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SABMiller plc Annual Report 2011 41
Miller Lite
Miller Lite is the ultimate light beer,
triple hops brewed for a great pilsener
taste. It is the only beer to win four
gold awards in the World Beer Cup ®
for best American-style light lager.
Origin:
USA
First brewed: 1973
www.millerlite.com
Total equity increased from US$20,593 million at
31 March 2010 to US$22,759 million at 31 March
2011. The increase was primarily due to the profit
for the year and foreign currency translation
movements on foreign currency investments,
partly offset by dividend payments.
Financial structure and liquidity
Our strong financial structure gives us adequate
resources to facilitate ongoing business along with
medium-term flexibility to invest in appropriate growth
opportunities and manage the balance sheet.
The group finances its operations through cash
generated by the business and a mixture of short
and medium-term bank credit facilities, bank loans,
corporate bonds and commercial paper. In this way,
we avoid over-reliance on any particular liquidity
source. We use cash in hand, cash from operations
and short-term borrowings to manage liquidity.
The following table summarises our funding
structure at 31 March 2011:
2011
US$m
2010
US$m
Overdrafts (258) (190)
Borrowings (8,193) (9,212)
Derivatives 298 237
Finance leases (9) (12)
Gross debt (8,162) (9,177)
Cash and cash equivalents 1,071 779
Net debt (7,091) (8,398)
Maturity of gross debt:
Within one year (1,358) (1,721)
Between one to two years (590) (1,052)
Between two and five years (4,383) (4,561)
Over five years (1,831) (1,843)
The average maturity of the gross committed debt
portfolio is 4.0 years (2010: 4.7 years).
We have undertaken a number of financing
activities during the year. On 10 September 2010 a
consent solicitation relating to our 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 these Notes and certain
financial thresholds were amended to align with
the terms of recently issued SABMiller plc notes.
In October 2010 a US$515 million 364-day facility
expired and was not renewed.
On 29 March 2011 the group’s Colombian
subsidiary, Bavaria, established a COP2,500,000
million bond and commercial paper programme,
to be used primarily to refinance Bavaria’s existing
COP1,910,320 million bonds by means of an
exchange offer under which bondholders were
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 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, the group
entered into a five-year US$2,500 million committed
syndicated facility on 7 April 2011, with the option
of two one-year extensions. This facility replaced
the existing US$2,000 million and US$600 million
committed syndicated facilities, due to expire in
December 2012 and May 2011 respectively.
As a result of the expiry of the US$515 million facility
noted above, our committed undrawn borrowing
facilities have decreased from US$3,579 million at
31 March 2010 to US$3,164 million at 31 March
2011. We have sufficient headroom to enable us to
conform to covenants on our existing borrowings
and sufficient undrawn committed financing facilities
to service our operating activities and ongoing
capital investment. Maturing debt in the next 24
months includes a US$600 million bond maturing
in July 2011, a ZAR1,600 million bond maturing in
July 2012, a COP370,000 million bond maturing in
September 2012 and a number of local bank facilities.
Current committed headroom is sufficient to cover
all maturing facilities over the next 24 months. We
have continued to be able to access sufficient and
significant funding from a number of sources and
expect to renew maturing facilities as they fall due.
Currency, interest rate, commodity
and credit risk management
We manage the risks from foreign exchange,
interest rates, commodities and credit risk within a
framework of policies approved by the board which
are reviewed on a regular basis. Exposures are
managed within target hedge levels and reported
regularly to the treasury and audit committees.
Currency risk
Most of our net assets are denominated in
currencies other than the US dollar with the
result that our US dollar balance sheet can be
significantly affected by currency movements. We
seek to mitigate this impact, where cost effective,
by borrowing (directly or synthetically) in the same
currencies as the functional currencies of our
main operating units. We borrow principally in US
dollars, South African rand, euros, Polish zloty and
Colombian pesos. Other than this, we do not hedge
translation exposures.
Our debt profile at 31 March 2011 (after taking
account of derivatives) is illustrated in chart (j).
We are also exposed to transactional currency risk
on sales and purchases. Committed transactional
exposures are fully hedged and a proportion of
other transactional exposures for a period of up
(j) Net debt profile
4
5
3
1 US dollars 37%
2 Euro 21%
3 Colombian peso 16%
4 SA rand 9%
5 Other 17%
1
2
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