SABMiller PLC (SAB) - Half Yearly Report
RNS Number : 7461R
22 November 2012
Release date: 22 November 2012
STRONG REVENUE AND EARNINGS GROWTH
SABMiller plc, one of the world's leading brewers with operations and
distribution agreements across six continents, reports its interim (unaudited)
results for the six months to 30 September 2012.
· Strong brand development and sales capability drove broad-based growth
in our emerging markets.
· Organic, constant currency group revenue growth of 8% and reported group
revenue up 11%.
· Lager volumes rose 4% on an organic basis, while selective price
increases and positive brand mix drove group revenue per hectolitre (hl)
growth^1 of 3%.
· Organic, constant currency EBITA grew by 9%. Reported EBITA up 17%,
despite adverse currency movements and increased commodity costs, enhanced by
the inclusion of Foster's.
· EBITA margin improvement of 30 basis points (bps) on an organic,
constant currency basis with a reported margin uplift of 100 bps driven by
last year's acquisitions and business combinations and strong top line
· Foster's integration programme progressing well, synergy delivery and
capability build running ahead of schedule.
· Adjusted EPS up 14% to 118.1 US cents per share.
· Free cash flow^2 up 14% to US$1,684 million, assisted by the timing of
tax cash flows.
^¹Growth is shown on an organic, constant currency basis.
²As defined in the financial definitions section. See also note 10b.
6months to Sept to Sept to March
2012 2011 2012
Financial highlights US$m US$m % change US$m
Group revenue^a 17,476 15,688 11 31,388
Revenue^b 11,370 10,539 8 21,760
EBITA^c 3,173 2,701 17 5,634
Adjusted profit before 2,759 2,457 12 5,062
Profit before tax^e 2,279 2,041 12 5,603
Profit attributable to 1,590 1,382 15 4,221
owners of the parent
Adjusted earnings^f 1,875 1,633 15 3,400
Adjusted earnings per
- US cents 118.1 103.3 14 214.8
- UK pence 74.7 64.0 17 134.4
- SA cents 967.5 731.1 32 1,607.0
Basic earnings per share 100.1 87.4 15 266.6
Interim dividend per 24.0 21.5 12
share (US cents)
Free cash flow 1,684 1,479 14 3,048
a Group revenue includes the attributable share of associates' and joint
ventures' revenue of US$6,106 million (2011: US$5,149 million).
b Revenue excludes the attributable share of associates' and joint
c Note 2 provides a reconciliation of operating profit to EBITA which is
defined as operating profit before exceptional items and amortisation of
intangible assets (excluding software) but includes the group's share of
associates' and joint ventures' operating profit, on a similar basis. EBITA is
used throughout this interim announcement.
d Adjusted profit before tax comprises EBITA less adjusted net finance
costs of US$391 million (2011: US$229 million) and share of associates' and
joint ventures' net finance costs of US$23 million (2011: US$15 million).
e Profit before tax includes exceptional charges of US$127 million (2011:
US$191 million). Exceptional items are explained in note 3.
f A reconciliation of adjusted earnings to the statutory measure of
profit attributable to owners of the parent is provided in note 5.
EXECUTIVE CHAIRMAN'S REVIEW
Graham Mackay, Executive Chairman of SABMiller, said:
"Broad-based revenue and profit growth in the first half reflects the
continued success of our approach to the development of our brands, product
portfolios, distribution and sales effectiveness. We have strengthened our
local flagship brands, complemented by product innovation across a wide range
of styles and prices. Margins have risen modestly despite higher input costs,
as a result of our cost reduction and procurement initiatives supplemented by
a positive contribution from the acquisitions and business combinations
concluded in the second half of last year."
Sept Reported currency
2012 EBITA growth growth
Segmental EBITA performance US$m % %
Latin America 920 15 14
Europe 516 (10) (5)
North America 479 6 6
Africa 355 8 19
Asia Pacific 506 265 10
South Africa: Beverages 426 (4) 11
South Africa: Hotels and Gaming 65 (2) 12
Corporate (94) - -
Group 3,173 17 9
The group has delivered strong revenue and profit growth during the period,
with underlying volumes, aggregate pricing and mix all trending positively and
contributing to margin development. We grew volumes and revenues across most
regions despite a moderation of growth in some emerging markets. Development
of brands, product ranges and the route to market continued across the breadth
of our portfolio supported by further improved operating processes. The
acquisition of Foster's in particular has contributed significantly.
Total beverage volumes were 4% ahead of the prior period on an organic basis
with lager volumes up 4%, soft drinks volumes up 6% and other alcoholic
beverages up 12%. This volume growth, selective price increases and improved
brand mix in most regions led to group revenue growth of 8% on an organic,
constant currency basis, with group revenue per hl up 3% on the same basis.
Reported group revenue, which includes business combinations, was up 11%.
Currency movements had an adverse impact of six percentage points on group
revenue growth principally due to the weakening of the South African rand and
Central European currencies.
EBITA of US$3,173 million represented growth of 17%, including the
contribution of Foster's and other business combinations but also the impact
of currency weakness. EBITA grew by 9% on an organic, constant currency basis
reflecting a combination of volume growth and rising group revenue per hl
combined with some cost savings and efficiencies. On an organic, constant
currency basis the EBITA margin rose 30 basis points (bps). Raw material
input costs rose, as expected, by mid-single digits (on a constant currency,
per hl basis) largely as a result of higher cereal costs partly offset by
procurement and other savings. Fixed costs increased with salary inflation
and further expenditure on sales and systems capabilities, partly offset by
on-going cost efficiency initiatives. Investment in brand development
continued, with related marketing costs rising slightly behind the increase in
revenue. EBITA margins also benefited from acquisitions and business
combinations, particularly Foster's, and the reported EBITA margin for the
group expanded by 100 bps to 18.2%.
Adjusted earnings growth of 15% reflects higher EBITA, boosted by the
acquisition of Foster's, and a reduction in the effective tax rate to 27.5%,
partly offset by increased finance costs driven by Foster's-related debt.
Adjusted earnings per share were up 14% to 118.1 US cents.
Despite the adverse currency movements, free cash flow increased by US$205
million compared with the prior period, to US$1,684 million. Adjusted EBITDA,
which includes dividends from MillerCoors but excludes the cash impact of
exceptional items, increased by US$342 million (12%) with underlying growth
enhanced by the contribution from Foster's. Capital expenditure, including
that on intangible assets, of US$655 million was US$105 million lower than in
the prior period. We have continued to invest, particularly in Africa, in
order to address capacity constraints and to support growth. New brewing
capacity was commissioned in South Sudan and Nigeria during the period and new
capacity in Ghana, Tanzania, Peru, Uganda and Zambia is currently under
construction. Working capital generated a net cash outflow during the period
of US$219 million driven by the timing of payments to creditors, increased
inventory value particularly in Africa and Latin America, utilisation of
provisions in Australia and higher receivables in Europe due to growth in the
modern trade channel. Net interest paid increased by US$190 million over the
prior period reflecting increased debt primarily reflecting the acquisition of
Foster's, but the timing of a one off tax cash inflow in Australia more than
The group's gearing ratio as at 30 September 2012 reduced to 65.0% from 68.6%
at 31 March 2012 (as restated). Net debt was reduced by US$750 million to
US$17,112 million. An interim dividend of 24.0 US cents per share, up 2.5
cents (12%) from the prior year's interim dividend, will be paid to
shareholders on 14 December 2012.
§ In Latin America, EBITA grew by 15% (14% on a constant currency basis) and
EBITA margin improved strongly, reflecting increased volumes and selective
price increases, combined with variable production and other cost
efficiencies. Lager volumes grew by 4% and soft drinks by 3%, with volume
improvements more modest in the second quarter as a result of a slowdown in
the pace of economic growth. Group revenue per hl grew by 4% on a constant
currency basis. Soft drink volume improvements benefited from wider
availability and pack range extensions of our non-alcoholic malt brands.
§ In Europe, reported EBITA declined by 10% (5% on an organic, constant
currency basis) with an EBITA margin decline of 170 bps (200 bps on an
organic, constant currency basis) driven by negative mix and higher raw
material costs together with increased level of marketing spend in advance of
peak trading. Reported EBITA was impacted by the weakening of European
currencies against the US dollar, but benefited from our alliance with Anadolu
Efes. Lager volumes improved by 9% on an organic basis, driven by selective
price reductions together with growth in the economy segment and the benefit
in the second quarter from cycling a weak comparative period. Performance
continues to be affected by the shift from on-premise to off-premise
consumption as well as growth of the modern trade channel, particularly
discounters. Group revenue per hl declined by 2% on an organic, constant
currency basis reflecting negative mix and the price resets. We increased
market share in Poland, Romania and some other countries, as we repositioned
our brand portfolios, launched new variants and enhanced sales execution.
§ In North America, EBITA increased by 6% with strong pricing and positive
brand mix, partly offset by increased marketing costs and lower volumes.
MillerCoors' domestic sales to retailers (STRs) were down 2% on a trading day
adjusted basis, with sales to wholesalers (STWs) 1% lower on an organic basis
following a slight build-up of distributor stocks. The decline in premium
light and economy volumes was partly offset by double digit volume growth in
the Tenth and Blake craft and imports division.
§ Reported EBITA in Africa increased by 8% (19% on an organic, constant
currency basis) with lager volumes up by 6% on an organic basis. Growth was
strong in most markets, although second quarter growth was reduced by the
effect of a 25% excise increase in Tanzania. Subsidiary EBITA margins
remained under pressure reflecting the impact of capacity expansion-related
costs, commodity cost pressures and continued building of our sales and
marketing capability. Total EBITA margin improved by 200 bps principally as a
result of the combination of our Angola and Nigeria businesses with Castel and
associated synergies. Other beverage categories contributed significantly to
total volume growth, with soft drinks 8% higher and other alcoholic beverages
up 12%, both on an organic basis.
§ The acquisition of Foster's and higher profits in China and India resulted
in reported EBITA in Asia Pacific increasing by 265% (10% on an organic,
constant currency basis). Lager volumes improved by 5% on an organic basis
while reported volumes grew by 17%. Our associate in China, CR Snow,
continued to deliver good growth with volumes up 4% on an organic basis
although the second quarter saw volume declines in Sichuan, Anhui and Fujian
provinces. In India volumes increased by 23% driven by strong growth in Andhra
Pradesh, partly cycling trade restrictions in the prior period, combined with
double digit growth across other key states.
In Australia, lager volumes declined by 8% on a pro forma^(1) basis, slightly
worse than the market, excluding the impact of the termination of some
licensed brands and the loss of two trading days. Including these impacts
lager volumes declined by 13%. Good progress continues to be made on plans to
strengthen the brand portfolio and commercial trading relationships, to
accelerate the realisation of synergies and to improve operational
(1) Australia pro forma volumes are based on volume information for the
period from 1 April 2011 to 30 September 2011 using SABMiller's definition of
volumes and include 100% of the volumes for Pacific Beverages, our joint
venture in Australia until January 2012.
§ South Africa: Beverages' EBITA decreased by 4% (but increased by 11% on a
constant currency basis). EBITA margin expanded by 10 bps benefiting from
price increases, operational efficiencies and fixed cost productivity, partly
offset by a non-recurring charge in our associate, Distell. Group revenue per
hl grew by 6% on a constant currency basis. Lager volumes grew by 1% and we
continued to gain market share in a challenging economic and trading
environment. Soft drinks volumes grew by 8%, cycling a relatively weak
comparative period in the prior year and benefiting from increased channel
§ The business capability programme progressed in line with expectations, with
net operating benefits of US$115 million in the six months. The most
significant contributions came from Trinity (global procurement) and European
regional manufacturing. The exceptional costs of the programme were US$70
million during the half year (2011: US$115 million). The global IS solution
was deployed in Ecuador and preparations continue for the next release, due to
be initiated in Poland after the year end.
We have recently seen moderation of economic growth in some countries, but the
potential of the principal emerging markets in which we operate remains
strong. The positive impact from acquisitions and business combinations seen
in the first half will reduce as we cycle their completion in the latter part
of the year. Performance will continue to reflect progress in the development
of our brands, product portfolios, distribution and sales effectiveness. We
expect input cost pressures to continue at a level similar to that of the
first half of the year, and we will selectively raise prices where market
conditions permit. We will continue to invest, in brand development,
innovation, systems and capability to sustain growth, as well as to implement
our planned capital programmes.
SABMiller plc Tel: +44 20 7659
Catherine May Director of Corporate Tel: +44 20 7927
Gary Leibowitz Senior Vice President, Tel: +44 20 7659
Investor Relations 0119
Richard Farnsworth Business Media Relations Tel: +44 20 7659
A live audio webcast of a presentation by Executive Chairman, Graham Mackay,
Chief Operating Officer, Alan Clark, and Chief Financial Officer, Jamie Wilson
to the investment community will begin at 9.30am (GMT) on 22 November 2012.
To register for the webcast, download the slide presentation, view management
video interviews and download photography and b-roll, visit our online Results
Centre at www.sabmiller.com/resultscentre.
To monitor Twitter bulletins throughout the day follow
www.twitter.com/sabmiller or #sabmillerresults.
Copies of the press release and detailed Interim Announcement are available
from the Company Secretary at the Registered Office, or from 2 Jan Smuts
Avenue, Johannesburg, South Africa.
Financial summary 2012 2011 %
Group revenue (including share of associates) (US$m) 3,687 3,396 9
EBITA¹ (US$m) 920 797 15
EBITA margin (%) 24.9 23.5
Sales volumes (hl 000)
- Lager 20,463 19,658 4
- Soft drinks 8,879 8,593 3
¹ In 2012 before exceptional charges of US$45 million being business
capability programme costs (2011: US$54 million being business capability
programme costs of US$42 million and integration and restructuring costs of
Latin America delivered lager volume growth of 4% in the half year,
outperforming most alcohol and soft drinks categories across our markets.
There was a slowdown in the rate of economic growth in the second quarter.
Soft drinks volumes were up 3% as a result of increased distribution and
non-alcoholic malt beverage pack range extensions. Volume growth, combined
with selective price increases, resulted in an increase in group revenue of 9%
on a reported basis. Reported EBITA increased by 15% and EBITA margin by 140
bps, as product costs benefited from stronger currencies and procurement
savings and distribution showed further efficiency gains, which were offset by
sales and system capability costs incurred during the period.
In Colombia, lager volumes grew by 3%, despite selective price increases in
April, local trade restrictions in some cities and the cycling of the FIFA
Under-20's World Cup in the prior period. Consumer acceptance of the more
affordable bulk pack launched in the prior year has been gratifying. Our
mainstream portfolio continues to expand, particularly in the light segment,
with Águila Light growing at double digit rates at upper mainstream prices.
Our premium and super-premium segment volumes showed combined growth of 6%
assisted by the enlarged Club Colombia franchise and increased availability of
Miller Genuine Draft (MGD). Our share of the alcohol market increased by 110
bps compared with the prior year, with gains driven by increased fridge
penetration and the narrowing of the affordability gap between beer and
spirits. Despite strong competition and increased prices in April, our
non-alcoholic malt beverages volumes grew by 1%.
In Peru, lager volumes grew by 6%, with consumers continuing to trade up from
informal alcohol. Trade execution improved as a result of our commercial
operating model roll-out and expanded trade and fridge coverage. This resulted
in a further gain of 120 bps in our lager market share. Cristal, our flagship
brand and leading sponsor of football, saw strong growth in the period and
Cusqueña continued to grow. Our soft drinks volumes expanded by 26%, as our
non-alcoholic malt brand, Maltin Power, and the water category grew their
In Ecuador, following price increases and strong growth in the comparative
period, lager volumes increased by 4%. Our share of the alcohol market rose,
reflecting the benefits of our continued direct service expansion and improved
outlet coverage. Our upper mainstream brand, Pilsener Light, doubled in
volume, while our local premium brand, Club, delivered growth of 19%. Our
non-alcoholic malt brand, Pony Malta, also benefited from wider distribution,
achieving double digit volume growth.
In Panama, lager volumes were up by 7%, with our premium brand, Miller Lite,
quadrupling its volumes and MGD growing by double digits, further enhancing
our revenue mix. We continue to lead the premium and the super-premium
segments, while competition remains intense in the mainstream segment. The
non-alcoholic malt beverages category saw healthy volume growth of 17%,
largely driven by wider distribution, while other soft drinks categories saw
Our business in Honduras saw growth of 1% across both lager and soft drinks.
Heightened security concerns have led to a structural shift toward off-premise
consumption and a decline in the total alcohol market. Nevertheless, our
share of the alcohol market increased by over 500 bps compared with the prior
period, supported by our bulk pack affordability strategy.
El Salvador delivered a strong performance, with domestic lager volume growth
of 12%, driven by the success of our bulk packs, trade activations and
coverage expansion. Our premium brand, Suprema, saw volume growth of 9%, after
the launch of new packaging late last year, while Golden Light was
repositioned as an upper mainstream brand and grew volumes by double digits.
Despite heightened competition, domestic soft drinks volumes grew by 1% over
the prior period.
Financial summary 2012 2011 %
Group revenue (including share of associates) (US$m) 3,293 3,268 1
EBITA¹ (US$m) 516 570 (10)
EBITA margin (%) 15.7 17.4
Sales volumes (hl 000)
- Lager 27,118 25,645 6
- Lager (organic) 23,047 21,232 9
- Soft drinks 3,661 58 >100
- Soft drinks (organic) 48 46 4
¹ In 2012 before exceptional charges of US$35 million being business
capability programme costs (2011: US$69 million being business capability
programme costs of US$54 million and the loss on disposal of a business of
In Europe, organic information excludes trading in Russia and Ukraine in the
prior year comparative period and our share of Anadolu Efes' trading in the
half year, following the completion of our strategic alliance on 6 March
2012. Our share of Anadolu Efes' results is included in reported information.
Lager volumes were up 6% (9% on an organic basis) driven by economy brand
growth, and supported by selective price reductions, increased promotional
activities and the launch of various product and pack innovations. In
addition, the second quarter benefited from cycling a weak comparative period.
Group revenue per hl decreased by 16%, (down 2% in organic, constant currency)
reflecting expansion of economy brands and price reductions, together with
further decline of the on-premise channel, adverse currency movements and the
change in category mix resulting from the inclusion of our share of Anadolu
Reported EBITA was down 10% impacted by the weakening of European currencies
against the US dollar but benefiting from the strategic alliance with Anadolu
Efes. Reported EBITA margin declined by 170 bps. Organic, constant currency
EBITA was down 5% with an EBITA margin decline of 200 bps on the same basis,
driven by increased raw material costs and a higher level of marketing spend
to support product launches and brand activations in advance of peak trading,
and further accentuated by continuing adverse channel, pack and brand mix
effects. Market share gains were achieved in several markets, most notably
Poland, Romania, Hungary and Slovakia as we repositioned our brand portfolios,
launched new flavoured variants and enhanced our execution in the on-premise
In Poland, volumes were up 10% benefiting from the beer market growth in the
first quarter, fuelled by Euro 2012 football tournament marketing activities
and favourable weather conditions. The second quarter benefited from cycling a
weak comparative period, but growth was more subdued towards the end of the
half year as the consumer environment became increasingly challenging. In
addition core brands benefited from the resetting of some price points and the
launch of innovations. Mainstream brand Tyskie gained market share supported
by the successful '5^th stadium' marketing campaign and the launch of the
variant Tyskie Klasyczne. Growth of our premium brand Lech was assisted by the
launch of Lech Shandy which helped to develop a new category with encouraging
results. Constant currency revenue per hl was down 1% as a result of price
resets, and this, coupled with higher input costs and marketing spend focused
on the first half of the year to support product launches, resulted in an
EBITA decline on the same basis.
In the Czech Republic, domestic volumes were up 2%. Revenue per hl declined
by 1% on a constant currency basis as consumers continued to shift from the
high value on-premise channel to the off-premise channel. Channel dynamics
particularly affected our performance in the super-premium and mainstream
segments as Pilsner Urquell and Gambrinus respectively are heavily skewed to
the on-premise channel. The launch of a new variant resulted in strong growth
of Frisco in the super-premium segment. Growth in the premium segment was
attributable to Kozel 11, which benefited from increased distribution and a
successful launch in PET, together with the newly-launched Gambrinus Radler.
EBITA on a constant currency basis declined as operational cost efficiencies
were outweighed by adverse channel mix and increased raw material costs.
In Romania, volumes grew by 25% driven by the national roll-out of economy
brand Ciucas in a new PET pack launched at the end of the prior financial
year. Mainstream brand Timisoreana also performed ahead of the prior period
with growth in larger PET formats. Price increases in the period were offset
by adverse pack and brand mix resulting in constant currency revenue per hl
declining by 5%. Despite the unfavourable mix, volume growth led to increased
EBITA on a constant currency basis.
Domestic lager volumes in Italy were 1% ahead of the prior period against the
backdrop of a challenging economic environment and poor consumer confidence.
The growth was mainly fuelled by our economy brand Wuhrer following a price
In the Netherlands, domestic volumes were down 1%, predominantly driven by a
decline in the on-premise channel which has been impacted by a challenging
market environment with low levels of consumer confidence, together with high
levels of promotional pressure in the off-premise channel.
In the United Kingdom, domestic volumes were up 5% driven by Peroni Nastro
Azzurro growth supported by continued draught expansion.
In Slovakia, a number of successful summer promotions resulted in solid growth
of Kozel, Pilsner Urquell and Birell, and this together with the launch of
Smadny Mnich Radler, led to aggregate volume growth of 10%.In the Canaries,
lager volumes grew by 5%, despite the challenging trading environment, driven
by good performance in the off‐premise channel which offset declines in
performance in the tourist areas. In Hungary, volumes were up 7% boosted by
on-premise activations supporting our economy brand Kobanyai Sor.
Anadolu Efes' lager volumes were down 5% on a pro forma^(1) basis compared
with the prior period, and soft drinks volumes were up 9% on the same basis.
The decline in lager volumes was driven by a softer performance in Russia with
market share suffering during the integration of SABMiller and Anadolu Efes'
businesses. Slower growth in Turkey, resulting from increased availability of
competitor products was also a factor. The increase in soft drinks volumes was
driven by strong growth in both the still and sparkling drinks categories.
^(1) Pro forma volumes are based on volume information for the period from
1 April 2011 to 30 September 2011 using SABMiller's definition of volumes for
the enlarged Anadolu Efes group as if the strategic alliance had commenced on
1 April 2011.
Financial summary 2012 2011 %
Group revenue (including share of joint ventures) (US$m) 2,901 2,830 3
EBITA¹ (US$m) 479 452 6
EBITA margin (%) 16.5 16.0
Sales volumes (hl 000)
- Lager - excluding contract brewing 22,237 22,586 (2)
- Lager - excluding contract brewing (organic) 22,218 22,586 (2)
- Lager - excluding contract brewing 21,539 21,779 (1)
- Lager - excluding contract brewing (organic) 21,520 21,779 (1)
- Sales to retailers (STRs) 21,336 21,914 (3)
- Contract brewing 2,538 2,357 8
¹ In 2012 before exceptional charges of US$nil (2011: US$35 million being the
group's share of MillerCoors' impairment of the Sparks brand).
The North America segment includes the group's 58% share in MillerCoors and
100% of Miller Brewing International and various North American holding
companies. Total North America EBITA increased by 6%, as growth in MillerCoors
was partly offset by higher marketing and fixed costs in Miller Brewing
In the six months to 30 September 2012, MillerCoors' US domestic STRs declined
by 2% on a trading day adjusted basis (declined by 3% on an unadjusted basis).
Domestic STWs were down by 1% on an organic basis, following higher
distributor inventory levels than in the comparative period. EBITA increased
by 8% with strong pricing, favourable brand mix and reduced general and
administrative costs partly offset by the impact of lower volumes and higher
Premium light volumes were down low single digits, as growth in Coors Light
was offset by a low single digit decline in Miller Lite. The Tenth and Blake
division delivered double digit volume growth, driven primarily by
Leinenkugel's, including the strong success of Leinenkugel's Summer Shandy and
Blue Moon. Peroni Nastro Azzurro delivered strong results growing by high
single digits. The economy segment declined by mid single digits, driven by
Keystone Light and Miller High Life, as consumers continued to trade up to
other categories. The premium regular segment was down by mid single digits
with a double digit decline in Miller Genuine Draft partly offset by low
single digit growth in Coors Banquet. All STR volume growth rates presented in
this paragraph are on a trading day adjusted basis.
MillerCoors' revenue per hectolitre grew by 4%, as a result of firm pricing
and favourable brand mix resulting from growth in the Tenth and Blake division
and declines in the economy segment. Cost of goods sold per hectolitre
increased by low single digits, driven by higher brewing material costs and
unfavourable pack mix linked to product innovation, partly offset by tight
cost control and savings initiatives.
Marketing spend increased, following investment behind the Miller64 brand
re-launch, together with higher spending on new products and packaging
innovations, with higher levels of marketing investment in Coors Light and
Miller Lite expected to continue. General and administrative costs decreased
primarily as a result of phasing of information system costs. Our share of an
impairment charge relating to the discontinuation of Home Draft packaging was
also taken in the half year.
Financial summary 2012 2011 %
Group revenue (including share of associates) (US$m) 1,792 1,839 (3)
EBITA¹ (US$m) 355 327 8
EBITA margin (%) 19.8 17.8
Sales volumes (hl 000)
- Lager 8,709 8,290 5
- Lager (organic) 8,345 7,904 6
- Soft drinks 6,201 6,693 (7)
- Soft drinks (organic) 6,098 5,642 8
- Other alcoholic beverages 2,969 2,597 14
- Other alcoholic beverages (organic) 2,919 2,597 12
¹ In 2012 before exceptional charges of US$nil (2011: US$1 million being
business capability programme costs).
Lager volumes in Africa grew by 5% (6% on an organic basis), cycling strong
comparatives. Robust volume growth continued in most African markets, although
overall growth in the second quarter was impacted by a significant excise
increase in Tanzania, as well as a softer economic backdrop in Uganda which
resulted in volume declines in these markets for the first half of the year.
This was more than offset by strong double digit lager volume growth in Ghana,
Mozambique, South Sudan and Zambia. We continue to increase our marketing
investment, ensuring our brands are appealing to the consumer, as well as
expanding our local geographic footprint to draw new consumers into the
category through improved availability. Castle Lite continued to establish
itself as a pan-African premium brand with growth of 50% in the half year.
Lager volume growth was further supported by the commissioning of new capacity
in South Sudan, in our associate in Zimbabwe and most recently in Nigeria as
well as broadly favourable economic conditions across the continent. Further
capacity projects are currently under way in Ghana, Tanzania, Uganda, and
Our full beverage portfolio offering continued to deliver results with soft
drinks and other alcoholic beverages volumes growing by 8% and 12%
respectively both on an organic basis. Soft drinks growth including
non-alcoholic malt beverages was underpinned by good performances in Ghana,
Botswana, Nigeria, South Sudan and Zambia as well as our associate in
Zimbabwe. Reported soft drinks volumes declined as a result of the management
changes relating to the Angolan businesses. Other alcoholic beverages were
buoyed by the strong performance of our wines and spirits in Tanzania. As part
of our affordability strategy and to take share from informal alcohol, we
continue to expand the geographic footprint of our traditional beer offering,
with product now available in nine markets and the recent launch of the
innovative Chibuku Super in PET in Zambia.
Volume growth and subsidiary organic, constant currency revenue per hectolitre
growth of 8% helped deliver strong first half EBITA growth of 8% (19% on an
organic, constant currency basis), despite the adverse impact of currency
movements on reported group revenue. EBITA margin improved by 200 bps, to
19.8%, principally as a result of the synergies realised from the combination
of our Angola and Nigeria businesses with Castel, with subsidiaries' EBITA
margin under pressure reflecting the impact of capacity expansion-related
costs, commodity cost pressures and continued building of our sales and
Lager volumes declined by 8% in Tanzania in the half year, as the beer market
was negatively affected by a 25% excise increase in July 2012. Despite this,
the continued strong performance of Castle Lite helped the premium segment
remain in growth. Our wines and spirits business continued to grow strongly
as we expand availability and introduce new pack offerings.
In Mozambique, lager volumes grew by 10%, underpinned by robust growth in the
mainstream brands 2M and Manica. After 11 months in the market, the
affordable cassava-based brand Impala continues to expand and gain acceptance
in the rural markets of the northern region.
Despite capacity constraints in Zambia, lager volume growth of 14% was
achieved through enhanced brewery throughput efficiencies as well as imports
from South Africa, expanded rural penetration and improved availability in the
trade together with a positive economic environment. In the premium segment,
Castle Lite more than doubled volumes while in the mainstream segment our key
brands Castle Lager and Mosi were supported by focused marketing activities
which delivered double digit growth. The construction of our new brewery at
Ndola remains on track to be commissioned in the third quarter. Sparkling soft
drinks and non-alcoholic malt beverages both delivered strong double digit
In the context of a softer economic environment and cycling particularly
strong comparatives, Uganda lager volumes contracted by 3%. Club Pilsener
continued to gain share in the mainstream segment. Good progress is being made
on the Mbarara brewery in west Uganda which is on track to be commissioned
early in the next financial year and will provide a platform for growth in a
market with a strong economic outlook expected in the medium term.
In Ghana, Club lager remained the notable performer leveraging its 'Pride in
Origins' positioning and helped to deliver 15% lager volume growth, driven by
improved availability coupled with a buoyant economy. Soft drinks volumes
also grew 11% underpinned by the performance of the local sparkling beverage
Despite a difficult political and economic period, South Sudan continued to
deliver strong double digit lager and soft drinks volume growth, assisted by
new capacity commissioned at the end of the first quarter. Delta Corporation,
our associate in Zimbabwe, grew lager volumes by 9% organically with
particularly strong growth from the premium lager, Golden Pilsener, supported
by focused marketing initiatives and pack innovations. The Onitsha brewery in
Nigeria was commissioned recently and the launch of our mainstream brand Hero
in September was well received.
Our associate Castel delivered pro forma^(1) half year lager volume growth of
5% with good volume performances in Cameroon and the Ivory Coast and further
solidified their leadership position in Ethiopia. Pro forma^(1) soft drinks
volumes grew by 6%. The Angola integration project is delivering synergies
ahead of expectation.
^(1) Pro forma volumes are based on volume information for the period
from 1 April 2011 to 30 September 2011 for the Castel business as if the
management combinations in Angola and Nigeria and the Castel acquisition in
Madagascar had occurred on 1 April 2011.
Financial summary 2012 2011 %
Group revenue (including share of associates and joint 3,040 1,439 111
EBITA¹ (US$m) 506 138 265
EBITA margin (%) 16.7 9.6
Sales volumes (hl 000)
- Lager 41,473 35,448 17
- Lager (organic) 37,158 35,377 5
¹ In 2012 before exceptional charges of US$47 million being integration and
restructuring costs (2011: US$nil).
Lager volumes in Asia Pacific grew by 5% on an organic basis, while reported
volumes were up 17% reflecting the acquisition of Foster's and other
acquisitions in China. Reported EBITA increased threefold and group revenue
per hl grew by 80% primarily due to the inclusion of Foster's. On an organic,
constant currency basis EBITA increased by 10% and group revenue per hl
improved by 6%. EBITA margin increased by 710 bps on a reported basis (level
on an organic, constant currency basis).
In China, lager volumes grew by 6% (4% on an organic basis) and market share
grew. Volume growth ahead of overall beer market growth was achieved in
Liaoning, Jiangsu, Guangdong, Guizhou, Gansu and Shandong with share declines
in Sichuan, Anhui and Fujian provinces.
Group revenue per hl increased by 2% despite the adverse impact of provincial
mix. High single digit increases were achieved in certain provinces and the
national trend continues to be positive, reflecting continued premiumisation
of the brand portfolio led by growth in Snow Draft. EBITA increased by 7% on
an organic, constant currency basis, although EBITA margin decreased slightly,
reflecting continued sales and marketing investment to support volume growth
in an increasingly competitive environment as well as adverse movements in
commodity and operating costs.
In India, volumes grew by 23%. Continued strong growth in Andhra Pradesh,
cycling trading restrictions in the state through to the end of August, was
assisted by double digit growth achieved in the important states of Punjab,
Maharashtra, Rajasthan, Orissa, West Bengal and Uttar Pradesh. Growth was more
muted in the other key states of Karnataka and Haryana with slower market
growth compared with the prior period.
Revenue per hl increased by 6% on a constant currency basis reflecting price
increases in certain states and a continued focus on higher margin states,
brands and packs. Marketing investment continued to increase in support of the
brand portfolio and the business continued to focus on cost initiatives to
offset commodity and other inflationary cost pressures. As a result, EBITA
grew strongly, driven by our differentiated state by state strategy, with
EBITA margin ahead of the prior period.
In Australia, lager volumes were down 13% on a pro forma^(1) basis including
the impact of two fewer trading days and the termination of some licensed
brands from our portfolio. After adjusting for these impacts, lager volumes
declined by 8%, slightly worse than the market and before the effects of our
management actions, with a backdrop of consumer confidence which remains at
subdued levels. While our share of draught remained firm, a reduction in
off-premise share reflected more constrained customer programmes during the
first half of the year and our focus on revenue optimisation.
The mainstream classic beer segment continued to underperform the market
although the recently announced restoration of the flagship Victoria Bitter
brand back to its full flavour, full strength position, has been favourably
received, and is expected to strengthen our position in this segment. The
Carlton brand franchise continued to consolidate its leading market share
position, with strong momentum in Carlton Dry in particular. The recently
launched Great Northern Brewing Co brand also continued to perform strongly.
Premium volumes performed well with growth in our global premium brands, cider
and craft segments. In particular, global premium draught volumes performed
strongly driven by Peroni Nastro Azzurro, up more than 100% in the second
quarter of the year compared with the prior period.
Revenue per hl increased by 3.5% for the six months on a pro forma continuing
basis^(2) reflecting our focus on driving profitable revenue growth. This has
delivered greater value both for our customers and ourselves. Initiatives
including accelerated synergy delivery, tighter cost control and supply
optimisation have all contributed towards the growth of EBITA on a pro forma
We remain focused on delivering sustainable profitable growth through
systematically building capability and investing in key areas of the business.
These include investing in and renovating the core portfolio, improving
revenue management capability and execution, and seeking out premium revenue
growth opportunities. We are targeting to improve in-store execution through
partnering with key customers, restructuring and refocusing the sales force.
The integration programme is progressing well, with synergy delivery and
capability build running ahead of schedule. The sale of Foster's interests in
its Fijian beverage operations, Foster's Group Pacific Limited, to Coca-Cola
Amatil Ltd (CCA) was completed on 7 September and Foster's soft drinks assets
were also sold to CCA on 28 September. There was no gain or loss on either
disposal. With effect from 1 October, our associate distribution business in
Dubai previously reported as part of Australia has been transferred to our
(1) Pro forma volumes and financial information are based on results reported
under IFRS and SABMiller accounting policies for the period from 1 April 2011
to 30 September 2011, as if the Foster's and Pacific Beverages transactions
had occurred on 1 April 2011.
(2) Pro forma continuing basis adjusts for the impact of discontinued licensed
brands in all comparative information.
South Africa: Beverages
Financial summary 2012 2011 %
Group revenue (including share of associates) (US$m) 2,530 2,669 (5)
EBITA¹ (US$m) 426 446 (4)
EBITA margin (%) 16.8 16.7
Sales volumes (hl 000)
- Lager 12,446 12,290 1
- Soft drinks 7,810 7,245 8
- Other alcoholic beverages 708 646 10
¹ In 2012 before net exceptional charges of US$12 million being charges
incurred in relation to the Broad-Based Black Economic Empowerment scheme of
US$10 million and business capability programme costs of US$2 million (2011:
US$13 million being charges incurred in relation to the Broad-Based Black
Economic Empowerment scheme of US$15 million and business capability programme
credits of US$2 million).
In South Africa, the focus on market-facing investment and retail execution
continued to deliver volume growth, despite a challenging economic and trading
environment. Group revenue declined by 5% at reported exchange rates, but
grew by 10% on a constant currency basis. Group revenue per hl grew by 6% on
the same basis. Lager revenue benefited from a moderate price increase
executed towards the end of the previous financial year, which was partly
offset by an above inflation excise increase, and the continued strength of
our premium portfolio. Overall revenue growth was somewhat restricted by the
below-inflationary price increases in the soft drinks portfolio.
Lager volumes grew 1% despite the adverse impact of the timing of the Easter
peak period, and we continued to gain market share. Volume growth was
sustained by continuing superior retail execution and customer service, and
innovative brand promotional campaigns. Key aspects of our sales execution
included trade marketing and customer management relationship initiatives,
customer loyalty programmes and sales force skills development. Castle Lite
gained additional market share in the premium segment, supported by media and
through the line campaigns associated with its unique 'Extra Cold' brand
positioning. Castle Lager grew strongly backed by the success of the 'It all
comes together with a Castle' campaign which draws on the brand's association
with South Africa's most popular national sports. While Carling Black Label
volumes declined slightly, performance in the second quarter improved,
supported by the award winning marketing campaign 'Carling Cup'.
Soft drinks volumes grew 8%, cycling a relatively weak performance in the
prior period and benefiting from increased channel penetration through the use
of market logistics partners. The use of market level partnerships and reward
structures, which were also used to penetrate key classes of trade, resulted
in benefits particularly for two litre PET packs. Volume growth was also
driven by very low price increases and warmer than expected weather in July
and August. Growth in the still drinks portfolio was better than expected,
with strong performances from Powerade and Play.
Our associate Distell reported good revenue and volume growth across its
portfolio of wines, spirits and RTDs reflecting its diverse geographic
footprint and despite subdued consumer spending in many of its export markets.
Our drive for productivity to fund market-facing investment continued with the
beer business delivering further productivity in variable distribution costs
and fixed costs. The soft drinks business saw some reduction in the pressure
on packaging costs while continuing to benefit from operational efficiencies
in the supply chain from distribution and warehousing initiatives. Reported
EBITA declined by 4% (increased by 11% on a constant currency basis) and EBITA
margin grew by 10 bps to 16.8%. EBITA growth was affected by our share of our
associate Distell's EBITA which was significantly below the prior comparable
period as the result of a one-off excise charge, caused by the
reclassification of wine aperitifs by the South African Revenue Service.
South Africa: Hotels and Gaming
Financial summary Sept 2012 2011 %
Group revenue (share of associates) (US$m) 233 247 (6)
EBITA (US$m) 65 67 (2)
EBITA margin (%) 28.0 26.9
Revenue per available room (Revpar) - US$ 66.0 68.9 (4)
SABMiller is a 39.7% shareholder in the Tsogo Sun Group which is listed on the
Johannesburg Stock Exchange.
Our share of Tsogo Sun's reported revenue was US$233 million, a decrease of 6%
over the prior period (up 7% on an organic, constant currency basis). The
organic, constant currency results indicate an improvement in trading in a
market which is affected by low growth and relatively high inflation, with
reported results impacted by the weakening rand.
Gaming revenues were up 8% on a constant currency basis. The gaming industry
in the major provinces of South Africa experienced varying levels of growth
over the prior period with the largest province in terms of gaming win,
Gauteng, reporting 6% growth and the KwaZulu-Natal province growing by 12%.
The Tsogo Sun casinos in these provinces maintained their market share by
growing in line with the market.
The South African hotel industry continued to show signs of improvement during
the half year. Demand in the key group and conventions, corporate and
government segments grew with constant currency revenue per available room
growth of 11% for the six months. This has been mainly occupancy driven with
pressure on rate increases still evident in the market.
Reported EBITA for the half year declined by 2% with growth of 12% on an
organic, constant currency basis. The underlying growth was driven by improved
gaming and hotel revenues together with cost savings, which resulted in the
EBITA margin improving to 28.0%.
New accounting standards and restatements
The accounting policies followed are the same as those published within the
Annual Report and Accounts for the year ended 31 March 2012. There were no
standards, interpretations or amendments adopted by the group since 1 April
2012 which have had a material impact on group results. The consolidated
balance sheets as at 30 September 2011 and as at 31 March 2012 have been
restated for further adjustments relating to the initial accounting for
business combinations, details of which are provided in note 12. The Annual
Report and Accounts for the year ended 31 March 2012 are available on the
company's website: www.sabmiller.com.
The group's operating results on a segmental basis are set out in the
segmental analysis of operations.
SABMiller uses group revenue and EBITA (as defined in the financial
definitions section) to evaluate performance and believes these measures
provide stakeholders with additional information on trends and allow for
greater comparability between segments. Segmental performance is reported
after the specific apportionment of attributable head office costs.
Disclosure of volumes
In the determination and disclosure of sales volumes, the group aggregates
100% of the volumes of all consolidated subsidiaries and its equity accounted
percentage of all associates' and joint ventures' volumes. Contract brewing
volumes are excluded from volumes although revenue from contract brewing is
included within group revenue. Volumes exclude intra-group sales volumes. This
measure of volumes is used in the segmental analyses as it closely aligns with
the consolidated group revenue and EBITA disclosures.
Organic, constant currency comparisons
The group discloses certain results on an organic, constant currency basis, to
show the effects of acquisitions net of disposals and changes in exchange
rates on the group's results. See the financial definitions section for the
The group uses an adjusted EBITDA measure of cash generation which adjusts
EBITDA (as defined in the financial definitions section) to exclude cash flows
relating to exceptional items and to include the dividends received from the
MillerCoors joint venture. Given the significance of the MillerCoors business
and the access to its cash generation, inclusion of the dividends from
MillerCoors (which approximate the group's share of its EBITDA) provides a
useful measure of the group's overall cash generation. Excluding the cash
impact of exceptional items allows the level and underlying trend of cash
generation to be understood.
On 7 September 2012 the group completed the disposal of Foster's interests in
its Fijian beverage operations, Foster's Group Pacific Limited, and on 28
September 2012 the group completed the disposal of Foster's soft drinks
assets, both to Coca-Cola Amatil Limited (CCA).
Items that are material either by size or incidence are classified as
exceptional items. Further details on the treatment of these items can be
found in note 3 to the financial information.
Net exceptional charges of US$127 million before finance costs and tax were
reported during the period (2011: US$210 million) including net exceptional
charges of US$nil (2011: US$35 million) related to the group's share of
associates' and joint ventures' exceptional items. The net exceptional charge
· US$70 million (2011: US$115 million) charge related to business
capability programme costs in Latin America, Europe, South Africa: Beverages
· US$10 million (2011: US$15 million) charge in respect of the Broad-Based
Black Economic Empowerment scheme in South Africa; and
· US$47 million charge related to integration and restructuring costs,
including the closure of certain beverage lines, in Asia Pacific (2011: US$12
million related to various integration and restructuring projects in Latin
In addition to the amounts noted above, the net exceptional charge in 2011
included transaction-related advisers' costs of US$18 million associated with
the acquisition of Foster's, an exceptional loss of US$15 million on the
disposal of the distribution business in Italy, and the group's share of
associates' and joint ventures' exceptional charges of US$35 million related
to the group's share of the impairment of the Sparks brand in MillerCoors.
Net finance costs were US$379 million, an 87% increase on the prior period's
US$203 million, mainly as a result of the increase in net debt related to the
Foster's acquisition. Finance costs in the current period include a net gain
of US$12 million (2011: US$7 million) from the mark to market adjustments of
various derivatives on capital items for which hedge accounting cannot be
applied. Finance costs in the prior period also included a net exceptional
gain of US$19 million related to the mark to market gains on derivative
financial instruments partially offset by financing fees connected with the
Foster's transaction. The mark to market gain, and in the prior period the
transaction-related gain, has been excluded from the determination of adjusted
net finance costs and adjusted earnings per share. Adjusted net finance costs
were US$391 million, up 71%.
Interest cover, as defined in the financial definitions section, has decreased
to 8.3 times from 12.7 times in the prior period.
Profit before tax
Adjusted profit before tax of US$2,759 million increased by 12% over the
comparable period in the prior year, primarily as a result of higher volumes,
selective price increases, positive mix and the impact of acquisitions and
business combinations in the prior financial year more than offsetting higher
input, marketing and fixed costs, finance costs and the impact of adverse
foreign exchange rate movements.
Profit before tax was US$2,279 million, up 12%, including the impact of the
exceptional and other adjusting finance items noted above. The principal
differences between reported and adjusted profit before tax relate to the
amortisation of intangible assets (excluding software) and exceptional items.
Amortisation amounted to US$229 million in the half year compared with US$105
million in the prior half year, with the increase resulting from the
amortisation of Foster's intangible assets, and net exceptional charges were
US$127 million compared with US$191 million in the prior year period.
The effective rate of tax for the half year before amortisation of intangible
assets (excluding software) and exceptional items is 27.5% compared with a
rate of 28.5% in the prior year period. The reduction in the rate primarily
results from geographic changes in taxable profit mix, together with the tax
effect of the interest charge on the additional debt taken on with the
Earnings per share
The group presents adjusted basic earnings per share, which excludes the
impact of amortisation of intangible assets (excluding software), certain
non-recurring items and post-tax exceptional items, in order to present an
additional measure of performance for the periods shown in the consolidated
interim financial information. Adjusted basic earnings per share of 118.1 US
cents were up 14% on the comparable period in the prior year, benefiting from
higher profits, including the impact of acquisitions and business
combinations, and a lower effective tax rate, partially offset by higher
finance costs and adverse foreign currency movements. An analysis of earnings
per share is shown in note 5. On a statutory basis, basic earnings per share
were higher by 15% at 100.1 US cents (2011: 87.4 US cents) for the reasons
given above, together with lower exceptional costs and higher amortisation of
intangible assets (excluding software) this half year.
Cash flow and capital expenditure
Net cash generated from operations before working capital movements (EBITDA)
of US$2,657 million increased by 16% compared with the prior year period
(2011: US$2,298 million). This increase was primarily due to higher revenue
leading to higher operating cash flows, offset by unfavourable currency
movements. Dividends received from the MillerCoors joint venture (reported
within cash flows from investing activities) amounted to US$517 million (2011:
Adjusted EBITDA of US$3,255 million (comprising EBITDA before cash outflows
from exceptional items of US$81 million plus dividends received from
MillerCoors of US$517 million) increased by 12% compared with the same period
in the prior year (2011: US$2,913 million), reflecting the higher EBITDA and
MillerCoors' dividends partially offset by lower cash exceptional items.
Net cash generated from operating activities of US$1,875 million was up US$156
million on the same period in the prior year, primarily reflecting improved
EBITDA and lower tax paid due to the receipt of a non-recurring tax refund in
Australia, partially offset by higher net interest paid and cash outflow from
Capital expenditure on property, plant and equipment for the six months of
US$599 million has decreased compared with the same period in the prior year
(2011: US$680 million). The group has continued to invest selectively in its
operations to support future growth, especially in Africa where capacity
constraints have been experienced. New brewery capacity has been commissioned
in South Sudan and Nigeria during the half year and further capacity projects
are currently in progress in Ghana, Tanzania, Uganda and Zambia, and also in
Peru. Capital expenditure including the purchase of intangible assets was
US$655 million (2011: US$760 million).
Free cash flow improved by 14% to US$1,684 million, reflecting higher cash
generated from operating activities and lower capital expenditure. Free cash
flow is detailed in note 10b, and defined in the financial definitions
Borrowings and net debt
Gross debt at 30 September 2012, comprising borrowings together with the fair
value of derivative assets or liabilities held to manage interest rate and
foreign currency risk of borrowings, decreased to US$17,892 million from
US$18,607 million at 31 March 2012, primarily as a result of a partial
repayment of the Foster's acquisition facilities and the repayment on maturity
of bonds in Colombia and South Africa. Net debt, comprising gross debt net of
cash and cash equivalents, decreased to US$17,112 million from US$17,862
million at 31 March 2012. An analysis of net debt is provided in note 10c.
The group's gearing (presented as a ratio of net debt/equity) has decreased to
65.0% from 68.6% at 31 March 2012 (restated). The weighted average interest
rate for the gross debt portfolio at 30 September 2012 was 4.4% (31 March
Total equity increased from US$26,032 million at 31 March 2012 (restated) to
US$26,337 million at 30 September 2012. The increase was primarily due to
profit for the period, partly offset by dividend payments and currency
translation movements on foreign currency investments.
Goodwill and intangible assets
Goodwill decreased to US$20,188 million (31 March 2012: US$20,297 million) as
a result of foreign exchange movements in the period. Intangible assets
decreased in the period to US$9,790 million (31 March 2012: US$9,958 million)
primarily owing to amortisation, partially offset by foreign exchange
movements and additions related to the business capability programme. The
comparatives for goodwill and intangible assets have been restated to reflect
adjustments to provisional fair values of business combinations, further
details of which are provided in note 12.
The exchange rates to the US dollar used in preparing the consolidated interim
financial information are detailed in the table below, with most of the major
currencies in which we operate weakening against the US dollar.
Six months ended Appreciation/ (depreciation)
2012 2011 %
Australian dollar (AUD) 0.98 0.95 (2)
South African rand (ZAR) 8.20 7.08 (14)
Colombian peso (COP) 1,792 1,796 -
Euro (€) 0.79 0.71 (11)
Czech koruna (CZK) 19.88 16.92 (15)
Peruvian nuevo sol (PEN) 2.64 2.76 4
Polish zloty (PLN) 3.32 2.91 (12)
Australian dollar (AUD) 0.96 1.03 7
South African rand (ZAR) 8.31 8.10 (3)
Colombian peso (COP) 1,801 1,915 6
Euro (€) 0.78 0.75 (4)
Czech koruna (CZK) 19.32 18.33 (5)
Peruvian nuevo sol (PEN) 2.60 2.77 7
Polish zloty (PLN) 3.20 3.30 3
Risks and uncertainties
The principal risks and uncertainties for the first six months and the
remaining six months of the financial year remain as described on pages 22 and
23 of the 2012 Annual Report. The risks are summarised as follows:
· The risk that, in light of the on-going consolidation of the brewing and
beverages industry, the group's ability to grow and increase profitability is
limited. This may be the result of failing to participate in value-adding
transactions; overpaying for an acquisition; failing to implement integration
plans successfully; or failing to identify and develop new approaches to
market and category entry.
· The risk that the group's market positions come under pressure and
profitable growth opportunities may not be realised. This may be a result of
the group failing to ensure the development of strong and relevant brands
which resonate with the consumer, shopper and customer; or failing to improve
its commercial capabilities to deliver propositions which respond
appropriately to changing consumer preferences.
· The risk that the group's long-term profitable growth potential may be
jeopardised due to a failure to develop and maintain an appropriate pipeline
of talented management.
· The risk that regulation places increasing restrictions on pricing
(including tax), availability and marketing of beer and drives changes in
consumption behaviour. In affected countries the group's ability to grow
profitably and contribute to local communities could be adversely affected.
· The risk that following the Foster's acquisition, the group fails to
deliver its specific, communicated financial and value creation targets
through its integration plans; this may limit the group's future growth and
profitability, as well as impacting its reputation for commercial capability
and for making value-creating acquisitions.
· The risk that the group fails to execute and derive benefits from the
business capability projects, resulting in increased project costs, business
disruption and reduced competitive advantage in the medium term.
The board has declared a cash interim dividend of 24.0 US cents per share, an
increase of 12%. The dividend will be payable on Friday 14 December 2012 to
shareholders registered on the London and Johannesburg registers on Friday 7
December 2012. The ex-dividend trading dates will be Wednesday 5 December 2012
on the London Stock Exchange (LSE) and Monday 3 December 2012 on the JSE
Limited (JSE). As the group reports in US dollars, dividends are declared in
US dollars. They are payable in South African rand to shareholders on the
Johannesburg register, in US dollars to shareholders on the London register
with a registered address in the United States (unless mandated otherwise),
and in sterling to all remaining shareholders on the London register. Further
details relating to dividends are provided in note 6.
The rates of exchange applicable for US dollar conversion into South African
rand and sterling were determined on Wednesday 21 November 2012. The rate of
exchange determined for converting to South African rand was US$:ZAR8.906800
resulting in an equivalent interim dividend of 213.76320 SA cents per share.
The rate of exchange determined for converting to sterling was GBP:US$1.593791
resulting in an equivalent interim dividend of 15.0584 UK pence per share.
Since the introduction on 1 April 2012 of a new dividend withholding tax in
South Africa, the JSE Listings Requirements require disclosure of additional
information in relation to any dividend payments. Shareholders registered on
the Johannesburg register are therefore advised that the new dividend
withholding tax will be withheld from the gross final dividend amount of
213.76320 SA cents per share at a rate of 15%, unless a shareholder qualifies
for an exemption; shareholders registered on the Johannesburg register who do
not quality for an exemption will therefore receive a net dividend of
181.69872 SA cents per share. The company, as a non‑resident of South Africa,
was not subject to the secondary tax on companies (STC) applicable before 1
April 2012, and accordingly, no STC credits are available for set-off against
the dividend withholding tax liability on the final net dividend amount. The
dividend is payable in cash as a 'Dividend' (as defined in the South African
Income Tax Act, 58 of 1962, as amended) by way of a reduction of income
reserves. The dividend withholding tax and the information contained in this
paragraph is only of direct application to shareholders registered on the
Johannesburg register, who should direct any questions about the application
of the new dividend withholding tax to Computershare Investor Services (Pty)
Limited, Tel: +27 11 373-0004.
From the commencement of trading on Thursday 22 November 2012 until the close
of business on Friday 7 December 2012, no transfers between the London and
Johannesburg registers will be permitted, and from Monday 3 December 2012
until Friday 7 December 2012, no shares may be dematerialised or
rematerialised, both days inclusive.
Directors' responsibility for financial reporting
This statement, which should be read in conjunction with the independent
review report of the auditors set out below, is made to enable shareholders to
distinguish the respective responsibilities of the directors and the auditors
in relation to the consolidated interim financial information, which the
directors confirm has been prepared on a going concern basis. The directors
consider that the group has used appropriate accounting policies, consistently
applied and supported by reasonable and appropriate judgements and estimates.
A copy of the interim report of the group is placed on the company's website.
The directors are responsible for the maintenance and integrity of the
statutory and audited information on the company's website. Information
published on the internet is accessible in many countries with different legal
requirements. Legislation in the United Kingdom governing the preparation and
dissemination of the financial statements may differ from legislation in other
The directors confirm that this condensed set of financial statements has been
prepared in accordance with IAS 34 as adopted by the European Union, and the
interim management report herein includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8 of the Disclosure and Transparency Rules
of the United Kingdom's Financial Services Authority.
At the date of this statement, the directors of SABMiller plc are those listed
in the SABMiller plc Annual Report at 31 March 2012 with the exception of
Meyer Kahn and Rob Pieterse, who retired from the board, and Alan Clark, who
was appointed to the board, all with effect from 26 July 2012. A list of
current directors is maintained on the SABMiller plc website:
On behalf of the board
21 November 2012
INDEPENDENT REVIEW REPORT OF CONSOLIDATED INTERIM FINANCIAL INFORMATION TO
We have been engaged by the company to review the condensed set of financial
statements in the interim report for the six months ended 30 September 2012,
which comprises the consolidated income statement, consolidated statement of
comprehensive income, consolidated balance sheet, consolidated cash flow
statement, consolidated statement of changes in equity and related notes. We
have read the other information contained in the interim report and considered
whether it contains any apparent misstatements or material inconsistencies
with the information in the condensed set of financial statements.
The interim report is the responsibility of, and has been approved by, the
directors. The directors are responsible for preparing the interim report in
accordance with the Disclosure and Transparency Rules of the United Kingdom's
Financial Services Authority.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this interim report has been
prepared in accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union.
Our responsibility is to express to the company a conclusion on the condensed
set of financial statements in the interim report based on our review. This
report, including the conclusion, has been prepared for and only for the
company for the purpose of the Disclosure and Transparency Rules of the
Financial Services Authority and for no other purpose. We do not, in producing
this report, accept or assume responsibility for any other purpose or to any
other person to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity' issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the interim report
for the six months ended 30 September 2012 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted
by the European Union and the Disclosure and Transparency Rules of the United
Kingdom's Financial Services Authority.
21 November 2012
CONSOLIDATED INCOME STATEMENT
for the six months ended 30 September
Six months Six months Year
ended 30/9/12 ended 30/9/11 ended 31/3/12
Unaudited Unaudited Audited
Notes US$m US$m US$m
Revenue 2 11,370 10,539 21,760
Net operating expenses (9,508) (8,930) (16,747)
Operating profit 2 1,862 1,609 5,013
Operating profit before 1,989 1,784 3,987
Exceptional items 3 (127) (175) 1,026
Net finance costs (379) (203) (562)
Interest payable and similar (723) (423) (1,093)
Interest receivable and 344 220 531
Share of post-tax results of 2 796 635 1,152
associates and joint ventures
Profit before taxation 2,279 2,041 5,603
Taxation 4 (598) (556) (1,126)
Profit for the period 1,681 1,485 4,477
Profit attributable to 91 103 256
Profit attributable to owners 5 1,590 1,382 4,221
of the parent
1,681 1,485 4,477
Basic earnings per share (US 5 100.1 87.4 266.6
Diluted earnings per share (US 5 99.1 86.8 263.8
All operations are continuing.
The notes are an integral part of this condensed interim financial
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 September
Six months Six months
ended 30/9/12 ended 30/9/11 31/3/12
Unaudited Unaudited Audited
Notes US$m US$m US$m
Profit for the period 1,681 1,485 4,477
Other comprehensive income:
Currency translation differences on (318) (1,072) 136
foreign currency net investments
(Decrease)/increase in foreign
currency translation reserve during (318) (1,087) 153
Recycling of foreign currency - 15 (17)
translation reserve on disposals
Net actuarial losses on defined - - (9)
Net investment hedges:
- Fair value gains/(losses) arising 15 184 (1)
during the period
Cash flow h
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