SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
February 27, 2015
Commission File No.: 1-34455
Anheuser-Busch InBev SA/NV
(Translation of registrants name into English)
Belgium
(Jurisdiction of Incorporation )
Brouwerijplein 1,
3000
Leuven, Belgium
(Address of principal executive offices )
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form
20-F x Form 40-F ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by
Regulation S-T Rule 101(b)(7): ¨
Indicate by check mark whether by furnishing
the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ¨ No
x
EXHIBIT INDEX
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Exhibit Number |
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Description |
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99.1 |
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Press release issued on 26 February 2015. |
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99.2 |
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Annual Report of Anheuser-Busch InBev SA/NV for the fiscal year dated 31 December 2014. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
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ANHEUSER-BUSCH INBEV SA/NV (Registrant) |
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Dated: February 27, 2015 |
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By: |
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/s/ Jan Vandermeersch |
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Name: Jan Vandermeersch Title:
Senior Legal Counsel Corporate |
Exhibit 99.1
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PRESS RELEASE
Brussels, 26 February 2015
1
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The enclosed information constitutes regulated information as defined in the Belgian Royal Decree of 14 November 2007
regarding the duties of issuers of financial instruments which have been admitted for trading on a regulated market
Anheuser-Busch InBev reports
Fourth Quarter and Full Year 2014 Results
HIGHLIGHTS
Except where otherwise stated, the comments below are based on organic figures and refer to 4Q14 and FY14 versus the same period of last year. For important
notes and disclaimers please refer to page 19
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Revenue growth: Revenue grew by 5.9% in FY14 and by 7.6% in 4Q14, with revenue per hl growth of 5.3% in FY14 and 7.6% in 4Q14. On a constant geographic basis, revenue per hl grew by 5.7% in FY14 and by 7.4% in
4Q14 |
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Volume performance: Total volumes grew by 0.6% in FY14, with own beer volumes growing by 0.5% and non-beer volumes growing by 1.3%. Total volumes were flat in 4Q14, with own beer volumes growing by 0.2%, while
non-beer volumes declined by 1.8% |
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Focus Brands: Volumes of our Focus Brands grew by 2.2% in FY14 and by 1.3% in 4Q14. Our global brands grew by 5.4% in FY14, led by Budweiser which grew by 5.9%, and Corona which grew by 5.8%. Our global brands
grew by 4.7% in 4Q14 |
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Cost of Sales: Cost of Sales (CoS) increased by 2.9% in FY14 and by 6.6% in 4Q14. CoS per hl increased by 3.9% in FY14 and by 7.5% in 4Q14, on a constant geographic basis. The increase in CoS per hl in 4Q14 was
driven primarily by higher depreciation and packaging costs in Brazil, as well as additional bottle costs in Mexico related to higher than expected demand for Corona globally |
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EBITDA: EBITDA grew by 6.6% in FY14 to 18 542 million USD, with a margin improvement of 25 bps to 39.4% driven by a strong revenue performance, and despite higher sales and marketing investments to build our
brands for the long term. In 4Q14, EBITDA grew by 5.6% to 5 066 million USD with a margin contraction of 81 bps to 42.2% |
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Net finance costs: Net finance costs (excl. non-recurring net finance results) were 1 828 million USD in FY14, compared to 2 486 million USD in FY13. This decrease was driven by lower interest expense,
currency gains, and a positive mark to market adjustment of 711 million USD in FY14, linked to the hedging of our share-based payment programs, compared to 456 million USD in FY13 |
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Income taxes: Income tax expense was 2 499 million USD in FY14, with a normalized effective tax rate (ETR) of 18.8%, compared to an income tax expense of 2 016 million USD in FY13 with a normalized ETR
of 16.6% |
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Profit: Normalized profit attributable to equity holders of AB InBev increased in nominal terms by 11.7% to 8 865 million USD in FY14 from 7 936 million USD in FY13. Normalized profit attributable to
equity holders of AB InBev increased in nominal terms to 2 520 million USD in 4Q14 from 2 374 million USD in 4Q13 |
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Earnings per share (EPS): Normalized EPS increased by 10.6% to 5.43 USD in FY14 from 4.91 USD in FY13. Normalized EPS increased to 1.54 USD in 4Q14 from 1.46 USD in 4Q13 |
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Dividend: The AB InBev Board proposes a final dividend of 2.00 EUR per share (2.27 USD based on the FX rate as at 25 February 2015), subject to shareholder approval at the AGM on 29 April 2015.
When combined with the interim dividend of 1.00 EUR per share (1.25 USD) paid in November 2014, the total dividend for the fiscal year 2014 would be 3.00 EUR per share (3.52 USD). This represents an increase of 46% in EUR and 26% in USD, when
compared to fiscal year 2013. If approved, the shares will trade ex-coupon as of 4 May 2015 and dividends will be payable as from 6 May 2015. The record date will be 5 May 2015 |
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Share Buyback Program: The Board has approved a share buyback program for an amount of one billion US dollars, which will be conducted during the course of this year. Our current intention is to use the shares
acquired to fulfil our various share delivery commitments under the stock ownership plan. The program will be executed under the powers granted at the General Meeting of Shareholders on 30 April 2014 |
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2014 Full Year Financial Report is available on our website at www.ab-inbev.com |
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PRESS RELEASE
Brussels, 26 February 2015
2
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Figure 1. Consolidated performance (million USD) |
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FY13 Reported |
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FY13 Reference Base |
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FY14 |
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Organic growth |
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Total Volumes (thousand hls) |
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425 939 |
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445 786 |
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458 801 |
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0.6% |
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AB InBev own beer |
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377 177 |
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397 024 |
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407 995 |
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0.5% |
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Non-beer volumes |
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46 739 |
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46 740 |
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47 341 |
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1.3% |
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Third party products |
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2 023 |
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2 022 |
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3 465 |
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2.0% |
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Revenue |
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43 195 |
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45 483 |
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47 063 |
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5.9% |
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Gross profit |
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25 601 |
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26 928 |
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28 307 |
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7.9% |
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Gross margin |
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59.3 |
% |
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59.2 |
% |
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60.1 |
% |
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113 bp |
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Normalized EBITDA |
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17 188 |
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17 943 |
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18 542 |
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6.6% |
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Normalized EBITDA margin |
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39.8 |
% |
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39.4 |
% |
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39.4 |
% |
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25 bp |
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Normalized EBIT |
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14 203 |
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14 800 |
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15 308 |
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6.7% |
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Normalized EBIT margin |
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32.9 |
% |
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32.5 |
% |
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32.5 |
% |
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25 bp |
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Profit attributable to equity holders of AB InBev |
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14 394 |
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9 216 |
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Normalized profit attributable to equity holders of AB |
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7 936 |
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8 865 |
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Earnings per share (USD) |
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8.90 |
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5.64 |
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Normalized earnings per share (USD) |
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4.91 |
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5.43 |
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Figure 1. Consolidated performance (million USD) |
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4Q13 Reported |
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4Q13 Reference Base |
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4Q14 |
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Organic growth |
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Total Volumes (thousand hls) |
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110 442 |
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110 442 |
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113 155 |
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AB InBev own beer |
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96 139 |
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96 140 |
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98 636 |
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0.2% |
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Non-beer volumes |
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13 809 |
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13 809 |
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13 567 |
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-1.8% |
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Third party products |
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494 |
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493 |
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952 |
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3.6% |
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Revenue |
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11 711 |
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11 696 |
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12 018 |
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7.6% |
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Gross profit |
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7 229 |
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7 221 |
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7 382 |
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8.2% |
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Gross margin |
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61.7 |
% |
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61.7 |
% |
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61.4 |
% |
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34 bp |
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Normalized EBITDA |
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5 199 |
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5 194 |
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5 066 |
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5.6% |
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Normalized EBITDA margin |
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44.4 |
% |
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44.4 |
% |
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42.2 |
% |
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-81 bp |
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Normalized EBIT |
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4 365 |
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4 361 |
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4 232 |
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5.9% |
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Normalized EBIT margin |
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37.3 |
% |
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37.3 |
% |
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35.2 |
% |
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-60 bp |
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Profit attributable to equity holders of AB InBev |
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2 519 |
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2 527 |
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Normalized profit attributable to equity holders of AB |
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2 374 |
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2 520 |
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Earnings per share (USD) |
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1.54 |
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1.54 |
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Normalized earnings per share (USD) |
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1.46 |
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1.54 |
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FY13 Reference base |
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Scope |
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Organic growth |
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FY14 |
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Organic growth |
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Figure 2. Volumes (thousand hls) |
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Total Volume |
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Own beer volume |
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North America |
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122 116 |
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642 |
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-1 608 |
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121 150 |
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-1.3 |
% |
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-1.4 |
% |
Mexico |
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38 185 |
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615 |
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38 800 |
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1.6 |
% |
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1.6 |
% |
Latin AmericaNorth |
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120 427 |
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39 |
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4 952 |
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125 418 |
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4.1 |
% |
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4.7 |
% |
Latin AmericaSouth |
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36 918 |
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-91 |
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36 826 |
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-0.2 |
% |
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0.0 |
% |
Europe |
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47 030 |
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60 |
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-2 812 |
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44 278 |
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-6.0 |
% |
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-6.1 |
% |
Asia Pacific |
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65 787 |
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15 602 |
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1 140 |
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82 529 |
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1.7 |
% |
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1.7 |
% |
Global Export and Holding Companies |
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15 323 |
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-5 821 |
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297 |
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9 800 |
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3.1 |
% |
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3.2 |
% |
AB InBev Worldwide |
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445 786 |
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10 522 |
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2 494 |
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458 801 |
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0.6 |
% |
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0.5 |
% |
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4Q13 Reference base |
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Scope |
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Organic growth |
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4Q14 |
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Organic growth |
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Total Volume |
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Own beer volume |
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North America |
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28 148 |
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146 |
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52 |
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28 345 |
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0.2 |
% |
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0.1 |
% |
Mexico |
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9 733 |
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112 |
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9 846 |
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1.2 |
% |
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1.2 |
% |
Latin AmericaNorth |
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35 773 |
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17 |
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454 |
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36 245 |
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1.3 |
% |
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2.1 |
% |
Latin AmericaSouth |
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11 378 |
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-331 |
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11 047 |
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-2.9 |
% |
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-2.7 |
% |
Europe |
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10 551 |
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19 |
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-438 |
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10 131 |
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-4.2 |
% |
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-4.2 |
% |
Asia Pacific |
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11 244 |
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4 075 |
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148 |
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15 468 |
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1.3 |
% |
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1.3 |
% |
Global Export and Holding Companies |
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3 615 |
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-1 499 |
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-43 |
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2 073 |
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-2.0 |
% |
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-2.0 |
% |
AB InBev Worldwide |
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110 442 |
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2 758 |
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-45 |
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113 155 |
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0.2 |
% |
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PRESS RELEASE
Brussels, 26 February 2015
3
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MANAGEMENT COMMENTS
Building a Company that Will Stand the Test of Time
2014
was another year of solid financial performance with strong commercial results in most of our top markets and further expansion of our global brands. But at AB InBev we have never measured success solely by our quarterly or even our annual results.
We are driven by our passion to create a company that can stand the test of time and create value for our shareholders, not only for the next 10 or 20 years but for the next 100 years. Our mindset is truly long term.
In the first 10 years since the combination of Interbrew and Ambev we have built a solid foundation. We have created the worlds leading brewer, through
organic growth as well as industry-changing combinations, including with Anheuser-Busch in 2008 and Grupo Modelo in 2013. We have also built the worlds leading beer brands, with strong consumer preference and growth potential, and driven net
revenue per hectoliter ahead of inflation through sound revenue management practices and premiumization of our portfolio. This has resulted in strong growth in margins, cash flow and total shareholder returns.
Yet our culture is one of never being completely satisfied with our results, and we are always looking to do better. We are operating in a rapidly shifting
environment where volatility and uncertainty are here to stay, and where consumer trends and habits are changing at an ever accelerating pace. We must therefore be nimble and quick to anticipate new tastes, demands and behaviors, by nurturing a
start-up mentality despite being a top five consumer goods company. We must promote out-of-the-box thinking to bring consumers what they truly want today, tomorrow and in the future.
In this new and evolving consumer environment, speed is of the essence and we must act with a far greater sense of urgency than ever. We cannot be complacent
and need to avoid acting as the incumbent. Instead we must be dynamic, flexible and take measured risks. Above all we need to remember how we became successful in the first place, by being the insurgent, by acting boldly, quickly and thinking
outside the box.
With this mindset and looking forward to the next stage of our journey, we have evolved our Dream, and aim to build the Best Beer
Company Bringing People Together For a Better World.
We asked ourselves and our stakeholders a number of questions. What is it that AB InBev really does?
What do we stand for? How can we make a real impact, a real difference in the world in which we all live and work?
In asking these questions, it became
clear that what we are really all about is bringing people together. We have a unique opportunity and ability to bring people together, through sports, music and culture, to enjoy great beers and share memorable experiences through our portfolio of
well-loved brands, our global reach, and our dedication to making a difference in our communities. We also bring together our colleagues around the world in a shared effort to deliver on our Dream.
Translating Our Dream into Action
Consumers today have
more information and choices than ever before, with their behaviors, preferences and tastes constantly evolving. Realizing this is the new normal, we have to ensure that our brands remain relevant and become part of consumers everyday lives.
To address these challenges, we have defined a clear game plan and are activating it throughout our organization.
We are using deep consumer insights
with the goal of winning a bigger share of the total alcohol beverage space, rather than focusing on beer occasions only. To remain successful in the future, we must win the hearts and minds of consumers who are of legal drinking age and above. Our
brands need to connect with them to become their first choice. We must also lead growth in the premium segment, which will force us to keep raising the bar. We see a major opportunity for our global and international portfolio in this area.
Global research into the potential consumers of our products and their preferences has helped us to identify several Growth Driven Platforms (GDPs). These
GDPs represent distinct occasions and opportunities for our brands, for example, savoring food, relaxing and enjoying a great night out or at home with friends. The insights gained will be used to drive our sales and marketing efforts and our
innovation agenda.
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PRESS RELEASE
Brussels, 26 February 2015
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Bringing People Together through the Strongest, Most Versatile Portfolio in the Industry
We have a strong foundation. We believe we have the strongest portfolio of brands in the industry, with 16 brands each generating over one billion USD in
retail sales per year, and more in the making through successful innovations such as the Ritas. Our three global brands, Budweiser, Corona and Stella Artois, are very complementary and give us opportunities to connect with a broad range of consumers
across multiple occasions and geographies. We are excited by the growth potential of all three brands. Corona, in particular, has the ability and consumer license to play in more than traditional beer occasions.
Our global brands, coupled with our international brands, Becks, Leffe and Hoegaarden, make up a strong international premium portfolio that gives us
options in terms of entry into new markets.
Our portfolio is rounded out by our local champions, such as Bud Light in the U.S., Harbin in China, Skol in
Brazil, Jupiler in Belgium and Quilmes in Argentina. These leading brands, focused on local markets, are the core of our business.
Driving Digital
Connections
Gone are the days when beer brands could be built through traditional media only. Todays consumers expect brands to engage with them
in a more differentiated and personal style than ever before. Millennials in particular are searching for experiences and involvement in the development of brands, and digital is playing a major role.
Millennials now spend more time on social media than on any other information channel, which is why we are increasingly allocating our marketing resources to
digital activation, with a positive impact on both brand health and market share. Our ambition is to be the top consumer goods company in digital connections, and with millions of followers of our brands on social media who interact with our
engaging content, we are well on our way.
The groundbreaking Bud Light Up For Whatever campaign is a great example of innovative digital
activation at its most effective. The campaign positioned Bud Light as The Perfect Beer For Whatever Happens from a ping pong match against Arnold Schwarzenegger to electric football with legendary American football coach Jimmy
Johnson. The high point of the digital activation during summer 2014 was a contest in which Bud Light fans were invited to submit their own Up For Whatever videos. Almost 2 million consumers viewed digital content related to the
campaign and we received over 204 000 video auditions, from which we chose 1 000 winners to celebrate with a Bud Light weekend in Crested Butte, Colorado renamed Whatever, USA for the occasion. Thanks to this widely hailed campaign, we
believe Bud Light gained share in the premium light category in the U.S. during the year.
We can cite many other examples showing how our brands are
engaging with consumers via digital means from the Stella Artois video of Rufus the Wimbledon hawk, to the live stream of Budweisers Made in America music festival, to the Friends Are Waiting video that highlighted
the importance of making a plan to get home safely after a night out.
Winning the Digital 2014 FIFA World Cup
The 2014 FIFA World Cup held in Brazil gave us a marvelous opportunity to bring people together, and to showcase many of our brands. It proved to be our
best World Cup execution to date, with digital activations playing a key role. Budweiser was the official beer of the tournament and 14 of our local champion brands, with links to soccer, also leveraged our sponsorship to drive engagement with
consumers in their local markets.
Our sponsorship gave our entire team an opportunity to raise its game, with exciting and innovative 360°
activations across many of our markets. The theme Rise as One was imprinted on special Budweiser bottles and our people lived up to that promise by delivering a great consumer experience and connecting
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PRESS RELEASE
Brussels, 26 February 2015
5
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our brands with millions of fans. Whether consumers were celebrating at the Budweiser Hotel on Copacabana Beach, voting for the Man of the Match on social media, cheering on their national team,
or participating in one of our many local programs, we estimate that our Budweiser activations alone generated over 34 billion consumer impressions leading up to and during the tournament.
We invested heavily behind these campaigns. The insights we gained, and the brand equity we built, will be invaluable in helping to drive future top-line
growth well beyond the 2014 FIFA World Cup.
Leading through Innovation
Innovation will continue to play an important role in building our brands, meeting evolving consumer needs and creating new consumption occasions in the
future. Innovations need to be bold and, as a result, we are not afraid to fail and learn from our efforts. Failure is part and parcel of our journey, building our ability to ultimately deliver game changing innovations.
The Bud Light Lime Ritas family in the U.S., for example, has created a whole new category of alcohol beverages. The Ritas appeal to consumers who may not
necessarily select beer as their first choice of alcohol beverage, particularly women, and we expect this will allow us to capture share of throat from the hard liquor, cocktail and ready-to-drink categories. The concept is scalable, and
there will be introductions in other markets where relevant.
Key beverage innovations in 2014 included Cubanisto, a premium rum-flavored beer, launched
in the U.K., France and Belgium; MixxTail in Argentina, a malt beverage cocktail; and Skol Beats Senses in Brazil, a flavored, higher ABV line extension from Skol that can be mixed with ice. All three innovations were designed to complement the
nighttime occasion. We also created Budweiser Brewmaster Reserve in China, a limited edition brew, capped with a distinctive champagne-style cork, for the growing super-premium channel. And there is more to come. Oculto, a new tequila-flavored
beer, as well as MixxTail, for example, are both planned to hit the U.S. market early in 2015.
Innovation is more than new products. It also includes
packaging. In 2014, for example, we introduced two major new packages in the U.S., a new 16oz. re-closeable aluminum bottle, initially focused on Bud Light, and the first ever 25oz. can. Both packages are exceeding our expectations, and have now
been extended to some of our other U.S. brands.
Bringing People Together For a Better World
Tapping into our ability to bring people together on a global scale to work for a Better World, is an essential part of our Dream.
In a major new initiative launched in 2014, we are founding members of Together for Safer Roads (TSR), a coalition of 10 leading global companies
across industries that are committed to working collaboratively to help improve road safety. Traffic crashes, which are currently the eighth leading cause of death worldwide and the primary cause of death among 15-29 year olds, are projected to move
to the fifth leading cause by 2030. To stop this progression and, ultimately, help save lives, TSR members have come together with a focus on safer roads, vehicles and systems; improved driver safety education; and the application of data and best
practices.
We also continued our successful activations across our Better World pillars, bringing together our colleagues, as well as customers,
partners, industry peers, public officials, non-governmental organizations and other stakeholders to make a positive impact.
Promoting Responsible
Drinking. Four years ago, we were the first alcohol beverage company to set aggressive Responsible Drinking goals, including encouraging parents to talk with their children about underage drinking, promoting the use of designated drivers, and
widely distributing ID-checking materials. We are proud to have achieved all of our goals on schedule by the end of 2014. In particular, we want to acknowledge our teams efforts to provide training on responsible alcohol beverage sales to more
than 1 million bartenders, waiters, store clerks, and others who sell and serve alcohol beverages in our markets around the world.
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PRESS RELEASE
Brussels, 26 February 2015
6
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Preserving the Environment. Having met or exceeded our original Environmental Goals, we committed
ourselves in 2013 to a set of even more ambitious goals to be achieved by the end of 2017. These goals include further reductions in water usage, greenhouse gas emissions, energy consumption and packaging materials, as well as watershed protection
efforts near key facilities and water-risk reduction initiatives in key barley growing regions. For the first time, we have also set a goal to reduce carbon emissions in logistics operations by using alternative fuels, smart driving tools, more
efficient trucks, and by collaborating with our supply chain partners.
Making a Difference in Our Communities. We have continued to contribute to
the well-being of our communities around the world. Our initiatives included providing emergency drinking water to areas hard hit by disasters, supporting education through a range of programs such as building Hope Schools in China, and active
volunteer efforts involving more than 61 000 of our colleagues globally.
Our Culture Drives Our Performance
Dream-People-Culture is the platform on which we have and will continue to build our company.
We are inspired by our ambitious Dream to be the Best Beer Company Bringing People Together For a Better World. To deliver on our Dream, we depend on a
talented and highly motivated team of people, underpinned by a culture based on the principles of ownership, meritocracy and informality.
We thank our
consumers and customers for their continued loyalty, our people for their commitment and dedication, and our shareholders for the confidence they have placed in us. We look forward to delivering on our commitments and striving to achieve our
Dream.
2015 COMMERCIAL PRIORITIES
Our major
commercial priorities in our top markets in 2015 reflect our Growth Driven Platforms (GDPs), and are as follows:
In the United States:
|
|
|
Invest behind our brands. Continue to drive the relevance of Bud Light and Budweiser. Continue to grow the share of Michelob Ultra. Drive share growth in the Mexican import segment by expanding Montejos
geographic distribution and packaging options |
|
|
|
Grow share of high end beer. Complete the roll-out of the high end business unit. Execute our portfolio strategy of international premium brands and regional and national craft brands, with a focus on Stella
Artois, Shock Top and Goose Island |
|
|
|
Gain share of throat through near beer innovations. Continue to grow the Ritas family with a new flavor and additional package options. Grow our share of cider, and launch Oculto and MixxTail to capture flavored
beer and cocktail occasions |
In Mexico:
|
|
|
Grow the beer category. Expand per capita consumption through a strong portfolio of Focus Brands, including the Corona and Modelo families, Bud Light and Victoria, and the creation of new consumption occasions
|
|
|
|
Grow high end volumes and share. Continue to develop our portfolio of domestic and international premium brands, and roll-out the Ritas to capture near beer opportunities |
|
|
|
Enhance the shopping experience. Enhance packaging options and in store merchandising standards. Continue with the roll-out of the Modelorama modernization and service improvement program. |
In Brazil:
|
|
|
Enhance our mainstream brands. Grow consumer preference for Skol, Brahma and Antarctica. Continue to address affordability through our revenue management best practices and packaging strategies |
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PRESS RELEASE
Brussels, 26 February 2015
7
/ 24 |
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Accelerate the growth of premium. Continue to elevate the perception of the beer category. Maintain our top position in the segment with our international premium brands Budweiser, Stella Artois and Corona, and
our domestic portfolio led by Bohemia and Original. Lead in the high end near beer segment through innovation in both product and packaging |
|
|
|
Capture geographic opportunities. Execute specific plans in targeted areas where we see volume and market share opportunities. |
In China:
|
|
|
Invest in winning brands. Continue to grow Budweiser, Harbin and our super premium portfolio of brands through selected channels. Drive innovation in product and packaging to further enhance the consumer
experience and drive per capita consumption |
|
|
|
Drive strong consumer connections. Leverage our global brands, properties and digital best practices to drive consumer connections and build aspiration for beer |
|
|
|
Build scale and capability. Maximize performance in our regional strongholds, and fully integrate acquired businesses and green field developments. Continue to implement sales and marketing best practices, drive
operational efficiencies and maintain a strong people pipeline. |
2015 OUTLOOK
|
|
|
In the US: We expect industry volumes to continue to improve in FY15. We expect our own sales-to-wholesalers (STWs) to decline by mid-single digits in the first quarter due to a difficult comparable following the
build-up of wholesaler inventories in 1Q14 ahead of union negotiations. We expect STWs and STRs to converge on a full year basis |
|
|
|
In Mexico: We expect beer industry volumes to continue to grow in FY15, driven by a stronger economy and our own commercial initiatives |
|
|
|
In Brazil: We expect our net revenues in Brazil to grow by mid to high single digits, helped by continuing growth in premium |
|
|
|
In China: We expect beer industry volumes to return to growth in FY15. We expect our revenue per hl to continue to be driven by favorable brand mix |
|
|
|
Total AB InBev: We expect revenue per hl to grow organically in line with inflation, on a constant geographic basis, as a result of our revenue management initiatives and continued improvements in mix |
(ii) |
Cost of Sales per hl: We expect CoS per hl to increase organically by low single digits, on a constant geographic basis, driven by mix and unfavorable foreign exchange transactional impact (primarily BRL/USD),
partly offset by favorable global commodity prices, procurement savings and efficiency gains |
(iii) |
Distribution expenses per hl: We expect distribution expenses per hl to increase organically by mid-single digits, driven by higher distribution expenses in Brazil, the US and Mexico |
(iv) |
Sales and Marketing investments: We expect sales and marketing investments to grow by mid to high single digits as we continue to invest behind our brands and global platforms for the long term |
(v) |
Net Finance Costs: We expect the average coupon on net debt to be in the range of 3.5% to 4.0% in FY15. Net pension interest expense and accretion expenses are expected to be approximately 35 and 80 million
USD per quarter, respectively. Other financial results will continue to be impacted by the potential gains and losses related to the hedging of our share-based payment programs |
(vi) |
Effective Tax Rate: We expect the normalized ETR in FY15 to be between 22% and 24%. We expect the normalized ETR to be in the range of 22% to 25% in the period 2016-2018, and in the range of 25% to 27% thereafter
|
(vii) |
Net Capital Expenditure: We expect net capital expenditure of approximately 4.3 billion USD in FY15, driven by investments in our consumer and commercial initiatives, and capacity expansion |
(viii) |
Debt: Our optimal capital structure remains a net debt to EBITDA ratio of around 2x. Approximately one third of AB InBevs gross debt is denominated in currencies other than the US dollar, principally the
Euro. |
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PRESS RELEASE
Brussels, 26 February 2015
8
/ 24 |
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BUSINESS REVIEW
United States
Key performance indicators
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY13 |
|
|
|
|
|
Organic |
|
Figure 3. United States (million USD) |
|
Reference Base |
|
|
FY14 |
|
|
growth |
|
Total volumes (thousand hls) |
|
|
113 048 |
|
|
|
111 691 |
|
|
|
-1.4 |
% |
Revenue |
|
|
14 054 |
|
|
|
14 118 |
|
|
|
0.3 |
% |
Normalized EBITDA |
|
|
5 885 |
|
|
|
6 029 |
|
|
|
-1.4 |
% |
Normalized EBITDA margin |
|
|
41.9 |
% |
|
|
42.7 |
% |
|
|
-72 |
bp |
|
|
|
|
|
|
4Q13 |
|
|
|
|
|
Organic |
|
|
|
Reference Base |
|
|
4Q14 |
|
|
growth |
|
Total volumes (thousand hls) |
|
|
25 981 |
|
|
|
26 078 |
|
|
|
0.2 |
% |
Revenue |
|
|
3 249 |
|
|
|
3 331 |
|
|
|
2.2 |
% |
Normalized EBITDA |
|
|
1 342 |
|
|
|
1 352 |
|
|
|
0.7 |
% |
Normalized EBITDA margin |
|
|
41.3 |
% |
|
|
40.6 |
% |
|
|
-63 |
bp |
In the United States, we estimate industry STRs were down 0.6% in FY14, an improvement compared to an estimated decline
of 1.8% in FY13, and flat in 4Q14. Our own STRs were down 1.7% in FY14, and down 1.4% in 4Q14. Our STWs declined by 1.5% in FY14 and were flat in 4Q14. We estimate market share was down approximately 50 bps in FY14, largely due to Budweiser, and by
60 bps in 4Q14.
The Bud Light brand ended the year with good momentum, gaining share of premium light in FY14 according to our estimates. Bud Light STRs
were down approximately 1.6% in FY14, and down only 1.1% in 4Q14, leading to a loss in total estimated market share of 20 bps in both the quarter and the full year. This performance was driven by the new Up For Whatever campaign which
was launched at the start of the year and which continued throughout the summer, as well as our new 25oz can and 16oz aluminum bottle packages. The Ritas family also performed well, delivering a total market share gain of 10 bps in FY14, based on
our estimates.
The total estimated market share of Budweiser was down approximately 30 bps in both FY14 and 4Q14. We remain committed to stabilizing the
market share of Budweiser and have strong music, food pairings and holiday programs in place for FY15.
Michelob Ultra and our high end brands
continue to deliver strong share growth, with an estimated gain in total market share of 40 bps in both FY14 and 4Q14. Montejo, our authentic Mexican brand, is also performing well. Distribution was extended to Nevada, Colorado and Florida during
February 2015, and we are working to make Montejo available in five additional states during 2Q15.
Our Value brands had a strong year, driven by our 25oz
can, gaining share of Value and holding share of total market based on our estimates.
US beer only revenue per hl grew by 1.7% in FY14 and by 2.1% in the
quarter. As previously reported, we faced a more favorable package mix comparable in 4Q14 as we cycled the launch of the new 25oz can.
US EBITDA declined
by 1.4% in FY14 to 6 029 million USD. EBITDA margin contracted by 72 bps to 42.7%, as a result of increased investment behind the long term growth of our brands, and higher distribution expenses due to increased freight rates. US EBITDA was up
0.7% in the quarter, with margin contraction of 63 bps.
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PRESS RELEASE
Brussels, 26 February 2015
9
/ 24 |
|
|
Mexico
Key performance indicators
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY13 |
|
|
|
|
|
Organic |
|
Figure 4. Mexico (million USD) |
|
Reference Base |
|
|
FY14 |
|
|
growth |
|
Total volumes (thousand hls) |
|
|
38 185 |
|
|
|
38 800 |
|
|
|
1.6 |
% |
Revenue |
|
|
4 669 |
|
|
|
4 619 |
|
|
|
5.7 |
% |
Normalized EBITDA |
|
|
1 940 |
|
|
|
2 186 |
|
|
|
21.3 |
% |
Normalized EBITDA margin |
|
|
41.5 |
% |
|
|
47.3 |
% |
|
|
608 |
bp |
|
|
|
|
|
|
4Q13 |
|
|
|
|
|
Organic |
|
|
|
Reference Base |
|
|
4Q14 |
|
|
growth |
|
Total volumes (thousand hls) |
|
|
9 733 |
|
|
|
9 846 |
|
|
|
1.2 |
% |
Revenue |
|
|
1 183 |
|
|
|
1 148 |
|
|
|
7.6 |
% |
Normalized EBITDA |
|
|
571 |
|
|
|
556 |
|
|
|
9.7 |
% |
Normalized EBITDA margin |
|
|
48.2 |
% |
|
|
48.4 |
% |
|
|
94 |
bp |
We estimate Mexican beer industry volumes grew by 2.6% in FY14, driven primarily by a stronger economy, with our own volumes
up by 1.6% in FY14 and 1.2% in the quarter. We estimate that we lost some share during the year, driven by regional mix. Industry growth was weaker in the Central Region, where we have a high market share, while growth was much stronger in the
North, where we have a lower, but growing market share, based on our estimates.
Our Focus Brands grew by 5.6% in FY14. The Corona brand family continued
to perform well, growing by 6.5% in the year, despite supply shortages during the first half of the year. We are also very pleased with the performance of Bud Light, with volumes almost doubling compared to FY13. Victoria volumes were also up over
10% in FY14, helped by a new campaign launched during the second half of the year. The renovation of the Modelorama chain is continuing, with the new store image providing improved consumer appeal and visibility for the Corona brand, and driving
volume growth.
Beer revenue per hl grew by 3.7% in FY14 and by 6.0% in 4Q14, reflecting our revenue management initiatives, and brand mix driven by the
strong performance of Bud Light.
Total cost synergies delivered to date amount to approximately 730 million USD, including synergies from best
practices implemented by the management of Grupo Modelo prior to the closing of the combination, as well as a limited amount of synergies generated and reported outside of the Mexico zone, principally in the global export business. We remain
committed to delivering 1 billion USD in cost synergies by the end of 2016, with the vast majority expected to come by the end of 2015. In addition, by the end of 2014 we had over-delivered against our commitment of 500 million USD of working
capital savings.
Mexico EBITDA grew by 21.3% to 2 186 million USD in FY14, with an EBITDA margin enhancement of 608 bps to 47.3%. The increase in
EBITDA was driven by the strong revenue performance, partly offset by additional bottle costs related to higher than expected demand for Corona globally. Mexico EBITDA grew by 9.7% in 4Q14, with EBITDA margin increasing to 48.4%.
|
|
|
PRESS RELEASE
Brussels, 26 February 2015
10
/ 24 |
|
|
Brazil
Key performance indicators
|
|
|
|
|
|
|
|
|
|
|
|
|
Figure 5. Brazil (million USD) |
|
FY13 Reference Base |
|
|
FY14 |
|
|
Organic growth |
|
Total volumes (thousand hls) |
|
|
113 148 |
|
|
|
117 509 |
|
|
|
3.9 |
% |
Beer volumes |
|
|
82 974 |
|
|
|
86 904 |
|
|
|
4.7 |
% |
Non- beer volumes |
|
|
30 174 |
|
|
|
30 605 |
|
|
|
1.4 |
% |
Revenue |
|
|
10 216 |
|
|
|
10 381 |
|
|
|
10.6 |
% |
Normalized EBITDA |
|
|
5 600 |
|
|
|
5 435 |
|
|
|
5.7 |
% |
Normalized EBITDA margin |
|
|
54.8 |
% |
|
|
52.4 |
% |
|
|
-246 |
bp |
|
|
|
|
|
|
4Q13 Reference Base |
|
|
4Q14 |
|
|
Organic growth |
|
Total volumes (thousand hls) |
|
|
33 666 |
|
|
|
33 873 |
|
|
|
0.6 |
% |
Beer volumes |
|
|
24 646 |
|
|
|
25 009 |
|
|
|
1.5 |
% |
Non- beer volumes |
|
|
9 020 |
|
|
|
8 864 |
|
|
|
-1.7 |
% |
Revenue |
|
|
3 183 |
|
|
|
3 172 |
|
|
|
10.4 |
% |
Normalized EBITDA |
|
|
2 056 |
|
|
|
1 961 |
|
|
|
5.2 |
% |
Normalized EBITDA margin |
|
|
64.6 |
% |
|
|
61.8 |
% |
|
|
-304 |
bp |
Brazil beer industry volumes increased by 4.3% in FY14, benefiting from a strong summer and the FIFA World Cup, and were up
0.7% in 4Q14, based on our estimates. Our total volumes grew by 3.9% in FY14, with beer volumes up 4.7% and soft drinks volumes up 1.4%. Our total volumes increased by 0.6% in the quarter, with our beer volumes up 1.5% and our soft drinks volumes
down 1.7%.
We delivered another strong market share performance in FY14. We estimate that our year-over-year market share for FY14 was up 30 bps to
68.2%, and up 50 bps in the quarter to 68.0%. Our premium brands continue to outperform the rest of the portfolio, with growth of almost 20% in FY14 and 18% in 4Q14, due to a strong performance by Budweiser, which grew over 40% in both FY14 and
4Q14. We estimate that premium now represents almost 8% of total industry volumes in Brazil, and continues to grow.
Brazil beer revenue per hl increased
by 6.2% in FY14 and by 9.8% in 4Q14, due to our revenue management initiatives, an increase in own distribution, premium brand mix, and package mix. The consumer environment in Brazil continues to be challenging, and our pack price, returnable
package and innovation strategies remain major business priorities.
Brazil EBITDA grew by 5.7% in FY14 to 5 435 million USD, with a margin decline
of 246 bps to 52.4%, driven by a strong volume and top line performance, partially offset by an increase in sales and marketing investments to support our FIFA World Cup activations. The increase in distribution expenses, was mainly due to an
expansion in own distribution, which is more than offset by the increase in net revenues, and the growth of our premium brands. Brazil EBITDA grew by 5.2% in 4Q14, with an EBITDA margin contraction of 304 bps. EBITDA in 4Q14 was impacted by a
difficult comparable in other operating income following the reporting of a one-time gain of 143 million USD in 4Q13 related to the recovery of restricted funds.
|
|
|
PRESS RELEASE
Brussels, 26 February 2015
11
/ 24 |
|
|
China
Key performance indicators
|
|
|
|
|
|
|
|
|
|
|
|
|
Figure 6. China (million USD) |
|
FY13 Reference Base |
|
|
FY14 |
|
|
Organic growth |
|
Total volumes (thousand hls) |
|
|
65 523 |
|
|
|
71 412 |
|
|
|
1.6 |
% |
Revenue |
|
|
3 334 |
|
|
|
3 873 |
|
|
|
11.6 |
% |
Normalized EBITDA |
|
|
552 |
|
|
|
716 |
|
|
|
29.0 |
% |
Normalized EBITDA margin |
|
|
16.6 |
% |
|
|
18.5 |
% |
|
|
257 |
bp |
|
|
|
|
|
|
4Q13 Reference Base |
|
|
4Q14 |
|
|
Organic growth |
|
Total volumes (thousand hls) |
|
|
11 186 |
|
|
|
12 310 |
|
|
|
1.2 |
% |
Revenue |
|
|
631 |
|
|
|
746 |
|
|
|
13.9 |
% |
Normalized EBITDA |
|
|
52 |
|
|
|
2 |
|
|
|
-82.4 |
% |
Normalized EBITDA margin |
|
|
8.3 |
% |
|
|
0.3 |
% |
|
|
-706 |
bp |
We estimated that industry volumes in China declined by approximately 4% in FY14, while our own volumes increased by 1.6% in
the same period, and by 1.2% in 4Q14. Our Focus Brands of Budweiser, Harbin and Sedrin, which represent nearly 73% of our portfolio, grew by 7.8% in FY14, and by 7.0% in the quarter. We estimate that on an organic basis, we gained approximately 90
bps of market share in FY14, reaching 15.9%. We estimate market share reached 16.8% in FY14 when including our recent acquisitions.
Budweiser continues
to perform very well, growing by double digits in FY14. To further support Budweisers leading position as an iconic premium brand, we have added the aluminum bottle and Budweiser Brewmaster Reserve, a super-premium line extension, to the
portfolio.
Revenue per hl grew by 9.9% in FY14 and by 12.6% in 4Q14, driven primarily by improved brand mix, with consumers trading up to our core plus
and premium priced brands, specifically Budweiser and Harbin Ice.
China EBITDA grew by 29.0% to 716 million USD in FY14, with EBITDA margin
increasing by 257 bps to 18.5%. This result was driven by strong top-line growth and good cost management, partly offset by higher cost of sales and distribution expenses related to brand mix. EBITDA was flat in 4Q14, being impacted by the timing of
events as part of our increased sales and marketing investments in FY14, as well as the timing of the receipt of incentives.
Highlights from our
other top markets
Industry volumes in Argentina in 4Q14 were impacted by a weak consumer environment and adverse weather. Our own beer
volumes were down 5.9% in the quarter, driven mainly by industry performance. Our own volumes in FY14 ended down 1.7%, with some market share loss, based on our estimates, due to competitive pressure. At the end of 2014 we launched Quilmes MixxTail
Mojito, a high end product designed to gain share of throat. This new brand has been very well received by consumers.
Own beer volumes in Belgium
were essentially flat in both FY14 and 4Q14, benefitting from a strong FIFA World Cup activation in the first half of the year, and market share gains in the off-premise channel in 4Q14. We estimate that our market share remained stable in FY14.
In Canada, our beer volumes were down 0.7% in FY14, but up 0.4% in 4Q14, on the back of a good industry performance in the quarter. We
estimate that we grew market share in FY14 in Canada. Our focus brands continue to lead the way, with estimated market share growth achieved by Budweiser, Bud Light, Corona and Stella Artois in FY14.
|
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|
PRESS RELEASE
Brussels, 26 February 2015
12
/ 24 |
|
|
In Germany, own beer volumes declined by 3.4% in FY14 and by 3.5% in 4Q14. Market share for our Focus
Brands of Becks and Franziskaner was flat in FY14 in the off trade channel, despite high promotional pressure in the market.
In South Korea,
beer volumes were down 6.4% in 4Q14, mainly due to a weak industry, and some estimated share loss. New campaigns have been implemented for both Cass and OB to help drive volumes in 2015. The acquisition of South Korea will continue to be reported as
a scope change until the end of 1Q15.
The United Kingdom had a very strong year, despite an estimated decline in industry volumes. Volumes of our
own products were up 1.5% in FY14 and up 2.1% in 4Q14 as a result of continued good performances by our Focus Brands, leading to estimated market share gains in the Off-premise. We took over distribution of the Corona brand with effect from the
beginning of 2015.
CONSOLIDATED INCOME STATEMENT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Figure 7. Consolidated income statement (million USD) |
|
FY13 Reported |
|
|
FY13 Reference Base |
|
|
FY14 |
|
|
Organic growth |
|
Revenue |
|
|
43 195 |
|
|
|
45 483 |
|
|
|
47 063 |
|
|
|
5.9 |
% |
Cost of sales |
|
|
-17 594 |
|
|
|
-18 555 |
|
|
|
-18 756 |
|
|
|
-2.9 |
% |
Gross profit |
|
|
25 601 |
|
|
|
26 928 |
|
|
|
28 307 |
|
|
|
7.9 |
% |
Distribution expenses |
|
|
-4 061 |
|
|
|
-4 286 |
|
|
|
-4 558 |
|
|
|
-9.1 |
% |
Sales and marketing expenses |
|
|
-5 958 |
|
|
|
-6 338 |
|
|
|
-7 036 |
|
|
|
-11.0 |
% |
Administrative expenses |
|
|
-2 539 |
|
|
|
-2 766 |
|
|
|
-2 791 |
|
|
|
-2.1 |
% |
Other operating income/(expenses) |
|
|
1 160 |
|
|
|
1 262 |
|
|
|
1 386 |
|
|
|
1.1 |
% |
Normalized profit from operations (normalized EBIT) |
|
|
14 203 |
|
|
|
14 800 |
|
|
|
15 308 |
|
|
|
6.7 |
% |
Non-recurring items above EBIT |
|
|
6 240 |
|
|
|
|
|
|
|
-197 |
|
|
|
|
|
Net finance income/(cost) |
|
|
-2 486 |
|
|
|
|
|
|
|
-1 828 |
|
|
|
|
|
Non-recurring net finance income/(cost) |
|
|
283 |
|
|
|
|
|
|
|
509 |
|
|
|
|
|
Share of results of associates |
|
|
294 |
|
|
|
|
|
|
|
9 |
|
|
|
|
|
Income tax expense |
|
|
-2 016 |
|
|
|
|
|
|
|
-2 499 |
|
|
|
|
|
Profit |
|
|
16 518 |
|
|
|
|
|
|
|
11 302 |
|
|
|
|
|
Profit attributable to non- controlling interest |
|
|
2 124 |
|
|
|
|
|
|
|
2 086 |
|
|
|
|
|
Profit attributable to equity holders of AB InBev |
|
|
14 394 |
|
|
|
|
|
|
|
9 216 |
|
|
|
|
|
Normalized EBITDA |
|
|
17 188 |
|
|
|
17 943 |
|
|
|
18 542 |
|
|
|
6.6 |
% |
Normalized profit attributable to equity holders of AB InBev |
|
|
7 936 |
|
|
|
|
|
|
|
8 865 |
|
|
|
|
|
|
|
|
|
|
|
|
4Q13 Reported |
|
|
4Q13 Reference Base |
|
|
4Q14 |
|
|
Organic growth |
|
Revenue |
|
|
11 711 |
|
|
|
11 696 |
|
|
|
12 018 |
|
|
|
7.6 |
% |
Cost of sales |
|
|
-4 482 |
|
|
|
-4 475 |
|
|
|
-4 636 |
|
|
|
-6.6 |
% |
Gross profit |
|
|
7 229 |
|
|
|
7 221 |
|
|
|
7 382 |
|
|
|
8.2 |
% |
Distribution expenses |
|
|
-1 047 |
|
|
|
-1 045 |
|
|
|
-1 134 |
|
|
|
-12.7 |
% |
Sales and marketing expenses |
|
|
-1 477 |
|
|
|
-1 476 |
|
|
|
-1 621 |
|
|
|
-10.8 |
% |
Administrative expenses |
|
|
-802 |
|
|
|
-800 |
|
|
|
-781 |
|
|
|
-0.8 |
% |
Other operating income/(expenses) |
|
|
462 |
|
|
|
462 |
|
|
|
386 |
|
|
|
-7.9 |
% |
Normalized profit from operations (normalized EBIT) |
|
|
4 365 |
|
|
|
4 361 |
|
|
|
4 232 |
|
|
|
5.9 |
% |
Non-recurring items above EBIT |
|
|
-13 |
|
|
|
|
|
|
|
-157 |
|
|
|
|
|
Net finance income/(cost) |
|
|
-669 |
|
|
|
|
|
|
|
-214 |
|
|
|
|
|
Non-recurring net finance income/(cost) |
|
|
132 |
|
|
|
|
|
|
|
168 |
|
|
|
|
|
Share of results of associates |
|
|
6 |
|
|
|
|
|
|
|
-4 |
|
|
|
|
|
Income tax expense |
|
|
-468 |
|
|
|
|
|
|
|
-749 |
|
|
|
|
|
Profit |
|
|
3 353 |
|
|
|
|
|
|
|
3 276 |
|
|
|
|
|
Profit attributable to non- controlling interest |
|
|
834 |
|
|
|
|
|
|
|
749 |
|
|
|
|
|
Profit attributable to equity holders of AB InBev |
|
|
2 519 |
|
|
|
|
|
|
|
2 527 |
|
|
|
|
|
Normalized EBITDA |
|
|
5 199 |
|
|
|
5 194 |
|
|
|
5 066 |
|
|
|
5.6 |
% |
Normalized profit attributable to equity holders of AB InBev |
|
|
2 374 |
|
|
|
|
|
|
|
2 520 |
|
|
|
|
|
|
|
|
PRESS RELEASE
Brussels, 26 February 2015
13
/ 24 |
|
|
Revenue
Revenue grew by 5.9% in FY14, with revenue per hl growth of 5.3%, driven by revenue management initiatives and brand mix improvements from our premiumization
strategies. On a constant geographic basis, revenue per hl grew by 5.7%. In 4Q14, revenue and revenue per hl both grew by 7.6%, with revenue per hl growing by 7.4% on a constant geographic basis.
Cost of Sales (CoS)
Total CoS increased by 2.9%
in FY14, and by 2.4% on a per hl basis. This performance was driven primarily by higher depreciation and packaging costs in Brazil, as well as additional bottle costs in Mexico related to higher than expected demand for Corona globally, partly
mitigated by procurement savings and efficiency gains. On a constant geographic basis, CoS per hl increased by 3.9%. In 4Q14, CoS increased by 6.6%, with a CoS per hl increase of 6.6%, or 7.5% on a constant geographic basis.
Distribution expenses
Distribution expenses grew
by 9.1% in FY14 and by 8.5% on a per hl basis, mainly driven by increases in freight rates in the US, increased own distribution in Brazil, which is more than offset by the increase in net revenues, growth of our premium brands in Brazil, and
increased expenses in Mexico. In Latin America South, distribution expenses per hl increased significantly due to higher fuel costs and wage increases for unionized workers. Distribution expenses and distribution expenses per hl both increased by
12.7% in 4Q14.
Sales and marketing investments
Sales and marketing investments increased by 11.0% in FY14, with increased support for our brands, innovations and sales activations in most Zones. The
increased investments include our FIFA World Cup activations in 1H14, particularly in Latin America North and South, Mexico and Europe, as well as investments behind proven trade marketing programs and the new Bud Light summer campaign in the United
States. Sales and Marketing investments increased by 10.8% in 4Q14.
Administrative expenses
Administrative expenses increased by 2.1% in FY14, and by 0.8% in 4Q14.
Other operating income
Other operating income
grew by 1.1% in FY14. Other operating income decreased by 7.9% in 4Q14 due to a difficult comparable in Brazil following the reporting of a one-time gain of 143 million USD in 4Q13 related to the recovery of restricted funds, and the timing of
the receipt of incentives in China.
Non-recurring items above EBIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Figure 8. Non-recurring items above EBIT (million USD) |
|
FY13 |
|
|
FY14 |
|
|
4Q13 |
|
|
4Q14 |
|
Restructuring (including impairment losses) |
|
|
-118 |
|
|
|
-277 |
|
|
|
|
|
|
|
-197 |
|
Fair value adjustments |
|
|
6 410 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition costs related to business combinations |
|
|
-82 |
|
|
|
-77 |
|
|
|
-4 |
|
|
|
-6 |
|
Business and asset disposal (including impairment losses) |
|
|
30 |
|
|
|
157 |
|
|
|
-9 |
|
|
|
46 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact on profit from operations |
|
|
6 240 |
|
|
|
-197 |
|
|
|
-13 |
|
|
|
-157 |
|
Normalized profit from operations excludes non-recurring items of -197 million USD in FY14. This compares to 6
240 million USD in FY13 which reflected the fair value adjustment on the initial investment held in Grupo Modelo, reported in the income statement in line with IFRS accounting standards. In 4Q14 non-recurring items were -157 million USD.
|
|
|
PRESS RELEASE
Brussels, 26 February 2015
14
/ 24 |
|
|
Net finance income / (cost)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Figure 9. Net finance income/(cost) (million USD) |
|
FY13 |
|
|
FY14 |
|
|
4Q13 |
|
|
4Q14 |
|
Net interest expense |
|
|
-1 719 |
|
|
|
-1 634 |
|
|
|
-389 |
|
|
|
-374 |
|
Net interest on net defined benefit liabilities |
|
|
-156 |
|
|
|
-124 |
|
|
|
-40 |
|
|
|
-29 |
|
Accretion expenses |
|
|
-360 |
|
|
|
-364 |
|
|
|
-124 |
|
|
|
-127 |
|
Other financial results |
|
|
-251 |
|
|
|
294 |
|
|
|
-116 |
|
|
|
316 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net finance income/(cost) |
|
|
-2 486 |
|
|
|
-1 828 |
|
|
|
-669 |
|
|
|
-214 |
|
Net finance cost (excluding non-recurring net finance results) was 1 828 million USD in FY14 compared to 2
486 million USD in FY13. This decrease was driven by lower interest expense, currency gains reported in other financial results, and a positive mark-to-market adjustment of 711 million USD in FY14, linked to the hedging of our share-based
payment programs, compared to 456 million USD in FY13.
Net finance cost was 214 million USD in 4Q14 compared to 669 million USD in
4Q13. The decrease in 4Q14 was due to currency gains reported in other financial results, while 4Q13 included a negative currency result. Other financial results in 4Q14 also includes a mark-to-market gain of 275 million USD linked to the
hedging of our share-based payment programs, compared to a gain of 158 million USD in 4Q13.
The number of shares covered by the hedging of our
share-based payment programs, and the opening and closing share prices, are shown in figure 10 below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Figure 10. Share-based payment hedge |
|
FY13 |
|
|
FY14 |
|
|
4Q13 |
|
|
4Q14 |
|
Share price at the start of the period (Euro) |
|
|
65.74 |
|
|
|
77.26 |
|
|
|
73.58 |
|
|
|
88.12 |
|
Share price at the end of the period (Euro) |
|
|
77.26 |
|
|
|
93.86 |
|
|
|
77.26 |
|
|
|
93.86 |
|
Number of equity instruments (millions) |
|
|
28.3 |
|
|
|
33.7 |
|
|
|
28.3 |
|
|
|
33.7 |
|
Non-recurring net finance income / (cost)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Figure 11. Non-recurring net finance income/(cost) (million USD) |
|
FY13 |
|
|
FY14 |
|
|
4Q13 |
|
|
4Q14 |
|
Mark-to-market adjustment |
|
|
384 |
|
|
|
509 |
|
|
|
133 |
|
|
|
168 |
|
Other |
|
|
-101 |
|
|
|
|
|
|
|
-1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-recurring net finance income/(cost) |
|
|
283 |
|
|
|
509 |
|
|
|
132 |
|
|
|
168 |
|
Non-recurring net finance results were 509 million USD in FY14 and 168 million USD in 4Q14 resulting from the
mark-to-market impact of derivative instruments entered into to hedge the deferred share instrument issued in a transaction related to the combination with Grupo Modelo. These compare to a reported mark-to-market gain of 384 million USD in FY13
and 133 million USD in 4Q13. The deferred share instrument was hedged at an average price of approximately 68 Euro per share. The number of shares covered by the hedging of the deferred share instrument, and the opening and closing share
prices, are shown in figure 12.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Figure 12. Deferred share instrument hedge |
|
FY13 |
|
|
FY14 |
|
|
4Q13 |
|
|
4Q14 |
|
Share price at the start of the period (Euro) |
|
|
65.74 |
|
|
|
77.26 |
|
|
|
73.58 |
|
|
|
88.12 |
|
Share price of additional hedges acquired during the period (Euro) |
|
|
69.47 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share price at the end of the period (Euro) |
|
|
77.26 |
|
|
|
93.86 |
|
|
|
77.26 |
|
|
|
93.86 |
|
Number of equity instruments at the start of the period (millions) |
|
|
9.5 |
|
|
|
23.1 |
|
|
|
23.0 |
|
|
|
23.1 |
|
Number of equity instruments at the end of the period (millions) |
|
|
23.1 |
|
|
|
23.1 |
|
|
|
23.1 |
|
|
|
23.1 |
|
Income tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Figure 13. Income tax expense (million USD) |
|
FY13 |
|
|
FY14 |
|
|
4Q13 |
|
|
4Q14 |
|
Tax expense |
|
|
2 016 |
|
|
|
2 499 |
|
|
|
468 |
|
|
|
749 |
|
Effective tax rate |
|
|
11.1 |
% |
|
|
18.1 |
% |
|
|
12.3 |
% |
|
|
18.6 |
% |
Normalized effective tax rate |
|
|
16.6 |
% |
|
|
18.8 |
% |
|
|
13.3 |
% |
|
|
18.5 |
% |
|
|
|
PRESS RELEASE
Brussels, 26 February 2015
15
/ 24 |
|
|
Income tax expense in FY14 was 2 499 million USD with a normalized effective tax rate (ETR) of 18.8%,
compared to an income tax expense of 2 016 million USD in FY13 and a normalized ETR of 16.6%. This increase in the normalized ETR is mainly due to changes in country profit mix, including the impact resulting from the combinations with Grupo
Modelo and Oriental Brewery (OB).
Income tax expense in 4Q14 was 749 million USD with a normalized ETR of 18.5%, compared to an income tax expense
of 468 million USD in 4Q13 and a normalized ETR of 13.3%. The normalized ETR in 4Q13 was positively impacted by the timing of the payment of interest on own capital in Brazil.
Share of results of associates
FY14 included a
share of results of associates of 9 million USD compared to 294 million USD in FY13. In the first five months of 2013, the share of results of associates reflected AB InBevs equity investment in Grupo Modelo. Since the combination
between Grupo Modelo and AB InBev at the start of June 2013, the results of Grupo Modelo are being fully consolidated.
Profit attributable to
non-controlling interest
Profit attributable to non-controlling interest decreased from 2 124 million USD in FY13 to 2 086 million USD
in FY14, with an improved operating performance in Ambev being offset by currency translation effects. Profit attributable to non-controlling interest decreased from 834 million USD in 4Q13 to 749 million USD in 4Q14.
Normalized Profit and Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Figure 14. Normalized Profit attribution to equity holders of AB InBev (million USD) |
|
FY13 |
|
|
FY14 |
|
|
4Q13 |
|
|
4Q14 |
|
Profit attributable to equity holders of AB InBev |
|
|
14 394 |
|
|
|
9 216 |
|
|
|
2 519 |
|
|
|
2 527 |
|
Non-recurring items, after taxes, attributable to equity holders of AB InBev |
|
|
-6 175 |
|
|
|
158 |
|
|
|
-13 |
|
|
|
161 |
|
Non-recurring finance (income)/cost, after taxes, attributable to equity holders of AB InBev |
|
|
-283 |
|
|
|
-509 |
|
|
|
-132 |
|
|
|
-168 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Normalized profit attributable to equity holders of AB InBev |
|
|
7 936 |
|
|
|
8 865 |
|
|
|
2 374 |
|
|
|
2 520 |
|
Normalized profit attributable to equity holders of AB InBev increased by 11.7% to 8 865 million USD in FY14 from 7
936 million USD in FY13, mainly due to improved operating performance, as well as the combinations with Grupo Modelo and Oriental Brewery (OB). Normalized profit attributable to equity holders of AB InBev increased to 2 520 million USD in
4Q14 from 2 374 million USD in 4Q13.
Profit attributable to equity holders of AB InBev decreased to 9 216 million USD in FY14 from 14
394 million USD in FY13, reflecting the non-recurring fair value adjustment on the initial investment held in Grupo Modelo, reported in FY13. Profit attributable to equity holders of AB InBev increased to 2 527 million USD in 4Q14, from 2
519 million USD in 4Q13.
Normalized EPS
Normalized earnings per share (EPS) increased by 10.6% to 5.43 USD in FY14 from 4.91 USD in FY13, and to 1.54 USD in 4Q14 from 1.46 USD in 4Q13.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Figure 15. Earnings per share (USD) |
|
FY13 |
|
|
FY14 |
|
|
4Q13 |
|
|
4Q14 |
|
Basic earnings per share |
|
|
8.90 |
|
|
|
5.64 |
|
|
|
1.54 |
|
|
|
1.54 |
|
Non-recurring items, after taxes, attributable to equity holder of AB InBev, per share |
|
|
-3.82 |
|
|
|
0.10 |
|
|
|
|
|
|
|
0.10 |
|
Non-recurring finance (income)/cost, after taxes, attributable to equity holders of AB InBev, per share |
|
|
-0.17 |
|
|
|
-0.31 |
|
|
|
-0.08 |
|
|
|
-0.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Normalized earnings per share |
|
|
4.91 |
|
|
|
5.43 |
|
|
|
1.46 |
|
|
|
1.54 |
|
|
|
|
PRESS RELEASE
Brussels, 26 February 2015
16
/ 24 |
|
|
Reconciliation between profit attributable to equity holders and normalized EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Figure 16. Reconciliation of normalized EBITDA to profit attributable to equity holders of AB InBev (million
USD) |
|
FY13 Reported |
|
|
FY14 |
|
|
4Q13 Reported |
|
|
4Q14 |
|
Profit attributable to equity holders of AB InBev |
|
|
14 394 |
|
|
|
9 216 |
|
|
|
2 519 |
|
|
|
2 527 |
|
Non-controlling interests |
|
|
2 124 |
|
|
|
2 086 |
|
|
|
834 |
|
|
|
749 |
|
Profit |
|
|
16 518 |
|
|
|
11 302 |
|
|
|
3 353 |
|
|
|
3 276 |
|
Income tax expense |
|
|
2 016 |
|
|
|
2 499 |
|
|
|
468 |
|
|
|
749 |
|
Share of result of associates |
|
|
-294 |
|
|
|
-9 |
|
|
|
-6 |
|
|
|
4 |
|
Net finance (income)/cost |
|
|
2 486 |
|
|
|
1 828 |
|
|
|
669 |
|
|
|
214 |
|
Non-recurring net finance (income)/cost |
|
|
-283 |
|
|
|
-509 |
|
|
|
-132 |
|
|
|
-168 |
|
Non-recurring items above EBIT (incl. non-recurring impairment) |
|
|
-6 240 |
|
|
|
197 |
|
|
|
13 |
|
|
|
157 |
|
Normalized EBIT |
|
|
14 203 |
|
|
|
15 308 |
|
|
|
4 365 |
|
|
|
4 232 |
|
Depreciation, amortization and impairment |
|
|
2 985 |
|
|
|
3 234 |
|
|
|
834 |
|
|
|
834 |
|
Normalized EBITDA |
|
|
17 188 |
|
|
|
18 542 |
|
|
|
5 199 |
|
|
|
5 066 |
|
Normalized EBITDA and normalized EBIT are measures utilized by AB InBev to demonstrate the companys underlying
performance. Normalized EBITDA is calculated excluding the following effects from profit attributable to equity holders of AB InBev: (i) non-controlling interest; (ii) income tax expense; (iii) share of results of associates;
(iv) net finance cost; (v) non-recurring net finance cost; (vi) non-recurring items above EBIT (including non-recurring impairment); and (vii) depreciation, amortization and impairment.
Normalized EBITDA and normalized EBIT are not accounting measures under IFRS accounting and should not be considered as an alternative to profit attributable
to equity holders as a measure of operational performance, or an alternative to cash flow as a measure of liquidity. Normalized EBITDA and normalized EBIT do not have a standard calculation method and AB InBevs definition of normalized EBITDA
and normalized EBIT may not be comparable to that of other companies.
|
|
|
PRESS RELEASE
Brussels, 26 February 2015
17
/ 24 |
|
|
FINANCIAL POSITION
|
|
|
|
|
|
|
|
|
Figure 17. Cash Flow Statement (million USD) |
|
FY13 |
|
|
FY14 |
|
Operating activities |
|
|
|
|
|
Profit |
|
|
16 518 |
|
|
|
11 302 |
|
Revaluation of initial stake in Grupo Modelo |
|
|
-6 415 |
|
|
|
|
|
Interest, taxes and non- cash items included in profit |
|
|
7 135 |
|
|
|
7 029 |
|
|
|
|
|
|
|
|
|
|
Cash flow from operating activities before changes in working capital and use of provisions |
|
|
17 238 |
|
|
|
18 331 |
|
|
|
|
Change in working capital |
|
|
866 |
|
|
|
815 |
|
Pension contributions and use of provisions |
|
|
-653 |
|
|
|
-458 |
|
Interest and taxes (paid)/received |
|
|
-4 193 |
|
|
|
-4 574 |
|
Dividends received |
|
|
606 |
|
|
|
30 |
|
|
|
|
|
|
|
|
|
|
Cash flow from operating activities |
|
|
13 864 |
|
|
|
14 144 |
|
|
|
|
Investing activities |
|
|
|
|
|
|
|
|
Net capex |
|
|
-3 612 |
|
|
|
-4 122 |
|
Acquisition and sale of subsidiaries, net of cash acquired/disposed of |
|
|
-17 397 |
|
|
|
-6 700 |
|
Proceeds from the sale of/(investments in) short- term debt securities |
|
|
6 707 |
|
|
|
-187 |
|
Proceeds from the sale of assets held for sale |
|
|
4 002 |
|
|
|
-65 |
|
Other |
|
|
19 |
|
|
|
-78 |
|
|
|
|
|
|
|
|
|
|
Cash flow from investing activities |
|
|
-10 281 |
|
|
|
-11 152 |
|
|
|
|
Financing activities |
|
|
|
|
|
|
|
|
Dividends paid |
|
|
-6 253 |
|
|
|
-7 400 |
|
Net (payments on)/proceeds from borrowings |
|
|
4 458 |
|
|
|
3 223 |
|
Net proceeds from the issue of share capital |
|
|
73 |
|
|
|
83 |
|
Cash received for deferred shares instrument |
|
|
1 500 |
|
|
|
|
|
Other (including net finance cost other than interest) |
|
|
563 |
|
|
|
239 |
|
|
|
|
|
|
|
|
|
|
Cash flow from financing activities |
|
|
341 |
|
|
|
-3 855 |
|
|
|
|
Net increase/(decrease) in cash and cash equivalents |
|
|
3 924 |
|
|
|
-863 |
|
FY14 recorded a decrease in cash and cash equivalents of 863 million USD compared to an increase of 3 924 million
USD in FY13, with the following movements:
|
|
Cash flow from operating activities reached 14 144 million USD in FY14 compared to 13 864 million USD in FY13, mainly explained by the higher profit following the combination with Grupo Modelo, as well
as strong working capital management. These increases were partly offset by an increase in interest and taxes paid, and a reduction in dividends received due to the consolidation of the results of Grupo Modelo following the combination in June 2013.
|
|
|
Cash flow from investing activities was a cash outflow of 11 152 million USD in FY14 compared to an outflow of 10 281 million USD in FY13. The evolution of the cash used in investment activities in FY14
mainly reflects the acquisition of OB. In FY13, the cash outflow from investing activities includes the combination with Grupo Modelo, offset by the proceeds from the sale of the Piedras Negras brewery to Constellation Brands and the perpetual
rights to the Grupo Modelo brands distributed in the US by Crown Imports. |
|
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|
PRESS RELEASE
Brussels, 26 February 2015
18
/ 24 |
|
|
|
|
Cash flow from financing activities amounted to a cash outflow of 3 855 million USD in 2014, as compared to a cash inflow of 341 million USD in 2013. The cash flow from financing activities in FY14
reflects the funding of the acquisition of OB and higher dividend paid. In FY13, cash inflow from financing activities reflects the funding of the combination with Grupo Modelo and the cash proceeds from the deferred share instruments issued in a
transaction related to the combination with Grupo Modelo. |
AB InBevs net debt as of 31 December 2014 was 42.1 billion USD, an
increase from 38.8 billion USD as of 31 December 2013. The increase in the net debt position was mainly due to the funding of the combination with OB.
Net debt to normalized EBITDA for the 12 month period ending 31 December 2014 was essentially flat at 2.27x, on a reported basis.
AB InBevs cash, cash equivalents and short-term investments in debt securities less bank overdrafts as of 31 December 2014 amounted to 8
617 million USD. As of 31 December 2014, the company had total liquidity of 16 617 million USD, which consisted of 8 000 million USD available under committed long-term credit facilities and 8 617 million USD of cash, cash
equivalents and short-term investments in debt securities less bank overdrafts.
Although AB InBev may borrow such amounts to meet its liquidity needs,
the company principally relies on cash flows from operating activities to fund its continuing operations.
RECENT EVENTS
AB
InBev Indian Operations
In February 2015, AB InBev announced the entry into an agreement with RJ Corp Limited under which AB InBev will exit the
Indian joint venture with RJ Corp Limited and staff and operations of the joint venture will be moved to Crown Beers India Private Limited, a wholly-owned subsidiary of AB InBev. Later in February 2015, AB InBev exited the Indian joint
venture. Following a transition period into mid-2015, AB InBev will operate independently in India via Crown Beers India Private Limited.
|
|
|
PRESS RELEASE
Brussels, 26 February 2015
19
/ 24 |
|
|
NOTES
AB InBevs 4Q14 and 4Q13 and FY14 and FY13 reported numbers are based on audited consolidated financial statements prepared in accordance with IFRS.
Unless otherwise indicated, amounts are presented in million USD.
To facilitate the understanding of AB InBevs underlying performance, the analyses
of growth, including all comments in this press release, unless otherwise indicated, are based on organic growth and normalized numbers. In other words, financials are analyzed eliminating the impact of changes in currencies on translation of
foreign operations, and scope changes. Scope changes represent the impact of acquisitions and divestitures, the start or termination of activities or the transfer of activities between segments, curtailment gains and losses and year over year
changes in accounting estimates and other assumptions that management does not consider as part of the underlying performance of the business. The results of OB are reported in the Asia Pacific zone, as a scope change, as from 1 April 2014.
All references per hectoliter (per hl) exclude US non-beer activities. To eliminate the effect of geographic mix, i.e. the impact of stronger volume
growth coming from countries with lower revenue per hl, and lower Cost of Sales per hl, we are also presenting, where specified, organic growth per hectoliter figures on a constant geographic basis. When we make estimations on a constant geographic
basis, we assume each country in which we operate accounts for the same percentage of our global volume as in the same period of the previous year.
Whenever presented in this document, all performance measures (EBITDA, EBIT, profit, tax rate, EPS) are presented on a normalized basis, which
means they are presented before non-recurring items. Non-recurring items are either income or expenses which do not occur regularly as part of the normal activities of the Company. They are presented separately because they are important for the
understanding of the underlying sustainable performance of the Company due to their size or nature. Normalized measures are additional measures used by management, and should not replace the measures determined in accordance with IFRS as an
indicator of the Companys performance. Values in the figures and annexes may not add up, due to rounding.
Effective 1 April 2014, AB InBev
discontinued the reporting of volumes sold to Constellation Brands under the temporary supply agreement (TSA), since these volumes do not form part of the underlying performance of our business. The 4Q13 reference base volumes related to the TSA
have therefore been treated as a negative scope.
Given the transformational nature of the transaction with Grupo Modelo that closed on 4 June 2013,
and to facilitate the understanding of AB InBevs underlying performance, AB InBev has updated its 2013 segment reporting for purposes of result announcement and internal review by senior management. This presentation (referred to as the
2013 Reference Base) includes, for comparative purposes, the results of the Grupo Modelo business as if the combination had taken place on 4 June 2012. Accordingly, the 2013 Reference base presented in this release includes 12
months of the Grupo Modelo combination. The 2013 Reference Base further reflects updates to the 2013 segment reporting for purposes of result announcement and internal review by senior management to reflect changes in the Zone presentation of AB
InBev that were effective 1 January 2014. The changes, effective 1 January 2014 include the combination of AB InBevs Western Europe and Central & Eastern Europe Zones into a single Europe Zone, the transfer of responsibility
from Global Export and Holding Companies to the Europe Zone of the companys Spanish operations and the export of Corona to a number of European countries.
4Q14 and FY14 Basic EPS is based upon a weighted average of 1 634 million shares compared to 1 617 million shares for 4Q13 and FY13.
Legal Disclaimer
This release contains certain
forward-looking statements reflecting the current views of the management of Anheuser-Busch InBev with respect to, among other things, Anheuser-Busch InBevs strategic objectives. These statements involve risks and uncertainties. The ability of
Anheuser-Busch InBev to achieve these objectives is dependent on many factors some of which may be outside of managements control. By their nature, forward-looking statements involve risk and uncertainty because they reflect
Anheuser-Busch InBevs current expectations and assumptions as to future events and circumstances that may not prove accurate. The actual results could differ materially from those anticipated in the forward-looking statements for many reasons
including the risks described under Item 3.D of Anheuser-Busch InBevs Annual Report on Form 20-F filed with the US Securities and Exchange Commission on 25 March 2014. Anheuser-Busch InBev cannot assure you that the future results,
level of activity, performance or achievements of Anheuser-Busch InBev will meet the expectations reflected in the forward-looking statements. Anheuser-Busch InBev disclaims any obligation to update any of these statements after the date of this
release.
The Fourth Quarter 2014 (4Q14) financial data set out in Figure 1 (except for the volume information), Figures 7 to 9, 11, 13 to 17 of this
press release have been extracted from the groups audited consolidated financial statements as of and for the twelve months ended 31 December 2014, which have been reviewed by our statutory auditors PricewaterhouseCoopers
Bedrijfsrevisoren BCVBA in accordance with the standards of the Public Company Accounting Oversight Board (United States). The auditors concluded that, based on their review, nothing had come to their attention that caused them to believe that the
financial statements were not presented fairly, in all material respects, in accordance with IAS 34 Interim Financial Reporting, as issued by the IASB and as adopted by the European Union. Financial data included in Figures 3 to 6, 10,
12 and 18 have been extracted from the underlying accounting records as of and for the twelve months ended 31 December 2014 (except for the volume information)
|
|
|
PRESS RELEASE
Brussels, 26 February 2015
20
/ 24 |
|
|
CONFERENCE CALL AND WEBCAST
Investor Conference call and Webcast on Thursday, 26 February 2015:
2.00pm Brussels / 1.00pm London / 8.00am New York
Registration details
Webcast (listen-only mode)
https://event.on24.com/eventRegistration/EventLobbyServlet?target=registration.jsp&eventid=933859&sessionid=1&key=6D48
A54D147080288F31F59ED4AF864D&sourcepage=register
Conference call (with interactive Q&A)
http://www.directeventreg.com/registration/event/77027694
ANHEUSER-BUSCH INBEV CONTACTS
|
|
|
Media |
|
Investors |
Marianne Amssoms Tel:
+1-212-573-9281 E-mail: marianne.amssoms@ab-inbev.com |
|
Graham Staley Tel: +1-212-573-4365
E-mail: graham.staley@ab-inbev.com |
|
|
Karen Couck Tel: +1-212-573-9283
E-mail: karen.couck@ab-inbev.com
Kathleen Van Boxelaer Tel: +32-16-27-68-23
E-mail: kathleen.vanboxelaer@ab-inbev.com |
|
Christina Caspersen Tel:
+1-212-573-4376 E-mail: christina.caspersen@ab-inbev.com
Heiko Vulsieck Tel: +32-16-27-68-88
E-mail: heiko.vulsieck@ab-inbev.com |
About Anheuser-Busch InBev
Anheuser-Busch InBev is a publicly traded company (Euronext: ABI) based in Leuven, Belgium, with American Depositary Receipts on the New York Stock Exchange
(NYSE: BUD). It is the leading global brewer and one of the worlds top five consumer products companies. Beer, the original social network, has been bringing people together for thousands of years and our portfolio of well over 200 beer brands
continues to forge strong connections with consumers. This includes global brands Budweiser®, Corona® and Stella Artois®; international brands Becks®, Leffe®, and Hoegaarden®; and local champions Bud Light®, Skol®, Brahma®, Antarctica®, Quilmes®,
Victoria®, Modelo Especial®, Michelob Ultra®, Harbin®, Sedrin®, Klinskoye®, Sibirskaya Korona®, Chernigivske®, Cass®, and
Jupiler®. Anheuser-Busch InBevs dedication to heritage and quality originates from the Den Hoorn brewery in Leuven, Belgium dating back to 1366 and the pioneering spirit of the
Anheuser & Co brewery, with origins in St. Louis, USA since 1852. Geographically diversified with a balanced exposure to developed and developing markets, Anheuser-Busch InBev leverages the collective strengths of its approximately 155 000
employees based in 25 countries worldwide. In 2014, AB InBev realized 47.1 billion USD revenue. The company strives to be the Best Beer Company Bringing People Together For a Better World. Learn more at
ab-inbev.com, at facebook.com/ABInBev or on Twitter through @ABInBevNews.
|
|
|
PRESS RELEASE
Brussels, 26 February 2015
21
/ 24 |
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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Annex 1
AB InBev Worldwide |
|
FY13 Reference Base |
|
|
Scope |
|
|
Currency translation |
|
|
Organic growth |
|
|
FY14 |
|
|
Organic growth |
|
Total volumes (thousand hls) |
|
|
445 786 |
|
|
|
10 522 |
|
|
|
|
|
|
|
2 494 |
|
|
|
458 801 |
|
|
|
0.6 |
% |
of which AB InBev own beer |
|
|
397 024 |
|
|
|
9 120 |
|
|
|
|
|
|
|
1 851 |
|
|
|
407 995 |
|
|
|
0.5 |
% |
Revenue |
|
|
45 483 |
|
|
|
1 223 |
|
|
|
-2 307 |
|
|
|
2 664 |
|
|
|
47 063 |
|
|
|
5.9 |
% |
Cost of sales |
|
|
-18 555 |
|
|
|
-480 |
|
|
|
820 |
|
|
|
-541 |
|
|
|
-18 756 |
|
|
|
-2.9 |
% |
Gross profit |
|
|
26 928 |
|
|
|
743 |
|
|
|
-1 487 |
|
|
|
2 123 |
|
|
|
28 307 |
|
|
|
7.9 |
% |
Distribution expenses |
|
|
-4 286 |
|
|
|
-155 |
|
|
|
277 |
|
|
|
-394 |
|
|
|
-4 558 |
|
|
|
-9.1 |
% |
Sales and marketing expenses |
|
|
-6 338 |
|
|
|
-285 |
|
|
|
285 |
|
|
|
-699 |
|
|
|
-7 036 |
|
|
|
-11.0 |
% |
Administrative expenses |
|
|
-2 766 |
|
|
|
-74 |
|
|
|
108 |
|
|
|
-59 |
|
|
|
-2 791 |
|
|
|
-2.1 |
% |
Other operating income/(expenses) |
|
|
1 262 |
|
|
|
177 |
|
|
|
-65 |
|
|
|
13 |
|
|
|
1 386 |
|
|
|
1.1 |
% |
Normalized EBIT |
|
|
14 800 |
|
|
|
406 |
|
|
|
-882 |
|
|
|
984 |
|
|
|
15 308 |
|
|
|
6.7 |
% |
Normalized EBITDA |
|
|
17 943 |
|
|
|
469 |
|
|
|
-1 039 |
|
|
|
1 169 |
|
|
|
18 542 |
|
|
|
6.6 |
% |
Normalized EBITDA margin |
|
|
39.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39.4 |
% |
|
|
25 |
bp |
|
|
|
|
|
|
|
North America |
|
FY13 Reference Base |
|
|
Scope |
|
|
Currency translation |
|
|
Organic growth |
|
|
FY14 |
|
|
Organic growth |
|
Total volumes (thousand hls) |
|
|
122 116 |
|
|
|
642 |
|
|
|
|
|
|
|
-1 608 |
|
|
|
121 150 |
|
|
|
-1.3 |
% |
Revenue |
|
|
16 023 |
|
|
|
159 |
|
|
|
-123 |
|
|
|
35 |
|
|
|
16 093 |
|
|
|
0.2 |
% |
Cost of sales |
|
|
-6 519 |
|
|
|
-35 |
|
|
|
28 |
|
|
|
135 |
|
|
|
-6 391 |
|
|
|
2.1 |
% |
Gross profit |
|
|
9 504 |
|
|
|
123 |
|
|
|
-95 |
|
|
|
170 |
|
|
|
9 702 |
|
|
|
1.8 |
% |
Distribution expenses |
|
|
-1 235 |
|
|
|
-58 |
|
|
|
22 |
|
|
|
-53 |
|
|
|
-1 324 |
|
|
|
-4.1 |
% |
Sales and marketing expenses |
|
|
-1 908 |
|
|
|
-27 |
|
|
|
16 |
|
|
|
-217 |
|
|
|
-2 136 |
|
|
|
-11.2 |
% |
Administrative expenses |
|
|
-497 |
|
|
|
-9 |
|
|
|
4 |
|
|
|
28 |
|
|
|
-473 |
|
|
|
5.6 |
% |
Other operating income/(expenses) |
|
|
67 |
|
|
|
212 |
|
|
|
-1 |
|
|
|
20 |
|
|
|
299 |
|
|
|
35.8 |
% |
Normalized EBIT |
|
|
5 932 |
|
|
|
242 |
|
|
|
-53 |
|
|
|
-52 |
|
|
|
6 068 |
|
|
|
-0.9 |
% |
Normalized EBITDA |
|
|
6 728 |
|
|
|
232 |
|
|
|
-57 |
|
|
|
-82 |
|
|
|
6 820 |
|
|
|
-1.2 |
% |
Normalized EBITDA margin |
|
|
42.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42.4 |
% |
|
|
-60 |
bp |
|
|
|
|
|
|
|
Mexico |
|
FY13 Reference Base |
|
|
Scope |
|
|
Currency translation |
|
|
Organic growth |
|
|
FY14 |
|
|
Organic growth |
|
Total volumes (thousand hls) |
|
|
38 185 |
|
|
|
|
|
|
|
|
|
|
|
615 |
|
|
|
38 800 |
|
|
|
1.6 |
% |
Revenue |
|
|
4 669 |
|
|
|
-166 |
|
|
|
-140 |
|
|
|
256 |
|
|
|
4 619 |
|
|
|
5.7 |
% |
Cost of sales |
|
|
-1 570 |
|
|
|
95 |
|
|
|
42 |
|
|
|
59 |
|
|
|
-1 374 |
|
|
|
4.0 |
% |
Gross profit |
|
|
3 099 |
|
|
|
-71 |
|
|
|
-98 |
|
|
|
315 |
|
|
|
3 245 |
|
|
|
10.4 |
% |
Distribution expenses |
|
|
-443 |
|
|
|
15 |
|
|
|
14 |
|
|
|
-39 |
|
|
|
-453 |
|
|
|
-9.0 |
% |
Sales and marketing expenses |
|
|
-844 |
|
|
|
16 |
|
|
|
24 |
|
|
|
-4 |
|
|
|
-808 |
|
|
|
-0.5 |
% |
Administrative expenses |
|
|
-455 |
|
|
|
-7 |
|
|
|
13 |
|
|
|
18 |
|
|
|
-430 |
|
|
|
4.0 |
% |
Other operating income/(expenses) |
|
|
200 |
|
|
|
-27 |
|
|
|
-7 |
|
|
|
72 |
|
|
|
237 |
|
|
|
41.6 |
% |
Normalized EBIT |
|
|
1 557 |
|
|
|
-74 |
|
|
|
-54 |
|
|
|
362 |
|
|
|
1 791 |
|
|
|
24.4 |
% |
Normalized EBITDA |
|
|
1 940 |
|
|
|
-82 |
|
|
|
-66 |
|
|
|
395 |
|
|
|
2 186 |
|
|
|
21.3 |
% |
Normalized EBITDA margin |
|
|
41.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47.3 |
% |
|
|
608 |
bp |
|
|
|
|
|
|
|
Latin AmericaNorth |
|
FY13 Reference Base |
|
|
Scope |
|
|
Currency translation |
|
|
Organic growth |
|
|
FY14 |
|
|
Organic growth |
|
Total volumes (thousand hls) |
|
|
120 427 |
|
|
|
39 |
|
|
|
|
|
|
|
4 952 |
|
|
|
125 418 |
|
|
|
4.1 |
% |
Revenue |
|
|
11 010 |
|
|
|
5 |
|
|
|
-948 |
|
|
|
1 201 |
|
|
|
11 269 |
|
|
|
10.9 |
% |
Cost of sales |
|
|
-3 576 |
|
|
|
-2 |
|
|
|
306 |
|
|
|
-468 |
|
|
|
-3 741 |
|
|
|
-13.1 |
% |
Gross profit |
|
|
7 434 |
|
|
|
3 |
|
|
|
-641 |
|
|
|
733 |
|
|
|
7 528 |
|
|
|
9.9 |
% |
Distribution expenses |
|
|
-1 351 |
|
|
|
|
|
|
|
119 |
|
|
|
-172 |
|
|
|
-1 404 |
|
|
|
-12.7 |
% |
Sales and marketing expenses |
|
|
-1 147 |
|
|
|
|
|
|
|
104 |
|
|
|
-209 |
|
|
|
-1 253 |
|
|
|
-18.2 |
% |
Administrative expenses |
|
|
-591 |
|
|
|
|
|
|
|
49 |
|
|
|
-39 |
|
|
|
-581 |
|
|
|
-6.5 |
% |
Other operating income/(expenses) |
|
|
807 |
|
|
|
|
|
|
|
-61 |
|
|
|
-57 |
|
|
|
689 |
|
|
|
-7.1 |
% |
Normalized EBIT |
|
|
5 151 |
|
|
|
2 |
|
|
|
-431 |
|
|
|
256 |
|
|
|
4 979 |
|
|
|
5.0 |
% |
Normalized EBITDA |
|
|
5 858 |
|
|
|
2 |
|
|
|
-494 |
|
|
|
376 |
|
|
|
5 742 |
|
|
|
6.4 |
% |
Normalized EBITDA margin |
|
|
53.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51.0 |
% |
|
|
-216 |
bp |
|
|
|
PRESS RELEASE
Brussels, 26 February 2015
22
/ 24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annex 1
Latin AmericaSouth |
|
FY13 Reference Base |
|
|
Scope |
|
|
Currency translation |
|
|
Organic growth |
|
|
FY14 |
|
|
Organic growth |
|
Total volumes (thousand hls) |
|
|
36 918 |
|
|
|
|
|
|
|
|
|
|
|
-91 |
|
|
|
36 826 |
|
|
|
-0.2 |
% |
Revenue |
|
|
3 269 |
|
|
|
|
|
|
|
-893 |
|
|
|
586 |
|
|
|
2 961 |
|
|
|
17.9 |
% |
Cost of sales |
|
|
-1 185 |
|
|
|
|
|
|
|
322 |
|
|
|
-218 |
|
|
|
-1 081 |
|
|
|
-18.4 |
% |
Gross profit |
|
|
2 084 |
|
|
|
|
|
|
|
-571 |
|
|
|
368 |
|
|
|
1 881 |
|
|
|
17.6 |
% |
Distribution expenses |
|
|
-309 |
|
|
|
|
|
|
|
104 |
|
|
|
-85 |
|
|
|
-290 |
|
|
|
-27.5 |
% |
Sales and marketing expenses |
|
|
-346 |
|
|
|
|
|
|
|
92 |
|
|
|
-61 |
|
|
|
-315 |
|
|
|
-17.8 |
% |
Administrative expenses |
|
|
-112 |
|
|
|
|
|
|
|
31 |
|
|
|
-24 |
|
|
|
-106 |
|
|
|
-21.6 |
% |
Other operating income/(expenses) |
|
|
-5 |
|
|
|
|
|
|
|
-2 |
|
|
|
13 |
|
|
|
5 |
|
|
|
|
|
Normalized EBIT |
|
|
1 311 |
|
|
|
|
|
|
|
-346 |
|
|
|
210 |
|
|
|
1 175 |
|
|
|
16.0 |
% |
Normalized EBITDA |
|
|
1 491 |
|
|
|
|
|
|
|
-394 |
|
|
|
256 |
|
|
|
1 352 |
|
|
|
17.1 |
% |
Normalized EBITDA margin |
|
|
45.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45.6 |
% |
|
|
-30 |
bp |
|
|
|
|
|
|
|
Europe |
|
FY13 Reference Base |
|
|
Scope |
|
|
Currency translation |
|
|
Organic growth |
|
|
FY14 |
|
|
Organic growth |
|
Total volumes (thousand hls) |
|
|
47 030 |
|
|
|
60 |
|
|
|
|
|
|
|
-2 812 |
|
|
|
44 278 |
|
|
|
-6.0 |
% |
of which AB InBev own beer |
|
|
45 284 |
|
|
|
60 |
|
|
|
|
|
|
|
-2 769 |
|
|
|
42 575 |
|
|
|
-6.1 |
% |
Revenue |
|
|
5 021 |
|
|
|
6 |
|
|
|
-166 |
|
|
|
3 |
|
|
|
4 865 |
|
|
|
0.1 |
% |
Cost of sales |
|
|
-2 272 |
|
|
|
-5 |
|
|
|
98 |
|
|
|
99 |
|
|
|
-2 081 |
|
|
|
4.3 |
% |
Gross profit |
|
|
2 749 |
|
|
|
1 |
|
|
|
-68 |
|
|
|
102 |
|
|
|
2 784 |
|
|
|
3.7 |
% |
Distribution expenses |
|
|
-503 |
|
|
|
-1 |
|
|
|
16 |
|
|
|
10 |
|
|
|
-477 |
|
|
|
2.0 |
% |
Sales and marketing expenses |
|
|
-1 066 |
|
|
|
-7 |
|
|
|
49 |
|
|
|
-43 |
|
|
|
-1 067 |
|
|
|
-4.0 |
% |
Administrative expenses |
|
|
-364 |
|
|
|
5 |
|
|
|
13 |
|
|
|
-16 |
|
|
|
-362 |
|
|
|
-4.4 |
% |
Other operating income/(expenses) |
|
|
32 |
|
|
|
|
|
|
|
|
|
|
|
-4 |
|
|
|
28 |
|
|
|
-12.7 |
% |
Normalized EBIT |
|
|
849 |
|
|
|
-2 |
|
|
|
10 |
|
|
|
49 |
|
|
|
906 |
|
|
|
5.8 |
% |
Normalized EBITDA |
|
|
1 341 |
|
|
|
-1 |
|
|
|
-18 |
|
|
|
21 |
|
|
|
1 343 |
|
|
|
1.5 |
% |
Normalized EBITDA margin |
|
|
26.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27.6 |
% |
|
|
39 |
bp |
|
|
|
|
|
|
|
Asia Pacific |
|
FY13 Reference Base |
|
|
Scope |
|
|
Currency translation |
|
|
Organic growth |
|
|
FY14 |
|
|
Organic growth |
|
Total volumes (thousand hls) |
|
|
65 787 |
|
|
|
15 602 |
|
|
|
|
|
|
|
1 140 |
|
|
|
82 529 |
|
|
|
1.7 |
% |
Revenue |
|
|
3 354 |
|
|
|
1 299 |
|
|
|
-8 |
|
|
|
396 |
|
|
|
5 040 |
|
|
|
11.8 |
% |
Cost of sales |
|
|
-1 885 |
|
|
|
-568 |
|
|
|
5 |
|
|
|
-103 |
|
|
|
-2 552 |
|
|
|
-5.5 |
% |
Gross profit |
|
|
1 469 |
|
|
|
730 |
|
|
|
-3 |
|
|
|
293 |
|
|
|
2 489 |
|
|
|
19.9 |
% |
Distribution expenses |
|
|
-302 |
|
|
|
-111 |
|
|
|
1 |
|
|
|
-22 |
|
|
|
-434 |
|
|
|
-7.2 |
% |
Sales and marketing expenses |
|
|
-833 |
|
|
|
-275 |
|
|
|
2 |
|
|
|
-121 |
|
|
|
-1 227 |
|
|
|
-14.5 |
% |
Administrative expenses |
|
|
-317 |
|
|
|
-59 |
|
|
|
1 |
|
|
|
-25 |
|
|
|
-400 |
|
|
|
-7.9 |
% |
Other operating income/(expenses) |
|
|
109 |
|
|
|
1 |
|
|
|
|
|
|
|
-20 |
|
|
|
90 |
|
|
|
-18.7 |
% |
Normalized EBIT |
|
|
127 |
|
|
|
286 |
|
|
|
|
|
|
|
104 |
|
|
|
517 |
|
|
|
82.2 |
% |
Normalized EBITDA |
|
|
546 |
|
|
|
366 |
|
|
|
-1 |
|
|
|
156 |
|
|
|
1 067 |
|
|
|
28.5 |
% |
Normalized EBITDA margin |
|
|
16.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21.2 |
% |
|
|
244 |
bp |
|
|
|
|
|
|
|
Global Export and Holding Companies |
|
FY13 Reference Base |
|
|
Scope |
|
|
Currency translation |
|
|
Organic growth |
|
|
FY14 |
|
|
Organic growth |
|
Total volumes (thousand hls) |
|
|
15 323 |
|
|
|
-5 821 |
|
|
|
|
|
|
|
297 |
|
|
|
9 800 |
|
|
|
3.1 |
% |
Revenue |
|
|
2 138 |
|
|
|
-79 |
|
|
|
-29 |
|
|
|
186 |
|
|
|
2 216 |
|
|
|
9.1 |
% |
Cost of sales |
|
|
-1 549 |
|
|
|
36 |
|
|
|
19 |
|
|
|
-44 |
|
|
|
-1 538 |
|
|
|
-2.9 |
% |
Gross profit |
|
|
589 |
|
|
|
-43 |
|
|
|
-10 |
|
|
|
142 |
|
|
|
678 |
|
|
|
26.0 |
% |
Distribution expenses |
|
|
-143 |
|
|
|
1 |
|
|
|
|
|
|
|
-34 |
|
|
|
-175 |
|
|
|
-23.7 |
% |
Sales and marketing expenses |
|
|
-194 |
|
|
|
9 |
|
|
|
-2 |
|
|
|
-43 |
|
|
|
-230 |
|
|
|
-23.1 |
% |
Administrative expenses |
|
|
-430 |
|
|
|
-5 |
|
|
|
-3 |
|
|
|
-2 |
|
|
|
-440 |
|
|
|
-0.4 |
% |
Other operating income/(expenses) |
|
|
52 |
|
|
|
-9 |
|
|
|
6 |
|
|
|
-10 |
|
|
|
39 |
|
|
|
-20.1 |
% |
Normalized EBIT |
|
|
-126 |
|
|
|
-48 |
|
|
|
-9 |
|
|
|
54 |
|
|
|
-128 |
|
|
|
32.9 |
% |
Normalized EBITDA |
|
|
40 |
|
|
|
-48 |
|
|
|
-8 |
|
|
|
48 |
|
|
|
33 |
|
|
|
|
|
|
|
|
PRESS RELEASE
Brussels, 26 February 2015
23
/ 24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annex 2
AB InBev Worldwide |
|
4Q13 Reference Base |
|
|
Scope |
|
|
Currency translation |
|
|
Organic growth |
|
|
4Q14 |
|
|
Organic growth |
|
Total volumes (thousand hls) |
|
|
110 442 |
|
|
|
2 758 |
|
|
|
|
|
|
|
-45 |
|
|
|
113 155 |
|
|
|
|
|
of which AB InBev own beer |
|
|
96 140 |
|
|
|
2 317 |
|
|
|
|
|
|
|
179 |
|
|
|
98 636 |
|
|
|
0.2 |
% |
Revenue |
|
|
11 696 |
|
|
|
286 |
|
|
|
-848 |
|
|
|
883 |
|
|
|
12 018 |
|
|
|
7.6 |
% |
Cost of sales |
|
|
-4 475 |
|
|
|
-132 |
|
|
|
265 |
|
|
|
-293 |
|
|
|
-4 636 |
|
|
|
-6.6 |
% |
Gross profit |
|
|
7 221 |
|
|
|
154 |
|
|
|
-583 |
|
|
|
589 |
|
|
|
7 382 |
|
|
|
8.2 |
% |
Distribution expenses |
|
|
-1 045 |
|
|
|
-48 |
|
|
|
93 |
|
|
|
-134 |
|
|
|
-1 134 |
|
|
|
-12.7 |
% |
Sales and marketing expenses |
|
|
-1 476 |
|
|
|
-85 |
|
|
|
100 |
|
|
|
-160 |
|
|
|
-1 621 |
|
|
|
-10.8 |
% |
Administrative expenses |
|
|
-800 |
|
|
|
-33 |
|
|
|
58 |
|
|
|
-6 |
|
|
|
-781 |
|
|
|
-0.8 |
% |
Other operating income/(expenses) |
|
|
462 |
|
|
|
-7 |
|
|
|
-31 |
|
|
|
-36 |
|
|
|
386 |
|
|
|
-7.9 |
% |
Normalized EBIT |
|
|
4 361 |
|
|
|
-18 |
|
|
|
-364 |
|
|
|
253 |
|
|
|
4 232 |
|
|
|
5.9 |
% |
Normalized EBITDA |
|
|
5 194 |
|
|
|
4 |
|
|
|
-422 |
|
|
|
290 |
|
|
|
5 066 |
|
|
|
5.6 |
% |
Normalized EBITDA margin |
|
|
44.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42.2 |
% |
|
|
-81 |
bp |
|
|
|
|
|
|
|
North America |
|
4Q13 Reference Base |
|
|
Scope |
|
|
Currency translation |
|
|
Organic growth |
|
|
4Q14 |
|
|
Organic growth |
|
Total volumes (thousand hls) |
|
|
28 148 |
|
|
|
146 |
|
|
|
|
|
|
|
52 |
|
|
|
28 345 |
|
|
|
0.2 |
% |
Revenue |
|
|
3 717 |
|
|
|
36 |
|
|
|
-35 |
|
|
|
78 |
|
|
|
3 796 |
|
|
|
2.1 |
% |
Cost of sales |
|
|
-1 510 |
|
|
|
-9 |
|
|
|
8 |
|
|
|
-11 |
|
|
|
-1 524 |
|
|
|
-0.8 |
% |
Gross profit |
|
|
2 207 |
|
|
|
26 |
|
|
|
-27 |
|
|
|
67 |
|
|
|
2 272 |
|
|
|
3.0 |
% |
Distribution expenses |
|
|
-276 |
|
|
|
-16 |
|
|
|
6 |
|
|
|
-34 |
|
|
|
-321 |
|
|
|
-11.8 |
% |
Sales and marketing expenses |
|
|
-470 |
|
|
|
-9 |
|
|
|
4 |
|
|
|
-26 |
|
|
|
-501 |
|
|
|
-5.6 |
% |
Administrative expenses |
|
|
-144 |
|
|
|
2 |
|
|
|
1 |
|
|
|
24 |
|
|
|
-117 |
|
|
|
16.9 |
% |
Other operating income/(expenses) |
|
|
16 |
|
|
|
-3 |
|
|
|
|
|
|
|
10 |
|
|
|
23 |
|
|
|
71.8 |
% |
Normalized EBIT |
|
|
1 332 |
|
|
|
2 |
|
|
|
-16 |
|
|
|
39 |
|
|
|
1 357 |
|
|
|
2.9 |
% |
Normalized EBITDA |
|
|
1 549 |
|
|
|
|
|
|
|
-17 |
|
|
|
21 |
|
|
|
1 553 |
|
|
|
1.4 |
% |
Normalized EBITDA margin |
|
|
41.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40.9 |
% |
|
|
-29 |
bp |
|
|
|
|
|
|
|
Mexico |
|
4Q13 Reference Base |
|
|
Scope |
|
|
Currency translation |
|
|
Organic growth |
|
|
4Q14 |
|
|
Organic growth |
|
Total volumes (thousand hls) |
|
|
9 733 |
|
|
|
|
|
|
|
|
|
|
|
112 |
|
|
|
9 846 |
|
|
|
1.2 |
% |
Revenue |
|
|
1 183 |
|
|
|
-73 |
|
|
|
-47 |
|
|
|
85 |
|
|
|
1 148 |
|
|
|
7.6 |
% |
Cost of sales |
|
|
-362 |
|
|
|
39 |
|
|
|
14 |
|
|
|
-6 |
|
|
|
-316 |
|
|
|
-1.6 |
% |
Gross profit |
|
|
821 |
|
|
|
-34 |
|
|
|
-33 |
|
|
|
79 |
|
|
|
833 |
|
|
|
10.1 |
% |
Distribution expenses |
|
|
-90 |
|
|
|
2 |
|
|
|
5 |
|
|
|
-26 |
|
|
|
-109 |
|
|
|
-29.7 |
% |
Sales and marketing expenses |
|
|
-220 |
|
|
|
1 |
|
|
|
8 |
|
|
|
-3 |
|
|
|
-213 |
|
|
|
-1.3 |
% |
Administrative expenses |
|
|
-84 |
|
|
|
-12 |
|
|
|
4 |
|
|
|
1 |
|
|
|
-91 |
|
|
|
1.0 |
% |
Other operating income/(expenses) |
|
|
43 |
|
|
|
3 |
|
|
|
-2 |
|
|
|
15 |
|
|
|
58 |
|
|
|
32.2 |
% |
Normalized EBIT |
|
|
470 |
|
|
|
-40 |
|
|
|
-19 |
|
|
|
66 |
|
|
|
477 |
|
|
|
15.4 |
% |
Normalized EBITDA |
|
|
571 |
|
|
|
-43 |
|
|
|
-22 |
|
|
|
52 |
|
|
|
556 |
|
|
|
9.7 |
% |
Normalized EBITDA margin |
|
|
48.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48.4 |
% |
|
|
94 |
bp |
|
|
|
|
|
|
|
Latin AmericaNorth |
|
4Q13 Reference Base |
|
|
Scope |
|
|
Currency translation |
|
|
Organic growth |
|
|
4Q14 |
|
|
Organic growth |
|
Total volumes (thousand hls) |
|
|
35 773 |
|
|
|
17 |
|
|
|
|
|
|
|
454 |
|
|
|
36 245 |
|
|
|
1.3 |
% |
Revenue |
|
|
3 428 |
|
|
|
2 |
|
|
|
-349 |
|
|
|
374 |
|
|
|
3 455 |
|
|
|
10.9 |
% |
Cost of sales |
|
|
-1 005 |
|
|
|
-1 |
|
|
|
103 |
|
|
|
-129 |
|
|
|
-1 033 |
|
|
|
-12.9 |
% |
Gross profit |
|
|
2 423 |
|
|
|
1 |
|
|
|
-246 |
|
|
|
244 |
|
|
|
2 423 |
|
|
|
10.1 |
% |
Distribution expenses |
|
|
-365 |
|
|
|
|
|
|
|
39 |
|
|
|
-44 |
|
|
|
-369 |
|
|
|
-11.9 |
% |
Sales and marketing expenses |
|
|
-194 |
|
|
|
|
|
|
|
28 |
|
|
|
-76 |
|
|
|
-242 |
|
|
|
-39.3 |
% |
Administrative expenses |
|
|
-212 |
|
|
|
|
|
|
|
19 |
|
|
|
-4 |
|
|
|
-196 |
|
|
|
-1.5 |
% |
Other operating income/(expenses) |
|
|
331 |
|
|
|
|
|
|
|
-26 |
|
|
|
-51 |
|
|
|
254 |
|
|
|
-15.5 |
% |
Normalized EBIT |
|
|
1 984 |
|
|
|
1 |
|
|
|
-187 |
|
|
|
70 |
|
|
|
1 869 |
|
|
|
3.5 |
% |
Normalized EBITDA |
|
|
2 150 |
|
|
|
1 |
|
|
|
-207 |
|
|
|
127 |
|
|
|
2 071 |
|
|
|
5.9 |
% |
Normalized EBITDA margin |
|
|
62.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
59.9 |
% |
|
|
-284 |
bp |
|
|
|
PRESS RELEASE
Brussels, 26 February 2015
24
/ 24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annex 2
Latin AmericaSouth |
|
4Q13 Reference Base |
|
|
Scope |
|
|
Currency translation |
|
|
Organic growth |
|
|
4Q14 |
|
|
Organic growth |
|
Total volumes (thousand hls) |
|
|
11 378 |
|
|
|
|
|
|
|
|
|
|
|
-331 |
|
|
|
11 047 |
|
|
|
-2.9 |
% |
Revenue |
|
|
1 042 |
|
|
|
|
|
|
|
-257 |
|
|
|
197 |
|
|
|
982 |
|
|
|
18.8 |
% |
Cost of sales |
|
|
-312 |
|
|
|
|
|
|
|
71 |
|
|
|
-98 |
|
|
|
-340 |
|
|
|
-31.4 |
% |
Gross profit |
|
|
730 |
|
|
|
|
|
|
|
-186 |
|
|
|
99 |
|
|
|
643 |
|
|
|
13.5 |
% |
Distribution expenses |
|
|
-85 |
|
|
|
|
|
|
|
26 |
|
|
|
-29 |
|
|
|
-88 |
|
|
|
-34.8 |
% |
Sales and marketing expenses |
|
|
-91 |
|
|
|
|
|
|
|
20 |
|
|
|
-4 |
|
|
|
-75 |
|
|
|
-5.2 |
% |
Administrative expenses |
|
|
-33 |
|
|
|
|
|
|
|
16 |
|
|
|
-17 |
|
|
|
-34 |
|
|
|
-52.4 |
% |
Other operating income/(expenses) |
|
|
4 |
|
|
|
|
|
|
|
-7 |
|
|
|
20 |
|
|
|
17 |
|
|
|
|
|
Normalized EBIT |
|
|
525 |
|
|
|
|
|
|
|
-130 |
|
|
|
67 |
|
|
|
463 |
|
|
|
12.7 |
% |
Normalized EBITDA |
|
|
562 |
|
|
|
|
|
|
|
-141 |
|
|
|
93 |
|
|
|
513 |
|
|
|
16.5 |
% |
Normalized EBITDA margin |
|
|
53.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52.2 |
% |
|
|
-108 |
bp |
|
|
|
|
|
|
|
Europe |
|
4Q13 Reference Base |
|
|
Scope |
|
|
Currency translation |
|
|
Organic growth |
|
|
4Q14 |
|
|
Organic growth |
|
Total volumes (thousand hls) |
|
|
10 551 |
|
|
|
19 |
|
|
|
|
|
|
|
-438 |
|
|
|
10 131 |
|
|
|
-4.2 |
% |
of which AB InBev own beer |
|
|
10 139 |
|
|
|
19 |
|
|
|
|
|
|
|
-428 |
|
|
|
9 730 |
|
|
|
-4.2 |
% |
Revenue |
|
|
1 215 |
|
|
|
2 |
|
|
|
-142 |
|
|
|
-6 |
|
|
|
1 069 |
|
|
|
-0.5 |
% |
Cost of sales |
|
|
-552 |
|
|
|
-2 |
|
|
|
62 |
|
|
|
26 |
|
|
|
-466 |
|
|
|
4.6 |
% |
Gross profit |
|
|
663 |
|
|
|
|
|
|
|
-80 |
|
|
|
19 |
|
|
|
603 |
|
|
|
2.9 |
% |
Distribution expenses |
|
|
-118 |
|
|
|
-1 |
|
|
|
13 |
|
|
|
2 |
|
|
|
-102 |
|
|
|
2.2 |
% |
Sales and marketing expenses |
|
|
-252 |
|
|
|
-2 |
|
|
|
36 |
|
|
|
17 |
|
|
|
-202 |
|
|
|
6.6 |
% |
Administrative expenses |
|
|
-116 |
|
|
|
1 |
|
|
|
11 |
|
|
|
-3 |
|
|
|
-108 |
|
|
|
-2.4 |
% |
Other operating income/(expenses) |
|
|
12 |
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
13 |
|
|
|
8.0 |
% |
Normalized EBIT |
|
|
189 |
|
|
|
-2 |
|
|
|
-20 |
|
|
|
37 |
|
|
|
204 |
|
|
|
19.7 |
% |
Normalized EBITDA |
|
|
320 |
|
|
|
-2 |
|
|
|
-38 |
|
|
|
31 |
|
|
|
311 |
|
|
|
9.4 |
% |
Normalized EBITDA margin |
|
|
26.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29.1 |
% |
|
|
262 |
bp |
|
|
|
|
|
|
|
Asia Pacific |
|
4Q13 Reference Base |
|
|
Scope |
|
|
Currency translation |
|
|
Organic growth |
|
|
4Q14 |
|
|
Organic growth |
|
Total volumes (thousand hls) |
|
|
11 244 |
|
|
|
4 075 |
|
|
|
|
|
|
|
148 |
|
|
|
15 468 |
|
|
|
1.3 |
% |
Revenue |
|
|
635 |
|
|
|
343 |
|
|
|
-3 |
|
|
|
89 |
|
|
|
1 064 |
|
|
|
14.1 |
% |
Cost of sales |
|
|
-403 |
|
|
|
-168 |
|
|
|
2 |
|
|
|
-25 |
|
|
|
-596 |
|
|
|
-6.3 |
% |
Gross profit |
|
|
232 |
|
|
|
174 |
|
|
|
-1 |
|
|
|
64 |
|
|
|
469 |
|
|
|
27.6 |
% |
Distribution expenses |
|
|
-73 |
|
|
|
-33 |
|
|
|
1 |
|
|
|
|
|
|
|
-105 |
|
|
|
0.4 |
% |
Sales and marketing expenses |
|
|
-199 |
|
|
|
-82 |
|
|
|
1 |
|
|
|
-54 |
|
|
|
-335 |
|
|
|
-27.3 |
% |
Administrative expenses |
|
|
-82 |
|
|
|
-25 |
|
|
|
1 |
|
|
|
-19 |
|
|
|
-125 |
|
|
|
-23.0 |
% |
Other operating income/(expenses) |
|
|
41 |
|
|
|
2 |
|
|
|
|
|
|
|
-36 |
|
|
|
6 |
|
|
|
-90.1 |
% |
Normalized EBIT |
|
|
-81 |
|
|
|
36 |
|
|
|
1 |
|
|
|
-46 |
|
|
|
-90 |
|
|
|
-56.3 |
% |
Normalized EBITDA |
|
|
50 |
|
|
|
63 |
|
|
|
|
|
|
|
-45 |
|
|
|
68 |
|
|
|
-90.1 |
% |
Normalized EBITDA margin |
|
|
7.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.4 |
% |
|
|
-715 |
bp |
|
|
|
|
|
|
|
Global Export and Holding Companies |
|
4Q13 Reference Base |
|
|
Scope |
|
|
Currency translation |
|
|
Organic growth |
|
|
4Q14 |
|
|
Organic growth |
|
Total volumes (thousand hls) |
|
|
3 615 |
|
|
|
-1 499 |
|
|
|
|
|
|
|
-43 |
|
|
|
2 073 |
|
|
|
-2.0 |
% |
Revenue |
|
|
475 |
|
|
|
-23 |
|
|
|
-14 |
|
|
|
65 |
|
|
|
504 |
|
|
|
14.6 |
% |
Cost of sales |
|
|
-331 |
|
|
|
10 |
|
|
|
6 |
|
|
|
-49 |
|
|
|
-364 |
|
|
|
-15.3 |
% |
Gross profit |
|
|
144 |
|
|
|
-13 |
|
|
|
-9 |
|
|
|
17 |
|
|
|
140 |
|
|
|
12.9 |
% |
Distribution expenses |
|
|
-38 |
|
|
|
1 |
|
|
|
2 |
|
|
|
-4 |
|
|
|
-39 |
|
|
|
-9.8 |
% |
Sales and marketing expenses |
|
|
-50 |
|
|
|
7 |
|
|
|
3 |
|
|
|
-12 |
|
|
|
-52 |
|
|
|
-28.1 |
% |
Administrative expenses |
|
|
-129 |
|
|
|
|
|
|
|
6 |
|
|
|
11 |
|
|
|
-112 |
|
|
|
8.7 |
% |
Other operating income/(expenses) |
|
|
14 |
|
|
|
-9 |
|
|
|
4 |
|
|
|
6 |
|
|
|
16 |
|
|
|
78.0 |
% |
Normalized EBIT |
|
|
-58 |
|
|
|
-15 |
|
|
|
6 |
|
|
|
19 |
|
|
|
-48 |
|
|
|
28.1 |
% |
Normalized EBITDA |
|
|
-7 |
|
|
|
-15 |
|
|
|
4 |
|
|
|
13 |
|
|
|
-5 |
|
|
|
69.1 |
% |
Exhibit 99.2
Annual Report 2014
1
Financial Report
Management report
Anheuser-Busch InBev is a publicly
traded company (Euronext: ABI) based in Leuven, Belgium, with American Depositary Receipts on the New York Stock Exchange (NYSE: BUD). It is the leading global brewer and one of the worlds top five consumer products companies. Beer, the
original social network, has been bringing people together for thousands of years and the companys portfolio of well over 200 beer brands continues to forge strong connections with consumers. This includes global brands Budweiser®, Corona® and Stella Artois®; international brands Becks®, Leffe® and Hoegaarden®; and local champions Bud Light®, Skol®, Brahma®,
Antarctica®, Quilmes®, Victoria®, Modelo Especial®, Michelob Ultra®, Harbin®,
Sedrin®, Klinskoye®, Sibirskaya Korona®, Chernigivske®, Cass® and Jupiler®. Anheuser-Busch InBevs dedication to heritage and
quality originates from the Den Hoorn brewery in Leuven, Belgium dating back to 1366 and the pioneering spirit of the Anheuser & Co brewery, with origins in St. Louis, USA since 1852. Geographically diversified with a balanced exposure to
developed and developing markets, Anheuser Busch InBev leverages the collective strengths of its approximately 155 000 employees based in 25 countries worldwide. In 2014, AB InBev realized 47.1 billion US dollar revenue. The company strives to be
the Best Beer Company Bringing People Together For a Better World. For more information, please visit: www.ab-inbev.com.
The following management
report should be read in conjunction with Anheuser-Busch InBevs audited consolidated financial statements.
In the rest of this document we refer to
Anheuser-Busch InBev as AB InBev or the company.
ORIENTAL BREWERY ACQUISITION
On 1 April 2014, AB InBev, KKR and Affinity announced that AB InBev successfully completed the acquisition of Oriental Brewery (OB), the
leading brewer in South Korea.
The acquisition returns OB to the AB InBev portfolio, after AB InBev sold the company in July 2009, following the
combination of InBev and Anheuser-Busch, in support of the companys deleveraging commitment.
Once OB has been fully re-integrated into AB InBev,
the company expects to drive premium growth by maximizing the combined portfolios of leading beer brands and to achieve improved efficiencies through best-practice sharing. AB InBev also plans to leverage its global platform to export OB brands more
widely.
The enterprise value for the transaction was 5.8 billion USD, and as a result of an agreement entered into with KKR and Affinity in 2009, AB
InBev also received approximately 320m US dollar in cash at closing from this transaction, subject to closing adjustments according to the terms of the transaction. OB estimates that its EBITDA (not prepared on the same basis as AB InBev EBITDA) in
2013 was approximately 529 billion KRW or approximately 500m US dollar at exchange rates at the date of the announcement.
Selected financial figures
To facilitate the understanding of AB InBevs underlying performance, the comments in this management report, unless otherwise indicated,
are based on organic and normalized numbers. Organic means the financials are analyzed eliminating the impact of changes in currencies on translation of foreign operations, and scopes. Scopes represent the impact of acquisitions and
divestitures, the start-up or termination of activities or the transfer of activities between segments, curtailment gains and losses and year-over-year changes in accounting estimates and other assumptions that management does not consider part of
the underlying performance of the business.
Given the transformational nature of the transaction with Grupo Modelo that closed on 4 June 2013, and
to facilitate the understanding of AB InBevs underlying performance, AB InBev is presenting in this management report the 2013 consolidated volumes and results up to Normalized EBIT on a 2013 Reference base and as such these financials are
included in the organic growth calculation. The 2013 Reference base includes, for comparative purposes, the results of the Grupo Modelo business as if the combination had taken place on 4 June 2012. Accordingly, the 2013 Reference base
presented below includes 12 months of the Grupo Modelo combination.
The 2013 Reference base also reflects updates to the 2013 segment reporting for
purposes of results announcement and internal review by senior management to reflect changes in the Zone presentation of AB InBev that were effective 1 January 2014. The changes include the combination of AB InBevs Western Europe and
Central & Eastern Europe Zones into a single Europe Zone, the transfer of responsibility from Global Export and Holding Companies to the Europe Zone of the companys Spanish operations and the export of Corona to a number of European
countries, and the transfer of management responsibility for Cuba to the Zone Latin America North.
Whenever used in this report, the term
normalized refers to performance measures (EBITDA, EBIT, Profit, EPS, effective tax rate) before non-recurring items. Non-recurring items are either income or expenses which do not occur regularly as part of the normal activities of the
company. They are presented separately because they are important for the understanding of the underlying sustainable performance of the company due to their size or nature. Normalized measures are additional measures used by management, and should
not replace the measures determined in accordance with IFRS as an indicator of the companys performance, but rather should be used in conjunction with the most directly comparable IFRS measures.
2
The tables below set out the components of AB InBevs operating income and operating expenses, as well as
the key cash flow figures.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
% |
|
|
2013 Reported |
|
|
% |
|
|
2013 Reference base |
|
|
% |
|
Revenue1 |
|
|
47 063 |
|
|
|
100 |
% |
|
|
43 195 |
|
|
|
100 |
% |
|
|
45 483 |
|
|
|
100 |
% |
Cost of sales |
|
|
(18 756 |
) |
|
|
40 |
% |
|
|
(17 594 |
) |
|
|
41 |
% |
|
|
(18 555 |
) |
|
|
41 |
% |
Gross profit |
|
|
28 307 |
|
|
|
60 |
% |
|
|
25 601 |
|
|
|
59 |
% |
|
|
26 928 |
|
|
|
59 |
% |
Distribution expenses |
|
|
(4 558 |
) |
|
|
10 |
% |
|
|
(4 061 |
) |
|
|
9 |
% |
|
|
(4 286 |
) |
|
|
9 |
% |
Sales and marketing expenses |
|
|
(7 036 |
) |
|
|
15 |
% |
|
|
(5 958 |
) |
|
|
14 |
% |
|
|
(6 338 |
) |
|
|
14 |
% |
Administrative expenses |
|
|
(2 791 |
) |
|
|
6 |
% |
|
|
(2 539 |
) |
|
|
6 |
% |
|
|
(2 766 |
) |
|
|
6 |
% |
Other operating income/(expenses) |
|
|
1 386 |
|
|
|
3 |
% |
|
|
1 160 |
|
|
|
3 |
% |
|
|
1 262 |
|
|
|
3 |
% |
Normalized profit from operations (Normalized EBIT) |
|
|
15 308 |
|
|
|
33 |
% |
|
|
14 203 |
|
|
|
33 |
% |
|
|
14 800 |
|
|
|
33 |
% |
Non-recurring items |
|
|
(197 |
) |
|
|
|
|
|
|
6 240 |
|
|
|
14 |
% |
|
|
10 482 |
|
|
|
23 |
% |
Profit from operations (EBIT) |
|
|
15 111 |
|
|
|
32 |
% |
|
|
20 443 |
|
|
|
47 |
% |
|
|
|
|
|
|
|
|
Depreciation, amortization and impairment |
|
|
3 354 |
|
|
|
7 |
% |
|
|
2 985 |
|
|
|
7 |
% |
|
|
3 179 |
|
|
|
7 |
% |
Normalized EBITDA |
|
|
18 542 |
|
|
|
39 |
% |
|
|
17 188 |
|
|
|
40 |
% |
|
|
17 943 |
|
|
|
39 |
% |
EBITDA |
|
|
18 465 |
|
|
|
39 |
% |
|
|
23 428 |
|
|
|
54 |
% |
|
|
|
|
|
|
|
|
Normalized profit attributable to equity holders of AB InBev |
|
|
8 865 |
|
|
|
19 |
% |
|
|
7 936 |
|
|
|
18 |
% |
|
|
|
|
|
|
|
|
Profit attributable to equity holders of AB InBev |
|
|
9 216 |
|
|
|
20 |
% |
|
|
14 394 |
|
|
|
33 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
2013 |
|
Operating activities |
|
|
|
|
|
|
|
|
Profit |
|
|
11 302 |
|
|
|
16 518 |
|
Revaluation of initial investment in Grupo Modelo |
|
|
|
|
|
|
(6 415 |
) |
Interest, taxes and non-cash items included in profit |
|
|
7 029 |
|
|
|
7 135 |
|
Cash flow from operating activities before changes in working capital and use of provisions |
|
|
18 331 |
|
|
|
17 238 |
|
Change in working capital |
|
|
815 |
|
|
|
866 |
|
Pension contributions and use of provisions |
|
|
(458 |
) |
|
|
(653 |
) |
Interest and taxes (paid)/received |
|
|
(4 574 |
) |
|
|
(4 193 |
) |
Dividends received |
|
|
30 |
|
|
|
606 |
|
|
|
|
|
|
|
|
|
|
Cash flow from operating activities |
|
|
14 144 |
|
|
|
13 864 |
|
Investing activities |
|
|
|
|
|
|
|
|
Net capex |
|
|
(4 122 |
) |
|
|
(3 612 |
) |
Acquisition and sale of subsidiaries, net of cash acquired/disposed of |
|
|
(6 700 |
) |
|
|
(17 397 |
) |
Proceeds from the sale of/(investments in) short-term debt securities |
|
|
(187 |
) |
|
|
6 707 |
|
Net of tax proceeds from the sale of assets held for sale |
|
|
(65 |
) |
|
|
4 002 |
|
Other |
|
|
(78 |
) |
|
|
19 |
|
|
|
|
|
|
|
|
|
|
Cash flow from investing activities |
|
|
(11 152 |
) |
|
|
(10 281 |
) |
Financing activities |
|
|
|
|
|
|
|
|
Dividends paid |
|
|
(7 400 |
) |
|
|
(6 253 |
) |
Net (payments on)/proceeds from borrowings |
|
|
3 223 |
|
|
|
4 458 |
|
Net proceeds from the issue of share capital |
|
|
83 |
|
|
|
73 |
|
Cash received for deferred shares instrument |
|
|
|
|
|
|
1 500 |
|
Other (including net finance cost other than interest) |
|
|
239 |
|
|
|
563 |
|
|
|
|
|
|
|
|
|
|
Cash flow from financing activities |
|
|
(3 855 |
) |
|
|
341 |
|
Net increase/(decrease) in cash and cash equivalents |
|
|
(863 |
) |
|
|
3 924 |
|
1 |
Turnover less excise taxes. In many jurisdictions, excise taxes make up a large proportion of the cost of beer charged to the companys customers. |
3
Financial performance
The tables in this management report provide the segment information per zone for the period ended 31 December 2014 and 2013 in the format up to
Normalized EBIT level that is used by management to monitor performance. To facilitate the understanding of AB InBevs underlying performance the company is presenting in this management report the 2013 consolidated volumes and results up to
Normalized EBIT on a 2013 Reference base and as such these financials are included in the organic growth calculation. The profit, cash flows and balance sheet are presented as reported in 2013.
Both from an accounting and managerial perspective, AB InBev is organized along seven business segments, which includes the Global Export and Holding
business as the seventh segment. Upon the combination with Grupo Modelo, the Grupo Modelo businesses are reported according to their geographical presence in the following segments: the Mexico beer and packaging businesses are reported in the new
Zone Mexico, the Spanish business is reported in the Zone Europe and the Export business is reported in the Global Export and Holding Companies segment. OB business is reported in the Zone Asia Pacific as from 1 April 2014 as a scope.
The tables below provide a summary of the performance of AB InBev (in million US dollar, except volumes in thousand hectoliters) and the related comments
are based on organic numbers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AB INBEV WORLDWIDE |
|
2013 Reference base |
|
|
Scope1 |
|
|
Currency translation |
|
|
Organic growth |
|
|
2014 |
|
|
Organic growth % |
|
Volumes (thousand hectoliters) |
|
|
445 786 |
|
|
|
10 522 |
|
|
|
|
|
|
|
2 494 |
|
|
|
458 801 |
|
|
|
0.6 |
% |
Revenue |
|
|
45 483 |
|
|
|
1 223 |
|
|
|
(2 307 |
) |
|
|
2 664 |
|
|
|
47 063 |
|
|
|
5.9 |
% |
Cost of sales |
|
|
(18 555 |
) |
|
|
(480 |
) |
|
|
820 |
|
|
|
(541 |
) |
|
|
(18 756 |
) |
|
|
(2.9 |
)% |
Gross profit |
|
|
26 928 |
|
|
|
743 |
|
|
|
(1 487 |
) |
|
|
2 123 |
|
|
|
28 307 |
|
|
|
7.9 |
% |
Distribution expenses |
|
|
(4 286 |
) |
|
|
(155 |
) |
|
|
277 |
|
|
|
(394 |
) |
|
|
(4 558 |
) |
|
|
(9.1 |
)% |
Sales and marketing expenses |
|
|
(6 338 |
) |
|
|
(285 |
) |
|
|
285 |
|
|
|
(699 |
) |
|
|
(7 036 |
) |
|
|
(11.0 |
)% |
Administrative expenses |
|
|
(2 766 |
) |
|
|
(74 |
) |
|
|
108 |
|
|
|
(59 |
) |
|
|
(2 791 |
) |
|
|
(2.1 |
)% |
Other operating income/(expenses) |
|
|
1 262 |
|
|
|
177 |
|
|
|
(65 |
) |
|
|
13 |
|
|
|
1 386 |
|
|
|
1.1 |
% |
Normalized EBIT |
|
|
14 800 |
|
|
|
406 |
|
|
|
(882 |
) |
|
|
984 |
|
|
|
15 308 |
|
|
|
6.7 |
% |
Normalized EBITDA |
|
|
17 943 |
|
|
|
469 |
|
|
|
(1 039 |
) |
|
|
1 169 |
|
|
|
18 542 |
|
|
|
6.6 |
% |
Normalized EBITDA margin |
|
|
39.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39.4 |
% |
|
|
25bps |
|
In 2014 AB InBev delivered normalized EBITDA growth of 6.6%, while its normalized EBITDA margin increased 25 bps, reaching
39.4%.
Consolidated volumes increased 0.6%, with own beer volumes increasing 0.5% and non-beer volumes increasing 1.3%. Focus Brands volumes grew by 2.2%
during 2014. On the same basis, the companys three Global Brands, Budweiser, Corona and Stella Artois, grew by 5.4%. Focus brands are those with the greatest growth potential within each relevant consumer segment and to which AB InBev directs
the majority of its marketing resources.
Consolidated revenue grew 5.9% to 47 063m US dollar, with revenue per hectoliter increasing 5.3%. On a constant
geographic basis (i.e. eliminating the impact of faster growth in countries with lower revenue per hectoliter), revenue per hectoliter increased 5.7%.
Consolidated Cost of Sales (CoS) increased 2.9%, or 2.4% on a per hectoliter basis. On a constant geographic basis, CoS per hectoliter increased 3.9%.
VOLUMES
The table below summarizes the volume evolution
per zone and the related comments are based on organic numbers. Volumes include not only brands that AB InBev owns or licenses, but also third party brands that the company brews as a subcontractor and third party products that it sells through AB
InBevs distribution network, particularly in Europe. Volumes sold by the Global Export business are shown separately.
Effective 1 April 2014, AB InBev discontinued the reporting of volumes sold to Constellation Brands under the temporary supply agreement (TSA), since
these volumes do not form part of the underlying performance of its business. The second, third and fourth quarter 2013 Reference base volumes related to the TSA have therefore been treated as a negative scope.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thousand hectoliters |
|
2013 Reference base |
|
|
Scope |
|
|
Organic growth |
|
|
2014 |
|
|
Organic growth % |
|
North America |
|
|
122 116 |
|
|
|
642 |
|
|
|
(1 608 |
) |
|
|
121 150 |
|
|
|
(1.3 |
)% |
Mexico |
|
|
38 185 |
|
|
|
|
|
|
|
615 |
|
|
|
38 800 |
|
|
|
1.6 |
% |
Latin America North |
|
|
120 427 |
|
|
|
39 |
|
|
|
4 952 |
|
|
|
125 418 |
|
|
|
4.1 |
% |
Latin America South |
|
|
36 918 |
|
|
|
|
|
|
|
(91 |
) |
|
|
36 826 |
|
|
|
(0.2 |
)% |
Europe |
|
|
47 030 |
|
|
|
60 |
|
|
|
(2 812 |
) |
|
|
44 278 |
|
|
|
(6.0 |
)% |
Asia Pacific |
|
|
65 787 |
|
|
|
15 602 |
|
|
|
1 140 |
|
|
|
82 529 |
|
|
|
1.7 |
% |
Global Export and Holding Companies |
|
|
15 323 |
|
|
|
(5 821 |
) |
|
|
297 |
|
|
|
9 800 |
|
|
|
3.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AB InBev Worldwide |
|
|
445 786 |
|
|
|
10 522 |
|
|
|
2 494 |
|
|
|
458 801 |
|
|
|
0.6 |
% |
4
North America total volumes decreased 1.3%. The company estimates that its shipment volumes in the United
States declined by 1.5% and its sales-to-retailers adjusted for the number of selling days declined by 1.7% during 2014 compared to 2013. On the same basis, the company estimates that United States industry sales-to-retailers adjusted for the number
of selling days declined by 0.6% compared to an estimated decline of 1.8% during 2013. The company estimates that its market share was down by approximately 50 bps during 2014 compared to 2013, largely due to Budweiser.
In Canada, beer volumes decreased by 0.7% during 2014 compared to the same period last year, mainly driven by very cold weather during the first quarter 2014,
partly offset by a better industry performance in the fourth quarter 2014.
Mexico total volumes increased 1.6%. The company estimates that the
Mexican beer industry volumes grew by 2.6%, driven primarily by a stronger economy. The company estimates that it lost some market share during 2014, driven by regional mix. Industry growth was weaker in the Central region, where the company has a
high market share, while growth was much stronger in the North, where the company has a lower, but growing market share, based on estimates. The companys Focus Brands in Mexico grew by 5.6%, with the Corona family continuing to perform well,
despite supply shortages during the first half of the year, and Bud Light and Victoria volumes also increasing in 2014 compared to the same period last year.
Latin America North volumes increased 4.1%, with beer volumes and soft drinks growing 4.7% and 2.3%, respectively. In Brazil, beer volumes increased by
4.7% and soft drinks increased 1.4%. The company estimates that beer industry volumes grew by approximately 4.3% during 2014, benefiting from a strong summer and the FIFA World Cup. The company estimates that its year-over-year market share
increased by approximately 30 bps to 68.2%. Premium brands continued to outperform the rest of the companys portfolio, due to a strong performance by Budweiser.
The consumer environment in Brazil continues to be challenging, and the companys pack price, returnable package and innovation strategies remain major
business priorities.
Latin America South total volumes decreased 0.2%, with beer volumes flat and non-beer volumes decreasing by 0.6%. Beer
volumes in Argentina decreased 1.7% during 2014, with some market share loss, based on the companys estimates, due to competitive pressure.
Europe own beer volumes declined 6.1%, while total volumes declined 6.0%, mainly driven by a weak beer industry in Ukraine and Russia, as well as high
promotional pressure in Germany. Volume decreases in Europe were partially offset by FIFA World Cup activations in Belgium, Germany and the United Kingdom. Own beer volumes were flat in Belgium, declined by 3.4% in Germany and grew by 1.5% in the
United Kingdom.
Asia Pacific volumes grew by 1.7%. In China, the company estimates that industry volumes declined by approximately 4%, while the
companys volumes increased by 1.6%. The Focus Brands Budweiser, Harbin and Sedrin, which represent nearly 73% of the companys portfolio, grew by 7.8% during 2014. The company estimates that, on an organic basis, it gained approximately
90 bps market share in 2014, reaching 15.9%.
5
OPERATING ACTIVITIES BY ZONE
The tables below provide a summary of the performance of each geographical zone (in million US dollar, except volumes in thousand hectoliters) and the related
comments are based on organic numbers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AB INBEV WORLDWIDE |
|
2013 Reference base |
|
|
Scope |
|
|
Currency translation |
|
|
Organic growth |
|
|
2014 |
|
|
Organic growth % |
|
Volumes |
|
|
445 786 |
|
|
|
10 522 |
|
|
|
|
|
|
|
2 494 |
|
|
|
458 801 |
|
|
|
0.6 |
% |
Revenue |
|
|
45 483 |
|
|
|
1 223 |
|
|
|
(2 307 |
) |
|
|
2 664 |
|
|
|
47 063 |
|
|
|
5.9 |
% |
Cost of sales |
|
|
(18 555 |
) |
|
|
(480 |
) |
|
|
820 |
|
|
|
(541 |
) |
|
|
(18 756 |
) |
|
|
(2.9 |
)% |
Gross profit |
|
|
26 928 |
|
|
|
743 |
|
|
|
(1 487 |
) |
|
|
2 123 |
|
|
|
28 307 |
|
|
|
7.9 |
% |
Distribution expenses |
|
|
(4 286 |
) |
|
|
(155 |
) |
|
|
277 |
|
|
|
(394 |
) |
|
|
(4 558 |
) |
|
|
(9.1 |
)% |
Sales and marketing expenses |
|
|
(6 338 |
) |
|
|
(285 |
) |
|
|
285 |
|
|
|
(699 |
) |
|
|
(7 036 |
) |
|
|
(11.0 |
)% |
Administrative expenses |
|
|
(2 766 |
) |
|
|
(74 |
) |
|
|
108 |
|
|
|
(59 |
) |
|
|
(2 791 |
) |
|
|
(2.1 |
)% |
Other operating income/(expenses) |
|
|
1 262 |
|
|
|
177 |
|
|
|
(65 |
) |
|
|
13 |
|
|
|
1 386 |
|
|
|
1.1 |
% |
Normalized EBIT |
|
|
14 800 |
|
|
|
406 |
|
|
|
(882 |
) |
|
|
984 |
|
|
|
15 308 |
|
|
|
6.7 |
% |
Normalized EBITDA |
|
|
17 943 |
|
|
|
469 |
|
|
|
(1 039 |
) |
|
|
1 169 |
|
|
|
18 542 |
|
|
|
6.6 |
% |
Normalized EBITDA margin |
|
|
39.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39.4 |
% |
|
|
25 bps |
|
|
|
|
|
|
|
|
NORTH AMERICA |
|
2013 Reference base |
|
|
Scope |
|
|
Currency translation |
|
|
Organic growth |
|
|
2014 |
|
|
Organic growth % |
|
Volumes |
|
|
122 116 |
|
|
|
642 |
|
|
|
|
|
|
|
(1 608 |
) |
|
|
121 150 |
|
|
|
(1.3 |
)% |
Revenue |
|
|
16 023 |
|
|
|
159 |
|
|
|
(123 |
) |
|
|
35 |
|
|
|
16 093 |
|
|
|
0.2 |
% |
Cost of sales |
|
|
(6 519 |
) |
|
|
(35 |
) |
|
|
28 |
|
|
|
135 |
|
|
|
(6 391 |
) |
|
|
2.1 |
% |
Gross profit |
|
|
9 504 |
|
|
|
123 |
|
|
|
(95 |
) |
|
|
170 |
|
|
|
9 702 |
|
|
|
1.8 |
% |
Distribution expenses |
|
|
(1 235 |
) |
|
|
(58 |
) |
|
|
22 |
|
|
|
(53 |
) |
|
|
(1 324 |
) |
|
|
(4.1 |
)% |
Sales and marketing expenses |
|
|
(1 908 |
) |
|
|
(27 |
) |
|
|
16 |
|
|
|
(217 |
) |
|
|
(2 136 |
) |
|
|
(11.2 |
)% |
Administrative expenses |
|
|
(497 |
) |
|
|
(9 |
) |
|
|
4 |
|
|
|
28 |
|
|
|
(473 |
) |
|
|
5.6 |
% |
Other operating income/(expenses) |
|
|
67 |
|
|
|
212 |
|
|
|
(1 |
) |
|
|
20 |
|
|
|
299 |
|
|
|
35.8 |
% |
Normalized EBIT |
|
|
5 932 |
|
|
|
242 |
|
|
|
(53 |
) |
|
|
(52 |
) |
|
|
6 068 |
|
|
|
(0.9 |
)% |
Normalized EBITDA |
|
|
6 728 |
|
|
|
232 |
|
|
|
(57 |
) |
|
|
(82 |
) |
|
|
6 820 |
|
|
|
(1.2 |
)% |
Normalized EBITDA margin |
|
|
42.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42.4 |
% |
|
|
(60) bps |
|
|
|
|
|
|
|
|
MEXICO |
|
2013 Reference base |
|
|
Scope |
|
|
Currency translation |
|
|
Organic growth |
|
|
2014 |
|
|
Organic growth % |
|
Volumes |
|
|
38 185 |
|
|
|
|
|
|
|
|
|
|
|
615 |
|
|
|
38 800 |
|
|
|
1.6 |
% |
Revenue |
|
|
4 669 |
|
|
|
(166 |
) |
|
|
(140 |
) |
|
|
256 |
|
|
|
4 619 |
|
|
|
5.7 |
% |
Cost of sales |
|
|
(1 570 |
) |
|
|
95 |
|
|
|
42 |
|
|
|
59 |
|
|
|
(1 374 |
) |
|
|
4.0 |
% |
Gross profit |
|
|
3 099 |
|
|
|
(71 |
) |
|
|
(98 |
) |
|
|
315 |
|
|
|
3 245 |
|
|
|
10.4 |
% |
Distribution expenses |
|
|
(443 |
) |
|
|
15 |
|
|
|
14 |
|
|
|
(39 |
) |
|
|
(453 |
) |
|
|
(9.0 |
)% |
Sales and marketing expenses |
|
|
(844 |
) |
|
|
16 |
|
|
|
24 |
|
|
|
(4 |
) |
|
|
(808 |
) |
|
|
(0.5 |
)% |
Administrative expenses |
|
|
(455 |
) |
|
|
(7 |
) |
|
|
13 |
|
|
|
18 |
|
|
|
(430 |
) |
|
|
4.0 |
% |
Other operating income/(expenses) |
|
|
200 |
|
|
|
(27 |
) |
|
|
(7 |
) |
|
|
72 |
|
|
|
237 |
|
|
|
41.6 |
% |
Normalized EBIT |
|
|
1 557 |
|
|
|
(74 |
) |
|
|
(54 |
) |
|
|
362 |
|
|
|
1 791 |
|
|
|
24.4 |
% |
Normalized EBITDA |
|
|
1 940 |
|
|
|
(82 |
) |
|
|
(66 |
) |
|
|
395 |
|
|
|
2 186 |
|
|
|
21.3 |
% |
Normalized EBITDA margin |
|
|
41.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47.3 |
% |
|
|
608 bps |
|
|
|
|
|
|
|
|
LATIN AMERICA NORTH |
|
2013 Reference base |
|
|
Scope |
|
|
Currency translation |
|
|
Organic growth |
|
|
2014 |
|
|
Organic growth % |
|
Volumes |
|
|
120 427 |
|
|
|
39 |
|
|
|
|
|
|
|
4 952 |
|
|
|
125 418 |
|
|
|
4.1 |
% |
Revenue |
|
|
11 010 |
|
|
|
5 |
|
|
|
(948 |
) |
|
|
1 201 |
|
|
|
11 269 |
|
|
|
10.9 |
% |
Cost of sales |
|
|
(3 576 |
) |
|
|
(2 |
) |
|
|
306 |
|
|
|
(468 |
) |
|
|
(3 741 |
) |
|
|
(13.1 |
)% |
Gross profit |
|
|
7 434 |
|
|
|
3 |
|
|
|
(641 |
) |
|
|
733 |
|
|
|
7 528 |
|
|
|
9.9 |
% |
Distribution expenses |
|
|
(1 351 |
) |
|
|
|
|
|
|
119 |
|
|
|
(172 |
) |
|
|
(1 404 |
) |
|
|
(12.7 |
)% |
Sales and marketing expenses |
|
|
(1 147 |
) |
|
|
|
|
|
|
104 |
|
|
|
(209 |
) |
|
|
(1 253 |
) |
|
|
(18.2 |
)% |
Administrative expenses |
|
|
(591 |
) |
|
|
|
|
|
|
49 |
|
|
|
(39 |
) |
|
|
(581 |
) |
|
|
(6.5 |
)% |
Other operating income/(expenses) |
|
|
807 |
|
|
|
|
|
|
|
(61 |
) |
|
|
(57 |
) |
|
|
689 |
|
|
|
(7.1 |
)% |
Normalized EBIT |
|
|
5 151 |
|
|
|
2 |
|
|
|
(431 |
) |
|
|
256 |
|
|
|
4 979 |
|
|
|
5.0 |
% |
Normalized EBITDA |
|
|
5 858 |
|
|
|
2 |
|
|
|
(494 |
) |
|
|
376 |
|
|
|
5 742 |
|
|
|
6.4 |
% |
Normalized EBITDA margin |
|
|
53.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51.0 |
% |
|
|
(216) bps |
|
|
|
|
|
|
|
|
LATIN AMERICA SOUTH |
|
2013 Reference base |
|
|
Scope |
|
|
Currency translation |
|
|
Organic growth |
|
|
2014 |
|
|
Organic growth % |
|
Volumes |
|
|
36 918 |
|
|
|
|
|
|
|
|
|
|
|
(91 |
) |
|
|
36 826 |
|
|
|
(0.2 |
)% |
Revenue |
|
|
3 269 |
|
|
|
|
|
|
|
(893 |
) |
|
|
586 |
|
|
|
2 961 |
|
|
|
17.9 |
% |
Cost of sales |
|
|
(1 185 |
) |
|
|
|
|
|
|
322 |
|
|
|
(218 |
) |
|
|
(1 081 |
) |
|
|
(18.4 |
)% |
Gross profit |
|
|
2 084 |
|
|
|
|
|
|
|
(571 |
) |
|
|
368 |
|
|
|
1 881 |
|
|
|
17.6 |
% |
Distribution expenses |
|
|
(309 |
) |
|
|
|
|
|
|
104 |
|
|
|
(85 |
) |
|
|
(290 |
) |
|
|
(27.5 |
)% |
Sales and marketing expenses |
|
|
(346 |
) |
|
|
|
|
|
|
92 |
|
|
|
(61 |
) |
|
|
(315 |
) |
|
|
(17.8 |
)% |
Administrative expenses |
|
|
(112 |
) |
|
|
|
|
|
|
31 |
|
|
|
(24 |
) |
|
|
(106 |
) |
|
|
(21.6 |
)% |
Other operating income/(expenses) |
|
|
(5 |
) |
|
|
|
|
|
|
(2 |
) |
|
|
13 |
|
|
|
5 |
|
|
|
|
|
Normalized EBIT |
|
|
1 311 |
|
|
|
|
|
|
|
(346 |
) |
|
|
210 |
|
|
|
1 175 |
|
|
|
16.0 |
% |
Normalized EBITDA |
|
|
1 491 |
|
|
|
|
|
|
|
(394 |
) |
|
|
256 |
|
|
|
1 352 |
|
|
|
17.1 |
% |
Normalized EBITDA margin |
|
|
45.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45.6 |
% |
|
|
(30) bps |
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EUROPE |
|
2013 Reference base |
|
|
Scope |
|
|
Currency translation |
|
|
Organic growth |
|
|
2014 |
|
|
Organic growth % |
|
Volumes |
|
|
47 030 |
|
|
|
60 |
|
|
|
|
|
|
|
(2 812 |
) |
|
|
44 278 |
|
|
|
(6.0 |
)% |
Revenue |
|
|
5 021 |
|
|
|
6 |
|
|
|
(166 |
) |
|
|
3 |
|
|
|
4 865 |
|
|
|
0.1 |
% |
Cost of sales |
|
|
(2 272 |
) |
|
|
(5 |
) |
|
|
98 |
|
|
|
99 |
|
|
|
(2 081 |
) |
|
|
4.3 |
% |
Gross profit |
|
|
2 749 |
|
|
|
1 |
|
|
|
(68 |
) |
|
|
102 |
|
|
|
2 784 |
|
|
|
3.7 |
% |
Distribution expenses |
|
|
(503 |
) |
|
|
(1 |
) |
|
|
16 |
|
|
|
10 |
|
|
|
(477 |
) |
|
|
2.0 |
% |
Sales and marketing expenses |
|
|
(1 066 |
) |
|
|
(7 |
) |
|
|
49 |
|
|
|
(43 |
) |
|
|
(1 067 |
) |
|
|
(4.0 |
)% |
Administrative expenses |
|
|
(364 |
) |
|
|
5 |
|
|
|
13 |
|
|
|
(16 |
) |
|
|
(362 |
) |
|
|
(4.4 |
)% |
Other operating income/(expenses) |
|
|
32 |
|
|
|
|
|
|
|
|
|
|
|
(4 |
) |
|
|
28 |
|
|
|
(12.7 |
)% |
Normalized EBIT |
|
|
849 |
|
|
|
(2 |
) |
|
|
10 |
|
|
|
49 |
|
|
|
906 |
|
|
|
5.8 |
% |
Normalized EBITDA |
|
|
1 341 |
|
|
|
(1 |
) |
|
|
(18 |
) |
|
|
21 |
|
|
|
1 343 |
|
|
|
1.5 |
% |
Normalized EBITDA margin |
|
|
26.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27.6 |
% |
|
|
39 bps |
|
|
|
|
|
|
|
|
ASIA PACIFIC |
|
2013 Reference base |
|
|
Scope |
|
|
Currency translation |
|
|
Organic growth |
|
|
2014 |
|
|
Organic growth % |
|
Volumes |
|
|
65 787 |
|
|
|
15 602 |
|
|
|
|
|
|
|
1 140 |
|
|
|
82 529 |
|
|
|
1.7 |
% |
Revenue |
|
|
3 354 |
|
|
|
1 299 |
|
|
|
(8 |
) |
|
|
396 |
|
|
|
5 040 |
|
|
|
11.8 |
% |
Cost of sales |
|
|
(1 885 |
) |
|
|
(568 |
) |
|
|
5 |
|
|
|
(103 |
) |
|
|
(2 552 |
) |
|
|
(5.5 |
)% |
Gross profit |
|
|
1 469 |
|
|
|
730 |
|
|
|
(3 |
) |
|
|
293 |
|
|
|
2 489 |
|
|
|
19.9 |
% |
Distribution expenses |
|
|
(302 |
) |
|
|
(111 |
) |
|
|
1 |
|
|
|
(22 |
) |
|
|
(434 |
) |
|
|
(7.2 |
)% |
Sales and marketing expenses |
|
|
(833 |
) |
|
|
(275 |
) |
|
|
2 |
|
|
|
(121 |
) |
|
|
(1 227 |
) |
|
|
(14.5 |
)% |
Administrative expenses |
|
|
(317 |
) |
|
|
(59 |
) |
|
|
1 |
|
|
|
(25 |
) |
|
|
(400 |
) |
|
|
(7.9 |
)% |
Other operating income/(expenses) |
|
|
109 |
|
|
|
1 |
|
|
|
|
|
|
|
(20 |
) |
|
|
90 |
|
|
|
(18.7 |
)% |
Normalized EBIT |
|
|
127 |
|
|
|
286 |
|
|
|
|
|
|
|
104 |
|
|
|
517 |
|
|
|
82.2 |
% |
Normalized EBITDA |
|
|
546 |
|
|
|
366 |
|
|
|
(1 |
) |
|
|
156 |
|
|
|
1 067 |
|
|
|
28.5 |
% |
Normalized EBITDA margin |
|
|
16.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21.2 |
% |
|
|
244 bps |
|
|
|
|
|
|
|
|
GLOBAL EXPORT AND HOLDING COMPANIES |
|
2013 Reference base |
|
|
Scope |
|
|
Currency translation |
|
|
Organic growth |
|
|
2014 |
|
|
Organic growth % |
|
Volumes |
|
|
15 323 |
|
|
|
(5 821 |
) |
|
|
|
|
|
|
297 |
|
|
|
9 800 |
|
|
|
3.1 |
% |
Revenue |
|
|
2 138 |
|
|
|
(79 |
) |
|
|
(29 |
) |
|
|
186 |
|
|
|
2 216 |
|
|
|
9.1 |
% |
Cost of sales |
|
|
(1 549 |
) |
|
|
36 |
|
|
|
19 |
|
|
|
(44 |
) |
|
|
(1 538 |
) |
|
|
(2.9 |
)% |
Gross profit |
|
|
589 |
|
|
|
(43 |
) |
|
|
(10 |
) |
|
|
142 |
|
|
|
678 |
|
|
|
26.0 |
% |
Distribution expenses |
|
|
(143 |
) |
|
|
1 |
|
|
|
|
|
|
|
(34 |
) |
|
|
(175 |
) |
|
|
(23.7 |
)% |
Sales and marketing expenses |
|
|
(194 |
) |
|
|
9 |
|
|
|
(2 |
) |
|
|
(43 |
) |
|
|
(230 |
) |
|
|
(23.1 |
)% |
Administrative expenses |
|
|
(430 |
) |
|
|
(5 |
) |
|
|
(3 |
) |
|
|
(2 |
) |
|
|
(440 |
) |
|
|
(0.4 |
)% |
Other operating income/(expenses) |
|
|
52 |
|
|
|
(9 |
) |
|
|
6 |
|
|
|
(10 |
) |
|
|
39 |
|
|
|
(20.1 |
)% |
Normalized EBIT |
|
|
(126 |
) |
|
|
(48 |
) |
|
|
(9 |
) |
|
|
54 |
|
|
|
(128 |
) |
|
|
32.9 |
% |
Normalized EBITDA |
|
|
40 |
|
|
|
(48 |
) |
|
|
(8 |
) |
|
|
48 |
|
|
|
33 |
|
|
|
|
|
REVENUE
Consolidated
revenue grew 5.9% to 47 063m US dollar, with revenue per hectoliter growth of 5.3% and 5.7% on a constant geographic basis (i.e. eliminating the impact of faster growth in countries with lower revenue per hectoliter), driven by revenue management
initiatives and brand mix improvements from the companys premiumization strategies.
COST OF SALES
Cost of Sales (CoS) increased 2.9% or 2.4% on a per hectoliter basis, driven primarily by higher depreciation and packaging costs in Brazil, as well as
additional bottle costs in Mexico related to higher than expected demand for Corona globally, partly mitigated by procurement savings and efficiency gains. On a constant geographic basis, CoS per hectoliter increased 3.9%.
7
OPERATING EXPENSES
Total operating expenses increased 9.4% in 2014:
|
|
|
Distribution expenses increased 9.1% in 2014, mainly driven by increases in freight rates in the U.S., increased own distribution in Brazil, which is more than offset by the increase in net revenues, the growth
of the companys premium brands in Brazil, increased expenses in Mexico and higher fuel costs and wage increases for unionized workers in Latin America South. |
|
|
|
Sales and marketing expenses increased 11.0% in 2014, with increased support for the companys brands, innovations and sales activations in most Zones. The increased investments include the FIFA World Cup
activations, particularly in Latin America North and South, Mexico and Europe, as well as investments behind proven trade marketing programs and the new Light summer campaign in the U.S. |
|
|
|
Administrative expenses increased by 2.1%. |
|
|
|
Other operating income was 1 386m US dollar in 2014 compared to 1 262m US dollar in 2013, mainly due to income from government grants and a one-time positive accounting adjustment of 223m US dollar, following an
actuarial reassessment of future liabilities under the companys post-retirement healthcare benefit plans in the US. This adjustment has been reported as a scope change in other operating income, and therefore excluded from organic growth.
|
NORMALIZED PROFIT FROM OPERATIONS BEFORE DEPRECIATION AND AMORTIZATION (NORMALIZED EBITDA)
Normalized EBITDA increased 3.3% in nominal terms and increased 6.6% organically to 18 542m US dollar, with an EBITDA margin of 39.4%, an organic growth of 25
bps.
|
|
|
North America EBITDA decreased 1.2% to 6 820m US dollar, with a margin contraction of 60 bps to 42.4%, as a result of increased investment behind the long term growth of the companys brands, and higher
distribution expenses due to increased freight rates. |
|
|
|
Mexico EBITDA grew by 21.3% to 2 186m US dollar, with an EBITDA margin enhancement of 608 bps to 47.3%, driven by the strong revenue performance, partly offset by incremental packaging costs related to higher than
expected demand for Corona globally. |
|
|
|
Latin America North EBITDA rose 6.4% to 5 742m US dollar, with margin contraction of 216 bps to 51.0%, driven by a strong volume and top line performance, partially offset by an increase in sales & marketing
investments to support the FIFA World Cup activations. The increase in distribution expenses was mainly due to an expansion in the companys own distribution, which is more than offset by the increase in net revenues, and the growth of the
companys premium brands. |
|
|
|
Latin America South EBITDA grew 17.1% to 1 352m US dollar, with margin contraction of 30 bps to 45.6%, driven by revenue growth partially offset by high cost inflation. |
|
|
|
Europe EBITDA increased 1.5% to 1 343m US dollar with margin growth of 39 bps to 27.6%, due to the FIFA World Cup activations, partially offset by a weak beer industry in Ukraine and Russia. |
|
|
|
Asia Pacific EBITDA grew 28.5% to 1 067m US dollar with margin growth of 244 bps to 21.2%. This result was driven by strong top-line growth and good cost management, partly offset by higher cost of sales and
distribution expenses related to brand mix. |
|
|
|
Global Export and Holding Companies reported EBITDA of 33m US dollar in 2014 (2013: 40m US dollar). |
RECONCILIATION BETWEEN NORMALIZED EBITDA AND PROFIT ATTRIBUTABLE TO EQUITY HOLDERS
Normalized EBITDA and EBIT are measures utilized by AB InBev to demonstrate the companys underlying performance.
Normalized EBITDA is calculated excluding the following effects from profit attributable to equity holders of AB InBev:
(i) Non-controlling interest, (ii) Income tax expense, (iii) Share of results of associates, (iv) Net finance cost, (v) Non-recurring net finance cost, (vi) Non-recurring items
above EBIT (including non-recurring impairment) and (vii) Depreciation, amortization and impairment.
8
Normalized EBITDA and EBIT are not accounting measures under IFRS accounting and should not be considered as an
alternative to Profit attributable to equity holders as a measure of operational performance or as an alternative to cash flow as a measure of liquidity. Normalized EBITDA and EBIT do not have a standard calculation method and AB InBevs
definition of normalized EBITDA and EBIT may not be comparable to that of other companies.
|
|
|
|
|
|
|
|
|
|
|
|
|
Million US dollar |
|
Notes |
|
|
2014 |
|
|
2013 Reported |
|
Profit attributable to equity holders of AB InBev |
|
|
|
|
|
|
9 216 |
|
|
|
14 394 |
|
Non-controlling interest |
|
|
|
|
|
|
2 086 |
|
|
|
2 124 |
|
Profit |
|
|
|
|
|
|
11 302 |
|
|
|
16 518 |
|
Income tax expense |
|
|
12 |
|
|
|
2 499 |
|
|
|
2 016 |
|
Share of result of associates |
|
|
|
|
|
|
(9 |
) |
|
|
(294 |
) |
Non-recurring net finance cost |
|
|
11 |
|
|
|
(509 |
) |
|
|
(283 |
) |
Net finance cost |
|
|
11 |
|
|
|
1 828 |
|
|
|
2 486 |
|
Non-recurring items above EBIT (including non-recurring impairment) |
|
|
8 |
|
|
|
197 |
|
|
|
(6 240 |
) |
Normalized EBIT |
|
|
|
|
|
|
15 308 |
|
|
|
14 203 |
|
Depreciation, amortization and impairment |
|
|
|
|
|
|
3 234 |
|
|
|
2 985 |
|
Normalized EBITDA |
|
|
|
|
|
|
18 542 |
|
|
|
17 188 |
|
Non-recurring items are either income or expenses which do not occur regularly as part of the normal activities of the
company. They are presented separately because they are important for the understanding of the underlying sustainable performance of the company due to their size or nature. Details on the nature of the non-recurring items are disclosed in Note 8
Non-recurring items.
IMPACT OF FOREIGN CURRENCIES
Foreign currency exchange rates have a significant impact on AB InBevs financial statements. The following table sets forth the percentage of its revenue
realized by currency for the years ended 31 December 2014 and 2013:
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
2013 Reference base |
|
US dollar |
|
|
32.4 |
% |
|
|
33.5 |
% |
Brazilian real |
|
|
22.1 |
% |
|
|
22.5 |
% |
Mexican peso |
|
|
11.9 |
% |
|
|
12.2 |
% |
Chinese yuan |
|
|
8.2 |
% |
|
|
7.3 |
% |
Euro |
|
|
6.6 |
% |
|
|
6.5 |
% |
Canadian dollar |
|
|
4.2 |
% |
|
|
4.3 |
% |
Argentinean peso |
|
|
3.6 |
% |
|
|
4.3 |
% |
South Korean won |
|
|
2.4 |
% |
|
|
|
|
Russian ruble |
|
|
1.7 |
% |
|
|
2.3 |
% |
Other |
|
|
6.9 |
% |
|
|
7.1 |
% |
The following table sets forth the percentage of its normalized EBITDA realized by currency for the periods ended
31 December 2014 and 2013:
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
2013 Reference base |
|
US dollar |
|
|
33.0 |
% |
|
|
33.6 |
% |
Brazilian real |
|
|
29.5 |
% |
|
|
31.8 |
% |
Mexican peso |
|
|
13.6 |
% |
|
|
12.2 |
% |
Canadian dollar |
|
|
4.3 |
% |
|
|
4.8 |
% |
Argentinean peso |
|
|
4.1 |
% |
|
|
4.9 |
% |
Chinese yuan |
|
|
3.9 |
% |
|
|
3.0 |
% |
Euro |
|
|
3.2 |
% |
|
|
3.2 |
% |
South Korean won |
|
|
2.0 |
% |
|
|
|
|
Russian ruble |
|
|
0.5 |
% |
|
|
0.8 |
% |
Other |
|
|
5.9 |
% |
|
|
5.7 |
% |
In 2014, the fluctuation of the foreign currency rates had a negative translation impact of (2 307)m US dollar on
AB InBevs revenue (2013: negative impact of (1 373)m US dollar), of (1 039)m US dollar on its normalized EBITDA (2013: negative impact of (753)m US dollar) and of (882)m US dollar on its normalized EBIT (2013: negative impact of (682)m US
dollar).
AB InBevs profit (after tax) has been negatively affected by the fluctuation of foreign currencies for (534)m US dollar (2013: negative
impact of (389)m US dollar), while the negative translation impact on its EPS base (profit attributable to equity holders of AB InBev) was (316)m US dollar or (0.19) US dollar per share (2013: negative impact of (167)m US dollar or (0.10) US
dollar per share).
The impact of the fluctuation of the foreign currencies on AB InBevs net debt amounted to (447)m US dollar (decrease of net
debt) in 2014, as compared to an impact of 606m US dollar (increase of net debt) in 2013. The impact of the fluctuation of the foreign currencies on the equity attributable to the equity holders of AB InBev amounted to (4 374)m US dollar (decrease
of equity), as compared to an impact of (3 109)m US dollar (decrease of equity) in 2013 on a reported basis.
9
PROFIT
Normalized profit attributable to equity holders of AB InBev was 8 865m US dollar (normalized EPS 5.43 US dollar) in 2014, compared to 7 936 m US dollar
(normalized EPS 4.91 US dollar) in 2013 - see Note 21 Changes in equity and earnings per share for more details. Profit attributable to equity holders of AB InBev for 2014 was 9 216m US dollar, compared to 14 394m US dollar for 2013 and
includes the following impacts:
|
|
|
Net finance costs (excluding non-recurring net finance items): 1 828m US dollar in 2014 compared to 2 486m US dollar in 2013. This decrease was driven by lower interest expenses, currecy gains reported in other
financial results, and a positive mark-to-market adjustment of 711m US dollar in 2014 linked to the hedging of the companys share-based payment programs, compared to 456m US dollar gains in 2013. |
|
|
|
Non-recurring net finance income/(cost): 509m US dollar in 2014 compared to 283m US dollar in 2013. Non-recurring net finance income in 2014 relates to mark-to market adjustments on derivative instruments entered
into to hedge the deferred share instrument issued in a transaction related to the combination with Grupo Modelo. The deferred share instrument had been hedged at an average price of approximately 68 euro per share. Non-recurring net finance costs
in 2013 also includes (101)m US dollar commitment and utilization fees incurred for the 2012 Facility agreement entered into to fund the Grupo Modelo combination. |
|
|
|
Share of result of associates: 9m US dollar in 2014 compared to 294m US dollar in 2013. In 2013, the share of results of associates reflects the companys equity investment in Grupo Modelo. The results of
Grupo Modelo have been fully consolidated since the combination between Grupo Modelo and the company on 4 June 2013. |
|
|
|
Income tax expense: 2 499m US dollar with an effective tax rate of 18.1% for 2014 compares with 2 016m US dollar with an effective tax rate of 11.1% in 2013. The increase in the effective tax rate mainly results
from the 2013 non-taxable, exceptional gain related to the fair value adjustment on the initial investment held in Grupo Modelo, changes in country profit mix, including the impact resulting from the combination with Grupo Modelo and the OB
acquisition. Excluding the effect of non-recurring items, the normalized effective tax rate was 18.8% in 2014 versus 16.6% in 2013. |
|
|
|
Profit attributable to non-controlling interest: 2 086m US dollar in 2014, a decrease from 2 124m US dollar in 2013, with improved operating performance in Ambev being offset by currency translation effects.
|
Liquidity position and capital resources
CASH FLOWS
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
2013 |
|
Cash flow from operating activities |
|
|
14 144 |
|
|
|
13 864 |
|
Cash flow from investing activities |
|
|
(11 152 |
) |
|
|
(10 281 |
) |
Cash flow from financing activities |
|
|
(3 855 |
) |
|
|
341 |
|
|
|
|
|
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents |
|
|
(863 |
) |
|
|
3 924 |
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
2013 |
|
Profit |
|
|
11 302 |
|
|
|
16 518 |
|
Revaluation of initial investment in Grupo Modelo |
|
|
|
|
|
|
(6 415 |
) |
Interest, taxes and non-cash items included in profit |
|
|
7 029 |
|
|
|
7 135 |
|
|
|
|
|
|
|
|
|
|
Cash flow from operating activities before changes in working capital and use of provisions |
|
|
18 331 |
|
|
|
17 238 |
|
Change in working capital |
|
|
815 |
|
|
|
866 |
|
Pension contributions and use of provisions |
|
|
(458 |
) |
|
|
(653 |
) |
Interest and taxes (paid)/received |
|
|
(4 574 |
) |
|
|
(4 193 |
) |
Dividends received |
|
|
30 |
|
|
|
606 |
|
|
|
|
|
|
|
|
|
|
Cash flow from operating activities |
|
|
14 144 |
|
|
|
13 864 |
|
AB InBevs cash flow from operating activities reached 14 144m US dollar in 2014 compared to 13 864m US dollar in 2013,
mainly explained by the higher profit following the combination with Grupo Modelo, as well as strong working capital management. These increases were partly offset by an increase in interests and taxes paid, and a reduction in dividends received due
to the consolidation of the results of Grupo Modelo following the combination in June 2013.
Cash flow from investing activities
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
2013 |
|
Net capex |
|
|
(4 122 |
) |
|
|
(3 612 |
) |
Acquisition and sale of subsidiaries, net of cash acquired/disposed of |
|
|
(6 700 |
) |
|
|
(17 397 |
) |
Proceeds from the sale of/(investments in) short-term debt securities |
|
|
(187 |
) |
|
|
6 707 |
|
Net of tax proceeds from the sale of assets held for sale |
|
|
(65 |
) |
|
|
4 002 |
|
Other |
|
|
(78 |
) |
|
|
19 |
|
|
|
|
|
|
|
|
|
|
Cash flow from investing activities |
|
|
(11 152 |
) |
|
|
(10 281 |
) |
Net cash used in investing activities was 11 152m US dollar in 2014 as compared to 10 281m US dollar in 2013. The
evolution of the cash used in investing activities in 2014 mainly reflects the acquisition of OB. See also Note 6 Acquisitions and disposals of subsidiaries. In 2013, the cash outflow from investing activities includes the combination with
Grupo Modelo, offset by the proceeds from the sale of the Piedras Negras brewery to Constellation Brands and the perpetual rights to the Grupo Modelo brands distributed in the US by Crown Imports.
10
AB InBevs net capital expenditures amounted to 4 122m US dollar in 2014 and 3 612m US dollar in 2013. Out
of the total capital expenditures of 2014 approximately 50% was used to improve the companys production facilities while 40% was used for logistics and commercial investments. Approximately 10% was used for improving administrative
capabilities and purchase of hardware and software.
Cash flow from financing activities
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
2013 |
|
Dividends paid |
|
|
(7 400 |
) |
|
|
(6 253 |
) |
Net (payments on)/proceeds from borrowings |
|
|
3 223 |
|
|
|
4 458 |
|
Net proceeds from the issue of share capital |
|
|
83 |
|
|
|
73 |
|
Cash received for deferred shares instrument |
|
|
|
|
|
|
1 500 |
|
Other (including net finance (cost)/income other than interest) |
|
|
239 |
|
|
|
563 |
|
|
|
|
|
|
|
|
|
|
Cash flow from financing activities |
|
|
(3 855 |
) |
|
|
341 |
|
The cash outflow from AB InBevs financing activities amounted to 3 855m US dollar in 2014, as compared to a cash inflow
of 341m US dollar in 2013. The cash flow from financing activities in 2014 reflects the funding of the acquisition of OB and higher dividends paid. In 2013, cash inflow from financing activities reflects the funding of the combination with Grupo
Modelo and the cash proceeds from the deferred share instruments issued in a transaction related to the combination with Grupo Modelo.
AB InBevs
cash, cash equivalents and short-term investments in debt securities less bank overdrafts as of 31 December 2014 amounted to 8 617m US dollar. As of 31 December 2014, the company had total liquidity of 16 617m US dollar, which
consisted of 8.0 billion US dollar available under committed long-term credit facilities and 8 617m US dollar of cash, cash equivalents and short-term investments in debt securities less bank overdrafts. Although the company may borrow such amounts
to meet its liquidity needs, the company principally relies on cash flows from operating activities to fund the companys continuing operations.
CAPITAL RESOURCES AND EQUITY
AB InBevs net debt
increased to 42 135m US dollar as at 31 December 2014, from 38 831m US dollar as at 31 December 2013.
Net debt is defined as non-current and
current interest-bearing loans and borrowings and bank overdrafts minus debt securities and cash. Net debt is a financial performance indicator that is used by AB InBevs management to highlight changes in the companys overall liquidity
position. The company believes that net debt is meaningful for investors as it is one of the primary measures AB InBevs management uses when evaluating its progress towards deleveraging.
Apart from operating results net of capital expenditures, the net debt is mainly impacted by the acquisition of OB (5.5 billion US dollar), dividend payments
to shareholders of AB InBev and Ambev (7.4 billion US dollar) the payment of interests and taxes (4.6 billion US dollar) and the impact of changes in foreign exchange rates (447m US dollar decrease of net debt).
Net debt to normalized EBITDA for the 12 month period ending 31 December 2014 was essentially flat at 2.27x, on a reported basis.
Consolidated equity attributable to equity holders of AB InBev as at 31 December 2014 was 49 972m US dollar, compared to 50 365m US dollar as at
31 December 2013. The combined effect of the weakening of mainly the closing rates of the euro, the Brazilian real, the Argentinean peso, the Mexican peso, the pound sterling, the Russian ruble and the Chinese yuan resulted in a foreign
exchange translation adjustment of (4 374)m US dollar. Further details on equity movements can be found in the consolidated statement of changes in equity.
Further details on interest-bearing loans and borrowings, repayment schedules and liquidity risk, are disclosed in Note 22 Interest-bearing loans and borrowings and Note 27 Risks arising from financial instruments.
Research and
development
Given its focus on innovation, AB InBev places a high value on research and development. In 2014 AB InBev spent
217m US dollar in research and development (2013: 185m US dollar). Part of this was spent in the area of market research, but the majority is related to innovation in the areas of process optimization and product development.
Research and development in process optimization is primarily aimed at capacity
increase (plant debottlenecking and addressing volume issues, while minimizing capital expenditure), quality improvement and cost management. Newly developed processes, materials and/or equipment are documented in best practices and shared across
business zones. Current projects range from malting to bottling of finished products.
Research and development in product innovation covers liquid,
packaging and draft innovation. Product innovation consists of breakthrough innovation, incremental innovation and renovation (that is, implementation of existing technology). The main goal for the innovation process is to provide consumers with
better products and experiences. This implies launching new liquid, new packaging and new draught products that deliver better performance both for the consumer and in terms of financial results, by increasing AB InBevs competitiveness in
the relevant markets. With consumers comparing products and experiences offered across very different drink categories and the offering of beverages increasing, AB InBevs research and development efforts also require an understanding of
the strengths and weaknesses of other drink categories, spotting opportunities for beer and developing consumer solutions (products) that better address consumer need and deliver better experience. This requires understanding consumer emotions and
expectations. Sensory experience, premiumization, convenience, sustainability and design are all central to AB InBevs research and development efforts.
11
Knowledge management and learning is also an integral part of research and development. AB InBev seeks to
continuously increase its knowledge through collaborations with universities and other industries.
AB InBevs research and development team is
briefed annually on the companys and the business zones priorities and approves concepts which are subsequently prioritized for development. Launch time, depending on complexity and prioritization, usually falls within the next calendar
year.
The Global Innovation and Technology Center (GITeC), located in Leuven, accommodates the Packaging, Product, Process Development teams
and facilities such as Labs, Experimental Brewery and the European Central Lab, which also includes Sensory Analysis. In addition to GITeC, AB InBev also has Product, Packaging and Process development teams located in each of the six
AB InBev geographic regions focusing on the short-term needs of such regions.
Risks and uncertainties
Under the explicit understanding that this is not an exhaustive list, AB InBevs major risk factors and uncertainties are listed below. There may be
additional risks which AB InBev is unaware of. There may also be risks AB InBev now believes to be immaterial, but which could turn out to have a material adverse effect. Moreover, if and to the extent that any of the risks described below
materialize, they may occur in combination with other risks which would compound the adverse effect of such risks. The sequence in which the risk factors are presented below is not indicative of their likelihood of occurrence or of the potential
magnitude of their financial consequence.
RISKS RELATING TO AB INBEV AND THE BEER AND BEVERAGE INDUSTRY
AB InBev relies on the reputation of its brands and its success depends on its ability to maintain and enhance the image and reputation of its existing
products and to develop a favorable image and reputation for new products. An event, or series of events, that materially damages the reputation of one or more of AB InBevs brands could have an adverse effect on the value of that brand and
subsequent revenues from that brand or business. Further, any restrictions on the permissible advertising style, media and messages used may constrain AB InBevs brand building potential and thus reduce the value of its brands and related
revenues.
AB InBev may not be able to protect its current and future brands and products and defend its intellectual property rights, including
trademarks, patents, domain names, trade secrets and know-how, which could have a material adverse effect on its business, results of operations, cash flows or financial condition, and in particular, on AB InBevs ability to develop its
business.
Certain of AB InBevs operations depend on independent distributors or wholesalers efforts to sell AB InBevs products
and there can be no assurance that such distributors will not give priority to AB InBevs competitors. Further, any inability of AB InBev to replace unproductive or inefficient distributors or any limitations imposed on AB InBev to purchase or
own any interest in distributors or wholesalers as a result of contractual restrictions, regulatory changes, changes in legislation or the interpretations of legislation by regulators or courts could adversely impact AB InBevs business,
results of operations and financial condition.
Changes in the availability or price of raw materials, commodities, energy and water could have an adverse
effect on AB InBevs results of operations to the extent that AB InBev fails to adequately manage the risks inherent in such volatility, including if AB InBevs hedging and derivative arrangements do not effectively or completely hedge
changes in commodity prices.
AB InBev relies on key third parties, including key suppliers, for a range of raw materials for beer, alcoholic beverages
and soft drinks, and for packaging material. The termination of or material change to arrangements with certain key suppliers or the failure of a key supplier to meet its contractual obligations could have a material impact on AB InBevs
production, distribution and sale of beer, alcoholic beverages and soft drinks and have a material adverse effect on AB InBevs business, results of operations, cash flows or financial condition. In addition, a number of key brand names are
both licensed to third-party brewers and used by companies over which AB InBev does not have control. Although AB InBev monitors brewing quality to ensure its high standards, to the extent that one of these key brand names or joint ventures,
investments in companies in which AB InBev does not own a controlling interest and AB InBevs licensees are subject to negative publicity, it could have a material adverse effect on AB InBevs business, results of operations, cash
flows or financial condition.
Competition in its various markets and increased
purchasing power of players in AB InBevs distribution channels could cause AB InBev to reduce pricing, increase capital investment, increase marketing and other expenditures, prevent AB InBev from increasing prices to recover higher cost
and thereby cause AB InBev to reduce margins or lose market share. Any dilution of AB InBevs brands as a result of competitive trends could also lead to a significant erosion of AB InBevs profitability. Any of the foregoing could
have a material adverse effect on AB InBevs business, financial condition and results of operations. Also, innovation faces inherent risks, and the new products AB InBev introduces may not be successful, while competitors may be able to
respond quicker to the emerging trends, such as the increasing consumer preference for craft beers produced by smaller microbreweries.
The
continued consolidation of retailers in markets in which AB InBev operates could result in reduced profitability for the beer industry as a whole and indirectly adversely affect AB InBevs financial results.
AB InBev could incur significant costs as a result of compliance with, and/or violations of or liabilities under, various regulations that govern AB
InBevs operations or the operations of its licensed third parties. Also, public concern about beer, alcoholic beverages and soft drink consumption and any resulting restrictions may cause the social acceptability of beer, alcoholic beverages
and soft drinks to decline significantly and consumption trends to shift away from these products, which would have a material adverse effect on AB InBevs business, financial condition and results of operations.
AB InBevs operations are subject to environmental regulations, which could expose it to significant compliance costs and litigation relating to
environmental issues.
Antitrust and competition laws and changes in such laws or in the interpretation and enforcement thereof, as well as being subject
to regulatory scrutiny, could affect AB InBevs business or the businesses of its subsidiaries.
12
In recent years, there has been increased public and political attention directed at the alcoholic beverage and
food and soft drinks industries, as a result of health care concerns related to the harmful use of alcohol (including drunk driving and excessive, abusive and underage drinking) and to health concerns such as diabetes and obesity related to the
overconsumption of food and soft drinks. Negative publicity regarding AB InBevs products and brands, publication of studies indicating a significant risk in using AB InBevs products or changes in consumer perceptions in relation to
AB InBevs products generally could adversely affect the sale and consumption of AB InBevs products and could harm its business, results of operations, cash flows or financial condition.
Demand for AB InBevs products may be adversely affected by changes in consumer preferences and tastes. Consumer preferences and tastes can change in
unpredictable ways. Failure by AB InBev to anticipate or respond adequately to changes in consumer preferences and tastes or to developments in new forms of media and marketing could adversely impact AB InBevs business, results of operations
and financial condition.
The beer and beverage industry may be subject to adverse changes in taxation, which makes up a large proportion of the cost of
beer charged to consumers in many jurisdictions. Increases in excise and other indirect taxes applicable to AB InBevs products tend to adversely affect AB InBevs revenue or margins, both by reducing overall consumption and by encouraging
consumers to switch to other categories of beverages. Minimum pricing is another form of fiscal regulation that can affect AB InBevs profitability. Furthermore, AB InBev may be subject to increased taxation on its operations by national, local
or foreign authorities, to higher corporate income tax rates or to new or modified taxation regulations and requirements, such as the Base Erosion Profit Shifting project being conducted by the Organization for Economic Co-operation and Development.
An increase in beer excise taxes or other taxes could adversely affect the financial results of AB InBev as well as its results of operations.
Seasonal consumption cycles and adverse weather conditions in the markets in which AB InBev operates may result in fluctuations in demand for AB InBevs
products and therefore may have an adverse impact on AB InBevs business, results of operations and financial condition.
Climate change, or legal,
regulatory or market measures to address climate change, could have a long-term, material adverse impact on AB InBevs business and results of operations. Further, water scarcity or poor water quality may affect AB InBev by increasing
production costs and capacity constraints, which could adversely affect AB InBevs business and results of operations. Additionally, AB InBevs inability to meet its compliance obligations under EU emissions trading regulations may also
have an adverse impact on AB InBevs business and results of operations.
A substantial portion of AB InBevs operations are carried out in
emerging European, Asian and Latin American markets. AB InBevs operations and equity investments in these markets are subject to the customary risks of operating in developing countries, which include, amongst others, political
insurrection, external interference, changes in government policy, political and economic changes, changes in the relations between the countries, actions of governmental authorities affecting trade and foreign investment, regulations on
repatriation of funds, interpretation and application of local laws and regulations, enforceability of intellectual property and contract rights, local labor conditions and regulations, potential political and economic uncertainty, application of
exchange controls, nationalization or expropriation, crime and lack of law enforcement as well as financial risks, which include risk of liquidity, inflation, devaluation, price volatility, currency convertibility and country default. Such emerging
market risks could adversely impact AB InBevs business, results of operations and financial condition.
Economic and political events in
Argentina may adversely affect the companys Argentinean operations. The political instability, fluctuations in the economy, governmental actions concerning the economy of Argentina, the devaluation of the Argentine peso, inflation and
deteriorating macroeconomic conditions in Argentina could indeed have, and may continue to have, a material adverse effect on AB InBevs Latin America South operations, their financial condition and their results. If the economic or political
situation in Argentina deteriorates, AB InBev Latin America South operations may be subject to additional restrictions under new Argentinean foreign exchange, export repatriation or expropriation regimes that could adversely affect AB InBevs
liquidity and operations, and its ability to access funds from Argentina.
Political events in Ukraine and related sanctions adopted by the European Union
and the United States targeting Russia and Crimea may adversely affect AB InBevs operations in Ukraine, Russia and elsewhere in the region. AB InBev owns and operates beer production facilities in Ukraine and Russia. Continued political
instability, civil strife, deteriorating macroeconomic conditions, the devaluation of the Russian ruble, the devaluation of the Ukrainian hryvnia and actual or threatened military action in the region could have a material adverse effect on AB
InBevs operations in the region and on the results of operations of AB InBevs Europe segment, and may result in impairment charges on goodwill or other intangible assets.
If any of AB InBevs products is defective or found to contain contaminants, AB InBev may be subject to product recalls or other liabilities. Although AB
InBev maintains insurance policies against certain product liability (but not product recall) risks, it may not be able to enforce its rights in respect of these policies and any amounts it recovers may not be sufficient to offset any damage it may
suffer, which could adversely impact its business, reputation, prospects, results of operations and financial condition.
AB InBev may not be able to
obtain the necessary funding for its future capital or refinancing needs and may face financial risks due to its level of debt and uncertain market conditions. AB InBev may be required to raise additional funds for AB InBevs future capital
needs or refinance its current indebtedness through public or private financing, strategic relationships or other arrangements and there can be no assurance that the funding, if needed, will be available on attractive terms, or at all. AB InBev has
incurred substantial indebtedness by entering into several senior credit facilities and accessing the bond markets from time to time based on its financial needs. The portion of AB InBevs consolidated balance sheet represented by debt will
remain significantly higher as compared to its historical position. AB InBevs increased level of debt could have significant adverse consequences on AB InBev, including (i) increasing its vulnerability to general adverse economic and
industry conditions, (ii) limiting its flexibility in planning for, or reacting to, changes in its business and the industry in which AB InBev operates; (iii) impairing its ability to obtain additional financing in the future,
(iv) requiring AB InBev to issue additional equity (potentially under unfavorable market conditions), and (v) placing AB InBev at a competitive disadvantage compared to its competitors that have less debt. AB InBevs ability to repay
and renegotiate its outstanding indebtedness will be dependent upon market conditions. Unfavorable conditions, including recent significant price volatility and liquidity disruptions in the global credit markets, as well as downward pressure on
credit capacity for certain issuers without regard to those issuers underlying financial strength, could increase costs beyond what is currently anticipated. Such costs could have a material adverse impact on AB InBevs cash flows,
results of operations or both. Further, AB InBev may restrict the amount of dividends it will pay as a result of AB InBevs level of debt and its strategy to give
13
priority to deleveraging. Also, a credit rating downgrade could have a material adverse effect on AB InBevs ability to finance its ongoing operations or to refinance its existing
indebtedness. In addition, a failure of AB InBev to refinance all or a substantial amount of its debt obligations when they become due, or more generally a failure to raise additional equity capital or debt financing or to realize proceeds from
asset sales when needed, would have a material adverse effect on its financial condition and results of operations.
AB InBevs results could be
negatively affected by increasing interest rates. Although AB InBev enters into interest rate swap agreements to manage its interest rate risk and also enters into cross-currency interest rate swap agreements to manage both its foreign currency risk
and interest-rate risk on interest-bearing financial liabilities, there can be no assurance that such instruments will be successful in reducing the risks inherent in exposures to interest rate fluctuations.
AB InBevs results of operations are affected by fluctuations in exchange rates. Any change in exchange rates between AB InBevs operating
companies functional currencies and the US dollar will affect its consolidated income statement and balance sheet when the results of those operating companies are translated into US dollar for reporting purposes as translational exposures are
not hedged. Also, there can be no assurance that the policies in place to manage commodity price and transactional foreign currency risks to protect AB InBevs exposure will be able to successfully hedge against the effects of such foreign
exchange exposure, especially over the long-term. Further, the use of financial instruments to mitigate currency risk and any other efforts taken to better match the effective currencies of AB InBevs liabilities to its cash flows could result
in increased costs.
AB InBevs shares currently trade on Euronext Brussels in euros and its American Depositary Shares trade on the New York Stock
Exchange in US dollars. Fluctuations in the exchange rate between the U.S. dollar and the euro may result in temporary differences between the value of its American Depositary Shares and the value of its ordinary shares, which may result in heavy
trading by investors seeking to exploit such differences.
The ability of AB InBevs subsidiaries to distribute cash upstream may be subject to
various conditions and limitations. The inability to obtain sufficient cash flows from its domestic and foreign subsidiaries and affiliated companies could adversely impact AB InBevs ability to pay dividends and otherwise negatively
impact its business, results of operations and financial condition.
Failure to generate significant cost savings and margin improvement through
initiatives for improving operational efficiencies could adversely affect AB InBevs profitability and AB InBevs ability to achieve its financial goals.
AB InBev may not be able to successfully carry out further acquisitions and business integrations or restructuring. AB InBev cannot make further acquisitions
unless it can identify suitable candidates and agree on terms with them. AB InBev may not be able to successfully complete such transactions. In addition, such transactions may involve the assumption of certain liabilities, which may have a
potential impact on AB InBevs financial risk profile. Further, the price AB InBev may pay in any future acquisition may prove to be too high as a result of various factors.
The combination with Grupo Modelo has exposed AB InBev to risks related to significant costs and potential difficulties in the integration of Grupo Modelo
into AB InBevs existing operations and the extraction of synergies from the transaction. Although the anticipated business growth opportunities, cost savings, increased profits, synergies and other benefits contemplated by the Modelo
combination are significant, there can be no assurance that the Modelo combination will realize these benefits in the time expected or at all. Any failures, material delays or unexpected costs of the integration process could therefore have a
material adverse effect on AB InBevs business, results of operations and financial condition.
AB InBev reached a settlement with the U.S.
Department of Justice in relation to the combination with Grupo Modelo, which included a three-year transition services agreement to ensure the smooth transition of the operation of the Piedras Negras brewery as well as certain distribution
guarantees for Constellation Brands, Inc. in the fifty states of the United States, the District of Columbia and Guam. AB InBevs compliance with its obligations under the settlement agreement is monitored by the U.S. Department of Justice and
the Monitoring Trustee appointed by them. Were AB InBev to fail to fulfill its obligations under the settlement, whether intentionally or inadvertently, AB InBev could be subject to monetary fines.
If the business of AB InBev does not develop as expected, impairment charges on goodwill or other intangible assets may be incurred in the future which
could be significant and which could have an adverse effect on AB InBevs results of operations and financial condition.
Although AB InBevs
operations in Cuba are quantitatively immaterial, its overall business reputation may suffer or it may face additional regulatory scrutiny as a result of its activities in Cuba based on Cubas identification as a state sponsor of terrorism and
target of US economic and trade sanctions. If investors decide to liquidate or otherwise divest their investments in companies that have operations of any magnitude in Cuba, the market in and value of AB InBevs securities could be adversely
impacted. In addition, US legislation known as the Helms-Burton Act authorizes private lawsuits for damages against anyone who traffics in property confiscated without compensation by the Government of Cuba from persons who at the time
were, or have since become, nationals of the United States. Although this section of the Helms-Burton Act is currently suspended, claims accrue notwithstanding the suspension and may be asserted if the suspension is discontinued. AB InBev has
received notice of a claim purporting to be made under the Helms-Burton Act. AB InBev is currently unable to express a view as to the validity of such claims, or as to the standing of the claimants to pursue them.
AB InBev may not be able to recruit or retain key personnel and successfully manage them, which could disrupt AB InBevs business and have an unfavorable
material effect on AB InBevs financial position, its income from operations and its competitive position.
Further, AB InBev may be exposed to labor
strikes, disputes and work stoppages or slowdown, within its operations or those of its suppliers, or an interruption or shortage of raw materials for any other reason that could lead to a negative impact on AB InBevs costs, earnings,
financial condition, production level and ability to operate its business. AB InBevs production may also be affected by work stoppages or slowdowns that affect its suppliers, distributors and retail delivery/logistics providers as a result of
disputes under existing collective labor agreements with labor unions, in connection with negotiations of new collective labor agreements, as a result of supplier financial distress or for other reasons. A work stoppage or slowdown at AB
InBevs facilities could interrupt the transport of raw materials from its suppliers or the transport of its products to its customers. Such disruptions could put a strain on AB InBevs relationships with suppliers and clients and may have
lasting effects on its business even after the disputes with its labor force have been resolved, including as a result of negative publicity.
14
AB InBev relies on information technology systems to process, transmit, and store electronic information.
Although AB InBev takes various actions to minimize potential technology disruptions, such disruptions could impact AB InBevs business. For example, if outside parties gained access to AB InBevs confidential data or strategic
information and appropriated such information or made such information public, this could harm AB InBevs reputation or its competitive advantage. More generally, technology disruptions could have a material adverse effect on
AB InBevs business, results of operations, cash flows or financial condition.
AB InBevs business and operating results could be
negatively impacted by social, technical, natural, physical or other disasters.
AB InBev maintains insurance policies to cover various risks and also
uses self-insurance in certain areas. Should an uninsured loss (self-insured risks) or a loss in excess of insured limits occur, this could adversely impact AB InBevs business, results of operations and financial condition.
AB InBev is exposed to the risk of a global recession or a recession in one or more of its key markets, and to credit and capital market volatility and
economic financial crisis, which could result in lower revenue and reduced profit, as beer consumption in many of the jurisdictions in which AB InBev operates is closely linked to general economic conditions and changes in disposable income. A
continuation or worsening of the levels of market disruption and volatility seen in the recent past could have an adverse effect on AB InBevs ability to access capital, on its business, results of operations and financial condition, and on the
market price of its shares and American Depositary Shares.
AB InBev operates its business and markets its products in certain countries that are less
developed, have less stability in legal systems and financial markets, and are potentially more corrupt business environments than Europe and the United States, and therefore present greater political, economic and operational risks. Although
AB InBev is committed to conducting business in a legal and ethical manner in compliance with local and international statutory requirements and standards applicable to its business, there is a risk that the employees or representatives of AB
InBevs subsidiaries, affiliates, associates, joint ventures/operations or other business interests may take actions that violate applicable laws and regulations that generally prohibit the making of improper payments to foreign government
officials for the purpose of obtaining or keeping business, including laws relating to the 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions such as the U.S. Foreign Corrupt Practices Act
and the U.K. Bribery Act.
The audit report included in AB InBevs annual report is prepared by an auditor who is not inspected by the US Public
Company Accounting Oversight Board (PCAOB). This lack of PCAOB inspections in Belgium prevents the PCAOB from regularly evaluating audits and quality control procedures of any auditors operating in Belgium, including AB InBevs auditors. As a
result, US and other investors may be deprived of the benefits of PCAOB inspections.
AB InBev is now, and may in the future be, a party to legal
proceedings and claims, including collective suits (class actions), and significant damages may be asserted against it. Given the inherent uncertainty of litigation, it is possible that AB InBev might incur liabilities as a consequence of the
proceedings and claims brought against it, including those that are not currently believed by it to be reasonably possible, which could have a material adverse effect on AB InBevs business, results of operations, cash flows or financial
position. Important contingencies are disclosed in Note 32 Contingencies of the consolidated financial statements.
RISKS ARISING FROM FINANCIAL
INSTRUMENTS
Note 27 of the 2014 consolidated financial statements on Risks arising from financial instruments contains detailed information on
the companys exposures to financial risks and its risk management policies.
Events after the balance sheet date
Please refer to Note 32 Events after the balance sheet date of the consolidated financial statements.
Corporate governance
For information with respect to
Corporate Governance, please refer to the Corporate Governance section, which forms an integral part of AB InBevs annual report.
15
Statement of the Board of Directors
The Board of Directors of AB InBev SA/NV certifies, on behalf and for the account of the company, that, to their knowledge, (a) the financial
statements which have been prepared in accordance with International Financial Reporting Standards give a true and fair view of the assets, liabilities, financial position and profit or loss of the company and the entities included in the
consolidation as a whole and (b) the management report includes a fair review of the development and performance of the business and the position of the company and the entities included in the consolidation as a whole, together with a
description of the principal risks and uncertainties they face.
16
Independent auditors report
STATUTORY AUDITORS REPORT TO THE GENERAL SHAREHOLDERS MEETING ON THE CONSOLIDATED ACCOUNTS FOR THE YEAR
ENDED 31 DECEMBER 2014
In accordance with the legal requirements, we report to you on the performance of our mandate of statutory auditor. This report
includes our opinion on the consolidated financial statements, as well as the required additional statements. The consolidated financial statements comprise the consolidated statement of financial position as at 31 December 2014, the consolidated
income statement, the consolidated statement of comprehensive income, consolidated statement of changes in equity and the consolidated cash flow statement for the year 2014 then ended, and notes, comprising a summary of significant accounting
policies and other explanatory information.
Report on the consolidated financial statements Unqualified opinion
We have audited the consolidated financial statements of Anheuser-Busch Inbev NV/SA (the Company) and its subsidiaries (jointly the
group), prepared in accordance with International Financial Reporting Standards as adopted by the European Union, and with the legal and regulatory requirements applicable in Belgium. The total of the consolidated statement of financial
position amounts to USD 142.550 million and the consolidated income statement shows a profit for the year 2014 of USD 11.302 million.
Board of
directors responsibility for the preparation of the consolidated financial statements
The Companys board of directors is responsible for
the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union, and with the legal and regulatory requirements applicable in Belgium,
and for such internal control as the board of directors determines, is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Statutory auditors responsibility
Our
responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (ISAs). Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
PwC Bedrijfsrevisoren cuba, burgerlijke vennootschap met handelsvorm PwC Reviseurs dEntreprises scrl, société civile à
forme commerciale - Financial Assurance Services
Maatschappelijke zetel/Siège social: Woluwe Garden, Woluwedal 18, B-1932
Sint-Stevens-Woluwe T: +32 (0)2 710 4211, F: +32(0)2 710 4299, www.pwc.com
BTW/TVA BE 0429.501.944 / RPR Brussel - RPM Bruxelles / ING BE43
3101 3811 9501 - BIC BBRUBEBB/ RBS BE89 7205 4043 3185 - BIC ABNABEBR
17
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated
financial statements. The procedures selected depend on the statutory auditors judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those
risk assessments, the statutory auditor considers internal control relevant to the groups preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the groups internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the
board of directors, as well as evaluating the overall presentation of the consolidated financial statements.
We have obtained from the board of directors
and the companys officials the explanations and information necessary for performing our audit.
We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
Unqualified Opinion
In our opinion, the consolidated financial statements give a true and fair view of the groups net equity and consolidated financial position as at 31
December 2014 and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union, and with the legal and regulatory
requirements applicable in Belgium.
18
Report on other legal and regulatory requirements
The board of directors is responsible for the preparation and the content of the management report on the consolidated financial statements.
In the context of our mandate and in accordance with the Belgian standard which is complementary to the International Standards on Auditing (ISAs) as
applicable in Belgium, our responsibility is to verify, in all material respects, compliance with certain legal and regulatory requirements. On this basis, we provide the following additional statement which does not impact our opinion on the
consolidated financial statements:
|
|
|
The management report on the consolidated financial statements includes the information required by law, is consistent with the consolidated financial statements and does not present any material inconsistencies with
the information that we became aware of during the performance of our mandate. |
Sint-Stevens-Woluwe, 25 February 2015
The Statutory Auditor
PwC Bedrijfsrevisoren BCVBA
Represented by
/s/ Yves Vandenplas
Yves Vandenplas
Bedrijfsrevisor
19
Consolidated financial statements
Consolidated income statement
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended 31 December
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 items1 |
|
|
21 |
|
|
|
5.43 |
|
|
|
4.91 |
|
Diluted earnings per share before non-recurring items1 |
|
|
21 |
|
|
|
5.32 |
|
|
|
4.81 |
|
The accompanying notes are an integral part of these consolidated financial statements.
1 |
Basic earnings per share and diluted earnings per share before non-recurring items are not defined metrics in IFRS. Refer to Note 21 Changes in equity and earnings per share for more details. |
20
Consolidated statement of comprehensive income
|
|
|
|
|
|
|
|
|
For the year ended 31 December
Million US dollar |
|
2014 |
|
|
2013 |
|
Profit |
|
|
11 302 |
|
|
|
16 518 |
|
Other comprehensive income: Items that will not be reclassified to profit or loss: |
|
|
|
|
|
|
|
|
Re-measurements of post-employment benefits |
|
|
(491 |
) |
|
|
503 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 |
|
The accompanying notes are an integral part of these consolidated financial statements.
21
Consolidated statement of financial position
|
|
|
|
|
|
|
|
|
|
|
|
|
As at
Million US dollar |
|
Notes |
|
|
2014 |
|
|
2013 |
|
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 |
|
|
|
1 252 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 loans 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 |
|
|
|
1 105 |
|
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 |
|
The accompanying notes are an integral part of these consolidated financial statements.
22
Consolidated statement of changes in equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to equity holders of AB InBev1 |
|
Million US dollar |
|
Issued capital |
|
|
Share premium |
|
|
Treasury shares |
|
|
Share- based payment reserves |
|
|
Translation reserves |
|
|
Hedging reserves |
|
|
Re-measurements of post-employment benefits |
|
|
Deferred share instrument |
|
|
Retained earnings |
|
|
Total |
|
|
Non-controlling interest |
|
|
Total equity |
|
As per 1 January 2013 |
|
|
1 734 |
|
|
|
17 574 |
|
|
|
(1 000 |
) |
|
|
693 |
|
|
|
2 147 |
|
|
|
(79 |
) |
|
|
(1 434 |
) |
|
|
|
|
|
|
21 519 |
|
|
|
41 154 |
|
|
|
4 299 |
|
|
|
45 453 |
|
Profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14 394 |
|
|
|
14 394 |
|
|
|
2 124 |
|
|
|
16 518 |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange differences on translation of foreign operations (gains/(losses)) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3 042 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3 042 |
) |
|
|
(524 |
) |
|
|
(3 566 |
) |
Cash flow hedges |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
534 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
534 |
|
|
|
9 |
|
|
|
543 |
|
Re-measurements of post-employment benefits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
466 |
|
|
|
|
|
|
|
|
|
|
|
466 |
|
|
|
37 |
|
|
|
503 |
|
Share of other comprehensive results of associates |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(67 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(67 |
) |
|
|
|
|
|
|
(67 |
) |
Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3 109 |
) |
|
|
534 |
|
|
|
466 |
|
|
|
|
|
|
|
14 394 |
|
|
|
12 285 |
|
|
|
1 646 |
|
|
|
13 931 |
|
Shares issued |
|
|
1 |
|
|
|
34 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 500 |
|
|
|
|
|
|
|
1 535 |
|
|
|
|
|
|
|
1 535 |
|
Dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(18 |
) |
|
|
(4 788 |
) |
|
|
(4 806 |
) |
|
|
(1 019 |
) |
|
|
(5 825 |
) |
Treasury shares |
|
|
|
|
|
|
|
|
|
|
126 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
126 |
|
|
|
|
|
|
|
126 |
|
Share-based payments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
192 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
192 |
|
|
|
23 |
|
|
|
215 |
|
Scope and other changes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(121 |
) |
|
|
(121 |
) |
|
|
(6 |
) |
|
|
(127 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As per 31 December 2013 |
|
|
1 735 |
|
|
|
17 608 |
|
|
|
(874 |
) |
|
|
885 |
|
|
|
(962 |
) |
|
|
455 |
|
|
|
(968 |
) |
|
|
1 482 |
|
|
|
31 004 |
|
|
|
50 365 |
|
|
|
4 943 |
|
|
|
55 308 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to equity holders of AB InBev |
|
Million US dollar |
|
Issued capital |
|
|
Share premium |
|
|
Treasury shares |
|
|
Share- based payment reserves |
|
|
Translation reserves |
|
|
Hedging reserves |
|
|
Re-measurements of post-employment benefits |
|
|
Deferred share instrument |
|
|
Retained earnings |
|
|
Total |
|
|
Non-controlling interest |
|
|
Total equity |
|
As per 1 January 2014 |
|
|
1 735 |
|
|
|
17 608 |
|
|
|
(874 |
) |
|
|
885 |
|
|
|
(962 |
) |
|
|
455 |
|
|
|
(968 |
) |
|
|
1 482 |
|
|
|
31 004 |
|
|
|
50 365 |
|
|
|
4 943 |
|
|
|
55 308 |
|
Profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9 216 |
|
|
|
9 216 |
|
|
|
2 086 |
|
|
|
11 302 |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange differences on translation of foreign operations (gains/(losses)) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4 374 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4 374 |
) |
|
|
(386 |
) |
|
|
(4 760 |
) |
Cash flow hedges |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
102 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
102 |
|
|
|
22 |
|
|
|
124 |
|
Re-measurements of post-employment benefits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(479 |
) |
|
|
|
|
|
|
|
|
|
|
(479 |
) |
|
|
(12 |
) |
|
|
(491 |
) |
Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4 374 |
) |
|
|
102 |
|
|
|
(479 |
) |
|
|
|
|
|
|
9 216 |
|
|
|
4 465 |
|
|
|
1 710 |
|
|
|
6 175 |
|
Shares issued |
|
|
1 |
|
|
|
12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 |
|
|
|
|
|
|
|
13 |
|
Dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(75 |
) |
|
|
(5 244 |
) |
|
|
(5 319 |
) |
|
|
(2 296 |
) |
|
|
(7 615 |
) |
Treasury shares |
|
|
|
|
|
|
|
|
|
|
55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55 |
|
|
|
|
|
|
|
55 |
|
Share-based payments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
195 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
195 |
|
|
|
18 |
|
|
|
213 |
|
Scope and other changes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
198 |
|
|
|
198 |
|
|
|
(90 |
) |
|
|
108 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As per 31 December 2014 |
|
|
1 736 |
|
|
|
17 620 |
|
|
|
(819 |
) |
|
|
1 080 |
|
|
|
(5 336 |
) |
|
|
557 |
|
|
|
(1 447 |
) |
|
|
1 407 |
|
|
|
35 174 |
|
|
|
49 972 |
|
|
|
4 285 |
|
|
|
54 257 |
|
The accompanying notes are an integral part of these consolidated financial statements.
1 |
As Reported, adjusted to reflect the effects of retrospective application on the revised IAS 19 Employee Benefits (see Note 3 Summary of significant accounting policies). |
23
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 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOW FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
14 144 |
|
|
|
13 864 |
|
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 |
|
The accompanying notes are an integral part of these consolidated financial statements.
24
Notes to the consolidated financial statements
|
|
|
|
|
Corporate information |
|
|
1 |
|
|
|
Statement of compliance |
|
|
2 |
|
|
|
Summary of significant accounting policies |
|
|
3 |
|
|
|
Use of estimates and judgments |
|
|
4 |
|
|
|
Segment reporting |
|
|
5 |
|
|
|
Acquisitions and disposals of subsidiaries |
|
|
6 |
|
|
|
Other operating income/(expenses) |
|
|
7 |
|
|
|
Non-recurring items |
|
|
8 |
|
|
|
Payroll and related benefits |
|
|
9 |
|
|
|
Additional information on operating expenses by nature |
|
|
10 |
|
|
|
Finance cost and income |
|
|
11 |
|
|
|
Income taxes |
|
|
12 |
|
|
|
Property, plant and equipment |
|
|
13 |
|
|
|
Goodwill |
|
|
14 |
|
|
|
Intangible assets |
|
|
15 |
|
|
|
Investment securities |
|
|
16 |
|
|
|
Deferred tax assets and liabilities |
|
|
17 |
|
|
|
Inventories |
|
|
18 |
|
|
|
Trade and other receivables |
|
|
19 |
|
|
|
Cash and cash equivalents |
|
|
20 |
|
|
|
Changes in equity and earnings per share |
|
|
21 |
|
|
|
Interest-bearing loans and borrowings |
|
|
22 |
|
|
|
Employee benefits |
|
|
23 |
|
|
|
Share-based payments |
|
|
24 |
|
|
|
Provisions |
|
|
25 |
|
|
|
Trade and other payables |
|
|
26 |
|
|
|
Risks arising from financial instruments |
|
|
27 |
|
|
|
Operating leases |
|
|
28 |
|
|
|
Collateral and contractual commitments for the acquisition of property, plant and equipment, loans to customers and other |
|
|
29 |
|
|
|
Contingencies |
|
|
30 |
|
|
|
Related parties |
|
|
31 |
|
|
|
Events after the balance sheet date |
|
|
32 |
|
|
|
AB InBev companies |
|
|
33 |
|
25
Anheuser-Busch InBev is a publicly traded company (Euronext: ABI) based in
Leuven, Belgium, with American Depositary Receipts on the New York Stock Exchange (NYSE: BUD). It is the leading global brewer and one of the worlds top five consumer products companies. Beer, the original social network, has been bringing
people together for thousands of years and the companys portfolio of well over 200 beer brands continues to forge strong connections with consumers. This includes global brands
Budweiser®, Corona® and Stella Artois®; international brands Becks®, Leffe® and Hoegaarden®; and local champions Bud Light®, Skol®, Brahma®,
Antarctica®, Quilmes®, Victoria®, Modelo Especial®, Michelob Ultra®, Harbin®,
Sedrin®, Klinskoye®, Sibirskaya Korona®, Chernigivske®, Cass® and Jupiler®. Anheuser-Busch InBevs dedication to heritage and
quality originates from the Den Hoorn brewery in Leuven, Belgium dating back to 1366 and the pioneering spirit of the Anheuser & Co brewery, with origins in St. Louis, USA since 1852. Geographically diversified with a balanced exposure to
developed and developing markets, Anheuser Busch InBev leverages the collective strengths of approximately 155 000 employees based in 25 countries worldwide. In 2014, AB InBev realized 47.1 billion US dollar revenue. The company strives to be the
Best Beer Bringing People Together For a Better World.
The consolidated financial statements of the company for the year ended 31 December 2014
comprise the company and its subsidiaries (together referred to as AB InBev or the company) and the companys interest in associates and jointly controlled entities.
The financial statements were authorized for issue by the Board of Directors on 25 February 2015.
2. |
STATEMENT OF COMPLIANCE |
The consolidated financial statements are prepared in accordance with
International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB) and in conformity with IFRS as adopted by the European Union up to 31 December 2014 (collectively IFRS).
AB InBev did not early apply any new IFRS requirements that were not yet effective in 2014 and did not apply any European carve-outs from IFRS.
3. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
The accounting policies set out below have been applied
consistently to all periods presented in these consolidated financial statements by the company and its subsidiaries.
(A) |
BASIS OF PREPARATION AND MEASUREMENT |
Depending on the applicable IFRS requirements, the measurement
basis used in preparing the financial statements is cost, net realizable value, fair value or recoverable amount. Whenever IFRS provides an option between cost and another measurement basis (e.g. systematic re-measurement), the cost approach is
applied.
(B) |
FUNCTIONAL AND PRESENTATION CURRENCY |
Unless otherwise specified, all financial information included in
these financial statements have been stated in US dollar and has been rounded to the nearest million. The functional currency of the parent company is the euro.
(C) |
USE OF ESTIMATES AND JUDGMENTS |
The preparation of financial statements in conformity with IFRS requires
management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
(D) |
PRINCIPLES OF CONSOLIDATION |
Subsidiaries are those entities controlled by AB InBev. AB InBev
controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. In assessing control, potential voting rights are taken
into account. Control is presumed to exist where AB InBev owns, directly or indirectly, more than one half of the voting rights (which does not always equate to economic ownership), unless it can be demonstrated that such ownership does not
constitute control. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Total comprehensive income of subsidiaries is attributed to
the owners of the company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.
Associates
are undertakings in which AB InBev has significant influence over the financial and operating policies, but which it does not control. This is generally evidenced by ownership of between 20% and 50% of the voting rights. A joint venture is an
arrangement in which AB InBev has joint control, whereby AB InBev has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities. Associates and joint ventures are accounted for by the equity
method of
26
accounting, from the date that significant influence or joint control commences until the date that significant influence or joint control ceases. When AB InBevs share of losses
exceeds the carrying amount of the associate or joint venture, the carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that AB InBev has incurred legal or constructive obligations on behalf
of the associate or joint venture.
Joint operations arise when AB InBev has rights to the assets and obligations to the liabilities of a joint
arrangement. AB InBev accounts for its share of the assets, liabilities, revenues and expenses as from the moment joint operation commences until the date that joint operation ceases.
The financial statements of the companys subsidiaries, joint ventures, joint operations and associates are prepared for the same reporting year as the
parent company, using consistent accounting policies. In exceptional cases when the financial statements of a subsidiary, joint venture, joint operation or associate are prepared as of a different date from that of AB InBev (e.g. Modelo
prior to the AB InBev and Grupo Modelo combination), adjustments are made for the effects of significant transactions or events that occur between that date and the date of AB InBevs financial statements. In such cases, the difference
between the end of the reporting period of these subsidiaries, joint ventures, joint operations or associates from AB InBevs reporting period is no more than three months.
All intercompany transactions, balances and unrealized gains and losses on transactions between group companies have been eliminated. Unrealized gains arising
from transactions with joint ventures, joint operations and associates are eliminated to the extent of AB InBevs interest in the entity. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that
there is no evidence of impairment.
A listing of the companys most important subsidiaries, joint ventures, joint operations and associates is set
out in Note 33 AB InBev companies.
(E) |
SUMMARY OF CHANGES IN ACCOUNTING POLICIES |
A number of new standards, amendment to standards and new
interpretations became mandatory for the first time for the financial year beginning 1 January 2014, and have not been listed in these consolidated financial statements because of either their non-applicability to or their immateriality to AB
InBevs consolidated financial statements.
FOREIGN CURRENCY TRANSACTIONS
Foreign currency transactions are accounted for at exchange rates prevailing at the date of the transactions. Monetary assets and liabilities denominated in
foreign currencies are translated at the balance sheet date rate. Gains and losses resulting from the settlement of foreign currency transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are
recognized in the income statement. Non-monetary assets and liabilities denominated in foreign currencies are translated at the foreign exchange rate prevailing at the date of the transaction. Non-monetary assets and liabilities denominated in
foreign currencies that are stated at fair value are translated to US dollar at foreign exchange rates ruling at the dates the fair value was determined.
TRANSLATION OF THE RESULTS AND FINANCIAL POSITION OF FOREIGN OPERATIONS
Assets and liabilities of foreign operations are translated to US dollar at foreign exchange rates prevailing at the balance sheet date. Income statements of
foreign operations, excluding foreign entities in hyperinflationary economies, are translated to US dollar at exchange rates for the year approximating the foreign exchange rates prevailing at the dates of the transactions. The components of
shareholders equity are translated at historical rates. Exchange differences arising from the translation of shareholders equity to US dollar at period-end exchange rates are taken to other comprehensive income (translation
reserves).
In hyperinflationary economies, re-measurement of the local currency denominated non-monetary assets, liabilities, income statement accounts
as well as equity accounts is made by applying a general price index. These re-measured accounts are used for conversion into US dollar at the closing exchange rate. AB InBev did not operate in hyperinflationary economies in 2013 and 2014.
EXCHANGE RATES
The most important exchange rates that
have been used in preparing the financial statements are:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closing rate |
|
|
Average rate |
|
1 US dollar equals: |
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
Argentinean peso |
|
|
8.552034 |
|
|
|
6.518027 |
|
|
|
8.119265 |
|
|
|
5.446585 |
|
Brazilian real |
|
|
2.656197 |
|
|
|
2.342604 |
|
|
|
2.348760 |
|
|
|
2.157419 |
|
Canadian dollar |
|
|
1.158305 |
|
|
|
1.063810 |
|
|
|
1.099011 |
|
|
|
1.030040 |
|
Chinese yuan |
|
|
6.206895 |
|
|
|
6.054043 |
|
|
|
6.165793 |
|
|
|
6.155014 |
|
Euro |
|
|
0.823655 |
|
|
|
0.725111 |
|
|
|
0.747695 |
|
|
|
0.755485 |
|
South Korean won |
|
|
1 090.93 |
|
|
|
|
|
|
|
1 045.73 |
|
|
|
|
|
Mexican peso |
|
|
14.718112 |
|
|
|
13.084394 |
|
|
|
13.224411 |
|
|
|
12.836159 |
|
Pound sterling |
|
|
0.641544 |
|
|
|
0.604525 |
|
|
|
0.605515 |
|
|
|
0.640409 |
|
Russian ruble |
|
|
56.256744 |
|
|
|
32.729000 |
|
|
|
36.741769 |
|
|
|
31.859528 |
|
Ukrainian hryvnia |
|
|
15.768560 |
|
|
|
7.993022 |
|
|
|
11.426006 |
|
|
|
7.993027 |
|
RESEARCH AND DEVELOPMENT
Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognized in the
income statement as an expense as incurred.
27
Expenditure on development activities, whereby research findings are applied to a plan or design for the
production of new or substantially improved products and processes, is capitalized if the product or process is technically and commercially feasible, future economic benefits are probable and the company has sufficient resources to complete
development. The expenditure capitalized includes the cost of materials, direct labor and an appropriate proportion of overheads. Other development expenditure is recognized in the income statement as an expense as incurred. Capitalized development
expenditure is stated at cost less accumulated amortization (see below) and impairment losses (refer accounting policy P).
Amortization related to
research and development intangible assets is included within the cost of sales if production related and in sales and marketing if related to commercial activities.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are capitalized as part of the cost of such assets.
SUPPLY AND DISTRIBUTION RIGHTS
A supply right is
the right for AB InBev to supply a customer and the commitment by the customer to purchase from AB InBev. A distribution right is the right to sell specified products in a certain territory.
Acquired customer relationships in a business combination are initially recognized at fair value as supply rights, to the extent that they arise from
contractual rights. If the IFRS recognition criteria are not met, these relationships are subsumed under goodwill.
Acquired distribution rights are
measured initially at cost or fair value when obtained through a business combination.
Amortization related to supply and distribution rights is included
within sales and marketing expenses.
BRANDS
If part
of the consideration paid in a business combination relates to trademarks, trade names, formulas, recipes or technological expertise these intangible assets are considered as a group of complementary assets that is referred to as a brand for which
one fair value is determined. Expenditure on internally generated brands is expensed as incurred.
SOFTWARE
Purchased software is measured at cost less accumulated amortization. Expenditure on internally developed software is capitalized when the expenditure
qualifies as development activities; otherwise, it is recognized in the income statement when incurred.
Amortization related to software is included in
cost of sales, distribution expenses, sales and marketing expenses or administrative expenses based on the activity the software supports.
OTHER
INTANGIBLE ASSETS
Other intangible assets, acquired by the company, are recognized at cost less accumulated amortization and impairment losses.
Other intangible assets also include multi-year sponsorship rights acquired by the company. These are initially recognized at the present value of the future
payments and subsequently measured at cost less accumulated amortization and impairment losses.
SUBSEQUENT EXPENDITURE
Subsequent expenditure on capitalized intangible assets is capitalized only when it increases the future economic benefits embodied in the specific asset to
which it relates. All other expenditures are expensed as incurred.
AMORTIZATION
Intangible assets with a finite life are amortized using the straight-line method over their estimated useful lives. Licenses, brewing, supply and distribution
rights are amortized over the period in which the rights exist. Brands are considered to have an indefinite life unless plans exist to discontinue the brand. Discontinuance of a brand can be either through sale or termination of marketing support.
When AB InBev purchases distribution rights for its own products the life of these rights is considered indefinite, unless the company has a plan to discontinue the related brand or distribution. Software and capitalized development cost
related to technology are amortized over 3 to 5 years.
Brands are deemed intangible assets with indefinite useful lives and, therefore, are not amortized
but tested for impairment on an annual basis (refer accounting policy P).
GAINS AND LOSSES ON SALE
Net gains on sale of intangible assets are presented in the income statement as other operating income. Net losses on sale are included as other operating
expenses. Net gains and losses are recognized in the income statement when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs can be estimated reliably,
and there is no continuing managerial involvement with the intangible assets.
(H) |
BUSINESS COMBINATIONS |
The company applies the purchase method of accounting to account for acquisitions
of businesses. The cost of an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred and equity instruments issued. Identifiable assets, liabilities and contingent liabilities
acquired or assumed are measured separately at their fair value as of the acquisition date. The excess of the cost of the acquisition over the companys interest in the fair value of the identifiable net assets acquired is recorded as goodwill.
The allocation of fair values to the identifiable assets acquired and liabilities assumed is based on various assumptions requiring management judgment.
Acquisition-related costs are expensed as incurred.
28
If the business combination is achieved in stages, the acquisition date carrying value of AB InBevs
previously held interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognized in profit or loss.
Goodwill is determined as the excess of the consideration paid over AB InBevs
interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquired subsidiary, jointly controlled entity or associate recognized at the date of acquisition. All business combinations are accounted for
by applying the purchase method.
In conformity with IFRS 3 Business Combinations, goodwill is stated at cost and not amortized but tested for
impairment on an annual basis and whenever there is an indicator that the cash generating unit to which goodwill has been allocated, may be impaired (refer accounting policy P).
Goodwill is expressed in the currency of the subsidiary or jointly controlled entity to which it relates and is translated to US dollar using the year-end
exchange rate.
In respect of associates and joint ventures, the carrying amount of goodwill is included in the carrying amount of the investment in the
associate.
If AB InBevs interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognized exceeds
the cost of the business combination such excess is recognized immediately in the income statement as required by IFRS 3 Business Combinations.
Expenditure on internally generated goodwill is expensed as incurred.
(J) |
PROPERTY, PLANT AND EQUIPMENT |
Property, plant and equipment is measured at cost less accumulated
depreciation and impairment losses (refer accounting policy P). Cost includes the purchase price and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner
intended by management (e.g. nonrefundable tax and transport cost). The cost of a self-constructed asset is determined using the same principles as for an acquired asset. The depreciation methods, residual
value, as well as the useful lives are reassessed and adjusted if appropriate, annually.
Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets are capitalized as part of the cost of such assets.
SUBSEQUENT EXPENDITURE
The company recognizes in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred
if it is probable that the future economic benefits embodied with the item will flow to the company and the cost of the item can be measured reliably. All other costs are expensed as incurred.
DEPRECIATION
The depreciable amount is the cost of an
asset less its residual value. Residual values, if not insignificant, are reassessed annually. Depreciation is calculated from the date the asset is available for use, using the straight-line method over the estimated useful lives of the assets.
The estimated useful lives are defined in terms of the assets expected utility to the company and can vary from one geographical area to another.
On average the estimated useful lives are as follows:
|
|
|
|
|
Industrial buildings other real estate properties |
|
|
20 - 33 years |
|
Production plant and equipment: |
|
|
|
|
Production equipment |
|
|
10 - 15 years |
|
Storage, packaging and handling equipment |
|
|
5 - 7 years |
|
Returnable packaging: |
|
|
|
|
Kegs |
|
|
2 - 10 years |
|
Crates |
|
|
2 - 10 years |
|
Bottles |
|
|
2 - 5 years |
|
Point of sale furniture and equipment |
|
|
5 years |
|
Vehicles |
|
|
5 years |
|
Information processing equipment |
|
|
3 - 5 years |
|
Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items
of property, plant and equipment.
Land is not depreciated as it is deemed to have an indefinite life.
GAINS AND LOSSES ON SALE
Net gains on sale of items of
property, plant and equipment are presented in the income statement as other operating income. Net losses on sale are presented as other operating expenses. Net gains and losses are recognized in the income statement when the significant risks and
rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs can be estimated reliably, and there is no continuing managerial involvement with the property, plant and equipment.
29
(K) |
ACCOUNTING FOR LEASES |
Leases of property, plant and equipment where the company assumes substantially
all the risks and rewards of ownership are classified as finance leases. Finance leases are recognized as assets and liabilities (interest-bearing loans and borrowings) at amounts equal to the lower of the fair value of the leased property and the
present value of the minimum lease payments at inception of the lease. Amortization and impairment testing for depreciable leased assets is the same as for depreciable assets that are owned (refer accounting policies J and P).
Lease payments are apportioned between the outstanding liability and finance charges so as to achieve a constant periodic rate of interest on the remaining
balance of the liability.
Leases of assets under which all the risks and rewards of ownership are substantially retained by the lessor are classified as
operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the term of the lease.
When an
operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognized as an expense in the period in which termination takes place.
All investments are accounted for at trade date.
INVESTMENTS IN EQUITY SECURITIES
Investments in equity
securities are undertakings in which AB InBev does not have significant influence or control. This is generally evidenced by ownership of less than 20% of the voting rights. Such investments are designated as available-for-sale financial assets
which are at initial recognition measured at fair value unless the fair value cannot be reliably determined in which case they are measured at cost. Subsequent changes in fair value, except those related to impairment losses which are recognized in
the income statement, are recognized directly in other comprehensive income.
On disposal of an investment, the cumulative gain or loss previously
recognized directly in other comprehensive income is recognized in profit or loss.
INVESTMENTS IN DEBT SECURITIES
Investments in debt securities classified as trading or as being available-for-sale are carried at fair value, with any resulting gain or loss respectively
recognized in the income statement or directly in other comprehensive income. Fair value of these investments is determined as the quoted bid price at the balance sheet date. Impairment charges and foreign exchange gains and losses are recognized in
the income statement.
Investments in debt securities classified as held to maturity are measured at amortized cost.
In general, investments in debt securities with maturities of more than three months when acquired and remaining maturities of less than one year are
classified as short-term investments. Investments with maturities beyond one year may be classified as short-term based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for
current operations.
OTHER INVESTMENTS
Other
investments held by the company are classified as available-for-sale and are carried at fair value, with any resulting gain or loss recognized directly in other comprehensive income. Impairment charges are recognized in the income statement.
Inventories are valued at the lower of cost and net realizable value. Cost includes
expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. The weighted average method is used in assigning the cost of inventories.
The cost of finished products and work in progress comprises raw materials, other production materials, direct labor, other direct cost and an allocation of
fixed and variable overhead based on normal operating capacity. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated completion and selling costs.
Inventories are written down on a case-by-case basis if the anticipated net realizable value declines below the carrying amount of the inventories. The
calculation of the net realizable value takes into consideration specific characteristics of each inventory category, such as expiration date, remaining shelf life, slow-moving indicators, amongst others.
(N) |
TRADE AND OTHER RECEIVABLES |
Trade and other receivables are carried at amortized cost less impairment
losses. An estimate is made for doubtful receivables based on a review of all outstanding amounts at the balance sheet date.
An allowance for impairment
of trade and other receivables is established if the collection of a receivable becomes doubtful. Such receivable becomes doubtful when there is objective evidence that the company will not be able to collect all amounts due according to the
original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter into bankruptcy or financial reorganization, and default or delinquency in payments are considered indicators that the
receivable is impaired. The amount of the allowance is the difference between the assets carrying amount and the present value of the estimated future cash flows. An impairment loss is recognized in the income statement, as are subsequent
recoveries of previous impairments.
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(O) |
CASH AND CASH EQUIVALENTS |
Cash and cash equivalents include all cash balances and short-term highly
liquid investments with a maturity of three months or less from the date of acquisition that are readily convertible into cash. They are stated at face value, which approximates their fair value. For the purpose of the cash flow statement, cash and
cash equivalents are presented net of bank overdrafts.
The carrying amounts of financial assets, property, plant and equipment, goodwill and
intangible assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the assets recoverable amount is estimated. In addition, goodwill, intangible assets that are
not yet available for use and intangibles with an indefinite useful life are tested for impairment annually at the business unit level (that is one level below a reporting segment). An impairment loss is recognized whenever the carrying amount of an
asset or the related cash-generating unit exceeds its recoverable amount. Impairment losses are recognized in the income statement.
CALCULATION OF
RECOVERABLE AMOUNT
The recoverable amount of the companys investments in unquoted debt securities is calculated as the present value of expected
future cash flows, discounted at the debt securities original effective interest rate. For equity investments classified as available for sale and quoted debt securities the recoverable amount is their fair value.
The recoverable amount of other assets is determined as the higher of their fair value less costs to sell and value in use. For an asset that does not
generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. The recoverable amount of the cash generating units to which the goodwill and the intangible assets with
indefinite useful life belong is based on discounted future cash flows using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. These calculations are corroborated by valuation
multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators.
Impairment losses recognized in respect of
cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit on a pro rata basis.
REVERSAL OF IMPAIRMENT LOSSES
Non-financial assets other
than goodwill and equity investments classified as held for sale that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date. An impairment loss is reversed only to the extent that the assets
carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.
REPURCHASE OF SHARE CAPITAL
When AB InBev buys back its own shares, the amount of the consideration paid, including directly attributable costs, is recognized as a deduction from
equity under treasury shares.
DIVIDENDS
Dividends
are recognized in the consolidated financial statements on the date that the dividends are declared unless minimum statutory dividends are required by local legislation or the bylaws of the companys subsidiaries. In such instances,
statutory minimum dividends are recognized as a liability.
SHARE ISSUANCE COSTS
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Provisions are recognized when (i) the company has a present legal or constructive
obligation as a result of past events, (ii) it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and (iii) a reliable estimate of the amount of the obligation can be made.
Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.
RESTRUCTURING
A provision for restructuring is
recognized when the company has approved a detailed and formal restructuring plan, and the restructuring has either commenced or has been announced publicly. Costs relating to the ongoing activities of the company are not provided for. The provision
includes the benefit commitments in connection with early retirement and redundancy schemes.
ONEROUS CONTRACTS
A provision for onerous contracts is recognized when the expected benefits to be derived by the company from a contract are lower than the unavoidable cost of
meeting its obligations under the contract. Such provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract.
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DISPUTES AND LITIGATIONS
A provision for disputes and litigation is recognized when it is more likely than not that the company will be required to make future payments as a result of
past events, such items may include but are not limited to, several claims, suits and actions both initiated by third parties and initiated by AB InBev relating to antitrust laws, violations of distribution and license agreements, environmental
matters, employment related disputes, claims from tax authorities, and alcohol industry litigation matters.
POST-EMPLOYMENT BENEFITS
Post-employment benefits include pensions, post-employment life insurance and post-employment medical benefits. The company operates a number of defined
benefit and defined contribution plans throughout the world, the assets of which are generally held in separate trustee-managed funds. The pension plans are generally funded by payments from employees and the company, and, for defined benefit plans
taking account of the recommendations of independent actuaries. AB InBev maintains funded and unfunded pension plans.
a) |
Defined contribution plans |
Contributions to defined contribution plans are recognized as an expense in the
income statement when incurred. A defined contribution plan is a pension plan under which AB InBev pays fixed contributions into a fund. AB InBev has no legal or constructive obligations to pay further contributions if the fund does not hold
sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
A defined benefit plan is a pension plan that is not a defined contribution plan.
Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. For defined benefit plans, the pension expenses
are assessed separately for each plan using the projected unit credit method. The projected unit credit method considers each period of service as giving rise to an additional unit of benefit entitlement. Under this method, the cost of providing
pensions is charged to the income statement so as to spread the regular cost over the service lives of employees in accordance with the advice of qualified actuaries who carry out a full valuation of the plans at least every three years. The amounts
charged to the income statement include current service cost, net interest cost (income), past service costs and the effect of any curtailments or settlements. Past service costs are recognized at the earlier of when the amendment / curtailment
occurs or when the company recognizes related restructuring or termination costs. The pension obligations recognized in the balance sheet are measured at the present value of the estimated future cash outflows using interest rates based on high
quality corporate bond yields, which have terms to maturity approximating the terms of the related liability, less the fair value of any plan assets. Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling
(excluding net interest) and the return on plan assets (excluding net interest) are recognized in full in the period in which they occur in the statement of comprehensive income. Re-measurements are not reclassified to profit or loss in subsequent
periods.
Where the calculated amount of a defined benefit liability is negative (an asset), AB InBev recognizes such pension asset to the extent
that economic benefits are available to AB InBev either from refunds or reductions in future contributions.
OTHER POST-EMPLOYMENT OBLIGATIONS
Some AB InBev companies provide post-employment medical benefits to their retirees. The entitlement to these benefits is usually based on the
employee remaining in service up to retirement age. The expected costs of these benefits are accrued over the period of employment, using an accounting methodology similar to that for defined benefit pension plans.
TERMINATION BENEFITS
Termination benefits are recognized
as an expense at the earlier when the company is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to terminate employment before the normal retirement date and when the company recognizes costs for a
restructuring. Termination benefits for voluntary redundancies are recognized if the company has made an offer encouraging voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably.
BONUSES
Bonuses received by company employees and management are based on pre-defined company and individual target achievement. The estimated amount of the bonus is
recognized as an expense in the period the bonus is earned. To the extent that bonuses are settled in shares of the company, they are accounted for as share-based payments.
Different share and share option programs allow company senior management and
members of the board to acquire shares of the company and some of its affiliates. The fair value of the share options is estimated at grant date, using an option pricing model that is most appropriate for the respective option. Based on the expected
number of options that will vest, the fair value of the options granted is expensed over the vesting period. When the options are exercised, equity is increased by the amount of the proceeds received.
(U) |
INTEREST-BEARING LOANS AND BORROWINGS |
Interest-bearing loans and borrowings are recognized initially at
fair value, less attributable transaction costs. Subsequent to initial recognition, interest-bearing loans and borrowings are stated at amortized cost with any difference between the initial amount and the maturity amount being recognized in the
income statement (in accretion expense) over the expected life of the instrument on an effective interest rate basis.
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(V) |
TRADE AND OTHER PAYABLES |
Trade and other payables are recognized initially at fair value and
subsequently measured at amortized cost using the effective interest method.
Income tax on the profit for the year comprises current and deferred tax. Income tax is
recognized in the income statement except to the extent that it relates to items recognized directly in equity, in which case the tax effect is also recognized directly in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted, or substantively enacted, at the balance sheet date, and
any adjustment to tax payable in respect of previous years.
In accordance with IAS 12 Income Taxes deferred taxes are provided using the so-called
balance sheet liability method. This means that, for all taxable and deductible differences between the tax bases of assets and liabilities and their carrying amounts in the balance sheet a deferred tax liability or asset is recognized. Under this
method a provision for deferred taxes is also made for differences between the fair values of assets and liabilities acquired in a business combination and their tax base. IAS 12 prescribes that no deferred taxes are recognized i) on initial
recognition of goodwill, ii) at the initial recognition of assets or liabilities in a transaction that is not a business combination and affects neither accounting nor taxable profit and iii) on differences relating to investments in subsidiaries to
the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using currently or
substantively enacted tax rates.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities
and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realize the assets and
settle the liabilities simultaneously.
The company recognizes deferred tax assets, including assets arising from losses carried forward, to the extent
that future probable taxable profit will be available against which the deferred tax asset can be utilized. A deferred tax asset is reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Tax claims are recorded within provisions on the balance sheet (refer accounting policy R).
Income is recognized when it is probable that the economic benefits associated with
the transaction will flow to the company and the income can be measured reliably.
GOODS SOLD
In relation to the sale of beverages and packaging, revenue is recognized when the significant risks and rewards of ownership have been transferred to the
buyer, and no significant uncertainties remain regarding recovery of the consideration due, associated costs or the possible return of goods, and there is no continuing management involvement with the goods. Revenue from the sale of goods is
measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts, volume rebates, discounts for cash payments and excise taxes.
RENTAL AND ROYALTY INCOME
Rental income is recognized
under other operating income on a straight-line basis over the term of the lease. Royalties arising from the use by others of the companys resources are recognized in other operating income on an accrual basis in accordance with the substance
of the relevant agreement.
GOVERNMENT GRANTS
A
government grant is recognized in the balance sheet initially as deferred income when there is reasonable assurance that it will be received and that the company will comply with the conditions attached to it. Grants that compensate the company for
expenses incurred are recognized as other operating income on a systematic basis in the same periods in which the expenses are incurred. Grants that compensate the company for the acquisition of an asset are presented by deducting them from the
acquisition cost of the related asset in accordance with IAS 20 Accounting for Government Grants and Disclosure of Government Assistance.
FINANCE INCOME
Finance income comprises interest
received or receivable on funds invested, dividend income, foreign exchange gains, losses on currency hedging instruments offsetting currency gains, gains on hedging instruments that are not part of a hedge accounting relationship, gains on
financial assets classified as trading as well as any gains from hedge ineffectiveness (refer accounting policy Z).
Interest income is recognized as it
accrues (taking into account the effective yield on the asset) unless collectability is in doubt.
DIVIDEND INCOME
Dividend income is recognized in the income statement on the date that the dividend is declared.
33
FINANCE COSTS
Finance costs comprise interest payable on borrowings, calculated using the effective interest rate method, foreign exchange losses, gains on currency hedging
instruments offsetting currency losses, results on interest rate hedging instruments, losses on hedging instruments that are not part of a hedge accounting relationship, losses on financial assets classified as trading, impairment losses on
available-for-sale financial assets as well as any losses from hedge ineffectiveness (refer accounting policy Z).
All interest costs incurred in
connection with borrowings or financial transactions are expensed as incurred as part of finance costs. Any difference between the initial amount and the maturity amount of interest bearing loans and borrowings, such as transaction costs and fair
value adjustments, are recognized in the income statement (in accretion expense) over the expected life of the instrument on an effective interest rate basis (refer accounting policy U). The interest expense component of finance lease payments is
also recognized in the income statement using the effective interest rate method.
RESEARCH AND DEVELOPMENT, ADVERTISING AND PROMOTIONAL COSTS AND
SYSTEMS DEVELOPMENT COSTS
Research, advertising and promotional costs are expensed in the year in which these costs are incurred. Development costs
and systems development costs are expensed in the year in which these costs are incurred if they do not meet the criteria for capitalization (refer accounting policy G).
PURCHASING, RECEIVING AND WAREHOUSING COSTS
Purchasing
and receiving costs are included in the cost of sales, as well as the costs of storing and moving raw materials and packaging materials. The costs of storing finished products at the brewery as well as costs incurred for subsequent storage in
distribution centers are included within distribution expenses.
(Z) |
DERIVATIVE FINANCIAL INSTRUMENTS |
AB InBev uses derivative financial instruments to mitigate the
transactional impact of foreign currencies, interest rates, equity prices and commodity prices on the companys performance. AB InBevs financial risk management policy prohibits the use of derivative financial instruments for trading
purposes and the company does therefore not hold or issue any such instruments for such purposes. Derivative financial instruments that are economic hedges but that do not meet the strict IAS 39 Financial Instruments: Recognition and
Measurement hedge accounting rules, however, are accounted for as financial assets or liabilities at fair value through profit or loss.
Derivative
financial instruments are recognized initially at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair
value of derivative financial instruments is either the quoted market price or is calculated using pricing models taking into account current market rates. These pricing models also take into account the current creditworthiness of the
counterparties.
Subsequent to initial recognition, derivative financial instruments are re-measured to their fair value at balance sheet date. Depending
on whether cash flow or net investment hedge accounting is applied or not, any gain or loss is either recognized directly in other comprehensive income or in the income statement.
Cash flow, fair value or net investment hedge accounting is applied to all hedges that qualify for hedge accounting when the required hedge documentation is
in place and when the hedge relation is determined to be effective.
CASH FLOW HEDGE ACCOUNTING
When a derivative financial instrument hedges the variability in cash flows of a recognized asset or liability, the foreign currency risk of a firm commitment
or a highly probable forecasted transaction, the effective part of any resulting gain or loss on the derivative financial instrument is recognized directly in other comprehensive income (hedging reserves). When the firm commitment in foreign
currency or the forecasted transaction results in the recognition of a non-financial asset or a non-financial liability, the cumulative gain or loss is removed from other comprehensive income and included in the initial measurement of the asset or
liability. When the hedge relates to financial assets or liabilities, the cumulative gain or loss on the hedging instrument is reclassified from other comprehensive income into the income statement in the same period during which the hedged risk
affects the income statement (e.g. when the variable interest expense is recognized). The ineffective part of any gain or loss is recognized immediately in the income statement.
When a hedging instrument or hedge relationship is terminated but the hedged transaction is still expected to occur, the cumulative gain or loss (at that
point) remains in equity and is reclassified in accordance with the above policy when the hedged transaction occurs. If the hedged transaction is no longer probable, the cumulative gain or loss recognized in other comprehensive income is
reclassified into the income statement immediately.
FAIR VALUE HEDGE ACCOUNTING
When a derivative financial instrument hedges the variability in fair value of a recognized asset or liability, any resulting gain or loss on the hedging
instrument is recognized in the income statement. The hedged item is also stated at fair value in respect of the risk being hedged, with any gain or loss being recognized in the income statement.
NET INVESTMENT HEDGE ACCOUNTING
When a foreign currency
liability hedges a net investment in a foreign operation, exchange differences arising on the translation of the liability to the functional currency are recognized directly in other comprehensive income (translation reserves).
When a derivative financial instrument hedges a net investment in a foreign operation, the portion of the gain or the loss on the hedging instrument that is
determined to be an effective hedge is recognized directly in other comprehensive income (translation reserves), while the ineffective portion is reported in the income statement.
34
Investments in equity instruments or derivatives linked to and to be settled by delivery of an equity instrument
are stated at cost when such equity instrument does not have a quoted market price in an active market and for which other methods of reasonably estimating fair value are clearly inappropriate or unworkable.
OFFSETTING DERIVATIVE ASSETS WITH DERIVATIVE LIABILITIES
A derivative asset and a derivative liability shall be offset and the net amount presented in the statement of financial position when, and only when, the
company has a currently legally enforceable right to set off the recognized amounts; and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
(AA) SEGMENT REPORTING
Operating segments are components
of the companys business activities about which separate financial information is available that is evaluated regularly by management.
AB InBevs operating segment reporting format is geographical because the companys risks and rates of return are affected predominantly by the
fact that AB InBev operates in different geographical areas. The companys management structure and internal reporting system to the Board of Directors is set up accordingly. A geographical segment is a distinguishable component of the company
that is engaged in providing products or services within a particular economic environment, which is subject to risks and returns that are different from those of other segments. In accordance with IFRS 8 Operating segments
AB InBevs reportable geographical segments were determined as North America, Mexico, Latin America North, Latin America South, Europe, Asia Pacific and Global Export and Holding Companies. The companys assets are predominantly
located in the same geographical areas as its customers.
Segment results, assets and liabilities include items directly attributable to a segment as well
as those that can be allocated on a reasonable basis. Unallocated assets comprise interest bearing loans granted, investment securities, deferred tax assets, income taxes receivable, cash and cash equivalent and derivative assets. Unallocated
liabilities comprise equity and non-controlling interest, interest bearing loans, deferred tax liabilities, bank overdrafts, income taxes payable and derivative liabilities.
Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment, and intangible assets other than goodwill.
(BB) NON-RECURRING ITEMS
Non-recurring items are
those that in managements judgment need to be disclosed by virtue of their size or incidence. Such items are disclosed on the face of the consolidated income statement or separately disclosed in the notes to the financial statements.
Transactions which may give rise to non-recurring items are principally restructuring activities, impairments, gains or losses on disposal of investments and the effect of the accelerated repayment of certain debt facilities.
(CC) DISCONTINUED OPERATIONS AND NON-CURRENT ASSETS HELD FOR SALE
A discontinued operation is a component of the company that either has been disposed of or is classified as held for sale and represents a separate major line
of business or geographical area of operations and is part of a single coordinated plan to dispose of or is a subsidiary acquired exclusively with a view to resale.
AB InBev classifies a non-current asset (or disposal group) as held for sale if its carrying amount will be recovered principally through a sale
transaction rather than through continuing use if all of the conditions of IFRS 5 are met. A disposal group is defined as a group of assets to be disposed of, by sale or otherwise, together as a group in a single transaction, and liabilities
directly associated with those assets that will be transferred. Immediately before classification as held for sale, the company measures the carrying amount of the asset (or all the assets and liabilities in the disposal group) in accordance with
applicable IFRS. Then, on initial classification as held for sale, non-current assets and disposal groups are recognized at the lower of carrying amount and fair value less costs to sell. Impairment losses on initial classification as held for sale
are included in profit or loss. The same applies to gains and losses on subsequent re-measurement. Non-current assets classified as held for sale are no longer depreciated or amortized.
(DD) RECENTLY ISSUED IFRS
To the extent that new IFRS
requirements are expected to be applicable in the future, they have been summarized hereafter. For the year ended 31 December 2014 they have not been applied in preparing these consolidated financial statements.
IFRS 9 Financial Instruments:
IFRS 9 Financial
Instruments is the standard issued as part of a wider project to replace IAS 39. IFRS 9 introduces a logical approach for the classification of financial assets, which is driven by cash flow characteristics and the business model in which an
asset is held; defines a new expected-loss impairment model that will require more timely recognition of expected credit losses; and introduces a substantially-reformed model for hedge accounting, with enhanced disclosures about risk management
activity. The new hedge accounting model represents a significant overhaul of hedge accounting that aligns the accounting treatment with risk management activities. IFRS 9 also removes the volatility in profit or loss that was caused by changes in
the credit risk of liabilities elected to be measured at fair value. IFRS 9 will be effective for annual periods beginning on or after 1 January 2018. Early application is permitted.
IFRS 15 Revenue from Contracts with Customers:
The core principle of the new standard is for companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect
the consideration (that is, payment) to which the company expects to be entitled in exchange for those goods
35
or services. The new standard will also result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively (for example,
service revenue and contract modifications) and improve guidance for multiple-element arrangements. IFRS 15 is effective for an entitys first annual IFRS financial statements for periods beginning on or after 1 January 2017. Early
application is permitted.
Other Standards, Interpretations and Amendments to Standards
A number of other amendments to standards are effective for annual periods beginning after 1 January 2014, and have not been listed above because of
either their non-applicability to or their immateriality to AB InBevs consolidated financial statements.
4. |
USE OF ESTIMATES AND JUDGMENTS |
The preparation of financial statements in conformity with IFRS requires
management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
Although each of its significant accounting policies reflects judgments, assessments or estimates, AB InBev believes that the following accounting
policies reflect the most critical judgments, estimates and assumptions that are important to its business operations and the understanding of its results: business combinations, intangible assets, goodwill, impairment, provisions, share-based
payments, employee benefits and accounting for current and deferred tax.
The fair values of acquired identifiable intangibles are based on an assessment
of future cash flows. Impairment analyses of goodwill and indefinite-lived intangible assets are performed annually and whenever a triggering event has occurred, in order to determine whether the carrying value exceeds the recoverable amount. These
calculations are based on estimates of future cash flows.
The company uses its judgment to select a variety of methods including the discounted cash flow
method and option valuation models and makes assumptions about the fair value of financial instruments that are mainly based on market conditions existing at each balance sheet date.
Actuarial assumptions are established to anticipate future events and are used in calculating pension and other long-term employee benefit expense and
liability. These factors include assumptions with respect to interest rates, rates of increase in health care costs, rates of future compensation increases, turnover rates, and life expectancy.
The company is subject to income tax in numerous jurisdictions. Significant judgment is required in determining the worldwide provision for income tax.
There are some transactions and calculations for which the ultimate tax determination is uncertain. Some subsidiaries within the group are involved in tax audits and local enquiries usually in relation to prior years. Investigations and
negotiations with local tax authorities are ongoing in various jurisdictions at the balance sheet date and, by their nature, these can take considerable time to conclude. In assessing the amount of any income tax provisions to be recognized in the
financial statements, estimation is made of the expected successful settlement of these matters. Estimates of interest and penalties on tax liabilities are also recorded. Where the final outcome of these matters is different from the amounts that
were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period such determination is made.
Judgments made by management in the application of IFRS that have a significant effect on the financial statements and estimates with a significant risk of
material adjustment in the next year are further discussed in the relevant notes hereafter.
In preparing these consolidated financial statements,
the significant judgments made by management in applying the companys accounting policies and the key sources of estimating uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended
31 December 2013, except as for the valuation of the individual assets acquired and liabilities assumed as part of the allocation of the OB purchase price. The company is in the process of finalizing the allocation of the purchase price
to the individual assets acquired and liabilities assumed in compliance with IFRS 3. Following the acquisition of OB, AB InBev is fully consolidating OB in the AB InBev audited financial statements as of 1 April 2014. Detail is provided in Note
6 Acquisitions and disposals of Subsidiaries of these audited consolidated financial statements. Furthermore, effective 1 January 2014, the company ceased the proportional consolidation of certain operations it has in Canada and
started to apply equity reporting as of that date without a material impact on AB InBevs consolidated financial statements.
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Segment information is presented by geographical segments, consistent with the
information that is available and evaluated regularly by the chief operating decision maker. AB InBev operates its business through seven business segments. Regional and operating company management is responsible for managing performance,
underlying risks, and effectiveness of operations. Internally, AB InBevs management uses performance indicators such as normalized profit from operations (normalized EBIT) and normalized EBITDA as measures of segment performance and to make
decisions regarding allocation of resources. These measures are reconciled to segment profit in the tables presented (figures may not add up due to rounding).
Given the transformational nature of the transaction with Grupo Modelo that closed on 4 June 2013, and to facilitate the understanding of AB InBevs
underlying performance, AB InBev has updated its 2013 segment reporting for purposes of result announcement and internal review by senior management. This presentation (referred to as the 2013 Reference base) includes, for comparative
purposes, the results of the Grupo Modelo business as if the combination had taken place on 4 June 2012. Accordingly, the 2013 Reference base presented below includes 12 months of the Grupo Modelo combination.
The 2013 Reference base further reflects updates to the 2013 segment reporting for purposes of result announcement and internal review by senior management to
reflect changes in the Zone presentation of AB InBev that were effective 1 January 2014. The changes include the combination of AB InBevs Western Europe and Central & Eastern Europe Zones into a single Europe Zone, the transfer
of responsibility from Global Export and Holding Companies to the Europe Zone of the companys Spanish operations and the export of Corona to a number of European countries, and the transfer of management responsibility for Cuba to the Zone
Latin America North.
The Grupo Modelo operations are reported according to their geographical presence in the following segments: the Mexico beer and
packaging businesses are reported in the Zone Mexico, the Export business is reported in the Global Export and Holding Companies segment and the sale of Modelo brands by AB InBev affiliates are reported in the respective Zones where these affiliates
operate. The Oriental Brewery (OB) business is reported in the Zone Asia Pacific as from 1 April 2014.
All figures in the tables below
are stated in million US dollar, except volume (million hls), Normalized EBITDA margin (in %) and full time equivalents (FTE in units).
SEGMENT
REPORTING (2013 REFERENCE BASE) NON-AUDITED
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Latin America South |
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|
2013 Refe- rence base |
|
|
2014 |
|
|
2013 Refe- rence base |
|
|
2014 |
|
|
2013 Refe- rence base |
|
|
2014 |
|
2013 Bridge to reported |
|
|
2014 |
|
|
2013 Reported |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Volume |
|
|
121 |
|
|
|
122 |
|
|
|
39 |
|
|
|
38 |
|
|
|
125 |
|
|
|
120 |
|
|
|
37 |
|
|
|
37 |
|
|
|
44 |
|
|
|
47 |
|
|
|
83 |
|
|
|
66 |
|
|
|
10 |
|
|
|
15 |
|
|
|
|
|
(20 |
) |
|
|
459 |
|
|
|
426 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
16 093 |
|
|
|
16 023 |
|
|
|
4 619 |
|
|
|
4 669 |
|
|
|
11 269 |
|
|
|
11 010 |
|
|
|
2 961 |
|
|
|
3 269 |
|
|
|
4 865 |
|
|
|
5 021 |
|
|
|
5 040 |
|
|
|
3 354 |
|
|
|
2 216 |
|
|
|
2 138 |
|
|
|
|
|
(2 288 |
) |
|
|
47 063 |
|
|
|
43 195 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
(6 391 |
) |
|
|
(6 519 |
) |
|
|
(1 374 |
) |
|
|
(1 570 |
) |
|
|
(3 741 |
) |
|
|
(3 576 |
) |
|
|
(1 081 |
) |
|
|
(1 185 |
) |
|
|
(2 081 |
) |
|
|
(2 272 |
) |
|
|
(2 552 |
) |
|
|
(1 885 |
) |
|
|
(1 538 |
) |
|
|
(1 549 |
) |
|
|
|
|
961 |
|
|
|
(18 756 |
) |
|
|
(17 594 |
) |
Distribution expenses |
|
|
(1 324 |
) |
|
|
(1 235 |
) |
|
|
(453 |
) |
|
|
(443 |
) |
|
|
(1 404 |
) |
|
|
(1 351 |
) |
|
|
(290 |
) |
|
|
(309 |
) |
|
|
(477 |
) |
|
|
(503 |
) |
|
|
(434 |
) |
|
|
(302 |
) |
|
|
(175 |
) |
|
|
(143 |
) |
|
|
|
|
225 |
|
|
|
(4 558 |
) |
|
|
(4 061 |
) |
Sales and marketing expenses |
|
|
(2 136 |
) |
|
|
(1 908 |
) |
|
|
(808 |
) |
|
|
(844 |
) |
|
|
(1 253 |
) |
|
|
(1 147 |
) |
|
|
(315 |
) |
|
|
(346 |
) |
|
|
(1 067 |
) |
|
|
(1 066 |
) |
|
|
(1 227 |
) |
|
|
(833 |
) |
|
|
(230 |
) |
|
|
(194 |
) |
|
|
|
|
380 |
|
|
|
(7 036 |
) |
|
|
(5 958 |
) |
Administrative expenses |
|
|
(473 |
) |
|
|
(497 |
) |
|
|
(430 |
) |
|
|
(455 |
) |
|
|
(581 |
) |
|
|
(591 |
) |
|
|
(106 |
) |
|
|
(112 |
) |
|
|
(362 |
) |
|
|
(364 |
) |
|
|
(400 |
) |
|
|
(317 |
) |
|
|
(440 |
) |
|
|
(430 |
) |
|
|
|
|
227 |
|
|
|
(2 791 |
) |
|
|
(2 539 |
) |
Other operating income/(expenses) |
|
|
299 |
|
|
|
67 |
|
|
|
237 |
|
|
|
200 |
|
|
|
689 |
|
|
|
807 |
|
|
|
5 |
|
|
|
(5 |
) |
|
|
28 |
|
|
|
32 |
|
|
|
90 |
|
|
|
109 |
|
|
|
39 |
|
|
|
52 |
|
|
|
|
|
(102 |
) |
|
|
1 386 |
|
|
|
1 160 |
|
Normalized profit from operations (EBIT) |
|
|
6 068 |
|
|
|
5 932 |
|
|
|
1 791 |
|
|
|
1 557 |
|
|
|
4 979 |
|
|
|
5 151 |
|
|
|
1 175 |
|
|
|
1 311 |
|
|
|
906 |
|
|
|
849 |
|
|
|
517 |
|
|
|
127 |
|
|
|
(128 |
) |
|
|
(126 |
) |
|
|
|
|
(598 |
) |
|
|
15 308 |
|
|
|
14 203 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, amortization and impairment |
|
|
(752 |
) |
|
|
(796 |
) |
|
|
(395 |
) |
|
|
(383 |
) |
|
|
(763 |
) |
|
|
(707 |
) |
|
|
(177 |
) |
|
|
(180 |
) |
|
|
(437 |
) |
|
|
(492 |
) |
|
|
(550 |
) |
|
|
(419 |
) |
|
|
(161 |
) |
|
|
(166 |
) |
|
|
|
|
158 |
|
|
|
(3 234 |
) |
|
|
(2 985 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Normalized EBITDA |
|
|
6 820 |
|
|
|
6 728 |
|
|
|
2 186 |
|
|
|
1 940 |
|
|
|
5 742 |
|
|
|
5 858 |
|
|
|
1 352 |
|
|
|
1 491 |
|
|
|
1 343 |
|
|
|
1 341 |
|
|
|
1 067 |
|
|
|
546 |
|
|
|
33 |
|
|
|
40 |
|
|
|
|
|
(755 |
) |
|
|
18 542 |
|
|
|
17 188 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Normalized EBITDA margin |
|
|
42.4 |
% |
|
|
42.0 |
% |
|
|
47.3 |
% |
|
|
41.5 |
% |
|
|
51.0 |
% |
|
|
53.2 |
% |
|
|
45.6 |
% |
|
|
45.6 |
% |
|
|
27.6 |
% |
|
|
26.7 |
% |
|
|
21.2 |
% |
|
|
16.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39.4 |
% |
|
|
39.8 |
% |
SEGMENT REPORTING (2013 REPORTED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
|
Mexico |
|
|
Latin America North |
|
|
Latin America South |
|
|
Europe |
|
|
Asia Pacific |
|
|
Global Export and Holding Companies |
|
|
Consolidated |
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Volume |
|
|
121 |
|
|
|
122 |
|
|
|
39 |
|
|
|
22 |
|
|
|
125 |
|
|
|
120 |
|
|
|
37 |
|
|
|
37 |
|
|
|
44 |
|
|
|
46 |
|
|
|
83 |
|
|
|
66 |
|
|
|
10 |
|
|
|
12 |
|
|
|
459 |
|
|
|
426 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
16 093 |
|
|
|
16 023 |
|
|
|
4 619 |
|
|
|
2 769 |
|
|
|
11 269 |
|
|
|
11 010 |
|
|
|
2 961 |
|
|
|
3 269 |
|
|
|
4 865 |
|
|
|
4 932 |
|
|
|
5 040 |
|
|
|
3 354 |
|
|
|
2 216 |
|
|
|
1 839 |
|
|
|
47 063 |
|
|
|
43 195 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
(6 391 |
) |
|
|
(6 519 |
) |
|
|
(1 374 |
) |
|
|
(869 |
) |
|
|
(3 741 |
) |
|
|
(3 576 |
) |
|
|
(1 081 |
) |
|
|
(1 185 |
) |
|
|
(2 081 |
) |
|
|
(2 238 |
) |
|
|
(2 552 |
) |
|
|
(1 885 |
) |
|
|
(1 538 |
) |
|
|
(1 323 |
) |
|
|
(18 756 |
) |
|
|
(17 594 |
) |
Distribution expenses |
|
|
(1 324 |
) |
|
|
(1 235 |
) |
|
|
(453 |
) |
|
|
(232 |
) |
|
|
(1 404 |
) |
|
|
(1 351 |
) |
|
|
(290 |
) |
|
|
(309 |
) |
|
|
(477 |
) |
|
|
(497 |
) |
|
|
(434 |
) |
|
|
(302 |
) |
|
|
(175 |
) |
|
|
(135 |
) |
|
|
(4 558 |
) |
|
|
(4 061 |
) |
Sales and marketing expenses |
|
|
(2 136 |
) |
|
|
(1 908 |
) |
|
|
(808 |
) |
|
|
(484 |
) |
|
|
(1 253 |
) |
|
|
(1 147 |
) |
|
|
(315 |
) |
|
|
(346 |
) |
|
|
(1 067 |
) |
|
|
(1 049 |
) |
|
|
(1 227 |
) |
|
|
(833 |
) |
|
|
(230 |
) |
|
|
(191 |
) |
|
|
(7 036 |
) |
|
|
(5 958 |
) |
Administrative expenses |
|
|
(473 |
) |
|
|
(497 |
) |
|
|
(430 |
) |
|
|
(234 |
) |
|
|
(581 |
) |
|
|
(592 |
) |
|
|
(106 |
) |
|
|
(112 |
) |
|
|
(362 |
) |
|
|
(359 |
) |
|
|
(400 |
) |
|
|
(317 |
) |
|
|
(440 |
) |
|
|
(429 |
) |
|
|
(2 791 |
) |
|
|
(2 539 |
) |
Other operating income/(expenses) |
|
|
299 |
|
|
|
67 |
|
|
|
237 |
|
|
|
104 |
|
|
|
689 |
|
|
|
807 |
|
|
|
5 |
|
|
|
(5 |
) |
|
|
28 |
|
|
|
30 |
|
|
|
90 |
|
|
|
109 |
|
|
|
39 |
|
|
|
48 |
|
|
|
1 386 |
|
|
|
1 160 |
|
Normalized profit from operations (EBIT) |
|
|
6 068 |
|
|
|
5 932 |
|
|
|
1 791 |
|
|
|
1 054 |
|
|
|
4 979 |
|
|
|
5 151 |
|
|
|
1 175 |
|
|
|
1 311 |
|
|
|
906 |
|
|
|
819 |
|
|
|
517 |
|
|
|
127 |
|
|
|
(128 |
) |
|
|
(191 |
) |
|
|
15 308 |
|
|
|
14 203 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-recurring items (refer Note 8) |
|
|
(5 |
) |
|
|
(5 |
) |
|
|
(105 |
) |
|
|
(54 |
) |
|
|
(21 |
) |
|
|
(6 |
) |
|
|
(12 |
) |
|
|
(5 |
) |
|
|
(132 |
) |
|
|
(37 |
) |
|
|
(85 |
) |
|
|
(26 |
) |
|
|
165 |
|
|
|
6 372 |
|
|
|
(197 |
) |
|
|
6 240 |
|
Profit from operations (EBIT) |
|
|
6 063 |
|
|
|
5 927 |
|
|
|
1 685 |
|
|
|
1 000 |
|
|
|
4 957 |
|
|
|
5 145 |
|
|
|
1 163 |
|
|
|
1 306 |
|
|
|
774 |
|
|
|
782 |
|
|
|
432 |
|
|
|
101 |
|
|
|
37 |
|
|
|
6 181 |
|
|
|
15 111 |
|
|
|
20 443 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net finance (cost)/income |
|
|
(403 |
) |
|
|
(494 |
) |
|
|
(1 371 |
) |
|
|
(1 059 |
) |
|
|
(414 |
) |
|
|
(418 |
) |
|
|
(230 |
) |
|
|
(317 |
) |
|
|
(704 |
) |
|
|
(672 |
) |
|
|
(24 |
) |
|
|
8 |
|
|
|
1 826 |
|
|
|
749 |
|
|
|
(1 319 |
) |
|
|
(2 203 |
) |
Share of result of associates |
|
|
6 |
|
|
|
278 |
|
|
|
(2 |
) |
|
|
11 |
|
|
|
5 |
|
|
|
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9 |
|
|
|
294 |
|
Profit/(loss) before tax |
|
|
5 666 |
|
|
|
5 710 |
|
|
|
312 |
|
|
|
(47 |
) |
|
|
4 548 |
|
|
|
4 732 |
|
|
|
933 |
|
|
|
989 |
|
|
|
70 |
|
|
|
111 |
|
|
|
408 |
|
|
|
109 |
|
|
|
1 864 |
|
|
|
6 930 |
|
|
|
13 801 |
|
|
|
18 534 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
(1 402 |
) |
|
|
(1 216 |
) |
|
|
(362 |
) |
|
|
(112 |
) |
|
|
(360 |
) |
|
|
(397 |
) |
|
|
(311 |
) |
|
|
(457 |
) |
|
|
(71 |
) |
|
|
37 |
|
|
|
(142 |
) |
|
|
(53 |
) |
|
|
148 |
|
|
|
181 |
|
|
|
(2 499 |
) |
|
|
(2 016 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) |
|
|
4 264 |
|
|
|
4 495 |
|
|
|
(49 |
) |
|
|
(159 |
) |
|
|
4 188 |
|
|
|
4 335 |
|
|
|
622 |
|
|
|
532 |
|
|
|
(1 |
) |
|
|
148 |
|
|
|
266 |
|
|
|
56 |
|
|
|
2 012 |
|
|
|
7 112 |
|
|
|
11 302 |
|
|
|
16 518 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Normalized EBITDA |
|
|
6 820 |
|
|
|
6 728 |
|
|
|
2 186 |
|
|
|
1 281 |
|
|
|
5 742 |
|
|
|
5 858 |
|
|
|
1 352 |
|
|
|
1 491 |
|
|
|
1 343 |
|
|
|
1 311 |
|
|
|
1 067 |
|
|
|
546 |
|
|
|
33 |
|
|
|
(25 |
) |
|
|
18 542 |
|
|
|
17 188 |
|
Non-recurring items (including impairment) |
|
|
(5 |
) |
|
|
(5 |
) |
|
|
(105 |
) |
|
|
(54 |
) |
|
|
(21 |
) |
|
|
(6 |
) |
|
|
(12 |
) |
|
|
(5 |
) |
|
|
(132 |
) |
|
|
(37 |
) |
|
|
(85 |
) |
|
|
(26 |
) |
|
|
165 |
|
|
|
6 372 |
|
|
|
(197 |
) |
|
|
6 240 |
|
Depreciation, amortization and impairment |
|
|
(752 |
) |
|
|
(796 |
) |
|
|
(395 |
) |
|
|
(226 |
) |
|
|
(764 |
) |
|
|
(707 |
) |
|
|
(177 |
) |
|
|
(180 |
) |
|
|
(437 |
) |
|
|
(491 |
) |
|
|
(550 |
) |
|
|
(419 |
) |
|
|
(161 |
) |
|
|
(165 |
) |
|
|
(3 234 |
) |
|
|
(2 985 |
) |
Net finance (cost)/income |
|
|
(403 |
) |
|
|
(494 |
) |
|
|
(1 371 |
) |
|
|
(1 059 |
) |
|
|
(414 |
) |
|
|
(418 |
) |
|
|
(230 |
) |
|
|
(317 |
) |
|
|
(704 |
) |
|
|
(672 |
) |
|
|
(24 |
) |
|
|
8 |
|
|
|
1 826 |
|
|
|
749 |
|
|
|
(1 319 |
) |
|
|
(2 203 |
) |
Share of results of associates |
|
|
6 |
|
|
|
278 |
|
|
|
(2 |
) |
|
|
11 |
|
|
|
5 |
|
|
|
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9 |
|
|
|
294 |
|
Income tax expense |
|
|
(1 402 |
) |
|
|
(1 216 |
) |
|
|
(362 |
) |
|
|
(112 |
) |
|
|
(360 |
) |
|
|
(397 |
) |
|
|
(311 |
) |
|
|
(457 |
) |
|
|
(71 |
) |
|
|
37 |
|
|
|
(142 |
) |
|
|
(53 |
) |
|
|
148 |
|
|
|
181 |
|
|
|
(2 499 |
) |
|
|
(2 016 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) |
|
|
4 264 |
|
|
|
4 495 |
|
|
|
(49 |
) |
|
|
(159 |
) |
|
|
4 188 |
|
|
|
4 335 |
|
|
|
622 |
|
|
|
532 |
|
|
|
(1 |
) |
|
|
148 |
|
|
|
266 |
|
|
|
56 |
|
|
|
2 012 |
|
|
|
7 112 |
|
|
|
11 302 |
|
|
|
16 518 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Normalized EBITDA margin % |
|
|
42.4 |
% |
|
|
42.0 |
% |
|
|
47.3 |
% |
|
|
46.3 |
% |
|
|
51.0 |
% |
|
|
53.2 |
% |
|
|
45.6 |
% |
|
|
45.6 |
% |
|
|
27.6 |
% |
|
|
26.6 |
% |
|
|
21.2 |
% |
|
|
16.3 |
% |
|
|
|
|
|
|
|
|
|
|
39.4 |
% |
|
|
39.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets |
|
|
63 921 |
|
|
|
64 639 |
|
|
|
28 918 |
|
|
|
30 259 |
|
|
|
16 538 |
|
|
|
17 541 |
|
|
|
3 508 |
|
|
|
3 483 |
|
|
|
7 210 |
|
|
|
8 359 |
|
|
|
13 921 |
|
|
|
6 246 |
|
|
|
5 728 |
|
|
|
4 242 |
|
|
|
139 743 |
|
|
|
134 769 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intersegment elimination |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8 338 |
) |
|
|
(5 171 |
) |
Non-segmented assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11 145 |
|
|
|
12 068 |
|
Total assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
142 550 |
|
|
|
141 666 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment liabilities |
|
|
6 321 |
|
|
|
6 690 |
|
|
|
5 513 |
|
|
|
3 653 |
|
|
|
6 778 |
|
|
|
5 783 |
|
|
|
1 465 |
|
|
|
1 228 |
|
|
|
4 842 |
|
|
|
4 812 |
|
|
|
4 018 |
|
|
|
2 996 |
|
|
|
2 958 |
|
|
|
3 133 |
|
|
|
31 894 |
|
|
|
28 293 |
|
Intersegment elimination |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8 338 |
) |
|
|
(5 171 |
) |
Non-segmented items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
118 994 |
|
|
|
118 544 |
|
Total equity and liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
142 550 |
|
|
|
141 666 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross capex |
|
|
542 |
|
|
|
588 |
|
|
|
439 |
|
|
|
202 |
|
|
|
1 464 |
|
|
|
1 415 |
|
|
|
385 |
|
|
|
299 |
|
|
|
445 |
|
|
|
434 |
|
|
|
987 |
|
|
|
817 |
|
|
|
80 |
|
|
|
84 |
|
|
|
4 342 |
|
|
|
3 839 |
|
Addition to/(reversal of) provisions |
|
|
90 |
|
|
|
8 |
|
|
|
16 |
|
|
|
(1 |
) |
|
|
139 |
|
|
|
188 |
|
|
|
7 |
|
|
|
1 |
|
|
|
15 |
|
|
|
31 |
|
|
|
34 |
|
|
|
11 |
|
|
|
(2 |
) |
|
|
(19 |
) |
|
|
300 |
|
|
|
219 |
|
FTE |
|
|
15 348 |
|
|
|
16 852 |
|
|
|
30 927 |
|
|
|
34 203 |
|
|
|
38 381 |
|
|
|
38 338 |
|
|
|
10 872 |
|
|
|
10 482 |
|
|
|
13 865 |
|
|
|
15 096 |
|
|
|
42 727 |
|
|
|
37 680 |
|
|
|
1 910 |
|
|
|
1 936 |
|
|
|
154 029 |
|
|
|
154 587 |
|
38
Net revenue from the beer business amounted to 43 116m US dollar while the net revenue from the non-beer business
(soft drinks and other business) accounted for 3 947m US dollar.
Net revenue from external customers attributable to AB InBevs country of domicile
(Belgium) and non-current assets located in the country of domicile represented 896m US dollar and 1 176m US dollar, respectively.
6. |
ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES |
The table below summarizes the impact of acquisitions on the
Statement of financial position and cash flows of AB InBev for 31 December 2014 and 2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 Acquisitions |
|
|
2013 Acquisitions |
|
|
2014 Disposal |
|
|
2013 Disposal |
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
947 |
|
|
|
4 818 |
|
|
|
|
|
|
|
|
|
Intangible assets |
|
|
1 255 |
|
|
|
5 068 |
|
|
|
|
|
|
|
|
|
Investment in subsidiaries |
|
|
|
|
|
|
44 |
|
|
|
|
|
|
|
|
|
Investment in associates |
|
|
|
|
|
|
75 |
|
|
|
|
|
|
|
|
|
Investment securities |
|
|
|
|
|
|
19 |
|
|
|
|
|
|
|
|
|
Trade and other receivables |
|
|
47 |
|
|
|
65 |
|
|
|
|
|
|
|
|
|
Deferred tax assets |
|
|
56 |
|
|
|
14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventories |
|
|
113 |
|
|
|
605 |
|
|
|
|
|
|
|
|
|
Income tax receivable |
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
|
|
Trade and other receivables |
|
|
323 |
|
|
|
676 |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
257 |
|
|
|
2 674 |
|
|
|
|
|
|
|
|
|
Assets held for sale |
|
|
|
|
|
|
5 385 |
|
|
|
(365 |
) |
|
|
|
|
|
|
|
|
|
Non-controlling interest |
|
|
|
|
|
|
(11 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing loans and borrowings |
|
|
(513 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other payables |
|
|
(187 |
) |
|
|
(566 |
) |
|
|
|
|
|
|
|
|
Employee benefits |
|
|
(31 |
) |
|
|
(256 |
) |
|
|
|
|
|
|
|
|
Provisions |
|
|
|
|
|
|
(21 |
) |
|
|
|
|
|
|
|
|
Deferred tax liabilities |
|
|
(306 |
) |
|
|
(1 157 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank overdraft |
|
|
(3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing loans and borrowings |
|
|
(96 |
) |
|
|
(68 |
) |
|
|
|
|
|
|
|
|
Income tax payable |
|
|
(107 |
) |
|
|
(1 502 |
) |
|
|
|
|
|
|
|
|
Trade and other payables |
|
|
(853 |
) |
|
|
(1 258 |
) |
|
|
|
|
|
|
|
|
Provisions |
|
|
|
|
|
|
(17 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net identifiable assets and liabilities |
|
|
902 |
|
|
|
14 588 |
|
|
|
(365 |
) |
|
|
|
|
|
|
|
|
|
Goodwill on acquisitions |
|
|
5 307 |
|
|
|
19 988 |
|
|
|
|
|
|
|
|
|
Loss/(gain) on disposal |
|
|
|
|
|
|
|
|
|
|
(196 |
) |
|
|
(42 |
) |
Acquisition-date fair value of the previously held equity interest |
|
|
|
|
|
|
(12 946 |
) |
|
|
|
|
|
|
|
|
Shareholdings increases |
|
|
|
|
|
|
(11 |
) |
|
|
|
|
|
|
|
|
Consideration to be paid |
|
|
|
|
|
|
(1 509 |
) |
|
|
52 |
|
|
|
|
|
Net cash paid on prior years acquisitions |
|
|
1 021 |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consideration paid/(received), satisfied in cash |
|
|
7 226 |
|
|
|
20 113 |
|
|
|
(509 |
) |
|
|
(42 |
) |
|
|
|
|
|
Cash (acquired)/ disposed of |
|
|
(254 |
) |
|
|
(2 674 |
) |
|
|
24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash outflow / (inflow) |
|
|
6 976 |
|
|
|
17 439 |
|
|
|
(485 |
) |
|
|
(42 |
) |
2014 ACQUISITIONS
The following transactions took place in 2014:
Oriental
Brewery acquisition
On 1 April 2014, AB InBev completed the acquisition of OB, the leading brewer in South Korea. The acquisition returned OB to
the AB InBev portfolio, after AB InBev sold the company in July 2009, following the combination of InBev and Anheuser-Busch, in support of the companys deleveraging commitment.
The enterprise value for the transaction was 5.8 billion US dollar, and as a result of an agreement entered into in 2009, AB InBev also received approximately
320m US dollar in cash at closing from this transaction, subject to closing adjustments according to the terms of the transaction.
AB InBev financed the
transactions with the issuance of bonds during the first half of 2014.
Transaction costs for the combination approximated 0.1 billion US dollar and were
reported as incurred in the non-recurring expenses in 2014.
39
The company is in the process of finalizing the allocation of the purchase price to the individual assets
acquired and liabilities assumed in compliance with IFRS 3. The provisional allocation of the purchase price included in the balance sheet and detailed in the table below is based on the current best estimates of AB InBevs management with
input from independent third parties. The completion of the purchase price allocation may result in further adjustment to the carrying value of OBs recorded assets and liabilities and the determination of any residual amount that will be
allocated to goodwill.
The following table presents the provisional allocation of purchase price to the OB business:
|
|
|
|
|
|
|
|
|
|
|
|
|
Million US dollar |
|
Before Purchase Price Allocation |
|
|
Purchase Price Allocation |
|
|
After Purchase Price Allocation |
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
729 |
|
|
|
5 |
|
|
|
734 |
|
Goodwill |
|
|
1 128 |
|
|
|
(1 128 |
) |
|
|
|
|
Intangible assets |
|
|
313 |
|
|
|
797 |
|
|
|
1 110 |
|
Trade and other receivables |
|
|
47 |
|
|
|
|
|
|
|
47 |
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
Inventories |
|
|
95 |
|
|
|
|
|
|
|
95 |
|
Trade and other receivables |
|
|
272 |
|
|
|
(2 |
) |
|
|
270 |
|
Cash and cash equivalent |
|
|
245 |
|
|
|
|
|
|
|
245 |
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing loans and borrowings |
|
|
(499 |
) |
|
|
|
|
|
|
(499 |
) |
Employee benefits |
|
|
(27 |
) |
|
|
(4 |
) |
|
|
(31 |
) |
Deferred tax liabilities |
|
|
(92 |
) |
|
|
(192 |
) |
|
|
(284 |
) |
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing loans and borrowings |
|
|
(7 |
) |
|
|
|
|
|
|
(7 |
) |
Income tax payable |
|
|
(94 |
) |
|
|
|
|
|
|
(94 |
) |
Trade and other payables |
|
|
(523 |
) |
|
|
(165 |
) |
|
|
(688 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net identified assets and liabilities |
|
|
1 587 |
|
|
|
(689 |
) |
|
|
898 |
|
|
|
|
|
Goodwill on acquisition |
|
|
|
|
|
|
|
|
|
|
4 298 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets acquired |
|
|
|
|
|
|
|
|
|
|
5 196 |
|
|
|
|
|
Consideration paid (enterprise value minus net debt) |
|
|
|
|
|
|
|
|
|
|
5 519 |
|
Cash received as part of the operation |
|
|
|
|
|
|
|
|
|
|
(323 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net consideration paid, satisfied in cash |
|
|
|
|
|
|
|
|
|
|
5 196 |
|
|
|
|
|
Cash and cash equivalent acquired |
|
|
|
|
|
|
|
|
|
|
(245 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash outflow |
|
|
|
|
|
|
|
|
|
|
4 951 |
|
The transaction resulted in 4.3 billion US dollar of goodwill provisionally allocated primarily to the South Korean business.
The factors that contributed to the recognition of goodwill include the acquisition of an assembled workforce and expected improved efficiencies through best-practice sharing. Goodwill also arises due to the recognition of deferred tax liabilities
in relation to the preliminary fair value adjustments on acquired intangible assets. None of the goodwill recognized is deductible for tax purposes.
The
valuation of the property, plant and equipment, intangible assets, employee benefits and other assets and liabilities are based on the current best estimates of AB InBevs management, with input from independent third parties.
The majority of the intangible asset valuation relates to brands with indefinite life. The valuation of the brands with indefinite life is based on a series
of factors, including the brand history, the operating plan and the countries in which the brands are sold. The intangibles with an indefinite life mainly include the Cass brand family and have been fair valued for a total amount of 1.1 billion US
dollar.
A deferred tax liability has been accrued on most fair value adjustments considering a tax rate of 24.2%.
As of 1 April 2014, the completion date of the transaction, OB contributed 1 142m US dollar to the revenue and 206m US dollar to the profit of AB InBev.
If the acquisition date had been 1 January 2014 it is estimated that AB InBevs unaudited combined revenue, profit from operations and profit would have been higher by 318m US dollar, 99m US dollar, and 70m US dollar, respectively. The
unaudited combined results do not include any anticipated cost savings or other effects of the planned integration of OB. Accordingly, such amounts are not necessarily indicative of the results if the combination had occurred on 1 January 2014
or that may result in the future.
Other 2014 acquisitions
In 2014, AB InBev completed the acquisition of the Siping Ginsber Draft Beer Co., Ltd. (Ginsber), which owns the Ginsber brand, as well as it
completed a transaction to acquire three breweries in China. The aggregate purchase price of such acquisitions was approximately 868m US dollar. The acquired business had an immaterial impact on profit in 2014. The company is in the process of
finalizing the allocation of the purchase price to the individual assets acquired and liabilities assumed in compliance with IFRS 3.
During 2014, AB
InBev also acquired the Blue Point brewery (Long Island), 10 Barrel Brewing in the northwest of the United States and two wholesalers in Kentucky and Oregon. The acquired businesses had an immaterial impact on profit in 2014. The company is in
the process of finalizing the allocation of the purchase price to the individual assets acquired and liabilities assumed in compliance with IFRS 3.
40
During 2014, AB InBev purchased 1 046m US dollar Grupo Modelos shares through the Trust established on
4 June 2013, to accept further tender of shares by Grupo Modelo shareholders over a period of up to 25 months. By 31 December 2014, AB InBev owned approximately 99% of Grupo Modelos outstanding shares.
During 2014, AB InBev paid 1m US dollar to former Anheuser-Busch shareholders (3m US dollar in 2013). Additionally, 3m US dollar were remitted to U.S. states
through an escheatment process, whereby the states become the owner of unclaimed amounts after a period of time specified by the state law. By 31 December 2014, 4m US dollar consideration remains payable to former Anheuser-Busch shareholders
whom did not yet claim the proceeds. This payable is recognized as a deferred consideration on acquisitions.
2013 ACQUISITIONS
The following transactions took place in 2013:
Combination
with Grupo Modelo
On 4 June 2013, AB InBev completed the combination with Grupo Modelo pursuant to the Transaction agreement between AB InBev and
Grupo Modelo S.A.B de CV announced on 29 June 2012.
The combination was completed through a series of steps that simplified Grupo Modelos
corporate structure, followed by an all-cash tender offer by AB InBev for all outstanding Grupo Modelo shares that it did not own at that time for 9.15 US dollar per share, in a transaction valued at 20.1 billion US dollar. By 4 June 2013 and
following the settlement of the tender offer AB InBev owned approximately 95% of Grupo Modelos outstanding shares. On 4 June 2013, AB InBev established and funded a Trust that will accept further tender of shares by Grupo Modelo
shareholders at a price of 9.15 US dollar per share over a period of up to 25 months, during which time Grupo Modelo will continue to be quoted on the Mexican stock exchange. As of 31 December 2014, AB InBev owned approximately 99% of Grupo
Modelos outstanding shares and 0.5 billion US dollar is deposited with the Trust and are reported in these audited financial statements as restricted cash. AB InBev recognized a liability for the Grupo Modelo shares it did not acquire by
31 December 2014 (see also Note 20 Cash and cash equivalents and Note 26 Trade and other payables).
The transaction resulted in 19.6
billion US dollar of goodwill allocated primarily to the Mexico business. The majority of the intangible asset valuation related to brands with indefinite life. These mainly include the Corona brand family, the Modelo brand family and the Victoria
brand family and have been fair valued for a total amount of 4.5 billion US dollar.
A deferred tax liability has been accrued on most fair value
adjustments considering a tax rate of 30%.
On 7 June 2013, in a transaction related to the combination of AB InBev and Grupo Modelo, Grupo Modelo
completed the sale of its US business to Constellation Brands, Inc. (Constellation). The transaction included the sale of Grupo Modelos 50% stake in Crown Imports for a total consideration of 1.845 billion US dollar and the sale of
the Grupo Modelos Piedras Negras brewery and perpetual rights to Grupo Modelos brands distributed by Crown in the US for 2.9 billion US dollar, subject to a post-closing adjustment estimated at 558m US dollar and collected in 2014. These
assets were recognized as assets held for sale at their after tax net realizable value in the opening balance sheet.
AB InBev and Constellation have
established a three-year transition services agreement to ensure the smooth transition of the operations of the Piedras Negras brewery. A temporary supply agreement has also been negotiated as part of the acquisition agreements whereby Constellation
can purchase for an initial three-year term inventory from AB InBev under a specified pricing while the Piedras Negras brewery business acquires the necessary capacity to fulfill 100 percent of the US demand. As part of the opening balance sheet AB
InBev recognized a liability for prepaid discounts related to the temporary supply agreement. The prepaid discount will be amortized in the consolidated income statement in line with volumes sold to Constellation.
Other 2013 acquisitions
On 27 April 2013, AB InBev
completed a transaction to acquire four breweries in China with a total capacity of approximately 9 million hectoliters. The aggregated purchase price was approximately 439m US dollar.
During 2013, Ambev acquired different distributors in Brazil for a total consideration of 47m US dollar and 0.92% additional stake in Cervecería
Nacional Dominicana S.A. (CND) for a total consideration of 22m US dollar, as part of the 2012 transaction in which Ambev acquired a controlling interest in CND.
During 2013, AB InBev paid 3m US dollar to former Anheuser-Busch shareholders (14m
US dollar in 2012). By 31 December 2013, 8m US dollar consideration remained payable to former Anheuser-Busch shareholders whom did not yet claim the proceeds. This payable was recognized as a deferred consideration on acquisitions.
2014 DISPOSALS
During 2014, AB InBev collected 197m US
dollar proceeds from prior years sale of the Central European operations to CVC Capital Partners.
During 2014, AB InBev sold its investment
in the company Comercio y Distribución Modelo (Extra) and AB InBev completed the sale of its glass production plant and other assets located in Piedras Negras, Coahuila, Mexico, to affiliates of Constellation Brands Inc. The
result of such sales was recorded as a non-recurring item see note 8 Non-recurring items.
2013 DISPOSALS
During 2013, AB InBev collected 42m US dollar proceeds from prior years sale of the Central European operations to CVC Capital Partners.
41
7. |
OTHER OPERATING INCOME/(EXPENSES) |
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
2013 |
|
|
|
|
Government grants |
|
|
697 |
|
|
|
614 |
|
License income |
|
|
123 |
|
|
|
125 |
|
Net (additions to)/reversals of provisions |
|
|
(10 |
) |
|
|
(31 |
) |
Net gain on disposal of property, plant and equipment, intangible assets and assets held for sale |
|
|
5 |
|
|
|
32 |
|
Net rental and other operating income |
|
|
573 |
|
|
|
420 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1 387 |
|
|
|
1 160 |
|
|
|
|
Research expenses as incurred |
|
|
217 |
|
|
|
185 |
|
The government grants relate primarily to fiscal incentives given by certain Brazilian states and Chinese provinces, based on
the companys operations and developments in those regions.
Net rental and other operating income increased from 420m US dollar in 2013 to 573m US
dollar in 2014. This increase results mainly from a one-time positive accounting adjustment of 223m US dollar, following an actuarial reassessment of future liabilities under the companys post-retirement healthcare benefit plans in the US.
In 2014, the company expensed 217m US dollar in research, compared to 185m US dollar in 2013. Part of this was expensed in the area of market
research, but the majority is related to innovation in the areas of process optimization especially as it pertains to capacity, new product developments and packaging initiatives.
IAS 1 Presentation of financial statements requires material items of income
and expense to be disclosed separately. Non-recurring items are items, which in managements judgment, need to be disclosed by virtue of their size or incidence in order for the user to obtain a proper understanding of the financial
information. The company considers these items to be of significance in nature, and accordingly, management has excluded these from their segment measure of performance as noted in Note 5 Segment Reporting.
The non-recurring items included in the income statement are as follows:
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
2013 |
|
|
|
|
Restructuring (including impairment losses) |
|
|
(277 |
) |
|
|
(118 |
) |
Fair value adjustments |
|
|
|
|
|
|
6 410 |
|
Acquisition costs business combinations |
|
|
(77 |
) |
|
|
(82 |
) |
Business and asset disposal (including impairment losses) |
|
|
157 |
|
|
|
30 |
|
|
|
|
|
|
|
|
|
|
Impact on profit from operations |
|
|
(197 |
) |
|
|
6 240 |
|
|
|
|
Non-recurring net finance cost |
|
|
509 |
|
|
|
283 |
|
Non-recurring taxes |
|
|
25 |
|
|
|
(70 |
) |
Non-recurring non-controlling interest |
|
|
14 |
|
|
|
5 |
|
|
|
|
|
|
|
|
|
|
Net impact on profit attributable to equity holders of AB InBev |
|
|
351 |
|
|
|
6 458 |
|
The non-recurring restructuring charges for 2014 total (277)m US dollar. These charges relate mainly to the integration of
Grupo Modelo, organizational alignments in Asia Pacific and Europe and the closure of the Angarsk and Perm breweries in Russia. These changes aim to eliminate overlap or duplicated processes, taking into account the right match of employee profiles
with the new organizational requirements. These one-time expenses, as a result of the series of decisions, provide the company with a lower cost base in addition to a stronger focus on AB InBevs core activities, quicker decision-making and improvements to efficiency, service and quality.
Acquisition costs of business combinations
amount to (77)m US dollar by the end of December 2014 primarily relating to cost incurred for the acquisition of OB that closed on 1 April 2014 see also Note 6 Acquisitions and disposals of subsidiaries.
The business and asset disposals (including impairment losses) resulted in a net
gain of 157m US dollar as per 31 December 2014 mainly attributable to the additional proceeds from the sale of the Central European operations to CVC Capital Partners and the disposal of Extra and the glass production plant located in Piedras
Negras, Coahuila, Mexico see also Note 6 Acquisitions and disposals of subsidiaries.
The non-recurring restructuring charges for the period
ended 31 December 2013 total (118)m US dollar. These charges primarily relate to the integration of Grupo Modelo, the integration of Cervecería Nacional Dominicana S.A. and to organizational alignments in China, Europe, North America and
Latin America South.
Fair value adjustments recognized in 2013 for a total of 6 410m US dollar, mainly relate to 6 415m US dollar non-recurring, non-cash
impact of revaluing the initial investment held in Grupo Modelo and the recycling to the consolidated income statement of amounts related to the investment, previously recognized in the consolidated statement of comprehensive income in line with
IFRS 3.
Acquisition costs of business combinations amount to (82)m US dollar by the end of December 2013 relating to cost incurred for the
combination with Grupo Modelo and the acquisition of four breweries in China on 27 April 2013 see also Note 6 Acquisitions and disposals of subsidiaries.
42
30m US dollar business and asset disposal (including impairment losses) as per 31 December 2013 results
mainly from additional proceeds from the sale of the Central European operations to CVC Capital Partners.
The company also incurred non-recurring finance
income of 509m US dollar for the period ended 31 December 2014 (31 December 2013: 283m US dollar) - see Note 11 Finance cost and income.
All
the above amounts are before income taxes. The non-recurring items as of 31 December 2014 decreased income taxes by 25m US dollar (31 December 2013: (70)m US dollar increase of income taxes).
Non-controlling interest on the non-recurring items amounts to 14m US dollar for the period ended 31 December 2014 (31 December 2013: 5m US dollar).
9. |
PAYROLL AND RELATED BENEFITS |
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
2013 |
|
|
|
|
Wages and salaries |
|
|
(3 844 |
) |
|
|
(4 137 |
) |
Social security contributions |
|
|
(663 |
) |
|
|
(722 |
) |
Other personnel cost |
|
|
(682 |
) |
|
|
(807 |
) |
Pension expense for defined benefit plans |
|
|
206 |
|
|
|
(141 |
) |
Share-based payment expense |
|
|
(251 |
) |
|
|
(243 |
) |
Contributions to defined contribution plans |
|
|
(145 |
) |
|
|
(117 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
(5 379 |
) |
|
|
(6 167 |
) |
|
|
|
Number of full time equivalents (FTE) |
|
|
154 029 |
|
|
|
154 587 |
|
The number of full time equivalents can be split as follows:
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
2013 |
|
|
|
|
AB InBev NV (parent company) |
|
|
185 |
|
|
|
184 |
|
Other subsidiaries |
|
|
153 844 |
|
|
|
152 441 |
|
Proportionally consolidated entities |
|
|
|
|
|
|
1 962 |
|
|
|
|
|
|
|
|
|
|
|
|
|
154 029 |
|
|
|
154 587 |
|
Effective 1 January 2014, the company discontinued the proportional consolidation of certain operations see
also Note 4 Use of estimates and judgments.
Note 5 Segment reporting contains the split of the FTE by geographical segment.
10. |
ADDITIONAL INFORMATION ON OPERATING EXPENSES BY NATURE |
Depreciation, amortization and impairment
charges are included in the following line items of the 2014 income statement:
|
|
|
|
|
|
|
|
|
|
|
|
|
Million US dollar |
|
Depreciation and impairment of property, plant and equipment |
|
|
Amortization and impairment of intangible assets |
|
|
Impairment of goodwill |
|
|
|
|
|
Cost of sales |
|
|
2 258 |
|
|
|
12 |
|
|
|
|
|
Distribution expenses |
|
|
127 |
|
|
|
1 |
|
|
|
|
|
Sales and marketing expenses |
|
|
292 |
|
|
|
189 |
|
|
|
|
|
Administrative expenses |
|
|
170 |
|
|
|
180 |
|
|
|
|
|
Other operating expenses |
|
|
|
|
|
|
5 |
|
|
|
|
|
Non-recurring items |
|
|
119 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2 967 |
|
|
|
388 |
|
|
|
|
|
43
Depreciation, amortization and impairment charges were included in the following line items of the 2013 income
statement:
|
|
|
|
|
|
|
|
|
|
|
|
|
Million US dollar |
|
Depreciation and impairment of property, plant and equipment |
|
|
Amortization and impairment of intangible assets |
|
|
Impairment of goodwill |
|
|
|
|
|
Cost of sales |
|
|
2 123 |
|
|
|
10 |
|
|
|
|
|
Distribution expenses |
|
|
117 |
|
|
|
1 |
|
|
|
|
|
Sales and marketing expenses |
|
|
253 |
|
|
|
194 |
|
|
|
|
|
Administrative expenses |
|
|
146 |
|
|
|
132 |
|
|
|
|
|
Other operating expenses |
|
|
2 |
|
|
|
7 |
|
|
|
|
|
Non-recurring items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2 641 |
|
|
|
344 |
|
|
|
|
|
The depreciation, amortization and impairment of property, plant and equipment included a full-cost reallocation of 4m US
dollar in 2014 from the aggregate depreciation, amortization and impairment expense to cost of goods sold. In 2013 this reallocation was 4m US dollar.
11. |
FINANCE COST AND INCOME |
RECOGNIZED IN PROFIT OR LOSS
FINANCE COSTS
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
2013 |
|
|
|
|
Interest expense |
|
|
(2 008 |
) |
|
|
(2 043 |
) |
Capitalization of borrowing costs |
|
|
39 |
|
|
|
38 |
|
Net interest on net defined benefit liabilities |
|
|
(124 |
) |
|
|
(156 |
) |
Accretion expense |
|
|
(364 |
) |
|
|
(360 |
) |
Net foreign exchange losses (net of the effect of foreign exchange derivative instruments) |
|
|
|
|
|
|
(295 |
) |
Tax on financial transactions |
|
|
(36 |
) |
|
|
(47 |
) |
Other financial costs, including bank fees |
|
|
(304 |
) |
|
|
(184 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
(2 797 |
) |
|
|
(3 047 |
) |
|
|
|
Non-recurring finance costs |
|
|
|
|
|
|
(101 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
(2 797 |
) |
|
|
(3 148 |
) |
Finance costs, excluding non-recurring items, decreased by 250m US dollar from prior year mainly driven by lower net foreign
exchange losses.
Borrowing costs capitalized relate to the capitalization of interest expenses directly attributable to the acquisition and construction
of qualifying assets mainly in Brazil and China. Interests were capitalized at a borrowing rate ranging from 6% to 8%.
Following the acquisition of the
remaining stake in Grupo Modelo, AB InBev recognized a non-recurring expense of 101m US dollar in 2013 mainly composed of utilization fees and accelerated accretion expenses related to the 2012 Facilities Agreement. The accelerated accretion
resulted from the repayment and termination of the 2012 Facilities Agreement in June 2013.
Interest expense is presented net of the effect of interest
rate derivative instruments hedging AB InBevs interest rate risk see also Note 27 Risks arising from financial instruments.
FINANCE INCOME
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
2013 |
|
|
|
|
Interest income |
|
|
335 |
|
|
|
286 |
|
Net foreign exchange gains (net of the effect of foreign exchange derivative instruments) |
|
|
319 |
|
|
|
|
|
Net gains on hedging instruments that are not part of a hedge accounting relationship |
|
|
275 |
|
|
|
186 |
|
Other financial income |
|
|
40 |
|
|
|
89 |
|
|
|
|
|
|
|
|
|
|
|
|
|
969 |
|
|
|
561 |
|
|
|
|
Non-recurring finance income |
|
|
509 |
|
|
|
384 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1 478 |
|
|
|
945 |
|
Finance income, excluding non-recurring items, increased mainly due to net foreign exchange gains on US dollar cash
held in Mexico and the mark-to-market result on certain derivatives related to the hedging of share-based payment programs which reached net gains of 711m US dollar in 2014 (2013: 456m US dollar income). This result was partially offset by costs of
currency hedges. See also Note 27 Risks arising from financial instruments.
Non-recurring net finance income was 509m US dollar resulting from
mark-to market adjustments on derivative instruments entered into to hedge the deferred share instrument issued in a transaction related to the combination with Grupo Modelo (2013: 384m US dollar income). By 31 December 2014, 100% of the
deferred share instrument had been hedged at an average price of approximately 68 euro per share. See also Note 21 Changes in equity and earnings per share.
No interest income was recognized on impaired financial assets.
44
The interest income stems from the following financial assets:
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
2013 |
|
|
|
|
Cash and cash equivalents |
|
|
227 |
|
|
|
209 |
|
Investment debt securities held for trading |
|
|
33 |
|
|
|
21 |
|
Loans to customers |
|
|
1 |
|
|
|
2 |
|
Other loans and receivables |
|
|
74 |
|
|
|
54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
335 |
|
|
|
286 |
|
The interest income on other loans and receivables includes the interest accrued on cash deposits given as guarantees for
certain legal proceedings pending resolution.
For further information on instruments hedging AB InBevs foreign exchange risk see Note 27
Risks arising from financial instruments.
Income taxes recognized in the income statement can be detailed as follows:
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
2013 |
|
|
|
|
Current tax expense |
|
|
|
|
|
|
|
|
Current year |
|
|
(2 332 |
) |
|
|
(2 130 |
) |
(Underprovided)/overprovided in prior years |
|
|
18 |
|
|
|
132 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(2 314 |
) |
|
|
(1 998 |
) |
|
|
|
Deferred tax (expense)/income |
|
|
|
|
|
|
|
|
Origination and reversal of temporary differences |
|
|
(293 |
) |
|
|
(174 |
) |
(Utilization)/recognition of deferred tax assets on tax losses |
|
|
96 |
|
|
|
153 |
|
Recognition of previously unrecognized tax losses |
|
|
12 |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(185 |
) |
|
|
(18 |
) |
|
|
|
|
|
|
|
|
|
Total income tax expense in the income statement |
|
|
(2 499 |
) |
|
|
(2 016 |
) |
The reconciliation of the effective tax rate with the aggregated weighted nominal tax rate can be summarized as follows:
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
20131 |
|
|
|
|
Profit before tax |
|
|
13 801 |
|
|
|
18 534 |
|
Deduct share of result of associates |
|
|
9 |
|
|
|
294 |
|
|
|
|
|
|
|
|
|
|
Profit before tax and before share of result of associates |
|
|
13 792 |
|
|
|
18 240 |
|
|
|
|
Adjustments on taxable basis |
|
|
|
|
|
|
|
|
One-time events related to the Grupo Modelo combination |
|
|
|
|
|
|
(6 577 |
) |
Foreign source income |
|
|
(523 |
) |
|
|
(679 |
) |
Government incentives |
|
|
(701 |
) |
|
|
(638 |
) |
Taxable intercompany dividends |
|
|
331 |
|
|
|
135 |
|
Expenses not deductible for tax purposes |
|
|
1 186 |
|
|
|
801 |
|
Other non-taxable income |
|
|
(530 |
) |
|
|
(649 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
13 555 |
|
|
|
10 633 |
|
|
|
|
Aggregated weighted nominal tax rate |
|
|
31.6 |
% |
|
|
33.3 |
% |
|
|
|
Tax at aggregated weighted nominal tax rate |
|
|
(4 288 |
) |
|
|
(3 545 |
) |
|
|
|
Adjustments on tax expense |
|
|
|
|
|
|
|
|
Utilization of tax losses not previously recognized |
|
|
93 |
|
|
|
16 |
|
Recognition of deferred taxes assets on previous years tax losses |
|
|
12 |
|
|
|
3 |
|
Write-down of deferred tax assets on tax losses and current year losses for which no deferred tax asset is recognized |
|
|
(151 |
) |
|
|
(74 |
) |
(Underprovided)/overprovided in prior years |
|
|
18 |
|
|
|
132 |
|
Deductions from interest on equity |
|
|
971 |
|
|
|
610 |
|
Deductions from goodwill |
|
|
113 |
|
|
|
264 |
|
Other tax deductions |
|
|
1 006 |
|
|
|
746 |
|
Change in tax rate |
|
|
46 |
|
|
|
116 |
|
Withholding taxes |
|
|
(436 |
) |
|
|
(425 |
) |
Other tax adjustments |
|
|
117 |
|
|
|
141 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(2 499 |
) |
|
|
(2 016 |
) |
|
|
|
Effective tax rate |
|
|
18.1 |
% |
|
|
11.1 |
% |
The total income tax expense amounts to 2 499m US dollar in 2014 compared to 2 016m US dollar in 2013. The effective
tax rate increased from 11.1% to 18.1% from 2013 to 2014, mainly resulting from the 2013 non-taxable, exceptional gain related to the fair value adjustment on the initial investment held in Grupo Modelo, changes in country profit mix, including the
impact resulting from the combination with Grupo Modelo and the OB acquisition.
The Company benefits from tax exempted income and tax credits which are
expected to continue in the future, except for the one-time benefit realized in 2013 relating to Grupo Modelo, and the tax deductible goodwill in Brazil which will expire in 2017. The Company does not benefit from significantly low tax rates in any
particular jurisdiction.
1 |
Reclassified to conform to the 2014 presentation. |
45
The normalized effective tax rate in 2014 is 18.8% (2013: 16.6%). Normalized effective tax rate is not an
accounting measure under IFRS accounting and should not be considered as an alternative to the effective tax rate. Normalized effective tax rate method does not have a standard calculation method and AB InBevs definition of normalized
effective rate may not be comparable to other companies.
Income taxes were directly recognized in other comprehensive income as follows:
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
2013 |
|
|
|
|
Income tax (losses)/gains |
|
|
|
|
|
|
|
|
Re-measurements of post-employment benefits |
|
|
308 |
|
|
|
(289 |
) |
Cash flow hedges |
|
|
(34 |
) |
|
|
(12 |
) |
Net investment hedges |
|
|
58 |
|
|
|
8 |
|
13. |
PROPERTY, PLANT AND EQUIPMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
2013 |
|
Million US dollar |
|
Land and buildings |
|
|
Plant and equipment |
|
|
Fixtures and fittings |
|
|
Under construction |
|
|
Total |
|
|
Total |
|
|
|
|
|
|
|
|
Acquisition cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of previous year |
|
|
9 968 |
|
|
|
22 414 |
|
|
|
3 660 |
|
|
|
2 065 |
|
|
|
38 107 |
|
|
|
33 108 |
|
Effect of movements in foreign exchange |
|
|
(821 |
) |
|
|
(2 143 |
) |
|
|
(477 |
) |
|
|
(179 |
) |
|
|
(3 620 |
) |
|
|
(1 359 |
) |
Acquisitions |
|
|
222 |
|
|
|
1 161 |
|
|
|
339 |
|
|
|
2 088 |
|
|
|
3 810 |
|
|
|
3 523 |
|
Acquisitions through business combinations |
|
|
532 |
|
|
|
363 |
|
|
|
25 |
|
|
|
30 |
|
|
|
950 |
|
|
|
4 818 |
|
Disposals |
|
|
(123 |
) |
|
|
(761 |
) |
|
|
(287 |
) |
|
|
(17 |
) |
|
|
(1 188 |
) |
|
|
(1 697 |
) |
Disposals through the sale of subsidiaries |
|
|
(108 |
) |
|
|
(153 |
) |
|
|
(158 |
) |
|
|
|
|
|
|
(419 |
) |
|
|
|
|
Transfer (to)/from other asset categories and other movements1 |
|
|
318 |
|
|
|
1 589 |
|
|
|
236 |
|
|
|
(2 299 |
) |
|
|
(156 |
) |
|
|
(286 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of the period |
|
|
9 988 |
|
|
|
22 471 |
|
|
|
3 338 |
|
|
|
1 688 |
|
|
|
37 485 |
|
|
|
38 107 |
|
|
|
|
|
|
|
|
Depreciation and impairment losses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of previous year |
|
|
(2 824 |
) |
|
|
(11 947 |
) |
|
|
(2 444 |
) |
|
|
(3 |
) |
|
|
(17 218 |
) |
|
|
(16 647 |
) |
Effect of movements in foreign exchange |
|
|
305 |
|
|
|
1 278 |
|
|
|
327 |
|
|
|
5 |
|
|
|
1 915 |
|
|
|
549 |
|
Disposals |
|
|
34 |
|
|
|
631 |
|
|
|
253 |
|
|
|
|
|
|
|
918 |
|
|
|
1 470 |
|
Disposals through the sale of subsidiaries |
|
|
4 |
|
|
|
22 |
|
|
|
93 |
|
|
|
|
|
|
|
119 |
|
|
|
|
|
Depreciation |
|
|
(376 |
) |
|
|
(2 018 |
) |
|
|
(414 |
) |
|
|
|
|
|
|
(2 808 |
) |
|
|
(2 567 |
) |
Impairment losses |
|
|
(58 |
) |
|
|
(92 |
) |
|
|
(1 |
) |
|
|
(12 |
) |
|
|
(163 |
) |
|
|
(70 |
) |
Transfer to/(from) other asset categories and other movements1 |
|
|
88 |
|
|
|
(113 |
) |
|
|
40 |
|
|
|
1 |
|
|
|
16 |
|
|
|
47 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of the period |
|
|
(2 826 |
) |
|
|
(12 240 |
) |
|
|
(2 147 |
) |
|
|
(9 |
) |
|
|
(17 222 |
) |
|
|
(17 218 |
) |
|
|
|
|
|
|
|
Carrying amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
at 31 December 2013 |
|
|
7 144 |
|
|
|
10 467 |
|
|
|
1 216 |
|
|
|
2 062 |
|
|
|
20 889 |
|
|
|
20 889 |
|
at 31 December 2014 |
|
|
7 162 |
|
|
|
10 231 |
|
|
|
1 191 |
|
|
|
1 679 |
|
|
|
20 263 |
|
|
|
|
|
The carrying amount of property, plant and equipment subject to restrictions on title amounts to 37m US dollar.
Contractual commitments to purchase property, plant and equipment amounted to 647m US dollar as at 31 December 2014 compared to 591m US dollar as at
31 December 2013. The increase results from projects mainly in North America and Mexico.
LEASED ASSETS
The company leases land and buildings as well as equipment under a number of finance lease agreements. The carrying amount as at 31 December 2014 of
leased land and buildings was 151m US dollar (31 December 2013: 155m US dollar).
1 |
The transfer (to)/from other asset categories and other movements mainly relates to transfers from assets under construction to their respective asset categories, to
contributions of assets to pension plans and to the separate presentation in the balance sheet of property, plant and equipment held for sale in accordance with IFRS 5 Non-current assets held for sale and discontinued operations.
|
46
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
2013 |
|
|
|
|
Acquisition cost |
|
|
|
|
|
|
|
|
Balance at end of previous year |
|
|
69 933 |
|
|
|
51 773 |
|
Effect of movements in foreign exchange |
|
|
(4 403 |
) |
|
|
(1 799 |
) |
Purchases of non-controlling interest |
|
|
(5 |
) |
|
|
(29 |
) |
Disposals through the sale of subsidiaries |
|
|
(60 |
) |
|
|
|
|
Acquisitions through business combinations |
|
|
5 300 |
|
|
|
19 988 |
|
|
|
|
|
|
|
|
|
|
Balance at end of year |
|
|
70 765 |
|
|
|
69 933 |
|
|
|
|
Impairment losses |
|
|
|
|
|
|
|
|
Balance at end of previous year |
|
|
(7 |
) |
|
|
(7 |
) |
Impairment losses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of year |
|
|
(7 |
) |
|
|
(7 |
) |
|
|
|
Carrying amount |
|
|
|
|
|
|
|
|
at 31 December 2013 |
|
|
69 927 |
|
|
|
69 927 |
|
at 31 December 2014 |
|
|
70 758 |
|
|
|
|
|
Goodwill increased from 69 927m US dollar per end of December 2013 to 70 758m US dollar per end of December 2014.
Current year acquisitions through business combinations primarily reflect the OB acquisition in South Korea and the acquisition of Ginsber and three breweries
in China see note 6 Acquisitions and disposals.
Disposals through the sale of subsidiaries relate to the sale of the glass production plant
in Mexico - see note 6 Acquisitions and disposals.
In 2013, the combination with Grupo Modelo resulted in the recognition of goodwill of 19 592m
US dollar and the acquisition of four breweries in China, different distributors in Brazil and a wholesaler in United States resulted in the recognition of 380m US dollar goodwill.
The carrying amount of goodwill was allocated to the different business unit levels as follows:
|
|
|
|
|
|
|
|
|
Million US dollar
Business unit |
|
2014 |
|
|
2013 |
|
|
|
|
USA |
|
|
32 718 |
|
|
|
32 654 |
|
Mexico |
|
|
17 100 |
|
|
|
19 171 |
|
Brazil |
|
|
6 764 |
|
|
|
7 669 |
|
South Korea |
|
|
4 031 |
|
|
|
|
|
China |
|
|
3 031 |
|
|
|
2 317 |
|
Canada |
|
|
1 786 |
|
|
|
1 945 |
|
Germany/Italy/Switzerland/Austria |
|
|
1 352 |
|
|
|
1 535 |
|
Dominican Republic |
|
|
1 040 |
|
|
|
1 037 |
|
Argentina and other Hispanic Latin America countries |
|
|
1 031 |
|
|
|
1 181 |
|
Global Export/Spain/Czech Republic |
|
|
679 |
|
|
|
731 |
|
UK/Ireland |
|
|
588 |
|
|
|
624 |
|
Russia/Ukraine |
|
|
547 |
|
|
|
960 |
|
Belgium/Netherlands/France/Luxemburg |
|
|
91 |
|
|
|
103 |
|
|
|
|
|
|
|
|
|
|
|
|
|
70 758 |
|
|
|
69 927 |
|
AB InBev completed its annual impairment test for goodwill and concluded, based on the assumptions described below, that
no impairment charge was warranted. The company cannot predict whether an event that triggers impairment will occur, when it will occur or how it will affect the asset values reported. AB InBev believes that all of its estimates are reasonable:
they are consistent with the internal reporting and reflect managements best estimates. However, inherent uncertainties exist that management may not be able to control. During its valuation, the company ran sensitivity analysis for key
assumptions including the weighted average cost of capital and the terminal growth rate, in particular for the valuations of the US, Brazil and Mexico, countries that show the highest goodwill, as well as for Russia and Ukraine due to continued
political instability and deteriorating macroeconomic conditions. While a change in the estimates used could have a material impact on the calculation of the fair values and trigger an impairment charge, the company, based on the sensitivity
analysis performed is not aware of any reasonably possible change in a key assumption used that would cause a business units carrying amount to materially exceed its recoverable amount.
Goodwill impairment testing relies on a number of critical judgments, estimates and
assumptions. Goodwill, which accounted for approximately 50% of AB InBevs total assets as at 31 December 2014, is tested for impairment at the business unit level (that is one level below the reporting segments). The business unit
level is the lowest level at which goodwill is monitored for internal management purposes. Whenever a business combination occurs, goodwill is allocated as from the acquisition date, to each of AB InBevs business units that are expected to
benefit from the synergies of the combination.
AB InBev impairment testing methodology is in accordance with IAS 36, in which a
fair-value-less-cost-to-sell and value in use approaches are taken into consideration. This consists in applying a discounted free cash flow approach based on acquisition valuation models for its major business units and the business units showing a
high invested capital to EBITDA multiple, and valuation multiples for its other business units.
The key judgments, estimates and assumptions used in the
discounted free cash flow calculations are generally as follows:
|
|
|
The first year of the model is based on managements best estimate of the free cash flow outlook for the current year; |
|
|
|
In the second to fourth years of the model, free cash flows are based on AB InBevs strategic plan as approved by key management. AB InBevs strategic plan is prepared per country and is based on
external sources in respect of macro-economic assumptions, industry, inflation and foreign exchange rates, past experience and identified initiatives in terms of market share, revenue, variable and fixed cost, capital expenditure and working capital
assumptions; |
47
|
|
|
For the subsequent six years of the model, data from the strategic plan is extrapolated generally using simplified assumptions such as constant volumes and variable cost per hectoliter and fixed cost linked to
inflation, as obtained from external sources; |
|
|
|
Cash flows after the first ten-year period are extrapolated generally using expected annual long-term consumer price indices (CPI), based on external sources, in order to calculate the terminal value, considering
sensitivities on this metric. For the three main cash generating units, the terminal growth rate applied ranged between 0.0% and 2.0% for the US; 0.0% and 3.2% for Brazil and 0.0% and 2.5% for Mexico; |
|
|
|
Projections are made in the functional currency of the business unit and discounted at the units weighted average cost of capital (WACC), considering sensitivities on this metric. The WACC ranged primarily between
6% and 22% in US dollar nominal terms for goodwill impairment testing conducted for 2014. For the three main cash generating units, the WACC applied in US dollar nominal terms ranged between 6% and 8% for the US, 9% and 11% for Brazil, and 8% and
10% for Mexico. |
|
|
|
Cost to sell is assumed to reach 2% of the entity value based on historical precedents. |
The above
calculations are corroborated by valuation multiples, quoted share prices for publicly-traded subsidiaries or other available fair value indicators (i.e. recent market transactions from peers).
Although AB InBev believes that its judgments, assumptions and estimates are appropriate, actual results may differ from these estimates under different
assumptions or market or macro-economic conditions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
2013 |
|
Million US dollar |
|
Brands |
|
|
Commercial intangibles |
|
|
Software |
|
|
Other |
|
|
Total |
|
|
Total |
|
|
|
|
|
|
|
|
Acquisition cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of previous year |
|
|
26 491 |
|
|
|
2 782 |
|
|
|
1 340 |
|
|
|
518 |
|
|
|
31 131 |
|
|
|
25 868 |
|
Effect of movements in foreign exchange |
|
|
(656 |
) |
|
|
(172 |
) |
|
|
(165 |
) |
|
|
(33 |
) |
|
|
(1 026 |
) |
|
|
(240 |
) |
Acquisitions through business combinations |
|
|
1 170 |
|
|
|
46 |
|
|
|
5 |
|
|
|
35 |
|
|
|
1 256 |
|
|
|
5 068 |
|
Acquisitions and expenditures |
|
|
5 |
|
|
|
298 |
|
|
|
155 |
|
|
|
74 |
|
|
|
532 |
|
|
|
543 |
|
Disposals through the sales of subsidiaries |
|
|
|
|
|
|
(8 |
) |
|
|
(1 |
) |
|
|
(1 |
) |
|
|
(10 |
) |
|
|
|
|
Disposals |
|
|
(1 |
) |
|
|
(31 |
) |
|
|
|
|
|
|
(5 |
) |
|
|
(37 |
) |
|
|
(286 |
) |
Transfer (to)/from other asset categories and other movements |
|
|
26 |
|
|
|
(78 |
) |
|
|
92 |
|
|
|
(6 |
) |
|
|
34 |
|
|
|
178 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period |
|
|
27 035 |
|
|
|
2 838 |
|
|
|
1 425 |
|
|
|
582 |
|
|
|
31 880 |
|
|
|
31 131 |
|
|
|
|
|
|
|
|
Amortization and impairment losses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of previous year |
|
|
|
|
|
|
(830 |
) |
|
|
(902 |
) |
|
|
(61 |
) |
|
|
(1 793 |
) |
|
|
(1 497 |
) |
Effect of movements in foreign exchange |
|
|
|
|
|
|
75 |
|
|
|
115 |
|
|
|
4 |
|
|
|
194 |
|
|
|
16 |
|
Amortization |
|
|
|
|
|
|
(194 |
) |
|
|
(177 |
) |
|
|
(13 |
) |
|
|
(384 |
) |
|
|
(334 |
) |
Impairment losses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4 |
) |
|
|
(4 |
) |
|
|
(10 |
) |
Disposals through the sales of subsidiaries |
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
1 |
|
|
|
|
|
Disposals |
|
|
|
|
|
|
26 |
|
|
|
|
|
|
|
3 |
|
|
|
29 |
|
|
|
52 |
|
Transfer to/(from) other asset categories and other movements |
|
|
|
|
|
|
(9 |
) |
|
|
8 |
|
|
|
1 |
|
|
|
|
|
|
|
(20 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period |
|
|
|
|
|
|
(932 |
) |
|
|
(955 |
) |
|
|
(70 |
) |
|
|
(1 957 |
) |
|
|
(1 793 |
) |
|
|
|
|
|
|
|
Carrying value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
at 31 December 2013 |
|
|
26 491 |
|
|
|
1 952 |
|
|
|
438 |
|
|
|
457 |
|
|
|
29 338 |
|
|
|
29 338 |
|
at 31 December 2014 |
|
|
27 035 |
|
|
|
1 906 |
|
|
|
470 |
|
|
|
512 |
|
|
|
29 923 |
|
|
|
|
|
Current year acquisitions through business combinations primarily reflect the OB acquisition which resulted in the recognition
of brands with an indefinite life of 1 104m US dollar and other intangible assets.
AB InBev is the owner of some of the worlds most valuable brands
in the beer industry. As a result, brands and certain distribution rights are expected to generate positive cash flows for as long as the company owns the brands and distribution rights. Given AB InBevs more than 600-year history, brands and
certain distribution rights have been assigned indefinite lives.
Acquisitions and expenditures of commercial intangibles mainly represent supply and
distribution rights, exclusive multi-year sponsorship rights and other commercial intangibles.
Intangible assets with indefinite useful lives are
comprised primarily of brands and certain distribution rights that AB InBev purchases for its own products, and are tested for impairment during the fourth quarter of the year or whenever a triggering event has occurred. As of 31 December
2014, the carrying amount of the intangible assets amounted to 29 923m US dollar (31 December 2013: 29 338m US dollar) of which 28 159m US dollar was assigned an indefinite useful life (31 December 2013: 27 593m US dollar) and 1 764m US dollar
a finite life (31 December 2013: 1 745m US dollar).
48
The carrying amount of intangible assets with indefinite useful lives was allocated to the different countries as
follows:
|
|
|
|
|
|
|
|
|
Million US dollar
Country |
|
2014 |
|
|
2013 |
|
|
|
|
USA |
|
|
21 468 |
|
|
|
21 414 |
|
Mexico |
|
|
4 091 |
|
|
|
4 608 |
|
South Korea |
|
|
1 035 |
|
|
|
|
|
China |
|
|
417 |
|
|
|
330 |
|
Dominican Republic |
|
|
386 |
|
|
|
399 |
|
Paraguay |
|
|
186 |
|
|
|
187 |
|
Bolivia |
|
|
171 |
|
|
|
171 |
|
Argentina |
|
|
169 |
|
|
|
220 |
|
UK |
|
|
107 |
|
|
|
111 |
|
Uruguay |
|
|
41 |
|
|
|
47 |
|
Canada |
|
|
35 |
|
|
|
38 |
|
Chile |
|
|
21 |
|
|
|
24 |
|
Germany |
|
|
17 |
|
|
|
19 |
|
Russia |
|
|
15 |
|
|
|
25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
28 159 |
|
|
|
27 593 |
|
Intangible assets with indefinite useful lives have been tested for impairment using the same methodology and assumptions as
disclosed in Note 14 Goodwill. Based on the assumptions described in that note, AB InBev concluded that no impairment charge is warranted. While a change in the estimates used could have a material impact on the calculation of the fair values
and trigger an impairment charge, the company is not aware of any reasonable possible change in a key assumption used that would cause a business units carrying amount to exceed its recoverable amount.
16. |
INVESTMENT SECURITIES |
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
2013 |
|
|
|
|
Non-current investments |
|
|
|
|
|
|
|
|
Investments in unquoted companies available for sale |
|
|
97 |
|
|
|
170 |
|
Debt securities held to maturity |
|
|
21 |
|
|
|
23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
118 |
|
|
|
193 |
|
|
|
|
Current investments |
|
|
|
|
|
|
|
|
Debt securities held for trading |
|
|
301 |
|
|
|
123 |
|
|
|
|
|
|
|
|
|
|
|
|
|
301 |
|
|
|
123 |
|
As of 31 December 2014, current debt securities of 301m US dollar mainly represented investments in Brazilian real
denominated government debt securities. The companys investments in such short-term debt securities are primarily to facilitate liquidity and for capital preservation.
The securities available for sale consist mainly of investments in unquoted companies and are measured at cost as their fair value cannot be reliably
determined.
17. |
DEFERRED TAX ASSETS AND LIABILITIES |
The amount of deferred tax assets and liabilities by type of
temporary difference can be detailed as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
Million US dollar |
|
Assets |
|
|
Liabilities |
|
|
Net |
|
|
|
|
|
Property, plant and equipment |
|
|
457 |
|
|
|
(2 765 |
) |
|
|
(2 308 |
) |
Intangible assets |
|
|
264 |
|
|
|
(9 891 |
) |
|
|
(9 627 |
) |
Goodwill |
|
|
29 |
|
|
|
(13 |
) |
|
|
16 |
|
Inventories |
|
|
140 |
|
|
|
(102 |
) |
|
|
38 |
|
Investment in associates |
|
|
|
|
|
|
(837 |
) |
|
|
(837 |
) |
Trade and other receivables |
|
|
51 |
|
|
|
(98 |
) |
|
|
(47 |
) |
Interest-bearing loans and borrowings |
|
|
163 |
|
|
|
(585 |
) |
|
|
(422 |
) |
Employee benefits |
|
|
899 |
|
|
|
(51 |
) |
|
|
848 |
|
Provisions |
|
|
368 |
|
|
|
(40 |
) |
|
|
328 |
|
Derivatives |
|
|
50 |
|
|
|
(6 |
) |
|
|
44 |
|
Other items |
|
|
585 |
|
|
|
(651 |
) |
|
|
(66 |
) |
Loss carry forwards |
|
|
390 |
|
|
|
|
|
|
|
390 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross deferred tax assets/(liabilities) |
|
|
3 396 |
|
|
|
(15 039 |
) |
|
|
(11 643 |
) |
|
|
|
|
Netting by taxable entity |
|
|
(2 338 |
) |
|
|
2 338 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets/(liabilities) |
|
|
1 058 |
|
|
|
(12 701 |
) |
|
|
(11 643 |
) |
49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013 |
|
Million US dollar |
|
Assets |
|
|
Liabilities |
|
|
Net |
|
|
|
|
|
Property, plant and equipment |
|
|
490 |
|
|
|
(2 879 |
) |
|
|
(2 389 |
) |
Intangible assets |
|
|
234 |
|
|
|
(9 812 |
) |
|
|
(9 578 |
) |
Goodwill |
|
|
37 |
|
|
|
(18 |
) |
|
|
19 |
|
Inventories |
|
|
101 |
|
|
|
(91 |
) |
|
|
10 |
|
Investment in associates |
|
|
|
|
|
|
(1 280 |
) |
|
|
(1 280 |
) |
Trade and other receivables |
|
|
81 |
|
|
|
(47 |
) |
|
|
34 |
|
Interest-bearing loans and borrowings |
|
|
90 |
|
|
|
(517 |
) |
|
|
(427 |
) |
Employee benefits |
|
|
885 |
|
|
|
(35 |
) |
|
|
850 |
|
Provisions |
|
|
286 |
|
|
|
(24 |
) |
|
|
262 |
|
Derivatives |
|
|
57 |
|
|
|
(10 |
) |
|
|
47 |
|
Other items |
|
|
1 060 |
|
|
|
(663 |
) |
|
|
397 |
|
Loss carry forwards |
|
|
394 |
|
|
|
|
|
|
|
394 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross deferred tax assets/(liabilities) |
|
|
3 715 |
|
|
|
(15 376 |
) |
|
|
(11 661 |
) |
|
|
|
|
Netting by taxable entity |
|
|
(2 535 |
) |
|
|
2 535 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets/(liabilities) |
|
|
1 180 |
|
|
|
(12 841 |
) |
|
|
(11 661 |
) |
The change in net deferred taxes recorded in the consolidated statement of financial position can be detailed as follows:
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
2013 |
|
|
|
|
Balance at 1 January |
|
|
(11 661 |
) |
|
|
(10 361 |
) |
Recognized in profit or loss |
|
|
(147 |
) |
|
|
(18 |
) |
Recognized in other comprehensive income |
|
|
308 |
|
|
|
(293 |
) |
Acquisitions through business combinations |
|
|
(250 |
) |
|
|
(1 143 |
) |
Other movements and effect of changes in foreign exchange rates |
|
|
107 |
|
|
|
154 |
|
|
|
|
|
|
|
|
|
|
Balance at 31 December |
|
|
(11 643 |
) |
|
|
(11 661 |
) |
Most of the temporary differences are related to the fair value adjustment on intangible assets with indefinite useful lives
and property, plant and equipment acquired in a business combination. The realization of such temporary differences is unlikely to revert within 12 months.
On 31 December 2014, a deferred tax liability of 283m US dollar (2013: 41m US dollar) relating to investment in subsidiaries has not been recognized
because management believes that this liability will not be incurred in the foreseeable future.
Tax losses carried forward and deductible temporary
differences on which no deferred tax asset is recognized amount to 2 397m US dollar (2013: 2 282m US dollar). 1 023m US dollar of these tax losses and deductible temporary differences do not have an expiration date, 86m US dollar, 87m
US dollar and 94m US dollar expire within respectively 1, 2 and 3 years, while 1 107m US dollar have an expiration date of more than 3 years. Deferred tax assets have not been recognized on these items because it is not probable that future
taxable profits will be available against which these tax losses and deductible temporary differences can be utilized and the company has no tax planning strategy currently in place to utilize these tax losses and deductible temporary differences.
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
2013 |
|
|
|
|
Prepayments |
|
|
86 |
|
|
|
78 |
|
Raw materials and consumables |
|
|
1 723 |
|
|
|
1 717 |
|
Work in progress |
|
|
315 |
|
|
|
326 |
|
Finished goods |
|
|
795 |
|
|
|
761 |
|
Goods purchased for resale |
|
|
55 |
|
|
|
68 |
|
|
|
|
|
|
|
|
|
|
|
|
|
2 974 |
|
|
|
2 950 |
|
Inventories other than work in progress |
|
|
|
|
|
|
|
|
Inventories stated at net realizable value |
|
|
107 |
|
|
|
29 |
|
Carrying amount of inventories subject to collateral |
|
|
|
|
|
|
|
|
The cost of inventories recognized as an expense in 2014 amounts to 18 756m US dollar, included in cost of sales (2013: 17
594m US dollar).
Impairment losses on inventories recognized in 2014 amount to 70m US dollar (2013: 59m US dollar).
50
19. |
TRADE AND OTHER RECEIVABLES |
NON-CURRENT TRADE AND OTHER RECEIVABLES
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
2013 |
|
|
|
|
Cash deposits for guarantees |
|
|
229 |
|
|
|
240 |
|
Loans to customers |
|
|
40 |
|
|
|
65 |
|
Deferred collection on disposals |
|
|
26 |
|
|
|
37 |
|
Tax receivable, other than income tax |
|
|
167 |
|
|
|
198 |
|
Derivatives |
|
|
507 |
|
|
|
120 |
|
Trade and other receivables |
|
|
800 |
|
|
|
592 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1 769 |
|
|
|
1 252 |
|
For the nature of cash deposits for guarantees see Note 29 Collateral and contractual commitments for the acquisition of
property, plant and equipment, loans to customers and other.
CURRENT TRADE AND OTHER RECEIVABLES
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
2013 |
|
|
|
|
Trade receivables and accrued income |
|
|
3 363 |
|
|
|
2 935 |
|
Interest receivable |
|
|
63 |
|
|
|
38 |
|
Tax receivable, other than income tax |
|
|
505 |
|
|
|
429 |
|
Derivatives |
|
|
1 737 |
|
|
|
607 |
|
Loans to customers |
|
|
52 |
|
|
|
50 |
|
Prepaid expenses |
|
|
554 |
|
|
|
616 |
|
Other receivables |
|
|
175 |
|
|
|
687 |
|
|
|
|
|
|
|
|
|
|
|
|
|
6 449 |
|
|
|
5 362 |
|
The fair value of trade and other receivables, excluding derivatives, equals their carrying amounts as the impact of
discounting is not significant.
The ageing of the current trade receivables and accrued income, interest receivable, other receivables and current and non-current loans to customers can be detailed as follows for 2014 and 2013 respectively:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net carrying amount as of December 31, 2014 |
|
|
Of which: neither impaired nor past due on the reporting date |
|
|
Of which not impaired as of the reporting date and past due |
|
|
|
|
|
Less than 30 days |
|
|
Between 30 and 59 days |
|
|
Between 60 and 89 days |
|
|
More than 90 days |
|
|
|
|
|
|
|
|
Trade receivables and accrued income |
|
|
3 363 |
|
|
|
3 164 |
|
|
|
152 |
|
|
|
28 |
|
|
|
19 |
|
|
|
|
|
Loans to customers |
|
|
92 |
|
|
|
89 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
|
|
Interest receivable |
|
|
63 |
|
|
|
63 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other receivables |
|
|
175 |
|
|
|
175 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 694 |
|
|
|
3 492 |
|
|
|
153 |
|
|
|
29 |
|
|
|
20 |
|
|
|
|
|
|
|
|
|
|
|
Net carrying amount as of December 31, 2013 |
|
|
Of which: neither impaired nor past due on the reporting date |
|
|
Of which not impaired as of the reporting date and past due |
|
|
|
|
|
Less than 30 days |
|
|
Between 30 and 59 days |
|
|
Between 60 and 89 days |
|
|
More than 90 days |
|
|
|
|
|
|
|
|
Trade receivables and accrued income |
|
|
2 935 |
|
|
|
2 738 |
|
|
|
139 |
|
|
|
24 |
|
|
|
11 |
|
|
|
23 |
|
Loans to customers |
|
|
115 |
|
|
|
105 |
|
|
|
|
|
|
|
1 |
|
|
|
1 |
|
|
|
8 |
|
Interest receivable |
|
|
38 |
|
|
|
38 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other receivables |
|
|
687 |
|
|
|
687 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 775 |
|
|
|
3 568 |
|
|
|
139 |
|
|
|
25 |
|
|
|
12 |
|
|
|
31 |
|
In accordance with IFRS 7 Financial Instruments:
Disclosures, the above analysis of the age of financial assets that are past due as at the reporting date but not impaired also includes the non-current part of loans to customers. Past due amounts were not impaired when collection is still
considered likely, for instance because the amounts can be recovered from the tax authorities or AB InBev has sufficient collateral. Impairment losses on trade and other receivables recognized in 2014 amount to 39m US dollar (2013: 85m US
dollar).
AB InBevs exposure to credit, currency and interest rate risks is disclosed in Note 27 Risks arising from financial instruments.
51
20. |
CASH AND CASH EQUIVALENTS |
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
2013 |
|
|
|
|
Short-term bank deposits |
|
|
5 804 |
|
|
|
7 109 |
|
US Treasury Bills |
|
|
800 |
|
|
|
|
|
Cash and bank accounts |
|
|
1 753 |
|
|
|
2 730 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
8 357 |
|
|
|
9 839 |
|
|
|
|
Bank overdrafts |
|
|
(41 |
) |
|
|
(6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
8 316 |
|
|
|
9 833 |
|
The cash outstanding per 31 December 2014 includes restricted cash for an amount of 462m US dollar. This restricted cash
includes 458m US dollar deposited with a Trust established and funded on 4 June 2013, following the closing of the AB InBev and Grupo Modelo combination. The Trust will accept further tender of shares by Grupo Modelo shareholders at a price of
9.15 US dollar per share over a period of up to 25 months. AB InBev set up a liability for the Grupo Modelo shares it did not acquire by 31 December 2014 see also Note 26 Trade and other payables.
The restricted cash also includes 4m US dollar for the outstanding consideration payable to former Anheuser-Busch shareholders who did not yet claim the
proceeds from the 2008 Anheuser-Busch combination (the related payable is recognized as a deferred consideration on acquisition).
21. |
CHANGES IN EQUITY AND EARNINGS PER SHARE |
STATEMENT OF CAPITAL
The tables below summarize the changes in issued capital and treasury shares during the year:
|
|
|
|
|
|
|
|
|
ISSUED CAPITAL |
|
Issued capital |
|
|
Million shares |
|
|
Million US dollar |
|
|
|
|
At the end of the previous year |
|
|
1 608 |
|
|
|
1 735 |
|
Changes during the year |
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1 608 |
|
|
|
1 736 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TREASURY SHARES |
|
Treasury shares |
|
|
Result on the use of treasury shares |
|
|
Million shares |
|
|
Million US dollar |
|
|
Million US dollar |
|
|
|
|
|
At the end of the previous year |
|
|
1.6 |
|
|
|
(97 |
) |
|
|
(777 |
) |
Changes during the year |
|
|
(0.7 |
) |
|
|
34 |
|
|
|
21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.9 |
|
|
|
(63 |
) |
|
|
(756 |
) |
As at 31 December 2014, the total issued capital of 1 736m US dollar is represented by 1 608 242 156 shares without face
value, of which 462 932 373 registered shares, and 1 145 309 783 dematerialized shares. As of the AGM of 30 April 2014, all outstanding subscription rights have been converted into options on existing shares further to the approval of the
shareholders. Therefore, there are no outstanding subscription rights.
The total of authorized, un-issued capital amounts to 45m US dollar (37m euro).
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the
company. In respect of the companys shares that are held by AB InBev, rights are suspended.
The shareholders structure based on the
notifications made to the company pursuant to the Belgian Law of 02 May 2007 on the disclosure of significant shareholdings in listed companies is included in the Corporate Governance section of AB InBevs annual report.
CHANGES IN OWNERSHIP INTERESTS
In compliance with IFRS 10, the acquisition of additional shares in a subsidiary is accounted for as an equity transaction with owners.
During 2014, AB InBev purchased non-controlling interests in subsidiaries for a total consideration of 88m US dollar. As the related subsidiaries were
already fully consolidated, the purchases did not impact AB InBevs profit, but reduced the non-controlling interests and thus impacted the profit attributable to equity holders of AB InBev.
REPORT ACCORDING TO ARTICLE 624 OF THE BELGIAN COMPANIES CODE - PURCHASE OF OWN SHARES
During the year 2014, AB InBev did not purchase any of its shares.
52
During 2014, the company proceeded with the following sale transactions:
|
|
|
34 903 shares were sold to members of the Ambev senior management who were transferred to AB InBev. The sale occurred according to a share exchange program at a price reduced with 16.66% compared to the market price, in
order to encourage management mobility; |
|
|
|
228 200 shares were granted to executives of the group according to the companys executive remuneration policy; |
|
|
|
Finally, 473 930 shares were sold, as a result of the exercise of options granted to employees of the group. |
At the end of the period, the group owned 882 230 own shares of which 356 336 were held directly by AB InBev.
The par value of the shares is 0.77 euro. As a consequence, the shares that were sold during the year 2014 represent 689 021 US dollar (567 515 euro) of the
subscribed capital and the shares that the company still owned at the end of 2014 represent 824 759 US dollar (679 317 euro) of the subscribed capital.
DIVIDENDS
On 30 October 2014, an interim dividend
of 1.00 euro per share or approximately 1 636m euro was approved by the Board of Directors. This interim dividend was paid out 14 November 2014. On 25 February 2015, in addition to the interim dividend paid on 14 November 2014, a
dividend of 2.00 euro per share or approximately 3 279m euro was proposed by the Board of Directors, reflecting a total dividend payment for 2014 fiscal year of 3.00 euro per share or approximately 4 915m euro.
In accordance with IAS 10 Events after the balance sheet date, the February 2015 dividend has not been recorded in the 2014 financial statements.
On 30 October 2013, an interim dividend of 0.60 euro per share or approximately 963m euro was approved by the Board of Directors. This dividend was paid
out on 18 November 2013. On 30 April 2014, in addition to the interim dividend paid on 18 November 2013, a dividend of 1.45 euro per share or approximately 2 322m euro was approved at the shareholders meeting, reflecting a total
dividend payment for 2013 fiscal year of 2.05 euro per share or approximately 3 285m euro. This dividend was paid out on 8 May 2014.
On
24 April 2013, a dividend of 1.70 euro per share or approximately 2 725m euro was approved at the shareholders meeting. This dividend was paid out on 2 May 2013.
TRANSLATION RESERVES
The translation reserves comprise
all foreign currency exchange differences arising from the translation of the financial statements of foreign operations. The translation reserves also comprise the portion of the gain or loss on the foreign currency liabilities and on the
derivative financial instruments determined to be effective net investment hedges in conformity with IAS 39 Financial Instruments: Recognition and Measurement hedge accounting rules.
HEDGING RESERVES
The hedging reserves comprise the
effective portion of the cumulative net change in the fair value of cash flow hedges to the extent the hedged risk has not yet impacted profit or loss see also Note 27 Risks arising from financial instruments.
TRANSFERS FROM SUBSIDIARIES
The amount of dividends
payable to AB InBev by its operating subsidiaries is subject to, among other restrictions, general limitations imposed by the corporate laws, capital transfer restrictions and exchange control restrictions of the respective jurisdictions where those
subsidiaries are organized and operate. Capital transfer restrictions are also common in certain emerging market countries, and may affect AB InBevs flexibility in implementing a capital structure it believes to be efficient. Dividends paid to
AB InBev by certain of its subsidiaries are also subject to withholding taxes. Withholding tax, if applicable, generally does not exceed 10%.
DEFERRED
SHARE INSTRUMENT
In a transaction related to the combination with Grupo Modelo, select Grupo Modelo shareholders committed, upon tender of their Grupo
Modelo shares, to acquire 23 076 923 AB InBev shares to be delivered within 5 years for consideration of approximately 1.5 billion US dollar. The consideration was paid on 5 June 2013. Pending the delivery of the AB InBev shares, AB InBev will
pay a coupon on each undelivered AB InBev share, so that the Deferred Share Instrument holders are compensated on an after tax basis, for dividends they would have received had the AB InBev shares been delivered to them prior to the record date for
such dividend.
The deferred share instrument is classified as an equity instrument, in line with IAS 32, as the number of shares and consideration
received are fixed. The coupon to compensate for the dividend equivalent is reported through equity. On 14 November 2014, the company paid a coupon of 1.00 euro per share or approximately 31m US dollar. On 30 April 2014, the company paid a
coupon of 1.45 euro per share or approximately 44m US dollar.
AB InBev included the weighted average number of shares promised via the deferred share
instruments as of 5 June 2013 in the calculation of the basic and diluted earnings per shares.
STOCK LENDING
In order to fulfil AB InBevs commitments under various outstanding stock option plans, AB InBev entered into stock lending arrangements for up to
13 million of its own ordinary shares. AB InBev shall pay any dividend equivalent, after tax in respect of the loaned securities. This payment will be reported through equity as dividend.
53
As of 31 December 2014, 10 million loaned securities were used to fulfil stock option plan commitments.
EARNINGS PER SHARE
The calculation of basic
earnings per share is based on the profit attributable to equity holders of AB InBev of 9 216m US dollar (2013: 14 394m US dollar) and a weighted average number of ordinary shares (including deferred share instruments and stock lending) outstanding
during the year, calculated as follows:
|
|
|
|
|
|
|
|
|
Million shares |
|
2014 |
|
|
2013 |
|
|
|
|
Issued ordinary shares at 1 January, net of treasury shares |
|
|
1 607 |
|
|
|
1 602 |
|
Effect of shares issued and share buyback programs |
|
|
|
|
|
|
2 |
|
Effect of stock lending |
|
|
4 |
|
|
|
|
|
Effect of undelivered shares under the deferred share instrument |
|
|
23 |
|
|
|
13 |
|
|
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares at 31 December |
|
|
1 634 |
|
|
|
1 617 |
|
The calculation of diluted earnings per share is based on the profit attributable to equity holders of AB InBev of 9 216m US
dollar (2013: 14 394m US dollar) and a weighted average number of ordinary shares (diluted) outstanding (including deferred share instruments and stock lending) during the year, calculated as follows:
|
|
|
|
|
|
|
|
|
Million shares |
|
2014 |
|
|
2013 |
|
|
|
|
Weighted average number of ordinary shares at 31 December |
|
|
1 607 |
|
|
|
1 604 |
|
Effect of stock lending |
|
|
4 |
|
|
|
|
|
Effect of undelivered shares under the deferred share instrument |
|
|
23 |
|
|
|
13 |
|
Effect of share options, warrants and restricted stock units |
|
|
31 |
|
|
|
33 |
|
|
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares (diluted) at 31 December |
|
|
1 665 |
|
|
|
1 650 |
|
The calculation of earnings per share before non-recurring items is based on the profit after tax and before non-recurring
items, attributable to equity holders of AB InBev. A reconciliation of profit before non-recurring items, attributable to equity holders of AB InBev to profit attributable to equity holders of AB InBev is calculated as follows:
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
2013 |
|
|
|
|
Profit before non-recurring items, attributable to equity holders of AB InBev |
|
|
8 865 |
|
|
|
7 936 |
|
Non-recurring items, after taxes, attributable to equity holders of AB InBev (refer Note 8) |
|
|
(158 |
) |
|
|
6 175 |
|
Non-recurring finance cost, after taxes, attributable to equity holders of AB InBev (refer Note 8) |
|
|
509 |
|
|
|
283 |
|
|
|
|
|
|
|
|
|
|
Profit attributable to equity holders of AB InBev |
|
|
9 216 |
|
|
|
14 394 |
|
The table below sets out the EPS calculation:
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
2013 |
|
|
|
|
Profit attributable to equity holders of AB InBev |
|
|
9 216 |
|
|
|
14 394 |
|
Weighted average number of ordinary shares |
|
|
1 634 |
|
|
|
1 617 |
|
Basic EPS |
|
|
5.64 |
|
|
|
8.90 |
|
|
|
|
Profit before non-recurring items, attributable to equity holders of AB InBev |
|
|
8 865 |
|
|
|
7 936 |
|
Weighted average number of ordinary shares |
|
|
1 634 |
|
|
|
1 617 |
|
EPS before non-recurring items |
|
|
5.43 |
|
|
|
4.91 |
|
|
|
|
Profit attributable to equity holders of AB InBev |
|
|
9 216 |
|
|
|
14 394 |
|
Weighted average number of ordinary shares (diluted) |
|
|
1 665 |
|
|
|
1 650 |
|
Diluted EPS |
|
|
5.54 |
|
|
|
8.72 |
|
|
|
|
Profit before non-recurring items, attributable to equity holders of AB InBev |
|
|
8 865 |
|
|
|
7 936 |
|
Weighted average number of ordinary shares (diluted) |
|
|
1 665 |
|
|
|
1 650 |
|
Diluted EPS before non-recurring items |
|
|
5.32 |
|
|
|
4.81 |
|
The average market value of the companys shares for purposes of calculating the dilutive effect of share options and
restricted stock units was based on quoted market prices for the period that the options and restricted stock units were outstanding. 8.5m share options were anti-dilutive and not included in the calculation of the dilutive effect as at
31 December 2014.
54
22. |
INTEREST-BEARING LOANS AND BORROWINGS |
This note provides information about the companys
interest-bearing loans and borrowings. For more information about the companys exposure to interest rate and foreign currency risk, refer to Note 27 Risks arising from financial instruments.
|
|
|
|
|
|
|
|
|
NON-CURRENT LIABILITIES
Million US dollar |
|
2014 |
|
|
2013 |
|
|
|
|
Secured bank loans |
|
|
169 |
|
|
|
192 |
|
Unsecured bank loans |
|
|
260 |
|
|
|
349 |
|
Unsecured bond issues |
|
|
43 014 |
|
|
|
40 526 |
|
Unsecured other loans |
|
|
57 |
|
|
|
75 |
|
Finance lease liabilities |
|
|
130 |
|
|
|
132 |
|
|
|
|
|
|
|
|
|
|
|
|
|
43 630 |
|
|
|
41 274 |
|
|
|
|
CURRENT LIABILITIES
Million US dollar |
|
2014 |
|
|
2013 |
|
|
|
|
Secured bank loans |
|
|
117 |
|
|
|
94 |
|
Commercial papers |
|
|
2 211 |
|
|
|
2 065 |
|
Unsecured bank loans |
|
|
560 |
|
|
|
345 |
|
Unsecured bond issues |
|
|
4 535 |
|
|
|
5 327 |
|
Unsecured other loans |
|
|
25 |
|
|
|
12 |
|
Finance lease liabilities |
|
|
3 |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
7 451 |
|
|
|
7 846 |
|
The current and non-current interest-bearing loans and borrowings amount to 51.1 billion US dollar as of 31 December 2014,
compared to 49.1 billion US dollar as of 31 December 2013.
In connection with the announcement of the acquisition of OB, on 27 January 2014,
Anheuser-Busch InBev Finance Inc., a subsidiary of AB InBev, issued 5.25 billion US dollar aggregated principal amount of bonds, consisting of 1.2 billion US dollar aggregated principal amount of fixed rate notes due 2017, 0.3 billion US dollar
aggregated principal amount of floating rate notes due 2017, 1.25 billion US dollar aggregated principal amount of fixed rate notes due 2019, 0.25 billion US dollar aggregated principal amount of floating rate notes due 2019, 1.4 billion US dollar
aggregated principal amount of fixed rate notes due 2024 and 0.85 billion US dollar aggregated principal amount of fixed rate notes due 2044. The fixed rate notes bear interest at an annual rate of 1.125% for the 2017 notes, 2.150% for the 2019
notes, 3.700% for the 2024 notes and 4.625% for the 2044 notes. The floating rate notes bear interest at an annual rate of 19 basis points above three-month LIBOR for the 2017 floating rate notes and 40 basis points above three-month LIBOR for the
2019 floating rate notes.
In addition to the above, on 30 March 2014, AB InBev issued 2.5 billion euro aggregate principal amount of notes,
consisting of 850m euro aggregate principal amount of floating rate notes due 2018 bearing interest at an annual rate of 38 basis points above three-month EURIBOR; 650m euro aggregate principal amount of fixed rate notes due 2021 bearing interest at
an annual rate of 1.95% and 1.0 billion euro aggregate principal amount of fixed rate notes due 2026 bearing interest at an annual rate of 2.70%. The use of the proceeds of such issuance was for general corporate purposes.
As of 31 December 2014, there are no amounts drawn under the 8.0 billion US dollar 2010 Senior Facilities.
Commercial papers amount to 2.2 billion US dollar as of 31 December 2014 and include programs in US dollar and euro with a total authorized issuance up
to 3.0 billion US dollar and 1.0 billion euro, respectively.
AB InBev is in compliance with all its debt covenants as of 31 December 2014. The 2010
Senior Facilities do not include restrictive financial covenants.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TERMS AND DEBT REPAYMENT SCHEDULE AT 31 DECEMBER 2014
Million US dollar |
|
Total |
|
|
1 year or less |
|
|
1-2 years |
|
|
2-3 years |
|
|
3-5 years |
|
|
More than 5 years |
|
|
|
|
|
|
|
|
Secured bank loans |
|
|
286 |
|
|
|
117 |
|
|
|
72 |
|
|
|
28 |
|
|
|
41 |
|
|
|
28 |
|
Commercial papers |
|
|
2 211 |
|
|
|
2 211 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured bank loans |
|
|
820 |
|
|
|
560 |
|
|
|
138 |
|
|
|
63 |
|
|
|
59 |
|
|
|
|
|
Unsecured bond issues |
|
|
47 549 |
|
|
|
4 535 |
|
|
|
2 383 |
|
|
|
6 682 |
|
|
|
10 240 |
|
|
|
23 709 |
|
Unsecured other loans |
|
|
82 |
|
|
|
25 |
|
|
|
14 |
|
|
|
10 |
|
|
|
13 |
|
|
|
20 |
|
Finance lease liabilities |
|
|
133 |
|
|
|
3 |
|
|
|
4 |
|
|
|
4 |
|
|
|
14 |
|
|
|
108 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51 081 |
|
|
|
7 451 |
|
|
|
2 611 |
|
|
|
6 787 |
|
|
|
10 367 |
|
|
|
23 865 |
|
|
|
|
|
|
|
|
TERMS AND DEBT REPAYMENT SCHEDULE AT 31 DECEMBER 2013
Million US dollar |
|
Total |
|
|
1 year or less |
|
|
1-2 years |
|
|
2-3 years |
|
|
3-5 years |
|
|
More than 5 years |
|
|
|
|
|
|
|
|
Secured bank loans |
|
|
286 |
|
|
|
94 |
|
|
|
81 |
|
|
|
46 |
|
|
|
30 |
|
|
|
35 |
|
Commercial papers |
|
|
2 065 |
|
|
|
2 065 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured bank loans |
|
|
694 |
|
|
|
345 |
|
|
|
170 |
|
|
|
142 |
|
|
|
37 |
|
|
|
|
|
Unsecured bond issues |
|
|
45 853 |
|
|
|
5 327 |
|
|
|
4 587 |
|
|
|
2 465 |
|
|
|
8 677 |
|
|
|
24 797 |
|
Unsecured other loans |
|
|
87 |
|
|
|
12 |
|
|
|
22 |
|
|
|
15 |
|
|
|
10 |
|
|
|
28 |
|
Finance lease liabilities |
|
|
135 |
|
|
|
3 |
|
|
|
3 |
|
|
|
4 |
|
|
|
7 |
|
|
|
118 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49 120 |
|
|
|
7 846 |
|
|
|
4 863 |
|
|
|
2 672 |
|
|
|
8 761 |
|
|
|
24 978 |
|
55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCE LEASE LIABILITIES
Million US dollar |
|
2014 Payments |
|
|
2014 Interests |
|
|
2014 Principal |
|
|
2013 Payments |
|
|
2013 Interests |
|
|
2013 Principal |
|
|
|
|
|
|
|
|
Less than one year |
|
|
14 |
|
|
|
11 |
|
|
|
3 |
|
|
|
14 |
|
|
|
11 |
|
|
|
3 |
|
Between one and two years |
|
|
13 |
|
|
|
10 |
|
|
|
3 |
|
|
|
14 |
|
|
|
11 |
|
|
|
3 |
|
Between two and three years |
|
|
14 |
|
|
|
10 |
|
|
|
4 |
|
|
|
13 |
|
|
|
10 |
|
|
|
3 |
|
Between three and five years |
|
|
33 |
|
|
|
19 |
|
|
|
14 |
|
|
|
28 |
|
|
|
20 |
|
|
|
8 |
|
More than 5 years |
|
|
168 |
|
|
|
59 |
|
|
|
109 |
|
|
|
186 |
|
|
|
68 |
|
|
|
118 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
242 |
|
|
|
109 |
|
|
|
133 |
|
|
|
255 |
|
|
|
120 |
|
|
|
135 |
|
Net debt is defined as non-current and current interest-bearing loans and borrowings and bank overdrafts minus debt securities
and cash. Net debt is a financial performance indicator that is used by AB InBevs management to highlight changes in the companys overall liquidity position. The company believes that net debt is meaningful for investors as it is one of
the primary measures AB InBevs management uses when evaluating its progress towards deleveraging.
AB InBevs net debt increased to 42.1
billion US dollar as of 31 December 2014, from 38.8 billion US dollar as of 31 December 2013. Apart from operating results net of capital expenditures, the net debt is mainly impacted by the OB acquisition (5.5 billion US dollar), dividend
payments to shareholders of AB InBev and Ambev (7.4 billion US dollar), the payment of interests and taxes (4.6 billion US dollar) and the impact of changes in foreign exchange rates (447m US dollar decrease of net debt). See also note 6
Acquisitions and disposals of subsidiaries.
The following table provides a reconciliation of AB InBevs net debt as of the dates
indicated:
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
2013 |
|
|
|
|
Non-current interest-bearing loans and borrowings |
|
|
43 630 |
|
|
|
41 274 |
|
Current interest-bearing loans and borrowings |
|
|
7 451 |
|
|
|
7 846 |
|
|
|
|
|
|
|
|
|
|
|
|
|
51 081 |
|
|
|
49 120 |
|
|
|
|
Bank overdrafts |
|
|
41 |
|
|
|
6 |
|
Cash and cash equivalents |
|
|
(8 357 |
) |
|
|
(9 839 |
) |
Interest bearing loans granted (included within Trade and other receivables) |
|
|
(308 |
) |
|
|
(310 |
) |
Debt securities (included within Investment securities) |
|
|
(322 |
) |
|
|
(146 |
) |
|
|
|
|
|
|
|
|
|
Net debt |
|
|
42 135 |
|
|
|
38 831 |
|
AB InBev sponsors various post-employment benefit plans worldwide. These include
pension plans, both defined contribution plans, and defined benefit plans, and other post-employment benefits. In accordance with IAS 19 Employee Benefits post-employment benefit plans are classified as either defined contribution plans or
defined benefit plans.
DEFINED CONTRIBUTION PLANS
For defined contribution plans, AB InBev pays contributions to publicly or privately administered pension funds or insurance contracts. Once the
contributions have been paid, the group has no further payment obligation. The regular contribution expenses constitute an expense for the year in which they are due. For 2014, contributions paid into defined contribution plans for the company
amounted to 145m US dollar compared to 117m US dollar for 2013.
DEFINED BENEFIT PLANS
During 2014, the company contributed to 63 defined benefit plans, of which 49 are retirement plans and 14 are medical cost plans. Most plans provide benefits
related to pay and years of service. The Belgian, Brazilian, Dominican Republic, Dutch, Canadian, South Korean, Mexican, UK and US plans are partially funded. When plan assets are funded, the assets are held in legally separate funds set up in
accordance with applicable legal requirements and common practice in each country. The medical cost plans in Canada, US, and Brazil provide medical benefits to employees and their families after retirement. Many of the defined benefit plans are
closed to new entrants.
The present value of funded obligations includes a 210m US dollar liability related to two medical plans in Brazil, for which the
benefits are provided through the Fundação Antonio Helena Zerrenner (FAHZ). The FAHZ is a legally distinct entity which provides medical, dental, educational and social assistance to current and retired employees of Ambev.
On 31 December 2014, the actuarial liabilities related to the benefits provided by the FAHZ are fully offset by an equivalent amount of assets existing in the fund. The net liability recognized in the balance sheet is nil.
The employee benefit net liability amounts to 3 039m US dollar as of 31 December 2014 compared to 2 852m US dollar as of 31 December 2013. In 2014,
the fair value of the plan assets value decreased by 603m US dollar and the defined benefit obligations decreased by 488m US dollar. The increase in the employee benefit net liability is mainly driven by unfavorable changes in discount rates (mainly
in the Eurozone, Mexico, US, UK and Canada) and mortality assumptions in the US, partially offset by positive asset returns and gains on plan amendments of post-retirement pensions and healthcare benefits in the US.
56
The companys net liability for post-employment and long-term employee benefit plans comprises the following
at 31 December:
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
2013 |
|
|
|
|
Present value of funded obligations |
|
|
(7 776 |
) |
|
|
(7 939 |
) |
Fair value of plan assets |
|
|
5 773 |
|
|
|
6 376 |
|
|
|
|
|
|
|
|
|
|
Present value of net obligations for funded plans |
|
|
(2 003 |
) |
|
|
(1 563 |
) |
Present value of unfunded obligations |
|
|
(809 |
) |
|
|
(1 134 |
) |
|
|
|
|
|
|
|
|
|
Present value of net obligations |
|
|
(2 812 |
) |
|
|
(2 697 |
) |
|
|
|
Unrecognized asset |
|
|
(171 |
) |
|
|
(137 |
) |
|
|
|
|
|
|
|
|
|
Net liability |
|
|
(2 983 |
) |
|
|
(2 834 |
) |
|
|
|
Other long term employee benefits |
|
|
(57 |
) |
|
|
(18 |
) |
|
|
|
|
|
|
|
|
|
Total employee benefits |
|
|
(3 039 |
) |
|
|
(2 852 |
) |
|
|
|
Employee benefits amounts in the balance sheet: |
|
|
|
|
|
|
|
|
Liabilities |
|
|
(3 049 |
) |
|
|
(2 862 |
) |
Assets |
|
|
10 |
|
|
|
10 |
|
|
|
|
|
|
|
|
|
|
Net liability |
|
|
(3 039 |
) |
|
|
(2 852 |
) |
The changes in the present value of the defined benefit obligations are as follows:
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
2013 |
|
|
|
|
Defined benefit obligation at 1 January |
|
|
(9 073 |
) |
|
|
(9 055 |
) |
Current service costs |
|
|
(74 |
) |
|
|
(105 |
) |
Interest cost |
|
|
(438 |
) |
|
|
(428 |
) |
Past service gain/(cost) |
|
|
334 |
|
|
|
63 |
|
(Losses)/gains on curtailments |
|
|
|
|
|
|
88 |
|
Settlements |
|
|
176 |
|
|
|
|
|
Benefits paid |
|
|
896 |
|
|
|
498 |
|
Contribution by plan participants |
|
|
(4 |
) |
|
|
(4 |
) |
Acquisition through business combination |
|
|
(78 |
) |
|
|
(942 |
) |
Actuarial gains/(losses) demographic assumptions |
|
|
(210 |
) |
|
|
(110 |
) |
Actuarial gains/(losses) financial assumptions |
|
|
(962 |
) |
|
|
729 |
|
Experience adjustments |
|
|
(40 |
) |
|
|
33 |
|
Exchange differences |
|
|
445 |
|
|
|
160 |
|
Transfers and other movements |
|
|
443 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined benefit obligation at 31 December |
|
|
(8 585 |
) |
|
|
(9 073 |
) |
Transfers and other movements refer to the fact that, effective 1 January 2014, the company discontinued the
proportional consolidation of certain operations see also Note 4 Use of estimates and judgments.
As at the last valuation date, the present
value of the defined benefit obligation was comprised of approximately 2.3 billion US dollar relating to active employees, 1.5 billion US dollar relating to deferred members and 4.8 billion US dollar relating to members in retirement.
The changes in the fair value of plan assets are as follows:
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
2013 |
|
|
|
|
Fair value of plan assets at 1 January |
|
|
6 376 |
|
|
|
5 704 |
|
Interest income |
|
|
328 |
|
|
|
299 |
|
Administration costs |
|
|
(24 |
) |
|
|
(23 |
) |
Return on plan assets exceeding interest income |
|
|
418 |
|
|
|
159 |
|
Contributions by AB InBev |
|
|
326 |
|
|
|
324 |
|
Contributions by plan participants |
|
|
4 |
|
|
|
4 |
|
Benefits paid net of administration costs |
|
|
(896 |
) |
|
|
(498 |
) |
Acquisition through business combination |
|
|
51 |
|
|
|
694 |
|
Assets distributed on settlements |
|
|
(82 |
) |
|
|
|
|
Exchange differences |
|
|
(338 |
) |
|
|
(141 |
) |
Transfers and other movements |
|
|
(392 |
) |
|
|
(146 |
) |
|
|
|
|
|
|
|
|
|
Fair value of plan assets at 31 December |
|
|
5 773 |
|
|
|
6 376 |
|
Actual return on plans assets amounted to a gain of 746m US dollar in 2014 compared to a gain of 458m US dollar in 2013. The
increase is mainly driven by higher market returns particularly in Brazil, US and UK.
The acquisition through business combinations in 2014 stems from
the OB combination.
Transfers and other movements refer to the fact that, effective 1 January 2014, the company discontinued the proportional
consolidation of certain operations see also Note 4 Use of estimates and judgments.
57
The changes in the asset ceiling are as follows:
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
2013 |
|
|
|
|
Irrecoverable surplus impact at 1 January |
|
|
(136 |
) |
|
|
(307 |
) |
Interest expense |
|
|
(12 |
) |
|
|
(27 |
) |
Change in asset ceiling excluding amounts included in interest expense |
|
|
(22 |
) |
|
|
197 |
|
|
|
|
|
|
|
|
|
|
Irrecoverable surplus impact at 31 December |
|
|
(171 |
) |
|
|
(136 |
) |
The expense recognized in the income statement with regard to defined benefit plans can be detailed as follows:
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
2013 |
|
|
|
|
Current service costs |
|
|
(74 |
) |
|
|
(105 |
) |
Administration costs |
|
|
(24 |
) |
|
|
(23 |
) |
Past service cost |
|
|
334 |
|
|
|
63 |
|
(Losses)/gains on settlements or curtailments |
|
|
94 |
|
|
|
88 |
|
|
|
|
|
|
|
|
|
|
Profit from operations |
|
|
330 |
|
|
|
23 |
|
Finance cost |
|
|
(124 |
) |
|
|
(156 |
) |
|
|
|
|
|
|
|
|
|
Total employee benefit expense |
|
|
206 |
|
|
|
(132 |
) |
The employee benefit expense is included in the following line items of the income statement:
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
2013 |
|
|
|
|
Cost of sales |
|
|
(1 |
) |
|
|
(56 |
) |
Distribution expenses |
|
|
(9 |
) |
|
|
(3 |
) |
Sales and marketing expenses |
|
|
(14 |
) |
|
|
(8 |
) |
Administrative expenses |
|
|
(24 |
) |
|
|
9 |
|
Other operating (expense)/income |
|
|
284 |
|
|
|
2 |
|
Non-recurring items |
|
|
85 |
|
|
|
80 |
|
Finance Cost |
|
|
(115 |
) |
|
|
(156 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
206 |
|
|
|
(132 |
) |
During 2014, the company implemented certain post-retirement pension and healthcare benefits, mainly in the US.
Weighted average assumptions used in computing the benefit obligations at the balance sheet date are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
United States |
|
Canada |
|
|
Mexico |
|
|
Brazil |
|
|
United Kingdom |
|
|
AB InBev |
|
|
|
|
|
|
|
Discount rate |
|
4.1% |
|
|
4.1 |
% |
|
|
6.5 |
% |
|
|
10.8 |
% |
|
|
3.8 |
% |
|
4.4% |
Price inflation |
|
|
|
|
2.0 |
% |
|
|
3.5 |
% |
|
|
4.5 |
% |
|
|
3.0 |
% |
|
2.7% |
Future salary increases |
|
2.0% |
|
|
1.0 |
% |
|
|
4.7 |
% |
|
|
5.8 |
% |
|
|
|
|
|
3.6% |
Future pension increases |
|
|
|
|
|
|
|
|
3.5 |
% |
|
|
|
|
|
|
2.8 |
% |
|
2.7% |
Medical cost trend rate |
|
6.9%-5.0% |
|
|
4.5 |
% |
|
|
|
|
|
|
8.2 |
% |
|
|
|
|
|
7.7%-5.8% |
Life expectation for a 65 year old male |
|
85 |
|
|
86 |
|
|
|
82 |
|
|
|
85 |
|
|
|
87 |
|
|
85 |
Life expectation for a 65 year old female |
|
88 |
|
|
89 |
|
|
|
85 |
|
|
|
88 |
|
|
|
89 |
|
|
88 |
|
|
|
|
2013 |
|
|
United States |
|
Canada |
|
|
Mexico |
|
|
Brazil |
|
|
United Kingdom |
|
|
AB InBev |
|
|
|
|
|
|
|
Discount rate |
|
4.9% |
|
|
4.9% |
|
|
|
7.8 |
% |
|
|
11.3 |
% |
|
|
4.6 |
% |
|
5.4% |
Price inflation |
|
|
|
|
2.0% |
|
|
|
3.5 |
% |
|
|
4.5 |
% |
|
|
3.4 |
% |
|
2.7% |
Future salary increases |
|
2.0% |
|
|
1.3% |
|
|
|
4.7 |
% |
|
|
7.7 |
% |
|
|
3.4 |
% |
|
3.3% |
Future pension increases |
|
|
|
|
|
|
|
|
3.5 |
% |
|
|
|
|
|
|
3.1 |
% |
|
2.7% |
Medical cost trend rate |
|
8.1%-5.0% |
|
|
4.2%-4.5% |
|
|
|
|
|
|
|
8.2 |
% |
|
|
|
|
|
7.6%-5.8% |
Life expectation for a 65 year old male |
|
83 |
|
|
85 |
|
|
|
83 |
|
|
|
85 |
|
|
|
87 |
|
|
84 |
Life expectation for a 65 year old female |
|
85 |
|
|
87 |
|
|
|
83 |
|
|
|
88 |
|
|
|
89 |
|
|
87 |
Through its defined benefit pension plans and
post-employment medical plans, the company is exposed to a number of risks, the most significant are detailed below:
ASSET VOLATILITY
The plan liabilities are calculated using a discount rate set with reference to high quality corporate yields; if plan assets underperform this yield, the
companys net defined benefit obligation may increase. Most of the companys funded plans hold a significant proportion of equities, which are expected to outperform corporate bonds in the long-term while providing volatility and risk in
the short-term. As the plans mature, the company usually reduces the level of investment risk by investing more in assets that better match the liabilities. However, the company believes that due to the long-term nature of the plan liabilities, a
level of continuing equity investment is an appropriate element of the companys long-term strategy to manage the plans efficiently.
CHANGES IN
BOND YIELDS
A decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of
the plans bond holdings.
58
INFLATION RISK
Some of the companys pension obligations, mainly in the UK, are linked to inflation, and higher inflation will lead to higher liabilities. The majority
of the plans assets are either unaffected by or loosely correlated with inflation, meaning that an increase in inflation could potentially increase the companys net benefit obligation.
LIFE EXPECTANCY
The majority of the plans
obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the plans liabilities.
In case of funded plans, the company ensures that the investment positions are managed within an asset-liability matching (ALM) framework that has been
developed to achieve long-term investments that are in line with the obligations under the pension schemes. Within this framework, the companys ALM objective is to match assets to the pension obligations by investing in long-term fixed
interest securities with maturities that match the benefit payments as they fall due and in the appropriate currency. The company actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows
arising from the pension obligation. The company has not changed the processes used to manage its risks from previous periods.
The weighted average
duration of the defined benefit obligation is 14.3 years (2013: 13.9 years).
The sensitivity of the defined benefit obligation to changes in the weighted
principal assumptions is:
|
|
|
|
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
|
Change in assumption |
|
|
Increase in assumption |
|
|
Decrease in assumption |
|
Discount rate |
|
|
0.50 |
% |
|
|
(556 |
) |
|
|
613 |
|
Future salary increase |
|
|
0.50 |
% |
|
|
28 |
|
|
|
(26 |
) |
Medical cost trend rate |
|
|
1.00 |
% |
|
|
49 |
|
|
|
(43 |
) |
Longevity |
|
|
One year |
|
|
|
214 |
|
|
|
(207 |
) |
The above are purely hypothetical changes in individual assumptions holding all other assumptions constant: economic conditions
and changes therein will often affect multiple assumptions at the same time and the effects of changes in key assumptions are not linear. Therefore, the above information is not necessarily a reasonable representation of future results.
The fair value of plan assets at 31 December consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
2013 |
|
|
|
Quoted |
|
|
Unquoted |
|
|
Total |
|
|
Quoted |
|
|
Unquoted |
|
|
Total |
|
Government bonds |
|
|
29 |
% |
|
|
|
|
|
|
29 |
% |
|
|
27 |
% |
|
|
|
|
|
|
27 |
% |
Corporate bonds |
|
|
26 |
% |
|
|
|
|
|
|
26 |
% |
|
|
27 |
% |
|
|
|
|
|
|
27 |
% |
Equity instruments |
|
|
36 |
% |
|
|
|
|
|
|
36 |
% |
|
|
40 |
% |
|
|
|
|
|
|
40 |
% |
Property |
|
|
|
|
|
|
3 |
% |
|
|
3 |
% |
|
|
|
|
|
|
3 |
% |
|
|
3 |
% |
Insurance contracts and others |
|
|
5 |
% |
|
|
1 |
% |
|
|
6 |
% |
|
|
3 |
% |
|
|
|
|
|
|
3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
96 |
% |
|
|
4 |
% |
|
|
100 |
% |
|
|
97 |
% |
|
|
3 |
% |
|
|
100 |
% |
AB InBev expects to contribute approximately 250m US dollar for its funded defined benefit plans and 68m US dollar in
benefit payments to its unfunded defined benefit plans and post-retirement medical plans in 2015.
24. |
SHARE-BASED PAYMENTS1 |
Different share and share
option programs allow company senior management and members of the Board of Directors to receive or acquire shares of AB InBev or Ambev. AB InBev has three primary share-based compensation plans, the share-based compensation plan
(Share-Based Compensation Plan), established in 2006 and amended as from 2010, the long-term incentive warrant plan (LTI Warrant Plan), established in 1999 and replaced by a long-term incentive stock option plan for directors
(LTI Stock Option Plan Directors) in 2014, and the long-term incentive stock-option plan for executives (LTI Stock Option Plan Executives), established in 2009. For all option plans, the fair value of share-based payment
compensation is estimated at grant date, using a binomial Hull model, modified to reflect the IFRS 2 Share-based Payment requirement that assumptions about forfeiture before the end of the vesting
period cannot impact the fair value of the option.
Share-based payment transactions resulted in a total expense of 251m US dollar for the year 2014
(including the variable compensation expense settled in shares), as compared to 243m US dollar for the year 2013.
AB INBEV SHARE-BASED PAYMENT PROGRAMS
Share-Based
Compensation Plan
As from 1 January 2010, the structure of the Share-Based Compensation Plan for certain executives, including the executive
board of management and other senior management in the general headquarters, has been modified. From 1 January 2011, the new plan structure applies to all other senior management. Under this plan, the executive board of management and other
senior employees will receive their bonus in cash but have the choice to invest some or all of the value of their bonus in AB InBev shares with a five-year vesting period, referred to as bonus shares. Such voluntary investment leads to a 10%
discount to the market price of the shares. The company will also match such voluntary investment by granting three matching shares for each bonus share voluntarily invested in, up to a limited total percentage of each participants bonus. The
percentage of the variable compensation that is entitled to get matching shares varies depending on the position of the executive. The matching is based on the gross amount of the variable
1 |
Amounts have been converted to US dollar at the average rate of the period. |
59
compensation invested. The discount shares and matching shares are granted in the form of restricted stock units which have a five-year vesting period. Additionally, the holders of the restricted
stock units may be entitled to receive from AB InBev additional restricted stock units equal to the dividends declared since the restricted stock units were granted.
During 2014, AB InBev issued 0.9m of matching restricted stock units in relation to the 2013 bonus granted to company employees and management. These matching
restricted stock units are valued at the share price of the day of grant, representing a fair value of approximately 90m US dollar, and cliff vest after five years. During 2013, AB InBev issued 0.8m of matching restricted stock units according to
the Share-Based Compensation Plan, with an estimated fair value of approximately 78m US dollar, in relation to the 2012 bonus.
LTI Warrant Plan
replaced by LTI Stock Option Plan for Directors
Before 2014, the company issued regularly warrants, or rights to subscribe for newly issued shares
under the LTI Warrant Plan for the benefit of directors and, until 2006, for the benefit of members of the executive board of management and other senior employees. Each LTI warrant gave its holder the right to subscribe for one newly issued share.
The exercise price of LTI warrants is equal to the average price of the companys shares on the regulated market of Euronext Brussels during the 30 days preceding their issue date. LTI warrants granted in the years prior to 2007 (except for
2003) have a duration of ten years; LTI warrants granted as from 2007 (and in 2003) have a duration of five years. LTI warrants are subject to a vesting period ranging from one to three years. Forfeiture of a warrant occurs in certain circumstances
when the holder leaves our employment. At the annual shareholders meeting of 30 April 2014, all outstanding LTI warrants under the companys LTI Warrant Plan were converted into LTI stock options, i.e. the right to purchase existing
ordinary shares of Anheuser-Busch InBev SA/NV instead of the right to subscribe to newly issued shares. All other terms and conditions of the existing grants under the LTI Warrant Plan remain unchanged.
Since 2007, members of the executive board of management and other employees are no longer eligible to receive warrants under the LTI Warrant Plan, but
instead receive a portion of their compensation in the form of shares and options granted under the Share-Based Compensation Plan and the LTI Stock Option Plan Executives.
Since 2014, directors are no longer eligible to receive warrants under the LTI Warrant Plan. Instead, on 30 April 2014, the annual shareholders meeting
decided to replace the LTI Warrant Plan by a LTI Stock Option plan for directors. As a result, grants for directors now consist of LTI stock options instead of LTI warrants (i.e. the right to purchase existing shares instead of the right to
subscribe to newly issued shares). Grants are made annually at our shareholders meeting on a discretionary basis upon recommendation of the Remuneration Committee. The LTI stock options have an exercise price that is set equal to the market price at
the time of the granting, a maximum lifetime of 10 years and an exercise period that starts after 5 years. The LTI stock options cliff vest after 5 years. Unvested options are subject to specific forfeiture provisions in the event that the
directorship is not renewed upon the expiry of its term or is terminated in the course of its term, both due to a breach of duty by the director.
AB
InBev granted 0.2m stock options to members of the board of directors during 2014 representing a fair value of approximately 4m US dollar. During 2013, 0.2m warrants with a fair value of approximately 3m US dollar were granted under this plan.
LTI Stock Option Plan Executives
As from 1 July
2009, senior employees are eligible for an annual long-term incentive to be paid out in LTI stock options (or, in future, similar share-based instruments), depending on managements assessment of the employees performance and future
potential.
In December 2014 AB InBev issued 4.4m LTI stock options with an estimated fair value of 101m US dollar, whereby 1.3m options relate to
American Depositary Shares (ADSs) and 3.1m options to AB InBev shares. In December 2013 AB InBev issued 4.1m LTI stock options with an estimated fair value of 93m US dollar, whereby 1.2m options relate to American Depositary Shares (ADSs) and
2.9m options to AB InBev shares.
Other Grants
As
from 2010 AB InBev has in place three specific long-term restricted stock unit programs. One program allows for the offer of restricted stock units to certain employees in certain specific circumstances, whereby grants are made at the discretion of
the CEO, e.g. to compensate for assignments of expatriates in countries with difficult living conditions. The restricted stock units vest after five years and in case of termination of service before the vesting date, special forfeiture rules apply.
In 2014, 0.1m restricted stock units with an estimated fair value of 2m US dollar were granted under this program to a selected number of employees. In 2013, 0.4m restricted stock units with an estimated fair value of 36m US dollar were granted
under this program.
A second program allows for the exceptional offer of restricted stock units to certain employees at the discretion of the
Remuneration Committee of AB InBev as a long-term retention incentive for key employees of the company. Employees eligible to receive a grant under this program receive two series of restricted stock units, the first half of the restricted stock
units vesting after five years, the second half after ten years. In case of termination of service before the vesting date, special forfeiture rules apply. In December 2014 0.2m restricted stock units with an estimated fair value of 21m US dollar
were granted under this program to a selected number of employees. In December 2013 0.4m restricted stock units with an estimated fair value of 34m US dollar were granted under this program.
A third program allows certain employees to purchase company shares at a discount aimed as a long-term retention incentive for (i) high-potential
employees of the company, who are at a mid-manager level (People bet share purchase program) or (ii) for newly hired employees. The voluntary investment in company shares leads to the grant of 3 matching shares for each share
invested. The discount and matching shares are granted in the form of restricted stock units which vest after 5 years. In case of termination before the vesting date, special forfeiture rules apply. In 2014, employees purchased shares under this
program for the equivalent of 0.5m US dollar (2013: equivalent of 0.5m US dollar).
In order to maintain consistency of benefits granted to executives and
to encourage international mobility of executives, an options exchange program has been executed whereby unvested options are exchanged against restricted shares that remain locked-up until
60
31 December 2023. In 2014, 0.5m unvested options were exchanged against 0.5m restricted shares. In 2013, 0.6m unvested options were exchanged against 0.5m restricted shares. As a variant to
this program, the Remuneration Committee has also approved the early release of the vesting conditions of 0.5m unvested options. The shares that result from the exercise of the options must remain locked-up until 31 December 2023. As the
vesting period for these stock options was changed, an accelerated expense was recorded as a result of the modification. Furthermore, certain options granted have been modified whereby the dividend protected feature of these options have been
cancelled and compensated by the issuance of new additional options. In 2014 0.1m new options were issued, representing the economic value of the dividend protection feature (2013: 0.6m new options). As there was no change between the fair value of
the original award immediately before the modification and the fair value of the modified award immediately after the modification, no additional expense was recorded as a result of the modification.
For further information on share-based payment grants of previous years, please refer to Note 24 Share-based payments of the 2013 consolidated
financial statements.
The weighted average fair value of the options and assumptions used in applying the AB InBev option pricing model for the 2014
grants of awards described above are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts in US dollar unless otherwise indicated1 |
|
2014 |
|
|
2013 |
|
|
2012 |
|
|
|
|
|
Fair value of options and warrants granted |
|
|
20.70 |
|
|
|
21.74 |
|
|
|
19.57 |
|
Share price |
|
|
113.29 |
|
|
|
103.06 |
|
|
|
86.87 |
|
Exercise price |
|
|
113.29 |
|
|
|
103.05 |
|
|
|
86.83 |
|
Expected volatility |
|
|
24 |
% |
|
|
24 |
% |
|
|
25 |
% |
Expected dividends |
|
|
3.00 |
% |
|
|
2.92 |
% |
|
|
2.50 |
% |
Risk-free interest rate |
|
|
1.23 |
% |
|
|
2.06 |
% |
|
|
1.73 |
% |
Expected volatility is based on historical volatility calculated using 2 531 days of historical data. In the determination of
the expected volatility, AB InBev is excluding the volatility measured during the period 15 July 2008 until 30 April 2009, in view of the extreme market conditions experienced during that period. The binomial Hull model assumes that all
employees would immediately exercise their options if the AB InBev share price is 2.5 times above the exercise price. As a result, no single expected option life applies.
The total number of outstanding AB InBev options and warrants developed as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Million options and warrants |
|
2014 |
|
|
2013 |
|
|
2012 |
|
|
|
|
|
Options and warrants outstanding at 1 January |
|
|
52.5 |
|
|
|
53.3 |
|
|
|
54.4 |
|
Options and warrants issued during the year |
|
|
4.5 |
|
|
|
4.8 |
|
|
|
4.5 |
|
Options and warrants exercised during the year |
|
|
(10.0 |
) |
|
|
(4.2 |
) |
|
|
(3.3 |
) |
Options and warrants forfeited during the year |
|
|
(1.4 |
) |
|
|
(1.4 |
) |
|
|
(2.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Options and warrants outstanding at the end of December |
|
|
45.6 |
|
|
|
52.5 |
|
|
|
53.3 |
|
The range of exercise prices of the outstanding options and warrants is between 10.32 euro (12.53 US dollar) and
96.36 euro (116.99 US dollar) while the weighted average remaining contractual life is 7.34 years.
Of the 45.6m outstanding options and warrants
10.8m are vested at 31 December 2014.
The weighted average exercise price of the AB InBev options and warrants is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts in US dollar1 |
|
2014 |
|
|
2013 |
|
|
2012 |
|
|
|
|
|
Options and warrants outstanding at 1 January |
|
|
45.38 |
|
|
|
38.31 |
|
|
|
32.98 |
|
Granted during the year |
|
|
113.29 |
|
|
|
103.05 |
|
|
|
87.94 |
|
Exercised during the year |
|
|
24.40 |
|
|
|
41.07 |
|
|
|
31.85 |
|
Forfeited during the year |
|
|
45.75 |
|
|
|
45.18 |
|
|
|
32.82 |
|
Outstanding at the end of December |
|
|
51.35 |
|
|
|
45.38 |
|
|
|
38.31 |
|
Exercisable at the end of December |
|
|
36.21 |
|
|
|
57.28 |
|
|
|
40.65 |
|
For share options and warrants exercised during 2014, the weighted average share price at the date of exercise was 83.54 euro
(101.42 US dollar).
The total number of outstanding AB InBev restricted stock units developed as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Million restricted stock units |
|
2014 |
|
|
2013 |
|
|
2012 |
|
|
|
|
|
Restricted stock units outstanding at 1 January |
|
|
4.7 |
|
|
|
3.3 |
|
|
|
2.3 |
|
Restricted stock units issued during the year |
|
|
1.3 |
|
|
|
1.6 |
|
|
|
1.1 |
|
Restricted stock units exercised during the year |
|
|
|
|
|
|
|
|
|
|
|
|
Restricted stock units forfeited during the year |
|
|
(0.2 |
) |
|
|
(0.2 |
) |
|
|
(0.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted stock units outstanding at the end of December |
|
|
5.8 |
|
|
|
4.7 |
|
|
|
3.3 |
|
1 |
Amounts have been converted to US dollar at the closing rate of the respective period. |
61
AMBEV SHARE-BASED PAYMENT PROGRAMS
Since 2005, Ambev has had a plan which is substantially similar to the Share-based compensation plan under which bonuses granted to company employees and
management are partially settled in shares. Under the Share-based compensation plan as modified as of 2010 Ambev issued in March 2014, 5.2m restricted stock units with an estimated fair value of 38m US dollar. In March 2013, Ambev issued 4.3m
restricted stock units with an estimated fair value of 35m US dollar.
As from 2010, senior employees are eligible for an annual long-term incentive to be
paid out in Ambev LTI stock options (or, in future, similar share-based instruments), depending on managements assessment of the employees performance and future potential. In 2014, Ambev granted 16.8m LTI stock options with an estimated
fair value of 37m US dollar. In 2013, Ambev granted 12.8m LTI stock options with an estimated fair value of 36m US dollar.
In order to encourage the
mobility of managers, the features of certain Ambev options granted in previous years have been modified whereby the dividend protection of these options was cancelled and replaced by the issuance of 0.2m options in 2014 representing the economic
value of the dividend protection feature. In 2013, 0.2m options were issued representing the economic value of the dividend protection feature. Since there was no change between the fair value of the original award before the modification and the
fair value of the modified award after the modification, no additional expense was recorded as a result of this modification.
The weighted fair value of
the options and assumptions used in applying a binomial option pricing model for the 2014 Ambev grants are as follows:
|
|
|
|
|
|
|
Amounts in US dollar unless otherwise indicated1 |
|
2014 |
|
2013 |
|
20122 |
|
|
|
|
Fair value of options granted |
|
1.96 |
|
2.61 |
|
2.73 |
Share price |
|
6.00 |
|
7.30 |
|
8.34 |
Exercise price |
|
6.00 |
|
7.30 |
|
8.34 |
Expected volatility |
|
32% |
|
33% |
|
33% |
Expected dividends |
|
0.00% - 5.00% |
|
0.00% - 5.00% |
|
0.00% - 5.00% |
Risk-free interest rate |
|
2.20% - 12.40%3 |
|
1.90% - 12.60%3 |
|
2.10% - 11.20%3 |
The total number of outstanding Ambev options developed as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Million options |
|
2014 |
|
|
2013 |
|
|
20122 |
|
|
|
|
|
Options outstanding at 1 January |
|
|
147.7 |
|
|
|
143.9 |
|
|
|
147.8 |
|
Options issued during the year |
|
|
17.0 |
|
|
|
13.1 |
|
|
|
15.5 |
|
Options exercised during the year |
|
|
(34.8 |
) |
|
|
(7.2 |
) |
|
|
(12.5 |
) |
Options forfeited during the year |
|
|
(3.8 |
) |
|
|
(2.1 |
) |
|
|
(6.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Options outstanding at the end of December |
|
|
126.1 |
|
|
|
147.7 |
|
|
|
143.9 |
|
Following the decision of the General Meeting of Shareholders of 30 July 2013 effective on 11 November 2013, each
common share issued by Ambev was split into 5 shares, without any modification to the amount of the capital stock of Ambev. As a consequence of the split of the Ambev shares with a factor 5, the exercise price and the number of options were adjusted
with the intention of preserving the rights of the existing option holders.
The range of exercise prices of the outstanding options is between 1.06
Brazilian real (0.40 US dollar) and 19.14 Brazilian real (7.21 US dollar) while the weighted average remaining contractual life is 6.87 years.
Of the
126.1m outstanding options 35.9m options are vested at 31 December 2014.
The weighted average exercise price of the Ambev options is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts in US dollar1 |
|
2014 |
|
|
2013 |
|
|
20122 |
|
|
|
|
|
Options outstanding at 1 January |
|
|
2.69 |
|
|
|
3.54 |
|
|
|
3.18 |
|
Granted during the year |
|
|
6.03 |
|
|
|
7.27 |
|
|
|
8.39 |
|
Exercised during the year |
|
|
1.45 |
|
|
|
1.15 |
|
|
|
1.38 |
|
Forfeited during the year |
|
|
4.25 |
|
|
|
3.46 |
|
|
|
1.37 |
|
Outstanding at the end of December |
|
|
3.79 |
|
|
|
2.69 |
|
|
|
3.54 |
|
Exercisable at the end of December |
|
|
1.11 |
|
|
|
1.42 |
|
|
|
1.85 |
|
For share options exercised during 2014, the weighted average share price at the date of exercise was 16.12 Brazilian real
(6.07 US dollar).
The total number of outstanding Ambev restricted stock units developed as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Million restricted stock units |
|
2014 |
|
|
2013 |
|
|
20122 |
|
|
|
|
|
Restricted stock units outstanding at 1 January |
|
|
15.6 |
|
|
|
11.5 |
|
|
|
8.0 |
|
Restricted stock units issued during the year |
|
|
5.2 |
|
|
|
4.3 |
|
|
|
5.0 |
|
Restricted stock units exercised during the year |
|
|
(2.3 |
) |
|
|
|
|
|
|
|
|
Restricted stock units forfeited during the year |
|
|
(1.0 |
) |
|
|
(0.2 |
) |
|
|
(1.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted stock units outstanding at the end of December |
|
|
17.5 |
|
|
|
15.6 |
|
|
|
11.5 |
|
1 |
Amounts have been converted to US dollar at the closing rate of the respective period. |
2 |
Amounts have been adjusted for the Ambev share split of 11 November 2013. |
3 |
The weighted average risk-free interest rates refer to granted ADRs and stock options respectively. |
62
During 2014, a limited number of Ambev shareholders who are part of the senior management of AB InBev were given
the opportunity to exchange Ambev shares against a total of 0.6m AB InBev shares (0.1m AB InBev shares in 2013) at a discount of 16.7% provided that they stay in service for another five years. The fair value of this transaction amounts to
approximately 12m US dollar (2.2m US dollar in 2013) and is expensed over the five years service period. The fair values of the Ambev and AB InBev shares were determined based on the market price.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Million US dollar |
|
Restructuring |
|
|
Disputes |
|
|
Other |
|
|
Total |
|
|
|
|
|
|
Balance at 1 January 2014 |
|
|
177 |
|
|
|
535 |
|
|
|
16 |
|
|
|
728 |
|
Effect of changes in foreign exchange rates |
|
|
(10 |
) |
|
|
(40 |
) |
|
|
(2 |
) |
|
|
(52 |
) |
Provisions made |
|
|
65 |
|
|
|
327 |
|
|
|
1 |
|
|
|
393 |
|
Provisions used |
|
|
(56 |
) |
|
|
(130 |
) |
|
|
(1 |
) |
|
|
(187 |
) |
Provisions reversed |
|
|
(11 |
) |
|
|
(79 |
) |
|
|
(3 |
) |
|
|
(93 |
) |
Other movements |
|
|
1 |
|
|
|
10 |
|
|
|
(1 |
) |
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 31 December 2014 |
|
|
166 |
|
|
|
623 |
|
|
|
10 |
|
|
|
799 |
|
The restructuring provisions are primarily explained by the organizational alignments - see also Note 8 Non-recurring
items. Provisions for disputes mainly relate to various disputed direct and indirect taxes and to claims from former employees.
The provisions are
expected to be settled within the following time windows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Million US dollar |
|
Total |
|
|
< 1 year |
|
|
1-2 years |
|
|
2-5 years |
|
|
> 5 years |
|
|
|
|
|
|
|
Restructuring |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reorganization |
|
|
166 |
|
|
|
60 |
|
|
|
10 |
|
|
|
83 |
|
|
|
13 |
|
|
|
|
|
|
|
Disputes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income and indirect taxes |
|
|
356 |
|
|
|
43 |
|
|
|
247 |
|
|
|
53 |
|
|
|
13 |
|
Labor |
|
|
83 |
|
|
|
25 |
|
|
|
19 |
|
|
|
36 |
|
|
|
3 |
|
Commercial |
|
|
47 |
|
|
|
26 |
|
|
|
14 |
|
|
|
4 |
|
|
|
3 |
|
Other disputes |
|
|
137 |
|
|
|
9 |
|
|
|
95 |
|
|
|
32 |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
623 |
|
|
|
103 |
|
|
|
375 |
|
|
|
125 |
|
|
|
20 |
|
|
|
|
|
|
|
Other contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Onerous contracts |
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
|
|
Guarantees given |
|
|
3 |
|
|
|
|
|
|
|
1 |
|
|
|
2 |
|
|
|
|
|
Other contingencies |
|
|
6 |
|
|
|
2 |
|
|
|
1 |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10 |
|
|
|
2 |
|
|
|
2 |
|
|
|
6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total provisions |
|
|
799 |
|
|
|
165 |
|
|
|
387 |
|
|
|
214 |
|
|
|
33 |
|
Since 1 January 2005 AB InBev is subject to the greenhouse gas emission allowance trading scheme in force in the
European Union. Acquired emission allowances are recognized at cost as intangible assets. To the extent that it is expected that the number of allowances needed to settle the CO2 emissions
exceeds the number of emission allowances owned, a provision is recognized. Such provision is measured at the estimated amount of the expenditure required to settle the obligation. At 31 December 2014, the emission allowances owned fully
covered the expected CO2 emissions. As such no provision needed to be recognized.
26. |
TRADE AND OTHER PAYABLES |
NON-CURRENT TRADE AND OTHER PAYABLES
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
2013 |
|
|
|
|
Indirect taxes payable |
|
|
230 |
|
|
|
369 |
|
Trade payables |
|
|
305 |
|
|
|
381 |
|
Cash guarantees |
|
|
11 |
|
|
|
12 |
|
Deferred consideration on acquisitions |
|
|
138 |
|
|
|
1 801 |
|
Derivatives |
|
|
64 |
|
|
|
159 |
|
Other payables |
|
|
322 |
|
|
|
500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1 070 |
|
|
|
3 222 |
|
63
CURRENT TRADE AND OTHER PAYABLES
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
2013 |
|
|
|
|
Trade payables and accrued expenses |
|
|
10 913 |
|
|
|
9 834 |
|
Payroll and social security payables |
|
|
1 030 |
|
|
|
1 173 |
|
Indirect taxes payable |
|
|
1 849 |
|
|
|
1 689 |
|
Interest payable |
|
|
850 |
|
|
|
888 |
|
Consigned packaging |
|
|
715 |
|
|
|
682 |
|
Cash guarantees |
|
|
64 |
|
|
|
71 |
|
Derivatives |
|
|
1 013 |
|
|
|
630 |
|
Dividends payable |
|
|
518 |
|
|
|
384 |
|
Deferred income |
|
|
53 |
|
|
|
38 |
|
Deferred consideration on acquisitions |
|
|
1 640 |
|
|
|
861 |
|
Other payables |
|
|
277 |
|
|
|
224 |
|
|
|
|
|
|
|
|
|
|
|
|
|
18 922 |
|
|
|
16 474 |
|
Deferred consideration on acquisitions is mainly comprised of 1.2 billion US dollar for the put option included in the
shareholders agreement between Ambev and E. León Jimenes S.A. (ELJ), which may result in Ambev acquiring additional Class B shares of Cervecería Nacional Dominicana S.A. (CND). The put option granted to
ELJ is exercisable as of the first year following the transaction. The valuation of this option is based on the EBITDA of the consolidated operations in Dominican Republic.
The deferred consideration on acquisitions is also comprised of 0.5 billion US dollar liability for the Grupo Modelo shares the company did not acquire by
31 December 2014. On 3 June 2013, AB InBev established and funded a Trust to accept further tender of shares by Grupo Modelo shareholders at a price of 9.15 US dollar per share over a period of up to 25 months.
Derivatives mainly reflect the mark-to-market of interest rate swaps, of forward exchange contracts and of commodity forward contracts entered into to hedge
the companys operational exposure (See also Note 27 Risks arising from financial instruments of the 31 December 2014 consolidated financial statements).
27. |
RISKS ARISING FROM FINANCIAL INSTRUMENTS |
AB InBevs activities expose it to a variety of financial
risks: market risk (including currency risk, fair value interest rate risk, cash flow interest risk, commodity risk and equity risk), credit risk and liquidity risk. The company analyses each of these risks individually as well as on an
interconnected basis, and defines strategies to manage the economic impact on the companys performance in line with its financial risk management policy.
Some of the companys risk management strategies include the usage of derivatives. The main derivative instruments used are foreign currency rate
agreements, exchange traded foreign currency futures and options, interest rate swaps and forwards, cross currency interest rate swaps (CCIRS), exchange traded interest rate futures, commodity swaps, exchange traded commodity futures and
equity swaps. AB InBevs policy prohibits the use of derivatives in the context of speculative trading.
The following table provides an
overview of the derivative financial instruments outstanding at year-end by maturity bucket. The amounts included in this table are the notional amounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
2013 |
|
Million US dollar |
|
< 1 year |
|
|
1-2 years |
|
|
2-3 years |
|
|
3-5 years |
|
|
> 5 years |
|
|
< 1 year |
|
|
1-2 years |
|
|
2-3 years |
|
|
3-5 years |
|
|
> 5 years |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward exchange contracts |
|
|
7 554 |
|
|
|
47 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7 530 |
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency futures |
|
|
1 822 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
927 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other foreign currency derivatives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
415 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps |
|
|
350 |
|
|
|
|
|
|
|
113 |
|
|
|
2 250 |
|
|
|
787 |
|
|
|
11 800 |
|
|
|
350 |
|
|
|
|
|
|
|
128 |
|
|
|
|
|
Cross currency interest rate swaps |
|
|
1 023 |
|
|
|
|
|
|
|
1 789 |
|
|
|
2 373 |
|
|
|
1 197 |
|
|
|
683 |
|
|
|
1 096 |
|
|
|
|
|
|
|
2 841 |
|
|
|
827 |
|
Interest rate futures |
|
|
|
|
|
|
139 |
|
|
|
113 |
|
|
|
151 |
|
|
|
|
|
|
|
|
|
|
|
137 |
|
|
|
13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aluminum swaps |
|
|
1 422 |
|
|
|
48 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 383 |
|
|
|
327 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other commodity derivatives |
|
|
1 374 |
|
|
|
194 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
992 |
|
|
|
293 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity derivatives |
|
|
4 854 |
|
|
|
838 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4 947 |
|
|
|
716 |
|
|
|
|
|
|
|
|
|
|
|
|
|
AB InBev incurs foreign currency risk on borrowings, investments, (forecasted)
sales, (forecasted) purchases, royalties, dividends, licenses, management fees and interest expense/income whenever they are denominated in a currency other than the functional currency of the subsidiary. The main derivative financial instruments
used to manage foreign currency risk are foreign currency rate agreements, exchange traded foreign currency futures and cross currency interest rate swaps.
64
FOREIGN EXCHANGE RISK ON OPERATING ACTIVITIES
As far as foreign currency risk on firm commitments and forecasted transactions is concerned, AB InBevs policy is to hedge operational transactions which
are reasonably expected to occur (e.g. cost of goods sold and selling, general & administrative expenses) within the forecast period determined in the financial risk management policy. Operational transactions that are certain are hedged
without any limitation in time. Non-operational transactions (such as acquisitions and disposals of subsidiaries) are hedged as soon as they are certain.
The table below provides an indication of the companys main net foreign currency positions as regards firm commitments and forecasted transactions for
the most important currency pairs. The open positions are the result of the application of AB InBevs risk management policy. Positive amounts indicate that the company is long (net future cash inflows) in the first currency of the currency
pair while negative amounts indicate that the company is short (net future cash outflows) in the first currency of the currency pair. The second currency of the currency pairs listed is the functional currency of the related subsidiary.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 December 2014 |
|
|
31 December 2013 |
|
|
|
Total |
|
|
Total |
|
|
Open |
|
|
Total |
|
|
Total |
|
|
Open |
|
Million US dollar |
|
exposure |
|
|
hedges |
|
|
position |
|
|
exposure |
|
|
hedges1 |
|
|
position |
|
|
|
|
|
|
|
|
Euro/Brazilian real |
|
|
(64 |
) |
|
|
64 |
|
|
|
|
|
|
|
(38 |
) |
|
|
38 |
|
|
|
|
|
Euro/Canadian dollar |
|
|
(51 |
) |
|
|
51 |
|
|
|
|
|
|
|
(39 |
) |
|
|
39 |
|
|
|
|
|
Euro/Czech koruna |
|
|
(3 |
) |
|
|
(9 |
) |
|
|
(12 |
) |
|
|
(3 |
) |
|
|
(10 |
) |
|
|
(13 |
) |
Euro/Hungarian forint |
|
|
(4 |
) |
|
|
(13 |
) |
|
|
(17 |
) |
|
|
(4 |
) |
|
|
(14 |
) |
|
|
(18 |
) |
Euro/Mexican peso |
|
|
(104 |
) |
|
|
104 |
|
|
|
|
|
|
|
138 |
|
|
|
(138 |
) |
|
|
|
|
Euro/Pound sterling |
|
|
(94 |
) |
|
|
225 |
|
|
|
131 |
|
|
|
(161 |
) |
|
|
259 |
|
|
|
98 |
|
Euro/Russian ruble |
|
|
(102 |
) |
|
|
127 |
|
|
|
25 |
|
|
|
(97 |
) |
|
|
97 |
|
|
|
|
|
Euro/Ukrainian hryvnia |
|
|
(72 |
) |
|
|
|
|
|
|
(72 |
) |
|
|
(94 |
) |
|
|
68 |
|
|
|
(26 |
) |
Euro/US dollar |
|
|
|
|
|
|
127 |
|
|
|
127 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Pound sterling/Euro |
|
|
(49 |
) |
|
|
11 |
|
|
|
(38 |
) |
|
|
(53 |
) |
|
|
33 |
|
|
|
(20 |
) |
US dollar/Argentinean peso |
|
|
(345 |
) |
|
|
345 |
|
|
|
|
|
|
|
(282 |
) |
|
|
282 |
|
|
|
|
|
US dollar/Bolivian boliviano |
|
|
(72 |
) |
|
|
72 |
|
|
|
|
|
|
|
(52 |
) |
|
|
52 |
|
|
|
|
|
US dollar/Brazilian real |
|
|
(1 389 |
) |
|
|
1 389 |
|
|
|
|
|
|
|
(1 680 |
) |
|
|
1 680 |
|
|
|
|
|
US dollar/Canadian dollar |
|
|
(271 |
) |
|
|
271 |
|
|
|
|
|
|
|
(184 |
) |
|
|
184 |
|
|
|
|
|
US dollar/Chilean peso |
|
|
(140 |
) |
|
|
140 |
|
|
|
|
|
|
|
(68 |
) |
|
|
68 |
|
|
|
|
|
US dollar/Euro |
|
|
(145 |
) |
|
|
120 |
|
|
|
(25 |
) |
|
|
101 |
|
|
|
(147 |
) |
|
|
(46 |
) |
US dollar/Mexican peso |
|
|
(1 182 |
) |
|
|
5 795 |
|
|
|
4 613 |
|
|
|
(694 |
) |
|
|
5 316 |
|
|
|
4 622 |
|
US dollar/Paraguayan guarani |
|
|
(84 |
) |
|
|
84 |
|
|
|
|
|
|
|
(48 |
) |
|
|
48 |
|
|
|
|
|
US dollar/Peruvian nuevo sol |
|
|
(46 |
) |
|
|
46 |
|
|
|
|
|
|
|
(57 |
) |
|
|
57 |
|
|
|
|
|
US dollar/Pound sterling |
|
|
(25 |
) |
|
|
14 |
|
|
|
(11 |
) |
|
|
(31 |
) |
|
|
27 |
|
|
|
(4 |
) |
US dollar/Russian ruble |
|
|
(135 |
) |
|
|
81 |
|
|
|
(54 |
) |
|
|
(75 |
) |
|
|
121 |
|
|
|
46 |
|
US dollar/Ukrainian hryvnia |
|
|
(44 |
) |
|
|
|
|
|
|
(44 |
) |
|
|
(35 |
) |
|
|
70 |
|
|
|
35 |
|
US dollar/Uruguayan peso |
|
|
(37 |
) |
|
|
37 |
|
|
|
|
|
|
|
(29 |
) |
|
|
29 |
|
|
|
|
|
The US dollar/Mexican peso open long position is mainly related to US dollar cash held in Mexico.
Further analysis on the impact of open currency exposures is performed in the Currency Sensitivity Analysis below.
In conformity with IAS 39 hedge accounting rules, these hedges of firm commitments and highly probable forecasted transactions denominated in foreign currency
are designated as cash flow hedges.
FOREIGN EXCHANGE RISK ON INTRAGROUP LOANS
In 2012, 2013 and 2014, a series of foreign exchange derivatives were contracted to hedge the foreign currency risk from intercompany loans transacted between
group entities with different functional currencies. As of 31 December 2014, intercompany loans with Russia were hedged against US dollar for an amount of 3 300m Russian ruble (5 900m Russian ruble in 2013).
FOREIGN EXCHANGE RISK ON NET INVESTMENTS IN FOREIGN OPERATIONS
AB InBev enters into hedging activities to mitigate exposures related to its investments in foreign operations. These strategies are designated as net
investment hedges and include both derivative and non-derivative financial instruments.
As of 31 December 2014, designated derivative and
non-derivative financial instruments in a net investment hedge relationship amount to 7 012m US dollar equivalent (7 866m US dollar in 2013) in Holding companies and approximately 2 889m US dollar equivalent (2 500m US dollar in 2013) at Ambev
level. Those derivatives and non-derivatives are used to hedge foreign operations with functional currencies mainly denominated in Argentinean peso, Brazilian real, Bolivian boliviano, Canadian dollar, Chilean peso, Dominican peso, euro, Mexican
peso, pound sterling, South Korean won and US dollar.
1 |
Reclassified to conform to the 2014 presentation. |
65
FOREIGN EXCHANGE RISK ON FOREIGN CURRENCY DENOMINATED DEBT
It is AB InBevs policy to have the debt in the subsidiaries as much as possible in the functional currency of the subsidiary. To the extent this is not
the case, hedging is put in place unless the cost to hedge outweighs the benefits. Interest rate decisions and currency mix of debt and cash are decided on a global basis and take into consideration the holistic risk management approach.
A description of the foreign currency risk hedging related to the debt instruments issued in a currency other than the functional currency of the subsidiary
is further detailed in the Interest Rate Risk section below.
CURRENCY SENSITIVITY ANALYSIS
Currency transactional risk
Most of AB
InBevs non-derivative monetary financial instruments are either denominated in the functional currency of the subsidiary or are converted into the functional currency through the use of derivatives. However, the company can have open positions
in certain countries for which hedging can be limited as the illiquidity of the local foreign exchange market prevents the company from hedging at a reasonable cost. The transactional foreign currency risk mainly arises from open positions in Czech
koruna, Hungarian forint, Mexican peso, pound sterling, Russian ruble and Ukrainian hryvnia against the US dollar and the euro. AB InBev estimated the reasonably possible change of exchange rate, on the basis of the average volatility on the open
currency pairs, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
|
Closing rate 31 December 2014 |
|
|
Possible closing rate1 |
|
Volatility of rates in % |
|
|
|
|
|
Pound sterling/Euro |
|
|
1.28 |
|
|
1.21 - 1.36 |
|
|
5.76 |
% |
Euro/Czech koruna |
|
|
27.73 |
|
|
27.11 - 28.36 |
|
|
2.26 |
% |
Euro/Hungarian forint |
|
|
315.56 |
|
|
294.18 - 336.93 |
|
|
6.77 |
% |
Euro/Russian ruble |
|
|
68.30 |
|
|
49.11 - 87.5 |
|
|
28.10 |
% |
Euro/Ukrainian hryvnia |
|
|
19.14 |
|
|
13.61 - 24.68 |
|
|
28.90 |
% |
US dollar/Euro |
|
|
0.82 |
|
|
0.77 - 0.87 |
|
|
6.14 |
% |
US dollar/Mexican peso |
|
|
14.72 |
|
|
13.69 - 15.75 |
|
|
7.00 |
% |
US dollar/Pound sterling |
|
|
0.64 |
|
|
0.61 - 0.68 |
|
|
5.59 |
% |
US dollar/Russian ruble |
|
|
56.26 |
|
|
41.27 - 71.25 |
|
|
26.65 |
% |
US dollar/Ukrainian hryvnia |
|
|
15.77 |
|
|
11.27 - 20.27 |
|
|
28.54 |
% |
|
|
|
|
2013 |
|
|
|
Closing rate 31 December 2013 |
|
|
Possible closing rate2 |
|
Possible volatility of rates in % |
|
|
|
|
|
Pound sterling/Euro |
|
|
1.20 |
|
|
1.12-1.28 |
|
|
6.96 |
% |
Euro/Czech koruna |
|
|
27.43 |
|
|
25.67-29.18 |
|
|
6.39 |
% |
Euro/Hungarian forint |
|
|
297.00 |
|
|
274.46-319.54 |
|
|
7.59 |
% |
Euro/Ukrainian hryvnia |
|
|
11.02 |
|
|
10.18-11.87 |
|
|
7.64 |
% |
US dollar/Euro |
|
|
0.73 |
|
|
0.67-0.78 |
|
|
7.09 |
% |
US dollar/Mexican peso |
|
|
13.08 |
|
|
11.67-14.5 |
|
|
10.80 |
% |
US dollar/Russian ruble |
|
|
32.73 |
|
|
30.29-35.17 |
|
|
7.45 |
% |
US dollar/Ukrainian hryvnia |
|
|
7.99 |
|
|
7.78-8.21 |
|
|
2.72 |
% |
Had the Czech koruna, the Hungarian forint, the Mexican peso, the pound sterling, the Russian ruble and the Ukrainian hryvnia
weakened/strengthened during 2014 by the above estimated changes against the euro or the US dollar, with all other variables held constant, the 2014 impact on consolidated profit before taxes would have been approximately 103m US dollar (19m US
dollar in 2013) higher/lower.
Additionally, the AB InBev sensitivity analysis1 to the foreign
exchange rates on its total derivatives positions as of 31 December 2014, shows a positive/negative pre-tax impact on equity reserves of 446m US dollar (427m US dollar in 2013).
NET FOREIGN EXCHANGE RESULTS
Foreign exchange results
recognized on unhedged and hedged exposures and from the related hedging derivative instruments can be summarized per type of hedging relationship as follows:
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
2013 |
|
|
|
|
Fair value hedges - hedging instruments |
|
|
|
|
|
|
(2 |
) |
Cash flow hedges - hedged items |
|
|
(60 |
) |
|
|
2 |
|
Cash flow hedges - hedging instruments (reclassified from equity) |
|
|
53 |
|
|
|
(1 |
) |
Economic hedges - hedged items not part of a hedge accounting relationship |
|
|
|
|
|
|
(122 |
) |
Economic hedges - hedging instruments not part of a hedge accounting relationship |
|
|
11 |
|
|
|
125 |
|
Other results - not hedged |
|
|
315 |
|
|
|
(297 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
319 |
|
|
|
(295 |
) |
1 |
Sensitivity analysis is assessed based on the yearly volatility using daily observable market data during 250 days at 31 December 2014. |
2 |
Sensitivity analysis is assessed based on the yearly volatility using daily observable market data during 250 days at 31 December 2013. |
66
The company applies a dynamic interest rate hedging approach whereby the target mix
between fixed and floating rate debt is reviewed periodically. The purpose of AB InBevs policy is to achieve an optimal balance between cost of funding and volatility of financial results, while taking into account market conditions as well as
AB InBevs overall business strategy.
FAIR VALUE HEDGE
Pound sterling bond hedges (foreign currency risk + interest rate risk on borrowings in pound sterling)
In June 2009, the company issued a pound sterling bond for an equivalent of 750m pound sterling. This bond bears interest at 6.50% with maturity in June 2017.
The company entered into several pound sterling fixed/euro floating cross currency interest rate swaps to manage and reduce the impact of changes in the
pound sterling exchange rate and interest rate on this bond.
These derivative instruments have been designated in a fair value hedge accounting
relationship.
US dollar fixed rate bond hedges (interest rate risk on borrowings in US dollar)
In May 2009, the company issued a series of fixed rate notes in an aggregate principal amount of 1.0 billion US dollar. These bond bears interest at 6.875%
with maturity in November 2019.
In March 2010, the company issued a series of fixed rate notes in an aggregate principal amount of 1.0 billion US dollar.
These bond bears interest at 5.00% with maturity in April 2020.
The company entered into several US dollar fixed/floating interest rate swaps to manage
and reduce the impact of changes in the US dollar interest rates on the fair value of these bonds.
These derivative instruments have been designated in a
fair value hedge accounting relationship.
Ambev bond hedges (interest rate risk on borrowings in Brazilian real)
In July 2007 Ambev issued a Brazilian real bond (Bond 17), which bears interest at 9.5% and is repayable semi-annually with final maturity date in
July 2017.
Ambev entered into a fixed/floating interest rate swap to hedge the interest rate risk on such bond. These derivative instruments have been
designated in a fair value hedge accounting relationship.
US dollar fixed rate bond hedges (interest rate risk on borrowings in US dollar)
In January 2014, the company issued a series of fixed rate notes in an aggregate principal amount of 1.25 billion US dollar. This bond bears
interest at 2.15% with maturity in February 2019.
The company entered into several US dollar fixed/floating interest rate swaps to manage and reduce the
impact of changes in the US dollar interest rates on this bond.
These derivative instruments have been designated in a fair value hedge accounting
relationship.
CASH FLOW HEDGE
Floating
interest rate risk on borrowings in US Dollar
Following the refinancing and the repayment of the 2008 and 2010 senior facilities the interest rate
swaps that were designated for the hedge of the financing of the Anheuser-Busch acquisition became freestanding given the repayment of part of these senior facilities. In order to offset the interest rate risk, the freestanding derivatives were
unwound via additional offsetting trades.
As of 31 December 2014 and 2013, there are no remaining open positions covering the interest exposure on
the outstanding balance drawn under the 2010 senior facilities and the remaining interest rate swaps matured during the course of 2014.
Canadian
dollar bond hedges (foreign currency risk + interest rate risk on borrowings in Canadian dollar)
In January 2013, the company issued a series of
notes in an aggregated principal amount of 1.2 billion Canadian dollar. These bonds bear interest at 2.375% with maturity in January 2018 and 3.375% with maturity in January 2023.
The company entered into several Canadian dollar fixed/euro floating cross currency interest rate swaps to manage and reduce the impact of changes in the
Canadian dollar exchange rate and interest rate on these bonds.
These derivative instruments have been designated in a cash flow hedge accounting
relationship.
Pound sterling bond hedges (foreign currency risk + interest rate risk on borrowings in pound sterling)
In September 2013, the company issued a pound sterling bond for an equivalent of 500m pound sterling. This bond bears interest at 4.00% per year with
maturity in September 2025.
The company entered into several pound sterling fixed/euro floating cross currency interest rate swaps to manage and reduce
the impact of changes in the pound sterling exchange rate and interest rate on this bond.
These derivative instruments have been designated in a cash
flow hedge accounting relationship.
ECONOMIC HEDGE
Swiss franc bond hedges (foreign currency risk + interest rate risk on borrowings in Swiss franc)
In May 2009, the company issued a Swiss franc bond for an equivalent of 600m Swiss franc. This bond matured in June 2014.
67
The company entered into a Swiss franc fixed/euro floating cross currency interest rate swap to manage and reduce
the impact of changes in the Swiss franc exchange rate and interest rate on this bond.
This derivative instrument was designated in a fair value hedge
accounting relationship in 2009. During 2010, although this derivative continues to be considered an economic hedge, hedge accounting designation was discontinued.
As of 31 December 2014, there were no remaining balance and open positions related to Swiss franc bond.
Marketable debt security hedges (interest rate risk on Brazilian real)
During 2014, Ambev invested in highly liquid Brazilian real denominated government debt securities. Those fixed-rate instruments are included in the held for
trading category.
The company also entered into interest rate future contacts in order to offset the Brazilian real interest rate exposure of such
government bonds. Since both instruments are measured at fair value with changes recorded into profit or loss, no hedge accounting designation was needed.
INTEREST RATE SENSITIVITY ANALYSIS
In respect of
interest-bearing financial liabilities, the table below indicates their effective interest rates at balance sheet date as well as the split per currency in which the debt is denominated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 December 2014 |
|
Before hedging |
|
|
After hedging |
|
Interest-bearing financial liabilities
Million US dollar |
|
Effective interest rate |
|
|
Amount |
|
|
Effective interest rate |
|
|
Amount |
|
|
|
|
|
|
Floating rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brazilian real |
|
|
7.24 |
% |
|
|
438 |
|
|
|
8.74 |
% |
|
|
668 |
|
Euro |
|
|
0.36 |
% |
|
|
1 328 |
|
|
|
2.70 |
% |
|
|
2 844 |
|
Russian ruble |
|
|
|
|
|
|
|
|
|
|
8.96 |
% |
|
|
94 |
|
US dollar |
|
|
0.98 |
% |
|
|
745 |
|
|
|
2.62 |
% |
|
|
3 539 |
|
Other |
|
|
11.12 |
% |
|
|
26 |
|
|
|
11.12 |
% |
|
|
26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2 537 |
|
|
|
|
|
|
|
7 171 |
|
|
|
|
|
|
Fixed rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Argentinean peso |
|
|
23.69 |
% |
|
|
37 |
|
|
|
23.69 |
% |
|
|
37 |
|
Brazilian real |
|
|
7.99 |
% |
|
|
595 |
|
|
|
7.96 |
% |
|
|
457 |
|
Canadian dollar |
|
|
3.14 |
% |
|
|
1 548 |
|
|
|
3.22 |
% |
|
|
1 161 |
|
Dominican peso |
|
|
10.38 |
% |
|
|
23 |
|
|
|
10.38 |
% |
|
|
23 |
|
Euro |
|
|
3.02 |
% |
|
|
10 246 |
|
|
|
2.90 |
% |
|
|
12 822 |
|
Pound sterling |
|
|
6.71 |
% |
|
|
2 816 |
|
|
|
9.34 |
% |
|
|
888 |
|
South Korean won |
|
|
|
|
|
|
|
|
|
|
2.26 |
% |
|
|
500 |
|
US dollar |
|
|
4.02 |
% |
|
|
33 312 |
|
|
|
4.13 |
% |
|
|
28 055 |
|
Other |
|
|
7.18 |
% |
|
|
8 |
|
|
|
7.18 |
% |
|
|
8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48 585 |
|
|
|
|
|
|
|
43 951 |
|
|
|
|
31 December 2013 |
|
Before hedging |
|
|
After hedging |
|
Interest-bearing financial liabilities
Million US dollar |
|
Effective interest rate |
|
|
Amount |
|
|
Effective interest rate |
|
|
Amount |
|
|
|
|
|
|
Floating rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brazilian real |
|
|
7.17 |
% |
|
|
535 |
|
|
|
8.16 |
% |
|
|
862 |
|
Canadian dollar |
|
|
0.98 |
% |
|
|
6 |
|
|
|
0.98 |
% |
|
|
6 |
|
Dominican peso |
|
|
8.07 |
% |
|
|
12 |
|
|
|
8.07 |
% |
|
|
12 |
|
Euro |
|
|
4.40 |
% |
|
|
69 |
|
|
|
5.70 |
% |
|
|
2 406 |
|
Russian ruble |
|
|
|
|
|
|
|
|
|
|
6.10 |
% |
|
|
184 |
|
US dollar |
|
|
0.81 |
% |
|
|
1 229 |
|
|
|
0.77 |
% |
|
|
899 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 851 |
|
|
|
|
|
|
|
4 369 |
|
|
|
|
|
|
Fixed rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brazilian real |
|
|
7.93 |
% |
|
|
611 |
|
|
|
7.55 |
% |
|
|
492 |
|
Canadian dollar |
|
|
3.14 |
% |
|
|
1 682 |
|
|
|
3.22 |
% |
|
|
1 263 |
|
Chinese yuan |
|
|
7.11 |
% |
|
|
7 |
|
|
|
7.11 |
% |
|
|
7 |
|
Dominican peso |
|
|
13.00 |
% |
|
|
20 |
|
|
|
13.00 |
% |
|
|
20 |
|
Euro |
|
|
3.61 |
% |
|
|
10 055 |
|
|
|
3.59 |
% |
|
|
10 928 |
|
Pound sterling |
|
|
5.69 |
% |
|
|
3 031 |
|
|
|
9.75 |
% |
|
|
890 |
|
Swiss franc |
|
|
4.51 |
% |
|
|
673 |
|
|
|
|
|
|
|
|
|
US dollar |
|
|
4.21 |
% |
|
|
31 195 |
|
|
|
4.18 |
% |
|
|
31 156 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47 274 |
|
|
|
|
|
|
|
44 756 |
|
At 31 December 2014, the total carrying amount of the floating and fixed rate interest-bearing financial liabilities
before hedging listed above includes bank overdrafts of 41m US dollar.
68
As disclosed in the above table, 7 171m US dollar or 14.03% of the companys interest bearing financial
liabilities bear a variable interest rate. The company estimated that the reasonably possible change of the market interest rates applicable to its floating rate debt after hedging is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
|
Interest rate 31 December 20141 |
|
|
Possible interest rate2 |
|
Volatility of rates in % |
|
|
|
|
|
Brazilian real |
|
|
11.11 |
% |
|
10.25% - 11.97% |
|
|
7.72 |
% |
Euro |
|
|
0.08 |
% |
|
0.04% - 0.11% |
|
|
43.74 |
% |
Russian ruble |
|
|
23.77 |
% |
|
11.93% - 35.61% |
|
|
49.79 |
% |
US dollar |
|
|
0.26 |
% |
|
0.23% - 0.28% |
|
|
9.16 |
% |
|
|
|
|
2013 |
|
|
|
Interest rate 31 December 20131 |
|
|
Possible interest rate2 |
|
Volatility of rates in % |
|
|
|
|
|
Brazilian real |
|
|
9.44 |
% |
|
8.17% - 10.7% |
|
|
13.41 |
% |
Canadian dollar |
|
|
1.28 |
% |
|
1.27% - 1.28% |
|
|
0.60 |
% |
Dominican peso |
|
|
6.25 |
% |
|
3.61% - 8.89% |
|
|
42.16 |
% |
Euro |
|
|
0.29 |
% |
|
0.24% - 0.33% |
|
|
16.02 |
% |
Russian ruble |
|
|
7.15 |
% |
|
6.68% - 7.62% |
|
|
6.61 |
% |
US dollar |
|
|
0.25 |
% |
|
0.23% - 0.26% |
|
|
7.29 |
% |
When AB InBev applies the reasonably possible increase/decrease in the market interest rates mentioned above on its floating
rate debt at 31 December 2014, with all other variables held constant, 2014 interest expense would have been 19m US dollar higher/lower (2013: 13m US dollar). This effect would be more than offset by 70m US dollar higher/lower interest income
on AB InBevs interest-bearing financial assets (2013: 82m US dollar).
INTEREST EXPENSE
Interest expense recognized on unhedged and hedged financial liabilities and the net interest expense from the related hedging derivative instruments can be
summarized per type of hedging relationship as follows:
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
2013 |
|
|
|
|
Financial liabilities measured at amortized cost not hedged |
|
|
(2 236 |
) |
|
|
(2 066 |
) |
Fair value hedges hedged items |
|
|
(97 |
) |
|
|
(106 |
) |
Fair value hedges hedging instruments |
|
|
42 |
|
|
|
21 |
|
Cash flow hedges hedged items |
|
|
(35 |
) |
|
|
|
|
Cash flow hedges hedging instruments (reclassified from equity) |
|
|
10 |
|
|
|
(5 |
) |
Net investment hedges hedging instruments (interest component) |
|
|
192 |
|
|
|
94 |
|
Economic hedges hedged items not part of a hedge accounting relationship |
|
|
(9 |
) |
|
|
(24 |
) |
Economic hedges hedging instruments not part of a hedge accounting relationship |
|
|
125 |
|
|
|
43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(2 008 |
) |
|
|
(2 043 |
) |
The commodity markets have experienced and are expected to continue to experience
price fluctuations. AB InBev therefore uses both fixed price purchasing contracts and commodity derivatives to minimize exposure to commodity price volatility. The company has important exposures to the following commodities: aluminum, barley, coal,
corn grits, corn syrup, corrugated board, fuel oil, glass, hops, labels, malt, natural gas, orange juice, rice, steel and wheat. As of 31 December 2014, the company has the following commodity derivatives outstanding (in notional amounts):
aluminum swaps for 1 470m US dollar (2013: 1 710m US dollar), natural gas and energy derivatives for 330m US dollar (2013: 330m US dollar), exchange traded sugar futures for 83 US dollar (2013: 147m US dollar), corn swaps for 285m US dollar (2013:
332m US dollar), exchange traded wheat futures for 648m US dollar (2013: 390m US dollar), rice swaps for 76m US dollar (2013: 70m US dollar) and plastic derivatives for 146m US dollar (2013: 16m US dollar). These hedges are designated in a cash flow
hedge accounting relationship.
COMMODITY PRICE SENSITIVITY ANALYSIS
The impact of changes in the commodity prices for AB InBevs derivative exposures would have caused an immaterial impact on 2014 profits as most of the
companys commodity derivatives are designated in a hedge accounting relationship.
1 |
Applicable 3-month InterBank Offered Rates as of 31 December 2014 and as of 31 December 2013. |
2 |
Sensitivity analysis is assessed based on the yearly volatility using daily observable market data during 250 days at 31 December 2014 and at December 2013. For the Brazilian real floating rate debt, the estimated
market interest rate is composed of the InterBank Deposit Certificate (CDI) and the Long-Term Interest Rate (TJLP). With regard to other market interest rates, the companys analysis is based on the 3-month InterBank
Offered Rates applicable for the currencies concerned (e.g. EURIBOR 3M, LIBOR 3M). |
69
The table below shows the estimated impact that changes in the price of the commodities, for which AB InBev held
material derivative exposures at 31 December 2014, would have on the equity reserves.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
|
Volatility of prices in %1 |
|
|
Pre-tax impact on equity |
|
Million US dollar |
|
|
Prices increase |
|
|
Prices decrease |
|
|
|
|
|
Aluminum |
|
|
15.81 |
% |
|
|
197 |
|
|
|
(197 |
) |
Sugar |
|
|
26.74 |
% |
|
|
53 |
|
|
|
(53 |
) |
Wheat |
|
|
26.57 |
% |
|
|
57 |
|
|
|
(57 |
) |
Energy |
|
|
22.48 |
% |
|
|
67 |
|
|
|
(67 |
) |
Rice |
|
|
16.72 |
% |
|
|
13 |
|
|
|
(13 |
) |
Corn |
|
|
22.30 |
% |
|
|
59 |
|
|
|
(59 |
) |
|
|
|
|
2013 |
|
|
|
Volatility of prices in %2 |
|
|
Pre-tax impact on equity |
|
Million US dollar |
|
|
Prices increase |
|
|
Prices decrease |
|
|
|
|
|
Aluminum |
|
|
16.89 |
% |
|
|
244 |
|
|
|
(244 |
) |
Sugar |
|
|
18.23 |
% |
|
|
27 |
|
|
|
(27 |
) |
Wheat |
|
|
19.73 |
% |
|
|
1 |
|
|
|
(1 |
) |
Energy |
|
|
13.77 |
% |
|
|
46 |
|
|
|
(46 |
) |
Rice |
|
|
18.19 |
% |
|
|
11 |
|
|
|
(11 |
) |
Corn |
|
|
37.72 |
% |
|
|
93 |
|
|
|
(93 |
) |
AB InBev entered into a series of derivative contracts to hedge the risk arising from
the different share-based payment programs. The purpose of these derivatives is mainly to effectively hedge the risk that a price increase in the AB InBev shares will negatively impact future cash flows related to the share-based payments.
Furthermore, AB InBev entered into a series of derivative contracts to hedge the deferred share instrument related to the Modelo combination (see also Note 11 Finance cost and income and Note 21 Changes in equity and earnings per
share). Most of these derivative instruments could not qualify for hedge accounting therefore they have not been designated in any hedging relationships.
As of 31 December 2014, an exposure for an equivalent of 56.7m of AB InBev shares was hedged, resulting in a total gain of 1 220m US dollar recognized in
the profit or loss account for the period, of which 711m US dollar related to the companys share-based payment programs and 509m US dollar related to the Modelo transaction (see also Note 11 Finance cost and income).
During 2012, 2013 and 2014, AB InBev reset with counterparties certain derivative contracts to market price. This resulted in a cash inflow of 675m US dollar,
515m US dollar and 155m US dollar in 2012, 2013 and 2014, respectively, and a decrease of counterparty risk.
EQUITY PRICE SENSITIVITY ANALYSIS
The sensitivity analysis on the share-based payments hedging program, calculated based on a 18.29% (2013: 23.47%) reasonable possible volatility3 of the AB InBev share price and with all the other variables held constant, would show 1 183m US dollar positive/negative impact on the 2014 profit before tax (2013: 1 272m US dollar).
Credit risk encompasses all forms of counterparty exposure, i.e. where counterparties may
default on their obligations to AB InBev in relation to lending, hedging, settlement and other financial activities. The company has a credit policy in place and the exposure to counterparty credit risk is monitored.
AB InBev mitigates its exposure to counterparty credit risk through minimum counterparty credit guidelines, diversification of counterparties, working within
agreed counterparty limits and through setting limits on the maturity of financial assets. The company has furthermore master netting agreements with all of the financial institutions that are counterparties to the over the counter (OTC) derivative
financial instruments. These agreements allow for the net settlement of assets and liabilities arising from different transactions with the same counterparty. Based on these factors, AB InBev considers the risk of counterparty default per
31 December 2014 to be limited.
AB InBev has established minimum counterparty credit ratings and enters into transactions only with financial
institutions of investment grade. The company monitors counterparty credit exposures closely and reviews any downgrade in credit rating immediately. To mitigate pre-settlement risk, minimum counterparty credit standards become more stringent as the
duration of the derivative financial instruments increases. To minimize the concentration of counterparty credit risk, the company enters into derivative transactions with different financial institutions.
1 |
Sensitivity analysis is assessed based on the yearly volatility using daily observable market data during 250 days at 31 December 2014. |
2 |
Sensitivity analysis is assessed based on the yearly volatility using daily observable market data during 250 days at 31 December 2013. |
3 |
Sensitivity analysis is assessed based on the yearly volatility using daily observable market data during 250 days at 31 December 2014. |
70
EXPOSURE TO CREDIT RISK
The carrying amount of financial assets represents the maximum credit exposure of the company. The carrying amount is presented net of the impairment losses
recognized. The maximum exposure to credit risk at the reporting date was:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
2013 |
|
Million US dollar |
|
Gross |
|
|
Impairment |
|
|
Net carrying amount |
|
|
Gross |
|
|
Impairment |
|
|
Net carrying amount |
|
|
|
|
|
|
|
|
Debt securities held for trading |
|
|
301 |
|
|
|
|
|
|
|
301 |
|
|
|
123 |
|
|
|
|
|
|
|
123 |
|
Available for sale |
|
|
108 |
|
|
|
(11 |
) |
|
|
97 |
|
|
|
183 |
|
|
|
(13 |
) |
|
|
170 |
|
Held to maturity |
|
|
21 |
|
|
|
|
|
|
|
21 |
|
|
|
23 |
|
|
|
|
|
|
|
23 |
|
Trade receivables |
|
|
3 488 |
|
|
|
(260 |
) |
|
|
3 228 |
|
|
|
3 052 |
|
|
|
(249 |
) |
|
|
2 803 |
|
Cash deposits for guarantees |
|
|
229 |
|
|
|
|
|
|
|
229 |
|
|
|
240 |
|
|
|
|
|
|
|
240 |
|
Loans to customers |
|
|
121 |
|
|
|
(30 |
) |
|
|
91 |
|
|
|
198 |
|
|
|
(84 |
) |
|
|
114 |
|
Other receivables |
|
|
2 281 |
|
|
|
(128 |
) |
|
|
2 153 |
|
|
|
2 885 |
|
|
|
(162 |
) |
|
|
2 723 |
|
Derivatives |
|
|
2 244 |
|
|
|
|
|
|
|
2 244 |
|
|
|
727 |
|
|
|
|
|
|
|
727 |
|
Cash and cash equivalents |
|
|
8 357 |
|
|
|
|
|
|
|
8 357 |
|
|
|
9 839 |
|
|
|
|
|
|
|
9 839 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17 150 |
|
|
|
(429 |
) |
|
|
16 721 |
|
|
|
17 270 |
|
|
|
(508 |
) |
|
|
16 762 |
|
There was no significant concentration of credit risks with any single counterparty per 31 December 2014 and no single
customer represented more than 10% of the total revenue of the group in 2014.
IMPAIRMENT LOSSES
The allowance for impairment recognized during the period per classes of financial assets was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
Million US dollar |
|
Available for sale |
|
|
Trade receivables |
|
|
Loans to customers |
|
|
Other receivables |
|
|
Cash and cash equivalents |
|
|
Total |
|
|
|
|
|
|
|
|
Balance at 1 January |
|
|
(13 |
) |
|
|
(249 |
) |
|
|
(84 |
) |
|
|
(162 |
) |
|
|
|
|
|
|
(508 |
) |
Impairment losses |
|
|
(1 |
) |
|
|
(37 |
) |
|
|
(1 |
) |
|
|
|
|
|
|
|
|
|
|
(39 |
) |
Derecognition |
|
|
2 |
|
|
|
28 |
|
|
|
38 |
|
|
|
15 |
|
|
|
|
|
|
|
83 |
|
Currency translation and other |
|
|
1 |
|
|
|
(2 |
) |
|
|
17 |
|
|
|
19 |
|
|
|
|
|
|
|
35 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 31 December |
|
|
(11 |
) |
|
|
(260 |
) |
|
|
(30 |
) |
|
|
(128 |
) |
|
|
|
|
|
|
(429 |
) |
|
|
|
|
2013 |
|
Million US dollar |
|
Available for sale |
|
|
Trade receivables |
|
|
Loans to customers |
|
|
Other receivables |
|
|
Cash and cash equivalents |
|
|
Total |
|
|
|
|
|
|
|
|
Balance at 1 January |
|
|
(48 |
) |
|
|
(246 |
) |
|
|
(100 |
) |
|
|
(134 |
) |
|
|
|
|
|
|
(528 |
) |
Impairment losses |
|
|
(69 |
) |
|
|
(53 |
) |
|
|
|
|
|
|
(1 |
) |
|
|
|
|
|
|
(123 |
) |
Derecognition |
|
|
104 |
|
|
|
41 |
|
|
|
19 |
|
|
|
2 |
|
|
|
|
|
|
|
204 |
|
Currency translation |
|
|
|
|
|
|
9 |
|
|
|
(3 |
) |
|
|
(29 |
) |
|
|
|
|
|
|
(23 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 31 December |
|
|
(13 |
) |
|
|
(249 |
) |
|
|
(84 |
) |
|
|
(162 |
) |
|
|
|
|
|
|
(508 |
) |
AB InBevs primary sources of cash flow have historically been cash flows from
operating activities, the issuance of debt, bank borrowings and the issuance of equity securities. AB InBevs material cash requirements have included the following:
|
|
|
Investments in companies; |
|
|
|
Increases in ownership of AB InBevs subsidiaries or companies in which it holds equity investments; |
|
|
|
Share buyback programs; and |
|
|
|
Payments of dividends and interest on shareholders equity. |
The company believes that cash flows from
operating activities, available cash and cash equivalent and short term investments, along with the derivative instruments and access to borrowing facilities, will be sufficient to fund capital expenditures, financial instrument liabilities and
dividend payments going forward. It is the intention of the company to continue to reduce its financial indebtedness through a combination of strong operating cash flow generation and continued refinancing.
71
The following are the nominal contractual maturities of non-derivative financial liabilities including interest
payments and derivative financial assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
Million US dollar |
|
Carrying amount1 |
|
|
Contractual cash flows |
|
|
Less than 1 year |
|
|
1-2 years |
|
|
2-3 years |
|
|
3-5 years |
|
|
More than 5 years |
|
|
|
|
|
|
|
|
|
Non-derivative financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured bank loans |
|
|
(286 |
) |
|
|
(313 |
) |
|
|
(124 |
) |
|
|
(82 |
) |
|
|
(32 |
) |
|
|
(46 |
) |
|
|
(29 |
) |
Commercial papers |
|
|
(2 211 |
) |
|
|
(2 214 |
) |
|
|
(2 214 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured bank loans |
|
|
(820 |
) |
|
|
(889 |
) |
|
|
(590 |
) |
|
|
(168 |
) |
|
|
(69 |
) |
|
|
(62 |
) |
|
|
|
|
Unsecured bond issues |
|
|
(47 549 |
) |
|
|
(66 851 |
) |
|
|
(5 715 |
) |
|
|
(4 212 |
) |
|
|
(8 339 |
) |
|
|
(13 154 |
) |
|
|
(35 431 |
) |
Unsecured other loans |
|
|
(82 |
) |
|
|
(175 |
) |
|
|
(35 |
) |
|
|
(21 |
) |
|
|
(18 |
) |
|
|
(22 |
) |
|
|
(79 |
) |
Finance lease liabilities |
|
|
(133 |
) |
|
|
(244 |
) |
|
|
(14 |
) |
|
|
(14 |
) |
|
|
(14 |
) |
|
|
(34 |
) |
|
|
(168 |
) |
Bank overdraft |
|
|
(41 |
) |
|
|
(41 |
) |
|
|
(41 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other payables |
|
|
(18 909 |
) |
|
|
(19 151 |
) |
|
|
(17 908 |
) |
|
|
(356 |
) |
|
|
(215 |
) |
|
|
(163 |
) |
|
|
(509 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(70 031 |
) |
|
|
(89 878 |
) |
|
|
(26 641 |
) |
|
|
(4 853 |
) |
|
|
(8 687 |
) |
|
|
(13 481 |
) |
|
|
(36 216 |
) |
|
|
|
|
|
|
|
|
Derivative financial assets/(liabilities) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate derivatives |
|
|
33 |
|
|
|
33 |
|
|
|
47 |
|
|
|
21 |
|
|
|
(11 |
) |
|
|
(24 |
) |
|
|
|
|
Foreign exchange derivatives |
|
|
(277 |
) |
|
|
(281 |
) |
|
|
(281 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cross currency interest rate swaps |
|
|
319 |
|
|
|
384 |
|
|
|
83 |
|
|
|
41 |
|
|
|
103 |
|
|
|
116 |
|
|
|
41 |
|
Commodity derivatives |
|
|
(166 |
) |
|
|
(169 |
) |
|
|
(171 |
) |
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity derivatives |
|
|
1 258 |
|
|
|
1 246 |
|
|
|
1 028 |
|
|
|
218 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 167 |
|
|
|
1 213 |
|
|
|
706 |
|
|
|
282 |
|
|
|
92 |
|
|
|
92 |
|
|
|
41 |
|
|
|
|
|
|
|
|
|
Of which: directly related to cash flow hedges |
|
|
(45 |
) |
|
|
(47 |
) |
|
|
(46 |
) |
|
|
2 |
|
|
|
41 |
|
|
|
(43 |
) |
|
|
(1 |
) |
|
|
|
|
2013 |
|
Million US dollar |
|
Carrying amount1 |
|
|
Contractual cash flows |
|
|
Less than 1 year |
|
|
1-2 years |
|
|
2-3 years |
|
|
3-5 years |
|
|
More than 5 years |
|
|
|
|
|
|
|
|
|
Non-derivative financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured bank loans |
|
|
(286 |
) |
|
|
(312 |
) |
|
|
(104 |
) |
|
|
(86 |
) |
|
|
(50 |
) |
|
|
(34 |
) |
|
|
(38 |
) |
Commercial papers |
|
|
(2 065 |
) |
|
|
(2 066 |
) |
|
|
(2 066 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured bank loans |
|
|
(694 |
) |
|
|
(774 |
) |
|
|
(374 |
) |
|
|
(206 |
) |
|
|
(156 |
) |
|
|
(38 |
) |
|
|
|
|
Unsecured bond issues |
|
|
(45 853 |
) |
|
|
(65 215 |
) |
|
|
(6 590 |
) |
|
|
(6 391 |
) |
|
|
(4 138 |
) |
|
|
(11 758 |
) |
|
|
(36 338 |
) |
Unsecured other loans |
|
|
(87 |
) |
|
|
(160 |
) |
|
|
(20 |
) |
|
|
(27 |
) |
|
|
(19 |
) |
|
|
(16 |
) |
|
|
(78 |
) |
Finance lease liabilities |
|
|
(135 |
) |
|
|
(256 |
) |
|
|
(14 |
) |
|
|
(13 |
) |
|
|
(14 |
) |
|
|
(28 |
) |
|
|
(187 |
) |
Bank overdraft |
|
|
(6 |
) |
|
|
(6 |
) |
|
|
(6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other payables |
|
|
(18 891 |
) |
|
|
(19 121 |
) |
|
|
(15 841 |
) |
|
|
(1 806 |
) |
|
|
(271 |
) |
|
|
(260 |
) |
|
|
(943 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(68 017 |
) |
|
|
(87 910 |
) |
|
|
(25 015 |
) |
|
|
(8 529 |
) |
|
|
(4 648 |
) |
|
|
(12 134 |
) |
|
|
(37 584 |
) |
|
|
|
|
|
|
|
|
Derivative financial assets/(liabilities) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate derivatives |
|
|
(36 |
) |
|
|
(36 |
) |
|
|
(30 |
) |
|
|
1 |
|
|
|
|
|
|
|
(7 |
) |
|
|
|
|
Foreign exchange derivatives |
|
|
(64 |
) |
|
|
(74 |
) |
|
|
(74 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cross currency interest rate swaps |
|
|
(61 |
) |
|
|
76 |
|
|
|
15 |
|
|
|
4 |
|
|
|
3 |
|
|
|
10 |
|
|
|
44 |
|
Commodity derivatives |
|
|
(149 |
) |
|
|
(147 |
) |
|
|
(154 |
) |
|
|
7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity derivatives |
|
|
248 |
|
|
|
248 |
|
|
|
210 |
|
|
|
38 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(62 |
) |
|
|
67 |
|
|
|
(33 |
) |
|
|
50 |
|
|
|
3 |
|
|
|
3 |
|
|
|
44 |
|
|
|
|
|
|
|
|
|
Of which: directly related to cash flow hedges |
|
|
(66 |
) |
|
|
26 |
|
|
|
(61 |
) |
|
|
4 |
|
|
|
7 |
|
|
|
32 |
|
|
|
44 |
|
AB InBev is continuously optimizing its capital structure targeting to maximize
shareholder value while keeping the desired financial flexibility to execute the strategic projects. AB InBevs capital structure policy and framework aims to optimize shareholder value through cash flow distribution to the company from
its subsidiaries, while maintaining an investment-grade rating and minimizing investments with returns below AB InBevs weighted average cost of capital. Besides the statutory minimum equity funding requirements that apply to the companys
subsidiaries in the different countries, AB InBev is not subject to any externally imposed capital requirements. When analyzing AB InBevs capital structure the company uses the same debt/equity classifications as applied in the
companys IFRS reporting.
Fair value is the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date. In conformity with IAS 39 all derivatives are recognized at fair value in the balance sheet.
The fair value of derivative financial instruments is either the quoted market price or is calculated using pricing models taking into account current market
rates.
1 |
Carrying amount refers to net book value as recognized in the balance sheet at each reporting date. |
72
The fair value of these instruments generally reflects the estimated amount that AB InBev would receive on the
settlement of favorable contracts or be required to pay to terminate unfavorable contracts at the balance sheet date, and thereby takes into account any unrealized gains or losses on open contracts.
The following table summarizes for each type of derivative the fair values recognized as assets or liabilities in the balance sheet:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
Liabilities |
|
|
Net |
|
Million US dollar |
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
Foreign currency |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward exchange contracts |
|
|
420 |
|
|
|
200 |
|
|
|
(652 |
) |
|
|
(322 |
) |
|
|
(232 |
) |
|
|
(122 |
) |
Foreign currency futures |
|
|
72 |
|
|
|
36 |
|
|
|
(117 |
) |
|
|
(29 |
) |
|
|
(45 |
) |
|
|
7 |
|
Other foreign currency derivatives |
|
|
|
|
|
|
51 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51 |
|
|
|
|
|
|
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps |
|
|
41 |
|
|
|
39 |
|
|
|
(8 |
) |
|
|
(75 |
) |
|
|
33 |
|
|
|
(36 |
) |
Cross currency interest rate swaps |
|
|
379 |
|
|
|
100 |
|
|
|
(60 |
) |
|
|
(161 |
) |
|
|
319 |
|
|
|
(61 |
) |
|
|
|
|
|
|
|
Commodities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aluminum swaps |
|
|
17 |
|
|
|
11 |
|
|
|
(53 |
) |
|
|
(100 |
) |
|
|
(36 |
) |
|
|
(89 |
) |
Sugar futures |
|
|
2 |
|
|
|
1 |
|
|
|
(27 |
) |
|
|
(22 |
) |
|
|
(25 |
) |
|
|
(21 |
) |
Wheat futures |
|
|
47 |
|
|
|
14 |
|
|
|
(16 |
) |
|
|
(19 |
) |
|
|
31 |
|
|
|
(5 |
) |
Other commodity derivatives |
|
|
8 |
|
|
|
27 |
|
|
|
(144 |
) |
|
|
(61 |
) |
|
|
(136 |
) |
|
|
(34 |
) |
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity derivatives |
|
|
1 258 |
|
|
|
248 |
|
|
|
|
|
|
|
|
|
|
|
1 258 |
|
|
|
248 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2 244 |
|
|
|
727 |
|
|
|
(1 077 |
) |
|
|
(789 |
) |
|
|
1 167 |
|
|
|
(62 |
) |
The following table summarizes the carrying amounts of the fixed rate interest-bearing financial liabilities and their fair
value. The fair value was assessed using common discounted cash-flow method based on market conditions existing at the balance sheet date. Therefore, the fair value of the fixed interest-bearing liabilities is within level 2 of the fair value
hierarchy as set forth by IFRS 13 Fair value measurement. Floating rate interest-bearing financial liabilities and all trade and other receivables and payables, including derivatives financial instruments, have been excluded from the
analysis as their carrying amounts are a reasonable approximation of their fair values:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing financial liabilities
Million US dollar |
|
2014 Carrying amount1 |
|
|
2014 Fair value |
|
|
2013 Carrying amount1 |
|
|
2013 Fair value |
|
Fixed rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Argentinean peso |
|
|
(37 |
) |
|
|
(37 |
) |
|
|
|
|
|
|
|
|
Brazilian real |
|
|
(595 |
) |
|
|
(591 |
) |
|
|
(611 |
) |
|
|
(624 |
) |
Canadian dollar |
|
|
(1 548 |
) |
|
|
(1 580 |
) |
|
|
(1 682 |
) |
|
|
(1 685 |
) |
Dominican peso |
|
|
(23 |
) |
|
|
(23 |
) |
|
|
(20 |
) |
|
|
(20 |
) |
Euro |
|
|
(10 246 |
) |
|
|
(11 373 |
) |
|
|
(10 055 |
) |
|
|
(10 577 |
) |
Pound sterling |
|
|
(2 816 |
) |
|
|
(3 534 |
) |
|
|
(3 031 |
) |
|
|
(3 615 |
) |
Swiss franc |
|
|
|
|
|
|
|
|
|
|
(673 |
) |
|
|
(687 |
) |
US dollar |
|
|
(33 312 |
) |
|
|
(37 646 |
) |
|
|
(31 195 |
) |
|
|
(35 028 |
) |
Other |
|
|
(8 |
) |
|
|
(8 |
) |
|
|
(7 |
) |
|
|
(7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(48 585 |
) |
|
|
(54 792 |
) |
|
|
(47 274 |
) |
|
|
(52 243 |
) |
As required by IFRS 13 Fair value measurement, the following table provides an analysis of financial instruments that
are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable.
|
|
|
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. |
|
|
|
Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived
from prices). |
|
|
|
Level 3 fair value measurements are those derived from valuation techniques for which the lowest level of input that is significant to the fair value measurement is unobservable. |
1 |
Carrying amount refers to net book value as recognized in the balance sheet at each reporting date. |
73
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value hierarchy 2014
Million US dollar |
|
Quoted (unadjusted) prices level 1 |
|
|
Observable market inputs level 2 |
|
|
Unobservable market inputs level 3 |
|
Financial Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Held for trading (non-derivatives) |
|
|
301 |
|
|
|
|
|
|
|
|
|
Derivatives at fair value through profit and loss |
|
|
37 |
|
|
|
1 352 |
|
|
|
|
|
Derivatives in a cash flow hedge relationship |
|
|
11 |
|
|
|
369 |
|
|
|
|
|
Derivatives in a fair value hedge relationship |
|
|
|
|
|
|
140 |
|
|
|
|
|
Derivatives in a net investment hedge relationship |
|
|
34 |
|
|
|
301 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
383 |
|
|
|
2 162 |
|
|
|
|
|
|
|
|
|
Financial Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Deferred consideration on acquisitions at fair value |
|
|
|
|
|
|
|
|
|
|
1 268 |
|
Derivatives at fair value through profit and loss |
|
|
65 |
|
|
|
459 |
|
|
|
|
|
Derivatives in a cash flow hedge relationship |
|
|
89 |
|
|
|
336 |
|
|
|
|
|
Derivatives in a fair value hedge relationship |
|
|
|
|
|
|
18 |
|
|
|
|
|
Derivatives in a net investment hedge relationship |
|
|
19 |
|
|
|
91 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
173 |
|
|
|
904 |
|
|
|
1 268 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value hierarchy 2013
Million US dollar |
|
Quoted (unadjusted) prices level 1 |
|
|
Observable market inputs level 2 |
|
|
Unobservable market inputs level 3 |
|
Financial Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Held for trading (non-derivatives) |
|
|
123 |
|
|
|
|
|
|
|
|
|
Derivatives at fair value through profit and loss |
|
|
27 |
|
|
|
412 |
|
|
|
|
|
Derivatives in a cash flow hedge relationship |
|
|
100 |
|
|
|
119 |
|
|
|
|
|
Derivatives in a fair value hedge relationship |
|
|
|
|
|
|
25 |
|
|
|
|
|
Derivatives in a net investment hedge relationship |
|
|
|
|
|
|
44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
250 |
|
|
|
600 |
|
|
|
|
|
|
|
|
|
Financial Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Deferred consideration on acquisitions at fair value |
|
|
|
|
|
|
|
|
|
|
1 111 |
|
Derivatives at fair value through profit and loss |
|
|
16 |
|
|
|
392 |
|
|
|
|
|
Derivatives in a cash flow hedge relationship |
|
|
69 |
|
|
|
216 |
|
|
|
|
|
Derivatives in a fair value hedge relationship |
|
|
|
|
|
|
68 |
|
|
|
|
|
Derivatives in a net investment hedge relationship |
|
|
13 |
|
|
|
15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
98 |
|
|
|
691 |
|
|
|
1 111 |
|
DERIVATIVE INSTRUMENTS
The fair value of exchange traded derivatives (e.g. exchange traded foreign currency futures) is determined by reference to the official prices published by
the respective exchanges (e.g. the New York Board of Trade). The fair value of over-the-counter derivatives is determined by commonly used valuation techniques. These are based on market inputs from reliable financial information providers.
NON-DERIVATIVE FINANCIAL LIABILITIES
As part of the
shareholders agreement between Ambev and E. León Jimenes S.A., following the acquisition of Cervecería Nacional Dominicana S.A. (CND), a put and call option is in place which may result in Ambev acquiring additional shares
in CND. As of 31 December 2014, the put option was valued 1 239m US dollar (2013: 1 076m US dollar) and recognized as a deferred consideration on acquisitions at fair value in level 3 category above. The variance is mainly explained
by accretion and foreign exchange expenses as well as fair value losses. No value was allocated to the call option. The fair value of such deferred consideration is calculated based on commonly-used valuation techniques (i.e. net present value of
future principal and interest cash flows discounted at market rate). These are based on market inputs from reliable financial information providers. As the put option may be exercised in the short-term, a portion of the liability is presented as a
current liability.
Fair values determined by reference to prices provided by reliable financial information providers are periodically checked for
consistency against other pricing sources.
74
I. |
OFFSETTING FINANCIAL ASSETS & FINANCIAL LIABILITIES |
The following financial assets and
liabilities are subject to offsetting, enforceable master netting agreements and similar agreements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
|
Amounts offset |
|
|
Amounts not offset |
|
|
Net |
|
Million US dollar |
|
Gross amounts |
|
|
Gross amounts offset |
|
|
Net amounts presented |
|
|
Financial instruments |
|
|
Cash collateral pledged / (received) |
|
|
Derivative assets |
|
|
2 244 |
|
|
|
|
|
|
|
2 244 |
|
|
|
(922 |
) |
|
|
(293 |
) |
|
|
1 029 |
|
Derivative liabilities |
|
|
(1 077 |
) |
|
|
|
|
|
|
(1 077 |
) |
|
|
922 |
|
|
|
19 |
|
|
|
(136 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013 |
|
|
|
Amounts offset |
|
|
Amounts not offset |
|
|
Net |
|
Million US dollar |
|
Gross amounts |
|
|
Gross amounts offset |
|
|
Net amounts presented |
|
|
Financial instruments |
|
|
Cash collateral pledged / (received) |
|
|
Derivative assets |
|
|
727 |
|
|
|
|
|
|
|
727 |
|
|
|
(601 |
) |
|
|
|
|
|
|
126 |
|
Derivative liabilities |
|
|
(789 |
) |
|
|
|
|
|
|
(789 |
) |
|
|
601 |
|
|
|
21 |
|
|
|
(167 |
) |
For the financial assets and liabilities subject to enforceable master netting agreements or similar agreements above, each
agreement between the company and the counterparty allows for net settlement of the relevant financial assets and liabilities when both elect to settle on a net basis. In the absence of such election, financial assets and liabilities will be settled
on a gross basis, however, each party to the master net agreement will have the option to settle all such amounts on a net basis in the event of default of the other part.
Non-cancelable operating leases are payable and receivable as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
|
Pub leases |
|
|
Other operational leases |
|
|
Net lease obligations |
|
Million US dollar |
|
Lessee |
|
|
Sublease |
|
|
Lessee |
|
|
Sublease |
|
|
Lessor |
|
|
Less than one year |
|
|
(121 |
) |
|
|
83 |
|
|
|
(107 |
) |
|
|
36 |
|
|
|
3 |
|
|
|
(106 |
) |
Between one and two years |
|
|
(118 |
) |
|
|
79 |
|
|
|
(89 |
) |
|
|
28 |
|
|
|
2 |
|
|
|
(98 |
) |
Between two and three years |
|
|
(115 |
) |
|
|
75 |
|
|
|
(70 |
) |
|
|
24 |
|
|
|
3 |
|
|
|
(83 |
) |
Between three and five years |
|
|
(214 |
) |
|
|
140 |
|
|
|
(90 |
) |
|
|
34 |
|
|
|
4 |
|
|
|
(126 |
) |
More than five years |
|
|
(704 |
) |
|
|
186 |
|
|
|
(118 |
) |
|
|
21 |
|
|
|
15 |
|
|
|
(600 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1 272 |
) |
|
|
563 |
|
|
|
(474 |
) |
|
|
143 |
|
|
|
27 |
|
|
|
(1 013 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013 |
|
|
|
Pub leases |
|
|
Other operational leases |
|
|
Net lease obligations |
|
Million US dollar |
|
Lessee |
|
|
Sublease |
|
|
Lessee |
|
|
Sublease |
|
|
Lessor |
|
|
Less than one year |
|
|
(121 |
) |
|
|
94 |
|
|
|
(152 |
) |
|
|
40 |
|
|
|
3 |
|
|
|
(136 |
) |
Between one and two years |
|
|
(117 |
) |
|
|
90 |
|
|
|
(116 |
) |
|
|
31 |
|
|
|
3 |
|
|
|
(109 |
) |
Between two and three years |
|
|
(113 |
) |
|
|
85 |
|
|
|
(86 |
) |
|
|
27 |
|
|
|
3 |
|
|
|
(84 |
) |
Between three and five years |
|
|
(209 |
) |
|
|
158 |
|
|
|
(123 |
) |
|
|
38 |
|
|
|
6 |
|
|
|
(130 |
) |
More than five years |
|
|
(826 |
) |
|
|
210 |
|
|
|
(164 |
) |
|
|
22 |
|
|
|
7 |
|
|
|
(751 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1 386 |
) |
|
|
637 |
|
|
|
(641 |
) |
|
|
158 |
|
|
|
22 |
|
|
|
(1 210 |
) |
Following the sale of Dutch and Belgian pub real estate to Cofinimmo in October 2007, AB InBev entered into lease agreements
of 27 years. These operating leases maturing in November 2034 represent an undiscounted obligation of 1 272m US dollar. The pubs leased from Cofinimmo are subleased for an average outstanding period of 6 to 8 years and represent an undiscounted
right to receive 563m US dollar. These leases are subject to renewal after their expiration date. The impact of such renewal is not reported in the table above.
Furthermore, the company leases a number of warehouses, factory facilities and other commercial buildings under operating leases. The leases typically run for
an initial period of five to ten years, with an option to renew the lease after that date. This represents an undiscounted obligation of 474m US dollar. Lease payments are increased annually to reflect market rentals. None of the leases include
contingent rentals. Also in this category AB InBev has sublet some of the leased properties, representing an undiscounted right of 143m US dollar.
At
31 December 2014, 276m US dollar was recognized as an expense in the income statement in respect of operating leases as lessee (2013: 255m US dollar), while 148m US dollar was recognized as income in the income statement in respect of subleases
(2013: 141m US dollar).
75
The company also leases out part of its own property under operating leases. At 31 December 2014, 23m US
dollar was recognized as income in the income statement in respect of operating leases as lessor (2013: 7m US dollar).
29. |
COLLATERAL AND CONTRACTUAL COMMITMENTS FOR THE ACQUISITION OF PROPERTY, PLANT AND EQUIPMENT, LOANS TO CUSTOMERS AND OTHER |
|
|
|
|
|
Million US dollar |
|
2014 |
|
2013 |
Collateral given for own liabilities |
|
641 |
|
559 |
Collateral and financial guarantees received for own receivables and loans to customers |
|
193 |
|
57 |
Contractual commitments to purchase property, plant and equipment |
|
647 |
|
591 |
Contractual commitments to acquire loans to customers |
|
13 |
|
26 |
Other commitments |
|
1 801 |
|
1 021 |
The collateral given for own liabilities of 641m US dollar at 31 December 2014 contains 198m US dollar cash guarantees.
Such cash deposits are a customary feature associated with litigations in Brazil: in accordance with Brazilian laws and regulations a company may or must (depending on the circumstances) place a deposit with a bank designated by the court or provide
other security such as collateral on property, plant and equipment. With regard to judicial cases, AB InBev has made the appropriate provisions in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets see also
Note 25 Provisions. In the companys balance sheet the cash guarantees are presented as part of other receivables see Note 19 Trade and other receivables. The remaining part of collateral given for own liabilities (443m US
dollar) contains collateral on AB InBevs property in favor of the excise tax authorities, the amount of which is determined by the level of the monthly excise taxes due, inventory levels and transportation risk, and collateral on its property,
plant and equipment with regard to outstanding loans. To the extent that AB InBev would not respect its obligations under the related outstanding contracts or would lose the pending judicial cases, the collateralized assets would be used to settle
AB InBevs obligations.
To keep AB InBevs credit risk with regard to receivables and loans to customers as low as possible collateral and
other credit enhancements were obtained for a total amount of 193m US dollar at 31 December 2014. Collateral is held on both real estate and debt securities while financial guarantees are obtained from banks and other third parties.
AB InBev has entered into commitments to purchase property, plant and equipment for an amount of 647m US dollar at 31 December 2014.
In a limited number of countries AB InBev has committed itself to acquire loans to customers from banks at their notional amount if the customers do not
respect their reimbursement commitments towards the banks. The total outstanding amount of such loans is 13m US dollar at 31 December 2014
Other
commitments amount to 1 801m US dollar at 31 December 2014 and mainly cover guarantees given to pension funds, rental and other guarantees.
As at
31 December 2014, the following M&A related commitments existed with respect to the combination with Grupo Modelo:
|
|
|
In a transaction related to the combination of AB InBev and Grupo Modelo select Grupo Modelo shareholders committed, upon tender of their Grupo Modelo shares, to acquire 23 076 923 AB InBev shares to be delivered within
5 years for consideration of approximately 1.5 billion US dollar. The consideration was paid on 5 June 2013. Pending the delivery of the AB InBev shares, AB InBev will pay a coupon on each undelivered AB InBev share, so that the Deferred Share
Instrument holders are compensated on an after tax basis, for dividends they would have received had the AB InBev shares been delivered to them prior to the record date for such dividend. |
|
|
|
On 7 June 2013, in a transaction related to the combination of AB InBev and Grupo Modelo, AB InBev and Constellation have entered into a three-year transition services agreement by virtue of which Grupo Modelo or
its affiliates will provide certain transition services to Constellation to ensure a smooth operational transition of the Piedras Negras brewery. AB InBev and Constellation have also entered into a temporary supply agreement for an initial
three-year term, whereby Constellation can purchase inventory from Grupo Modelo or its affiliates under a specified pricing until the Piedras Negras brewery business acquires the necessary capacity to fulfill 100 percent of the US demand.
|
In order to fulfil AB InBevs commitments under various outstanding stock option plans, AB InBev entered into stock lending
arrangements for up to 13 million of its own ordinary shares. AB InBev shall pay any dividend equivalent, after tax in respect of the loaned securities. This payment will be reported through equity as dividend. As of 31 December 2014,
10 million loaned securities were used to fulfil stock option plan commitments.
76
The company has contingencies for
which, in the opinion of management and its legal counsel, the risk of loss is possible but not probable and therefore no provisions have been recorded. Due to their nature, such legal proceedings and tax matters involve inherent uncertainties
including, but not limited to, court rulings, negotiations between affected parties and governmental actions, and as a consequence AB InBev management cannot at this stage estimate the likely timing of resolution of these matters. The most
significant contingencies are discussed below.
AMBEV TAX MATTERS
As of 31 December 2014, AB InBevs material tax proceedings related to Ambev and its subsidiaries. Estimates of amounts of possible loss are as
follows:
|
|
|
|
|
|
|
|
|
Million US dollar |
|
31 December 2014 |
|
|
31 December 2013 |
|
Income tax and social contribution |
|
|
4 874 |
|
|
|
4 352 |
|
Value-added and excise taxes |
|
|
2 127 |
|
|
|
1 625 |
|
Other taxes |
|
|
115 |
|
|
|
155 |
|
|
|
|
|
|
|
|
|
|
|
|
|
7 116 |
|
|
|
6 132 |
|
The most significant tax proceedings of Ambev are discussed below.
INCOME TAX AND SOCIAL CONTRIBUTION
During the first
quarter 2005, certain subsidiaries of Ambev received a number of assessments from Brazilian federal tax authorities relating to profits of its foreign subsidiaries. In December 2008, the Administrative Court decided on one of the tax assessments
relating to earnings of Ambevs foreign subsidiaries. This decision was partially favorable to Ambev, and in connection with the remaining part, Ambev filed an appeal to the Upper House of the Administrative Court and is awaiting its decision.
With respect to another tax assessment relating to foreign profits, the Administrative Court rendered a decision favorable to Ambev in September 2011. In December 2013, Ambev received another tax assessment related to profits of its foreign
subsidiaries. As of 31 December 2014, Ambev management estimates the exposure of approximately 4.2 billion Brazilian real (1.6 billion US dollar) as a possible risk, and accordingly has not recorded a provision for such amount, and
approximately 35m Brazilian real (13m US dollar) as a probable loss.
In December 2011, Ambev received a tax assessment related to the goodwill
amortization resulting from the Inbev Holding Brasil S.A. merger with Ambev. In November 2014 the Lower Administrative Court concluded the judgment and now Ambev awaits the publication of the decision. As this decision was partly favorable, Ambev
will present an appeal to the Upper Administrative Court after such publication. Ambev management estimates the amount of possible losses in relation to this assessment to be approximately 4.3 billion Brazilian real (1.6 billion US dollar) as of
31 December 2014. Ambev has not recorded any provision in connection therewith. In the event Ambev would be required to pay these amounts, Anheuser-Busch InBev SA/NV will reimburse Ambev the amount proportional to the benefit received by
Anheuser-Busch InBev SA/NV pursuant to the merger protocol, as well as the respective costs.
In October 2013, Ambev also received a tax assessment
related to the goodwill amortization resulting from the merger of QUINSA S.A. into Ambev. Ambev filed a defense in November 2013. In December 2014, Ambev filed an appeal against the unfavorable first level administrative decision published in
November 2014. Ambev management estimates the amount of possible losses in relation to this assessment to be approximately 1.2 billion Brazilian real (0.5 billion US dollar) as of 31 December 2014. Ambev has not recorded any provision in
connection therewith.
Ambev and certain of its subsidiaries received a number of assessments from Brazilian federal tax authorities relating to the
consumption of income tax losses in relation to company mergers. After a decision by the CARF and a related appeal presented by the tax authorities on one of those assessments, Ambev management estimates the total exposures of possible losses in
relation to these assessments to be approximately of 419m Brazilian real (158m US dollar) as of 31 December 2014.
In December 2014, Ambev received a
tax assessment from the Brazilian Federal Tax Authorities related to the disallowance of alleged non-deductible expenses and the deduction of certain losses mainly associated to financial investments and loans. The defense was presented on
27 January 2015. Ambev management estimates the amount of possible losses in relation to this assessment to be approximately 1.2 billion Brazilian real (0.5 billion US dollar) as of 31 December 2014. Ambev has not recorded any provision in
connection therewith.
ICMS VALUE ADDED TAX, IPI EXCISE TAX AND TAXES ON NET SALES
In Brazil, goods manufactured within the Manaus Free Trade Zone intended for consumption elsewhere in Brazil are exempt from IPI excise tax. Ambevs
subsidiaries have been registering IPI excise tax presumed credits upon the acquisition of exempted inputs manufactured therein. Since 2009, Ambev has been receiving a number of tax assessments from the Brazilian Federal Tax Authorities relating to
the disallowance of such presumed credits and other IPI credits, which are under discussion. Ambev management estimates the possible losses related to these assessments to be approximately 917m Brazilian real (345m US dollar) as of 31 December
2014. Ambev has not recorded any provision in connection therewith.
In 2014, Ambev received tax assessments from the Brazilian Federal Tax Authorities
relating to IPI excise tax, supposedly due over remittances of manufactured goods to other related factories, for which the decision from the Upper House of the Administrative Court is still pending. Ambev management estimates the possible losses
related to these assessments to be approximately 510m Brazilian real (192m US dollar) as of 31 December 2014. Ambev has not recorded any provision in connection therewith. In 7 January 2015, Ambev received a new tax assessment related to
this issue in the amount of 568m Brazilian real (214m US dollar), also considered a possible loss.
1 |
Amounts have been converted to US dollar at the closing rate of the respective period. |
77
Ambev is currently challenging tax assessments from the States of São Paulo, Rio de Janeiro and Minas
Gerais, which question the legality of tax credits arising from existing tax incentives received by Ambev in other States. In August 2014, Ambev received other tax assessments related to the same issue. Ambev management estimates the possible losses
related to these assessments to be approximately 1.0 billion Brazilian real (390m US dollar) as of 31 December 2014. Ambev has not recorded any provision in connection therewith.
Ambev is currently party to legal proceedings with the State of Rio de Janeiro where it is challenging such States attempt to assess ICMS with respect
to unconditional discounts granted by Ambev from January 1996 to February 1998. These proceedings are currently before the Superior Court of Justice and the Brazilian Supreme Court. In November 2013, Ambev received a similar tax assessments issued
by the State of Pará. Ambev management estimates the total exposure in relation to the matter to be approximately 820m Brazilian real (309m US dollar) as of 31 December 2014, of which 704m Brazilian real (265m US dollar) are considered
as possible losses, and accordingly Ambev has not recorded a provision for such amount, and approximately 116m Brazilian real (44m US dollar) as a probable loss.
OTHER TAX MATTERS
During 2014, Anheuser-Busch InBev
Worldwide Inc. received a net proposed tax assessment from the United States federal tax authorities (IRS) of 0.3 billion US dollar predominantly involving certain inter-company transactions, related to tax returns for the years 2008 and 2009.
Anheuser-Busch InBev Worldwide Inc. has filed protests with the IRS and intends to vigorously defend its position.
WARRANTS
Certain holders of warrants issued by Ambev in 1996 for exercise in 2003 proposed lawsuits to subscribe correspondent shares for an amount lower than Ambev
considers as established upon the warrant issuance. In case Ambev loses the totality of these lawsuits, the issuance of 172,831,575 shares would be necessary. Ambev would receive in consideration funds that are materially lower than the current
market value. This could result in a dilution of about 1% to all Ambev shareholders. Furthermore, the holders of these warrants are claiming that they should receive the dividends relative to these shares since 2003, approximately 572m
Brazilian real (215m US dollar) in addition to legal fees. Ambev disputes these claims and intends to continue to vigorously defend its case.
ANTITRUST MATTERS
On 22 July 2009, CADE, the
Brazilian antitrust authority issued its ruling in Administrative Proceeding No. 08012.003805/2004-1. This proceeding was initiated in 2004 as a result of a complaint filed by Schincariol (a South American brewery and beverage maker based in
Brazil) and had, as its main purpose, the investigation of Ambevs conduct in the market, in particular its customer loyalty program known as Tô Contigo, which is similar to airline frequent flyer and other mileage programs.
During its investigation, the Secretariat of Economic Law of the Ministry of Justice (SDE) concluded that the program should be considered anticompetitive unless certain adjustments were made. These adjustments had already been
substantially incorporated into the then-current version of the Program. The SDE opinion did not threaten any fines and recommended that the other accusations be dismissed. After the SDE opinion was issued, the proceeding was sent to CADE, which
issued a ruling that, among other things, imposed a fine in the amount of 353m Brazilian real (133m US dollar). Ambev believes that CADEs decision was without merit and thus has challenged it before the federal courts, which have ordered the
suspension of the fine and other parts of the decision upon its posting of a guarantee. Ambev has already rendered a court bond (letter of credit) for this purpose. According to the opinion of Ambevs management, a loss is possible (but not
probable), and therefore Ambev has not established a provision in its financial statements. This possible loss is expected to be limited to the aforementioned fine (which reached 524m Brazilian Real (197m US dollar) as of 31 December 2014,
reflecting adjustment for inflation and accrued interests and additional legal fees in connection with this matter. Ambev is also involved in other administrative proceedings before CADE and SDE, relating to the investigation of certain conduct,
none of which the company believes contravenes applicable competition rules and regulations.
In August 2011, the German Federal Cartel Office
(Bundeskartellamt) launched an investigation against several breweries and retailers in Germany in connection with an allegation of anticompetitive vertical price maintenance by breweries vis-à-vis their trading partners in Germany.
Depending on the outcome of the investigation, the company may face fines. The company is taking the appropriate steps in the pending proceedings but has not recorded any provisions for any potential fines at this point in time, as AB
InBev management does not know whether the company will eventually face any such fines and, in any event, cannot at this stage reliably estimate the appropriate amount. In addition, the company cannot at this stage estimate the likely
timing of the resolution of this matter.
On 12 December 2014, claimants in Canada brought a lawsuit against the Liquor Control Board of Ontario,
Brewers Retail Inc. (The Beer Store) and the owners of Brewers Retail Inc. (Molson Coors Canada, Sleeman Breweries Ltd. and Labatt Breweries of Canada LP). The lawsuit, brought pursuant to the Ontario Class Proceedings Act in the Ontario
Superior Court of Justice, seeks, among other things: a declaration that the defendants conspired and agreed with each other to allocate sales, territories, customers or markets for the supply of beer sold in Ontario since June 1, 2000, and a
declaration that the owners of Brewers Retail Inc. conspired and agreed to fix, increase and/or maintain prices charged to Ontario licensees (on-trade) for beer and the fees charged by The Beer Store to other competitive brewers who wished to sell
their products through The Beer Store. The claimants are seeking damages not exceeding 1.4 billion Canadian dollar (1.2 billion US dollar) and punitive, exemplary and aggravated damages of 5 million Canadian dollar. The company
believes that there are strong defenses and, accordingly, has not recorded any provision in connection therewith.
2009 DISPOSITIONS PENSION LITIGATION
On 1 December 2009, AB InBev and several of its related companies were sued in Federal Court in the Eastern District of Missouri in a lawsuit
styled Richard F. Angevine v. AB InBev, et al. The plaintiff sought to represent a class of certain employees of Busch Entertainment Corporation, which was divested on 1 December 2009, and the four Metal Container Corporation plants which were
78
divested on 1 October 2009. He also sought to represent certain employees of any other subsidiary of Anheuser-Busch Companies, Inc. (ABC) which were divested on 1 October 2009. The
lawsuit contained claims that the class was entitled to enhanced retirement benefits under sections 4.3 and 19.11(f) of the Anheuser-Busch Companies Salaried Employees Pension Plan (the Plan). Specifically, plaintiff alleged
that the divestitures resulted in his involuntarily termination from ABC and its operating division and subsidiaries within three years after the 18 November 2008 ABC/InBev merger, which allegedly triggered the enhanced
benefits under the Plan. The lawsuit claimed that by failing to provide the class members with these enhanced benefits, AB InBev, et al. breached their fiduciary duties under ERISA. The complaint sought punitive damages and attorneys fees. On
16 July 2010, the Court ruled that the claims for breach of fiduciary duty and punitive damages were not proper. The Court also found that Angevine did not exhaust his administrative remedies, which he must first do before filing a lawsuit.
Angevine filed an appeal of this ruling with the Eighth Circuit Court of Appeals. On 22 July 2011, the Court of Appeals affirmed the decision of the lower court. No further appeals were filed.
On 15 September 2010, AB InBev and several of its related companies were sued in Federal Court for the Southern District of Ohio in a lawsuit entitled
Rusby Adams et al. v. AB InBev et al. This lawsuit was filed by four employees of Metal Container Corporations facilities (MCC) in Columbus, Ohio, Gainesville, Florida, and Ft. Atkinson, Wisconsin that were divested on
1 October 2009. Similar to the Angevine lawsuit, these plaintiffs seek to represent a class of participants of the Anheuser-Busch Companies Inc. Salaried Employees Pension Plan (the Plan) who had been employed by
subsidiaries of Anheuser-Busch Companies, Inc. that had been divested during the period of 18 November 2008 and 17 November 2011. The plaintiffs also allege claims similar to the Angevine lawsuit: (1) that they are entitled to
benefits under section 19.11(f) of the Plan; and (2) that the denial of benefits was a breach of fiduciary duty. AB InBev believed that it had defenses to these claims, and filed a motion to dismiss. On 25 April 2011, the Court dismissed
the breach of fiduciary duty claims, and the only remaining claim is for benefits under section 19.11(f). On 28 March 2012, the Court certified that the case could proceed as a class action comprised of former employees of the divested MCC
operations. On 9 January 2013, the Court granted AB InBevs motion for Judgment on the Administrative Record. The plaintiffs appealed this decision on 5 February 2013. On 11 July 2014, the Court of Appeals for the 6th Circuit reversed the lower court and remanded the case for judgment against AB InBev. On 16 September 2014, AB InBevs Motion for Rehearing En Banc was denied. A Final Order and Judgment
was then entered by the District Court on 24 December 2014, which ordered the Plan to provide the enhanced pension benefit under Section 19.11(f) to members of the certified class. The company believes that the total amount of the enhanced
pension benefit is approximately 8m US dollar. Plaintiffs are in the process of preparing their attorneys fee application.
On 10 January 2012,
a class action complaint asserting claims very similar to those asserted in the Angevine lawsuit was filed in Federal Court for the Eastern District of Missouri, styled Nancy Anderson et al. v. Anheuser-Busch Companies Pension Plan et al. Unlike the
Angevine case, however, the plaintiff in this matter alleges complete exhaustion of all administrative remedies. The company filed a motion to dismiss on 9 October 2012. This was still pending when the Court allowed the complaint to be amended
on 19 November 2012 to name four new plaintiffs. AB InBev filed a motion to dismiss on 17 December 2012. While this motion was pending, on 11 March 2013 the Court consolidated the case with the Knowlton case (see below) which had been
transferred from California to Missouri.
On 10 October 2012, another class action complaint was filed against Anheuser-Busch Companies, LLC,
Anheuser-Busch Companies Pension Plan, Anheuser-Busch Companies Pension Plan Appeals Committee and the Anheuser-Busch Companies Pension Plans Administrative Committee by Brian Knowlton, an employee of the divested Busch Entertainment Corporation
(BEC). This complaint, filed in Federal Court in the Southern District of California, was amended on 12 October 2012. Like the other lawsuits, it claims that the employees of any divested assets were entitled to enhanced
retirement benefits under section 19.11(f) of the Plan. However, it specifically excludes the divested Metal Container Corporation facilities that have been included in the Adams class action. On 6 November 2012, the plaintiffs filed a motion
asking the court to move the Anderson case to California to join it with the Knowlton case for discovery. The company filed a motion to dismiss/motion to transfer the case to Missouri on 12 November 2012, which was granted on 30 January
2013. As outlined above, on 11 March 2013, the Knowlton case was then consolidated in Missouri with the Anderson case. On 19 April 2013 a consolidated complaint was filed, and a Motion to Dismiss was filed by the company on 10 May
2013. On 30 October 2013, the court dismissed the breach of fiduciary claims, and an answer was filed on 13 November 2013. On 19 November 2013, plaintiffs amended one count of the consolidated complaint. On 16 May 2014, the Court
granted class certification. The class consists of divested BEC employees. On 10 November 2014, Plaintiffs filed a Motion for Judgment on the Pleadings based on the decision by the Sixth Circuit Court of Appeals in the Adams case.
79
TRANSACTIONS WITH DIRECTORS AND EXECUTIVE BOARD MANAGEMENT MEMBERS (KEY MANAGEMENT
PERSONNEL)
In addition to short-term employee benefits (primarily salaries) AB InBevs executive board management members are entitled to
post-employment benefits. More particular, members of the executive board management participate in the pension plan of their respective country see also Note 23 Employee Benefits. Finally, key management personnel are eligible for the
companys share option; restricted stock and/or share swap program (refer Note 24 Share-based Payments). Total directors and executive board management compensation included in the income statement can be detailed as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
2013 |
|
Million US dollar |
|
Directors |
|
|
Executive board management |
|
|
Directors |
|
|
Executive board management |
|
Short-term employee benefits |
|
|
2 |
|
|
|
21 |
|
|
|
2 |
|
|
|
22 |
|
Post-employment benefits |
|
|
|
|
|
|
2 |
|
|
|
|
|
|
|
2 |
|
Other long-term employee benefits |
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
|
|
Share-based payments |
|
|
3 |
|
|
|
73 |
|
|
|
3 |
|
|
|
66 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5 |
|
|
|
97 |
|
|
|
5 |
|
|
|
90 |
|
Directors compensation consists mainly of directors fees. During 2014, AB InBev acquired, through a subsidiary of
Grupo Modelo, information technology and infrastructure services for a consideration of approximately 9m US dollar from a company in which one of the companys Board Member had significant influence as of 31 December 2014. AB InBev also
sold real estate from a non-consolidated, non-profit affiliate of Grupo Modelo to one of its Board Members for a consideration of approximately 28m US dollar, a price corresponding to the average of two independent external valuation reports. With
the exception of the abovementioned transactions, key management personnel were not engaged in any transactions with AB InBev and did not have any significant outstanding balances with the company.
JOINTLY CONTROLLED ENTITIES
Significant interests in
joint ventures include two entities in Brazil, two in China, one in Mexico and one in UK. None of these joint ventures are material to the company. Aggregate amounts of AB InBevs interest are as follows:
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
2013 |
|
Non-current assets |
|
|
2 |
|
|
|
101 |
|
Current assets |
|
|
4 |
|
|
|
57 |
|
Non-current liabilities |
|
|
|
|
|
|
67 |
|
Current liabilities |
|
|
5 |
|
|
|
115 |
|
Result from operations |
|
|
6 |
|
|
|
24 |
|
Profit attributable to equity holders of AB InBev |
|
|
3 |
|
|
|
11 |
|
Effective 1 January 2014, the company discontinued the proportional consolidation of certain operations.
see also Note 4 Use of estimates and judgments.
TRANSACTIONS WITH ASSOCIATES
AB InBevs transactions with associates were as follows:
|
|
|
|
|
|
|
|
|
Million US dollar |
|
2014 |
|
|
2013 |
|
Gross profit |
|
|
(92 |
) |
|
|
31 |
|
Current assets |
|
|
2 |
|
|
|
6 |
|
Current liabilities |
|
|
11 |
|
|
|
32 |
|
TRANSACTIONS WITH PENSION PLANS
AB InBevs transactions with pension plans mainly comprise 12m US dollar other income from pension plans in US and 5m US dollar other income from pension
plans in Brazil.
TRANSACTIONS WITH GOVERNMENT-RELATED ENTITIES
AB InBev has no material transactions with government-related entities.
80
32. |
EVENTS AFTER THE BALANCE SHEET DATE |
SHARE BUYBACK PROGRAM
The Board of Directors has approved a share buyback program for an amount of one billion US dollar, which will be conducted during the course of 2015. The
companys current intention is to use the shares acquired to fulfil its various share delivery commitments under the stock ownership plan. The program will be executed under the powers granted at the General Meeting of Shareholders on
30 April 2014.
AB INBEV INDIAN OPERATIONS
In
February 2015, AB InBev announced the entry into an agreement with RJ Corp Limited under which AB InBev will exit the Indian joint venture with RJ Corp Limited and staff and operations of the joint venture will be moved to Crown Beers India Private
Limited, a wholly-owned subsidiary of AB InBev. Later in February 2015, AB InBev exited the Indian joint venture. Following a transition period into mid-2015, AB InBev will operate independently in India via Crown Beers India Private
Limited.
81
Listed below are the most important AB InBev companies. A complete list of the
companys investments is available at AB InBev NV, Brouwerijplein 1, B-3000 Leuven, Belgium. The total number of companies consolidated (fully, proportional and equity method) is 439.
LIST OF MOST IMPORTANT FULLY CONSOLIDATED COMPANIES
|
|
|
|
|
NAME AND REGISTERED OFFICE OF FULLY CONSOLIDATED COMPANIES |
|
% OF ECONOMIC INTEREST AS AT 31 DECEMBER 2014 |
|
|
|
ARGENTINA |
|
|
|
|
CERVECERIA Y MALTERIA QUILMES SAICA y G Charcas 5160 Buenos Aires |
|
|
61.84 |
|
|
|
BELGIUM |
|
|
|
|
AB INBEV NV Grote Markt 1 1000 Brussel |
|
|
Consolidating Company |
|
BRASSERIE DE LABBAYE DE LEFFE S.A. Place de lAbbaye 1 5500 Dinant |
|
|
98.54 |
|
BROUWERIJ VAN HOEGAARDEN N.V. Stoopkensstraat 46 3320 Hoegaarden |
|
|
100.00 |
|
COBREW N.V. Brouwerijplein 1 3000 Leuven |
|
|
100.00 |
|
INBEV BELGIUM N.V. Industrielaan 21 1070 Brussel |
|
|
100.00 |
|
|
|
BOLIVIA |
|
|
|
|
CERVECERIA BOLIVIANA NACIONAL S.A. Av. Montes 400 and Chuquisaca Street La Paz |
|
|
61.84 |
|
|
|
BRAZIL |
|
|
|
|
CIA DE BEBIDAS DAS AMERICAS AMBEV BRASIL Rua Dr. Renato Paes de Barros, 1017, 4° Andar (parte), cj. 44 e 42
Itaim Bibi, Sao Paulo |
|
|
61.84 |
|
|
|
CANADA |
|
|
|
|
LABATT BREWING COMPANY LIMITED 207 Queens Quay West, Suite 299 M5J 1A7 Toronto |
|
|
61.84 |
|
|
|
CHILE |
|
|
|
|
CERVECERIA CHILE S.A. Av. Presidente Eduardo Frei Montalva 9600 Quilicura |
|
|
61.84 |
|
|
|
CHINA |
|
|
|
|
ANHEUSER-BUSCH INBEV (WUHAN) BREWING COMPANY LIMITED Shangshou, Qin Duan Kou, Hanyang Area, Wuhan, Hubei Province |
|
|
97.06 |
|
ANHEUSER-BUSCH INBEV HARBIN BREWERY COMPANY LIMITED 20 Youfang Street Xiangfang District Harbin, Heilongjiang
Province |
|
|
100.00 |
|
ANHEUSER-BUSCH INBEV (ZHOUSHAN) BREWERY Co., Ltd. No.1 Linggang Yi Road, Linggang industrial area, Dinghai District Zhou
Shan |
|
|
100.00 |
|
INBEV BAISHA (HUNAN) BREWERY CO LTD No. 304 Shao Shan Zhong Lu Changsha |
|
|
100.00 |
|
INBEV DOUBLE DEER GROUP CO LTD 419 Wu Tian Street Wenzhou |
|
|
55.00 |
|
INBEV JINLONGQUAN (HUBEI) BREWERY CO LTD 89 Chang Ning Street Jingmen |
|
|
60.00 |
|
INBEV JINLONGQUAN (XIAOGAN) BREWERY CO LTD No. 198 Chengzhan Street Xiaogan |
|
|
60.00 |
|
INBEV KK (NINGBO) BREWERY CO LTD Jinjiang Zhen, 315000 Ningbo |
|
|
100.00 |
|
INBEV SEDRIN BREWERY Co, Ltd No.2 factory Xialin Cun, Chen Xiang district, PuTian City, Fujian Province |
|
|
100.00 |
|
ANHEUSER-BUSCH INBEV (TAIZHOU) BREWERY CO., LTD. 159, Qi Xia Dong Road Cheng Guan, Tiantai County |
|
|
100.00 |
|
ANHEUSER-BUSCH INBEV (NINGBO) BREWERY CO., LTD. JinJiang Zhen, 315000 Ningbo, Zhejiang Province |
|
|
100.00 |
|
ANHEUSER-BUSCH INBEV (NANJING) BREWERY CO., LTD. Qi Li Qiao, Jiang Pu district, 211800 Nanjing |
|
|
100.00 |
|
Siping Ginsber Draft Beer Co Ltd-XianMaQuan area, TieDong district, ShiPing city, JiLin province, Hebei, China |
|
|
100.00 |
|
JIANGSHU BIG BOSS CO.,LTD. No. 666 Zhaoxia road, High technical develop District, Nantong city |
|
|
100.00 |
|
YANCHENG BIG BOSS CO.,LTD. West Shou of South huan road, Gongyeyuan district, Dazhong town, Dafeng city |
|
|
100.00 |
|
SUZHOU BIG BOSS CO.,LTD. No. 12 East Jiaotong Road, Lili town, Wujiang District, Suzhou city |
|
|
100.00 |
|
|
|
CZECH REPUBLIC |
|
|
|
|
Pivovar Samson a.s. V parku 2326/18, Chodov, 148 00 Praha 4, Česká republika |
|
|
100.00 |
|
|
|
DOMINICAN REPUBLIC |
|
|
|
|
CND Cervecería Nacional Dominicana, Autopista 30 de Mayo, Distrito Nacional, RD |
|
|
34.01 |
|
|
|
ECUADOR |
|
|
|
|
COMPAÑIA CERVECERA AMBEV ECUADOR S.A. Km 14.5 Via a Daule S/N y Av. Las Iguanas, Guayaquil |
|
|
61.84 |
|
|
|
FRANCE |
|
|
|
|
AB INBEV FRANCE S.A.S. 38 Allée Vauban 59110 La Madeleine |
|
|
100.00 |
|
|
|
GERMANY |
|
|
|
|
BRAUEREI BECK GmbH & CO. KG Am Deich 18/19 28199 Bremen |
|
|
100.00 |
|
BRAUEREI DIEBELS GmbH & CO.KG Brauerei-Diebels-Strasse 1 47661 Issum |
|
|
100.00 |
|
82
|
|
|
|
|
NAME AND REGISTERED OFFICE OF FULLY CONSOLIDATED COMPANIES |
|
% OF ECONOMIC INTEREST AS AT 31 DECEMBER 2014 |
|
BRAUERGILDE HANNOVER AG Hildesheimer Strasse 132 30173 Hannover |
|
|
100.00 |
|
HAAKE-BECK BRAUEREI GmbH & Co. KG Am Deich 18/19 28199 Bremen |
|
|
99.96 |
|
HASSERÖDER BRAUEREI GmbH Auerhahnring 1 38855 Wernigerode |
|
|
100.00 |
|
ANHEUSER-BUSCH INBEV GERMANY HOLDING GmbH Am Deich 18/19 28199 Bremen |
|
|
100.00 |
|
SPATEN FRANZISKANER BRÄU GmbH Marsstrasse 46 + 48 80335 München |
|
|
100.00 |
|
|
|
GRAND DUCHY OF LUXEMBOURG |
|
|
|
|
BRASSERIE DE LUXEMBOURG MOUSEL DIEKIRCH 1, Rue de la Brasserie L-9214 Diekirch |
|
|
95.82 |
|
|
|
INDIA |
|
|
|
|
CROWN BEERS INDIA LIMITED #8-2-684/A, ROAD NO. 12 BANJARA HILLS, HYDERABAD 500034 ANDHRA PRADESH |
|
|
100.00 |
|
|
|
SOUTH KOREA |
|
|
|
|
ORIENTAL BREWERY CO., LTD 151, Hyeondogongdan-ro, Seowon-gu Cheongju-si, Chungcheongbuk-do, South Korea |
|
|
100.00 |
|
|
|
MEXICO |
|
|
|
|
GRUPO MODELO, S.A.B. DE C.V. JAVIER BARROS SIERRA 555 PISO 3 ZEDEC ED PLAZA SANTA FE DISTRITO FEDERAL C.P. 01210 |
|
|
98.87 |
|
|
|
PARAGUAY |
|
|
|
|
CERVECERIA PARAGUAYA S.A. Ruta Villeta KM30 Ypané |
|
|
61.84 |
|
|
|
PERU |
|
|
|
|
COMPANIA CERVECERA AMBEV PERU SAC Av Los Laureles Mza a lote 4 (Mirador 12 Carretera R. Priale) Lima Luringancho |
|
|
61.84 |
|
|
|
RUSSIA |
|
|
|
|
OAO SUN INBEV 28 Moscovskaya Street, Moscow region 141600 Klin |
|
|
99.95 |
|
|
|
THE NETHERLANDS |
|
|
|
|
INBEV NEDERLAND N.V. Ceresstraat 1 4811 CA Breda |
|
|
100.00 |
|
INTERBREW INTERNATIONAL B.V. Ceresstraat 1 4811 CA Breda |
|
|
100.00 |
|
|
|
UKRAINE |
|
|
|
|
PJSC SUN InBev Ukraine 30V Fizkultury St 03680 Kyiv |
|
|
98.29 |
|
|
|
US |
|
|
|
|
ANHEUSER-BUSCH COMPANIES, LLC. One Busch Place St. Louis, MO 63118 |
|
|
100.00 |
|
ANHEUSER-BUSCH INTERNATIONAL, INC. One Busch Place St. Louis, MO 63118 |
|
|
100.00 |
|
ANHEUSER-BUSCH PACKAGING GROUP, INC. One Busch Place St. Louis, MO 63118 |
|
|
100.00 |
|
|
|
UNITED KINGDOM |
|
|
|
|
BASS BEERS WORLDWIDE LIMITED Porter Tun House, 500 Capability Green LU1 3LS Luton |
|
|
100.00 |
|
INBEV UK LTD Porter Tun House, 500 Capability Green LU1 3LS Luton |
|
|
100.00 |
|
|
|
URUGUAY |
|
|
|
|
CERVECERIA Y MALTERIA PAYSSANDU S.A. Rambla Baltasar Brum, 2933 11800 Payssandu |
|
|
61.84 |
|
|
|
VIETNAM |
|
|
|
|
ANHEUSER-BUSCH INBEV VIETNAM BREWERY COMPANY LIMITED/No.2 VSIP II-A, Street no. 28, Vietnam Singapore II-A Industrial Park, Tan
Uyen District, Binh Duong Province, Vietnam |
|
|
100.00 |
|
83
Information to our shareholders
EARNINGS, DIVIDENDS, SHARE AND SHARE PRICE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
2013 |
|
|
2012 |
|
|
2011 |
|
|
2010 |
|
Cash flow from operating activities (US dollar per share) |
|
|
8.66 |
|
|
|
8.53 |
|
|
|
8.29 |
|
|
|
7.83 |
|
|
|
6.22 |
|
Normalized earnings per share (US dollar per share) |
|
|
5.43 |
|
|
|
4.91 |
|
|
|
4.50 |
|
|
|
4.04 |
|
|
|
3.17 |
|
Dividend (euro per share) |
|
|
3.00 |
|
|
|
2.05 |
|
|
|
1.70 |
|
|
|
1.20 |
|
|
|
0.80 |
|
|
|
|
|
|
|
Share price high (euro per share) |
|
|
94.89 |
|
|
|
79.60 |
|
|
|
71.05 |
|
|
|
47.35 |
|
|
|
46.33 |
|
Share price low (euro per share) |
|
|
69.14 |
|
|
|
63.44 |
|
|
|
46.10 |
|
|
|
33.85 |
|
|
|
33.50 |
|
Year-end share price (euro per share) |
|
|
93.86 |
|
|
|
77.26 |
|
|
|
65.74 |
|
|
|
47.31 |
|
|
|
42.80 |
|
|
|
|
|
|
|
Weighted average number of ordinary shares (million shares) |
|
|
1 634 |
|
|
|
1 617 |
|
|
|
1 600 |
|
|
|
1 595 |
|
|
|
1 592 |
|
Diluted weighted average number of ordinary shares (million shares) |
|
|
1 665 |
|
|
|
1 650 |
|
|
|
1 628 |
|
|
|
1 614 |
|
|
|
1 611 |
|
Volume of shares traded (million shares) |
|
|
397 |
|
|
|
423 |
|
|
|
486 |
|
|
|
652 |
|
|
|
588 |
|
84
INFORMATION ON THE AUDITORS ASSIGNMENTS AND RELATED FEES
AB InBevs Statutory auditor is PricewaterhouseCoopers Bedrijfsrevisoren cvba, represented by Yves Vandenplas, engagement partner.
Base fees for auditing the annual financial statements of AB InBev and its subsidiaries are determined by the general meeting of shareholders after review and
approval by the companys Audit Committee and Board of Directors.
Fees for 2014 in relation to services provided by PricewaterhouseCoopers
Bedrijfsrevisoren amounted to 2 551k US dollar (2013: 3 743k US dollar), which was composed of audit services for the annual financial statements of 1 786k US dollar (2013: 1 864k US dollar), tax services of 171k US dollar (2013: 1 386k US dollar),
audit related services of 397k US dollar (2013: 407k US dollar) and other services of 197k US dollar (2013: 86k US dollar). Audit related services mainly relate to services incurred in connection with rights and bonds issuance, interim dividends,
responsible drinking certification and capital increases. Tax services mainly relate to services incurred in connection with expat services and other services mainly relate to services incurred in connection with Better World initiatives, all of
which have been pre-approved by the companys Audit Committee.
Fees for 2014 in relation to services provided by other offices in the
PricewaterhouseCoopers network amounted to 17 935k US dollar (2013: 18 006k US dollar), which was composed of audit services for the annual financial statements of 12 912k US dollar (2013: 11 804k US dollar), tax services of 3 754k US dollar (2013:
5 154k US dollar), audit related services of 167k US dollar (2013: 1 030k US dollar) and other services of 1 102k US dollar (2013: 18k US dollar).
FINANCIAL CALENDAR
|
|
|
Publication of 2014 results |
|
26 February 2015 |
Annual report 2014 available on www.ab-inbev.com |
|
26 February 2015 |
General shareholders meeting |
|
29 April 2015 |
Dividend: ex-coupon date |
|
4 May 2015 |
Publication of first quarter results |
|
6 May 2015 |
Publication of half year results |
|
30 July 2015 |
Publication of third quarter results |
|
30 October 2015 |
INVESTOR RELATIONS CONTACT
|
|
|
Media |
|
Investors |
Marianne Amssoms |
|
Graham Staley |
Tel: +1-212-573-9281 |
|
Tel: +1-212-573-4365 |
E-mail: marianne.amssoms@ab-inbev.com |
|
E-mail: graham.staley@ab-inbev.com |
|
|
Karen Couck |
|
Heiko Vulsieck |
Tel: +1-212-573-9283 |
|
Tel: +32-16-27-68-88 |
E-mail: karen.couck@ab-inbev.com |
|
E-mail: thelke.gerdes@ab-inbev.com |
|
|
Kathleen Van Boxelaer |
|
Christina Caspersen |
Tel: + 32-16-27-68-23 |
|
Tel: +1-212-573-4376 |
E-mail: kathleen.vanboxelaer@ab-inbev.com |
|
E-mail: christina.caspersen@ab-inbev.com |
85
Excerpt from the AB InBev NV separate (non-consolidated) financial statements prepared in accordance with
Belgian GAAP
The following information is extracted from the separate Belgian GAAP financial statements of AB InBev NV. These separate financial
statements, together with the management report of the Board of Directors to the general assembly of shareholders as well as the auditors report, will be filed with the National Bank of Belgium within the legally foreseen time limits. These
documents are also available on request from: AB InBev NV, Brouwerijplein 1, 3000 Leuven.
It should be noted that only the consolidated financial
statements as set forth above present a true and fair view of the financial position and performance of the AB InBev group.
Since AB InBev NV
is essentially a holding company, which recognizes its investments at cost in its non-consolidated financial statements, these separate financial statements present no more than a limited view of the financial position of AB InBev NV. For this
reason, the Board of Directors deemed it appropriate to publish only an abbreviated version of the non-consolidated balance sheet and income statement prepared in accordance with Belgian GAAP as at and for the year ended 31 December 2014.
The statutory auditors report is unqualified and certifies that the non-consolidated financial statements of AB InBev NV prepared in accordance
with Belgian GAAP for the year ended 31 December 2014 give a true and fair view of the financial position and results of AB InBev NV in accordance with all legal and regulatory dispositions.
ABBREVIATED NON-CONSOLIDATED BALANCE SHEET
|
|
|
|
|
|
|
|
|
Million euro |
|
2014 |
|
|
2013 |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
|
|
Intangible assets |
|
|
195 |
|
|
|
197 |
|
Property, plant and equipment |
|
|
87 |
|
|
|
104 |
|
Financial assets |
|
|
55 805 |
|
|
|
50 268 |
|
|
|
|
|
|
|
|
|
|
|
|
|
56 087 |
|
|
|
50 569 |
|
|
|
|
Current assets |
|
|
10 905 |
|
|
|
10 410 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
|
66 992 |
|
|
|
60 979 |
|
|
|
|
EQUITY AND LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
Issued capital |
|
|
1 239 |
|
|
|
1 238 |
|
Share premium |
|
|
13 186 |
|
|
|
13 178 |
|
Legal reserve |
|
|
124 |
|
|
|
124 |
|
Reserves not available for distribution |
|
|
279 |
|
|
|
38 |
|
Reserves available for distribution |
|
|
242 |
|
|
|
483 |
|
Profit carried forward |
|
|
20 941 |
|
|
|
24 084 |
|
|
|
|
|
|
|
|
|
|
|
|
|
36 011 |
|
|
|
39 145 |
|
|
|
|
Provisions and deferred taxes |
|
|
325 |
|
|
|
166 |
|
|
|
|
Non-current liabilities |
|
|
20 242 |
|
|
|
12 925 |
|
|
|
|
Current liabilities |
|
|
10 414 |
|
|
|
8 743 |
|
|
|
|
|
|
|
|
|
|
Total equity and liabilities |
|
|
66 992 |
|
|
|
60 979 |
|
ABBREVIATED NON-CONSOLIDATED INCOME STATEMENT
|
|
|
|
|
|
|
|
|
Million euro |
|
2014 |
|
|
2013 |
|
Operating income |
|
|
850 |
|
|
|
806 |
|
Operating expenses |
|
|
(634 |
) |
|
|
(474 |
) |
|
|
|
|
|
|
|
|
|
Operating result |
|
|
216 |
|
|
|
332 |
|
|
|
|
Financial result |
|
|
2 086 |
|
|
|
1 417 |
|
Impairment financial assets |
|
|
(628 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Result for the year available for appropriation |
|
|
1 674 |
|
|
|
1 749 |
|
86
Glossary
AGGREGATED WEIGHTED NOMINAL TAX RATE
The aggregated
weighted nominal tax rate is based on the statutory corporate income tax rates applicable in the various countries.
DILUTED EPS
Profit attributable to equity holders of AB InBev divided by the fully diluted weighted average number of ordinary shares.
DILUTED WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES
Weighted average number of ordinary shares, adjusted by the effect of share options on issue.
EBIT
Profit from operations.
EBITDA
Profit from operations plus depreciation,
amortization and impairment.
EPS
Profit
attributable to equity holders of AB InBev divided by the weighted average number of ordinary shares.
INVESTED CAPITAL
Includes property, plant and equipment, goodwill and intangible assets, investments in associates and equity securities, working capital, provisions, employee
benefits and deferred taxes.
MARKETING EXPENSES
Include all costs relating to the support and promotion of the brands. They include among others operating costs (payroll, office costs, etc.) of the marketing
department, advertising costs (agency costs, media costs, etc.), sponsoring and events, and surveys and market research.
NET CAPEX
Acquisitions of property, plant and equipment and of intangible assets, minus proceeds from sale.
NET DEBT
Non-current and current interest-bearing loans
and borrowings and bank overdrafts, minus debt securities and cash.
NON-RECURRING ITEMS
Items of income or expense which do not occur regularly as part of the normal activities of the company.
NORMALIZED
The term normalized refers to
performance measures (EBITDA, EBIT, Profit, EPS, effective tax rate) before non-recurring items. Non-recurring items are items of income or expense which do not occur regularly as part of the normal activities of the company and which warrant
separate disclosure because they are important for the understanding of the underlying results of the company due to their size or nature. AB InBev believes that the communication and explanation of normalized measures is essential for readers
of its financial statements to understand fully the sustainable performance of the company. Normalized measures are additional measures used by management and should not replace the measures determined in accordance with IFRS as an indicator of the
companys performance.
NORMALIZED DILUTED EPS
Diluted EPS adjusted for non-recurring items.
NORMALIZED
EBIT
Profit from operations adjusted for non-recurring items.
NORMALIZED EBITDA
Profit from operations adjusted for
non-recurring items, plus depreciation, amortization and impairment.
NORMALIZED EFFECTIVE TAX RATE
Effective tax rate adjusted for non-recurring items.
NORMALIZED EPS
EPS adjusted for non-recurring items.
NORMALIZED PROFIT
Profit adjusted for non-recurring
items.
NORMALIZED PROFIT FROM OPERATIONS
Profit
from operations adjusted for non-recurring items.
PAY OUT RATIO
Gross dividend per share multiplied by the estimated number of ordinary shares outstanding at the dividend record date, divided by normalized profit
attributable to equity holders of AB InBev.
RE-MEASUREMENTS OF POST-EMPLOYEE BENEFITS
Comprised of actuarial gains and losses, the effect of the asset ceiling (excluding net interest) and the return on plan assets (excluding net interest).
REVENUE
Gross revenue less excise taxes and discounts.
SALES EXPENSES
Include all costs relating to the
selling of the products. They include among others the operating costs (payroll, office costs, etc.) of the sales department and the sales force.
87
SCOPE
Financials are analyzed eliminating the impact of changes in currencies on translation of foreign operations, and scopes. A scope represents the impact of
acquisitions and divestitures, the start-up or termination of activities or the transfer of activities between segments, curtailment gains and losses and year-over-year changes in accounting estimates and other assumptions that management does not
consider as part of the underlying performance of the business.
WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES
Number of shares outstanding at the beginning of the period, adjusted by the number of shares cancelled, repurchased or issued during the period multiplied by
a time-weighing factor.
WORKING CAPITAL
Includes
inventories, trade and other receivables and trade and other payables, both current and non-current.
88
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