| Thu 9 Nov 2006, 9:00 | | SABMiller Plc - Interim (Unaudited) Results For Th |
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SAB
SOSAB
SABMiller Plc - Interim (Unaudited) Results For The Six Months
ended 30 September 2006 and dividend declaration
SABMiller Plc
JSEALPHA CODE: SAB
ISSUER CODE: SOSAB
ISIN CODE: GB0004835483
SAB Miller Interim Announcement
Ref: 54/2006
Delivering growth from our global footprint
London and Johannesburg, 9 November 2006. SABMiller plc today announces its
interim (unaudited) results for the six months ended 30 September 2006.
Highlights are:
Sept Sept March
2006 2005 % 2006
US$m US$m change US$m
Revenue (a) 9,344 7,051 33% 15,307
EBITA (b) 1,781 1,264 41% 2,941
Adjusted profit before
tax (c) 1,533 1,192 29% 2,626
Profit before tax 1,378 1,126 22% 2,453
Adjusted earnings (d) 846 667 27% 1,497
Adjusted earnings per
share (d)
- US cents 56.6 52.7 7% 109.1
- UK pence 30.5 28.9 6% 61.0
- SA cents 385.2 340.5 13% 699.2
Basic earnings per
share (US cents) 52.9 51.3 3% 105.0
Interim dividend per
share (US cents) 14.0 13.0 8%
Net cash generated from
operations 2,152 1,289 67% 3,291
- Group lager volumes up 29% to 117 million hectolitres (hl), organic growth
of 9%
- South American volumes exceeding expectations
- Continued strong volume and earnings growth in Europe
- Performance in North America reflects challenging trading conditions
- Excellent volume growth in China and India
- South Africa earnings driven by premium segment growth
- Interim dividend increase of 8%, supported by strong cash flows
(a) Revenue excludes the attributable share of associates" revenue of
US$1,052 million (2005: US$850 million).
(b) Note 2 provides a reconciliation of operating profit to EBITA which is
defined as operating profit before exceptional items and amortisation of
intangible assets (excluding software) but includes the group"s share of
associates" operating profit, on a similar basis. EBITA is used throughout
the interim announcement.
(c) Adjusted profit before tax comprises EBITA less net finance costs of
US$242 million (2005: US$77 million) and share of associates" net finance
costs of US$6 million (2005: US$8 million) adjusted in 2005 for the early
redemption penalty in respect of the private placement notes (US$13 million).
(d) A reconciliation of adjusted earnings to the statutory measure of profit
attributable to equity shareholders is provided in note 5.
Organic, constant
2006 Reported currency
EBITA growth growth
US$m % %
Europe 485 28 21
North America 253 (12) (12)
Africa and Asia 240 14 14
South Africa: Beverages 411 10 15
South Africa: Hotels and
Gaming 44 16 22
Corporate (39) - -
Sub-total 1,394 13 13
Latin America (1) 387 n/a n/a
Group 1,781 41 13
(1) No metrics have been given for Latin America as the inclusion of South
America has materially changed the composition of this segment such that
growth statistics are not meaningful.
Statement from Graham Mackay, chief executive
"This good start to the year is a further demonstration of the advantage we
enjoy in our access to growth markets and our ability to offer our customers
and consumers comprehensive and varied portfolios of unique beer brands.
"The combination of strong volume growth together with good earnings
contributions from around the group supports our confidence for the future."
Enquiries:
SABMiller plc Tel: +44 20 7659 0100
Sue Clark Director of Corporate
Affairs Mob: +44 7850 285471
Gary Leibowitz Senior Vice President,
Investor Relations Mob: +44 7717 428540
Nigel Fairbrass Head of Media
Relations Mob: +44 7799 894265
A live webcast of the management presentation to analysts will begin at
9.30am (GMT) on 9 November 2006.
This announcement, a copy of the slide presentation and video interviews with
management are available on the SABMiller
plc website at www.sabmiller.com . Video interviews with management can also
be found at www.cantos.com.
High resolution images are available for the media to view and download free
of charge from www.vismedia.co.uk
Copies of the press release and the detailed Interim Announcement are
available from the Company Secretary
at the Registered Office, or from 2 Jan Smuts Avenue, Johannesburg, South
Africa.
Registered office: SABMiller House, Church Street West, Woking, Surrey, GU21
6HS
Incorporated in England and Wales (Registration Number 3528416)
Telephone: +44 1483 264000
Telefax: +44 1483 264117
Business review
The group has delivered satisfactory growth for the half year on top of the
strong performance in the comparable period last year. Our portfolio of
developing and developed market businesses, using the strength of our local,
regional and international brands, drove organic growth in overall lager
volumes of 9% and in EBITA of 13% on a constant currency basis. The group
EBITA margin increased to 17.1%, a 110 basis points improvement over the
prior period.
Overall, these results continue to demonstrate the group"s growth profile and
the advantages of our global footprint. Total beverage volumes were up 9% on
an organic basis, and 30% above last year on a reported basis at 144 million
hectolitres (hl) which includes the first full contribution from our business
in South America. Total lager volumes were 117 million hl. We saw
particularly strong lager volume growth in Europe, with market share gains in
a number of countries buoyed by the World Cup, and in China where our
associate, CR Snow, became the country"s largest brewer by sales volume in
the first half of calendar 2006, and its national brand `Snow" moved into the
top ten beer brands by volume worldwide. In North America Miller Brewing
Company has continued to be impacted by competitive pricing conditions and
significant increases in commodity and energy prices. In South America our
integration activities are proceeding well with volume growth across the four
countries running ahead of our initial expectations and we are accelerating
our capital investment programme. The current growth rates in South America
give us further confidence in the long term potential of this business.
The strong volume growth, further enhanced by price and mix benefits, has
resulted in a good increase in EBITA. In Europe we enjoyed mix gains across
much of the division; from Africa & Asia, we saw price improvements in both
Angola and Mozambique, and from South Africa we continued to benefit from the
consumer shift to premium products.
Reported EBITA of US$1,781 million, up 41%, includes the first full half year
contribution from South America. Weighted average currency rates as a whole
were largely stable in the six month period. On an organic, constant
currency basis, EBITA increased by 13% reflecting strong operating
performances including improved pricing and mix, in most of our key markets.
Adjusted earnings are up by 27%, to US$846 million, whilst adjusted earnings
per share of 56.6 US cents have grown by 7% for the first six months on a
reported basis, reflecting the increased number of shares in issue following
the transaction in South America during 2005. An interim dividend of 14.0 US
cents per share, an 8% increase, will be paid to shareholders on 22 December
2006.
We continue to make progress against our four strategic priorities.
Creating a business portfolio for growth
Over the period we continued to expand and develop our global footprint to
ensure access to markets that will deliver a combination of volume growth and
future value. In July, our Chinese associate CR Snow acquired two further
breweries in the Zhejiang and Anhui provinces, extending our influence into
the major Chinese cities of Shanghai, Hangzhou and Ningbo. In August, we
announced the creation of a joint venture with Coca-Cola Amatil in Australia,
to market and distribute directly our international premium brands which have
a small, but growing presence there.
Investing in strong local, regional and international brands
We have more beer brands in the world"s top 50 than any other brewer. Our
ability to create and manage comprehensive brand portfolios in each local
market gives our group a unique competitive advantage. During the period we
acquired the McKenzie River Corporation"s Sparks and Steel Reserve brands in
the US and simultaneously agreed a deal with McKenzie River that will give
Miller Brewing Company access to McKenzie River"s future brand innovation
programme. In August we announced the acquisition of the Foster"s brand and
brewery in India. In South America, our plans to create differentiated
positions for all our brands and to upgrade packaging are well advanced, and
in the next six to eighteen months we will establish new price frameworks and
upgrade sales efforts across the board.
Driving local performance
We continued to drive superior performance from our existing businesses over
the period with notable volume and mix benefits. In Poland, volumes were up
11% substantially ahead of the market and in the last twelve months we have
added a further 1% of market share to 38%. In Russia, volumes of our premium
brand portfolio were ahead 25%, almost twice the market growth rate, and our
largest brand, Zolotaya Bochka was up 43%. In Mozambique and Tanzania, we
have extended our market penetration into rural areas whilst simultaneously
driving mix and volume improvements. Our Italian business, Birra Peroni,
grew its core brands, Peroni and Nastro Azzurro by 4% and 9% respectively
over the period.
Benefits from global scale
Our ability to source and develop talent at a global level is becoming a key
competitive advantage for the group. The SABMiller processes and techniques
are being embedded in South America and we are starting to see the benefits
in improved performance.
From the beginning of the next calendar year, Miller will begin importing
into the US three of our South American brands, namely Cristal, Aguila and
Cusquena, which will be targeted at the expanding South American communities.
Peroni Nastro Azzurro which grew volumes over the period by 28% in the UK,
and 23% in the US, was introduced into Poland in April and into Colombia in
September.
Outlook
The group delivered satisfactory growth in the half year, enhanced by our new
businesses in South America. Our global footprint; our brands and our brand
portfolios; and our ability to continue to leverage our global scale and to
improve productivity, give us confidence that we will continue to make
progress.
Operational review
Latin America
Central Latin
America Organic South America
Sept growth America Sept
2005 2006** 2006 2006
Financial summary US$m US$m US$m US$m
Group revenue (including
share of associates) 262 32 1,718 2,012
12%
EBITA* 32 9 346 387
27%
EBITA margin (%) 12.2 20.1 19.2
Sales volumes (hl 000)
- Lager 826 49 15,585 16,460
6%
- Carbonated soft drinks
(CSDs) 2,991 195 1,274 4,460
7%
- Other beverages 1,451 139 3,680 5,270
10%
* In 2006 before exceptional items of US$24 million being integration and
restructuring costs in South America.
** Organic growth in the period represents the organic growth for Central
America only. There is no currency impact on reported growth in the period
under review.
The Latin America segment includes the results of our operations in Central
America, as well as those in South America. The completion date for the
transaction was 12 October 2005. Accordingly the results for the current
half year include a full six months for South America, but the comparative
period does not and volume growth is discussed below on a pro-forma basis.
The first half of the financial year in South America saw strong trading
performances in all countries, with total volumes up 11% (lager volumes up
11%) against the prior year. The timing of Easter and brand promotional
campaigns capitalising on the World Cup assisted volumes during the first
quarter, despite there being a number of "dry days" in various countries for
electoral reasons as well as floods in the greater Bogota area.
Lager volumes in Colombia increased by 9%, despite the cycling of double
digit growth in the prior year and an unusual number of "dry days" where for
electoral reasons alcohol sales are banned. Total volumes grew by 10%, aided
by economic growth of over 5%, as well as World Cup related marketing
initiatives and an upgrade in point of sale activity. Aguila, our flagship
brand and the leading brand in Colombia, recorded growth of 10%. In September
we launched Peroni Nastro Azzurro - our first international brand to be
brought to the region. The coming 18 months will see further development of
the brand portfolio, with the renovation of six domestic brands, including
the upgrade of both packaging and brand presentation, and the launch of
further international and regional brands.
The strong volume growth has accelerated the need for additional capacity,
especially in the western parts of Colombia. Accordingly, work has commenced
on the construction of a new brewery on the outskirts of Cali, Colombia"s
third largest city, which should come on stream in late 2007.
During June, the company announced the disposal of its fruit juice business,
Productora de Jugos, for a cash consideration of approximately US$55 million.
Completion of the sale is still subject to satisfaction of a number of
conditions, principally the approval of the Colombian Superintendence of
Industry and Commerce in accordance with Colombian merger control
regulations.
SABMiller has made a series of offers to purchase the remaining shares of
minority shareholders of Bavaria since obtaining control in October 2005 and
the group shareholding in Bavaria is now 98% with an effective interest of
97.65%.
Lager volumes in Peru grew by 13% during the period driven by favourable
economic conditions. GDP growth was 7.25% for the calendar year to 31 August
2006. Volumes have also been stimulated by competitive pricing in the market.
During the first half our market share has remained stable at some 92%
despite the competitor expansion of distribution nationwide. Good volume
growth was recorded in all regions and particularly in the South where the
distribution of our main brand, Cristal, was extended during June. This,
together with Cristal"s World Cup promotions in the country, has contributed
to volume growth of over 30% for the brand.
Barena was launched in September, the first in a planned series of new brand
introductions and renovations. We are accelerating investment for additional
capacity and plans for our container upgrade programme are well advanced.
During the period under review, SABMiller acquired additional shares in
Backus and Johnston, thereby increasing its effective interest to 93.7%.
Our Ecuador operations performed strongly, with volume growth of over 16%,
driven by the flagship mainstream brand Pilsener, which capitalised on the
brand"s association with the World Cup. The brand was recently relaunched
with enhanced graphics and labelling.
In Panama the beer market grew by 5.6%, fuelled by strong GDP growth, with
Cerveceria Nacional increasing its market share to 84%. Brands Atlas and
Balboa have performed well, contributing to total volume growth of 7%. The
price on the 285 ml main returnable bottle was increased by 16% in July.
We are entering a period of heightened investment in all our major markets as
evidenced by the recent launches in the premium segment of Peroni Nastro
Azzurro in Colombia, Barena in Peru and Miller Genuine Draft in Panama and
packaging upgrades for domestic brands. Furthermore exceptional costs of
US$24 million have been recorded for integration and restructuring costs in
the first half, with the majority of this related to brand portfolio designs
and the container upgrade programme.
In Central America, both El Salvador and Honduras delivered good volume
performances across the range of products. Lager volumes grew by 6% and
carbonated soft drink (CSD) volumes improved by 7%. This, with some selected
price increases, resulted in organic constant currency EBITA growth of 27%.
Europe
Sept Sept
2006 2005
Financial summary US$m US$m %
Revenue 2,279 1,905 20
EBITA 485 379 28
EBITA margin (%) 21.3 19.9
Sales volumes (hl 000)
- Lager 23,040 20,910 10
- Lager organic 22,757 20,910 9
Europe again delivered an excellent result with EBITA up 28% (21% in organic
constant currency terms). Total volumes were up 10% (9% organic growth) with
strong growth in Poland, Russia, Romania and the UK. Premium (worthmore)
volumes increased by 13% on an organic basis, assisting revenue per
hectolitre to improve. EBITA margin expanded by 140 basis points to 21.3%.
In Poland volumes were up 11% compared to market growth of 7% and our market
share has improved by a further 1% over the last twelve months to 38%. Our
Tyskie brand, the market leader, returned to growth - up 6%, leveraging its
association with the national football team during the World Cup. Our Lech
brand grew 7% with new variants making good contributions. In the economy
segment the Zubr brand continued its strong performance growing by 23%, and
Redds, our flavoured alcoholic beverage, was up 35%. These encouraging trends
have also been stimulated by new multipacks in the off-premise trade, and
consumer activation programmes in the on-premise trade. In both channels, we
have focused on product visibility and availability of chilled product,
employing enhanced point of sale equipment.
In the Czech Republic, the total beer market grew 1% assisted by World Cup
activity, while our volumes were up almost 1%. In line with our strategy to
build value share in this market, worthmore volumes were up 3% and Pilsner
Urquell grew by 4%, following the introduction in the on-premise of new draft
formats. In the off-premise trade, Gambrinus performed well supported by new
packaging, including crates, and the introduction of multipacks. Exports to
our key market, Germany, were up 37% benefitting from new packaging and an
upweighting of the field sales force. Kozel, now produced in three
countries, grew by 8% domestically and over 20% regionally.
In Russia, industry volumes were up 13%, temporarily boosted by disruption to
wine and spirit supplies due to new excise labelling requirements. Our
volumes grew 25%, assisted by significant marketing investment. Miller
Genuine Draft volumes increased by 14% following the launch of a new half
litre bottle and a related marketing campaign. Zolotaya Bochka, our biggest
volume brand, performed strongly - up 43%, while Redds, Kozel and Pilsner
Urquell all achieved good growth. Our increased sales force, extended cooler
programmes and focused trade marketing efforts have all contributed to
improved profitability.
In Italy the industry grew 2%, notwithstanding the 19% excise increase year
on year. Our core brands performed well with Peroni up 4% and Nastro Azzurro
growing 9%, while Pilsner Urquell was ahead by over 30%. Total Birra Peroni
volumes were level with the prior year"s comparable period, despite a 27%
decline in private label volumes as a result of our managed exit strategy.
Exports showed strong growth with Peroni Nastro Azzurro volumes up 28% in the
UK.
In Romania, volume was up 13%, against industry growth of 17%. Our business,
Ursus Breweries, was capacity constrained during the first quarter but grew
volumes by 24% in the second quarter. Our Timisoreana brand grew 27% with the
launch of a new mainstream PET pack, and the Ciucas brand was up 22% in the
economy segment. The number of on-premise outlets selling our Peroni Nastro
Azzurro brand is being expanded and it has recently been launched in the off-
premise channel.
In Hungary, Dreher"s volumes were up 4%, in line with the industry. Revenue
per hl was impacted negatively by the inability to pass on fully the 21%
effective increase in excise. Recent political instability and the
introduction of fiscal austerity measures will impact consumer purchasing
power going forward.
In Slovakia, our organic volume growth was in line with industry volume
growth of 1%. In March 2006 we acquired 48% of Pivovar Topvar A.S., and have
since increased our shareholding to 92%.
North America
Sept Sept
2006 2005
Financial summary US$m US$m %
Revenue 2,632 2,651 (1)
EBITA 253 286 (12)
EBITA margin (%) 9.6 10.8
Sales volumes (hl 000)
- Lager - excluding contract brewing 24,693 25,558 (3)
- contract brewing 5,224 5,506 (5)
- Carbonated soft drinks (CSDs) 49 42 17
Lager - domestic sales to
retailers (STRs) 23,177 23,976 (3)
Miller Brewing Company continued to experience a difficult trading
environment due to competitive pricing conditions, market share gains by
import and craft beers, and significant increases in commodity input costs.
Miller has however sustained its marketing investment in major brands and
continued to improve its overall organisational capabilities with a specific
focus on brand marketing and main retailers.
As reported by the US Beer Institute, beer industry shipments to wholesalers
(STWs) grew by 1.4% for the period, but excluding imports, which were up
8.6%, the US domestic industry grew by only 0.3%. Industry shipments to
retailers (STR) performance for the same period is believed to have lagged
STW growth as unfavourable weather in September resulted in increases in
distributor inventories.
On an organic (excluding Sparks and Steel Reserve) comparable trading day
basis, Miller"s US domestic STRs decreased by 3.6% over the six months while
domestic STWs declined by 3.8%. Including Sparks and Steel Reserve volumes,
Miller"s US domestic STRs decreased 2.6% on a comparable trading day basis
(3.4% unadjusted), while actual reported domestic STWs declined 2.9%.
Contract brewing volumes were lower by 5%, due primarily to the transfer of
the Sparks and Steel Reserve volumes into the Miller system.
Miller Lite volumes recorded a low-single digit decline during the period.
Marketing for Miller Lite has been increased with further investment in
retail activation programmes. Miller High Life and Milwaukee"s Best franchise
volumes both declined by mid-single digit levels due to particularly strong
competitive pricing pressure in the economy segment, whilst Icehouse volumes
were level with the prior period. Miller Genuine Draft volumes continued to
decline.
Miller"s worthmore brand portfolio grew volumes by 8% which was driven by
growth of the Leinenkugel"s franchise, following the successful launch of the
Sunset Wheat variant, as well as continued rapid growth of Peroni Nastro
Azzurro.
Total revenue declined by 1% compared with the prior period, to US$2,632
million. US domestic revenue excluding contract brewing also declined by 1%
as higher front-line pricing and lower price promotions were offset by lower
domestic volumes. Miller recorded firmer pricing across its portfolio than
the other major domestic brewers.
EBITA for the period, of US$253 million, was 12% lower than the prior year"s
US$286 million, mainly as a result of higher input costs of aluminium, glass
and energy. Marketing expenditure was approximately level compared to the
comparable period of the prior year.
Miller continues to focus efforts behind its flagship Miller Lite brand,
while improving the performance of other key brands to protect Miller"s share
of key industry segments. Miller is also reshaping its brand portfolio to
capitalise on growth areas of the beer industry, including low-calorie,
caffeinated, craft and import beers. In August, Miller completed the
purchase of the Sparks and Steel Reserve brands from McKenzie River, adding
two brands to the portfolio that are experiencing double-digit growth rates
and offer significant expansion opportunities through main retailers. In
September, Miller announced the geographic expansion of the Leinenkugel"s
range to six additional markets across the US. The distribution and
marketing of Peroni Nastro Azzurro is expanding the brand across key US
cities, and Miller recently announced an increased focus on marketing and
selling the Polish Tyskie brand as well as the importation of three of
SABMiller"s Latin American brands into the US.
Profitability in the second half of the year will be affected by the ongoing
competitive conditions, growth in import and craft beers, consumer-facing
marketing investment behind Miller Lite, and high levels of commodity and
energy prices.
Africa & Asia
Sept Sept
2006 2005
Financial summary US$m US$m %
Group revenue (including share of
associates) 1,356 1,065 27
EBITA 240 209 14
EBITA margin (%) 17.7 19.7
Sales volumes (hl 000)*
- Lager 40,854 31,156 31
- Lager organic 38,724 31,156 24
- Carbonated soft drinks (CSDs) 2,030 1,939 5
- Other beverages 8,010 7,142 12
* Castel volumes of 7,563 hl 000 (2005: 6,826 hl 000) lager, 4,693 hl 000
(2005: 4,382 hl 000) CSDs, and 1,966 hl 000 (2005: 1,740 hl 000) other
beverages are not included.
Africa & Asia growth momentum continued in the period under review, with
lager volume growth of 31% (organic growth of 24%) and reported EBITA growth
of 14%, despite currency weakness in some of our countries. Geographic EBITA
mix in Africa, combined with faster growth in Asia, resulted in a lower EBITA
margin for the region.
Africa
Africa delivered a strong half year performance. Total Africa lager volumes
(excluding Zimbabwe) were up 6%, driven by good performances from Mozambique,
Uganda, Tanzania and Ghana. Our total CSD volumes grew by 24% (excluding
Zimbabwe) as a result of both industry and market share growth in Angola.
EBITA improved on prior year, despite the expected decline in EBITA in
Botswana and rising input costs across Africa, particularly fuel costs.
In Mozambique, volume growth trends benefited from ongoing economic growth
and increased distribution with volumes advancing 10% over the prior period.
Uganda recorded volume growth of 19% for the half year, with the Eagle brands
continuing to perform well, despite an increase in excise tax for sorghum
beers in June 2006. Our mainstream brands, Nile Special and Club, showed
renewed growth whilst Chairman"s ESB benefited from exports to neighbouring
countries.
Tanzania recovered from a slow start due to a longer than usual rainy season
in the first quarter to record volume growth of 5%, and benefited from a
strong agricultural sector in the second quarter. Among the core brands,
Castle was a strong contributor to growth, up 10%. However increasing
inflation and input cost pressures including rising fuel prices hindered
EBITA margin development.
In Zambia volume growth was 5% for lager and 3% for CSDs. The rollout of the
Eagle brand in Zambia has been successful, with its share of total volumes
more than doubling to 15%.
Conditions in Botswana remained difficult; with volumes of both lager and
soft drinks down by 13%. Consumer spending has not yet recovered from the
impact of the Pula devaluations in the prior years. Rising commodity input
prices have been exacerbated by exchange rate impacts.
In Ghana volumes grew by 35% driven by the recently launched Stone Extra
Strong
Lager brand.
Our CSD businesses in Angola produced an excellent performance, with consumer
demand stimulated by improved availability and extended pack offerings,
resulting in market share gains and volume growth of 43%.
Our associate Castel grew total lager beer volumes by 11% and CSDs by 7%.
Asia
The excellent growth trend from our Asian businesses continued in the first
half and EBITA for the region grew strongly despite the inclusion of start-up
costs in Vietnam.
Volume growth in China of 32% (organic growth of 27%) was well in excess of
industry growth, and was spread across all regions. During the period CR Snow
became China"s largest brewer by volume and Snow is now acknowledged as the
top selling beer brand in the country. Significant marketing, distribution
and capital investments continue to be made behind the Snow brand. The volume
growth and shift in mix towards Snow enhanced profitability, notwithstanding
the costs of integration of recent acquisitions and start-up losses from our
two new greenfield sites.
India experienced strong growth in volumes of over 40%, on a pro-forma basis
for the first six months. The business has benefited from strong demand in
Andhra Pradesh and de-regulation of markets in the Northern region. On 12
September 2006, we acquired the Foster"s brand and business in India.
Foster"s has a strong position in the mild lager segment and complements our
existing brand portfolio.
In Vietnam our greenfield brewery (in a joint venture with Vinamilk) is on
target to commence operations early in the new calendar year. In Australia
the group signed an agreement with Coca-Cola Amatil to market our
international worthmore brands, and the venture is expected to be operational
in mid November 2006.
South Africa: Beverages
Sept Sept
2006 2005
Financial summary US$m US$m %
Group revenue (including share of
associates) 1,950 1,864 5
EBITA 411 375 10
EBITA margin (%) 21.1 20.1
Sales volumes (hl 000)
- Lager 12,237 12,153 1
- Soft drinks 6,505 6,414 1
- Carbonated soft drinks (CSDs) 6,080 6,091 -
- Other beverages 425 323 32
Both beer and soft drinks delivered further volume growth in the six month
period to September despite facing challenging comparatives in CSDs. Growth
was assisted by an Easter trading period in the current year, a continuation
of the strong trends in our premium beer brands and growth in our non-
carbonated alternative soft drinks.
The growth rate of the South African economy continued over the last six
months despite higher international crude oil prices and rising domestic
interest rates. Household disposable income was buoyed by rising employment
and wage levels as well as some tax relief for individuals. Consumption by
households rose in line, led by higher purchases of durable and semi-durable
goods. This was accompanied by higher debt levels which, in a rising local
interest rate environment, may dampen volume growth going forward.
Lager volumes grew by 1% driven by strong performances by our premium and
fruit alcoholic beverage (FAB) portfolios. Castle Lite, Miller Genuine Draft,
Peroni Nastro Azzurro and Amstel were again the biggest contributors to the
growth in the premium category with all these brands delivering double digit
growth. The introduction of a bulk returnable pack in our Brutal Fruit
product range in the previous financial year continued to benefit these
brands.
Product and pack innovation continue. In October a new apple-flavoured
premium FAB, Sarita, was launched, presented in a flint bottle with an easy-
to-open rip tab crown, a first for South African consumers. Our Redd"s brand
has new, contemporary, pressure sensitive labels on both packs. These
upgrades leverage the investment in new labelling capability initiated last
year. We have also introduced a new 330ml returnable bottle for our
mainstream lager beer.
Good progress was made in expanding direct distribution of both beer and soft
drinks. The beer customer base increased by 8% and soft drink"s growth in
direct store delivery customers was almost 5%.
Total soft drink beverage volumes grew by over 1%, led by strong growth in
alternative beverages, particularly by water (Valpre and Bon Aqua) and energy
drink (Power Play) portfolios. CSD volume growth was level with the previous
year"s volumes which had grown 10% over the comparable period due to an
unusually warm winter season.
Revenue growth of 5% was driven by increased sales volumes, selective price
increases in lager and soft drink products and continuing growth of premium
products. Tight cost control and favourable raw material hedging positions
assisted EBITA to grow 10%, notwithstanding increased distribution costs to
enable greater market penetration.
The completion of the liquor industry charter, in line with the BEE (Broad
Based Black Economic Empowerment) Act, is contingent on the final publication
of the Codes of Good Conduct. We expect that these codes will be published
before the end of the financial year.
Sales of Appletiser continued to show strong growth both in South Africa and
internationally with total volumes up 14%. Distell delivered growth in total
volumes, revenue and profit.
South Africa: Hotels and Gaming
Sept Sept %
2006 2005
Financial summary US$m US$m
Group revenue (share of associates) 167 154 9
EBITA 44 38 16
EBITA margin (%) 26.6 25.0
Revenue per available room (Revpar)- US$ 58.46 52.58 11
The group is a 49% shareholder in the Tsogo Sun group, which reported a
strong first half result. Growth in the South African economy continued into
the current financial year and positively influenced trading performance in
both the Hotels and Gaming divisions. Good occupancy levels continue to be
achieved by the Hotels division with strong growth in room rates, and the
Gaming industry has enjoyed further growth but at a slower pace than last
year.
Financial review
Accounting policies
The accounting policies followed are the same as those published within the
Annual Report and Accounts for the year ended 31 March 2006 amended for IFRIC
Interpretation 4 `Determining whether an arrangement contains a lease" and an
amendment to IAS 39 `Financial Guarantee Contracts". The adoption of these
new policies did not impact the company"s financial results as reported. The
Annual report and accounts for the year ended 31 March 2006 are available on
the company"s website, www.sabmiller.com. The balance sheet as at 31 March
2006 has been restated for further adjustments relating to initial accounting
for business combinations, further details of which are provided in note 9.
Segmental analysis
The group"s operating results on a segmental basis are set out in the
segmental analysis of operations, and the disclosures are in accordance with
the basis on which the businesses are managed and according to the differing
risk and reward profiles. SABMiller believes that the reported profit
measures - before exceptional items and amortisation of intangible assets
(excluding software), and including associates on a similar basis (i.e.
before interest, tax and minority interests) - provide additional information
on trends and allow for greater comparability between segments. Segmental
performance is reported after the specific apportionment of attributable head
office service costs.
This announcement includes segmental results and commentaries for Latin
America, following our investment in Bavaria whose operations are located in
South America. The reporting segment Latin America combines the group"s
South America operations with the previously reported geographical segment of
Central America.
Accounting for volumes
In the determination and disclosure of reported sales volumes, the group
aggregates 100% of the volumes of all consolidated subsidiaries and its
equity accounted associates, other than associates where the group exercises
significant influence but primary responsibility for day to day management
rests with others (such as Castel and Distell). In these latter cases, the
financial results of operations are equity accounted in terms of IFRS but
volumes are excluded. Contract brewing volumes are excluded from total
volumes; however revenue from contract brewing is included within revenue.
Reported volumes exclude intra-group sales volumes.
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. Organic results exclude the first twelve
months" results of acquisitions and the last twelve months" results of
disposals. Constant currency results have been determined by translating the
local currency denominated results for the period ended 30 September 2006 at
the exchange rates for the comparable period in the prior period.
Acquisitions and disposals
On 3 July 2006, the group announced that it had entered into an agreement to
acquire the Sparks and Steel Reserve brands from US contract brewing partner
McKenzie River Corporation for a cash consideration of US$215 million. This
transaction was subsequently completed on 11 August 2006.
On 4 August 2006, the group announced that it had entered into an agreement
to acquire a 100% interest in the Foster"s business and Foster"s brand in
India for a cash consideration of US$120 million. This transaction was
subsequently completed on 12 September 2006.
On 10 August 2006, the group announced that it had entered into a joint
venture with Coca-Cola Amatil (CCA) to import, market and distribute
SABMiller"s international premium brands in Australia. Under the terms of
the agreement SABMiller and CCA will each hold a 50% interest in the joint
venture, which will be known as Pacific Beverages Pty Ltd, and is expected to
be operational by mid November 2006.
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.
Exceptional charges of US$27 million reported during the period relate to
integration costs, incurred by the Bavaria group of which US$24 million was
incurred in the region and US$3 million in the corporate centre. In the
prior comparable period there were no exceptional items.
Borrowings and net debt
Gross debt, comprising borrowings of the group together with the fair value
of derivative assets or liabilities held to manage interest rate and foreign
currency risk of borrowings, has decreased to US$7,579 million from US$7,775
million at 31 March 2006 (as restated). Net debt comprising gross debt net
of cash and cash equivalents and the loan participation deposit has decreased
to US$6,732 million from US$7,107 million at 31 March 2006 (as restated). An
analysis of net debt is provided in note 8. The group"s gearing (presented
as a ratio of debt/equity) has decreased to 49.0% from 52.3% at 31 March 2006
(as restated).
On 27 June 2006, SABMiller plc successfully raised US$1,750 million of new
debt through the issue of a US$300 million 3 year Floating Rate Note at US
LIBOR plus 30 basis points, a US$600 million 6.2% 5 year bond and a US$850
million 6.5% 10 year bond. The proceeds of these issuances were used to
refinance amounts drawn under committed facilities related to the Bavaria
transaction, including the subsequent purchase of minority interests and the
restructuring of priority debt.
The average borrowing rate for the total debt portfolio at 30 September 2006
was 6.7% (2005: 5.6%), compared to 6.9% at 31 March 2006.
Further progress has been made in the restructuring of priority debt at the
subsidiary company level to remove structural subordination of senior lenders
to SABMiller plc. In particular, debt in the Bavaria group comprising US$500
million 144A bonds and US$150 million (equivalent Colombian pesos) related to
a securitisation programme were repaid in May 2006 and in October 2006
respectively.
Since 30 September 2006, the group has diversified further its sources of
financing by launching on 12 October 2006 a US$1,000 million commercial paper
programme. This programme also increases the flexibility of the group"s
financing arrangements at a lower cost of debt.
Finance costs
Net finance costs increased to US$242 million, a 214% increase on the prior
year"s finance costs of US$77 million, reflecting the increase in net debt
following the consolidation of the Bavaria group from October 2005 and
subsequent acquisition of minority interests.
Profit before tax
Profit before tax of US$1,378 million was up 22% on prior year, reflecting
the inclusion of South America and performance improvements across the
businesses which more than offset a number of exceptional items (as described
above).
Taxation
Our effective tax rate, of 35.7%, is marginally higher than the prior year
period under review. It is higher than the prior year full year rate,
reflecting a different geographic mix of profits across the group.
Earnings per share
The group presents adjusted basic earnings per share to exclude the impact of
the amortisation of intangible assets (excluding software) and other non-
recurring items, which include post-tax exceptional items, in order to
present a more meaningful comparison for the years shown in the consolidated
financial statements. Adjusted basic earnings per share of 56.6 US cents are
up 7% on the prior comparable period, reflecting the improved performance
noted above. An analysis of earnings per share is shown in note 5 to the
financial statements.
Cash flow
Net cash generated from operating activities before working capital movements
(EBITDA) increased by 39%, to US$1,964 million, compared to the prior period.
The ratio of EBITDA to revenue increased in the period to 21.0% (2005:
20.1%).
Currencies: South African rand/Colombian peso
During the period, the rand weakened by 25% against the US dollar and ended
the period at R7.76 to the US dollar compared to R6.20 at 31 March 2006,
whilst the weighted average rand/dollar rate weakened by 5% to R6.81 compared
with R6.47 in the prior year. The peso has weakened by 4% against the US
dollar ending the period at COP2,394 to the US dollar, compared to COP2,292
at 31 March 2006.
Dividend
The board has declared an interim dividend of 14.0 US cents per share. The
dividend will be payable on 22 December 2006 to shareholders registered on
the London and Johannesburg registers on 1 December 2006. The ex-dividend
trading dates will be 29 November 2006 on the London Stock Exchange (LSE) and
27 November 2006 on the JSE Limited (JSE). As the group reports in US
dollars, dividends are declared in US dollars. They are payable in South
African rand to shareholders on the Johannesburg register, in US dollars to
shareholders on the London register with a registered address in the United
States (unless mandated otherwise), and in sterling to all remaining
shareholders on the London register. Further details relating to dividends
are provided in note 6.
The rate of exchange applicable on 16 November 2006 will be used for US
dollar conversion into South African rand and will be announced on the 17
November 2006. The rate of exchange on 4 December 2006 will be used for US
dollar conversion into sterling.
Currency conversion announcements will be made on the LSE"s Regulatory News
Service and on the JSE"s Stock Exchange News Service, indicating the rates of
exchange to be applied.
From the close of business on 16 November 2006 until the close of business on
1 December 2006, no transfers between the London and Johannesburg registers
will be permitted, and from the close of business on 24 November 2006 until
the close of business on 1 December 2006, no shares may be dematerialised or
rematerialised.
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 17 to 29, 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
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.
On behalf of the board
E A G Mackay M I Wyman
Chief executive Chief financial officer
8 November 2006
INDEPENDENT REVIEW REPORT TO SABMILLER plc
Introduction
We have been instructed by the company to review the financial information
for the six months ended 30 September 2006 which comprises the consolidated
interim balance sheet as at 30 September 2006, the related consolidated
interim statements of income, cash flows and recognised income and expense
for the six months then ended and the related notes. We have read the other
information contained in the interim report and considered whether it
contains any apparent misstatements or material inconsistencies with the
financial information.
Directors" responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The Listing
Rules of the Financial Services Authority require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where
any changes, and the reasons for them, are disclosed.
This interim report has been prepared in accordance with the basis set out in
note 1.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom.
A review consists principally of making enquiries of group management and
applying analytical procedures to the financial information and underlying
financial data and, based thereon, assessing whether the disclosed accounting
policies have been applied. A review excludes audit procedures such as tests
of controls and verification of assets, liabilities and transactions. It is
substantially less in scope than an audit and therefore provides a lower
level of assurance. Accordingly we do not express an audit opinion on the
financial information. This report, including the conclusion, has been
prepared for and only for the company for the purpose of the Listing 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.
Review conclusion
On the basis of our review we are not aware of any material modifications
that should be made to the financial information as presented for the six
months ended 30 September 2006.
PricewaterhouseCoopers LLP
Chartered Accountants
London, 8 November 2006
Consolidated income statements for the six months ended 30 September
Six Six
months months Year
ended ended ended
30/9/06 30/9/05 31/3/06
Unaudited Unaudited Audited
Notes US$m US$m US$m
Revenue 2 9,344 7,051 15,307
Net operating expenses (7,829) (5,948) (12,732)
Operating profit 2 1,515 1,103 2,575
Operating profit before
exceptional items 1,542 1,103 2,590
Exceptional items 3 (27) - (15)
Net finance costs (242) (77) (299)
Interest payable and
similar charges (388) (117) (377)
Interest receivable 146 40 78
Share of post-tax results
of associates 105 100 177
Profit before taxation 1,378 1,126 2,453
Taxation 4 (470) (377) (779)
Profit for the financial
period 908 749 1,674
Profit attributable to
minority interests 118 99 234
Profit attributable to
equity shareholders 790 650 1,440
908 749 1,674
Basic earnings per share
(US cents) 5 52.9 51.3 105.0
Diluted earnings per share
(US cents) 5 52.6 50.9 104.3
All operations are continuing.
Consolidated balance sheets at 30 September
30/9/06 30/9/05 1/3/06*
Unaudited Unaudited Unaudited
Notes US$m US$m US$m
Assets
Non-current assets
Goodwill 12,678 7,415 12,814
Intangible assets 3,741 150 3,596
Property, plant and
equipment 6,169 4,102 6,337
Investments in associates 1,049 1,156 1,065
Financial assets:
- Available for sale
investments 42 59 43
- Derivative financial
instruments 72 14 3
Trade and other receivables 95 58 86
Deferred tax assets 359 164 274
24,205 13,118 24,218
Current assets
Inventories 801 608 878
Trade and other receivables 1,304 1,117 1,225
Current tax assets 52 28 54
Financial assets:
- Derivative financial
instruments 66 8 4
- Loan participation deposit 190 - 196
Cash and cash equivalents 8 657 1,142 472
3,070 2,903 2,829
Total assets 27,275 16,021 27,047
Liabilities
Current liabilities
Financial liabilities:
- Derivative financial
instruments (4) (7) (3)
- Borrowings (1,157) (1,154) (1,950)
Trade and other payables (2,493) (1,936) (2,414)
Current tax liabilities (354) (332) (316)
Provisions (205) (64) (182)
(4,213) (3,493) (4,865)
Non-current liabilities
Financial liabilities:
- Derivative financial
instruments (136) (2) (175)
- Borrowings (6,326) (2,428) (5,652)
Trade and other payables (61) (48) (86)
Deferred tax liabilities (1,537) (188) (1,437)
Provisions (1,265) (931) (1,247)
(9,325) (3,597) (8,597)
Total liabilities (13,538) (7,090) (13,462)
Net assets 13,737 8,931 13,585
Equity
Total shareholders" equity 13,191 8,261 13,043
Minority interests 546 670 542
Total equity 13,737 8,931 13,585
* As restated (see note 9).
Consolidated cash flow statements for the six months ended 30 September
Six Six
months months Year
ended ended ended
30/9/06 30/9/05 31/3/06
Unaudited Unaudited Audited
Notes US$m US$m US$m
Cash flows from operating
activities
Net cash generated from
operations 7 2,152 1,289 3,291
Interest received 94 41 80
Interest paid (347) (123) (401)
Interest element of finance
lease payments (1) - -
Tax paid (371) (394) (869)
Net cash from operating
activities 1,527 813 2,101
Cash flows from investing
activities
Purchase of property, plant
and equipment (462) (404) (999)
Proceeds from sale of
property, plant and equipment 25 21 48
Purchase of intangible assets (240) (15) (33)
Purchase of investments - (18) (7)
Proceeds from sale of
investments 1 - 5
Acquisition of subsidiaries
(net of cash acquired) (145) (180) (717)
Purchase of shares from
minorities (34) (6) (2,048)
Purchase of shares in
associates (8) - (1)
Repayment of funding by
associates - - 122
Dividends received from
associates 73 38 71
Dividends received from
other investments 1 1 2
Net cash used in investing
activities (789) (563) (3,557)
Cash flows from financing
activities
Proceeds from the issue of
shares 24 18 30
Purchase of own shares for
share trusts (8) (8) (8)
Proceeds from borrowings 3,710 265 3,002
Repayment of borrowings (3,702) (356) (900)
Capital element of finance
lease payments (9) (9) (28)
Increase in loan participation
deposit - - (196)
Dividends paid to shareholders
of the parent (473) (328) (520)
Dividends paid to minority
interests (68) (63) (167)
Net cash (used) / generated
in financing activities (526) (481) 1,213
Net cash from operating,
investing and financing
activities 212 (231) (243)
Effects of exchange rate
changes 26 2 11
Net increase / (decrease) in
cash and cash equivalents 238 (229) (232)
Cash and cash equivalents
at 1 April 398 630 630
Cash and cash equivalents
at period end 8 636 401 398
Consolidated statements of recognised income and expense for the six months
ended 30 September
Six Six
months months Year
ended ended ended
30/9/06 30/9/05 31/3/06
Unaudited Unaudited Audited
US$m US$m US$m
Currency translation differences on
foreign currency net investments (302) (227) (128)
Actuarial gains on defined benefit
plans - - 42
Tax on items taken directly to
equity - - (17)
Net investment hedges 106 10 (2)
Net losses recognised directly
in equity (196) (217) (105)
Profit for the period 908 749 1,674
Total recognised income for the
period 712 532 1,569
- attributable to equity
shareholders 606 453 1,360
- attributable to minority
interests 106 79 209
Notes to the financial statements
1. Basis of preparation
The financial information comprises the unaudited results of SABMiller plc
for the six months ended 30 September 2006 and 30 September 2005, together
with the audited results for the year ended 31 March 2006, restated for
further adjustments relating to initial accounting for business combinations.
Further details of these adjustments are provided in note 9. The financial
information in this report is not audited and does not constitute statutory
accounts within the meaning of s240 of the Companies Act 1985 (as amended).
The board of directors approved this financial information on 8 November
2006. The annual financial statements for the year ended 31 March 2006, which
represent the statutory accounts for that year have been filed with the
Registrar of Companies. The auditors" report on those accounts was
unqualified and did not contain a statement made under s237(2) or (3) of the
Companies Act 1985.
The unaudited financial information in this interim announcement has been
prepared in accordance with the Listing Rules of the Financial Services
Authority (FSA) and on a basis consistent with the IFRS accounting policies
set out in the Group"s Annual report for the year ended 31 March 2006, except
that IFRIC Interpretation 4 `Determining whether an arrangement contains a
lease" and an amendment to IAS 39 `Financial guarantee contracts" have been
implemented. There is no material effect of either change on the current or
prior periods.
IAS 34 `Interim financial statements" may be applied if a company elects to
apply it; it is not a mandatory Standard. The Group has chosen not to adopt
IAS 34, `Interim financial statements", in preparing its 2006 interim
financial statements and, therefore, this interim financial information is
not in compliance with IFRS.
The subsidiary and associated undertakings in the group operate in the local
currency of the country in which they are based. From a presentational
perspective, the group regards these operations as being US dollar-based as
the transactions of these entities are, insofar as is possible, evaluated in
US dollars. In management accounting terms all companies report in US
dollars. The directors of the company regard the US dollar as the
presentational currency of the group, being the most representative currency
of its operations. Therefore the consolidated interim financial statements
are presented in US dollars.
Accounting policies
These interim financial statements should be read in conjunction with the
annual financial statements for the year ended 31 March 2006 and the
accounting policies laid down therein (which were published in June 2006).
The financial statements are prepared under the historical cost convention,
except for the revaluation to fair value of certain financial assets and
liabilities.
2. Segmental information (unaudited)
Revenue
The following table provides a reconciliation of Group revenue (including
share of associates" revenue) to segment revenue.
Share of
Segment associates" Group
revenue revenue revenue
Six months ended 30 September: 2006 2006 2006
US$m US$m US$m
Latin America 2,003 9 2,012
Europe 2,279 - 2,279
North America 2,632 - 2,632
Africa and Asia 681 675 1,356
South Africa:
- Beverages 1,749 201 1,950
- Hotels and Gaming - 167 167
South Africa: Total 1,749 368 2,117
9,344 1,052 10,396
Segment associates" Group
revenue revenue revenue
Six months ended 30 September: 2005 2005 2005
US$m US$m US$m
Latin America 262 - 262
Europe 1,905 - 1,905
North America 2,651 - 2,651
Africa and Asia 545 520 1,065
South Africa:
- Beverages 1,688 176 1,864
- Hotels and Gaming - 154 154
South Africa: Total 1,688 330 2,018
7,051 850 7,901
Year ended 31 March: 2006 2006 2006
US$m US$m US$m
Latin America 2,153 12 2,165
Europe 3,258 - 3,258
North America 4,912 - 4,912
Africa and Asia 1,203 1,018 2,221
South Africa:
- Beverages 3,781 423 4,204
- Hotels and Gaming - 321 321
South Africa: Total 3,781 744 4,525
15,307 1,774 17,081
Operating profit before exceptional items
The following table provides a reconciliation of operating profit (segment
result) to operating profit before exceptional items.
Operating
profit
before
Operating Exceptional exceptional
profit items items
Six months ended 30 September: 2006 2006 2006
US$m US$m US$m
Latin America 311 24 335
Europe 484 - 484
North America 251 - 251
Africa and Asia 124 - 124
South Africa: Beverages 387 - 387
Corporate (42) 3 (39)
1,515 27 1,542
profit
before
Operating Exceptional exceptional
profit items items
Six months ended 30 September: 2005 2005 2005
US$m US$m US$m
Latin America 32 - 32
Europe 379 - 379
North America 286 - 286
Africa and Asia 108 - 108
South Africa: Beverages 353 - 353
Corporate (55) - (55)
1,103 - 1,103
Year ended 31 March: 2006 2006 2006
US$m US$m US$m
Latin America 376 11 387
Europe 567 - 567
North America 454 - 454
Africa and Asia 257 - 257
South Africa: Beverages 1,011 - 1,011
Corporate (90) 4 (86)
2,575 15 2,590
EBITA
The following table provides a reconciliation of operating profit before
exceptional items to EBITA.
Share of
associates" Amortisation
Operating operating of
profit profit intangible
before before assets
exceptional exceptional (excluding)
items items software) EBITA
Six months ended
30 September: 2006 2006 2006 2006
US$m US$m US$m US$m
Latin America 335 - 52 387
Europe 484 - 1 485
North America 251 - 2 253
Africa and Asia 124 115 1 240
South Africa:
- Beverages 387 24 - 411
- Hotels and Gaming - 44 - 44
South Africa: Total 387 68 - 455
Corporate (39) - - (39)
Group 1,542 183 56 1,781
Share of
associates" Amortisation
Operating operating of
profit profit intangible
before before assets
exceptional exceptional (excluding)
items items software) EBITA
Six months ended
30 September: 2005 2005 2005 2005
US$m US$m US$m US$m
Latin America 32 - - 32
Europe 379 - - 379
North America 286 - - 286
Africa and Asia 108 100 1 209
South Africa:
- Beverages 353 22 - 375
- Hotels and Gaming - 38 - 38
South Africa: Total 353 60 - 413
Corporate (55) - - (55)
Group 1,103 160 1 1,264
Year ended 31 March:
2006 2006 2006 2006
US$m US$m US$m US$m
Latin America 387 - 49 436
Europe 567 - 2 569
North America 454 - - 454
Africa and Asia 257 164 1 422
South Africa:
- Beverages 1,011 51 - 1,062
- Hotels and Gaming - 84 - 84
South Africa: Total 1,011 135 - 1,146
Corporate (86) - - (86)
Group 2,590 299 52 2,941
The group"s share of associates" operating profit is reconciled to the share
of post-tax results of associates in the income statement as follows:
Six months Six months Year
ended Ended ended
30/9/06 30/9/05 31/3/06
US$m US$m US$m
Share of associates" operating
profit 183 160 299
Share of associates" net finance
cost (6) (8) (16)
Share of associates" tax (52) (38) (81)
Share of associates" minority
interests (20) (14) (25)
105 100 177
Excise duties of US$1,887 million (2005: US$1,295 million) have been incurred
during the six months as follows: Latin America US$497 million (2005: US$29
million); Europe US$442 million (2005: US$355 million); North America US$461
million (2005: US$477 million); Africa and Asia US$152 million (2005: US$112
million) and South Africa US$335 million (2005: US$322 million).
The following table provides a reconciliation of EBITDA (the net cash inflow
from operating activities before working capital movements) before cash
exceptional items to EBITDA after cash exceptional items. A reconciliation
of group EBITDA after cash exceptional items can be found in note 7.
EBITDA
before
cash
exceptional Exceptional
items items EBITDA
Six months ended 30 September: 2006 2006 2006
US$m US$m US$m
Latin America 493 (17) 476
Europe 577 - 577
North America 325 - 325
Africa and Asia 159 - 159
South Africa: Beverages 458 - 458
Corporate (28) (3) (31)
1,984 (20) 1,964
EBITDA
before
cash
exceptional Exceptional
items items EBITDA
Six months ended 30 September: 2006 2006 2006
US$m US$m US$m
Latin America 52 - 52
Europe 469 - 469
North America 359 - 359
Africa and Asia 137 - 137
South Africa: Beverages 440 - 440
Corporate (39) - (39)
1,418 - 1,418
Year ended 31 March: 2006 2006 2006
US$m US$m US$m
Latin America 574 (4) 570
Europe 733 - 733
North America 591 - 591
Africa and Asia 321 - 321
South Africa: Beverages 1,205 - 1,205
Corporate (68) (4) (72)
3,356 (8) 3,34
Six Six
months months Year
ended ended ended
30/9/06 30/9/05 31/3/06
Unaudited Unaudited Audited
US$m US$m US$m
3. Exceptional items
Subsidiaries" exceptional items
included in operating profit:
Latin America
Bavaria integration and
restructuring costs (24) - (11)
Corporate
Bavaria integration costs (3) - (4)
Exceptional items included in
operating profit (27) - (15)
Taxation credit 8 - 5
Minority interests" share of the
above items - - -
2006
Latin America and Corporate
Integration and restructuring costs associated with the consolidation of
Bavaria of US$27 million were incurred during the period (six months ended
30/9/05: US$Nil million; year ended 31/3/06: US$15 million).
4. Taxation
Six Six
months months Year
ended ended ended
30/9/06 30/9/05 31/3/06
Unaudited Unaudited Audited
US$m US$m US$m
Current taxation 384 350 701
- Charge for the period 1 377 357 717
- Adjustments in respect of
prior years 7 (7) (16)
Withholding taxes and other taxes 48 29 78
Total current taxation 432 379 779
Deferred taxation 38 (2) -
- Charge for the period 2 33 (2) 7
- Adjustments in respect of
prior years 5 2 (5)
- Rate change - (2) (2)
Total taxation 470 377 779
Effective tax rate, before
amortisation of intangibles
(excluding software) and
exceptional items (%) 35.7 35.3 33.6
The effective tax rate is calculated including share of associates" operating
profit before exceptional items and share of associates" tax before
exceptional items. This calculation is on a basis consistent with that used
in prior years and is also consistent with other group operating metrics.
1 The current tax charge for the period includes a UK corporation tax charge
of US$4 million (six months ended 30/9/05: charge of US$14 million; year
ended 31/3/06: US$29 million charge).
2 The deferred tax charge for the period includes a UK corporation tax charge
of US$5 million (six months ended 30/9/05: charge of US$10 million; year
ended 31/3/06: US$6 million charge).
5. Earnings per share
Six Six
months months Year
ended ended ended
30/9/06 30/9/05 31/3/06
Unaudited Unaudited Audited
US cents US cents UScents
Basic earnings per share 52.9 51.3 105.0
Diluted earnings per share 52.6 50.9 104.3
Headline earnings per share 55.4 52.7 108.3
Adjusted basic earnings
per share 56.6 52.7 109.1
Adjusted diluted earnings
per share 56.3 52.2 108.4
The weighted average number of shares was:
30/9/06 30/9/05 31/3/06
Unaudited Unaudited Audited
Millions Millions Millions
of shares of shares of shares
Ordinary shares 1,498 1,270 1,376
ESOP trust ordinary shares (4) (4) (4)
Basic shares 1,494 1,266 1,372
Dilutive ordinary shares from
share options 9 11 9
Diluted shares 1,503 1,277 1,381
Adjusted and headline earnings
The group has also presented an adjusted basic earnings per share figure to
exclude the impact of amortisation of intangible assets (excluding
capitalised software) and other non-recurring items for the years shown in
the consolidated financial statements. Adjusted earnings per share are based
on adjusted headline earnings for each financial year and on the same number
of weighted average shares in issue as the basic earnings per share
calculation. Headline earnings per share are calculated in accordance with
the UK Society of Investment Professionals (UKSIP) formerly the Institute of
Investment Management and Research Statement of Investment Practice No. 1
entitled `The Definition of Headline Earnings". The adjustments made to
arrive at headline earnings and adjusted earnings are as follows:
Six Six
months months Year
ended ended ended
30/9/06 30/9/05 31/3/06
Unaudited Unaudited Audited
US$m US$m US$m
Profit for the financial period
attributable to equity holders
of the parent 790 650 1,440
Early redemption penalty in
respect of private placement notes - 13 13
(Profit) / loss on derivatives on
capital items 1 (1) 10 5
Amortisation of intangible assets
(excluding capitalised software) 56 1 52
Impairment of property, plant
and equipment 2 - 4
Profit on sale of property, plant
and equipment (6) (2) (5)
Tax effects of the above items (17) (7) (19)
Minority interest effects 3 2 (6)
Headline earnings (basic) 827 667 1,484
Integration / reorganisation costs
(net of tax effects) 19 - 13
Adjusted earnings 846 667 1,497
1 This does not include all derivative movements but includes those in
relation to capital items for which hedge accounting cannot be applied.
6. Dividends paid and proposed
Dividends paid are as follows:
Six Six
months months Year
ended ended ended
30/9/06 30/9/05 31/3/06
Unaudited Unaudited Audited
US cents US cents UScents
Prior year final dividend paid
per ordinary share 31.0 26.0 26.0
Current year interim dividend
paid per ordinary share - - 13.0
The interim dividend declared of 14.0 US cents per ordinary share is payable
on 22 December 2006 to ordinary shareholders on the register as at 1 December
2006 and will absorb an estimated US$210 million of shareholders" funds.
7. Reconciliation of profit for the year to net cash generated from
operations
Six Six
months months Year
ended ended ended
30/9/06 30/9/05 31/3/06
Unaudited Unaudited Audited
US$m US$m US$m
Profit for the year 908 749 1,674
Taxation 470 377 779
Share of post-tax results
of associates (105) (100) (177)
Interest receivable (146) (40) (78)
Interest payable and similar
charges 388 117 377
Operating profit 1,515 1,103 2,575
Depreciation:
Property, plant and equipment 270 204 444
Containers 85 45 111
Container breakages, shrinkage
and write-offs 11 11 77
Profit on sale of property,
plant and equipment (6) (2) (5)
Impairment of property,
plant and equipment 2 - 4
Amortisation of intangible assets 81 22 105
Net (gain) / loss from fair
value hedges (8) 20 5
Dividends received from
other investments (1) (1) (3)
Charge with respect to share
options 14 10 17
Restructuring and integration costs
(Latin America, Corporate) - - 7
Other non-cash movements 1 6 11
Net cash generated from
operations before working
capital movements (EBITDA) 1,964 1,418 3,348
Net inflow / (outflow) in
working capital 188 (129) (57)
Net cash generated from operations 2,152 1,289 3,291
Cash generated from operations include cash flows relating to exceptional
items of US$20 million in respect of South America integration and
restructuring costs (year ended 31 March 2006: US$8 million in respect of
South America integration and restructuring costs; six months ended 30
September 2005: US$Nil million).
8. Net debt
Net debt is analysed as follows:
As at As at As at
30/9/06 30/9/05 31/3/06*
Unaudited Unaudited Unaudited
US$m US$m US$m
Borrowings (7,260) (2,830) (7,251)
Borrowings-related derivative
financial instruments (96) 12 (173)
Overdrafts (206) (741) (324)
Finance leases (17) (11) (27)
Gross debt (7,579) (3,570) (7,775)
Loan participation deposit 190 - 196
Cash and cash equivalents
(excluding overdrafts) 657 1,142 472
Net debt (6,732) (2,428) (7,107)
*As restated (see note 9).
Cash and cash equivalents on the Balance Sheet are reconciled to cash and
cash equivalents on the Cash Flow as follows:
As at As at As at
30/9/06 30/9/05 31/3/06
Unaudited Unaudited Audited
US$m US$m US$m
Cash and cash equivalents
(Balance Sheet) 657 1,142 472
Overdrafts (206) (741) (324)
Legal right of offset 185 - 250
Cash and cash equivalents
(Cash Flow) 636 401 398
9. Business combinations
The initial accounting under IFRS 3, `Business Combinations", for the Bavaria
transaction had not been completed as at 31 March 2006. During the six
months ended 30 September 2006, adjustments to provisional fair values in
respect of the Bavaria transaction have been made. As a result comparative
information for the year ended 31 March 2006 has been presented in these
interim financial statements as if the further adjustments to provisional
fair values had been made from the transaction date of 12 October 2005. The
impact on the prior period Income Statement has been reviewed and no material
adjustments to the Income Statement as a result of the adjustments to
provisional fair values are required. The following table reconciles the
impact on the Balance Sheet reported for the year ended 31 March 2006 to the
comparative Balance Sheet presented in this interim announcement.
Balance Sheet
Adjustments At
to 31/3/06
At 31/3/06 provisional As
restated
Audited fair values
Unaudited
Unaudited
US$ US$ US$
Assets
Non-current assets
Goodwill 12,539 275 12,814
Intangible assets 3,596 - 3,596
Property, plant and equipment 6,340 (3) 6,337
Other non-current assets 1,476 (5) 1,471
23,951 267 24,218
Current assets
Inventories 881 (3) 878
Trade and other receivables 1,218 7 1,225
Other current assets 726 - 726
2,825 4 2,829
Total assets 26,776 271 27,047
Liabilities
Current liabilities
Trade and other payables (2,473) 59 (2,414)
Other current liabilities (2,334) (117) (2,451)
(4,807) (58) (4,865)
Non-current liabilities
Trade and other payables (63) (23) (86)
Provisions (1,088) (159) (1,247)
Other non-current liabilities (7,219) (45) (7,264)
(8,370) (227) (8,597)
Total liabilities (13,177) (285) (13,462)
Net assets 13,599 (14) 13,585
Total equity 13,599 (14) 13,585
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 includes `forward-looking statements". 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 document. 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.
SABMiller plc
(Registration No. 3528416)
Company Secretary
John Davidson
Registered Office
SABMiller House
Church Street West
Woking
Surrey, England
GU21 6HS
Telefax +44 1483 264103
Telephone +44 1483 264000
Head Office
One Stanhope Gate
London, England
W1K 1AF
Telefax +44 20 7659 0111
Telephone +44 20 7659 0100
Internet address
http://www.sabmiller.com
Investor Relations
investor.relations@sabmiller.com
Telephone +44 20 7659 0100
Independent Auditors
PricewaterhouseCoopers LLP
1 Embankment Place
London, England
WC2N 6RH
Telefax +44 20 7822 4652
Telephone +44 20 7583 5000
Registrar (United Kingdom)
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent, England
BR3 4TU
Telefax +44 20 8658 3430
Telephone +44 20 8639 2157 (outside UK)
Telephone 0870 162 3100 (from UK)
Registrar (South Africa)
Computershare Investor Services 2004 (Pty) Limited
70 Marshall Street, Johannesburg
PO Box 61051
Marshalltown 2107
South Africa
Telefax +27 11 370 5487
Telephone +27 11 370 5000
United States ADR Depositary
The Bank of New York
ADR Department
101 Barclay Street
New York, NY 10286
United States of America
Telefax +1 212 815 3050
Telephone +1 212 815 2051
Internet: http:// www.bankofny.com
Toll free +1 888 269 2377 (USA & Canada only)
Date: 09/11/2006 09:02:34 AM Produced by the JSE SENS Department
