Annual Report 2016 - AB InBev

1 Annual Report 2016 . 1. Financial Report Management Report Anheuser-Busch InBev is a publicly traded company (Euronext: ABI) based in Leuven, Belgium, with secondary listings on the Mexico (MEXBOL: ANB) and South Africa (JSE: ANH) stock exchanges and with American Depositary Receipts on the New York Stock Exchange (NYSE: BUD). Our Dream is to bring people together for a better world. Beer, the original social network, has been bringing people together for thousands of years. We are committed to building great brands that stand the test of time and to brewing the best beers using the finest natural ingredients. Our diverse portfolio of well over 500 beer brands includes global brands Budweiser , Corona and Stella Artois ; multi-country brands Beck's , Castle , Castle Lite , Hoegaarden and Leffe ; and local champions such as Aguila , Antarctica , Bud Light , Brahma , Cass , Chernigivske , Cristal , Harbin , Jupiler , Klinskoye , Michelob Ultra , Modelo Especial , Quilmes , Victoria , Sedrin , Sibirskaya Korona and Skol.

2 Our brewing heritage dates back more than 600 years, spanning continents and generations. From our European roots at the Den Hoorn brewery in Leuven, Belgium. To the pioneering spirit of the Anheuser & Co brewery in St. Louis, US. To the creation of the Castle Brewery in South Africa during the Johannesburg gold rush. To Bohemia, the first brewery in Brazil. Geographically diversified with a balanced exposure to developed and developing markets, we leverage the collective strengths of approximately 200 000 employees based in more than 50 countries worldwide. For 2016 , AB InBev 's reported revenue was billion US dollar (excluding joint ventures and associates).

3 The following management Report should be read in conjunction with Anheuser-Busch InBev 's audited consolidated financial statements. In the rest of this document we refer to Anheuser-Busch InBev as AB InBev or the company . RECENT EVENTS. COMPLETION OF COMBINATION WITH SABMILLER. On 10 October 2016 , AB InBev announced the completion of the Belgian Merger and the successful completion of the business combination with SABM iller. The combined company has operations in virtually every major beer market and an expanded portfolio that includes global, multi- country and local brands, providing more choices for consumers around the world. Customers will benefit from a broad distribution network and strong brand-building expertise.

4 The company will also continue to develop its business in partnership with its suppliers as it continues brewing the best beers using the best ingredients. Following the combinations with SABM iller, AB InBev benefits from a geographically diversified platform, with a stronger presence in key emerging regions with attractive growth prospects, such as Africa and Latin America. The growth opportunities in these developing markets complement the stability and strength of the company's strong existing presence in developed markets. As a result of the Belgian merger, which was the final step in completion of the combination, the former AB InBev merged into Newbelco, and Newbelco has become the holding company for the combined former AB InBev and SABM iller groups.

5 All assets and liabilities of the former AB InBev have been transferred to Newbelco, and Newbelco has automatically been substituted for the former AB InBev in all its rights and obligations by operation of Belgian law. Newbelco has been renamed Anheuser-Busch InBev , and the former AB InBev has been dissolved by operation of Belgian law. The shares in the former AB InBev were delisted from Euronext Brussels, the Bolsa Mexicana de Valores and the Johannesburg Stock Exchange. The new ordinary shares were admitted to listing and trading on Euronext Brussels, the Johannesburg Stock Exchange and the Bolsa Mexicana de Valores at the opening of business in each market on 11 October 2016 .

6 In addition, ADSs trading on the New York Stock Exchange, each of which used to represent one ordinary share of the former AB InBev , now each represent one new ordinary share, effective as of the opening of business in New York on 11 October 2016 . The share capital of AB InBev now amounts to 1 238 608 344 euro. It is represented by 2 019 241 973 shares without nominal value, of which 85 540 392 are held in treasury by AB InBev and its subsidiaries as at 31 December 2016 . All shares are new ordinary shares, except for 325 999 817 restricted shares. Following the combination, AB InBev is consolidating SABM iller and reporting the results of the retained SABM iller operations in its income statement as of the fourth quarter 2016 .

7 COMPLETION OF PERONI, GROLSCH AND MEANTIME DISPOSAL. On 11 October 2016 , AB InBev announced the completion of the divestiture of SABM iller's interest in the Peroni, Grolsch and Meantime brand families and associated businesses in Italy, the Netherlands, the UK and internationally (excluding certain rights in the US) (the PGM Business ) to Asahi Group Holdings, Ltd ( Asahi ). The transaction valued the PGM Business at billion euro on a debt free/cash free basis, and was originally announced on 10 February 2016 . COMPLETION OF CR SNOW DISPOSAL. On 11 October 2016 , AB InBev announced the completion of the divestiture of SABM iller's equity interest in China Resources Snow Breweries Limited ( CR Snow ) to China Resources Beer (Holdings) Company Limited ( CRB ).

8 The total consideration of the transaction was billion US dollar before tax, and was originally announced on 2 March 2016 . CRB has acquired SABM iller's 49%. equity interest in the share capital of CR Snow and CR Snow has upon completion become a wholly owned subsidiary of CRB. 2. COMPLETION OF MILLERCOORS DISPOSAL. On 11 October 2016 , AB InBev announced the completion of the divestiture of SABM iller's interest in MillerCoors LLC. ( MillerCoors ), a joint venture in the and Puerto Rico between Molson Coors and SABM iller. The total transaction was valued at 12 billion US dollar before tax, and was originally announced on 11 November 2015. Under the terms of the Molson Coors Purchase Agreement, Molson Coors has acquired SABM iller's 50% voting interest and 58%.

9 Economic interest in MillerCoors. MillerCoors became a wholly owned subsidiary of Molson Coors, and Molson Coors has full control of the operations and resulting economic benefits of MillerCoors. Under the terms of the Molson Coors purchase agreement, Molson Coors has acquired full ownership of the Miller brand portfolio outside of the and perpetual licenses to the rights to all of the brands currently in the MillerCoors portfolio for the market, including import brands such as Peroni and Pilsner Urquell. The sale also includes the global Miller brand, currently sold in over 50. countries (including Australia, Argentina, Canada, Colombia, Ecuador, Mexico, Panama, Russia, South Africa and the United Kingdom), as well as related trademarks and other intellectual property rights.

10 ANHEUSER-BUSCH InBev TO SELL FORMER SABMILLER'S CENTRAL AND EASTERN EUROPEAN BUSINESS TO ASAHI. On 13 December 2016 , AB InBev announced that it has entered into a binding agreement with Asahi to sell the businesses formerly owned by SABM iller Limited in Poland, the Czech Republic, Slovakia, Hungary and Romania (the CEE Business ) for an agreed enterprise value of billion euro, subject to customary adjustments. In connection with the combination with SABM iller, AB InBev made commitments to the European Commission ( EC ) to sell the CEE. Business. The sale is conditional upon EC regulatory approval. The disposal process is being carried out under the supervision of Mazars LLP in their role as EC monitoring trustee.