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SABMiller PLC - Interim Results

RNS Number:9189T
SABMiller PLC
10 November 2005





                                    SABMILLER PLC


                                INTERIM ANNOUNCEMENT


Ref: 20/2005



                 Further growth demonstrates strength of our global footprint



London and Johannesburg, 10 November 2005. SABMiller plc today announces its
first IFRS results for the six months ended 30 September 2005. All comparatives
have been appropriately restated. Highlights are:




                                                               Half year   Half year                    Full year
                                                                    2005        2004                   March 2005
                                                                    US$m        US$m    % change             US$m

Group revenue (including share of associates' revenue)             7,901       7,178         10            14,543

Revenue                                                            7,051       6,443          9            12,901


EBITA (1)                                                          1,264       1,130         12             2,389


Profit before tax (including net exceptional credits in the        1,126       1,324        (15)            2,552
prior year)


Adjusted profit before tax (2)                                     1,192       1,039         15             2,221


Adjusted earnings (3)                                                667         572         17             1,224


Adjusted earnings per share (3)

- US cents                                                          52.7        47.9         10             101.0

- UK pence                                                          28.9        26.4         10              54.7

- SA cents                                                         340.5       311.1          9             628.2


- on a comparable basis (3) (4) (US cents)                          52.7        46.3         14              98.4


Basic earnings per share (US cents)                                 51.3        71.8        (29)            125.5


Interim dividend per share (US cents)                               13.0        12.0          8


Cash generated from operations                                     1,289       1,262          2             2,792



  * Group lager beer volumes up 10.5% to 91 million hls, organic growth of
5.6%
  * Group EBITA margin further improved to 16.0%
  * Strong South Africa Beverages performance
  * Miller performed satisfactorily in an intensely competitive environment
  * Europe benefited from strong contributions in Poland and Czech
  * Good contribution from Africa and Asia driven by China, Mozambique and
Tanzania
  * Major transaction involving Bavaria in South America completed on 12
October



                                                                                     Organic, constant
                                                      2005              Reported              currency
                                                     EBITA                growth                growth
                                                      US$m                     %                     %
North America                                         286                    (5)                   (5)
Central America                                        32                   (12)                   (8)
Europe                                                379                    27                    16
Africa and Asia                                       209                    17                    14
South Africa: Beverages                               375                    19                    19
South Africa: Hotels and Gaming                        38                    29                    29
Corporate                                             (55)                    -                     -
Group                                               1,264                    12                     9



Statement from Graham Mackay, Chief executive


"The group has delivered further increases in volumes and earnings in the first
half, reaffirming our strong growth profile within the global brewing industry.


"Despite the intensely competitive pricing environment in the US this summer,
Miller has continued to invest in its brands and its organisation to strengthen
its base for sustainable future growth.  South Africa's strong contribution has
been supported by further operational improvements as well as robust consumer
growth in the local economy.


"The group has successfully secured a controlling interest in the leading Andean
brewer Grupo Empresarial Bavaria, which delivers a new platform for growth on
the South American continent."


(1) EBITA comprises operating profit (US$1,103 million) before amortisation of
brands (US$1 million) and exceptional items (US$Nil million) and includes share
of post-tax results of associates  (US$100 million) together with exceptional
items, amortisation of brands, interest, tax, and minority interests (US$60
million).

(2) Adjusted profit before tax comprises EBITA less net interest payable (US$77
million) less share of associates' interest (US$8 million) adjusted for the
early redemption penalty in respect of the private placement notes (US$13
million).

(3) The calculation of adjusted earnings and earnings per share is given in note
5.

(4) 2004 figure adjusted for conversion of convertible bonds.  Further details
are given in note 5.


Enquiries:

                               SABMiller plc                           Tel: +44 20 7659 0100

Sue Clark                      Director of Corporate Affairs           Tel: +44 20 7659 0184

Gary Leibowitz                 Vice President, Investor Relations      Mob: +44 7717 428540

Nigel Fairbrass                Head of Media Relations                 Mob: +44 7799 894265

Philip Gawith                  The Maitland Consultancy Ltd            Tel: +44 20 7379 5151

A live webcast of the management presentation to analysts will begin at 9.30am
(GMT) on 10 November 2005. This announcement, a copy of the slide presentation
and video interviews with management are available on the SABMiller plc website
at www.sabmiller.com . Video interviews with management can also be found at
www.cantos.com. High resolution images are available for the media to view and
download free of charge from www.vismedia.co.uk Copies of the SABMiller B-roll
are available for accredited journalists and news producers.  Contact Lucy
Charlesworth or Nick Spears at Medialink on Tel: +44 20 7554 2700


Registered office: SABMiller House, Church Street West, Woking, Surrey  GU21 6HS

Telephone:    +44 1483 264000
Telefax:      +44 1483 264103



CHIEF EXECUTIVE'S REVIEW  (continued)                                          3


Business review


A good performance was achieved against the comparable prior period's high base,
reflecting SABMiller's access to growth in the global beer market.  Our
portfolio of developing and developed market operations generated organic growth
of 5.6% in lager volumes.  EBITA rose 12% (9% on an organic, constant currency
basis), benefiting from both volume and value growth.  The group EBITA margin
increased to 16%, 20 basis points higher than in the comparable prior period.


During the period we announced a major investment in South America, which was
completed on 12 October, obtaining a controlling interest in the leading Andean
brewer, Grupo Empresarial Bavaria.  In addition, we increased our interest in
India through acquiring the balance of our joint venture; and our Chinese
associate China Resources Snow Breweries Ltd (CR Snow) has continued to
consolidate its presence in the world's largest beer market.


The South Africa Beverages division has recorded strong EBITA growth and the
Africa and Asia business also delivered further good results.  Europe
contributed a particularly pleasing performance.  In North America the results
from Miller Brewing Company reflect higher input costs and an increasingly price
competitive trading environment.


Group beverage volumes totalled 110 million hectolitres (hls), a 10.4% increase
on the comparable six-month period. Lager beer volumes were up 10.5% to 91
million hls, with organic growth of 5.6%. Group revenue, including share of
associates, increased by almost 7% on an organic, constant currency basis, and
on a reported basis at US$7,901 million was 10% ahead of last year.


Reported EBITA of US$1,264 million (up 12%), reflects strong operating
performances with improved pricing and mix in most of our key markets.  The
reported results include currency benefits from the Polish zloty and Czech
koruna, whilst the average rand rate was very similar to that in the same period
of the prior year.  On an organic, constant currency basis, EBITA increased 9%.
Adjusted earnings are up by 17%, to US$667 million.  Adjusted earnings per share
of 52.7 US cents have grown by 10% for the first six months on a reported basis,
and are up 14% on a comparable basis, the calculation of which assumes the
redemption of the group's convertible bonds on 1 April 2004.


An interim dividend of 13 US cents per share, an 8% increase, will be paid to
shareholders.


North America


Over the period, the Miller business continued to invest in its brands and its
organisational capabilities, despite rising input costs and an intensely
competitive summer pricing environment which contributed to a 5% decline in
EBITA.   While domestic sales to retailers (STRs) recorded a small decline
compared to the prior year, Miller competed effectively against the other major
domestic brewers in the face of aggressive price discounting.  Results continued
to benefit from the strength of its flagship brand, Miller Lite, which
demonstrated improved brand equity, particularly in the on-premise channel, and
delivered mid-single-digit overall sales growth on top of double-digit growth in
the comparable period last year.


Central America


Group revenue for the period grew by 3% on a constant currency basis, reflecting
improved pricing for beer across the business and for carbonated soft drinks
(CSDs) in Honduras.  The decline in EBITA, against last year's strong recovery
for the same period reflects adverse economic conditions and in El Salvador,
excise changes, together with lower aggregate CSD pricing.




CHIEF EXECUTIVE'S REVIEW  (continued)                                          4


Europe


Our Europe business performed well over the important summer period.  Organic,
constant currency EBITA increased by 16% and organic volumes were ahead by 4%,
despite unseasonable rainfall and localised flooding in July and August.  Strong
growth in Poland, where volumes over the last twelve months have exceeded 11
million hls, was coupled with more moderate growth in the Czech Republic, where
the Plzensky Prazdroj business grew volumes against a declining market.  Russia
volumes grew 6% and satisfactory progress is being made in Italy where Birra
Peroni's branded volumes grew by 2%.



Africa and Asia


Africa produced a further good set of results in the half year, reflecting
excellent trading in Tanzania and Mozambique, partially offset by tougher
conditions in Botswana where currency devaluation and rising inflation impacted
consumer demand across the market.


In China, our associate, CR Snow, generated organic volume growth of 16%, well
ahead of the market, and our leading national brand, Snow, grew 51%.  Together
with the impact of acquisitions made in the previous financial year, CR Snow's
share of the Chinese market has risen to 13%.



South Africa Beverages


Beer and soft drink volumes continued their positive growth trends benefiting
from increased marketing and sales activity, a mild winter and continued strong
economic conditions.


Comparable beer volumes grew by almost 3%, with the premium segment recording
strong growth.  The organisation continues to develop its capability to build
local premium and international brands in the market and over the period our
premium portfolio achieved strong double-digit growth compared to the same
period last year.



South America


In preparation for the integration of our South American business, a new
regional management team is being established in Bogota. Whilst the Bavaria
business will be included for five and a half months in the second half of this
financial year, our initiatives - to develop differentiated brand portfolios,
marketing and price management strategies, and reduce operating costs - are only
expected to start taking effect from the following financial year.



Outlook


The group will continue to benefit from its exposure to attractive growth
markets.  In the second half of the financial year, increasing input costs from
higher commodity prices, ongoing investment in marketing and in our business
infrastructure, and tough currency comparatives are expected to have an effect
on our results.  Nevertheless, the general outlook remains positive and we
expect to deliver growth in comparable adjusted earnings per share for the year.



CHIEF EXECUTIVE'S REVIEW  (continued)                                                                           5



Operational reviews


North America


                                                                          2005          2004     % change
Financial summary                                                         US$m          US$m

Group revenue                                                            2,662         2,615            2
EBITA £                                                                    286           301           (5)
EBITA margin (%)£                                                         10.7          11.5

Sales volumes (hl 000s)
Lager - excluding contract brewing                                      25,655        25,427            1
Lager - contract brewing                                                 5,506         5,562           (1)
Carbonated soft drinks (CSDs)                                               42            46           (9)

Lager - domestic sales to retailers (STRs)                              23,976        24,041            -


£ Before exceptional profit on the sale of Tumwater brewery of US$4 million in
2004


Miller Brewing Company faced significant industry headwinds as pressure from an
intensely competitive pricing environment was exacerbated by rising input costs
and share gains by the spirits and wine industries in the total alcoholic
beverage market.  Despite these challenges, Miller's  focus on the fundamentals
of brand-building, sales and distribution execution, cost and productivity
improvement, and its organisational capability ensured that it remains on track
to strengthen its base for future growth.

Industry sales to retailers (STRs) for the first half of the financial year were
largely unchanged as moderately negative domestic beer STRs were offset by
strong growth in the import and craft beer segments.  Total US industry domestic
shipments to wholesalers (STWs) for the same period decreased by an estimated
0.4%.

Miller's US domestic STRs decreased by 0.3% in the reporting period, decreasing
by 1.5% in the second quarter.  Domestic STWs rose by 1.1% in the first half,
cycling a reduction in wholesaler inventories during the comparable period in
the prior year.  Total volumes including contract brewing for the six month
period increased by 0.6% to 31.2 million hls. Export sales continued to be
depressed by difficult trading conditions in key markets, and contract brewing
volumes were down by 1%.

While overall STRs were down due to price competition and continued softness of
the Miller Genuine Draft brand, Miller competed effectively against the other
major domestic brewers in the face of aggressive price discounting.  Results
benefited from the strength of Miller's flagship brand, Miller Lite, which
showed significant brand equity in delivering a mid-single digit increase in
STRs cycling last year's double-digit growth in the comparable period.  Miller
Lite continues to show momentum despite unprecedented competitor discounting
levels.

Marketing investment and operational focus in the economy portfolio have
resulted in sales increases in the Milwaukee's Best franchise, and initial
indications are that new advertising for Miller High Life will positively impact
brand performance.  Miller Genuine Draft will be re-positioned and re-launched
during the second half of the year.

Group revenue grew by 1.8% to US$2,662 million during the first half versus the
prior period, and within this US domestic revenue excluding contract brewing
grew by 1.7%. This increase is the result of earlier price increases partly
offset by extensive price promotions.  Whilst the effect of brand mix was
positive following the improvement in Miller Lite sales, geographic and package
mix were negative. Contract brewing revenues reduced ahead of volume declines as
a result of unfavourable mix impacts.




CHIEF EXECUTIVE'S REVIEW  (continued)                                          6



Costs of goods sold increased by more than the US Consumer Price Index, driven
by commodity and fuel price increases.  Furthermore, increased investments were
made in brand marketing, specialised sales staff, recruitment, information
systems, health care and retirement funding.  Savings from other general costs
and continued improved brewery efficiencies during the period only partially
offset these increases.

EBITA for the period of US$286 million was 5% lower than the prior year's US$301
million, driven by the well-publicised US pricing environment and higher input
costs of fuel, glass and aluminium. As a result, EBITA margin decreased to
10.7%.

Miller continues to progress in all four areas of its three-year turnaround
strategy.  The improved marketing capabilities and brand-building approach that
has helped improve the Miller Lite brand equity measures have been applied to
other key brands, most importantly Milwaukee's Best and Miller High Life.
Pilsner Urquell and Peroni Nastro Azzurro will also receive greater focus with
the enhancement of the specialised sales force.  As the turnaround period nears
completion, improved alignment with distributors, increased rigour and
discipline in local market planning, and the activation of enhanced marketing
activities will drive further improvements in sales and distribution execution.
Miller will continue to invest substantial marketing resources against its core
brands to build a sustainable portfolio of growing brands across all major
segments.  Finally, steady progress in building organisational capability will
continue as performance management becomes further entrenched and new talent and
personnel development initiatives are introduced into the organisation.

Profitability in the second half of the year will continue to be impacted by the
effects of the competitive pricing environment and higher raw material and
energy costs together with further investments in brand and local marketing and
sales force improvements.



CHIEF EXECUTIVE'S REVIEW  (continued)                                          7



Central America


                                                                           2005          2004     % change
Financial summary                                                          US$m          US$m

Group revenue                                                              262           260            1
EBITA                                                                       32            36          (12)
EBITA margin (%)                                                          12.2          13.9

Sales volumes (hl 000s)
Lager                                                                      826           891           (7)
Carbonated soft drinks (CSDs)                                            2,991         2,886            4
Other beverages                                                          1,451         1,410            3



During the period under review disposable incomes in both countries continued to
be negatively impacted by fuel price increases and consequent increases in
electricity and transport costs.  Further progress has been made across both
countries in improving execution through customer focused channel marketing and
growing the worth-more lager segment.


Lager volumes declined by 7% across the business, with growth in Honduras being
more than offset by a decline in El Salvador, driven mainly by the
discriminatory increases in excise taxes in January 2005. The entry of a
competitor into El Salvador also eroded volumes and share, but to a lesser
extent than was anticipated. Improved revenue management through brand
segmentation, enhanced brand equity and portfolio management have yielded
benefits, and supported price increases across the business.


Aggregate CSD volumes increased by 4% reflecting a relatively stable CSD market
share in Honduras, and increased volumes in El Salvador.  Selective price
increases were taken in Honduras to improve the profitability of the CSD market,
whilst in El Salvador we have introduced lower-priced offerings in selected
market segments to compete on a price basis with competitors in these market
segments.


Group revenue for the period grew by 3% on a constant currency basis, reflecting
improved pricing for beer across the business and for CSDs in Honduras.  The
decline in EBITA (8% in constant currency terms) against last year's strong
recovery principally reflects the contraction of the El Salvador beer market
following the excise tax changes and the impact of lower aggregate CSD pricing.


We will continue our efforts to stimulate further growth in beer volumes and a
gradual recovery of the CSD profit pool.




CHIEF EXECUTIVE'S REVIEW  (continued)                                          8



Europe


                                                                        2005          2004     % change
Financial summary                                                       US$m          US$m

Group revenue                                                          1,894         1,617           17
EBITA £                                                                  379           299           27
EBITA margin (%)£                                                       20.0          18.5

Sales volumes (hl 000s)
Lager                                                                 20,813        19,797            5
Lager organic                                                         20,667        19,797            4


£ Before exceptional Naples brewery closure costs of US$23 million in 2004.



Europe has delivered an excellent performance in the first half of the year,
with share gains in most markets and organic EBITA growth of 16% in constant
currency, boosted in US dollar terms by currency benefits from the Polish zloty
and the Czech koruna. Following organic volume growth of 6% in the first
quarter, the peak months of July and August were characterised by unseasonable
rainfall and localised flooding. This impacted second quarter volumes, which
grew 3% organically, bringing organic growth in the first half to 4% overall.
Worthmore brands were ahead by 6% regionally, while Poland's total volumes
surged 12%. EBITA margins were further boosted by productivity and improved
sales mix, adding 150 basis points.


The strong volume growth in Kompania Piwowarska (KP) in Poland exceeded the
industry growth of 5%, reflecting successful brand and channel initiatives, and
our volumes over the last 12 months have exceeded 11 million hls. Together with
the benefits from volume growth, enhanced productivity has resulted in healthy
margin improvement. KP is again the market leader with share gains of 2% year on
year, and commands an estimated 37% market share as at September.  Brands
Tyskie, Zubr and Lech now represent the top three beer brands in Poland, with
Tyskie having won the coveted 2005 BIIA (Burton upon Trent) Grand Champion Award
for the second time.  Zubr, Lech and Redds have all shown growth in excess of
25% over the last twelve months, with overall sales mix improving.  Price
competition is intense and industry prices have reduced by 3% in real terms with
KP achieving selective price increases. Channel initiatives continue to focus on
increasing the off-premise availability of cold beer, developing KP's leading
key accounts' presence despite greater discounting of competitor brands, and
continuing to build share in the on-premise segment, which rose by over three
percentage points to some 39% in the first half of the year.  To support this
rapid growth, further capacity is being installed at the Poznan and Bialystok
breweries.


In Czech the domestic beer industry recorded a decline of 1%, reflecting higher
summer rainfall than in the prior year, and against this market performance
Plzensky Prazdroj grew by 1%. The Pilsner Urquell brand has grown 1%
domestically, with domestic focus on key accounts and further on-premise
availability.  Improving mix resulting from growth in the worthmore and
mainstream segments, together with real price gains, increased net revenue per
hectolitre by 5%.  These positive developments, along with cost benefits from
centralised procurement, have resulted in satisfactory profit growth.  On 25
July 2005 the group announced that it had initiated a buy-out process to acquire
the remaining 3.1% interest held by minority shareholders in the group's Czech
operating company, Plzensky Prazdroj a.s. This transaction has yet to complete.


Our Russian operations continued to perform favourably with volume growth of
over 6%. The performance was particularly strong in the important Moscow area,
following accelerated cooler placement in retail and on-premise trade outlets.
We benefited from strong growth in the worthmore sector, led by Kozel which grew
by 54% and is now Russia's leading licensed brand.  Multi-pack offerings were
introduced for Miller Genuine Draft (MGD), Redds and Zolotaya Botchka, with
Redds growth of almost 100%.  According to AC Nielsen, SABMiller now markets
three (MGD, Holsten and Kozel) of the top four licensed brands in Russia on both
a volume and value basis. Additional local supply lines have reduced input costs
and assisted margin growth.



CHIEF EXECUTIVE'S REVIEW  (continued)                                          9


Birra Peroni's branded volumes have grown by 2% in the Italian market, which is
level year on year. Key brands Peroni and Nastro Azzurro have performed
particularly well and both show volume growth of over 5%. Birra Peroni increased
pricing on its economy private label brands in conjunction with its deliberate
strategy to significantly reduce these volumes, which fell nearly 40% in the
period. The combination of mainstream and premium growth, combined with the
economy segment decline, has produced a better sales mix with net revenue per
hectolitre increasing by 8%, and production efficiencies have been improved.
Export volumes continue their improving trend with the United Kingdom performing
particularly well showing 25% growth on the back of the new packaging launch for
the international brand Peroni Nastro Azzurro. In line with its premium-focused
strategy, marketing investment has increased, particularly for the core domestic
and international brands. Overhead productivity has benefited from the
rationalisation of production which took place in the prior year.


Ursus Breweries in Romania has produced a good performance with 6% organic and
14% reported volume growth overall and 56% growth for the Timosoreana Lux brand
assisted by its increased distribution footprint. Peroni Nastro Azzurro was
launched in the worthmore segment while the Ciucas brand was successfully
launched in PET packs nationally, creating a full brand portfolio alongside
Ursus and Timosoreana Lux. Capacity expansion and upgrading continues and should
be finalised by May 2006.


Our Hungarian operations have shown 4% volume growth in a market that has
declined 4% in the first six months. This has been achieved through renewed
focus on Arany Aszok, our largest brand, which has grown 7%. International
worthmore brands Pilsner Urquell and MGD have grown volume sharply, albeit from
a low base. Significant price competition continues in the industry while lower
input costs assisted by favourable pack mix have improved margins.


In the Canary Islands the market declined by around 2% with weaker summer demand
and lower tourism. We have maintained our value share of the market at 57%. The
restructuring plan announced in the prior year is on plan.


Volumes at our Slovakian operations have declined by 1% in a market showing a
decline of 4% while price competition remains fierce. The acquisition of Topvar
a.s announced on the 9 May 2005 remains under review by the Slovakian
Anti-Monopoly office.


In the second half of the year, growth will be impacted by the cycling of the
prior year's earnings boost from Easter.  Investments in sales, marketing and
manufacturing will also continue in our major markets.  Together with a
challenging pricing environment and a more modest improvement in sales mix, this
is expected to affect margins and profitability.



CHIEF EXECUTIVE'S REVIEW  (continued)                                         10


Africa and Asia


                                                                       2005          2004      % change
Financial summary                                                      US$m          US$m

Group revenue (including share of associates' revenue)                1,065           870            22
EBITA £                                                                 209           179            17
EBITA margin (%) £                                                     19.7          20.6

Sales volumes (hl 000s)*
Lager                                                                31,156        23,851            31
Lager organic **?c=8734                                              27,268        23,851            14
Carbonated soft drinks (CSDs)                                         1,939         2,000            (3)
Other beverages                                                       7,142         6,113            17


£ Excludes exceptional profit of US$96 million on the disposal of the group's
interest in Harbin Brewery Group Limited (Harbin) in 2004

* Castel volumes of 6,826 (2004: 6,397) hls 000s lager beer, 4,382 (2004: 4,215)
hls 000s carbonated soft drinks and 1,740 (2004: 1,337) hls 000s other beverages
are not included.

**?c=8734 During 2004, the management responsibility for sales to Angola was
transferred from South Africa: Beverages to the Africa and Asia division. On a
pro forma comparable basis, the organic growth in lager volume in Africa and
Asia would have been 13% compared to the same period in the prior year.


Africa


Our business in Africa delivered further growth in the first six months
following three years of outstanding results, and reported lager volumes
increased by almost 6%.  This lager volume performance was underpinned by
excellent trading in Tanzania, with growth of 7% led by the Kilimanjaro brand,
and Mozambique with growth of 12% led by the 2M and Laurentina brands.  In both
Tanzania and Mozambique, favourable economic conditions and improved
availability through distribution initiatives drove this success.  In Uganda the
launch of Eagle Extra, a sorghum based lager beer, resulted in high double-digit
volume growth and market share gains, and in Zambia results were led by market
share gains in the traditional beer sector, with volume growth of 20%.  A 12.5%
currency devaluation in Botswana, with resulting rising inflation and fuel
prices, dampened consumer demand across the beer and soft drink product range,
while beer volumes also declined in Zimbabwe.


CSD volume growth moderated following an entry by a competitor in the economy
segment in Angola and continuing tough economic conditions in Zimbabwe, partly
offset by further growth in Zambia.


Group revenue in Africa was supported by inflation-led pricing growth.  Volume
and pricing growth and selected brand and package mix improvements more than
offset fuel and distribution cost increases, and in conjunction with
productivity gains, these resulted in good EBITA increases in the period.
Higher organic, constant currency EBITA was achieved in most African countries,
but the reported results were negatively impacted by currency devaluations in
Botswana and other countries. The EBITA contribution from Castel reflected solid
growth for the period.


Lager volumes for Castel grew 7% compared to the first half of the prior year,
with strong growth in Angola, Gabon and Ethiopia. Within these volumes, our
Castle Milk Stout brand produced under licence in Cameroon continues to grow in
a competitive environment.


Asia


In China, organic lager volume growth of 16% outperformed the market, with the
Snow brand growing by 51% and gaining further market share in the period. Total
volumes grew 31% following the acquisitions in the previous financial year. All
regions posted strong organic volume growth for the period including the North
East where competitive pressures continue. This growth reflects the success of
initiatives to strengthen and simplify the route to market, a significant
increase in brand marketing investment and a focus on Snow as the lead brand
within the portfolio



CHIEF EXECUTIVE'S REVIEW  (continued)                                         11



In addition to volume growth, turnover has gained from continued modest and
selective price increases in many regions.  Mix has improved and includes the
increased contribution made by the sales of the Snow brand.  This, together with
more stable input costs and further operational efficiencies, contributed to
good double-digit organic growth in EBITA.  The acquisitions that we have made
during the past year, including that in southern Jiangsu, are benefiting from
greater efficiencies with resulting improvements in profitability.


In India, we acquired the balance of our joint venture with Shaw Wallace
Breweries in late May 2005, from which date the results have been consolidated.
Trading compared with the same period in the prior year has shown improvement
with volumes up 12% on a pro forma basis. Regulatory reform remains a key issue
in liberalising the industry, which is poised for further growth in line with
strong economic fundamentals.



CHIEF EXECUTIVE'S REVIEW  (continued)                                         12



South Africa: Beverages


                                                                       2005            2004          % change
Financial summary                                                      US$m            US$m

Group revenue (including share of associates' revenue)                1,864           1,684                11
EBITA                                                                   375             315                19
EBITA margin (%)                                                       20.1            18.7

Sales volumes (hl 000s)
Lager                                                                12,153          11,992                 1
Carbonated soft drinks (CSDs)                                         5,922           5,384                10
Other beverages                                                         492             394                25



Beer and soft drink volumes continued their positive growth trends during the
six months to September, despite the absence of an Easter period in the current
financial year. The growth was driven by the continued strength of the economy,
a mild winter and targeted marketing and sales activity.


A programme is continuing to establish and leverage benefits from the
combination of our beverage businesses in South Africa. ABI now trades as the
Soft Drink division of The South African Breweries Limited (SAB Limited).


Beer volumes grew by almost 3% on a pro forma comparable basis, having adjusted
for the transfer of management responsibility for exports to Angola to the
Africa division during 2004. Within this performance, the premium portfolio
continues to show strong growth with Miller Genuine Draft, Castle Lite and
Amstel achieving double digit growth versus the comparable six-month period in
2004.


The organisation continues to increase its capability to build both local
premium and international brands in the market. The introduction of bulk packs
in October for both Miller Genuine Draft and Brutal Fruit will continue to
provide consumers with more choice, enhancing availability and value for money
and an accessible premium offering.


In line with our strategy to improve market penetration and with increased
liquor licensing in two of the major areas of South Africa, the delivered
customer base increased by 10% over the past six months.


CSD volumes have benefited from the favourable economic environment, which has
continued from the prior year into the first half of the current year, with ABI
sales volume ending 10% above prior year. Significant consumer promotional
activity during the winter months, improved market execution and distribution
reach, price restraint and favourable weather conditions throughout the trading
period ensured that sales volume accelerated from a buoyant base.  Although
still a relatively small contribution to sales, non-carbonated beverage volume
performed exceptionally well, contributing to the excellent volume growth.


The increased sales volumes, together with selective price increases in both
beer and soft drinks and an improved mix with higher sales of premium products,
resulted in an 11% increase in group revenue. Both beer and soft drink
categories performed well, contributing to strong EBITA growth and improved
margins.  EBITA grew by 19% in constant currency, benefiting from increased
revenue, lower commodity prices (including benefits from favourable effective
exchange rates), and continued focus on cost productivity. In addition, EBITA
improved as capacity was better utilised during the winter months.  These
factors combined to increase the EBITA margin by 140 basis points to 20.1%.



CHIEF EXECUTIVE'S REVIEW  (continued)                                         13


SAB Limited's reputation as one of South Africa's leading companies, has been
further confirmed in a series of recent awards.  The business was voted "most
admired company in South Africa" in a poll of CEOs and top business executives
and the "best company to work for" in a survey carried out by Finance Week. In
the Sunday Times/Markinor poll, SAB Limited was voted second most favourite
brand in South Africa, the only corporate brand that is not also a product brand
to be recognised in the top ten.  SAB Limited's product brand portfolio
dominated the top ten brands in the same survey.


The process of provincial licensing of the liquor trade continues to progress
slowly. Temporary liquor permits have been issued to previously unlicensed
outlets, a significant proportion of which are investing to upgrade their
outlets to meet formal licensing requirements and enhance the consumer
experience.  In line with our intention to actively support the normalisation of
the retail liquor industry we have provided commercial training to almost 4,000
licensees during the last six months, at a cost of some  US$2 million.


In line with the BEE (Broad Based Black Economic Empowerment) Act, the liquor
industry has been developing a liquor charter. The completion of the charter is
dependent on Government finalising the codes of good conduct. We are led to
believe that these codes will be published later this year, following which the
liquor charter will be completed. We continue to successfully progress our
internal BEE agenda with spend on preferential procurement up by 37% on the
comparable period last year and the first two franchise distribution centres
also opening during the period.  These centres have been created to enable
direct delivery to an increasing customer base and positively improve enterprise
development in the country.


Appletiser


Total volumes rose 7% following on from significant growth in the prior period.
The business continues to benefit from marketing initiatives including the new
bottle styles introduced in July 2004 and the good economic conditions.


Distell


Volumes have increased by 1.8%, with South African volumes up 1%, consistent
with muted growth experience in the South African wine and spirit industry. The
business recognised strong improvements in performance due to enhancements in
revenue, mix, and logistics.



South Africa: Hotels and Gaming


                                                                        2005         2004       % change
Financial summary                                                       US$m         US$m

Group revenue (including share of associates' revenue)                   154          132             17
EBITA £                                                                   38           29             29
EBITA margin (%) £                                                      25.0         22.1

Revpar (US$) *                                                         52.58        46.07             14


£ Excludes share of associates' exceptional profit of US$11 million on the
disposal of property, plant and equipment in 2004.

* Revenue per available room.



The Tsogo Sun group reported a strong first half year performance with our share
of EBITA for the period being US$38 million, an increase of 29% over the
comparable period. The beneficial effects of low interest rates, low inflation
and growth in household spending have all contributed to the good results
achieved by both Gaming and Hotels divisions. In particular, the gaming industry
has remained buoyant during the past half year, and within this Tsogo Sun's
major casinos maintained or grew their share and achieved operational
efficiencies. Good occupancy levels have been achieved in the group's hotels,
with most of the growth occurring in the higher-priced sectors of the market,
leading to the increased Revpar. These factors combined to produce an
improvement in the group EBITA margin to 25%, 290 basis points higher than
reported for the comparable period.


CHIEF EXECUTIVE'S REVIEW  (continued)                                         14



Financial review


New accounting standards and restatements


The group previously prepared its financial statements under United Kingdom
Generally Accepted Accounting Principles (UK GAAP). From 1 April 2005, SABMiller
plc is required to adopt the International Financial Reporting Standards (IFRS)
endorsed by the European Union (EU) and has made available comparative financial
information for the year ended 31 March 2005 prepared on a basis consistent with
the IFRS accounting policies as set out in note 9 to this interim financial
report (www.sabmiller.com/SABMiller/Financial+centre/ - Restatement of Financial
Information under International Financial Reporting Standards). The group's
accounting policies in note 9 detail certain permitted exemptions from the full
requirements of IFRS which the group has elected to take in adopting IFRS for
the first time.


IAS 34 Interim Financial Reporting has not been applied in preparing this report
due to the continual changes to timing and content of the IFRSs and due to
certain elements which the group expects to use having not been endorsed by the
EU at the date of this report, principally in relation to the proposed
amendments to IAS 19 Employee Benefits.  This report has been prepared based on
accounting standards the group expects to apply for the 31 March 2006 annual
report and not on the accounting standards in place at the time of issuing this
report.


In accordance with the exemption available in IFRS 1, the group has applied IAS
32 Financial Instruments: Disclosure and Presentation and IAS 39 Financial
Instruments: Recognition and Measurement with effect from 1 April 2005.  This
has resulted in increases in total assets of US$6 million and total liabilities
of US$1 million, giving an increase in net assets of US$5 million, as at 1 April
2005. The impact includes adjustments to the carrying value of borrowings where
there was a fair value hedge and an increase in borrowings reflecting the
reclassification of interest accruals, previously shown as creditors under UK
GAAP. Further details of the impact of the adoption of these standards are given
in note 8.


Segmental analysis


The group's operating results are set out in the segmental analysis of
operations, and the disclosures accord with the manner in which the group is
managed. SABMiller believes that the reported profit measures - before
exceptional items and brand amortisation, and including associates on a gross
operating profit basis (i.e. before interest, tax and minority interests) -
provide additional information on trends to shareholders and allow for greater
comparability between segments. Segmental performance is reported after the
specific apportionment of attributable head office service costs.


This announcement includes segmental results and commentaries for South Africa:
Beverages. This follows the acquisition in December 2004 of all of the shares in
ABI which the group did not own, and the commencement of a programme of work to
establish and leverage the benefits from the combination of our beverage
businesses in South Africa. South Africa: Beverages combines two previously
separate business segments: Beer South Africa and Other Beverage Interests.


Presentation of volumes


In the determination and disclosure of reported sales volumes, the group
aggregates 100% of the volumes of all consolidated subsidiaries and its equity
accounted associates, other than associates where the group exercises
significant influence but primary responsibility for day to day management rests
with others (such as Castel and Distell). In these latter cases, the financial
results of operations are equity accounted in terms of IFRS but volumes are
excluded.  Contract brewing volumes are excluded from total volumes; however
revenue from contract brewing is included within group revenue.  Reported
volumes exclude intra-group sales volumes.




CHIEF EXECUTIVE'S REVIEW  (continued)                                         15



Organic, constant currency comparisons


The group has made some additional disclosures of its results on an organic,
constant currency basis, to analyse the effects of acquisitions net of disposals
and changes in exchange rates on the group's results.  Organic results exclude
the first twelve months' results of acquisitions and the last twelve months'
results of disposals. Constant currency results have been determined by
translating the local currency denominated results for the six months ended 30
September 2005 at the exchange rates for the comparable period in the prior
year.


Acquisitions


On 27 May 2005 the group announced that its Indian subsidiary, MBL Investments
had acquired the Shaw Wallace Group's interest in the brewing operations of its
Indian investment, taking the group's interest to 99%.


On 19 July 2005 the group announced a major investment through a transaction
involving the Santo Domingo Group, which completed on 12 October 2005, in which
SABMiller obtained a 71.77% controlling interest in Bavaria S.A., a company
listed on the Colombian Stock Exchange. As consideration, SABMiller plc issued
225 million ordinary shares, amounting to some 15.04% of the enlarged ordinary
share capital of SABMiller. Following the share issue, the group has made or
will make cash offers to acquire the remaining 28.23% of Bavaria and certain
other minority interests held in the Bavaria group.


Profit before tax


Profit before tax of US$1,126 million was down 15% on prior period.  However
excluding the impact of exceptional items in the prior year and the early
redemption penalty on the private placement notes in the current year (see
below) and including the share of results of associates before tax and minority
interests, adjusted profit before tax increased 15% reflecting performance
improvements in the majority of our business segments, excluding those in the
Americas. Additional acquisitions have not had a significant impact on profit
before tax for the period.


Exceptional items


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 notes 3 and 9(r).


There were no exceptional items during the six months ended 30 September 2005.


In the prior period, an exceptional profit of US$316 million was included within
operating profit. This comprised a US$239 million profit on the disposal of the
group's 21% investment in Edgars Consolidated Stores Ltd (Edcon), a US$96
million profit on the disposal of the group's 29.4% stake in Harbin Brewery
Group Limited (Harbin) and a US$4 million profit on the disposal of the Tumwater
brewery at Miller, partly offset by US$23 million of brewery closure costs in
Italy.  In addition there was an exceptional profit within the share of post-tax
results of associates of US$11 million, relating to the share of associate's
profit on the disposal of property, plant and equipment in South Africa: Hotels
and Gaming.


Interest


Net interest costs are broadly in line with the prior year, despite the early
redemption penalty referred to below.


Taxation


The effective tax rate, before exceptional items and including share of
associates' operating profit before exceptional items and share of associates'
tax, is 35.3%, broadly in line with the prior period.


CHIEF EXECUTIVE'S REVIEW  (continued)                                         16



Treasury


Gross debt, comprising borrowings of the group together with the fair value of
derivative assets or liabilities held to manage interest rate and foreign
currency risk of borrowings, have increased to US$3,570 million from US$3,354
million at 1 April 2005 (restated).  Net debt comprises gross debt net of cash
and cash equivalents. Net debt has increased to US$2,428 million from US$2,210
million at 1 April 2005 (restated) reflecting the increase in cash generated
from operating activities offset by additional borrowings to fund the purchase
of the Indian business. The group's gearing (presented as a ratio of debt/
equity) has increased to 27.2% from 25.2% (restated) at 1 April 2005.


The group previously had US dollar and sterling private placement notes in issue
with final maturity in 2008. As part of the refinancing for the Bavaria
transaction, notice was given to repay all of these notes in accordance with
their terms, with repayment on 22 September 2005. The amounts on repayment
totalled US$179 million and £25 million (US$37 million) and were met out of
existing resources.  These amounts included an early redemption penalty of US$13
million, included in interest payable but which has been treated as an adjusting
item for adjusted earnings purposes.


The average loan maturity in respect of the US$ fixed rate debt portfolio is 5.9
years.  The average borrowing rate for the total debt portfolio at 30 September
2005 was 5.6% (2004: 5.1%).


On 9 September 2005 the group entered into a US$3,500 million 364 day revolving
credit facility for general corporate purposes (including financing the Bavaria
minority acquisitions).  This facility can be extended at the group's election
for a term of a further year.


Goodwill


Goodwill increased by US$234 million compared to 31 March 2005, due primarily to
the goodwill arising on the Indian acquisition, partially offset by the effect
of foreign exchange movements.


Cash flow


Net cash generated from operations before working capital movement (EBITDA) rose
to US$1,418 million from last half year's US$1,278 million. Management believes
that an appropriate ratio for showing the conversion of revenue into cash is
EBITDA to revenue. This ratio increased in the period to 20.1% (2004: 19.9%).


Dividend


The board has declared an interim dividend of 13 US cents per share.  The
dividend will be payable on 19 December 2005 to all shareholders registered on
the London and Johannesburg Registers on 2 December 2005. The ex-dividend
trading dates will be 30 November 2005 on the London Stock Exchange (LSE) and 28
November 2005 on the JSE Limited, South Africa.  As the group reports in US
dollars, dividends are declared in US dollars. They are payable in South African
rand to shareholders on the South African register, in US dollars to
shareholders on the UK register with a registered address in the United States
(unless mandated otherwise), and in sterling to all remaining shareholders on
the UK section of the register.


The rates of exchange will be calculated on 17 November 2005 and announcements
will be made on the LSE's Regulatory News Service and on the JSE Stock Exchange
News Service to shareholders, indicating the exchange rates to be applied.


To comply with the requirements of STRATE in South Africa, from the close of
business on 25 November 2005 until the close of business on 2 December 2005, no
transfers between the UK and South African registers will be permitted and no
shares may be dematerialised or rematerialised.


DIRECTORS' RESPONSIBILITY FOR FINANCIAL REPORTING                             17



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, set out on pages 18
to 40, which the directors confirm has been prepared on a going concern basis
and follows all applicable accounting standards. 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 information
on the company's website.  Information published on the internet is accessible
in many countries with different legal requirements.  Legislation in the United
Kingdom governing the preparation and dissemination of the financial statements
may differ from legislation in other jurisdictions.


On behalf of the board


E A G Mackay                                             M I Wyman
Chief executive                                          Chief financial officer


9 November 2005


INDEPENDENT REVIEW REPORT TO SABMILLER plc



Introduction


We have been instructed by the company to review the financial information for
the six months ended 30 September 2005 which comprises the consolidated interim
balance sheet as at 30 September 2005, the related consolidated interim
statements of income, cash flows and recognised income and expense for the six
months then ended and the 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 financial information. The
previously published IFRS transition information as referred to in note 1 does
not form part of this review.


Directors' responsibilities


The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The directors are
responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority.


As disclosed in note 1, the next annual financial statements of the group will
be prepared in accordance with accounting standards adopted for use in the
European Union. This interim report has been prepared in accordance with the
basis set out in note 1.


The accounting policies are consistent with those that the directors intend to
use in the next annual financial statements. As explained in note 1, there is,
however, a possibility that the directors may determine that some changes are
necessary when preparing the full annual financial statements for the first time
in accordance with accounting standards adopted for use in the European Union.
The IFRS standards and IFRIC interpretations that will be applicable and adopted
for use in the European Union are not known with certainty at the time of
preparing this interim financial information.


Review work performed


We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the disclosed accounting policies have
been applied.


A review excludes audit procedures such as tests of controls and verification of
assets, liabilities and transactions. It is substantially less in scope than an
audit and therefore provides a lower level of assurance. Accordingly we do not
express an audit opinion on the financial information.


This report, including the conclusion, has been prepared for and only for the
company for the purpose of the Listing 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.


Review conclusion


On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 September 2005.


PricewaterhouseCoopers LLP
Chartered Accountants


London, 9 November 2005



SABMiller plc
CONSOLIDATED INCOME STATEMENTS
for the six months ended 30 September                                         18




                                                              Six months      Six months      Year ended
                                                           ended 30/9/05   ended 30/9/04         31/3/05
                                                               Unaudited       Unaudited       Unaudited
                                                    Notes           US$m            US$m            US$m

Group revenue (including share of associates'          2           7,901           7,178          14,543
revenue)
Share of associates' revenue                                        (850)           (735)         (1,642)
Revenue                                                2           7,051           6,443          12,901

Net operating expenses                                            (5,948)         (5,123)        (10,354)

Operating profit                                       2           1,103           1,320           2,547
Operating profit before exceptional items                          1,103           1,004           2,132
Exceptional items                                      3               -             316             415

Net finance costs                                                    (77)            (78)           (143)
Interest payable and similar charges                                (117)           (121)           (239)
Interest receivable                                                   40              43              96

Share of post-tax results of associates                               100             82             148

Profit before taxation                                             1,126           1,324           2,552
Taxation                                               4            (377)           (365)           (823)

Profit for the financial period                                      749             959           1,729

Profit attributable to minority interests                             99             101             208
Profit attributable to equity shareholders                           650             858           1,521

                                                                     749             959           1,729



Basic earnings per share (US cents)                    5            51.3            71.8           125.5
Diluted earnings per share (US cents)                  5            50.9            68.5           121.0




SABMiller plc
CONSOLIDATED BALANCE SHEETS
at 30 September                                                               19






                                                                30/9/05           30/9/04           31/3/05
                                                              Unaudited         Unaudited         Unaudited
                                                                   US$m              US$m              US$m

Assets
Non-current assets
Goodwill                                                          7,415             6,551             7,181
Other intangible assets                                             150               113               122
Property, plant and equipment                                     4,102             3,743             4,056
Investments in associates                                         1,156             1,045             1,125
Financial assets
- Available for sale investments                                     59               170               187
- Derivative financial instruments                                   14                 -                 -
Trade and other receivables                                          58                53                54
Deferred tax assets                                                 164               110               153
                                                                 13,118            11,785            12,878

Current assets
Inventories                                                         608               601               627
Trade and other receivables                                       1,145             1,000             1,008
Financial assets
- Derivative financial instruments                                    8                 -                 -
Cash and cash equivalents                                         1,142             1,279             1,143
                                                                  2,903             2,880             2,778

Total assets                                                     16,021            14,665            15,656

Liabilities
Current liabilities
Financial liabilities
- Derivative financial instruments                                   (7)                -                 -
- Borrowings                                                     (1,154)             (507)             (815)
Trade and other payables                                         (1,936)           (1,821)           (1,941)
Current tax liabilities                                            (332)             (257)             (381)
Provisions                                                          (64)              (86)              (62)
                                                                 (3,493)           (2,671)           (3,199)


Non-current liabilities
Financial liabilities
- Derivative financial instruments                                   (2)                -                 -
- Borrowings                                                     (2,428)           (3,169)           (2,525)
Trade and other payables                                            (48)              (63)              (53)
Deferred tax liabilities                                           (188)             (224)             (188)
Provisions                                                         (931)             (795)             (927)
                                                                 (3,597)           (4,251)           (3,693)

Total liabilities                                                (7,090)           (6,922)           (6,892)

Net assets                                                        8,931             7,743             8,764

Equity
Total shareholders' equity                                        8,261             6,910             8,086
Minority interests                                                  670               833               678
Total equity                                                      8,931             7,743             8,764






SABMiller plc
CONSOLIDATED CASH FLOW STATEMENTS
for the six months ended 30 September                                         20





                                                              Six months      Six months      Year ended
                                                           ended 30/9/05   ended 30/9/04         31/3/05
                                                               Unaudited       Unaudited       Unaudited
                                                     Notes          US$m            US$m            US$m


Cash flows from operating activities
Cash generated from operations                         6           1,289           1,262           2,792
Interest received                                                     41              45              94
Interest paid                                                       (123)           (114)           (228)
Interest element of finance lease rental payments                      -              (1)             (2)
Tax paid                                                            (394)           (272)           (625)

Net cash from operating activities                                   813             920           2,031

Cash flows (to)/from investing activities
Purchase of property, plant and equipment                           (404)           (334)           (756)
Proceeds from sale of property, plant and equipment                   21              12              30
Purchase of intangible assets                                        (15)             (4)            (12)
Purchase of investments                                              (18)             (5)            (19)
Proceeds from sale of investments                                      -             463             475
Acquisition of subsidiaries (net of cash acquired)                  (180)            (24)            (23)
Purchase of shares from minorities                                    (6)              -            (793)
Purchase of shares in associates                                       -              (8)            (13)
Net funding to associates                                              -             (59)            (68)
Dividends received from associates                                    38              21              47
Dividends received from other investments                              1              10              10

Net cash (to)/from investing activities                            (563)              72          (1,122)

Cash flows (to)/from financing activities
Proceeds from issue of shares                                         18              19              38
Proceeds from issue of shares to minorities                            -               1               1
Net purchase of own shares for share trusts                           (8)             (5)            (21)
Issue of loans                                                       265             527             540
Repayment of loans                                                  (356)           (566)           (632)
Capital element of finance lease payments                             (9)            (13)            (25)
Equity dividends paid to equity holders of the                      (328)           (269)           (412)
parent
Dividends paid to minority interests                                 (63)            (76)           (172)

Net cash to financing activities                                    (481)           (382)           (683)

Net cash (to)/from operating, investing and                         (231)            610             226
financing activities

Effects of exchange rate changes                                       2             (14)            (56)

Net (decrease)/increase in cash and cash equivalents                (229)            596             170

Cash and cash equivalents at 1 April                                 630             460             460

Cash and cash equivalents at period end                              401           1,056             630





SABMiller plc
CONSOLIDATED STATEMENTS OF RECOGNISED INCOME AND EXPENSE
for the six months ended 30 September                                         21




                                                                 Six months      Six months      Year ended
                                                              ended 30/9/05   ended 30/9/04         31/3/05
                                                                  Unaudited       Unaudited       Unaudited
                                                                       US$m            US$m            US$m

Currency translation differences on foreign currency                   (227)             45             220
net investments, net of tax
Actuarial losses on defined benefit plans                                 -               -            (127)
Net investment hedges                                                    10               -               -

Net (losses)/gains recognised directly in equity                       (217)             45              93
Profit for the financial period                                         749             959           1,729

Total recognised income for the period                                  532           1,004           1,822
- attributable to equity shareholders                                   453             898           1,601
- attributable to minority interests                                     79             106             221







SABMiller plc
NOTES TO THE INTERIM FINANCIAL REPORT                                         22




1.  Basis of preparation


SABMiller plc and its subsidiaries and associates (together referred to as the
group) previously prepared its consolidated financial statements under UK
Generally Accepted Accounting Principles (GAAP). From 1 April 2005 onwards, the
group is required to prepare its consolidated financial statements in accordance
with International Financial Reporting Standards (IFRS) as endorsed by the
European Union (EU).


The unaudited financial information in this interim announcement is prepared on
the basis of the IFRS accounting policies that the directors intend to use in
the next annual report, as set out in note 9.  This basis is subject to
amendment by the International Accounting Standards Board (IASB) and is
dependent on further endorsement by the European Commission (EC).  Accordingly
the information presented and the format of presentation may be subject to
change as new guidance is issued or as practice develops.


The group has decided to adopt the amendments of IAS 19 Employee Benefits issued
in December 2004 in advance of their earlier effective date of January 2006, as
endorsement of these amendments by the EU is expected later this year. As a
result, the group has recognised actuarial gains and losses arising on its
post-retirement benefit schemes in the consolidated statements of recognised
income and expense.


Comparative numbers included in this interim report represent amounts adjusted
for the impact of IFRS with the exception of IAS 32 Financial Instruments:
Disclosure and Presentation and IAS 39 Financial Instruments: Recognition and
Measurement which have been applied with effect from 1 April 2005.


The UK GAAP to IFRS reconciliations for both the year ended 31 March 2005 and
six month interim period ended 30 September 2004 detailing the unaudited IFRS
adjustments were published on 5 July 2005 and are available in the 'Restatement
of Financial Information under International Financial Reporting Standards'
publication available on the SABMiller plc website www.sabmiller.com/SABMiller/
Financial+centre/.


The preparation of financial statements in conformity with generally accepted
accounting principles requires the use of certain critical accounting estimates.
It also requires management to exercise judgment in the process of applying the
group's accounting policies. The areas involving a higher degree of judgment or
complexity or areas where assumptions and estimates are significant to the
consolidated financial statements are disclosed in these statements. Actual
results could differ from those estimates.


The unaudited interim report was approved by the Board of Directors on 9
November 2005.


The financial information included in this report does not constitute statutory
accounts for the purpose of Section 240 of the Companies Act 1985 (as amended).
A copy of the statutory accounts for the year ended 31 March 2005 under UK GAAP
has been delivered to the Registrar of Companies on which an unqualified report
has been made by the auditors under Section 235 of the Companies Act 1985 (as
amended).




SABMiller plc
NOTES TO THE INTERIM FINANCIAL REPORT (continued)                             23



2.  Segmental analysis


                                                              Six months      Six months       Year ended
Revenue                                                    ended 30/9/05   ended 30/9/04          31/3/05
                                                               Unaudited       Unaudited        Unaudited
                                                                    US$m            US$m             US$m


North America                                                      2,662           2,615            4,892

Central America                                                      262             260              521

Europe                                                             1,894           1,617            2,909


Africa and Asia                                                    1,065             870            1,937
Less: associates' share                                             (520)           (427)            (934)
                                                                     545             443            1,003


South Africa: Beverages                                            1,864           1,684            3,995

Less: associates' share                                             (176)           (176)            (419)
                                                                   1,688           1,508            3,576

South Africa: Hotels and Gaming                                      154             132              289
Less: associates' share                                             (154)           (132)            (289)
                                                                       -               -                -


South Africa: Total                                                1,688           1,508            3,576


Group revenue (including share of associates')                     7,901           7,178           14,543
Less: associates' share                                             (850)           (735)          (1,642)
Revenue                                                            7,051           6,443           12,901




SABMiller plc
NOTES TO THE INTERIM FINANCIAL REPORT (continued)                             24





2.  Segmental analysis (continued)


                                                              Six months      Six months      Year ended
Operating profit                                           ended 30/9/05   ended 30/9/04         31/3/05
                                                               Unaudited       Unaudited       Unaudited
                                                                    US$m            US$m            US$m




North America                                                        286             305             598
Operating profit before exceptional items                            286             301             487
Exceptional items                                                      -               4             111

Central America                                                       32              36              90

Europe                                                               379             276             431

Operating profit before exceptional items                            379             299             482
Exceptional items                                                      -            (23)             (51)

Africa and Asia                                                      108             195             352
Operating profit before exceptional items                            108              99             249
Exceptional items                                                      -              96             103

South Africa: Beverages and Total                                    353             298             906

Corporate                                                            (55)            210             170
Operating loss before exceptional items                              (55)            (29)            (82)
Exceptional items                                                      -             239             252


Group                                                              1,103           1,320           2,547
Operating profit before exceptional items                          1,103           1,004           2,132
Exceptional items                                                      -             316             415





SABMiller plc
NOTES TO THE INTERIM FINANCIAL REPORT (continued)                             25





2.  Segmental analysis (continued)




                                                                Six months      Six months      Year ended
EBITA *                                                      ended 30/9/05   ended 30/9/04         31/3/05
                                                                 Unaudited       Unaudited       Unaudited
                                                                      US$m            US$m            US$m



North America                                                          286             301             487

Central America                                                         32              36              90

Europe                                                                 379             299             482


Africa and Asia                                                        209             179             383
Less: share of associate's operating profit                           (100)            (80)           (134)
                                                                       109              99             249

South Africa: Beverages                                                375             315             956
Less: share of associate's operating profit                            (22)            (17)            (50)
                                                                       353             298             906

South Africa: Hotels and Gaming                                         38              29              73
Less: share of associate's operating profit                            (38)            (29)            (73)
                                                                         -               -               -


South Africa: Total                                                    353             298             906



Corporate                                                              (55)            (29)            (82)


EBITA                                                                1,264           1,130           2,389
Less: share of associate's operating profit                           (160)           (126)           (257)
Group - excluding exceptional items                                  1,104           1,004           2,132


Reconciliation of operating profit to EBITA

Operating profit                                                     1,103           1,320           2,547

Add: Brand amortisation                                                  1               -               -

Add: Share of associates' operating profit (excluding                  160             126             257
exceptional items)
Less: Exceptional items (excluding share of associates'
exceptional items)
- North America                                                          -              (4)           (111)
- Europe                                                                 -              23              51
- Africa and Asia                                                        -             (96)           (103)
- Corporate                                                              -            (239)           (252)
EBITA                                                                1,264           1,130           2,389



* EBITA comprises operating profit (US$1,103 million) before amortisation of
brands (US$1 million) and
exceptional items (US$Nil million) and includes post-tax results of associates
(US$100 million) together
with exceptional items, amortisation of brands, interest, tax and minority
interests (US$60 million).





SABMiller plc
NOTES TO THE INTERIM FINANCIAL REPORT (continued)                             26




2.  Segmental analysis (continued)




                                                             Six months      Six months      Year ended
EBITDA                                                    ended 30/9/05   ended 30/9/04         31/3/05
                                                              Unaudited       Unaudited       Unaudited
                                                                   US$m            US$m            US$m



North America                                                       359             366             634

Central America                                                      52              57             129

Europe                                                              469             377             649


Africa and Asia                                                     137             116             293

South Africa: Beverages and Total                                   440             384           1,101

Corporate                                                           (39)            (26)            (69)

                                                                  1,418           1,274           2,737

Exceptional items
North America                                                         -               4               4
Europe                                                                -               -              (5)

EBITDA                                                            1,418           1,278           2,736


EBITDA is the net cash inflow from operating activities before working capital
movements.







SABMiller plc
NOTES TO THE INTERIM FINANCIAL REPORT (continued)                             27





3.  Exceptional items

The following items were treated as exceptional items by the group:


                                                              Six months      Six months      Year ended
                                                           ended 30/9/05   ended 30/9/04         31/3/05
                                                               Unaudited       Unaudited       Unaudited
                                                                    US$m            US$m            US$m

Subsidiaries' exceptional items included in operating
profit:
North America                                                          -               4             111

Profit on disposal of Tumwater brewery                                 -               4               4
Miller integration and restructuring costs                             -               -               2
Brewery closure costs in Tumwater                                      -               -               1
Gain in relation to changes to post-retirement plans                   -               -             104



Europe                                                                 -             (23)            (51)

Brewery closure costs in Italy                                         -             (23)            (35)
Restructuring costs in the Canary Islands                              -               -             (16)

Africa and Asia
Profit on disposal of investment                                       -              96             103

Corporate
Profit on disposal of investment                                       -             239             252


Exceptional items included in operating profit                         -             316             415

Taxation charge                                                        -             (31)            (74)
Minority interests' share of the above items                           -               -               8

Share of associates' exceptional items
South Africa: Hotels and Gaming
Share of associate's profit on disposal of property, plant             -              11              11
and equipment
Restructuring costs                                                    -               -              (4)

Taxation credit                                                        -               -               1

Exceptional items (including share of associates'                      -              327            422
exceptional items)





There were no exceptional items during the six months ended 30 September 2005.



In the prior period, an exceptional profit of US$316 million was included within
operating profit.  This comprised a US$239 million profit on the disposal of the
group's 21% investment in Edgars Consolidated Stores Ltd (Edcon), a US$96
million profit on the disposal of the group's 29.4% stake in Harbin Brewery
Group Limited (Harbin) and a US$4 million profit on the disposal of the Tumwater
brewery at Miller, partly offset by US$23 million brewery closure costs in
Italy.  In addition there was an exceptional profit within the share of post tax
results of associates of US$11 million, relating to the share of associate's
profit on the disposal of property, plant and equipment in South Africa: Hotels
and Gaming.




SABMiller plc
NOTES TO THE INTERIM FINANCIAL REPORT (continued)                             28





4.  Taxation


                                                              Six months      Six months      Year ended
                                                           ended 30/9/05   ended 30/9/04         31/3/05
                                                               Unaudited       Unaudited       Unaudited
                                                                    US$m            US$m            US$m

Current taxation charge                                              379             339             807
- Charge for the period                                              357             301             638
- Adjustments in respect of prior years                               (7)             (1)             43
- Withholding  and other taxes                                        29              39             126
Deferred taxation (credit)/charge                                     (2)             26              16
- Charge for the year                                                 (2)             25              55
- Adjustment in respect of prior years                                 2               1             (39)
- Rate change                                                         (2)              -               -

                                                                     377             365             823

Effective tax rate, before exceptional items (%)*                   35.3            35.1            37.1


The effective tax rate is calculated including share of associates' operating
profit before exceptional items and share of associates' tax before exceptional
items. This calculation is on a basis consistent with that used in prior years
and is also consistent with other group operating metrics.


*The effective tax rate for the year ended 31 March 2005 before the South
African secondary tax on companies (STC) charge on non-recurring dividends,
following a restructuring of the group's holdings in South Africa, of US$38
million was 35.4%.



5.  Earnings per share


                                                             Six months      Six months      Year ended
                                                          ended 30/9/05   ended 30/9/04         31/3/05
                                                              Unaudited       Unaudited       Unaudited
                                                               US cents        US cents        US cents

Basic earnings per share                                           51.3            71.8           125.5
Headline earnings per share                                        52.7            47.9            95.3
Adjusted basic earnings per share                                  52.7            47.9           101.0
Adjusted comparable earnings per share *                           52.7            46.3            98.4
Diluted earnings per share                                         50.9            68.5           121.0
Adjusted diluted earnings per share                                52.2            46.0            97.7


* Comparative figures adjusted for conversion of convertible bonds. The amounts
are calculated as if the bonds had converted on 1 April 2004.


The calculation of basic earnings per share has been based on the profit for the
financial period as shown in the table below, and on a weighted average number
of shares in issue of 1,265,874,123 (2004: 1,193,753,551).


At 30 September 2005 there were 11,399,683 share purchase options outstanding
under the SABMiller plc Executive Share Purchase Scheme (South Africa),
9,230,114 share purchase options outstanding under the SABMiller plc Executive
Share Option Scheme (Approved Scheme and (No 2) Scheme combined), 1,426,911
conditional awards under the SABMiller plc Performance Share Awards Scheme which
have not yet vested and 3,709,136 share purchase options outstanding under the
SABMiller plc International Employee Share Scheme.  The calculation of diluted
earnings per share is based on a weighted average number of shares in issue of
1,277,058,054 after adjusting for 11,203,931 weighted potentially dilutive
ordinary shares arising from the share options (2004: and the guaranteed
convertible bond), and the profit for the financial period as shown below. The
average share price of SABMiller plc since the beginning of the financial year,
used in determining the number of potentially dilutive ordinary shares, is
US$16.52, compared with an average strike price on the outstanding options of
US$9.65.


The group has also presented an adjusted basic earnings per share figure to
exclude the impact of brand amortisation and other non-recurring items in order
to present a more meaningful comparison for the periods shown in the
consolidated interim report. Adjusted earnings per share has been based on
adjusted headline earnings for each financial period and on the same number of
weighted average shares in issue as the basic earnings per share calculation.
Headline earnings per share has been calculated in accordance with the Institute
of Investment Management and Research (IIMR)'s Statement of Investment Practice
No. 1 entitled 'The Definition of Headline Earnings'.  The adjustments made to
arrive at headline earnings and adjusted earnings are detailed below.


The calculation of prior period adjusted earnings on a comparable basis adjusts
for the conversion of the US$600 million convertible bonds, as if the bonds had
been converted on 1 April 2004. The profit for the financial period after
adjusting for the interest on the convertible bonds was US$585 million for the
six months ended 30 September 2004 and US$1,243 million for the year ended 31
March 2005, and the weighted average number of shares was 1,262,945,732 for the
six months ended 30 September 2004 and 1,263,672,981 for the year ended 31 March
2005.

SABMiller plc
NOTES TO THE INTERIM FINANCIAL REPORT (continued)                             29




5.  Earnings per share (continued)


                                                             Six months      Six months      Year ended
                                                          ended 30/9/05   ended 30/9/04         31/3/05
                                                              Unaudited       Unaudited       Unaudited
                                                                   US$m            US$m            US$m

Profit for the financial period attributable to equity              650             858           1,521
holders of the parent
Loss on derivatives on capital items*                                10               -               -
Early redemption penalty in respect of private placement             13               -               -
notes (Corporate)
Brewery closure costs in Tumwater (North America)                     -               -              (1)
Gain in relation to changes to post-retirement plans                  -               -            (104)
(North America)
Impairment of property, plant and equipment                           -               -               9
Share of associate's profit on disposal of property, plant            -             (11)            (11)
and equipment (South Africa: Hotels and Gaming)
Profit on sale of investments (Africa and Asia, Corporate)            -            (335)           (355)
Profit on disposal of Tumwater (North America)                        -              (4)             (4)
Brewery closure costs in Italy (Europe)                               -              23              21
Brand amortisation                                                    1               -               -
(Profit)/loss on sale of property, plant and equipment and           (2)              9              16
investments
Tax effects of the above items                                       (7)             31              71
Minority interests' share of the above items                          2               1              (9)
Headline earnings (basic)                                           667             572           1,154
Integration/reorganisation costs                                      -               -              32
South African STC on non-recurring dividend                           -               -              38
Adjusted earnings                                                   667             572           1,224



* This does not include all derivative movements but includes those in relation
to capital items for
which hedge accounting cannot be applied.



SABMiller plc
NOTES TO THE INTERIM FINANCIAL REPORT (continued)                             30





6.  Reconciliation of operating profit to net cash generated from operations


                                                              Six months      Six months      Year ended
                                                           ended 30/9/05   ended 30/9/04         31/3/05
                                                               Unaudited       Unaudited       Unaudited
                                                                    US$m            US$m            US$m

Operating profit                                                   1,103           1,320           2,547
Depreciation:
- Property, plant and equipment                                      204             197             396
- Containers                                                          45              40              82

Container breakages, shrinkage and write-offs                         11              13              51

(Profit)/loss on sale of property, plant and equipment                (2)              9              16

Impairment of property, plant and equipment                            -               -               8

Amortisation of intangible assets                                     22              15              33

Net loss from fair value hedges                                       20               -               -
Dividends received from other investments                             (1)            (10)            (10)
Charge with respect to share options                                  10               5              18
Gain in relation to changes to post-retirement plans (North            -               -            (104)
America)
Profit on sale of investments (Africa and Asia, Corporate)             -            (335)           (355)
Restructuring provision in the Canary Islands (Europe)                 -               -              16
Restructuring provision (North America)                                -               -              (2)
Brewery closure costs in Tumwater (North America)                      -               -              (1)
Brewery closure costs in Italy (Europe)                                -              23              30
Deferred income                                                       (1)             (1)             (3)
Other non-cash movements                                               7               2              14

Net cash generated from operations before working
capital movements (EBITDA)                                         1,418           1,278           2,736

Net (decrease)/increase in working capital                          (129)            (16)             56
Net cash generated from operations                                 1,289           1,262           2,792



In the six months ended 30 September 2004, operating cash flows included cash
inflows relating to exceptional items of US$4 million (year ended 31 March 2005:
US$4 million) in respect of proceeds on the Tumwater disposal, and a cash
outflow of US$Nil million (year ended 31 March 2005: US$5 million) in respect of
brewery closure costs in Italy.



7.  Post-balance sheet events



On 19 July 2005 the group announced a major investment through a transaction
involving the Santo Domingo Group which completed on 12 October 2005, in which
SABMiller obtained a 71.77% controlling interest in Bavaria S.A., a company
listed on the Colombian Stock Exchange. As consideration, SABMiller issued 225
million ordinary shares, amounting to some 15.04% of the enlarged ordinary share
capital of SABMiller. Following the share issue, the group has made or will make
cash offers to acquire the remaining 28.23% of Bavaria and certain other
minority interests held in the Bavaria group.



8.  Adoption of IAS 32 and IAS 39



In accordance with the exemption available in IFRS 1, the group has adopted IAS
32 and IAS 39 with effect from 1 April 2005. As a result, the group is required
to recognise transitional adjustments for financial instruments, including
designated hedging relationships, in accordance with the measurement
requirements of IAS 39 at 1 April 2005. The effects of applying these standards
are as follows:


Fair value hedges


Fair value hedges comprise derivative financial instruments designated in a
hedging relationship to manage the group's interest rate risk to which the fair
value of certain assets and liabilities are exposed. Changes in the fair value
of the derivative offset the relevant changes in the fair value of the
underlying hedged item attributable to the hedged risk in the income statement
in the period incurred.


At 1 April 2005, the group recognised additional non-current derivative assets
of US$3 million, additional non-current derivative liabilities of US$5 million
and a decrease in non-current borrowings of US$2 million in respect of financial
instruments used to hedge the group's interest rate risk. These adjustments had
no impact on deferred tax.



SABMiller plc
NOTES TO THE INTERIM FINANCIAL REPORT (continued)                             31



8.  Adoption of IAS 32 and IAS 39 (continued)


Cash flow hedges


Cash flow hedges comprise derivative financial instruments designated in a
hedging relationship to manage currency risk to which the cash flows of certain
liabilities are exposed. The effective portion of changes in the fair value of
the derivative that is designated and qualifies for hedge accounting is
recognised in equity. Amounts accumulated in equity are recycled to the income
statement in the period in which the hedged item affects profit or loss.


At 1 April 2005, the group recognised additional non-current derivative assets
of US$14 million and a decrease in non-current trade and other receivables of
US$14 million in respect of financial instruments used to hedge the group's
foreign currency debt exposure. These adjustments had no impact on deferred tax.


Embedded derivatives


At 1 April 2005, the group recognised additional current derivative assets of
US$5 million and an increase in equity of US$5 million in respect of embedded
derivatives relating to the group's malt and barley contracts (US$4 million),
and foreign exchange contracts (US$1 million). These adjustments had no impact
on deferred tax.


Balance sheet classification


At 1 April 2005, the reclassification of interest accruals and prepayments
resulted in a US$2 million decrease in current trade and other receivables, a
US$29 million decrease in current trade and other payables, a US$1 million
decrease in current borrowings and a US$28 million increase in non-current
borrowings. The net impact on the group's gross borrowings at 1 April 2005 was
an increase of US$27 million.


Restatement of consolidated balance sheet to include IAS 32 and 39 - as at 1
April 2005


                                                                                                     1 April
                                                                                                        2005
                                                                                                    Restated
                                                                                                        IFRS
                                                                31 March         IAS 32/39             after
                                                                    2005        transition          adoption
                                                                    IFRS        adjustment      of IAS 32/39
                                                               Unaudited         Unaudited         Unaudited
                                                                    US$m              US$m              US$m

Assets
Non-current assets
Derivative financial instruments                                      -                17                17
Trade and other receivables                                          54               (14)               40
                                                                     54                 3                57
Current assets
Trade and other receivables                                       1,008                (2)            1,006
Derivative financial instruments                                      -                 5                 5
                                                                  1,008                 3             1,011
Liabilities
Current liabilities
Borrowings                                                         (815)                1              (814)
Trade and other payables                                         (1,941)               29            (1,912)
                                                                 (2,756)               30            (2,726)
Non-current liabilities
Derivative financial instruments                                      -                (5)               (5)
Borrowings                                                       (2,525)              (26)           (2,551)
                                                                 (2,525)              (31)           (2,556)

Impact on net assets                                                                    5

Equity
Equity attributable to equity holders                             8,086                 5             8,091
                                                                  8,086                 5             8,091
Impact on equity                                                                        5



SABMiller plc
NOTES TO THE INTERIM FINANCIAL REPORT (continued)                             32




9.  Accounting policies under IFRS


The significant accounting policies adopted in the preparation of the group's
financial statements are set out below, together with the decisions made by the
group as part of its transition to IFRS. These policies have been consistently
applied to all the periods presented, unless otherwise stated.


a)       Basis of preparation


The consolidated financial statements will be prepared on a basis consistent
with IFRS as required by a European Union Regulation issued in June 2002, the
International Financial Reporting Interpretations Committee (IFRIC)
interpretations and with those parts of the Companies Act 1985 applicable to
companies reporting under IFRS. This basis is subject to amendment by the
International Accounting Standards Board (IASB) and is dependent on further
endorsement by the European Commission (EC).  Accordingly the information
presented and the format of presentation may be subject to change as new
guidance is issued or as practice develops.


The financial statements are prepared under the historical cost convention,
except for the revaluation to fair value of certain financial instruments as
described in the accounting policies below.


IFRS 1 First-time adoption of IFRS permits certain exemptions from the full
requirements of IFRS to companies adopting IFRS for the first time. The group
has elected to take the following permitted exemptions:


i)         Business combinations (including acquisitions) before the date of
transition have not been restated. The net book value of goodwill as at the
transition date has been restated as deemed cost of goodwill under IFRS.

ii)        Non-current assets held at historical cost have not been revalued;
therefore depreciation and impairment tests will continue to be based on
historical cost.

iii)       IAS 32 and IAS 39 have been applied with effect from 1 April 2005,
therefore hedge documentation and effectiveness is measured from that date.

iv)      Cumulative currency translation differences on foreign net investments
recognised separately in equity have been reset to US$Nil at the date of
transition.

v)       The cost of share options granted prior to 7 November 2002 has not been
recognised in the income statement.

vi)      The accumulated actuarial gains and losses with regard to employee
defined benefit post-retirement plans have been recognised in full in the
opening IFRS balance sheet as at 1 April 2004.

vii)     Convertible bonds have not been split into component values if the bond
has been repaid by the transition date for financial instruments, which was 1
April 2005.


The accounts have been prepared on a going concern basis.


The preparation of financial statements in conformity with generally accepted
accounting principles requires the use of certain critical accounting estimates.
It also requires management to exercise judgment in the process of applying the
group's accounting policies. Actual results could differ from those estimates.


b)       Segmental reporting


A reportable segment is a distinguishable business or geographical component of
the group that provides products or services that are different from those of
other segments. Segments results, assets and liabilities include items directly
attributable to a segment as well as those that can be allocated on a reasonable
basis.


The group's primary segmental analyses are in accordance with the basis on which
the businesses are managed and according to the differing risk and reward
profiles. The group presents its geographic analysis as its primary
segmentation.


The group intends to present its product analysis as its secondary segmentation.
This will be analysed between secondary segments of Beer, Soft drinks and Other.


c)       Basis of consolidation


SABMiller plc (the company) is a public limited company incorporated in Great
Britain and registered in England and Wales.  The consolidated financial
statements include the financial information of the subsidiary and associated
entities owned by the company.


(i)       Subsidiaries

Subsidiaries are entities controlled by the company, where control is the power
directly or indirectly to govern the financial and operating policies of the
entity so as to obtain benefit from its activities, regardless of whether this
power is actually exercised. Where the company's interest in subsidiaries is
less than 100%, the share attributable to outside shareholders is reflected in
minority interests. Subsidiaries are included in the financial statements from
the date control commences until the date control ceases.


Intra-group balances, and any unrealised gains and losses or income and expenses
arising from intra-group transactions, are eliminated in preparing the
consolidated financial statements. Unrealised losses are eliminated unless the
transaction provides evidence of an impairment of the asset transferred.


Some of the company's subsidiaries have a local statutory accounting reference
date of 31 December. These are consolidated using management prepared
information on a basis coterminous with the company's accounting reference date.


(ii)     Associates

Associates are entities in which the group has a long-term interest and over
which the group has directly or indirectly significant influence, where
significant influence is the ability to influence the financial and operating
policies of the entity.


The associate, Distell Group Ltd, has a statutory accounting reference date of
30 June. In respect of each year ending 31 March, this company is included based
on financial statements drawn up to the previous 31 December, but taking into
account any changes in the subsequent period from 1 January to 31 March that
would materially affect the results. All other associates are included on a
coterminous basis.



SABMiller plc
NOTES TO THE INTERIM FINANCIAL REPORT (continued)                             33



9.  Accounting policies under IFRS (continued)


d)       Foreign exchange


(i)     Foreign exchange translation

Items included in the financial statements of each of the group's entities are
measured using the currency of the primary economic environment in which the
entity operates (the functional currency). The consolidated financial statements
are presented in US dollars which is the group's functional and presentational
currency.


(ii)    Transactions and balances

The financial statements for each group company have been prepared on the basis
that transactions in foreign currencies are recorded in their functional
currency at the rate of exchange ruling at the date of the transaction. Monetary
items denominated in foreign currencies are retranslated at the rate of exchange
ruling at the balance sheet date with the resultant translation differences
being included in operating profit in the income statement other than those
arising on financial liabilities which are recorded within net finance costs and
those which are deferred in equity as qualifying cash flow hedges and qualifying
net investment hedges.  Translation differences on non-monetary assets such as
equity investments classified as available for sale assets are included in
equity.


(iii)   Overseas subsidiaries and associates

One-off items in the income and cash flow statements of overseas subsidiaries
and associates expressed in currencies other than the US dollar are translated
to US dollars at the rates of exchange prevailing on the day of the transaction.
All other items are translated at weighted average rates of exchange for the
relevant reporting period. Assets and liabilities of these undertakings are
translated at closing rates of exchange at each balance sheet date. All
translation exchange differences arising on the retranslation of opening net
assets together with differences between income statements translated at average
and closing rates are recognised as a separate component of equity.  For these
purposes net assets include loans between group companies that form part of the
net investment, for which settlement is neither planned nor likely to occur in
the foreseeable future and is either denominated in the functional currency of
the parent or the foreign entity. When a foreign operation is disposed of, any
related exchange differences in equity are recycled through the income statement
as part of the gain or loss on disposal.


Goodwill and fair value adjustments arising on the acquisition of a foreign
entity are treated as assets and liabilities of the foreign entity and
translated at the closing rate.


e)       Business combinations


(i)       Subsidiaries

The purchase method is used to account for the acquisition of subsidiaries. The
separable net assets (including intangibles), are incorporated into the
financial statements on the basis of the fair value to the group from the
effective date of control, and the results of subsidiary undertakings acquired
during the financial year are included in the group's results from that date.


Control is presumed to exist when the group owns, directly or indirectly through
subsidiaries, more than half of the voting power of an entity unless, in
exceptional circumstances, it can be clearly demonstrated that such ownership
does not constitute control. Control also exists where the group has the ability
to direct or dominate decision-making in an entity, regardless of whether this
power is actually exercised.


On the acquisition of a company or business, fair values reflecting conditions
at the date of acquisition are attributed to the identifiable assets (including
intangibles), liabilities and contingent liabilities acquired. Fair values of
these assets and liabilities are determined by reference to market values, where
available, or by reference to the current price at which similar assets could be
acquired or similar obligations entered into, or by discounting expected future
cash flows to present value, using either market rates or the risk-free rates
and risk-adjusted expected future cash flows.


The cost of an acquisition is measured as the fair value of the assets given,
equity instruments issued and liabilities incurred or assumed at the date of the
acquisition plus costs directly attributable to the acquisition. It also
includes the group's estimate of any deferred consideration payable. Where the
business combination agreement provides for an adjustment to the cost that is
contingent on future events, contingent consideration is included in the cost of
an acquisition if the adjustment is probable (that is, more likely than not) and
can be measured reliably.  The difference between the costs of acquisition and
the share of the net assets acquired is capitalised as goodwill.


Where the group purchases additional shares in subsidiaries such purchases are
reflected as separate acquisition processes and no revised fair valuation is
required. The difference between the costs of acquisition and the share of the
net assets acquired is capitalised as goodwill.


On the subsequent disposal or termination of a previously acquired business, the
results of the business are included in the group's results up to the effective
date of disposal. The profit or loss on disposal or termination is calculated
after charging or crediting the amount of any related goodwill to the extent
that it has not previously been taken to the income statement.


(ii)     Associates

The group's share of the recognised income and expenses of associates are
accounted for using the equity method from the date significant influence
commences to the date it ceases based on present ownership interests. The date
significant influence commences is not necessarily the same as the closing date
or any other date named in the contract.


The group recognises its share of associates' results as a one line entry before
tax in the income statement, after taking account of the share of interest, tax
and minority interests.


When the group's interest in an associate has been reduced to nil because the
group's share of losses exceeds its interest in the associate, the group only
provides for additional losses to the extent that it has incurred legal or
constructive obligations to fund such losses, or make payments on behalf of the
associate. Where the disposal of an investment in an associate is considered
highly probable (that is, significantly more likely than probable), the
investment ceases to be equity accounted and, instead, is classified as held for
sale and stated at the lower of carrying amount and fair value less costs to
dispose.



 
SABMiller plc
NOTES TO THE INTERIM FINANCIAL REPORT (continued)                             34



9.  Accounting policies under IFRS (continued)


e)     Business combinations (continued)


(iii)    Goodwill

Goodwill arising on consolidation represents the excess of the costs of
acquisition over the group's interest in the fair value of the identifiable
assets (including intangibles), liabilities and contingent liabilities of the
acquired entity at the date of acquisition. Where the fair value of the group's
share of separable net assets acquired exceeds the fair value of the
consideration, the difference is recorded as negative goodwill. Negative
goodwill arising on an acquisition is recognised immediately in the income
statement.


Goodwill is stated at cost less impairment losses and is reviewed for impairment
on an annual basis. Any impairment identified is recognised immediately in the
income statement and is not reversed.


The carrying amount of goodwill in respect of associates is included in the
carrying value of the investment in the associate.


Where a business combination occurs in several stages, the goodwill associated
with each stage is calculated using fair value information at the date of each
additional share purchase.


f)        Intangible assets


Intangible assets are stated at cost less accumulated amortisation on a
straight-line basis (if applicable) and impairment losses. Cost is usually
determined as the amount paid by the group, unless the asset has been acquired
as part of a business combination. Amortisation is included within net operating
expenses in the income statement. Internally generated intangibles are not
recognised except for applied development costs referred to under research and
development below.


Intangible assets with indefinite lives are not amortised but are subject to
annual reviews for impairment.


Intangible assets with finite lives are amortised over their estimated useful
economic lives, and only tested for impairment where there is a triggering
event. The directors' assessment of the useful life of intangible assets is
based on the nature of the asset acquired, the durability of the products to
which the asset attaches and the expected future impact of competition on the
business.


Intangible assets acquired as part of a business combination are recognised
separately when they are identifiable, it is probable that economic benefits
will flow to the group and the fair value can be measured reliably.


(i)       Trademarks recognised as part of a business combination

Trademarks are recognised as an intangible asset where the trademark has a long
term value. Acquired trademarks are only recognised where title is clear or the
trademark could be sold separately from the rest of the business and the
earnings attributable to it are separately identifiable. The group typically
arrives at the cost of such trademarks on a relief from royalty basis.


Where the acquired trademark is seen as having a finite useful economic life, it
is subject to amortisation, which in respect of trademarks currently held is
10-15 years, being the period for which the group has exclusive rights to those
trademarks. Where the acquired trademark is seen as having an indefinite useful
economic life, the carrying value is subject to an annual impairment review.


(ii)     Contract brewing and other licences recognised as part of a business
combination

Contractual arrangements for contract brewing and competitor licensing
arrangements are recognised as an intangible asset at a fair value representing
the remaining contractual period with an assumption about the expectation that
such a contract will be renewed, together with a valuation of this extension.
Contractual arrangements and relationships with customers and distributors also
fall to be valued on a similar basis.


Where the acquired licence or contract is seen as having a finite useful
economic life, it is subject to amortisation, which is the period for which the
group has exclusive rights to these assets or income streams.


(iii)    Customer lists and relationships recognised as part of a business
combination

The fair value of businesses acquired may include customer lists and
relationships. These are recognised as intangible assets and are calculated by
discounting the future revenue stream attributable to these lists or
relationships.


Where the acquired asset is seen as having a finite useful economic life, it is
subject to amortisation over the period for which the group has the benefit of
these assets.


(iv)    Software

Where computer software is not an integral part of a related item of property,
plant and equipment, the software is capitalised as an intangible asset.


Acquired computer software licences are capitalised on the basis of the costs
incurred to acquire and bring them to use. Direct costs associated with the
production of identifiable and unique internally generated software products
controlled by the group that will probably generate economic benefits exceeding
costs beyond one year are capitalised. Direct costs include software development
employment costs (including those of contractors used) and an appropriate
portion of overheads. Capitalised computer software, licence and development
costs are amortised over their useful economic lives of between 3 and 5 years.


Internally generated costs associated with developing or maintaining computer
software programmes are expensed as incurred.


(v)     Research and development

Research and general development expenditure is written off in the period in
which it is incurred.


Certain applied development costs are only capitalised as internally generated
intangible assets where there is a clearly defined project, separately
identifiable expenditure, an outcome assessed with reasonable certainty (in
terms of feasibility and commerciality), future costs exceed expected revenue
and the group has the resources to complete the task. Such assets are amortised
on a straight line basis over their useful lives.


SABMiller plc
NOTES TO THE INTERIM FINANCIAL REPORT (continued)                             35



9.  Accounting policies under IFRS (continued)


g)                   Property, plant and equipment


Property, plant and equipment are stated at cost net of accumulated depreciation
and any impairment losses.


Cost includes expenditure that is directly attributable to the acquisition of
the assets. Subsequent costs are included in the asset's carrying value or
recognised as a separate asset as appropriate, only when it is probable that
future economic benefits associated with the specific asset will flow to the
group and the cost can be measured reliably. Repairs and maintenance costs are
charged to the income statement during the financial period in which they are
incurred.


(i)       Land and buildings

Land and buildings have been included at their cost as permitted by IFRS 1. Cost
represents the carrying value of land and buildings as at the transition date to
IFRS, being 1 April 2004.


(ii)     Assets in the course of construction

Assets in the course of construction are carried at cost less any impairment
loss. Cost includes professional fees and for qualifying assets certain
borrowing costs as determined below. Depreciation of these assets, on the same
basis as other property assets commences when the assets are ready for their
intended use.


(iii)    Assets held under finance leases

Assets held under finance leases which result in the group bearing substantially
all the risks and rewards incidental to ownership are capitalised as property,
plant and equipment. Finance lease assets are initially recognised at an amount
equal to the lower of their fair value and the present value of the minimum
lease payments at inception of the lease, then depreciated over their useful
lives. The capital element of future obligations under the leases is included as
a liability in the balance sheet classified, as appropriate, as a current or
non-current liability. The interest element of the lease obligations is charged
to the income statement over the period of the lease term to reflect a constant
rate of interest on the remaining balance of the obligation for each financial
period.


(iv)    Containers

Containers in circulation are recorded within plant, property and equipment at
cost net of accumulated depreciation less any impairment loss.


Depreciation of returnable bottles and containers is recorded to write the
containers off over the course of their economic life. This is typically
undertaken in a two stage process;

*          The excess over deposit value is written down over a period of 1 - 3
years.

*          Provisions are made against the deposit values for breakages and loss
in trade together with a design obsolescence provision held to write off the
deposit value over the expected bottle design period - which is a period of no
more than 10 years from the inception of a bottle design. This period is
shortened where appropriate by reference to market dynamics and the ability of
the entity to use bottles for different brands.


(v)     Depreciation

No depreciation is provided on freehold land or assets in the course of
construction. In respect of all other plant, property and equipment,
depreciation is provided on a straight-line basis at rates calculated to write
off the cost or valuation, less the estimated residual value of each asset over
its expected useful life as follows:


Freehold buildings                                  20 - 50 years
Leasehold land and buildings                        Shorter of the lease term or 50 years
Plant, vehicles and systems                         2 -30 years
Containers, including returnable containers         1 -10 years
Assets held under finance leases                    Lower of the lease term of life of the asset


The group regularly reviews all of its depreciation rates and residual values to
take account of any changes in circumstances. When setting useful economic
lives, the principal factors the group takes into account are the expected rate
of technological developments, expected market requirements for the equipment
and the intensity at which the assets are expected to be used.


The profit or loss on the disposal of an asset is the difference between the
disposal proceeds and the net book amount, including any revaluation, of the
asset. Any amount in the revaluation reserve relating to such an asset is
transferred across reserves to retained earnings and is not included in the
income statement for the financial year.


(vi)    Capitalisation of borrowing costs

Direct financing costs incurred, before tax, on major capital projects during
the period of development or construction that necessarily take a substantial
period of time to be developed for their intended use are capitalised up to the
time of completion of the project.


h)        Advance payments made to customers (principally hotels, restaurants,
bars and clubs)


Advance payments made to customers are conditional on the achievement of
contracted sales targets or marketing commitments. The group records such
payments as prepayments initially at fair value and amortised in the income
statement over the relevant period to which the customer commitment is made
(typically 3-5 years). These prepayments are recorded net of any impairment
losses.


Where there is a volume target the amortised cost of the advance is included in
sales discounts and where there are specific marketing activities/commitments
the cost is included in marketing. The amounts capitalised are reassessed
annually for achievement of targets and are written down if there are impairment
concerns.


Assets held at customer premises are included within plant, property and
equipment and are depreciated in line with group policies on similar assets.


SABMiller plc
NOTES TO THE INTERIM FINANCIAL REPORT (continued)                             36



9.  Accounting policies under IFRS (continued)


i)          Inventories


Inventories are stated at the lower of cost incurred in bringing each product to
its present location and condition, and net realisable value, as follows:


*          Raw materials, consumables and goods for resale: Purchase cost net of
discounts and rebates on a first-in first-out basis (FIFO).

*          Finished goods and work in progress: Raw material cost plus direct
costs and a proportion of manufacturing overhead expenses on a FIFO basis.


Net realisable value is based on estimated selling price less further costs
expected to be incurred to completion and disposal.


j)         Financial assets and financial liabilities


Financial assets and financial liabilities are initially recorded at fair value
(plus any directly attributable transactions costs where applicable). For those
financial instruments that are not subsequently held at fair value, the group
assesses whether there is any objective evidence of impairment at each balance
sheet date.


Financial assets are recognised when the group has rights or other access to
economic benefits. Such assets consist of cash, equity instruments, a
contractual right to receive cash or another financial asset, or a contractual
right to exchange financial instruments with another entity on potentially
favourable terms. Financial assets are derecognised when the right to receive
cash flows from the asset have expired or have been transferred and the group
has transferred substantially all risks and rewards of ownership.


Financial liabilities are recognised when there is an obligation to transfer
benefits and that obligation is a contractual liability to deliver cash or
another financial asset or to exchange financial instruments with another entity
on potentially unfavourable terms. Financial liabilities are derecognised when
they are extinguished, that is discharged, cancelled or expired.


If a legally enforceable right exists to set off recognised amounts of financial
assets and liabilities, which are in determinable monetary amounts, the relevant
financial assets and liabilities are offset.


Interest costs are charged against income in the year in which they accrue.
Premiums or discounts arising from the difference between the net proceeds of
financial instruments purchased or issued and the amounts receivable or
repayable at maturity are included in the effective interest calculation and
taken to net interest payable over the life of the instrument.


(i)       Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They arise when
the group provides money, goods or services directly to a debtor with no
intention of trading the receivable. They are included in current assets, except
for maturities of greater than 12 months after the balance sheet date which are
classified as non-current assets. Loans and receivables are included in trade
and other receivables in the balance sheet. Investments in this category are
initially recognised at fair value including originating fees and transaction
costs, and subsequently measured at amortised cost using the effective interest
method less provision for impairment.


(ii)     Available-for-sale investments

Available-for-sale investments are non-derivative financial assets that are
either designated in this category or not classified as financial assets at fair
value through the income statement, or loans and receivables. Investments in
this category are included in non-current assets unless management intends to
dispose of the investment within 12 months of the balance sheet date. They are
initially recognised at fair value plus transaction costs and subsequently
re-measured at fair value. Gains and losses arising from changes in fair value
including any related foreign exchange movements are recognised in equity. On
disposal or impairment of available-for-sale investments, any gains or losses in
equity are recycled through the income statement.


Purchases and sales of investments are recognised on the date on which the group
commits to purchase or sell the asset. Investments are derecognised when the
rights to receive cash flows from the investments have expired or have been
transferred and the group has transferred substantially all risks and rewards of
ownership.


(iii)    Trade receivables

Trade receivables are initially recognised at fair value and subsequently
measured at amortised cost less provision for impairment.


A provision for impairment of trade receivables is established when there is
objective evidence that the group will not be able to collect all amounts due
according to the terms of the receivables. The amount of the provision is the
difference between the asset's carrying value and the present value of the
estimated future cash flows discounted at the original effective interest rate.
This provision is recognised in the income statement.


(iv)    Cash and cash equivalents

Cash and cash equivalents include cash in hand, bank deposits repayable on
demand, other short-term highly liquid investments with original maturities of
three months or less, and bank overdrafts.


Bank overdrafts are shown within borrowings in current liabilities and are
included within cash and cash equivalents on the face of the cash flow statement
as they form an integral part of the group's cash management.


(v)     Derivative financial assets and financial liabilities

Derivative financial assets and financial liabilities are financial instruments
whose value changes in response to an underlying variable, require little or no
initial investment and are settled in the future.


These include derivatives embedded in host contracts. Such embedded derivatives
need not be accounted for separately if the host contract is already fair
valued; if it is not considered as a derivative if it was freestanding; or if it
can be demonstrated that it is closely related to the host contract. There are
certain currency exemptions which the group has applied to these rules which
limit the need to account for certain potential embedded foreign exchange
derivatives. These are: if a contract is denominated in the functional currency
of either party; where that currency is commonly used in international trade of
the good traded; or if it is commonly used for local transactions in an economic
environment.


SABMiller plc
NOTES TO THE INTERIM FINANCIAL REPORT (continued)                             37


9.  Accounting policies under IFRS (continued)


j)       Financial assets and financial liabilities (continued)


(v)   Derivative financial assets and financial liabilities (continued)

Derivative financial assets and liabilities are analysed between current and
non-current assets and liabilities on the face of the balance sheet, depending
on when they are expected to mature.


For derivatives that have not been designated to a hedging relationship, all
fair value movements are recognised immediately in the income statement. See
note (v) for the group's accounting policy on hedge accounting.


(vi)    Trade payables

Trade payables are initially recognised at fair value and subsequently measured
at amortised cost.


Trade payables are analysed between current and non-current liabilities on the
face of the balance sheet, depending on when the obligation to settle will be
realised.


(vii)  Borrowings

Borrowings are recognised initially at fair value, net of transactions costs and
are subsequently stated at amortised cost and include accrued interest and
prepaid interest.  Borrowings are classified as current liabilities unless the
group has an unconditional right to defer settlement of the liability for at
least 12 months from the balance sheet date.


k)        Impairment


This policy covers all assets except inventories (see note i), financial assets
(see note j), non-current assets classified as held for sale (see note l), and
deferred tax assets (see note s).


Impairment reviews are performed by comparing the carrying value of the
non-current asset to its recoverable amount, being the higher of the fair value
less costs to sell and value in use. The fair value less costs to sell is
considered to be the amount that could be obtained on disposal of the asset. The
value in use of the asset is determined by discounting, at a market based
pre-tax discount rate, the expected future cash flows resulting from its
continued use, including those arising from its final disposal. When the
carrying values of non-current assets are written down by any impairment amount,
the loss is recognised in the income statement in the period in which it is
incurred.


Where the asset does not generate cash flows that are independent from the cash
flows of other assets the group estimates the recoverable amount of the cash
generating unit (CGU) to which the assets belongs. For the purpose of conducting
impairment reviews, CGU's are considered to be groups of assets and liabilities
that are separately identifiable cash flows. They also include those assets and
liabilities directly involved in producing the income and a suitable proportion
of those used to produce more than one income stream.


When an impairment is recognised, the impairment loss is held firstly against
any specifically impaired assets of the CGU, then taken against goodwill
balances and if there is a remaining loss it is set against the remaining
intangible and tangible assets on a pro-rata basis.



Should circumstances or events change and give rise to a reversal of a previous
impairment loss, the reversal is recognised in the income statement in the
period in which it occurs and the carrying value of the asset is increased. The
increase in the carrying value of the asset is restricted to the amount that it
would have been had the original impairment not occurred. Impairment losses in
respect of goodwill are irreversible.


Intangible non-current assets with an indefinite life and goodwill are tested
annually for impairment. Assets subject to amortisation are reviewed for
impairment if circumstances or events change to indicate that the carrying value
may not be fully recoverable.


l)          Non-current assets held for resale


Non-current assets and all assets and liabilities classified as held for resale
are measured at the lower of carrying value and fair value less costs to sell.


Such assets are classified as held for resale if their carrying amount will be
recovered through a sale transaction rather than through continued use. This
condition is regarded as met only when a sale is highly probable, the asset or
disposal group is available for immediate sale in its present condition and when
management is committed to the sale which is expected to qualify for recognition
as a completed sale within one year from date of classification.


m)      Provisions


Provisions are recognised when there is a present obligation, whether legal or
constructive, as a result of a past event for which it is probable that a
transfer of economic benefits will be required to settle the obligation and a
reliable estimate can be made of the amount of the obligation. Such provisions
are calculated on a discounted basis where the effect is material to the
original undiscounted provision. The carrying amount of the provision increases
in each period to reflect the passage of time and the unwinding of the discount
and the movement is recognised in the income statement within interest costs.


Restructuring provisions comprise lease termination penalties and employee
termination payments. Provisions are not recognised for future operating losses
however provisions are recognised for onerous contracts where a contract is
expected to be loss making (and not merely less profitable than expected).


n)        Share capital


Ordinary shares are classified as equity. The convertible participating shares
and the non-voting convertible shares are also classified as equity. Incremental
costs directly attributable to the issue of new shares or options are shown in
equity as a deduction, net of tax, from the proceeds. Incremental costs directly
attributable to the issue of new shares or options, or for the acquisition of a
business, are included in the share premium account.




SABMiller plc
NOTES TO THE INTERIM FINANCIAL REPORT (continued)                             38



9.  Accounting policies under IFRS (continued)


o)        Investments in own shares and those shares held by employee benefit
trusts


Shares held by employee share ownership plans and employee benefit trusts are
treated as a deduction from equity until the shares are cancelled, reissued, or
disposed of. The SABMiller plc shares held by Safari Ltd, a special purpose
vehicle, are classified similarly.


Net purchases of such shares are classified in the cash flow statement as a net
purchase of own shares for share trusts within net cash from financing
activities.


Where such shares are subsequently sold or reissued any consideration received,
net of any directly attributable incremental costs and related tax effects, is
included in equity attributable to the company's equity shareholders.


p)        Revenue recognition


(i)       Sale of goods and services

Revenue represents the net invoice value of goods and services provided to third
parties and is recognised when the risks and rewards of ownership are
substantially transferred.


The group presents revenue gross of excise duties because unlike value added
tax, excise is not directly related to the value of sales. It is not generally
recognised as a separate item on invoices, increases in excise are not always
directly passed on to customers, and the group cannot reclaim the excise where
customers do not pay for product received. The group therefore considers excise
as a cost to the group and reflects it as a production cost. Consequently any
excise that is recovered in the sale price is included in revenue.


Revenue excludes value added tax. It is stated net of price discounts,
promotional discounts and after an appropriate amount has been provided to cover
the sales value of credit notes yet to be issued that relate to the current and
prior periods.


The same recognition criteria also apply to the sale of by-products and waste
(such as spent grain, malt dust and yeast) with the exception that these are
included within other income.


(ii)     Interest income

Interest income is recognised using the effective interest method.


When a receivable is impaired the group reduces the carrying amount to its
recoverable amount by discounting the estimated future cash flows at the
original effective interest rate, and continuing to unwind the discount as
interest income.


(iii)    Royalty income

Royalty income is recognised on an accruals basis in accordance with the
relevant agreements and is included in other income.


(iv)    Dividend income

Dividend income is recognised when the right to receive payment is established.


q)        Operating leases


Rentals paid and incentives received on operating leases are charged or credited
to the income statement on a straight-line basis over the lease term.


r)         Exceptional items


Where certain expense or revenue items recorded in a period are material by
their size or incidence, the group reflects such items as exceptional items
within a separate line on the income statement except for those exceptional
items that relate to associates, interest and tax. (Associates, interest and tax
exceptional items are only referred to in the notes to the consolidated
financial statements).


Exceptional items are also summarised by class in the segmental analyses,
excluding those that relate to interest and tax.


Where certain income statement items incurred are of a capital nature or are
considered material and non-recurring, the group proposes to continue to present
alternative earnings per share calculations both on a headline (under the IIMR
definition) and on an adjusted basis.


s)        Taxation


The tax expense for the period comprises current and deferred tax. Tax is
recognised in the income statement except to the extent that it relates to items
recognised directly in equity, in which case it is recognised in equity.


Current tax expense is based on the results for the period as adjusted for items
that are not taxable or not deductible. The group's liability for current
taxation is calculated using tax rates and laws that have been enacted or
substantively enacted by the balance sheet date.


Deferred tax is provided in full using the liability method, in respect of all
temporary differences arising between the tax bases of assets and liabilities
and their carrying values in the consolidated financial statements, except where
the temporary difference arises from goodwill or from the initial recognition
(other than a business combination) of other assets and liabilities in a
transaction that affects neither accounting nor taxable profit.


Deferred tax liabilities are recognised where the carrying value of an asset is
greater than its tax base, or where the carrying value of a liability is less
than its tax base. Deferred tax is recognised in full on temporary differences
arising from investment in subsidiaries and associates, except where the timing
of the reversal of the temporary difference is controlled by the group and it is
probable that the temporary difference will not reverse in the foreseeable
future. This includes taxation in respect of the retained earnings of overseas
subsidiaries only to the extent that, at the balance sheet date, dividends have
been accrued as receivable or a binding agreement to distribute past earnings in
future periods has been entered into by the subsidiary. Deferred income tax is
also recognised in respect of the unremitted retained earnings of overseas
associates as the group is not able to determine when such earnings will be
remitted and when such additional tax such as withholding taxes might be
payable.





SABMiller plc
NOTES TO THE INTERIM FINANCIAL REPORT (continued)                             39



9.  Accounting policies under IFRS (continued)


s)     Taxation (continued)


A net deferred tax asset is regarded as recoverable and therefore recognised
only when, on the basis of all available evidence, it is probable that future
taxable profit will be available against which the temporary differences
(including carried forward tax losses) can be utilised.


Deferred tax is measured at the tax rates expected to apply in the periods in
which the timing differences are expected to reverse based on tax rates and laws
that have been enacted or substantively enacted at balance sheet date. Deferred
tax is measured on a non-discounted basis.


t)          Dividend distributions


Dividend distributions to equity holders of the parent are recognised as a
liability in the group's financial statements in the period in which the
dividends are approved by the company's shareholders. Interim dividends are
recognised when approved by the board.  Dividends declared after the balance
sheet date are not recognised, as there is no present obligation at the balance
sheet date.


u)           Employee benefits


(i)       Wages and salaries

Wages and salaries for current employees are recognised in the income statement
as the employees' services are rendered.


(ii)     Vacation and long term service awards costs

The group recognises a liability and an expense for accrued vacation pay when
such benefits are earned and not when these benefits are paid.


The group also recognises a liability and an expense for long term service
awards where cash is paid to the employee at certain milestone dates in a career
with the group. Such accruals are appropriately discounted to reflect the future
payment dates at discount rates determined by reference to local high quality
corporate bonds.


(iii)    Profit-sharing and bonus plans

The group recognises a liability and an expense for bonuses and profit-sharing,
based on a formula that takes into consideration the profit attributable to the
company's shareholders after certain adjustments.


The group recognises a provision where contractually obliged or where there is a
past practice that has created a constructive obligation. At a mid year point an
accrual is maintained for the appropriate proportion of the expected bonuses
which would become payable at the year end.


(iv)    Share-based compensation

The group operates a variety of equity-settled, share-based compensation plans.
These comprise share option plans (with and without non-market performance
conditions attached) and a performance share award scheme (with market
conditions attached). An expense is recognised to spread the fair value of each
award granted after 7 November 2002 over the vesting period on a straight-line
basis, after allowing for an estimate of the share awards that will eventually
vest. This expense is offset by a corresponding adjustment made to equity over
the remaining vesting period. The estimate of the level of vesting is reviewed
at least annually, with any impact on the cumulative charge being recognised
immediately. The charge is based on the fair value of the award as at the date
of grant, as calculated by various binomial model calculations.


The charge is not reversed if the options are not exercised because the market
value of the shares is lower than the option price at the date of grant.


The proceeds received net of any directly attributable transaction costs are
credited to share capital (nominal value) and share premium when the options are
exercised.


(v)     Pension obligations

The group has both defined benefit and defined contribution plans.


The liability recognised in the balance sheet in respect of defined benefit
pension plans is the present value of the defined benefit obligation at the
balance sheet date less the fair value of plan assets, together with adjustments
for any actuarial gains or losses and unrecognised past service costs. The
defined benefit obligation is calculated annually by independent actuaries using
the projected unit credit method. The present value of the defined benefit
obligation is determined by discounting the estimated future cash outflows using
interest rates of high-quality corporate bonds that are denominated in the
currency in which the benefits will be paid, and that have terms to maturity
approximating to the terms of the related pension liability.


Actuarial gains and losses arising from experience adjustments and changes in
actuarial assumptions are recognised in full as they arise outside of income
statement and are presented in the statement of recognised income and expense,
with the exception of gains or losses arising from changes in the benefits
regarding past services, which are recognised in the income statement.


Past-service costs are recognised immediately in the income statement, unless
the changes to the pension plan are conditional on the employees remaining in
service for a specified period of time. In this case, the past-service costs are
amortised on a straight-line basis over the vesting period.


The contributions to defined contribution plans are recognised as an expense as
the costs become payable. The contributions are recognised as employee benefit
expense when they are due. Prepaid contributions are recognised as an asset to
the extent that a cash refund or a reduction in the future payments is
available.




SABMiller plc
NOTES TO THE INTERIM FINANCIAL REPORT (continued)                             40



9.  Accounting policies under IFRS (continued)


u)     Employee benefits (continued)


(vi)    Other post-employment obligations

Some group companies provide post-retirement healthcare benefits to qualifying
employees. The expected costs of these benefits are assessed in accordance with
the advice of qualified actuaries and contributions are made to the relevant
funds over the expected service lives of the employees entitled to those funds.
Actuarial gains and losses arising from experience adjustments, and changes in
actuarial assumptions, are charged or credited to the income statement over the
expected average remaining working lives of the related employees. These
obligations are valued annually by independent qualified actuaries.


(vii)  Termination benefits

Termination benefits are payable when employment is terminated before the normal
retirement date, or whenever an employee accepts voluntary redundancy in
exchange for these benefits. The group recognises termination benefits when it
is demonstrably committed to terminating the employment of current employees
according to a detailed formal plan without possibility of withdrawal, or
providing termination benefits as a result of an offer made to encourage
voluntary redundancy. Benefits falling due more than 12 months after balance
sheet date are discounted to present value in a similar manner to all long term
employee benefits.


v)         Hedge accounting


The derivative instruments used by the group, which are used solely for hedging
purposes (i.e. to offset foreign exchange and interest rate risks), comprise
interest rate swaps and forward foreign exchange contracts. Such derivative
instruments are used to alter the risk profile of an existing underlying
exposure of the group in line with the group's risk management policies. The
group also has derivatives embedded in other contracts primarily cross border
foreign currency supply contracts for raw materials.


Derivatives are initially recorded at fair value on the date a derivative
contract is entered into and are subsequently re-measured at their fair value.
The method of recognising the resulting gain or loss depends on whether the
derivative is designated as a hedging instrument, and if so, the nature of the
hedging relationship.


In order to qualify for hedge accounting, the group is required to document the
relationship between the hedged item and the hedging instrument.  The group is
also required to document and demonstrate that the relationship between the
hedged item and the hedging instrument will be highly effective.  This
effectiveness test is re-performed at each period end to ensure that the hedge
has remained and will continue to remain highly effective.


The group designates certain derivatives as either: hedges of the fair of
recognised assets or liabilities or a firm commitment (fair value hedge); hedges
of highly probable forecast transactions or commitment (cash flow hedge); or
hedges of net investments in foreign operations.


(i)       Fair value hedges

Fair value hedges comprise derivative financial instruments designated in a
hedging relationship to manage the group's interest rate risk to which the fair
value of certain assets and liabilities are exposed. Changes in the fair value
of the derivative offset the relevant changes in the fair value of the
underlying hedged item attributable to the hedged risk in the income statement
in the period incurred.


Gains or losses on fair value hedges that are regarded as highly effective are
recorded in the income statement together with the gain or loss on the hedged
item attributable to the hedged risk.


(ii)     Cash flow hedges

Cash flow hedges comprise derivative financial instruments designated in a
hedging relationship to manage currency risk to which the cash flows of certain
liabilities are exposed. The effective portion of changes in the fair value of
the derivative that is designated and qualifies for hedge accounting is
recognised in equity. The ineffective portion is recognised immediately in the
income statement. Amounts accumulated in equity are recycled to the income
statement in the period in which the hedged item affects profit or loss.
However, where a forecasted transaction results in a non-financial asset or
liability, the accumulated fair value movements previously deferred in equity
are included in the initial cost of the asset or liability.


(iii)    Hedges of net investments in foreign operations

Hedges of net investments in foreign operations comprise either foreign currency
borrowings or derivatives (typically forward exchange contracts) designated in a
hedging relationship.


Gains or losses on hedging instruments that are regarded as highly effective are
recognised in equity.  These largely offset foreign currency gains or losses
arising on the translation of net investments that are recorded in equity, in
the foreign currency translation reserve. The ineffective portion of gains or
losses on hedging instruments is recognised immediately in the income statement.
Amounts accumulated in equity are only recycled to the income statement upon
disposal of the net investment.


Where a derivative ceases to meet the criteria of being a hedging instrument or
the underlying exposure which it is hedging is sold, matures or is extinguished,
hedge accounting is discontinued.  A similar treatment is applied where the
hedge is of a future transaction and that transaction is no longer likely to
occur.


Certain derivative instruments, whilst providing effective economic hedges under
the group's policies, are not designated as hedges.  Changes in the fair value
of any derivative instruments that do not qualify or have not been designated as
hedges are recognised immediately in the income statement. The group does not
hold or issue derivative financial instruments for speculative purposes.


w)       Deposits by customers


Bottles and containers in circulation are recorded within property, plant and
equipment and a corresponding liability is recorded in respect of the obligation
to repay the customers' deposits.  Deposits paid by customers for branded
returnable containers are reflected in the balance sheet within current
liabilities.  Any estimated liabilities that may arise in respect of deposits
for unbranded containers and bottles is shown in provisions.



SABMiller plc
FORWARD LOOKING STATEMENTS                                                    41







This announcement does not constitute an offer to sell or issue or the
solicitation of an offer to buy or acquire ordinary shares in the capital of
SABMiller plc (the "company") or an inducement to enter into investment activity
in any jurisdiction.


This announcement includes "forward-looking statements".  These statements may
contain the words "anticipate", "believe", "intend", "estimate", "expect" and
words of similar meaning.  All statements other than statements of historical
facts included in this announcement, including, without limitation, those
regarding the company's financial position, business strategy, plans and
objectives of management for future operations (including development plans and
objectives relating to the company's products and services) are forward-looking
statements.  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 from
future results, performance or achievements expressed or implied by such
forward-looking statements.  Such forward-looking statements are based on
numerous assumptions regarding the company's present and future business
strategies and the environment in which the company will operate in the future.
These forward-looking statements speak only as at the date of this announcement.
  The company expressly disclaims any obligation or undertaking to disseminate
any updates or revisions to any forward-looking statements herein to reflect any
change in the company's expectations with regard thereto or any change in
events, conditions or circumstances on which any such statement is based.







SABMiller plc
ADMINISTRATION                                                                42





                                SABMiller plc
                         (Registration No. 3528416)


                              Company Secretary
                               A O C Tonkinson


                              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
                     investor.relations@sabmiller.com
                         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
END

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