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SAB
SOSAB
SAB - SAB Miller - Strong Developing Market Performance Drives Sales And
Earnings Growth
SAB MILLER Plc
JSEALPHA CODE: SAB
ISSUER CODE: SOSAB
ISIN CODE: GB0004835483
Interim Announcement
SAB MILLER
Release date: 17 November 2011
STRONG DEVELOPING MARKET PERFORMANCE DRIVES SALES AND EARNINGS GROWTH
SABMiller plc, one of the world`s leading brewers with operations and
distribution agreements across six continents, today reports its interim
(unaudited) results for the six months to 30 September 2011.
Operational Highlights
- Lager volumes increase 3% on an organic basis led by robust growth in Latin
America, Africa and Asia
- Reported group revenue up 10%, with organic, constant currency revenue growth
of 6%
- Reported EBITA up 10%, with organic, constant currency EBITA up 6%:
- Latin America EBITA1 up 16% reflecting good volume growth, positive mix and
fixed cost efficiencies
- Europe EBITA1 down 6% constrained by challenging economic and market
conditions
- North America EBITA1 down by 6% reflecting lower volumes and higher costs
- Africa EBITA1 up 23% benefiting from strong volume growth and price and mix
benefits
- Asia EBITA1 up 29% reflecting higher profits in China
- South Africa Beverages EBITA1 up 8% driven by price and mix benefits
- Adjusted earnings up 11% and adjusted EPS up 11% to 103.3 US cents per share
- Continued improvement in free cash flow2, up 19% to US$1,479 million
Segmental EBITA growth is shown on an organic, constant currency basis.
SquaredAs defined in the financial definitions section. See also note 9b.
6 months 6 months 12 months
to Sept to Sept to March
2011 2010 2011
Financial highlights US$m US$m % change US$m
Group revenuea 15,688 14,236 10 28,311
Revenueb 10,539 9,451 12 19,408
EBITAc 2,701 2,466 10 5,044
Adjusted profit before taxd 2,457 2,167 13 4,491
Profit before taxe 2,041 1,690 21 3,626
Adjusted earningsf 1,633 1,465 11 3,018
Adjusted earnings per share
- US cents 103.3 93.0 11 191.5
- UK pence 64.0 61.3 4 123.4
- SA cents 731.1 690.4 6 1,369.6
Basic earnings per share 87.4 71.2 23 152.8
(US cents)
Interim dividend per share 21.5 19.5 10
(US cents)
Free cash flow 1,479 1,244 19 2,488
aGroup revenue includes the attributable share of associates` and joint
ventures` revenue of US$5,149 million (2010: US$4,785 million).
bRevenue excludes the attributable share of associates` and joint ventures`
revenue.
cNote 2 provides a reconciliation of operating profit to EBITA which is defined
as operating profit before exceptional items and amortisation of intangible
assets (excluding software) but includes the group`s share of associates` and
joint ventures` operating profit, on a similar basis. EBITA is used throughout
this interim announcement.
dAdjusted profit before tax comprises EBITA less adjusted net finance costs of
US$229 million (2010: US$282 million) and share of associates` and joint
ventures` net finance costs of US$15 million (2010:
US$17 million).
eProfit before tax includes exceptional charges of US$191 million (2010: US$285
million). Exceptional items are explained in note 3.
fA reconciliation of adjusted earnings to the statutory measure of profit
attributable to equity shareholders is provided in note 5.
CHIEF EXECUTIVE`S REVIEW
Graham Mackay, Chief Executive of SABMiller, said:
"Top and bottom line growth has been strong in most of our developing market
businesses, propelled by our continued investment in brands, sales and marketing
capability and production capacity. Market conditions have remained challenging
in the USA and much of Europe and increases in input costs have continued, as
expected. We have taken further steps to extend our global portfolio: our
planned alliance with Anadolu Efes and recommended proposal to acquire Foster`s
both represent strategically important moves into attractive markets."
Organic,
Sept constant
2011 Reported currency
EBITA growth growth
Segmental EBITA performance US$m % %
Latin America 797 18 16
Europe 570 4 (6)
North America 452 (6) (6)
Africa 327 27 23
Asia 138 26 29
South Africa: Beverages 446 13 8
South Africa: Hotels and Gaming 67 5 -
Corporate (96) - -
Group 2,701 10 6
Business review
The group delivered a good financial performance in trading conditions which
remained mixed across our markets. Latin America, Africa and Asia delivered good
volume growth reflecting the strength of our brands and sales execution against
a backdrop of increasing consumer expenditure. Conversely, in the USA and
Europe, consumer markets remain weak. Trading conditions in Europe were also
affected by competitor price reductions and intensified marketing investment and
promotional activity, particularly in the economy segment.
Total beverage volumes were 3% ahead of the prior year on an organic basis with
lager volumes up 3% and soft drinks volumes up 6%. This volume growth, some mix
benefits and selective pricing drove group revenue up by 10%, 6% on an organic,
constant currency basis with revenue per hectolitre up 3% on the same basis.
EBITA of US$2,701 million rose by 10% or by 6% on an organic, constant currency
basis. As anticipated, raw material input costs rose by low single digits (on a
constant currency, per hl basis), reflecting higher raw material and packaging
costs. Marketing spend was increased in line with revenue to support brand
development, particularly in growing markets. Fixed costs increased, reflecting
additional spend to support sales, marketing and system capabilities across our
operations and the corporate centre. Corporate costs were also affected by
adverse foreign exchange movements. These increases were partly offset by
productivity initiatives across the business. The group`s EBITA margin reduced
by
10 basis points (bps) to 17.2%.
Adjusted earnings increased by 11% as a result of the higher EBITA, lower
finance costs and a slight reduction in effective tax rate to 28.5%. Adjusted
earnings per share were also up 11% to 103.3 US cents. The results benefited
from the strength of key operating currencies against the US dollar compared
with the prior year.
Free cash flow increased by US$235 million over the prior year to US$1,479
million. Adjusted EBITDA, which includes dividends from MillerCoors but excludes
the cash impact of exceptional charges, increased by US$187 million. Capital
expenditure, including intangible assets, of US$760 million was US$146 million
higher than the prior period. We selectively invested to support future business
growth and developed our IT systems as part of our business capability
programme. Working capital improvements generated a cash inflow of US$71
million, marginally lower than the prior period. Net interest paid was
US$145 million lower than the prior period mainly reflecting reduced net debt.
The group`s gearing ratio as at 30 September 2011 reduced to 28.9% from 31.2% as
at 31 March 2011. Group net debt fell by US$608 million to US$6,483 million. An
interim dividend of 21.5 US cents per share, up
2.0 US cents (10%) from the prior year, will be paid to shareholders on 9
December 2011.
- Latin America delivered strong volume growth with lager volumes up 8% on an
organic basis and soft drinks volumes up 12% supported by brand and pack
portfolio enhancements. EBITA grew by 18% (16% on an organic, constant currency
basis) and margin improved by 80 bps reflecting a combination of volume growth,
price and mix benefits and continuing fixed cost productivity initiatives. In
Colombia, lager volumes grew 7% benefiting from a strategy of price restraint,
improved trade execution, a healthy economy and a relatively weak prior year
comparative. In Peru, lager volumes grew 11%, underpinned by gains in market
share, the successful repositioning of Pilsen Callao in the upper mainstream
segment and a buoyant economy.
- In Europe, lager volumes were in line with the prior year in a region impacted
by competitor price reductions and intensified marketing and promotional
activity, particularly in the economy segment, and weakened consumer demand. We
maintained revenue per hl in line with the prior period with moderate price
increases where possible, and tactical discounting where required, in response
to competitor net price reductions. Reported EBITA grew by 4%, but declined by
6% on an organic, constant currency basis reflecting negative sales mix and
increased raw material costs. Volumes in the Czech Republic declined 1% as the
market was impacted by weakened consumer demand and adverse weather in July.
Volumes in Poland declined 2%, and volumes in Romania declined 8%, as both
markets were impacted by intensified competition, continued downtrading and
fragile consumer environments. Volumes in Russia grew 3%, with growth in the
first quarter partly offset by a decline in the second quarter, cycling an
exceptionally hot summer in the prior year.
- In North America, MillerCoors` domestic sales to retailers (STRs) were down 2%
driven by a weak economy and low consumer spending. Sales to wholesalers (STWs)
were down 4%, declining by more than STRs due to the timing of shipments in the
prior year. Strong volume growth of the Tenth and Blake crafts and imports
division was more than offset by volume declines in both the premium light and
below premium segments. Lower volumes, rising input commodity costs and higher
fixed costs offset revenue management to result in a 6% decline in North America
EBITA.
- Lager volumes in Africa grew 15% on an organic basis with robust growth
continuing across the region. Reported EBITA increased by 27% (23% on an
organic, constant currency basis) and margin improved by 60bps as we continued
to benefit from improved operating leverage. In Tanzania, lager volumes grew 20%
as market share gains were driven through increased refrigeration at the point
of sale, enhanced outlet branding and improvements in distribution. Lager
volumes in Mozambique, Uganda and Zambia all exhibited strong growth underpinned
by our increased market penetration and strong local brand portfolios. Our
associate Castel grew lager volumes by 11% on an organic basis with good
performance in the Democratic Republic of Congo and Cameroon. Soft drinks
volumes grew by 10% on an organic basis driven by solid performances in
Zimbabwe, Ghana and South Sudan.
- Asia`s lager volumes grew 9% including the benefits of regional acquisitions
in China, and grew 4% on an organic basis. Reported EBITA increased by 26% (29%
on an organic, constant currency basis) driven mainly by higher profitability in
China following price increases introduced in the prior year. Our China
associate, CR Snow, continued to deliver good growth with reported lager volumes
up 10% (5% on an organic basis), with all regions contributing. In India,
volumes declined 7%, impacted by excise increases at the start of the year and
trading restrictions in Andhra Pradesh, although these were lifted at the end of
the half year.
- South Africa Beverages held lager volumes in line with the prior year.
Although volumes benefited from an Easter peak in the first quarter, growth was
constrained by weak consumer demand and the cycling of the impact of the 2010
FIFA World Cup in the prior period. Soft drinks volumes declined by 3%, cycling
strong growth in the second quarter of the prior year and the effects of much
colder and wetter weather in the current year. Despite the lower volumes,
reported EBITA grew 13% (8% on a constant currency basis) and margin expanded 50
bps as a result of mix and pricing benefits from our local beer brands. The
business maintained its focus on improving productivity and reducing operating
costs allowing an increase in market-facing investment behind core brands.
- The business capability programme continues to progress, with cumulative net
operating benefits worth US$60 million in the first six months of the year.
These mainly reflect an expanding range of procurement initiatives together with
efficiency gains and fixed costs savings from the European manufacturing
project, partly offset by the higher operating expenses of the new IT systems.
Exceptional costs of US$115 million in the period reflect spend on the
development of the global systems template and preparation for its deployment in
Ecuador in November.
- In September, we announced that we had agreed with Foster`s Group Limited a
recommended proposal to acquire Foster`s for cash in a transaction which
represents an acquisition enterprise value of
A$11.5 billion. The proposed acquisition of Foster`s is consistent with our
strategic priorities and will provide us with exposure to Australia`s strong
economic growth prospects, a leading position in the stable and profitable
Australian beer industry and the opportunity to apply our capabilities and scale
to improve Foster`s financial and operating performance. The proposed
acquisition is to be implemented by means of a scheme of arrangement, and
subject to receiving all necessary regulatory and court approvals, and the
approval of Foster`s shareholders at meetings which have now been convened for 1
December 2011, we expect to complete the acquisition on 16 December 2011. We
announced in June that we had separately reached agreement with Coca-Cola Amatil
Limited to acquire their share of the Pacific Beverages joint venture in
Australia once we complete the Foster`s acquisition.
- In October, we announced our intention to form a strategic alliance with
Anadolu Efes. We will transfer our Russian and Ukrainian beer businesses to
Anadolu Efes, and we will take a 24% equity stake in the enlarged group, which
will be the vehicle for both groups` investments in Turkey, Russia, the CIS,
Central Asia and the Middle East. The alliance will result in the enlarged
Anadolu Efes strengthening its market position to become the number two brewer,
in value terms, in the large Russian beer market. It is already the leading
beverage producer in Turkey, with 89% of the beer market and a 69% share of the
carbonated soft drinks market, and it has leading market positions in the growth
beer markets of Kazakhstan, Moldova and Georgia. Subject to finalisation of the
definitive legal agreements and relevant regulatory approvals, we expect to
complete the transaction before the end of the financial year.
Outlook
We expect trading conditions experienced in the first half to continue through
the remainder of the year. Economic and market environments in the USA and
Europe are expected to remain difficult with generally favourable conditions
elsewhere, particularly in Latin America and Africa.
Price increases will be taken selectively during the second half, taking into
account the competitive environment and our strategy to achieve growth through
affordability in some markets. Compared with the first half of the current
financial year, raw material input costs are expected to increase at a slightly
faster rate in the second half and as we enter the following year; we continue
to expect increases for the full year to be in the low single digits range.
Increased investment to support our brand portfolios, sales capabilities and IT
will continue, balanced by initiatives to reduce costs and increase efficiency.
After a strong start to the year, the South African rand and some other key
operating currencies have recently weakened against the US dollar. Our
financial position is strong and we look forward to completing our acquisition
of Foster`s and finalising our alliance with Anadolu Efes.
Enquiries:
SABMiller plc Tel: +44 20 7659 0100
Sue Clark Director of Corporate Tel: +44 20 7659 0184
Affairs
Gary Leibowitz Senior Vice President, Tel: +44 20 7659 0119
Investor Relations
Nigel Fairbrass Head of Media Relations Mob: +44 77 9989 4265
A live audiocast of the management presentation to the investment community will
begin at 9.30am (GMT) on 17 November 2011.
Access details for this audiocast, video interviews with management and copies
of this announcement and the slide presentation are available on the SABMiller
plc website at www.sabmiller.com.
Images: Our media image library has a large selection of images for use in print
and digital media.
Visit www.sabmiller.com/imagelibrary
Broadcast footage: Our broadcast footage library has stock footage for media
organisations to view and download for use in TV programmes or news websites.
Visit www.sabmiller.com/broadcastfootage
Copies of the press release and detailed Interim Announcement are available from
the Company Secretary at the Registered Office, or from
2 Jan Smuts Avenue, Johannesburg, South Africa.
Operational review
Latin America
Sept Sept
Financial summary 2011 2010 %
Group revenue (including share of 3,396 2,971 14
associates) (US$m)
EBITA (US$m) 797 676 18
EBITA margin (%) 23.5 22.7
Sales volumes (hl 000)
- Lager 19,658 17,973 9
- Lager (organic) 19,440 17,973 8
- Soft drinks 8,593 7,687 12
In 2011 before exceptional charges of US$54 million being business capability
programme costs of US$42 million and integration and restructuring costs of
US$12 million (2010: US$44 million being business capability programme costs).
LATIN AMERICA delivered healthy volume growth in the first half of the year,
with lager volumes up 9% (8% on an organic basis), and soft drinks volumes
improving by 12%. Volume growth, combined with mix benefits and selective price
increases resulted in a group revenue increase of 14% (10% on an organic,
constant currency basis). Raw material costs rose moderately and investment in
brands and market-facing capabilities increased. Ongoing fixed cost productivity
projects contributed to reported EBITA growth of 18% (16% on an organic,
constant currency basis) and EBITA margin growth of 80bps.
In COLOMBIA lager volumes returned to growth rising 7%. Volume benefited from
price restraint, new creative platforms and marketing campaigns for our core
brands, activations around the FIFA Under-20`s World Cup and improved trade
execution in key consumption occasions and channels. Volume growth also
benefited from a more buoyant economy, the cycling of the February 2010 VAT
increase and more favourable weather conditions than in the prior period. Our
share of the alcohol market increased during the half year, due to our marketing
efforts and the narrowing of the affordability gap between beer and spirits. The
light beer category showed continued momentum with Aguila Light growing at 49%
compared with the prior year. Our premium segment volumes grew 25%, helped by
the permanent listing of the previously seasonal Club Colombia Roja variant,
which has attracted new consumers to the beer category. In the non-alcoholic
malts category, Pony Malta recorded double-digit growth aided by the
introduction of a new smaller pack together with increased distribution reach.
At the end of the period, a new refreshing `good for you` malt brand, Maltizz,
was launched to capitalise on the growing appeal of our non-alcoholic malt
portfolio.
In PERU lager volumes grew by 11%, underpinned by further gains in beer market
share of over 270 bps, in part reflecting the successful repositioning and new
packaging of Pilsen Callao in the upper mainstream segment, and assisted by a
buoyant economy. Our local premium brand, Cusquena, grew volumes by 25%,
capitalising on its association with Peruvian heritage and the centenary of the
rediscovery of Machu Picchu. Our flagship mainstream brand, Cristal, grew
volumes by 11%, supported by strong brand activation, football sponsorship,
further expansion of refrigeration at the point of sale and execution in new
consumption occasions. Positive mix was delivered by strong growth in the
premium segment and the repositioning of Pilsen Callao as an upper mainstream
brand. The successful new sales service model continues to be rolled out
nationally.
ECUADOR`s lager volumes increased by 5%, with growth of 11% in the second
quarter, following the roll-out of the direct service model into coastal and
highland areas and the cycling of Sunday trade restrictions introduced in June
2010. The direct service model has significantly improved outlet coverage and
captured share of total alcohol from the informal sector, resulting in an
increase in beer share of total alcohol of over 360bps. Our premium brand, Club,
delivered double-digit volume growth while our flagship brand, Pilsener,
continued to benefit from new marketing campaigns and increased presence and
participation at events. Pilsener Light, an upper mainstream variant, continued
to grow following its successful launch earlier in the year.
In PANAMA, total volumes were up by 2%, although market share declined
marginally as competition intensified in the lager category. Lager mix improved
following the successful launch of Miller Lite, which together with good
performance of Miller Genuine Draft helped maintain our overall market share and
gave us the leading position in the premium segment. Our mainstream brand,
Atlas, returned to growth following the launch of a new creative platform and
improvements in trade execution, while Balboa continued its growth momentum.
HONDURAS delivered double-digit volume growth across both lager and soft drinks
during the period. Lager volumes were up 16%, underpinned by an affordability
strategy across both the traditional channel (with bulk packs) and the modern
trade (with cans), which drove our share of alcohol up nearly 500bps. Soft
drinks volume growth was supported by good performance of the Jugos Del Valle
juice brand and the Nestea brand following their launch at the end of last year.
EL SALVADOR also delivered a strong performance, with double-digit lager volume
growth, largely due to the launch of a mainstream bulk pack as part of our
affordability strategy. The premium segment was revitalised with the relaunch
of Suprema and the introduction of a new returnable pack and the Miller Genuine
Draft brand. Soft drinks volumes grew 9%, benefiting from improved reach and
cooler penetration.
The integration of our ARGENTINA business continued as planned. The last six
months have yielded good progress following the optimisation of the route to
market and sales service models, while manufacturing capability development has
improved both quality and productivity.
Europe
Sept Sept
Financial summary 2011 2010 %
Group revenue (including share of 3,268 3,040 8
associates) (US$m)
EBITA (US$m) 570 549 4
EBITA margin (%) 17.4 18.0
Sales volumes (hl 000)
- Lager 25,645 25,633 -
In 2011 before exceptional charges of US$69 million being business capability
programme costs of US$54 million and the loss on disposal of a business of US$15
million (2010: US$60 million being business capability programme costs).
Lager volumes in EUROPE were level with the prior year as beer markets were
affected by competitor price reductions and increased investment and promotion
in the economy segment, exacerbated by reduced consumer confidence and
expenditure in recent months. Organic, constant currency revenue per hl was in
line with the prior year with moderate price increases taken where possible, and
tactical discounting applied where required, in response to competitor net price
reductions.
Reported EBITA increased by 4% primarily due to the weakening of the US dollar
against central and eastern European currencies compared with the prior year.
EBITA on an organic, constant currency basis was down 6% with a margin decline
of 60 bps as profitability was negatively impacted by increased raw material
costs, and negative sales mix partly mitigated by operational cost efficiencies
led by our regional manufacturing project and strong profit growth in our medium
size markets, particularly the United Kingdom and Hungary. Marketing expenditure
was marginally lower reflecting the cycling of 2010 FIFA World Cup activations
in the prior period.
In POLAND, lager volumes were down 2%, despite a weak prior year comparative in
the first quarter, as the beer market in the second quarter was impacted by poor
weather and weakening consumer spending. The beer market is increasingly being
impacted by downtrading, driven by competitor price reductions and economy
segment investment, and the growth of the discounter and modern trade channels.
As a consequence, the economy segment has grown and our economy brand, Wojak,
has grown in this environment, while mainstream brands including Tyskie and Zubr
have lost market share. As a result of the downtrading and competitive price
pressures, revenue per hectolitre declined by 1% in constant currency terms, and
EBITA was lower.
In the CZECH REPUBLIC volumes declined by 1% as the market was impacted by a
sharp drop in consumer sentiment in the second quarter and adverse weather in
July. The on-premise channel remained weak and consumers continued to downtrade.
In this context, our premium brands continued to grow and thus outperformed the
market. Pilsner Urquell benefited from successful trade activities, growing
brand equity and expanding tank beer distribution, while premium variant Kozel
11 also continued to grow, particularly in the on-premise channel, supported by
outlet expansion. Innovations also boosted these segments with the successful
launch of new variants of super-premium Frisco and premium Birell. Mainstream
volumes, led by our Gambrinus brand, continued to decline, although the rate of
decline slowed, supported by the successful launch of Kozel in PET and cans to
capture share of the growing convenience package sub-segment. Despite continuing
pressure in the on-premise channel, revenue per hectolitre grew reflecting solid
performance of the super-premium and premium brand portfolio which combined with
operational cost efficiencies drove EBITA ahead of the prior year.
In ROMANIA, volumes were down 8% in a market where once again intensified
competitor activity in the economy segment resulted in continued downtrading and
reduced share for our flagship mainstream brand, Timisoreana. The macroeconomic
environment remained fragile and consumer confidence remained low. In this
context, our economy brand, Ciucas, grew supported by new PET packaging. The
premium segment was significantly impacted by competitive price pressure
resulting in volume losses for the Ursus brand, although the recently launched 1
litre PET is performing well. Downtrading and promotional price reductions in
the market drove revenue per hectolitre down by 2% on a constant currency basis
and resulted in a reduced EBITA compared with the prior period.
Volumes were up 3% in RUSSIA in a market estimated to have declined, with growth
in the first quarter partly offset by a decline in the second quarter following
an exceptionally hot summer in the prior year. The economy showed signs of
recovery with consumer sentiment improving, although more recent market
volatility subdued growth. In contrast with the previous trend of downtrading
in the market, the current period saw share growth in the super premium and
mainstream segments and decline in the economy segment. In the super premium
segment, our brand Essa performed well, benefiting from a successful can launch
and overall growth within the feminine brand sub-segment, supported by marketing
investment. In the premium segment, Kozel continued to grow benefiting from
consistent communication and consumer appeal. Our local brand, Zolotaya Bochka,
lost volume, despite brand investment, as a result of competitor price
discounting. A new mainstream brand, Zwei Meister, was successfully launched in
the period with performance to date in line with expectations. Our local economy
brands delivered good growth, performing ahead of the market. Despite the
adverse mix effect from increased economy brand performance and significantly
higher raw material costs, EBITA was ahead of the prior year.
In UKRAINE, volumes grew by 58% benefiting from economic improvement, the
successful introduction of our mainstream brand, Amsterdam, further growth of
the premium brand Zolotaya Bochka (particularly from the recently launched
variant Razlivnoe), and continued solid performance of the core brand Sarmat and
its variant Zhigulivskoe.
In ITALY, recent economic developments concerning Italian debt and government
austerity measures significantly impacted consumer confidence, which, combined
with competitor price promotion activities in the off-premise channel, led to a
2% decline in Birra Peroni`s domestic volumes. During the period, our share in
the on-premise draught market rose in part due to the successful expansion of
the Peroni draught beer, while a focused expansion of our premium portfolio was
effective. On 13 June 2011, we successfully disposed of our Italian distribution
business.
Domestic lager volumes in the NETHERLANDS declined by 1%, predominantly driven
by a highly competitive off-premise channel which was impacted by subdued
consumer confidence.
In HUNGARY, volumes were up 6%, growing ahead of the market as we captured
consumer downtrading into our economy brands, and delivered solid growth in our
super premium brands. Macroeconomic conditions improved in Slovakia which,
combined with a number of successful summer promotions, resulted in volumes
increasing by 4%. Trading was challenging in the CANARIES, but volumes grew by
1%, boosted by improved performance in the tourist areas.
In the UNITED KINGDOM, lager volumes grew 6% and we continued to gain share in a
premium segment which declined following the impact of the 2010 FIFA World Cup
in the prior year. Peroni Nastro Azzurro continued its solid growth performance,
supported by continued draught expansion.
North America
Sept Sept
Financial summary 2011 2010 %
Group revenue (including share of joint 2,830 2,865 (1)
ventures) (US$m)
EBITA (US$m) 452 480 (6)
EBITA margin (%) 16.0 16.8
Sales volumes (hl 000)
- Lager - excluding contract brewing 22,586 23,423 (4)
MillerCoors` volumes
- Lager - excluding contract brewing 21,779 22,654 (4)
- Sales to retailers (STRs) 21,914 22,436 (2)
- Contract brewing 2,357 2,437 (3)
In 2011 before exceptional charges of US$35 million being the group`s share of
MillerCoors` impairment of the Sparks brand (2010: US$4 million being the
group`s share of MillerCoors` integration and restructuring costs).
The North America segment includes the group`s 58% share in MillerCoors and 100%
of Miller Brewing International. Total North America EBITA declined 6%, as firm
revenue management and the continued delivery of synergies and costs savings was
more than offset by the impact of lower volumes and rising commodity costs.
MillerCoors
In the six months to 30 September 2011, MillerCoors` US domestic STRs were down
2%, as the US beer market continued to be impacted by a weak economic
environment and subdued consumer spending. Domestic STWs were down 4%, impacted
by the timing of shipments in the prior year. Lower volumes, rising cost of
goods and higher fixed costs resulted in a 5% decline in EBITA.
Premium light volumes declined low single digits, as growth in Coors Light was
offset by a mid single digit decline in Miller Lite. MillerCoors` Tenth and
Blake crafts and imports division experienced double digit growth, driven by
Blue Moon and Leinenkugel`s, and supported by innovative seasonal craft brand
extensions including Leinenkugel`s Summer Shandy. The below premium segment
declined mid single digits, led by Miller High Life, as consumers continued to
trade up to other categories.
MillerCoors` revenue per hectolitre grew by 2%, as a result of firm pricing and
favourable brand mix. Cost of goods sold per hectolitre increased slightly,
driven by higher freight and packaging costs, partially offset by the continued
delivery of synergies and cost savings.
Marketing, general and administrative costs increased, largely as a result of
higher information system costs and higher depreciation.
MillerCoors delivered US$18 million of incremental synergies in the six months
to 30 September 2011, mainly through the optimisation of marketing and media,
freight, and brewing and packaging expenditure. Other cost savings of US$36
million were realised in the first half, driven by a variety of initiatives,
primarily within the integrated supply chain function.
Total annualised synergies and other cost savings of US$738 million have now
been achieved since the joint venture commenced operations on 1 July 2008,
comprising synergies of US$546 million and other savings of
US$192 million. MillerCoors expects to achieve US$750 million in total
annualised synergies and other cost savings by the end of the calendar year
2011, a year earlier than originally planned.
Africa
Sept Sept
Financial summary 2011 2010 %
Group revenue (including share of 1,839 1,506 22
associates) (US$m)
EBITA (US$m) 327 258 27
EBITA margin (%) 17.8 17.2
Sales volumes (hl 000)
- Lager 8,290 7,154 16
- Lager (organic) 8,218 7,154 15
- Soft drinks 6,693 5,899 13
- Soft drinks (organic) 6,488 5,899 10
- Other alcoholic beverages 2,597 2,646 (2)
- Other alcoholic beverages (organic) 2,587 2,646 (2)
In 2011 before exceptional charges of US$1 million being business capability
programme costs (2010: US$2 million).
Lager volume growth in AFRICA remained strong, with volumes up 15% on an organic
basis, helped by a generally positive environment and market activation of our
diverse brand portfolio, which led to market share gains. Our premium and
mainstream brands performed particularly well with the Castle portfolio growing
by 34% supported by strong growth of Castle Lite. Consistent messaging across
our lager brand segments, coupled with increased investment behind our brand
portfolios, has enabled growth across the entire portfolio. The Eagle brand
continued to perform well across Africa and has now been launched in South Sudan
and Nigeria. Soft drinks volumes grew by 10% on an organic basis driven by solid
performances in Zimbabwe, Ghana and South Sudan. Volumes of traditional beer
declined slightly as a result of price increases in Zambia, but we delivered
good growth in our new territories.
Africa delivered strong first half EBITA growth of 27% (23% on an organic
constant currency basis), driven by increased volumes, good revenue management
and cost control. EBITA margin improved by 60 bps, to 17.8%, reflecting positive
leverage through improved utilisation of our recent capacity investments. The
continued strong volume growth across Africa will require further capacity
investments in a number of markets in the next two years.
Lager volumes in MOZAMBIQUE increased by 11%, supported by strong mainstream
brand growth and increased penetration in the north of the country enabled by
our Nampula brewery. The 2M brand grew by 26% following its packaging upgrade in
the latter part of the prior year, partly at the expense of Laurentina Preta.
Exceptional growth was delivered by the Manica brand, reflecting the expansion
in the north of the country where it enjoys a strong regional following.
In TANZANIA, lager volumes grew by 20%, delivering market share gains. Growth
was underpinned by placing more refrigeration at the point of sale, enhanced
outlet branding and a more focused distribution model, as well as favourable
economic conditions. Volumes of the Safari brand increased by 23%, benefiting
from a brand renovation completed last year. Castle Lite volumes continued to
exceed expectations with volumes now comprising 7% of the total lager mix. The
Mbeya brewery, commissioned two years ago in the south of the country, has
served as a catalyst for incremental growth in that region and delivered
distribution benefits.
Despite capacity constraints, lager volumes increased 23% in Uganda as a result
of improved market penetration into the western regions and a differentiated
brand portfolio, reflecting growth in all segments. The Nile Special and Club
Pilsener brands performed particularly well.
In ANGOLA, lager volume growth of 12% was more subdued due to the cycling of the
capacity expansion in the prior year. Soft drinks volumes continued to be
impacted by a relatively poor economic environment and lower consumer disposable
income.
ZAMBIA continued to perform well with lager volume up 22%, driven by favourable
economic conditions, strong growth of the Castle and Mosi brands and improved
availability.
In GHANA, lager volumes grew strongly following two years of declining volumes
after a significant excise increase. This growth was driven by improved
availability and a buoyant economy. Club Lager, which is celebrating its 80th
anniversary, led the volume growth. Soft drinks volumes also grew strongly
underpinned by the performance of the Voltic water brand.
Delta Corporation, our associate in ZIMBABWE, enjoyed strong organic growth
across all categories following additional capacity investments made in the last
two years. Delta`s diverse portfolio of lager brands helped deliver volume
growth of 30%.
Our start up operation in SOUTH SUDAN delivered good growth in both lager and
soft drinks with our brewery already operating at full capacity. In April 2011,
a further capacity expansion project was announced, which will see capacity
doubling by early next year.
Our associate, CASTEL, performed well, and achieved good growth in lager and
soft drinks volumes in many markets. Lager volumes grew 11% on an organic basis
with good performance in the Democratic Republic of Congo and Cameroon. During
the second quarter Castel acquired the Star Breweries business in Madagascar,
which is the market leader in both lager and soft drinks.
Asia
Sept Sept
Financial summary 2011 2010 %
Group revenue (including share of 1,439 1,193 21
associates and joint ventures) (US$m)
EBITA (US$m) 138 110 26
EBITA margin (%) 9.6 9.2
Sales volumes (hl 000)
- Lager 35,448 32,532 9
- Lager (organic) 33,977 32,532 4
In ASIA, lager volumes increased 9% on a reported basis, reflecting the benefits
of regional acquisitions in China. On an organic basis, lager volumes grew 4%.
EBITA increased 26% (29% on an organic, constant currency basis) principally
driven by improved profitability in China. Group revenue per hl increased by
11%, (organic, constant currency up 12%) reflecting price and mix benefits in
both China and India. Despite cost pressures across the region, reported EBITA
margin increased by
40 bps.
CHINA`s lager volumes increased by 10% (5% on an organic basis), in a market
which grew at an estimated 5%. All regions grew, particularly the north-east and
west regions. CR Snow`s newly acquired breweries in Jiangsu, Liaoning, Henan and
Shanghai contributed to the reported volume growth in the period.
Overall, CR Snow continued to expand its market share although organic growth
was constrained by heavy and prolonged rains that affected key provinces during
the second quarter. Continued sales and marketing execution delivered good
market share gains in Zhejiang, Anhui, Liaoning, Heilongjiang, Guizhou, Sichuan
and Tianjin. The share increases in Sichuan and Tianjin were particularly
pleasing, following declines in the prior year.
Revenue per hectolitre grew 13% on a reported basis (14% on an organic, constant
currency basis) benefiting from price increases taken in the previous financial
year and positive mix. CR Snow continued to increase its presence in the premium
segment and on-premise channel through the expansion of Snow Draft. Reported
EBITA margin increased by 20 bps
(110 bps on an organic, constant currency basis) despite higher input costs and
adverse changes to consumption tax legislation introduced in December 2010.
CR Snow continues to expand its presence in the market with three significant
acquisitions announced during the period; the purchase of a 49% equity stake in
Jiangsu Dafuhao, the acquisition of Shanghai Asia Pacific Breweries, and the
purchase of a 70% equity stake in Guizhou.
INDIA`s lager volumes declined by 7%. Volumes were affected by dampened consumer
demand following excise increases implemented at the beginning of the period
across a number of key states. In addition, volumes were constrained by trading
restrictions imposed in Andhra Pradesh in July 2010, although these were
reversed in September 2011. We increased market share in the key higher margin
states of Karnataka and Haryana.
Revenue per hectolitre increased by 15% reflecting favourable mix as a result of
a continued focus on the most profitable brands, packs and states, as well as
price increases due to higher excise taxes. We continued to innovate with the
launch of strong variants of Foster`s and Royal Challenge and the introduction
of PET containers into the market for the first time.
Lager volumes in Vietnam were lower than in the prior period, although EBITA
improved, reflecting a focus on higher margin channels and geographies and
reduced discounting of the Zorok brand in the off-premise channel.
In AUSTRALIA, our joint venture delivered strong volume growth with the
Warnervale brewery enabling greater penetration of the on-premise channel,
particularly through draught Peroni Nastro Azzurro and Bluetongue, and the
growth of our brands in the off-premise channel.
South Africa: Beverages
Sept Sept
Financial summary 2011 2010 %
Group revenue (including share of 2,669 2,432 10
associates) (US$m)
EBITA (US$m) 446 394 13
EBITA margin (%) 16.7 16.2
Sales volumes (hl 000)
- Lager 12,290 12,274 -
- Soft drinks 7,245 7,467 (3)
- Other alcoholic beverages 646 634 2
In 2011 before net exceptional charges of US$13 million being costs incurred in
relation to the Broad-Based Black Economic Empowerment scheme of US$15 million
and business capability programme credits of US$2 million (2010: US$149 million
being US$23 million of business capability programme costs and US$126 million of
costs associated with the Broad-Based Black Economic Empowerment scheme).
In SOUTH AFRICA, the business posted improved EBITA and grew EBITA margin in the
first half of the year. The performance was achieved despite a challenging
environment during the period. The benefit of a peak Easter trading period in
April was offset by weaker consumer demand and the cycling of the positive
impact of the 2010 FIFA World Cup in the prior year.
In our beer business, lager volumes were level with the prior year, while EBITA
and EBITA margins grew. This was underpinned by continued efforts to strengthen
the core brand portfolio including intensifying our investments in marketing and
sales, largely funded by cost efficiencies.
Castle Lite, South Africa`s most popular premium beer, maintained its strong
growth rate as it continued to communicate its "Extra Cold" proposition. Castle
Lager delivered high single digit volume growth by effectively communicating its
core brand proposition of "It all comes together with a Castle", amplifying its
quality credentials and leveraging sponsorships. The repositioning of Castle
Milk Stout as a local premium offering translated into encouraging growth. While
Hansa Pilsener`s volumes came under pressure, the brand continued to build on
its distinctive positioning around the "Kiss of the Saaz Hop". Carling Black
Label, South Africa`s best selling beer, continued to reduce its rate of
decline, supported by its positioning as a champion beer as well as leveraging
its quality credentials and award-winning status.
A consistent focus on key classes of trade, and an expanded distribution
approach, resulted in strong improvements in retail execution.
Soft drinks volumes declined 3% during the first half year, cycling strong
growth in the comparable period, and impacted by colder and wetter weather in
the current period. Sparkling drinks declined 3% but still drinks grew 2% driven
by good growth in Glaceau and Powerade. Commodity cost pressures impacted gross
margin, but this was offset by improved fixed cost efficiency and revenue
management. Customer service was improved and retail execution enhanced.
Group revenue grew 5% on a constant currency basis and group revenue per
hectolitre grew by 6% on the same basis, buoyed by the strong performance of the
local premium power brands and factoring in the 7.5% excise increase on beer
earlier in the year.
Continued emphasis on improving productivity and reducing operating costs
allowed further market-facing investments while improving margin. Reported group
EBITA grew by 13% (8% on a constant currency basis) and the half year EBITA
margin rose to 16.7%, reflecting a 50 basis point improvement on the prior
comparable period.
Our associate, Distell, overcame difficult trading conditions through their
diverse portfolio and geographic footprint. This, coupled with pricing benefits,
enabled them to grow revenue and EBITA margin.
South Africa: Hotels and Gaming
Financial summary Sept Sept %
2011 2010
Group revenue (share of associates) (US$m) 247 229 8
EBITA (US$m) 67 63 5
EBITA margin (%) 26.9 27.8
Revenue per available room (Revpar) - US$ 68.92 76.18 (10)
SABMiller is a 39.7% shareholder in the Tsogo Sun Group, which is listed on the
Johannesburg Stock Exchange. The half year results reflect our share of the
enlarged group following the merger with Gold Reef Resorts Ltd at the end of the
previous financial year.
Our share of Tsogo Sun`s reported revenue was US$247 million, an increase of 8%
over the prior year (3% on an organic, constant currency basis).
The South African gaming industry experienced varied levels of growth across the
major provinces during the six months under review. The largest province in
terms of gaming win, Gauteng, reported 3% growth over the prior period, with
Montecasino and Gold Reef City casino, two of the group`s largest gaming units,
outperforming the market. The KwaZulu-Natal province grew by 8%, and the
Suncoast Casino by slightly less.
The South African hotel industry continued to experience weak demand in the key
corporate, group and conventions segments. Revenue per available room declined
by 10%, reflecting the higher room rate charges enjoyed during the 2010 FIFA
World Cup in the prior period.
Reported EBITA for the half year grew by 5%, but was level on an organic,
constant currency basis, reflecting the effects of the sluggish local economy on
both the gaming and hospitality and tourism industries. Prior period results
were also assisted by the 2010 FIFA World Cup. EBITA margin declined as a result
of the weak hotel trading.
FINANCIAL REVIEW
New accounting standards and restatements
The accounting policies followed are the same as those published within the
Annual Report and Accounts for the year ended 31 March 2011 as amended for the
changes set out in note 1, which have had no material impact on group results.
The consolidated balance sheets as at
30 September 2010 and as at 31 March 2011 have been restated for further
adjustments relating to the initial accounting for business combinations,
details of which are provided in note 11. The Annual Report and Accounts for the
year ended 31 March 2011 are available on the company`s website:
www.sabmiller.com.
Segmental analysis
The group`s operating results on a segmental basis are set out in the segmental
analysis of operations.
SABMiller uses group revenue and EBITA (as defined in the financial definitions
section) to evaluate performance and believes these measures provide
stakeholders with additional information on trends and allow for greater
comparability between segments. Segmental performance is reported after the
specific apportionment of attributable head office costs.
Disclosure of volumes
In the determination and disclosure of sales volumes, the group aggregates 100%
of the volumes of all consolidated subsidiaries and its equity accounted
percentage of all associates` and joint ventures` volumes. Contract brewing
volumes are excluded from volumes although revenue from contract brewing is
included within group revenue. Volumes exclude intra-group sales volumes. This
measure of volumes is used in the segmental analyses as it closely aligns with
the consolidated group revenue and EBITA disclosures.
Organic, constant currency comparisons
The group discloses certain results on an organic, constant currency basis, to
show the effects of acquisitions net of disposals and changes in exchange rates
on the group`s results. See the financial definitions section for the
definition.
In relation to the merger of the Tsogo Sun Group with Gold Reef Resorts Ltd no
adjustments have been made in the calculation of organic results as the group`s
share of the enlarged group is deemed to be comparable with the group`s share of
the Tsogo Sun Group in the comparative period.
Adjusted EBITDA
The group uses an adjusted EBITDA measure of cash generation which adjusts
EBITDA (as defined in the financial definitions section) to exclude cash flows
relating to exceptional items and to include the dividends received from the
MillerCoors joint venture. Given the significance of the MillerCoors business
and the access to its cash generation, inclusion of the dividends from
MillerCoors (which approximate the group`s share of its EBITDA) provides a
useful measure of the group`s overall cash generation. Excluding the cash impact
of exceptional items allows the level and underlying trend of cash generation to
be understood.
Business combinations and similar transactions
During the course of the half year the group increased its direct interest in
Delta Corporation Limited in Zimbabwe from 36.75% to 37.52%.
Disposals
On 13 June 2011 the group completed the disposal of its distribution business in
Italy, which was classified as a disposal group held for sale at 31 March 2011,
and which generated a US$15 million exceptional loss on disposal, primarily
being the recycling of the foreign currency translation reserve associated with
this business.
Exceptional items
Items that are material either by size or incidence are classified as
exceptional items. Further details on the treatment of these items can be found
in note 3 to the financial information.
Net exceptional charges of US$210 million before finance costs and tax were
reported during the period (2010: US$285 million) including net exceptional
charges of US$35 million (2010: US$4 million) related to the group`s share of
associates` and joint ventures` exceptional charges. The net exceptional charge
included US$115 million (2010:
US$155 million) related to business capability programme costs principally in
Latin America, Europe and Corporate. A charge of
US$15 million (2010: US$126 million) has been recognised in respect of the
Broad-
Based Black Economic Empowerment scheme in South Africa; this represents the
ongoing IFRS 2 `Share-based Payment Transactions` charge in respect of the
employee element of the scheme and in the prior year also, the one-off IFRS 2
charge in respect of the retailer element, together with the costs of the
transaction. Transaction-related advisers` costs associated with the potential
acquisition of the Foster`s Group Limited amounting to US$18 million have been
incurred in the period and treated as exceptional costs in Corporate. The
disposal of the distribution business in Italy generated an exceptional loss of
US$15 million and various integration and restructuring projects in Latin
America resulted in an exceptional charge of US$12 million.
The group`s share of associates` and joint ventures` exceptional items included
charges of US$35 million related to the group`s share of the impairment of the
Sparks brand in MillerCoors.
Finance costs
Net finance costs were US$203 million, a 28% decrease on the prior period`s
US$283 million, mainly as a result of the reduction in net debt. Finance costs
in the current period include a net gain of
US$7 million (2010: net loss of US$1 million) from the mark to market
adjustments of various derivatives on capital items for which hedge accounting
cannot be applied. Finance costs in the period also included a transaction-
related net exceptional gain of US$19 million in relation to mark to market
gains on derivative financial instruments partially offset by financing fees
connected with the proposed Foster`s acquisition. The mark to market gain and
the transaction-related gain have been excluded from the determination of
adjusted net finance costs and adjusted earnings per share. Adjusted net finance
costs were
US$229 million, down by 19%.
Interest cover, as defined in the financial definitions section, has increased
to 12.7 times from 9.7 times in the prior year period.
Profit before tax
Adjusted profit before tax of US$2,457 million increased by 13% over the
comparable period in the prior year, primarily as a result of increased volumes,
selective price increases, and positive mix more than offsetting higher input,
marketing and fixed costs.
Profit before tax was US$2,041 million, up by 21%, including the impact of the
exceptional and other adjusting finance items noted above. The principal
difference between the reported and adjusted profit before tax relates to
exceptional items, with net exceptional charges of
US$191 million in the half year compared to net exceptional charges of US$285
million in the prior year period.
Taxation
The effective rate of tax for the half year before amortisation of intangible
assets (excluding software) and exceptional items and the adjustments to finance
costs noted above was 28.5% compared to a rate of 29.0% in the prior year
period. This reduction in the rate results from our successful appeal relating
to Russian royalty cases and from general tax efficiencies throughout the group.
Earnings per share
The group presents adjusted basic earnings per share, which excludes the impact
of amortisation of intangible assets (excluding software), certain non-recurring
items and post-tax exceptional items, in order to present an additional measure
of performance for the periods shown in the consolidated interim financial
information. Adjusted basic earnings per share of 103.3 US cents were up 11% on
the comparable period in the prior year, benefiting from improved operating
profitability, lower net finance costs and favourable foreign currency
movements. An analysis of earnings per share is shown in note 5. On a statutory
basis, basic earnings per share were higher by 23% at 87.4 US cents (2010:
71.2 US cents) for the reasons given above together with lower exceptional costs
this half year.
Cash flow and capital expenditure
Net cash generated from operations before working capital movements (EBITDA) of
US$2,298 million increased by 11% compared with the prior year period (2010:
US$2,062 million). This increase was primarily due to higher revenue assisted by
favourable currency movements.
Adjusted EBITDA of US$2,913 million (comprising EBITDA before cash outflows from
exceptional items of US$121 million plus dividends received from MillerCoors of
US$494 million) increased by 7% on the same period in the prior year (2010:
US$2,726 million), reflecting the higher EBITDA partially offset by lower cash
exceptional items and lower MillerCoors` dividends than in the prior year
period.
Net cash generated from operating activities of US$1,719 million was up US$373
million on the same period in the prior year, primarily reflecting improved
EBITDA, positive cash inflow from working capital and lower net interest paid.
Capital expenditure for the six months of US$680 million has increased compared
with the same period in the prior year (2010: US$565 million). The group has
continued to invest in its operations, selectively maintaining investment to
support future growth including a greenfield brewery in Nigeria, a maltings
plant in Uganda as well as capacity expansion in Peru and South Sudan, and depot
expansion in Colombia. Capital expenditure including the purchase of intangible
assets was US$760 million (2010: US$614 million).
Free cash flow improved by 19% to US$1,479 million, reflecting the higher cash
generated from operating activities partially offset by higher capital
expenditure. Free cash flow is detailed in note 9b, and defined in the financial
definitions section.
Borrowings and net debt
Gross debt at 30 September 2011, comprising borrowings together with
the fair value of derivative assets or liabilities held to manage interest rate
and foreign currency risk of borrowings, decreased to US$7,436 million from
US$8,162 million at 31 March 2011, primarily as a result of the strong cash
flows generated as well as favourable foreign exchange rate movements in some of
the currencies in which our debt is denominated. Net debt, comprising gross debt
net of cash and cash equivalents, decreased to US$6,483 million from US$7,091
million at
31 March 2011. An analysis of net debt is provided in note 9c.
The group`s gearing (presented as a ratio of net debt/equity) has decreased to
28.9% from 31.2% at 31 March 2011. The weighted average interest rate for the
gross debt portfolio at 30 September 2011 was 6.1% (31 March 2011: 5.9%).
On 7 April 2011 the group entered into a five-year US$2,500 million committed
syndicated facility, with the option of two one-year extensions. This facility
replaced the existing US$2,000 million and US$600 million committed syndicated
facilities, which were both voluntarily cancelled.
On 1 July 2011 the US$600 million 6.2% Notes due 2011 matured and were repaid
from existing cash.
On 9 September 2011 the group entered into a US$12,500 million committed
syndicated facility to finance the proposed acquisition of Foster`s. The
facility consists of four tranches; a US$8,000 million one-year term loan with
the option of two six-month extensions; a US$2,500 million three-year term loan;
a US$1,000 million five-year term loan; and a US$1,000 million five-year
revolving credit facility.
Total equity
Total equity decreased from US$22,759 million at 31 March 2011 to US$22,453
million at 30 September 2011. The decrease was primarily due to dividend
payments and currency translation movements on foreign currency investments,
partly offset by profit for the period.
Goodwill and intangible assets
Goodwill decreased to US$11,435 million (31 March 2011:
US$11,949 million) primarily due to foreign exchange movements in the period.
Intangible assets decreased in the period to US$4,259 million (31 March 2011:
US$4,364 million) as a result of foreign exchange movements and amortisation,
partially offset by additions, primarily related to the business capability
programme. The comparatives for goodwill and intangible assets have been
restated to reflect adjustments to provisional fair values of business
combinations, further details of which are provided in note 11.
Currencies
The exchange rates to the US dollar used in preparing the consolidated interim
financial information are detailed in the table below, with most of the major
currencies in which we operate weakening against the US dollar in the period but
appreciating compared with the same period in the prior year.
Six months ended Appreciation/
30 September (depreciation)
2011 2010 %
Average rate
South African rand (ZAR) 7.08 7.42 5
Colombian peso (COP) 1,796 1,887 5
Euro (Euro) 0.71 0.78 10
Czech koruna (CZK) 16.92 19.83 17
Peruvian nuevo sol (PEN) 2.76 2.82 2
Polish zloty (PLN) 2.91 3.09 6
Closing rate
South African rand (ZAR) 8.10 6.96 (14)
Colombian peso (COP) 1,915 1,800 (6)
Euro (Euro) 0.75 0.73 (2)
Czech koruna (CZK) 18.33 18.03 (2)
Peruvian nuevo sol (PEN) 2.77 2.79 -
Polish zloty (PLN) 3.30 2.91 (12)
Risks and uncertainties
The principal risks and uncertainties for the first six months and the remaining
six months of the financial year remain as described on pages 20 and 21 of the
2011 Annual Report with the exception of the risk in relation to ensuring an
adequate supply of brewing and packaging raw materials at competitive prices
which has been removed in recognition of the increasing maturity of our
commodity risk management arrangements and a reduction in the volatility of
prices compared with when the risk was first introduced. The risks are
summarised as follows:
The risk that, as the industry continues to consolidate, failure to participate
in attractive value-adding transactions, overpaying for a transaction, or
failure to implement integration plans successfully after transactions are
completed, may inhibit the group`s ability to grow and increase profitability.
The risk that market positions come under pressure and opportunities for
profitable growth may not be realised should the group fail to ensure the
attractiveness of its brands, and continuously improve its marketing and related
sales capability to deliver consumer relevant propositions.
The risk that the group`s long-term profitable growth potential may be
jeopardised due to a failure to develop and maintain a sufficient cadre of
talented management.
The risk that regulation places increasing restrictions on pricing (including
tax), availability and marketing of beer and drives changes in consumption
behaviour. In affected countries the group`s ability to grow profitably and
contribute to local communities could be adversely affected.
The risk that the group`s marketing, operating and financial responses to
changes in global economic conditions may not be timely or adequate to respond
to changing consumer demand.
The risk that the group fails to execute and derive benefits from the business
capability projects, resulting in increased project costs, business disruption
and reduced competitive advantage in the medium term.
Dividend
The board has declared a cash interim dividend of 21.5 US cents per share, an
increase of 10%. The dividend will be payable on Friday
9 December 2011 to shareholders registered on the London and Johannesburg
registers on Friday 2 December 2011. The ex-dividend trading dates will be
Wednesday 30 November 2011 on the London Stock Exchange (LSE) and Monday 28
November 2011 on the JSE Limited (JSE). As the group reports in US dollars,
dividends are declared in US dollars. They are payable in South African rand to
shareholders on the Johannesburg register, in US dollars to shareholders on the
London register with a registered address in the United States (unless mandated
otherwise), and in sterling to all remaining shareholders on the London
register. Further details relating to dividends are provided in note 6.
The rates of exchange applicable for US dollar conversion into South African
rand and sterling were determined yesterday. The rate of exchange determined for
converting to South African rand was US$:ZAR8.192400 resulting in an equivalent
interim dividend of 176.13660 SA cents per share. The rate of exchange
determined for converting to sterling was GBP:US$1.5767 resulting in an
equivalent interim dividend of 13.6361 UK pence per share.
From the commencement of trading on Thursday 17 November 2011 until the close of
business on Friday 2 December 2011, no transfers between the London and
Johannesburg registers will be permitted, and from Monday
28 November 2011 until Friday 2 December 2011, no shares may be dematerialised
or rematerialised, both days inclusive.
Directors` responsibility for financial reporting
This statement, which should be read in conjunction with the independent review
report of the auditors set out below, is made to enable shareholders to
distinguish the respective responsibilities of the directors and the auditors in
relation to the consolidated interim financial information, set out on pages 23
to 39 which the directors confirm has been prepared on a going concern basis.
The directors consider that the group has used appropriate accounting policies,
consistently applied and supported by reasonable and appropriate judgements and
estimates.
A copy of the interim report of the group is placed on the company`s website.
The directors are responsible for the maintenance and integrity of the statutory
and audited information on the company`s website. Information published on the
internet is accessible in many countries with different legal requirements.
Legislation in the United Kingdom governing the preparation and dissemination of
the financial statements may differ from legislation in other jurisdictions.
The directors confirm that this condensed set of financial statements has been
prepared in accordance with IAS 34 as adopted by the European Union, and the
interim management report herein includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8 of the Disclosure and Transparency Rules of
the United Kingdom`s Financial Services Authority.
At the date of this statement, the directors of SABMiller plc are those listed
in the SABMiller plc Annual Report for the year ended 31 March 2011 with the
exception of Malcolm Wyman, who retired from the board, and Jamie Wilson, who
was appointed to the board, both with effect from 21 July 2011. A list of
current directors is maintained on the SABMiller plc website: www.sabmiller.com.
On behalf of the board
EAG Mackay JS Wilson
Chief executive Chief financial officer
16 November 2011
INDEPENDENT REVIEW REPORT OF CONSOLIDATED INTERIM FINANCIAL INFORMATION TO
SABMILLER PLC
Introduction
We have been engaged by the company to review the condensed set of financial
statements in the interim financial report for the six months ended 30 September
2011, which comprises the consolidated income statement, consolidated statement
of comprehensive income, consolidated balance sheet, consolidated cash flow
statement, consolidated statement of changes in equity and related notes. We
have read the other information contained in the interim financial report and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial
statements.
Directors` responsibilities
The interim financial report is the responsibility of, and has been approved by,
the directors. The directors are responsible for preparing the interim financial
report in accordance with the Disclosure and Transparency Rules of the United
Kingdom`s Financial Services Authority.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this interim financial report
has been prepared in accordance with International Accounting Standard 34,
`Interim Financial Reporting`, as adopted by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed
set of financial statements in the interim financial report based on our review.
This report, including the conclusion, has been prepared for and only for the
company for the purpose of the Disclosure and Transparency Rules of the
Financial Services Authority and for no other purpose. We do not, in producing
this report, accept or assume responsibility for any other purpose or to any
other person to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, `Review of Interim Financial Information
Performed by the Independent Auditor of the Entity` issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the interim financial report
for the six months ended 30 September 2011 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by
the European Union and the Disclosure and Transparency Rules of the United
Kingdom`s Financial Services Authority.
PricewaterhouseCoopers LLP
Chartered Accountants
London
16 November 2011
SABMiller plc
CONSOLIDATED INCOME STATEMENT
for the six months ended 30 September
Six months Six months Year
ended ended ended
30/9/11 30/9/10 31/3/11
Unaudited Unaudited Audited
Notes US$m US$m US$m
Revenue 2 10,539 9,451 19,408
Net operating expenses (8,930) (8,136) (16,281)
Operating profit 2 1,609 1,315 3,127
Operating profit before 1,784 1,596 3,563
exceptional items
Exceptional items 3 (175) (281) (436)
Net finance costs (203) (283) (525)
Interest payable and similar (423) (489) (883)
charges
Interest receivable and 220 206 358
similar income
Share of post-tax results of 2 635 658 1,024
associates and joint ventures
Profit before taxation 2,041 1,690 3,626
Taxation 4 (556) (523) (1,069)
Profit for the period 1,485 1,167 2,557
Profit attributable to non- 103 45 149
controlling interests
Profit attributable to equity 5 1,382 1,122 2,408
shareholders
1,485 1,167 2,557
Basic earnings per share (US 5 87.4 71.2 152.8
cents)
Diluted earnings per share 5 86.8 70.8 151.8
(US cents)
All operations are continuing.
The notes form an integral part of this condensed interim financial information.
SABMiller plc
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 September
Six months Six months Year
ended ended ended
30/9/11 30/9/10 31/3/11
Unaudited Unaudited Audited
Notes US$m US$m US$m
Profit for the period 1,485 1,167 2,557
Other comprehensive income:
Currency translation (1,072) 552 644
differences on foreign
currency net investments
(Decrease)/increase in (1,087) 552 644
foreign currency translation
reserve during the period
Recycling of foreign currency 15 - -
translation reserve on
disposals
Actuarial losses on defined - - (28)
benefit plans
Net investment hedges:
- Fair value gains/(losses) 184 (60) (137)
arising during the period
Cash flow hedges: 28 7 39
- Fair value gains/(losses) 21 (3) 16
arising during the period
- Fair value losses 6 8 2
transferred to inventory
- Fair value losses - 1 -
transferred to property,
plant and equipment
- Fair value losses 1 1 21
transferred to profit or loss
Tax on items included in 4 23 26 22
other comprehensive income
Share of associates` and (67) (75) (50)
joint ventures` losses
included in other
comprehensive income
Other comprehensive income (904) 450 490
for the period, net of tax
Total comprehensive income 581 1,617 3,047
for the period
Attributable to:
Equity shareholders 505 1,585 2,904
Non-controlling interests 76 32 143
Total comprehensive income 581 1,617 3,047
for the period
The notes form an integral part of this condensed interim financial information.
SABMiller plc
CONSOLIDATED BALANCE SHEET
at 30 September
30/9/11 30/9/10 31/3/11
Unaudited Unaudited Unaudited
Notes US$m US$m US$m
Assets
Non-current assets
Goodwill 11,435 11,963 11,949
Intangible assets 7 4,259 4,469 4,364
Property, plant and equipment 8 8,821 9,121 9,331
Investments in joint ventures 5,689 5,685 5,813
Investments in associates 2,715 2,445 2,719
Available for sale 29 33 35
investments
Derivative financial 673 596 330
instruments
Trade and other receivables 114 120 140
Deferred tax assets 128 169 184
33,863 34,601 34,865
Current assets
Inventories 1,177 1,308 1,256
Trade and other receivables 1,666 1,731 1,687
Current tax assets 114 140 152
Derivative financial 142 24 16
instruments
Available for sale 1 1 -
investments
Cash and cash equivalents 9c 953 478 1,067
4,053 3,682 4,178
Assets of disposal group - - 66
classified as held for sale
4,053 3,682 4,244
Total assets 37,916 38,283 39,109
Liabilities
Current liabilities
Derivative financial (64) (177) (50)
instruments
Borrowings 9c (1,142) (1,676) (1,345)
Trade and other payables (3,378) (3,443) (3,484)
Current tax liabilities (677) (672) (658)
Provisions (389) (347) (410)
(5,650) (6,315) (5,947)
Liabilities of disposal group - - (66)
classified as held for sale
(5,650) (6,315) (6,013)
Non-current liabilities
Derivative financial (11) (105) (85)
instruments
Borrowings 9c (6,788) (7,235) (7,115)
Trade and other payables (125) (142) (98)
Deferred tax liabilities (2,463) (2,439) (2,578)
Provisions (426) (474) (461)
(9,813) (10,395) (10,337)
Total liabilities (15,463) (16,710) (16,350)
Net assets 22,453 21,573 22,759
Equity
Share capital 166 165 166
Share premium 6,423 6,340 6,384
Merger relief reserve 4,586 4,586 4,586
Other reserves 1,005 1,825 1,881
Retained earnings 9,420 7,962 8,991
Total shareholders` equity 21,600 20,878 22,008
Non-controlling interests 853 695 751
Total equity 22,453 21,573 22,759
As restated (see note 11).
The notes form an integral part of this condensed interim financial information.
SABMiller plc
CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 30 September
Six months Six months Year ended
ended ended 31/3/11
30/9/11 30/9/10
Unaudited Unaudited Audited
Notes US$m US$m US$m
Cash flows from operating
activities
Cash generated from 9a 2,369 2,152 4,568
operations
Interest received 108 138 293
Interest paid (320) (495) (933)
Tax paid (438) (449) (885)
Net cash generated from 9b 1,719 1,346 3,043
operating activities
Cash flows from investing
activities
Purchase of property, plant (680) (565) (1,189)
and equipment
Proceeds from sale of 73 17 73
property, plant and equipment
Purchase of intangible assets (80) (49) (126)
Purchase of available for - - (3)
sale investments
Proceeds from disposal of 2 - -
available for sale
investments
Proceeds from disposal of 2 - -
businesses (net of cash
disposed)
Acquisition of businesses - (6) (60)
(net of cash acquired)
Investments in joint ventures (67) (21) (186)
Investments in associates (1) (5) (5)
Repayment of investments by 4 - 68
associates
Dividends received from joint 494 515 822
ventures
Dividends received from 74 53 88
associates
Dividends received from other 1 1 1
investments
Net cash used in investing (178) (60) (517)
activities
Cash flows from financing
activities
Proceeds from the issue of 39 28 73
shares
Proceeds from the issue of 73 19 34
shares in subsidiaries to non-
controlling interests
Purchase of own shares for (50) - -
share trusts
Purchase of shares from non- - (3) (12)
controlling interests
Proceeds from borrowings 346 826 1,608
Repayment of borrowings (895) (1,654) (2,767)
Capital element of finance (3) (3) (5)
lease payments
Net cash payments on (112) (12) (43)
derivative financial
instruments
Dividends paid to (973) (806) (1,113)
shareholders of the parent
Dividends paid to non- (59) (49) (102)
controlling interests
Net cash used in financing (1,634) (1,654) (2,327)
activities
Net cash (outflow)/inflow (93) (368) 199
from operating, investing and
financing activities
Effects of exchange rate 13 21 25
changes
Net (decrease)/increase in (80) (347) 224
cash and cash equivalents
Cash and cash equivalents at 9c 813 589 589
1 April
Cash and cash equivalents at 9c 733 242 813
end of period
The notes form an integral part of this condensed interim financial information.
SABMiller plc
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 September
Called up Share Merger Other
share premium relief reserves
capital account reserve
US$m US$m US$m US$m
At 1 April 2010 (audited) 165 6,312 4,586 1,322
Total comprehensive - - - 503
income
Profit for the period - - - -
Other comprehensive - - - 503
income
Dividends paid - - - -
Issue of SABMiller plc - 28 - -
ordinary shares
Proceeds from the issue - - - -
of shares in subsidiaries
to non-controlling
interests
Credit entry relating to - - - -
share-based payments
At 30 September 2010 165 6,340 4,586 1,825
(unaudited)
At 1 April 2010 (audited) 165 6,312 4,586 1,322
Total comprehensive - - - 559
income
Profit for the period - - - -
Other comprehensive - - - 559
income
Dividends paid - - - -
Issue of SABMiller plc 1 72 - -
ordinary shares
Proceeds from the issue - - - -
of shares in subsidiaries
to non-controlling
interests
Buyout of non-controlling - - - -
interests
Credit entry relating to - - - -
share-based payments
At 31 March 2011 166 6,384 4,586 1,881
(audited)
At 1 April 2011 (audited) 166 6,384 4,586 1,881
Total comprehensive - - - (876)
income
Profit for the period - - - -
Other comprehensive - - - (876)
income
Dividends paid - - - -
Issue of SABMiller plc - 39 - -
ordinary shares
Proceeds from the issue - - - -
of shares in subsidiaries
to non-controlling
interests
Payment for purchase of - - - -
own shares for share
trusts
Credit entry relating to - - - -
share-based payments
At 30 September 2011 166 6,423 4,586 1,005
(unaudited)
Retained Total Non- Total
earnings shareholders` controlling equity
equity interests
US$m US$m US$m US$m
At 1 April 2010 7,525 19,910 683 20,593
(audited)
Total comprehensive 1,082 1,585 32 1,617
income
Profit for the period 1,122 1,122 45 1,167
Other comprehensive (40) 463 (13) 450
income
Dividends paid (809) (809) (39) (848)
Issue of SABMiller - 28 - 28
plc ordinary shares
Proceeds from the - - 19 19
issue of shares in
subsidiaries to non-
controlling interests
Credit entry relating 164 164 - 164
to share-based
payments
At 30 September 2010 7,962 20,878 695 21,573
(unaudited)
At 1 April 2010 7,525 19,910 683 20,593
(audited)
Total comprehensive 2,345 2,904 143 3,047
income
Profit for the period 2,408 2,408 149 2,557
Other comprehensive (63) 496 (6) 490
income
Dividends paid (1,115) (1,115) (106) (1,221)
Issue of SABMiller - 73 - 73
plc ordinary shares
Proceeds from the - - 34 34
issue of shares in
subsidiaries to non-
controlling interests
Buyout of non- (10) (10) (3) (13)
controlling interests
Credit entry relating 246 246 - 246
to share-based
payments
At 31 March 2011 8,991 22,008 751 22,759
(audited)
At 1 April 2011 8,991 22,008 751 22,759
(audited)
Total comprehensive 1,381 505 76 581
income
Profit for the period 1,382 1,382 103 1,485
Other comprehensive (1) (877) (27) (904)
income
Dividends paid (973) (973) (47) (1,020)
Issue of SABMiller - 39 - 39
plc ordinary shares
Proceeds from the - - 73 73
issue of shares in
subsidiaries to
non-controlling
interests
Payment for purchase (50) (50) - (50)
of own shares for
share trusts
Credit entry relating 71 71 - 71
to share-based
payments
At 30 September 2011 9,420 21,600 853 22,453
(unaudited)
The notes form an integral part of this condensed interim financial information.
SABMiller plc
NOTES TO THE FINANCIAL INFORMATION
1. Basis of preparation
The condensed consolidated interim financial information (the `financial
information`) comprises the unaudited results of SABMiller plc for the six
months ended 30 September 2011 and 30 September 2010, together with the audited
results for the year ended 31 March 2011, restated for further unaudited
adjustments relating to initial accounting for business combinations. Further
details of these adjustments are provided in note 11. The financial information
in this report is not audited and does not constitute statutory accounts within
the meaning of s434 of the Companies Act 2006. The board of directors approved
this financial information on 16 November 2011. The annual financial statements
for the year ended 31 March 2011, approved by the board of directors on 3 June
2011, which represent the statutory accounts for that year, have been filed with
the Registrar of Companies. The auditors` report on those accounts was
unqualified and did not contain a statement made under s498(2) or (3) of the
Companies Act 2006.
The unaudited financial information in this interim report has been prepared in
accordance with the Disclosure and Transparency Rules of the Financial Services
Authority, and with IAS 34 `Interim Financial Reporting` as adopted by the
European Union. The interim financial information should be read in conjunction
with the annual financial statements for the year ended 31 March 2011, which
have been prepared in accordance with IFRS as adopted by the European Union.
Items included in the financial information of each of the group`s entities are
measured using the currency of the primary economic environment in which the
entity operates (the functional currency). The consolidated financial
information is presented in US dollars which is the group`s presentational
currency.
Accounting policies
The financial statements are prepared under the historical cost convention,
except for the revaluation to fair value of certain financial assets and
liabilities, and post-retirement assets and liabilities.
The accounting policies adopted are consistent with those of the annual
financial statements for the year ended 31 March 2011, which were published in
June 2011, as described in those financial statements except as set out below.
The following standards, interpretations and amendments have been adopted by the
group since 1 April 2011 with no significant impact on its consolidated results
or financial position:
- IFRIC 19, `Extinguishing Financial Liabilities with Equity Instruments`.
- Amendment to IFRS 1, `Limited Exemption from Comparative IFRS 7 Disclosures
for First-time Adopters`.
- Amendment to IAS 24, `Related Party Disclosures`.
- Amendment to IFRIC 14, `Pre-payments of a Minimum Funding Requirement`.
- Annual improvements to IFRSs (2010).
SABMiller plc
NOTES TO THE FINANCIAL INFORMATION (continued)
2. Segmental information
The segmental information presented below includes the reconciliation of GAAP
measures presented on the face of the income statement to non-GAAP measures
which are used by management to analyse the group`s performance.
Income statement
Six months ended Six months ended
30/9/11 30/9/10
Group EBITA Group EBITA
revenue Unaudited revenue Unaudited
Unaudited Unaudited
US$m US$m US$m US$m
Latin America 3,396 797 2,971 676
Europe 3,268 570 3,040 549
North America 2,830 452 2,865 480
Africa 1,839 327 1,506 258
Asia 1,439 138 1,193 110
South Africa: 2,916 513 2,661 457
- Beverages 2,669 446 2,432 394
- Hotels and Gaming 247 67 229 63
Corporate - (96) - (64)
Group 15,688 2,701 14,236 2,466
Amortisation of intangible (105) (103)
assets (excluding software)
- group and share of
associates` and joint
ventures`
Exceptional items - group (191) (285)
and share of associates`
and joint ventures`
Net finance costs - group (237) (300)
and share of associates`
and joint
ventures` (excluding
exceptional items)
Share of associates` and (104) (64)
joint ventures` taxation
Share of associates` and (23) (24)
joint ventures` non-
controlling interests
Profit before tax 2,041 1,690
Year ended 31/3/11
Group EBITA
revenue Audited
Audited
US$m US$m
Latin America 6,335 1,620
Europe 5,394 887
North America 5,223 741
Africa 3,254 647
Asia 2,026 92
South Africa: 6,079 1,204
- Beverages 5,598 1,067
- Hotels and Gaming 481 137
Corporate - (147)
Group 28,311 5,044
Amortisation of intangible (209)
assets (excluding software)
- group and share of
associates` and joint
ventures`
Exceptional items - group (467)
and share of associates`
and joint ventures`
Net finance costs - group (560)
and share of associates`
and joint ventures`
(excluding exceptional
items)
Share of associates` and (139)
joint ventures` taxation
Share of associates` and (43)
joint ventures` non-
controlling interests
Profit before tax 3,626
Group revenue (including associates and joint ventures)
With the exception of South Africa Hotels and Gaming, all reportable segments
derive their revenues from the sale of beverages. Revenues are derived from a
large number of customers which are internationally dispersed, with no customers
being individually material.
Revenue Share of Group
2011 associates` revenue
and joint 2011
ventures`
revenue
2011
Unaudited Unaudited Unaudited
US$m US$m US$m
Latin America 3,390 6 3,396
Europe 3,261 7 3,268
North America 70 2,760 2,830
Africa 1,109 730 1,839
Asia 327 1,112 1,439
South Africa: 2,382 534 2,916
- Beverages 2,382 287 2,669
- Hotels and Gaming - 247 247
Group 10,539 5,149 15,688
Year ended 31 March:
Latin America
Europe
North America
Africa
Asia
South Africa:
- Beverages
- Hotels and Gaming
Group
Revenue Share of Group
2010 associates` revenue
and joint 2010
ventures`
revenue
2010
Unaudited Unudited Unudited
US$m US$m US$m
Latin America 2,966 5 2,971
Europe 3,031 9 3,040
North America 64 2,801 2,865
Africa 915 591 1,506
Asia 305 888 1,193
South Africa: 2,170 491 2,661
- Beverages 2,170 262 2,432
- Hotels and Gaming - 229 229
Group 9,451 4,785 14,236
Year ended 31 March: 2011 2011 2011
Audited Audited Audited
US$m US$m US$m
Latin America 6,324 11 6,335
Europe 5,379 15 5,394
North America 117 5,106 5,223
Africa 2,059 1,195 3,254
Asia 564 1,462 2,026
South Africa: 4,965 1,114 6,079
- Beverages 4,965 633 5,598
- Hotels and Gaming - 481 481
Group 19,408 8,903 28,311
SABMiller plc
2. Segmental information (continued)
Operating profit
The following table provides a reconciliation of operating profit to operating
profit before exceptional items.
Six months ended 30 September: Operating Exceptional Operating
profit items profit
2011 2011 before
exceptional
items
2011
Unaudited Unaudited Unaudited
US$m US$m US$m
Latin America 679 54 733
Europe 488 69 557
North America 14 - 14
Africa 165 1 166
Asia (9) - (9)
South Africa: Beverages 406 13 419
Corporate (134) 38 (96)
Group 1,609 175 1,784
Year ended 31 March:
Latin America
Europe
North America
Africa
Asia
South Africa: Beverages
Corporate
Group
Six months ended 30 September: Operating Exceptional Operating
profit items profit
2010 2010 before
exceptional
items
2010
Unaudited Unaudited Unaudited
US$m US$m US$m
Latin America 571 44 615
Europe 475 60 535
North America 17 - 17
Africa 127 2 129
Asia (6) - (6)
South Africa: Beverages 221 149 370
Corporate (90) 26 (64)
Group 1,315 281 1,596
Year ended 31 March: 2011 2011 2011
Audited Audited Audited
US$m US$m US$m
Latin America 1,391 106 1,497
Europe 596 261 857
North America 16 - 16
Africa 361 4 365
Asia (22) - (22)
South Africa: Beverages 809 188 997
Corporate (24) (123) (147)
Group 3,127 436 3,563
EBITA (segment result)
This comprises operating profit before exceptional items, amortisation of
intangible assets (excluding software) and includes the group`s share of
associates` and joint ventures` operating profit on a similar basis. The
following table provides a reconciliation of operating profit before exceptional
items to EBITA.
Operating Share of Amortisation EBITA
profit associates` of
before and joint intangible
exceptional ventures` assets
items operating (excluding
profit before software) -
exceptional group and
items share of
associates`
and joint
ventures`
2011 2011 2011 2011
Six months ended Unaudited Unaudited Unaudited Unaudited
30 September: US$m US$m US$m US$m
Latin America 733 - 64 797
Europe 557 1 12 570
North America 14 415 23 452
Africa 166 159 2 327
Asia (9) 144 3 138
South Africa: 419 93 1 513
- Beverages 419 27 - 446
- Hotels and - 66 1 67
Gaming
Corporate (96) - - (96)
Group 1,784 812 105 2,701
Year ended
31 March:
Latin America
Europe
North America
Africa
Asia
South Africa:
- Beverages
- Hotels and
Gaming
Corporate
Group
Operating Share of Amortisation EBITA
profit associates` of
before and joint intangible
exceptional ventures` assets
items operating (excluding
profit before software) -
exceptional group and
items share of
associates`
and joint
ventures`
2010 2010 2010 2010
Six months ended Unaudited Unaudited Unaudited Unaudited
30 September: US$m US$m US$m US$m
Latin America 615 - 61 676
Europe 535 1 13 549
North America 17 440 23 480
Africa 129 127 2 258
Asia (6) 112 4 110
South Africa: 370 87 - 457
- Beverages 370 24 - 394
- Hotels and - 63 - 63
Gaming
Corporate (64) - - (64)
Group 1,596 767 103 2,466
2011 2011 2011 2011
Year ended Audited Audited Audited Audited
31 March US$m US$m US$m US$m
Latin America 1,497 - 123 1,620
Europe 857 2 28 887
North America 16 679 46 741
Africa 365 277 5 647
Asia (22) 108 6 92
South Africa: 997 206 1 1,204
- Beverages 997 70 - 1,067
- Hotels and - 136 1 137
Gaming
Corporate (147) - - (147)
Group 3,563 1,272 209 5,044
SABMiller plc
NOTES TO THE FINANCIAL INFORMATION (continued)
2. Segmental information (continued)
The group`s share of associates` and joint ventures` operating profit is
reconciled to the share of post-tax results of associates and joint ventures in
the income statement as follows.
Six months Six months Year ended
ended ended 31/3/11
30/9/11 30/9/10
Unaudited Unaudited Audited
US$m US$m US$m
Share of associates` and joint 812 767 1,272
ventures` operating profit (before
exceptional items)
Share of associates` and joint (35) (4) (31)
ventures` exceptional items
Share of associates` and joint (15) (17) (35)
ventures` net finance costs
Share of associates` and joint (104) (64) (139)
ventures` taxation
Share of associates` and joint (23) (24) (43)
ventures` non-controlling interests
Share of post-tax results of 635 658 1,024
associates and joint ventures
Excise duties of US$2,391 million (2010: US$2,089 million) have been incurred
during the six months as follows: Latin America US$877 million (2010: US$769
million); Europe US$724 million (2010: US$648 million); North America US$2
million (2010: US$1 million); Africa US$194 million (2010: US$142 million); Asia
US$132 million (2010: US$118 million) and South Africa US$462 million (2010:
US$411 million). The group`s share of MillerCoors` excise duties incurred during
the period was US$383 million (2010: US$398 million).
Beer volumes increase during the summer months leading to higher revenues being
recognised in the first half of the year in the Europe and North America
segments. Due to the spread of the business between Northern and Southern
hemispheres, the results for the group as a whole are not highly seasonal in
nature.
EBITDA
The following table provides a reconciliation of EBITDA (the net cash generated
from operations before working capital movements) to adjusted EBITDA. A
reconciliation of profit for the period for the group to EBITDA after cash
exceptional items for the group can be found in note 9a.
EBITDA Cash Dividends Adjusted
2011 exceptional received EBITDA
items from 2011
2011 MillerCoors
2011
Six months ended Unaudited Unaudited Unaudited Unaudited
30 September: US$m US$m US$m US$m
Latin America 925 49 - 974
Europe 677 48 - 725
North America 20 - 494 514
Africa 251 - - 251
Asia 14 - - 14
South Africa: Beverages 507 - - 507
Corporate (96) 24 - (72)
Group 2,298 121 494 2,913
Year ended 31 March:
Latin America
Europe
North America
Africa
Asia
South Africa: Beverages
Corporate
Group
EBITDA Cash Dividends Adjusted
2010 exceptional received EBITDA
items from 2010
2010 MillerCoors
2010
Six months ended Unaudited Unaudited Unaudited Unaudited
30 September: US$m US$m US$m US$m
Latin America 807 39 - 846
Europe 622 58 - 680
North America 15 - 515 530
Africa 195 2 - 197
Asia 14 - - 14
South Africa: Beverages 431 24 - 455
Corporate (22) 26 - 4
Group 2,062 149 515 2,726
Year ended 31 March: 2011 2011 2011 2011
Audited Audited Audited Audited
US$m US$m US$m US$m
Latin America 1,853 103 - 1,956
Europe 1,021 125 - 1,146
North America 27 - 822 849
Africa 517 4 - 521
Asia 17 - - 17
South Africa: Beverages 1,143 42 - 1,185
Corporate (76) 19 - (57)
Group 4,502 293 822 5,617
SABMiller plc
NOTES TO THE FINANCIAL INFORMATION (continued)
3. Exceptional items
Six months Six months Year ended
ended ended ended
30/9/11 30/9/10 31/3/11
Unaudited Unaudited Audited
US$m US$m US$m
Exceptional items included in
operating profit:
Business capability programme (115) (155) (296)
costs
Broad-Based Black Economic (15) (126) (149)
Empowerment scheme costs
Integration and restructuring (12) - (52)
costs
Loss on disposal of business (15) - -
Transaction-related costs (18) - -
Impairments - - (98)
Profit on disposal of investment - - 159
in associate
Net exceptional losses included (175) (281) (436)
within operating profit
Exceptional items included in net
finance costs:
Transaction-related net gains 19 - -
Net exceptional gains included 19 - -
within net finance costs
Share of associates` and joint
ventures` exceptional items:
Impairments (35) - -
Integration and restructuring - (4) (5)
costs
Loss on transaction in associate - - (26)
Share of associates` and joint (35) (4) (31)
ventures` exceptional losses
Net taxation credits relating to 11 13 2
subsidiaries` and the group`s
share of associates` and joint
ventures` exceptional items
EXCEPTIONAL ITEMS INCLUDED IN OPERATING PROFIT
Business capability programme costs
The business capability programme will streamline finance, human resources and
procurement activities through the deployment of global systems and introduce
common sales, distribution and supply chain management systems. Costs of US$115
million have been incurred in the period (2010: US$155 million).
Broad-Based Black Economic Empowerment scheme costs
US$15 million (2010: US$126 million) of costs have been incurred in relation to
the Broad-Based Black Economic Empowerment (BBBEE) scheme in South Africa. This
represents the ongoing IFRS 2 share-based payment charge in respect of the
employee element of the scheme and in the prior year also, the one-off IFRS 2
charge in respect of the retailer element, together with the costs associated
with the transaction.
Integration and restructuring costs
During 2011, US$12 million (2010: US$nil) of restructuring costs were incurred
in Latin America, principally in Ecuador and Peru.
Loss on disposal of business
During 2011, a loss of US$15 million (2010: US$nil) arose in Europe primarily in
relation to the recycling of the foreign currency translation reserve on the
disposal of the distribution business in Italy.
Transaction-related costs
During 2011, advisers` costs of US$18 million (2010: US$nil) were incurred in
relation to the proposed Foster`s transaction in the Corporate division.
Exceptional items included in net finance costs
Transaction-related net gains
During 2011, a net gain of US$19 million (2010: US$nil) arose on the mark to
market valuation gain on various derivative financial instruments taken out in
anticipation of the proposed Foster`s transaction and where hedge accounting
could not be applied, partially offset by facility and commitment fees in
relation to the proposed transaction.
SHARE OF ASSOCIATES` AND JOINT VENTURES` EXCEPTIONAL ITEMS
Impairment costs
In 2011, the group`s share of MillerCoors` impairment of the Sparks brand
amounted to US$35 million (2010: US$nil).
Integration and restructuring costs
In 2011, the group`s share of MillerCoors` integration and restructuring costs
was US$nil (2010: US$4 million, primarily related to severance costs).
Net taxation credits relating to subsidiaries` and the group`s share of
associates` and joint ventures` exceptional items
Net taxation credits of US$11 million (2010: US$13 million) arose in relation to
exceptional items during the period and include US$13 million (2010: US$2
million) in relation to MillerCoors although the tax credit is recognised in
Miller Brewing Company (see note 4).
SABMiller plc
NOTES TO THE FINANCIAL INFORMATION (continued)
4. Taxation
Six months Six months Year
ended ended ended
30/9/11 30/9/10 31/3/11
Unaudited Unaudited Audited
US$m US$m US$m
Current taxation 466 464 808
- Charge for the period (UK 486 465 817
corporation tax: US$nil (2010:
US$nil))
- Adjustments in respect of prior (20) (1) (9)
years
Withholding taxes and other 59 37 101
remittance taxes
Total current taxation 525 501 909
Deferred taxation 31 22 160
- Charge for the period (UK 31 22 183
corporation tax: US$nil (2010:
US$nil))
- Adjustments in respect of prior - - (16)
years
- Rate change - - (7)
Taxation expense 556 523 1,069
Tax credit relating to components
of other comprehensive income is
as follows:
Deferred tax credit on actuarial - (25) (36)
gains and losses
Deferred tax (credit)/charge on (23) (1) 14
financial instruments
(23) (26) (22)
Effective tax rate (%) 28.5 29.0 28.2
See the financial definitions section for the definition of the effective tax
rate. This calculation is on a basis consistent with that used in prior periods
and is also consistent with other group operating metrics. Tax on amortisation
of intangible assets (excluding software) was US$30 million (2010: US$28
million).
MillerCoors is not a taxable entity. The tax balances and obligations therefore
remain with Miller Brewing Company as a 100% subsidiary of the group. This
subsidiary`s tax charge includes tax (including deferred tax) on the group`s
share of the taxable profits of MillerCoors and includes tax in other
comprehensive income on the group`s share of MillerCoors` taxable items included
within other comprehensive income.
SABMiller plc
NOTES TO THE FINANCIAL INFORMATION (continued)
5. Earnings per share
Six months Six months Year
ended ended ended
30/9/11 30/9/10 31/3/11
Unaudited Unaudited Audited
US cents US cents US cents
Basic earnings per share 87.4 71.2 152.8
Diluted earnings per share 86.8 70.8 151.8
Headline earnings per share 90.0 71.1 150.8
Adjusted basic earnings per share 103.3 93.0 191.5
Adjusted diluted earnings per 102.5 92.5 190.3
share
The weighted average number of
shares was:
Six months Six months Year
ended ended ended
30/9/11 30/9/10 31/3/11
Unaudited Unaudited Audited
Millions of Millions Millions of
shares of shares shares
Ordinary shares 1,660 1,655 1,656
Treasury shares (72) (72) (72)
EBT ordinary shares (7) (8) (8)
Basic shares 1,581 1,575 1,576
Dilutive ordinary shares 11 9 10
Diluted shares 1,592 1,584 1,586
The calculation of diluted earnings per share excludes 11,641,929 (2010:
6,812,050) share options that were non-dilutive for the period because the
exercise price of the option exceeded the fair value of the shares during the
period, 15,208,332 (2010: 13,242,372) share awards that were non-dilutive for
the period because the performance conditions attached to the share awards have
not been met and 366,649 (2010: nil) shares in relation to the employee
component of the BBBEE scheme that were non-dilutive for the period. These share
incentives could potentially dilute earnings per share in the future.
SABMiller plc
NOTES TO THE FINANCIAL INFORMATION (continued)
5. Earnings per share (continued)
Adjusted and headline earnings
The group presents an adjusted earnings per share figure which excludes the
impact of amortisation of intangible assets (excluding software), certain non-
recurring items and post-tax exceptional items in order to present an additional
measure of performance for the periods shown in the consolidated interim
financial information. Adjusted earnings per share has been based on adjusted
earnings for each financial period and on the same number of weighted average
shares in issue as the basic earnings per share calculation. Headline earnings
per share has been calculated in accordance with the South African Circular
3/2009 entitled `Headline Earnings` which forms part of the listing requirements
for the JSE Ltd (JSE). The adjustments made to arrive at headline earnings and
adjusted earnings are as follows.
Six months Six months Year
ended ended ended
30/9/11 30/9/10 31/3/11
Unaudited Unaudited Audited
US$m US$m US$m
Profit for the period 1,382 1,122 2,408
attributable to equity holders
of the parent
Headline adjustments
Impairment of business held for - - 53
sale
Impairment of intangible assets - - 14
Impairment of property, plant - 1 31
and equipment
Loss on disposal of businesses 18 - -
Profit on disposal of property, (1) (5) (5)
plant and equipment
Profit on disposal of investment - - (159)
in associate
Tax effects of these items (11) - 14
Non-controlling interests` share - 1 1
of the above items
Share of joint ventures` and 35 - 20
associates` headline
adjustments, net of tax and non-
controlling interests
Headline earnings 1,423 1,119 2,377
Business capability programme 115 155 296
costs
Broad-Based Black Economic 15 126 149
Empowerment scheme costs
Integration and restructuring 12 - 52
costs
Transaction-related net gains (1) - -
Net (gain)/loss on fair value (7) 1 7
movements on capital items
Amortisation of intangible 80 79 158
assets (excluding software)
Tax effects of the above items (27) (41) (71)
Non-controlling interests` share (3) (3) (10)
of the above items
Share of joint ventures` and 26 29 60
associates` other adjustments,
net of tax and non- controlling
interests
Adjusted earnings 1,633 1,465 3,018
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 31/3/11
30/9/11 30/9/10
Unaudited Unaudited Audited
US cents US cents US cents
Prior year final dividend paid 61.5 51.0 51.0
per ordinary share
Current year interim dividend - - 19.5
paid per ordinary share
The interim dividend declared of 21.5 US cents per ordinary share is payable on
9 December 2011 to ordinary shareholders on the register as at 2 December 2011
and will absorb an estimated US$340 million of shareholders` funds.
SABMiller plc
NOTES TO THE FINANCIAL INFORMATION (continued)
7. Intangible assets
Six months Six months Year
ended ended ended
30/9/11 30/9/10 31/3/11
Unaudited Unaudited Unaudited
US$m US$m US$m
Net book amount at beginning of 4,364 4,354 4,354
period
Exchange adjustments (80) 172 101
Additions - separately acquired 85 49 126
Acquisitions - through business - - 10
combinations
Amortisation (112) (108) (220)
Disposals - - (1)
Impairment - - (14)
Transfers from property, plant 2 2 8
and equipment
Net book amount at end of period 4,259 4,469 4,364
As restated (see note 11).
8. Property, plant and equipment
Six months Six months Year ended
ended ended 31/3/11
30/9/11 30/9/10
Unaudited Unaudited Unaudited
US$m US$m US$m
Net book amount at beginning of 9,331 8,915 8,915
period
Exchange adjustments (605) 147 258
Additions 650 554 1,221
Acquisitions - through business - - 23
combinations
Disposals (58) (21) (94)
Impairment - (1) (31)
Depreciation (473) (451) (904)
Other movements (24) (22) (57)
Net book amount at end of period 8,821 9,121 9,331
As restated (see note 11).
SABMiller plc
NOTES TO THE FINANCIAL INFORMATION (continued)
9a. Reconciliation of profit for the period to net cash generated from
operations
Six months Six months Year ended
ended ended 31/3/11
30/9/11 30/9/10
Unaudited Unaudited Audited
US$m US$m US$m
Profit for the period 1,485 1,167 2,557
Taxation 556 523 1,069
Share of post-tax results of (635) (658) (1,024)
associates and joint ventures
Interest receivable and similar (220) (206) (358)
income
Interest payable and similar 423 489 883
charges
Operating profit 1,609 1,315 3,127
Depreciation:
- Property, plant and equipment 351 337 665
- Containers 122 114 239
Container breakages, shrinkage 16 11 24
and write-offs
Loss on disposal of businesses 18 - -
Profit on disposal of investment - - (159)
in associate
Profit on disposal of property, (1) (5) (5)
plant and equipment
Amortisation of intangible 112 108 220
assets
Impairment of intangible assets - - 14
Impairment of property, plant - 1 31
and equipment
Impairment of working capital 7 6 82
balances
Amortisation of advances to 14 12 28
customers
Unrealised net (gain)/loss from (11) - 1
fair value hedges
Dividends received from other (1) (1) (1)
investments
Charge with respect to share 56 40 99
options
Charge with respect to Broad- 15 124 147
Based Black Economic Empowerment
scheme
Other non-cash movements (9) - (10)
Net cash generated from 2,298 2,062 4,502
operations before working
capital movements (EBITDA)
Net inflow in working capital 71 90 66
Net cash generated from 2,369 2,152 4,568
operations
Profit for the period and cash generated from operations before working capital
movements includes cash flows relating to exceptional items of US$121 million
(2010: US$149 million), comprising US$103 million (2010: US$147 million) in
respect of business capability programme costs, US$nil (2010: US$2 million) in
respect of Broad-Based Black Economic Empowerment scheme costs, US$12 million
(2010: US$nil) in respect of integration and restructuring costs, and US$6
million (2010: US$nil) in respect of transaction-related costs.
The following table provides a reconciliation of EBITDA to adjusted EBITDA.
Six months Six months Year ended
ended ended 31/3/11
30/9/11 30/9/10
Unaudited Unaudited Audited
US$m US$m US$m
EBITDA 2,298 2,062 4,502
Cash exceptional items 121 149 293
Dividends received from 494 515 822
MillerCoors
Adjusted EBITDA 2,913 2,726 5,617
SABMiller plc
NOTES TO THE FINANCIAL INFORMATION (continued)
9b. Reconciliation of net cash generated from operating activities to free cash
flow
Six months Six months Year
ended ended ended
30/9/11 30/9/10 31/3/11
Unaudited Unaudited Audited
US$m US$m US$m
Net cash generated from 1,719 1,346 3,043
operating activities
Purchase of property, plant and (680) (565) (1,189)
equipment
Proceeds from sale of property, 73 17 73
plant and equipment
Purchase of intangible assets (80) (49) (126)
Investments in joint ventures (67) (21) (186)
Investments in associates - (4) (4)
Repayment of investments by 4 - 68
associates
Dividends received from joint 494 515 822
ventures
Dividends received from 74 53 88
associates
Dividends received from other 1 1 1
investments
Dividends paid to non- (59) (49) (102)
controlling interests
Free cash flow 1,479 1,244 2,488
9c. Analysis of net debt
Cash and cash equivalents on the balance sheet are reconciled to cash and cash
equivalents on the cash flow statement as follows.
As at As at As at
30/9/11 30/9/10 31/3/11
Unaudited Unaudited Audited
US$m US$m US$m
Cash and cash equivalents 953 478 1,067
(balance sheet)
Cash and cash equivalents of - - 4
disposal group classified as
held for sale
953 478 1,071
Overdrafts (220) (236) (258)
Cash and cash equivalents (cash 733 242 813
flow statement)
Net debt is analysed as follows.
As at As at As at
30/9/11 30/9/10 31/3/11
Unaudited Unaudited Audited
US$m US$m US$m
Borrowings (7,697) (8,664) (8,193)
Borrowings-related derivative 494 495 298
financial instruments
Overdrafts (220) (236) (258)
Finance leases (13) (11) (9)
Gross debt (7,436) (8,416) (8,162)
Cash and cash equivalents 953 478 1,071
(excluding overdrafts)
Net debt (6,483) (7,938) (7,091)
The movement in net debt is analysed as follows.
Cash and Overdrafts Borrowings
cash
equivalents
(excluding
overdrafts)
US$m US$m US$m
At 1 April 2011 1,071 (258) (8,193)
Exchange adjustments (29) 42 171
Cash flow (71) (4) 549
Disposals (18) - -
Other movements - - (224)
At 30 September 2011 953 (220) (7,697)
Derivative Finance Total gross Net debt
financial leases borrowings
instruments
US$m US$m US$m US$m
At 1 April 2011 298 (9) (8,162) (7,091)
Exchange adjustments - 1 214 185
Cash flow (9) 3 539 468
Disposals - - - (18)
Other movements 205 (8) (27) (27)
At 30 September 2011 494 (13) (7,436) (6,483)
SABMiller plc
NOTES TO THE FINANCIAL INFORMATION (continued)
9c. Analysis of net debt continued
The group has sufficient headroom to enable it to comply with all covenants on
its existing borrowings. The group has sufficient undrawn financing facilities
to service its operating activities and ongoing capital investment and thus the
directors have continued to adopt the going concern basis of accounting. The
group had the following undrawn committed borrowing facilities available at 30
September 2011 in respect of which all conditions precedent had been met at that
date.
As at As at As at
30/9/11 30/9/10 31/3/11
Unaudited Unaudited Audited
US$m US$m US$m
Amounts expiring:
Within one year 332 1,383 967
Between one and two years 150 88 2,118
Between two and five years 2,516 2,099 79
2,998 3,570 3,164
The above table excludes the US$12,500 million acquisition-financing facility
relating to the proposed Foster`s transaction.
10. Commitments, contingencies and guarantees
Except as stated below there have been no material changes to commitments,
contingencies or guarantees as disclosed in the annual financial statements for
the year ended 31 March 2011.
Commitments
Contracts placed for future capital expenditure for property, plant
and equipment not provided in the financial statements amount to
US$313 million at 30 September 2011 (2010: US$180 million).
11. Balance sheet restatements
The initial accounting under IFRS 3, `Business Combinations`, for the Rwenzori
acquisition had not been completed as at 30 September 2010. During the six
months ended 31 March 2011, adjustments to provisional fair values in respect of
this acquisition were made which resulted in goodwill increasing by US$1 million
to US$11,963 million and property, plant and equipment decreasing by US$1
million to US$9,121 million. As a result comparative information for the six
months ended 30 September 2010 has been presented in this interim financial
information as if the adjustments to provisional fair values had been made from
the respective transaction date. The impact on the prior period income statement
has been reviewed and no adjustments to the income statement are required as a
result of the adjustments to provisional fair values.
The initial accounting under IFRS 3, `Business Combinations`, for the Cerveceria
Argentina SA Isenbeck (CASA Isenbeck) and Crown Beverages Ltd (previously Crown
Foods Ltd) acquisitions had not been completed as at 31 March 2011. During the
six months ended 30 September 2011, adjustments to provisional fair values in
respect of these acquisitions were made which resulted in goodwill decreasing by
US$3 million to US$11,949 million, intangible assets increasing by US$3 million
to US$4,364 million, property, plant and equipment increasing by US$1 million to
US$9,331 million and non-current provisions increasing by US$1 million to US$461
million. As a result comparative information for the year ended 31 March 2011
has been presented in this interim financial information as if the adjustments
to provisional fair values had been made from the respective transaction dates.
The impact on the prior period income statement has been reviewed and no
adjustments to the income statement are required as a result of the adjustments
to provisional fair values.
12. Related party transactions
There have been no material changes to the nature or relative quantum of related
party transactions as described in the 2011 Annual Report.
The following changes were made to key management during the period.
Lesley Knox and Helen Weir joined the SABMiller board as independent non-
executive directors on 19 May 2011.
On 1 July 2011, Domenic De Lorenzo, the group`s director of corporate finance
and development, joined the SABMiller group executive committee.
Malcolm Wyman, chief financial officer, retired from the board at the conclusion
of the 2011 annual general meeting on 21 July 2011. He was replaced by Jamie
Wilson, previously the finance director for SABMiller Europe, who was appointed
to the board on that date.
13. Post balance sheet events
On 19 October 2011, SABMiller plc announced its intention to form a strategic
alliance with Anadolu Efes Biracylyk ve Malt Sanayii A._. (Anadolu Efes),
pursuant to which SABMiller will transfer its Russian and Ukrainian beer
businesses to Anadolu Efes, and will take a 24% equity stake in the enlarged
Anadolu Efes. The transaction is subject to finalisation of definitive legal
agreements and relevant regulatory approvals, and is expected to be completed
before the end of the financial year.
On 4 November 2011 East African Breweries Limited launched a public offer
through the Dar-es-Salaam Stock Exchange for the sale of its 20% interest in
SABMiller`s subsidiary in Tanzania, Tanzania Breweries Ltd. The offer closes on
25 November 2011. SABMiller Africa BV has applied for all of the shares on
offer, which if accepted in full would have a value of approximately US$70
million, although under the terms of the offer, priority will be given to
applicants who are Tanzanian residents or East African residents.
Subsequent to 30 September 2011, two of SABMiller`s African subsidiaries, Nile
Breweries Ltd in Uganda and Zambian Breweries plc in Zambia, have announced
rights issues each to raise approximately
US$70 million.
SABMiller plc
FINANCIAL DEFINITIONS
Adjusted earnings
Adjusted earnings are calculated by adjusting headline earnings (as defined
below) for the amortisation of intangible assets (excluding software),
integration and restructuring costs, the fair value movements in relation to
capital items for which hedge accounting cannot be applied and other items which
have been treated as exceptional but not included above or as headline earnings
adjustments together with the group`s share of joint ventures` and associates`
adjustments for similar items. The tax and non-controlling interests in respect
of these items are also adjusted.
Adjusted EBITDA
This comprises EBITDA (as defined below) before cash flows from exceptional
items and includes dividends received from our joint venture, MillerCoors.
Dividends received from MillerCoors approximate to the group`s share of the
EBITDA of the MillerCoors joint venture.
Adjusted EBITDA margin
This is calculated by expressing adjusted EBITDA as a percentage of revenue plus
the group`s share of MillerCoors` revenue.
Adjusted net finance costs
This comprises net finance costs excluding fair value movements in relation to
capital items for which hedge accounting cannot be applied and any exceptional
finance charges or income.
Adjusted profit before tax
This comprises EBITA less adjusted net finance costs and less the group`s share
of associates` and joint ventures` net finance costs on a similar basis.
Constant currency
Constant currency results have been determined by translating the local currency
denominated results for the six months ended 30 September at the exchange rates
for the comparable period in the prior year.
EBITA
This comprises operating profit before exceptional items, amortisation of
intangible assets (excluding software) and includes the group`s share of
associates` and joint ventures` operating profit on a similar basis.
EBITA margin (%)
This is calculated by expressing EBITA as a percentage of group revenue.
EBITDA
This comprises the net cash generated from operations before working capital
movements. This includes cash flows relating to exceptional items incurred in
the period.
EBITDA margin (%)
This is calculated by expressing EBITDA as a percentage of revenue.
Effective tax rate (%)
The effective tax rate is calculated by expressing tax before tax on exceptional
items and on amortisation of intangible assets (excluding software), including
the group`s share of associates` and joint ventures` tax on the same basis, as a
percentage of adjusted profit before tax.
Free cash flow
This comprises net cash generated from operating activities less cash paid for
the purchase of property, plant and equipment, and intangible assets, net
investments in existing associates and joint ventures (in both cases only where
there is no change in the group`s effective ownership percentage) and dividends
paid to non-controlling interests plus cash received from the sale of property,
plant and equipment and intangible assets and dividends received.
Group revenue
This comprises revenue together with the group`s share of revenue from
associates and joint ventures.
Headline earnings
Headline earnings are calculated by adjusting profit for the financial period
attributable to equity holders of the parent for items in accordance with the
South African Circular 3/2009 entitled `Headline Earnings`. Such items include
impairments of non-current assets and profits or losses on disposals of non-
current assets and their related tax and non-controlling interests. This also
includes the group`s share of associates` and joint ventures` adjustments on the
same basis.
Interest cover
This is the ratio of adjusted EBITDA to adjusted net finance costs.
Net debt
This comprises gross debt (including borrowings, borrowings-related derivative
financial instruments, overdrafts and finance leases) net of cash and cash
equivalents (excluding overdrafts).
Organic information
Organic results and volumes exclude the first 12 months` results and volumes
relating to acquisitions and the last 12 months results` and volumes relating to
disposals.
Sales volumes
In the determination and disclosure of sales volumes, the group aggregates 100%
of the volumes of all consolidated subsidiaries and its equity accounted
percentage of all associates` and joint ventures` volumes. Contract brewing
volumes are excluded from volumes although revenue from contract brewing is
included within group revenue. Volumes exclude intra-group sales volumes. This
measure of volumes is used for lager volumes, soft drinks volumes, other
alcoholic beverage volumes and beverage volumes and is used in the segmental
analyses as it more closely aligns with the consolidated group revenue and EBITA
disclosures.
FORWARD-LOOKING STATEMENTS
This announcement does not constitute an offer to sell or issue or the
solicitation of an offer to buy or acquire ordinary shares in the capital of
SABMiller plc (the "company") or any other securities of the company in any
jurisdiction or an inducement to enter into investment activity.
This announcement is intended to provide information to shareholders. It should
not be relied upon by any other party or for any other purpose. This
announcement includes `forward-looking statements` with respect to certain of
SABMiller plc`s plans, current goals and expectations relating to its future
financial condition, performance and results. These statements contain the words
"anticipate", "believe", "intend", "estimate", "expect" and words of similar
meaning. All statements other than statements of historical facts included in
this announcement, including, without limitation, those regarding the company`s
financial position, business strategy, plans and objectives of management for
future operations (including development plans and objectives relating to the
company`s products and services) are forward-looking statements. Such forward-
looking statements involve known and unknown risks, uncertainties and other
important factors that could cause the actual results, performance or
achievements of the company to be materially different from future results,
performance or achievements expressed or implied by such forward-looking
statements. Such forward-looking statements are based on numerous assumptions
regarding the company`s present and future business strategies and the
environment in which the company will operate in the future. These forward-
looking statements speak only as at the date of this announcement. The company
expressly disclaims any obligation or undertaking to disseminate any updates or
revisions to any forward-looking statements contained herein to reflect any
change in the company`s expectations with regard thereto or any change in
events, conditions or circumstances on which any such statement is based. The
past business and financial performance of SABMiller plc is not to be relied on
as an indication of its future performance.
ADMINISTRATION
SABMiller plc
Incorporated in England and Wales (Registration No. 3528416)
General Counsel and Group Company Secretary
John Davidson
Registered office
SABMiller House
Church Street West
Woking
Surrey, England
GU21 6HS
Facsimile +44 1483 264103
Telephone +44 1483 264000
Head office
One Stanhope Gate
London, England
W1K 1AF
Facsimile +44 20 7659 0111
Telephone +44 20 7659 0100
Internet address
http://www.sabmiller.com
Investor relations
Telephone +44 20 7659 0100
Email: investor.relations@sabmiller.com
Sustainable development
Telephone +44 1483 264134
Email: sustainable.development@sabmiller.com
Independent auditors
PricewaterhouseCoopers LLP
1 Embankment Place
London, England
WC2N 6RH
Facsimile +44 20 7822 4652
Telephone +44 20 7583 5000
Registrar (United Kingdom)
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent, England
BR3 4TU
Facsimile +44 20 8658 2342
Telephone +44 20 8639 3399 (outside UK)
Telephone 0871 664 0300 (from UK calls cost 10p per minute plus network extras,
lines are open 8.30am-5.30pm Mon-Fri)
Email: ssd@capitaregistrars.com
www.capitaregistrars.com
Registrar (South Africa)
Computershare Investor Services (Pty) Limited
70 Marshall Street, Johannesburg
PO Box 61051
Marshalltown 2107
South Africa
Facsimile +27 11 688 5248
Telephone +27 11 370 5000
United States ADR Depositary
BNY Mellon
Shareholder Services
PO Box 358516
Pittsburgh PA 15252-8516
United States of America
Telephone +1 888 269 2377
Telephone +1 888 BNY ADRS (toll free within the USA)
Telephone: +1 201 680 6825 (outside USA)
Email: shrrelations@bnymellon.com
www.adrbnymellon.com
Date: 17/11/2011 09:00:58 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
