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SAB - SABMiller plc - Annual financial report
SABMiller plc
JSEALPHA CODE: SAB
ISSUER CODE: SOSAB
ISIN CODE: GB0004835483
26 June 2012
Annual Financial Report
SABMiller plc has today submitted a copy of the 2012 Annual Report and
Accounts, Notice of the 2012 Annual General Meeting and Shareholder Proxy
Form (UK) to the National Storage Mechanism and they will shortly be
available for inspection at www.hemscott.com/nsm.do.
The Annual Report and Notice of Annual General Meeting are also available on
the Company`s website www.sabmiller.com
SABMiller plc`s Annual General Meeting will be held on Thursday, 26 July 2012
at Pennyhill Park Hotel, London Road, Bagshot, Surrey GU19 5EU.
A condensed set of SABMiller`s financial statements and information on
important events that have occurred during the financial year and their
impact on the financial statements were included in SABMiller`s preliminary
results announcement released on 24 May 2012. That information, together with
the information set out below, which is extracted from the 2012 Annual
Report, constitutes the material required by Disclosure and Transparency Rule
6.3.5 to be communicated to the media in unedited full text through a
Regulatory Information Service. This announcement is not a substitute for
reading the full 2012 Annual Report. Page numbers and cross-references in the
extracted information below refer to page numbers and sections in the 2012
Annual Report.
PRINCIPAL RISKS AND UNCERTAINTIES (page 22 & 23)
Principal risks
Monitoring and managing the risks we face
The principal risks facing the group and considered by the board are detailed
below. The group`s comprehensive risk management process is described in the
corporate governance section while financial risks are discussed in the Chief
Financial Officer`s review and in note 23 to the consolidated financial
statements.
Principa Context Specific Possible Mitigation Associat
l risk risks we impact ed
face strategi
c
prioriti
es
Industry The Failing Lower Potential
consolid global to growth transactions Creating
ation brewing particip rate, are subject a
and ate in profitab to rigorous balanced
beverage value- ility analysis. and
s adding and Only attracti
industry transact financia opportunitie ve
is ions. l s with global
expected Paying returns. potential to spread
to too much create value of
continue to are pursued. business
to acquire Proven es.
consolid a integration
ate. business processes, Constant
There . procedures ly
will Not and raising
continue implemen practices the
to be ting are applied profitab
opportun integrat to ensure ility of
ities to ion delivery of local
enter plans expected business
attracti successf returns. es,
ve ully. Activities sustaina
growth to deliver bly.
markets, synergies
to and leverage
realise scale are in
synergy place,
benefits monitored
from closely and
integrat continuously
ion and enhanced.
to Develop non-
leverage traditional
our capabilities
global to enter and
scale. grow
profitably
in new
markets.
Change Consumer Failing Market Ongoing Developi
in tastes to position evaluation ng
consumer and ensure s come of our brand strong,
preferen behaviou the under portfolios relevant
ces rs are strength pressure in every brand
constant and , lower market to portfoli
ly relevanc top-line ensure that os that
evolving e of our growth they target win in
, and at brands rates current and the
an with and future local
increasi consumer profitab opportunitie market.
ngly s and ility. s for
rapid customer profitable Constant
rate. s. growth. ly
Competit Failing Building raising
ion in to our brand the
the respond equities profitab
beverage in an through ility of
industry adequate innovation local
is and and business
expandin timely compelling es,
g and manner marketing sustaina
becoming to programmes. bly.
more rapidly Ensuring we
fragment changing have deep Leveragi
ed, consumer understandin ng our
complex preferen g of skills
and ces and changing and
sophisti behaviou consumer and global
cated. rs. industry scale.
Failing dynamics in
to key markets,
continue enabling us
to to respond
improve appropriatel
our y to issues
commerci which may
al impact our
capabili business
ties to performance.
deliver Continued
brand enhancement
proposit of the
ions SABMiller
that Marketing
meet Way which
consumer sets out the
, best-
shopper practice
and approach for
customer our
needs. commercial
processes.
Focus on
monitoring
and
benchmarking
commercial
performance
and
developing
the critical
commercial
capabilities
that are
required in
order to win
in local
markets.
Manageme We Failing Lower Further
nt believe to long- develop our Developi
capabili that our identify term leadership ng
ty people , profitab talent strong,
are our develop le pipeline relevant
enduring and growth. through our brand
advantag retain a Global portfoli
e and sufficie Talent os that
therefor nt Management win in
e it is pipeline model and the
essentia of strategic local
l that talented people market.
we managers resourcing.
develop for the Sustaining Constant
and present a strong ly
maintain and culture of raising
global future accountabili the
manageme needs of ty, profitab
nt the empowerment ility of
capabili group. and personal local
ty. development. business
es,
Standardisat sustaina
ion of key bly.
processes
and best Leveragi
practices ng our
across the skills
group and
through the global
roll-out of scale.
the
SABMiller
Ways.
Recognising
strong
performance
through
appropriate
reward
structures.
Regulato With Lower Rigorous
ry increasi Regulati growth, adherence to Creating
changes ng and on profitab the a
high- places ility principle of balanced
profile increasi and self- and
debate ng contribu regulation attracti
over restrict tion to backed by ve
alcohol ions on local appropriate global
consumpt the communit policies and spread
ion in availabi ies in management of
many lity and some review. business
markets, marketin countrie es.
the g of s. Constructive
alcohol beer. engagement Developi
industry Tax and with ng
is excise government strong,
coming changes and all relevant
under cause external brand
increasi pressure stakeholders portfoli
ng on on alcohol- os that
pressure pricing. related win in
from issues. the
national Investment local
and to improve market.
internat the economic
ional and social Constant
regulato impact of ly
rs, NGOs our raising
and tax businesses the
authorit in local profitab
ies. communities ility of
and working local
in business
partnership es,
with local sustaina
governments bly.
and NGOs.
Acquisit Followin Failing Lower Embedding Creating
ion g the to growth of the a
of Foster`s deliver rates SABMiller balanced
Foster`s acquisit integrat and Ways and
ion, we ion profitab (processes, attracti
have objectiv ility. systems and ve
committe es and Damage tools) global
d to commerci to our throughout spread
deliveri al and reputati the Foster`s of
ng an operatio on for business. business
integrat nal strong Ongoing es.
ion plan excellen commerci monitoring
with ce al of progress Developi
value targets capabili versus the ng
creation communic ty and integration strong,
defined ated as for plan, relevant
by part of making including brand
specific the value- frequent and portfoli
, integrat creating regular os that
communic ion acquisit tracking of win in
ated plan. ions. key the
medium- Failing performance local
term to indicators. market.
targets, achieve
synergie the Constant
s and synergy ly
cost and cost raising
savings saving the
from the commitme profitab
Foster`s nts of ility of
business the local
. transact business
ion. es,
sustaina
bly.
Leveragi
ng our
skills
and
global
scale.
Deliveri The Failing Increase Senior
ng group to d leadership Constant
business continue derive programm closely ly
transfor s to the e costs, involved in raising
mation execute expected delays monitoring the
a major benefits in progress and profitab
business from the benefit in making ility of
capabili projects realisat key local
ty currentl ion, decisions. business
programm y under business Mechanisms es,
e that way. disrupti in place to sustaina
will Failing on. track both bly.
simplify to costs and
processe contain benefits. Leveragi
s, programm Rigorous ng our
reduce e costs programme skills
costs or management and
and ensure and global
allow executio governance scale.
local n is in processes
manageme line with
nt teams with dedicated
to focus planned resources
more timeline and clear
closely s. accountabili
on their ty.
markets.
RELATED PARTY TRANSACTIONS
Note 33 to the consolidated financial statements on page 160 details the
following related party transactions.
33. Related party transactions
a. Parties with significant influence over the group: Altria Group, Inc.
(Altria) and the Santo Domingo Group (SDG)
Altria is considered to be a related party of the group by virtue of its
27.0% equity shareholding. There were no transactions with Altria during the
year.
SDG is considered to be a related party of the group by virtue of its 14.1%
equity shareholding in SABMiller plc. During the year the group made a
donation of US$33 million to the Fundacion Mario Santo Domingo (2011: US$32
million), pursuant to the contractual arrangements entered into at the time
of the Bavaria transaction in 2005, under which it was agreed that the
proceeds of the sale of surplus non-operating property assets owned by
Bavaria SA and its subsidiaries would be donated to various charities,
including the Fundacion Mario Santo Domingo. At 31 March 2012 US$nil (2011:
US$nil) was owing to the SDG.
b. Associates and joint ventures
Details relating to transactions with associates and joint ventures are
analysed below.
2012 2011
US$m US$m
Purchases from associates1 (214) (211)
Purchases from joint ventures2 (86) (75)
Sales to associates3 39 36
Sales to joint ventures4 28 31
Dividends receivable from associates5 150 89
Dividends received from joint ventures6 896 822
Royalties received from associates7 13 7
Royalties received from joint ventures8 2 2
Management fees and other recoveries 24 10
received from associates9 (1) (2)
Management and guarantee fees paid to
joint ventures10
1 The group purchased canned Coca-Cola products for resale from Coca-Cola
Canners of Southern Africa (Pty) Limited (Coca-Cola Canners); inventory from
Distell Group Ltd (Distell) and Associated Fruit Processors (Pty) Ltd (AFP);
and accommodation from Tsogo Sun Holdings (Pty) Ltd (Tsogo Sun), all in South
Africa.
2 The group purchased lager from MillerCoors LLC (MillerCoors).
3 The group made sales of lager to Tsogo Sun, Empresa de Cervejas N`Gola SARL
(ECN), Societe des Brasseries et Glacieres Internationales and Brasseries
Internationales Holding Ltd (Castel), Delta Corporation Ltd (Delta) and
Distell.
4 The group made sales to MillerCoors and Pacific Beverages.
5 The group had dividends receivable from Castel of US$61 million (2011:
US$39 million), Kenya Breweries Ltd US$9 million (2011: US$14 million),
Coca-Cola Canners US$6 million (2011: US$5 million), Distell US$22 million
(2011: US$21 million), Tsogo Sun US$41 million (2011: US$3 million), ECN
US$nil (2011: US$3 million), Delta US$3 million (2011: US$2 million), Grolsch
(UK) Ltd of US$2 million (2011: US$2 million) and International Trade and
Supply Limited of US$6 million (2011: US$nil).
6 The group received dividends from MillerCoors.
7 The group received royalties from Delta, Kenya Breweries Ltd and Anadolu
Efes.
8 The group received royalties from MillerCoors and Pacific Beverages.
9 The group received management fees from ECN and Delta, and other recoveries
from AFP.
10 The group paid management fees to MillerCoors.
At 31 March 2012 2011
US$m US$m
Amounts owed by associates - trade1 145 12
Amounts owed by associates - loans2 60 -
Amounts owed by joint ventures3 6 5
Amounts owed to associates4 (42) (24)
Amounts owed to joint ventures5 (17) (16)
1 Amounts owed by AFP, Delta, BIH Angola and Anadolu Efes.
2 Amounts owed by BIH Angola.
3 Amounts owed by MillerCoors and in the prior year also Pacific Beverages.
4 Amounts owed to Coca-Cola Canners and Tsogo Sun.
5 Amounts owed to MillerCoors.
Amounts owed by associates include balances with BIH Angola and Anadolu Efes
which were previously intra-group balances with former group subsidiaries in
Angola, Russia and Ukraine.
c. Transactions with key management
The group has a related party relationship with the directors of the group
and members of the excom as key management. At 31 March 2012 there were 27
(2011: 24) members of key management. Key management compensation is provided
in note 6c.
DIRECTORS` RESPONSIBILITY STATEMENT IN RESPECT OF THE CONSOLIDATED FINANCIAL
STATEMENTS (page 84)
The directors are responsible for preparing the consolidated financial
statements in accordance with applicable law and regulations.
Company law requires the directors to prepare consolidated financial
statements for each financial year. The directors have prepared the
consolidated financial statements in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the European Union. The
consolidated financial statements are required by law to give a true and fair
view of the state of affairs of the group and of the profit or loss of the
group for that year.
In preparing those financial statements, the directors are required to:
* select suitable accounting policies and then apply them consistently;
* make judgements and estimates that are reasonable and prudent;
* state that the financial statements comply with IFRSs as adopted by the
European Union; and
* prepare the consolidated financial statements on the going concern basis,
unless it is inappropriate to presume that the group will continue in
business, in which case there should be supporting assumptions or
qualifications as necessary.
The directors confirm that they have complied with the above requirements in
preparing the financial statements.
The directors are responsible for keeping adequate accounting records that
disclose with reasonable accuracy at any time the financial position of the
group and to enable them to ensure that the consolidated financial statements
comply with the Companies Act 2006 and Article 4 of the IAS Regulation. They
are also responsible for safeguarding the assets of the group and hence for
taking reasonable steps for the prevention and detection of fraud and other
irregularities.
Each of the directors, whose names and functions are listed in the Governance
section of the Annual Report, confirms that, to the best of their knowledge:
* the consolidated financial statements, which have been prepared in
accordance with IFRSs as adopted by the EU, give a true and fair view of the
assets, liabilities, financial position and profit of the group; and
* the directors` report contained in the Governance section of the Annual
Report includes a fair review of the development and performance of the
business and the position of the group, together with a description of the
principal risks and uncertainties that it faces.
In addition, the Companies Act 2006 requires directors to provide the group`s
auditors with every opportunity to take whatever steps and undertake whatever
inspections the auditors consider to be appropriate for the purpose of
enabling them to give their audit report. Each of the directors, having made
appropriate enquiries, confirms that:
* so far as the director is aware, there is no relevant audit information of
which the group`s auditors are unaware; and
* each director has taken all the steps that they ought to have taken as a
director in order to make themselves aware of any relevant audit information
and to establish that the group`s auditors are aware of that information.
The directors have reviewed the group`s budget and cash flow forecasts. On
the basis of this review, and in the light of the current financial position
and existing borrowing facilities, the directors are satisfied that SABMiller
plc is a going concern and have continued to adopt the going concern basis in
preparing the financial statements.
A copy of the financial statements of the group is placed on the company`s
website. The directors are responsible for the maintenance and integrity of
statutory and audited information on the company`s website. Information
published on the internet is accessible in many countries with different
legal requirements. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
John Davidson
General Counsel and Group Company Secretary
This document 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 document is intended to provide information to shareholders. It should
not be relied upon by any other party or for any other purpose. This document
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
document, 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 forwardlooking
statements. Such forward-looking statements are based on numerous assumptions
regarding the company`s present and future business strategies and the
environment in which the company will operate in the future. These forward-
looking statements speak only as at the date of this document. Factors which
may cause differences between actual results and those expected or implied by
the forward-looking statements include, but are not limited to: material
adverse changes in the economic and business conditions in the markets which
SABMiller operates; increased competition
and consolidation within the global brewing and beverages industry; changes
in consumer preferences; changes to the regulatory environment; failure to
deliver the integration and cost-saving objectives in relation to the
Foster`s acquisition; failure to derive the expected benefits from the
business capability programme; and fluctuations in foreign currency exchange
rates and interest rates. The company expressly disclaims any obligation or
undertaking to disseminate any updates or revisions to any forward-looking
statements contained herein to reflect any change in the company`s
expectations with regard thereto or any change in events, conditions or
circumstances on which any such statement is based. The past business and
financial performance of SABMiller plc is not to be relied on as an
indication of its future performance.
Date: 26/06/2012 12:30:01 Supplied by www.sharenet.co.za
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