Wrap Text
Annual Financial Report
SABMiller plc
JSEALPHA CODE: SAB
ISIN CODE: SOSAB
ISIN CODE: GB0004835483
Annual Financial Report
SABMiller plc has today submitted a copy of the 2014 Annual Report and Accounts,
Notice of the 2014 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, 24 July 2014 at
the InterContinental London Park Lane, One Hamilton Place, Park Lane, London
W1J 7QY.
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 22 May 2014. That information, together with the information set out below, which
is extracted from the 2014 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 2014 Annual Report. Page numbers and cross-
references in the extracted information below refer to page numbers and sections in
the 2014 Annual Report.
PRINCIPAL RISKS AND UNCERTAINTIES (page 18 & 19)
Principal risks
Focused on managing our risks
The principal risks facing the group and considered by the board are detailed below.
The group’s well-developed risk management process is described in the corporate
governance section while financial risks are discussed in the Chief Financial Officer’s
review on page 39 and in note 21 to the consolidated financial statements.
Principal risk Context Specific risks Possible impact Mitigation Associated
we face strategic
elements
Industry The global • Failing to Lower growth rate, • Continued competitor • Retaining a
consolidation brewing and participate in the profitability and and target analysis to broad portfolio of
beverages right financial returns. consider strategic and operations.
industry is opportunities. financial implications of • Creating superior
expected to • Paying too potential transactions. revenue growth
continue to much to acquire • Potential transactions are and profitability for
consolidate. a business. subject to continual and our investors.
There will • Not rigorous analysis. Only
continue to be implementing opportunities with potential
opportunities to integration plans to create value are
enter attractive successfully. pursued.
growth markets, • Failing to • Proven integration
to realise identify and processes, procedures
synergy benefits develop the and practices are applied
from integration capabilities to ensure delivery of
and to leverage necessary to expected returns.
our global scale. facilitate market • Activities to deliver
and category synergies and leverage
entry. scale are in place,
monitored closely and
continuously enhanced.
• Developing non-
traditional capabilities to
enter and grow profitably
in new markets.
Change in Consumer • Failing to Market positions • Ongoing evaluation of • Offering beers
consumer tastes and develop and come under our brand portfolios in and soft drinks
preferences behaviours are ensure the pressure, market every market to ensure that appeal to
constantly strength and opportunities are that they target current local tastes.
evolving, and at relevance of our missed, lower top and future opportunities • Creating superior
an increasingly brands with line growth rates for profitable growth. revenue growth
rapid rate. consumers, and profitability. • Developing a beer and profitability for
Competition in shoppers and category structure that our investors.
the beverage customers. enables us to grow both • Producing
industry is • Failing to the value of the beer economies of
expanding and continue to category, and our share of scale and skill.
becoming more improve our it.
fragmented, commercial • Ensuring we have deep
complex and capabilities to understanding of changing
sophisticated. deliver brand consumer and industry
propositions dynamics in key markets,
which respond enabling us to respond
appropriately to appropriately to
changing opportunities and issues
consumer which may impact our
preferences. business performance.
• Building our brand
equities through
innovation and compelling
marketing programmes;
creating a pipeline of
opportunities to support
our premium offering.
• Focus on monitoring and
benchmarking commercial
performance and
developing the critical
commercial capabilities
that are required in order
to win in local markets.
Management We believe that • Failing to Failure to deliver • Building the group’s • Offering beers
capability our people are identify, develop the group’s leadership talent pipeline and soft drinks
our enduring and retain an strategic and through our Global Talent that appeal to
advantage and appropriate financial Management model, local tastes.
therefore it is pipeline of ambitions. strategic people • Creating superior
essential that we talented resourcing and long-term revenue growth
develop and managers for Lower long-term talent pipeline. and profitability for
maintain global the present and profitable growth. • Sustaining a strong our investors.
management future needs of culture of accountability, • Producing
capability. the group. empowerment and economies of
personal development. scale and skill.
Regulatory With an • Regulation Lower growth, • Rigorous adherence to • Retaining a
changes increasingly high places profitability and the principle of self- broad portfolio of
profile debate increasing reduced regulation backed by operations.
over alcohol restrictions on contribution to appropriate policies and • Offering beers
consumption in the availability local communities management review. and soft drinks
many markets, and marketing of in some countries. • Building licence to trade that appeal to
the alcohol beer. capabilities across the local tastes.
industry is • Tax and excise Loss of consumer group to facilitate sound • Creating real and
coming under changes cause goodwill and risk analysis and lasting economic
more pressure pressure on public sentiment. mitigation plan and social benefits
from national pricing. development. in communities.
and international • Anti-alcohol • Constructive
regulators, advocates erode engagement with
NGOs and local industry government and all
governments. reputation. external stakeholders on
alcohol-related issues.
Working collaboratively
with them to address the
harmful use of alcohol.
• Investment to improve
the economic and social
impact of our businesses
in local communities and
working in partnership with
local governments and
NGOs.
Acquisition A key aspect of • Failing to Lower growth • Embedding of the • Retaining a
of Foster’s the Foster’s deliver rates and SABMiller Ways (its broad portfolio of
acquisition was integration profitability. processes, systems and operations.
the delivery of a objectives and tools) throughout the • Offering beers
turnaround plan commercial and Damage to the Foster’s business. and soft drinks
with specific and operational group’s reputation • Commercial efforts in that appeal to
communicated excellence for strong market to effectively local tastes.
financial value targets commercial deliver volume, value and • Creating superior
creation. communicated capability and for market share gains. revenue growth
as part of the making value • Continued monitoring of and profitability for
turnaround plan. creating progress against the our investors.
• Failing to acquisitions. integration plan, including • Producing
achieve the frequent and regular economies of
synergy and tracking of key scale and skill.
cost saving performance indicators.
commitments of
the transaction.
Delivering We continue to • Failing to Increased • Senior leadership closely • Creating superior
business execute major derive the programme costs, involved in monitoring revenue growth
transformation efficiency expected delays in benefit progress and in making and profitability for
programmes benefits from the realisation, key decisions. our investors.
that will simplify projects business • Mechanisms in place to • Producing
processes, currently under disruption, track both costs and economies of
reduce costs way. reputational benefits. scale and skill.
and allow local • Failing to damage, reduced • Rigorous programme
management contain competitive management and
teams to focus programme advantage in the governance processes
more closely on costs or ensure medium term. with dedicated resources
their markets. execution is in and clear accountability.
line with planned
timelines.
Information There is • Disruption of Loss of • Continued articulation • Producing
and cyber increasing information competitive and implementation of economies of
security sophistication of technology (IT) advantage and information security scale and skill.
cyber-attack systems and a reputational policies. • Creating superior
capabilities. loss of valuable damage through • Increased investment to revenue growth
Business’s and sensitive the publicised loss improve information and profitability for
increasing information and of key operating security awareness, our investors
demand for assets. systems and intelligence and
consumers’ and • Significant confidential data. implementation of sound
customers’ business security processes.
personal data disruption. Adverse effect of • Building and enhancing
means • Failing to profitability, cash processes to deal with IT
legislators rightly comply with flows or financial security incidents.
continue to tightening position.
impose tighter legislation poses
data a threat of
management significant
control. financial
penalties or
restrictions.
RELATED PARTY TRANSACTIONS
Note 32 to the consolidated financial statements on page 158 details the
following related party transactions.
32. Related party transactions
a. Parties with significant influence over the group: Altria Group, Inc (Altria)
and the Santo Domingo Group (SDG)
Altria is considered to be a related party of the group by virtue of its 26.8% equity
shareholding in SABMiller plc. There were no transactions with Altria during the year.
SDG is considered to be a related party of the group by virtue of its 14.0% equity
shareholding in SABMiller plc. During the year Bavaria SA and its subsidiaries made
donations of US$14 million (2013: US$nil) to the Fundación Mario Santo Domingo,
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 Fundación Mario Santo
Domingo. At 31 March 2014 US$nil (2013: US$nil) was owing to the SDG.
b. Associates and joint ventures
Details relating to transactions with associates and joint ventures are analysed
below.
2014 2013
US$m US$m
Purchases from associates1 (168) (227)
Purchases from joint ventures2 (93) (97)
Sales to associates3 9 46
Sales to joint ventures4 23 25
Dividends receivable from associates5 224 113
Dividends received from joint ventures6 903 886
Royalties received from associates7 25 27
Royalties received from joint ventures8 2 2
Management fees, guarantee fees and other recoveries received from associates9 11 17
Management fees paid to joint ventures10 (2) (2)
Sale of associate to joint venture11 - 21
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 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, Delta Corporation Ltd (Delta), Anadolu Efes Biracilik ve Malt Sanayii
AS (Anadolu Efes), and Distell.
4 The group made sales to MillerCoors.
5 The group had dividends receivable from Société des Brasseries et Glacières Internationales SA, Brasseries
Internationales Holding Ltd, and Morrocaine d’Investissements et de Services SA (Castel) of US$97 million (2013:
US$21 million), Coca-Cola Canners US$5 million (2013: US$11 million), Distell US$20 million (2013: US$21 million),
Tsogo Sun US$34 million (2013: US$33 million), Delta US$17 million (2013: US$12 million), International Trade and
Supply Limited $18 million (2013: US$14 million), Grolsch (UK) Ltd US$1 million (2013: US$1 million) and Anadolu
Efes US$32 million (2013: US$nil).
6 The group received dividends from MillerCoors.
7 The group received royalties from Delta and Anadolu Efes.
8 The group received royalties from MillerCoors.
9 The group received management fees from Delta, guarantee fees from Delta and BIH Brasseries Internationales
Holding (Angola) Ltd (BIH Angola), and other recoveries from AFP.
10 The group paid management fees to MillerCoors.
11 In 2013 the group sold its interest in Foster’s USA LLC to MillerCoors for cash consideration.
At 31 March 2014 2013
US$m US$m
Amounts owed by associates – trade1 42 68
Amounts owed by joint ventures2 5 5
Amounts owed to associates3 (39) (150)
Amounts owed to joint ventures4 (16) (14)
1 Amounts owed by AFP, Delta and Anadolu Efes and BIH Angola.
2 Amounts owed by MillerCoors.
3 Amounts owed to Coca-Cola Canners, Castel and Tsogo Sun. At 31 March 2013 this balance included US$100
million received in compensation for the loan participation deposit relating to the Angolan businesses managed by
Castel.
4 Amounts owed to MillerCoors.
Guarantees provided in respect of associates’ bank facilities are detailed in note 21.
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 2014 there were 25 (2013:
26) members of key management. Key management compensation is provided in
note 6c.
DIRECTORS’ RESPONSIBILITY STATEMENT IN RESPECT OF THE
CONSOLIDATED FINANCIAL STATEMENTS (page 88)
The directors are responsible for preparing the annual report, the directors’
remuneration report and the financial statements in accordance with applicable law
and regulations.
Company law requires the directors to prepare 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, and the parent company financial statements in accordance
with United Kingdom Generally Accepted Accounting Practice (United Kingdom
Accounting Standards) and applicable law.
Under company law the directors must not approve the consolidated financial
statements unless they are satisfied that they give a true and fair view of the state of
affairs of the group and company and of the profit or loss of the group for that period.
In preparing those financial statements, the directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and accounting estimates that are reasonable and prudent;
- state whether IFRSs as adopted by the European Union and applicable UK
Accounting Standards have been followed, subject to any material departures
disclosed and explained in the group and parent company financial statements
respectively;
- prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the group and the company will continue in
business.
The directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the transactions of the company and group and
disclose with reasonable accuracy at any time the financial position of the company
and group and enable them to ensure that the company and consolidated financial
statements and the directors’ remuneration report comply with the Companies Act
2006 and, as regards the consolidated financial statements, Article 4 of the IAS
Regulation. They are also responsible for safeguarding the assets of the company
and the group and hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
A copy of the consolidated and company financial statements is placed on the
company’s website. The directors are responsible for the maintenance and integrity
of the statutory and audited information on the company’s website. Legislation in the
United Kingdom governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
The directors consider that the annual report and accounts, taken as a whole, is fair,
balanced and understandable and provides the information necessary for
shareholders to assess the group’s performance, business model and strategy.
Each of the directors, whose names and functions are listed on pages 46 and 47 of
this annual report, confirm that, to the best of their knowledge:
- the consolidated financial statements, which have been prepared in accordance
with IFRSs as adopted by the EU, the Companies Act 2006 and Article 4 of the
IAS Regulation, give a true and fair view of the assets, liabilities, financial position
and profit of the group; and
- the management report contained in this 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.
The directors in office at the date of this report have each confirmed that:
- so far as the director is aware, there is no relevant audit information of which the
group’s auditors are unaware; and
- he or she has taken all the steps he or she ought to have taken as a director in
order to make himself or herself aware of any relevant audit information and to
establish that the group’s auditors are aware of that information.
John Davidson
General Counsel and Group Company Secretary
24 June 2014
Sponsor:
J.P. Morgan Equities South Africa (Pty) Ltd
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 or its subsidiaries or associates in any jurisdiction or an inducement
to enter into investment activity.
This announcement is intended to provide information to shareholders. It should not be relied
upon by any other party or for any other purpose. This announcement includes ‘forward-
looking statements’ with respect to certain of SABMiller plc’s plans, current goals and
expectations relating to its future financial condition, performance and results. These
statements contain the words ‘anticipate’, ‘believe’, ‘intend’, ‘estimate’, ‘expect’ and words of
similar meaning. All statements other than statements of historical facts included in this
announcement, including, without limitation, those regarding the company’s financial position,
business strategy, plans and objectives of management for future operations (including
development plans and objectives relating to the company’s products and services) are
forward-looking statements. Such forward-looking statements involve known and unknown
risks, uncertainties and other important factors that could cause the actual results,
performance or achievements of the company to be materially different from future results,
performance or achievements expressed or implied by such forward-looking statements.
Such forward-looking statements are based on numerous assumptions regarding the
company’s present and future business strategies and the environment in which the company
will operate in the future. These forward-looking statements speak only as at the date of this
announcement. 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 global efficiency programmes; 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.
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