Chairman’s statement

Dear Shareholder,

I am pleased to report another robust performance from your company. We all know that things have been tough this year. Not only did we face softening consumer demand, we also had to contend with an increase in commodity costs and a strengthening US dollar. So it’s especially pleasing to have delivered such creditable results.

Total beverage volumes grew 2% to 260 million hectolitres, with reported lager volumes also rising 2% to 210 million hectolitres including acquisitions in Europe, Africa and Asia. Without the acquisitions, lager volumes were level with the prior year.

Earnings before interest, tax and amortisation (EBITA) grew 5% on an organic, constant currency basis. This underlying profit growth is quite an achievement in these challenging times and shows the operational strengths of our businesses, which we have built over many years, and the power of their leading local brands. On a reported basis, however, results were impacted by the strengthening of the US dollar against our major operating currencies. Reported EBITA at US$4,129 million was therefore flat, and profit before tax decreased 9% to US$2,958 million reflecting the impact of exceptional items and increased net finance costs.

Despite EBITA being level with the prior year, adjusted earnings per share in US dollars declined by 4% on the prior year, due to a significant increase in net finance costs which was partly offset by a lower effective tax rate. However, in sterling terms earnings per share gained 12% and 19% in South African rand.

We continued to invest in the business, with capital expenditure during the year totalling some US$2,100 million and acquisitions a further US$300 million. Despite this very significant investment, net debt at the year end was lower than the prior year and the group remains financially strong.

In view of this performance, the board has recommended a final dividend of 42 US cents per share to be paid to shareholders on 28 August 2009. This brings the total dividend for the year to 58 US cents, unchanged from the prior year.

Share price 1 April 2004 to 31 March 2009

(£ sterling)

Market overview

While certainly not immune to the current crisis, beer is a fairly resilient product and SABMiller is better placed than many to weather the storm. Thanks, partly, to our long experience of emerging markets, we are used to operating under difficult conditions. If we look back ten years to our London stock market listing, it is worth remembering that the Asian currency crisis at that time had shaken investor confidence in emerging markets and that the outlook was far from encouraging. Nevertheless, we prospered and grew and achieved the international expansion that our listing was intended to facilitate. Since our London listing in 1999, we have moved from 88th to 17th place in the FTSE 100. Our market capitalisation has grown from US$5,503 million to US$22,415 million as at 31 March 2009 and total shareholder return over the period stands at 204% compared to minus 12% for the FTSE 100.

Ten years on, our geographic spread is proving to be an advantage in that different countries are affected by the crisis at different rates and to differing degrees. So while demand in Europe has dropped sharply, countries in emerging markets such as Africa and Asia have fared relatively well despite falling back from the high – one might say unsustainable – rates of growth of recent years.

Another of our advantages, as our Chief Executive explains more fully in the Chief Executive’s review, is a consistent and robust strategy, effectively implemented. Although the strategy continues to evolve to take account of new conditions, its essential elements remain unchanged.

We have continued, for example, to develop our international portfolio of businesses. The year’s highlight was the formation of the MillerCoors joint venture in the US. Having started operations on 1 July 2008, MillerCoors is making good progress and is more than meeting its cost-saving targets. We are also judiciously expanding our geographic footprint in other parts of the world where it makes sense to do so. In the past year we’ve acquired one of the larger breweries in the Ukraine and a beer and malt operation in Nigeria, each marking our first entry to the country in question. In the case of Nigeria, the move takes us into the only major African market in which SABMiller did not previously have a presence.

Investment in existing markets has continued with the acquisition, by our associate CR Snow, of three breweries in the Anhui, Liaoning and Zhejiang provinces of China. We have also acquired the remaining 50% interest in our Vietnamese brewing business and in May 2009 we acquired the outstanding 28.1% minority interest in our Polish subsidiary, Kompania Piwowarska. Elsewhere we bought the Vladpivo brewing company in Russia and Bere Azuga in Romania to strengthen our positions in these countries. We are also building new brewing facilities in Russia, Tanzania, Mozambique and Angola with a brewery recently completed in southern Sudan. Further investment has gone into sales and marketing and assets such as bottles and fridges.

With the bulk of these investments behind us, we expect to reduce our capital expenditure from its peak of almost US$2,100 million in the year just ended to US$1,500 million in the current year, to the benefit of our cash flow. We are also reaping the benefits of steady investment in our brands and the development of the beer category as a whole. Even in countries badly affected by the recession, the brand equity we’ve now created enables us to claim a rising share of the total alcohol market while also in many cases growing our revenues.

Operational highlights

Perhaps the most pleasing performance this year was in North America where EBITA grew 22%. The new leadership team at MillerCoors has moved quickly to bring the two businesses together and achieve the cost savings we identified prior to the deal. In fact these savings are coming through faster than expected. The team has delivered outstanding profit growth through strong revenue management, cost efficiencies and the vigorous execution of its strategy.

There were mixed performances in Latin America where organic lager volumes overall grew by 1%. A combination of cost reductions, strong pricing and a shift to premium products has improved the margin and achieved a 10% increase in reported EBITA.

In Europe, the sharp deterioration in the economy has squeezed consumer spending. Nevertheless, we maintained our lager volumes, on an organic basis, and gained share in some of our markets. After several years of double digit growth, however, reported EBITA in Europe showed a small fall of 1%.

Africa performed extremely well, growing total beverage volumes by around 10% organically with notable performances from Tanzania and Angola. Sales in Botswana, however, were severely affected by the introduction of a new levy on alcohol.

In Asia, lager volume growth at CR Snow in China slowed to 4% organically through a combination of the weaker economy, the poor weather at the start of the year and the earthquake in Sichuan, an important province for the business. India, with its difficult regulatory environment, saw volumes increasing by 5%. For reporting purposes we continue to combine the results for Africa and Asia: on a joint basis reported EBITA was up 13%.

Finally, volumes in South Africa were slightly down on the previous year, and the weaker currency exacerbated increases in commodity costs. Despite some strong pricing across lager and soft drinks, both margin and profits suffered, with reported EBITA down 26%.

Sustainable development

Whatever the conditions, we will not compromise our commitment to operating more sustainably and benefiting the communities in which we work. Among other initiatives this year, we’ve committed ourselves to reducing further the amount of water we use per litre of lager by 25% over the next six years and to cutting fossil fuel emissions per litre of lager by 50% by 2020. To foster local enterprise in emerging markets, we have plans to raise the number of local farmers from whom we buy our raw materials from 22,000 at present to 60,000 by 2012.

The past year has also seen the launch of our website which provides accurate and balanced information about responsible consumption. While the vast majority of our customers enjoy alcohol responsibly, the small minority of irresponsible drinkers can cause problems and we’re working with partners to address the issue.

More details of these and other sustainable development initiatives can be found in Sustainable development.

Board and executive

We were delighted this year to welcome Norman Adami back to the group as Managing Director and Chairman of SAB Ltd in South Africa. Formerly President and CEO of SABMiller Americas, Norman was obliged to resign in 2007 to attend to urgent family matters in South Africa. With these issues now resolved, he is able to return to a role he last held in 2003.

Norman’s predecessor in South Africa, Tony van Kralingen, has been appointed Director of Supply Chain and Human Resources for the SABMiller group. His new role emphasises our determination to gain maximum value from our global scale.

Our former Human Resources Director, Johann Nel, has retired from the group. Johann has made an exceptional contribution over the last seven years and he leaves with our gratitude and very best wishes.

Among our non-executives, we are sorry that Maria Ramos has had to step down at the request of the South African banking regulator following her appointment as Chief Executive of ABSA. Although she was only with us for a few months, we greatly valued her contribution.

With effect from 1 June 2009, Dr Dambisa Moyo has been appointed as a new non-executive director. Dambisa is an economist and commentator on Africa who has held positions at Goldman Sachs and the World Bank and she will add much value to our deliberations. Her appointment will also enhance the balance between the independent and the non-independent directors on the board.

In addition to thanking all those who have served on our board this year, I must also express my gratitude to our executives, managers and staff who have shown tremendous dedication and skill in challenging circumstances. We are grateful, too, to our business partners and to you, our shareholders, for your support during the year.


In summary, the group delivered resilient underlying results, despite the strong headwinds that we faced. Global economic conditions and consumer demand weakened during the year and there remains little visibility as to the timing of any recovery. In the current year we expect commodity cost pressures to continue, given existing contractual arrangements. In addition, the currency translation effect of the stronger US dollar will impact our reported results.

However, the group remains confident in its medium-term prospects. We are taking appropriate short-term mitigating actions in certain countries to reduce costs. Investment plans have been reviewed and curtailed where necessary in the light of expected economic conditions, but we continue to invest selectively to support growth. The group remains in a strong financial position, and we are confident that we will continue to benefit from the strength of our brands and our globally diversified and well balanced portfolio of businesses.

Meyer Kahn Chairman

Meyer Kahn, Chairman