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SABMillerEurope seminarAlan Clark Managing Director, SABMiller Europe
Doug Brodman Managing Director, Czech Republic
Jamie Wilson Finance Director, SABMiller Europe
Gary Leibowitz, SVP Investor RelationsLondon, 27th & 28th September 2010
New York, 29th September 2010
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Forward looking statements
This presentation includes forward-looking statements. These statements contain the wordsanticipate, believe, intend, estimate, expect and words of similar meaning. All statementsother than statements of historical facts included in this presentation, including, without limitation,
those regarding the Companys financial position, business strategy, plans and objectives ofmanagement for future operations (including development plans and objectives relating to theCompanys products and services) are forward-looking statements. Such forward-lookingstatements involve known and unknown risks, uncertainties and other important factors that couldcause the actual results, performance or achievements of the Company to be materially differentfrom future results, performance or achievements expressed or implied by such forward-lookingstatements. Such forward-looking statements are based on numerous assumptions regarding the
Companys present and future business strategies and the environment in which the Companywill operate in the future. These forward-looking statements speak only as at the date of thispresentation. The Company expressly disclaims any obligation or undertaking to disseminate anyupdates or revisions to any forward-looking statements contained herein to reflect any change inthe Companys expectations with regard thereto or any change in events, conditions orcircumstances on which any such statement is based.
All references to EBIT in this presentation refer to earnings before interest, tax, amortization ofintangible assets and exceptional items. All references to organic mean as adjusted to excludethe impact of acquisitions, while all references to constant currency mean as adjusted toexclude the impact of movements in foreign currency exchange rates in the translation of ourresults.
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Our speakers today
Alan Clark career background
1985 Lecturer in Psychology, University of South Africa
1988 Associate Professor of Psychology, Vista University, SA
1990 Training and Development Manager, SAB Ltd
1994 General Manager, Alrode Brewery, SAB Ltd
1996 Operations Director, Northern Regions, SAB Ltd
2000 Marketing Director, SAB Ltd
2001 Managing Director, Amalgamated Beverage Industries
2003 Managing Director, SABMiller Europe
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Our speakers today
Jamie Wilson career background
1982 Corporate Tax Manager, Deloitte Haskins & Sells
1987 - 1999 Group Finance Director, Highland Distillers Plc
1999 Executive Chairman, Maxxium BV
2000 Managing Director, Remy Cointreau SA
2001 - 2004 Strategy / Finance Director, Scottish & Newcastle Plc
2005 SVP Distributors, Miller Brewing Company
2006 Managing Director, SABMiller Russia2008 Managing Director, SABMiller Central Europe
2010 Finance Director, SABMiller Europe
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Our speakers today
Douglas Brodman career background
1992 Vice President Sales Heineken U.S.
1994 Vice President Northeast Business Unit Stroh Brewing Company
1999 Region Vice President Miller Brewing Company
2001 Vice President, National Accounts Miller Brewing Company
2002 Senior Vice President, Sales & Distribution Miller Brewing Company
2006 Senior Vice President, Miller International
2009 Managing Director - Plzensky Prazdroj; Czech Republic
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Europe in context
Volumes* Revenue EBITA**
* Excludes contract brewing, includes soft drinks and other alcoholic beverages** Before corporate costs and excluding exceptional items and the amortisation of intangible assets (excluding software)
Latin America Europe North America South Africa Africa Asia
Europe a significant contributor to group EBITA**Twelve months to 31 March 2010
21%
17%
17%
17%
11%
17%22%
21%
20%
20%
10%
7%
30%
19%14%
22%
13%2%
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Significant long term profit growth with
trajectory impacted by crisis
Organic CC 2005-2010 EBITA CAGR: 15%
Reported EBITA $m
0
100
200
300
400
500
600
700
800
900
1000
F05 F06 F07 F08 F09 F100
5
10
15
20
25
30
35
40
45
50
F05 F06 F07 F08 F09 F10
Volume mhl
CAGR 6.5%CAGR 9%
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Update on Industry Context
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Driving the beer category
In a backdrop of economic growth SABMiller:
Stimulated growth in beer consumption Real beer price declines further fuelled the trend
Beer took share of total alcohol
Rapidly developed local full brand portfolios Leading power brands
Strong consumer equity, refreshment for a new generation
Built strong positions in fragmented on and off premise
M&A and bolt-on acquisitions deliver real value
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Volumes have declined across Europe,with some recovery expected in coming years
Europe volumes 2004-2010e
Source: Canadean
502514
537559 551
525507
300
600
2004 2005 2006 2007 2008 2009 2010
mHL100979599
106114116
2007 2008 2009 2010 2011 2012 2013
14131315
16
2020
2012 20132007 2008 2009 2010 2011
Russia
2007-2013f
Romania2007-2013f
35353534343536
2007 2008 2009 2010 2011 2012 2013
Poland
2007-2013f
Source: Internal Estimates and ForecastsNote: Russia forecast includes risk impact of possible regulatory changes
Key market volumes & forecasts
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Continuing shift from on to off,with strengthening modern trade
Czech: on & off evolutionmarket share %
Poland: channel split %
47.6
46.846.0
45.646.2 46.7
47.8
48.849.4
52.4
53.2
54.054.4
53.853.3
52.2
51.2
50.6
49.5
52.552.0
50.5
47.548.0
44
45
46
47
48
49
50
51
52
53
54
55
56
1998 2000 2002 2004 2006 2008 2010
Source: Czech Beer and Malt Association Source: ACNielsen, GfK, internal analysis
6057
23
100% 100%
27
16
2007 2010
On Trade
Traditional Trade
Modern Trade
17on premise
off premise
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5
10
15
20
2005 2006 2007 2008 2009 2010
25
30
35
40
45
2005 2006 2007 2008 2009 2010
We expect the premiumisation trend to continue;disruption during the crisis
SABMiller over-indexes in super premium,premium and mainstream vs. economy
premium / super premiumshare of Beer (%)
Russia, Czech
Romania, Poland, Ukraine
SABMiller share of price segments(MAT % Jun 2010)
Source: Consolidation of external data providers SABME footprint
18.8
22.6
25.5
5.4
16.7
19.6
Super
Premium
Off
Premium
Off
Mainstream
Off
Economy
Off
Total Off Total
Market
Russia
Czech
Romania
Ukraine
Poland
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Responsible alcohol and excise
Requires engaged response from industry and individual brewers
Self regulation & responsible industry behaviour essential
Challenging excise environment e.g. 2008: Russia + 32%, UK + 17.8%
2009: Poland + 13.6%, Russia +9.5%, Netherlands +30%, Ukraine +93%
2010: Czech + 33%, Romania +11.4% (Euro effect), Russia +200%, Ukraine +23%
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Sources of growth will continue to evolve
Growing the total beeruser-base
Focus on product quality andavailability
Raising marketing support
M&A opportunities fuel growth& consolidation
Growing the total beeruser-base
Focus on product quality andavailability
Raising marketing support
M&A opportunities fuel growth& consolidation
Crisis takes toll on disposableincome & volumes
Commodity spike
Excise pressure
Pricing above CPI
Fewer M&A opportunities
Share & revenue game
Crisis takes toll on disposableincome & volumes
Commodity spikeExcise pressure
Pricing above CPI
Fewer M&A opportunities
Share & revenue game
Build excitement in beercategory
Further penetrate premiumoccasions & need states
Give consumers reasons topay more
Innovation becomes key
Build excitement in beercategory
Further penetrate premiumoccasions & need states
Give consumers reasons topay more
Innovation becomes key
2008 2011
Establishing thecategory
Build perceived benefits andvalue per serving
Illustrative
Inde
x
Revenue managedvalue growth
Volume
Value
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Business imperatives
Drive organic revenue growth
In an expanded and more aspirational category
With higher value points
More sophisticated trade partners
Whilst being seen as a positive social force
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Europes operating model
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Our ambition
Differentiate value delivery by market
Build country commercial focus and capability
Design for scale cost advantage and focus
Drive superior organic revenue growth and
margin expansion
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Differentiate value delivery by market
Build country commercial focus and capability
Design for scale cost advantage and focus
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Strengthening leadership positionsin large attractive markets
35.232.632.9
34.6
Jun F08 Jun F09 Jun F10 Jun F11
Czech
9.79.3
7.8
6.0
Jun F08 Jun F09 Jun F10 Jun F11
Poland
2.5
-1.2
1.6
-1.2
Jun F08 Jun F09 Jun F10 Jun F11
Romania
Strength of mainstreambrands Tyskie and Zubr
Modern trade expansion
Sharper portfolio focus: Contain economy
Strengthen premium
Timisoreana strength
Leader in on-premise and
local premium
Expanding portfolio
SABMiller share grows from23.5% in F08 to 31.8% in F11(Jun MAT)
Source: MEMRB, Gus, Internal Data
Market share gap vs no. 2 (MAT %)
Continued strength of PilsnerUrquell brand
Regional on-premise growthstrategy
Portfolio strengthened
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Building premium portfolios in Russia,United Kingdom and Ukraine
Aug F11
181
Aug F10Nov F09
111
4
SABMiller super premiumand premium1 brand growth
in Ukraine (khl MAT)
1. Zolotaya Bochka, Kozel, Miller Genuine Draft
Peroni Nastro Azzurrogrowth in United Kingdom
(khl MAT)
SABMiller Russia superpremium and premium
Market Share (%)
Aug F09
+34%
Aug F11Aug F10Aug F08
CAGR
Selectively build premiumportfolio
Maintaining premium imageand discipline
17.216.4
16.9
19.218.2
19.0
F08 F10F09
Volume
Value
Recovering share in verycompetitive market
Continued leadershipin Moscow
Expanded portfolio to builddistribution scale
Source: Internal analysisSource: Business Analytica
Seeding of super premiumand premium brands
Selective channels and cities
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F08 F09 F10 F11E
F06 F07 F08 F09 F10 F11E
Driving value in mature markets
EBITA margin progression (domestic beer incremental bps)
Italy
Netherlands
175
90
12575
9030
Build core brand value
Consolidate significantmainstream positions
Value enhancing behaviour
Leverage regional strongholds
Drive productivity
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Differentiate value delivery by market
Build country commercial focus and capability
Design for scale cost advantage and focus
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Build country commercial focus and capability
New consumers and occasions
Differentiate premium
Strengthen core mainstream
Win in priority channels
Improve revenue management
Country management structure simplified to allow absolute focus on brands,customers, shoppers and consumers
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Debowe Mocne relaunch in Poland
Establish craft credentials
Diligence in brewing
Stand-out packaging
New consumers and occasions
Approach Expand view of addressable market
Target most attractive opportunities
Innovate on liquid, packaging, positioning,presentation, and activation
Essa launch in Russia
Female focus
Accessible premium
price-point Heart of the evening
positioning
Birell Semi-Dark non-alcoholic in Czech
Extension of leading non-alcohol beerbrand in Czech
Ability to access
non-beer occasions
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Zolotaya Bochka Russia gaining share inPremium segment
Success of Razlivnoe variant(at additional premium)
0.75l Bottle introduction Meaningful innovation
Grolsch launched inPoland, Russiaand Romania
Targets being achieved
Good rate of sale
Pilsner Urquell making share gains in keymarkets
Price index vs lead competitor up 10% inyear in Czech
Brand equity measures very strong
Differentiate premium
Approach Capitalise on enduring trend to premium
Country specific portfolios with relevant
global and local premium brands
Ladder premium price points
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Romania: TimisoreanaMarket Share
Strengthen core mainstream
Approach Distinct and relevant brand positions
Keep brands fresh
Upweight activation
Share gain F04 F10 of +12%
0%
5%
10%
15%
20%
25%
30%
35%
F04 F05 F06 F07 F08 F09 F10
Source: Internal data based on consolidated market data
Share gain F05 F10 of +11%
Poland: Tyskie and ZubrMarket Share
0%
5%
10%
15%
20%
F05 F06 F07 F08 F09 F10
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Leading on-premise share in Czech2
volume share %
Growing share in KAs in Romania3
volume share %
Win in priority channels
Approach Clear outlet segmentation and prioritisation
Deep understanding of customers, consumers
and shoppers Differentiated and tailored execution
Close channel partnerships, favouringperformance based incentives
3. Source: Internal Analysis
32.329.8
27.9
F08 F09 F10
1. Source: Business Analytica
30.228.1
24.220
2007 2008 2009 2010
Super premium andpremium leaders in Moscow KAs1
volume share %
50.450.850.551.951.3
2. Source: Internal Analysis: keg & tank only
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From pricing to revenue management
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Content
Context
Why is revenue management important?
Overall approach
What do we mean by revenue management?
Case studies
How are we applying our approach?
Summary
What are the key takeaways?
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Our perspective
Profitable top line growth to create sources of valueDriving the growth smartly holds most potential
Offset value eroding pressures
Revenue management contextWhy is revenue management important?
Competitors
Fighting for volume share
Value leakage
Macro Environment
Fragile, recovering
from economic downturn
Consumers
Getting more affluentDemanding more
for their money
Customers
Consolidating
Differentiating
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Overall approachWhat do we mean by revenue management?
It is a systematic management approach to driving sustainable
profitable top line growth through price, volume and mix
It is aligning the consumer oriented brand marketing efforts andcustomer oriented sales efforts
Price plays a strong role in the marketing mix / brand positioning
Price influences the volumes and mix sold by channel / pack / occasion
It is our way of doing business to grow the top line
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Principles
Techniques
Processes
Organization
Tools
What is it?
Categorypricing
Pricing the overall portfolioappropriately to capture maximumvalue
1
Brand / pack /channel /
region (BPCR)architecture
Pricing each brand/pack within theportfolio to optimize value withinchannel
2
Trade termsmanagement
Establish rules for trade terms thatsupport fulfillment of joint customerobjectives
3
Promotionalstrategy andmanagement
Setting rules for consumer pricereductions that help achieveconsumer and customer objectives
4
Overall approachHow do we approach revenue management?
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Examples and case studies1. Category pricing - how do we approach it?
Regular evaluation of the beer category pricing from four key perspectives: consumer,customer, competitor and communication
Consumer assessment includes benchmarking the beer pricing vs other beverages (seeabove), beer affordability, demand elasticity and category attractiveness
Price per liter comparison Price per pack comparison
238
143
100
152
Cola (0.25 l)
Mineral water (0.33 l)
GA 10 (0.5 l)
PU 12 (0.5 l)
119
105
100
150On trade pricebenchmarking
Category pricing: Pricing the overall portfolio appropriately vis--vis theconsumers, customers and competitors to capture maximum value
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Gambrinus 10 Gambrinus 11 Gambrinus 12
Examples and case studies2. BPCR architecture Gambrinus 11 introduction
Most Czech beer brands havetraditionally fallen into one of the twogravities: 10 or 12
Recent trend has seen the growth of11 degree gravity segment, mostly at
premium pricing Prazdroj launched in 2008 Gambrinus
11 with a price between that of 10 and12 variants
Gambrinus 11 is now, 2 years after
launch, a clear leader in the 11 degreegravity segment
BPCR architecture:Pricing each brand / pack within the portfolio right for maximum value
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Examples and case studies2. BPCR architecture case study Gambrinus 11
Gambrinus 11brand pricing ladder Gambrinus 11volum e development
PriceCKZ/500 ml
VolumeIndex vs yr 1
0
2
4
6
8
10
12
14
16
10degree 11degree 12degree
Launchedin 2008
Gambrinus variant
390370
300275
100
F09 F10 F11
On-trade
Off-trade
Fiscal year
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BPCR architecture:Pricing each brand / pack within the portfolio right for maximum value
Examples and case studies2. BPCR architecture Gambrinus 11, 330 ml bottle
Introduction of Gambrinus 11, 330 ml non returnablebottle in Oct 2010
Premium pricing
Taking a consistently refreshing approach to thebrand, building on Gambrinus 11 success so far
Targeting LDAC on trade consumers
Driving new consumption occasions
Bringing new news into the category
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Examples and case studies2. BPCR architecture case study Frisco
Frisco is a flavored, malt-based alcoholic beverage Launched in F06 with a clubbing positioning and
super-premium pricing
Re-launched in F09 Repositioned to alcoholic refreshment
Targeted at women as #1 alternative to beer
Redesigned the label
Launched a second variant
Re-aligned pricing
Volumes have grown almost three-fold since the F09
re-launch Currently a clear leader in the flavored alcoholic
beverages segment
BPCR architecture:Pricing each brand / pack within the portfolio right for maximum value
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8080
8090
100
100
570
380
206
135110100
F06 F07 F08 F09 F10 F11E
Retail price indexdevelopment
Volume index
development
Frisco (flavored malt-based alcoholic beverage)
Examples and case studies2. BPCR architecture case study Frisco
Fiscal yearRepositioned brand, re-aligned pricing to achieve optimal reachfor the consumption occasion
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Examples and case studies2. BPCR architecture case study Master
Master is a specialty beer brand launchedin kegs in on trade to build credentials
Bottled version was launched in June 2010 355 ml NRB
Off trade focus to reach at home indulgenceoccasion
Premium pricing
Elevates the beer category presentationand experience
Targets premium, home consumption
occasions, appreciated by the beer lovers
BPCR architecture:Pricing each brand / pack within the portfolio right for maximum value
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Trade terms management: Setting rules for customer discounts andbonuses that support fulfillment of account objectives
Case studies3. Trade terms management how do we approach it?
Key Accounts are growing and consolidating Winning in key accounts is therefore crucial
Trade terms are one of the keys towinning in KA
A trade term revision will mark a step changein our KA relationships, including:
Transactional
Pay for importance
% discount focus
Account contracts
Strategic
Pay for performance
Total margin focus
Joint business plans
From To
Performancebased
Traditional
approach
New
approach
Nonperformance
based
Discount structure
E l d t di
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Sales volume impact(thousand hl)
Brand equity impact(perceived value)
Financial impact(ROI)
Key variablesKA
Brand pricing strategy
SKU
Depth, frequency and timing
Promo management: Setting rules for consumer price reductions that helpachieve consumer and customer objectives
Examples and case studies4. Promo management how do we approach it?
E l d t di
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Promo management: Setting rules for consumer price reductions that helpachieve consumer and customer objectives
Examples and case studies4. Promo management case study cans
Can share in the Czech beer market is with~6% off trade one of the lowest in Europe
Legacy of conservative consumer
High average price premium vs returnable
bottles (150-170)
Prazdroj has an estimated 65% share of
the can segment
Tactical can discounting in the season is
delivering several objectives Growing Prazdroj volumes and share at above
average brand prices
Developing consumer repertoire & occasions
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SummaryRevenue management has a firm position on our strategic agenda
Revenue management (RM) is an important commercial capability
Addressing all top line drivers volume, price, mix
Focus on margin impact Aligning the actions across teams and functions
Brewers with leadership position in mature beer markets are in aparticularly advantageous position to leverage RM
Ability to lead category value development
Full product portfolio to optimize
Scale to develop the specialist resources
Plzensky Prazdroj is implementing cutting edge RM approaches Developing and embedding new capability and thinking in the organization
Leveraging SABM experience
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Differentiate value delivery by market
Build country commercial focus and capability
Design for scale cost advantage and focus
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Design for scale cost advantage and focus
One system
Lower costs
New skills
Productivity
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Design for scale cost advantage and focus
Centralizeprocurement
Functionalizeoperations
Improvecommercialsystems andprocesses
Driveproductivity
Business Capability Projects
Simplify, standardize, centralize, outsource
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Improve commercial systems and processes
WinningBrands
Choiceful portfoliostrategies; clear
relevantpositionings;
compelling creativeplatforms;
excellent 360
activation
Tool:Marketing Way
Revenue GrowthManagement
Optimized brand,pack, price,
occasion, plans togrow revenue
Tools:Margin Minder
The Pricing Way
Innovation
Expand andpremiumise
category andcommercialize
innovation
Tool:Smartgate
WinningInstore
Superior shopperand customer plans
based on deepinsights delivered
consistently
Tool:Segmentationtrade survey
Marketingsupport
Optimizedeffectiveness and
efficiency ofmarketing andsales to drive
revenues and profit
Tool:Marketing
Effectiveness
Toolkit
Relentless commercial performance culture
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Functionalize operations
Brewery
operations
Service levels
Distribution
Networkcomplexity
Performance variances between countries
Drive WCM consistently
Objectives
Improve forecast accuracy and planning
Optimise inventory levels
Greater focus on demand shaping within periods
Rationalise logistics providers
Improve productivity of warehousing
Optimise source of supply
Rationalise CapEx requirements
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Functionalize operations
Split reporting relationship
European OpCo responsible forreplenishment cycle
Direct reporting lines for country technicaldirectors and supply planners
Country commercial companiesresponsible for demand planning and
delivery to customersService level agreement between operations
and country commercial companies
Europe steady state contribution to group: c$60m
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Centralize procurement
Functional expertise developed drivingimproved brewing and packaging costs
Standardized inputsi.e. in trade activation materials
Leverage scale in sourcing and CapEx
Europe steady state contribution to group: c$60m
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Centralise Procurement
Further categoriesmigrating
Start of region andcountry implementation
Centre-LedImplementation Phase2011
Pre-ImplementationPhase 2010
Design PhaseJuly 09 to Nov 09
Employees in place forfirst category teams
Transition planning forimplementation
Accelerated waves signfirst supplier contracts
Organisation andoperational processdesign
Pilot of acceleratedcategory waves
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Productivity steps already taken
Exceptional restructuring charges in F09: Total restructuring costs $50m
Approximately 340 FTEs (NL, PL, CZ)
Exceptional restructuring charges in F10: Total restructuring costs $64m
2 Breweries (PL, SK)
2 maltings
PL depot rationalisation
640 FTEs
Estimated combined benefits F11 $40m
Cost savings re-invested in brand marketing
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Key financials
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Margin development
0
1,000
2,000
3,000
4,000
5,000
6,000
F05 F06 F07 F08 F09 F10
0%
5%
10%
15%
20%
25%
EBITA margin %Revenue
Top 4margin:22.5%
Source: SABMiller Annual Financial Statements
RevenueUSD (millions)
EBITA margin% Revenue
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Input costs still impacting margins
Relief on variable costs per HL in F10
Hedging strategy objective is to smooththe peaks and troughs
Evolving consumer preference to one-way packaging
Transactional impact of currency
100
120
140
160
F07 F08 F09 F10
10
20
30
40
50
60
Variable costs/hl Growth
Variable costs per HL USD F07=100
SABME Pack split
SABME key currency movements v
80%
90%
100%
110%
120%
F07 F08 F09 F10
CZK PLN RON
46% 50% 51% 53%
54% 50% 49% 47%
0%
20%
40%
60%
80%
100%
F07 F08 F09 F10
Non Returnable Returnable
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0
100
200
300
400
500
600
700
800
F06 F07 F08 F09 F10 F11B0%
10%
20%
30%
40%
50%
60%
Trade CapEx Other CapEx Capex % EBITDA
CapEx investment
CapEx peak behind us
CapEx peak 57% of EBITDA
F10: 30% of EBITDA
F11: 23% of EBITDA
F12-F14: est.25% - 30% ofEBITDA invested in trade assets and
capability at the appropriate rate
CapEx USD (millions) CapEx % EBITDA
W ki i l f d li i l
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Working capital focus delivering results
-200
-150
-100
-50
0
50
100
150
200
F06 F07 F08 F09 F10
Net Inventory / payables WC Receivables
+$5m
-$25m
-$153m
-$106m
Total average net working capital cash flow, USD
2012 net working capital target of 4% of revenue achieved in 2010
+$155m
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Medium term outlook
SABMiller EuropeM di t l d i tl k
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Medium-term value driver outlook
Volume growth CAGR
2-4%
Revenue per hl CAGR
2-4%
EBIT margin
+30-50 bps per year
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Q & A
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