RNS Number : 2550S
SABMiller PLC
17 November 2011
 



                                                                                                                                                                                                                            

Interim Announcement

 

Release date:  17 November 2011                   

                    

STRONG DEVELOPING MARKET PERFORMANCE DRIVES SALES AND EARNINGS GROWTH                                     

 

SABMiller plc, one of the world's leading brewers with operations and distribution agreements across six continents, today reports its interim (unaudited) results for the six months to 30 September 2011.

 

Operational Highlights

·     Lager volumes increase 3% on an organic basis led by robust growth in Latin America, Africa and Asia

·     Reported group revenue up 10%, with organic, constant currency revenue growth of 6%

·     Reported EBITA up 10%, with organic, constant currency EBITA up 6%:

-     Latin America EBITA1 up 16% reflecting good volume growth, positive mix and fixed cost efficiencies

-     Europe EBITA1 down 6% constrained by challenging economic and market conditions

-     North America EBITA1 down by 6% reflecting lower volumes and higher costs

-     Africa EBITA1 up 23% benefiting from strong volume growth and price and mix benefits

-     Asia EBITA1 up 29% reflecting higher profits in China

-     South Africa Beverages EBITA1 up 8% driven by price and mix benefits

·     Adjusted earnings up 11% and adjusted EPS up 11% to 103.3 US cents per share

·     Continued improvement in free cash flow2, up 19% to US$1,479 million

 

 ¹Segmental EBITA growth is shown on an organic, constant currency basis.

²As defined in the financial definitions section. See also note 9b.

 

Financial highlights

6 months to Sept

2011

US$m

6 months to Sept

2010

US$m

% change

12 months to March

2011

US$m






Group revenuea

15,688

14,236

10

28,311






Revenueb

10,539

9,451

12

19,408






EBITAc

2,701

2,466

10

5,044






Adjusted profit before taxd

2,457

2,167

13

4,491






Profit before taxe

2,041

1,690

21

3,626






Adjusted earningsf

1,633

1,465

11

3,018






Adjusted earnings per share





- US cents

103.3

93.0

11

191.5

- UK pence

64.0

61.3

4

123.4

- SA cents

731.1

690.4

6

1,369.6






Basic earnings per share (US cents)

87.4

71.2

23

152.8






Interim dividend per share (US cents)

21.5

19.5

10







Free cash flow

1,479

1,244

19

2,488

 

a      Group revenue includes the attributable share of associates' and joint ventures' revenue of US$5,149 million (2010: US$4,785 million).

b      Revenue excludes the attributable share of associates' and joint ventures' revenue.

c      Note 2 provides a reconciliation of operating profit to EBITA which is defined as operating profit before exceptional items and amortisation of intangible assets (excluding software) but includes the group's share of associates' and joint ventures' operating profit, on a similar basis. EBITA is used throughout this interim announcement.

d      Adjusted profit before tax comprises EBITA less adjusted net finance costs of US$229 million (2010: US$282 million) and share of associates' and joint ventures' net finance costs of US$15 million (2010: US$17 million).

e      Profit before tax includes exceptional charges of US$191 million (2010: US$285 million). Exceptional items are explained in note 3.

f       A reconciliation of adjusted earnings to the statutory measure of profit attributable to equity shareholders is provided in note 5.

 

 

 

 

 

CHIEF EXECUTIVE'S REVIEW



 

Graham Mackay, Chief Executive of SABMiller, said:

 

"Top and bottom line growth has been strong in most of our developing market businesses, propelled by our continued investment in brands, sales and marketing capability and production capacity. Market conditions have remained challenging in the USA and much of Europe and increases in input costs have continued, as expected. We have taken further steps to extend our global portfolio: our planned alliance with Anadolu Efes and recommended proposal to acquire Foster's both represent strategically important moves into attractive markets."

 

 

 

 

Segmental EBITA performance

Sept

2011
EBITA

US$m

Reported

growth

%

Organic, constant

currency

growth

%





Latin America

797

18

16

Europe

570

4

(6)

North America

452

(6)

(6)

Africa

327

27

23

Asia

138

26

29

South Africa: Beverages

446

13

8

South Africa: Hotels and Gaming

67

5

-

Corporate

(96)

-

-

Group

2,701

10

6


 

Business review

 

The group delivered a good financial performance in trading conditions which remained mixed across our markets. Latin America, Africa and Asia delivered good volume growth reflecting the strength of our brands and sales execution against a backdrop of increasing consumer expenditure. Conversely, in the USA and Europe, consumer markets remain weak. Trading conditions in Europe were also affected by competitor price reductions and intensified marketing investment and promotional activity, particularly in the economy segment.

 

Total beverage volumes were 3% ahead of the prior year on an organic basis with lager volumes up 3% and soft drinks volumes up 6%. This volume growth, some mix benefits and selective pricing drove group revenue up by 10%, 6% on an organic, constant currency basis with revenue per hectolitre up 3% on the same basis.   

 

EBITA of US$2,701 million rose by 10% or by 6% on an organic, constant currency basis.  As anticipated, raw material input costs rose by low single digits (on a constant currency, per hl basis), reflecting higher raw material and packaging costs.  Marketing spend was increased in line with revenue to support brand development, particularly in growing markets. Fixed costs increased, reflecting additional spend to support sales, marketing and system capabilities across our operations and the corporate centre.  Corporate costs were also affected by adverse foreign exchange movements.  These increases were partly offset by productivity initiatives across the business.  The group's EBITA margin reduced by 10 basis points (bps) to 17.2%.

 

Adjusted earnings increased by 11% as a result of the higher EBITA, lower finance costs and a slight reduction in effective tax rate to 28.5%. Adjusted earnings per share were also up 11% to 103.3 US cents.  The results benefited from the strength of key operating currencies against the US dollar compared with the prior year.

 

Free cash flow increased by US$235 million over the prior year to US$1,479 million. Adjusted EBITDA, which includes dividends from MillerCoors but excludes the cash impact of exceptional charges, increased by US$187 million. Capital expenditure, including intangible assets, of US$760 million was US$146 million higher than the prior period. We selectively invested to support future business growth and developed our IT systems as part of our business capability programme. Working capital improvements generated a cash inflow of US$71 million, marginally lower than the prior period. Net interest paid was US$145 million lower than the prior period mainly reflecting reduced net debt.

 

The group's gearing ratio as at 30 September 2011 reduced to 28.9% from 31.2% as at 31 March 2011. Group net debt fell by US$608 million to US$6,483 million. An interim dividend of 21.5 US cents per share, up 2.0 US cents (10%) from the prior year, will be paid to shareholders on 9 December 2011.

 

§ Latin America delivered strong volume growth with lager volumes up 8% on an organic basis and soft drinks volumes up 12% supported by brand and pack portfolio enhancements. EBITA grew by 18% (16% on an organic, constant currency basis) and margin improved by 80 bps reflecting a combination of volume growth, price and mix benefits and continuing fixed cost productivity initiatives. In Colombia, lager volumes grew 7% benefiting from a strategy of price restraint, improved trade execution, a healthy economy and a relatively weak prior year comparative. In Peru, lager volumes grew 11%, underpinned by gains in market share, the successful repositioning of Pilsen Callao in the upper mainstream segment and a buoyant economy.

 

§ In Europe, lager volumes were in line with the prior year in a region impacted by competitor price reductions and intensified marketing and promotional activity, particularly in the economy segment, and weakened consumer demand. We maintained revenue per hl in line with the prior period with moderate price increases where possible, and tactical discounting where required, in response to competitor net price reductions. Reported EBITA grew by 4%, but declined by 6% on an organic, constant currency basis reflecting negative sales mix and increased raw material costs. Volumes in the Czech Republic declined 1% as the market was impacted by weakened consumer demand and adverse weather in July. Volumes in Poland declined 2%, and volumes in Romania declined 8%, as both markets were impacted by intensified competition, continued downtrading and fragile consumer environments. Volumes in Russia grew 3%, with growth in the first quarter partly offset by a decline in the second quarter, cycling an exceptionally hot summer in the prior year.

 

§ In North America, MillerCoors' domestic sales to retailers (STRs) were down 2% driven by a weak economy and low consumer spending. Sales to wholesalers (STWs) were down 4%, declining by more than STRs due to the timing of shipments in the prior year. Strong volume growth of the Tenth and Blake crafts and imports division was more than offset by volume declines in both the premium light and below premium segments. Lower volumes, rising input commodity costs and higher fixed costs offset revenue management to result in a 6% decline in North America EBITA.   

 

§ Lager volumes in Africa grew 15% on an organic basis with robust growth continuing across the region. Reported EBITA increased by 27% (23% on an organic, constant currency basis) and margin improved by 60bps as we continued to benefit from improved operating leverage. In Tanzania, lager volumes grew 20% as market share gains were driven through increased refrigeration at the point of sale, enhanced outlet branding and improvements in distribution. Lager volumes in Mozambique, Uganda and Zambia all exhibited strong growth underpinned by our increased market penetration and strong local brand portfolios. Our associate Castel grew lager volumes by 11% on an organic basis with good performance in the Democratic Republic of Congo and Cameroon. Soft drinks volumes grew by 10% on an organic basis driven by solid performances in Zimbabwe, Ghana and South Sudan.

 

§ Asia's lager volumes grew 9% including the benefits of regional acquisitions in China, and grew 4% on an organic basis. Reported EBITA increased by 26% (29% on an organic, constant currency basis) driven mainly by higher profitability in China following price increases introduced in the prior year. Our China associate, CR Snow, continued to deliver good growth with reported lager volumes up 10% (5% on an organic basis), with all regions contributing. In India, volumes declined 7%, impacted by excise increases at the start of the year and trading restrictions in Andhra Pradesh, although these were lifted at the end of the half year.

 

§ South Africa Beverages held lager volumes in line with the prior year.  Although volumes benefited from an Easter peak in the first quarter, growth was constrained by weak consumer demand and the cycling of the impact of the 2010 FIFA World Cup in the prior period. Soft drinks volumes declined by 3%, cycling strong growth in the second quarter of the prior year and the effects of much colder and wetter weather in the current year. Despite the lower volumes, reported EBITA grew 13% (8% on a constant currency basis) and margin expanded 50 bps as a result of mix and pricing benefits from our local beer brands. The business maintained its focus on improving productivity and reducing operating costs allowing an increase in market-facing investment behind core brands.

 

§ The business capability programme continues to progress, with cumulative net operating benefits worth US$60 million in the first six months of the year.  These mainly reflect an expanding range of procurement initiatives together with efficiency gains and fixed costs savings from the European manufacturing project, partly offset by the higher operating expenses of the new IT systems.  Exceptional costs of US$115 million in the period reflect spend on the development of the global systems template and preparation for its deployment in Ecuador in November.

 

§ In September, we announced that we had agreed with Foster's Group Limited a recommended proposal to acquire Foster's for cash in a transaction which represents an acquisition enterprise value of A$11.5 billion.   The proposed acquisition of Foster's is consistent with our strategic priorities and will provide us with exposure to Australia's strong economic growth prospects, a leading position in the stable and profitable Australian beer industry and the opportunity to apply our capabilities and scale to improve Foster's financial and operating performance. The proposed acquisition is to be implemented by means of a scheme of arrangement, and subject to receiving all necessary regulatory and court approvals, and the approval of Foster's shareholders at meetings which have now been convened for 1 December 2011, we expect to complete the acquisition on 16 December 2011. We announced in June that we had separately reached agreement with Coca-Cola Amatil Limited to acquire their share of the Pacific Beverages joint venture in Australia once we complete the Foster's acquisition. 

 

§ In October, we announced our intention to form a strategic alliance with Anadolu Efes. We will transfer our Russian and Ukrainian beer businesses to Anadolu Efes, and we will take a 24% equity stake in the enlarged group, which will be the vehicle for both groups' investments in Turkey, Russia, the CIS, Central Asia and the Middle East. The alliance will result in the enlarged Anadolu Efes strengthening its market position to become the number two brewer, in value terms, in the large Russian beer market. It is already the leading beverage producer in Turkey, with 89% of the beer market and a 69% share of the carbonated soft drinks market, and it has leading market positions in the growth beer markets of Kazakhstan, Moldova and Georgia. Subject to finalisation of the definitive legal agreements and relevant regulatory approvals, we expect to complete the transaction before the end of the financial year.

 

Outlook 

 

We expect trading conditions experienced in the first half to continue through the remainder of the year. Economic and market environments in the USA and Europe are expected to remain difficult with generally favourable conditions elsewhere, particularly in Latin America and Africa. 

 

Price increases will be taken selectively during the second half, taking into account the competitive environment and our strategy to achieve growth through affordability in some markets. Compared with the first half of the current financial year, raw material input costs are expected to increase at a slightly faster rate in the second half and as we enter the following year; we continue to expect increases for the full year to be in the low single digits range.  Increased investment to support our brand portfolios, sales capabilities and IT will continue, balanced by initiatives to reduce costs and increase efficiency. 

 

After a strong start to the year, the South African rand and some other key operating currencies have recently weakened against the US dollar.  Our financial position is strong and we look forward to completing our acquisition of Foster's and finalising our alliance with Anadolu Efes.

 

Enquiries:           




SABMiller plc

Tel:   +44 20 7659 0100




Sue Clark

Director of Corporate Affairs

Tel:   +44 20 7659 0184




Gary Leibowitz

Senior Vice President, Investor Relations

Tel:   +44 20 7659 0119




Nigel Fairbrass

Head of Media Relations

Mob: +44 77 9989 4265


A live audiocast of the management presentation to the investment community will begin at 9.30am (GMT) on 17 November 2011.

Access details for this audiocast, video interviews with management and copies of this announcement and the slide presentation are available on the SABMiller plc website at www.sabmiller.com.


Images: Our media image library has a large selection of images for use in print and digital media.

Visit  www.sabmiller.com/imagelibrary

 

Broadcast footage: Our broadcast footage library has stock footage for media organisations to view and download for use in TV programmes or news websites. Visit www.sabmiller.com/broadcastfootage

 

Copies of the press release and detailed Interim Announcement are available from the Company Secretary at the Registered Office, or from 2 Jan Smuts Avenue, Johannesburg, South Africa.


 

 

Operational review

 

Latin America

 

Financial summary

Sept

2011

Sept

2010

%





Group revenue (including share of associates) (US$m)

3,396

2,971

14





EBITA¹ (US$m)

797

676

18





EBITA margin (%)

23.5

22.7






Sales volumes (hl 000)




- Lager

19,658

17,973

9

- Lager (organic)

19,440

17,973

8

- Soft drinks

8,593

7,687

12





 

¹ In 2011 before exceptional charges of US$54 million being business capability programme costs of US$42 million and integration and restructuring costs of US$12 million (2010: US$44 million being business capability programme costs).

 

Latin America delivered healthy volume growth in the first half of the year, with lager volumes up 9% (8% on an organic basis), and soft drinks volumes improving by 12%. Volume growth, combined with mix benefits and selective price increases resulted in a group revenue increase of 14% (10% on an organic, constant currency basis). Raw material costs rose moderately and investment in brands and market-facing capabilities increased. Ongoing fixed cost productivity projects contributed to reported EBITA growth of 18% (16% on an organic, constant currency basis) and EBITA margin growth of 80bps.

 

In Colombia lager volumes returned to growth rising 7%. Volume benefited from price restraint, new creative platforms and marketing campaigns for our core brands, activations around the FIFA Under-20's World Cup and improved trade execution in key consumption occasions and channels. Volume growth also benefited from a more buoyant economy, the cycling of the February 2010 VAT increase and more favourable weather conditions than in the prior period. Our share of the alcohol market increased during the half year, due to our marketing efforts and the narrowing of the affordability gap between beer and spirits. The light beer category showed continued momentum with Aguila Light growing at 49% compared with the prior year. Our premium segment volumes grew 25%, helped by the permanent listing of the previously seasonal Club Colombia Roja variant, which has attracted new consumers to the beer category. In the non-alcoholic malts category, Pony Malta recorded double-digit growth aided by the introduction of a new smaller pack together with increased distribution reach. At the end of the period, a new refreshing 'good for you' malt brand, Maltizz, was launched to capitalise on the growing appeal of our non-alcoholic malt portfolio.

 

In Peru lager volumes grew by 11%, underpinned by further gains in beer market share of over 270 bps, in part reflecting the successful repositioning and new packaging of Pilsen Callao in the upper mainstream segment, and assisted by a buoyant economy. Our local premium brand, Cusqueña, grew volumes by 25%, capitalising on its association with Peruvian heritage and the centenary of the rediscovery of Machu Picchu. Our flagship mainstream brand, Cristal, grew volumes by 11%, supported by strong brand activation, football sponsorship, further expansion of refrigeration at the point of sale and execution in new consumption occasions. Positive mix was delivered by strong growth in the premium segment and the repositioning of Pilsen Callao as an upper mainstream brand.  The successful new sales service model continues to be rolled out nationally.

 

Ecuador's lager volumes increased by 5%, with growth of 11% in the second quarter, following the roll-out of the direct service model into coastal and highland areas and the cycling of Sunday trade restrictions introduced in June 2010. The direct service model has significantly improved outlet coverage and captured share of total alcohol from the informal sector, resulting in an increase in beer share of total alcohol of over 360bps. Our premium brand, Club, delivered double-digit volume growth while our flagship brand, Pilsener,

continued to benefit from new marketing campaigns and increased presence and participation at events.  Pilsener Light, an upper mainstream variant, continued to grow following its successful launch earlier in the year.

 

In Panama, total volumes were up by 2%, although market share declined marginally as competition intensified in the lager category.  Lager mix improved following the successful launch of Miller Lite, which together with good performance of Miller Genuine Draft helped maintain our overall market share and gave us the leading position in the premium segment. Our mainstream brand, Atlas, returned to growth following the launch of a new creative platform and improvements in trade execution, while Balboa continued its growth momentum.

 

Honduras delivered double-digit volume growth across both lager and soft drinks during the period. Lager volumes were up 16%, underpinned by an affordability strategy across both the traditional channel (with bulk packs) and the modern trade (with cans), which drove our share of alcohol up nearly 500bps. Soft drinks volume growth was supported by good performance of the Jugos Del Valle juice brand and the Nestea brand following their launch at the end of last year.

 

El Salvador also delivered a strong performance, with double-digit lager volume growth, largely due to the launch of a mainstream bulk pack as part of our affordability strategy.  The premium segment was revitalised with the relaunch of Suprema and the introduction of a new returnable pack and the Miller Genuine Draft brand.  Soft drinks volumes grew 9%, benefiting from improved reach and cooler penetration.

 

The integration of our Argentina business continued as planned. The last six months have yielded good progress following the optimisation of the route to market and sales service models, while manufacturing capability development has improved both quality and productivity.

 

Europe

 

Financial summary

Sept

2011

Sept

2010

%





Group revenue (including share of associates) (US$m)

3,268

3,040

8





EBITA¹ (US$m)

570

549

4





EBITA margin (%)

17.4

18.0






Sales volumes (hl 000)




- Lager

25,645

25,633

-





 

¹ In 2011 before exceptional charges of US$69 million being business capability programme costs of US$54 million and the loss on disposal of a business of US$15 million (2010: US$60 million being business capability programme costs).

 

Lager volumes in Europe were level with the prior year as beer markets were affected by competitor price reductions and increased investment and promotion in the economy segment, exacerbated by reduced consumer confidence and expenditure in recent months. Organic, constant currency revenue per hl was in line with the prior year with moderate price increases taken where possible, and tactical discounting applied where required, in response to competitor net price reductions. 

 

Reported EBITA increased by 4% primarily due to the weakening of the US dollar against central and eastern European currencies compared with the prior year. EBITA on an organic, constant currency basis was down 6% with a margin decline of 60 bps as profitability was negatively impacted by increased raw material costs, and negative sales mix partly mitigated by operational cost efficiencies led by our regional manufacturing project and strong profit growth in our medium size markets, particularly the United Kingdom and Hungary. Marketing expenditure was marginally lower reflecting the cycling of 2010 FIFA World Cup activations in the prior period.

 

In Poland, lager volumes were down 2%, despite a weak prior year comparative in the first quarter, as the beer market in the second quarter was impacted by poor weather and weakening consumer spending. The beer market is increasingly being impacted by downtrading, driven by competitor price reductions and economy segment investment, and the growth of the discounter and modern trade channels. As a consequence, the economy segment has grown and our economy brand, Wojak, has grown in this environment, while mainstream brands including Tyskie and Zubr have lost market share. As a result of the downtrading and competitive price pressures, revenue per hectolitre declined by 1% in constant currency terms, and EBITA was lower.

 

In the Czech Republic volumes declined by 1% as the market was impacted by a sharp drop in consumer sentiment in the second quarter and adverse weather in July. The on-premise channel remained weak and consumers continued to downtrade. In this context, our premium brands continued to grow and thus outperformed the market. Pilsner Urquell benefited from successful trade activities, growing brand equity and expanding tank beer distribution, while premium variant Kozel 11 also continued to grow, particularly in the on-premise channel, supported by outlet expansion. Innovations also boosted these segments with the successful launch of new variants of super-premium Frisco and premium Birell. Mainstream volumes, led by our Gambrinus brand, continued to decline, although the rate of decline slowed, supported by the successful launch of Kozel in PET and cans to capture share of the growing convenience package sub-segment. Despite continuing pressure in the on-premise channel, revenue per hectolitre grew reflecting solid performance of the super-premium and premium brand portfolio which combined with operational cost efficiencies drove EBITA ahead of the prior year.

 

In Romania, volumes were down 8% in a market where once again intensified competitor activity in the economy segment resulted in continued downtrading and reduced share for our flagship mainstream brand, Timisoreana. The macroeconomic environment remained fragile and consumer confidence remained low. In this context, our economy brand, Ciucas, grew supported by new PET packaging. The premium segment wassignificantly impacted by competitive price pressure resulting in volume losses for the Ursus brand, although the recently launched 1 litre PET is performing well. Downtrading and promotional price reductions in the market drove revenue per hectolitre down by 2% on a constant currency basis and resulted in a reduced EBITA compared with the prior period.

 

Volumes were up 3% in Russia in a market estimated to have declined, with growth in the first quarter partly offset by a decline in the second quarter following an exceptionally hot summer in the prior year. The economy showed signs of recovery with consumer sentiment improving, although more recent market volatility subdued growth.  In contrast with the previous trend of downtrading in the market, the current period saw share growth in the super premium and mainstream segments and decline in the economy segment. In the super premium segment, our brand Essa performed well, benefiting from a successful can launch and overall growth within the feminine brand sub-segment, supported by marketing investment. In the premium segment, Kozel continued to grow benefiting from consistent communication and consumer appeal. Our local brand, Zolotaya Bochka, lost volume, despite brand investment, as a result of competitor price discounting. A new mainstream brand, Zwei Meister, was successfully launched in the period with performance to date in line with expectations. Our local economy brands delivered good growth, performing ahead of the market. Despite the adverse mix effect from increased economy brand performance and significantly higher raw material costs, EBITA was ahead of the prior year.

 

In Ukraine, volumes grew by 58% benefiting from economic improvement, the successful introduction of our mainstream brand, Amsterdam, further growth of the premium brand Zolotaya Bochka (particularly from the recently launched variant Razlivnoe), and continued solid performance of the core brand Sarmat and its variant Zhigulivskoe.

 

In Italy, recent economic developments concerning Italian debt and government austerity measures significantly impacted consumer confidence, which, combined with competitor price promotion activities in the off-premise channel, led to a 2% decline in Birra Peroni's domestic volumes. During the period, our share in the on-premise draught market rose in part due to the successful expansion of the Peroni draught beer, while a focused expansion of our premium portfolio was effective. On 13 June 2011, we successfully disposed of our Italian distribution business.

 

Domestic lager volumes in the Netherlands declined by 1%, predominantly driven by a highly competitive off-premise channel which was impacted by subdued consumer confidence.

 

In Hungary, volumes were up 6%, growing ahead of the market as we captured consumer downtrading into our economy brands, and delivered solid growth in our super premium brands. Macroeconomic conditions improved in Slovakia which, combined with a number of successful summer promotions, resulted in volumes increasing by 4%.  Trading was challenging in the Canaries, but volumes grew by 1%, boosted by improved performance in the tourist areas.

 

In the United Kingdom, lager volumes grew 6% and we continued to gain share in a premium segment which declined following the impact of the 2010 FIFA World Cup in the prior year. Peroni Nastro Azzurro continued its solid growth performance, supported by continued draught expansion.

 

North America

 

Financial summary

Sept

2011

Sept

2010

%  





Group revenue (including share of joint ventures) (US$m)

2,830

2,865

(1)





EBITA¹ (US$m)

452

480

(6)





EBITA margin (%)

16.0

16.8






Sales volumes (hl 000)




- Lager - excluding contract brewing

22,586

23,423

(4)

 

MillerCoors' volumes

- Lager - excluding contract brewing

21,779

22,654

(4)

- Sales to retailers (STRs)

21,914

22,436

(2)

- Contract brewing

2,357

2,437

(3)





 

¹ In 2011 before exceptional charges of US$35 million being the group's share of MillerCoors' impairment of the Sparks brand (2010: US$4 million being the group's share of MillerCoors' integration and restructuring costs).

 

The North America segment includes the group's 58% share in MillerCoors and 100% of Miller Brewing International. Total North America EBITA declined 6%, as firm revenue management and the continued delivery of synergies and costs savings was more than offset by the impact of lower volumes and rising commodity costs.

 

MillerCoors

In the six months to 30 September 2011, MillerCoors' US domestic STRs were down 2%, as the US beer market continued to be impacted by a weak economic environment and subdued consumer spending. Domestic STWs were down 4%, impacted by the timing of shipments in the prior year. Lower volumes, rising cost of goods and higher fixed costs resulted in a 5% decline in EBITA.

 

Premium light volumes declined low single digits, as growth in Coors Light was offset by a mid single digit decline in Miller Lite. MillerCoors' Tenth and Blake crafts and imports division experienced double digit growth, driven by Blue Moon and Leinenkugel's, and supported by innovative seasonal craft brand extensions including Leinenkugel's Summer Shandy. The below premium segment declined mid single digits, led by Miller High Life, as consumers continued to trade up to other categories.

 

MillerCoors' revenue per hectolitre grew by 2%, as a result of firm pricing and favourable brand mix. Cost of goods sold per hectolitre increased slightly, driven by higher freight and packaging costs, partially offset by the continued delivery of synergies and cost savings.

 

Marketing, general and administrative costs increased, largely as a result of higher information system costs and higher depreciation.

 

MillerCoors delivered US$18 million of incremental synergies in the six months to 30 September 2011, mainly through the optimisation of marketing and media, freight, and brewing and packaging expenditure. Other cost savings of US$36 million were realised in the first half, driven by a variety of initiatives, primarily within the integrated supply chain function.

 

Total annualised synergies and other cost savings of US$738 million have now been achieved since the joint venture commenced operations on 1 July 2008, comprising synergies of US$546 million and other savings of US$192 million. MillerCoors expects to achieve US$750 million in total annualised synergies and other cost savings by the end of the calendar year 2011, a year earlier than originally planned.

 

Africa

 

Financial summary

Sept

2011

Sept

2010

%  





Group revenue (including share of associates) (US$m)

1,839

1,506

22  





EBITA¹ (US$m)

327

258

27





EBITA margin (%)

17.8

17.2






Sales volumes (hl 000)




- Lager

8,290

7,154

16

- Lager (organic)

8,218

7,154

15

- Soft drinks

6,693

5,899

13

- Soft drinks (organic)

6,488

5,899

10

- Other alcoholic beverages

2,597

2,646

(2) 

- Other alcoholic beverages (organic)

2,587

2,646

(2) 





 

¹ In 2011 before exceptional charges of US$1 million being business capability programme costs (2010: US$2 million).

 

Lager volume growth in Africa remained strong, with volumes up 15% on an organic basis, helped by a generally positive environment and market activation of our diverse brand portfolio, which led to market share gains. Our premium and mainstream brands performed particularly well with the Castle portfolio growing by 34% supported by strong growth of Castle Lite. Consistent messaging across our lager brand segments, coupled with increased investment behind our brand portfolios, has enabled growth across the entire portfolio. The Eagle brand continued to perform well across Africa and has now been launched in South Sudan and Nigeria. Soft drinks volumes grew by 10% on an organic basis driven by solid performances in Zimbabwe, Ghana and South Sudan. Volumes of traditional beer declined slightly as a result of price increases in Zambia, but we delivered good growth in our new territories.

 

Africa delivered strong first half EBITA growth of 27% (23% on an organic constant currency basis), driven by increased volumes, good revenue management and cost control. EBITA margin improved by 60 bps, to 17.8%, reflecting positive leverage through improved utilisation of our recent capacity investments. The continued strong volume growth across Africa will require further capacity investments in a number of markets in the next two years.

 

Lager volumes in Mozambique increased by 11%, supported by strong mainstream brand growth and increased penetration in the north of the country enabled by our Nampula brewery. The 2M brand grew by 26% following its packaging upgrade in the latter part of the prior year, partly at the expense of Laurentina Preta. Exceptional growth was delivered by the Manica brand, reflecting the expansion in the north of the country where it enjoys a strong regional following.

 

In Tanzania, lager volumes grew by 20%, delivering market share gains. Growth was underpinned by placing more refrigeration at the point of sale, enhanced outlet branding and a more focused distribution model, as well as favourable economic conditions. Volumes of the Safari brand increased by 23%, benefiting from a brand renovation completed last year. Castle Lite volumes continued to exceed expectations with volumes now comprising 7% of the total lager mix. The Mbeya brewery, commissioned two years ago in the south of the country, has served as a catalyst for incremental growth in that region and delivered distribution benefits.

 

Despite capacity constraints, lager volumes increased 23% in Uganda as a result of improved market penetration into the western regions and a differentiated brand portfolio, reflecting growth in all segments. The Nile Special and Club Pilsener brands performed particularly well.

 

In Angola, lager volume growth of 12% was more subdued due to the cycling of the capacity expansion in the prior year. Soft drinks volumes continued to be impacted by a relatively poor economic environment and lower consumer disposable income.

 

Zambia continued to perform well with lager volume up 22%, driven by favourable economic conditions, strong growth of the Castle and Mosi brands and improved availability.

 

In Ghana, lager volumes grew strongly following two years of declining volumes after a significant excise increase. This growth was driven by improved availability and a buoyant economy. Club Lager, which is celebrating its 80th anniversary, led the volume growth.  Soft drinks volumes also grew strongly underpinned by the performance of the Voltic water brand.

 

Delta Corporation, our associate in Zimbabwe, enjoyed strong organic growth across all categories following additional capacity investments made in the last two years. Delta's diverse portfolio of lager brands helped deliver volume growth of 30%.

 

Our start up operation in South Sudan delivered good growth in both lager and soft drinks with our brewery already operating at full capacity. In April 2011, a further capacity expansion project was announced, which will see capacity doubling by early next year.

 

Our associate, Castel, performed well, and achieved good growth in lager and soft drinks volumes in many markets.  Lager volumes grew 11% on an organic basis with good performance in the Democratic Republic of Congo and Cameroon. During the second quarter Castel acquired the Star Breweries business in Madagascar, which is the market leader in both lager and soft drinks.

 

Asia

 

Financial summary

Sept

2011

Sept

2010

%





Group revenue (including share of associates and joint ventures) (US$m)

1,439

1,193

21





EBITA (US$m)

138

110

26





EBITA margin (%)

9.6

9.2






Sales volumes (hl 000)




- Lager

35,448

32,532

9

- Lager (organic)

33,977

32,532

4





 

 

In Asia, lager volumes increased 9% on a reported basis, reflecting the benefits of regional acquisitions in China. On an organic basis, lager volumes grew 4%. EBITA increased 26% (29% on an organic, constant currency basis) principally driven by improved profitability in China. Group revenue per hl increased by 11%, (organic, constant currency up 12%) reflecting price and mix benefits in both China and India. Despite cost pressures across the region, reported EBITA margin increased by 40 bps.

 

China's lager volumes increased by 10% (5% on an organic basis), in a market which grew at an estimated 5%. All regions grew, particularly the north-east and west regions. CR Snow's newly acquired breweries in Jiangsu, Liaoning, Henan and Shanghai contributed to the reported volume growth in the period.

 

Overall, CR Snow continued to expand its market share although organic growth was constrained by heavy and prolonged rains that affected key provinces during the second quarter. Continued sales and marketing execution delivered good market share gains in Zhejiang, Anhui, Liaoning, Heilongjiang, Guizhou, Sichuan and Tianjin. The share increases in Sichuan and Tianjin were particularly pleasing, following declines in the prior year.

 

Revenue per hectolitre grew 13% on a reported basis (14% on an organic, constant currency basis) benefiting from price increases taken in the previous financial year and positive mix. CR Snow continued to increase its presence in the premium segment and on-premise channel through the expansion of Snow Draft. Reported EBITA margin increased by 20 bps (110 bps on an organic, constant currency basis) despite higher input costs and adverse changes to consumption tax legislation introduced in December 2010.

 

CR Snow continues to expand its presence in the market with three significant acquisitions announced during the period; the purchase of a 49% equity stake in Jiangsu Dafuhao, the acquisition of Shanghai Asia Pacific Breweries, and the purchase of a 70% equity stake in Guizhou.

 

India's lager volumes declined by 7%. Volumes were affected by dampened consumer demand following excise increases implemented at the beginning of the period across a number of key states. In addition, volumes were constrained by trading restrictions imposed in Andhra Pradesh in July 2010, although these were reversed in September 2011. We increased market share in the key higher margin states of Karnataka and Haryana.

 

Revenue per hectolitre increased by 15% reflecting favourable mix as a result of a continued focus on the most profitable brands, packs and states, as well as price increases due to higher excise taxes. We continued to innovate with the launch of strong variants of Foster's and Royal Challenge and the introduction of PET containers into the market for the first time.  

 

Lager volumes in Vietnam were lower than in the prior period, although EBITA improved, reflecting a focus on higher margin channels and geographies and reduced discounting of the Zorok brand in the off-premise channel.

 

In Australia, our joint venture delivered strong volume growth with the Warnervale brewery enabling greater penetration of the on-premise channel, particularly through draught Peroni Nastro Azzurro and Bluetongue, and the growth of our brands in the off-premise channel.

 

South Africa: Beverages

 

Financial summary

Sept

2011

Sept

2010

%  





Group revenue (including share of associates) (US$m)

2,669

2,432

10





EBITA¹ (US$m)

446

394

13





EBITA margin (%)

16.7

16.2






Sales volumes (hl 000)




- Lager

12,290

12,274

-  

- Soft drinks

7,245

7,467

(3) 

- Other alcoholic beverages

646

634

           2





 

¹ In 2011 before net exceptional charges of US$13 million being costs incurred in relation to the Broad-Based Black Economic Empowerment scheme of US$15 million and business capability programme credits of US$2 million (2010: US$149 million being US$23 million of business capability programme costs and US$126 million of costs associated with the Broad-Based Black Economic Empowerment scheme).

 

In South Africa, the business posted improved EBITA and grew EBITA margin in the first half of the year. The performance was achieved despite a challenging environment during the period. The benefit of a peak Easter trading period in April was offset by weaker consumer demand and the cycling of the positive impact of the 2010 FIFA World Cup in the prior year.

 

In our beer business, lager volumes were level with the prior year, while EBITA and EBITA margins grew. This was underpinned by continued efforts to strengthen the core brand portfolio including intensifying our investments in marketing and sales, largely funded by cost efficiencies.

 

Castle Lite, South Africa's most popular premium beer, maintained its strong growth rate as it continued to communicate its "Extra Cold" proposition. Castle Lager delivered high single digit volume growth by effectively communicating its core brand proposition of "It all comes together with a Castle", amplifying its quality credentials and leveraging sponsorships. The repositioning of Castle Milk Stout as a local premium offering translated into encouraging growth. While Hansa Pilsener's volumes came under pressure, the brand continued to build on its distinctive positioning around the "Kiss of the Saaz Hop". Carling Black Label, South Africa's best selling beer, continued to reduce its rate of decline, supported by its positioning as a champion beer as well as leveraging its quality credentials and award-winning status.

 

A consistent focus on key classes of trade, and an expanded distribution approach, resulted in strong improvements in retail execution.

 

Soft drinks volumes declined 3% during the first half year, cycling strong growth in the comparable period, and impacted by colder and wetter weather in the current period. Sparkling drinks declined 3% but still drinks grew 2% driven by good growth in Glaceau and Powerade. Commodity cost pressures impacted gross margin, but this was offset by improved fixed cost efficiency and revenue management. Customer service was improved and retail execution enhanced.

 

Group revenue grew 5% on a constant currency basis and group revenue per hectolitre grew by 6% on the same basis, buoyed by the strong performance of the local premium power brands and factoring in the 7.5% excise increase on beer earlier in the year.

 

Continued emphasis on improving productivity and reducing operating costs allowed further market-facing investments while improving margin. Reported group EBITA grew by 13% (8% on a constant currency basis) and the half year EBITA margin rose to 16.7%, reflecting a 50 basis point improvement on the prior comparable period.

 

Our associate, Distell, overcame difficult trading conditions through their diverse portfolio and geographic footprint. This, coupled with pricing benefits, enabled them to grow revenue and EBITA margin.

 

 

South Africa: Hotels and Gaming

 

Financial summary

Sept 2011

Sept

2010

%  





Group revenue (share of associates) (US$m)

247

229

8





EBITA (US$m)

67

63

5





EBITA margin (%)

26.9

27.8






Revenue per available room (Revpar) - US$

68.92

76.18

(10)





 

 

SABMiller is a 39.7% shareholder in the Tsogo Sun Group, which is listed on the Johannesburg Stock Exchange. The half year results reflect our share of the enlarged group following the merger with Gold Reef Resorts Ltd at the end of the previous financial year.

 

Our share of Tsogo Sun's reported revenue was US$247 million, an increase of 8% over the prior year (3% on an organic, constant currency basis).

 

The South African gaming industry experienced varied levels of growth across the major provinces during the six months under review. The largest province in terms of gaming win, Gauteng, reported 3% growth over the prior period, with Montecasino and Gold Reef City casino, two of the group's largest gaming units, outperforming the market. The KwaZulu-Natal province grew by 8%, and the Suncoast Casino by slightly less.

 

The South African hotel industry continued to experience weak demand in the key corporate, group and conventions segments. Revenue per available room declined by 10%, reflecting the higher room rate charges enjoyed during the 2010 FIFA World Cup in the prior period.

 

Reported EBITA for the half year grew by 5%, but was level on an organic, constant currency basis, reflecting the effects of the sluggish local economy on both the gaming and hospitality and tourism industries. Prior period results were also assisted by the 2010 FIFA World Cup. EBITA margin declined as a result of the weak hotel trading.

 

Financial review

 

New accounting standards and restatements

The accounting policies followed are the same as those published within the Annual Report and Accounts for the year ended 31 March 2011 as amended for the changes set out in note 1, which have had no material impact on group results. The consolidated balance sheets as at 30 September 2010 and as at 31 March 2011 have been restated for further adjustments relating to the initial accounting for business combinations, details of which are provided in note 11. The Annual Report and Accounts for the year ended 31 March 2011 are available on the company's website: www.sabmiller.com.

 

Segmental analysis

The group's operating results on a segmental basis are set out in the segmental analysis of operations.

 

SABMiller uses group revenue and EBITA (as defined in the financial definitions section) to evaluate performance and believes these measures provide stakeholders with additional information on trends and allow for greater comparability between segments. Segmental performance is reported after the specific apportionment of attributable head office costs.

 

Disclosure of volumes

In the determination and disclosure of sales volumes, the group aggregates 100% of the volumes of all consolidated subsidiaries and its equity accounted percentage of all associates' and joint ventures' volumes. Contract brewing volumes are excluded from volumes although revenue from contract brewing is included within group revenue. Volumes exclude intra-group sales volumes. This measure of volumes is used in the segmental analyses as it closely aligns with the consolidated group revenue and EBITA disclosures.

 

Organic, constant currency comparisons

The group discloses certain results on an organic, constant currency basis, to show the effects of acquisitions net of disposals and changes in exchange rates on the group's results. See the financial definitions section for the definition.

 

In relation to the merger of the Tsogo Sun Group with Gold Reef Resorts Ltd no adjustments have been made in the calculation of organic results as the group's share of the enlarged group is deemed to be comparable with the group's share of the Tsogo Sun Group in the comparative period.

 

Adjusted EBITDA

The group uses an adjusted EBITDA measure of cash generation which adjusts EBITDA (as defined in the financial definitions section) to exclude cash flows relating to exceptional items and to include the dividends received from the MillerCoors joint venture. Given the significance of the MillerCoors business and the access to its cash generation, inclusion of the dividends from MillerCoors (which approximate the group's share of its EBITDA) provides a useful measure of the group's overall cash generation. Excluding the cash impact of exceptional items allows the level and underlying trend of cash generation to be understood.

 

Business combinations and similar transactions

During the course of the half year the group increased its direct interest in Delta Corporation Limited in Zimbabwe from 36.75% to 37.52%.

 

Disposals

On 13 June 2011 the group completed the disposal of its distribution business in Italy, which was classified as a disposal group held for sale at 31 March 2011, and which generated a US$15 million exceptional loss on disposal, primarily being the recycling of the foreign currency translation reserve associated with this business. 

 

Exceptional items

Items that are material either by size or incidence are classified as exceptional items. Further details on the treatment of these items can be found in note 3 to the financial information.

 

Net exceptional charges of US$210 million before finance costs and tax were reported during the period (2010: US$285 million) including net exceptional charges of US$35 million (2010: US$4 million) related to the group's share of associates' and joint ventures' exceptional charges. The net exceptional charge included US$115 million (2010: US$155 million) related to business capability programme costs principally in Latin America, Europe and Corporate. A charge of US$15 million (2010: US$126 million) has been recognised in respect of the Broad-Based Black Economic Empowerment scheme in South Africa; this represents the ongoing IFRS 2 'Share-based Payment Transactions' charge in respect of the employee element of the scheme and in the prior year also, the one-off IFRS 2 charge in respect of the retailer element, together with the costs of the transaction. Transaction-related advisers' costs associated with the potential acquisition of the Foster's Group Limited amounting to US$18 million have been incurred in the period and treated as exceptional costs in Corporate. The disposal of the distribution business in Italy generated an exceptional loss of US$15 million and various integration and restructuring projects in Latin America resulted in an exceptional charge of US$12 million.

 

The group's share of associates' and joint ventures' exceptional items included charges of US$35 million related to the group's share of the impairment of the Sparks brand in MillerCoors.

 

Finance costs

Net finance costs were US$203 million, a 28% decrease on the prior period's US$283 million, mainly as a result of the reduction in net debt. Finance costs in the current period include a net gain of US$7 million (2010: net loss of US$1 million) from the mark to market adjustments of various derivatives on capital items for which hedge accounting cannot be applied. Finance costs in the period also included a transaction-related net exceptional gain of US$19 million in relation to mark to market gains on derivative financial instruments partially offset by financing fees connected with the proposed Foster's acquisition. The mark to market gain and the transaction-related gain have been excluded from the determination of adjusted net finance costs and adjusted earnings per share. Adjusted net finance costs were US$229 million, down by 19%.

 

Interest cover, as defined in the financial definitions section, has increased to 12.7 times from 9.7 times in the prior year period.

 

Profit before tax

Adjusted profit before tax of US$2,457 million increased by 13% over the comparable period in the prior year, primarily as a result of increased volumes, selective price increases, and positive mix more than offsetting higher input, marketing and fixed costs.

 

Profit before tax was US$2,041 million, up by 21%, including the impact of the exceptional and other adjusting finance items noted above. The principal difference between the reported and adjusted profit before tax relates to exceptional items, with net exceptional charges of US$191 million in the half year compared to net exceptional charges of US$285 million in the prior year period.

 

Taxation

The effective rate of tax for the half year before amortisation of intangible assets (excluding software) and exceptional items and the adjustments to finance costs noted above was 28.5% compared to a rate of 29.0% in the prior year period. This reduction in the rate results from our successful appeal relating to Russian royalty cases and from general tax efficiencies throughout the group.

 

Earnings per share

The group presents adjusted basic earnings per share, which excludes the impact of amortisation of intangible assets (excluding software), certain non-recurring items and post-tax exceptional items, in order to present an additional measure of performance for the periods shown in the consolidated interim financial information. Adjusted basic earnings per share of 103.3 US cents were up 11% on the comparable period in the prior year, benefiting from improved operating profitability, lower net finance costs and favourable foreign currency movements. An analysis of earnings per share is shown in note 5. On a statutory basis, basic earnings per share were higher by 23% at 87.4 US cents (2010: 71.2 US cents) for the reasons given above together with lower exceptional costs this half year.

 

Cash flow and capital expenditure

Net cash generated from operations before working capital movements (EBITDA) of US$2,298 million increased by 11% compared with the prior year period (2010: US$2,062 million). This increase was primarily due to higher revenue assisted by favourable currency movements.

 

Adjusted EBITDA of US$2,913 million (comprising EBITDA before cash outflows from exceptional items of US$121 million plus dividends received from MillerCoors of US$494 million) increased by 7% on the same period in the prior year (2010: US$2,726 million), reflecting the higher EBITDA partially offset by lower cash exceptional items and lower MillerCoors' dividends than in the prior year period.

 

Net cash generated from operating activities of US$1,719 million was up US$373 million on the same period in the prior year, primarily reflecting improved EBITDA, positive cash inflow from working capital and lower net interest paid.

 

Capital expenditure for the six months of US$680 million has increased compared with the same period in the prior year (2010: US$565 million). The group has continued to invest in its operations, selectively maintaining investment to support future growth including a greenfield brewery in Nigeria, a maltings plant in Uganda as well as capacity expansion in Peru and South Sudan, and depot expansion in Colombia. Capital expenditure including the purchase of intangible assets was US$760 million (2010: US$614 million).

 

Free cash flow improved by 19% to US$1,479 million, reflecting the higher cash generated from operating activities partially offset by higher capital expenditure. Free cash flow is detailed in note 9b, and defined in the financial definitions section.

 

Borrowings and net debt

Gross debt at 30 September 2011, comprising borrowings together with the fair value of derivative assets or liabilities held to manage interest rate and foreign currency risk of borrowings, decreased to US$7,436 million from US$8,162 million at 31 March 2011, primarily as a result of the strong cash flows generated as well as favourable foreign exchange rate movements in some of the currencies in which our debt is denominated. Net debt, comprising gross debt net of cash and cash equivalents, decreased to US$6,483 million from US$7,091 million at 31 March 2011. An analysis of net debt is provided in note 9c.

 

The group's gearing (presented as a ratio of net debt/equity) has decreased to 28.9% from 31.2% at 31 March 2011. The weighted average interest rate for the gross debt portfolio at 30 September 2011 was 6.1% (31 March 2011: 5.9%).

 

On 7 April 2011 the group entered into a five-year US$2,500 million committed syndicated facility, with the option of two one-year extensions. This facility replaced the existing US$2,000 million and US$600 million committed syndicated facilities, which were both voluntarily cancelled.

 

On 1 July 2011 the US$600 million 6.2% Notes due 2011 matured and were repaid from existing cash.

 

On 9 September 2011 the group entered into a US$12,500 million committed syndicated facility to finance the proposed acquisition of Foster's. The facility consists of four tranches; a US$8,000 million one-year term loan with the option of two six-month extensions; a US$2,500 million three-year term loan; a US$1,000 million five-year term loan; and a US$1,000 million five-year revolving credit facility.

 

Total equity

Total equity decreased from US$22,759 million at 31 March 2011 to US$22,453 million at 30 September 2011. The decrease was primarily due to dividend payments and currency translation movements on foreign currency investments, partly offset by profit for the period.

 

Goodwill and intangible assets

Goodwill decreased to US$11,435 million (31 March 2011: US$11,949 million) primarily due to foreign exchange movements in the period. Intangible assets decreased in the period to US$4,259 million (31 March 2011: US$4,364 million) as a result of foreign exchange movements and amortisation, partially offset by additions, primarily related to the business capability programme. The comparatives for goodwill and intangible assets have been restated to reflect adjustments to provisional fair values of business combinations, further details of which are provided in note 11.

 

Currencies

The exchange rates to the US dollar used in preparing the consolidated interim financial information are detailed in the table below, with most of the major currencies in which we operate weakening against the US dollar in the period but appreciating compared with the same period in the prior year.

 


Six months ended

30 September

Appreciation/ (depreciation)


2011

2010

%

Average rate




South African rand (ZAR)

7.08

7.42

5

Colombian peso (COP)

1,796

1,887

5

Euro (€)

0.71

0.78

10

Czech koruna (CZK)

16.92

19.83

17

Peruvian nuevo sol (PEN)

2.76

2.82

2

Polish zloty (PLN)

2.91

3.09

6





Closing rate




South African rand (ZAR)

8.10

6.96

(14)

Colombian peso (COP)

1,915

1,800

(6)

Euro (€)

0.75

0.73

(2)

Czech koruna (CZK)

18.33

18.03

(2)

Peruvian nuevo sol (PEN)

2.77

2.79

-

Polish zloty (PLN)

3.30

2.91

(12)

 

Risks and uncertainties

The principal risks and uncertainties for the first six months and the remaining six months of the financial year remain as described on pages 20 and 21 of the 2011 Annual Report with the exception of the risk in relation to ensuring an adequate supply of brewing and packaging raw materials at competitive prices which has been removed in recognition of the increasing maturity of our commodity risk management arrangements and a reduction in the volatility of prices compared with when the risk was first introduced. The risks are summarised as follows:

 

The risk that, as the industry continues to consolidate, failure to participate in attractive value-adding transactions, overpaying for a transaction, or failure to implement integration plans successfully after transactions are completed, may inhibit the group's ability to grow and increase profitability.

 

The risk that market positions come under pressure and opportunities for profitable growth may not be realised should the group fail to ensure the attractiveness of its brands, and continuously improve its marketing and related sales capability to deliver consumer relevant propositions.

 

The risk that the group's long-term profitable growth potential may be jeopardised due to a failure to develop and maintain a sufficient cadre of talented management.

 

The risk that regulation places increasing restrictions on pricing (including tax), availability and marketing of beer and drives changes in consumption behaviour. In affected countries the group's ability to grow profitably and contribute to local communities could be adversely affected.

 

The risk that the group's marketing, operating and financial responses to changes in global economic conditions may not be timely or adequate to respond to changing consumer demand.

 

The risk that the group fails to execute and derive benefits from the business capability projects, resulting in increased project costs, business disruption and reduced competitive advantage in the medium term.

 

Dividend

The board has declared a cash interim dividend of 21.5 US cents per share, an increase of 10%. The dividend will be payable on Friday 9 December 2011 to shareholders registered on the London and Johannesburg registers on Friday 2 December 2011. The ex-dividend trading dates will be Wednesday 30 November 2011 on the London Stock Exchange (LSE) and Monday 28 November 2011 on the JSE Limited (JSE). As the group reports in US dollars, dividends are declared in US dollars. They are payable in South African rand to shareholders on the Johannesburg register, in US dollars to shareholders on the London register with a registered address in the United States (unless mandated otherwise), and in sterling to all remaining shareholders on the London register. Further details relating to dividends are provided in note 6.

 

The rates of exchange applicable for US dollar conversion into South African rand and sterling were determined yesterday. The rate of exchange determined for converting to South African rand was US$:ZAR8.192400 resulting in an equivalent interim dividend of 176.13660 SA cents per share. The rate of exchange determined for converting to sterling was GBP:US$1.5767 resulting in an equivalent interim dividend of 13.6361 UK pence per share.

 

From the commencement of trading on Thursday 17 November 2011 until the close of business on Friday 2 December 2011, no transfers between the London and Johannesburg registers will be permitted, and from Monday 28 November 2011 until Friday 2 December 2011, no shares may be dematerialised or rematerialised, both days inclusive.

 

Directors' responsibility for financial reporting

This statement, which should be read in conjunction with the independent review report of the auditors set out below, is made to enable shareholders to distinguish the respective responsibilities of the directors and the auditors in relation to the consolidated interim financial information, set out on pages 23 to 39 which the directors confirm has been prepared on a going concern basis. The directors consider that the group has used appropriate accounting policies, consistently applied and supported by reasonable and appropriate judgements and estimates.

 

A copy of the interim report of the group is placed on the company's website. The directors are responsible for the maintenance and integrity of the statutory and audited information on the company's website. Information published on the internet is accessible in many countries with different legal requirements. Legislation in the United Kingdom governing the preparation and dissemination of the financial statements may differ from legislation in other jurisdictions.

 

The directors confirm that this condensed set of financial statements has been prepared in accordance with IAS 34 as adopted by the European Union, and the interim management report herein includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8 of the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

 

At the date of this statement, the directors of SABMiller plc are those listed in the SABMiller plc Annual Report for the year ended 31 March 2011 with the exception of Malcolm Wyman, who retired from the board, and Jamie Wilson, who was appointed to the board, both with effect from 21 July 2011. A list of current directors is maintained on the SABMiller plc website: www.sabmiller.com.

 

On behalf of the board

 

 

EAG Mackay                                                                           JS Wilson

Chief executive                                                                       Chief financial officer

 

16 November 2011

 

 

INDEPENDENT REVIEW REPORT OF CONSOLIDATED INTERIM FINANCIAL INFORMATION TO SABMILLER PLC




 

Introduction

We have been engaged by the company to review the condensed set of financial statements in the interim financial report for the six months ended 30 September 2011, which comprises the consolidated income statement, consolidated statement of comprehensive income, consolidated balance sheet, consolidated cash flow statement, consolidated statement of changes in equity and related notes. We have read the other information contained in the interim financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

 

Directors' responsibilities

The interim financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

 

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this interim financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.

 

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the interim financial report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

 

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the interim financial report for the six months ended 30 September 2011 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

 

PricewaterhouseCoopers LLP

Chartered Accountants

London

 

16 November 2011

 

 

SABMiller plc


CONSOLIDATED INCOME STATEMENT


for the six months ended 30 September


 

 


Notes

Six months

ended 30/9/11

Unaudited

US$m

Six months

ended 30/9/10

Unaudited

US$m

Year

ended 31/3/11

Audited

US$m






Revenue

2

10,539

9,451

19,408

Net operating expenses


(8,930)

(8,136)

(16,281)






Operating profit

2

1,609

1,315

3,127

Operating profit before exceptional items


1,784

1,596

3,563

Exceptional items

3

(175)

(281)

(436)






Net finance costs


(203)

(283)

(525)

Interest payable and similar charges


(423)

(489)

(883)

Interest receivable and similar income


220

206

358






Share of post-tax results of associates and joint ventures

2

635

658

1,024






Profit before taxation


2,041

1,690

3,626

Taxation

4

(556)

(523)

(1,069)






Profit for the period


1,485

1,167

2,557






Profit attributable to non-controlling interests


103

45

149

Profit attributable to equity shareholders

5

1,382

1,122

2,408



1,485

1,167

2,557











Basic earnings per share (US cents)

5

87.4

71.2

152.8

Diluted earnings per share (US cents)

5

86.8

70.8

151.8






 

All operations are continuing.

 

The notes form an integral part of this condensed interim financial information.

 

SABMiller plc


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the six months ended 30 September


 

 


 

 

 

Notes

Six months

ended 30/9/11

Unaudited

US$m

Six months

ended 30/9/10

Unaudited

US$m

Year

ended 31/3/11

Audited

US$m






Profit for the period


1,485

1,167

2,557

Other comprehensive income:





Currency translation differences on foreign currency net investments


(1,072)

552

644

(Decrease)/increase in foreign currency translation reserve during the period


(1,087)

552

644

Recycling of foreign currency translation reserve on disposals


15

-

-






Actuarial losses on defined benefit plans


-

-

(28)






Net investment hedges:





- Fair value gains/(losses) arising during the period


184

(60)

(137)






Cash flow hedges:


28

7

39

- Fair value gains/(losses) arising during the period


21

(3)

16

- Fair value losses transferred to inventory


6

8

2

- Fair value losses transferred to property, plant and equipment


-

1

-

- Fair value losses transferred to profit or loss


1

1

21






Tax on items included in other comprehensive income

4

23

26

22






Share of associates' and joint ventures' losses included in other comprehensive income


(67)

(75)

(50)

Other comprehensive income for the period, net of tax


(904)

450

490

Total comprehensive income for the period


581

1,617

3,047






Attributable to:





Equity shareholders


505

1,585

2,904

Non-controlling interests


76

32

143

Total comprehensive income for the period


581

1,617

3,047

 

The notes form an integral part of this condensed interim financial information.

 

 

SABMiller plc


CONSOLIDATED BALANCE SHEET


at 30 September


 

 


Notes

30/9/11

Unaudited

US$m

30/9/10¹

Unaudited

US$m

31/3/11¹

Unaudited

US$m

Assets





Non-current assets





Goodwill


11,435

11,963

11,949

Intangible assets

7

4,259

4,469

4,364

Property, plant and equipment

8

8,821

9,121

9,331

Investments in joint ventures


5,689

5,685

5,813

Investments in associates


2,715

2,445

2,719

Available for sale investments


29

33

35

Derivative financial instruments


673

596

330

Trade and other receivables


114

120

140

Deferred tax assets


128

169

184



33,863

34,601

34,865

Current assets





Inventories


1,177

1,308

1,256

Trade and other receivables


1,666

1,731

1,687

Current tax assets


114

140

152

Derivative financial instruments


142

24

16

Available for sale investments


1

1

-

Cash and cash equivalents

9c

953

478

1,067



4,053

3,682

4,178

Assets of disposal group classified as held for sale


-

-

66



4,053

3,682

4,244

Total assets


37,916

38,283

39,109






Liabilities





Current liabilities





Derivative financial instruments


(64)

(177)

(50)

Borrowings

9c

(1,142)

(1,676)

(1,345)

Trade and other payables


(3,378)

(3,443)

(3,484)

Current tax liabilities


(677)

(672)

(658)

Provisions


(389)

(347)

(410)



(5,650)

(6,315)

(5,947)

Liabilities of disposal group classified as held for sale


-

-

(66)



(5,650)

(6,315)

(6,013)

Non-current liabilities





Derivative financial instruments


(11)

(105)

(85)

Borrowings

9c

(6,788)

(7,235)

(7,115)

Trade and other payables


(125)

(142)

(98)

Deferred tax liabilities


(2,463)

(2,439)

(2,578)

Provisions


(426)

(474)

(461)



(9,813)

(10,395)

(10,337)

Total liabilities


(15,463)

(16,710)

(16,350)

Net assets


22,453

21,573

22,759






Equity





Share capital


166

165

166

Share premium


6,423

6,340

6,384

Merger relief reserve


4,586

4,586

4,586

Other reserves


1,005

1,825

1,881

Retained earnings


9,420

7,962

8,991

Total shareholders' equity


21,600

20,878

22,008

Non-controlling interests


853

695

751

Total equity


22,453

21,573

22,759

 

¹ As restated (see note 11).

 

The notes form an integral part of this condensed interim financial information.

 

SABMiller plc


CONSOLIDATED CASH FLOW STATEMENT


for the six months ended 30 September


 

 


Notes

Six months

ended 30/9/11

Unaudited

US$m

Six months

ended 30/9/10

Unaudited

US$m

Year

ended 31/3/11

Audited

US$m






Cash flows from operating activities



 


Cash generated from operations

9a

2,369

2,152

4,568

Interest received


108

138

293

Interest paid


(320)

(495)

(933)

Tax paid


(438)

(449)

(885)

Net cash generated from operating activities

9b

1,719

1,346

3,043






Cash flows from investing activities





Purchase of property, plant and equipment


(680)

(565)

(1,189)

Proceeds from sale of property, plant and equipment


73

17

73

Purchase of intangible assets


(80)

(49)

(126)

Purchase of available for sale investments


-

-

(3)

Proceeds from disposal of available for sale investments


2

-

-

Proceeds from disposal of businesses (net of cash disposed)


2

-

-

Acquisition of businesses (net of cash acquired)


-

(6)

(60)

Investments in joint ventures


(67)

(21)

(186)

Investments in associates


(1)

(5)

(5)

Repayment of investments by associates


4

-

68

Dividends received from joint ventures


494

515

822

Dividends received from associates


74

53

88

Dividends received from other investments


1

1

1

Net cash used in investing activities


(178)

(60)

(517)






Cash flows from financing activities





Proceeds from the issue of shares


39

28

73

Proceeds from the issue of shares in subsidiaries to non-controlling interests


73

19

34

Purchase of own shares for share trusts


(50)

-

-

Purchase of shares from non-controlling interests


-

(3)

(12)

Proceeds from borrowings


346

826

1,608

Repayment of borrowings


(895)

(1,654)

(2,767)

Capital element of finance lease payments


(3)

(3)

(5)

Net cash payments on derivative financial instruments


(112)

(12)

(43)

Dividends paid to shareholders of the parent


(973)

(806)

(1,113)

Dividends paid to non-controlling interests


(59)

(49)

(102)

Net cash used in financing activities


(1,634)

(1,654)

(2,327)






Net cash (outflow)/inflow from operating, investing and financing activities


(93)

(368)

199

Effects of exchange rate changes


13

21

25

Net (decrease)/increase in cash and cash equivalents


(80)

(347)

224

Cash and cash equivalents at 1 April

9c

813

589

589

Cash and cash equivalents at end of period

9c

733

242

813






 

The notes form an integral part of this condensed interim financial information.

 

SABMiller plc


 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


for the six months ended 30 September


 

 

 











Called up share capital

Share premium account

Merger relief reserve

Other reserves

Retained earnings

Total shareholders' equity

Non-controlling interests

Total  equity


US$m

US$m

US$m

US$m

US$m

US$m

US$m

US$m










At 1 April 2010 (audited)

165

6,312

4,586

1,322

7,525

19,910

683

20,593










Total comprehensive income

-

-

-

503

1,082

1,585

32

1,617

Profit for the period

-

-

-

-

1,122

1,122

45

1,167

Other comprehensive income

-

-

-

503

(40)

463

(13)

450

Dividends paid

-

-

-

-

(809)

(809)

(39)

(848)

Issue of SABMiller plc ordinary shares

-

28

-

-

-

28

-

28

Proceeds from the issue of shares in subsidiaries to

  non-controlling interests

 

-

 

-

 

-

 

-

 

-

 

-

 

19

 

19

Credit entry relating to share-based payments

-

-

-

-

164

164

-

164










At 30 September 2010 (unaudited)

165

6,340

4,586

1,825

7,962

20,878

695

21,573










At 1 April 2010 (audited)

165

6,312

4,586

1,322

7,525

19,910

683

20,593










Total comprehensive income

-

-

-

559

2,345

2,904

143

3,047

Profit for the period

-

-

-

-

2,408

2,408

149

2,557

Other comprehensive income

-

-

-

559

(63)

496

(6)

490

Dividends paid

-

-

-

-

(1,115)

(1,115)

(106)

(1,221)

Issue of SABMiller plc ordinary shares

1

72

-

-

-

73

-

73

Proceeds from the issue of shares in subsidiaries to 

  non-controlling interests

 

-

 

-

 

-

 

-

 

-

 

-

 

34

 

34

Buyout of non-controlling interests

-

-

-

-

(10)

(10)

(3)

(13)

Credit entry relating to share-based payments

-

-

-

-

246

246

-

246










At 31 March 2011 (audited)

166

6,384

4,586

1,881

8,991

22,008

751

22,759










At 1 April 2011 (audited)

166

6,384

4,586

1,881

8,991

22,008

751

22,759










Total comprehensive income

-

-

-

(876)

1,381

505

76

581

Profit for the period

-

-

-

-

1,382

1,382

103

1,485

Other comprehensive income

-

-

-

(876)

(1)

(877)

(27)

(904)

Dividends paid

-

-

-

-

(973)

(973)

(47)

(1,020)

Issue of SABMiller plc ordinary shares

-

39

-

-

-

39

-

39

Proceeds from the issue of shares in subsidiaries to 

  non-controlling interests

 

-

 

-

 

-

 

-

 

-

 

-

 

73

 

73

Payment for purchase of own shares for share trusts

-

-

-

-

(50)

(50)

-

(50)

Credit entry relating to share-based payments

-

-

-

-

71

71

-

71










At 30 September 2011 (unaudited)

166

6,423

4,586

1,005

9,420

21,600

853

22,453










 

The notes form an integral part of this condensed interim financial information.

 

 

SABMiller plc


NOTES TO THE FINANCIAL INFORMATION


 

 

1. Basis of preparation

 

The condensed consolidated interim financial information (the 'financial information') comprises the unaudited results of SABMiller plc for the six months ended 30 September 2011 and 30 September 2010, together with the audited results for the year ended 31 March 2011, restated for further unaudited adjustments relating to initial accounting for business combinations. Further details of these adjustments are provided in note 11. The financial information in this report is not audited and does not constitute statutory accounts within the meaning of s434 of the Companies Act 2006. The board of directors approved this financial information on 16 November 2011. The annual financial statements for the year ended 31 March 2011, approved by the board of directors on 3 June 2011, which represent the statutory accounts for that year, have been filed with the Registrar of Companies. The auditors' report on those accounts was unqualified and did not contain a statement made under s498(2) or (3) of the Companies Act 2006.

 

The unaudited financial information in this interim report has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority, and with IAS 34 'Interim Financial Reporting' as adopted by the European Union. The interim financial information should be read in conjunction with the annual financial statements for the year ended 31 March 2011, which have been prepared in accordance with IFRS as adopted by the European Union.

 

Items included in the financial information of each of the group's entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial information is presented in US dollars which is the group's presentational currency.

 

Accounting policies

The financial statements are prepared under the historical cost convention, except for the revaluation to fair value of certain financial assets and liabilities, and post-retirement assets and liabilities.

 

The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 March 2011, which were published in June 2011, as described in those financial statements except as set out below.

 

The following standards, interpretations and amendments have been adopted by the group since 1 April 2011 with no significant impact on its consolidated results or financial position:

 

§  IFRIC 19, 'Extinguishing Financial Liabilities with Equity Instruments'.

§  Amendment to IFRS 1, 'Limited Exemption from Comparative IFRS 7 Disclosures for First-time Adopters'.

§  Amendment to IAS 24, 'Related Party Disclosures'.

§  Amendment to IFRIC 14, 'Pre-payments of a Minimum Funding Requirement'.

§  Annual improvements to IFRSs (2010).

 

                             

2. Segmental information

 

The segmental information presented below includes the reconciliation of GAAP measures presented on the face of the income statement to non-GAAP measures which are used by management to analyse the group's performance.

 

Income statement

 

 

Six months ended 30/9/11

Six months ended 30/9/10

Year ended 31/3/11

 

Group revenue Unaudited

US$m

EBITA Unaudited

US$m

Group revenue Unaudited

US$m

EBITA Unaudited

US$m

Group revenue Audited

US$m

EBITA Audited

US$m

Latin America

3,396

797

2,971

676

6,335

1,620

Europe

3,268

570

3,040

549

5,394

887

North America

2,830

452

2,865

480

5,223

741

Africa

1,839

327

1,506

258

3,254

647

Asia

1,439

138

1,193

110

2,026

92

South Africa:

2,916

513

2,661

457

6,079

1,204

- Beverages

2,669

446

2,432

394

5,598

1,067

- Hotels and Gaming

247

67

229

63

481

137

Corporate

-

(96)

-

(64)

-

(147)

Group

15,688

2,701

14,236

2,466

28,311

5,044








Amortisation of intangible assets (excluding software) - group and

(105)

 

(103)

 

(209)

share of associates' and joint ventures'

Exceptional items - group and share of associates' and joint

(191)

 

(285)

 

(467)

ventures'

Net finance costs - group and share of associates' and joint

(237)

 

(300)

 

(560)

ventures' (excluding exceptional items)

Share of associates' and joint ventures' taxation

 

(104)

 

(64)

 

(139)

Share of associates' and joint ventures' non-controlling interests

(23)

 

(24)

 

(43)

Profit before tax

 

2,041

 

1,690

 

3,626

 

Group revenue (including associates and joint ventures)

With the exception of South Africa Hotels and Gaming, all reportable segments derive their revenues from the sale of beverages. Revenues are derived from a large number of customers which are internationally dispersed, with no customers being individually material.

 








Six months ended

30 September:

Revenue 2011

Unaudited

US$m

Share of associates' and joint ventures'

revenue

2011

Unaudited

US$m

 

 

 

Group

revenue

2011

Unaudited

US$m

 

 

 

Revenue

2010

Unaudited

US$m

Share of associates'

and joint ventures'

revenue

2010

Unaudited

US$m

 

 

 

Group

revenue

2010

Unaudited

US$m

Latin America

3,390

6

3,396

2,966

5

2,971

Europe

3,261

7

3,268

3,031

9

3,040

North America

70

2,760

2,830

64

2,801

2,865

Africa

1,109

730

1,839

915

591

1,506

Asia

327

1,112

1,439

305

888

1,193

South Africa:

2,382

534

2,916

2,170

491

2,661

- Beverages

2,382

287

2,669

2,170

262

2,432

- Hotels and Gaming

-

247

247

-

229

229








Group

10,539

5,149

15,688

9,451

4,785

14,236

 

 

 

 

 

 

 

Year ended 31 March:

 

 

 

2011

2011

2011

 

 

 

 

Audited

Audited

Audited

 

 

 

US$m

US$m

US$m

Latin America

 

 

 

6,324

11

6,335

Europe

 

 

 

5,379

15

5,394

North America

 

 

 

117

5,106

5,223

Africa

 

 

 

2,059

1,195

3,254

Asia

 

 

 

564

1,462

2,026

South Africa:

 

 

 

4,965

1,114

6,079

- Beverages

 

 

 

4,965

633

5,598

- Hotels and Gaming

 

 

 

-

481

481








Group

 

 

 

19,408

8,903

28,311

 

                             

Operating profit

The following table provides a reconciliation of operating profit to operating profit before exceptional items.

 

Six months ended

30 September:

Operating

profit

2011

Unaudited

US$m

Exceptional

items

2011

Unaudited

US$m

Operating profit before exceptional items

2011

Unaudited

US$m

Operating

profit

2010

Unaudited

US$m

Exceptional

items

2010

Unaudited

US$m

Operating

profit before

exceptional

items

2010

Unaudited

US$m

Latin America

679

54

733

571

44

615

Europe

488

69

557

475

60

535

North America

14

-

14

17

-

17

Africa

165

1

166

127

2

129

Asia

(9)

-

(9)

(6)

-

(6)

South Africa: Beverages

406

13

419

221

149

370

Corporate

(134)

38

(96)

(90)

26

(64)

Group

1,609

175

1,784

1,315

281

1,596








Year ended 31 March:





2011

2011

2011

 





Audited

US$m

Audited

US$m

Audited

US$m

Latin America

 

 

 

 

1,391

106

1,497

Europe

 

 

 

 

596

261

857

North America

 

 

 

 

16

-

16

Africa

 

 

 

 

361

4

365

Asia

 

 

 

 

(22)

-

(22)

South Africa: Beverages

 

 

 

 

809

188

997

Corporate

 

 

 

 

(24)

(123)

(147)

Group

 

 

 

 

3,127

436

3,563

 

 

EBITA (segment result)

This comprises operating profit before exceptional items, amortisation of intangible assets (excluding software) and includes the group's share of associates' and joint ventures' operating profit on a similar basis. The following table provides a reconciliation of operating profit before exceptional items to EBITA.

 

Six months ended

30 September:

Operating profit before exceptional items

2011

 Unaudited

US$m

Share of associates' and joint ventures' operating profit before exceptional items

2011 Unaudited

US$m

Amortisation of intangible assets (excluding software) - group and share of associates' and joint ventures'

2011 Unaudited

US$m

EBITA

2011 Unaudited

US$m

Operating profit before exceptional items

2010 Unaudited

US$m

Share of associates' and joint ventures' operating profit before exceptional items

2010 Unaudited

US$m

Amortisation of intangible assets (excluding software) - group and share of associates' and joint ventures'

2010 Unaudited

US$m

EBITA

2010

Unaudited

US$m

Latin America

733

-

64

797

615

-

61

676

Europe

557

1

12

570

535

1

13

549

North America

14

415

23

452

17

440

23

480

Africa

166

159

2

327

129

127

2

258

Asia

(9)

144

3

138

(6)

112

4

110

South Africa:

419

93

1

513

370

87

-

457

- Beverages

419

27

-

446

370

24

-

394

- Hotels and Gaming

-

66

1

67

-

63

-

63

Corporate

(96)

-

-

(96)

(64)

-

-

(64)

Group

1,784

812

105

2,701

1,596

767

103

2,466










Year ended 31 March:




2011

2011

2011

2011

 





Audited US$m

Audited US$m

Audited US$m

Audited

US$m

Latin America

 

 

 

 

1,497

-

123

1,620

Europe

 

 

 

 

857

2

28

887

North America

 

 

 

 

16

679

46

741

Africa

 

 

 

 

365

277

5

647

Asia

 

 

 

 

(22)

108

6

92

South Africa:

 

 

 

 

997

206

1

1,204

- Beverages

 

 

 

 

997

70

-

1,067

- Hotels and Gaming

 

 

 

 

-

136

1

137

Corporate

 

 

 

 

(147)

-

-

(147)

Group

 

 

 

 

3,563

1,272

209

5,044

 

The group's share of associates' and joint ventures' operating profit is reconciled to the share of post-tax results of associates and joint ventures in the income statement as follows.

 

 

Six months
         ended

         30/9/11

   Unaudited
           US$m

Six months

ended

30/9/10 Unaudited

US$m

Year

ended

31/3/11 Audited

US$m

 

 

 

 

Share of associates' and joint ventures' operating profit (before exceptional items)

              812

767

1,272

Share of associates' and joint ventures' exceptional items

               (35)

(4)

(31)

Share of associates' and joint ventures' net finance costs

               (15)

(17)

(35)

Share of associates' and joint ventures' taxation

             (104)

(64)

(139)

Share of associates' and joint ventures' non-controlling interests

               (23)

(24)

(43)

Share of post-tax results of associates and joint ventures

              635

658

1,024

 

Excise duties of US$2,391 million (2010: US$2,089 million) have been incurred during the six months as follows: Latin America US$877 million (2010: US$769 million); Europe US$724 million (2010: US$648 million); North America US$2 million (2010: US$1 million); Africa US$194 million (2010: US$142 million); Asia US$132 million (2010: US$118 million) and South Africa US$462 million (2010: US$411 million). The group's share of MillerCoors' excise duties incurred during the period was US$383 million (2010: US$398 million).

 

Beer volumes increase during the summer months leading to higher revenues being recognised in the first half of the year in the Europe and North America segments. Due to the spread of the business between Northern and Southern hemispheres, the results for the group as a whole are not highly seasonal in nature.

 

EBITDA

The following table provides a reconciliation of EBITDA (the net cash generated from operations before working capital movements) to adjusted EBITDA. A reconciliation of profit for the period for the group to EBITDA after cash exceptional items for the group can be found in note 9a.

 

Six months ended

30 September:

EBITDA

2011 Unaudited

US$m

 

Cash

exceptional

items

2011 Unaudited

US$m

Dividends received from MillerCoors

2011 Unaudited

US$m

Adjusted EBITDA

2011 Unaudited

US$m

EBITDA

2010 Unaudited

US$m

 

Cash

exceptional

items

2010 Unaudited

US$m

Dividends received

from MillerCoors

2010 Unaudited

US$m

Adjusted EBITDA

2010 Unaudited

US$m

 

 

 

 

 

 

 

 

 

Latin America

925

49

-

974

807

39

-

846

Europe

677

48

-

725

622

58

-

680

North America

20

-

494

514

15

-

515

530

Africa

251

-

-

251

195

2

-

197

Asia

14

-

-

14

14

-

-

14

South Africa: Beverages

507

-

-

507

431

24

-

455

Corporate

(96)

24

-

(72)

(22)

26

-

4

Group

2,298

121

494

2,913

2,062

149

515

2,726

 

 

 

 

 

 

 

 

 

Year ended 31 March:

 

 

 

 

2011

2011

2011

2011

 

 

 

 

 

Audited

US$m

Audited

US$m

Audited

US$m

Audited

US$m

 

 

 

 

 

 

 

 

 

Latin America

 

 

 

 

1,853

103

-

1,956

Europe

 

 

 

 

1,021

125

-

1,146

North America

 

 

 

 

27

-

822

849

Africa

 

 

 

 

517

4

-

521

Asia

 

 

 

 

17

-

-

17

South Africa: Beverages

 

 

 

 

1,143

42

-

1,185

Corporate

 

 

 

 

(76)

19

-

(57)

Group

 

 

 

 

4,502

293

822

5,617

 

 

3. Exceptional items

 








Six months ended 30/9/11

Unaudited

US$m

Six months ended 30/9/10

Unaudited

US$m

Year

ended 31/3/11

Audited

US$m






Exceptional items included in operating profit:





Business capability programme costs


(115)

(155)

(296)

Broad-Based Black Economic Empowerment scheme costs


(15)

(126)

(149)

Integration and restructuring costs


(12)

-

(52)

Loss on disposal of business


(15)

-

-

Transaction-related costs


(18)

-

-

Impairments


-

-

(98)

Profit on disposal of investment in associate


-

-

159

Net exceptional losses included within operating profit


(175)

(281)

(436)






Exceptional items included in net finance costs:





Transaction-related net gains


19

-

-

Net exceptional gains included within net finance costs


19

-

-






Share of associates' and joint ventures' exceptional items:





Impairments


(35)

-

-

Integration and restructuring costs


-

(4)

(5)

Loss on transaction in associate


-

-

(26)

Share of associates' and joint ventures' exceptional losses


(35)

(4)

(31)

  

Net taxation credits relating to subsidiaries' and the group's share of associates' and joint ventures' exceptional items


11

13

2

 

Exceptional items included in operating profit

 

Business capability programme costs

The business capability programme will streamline finance, human resources and procurement activities through the deployment of global systems and introduce common sales, distribution and supply chain management systems. Costs of US$115 million have been incurred in the period (2010: US$155 million).

 

Broad-Based Black Economic Empowerment scheme costs

US$15 million (2010: US$126 million) of costs have been incurred in relation to the Broad-Based Black Economic Empowerment (BBBEE) scheme in South Africa. This represents the ongoing IFRS 2 share-based payment charge in respect of the employee element of the scheme and in the prior year also, the one-off IFRS 2 charge in respect of the retailer element, together with the costs associated with the transaction.

 

Integration and restructuring costs

During 2011, US$12 million (2010: US$nil) of restructuring costs were incurred in Latin America, principally in Ecuador and Peru.

 

Loss on disposal of business

During 2011, a loss of US$15 million (2010: US$nil) arose in Europe primarily in relation to the recycling of the foreign currency translation reserve on the disposal of the distribution business in Italy.

 

Transaction-related costs

During 2011, advisers' costs of US$18 million (2010: US$nil) were incurred in relation to the proposed Foster's transaction in the Corporate division.

 

Exceptional items included in net finance costs

 

Transaction-related net gains

During 2011, a net gain of US$19 million (2010: US$nil) arose on the mark to market valuation gain on various derivative financial instruments taken out in anticipation of the proposed Foster's transaction and where hedge accounting could not be applied, partially offset by facility and commitment fees in relation to the proposed transaction.

 

Share of associates' and joint ventures' exceptional items

 

Impairment costs

In 2011, the group's share of MillerCoors' impairment of the Sparks brand amounted to US$35 million (2010: US$nil).

 

Integration and restructuring costs

In 2011, the group's share of MillerCoors' integration and restructuring costs was US$nil (2010: US$4 million, primarily related to severance costs).

 

Net taxation credits relating to subsidiaries' and the group's share of associates' and joint ventures' exceptional items

Net taxation credits of US$11 million (2010: US$13 million) arose in relation to exceptional items during the period and include US$13 million (2010: US$2 million) in relation to MillerCoors although the tax credit is recognised in Miller Brewing Company (see note 4).

 

4.  Taxation

 








Six months ended 30/9/11

Unaudited

US$m

Six months ended 30/9/10

Unaudited

US$m

Year

ended 31/3/11

Audited

US$m






Current taxation


466

464

808

- Charge for the period (UK corporation tax: US$nil (2010: US$nil))


486

465

817

- Adjustments in respect of prior years


(20)

(1)

(9)

Withholding taxes and other remittance taxes


59

37

101

Total current taxation


525

501

909






Deferred taxation


31

22

160

- Charge for the period (UK corporation tax: US$nil (2010: US$nil))


31

22

183

- Adjustments in respect of prior years


-

-

(16)

- Rate change


-

-

(7)






Taxation expense


556

523

1,069




 

 

Tax credit relating to components of other comprehensive income is as follows:


 

 

Deferred tax credit on actuarial gains and losses


-

(25)

(36)

Deferred tax (credit)/charge on financial instruments


(23)

(1)

14



(23)

(26)

(22)




 

 

Effective tax rate (%)


28.5

29.0

28.2

 

See the financial definitions section for the definition of the effective tax rate. This calculation is on a basis consistent with that used in prior periods and is also consistent with other group operating metrics. Tax on amortisation of intangible assets (excluding software) was US$30 million (2010: US$28 million).

 

MillerCoors is not a taxable entity. The tax balances and obligations therefore remain with Miller Brewing Company as a 100% subsidiary of the group. This subsidiary's tax charge includes tax (including deferred tax) on the group's share of the taxable profits of MillerCoors and includes tax in other comprehensive income on the group's share of MillerCoors' taxable items included within other comprehensive income.

 

5. Earnings per share

 


Six months ended 30/9/11

Unaudited

US cents

Six months

 ended 30/9/10

Unaudited

US cents

Year

ended 31/3/11

Audited

US cents

Basic earnings per share

87.4

71.2

152.8

Diluted earnings per share

86.8

70.8

151.8

Headline earnings per share

90.0

71.1

150.8

Adjusted basic earnings per share

103.3

93.0

191.5

Adjusted diluted earnings per share

102.5

92.5

190.3

 

The weighted average number of shares was:

 






Six months ended 30/9/11

Unaudited

Millions of shares

Six months

 ended 30/9/10

Unaudited

Millions of

 shares

Year

ended 31/3/11

Audited

Millions of shares

Ordinary shares

1,660

1,655

1,656

Treasury shares

(72)

(72)

(72)

EBT ordinary shares

(8)

(8)

Basic shares

1,581

1,575

1,576

Dilutive ordinary shares

11

9

10

Diluted shares

1,592

1,584

1,586

 

The calculation of diluted earnings per share excludes 11,641,929 (2010: 6,812,050) share options that were non-dilutive for the period because the exercise price of the option exceeded the fair value of the shares during the period, 15,208,332 (2010: 13,242,372) share awards that were non-dilutive for the period because the performance conditions attached to the share awards have not been met and 366,649 (2010: nil) shares in relation to the employee component of the BBBEE scheme that were non-dilutive for the period. These share incentives could potentially dilute earnings per share in the future.

 

Adjusted and headline earnings

The group presents an adjusted earnings per share figure which excludes the impact of amortisation of intangible assets (excluding software), certain non-recurring items and post-tax exceptional items in order to present an additional measure of performance for the periods shown in the consolidated interim financial information. Adjusted earnings per share has been based on adjusted earnings for each financial period and on the same number of weighted average shares in issue as the basic earnings per share calculation. Headline earnings per share has been calculated in accordance with the South African Circular 3/2009 entitled 'Headline Earnings' which forms part of the listing requirements for the JSE Ltd (JSE). The adjustments made to arrive at headline earnings and adjusted earnings are as follows.

 






Six months ended 30/9/11

Unaudited

US$m

Six months

ended 30/9/10

Unaudited

US$m

Year

ended 31/3/11

Audited

US$m





Profit for the period attributable to equity holders of the parent

1,382

1,122

2,408

Headline adjustments

 

 

 

Impairment of business held for sale

-

-

53

Impairment of intangible assets

-

-

14

Impairment of property, plant and equipment

-

1

31

Loss on disposal of businesses

18

-

-

Profit on disposal of property, plant and equipment

(1)

(5)

(5)

Profit on disposal of investment in associate

-

-

(159)

Tax effects of these items

(11)

-

14

Non-controlling interests' share of the above items

-

1

1

Share of joint ventures' and associates' headline adjustments, net of tax and non-

  controlling interests

35

-

20

Headline earnings

1,423

1,119

2,377

Business capability programme costs

115

155

296

Broad-Based Black Economic Empowerment scheme costs

15

126

149

Integration and restructuring costs

12

-

52

Transaction-related net gains

(1)

-

-

Net (gain)/loss on fair value movements on capital items¹

(7)

1

7

Amortisation of intangible assets (excluding software)

80

79

158

Tax effects of the above items

(27)

(41)

(71)

Non-controlling interests' share of the above items

(3)

(3)

(10)

Share of joint ventures' and associates' other adjustments, net of tax and non-

  controlling interests

26

29

60

Adjusted earnings

1,633

1,465

3,018

 

¹ This does not include all fair value movements but includes those in relation to capital items for which hedge accounting cannot be applied.

 

 

6. Dividends

 

Dividends paid were as follows.


 

Six months ended 30/9/11

Unaudited

US cents

Six months

ended 30/9/10

Unaudited

US cents

Year

 ended 31/3/11

Audited

US cents





Prior year final dividend paid per ordinary share

61.5

51.0

51.0

Current year interim dividend paid per ordinary share

-

19.5

 

The interim dividend declared of 21.5 US cents per ordinary share is payable on 9 December 2011 to ordinary shareholders on the register as at

2 December 2011 and will absorb an estimated US$340 million of shareholders' funds.

 

7. Intangible assets

 


 

Six months ended 30/9/11

Unaudited

US$m

Six months

ended 30/9/10

Unaudited

US$m

Year

ended 31/3/11¹

Unaudited

US$m





Net book amount at beginning of period

4,364

4,354

4,354

Exchange adjustments

(80)

172

101

Additions - separately acquired

85

49

126

Acquisitions - through business combinations

-

-

10

Amortisation

(112)

(108)

(220)

Disposals

-

-

(1)

Impairment

-

-

(14)

Transfers from property, plant and equipment

2

2

8

Net book amount at end of period

4,259

4,469

4,364

 

¹ As restated (see note 11).

 

8. Property, plant and equipment

 


Six months ended 30/9/11

Unaudited

US$m

Six months

ended 30/9/10¹

Unaudited

US$m

Year

ended 31/3/11¹

Unaudited

US$m





Net book amount at beginning of period

9,331

8,915

8,915

Exchange adjustments

(605)

147

258

Additions

650

554

1,221

Acquisitions - through business combinations

-

-

23

Disposals

(58)

(21)

(94)

Impairment

-

(1)

(31)

Depreciation

(473)

(451)

(904)

Other movements

(24)

(22)

(57)

Net book amount at end of period

8,821

9,121

9,331

 

¹ As restated (see note 11).

 

9a. Reconciliation of profit for the period to net cash generated from operations

 


 

Six months ended 30/9/11

Unaudited

US$m

Six months ended 30/9/10

Unaudited

US$m

Year

ended 31/3/11

Audited

US$m





Profit for the period

1,485

1,167

2,557

Taxation

556

523

1,069

Share of post-tax results of associates and joint ventures

(635)

(658)

(1,024)

Interest receivable and similar income

(220)

(206)

(358)

Interest payable and similar charges

423

489

883

Operating profit

1,609

1,315

3,127

Depreciation:

 

 

 

- Property, plant and equipment

351

337

665

- Containers

122

114

239

Container breakages, shrinkage and write-offs

16

11

24

Loss on disposal of businesses

18

-

-

Profit on disposal of investment in associate

-

-

(159)

Profit on disposal of property, plant and equipment

(1)

(5)

(5)

Amortisation of intangible assets

112

108

220

Impairment of intangible assets

-

-

14

Impairment of property, plant and equipment

-

1

31

Impairment of working capital balances

7

6

82

Amortisation of advances to customers

14

12

28

Unrealised net (gain)/loss from fair value hedges

(11)

-

1

Dividends received from other investments

(1)

(1)

(1)

Charge with respect to share options

56

40

99

Charge with respect to Broad-Based Black Economic Empowerment scheme

15

124

147

Other non-cash movements

(9)

-

(10)

Net cash generated from operations before working capital movements (EBITDA)

2,298

2,062

4,502

Net inflow in working capital

71

90

66

Net cash generated from operations

2,369

2,152

4,568

 

Profit for the period and cash generated from operations before working capital movements includes cash flows relating to exceptional items of US$121 million (2010: US$149 million), comprising US$103 million (2010: US$147 million) in respect of business capability programme costs, US$nil (2010: US$2 million) in respect of Broad-Based Black Economic Empowerment scheme costs, US$12 million (2010: US$nil) in respect of integration and restructuring costs, and US$6 million (2010: US$nil) in respect of transaction-related costs.

 

 

The following table provides a reconciliation of EBITDA to adjusted EBITDA.

 


Six months ended 30/9/11

Unaudited

US$m

Six months ended 30/9/10

Unaudited

US$m

Year

ended 31/3/11

Audited

US$m





EBITDA

2,298

2,062

4,502

Cash exceptional items

121

149

293

Dividends received from MillerCoors

494

515

822

Adjusted EBITDA

2,913

2,726

5,617

 

9b. Reconciliation of net cash generated from operating activities to free cash flow

 


Six months ended 30/9/11

Unaudited

US$m

Six months ended 30/9/10

Unaudited

US$m

Year

ended 31/3/11

Audited

US$m





Net cash generated from operating activities

1,719

1,346

3,043

Purchase of property, plant and equipment

(680)

(565)

(1,189)

Proceeds from sale of property, plant and equipment

73

17

73

Purchase of intangible assets

(80)

(49)

(126)

Investments in joint ventures

(67)

(21)

(186)

Investments in associates

-

(4)

(4)

Repayment of investments by associates

4

-

68

Dividends received from joint ventures

494

515

822

Dividends received from associates

74

53

88

Dividends received from other investments

1

1

1

Dividends paid to non-controlling interests

(59)

(49)

(102)

Free cash flow

1,479

1,244

2,488

 

 

9c. Analysis of net debt

 

Cash and cash equivalents on the balance sheet are reconciled to cash and cash equivalents on the cash flow statement as follows.

 


As at

30/9/11

Unaudited

US$m

As at

30/9/10

Unaudited

US$m

As at

31/3/11

Audited

US$m





Cash and cash equivalents (balance sheet)

953

478

1,067

Cash and cash equivalents of disposal group classified as held for sale

-

-

4


953

478

1,071

Overdrafts

(220)

(236)

(258)

Cash and cash equivalents (cash flow statement)

733

242

813

 

Net debt is analysed as follows.

 


As at

30/9/11

Unaudited

US$m

As at

30/9/10

Unaudited

US$m

As at

31/3/11

Audited

US$m





Borrowings

(7,697)

(8,664)

(8,193)

Borrowings-related derivative financial instruments

494

495

298

Overdrafts

(220)

(236)

(258)

Finance leases

(13)

(11)

(9)

Gross debt

(7,436)

(8,416)

(8,162)

Cash and cash equivalents (excluding overdrafts)

953

478

1,071

Net debt

(6,483)

(7,938)

(7,091)

 

 

The movement in net debt is analysed as follows.

 


Cash and cash equivalents (excluding overdrafts)

US$m

Overdrafts

US$m

Borrowings

US$m

Derivative financial instruments

US$m

Finance leases

US$m

Total gross borrowings

US$m

Net debt

US$m









At 1 April 2011

1,071

(258)

(8,193)

298

(9)

(8,162)

(7,091)

Exchange adjustments

(29)

42

171

-

1

214

185

Cash flow

(71)

(4)

549

(9)

3

539

468

Disposals

(18)

-

-

-

-

-

(18)

Other movements

-

-

(224)

205

(8)

(27)

(27)

At 30 September 2011

953

(220)

(7,697)

494

(13)

(7,436)

(6,483)

 

The group has sufficient headroom to enable it to comply with all covenants on its existing borrowings. The group has sufficient undrawn financing facilities to service its operating activities and ongoing capital investment and thus the directors have continued to adopt the going concern basis of accounting. The group had the following undrawn committed borrowing facilities available at 30 September 2011 in respect of which all conditions precedent had been met at that date.

 


As at

30/9/11

Unaudited

US$m

As at

30/9/10

Unaudited

US$m

As at

31/3/11

Audited

US$m

Amounts expiring:




Within one year

332

1,383

967

Between one and two years

150

88

2,118

Between two and five years

2,516

2,099

79


2,998

3,570

3,164

 

The above table excludes the US$12,500 million acquisition-financing facility relating to the proposed Foster's transaction.

 

 

10. Commitments, contingencies and guarantees

 

Except as stated below there have been no material changes to commitments, contingencies or guarantees as disclosed in the annual financial statements for the year ended 31 March 2011.

 

Commitments

Contracts placed for future capital expenditure for property, plant and equipment not provided in the financial statements amount to US$313 million at 30 September 2011 (2010: US$180 million).

 

 

11. Balance sheet restatements

 

The initial accounting under IFRS 3, 'Business Combinations', for the Rwenzori acquisition had not been completed as at 30 September 2010. During the six months ended 31 March 2011, adjustments to provisional fair values in respect of this acquisition were made which resulted in goodwill increasing by US$1 million to US$11,963 million and property, plant and equipment decreasing by US$1 million to US$9,121 million. As a result comparative information for the six months ended 30 September 2010 has been presented in this interim financial information as if the adjustments to provisional fair values had been made from the respective transaction date. The impact on the prior period income statement has been reviewed and no adjustments to the income statement are required as a result of the adjustments to provisional fair values.

 

The initial accounting under IFRS 3, 'Business Combinations', for the Cervecería Argentina SA Isenbeck (CASA Isenbeck) and Crown Beverages Ltd (previously Crown Foods Ltd) acquisitions had not been completed as at 31 March 2011. During the six months ended 30 September 2011, adjustments to provisional fair values in respect of these acquisitions were made which resulted in goodwill decreasing by US$3 million to US$11,949 million, intangible assets increasing by US$3 million to US$4,364 million, property, plant and equipment increasing by US$1 million to US$9,331 million and non-current provisions increasing by US$1 million to US$461 million. As a result comparative information for the year ended 31 March 2011 has been presented in this interim financial information as if the adjustments to provisional fair values had been made from the respective transaction dates. The impact on the prior period income statement has been reviewed and no adjustments to the income statement are required as a result of the adjustments to provisional fair values.

 

 

12.   Related party transactions

 

There have been no material changes to the nature or relative quantum of related party transactions as described in the 2011 Annual Report.

 

The following changes were made to key management during the period.

 

Lesley Knox and Helen Weir joined the SABMiller board as independent non-executive directors on 19 May 2011.

 

On 1 July 2011, Domenic De Lorenzo, the group's director of corporate finance and development, joined the SABMiller group executive committee.

Malcolm Wyman, chief financial officer, retired from the board at the conclusion of the 2011 annual general meeting on 21 July 2011. He was replaced by Jamie Wilson, previously the finance director for SABMiller Europe, who was appointed to the board on that date.

 

Consequently as at 30 September 2011 there were 27 key management (31 March 2011: 24).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

 

 

13.   Post balance sheet events

 

On 19 October 2011, SABMiller plc announced its intention to form a strategic alliance with Anadolu Efes Biracılık ve Malt Sanayii A.Ş. (Anadolu Efes), pursuant to which SABMiller will transfer its Russian and Ukrainian beer businesses to Anadolu Efes, and will take a 24% equity stake in the enlarged Anadolu Efes. The transaction is subject to finalisation of definitive legal agreements and relevant regulatory approvals, and is expected to be completed before the end of the financial year.

 

On 4 November 2011 East African Breweries Limited launched a public offer through the Dar-es-Salaam Stock Exchange for the sale of its 20% interest in SABMiller's subsidiary in Tanzania, Tanzania Breweries Ltd. The offer closes on 25 November 2011. SABMiller Africa BV has applied for all of the shares on offer, which if accepted in full would have a value of approximately US$70 million, although under the terms of the offer, priority will be given to applicants who are Tanzanian residents or East African residents.

 

Subsequent to 30 September 2011, two of SABMiller's African subsidiaries, Nile Breweries Ltd in Uganda and Zambian Breweries plc in Zambia, have announced rights issues each to raise approximately US$70 million.

 

SABMiller plc


FINANCIAL DEFINITIONS


 

 

Adjusted earnings

Adjusted earnings are calculated by adjusting headline earnings (as defined below) for the amortisation of intangible assets (excluding software), integration and restructuring costs, the fair value movements in relation to capital items for which hedge accounting cannot be applied and other items which have been treated as exceptional but not included above or as headline earnings adjustments together with the group's share of joint ventures' and associates' adjustments for similar items. The tax and non-controlling interests in respect of these items are also adjusted.

 

Adjusted EBITDA

This comprises EBITDA (as defined below) before cash flows from exceptional items and includes dividends received from our joint venture, MillerCoors. Dividends received from MillerCoors approximate to the group's share of the EBITDA of the MillerCoors joint venture.

 

Adjusted EBITDA margin

This is calculated by expressing adjusted EBITDA as a percentage of revenue plus the group's share of MillerCoors' revenue.

 

Adjusted net finance costs

This comprises net finance costs excluding fair value movements in relation to capital items for which hedge accounting cannot be applied and any exceptional finance charges or income.

 

Adjusted profit before tax

This comprises EBITA less adjusted net finance costs and less the group's share of associates' and joint ventures' net finance costs on a similar basis.

 

Constant currency

Constant currency results have been determined by translating the local currency denominated results for the six months ended 30 September at the exchange rates for the comparable period in the prior year.

 

EBITA

This comprises operating profit before exceptional items, amortisation of intangible assets (excluding software) and includes the group's share of associates' and joint ventures' operating profit on a similar basis.

 

EBITA margin (%)

This is calculated by expressing EBITA as a percentage of group revenue.

 

EBITDA

This comprises the net cash generated from operations before working capital movements. This includes cash flows relating to exceptional items incurred in the period.

 

EBITDA margin (%)

This is calculated by expressing EBITDA as a percentage of revenue.

 

Effective tax rate (%)

The effective tax rate is calculated by expressing tax before tax on exceptional items and on amortisation of intangible assets (excluding software), including the group's share of associates' and joint ventures' tax on the same basis, as a percentage of adjusted profit before tax.

 

Free cash flow

This comprises net cash generated from operating activities less cash paid for the purchase of property, plant and equipment, and intangible assets, net investments in existing associates and joint ventures (in both cases only where there is no change in the group's effective ownership percentage) and dividends paid to non-controlling interests plus cash received from the sale of property, plant and equipment and intangible assets and dividends received.

 

Group revenue

This comprises revenue together with the group's share of revenue from associates and joint ventures.

 

Headline earnings

Headline earnings are calculated by adjusting profit for the financial period attributable to equity holders of the parent for items in accordance with the South African Circular 3/2009 entitled 'Headline Earnings'. Such items include impairments of non-current assets and profits or losses on disposals of non-current assets and their related tax and non-controlling interests. This also includes the group's share of associates' and joint ventures' adjustments on the same basis.

 

Interest cover

This is the ratio of adjusted EBITDA to adjusted net finance costs.

 

Net debt

This comprises gross debt (including borrowings, borrowings-related derivative financial instruments, overdrafts and finance leases) net of cash and cash equivalents (excluding overdrafts).

 

Organic information

Organic results and volumes exclude the first 12 months' results and volumes relating to acquisitions and the last 12 months results' and volumes relating to disposals.

 

Sales volumes

In the determination and disclosure of sales volumes, the group aggregates 100% of the volumes of all consolidated subsidiaries and its equity accounted percentage of all associates' and joint ventures' volumes. Contract brewing volumes are excluded from volumes although revenue from contract brewing is included within group revenue. Volumes exclude intra-group sales volumes. This measure of volumes is used for lager volumes, soft drinks volumes, other alcoholic beverage volumes and beverage volumes and is used in the segmental analyses as it more closely aligns with the consolidated group revenue and EBITA disclosures.

 

 

SABMiller plc


FORWARD-LOOKING STATEMENTS


 

 

This announcement does not constitute an offer to sell or issue or the solicitation of an offer to buy or acquire ordinary shares in the capital of SABMiller plc (the "company") or any other securities of the company in any jurisdiction or an inducement to enter into investment activity.

 

This announcement is intended to provide information to shareholders. It should not be relied upon by any other party or for any other purpose. This announcement includes 'forward-looking statements' with respect to certain of SABMiller plc's plans, current goals and expectations relating to its future financial condition, performance and results. These statements contain the words "anticipate", "believe", "intend", "estimate", "expect" and words of similar meaning. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding the company's financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to the company's products and services) are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the company's present and future business strategies and the environment in which the company will operate in the future. These forward-looking statements speak only as at the date of this announcement. The company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. The past business and financial performance of SABMiller plc is not to be relied on as an indication of its future performance.

 

 

SABMiller plc


ADMINISTRATION


  

 

SABMiller plc

Incorporated in England and Wales (Registration No. 3528416)

 

General Counsel and Group Company Secretary

John Davidson

 

Registered office

SABMiller House

Church Street West

Woking

Surrey, England

GU21 6HS

Facsimile   +44 1483 264103

Telephone +44 1483 264000

 

Head office

One Stanhope Gate

London, England

W1K 1AF

Facsimile   +44 20 7659 0111

Telephone +44 20 7659 0100

 

Internet address

http://www.sabmiller.com

 

Investor relations

Telephone +44 20 7659 0100

Email: investor.relations@sabmiller.com

 

Sustainable development

Telephone +44 1483 264134

Email: sustainable.development@sabmiller.com

 

Independent auditors

PricewaterhouseCoopers LLP

1 Embankment Place

London, England

WC2N 6RH

Facsimile   +44 20 7822 4652

Telephone +44 20 7583 5000

 

Registrar (United Kingdom)

Capita Registrars

The Registry

34 Beckenham Road

Beckenham

Kent, England

BR3 4TU

Facsimile +44 20 8658 2342

Telephone +44 20 8639 3399 (outside UK)

Telephone 0871 664 0300 (from UK calls cost 10p per minute plus network extras, lines are open 8.30am-5.30pm Mon-Fri)

Email: ssd@capitaregistrars.com

www.capitaregistrars.com

 

Registrar (South Africa)

Computershare Investor Services (Pty) Limited

70 Marshall Street, Johannesburg

PO Box 61051

Marshalltown 2107

South Africa

Facsimile   +27 11 688 5248

Telephone +27 11 370 5000

 

United States ADR Depositary

BNY Mellon

Shareholder Services

PO Box 358516

Pittsburgh PA 15252-8516

United States of America

Telephone +1 888 269 2377

Telephone +1 888 BNY ADRS (toll free within the USA)

Telephone: +1 201 680 6825 (outside USA)

Email: shrrelations@bnymellon.com

www.adrbnymellon.com

 


This information is provided by RNS
The company news service from the London Stock Exchange