Directors’ report

The directors have pleasure in submitting their report to shareholders, together with the audited annual financial statements for the year ended 31 March 2009.

Principal activities and business review

SABMiller plc is a holding company which has brewing and beverage interests across six continents. The principal subsidiaries, associates and joint ventures of the company are listed in note 34 to the consolidated financial statements. The principal activities of the group are the manufacture, distribution and sale of beverages.

The company is required by the Companies Act 2006 to produce a fair review of the business of the group including a description of the principal risks and uncertainties it faces, its development and performance during the year and the position of the group at the end of the year. The business review includes a review of the development and performance of the group during the financial year, its position at the end of the year, likely future developments in the business of the group, key performance indicators and a description of the principal risks and uncertainties facing the group is set out in the Chairman’s statement, Global beer market trends, Chief Executive’s review, Operations review and Chief Financial Officer’s review. 'Other key performance indicators and information relating to environmental matters, employee matters and social and community issues required by the business review are set out in the sustainable development review of this annual report.

Significant acquisitions, disposals, financing transactions, investments and material developments during the year.

In May 2008 the company announced that it had agreed to acquire a 99.84% interest in the Ukrainian brewer CJSC Sarmat. The acquisition was subject to approval by the Ukrainian competition authorities and completed in July 2008.

Also in May 2008 the company announced that it had reached an agreement in principle with Anheuser-Busch (‘AB’) to acquire the US import rights for the Grolsch brand which AB had acquired prior to the company’s acquisition of Grolsch. This agreement was concluded in July 2008, with the rights being transferred to the group’s US joint venture, MillerCoors, with effect from 1 August 2008.

In June 2008 the company announced that, subject to customary pre-closing conditions, it had agreed to acquire the Russian brewer LLC Vladpivo. Those conditions were satisfied the same month.

On 1 July 2008 MillerCoors began operating as a combined entity. The company and Molson Coors Brewing Company had signed a definitive agreement to combine the US and Puerto Rico businesses of their subsidiaries, Miller and Coors, in December 2007. Closing of the transaction was subject to obtaining regulatory clearance and this was obtained in June 2008 after the US Department of Justice completed its antitrust review. SABMiller has a 58% economic interest in MillerCoors and Molson Coors has a 42% economic interest. Voting interests are shared equally.

Also in July 2008 the company announced the completion of a US$1,250 million bond issue. The notes were issued in two tranches, US$550 million of 5.5 year notes with a coupon of 5.7% and US$700 million of 10 year notes with a coupon of 6.5%. The net proceeds of the offering were used to repay existing indebtedness. In the same month the company announced the establishment of a US$5,000 million Euro Medium Term Note Programme to allow the group to further diversify its sources of funding in the future. No notes have been issued under the programme at this time.

In August 2008 the company announced that its Colombian subsidiary Bavaria S.A. had agreed to dispose of its Agua Brisa bottled water business and assets to Coca-Cola FEMSA and The Coca-Cola Company for a consideration of US$92 million. The sale, which was subject to approval by the Colombian competition authorities and other customary pre-closing conditions, was completed in February 2009. In December 2008 the group acquired an interest in Pabod Breweries in Nigeria and in the following month agreed to acquire an interest in Voltic International Inc. Voltic has water businesses in Ghana and Nigeria. In accordance with an agreement with Castel, Castel subsequently acquired an interest in the holding company of Pabod and Voltic and at year end the group held a 57% effective interest in Pabod and an 80% effective interest in Voltic.

In January 2009 the company announced that its Romanian subsidiary, Ursus Breweries (‘Ursus’), had acquired a 71% interest in the Romanian brewer Bere Azuga. The acquisition was subject to approval by the Romanian competition authorities and this was granted after 31 March 2009. In accordance with local securities laws, Ursus will launch a mandatory public tender offer for the shares it does not own as soon as regulatory approval is given.

Also in January 2009 the company announced the establishment of a guaranteed medium-term note programme by SABMiller plc and its wholly-owned subsidiary, Racetrack Perú S.A. The maximum aggregate principal amount of notes that may be outstanding at any time under the programme is PEN 1,500 million (approximately US$500 million) although no notes have yet been issued under the programme. Should any notes be issued in the future, the company expects they will be admitted to the Official List of the UK Listing Authority and admitted to trading on the Professional Securities Market of the London Stock Exchange.

In February 2009 China Resources Snow Breweries Limited (‘CR Snow’), an associate of the company and a subsidiary of China Resources Enterprise, Limited, announced that it had agreed to acquire three breweries in the Anhui, Liaoning and Zhejiang provinces of China in three separate transactions. CR Snow acquired the respective brewing assets of Anqing Tianzhu Beer Company Limited, Liaoning Songlin Brewery Group Company Limited and Zhejiang Luck Beer Company Limited through three newly-formed subsidiaries in which it owns 80%, 85% and 100% equity interests respectively.

In March 2009 CR Snow announced that it had agreed to acquire the brewing assets of Shandong Hupo Brewery through the formation of a new joint venture. CR Snow will initially own a 90% equity interest, and plans to acquire the additional 10% within three years of the formation of the joint venture.

Also in March 2009 the company announced that it had acquired the residual 50% interest in SABMiller Vietnam JV Company Limited held by its joint venture partner Vietnam Dairy Products Joint Stock Company.

In the same month the company announced that subsidiaries of Bavaria S.A. had completed the sale of Bebidas y Aguas Gaseosa Occidente SRL, its Pepsi bottling operations in Bolivia, to subsidiaries of Quilmes Industrial S.A. (Quinsa), a subsidiary of Anheuser-Busch InBev SA/NV, for a total consideration of US$27 million.

Post balance sheet events

In May 2009 the company acquired the outstanding 28.1% minority interest in its Polish subsidiary, Kompania Piwowarska S.A. from Kulczyk Holding S.A. (‘Kulczyk’) in exchange for 60 million new SABMiller shares. Following completion of the transaction on 29 May 2009, Kulczyk held approximately 3.82% of the enlarged issued ordinary share capital of SABMiller.


An interim dividend of 16 US cents per share was paid to shareholders on 5 December 2008, in respect of the year ended 31 March 2009. Details of the final dividend proposed by the board for the year ended 31 March 2009 are set out below:

Amount of final dividend
proposed by the board:
42 US cents per share
Total proposed dividend for the
year ended 31 March 2009:
58 US cents per share
If approved, the final dividend will be payable to shareholders on either section of the register at 21 August 2009 in the following way:
Dividend payable on: 28 August 2009
Currency of payment:

South African rands – to shareholders on the RSA section of the register,

US dollars – to shareholders shown as having an address in the USA and recorded on the UK section of the register (unless mandated otherwise),

Pounds sterling – to all other shareholders on the UK section of the register.

Ex-dividend dates: 17 August 2009 for shares traded on the JSE Limited, South Africa. 19 August 2009 for shares traded on the London Stock Exchange (LSE).
The rate of exchange for conversion from US dollars will be calculated on 30 July 2009 and published on the RNS of the LSE and the SENS of the JSE Limited on 31 July 2009.

Note 9 to the consolidated financial statements discloses dividends waived.


The names and biographical details of the current directors are set out in Board of directors. With the exception of Mr Pieterse (who was appointed to the board on 15 May 2008) and Dr Moyo (who was appointed to the board on 1 June 2009) all directors served throughout the period. Both Lord Renwick and Ms Ramos also served on the board during the period. Lord Renwick served as a director of the company until his retirement on 31 July 2008. Ms Ramos was appointed to the board on 15 May 2008 but, in consequence of her accepting an appointment as Group Chief Executive of ABSA Group Limited in South Africa, was unable to continue to act as a director of the company and resigned with effect from 26 February 2009. Details of the interests in shares and/or options of the directors who held office during the period and any persons connected to such directors are set out in the remuneration report.

Corporate governance

The directors are committed to maintaining high standards of corporate governance, which they see as fundamental to discharging their stewardship responsibilities. The board strives to provide the right leadership, strategic oversight and control environment to produce and sustain the delivery of value to all of the company’s shareholders. The board applies integrity, principles of good governance and accountability throughout its activities and each director brings independence of character and judgement to the role.

All of the members of the board are individually and collectively aware of their responsibilities to the company’s stakeholders. Statements of our application of the Combined Code on Corporate Governance are set out in the corporate governance and the remuneration report.

Share capital

During the year, the issued ordinary share capital of the company increased from 1,505,779,276 shares of 10 US cents each to 1,585,366,969 shares of 10 US cents each. 2,219,355 new ordinary shares were issued to satisfy the exercise of options granted under the SABMiller plc Mirror Executive Share Purchase Scheme, the SABMiller plc Approved Executive Share Option Scheme, the SABMiller plc Executive Share Option (No. 2) Scheme and the SABMiller plc International Employee Share Scheme.

In connection with the unwinding of the Safari structure during the year, as referred to in last year’s directors’ report and notice of annual general meeting, 77,368,338 non-voting convertible participating shares of 10 US cents each in the capital of the company were converted into ordinary shares and were acquired by the company on 26 February 2009, and are now held as treasury shares within the meaning of Section 162A(3) of the Companies Act 1985.

In addition, the company has 50,000 deferred shares of £1 each in issue. No non-voting convertible participating shares, convertible participating shares or deferred shares were issued during the year.

Purchase of own shares

At the last annual general meeting, shareholder authority was obtained for the company to purchase its own shares up to a maximum of 10% of the number of ordinary shares in issue on 14 May 2008. This authority is due to expire at the earlier of the next annual general meeting or 31 October 2009, and remains exercisable provided that certain conditions relating to the purchase are met. The notice of annual general meeting proposes that shareholders approve a resolution updating and renewing the authority allowing the company to purchase its own shares.

Shares in the company were purchased during the year by the trustee of the company’s employee benefit trust, details of which are provided in the remuneration report. Additionally, as noted above, in connection with the unwinding of the Safari structure the company acquired 77,368,338 shares which it now holds as treasury shares. While the total consideration paid for these shares amounted to US$1,176,875,166, the whole amount of the consideration was paid between group companies. The company did not repurchase any further shares during the year for the purpose of cancellation, holding in treasury or for any other purpose.

Annual general meeting

The company’s annual general meeting for 2009 will be held at the InterContinental London Park Lane, One Hamilton Place, London, W1V 7QY, UK at 11:00 am on Friday 31 July 2009. Notice of this meeting (pdf 17kb) may be obtained from the company’s website.


During the year the group invested US$34.8 million in corporate social investment programmes, of which US$8,865,000 represented charitable donations. Of this amount US$994,302 were charitable donations made by the company and Miller Brands (UK) Limited for the benefit of various causes, both in the UK and overseas, comprising donations in respect of community development, health and education, the environment and other causes. This included a donation of US$84,448 made to the Down’s Syndrome Association, a charity registered in England and Wales (during her time in office Ms Ramos waived all board and committee fees due to her and asked that a donation equivalent to those fees be made by the company to this charity).

It remains the group’s policy that political donations are only made by exception, and where permitted by local laws, and must be consistent with building multi-party democracy.

In March 2009 the board announced, following due consideration, that the group would provide funding to political parties in the 2009 South African elections. These contributions amounted to US$0.6 million (R5 million) and were distributed across six parties. The group made contributions at the same level in the run up to the 1999 and 2004 elections and has not made any other political donations in South Africa outside of the national election cycle. It is the board’s belief that great strides have been made in recent years to foster a vibrant, multi-party democracy in South Africa and SABMiller is proud to have made a contribution to that achievement.

Miller Brewing Company made contributions to individual candidates for political office and to party committees in the USA, where permitted by applicable campaign finance laws. Political donations in the USA are an accepted part of the local socio-political environment. These contributions amounted to US$245,312 in aggregate.

The group’s subsidiary in El Salvador made donations totalling US$160,000 to a number of parties participating in the legislative and presidential elections. Additionally, a donation of soft drinks to the value of US$4,822 was made to support volunteers of the various political parties during the election process. In Honduras the group’s subsidiary donated soft drinks to the value of US$3,579 to participants in the primary elections for the benefit of volunteers assisting during the elections.

The board has reaffirmed the group’s policy not to make donations to political organisations in the European Union.

Employment, environmental and social policies

The aim of the group is to be the employer of choice in each country in which it operates. In order to achieve this, each operating company designs employment policies which attract, retain and motivate the highest quality of staff.

The group is committed to an active equal opportunities policy from recruitment and selection, through training and development, appraisal and promotion to retirement. Within the constraints of local law, it is our policy to ensure that everyone is treated equally, regardless of gender, colour, nationality, ethnic origin, race, disability, marital status, sexual orientation, religion or trade union affiliation. In the event of employees becoming disabled, efforts are made to allow them to continue in their role, or a suitable alternative role, through making reasonable adjustments.

All employees of all SABMiller group companies must adhere to a refreshed code of business conduct and ethics. This sets out our core principles of business conduct and ethics, including being fair and ethical in all our dealings and treating people with dignity and respect. The group is committed to the 10 principles of the United Nations Global Compact. This framework sets out universally accepted principles in the areas of human rights, labour, the environment and anti-corruption. The company’s website sets out these principles and the group’s progress towards them.

The group is committed to regular communication and consultation with employees and encourages employee involvement in the performance of the company. During the year the group launched a quarterly global newsletter. The newsletter is distributed to all of the group’s businesses to help inform employees about what is happening in our businesses globally. Further information is provided to employees at a regional/country level by way of newsletters and electronic communication. Certain employees throughout the group are eligible to participate in the group’s share incentive plans.

The sustainable development review gives an overview of the progress on the group’s 10 environmental and social sustainable development priorities.

Research and development

To ensure improved overall operational effectiveness, the group places considerable emphasis on research and development in its global technical activities. This enables us to develop new products, packaging, processes and manufacturing technologies. Good progress was made in the group’s on-going research in the key areas of raw materials, brewing, flavour stability, packaging materials and energy and water saving. Our total investment in research and development in the year under review was US$7 million (2008: US$9 million).

Payment of suppliers

The group’s policy is to pay invoices in accordance with the terms of payment agreed in advance. At the year end, the amount owed by the group to trade creditors was equivalent to 36.3 days (2008: 32.8 days) of purchases from suppliers.

Overseas branches

The company does not have any branches registered overseas.

Going concern and audit

The Statement of directors’ responsibilities details the directors’ responsibilities for preparing the consolidated financial statements. As set out in that statement the directors are satisfied that SABMiller plc is a going concern.

So far as each director is aware, there is no relevant audit information of which the group’s auditors are unaware, and each director has taken all the steps necessary that he or she ought to have taken as a director in order to make himself or herself aware of the relevant audit information and to establish that the group’s auditors are aware of that information.

PricewaterhouseCoopers LLP have expressed their willingness to continue in office as auditors and resolutions proposing their re-appointment and authorising the board to set their remuneration will be submitted to the forthcoming annual general meeting.

Directors’ indemnities

The company has granted rolling indemnities to the directors, uncapped in amount, in relation to certain losses and liabilities which they may incur in the course of acting as directors of the company or of one or more of its subsidiaries. The Company Secretary and Deputy Company Secretary have also been granted indemnities, on similar terms, covering their roles as Company Secretary and Deputy Company Secretary respectively of the company and as directors or as company secretary of one or more of the company’s subsidiaries. The board believes that it is in the best interests of the group to attract and retain the services of the most able and experienced directors and officers by offering competitive terms of engagement, including the granting of such indemnities.

The indemnities were granted at different times according to the law in force at the time and where relevant are categorised as qualifying third-party indemnity provisions as defined by Section 309B of the Companies Act 1985 and Section 234 of the Companies Act 2006. They will continue in force for the benefit of directors and officers for as long as they remain in their positions.

Substantial shareholdings

Details of notifications received by the company in accordance with the Disclosure and Transparency Rules as at 1 June 2009 and of persons with significant direct or indirect holdings known to the company at year end are set out in the ordinary shareholding analyses.

Financial instruments

Information on the financial risk management objectives and policies of the group and details of the group’s exposure to price risk, credit risk, liquidity risk and cash flow risk are contained in Note 22 to the consolidated financial statements.

Other Companies Act disclosures

The company does not have any contractual or other arrangements that individually are essential to the business of the company.

Following the implementation of the Takeovers Directive into UK law, the directors’ report is required to disclose certain additional information, irrespective of whether the company is involved in a takeover situation.

The structure of the company’s share capital, including the rights and obligations attaching to each class of share and the percentage of the share capital that each class of share comprises, is set out in Note 25 to the consolidated financial statements. There are no securities of the company that grant the holder special control rights.

At year end the company’s employee benefit trust held 5,746,387 ordinary shares in the company. By agreement with the company, the trustees do not exercise the voting rights attached to these shares.

The directors are responsible for the management of the business of the company and may exercise all the powers of the company subject to the company’s memorandum and articles of association and relevant statutes. Powers of the directors relating to the issuing and buying back of shares are set out in the articles of association. Such powers are subject to renewal by the shareholders of the company each year at the annual general meeting.

The company’s articles of association give the board of directors power to appoint directors. The articles of association may be amended by special resolution of the shareholders. Directors appointed by the board are required to submit themselves for election by the shareholders at the next annual general meeting of the company. Additionally, as disclosed in the corporate governance report, Altria Group, Inc (‘Altria’) and BevCo Ltd (‘BevCo’) have power under their respective relationship agreements with the company to nominate directors for appointment to the board and certain committees. These relationship agreements also regulate processes applicable in relation to the acquisition or disposal of shares by Altria and BevCo.

The company’s articles of association allow directors, in their absolute discretion, to refuse to register the transfer of a share in certificated form which is not fully paid or the transfer of a share in certificated form on which the company has a lien. If that share has been admitted to the Official List, the board may not refuse to register the transfer if this would prevent dealings in the company’s shares from taking place on an open and proper basis. They may also refuse to register a transfer of a share in certificated form unless the instrument of transfer is lodged, duly stamped (if stampable), at the address at which the register of the company is held or at such other place as the directors may appoint, and (except in the case of a transfer by a financial institution where a certificate has not been issued in respect of the share) is accompanied by the certificate for the share to which it relates and such other evidence as the directors may reasonably require to show the right of the transferor to make the transfer, is in respect of only one class of share and is in favour of not more than four transferees jointly.

Transfers of shares in uncertificated form must be made in accordance with and subject to the Uncertificated Securities Regulations (the ‘Regulations’), the facilities and requirements of the relevant CREST system and such arrangements as the board may determine in relation to the transfer of certificated shares (subject to the Regulations).

Transfers of shares listed on the JSE Limited (‘JSE’) in uncertificated form must be made in accordance with, and subject to, the Securities Services Act 2004, the Rules and Directives of the JSE and STRATE Ltd. Certificated shares may be transferred prior to dematerialisation, but share certificates must be dematerialised prior to trading in the STRATE environment.

In addition, subject to the Regulations, and each Act and statutory instrument concerning and affecting companies for the time being in force, and in exceptional circumstances approved by the FSA, the board may refuse to register a transfer of a share (including a fully paid share) if the refusal does not disturb the market in the company’s shares.

Pursuant to the company’s code for securities transactions, directors and persons discharging managerial responsibilities require, and employees may in certain circumstances require, approval to deal in the company’s shares. No shareholder shall, unless the directors otherwise determine, be entitled in respect of any share held by him/her to vote either personally or by proxy at a shareholders’ meeting or to exercise any other right conferred by membership in relation to shareholders’ meetings if any call or other sum presently payable by him/her to the company in respect of that share remains unpaid. In addition, no shareholder shall be entitled to vote if he/she has been served with a notice after failing to provide the company with information concerning interests in those shares required to be provided under Section 793 of the Companies Act 2006. Restrictions on the rights of the holders of convertible shares and deferred shares are set out in Note 25.

Votes may be exercised in person, by proxy, or in relation to corporate members by a corporate representative. The deadline for delivering proxy forms is 48 hours before the time for holding the meeting.

The company is also required to disclose any significant agreements that take effect, alter or terminate upon a change of control following a takeover bid. The company has a number of facility agreements with banks which contain provisions giving rights to the banks upon a change of control of the company. A change of control of the company would also give The Coca-Cola Company certain rights under its bottling agreements with various subsidiaries of the company. Similarly, in certain circumstances a change of control may give China Resources Enterprise, Limited the ability to exercise certain rights under a shareholder agreement in relation to the company’s associate CR Snow. A change of control may also give the Molson Coors Brewing Company the ability to exercise certain rights under the MillerCoors operating agreement.

The company does not have any agreements with any director or officer that would provide compensation for loss of office or employment resulting from a takeover.

Listing Rules disclosures: related party transaction

On 13 May 2009, the company agreed to acquire the outstanding 28.1% minority interest in the company’s Polish subsidiary, Kompania Piwowarska S.A., from Kulczyk Holding S.A. in exchange for 60 million new ordinary shares in the company. The acquisition was completed on 29 May 2009, and Kulczyk Holding S.A. now holds 3.82% of the company’s enlarged issued ordinary share capital (excluding treasury shares). Based upon SABMiller’s closing share price on Wednesday, 13 May 2009, of £12.20 per share and an exchange rate of £1=US$1.52, the value of the consideration for the transaction was US$1,110 million. Kulczyk Holding S.A. was a related party of SABMiller because it is a member of a group of companies connected to Dr Jan Kulczyk, who at the time the transaction was entered into was a non-executive director and member of the supervisory board of Kompania Piwowarska S.A.

John Davidson

General Counsel and Group Company Secretary

For and on behalf of the board of SABMiller plc

1 June 2009