S 27th Edition March 2012 - Molson Coors Pension Scheme · Welcome to the 27th edition of ‘Connections’. ... Plan Auditor Deloitte LLP ... a new payslip will be issued to you.

CONNECTIONS

THE NEWSLETTER FOR MOLSON COORS (UK) PLAN PENSIONERS

27th Edition

March 2012

PENSIONS NEwSWelcome to the 27th edition of ‘Connections’. In this edition we feature some of our World Beers, but more on that later. Let’s start with a summary of the 2011 Report and Accounts and highlights of the MCBC UK 2011 Q4 and full year results.

Chair of Trustee, Nicholas Godden provided a review of the year:During the year our triennial actuarial valuation with an effective date of 30 June 2010 was completed. The formal valuation is a statutory obligation on the Trustee of the Plan, and it is where the Plan’s Actuary works with the Trustee in order to estimate the amount of money (the assets) that is needed to pay member benefits as they fall due (the liabilities). By its nature it is an estimate and the calculations and assumptions inherent within the valuation have to account primarily for how long the member benefits will be payable, what impact inflation will have over the life of the Plan and the return the Trustee can expect on our investments (the assets). The Trustee has consulted with the Company Molson Coors Brewing Company (UK) Limited (MCBC UK) to agree by consensus on what valuation assumptions the Trustee should adopt. The Actuary calculated the value of the liabilities, using the agreed assumptions as at 30 June 2010 to be £1,368.6m. This value is then compared to the value of the investments or assets held within the Plan. This value is £1,012.6m as at 30 June 2010, which demonstrated a shortfall (or deficit) of £356m. The Trustee then had to develop a Recovery Plan in order to make up the shortfall and agree this with the Company.

In our Recovery Plan it was agreed that the Company would pay an amount of £125m into the Plan, this was paid in December 2010 and £25m per year (increasing in line with RPI) for 10 years from 1 January 2013. This, it was estimated, would close this deficit by 31 March 2022. The parent Company (MCBC UK) also agreed to guarantee the first three annual payments of £25m and in certain circumstances would provide further guarantees. This has given the Plan and its members a greater degree of security.

Report and Accounts SummaryThe annual report and financial statements of the Molson Coors (UK) Pension Plan (“the Plan”) which covered the year ending 30 June 2011 (“the year”) was completed at the end of 2011. The Report contains important information about the financial position, administration and stewardship of the Plan. It is produced for the benefit of members and other interested parties, in order that they may gain a greater understanding of the way in which the Plan operates. It also satisfies the legal obligations placed upon the Trustee and companies who operate such pension arrangements.

The investment strategy, which the Trustee has been developing over the last few years, has been kept the same. Broadly it is that the Trustee shall keep around 40% of the total assets in investment vehicles that aim to match, in many ways, the characteristics of the liabilities, and around 60% of the total assets will remain invested in return seeking assets. We expect, over time, the additional risk will be rewarded by additional return, thus reducing the amount that may have to be paid into the Plan in the future. The Trustee will look to further reduce unrewarded investment risks by hedging some of the interest and inflation uncertainties. The Trustee, having taken advice from its Investment Advisors (KPMG LLP) believes this to be the correct strategy whilst the Company is strong and able to support the Plan should the extra risk not pay off. During the year to 30 June 2011 the investments performed ahead of expectations delivering 13.1% growth versus the overall benchmark of 10.9%.

The Trustee has recently been carefully analysing how and when it should de-risk the investments over time, as the deficit or shortfall reduces. This will be kept under careful review, though as I write the continued uncertainty in the western economies and recent poor performance in the financial markets is unfortunately not helping in this respect.

Plan Advisers:A list of those who acted as advisers to the Trustee during the year is shown below.

Plan Actuary Hymans Robertson LLP (appointed November 2011)

Plan Auditor Deloitte LLP

Investment Adviser KPMG LLP

Legal Adviser Wragge & Co LLP (appointed April 2011)

Global Custodian Northern Trust Limited

Membership:The total number of members reduced during the year from 16,767 to 16,301.

12000

10000

8000

6000

4000

2000

0Active

MembersPensioners Deferred

Pensioners

10180

0 0

10002

6587 6299 30-Jun-1030-Jun-11

Plan Assets: The strategic management of the assets (i.e. how they are split between broad asset classes) is fundamentally the responsibility of the Trustee, acting on expert advice. Presently the advisor to the Trustee is KPMG LLP.

There has been no change to the overall target allocation to growth and matching assets over the year, however, there has been a small adjustment within the growth component:

• InMay2011,thePlaninvested5%ofthePlan’sassetsinDistressedDebt (managed by Neuberger Berman) on a tactical basis.

• ThiswasfundedbythePlan’sdisinvestment,inMarch2011,ofallofitsassets in Senior Secured Loans (managed by Nomura).

The following chart shows the distribution of the Plan’s investment portfolios by asset class, excluding AVCs, as at 30 June 2010 and 30 June 2011.

If you wish to receive a full copy of the Report and Accounts, please write to the ‘Editor’ at the address given on the back page.

Triennial ValuationThe next formal triennial valuation is due June 2013. Work on the valuation is scheduled to commence in June 2013. The valuation is undertaken to establish the value of assets, the amount needed to provide pensions and levels of additional funding that may be required. We will keep you updated on progress in future editions.

Plan Asset Allocation by Asset Class

30-June-10

30.9

%31

.5%

26.9

%28

.3%

14.1

%12

.5%

4.9%

3.6%

0.5%

0.7%

15.7

%17

.3%

4.9%

0.0%

4.5%

0.8%

0.0% 1.

4%

1.3%

0.1%

Equity

Corpora

te Bonds LDI

Propert

y

Global Prop

erty

Hedge Funds

Senior Secured

Distresse

d Debt

Currency

Internal Cash

30-June-11

% o

f ove

rall

asse

ts

35.0%

30.0%

25.0%

20.0%

15.0%

10.0%

5.0%

0.0%

Pension Plan website

The website contains information about the Pension Plan, the Plan Administrator’s (Xafinity

Paymaster) and the Trustee. There is also a section containing useful forms and FAQ’s

designed to help answer questions or queries you may have. We have set up a document store

containing the Plan Trust Deed and Rules, Summary Funding Statements and back editions of

Connections. If you have not yet had chance to look, just type the following link into your web

browser http://molsoncoors.xpmemberservices.com

Changes to the PlanSince our last edition John Heynen has left the Company and also resigned as a Trustee of the Molson Coors (UK) Pension Plan.

The Trustee Board is currently made up as follows:

Company Nominated:

Nicholas Godden (Independent Chairman)

Sue Albion (Legal Director & Company Secretary)

Gordon Blasius (Vice President Global Rewards, Molson Coors Brewing Company)

David Heede (Director of Finance & Strategy)

Tracey Ashworth-Davies (HR Director)

Martin Thomas

Robert Drewell (Business Partner Compensation & Benefits (Secretary to the Trustees))

Member Nominated:

Roy Barnes (pensioner member)

Paul Arnold (pensioner member)

Kevin Giles

Colin Greatorex (pensioner member)

Payment of Pensions in 2012 Pension payments are made monthly on the first working day of the month. The pay days for the remainder of the 2012 calendar year are as follows:

April May June July August

02.04.2012 01.05.2012 01.06.2012 02.07.2012 01.08.2012

September October November December

03.09.2012 01.10.2012 01.11.2012 03.12.2012

April Guaranteed Minimum Pensions (GMPs)The increase to Post 1988 GMPs effective from April 2012 will be 3%. For those of you who will have a £1 or more increase to your pension payment (as a result of either the GMP increase or due to the start of the new tax year) a new payslip will be issued to you.

Issue of P60sP60s will be issued to all our pensioners by the beginning of May 2012. If you are a non tax payer, your P60 will show your gross and net pension amounts to be the same.

Change of Address or Bank DetailsIf you change address or your bank details, please remember to notify the Pension Plan Administrator in writing to the address below, ensuring that you provide your full name and date of birth (or National Insurance number). Change forms are now also available to download from the pension plan website. Should correspondence or payment be returned via the postal or banking systems, your pension will be suspended until we receive appropriate written confirmation from you.

Xafinity Paymaster (1836) Ltd Molson Coors (UK) Pension Plan Administration Team Sutherland House Russell Way Crawley West Sussex RH10 1WL

Or email [email protected]

Please do NOT write to the “Connections” Editor as Xafinity Paymaster hold all our pensioner records and action changes without delay.

State PensionsFrom April 2012, the basic state pension will increase to £107.45 per week for a single pensioner and to £171.85 per week for couples. However, your individual circumstances may affect the amount you get.

Company News

The Molson Coors (UK) Board is made up as follows:

Molson Coors Board:

Mark Hunter - Chief Executive Officer

Simon Cox - Managing Director Free Trade and Wholesale Business

Chris McDonough - Managing Director Brand Business

Sue Albion - Legal Director & Company Secretary

Tracey Ashworth-Davies - HR Director

David Heede - Director of Finance & Strategy

Lee Finney - Supply Chain Director

MCBCUK 2011 Q4 and Full Year ResultsUK & Ireland underlying pre-tax income increased by 29.8% to £22.2 million in the quarter, due to overall higher volumes and lower pension cost, partly offset by lower net pricing, higher marketing investments and higher cost of goods sold.

Full year EBIT excluding special items decreased by (-4.5%) to £61.6m (including benefits from reduced pension expense).

The fourth quarter for Molson Coors was a positive finish to a challenging year. Our total share in 2011 grew to 19.2%, up from 18.8% in 2010. We grew on trade share from 22.0% to 22.9% and held off trade share at 15.4%. Importantly, in Q4 we significantly out-performed the industry at both a total, on trade and off trade level.

Despite some challenging market conditions with industry volumes down (4%), impressive Coors Light sales figures, the addition of Corona and other Modelo brands, and the recently acquired Sharp’s Brewery contributed significantly to a 10% increase in net sales in the UK and Ireland.

As well as repositioning the Carling brand, we introduced new aluminium bottle packaging for Carling, Coors Light and Caffrey’s, and we launched a targeted roll-out of new brands Carling Chrome and Animée. Also in the second half of 2011, we initiated a multi-year redevelopment program for our UK brewing network, Master Plan, which will support brand growth, innovation and operations efficiencies in the years ahead.

Across the business there were many things to be proud of in 2011 … share growth delivered - on trade driven, Ireland growing strongly, Scotland repurposed and building momentum, Horizon implementation, Safety : The Molson Coors Way, World Class Manufacturing progress and an engaged and proud team of MCBC people.

You can see the full Molson Coors results on the Molson Coors website.

Cobra – Same beer, great new look

2012 promises to be a hugely important year for Cobra as it spearheads Molson Coors’ World Beer portfolio.

With a major brand redesign launched this autumn – and its first advertising campaign for a number of years set to hit the nation’s cinema and TV screens in March – Cobra is in great shape as it heads into 2012.

The sharp new branding emphasises both Cobra’s premium positioning and world class beer credentials, while retaining its Indian heritage, and includes packaging across the off-trade and new glassware and fonts in the on-trade.

Lord Karan Bilimoria, founder and chairman of Cobra Beer says: ‘Cobra is a unique and iconic brand and our redesign is modern and sophisticated, as it befits an award winning beer. This is an exciting time for Cobra as we start our journey to lead the Molson Coors World Beer category and ultimately become a top-10 brand in the UK.’

Cobra’s brand identity is centred on the concept of ‘Traditionally Indian with a modern twist’, reflecting the fact that India has one of the world’s most vibrant economies and cultures and is increasingly at the cutting edge in terms of technology and innovation.

Research found that both existing Cobra customers and world beer drinkers generally perceive the look as more premium, stylish and modern and said they were more likely to purchase Cobra as a result. Consumers also rated the new glass design as one of the most desirable in the market.

Not just for curry - In the coming year, Cobra will venture beyond its traditional ‘heartland’ of Indian restaurants. Lord Bilimoria comments: ‘Cobra is already well known as the perfect accompaniment to Indian cuisine. Restaurants will always be important to our success, but Cobra is now on a journey to make its presence felt in both the on-trade and off-trade and our new look reaffirms that Cobra is a beer that can be enjoyed on any occasion’.

world Beers

Corona – Mexican wave

Our ambition with Corona is simple – we want to make it famous for being the stylish beer from Mexico that is refreshing, crisp and best served ice cold, with a slice of lime. We started this journey in 2011 with new advertising and more investment behind the brand than ever before.

And the results are speaking for themselves. We’re on track to achieve our volume target this year and we’ve had some great feedback from our brand activity – 35% of people who saw our advertising said that they were more likely to drink Corona as a result of seeing the campaign.

The challenge for 2012 is to make Corona more front of mind and relevant to our drinkers by creating ownable, unique brand experiences that they will remember. We want them to buy Corona ahead of our competitors and to share it with their friends.

So watch this space for lots of exciting activity this year on Corona, as well as the brand being part of the ‘Molson Coors’ first ever portfolio World Beer sell-in to bars and shops along side Cobra, Grolsch and Singha.

Grolsch

Why 2012 will be a milestone year for the authentic Dutch Larger.

Grolsch is a key part of the Molson Coors (UK & Ireland) World Beer Portfolio and we have an ambitious plan for its development in 2012.

At the heart of this plan is the big, bold flavour of the beer, which will be celebrated with the end-line ‘Big Bold Grolsch: character speaks louder than words’.

1. PremiumiseNew pack sizes, packaging design, fonts and glassware aim to improve customer and consumer perceptions of the brand as something worth paying extra for. In research, consumers told us that they drove significant increases in purchase intent among world beer drinkers.

2. CommunicateWe plan to deliver a ‘jolt’ to the brand with a big, bold advertising campaign that positions Grolsch as ‘classy’ and ’epic’ and which aims to help consumers rediscover the brand. The communications strategy will include some exciting digital innovations, as well as a series of sort feature films, the first of which stars none other than Hollywood A-lister Val Kilmer!

3. Grolsch Blond and SwingtopWe will accelerate the growth of these two vital parts of the Grolsch brand is 2012. Grolsh Blond is an on-trade exclusive and will grow significantly as we focus on expanding distribution in high-quality outlets. Meanwhile, the unique, iconic Swingtop will play a key supporting role as we increase our share of the space in the on-trade fridges around the UK.

Singha Beer – Thai treasure

Singha, the authentic Thai beer brewed by Royal permission since 1939, is at the most exciting time in history since Phraya Bhirom Bhakdi sold his first bottles to the people of Bangkok.

We have an ambition for the brand to become the most recommended world beer among our target audience of Enthusiastic Influencers by 2014, and the realisation of that ambition starts now, as we head into 2012.

We’re aiming to grab the attention of the Enthusiastic Influencers category, and give them the chance to share their discovery of the brand with their friends.

Sharing the secretA new advertising campaign that links Singha to its Thai heritage will help consumers understand the brand’s culture. While this creative is still in the approval stage, consumers have told us that the adverts are eye catching and engaging.

Singha will be promoted in upmarket bars and restaurants through display materials, such as Thai lanterns and pop-up table talkers, again inviting people to ‘share the secret’ of the brand.

This will be enforced by highly targeted interactive digital activity for consumers and great training for staff within on-trade outlets.

Move over red wine. Recent research shows that beer can also be good for what ails you, from reducing risk for broken bones to helping ward off diabetes and mental decline. It can even increase longevity, a large study suggests.

The key to tapping into beer’s benefits is moderation, meaning just one 12-ounce beer per day for women and two for men. Here are 10 healthy reasons to raise a pint:

1. Stronger Bones

Beer contains high levels of silicon, which is linked to bone health. In a 2009 study at Tufts University and other centres, older men and women who swigged one or two drinks daily had higher bone density, with the greatest benefits found in those who favoured beer or wine. However, downing more than two drinks was linked to increased risk of fractures.

For the best bone-building benefits, reach for pale ale. These brews are richest in silicon, while light lagers and non-alcoholic beers contained the least.

2. A Stronger Heart

A 2011 analysis found a 31% reduced risk of heart disease in those who quaffed about a pint of beer daily, while risk surged in those who guzzled higher amounts of alcohol, whether beer, wine, or spirits.

More than 100 studies also show that moderate drinking trims risk of heart attacks and dying from cardiovascular disease by 25 to 40%, Harvard reports. A beer or two a day can help raise levels of HDL, the “good” cholesterol that helps keep arteries from getting clogged.

3. Healthier Kidneys

A study in Finland singled out beer among other alcoholic drinks, finding that each bottle of beer men drank daily lowered their risk of developing kidney stones by 40%. One theory is that beer’s high water content helped keep kidneys working, since dehydration increases kidney stone risk.

It’s also possible that the hops in beer help curb leeching of calcium from bones; that “lost” calcium also could end up in the kidneys as stones.

4. Boosting Brain Health

A beer a day may help keep Alzheimer’s disease and other dementia at bay, researchers say.

A 2005 study showed that moderate drinkers (those who consumed about one drink a day) lowered their risk of mental decline by as much as 20%, compared to non-drinkers. In addition, older women who downed a drink a day scored as about 18 months “younger,” on average, on tests of mental skills than the non-drinkers.

10 Surprising Health Benefits of Beer

If you would like to comment on anything that appears in this issue or suggest topics for future editions, please contact The Editor ‘Connections’, Molson Coors Brewing Company (UK) Ltd., Pensions Department, Carling House, 137 High Street, Burton-on-Trent, Staffordshire, DE14 1JZ.

5. Reduced Cancer Risk

A Portuguese study found that marinating steak in beer eliminates almost 70% of the carcinogens, called heterocyclic amines (HCAs) produced when the meat is pan-fried. Researchers theorise that beer’s sugars help block HCAs from forming.

Scientists also have found that beer and wine contain about the same levels of antioxidants, but the antioxidants are different because the flavonoids found in hops and grapes are different.

6. Boosting Vitamin Levels

A Dutch study found that beer-drinking participants had 30% higher levels of vitamin B6 levels in their blood than their non-drinking counterparts, and twice as much as wine drinkers. Beer also contains vitamin B12 and folic acid.

7. Guarding Against Stroke

Researchers at the Harvard School of Public Health found that moderate amounts of alcohol, including beer, help prevent blood clots that block blood flow to the heart, neck and brain—the clots that cause ischemic stroke, the most common type.

8. Reduced Risk for Diabetes

A 2011 Harvard study of about 38,000 middle-aged men found that when those who only drank occasionally raised their alcohol intake to one to two beers or other drinks daily, their risk of developing type 2 diabetes dropped by 25%. The researchers found no benefit to quaffing more than two drinks. The researchers found that alcohol increases insulin sensitivity, thus helping protect against diabetes.

9. Lower Blood Pressure

Wine is fine for your heart, but beer may be even better: A Harvard study found that moderate beer drinkers were less likely to develop high blood pressure – a major risk factor for heart attack – than women who sipped wine or spirits.

10. Longer Life

In a 2005 review, the U.S. Department of Agriculture (USDA) reported that moderate drinkers live longer. The USDA also estimates that moderate drinking prevents about 26,000 deaths a year, due to lower rates of heart disease, stroke, and diabetes.

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