Interim Results

9th Nov 2006 07:02

SABMiller PLC09 November 2006 Delivering growth from our global footprint London and Johannesburg, 9 November 2006. SABMiller plc today announces itsinterim (unaudited) results for the six months ended 30 September 2006.Highlights are: ___________________________________________________________________________ Sept Sept March 2006 2005 % 2006 US$m US$m change US$m___________________________________________________________________________Revenue (a) 9,344 7,051 33% 15,307 EBITA (b) 1,781 1,264 41% 2,941 Adjusted profit before tax (c) 1,533 1,192 29% 2,626 Profit before tax 1,378 1,126 22% 2,453 Adjusted earnings (d) 846 667 27% 1,497 Adjusted earnings per share (d)- US cents 56.6 52.7 7% 109.1- UK pence 30.5 28.9 6% 61.0- SA cents 385.2 340.5 13% 699.2 Basic earnings per share (US cents) 52.9 51.3 3% 105.0 Interim dividend per share (US cents) 14.0 13.0 8% Net cash generated from operations 2,152 1,289 67% 3,291___________________________________________________________________________ • Group lager volumes up 29% to 117 million hectolitres (hl), organic growth of 9% • South American volumes exceeding expectations • Continued strong volume and earnings growth in Europe • Performance in North America reflects challenging trading conditions • Excellent volume growth in China and India • South Africa earnings driven by premium segment growth • Interim dividend increase of 8%, supported by strong cash flows (a) Revenue excludes the attributable share of associates' revenue of US$1,052 million (2005: US$850 million).(b) Note 2 provides a reconciliation of operating profit to EBITA which is defined as operating profit before exceptional items and amortisation of intangible assets (excluding software) but includes the group's share of associates' operating profit, on a similar basis. EBITA is used throughout the interim announcement.(c) Adjusted profit before tax comprises EBITA less net finance costs of US$242 million (2005: US$77 million) and share of associates' net finance costs of US$6 million (2005: US$8 million) adjusted in 2005 for the early redemption penalty in respect of the private placement notes (US$13 million).(d) A reconciliation of adjusted earnings to the statutory measure of profit attributable to equity shareholders is provided in note 5. _______________________________________________________________________________ 2006 Reported Organic, constant EBITA growth currency US$m % growth %_______________________________________________________________________________ Europe 485 28 21North America 253 (12) (12)Africa and Asia 240 14 14South Africa: Beverages 411 10 15South Africa: Hotels and Gaming 44 16 22Corporate (39) - - ___________________________________________Sub-total 1,394 13 13Latin America (1) 387 n/a n/a ___________________________________________Group 1,781 41 13 ___________________________________________ (1) No metrics have been given for Latin America as the inclusion of SouthAmerica has materially changed the composition of this segment such that growthstatistics are not meaningful. Statement from Graham Mackay, chief executive "This good start to the year is a further demonstration of the advantage weenjoy in our access to growth markets and our ability to offer our customers andconsumers comprehensive and varied portfolios of unique beer brands. "The combination of strong volume growth together with good earningscontributions from around the group supports our confidence for the future." ______________________________________________________________________________________________________Enquiries:______________________________________________________________________________________________________ SABMiller plc Tel: +44 20 7659 0100 Sue Clark Director of Corporate Affairs Mob: +44 7850 285471 Gary Leibowitz Senior Vice President, Investor Relations Mob: +44 7717 428540 Nigel Fairbrass Head of Media Relations Mob: +44 7799 894265 A live webcast of the management presentation to analysts will begin at 9.30am (GMT) on 9 November 2006.This announcement, a copy of the slide presentation and video interviews with management are available on the SABMiller plc website at www.sabmiller.com . Video interviews with management can also be found at www.cantos.com. High resolution images are available for the media to view and download free of charge from www.vismedia.co.uk Copies of the press release and the detailed Interim Announcement are available from the Company Secretary at the Registered Office, or from 2 Jan Smuts Avenue, Johannesburg, South Africa. Registered office: SABMiller House, Church Street West, Woking, Surrey, GU21 6HS Incorporated in England and Wales (Registration Number 3528416) Telephone: +44 1483 264000 Telefax: +44 1483 264117______________________________________________________________________________________________________ CHIEF EXECUTIVE'S REVIEW Business review The group has delivered satisfactory growth for the half year on top of thestrong performance in the comparable period last year. Our portfolio ofdeveloping and developed market businesses, using the strength of our local,regional and international brands, drove organic growth in overall lager volumesof 9% and in EBITA of 13% on a constant currency basis. The group EBITA marginincreased to 17.1%, a 110 basis points improvement over the prior period. Overall, these results continue to demonstrate the group's growth profile andthe advantages of our global footprint. Total beverage volumes were up 9% on anorganic basis, and 30% above last year on a reported basis at 144 millionhectolitres (hl) which includes the first full contribution from our business inSouth America. Total lager volumes were 117 million hl. We saw particularlystrong lager volume growth in Europe, with market share gains in a number ofcountries buoyed by the World Cup, and in China where our associate, CR Snow,became the country's largest brewer by sales volume in the first half ofcalendar 2006, and its national brand 'Snow' moved into the top ten beer brandsby volume worldwide. In North America Miller Brewing Company has continued to beimpacted by competitive pricing conditions and significant increases incommodity and energy prices. In South America our integration activities areproceeding well with volume growth across the four countries running ahead ofour initial expectations and we are accelerating our capital investmentprogramme. The current growth rates in South America give us further confidencein the long term potential of this business. The strong volume growth, further enhanced by price and mix benefits, hasresulted in a good increase in EBITA. In Europe we enjoyed mix gains across muchof the division; from Africa & Asia, we saw price improvements in both Angolaand Mozambique, and from South Africa we continued to benefit from the consumershift to premium products. Reported EBITA of US$1,781 million, up 41%, includes the first full half yearcontribution from South America. Weighted average currency rates as a whole werelargely stable in the six month period. On an organic, constant currency basis,EBITA increased by 13% reflecting strong operating performances includingimproved pricing and mix, in most of our key markets. Adjusted earnings are upby 27%, to US$846 million, whilst adjusted earnings per share of 56.6 US centshave grown by 7% for the first six months on a reported basis, reflecting theincreased number of shares in issue following the transaction in South Americaduring 2005. An interim dividend of 14.0 US cents per share, an 8% increase,will be paid to shareholders on 22 December 2006. We continue to make progress against our four strategic priorities. Creating a business portfolio for growth Over the period we continued to expand and develop our global footprint toensure access to markets that will deliver a combination of volume growth andfuture value. In July, our Chinese associate CR Snow acquired two furtherbreweries in the Zhejiang and Anhui provinces, extending our influence into themajor Chinese cities of Shanghai, Hangzhou and Ningbo. In August, we announcedthe creation of a joint venture with Coca-Cola Amatil in Australia, to marketand distribute directly our international premium brands which have a small, butgrowing presence there. Investing in strong local, regional and international brands We have more beer brands in the world's top 50 than any other brewer. Ourability to create and manage comprehensive brand portfolios in each local marketgives our group a unique competitive advantage. During the period we acquiredthe McKenzie River Corporation's Sparks and Steel Reserve brands in the US andsimultaneously agreed a deal with McKenzie River that will give Miller BrewingCompany access to McKenzie River's future brand innovation programme. In Augustwe announced the acquisition of the Foster's brand and brewery in India. InSouth America, our plans to create differentiated positions for all our brandsand to upgrade packaging are well advanced, and in the next six to eighteenmonths we will establish new price frameworks and upgrade sales efforts acrossthe board. Driving local performance We continued to drive superior performance from our existing businesses over theperiod with notable volume and mix benefits. In Poland, volumes were up 11%substantially ahead of the market and in the last twelve months we have added afurther 1% of market share to 38%. In Russia, volumes of our premium brandportfolio were ahead 25%, almost twice the market growth rate, and our largestbrand, Zolotaya Bochka was up 43%. In Mozambique and Tanzania, we have extendedour market penetration into rural areas whilst simultaneously driving mix andvolume improvements. Our Italian business, Birra Peroni, grew its core brands,Peroni and Nastro Azzurro by 4% and 9% respectively over the period. Benefits from global scale Our ability to source and develop talent at a global level is becoming a keycompetitive advantage for the group. The SABMiller processes and techniques arebeing embedded in South America and we are starting to see the benefits inimproved performance. From the beginning of the next calendar year, Miller will begin importing intothe US three of our South American brands, namely Cristal, Aguila and Cusquena,which will be targeted at the expanding South American communities. PeroniNastro Azzurro which grew volumes over the period by 28% in the UK, and 23% inthe US, was introduced into Poland in April and into Colombia in September. Outlook The group delivered satisfactory growth in the half year, enhanced by our newbusinesses in South America. Our global footprint; our brands and our brandportfolios; and our ability to continue to leverage our global scale and toimprove productivity, give us confidence that we will continue to make progress. Operational review Latin America Central America Organic South Latin America Sept growth America Sept 2005 2006** 2006 2006Financial summary US$m US$m US$m US$m________________________________________________________________________________ Group revenue (includingshare of associates) 262 32 1,718 2,012 12%EBITA* 32 9 346 387 27%EBITA margin (%) 12.2 20.1 19.2 Sales volumes (hl 000)- Lager 826 49 15,585 16,460 6%- Carbonated soft drinks (CSDs) 2,991 195 1,274 4,460 7%- Other beverages 1,451 139 3,680 5,270 10%________________________________________________________________________________ * In 2006 before exceptional items of US$24 million being integration andrestructuring costs in South America. ** Organic growth in the period represents the organic growth for CentralAmerica only. There is no currency impact on reported growth in the period underreview. The Latin America segment includes the results of our operations in CentralAmerica, as well as those in South America. The completion date for thetransaction was 12 October 2005. Accordingly the results for the current halfyear include a full six months for South America, but the comparative perioddoes not and volume growth is discussed below on a pro-forma basis. The first half of the financial year in South America saw strong tradingperformances in all countries, with total volumes up 11% (lager volumes up 11%)against the prior year. The timing of Easter and brand promotional campaignscapitalising on the World Cup assisted volumes during the first quarter, despitethere being a number of "dry days" in various countries for electoral reasons aswell as floods in the greater Bogota area. Lager volumes in Colombia increased by 9%, despite the cycling of double digitgrowth in the prior year and an unusual number of "dry days" where for electoralreasons alcohol sales are banned. Total volumes grew by 10%, aided by economicgrowth of over 5%, as well as World Cup related marketing initiatives and anupgrade in point of sale activity. Aguila, our flagship brand and the leadingbrand in Colombia, recorded growth of 10%. In September we launched PeroniNastro Azzurro - our first international brand to be brought to the region. Thecoming 18 months will see further development of the brand portfolio, with therenovation of six domestic brands, including the upgrade of both packaging andbrand presentation, and the launch of further international and regional brands. The strong volume growth has accelerated the need for additional capacity,especially in the western parts of Colombia. Accordingly, work has commenced onthe construction of a new brewery on the outskirts of Cali, Colombia's thirdlargest city, which should come on stream in late 2007. During June, the company announced the disposal of its fruit juice business,Productora de Jugos, for a cash consideration of approximately US$55 million.Completion of the sale is still subject to satisfaction of a number ofconditions, principally the approval of the Colombian Superintendence ofIndustry and Commerce in accordance with Colombian merger control regulations. SABMiller has made a series of offers to purchase the remaining shares ofminority shareholders of Bavaria since obtaining control in October 2005 and thegroup shareholding in Bavaria is now 98% with an effective interest of 97.65%. Lager volumes in Peru grew by 13% during the period driven by favourableeconomic conditions. GDP growth was 7.25% for the calendar year to 31 August2006. Volumes have also been stimulated by competitive pricing in the market. During the first half our market share has remained stable at some 92% despitethe competitor expansion of distribution nationwide. Good volume growth wasrecorded in all regions and particularly in the South where the distribution ofour main brand, Cristal, was extended during June. This, together with Cristal'sWorld Cup promotions in the country, has contributed to volume growth of over30% for the brand. Barena was launched in September, the first in a planned series of new brandintroductions and renovations. We are accelerating investment for additionalcapacity and plans for our container upgrade programme are well advanced. During the period under review, SABMiller acquired additional shares in Backusand Johnston, thereby increasing its effective interest to 93.7%. Our Ecuador operations performed strongly, with volume growth of over 16%,driven by the flagship mainstream brand Pilsener, which capitalised on thebrand's association with the World Cup. The brand was recently relaunched withenhanced graphics and labelling. In Panama the beer market grew by 5.6%, fuelled by strong GDP growth, withCerveceria Nacional increasing its market share to 84%. Brands Atlas and Balboahave performed well, contributing to total volume growth of 7%. The price on the285 ml main returnable bottle was increased by 16% in July. We are entering a period of heightened investment in all our major markets asevidenced by the recent launches in the premium segment of Peroni Nastro Azzurroin Colombia, Barena in Peru and Miller Genuine Draft in Panama and packagingupgrades for domestic brands. Furthermore exceptional costs of US$24 millionhave been recorded for integration and restructuring costs in the first half,with the majority of this related to brand portfolio designs and the containerupgrade programme. In Central America, both El Salvador and Honduras delivered good volumeperformances across the range of products. Lager volumes grew by 6% andcarbonated soft drink (CSD) volumes improved by 7%. This, with some selectedprice increases, resulted in organic constant currency EBITA growth of 27%. Europe_______________________________________________________________________________ Sept Sept 2006 2005Financial summary US$m US$m %________________________________________________________________________________ Revenue 2,279 1,905 20 EBITA 485 379 28 EBITA margin (%) 21.3 19.9 Sales volumes (hl 000)- Lager 23,040 20,910 10- Lager organic 22,757 20,910 9________________________________________________________________________________ Europe again delivered an excellent result with EBITA up 28% (21% in organicconstant currency terms). Total volumes were up 10% (9% organic growth) withstrong growth in Poland, Russia, Romania and the UK. Premium (worthmore) volumesincreased by 13% on an organic basis, assisting revenue per hectolitre toimprove. EBITA margin expanded by 140 basis points to 21.3%. In Poland volumes were up 11% compared to market growth of 7% and our marketshare has improved by a further 1% over the last twelve months to 38%. OurTyskie brand, the market leader, returned to growth - up 6%, leveraging itsassociation with the national football team during the World Cup. Our Lech brandgrew 7% with new variants making good contributions. In the economy segment theZubr brand continued its strong performance growing by 23%, and Redds, ourflavoured alcoholic beverage, was up 35%. These encouraging trends have alsobeen stimulated by new multipacks in the off-premise trade, and consumeractivation programmes in the on-premise trade. In both channels, we have focusedon product visibility and availability of chilled product, employing enhancedpoint of sale equipment. In the Czech Republic, the total beer market grew 1% assisted by World Cupactivity, while our volumes were up almost 1%. In line with our strategy tobuild value share in this market, worthmore volumes were up 3% and PilsnerUrquell grew by 4%, following the introduction in the on-premise of new draftformats. In the off-premise trade, Gambrinus performed well supported by newpackaging, including crates, and the introduction of multipacks. Exports to ourkey market, Germany, were up 37% benefitting from new packaging and anupweighting of the field sales force. Kozel, now produced in three countries,grew by 8% domestically and over 20% regionally. In Russia, industry volumes were up 13%, temporarily boosted by disruption towine and spirit supplies due to new excise labelling requirements. Our volumesgrew 25%, assisted by significant marketing investment. Miller Genuine Draftvolumes increased by 14% following the launch of a new half litre bottle and arelated marketing campaign. Zolotaya Bochka, our biggest volume brand, performedstrongly - up 43%, while Redds, Kozel and Pilsner Urquell all achieved goodgrowth. Our increased sales force, extended cooler programmes and focused trademarketing efforts have all contributed to improved profitability. In Italy the industry grew 2%, notwithstanding the 19% excise increase year onyear. Our core brands performed well with Peroni up 4% and Nastro Azzurrogrowing 9%, while Pilsner Urquell was ahead by over 30%. Total Birra Peronivolumes were level with the prior year's comparable period, despite a 27%decline in private label volumes as a result of our managed exit strategy.Exports showed strong growth with Peroni Nastro Azzurro volumes up 28% in theUK. In Romania, volume was up 13%, against industry growth of 17%. Our business,Ursus Breweries, was capacity constrained during the first quarter but grewvolumes by 24% in the second quarter. Our Timisoreana brand grew 27% with thelaunch of a new mainstream PET pack, and the Ciucas brand was up 22% in theeconomy segment. The number of on-premise outlets selling our Peroni NastroAzzurro brand is being expanded and it has recently been launched in theoff-premise channel. In Hungary, Dreher's volumes were up 4%, in line with the industry. Revenue perhl was impacted negatively by the inability to pass on fully the 21% effectiveincrease in excise. Recent political instability and the introduction of fiscalausterity measures will impact consumer purchasing power going forward. In Slovakia, our organic volume growth was in line with industry volume growthof 1%. In March 2006 we acquired 48% of Pivovar Topvar A.S., and have sinceincreased our shareholding to 92%. North America________________________________________________________________________________ Sept Sept 2006 2005Financial summary US$m US$m %________________________________________________________________________________Revenue 2,632 2,651 (1) EBITA 253 286 (12) EBITA margin (%) 9.6 10.8 Sales volumes (hl 000)- Lager - excluding contract brewing 24,693 25,558 (3) - contract brewing 5,224 5,506 (5)- Carbonated soft drinks (CSDs) 49 42 17 Lager - domestic sales to retailers (STRs) 23,177 23,976 (3)________________________________________________________________________________ Miller Brewing Company continued to experience a difficult trading environmentdue to competitive pricing conditions, market share gains by import and craftbeers, and significant increases in commodity input costs. Miller has howeversustained its marketing investment in major brands and continued to improve itsoverall organisational capabilities with a specific focus on brand marketing andmain retailers. As reported by the US Beer Institute, beer industry shipments to wholesalers(STWs) grew by 1.4% for the period, but excluding imports, which were up 8.6%,the US domestic industry grew by only 0.3%. Industry shipments to retailers(STR) performance for the same period is believed to have lagged STW growth asunfavourable weather in September resulted in increases in distributorinventories. On an organic (excluding Sparks and Steel Reserve) comparable trading day basis,Miller's US domestic STRs decreased by 3.6% over the six months while domesticSTWs declined by 3.8%. Including Sparks and Steel Reserve volumes, Miller's USdomestic STRs decreased 2.6% on a comparable trading day basis (3.4%unadjusted), while actual reported domestic STWs declined 2.9%. Contract brewingvolumes were lower by 5%, due primarily to the transfer of the Sparks and SteelReserve volumes into the Miller system. Miller Lite volumes recorded a low-single digit decline during the period.Marketing for Miller Lite has been increased with further investment in retailactivation programmes. Miller High Life and Milwaukee's Best franchise volumesboth declined by mid-single digit levels due to particularly strong competitivepricing pressure in the economy segment, whilst Icehouse volumes were level withthe prior period. Miller Genuine Draft volumes continued to decline. Miller's worthmore brand portfolio grew volumes by 8% which was driven by growthof the Leinenkugel's franchise, following the successful launch of the SunsetWheat variant, as well as continued rapid growth of Peroni Nastro Azzurro. Total revenue declined by 1% compared with the prior period, to US$2,632million. US domestic revenue excluding contract brewing also declined by 1% ashigher front-line pricing and lower price promotions were offset by lowerdomestic volumes. Miller recorded firmer pricing across its portfolio than theother major domestic brewers. EBITA for the period, of US$253 million, was 12% lower than the prior year'sUS$286 million, mainly as a result of higher input costs of aluminium, glass andenergy. Marketing expenditure was approximately level compared to the comparableperiod of the prior year. Miller continues to focus efforts behind its flagship Miller Lite brand, whileimproving the performance of other key brands to protect Miller's share of keyindustry segments. Miller is also reshaping its brand portfolio to capitalise ongrowth areas of the beer industry, including low-calorie, caffeinated, craft andimport beers. In August, Miller completed the purchase of the Sparks and SteelReserve brands from McKenzie River, adding two brands to the portfolio that areexperiencing double-digit growth rates and offer significant expansionopportunities through main retailers. In September, Miller announced thegeographic expansion of the Leinenkugel's range to six additional markets acrossthe US. The distribution and marketing of Peroni Nastro Azzurro is expanding thebrand across key US cities, and Miller recently announced an increased focus onmarketing and selling the Polish Tyskie brand as well as the importation ofthree of SABMiller's Latin American brands into the US. Profitability in the second half of the year will be affected by the ongoingcompetitive conditions, growth in import and craft beers, consumer-facingmarketing investment behind Miller Lite, and high levels of commodity and energyprices. Africa & Asia________________________________________________________________________________ Sept Sept 2006 2005Financial summary US$m US$m %________________________________________________________________________________ Group revenue (including share of associates) 1,356 1,065 27 EBITA 240 209 14 EBITA margin (%) 17.7 19.7 Sales volumes (hl 000)*- Lager 40,854 31,156 31- Lager organic 38,724 31,156 24- Carbonated soft drinks (CSDs) 2,030 1,939 5- Other beverages 8,010 7,142 12________________________________________________________________________________ * Castel volumes of 7,563 hl 000 (2005: 6,826 hl 000) lager, 4,693 hl 000 (2005:4,382 hl 000) CSDs, and 1,966 hl 000 (2005: 1,740 hl 000) other beverages arenot included. Africa & Asia growth momentum continued in the period under review, with lagervolume growth of 31% (organic growth of 24%) and reported EBITA growth of 14%,despite currency weakness in some of our countries. Geographic EBITA mix inAfrica, combined with faster growth in Asia, resulted in a lower EBITA marginfor the region. Africa Africa delivered a strong half year performance. Total Africa lager volumes(excluding Zimbabwe) were up 6%, driven by good performances from Mozambique,Uganda, Tanzania and Ghana. Our total CSD volumes grew by 24% (excludingZimbabwe) as a result of both industry and market share growth in Angola. EBITAimproved on prior year, despite the expected decline in EBITA in Botswana andrising input costs across Africa, particularly fuel costs. In Mozambique, volume growth trends benefited from ongoing economic growth andincreased distribution with volumes advancing 10% over the prior period. Uganda recorded volume growth of 19% for the half year, with the Eagle brandscontinuing to perform well, despite an increase in excise tax for sorghum beersin June 2006. Our mainstream brands, Nile Special and Club, showed renewedgrowth whilst Chairman's ESB benefited from exports to neighbouring countries. Tanzania recovered from a slow start due to a longer than usual rainy season inthe first quarter to record volume growth of 5%, and benefited from a strongagricultural sector in the second quarter. Among the core brands, Castle was astrong contributor to growth, up 10%. However increasing inflation and inputcost pressures including rising fuel prices hindered EBITA margin development. In Zambia volume growth was 5% for lager and 3% for CSDs. The rollout of theEagle brand in Zambia has been successful, with its share of total volumes morethan doubling to 15%. Conditions in Botswana remained difficult; with volumes of both lager and softdrinks down by 13%. Consumer spending has not yet recovered from the impact ofthe Pula devaluations in the prior years. Rising commodity input prices havebeen exacerbated by exchange rate impacts. In Ghana volumes grew by 35% driven by the recently launched Stone Extra StrongLager brand. Our CSD businesses in Angola produced an excellent performance, with consumerdemand stimulated by improved availability and extended pack offerings,resulting in market share gains and volume growth of 43%. Our associate Castel grew total lager beer volumes by 11% and CSDs by 7%. Asia The excellent growth trend from our Asian businesses continued in the first halfand EBITA for the region grew strongly despite the inclusion of start-up costsin Vietnam. Volume growth in China of 32% (organic growth of 27%) was well in excess ofindustry growth, and was spread across all regions. During the period CR Snowbecame China's largest brewer by volume and Snow is now acknowledged as the topselling beer brand in the country. Significant marketing, distribution andcapital investments continue to be made behind the Snow brand. The volume growthand shift in mix towards Snow enhanced profitability, notwithstanding the costsof integration of recent acquisitions and start-up losses from our two newgreenfield sites. India experienced strong growth in volumes of over 40%, on a pro-forma basis forthe first six months. The business has benefited from strong demand in AndhraPradesh and de-regulation of markets in the Northern region. On 12 September2006, we acquired the Foster's brand and business in India. Foster's has astrong position in the mild lager segment and complements our existing brandportfolio. In Vietnam our greenfield brewery (in a joint venture with Vinamilk) is ontarget to commence operations early in the new calendar year. In Australia thegroup signed an agreement with Coca-Cola Amatil to market our internationalworthmore brands, and the venture is expected to be operational in mid November2006. South Africa: Beverages________________________________________________________________________________ Sept Sept 2006 2005Financial summary US$m US$m %________________________________________________________________________________Group revenue (including share of associates) 1,950 1,864 5 EBITA 411 375 10 EBITA margin (%) 21.1 20.1 Sales volumes (hl 000)- Lager 12,237 12,153 1- Soft drinks 6,505 6,414 1- Carbonated soft drinks (CSDs) 6,080 6,091 -- Other beverages 425 323 32________________________________________________________________________________ Both beer and soft drinks delivered further volume growth in the six monthperiod to September despite facing challenging comparatives in CSDs. Growth wasassisted by an Easter trading period in the current year, a continuation of thestrong trends in our premium beer brands and growth in our non-carbonatedalternative soft drinks. The growth rate of the South African economy continued over the last six monthsdespite higher international crude oil prices and rising domestic interestrates. Household disposable income was buoyed by rising employment and wagelevels as well as some tax relief for individuals. Consumption by householdsrose in line, led by higher purchases of durable and semi-durable goods. Thiswas accompanied by higher debt levels which, in a rising local interest rateenvironment, may dampen volume growth going forward. Lager volumes grew by 1% driven by strong performances by our premium and fruitalcoholic beverage (FAB) portfolios. Castle Lite, Miller Genuine Draft, PeroniNastro Azzurro and Amstel were again the biggest contributors to the growth inthe premium category with all these brands delivering double digit growth. Theintroduction of a bulk returnable pack in our Brutal Fruit product range in theprevious financial year continued to benefit these brands. Product and pack innovation continue. In October a new apple-flavoured premiumFAB, Sarita, was launched, presented in a flint bottle with an easy-to-open riptab crown, a first for South African consumers. Our Redd's brand has new,contemporary, pressure sensitive labels on both packs. These upgrades leveragethe investment in new labelling capability initiated last year. We have alsointroduced a new 330ml returnable bottle for our mainstream lager beer. Good progress was made in expanding direct distribution of both beer and softdrinks. The beer customer base increased by 8% and soft drink's growth in directstore delivery customers was almost 5%. Total soft drink beverage volumes grew by over 1%, led by strong growth inalternative beverages, particularly by water (Valpre and Bon Aqua) and energydrink (Power Play) portfolios. CSD volume growth was level with the previousyear's volumes which had grown 10% over the comparable period due to anunusually warm winter season. Revenue growth of 5% was driven by increased sales volumes, selective priceincreases in lager and soft drink products and continuing growth of premiumproducts. Tight cost control and favourable raw material hedging positionsassisted EBITA to grow 10%, notwithstanding increased distribution costs toenable greater market penetration. The completion of the liquor industry charter, in line with the BEE (Broad BasedBlack Economic Empowerment) Act, is contingent on the final publication of theCodes of Good Conduct. We expect that these codes will be published before theend of the financial year. Sales of Appletiser continued to show strong growth both in South Africa andinternationally with total volumes up 14%. Distell delivered growth in totalvolumes, revenue and profit. South Africa: Hotels and Gaming________________________________________________________________________________ Sept Sept 2006 2005Financial summary US$m US$m %________________________________________________________________________________Group revenue (share of associates) 167 154 9 EBITA 44 38 16 EBITA margin (%) 26.6 25.0 Revenue per available room (Revpar) - US$ 58.46 52.58 11________________________________________________________________________________ The group is a 49% shareholder in the Tsogo Sun group, which reported a strongfirst half result. Growth in the South African economy continued into thecurrent financial year and positively influenced trading performance in both theHotels and Gaming divisions. Good occupancy levels continue to be achieved bythe Hotels division with strong growth in room rates, and the Gaming industryhas enjoyed further growth but at a slower pace than last year. Financial review Accounting policies The accounting policies followed are the same as those published within theAnnual Report and Accounts for the year ended 31 March 2006 amended for IFRICInterpretation 4 'Determining whether an arrangement contains a lease' and anamendment to IAS 39 'Financial Guarantee Contracts'. The adoption of these newpolicies did not impact the company's financial results as reported. The Annualreport and accounts for the year ended 31 March 2006 are available on thecompany's website, www.sabmiller.com. The balance sheet as at 31 March 2006 hasbeen restated for further adjustments relating to initial accounting forbusiness combinations, further details of which are provided in note 9. Segmental analysis The group's operating results on a segmental basis are set out in the segmentalanalysis of operations, and the disclosures are in accordance with the basis onwhich the businesses are managed and according to the differing risk and rewardprofiles. SABMiller believes that the reported profit measures - beforeexceptional items and amortisation of intangible assets (excluding software),and including associates on a similar basis (i.e. before interest, tax andminority interests) - provide additional information on trends and allow forgreater comparability between segments. Segmental performance is reported afterthe specific apportionment of attributable head office service costs. This announcement includes segmental results and commentaries for Latin America,following our investment in Bavaria whose operations are located in SouthAmerica. The reporting segment Latin America combines the group's South Americaoperations with the previously reported geographical segment of Central America. Accounting for volumes In the determination and disclosure of reported sales volumes, the groupaggregates 100% of the volumes of all consolidated subsidiaries and its equityaccounted associates, other than associates where the group exercisessignificant influence but primary responsibility for day to day management restswith others (such as Castel and Distell). In these latter cases, the financialresults of operations are equity accounted in terms of IFRS but volumes areexcluded. Contract brewing volumes are excluded from total volumes; howeverrevenue from contract brewing is included within revenue. Reported volumesexclude intra-group sales volumes. Organic, constant currency comparisons The group discloses certain results on an organic, constant currency basis, toshow the effects of acquisitions net of disposals and changes in exchange rateson the group's results. Organic results exclude the first twelve months' resultsof acquisitions and the last twelve months' results of disposals. Constantcurrency results have been determined by translating the local currencydenominated results for the period ended 30 September 2006 at the exchange ratesfor the comparable period in the prior period. Acquisitions and disposals On 3 July 2006, the group announced that it had entered into an agreement toacquire the Sparks and Steel Reserve brands from US contract brewing partnerMcKenzie River Corporation for a cash consideration of US$215 million. Thistransaction was subsequently completed on 11 August 2006. On 4 August 2006, the group announced that it had entered into an agreement toacquire a 100% interest in the Foster's business and Foster's brand in India fora cash consideration of US$120 million. This transaction was subsequentlycompleted on 12 September 2006. On 10 August 2006, the group announced that it had entered into a joint venturewith Coca-Cola Amatil (CCA) to import, market and distribute SABMiller'sinternational premium brands in Australia. Under the terms of the agreementSABMiller and CCA will each hold a 50% interest in the joint venture, which willbe known as Pacific Beverages Pty Ltd, and is expected to be operational by midNovember 2006. Exceptional items Items that are material either by size or incidence are classified asexceptional items. Further details on the treatment of these items can be foundin note 3. Exceptional charges of US$27 million reported during the period relate tointegration costs, incurred by the Bavaria group of which US$24 million wasincurred in the region and US$3 million in the corporate centre. In the priorcomparable period there were no exceptional items. Borrowings and net debt Gross debt, comprising borrowings of the group together with the fair value ofderivative assets or liabilities held to manage interest rate and foreigncurrency risk of borrowings, has decreased to US$7,579 million from US$7,775million at 31 March 2006 (as restated). Net debt comprising gross debt net ofcash and cash equivalents and the loan participation deposit has decreased toUS$6,732 million from US$7,107 million at 31 March 2006 (as restated). Ananalysis of net debt is provided in note 8. The group's gearing (presented as aratio of debt/equity) has decreased to 49.0% from 52.3% at 31 March 2006 (asrestated). On 27 June 2006, SABMiller plc successfully raised US$1,750 million of new debtthrough the issue of a US$300 million 3 year Floating Rate Note at US LIBOR plus30 basis points, a US$600 million 6.2% 5 year bond and a US$850 million 6.5% 10year bond. The proceeds of these issuances were used to refinance amounts drawnunder committed facilities related to the Bavaria transaction, including thesubsequent purchase of minority interests and the restructuring of prioritydebt. The average borrowing rate for the total debt portfolio at 30 September 2006 was6.7% (2005: 5.6%), compared to 6.9% at 31 March 2006. Further progress has been made in the restructuring of priority debt at thesubsidiary company level to remove structural subordination of senior lenders toSABMiller plc. In particular, debt in the Bavaria group comprising US$500million 144A bonds and US$150 million (equivalent Colombian pesos) related to asecuritisation programme were repaid in May 2006 and in October 2006respectively. Since 30 September 2006, the group has diversified further its sources offinancing by launching on 12 October 2006 a US$1,000 million commercial paperprogramme. This programme also increases the flexibility of the group'sfinancing arrangements at a lower cost of debt. Finance costs Net finance costs increased to US$242 million, a 214% increase on the prioryear's finance costs of US$77 million, reflecting the increase in net debtfollowing the consolidation of the Bavaria group from October 2005 andsubsequent acquisition of minority interests. Profit before tax Profit before tax of US$1,378 million was up 22% on prior year, reflecting theinclusion of South America and performance improvements across the businesseswhich more than offset a number of exceptional items (as described above). Taxation Our effective tax rate, of 35.7%, is marginally higher than the prior yearperiod under review. It is higher than the prior year full year rate, reflectinga different geographic mix of profits across the group. Earnings per share The group presents adjusted basic earnings per share to exclude the impact ofthe amortisation of intangible assets (excluding software) and othernon-recurring items, which include post-tax exceptional items, in order topresent a more meaningful comparison for the years shown in the consolidatedfinancial statements. Adjusted basic earnings per share of 56.6 US cents are up7% on the prior comparable period, reflecting the improved performance notedabove. An analysis of earnings per share is shown in note 5 to the financialstatements. Cash flow Net cash generated from operating activities before working capital movements(EBITDA) increased by 39%, to US$1,964 million, compared to the prior period.The ratio of EBITDA to revenue increased in the period to 21.0% (2005: 20.1%). Currencies: South African rand/Colombian peso During the period, the rand weakened by 25% against the US dollar and ended theperiod at R7.76 to the US dollar compared to R6.20 at 31 March 2006, whilst theweighted average rand/dollar rate weakened by 5% to R6.81 compared with R6.47 inthe prior year. The peso has weakened by 4% against the US dollar ending theperiod at COP2,394 to the US dollar, compared to COP2,292 at 31 March 2006. Dividend The board has declared an interim dividend of 14.0 US cents per share. Thedividend will be payable on 22 December 2006 to shareholders registered on theLondon and Johannesburg registers on 1 December 2006. The ex-dividend tradingdates will be 29 November 2006 on the London Stock Exchange (LSE) and 27November 2006 on the JSE Limited (JSE). As the group reports in US dollars,dividends are declared in US dollars. They are payable in South African rand toshareholders on the Johannesburg register, in US dollars to shareholders on theLondon register with a registered address in the United States (unless mandatedotherwise), and in sterling to all remaining shareholders on the Londonregister. Further details relating to dividends are provided in note 6. The rate of exchange applicable on 16 November 2006 will be used for US dollarconversion into South African rand and the rate of exchange on 4 December 2006will be used for US dollar conversion into sterling. Currency conversionannouncements will be made on the LSE's Regulatory News Service and on the JSE'sStock Exchange News Service, indicating the rates of exchange to be applied. From the close of business on 16 November 2006 until the close of business on 1December 2006, no transfers between the London and Johannesburg registers willbe permitted, and from the close of business on 24 November 2006 until the closeof business on 1 December 2006, no shares may be dematerialised orrematerialised. This statement, which should be read in conjunction with the independent reviewreport of the auditors set out below, is made to enable shareholders todistinguish the respective responsibilities of the directors and the auditors inrelation to the consolidated interim financial information, set out on pages 17to 29, which the directors confirm has been prepared on a going concern basis.The directors consider that the group has used appropriate accounting policies,consistently applied and supported by reasonable and appropriate judgements andestimates. 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 informationon the company's website. Information published on the internet is accessible inmany countries with different legal requirements. Legislation in the UnitedKingdom governing the preparation and dissemination of the financial statementsmay differ from legislation in other jurisdictions. On behalf of the board E A G Mackay M I WymanChief executive Chief financial officer 8 November 2006 INDEPENDENT REVIEW REPORT TO SABMILLER plc________________________________________________________________________________ Introduction We have been instructed by the company to review the financial information forthe six months ended 30 September 2006 which comprises the consolidated interimbalance sheet as at 30 September 2006, the related consolidated interimstatements of income, cash flows and recognised income and expense for the sixmonths then ended and the related notes. We have read the other informationcontained in the interim report and considered whether it contains any apparentmisstatements or material inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The Listing Rulesof the Financial Services Authority require that the accounting policies andpresentation applied to the interim figures should be consistent with thoseapplied in preparing the preceding annual accounts except where any changes, andthe reasons for them, are disclosed. This interim report has been prepared in accordance with the basis set out innote 1. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom. A reviewconsists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the disclosed accounting policies havebeen applied. A review excludes audit procedures such as tests of controls andverification of assets, liabilities and transactions. It is substantially lessin scope than an audit and therefore provides a lower level of assurance.Accordingly we do not express an audit opinion on the financial information.This report, including the conclusion, has been prepared for and only for thecompany for the purpose of the Listing Rules of the Financial Services Authorityand for no other purpose. We do not, in producing this report, accept or assumeresponsibility for any other purpose or to any other person to whom this reportis shown or into whose hands it may come save where expressly agreed by ourprior consent in writing. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 September 2006. PricewaterhouseCoopers LLPChartered Accountants London, 8 November 2006 CONSOLIDATED INCOME STATEMENTSfor the six months ended 30 September ________________________________________________________________________________ Six months Six months Year ended 30/9/06 ended 30/9/05 ended 31/3/06 Unaudited Unaudited Audited Notes US$m US$m US$m________________________________________________________________________________ Revenue 2 9,344 7,051 15,307 Net operating expenses (7,829) (5,948) (12,732) ____________________________________________ Operating profit 2 1,515 1,103 2,575 ____________________________________________Operating profit beforeexceptional items 1,542 1,103 2,590Exceptional items 3 (27) - (15) ____________________________________________ Net finance costs (242) (77) (299) ____________________________________________Interest payable andsimilar charges (388) (117) (377)Interest receivable 146 40 78 ____________________________________________ Share of post-tax resultsof associates 105 100 177 ____________________________________________ Profit before taxation 1,378 1,126 2,453Taxation 4 (470) (377) (779) ____________________________________________ Profit for the financialperiod 908 749 1,674 ____________________________________________ Profit attributable tominority interests 118 99 234Profit attributable toequity shareholders 790 650 1,440 ____________________________________________ 908 749 1,674 ____________________________________________ Basic earnings per share(US cents) 5 52.9 51.3 105.0Diluted earnings per share(US cents) 5 52.6 50.9 104.3 ____________________________________________ All operations are continuing. CONSOLIDATED BALANCE SHEETSat the 30 September ________________________________________________________________________________ 30/9/06 30/9/05 31/3/06* Unaudited Unaudited Unaudited Notes US$m US$m US$m________________________________________________________________________________ AssetsNon-current assetsGoodwill 12,678 7,415 12,814Intangible assets 3,741 150 3,596Property, plant and equipment 6,169 4,102 6,337Investments in associates 1,049 1,156 1,065Financial assets: - Available for sale investments 42 59 43 - Derivative financial instruments 72 14 3Trade and other receivables 95 58 86Deferred tax assets 359 164 274 ____________________________________ 24,205 13,118 24,218Current assetsInventories 801 608 878Trade and other receivables 1,304 1,117 1,225Current tax assets 52 28 54Financial assets: - Derivative financial instruments 66 8 4 - Loan participation deposit 190 - 196Cash and cash equivalents 8 657 1,142 472 ____________________________________ 3,070 2,903 2,829 ____________________________________Total assets 27,275 16,021 27,047 ____________________________________ LiabilitiesCurrent liabilitiesFinancial liabilities: - Derivative financial instruments (4) (7) (3) - Borrowings (1,157) (1,154) (1,950)Trade and other payables (2,493) (1,936) (2,414)Current tax liabilities (354) (332) (316)Provisions (205) (64) (182) ____________________________________ (4,213) (3,493) (4,865)Non-current liabilitiesFinancial liabilities: - Derivative financial instruments (136) (2) (175) - Borrowings (6,326) (2,428) (5,652)Trade and other payables (61) (48) (86)Deferred tax liabilities (1,537) (188) (1,437)Provisions (1,265) (931) (1,247) ____________________________________ (9,325) (3,597) (8,597) ____________________________________Total liabilities (13,538) (7,090) (13,462) ____________________________________ ____________________________________Net assets 13,737 8,931 13,585 ____________________________________ EquityTotal shareholders' equity 13,191 8,261 13,043Minority interests 546 670 542 ____________________________________Total equity 13,737 8,931 13,585 ____________________________________ * As restated (see note 9). CONSOLIDATED CASH FLOW STATEMENTSfor the six months ended 30 September________________________________________________________________________________________ Six months Six months Year ended 30/9/06 ended 30/9/05 ended 31/3/06 Unaudited Unaudited Audited Notes US$m US$m US$m________________________________________________________________________________________ Cash flows from operatingactivitiesNet cash generated fromoperations 7 2,152 1,289 3,291Interest received 94 41 80Interest paid (347) (123) (401)Interest element offinance lease payments (1) - -Tax paid (371) (394) (869) _________________________________________________Net cash from operatingactivities 1,527 813 2,101 _________________________________________________ Cash flows from investingactivitiesPurchase of property,plant and equipment (462) (404) (999)Proceeds from sale ofproperty, plant andequipment 25 21 48Purchase of intangibleassets (240) (15) (33)Purchase of investments - (18) (7)Proceeds from sale ofinvestments 1 - 5Acquisition ofsubsidiaries (net ofcash acquired) (145) (180) (717)Purchase of shares fromminorities (34) (6) (2,048)Purchase of shares inassociates (8) - (1)Repayment of funding byassociates - - 122Dividends received fromassociates 73 38 71Dividends received fromother investments 1 1 2 _________________________________________________Net cash used ininvesting activities (789) (563) (3,557) _________________________________________________ Cash flows from financingactivitiesProceeds from the issueof shares 24 18 30Purchase of own sharesfor share trusts (8) (8) (8)Proceeds from borrowings 3,710 265 3,002Repayment of borrowings (3,702) (356) (900)Capital element offinance lease payments (9) (9) (28)Increase in loanparticipation deposit - - (196)Dividends paid toshareholders of theparent (473) (328) (520)Dividends paid tominority interests (68) (63) (167) _________________________________________________Net cash (used) /generated in financingactivities (526) (481) 1,213 _________________________________________________ Net cash from operating,investing and financingactivities 212 (231) (243)Effects of exchange ratechanges 26 2 11 _________________________________________________Net increase /(decrease) in cash andcash equivalents 238 (229) (232) Cash and cashequivalents at 1 April 398 630 630 _________________________________________________Cash and cashequivalents at period end 8 636 401 398 _________________________________________________ CONSOLIDATED STATEMENTS OF RECOGNISED INCOME AND EXPENSEfor the six months ended 30 September ________________________________________________________________________________ Six months Six months Year ended 30/9/06 ended 30/9/05 ended 31/3/06 Unaudited Unaudited Audited US$m US$m US$m________________________________________________________________________________ Currency translationdifferences on foreigncurrency net investments (302) (227) (128)Actuarial gains on definedbenefit plans - - 42Tax on items taken directly toequity - - (17)Net investment hedges 106 10 (2) _________________________________________________Net losses recognised directlyin equity (196) (217) (105) Profit for the period 908 749 1,674 _________________________________________________ Total recognised income forthe period 712 532 1,569 _________________________________________________- attributable to equityshareholders 606 453 1,360- attributable to minorityinterests 106 79 209 _________________________________________________ NOTES TO THE FINANCIAL STATEMENTS 1. Basis of preparation The financial information comprises the unaudited results of SABMiller plc forthe six months ended 30 September 2006 and 30 September 2005, together with theaudited results for the year ended 31 March 2006, restated for furtheradjustments relating to initial accounting for business combinations. Furtherdetails of these adjustments are provided in note 9. The financial informationin this report is not audited and does not constitute statutory accounts withinthe meaning of s240 of the Companies Act 1985 (as amended). The board ofdirectors approved this financial information on 8 November 2006. The annualfinancial statements for the year ended 31 March 2006, which represent thestatutory accounts for that year have been filed with the Registrar ofCompanies. The auditors' report on those accounts was unqualified and did notcontain a statement made under s237(2) or (3) of the Companies Act 1985. The unaudited financial information in this interim announcement has beenprepared in accordance with the Listing Rules of the Financial ServicesAuthority (FSA) and on a basis consistent with the IFRS accounting policies setout in the Group's Annual report for the year ended 31 March 2006, except thatIFRIC Interpretation 4 'Determining whether an arrangement contains a lease' andan amendment to IAS 39 'Financial guarantee contracts' have been implemented.There is no material effect of either change on the current or prior periods. IAS 34 'Interim financial statements' may be applied if a company elects toapply it; it is not a mandatory Standard. The Group has chosen not to adopt IAS34, 'Interim financial statements', in preparing its 2006 interim financialstatements and, therefore, this interim financial information is not incompliance with IFRS. The subsidiary and associated undertakings in the group operate in the localcurrency of the country in which they are based. From a presentationalperspective, the group regards these operations as being US dollar-based as thetransactions of these entities are, insofar as is possible, evaluated in USdollars. In management accounting terms all companies report in US dollars. Thedirectors of the company regard the US dollar as the presentational currency ofthe group, being the most representative currency of its operations. Thereforethe consolidated interim financial statements are presented in US dollars. Accounting policies These interim financial statements should be read in conjunction with the annualfinancial statements for the year ended 31 March 2006 and the accountingpolicies laid down therein (which were published in June 2006). The financialstatements are prepared under the historical cost convention, except for therevaluation to fair value of certain financial assets and liabilities. 2. Segmental information (unaudited) Revenue The following table provides a reconciliation of Group revenue (including shareof associates' revenue) to segment revenue. Share of Share of Segment associates' Group Segment associates' GroupSix months revenue revenue revenue revenue revenue revenue ended 30 2006 2006 2006 2005 2005 2005September: US$m US$m US$m US$m US$m US$m__________________________________________________________________________________ Latin America 2,003 9 2,012 262 - 262Europe 2,279 - 2,279 1,905 - 1,905North America 2,632 - 2,632 2,651 - 2,651Africa and Asia 681 675 1,356 545 520 1,065South Africa: _____________________________ _________________________________- Beverages 1,749 201 1,950 1,688 176 1,864- Hotels andGaming - 167 167 - 154 154 _____________________________ _________________________________South Africa:Total 1,749 368 2,117 1,688 330 2,018 _____________________________ _________________________________ 9,344 1,052 10,396 7,051 850 7,901 _____________________________ _________________________________ Year ended 31March: 2006 2006 2006 US$m US$m US$m _________________________________ Latin America 2,153 12 2,165Europe 3,258 - 3,258North America 4,912 - 4,912Africa and Asia 1,203 1,018 2,221South Africa: _________________________________- Beverages 3,781 423 4,204- Hotels and Gaming - 321 321 _________________________________South Africa:Total 3,781 744 4,525 _________________________________ 15,307 1,774 17,081 _________________________________ Operating profit before exceptional items The following table provides a reconciliation of operating profit (segmentresult) to operating profit before exceptional items. Operating Operating profit before profit before Operating Exceptional exceptional Operating Exceptional exceptionalSix months profit items items profit items itemsended 30 2006 2006 2006 2005 2005 2005September: US$m US$m US$m US$m US$m US$m_____________________________________________________________________________________________ Latin America 311 24 335 32 - 32Europe 484 - 484 379 - 379North America 251 - 251 286 - 286Africa and Asia 124 - 124 108 - 108South Africa:Beverages 387 - 387 353 - 353Corporate (42) 3 (39) (55) - (55) _____________________________________________________________________________ 1,515 27 1,542 1,103 - 1,103 _____________________________________________________________________________ Year ended 31March: 2006 2006 2006 US$m US$m US$m ____________________________________ Latin America 376 11 387Europe 567 - 567North America 454 - 454Africa and Asia 257 - 257South Africa:Beverages 1,011 - 1,011Corporate (90) 4 (86) ____________________________________ 2,575 15 2,590 ____________________________________ EBITA The following table provides a reconciliation of operating profit beforeexceptional items to EBITA. Six months Operating Share of Amortisation of EBITA Operating Share of Amortisation of EBITAended 30 profit before associates' intangible profit before associates' intangibleSeptember: exceptional operating assets exceptional operating assets items profit before (excluding items profit before (excluding exceptional software) exceptional software) items items 2006 2006 2006 2006 2005 2005 2005 2005 US$m US$m US$m US$m US$m US$m US$m US$m___________________________________________________________________________________________________________________ Latin 335 - 52 387 32 - - 32AmericaEurope 484 - 1 485 379 - - 379North 251 - 2 253 286 - - 286AmericaAfrica and 124 115 1 240 108 100 1 209AsiaSouthAfrica: ____________________________________________________________________________________________________- Beverages 387 24 - 411 353 22 - 375- Hotels and Gaming - 44 - 44 - 38 - 38 ____________________________________________________________________________________________________SouthAfrica: 387 68 - 455 353 60 - 413TotalCorporate (39) - - (39) (55) - - (55) ____________________________________________________________________________________________________Group 1,542 183 56 1,781 1,103 160 1 1,264 ____________________________________________________________________________________________________ Year ended31 March: 2006 2006 2006 2006 US$m US$m US$m US$m _________________________________________________ Latin America 387 - 49 436Europe 567 - 2 569North America 454 - - 454Africa and Asia 257 164 1 422South Africa: _________________________________________________- Beverages 1,011 51 - 1,062- Hotels and Gaming - 84 - 84 _________________________________________________South Africa: 1,011 135 - 1,146Total Corporate (86) - - (86) _________________________________________________Group 2,590 299 52 2,941 _________________________________________________ The group's share of associates' operating profit is reconciled to the share ofpost-tax results of associates in the income statement as follows: Six months Six months Year ended Ended ended 30/9/06 30/9/05 31/3/06 US$m US$m US$m________________________________________________________________________________ Share of associates' operating profit 183 160 299Share of associates' net finance cost (6) (8) (16)Share of associates' tax (52) (38) (81)Share of associates' minority interests (20) (14) (25) _______________________________________ 105 100 177 _______________________________________ Excise duties of US$1,887 million (2005: US$1,295 million) have been incurredduring the six months as follows: Latin America US$497 million (2005: US$29million); Europe US$442 million (2005: US$355 million); North America US$461million (2005: US$477 million); Africa and Asia US$152 million (2005: US$112million) and South Africa US$335 million (2005: US$322 million). The following table provides a reconciliation of EBITDA (the net cash inflowfrom operating activities before working capital movements) before cashexceptional items to EBITDA after cash exceptional items. A reconciliation ofgroup EBITDA after cash exceptional items can be found in note 7. EBITDA EBITDA before cash before cash exceptional Exceptional exceptional ExceptionalSix months items items EBITDA items items EBITDAended 30 2006 2006 2006 2005 2005 2005September: US$m US$m US$m US$m US$m US$m____________________________________________________________________________________ Latin America 493 (17) 476 52 - 52Europe 577 - 577 469 - 469North America 325 - 325 359 - 359Africa and Asia 159 - 159 137 - 137South Africa:Beverages 458 - 458 440 - 440Corporate (28) (3) (31) (39) - (39) ___________________________________________________________________ 1,984 (20) 1,964 1,418 - 1,418 ___________________________________________________________________ Year ended 31March: 2006 2006 2006 US$m US$m US$m _________________________________ Latin America 574 (4) 570Europe 733 - 733North America 591 - 591Africa and Asia 321 - 321South Africa:Beverages 1,205 - 1,205Corporate (68) (4) (72) _________________________________ 3,356 (8) 3,348 _________________________________ 3. Exceptional items______________________________________________________________________________________________ Six months Six months Year ended ended 30/9/06 ended 30/9/05 31/3/06 Unaudited Unaudited Audited US$m US$m US$m______________________________________________________________________________________________ Subsidiaries' exceptional items included in operating profit: Latin AmericaBavaria integration and restructuring costs (24) - (11) Corporate Bavaria integration costs (3) - (4) Exceptional items included in operating profit (27) - (15) ________________________________________ ________________________________________Taxation credit 8 - 5Minority interests' share of the above items - - - ________________________________________ 2006 Latin America and Corporate Integration and restructuring costs associated with the consolidation of Bavariaof US$27 million were incurred during the period (six months ended 30/9/05:US$Nil million; year ended 31/3/06: US$15 million). 4. Taxation ________________________________________________________________________________ Six months Six months Year ended ended 30/9/06 ended 30/9/05 31/3/06 Unaudited Unaudited Audited US$m US$m US$m________________________________________________________________________________ Current taxation 384 350 701 _________________________________________________- Charge for the period 1 377 357 717- Adjustments in respect of prior years 7 (7) (16) _________________________________________________Withholding taxes and other taxes 48 29 78 _________________________________________________Total current taxation 432 379 779 Deferred taxation 38 (2) - _________________________________________________- Charge for the period 2 33 (2) 7- Adjustments in respect ofprior years 5 2 (5)- Rate change - (2) (2) _________________________________________________ Total taxation 470 377 779 _________________________________________________ Effective tax rate, beforeamortisation of intangibles(excluding software) andexceptional items (%) 35.7 35.3 33.6 _________________________________________________ The effective tax rate is calculated including share of associates' operatingprofit before exceptional items and share of associates' tax before exceptionalitems. This calculation is on a basis consistent with that used in prior yearsand is also consistent with other group operating metrics. 1 The current tax charge for the period includes a UK corporation tax charge ofUS$4 million (six months ended 30/9/05: charge of US$14 million; year ended 31/3/06: US$29 million charge). 2 The deferred tax charge for the period includes a UK corporation tax charge ofUS$5 million (six months ended 30/9/05: charge of US$10 million; year ended 31/3/06: US$6 million charge). 5. Earnings per share________________________________________________________________________________ Six months Six months Year ended ended 30/9/06 ended 30/9/05 31/3/06 Unaudited Unaudited Audited US cents US cents US cents________________________________________________________________________________ Basic earnings per share 52.9 51.3 105.0Diluted earnings per share 52.6 50.9 104.3Headline earnings per share 55.4 52.7 108.3Adjusted basic earnings per share 56.6 52.7 109.1Adjusted diluted earnings pershare 56.3 52.2 108.4 _________________________________________________ The weighted average number of shares was:________________________________________________________________________________ 30/9/06 30/9/05 31/3/06 Unaudited Unaudited Audited Millions of Millions of Millions of shares shares shares________________________________________________________________________________ Ordinary shares 1,498 1,270 1,376ESOP trustordinary shares (4) (4) (4) _________________________________________________ Basic shares 1,494 1,266 1,372Dilutive ordinary sharesfrom share options 9 11 9 _________________________________________________ Diluted shares 1,503 1,277 1,381 _________________________________________________ Adjusted and headline earnings The group has also presented an adjusted basic earnings per share figure toexclude the impact of amortisation of intangible assets (excluding capitalisedsoftware) and other non-recurring items for the years shown in the consolidatedfinancial statements. Adjusted earnings per share are based on adjusted headlineearnings for each financial year and on the same number of weighted averageshares in issue as the basic earnings per share calculation. Headline earningsper share are calculated in accordance with the UK Society of InvestmentProfessionals (UKSIP) formerly the Institute of Investment Management andResearch Statement of Investment Practice No. 1 entitled 'The Definition ofHeadline Earnings'. The adjustments made to arrive at headline earnings andadjusted earnings are as follows: ________________________________________________________________________________ Six months Six months Year ended ended 30/9/06 ended 30/9/05 31/3/06 Unaudited Unaudited Audited US$m US$m US$m________________________________________________________________________________ Profit for the financial periodattributable to equity holders of the parent 790 650 1,440Early redemption penalty in respectof private placement notes - 13 13(Profit) / loss on derivatives oncapital items 1 (1) 10 5Amortisation of intangible assets(excluding capitalised software) 56 1 52Impairment of property, plant andequipment 2 - 4Profit on sale of property, plant andequipment (6) (2) (5)Tax effects of the above items (17) (7) (19)Minority interest effects 3 2 (6) _________________________________________________Headline earnings (basic) 827 667 1,484Integration / reorganisationcosts (net of tax effects) 19 - 13 _________________________________________________Adjusted earnings 846 667 1,497 _________________________________________________ 1 This does not include all derivative movements but includes those in relationto capital items for which hedge accounting cannot be applied. 6. Dividends paid and proposed Dividends paid are as follows:________________________________________________________________________________ Six months Six months Year ended ended 30/9/06 ended 30/9/05 31/3/06 Unaudited Unaudited Audited US cents US cents US cents________________________________________________________________________________ Prior year final dividendpaid per ordinary share 31.0 26.0 26.0Current year interimdividend paid per ordinary share - - 13.0 _________________________________________________ The interim dividend declared of 14.0 US cents per ordinary share is payable on22 December 2006 to ordinary shareholders on the register as at 1 December 2006and will absorb an estimated US$210 million of shareholders' funds. 7. Reconciliation of profit for the year to net cash generated from operations________________________________________________________________________________ Six months Six months Year ended ended 30/9/06 ended 30/9/05 31/3/06 Unaudited Unaudited Audited US$m US$m US$m________________________________________________________________________________ Profit for the year 908 749 1,674Taxation 470 377 779Share of post-taxresults of associates (105) (100) (177)Interest receivable (146) (40) (78)Interest payable andsimilar charges 388 117 377 _________________________________________________Operating profit 1,515 1,103 2,575Depreciation: Property, plant and equipment 270 204 444 Containers 85 45 111Container breakages,shrinkage and write-offs 11 11 77Profit on sale of property,plant and equipment (6) (2) (5)Impairment of property,plant and equipment 2 - 4Amortisation of intangible assets 81 22 105Net (gain) / loss from fair value hedges (8) 20 5Dividends received fromother investments (1) (1) (3)Charge with respect toshare options 14 10 17Restructuring and integrationcosts (Latin America, Corporate) - - 7Other non-cash movements 1 6 11 _________________________________________________Net cash generated fromoperations before workingcapital movements (EBITDA) 1,964 1,418 3,348Net inflow / (outflow) inworking capital 188 (129) (57) _________________________________________________Net cash generated from operations 2,152 1,289 3,291 _________________________________________________ Cash generated from operations include cash flows relating to exceptional itemsof US$20 million in respect of South America integration and restructuring costs(year ended 31 March 2006: US$8 million in respect of South America integrationand restructuring costs; six months ended 30 September 2005: US$Nil million). 8. Net debt Net debt is analysed as follows:________________________________________________________________________________ As at As at As at 30/9/06 30/9/05 31/3/06* Unaudited Unaudited Unaudited US$m US$m US$m________________________________________________________________________________ Borrowings (7,260) (2,830) (7,251)Borrowings-related derivative financialinstruments (96) 12 (173)Overdrafts (206) (741) (324)Finance leases (17) (11) (27) _________________________________________________Gross debt (7,579) (3,570) (7,775) Loan participation deposit 190 - 196Cash and cash equivalents (excludingoverdrafts) 657 1,142 472 _________________________________________________Net debt (6,732) (2,428) (7,107) _________________________________________________ *As restated (see note 9). Cash and cash equivalents on the Balance Sheet are reconciled to cash and cashequivalents on the Cash Flow as follows:________________________________________________________________________________ As at As at As at 30/9/06 30/9/05 31/3/06 Unaudited Unaudited Audited US$m US$m US$m________________________________________________________________________________ Cash and cash equivalents (Balance Sheet) 657 1,142 472Overdrafts (206) (741) (324)Legal right of offset 185 - 250 _________________________________________________Cash and cash equivalents (Cash Flow) 636 401 398 _________________________________________________ 9. Business combinations The initial accounting under IFRS 3, 'Business Combinations', for the Bavariatransaction had not been completed as at 31 March 2006. During the six monthsended 30 September 2006, adjustments to provisional fair values in respect ofthe Bavaria transaction have been made. As a result comparative information forthe year ended 31 March 2006 has been presented in these interim financialstatements as if the further adjustments to provisional fair values had beenmade from the transaction date of 12 October 2005. The impact on the priorperiod Income Statement has been reviewed and no material adjustments to theIncome Statement as a result of the adjustments to provisional fair values arerequired. The following table reconciles the impact on the Balance Sheet reported for the year ended 31 March 2006 to the comparative Balance Sheet presented inthis interim announcement. Balance Sheet________________________________________________________________________________ Adjustments to provisional At 31/3/06 At 31/3/06 fair values As restated Audited Unaudited Unaudited US$m US$m US$m________________________________________________________________________________AssetsNon-current assetsGoodwill 12,539 275 12,814Intangible assets 3,596 - 3,596Property, plant and equipment 6,340 (3) 6,337Other non-current assets 1,476 (5) 1,471 _________________________________________________ 23,951 267 24,218Current assetsInventories 881 (3) 878Trade and other receivables 1,218 7 1,225Other current assets 726 - 726 _________________________________________________ 2,825 4 2,829 _________________________________________________Total assets 26,776 271 27,047 LiabilitiesCurrent liabilitiesTrade and other payables (2,473) 59 (2,414)Other current liabilities (2,334) (117) (2,451) _________________________________________________ (4,807) (58) (4,865)Non-current liabilitiesTrade and other payables (63) (23) (86)Provisions (1,088) (159) (1,247)Other non-current liabilities (7,219) (45) (7,264) _________________________________________________ (8,370) (227) (8,597) _________________________________________________Total liabilities (13,177) (285) (13,462) _________________________________________________Net assets 13,599 (14) 13,585 _________________________________________________ Total equity 13,599 (14) 13,585 _________________________________________________ FORWARD-LOOKING STATEMENTS This announcement does not constitute an offer to sell or issue or thesolicitation of an offer to buy or acquire ordinary shares in the capital ofSABMiller plc (the "Company") or any other securities of the Company in anyjurisdiction or an inducement to enter into investment activity. This announcement 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 announcement, 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 document. TheCompany 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. ADMINISTRATION SABMiller plc (Registration No. 3528416) Company Secretary John Davidson Registered Office SABMiller House Church Street West Woking Surrey, England GU21 6HS Telefax +44 1483 264103 Telephone +44 1483 264000 Head Office One Stanhope Gate London, England W1K 1AF Telefax +44 20 7659 0111 Telephone +44 20 7659 0100 Internet address http://www.sabmiller.com Investor Relations [email protected] Telephone +44 20 7659 0100 Independent Auditors PricewaterhouseCoopers LLP 1 Embankment Place London, England WC2N 6RH Telefax +44 20 7822 4652 Telephone +44 20 7583 5000 Registrar (United Kingdom) Capita Registrars The Registry 34 Beckenham Road Beckenham Kent, England BR3 4TU Telefax +44 20 8658 3430 Telephone +44 20 8639 2157 (outside UK) Telephone 0870 162 3100 (from UK) Registrar (South Africa) Computershare Investor Services 2004 (Pty) Limited 70 Marshall Street, Johannesburg PO Box 61051 Marshalltown 2107 South Africa Telefax +27 11 370 5487 Telephone +27 11 370 5000 United States ADR Depositary The Bank of New York ADR Department 101 Barclay Street New York, NY 10286 United States of America Telefax +1 212 815 3050 Telephone +1 212 815 2051 Internet: http:// www.bankofny.com Toll free +1 888 269 2377 (USA & Canada only) This information is provided by RNS The company news service from the London Stock Exchange

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