Preliminary Announcement

17th May 2007 07:02

SABMiller PLC17 May 2007 Good growth with strong underlying momentum SABMiller plc today announces its preliminary (unaudited) results for the yearto 31 March 2007. Highlights are: ------------------------------------------- -------- -------- -------- 2007 2006 % US$m US$m change------------------------------------------- -------- -------- -------- Revenue (a) 18,620 15,307 22% EBITA (b) 3,591 2,941 22% Adjusted profit before tax (c) 3,154 2,626 20% Profit before tax 2,804 2,453 14% Adjusted earnings (d) 1,796 1,497 20% Adjusted earnings per share (d) - US cents 120.0 109.1 10% - UK pence 63.4 61.0 4% - SA cents 847.1 699.2 21% Basic earnings per share (US cents) 110.2 105.0 5% Dividends per share (US cents) 50.0 44.0 14% Net cash generated from operations 4,018 3,291 22%-------------------------------- -------- -------- -------- • Group lager volumes up 23% to 216 million hectolitres (hl), organic growth of 10% • South America delivered pro forma volume growth of 12%, ahead of expectations • Excellent Europe organic volume growth of 11% and market share gains • Good constant currency growth in South Africa supported by strong economic backdrop • Continued strong volume growth rates in China and India • Difficult trading conditions persisted in North America • Strong cash flows support the dividend increase of 14% (a) Revenue excludes the attributable share of associates' revenue ofUS$2,025 million (2006: US$1,774 million). (b) Note 2 provides a reconciliation of operating profit to EBITA which isdefined as operating profit before exceptional items and amortisation ofintangible assets (excluding software) but includes the group's share ofassociates' operating profit, on a similar basis. EBITA is used throughout thepreliminary announcement. (c) Adjusted profit before tax comprises EBITA less net finance costs ofUS$428 million (2006: US$299 million), and share of associates' net financecosts of US$9 million (2006: US$16 million). (d) Reconciliation of adjusted earnings to statutory measure of profitattributable to equity shareholders is provided in note 5. -------------------- --------- --------- ------------- 2007 Reported Organic, constant EBITA growth currency US$m % growth % -------------------- --------- --------- ------------- Latin America 915 110 *Europe 733 29 19North America 375 (17) (17)Africa and Asia 467 11 14South Africa: Beverages 1,102 4 14South Africa: Hotels and Gaming 100 19 31Corporate (101) (17) - --------- --------- -------------Group 3,591 22 12 --------- --------- -------------* Organic growth based on year on year Central America performance and SouthAmerica performance for the 5 1/2 months from 12 October 2006 to 31 March 2007is 27%. Statement from Meyer Kahn, Chairman "These results demonstrate that the momentum of recent years is continuingacross our businesses. I am particularly pleased by the successfulimplementation of the South America strategy that is delivering volume andrevenue growth ahead of expectations following a substantial integrationproject. Our Europe business continues to deliver strong results and isreporting a sixth consecutive year of double digit earnings growth. Both SABeverages and Africa and Asia divisions reported double digit growth in organicconstant currency EBITA. SABMiller has a reputation for successfully transferring skills and technologyacross the globe, repositioning beer markets and driving volume growth. Onceagain we have shown the strength and depth of our brand portfolios and ourability to grow robust businesses." 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 Fiona Antcliffe Brunswick Group Limited Mob: +44 7974 982546 A live webcast of the management presentation to analysts will begin at 9.30am (BST) on 17 May 2007.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.newscast.co.uk------------------------------------------------------------------------------------------------------ Copies of the press release and the detailed Preliminary 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 good growth for the year, and ended with a strong fourthquarter performance. Our portfolio of developing and developed market businessesdelivered organic growth in lager volumes of 10% and growth in EBITA of 12% onan organic, constant currency basis, despite higher commodity costs andchallenging trading conditions in North America. The group EBITA marginincreased to 17.4%, an increase of 20 basis points over the prior year. Thistranslated into a 10% increase in adjusted earnings per share of 120.0 US cents. Total beverage volumes were up 10% on an organic basis, and 23% above last yearon a reported basis at 272 million hl as the prior year only included a partialcontribution from our South American business from 12 October 2005. Total lagervolumes were 216 million hl. Overall, these results continue to demonstrate the strength of the group'sgrowth profile and the advantage of its bias towards developing beer marketsaround the world. Europe and Latin America delivered excellent growth. Europe'simpressive performance represents the division's sixth consecutive year ofdouble digit earnings growth, driven by its focus on trade marketing and thedevelopment of a full brand portfolio in its markets. These portfolios havebenefited from continuous renovation of mainstream brands, the introduction ofnew premium products, utilisation of innovation in product packaging and pointof sale materials and the addition of our international premium brands. In SouthAmerica, our strategy is delivering volume, revenue and earnings growth ahead ofexpectations, as new brand launches and packaging renovations contributed to anacceleration of volume growth in the second half of the year. Robustperformances in our South American businesses were underpinned by positivemacroeconomic performance, with GDP growth of more than 6% in our largermarkets. Net cash generated from operations was 22% above the prior year, reflecting theoverall strength of the trading performance and our strong cash characteristics.The group's gearing decreased at the year-end to 45.8% from last year's 52.3%. The board has proposed a final dividend of 36 US cents per share, making a totalof 50 US cents per share for the year, an increase of 14% over the prior year.The dividend is covered 2.4 times by adjusted earnings per share. Strategic review These good results are a consequence of the group's delivery against its fourmain strategic initiatives, namely: Creating a balanced and attractive global spread of businesses SABMiller is building a diversified portfolio of businesses to deliver industryleading growth and to provide a platform for the application of the group'sproven skills and techniques. During the year we formed Pacific Beverages, ajoint venture with Coca Cola Amatil in Australia, to import, market anddistribute three of the group's international premium brands. In Vietnam, thegroup's joint venture with Vinamilk made significant progress as its brewerynear Ho Chi Minh City moved into production, establishing a platform in thisfast growing market. In India, we acquired the Foster's brand and brewery which has now beensuccessfully integrated into our existing business, and pro forma annual volumegrowth of 36% has been recorded by the combined business. The Empressa N'Golabrewery in Southern Angola which SABMiller has managed under contract for manyyears, was privatised in December 2006, with SABMiller acquiring a 45%shareholding. In China, our associate CR Snow has continued to consolidate its position as thecountry's largest brewer with the purchase of further breweries and investmentin greenfield development. During the year we acquired five breweries, as wellas the remaining 38% minority shareholding in the Blue Sword group which CR Snowdid not already own, consolidating our interests in the South West of thecountry. In South America, we announced the disposal of non-core juice interests inColombia and the Pepsi bottling and hotel interests in Costa Rica, and acquiredminority shareholdings in Colombia, Peru and Ecuador. Developing strong, relevant brand portfolios in local markets SABMiller seeks to build portfolios of local brands which collectively address awide range of consumer segments, thereby maximising profitability through theoptimal combination of scale and margin. During the year we have undertakensuccessful brand positioning and packaging renovations in Colombia, where ourAguila, Pilsen and Poker brands have been clearly separated to ensure theyoccupy unique consumer positioning which appeals beyond the brands' traditionalregional markets. In Europe, Poland's leading beer brands, Tyskie and Zubr, grew volumes in doubledigits as Tyskie successfully returned to growth following some years ofmarginal decline. In Romania, our business overcame capacity constraints in thefirst half of the year, and Timisoreana Lux was repositioned from a regionalbrand to become the strongest growing brand in the country, assisted by a newtwo litre PET pack. In North America, the Miller Brewing Company has continued to build its brandportfolio in the fast-growing worthmore category with the addition of a numberof exciting brands to its portfolio. In the first half of the year it announcedthe acquisition of Sparks, a leader in the caffeinated alcoholic malt beveragecategory. Alongside Peroni Nastro Azzurro, which is demonstrating clear salesmomentum, Miller Brewing Company will import a number of SABMiller's SouthAmerican brands to capitalise on the high growth in imported beer brands, and anational rollout of the worthmore light lager, Miller Chill, is underway. Increased investment in marketing and pack innovation is driving strong premiumcategory growth in South Africa, with packaging enhancements for Castle Lite andRedds, in addition to the launch of two new products, Sarita, an apple flavouredale, and a lemon flavoured Brutal Fruit variant. Driving local performance The group has a strong record of driving year-on-year improvements in itsoperational performance as evidenced by EBITA margin improvements. Around the world, our manufacturing capability continues to improve in terms ofits productivity, efficiency and flexibility. At Miller Brewing Company,improved brewery efficiencies and cost savings partially offset very significantcommodity cost increases thereby limiting the rise in cost of goods sold perhectolitre to mid single digits. This strategy applies to more than justmanufacturing. Significant improvements have been made in the entire value chainfrom brewery to consumer. In Italy, a focus on improving our distributionlogistics, better segmentation and analysis of the channels to the consumer, andensuring the right conditions and consumer experience at the point of sale haveresulted in strong volume growth, ahead of the domestic market. In Latin America, market share gains were achieved against strong competition inPeru, Ecuador, Panama and El Salvador, as our businesses invested in buildingbrand equity and in service levels to the trade. Benefits from global scale Despite the local nature of the brewing industry, access to the benefits ofglobal scale is increasingly important as the environment becomes morecompetitive. SABMiller aims to identify areas of competitive advantage affordedby its growing global footprint and capitalise on these. The successfulintegration of our operations in South America, which are now delivering aheadof expectations, benefited from access to SABMiller global resource, skills andexpertise which were introduced within a short period of the transaction. The group's international premium brands continue to make good progress, withinternational sales volumes of Peroni Nastro Azzurro up 47%, Miller GenuineDraft up 13% and Pilsner Urquell up 8%. During the period Peroni Nastro Azzurrowas launched in Peru, Colombia and Puerto Rico. Additionally, the group isinvesting in a growing number of regional brands, such as our Czech brand Kozelin Eastern Europe and Barena, a regional brand in Latin America. Kozel waslaunched in Russia in 2002 and following subsequent regional expansion it is nowour fourth largest brand in Europe, with a compound annual volume growth rate ofover 27% in the last five years, both in Czech and across the region. Outlook This has been another year of good growth for the group, with a particularlystrong performance in the fourth quarter. We have established a compelling portfolio of brands and businesses and, giventhe strong growth in many markets, we will be increasing our investments behindthese assets in the coming year. While we face some challenges, includingincreasing commodity cost pressures and the need to rebuild our share of thepremium segment in South Africa, we expect the group's underlying progress ofrecent years to continue. Operational review Latin America Organic, constant Bavaria(2)Financial currency (April-Octsummary 2006 Currency growth(1) 2006) 2007 Group revenue(US$m) 2,165 (27) 420 1,834 4,392(including share ofassociates) EBITA(3) (US$m) 436 (8) 117 370 915 EBITA margin(%) 20.1 27.9 20.2 20.9 Sales volumes (hl 000) - Lager 16,163 2,212 16,573 34,948 14% - Carbonated soft drinks (CSDs) 7,335 362 1,361 9,058 5% - Other beverages 6,049 464 3,903 10,416 8% 1 Represents full year growth for Central America, and growth for South America,for the period of 12 October 2006 -31 March 2007, over the 2006 comparative. 2 Represents the results of Bavaria from 1 April 2006 to 11 October 2006, forwhich there are no comparative period data. 3 In 2007 before exceptional items of US$64 million (2006: US$11 million) beingintegration and restructuring costs. EBITA for the region was US$915 million. Organic constant currency growth ofUS$117 million represents growth of 27% on the prior year. The results in LatinAmerica reflect robust market performances and successful business initiativesin each country underpinned by strong economic growth in the region. In SouthAmerica the strong momentum reported at the half year continued into the secondhalf with pro forma lager volumes increasing by 12% for the year, while inCentral America both beer and CSDs showed commendable performances with growthof 8% and 6% respectively. The integration of operations in South America intothe SABMiller group has been successfully completed during the year. In Colombia lager volumes for the year grew by 11% on a pro forma basis drivenby solid economic growth, successful brand and packaging renovations, increasedmarketing investment and improved retail price discipline, which drove lowerretail prices. Brand renovations during the second half of the year included thelocal premium brand Club Colombia, and Pilsen in the mainstream segment, whilein the premium segment our Peroni Nastro Azzurro brand was successfullylaunched. Trade marketing capabilities have been upgraded and include theappointment of brand developers to focus on quality of point of sale andenhancement of drinking occasions, while order taking has been supplemented witha telesales operation. Improvements have also been made in the distributionsystem, notably the introduction of a deposit system for returnable containersin October 2006, while national pricing was introduced from December 2006.Strong growth has necessitated investment in production capacity and a new 3.5million hl brewery in western Colombia is scheduled to come on stream in October2007. Corporate restructuring proceeded during the year including an offer tominority shareholders which resulted in an increase in SABMiller's effectiveinterest in Bavaria S.A. to 98.5%. The sale of Productura de Jugos S.A, ourfruit juice and fruit pulp manufacturer received the necessary regulatoryapprovals, and is expected to be completed by the end of May 2007. A good performance was reported by our Peru operations with pro forma lagervolume growth of 16% for the year, which was assisted by strong GDP growth of8%, as well as the impact of competitive pricing in the earlier part of theyear. Our flagship mainstream brand Cristal was relaunched with a new andinnovative packaging design and clear positioning as the beer of the Peruvians,resulting in annual growth of 27% and a significant improvement in market share.This, together with further investment in marketing, brand renovations and newbrand launches in the second half of the year, particularly in the premiumcategory, resulted in the company increasing its market share year on year to92%. In the premium segment, our Peroni Nastro Azzurro brand was launched inFebruary 2007 following the launch of our regional brand, Barena, in October2006 and Cusquena was relaunched in new packaging during March 2007. Pack mixhas improved in favour of returnable packaging, influenced by the introductionof a deposit system in November 2006, while our route to market will benefitfrom the organisational change focusing on channel marketing based onconsumption occasions. Corporate restructuring continued, including the purchaseof further minority shareholdings, with SABMiller's effective interest in Backus& Johnston increasing to 93.3%. In Ecuador pro forma lager volume growth of over 12% was driven by the flagshipmainstream brand Pilsener, capitalising on favourable economic conditions andbuoyant consumer demand, underpinned by the brand's mid year packaging upgrade.Market share gains in the fourth quarter confirmed the strength of this brand asthe leading brand in Ecuador. Total beer market share increased by nearly onepercentage point to 95.3% at the end of March 2007. The favourable volumeperformance together with a 7% price increase earlier in the year boostedprofitability. In Panama we increased our share of the beer market by 2.5% on a year-on-yearbasis to reach 84%, with the market growing by an estimated 4%, fuelled bystrong GDP growth. Our mainstream brands Atlas and Balboa have performed well,contributing to total pro forma volume growth of 7%, despite a significant priceincrease introduced in July 2006. The relaunch of SABMiller's internationalpremium brand, Miller Genuine Draft, in October 2006 has strengthened ourperformance in the premium segment. In the non beer segment, the unit performedwell ahead of the prior year with sales volumes increasing by 11%, mainly drivenby CSDs. In Honduras lager sales volumes grew by 3%, while CSDs reported growth of 9%.The volume growth of our Barena brand in the lager premium segment has improvedthe mix, and together with the full year effect of price increases in February2006, has enhanced profitability. Innovation continued with Port Royal GoldGrand Reserve launched in a 12oz aluminium bottle at a premium price. CSD volumegrowth was impacted by competitive pricing and discounting in the market, with ashift in mix to family packs tempering price gains. The trading environment in El Salvador showed signs of improvement compared withthe prior year. However the country continues to attract high levels ofcompetition in both lager and CSDs. Our operations performed strongly with lagervolume growth of 14% assisted by good economic growth, and market shareincreased. Mix improved with our local premium brand, Golden Light, reportinggrowth of 36%. CSD volumes grew by 5% with robust market share gains on the backof above inflation price increases in April 2006. The benefit of better pricingin CSDs was somewhat reduced by adverse pack mix. Towards the end of the year, SABMiller entered the Puerto Rico market with thelaunch of Peroni Nastro Azzurro in March 2007. The sale of our Costa Rican Pepsisoft drink bottler was completed in April 2007. In line with the strategic initiatives and plans for the region, a significantamount of restructuring and integration has been completed with one-timeintegration costs of $64 million recorded during the year, mostly related topackaging upgrades and organisational restructuring. Capital investment levelswill increase in the next year as we continue to implement our restructuringplans. Europe Financial summary 2007 2006 % Revenue (US$m) 4,078 3,258 25 EBITA* (US$m) 733 569 29 EBITA margin (%)* 18.0 17.5 Sales volumes (hl 000) - Lager 40,113 35,664 12 - Lager organic 39,641 35,664 11 * In 2007 before net exceptional costs of US$24 million (2006: nil) being profiton disposal in Italy of US$14 million less restructuring costs of US$7 millionprimarily in Slovakia and an adjustment to goodwill on acquisition of US$31million for Birra Peroni . Europe again delivered excellent results, with total lager volume growth of 12%(organic 11%) and EBITA improving by 29%. Volumes were strong in Poland, Russiaand Romania, while most other operations outperformed their underlying marketgrowth. Volume performance was boosted by the favourable weather conditionswhich prevailed during the year, including an exceptionally mild winter,generally buoyant economies and the soccer World Cup. Direct marketinginvestment grew in line with revenue while productivity was up 6% reflectingimproved scale efficiencies. EBITA margin enhancement of 50 basis points wasassisted by positive brand mix with premium brands growing 15%. Reported EBITA growth of 29% was enhanced by strong currencies, with organicconstant currency growth of 19%. During the second half, margins tightened witha move to non-returnable packaging, particularly cans, where volumes were up34%. Poor 2006 barley and hop harvests resulted in significantly increased maltand brewing costs in the final quarter, whilst skills shortages, and noticeablewage pressures, emerged across Central and Eastern Europe. In Poland our volumes were up 13% and market share increased by 1% to 39%.Industry growth was 10% due to the combined effects of the soccer world cup, awarm summer and mild winter, a buoyant economy and growth in personal incomes.The operation achieved a small real price increase, a trend improvement fromprior years, while industry prices declined in real terms. Tyskie and Zubr,Poland's two leading beer brands, grew volumes by 10% and 23% respectively,whilst our upper mainstream brand Lech grew 9%. In the premium segment, ourflavoured beer Redd's grew 42% with a new variant, upgraded packaging, and asuccessful repositioning of the range towards female consumers, contributing togrowth in volumes. Sales and distribution initiatives have focused on increasedproduct visibility, more chilled product availability and improving share ofdisplay within outlets. Marketing support has centred on enhanced consumer andoutlet segmentation and shopper marketing techniques. Current expansion ofbrewing and packaging will increase annual capacity from 12.5 million hl to 15million hl by July 2007, with the Tychy brewery having capacity of 8 million hl. In the Czech Republic volumes grew by 1% which was in line with the industry,and domestic volume share was stable at 49%. Our strategy to build value sharecontinued, with our premium brands up by 2% overall while our economy brandsdeclined by 8% as we chose not to follow aggressive competitor price discountingin this segment. Pilsner Urquell grew by 4% and exceeded 1 million hl for thefirst time. This performance was achieved by expanding our presence in theon-premise channel, as well as the launch of new packaging and a focus onshopper marketing in large format supermarkets. Volumes of our leading Czechbrand Gambrinus (26% market share) declined in the on-premise channel followinga price increase. However, off-premise growth was strong, supported by newprimary and secondary packaging, the introduction of new multipacks, and brandsponsorship of the Czech national soccer team during the world cup. Kozel grewby 10% in the domestic market, following the introduction of a new proprietarybottle, new labelling and a new variant. Across Central and Eastern Europe,Kozel is now marketed and sold in several of our countries and total volumeswere up 17% to 2.5 million hl. Exports to the key German market were well upwith Pilsner Urquell growing by 31% and now established as the leading premiumimported beer in the off-premise channel. Price increases marginally ahead ofinflation were achieved, largely in the on-premise channel. In Russia, volumes ended 24% up on prior year, well ahead of the market growthof 17%. Price increases of 5% were achieved against generally restrainedindustry pricing, and our national value share continued to increase. Wesignificantly increased our investment in coolers and extended retail coverageby 25%. Miller Genuine Draft returned to robust growth, with volumes up 21% anda new half litre bottle driving new consumption occasions. Zolotaya Bochka, thefastest growing local premium brand, was up 40% with the launch of a twist-offcrown, and Pilsner Urquell and Redd's both grew strongly. Our marketing effortnow includes non-traditional media, with the use of internet based marketingtechniques. Profitability was improved by considerable operating leverage. Theexpansion of our Kaluga brewery to 6 million hl continued on schedule and inMarch 2007 we announced a new 3 million hl brewery to be constructed for $170million in Ulyanovsk, 1000km east of Moscow. In Italy, the beer market grew by an estimated 3%, benefiting from someimprovement in economic performance, increased consumption during the soccerworld cup and a mild winter. Excluding imports, domestic industry production wasup 1%, whilst Birra Peroni's total volume growth was 2%, with branded domesticvolumes 5% higher than last year and private label declining by 28%, as wecontinued our managed reduction in our presence in this category. Nastro Azzurrowas up 9% with premiumisation of the brand continuing through key prestigesponsorships and a marketing position focused on Italian style and design. ThePeroni brand accelerated to 6% growth from the 2% posted last year, supported bya successful draught launch in the Northern provinces. Exports of Peroni NastroAzzurro continued their strong momentum. The operation has recorded a solidimprovement in profitability. In Romania, industry volume growth is estimated at 20%, led by the continuingperformance of mainstream PET. Our operation was capacity constrained during thefirst half of the year but nevertheless grew full year volumes by 23% and yearon year market share rose by 60 basis points to 22% driven by second half volumegrowth of 42%. Our premium brand Ursus grew by 16%. Our mainstream TimisoreanaLux brand grew by 59% and was the strongest growing brand in the market,assisted by the newly launched two litre PET pack. Industry pricing remainedsubdued. Following from the strong growth of recent years, capacity is beingexpanded from 4.3 million hl to 6.3 million hl over the next 18 months. In Hungary, our volumes grew by 7% and outperformed the market. This performancewas achieved against a backdrop of significant fiscal austerity measuresimpacting consumers, a 20% excise increase, and competitor discounting. In Slovakia the major focus has been the integration of Topvar, which wascompleted successfully during the year. Organic growth of our brands was broadlyin line with the market which was up by an estimated 2% as it begins to exhibitsigns of recovery from the major excise rises of recent years. In the Canaries,our international brands gained almost 3% whilst profits were boosted by thedistribution of Red Bull and the introduction of Appletiser, alongside theexisting Compal range of juices. In its first full year of operation, Miller Brands UK has exceeded ourexpectations with volumes and revenues ahead of plan. Peroni Nastro Azzurro,supported by innovative marketing and increased distribution, has grown 36%. Theprior year decline in Miller Genuine Draft has been halted, and Pilsner Urquellhas been successfully repositioned. In February 2007, the two key Polish brandsTyskie and Lech were added to the portfolio and are growing strongly. North America Financial summary 2007 2006 % Revenue (US$m) 4,887 4,912 (1) EBITA (US$m) 375 454 (17) EBITA margin (%) 7.7 9.3 Sales volumes (hl 000)- Lager - excluding contract brewing 46,591 47,059 (1) - contract brewing 8,907 10,246 (13)- Carbonated soft drinks (CSDs) 84 74 13 Lager - domestic sales to retailers (STRs) 43,897 43,964 (-) Miller Brewing Company experienced a difficult year with significantly highercommodity costs, declining Miller Lite volume and price competition in theeconomy segment negatively impacting results. However, in line with itsstrategy, the company continued to migrate its brand portfolio to higher marginsegments, deliver domestic revenue increases, and invest in its core brands andorganisational capabilities in order to drive sustainable, long-term growth. As the US beer industry continued to feel the impact of consumers trading intowine and spirits, volume performance of mainstream domestic beers was outpacedby import and craft brands. Total US industry domestic shipment volumesdecreased by 0.4% during the financial year, while imports increased 13.1%. In this trading environment, Miller's US domestic sales to retailers (STRs) werelevel with the prior year and down 3% on an organic basis, excluding theacquisition of the Sparks and Steel Reserve brands at mid-year. Domesticshipments to wholesalers (STWs) were in line with STRs in the period. There wasone less trading day in the year under review in comparison to the prior year. Total shipment volumes, excluding contract brewing, declined by 1% as exportsales to non-group market places declined due to challenging trading conditions.Contract brewing volumes were lower by 13%, largely due to the acquisition ofSparks and Steel Reserve which Miller had previously brewed under contract, andare down 4% on an organic basis. Miller Lite sales declined by 1% as the brand cycled strong prior yearcomparisons and faced broader competition in the low calorie segment from importand craft entrants. Miller Genuine Draft continued its decline broadly in linewith the overall decline in the full-calorie mainstream domestic segment. While Miller High Life sales decreased in low single digits, a new advertisingcampaign in the third quarter helped drive positive trends in core markets bythe end of the fourth quarter. Milwaukee's Best franchise sales declined inmid-single digits due to pricing dynamics within the economy segment. MillerHigh Life and Milwaukee's Best trends were both negatively impacted by reducedpricing gaps between the economy and mainstream segments, both at the wholesaleand retail level. Miller's worthmore platform continues to grow, robustly led by Peroni andLeinenkugel's, both of which brands significantly outperformed their respectiveimport and craft segments. Sparks, which Miller acquired in August 2006,continues to perform strongly as the leader in the fast-growing caffeinatedalcohol beverage segment. Total revenue declined slightly by 1% versus the prior period, to US$4,887million. Contract brewing revenues declined by 13%, but increased marginallyafter adjusting for the shift of Sparks and Steel Reserve from contract brewingto domestic brewing. Domestic net revenue per hl increased 1.7%, driven by priceincreases of nearly 2%. Improved brewery efficiencies and cost savings partiallyoffset very significant commodity cost increases, thereby limiting the increasein cost of goods per hectolitre sold to mid-single digits. Miller strengthened its sales capabilities with the addition of specialisedsales staff for Sparks and import brands. Furthermore, in the fourth quarter,Miller announced plans to create new model markets in Texas and Florida/Georgiain which it will deploy sales, marketing, planning/strategy and financecapabilities locally to better capture business opportunities. Based on thelearnings from these initial markets, Miller intends to roll-out this initiativeto additional markets in the next fiscal year. EBITA for the period of US$375 million was 17% lower than the prior year, drivenprimarily by higher input costs of fuel, glass and, especially, aluminium.Overall EBITA margin decreased to 7.7% due mainly to the challenging input costsenvironment. Going forward, Miller has set itself strategic objectives of which the primaryobjective is to grow Miller Lite in the mainstream light segment. Secondly it isto strengthen Miller's worthmore portfolio through expanding the distribution ofSparks, Leinenkugel's and Peroni and adding Miller Chill, a new light lager, andvarious South American brands. Miller also intends to maximise the sales andprofitability of its legacy brands, whilst it is committed to delivering furtheroperational efficiencies, which includes projects to deliver savings of US$100million by 2010, to reinvest into sales and marketing and improving margins. Africa and Asia Financial summary 2007 2006 % Group revenue (including share of associates) (US$m) 2,674 2,221 20 EBITA (US$m) 467 422 11 EBITA margin (%) 17.5 19.0 Sales volumes (hl 000)*- Lager 68,067 50,956 34- Lager organic 64,429 50,956 26- Carbonated soft drinks (CSDs) 4,796 4,061 18- Other beverages 15,137 13,093 16 * Castel volumes of 15,407 hl 000 (2006: 13,991 hl 000) lager, 9,424 hl 000(2006: 8,557 hl 000) CSDs, and 3,320 hl 000 (2006: 3,015 hl 000) other beveragesare not included. Africa and Asia growth momentum continued for the year, with lager volume growthof 34% (organic growth of 26%) and reported EBITA growth of 11%, despitecurrency weakness in some of the African countries. Organic volume growth hasbeen assisted by innovation, packaging upgrades and brand renovation. WhilstEBITA increased in Asia and in Africa, despite headwinds in Botswana, geographicEBITA mix in Africa combined with faster revenue growth in Asia resulted in ananticipated lower EBITA margin for the region. Africa Lager volumes for Africa, excluding Zimbabwe, grew 7% for the year while growthin total volumes, excluding Zimbabwe, was 11%. Continued economic growth in mostcountries, ongoing brand renovation and further improvements in distributionnetworks combined to deliver this result. Zimbabwe continues to experiencedifficult economic and political conditions with foreign currency shortages akey issue. Mozambique enjoyed a third consecutive year of volume growth, with lager volumesadvancing 10% on the back of improving economic fundamentals, a strong brandportfolio and new distribution centres in the North. Our key brands, 2M, Manicaand Raiz, performed well. Recent flooding in the Zambezi river delta did littleto hamper the ongoing volume growth. During the year a new brewhouse wascommissioned in Maputo with a further new brewhouse planned for Beira, in thecoming year. Tanzania posted lager volume growth of 8% with recent packaging changes in keybrands driving much of this growth. Castle Lager was reintroduced in a new longneck bottle, posting double digit growth, notwithstanding its price premium andour local premium brand, Ndovu, was successfully relaunched as a pure malt lager. Profitability was constrained by the effects of currency weakness and higher input and energy costs Uganda's lager volumes again grew in double digits this year with volumes up12%, and our core mainstream brands of Nile Special and Club enjoyed good growthduring the year. Profitability improved despite increased fuel costs. Following the effects of prior year devaluations and pressure on consumerdisposable incomes, Botswana recorded another year of decline with lager volumesdown 4%. Cost pressure was evident throughout the year as the operation isheavily reliant on imported goods and services with the consequent impact onprofit margins. The final quarter, however, reflected growth in all beveragecategories. Elsewhere in Africa, Ghana benefited from a successful new brand launch, StoneLager, which drove market share gains and improved profitability. Our innovativesorghum-based Eagle lager continues to play a meaningful role in the economysegment across the region and is now available in Uganda, Zambia and Zimbabweand was launched in Tanzania in April. CSD volumes in Angola grew by 34% to surpass 2.5 million hl. Ongoing capacityupgrades are planned to meet ongoing growth. The Empressa N'Gola brewery inSouthern Angola which SABMiller has managed under contract for many years, wassuccessfully privatised in December 2006, with SABMiller acquiring a 45%shareholding. Castel delivered a strong performance with lager volumes growing 11% while CSD'sincreased by 9%. Ethiopia and Angola provided above average growth withcontinued improvements in the more established markets in Cameroon, Gabon andMorocco. Asia China maintained the momentum reported at the half year with organic volumegrowth for the full year of 30% well above industry growth rates, and allregions posted growth. Our national brand, Snow, showed a higher growth rate,with annual volumes approaching 30 million hl. Snow is now the leading brand byvolume in China, driven by the combined impact of national brand campaigns andthe expansion of our production base. The greenfield brewery in Guangdong province was commissioned in February 2006and produced volumes of 550,000 hl in its first full year. During the year weacquired five breweries and in December 2006 we announced the acquisition of the38% minority shareholding in the Blue Sword group of companies in SichuanProvince which is expected to be completed in May 2007. Increases in energy costs impacted the business, and price increases, wereinsufficient to offset the full impact of the cost increases and highermarketing spend. Profit margins were also impacted by start-up costs and initiallosses at our greenfield breweries India also recorded excellent lager volume growth of 36% on a pro forma basis,above industry growth rates. Volumes were notably strong in Andra Pradesh aswell as Punjab and Haryana where industry reform provided a boost to volumes.Continuing capacity expansion is planned to meet demand in this fast growingmarket. The Foster's brewery and brand acquired during the year have beensuccessfully integrated and production of the brand will be rolled out to otherof our breweries in the coming year. Our new joint ventures in Australia and Vietnam commenced trading during thesecond half of the year. With strong volume growth expected across the division, increased capitalexpenditure in a number of countries will be necessary to meet capacityrequirements. South Africa: Beverages Financial summary 2007 2006 % Group revenue (including share of associates) (US$m) 4,274 4,204 2 EBITA (US$m) 1,102 1,062 4 EBITA margin (%) 25.8 25.3 Sales volumes (hl 000)- Lager 26,543 25,951 2- Carbonated soft drinks (CSDs) 14,967 14,154 6- Other beverages 1,019 828 23 South Africa has experienced good economic growth over the last year with grossdomestic product growing at 5%, supported by strong consumer demand,notwithstanding firmer interest rates and inflationary pressures driven byhigher food and fuel prices. We recorded lager volume growth of 2.3%, and total soft drink volume growth of7% supported by strong CSD volume growth of 6%. The double digit growth trend inother beverages continued, particularly in the water and energy drinkcategories. Performance was driven by buoyant fourth quarter sales in both lagerand soft drinks operations with lager volumes up over 8% and soft drink volumesup 33% over the prior year. Both operations benefited from the exceptionally hotand dry weather conditions experienced over the last quarter of the year. Softdrinks volumes were also boosted in the final quarter by replenishment ofcustomer stocks following the carbon dioxide supply problems in the thirdquarter which severely limited CSD sales. The premium and flavoured alcoholic beverage (FAB) categories continued to drivegrowth in lager volumes. Investment in marketing and pack innovation withinthese categories underpinned the 23% growth in premium lager volumes and the 9%increase in FABs for the year. The termination of the Amstel license in earlyMarch 2007 did not impact sales volumes for the year. Strong performances weredelivered by Castle Lite, Miller Genuine Draft and Peroni Nastro Azzurro brands.Mainstream beer volumes were marginally lower than the prior year despiterenewed growth in Hansa and Castle Milk Stout. This lager volume performance, supported by favourable premium mix benefits,delivered constant currency revenue growth of over 11% on the prior year. Rawmaterial input costs increased as a result of higher commodity prices and therelatively weaker rand exchange rate, although favourable currency hedgingpositions, which were in place for much of the year, helped to mitigate thesecost increases to below inflation in the year under review. Distribution costs rose by some 20% in the current year principally resultingfrom the expansion of direct deliveries to customers, as we implemented ourmarket penetration initiative. By the end of the year the lager customer basehad increased by 20% and the soft drink customer base by 8%. Constant currency EBITA growth of 14% was achieved and the focus on fixed costproductivity as well as minimising raw material input costs assisted EBITAmargin to improve by 50 basis points to 25.8%. Our continuing innovation agenda led to a number of new product launches andpack renovations in the year. Both Castle Lite and Redd's packaging wereenhanced, with a silver neck foil being added to the Castle Lite pack and allRedd's packs were redressed with contemporary pressure sensitive labels. The375ml returnable bottle was replaced with a new 330ml returnable bottle. Our FABportfolio was bolstered by the introduction of two new products. A newapple-flavoured premium brand, Sarita, was introduced and the Brutal Fruitproduct range was enhanced by a new lemon flavoured variant. Peroni NastroAzzurro was launched in draught format in March 2007 following the success ofthis brand's single serve offering. Hansa Marzen Gold, a rich malt beer, waslaunched in early May 2007 and will build on our expanding portfolio of premiumlagers. The 750ml returnable bottle for our mainstream brands will also bereplaced by a new equivalent sized bottle over the next 18 months. Thisintensified market innovation leverages the installed manufacturing capacity aswell as the investment in labeling capacity initiated last year. Normalisation of the liquor trade, through formal government licensing ofpreviously unlicensed outlets (or "shebeens") has proceeded slowly over the pastyear, notwithstanding the progress made in a number of provinces where enablinglegislation to issue new liquor licences has been promulgated. Our tavernertraining programme, aimed at uplifting new taverners' business skills, has seena further 5,000 taverners trained over the last year bringing the total numbertrained to date to 12,400. This training programme is closely aligned with themarket penetration initiative, to ensure improved commercial capabilities of newtaverners. The Department of Trade and Industry issued the final BEE (Broad Based BlackEconomic Empowerment) codes of good practice in early February 2007. Given thatthe BEE Act allows for the development of sector specific codes of goodpractice, the Liquor Industry Charter Steering Committee, in which weparticipate, will be meeting with the Department of Trade and Industry todiscuss their respective expectations with the formulation of a sector code forthe liquor industry. As a result of a private arbitration award in favour of Heineken, and Heineken'ssubsequent decision to terminate the Amstel license in March 2007, SA Beveragesstopped manufacturing and distributing Amstel lager in South Africa. Asannounced in March 2007, the loss of Amstel has had no material impact on theearnings for the year under review. SA Beverages expects to mitigate thefinancial impact in the next financial year and going forward, through a numberof initiatives including drawing upon SABMiller's global portfolio of brands andmarket experience, extending reach into direct distribution and broadening itspremium offerings but there will nevertheless still be a negative financialimpact in the March 2008 financial year. In the financial year under review, ona proforma basis, SA Beverages estimates that this would have amounted to someUS$80 million at the EBITA level and expects the impact in the next financialyear to be at a similar level. Sales of Appletiser in South Africa continued to show strong growth both inSouth Africa and internationally, with volumes up 13% Distell's domestic sales volumes increased, with gains in the spirits and cidercategory, particularly in the premium sector, both contributing to improvedsales mix. International volumes also grew, continuing the trends seen in prioryears. Further improvements in operating efficiencies in production have alsocontributed to improved margins. South Africa: Hotels and Gaming Financial summary 2007 2006 % Revenue (share of associate) (US$m) 340 321 6 EBITA (US$m) 100 84 19 EBITA margin (%) 29.3 26.1 Revenue per available room (Revpar) - US$ $62.21 $55.87 11 SABMiller is a 49% shareholder in the Tsogo Sun group. The performance of TsogoSun continued to be assisted by a buoyant South African economy. The casinoindustry in general and Tsogo Sun Gaming in particular have shown real growth inrevenue. The South African hotel industry has reported one of its best years onthe back of a robust local economy and growth in international arrivals. Strongdemand coupled with limited capacity growth to date, is underpinning significantreal growth in average room rates. The improved level of trading, assisted by good cost controls, resulted in astrong improvement in EBITA and margins. Financial review New accounting standards and restatements The accounting policies followed are the same as those published within theAnnual Report and Accounts for the year ended 31 March 2006 amended for thechanges set out in note 1, which had no impact on group results. The AnnualReport and Accounts are available on the company's website, www.sabmiller.com.The balance sheet as at 31 March 2006 has been restated for further adjustmentsrelating to initial accounting for business combinations, further details ofwhich are provided in note 10. 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 to shareholders additional information on trendsand allow for greater comparability between segments. Segmental performance isreported after the specific apportionment of attributable head office servicecosts. 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, but revenuefrom contract brewing is included within revenue. Reported volumes excludeintra-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 investments and the last twelve months' results ofdisposals. Constant currency results have been determined by translating thelocal currency denominated results for the year ended 31 March 2007 at theexchange rates for the comparable period in the prior year. 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 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 operation and brand in India at a costof US$127 million. This transaction was completed on 12 September 2006. On 10 August 2006, the group announced that it had entered into a 50/50 jointventure with Coca-Cola Amatil to import, market and distribute SABMiller'sinternational premium brands in Australia. The joint venture, Pacific BeveragesPty Ltd, commenced operations in December 2006. During the year the group has also continued to purchase further minorityshareholdings in Colombia, Peru and Ecuador. 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$93 million were reported during the year. Of these,$69 million relates to integration and restructuring costs incurred in LatinAmerica of which US$64 million (2006: US$11 million) was incurred in the regionand US$5 million (2006: US$4 million) in the corporate centre. Europe has alsoreported a net exceptional cost of US$24 million. This comprises a profit on thedisposal of land in Naples of US$14 million less integration costs of US$7million principally incurred in Slovakia, and an adjustment to goodwill at BirraPeroni. As required under IFRS, to the extent that a business is able toutilise, after an acquisition, previously unrecognised deferred tax assets, anadjustment to goodwill is required with a compensating adjustment to tax. Duringthe year we have recorded such an adjustment for US$31 million and this has beenincluded within exceptional items. Borrowings and net debt Gross debt at 31 March 2007, comprising borrowings of the group together withthe fair value of derivative assets or liabilities held to manage interest rateand foreign currency risk of borrowings, has decreased to US$7,358 million fromUS$7,775 million at 31 March 2006 (as restated for the finalisation of the SouthAmerica opening balance sheet). Net debt comprising gross debt net of cash andcash equivalents and loan participation deposits has decreased to US$6,877million from US$7,107 million at 31 March 2006 (as restated) reflecting the cashgenerated by the group less capital investments. An analysis of net debt isprovided in note 9. The group's gearing (presented as a ratio of debt/equity)has decreased to 45.8% from 52.3% at 31 March 2006 (as restated). The weightedaverage interest rate for the gross debt portfolio at 31 March 2007 was 7.6%(2006: 6.9%). 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. Further progress has been made in the restructuring of debt in the Bavariagroup, with US$500 million 144A bonds and US$150 million (equivalent Colombianpesos) related to a securitisation programme repaid in May 2006 and in October2006 respectively. The group has further diversified its sources of financing by launching, on 12October 2006, a US$1,000 million commercial paper programme. This programme alsoincreases the flexibility of the group's financing arrangements at a lower costof debt. Finance costs Net finance costs increased to US$428 million, a 43% increase on the prioryear's US$299 million, reflecting an increase in net debt primarily due to thetransaction with Bavaria. Interest cover, based on pre-exceptional profit beforeinterest and tax, has reduced to 7.8 times from 9.2 times in the prior year. Profit before tax Adjusted profit before tax of $3,154 million increased by 20% reflecting theconsolidation of the investment in Bavaria for a full year and performanceimprovements across the businesses. On a statutory basis, profit before tax ofUS$2,804 million was only up 14% on prior year reflecting the impact ofexceptional items noted above. Taxation The effective tax rate of 34.5%, before amortisation of intangible assets(excluding software) and exceptional items, is above that of the prior year,principally reflecting a different mix of profits across the group, includingSouth America for a full year, together with adjustments in respect of prioryears partially offset by improved tax efficiencies and some rate reductions incertain jurisdictions. Earnings per share The group presents adjusted basic earnings per share to exclude the impact ofamortisation of intangible assets (excluding software) and other non-recurringitems, which include post-tax exceptional items, in order to present a moremeaningful comparison for the years shown in the consolidated financialstatements. Adjusted basic earnings per share of 120.0 US cents were up 10% onthe prior year, reflecting the improved performance noted above. An analysis ofearnings per share is shown in note 5 to the financial statements. Goodwill and intangible assets Additional goodwill has arisen on the acquisition of further minorityshareholdings in Colombia, Peru and Ecuador and on the Foster's acquisition inIndia. Intangible assets increased by US$305 million principally due to the brandsacquired as part of the purchase of the Sparks and Steel Reserve brands in NorthAmerica and the Foster's brand in India. Cash flow Net cash generated from operating activities before working capital movement(EBITDA) increased by 20% to US$4,031 million compared to the prior year. Theratio of EBITDA to revenue is 22% (2006: 22%). Net cash generated fromoperations including working capital movements is up 22%. Currencies: South African rand/Colombian peso The rand has declined against the US dollar during the year and ended thefinancial year at R7.29 to the US dollar, whilst the weighted average rand/dollar rate worsened by 10% to R7.06 compared with R6.41 in the prior year. TheColombian peso (COP) declined by almost 2% against the US dollar compared to thepost-acquisition period of the prior year but ended the financial year atCOP2,190 to the US dollar, compared with COP2,292 at 31 March 2006. Dividend The board has proposed a final dividend of 36.0 US cents per share for the year.Shareholders will be asked to approve this recommendation at the annual generalmeeting, which will be held on 31 July 2007. If approved, the dividend will bepayable on 7 August 2007 to shareholders registered on the London andJohannesburg registers on 13 July 2007. The ex-dividend trading dates will be 11July 2007 on the London Stock Exchange (LSE) and 9 July 2007 on the JSE Limited(JSE). As the group reports in US dollars, dividends are declared in US dollars.They are payable in South African rand to shareholders on the Johannesburgregister, in US dollars to shareholders on the London register with a registeredaddress in the United States (unless mandated otherwise), and in sterling to allremaining shareholders on the London register. The rate of exchange applicable on 28 June 2007 will be used for US dollarconversion into South African rand and the rate of exchange on 17 July 2007 willbe used for US dollar conversion into sterling. Currency conversionannouncements will be made on the JSE's Stock Exchange News Service and on theLSE's Regulatory News Service, indicating the rates of exchange to be applied,on 29 June 2007 and on 18 July 2007, respectively. From the close of business on 28 June 2007 until the close of business on 13July 2007, no transfers between the London and Johannesburg registers will bepermitted, and from the close of business on 6 July 2007 until the close ofbusiness on 13 July 2007, no shares may be dematerialised or rematerialised. Annual report and accounts The group's unaudited summarised financial statements and certain significantexplanatory notes follow. The annual report will be mailed to shareholders inearly July 2007 and the annual general meeting of the company will be held atthe Intercontinental Park Lane Hotel in London at 11:00 on 31 July 2007. SABMiller plcCONSOLIDATED INCOME STATEMENTfor the year ended 31 March -------------------------------------------- ----- --------- -------- 2007 2006 Unaudited Unaudited Notes US$m US$m--------------------------------------------- ----- --------- -------- Revenue 2 18,620 15,307 Net operating expenses (15,593) (12,732) --------- -------- Operating profit 2 3,027 2,575 --------- --------Operating profit before exceptional items 3,120 2,590Exceptional items 3 (93) (15) --------- -------- Net finance costs (428) (299) --------- --------Interest payable and similar charges (668) (377)Interest receivable 240 78 --------- -------- Share of post-tax results of associates 205 177 --------- -------- Profit before taxation 2,804 2,453Taxation 4 (921) (779) --------- -------- Profit for the financial period 1,883 1,674 --------- -------- Profit attributable to minority interests 234 234Profit attributable to equity shareholders 1,649 1,440 --------- -------- 1,883 1,674 --------- -------- Basic earnings per share (US cents) 5 110.2 105.0Diluted earnings per share (US cents) 5 109.5 104.3 --------- -------- All operations are continuing. SABMiller plcCONDENSED CONSOLIDATED BALANCE SHEETat 31 March -------------------------------------------- ----- --------- -------- 2007 2006* Unaudited Unaudited Notes US$m US$m-------------------------------------------- ----- --------- -------- AssetsNon-current assetsGoodwill 7 13,250 12,814Intangible assets 7 3,901 3,596Property, plant and equipment 6,750 6,337Investments in associates 1,351 1,133Available for sale investments 52 43Derivative financial instruments 34 3Trade and other receivables 181 86Deferred tax assets 164 274 --------- -------- 25,683 24,286Current assetsInventories 928 878Trade and other receivables 1,471 1,225Current tax assets 103 54Derivative financial instruments 6 4Loan participation deposit - 196Cash and cash equivalents 9 481 472 --------- -------- 2,989 2,829Assets in disposal groups held for sale 64 - --------- -------- 3,053 2,829 --------- --------Total assets 28,736 27,115 --------- -------- LiabilitiesCurrent liabilitiesDerivative financial instruments (5) (3)Borrowings 9 (1,711) (1,950)Trade and other payables (2,746) (2,414)Current tax liabilities (429) (316)Provisions (266) (182) --------- -------- (5,157) (4,865)Liabilities directly associated with disposalgroups held for sale (19) - --------- -------- (5,176) (4,865) --------- -------- Non-current liabilitiesDerivative financial instruments (204) (175)Borrowings 9 (5,520) (5,652)Trade and other payables (269) (272)Deferred tax liabilities (1,393) (1,437)Provisions (1,173) (1,129) --------- -------- (8,559) (8,665) --------- --------Total liabilities (13,735) (13,530) --------- -------- --------- --------Net assets 15,001 13,585 --------- -------- EquityTotal shareholders' equity 14,406 13,043Minority interests 595 542 --------- --------Total equity 15,001 13,585 --------- -------- *As restated (see note 10). SABMiller plcCONSOLIDATED CASH FLOW STATEMENTfor the year ended 31 March ---------------------------------------------------- ----- --------- -------- 2007 2006 Unaudited Audited Notes US$m US$m---------------------------------------------------- ----- --------- -------- Cash flows from operating activitiesCash generated from operations 8 4,018 3,291Interest received 231 80Interest paid (719) (401)Tax paid (801) (869) --------- -------- Net cash from operating activities 2,729 2,101 --------- -------- Cash flows from investing activitiesPurchase of property, plant and equipment (1,191) (999)Proceeds from sale of property, plant and equipment 110 48Purchase of intangible assets (270) (33)Purchase of investments (3) (7)Proceeds from sale of investments 1 5Proceeds from sale of associates 81 -Proceeds on disposal of shares in subsidiaries 7 -Acquisition of subsidiaries (net of cash acquired) (131) (717)Purchase of shares from minorities (200) (2,048)Purchase of shares in associates (186) (1)Repayment of funding by associates - 122Dividends received from associates 102 71Dividends received from other investments 1 2 --------- --------Net cash used in investing activities (1,679) (3,557) --------- -------- Cash flows from financing activitiesProceeds from the issue of shares 38 30Purchase of own shares for share trusts (30) (8)Proceeds from borrowings 5,126 3,002Repayment of borrowings (5,663) (900)Net repayments of capital element of finance lease (7) (28)(Decrease) / increase in loan participation deposit 200 (196)Net cash receipts on net investment hedges 42 -Dividends paid to shareholders of the parent (681) (520)Dividends paid to minority interests (161) (167) --------- --------Net cash generated / (used) in financing activities (1,136) 1,213 --------- -------- Net cash from operating, investing and financingactivities (86) (243)Effects of exchange rate changes (18) 11 --------- --------Net (decrease) / increase in cash and cash (104) (232)equivalents Cash and cash equivalents at 1 April 398 630 --------- --------Cash and cash equivalents at 31 March 9 294 398 --------- -------- SABMiller plcCONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSEfor the year ended 31 March ------------------------------------------------------ --------- -------- 2007 2006 Unaudited Unaudited US$m US$m------------------------------------------------------ --------- -------- Currency translation differences on foreign currencynet investments 362 (128)Actuarial (losses) / gains on defined benefit plans (5) 42Fair value moves on available for sale investments 7 -Tax on items taken directly to equity 2 (17)Net investment hedges (2) (2) --------- --------Net gains / (losses) recognised directly in equity 364 (105) Profit for the year 1,883 1,674 --------- -------- Total recognised income for the year 2,247 1,569 --------- --------- attributable to equity shareholders 2,010 1,360- attributable to minority interests 237 209 --------- -------- SABMiller plcNOTES TO THE FINANCIAL STATEMENTS 1. Basis of preparation The preliminary announcement for the year ended 31 March 2007 has been preparedin accordance with the Listing Rules of the Financial Services Authority,International Accounting Standards and International Financial ReportingStandards (collectively IFRS), and International Financial ReportingInterpretation Committee (IFRIC) interpretations as adopted by the EU. The financial information in this preliminary announcement is not audited anddoes not constitute statutory accounts within the meaning of s240 of theCompanies Act 1985 (as amended). Group financial statements for 2007 will bedelivered to the Registrar of Companies in due course. The board of directorsapproved this financial information on 16 May 2007. Statutory accounts for theyear ended 31 March 2006, which were prepared in accordance with IFRS and IFRICinterpretations endorsed by the EU, 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 consolidated financial statements present the financial record for the yearsended 31 March 2007 and 31 March 2006, as restated for further adjustments toinitial accounting for business combinations (see note 10). The subsidiary andassociated undertakings in the group operate in the local currency of thecountry in which they are based. From a presentational perspective, the groupregards these operations as being US dollar-based as the transactions of theseentities are, insofar as is possible, evaluated in US dollars. In managementaccounting terms all companies report in US dollars. The directors of thecompany regard the US dollar as the presentational currency of the group, beingthe most representative currency of its operations. Therefore the consolidatedfinancial statements are presented in US dollars. Accounting policies The financial statements are prepared under the historical cost convention,except for the revaluation to fair value of certain financial assets andliabilities. The accounting policies adopted are consistent with those of the previousfinancial year except that the Group has adopted the following IFRICinterpretations with effect from 1 April 2006. Adoption of these interpretationsdid not have a material effect on the financial statements of the Group. • IFRIC 4 'Determining Whether an Arrangement Contains a Lease', provides guidance in determining whether arrangements contain a lease to which lease accounting must be applied.• IFRIC 7 'Applying the Restatement Approach' under IAS 29 'Financial Reporting in Hyperinflationary Economies', provides guidance on how to apply the requirements of IAS 29 in a reporting period in which an entity identifies the existence of hyperinflation in the economy when that economy was not hyperinflationary in the prior period. The Group also applied the amendment to IAS 39 'Financial Instruments:Recognition and Measurement' and IFRS 4 'Insurance Contracts' which requiresthat financial guarantee contracts are accounted for as financial instruments,initially recognised at fair value. As the Group has no material externalfinancial guarantees, the amendment did not have a material effect on thefinancial statements. 2. Segmental information (unaudited) The segmental information presented below includes the reconciliation of GAAPmeasures presented on the face of the income statement to non-GAAP measureswhich are used by management to analyse the group's performance. Group Group Share of revenue Share of revenue Segment associates' (including Segment associates' (including revenue revenue Associates) revenue revenue Associates) 2007 2007 2007 2006 2006 2006Revenue US$m US$m US$m US$m US$m US$m----------- ------- -------- -------- ------- ------- -------- Latin 4,373 19 4,392 2,153 12 2,165AmericaEurope 4,078 - 4,078 3,258 - 3,258North 4,887 - 4,887 4,912 - 4,912AmericaAfrica and 1,455 1,219 2,674 1,203 1,018 2,221AsiaSouth Africa: ------- -------- -------- ------- ------- -------- - Beverages 3,827 447 4,274 3,781 423 4,204- Hotels and Gaming - 340 340 - 321 321 ------- -------- -------- ------- ------- --------South Africa: Total 3,827 787 4,614 3,781 744 4,525 ------- -------- -------- ------- ------- -------- 18,620 2,025 20,645 15,307 1,774 17,081 ------- -------- -------- ------- ------- -------- Operating Operating profit profit before before Operating Exceptional exceptional Operating Exceptional Exceptional profit Items items profit items itemsOperating 2007 2007 2007 2006 2006 2006profit US$m US$m US$m US$m US$m US$m----------- ------- -------- -------- ------- ------- -------- Latin 746 64 810 376 11 387AmericaEurope 706 24 730 567 - 567North 366 - 366 454 - 454AmericaAfrica and 272 - 272 257 - 257AsiaSouth Africa: Beverages 1,043 - 1,043 1,011 - 1,011 Corporate (106) 5 (101) (90) 4 (86) ------- -------- -------- ------- ------- -------- 3,027 93 3,120 2,575 15 2,590 ------- -------- -------- ------- ------- -------- Share of Share of associates' Amortisation associates' Amortisation Operating operating of Operating operating of profit profit intangible profit profit intangible before before assets before before assets exceptional exceptional (excluding exceptional exceptional (excluding items items software) EBITA items items software) EBITA 2007 2007 2007 2007 2006 2006 2006 2006EBITA US$m US$m US$m US$m US$m US$m US$m US$m---------- ------- ------- ------- ------ --- -------- ------- ------- ------ Latin 810 - 105 915 387 - 49 436AmericaEurope 730 - 3 733 567 - 2 569North 366 - 9 375 454 - - 454AmericaAfrica and 272 193 2 467 257 164 1 422AsiaSouth Africa: ------- ------- ------- ------ -------- ------- ------- ------- Beverages 1,043 59 - 1,102 1,011 51 - 1,062- Hotels and Gaming - 100 - 100 - 84 - 84 ------- ------- ------- ------ -------- ------- ------- ------South Africa:Total 1,043 159 - 1,202 1,011 135 - 1,146 Corporate (101) - - (101) (86) - - (86) ------- ------- ------- ------ -------- ------- ------- ------Group 3,120 352 119 3,591 2,590 299 52 2,941 ------- ------- ------- ------ -------- ------- ------- ------ The group's share of associates' operating profit is reconciled to the share of post-tax results of associatesin the income statement as follows: 2007 2006 US$m US$m -------- ------- Share of associates' operating profit beforeexceptional items 352 299Share of associates' interest (9) (16)Share of associates' tax (102) (81)Share of associates' minorityinterests (36) (25) -------- ------- 205 177 -------- ------- The following table provides a reconciliation of EBITDA (the net cash inflowfrom operating activities before working capital movements) before cashexceptional items to EBITDA after cash exceptional items. A reconciliation ofprofit for the year for the Group to EBITDA after cash exceptional items for theGroup can be found in note 8. EBITDA Cash EBITDA Cash before cash exceptional before cash exceptional exceptional items exceptional items items EBITDA items EBITDA 2007 2007 2007 2006 2006 2006EBITDA US$m US$m US$m US$m US$m US$m---------------- -------- -------- -------- -------- -------- -------- Latin America 1,147 (25) 1,122 574 (4) 570Europe 936 (7) 929 733 - 733North America 510 - 510 591 - 591Africa and Asia 340 - 340 321 - 321South Africa:Beverages 1,200 - 1,200 1,205 - 1,205Corporate (65) (5) (70) (68) (4) (72) -------- -------- -------- -------- -------- --------Group 4,068 (37) 4,031 3,356 (8) 3,348 -------- -------- -------- -------- -------- -------- Excise duties of US$3,758 million (2006: US$2,929 million) have been incurredduring the year as follows: Latin America US$1,092 million (2006: US$502million); Europe US$784 million (2006: US$607 million); North America US$856million (2006: US$879 million); Africa and Asia US$321 million (2006: US$243million) and South Africa US$705 million (2006: US$698 million). Investment Investment Segment in Unallocated Total Segment in Unallocated Total assets associates assets assets assets associates assets assets 2007 2007 2007 2007 2006 2006 2006 2006Total US$m US$m US$m US$m US$m US$m US$m US$massets ------ ------- -------- ------ ------- -------- ------- ---------------- Latin 12,575 5 - 12,580 12,092 73 - 12,165AmericaEurope 4,232 - - 4,232 3,582 - - 3,582North 6,072 - - 6,072 5,732 - - 5,732AmericaAfrica and 1,562 1,045 - 2,607 1,218 721 - 1,939AsiaSouth 2,074 301 - 2,375 2,331 339 - 2,670AfricaCorporate 575 - - 575 699 - - 699Unallocatedassets - - 295 295 - - 328 328 ------ ------- -------- ------ ------- -------- ------- ------Group 27,090 1,351 295 28,736 25,654 1,133 328 27,115 ------ ------- -------- ------ ------- -------- ------- ------ Segment Unallocated Total Segment Unallocated Total liabilities liabilities liabilities liabilities liabilities liabilitiesTotal 2007 2007 2007 2006 2006 2006liabilities US$m US$m US$m US$m US$m US$m----------- -------- -------- -------- -------- ------- -------- Latin 1,226 - 1,226 1,072 - 1,072AmericaEurope 874 - 874 644 - 644North 1,272 - 1,272 1,303 - 1,303AmericaAfrica and 329 - 329 190 - 190AsiaSouth 592 - 592 607 - 607AfricaCorporate 234 - 234 184 - 184Unallocatedliabilities - 9,208 9,208 - 9,530 9,530 -------- -------- -------- -------- ------- --------Group 4,527 9,208 13,735 4,000 9,530 13,530 -------- -------- -------- -------- ------- -------- Capital Acquisition Total Capital Acquisition Total expenditure activity capital expenditure activity capital excluding expenditure* excluding expenditure* acquisitions acquisitions Capital 2007 2007 2007 2006 2006 2006expenditure US$m US$m US$m US$m US$m US$m----------- -------- -------- -------- -------- ------- -------- Latin 372 - 372 161 5,473 5,634AmericaEurope 374 7 381 279 21 300North 155 215 370 146 - 146America**Africa and 144 48 192 110 107 217AsiaSouth 230 - 230 280 - 280AfricaCorporate 12 - 12 44 - 44 -------- -------- -------- -------- ------- --------Group 1,287 270 1,557 1,020 5,601 6,621 -------- -------- -------- -------- ------- -------- * Capital expenditure is defined as the acquisition and addition of intangibleassets (excluding goodwill) and property, plant and equipment. ** The Sparks and Steel Reserve brands have been reflected within acquisitionactivity for segmental reporting purposes. 3. Exceptional items---------------------------------------------------------- -------- -------- 2007 2006 Unaudited Unaudited US$m US$m---------------------------------------------------------- -------- -------- Subsidiaries' exceptional items included in operatingprofit:----------------------------------------------------- Latin America Bavaria integration and restructuring costs (64) (11) Europe -------- --------Integration and restructuring costs (7) -Profit on sale of land in Italy 14 -Adjustment to goodwill (31) - -------- -------- (24) - CorporateBavaria integration costs (5) (4) -------- --------Exceptional items included within operating profit (93) (15) -------- -------- Taxation credit 30 5 -------- -------- 2007 Latin America and Corporate Integration and restructuring costs associated with the consolidation of BavariaS.A. of US$69 million were incurred during the year. Europe Integration and restructuring costs of US$7 million associated with theconsolidation of Pivovar Topvar a.s. and the relocation of the Europe hub officeto Zug were incurred during the year. In November 2006, the Naples brewery site was sold for US$28 million giving riseto a profit of US$14 million. During the year the Group recognised deferred tax assets that had previously notbeen recognised on the acquisition of Birra Peroni. In accordance with IAS12,Income Taxes, when deferred tax assets on losses not previously recognised onacquisition are subsequently recognised, both goodwill and deferred tax assetsare adjusted with corresponding entries to operating expense and taxation in theincome statement. This deferred tax asset has been substantially utilised duringthe year. 2006 Latin America and Corporate Integration and restructuring costs associated with the consolidation of Bavariaof US$15 million were incurred during the year. 4. Taxation ------------------------------------------------------- -------- -------- 2007 2006 Unaudited Unaudited US$m US$m------------------------------------------------------- -------- -------- Current taxation 780 701 -------- -------- - Charge for the year (UK corporation tax: nil charge (2006: US$29 million charge)) 833 717 - Adjustments in respect of prior years (53) (16) -------- --------Withholding taxes and other taxes 119 78 -------- --------Total current taxation 899 779 Deferred taxation 22 - -------- -------- - Charge for the year (UK corporation tax: US$9 million charge (2006: US$6 million charge)) 82 7 - Adjustments in respect of prior years 5 (5) - Recognition of deferred tax asset in connection with the acquisition of Birra Peroni (31) - - Rate change (34) (2) -------- -------- -------- -------- 921 779 -------- -------- Effective tax rate, before amortisation of intangibles(excluding software and exceptional items) (%) * 34.5 33.6 -------- -------- * The effective tax rate is calculated including share of associates' operatingprofit before exceptional items after net finance costs and share of associates'tax before exceptional items. This calculation is on a basis consistent withthat used in prior years and is also consistent with other group operatingmetrics. 5. Earnings per share ---------------------------------------------------- ---------- ---------- 2007 2006 Unaudited Unaudited US cents US cents---------------------------------------------------- ---------- ----------Basic earnings per share 110.2 105.0 ----------- ----------Diluted earnings per share 109.5 104.3 ----------- ----------Headline earnings per share 116.4 108.3 ----------- ----------Adjusted basic earnings per share 120.0 109.1 ----------- ----------Adjusted diluted earnings per share 119.3 108.4 ----------- ---------- The weighted average number of shares was: ---------------------------------------------------- ---------- ---------- 2007 2006 Unaudited Unaudited Millions of Millions of shares shares---------------------------------------------------- ---------- ---------- Ordinary shares 1,500 1,376ESOP trust ordinary shares (4) (4) ----------- ----------Basic shares 1,496 1,372Dilutive ordinary shares from shareoptions 9 9 ----------- ----------Diluted shares 1,505 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 has been based on adjustedheadline earnings for each financial year and on the same number of weightedaverage shares in issue as the basic earnings per share calculation. Headlineearnings per share has been calculated in accordance with the Institute ofInvestment Management and Research (IIMR)'s Statement of Investment Practice No.1 entitled 'The Definition of Headline Earnings'. The adjustments made to arriveat headline earnings and adjusted earnings are as follows: ---------------------------------------------------- ---------- ---------- 2007 2006 Unaudited Unaudited US$m US$m---------------------------------------------------- ---------- ----------Profit for the financial year attributable to equityholders of the parent 1,649 1,440Early redemption penalty in respect of privateplacement notes - 13(Profit)/loss on fair value movements on capitalitems * (10) 5Intangible amortisation excluding capitalisedsoftware 119 52Impairment of property, plant and equipment 13 4Profit on sale of property, plant and equipment andinvestments (20) (5)Adjustment to goodwill 31 -Tax effects of the above items (43) (19)Minority interests' share of the above items 2 (6) ----------- ----------Headline earnings (basic) 1,741 1,484Integration/reorganisation costs (net of taxeffects) 55 13 ----------- ----------Adjusted earnings 1,796 1,497 ----------- ---------- * This does not include all fair value movements but includes those in relationto capital items for which hedge accounting cannot be applied. 6. Dividends Dividends paid are as follows: ------------------------------------------------------ ----------- ---------- 2007 2006 Unaudited UnauditedEquity US$m US$m------------------------------------------------------ ----------- ---------- 2006 Final dividend paid: 31.0 US cents (2005: 26.0 UScents) per ordinary share 472 3282007 Interim dividend paid: 14.0 US cents (2006: 13.0US cents) per ordinary share 209 192 ----------- ---------- 681 520 ----------- ---------- In addition, the directors are proposing a final dividend of 36.0 US cents pershare in respect of the financial year ended 31 March 2007, which will absorb anestimated US$541 million of shareholders' equity. The dividends will be paid on7 August 2007 to shareholders registered on the London and Johannesburgregisters on 13 July 2007. 7. Goodwill and intangible assets ------------------------------------------------- ----------- ---------- Goodwill * Intangible assets Unaudited Unaudited US$m US$m------------------------------------------------- ----------- ----------Net book amountAt 1 April 2005 7,181 122Exchange adjustments (76) (17)Acquisitions and net additions during theyear 5,716 3,596Amortisation - (105)Adjustments to purchase consideration (7) - ----------- ----------At 31 March 2006 12,814 3,596Exchange adjustments 278 159Acquisitions - through business combinations 199 44Additions - separately acquired - 276Amortisation - (162)Adjustment on recognition of deferred taxassets in connection with the acquisition ofBirra Peroni (31) -Transfer to disposal groups (10) (12) ----------- ----------At 31 March 2007 13,250 3,901 ----------- ---------- * As restated (see note 10). Goodwill 2007 Additional goodwill arising on the consolidation of subsidiary undertakings wasdue to the acquisition of the Foster's business in India and minority purchasesin Latin America. 2006 Additional goodwill arising on the consolidation of subsidiary undertakingsprincipally arose due to the Bavaria transaction on 12 October 2005 whichresulted in US$4,317 million of goodwill, the acquisition of additional minorityinterests in Colombia and Peru which resulted in additional goodwill of US$942million, the consolidation of 99% of the brewing interests of the Shaw Wallacegroup in the India investment resulting in US$315 million of goodwill and theacquisitions of the remaining minority interests in Bevco (Central America) andPlzensky Prazdroj a.s. (Czech) which resulted in additional goodwill of US$107million. Intangible assets 2007 Brands acquired during the year include the Sparks and Steel Reserve brands inthe U.S. and the Foster's brand in India. 2006 Intangible assets acquired during the year principally comprised brands with avalue of US$3,480 million which were recognised as a result of the Bavariatransaction. 8. Reconciliation of profit for the year to net cash generated from operations ---------------------------------------------------- ----------- ---------- 2007 2006 Unaudited Unaudited US$m US$m---------------------------------------------------- ----------- ----------Profit for the financial period 1,883 1,674Taxation 921 779Share of post-tax results of associates (205) (177)Interest receivable (240) (78)Interest payable and similar charges 668 377 ----------- ----------Operating profit 3,027 2,575Depreciation:Property, plant and equipment 550 444Containers 187 111Container breakages, shrinkage and write-offs 44 77Profit on sale of property, plant and equipment (6) (5)Exceptional profit on sale of property, plant andequipment (Europe) (14) -Impairment of property, plant and equipment 13 4Amortisation of intangible assets 162 105Unrealised net (loss)/gain from derivatives (2) 5Dividends received from other investments (1) (3)Charge with respect to share options 31 17Restructuring and integration costs (Latin America) 10 7Adjustment to goodwill (Europe) 31 -Other non-cash movements (1) 11 ----------- ----------Net cash generated from operations before workingcapital movements (EBITDA) 4,031 3,348Increase in inventories (73) (78)Increase in receivables (294) (67)Increase in payables 319 86Increase / (decrease) in provisions 21 (31)Increase in post-retirement provisions 14 33 ----------- ----------Net cash generated from operations 4,018 3,291 ----------- ---------- Cash generated from operations include cash flows relating to exceptional itemsof US$37 million in respect of South America and European integration andrestructuring costs (2006: US$8 million). 9. Analysis of net debt (unaudited) -------------- ------- ------- ------- ------- ------- ------ ------- ------ Cash and Loan Overdrafts Borrowings Derivative Finance Total Net cash participation financial leases gross debt equivalents deposit instruments borrowings (excluding overdrafts) -------------- ------- ------- ------- ------- ------- ------ ------- ------ US$m US$m US$m US$m US$m US$m US$m US$m -------------- ------- ------- ------- ------- ------- ------ ------- ------At 1 April 2005 1,143 - (513) (2,833) 12 (19) (3,353) (2,210)Exchangeadjustments (2) - 13 62 - - 75 73Cash flow (651) 196 179 (2,102) - 28 (1,895) (2,350)Acquisitions(as restated -see note 10) 232 - (3) (2,662) (138) (36) (2,839) (2,607)Other non-cashmovements - - - 34 (47) - (13) (13)-------------- ------- ------- ------- ------- ------- ------ ------- ------At 31 March2006* 722 196 (324) (7,501) (173) (27) (8,025) (7,107)-------------- ------- ------- ------- ------- ------- ------ ------- ------Exchangeadjustments (24) 4 6 (47) - (1) (42) (62)Cash flow (220) (200) 133 537 28 7 705 285Acquisitions 3 - (2) - - - (2) 1Transfer todisposalgroups - - - 2 - 2 4 4Other non-cashmovements - - - (20) 18 4 2 2-------------- ------- ------- ------- ------- ------- ------ ------- ------At 31 March2007 481 - (187) (7,029) (127) (15) (7,358) (6,877)-------------- ------- ------- ------- ------- ------- ------ ------- ------ * Reconciliation of borrowings and cash and cash equivalents (excludingoverdrafts) from the Cash Flow to the Balance Sheet: ----------------------------------------- -------- -------- Cash and cash Total gross equivalents borrowings (excluding overdrafts) US$m US$m----------------------------------------- -------- --------Cash flow at31 March 2006 722 (8,025)Legal right ofoffset (250) 250 -------- --------Balance sheetat 31 March2006 472 (7,775) -------- -------- Cash and cash equivalents on the Balance Sheet are reconciled to cash and cashequivalents on the Cash Flow as follows: ----------------------------------------- -------- -------- As at As at 31/3/07 31/3/06 US$m US$m----------------------------------------- -------- -------- Cash and cash equivalents (Balance Sheet) 481 472Overdrafts (187) (324)Legal right of offset - 250 -------- --------Cash and cash equivalents (Cash Flow) 294 398 -------- -------- The group's net debt is denominated in the following currencies: US SA rand Euro Colombian Other Total dollars peso currencies US$m US$m US$m US$m US$m US$m --------------- ------- ------- ------- ------- ------- ------- Total cash andcashequivalents 174 46 28 45 179 472Loanparticipationdeposit - - - - 196 196Total grossborrowings (4,418) (225) (253) (2,051) (828) (7,775) ------- ------- ------- ------- ------- -------Net debt at 31March 2006 (4,244) (179) (225) (2,006) (453) (7,107) ------- ------- ------- ------- ------- ------- Total cash andcashequivalents 129 19 36 77 220 481Total grossborrowings (4,580) (389) (267) (1,384) (738) (7,358) ------- ------- ------- ------- ------- -------Net debt at 31March 2007 (4,451) (370) (231) (1,307) (518) (6,877) ------- ------- ------- ------- ------- ------- 10. Business combinations The initial accounting under IFRS 3, 'Business Combinations', for the Bavariatransaction had not been completed as at 31 March 2006. During the period ended11 October 2006, adjustments to provisional fair values in respect of theBavaria transaction were made. As a result comparative information for the yearended 31 March 2006 has been presented as if the further adjustments toprovisional fair values had been made from the transaction date of 12 October2005. The impact on the prior period Income Statement has been reviewed and nomaterial adjustments to the Income Statement as a result of the adjustments toprovisional fair values are required and therefore there is no adjustment tobasic or diluted earnings per share. The following table reconciles the impacton the Balance Sheet reported for the year ended 31 March 2006 to thecomparative Balance Sheet presented in this preliminary announcement. Balance Sheet -------------------------- --------- ------------ ---------- Adjustments to provisional At 31/3/06 At 31/3/06 fair values As restated Audited Unaudited Unaudited US$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 63 1,539 --------- -------- -------- 23,951 335 24,286Current assetsInventories 881 (3) 878Trade and other receivables 1,218 7 1,225Other current assets 726 - 726 --------- -------- -------- 2,825 4 2,829 --------- -------- --------Total assets 26,776 339 27,115 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) (209) (272)Provisions (1,088) (41) (1,129)Other non-current liabilities (7,219) (45) (7,264) --------- -------- -------- (8,370) (295) (8,665) --------- -------- --------Total liabilities (13,177) (353) (13,530) --------- -------- --------Net assets 13,599 (14) 13,585 --------- -------- -------- Total equity 13,599 (14) 13,585 --------- -------- -------- Business combinations becoming effective during the period On 12 September 2006 SABMiller plc, through its wholly-owned subsidiarySABMiller (A&A 2) Limited, completed the acquisition of a 100% interest inFoster's India for a cash consideration of approximately US$127 million on acash-free debt-free basis. Under the terms of the transaction, SABMiller assumedownership of all Foster's assets in India, including the Foster's brand in theterritory. 11. Share capital During the year ended 31 March 2007 4,342,988 ordinary shares (2006: 3,673,590ordinary shares) were allotted and issued in accordance with the group's sharepurchase, option and award schemes. 12. Post balance sheet events The Group completed the sale of Embotelladora Centroamericana S.A., its Pepsibottling operation in Costa Rica, on the 27 April 2007. SABMiller plcFORWARD-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. SABMiller plcADMINISTRATION 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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