Half Yearly Report

Interim Announcement

Release date: 12 November 2015

SABMiller delivers good underlying performance

SABMiller plc reports its interim (unaudited) results for the six months to 30 September 2015.

Highlights

− Good underlying performance with group net producer revenue (NPR) growth of 4%, beverage volumes up 1% and group NPR per hectolitre (hl) up 4%

− Growth accelerated in the second quarter, with group NPR growth of 6% and beverage volume growth of 2%

− Group lager volumes for the half were in line with the prior year with subsidiary lager volume growth of 3% (second quarter growth of 5%) offset by the performance of our associates

− Premium lager brands NPR growth of 7%1, driven by strong performance in many of our key markets, supported by global lager brands NPR growth of 14%2 with growth across all regions

− Good performance across both Latin America and Africa resulted in soft drinks volumes up 4%

− Our cost programme is on track to deliver more than US$430 million of annualised savings by the year end2

− EBITA growth of 5% and EBITA margin3 expansion of 20 basis points (bps). EBITA margin was adversely impacted by competitive pressure in Poland and the transactional impacts of currency depreciation

− Adjusted constant currency EPS grew by 5% and by 7% excluding the impact of Tsogo Sun4

− Reported group NPR, EBITA and adjusted EPS declined by 12%, 11% and 11%, respectively, primarily as a result of the depreciation of key operating currencies against the US dollar

− Free cash flow of US$1,423 million despite adverse currency movements, with improved cash conversion

− Interim dividend per share of 28.25 US cents, up 9% on prior year5

− On 11 November 2015, the boards of SABMiller and Anheuser-Busch InBev (AB InBev) announced that they had reached agreement on the terms of a recommended acquisition of SABMiller by AB InBev, expected to complete in the second half of 2016

Except where indicated, all growth rates in the Highlights are over the prior year comparative period and are expressed on an organic basis for volumes and on an organic, constant currency basis for group NPR, group NPR per hl, EBITA and EBITA margin movements.

1 On a subsidiary basis, excluding home market for global brands. Global brands include Miller Lite in both periods.

2 Refer to the Cost and efficiency programme section on page 40.

3 Expressed as a percentage of group NPR.

4 Excluding the prior year net earnings impact of the group's disposed investment in Tsogo Sun Holdings Limited.

5 In line with SABMiller's stated policy for the interim dividend to be 25% of the prior year's full year dividend. The interim dividend is in accordance with the terms of SABMiller and AB InBev's joint Rule 2.7 announcement on 11 November.

6 Revenue excludes the group's share of associates' and joint ventures' revenue. Group net producer revenue (NPR) comprises group revenue, including the group's share of associates' and joint ventures' revenue, less excise and similar taxes, including the group's share of associates' and joint ventures' excise and similar taxes.

7 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 computer software) and includes the group's share of associates' and joint ventures' operating profit, on a similar basis. EBITA is used throughout this interim announcement.

8 Constant currency percentage change, not adjusted for the impact of acquisitions and disposals. Adjusting for Tsogo Sun, 7% increase.

9 Profit before tax includes net exceptional charges of US$8 million (2014: credits of US$285 million). Exceptional items are explained in note 3.

Alan Clark, Chief Executive of SABMiller, said:

"We had a good first half, stripping out the effects of adverse exchange rates, with strong growth in Africa and Latin America and better mix across all of our regions. On an organic, constant currency basis, group earnings and margins improved as a result of growing volumes and NPR per hectolitre, and continued cost savings.

"In our African and Latin American markets, our affordability strategies are helping us to grow beer's share of total alcohol. At the other end of the price ladder, our volume growth in premium lagers included particularly strong growth of our global premium brands. Our reported results were again negatively impacted by the depreciation of major operating currencies against the US dollar."

1 Expressed as a percentage of group NPR.

Continued depreciation of key operating currencies against the US dollar has had an adverse impact on our results on both a translational and transactional basis. The adverse translational foreign exchange impact on EBITA in the period was US$497 million, with a further adverse transactional impact on margins.

Business review

Regional highlights1

1 Except where indicated all growth rates in the Regional highlights are over the prior year comparative period and are expressed on an organic basis for volumes and on an organic, constant currency basis for group NPR, group NPR per hl, EBITA and EBITA margin movements.

Latin America

− Group NPR grew 8% driven by beverage volume growth of 6% together with selective price increases and favourable mix.

− Lager volumes grew 5% with premium segment growth of 6%. Soft drinks volumes increased by 7%.

− Growth accelerated in the second quarter, with group NPR growth of 9% and beverage volume growth of 7%, supported by lager volume growth of 6%.

− Regional EBITA grew 5% although margin declined 80 bps, reflecting the transactional impacts of currency depreciation, the 18 day strike in Panama, and increased investment in our brands.

Africa

− Group NPR grew 9% reflecting beverage volume growth of 5%, positive category mix and selective restrained pricing.

− Lager volumes grew by 6% and soft drinks volumes increased by 5%.

− Growth accelerated in the second quarter with group NPR growth of 11%, beverage volume growth of 6%, and lager volume growth of 8%.

− In South Africa, group NPR grew 7% (beverage volumes up 3%), supported by the fourth consecutive quarter of lager volume growth despite a weak economic environment and electricity shortages, supported by successful innovation and premium lager brand volume growth of 13%.

− In the rest of Africa, our subsidiary businesses delivered lager volume growth of 16% and group NPR growth of 14% due to our continued focus on more affordable beers, mainstream price moderation, and improved sales execution, complemented by steady progress in premiumisation.

− Beverage volume growth of our associate Castel was impacted by challenging macro-economic conditions in some of its key markets, particularly Angola.

− Regional EBITA grew 11% despite transactional foreign exchange pressures, with margin expansion of 30 bps driven by strong cost management, efficiency gains in manufacturing and distribution, and positive leverage.

Asia Pacific

− Group NPR grew 4% as a result of group NPR per hl growth of 7%, underpinned by premiumisation which more than offset the beverage volume decline of 3%.

− In Australia, group NPR grew 2% driven by group NPR per hl growth of 4% supported by positive brand mix reflecting continued momentum in the premium and contemporary segments, with our premium lager brands growing by 10%. Lager volumes were down 2%, although we gained share from our key competitor in a declining market, which was adversely impacted by the timing of Easter trading. Australia's volume trend improved in the second quarter, with lager volumes in line with the prior year while maintaining positive price realisation.

− In China, group NPR grew 5% as an increase in one-way packaging volumes and the continuing premiumisation of the portfolio offset a 3% volume decline due to the tough macro-economic and consumer spending environment. Our associate CR Snow has outperformed the market over the financial year to date.

− Regional EBITA grew 7% with margin expansion of 60 bps reflecting positive mix and cost control.

Europe

− Group NPR was in line with the prior year with group NPR per hl growth in the majority of our markets.

− Beverage volumes declined by 3%.

− Lager volumes declined by 5% reflecting sustained competitive pricing pressure in Poland and underlying weakness in the key markets of our associate, Anadolu Efes.

− Excluding Poland and Anadolu Efes, Europe showed encouraging performance with group NPR growth of 4% and beverage volume growth of 3% in a challenging operating environment.

− Regional EBITA declined by 2% and EBITA margin contracted by 20 bps. Cost optimisation initiatives across the rest of the region mitigated an EBITA decline in Poland and the impact of the supply chain disruptions in the Czech Republic and Slovakia following a major IT deployment.

− In June we acquired the UK modern craft brewer, Meantime Brewing Company Ltd, which continues to grow in both the on and the off-premise.

North America

− Group NPR was down 1% with group NPR per hl growth offsetting lower volumes.

− MillerCoors continues to evolve its portfolio mix towards the above premium market segments and strengthened its performance in the premium light segment with Miller Lite gaining segment share for the last four consecutive quarters.

− Regional EBITA was in line with the prior year, with EBITA margin up 10 bps reflecting continued cost savings and lower fuel and packaging material expenses.

− An exceptional charge of US$23 million has been recognised, being the group's share of MillerCoors' restructuring costs relating to the closure of the brewery in Eden, North Carolina, which will be fully effective September 2016.

Group financial highlights

− EBITA growth of 5% and EBITA margin expansion of 20 bps. EBITA margin was adversely impacted by competitive pressure in Poland and the transactional impacts of currency depreciation, which was mitigated by a reduction in performance-related share incentive charges.

− Adjusted EBITDA1 of US$2,960 million was down US$340 million on the prior year due to an adverse translational currency impact of US$517 million.

− Weighted average interest rate for the gross debt portfolio was 3.4%, down from 3.5%.

− The effective tax rate for the half year was 26.5%, up from 26.0% in the prior year period.

− The group's gearing ratio declining by 320 bps to 46.2% and net debt increasing marginally by US$75 million to US$10,540 million as at 30 September 2015.

− Net debt to adjusted EBITDA ratio of 1.7x (1.6x for the year ended 31 March 2015).

− Capex of US$582 million, focused on investment in production capacity and capability, most notably in our higher growth markets of Africa and Latin America.

Outlook

We expect that growth will continue to be principally driven by our developing markets and through our focus on premiumisation across all markets. We anticipate that we will continue to be impacted by the depreciation of key operating currencies against the US dollar in the current financial year, which has materially impacted our reported results.

Raw material input costs are anticipated to increase by low single digits in constant currency terms with some markets continuing to be impacted by foreign exchange movements on imported raw materials. We expect to deliver more than US$430 million of annualised savings by 31 March 2016, against our original target of US$500 million per annum by 31 March 2018. Further savings of at least US$550 million are expected by 2020, bringing the aggregate annual run rate for the programme to at least US$1,050 million2.

1 Adjusted EBITDA comprises operating profit before exceptional items, depreciation and amortisation (i.e. subsidiary EBITDA) together with the group's share of operating profit from the MillerCoors joint venture on a similar basis. EBITDA including the group's share of all associates and joint ventures on a similar basis is US$3,576 million (refer to note 2).

2 Refer to the Cost and efficiency programme section on page 40.

Operational review

Latin America

In Latin America, group NPR grew 8% on a constant currency basis (down 11% on a reported basis) driven by beverage volume growth of 6% together with selective price increases and favourable brand mix. Lager volumes grew 5% with premium segment growth of 6%. Lager volume growth has accelerated, based on our strategy to target a broader range of consumption occasions by expanding our brand and pack portfolios, including recent launches of low alcohol offerings. Our affordability initiatives in Central America in particular have outperformed expectations. Soft drinks volumes increased by 7% driven by the continuing growth of sparkling soft drinks and water in Central America, together with the success of our non-alcoholic malt brands in Colombia and Peru, reflecting the success of new bulk packs.

Our strong top line growth has helped to offset some of the adverse impact of weaker currencies on our input costs and the increased investment behind our brands. The first half of the year was also adversely impacted by an excise-driven price increase as well as an 18 day strike in Panama. Notwithstanding these effects our EBITA grew by 5% on an organic, constant currency basis (down 16% on a reported basis). Reported EBITA margin declined by 200 bps and constant currency EBITA margin declined by 80 bps reflecting these headwinds, in particular the adverse transactional foreign exchange impact.

In Colombia, group NPR grew by 10% on a constant currency basis with beverage volumes up 9%. Strong lager volume growth of 9% was underpinned by price restraint and the continued momentum of our above mainstream brands, Aguila Light and the recently launched alcohol-free Aguila Cero, together with our mainstream brand Poker. Volume growth also reflected a softer comparative in the first quarter given the trading restrictions in the prior year. The premium portfolio volumes grew by over 20%, with Miller Lite and our local premium brand, Club Colombia, leading this strong performance. Soft drinks volume growth of 7% was driven by our non-alcoholic malt brand Pony Malta and the 1 litre PET bulk pack, introduced in the prior year. Marketing investment increased due to the sponsorship of the national football league. Currency headwinds and the impact of cycling non-core asset disposals in the prior year were only partially offset by continuing fixed cost efficiencies, with a consequent negative impact on margin.

In Peru, group NPR grew by 8% on a constant currency basis, based on beverage volume growth of 4%, selective price increases and positive mix. Consumers continued to trade up from mainstream brands with strong growth in our above mainstream brand, Pilsen Callao, notwithstanding the price increase, and our local premium brand, Cusqueña. We increased our share of the beer market by 120 bps, supported by our continued expansion of direct store distribution. We also achieved rapid growth, albeit off a low base, in our global brands as we continue to expand our reach. Soft drinks volumes were up 15% with growth in our sparkling soft drink brand, Guarana, San Mateo water, and our non-alcoholic malt brand, Maltin Power. Financial performance also benefited from continuing fixed cost productivity and the sale of non-core assets.

In Ecuador, group NPR grew by 3% cycling a strong comparative period. Group NPR growth was driven by positive brand mix as consumers continued to trade up to Pilsener Light. Beverage volume growth of 1% was constrained by a difficult trading environment and the macro-economic downturn. Fixed cost savings, marketing spend optimisation and distribution efficiencies translated into strong EBITA growth and margin expansion.

In Panama, group NPR declined by 15% with a beverage volume decline of 13%. Lager volumes declined by 19% due to a combination of an excise-driven price increase in April, when excise was increased on beer but reduced on spirits, and an 18 day strike in July which adversely impacted both lager and soft drinks production and distribution.

In Honduras, group NPR grew by 9% on a constant currency basis, with lager volume growth of 17% reflecting a price reduction to drive affordability. This initiative was implemented across all price segments and significantly reinvigorated the category, driving double digit growth of our mainstream brand, Salva Vida, and our local premium brand, Barena. This success was achieved despite continuing security concerns which have a negative impact on our distribution and on-premise consumers. Our soft drinks portfolio saw strong growth with volumes up 7%, mainly driven by sparkling soft drinks, combined with selective pricing.

In El Salvador, group NPR grew by 11% for the half year, with beverage volumes increasing by 9%. Lager volume growth of 10% was driven by our route to market expansion and a continuing focus on our bulk pack affordability strategy. Our flagship mainstream brand, Pilsener, and above mainstream brand, Golden Light, both grew by 10% while our Miller range saw high double digit growth. Soft drinks volumes grew by 10% supported by increased direct distribution.

Africa

Group NPR in Africa grew 9% on an organic, constant currency basis (down 8% on a reported basis) underpinned by beverage volume growth of 5% on an organic basis, positive category mix and selective pricing. Lager volumes grew by 6% and soft drinks volumes increased by 5%. Growth accelerated in the second quarter with group NPR growth of 11% and beverage volume growth of 6% on an organic basis, with lager volume growth of 8% benefiting from the price moderation across most markets. We are seeing significant success in the execution of our strategies through our continued focus on more affordable beers, mainstream price moderation, steady progress in premiumisation, all complemented by improved sales execution.

Strong growth in our affordable segment was driven by our cassava-based beer, Impala, in Mozambique and our sorghum-based beer, Eagle, in other countries, while our mainstream segment recorded significant gains driven by Castle Lager with double digit growth. In the premium segment, Castle Lite continued to perform well, particularly in South Africa and Zambia. Soft drinks volumes grew by 5% cycling a strong comparative period. Other alcoholic beverages were in line with the prior year, with growth in wines and spirits volumes offset by a decline in traditional beer volumes. Traditional beer volumes performed well across the majority of markets although a decline in Delta, our associate in Zimbabwe, led to an overall negative performance. We continue to grow our footprint in Nigeria and Ghana with increased capacity, and we expect new maltings plants in South Africa and Zambia to be commissioned by the end of the financial year.

EBITA grew by 11% on an organic, constant currency basis but declined by 7% on a reported basis. Raw material input costs pressures as a result of currency depreciation have been partly offset by our continued drive for local sourcing and efficiency gains in both manufacturing and distribution with route to market initiatives being rolled out in some markets. EBITA margin improved by 20 bps on a reported basis, reflecting our focus on cost management.

In South Africa, group NPR growth of 7% on an organic, constant currency basis reflected positive category mix, premiumisation and selective price increases on key lager brands and packs. Lager volumes grew 3%, with share gains across both the beer and total alcohol markets, supported by the growth of bulk packs. This is the fourth consecutive quarter of lager volume growth despite a weak economic environment and electricity shortages. While our mainstream brand segment was in line with the prior year, our premium lager brands continued to grow strongly with volumes increasing by 13%, led by Castle Lite and successful innovations. Soft drinks volume growth of 2%, cycling a strong comparative period, was achieved through a focus on affordability, streamlined in-trade execution and expansion by direct servicing of our outlets. Our associate, Distell, delivered strong volume growth of 13% benefiting from strong developing markets performance and a diverse portfolio that targets a broad range of consumption occasions.

In Tanzania, group NPR growth of 5% on a constant currency basis was delivered through a 5% increase in beverage volumes following a strong recovery in lager volumes in the second quarter, with double digit growth as we cycled an excise-related price increase in the prior year, together with strong growth in traditional beer. Expanded market penetration, and a revised sales model with improved service and better coverage, supported beer market share gains.

Group NPR in Mozambique grew by 20% on a constant currency basis underpinned by robust beverage volume growth of 19%, with lager volume growth of 25% despite cycling a strong comparative period, driven by holding key price points and increased outlet reach. Volume growth was achieved through strong growth of our more affordable, cassava-based Impala brand and our mainstream brand 2M, benefiting from strong brand equity, aided by the can pack renovation undertaken at the end of the prior financial year.

In Nigeria, strong momentum was maintained with group NPR growth of 30% on a constant currency basis underpinned by a double digit beverage volume increase as additional brewing capacity was commissioned, with utilisation running ahead of schedule. Increased market penetration was driven through improved availability and expansion into new regions. Our mainstream lager brand, Hero, continued to increase volumes by double digits. The malt beverage category also remained strong, with double digit volume growth.

Despite severe economic headwinds, Zambia grew strongly, with group NPR up 9% on a constant currency basis reflecting beverage volume growth of 5% supported by positive category mix. Lager volumes increased 21% benefiting from price reductions at the beginning of the financial year in anticipation of an excise decrease which was subsequently announced in September and is expected to be effective in January 2016. Soft drinks volumes declined by 11% following pricing taken earlier in the year, while traditional beer volumes grew 5% as a result of enhanced route to market execution and additional capacity.

In Uganda, group NPR grew by 20% on a constant currency basis underpinned by beverage volume growth of 22% as a result of the continued growth of our more affordable, sorghum-based Eagle brand, and benefiting from the utilisation of additional capacity at the Mbarara brewery.

In Botswana, group NPR increased by 4% on a constant currency basis, while beverage volumes declined by 1% as lager volume growth of 14% was offset by a decline in traditional beer volumes.

Continued economic weakness in Zimbabwe led to our associate's group NPR declining 6% and beverage volumes declining by 11%.

Our associate Castel delivered double digit group NPR growth on a constant currency basis, although beverage volume growth was constrained by challenging macro-economic conditions in some of its key markets, particularly Angola.

Asia Pacific

1 In 2015 before exceptional credits of US$29 million (2014: charges of US$64 million), being integration and restructuring costs.

In Asia Pacific, group NPR grew by 4% on a constant currency basis with a beverage volume decline of 3% offset by group NPR per hl growth of 7% on the same basis, supported by continued premiumisation in Australia and China. Reported group NPR declined by 4% and reported EBITA declined by 6%, with EBITA margin declining by 40 bps reflecting the depreciation of currencies against the US dollar. On a constant currency basis, EBITA grew by 7% driven by Australia and China, with a 60 bps improvement in EBITA margin.

In Australia, group NPR grew by 2% on a constant currency basis with group NPR per hl growth of 4% offsetting a beverage volume decline of 3%. Lager volumes declined by 2% in the half year, although we gained share from our key competitor in a declining market, which was adversely impacted by the timing of Easter trading and continuing negative consumer sentiment. The volume trend improved in the second quarter, with lager volumes in line with the prior year while also maintaining positive price realisation.

Group NPR per hl growth was supported by positive brand mix driven by our focus on category expansion and portfolio innovation. Continued momentum in the premium and contemporary segments was led by sustained double digit growth from Great Northern, Peroni, and our craft brands, in particular the Yak brand family. Our mainstream brands, Victoria Bitter and Carlton Draught, declined. Effective cost control resulted in EBITA growth and margin expansion on an organic, constant currency basis. The integration programme was completed at the end of the last financial year and we continue to leverage the scale of the group in order to reduce costs and provide a platform for future growth.

In China, group NPR grew by 5% on a constant currency basis, as group NPR per hl growth of 8% offset a 3% beverage volume decline. The volume decline reflects a disappointing summer peak season in most core provinces due to the tough macro-economic and consumer spending environment. Our associate CR Snow has outperformed the market over the financial year to date.

Constant currency group NPR per hl growth was driven by an increase in one-way packaging volumes and the continuing premiumisation of the portfolio. CR Snow's premium portfolio continues to grow by double digits assisted by national consumer campaigns which leverage the equity of Snow Draft and Snow Brave the World through clear and consistent positioning and pricing. Snow Brave the World has grown to over 20% of CR Snow's total volume since its launch in 2008, and over 25% of its NPR. EBITA grew reflecting continuing cost control in the face of the industry downturn.

In India, group NPR on a constant currency basis grew by 6% underpinned by NPR per hl growth of 7% with volumes down by 1%. NPR per hl growth was driven by price increases in several key states as well strong growth in our premium portfolio. On a constant currency basis, EBITA was significantly higher than the prior year and EBITA margin improved driven by pricing and cost management.

Europe

In Europe, group NPR was in line with the prior year on an organic, constant currency basis (but was down 18% on a reported basis). Group NPR per hl growth of 3% on the same basis reflected improvements in the majority of our markets, while beverage volumes declined by 3% and lager volumes declined by 5%, both on an organic basis driven by sustained competitive pricing pressure in Poland and underlying weakness in the key markets of our associate, Anadolu Efes. Following a first quarter that was adversely impacted by the timing of Easter and a major IT deployment in the Czech Republic and Slovakia, trends improved in the second quarter, with lager volumes down just 1% on an organic basis. Excluding Poland and Anadolu Efes, Europe showed encouraging momentum with group NPR growth of 4% on an organic, constant currency basis and beverage volume growth of 3% on an organic basis in what remains a challenging operating environment.

Reported EBITA declined by 20%, with EBITA margin down 40 bps. On an organic, constant currency basis, EBITA was down 2% and EBITA margin declined by 20 bps. Notwithstanding the significant decline in trading performance in Poland and supply chain disruptions in the Czech Republic and Slovakia, cost optimisation initiatives across the rest of the region mitigated the EBITA decline.

In the Czech Republic and Slovakia, group NPR increased by 2% on a constant currency basis largely as a result of group NPR per hl growth of 3% on the same basis, due to positive brand mix reflecting growth across our premium portfolio. Beverage volumes were down 1%, rebounding strongly to grow by 6% in the second quarter, assisted by hot weather conditions over the peak summer months that helped offset the challenging first quarter. Our premium segment volumes grew by 6%, boosted by the continued growth of Kozel 11, Pilsner Urquell, and Birell, our non-alcoholic lager which penetrates soft drinks occasions, while our core mainstream brand Gambrinus 10 continued to decline. EBITA margin contracted as the strong topline growth was offset by adverse channel mix and additional operating costs associated with the major IT deployment.

In Poland, group NPR declined by 14% on a constant currency basis, with volumes down 12% reflecting the adverse price positioning of competitor brands relative to our own. During the second quarter a number of sales, brand portfolio, and operational initiatives were launched to restore the competitiveness of the business, and sequential improvements in market share were achieved in August and September. As a result of the competitive pricing environment and lower volumes, EBITA margin decreased significantly.

In the United Kingdom, group NPR was in line with the prior year on an organic, constant currency basis with group NPR per hl growth of 2% on the same basis offsetting a volume decline. Continued growth of Peroni Nastro Azzurro through increased rate of sale and distribution in key outlets was offset by a volume decline in the Polish brand portfolio as well as a decrease in Miller Genuine Draft as a result of our profitable revenue growth management strategy. In June, we acquired the modern craft brewer Meantime Brewing Company Ltd which continues to grow in both the on and the off-premise.

The remainder of our European subsidiaries increased group NPR by 6% with strong EBITA performance, both on a constant currency basis, in all markets particularly Romania and Italy where we benefited from cycling poor weather in the prior year. In Romania, group NPR grew by 5% as a result of our enhanced revenue management capabilities with strong growth of our local premium brand Ursus, and our global brands Peroni Nastro Azzurro and Pilsner Urquell. In Italy, group NPR increased 6% with growth in both our premium and mainstream lager segments, supported by firmer pricing.

Our associate Anadolu Efes continues to be affected by the beer market decline in Russia, geopolitical uncertainty in Ukraine, and the economic slowdown in Turkey, which have adversely impacted both the soft drinks and beer businesses.

North America

1 In 2015: before exceptional restructuring costs of US$23 million.

The North America segment includes our 58% share of MillerCoors and 100% of Miller Brewing International and our North American holding companies. Total North America reported EBITA was level with the prior year, with growth in MillerCoors offset by increased investment in the international operations in Brazil and Canada as we expand our businesses in these markets.

MillerCoors

MillerCoors' group NPR declined by 2% compared with the prior half year. Growth in group NPR per hl of 1%, driven by net pricing and positive sales mix, was offset by lower volumes, as domestic sales to wholesalers (STWs) were down by 3.0%. Domestic sales to retailers (STRs) were down 2.8%. EBITA growth of 2% was assisted by cost saving initiatives, which more than offset lower volumes and cost inflation.

Despite strong performance within the segment, premium light STRs declined by low single digits in the half year, with similar declines in both Miller Lite and Coors Light. However, Miller Lite grew marginally in the second quarter and has gained segment share for the last four consecutive quarters, reflecting the renewed strength of the brand. Coors Light also demonstrated a strong performance within the segment, introducing a new packaging design and a new marketing campaign, emphasising the brand's 'Born in the Rockies' positioning. Above premium STRs were in line with the prior half year primarily due to the double digit decline in Miller Fortune, as the brand has been deprioritised. This was offset by double digit growth in the Redd's franchise, now in its third year of growth despite cycling the successful launch of the Redd's Wicked series, mid single digit growth in the Leinenkugel's portfolio, driven by its Grapefruit and Harvest Patch shandy variants, and a low single digit increase in the Blue Moon franchise. The MillerCoors' STR decline was largely due to the below premium portfolio, down mid single digits, including a double digit decline in Milwaukee's Best, a high single digit decline in Keystone, and a mid single digit decline in Miller High Life.

Continued cost savings and lower fuel and packaging material expenses resulted in a low single digit decline in cost of goods sold per hl. Both marketing investment and general and administrative costs increased marginally compared with the prior half year.

In September 2015, MillerCoors announced plans to close the brewery in Eden, North Carolina with an effective closure date of September 2016. Certain charges associated with the closure were incurred in the half year and further charges will be recognised over the next four quarters. These are being treated as exceptional.

Financial review

New accounting standards

The accounting policies followed are the same as those published within the Annual Report and Accounts for the year ended 31 March 2015 except for the new interpretations and amendments adopted by the group since 1 April 2015 as detailed in note 1 to the condensed consolidated financial information.

The Annual Report and Accounts for the year ended 31 March 2015 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 NPR 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 and group NPR. Volumes exclude intra-group sales volumes. This measure of volumes is used in the segmental analyses as it closely aligns with the consolidated group NPR and EBITA disclosures.

Organic, constant currency comparisons

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

Acquisitions

In June 2015, the group acquired 100% of Meantime Brewing Company Ltd, a UK modern craft brewer.

Exceptional items

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

A net exceptional charge of US$8 million before finance costs and tax was reported for the period (2014: net credit of US$285 million). The net exceptional charge included:

− US$14 million (2014: US$39 million) charge related to cost and efficiency programme costs in Corporate;

− US$29 million credit (2014: US$64 million charge) related to integration and restructuring in Asia Pacific following the Foster's and Pacific Beverages acquisitions; and

− US$23 million (2014: US$nil million) charge being the group's share of MillerCoors' restructuring costs, including accelerated depreciation and severance costs, relating to the closure of the Eden brewery.

In addition to the items noted above, the net exceptional credit in 2014 included a US$388 million gain, after associated costs, on the disposal of the group's investment in Tsogo Sun.

Finance costs

Net finance costs, and adjusted finance costs, were US$238 million, a 28% decrease on the prior period's US$331 million, mainly as a result of debt repayments in the prior year.

Interest cover, as defined in the financial definitions section, has increased to 12.4 times from 9.9 times in the prior period.

Profit before tax

Adjusted profit before tax of US$2,627 million decreased by 11% over the comparable period in the prior year, primarily as a result of the translational effect of currency depreciation, notwithstanding the pricing and premiumisation initiatives driving group NPR growth, together with cost savings, operational efficiencies and lower finance costs.

Profit before tax was US$2,327 million, down by 18%, including the impact of the exceptional items noted above. The principal differences between reported and adjusted profit before tax relate to exceptional items, the amortisation of intangible assets (excluding computer software) and the group's share of associates' and joint ventures' tax and non-controlling interests. Net exceptional charges were US$8 million (2014: net credits of US$285 million) as detailed above, amortisation amounted to US$179 million in the half year (2014: US$226 million); and the group's share of associates' and joint ventures' tax and non-controlling interests was US$113 million (2014: US$167 million).

Taxation

The effective rate of tax for the half year before amortisation of intangible assets (excluding computer software) and exceptional items was 26.5% compared with a rate of 26.0% in the prior year period. The higher rate is primarily due to tax reforms in Latin America, the relative level of tax audit settlements and the deferred tax impact of legislative changes.

Earnings per share

The group presents adjusted basic earnings per share, which excludes the impact of amortisation of intangible assets (excluding computer software) 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 110.2 US cents were down 11% on the comparable period in the prior year, primarily as a result of the translational impact of the depreciation of key operating currencies against the US dollar. On a constant currency basis, adjusted earnings per share were up 5% as a result of increased EBITA and lower finance costs. An analysis of earnings per share is shown in note 5. On a statutory basis, basic earnings per share were 17% lower at 102.0 US cents (2014: 123.2 US cents) primarily due to the translational effects of foreign currency depreciation against the US dollar, together with the year on year change in the value of exceptional items, as explained above.

Cash flow and capital expenditure

The group uses an adjusted EBITDA measure which provides a useful indication of the cash generated to service the group's debt. Adjusted EBITDA comprises operating profit before exceptional items, depreciation and amortisation (i.e. subsidiary EBITDA) together with the group's share of operating profit from the MillerCoors joint venture on a similar basis. Given the significance of the MillerCoors business and the access to its cash generation, the inclusion of MillerCoors' EBITDA provides a useful measure of the group's overall cash generation. Adjusted EBITDA of US$2,960 million decreased by 10% compared with the same period in the prior year (2014: US$3,300 million).

Net cash generated from operations before working capital movements of US$2,436 million decreased by 11% compared with the prior year period (2014: US$2,733 million), in line with the decline in reported EBITA, mainly as a result of adverse currency movements against the US dollar.

Net cash generated from operating activities of US$1,399 million decreased by US$146 million on the same period in the prior year, primarily reflecting the decline in EBITA partly offset by lower net interest payments following the repayment of debt in the prior year, together with working capital improvements.

Capital expenditure on property, plant and equipment for the six months of US$518 million decreased compared with the same period in the prior year (2014: US$643 million), with continued investment in production capacity and capability, principally in Latin America and Africa. Capital expenditure including the purchase of intangible assets was US$582 million (2014: US$696 million), including spend on the group's digital capability, networks and communications.

Free cash flow decreased by 4% to US$1,423 million, reflecting the translational effects of foreign currency depreciation against the US dollar, in part offset by lower net interest paid, improvements in working capital flows, and higher dividends received. Free cash flow is detailed in note 10b, and defined in the financial definitions section.

Borrowings and net debt

Gross debt at 30 September 2015, comprising borrowings together with the fair value of financing derivative financial assets and liabilities, decreased to US$11,169 million from US$11,430 million at 31 March 2015, primarily as a result of the repayment of maturing commercial paper borrowings from available cash. Net debt, comprising gross debt net of cash and cash equivalents, increased marginally to US$10,540 million from US$10,465 million at 31 March 2015, following the payment in August 2015 of the final dividend for the year ended 31 March 2015, materially offset by strong operating cash flow. An analysis of net debt is provided in note 10c.

The group's gearing (presented as a ratio of net debt/equity) has increased to 46.2% from 43.0% at 31 March 2015. The weighted average interest rate for the gross debt portfolio at 30 September 2015 was 3.4% (31 March 2015: 3.5%).

The group's credit rating from Moody's Investors Service was lifted from Baa1 with a positive outlook to A3 with a stable outlook in June 2015. In October 2015, the rating was placed on review with direction uncertain by Moody's Investors Service following the joint announcement that AB InBev and SABMiller had reached an agreement in principle on AB InBev's intention to make an offer to acquire SABMiller.

Total equity

Total equity decreased from US$24,355 million at 31 March 2015 to US$22,812 million at 30 September 2015, primarily as a result of currency translation movements on foreign currency investments and the payment of the final dividend for the year ended 31 March 2015, partially offset by the profit for the period.

Goodwill and intangible assets

Goodwill decreased to US$13,721 million (31 March 2015: US$14,746 million) as a result of foreign currency movements in the period, partly offset by goodwill arising on the Meantime acquisition. Intangible assets decreased in the period to US$6,366 million (31 March 2015: US$6,878 million) primarily due to foreign exchange rate movements and amortisation, partly offset by intangibles recognised in relation to the acquisition of Meantime Brewing Company Ltd.

Currencies

The exchange rates to the US dollar used in preparing the consolidated interim financial information are detailed in the table below, with other major currencies in which the group operates weakening against the US dollar during the period.

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 16 and 17 of the 2015 Annual Report. The risks are summarised as follows:

− The risk that topline growth progression does not meet internal and external expectations, the group's market positions come under pressure, market opportunities may be missed and profitability may be reduced. This may be a result of failing to develop and ensure the strength and relevance of the group's brands with consumers, shoppers and customers.

− The risk that, in light of the expected continued consolidation of the brewing and beverages industry, the group's ability to grow and increase profitability is limited. This may be the result of failing to participate in the right opportunities; overpaying for an acquisition; failing to implement integration plans successfully; or failing to identify and develop the capabilities necessary to facilitate market and category entry.

− The risk that unreasonable regulation places increasing restrictions on the availability and marketing of beer and pricing (including tax), which 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 long-term profitable growth potential may be jeopardised due to a failure to identify, develop and retain an appropriate pipeline of talented management.

− The risk that the group fails to execute and derive benefits from the cost saving and efficiency programme, resulting in increased programme costs, lower benefits than planned, delays in benefit realisation, business disruption and reduced competitive advantage in the medium term.

− The risk that the group suffers from a cyber-attack or the failure to comply with tighter data control legislation to combat cyber-attacks, which may lead to business disruption, financial penalties or restrictions.

− The risk that following the CUB acquisition, the group fails to deliver its specific, communicated financial and value creation targets through its integration plans; this may limit the group's future growth and profitability, as well as impacting its reputation for commercial capability and for making value-creating acquisitions.

In addition to these risks, management has identified risks and uncertainties arising from the recommended offer for SABMiller by AB InBev. These include potential adverse impacts on: the retention of management and employees, their motivation, and ongoing recruitment; the relationships that the group has with its customers, suppliers, employees, associates and joint venture partners, as well as governments in the territories in which the group operates; and on its competitive position arising from the action of competitors. These risks may adversely affect the financial and operational performance of the group and may reduce its overall strategic progress. 

Dividend

The board has declared a cash interim dividend of 28.25 US cents per share, an increase of 9%. The dividend will be payable on Friday 4 December 2015 to shareholders registered on the London and Johannesburg registers on Friday 27 November 2015. The last date to trade cum dividend will be Wednesday 25 November 2015 on the London Stock Exchange and Friday 20 November 2015 on the JSE Ltd. The ex-dividend trading dates will be Thursday 26 November 2015 on the London Stock Exchange and Monday 23 November 2015 on the JSE Ltd. 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 interim dividend is in line with SABMiller's stated policy for the interim dividend to be 25% of the prior year's full year dividend. The interim dividend is in accordance with the terms of SABMiller and AB InBev's joint Rule 2.7 announcement on 11 November.

The rates of exchange applicable for US dollar conversion into South African rand and sterling were determined on Wednesday 11 November 2015. The rate of exchange determined for converting to South African rand was US$:ZAR14.233569 resulting in an equivalent interim dividend of 402.09832 SA cents per share. The rate of exchange determined for converting to sterling was GBP:US$1.516773 resulting in an equivalent interim dividend of 18.6251 UK pence per share.

Shareholders registered on the Johannesburg register are advised that dividend withholding tax will be withheld from the gross final dividend amount of 402.09832 SA cents per share at a rate of 15%, unless a shareholder qualifies for an exemption. Shareholders registered on the Johannesburg register who do not qualify for an exemption will therefore receive a net dividend of 341.78357 SA cents per share.

The company, as a non‑resident of South Africa, was not subject to the secondary tax on companies (STC) applicable before the introduction of dividend withholding tax on 1 April 2012, and accordingly, no STC credits are available for set-off against the dividend withholding tax liability on the final net dividend amount. The dividend is payable in cash as a 'Dividend' (as defined in the South African Income Tax Act, 58 of 1962, as amended) by way of a reduction of income reserves. The dividend withholding tax and the information contained in this paragraph is only of direct application to shareholders registered on the Johannesburg register, who should direct any questions about the application of the dividend withholding tax to Computershare Investor Services (Pty) Limited, Tel: +27 11 373-0004.

From the commencement of trading on Thursday 12 November 2015 until the close of business on Friday 27 November 2015, no transfers between the London and Johannesburg registers will be permitted, and from Monday 23 November 2015 until Friday 27 November 2015, 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 condensed consolidated interim financial information, 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 Conduct Authority.

At the date of this statement, the directors of SABMiller plc are those listed in the SABMiller plc Annual Report at 31 March 2015 with the exception of Domenic De Lorenzo, Javier Ferrán and David Beran, who were appointed to the board and John Manser, John Manzoni and Howard Willard, who retired from the board, all on 23 July 2015. On this same day, Jan du Plessis succeeded John Manser as Chairman and Domenic De Lorenzo was appointed as Chief Financial Officer. A list of current directors is maintained on the SABMiller plc website: www.sabmiller.com.

On behalf of the board

Alan Clark Domenic De Lorenzo

Chief executive Chief financial officer

11 November 2015

Report on the condensed consolidated interim financial information

Our conclusion

We have reviewed the condensed consolidated interim financial information, defined below, in the interim announcement of SABMiller plc for the six months ended 30 September 2015. Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial information 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 Conduct Authority.

This conclusion is to be read in the context of what we say in the remainder of this report.

What we have reviewed

The condensed consolidated interim financial information, which is prepared by SABMiller plc, comprises:

- the consolidated balance sheet as at 30 September 2015;

- the consolidated income statement and consolidated statement of comprehensive income for the period then ended;

- the consolidated cash flow statement for the period then ended;

- the consolidated statement of changes in equity for the period then ended; and

- the explanatory notes to the condensed consolidated interim financial information.

As disclosed in note 1, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

The condensed consolidated interim financial information included in the interim announcement has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

What a review of condensed consolidated financial information involves

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.

We have read the other information contained in the interim announcement and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed consolidated interim financial information.

Responsibilities for the condensed consolidated interim financial information and the review

Our responsibilities and those of the directors

The interim announcement, including the condensed consolidated interim financial information, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim announcement in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Our responsibility is to express to the company a conclusion on the condensed consolidated interim financial information in the interim announcement based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure and Transparency Rules of the Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, 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.

PricewaterhouseCoopers LLP

Chartered Accountants

London

11 November 2015

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

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

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

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