Gearing Ratio Dividends Decision and Working Capital

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SABMiller plc is one of the biggest brewers in the world. The company produces globally recognised brands as Pilsner Urquell, Peroni Nastro Azzurro, Grolsch, Miller Genuine Draft, etc., and is also one of the largest bottlers of Coca-Cola products.

SABMiller’s main office is located in the City of Westminster, London. It is listed on the London Stock Exchange and is part of the FTSE 100 Index.

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SABMiller has operations and distribution interests across six continents.

The company was founded as South African Breweries (SAB) in South Africa in 1895, where the business operations were limited until 1995 with the entry into the European market acquiring Dreher in Hungary. After this, the group began to expand operations and/or distributions all around Europe.

In 1999 the company began to be listed on the London Stock Exchange to raise capital for acquisitions. Thus, in 2002 the group purchased the Miller Brewing Company in North America from the Altria Group and added Miller to its original name.

SABMiller expanded its operations to the Latin American market in 2005 with the acquisition of a major interest in Bavaria S.A., South America’s second largest brewer, in Colombia. Actually the group has operations in another five countries of Latin America, including El Salvador, Ecuador, Panama, Peru and Honduras.

The next important acquisition in Europe was on 9 October 2007 when SABMiller and Molson Coors Brewing Company made a joint venture known as Miller Coors. It was followed by the acquisition of Royal Grolsch in Europe on 19 November 2007.

Moreover, SABMiller has brewing operations in another 31 countries from the African continent, and in Asia where is the second-largest brewer in India, has ventures in Vietnam and Australia, and produces a Chinese brewer brand in partnership with China Resources Enterprise Limited.

Adoption of International Financial Reporting Standards

SABMiller plc began to prepare its consolidated financial statements in accordance with IFRS from 1 April 2005. As the group’s financial year represents the period from 1 April to 31 March, the first consolidated financial statement prepared in accordance with IFRS was for the 2006 financial year, because this includes comparatives for 2005.

To be fully prepared for the transition in 2005 and for the first set of applicable financial statements for the year ending 31 March 2006, SABMiller established a project team involving representatives of businesses and functions to plan for and achieve a smooth transition to IFRS.

The main effects of the adoption of IFRS that impact the group’s 2005 published UK GAAP results included hedge accounting, accounting for embedded derivatives and other items as accounting for business combinations, pensions and post-retirement benefits, deferred tax, share-based payments, goodwill and the presentation of results of associates.

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