purchase of shares from non-controlling (12) (5)
interests
Proceeds from borrowings 1,608 5,110
Repayment of borrowings (2,767) (5,714)
Capital element of finance lease payments (5) (4)
Net cash payments on net investment hedges (43) (137)
Dividends paid to shareholders of the (1,113) (924)
parent
Dividends paid to non-controlling interests (102) (160)
Net cash used in financing activities (2,327) (1,728)
Net cash inflow from operating, investing 199 377
and financing activities
Effects of exchange rate changes 25 90
Net increase in cash and cash equivalents 224 467
Cash and cash equivalents at 1 April 10c 589 122
Cash and cash equivalents at 31 March 10c 813 589
The notes on pages 26 to 37 form an integral part of these consolidated
financial statements.
SABMiller plc
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 2009 159 6,198 3,395 (872)
(audited)
Total comprehensive - - - 2,194
income
Profit for the year - - - -
Other comprehensive - - - 2,194
income
Dividends paid - - - -
Issue of SABMiller plc 6 114 1,191 -
ordinary shares
Payment for purchase of - - - -
own shares for share
trusts
Arising on business - - - -
combinations
Buyout of non- - - - -
controlling interests
Credit entry relating to - - - -
share-based payments
At 31 March 2010 165 6,312 4,586 1,322
(unaudited)
Total comprehensive - - - 559
income
Profit for the year - - - -
Other comprehensive - - - 559
income
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 166 6,384 4,586 1,881
(unaudited)
Retained Total Non- Total
earnings shareholders` controlling equity
equity interests
US$m US$m US$m US$m
At 1 April 2009 6,496 15,376 741 16,117
(audited)
Total comprehensive 1,881 4,075 155 4,230
income
Profit for the year 1,910 1,910 171 2,081
Other comprehensive (29) 2,165 (16) 2,149
income
Dividends paid (924) (924) (162) (1,086)
Issue of SABMiller - 1,311 - 1,311
plc ordinary shares
Payment for purchase (8) (8) - (8)
of own shares for
share trusts
Arising on business - - 21 21
combinations
Buyout of non- - - (72) (72)
controlling interests
Credit entry relating 80 80 - 80
to share-based
payments
At 31 March 2010 7,525 19,910 683 20,593
(unaudited)
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 - 73 - 73
plc ordinary shares
Proceeds from the
issue of shares in
subsidiaries to
non-controlling - - 34 34
interests
Buyout of non- (10) (10) (3) (13)
controlling interests
Credit entry relating 246 246 - 246
to share-based
payments
At 31 March 2011 8,991 22,008 751 22,759
(unaudited)
As restated (see note 12).
The notes on pages 26 to 37 form an integral part of these consolidated
financial statements.
SABMiller plc
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of preparation
The preliminary announcement for the year ended 31 March 2011 has been
prepared in accordance with the International Accounting Standards and
International Financial Reporting Standards (collectively IFRS) and
International Financial Reporting Interpretation Committee (IFRIC)
interpretations as adopted by the EU.
The financial information in this preliminary announcement is not audited
and does not constitute statutory accounts within the meaning of s434 of the
Companies Act 2006. Group financial statements for 2011 will be delivered to
the Registrar of Companies in due course. The board of directors approved
this financial information on 18 May 2011. The annual financial statements
for the year ended 31 March 2010, approved by the board of directors on 3
June 2010, 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 (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 accounting policies adopted are consistent with those of the previous
financial year except that the group has adopted the following standards
which became mandatory for the first time in the financial year ended 31
March 2011.
- IFRS 3 (revised), `Business Combinations` requires all acquisition-related
costs to be expensed and adjustments to contingent consideration classified
as debt to be recognised in profit or loss rather than as an adjustment to
goodwill. It allows the choice on an acquisition by acquisition basis of
measuring the non-controlling interest in the acquiree either at fair value
or at the non-controlling interest`s share of the acquiree`s net assets. The
group has applied the revised standard prospectively from 1 April 2010 for
combinations completed after that date with no material impact in the year
ended 31 March 2011.
- IAS 27 (revised), `Consolidated and Separate Financial Statements`
requires the effects of all transactions with non-controlling interests to
be recorded in equity if there is no change in control. These transactions
no longer result in the recognition of goodwill or gains and losses. When
control is lost, any remaining interest in the entity is re-measured to fair
value, and a gain or loss is recognised in profit or loss. The group has
applied the revised standard prospectively from 1 April 2010 with no
material impact in the year ended 31 March 2011. The revision to IAS 27
contained consequential amendments to IAS 28, `Investments in Associates`,
and IAS 31, `Interests in Joint Ventures`.
The following standards, interpretations and amendments have been adopted by
the group since 1 April 2010 with no significant impact on its consolidated
results or financial position:
- IFRS 1 (revised), `First-time Adoption` and Amendment to IFRS 1 for
Additional Exemptions.
- IFRIC 15, `Agreements for the Construction of Real Estate`.
- IFRIC 16, `Hedges of a Net Investment in a Foreign Operation`.
- IFRIC 17, `Distribution of Non-cash Assets to Owners`.
- IFRIC 18, `Transfers of Assets from Customers`.
- Amendment to IFRS 2, `Group Cash-settled Share-based Payment
Transactions`.
- Amendment to IAS 32, `Financial Instruments: Presentation` -
Classification of Rights Issues.
- Amendment to IAS 39, `Financial Instruments: Recognition and Measurement`
- Eligible Hedged Items.
- Annual improvements to IFRSs (2009).
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 2011 or later periods, but which have
not been early adopted by the group:
- IFRIC 19, `Extinguishing Financial Liabilities with Equity Instruments`,
is effective from 1 July 2010.
- Amendment to IFRS 1, `Limited Exemption from Comparative IFRS 7
Disclosures for First-time Adopters`, is effective from 1 July 2010.
- Amendment to IAS 24, `Related Party Disclosures`, is effective from 1
January 2011.
- Amendment to IFRIC 14, `Pre-payments of a Minimum Funding Requirement`, is
effective from 1 January 2011.
- Annual improvements to IFRSs (2010), is primarily effective from 1 January
2011.
- Amendment to IFRS 1, `Hyperinflation and Fixed Dates`, is effective from 1
July 2011.
- Amendment to IFRS 7, `Financial Instrument Disclosures: Transfers of
Financial Assets`, is effective from 1 July 2011.
- Amendment to IAS 12 `Deferred Tax: Recovery of Underlying Assets`, is
effective from 1 January 2012.
- IFRS 9, `Financial Instruments`, is effective from 1 January 2013.
Not yet endorsed by the EU.
The adoption of these standards, interpretations and amendments is not
expected to have a material effect on the consolidated results of operations
or financial position of the group.
2. Segmental 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 revenue
2011 2011 2010 2010
Unaudited Unaudited Audited Audited
US$m US$m US$m US$m
Latin America 6,335 1,620 5,905 1,386
Europe 5,394 887 5,577 872
North America 5,223 741 5,228 619
Africa 3,254 647 2,716 565
Asia 2,026 92 1,741 71
South Africa: 6,079 1,204 5,183 1,007
- Beverages 5,598 1,067 4,777 885
- Hotels and Gaming 481 137 406 122
Corporate - (147) - (139)
Group 28,311 5,044 26,350 4,381
Amortisation of intangible
assets (excluding
software) - group and
share of associates`
and joint ventures` (209) (199)
Exceptional items - group (467) (507)
and share of associates`
and joint ventures`
Net finance costs - group (560) (586)
and share of associates`
and joint ventures`
(excluding exceptional
items)
Share of associates` and (139) (118)
joint ventures` taxation
Share of associates` and (43) (42)
joint ventures` non-
controlling interests
Profit before tax 3,626 2,929
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
associates` revenue
and joint
ventures`
revenue
2011 2011 2011
Unaudited Unaudited Unaudited
US$m US$m US$m
Latin America 6,324 11 6,335
Europe 5,379 15 5,394
North America 117 5,106 5,223
Africa 2,059 1,195 3,254
Asia 564 1,462 2,026
South Africa: 4,965 1,114 6,079
- Beverages 4,965 633 5,598
- Hotels and Gaming - 481 481
Group 19,408 8,903 28,311
Revenue Share of Group
associates` revenue
and joint
ventures`
revenue
2010 2010 2010
Audited Audited Audited
US$m US$m US$m
Latin America 5,894 11 5,905
Europe 5,558 19 5,577
North America 107 5,121 5,228
Africa 1,774 942 2,716
Asia 473 1,268 1,741
South Africa: 4,214 969 5,183
- Beverages 4,214 563 4,777
- Hotels and Gaming - 406 406
Group 18,020 8,330 26,350
Operating profit
The following table provides a reconciliation of operating profit to
operating profit before exceptional items.
Operating Exceptional Operating
profit items profit
before
exceptional
items
2011 2011 2011
Unaudited Unaudited Unaudited
US$m US$m US$m
Latin America 1,391 106 1,497
Europe 596 261 857
North America 16 - 16
Africa 361 4 365
Asia (22) - (22)
South Africa: Beverages 809 188 997
Corporate (24) (123) (147)
Group 3,127 436 3,563
Operating Exceptional Operating
profit items profit
before
exceptional
items
2010 2010 2010
Audited Audited Audited
US$m US$m US$m
Latin America 1,114 156 1,270
Europe 638 202 840
North America 12 - 12
Africa 313 3 316
Asia (34) - (34)
South Africa: Beverages 773 53 826
Corporate (197) 58 (139)
Group 2,619 472 3,091
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 intangible
before and joint assets
exceptional ventures` (excluding
items operating software) -
profit group and
before share of
exceptional associates`
items and joint
ventures`
2011 2011 2011 2011
Unaudited Unaudited Unaudited Unaudited
US$m US$m US$m US$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 (22) 108 6 92
South Africa: 997 206 1 1,204
- Beverages 997 70 - 1,067
- Hotels and - 136 1 137
Gaming
Corporate (147) - - (147)
Group 3,563 1,272 209 5,044
Operating Share of Amortisation EBITA
profit associates` of intangible
before and joint assets
exceptional ventures` (excluding
items operating software) -
profit group and
before share of
exceptional associates`
items and joint
ventures`
2010 2010 2010 2010
Audited Audited Audited Audited
US$m US$m US$m US$m
Latin America 1,270 - 116 1,386
Europe 840 3 29 872
North America 12 562 45 619
Africa 316 248 1 565
Asia (34) 98 7 71
South Africa: 826 180 1 1,007
- Beverages 826 59 - 885
- Hotels and - 121 1 122
Gaming
Corporate (139) - - (139)
Group 3,091 1,091 199 4,381
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:
2011 2010
Unaudited Audited
US$m US$m
Share of associates` and joint ventures` 1,272 1,091
operating profit (before exceptional items)
Share of associates` and joint ventures` (31) (18)
exceptional items
Share of associates` and joint ventures` net (35) (40)
finance costs
Share of associates` and joint ventures` (139) (118)
taxation
Share of associates` and joint ventures` non- (43) (42)
controlling interests
Share of post-tax results of associates and 1,024 873
joint ventures
Excise duties of US$4,263 million (2010: US$3,825 million) have been
incurred during the year as follows: Latin America US$1,639 million (2010:
US$1,517 million); Europe US$1,160 million (2010:
US$1,075 million); North America US$2 million (2010: US$2 million); Africa
US$324 million (2010: US$282 million); Asia US$219 million (2010: US$181
million) and South Africa US$919 million (2010: US$768 million). The group`s
share of MillerCoors` excise duties incurred during the year was US$719
million (2010: US$737 million).
The following table provides a reconciliation of EBITDA (the net cash
generated from operations before working capital movements) to adjusted
EBITDA. A reconciliation of profit for the year for the group to EBITDA for
the group can be found in note 10a.
EBITDA Cash Dividends Adjusted
exceptional received EBITDA
items from
MillerCoors
2011 2011 2011 2011
Unaudited Unaudited Unaudited Unaudited
US$m US$m US$m US$m
Latin America 1,853 103 - 1,956
Europe 1,021 125 - 1,146
North America 27 - 822 849
Africa 517 4 - 521
Asia 17 - - 17
South Africa: 1,143 42 - 1,185
Beverages
Corporate (76) 19 - (57)
Group 4,502 293 822 5,617
EBITDA Cash Dividends Adjusted
exceptional received EBITDA
items from
MillerCoors
2010 2010 2010 2010
Audited Audited Audited Audited
US$m US$m US$m US$m
Latin America 1,618 92 - 1,710
Europe 1,059 144 - 1,203
North America 15 - 707 722
Africa 409 3 - 412
Asia (3) - - (3)
South Africa: 942 42 - 984
Beverages
Corporate (66) 58 - (8)
Group 3,974 339 707 5,020
Capital Investment Total
expenditure activitySquared
excluding
investment
activity1
2011 2011 2011
Unaudited Unaudited Unaudited
US$m US$m US$m
Latin America 438 55 493
Europe 265 (2) 263
North America - 171 171
Africa 211 24 235
Asia 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 Investment Total
expenditure activitySquared
excluding
investment
activity1
2010 2010 2010
Audited Audited Audited
US$m US$m US$m
Latin America 357 (13) 344
Europe 346 8 354
North America - 317 317
Africa 524 84 608
Asia 48 36 84
South Africa: 210 63 273
- Beverages 210 - 210
- Hotels and Gaming - 63 63
Corporate 43 6 49
Group 1,528 501 2,029
Capital expenditure includes additions of intangible assets (excluding
goodwill) and property, plant and equipment.
2Investment activity includes acquisitions and disposals of businesses, net
investments in associates and joint ventures, purchases of shares in non-
controlling interests and purchases and disposals of available for sale
investments.
3. Exceptional items
2011 2010
Unaudited Audited
US$m US$m
Exceptional items included in operating
profit:
Business capability programme costs (296) (325)
Broad-Based Black Economic Empowerment (149) (11)
scheme costs
Profit on partial disposal of investment in 159 -
associate
Impairments (98) (45)
Integration and restructuring costs (52) (78)
Transaction costs - (13)
Net exceptional losses included within (436) (472)
operating profit
Exceptional items included in net finance
costs:
Business capability programme costs - (17)
Net exceptional losses included within net - (17)
finance costs
Share of associates` and joint ventures`
exceptional items:
Loss on transaction in associate (26) -
Integration and restructuring costs (5) (14)
Unwinding of fair value adjustments on - (4)
inventory
Share of associates` and joint ventures` (31) (18)
exceptional losses
Net taxation credits relating to 2 64
subsidiaries` and the group`s share of
associates` and joint ventures` exceptional
items
EXCEPTIONAL ITEMS INCLUDED IN OPERATING PROFIT
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$296 million have been incurred in the year (2010: US$325
million).
Broad-Based Black Economic Empowerment scheme costs
US$149 million (2010: US$11 million) of costs have been incurred in relation
to the Broad-Based Black Economic Empowerment (BBBEE) scheme in South
Africa. These were IFRS 2 share-based payment charges in relation to the
retailer and employee components of the scheme and the costs associated with
the scheme.
Profit on partial disposal of investment in associate
In February 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/Gold Reef Resorts Ltd (GRR) merger (see note 9 for
further details).
Impairments
During 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.
In 2010, an impairment charge of US$45 million was recorded in Latin America
in relation to property, plant and equipment following the announcement of
the closure of production facilities at the Bogota brewery in Colombia.
Integration and restructuring costs
During 2011, US$52 million of restructuring costs were incurred in Europe
including the closure of the Cluj brewery and associated restructuring in
Romania; retrenchments in the Netherlands; restructuring of distribution in
the Canary Islands; and costs associated with the intended disposal of the
in-house distribution business in Italy.
In 2010, in Europe US$64 million of integration and restructuring costs were
incurred in Romania, Poland, Slovakia, Italy, the Netherlands and the Canary
Islands; and US$14 million of restructuring costs were incurred in Colombia
in Latin America.
Transaction costs
In 2010, costs of US$13 million were incurred in relation to transaction
services and were treated as exceptional in the Corporate division.
EXCEPTIONAL ITEMS INCLUDED IN NET FINANCE COSTS
Business capability programme costs
In 2010, a charge of US$17 million was incurred to reflect differences on
the fair valuation of financial instruments as a result of the business
capability programme and resultant changes in treasury systems used and
their differing valuation methodologies.
Share of associates` and joint ventures` exceptional items
Loss on transaction in associate
During 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.
Integration and restructuring costs
During 2011, the group`s share of MillerCoors` integration and restructuring
costs was US$5 million, primarily related to severance costs (2010: US$14
million primarily related to relocation and severance costs).
Unwinding of fair value adjustments on inventory
In 2010, the group`s share of MillerCoors` charge to operating profit in the
year relating to the unwind of the fair value adjustment to inventory was
US$4 million.
TAXATION CREDITS
Net taxation credits of US$2 million (2010: US$64 million) arose in relation
to exceptional items during the year and include US$2 million (2010: US$7
million) in relation to MillerCoors although the tax credit is recognised in
Miller Brewing Company (see note 5).
4. Net finance costs
2011 2010
Unaudited Audited
US$m US$m
a. Interest payable and similar charges
Interest payable on bank loans and overdrafts 123 162
Interest payable on derivatives 163 216
Interest payable on corporate bonds 408 389
Interest element of finance leases payments 1 1
Net exchange gains on financing activities (14) (51)
Net exchange losses on dividends 9 -
Fair value losses on financial instruments:
- Fair value losses on dividend-related - 9
derivatives
- Fair value losses on standalone derivative 153 104
financial instruments
- Ineffectiveness of net investment hedges 4 8
Change in valuation methodology of financial - 17
instruments
Other finance charges 36 24
Total interest payable and similar charges 883 879
b. Interest receivable and similar income
Interest receivable 48 60
Interest receivable on derivatives 212 217
Fair value gains on financial instruments:
- Fair value gains on standalone derivative 92 28
financial instruments
- Fair value gains on dividend-related 6 -
derivatives
Net exchange gains on dividends - 9
Other finance income - 2
Total interest receivable and similar income 358 316
Net finance costs 525 563
These items have been excluded from the determination of adjusted earnings
per share. Adjusted net finance costs are therefore US$518 million (2010:
US$538 million).
5. Taxation
2011 2010
Unaudited Audited
US$m US$m
Current taxation 808 725
- Charge for the year (UK corporation tax: 817 755
US$11 million (2010: US$6 million))
- Adjustments in respect of prior years (9) (30)
Withholding taxes and other remittance taxes 101 77
Total current taxation 909 802
Deferred taxation 160 46
- Charge for the year (UK corporation tax: 183 71
US$nil (2010: US$nil))
- Adjustments in respect of prior years (16) (14)
- Rate change (7) (11)
Taxation expense 1,069 848
Tax (credit)/charge relating to components of
other comprehensive income is as follows:
Deferred tax credit on actuarial gains and (36) (10)
losses
Deferred tax charge on financial instruments 14 46
(22) 36
Effective tax rate (%) 28.2 28.5
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.
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
2011 2010
Unaudited Audited
US cents US cents
Basic earnings per share 152.8 122.6
Diluted earnings per share 151.8 122.1
Headline earnings per share 150.8 127.3
Adjusted basic earnings per share 191.5 161.1
Adjusted diluted earnings per share 190.3 160.4
The weighted average number of shares was:
2011 2010
Unaudited Audited
Millions of Millions of
shares shares
Ordinary shares 1,656 1,641
Treasury shares (72) (77)
EBT ordinary shares (8) (6)
Basic shares 1,576 1,558
Dilutive ordinary shares 10 6
Diluted shares 1,586 1,564
The calculation of diluted earnings per share excludes 9,045,847 (2010:
6,920,802) 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, 12,842,609 (2010: 10,485,166) share awards that were non-dilutive
for the year because the performance conditions attached to the share awards
have not been met and 732,869 shares in relation to the employee component
of the BBBEE scheme that were non-dilutive in the year. These share awards
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:
2011 2010
Unaudited Audited
US$m US$m
Profit for the year attributable to equity 2,408 1,910
holders of the parent
Headline adjustments
Impairment of business held for sale 53 -
Impairment of intangible assets 14 -
Impairment of property, plant and equipment 31 45
(Profit)/loss on disposal of property, (5) 39
plant and equipment
Profit on partial disposal of investment in (159) -
associate
Profit on disposal of available for sale - (2)
investments
Tax effects of the above items 14 (17)
Non-controlling interests` share of the 1 9
above items
Share of joint ventures` and associates` 20 -
other adjustments, net of tax and non-
controlling interests
Headline earnings 2,377 1,984
Business capability programme costs 296 342
Broad-Based Black Economic Empowerment 149 11
scheme costs
Integration and restructuring costs 52 41
Transaction costs - 13
Net loss on fair value movements on capital 7 8
items
Amortisation of intangible assets 158 150
(excluding capitalised software)
Tax effects of the above items (71) (101)
Non-controlling interests` share of the (10) (6)
above items
Share of joint ventures` and associates` 60 67
other adjustments, net of tax and non-
controlling interests
Adjusted earnings 3,018 2,509
This does not include all fair value movements but includes those in
relation to capital items for which hedge accounting cannot be applied.
7. Dividends
Dividends paid were as follows:
2011 2010
Unaudited Audited
Equity US$m US$m
2010 Final dividend paid: 51.0 US cents 806 654
(2009: 42.0 US cents) per ordinary share
2011 Interim dividend paid: 19.5 US cents 309 270
(2010: 17.0 US cents) per ordinary share
1,115 924
In addition, the directors are proposing a final dividend of 61.5 US cents
per share in respect of the financial year ended 31 March 2011, which will
absorb an estimated US$971 million of shareholders` funds. If approved by
shareholders, the dividend will be paid on 12 August 2011 to shareholders
registered on the London and Johannesburg registers on
5 August 2011.
8. Goodwill and intangible assets
Goodwill Intangible
assets
Unaudited Unaudited
US$m US$m
Net book amount
At 1 April 2009 8,716 3,742
Exchange adjustments 1,671 657
Arising on increase in share of subsidiary 1,125 -
undertakings
Additions - separately acquired - 93
Acquisitions - through business combinations 67 33
Amortisation - (203)
Transfers from property, plant and equipment - 32
At 31 March 2010 11,579 4,354
Exchange adjustments 332 101
Additions - separately acquired - 126
Acquisitions - through business combinations 41 7
Amortisation - (220)
Disposals - (1)
Impairment - (14)
Transfers from property, plant and equipment - 8
At 31 March 2011 11,952 4,361
As restated (see note 12).
GOODWILL
2011
Provisional goodwill arose on the acquisition through business combinations
in the year of Cerveceria Argentina S.A. Isenbeck (CASA Isenbeck) in
Argentina and Crown Foods Limited in Kenya (see note 11). The fair value
exercises in respect of these business combinations have yet to be
completed.
2010
Additional goodwill arose on the acquisition through business combinations
of Ambo Mineral Water Share Company in Ethiopia, Rwenzori Bottling Company
Ltd in Uganda, the maheu business in Zambia and Bere Azuga in Romania,
together with goodwill which arose on the increase in the group`s share of
subsidiary undertakings primarily related to the buyout of non-controlling
interests in Poland. The fair value exercises in respect of these business
combinations are now complete.
9. Investments in joint ventures and associates
Investments Investments
in joint in
ventures associates
US$m US$m
At 1 April 2009 (audited) 5,495 1,787
Exchange adjustments 11 90
Net increase in investments 353 73
Share of results retained 536 337
Share of gains recognised in other 134 2
comprehensive income
Dividends receivable (707) (109)
Transfer from other assets - 33
At 31 March 2010 (audited) 5,822 2,213
Exchange adjustments 12 136
Net increase in investments 186 100
Share of results retained 667 357
Share of (losses)/gains recognised in other (52) 2
comprehensive income
Dividends receivable (822) (89)
At 31 March 2011 (unaudited) 5,813 2,719
Following the effective `dollarisation` of the Zimbabwean economy in 2009,
the end of hyperinflation and the stabilisation of the Zimbabwean economy,
the group has included its share of the volumes and the results of its
Zimbabwean associate, Delta Corporation Limited, with effect from 1 April
2010.
The net increase in investments in associates in the current year includes
the impact of the following:
On 4 November 2010, Tsogo Sun Gaming (Pty) Ltd, a wholly owned subsidiary of
the group`s associate, Tsogo Sun, repaid the R490 million (US$68 million)
preference shares issued to SABSA Holdings (Pty) Ltd, a wholly owned
subsidiary of the group.
On 24 February 2011, the Tsogo Sun Group merged with GRR, a Johannesburg
Stock Exchange listed business, through an all share merger. The transaction
was effected through the acquisition by GRR of the group`s entire 49%
shareholding in Tsogo Sun in exchange for a 39.68% shareholding in the
listed enlarged entity and resulted in a profit of US$159 million on the
partial disposal of the group`s shareholding in Tsogo Sun and a loss of
US$26 million being the group`s share of the associate`s loss on the merger
transaction.
10a. Reconciliation of profit for the year to net cash generated from
operations
2011 2010
Unaudited Audited
US$m US$m
Profit for the year 2,557 2,081
Taxation 1,069 848
Share of post-tax results of associates and (1,024) (873)
joint ventures
Interest receivable and similar income (358) (316)
Interest payable and similar charges 883 879
Operating profit 3,127 2,619
Depreciation:
- Property, plant and equipment 665 655
- Containers 239 226
Container breakages, shrinkages and write- 24 40
offs
Profit on partial disposal of investment in (159) -
associate
(Profit)/loss on disposal of property, (5) 39
plant and equipment
Profit on disposal of available for sale - (2)
investments
Amortisation of advances to customers 28 28
Amortisation of intangible assets 220 203
Impairment of intangible assets 14 -
Impairment of property, plant and equipment 31 45
Impairment of working capital balances 82 34
Unrealised net loss from fair value hedges 1 1
Dividends received from other investments (1) (2)
Charge with respect to share options 99 80
Charge with respect to Broad-Based Black 147 -
Economic Empowerment scheme
Other non-cash movements (10) 8
Net cash generated from operations before 4,502 3,974
working capital movements (EBITDA)
Decrease in inventories 26 78
(Increase)/decrease in receivables (147) 48
Increase in payables 161 416
Increase in provisions 18 22
Increase/(decrease) in post-retirement 8 (1)
provisions
Net cash generated from operations 4,568 4,537
Profit for the year and cash generated from operations before working
capital movements includes cash flows relating to exceptional items of
US$293 million (2010: US$339 million), comprising US$283 million (2010:
US$301 million) in respect of business capability programme costs,
US$8 million (2010: US$15 million) in respect of integration and
restructuring costs, US$2 million (2010: US$11 million) in respect of BBBEE
scheme costs, and US$nil (2010: US$12 million) in respect of transaction
costs.
The following table provides a reconciliation of EBITDA to adjusted EBITDA.
2011 2010
Unaudited Unaudited
US$m US$m
EBITDA 4,502 3,974
Cash exceptional items 293 339
Dividends received from MillerCoors 822 707
Adjusted EBITDA 5,617 5,020
10b. Reconciliation of net cash from operating activities to free cash flow
2011 2010
Unaudited Unaudited
US$m US$m
Net cash generated from operating activities 3,043 3,277
Purchase of property, plant and equipment (1,189) (1,436)
Proceeds from sale of property, plant and 73 37
equipment
Purchase of intangible assets (126) (92)
Investments in joint ventures (186) (353)
Investments in associates (4) (63)
Repayment of investments by associates 68 3
Dividends received from joint ventures 822 707
Dividends received from associates 88 106
Dividends received from other investments 1 2
Dividends paid to non-controlling interests (102) (160)
Free cash flow 2,488 2,028
10c. Analysis of net debt
Cash and cash equivalents on the balance sheet are reconciled to cash and
cash equivalents on the cash flow as follows:
2011 2010
Unaudited Audited
US$m US$m
Cash and cash equivalents (balance sheet) 1,067 779
Cash and cash equivalents of disposal group 4 -
classified as held for sale
1,071 779
Overdrafts (258) (190)
Cash and cash equivalents (cash flow) 813 589
Net debt is analysed as follows:
2011 2010
Unaudited Audited
US$m US$m
Borrowings (8,193) (9,212)
Borrowings-related derivative financial 298 237
instruments
Overdrafts (258) (190)
Finance leases (9) (12)
Gross debt (8,162) (9,177)
Cash and cash equivalents (excluding 1,071 779
overdrafts)
Net debt (7,091) (8,398)
The movement in net debt is analysed as follows:
Cash and Overdrafts Borrowings Derivative Finance
cash financial leases
equivalents instruments
(excluding
overdrafts)
US$m US$m US$m US$m US$m
At 1 April 779 (190) (9,212) 237 (12)
2010
Exchange 8 17 (174) (3) -
adjustments
Cash flow 283 (72) 1,159 84 5
Acquisitions 1 (13) - - (1)
Other - - 34 (20) (1)
movements
At 31 March 1,071 (258) (8,193) 298 (9)
2011
Total Net debt
Gross
borrowings
US$m US$m
At 1 April (9,177) (8,398)
2010
Exchange (160) (152)
adjustments
Cash flow 1,176 1,459
Acquisitions (14) (13)
Other 13 13
movements
At 31 March (8,162) (7,091)
2011
The group has sufficient headroom to enable it to conform to covenants on
its existing borrowings. The group has sufficient undrawn financing
facilities to service its operating activities and ongoing capital
investment. The group had the following undrawn committed borrowing
facilities available at 31 March 2011 in respect of which all conditions
precedent had been met at that date:
2011 2010
Unaudited Audited
US$m US$m
Amounts expiring:
Within one year 967 441
Between one and two years 2,118 1,025
Between two and five years 79 2,112
In five years or more - 1
3,164 3,579
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. This
facility replaced the existing US$2,000 million and US$600 million committed
syndicated facilities, which were both voluntarily cancelled and which are
shown in the table above as expiring between one and two years and within
one year, respectively.
The group`s net debt is denominated in the following currencies:
US SA rand Euro Colombian Other Total
dollars peso currencies
US$m US$m US$m US$m US$m US$m
Total cash 609 30 111 96 225 1,071
and cash
equivalents
Total gross (4,334) (290) (1,482) (1,202) (854) (8,162)
borrowings
(3,725) (260) (1,371) (1,106) (629) (7,091)
Cross 1,089 (413) (116) - (560) -
currency
swaps
At 31 March (2,636) (673) (1,487) (1,106) (1,189) (7,091)
2011
(unaudited)
Total cash 352 134 49 48 196 779
and cash
equivalents
Total gross (5,094) (526) (1,403) (1,253) (901) (9,177)
borrowings
(4,742) (392) (1,354) (1,205) (705) (8,398)
Cross 2,124 (384) (569) (557) (614) -
currency
swaps
At 31 March (2,618) (776) (1,923) (1,762) (1,319) (8,398)
2010
(audited)
11. Business combinations
Acquisitions
The following business combinations took effect during the year:
On 24 November 2010 the group acquired a 100% interest in CASA Isenbeck, the
third largest brewer in Argentina, for a cash consideration of
US$38 million.
On 30 November 2010 the group acquired an 80% effective interest in Crown
Foods Limited, a mineral water and juice business in Kenya, for a cash
consideration of US$7 million.
Goodwill arising on the above business combinations of US$41 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, and the assembled workforce.
12. Balance sheet restatements
The initial accounting under IFRS 3, `Business Combinations`, for the maheu
and Rwenzori acquisitions had not been completed as at 31 March 2010. During
the year ended 31 March 2011, adjustments to provisional fair values in
respect of these acquisitions were made which resulted in goodwill
decreasing by US$5 million to US$11,579 million, trade and other payables
increasing by US$1 million to US$3,228 million and total equity decreasing
by US$6 million to US$20,593 million. As a result comparative information
for the year ended 31 March 2010 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.
13. Share capital
During the year ended 31 March 2011 4,290,162 ordinary shares (2010:
9,382,883 ordinary shares) were allotted and issued in accordance with the
group`s share purchase, option and award schemes.
In May 2009 60 million ordinary shares were issued as consideration for the
purchase of the 28.1% non-controlling interest in the Polish business.
14. Post balance sheet events
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. This
facility replaced the existing US$2,000 million and US$600 million committed
syndicated facilities, which were both voluntarily cancelled.
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 joint ventures` and
associates` adjustments for similar items. The tax and non-controlling
interests in respect of these items are also adjusted.
ADJUSTED EBITDA
This comprises EBITDA 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 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.
The definition of free cash flow has been refined to exclude the purchase of
shares from non-controlling interests and net investments in associates and
joint ventures which result in a change in the group`s effective ownership
percentage, as these are deemed to be discretionary expenditure.
Comparatives have been restated accordingly.
GROUP REVENUE
This comprises revenue together with the group`s share of revenue from
associates and joint ventures.
HEADLINE EARNINGS
Headline earnings are calculated by adjusting profit for the financial
period attributable to equity holders of the parent for items in accordance
with the South African Circular 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.
This announcement does not constitute an offer to sell or issue or the
solicitation of an offer to buy or acquire ordinary shares in the capital of
SABMiller plc (the "company") or any other securities of the company in any
jurisdiction or an inducement to enter into investment activity.
This announcement includes `forward-looking statements` with respect to
certain of SABMiller plc`s plans, current goals and expectations relating to
its future financial condition, performance and results. These statements
contain the words "anticipate", "believe", "intend", "estimate", "expect"
and words of similar meaning. All statements other than statements of
historical facts included in this announcement, including, without
limitation, those regarding the company`s financial position, business
strategy, plans and objectives of management for future operations
(including development plans and objectives relating to the company`s
products and services) are forward-looking statements. Such forward-looking
statements involve known and unknown risks, uncertainties and other
important factors that could cause the actual results, performance or
achievements of the company to be materially different from future results,
performance or achievements expressed or implied by such forward-looking
statements. Such forward-looking statements are based on numerous
assumptions regarding the company`s present and future business strategies
and the environment in which the company will operate in the future. These
forward-looking statements speak only as at the date of this 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.
SABMiller plc
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 7822 4652
Telephone +44 20 7583 5000
Registrar (United Kingdom)
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent, England
BR3 4TU
Facsimile +44 20 8658 2342
Telephone +44 20 8639 3399 (outside UK)
Telephone 0871 664 0300 (from UK calls cost 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: 19/05/2011 08:00:42 Supplied by www.sharenet.co.za
Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
