UK & South Africa: SABMiller reported beverage volumes were up 9% on an organic basis for the six months ended 30 September 2006

SABMiller plc announced November 09 its interim (unaudited) results for the six months ended 30 September 2006.

Group lager volumes up 29% to 117 million hectolitres (hl), organic growth of 9%
South American volumes exceeding expectations
Continued strong volume and earnings growth in Europe
Performance in North America reflects challenging trading conditions
Excellent volume growth in China and India
South Africa earnings driven by premium segment growth
Interim dividend increase of 8%, supported by strong cash flows

Statement from Graham Mackay, chief executive:

“This good start to the year is a further demonstration of the advantage we enjoy in our access to growth markets and our ability to offer our customers and consumers comprehensive and varied portfolios of unique beer brands. The combination of strong volume growth together with good earnings contributions from around the group supports our confidence for the future.”

Business review

The group has delivered satisfactory growth for the half year on top of the strong performance in the comparable period last year. The company’s portfolio of developing and developed market businesses, using the strength of SABMiller’s local, regional and international brands, drove organic growth in overall lager volumes of 9% and in EBITA of 13% on a constant currency basis. The group EBITA margin increased to 17.1%, a 110 basis points improvement over the prior period.

Overall, these results continue to demonstrate the group’s growth profile and the advantages of the company’s global footprint. Total beverage volumes were up 9% on an organic basis, and 30% above last year on a reported basis at 144 million hectolitres (hl) which includes the first full contribution from the company’s business in South America. Total lager volumes were 117 million hl. SABMiller saw particularly strong lager volume growth in Europe, with market share gains in a number of countries buoyed by the World Cup, and in China where SABMiller’s associate, CR Snow, became the country’s largest brewer by sales volume in the first half of calendar 2006, and its national brand ‘Snow’ moved into the top ten beer brands by volume worldwide. In North America Miller Brewing Company has continued to be impacted by competitive pricing conditions and significant increases in commodity and energy prices. In South America the company’s integration activities are proceeding well with volume growth across the four countries running ahead of the company’s initial expectations and SABMiller is accelerating its capital investment programme. The current growth rates in South America give us further confidence in the long term potential of this business.

The strong volume growth, further enhanced by price and mix benefits, has resulted in a good increase in EBITA. In Europe SABMiller enjoyed mix gains across much of the division; from Africa & Asia, SABMiller saw price improvements in both Angola and Mozambique, and from South Africa SABMiller continued to benefit from the consumer shift to premium products.

Reported EBITA of US$1,781 million, up 41%, includes the first full half year contribution from South America. Weighted average currency rates as a whole were largely stable in the six month period. On an organic, constant currency basis, EBITA increased by 13% reflecting strong operating performances including improved pricing and mix, in most of its key markets. Adjusted earnings are up by 27%, to US$846 million, whilst adjusted earnings per share of 56.6 US cents have grown by 7% for the first six months on a reported basis, reflecting the increased number of shares in issue following the transaction in South America during 2005. An interim dividend of 14.0 US cents per share, an 8% increase, will be paid to shareholders on 22 December 2006.

SABMiller continues to make progress against its four strategic priorities.

Creating a business portfolio for growth
Over the period SABMiller continued to expand and develop its global footprint to ensure access to markets that will deliver a combination of volume growth and future value. In July, its Chinese associate CR Snow acquired two further breweries in the Zhejiang and Anhui provinces, extending its influence into the major Chinese cities of Shanghai, Hangzhou and Ningbo. In August, SABMiller announced the creation of a joint venture with Coca-Cola Amatil in Australia, to market and distribute directly its international premium brands which have a small, but growing presence there.

Investing in strong local, regional and international brands
SABMiller has more beer brands in the world’s top 50 than any other brewer. Its ability to create and manage comprehensive brand portfolios in each local market gives its group a unique competitive advantage. During the period SABMiller acquired the McKenzie River Corporation’s Sparks and Steel Reserve brands in the US and simultaneously agreed a deal with McKenzie River that will give Miller Brewing Company access to McKenzie River’s future brand innovation programme. In August SABMiller announced the acquisition of the Foster’s brand and brewery in India. In South America, its plans to create differentiated positions for all the company’s brands and to upgrade packaging are well advanced, and in the next six to eighteen months SABMiller will establish new price frameworks and upgrade sales efforts across the board.

Driving local performance
SABMiller continued to drive superior performance from its existing businesses over the period with notable volume and mix benefits. In Poland, volumes were up 11% substantially ahead of the market and in the last twelve months SABMiller has added a further 1% of market share to 38%. In Russia, volumes of its premium brand portfolio were ahead 25%, almost twice the market growth rate, and its largest brand, Zolotaya Bochka was up 43%. In Mozambique and Tanzania, SABMiller has extended its market penetration into rural areas whilst simultaneously driving mix and volume improvements. SABMiller’s Italian business, Birra Peroni, grew its core brands, Peroni and Nastro Azzurro by 4% and 9% respectively over the period.

Benefits from global scale
The company’s ability to source and develop talent at a global level is becoming a key competitive advantage for the group. The SABMiller processes and techniques are being embedded in South America and SABMiller is starting to see the benefits in improved performance.

From the beginning of the next calendar year, Miller will begin importing into the US three of its South American brands, namely Cristal, Aguila and Cusquena, which will be targeted at the expanding South American communities. Peroni Nastro Azzurro which grew volumes over the period by 28% in the UK, and 23% in the US, was introduced into Poland in April and into Colombia in September.

Outlook

The group delivered satisfactory growth in the half year, enhanced by its new businesses in South America. SABMiller’s global footprint; its brands and its brand portfolios; and its ability to continue to leverage its global scale and to improve productivity, give the company confidence that SABMiller will continue to make progress.

Operational review

Latin America
The Latin America segment includes the results of SABMiller’s operations in Central America, as well as those in South America. The completion date for the transaction was 12 October 2005. Accordingly the results for the current half year include a full six months for South America, but the comparative period does not and volume growth is discussed below on a pro-forma basis.

The first half of the financial year in South America saw strong trading performances in all countries, with total volumes up 11% (lager volumes up 11%) against the prior year. The timing of Easter and brand promotional campaigns capitalising on the World Cup assisted volumes during the first quarter, despite there being a number of “dry days” in various countries for electoral reasons as well as floods in the greater Bogota area.

Lager volumes in Colombia increased by 9%, despite the cycling of double digit growth in the prior year and an unusual number of “dry days” where for electoral reasons alcohol sales are banned. Total volumes grew by 10%, aided by economic growth of over 5%, as well as World Cup related marketing initiatives and an upgrade in point of sale activity. Aguila, SABMiller’s flagship brand and the leading brand in Colombia, recorded growth of 10%. In September SABMiller launched Peroni Nastro Azzurro – its first international brand to be brought to the region. The coming 18 months will see further development of the brand portfolio, with the renovation of six domestic brands, including the upgrade of both packaging and brand presentation, and the launch of further international and regional brands.

The strong volume growth has accelerated the need for additional capacity, especially in the western parts of Colombia. Accordingly, work has commenced on the construction of a new brewery on the outskirts of Cali, Colombia’s third largest city, which should come on stream in late 2007.

During June, the company announced the disposal of its fruit juice business, Productora de Jugos, for a cash consideration of approximately US$55 million. Completion of the sale is still subject to satisfaction of a number of conditions, principally the approval of the Colombian Superintendence of Industry and Commerce in accordance with Colombian merger control regulations.

SABMiller has made a series of offers to purchase the remaining shares of minority shareholders of Bavaria since obtaining control in October 2005 and the group shareholding in Bavaria is now 98% with an effective interest of 97.65%.

Lager volumes in Peru grew by 13% during the period driven by favourable economic conditions. GDP growth was 7.25% for the calendar year to 31 August 2006. Volumes have also been stimulated by competitive pricing in the market.

During the first half its market share has remained stable at some 92% despite the competitor expansion of distribution nationwide. Good volume growth was recorded in all regions and particularly in the South where the distribution of its main brand, Cristal, was extended during June. This, together with Cristal’s World Cup promotions in the country, has contributed to volume growth of over 30% for the brand.

Barena was launched in September, the first in a planned series of new brand introductions and renovations. SABMiller is accelerating investment for additional capacity and plans for its container upgrade programme are well advanced.

During the period under review, SABMiller acquired additional shares in Backus and Johnston, thereby increasing its effective interest to 93.7%.

SABMiller Ecuador operations performed strongly, with volume growth of over 16%, driven by the flagship mainstream brand Pilsener, which capitalised on the brand’s association with the World Cup. The brand was recently relaunched with enhanced graphics and labelling.

In Panama the beer market grew by 5.6%, fuelled by strong GDP growth, with Cervecería Nacional increasing its market share to 84%. Brands Atlas and Balboa have performed well, contributing to total volume growth of 7%. The price on the 285 ml main returnable bottle was increased by 16% in July. SABMiller is entering a period of heightened investment in all its major markets as evidenced by the recent launches in the premium segment of Peroni Nastro Azzurro in Colombia, Barena in Peru and Miller Genuine Draft in Panama and packaging upgrades for domestic brands. Furthermore exceptional costs of US$24 million have been recorded for integration and restructuring costs in the first half, with the majority of this related to brand portfolio designs and the container upgrade programme.

In Central America, both El Salvador and Honduras delivered good volume performances across the range of products. Lager volumes grew by 6% and carbonated soft drink (CSD) volumes improved by 7%. This, with some selected price increases, resulted in organic constant currency EBITA growth of 27%.

Europe

Europe again delivered an excellent result with EBITA up 28% (21% in organic constant currency terms). Total volumes were up 10% (9% organic growth) with strong growth in Poland, Russia, Romania and the UK. Premium (worthmore) volumes increased by 13% on an organic basis, assisting revenue per hectolitre to improve. EBITA margin expanded by 140 basis points to 21.3%.

In Poland volumes were up 11% compared to market growth of 7% and its market share has improved by a further 1% over the last twelve months to 38%.SABMiller’s Tyskie brand, the market leader, returned to growth – up 6%, leveraging its association with the national football team during the World Cup. Its Lech brand grew 7% with new variants making good contributions. In the economy segment the Zubr brand continued its strong performance growing by 23%, and Redds, its flavoured alcoholic beverage, was up 35%. These encouraging trends have also been stimulated by new multipacks in the off-premise trade, and consumer activation programmes in the on-premise trade. In both channels, SABMiller has focused on product visibility and availability of chilled product, employing enhanced point of sale equipment.

In the Czech Republic, the total beer market grew 1% assisted by World Cup activity, while the company’s volumes were up almost 1%. In line with our strategy to build value share in this market, worthmore volumes were up 3% and Pilsner Urquell grew by 4%, following the introduction in the on-premise of new draft formats.

In the off-premise trade, Gambrinus performed well supported by new packaging, including crates, and the introduction of multipacks. Exports to SABMiller’s key market, Germany, were up 37% benefitting from new packaging and an upweighting of the field sales force. Kozel, now produced in three countries, grew by 8% domestically and over 20% regionally.

In Russia, industry volumes were up 13%, temporarily boosted by disruption to wine and spirit supplies due to new excise labelling requirements. Its volumes grew 25%, assisted by significant marketing investment. Miller Genuine Draft volumes increased by 14% following the launch of a new half litre bottle and a related marketing campaign. Zolotaya Bochka, its biggest volume brand, performed strongly – up 43%, while Redds, Kozel and Pilsner Urquell all achieved good growth. SABMiller’s increased sales force, extended cooler programmes and focused trade marketing efforts have all contributed to improved profitability.

In Italy the industry grew 2%, notwithstanding the 19% excise increase year on year. Its core brands performed well with Peroni up 4% and Nastro Azzurro growing 9%, while Pilsner Urquell was ahead by over 30%. Total Birra Peroni volumes were level with the prior year’s comparable period, despite a 27% decline in private label volumes as a result of its managed exit strategy. Exports showed strong growth with Peroni Nastro Azzurro volumes up 28% in the UK.

In Romania, volume was up 13%, against industry growth of 17%. SABMiller’s business, Ursus Breweries, was capacity constrained during the first quarter but grew volumes by 24% in the second quarter. Its Timisoreana brand grew 27% with the launch of a new mainstream PET pack, and the Ciucas brand was up 22% in the economy segment. The number of on-premise outlets selling its Peroni Nastro Azzurro brand is being expanded and it has recently been launched in the off-premise channel.

In Hungary, Dreher’s volumes were up 4%, in line with the industry. Revenue per hl was impacted negatively by the inability to pass on fully the 21% effective increase in excise. Recent political instability and the introduction of fiscal austerity measures will impact consumer purchasing power going forward.

In Slovakia, its organic volume growth was in line with industry volume growth of 1%. In March 2006 SABMiller acquired 48% of Pivovar Topvar A.S., and have since increased SABMiller’s shareholding to 92%.

North America

Miller Brewing Company continued to experience a difficult trading environment due to competitive pricing conditions, market share gains by import and craft beers, and significant increases in commodity input costs. Miller has however sustained its marketing investment in major brands and continued to improve its overall organisational capabilities with a specific focus on brand marketing and main retailers.

As reported by the US Beer Institute, beer industry shipments to wholesalers (STWs) grew by 1.4% for the period, but excluding imports, which were up 8.6%, the US domestic industry grew by only 0.3%. Industry shipments to retailers (STR) performance for the same period is believed to have lagged STW growth as unfavourable weather in September resulted in increases in distributor inventories.

On an organic (excluding Sparks and Steel Reserve) comparable trading day basis, Miller’s US domestic STRs decreased by 3.6% over the six months while domestic STWs declined by 3.8%. Including Sparks and Steel Reserve volumes, Miller’s US domestic STRs decreased 2.6% on a comparable trading day basis (3.4% unadjusted), while actual reported domestic STWs declined 2.9%. Contract brewing volumes were lower by 5%, due primarily to the transfer of the Sparks and Steel Reserve volumes into the Miller system.

Miller Lite volumes recorded a low-single digit decline during the period. Marketing for Miller Lite has been increased with further investment in retail activation programmes. Miller High Life and Milwaukee’s Best franchise volumes both declined by mid-single digit levels due to particularly strong competitive pricing pressure in the economy segment, whilst Icehouse volumes were level with the prior period. Miller Genuine Draft volumes continued to decline.

Miller’s worthmore brand portfolio grew volumes by 8% which was driven by growth of the Leinenkugel’s franchise, following the successful launch of the Sunset Wheat variant, as well as continued rapid growth of Peroni Nastro Azzurro.

Total revenue declined by 1% compared with the prior period, to US$2,632 million. US domestic revenue excluding contract brewing also declined by 1% as higher front-line pricing and lower price promotions were offset by lower domestic volumes. Miller recorded firmer pricing across its portfolio than the other major domestic brewers.

EBITA for the period, of US$253 million, was 12% lower than the prior year’s US$286 million, mainly as a result of higher input costs of aluminium, glass and energy. Marketing expenditure was approximately level compared to the comparable period of the prior year.

Miller continues to focus efforts behind its flagship Miller Lite brand, while improving the performance of other key brands to protect Miller’s share of key industry segments. Miller is also reshaping its brand portfolio to capitalise on growth areas of the beer industry, including low-calorie, caffeinated, craft and import beers. In August, Miller completed the purchase of the Sparks and Steel Reserve brands from McKenzie River, adding two brands to the portfolio that are experiencing double-digit growth rates and offer significant expansion opportunities through main retailers. In September, Miller announced the geographic expansion of the Leinenkugel’s range to six additional markets across the US. The distribution and marketing of Peroni Nastro Azzurro is expanding the brand across key US cities, and Miller recently announced an increased focus on marketing and selling the Polish Tyskie brand as well as the importation of three of SABMiller’s Latin American brands into the US.

Profitability in the second half of the year will be affected by the ongoing competitive conditions, growth in import and craft beers, consumer-facing marketing investment behind Miller Lite, and high levels of commodity and energy prices.

Africa & Asia

Africa & Asia growth momentum continued in the period under review, with lager volume growth of 31% (organic growth of 24%) and reported EBITA growth of 14%, despite currency weakness in some of its countries. Geographic EBITA mix in Africa, combined with faster growth in Asia, resulted in a lower EBITA margin for the region.

Africa
Africa delivered a strong half year performance. Total Africa lager volumes (excluding Zimbabwe) were up 6%, driven by good performances from Mozambique, Uganda, Tanzania and Ghana. The company’s total CSD volumes grew by 24% (excluding Zimbabwe) as a result of both industry and market share growth in Angola. EBITA improved on prior year, despite the expected decline in EBITA in Botswana and rising input costs across Africa, particularly fuel costs.

In Mozambique, volume growth trends benefited from ongoing economic growth and increased distribution with volumes advancing 10% over the prior period.

Uganda recorded volume growth of 19% for the half year, with the Eagle brands continuing to perform well, despite an increase in excise tax for sorghum beers in June 2006. Its mainstream brands, Nile Special and Club, showed renewed growth whilst Chairman’s ESB benefited from exports to neighbouring countries.

Tanzania recovered from a slow start due to a longer than usual rainy season in the first quarter to record volume growth of 5%, and benefited from a strong agricultural sector in the second quarter. Among the core brands, Castle was a strong contributor to growth, up 10%. However increasing inflation and input cost pressures including rising fuel prices hindered EBITA margin development.

In Zambia volume growth was 5% for lager and 3% for CSDs. The rollout of the Eagle brand in Zambia has been successful, with its share of total volumes more than doubling to 15%.

Conditions in Botswana remained difficult; with volumes of both lager and soft drinks down by 13%. Consumer spending has not yet recovered from the impact of the Pula devaluations in the prior years. Rising commodity input prices have been exacerbated by exchange rate impacts.

In Ghana volumes grew by 35% driven by the recently launched Stone Extra Strong Lager brand.

SABMiller CSD businesses in Angola produced an excellent performance, with consumer demand stimulated by improved availability and extended pack offerings, resulting in market share gains and volume growth of 43%.
Its associate Castel grew total lager beer volumes by 11% and CSDs by 7%.

Asia
The excellent growth trend from its Asian businesses continued in the first half and EBITA for the region grew strongly despite the inclusion of start-up costs in Vietnam.

Volume growth in China of 32% (organic growth of 27%) was well in excess of industry growth, and was spread across all regions. During the period CR Snow became China’s largest brewer by volume and Snow is now acknowledged as the top selling beer brand in the country. Significant marketing, distribution and capital investments continue to be made behind the Snow brand. The volume growth and shift in mix towards Snow enhanced profitability, notwithstanding the costs of integration of recent acquisitions and start-up losses from its two new greenfield sites.

India experienced strong growth in volumes of over 40%, on a pro-forma basis for the first six months. The business has benefited from strong demand in Andhra Pradesh and de-regulation of markets in the Northern region. On 12 September 2006, SABMiller acquired the Foster’s brand and business in India. Foster’s has a strong position in the mild lager segment and complements SABMiller’s existing brand portfolio.

In Vietnam its greenfield brewery (in a joint venture with Vinamilk) is on target to commence operations early in the new calendar year. In Australia the group signed an agreement with Coca-Cola Amatil to market its international worthmore brands, and the venture is expected to be operational in mid November 2006.

South Africa: Beverages
Both beer and soft drinks delivered further volume growth in the six month period to September despite facing challenging comparatives in CSDs. Growth was assisted by an Easter trading period in the current year, a continuation of the strong trends in its premium beer brands and growth in its non-carbonated alternative soft drinks.

The growth rate of the South African economy continued over the last six months despite higher international crude oil prices and rising domestic interest rates. Household disposable income was buoyed by rising employment and wage levels as well as some tax relief for individuals. Consumption by households rose in line, led by higher purchases of durable and semi-durable goods. This was accompanied by higher debt levels which, in a rising local interest rate environment, may dampen volume growth going forward.

Lager volumes grew by 1% driven by strong performances by its premium and fruit alcoholic beverage (FAB) portfolios. Castle Lite, Miller Genuine Draft, Peroni Nastro Azzurro and Amstel were again the biggest contributors to the growth in the premium category with all these brands delivering double digit growth. The introduction of a bulk returnable pack in its Brutal Fruit product range in the previous financial year continued to benefit these brands.

Product and pack innovation continue. In October a new apple-flavoured premium FAB, Sarita, was launched, presented in a flint bottle with an easy-to-open rip tab crown, a first for South African consumers. SABMiller’s Redd’s brand has new, contemporary, pressure sensitive labels on both packs. These upgrades leverage the investment in new labelling capability initiated last year. SABMiller has also introduced a new 330ml returnable bottle for its mainstream lager beer.

Good progress was made in expanding direct distribution of both beer and soft drinks. The beer customer base increased by 8% and soft drink’s growth in direct store delivery customers was almost 5%.

Total soft drink beverage volumes grew by over 1%, led by strong growth in alternative beverages, particularly by water (Valpre and Bon Aqua) and energy drink (Power Play) portfolios. CSD volume growth was level with the previous year’s volumes which had grown 10% over the comparable period due to an unusually warm winter season.

Revenue growth of 5% was driven by increased sales volumes, selective price increases in lager and soft drink products and continuing growth of premium products. Tight cost control and favourable raw material hedging positions assisted EBITA to grow 10%, notwithstanding increased distribution costs to enable greater market penetration.

The completion of the liquor industry charter, in line with the BEE (Broad Based Black Economic Empowerment) Act, is contingent on the final publication of the Codes of Good Conduct. SABMiller expects that these codes will be published before the end of the financial year.

Sales of Appletiser continued to show strong growth both in South Africa and internationally with total volumes up 14%. Distell delivered growth in total volumes, revenue and profit.

Acquisitions and disposals
On 3 July 2006, the group announced that it had entered into an agreement to acquire the Sparks and Steel Reserve brands from US contract brewing partner McKenzie River Corporation for a cash consideration of US$215 million. This transaction was subsequently completed on 11 August 2006.

On 4 August 2006, the group announced that it had entered into an agreement to acquire a 100% interest in the Foster’s business and Foster’s brand in India for a cash consideration of US$120 million. This transaction was subsequently completed on 12 September 2006.

On 10 August 2006, the group announced that it had entered into a joint venture with Coca-Cola Amatil (CCA) to import, market and distribute SABMiller’s international premium brands in Australia. Under the terms of the agreement SABMiller and CCA will each hold a 50% interest in the joint venture, which will be known as Pacific Beverages Pty Ltd, and is expected to be operational by mid November 2006.

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 note 3. Exceptional charges of US$27 million reported during the period relate to integration costs, incurred by the Bavaria group of which US$24 million was incurred in the region and US$3 million in the corporate centre. In the prior comparable period there were no exceptional items.

Borrowings and net debt
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, has decreased to US$7,579 million from US$7,775 million at 31 March 2006 (as restated). Net debt comprising gross debt net of cash and cash equivalents and the loan participation deposit has decreased to US$6,732 million from US$7,107 million at 31 March 2006 (as restated). An analysis of net debt is provided in note 8. The group’s gearing (presented as a ratio of debt/equity) has decreased to 49.0% from 52.3% at 31 March 2006 (as restated).

On 27 June 2006, SABMiller plc successfully raised US$1,750 million of new debt through the issue of a US$300 million 3 year Floating Rate Note at US LIBOR plus 30 basis points, a US$600 million 6.2% 5 year bond and a US$850 million 6.5% 10 year bond. The proceeds of these issuances were used to refinance amounts drawn under committed facilities related to the Bavaria transaction, including the subsequent purchase of minority interests and the restructuring of priority debt.

The average borrowing rate for the total debt portfolio at 30 September 2006 was 6.7% (2005: 5.6%), compared to 6.9% at 31 March 2006.

Further progress has been made in the restructuring of priority debt at the subsidiary company level to remove structural subordination of senior lenders to SABMiller plc. In particular, debt in the Bavaria group comprising US$500 million 144A bonds and US$150 million (equivalent Colombian pesos) related to a securitisation programme were repaid in May 2006 and in October 2006 respectively.

Since 30 September 2006, the group has diversified further its sources of financing by launching on 12 October 2006 a US$1,000 million commercial paper programme. This programme also increases the flexibility of the group’s financing arrangements at a lower cost of debt.

Finance costs
Net finance costs increased to US$242 million, a 214% increase on the prior year’s finance costs of US$77 million, reflecting the increase in net debt following the consolidation of the Bavaria group from October 2005 and subsequent acquisition of minority interests.

Profit before tax
Profit before tax of US$1,378 million was up 22% on prior year, reflecting the inclusion of South America and performance improvements across the businesses which more than offset a number of exceptional items (as described above).

Taxation
SABMiller’s effective tax rate, of 35.7%, is marginally higher than the prior year period under review. It is higher than the prior year full year rate, reflecting a different geographic mix of profits across the group.

Earnings per share
The group presents adjusted basic earnings per share to exclude the impact of the amortisation of intangible assets (excluding software) and other non-recurring items, which include post-tax exceptional items, in order to present a more meaningful comparison for the years shown in the consolidated financial statements. Adjusted basic earnings per share of 56.6 US cents are up 7% on the prior comparable period, reflecting the improved performance noted above. An analysis of earnings per share is shown in note 5 to the financial statements.

Cash flow
Net cash generated from operating activities before working capital movements (EBITDA) increased by 39%, to US$1,964 million, compared to the prior period. The ratio of EBITDA to revenue increased in the period to 21.0% (2005: 20.1%).

Currencies: South African rand/Colombian peso
During the period, the rand weakened by 25% against the US dollar and ended the period at R7.76 to the US dollar compared to R6.20 at 31 March 2006, whilst the weighted average rand/dollar rate weakened by 5% to R6.81 compared with R6.47 in the prior year. The peso has weakened by 4% against the US dollar ending the period at COP2,394 to the US dollar, compared to COP2,292 at 31 March 2006.

Dividend
The board has declared an interim dividend of 14.0 US cents per share. The dividend will be payable on 22 December 2006 to shareholders registered on the London and Johannesburg registers on 1 December 2006. The ex-dividend trading dates will be 29 November 2006 on the London Stock Exchange (LSE) and 27 November 2006 on the JSE Limited (JSE). As the group reports in US dollars, dividends are declared in US dollars. They are payable in South African rand to shareholders on the Johannesburg register, in US dollars to shareholders on the London register with a registered address in the United States (unless mandated otherwise), and in sterling to all remaining shareholders on the London register.

The rate of exchange applicable on 16 November 2006 will be used for US dollar conversion into South
African rand and the rate of exchange on 4 December 2006 will be used for US dollar conversion into sterling. Currency conversion announcements will be made on the LSE's Regulatory News Service and on the JSE’s Stock Exchange News Service, indicating the rates of exchange to be applied. From the close of business on 16 November 2006 until the close of business on 1 December 2006, no transfers between the London and Johannesburg registers will be permitted, and from the close of business on 24 November 2006 until the close of business on 1 December 2006, no shares may be dematerialised or rematerialised.

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