| Thu 19 Nov 2009, 9:00 | | SAB - SABMiller - Interim Announcement |
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SAB
SOSAB
SAB - SABMiller - Interim Announcement
SABMiller Plc
JSEALPHA CODE : SAB
ISSUER CODE: SOSAB
ISIN CODE: GB0004835483
INTERIM ANNOUNCEMENT
19 November 2009
STRONG UNDERLYING OPERATIONAL PERFORMANCE
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 2009.
Operational Highlights
- Lager volumes decrease 1% on an organic basis with growth in Africa and
Asia offset by weaker volumes in other markets
- Reported group revenue down 6% and reported EBITA down 2% impacted by
weakness of our major operating currencies against the US dollar compared
with the same period last year
- Firm pricing and cost efficiency drives organic, constant currency group
revenue growth of 3%, EBITA growth of 11% and margin growth of 110 bps
- EBITA on an organic, constant currency basis increases across all regions
despite mixed volume performance:
- Pricing benefits and cost efficiencies in Latin America drive excellent
EBITA(1) growth of 33%
- Solid pricing in Europe supports a 5% increase in EBITA(1) despite volume
decline
- North America EBITA(1) grows 7% as cost synergies are realised
- Africa EBITA(1) up 15%, driven by volume growth and pricing
- Asia EBITA(1) up 29% as CR Snow volumes in China grow at more than double
the market rate
- South Africa Beverages EBITA(1) up 4% despite weaker consumer spending
and increased marketing spend
- Free cash flow(2) improves by US$1,124 million compared with the prior
year period
(1) EBITA growth is shown on an organic, constant currency basis.
(2) As defined in the Financial Definitions section. See also note 9b.
Sept Sept March
2009 2008 2009
US$m US$m % change US$m
Group revenue (a) 13,355 14,222 (6) 25,302
Revenue (b) (excludes 8,846 11,166 (21) 18,703
associates` and joint
ventures` revenue)
EBITA (c) 2,187 2,225 (2) 4,129
Adjusted profit before tax 1,920 1,860 3 3,405
(d)
Profit before tax(e) 1,498 2,020 (26) 2,958
Adjusted earnings (f) 1,236 1,128 10 2,065
Adjusted earnings per share
- US cents 80.0 75.2 6 137.5
- UK pence 49.9 38.9 28 79.7
- SA cents 648.9 585.8 10 1,218.6
Basic earnings per share (US 63.0 94.8 (34) 125.2
cents)
Interim dividend per share 17.0 16.0 6
(US cents)
a) Group revenue includes the attributable share of associates` and joint
ventures` revenue of US$4,509 million (i.e. including MillerCoors`
revenue) (2008: US$3,056 million).
b) Revenue excludes the attributable share of associates` and joint
ventures` revenue. 2009 is not comparable with 2008 as MillerCoors`
revenue is not included in 2009, although Miller Brewing Company`s
revenue is included in 2008.
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 the interim announcement.
d) Adjusted profit before tax comprises EBITA less adjusted net finance
costs of US$253 million (2008: US$358 million) and share of associates`
and joint ventures` net finance costs of US$14 million (2008: US$7
million).
e) Profit before tax includes exceptional charges of US$239 million (2008:
exceptional credits of US$371 million).
f) A reconciliation of adjusted earnings to the statutory measure of profit
attributable to equity shareholders is provided in note 5.
Graham Mackay, Chief Executive of SABMiller, said:
"In some of the toughest economic conditions seen for decades, we have
continued to take share in a number of markets. The weakness of our major
operating currencies against the US dollar has affected reported results, but
we have continued to generate a strong underlying performance. The actions we
have taken to position our business globally, to invest in brands and to
develop our operational capabilities will continue to underpin our long term
growth."
September Reported Organic,
2009 growth constant
EBITA currency
growth
US$m % %
Latin America 566 19 33
Europe 590 (19) 5
North America 379 7 7
Africa 246 3 15
Asia 90 24 29
South Africa: Beverages 333 0 4
South Africa: Hotels and Gaming 53 (12) (16)
Corporate (70) - -
Group 2,187 (2) 11
BUSINESS REVIEW
Our underlying performance has been strong although difficult trading
conditions persisted across most markets. Lager volumes were down 1% on an
organic basis, but our market execution and the strength of our brands enabled
us to continue to gain share across many of our key markets. Group revenue
increased by 3% organically in constant currency, supported by price increases
taken predominantly in the second half of the prior year.
Despite the slight decline in volumes, EBITA performance was strong, growing
11% on an organic, constant currency basis with the group`s EBITA margin
improving 110 basis points (bps) to 16.8%. The benefits of falling commodity
prices are not yet fully reflected in our costs, due to the long term nature
of our raw material supply contracts and the relative strength of the US
dollar in which many of these contracts are priced. Greater efficiencies in
our marketing spend, combined with cost reductions and restructuring in
certain markets, continued to benefit our cost base. On a reported basis,
EBITA of US$2,187 million declined 2% reflecting significantly weaker
operating currencies against the US dollar compared to the same period in the
prior year.
Although reported EBITA was lower, adjusted earnings grew 10% due to lower
finance charges and reduced profit attributable to minority interests
following the purchase of the 28.1% minority interest in our Polish subsidiary
Kompania Piwowarska in May 2009 in exchange for the issue of 60 million
ordinary shares. The group`s effective tax rate for the period was 29.4%,
compared with 31.0% in the same period in the prior year.
Free cash flow of US$998 million showed an improvement of US$1,124 million
compared to the same period last year. Capital expenditure was US$517 million
lower than in the prior year period following the completion of several major
investments. Improved working capital management delivered cash inflow of
US$300 million, US$638 million better than in the prior year period.
Normalised EBITDA margin, including both dividends and revenue from
MillerCoors, improved 30 bps during the period.
The group`s gearing ratio at 30 September reduced to 47.0% from 54.0%
(restated) at the previous year end. An interim dividend of 17 US cents per
share, up 1 US cent from the prior year, will be paid to shareholders on 11
December 2009.
- In Latin America, despite local currency devaluation, EBITA grew 19% (33%
on an organic, constant currency basis) reflecting strong pricing,
principally in the second half of the prior year, and cost reduction.
Lager volumes fell 1% as economic pressures, combined with political and
social unrest in some countries, impacted beer markets across the region.
We continued to focus on expanding the appeal, availability and
affordability of the beer category. In Colombia, lager volumes were 2%
below the prior year period which benefited from increased sales in
September 2008 ahead of a 1 October price increase. Our share of the
alcohol market continued to increase aided by strong performance of our
premium brands. Against prior year comparative growth of 10%, Peru`s
lager volumes declined 2%, but market share increased in a market that
declined 7%.
- In Europe, lager volumes declined 6% on an organic basis, with depressed
consumer spending leading to a contraction in beer consumption across the
region. With key exchange rates much weaker than last year, EBITA
declined 19% but grew 5% on an organic, constant currency basis. Strong
pricing drove organic, constant currency revenue per hectolitre growth of
6% and further cost efficiencies more than offset higher depreciation and
a 2% increase in variable production costs. We gained market share in
Poland, Romania and the UK, with strong momentum behind key brands. In
the Czech Republic volume share declined marginally, consistent with our
value oriented strategy, and in Russia both volumes and market share
fell, reflecting down-trading in the market and our focus on the premium
segment.
- North America delivered reported EBITA growth of 7% despite lager volumes
5% below those reported last year. On a pro forma basis, MillerCoors US
domestic volume sales to retailers (STRs) were down 1% for the half year
driven by a slight decline in premium light volumes and continued
softness in above premium and premium brands. Domestic sales to
wholesalers (STWs) were down 1% on a pro forma basis. Strong revenue and
cost management, and continued synergy delivery drove a 22% increase in
MillerCoors EBITA on a pro forma basis.
- Africa lager volumes grew 3% on an organic basis with Uganda, Zambia and
Mozambique all reporting good growth. However, soft economic conditions
contributed to reduced volumes in Tanzania, and Botswana continued to be
impacted by the 30% social levy on alcoholic beverages imposed in
November 2008. Soft drink volumes grew 5% on an organic basis reflecting
robust performance across the region. EBITA grew 3%, held back by local
currency weakness, but rose 15% on an organic, constant currency basis
assisted by firm pricing. We continue to implement our full beverage
portfolio strategy, acquiring a water business in Ethiopia and a non-
alcoholic beverage business in Zambia. New local premium lager beers were
introduced in five markets. Capacity expansion projects in Uganda and
Ghana have recently been completed, as has a new brewery in Southern
Sudan. New plants in Tanzania, Mozambique and Angola will be commissioned
shortly.
- Asia lager volumes grew 9% on an organic basis and organic, constant
currency EBITA grew 29%, while reported EBITA was up 24%. This reflected
a strong performance from CR Snow, our associate in China, which
increased lager volumes by 15% in a market which grew by 6%. Significant
share gains were achieved in the key provinces of Anhui and Zhejiang,
driven by the success of the Snow brand. In Australia, our joint venture
enjoyed strong growth in a flat market, driven by Peroni Nastro Azzurro,
Miller Genuine Draft and Bluetongue. India experienced a difficult first
half, with volumes declining 21%, largely as a result of regulatory
issues in the key states of Andhra Pradesh and Uttar Pradesh.
- Lager volumes in South Africa declined by 3%, impacted by generally weak
consumer spending. As expected, our year on year market share fell. EBITA
was flat due to adverse exchange rates; however on a constant currency
basis grew 4%. Group revenue increased by 6% on a constant currency
basis, benefiting from the price increases implemented in the prior year,
more than offsetting higher input costs. Fixed cost savings helped fund a
substantial increase in sales and marketing investment in the beer
business, with the core of the lager brand portfolio strengthened by new
advertising campaigns and sponsorship of the Confederations Football Cup
and the Lions rugby tour. Soft drinks volumes were down 2%, in line with
the market. On 1 July, we announced preliminary details of a proposed
broad-based black economic empowerment transaction in South Africa. This
will benefit employees, soft drink and liquor retailers and the wider
South African community by enabling them to participate in the equity of
The South African Breweries Limited.
- The group has begun a major business capability programme that will
simplify processes, reduce costs and allow local management teams to
enhance focus on their markets. Finance, human resources and procurement
activities will be streamlined by deploying global information systems,
establishing a global procurement operation and selectively outsourcing
certain activities. Sales, distribution and supply chain management
processes will also be enhanced and moved onto common, regional systems
platforms. The programme is expected to take four years to complete with
spend weighted to the start of the programme. Exceptional costs of
approximately US$370 million will be recognised in the current year`s
income statement (US$187 million in the first half) with costs lowering
progressively by approximately 40% year on year in each of the financial
years 2011 to 2013. In addition to non-financial benefits, we expect cost
and efficiency savings rising to approximately US$300 million per annum
by the 2014 financial year and working capital inflows of approximately
US$350 million which will largely be realised in the financial years 2010
to 2012.
(1)MillerCoors pro forma figures are based on results for Miller`s and Coors`
US and Puerto Rico operations reported under International Financial Reporting
Standards (IFRS) and US GAAP respectively for the six months ended 30
September 2008. Adjustments have been made to reflect both companies`
comparative data on a similar basis including amortisation of definite-life
intangible assets, depreciation reflecting revisions to property, plant and
equipment values and the exclusion of exceptional items.
OUTLOOK
Overall, we expect the current trading conditions to continue in the second
half, as unemployment, retail spending and other consumer indicators lag the
reported stabilisation of GDP in many of our markets.
Our operational performance continues to be driven by the unique strength of
our local brand portfolios which have enabled market share gains in spite of
the significant price increases taken in the prior year. Price rises will
moderate in the coming months compared with last year. The margin trend
delivered in the first half will be affected over the remainder of the year as
the price increases and cost efficiencies achieved in the prior year are
cycled. Input costs continue to be affected by existing contractual
obligations but will begin to ease towards the end of this year.
We expect second half reported results to benefit from favourable currency
movements, provided our major operating currencies remain at or near current
exchange rates to the US dollar. The group`s financial position remains strong
and we are well positioned to take advantage of future improvements in the
market environment.
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 Tel: +44 20 7659 0119
Relations
Nigel Fairbrass Head of Media Relations Mob: +44 7799 894265
A live audiocast of the management presentation to the investment community
will begin at 9.30am (GMT) on 19 November 2009.
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 2009 2008 %
Group revenue (including share of 2,746 2,848 (4)
associates) (US$m)
EBITA* (US$m) 566 474 19
EBITA margin (%) 20.6 16.6
Sales volumes (hl 000)
- Lager 18,053 18,260 (1)
- Soft drinks 7,812 9,467 (17)
- Soft drinks (organic) 7,812 7,647 2
*In 2009 before net exceptional charges of US$51 million being business
capability programme costs (2008: US$nil).
Latin America delivered very strong EBITA growth in the first half of the year
despite a 1% decline in lager volumes. Volumes were impacted by tough
operating conditions in all markets however we continued to see share gains in
Colombia and Peru, while Ecuador had a particularly strong first half with
lager volume growth of 7%. Soft drinks volumes were 17% lower on a reported
basis due to the disposal of the water business in Colombia and the soft
drinks business in Bolivia in the prior year. On an organic basis, soft drinks
grew 2% with good performance across the Central America markets.
EBITA grew 19%, despite year on year currency weakness, and margin increased
400 basis points. EBITA increased 33% on an organic, constant currency basis
underpinned by pricing benefits, together with fixed cost savings and reduced
marketing spend compared to relatively high expenditure in the same period
last year, which more than offset higher commodity costs.
In COLOMBIA strong pricing in the prior year drove revenue growth of 6% on an
organic, constant currency basis despite a 2% decline in lager volumes. This
decline is a result principally of the benefit in September of the prior year
of increased sales activity ahead of a price increase on 1 October 2008.
During October 2009, this reduction in volume has been largely recovered.
Economic indicators continue to be soft with retail sales figures for the
quarter to July showing a 3.7% contraction. Our share of the alcohol market
increased steadily over the period and was up 330 bps against the prior year
at the end of September reflecting continued strengthening of the appeal of
the beer category to consumers, improving consumption frequency and greater
beer affordability. Despite the economic environment, premium lager volumes
grew by 20% in the first six months of the year boosted by robust growth of
Redd`s, a brand focused on the female consumer, and Club Colombia, the local
premium brand. In the mainstream segment, Poker continued its momentum, while
Aguila and Aguila Light increased market share in recent months.
Our PERU operations reported a lager volume decline of 2%, following high
growth in the prior year of 10%. In a market that declined by 7% due to
pressure on disposable income and social conflict in parts of the country
during May and July, our market share grew 420 bps. Our flagship brand,
Cristal, continued to show positive momentum, while strong sales of Cusquena
drove 17% growth in the premium segment which more than offset a decline in
the economy segment resulting in a favourable mix change. Brand activation
continues to focus on developing consumption occasions while significant
investment in direct store delivery initiatives will aid our market execution
further.
ECUADOR delivered robust sales growth with a 7% increase in lager volumes.
This performance was supported by growth in consumer disposable income,
following an increase in the minimum wage, combined with improved in-market
execution and brand activation at the point of purchase. Expanded route to
market penetration grew outlet reach by 6% during the period, increasing our
customer base by 6,600 new customers. The performance of our premium brand,
Club, continues to be strong with growth of over 50%, following the
introduction of a new 550ml pack in 2009. Our principal mainstream brand,
Pilsener, continued to capitalise on its strong brand equity and increased
consumption frequency.
Lager volumes in PANAMA grew by 2% although market share fell. A decline in
our mainstream brand Atlas was partly offset by strong growth in our Balboa
brand and the doubling of volume in our premium brands. The soft drinks
category delivered strong growth in the period supported by the successful re-
launch of Malta Vigor in a new pack.
In HONDURAS, total volumes for the first half ended level with the prior year.
In spite of difficult trading conditions, beer share of alcohol increased
substantially during the period. Lager volumes declined by 16% as a result of
curfews and dry laws implemented during the political turmoil, offset by
increased sparkling soft drinks sales as consumers stocked up for home and
family consumption. Our operation continued trading throughout the disruption
in the country.
In EL SALVADOR domestic sparkling soft drinks volumes increased by 7% and we
maintained market share during the period. Lager volumes were level with the
prior year, with a 7% decline in domestic volumes offset by increased export
volumes. Pricing gains and improved lager mix benefited revenue.
EUROPE
Financial summary 2009 2008 %
Group revenue (including share of 3,211 4,010 (20)
associates) (US$m)
EBITA* (US$m) 590 725 (19)
EBITA margin (%) 18.4 18.1
Sales volumes (hl 000)
- Lager 27,125 28,285 (4)
- Lager (organic) 26,534 28,285 (6)
* In 2009 before net exceptional charges of US$123 million being US$41 million
of integration and restructuring costs and US$82 million of business
capability programme costs (2008: US$10 million being the unwind of fair value
adjustments on inventory following the acquisition of Grolsch).
In EUROPE, reported lager volumes declined 4% while lager volumes were down 6%
on an organic basis versus the prior year. The beer market continued to
contract across the region as economic conditions depressed consumer spending.
We gained market share in Poland, Romania and the UK with strong momentum
behind key brands. In the Czech Republic, where we continued to pursue a value-
focused strategy, our volume share declined marginally. In Russia, our mainly
premium portfolio has lost volume share as a result of down-trading.
Due to the devaluation of major central and eastern European currencies
compared to the prior year, reported group revenue declined 20% and EBITA
declined 19%. On an organic, constant currency basis, EBITA increased 5% and
margin grew 90 basis points due largely to organic, constant currency revenue
per hectolitre growth of 6%, reflecting strong pricing, and cost efficiencies.
Marketing expenditure was lower than the prior year which included sponsorship
at a local level of the Euro 2008 football championships and the Olympics.
Fixed costs and depreciation increased due to expanded reach in Russia and
Romania.
In POLAND, lager volumes were down 4% in a market which declined 9%. Market
share rose 280 bps driven by strong sales execution, up-weighted distributor
and trade promotional programmes and brand activities centred on Tyskie as
sponsor of the International Year of Beer. Our key mainstream brands performed
ahead of the market. Tyskie, which has enjoyed compounded annual growth of 7%
over the past three years, declined 6%. Zubr captured significant market share
with volumes level with the prior year. The premium portfolio fared slightly
better than the market. In the economy segment, the Wojak brand more than
doubled its volume versus the prior year as distribution was expanded. Revenue
per hectolitre grew 6% reflecting price increases taken in the prior year
following an excise increase. In September 2009 we announced the complete
closure of the Kielce brewery.
Our strategy in the CZECH REPUBLIC remains focused on core portfolio strength
and value leadership. Domestic lager volumes declined 3%, whilst the market
declined 2% impacted by higher unemployment. The first half of the year was
marked by the launch of PET packs for our two economy brands in response to
competitive activity. The economic slowdown and lower tourism continue to
impact on-premise consumption, however consumption in the off-premise channel
was firmer than in the previous year and we captured share in the expanding
modern-trade. Our premium brands Pilsner Urquell, Frisco and the non-alcoholic
Birell all enjoyed volume growth during the period. In mainstream, Kozel
consolidated its position as Czech`s number two brand, behind Gambrinus, and
enjoyed another excellent performance with volume growth of 8%, doing well in
both the on and off-premise channels. Gambrinus 10 continued to decline, but
the higher-priced variant Gambrinus 11 performed strongly.
Domestic revenue per hectolitre growth was 3%, despite negative sales mix.
Efficiency in marketing investment, together with ongoing overhead cost
savings, drove an improvement in constant currency EBITA.
Following strong comparative growth of 24%, lager volumes in ROMANIA fell 12%
in a market that declined 16% impacted severely by the economic crisis. The
latest IMF forecast shows a downward revision to GDP and the Romanian economy
is now expected to contract by 8.5% this year. In this context we continued to
grow our market share, which increased by 140bps over the period.
Encouragingly our mainstream brand, Timisoreana, continued its strong
performance, with volume growth of 1%, notwithstanding comparative growth of
31% in the prior year, and took significant market share. The on-premise
channel declined sharply leading to a marked decline in premium volumes with
the Ursus brand well down despite gaining share of the segment. The
integration of the Azuga business was completed during the period and we
closed its brewery, as planned. A new campaign to renovate the Azuga economy
brand was launched in August. Revenue per hectolitre is up 10% following above-
inflation price increases in the prior year and pricing taken in July of this
year.
In RUSSIA, a sharp decline in consumer disposable income led to an 8% drop in
industry beer production. STRs were down 7%, approximately in line with the
market. Our STW volumes were down 12% reflecting significant trade destocking.
Down-trading is a feature of the market and our super premium and premium
portfolio has therefore been disproportionately affected. Despite this, our
premium value share in Moscow grew 140 bps. On the back of our geographic
expansion strategy, we have launched the Tri Bogatyrya economy brand in a new
PET format leading to growth of almost 60%. This brand mix partially diluted
the strong pricing taken in the prior year but we still achieved revenue per
hectolitre growth of 6%. In May 2009, we opened the new brewery in Ulyanovsk.
In the UKRAINE the Sarmat brand has been re-launched and licensed production
of Zolotaya Bochka and Kozel has commenced.
In ITALY, economic conditions are still adverse but consumer confidence is
starting to improve. Birra Peroni volumes declined 9% during the period as we
reduced our reliance on promoted volume and focused on value. On a STR basis
we have grown our market share in both volume and value. Profitability
improved through efficiencies in both production and marketing.
Domestic lager volumes in the NETHERLANDS declined 8% and market share was
marginally down. This intensely competitive beer market has resulted in
difficult conditions in the off-premise channel; however recent trends are
positive in the on-premise channel which is now cycling the smoking ban
introduced in July 2008. Restructuring initiatives taken in the prior year are
beginning to show benefits.
In the UNITED KINGDOM, lager volumes grew 15% on a like for like basis,
underpinned by Peroni Nastro Azzurro growth of 35%. During the period, exports
of Miller Genuine Draft to Eire were taken over by our UK business following
the termination of the previous licensing arrangement. Our European import
business, which serves Western European markets including Germany, Spain and
France, continued to exhibit strong growth driven by Grolsch and Pilsner
Urquell. In HUNGARY, SLOVAKIA and the CANARIES, economic conditions remain
severe and the beer markets depressed.
NORTH AMERICA
Financial summary 2009 2008 %
Group revenue (including share of 2,870 2,916(1) (2)
joint ventures) (US$m)
EBITA* (US$m) 379 355(1) 7
EBITA margin (%) 13.2 12.2(1)
Sales volumes (hl 000)
- Lager - excluding contract brewing 24,116 25,282(1) (5)
- Soft drinks 22 39(1) (42)
MillerCoors` volumes
- Lager - excluding contract brewing 23,370 23,591(2) (1)
- Sales to retailers (STRs) 23,179 23,419(2) (1)
- Contract brewing 2,456 2,603(2) (6)
* In 2009 before net exceptional charges of US$11 million being the group`s
share of MillerCoors` integration and restructuring costs of US$7 million and
the group`s share of the unwind of the fair value inventory adjustment of US$4
million (2008: net exceptional credit of US$390 million being US$437 million
profit on the deemed disposal of the Miller business and exceptional costs of
US$23 million in relation to the exceptional credit of integration and
restructuring costs for MillerCoors, together with the group`s share of
MillerCoors` integration and restructuring costs of US$17 million and the
group`s share of the unwind of the fair value inventory adjustment of US$7
million).
1 Volumes, group revenue and EBITA represent 100% of Miller Brewing Company
performance in the first quarter of the half year ended 30 September 2008 and
the group`s 58% share of MillerCoors` performance and the retained wholly
owned Miller Brewing Company business (principally Miller Brewing
International) for the balance of the period.
(2 MillerCoors pro forma figures are based on results for Miller`s and Coors`
US and Puerto Rico operations reported under International Financial Reporting
Standards (IFRS) and US GAAP respectively for the six months ended 30
September 2008. Adjustments have been made to reflect both companies`
comparative data on a similar basis including amortisation of definite-life
intangible assets, depreciation reflecting revisions to property, plant and
equipment values and the exclusion of exceptional items.
Strong revenue and cost management together with continued synergy delivery
from MillerCoors drove EBITA growth of 7% for North America for the half year.
Lager volumes, excluding contract brewing, declined 5%.
MILLERCOORS
In the six months ended 30 September 2009, MillerCoors US domestic volume STRs
were down 1% on a pro forma2 basis due to a slight decline in premium light
volumes and continued softness in above premium and premium brands. Domestic
STWs fell 1% on a pro forma basis driven by lower retail sales and a reduction
in contract brewing volumes. EBITA grew 22% on a pro forma basis.
Pricing remained strong, with domestic net revenue per hl, excluding contract
brewing and company-owned distributor sales, growing 3% driven by sustained
price increases taken in the second half of the prior year and reduced
discount activity.
Premium light brand volumes (Miller Lite, Coors Light and MGD 64) were down in
low single digits largely due to a decline in Miller Lite, which was partially
offset by MGD 64 growth. Miller Lite STRs were down mid single digits and
Coors Light STRs were in line with the prior year period. MGD 64 continued to
perform well ahead of expectations.
MillerCoors` craft and import portfolio grew slightly during the half, led by
growth of Blue Moon and Peroni Nastro Azzurro. The domestic above-premium
portfolio, which includes Miller Chill, Sparks and Killian`s Irish Red,
experienced a double digit decline. The below premium portfolio was up low
single digits, largely due to the strong performance of Keystone Light and
continued growth of Miller High Life, which more than offset declines in
Milwaukee`s Best.
Cost of goods sold increased as benefits from MillerCoors` cost leadership
programmes were more than offset by brewing and packaging materials cost
increases under procurement contracts largely arranged prior to the softening
in recent commodity prices.
Marketing, general and administrative costs decreased driven primarily by
lower organisational costs and synergies, partially offset by IT integration-
related expenses.
MillerCoors achieved US$133 million in synergies in the six months to 30
September 2009, largely within marketing and more broadly from the elimination
of duplicate and transitional positions. Network optimisation savings continue
to be realised from shifting production of Coors and Miller brands within the
larger MillerCoors brewery network, a process which will continue for the next
nine months. MillerCoors continued to integrate business processes and systems
across the enterprise to improve customer service and capitalise on the scale
of the business.
MillerCoors has delivered a total of US$211 million in cost savings since
beginning operations on 1 July 2008, and now expects to achieve US$335 million
of cumulative synergies by the end of our current financial year, surpassing
its original commitment of US$312 million. As previously communicated,
MillerCoors will deliver incremental cost savings of US$200 million above its
US$500 million synergy target, and these are expected to be delivered by the
end of 2012, broadly in line with current market expectations. These cost
savings include efficiencies in production costs, procurement, and marketing,
general and administrative expenses.
AFRICA
Financial summary 2009 2008 %
Group revenue (including share of 1,263 1,350 (6)
associates) (US$m)
EBITA* (US$m) 246 239 3
EBITA margin (%) 19.5 17.7
Sales volumes (hl 000)
- Lager 6,392 6,203 3
- Lager (organic) 6,379 6,203 3
- Soft drinks 5,037 4,084 23
- Soft drinks (organic) 4,275 4,084 5
- Other alcoholic beverages 1,978 2,091 (5)
*In 2009 before net exceptional costs of US$4 million being business
capability programme costs (2008: US$nil).
Africa`s total volumes grew 8% aided by acquisitions in Ghana, Nigeria and
Ethiopia. Lager volumes grew 3% on an organic basis against a backdrop of
softer economic conditions, with good performances in Uganda, Mozambique and
Zambia. Soft drink volumes grew 5% on an organic basis with solid growth
across the region, while other alcoholic beverages declined by 5% following a
period of strong growth in the prior year.
Our strategy of broadening the brand portfolio continued with the introduction
of local premium beer offerings in five markets and the roll out of more
affordable beverages in Tanzania and Mozambique to grow the beer category at
the expense of subsistence alcohol. We also completed the acquisition of a
water business in Ethiopia and a non-alcoholic beverage business in Zambia
further expanding our full beverage portfolio.
Further investments were made at the point of consumption in coolers and
outlet infrastructure to uplift and enliven on-premise drinking occasions. The
sales force has been expanded and service levels have been improved for each
class of trade.
The extensive capacity upgrade project is nearing completion and we have
recently completed projects in Uganda, Southern Sudan and Ghana. New plants in
Tanzania, Mozambique and Angola are due to be commissioned shortly.
EBITA grew 3%, despite adverse currency movements. On an organic, constant
currency basis, EBITA grew 15% and margin improved by 190 basis points on the
same basis, driven by robust pricing and a good performance from our associate
Castel.
In UGANDA, lager volumes grew 18% driven by a healthy brand portfolio and
supported by the introduction of the long neck bottle last year and the launch
of Nile Gold as a premium offering in a 330ml returnable bottle. A 20%
increase in brewing capacity was commissioned in June 2009.
MOZAMBIQUE delivered strong results with lager volume ahead by 7%. Much of
this growth came from the market in the north of the country, justifying our
November commissioning of the greenfield brewery in this region. Strong growth
from Laurentina Preta, a dark lager, and the recently launched Laurentina
Premium further drove performance.
ZAMBIA benefited from a reduction in excise rates at the beginning of the
year, growing lager volumes 23% despite a depressed economy. Soft drinks
volumes were level with the prior year, while traditional beer volumes fell by
2% following strong growth in the prior year. We concluded the acquisition of
the Maheu business, a traditional maize-based non-alcoholic flavoured drink,
in September 2009.
In TANZANIA, the economy was impacted more than other African markets by
reduced agricultural exports and lower foreign direct investment, and also
suffered from extreme drought conditions in the northern and central regions.
Lager volumes declined by 6% but market share improved marginally reflecting
continued improvements in sales execution and outlet penetration. During the
period, we successfully re-launched Ndovu Lager in a 375ml green returnable
bottle with enhanced packaging.
The BOTSWANA government implemented a 30% social levy on all alcoholic
products in November 2008. The levy, compounded by an economy impacted by
reduced diamond exports, resulted in sales for the half year declining
dramatically, with lager volumes 47% below the prior year and traditional beer
sales down 14%. Soft drinks volumes grew by 7% during the period.
In ANGOLA total volumes declined 1% for the half year due to a combination of
port congestion, an economic slowdown following a decline in the oil price and
reduced global demand for diamonds and limited availability of foreign
currency. Our planned commissioning of a new beer and a new soft drinks plant
in north Luanda later this year will alleviate some of the adverse impacts of
port congestion by reducing the need to import finished product and the costs
associated with demurrage and port handling.
CASTEL continued its strong performance with organic lager volume growth of
12% aided by the commissioning of two new breweries in Angola at the beginning
of the calendar year, and good lager growth from Cameroon. Soft drinks volumes
grew 9% with good performances in Tunisia and Algeria.
ASIA
Financial summary 2009 2008 %
Group revenue (including share of 1,021 905 13
associates and joint ventures) (US$m)
EBITA* (US$m) 90 72 24
EBITA margin (%) 8.8 8.0
Sales volumes (hl 000)
- Lager 29,229 25,981 12
- Lager (organic) 28,343 25,981 9
*In 2009 before net exceptional costs of US$1 million being business
capability programme costs (2008: US$nil).
Asia lager volumes grew 9% on an organic basis through good performances from
China, Australia and Vietnam, while India`s volumes contracted predominantly
due to regulatory issues. EBITA increased 24% and organic, constant currency
EBITA grew 29% reflecting a strong performance from our associate in China, CR
Snow. Organic, constant currency EBITA margin grew 100 bps to 9.0%.
CHINA`s beer industry experienced solid market growth of approximately 6%, and
CR Snow enjoyed volume growth of 15%, well ahead of the market. CR Snow`s
national brand, Snow, continued to exploit its national brand positioning
which, together with consistent retail pricing and improved sales execution,
drove further market share gains.
In the northeast, CR Snow continues to lead the market with further volume
gains in the Liaoning and Jilin provinces. Strong growth was reported in the
central region, despite the effects of bad weather and flooding in the second
quarter. Within the central region, significant share gains were achieved in
the key provinces of Anhui and Zhejiang driven by the success of the Snow
brand, and profitability was enhanced by improved cost efficiencies and
synergies from previous acquisitions. The Sichuan area in the west remains a
key stronghold for the business, returning to growth following the earthquake
in the prior year.
INDIA experienced a tough first half year with volumes declining 21% largely
as a result of regulatory issues in the important states of Andhra Pradesh and
Uttar Pradesh. Volumes were further reduced by excise increases in Karnataka
and Rajasthan implemented during the period.
Vietnam, a wholly owned subsidiary from March 2009, continues to build from
its greenfield start, recently launching Miller High Life to support the local
Zorok brand. While still loss making, the business is gaining good growth
momentum in the market place.
Our joint venture in AUSTRALIA enjoyed strong growth in a stagnant market,
underpinned by growth of Peroni Nastro Azzurro, Miller Genuine Draft and
Bluetongue. The business is currently constructing a greenfield brewery in New
South Wales, to be commissioned next year.
SOUTH AFRICA: BEVERAGES
Financial summary 2009 2008 %
Group revenue (including share of 2,051 2,007 2
associates) (US$m)
EBITA* (US$m) 333 332 -
EBITA margin (%) 16.3 16.5
Sales volumes (hl 000)
- Lager 11,973 12,307 (3)
- Soft drinks 7,248 7,396 (2)
- Other alcoholic beverages 594 572 4
*In 2009 before net exceptional costs of US$21 million being business
capability programme costs (2008: US$nil).
The South African economy weakened during the period with real gross domestic
product declining by 3% during the second quarter of 2009. Headline inflation
fell considerably from 13% to 6% compared to the same period a year ago, but
retail sales remained under pressure falling by 5% year on year in September.
Lager volumes declined by 3%, impacted by reduced consumer spending. As
expected, our year on year beer market share has declined. Mainstream volumes,
down 2%, performed relatively better supported by strong growth in Castle
Lager and Hansa Pilsener. Carling Black Label continued to be impacted by its
prevalence in the challenging Western Cape liquor market. Within local
premium, Castle Lite returned to growth. Soft drinks volumes were down 2%, in
line with the market. During the period, we grew our share of the sparkling
soft drinks segment through effective market execution, particularly in the
top-end grocer channel.
Group revenue increased by 2% (6% on a constant currency basis), continuing to
benefit from the price increases implemented in the prior year in both the
beer and soft drinks businesses.
Input costs remained under pressure as medium term contractual arrangements
with key brewing raw material suppliers limited the business` ability to
benefit from the downturn in brewing commodity prices. Higher packaging
materials and sugar prices also contributed to increased input costs in the
first six months. In addition, our dollar based input costs were higher than
the prior year due to adverse foreign exchange rates. Distribution costs
declined in line with relatively lower crude oil prices, aided by distribution
efficiencies.
Sales and marketing investment increased substantially, focused on our key
brands. Investment in customer facing route to market capability intensified,
with investment in direct distribution and improved service levels to
customers. These additional market facing investments were partly financed
through an intensified productivity and cost reduction programme.
Efforts to enhance and grow the core of the lager brand portfolio saw new
marketing campaigns for Carling Black Label, Castle Lager and Hansa Pilsener,
reinforcing key characteristics of the brands. Castle Lager also benefited
from the recent sponsorship of the Confederations Football Cup championship
and the Lions rugby tour of South Africa. Castle Lite saw growth returning
towards the end of the period supported by its "Extra cold" media campaign and
sub-zero fridge placement in targeted outlets. At the same time, we pursued
further growth in Peroni Nastro Azzurro and established our premium lager
portfolio additions Grolsch and Dreher as longer term contributors.
EBITA was level with the prior year at reported exchange rates, but grew 4% on
an organic, constant currency basis. Margins reduced slightly as price
increases were not sufficient to offset the decline in volumes, continued
pressure from significantly higher input costs and additional market facing
investments.
On 1 July, we announced preliminary details of a proposed broad-based black
economic empowerment transaction in South Africa. The transaction is intended
to benefit employees, soft drinks and liquor retailers and the wider South
African community through the formation of The SAB Foundation, by enabling
them to participate in the equity of The South African Breweries Limited. The
full terms of the transaction will be announced in early December 2009.
Distell continued its robust performance with both domestic and international
volumes exhibiting good growth to deliver increased revenue and improved
profitability.
SOUTH AFRICA: HOTELS AND GAMING
Financial summary 2009 2008 %
Group revenue (share of associates) 193 186 3
(US$m)
EBITA* (US$m) 53 61 (12)
EBITA margin (%) 27.8 32.5
Revenue per available room (Revpar) 63.44 75.56 (16)
- US$
* In 2009 before exceptional costs of US$nil (2008: before exceptional charges
of US$9 million in relation to the fair value mark to market losses on
financial instruments).
The group is a 49% shareholder in the Tsogo Sun Group. The half year results
were affected by contraction in the South African economy affecting both the
gaming market and the hospitality and tourism industry.
Our share of Tsogo Sun`s reported revenue was US$193 million, an increase of
3% including the non-organic share of revenue of Tsogo Sun`s associated
company Gold Reef Resorts and the newly acquired Century Casinos business.
Excluding this incremental revenue, revenue declined 7% against the prior
year.
The gaming industry in South Africa contracted from last year`s levels with
the exception of the KwaZulu-Natal region which continued to show growth.
Gauteng, the most significant gaming province, reported a 5% decline in market
size compared to the prior year, with Tsogo Sun`s Montecasino, the largest
gaming unit, reporting flat revenue. On 30 June 2009, Tsogo Sun acquired 100%
of the Century Casinos business in Caledon and Newcastle.
The South African hotel industry has been under continued pressure throughout
the first half of the year, particularly in the key corporate and government
market segments. A number of major sporting events in South Africa during the
first quarter of the year including the Indian Premier League cricket
tournament, the Confederations Football Cup championship and the Lions rugby
tour assisted trading. However this was not enough to prevent a 16% decline in
revpar.
EBITA for the division declined 12% for the period and margins were reduced,
impacted by the difficult trading environment.
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 2009 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 2008 and as at 31 March
2009 have been restated for further adjustments relating to initial accounting
for business combinations, further details of which are provided in note 12.
The Annual Report and Accounts for the year ended 31 March 2009 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. The group has adopted IFRS 8 Operating
Segments with effect from 1 April 2009 and this has resulted in a change to
the segmental information reported, with Africa and Asia now reported as
separate segments. Comparative information has been restated accordingly.
Additional historical information for each of the Africa and Asia segments is
available on the company`s website.
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 more 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 MillerCoors joint venture no adjustments have been made in
the calculation of organic results as the group`s share of the joint venture
is deemed to be comparable with 100% of the Miller business in the comparative
period.
BUSINESS COMBINATIONS AND ACQUISITIONS
On 10 April 2009 the group assumed control of a 70.56% interest in Bere Azuga
in Romania following receipt of clearance from the competition authorities and
has consolidated Bere Azuga from this date. Subsequently, further share
purchases were made, together with a mandatory public offer for the remainder
of shares in Bere Azuga. As at 30 September 2009, the group had an effective
interest of 94.85% in Bere Azuga.
In July 2009 the group completed the acquisition of an effective 40% interest
in Ambo Mineral Water Share Company in Ethiopia.
In September 2009 the group acquired Maheu, a non-alcoholic maize drinks
business, in Zambia.
On 29 May 2009 SABMiller plc acquired the outstanding 28.1% minority interest
in its Polish subsidiary, Kompania Piwowarska SA, in exchange for 60 million
ordinary shares of SABMiller plc.
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$222 million before finance costs and tax were
reported during the period (2008: net exceptional credit of US$371 million)
including net exceptional charges of US$11 million (2008: US$33 million)
related to the group`s share of joint ventures` and associates` exceptional
charges. The net exceptional charge included US$170 million related to
business capability programme costs in Latin America, Europe, Africa, Asia,
South Africa Beverages and Corporate, together with a charge of US$41 million
related to integration and restructuring costs in Europe.
The group`s share of joint ventures` and associates` exceptional items
includes a charge of US$7 million related to the group`s share of MillerCoors`
integration and restructuring costs and US$4 million related to the group`s
share of the unwinding of fair value adjustments on inventory in MillerCoors.
In addition there was an exceptional charge in the period of US$17 million
(2008: US$nil) within net finance costs related to the business capability
programme.
In 2008 the net exceptional credit included a US$437 million profit on the
deemed disposal of 42% of the US and Puerto Rico operations of Miller, partly
offset by a charge of US$23 million related to MillerCoors` integration and
restructuring costs and a charge of US$10 million relating to the unwinding of
fair value adjustments on inventory relating to the acquisition of Grolsch.
The group`s share of joint ventures` and associates` exceptional items
included a charge of US$17 million relating to its share of MillerCoors`
integration and restructuring costs, US$7 million relating to its share of the
unwinding of fair value adjustments on inventory in MillerCoors and a charge
of US$9 million relating to fair value mark to market losses on financial
instruments in Tsogo Sun.
FINANCE COSTS
Net finance costs decreased to US$266 million, a 31% decrease on the prior
period`s US$384 million. Finance costs in the current period include a net
gain of US$3 million (2008: net loss of US$26 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 include a US$17 million
charge resulting from a change in valuation methodology of financial
instruments as part of the business capability programme. The mark to market
loss and the charge resulting from the change in valuation have been excluded
from the determination of adjusted finance costs and adjusted earnings per
share. Adjusted net finance costs were US$253 million, down 29% reflecting the
reduction in the weighted average interest rate due to the lower global
interest rate environment.
Interest cover, as defined in the Financial Definitions section, has increased
to 9.1 times from 6.8 times in the comparable prior year period.
PROFIT BEFORE TAX
Adjusted profit before tax of US$1,920 million increased by 3% over the
comparable period in the prior year, benefiting from lower net finance costs.
On a statutory basis, profit before tax of US$1,498 million was down 26%
including the impact of the exceptional and other adjusting finance items
noted above. The principal differences relate to exceptional items with net
exceptional charges of US$239 million in the half year compared to net
exceptional credits of US$371 million in the prior period.
TAXATION
The effective tax rate of 29.4% before amortisation of intangible assets
(other than software), exceptional items and the adjustments to finance costs
noted above, is below that of the prior year (31.0%). The rate has fallen
principally as a result of beneficial changes in the combination of geographic
profits, but also through ongoing management of the effective tax rate.
EARNINGS PER SHARE
The group presents adjusted basic earnings per share to exclude the impact of
amortisation of intangible assets (other than software) and other non-
recurring items, which include post-tax exceptional items, in order to present
a more meaningful comparison for the periods shown in the consolidated
financial information. Adjusted basic earnings per share of 80.0 US cents were
up 6% on the comparable period in the prior year, benefiting from lower
finance costs and taxation as discussed above together with lower profit
attributable to minority interests, partially offset by an increase in the
weighted average number of shares in issue. The reduction in profit
attributable to minority interests and the increase in shares in issue result
from the buyout of the minority interests in our Polish business. An analysis
of earnings per share is shown in note 5. On a statutory basis, basic earnings
per share are 34% lower at 63.0 US cents.
CASH FLOW
Net cash generated from operations before working capital movements (EBITDA)
decreased by 21% to US$1,865 million compared to the prior year period. This
decrease was primarily due to the reduction in EBITDA from North America
following the formation of the MillerCoors joint venture, as EBITDA excludes
cash flows from associates and joint ventures. Dividends received from the
MillerCoors joint venture (reported within cash flows from investing
activities) amounted to US$427 million (2008: US$81 million). EBITDA together
with the MillerCoors dividends decreased by 6% on the same period in the prior
year, primarily due to expenditure on the business capability programme and
the impact of the strength of the US dollar on translated results. Net cash
generated from operating activities of US$1,499 million was up 27% reflecting
a significant improvement in working capital, together with lower tax and net
interest payments partly offset by the reduction in EBITDA. The working
capital improvement compared to the same period last year reflects changes in
process management practices applied to inventory, receivables and payables,
resulting in net working capital inflows in most major operations. Free cash
flow improved by US$1,124 million to US$998 million, as detailed in note 9b.
CAPITAL EXPENDITURE
The group has continued to invest in its operations, selectively maintaining
investment to support future growth, including new breweries in Russia,
Angola, Tanzania, Southern Sudan and Mozambique together with recently
completed capacity expansions in Poland, Romania, Ghana and Uganda. Capital
expenditure for the six months to 30 September 2009 was US$728 million (2008
US$1,245 million). With effect from 1 July 2008, the capital expenditure for
the MillerCoors joint venture has been excluded from the consolidated capital
expenditure reported.
Capital expenditure including the purchase of intangible assets was US$739
million (2008: US$1,279 million).
BORROWINGS AND NET DEBT
Gross debt at 30 September 2009, comprising borrowings together with the fair
value of derivative assets or liabilities held to manage interest rate and
foreign currency risk of borrowings, has increased to US$9,809 million from
US$9,131 million at 31 March 2009, primarily as result of the impact of
exchange rates on the retranslation of the group`s Colombian peso and euro
denominated debt. Net debt comprising gross debt net of cash and cash
equivalents has increased to US$9,345 million from US$8,709 million (restated)
at 31 March 2009. 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
47.0% from 54.0% (restated) at 31 March 2009. The weighted average interest
rate for the gross debt portfolio at 30 September 2009 was 6.0% (31 March
2009: 7.1%).
On 1 July 2009 the US$300 million LIBOR +0.3% Notes issued by SABMiller plc
matured and were refinanced from existing facilities. On 17 July 2009
SABMiller plc completed a Euro1,000 million bond issue which was issued under
the US$5,000 million Euro Medium Term Note Programme. The notes were issued in
a single tranche of 5.5 year notes with a coupon of 4.5%. The net proceeds of
the bond have been used to repay certain indebtedness.
Subsequent to 30 September 2009 the US$1,000 million 364 day facility was
voluntarily cancelled in part, reducing the size of the facility to US$600
million. The facility was subsequently extended from October 2009 to 6 October
2010 in the amount of US$515 million, with a one year term out option.
TOTAL EQUITY
Total equity increased from US$16,117 million (as restated) at 31 March 2009
to US$19,880 million at 30 September 2009. The increase is principally due to
currency translation movements on foreign currency investments, profit for the
period and the issue of shares for the Polish minority buyout, partly offset
by fair value moves on hedged items and dividend payments.
GOODWILL AND INTANGIBLE ASSETS
Goodwill has increased to US$11,608 million (31 March 2009: US$8,715 million)
primarily due to foreign exchange movements and goodwill on acquisitions in
the period, including the Polish minority buyout. Intangible assets have
increased in the period to US$4,369 million (31 March 2009: US$3,741 million)
as a result of foreign exchange movements partially offset by amortisation.
The comparatives for both 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 12.
CURRENCIES
The rand appreciated by 27% against the US dollar during the six months to 30
September 2009 and ended the period at R7.55 to the US dollar, while the
weighted average rand/dollar rate weakened by 4% to R8.12 compared with R7.79
in the comparable period. The Colombian peso (COP) strengthened by 33% against
the US dollar during the six months and ended the period at COP1,922 to the US
dollar compared with COP2,561 at 31 March 2009. The weighted average
COP/dollar rate weakened by 14% to COP2,113 compared with COP1,827 in the
comparable period.
RISKS AND UNCERTAINTIES
The principal risks and uncertainties for the first six months and remaining
six months of the financial year remain as reflected on page 10 of the 2009
Annual Report. These are summarised as follows:
The risk that, as the industry consolidates, failure to participate in
attractive value-adding transactions may inhibit the group`s ability to grow
and exploit scale benefits. There is also a risk that expected benefits from
participating in consolidation and integrating acquisitions may not be
captured or may be inadequate, or that the group may not fully leverage its
scale across business operations.
The risk that opportunities for profitable growth may not be realised should
the group fail to ensure the relevance and attractiveness of its brands, and
continuously improve its marketing and related sales capability.
The risk that the group`s global growth potential may be jeopardised due to a
failure to develop and maintain a sufficient cadre of talented management or
to capture shared learnings and leverage expertise through effective
management practices.
The risk that regulatory authorities when making impositions on beer do not
recognise the positive contribution of the group`s businesses, and effective
ways of addressing health and social concerns. In affected countries the
group`s ability to grow profitably and contribute to local communities could
be adversely affected.
The risk that margins could fall because the group fails to ensure an adequate
supply of brewing and packaging raw materials at competitive prices.
The risk that the group`s plans and responses to changes in global economic
conditions may not be adequate.
DIVIDEND
The board has declared a cash interim dividend of 17 US cents per share, an
increase of 6%. The dividend will be payable on Friday 11 December 2009 to
shareholders registered on the London and Johannesburg registers on Friday 4
December 2009. The ex-dividend trading dates will be Wednesday 2 December 2009
on the London Stock Exchange (LSE) and Monday 30 November 2009 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 rate of exchange applicable for US dollar conversion into South African
rand and sterling was determined yesterday. The rate of exchange determined
for converting to South African rand was US$:ZAR 7.41400 resulting in an
equivalent interim dividend of 126.03800 SA cents per share. The rate of
exchange determined for converting to sterling was GBP:US$1.6799 resulting in
an equivalent interim dividend of 10.1197 UK pence per share.
From the commencement of trading on Thursday 19 November 2009 until the close
of business on Friday 4 December 2009, no transfers between the London and
Johannesburg registers will be permitted, and from Monday 30 November 2009
until Friday 4 December 2009, 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 22 to 40, 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 interim financial information
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.
The directors of SABMiller plc are listed in the SABMiller plc Annual Report
for the year ended 31 March 2009. Howard Willard was appointed to the board
with effect from 1 August 2009. A list of current directors is maintained on
the SABMiller plc website: www.sabmiller.com.
On behalf of the board
EAG Mackay MI Wyman
Chief executive Chief financial officer
19 November 2009
INDEPENDENT REVIEW REPORT OF HALF-YEARLY CONSOLIDATED FINANCIAL INFORMATION TO
SABMILLER PLC 21
INTRODUCTION
We have been engaged by the company to review the condensed set of financial
information in the half-yearly financial report for the six months ended 30
September 2009, 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 half
yearly financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in the
condensed set of financial information.
DIRECTORS` RESPONSIBILITIES
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly 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 IFRS as adopted by the European Union. The
condensed set of financial information included in this half-yearly 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 information in the half-yearly 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 information in the half-yearly
financial report for the six months ended 30 September 2009 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
19 November 2009
SABMiller plc
CONSOLIDATED INCOME STATEMENT
for the six months ended 30 September
Notes Six months Six months Year
ended ended ended
30/9/09 30/9/08 31/3/09
Unaudited Unaudited Audited
US$m US$m US$m
Revenue 2 8,846 11,166 18,703
Net operating expenses (7,632) (9,011) (15,555)
Operating profit 2 1,214 2,155 3,148
Operating profit before 1,425 1,751 3,146
exceptional items
Exceptional items 3 (211) 404 2
Net finance costs (266) (384) (706)
Interest payable and similar (425) (654) (1,301)
charges
Interest receivable and 159 270 595
similar income
Share of post-tax results of 2 550 249 516
associates and joint ventures
Profit before taxation 1,498 2,020 2,958
Taxation 4 (436) (455) (801)
Profit for the financial 1,062 1,565 2,157
period
Profit attributable to 89 142 276
minority interests
Profit attributable to equity 5 973 1,423 1,881
shareholders
1,062 1,565 2,157
Basic earnings per share (US 5 63.0 94.8 125.2
cents)
Diluted earnings per share 5 62.6 94.3 124.6
(US cents)
All operations are continuing.
The notes on pages 27 to 40 form an integral part of this condensed interim
financial information.
SABMiller plc
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 September
Six months Six months Year
ended ended ended
30/9/09 30/9/08 31/3/09
Unaudited Unaudited Unaudited
US$m US$m US$m
Profit for the period 1,062 1,565 2,157
Other comprehensive income:
Currency translation differences on 2,590 (1,587) (3,385)
foreign currency net investments
Actuarial losses on defined benefit - (37) (18)
plans
Available for sale investments:
- Fair value gains/(losses) arising 2 (3) (8)
during the period
Net investment hedges:
- Fair value (losses)/gains arising (367) 112 337
during the period
Cash flow hedges: (46) 20 28
- Fair value (losses)/gains arising (47) 25 24
during the period
- Reclassification adjustment for 1 (5) 4
gains/(losses) included in profit or
loss
Tax on items included in other (26) 10 125
comprehensive income:
- Tax on cash flow hedges (26) (4) 31
- Tax on actuarial losses on defined - 14 94
benefit plans
Share of associates` and joint 85 (38) (330)
ventures` gains/(losses) included in
other comprehensive income
Total comprehensive income for the 3,300 42 (1,094)
period, net of tax
- attributable to equity shareholders 3,222 (89) (1,345)
- attributable to minority interests 78 131 251
The notes on pages 27 to 40 form an integral part of this condensed interim
financial information.
SABMiller plc
CONSOLIDATED BALANCE SHEET
at 30 September
Notes 30/9/09 30/9/08* 31/3/09*
Unaudited Unaudited Unaudited
US$m US$m US$m
Assets
Non-current assets
Goodwill 7 11,608 10,067 8,715
Intangible assets 7 4,369 4,217 3,741
Property, plant and equipment 8 8,883 8,064 7,404
Investments in joint ventures 5,638 5,812 5,495
Investments in associates 2,136 1,765 1,787
Available for sale 34 35 29
investments
Derivative financial 413 294 695
instruments
Trade and other receivables 155 124 125
Deferred tax assets 175 185 161
33,411 30,563 28,152
Current assets
Inventories 1,424 1,299 1,241
Trade and other receivables 1,711 1,752 1,576
Current tax assets 143 152 168
Derivative financial 12 45 54
instruments
Available for sale - - 11
investments
Cash and cash equivalents 9c 464 350 422
3,754 3,598 3,472
Total assets 37,165 34,161 31,624
Liabilities
Current liabilities
Derivative financial (128) (45) (35)
instruments
Borrowings 9c (1,172) (1,569) (2,148)
Trade and other payables (3,040) (2,694) (2,397)
Current tax liabilities (561) (545) (463)
Provisions (313) (276) (299)
(5,214) (5,129) (5,342)
Non-current liabilities
Derivative financial (212) (302) (107)
instruments
Borrowings 9c (8,844) (8,255) (7,470)
Trade and other payables (235) (243) (186)
Deferred tax liabilities (2,321) (2,251) (2,029)
Provisions (459) (452) (373)
(12,071) (11,503) (10,165)
Total liabilities (17,285) (16,632) (15,507)
Net assets 19,880 17,529 16,117
Equity
Share capital 165 158 159
Share premium 6,255 6,192 6,198
Merger relief reserve 4,586 3,395 3,395
Other reserves 1,377 713 (872)
Retained earnings 6,831 6,386 6,496
Total shareholders` equity 19,214 16,844 15,376
Minority interests 666 685 741
Total equity 19,880 17,529 16,117
* As restated (see note 12).
The notes on pages 27 to 40 form an integral part of this condensed financial
information.
SABMiller plc
CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 30 September
Notes Six months Six months Year
ended ended ended
30/9/09 30/9/08* 31/3/09*
Unaudited Unaudited Unaudited
US$m US$m US$m
Cash flows from operating
activities
Cash generated from 9a 2,165 2,017 3,671
operations
Interest received 170 122 275
Interest paid (499) (511) (997)
Tax paid (337) (450) (766)
Net cash from operating 9b 1,499 1,178 2,183
activities
Cash flows from investing
activities
Purchase of property, plant (728) (1,245) (2,073)
and equipment
Proceeds from sale of 20 22 75
property, plant and equipment
Purchase of intangible assets (11) (34) (74)
Purchase of available for - - (14)
sale investments
Proceeds from disposal of 2 1 4
available for sale
investments
Proceeds from disposal of - - 119
businesses
Acquisition of businesses (30) (184) (252)
(net of cash acquired)
Overdraft disposed with - 2 2
businesses
Cash disposed with businesses - - (4)
Purchase of shares from (3) (2) (5)
minorities
Investments in joint ventures (142) (123) (397)
Investments in associates (9) (5) (4)
Repayment of investments by - - 3
associates
Dividends received from joint 427 81 454
ventures
Dividends received from 39 119 151
associates
Dividends received from other 1 1 1
investments
Net cash used in investing (434) (1,367) (2,014)
activities
Cash flows from financing
activities
Proceeds from the issue of 57 16 23
shares
Purchase of own shares for (8) (26) (37)
share trusts
Proceeds from borrowings 3,623 2,466 4,960
Repayment of borrowings (3,857) (1,802) (4,096)
Net repayment of capital (1) (3) (1)
element of finance leases
Net cash payments on net (109) (24) (12)
investment hedges
Dividends paid to (654) (640) (877)
shareholders of the parent
Dividends paid to minority (95) (118) (217)
interests
Net cash used in financing (1,044) (131) (257)
activities
Net cash from operating, 21 (320) (88)
investing and financing
activities
Effects of exchange rate 56 83 22
changes
Net increase/(decrease) in 77 (237) (66)
cash and cash equivalents
Cash and cash equivalents at 9c 122 188 188
1 April
Cash and cash equivalents at 9c 199 (49) 122
end of period
* As restated (see note 12).
The notes on pages 27 to 40 form an integral part of this condensed financial
information.
SABMiller plc
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 September
Called Share Other Retained Total Minority Total
up premium reserves earnings share- interests equity
share account holders`
capital equity
US$m US$m US$m US$m US$m US$m US$m
At 1 April 158 6,176 5,610 5,601 17,545 699 18,244
2008
(audited)
Total - - (1,499) 1,410 (89) 131 42
comprehensive
income
Profit for - - - 1,423 1,423 142 1,565
the period
Other - - (1,499) (13) (1,512) (11) (1,523)
comprehensive
income
Other - - 4 2 6 - 6
movements
Contributed - - (7) - (7) (2) (9)
to joint
ventures
Dividends - - - (640) (640) (143) (783)
paid
Issue of - 16 - - 16 - 16
SABMiller plc
ordinary
shares
Payment for - - - (26) (26) - (26)
purchase of
own shares
for share
trusts
Credit entry - - - 39 39 - 39
relating to
share-based
payments
At 30 158 6,192 4,108 6,386 16,844 685 17,529
September
2008*
(unaudited)
At 1 April 158 6,176 5,610 5,601 17,545 699 18,244
2008
(audited)
Total - - (3,080) 1,735 (1,345) 251 (1,094)
comprehensive
income
Profit for - - - 1,881 1,881 276 2,157
the period
Other - - (3,080) (146) (3,226) (25) (3,251)
comprehensive
income
Other - - - (5) (5) - (5)
movements
Contributed - - (7) - (7) (2) (9)
to joint
ventures
Dividends - - - (877) (877) (221) (1,098)
paid
Issue of 1 22 - - 23 - 23
SABMiller plc
ordinary
shares
Payment for - - - (37) (37) - (37)
purchase of
own shares
for share
trusts
Arising on - - - - - 17 17
business
combinations
Buyout of - - - - - (3) (3)
minority
interests
Credit entry - - - 79 79 - 79
relating to
share-based
payments
At 31 March 159 6,198 2,523 6,496 15,376 741 16,117
2009*
(unaudited)
At 1 April 159 6,198 2,523 6,496 15,376 741 16,117
2009
(unaudited)
Total - - 2,249 973 3,222 78 3,300
comprehensive
income
Profit for - - - 973 973 89 1,062
the period
Other - - 2,249 - 2,249 (11) 2,238
comprehensive
income
Other - - - (4) (4) - (4)
movements
Dividends - - - (663) (663) (88) (751)
paid
Issue of 6 57 1,191 - 1,254 - 1,254
SABMiller plc
ordinary
shares
Payment for - - - (8) (8) - (8)
purchase of
own shares
for share
trusts
Arising on - - - - - 14 14
business
combinations
Buyout of - - - - - (79) (79)
minority
interests
Credit entry - - - 37 37 - 37
relating to
share-based
payments
At 30 165 6,255 5,963 6,831 19,214 666 19,880
September
2009
(unaudited)
* As restated (see note 12).
The notes on pages 27 to 40 form an integral part of this condensed financial
information.
The US$1,191 million increase in other reserves in the six months ended
30 September 2009 relates to merger relief arising on the issue of SABMiller
plc ordinary shares for the buyout of minority interests in the group`s Polish
business.
SABMiller plc
NOTES TO THE FINANCIAL INFORMATION 27
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 2009 and 30 September 2008, together with the
audited results for the year ended 31 March 2009, restated for further
unaudited adjustments relating to initial accounting for business
combinations. Further details of these adjustments are provided in note 12.
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 18
November 2009. The annual financial statements for the year ended 31 March
2009, approved by the board of directors on 1 June 2009, 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 s237(2) or (3) of the Companies Act 1985.
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
2009, 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, share-based payments, and pension assets and liabilities.
The accounting policies adopted are consistent with those of the annual
financial statements for the year ended 31 March 2009, which were published in
June 2009, as described in those financial statements except as set out below.
The following standards are mandatory for the first time in the financial year
ending 31 March 2010 and are relevant for the group.
IAS 1 (revised), `Presentation of financial statements` requires the
presentation of a statement of changes in equity as a primary statement,
includes non-mandatory changes to the titles of primary statements and
introduces a statement of comprehensive income, but allows the presentation of
a two statement approach with a separate income statement and statement of
comprehensive income. The group has chosen to maintain existing primary
statement titles and to follow the two statement approach.
IFRS 8, `Operating Segments` requires separate reporting of segmental
information for operating segments. Operating segments reflect the management
structure of the group and the way performance is evaluated and resources
allocated based on group revenue and EBITA by the group`s chief operating
decision maker, defined as the executive directors. The group is focussed
geographically and as a result of the implementation of IFRS 8, Africa and
Asia are now presented as separate segments. Comparative information has been
restated accordingly. Whilst not meeting the definition of reportable
segments, the group reports separately as segments Asia, South Africa Hotels &
Gaming and Corporate as this provides useful additional information.
The following standards and interpretations have been adopted by the group
since 1 April 2009 with no significant impact on its consolidated results or
financial position:
- Amendment to IAS 23, Revised, `Borrowing Costs`
- Amendment to IFRS 2, `Share based payments` - Vesting conditions and
cancellations
- Amendment to IFRS 7, `Financial Instruments: Disclosures`
- Amendment to IAS 32, `Financial Instruments: Presentation` and IAS 1,
`Presentation of financial statements` - `Puttable financial instruments
and obligations arising on liquidation`
- Amendment to IAS 39, `Financial Instruments: Recognition and measurement`
- Reclassification of financial assets
- IFRIC 13, `Customer Loyalty Programmes`
- Amendment to IFRIC 9, `Reassessment of Embedded Derivatives`.
SABMiller plc
NOTES TO THE FINANCIAL INFORMATION (continued)
2. SEGMENTAL INFORMATION (UNAUDITED)
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.
Six months Segment Share of Group Segment Share of Group
ended 30 revenue associates` revenue revenue associates` revenue
September: 2009 and joint 2009 2008 and joint 2008
US$m ventures` US$m US$m ventures` US$m
revenue revenue
2009 2008
US$m US$m
Latin 2,741 5 2,746 2,842 6 2,848
America
Europe 3,201 10 3,211 3,992 18 4,010
North 57 2,813 2,870 1,501 1,415 2,916
America
Africa 802 461 1,263 815 535 1,350
Asia 226 795 1,021 248 657 905
South 1,819 425 2,244 1,768 425 2,193
Africa:
- Beverages 1,819 232 2,051 1,768 239 2,007
- Hotels and - 193 193 - 186 186
Gaming
Group 8,846 4,509 13,355 11,166 3,056 14,222
Year ended
31 March:
2009 2009 2009
US$m US$m US$m
Latin 5,484 11 5,495
America
Europe 6,118 27 6,145
North 1,553 3,674 5,227
America
Africa 1,615 952 2,567
Asia 470 1,095 1,565
South 3,463 840 4,303
Africa:
- Beverages 3,463 492 3,955
- Hotels and - 348 348
Gaming
Group 18,703 6,599 25,302
OPERATING PROFIT
The following table provides a reconciliation of operating profit to operating
profit before exceptional items.
Six months Operating Excep- Operating Operating Excep- Operating
ended Profit tional profit profit tional profit
30 September: 2009 items before 2008 items before
US$m 2009 exceptional US$m 2008 excep-
US$m items US$m tional
2009 items
US$m 2008
US$m
Latin America 458 51 509 411 - 411
Europe 452 123 575 695 10 705
North America (3) - (3) 642 (414) 228
Africa 115 4 119 135 - 135
Asia (17) 1 (16) 1 - 1
South Africa: 290 21 311 304 - 304
Beverages
Corporate (81) 11 (70) (33) - (33)
Group 1,214 211 1,425 2,155 (404) 1,751
Year ended
31 March:
2009 2009 2009
US$m US$m US$m
Latin America 1,102 (45) 1,057
Europe 448 452 900
North America 639 (409) 230
Africa 354 - 354
Asia (2) - (2)
South Africa: 704 - 704
Beverages
Corporate (97) - (97)
Group 3,148 (2) 3,146
EBITA (segment result)
This comprises operating profit before exceptional items, amortisation of
intangible assets (excluding software) and includes the group`s share of
associates` and joint ventures` operating profit on a similar basis. The
following table provides a reconciliation of operating profit before
exceptional items to EBITA.
Six months ended Operating Share of Amortisation EBITA
30 September: profit associates` of 2009
before and joint intangible US$m
exceptional ventures` assets
items operating (excluding
2009 profit software) -
US$m before group and
exceptional share of
items associates
2009 and joint
US$m ventures
2009
US$m
Latin America 509 - 57 566
Europe 575 1 14 590
North America (3) 360 22 379
Africa 119 126 1 246
Asia (16) 103 3 90
South Africa: 311 75 - 386
- Beverages 311 22 - 333
- Hotels and Gaming - 53 - 53
Corporate (70) - - (70)
Group 1,425 665 97 2,187
Year ended 31 March:
Latin America
Europe
North America
Africa
Asia
South Africa:
- Beverages
- Hotels and Gaming
Corporate
Group
Six months ended Operating Share of Amortisation EBITA
30 September: profit associates` of 2008
before and joint intangible US$m
exceptional ventures` assets
items operating (excluding
2008 profit software) -
US$m before group and
exceptional share of
items associates
2009 and joint
US$m ventures
2008
US$m
Latin America 411 - 63 474
Europe 705 2 18 725
North America 228 113 14 355
Africa 135 104 - 239
Asia 1 68 3 72
South Africa: 304 89 - 393
- Beverages 304 28 - 332
- Hotels and Gaming - 61 - 61
Corporate (33) - - (33)
Group 1,751 376 98 2,225
Year ended 31 March:
2009 2009 2009 2009
US$m US$m US$m US$m
Latin America 1,057 1 115 1,173
Europe 900 4 40 944
North America 230 314 37 581
Africa 354 208 - 562
Asia (2) 75 7 80
South Africa: 704 181 1 886
- Beverages 704 60 - 764
- Hotels and Gaming - 121 1 122
Corporate (97) - - (97)
Group 3,146 783 200 4,129
The group`s share of associates` and joint ventures` operating profit is
reconciled to the share of post-tax results of associates and joint ventures
in the income statement as follows:
Six months Six months Year
ended ended ended
30/9/09 30/9/08 31/3/09
US$m US$m US$m
Share of associates` and joint 665 376 783
ventures` operating profit before
exceptional items
Share of associates` and joint (11) (33) (91)
ventures` exceptional items
Share of associates` and joint (14) (7) (25)
ventures` net finance cost
Share of associates` and joint (63) (65) (113)
ventures` tax
Share of associates` and joint (27) (22) (38)
ventures` minority interests
550 249 516
Excise duties of US$1,859 million (2008: US$2,271 million) have been incurred
during the six months as follows: Latin America US$698 million (2008: US$721
million); Europe US$602 million (2008: US$734 million); North America US$1
million (2008: US$239 million); Africa US$129 million (2008: US$139 million);
Asia US$89 million (2008: US$102 million) and South Africa US$340 million
(2008: US$336 million).
Beer volumes increase during the summer months leading to higher revenues
being recognised in the first half of the year in the Europe and North America
segments. Due to the spread of the business between Northern and Southern
hemispheres, the results for the group as a whole are not highly seasonal in
nature.
The following table provides a reconciliation of EBITDA (the net cash inflow
from operating activities before working capital movements) before cash
exceptional items to EBITDA after cash exceptional items. A reconciliation of
profit for the period for the group to EBITDA after cash exceptional items for
the group can be found in note 9a.
Six months ended EBITDA Cash EBITDA EBITDA Cash EBITDA
30 September: before Excep- 2009 Before excep- 2008
cash tional US$m cash tional US$m
excep- Items excep- items
tional 2009 tional 2008
items US$m items US$m
2009 2008
US$m US$m
Latin America 712 (50) 662 621 - 621
Europe 693 (90) 603 902 - 902
North America* (2) - (2) 244 (20) 224
Africa 168 (4) 164 171 - 171
Asia - (1) (1) 14 - 14
South Africa: 397 (20) 377 414 - 414
Beverages
Corporate 73 (11) 62 9 - 9
Group 2,041 (176) 1,865 2,375 (20) 2,355
Year ended 31 2009 2009 2009
March:
US$m US$m US$m
Latin America 1,418 (19) 1,399
Europe 1,239 (6) 1,233
North America* 244 (24) 220
Africa 415 - 415
Asia 26 - 26
South Africa: 883 - 883
Beverages
Corporate (12) - (12)
Group 4,213 (49) 4,164
* EBITDA excludes the results of associates and joint ventures and hence the
decline in EBITDA for North America is due to the US and Puerto Rico
operations of the Miller business being contributed into the MillerCoors joint
venture during the six months ended 30 September 2008.
3. EXCEPTIONAL ITEMS
Six months Six months Year ended
ended ended 31/3/09
30/9/09 30/9/08 Audited
Unaudited Unaudited US$m
US$m US$m
Exceptional items included in
operating profit:
Business capability programme (170) - -
costs
Integration and restructuring (41) (23) (110)
costs
Impairments - - (392)
Profit on disposal of businesses - 437 526
Unwinding of fair value - (10) (9)
adjustments on inventory
Litigation - - (13)
Net exceptional (losses)/gains (211) 404 2
included within operating profit
Exceptional items included in net
finance costs
Business capability programme (17) - -
costs
Gain on early termination of - - 20
financial derivatives
Net exceptional (losses)/gains (17) - 20
included within net finance costs
Share of associates` and joint
ventures` exceptional items:
Integration and restructuring (7) (17) (33)
costs
Unwinding of fair value (4) (7) (13)
adjustments on inventory
Impairment of intangible assets - - (38)
Fair value losses on financial - (9) (7)
instruments
Share of associates` and joint (11) (33) (91)
ventures` exceptional items
Taxation credits relating to
subsidiaries` and the group`s
share of
associates` and joint ventures` 31 19 56
exceptional items:
EXCEPTIONAL ITEMS INCLUDED IN OPERATING PROFIT
BUSINESS CAPABILITY PROGRAMME COSTS
Following the establishment of the business capability programme which will
streamline finance, human resources and procurement activities through the
deployment of global systems and, within regions, the introduction of common
sales, distribution and supply chain management systems, costs of US$170
million have been incurred in the period (2008: US$nil).
INTEGRATION AND RESTRUCTURING COSTS
In Europe a total of US$41 million has been charged in relation to the
integration and restructuring of the Romanian business following the
acquisition of Bere Azuga, including the closure of a brewery and in relation
to the restructuring of the Polish business including the closure of the
Kielce brewery.
In 2008, a charge of US$23 million was incurred within operating profit during
the period for staff retention and for certain integration costs of the US and
Puerto Rico operations of the Miller business into the MillerCoors joint
venture.
PROFIT ON DISPOSAL OF BUSINESSES
In 2008, a profit of US$437 million arose on the deemed disposal of the US and
Puerto Rico operations of the Miller business into the MillerCoors joint
venture.
UNWINDING OF FAIR VALUE ADJUSTMENTS ON INVENTORY
In 2008, on acquisition the Grolsch inventory was fair valued to market value.
The uplift is charged to the income statement as the inventory is sold. US$10
million was charged to operating profit in the six months ended 30 September
2008.
EXCEPTIONAL ITEMS INCLUDED WITHIN NET FINANCE COSTS
BUSINESS CAPABILITY PROGRAMME COSTS
As a result of the business capability programme and resultant changes in
treasury systems used and their differing valuation methodologies, a charge of
US$17 million has been incurred to reflect differences on the fair valuation
of financial instruments (2008: US$nil).
SHARE OF ASSOCIATES` AND JOINT VENTURES` EXCEPTIONAL ITEMS
INTEGRATION AND RESTRUCTURING COSTS
During 2009, the group`s share of MillerCoors` integration and restructuring
costs was US$7 million and primarily related to relocation.
In 2008, the group`s share of MillerCoors` integration and restructuring costs
was US$17 million mainly related to retrenchment costs.
Unwinding of fair value adjustments on inventory
In 2009 the group`s share of MillerCoors` charge to operating profit in the
period relating to the unwind of the fair value adjustment to inventory was
US$4 million (2008: US$7 million).
FAIR VALUE LOSSES ON FINANCIAL INSTRUMENTS
In 2008 the group`s share of losses relating to fair value mark to market
adjustments on financial instruments at Hotels and Gaming amounted to US$9
million.
TAXATION CREDITS
Taxation credits of US$31 million (2008: US$19 million) were recorded in
relation to exceptional items during the period and included US$4 million
(2008: US$10 million) in relation to MillerCoors although the tax credit is
recognised in Miller Brewing Company (see note 4).
4. TAXATION
Six months Six months Year
ended ended ended
30/9/09 30/9/08 31/3/09
Unaudited Unaudited US$m
US$m US$m
Current taxation 425 453 670
- Charge for the period (UK 441 452 693
corporation tax: US$nil (2008:
US$nil))
- Adjustments in respect of prior (16) 1 (23)
years
Withholding taxes and other 35 52 67
remittance taxes
Total current taxation 460 505 737
Deferred taxation (24) (50) 64
- (Credit)/charge for the period (24) (42) 81
(UK corporation tax: US$nil
(2008: US$nil))
- Adjustments in respect of prior - (8) (14)
years
- Rate change - - (3)
Total taxation 436 455 801
Effective tax rate (%) 29.4 31.0 30.2
See the Financial Definitions section for the definition of the effective tax
rate. The calculation is on a basis consistent with that used in prior years
and is also consistent with other group operating metrics.
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.
5. EARNINGS PER SHARE
Six months Six months Year
ended ended ended 31/3/09
30/9/09 30/9/08 Audited
Unaudited Unaudited US cents
US cents US cents
Basic earnings per share 63.0 94.8 125.2
Diluted earnings per share 62.6 94.3 124.6
Headline earnings per share 64.6 65.8 119.0
Adjusted basic earnings per 80.0 75.2 137.5
share
Adjusted diluted earnings per 79.5 74.8 136.8
share
The weighted average number of shares was:
Six months Six months Year
ended ended ended 31/3/09
30/9/09 30/9/08 Audited
Unaudited Unaudited Millions of
Millions of Millions of shares
shares shares
Ordinary shares 1,627 1,506 1,514
Treasury shares (77) - (7)
ESOP trust ordinary shares (5) (6) (5)
Basic shares 1,545 1,500 1,502
Dilutive ordinary shares from 9 8 8
share options
Diluted shares 1,554 1,508 1,510
The calculation of diluted earnings per share excludes 12,672,482 (2008:
13,281,197) 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 and 6,569,614 (2008: 6,922,745) share awards that were non-dilutive for
the period because the performance conditions attached to the awards have not
been met. These share awards could potentially dilute earnings per share in
the future.
ADJUSTED AND HEADLINE EARNINGS
The group presents an adjusted earnings per share figure to exclude the impact
of amortisation of intangible assets (excluding capitalised software) and
other non-recurring items in order to present a more useful comparison for the
periods shown in the consolidated financial information. Adjusted earnings per
share has been based on adjusted headline 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 8/2007 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 Six months Year
ended ended ended
30/9/09 30/9/08 31/3/09
Unaudited Unaudited Audited
US$m US$m US$m
Profit for the financial period 973 1,423 1,881
attributable to equity holders of
the parent
Headline adjustments
Impairment of goodwill - - 364
Impairment of intangible assets - - 14
Impairment of property, plant and - - 16
equipment
Loss on disposal of property, plant 28 - 10
and equipment
Profit on disposal of businesses - (437) (526)
Tax effects of the above items (6) - (4)
Minority interests` share of the 3 - (1)
above items
Share of joint ventures` and - 2 34
associates` headline adjustments,
net of tax and minority interests
Headline earnings 998 988 1,788
Other adjustments
Business capability programme costs 187 - -
Integration and restructuring costs 9 23 108
Net (gain)/loss on fair value (3) 26 27
movements on capital items*
Gain on early termination of - - (20)
financial derivatives
Unwind of fair value adjustments on - 10 9
inventory
Litigation - - 13
Amortisation of intangible assets 73 86 164
(excluding capitalised software)
Tax effects of the above items (59) (48) (110)
Minority interests` share of the (3) (2) (4)
above items
Share of joint ventures` and 34 45 90
associates` other adjustments, net
of tax and minority interests
Adjusted earnings 1,236 1,128 2,065
* 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 Six months Year
ended ended ended
30/9/09 30/9/08 31/3/09
Unaudited Unaudited Audited
US cents US cents US cents
Prior year final dividend paid per 42.0 42.0 42.0
ordinary share
Current year interim dividend paid - - 16.0
per ordinary share
The interim dividend declared of 17.0 US cents per ordinary share is payable
on 11 December 2009 to ordinary shareholders on the register as at
4 December 2009 and will absorb an estimated US$267 million of shareholders`
funds.
7. GOODWILL AND INTANGIBLE ASSETS
Goodwill Intangible
Unaudited assets
US$m Unaudited
US$m
Net book amount at 1 April 2009* 8,715 3,741
Exchange adjustments 1,740 696
Arising on increase in share of subsidiary 1,122 -
undertakings
Acquisitions through business combinations 31 8
Additions - separately acquired - 10
Amortisation - (92)
Transfers from other assets - 6
Net book amount at 30 September 2009 11,608 4,369
* As restated (see note 12).
8. PROPERTY, PLANT AND EQUIPMENT
Six months Six months Year
ended ended ended
30/9/09 30/9/08* 31/3/09*
Unaudited Unaudited Unaudited
US$m US$m US$m
Net book amount at beginning of 7,404 9,113 9,113
period
Exchange adjustments 1,257 (718) (1,885)
Additions 701 1,122 2,074
Acquisitions through business 25 120 160
combinations
Disposals (50) (22) (101)
Contributed to joint ventures - (1,043) (1,043)
Impairment - - (16)
Depreciation (431) (459) (829)
Other movements (23) (49) (69)
Net book amount at end of period 8,883 8,064 7,404
* As restated (see note 12).
9a. Reconciliation of profit for the period to net cash generated from
operations (unaudited)
Six months Six months Year
ended ended ended
30/9/09 30/9/08 30/3/09
Unaudited Unaudited Audited
US$m US$m US$m
Profit for the period 1,062 1,565 2,157
Taxation 436 455 801
Share of post-tax results of (550) (249) (516)
associates and joint ventures
Interest receivable and similar (159) (270) (595)
income
Interest payable and similar charges 425 654 1,301
Operating profit 1,214 2,155 3,148
Depreciation:
Property, plant and equipment 318 345 626
Containers 113 114 203
Container breakages, shrinkage and 17 12 13
write-offs
Loss on sale of property, plant and 28 - 10
equipment
Impairment of goodwill - - 364
Impairment of intangible assets - - 14
Impairment of property, plant and - - 16
equipment
Amortisation of intangible assets 92 108 204
Unrealised net loss from fair value 12 20 14
hedges
Profit on disposal of businesses - (437) (526)
Dividends received from other (1) (1) (1)
investments
Charge with respect to share options 37 39 79
Other non-cash movements 35 - -
Net cash generated from operations 1,865 2,355 4,164
before working capital movements
(EBITDA)
Net inflow/(outflow) in working 300 (338) (493)
capital
Net cash generated from operations 2,165 2,017 3,671
Cash generated from operations before working capital movements includes cash
flows relating to exceptional items of US$168 million in respect of business
capability programme costs, and US$8 million in respect of integration and
restructuring costs (2008: US$20 million in respect of integration and
restructuring costs relating to MillerCoors).
9b. Reconciliation of net cash from operating activities to free cash flow
Six months Six months Year
ended ended ended
30/9/09 30/9/08 30/3/09
Unaudited Unaudited Unaudited
US$m US$m US$m
Net cash from operating activities 1,499 1,178 2,183
Purchase of property, plant and (728) (1,245) (2,073)
equipment
Proceeds from sale of property, 20 22 75
plant and equipment
Purchase of intangible assets (11) (34) (74)
Purchase of shares from minorities (3) (2) (5)
Investments in joint ventures (142) (123) (397)
Investments in associates (9) (5) (4)
Repayment of investments by - - 3
associates
Dividends received from joint 427 81 454
ventures
Dividends received from associates 39 119 151
Dividends received from other 1 1 1
investments
Dividends paid to minority interests (95) (118) (217)
Free cash flow 998 (126) 97
9c. Analysis of net debt (unaudited)
Net debt is analysed as follows:
As at As at As at
30/9/09 30/9/08 30/3/09*
Unaudited Unaudited Unaudited
US$m US$m US$m
Borrowings (9,738) (9,414) (9,308)
Borrowings-related derivative 207 83 487
financial instruments
Overdrafts (265) (399) (300)
Finance leases (13) (11) (10)
Gross debt (9,809) (9,741) (9,131)
Cash and cash equivalents (excluding 464 350 422
overdrafts)
Net debt (9,345) (9,391) (8,709)
Cash and cash equivalents on the balance sheet are reconciled to cash and cash
equivalents on the cash flow as follows:
As at As at As at
30/9/09 30/9/08 30/3/09*
Unaudited Unaudited Unaudited
US$m US$m US$m
Cash and cash equivalents (balance 464 350 422
sheet)
Overdrafts (265) (399) (300)
Cash and cash equivalents (cash 199 (49) 122
flow)
The movement in net debt is analysed as follows:
Cash and Over- Borrow- Deriva- Finance Total Net debt
cash drafts ings tive leases gross US$m
equiva- US$m US$m finan- US$m borrow-
lents cial ings
(exclud- instru- US$m
ing over- ments
drafts) US$m
US$m
At 1 April 422 (300) (9,308) 487 (10) (9,131) (8,709)
2009*
Exchange 68 (12) (792) (8) (1) (813) (745)
adjustments
Cash flow (44) 47 234 - 1 282 238
Acquisitions 18 - (9) - (1) (10) 8
Other - - 137 (272) (2) (137) (137)
movements
At 30 464 (265) (9,738) 207 (13) (9,809) (9,345)
September
2009
* As restated (see note 12).
The group has sufficient headroom to enable it to conform to covenants on its
existing borrowings. The group has sufficient undrawn financing facilities to
service its operating activities and ongoing capital investment. The group has
the following undrawn committed borrowing facilities available at 30 September
2009 in respect of which all conditions precedent have been met at that date:
As at As at As at
30/9/09 30/9/08 30/3/09
Unaudited Unaudited Unaudited
US$m US$m US$m
Amounts falling due:
Within one year 973 1,056 716
Between one and two years 398 11 72
Between two and five years 1,769 736 1,272
In five years or more 57 12 33
3,197 1,815 2,093
Subsequent to 30 September 2009, the US$1,000 million 364 day facility with
the undrawn amount shown as falling due within one year in the table above,
was voluntarily cancelled in part, reducing the size of the facility to US$600
million. The facility was subsequently extended from October 2009 to 6 October
2010 in the amount of US$515 million, with a one year term out option.
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 2009.
COMMITMENTS
Contracts placed for future capital expenditure for property, plant and
equipment not provided in the financial statements amount to US$292 million at
30 September 2009.
As part of the business capability programme the group has entered into
contracts for the provision of IT, communications and consultancy services and
in relation to which the group had commitments of US$210 million at 30
September 2009.
11. BUSINESS COMBINATIONS
ACQUISITIONS
The following business combinations took effect during the period:
In April 2009 control was assumed over Bere Azuga in Romania and the group had
a 94.85% interest as at 30 September 2009.
In July 2009 the group acquired an effective 40% interest in Ambo Mineral
Water Share Company in Ethiopia.
In September 2009 the group acquired Maheu, a non-alcoholic maize drinks
business in Zambia.
The following table represents the assets and liabilities acquired in respect
of all business combinations entered into during the six months ended 30
September 2009:
Carrying Provisional
values pre- fair value
acquisition US$m
US$m
Intangible assets 4 8
Property, plant and equipment 34 25
Inventories 4 3
Trade and other receivables 2 1
Cash and cash equivalents 18 18
Borrowings (10) (10)
Trade and other payables (4) (5)
48 40
Minority interests (14)
Net assets acquired 26
Provisional goodwill 31
Consideration 57
Goodwill represents, amongst other things, tangible and intangible assets yet
to be recognised separately from goodwill, potential synergies and the value
of the assembled workforce.
From the date of acquisition to 30 September 2009 the following amounts have
been included in the group`s income statement for the period:
US$m
Income statement
Revenue 2
Operating loss (5)
Loss before tax (2)
If the date of the acquisitions made in the six months ended 30 September 2009
had been 1 April 2009, then the group`s revenue, operating profit and profit
before tax for the six months ended 30 September 2009 would have been as
follows:
US$m
Income statement
Revenue 8,855
Operating profit 1,211
Profit before tax 1,491
12. BALANCE SHEET RESTATEMENTS
INITIAL ACCOUNTING
The initial accounting under IFRS 3, `Business Combinations`, for the Grolsch,
Sarmat and Vladpivo acquisitions had not been completed as at 30 September
2008. During the six months ended 31 March 2009, adjustments to provisional
fair values in respect of these acquisitions, together with adjustments to
provisional fair values in relation to the formation of the MillerCoors joint
venture, were made. As a result comparative information for the six months
ended 30 September 2008 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 material adjustments to the income
statement are required as a result of the adjustments to provisional fair
values. The following table reconciles the impact on the balance sheet
reported as at 30 September 2008 to the comparative balance sheet presented in
this interim financial information.
The initial accounting under IFRS 3, `Business Combinations`, for the Pabod
and Voltic acquisitions had not been completed as at 31 March 2009. During the
six months ended 30 September 2009, adjustments to provisional fair values in
respect of these acquisitions were made. As a result comparative information
for the year ended 31 March 2009 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 material adjustments to the income
statement are required as a result of the adjustments to provisional fair
values. The following table reconciles the impact on the balance sheet
reported as at 31 March 2009 to the comparative balance sheet presented in
this interim financial information.
BALANCE SHEET
At Adjust- At At Adjust- At
30/9/08 ments to 30/9/08 31/3/09 ments 31/3/09
Unaudited provi- As Audited to provi- As
US$m sional fair restated US$m sional restated
values Unaudited fair Unaudited
Unaudited US$m values US$m
US$m Unaudited
US$m
Assets
Non-current
assets
Goodwill 10,030 37 10,067 8,734 (19) 8,715
Intangible 4,197 20 4,217 3,729 12 3,741
assets
Property, 8,077 (13) 8,064 7,404 - 7,404
plant and
equipment
Investments 5,133 679 5,812 5,495 - 5,495
in joint
ventures
Other non- 2,572 (169) 2,403 2,797 - 2,797
current
assets
30,009 554 30,563 28,159 (7) 28,152
Current
assets
Inventories 1,300 (1) 1,299 1,242 (1) 1,241
Trade and 1,759 (7) 1,752 1,576 - 1,576
other
receivables
Other 547 - 547 642 13 655
current
assets
3,606 (8) 3,598 3,460 12 3,472
Total 33,615 546 34,161 31,619 5 31,624
assets
Liabilities
Current
liabilities
Trade and (2,686) (8) (2,694) (2,396) (1) (2,397)
other
payables
Other (2,431) (4) (2,435) (2,945) - (2,945)
current
liabilities
(5,117) (12) (5,129) (5,341) (1) (5,342)
Non-current
liabilities
Trade and (239) (4) (243) (186) - (186)
other
payables
Provisions (444) (8) (452) (373) - (373)
Deferred (1,731) (520) (2,251) (2,029) - (2,029)
tax
liabilities
Other non- (8,557) - (8,557) (7,577) - (7,577)
current
liabilities
(10,971) (532) (11,503) (10,165) - (10,165)
Total (16,088) (544) (16,632) (15,506) (1) (15,507)
liabilities
Net assets 17,527 2 17,529 16,113 4 16,117
Total 17,527 2 17,529 16,113 4 16,117
equity
13. RELATED PARTY TRANSACTIONS
There have been no material changes to the nature or relative quantum of
related party transactions as described in the 2009 Annual Report.
The only changes to key management during the period were the appointments to
the board of Dambisa Moyo on 1 June 2009 and of Howard Willard on 1 August
2009. Consequently as at 30 September 2009 there were 25 key management (31
March 2009: 23).
14. POST BALANCE SHEET EVENTS
Subsequent to 30 September 2009, the US$1,000 million 364 day facility was
voluntarily cancelled in part, reducing the size of the facility to US$600
million. The facility was subsequently extended from October 2009 to 6 October
2010 in the amount of US$515 million, with a one year term out option.
On 12 October 2009, SABSA Holdings Pty Ltd, a wholly owned subsidiary of the
group, subscribed for US$65 million preference shares in Tsogo Sun Gaming
(Pty) Ltd (TSG), a wholly owned subsidiary of the group`s associate, Tsogo Sun
Holdings Ltd (TSH), as the group`s share of the funding for the 30% increase
in the TSH group`s effective interest in Tsogo Sun KwaZulu-Natal (Pty) Ltd,
the licensee and operator of the Suncoast Casino in Durban.
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 share of joint ventures` and
associates` adjustments for similar items. The tax and minority interests in
respect of these items are also adjusted.
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.
EBITDA MARGIN (%)
This is calculated by expressing EBITDA excluding cash flows related to
exceptional items incurred during the year 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 from operating activities less cash paid for the
purchase of property, plant and equipment, intangible assets and shares from
minorities, net investments in associates and joint ventures and dividends
paid to minority 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 8/2007 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 minority 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 EBITDA plus dividends received from joint ventures 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 twelve months` results and
volumes relating to acquisitions and the last twelve 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 in the segmental analyses as it more closely aligns
with the consolidated group revenue and EBITA disclosures.
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 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
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 264139
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 11 370 5487
Telephone +27 11 370 5000
UNITED STATES ADR DEPOSITARY
The Bank of New York 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
Date: 19/11/2009 09:00:07 Produced by the JSE SENS Department.
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