Anheuser-Busch InBev and SABMiller: Would Strategic Benefits Come Easily with “Newco”?

Abstract

On 11 November 2015, Carlos Brito, chief executive of global leading beer brewer Anheuser-Busch InBev (AB InBev), presented his final offer of US$105.5 billion (£69.8 or £44 pounds per share), to acquire its rival, SABMiller, which the company accepted. The acquisition process had started in September and just over a month later, on 13 October, SABMiller had accepted the offer in principle, but had certain requirements before it would accept. Such a massive transaction could well present hurdles – one being anti-competitive issues. But would this acquisition deliver synergies soon enough for InBev, Brito wondered?

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Exhibit 1a AB InBev Consolidated Income Statement for the Year Ended 31 December 2014

Consolidated income statement

For the year ended 31 December 2014

Million US dollar, except earnings per shares in US dollar

Notes

2014

2013

Revenue

47 063

43 195

Cost of sales

(18 756)

(17 594)

Gross profit

28 307

25 601

Distribution expenses

(4 558)

(4 061)

Sales and marketing expenses

(7 036)

(5 958)

Administrative expenses

(2 791)

(2 539)

Other operating income (expenses)

7

1 386

1 160

Profit from operations before non-recurring items

15 308

14 203

Restructuring (including impairment losses)

8

(277)

(118)

Business and asset disposal (including impairment losses)

8

157

30

Acquisition costs business combinations

8

(77)

(82)

Fair value adjustments

8

-

6 410

Profit from operations

15 111

20 443

Finance cost

11

(2 797)

(3 047)

Finance income

11

969

561

Non-recurring net finance cost

8

509

283

Net finance cost

(1 319)

(2 203)

Share of result of associates

9

294

Profit before tax

13 801

18 534

Income tax expense

12

(2 499 )

(2 016)

Profit

11 302

16 518

Attributable to:

    Equity holders of AB InBev

9 216

14 394

    Non-controlling interest

2 086

2 124

Basic earnings per share

21

5.64

8.90

Diluted earnings per share

21

5.54

8.72

Basic earnings per share before non-recurring items 1

21

5.43

4.91

Diluted earnings per share before non-recurring items 1

21

5.32

4.81

Other comprehensive income: items that will not be reclassified to profit or loss:

Re-measurements of post-employment benefits

(491)

503

Other comprehensive income: items that may be reclassified subsequently to profit or loss

Translation reserves (gains/losses)

    Exchange differences on translation of foreign operations

(4 793)

(3 500)

    Effective portion of changes in fair value of net investment hedges

33

(66)

Cash flow hedges

    Recognized in equity

314

579

    Removed from equity and included in profit or loss

(190)

(36)

Share of other comprehensive results of associates

-

(67)

(4 636)

(3 090)

Other comprehensive income, net of tax

(5 127)

(2 587)

Total comprehensive income

6 175

13 931

Attributable to:

    Equity holders of AB InBev

4 465

12 285

    Non-controlling interest

1 710

1 646

Exhibit 1b AB InBev Consolidated Cash Flow Statement for the Year Ended 31 December 2014

Consolidated cash flow statement

For the year ended 31 December

Million US dollar

Notes

2014

2013

Operating activities

Profit

11 302

16 518

Depreciation, amortization and impairment

10

3 353

2 985

Impairment losses on receivables, inventories and other assets

108

91

Additions/(reversals) in provisions and employee benefits

(85)

109

Net finance cost

11

1 319

2 203

Loss/(gain) on sale of property, plant and equipment and intangible assets

4

(25)

Loss/(gain) on sale of subsidiaries, associates and assets held for sale

(219)

(85)

Revaluation of initial investment in Grupo Modelo

6

-

(6 415)

Equity-settled share-based payment expense

24

249

240

Income tax expense

12

2 499

2 016

Other non-cash items included in the profit

(190)

(105)

Share of result of associates

(9)

(294)

Cash flow from operating activities before changes in working capital and use of provisions

18 331

17 238

Decrease/(increase) in trade and other receivables

(371)

(25)

Decrease/(increase) in inventories

(354)

(129)

Increase/(decrease) in trade and other payables

1 540

1 020

Pension contributions and use of provisions

(458)

(653)

Cash generated from operations

18 688

17 451

Interest paid

(2 476)

(2 214)

Interest received

273

297

Dividends received

30

606

Income tax paid

(2 371)

(2 276)

Income tax paid

(2 371)

(2 276)

Cash flow from operating activities

14 144

13 684

Investing activities

Proceeds from sale of property, plant and equipment and of intangible assets

273

257

Sale of subsidiaries, net of cash disposed of

6

426

42

Acquisition of subsidiaries, net of cash acquired

6

(7 126)

(17 439)

Purchase of non-controlling interest

21

(92)

(99)

Acquisition of property, plant and equipment and of intangible assets

13/15

(4 395)

(3 869)

Net of tax proceeds from the sale of assets held for sale

(65)

4 002

Net proceeds from sale/(acquisition) of investment in short-term debt securities

16

(187)

6 707

Net proceeds from sale/(acquisition) of other assets

15

(13)

Net repayments/(payments) of loans granted

(1)

131

Cash flow from investing activities

(11 152)

(10 281)

Financing activities

Net proceeds from the issue of share capital

21

83

73

Proceeds from borrowings

18 382

22 464

Payments on borrowings

(15 159)

(18 006)

Cash received for deferred shares instrument

-

1 500

Cash net finance (cost)/income other than interests

239

563

Dividends paid

(7 400)

(6 253)

Cash flow from financing activities

(3 855)

341

Net increase/(decrease) in cash and cash equivalents

(863)

3 924

Cash and cash equivalents less bank overdrafts at beginning of year

9 833

7 051

Effect of exchange rate fluctuations

(654)

(1 142)

Cash and cash equivalents less bank overdrafts at end of period

20

8 316

9 833

Notes to the Financial Statements

1. Corporate information

2. Statement of compliance

3. Summary of significant accounting policies

4. Use of estimates and judgements

5. Segment reporting

6. Acquisitions and disposals of subsidiaries

7. Other operating income/(expenses)

8. Non-recurring items

9. Payroll and related benefits

10. Additional information on operating expenses by nature

11. Finance cost and income

12. Income taxes

13. Property, plant and equipment

14. Goodwill

15. Intangible assets

16. Investments securities

17. Deferred tax assets and liabilities

18. Inventories

19. Trade and other receivables

20. Cash and cash equivalents

21. Changes in equity and earnings per share

22. Interest-bearing loans and borrowings

23. Employee benefits

24. Share-based payments

25. Provisions

26. Trade and other payables

27. Risks arising from financial instruments

28. Operating leases

29. Collateral and contractual commitment for the acquisition of property, plant and equipment, loans to customers and other

30. Contingencies

31. Related parties

32. Events after the balance sheet date

33. AB InBev companies

Source: AB InBev (2014), “AB InBev Annual Report 2014”, available at: www.ab-inbev.com/media/annual-report.html (accessed 9 October 2015).

Exhibit 1c AB InBev Shareholder Structure (2014)

Figure

Source: InBev (n.d.), “AB InBev Shareholder Structure”, available at: www.abinbev.com/investors/shareholder-structure.html (accessed 9 October 2015).

Exhibit 1d AB InBev Key Financial Ratios: 2005–2014

Financials

2005-12

2006-12

2007-12

2008-12

2009-12

2010-12

2011-12

2012-12

2013-12

2014-12

TTM

Revenue USD mil

13 805

17 564

21 039

23 507

36 758

36 297

39 046

39 758

43 195

47 063

45 762

Gross margin %

56.4

58.8

58.9

56.0

53.2

55.5

57.4

58.6

59.3

60.1

60.1

Operating income USD mil

2 603

4 130

6 261

5 340

11 569

10 897

12 329

12 733

20 443

15 111

14 642

Operating margin %

18.9

23.5

29.8

22.7

31.5

30.0

31.6

32.0

47.3

32.1

32.0

Net income USD mil

1 661

2 806

4 444

1 927

4 613

4 026

5 855

7 243

14 394

9 216

9 636

Earnings per share USD

1.78

3.04

5.23

1.93

2.90

2.50

3.63

4.45

8.72

5.54

5.77

Dividends USD

0.49

1.18

1.57

3.03

3.25

3.49

Payout ratio %

19.8

38.3

35.4

26.6

51.4

60.5

Shares mil

603

613

613

1 000

1 593

1 611

1 614

1 628

1 650

1 665

1 669

Book value per share USD

18.90

21.97

22.88

25.61

29.54

32.58

29.54

Operating cash flow USD mil

2 708

4 338

5 925

6 158

9 124

9 905

12 486

13 268

13 864

14 144

14 137

Cap spending USD mil

−1 399

−1 821

−2 305

−2 652

−1 713

−2 344

−3 376

−3 264

−3 869

−4 395

−4 401

Free cash flow USD mil

1 309

2 517

3 620

3 506

7 411

7 561

9 110

10 004

9 995

9 749

9 736

Free cash flow per share USD

4.65

4.69

4.46

6.15

5.44

6.38

Working capital mil

−1 097

−1 472

−1 671

−13 064

−3 401

−3 123

−7 321

222

−6 937

−8 667

Margins % of sales

2005-12

2006-12

2007-12

2008-12

2009-12

2010-12

2011-12

2012-12

2013-12

2014-12

TTM

Revenue

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

COGS

43.60

41.16

41.14

43.97

46.79

44.50

42.60

41.37

40.73

39.85

39.91

Gross margin

56.40

58.84

58.86

56.03

53.21

55.50

57.40

58.63

59.27

60.15

60.09

SG&A

36.47

35.77

33.35

32.81

27.13

26.41

26.89

28.25

29.07

30.57

30.43

R&D

Other

1.07

−0.44

−4.25

0.50

−5.39

−0.93

−1.07

−1.64

−17.13

−2.53

−2.34

Operating margin

18.86

23.51

29.76

22.72

31.47

30.02

31.58

32.03

47.33

32.11

32.00

Net int inc & other

−3.47

−3.55

−4.14

−6.55

−10.63

−8.86

−6.44

−3.98

−4.42

−2.78

−0.94

EBT margin

15.38

19.97

25.62

16.17

20.85

21.16

25.14

28.05

42.91

29.32

31.05

Profitability

2005-12

2006-12

2007-12

2008-12

2009-12

2010-12

2011-12

2012-12

2013-12

2014-12

TTM

Tax rate %

21.81

19.98

17.55

17.74

23.31

24.99

18.91

15.40

10.88

18.11

18.00

Net margin %

7.76

10.60

15.23

8.20

12.55

11.09

15.00

18.22

33.32

19.58

21.06

Asset turnover (average)

0.52

0.56

0.55

0.30

0.33

0.32

0.34

0.34

0.33

0.33

0.32

Return on assets %

4.03

5.95

8.38

2.49

4.09

3.55

5.16

6.16

10.89

6.49

6.69

Financial leverage (average)

2.05

2.14

2.11

5.04

3.71

3.24

3.00

2.98

2.81

2.85

2.91

Return on equity %

8.20

12.51

17.78

9.11

17.49

12.28

16.10

18.42

31.46

18.37

19.29

Return on invested capital %

6.22

11.29

15.57

5.30

9.74

8.34

10.49

11.17

17.69

10.52

10.51

Interest coverage

5.16

6.19

3.01

2.56

2.80

3.75

5.37

7.08

8.01

8.57

Source: Morningstar (n.d.), “Anheuser-Busch Inbev SA ADR BUD”, available at: http://financials.morningstar.com/ratios/r.html?t=BUD (accessed 18 November 2015).

Exhibit 1e AB InBev Consolidated Statement of Financial Position for the Year Ended 31 December 2014

Consolidated statement of financial position

As at

Notes

2014

2013

Million US dollar

Assets

Non-current assets

Property, plant and equipment

13

20 263

20 889

Goodwill

14

70 758

69 927

Intangible assets

15

29 923

29 338

Investments in associates

110

187

Investment securities

16

118

193

Deferred tax assets

17

1 058

1 180

Employee benefits

23

10

10

Trade and other receivables

19

1 769

1252

124 009

122 976

Current assets

Investment securities

16

301

123

Inventories

18

2 974

2 950

Income tax receivable

359

332

Trade and other receivables

19

6 449

5 362

Cash and cash equivalents

20

8 357

9 839

Assets held for sale

101

84

18 541

18 690

Total assets

142 550

141 666

Equity and liabilities

Equity

Issued capital

21

1 736

1 735

Share premium

17 620

17 608

Reserves

(4 558)

18

Retained earnings

35 174

31 004

Equity attributable to equity holders of AB Inbev

49 972

50 365

Non-controlling interest

4 285

4 943

54 257

55 308

Non-current liabilities

Interest-bearing loan and borrowings

22

43 630

41 274

Employee benefits

23

3 050

2 862

Deferred tax liabilities

17

12 701

12 841

Trade and other payables

26

1 070

3 222

Provisions

25

634

532

61 085

60 731

Current liabilities

Bank overdrafts

20

41

6

Interest-bearing loans and borrowings

22

7 451

7 846

Income tax payable

629

1105

Trade and other payables

26

18 922

16 474

Provisions

25

165

196

27 208

25 627

Total equity and liabilities

142 550

141 666

Source: AB InBev (2014), “AB InBev Annual Report 2014”, available at: www.ab-inbev.com/media/annual-report.html (accessed 9 October 2015).

Exhibit 2 AB InBev’s Global Presence (2015)

Figure

Source: AB InBev (2014), “AB InBev Annual Report 2014”, available at: www.ab-inbev.com/media/annual-report.html (accessed 9 October 2015).

Exhibit 3 AmBev Financial Highlights 2000 and 2001, Following the Merger with Brahma and Antarctica

Ambev Financial Highlights

2001 (US$)(1)

2001

2000

% change

SALES VOLUME (millions of hectolitres)

Beer – Brazil

-

59.0

59.3

−0.5

Beer – International

-

3.3

2.9

13.8

Soft drinks

-

18.5

17.2

7.4

Total

-

80.8

79.3

1.9

INCOME STATEMENT DATA (R$ millions)

Net sales

2 766.1

6 525.6

5 250.3

24.3

Gross profit

1 344.1

3 159.3

2 406.6

31.3

EBITDA

846.4

1 987.7

1 505.0

32.2

EBIT

585.3

1 375.8

915.8

59.2

Net income

333.8

784.6

470.2

66.9

EVA

151.0

355.0

283.6

25.2

Return of equity

-

23%

15%

-

BALANCE SHEET DATA (R$ millions)

Total assets

4 691.9

11 028.8

8 639.6

28.7

Total debt

1 943.9

4 569.3

2 192.9

108.4

Cash and cash equivalents

1 080.2

2 539.0

1 028.3

146,9

Net debt

863.7

2 030.3

1 164.6

74.3

Capital expenditure

-

446.8

589.2

−24.2

Shareholder’s equity

1 430.9

3 363.4

3 076.9

15.2

PER SHARE DATA (R$/1 000 shares)

Book value

37.24

87.54

79.89

10.91

EP5

8.69

20.42

12.19

67.20

Dividends (ON)(2)

3.50

8.22

4.47

86.81

Dividends (PN)(2)

3.85

9.04

4.84

86.81

Number of shares (millions)(3)

-

39 741.4

38 646.1

-

Number of ADRs (millions)(3)

-

91.0

94.8

-

Market capitalization (R$ millions)

-

18 744.0

18 283.8

2.5

Market capitalization (US$ millions)

-

8 077.9

9 350.4

−13.6

(1) U.S. dollar amounts have been translated at R82.35

(2) Includes all payments to shareholders, including dividends, interest on own capital and capital decrease

(3) Includes treasury shares

Source: AmBev (2001), “AmBev Annual Report 2001”, available at: http://ri.ambev.com.br/arquivos/Ambev_AnnualRepl_2001_eng.pdf (accessed 4 November 2015).

Exhibit 4 Interbrew Financials for the Year Ended 31 December 2000 (Just Prior to Acquiring AmBev)

Year ended 31 December

1998

1999

2000

(€ in millions)

Turnover

3 478.5

4 346.4

7 999.6

Excise taxes

(763.5)

(1 102.6)

(2 343.0)

Net turnover

2 715.0

3 243.8

5 656.6

Other (1)

4.0

9.3

(10.3)

Other operating revenue

116.8

144.4

177.5

Net operating revenue

2 835.8

3 397.5

5 823.8

Net operating expenses

    Raw material, consumables and goods for sale (excluding excise taxes)

    Services and other goods

    Payroll and benefits

    Depreciation and amortization

    Other (2)

2 425.8

799.0

761.6

581.6

237.0

73.6

2 978.7

1 014.7

910.0

635.9

303.2

114.9

5 179.4

1 937.7

1 541.4

1 010.0

482.2

208.1

Operating profit

383.0

418.8

644.4

Other data:

EBITDA

650.9

755.7

1 1985.5

ROIC (3)

12.6%

10.4%

11.7%

(1) Consists of increase (decrease) in inventory of finished goods, work and contracts in progress and operating expenses capitalised to capital assets.

(2) Consists of inventory provisions and bad debt expenses, decrease in provisions for liabilities and expenses, other operating expenses and amortisation of goodwill.

(3) Operating (EBIT) on depreciated net assets, including goodwill.

Source: Interbrew (2000), “Interbrew Annual Report 2000”, available at: www.ab-inbev.com/content/dam/universaltemplate/abinbev/pdf/investors/annual-and-hy-reports/2000/Financial_Report2000EN.pdf (accessed 9 November 2015).

Exhibit 5 InBev Financials 2004 (Including Interbrew 2000–2003)

InBev Key Figures: Five-year Review

Million euro unless stated otherwise

2004

2003

2002

2001

2000

Net turnover

8 568

7 044

6 992

7 303

5 657

Normalized EBITFA

2 112

1 498

1 394

1 533

1 156

EBITDA

2 325

1 498

1 394

1 533

1 156

Normalized profit from operations

1 251

839

836

884

533

Profit from operations

1 310

839

728

884

533

Normalized net profit

621

505

467

537

271

Net profit from ordinary activities

719

505

467

537

271

Net profit

719

505

467

698

(964)

Normalized earnings per share before goodwill¹ (euro)

1.69

1.45

1.51

1.44

1.04

Earnings per share before goodwill¹ (euro)

1.95

1.45

1.51

1.44

1.04

Dividend per share (euro)

0.39

0.36

0.33

0.29

0.21

Pay-out ratio (%)

31.2

30.8

26.2

25.8

33.1

Weighted average number of ordinary shares (million shares)

480

432

431

429

335

Fully diluted weighted average number of ordinary shares (million shares)

483

434

435

434

343

Share price high (euro)

29.1

23.2

34.5

37.5

38.1

Share price low (euro)

20.3

15.0

19.1

25.5

34.0

Year-end share price (euro)

28.8

21.2

22.5

30.75

37.12

Market capitalization

16 442

9 141

9 712

13 257

15 865

Normalized return on invested capital (%)

12.9

10.6

11.2

10.6

8.9

Return on invested capital (%)

14.5

10.6

10.2

10.6

8.9

Net CAPEX

725

595

510

488

425

Cash flow from operations

1 384

1 151

1 045

1 053

871

Cash interest coverage

7.5

7.6

6.8

5.4

2.8

Net financial debt

3 271

2 434

2 583

2 662

2 906

Debt/equity ratio

0.38

0.52

0.55

0.55

0.71

1. Adjusted for stock splits

Source: InBev (2004), “InBev Annual report 2004”, available at: www.ab-inbev.com/content/dam/universaltemplate/abinbev/pdf/investors/annual-and-hy-reports/2004/Light_Report2004_EN.pdf (accessed 5 November 2015).

Exhibit 6 InBev Historical Key Financials 2008–2014

Figure

Source: AB InBev (n.d.), “AB InBev Historical Key Financials 2008 to 2014”, available at: www.ab-inbev.com/content/…/Historical_financials_final_FY14.xlsx (accessed 28 September 2015).

Exhibit 7a SABMiller Share Price Chart

One-month Share Price Chart

Figure

One-year Share Price Chart

Figure

Source: ADVFN (2015), “SABMiller Share Chart”, available at: http://uk.advfn.com/stock-market/london/sabmiller-SAB/share-chart (accessed 5 November 2015).

Exhibit 7b AB InBev Share Price

One-month Share Price Chart

Figure

One-year Share Price Chart

Figure

Source: Author unknown (2015), “AB InBev Equities”, available at: http://markets.ft.com/research/Markets/Tearsheets/Summary?s=ABI:BRU (accessed 9 November 2015).

Exhibit 7c Share Price History: SABMiller and AB InBev

SABMiller share price history

GBP

London Stock Exchange

AB InBev share price history

Euros

Euronext Brussels

30/11/2005

1 029.00

2/12/2005

37.18

30/11/2006

1 064.00

8/12/2006

48.15

30/11/2007

1 383.00

7/12/2007

58.62

1/12/2008

1 014.00

5/12/2008

12.65

1/12/2009

1 794.00

11/12/2009

35.75

1/12/2010

2 083.50

3/12/2010

43.22

2/12/2011

2 237.00

2/12/2011

44.51

4/12/2012

2 820.00

7/12/2012

67.59

4/12/2013

3 078.50

13/12/2013

72.56

4/12/2014

3 372.50

5/12/2014

94.25

9/11/2015

3 965.00

10/11/2015

110.90

Source: Bloomberg (2015), “AB InBev Share Price Chart”, 10 November, available at: www.bloomberg.com/quote/ABI:BB (accessed 10 November 2015); and SABMiller (2015), “SABMiller Share Price Chart”, available at: www.sabmiller.com/investors/share-price/share-price-monitor (accessed 10 November 2015).

Exhibit 8a SABMiller: Consolidated Income Statement for the Year Ended 31 March 2015

Consolidated income statement

for the year ended 31 March

Notes

2015 US$m

2014 US$m

Revenue

2

22 130

22 311

Net operating expenses

3

(17 746)

(18 069)

Operating profit

2

4 384

4 242

Operating profit before exceptional terms

2

4 459

4 439

Exceptional terms

4

(76)

(197)

Net finance costs

5

(637)

(645)

Finance costs

5a

(1 047)

(1 055)

Finance income

5b

410

410

Share of post-tax results of associates and joint ventures

2

1 083

1 226

Profit before taxation

4 830

4 823

Taxation

7

(1 273)

(1 173)

Profit for the year

27a

3 557

3 650

Profit attributable to non-controlling interests

258

269

Profit attributable to owners of the parent

26a

3 299

3 381

3 557

3 650

Basic earnings per share (US cents)

8

205.7

211.8

Diluted earnings per share (US cents)

8

203.5

209.1

The notes on page 112 to 175 in the annual report are an integral part of these consolidated financial statements and are available at the source given below.

Source: SABMiller (2015), “SABMiller Annual Report 2015”, available at: www.sabmiller.com/investors/reports (accessed 28 September 2015).

Exhibit 8b SABMiller: Consolidated Balance Sheet for the Year Ended 31 March 2015

Consolidated balance sheet

at 31 March

Notes

2015 US$m

2014 US$m

Assets

Non-current assets

Goodwill

10

14 746

18 497

Intangible assets

11

6 878

8 532

Property, plant and equipment

12

7 961

9 085

Investments in joint ventures

13

5 428

5 581

Investments in associates

14

4 459

5 787

Available for sale investments

21

22

Derivative financial instruments

22

770

628

Trade and other receivables

16

126

139

Deferred tax assets

19

163

115

40 552

48 366

Current assets

Inventories

15

1 030

1 168

Trade and other receivables

16

1 711

1 821

Current tax assets

190

174

Derivative financial instruments

22

463

141

Cash and cash equivalents

17

965

2 081

4 359

5 385

Total assets

44 911

53 751

Liabilities

Current liabilities

Derivative financial instruments

22

(101)

(78)

Borrowings

20

(1 961)

(4 519)

Trade and other payables

18

(3 728)

(3 847)

Current tax liabilities

(1 184)

(1 106)

Provisions

24

(358)

(450)

(7 332)

(10 000)

Non-current liabilities

Derivative financial instruments

22

(10)

(37)

Borrowings

20

(10 583)

(12 528)

Trade and other payables

18

(18)

(25)

Deferred tax liabilities

19

(2 275)

(3 246)

Provisions

24

(338)

(433)

(13 224)

(16 269)

Total liabilities

(20 556)

(26 269)

Net assets

24 355

27 482

Equity

Share capital

25

168

167

Share premium

6 752

6 648

Merger relief reserve

3 963

4 321

Other reserves

26b

(5 457)

(702)

Retained earnings

26a

17 746

15 885

Total shareholders’ equity

23 172

26 319

Non-controlling interests

1 183

1 163

Total equity

24 355

27 482

The notes on page 112 to 175 in the annual report are an integral part of these consolidated financial statements and are available at the source given at the end of the financial statements.

Source: SABMiller (2015), “SABMiller Annual Report 2015”, available at: www.sabmiller.com/investors/reports (accessed 28 September 2015).

Exhibit 8c SABMiller: Consolidated Cash Flow Statement for the Year Ended 31 March 2015

Consolidated cash flow statement

for the year ended 31 March

Notes

2015 US$m

2014 US$m

Cash flows from operating activities

Cash generated from operations

27a

5 812

5 770

Interest received

352

365

Interest paid

(1 003)

(1 108)

Tax paid

(1 439)

(1 596)

Net cash generated from operating activities

27b

3 722

3 431

Cash flows from investing activities

Purchase of property, plant and equipment

(1 394)

(1 401)

Proceeds from sale of property, plant and equipment

68

70

Purchase of intangible assets

(178)

(84)

Purchase of available for sale investments

-

(1)

Proceeds from disposal of available for sale investments

1

-

Proceeds from disposal of associates

979

-

Proceeds from disposal of businesses (net of cash disposed)

-

88

Acquisition of businesses (net of cash acquired)

(5)

(39)

Investments in joint ventures

13

(216)

(188)

Investments in associates

(3)

(199)

Dividends received from joint ventures

13

976

903

Dividends received from associates

430

224

Dividends received from other investments

1

1

Net cash generated from/(used in) investing activities

659

(626)

Cash flows from financing activities

Proceeds from the issue of shares

202

88

Proceeds from the issue of shares in subsidiaries to non-controlling interests

29

20

Purchase of own shares for share trusts

26a

(146)

(79)

Purchase of shares from non-controlling interest

(3)

(5)

Proceeds from borrowings

594

2 585

Repayment of borrowings

(4 413)

(3829)

Capital element of finance lease payments

(10)

(9)

Net cash receipts on derivative financial instruments

243

228

Dividends paid to shareholders of the parent

9

(1 705)

(1 604)

Dividends paid to non-controlling interests

(173)

(194)

Net cash used in financing activities

(5 382)

(2 835)

Net cash outflow from operating, investing and financing activities

(1 001)

(30)

Effects of exchange rate changes

(117)

(61)

Cash decrease in cash and cash equivalents

(1 118)

(91)

Cash and cash equivalent at 1 April

1 868

1 959

Cash and cash equivalent at 31 March

27c

750

1 868

The notes on pages 112 to 175 are an integral part of these consolidated financial statements and are available at the source given below.

Source: SABMiller (2015), “SABMiller Annual Report 2015”, available at: www.sabmiller.com/investors/reports (accessed 28 September 2015).

Exhibit 8d SABMiller Shareholder Structure (Percentage), September 2015

Figure

Source: Pooler, M. and Dombey, D. (2015), “Profiles: AB InBev-SABMiller’s key shareholders”, Financial Times, 16 September, available at: www.ft.com/intl/cms/s/0/eed72990-5c6e-11e5-a28b-50226830d644.html#axzz3rY0uq33A (accessed 15 October 2015).

Exhibit 8e SABMiller Key Financial Ratios: 2005–2014

Financials

2006-03

2007-03

2008-03

2009-03

2010-03

2011-03

2012-03

2013-03

2014-03

2015-03

TTM

Revenue USD mil

15 307

18 620

21 410

18 703

18 020

19 408

21 760

23 213

16 704

22 130

20 754

Gross margin %

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

71.8

79.7

Operating income USD mil

2 575

3 027

3 448

3 148

2 619

3 127

5 013

4 203

4 242

4 384

3 845

Operating margin %

16.8

16.3

16.1

16.8

14.5

16.1

23.0

18.1

25.4

19.8

18.5

Net income USD mil

1 440

1 649

2 023

1 881

1 910

2 408

4 221

3 274

3 381

3 299

2 965

Earnings per share USD

1.04

1.10

1.34

1.25

1.22

1.52

2.64

2.04

2.09

2.04

1.83

Dividends USD

0.35

0.42

0.47

0.55

0.54

0.69

0.79

0.91

0.99

1.00

1.10

Pay-out ratio %

33.1

39.2

35.1

44.2

44.2

45.7

47.2

31.8

46.6

44.3

60.4

Shares mil

1 381

1 505

1 508

1 510

1 564

1 586

1 600

1 609

1 617

1 621

1 622

Book value per share USD

8.71

8.78

11.65

10.20

12.58

13.87

13.57

15.80

15.76

16.11

13.37

Operating cash flow USD mil

2 032

2 498

2 577

1 908

3 050

2 775

3 382

4 101

3 431

3 722

3 576

Cap spending USD mil

−1 032

−1 461

−2 037

−2 147

−1 528

−1 315

−1 639

−1 479

−1 485

−1 572

−1 458

Free cash flow USD mil

1 000

1 037

540

−239

1 522

1 460

1 743

2 622

1 946

2 150

2 118

Free cash flow per share USD

0.72

0.95

0.36

−0.16

0.97

0.92

1.07

1.25

1.19

1.41

Working capital USD mil

−2 036

−2 123

−2 122

−1 873

−2 083

−1 774

−2 048

−2 820

−4 615

−2 973

Margins % of sales

2006-03

2007-03

2008-03

2009-03

2010-03

2011-03

2012-03

2013-03

2014-03

2015-03

TTM

Revenue

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

COGS

28.20

20.31

Gross margin

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

71.80

79.69

SG&A

11.74

12.15

12.81

12.20

11.40

11.59

11.77

14.77

10.97

R&D

0.05

0.03

0.04

0.04

0.02

0.04

0.03

0.02

0.02

Other

72.45

71.48

72.33

70.87

75.92

74.28

67.46

81.89

33.88

50.43

61.47

Operating margin

16.82

16.26

16.10

16.83

14.53

16.11

23.04

18.11

25.40

19.81

18.53

Net int inc & other

−0.80

−1.20

−0.86

−1.02

1.72

2.57

2.71

2.19

3.48

2.02

2.34

EBT margin

16.03

15.06

15.25

15.82

16.25

18.68

25.75

20.30

28.87

21.83

20.86

Profitability

2006-03

2007-03

2008-03

2009-03

2010-03

2011-03

2012-03

2013-03

2014-03

2015-03

TTM

Tax rate %

31.76

32.85

29.90

27.08

28.95

29.48

20.10

25.49

24.32

26.36

25.70

Net margin %

9.41

8.86

9.45

10.06

10.60

12.41

19.40

14.10

20.24

14.91

14.29

Asset turnover (average)

0.72

0.67

0.66

0.55

0.52

0.51

0.46

0.41

0.30

0.45

0.44

Return on assets %

6.73

5.91

6.24

5.56

5.53

6.29

8.91

5.85

6.14

6.69

6.24

Financial leverage (average)

2.08

1.99

2.06

2.06

1.88

1.78

2.22

2.13

2.04

1.94

1.95

Return on equity %

13.64

12.02

12.66

11.43

10.83

11.49

17.93

12.73

12.83

13.33

12.43

Return on invested capital %

10.14

9.20

9.69

9.04

8.32

9.58

12.86

8.55

8.72

8.99

8.27

Interest coverage

8.01

5.54

6.69

4.21

4.81

6.22

8.09

5.22

5.91

8.45

9.87

Source: Morningstar (n.d.), “SABMiller PLC ADR SBMRY”, available at: http://financials.morningstar.com/ratios/r.html?t=SBMRY (accessed 18 November 2015).

Exhibit 9 SAB Financials for 1999 (Including 1995, 1996, 1997 and 1998)

SAB Financial Highlights 1995–1999

Cash flow (in millions of rand)

95/96

96/97

97/98

98/99

99/00E

EBIT

3 511

3 742

3 929

4 012

4 177

Depreciation

1 086

1 169

1 379

1 439

1 700

Increase, decrease (−) in provisions

50

54

1

−322

64

Operating cash flow

4 290

4 305

4 881

4 860

7 576

Interest paid (−) and received

−603

−425

−343

−464

−531

Tax paid

−889

−942

(1 002)

(1 042)

(1 043)

Dividends paid

−29

−263

−375

0

−272

Capex

1 956)

(1 824)

(2 562)

(3 451)

(2 936)

Net other investments

−245

−625

(1 614)

(1 309)

−927

Other cash flow-related items

−44

−116

−389

1 184

(2 489)

Change in net debt (−) cash (+)

551

1 918

(1 380)

1 412

−621

Balance sheet (millions of rand)

Net working capital

1 282

1 317

−229

(3 154)

(1 591)

Net financial debt (−) cash (+)

(3 218)

(1 301)

(2 681)

(1 269)

(1 890)

Gross tangible fixed assets

12 876

14 676

16 486

18 358

22 221

Net tangible fixed assets

8 480

9 284

10 329

11 711

13 407

Goodwill

1 094

1 454

3 040

2 971

2 080

Other long-term assets

227

401

413

2 025

0

Other long-term provisions

405

459

460

138

2 550

Other LT liabilities

0

0

0

0

0

Stated shareholder’s equity

6 364

8 654

9 613

13 389

10 936

Minorities

2 510

3 010

2 159

1 001

1 641

Total net worth

8 874

11 664

11 772

14 390

12 577

Shareholders equity after goodwill write-off

5 270

7 200

6 573

10 418

8 856

Valuation comparisons

P/E

1995

1996

1997

1998

1999E

An. Busch

25.2

Ambev/Brahma

31.3

Asia Pacific (Singapore)

27.4

Bass (UK)

11.1

Carlsberg

16.7

19.3

19.5

16.6

20.4

Femsa

19.4

Fosters

20.2

Grupo Modelo

30

Hartwall (Finland)

17.5

Heineken

16.6

25.6

21.8

26.1

27.8

Lion Natham (Australia)

14.5

Nambrew (Namibia)

12.1

Quilmes (Argentina)

16.8

San Miguel (Philippines)

20.5

Scottish & Newcastle

9.4

SAB

24.3

20.7

20.5

18

17.8

SUN Interbrew (Russia)

26.8

Whitbread

10.4

Zywiec (Poland)

77.4

SAB share performance (cents per share)

1998

1999

2000

Adjusted earnings (US cents)

56.6

54

56.6

Adjusted earnings (SA cents)

271.4

315.9

348.4

Net asset value (US cents)

151

20.1

279.3

Source: Wits Business School (2000), South African Breweries: Achieving Growth in the Global Beer Market, ase study [WBS-2000-4], Wits Business School Case Centre, Johannesburg.

Exhibit 10 SABMiller Financials 2002 (Including 1999, 2000 and 2001)

Extracts from Consolidated Profit and Loss Accounts for the Years Ended 31 March in US$ (Excluding Notes)

Figure

Source: SABMiller (2002), “SABMiller Annual Report 2002”, available at: www.portalchemy.com/Report.asp?ShareCode=SAB.L&arYear=2002 (accessed 13 November 2015).

Exhibit 11 SABMiller Key Financials 2005 for the Year Ended 31 March

2005

US$m

2004

US$m

%

change

Turnover

14 543

12 645

15

EBITA*

2 409

1 893

27

Profit before tax

2 194

1 391

58

Adjusted profit before tax*

2 242

1 705

31

Adjusted earnings*

1 251

925

35

Adjusted earnings per share*

 US cents

 UK pence (up 22%)

 SA cents (up 17%)

103.2

55.9

641.8

77.6

45.8

547.6

33

Adjusted diluted earnings per share* (US cents)

99.8

75.2

33

Basic earnings per share (US cents)

94.1

54.1

74

Dividends per share (US cents)

38.0

30.0

27

Net cash inflow from operating activities

2 792

2 292

22

*EBITA and adjusted profit before tax comprise profit before interest and tax (US$2 361 million) and profit before tax (US$2194 million) respectively before goodwill amortisation (US$366 million), and before exceptional items (net credit US$318 million – see note p. 77 in annual report available at the source below). The calculations of adjusted earnings and adjusted earnings per share measure are given in note 11, p. 81 in the annual report. All references to EBITA refer to pre-exceptional EBITA.

Source: SABMiller (2005), SABMiller Annual Report 2005, available at: www.sabmiller.com/docs/default-source/investor-documents/reports/2005/financial-reports/annual-report-2005.pdf?sfvrsn=2 (accessed 13 November 2015).

Exhibit 12 SABMiller Consolidated Income Statement for 2010 the Year Ended 31 March

Notes

2010

US$m

2009

US$m

Revenue

2

18 020

18 703

Net operating expenses

3

(15 401)

(15 555)

Operating profit

2

2 619

3 148

Operating profit before exceptional items

2

3 091

3 146

Exceptional items

4

−472

2

Net finance costs

5

−563

−706

Interest payable and similar changes

5a

−879

1 301)

Interest receivable and similar income

5b

316

595

Share of post-tax results of associates and joint ventures

2

873

516

Profit before taxation

7

2 929

2 958

Taxation

−848

−801

Profit for the financial year

27a

2 081

2 157

Profit attributable to minority interests

171

276

Profit attributable to equity shareholders

1 910

1 881

2 081

2 157

Basic earnings per share (US cents)

8

122.6

125.2

Diluted earnings per share (US cents)

8

122.1

124.6

All operations are continuing.

The notes on pages 75 to 142 are an integral part of these consolidated financial statements (available at the source below)

Source: SABMiller (2010), SABMiller Annual Report 2010, available at: www.portalchemy.com/Report.asp?arYear=2001&sharecode=SAB.L (accessed 13 November 2015).

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2024 Sage Publications, Inc. All Rights Reserved

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