RNS Number : 0908O
23 June 2010

23 June 2010


SABMiller plc


Annual Financial Report



SABMiller plc has today submitted copies of the 2010 Annual Report and Accounts, Notice of the 2010 Annual General Meeting, Shareholder Proxy Form (UK) and proposed new Articles of Association to the Financial Services Authority. These will shortly be available for inspection at the UK Listing Authority's Document Viewing Facility which is situated at:


Financial Services Authority

25 The North Colonnade

Canary Wharf


E14 5HS


The Annual Report and Notice of Annual General Meeting are also available on the Company's website www.sabmiller.com 


It is proposed that at the Annual General Meeting on 22 July 2010 the Company adopts new Articles of Association. A summary of the material differences between the current articles of association and the proposed new articles of association is set out in the Notice of the 2010 Annual General Meeting. The proposed new Articles of Association will be available for inspection during normal business hours at the offices of the Company's solicitors, Hogan Lovells International LLP, Atlantic House, 50 Holborn Viaduct, London EC1A 2FG from 24 June 2010 until the date of the Annual General Meeting.


A condensed set of SABMiller's financial statements and information on important events that have occurred during the financial year and their impact on the financial statements were included in SABMiller's preliminary results announcement released on 20 May 2010. That information, together with the information set out below, which is extracted from the 2010 Annual Report, constitute the material required by Disclosure and Transparency Rule 6.3.5 which is required to be communicated to the media in unedited full text through a Regulatory Information Service. This announcement is not a substitute for reading the full 2010 Annual Report. Page numbers and cross-references in the extracted information below refer to page numbers and sections in the 2010 Annual Report.





Principal risks

The principal risks facing the group, which have been considered by the board, are detailed below. The group's well-developed risk management process is detailed in the corporate governance section and our financial risks are discussed in the Chief Financial Officer's review and in note 22 to the consolidated financial statements.


Specific risk


Industry consolidation


The global brewing industry is expected to continue to consolidate, albeit more slowly, creating opportunities to enter attractive growth markets and realise synergy benefits from integration and to leverage global scale.


Failure to participate in value-adding transactions; overpaying for a transaction; and failure to implement integration plans successfully after transactions are completed.

Possible impact

Lower growth rate, profitability and financial returns.

Associated strategic priorities

Creating a balanced and attractive global spread of businesses.

Constantly raising the profitability of local businesses, sustainably.



■ Potential transactions are subject to

rigorous analysis. Only opportunities with

potential to create value are pursued.

■ Proven integration processes,

procedures and practices are

applied to deliver expected returns.

■ Activities to deliver synergies and

leverage scale are in place, monitored

closely and continuously enhanced.

Change in consumer preferences


Consumer tastes and behaviours are constantly evolving and competitor activity is increasing and becoming more sophisticated. Strong brand portfolios together with excellence in marketing

and sales execution are required if we are to meet consumer, shopper and customer needs.


Failure to ensure the attractiveness of our brands; failure to continuously improve our marketing and related sales capability to deliver consumer relevant propositions.

Possible impact

Market positions come under pressure, lower volume growth rates and profitability.

Associated strategic priorities:

Developing strong, relevant brand portfolios that win in the local market.

Constantly raising the profitability of local businesses, sustainably.

Leveraging our skills and global scale.



■ Ongoing focus on building our marketing and sales capabilities through continued roll-out and enhancement of the SABMiller Marketing Way.

■ Ensuring that our brand equities remain strong through relevant innovation and compelling marketing programmes.

■ Ongoing evaluation of our brand

portfolios in every market to ensure

that they target current and future

opportunities for profitable growth.

Management capability impairment


We believe that our people are our enduring advantage. It is essential therefore that we identify, develop and retain global management capability.


Failure to develop and maintain a sufficient cadre of talented management.

Possible impact

Potential lower long-term profitable growth.

Associated strategic priorities:

Developing strong, relevant brand portfolios that win in the local market.

Constantly raising the profitability of local businesses, sustainably.

Leveraging our skills and global scale.



■ Effective and well-developed

strategic people resourcing and

talent management processes.

■ A strong culture of accountability,

empowerment and personal


■ Standardisation of key processes

and best practices across the

group through the roll-out of the

SABMiller Ways.

Regulatory changes


The alcohol industry is coming under increasing pressure from regulators, NGOs and tax authorities as the debate over alcohol consumption continues in many markets.


Regulation places increasing restrictions on pricing (including tax), availability and marketing of beer and drives changes in consumption behaviour.

Possible impact

Lower profitability growth and reduced contribution to local communities in some countries.

Associated strategic priorities

Creating a balanced and attractive global spread of businesses.

Developing strong, relevant brand portfolios that win in the local market.

Constantly raising the profitability of local businesses, sustainably.



■ Rigorous adherence to the principle of self-regulation backed by appropriate

policies and management review.

■ Constructive engagement with government and all external stakeholders on alcohol-related issues.

■ Investment to improve the economic and social impact of our businesses in local communities and working in partnership with governments and NGOs.

Raw material volatility


Recent volatility in the supply and pricing in some of our key raw materials.


Failure to obtain an adequate supply of brewing and packaging raw materials

at competitive prices.

Possible impact

Lower profitability and occasional supply disruption.

Associated strategic priorities

Constantly raising the profitability of local businesses, sustainably.

Leveraging our skills and global scale.



■ Contractual agreements with

suppliers covering multiple time

horizons, combined with an active

hedging programme.

■ Programmes to support development

of local sourcing for certain key

commodities, such as barley, in Africa,

India and Latin America.

Economic environment


Recent global recession with weak GDP growth projected in 2010. Uncertain economic growth and rising unemployment have resulted in weak consumer demand which has, in some cases, been compounded by currency weakness.


Our marketing, operating and financial responses may not be timely or adequate

to respond to changing consumer demand.

Possible impact

Lower short-term growth rates and profitability.

Associated strategic priorities

Creating a balanced and attractive global spread of businesses.

Developing strong, relevant brand portfolios that win in the local market.

Constantly raising the profitability of local businesses, sustainably.



■ Actions to restructure operations

in certain countries to reflect current

or expected deterioration in local

economic conditions.

■ Maintaining and extending our local

industry leadership positions through

appropriate investments in our brands,

focus on local execution and

development of commercial capability.

■ Increased emphasis on cash flow


Delivering transformation


The group has begun executing a major business capability programme that will

simplify processes, reduce costs and allow local management teams to enhance focus on their markets.


Failure to execute and derive benefits from the projects currently under way.

Possible impact

Increased project costs, business disruption and reduced competitive advantage in the medium term.

Associated strategic priorities

Constantly raising the profitability of local businesses, sustainably.

Leveraging our skills and global scale.



■ Senior leadership closely involved in

monitoring progress and in making

key decisions.

■ Rigorous programme management

and governance processes with

dedicated resources.





Note 32 to the consolidated financial statements on page 139 details the following related party transactions.


32. Related party transactions


a. Parties with significant influence over the group: Altria Group, Inc. (Altria) and the Santo Domingo Group (SDG)


Altria is considered to be a related party of the group by virtue of its 27.2% equity shareholding. There were no transactions with Altria during the year.


SDG is considered to be a related party of the group by virtue of its 14.2% equity shareholding in SABMiller plc. During the year the group made a donation of US$30 million to the Fundacion Mario Santo Domingo (2009: US$69 million), pursuant to the contractual arrangements entered into at the time of the Bavaria transaction in 2005, under which it was agreed that the proceeds of the sale of surplus non-operating property assets owned by Bavaria SA and its subsidiaries would be donated to various charities, including the Fundacion Mario Santo Domingo. At 31 March 2010, US$nil million (2009: US$nil) was owing to the SDG.


b. Associates and joint ventures


The MillerCoors joint venture is deemed to be a related party from 1 July 2008. Transactions with the MillerCoors joint venture include the sale of hops and lager to and the purchase of lager from MillerCoors. MillerCoors has also carried out contract brewing on behalf of group companies. Further details relating to transactions with MillerCoors are included within the analysis of transactions with joint ventures below.






Purchases from associates1

Purchases from joint ventures2

Sales to associates3

Sales to joint ventures4

Dividends received from associates5

Dividends received from joint ventures6

Royalties received7

Management and guarantee fees8

Receipt from sale of distribution rights9




















1 The group purchased canned Coca-Cola products for resale from Coca-Cola Canners of Southern Africa (Pty) Limited (Coca-Cola Canners) and purchased inventory from Distell Group Ltd (Distell) and Associated Fruit Processors (Pty) Ltd (AFP) in South Africa.

2 The group purchased lager from MillerCoors.

3 The group made sales of lager to Tsogo Sun Holdings (Pty) Ltd (Tsogo Sun), Empresa Cervejas De N'Gola SARL (ECN), Société des Brasseries et Glacières Internationales and Brasseries Internationales Holding Ltd (Castel), Delta Corporation Ltd and Distell.

4 The group made sales to MillerCoors and Pacific Beverages (Pty) Ltd.

5 The group received dividends from Castel of US$40 million (2009: US$39 million), Kenya Breweries Ltd US$11 million (2009: US$15 million), Coca-Cola Canners US$5 million (2009: US$4 million), Distell US$19 million (2009: US$17 million), Tsogo Sun US$28 million (2009: US$73 million), ECN US$3 million (2009: US$nil) and Grolsch (UK) Ltd of US$3 million (2009: US$3 million).

6 The group received dividends from MillerCoors.

7 The group received royalties from MillerCoors and Pacific Beverages (Pty) Ltd.

8 The group paid management and guarantee fees to MillerCoors.

9 The group sold distribution rights to MillerCoors.


At 31 March





Amounts owed by associates1

Amounts owed by joint ventures2

Amounts owed to associates3

Amounts owed to joint ventures4










1 Amounts owed by Grolsch (UK) Ltd, Castel and AFP.

2 Amounts owed by MillerCoors and Pacific Beverages (Pty) Ltd.

3 Amounts owed to Coca-Cola Canners.

4 Amounts owed to MillerCoors.


c. Transactions with key management


The group has a related party relationship with the directors of the group and members of the excom as key management. At 31 March 2010, there were 25 (2009: 23) members of key management. Key management compensation is provided in note 6c.




The directors are responsible for preparing the consolidated financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare consolidated financial statements for each financial year. The directors have prepared the consolidated financial statements in accordance with International

Financial Reporting Standards (IFRSs) as adopted by the European Union. The consolidated financial statements are required by law to give a true and fair view of the state of affairs of the group and of the profit or loss of the group for that year.


In preparing those financial statements, the directors are required to:

select suitable accounting policies and then apply them consistently;

make judgements and estimates that are reasonable and prudent;

state that the financial statements comply with IFRSs as adopted by the European Union; and

prepare the consolidated financial statements on the going concern basis, unless it is inappropriate to presume that the group will continue in business, in which case there should be supporting assumptions or qualifications as necessary.


The directors confirm that they have complied with the above requirements in preparing the financial statements.


The directors are responsible for keeping adequate accounting records that disclose with reasonable accuracy at any time the financial position of the group and to enable them to ensure that the consolidated financial statements comply with the Companies Act 2006 and Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.


Each of the directors, whose names and functions are listed in the Governance section of the Annual Report, confirms that, to the best of their knowledge:

the consolidated financial statements, which have been prepared  in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the group; and

the directors' report contained in the Governance section of the Annual Report includes a fair review of the development and performance of the business and the position of the group, together with a description of the principal risks and uncertainties that it faces.


In addition, the Companies Act 2006 requires directors to provide the group's auditors with every opportunity to take whatever steps and undertake whatever inspections the auditors consider to be appropriate for the purpose of enabling them to give their audit report. Each of the directors, having made appropriate enquiries, confirms that:

so far as the director is aware, there is no relevant audit information of which the group's auditors are unaware; and

each director has taken all the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the group's auditors are aware of that information.


The directors have reviewed the group's budget and cash flow forecasts. On the basis of this review, and in the light of the current financial position and existing borrowing facilities, the directors are satisfied that SABMiller plc is a going concern and have continued to adopt the going concern basis in preparing the financial statements.


A copy of the financial statements of the group is placed on the company's website. The directors are responsible for the maintenance and integrity of statutory and audited information on the company's website. Information published on the internet is accessible in many countries with different legal requirements. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.


John Davidson

General Counsel and Group Company Secretary




This announcement does not constitute an offer to sell or issue or the solicitation of an offer to buy or acquire ordinary shares in the capital of SABMiller plc (the "Company") or any other securities of the Company in any jurisdiction or an inducement to enter into investment activity. 


This announcement includes 'forward-looking statements' with respect to certain of SABMiller plc's plans, current goals and expectations relating to its future financial condition, performance and results. These statements contain the words "anticipate", "believe", "intend", "estimate", "expect" and words of similar meaning. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding the Company's financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to the Company's products and services) are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. These forward-looking statements speak only as at the date of this document. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.  The past business and financial performance of SABMiller plc is not to be relied on as an indication of its future performance.


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