Directors' Report
The directors have pleasure in submitting to shareholders their report together with the audited financial statements for the year ended 31 March 2003.
Business activities and development
% change 


EBITA before exceptionals
Profit before tax
Basic earnings per share (US cents)
Adjusted earnings per share      
– US cents
– SA cents
Statements by the chairman and the chief executive on the performance during the year and the future prospects of the group's businesses are included separately in this document.

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 2002.

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 (Pty) Ltd.

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 consideration of
€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.

Change of name
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.

Share capital

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
Notifiable interests representing 3% or more of the issued ordinary share capital of the company are disclosed in note 36 to the accounts.
Annual general meeting
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 Governance Review.


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.

Employment policies

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 targets.
Purchase of own shares
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 technologies.

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.

By order of the board

A O C Tonkinson
Group secretary
9 June 2003