The Annual Report and Notice of Annual General Meeting are also available on the Company s website

Transcription

1 SABMiller plc JSEALPHA CODE: SAB ISSUER CODE: SOSAB ISIN CODE: GB June 2016 SABMiller plc Annual Financial Report SABMiller plc has today submitted a copy of the 2016 Annual Report and Accounts, Notice of the 2016 Annual General Meeting and Shareholder Proxy Form (UK) to the National Storage Mechanism and they will shortly be available for inspection at The Annual Report and Notice of Annual General Meeting are also available on the Company s website SABMiller plc s Annual General Meeting will be held on Thursday, 21 July 2016 at the InterContinental London Park Lane, One Hamilton Place, Park Lane, London W1J 7QY. A printed copy of the 2016 Annual Report and Accounts and Notice of Annual General Meeting 2016 will be sent to those shareholders who have elected to receive paper communications on 21 June A condensed set of SABMiller s statements and information on important events that have occurred during the year and their impact on the statements were included in SABMiller s preliminary results announcement released on 18 May That information, together with the information set out below, which is extracted from the 2016 Annual Report, constitutes the material required by Disclosure and Transparency Rule 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 2016 Annual Report. Page numbers and crossreferences in the extracted information below refer to page numbers and sections in the 2016 Annual Report. PRINCIPAL RISKS (page 16 & 17) Principal risks Focused on managing our risks The principal risks facing the group and considered by the board and the executive committee are detailed below. The group s risk process is described in the corporate governance section while risks are discussed in the finance review on page 47 and in note 21 to the consolidated statements. Principal risk Context Specific risks we face Management capability We believe that our people are our enduring it is essential that we identify, develop and retain an appropriate pipeline of talented managers for Possible impact Failure to deliver the group s strategic and ambitions. Lower long- Mitigation Building the group s leadership talent pipeline through our Global Talent Management model, strategic people resourcing Associated strategic priorities Comparison to previous year

2 Regulatory changes develop and maintain global capability. Our people are a source of will continue to be in the new enlarged organisation or in a standalone business if the AB InBev transaction does not complete. With an increasingly high profile debate over alcohol consumption in many markets, the alcohol industry is coming under more pressure from national and international regulators, NGOs and local governments. This risk has as compared with the previous year due to possible increased regulatory scrutiny arising from the AB InBev offer. the present and future needs of the group. Potential disruption to and staff arising from uncertainty during the AB period and exacerbated by the complexity of potential disposals to facilitate regulatory approvals. Regulation places increasing restrictions on the availability and marketing of beer. Tax and excise changes cause pressure on pricing. Anti-alcohol advocates erode industry reputation. term profitable growth. advantage. Lower growth, profitability and reduced contribution to local communities in some countries. consumer goodwill and public sentiment. and long-term talent pipeline. Sustaining a strong culture of accountability, empowerment, and personal development. Continuous employee engagement and communication to promote retention of key talent and use of incentive programmes that support motivation and retention. Aligned goal setting focused on current priorities. Rigorous adherence to the principle of selfregulation backed by appropriate policies and review. Building licence to trade capabilities across the group to facilitate sound risk analysis and mitigation plan development. Constructive engagement with government and all external stakeholders on alcohol-related issues. Investment to enhance the positive economic and social impact of our businesses in local communities and working in partnership with local governments and local and global NGOs. Consistent sustainable revenue growth Consumer tastes and behaviours are constantly evolving, and at an develop and ensure the strength and relevance of our brands with Topline growth progression does not meet internal and external expectations. Driving our Prosper shared imperatives to make a sustainable and measurable difference to the communities and ecosystems in which we operate. Pursuing a beer category structure that enables us to grow both the value of the beer category, and our share of it.

3 increasingly rapid rate. Competition in the beverage industry is expanding and becoming more fragmented, complex and sophisticated. Potential actions of our competitors and stakeholders during the offer period could impact the environment and our performance. consumers, shoppers and customers. continue to improve our capabilities to deliver brand propositions which respond appropriately to changing consumer preferences. Market positions come under more pressure and market opportunities are missed, leading to lower profitability. Ensuring we have a deep understanding of changing consumer and industry dynamics in key markets, enabling us to respond appropriately to opportunities and issues which may impact our business performance. Ongoing evaluation of our brand portfolios in every market to ensure that they target current and future opportunities for profitable growth. 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 performance and developing the critical capabilities that are required in order to win in local markets. Information and cyber There is increasing sophistication of cyber-attack capabilities. Business s increasing demand for consumers and customers personal data means legislators rightly continue to impose tighter data control. Disruption of information technology systems and a loss of valuable and sensitive information and assets. Significant business disruption. comply with tightening legislation poses a threat of significant penalties or reputational damage through the publicised loss of key operating systems and confidential data. Adverse effect of profitability, cash flows or position. Active of key relationships in local markets to minimise any potential disruption arising during the AB InBev offer period. Continued development and implementation of information policies. Increased investment to improve information awareness, intelligence and implementation of sound processes. Building and enhancing processes to accelerate detection of, and deal with, IT incidents.

4 Confidentialit y and antitrust compliance There is a heightened risk of information loss, cyber attacks and deliberate, harmful acts as a result of possible disruption and business distraction during the AB period. The business s support for the AB and the posttransaction convergence planning process through to change of control requires clear and consistent compliance with anti-trust legislation and information protocols with respect to provision of information to AB InBev and other parties. restrictions. Failure to comply with antitrust legislation and information protocols results in negative reputational impact, implications, and significant penalties. reputational damage. Adverse effect on profitability, cash flows or position. Group-wide communications and protocols developed and disseminated throughout the organisation. Engagement of external anti-trust counsel engaged at global and local levels to ensure SABMiller s interests are protected. Use of clean teams and associated protocols to manage necessary information sharing as part of the regulatory, disposals and convergence planning processes. New due to the AB. Transaction fails to complete The AB InBev offer is subject to multiple approvals from regulatory bodies and shareholders. Transaction failure impacts the organisation resulting in loss of momentum and short and medium-term disruption to business performance. Unsettled and staff. Transaction failure poses threat to relationships with external stakeholders including shareholders, customers, suppliers, and joint venture and associate partners. value. shortterm advantage. Failure to deliver the group s short and mediumterm strategic and ambitions. Engagement with AB InBev to support timely transaction completion including support for disposal processes and convergence planning assistance. US$3 billion break fee in place should the AB fail to complete. Strong continued focus on delivery of strategy and performance, cost control and budget discipline in place across the organisation. Management response plans in place should the AB fail to complete. New due to the AB. RELATED PARTY TRANSACTIONS

5 Note 31 to the consolidated statements on page 167 details the following related party transactions. 31. 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 26.7% 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 14.0% equity shareholding in SABMiller plc. During the year the group made purchases of logistics services and natural gas from SDG companies totalling US$5 million (2015: US$nil). At 31 March 2016 US$1 million (2015: US$nil) was owing to SDG companies. b. Associates and joint ventures Details relating to transactions with associates and joint ventures are analysed below. Purchases from associates1 Purchases from joint ventures2 Sales to associates3 Sales to joint ventures4 Dividends receivable from associates5 Dividends received from joint ventures6 Royalties received from associates7 Royalties received from joint ventures8 Management fees, guarantee fees and other recoveries received from associates9 Marketing fees paid to associates10 Management fees paid to joint ventures11 Management fees received from joint ventures (165) (103) (1) (2) (173) (88) (1) (2) - 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), Associated Fruit Processors (Pty) Ltd (AFP); and Delta Corporation (Delta); and in 2015 accommodation from Tsogo Sun Holdings Ltd (Tsogo Sun). 2 The group purchased lager from MillerCoors LLC (MillerCoors). 3 The group made sales of lager to Delta, Anadolu Efes Biracılık ve Malt Sanayii AŞ (Anadolu Efes), International Trade and Supply Ltd (ITSL) and Distell, and in 2015 to Tsogo Sun. 4 The group made sales to MillerCoors. 5 The group had dividends receivable from China Resources Snow Breweries Ltd (CR Snow) of US$71 million (2015: US$228 million), Castel of US$89 million (2015: US$108 million), Coca-Cola Canners of US$10 million (2015: US$5 million), Distell of US$15 million (2015: US$18 million), Tsogo Sun of US$nil (2015: US$24 million), Delta of US$19 million (2015: US$18 million), ITSL of US$24 million (2015: US$21 million), Grolsch (UK) Ltd of US$1 million (2015: US$1 million) and Anadolu Efes US$24 million (2015: US$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 fees from Delta, Anadolu Efes and Castel and other recoveries from AFP. 10 The group paid marketing fees to ITSL. 11 The group paid fees to MillerCoors. 12 The group received fees from MillerCoors. At 31 March 2016 Amounts owed by associates1 15 Amounts owed by joint ventures2 8 Amounts owed to associates3 (36) Amounts owed to joint ventures4 (14) 1 Amounts owed by AFP, Delta, Coca-Cola Canners, Castel and Anadolu Efes. 2 Amounts owed by MillerCoors. 3 Amounts owed to AFP and Castel. 4 Amounts owed to MillerCoors (38) (18)

6 Guarantees provided in respect of associates bank facilities are detailed in note 21. c. Transactions with key The group has a related party relationship with the directors of the group and members of the excom as key. Key compensation is provided in note 6c. DIRECTORS RESPONSIBILITY STATEMENT IN RESPECT OF THE CONSOLIDATED FINANCIAL STATEMENTS (page 96) The directors are responsible for preparing the annual report, the directors remuneration report and the statements in accordance with applicable law and regulations. Company law requires the directors to prepare statements for each year. The directors have prepared the consolidated statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union, and the parent company 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 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 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 statements respectively; and prepare the 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 position of the company and group and enable them to ensure that the company and consolidated statements and the directors remuneration report comply with the Companies Act 2006 and, as regards the consolidated 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 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 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

7 shareholders to assess the group s position and performance, business model and strategy. Each of the directors, whose names and functions are listed on pages 54 and 55 of this annual report, confirms that, to the best of his or her knowledge: the consolidated 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, position and profit of the group; and the 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 that 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. Stephen Shapiro 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 or its subsidiaries or associates 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 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 position, business strategy, plans and objectives of 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 forwardlooking 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: the outcome of the proposed transaction with Anheuser-Busch InBev SA/NV; material adverse changes in the economic and business conditions in the markets in which SABMiller operates; increased competition in the global brewing and beverages industry; changes in consumer preferences; changes to the regulatory environment; 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 performance of SABMiller plc is not to be relied on as an indication of its future performance. Sponsor: J.P. Morgan Equities South Africa (Pty) Ltd