Acquisitions and investments
Following the approval of shareholders at the extraordinary
general meeting (EGM) on 1 July 2002, Miller Brewing Company
became a wholly owned subsidiary of SABMiller plc on 9 July
In November 2002 the group and China Resources Enterprise,
Limited (CRE) announced through their joint venture, China Resources
Breweries Limited (CRB), their intention to raise their ownership
of three breweries from 90% to 100% to gain full control of
the Snow beer brand, by purchasing the outstanding shares in
China Resources (Shenyang) Snowflake Brewery Co. Ltd, Shenyang
Snowflake Beer Co. Ltd and Shenyang Beer Co. Ltd from Shenyang
Pi Jiu Chang for a cash consideration of US$16.9 million.
In December 2002 a landmark empowerment transaction was announced
which completed in March 2003. This agreement resulted in SABMiller
plc and Tsogo Investment Holding Company (Pty) Ltd transferring
their interests into a new company named Tsogo Sun Holdings
In terms of the transaction SABMiller contributed its entire
hotel and gaming interests, including 100% of Southern Sun's
hotel interests and 50% of Tsogo Sun's gaming interests, to
the new company in which SABMiller plc has a 49% interest.
During February 2003 SABMiller's Polish subsidiary, Kompania
Piwowarska S.A. (KP), agreed to acquire a 98.8% equity interest
in Browar Dojlidy Sp z.o.o. and an outstanding shareholder loan
from Radeberger Gruppe AG for a cash consideration of US$38
million. The transaction was completed in April 2003.
In February 2003, the disposal of the Valpré and Just
Juice trademarks to a subsidiary of The Coca-Cola Company was
agreed. The transaction was completed during April 2003.
During March 2003, SABMiller's Indian subsidiary, Mysore Breweries
Ltd, acquired a 97.35% interest in Rochees Brewing Limited,
replacing a contract brewing arrangement that had been in place
throughout the financial year.
Post balance sheet acquisitions
In May 2003, the group announced it had reached an unconditional
agreement to acquire a majority interest in Birra Peroni, the
number two brewer in Italy, with options to increase the holding
in the future. The transaction was completed on 4 June
2003, with SABMiller acquiring an initial stake of 60% for cash
€246 million (US$288 million).
Also in May 2003, it was announced that SABMiller's Indian
subsidiary, Mysore Breweries Ltd, had become a strong number
two brewer in India through a joint venture with the Shaw Wallace
group of companies.
Following shareholders' approval at an EGM of shareholders
held on 1 July 2002,
the company changed its name from South African Breweries plc
to SABMiller plc on 9 July 2002.
During the year, the issued ordinary share capital increased
from 840,888,305 shares of 10 US cents each to 998,802,609 ordinary
shares of 10 US cents each. 430 million shares were issued
to Altria Group, Inc. (formerly Philip Morris Companies Inc.) which
comprised 234,948,770 ordinary shares and 195,051,230 convertible
participating shares and 77,368,338 ordinary shares held by Safari
Ltd were converted to non-voting convertible shares. 333,872 new
shares were issued to satisfy the implementation of options in the
SAB Executive Share Purchase Scheme.
An interim dividend of 6.5 US cents per share in respect of the
year ended 31 March 2003 was paid on 20 December 2002.
The board has proposed a final dividend of 18.5 US cents per share,
making a total of 25.0 US cents per share for the year, representing
a dividend cover ratio of 2.2 times adjusted earnings. Shareholders
will be asked to ratify this proposal at the annual general meeting,
scheduled for 30 July 2003. In the event that ratification takes
place, the dividend will be payable on 8 August 2003 to shareholders
on either register on 11 July 2003. The ex-dividend trading dates
as stipulated by the London Stock Exchange (LSE) will be 9 July
2003 on the LSE and 7 July 2003 on the Johannesburg Securities Exchange
South Africa. As the group reports primarily in US dollars,
dividends are also declared in US dollars. They are payable in sterling
to shareholders on the UK section of the register and in South African
rand to shareholders on the RSA section of the register. The rates
of exchange applicable on 16 May 2003, being the last practical
date before the declaration date will be used for conversion (£/$=1.6240
and R/$=7.8000) resulting in an equivalent final dividend of 144.3000
SA cents for RSA shareholders and 11.3916 UK pence for UK shareholders.
The equivalent total dividend for the year for RSA shareholders
is 207.0250 SA cents (2002: 250.6000 SA cents) and for UK shareholders
is 15.5081 UK pence (2002: 17.2931 UK pence).
Notifiable interests representing 3% or more of the issued ordinary
share capital of the company are disclosed in note 36 to the accounts.
The annual general meeting (AGM) to receive the annual report
will be held at the Hotel InterContinental, One Hamilton Place,
Hyde Park Corner, London W1J 7QY, England at 11.00 am on Wednesday,
30 July 2003. Notice of the meeting has been mailed to shareholders
and may also be obtained separately.
Particulars of the directors of the company and the secretary
are set out separately in this document. The membership and terms
of reference of each board committee are further described in the
same section. The report on directors' remuneration (including directors'
shareholdings in the company) is set out, in full, separately in
this document. The statement regarding the directors' responsibilities
in respect of the financial statements is also set out separately.
Details of internal control compliance, including financial control,
are set out separately in the Corporate
Following the conversion of our auditors, PricewaterhouseCoopers,
to a Limited Liability Partnership (LLP) from 1 January 2003, PricewaterhouseCoopers
resigned on 21 February 2003 and the Directors appointed its successor,
PricewaterhouseCoopers LLP as auditors. PricewaterhouseCoopers LLP
have expressed their willingness to continue in office and resolutions
proposing their reappointment and authorising the board to set their
remuneration will be submitted to the forthcoming annual general meeting.
The continued motivation of employees and management towards overall
productivity enhancement in the business, by increasing empowerment,
is a fundamental feature of the group's operating philosophy and
is key to the management of risk. This is achieved through training,
development, information sharing and progressive co-operative contributions
to operating methods and planning, supported by rewards at competitive
levels, including short and long-term incentives where appropriate.
Each company within the group designs employment policies which
are appropriate to its business and markets and which attract, retain
and motivate the quality of staff necessary to compete. These policies
are required to provide equal employment opportunities, without
discriminating against gender, race or physical disability. Reports
to employees are published, to international standards, by the major
subsidiary companies and divisions.
In southern Africa, the group encourages and implements the inclusion
and advancement of black and female persons in managerial capacities
throughout every aspect of the group's activities, and encourages
black business within all the group's commercial associations. This
activity is driven by top management commitment, and progress is
measured at group level as well as divisional and subsidiary board
levels against agreed time-related, qualitative and quantitative
At the last AGM, shareholder authority was obtained for the
company to purchase its own shares up to a maximum of 10% of the
number of shares in issue on 31 March 2002 over a period covering
the earlier of the next AGM or 31 October 2003, on certain pricing
conditions. Under the terms of the Employee Benefit Trust, details
of which are provided in the report on directors' remuneration and
in note 15
to the accounts,
shares in the company may also be purchased.
The notice of AGM proposes that shareholders approve a resolution
renewing this authority.
Corporate citizenship and community relations
SABMiller's corporate citizenship philosophy is set out in the
Corporate Accountability Review in this report. The 2003 report
on corporate citizenship, which looks at the group's social, environmental
and economic performance in more detail, is published and distributed
as a companion document to this report.
During the year, group companies made donations of US$13.0 million
to charitable organisations. The group makes no political donations
in the United Kingdom, nor within the European Union. We do not
plan, in the current year, to make political donations in member
countries of the European Union.
During the year under review, Miller Brewing Company made no contributions
to individual federal or state candidates, but did, however, make
contributions to state governments which permit corporate support,
totalling US$0.7 million.
Research and development
The group continues to invest in new products and processes, as
well as new technologies to improve overall operational effectiveness.
SABMiller plc's scientific research has yielded solid progress
in brewing raw materials, new brands and packs and in proprietary
Payment of suppliers
Operational companies across the group agree terms and conditions
with suppliers before business takes place, and its policy and
practice is to pay agreed invoices in accordance with the terms
of payment. At the year-end the amount owed to trade creditors
was equivalent to 46.2 days of purchases from suppliers.
A O C Tonkinson
9 June 2003