5th Jul 2005 09:00
SABMiller PLC05 July 2005 5 July 2005 Restatement of Financial Information under International Financial Reporting Standards SABMiller plc currently prepares its financial statements under United KingdomGenerally Accepted Accounting Principles (UK GAAP). As part of its preparationfor the adoption of International Financial Reporting Standards (IFRS),SABMiller plc is today making available financial information for the year ended31 March 2005 in accordance with IFRS. The adoption of IFRS represents an accounting change only, and does not affectthe underlying operations or cash flows of the group. The IFRS financialinformation in this document is unaudited. Summary of main changes UK GAAP 2005 IFRS 2005 Audited Unaudited US$m US$m % change Group revenue 12,901 12,901 - EBITA (becoming EBIT under IFRS)* 2,409 2,389 (0.8) Profit before tax 2,194 2,552 16.3 Adjusted earnings** 1,251 1,224 (2.1) Basic earnings per share 94.1 125.5 33.3 Adjusted earnings per share (US cents) 103.2 101.0 (2.1) Adjusted diluted earnings per share (US cents) 99.8 97.7 (2.1) *EBITA comprises profit before interest, tax, goodwill amortisation and beforeone-off items. EBIT comprises profit before interest, tax and one-off items.*\* The calculation of adjusted earnings is given in table 1. The most significant changes from UK GAAP to IFRS are: • The reversal of amortisation of goodwill which increases profit before tax by US$366 million but has no impact on EBITA or adjusted earnings. • A pre-tax increase in post-retirement costs of US$4 million impacting all measures shown above, and an additional one-off credit of US$104 million relating to certain changes in the group's post-retirement arrangements which does not affect EBITA or adjusted earnings. • The inclusion of a charge, based on fair value, in respect of outstanding share-based awards granted after 7 November 2002. This increases net operating costs by US$6 million. IFRS RESTATEMENT 2 Background to the change SABMiller plc has previously prepared its financial statements under UK GAAP.For the purposes of this announcement all references to UK GAAP relate to theaccounting policies adopted by SABMiller plc as set out in the SABMiller plcannual report for the year ended 31 March 2005. From 1 April 2005 onwards, thegroup is required to prepare its consolidated financial statements in accordancewith IFRS as endorsed by the European Union (EU) and implemented in the UK. This change applies to all of the group's financial reporting for accountingperiods beginning on 1 April 2005. The group's date of transition to IFRS underIFRS1 (First-time adoption of IFRS) was 1 April 2004. The group's firstpublished IFRS results will be for the six months to 30 September 2005 and thefirst full year IFRS results will be for the year ending 31 March 2006. The 2006financial statements will include comparatives for 2005 which will be restatedto IFRS, other than with respect to IAS 32 (Financial Instruments: Disclosureand Presentation) and IAS 39 (Financial Instruments: Recognition andMeasurement). To explain how the group's reported performance and financial position areaffected by this change, set out in tables 1 to 7 is a comparison of key UK GAAPfigures for the interim and full 2005 financial year to unaudited restated IFRSresults. Basis of preparation of IFRS information The key figures set out in tables 1 to 7 are based on the IFRS expected to beapplicable at 31 March 2006, and the interpretation of those standards. IFRS aresubject to possible amendment by and interpretative guidance from theInternational Accounting Standards Board, as well as ongoing review andendorsement by the EU, and are thus subject to change. The IFRS figures intables 1 to 7 may therefore be subject to changes in the basis of accounting and/or presentation of certain financial information before their inclusion in theIFRS financial statements for the year ending 31 March 2006 when the groupprepares its first complete set of IFRS financial statements. IFRS 1 Exemptions IFRS1 (First-time adoption of IFRS) permits certain exemptions from the fullrequirements of IFRS to companies adopting IFRS for the first time. The groupexpects to apply the following transitional provisions: i) Business combinations (including acquisitions) recognised before the date of transition (1 April 2004) have not been restated. ii) Fixed assets held at historical cost have not been revalued; therefore depreciation and impairment tests will continue to be based on historical cost. iii) IAS 32 and IAS 39 are applied prospectively from 1 April 2005, therefore hedge documentation and effectiveness is only measured from that date. iv) Cumulative currency translation differences on foreign net investments recognised separately in equity have been reset to US$Nil at the date of transition. v) The cost of share options granted prior to 7 November 2002 has not been recognised in the income statement. vi) The accumulated actuarial gains and losses with regards to employee defined benefit post-retirement plans have been recognised in full in the opening IFRS balance sheet as at 1 April 2004. vii) Convertible bonds have not been split into component values if the bond has been repaid by the transition date for financial instruments, which was 1 April 2005. IFRS RESTATEMENT 3 Significant Changes The most significant areas of change are as follows;(Tables 1 to 7 are cross referenced to the notes below where relevant.) (a) Goodwill Under UK GAAP, goodwill is amortised over its estimated useful life (the grouptypically applies a 20 year life to goodwill, with the exception of goodwill inAmalgamated Beverage Industries (ABI) which has an indefinite life and has beensubjected to annual impairment reviews). Under IFRS, the amortisation of goodwill is no longer permitted and goodwill isreviewed for impairment on an annual basis. As a result the amortisation chargeof US$366 million recorded in 2005 is reversed. As a consequence of thischange, the profit attributable to minority interests also increases by US$22million. (b) Post-retirement benefits (1) Under UK GAAP, the group accounts for post-retirement benefits under SSAP24 (Accounting for Pension Costs), whereby the costs of providing pensions and other post-employment benefits are charged against operating profit on a systematic basis with surpluses and deficits arising allocated over the expected average remaining service lives of current employees. The group disclosed the impact of accounting for pensions under FRS 17 (Retirement Benefits) by way of footnote, as required by the FRS 17 transitional arrangements. Under IFRS, the impact on the income statement is that the unwinding of the discounting on liabilities and the expected return on assets are included in operating profit. The impact on the balance sheet is that the full actuarial surplus or deficit is recognised. The more volatile components of movements in surpluses and deficits (actuarial gains and losses) are recorded as a movement in shareholders' funds in line with the amendments to IAS 19 (Employee Benefits) although this is subject to endorsement by the EU. The new IFRS rules primarily affect Miller in North America and Beer South Africa. The ongoing income statement effect of this change is an additional cost of US$4 million in 2005. The costs in North America have risen by US$7 million, offset by a credit in Beer South Africa of US$3 million (the latter of which is not expected to recur in 2006). The pre-tax IFRS adjustments to post-retirement benefits are summarised below: US$m North America Pensions (5) Other post-retirement costs (2) (7) Beer South Africa Pensions (4) Other post-retirement costs 7 3 Total (4) IFRS RESTATEMENT 4 (2) During 2005 Miller also revised its post-retirement arrangements. The effect of the changes in plans and the capping of post-retirement medical healthcare liabilities results in a credit to the 2005 IFRS income statement of some US$104 million (US$63 million net of tax). This represents the savings associated with past service. This has been treated as a one-off item. The impact of all post-retirement benefit adjustments on the IFRS openingbalance sheet as at 1 April 2004 is to reduce net assets by US$80 million net ofdeferred tax. The reduction at 31 March 2005 is US$147 million net of deferredtax. (c) Share-based payments Under UK GAAP, only certain share-based plans (where the grant price is lessthan the market price at the date of grant) result in a charge to operatingprofit over the performance period on a straight line basis. Under IFRS, all share-based awards granted after 7 November 2002 result in acharge to operating profit over the performance period on a straight line basis. The additional cost to the group in 2005 includes extra costs for certainshare-based plans and results in the recognition of an additional pre-tax chargefor 2005 of US$6 million. As more option tranches are covered by the new rules the costs in relation toshare-based payments will rise under IFRS. It is anticipated that the ongoingannual cost compared to UK GAAP will be some US$10 -14 million in 2006. (d) Presentation of associates Under UK GAAP, operating profit, net interest, taxation and minority interestsinclude the group's share of associates' results. Under IFRS, the income statement only includes the group's share of the post-taxand minority results of associates as one line before the group's pre-taxprofit. In order to aid comparison of results across segments, the group intends topresent an operating profit/EBIT measure in the segmental analysis which willinclude associates in the same format as subsidiaries. (e) IFRS application to associates As a result of the non-amortisation of goodwill, profits from associatesincrease by US$15 million for 2005. Other net charges of US$9 million for 2005principally arise in respect of share-based payments, inventories, intangiblesand property, plant and equipment. The application of IFRS, including the non-amortisation of goodwill,increases the group's carrying value of associates as at 31 March 2005 by US$9million. Certain of the group's associates continue to work on therestatement of IFRS in their own results. Any further changes arising will bereflected in the group IFRS position as at 30 September 2005 in the interimresults for the year ending 31 March 2006. IFRS RESTATEMENT 5 (f) Agricultural assets Under UK GAAP, agricultural assets are not separately recorded. Under IFRS, agricultural assets are recognised on the balance sheet at fairvalue with gains/losses recorded in the income statement. The additional US$2million cost for 2005 relates to sugar plantations in Honduras and hop farms inSouth Africa. (g) Taxation Under UK GAAP, the group recognises deferred tax on timing differences thatarise from the inclusion of gains and losses in tax assessments in periodsdifferent from those in which they are recognised in the financial statements(an income statement approach). Under IFRS, deferred tax is recognised in respect of nearly all taxabletemporary differences arising between the tax base and the accounting book valueof balance sheet items (a balance sheet approach). This results in deferred taxbeing recognised on certain timing differences that would not have given rise todeferred tax under UK GAAP. Excluding the net impact of deferred tax onpost-retirement schemes, the IFRS impact on other deferred tax assets andliabilities is a reduction in net assets of US$108 million in the opening IFRSbalance sheet and US$119 million as at 31 March 2005. Upon the adoption of IFRS, deferred tax is recognised on unremitted earnings ofsubsidiaries and associates, unless the group is able to demonstrate that thedividend policy cannot be changed without its consent and it is unlikely thatthose earnings will be paid as dividends in the foreseeable future. The group has recognised an additional US$7 million deferred tax charge in the2005 income statement primarily with respect to unremitted earnings ofassociates. (h) Exceptional items Under UK GAAP, gains and loses on the disposal of subsidiaries, associates,fixed asset investments and tangible fixed assets are shown as exceptional itemsbelow operating profit (non-operating exceptionals). IFRS does not contain the same specific rules related to the presentation ofexceptional items, but does require disclosure of additional items wherenecessary to assist in the understanding of an entity's financial performance. Areclassification of US$366 million exceptional profit under UK GAAP previouslyrecognised below operating profit has been made to move the UK GAAPnon-operating exceptional items back into operating profit. The group willcontinue to separately identify significant and one-off items previously treatedas exceptional under UK GAAP. These will all be recognised within operatingprofit. In addition, the group will continue to present the adjusted earningsper share and operating profit before exceptional items measures. (i) Dividends Under UK GAAP, dividends for the period are provided for in the results for thatperiod. Under IFRS, the dividends for the period are provided in the results in theperiod during which they are approved. IFRS RESTATEMENT 6 Balance Sheet reclassifications (j) Capitalised software Under UK GAAP, software assets are included as part of property, plant andequipment. Under IFRS, unless they are integral to another tangible fixed asset, softwareassets are recognised as intangible assets. (k) Debtors Under UK GAAP, debtors are generally shown as a one line entry in current assetsunless they are deemed to be highly significant for separate disclosure on theface of the balance sheet. Under IFRS, debtors due within one year are recognised as current assets anddebtors due after more than one year are recognised as non-current assets on theface of the balance sheet. (l) Deferred tax assets and liabilities Under UK GAAP, deferred tax assets and liabilities are shown as part of currentdebtors and provisions on the face of the balance sheet. Under IFRS, deferred tax assets and liabilities are presented separately on theface of the balance sheet under IFRS. (m) Provisions Under UK GAAP, provisions are presented as a one line entry on the balancesheet. Under IFRS, provisions likely to fall due within one year are recognised ascurrent liabilities and provisions likely to fall due after more than one yearare recognised as long-term liabilities on the face of the balance sheet. Other IFRS Adjustments Other IFRS adjustments result in an increase in net assets of US$16 million at31 March 2005 and include the following items: (n) Buyout of minority shares in Birra Peroni and ABI Upon the adoption of IFRS goodwill is recognised on the buy out of minorityinterests in subsidiaries as the difference between the value of IFRS net assetsacquired and the consideration paid. The buyout of minority interests in Birra Peroni SpA and ABI increased goodwilldue to changes within deferred tax. As a consequence, this reduced equityattributable to minority interests by US$11 million and US$1 millionrespectively. IFRS RESTATEMENT 7 (o) Foreign currency translations Under UK GAAP if a derivative instrument has been entered into which is linkedto the settlement of a foreign currency asset or liability the exchange rate ofthe derivative can be used to translate the foreign currency amount. Under IFRS the closing rate exchange rate must be used with the derivativeeffect recognised separately. The group has a sterling denominated private note of £40 million covered by suchan arrangement - the value of the loan at 31 March 2005 rises by US$14 millionand an equivalent US$14 million asset is recognised in debtors (1 April 2004adjustment US$14 million). The full adoption of IAS32 and 39 as at 1 April 2005will not change this position materially. In addition, exchange differences arising on the translation of IFRS adjustmentsto net assets, together with differences between IFRS income statementadjustments translated at average and closing rates, are shown as a movement inshareholders' funds. (p) Prepaid interest Under UK GAAP, prepaid interest is included as part of prepayments in debtors onthe face of the balance sheet. Under IFRS, prepaid interest is recognised as part of the debt balance to whichit is related. Therefore, prepaid interest is reallocated to current andnon-current liabilities in the same manner. (q) Spare parts Spare parts previously held in inventory under UK GAAP have been reallocated totangible fixed assets under IFRS where the part is deemed to be a major sparepart that will be in use for more than one year when installed. Other Matters Excise Unlike value added tax, excise is not directly related to the value of sales. Itis not generally recognised as a separate item on invoices, increases in exciseare not always directly passed on to customers, and the group cannot reclaim theexcise where customers do not pay for product received. Under UK GAAP, the grouptherefore considered excise as a cost to the group and reflected it as aproduction cost and consequently any excise that is recovered in the sale priceis included in revenue. The group believes the current UK GAAP treatment ofexcise within revenue continues to be appropriate under IFRS. Therefore, no IFRSadjustment has been made to revenue. The matter will be kept under review. IFRS RESTATEMENT 8 Segmental analysis Under IFRS, the group will continue to report on a regional segmental basis(refer to table 2). Following the acquisition in December 2004 of the remainingshares in ABI, a programme of work has begun to establish and leverage thebenefits from the combination of our beverage businesses in South Africa.Results for South Africa Beverages are now shown as one segment. In addition to statutory requirements under IFRS, the group will present anoperating profit/EBIT measure on a segmental basis which will include associatesin the same format as subsidiaries, before interest, tax and minority interests,to allow for consistent comparison of results across segments. Under IFRS, share-based payments are allocated on a segmental basis. This wasnot the case under UK GAAP. Earnings per share (EPS) Under both UK GAAP and IFRS, basic earnings per share is derived from theearnings attributable to ordinary shareholders divided by the average number ofordinary shares in issue during the period (excluding shares held by employeeshare trusts and by Safari Ltd). Under both UK GAAP and IFRS, adjusted earnings per share uses the same number ofshares with profit adjusted to exclude the impact of amortisation, capital itemsand other one-off items. Cash and cash equivalents Under UK GAAP, the cash flow statement presents changes in cash. Under IFRS, the cash flow statement presents changes in cash and cashequivalents (certain short-term highly liquid investments that are readilyconvertible to known amounts of cash and which are subject to an insignificantrisk of changes in value). Although the format of the cash flow statement will change under IFRS, and netdebt will change to reflect prepaid interest, cash flows are unaffected. A fullreconciliation of net debt will continue to be provided. Financial instruments IAS32 and IAS39 on financial instruments will be applied prospectively from 1April 2005. Consequently the restated figures for the 2005 financial year (1April 2004 - 31 March 2005) do not reflect the impact of these standards. These are complex standards and are continuing to change. On the currentunderstanding of IAS32 and IAS39, it is expected that the main implication ofapplying these standards in the 2006 financial year will be as follows: (i) The group uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from operational, financing and investment activities. The group does not hold derivatives for trading purposes but under IFRS, if the tests for hedge accounting are not met, the derivatives are treated as if held for trading purposes. For many derivatives used by the group it is possible to obtain hedge accounting or the implications of not doing so are not considered material. IFRS RESTATEMENT 9 (ii) Under UK GAAP, the book value of derivative financial instruments (cross currency swaps and forward foreign exchange contracts) in respect of borrowings and short-term deposits was included in their carrying value on the balance sheet. Under IFRS, the fair value of these derivatives is shown separately on the balance sheet. (iii) Available for sale investments will be marked to market with changes in value taken to equity and recycled to income when the investment is sold. This is not expected to have a material impact on the group. Although the 31 March 2005 balance sheet will not be restated to show the effectof adopting IAS 32 and IAS 39, the balance sheet as at 1 April 2005 will berestated to show the effect of retrospective application of these standards.This will be provided in the publication of the first half result for 2006. IFRS RESTATEMENT 10 1. The effect of the change to IFRS on the income statement for the year ended31 March 2005 is as follows: Reported Goodwill Post- Share- Associates Agricultural Deferred Reclass- Restated (UK GAAP) retirement based ifications (IFRS) audited benefits payments assets taxation unaudited (a) (b) 1 (b) 2 (c) (d) (e) (f) (g) (h) US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m Revenue 14,543 - - - - - - - - - 14,543(includingshare ofassociates'revenue)Less: share (1,642) - - - - - - - - - (1,642)of associates'revenue Group revenue 12,901 - - - - - - - - - 12,901Net operating (11,152) 351 (4) 104 (6) - - (2) - 355 (10,354)costs Group 1,749 351 (4) 104 (6) - - (2) - 355 2,547operating profitShare of profit 246 15 - - - (115) (9) - - 11 148of associatespost interest,tax andminorityinterestsExceptional 366 - - - - - - - - (366) -items Profit on 2,361 366 (4) 104 (6) (115) (9) (2) - - 2,695ordinaryactivitiesbefore interestand taxation Net interest (167) - - - - 24 - - - - (143)payable Profit on 2,194 366 (4) 104 (6) (91) (9) (2) - - 2,552ordinaryactivitiesbefore taxation Taxation on (850) - 1 (41) - 74 - - (7) - (823)profit onordinaryactivities Profit on 1,344 366 (3) 63 (6) (17) (9) (2) (7) - 1,729ordinaryactivitiesafter taxation Attributable to (203) (22) - - - 17 - - - - (208)minorityinterests Attributable 1,141 344 (3) 63 (6) - (9) (2) (7) - 1,521to the group Reconciliationto adjustedearningsProfit for the 1,141 344 (3) 63 (6) - (9) (2) (7) - 1,521financial year Amortisation of 366 (366) - - - - - - - - -goodwillImpairment 9 - - - - - - - - - 9costsNet profit on (343) - - - - - - - - - (343)disposal ofassetsBrewery closure 20 - - - - - - - - - 20costsAssociates' (11) - - - - - - - - - (11) share of profiton disposal ofassetsIFRS - - - (104) - - - - - - (104)adjustmentsTax effects on 30 - - 41 - - - - - - 71the above itemsMinority (31) 22 - - - - - - - - (9)interests'share of theabove itemsHeadline 1,181 - (3) - (6) - (9) (2) (7) - 1,154earningsIntegration/ 32 - - - - - - - - - 32reorganisationcostsSouth African 38 - - - - - - - - - 38STC onnon-recurringdividend Adjusted 1,251 - (3) - (6) - (9) (2) (7) - 1,224earnings The presentation of the IFRS information on this page and those that follow isnot fully in accordance with IAS 1 (Presentation of Financial Statements) andhas been presented to give an indication of changes in results under IFRS fromprevious UK GAAP equivalents and not an exact representation of how restatedIFRS results will be presented in the future. IFRS RESTATEMENT 11 2. The effect of the change to IFRS on the income statement for the year ended 31 March 2005 is as follows: Segmental Analysis EBIT Amortisation EBITA Post-retirement Share-based Associates Agricultural EBIT reported reported benefits payments assets restated (UK (UK GAAP) (IFRS) GAAP) unaudited audited (b) 1 (b) 2 (c) (e) (f) US$m US$m US$m US$m US$m US$m US$m US$m US$m North America 261 236 497 (7) - (3) - - 487 Central America 48 43 91 - - - - (1) 90 Europe 419 64 483 - - (1) - - 482 Africa and Asia 363 21 384 - - (1) - - 383Associates' share* (121) (13) (134) - - - - - (134) 242 8 250 - - (1) - - 249 South Africa Beverages 958 - 958 3 - (4) - (1) 956Associates' share* (50) - (50) - - - - - (50) Beer South Africa 708 - 708 3 - (2) - (1) 708Other Beverage 250 - 250 - - (2) - - 248InterestsAssociates' share* (50) - (50) - - - - - (50) 908 - 908 3 - (4) - (1) 906 Hotels and Gaming 79 2 81 - - - (8) - 73Associates' share* (79) (2) (81) - - - 8 - (73) - - - - - - - - - Corporate (85) - (85) - - 3 - - (82) Group - excluding 2,043 366 2,409 (4) - (6) (8) (2) 2,389exceptional itemsAssociates' share* (250) (15) (265) - - - 8 - (257) 1,793 351 2,144 (4) - (6) - (2) 2,132 One-off items (48) 366(^) 318 - 104 - - - 422 Group - including 1,995 732 2,727 (4) 104 (6) (8) (2) 2,811exceptional itemsAssociates' share* (246) (26) (272) - - - 8 - (264) 1,749 706 2,455 (4) 104 (6) - (2) 2,547 Statutory information presented from 30 September 2005 onwards will disclose thegroup's share of post-tax and minority results of associates on the face of theincome statement and in the analysis of group EBIT in the segmental disclosures. \* The results above include associates' profit before interest (US$24 million),tax (US$75 million) and minority interests (US$17 million) which allows forconsistent comparison of results across the segments. When these items arededucted from the group results of US$2,811 million above, the group profitbefore interest and tax is US$2,695 million, as stated in the income statement. (^)Reclassification of one-off items into operating profit. IFRS RESTATEMENT 12 3. The effect of the change to IFRS on the balance sheet as at 1 April 2004(opening IFRS balance sheet) is as follows: Reported Post- Associates Agricultural Deferred Dividends Reclass- Other Restated (UK GAAP) retirement assets taxation ifications (IFRS) audited benefits unaudited (b) 1 (e) (f) (g) (i) (j) (k) (l) (m) (n) (o) (p) (q) US$m US$m US$m US$m US$m US$m US$m US$m US$mFixed assetsIntangible 6,513 - - - - - 94 - 6,607assetsTangible 3,758 - - 5 - - (94) 3 3,672assetsInvestments in 928 - 1 - - - - - 929associatesTrade and - - - - - - 70 - 70other debtorsOther 284 - - - - - - - 284investmentsDeferred tax - 79 - - (54) - 107 - 132asset 11,483 79 1 5 (54) - 177 3 11,694 Current assetsInventories 599 - - (2) - - - (3) 594Trade and 1,035 4 - - - - (177) (7) 855other debtors Investments 31 - - - - - (31) - -Cash and cash 651 - - - - - 31 - 682equivalents 2,316 4 - (2) - - (177) (10) 2,131 CurrentliabilitiesCreditors due (2,783) 42 - - - 289 - 10 (2,442)within oneyearProvisions - - - - - - (42) - (42) (2,783) 42 - - - 289 (42) 10 (2,484) Net current (467) 46 - (2) - 289 (219) - (353)liabilities Non-currentliabilitiesInterest (3,094) - - - - - - - (3,094)bearingcreditorsProvisions (866) (205) - - - - 208 (3) (866)Deferred tax - - - - (54) - (166) (1) (221)liabilitiesOther (72) - - - - - - - (72)liabilities (4,032) (205) - - (54) - 42 (4) (4,253) Net assets 6,984 (80) 1 3 (108) 289 - (1) 7,088 Capital andreservesShareholders' 6,165 (80) 1 2 (94) 269 - (1) 6,262fundsEquity 819 - - 1 (14) 20 - - 826minorityinterests Total equity 6,984 (80) 1 3 (108) 289 - (1) 7,088 IFRS RESTATEMENT 13 4. The effect of the change to IFRS on the balance sheet as at 31 March 2005 isas follows: Reported Goodwill Post- Associates Agricult- Deferred Dividends Reclass- Other Restated (UK GAAP) retirement ural ifications (IFRS) audited benefits assets taxation unaudited (a) (b) 1 (e) (f) (g) (i) (j)(k)(l)(m) (n)(o)(p)(q) US$m US$m US$m US$m US$m US$m US$m US$m US$m US$mFixed assetsIntangible 6,822 351 - - - - - 111 19 7,303assetsTangible 4,162 - - - 4 - - (111) 1 4,056assetsInvestments 1,116 15 - (6) - - - - - 1,125in associatesTrade and - - - - - - - 54 - 54other debtorsOther 187 - - - - - - - - 187investmentsDeferred tax - - 123 - - (54) - 84 - 153asset 12,287 366 123 (6) 4 (54) - 138 20 12,878 CurrentassetsInventories 634 - - - (2) - - - (5) 627Trade and 1,164 - - - - - - (138) (18) 1,008other debtorsInvestments 689 - - - - - - (689) - -Cash and cash 454 - - - - - - 689 - 1,143equivalents 2,941 - - - (2) - - (138) (23) 2,778 CurrentLiabilitiesCreditors due (3,550) - 42 - - - 349 - 22 (3,137)within oneyearProvisions - - - - - - - (62) - (62)due withinone year (3,550) - 42 - - - 349 (62) 22 (3,199) Net current (609) - 42 - (2) - 349 (200) (1) (421)liabilities Non-currentliabilitiesInterest (2,526) - - - - - - - 1 (2,525)bearingcreditorsProvisions (796) - (312) - - - - 184 (3) (927)Deferred tax - - - - - (65) - (122) (1) (188)liabilitiesOther (53) - - - - - - - - (53)liabilities (3,375) - (312) - - (65) - 62 (3) (3,693) Net assets 8,303 366 (147) (6) 2 (119) 349 - 16 8,764 Capital andreservesShareholders' 7,665 344 (147) (6) 1 (115) 329 - 15 8,086fundsEquity 638 22 - - 1 (4) 20 - 1 678minorityinterests Total equity 8,303 366 (147) (6) 2 (119) 349 - 16 8,764 IFRS RESTATEMENT 14 5. The effect of the change to IFRS on the income statement for the six months ended 30 September 2004 is as follows: Reported Goodwill Post- Share- Associates Agricultural Deferred Reclass- Restated (UK GAAP) retirement based ifications (IFRS) audited benefits payments assets taxation unaudited (a) (b) 1 (c) (d) (e) (f) (g) US$m US$m US$m US$m US$m US$m US$m US$m US$m US$mRevenue 7,178 - - - - - - - - 7,178(includingshare ofassociates'revenue)Less: share of (735) - - - - - - - - (735)associates'revenue Group revenue 6,443 - - - - - - - - 6,443Net operating (5,625) 173 (3) (2) - - (1) - 335 (5,123)costs Group 818 173 (3) (2) - - (1) - 335 1,320operatingprofitShare of 123 8 - - (55) (5) - - 11 82profit ofassociatespost interest,tax andminorityinterestsExceptional 346 - - - - - - - (346) -items Profit on 1,287 181 (3) (2) (55) (5) (1) - - 1,402ordinaryactivitiesbeforeinterest andtaxation Net interest (91) - - - 13 - - - - (78)payable Profit on 1,196 181 (3) (2) (42) (5) (1) - - 1,324ordinaryactivitiesbeforetaxation Taxation on (397) - 2 - 32 - - (2) - (365)profit onordinaryactivities Profit on 799 181 (1) (2) (10) (5) (1) (2) - 959ordinaryactivitiesafter taxation Attributable (100) (11) - - 10 - - - - (101)to minorityinterests Attributable 699 170 (1) (2) - (5) (1) (2) - 858to the group Reconciliationto adjustedearningsProfit for the 699 170 (1) (2) - (5) (1) (2) - 858financial year Amortisation 181 (181) - - - - - - - -of goodwillNet profit on (330) - - - - - - - - (330)disposal ofassetsBrewery 23 - - - - - - - - 23closure costsAssociates' (11) - - - - - - - - (11)share ofprofit ondisposal ofassetsTax effects on 31 - - - - - - - - 31the aboveitems Minority (10) 11 - - - - - - - 1interests'shareHeadline 583 - (1) (2) - (5) (1) (2) - 572earnings Adjusted 583 - (1) (2) - (5) (1) (2) - 572earnings IFRS RESTATEMENT 15 6. The effect of the change to IFRS on the income statement for the six months ended 30 September 2004 is as follows: Segmental Analysis EBIT Amortisation EBITA Post- Share- Associates Agricultural EBIT reported reported retirement based assets restated (UK (UK GAAP) benefits payments (IFRS) GAAP) unaudited audited (b) 1 (c) (e) (f) US$m US$m US$m US$m US$m US$m US$m US$mNorth America 189 117 306 (3) (2) - - 301 Central America 15 22 37 - - - (1) 36 Europe 270 30 300 - (1) - - 299 Africa and Asia 168 11 179 - - - - 179Associates' share* (73) (7) (80) - - - - (80) 95 4 99 - - - - 99 South Africa 317 - 317 - (1) (1) - 315BeveragesAssociates' share* (18) - (18) - - 1 - (17) Beer South Africa 249 - 249 - (1) - - 248Other Beverage 68 - 68 - - (1) - 67InterestsAssociates' share* (18) - (18) - - 1 - (17) 299 - 299 - (1) - - 298 Hotels and Gaming 32 1 33 - - (4) - 29Associates' share* (32) (1) (33) - - 4 - (29) - - - - - - - - Corporate (31) - (31) - 2 - - (29) Group - excluding 960 181 1,141 (3) (2) (5) (1) 1,130exceptional itemsAssociates' share* (123) (8) (131) - - 5 - (126) 837 173 1,010 (3) (2) - (1) 1,004 One-off items (19) 346)(^) 327 - - - - 327 Group - including 941 527 1,468 (3) (2) (5) (1) 1,457exceptional itemsAssociates' share* (123) (19) (142) - - 5 - (137) 818 508 1,326 (3) (2) - (1) 1,320 \* The results above include associates' profit before interest (US$13 million),tax (US$32 million) and minority interests (US$10 million) which allows forconsistent comparison of results across the segments. When these items arededucted from the group results of US$1,457 million above, the group profitbefore interest and tax is US$1,402 million, as stated in the income statement. (^)Reclassification of one-off items into operating profit. IFRS RESTATEMENT 16 7. The effect of the change to IFRS on the balance sheet as at 30 September 2004is as follows: Reported Goodwill Post- Associates Agricult- Deferred Dividends Reclass- Other Restated (UK GAAP) retirement ural ifications (IFRS) audited benefits assets taxation unaudited (a) (b) 1 (e) (f) (g) (i) (j)(k)(l)(m) (n)(o)(p)(q) US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m Fixed assetsIntangible 6,387 173 - - - - - 100 4 6,664assetsTangible 3,835 - - - 4 - - (100) 4 3,743assetsInvestments 1,041 8 - (4) - - - - - 1,045in associatesTrade and - - - - - - - 53 - 53other debtorsOther 170 - - - - - - - - 170investmentsDeferred tax - - 79 - - (54) - 85 - 110asset 11,433 181 79 (4) 4 (54) - 138 8 11,785 Currentassets Inventories 607 - - - (2) - - - (4) 601Trade and 1,155 - - - - - - (138) (17) 1,000other debtorsInvestments 379 - - - - - - (379) - -Cash and cash 900 - - - - - - 379 - 1,279equivalents 3,041 - - - (2) - - (138) (21) 2,880 CurrentLiabilitiesCreditors due (2,793) - 42 - - - 144 - 22 (2,585)within oneyearProvisions - - - - - - - (86) - (86) (2,793) - 42 - - - 144 (86) 22 (2,671) Net current 248 - 42 - (2) - 144 (224) 1 209liabilities Non-currentliabilitiesInterest (3,173) - - - - - - - 4 (3,169)bearingcreditors Provisions (668) - (205) - - - - 86 (8) (795)Deferred tax (168) - - - - (55) - - (1) (224) liabilitiesOther (63) - - - - - - - - (63)liabilities (4,072) - (205) - - (55) - 86 (5) (4,251) Net assets 7,609 181 (84) (4) 2 (109) 144 - 4 7,743 Capital andReservesShareholders' 6,775 170 (84) (4) 1 (95) 143 - 4 6,910fundsEquity 834 11 - - 1 (14) 1 - - 833minorityinterests Total equity 7,609 181 (84) (4) 2 (109) 144 - 4 7,743 IFRS RESTATEMENT 17 The financial information in this report does not constitute statutory accountswithin the meaning of s240 of the Companies Act 1985 (as amended). Enquiries SABMiller plc Tel: +44 20 7659 0100Sue Clark Director of Corporate Affairs Tel: +44 20 7659 2184Gary Leibowitz Vice President, Investor Relations Tel: +44 20 7659 2119Nigel Fairbrass Head of Media Relations Tel: +44 20 7659 2105 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 264103 This presentation does not constitute an offer to sell or issue or thesolicitation of an offer to buy or acquire ordinary shares in the capital ofSABMiller plc (the "Company") or an inducement to enter into investment activityin any jurisdiction. The information contained in this presentation has not been independentlyverified. No representation or warranty express or implied is made as to and noreliance should be placed on, the fairness, accuracy, completeness orcorrectness of the information or the opinions contained herein. None of theCompany or any of its respective affiliates shall have any liability whatsoever(in negligence or otherwise) for any loss howsoever arising from any use of thispresentation or its contents or otherwise arising in connection with thepresentation. This presentation includes 'forward-looking statements'. These statementscontain the words "anticipate", "believe", "intend", "estimate", "expect" andwords of similar meaning. All statements other than statements of historicalfacts included in this presentation, including, without limitation, thoseregarding the Company's financial position, business strategy, plans andobjectives of management for future operations (including development plans andobjectives relating to the Company's products and services) are forward-lookingstatements. 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 fromfuture results, performance or achievements expressed or implied by suchforward-looking statements. Such forward-looking statements are based onnumerous assumptions regarding the Company's present and future businessstrategies and the environment in which the Company will operate in the future.These forward-looking statements speak only as at the date of this presentation.The Company expressly disclaims any obligation or undertaking to disseminate anyupdates or revisions to any forward-looking statements contained herein toreflect any change in the Company's expectations with regard thereto or anychange in events, conditions or circumstances on which any such statement isbased. 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