Download Sabmiller Plc Annual Report 2012 PDF

SABMiller plc Annual Report 2012 55Directors’ reportThe directors have pleasure in submitting their report to shareholders,together with the audited annual financial statements for the yearended 31 March 2012.Principal activities and business reviewSABMiller plc is a holding company which has brewing and beverageinterests across six continents. Our principal subsidiaries, associatesand joint ventures are listed in note 35 to the consolidated financialstatements. Our principal activities are the manufacture, distributionand sale of beverages.We are required by the Companies Act 2006 to produce a fair reviewof our business, including a description of the principal risks anduncertainties we face, our development and performance during theyear, and our position at the end of the year. These are all covered inthe business review on pages 1 to 44 of this annual report. Other keyperformance indicators and information relating to environmentalmatters, employee matters and social and community issues requiredby the business review are set out in our sustainable developmentreview and people section on pages 46 to 51 of this annual report.Significant acquisitions, disposals, financing transactions,investments and material developments during the yearIn April 2011 we entered into a five-year US$2,500 million committedsyndicated facility, with the option of two-one year extensions. Thisfacility replaced our existing US$2,000 million and US$600 millioncommitted syndicated facilities, which were both voluntarily cancelled.In May 2011 Birra Peroni agreed to sell its in-house distributionbusiness to the Tuo Group for cash consideration. The disposal wascompleted in June 2011.Also in May, SABMiller Africa BV agreed to sell its 20% shareholdingin its associate, Kenya Breweries Limited (KBL), to East AfricanBreweries Limited (EABL), subject to EABL disposing of its 20%shareholding in SABMiller Africa BV’s subsidiary, Tanzania BreweriesLimited (TBL), by way of public offer through the Dar-es-Salaam StockExchange. SABMiller International BV also agreed to terminate abrewing and distribution agreement with KBL, with KBL ceasing todistribute SABMiller’s brands in Kenya. Pursuant to that agreement,the group disposed of its 20% shareholding (12% effective economicinterest) in KBL in November 2011 for cash consideration of US$205million. SABMiller Africa BV applied for all the shares offered in TBL,but the offer was substantially oversubscribed, and after priorityapplications were made to applicants who were Tanzanian residentsor East African residents, SABMiller Africa BV was allocated sharesrepresenting an additional 4.72% of TBL, increasing its shareholdingto 58% (36% group effective economic interest).In June 2011 we announced a proposal to acquire Foster’s GroupLimited (Foster’s). Agreement was reached with the Foster’s boardin September 2011 for a recommended cash offer. The acquisition, viaa scheme of arrangement, was approved by the Foster’s shareholdersin December 2011 and subsequently implemented on 16 December2011 with the approval of the Supreme Court of Victoria. The cashconsideration for the acquisition was US$10,598 million. As part ofthe proposal to acquire Foster’s we separately reached agreementwith Coca-Cola Amatil Limited to acquire its 50% share of our jointventure, Pacific Beverages Pty Limited for cash consideration ofUS$343 million, and this acquisition was completed in January 2012.In September 2011 SABMiller Holdings Inc, a wholly owned indirectsubsidiary of SABMiller plc, entered into a US$12,500 millioncommitted syndicated facility to finance the acquisition of Foster’s andrelated purposes. The facility consisted of four tranches; a US$8,000million one-year term facility with the option of two six-monthextensions; a US$2,500 million three-year term facility; a US$1,000million five-year term facility; and a US$1,000 million five-year revolvingcredit facility. In December 2011 the group drew US$7,850 millionunder the one-year term facility; AUD2,000 million (approximatelyUS$2,021 million) and US$100 million under the three-year termfacility and US$750 million under the five-year term facility. Theundrawn balance of those facilities was cancelled and the amountof the revolving credit facility was reduced to US$500 million.In October 2011 we announced our proposed agreement with theAnadolu Group (Anadolu Endüstri Holding A.Ş., Yazıcılar HoldingA.Ş. and Özilhan Sınai Yatırım A.Ş.), and Anadolu Efes Biracılık ve MaltSanayii A.Ş. (‘Anadolu Efes’) to form a strategic alliance for Turkey,Russia, CIS, Central Asia and the Middle East. The strategic alliancecompleted in March 2012, under which our Russian and Ukrainianbeer businesses were contributed to Anadolu Efes in exchange fora 24% equity stake in the enlarged Anadolu Efes.In November and December 2011 two of our African subsidiariesZambian Breweries plc in Zambia and Nile Breweries Ltd in Uganda,launched rights issues. On closing of the rights issue in Uganda oursubsidiary’s interest increased by 2.7% to 99.8% (group effectiveeconomic interest increasing from 60% to 62%). The rights issue inZambia closed with our interest remaining unchanged (group effectiveeconomic interest 54%).With effect from 1 January 2012, together with Castel, weimplemented a number of organisational changes in our Africanoperations as part of our strategic alliance agreement. We combinedthe operational management of our Angolan businesses with theAngolan businesses of our associate, Castel, with all of the Angolanbusinesses, in which the group retains an associate interest, beingmanaged from that date by Castel. We acquired a 65% interest(effective 33% interest) in International Breweries plc in Nigeria,from Brasseries Internationales Holding Ltd (BIH), part of the Castelgroup, in exchange for cash and a dilution of our effective interestsin our existing Nigerian businesses, Pabod Breweries Ltd andVoltic Nigeria Ltd.Also in January 2012, SABMiller Holdings Inc issued bonds to thevalue of US$7,000 million, in four tranches: US$1,000 million 1.85%Notes due January 2015, US$2,000 million 2.45% Notes due January2017, US$2,500 million 3.75% Notes due January 2022 and US$1,500million 4.950% Notes due January 2042, all guaranteed by SABMillerplc. The proceeds of the bonds were used to repay US$7,000 millionunder the one-year term facility.In the same month our subsidiary in Mozambique, Cervejas deMoçambique SARL, launched a rights issue. Our interest on closingremained unchanged at 79% (group effective economic interest 49%).In March 2012 SABMiller Holdings Inc repaid from existing cashresources the remaining US$850 million balance outstanding onthe one-year term facility, which was then cancelled.Overview Business review Governance Financial statements Shareholder information