EX-99.1

EX-99.1 2 d189399dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

LOGO

Unaudited Interim Report

for the six-month period ended 30 June 2021

The following is a review of our financial condition and results of operations as of 30 June 2021 and for the six-month periods ended 30 June 2021 and 2020, and of the key factors that have affected or are expected to be likely to affect our ongoing and future operations.

This document includes information from the previously published results announcement and unaudited interim report of Anheuser-Busch InBev SA/NV for the six-month period ended 30 June 2021, as amended to comply with the requirements of Regulation G and Item 10(e) of Regulation S-K promulgated by the U.S. Securities and Exchange Commission (“SEC”). The purpose of this document is to provide such additional disclosure as may be required by Regulation G and Item 10(e) and to delete certain information not in compliance with SEC regulations. This document does not update or otherwise supplement the information contained in the previously published results announcement and unaudited interim report.

Some of the information contained in this discussion, including information with respect to our plans and strategies for our business and our expected sources of financing, contain forward-looking statements that involve risk and uncertainties. You should read “Forward-Looking Statements” below for a discussion of the risks related to those statements. You should also read “Item 3. Key Information—D. Risk Factors” of our Annual Report on Form 20-F for the year ended 31 December 2020 filed with the SEC on 19 March 2021 (“2020 Annual Report”) for a discussion of certain factors that may affect our business, financial condition and results of operations. See “Presentation of Financial and Other Data” in our 2020 Annual Report for further information on our presentation of financial information.

We have prepared our interim unaudited condensed consolidated financial statements as of 30 June 2021 and for the six-month period ended 30 June 2021 and 2020 in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and in conformity with International Financial Reporting Standards as adopted by the European Union (“IFRS”). The financial information and related discussion and analysis contained in this report are presented in U.S. dollars except as otherwise specified. Unless otherwise specified the financial information analysis in this Form 6-K is based on interim unaudited condensed financial statements as of 30 June 2021 and for the six-month period ended 30 June 2021 and 2020. The reported numbers as of 30 June 2021 and for the six-month period ended 30 June 2021 and 2020 are unaudited, and in the opinion of management, include all normal adjustments that are necessary to present fairly the results for the interim periods. Due to seasonal fluctuations and other factors, the results of operations for the six-month period ended 30 June 2021 and 2020 are not necessarily indicative of the results to be expected for the full year. Certain monetary amounts and other figures included in this report have been subject to rounding adjustments. Accordingly, any discrepancies in any tables between the totals and the sums of amounts listed are due to rounding.

We are a publicly traded company (Euronext: ABI) based in Leuven, Belgium, with secondary listings on the Mexico (MEXBOL: ANB) and South Africa (JSE: ANH) stock exchanges and with American Depositary Receipts on the New York Stock Exchange (NYSE: BUD). Our Dream is to bring people together for a better world. Beer, the original social network, has been bringing people together for thousands of years. We are committed to building great brands that stand the test of time and to brewing the best beers using the finest natural ingredients. Our diverse portfolio of well over 500 beer brands includes global brands Budweiser^®, Corona^® and Stella Artois^®; multi-country brands Beck’s^®, Hoegaarden^®, Leffe^® and Michelob Ultra^®; and local champions such as Aguila^®, Antarctica^®, Bud Light^®, Brahma^®, Cass^®, Castle^®, Castle Lite^®, Cristal^®, Harbin^®, Jupiler^®, Modelo Especial^®, Quilmes^®, Victoria^®, Sedrin^® and Skol^®. Our brewing heritage dates back more than 600 years, spanning continents and generations. From our European roots at the Den Hoorn brewery in Leuven, Belgium. To the pioneering spirit of the Anheuser & Co brewery in St. Louis, US. To the creation of the Castle Brewery in South Africa during the Johannesburg gold rush. To Bohemia, the first brewery in Brazil. Geographically diversified with a balanced exposure to developed and developing markets, we leverage the collective strengths of approximately 164 000 employees based in nearly 50 countries worldwide. For 2020, AB InBev’s reported revenue was 46.9 billion US dollar (excluding joint ventures and associates).

Capitalized terms used herein and not defined have the meanings given to them in the 2020 Annual Report.

Forward-Looking Statements

There are statements in this document, such as statements that include the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “anticipate,” “estimate,” “project,” “may,” “might,” “could,” “believe,” “expect,” “plan,” “potential,” “we aim,” “our goal,” “our vision,” “we intend” or similar expressions that are forward-looking statements. These statements are subject to certain risks and uncertainties. Actual results may differ materially from those suggested by these statements due to, among others, the risks or uncertainties listed below. See also “Item 3. Key Information—D. Risk Factors” of our 2020 Annual Report for further discussion of risks and uncertainties that could impact our business.

These forward-looking statements are not guarantees of future performance. Rather, they are based on current views and assumptions and involve known and unknown risks, uncertainties and other factors, many of which are outside our control and are difficult to predict, that may cause actual results or developments to differ materially from any future results or developments expressed or implied by the forward-looking statements. Factors that could cause actual results to differ materially from those contemplated by the forward-looking statements include, among others:

•

the effects of the COVID-19 pandemic and uncertainties about its impact and duration;

•

local, regional, national and international economic conditions, including the risks of a global recession or a recession in one or more of our key markets, and the impact they may have on us and our customers and our assessment of that impact;

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financial risks, such as interest rate risk, foreign exchange rate risk (in particular as against the U.S. dollar, our reporting currency), commodity risk, asset price risk, equity market risk, counterparty risk, sovereign risk, liquidity risk, inflation or deflation, including inability to achieve our optimal net debt level;

•

continued geopolitical instability, which may result in, among other things, economic and political sanctions and currency exchange rate volatility, and which may have a substantial impact on the economies of one or more of our key markets;

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changes in government policies and currency controls;

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continued availability of financing and our ability to achieve our targeted coverage and debt levels and terms, including the risk of constraints on financing in the event of a credit rating downgrade;

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the monetary and interest rate policies of central banks, in particular the European Central Bank, the Board of Governors of the U.S. Federal Reserve System, the Bank of England, Banco Central do Brasil, Banco Central de la República Argentina, the Central Bank of China, the South African Reserve Bank, Banco de la República in Colombia, the Bank of Mexico and other central banks;

•

changes in applicable laws, regulations and taxes in jurisdictions in which we operate, including the laws and regulations governing our operations and changes to tax benefit programs, as well as actions or decisions of courts and regulators;

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limitations on our ability to contain costs and expenses;

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our expectations with respect to expansion plans, premium growth, accretion to reported earnings, working capital improvements and investment income or cash flow projections;

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our ability to continue to introduce competitive new products and services on a timely, cost-effective basis;

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the effects of competition and consolidation in the markets in which we operate, which may be influenced by regulation, deregulation or enforcement policies;

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changes in consumer spending;

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changes in pricing environments;

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volatility in the prices of raw materials, commodities and energy;

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difficulties in maintaining relationships with employees;

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regional or general changes in asset valuations;

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greater than expected costs (including taxes) and expenses;

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the risk of unexpected consequences resulting from acquisitions, joint ventures, strategic alliances, corporate reorganizations or divestiture plans, and our ability to successfully and cost-effectively implement these transactions and integrate the operations of businesses or other assets we have acquired;

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the outcome of pending and future litigation, investigations and governmental proceedings;

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natural and other disasters, including widespread health emergencies, cyberattacks and military conflict and political instability;

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any inability to economically hedge certain risks;

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inadequate impairment provisions and loss reserves;

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technological changes, threats to cybersecurity and the risk of loss or misuse of personal data;

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other statements included in these interim unaudited condensed consolidated financial statements that are not historical; and

•

our success in managing the risks involved in the foregoing.

Many of these risks and uncertainties are, and will be, exacerbated by the COVID-19 pandemic and any worsening of the global business and economic environment as a result. Our statements regarding financial risks, including interest rate risk, foreign exchange rate risk, commodity risk, asset price risk, equity market risk, counterparty risk, sovereign risk, inflation and deflation, are subject to uncertainty. For example, certain market and financial risk disclosures are dependent on choices about key model characteristics and assumptions and are subject to various limitations. By their nature, certain of the market or financial risk disclosures are only estimates and, as a result, actual future gains and losses could differ materially from those that have been estimated.

We caution that the forward-looking statements in this document are further qualified by the risk factors disclosed in “Item 3. Key Information—D. Risk Factors” of our 2020 Annual Report that could cause actual results to differ materially from those in the forward-looking statements. Subject to our obligations under Belgian and U.S. law in relation to disclosure and ongoing information, we undertake no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Management Comments

Continued momentum in the second quarter of 2021 with top-line growth ahead of pre-pandemic levels

Our business continued its momentum in the second quarter of 2021. We delivered top-line growth of 3.2%¹ versus the second quarter of 2019, even in the context of ongoing impacts related to COVID-19. We remain focused on investing in and accelerating what is already working: category development, premiumization, health and wellness, beyond beer and our digital transformation initiatives.

On a year-over-year basis we grew top-line by 27.6%², comprised of 20.8%³ volume and 5.8% revenue per hectoliter growth, yielding an increase of 31.0%⁴ in EBITDA, as defined, before exceptional items⁵. Positive brand mix, revenue management initiatives, operational leverage and ongoing cost discipline were partially offset by anticipated transactional foreign exchange and commodity headwinds. Additionally, our selling, general and administrative expenses increased due to higher variable compensation accruals, which are recorded by quarter at the zone level depending on operational performance, and growth in sales and marketing investments to support our top-line momentum.

Winning customer and consumer-centric commercial strategy:

•

Reaching more consumers on more occasions with our best-in-class portfolio:

•

Leading, premiumizing and accelerating growth in the beer category:

•

Driving innovation to meet customer and consumer needs: Based on the success of Brahma Duplo Malte in Brazil, which continues to lead the core pure malt segment, we have leveraged our ‘prove and move’ strategy to scale the concept in five new markets.

•

Our premium portfolio grew by 28%² in the second quarter of 2021 compared to the same period last year, with our global brands – Budweiser, Stella Artois and Corona – delivering 19.3%² revenue growth outside their home markets, where they typically command a price premium.

•

Connecting with consumers through award-winning creative content: At the 2021 Cannes Lions festival we achieved our best performance ever, winning 40 Lions including four won by our internal creative agency, draftLine.

•

Adding profitable growth in Beyond Beer globally: Our Beyond Beer business continues to accelerate, growing revenue by 45%² in the second quarter of 2021, and delivering an average gross profit per hectoliter 20% higher than our traditional beer business.

•

Creating new value from our ecosystem using data and technology:

•

Digitizing our relationships with our more than 6 million global customers: In the second quarter of 2021, our proprietary B2B platform, BEES, captured over USD 4.5 billion in gross merchandise value (“GMV”), growing more than 50% from the first quarter of 2021. In June 2021, our monthly active user base (“MAU”) reached more than 1.8 million users, more than 20% above March 2021. In our 7 initial focus markets (Dominican Republic, Brazil, Mexico, Colombia, Ecuador, Peru and South Africa), BEES has now achieved significant adoption within our customer base with 60% to 90% of our revenue digital.

•

Leading the way in e-commerce beer sales: In the first half of 2021, our owned direct-to-consumer (“DTC”) e-commerce platforms grew revenue more than 2x² compared to the same period last year. In Brazil, Zé Delivery continued its strong growth, delivering over 15 million orders in the second quarter of 2021, with total orders in the first half of 2021 more than all of last year. Based on this success, we continue to scale our courier platforms which are now available in ten of our markets.

¹	Excluding the effects of the 2019, 2020 and 2021 acquisitions and disposals, currency translation effects and changes in presentation of commercial investments, see “—Revenue” below.

²	Excluding the effects of the 2020 and 2021 acquisitions and disposals, currency translation effects and changes in presentation of commercial investments, see “—Revenue” below.

³	Excluding volume changes attributable to the 2020 and 2021 acquisitions and disposals, see “—Volumes” below.

⁴	Excluding the effects of the 2020 and 2021 acquisitions and disposals, currency translation effects and exceptional items, see “—EBITDA, as defined” and “—Exceptional Items” below.

⁵	For a discussion of how we use EBITDA, as defined, and its limitations, and a table showing the calculation of our EBITDA, as defined, for the periods shown, see “—EBITDA, as defined” below.

Optimizing capital allocation to drive long-term value creation

Maximizing long-term value creation drives how we balance our capital allocation priorities. In the first half of 2021, we continued to invest behind the organic growth of our business with over USD 5.7 billion in capex and sales and marketing, led by our investments in customer- and consumer-centric capabilities, innovation and digital transformation. Deleveraging to our optimal capital structure of around 2x remains our commitment. Our net debt to EBITDA, as defined, before exceptional items⁶, decreased from 4.8x at 31 December 2020 to 4.4x for the 12-month period ending 30 June 2021. We reduced our gross debt from USD 98.6 billion as of 31 December 2020 to USD 90.6 billion, while maintaining a strong liquidity position of approximately USD 16.9 billion, consisting of USD 10.1 billion available under our Sustainable-Linked Loan Revolving Credit Facility (“SLL RCF”) and USD 6.8 billion of cash.

Advancing sustainability around the world

Sustainability is core to our business strategy and a key driver of innovation. The appointment of Ezgi Barcenas as our dedicated Chief Sustainability Officer, reporting directly to the CEO, builds on a strong track record and reinforces our commitment to further accelerate a broader ESG agenda.

In line with our commitment to Smart Agriculture, we continue to innovate to support farmers around the world to be skilled, connected and financially empowered. We recently expanded the blockchain-enabled supply chain platform BanQu to Latin America, following its success across several of our markets in Africa. BanQu gives farmers and recyclers improved security in the delivery and payment process and creates a digital economic identity allowing greater access to formal financial services. It also provides us better visibility across our value chain.

Confident about the future of our business and the beer category

We are confident in the future growth prospects for our business and the resilience of the beer category. We will continue to invest behind a customer and consumer-centric commercial strategy that is backed by a best-in-class brand portfolio, innovation capabilities and digital transformation. Combined with our fundamental strengths, which include our people, leadership across the world’s largest beer profit pools, exposure to fast-growing emerging markets, operational excellence and a culture of ownership, we have an unmatched platform to drive long-term value creation.

⁶	For a discussion of how we use EBITDA, as defined, and its limitations, and a table showing the calculation of our EBITDA, as defined, for the periods shown, see “—EBITDA, as defined” below.

Selected Financial Information

The selected historical financial information presented below as of 31 December 2020 and for the five years ended 31 December 2020 has been derived from our audited consolidated financial statements, which were prepared in accordance with IFRS. The selected historical financial information presented below as of 30 June 2021 and for the six-month period ended 30 June 2020 has been derived from our unaudited IFRS condensed consolidated interim financial statements. The interim data include all adjustments, consisting of normally recurring adjustments, necessary for a fair statement of the results for the interim period.

The selected historical financial information presented in the tables below should be read in conjunction with, and is qualified in its entirety by reference to, our audited consolidated financial statements and the accompanying notes. The audited consolidated financial statements and the accompanying notes as of 31 December 2020 and 2019 are included in our 2020 Annual Report. Similarly, the unaudited consolidated interim financial statements and the accompanying notes as of 30 June 2021 and for the six-month period ended 30 June 2020 are included in this interim report.


	Six-month period ended 30 June					Year ended 31 December
	2021		2020			2020			2019		2018⁽⁷⁾⁽⁸⁾		2017⁽⁸⁾		2016⁽⁶⁾
	(USD millions)
	(Unaudited)					(Audited⁸)
Income Statement Data
Revenue⁽¹⁾		25,832		21,298			46,881			52,329		53,041		54,859		45,517
Profit from operations		6,551		2,306			9,620			16,098		16,414		16,460		12,882
Profit from continuing operations		3,074		(3,744	)		147			9,990		5,157		8,606		2,721
Profit of the period		3,074		(1,688	)		2,202			10,414		5,688		9,166		2,769
Profit attributable to our equity holders		2,458		(1,900	)		1,405			9,171		4,370		7,990		1,241
Weighted average number of Ordinary and Restricted Shares (million shares)⁽²⁾		2,004		1,995			1,998			1,984		1,975		1,971		1,717
Diluted weighted average number of Ordinary and Restricted Shares (million shares)⁽³⁾		2,045		1,995			2,037			2,026		2,011		2,010		1,755
Basic earnings per share (USD)⁽⁴⁾		1.23		(0.95	)		0.70			4.62		2.21		4.05		0.72
Basic earnings per share from continuing operations (USD)⁽⁴⁾		1.23		(1.98	)		(0.33	)		4.41		1.94		3.77		0.69
Diluted earnings per share (USD)⁽⁵⁾		1.20		(0.95	)		0.69			4.53		2.17		3.98		0.71
Dividends per share (USD)		n/a		n/a			0.61			2.02		2.05		4.33		3.85
Dividends per share (EUR)		n/a		n/a			0.50			1.80		1.80		3.60		3.60
Other Data
Volumes (million hectoliters)		280		240			531			561		560		605		500


	As of 30 June		As of 31 December
	2021		2020		2019		2018⁽⁷⁾⁽⁸⁾		2017⁽⁸⁾
	(USD millions)
	(Unaudited)		(Audited⁸)
Financial Position Data
Total assets		217,475		226,410		236,648		233,868		248,208
Equity		79,561		78,351		84,553		71,889		80,200
Equity attributable to our equity holders		68,596		68,024		75,722		64,485		72,576
Issued capital		1,736		1,736		1,736		1,736		1,736

Notes:

(1)	Turnover less excise taxes and discounts. In many jurisdictions, excise taxes make up a large proportion of the cost of beer charged to our customers (see “Item 5. Operating and Financial Review—A. Key Factors Affecting Results of Operations—Excise Taxes”).

(2)

Weighted average number of Ordinary and Restricted Shares means, for any period, the number of shares outstanding at the beginning of the period, adjusted by the number of shares canceled, repurchased or issued during the period, including deferred share instruments and stock lending, multiplied by a time-weighting factor.

(3)	Diluted weighted average number of Ordinary and Restricted Shares means the weighted average number of Ordinary and Restricted Shares, adjusted by the effect of share options and restricted stock units issued.

(4)	Earnings per share means, for any period, profit attributable to our equity holders for the period divided by the weighted average number of Ordinary and Restricted Shares. See “—Profit Attributable to Our Equity Holders” below.

(5)	Diluted earnings per share means, for any period, profit attributable to our equity holders for the period divided by the diluted weighted average number of Ordinary and Restricted Shares. See “—Profit Attributable to Our Equity Holders” below.

(6)	Following the combination with SAB, we consolidated SAB and report results and volumes of the retained SAB operations as of the fourth quarter of 2016.

(7)	The financial information for 2018 is presented under IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers, which were adopted by us with effect on 1 January 2018 in accordance with the modified retrospective application.

(8)

The financial information for 2018 and 2017 is presented under IFRS 16 Leases which was adopted by us with effect on 1 January 2017 in accordance with the full retrospective application. In addition, the financial information for 2018 and 2017 reflects the classification of the Australian operations as discontinued operations. The financial information for 2016 has not been restated to reflect these changes.

Results of Operations for the Six-Month Period Ended 30 June 2021 Compared to Six-Month Period Ended 30 June 2020

Brazilian Tax Credits

In the second quarter of 2021, Ambev, our subsidiary, recognized USD 226 million income in Other operating income related to tax credits following a favorable decision from the Brazilian Supreme Court. Additionally, Ambev recognized USD 76 million of interest income in Finance income for the six-month periods ended 30 June 2021.

Zenzele Kabili

On 28 May 2021, upon maturity of the previous broad-based black economic empowerment (“B-BBEE”) scheme in South Africa (“Zenzele scheme”), we implemented a new scheme through the listing of a special purpose company called SAB Zenzele Kabili Holdings Limited (“Zenzele Kabili”), on the Johannesburg Stock Exchange. At the same date, we settled the remaining obligations of the Zenzele scheme to SAB retailers. The settlement of the balance of the SAB retailers entitlement and the set-up of the new B-BBEE scheme required ZAR 5.8 billion (USD 0.4 billion). 5.1 million AB InBev Treasury shares were used in the transaction. The IFRS 2 cost of USD 73 million related to the grant of shares to qualifying SAB retailers and employees participating in the Zenzele Kabili scheme was reported in exceptional items.

The table below presents our condensed consolidated results of operations for the six-month periods ended 30 June 2021 and 2020.


	Six-month period ended 30 June 2021			Six-month period ended 30 June 2020			Change
	(USD million, except volumes)						*(%)⁽¹⁾*
Volumes (thousand hectoliters)		280,398			239,577			17.0
Revenue		25,832			21,298			21.3
Cost of sales		(10,963	)		(9,097	)		(20.5	)
Gross profit		14,869			12,201			21.9
Selling, General and Administrative expenses		(8,571	)		(7,257	)		(18.1	)
Other operating income/(expenses)		470			158			—
Exceptional items		(217	)		(2,796	)		92.2
Profit from operations		6,551			2,306			—

EBITDA, as defined⁽²⁾		8,920			7,217			23.6

Note:

(1)	The percentage change reflects the improvement (or worsening) of results for the period as a result of the change in each item.

(2)	For a discussion of how we use EBITDA, as defined, and its limitations, and a table showing the calculation of our EBITDA, as defined, for the periods shown, see “—EBITDA, as defined” below.

Volumes

Our reported volumes include both beer (including beyond beer) and non-beer (primarily carbonated soft drinks) volumes. In addition, volumes include not only brands that we own or license, but also third-party brands that we brew or otherwise produce as a subcontractor and third-party products that we sell through our distribution network, particularly in Europe. Volumes sold by the Global Export and Holding Companies businesses are shown separately.

The table below summarizes the volume evolution by business segment.


	Six-month period ended 30 June 2021		Six-month period ended 30 June 2020		Change
	(thousand hectoliters)				*(%)⁽¹⁾*
North America		53,252		51,977		2.5
Middle Americas		67,980		51,858		31.1
South America		71,929		62,782		14.6
EMEA		40,540		33,551		20.8
Asia Pacific		46,081		39,045		18.0
Global Export & Holding Companies		615		364		69.0

Total		280,398		239,577		17.0

Note:

(1)	The percentage change reflects the improvement (or worsening) of results for the period as a result of the change in each item.

Our consolidated volumes for the six-month period ended 30 June 2021 increased by 40.8 million hectoliters, or 17.0%, to 280.4 million hectoliters compared to our consolidated volumes for the six-month period ended 30 June 2020. The results for the six-month period ended 30 June 2021 reflect the performance of our business after the completion of certain acquisitions and disposals we undertook in 2020 and 2021.

The 2020 and 2021 acquisitions and disposals include acquisitions and disposals which were individually not significant (collectively the “acquisitions and disposals”).

The 2020 and 2021 acquisitions and disposals had no significant impact on our volumes for the six-month period ended 30 June 2021 compared to the six-month period ended 30 June 2020.

Excluding volume changes attributable to the acquisitions and disposals, our own beer volumes increased 17.7% in the six-month period ended 30 June 2021 compared to the six-month period ended 30 June 2020. On the same basis, in the six-month period ended 30 June 2021, our non-beer volumes increased 12.6% compared to the same period in 2020.

North America

In the six-month period ended 30 June 2021, our volumes in North America increased by 1.3 million hectoliters, or 2.5%, compared to the six-month period ended 30 June 2020.

Excluding volume changes attributable to the acquisitions and disposals, our total volumes increased by 2.4% in the six-month period ended 30 June 2021 compared to the same period last year.

In the United States, our sales-to-wholesalers (“STWs”) grew by 2.5% and our sales-to-retailers (“STRs”) declined by 1.1%. We continue to strengthen and premiumize our portfolio, rebalancing toward faster growing above core segments. Our seltzer portfolio, led by Bud Light Seltzer, continues to grow ahead of the industry according to IRI and our canned cocktail brand Cutwater is growing by triple digits.

In Canada, our volume grew by low single digits in the first half of 2021 compared to the same period last year. Our above core beer brands and Beyond Beer portfolio gained share in the first half of 2021 compared to the same period last year, led by Bud Light Seltzer. We estimate our performance was in line with the industry, which had a volume decline in the second quarter of 2021 due to continued on-premise restrictions.

Middle Americas

In the six-month period ended 30 June 2021, our volumes in Middle Americas increased by 16.1 million hectoliters, or 31.1%, compared to the six-month period ended 30 June 2020.

Our business in Mexico continued its momentum, with a volume growth of over 30% in the first six months of 2021, as we cycled a favorable comparable from a two-month nationwide lockdown in the second quarter of 2020. We continue to see healthy growth across all segments of our portfolio. We completed our sixth wave of expansion into OXXO, with our brands now available in nearly 10,000 stores. We continued expanding our DTC business, opening our 10,000^th Modelorama store in June 2021, while reaching more consumers through our ModeloramaNow e-commerce platform. The digital transformation of our business is progressing rapidly, with orders through our BEES platform now comprising over 60% of our revenue.

Our business in Colombia continued its momentum, despite on-going COVID-19 restrictions. Our volumes grew by double-digits in the first six months of 2021 compared to the same period last year. Our core brands, Aguila and Poker, grew by strong double-digits and our international premium brands grew by double-digits, led by Corona and Budweiser. We continue to transform our business through technology, with our BEES platform now representing nearly 80% of our revenue.

In Peru, our business continues to recover, with volume growth of double-digits in the first six months of 2021, supported by a favorable comparable. We remain focused on strengthening our portfolio through premiumization and innovation and advancing the digital transformation of our business. Our global and local premium brands grew by strong double-digits. Our BEES platform is expanding, now making up close to 70% of our revenue.

In Ecuador, we delivered volume growth of double-digits, supported by a favorable comparable. As restrictions began to ease in June 2021, we delivered our best monthly volume performance in the last 5 years, supported by enhancements to our portfolio and digital transformation, with over 90% of our revenue coming through BEES.

South America

In the six-month period ended 30 June 2021, our volumes in South America increased by 9.1 million hectoliters, or 14.6%, compared to the six-month period ended 30 June 2020, with our beer volumes increasing 15.3% and soft drinks increasing 12.7%.

In Brazil, our volumes grew by 13.7%, with beer volumes up by 14.3% and non-beer volumes up by 12.0% in the first six months of 2021 compared to the same period last year. Our beer volumes once again outperformed the industry according to our estimates. Non-beer volumes were supported by the gradual recovery of mobility. We saw sustained growth of our core plus brands, led by Brahma Duplo Malte, and continued double-digit growth of our premium and super premium brands, with particularly strong growth of Corona, Original and Beck’s. Innovations represented more than 20% of our total revenue for the fourth quarter in a row. We continue to advance our digital transformation agenda with our B2B and DTC initiatives. BEES now covers more than 70% of our active customers across the country and our DTC platform, Zé Delivery, fulfilled more than 15 million orders in in the second quarter 2021.

In Argentina, we grew volume by double-digits. We continue to see our core plus and premium brands outperforming the overall portfolio in the first half of 2021 compared to the same period last year.

EMEA

In EMEA, our volumes, including subcontracted volumes, for the six-month period ended 30 June 2021 increased by 7.0 million hectoliters, or 20.8%, compared to the six-month period ended 30 June 2020.

Excluding volume changes attributable to the acquisitions and disposals, our total volumes for the six-month period ended 30 June 2021 increased by 21.2%, with our own beer volumes increasing by 23.4% compared to the same period last year.

In Europe, our volumes grew by mid-single digits powered by continued strong commercial performance. We are driving premiumization across Europe with our premium and super premium portfolio now making up over 50% of our revenue. Our Global brand portfolio continued to outperform and grew by mid-single digits in volume in the first six months of 2021compared to the same period last year, with particularly strong performance of Corona and Stella Artois. We are supporting the on-premise channel and welcomed its reopening in the second quarter of 2021 with the “Stella Tips” campaign in the UK and “Merci Horeca” campaign in Belgium.

In South Africa, our volumes grew by strong double-digits in the first six months of 2021 compared to the same period last year, as we cycled a favorable comparable from a government-mandated ban on alcohol sales through much of the second quarter of 2020. When allowed to trade, we have seen strong underlying consumer demand for our brands and we continue to adapt our business to navigate the challenging operating environment. However, a new alcohol ban was instituted on 28 June 2021 and lasted until 25 July 2021, impacting the last selling week of June and the first month of the third quarter of 2021. Our diverse portfolio of brands spanning styles and price points serves various consumer needs across different occasions. Strong demand and the power of our brands continues to benefit our core portfolio, particularly Carling Black Label. In the premium segment, we see ongoing healthy performance from our global brands, Corona and Stella Artois, and our flavored alcohol beverages, Brutal Fruit and Flying Fish.

In Africa excluding South Africa, underlying consumer demand for our brands remains resilient in many of our markets, though the operating environment remains challenging due to ongoing COVID-19 related restrictions. We grew volumes in the majority of our key markets in the first six months of 2021 compared to the same period last year.

Asia Pacific

For the six-month period ended 30 June 2021, our volumes increased by 7.0 million hectoliters, or 18.0%, compared to the six-month period ended 30 June 2020.

In China, our volumes outperformed the industry according to our estimates. Our volumes grew by 21.6% in the first six months of 2021 compared to the same period last year, enhanced by a successful Chinese New Year campaign in the first quarter of 2021 coupled with a challenging comparable from the easing of COVID-19 restrictions in the second quarter of 2020. Our premium and super premium brands grew by double digits in volume, led by Budweiser in the first half of 2021. Innovations further accelerated our momentum in premiumization, including the expansion of Budweiser Supreme and successful launch of ME-X exclusively in the e-commerce channel.

In South Korea, led by the success of our recent innovations including ‘All New Cass’ and our new classic lager, HANMAC, we estimate our volumes outperformed the industry. Our volumes declined by low single digits in the first six months of 2021 compared to the same period last year and continue to be impacted by ongoing COVID-19 restrictions. We achieved double-digit volume growth in the premium segment in the second quarter of 2021 compared to the same period of last year, led by Budweiser and Hoegaarden.

Global Export & Holding Companies

For the six-month period ended 30 June 2021, Global Export and Holding Companies volumes increased by 26.3% compared to the same period last year.

Revenue

The following table reflects changes in revenue across our business segments for the six-month period ended 30 June 2021 as compared to our revenue for the six-month period ended 30 June 2020:


	Six-month period ended 30 June 2021		Six-month period ended 30 June 2020		Change
	(USD million)				*(%)⁽¹⁾*
North America		8,040		7,536		6.7
Middle Americas		5,893		4,246		38.8
South America		4,146		3,613		14.8
EMEA		3,763		3,007		25.1
Asia Pacific		3,500		2,609		34.2
Global Export & Holding Companies		491		287		71.1

Total		25,832		21,298		21.3

Note:

(1)	The percentage change reflects the improvement (or worsening) of results for the period as a result of the change in each item.

Our consolidated revenue was USD 25,832 million for the six-month period ended 30 June 2021. This represented an increase of USD 4,534 million, or 21.3%, as compared to our consolidated revenue for the six-month period ended 30 June 2020 of USD 21,298 million. The results for the six-month period ended 30 June 2021 reflect (i) the performance of our business after the completion of certain acquisitions and disposals we undertook in 2020 and 2021, (ii) currency translation effects and (iii) changes in presentation of commercial investments.

•

The 2020 and 2021 acquisitions and disposals and changes in presentation of commercial investments negatively impacted our consolidated revenue by USD 42 million for the six-month period ended 30 June 2021 compared to the six-month period ended 30 June 2020.

•

Our consolidated revenue for the six-month period ended 30 June 2021 also reflects a negative currency translation impact of USD 169 million mainly arising from currency translation effects in South America.

Excluding the effects of the acquisitions and disposals, changes in presentation of commercial investments and currency translation effects, our revenue increased 22.4% in total and increased by 4.7% on a per hectoliter basis in the six-month period ended 30 June 2021 compared to the same period in 2020. Our consolidated revenue for the six-month period ended 30 June 2021 was partially impacted by the increase in volumes discussed above.

During the six-month period ended 30 June 2021, our revenue on a per hectoliter basis increased by 4.7% compared to the same period in 2020, driven by a positive brand mix and revenue management initiatives. The increase in our revenue per hectoliter in the six-month period ended 30 June 2021 was most significant in South America, primarily driven by double-digit revenue per hectoliter growth in Argentina in line with inflation, in Middle Americas and Asia Pacific due to ongoing premiumization.

Combined revenues of our global brands, Budweiser, Stella Artois and Corona, increased by 26.2% and 31.4% outside their home markets in the six-month period ended 30 June 2021 compared to the same period of 2020.

Cost of Sales

The following table reflects changes in cost of sales across our business segments for the six-month period ended 30 June 2021 as compared to six-month period ended 30 June 2020:


	Six-month period ended 30 June 2021			Six-month period ended 30 June 2020			Change
	(USD million)						*(%)⁽¹⁾*
North America		(3,080	)		(2,842	)		(8.4	)
Middle Americas		(2,055	)		(1,454	)		(41.3	)
South America		(2,091	)		(1,727	)		(21.1	)
EMEA		(1,796	)		(1,555	)		(15.5	)
Asia Pacific		(1,555	)		(1,217	)		(27.8	)
Global Export & Holding Companies		(385	)		(302	)		(27.5	)

Total		(10,963	)		(9,097	)		(20.5	)

Note:

(1)	The percentage change reflects the improvement (or worsening) of results for the period as a result of the change in each item.

Our consolidated cost of sales was USD 10,963 million for the six-month period ended 30 June 2021. This represented an increase of USD 1,866 million, or 20.5% compared to our consolidated cost of sales for the six-month period ended 30 June 2020. The results for the six-month period ended 30 June 2021 reflect (i) the performance of our business after the completion of certain acquisitions and disposals we undertook in 2020 and 2021 and (ii) currency translation effects.

•

The 2020 and 2021 acquisitions and disposals positively impacted our consolidated cost of sales by USD 34 million for the six-month period ended 30 June 2021 compared to the six-month period ended 30 June 2020.

•

Our consolidated cost of sales for the six-month period ended 30 June 2021 also reflects a positive currency translation impact of USD 91 million mainly arising from currency translation effects in South America.

Excluding the effects of the acquisitions and disposals and currency translation effects, our cost of sales increased USD 1,991 million or 22.0%. Our consolidated cost of sales for the six-month period ended 30 June 2021 was partially impacted by increase in volumes discussed above. On the same basis, our consolidated cost of sales per hectoliter increased by 4.8%. This was driven primarily by operational leverage and ongoing cost discipline partially offset by anticipated transactional foreign exchange and commodity headwinds. The increase in cost of sales per hectoliter was most significant in Middle Americas and South America, driven by anticipated transactional foreign exchange and commodity headwinds.

Operating Expenses

The discussion below relates to our operating expenses, which equal the sum of our distribution, sales and marketing expenses, administrative expenses and other operating income and expenses (net), for the six-month period ended 30 June 2021 as compared to the six-month period ended 30 June 2020. Our operating expenses do not include exceptional charges, which are reported separately.

Our operating expenses for the six-month period ended 30 June 2021 were USD 8,101 million, representing an increase of USD 1,002 million, or 14.1%, compared to our operating expenses for the same period in 2020.


	Six-month period ended 30 June 2021			Six-month period ended 30 June 2020			Change
	(USD million)						*(%)⁽¹⁾*
Selling, General and Administrative expenses		(8,571	)		(7,257	)		(18.1	)
Other operating income/(expenses)		470			158			—

Total Operating Expenses		(8,101	)		(7,099	)		(14.1	)

Note:

(1)	The percentage change reflects the improvement (or worsening) of results for the period as a result of the change in each item.

Selling, General and Administrative Expenses

The following table reflects changes in our distribution expenses, sales and marketing expenses and administrative expenses (our “selling, general and administrative expenses”) across our business segments for the six-month period ended 30 June 2021 as compared to the six-month period ended 30 June 2020:


	Six-month period ended 30 June 2021			Six-month period ended 30 June 2020			Change
	(USD million)						*(%)⁽¹⁾*
North America		(2,350	)		(2,104	)		(11.7	)
Middle Americas		(1,577	)		(1,258	)		(25.4	)
South America		(1,254	)		(1,205	)		(4.1	)
EMEA		(1,496	)		(1,263	)		(18.4	)
Asia Pacific		(1,126	)		(961	)		(17.2	)
Global Export & Holding Companies		(769	)		(466	)		(65.0	)

Total		(8,571	)		(7,257	)		(18.1	)

Note:

(1)	The percentage change reflects the improvement (or worsening) of results for the period as a result of the change in each item.

Our consolidated selling, general and administrative expenses were USD 8,571 million for the six-month period ended 30 June 2021. This represented an increase of USD 1,314 million, or 18.1%, as compared to the six-month period ended 30 June 2020. The results for the six-month period ended 30 June 2021 reflect (i) the performance of our business after the completion of certain acquisitions and disposals we undertook in 2020 and 2021, (ii) currency translation effects and (iii) changes in presentation of commercial investments.

•

The 2020 and 2021 acquisitions and disposals and changes in presentation of commercial investments negatively impacted our consolidated selling, general and administrative expenses by USD 12 million on a net basis for the six-month period ended 30 June 2021 compared to the six-month period ended 30 June 2020.

•

Our consolidated selling, general and administrative expenses for the six-month period ended 30 June 2021 also reflects a negative currency translation impact of USD 13 million mainly arising from currency translation effects in South America, EMEA and Asia Pacific.

Excluding the effects of the acquisitions and disposals and currency translation effects, our consolidated selling, general and administrative expenses increased by 17.8% due to higher variable compensation accruals, which are recorded by quarter at the zone level depending on operational performance, and growth in sales and marketing investments to support our top-line momentum.

Other operating income/(expense)

The following table reflects changes in other operating income and expenses across our business segments for the six-month period ended 30 June 2021 as compared to the six-month period ended 30 June 2020:


	Six-month period ended 30 June 2021		Six-month period ended 30 June 2020			Change
	(USD million)					*(%)⁽¹⁾*
North America		15		(10	)		—
Middle Americas		5		—			—
South America		287		54			—
EMEA		92		55			67.3
Asia Pacific		64		40			60.0
Global Export & Holding Companies		7		19			(63.2	)

Total		470		158			—

Note:

(1)	The percentage change reflects the improvement (or worsening) of results for the period as a result of the change in each item.

The net positive effect of our consolidated other operating income and expenses was USD 470 million for the six-month period ended 30 June 2021. This represented an increase of USD 312 million, as compared to the six-month period ended 30 June 2020. The results for the six-month period ended 30 June 2021 reflect (i) the performance of our business after the completion of certain acquisitions and disposals we undertook in 2020 and 2021, (ii) the Brazilian tax credits, and (iii) currency translation effects.

•

The 2020 and 2021 acquisitions and disposals and the Brazilian tax credits described above positively impacted our net consolidated other operating income and expenses by USD 226 million on a net basis for the six-month period ended 30 June 2021 compared to the six-month period ended 30 June 2020.

•

Our net consolidated other operating income and expenses for the six-month period ended 30 June 2021 had no significant currency translation impact.

Excluding the effects of the business acquisitions and disposals, the Brazilian tax credits and currency translation effects, our net consolidated other operating income and expenses increased by 54.0%, primarily driven by government grants in Brazil and China and lower other operating expenses in Europe.

Exceptional Items

Exceptional items are items which, in our management’s judgment, need to be disclosed separately by virtue of their size and incidence in order to obtain a proper understanding of our financial information. We consider these items to be significant in nature, and accordingly, our management has excluded these items from their segment measure of performance.

For the six-month period ended 30 June 2021, exceptional items consisted of COVID-19 costs, restructuring charges, business and asset disposals (including impairment losses), acquisition costs of business combinations and the Zenzele Kabili costs. Exceptional items were as follows for six-month period ended 30 June 2021 and 2020:


	Six-month period ended 30 June 2021			Six-month period ended 30 June 2020
	(USD million)
COVID-19 costs		(54	)		(78	)
Restructuring		(97	)		(60	)
Business and asset disposal (including impairment losses)		14			(154	)
Acquisition costs / Business combinations		(6	)		(4	)
Zenzele Kabili costs		(73	)		—
Impairment of goodwill		—			(2,500	)
Gain on divestiture of Australia (in discontinued operations)		—			1,919

Total		(217	)		(877	)

COVID-19 costs

Cost associated with COVID-19 amounted to USD 54 million for the six-month period ended 30 June 2021 (30 June 2020: USD 78 million). These expenses mainly comprise costs related to personal protective equipment for our colleagues, charitable donations and other costs incurred as a direct consequence of the COVID-19 pandemic.

Restructuring

Exceptional restructuring charges amounted to a net cost of USD 97 million for the six-month period ended 30 June 2021 as compared to a net cost of USD 60 million for the six-month period ended 30 June 2020. These charges primarily relate to organizational alignments and aim to eliminate overlapping organizations or duplicated processes, taking into account the right match of employee profiles with the new organizational requirements. These expenses provide us with a lower cost base in addition to a stronger focus on our core activities, quicker decision-making and improvements to efficiency, service and quality.

Business and asset disposals

Business and asset disposals amounted to a net gain of USD 14 million for the six-month period ended 30 June 2021, mainly comprising net gains incurred in relation to disposals completed in the first half of 2021. Business and asset disposals amounted to a net cost of USD 154 million for the six-month period ended 30 June 2020, mainly comprising impairment of intangible assets classified as assets held for sale as of 30 June 2020 and other intangibles.

Zenzele Kabili

In May 2021, we set up a new broad-based black economic empowerment (“B-BBEE”) scheme (the “Zenzele Kabili scheme”) and reported USD 73 million in exceptional items mainly representing the IFRS 2 cost related to the grant of shares to qualifying SAB retailers and employees participating in the Zenzele Kabili scheme.

Impairment of goodwill

In the second quarter of 2020, we recognized USD 2,500 million of goodwill impairment for our South Africa and Rest of Africa cash-generating units.

Gain on divestiture of Australia

On 1 June 2020, we completed the previously announced sale of CUB to Asahi resulting in a net exceptional gain of USD 1,919 million reported in discontinued operations.

Profit from Operations

The following table reflects changes in profit from operations across our business segments for the six-month period ended 30 June 2021 as compared to the six-month period ended 30 June 2020:


	Six-month period ended 30 June 2021			Six-month period ended 30 June 2020			Change
	(USD million)						*(%)⁽¹⁾*
North America		2,612			2,496			4.7
Middle Americas		2,207			1,484			48.7
South America		1,065			719			48.1
EMEA		461			(2,344	)		—
Asia Pacific		860			462			86.1
Global Export & Holding Companies		(654	)		(509	)		(28.4	)

Total		6,551			2,306			—

Note:

(1)	The percentage change reflects the improvement (or worsening) of results for the period as a result of the change in each item.

Our profit from operations was USD 6,551 million for the six-month period ended 30 June 2021. This represented an increase of USD 4,245 million, as compared to our profit from operations for the six-month period ended 30 June 2020. The results for the six-month period ended 30 June 2021 reflect (i) the performance of our business after the completion of certain acquisitions and disposals we undertook in 2020 and 2021, (ii) the Brazilian tax credits, (iii) currency translation effects and (iv) the effects of certain exceptional items as described above.

•

The 2020 and 2021 acquisitions and disposals and the Brazilian tax credits described above positively impacted our consolidated profit from operations by USD 206 million for the six-month period ended 30 June 2021 compared to the six-month period ended 30 June 2020.

•

Our consolidated profit from operations for the six-month period ended 30 June 2021 also reflects a negative currency translation impact of USD 90 million.

•

Our profit from operations for the six-month period ended 30 June 2021 was negatively impacted by USD 217 million of certain exceptional items reported in continuing operations, as compared to a negative impact of USD 2,796 million for the six-month period ended 30 June 2020. See “Exceptional Items” above for a description of the exceptional items during the six-month period ended 30 June 2021 and 2020.

Excluding the effects of the acquisitions and disposals, the Brazilian tax credits and currency translation effects, our profit from operations increased by 179.0%. This increase was most significant in EMEA, Middle Americas, South America and Asia Pacific supported by a favorable comparable due to the impairment of goodwill recognized in the first half of 2020 and severe lockdown measures implemented across our business last year.

EBITDA, as defined

The following table reflects changes in our EBITDA, as defined, for the six-month period ended 30 June 2021 as compared to six-month period ended 30 June 2020:


	Six-month period ended 30 June 2021			Six-month period ended 30 June 2020			Change
	(USD million)						*(%)⁽¹⁾*
Profit attributable to equity holders of AB InBev		2,458			(1,900	)		—
Profit attributable to non-controlling interests		616			211			—
Profit of the period		3,074			(1,688	)		—
Profit from discontinued operations		—			(2,055	)		—
Profit from continuing operations		3,074			(3,744	)		—
Net finance cost		2,346			5,592			(58.0	)
Income tax expense		1,231			492			—
Share of result of associates and joint ventures		(100	)		(33	)		—

Profit from operations		6,551			2,306			—
Depreciation, amortization and impairment		2,345			2,261			3.7
Exceptional impairment		24			2,650			(99.1	)

EBITDA, as defined⁽²⁾		8,920			7,217			23.6

Note:

(1)	The percentage change reflects the improvement (or worsening) of results for the period as a result of the change in each item.

(2)	See “Item 5. Operating and Financial Review—E. Results of Operations—Year Ended 31 December 2020 Compared to Year Ended 31 December 2019—EBITDA, as defined” of our 2020 Annual Report for additional information on our definition and use of EBITDA, as defined.

Our EBITDA, as defined, was USD 8,920 million for the six-month period ended 30 June 2021. This represented an increase of USD 1,703 million, or 23.6%, as compared to our EBITDA, as defined, for the six-month period ended 30 June 2020. The results for the six-month period ended 30 June 2021 reflect (i) the performance of our business after the completion of the acquisitions and disposals we undertook in 2020 and 2021 (ii) the Brazilian tax credits and (iii) currency translation effects. Furthermore, our EBITDA, as defined, was negatively impacted by certain exceptional items reported in continuing operations by USD 194 million (excluding exceptional impairment losses) in the six-month period ended 30 June 2021, as compared to a negative impact of USD 146 million (excluding exceptional impairment losses) during the six-month period ended 30 June 2020. See “Exceptional Items” above for a description of the exceptional items during the six-month period ended 30 June 2021 and 2020.

Net Finance Income/(Cost)

Our net finance income/(cost) items were as follows for the six-month period ended 30 June 2021 and 30 June 2020:


	Six-month period ended 30 June 2021			Six-month period ended 30 June 2020			Change
	(USD million)						*(%)⁽¹⁾*
Net interest expense		(1,817	)		(1,911	)		4.9
Net interest on net defined benefit liabilities		(37	)		(41	)		9.8
Accretion expense		(265	)		(291	)		8.9
Mark-to-market (hedging of our share-based payment programs)		348			(1,724	)		—
Net interest income on Brazilian tax credits		76			13			—
Other financial results		(353	)		(250	)		(41.2	)

Net finance cost before exceptional finance results		(2,047	)		(4,204	)		—
Other mark-to-market		283			(1,438	)		—
Other		(582	)		50			—

Exceptional net finance income/(cost)		(299	)		(1,388	)		—

Net finance income/(cost)		(2,346	)		(5,592	)		—

Note:

(1)	The percentage change reflects the improvement (or worsening) of results for the period as a result of the change in each item.

Our net finance cost for the six-month period ended 30 June 2021 was USD 2,346 million, as compared to a net finance cost of USD 5,592 million for the six-month period ended 30 June 2020, representing a cost reduction of USD 3,246 million.

The decrease in net finance costs before exceptional financial items from USD 4,204 million for the six-month period ended 30 June 2020 to USD 2,047million for the six-month period ended 30 June 2021 is driven primarily by a positive mark-to-market adjustment of USD 348 million in the six-month period ended 30 June 2021, linked to the hedging of our share-based payment program, compared to a negative mark-to-market adjustment of USD 1,724 million in the six-month period ended 30 June 2020.

The number of shares covered by the hedging of our share-based payment programs, together with the opening and closing share prices, are shown below:


	Six-month period ended 30 June 2021		Six-month period ended 30 June 2020
Share price at the start of the six-month period (in euro)		57.01		72.71
Share price at the end of the six-month period (in euro)		60.81		43.87
Number of derivative equity instruments at the end of the period (in millions)		55.0		55.0

Exceptional net finance income/(cost) includes a positive mark-to-market adjustment of USD 283 million on derivative instruments entered into to hedge the shares issued in relation to the combination with Grupo Modelo and SAB, compared to a negative mark-to-market adjustment of USD 1,438 million for the six-month period ended 30 June 2020. The number of shares covered by the hedging of the deferred share instrument and the restricted shares, together with the opening and closing share prices, are shown below:


	Six-month period ended 30 June 2021		Six-month period ended 30 June 2020
Share price at the start of the six-month period (in euro)		57.01		72.71
Share price at the end of the six-month period (in euro)		60.81		43.87
Number of derivative equity instruments at the end of the period (in millions)		45.5		45.5

Other exceptional net finance cost for the six-month period ended 30 June 2021 includes costs resulting from the early termination of certain bonds.

Share of Results of Associates and Joint Ventures

Our share of results of associates and joint ventures for the six-month period ended 30 June 2021 was USD 100 million as compared to USD 33 million for the six-month period ended 30 June 2020.

Income Tax Expense

Our total income tax expense for the six-month period ended 30 June 2021 was USD 1,231 million, with an effective tax rate of 29.3%, as compared to an income tax expense of USD 492 million and an effective tax rate of (15.0)% for the six-month period ended 30 June 2020. The effective tax rates for the six-month period ended 30 June 2021 was positively impacted by the non-taxable gains from derivatives related to the hedging of share-based payment programs and the hedging of the shares issued in a transaction related to the combination with Grupo Modelo and SAB. The effective tax rate for the six-month period ended 30 June 2020 was negatively impacted by non-deductible losses from these derivatives and the non-deductible, non-cash goodwill impairment loss.

Profit Attributable to Non-Controlling Interests

Profit attributable to non-controlling interests was USD 616 million for the six-month period ended 30 June 2021, an increase of USD 405 million from USD 211 million for the six-month period ended 30 June 2020.

Profit Attributable to Our Equity Holders

Profit/(loss) attributable to our equity holders for the six-month period ended 30 June 2021 was USD 2,458 million compared to USD (1,900) million for the same period in 2020. Basic earnings per share of USD 1.23 is based on 2,004 million shares outstanding, representing the weighted average number of ordinary and restricted shares outstanding during the six-month period ended 30 June 2021.

Excluding the after-tax impact of exceptional items discussed above, profit attributable to our equity holders from continuing operations for the six-month period ended 30 June 2021 would have been a gain of USD 2,924 million, and basic earnings per share would have been USD 1.46.

Underlying EPS for the six-month period ended 30 June 2021 was USD 1.30. Underlying EPS is basic earnings per share excluding the after-tax exceptional items discussed above, the mark-to-market of the hedging of our share-based payment programs, the impact of hyperinflation accounting and the impact of discontinued operations.

The increase in profit attributable to our equity holders for the six-month period ended 30 June 2021 was primarily due to increases in profit from operations discussed above and positive mark-to-market adjustment linked to the hedging of our share-based payment programs and gains on the hedging of the shares issued in transactions related to the combination with Grupo Modelo and SAB compared to the negative mark-to-market adjustment linked to these hedges for the six-month period ended 30 June 2020.


	Six-month period ended 30 June 2021			Six-month period ended 30 June 2020
	(USD per share)
Basic earnings per share		1.23			(0.95	)

Exceptional items, before taxes, attributable to equity holders of AB InBev		0.11			1.40
Exceptional net finance cost, before taxes, attributable to equity holders of AB InBev		0.15			0.70
Exceptional taxes attributable to equity holders of AB InBev		(0.02	)		(0.05	)
Exceptional non-controlling interest		—			(0.02	)
Profit from discontinued operations attributable to equity holders of AB InBev		—			(1.03	)

Earnings per share excluding exceptional items and discontinued operations		1.46			0.04
Mark-to-market (hedging of our share-based payment programs)		(0.17	)		0.86
Hyperinflation accounting impacts in EPS		0.02			—

Underlying EPS		1.30			0.90

The calculation of earnings per share is based on 2,004 million shares outstanding, representing the weighted average number of ordinary and restricted shares outstanding during the six-month period ended 30 June 2021 (30 June 2020: 1,995 million shares).

Earnings per share excluding exceptional items and discontinued operations and Underlying earnings per share are not defined metrics in IFRS. See “Item 5. Operating and Financial Review—E. Results of Operations—Year Ended 31 December 2020 Compared to the Year Ended 31 December 2019—Profit Attributable to Our Equity Holders” of our 2020 Annual Report for additional information regarding our use of Underlying earnings per share and a discussion of why we believe the presentation of this measure provides useful information to investors.

Impact of Changes in Foreign Exchange Rates

Foreign exchange rates have a significant impact on our consolidated financial statements. The following table sets forth the percentage of our revenue realized by currency for the six-month period ended 30 June 2021 and 2020:


	Six-month period ended
	30 June 2021			30 June 2020
U.S. dollar		31.2	%		34.7	%
Brazilian real		11.6	%		12.6	%
Mexican peso		9.8	%		8.6	%
Chinese yuan		9.3	%		9.0	%
Euro		7.6	%		6.0	%
Colombian peso		3.9	%		3.4	%
South African rand		3.4	%		2.8	%
Dominican peso		3.3	%		1.7	%
Argentinean peso⁽¹⁾		3.0	%		2.4	%
Canadian dollar		2.8	%		4.0	%
Peruvian peso		2.5	%		2.3	%
Pound sterling		2.1	%		2.7	%
South Korean won		1.8	%		2.5	%
Other		7.6	%		7.2	%

Note:

(1)	Hyperinflation accounting was adopted starting from the September year-to-date 2018 results.

Liquidity and Capital Resources

The following table sets forth our consolidated cash flows for the six-month period ended 30 June 2021 and 2020:


	Six-month period ended 30 June 2021			Six-month period ended 30 June 2020
	(USD million)
Cash flow from operating activities		3,939			1,119
Cash flow from/(used in) investing activities		(2,209	)		9,067
Cash flow from/(used in) financing activities		(10,107	)		8,231

Net increase/(decrease) in cash and cash equivalents		(8,377	)		18,416

Cash flow from operating activities

The following table sets forth our cash flow from operating activities for the six-month period ended 30 June 2021 and 2020:


	Six-month period ended 30 June 2021			Six-month period ended 30 June 2020
	(USD million)
Profit/(loss) from continuing operations		3,074			(3,744	)
Interest, taxes and non-cash items included in profit		6,062			11,164

Cash flow from operating activities before changes in working capital and provisions		9,134			7,420

Change in working capital		(1,327	)		(2,700	)
Pension contributions and use of provisions		(258	)		(327	)
Interest and taxes (paid)/received		(3,696	)		(3,388	)
Dividends received		86			30
Cash flow from operating activities on Australia discontinued operations		—			84

Cash flow from operating activities		3,939			1,119

Cash flow from operating activities was USD 3,939 million for the six-month period ended 30 June 2021 compared to USD 1,119 million for the six-month period ended 30 June 2020. The increase primarily results from higher profit and lower changes in working capital for the first six months of 2021 compared to the same period last year as our results for the first half of 2020 were negatively impacted by the COVID-19 pandemic. Changes in working capital in the first half of 2021 and 2020 reflect higher working capital levels end of June than at year-end as a result of seasonality.

Cash flow from investing activities

The following table sets forth our cash flow from investing activities for the six-month period ended 30 June 2021 and 2020:


	Six-month period ended 30 June 2021			Six-month period ended 30 June 2020
	(USD million)
Net capital expenditure		(2,104	)		(1,524	)
Acquisition and sale of subsidiaries, net of cash acquired/disposed of		(203	)		(204	)
Net proceeds from the sale/(acquisition) of other assets		98			30
Proceeds from Australia divestiture (discontinued operations)		—			10,838
Cash flow from investing activities on Australia discontinued operations		—			(13	)

Cash flow from investing activities		(2,209	)		9,067

Cash flow from investing activities was a net cash outflow of USD 2,209 million for the six-month period ended 30 June 2021 as compared to a net cash inflow of USD 9,067 million for the six-month period ended 30 June 2020. The decrease in the cash flow from investing activities was mainly due to the exceptional USD 10,838 million proceeds from the divestiture of the Australian business reported in the first six months of 2020 and higher net capital expenditures in the first six months of 2021 compared to the same period last year.

Net capital expenditures were USD 2,104 million for the six-month period ended 30 June 2021 and USD 1,524 million for the six-month period ended 30 June 2020. Out of the total half-year 2021 capital expenditures approximately 42% was used to improve our production facilities, 46% was used for logistics and commercial investments and 12% was used for improving administrative capabilities and the purchase of hardware and software.

Cash flow from financing activities

The following table sets forth our cash flow from financing activities for the six-month period ended 30 June 2021 and 2020:


	Six-month period ended 30 June 2021			Six-month period ended 30 June 2020
	(USD million)
Dividends paid		(1,382	)		(1,219	)
Net (payments on)/proceeds from borrowings		(7,999	)		10,194
Payments of lease liabilities		(256	)		(280	)
Other (including purchase of non-controlling interests)		(470	)		(457	)
Cash flow from financing activities on Australia discontinued operations		—			(6	)

Cash flow from financing activities		(10,107	)		8,231

Cash outflow from financing activities was USD 10,107 million for the six-month period ended 30 June 2021, as compared to a cash inflow of USD 8,231 million for the six-month period ended 30 June 2020, mainly driven by lower proceeds from borrowings coupled with higher repayments of borrowings in the first six months of 2021 compared to the same period last year. During the second quarter of 2020, we took significant actions to maintain a strong liquidity in light of the COVID-19 pandemic and issued a series of bonds for a total amount of approximately USD 11 billion.

As of 30 June 2021, we had total liquidity of USD 16.9 billion, which consisted of USD 10.1 billion available under our Sustainable-Linked Loan Revolving Credit Facility (“SLL RCF”) and USD 6.8 billion of cash, cash equivalents and short-term investments in debt securities less bank overdrafts. Although we may borrow such amounts to meet our liquidity needs, we principally rely on cash flows from operating activities to fund the company’s continuing operations.

Capital Resources and Equity

Our net debt was USD 83.4 billion as of 30 June 2021 as compared to USD 82.7 billion as of 31 December 2020.

Our net debt increased by USD 0.7 billion as of 30 June 2021 compared to 31 December 2020. Aside from operating results that are net of capital expenditures, the net debt is impacted mainly by the payment of interests and taxes (USD 3.7 billion increase of net debt), settlement of derivatives (USD 0.3 billion increase of net debt), dividend payments to shareholders of AB InBev and Ambev (USD 1.4 billion) and foreign exchange impact on net debt (USD 0.6 billion decrease of net debt).

After redemptions in January and June 2021, 95% of our bond portfolio holds a fixed-interest rate, 49% is denominated in currencies other than USD and maturities are well-distributed across the next several years.

Consolidated equity attributable to our equity holders as at 30 June 2021 was USD 68,596 million, compared to USD 68,024 million as at 31 December 2020. The net increase in equity results from the profit attributable to equity shareholders partially offset by dividends paid and foreign exchange losses on translation of foreign operations primarily related to the combined effect of the weakening of the closing rates of the Peruvian Sol, the Colombian pesos and the Euro, and the strengthening of the South African rand and the Brazilian real, which resulted in a foreign exchange translation adjustment of USD 1,347 million as of 30 June 2021 (decrease of equity).

The chart below shows the bond repayment schedule⁷ as of 30 June 2021 (figures in USD billion):

LOGO

Further details on interest bearing loans and borrowings, repayment schedules and liquidity risk are disclosed in notes 18 and 20 to our unaudited interim report as of 30 June 2021 and for the six-month periods ended 30 June 2021 and 2020.

Adoption of hyperinflation accounting in Argentina

In May 2018, the Argentinean peso underwent a severe devaluation resulting in the three-year cumulative inflation of Argentina exceeding 100% in 2018, thereby triggering the requirement to transition to hyperinflation accounting as prescribed by IAS 29 Financial Reporting in Hyperinflationary Economies as of 1 January 2018.

Consequently, we have applied hyperinflation accounting for our Argentinean subsidiaries for the first time in the year to date September 2018 unaudited interim report, with effect as of 1 January 2018.

The results for the six-month period ended 30 June 2021 were translated at the June 2021 closing rate of 95.730147 Argentinean pesos per US dollar. The results for the six-month period ended 30 June 2020, were translated at the June 2020 closing rate of 70.454990 Argentinean pesos per US dollar.

The impact of hyperinflation accounting for the period ended 30 June 2021 amounted to USD 14 million increase in revenue, USD 75 million positive monetary adjustment reported in the finance line and represented USD 0.02 earnings per share excluding exceptional items and discontinued operations.

⁷	Pro forma for announced bond redemption transactions that settle after 30 June 2021.

Guarantor Financial Information

The debt securities issued by (i) Anheuser-Busch InBev Finance Inc. (“ABIFI”) under Indentures dated as of January 17, 2013, January 25, 2016 and May 15, 2017, in each case among ABIFI, Anheuser-Busch InBev SA/NV (the “Parent Guarantor”), the subsidiary guarantors listed therein and the Bank of New York Mellon Trust Company, N.A., as trustee (ii) Anheuser-Busch InBev Worldwide Inc. (“ABIWW”) under Indentures dated as of October 16, 2009, December 16, 2016 and April 4, 2018, in each case among ABIWW, the Parent Guarantor, the subsidiary guarantors listed therein and the Bank of New York Mellon Trust Company, N.A, as trustee and (iii) Anheuser-Busch Companies, LLC (“ABC”) and ABIWW, as co-issuers, under the Indenture dated as of November 13, 2018, among ABC, ABIWW, the subsidiary guarantors listed therein and the Bank of New York Mellon Trust Company, N.A., as trustee, are, in each case, fully and unconditionally guaranteed by the Parent Guarantor and jointly and severally guaranteed by Brandbrew S.A., Brandbev S.à r.l. and Cobrew NV, and by ABC (in respect of debt issued by ABIFI and/or ABIWW (as sole issuer)), ABIWW (in respect of debt issued by ABIFI) and by ABIFI (in respect of debt issued by ABIWW and/or ABC) on a full and unconditional basis. The Parent Guarantor owns, directly or indirectly, 100% of each of ABIFI, ABIWW, ABC, Brandbrew S.A., Brandbev S.à r.l. and Cobrew NV.

Each guarantee provided under the aforementioned indentures is referred to as a “Guarantee” and collectively, the “Guarantees;” the subsidiaries of the Parent Guarantor providing Guarantees are referred to as the “Subsidiary Guarantors” and the Parent Guarantor and Subsidiary Guarantors collectively are referred to as the “Guarantors”. ABIWW, ABIFI and ABC are collectively referred to as the “Issuers”.

For disclosure required by Rule 13-01 of Regulation S-X of certain terms and conditions of the guarantees and how the issuer and guarantor structure and other factors may affect payments to the holder of the debt securities see “Item 5. Operating and Financial Review—G. Liquidity and Capital Resources—Guarantor Financial Information” of our 2020 Annual Report.

Summarized financial information is presented below for Anheuser-Busch InBev SA/NV, the Issuers and the Subsidiary Guarantors on a combined basis after elimination of intercompany transactions and balances among them and does not include investments in and equity in the earnings of non-guarantor subsidiaries. The intercompany balances with Non-Guarantor Subsidiaries have been presented separately. This summarized financial information is not intended to present the financial position or results of operations of Anheuser-Busch InBev SA/NV, the Issuers and the Subsidiary Guarantors in accordance with IFRS.


	Six-month period ended 30 June 2021		Year ended 31 December 2020
	USD million		USD million
Statement of Income Data
Revenue⁽¹⁾		7,393		14,260
Gross profit⁽¹⁾		4,085		8,193
Profit from continuing operations⁽¹⁾		961		859
Profit from discontinued operations⁽¹⁾		—		368
Profit for the period⁽¹⁾		961		1,227

	Six-month period ended 30 June 2021		Year ended 31 December 2020
	USD million		USD million
Balance Sheet Data
Due from non-guarantor subsidiaries		63,814		43,420
Other non-current assets		61,490		61,602
Non-current assets		125,304		105,022
Due from non-guarantor subsidiaries		15,027		22,881
Other current assets		11,178		23,323
Current assets		26,204		46,204
Due to non-guarantor subsidiaries		52,541		36,364
Other non-current liabilities		96,345		103,874
Non-current liabilities		148,887		140,238
Due to non-guarantor subsidiaries		14,215		15,963
Other current liabilities		25,899		33,290
Current liabilities		40,144		49,253

Note:

(1)

For the six-month period ended 30 June 2021, revenue, gross profit, profit from continuing operations and profit for the period includes USD 203 million, USD (262) million, USD 834 million and USD 834 million of intercompany transactions with non-guarantor subsidiaries and related parties, respectively. For the year ended 31 December 2020, revenue, gross profit, profit from continuing operations and profit for the period includes USD 365 million, USD (524) million, USD 2,758 million and USD 2,758 million of intercompany transactions with non-guarantor subsidiaries and related parties, respectively.

2021 OUTLOOK

We expect our EBITDA, as defined, before exceptional items⁸, to grow between 8-12% and our revenue to grow ahead of EBITDA from a healthy combination of volume and price. The outlook for 2021 reflects our current assessment of the scale and magnitude of the COVID-19 pandemic, which is subject to change as we continue to monitor ongoing developments.

We expect the average gross debt coupon in 2021 to be approximately 4.0%. Net pension interest expenses and accretion expenses including IFRS 16 adjustments (lease reporting) are expected to be in the range of USD 140 to 160 million per quarter, depending on currency fluctuations. Net finance costs will continue to be impacted by any gains and losses related to the hedging of our share-based payment programs.

We expect net capital expenditure of between USD 4.5 and 5.0 billion in 2021 as we are increasing investments in innovation and other consumer-centric initiatives to fuel our momentum.

Approximately 49% of our gross debt is denominated in currencies other than the USD, primarily the Euro. Our optimal capital structure remains a net debt to EBITDA, as defined, before exceptional items⁸, ratio of around 2x.

⁸	For a discussion of how we use EBITDA, as defined, and its limitations, and a table showing the calculation of our EBITDA, as defined, for the periods shown, see “—EBITDA, as defined” above.

Index


Unaudited condensed consolidated interim financial statements			2
Unaudited condensed consolidated interim income statement			2
Unaudited condensed consolidated interim statement of comprehensive income/(loss)			3
Unaudited condensed consolidated interim statement of financial position			4
Unaudited condensed consolidated interim statement of changes in equity			5
Unaudited condensed consolidated interim statement of cash flows			6
Notes to the unaudited condensed consolidated interim financial statements			7

-1-

Unaudited condensed consolidated interim income statement


For the six-month period ended 30 June
Million US dollar, except earnings per shares in US dollar	Notes		2021			2020
Revenue				25 832			21 298
Cost of sales				(10 963	)		(9 097	)

Gross profit				14 869			12 201


Distribution expenses				(2 791	)		(2 401	)
Sales and marketing expenses				(3 532	)		(3 278	)
Administrative expenses				(2 247	)		(1 578	)
Other operating income/(expenses)				470			158
COVID-19 costs		7		(54	)		(78	)
Restructuring		7		(97	)		(60	)
Business and asset disposal (including impairment losses)		7		14			(154	)
Acquisition costs business combinations		7		(6	)		(4	)
Zenzele Kabili costs		7		(73	)		—
Impairment of goodwill		7		—			(2 500	)

Profit from operations				6 551			2 306


Finance cost		8		(3 191	)		(5 835	)
Finance income		8		845			243

Net finance income/(cost)				(2 346	)		(5 592	)


Share of result of associates and joint ventures		13		100			33

Profit/(loss) before tax				4 305			(3 253	)


Income tax expense		9		(1 231	)		(492	)

Profit/(loss) from continuing operations				3 074			(3 744	)


Profit from discontinued operations		16		—			2 055


Profit/(loss) of the period				3 074			(1 688	)


Profit/(loss) from continuing operations attributable to:
Equity holders of AB InBev				2 458			(3 955	)
Non-controlling interest				616			211

Profit/(loss) of the period attributable to:
Equity holders of AB InBev				2 458			(1 900	)
Non-controlling interest				616			211

Basic earnings per share		17		1.23			(0.95	)
Diluted earnings per share		17		1.20			(0.95	)

Basic earnings per share from continuing operations		17		1.23			(1.98	)
Diluted earnings per share from continuing operations		17		1.20			(1.98	)

The accompanying notes are an integral part of these consolidated financial statements.

-2-

Unaudited condensed consolidated interim statement of comprehensive income/(loss)


For the six-month period ended 30 June
Million US dollar	Notes		2021			2020
Profit/(loss) of the period				3 074			(1 688	)

Other comprehensive income/(loss): items that will not be reclassified to profit or loss:
Re-measurements of post-employment benefits		17		(9	)		(1	)
				(9	)		(1	)

Other comprehensive income/(loss): items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations		17		(1 164	)		(15 002	)
Effective portion of changes in fair value of net investment hedges				(91	)		687
Cash flow hedges recognized in equity				463			508
Cash flow hedges recognized in equity in relation to Australia divestiture		17		—			426
Cash flow hedges reclassified from equity to profit or loss				(285	)		(169	)
				(1 078	)		(13 550	)

Other comprehensive income/(loss), net of tax				(1 087	)		(13 551	)


Total comprehensive income/(loss)				1 987			(15 239	)


Attributable to:
Equity holders of AB InBev				1 289			(14 758	)
Non-controlling interest				697			(481	)

The accompanying notes are an integral part of these consolidated financial statements.

-3-

Unaudited condensed consolidated interim statement of financial position


As at
Million US dollar	Notes		30 June 2021		31 December 2020
ASSETS
Non-current assets
Property, plant and equipment		10		26 618		26 419
Goodwill		11		119 166		120 971
Intangible assets		12		41 072		41 527
Investments in associates and joint ventures		13		6 007		6 143
Investment securities		15		146		137
Deferred tax assets				2 100		2 019
Employee benefits				7		6
Income tax receivables				818		869
Derivatives		20		43		138
Trade and other receivables		14		1 996		1 661

Total non-current assets				197 973		199 891


Current assets
Investment securities		15		286		396
Inventories				5 355		4 482
Income tax receivables				531		655
Derivatives		20		1 000		827
Trade and other receivables		14		5 489		4 833
Cash and cash equivalents		15		6 790		15 252
Assets classified as held for sale				50		74

Total current assets				19 502		26 519


Total assets				217 475		226 410


EQUITY AND LIABILITIES
Equity
Issued capital		17		1 736		1 736
Share premium				17 620		17 620
Reserves				17 649		17 798
Retained earnings				31 591		30 870

Equity attributable to equity holders of AB InBev				68 596		68 024


Non-controlling interests				10 965		10 327

Total equity				79 561		78 351


Non-current liabilities
Interest-bearing loans and borrowings		18		89 344		95 478
Employee benefits				2 887		2 970
Deferred tax liabilities				12 530		12 627
Income tax payables				796		808
Derivatives		20		639		1 759
Trade and other payables				1 207		1 522
Provisions				438		544

Total non-current liabilities				107 841		115 707


Current liabilities
Bank overdrafts		15		46		5
Interest-bearing loans and borrowings		18		1 248		3 081
Income tax payables				982		1 036
Derivatives		20		4 872		5 046
Trade and other payables				22 731		22 965
Provisions				193		219

Total current liabilities				30 072		32 352


Total equity and liabilities				217 475		226 410

The accompanying notes are an integral part of these consolidated financial statements.

-4-

Unaudited condensed consolidated interim statement of changes in equity


			Attributable to equity holders of AB InBev
Million US dollar	Notes		Issued Capital		Share premium		Treasury shares			Reserves		Share- based payments reserves			Other comprehensive income reserves			Retained earnings			Total			Non-controlling interest			Total Equity
As per 1 January 2020				1 736		17 620		(6 270	)		50 104		2 327			(21 279	)		31 484			75 722			8 831			84 553
Profit/(loss) of the period				—		—		—			—		—			—			(1 900	)		(1 900	)		211			(1 688	)
Other comprehensive income/(loss)
Exchange differences on translation of foreign operations (gains/(losses))		17		—		—		—			—		—			(13 583	)		—			(13 583	)		(732	)		(14 315	)
Cash flow hedges		17		—		—		—			—		—			300			—			300			39			339
Cash flow hedges and cumulative translation adjustments reclassified from equity to profit or loss in relation to Australia divestiture		17		—		—		—			—		—			426			—			426			—			426
Re-measurements of post-employment benefits		17		—		—		—			—		—			(1	)		—			(1	)		—			(1	)

Total comprehensive income/(loss)				—		—		—			—		—			(12 858	)		(1 900	)		(14 758	)		(481	)		(15 239	)

Dividends				—		—		—			—		—			—			(1 118	)		(1 118	)		(144	)		(1 262	)
Treasury shares				—		—		1 236			—		—			—			(897	)		340			—			340
Share-based payments		19		—		—		—			—		(156	)		—			—			(156	)		8			(148	)
Hyperinflation monetary adjustments				—		—		—			—		—			—			68			68			42			110
Scope and other changes				—		—		—			—		—			—			(32	)		(32	)		30			(2	)

As per 30 June 2020				1 736		17 620		(5 034	)		50 104		2 171			(34 137	)		27 605			60 065			8 282			68 347


			Attributable to equity holders of AB InBev
			Issued		Share		Treasury					Share- based payments			Other comprehensive income			Retained						Non-controlling			Total
Million US dollar	Notes		Capital		premium		shares			Reserves		reserves			reserves			earnings			Total			interest			Equity
As per 1 January 2021				1 736		17 620		(4 911	)		51 220		2 330			(30 841	)		30 870			68 024			10 327			78 351
Profit/(loss) of the period				—		—		—			—		—			—			2 458			2 458			616			3 074
Other comprehensive income/(loss)
Exchange differences on translation of foreign operations (gains/(losses))		17		—		—		—			—		—			(1 347	)		—			(1 347	)		92			(1 255	)
Cash flow hedges		17		—		—		—			—		—			184			—			184			(7	)		177
Re-measurements of post-employment benefits		17		—		—		—			—		—			(5	)		—			(5	)		(4	)		(9	)

Total comprehensive income/(loss)				—		—		—			—		—			(1 168	)		2 458			1 289			697			1 987

Dividends				—		—		—			—		—			—			(1 139	)		(1 139	)		(186	)		(1 325	)
Treasury shares				—		—		710			—		—			—			(690	)		20			—			20
Share-based payments		19		—		—		—			—		309			—			—			309			12			321
Hyperinflation monetary adjustments				—		—		—			—		—			—			131			131			81			212
Scope and other changes				—		—		—			—		—			—			(38	)		(38	)		34			(5	)

As per 30 June 2021				1 736		17 620		(4 201	)		51 220		2 639			(32 009	)		31 591			68 596			10 965			79 561

The accompanying notes are an integral part of these consolidated financial statements.

-5-

Unaudited condensed consolidated interim statement of cash flows


For the six-month period ended 30 June
Million US dollar	Notes		2021			2020
OPERATING ACTIVITIES
Profit/(loss) from continuing operations				3 074			(3 744	)
Depreciation, amortization and impairment				2 367			2 402
Impairment losses on goodwill		11		—			2 500
Impairment losses on receivables, inventories and other assets				61			237
Additions/(reversals) in provisions and employee benefits				114			186
Net finance cost/(income)		8		2 346			5 592
Loss/(gain) on sale of property, plant and equipment and intangible assets				(49	)		(4	)
Loss/(gain) on sale of subsidiaries, associates and assets held for sale				(3	)		4
Equity-settled share-based payment expense		19		345			(18	)
Income tax expense		9		1 231			492
Other non-cash items included in profit				(250	)		(194	)
Share of result of associates and joint ventures		13		(100	)		(33	)

Cash flow from operating activities before changes in working capital and use of provisions				9 134			7 420
Decrease/(increase) in trade and other receivables				(755	)		15
Decrease/(increase) in inventories				(894	)		(487	)
Increase/(decrease) in trade and other payables				322			(2 228	)
Pension contributions and use of provisions				(258	)		(327	)

Cash generated from operations				7 549			4 393
Interest paid				(2 238	)		(2 203	)
Interest received				72			172
Dividends received				86			30
Income tax paid				(1 530	)		(1 357	)
Cash flow from operating activities on Australia discontinued operations		16		—			84

Cash flow from operating activities				3 939			1 119


INVESTING ACTIVITIES
Acquisition of property, plant and equipment and of intangible assets		10/12		(2 174	)		(1 580	)
Proceeds from sale of property, plant and equipment and of intangible assets				70			56
Acquisition of subsidiaries, net of cash acquired		6		(210	)		(204	)
Sale of other subsidiaries, net of cash disposed of		6		7			—
Net proceeds from sale/(acquisition) of other assets				98			(30	)
Proceeds from Australia divestiture		16		—			10 838
Cash flow from investing activities on Australia discontinued operations		16		—			(13	)

Cash flow from investing activities				(2 209	)		9 067


FINANCING ACTIVITIES
Sale/(purchase) of non-controlling interests		17		(8	)		—
Proceeds from borrowings		18		370			14 522
Payments on borrowings		18		(8 369	)		(4 328	)
Cash net finance (cost)/income other than interests				(462	)		(457	)
Payment of lease liabilities				(256	)		(280	)
Dividends paid				(1 382	)		(1 219	)
Cash flow from financing activities on Australia discontinued operations		16		—			(6	)

Cash flow from financing activities				(10 107	)		8 231


Net increase/(decrease) in cash and cash equivalents				(8 377	)		18 416
Cash and cash equivalents less bank overdrafts at beginning of year				15 247			7 169
Effect of exchange rate fluctuations				(126	)		(720	)

Cash and cash equivalents less bank overdrafts at end of period		15		6 744			24 865

The accompanying notes are an integral part of these consolidated financial statements.

-6-

Notes to the consolidated financial statements


	Note
Corporate information		1
Statement of compliance		2
Summary of significant accounting policies		3
Use of estimates and judgments		4
Segment reporting		5
Acquisitions and disposals of subsidiaries		6
Exceptional items		7
Finance cost and income		8
Income taxes		9
Property, plant and equipment		10
Goodwill		11
Intangible assets		12
Investments in associates		13
Trade and other receivables		14
Cash and cash equivalents		15
Assets classified as held for sale, liabilities associated with assets held for sale and discontinued operations		16
Changes in equity and earnings per share		17
Interest-bearing loans and borrowings		18
Share-based payments		19
Risks arising from financial instruments		20
Collateral and contractual commitments for the acquisition of property, plant and equipment, loans to customers and other		21
Contingencies		22
Related parties		23
Events after the balance sheet date		24

-7-

1.	Corporate information

Anheuser-Busch InBev is a publicly traded company (Euronext: ABI) based in Leuven, Belgium, with secondary listings on the Mexico (MEXBOL: ANB) and South Africa (JSE: ANH) stock exchanges and with American Depositary Receipts on the New York Stock Exchange (NYSE: BUD). Our Dream is to bring people together for a better world. Beer, the original social network, has been bringing people together for thousands of years. We are committed to building great brands that stand the test of time and to brewing the best beers using the finest natural ingredients. Our diverse portfolio of well over 500 beer brands includes global brands Budweiser^®, Corona^® and Stella Artois^®; multi-country brands Beck’s^®, Hoegaarden^®, Leffe^® and Michelob Ultra^®; and local champions such as Aguila^®, Antarctica^®, Bud Light^®, Brahma^®, Cass^®, Castle^®, Castle Lite^®, Cristal^®, Harbin^®, Jupiler^®, Modelo Especial^®, Quilmes^®, Victoria^®, Sedrin^® and Skol^®. Our brewing heritage dates back more than 600 years, spanning continents and generations. From our European roots at the Den Hoorn brewery in Leuven, Belgium. To the pioneering spirit of the Anheuser & Co brewery in St. Louis, US. To the creation of the Castle Brewery in South Africa during the Johannesburg gold rush. To Bohemia, the first brewery in Brazil. Geographically diversified with a balanced exposure to developed and developing markets, we leverage the collective strengths of approximately 164 000 employees based in nearly 50 countries worldwide. For 2020, AB InBev’s reported revenue was 46.9 billion US dollar (excluding joint ventures and associates).

The unaudited condensed consolidated interim financial statements of the company for the six-month period ended 30 June 2021 comprise the company and its subsidiaries (together referred to as “AB InBev” or the “company”) and the company’s interest in associates, joint ventures and operations. The condensed consolidated interim financial statements for the six-month period ended 30 June 2021 and 2020 are unaudited; however, in the opinion of the company, the interim data include all adjustments, consisting of only normally recurring adjustments, necessary for a fair statement of the results for the interim period.

The unaudited condensed interim consolidated financial statements were authorized for issue by the Board of Directors on 28 July 2021.

2.	Statement of compliance

The unaudited condensed consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standard (IFRS) IAS 34 Interim Financial Reporting as issued by the International Accounting Standard Board (IASB) and as adopted by the European Union. They do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the company as at and for the year ended 31 December 2020. AB InBev did not early apply any new IFRS requirements that were not yet effective in 2021 and did not apply any European carve-outs from IFRS.

3.	Summary of significant accounting policies

The accounting policies applied are consistent with those applied in the annual consolidated financial statements ended 31 December 2020.

(A)

SUMMARY OF CHANGES IN ACCOUNTING POLICIES

A number of new standards, amendment to standards and new interpretations became mandatory for the first time for the financial year beginning on 1 January 2021 and have not been listed in these unaudited condensed consolidated interim financial statements as they either do not apply or are immaterial to AB InBev’s consolidated financial statements.

In March 2020, the SEC amended its regulations regarding financial information of guarantors and issuers of guaranteed securities registered or being registered. We adopted these amendments for the year ended 31 December 2020, which included replacing guarantor condensed consolidating financial information with summarized financial information for the combined obligor group (Parent, Issuer and Guarantor Subsidiaries) in accordance with the amended regulations and no longer requiring guarantor cash flow information, financial information for non-guarantor subsidiaries, or a reconciliation to the consolidated results. The location of the required disclosures has been removed from the Notes to the Condensed Consolidated Interim Financial Statements and moved to “Guarantor Financial Information” of the Form 6-K.

(B)

FOREIGN CURRENCIES

Foreign currency transactions

Foreign currency transactions are accounted for at exchange rates prevailing at the date of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rates prevailing on the date of the balance sheet. Gains and losses resulting from the settlement of foreign currency transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement. Non-monetary assets and liabilities denominated in foreign currencies are translated at the foreign exchange rate prevailing at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to US dollar at foreign exchange rates prevailing at the dates the fair value was determined.

Translation of the results and financial position of foreign operations

Assets and liabilities of foreign operations are translated to US dollar at foreign exchange rates prevailing at the balance sheet date. Income statements of foreign operations, excluding foreign entities in hyperinflationary economies, are translated to US dollar at exchange rates for the year approximating the foreign exchange rates prevailing at the dates of the transactions. The components of shareholders’ equity are translated at historical rates. Exchange differences arising from the translation of shareholders’ equity to US dollar at period-end exchange rates are taken to other comprehensive income (translation reserves).

-8-

Financial Reporting in hyperinflationary economies

In May 2018, the Argentinean peso underwent a severe devaluation, causing Argentina´s three-year cumulative inflation to exceed 100% and thus, triggering the requirement to transition to hyperinflation accounting as prescribed by IAS 29 Financial Reporting in Hyperinflationary Economies. IAS 29 requires that the results of the company’s Argentinian operations be reported as if these were highly inflationary as of 1 January 2018.

Under IAS 29, non-monetary assets and liabilities stated at historical cost, equity and income statements of subsidiaries operating in hyperinflationary economies are restated for changes in the general purchasing power of the local currency, applying a general price index. These re-measured accounts are used for conversion into US dollar at the period closing exchange rate. As a result, the balance sheet and net results of subsidiaries operating in hyperinflation economies are stated in terms of the measuring unit current at the end of the reporting period.

Consequently, the company applied hyperinflation accounting for its Argentinean subsidiaries for the first time in the year-to-date September 2018 unaudited condensed interim financial statements, with effect as of 1 January 2018. The IAS 29 rules are applied as follows:

•

Non-monetary assets and liabilities stated at historical cost (e.g. property plant and equipment, intangible assets, goodwill, etc.) and equity of Argentina were restated using an inflation index. The hyperinflation accounting impacts resulting from changes in the general purchasing power from 1 January 2018 are reported in the income statement in a dedicated account for hyperinflation monetary adjustments in the finance line (see also Note 8 Finance cost and income)

•

The income statement is adjusted at the end of each reporting period using the change in the general price index. It is converted at the closing exchange rate of each period (rather than the year-to-date average rate which is used for non-hyperinflationary economies), thereby restating the year-to-date income statement account for both inflation index and currency conversion.

The 2021 results, restated for purchasing power, were translated at the June 2021 closing rate of 95.730147 Argentinean pesos per US dollar (2020 results—at 70.454990 Argentinean pesos per US dollar).

Exchange rates

The most important exchange rates that have been used in preparing the financial statements are:


	Closing rate				Average rate
1 US dollar equals:	30 June 2021		31 December 2020		30 June 2021		30 June 2020
Argentinean peso		95.730147		84.143520		—		—
Brazilian real		5.002217		5.196694		5.404575		4.683731
Canadian dollar		1.238808		1.273981		1.245300		1.362592
Colombian peso		3 756.55		3 438.52		3 630.50		3 581.62
Chinese yuan		6.457580		6.537798		6.471074		7.052919
Euro		0.841468		0.814930		0.827754		0.906152
Mexican peso		19.802508		19.948838		20.275664		20.397344
Pound sterling		0.722021		0.732646		0.719643		0.791317
Peruvian nuevo sol		3.928495		3.621009		3.708425		3.377006
South Korean won		1 129.49		1 088.02		1 114.07		1 204.98
South African rand		14.314575		14.686598		14.650513		16.230856

(C)

RECENTLY ISSUED IFRS

There are no new IFRS requirements that are not yet effective which have been early applied in preparing these unaudited condensed consolidated interim financial statements.

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4.	Use of estimates and judgments

The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

These estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or, if the revision affects both current and future periods, in the period of the revision and future periods.

Although each of its significant accounting policies reflects judgments, assessments or estimates, AB InBev believes that the following accounting policies reflect the most critical judgments, estimates and assumptions that are important to its business operations and understanding results: business combinations, intangible assets, goodwill, impairment, provisions, share-based payments, employee benefits and accounting for current and deferred tax.

The fair values of acquired identifiable intangibles are based on an assessment of future cash flows. Impairment analyses of goodwill and indefinite-lived intangible assets are performed annually and whenever a triggering event has occurred, in order to determine whether the carrying value exceeds the recoverable amount. These calculations are based on estimates of future cash flows.

The company uses its judgment to select a variety of methods including the discounted cash flow method and option valuation models and makes assumptions about the fair value of financial instruments that are mainly based on market conditions existing at each balance sheet date.

Actuarial assumptions are established to anticipate future events and are used in calculating pension and other long-term employee benefit expenses and liabilities. These factors include assumptions with respect to interest rates, rates of increase in health care costs, rates of future compensation increases, turnover rates, and life expectancy.

The company is subject to income tax in numerous jurisdictions. Significant judgment is required to determine the worldwide provision for income tax. There are some transactions and calculations for which the ultimate tax determination is uncertain. Some subsidiaries within the group are involved in tax audits and local enquiries usually in relation to prior years. Investigations and negotiations with local tax authorities are ongoing in various jurisdictions at the balance sheet date and, by their nature, these can take considerable time to conclude. In assessing the amount of any income tax provisions to be recognized in the financial statements, estimates are made of the expected successful settlement of these matters. Estimates of interest and penalties on tax liabilities are also recorded. Where the final outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period that such determination is made.

Judgments made by management in the application of IFRS that have a significant effect on the financial statements and estimates with a significant risk of material adjustment in the following year are further discussed in the relevant notes hereafter.

In preparing these unaudited condensed consolidated interim financial statements, the significant judgments made by management in applying the company’s accounting policies and the key sources of uncertainty relate mainly to accounting for the COVID-19 pandemic impact on the company’s results as discussed below.

(A)

COVID-19 PANDEMIC IMPACT

Management considered the impact of COVID-19 and the current economic environment on the basis of preparation of these interim condensed consolidated financial statements. The company continues to adequately manage its liquidity and capital resources (refer to Note 15 Cash and cash equivalents, Note 18 Interest-bearing loans and borrowings and Note 20 Risks arising from financial instruments). As such, management concluded the company is able to continue as a going concern.

COVID-19 costs

As required by IAS 1 Presentation of financial statements, the company has assessed the impact of the COVID-19 outbreak on its performance for the six-month period ended 30 June 2021, and reported (54)m US dollar of costs in exceptional items as a result of the pandemic. These expenses mainly comprise costs related to personal protection equipment for the company’s employees, charitable donations and other costs incurred as a direct consequence of the COVID-19 pandemic. Refer to Note 7 Exceptional items.

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5.	Segment reporting

Segment information is presented by geographical segments, consistent with the information available to and regularly evaluated by the chief operating decision maker. AB InBev operates its business through six business segments. Regional and operating company management is responsible for managing performance, underlying risks, and the effectiveness of operations. Internally, AB InBev’s management uses performance indicators such as normalized profit from operations (normalized EBIT) and normalized EBITDA as measures of segment performance and to make decisions regarding the allocation of resources. The organizational structure comprises five regions: North America, Middle Americas, South America, EMEA and Asia Pacific. In addition to these five geographic regions, the company uses a sixth segment, Global Export and Holding Companies, for all financial reporting purposes.

On 1 June 2020, AB InBev divested CUB, its Australian subsidiary, to Asahi (refer to Note 16 Assets classified as held for sale, liabilities associated with assets held for sale and discontinued operations). Since the results of the Australian operations represented a separate major line of business, these were accounted for as discontinued operations (“profit from discontinued operations”) up to 31 May 2020.

All figures in the tables below are stated in million US dollar, except volume (million hls) and Normalized EBITDA margin (in %).


	North America						Middle Americas						South America						EMEA						Asia Pacific						Global Export and Holding companies						AB InBev Worldwide
	2021			2020			2021			2020			2021			2020			2021			2020			2021			2020			2021			2020			2021			2020
Volume		53			52			68			52			72			63			41			34			46			39			—			—			280			240
Revenue		8 040			7 536			5 893			4 246			4 146			3 613			3 763			3 007			3 500			2 609			491			287			25 832			21 298
Normalized EBITDA		3 014			2 986			2 824			2 021			1 447			1 146			1 060			713			1 242			783			(473	)		(287	)		9 114			7 363
Normalized EBITDA margin %		37.5	%		39.6	%		47.9	%		47.6	%		34.9	%		31.7	%		28.2	%		23.7	%		35.5	%		30.0	%		—			—			35.3	%		34.6	%
Depreciation, amortization and impairment		(389	)		(407	)		(558	)		(486	)		(359	)		(410	)		(497	)		(470	)		(360	)		(311	)		(183	)		(175	)		(2 346	)		(2 261	)
Normalized profit from operations (EBIT)		2 625			2 579			2 266			1 535			1 088			736			563			243			882			472			(656	)		(462	)		6 768			5 102
Exceptional items		(13	)		(83	)		(59	)		(51	)		(23	)		(17	)		(102	)		(2 587	)		(22	)		(10	)		2			(47	)		(217	)		(2 796	)
Profit from operations (EBIT)		2 612			2 496			2 207			1 484			1 065			719			461			(2 344	)		860			462			(654	)		(509	)		6 551			2 306
Net finance income/(cost)																																						(2 346	)		(5 592	)
Share of results of associates and joint ventures																																						100			33
Income tax expense																																						(1 231	)		(492	)
Profit from continuing operations																																						3 074			(3 744	)
Discontinued operations results																																						—			2 055
Profit/(loss)																																						3 074			(1 688	)

Segment assets (non-current)		63 736			63 322			69 312			67 989			13 318			10 807			36 025			32 477			13 634			12 751			1 948			1 886			197 973			189 233
Gross capex		(357	)		(225	)		(456	)		(350	)		(460	)		(387	)		(402	)		(301	)		(265	)		(191	)		(235	)		(126	)		(2 174	)		(1 580	)

For the six-month period ended 30 June 2021, net revenue from the beer business amounted to 23 669m US dollar (30 June 2020: 19 510m US dollar) while the net revenue from the non-beer business (soft drinks and other business) accounted for 2 163m US dollar (30 June 2020: 1 788m US dollar). Additionally, for the six-month period ended 30 June 2021, net revenue from the company’s business in the United States amounted to 7 071m US dollar (30 June 2020: 6 675m US dollar) and net revenue from the company’s business in Brazil amounted to 2 858 m US dollar (30 June 2020: 2 641m US dollar).

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6.	Acquisitions and disposals of subsidiaries

The table below summarizes the impact of acquisitions and disposals on the statement of financial position and cash flows of AB InBev for the six-month period ended 30 June 2021 and 30 June 2020:


Million US dollar	2021 Acquisitions		2020 Acquisitions			2021 Disposals			2020 Disposals
Non-current assets
Property, plant and equipment		—		3			(5	)		—
Intangible assets		—		14			—			—

Current assets
Inventories		—		5			(7	)		—
Trade and other receivables		—		3			(6	)		—
Cash and cash equivalents		—		—			(5	)		—

Non-current liabilities
Interest-bearing loans and borrowings		—		(1	)		—			—
Trade and other payables		—		(24	)		—			—

Current liabilities
Interest-bearing loans and borrowings				(1	)					—
Trade and other payables		—		(5	)		10			—

Net identifiable assets and liabilities		—		(6	)		(13	)		—

Non-controlling interest		—		—			—			—

Goodwill on acquisitions and goodwill disposed of		—		73			—			—
Loss/(gain) on disposal		—		—			1			—
Consideration to be (paid)/received		—		(8	)		—			—
Net cash paid/(received) on prior years acquisitions/(disposals)		210		145			—			—

Consideration paid/(received)		210		204			(12	)		—

Cash (acquired)/disposed of		—		—			5			—

Net cash outflow / (inflow)		210		204			(7	)		—

On 1 June 2020, AB InBev completed the divestiture of CUB to Asahi – see Note 16 Assets classified as held for sale, liabilities associated with assets held for sale and discontinued operations.

The company undertook a series of acquisitions and disposals during 2021 and 2020, with no significant impact in the company’s consolidated financial statements.

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7.	Exceptional items

IAS 1 Presentation of financial statements requires that material items of income and expense be disclosed separately. Exceptional items are items that in management’s judgment need to be disclosed by virtue of their size or incidence so that a user can obtain a proper understanding of the company´s financial information. The company considers these items to be significant and accordingly, management has excluded them from their segment measure of performance as noted in Note 5 Segment Reporting.

The exceptional items included in the income statement are as follows:


For the six-month period ended 30 June Million US dollar	2021			2020
COVID-19 costs		(54	)		(78	)
Restructuring		(97	)		(60	)
Business and asset disposal (including impairment losses)		14			(154	)
Acquisition costs business combinations		(6	)		(4	)
Zenzele Kabili costs		(73	)		—
Impairment of goodwill		—			(2 500	)

Impact on profit from operations		(217	)		(2 796	)

COVID-19 costs amount to (54)m US dollar for the six-month period ended 30 June 2021 (30 June 2020: (78)m US dollar). These expenses mainly comprise costs related to personal protection equipment for the company’s employees, charitable donations and other costs incurred as a direct consequence of the COVID-19 pandemic.

The exceptional restructuring charges for the six-month period ended 30 June 2021 total (97)m US dollar (30 June 2020: (60)m US dollar). These charges primarily relate to organizational alignments. These changes aim to eliminate overlapping organizations or duplicated processes, taking into account the matching of employee profiles with new organizational requirements. These one-time expenses provide the company with a lower cost base and bring a stronger focus to AB InBev´s core activities, quicker decision-making and improvements to efficiency, service and quality.

Business and asset disposals amount to 14m US dollar for the six-month period ended 30 June 2021, mainly comprising net gains incurred in relation to disposals completed in the first half of 2021. Business and asset disposals amounted to (154)m US dollar for the six-month period ended 30 June 2020, mainly comprising impairment of intangible assets classified as assets held for sale as of 30 June 2020 and other intangibles.

In May 2021, the company set up a new broad-based black economic empowerment (“B-BBEE”) scheme (the “Zenzele Kabili scheme”) and reported (73)m US dollar in exceptional items mainly representing the IFRS 2 cost related to the grant of shares to qualifying SAB retailers and employees participating to the Zenzele Kabili scheme. For more details, refer to Note 17 Changes in equity and earnings per share.

In the second quarter of 2020, the company recognized (2 500)m US dollar of goodwill impairment for its South Africa and Rest of Africa cash-generating units – see Note 11 Goodwill for further details.

On 1 June 2020, the company completed the previously announced sale of CUB to Asahi resulting in a net exceptional gain of 1 919m US dollar reported in discontinued operations. For more details, refer to Note 16 Assets classified as held for sale, liabilities associated with assets held for sale and discontinued operations.

The company incurred an exceptional net finance cost of (299)m US dollar for the six-month period ended 30 June 2021 (30 June 2020: net finance cost of (1 388)m US dollar) – see Note 8 Finance cost and income.

All the amounts referenced above are before income taxes. The exceptional items for the six-month period ended 30 June 2021 decreased income taxes by 42m US dollar (30 June 2020: decrease of income taxes by 107m US dollar).

Non-controlling interest on the exceptional items amounts to 7m US dollar for the six-month period ended 30 June 2021 (30 June 2020: 46m US dollar).

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8.	Finance cost and income

The finance cost and income included in the income statement are as follows:


For the six-month period ended 30 June Million US dollar	2021			2020
Interest expense		(1 878	)		(2 002	)
Capitalization of borrowing costs		3			5
Net interest on net defined benefit liabilities		(37	)		(41	)
Accretion expense		(265	)		(291	)
Net losses on hedging instruments that are not part of a hedge accounting relationship		(297	)		(219	)
Net foreign exchange results (net of the effect of foreign exchange derivative instruments)		(38	)		—
Tax on financial transactions		(31	)		(48	)
Net mark-to-market results on derivatives related to the hedging of share-based payment programs		—			(1 724	)
Other financial costs, including bank fees		(66	)		(77	)

Finance cost excluding exceptional items		(2 609	)		(4 397	)

Exceptional finance cost		(582	)		(1 438	)

Finance cost		(3 191	)		(5 835	)

Interest income		58			85
Interest income on Brazilian tax credits		76			13
Hyperinflation monetary adjustments		75			30
Net foreign exchange results (net of the effect of foreign exchange derivative instruments)		—			61
Net mark-to-market results on derivatives related to the hedging of share-based payment programs		348			—
Other financial income		5			4

Finance income excluding exceptional items		562			193


Exceptional finance income		283			50
Finance income		845			243


Net finance income/(cost) excluding exceptional items		(2 047	)		(4 204	)

Net finance income/(cost)		(2 346	)		(5 592	)

Net finance costs, excluding exceptional items, were 2 047m US dollar in the six-month period ended 30 June 2021 compared to 4 204m US dollar in six-month period ended 30 June 2020. The decrease was predominantly due to a mark-to-market gain of 348m US dollar in 2021, compared to a loss of 1 724m US dollar in 2020, resulting in a swing of 2 072m US dollar.

In the six-month period ended 30 June 2021, accretion expense mainly includes interest on lease liabilities of 60m US dollar (30 June 2020: 54m US dollar), unwind of discounts of 154m US dollar (30 June 2020: 171m US dollar) and bond fees of 33m US dollar (30 June 2020: 52m US dollar).

Interest expenses are presented net of the effect of interest rate derivative instruments hedging AB InBev’s interest rate risk.

Exceptional finance income/(cost) for the six-month period ended 30 June 2021 includes:

•

283m US dollar gain resulting from mark-to-market adjustments on derivative instruments entered into to hedge the shares issued in relation to the combination with Grupo Modelo and the restricted shares issued in connection with the combination with SAB (30 June 2020: 1 438m US dollar loss);

•

582m US dollar loss resulting from the early termination of certain bonds (30 June 2020: nil).

Exceptional finance income/(cost) for the six-month period ended 30 June 2020 includes 50m US dollar gain related to remeasurement of deferred considerations on prior year acquisitions.

No interest income was recognized on impaired financial assets.

-14-

9.	Income taxes

Income taxes recognized in the income statement can be detailed as follows:


For the six-month period ended 30 June Million US dollar	2021			2020
Current tax expense
Current year		(1 388	)		(807	)
Deferred tax (expense)/income		157			315

Total income tax expense in the income statement		(1 231	)		(492	)

The reconciliation of the effective tax rate with the aggregated weighted nominal tax rate can be summarized as follows:


For the six-month period ended 30 June Million US dollar	2021			2020
Profit/(loss) before tax		4 305			(3 253	)
Deduct share of results of associates and joint ventures		100			33

Profit/(loss) before tax and before share of results of associates and joint ventures		4 205			(3 286	)


Adjustments to the tax basis
Government incentives		(216	)		(194	)
Non-deductible/(non-taxable) marked to market on derivatives		(631	)		3 162
Non-deductible impairment of goodwill		—			2 500
Other expenses not deductible for tax purposes		1 187			1 208
Other non-taxable income		(272	)		(607	)

		4 273			2 783


Aggregate weighted nominal tax rate		27.2	%		27.0	%

Tax at aggregated nominal tax rate		(1 163	)		(751	)

Adjustments on tax expense
Utilization of tax losses not previously recognized		—			117
Recognition of deferred taxes on previous years’ tax losses		—			6
Write-down of deferred tax assets on losses and current year losses for which no deferred tax asset is recognized		(128	)		(61	)
(Underprovided)/overprovided in prior years		14			34
Deductions from interest on equity		191			144
Deductions from goodwill		7			8
Other tax deductions		113			125
Change in tax rate		(44	)		71
Withholding taxes		(192	)		(195	)
Other tax adjustments		(29	)		10

		(1 231	)		(492	)


Effective tax rate		29.3	%		(15.0	)%

The total income tax expense for the six-month period ended 30 June 2021 amounts to 1 231m US dollar compared to 492m US dollar for the six-month period ended 30 June 2020. The effective tax rate increased from (15.0)% for the six-month period ended 30 June 2020 to 29.3% for the six-month period ended 30 June 2021. The 2021 effective tax rate was positively impacted by the non-taxable gains from derivatives related to the hedging of share-based payment programs and the hedging of the shares issued in a transaction related to the combination with Grupo Modelo and SAB. The 2020 effective tax rate was negatively impacted by non-deductible losses from these derivatives and the non-deductible, non-cash goodwill impairment loss.

The company benefits from tax exempted income and tax credits which are expected to continue in the future. The company does not have significant benefits coming from low tax rates in any particular jurisdiction.

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10.

Property, plant and equipment

Property, plant and equipment comprises owned and leased assets, as follows:


Million US dollar	30 June 2021		31 December 2020
Property, plant and equipment owned		24 248		24 191
Property, plant and equipment leased (right-of-use assets)		2 370		2 228

Total property, plant and equipment		26 618		26 419


	30 June 2021												31 December 2020
Million US dollar	Land and buildings			Plant and equipment, fixtures and fittings			Under construction			Total			Total
Acquisition cost
Balance at end of previous year		12 237			34 976			1 780			48 993			48 757
Effect of movements in foreign exchange		4			4			35			43			(1 644	)
Acquisitions		5			594			1 274			1 873			3 188
Acquisitions through business combinations		—			—			—			—			111
Disposals		(19	)		(344	)		—			(363	)		(1 274	)
Disposals through the sale of subsidiaries		(2	)		(8	)		—			(10	)		—
Transfer (to)/from other asset categories and other movements¹		200			699			(1 031	)		(133	)		(145	)

Balance at end of the period		12 425			35 921			2 058			50 403			48 993


Depreciation and impairment losses
Balance at end of previous year		(3 950	)		(20 852	)		—			(24 802	)		(23 242	)
Effect of movements in foreign exchange		(2	)		(21	)		—			(23	)		625
Depreciation		(192	)		(1 488	)		—			(1 680	)		(3 250	)
Disposals		9			307			—			316			1 130
Disposals through the sale of subsidiaries		—			5			—			5			—
Impairment losses		(4	)		(61	)		—			(66	)		(145	)
Transfer to/(from) other asset categories and other movements¹		11			85			—			95			80

Balance at end of the period		(4 128	)		(22 027	)		—			(26 155	)		(24 802	)


Carrying amount
at 31 December 2020		8 287			14 124			1 780			24 191			24 191
at 30 June 2021		8 297			13 894			2 057			24 248			—

As at 30 June 2021, the carrying amount of property, plant and equipment subject to restrictions on title amounted to 2m US dollar (31 December 2020: 2m US dollar).

Contractual commitments to purchase property, plant and equipment amounted to 928m US dollar as at 30 June 2021 compared to 528m US dollar as at 31 December 2020.

AB InBev’s net capital expenditures in the statement of cash flow amounted to 2 104m US dollar in 2021 compared to 1 524m US dollar for the same period last year. Out of the total 2021 capital expenditures approximately 42% was used to improve the company’s production facilities while 46% was used for logistics and commercial investments and 12% for improving administrative capabilities and for the purchase of hardware and software. ¹

The transfer (to)/from other asset categories and other movements relates mainly to transfers from assets under construction to their respective asset categories, to contributions of assets to pension plans, to the separate presentation in the balance sheet of property, plant and equipment held for sale in accordance with IFRS 5 Non-current assets held for sale and discontinued operations and to the restatement of non-monetary assets under hyperinflation accounting in line with IAS 29 Financial reporting in hyperinflationary economies..

-16-

Property, plant and equipment leased by the company (right-of-use assets) is detailed as follows:


	2021
Million US dollar	Land and buildings			Machinery, equipment and other			Total

Net carrying amount at 30 June		1 784			586			2 370
Depreciation for the six-month period ended 30 June		(184	)		(98	)		(282	)

	2020
Million US dollar	Land and buildings			Machinery, equipment and other			Total
Net carrying amount at 31 December		1 726			502			2 228
Depreciation for the six-month period ended 30 June		(169	)		(75	)		(244	)

Additions to right-of-use assets for the six-month period ended 30 June 2021 were 347m US dollar (30 June 2020: 393m US dollar).

Following the sale of Dutch and Belgian pub real estate to Cofinimmo in October 2007, AB InBev entered into lease agreements with a term of 27 years. Furthermore, the company leases a number of warehouses, trucks, factory facilities and other commercial buildings, which typically run for a period of five to ten years. Lease payments are increased annually to reflect market rentals, if applicable. None of the leases include contingent rentals.

The company leases out pub real estate for an average outstanding period of 6 to 8 years and part of its own property under operating leases.

The expense related to short-term and low-value leases and variable lease payments that are not included in the measurement of the lease liabilities is not significant.

-17-

11.

Goodwill


Million US dollar	30 June 2021			31 December 2020

Acquisition cost
Balance at end of previous year		123 702			128 119
Effect of movements in foreign exchange		(1 876	)		(4 723	)
Acquisitions through business combinations		—			185
Transfers (to)/from intangible assets		58			—
Hyperinflation monetary adjustments		111			120

Balance at end of the period		121 995			123 702


Impairment losses
Balance at end of previous year		(2 731	)		(5	)
Effect of movements in foreign exchange		(98	)		(226	)
Impairment losses		—			(2 500	)

Balance at end of the period		(2 829	)		(2 731	)


Carrying amount
at 31 December 2020		120 971			120 971
at 30 June 2021		119 166

AB InBev’s annual goodwill impairment testing is performed during the fourth quarter of the year, or whenever a triggering event has occurred.

In the second quarter of 2020, the company recognized a 2.5 billion US dollar non-cash goodwill impairment charge. The COVID-19 pandemic resulted in a sharp contraction of sales during the second quarter of 2020 in many countries in which the company operates. The decline in performance resulting from the COVID-19 pandemic was viewed as a triggering event for impairment testing in accordance with IAS 36 Impairment of Assets. The 2020 interim impairment test considered three scenarios for recovery of sales for the tested cash-generating units: a base case (which the company deemed to be the most likely case at the time of the interim impairment test), a best case and a worst case. Based on the results of the interim impairment test, the company concluded that no goodwill impairment was warranted under the base and best case scenarios. Nevertheless, under the worst case scenario ran with higher discounts rates to factor the heightened business risk, the company concluded that the estimated recoverable amounts were below their carrying value for the South Africa and Rest of Africa cash-generating units. As a consequence, management determined that it was prudent, in view of the uncertainties, to record an impairment charge of 2.5 billion US dollar applying a 30% probability of occurrence of the worst-case scenario.

The company did not recognize any additional impairment of goodwill based on the results of its annual impairment testing conducted in the fourth quarter of 2020.

The carrying amount of goodwill was allocated to the different cash-generating units as follows:


Million US dollar	30 June 2021		31 December 2020

United States		33 610		33 552
Rest of North America		2 165		2 105
Mexico		12 538		12 446
Colombia		16 245		17 748
Rest of Middle Americas		23 035		24 036
Brazil		3 658		3 521
Rest of South America		1 124		1 061
Europe		2 402		2 444
South Africa		11 399		11 110
Rest of Africa		5 160		4 990
China		3 332		3 291
Rest of Asia Pacific		3 910		4 059
Global Export and Holding Companies		589		608

Total carrying amount of goodwill		119 166		120 971

-18-

12.

Intangible assets


	30 June 2021															31 December 2020
Million US dollar	Brands			Commercial intangibles			Software			Other			Total			Total

Acquisition cost
Balance at end of previous year		39 427			3 031			2 972			455			45 885			46 108
Effect of movements in foreign exchange		(406	)		(7	)		(37	)		2			(448	)		(789	)
Acquisitions through business combinations		—			—			—			—			—			162
Acquisitions and expenditures		—			—			28			184			212			557
Disposals		—			(5	)		(3	)		(9	)		(17	)		(142	)
Disposals through the sale of subsidiaries		—			—			—			—			—			—
Transfer (to)/from other asset categories and other movements¹		—			(71	)		71			(32	)		(32	)		(11	)

Balance at end of period		39 021			2 948			3 031			600			45 600			45 885


Amortization and impairment losses
Balance at end of previous year		(41	)		(2 072	)		(2 181	)		(64	)		(4 358	)		(3 656	)
Effect of movements in foreign exchange		—			5			30			(1	)		34			(16	)
Amortization		—			(114	)		(187	)		(21	)		(322	)		(715	)
Impairment		—			—			—			—			—			(165	)
Disposals		—			4			2			2			9			62
Transfer to/(from) other asset categories and other movements¹		—			80			30			—			110			132

Balance at end of period		(41	)		(2 097	)		(2 306	)		(84	)		(4 528	)		(4 358	)


Carrying value
at 31 December 2020		39 386			959			791			391			41 527			41 527
at 30 June 2021		38 980			851			725			516			41 072

In 2020, the company recognized (165)m US dollar impairment on intangible sold during 2020 and other intangibles – see Note 7 Exceptional items.

AB InBev is the owner of some of the world’s most valuable brands in the beer industry. As a result, brands and certain distribution rights are expected to generate positive cash flows for as long as the company owns the brands and distribution rights. Given AB InBev’s more than 600-year history, brands and certain distribution rights have been assigned indefinite lives.¹

Acquisitions and expenditures of commercial intangibles mainly represent supply and distribution rights, exclusive multi-year sponsorship rights and other commercial intangibles.

Intangible assets with indefinite useful lives are comprised primarily of brands and certain distribution rights that AB InBev purchased for its own products and are tested for impairment during the fourth quarter of the year or whenever a triggering event has occurred.

13.

Investments in associates

A reconciliation of the summarized financial information to the carrying amount of the company’s interests in material associates is as follows:


	2021									2020
Million US dollar	AB InBev Efes			Castel			Efes			AB InBev Efes			Castel			Efes

Balance at 1 January		1 135			3 566			391			1 132			3 239			451
Effect of movements in foreign exchange		—			(101	)		(52	)		—			(10	)		(60	)
Dividends received		—			—			(67	)		—			(19	)		—
Share of results of associates		(11	)		59			12			(19	)		38			4

Balance at 30 June		1 124			3 524			284			1 113			3 248			395

In the six-month period ended 30 June 2021, associates that are not individually material contributed 40m US dollar to the results of investment in associates (30 June 2020: 10m US dollar).

The transfer (to)/from other asset categories and other movements mainly relates to transfers from assets under construction to their respective asset categories, to contributions of assets to pension plans, to the separate presentation in the balance sheet of intangible assets held for sale in accordance with IFRS 5 Non-current assets held for sale and discontinued operations and to the restatement of non-monetary assets under hyperinflation accounting in line with IAS 29 Financial reporting in hyperinflationary economies.

-19-

14.

Trade and other receivables


Million US dollar	30 June 2021		31 December 2020

Cash deposits for guarantees		182		184
Loans to customers		20		25
Tax receivable, other than income tax		219		99
Brazilian tax credits and interest receivables		1 257		997
Trade and other receivables		318		357

Non-current trade and other receivables		1 996		1 661


Trade receivables and accrued income		3 908		3 284
Interest receivables		10		4
Tax receivable, other than income tax		518		552
Loans to customers		94		117
Prepaid expenses		449		354
Other receivables		511		522

Current trade and other receivables		5 489		4 833

Ambev’s tax credits and interest receivables are expected to be collected over a period exceeding 12 months after the balance sheet date. As of 30 June 2021, the total amount of such credits and interest receivables represented 1 257m US dollar (31 December 2020: 997m US dollar).

The carrying amount of trade and other receivables is a good approximation of their fair value as the impact of discounting is not significant.

The ageing of the current trade receivables and accrued income, interest receivable, other receivables and current and non-current loans to customers can be detailed as follows for 2021 and 2020 respectively:


	Net carrying amount as of 30 June 2021		Of which: neither impaired nor past due on the reporting date		Of which not impaired as of the reporting date and past due
	Net carrying amount as of 30 June 2021				Less than 30 days		Between 30 and 59 days		Between 60 and 89 days		More than 90 days

Trade receivables and accrued income		3 908		3 675		155		50		15		14
Loans to customers		114		79		7		2		6		20
Interest receivable		11		10		—		—		1		—
Other receivables		510		452		10		9		3		36

		4 543		4 216		171		61		25		70


	Net carrying amount as of 31 December 2020		Of which: neither impaired nor past due on the reporting date		Of which not impaired as of the reporting date and past due
	Net carrying amount as of 31 December 2020				Less than 30 days		Between 30 and 59 days		Between 60 and 89 days		More than 90 days

Trade receivables and accrued income		3 285		3 074		155		37		10		8
Loans to customers		142		86		3		2		50		—
Interest receivable		4		4		—		—		—		—
Other receivables		522		416		2		16		5		83

		3 953		3 580		161		55		66		91

The above analysis of the age of financial assets that are past due as at the reporting date but not impaired also includes non-current loans to customers. Past due amounts were not impaired when collection is still considered likely, for instance because the amounts can be recovered from the tax authorities, AB InBev has sufficient collateral, or the customer entered into a payment plan. Impairment losses on trade and other receivables recognized in the six-month period ended 30 June 2021 amount to 25m US dollar (30 June 2020: 122m US dollar). The impairment loss recognized in 2020 included AB InBev’s estimate of overdue receivables the company would not be able to collect from defaulting customers as a result of the COVID-19 pandemic.

AB InBev’s exposure to credit, currency and interest rate risks is disclosed in Note 20 Risks arising from financial instruments.

-20-

15.

Cash and cash equivalents and investment securities


Million US dollar	30 June 2021			31 December 2020

Short-term bank deposits		2 502			3 319
Treasury Bills		—			6 800
Cash and bank accounts		4 287			5 132

Cash and cash equivalents		6 790			15 252


Bank overdrafts		(46	)		(5	)

		6 744			15 247

The company’s investment in Treasury Bills as at 31 December 2020 was to facilitate liquidity and for capital preservation.

The cash outstanding as at 30 June 2021 includes restricted cash for an amount of 81m US dollar (31 December 2020: 84m US dollar). This restricted cash relates to an outstanding consideration payable to former Anheuser-Busch shareholders that have not yet claimed the proceeds from the 2008 combination (1m US dollar) and amounts deposited on a blocked account in respect to the state aid investigation into the Belgian excess profit ruling system (80m US dollar).


Million US dollar	30 June 2021		31 December 2020

Investment in unquoted companies		120		115
Investment on debt securities		25		22

Non-current investments		146		137


Investment on debt securities		286		396

Current investments		286		396

As at 30 June 2021, current debt securities of 286m US dollar mainly represented investments in government bonds (31 December 2020: 396m US dollar). The company’s investments in such short-term debt securities are primarily to facilitate liquidity and for capital preservation.

16.

Assets classified as held for sale, liabilities associated with assets held for sale and discontinued operations

On 1 June 2020, AB InBev divested CUB, its Australian subsidiary, to Asahi for 16.0 billion AUD on a cash free, debt free basis. Upon the closing of the transaction, the company received 10.8 billion US dollar proceeds net of disposal costs, derecognized (8.5) billion US dollar of net assets in relation to its former Australian operations, recycled (0.4) billion US dollar of the cumulative foreign exchange differences on its former Australian operations and cashflow hedges from equity to profit or loss, resulting in a net gain on disposal of 1.9 billion US dollar recognized in discontinued operations. The results of the Australian operations were accounted for as discontinued operations and presented in a separate line in the condensed consolidated interim income statement (“profit from discontinued operations”) up to 31 May 2020.

Assets and liabilities relating to the Australian operations disposed of on 1 June 2020 are detailed in the table below:


Million US dollar	1 June 2020

Assets
Property, plant and equipment		581
Goodwill and intangible assets		8 584
Other assets		371

Assets classified as held for sale		9 537


Liabilities
Trade and other payables		(581	)
Deferred tax liabilities		(363	)
Other liabilities		(101	)

Liabilities associated with assets held for sale		(1 044	)


Net assets disposed of		8 493
Exceptional gain on divestiture of Australia (discontinued operations)		1 919
Recycling of cash flow hedges and cumulative translation adjustments		426

Consideration received		10 838

-21-

The following table summarizes the results of the Australian operations included in the condensed consolidated interim income statement and presented as discontinued operations:


For the period ended Million US dollar	31 May 2020
Revenue		477
Profit from operations		178
Profit from discontinued operations		136

Profit from discontinued operations		2 055
Weighted average number of ordinary and restricted shares		1 995

Basic EPS from discontinued operations		1.03


Weighted average number of ordinary and restricted shares (diluted)		2 034

Diluted EPS from discontinued operations		1.01

Cash flows attributable to the operating, investing and financing activities of the Australian operations are summarized as follows:


For the period ended Million US dollar	31 May 2020
Cash flow from operating activities		84
Cash flow from investing activities (proceeds from Australia divestiture)		10 838
Cash flow from investing activities (other)		(13	)
Cash flow from financing activities		(6	)

Net increase in cash and cash equivalents		10 903

17. Changes in equity and earnings per share

STATEMENT OF CAPITAL

The tables below summarize the changes in issued capital and treasury shares during 2021:


	Issued capital
Issued capital	Million shares		Million US dollar
At the end of the previous year		2 019		1 736
Changes during the period		—		—

		2 019		1 736

Of which:
Ordinary shares		1 693
Restricted shares		326


	Treasury shares						Result on the use of treasury shares
Treasury shares	Million shares			Million US dollar			Million US dollar
At the end of the previous year		47.0			(4 911	)		(3 530	)
Changes during the period		(7.5	)		710			(690	)

		39.5			(4 201	)		(4 220	)

As at 30 June 2021, the share capital of AB InBev amounts to 1 238 608 344.12 euro (1 736 million US dollar). It is represented by 2 019 241 973 shares without nominal value, of which 39 513 430 are held in treasury by AB InBev and its subsidiaries. All shares are ordinary shares, except for 325 999 817 restricted shares. As at 30 June 2021, the total of authorized, unissued capital amounts to 37m euro.

The treasury shares held by the company are reported in equity in Treasury shares. During the six-month period ended 30 June 2021, 5.1 million AB InBev Treasury shares were used for the settlement of the prior and the entire new Zenzele B-BBEE schemes in South Africa in May 2021 (see below).

The holders of ordinary and restricted shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the company. In respect of the company’s shares that are held by AB InBev and its subsidiaries, the economic and voting rights are suspended.

The restricted shares are unlisted, not admitted to trading on any stock exchange, and are subject to, among other things, restrictions on transfer until converted into new ordinary shares. The restricted shares will be convertible at the election of the holder into new ordinary shares on a one-for-one basis with effect from the fifth anniversary of completion of the SAB combination (i.e. as from 11 October 2021). From completion of the SAB combination, such restricted shares will rank equally with the ordinary shares with respect to dividends and voting rights.

-22-

The shareholders’ structure is based on the notifications made to the company pursuant to the Belgian Law of 2 May 2007, which governs the disclosure of significant shareholdings in listed companies. It is included in the Corporate Governance section of AB InBev’s annual report.

ZENZELE SCHEMES IN SOUTH AFRICA

Following the combination with SAB in 2016, AB InBev decided to maintain the SAB Zenzele share-scheme (Zenzele Scheme), the broad-based black economic empowerment (B-BBEE) scheme, which provided opportunities for black South Africans, including employees (through The SAB Zenzele Employee Trust), SAB retailers (through SAB Zenzele Holdings Limited) and The SAB Foundation, to participate as shareholders of AB InBev’s indirect subsidiary, The South African Breweries Pty Ltd (SAB). The Zenzele Scheme, originally implemented by SAB in 2010 as a 10-year scheme, was amended at the time of the combination with SAB and matured on 31 March 2020.

Obligations to the SAB Foundation and the employees as beneficiaries of The SAB Zenzele Employee Share Trust were settled in full on 15 April 2020. The obligations to SAB retailers, who participate in the Zenzele Scheme through SAB Zenzele Holdings, were partially settled (77.4%) on 15 April 2020. As a direct consequence of the COVID-19 outbreak, the remaining settlement (22,6%) was postponed and was performed on 28 May 2021, when AB InBev and SAB implemented the new scheme as described below. Some SAB retailers received the balance of their entitlement and others reinvested a portion of their Zenzele payout into the new scheme.

In total, 10.8 million AB InBev Treasury shares with a total value of 491m US dollar were used in 2020 to settle the obligations to the participants of the Zenzele Scheme. The total value delivered to the participants of the Zenzele Scheme amounted to 8.6 billion ZAR.

As part of the combination with SAB in 2016, AB InBev made a commitment to the South African Government and Competition Authorities to create a new B-BBEE scheme upon maturity of the Zenzele Scheme. In order to create the new B-BBEE scheme, the following steps were undertaken:

•

The new scheme was implemented through the listing of a special purpose company, which is called SAB Zenzele Kabili Holdings Limited (Zenzele Kabili) on the segment of the Johannesburg Stock Exchange’s Main Board on which an issuer may list its B-BBEE shares;

•

Zenzele Kabili holds AB InBev shares;

•

Existing Zenzele participants (SAB retailers) reinvested a portion of their Zenzele payout into Zenzele Kabili and the SAB Foundation invested AB InBev shares into Zenzele Kabili;

•

A new Employee Share Plan, funded by AB InBev, subscribed for shares in Zenzele Kabili.

The settlement of the balance of the SAB retailers entitlement required 1.1 billion ZAR (0.1 billion US dollar¹), out of which 0.7 billion ZAR (0.1 billion US dollar) were re-invested in the new B-BBEE scheme by the SAB retailers. The set-up of the new B-BBEE scheme required 4.7 billion ZAR (0.3 billion US dollar), out of which 4.4 billion ZAR in AB InBev Treasury shares and 0.3 billion ZAR in AB InBev shares that were bought from the SAB retailers by the SAB Foundation.

5.1 million AB InBev Treasury shares were used for the settlement of part of the prior and the entire new B-BBEE schemes (based on the AB InBev share price and the ZAR Euro exchange rate as at 24 May 2021²). The new Zenzele scheme arrangement met the criteria under IFRS 2 to be classified as equity settled. The IFRS 2 charge for the period is reported in exceptional items (Refer to Note 7 Exceptional items).

CHANGES IN OWNERSHIP INTERESTS

In compliance with IFRS 10 Consolidated Financial Statements, the acquisition or disposal of additional shares in a subsidiary is accounted for as an equity transaction with owners.

In the six-month period ended 30 June 2021, there were no significant sales and purchases of non-controlling interests in subsidiaries.

BORROWED SHARES

In order to fulfill AB InBev’s commitments under various outstanding stock option plans, during the course of 2021, the company had stock lending arrangements in place for up to 30 million shares, which were fully used to fulfill stock option plan commitments. The company shall pay any dividend equivalent after tax in respect of such borrowed shares. This payment will be reported through equity as dividend.

DIVIDENDS

On 28 April 2021, a dividend of 0.50 euro per share or 1 003m euro was approved at the shareholders’ meeting. The dividend was paid out as of 6 May 2021.

¹	Converted at the closing rate as at 24 May 2021.

²	Considering the closing share price of 62.26 euro per share as at 24 May 2021 and ZAR per Euro exchange rate of 17.0064 as at 24 May 2021.

-23-

On 3 June 2020, a dividend of 0.50 euro per share or 1 002m euro was approved at the shareholders’ meeting. The dividend was paid out as of 11 June 2020.

TRANSLATION RESERVES

The translation reserves comprise all foreign currency exchange differences arising from the translation of the financial statements of foreign operations. The translation reserves also comprise the portion of the gain or loss on the foreign currency liabilities and on the derivative financial instruments determined to be effective net investment.

HEDGING RESERVES

The hedging reserves comprise the effective portion of the cumulative net change in the fair value of cash flow hedges to the extent that the hedged risk has not yet impacted profit or loss. On 1 June 2020, upon the Australia divestiture, the company recycled 370m US dollar of cash flow hedges in relation to its former Australia operations from equity to profit or loss.

TRANSFERS FROM SUBSIDIARIES

The amount of dividends payable to AB InBev by its operating subsidiaries is subject to, among other restrictions, general limitations imposed by the corporate laws, capital transfer restrictions and exchange control restrictions of the respective jurisdictions where those subsidiaries are organized and operate. Capital transfer restrictions are also common in certain emerging market countries and may affect AB InBev’s flexibility in implementing a capital structure it believes to be efficient. As at 30 June 2021, the restrictions above mentioned were not deemed significant on the company’s ability to access or use the assets or settle the liabilities of its operating subsidiaries.

Dividends paid to AB InBev by certain of its subsidiaries are also subject to withholding taxes. Withholding taxes, if applicable, generally do not exceed 15%.

OTHER COMPREHENSIVE INCOME RESERVES

The changes in the other comprehensive income reserves are as follows:


Million US dollar	Translation Reserves			Hedging reserves		Post- employment benefits			Total OCI Reserves
As per 1 January 2021		(29 234	)		376		(1 983	)		(30 841	)
Other comprehensive income/(loss)
Exchange differences on translation of foreign operations (gains/(losses))		(1 347	)		—		—			(1 347	)
Cash flow hedges		—			184		—			184
Re-measurements of post-employment benefits		—			—		(5	)		(5	)

Other comprehensive income/(loss)		(1 347	)		184		(5	)		(1 168	)

As per 30 June 2021		(30 581	)		560		(1 988	)		(32 009	)

The increase in translation reserves is primarily related to the combined effect of the weakening of the closing rates of the Peruvian Sol, the Colombian pesos and the Euro, and the strengthening of the South African rand and the Brazilian real, which resulted in a foreign exchange translation adjustment of 1 347m US dollar as of 30 June 2021 (decrease of equity).


Million US dollar	Translation Reserves			Hedging reserves			Post- employment benefits			Total OCI Reserves
As per 1 January 2020		(19 936	)		397			(1 740	)		(21 279	)
Other comprehensive income/(loss)
Exchange differences on translation of foreign operations (gains/(losses))		(13 583	)		—			—			(13 583	)
Cash flow hedges		—			300			—			300
Cash flow hedges and cumulative translation adjustments reclassified from equity to profit or loss in relation to Australia divestiture		645			(219	)		—			426
Re-measurements of post-employment benefits		—			—			(1	)		(1	)

Other comprehensive income/(loss)		(12 938	)		81			(1	)		(12 858	)

As per 30 June 2020		(32 874	)		478			(1 741	)		(34 137	)

-24-

EARNINGS PER SHARE

The calculation of basic earnings per share for the six-month period ended 30 June 2021 is based on the profit attributable to equity holders of AB InBev of 2 458m US dollar (30 June 2020: (1 900)m US dollar) and a weighted average number of ordinary and restricted shares outstanding (including deferred share instruments and stock lending) per end of the period, calculated as follows:


Million shares	2021		2020
Issued ordinary and restricted shares at 1 January, net of treasury shares		1 972		1 959
Effect of stock lending		30		30
Effect of delivery of treasury shares		2		6

Weighted average number of ordinary and restricted shares at 30 June		2 004		1 995

The calculation of diluted earnings per share for the six-month period ended 30 June 2021 is based on the profit attributable to equity holders of AB InBev of 2 458m US dollar (30 June 2020: (1 900)m US dollar) and a weighted average number of ordinary and restricted shares (diluted) outstanding (including deferred share instruments and stock lending) at the end of the period, calculated as follows:


Million shares	2021		2020
Weighted average number of ordinary and restricted shares at 30 June		2 004		1 995
Effect of share options, warrants and restricted stock units		41		39

Weighted average number of ordinary and restricted shares (diluted) at 30 June		2 045		2 034

The calculation of earnings per share before exceptional items and discontinued operations is based on the profit from continuing operations attributable to equity holders of AB InBev. A reconciliation of the profit before exceptional items and discontinued operations, attributable to equity holders of AB InBev to the profit attributable to equity holders of AB InBev is calculated as follows:


For the six-month period ended 30 June Million US dollar	2021			2020
Profit before exceptional items and discontinued operations, attributable to equity holders of AB InBev		2 924			76
Exceptional items, before taxes (refer to Note 7)		(217	)		(2 796	)
Exceptional finance income/(cost), before taxes (refer to Note 8)		(299	)		(1 388	)
Exceptional taxes (refer to Note 7)		42			107
Exceptional non-controlling interest (refer to Note 7)		7			46
Profit from discontinued operations (refer to Note 16)		—			2 055

Profit/(loss) attributable to equity holders of AB InBev		2 458			(1 900	)

The calculation of the Underlying EPS is based on the profit before exceptional items, discontinued operations, mark-to-market gains/losses and hyperinflation impacts attributable to equity holders of AB InBev. A reconciliation of the profit before exceptional items, discontinued operations, mark-to-market gains/losses and hyperinflation impacts, attributable to equity holders of AB InBev to the profit before exceptional items and discontinued operations, attributable to equity holders of AB InBev, is calculated as follows:


For the six-month period ended 30 June Million US dollar	2021			2020
Profit before exceptional items, discontinued operations, mark-to-market gains/losses and hyperinflation impacts, attributable to equity holders of AB InBev		2 606			1 805
Mark-to-market (losses)/gains on certain derivatives related to the hedging of share-based payment programs (refer to Note 8)		348			(1 724	)
Hyperinflation impacts		(30	)		(5	)

Profit before exceptional items and discontinued operations, attributable to equity holders of AB InBev		2 924			76

-25-

The table below sets out the EPS calculation:


For the six-month period ended 30 June Million US dollar	2021		2020
Profit/(loss) attributable to equity holders of AB InBev		2 458		(1 900	)
Weighted average number of ordinary and restricted shares		2 004		1 995

Basic EPS from continuing and discontinued operations		1.23		(0.95	)

Profit/(loss) from continuing operations attributable to equity holders of AB InBev		2 458		(3 955	)
Weighted average number of ordinary and restricted shares		2 004		1 995

Basic EPS from continuing operations		1.23		(1.98	)

Profit from continuing operations before exceptional items and discontinued operations, attributable to equity holders of AB InBev		2 924		76
Weighted average number of ordinary and restricted shares		2 004		1 995

Basic EPS from continuing operations before exceptional items		1.46		0.04

Profit before exceptional items, discontinued operations, mark-to-market gains/losses and hyperinflation impacts, attributable to equity holders of AB InBev		2 606		1 805
Weighted average number of ordinary and restricted shares		2 004		1 995

Underlying EPS		1.30		0.90

Profit/(loss) attributable to equity holders of AB InBev		2 458		(1 900	)
Weighted average number of ordinary and restricted shares (diluted)		2 045		1 995

Diluted EPS from continuing and discontinued operations		1.20		(0.95	)

Profit/(loss) from continuing operations attributable to equity holders of AB InBev		2 458		(3 955	)
Weighted average number of ordinary and restricted shares (diluted)		2 045		1 995

Diluted EPS from continuing operations		1.20		(1.98	)

Profit from continuing operations before exceptional items and discontinued operations, attributable to equity holders of AB InBev		2 924		76
Weighted average number of ordinary and restricted shares (diluted)		2 045		2 034

Diluted EPS from continuing operations before exceptional items		1.43		0.04

The average market value of the company’s shares for purposes of calculating the dilutive effect of share options and restricted stock units was based on quoted market prices for the period that the options and restricted stock units were outstanding. For the calculation of Diluted EPS from continuing operations before exceptional items, 72m share options were anti-dilutive and not included in the calculation of the dilutive effect as at 30 June 2021 (30 June 2020: 72m share options). In accordance with the guidance provided by IAS 33 Earnings per Share, for the 2020 calculation of Diluted EPS, the potential dilutive effect of share options, warrants and restricted stock units was disregarded considering the negative results in the period.

-26-

18. Interest-bearing loans and borrowings

This note provides information about the company’s interest-bearing loans and borrowings. For more information about the company’s exposure to interest rate and foreign exposure currency risk—refer to Note 20 Risks arising from financial instruments.


Non-current liabilities Million US dollar	30 June 2021		31 December 2020
Secured bank loans		108		46
Unsecured bond issues		87 239		93 523
Unsecured other loans		64		73
Lease liabilities		1 933		1 837

Non-current interest-bearing loans and borrowings		89 344		95 478


Current liabilities Million US dollar	30 June 2021		31 December 2020
Secured bank loans		332		656
Commercial papers		—		1 522
Unsecured bank loans		434		294
Unsecured bond issues		24		202
Unsecured other loans		9		10
Lease liabilities		448		397

Current interest-bearing loans and borrowings		1 248		3 081

The current and non-current interest-bearing loans and borrowings amount to 90.6 billion US dollar as at 30 June 2021, compared to 98.6 billion US dollar as at 31 December 2020.

On 18 February 2021, the company entered into a new 10.1 billion US dollar Sustainable-Linked Loan Revolving Credit Facility (“SLL RCF”) with an initial five-year term, replacing the previous 9.0 billion US dollar of committed long-term credit facilities.

As at 30 June 2021, the company had no outstanding balance on commercial papers compared to 1.5 billion US dollar as at 31 December 2020. The commercial papers included programs in US dollar and euro with a total authorized issuance up to 5.0 billion US dollar and 3.0 billion euro, respectively.

In 2021, Anheuser-Busch InBev NV/SA (“ABISA”) announced that it and its wholly-owned subsidiary Anheuser-Busch InBev Worldwide Inc. (“ABIWW”, and together with ABISA, the “Issuers”) exercised their respective options to redeem the outstanding principal amounts for an aggregate principal amount of 5.6 billion US dollar of the following series of notes:

Date of redemption

Issuer
(abbreviated)

Title of series of notes issued exchanged

Currency

Original
principal
amount
outstanding
(in million)

Principal
amount
redeemed
(in million)

27 January 2021

ABIWW

3.750% Notes due 2024

AUD

650

28 January 2021

ABISA

1.500% Notes due 2025

EUR

2 147

29 June 2021

ABIWW

4.150% Notes due 2025

USD

2 500

Net debt is defined as non-current and current interest-bearing loans and borrowings and bank overdrafts minus debt securities and cash and cash equivalents. Net debt is a financial performance indicator that is used by AB InBev’s management to highlight changes in the company’s overall liquidity position.

AB InBev’s net debt increased to 83.4 billion US dollar as at 30 June 2021, from 82.7 billion US dollar as at 31 December 2020. Aside from operating results that are net of capital expenditures, the net debt is impacted mainly by the payment of interests and taxes (3.7 billion US dollar), settlement of derivatives (0.3 billion US dollar increase of net debt), dividend payments to shareholders of AB InBev and Ambev (1.4 billion US dollar) and foreign exchange impact on net debt (0.6 billion US dollar decrease of net debt).

The following table provides a reconciliation of AB InBev’s net debt as at the dates indicated:


Million US dollar	30 June 2021			31 December 2020
Non-current interest-bearing loans and borrowings		89 344			95 478
Current interest-bearing loans and borrowings		1 248			3 081

Interest-bearing loans and borrowings		90 592			98 559

Bank overdrafts		46			5
Cash and cash equivalents		(6 790	)		(15 252	)
Interest bearing loans granted and other deposits (included within Trade and other receivables)		(172	)		(173	)
Debt securities (included within Investment securities)		(312	)		(418	)

Net debt		83 364			82 722

-27-

Reconciliation of liabilities arising from financing activities

The table below details changes in the company’s liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be classified in the company’s consolidated cash flow statement from financing activities.


Million US dollar	Long-term debt, net of current portion			Short-term debt and current portion of long-term debt
Balance at 1 January 2021		95 478			3 081
Proceeds from borrowings		99			271
Payments on borrowings		(6 217	)		(2 152	)
Capitalization / (payment) of lease liabilities		423			(262	)
Amortized cost		32			4
Unrealized foreign exchange effects		(734	)		(7	)
Current portion of long-term debt		(316	)		316
Other movements		579			(3	)

Balance at 30 June 2021		89 344			1 248


Million US dollar	Long-term debt, net of current portion			Short-term debt and current portion of long-term debt
Balance at 1 January 2020		97 564			5 410
Proceeds from borrowings		10 915			3 607
Payments on borrowings		—			(4 328	)
Capitalization / (payment) of lease liabilities		290			(129	)
Amortized cost		36			4
Unrealized foreign exchange effects		(680	)		(147	)
Current portion of long-term debt		(2 076	)		2 076
Other movements		(15	)		(9	)

Balance at 30 June 2020		106 034			6 484

19. Share-based payments

Different share and share option programs allow company senior management and members of the board of directors to receive or acquire shares of AB InBev, Ambev or Budweiser APAC. AB InBev has three primary share-based compensation plans, the share-based compensation plan (“Share-Based Compensation Plan”), the long-term restricted stock unit plan for directors (“Restricted Stock Units Plan for Directors), and the long-term incentive plan for executives (“LTI Plan Executives”). For all option plans, the fair value of share-based payment compensation is estimated at grant date, using a binomial Hull model, modified to reflect the IFRS 2 Share-based Payment requirement that assumptions about forfeiture before the end of the vesting period cannot impact the fair value of the option. All the company share-based payment plans are equity-settled. There were no significant changes to the terms and conditions of the programs disclosed in the annual consolidated financial statements for the year ended 31 December 2020.

Share-based payment transactions resulted in a total expense of 345m US dollar for the six-month period ended 30 June 2021, of which 73m US dollar were reported in non-underlying items representing the IFRS 2 cost related to the Zenzele Kabili scheme. For more details, refer to Note 17 Changes in equity and earnings per share.

Share-based payment transactions resulted in an income of 18m US dollar for the six-month period ended 30 June 2020.During the six-month period ended 30 June 2020, as a result of the COVID-19 pandemic, the company reversed accrued cost for performance-related LTIs for which the conditions would not be met.

AB INBEV SHARE-BASED COMPENSATION PROGRAMS

Share-Based Compensation Plan for Executives

During the six-month period ended 30 June 2021, AB InBev issued 0.2m matching restricted stock units in relation to bonuses granted to company employees and management (30 June 2020: 0.1m matching restricted stock units). These matching restricted stock units represent a fair value of approximately 9m US dollar (30 June 2020: 2m US dollar).

Restricted Stock Units Plan for Directors

During the six-month period ended 30 June 2021, 0.1m restricted stock units with an estimated fair value of 4m US dollar were granted to directors (30 June 2020: 0.1m with an estimated fair value of approximately 4m US dollar).

Annual and Exceptional LTI Plans for Executives

During the six-month period ended 30 June 2021, no LTI stock options were granted to Executives (30 June 2020: 34.3m LTI stock options were granted with an estimated fair value of 241m US dollar, out of which, 3.6m stock options were granted to members of the Executive Committee).

-28-

During the six-month period ended 30 June 2021, AB InBev issued 0.2m Restricted Stock Units with an estimated fair value of 9m US dollar under this plan (30 June 2020: nil). Out of these Restricted Stock Units, 0.1m Restricted Stock Units were granted to members of the Executive Committee (30 June 2020: nil).

Recurring LTI Restricted Stock Units Plans for Executives

During the six-month period ended 30 June 2021, approximately 4 thousand discretionary restricted stock units were granted to a selected number of employees with an estimated fair value of less than 1m US dollar (30 June 2020: 6.9m discretionary restricted stock units with an estimated fair value of 301m US dollar).

During the six-month period ended 30 June 2021, employees purchased approximately 1 thousand shares under the People bet share purchase program for the equivalent of less than 1m US dollar (30 June 2020: approximately 6 thousand shares for the equivalent of less than 1m US dollar).

Performance related incentive plan for ZX Ventures

During the six-month period ended 30 June 2021, 1.0m performance units were granted to senior management of ZX Ventures (30 June 2020: nil).

AMBEV SHARE-BASED COMPENSATION PROGRAMS

In the six-month period ended 30 June 2021, 30 thousand deferred stock units were granted with estimated fair value of less than 1m US dollar (30 June 2020: nil) under the 2005 Share-based compensation plan.

Under the 2018 Share-based compensation plan, Ambev issued 2m restricted stock units in the six-month period ended 30 June 2021 with an estimated fair value of 5m US dollar (30 June 2020: 1.6m restricted stock units with an estimated fair value of 6m US dollar).

BUDWEISER APAC SHARE-BASED COMPENSATION PROGRAM

Budweiser APAC has five Share Award Schemes:

LTI Stock Option Plans for Executives

In the six-month period ended 30 June 2021, no stock options were granted (30 June 2020: 69.7m LTI stock options with an estimated fair value of 52m US dollar).

Discretionary Restricted Stock Units Plan

In the six-month period ended 30 June 2021, no restricted stock units were granted under this program (30 June 2020: 29.7m restricted stock units with an estimated fair value of 84m US dollar).

Share-Based Compensation Plan

In the six-month period ended 30 June 2021, Budweiser APAC issued 0.1m matching restricted stock units in relation to bonuses granted to Budweiser APAC employees with an estimated fair value of less than 1m US dollar (30 June 2020: 0.2m matching restricted stock units with a fair value of approximately 1m US dollar).

New Restricted Stock Units Plan

During the six-month period ended 30 June 2021, 0.6m restricted stock units with an estimated fair value of 2m US dollar were granted under this program to a selected number of employees (30 June 2020: nil).

People Bet Plan

During the six-month period ended 30 June 2021, no restricted stock units were granted under this program (30 June 2020: 0.6m restricted stock units with an estimated fair value of 2m US dollar were granted to a selected number of employees).

-29-

20. Risks arising from financial instruments

FINANCIAL ASSETS AND FINANCIAL LIABILITIES

Set out below is an overview of financial assets¹ and liabilities held by the company as at the dates indicated:


	30 June 2021								31 December 2020
Million US dollar	At amortized cost		At fair value through profit or loss		At fair value through OCI		Total		At amortized cost		At fair value through profit or loss		At fair value through OCI		Total
Trade and other receivables		5 043		—		—		5 043		4 493		—		—		4 493
Unquoted debt (debt instruments)		25		—		—		25		22		—		—		22
Quoted debt (debt instruments)		—		286		—		286		—		396		—		396
Unquoted companies (equity instruments)		—		—		120		120		—		—		115		115
Derivatives not designated in hedge accounting relationships:
Equity swaps		—		15		—		15		—		27		—		27
Interest rate swaps		—		40		—		40		—		45		—		45
Cross currency interest rate swaps		—		45		—		45		—		7		—		7
Derivatives designated in hedge accounting relationships:
Foreign exchange forward contracts		—		—		288		288		—		—		480		480
Foreign currency futures		—		—		17		17		—		—		36		36
Interest rate swaps		—		—		28		28		—		—		35		35
Cross currency interest rate swaps		—		—		65		65		—		—		100		100
Commodities		—		—		544		544		—		—		235		235

Financial assets		5 068		387		1 063		6 517		4 515		474		1 001		5 991

Non-current		545		100		62		708		588		79		174		841
Current		4 522		286		1 000		5 809		3 928		396		827		5 150

Trade and other payables		20 303		—		—		20 303		20 807		—		—		20 807
Interest-bearing loans and borrowings:
Secured bank loans		440		—		—		440		702		—		—		702
Unsecured bank loans		434		—		—		434		294		—		—		294
Unsecured bond issues		87 263		—		—		87 263		93 725		—		—		93 725
Unsecured other loans		73		—		—		73		83		—		—		83
Commercial paper		—		—		—		—		1 522		—		—		1 522
Bank overdrafts		46		—		—		46		5		—		—		5
Lease liabilities		2 381		—		—		2 381		2 234		—		—		2 234
Derivatives not designated in hedge accounting relationships:
Equity swaps		—		4 759		—		4 759		—		5 353		—		5 353
Cross currency interest rate swaps		—		329		—		329		—		446		—		446
Foreign exchange forward contracts		—		7		—		7		—		321		—		321
Derivatives designated in hedge accounting relationships:
Foreign exchange forward contracts		—		—		205		205		—		—		370		370
Foreign currency futures		—		—		—		—		—		—		5		5
Cross currency interest rate swaps		—		—		187		187		—		—		264		264
Commodities		—		—		24		24		—		—		26		26
Equity swaps		—		—		—		—		—		—		21		21

Financial liabilities		110 940		5 095		416		116 451		119 372		6 119		685		126 176

Non-current		90 271		639		—		90 910		96 748		1 758		—		98 506
Current		20 669		4 456		416		25 541		22 623		4 361		685		27 670

¹	Cash and short-term deposits are not included in this overview.

-30-

INTEREST RATE RISK

The table below reflects the effective interest rates of interest-bearing financial liabilities at balance sheet date as well as the currency in which the debt is denominated.


30 June 2021 Interest-bearing financial liabilities Million US dollar	Before hedging					After hedging
	Effective interest rate			Amount		Effective interest rate			Amount
Floating rate
Australian dollar		1.00	%		225		—			—
Canadian dollar		—			—		1.29	%		2 046
Euro		0.00	%		1 167		0.00	%		1 167
Pound sterling		—			—		1.26	%		1 011
US dollar		1.53	%		493		—			—
Other		7.15	%		503		6.60	%		832

					2 388					5 057

Fixed rate
Australian dollar		4.13	%		335		—			—
Brazilian real		8.01	%		486		8.01	%		486
Canadian dollar		4.14	%		628		4.30	%		3 161
Euro		2.27	%		22 778		2.20	%		31 500
Pound sterling		4.36	%		3 707		4.44	%		3 015
South Korean won		—			—		1.17	%		2 191
US dollar		4.94	%		59 850		5.43	%		44 596
Other		11.37	%		464		8.65	%		631

					88 248					85 579


31 December 2020 Interest-bearing financial liabilities Million US dollar	Before hedging					After hedging
	Effective interest rate			Amount		Effective interest rate			Amount
Floating rate
Australian dollar		0.99	%		231		—			—
Brazilian real		3.90	%		164		3.90	%		164
Canadian dollar		—			—		1.23	%		1 895
Euro		0.15	%		2 690		0.15	%		2 690
Pound sterling		—			—		1.10	%		937
US dollar		1.05	%		617		1.13	%		201
Other		7.30	%		260		7.90	%		573

					3 962					6 461

Fixed rate
Australian dollar		3.91	%		846		—			—
Brazilian real		8.58	%		578		8.58	%		578
Canadian dollar		4.12	%		613		4.29	%		2 646
Euro		2.12	%		26 092		2.15	%		35 515
Pound sterling		4.30	%		3 655		4.36	%		2 973
South Korean won		—			—		1.30	%		1 997
US dollar		4.91	%		62 340		5.30	%		47 892
Other		11.96	%		479		11.72	%		502

					94 602					92 103

As at 30 June 2021, the total carrying amount of the floating and fixed rate interest-bearing financial liabilities before hedging as listed above includes bank overdrafts of 46m US dollar (31 December 2020: 5m US dollar).

-31-

As disclosed in the above table, 5 057m US dollar or 5.6% of the company’s interest-bearing financial liabilities bears interest at a variable rate. The company estimated that the reasonably possible change of the market interest rates applicable to its floating rate debt after hedging is as follows:


	2021
	Interest rate 30 June 2021¹			Possible interest rate²			Volatility of rates in %
Brazilian real		4.18	%		2.95% - 5.42	%		29.58	%
Euro		—			—			5.87	%
US dollar		0.15	%		0.13% - 0.16	%		11.00	%

	2020
	Interest rate 31 December 2020¹			Possible interest rate²			Volatility of rates in %
Brazilian real		2.09	%		1.74% - 2.44	%		16.77	%
Euro		—			—			16.83	%
US dollar		0.24	%		0.10% - 0.38	%		58.30	%

When AB InBev applies the reasonably possible increase/decrease in the market interest rates mentioned above on its floating rate debt at 30 June 2021, with all other variables held constant, 2021 interest expense would have been 1m US dollar higher/lower (31 December 2020: 3m US dollar). This effect would be more than offset by 49m US dollar higher/lower interest income on AB InBev’s interest-bearing financial assets (31 December 2020: 58m US dollar).

EQUITY PRICE RISK

AB InBev enters into equity swap derivatives to hedge the price risk on its shares in connection with its share-based payments programs. AB InBev also hedges its exposure arising from shares issued in connection with the Modelo and SAB combination (see also Note 8 Finance cost and income). These derivatives do not qualify for hedge accounting and the changes in fair value are recorded in the profit or loss.

As at 30 June 2021, an exposure for an equivalent of 100.5m of AB InBev shares was hedged, resulting in a total gain of 631m US dollar recognized in the profit or loss account for the period, of which 348m US dollar related to the company’s share-based payment programs, 144m US dollar and 139m US dollar related to the Modelo and SAB transactions respectively. As at 30 June 2021 liabilities for equity swap derivates amounted to 4.8 billion US dollar (31 December 2020: 5.4 billion US dollar).

Equity price sensitivity analysis

The sensitivity analysis on the equity swap derivatives, calculated based on a 30.38% (2020: 53.87%) reasonably possible volatility of the AB InBev share price, with all the other variables held constant, would show 2 206m US dollar positive/negative impact on the 2021 profit before tax (31 December 2020: 3 787m US dollar).

CREDIT RISK

Credit risk encompasses all forms of counterparty exposure, i.e. where counterparties may default on their obligations to AB InBev in relation to lending, hedging, settlement and other financial activities. The company has a credit policy in place and the exposure to counterparty credit risk is monitored.

AB InBev mitigates its exposure through a variety of mechanisms. It has established minimum counterparty credit ratings and enters into transactions only with financial institutions of investment grade rating. The company monitors counterparty credit exposures closely and reviews any external downgrade in credit rating immediately. To mitigate pre-settlement risk, counterparty minimum credit standards become more stringent with increases in the duration of the derivatives. To minimize the concentration of counterparty credit risk, the company enters into derivative transactions with different financial institutions.

The company also has master netting agreements with all of the financial institutions that are counterparties to over the counter (OTC) derivatives. These agreements allow for the net settlement of assets and liabilities arising from different transactions with the same counterparty. Based on these factors, AB InBev considers the impact of the risk of counterparty default as at 30 June 2021 to be limited.

¹	Applicable 3-month InterBank Offered Rates as of 30 June 2021 and as of 31 December 2020.

Sensitivity analysis is assessed based on the yearly volatility using daily observable market data during 250 days at 30 June 2021 and at December 2020. For the Brazilian real floating rate debt, the estimated market interest rate is composed of the InterBank Deposit Certificate (‘CDI’) and the Long-Term Interest Rate (‘TJLP’). With regard to other market interest rates, the company’s analysis is based on the 3-month InterBank Offered Rates applicable for the currencies concerned (e.g. EURIBOR 3M, LIBOR 3M). The sensitive analysis does not include any spread applicable to the company’s funding.

-32-

Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure of the company. The carrying amount is presented net of the impairment losses recognized. The maximum exposure to credit risk at the reporting date was:


	30 June 2021							31 December 2020
Million US dollar	Gross		Impairment			Net carrying amount		Gross		Impairment			Net carrying amount
Investment in unquoted companies		127		(6	)		120		121		(6	)		115
Investment in debt securities		312		—			312		418		—			418
Trade receivables		4 279		(371	)		3 908		3 593		(308	)		3 285
Cash deposits for guarantees		182		—			182		184		—			184
Loans to customers		114		—			114		142		—			142
Other receivables		1 350		(63	)		1 287		1 299		(62	)		1 237
Derivatives		1 043		—			1 043		965		—			965
Cash and cash equivalents		6 790		—			6 790		15 252		—			15 252

		14 197		(440	)		13 756		21 974		(376	)		21 598

There was no significant concentration of credit risks with any single counterparty as of 30 June 2021 and no single customer represented more than 10% of the total revenue of the group in 2021.

Impairment losses

The allowance for impairment recognized during the period per classes of financial assets was as follows:


	2021
Million US dollar	Trade receivables			FVOCI			Other receivables			Total
Balance at 1 January		(308	)		(6	)		(62	)		(376	)
Impairment losses		(25	)		—			—			(25	)
Derecognition		1			—			(1	)		1
Currency translation and other		(38	)		—			—			(38	)

Balance at 30 June		(371	)		(6	)		(63	)		(440	)


	2020
Million US dollar	Trade receivables			FVOCI			Other receivables			Total
Balance at 1 January		(173	)		(6	)		(103	)		(283	)
Impairment losses		(93	)		—			(6	)		(99	)
Derecognition		7			—			42			49
Currency translation and other		(50	)		—			4			(46	)

Balance at 31 December		(308	)		(6	)		(62	)		(376	)

LIQUIDITY RISK

Historically, AB InBev’s primary sources of cash flow have been cash flows from operating activities, the issuance of debt, bank borrowings and equity securities. AB InBev’s material cash requirements have included the following:

•

Debt servicing;

•

Capital expenditures;

•

Investments in companies;

•

Increases in ownership of AB InBev’s subsidiaries or companies in which it holds equity investments;

•

Share buyback programs; and

•

Payments of dividends and interest on shareholders’ equity.

The company believes that cash flows from operating activities, available cash and cash equivalents as well as short term investments, along with related derivatives and access to borrowing facilities, will be sufficient to fund capital expenditures, financial instrument liabilities and dividend payments going forward. It is the intention of the company to continue to reduce its financial indebtedness through a combination of strong operating cash flow generation and continued refinancing.

-33-

The following are the nominal contractual maturities of non-derivative financial liabilities including interest payments and derivative liabilities:


	30 June 2021
Million US dollar	Carrying amount¹			Contractual cash flows			Less than 1 year			1-2 years			2-3 years			3-5 years			More than 5 years
Non-derivative financial liabilities
Secured bank loans		(440	)		(467	)		(342	)		(87	)		(9	)		(10	)		(19	)
Unsecured bank loans		(434	)		(434	)		(434	)		—			—			—			—
Unsecured bond issues		(87 263	)		(156 415	)		(3 282	)		(3 873	)		(4 931	)		(15 611	)		(128 718	)
Unsecured other loans		(73	)		(135	)		(12	)		(26	)		(6	)		(58	)		(33	)
Lease liabilities		(2 381	)		(2 573	)		(507	)		(437	)		(350	)		(440	)		(839	)
Bank overdraft		(46	)		(46	)		(46	)		—			—			—			—
Trade and other payables		(23 920	)		(24 151	)		(22 702	)		(423	)		(571	)		(123	)		(332	)

		(114 557	)		(184 221	)		(27 325	)		(4 846	)		(5 867	)		(16 242	)		(129 941	)

Derivative financial liabilities
Foreign exchange derivatives		(212	)		(212	)		(212	)		—			—			—			—
Cross currency interest rate swaps		(516	)		(577	)		(308	)		(44	)		(66	)		(117	)		(41	)
Commodity derivatives		(24	)		(24	)		(24	)		—			—			—			—
Equity derivatives		(4 759	)		(4 760	)		(4 332	)		(428	)		—			—			—

		(5 511	)		(5 574	)		(4 877	)		(472	)		(66	)		(117	)		(41	)

Of which: related to cash flow hedges		(172	)		(172	)		(137	)		—			—			(36	)		—


	31 December 2020
Million US dollar	Carrying amount¹			Contractual cash flows			Less than 1 year			1-2 years			2-3 years			3-5 years			More than 5 years
Non-derivative financial liabilities
Secured bank loans		(702	)		(735	)		(675	)		(14	)		(12	)		(10	)		(24	)
Commercial papers		(1 522	)		(1 522	)		(1 522	)		—			—			—			—
Unsecured bank loans		(294	)		(299	)		(299	)		—			—			—			—
Unsecured bond issues		(93 725	)		(165 812	)		(3 582	)		(4 057	)		(3 823	)		(16 557	)		(137 793	)
Unsecured other loans		(83	)		(115	)		(13	)		(8	)		(6	)		(57	)		(31	)
Lease liabilities		(2 234	)		(2 455	)		(460	)		(425	)		(315	)		(424	)		(831	)
Bank overdraft		(5	)		(5	)		(5	)		—			—			—			—
Trade and other payables		(24 496	)		(24 688	)		(22 906	)		(1 103	)		(135	)		(197	)		(347	)

		(123 061	)		(195 631	)		(29 462	)		(5 607	)		(4 291	)		(17 245	)		(139 026	)

Interest rate derivatives		—			—			—			—			—			—			—
Foreign exchange derivatives		(696	)		(696	)		(696	)		—			—			—			—
Cross currency interest rate swaps		(709	)		(852	)		(8	)		(575	)		(98	)		(132	)		(39	)
Commodity derivatives		(26	)		(26	)		(26	)		—			—			—			—
Equity derivatives		(5 373	)		(5 372	)		(4 455	)		(917	)		—			—			—

		(6 803	)		(6 946	)		(5 184	)		(1 492	)		(98	)		(132	)		(39	)

Of which: related to cash flow hedges		(418	)		(418	)		(353	)		—			—			(65	)		—

¹	“Carrying amount” refers to net book value as recognized in the balance sheet at each reporting date.

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FAIR VALUE

The following table summarizes for each type of derivative the fair values recognized as assets or liabilities in the balance sheet:


	Assets				Liabilities						Net
Million US dollar	30 June 2021		31 December 2020		30 June 2021			31 December 2020			30 June 2021			31 December 2020
Foreign currency
Forward exchange contracts		288		480		(212	)		(691	)		75			(211	)
Foreign currency futures		17		36		—			(5	)		17			31
Interest rate
Interest rate swaps		68		80		—			—			68			80
Cross currency interest rate swaps		110		107		(516	)		(709	)		(406	)		(602	)
Commodities
Aluminum swaps		388		170		(7	)		(10	)		381			160
Sugar futures		17		10		—			—			17			10
Energy		43		9		—			(7	)		43			2
Other commodity derivatives		97		46		(17	)		(8	)		80			37
Equity
Equity derivatives		15		27		(4 759	)		(5 373	)		(4 744	)		(5 346	)

		1 043		965		(5 511	)		(6 804	)		(4 469	)		(5 839	)

Of which:
Non-current		43		138		(639	)		(1 759	)		(596	)		(1 621	)
Current		1 000		827		(4 872	)		(5 046	)		(3 871	)		(4 218	)

The following table summarizes the carrying amount and the fair value of the fixed rate interest-bearing financial liabilities as recognized on the balance sheet. Floating rate interest-bearing financial liabilities, trade and other receivables and trade and other payables, including derivatives financial instruments, have been excluded from the analysis as their carrying amount is a reasonable approximation of their fair value:


Interest-bearing financial liabilities	30 June 2021						31 December 2020
Million US dollar	Carrying amount¹			Fair value			Carrying amount¹			Fair value
Fixed rate
Australian dollar		(335	)		(389	)		(846	)		(964	)
Brazilian real		(486	)		(486	)		(578	)		(578	)
Canadian dollar		(628	)		(662	)		(613	)		(633	)
Euro		(22 778	)		(26 232	)		(26 092	)		(29 809	)
Pound sterling		(3 707	)		(4 223	)		(3 655	)		(4 301	)
US dollar		(59 850	)		(76 473	)		(62 340	)		(81 771	)
Other		(464	)		(467	)		(479	)		(480	)

		(88 248	)		(108 932	)		(94 602	)		(118 536	)

¹	“Carrying amount” refers to net book value as recognized in the balance sheet at each reporting date.

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The table sets out the fair value hierarchy based on the degree to which significant market inputs are observable:


Fair value hierarchy 30 June 2021 Million US dollar	Quoted (unadjusted) prices - level 1		Observable market inputs - level 2		Unobservable market inputs - level 3
Financial Assets
Held for trading (non-derivatives)		—		9		—
Derivatives at fair value through profit and loss		—		322		—
Derivatives in a cash flow hedge relationship		66		556		—
Derivatives in a fair value hedge relationship		—		28		—
Derivatives in a net investment hedge relationship		—		71		—

		66		986		—

Financial Liabilities
Deferred consideration on acquisitions at fair value		—		—		1 130
Derivatives at fair value through profit and loss		—		5 097		—
Derivatives in a cash flow hedge relationship		13		221		—
Derivatives in a net investment hedge relationship		—		180		—

		13		5 498		1 130


Fair value hierarchy 31 December 2020 Million US dollar	Quoted (unadjusted) prices - level 1		Observable market inputs - level 2		Unobservable market inputs - level 3
Financial Assets
Held for trading (non-derivatives)		—		11		—
Derivatives at fair value through profit and loss		—		457		—
Derivatives in a cash flow hedge relationship		29		343		—
Derivatives in a fair value hedge relationship		—		80		—
Derivatives in a net investment hedge relationship		—		57		—

		29		948		—

Financial Liabilities
Deferred consideration on acquisitions at fair value		—		—		1 251
Derivatives at fair value through profit and loss		—		6 119		—
Derivatives in a cash flow hedge relationship		46		353		—
Derivatives in a net investment hedge relationship		—		287		—

		46		6 759		1 251

Non-derivative financial liabilities

As part of the 2012 shareholders agreement between Ambev and ELJ, following the acquisition of Cervecería Nacional Dominicana S.A. (“CND”), a forward-purchase contract (combination of a put option and purchased call option) was put in place which may result in Ambev acquiring additional shares in CND. In July 2020, Ambev and ELJ amended the Shareholders’ Agreement to extend their partnership and change the terms and the exercise date of the call and put options. ELJ currently holds 15% of CND and the put option is exercisable in 2022, 2023, 2024 and 2026. As at 30 June 2021, the put option on the remaining shares held by ELJ was valued at 627m US dollar (31 December 2020: 671m US dollar) and recognized as a deferred consideration on acquisitions at fair value in the “level 3” category above.

21. Collateral and contractual commitments for the acquisition of property, plant and equipment, loans to customers and other

In the six-month period ended 30 June 2021, there were no significant changes in collateral and contractual commitments to purchase property, plant and equipment and other, besides those mentioned in Note 10 Property, plant and equipment, as compared to 31 December 2020.

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22. Contingencies

The company has contingencies for which, in the opinion of management and its legal counsel, the risk of loss is possible but not probable and therefore no provisions have been recorded. Due to their nature, such legal proceedings and tax matters involve inherent uncertainties including, but not limited to, court rulings, negotiations between affected parties and governmental actions, and as a consequence AB InBev’s management cannot at this stage estimate the likely timing of resolution of these matters. The most significant contingencies are discussed below. Amounts have been converted to US dollar at the closing rate of the respective period.

AMBEV TAX MATTERS

As of 30 June 2021 and 31 December 2020, AB InBev’s material tax proceedings are related to Ambev and its subsidiaries. Estimates of amounts of possible loss are as follows:


Million US dollar	30 June 2021		31 December 2020
Income tax and social contribution		10 875		10 372
Value-added and excise taxes		4 605		4 483
Other taxes		685		727

		16 165		15 582

The most significant tax proceedings of Ambev are discussed below.

INCOME TAX AND SOCIAL CONTRIBUTION

Foreign Earnings

Since 2005, Ambev and certain of its subsidiaries have been receiving assessments from the Brazilian Federal Tax Authorities relating to the profits of its foreign subsidiaries. The cases are being challenged at both the administrative and judicial levels of the courts in Brazil.

The administrative proceedings have resulted in partially favorable decisions, which are still subject to review by the Administrative Court. In the judicial proceedings, Ambev has received favorable injunctions that suspend the enforceability of the tax credit, as well as favorable first level decisions, which remain subject to review by the second-level judicial court.

The amount related to this uncertain tax position as of 30 June 2021 is approximately 7.4 billion Brazilian real (1.5 billion US dollar) and Ambev has not recorded any provisions in connection therewith as it considers the chance of loss to be possible. For proceedings where it considers the chance of loss to be probable, Ambev has recorded a provision in the total amount of 53 million Brazilian real (11 million US dollar).

Goodwill InBev Holding

In December 2011, Ambev received a tax assessment related to the goodwill amortization resulting from the InBev Holding Brasil S.A. merger with Ambev. At the administrative level, Ambev received partially favorable decisions at both the Lower and Upper Administrative Court. Ambev filed judicial proceedings to discuss the unfavorable portion of the decisions of the Lower and the Upper Administrative Court and requested injunctions to suspend the enforceability of the remaining tax credit, which were granted.

In June 2016, Ambev received a new tax assessment charging the remaining value of the goodwill amortization and filed a defense. Ambev received partially favorable decisions at the first level administrative court and Lower Administrative Court. Ambev filed a Special Appeal which was partially admitted and awaits judgment by the Upper Administrative Court. For the unfavorable portion of the decision which became final at the administrative level, Ambev filed a judicial proceeding requesting an injunction to suspend the enforceability of the remaining tax credit, which was granted.

The amount related to this uncertain tax position as of 30 June 2021 is approximately 10.3 billion Brazilian real (2.1 billion US dollar). Ambev has not recorded any provisions for this matter. In the event Ambev is required to pay these amounts, AB InBev will reimburse the amount proportional to the benefit received by AB InBev pursuant to the merger protocol as well as the related costs.

Goodwill Beverage Associate Holding (BAH)

In October 2013, Ambev received a tax assessment related to the goodwill amortization resulting from the merger of Beverage Associates Holding Limited (“BAH”) into Ambev. The decision from the first level administrative court was unfavorable to Ambev. Ambev filed an appeal to the Lower Administrative Court against the decision, which was partially granted. Ambev and the tax authorities filed Special Appeals to the Upper Administrative Court, which are awaiting judgment.

In April and August 2018, Ambev received new tax assessments charging the remaining value of the goodwill amortization and filed defenses. In April 2019, the first level administrative court rendered unfavorable decisions to Ambev. As a result thereof, Ambev appealed to the Lower Administrative Court. In November and December 2019, Ambev received partially favorable decisions at the Lower Administrative Court and filed Special Appeals to the Upper Administrative Court. The Special Appeals filed in both tax assessments are awaiting judgment by the Upper Administrative Court.

The amount related to this uncertain tax position as of 30 June 2021 is approximately 2.3 billion Brazilian real (0.5 billion US dollar). Ambev has not recorded any provisions for this matter as it considers the chance of loss to be possible.

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Goodwill CND Holdings

In November 2017, Ambev received a tax assessment related to the goodwill amortization resulting from the merger of CND Holdings into Ambev. The decision from the first level administrative court was unfavorable to Ambev. Ambev filed an appeal to the Lower Administrative Court. In February 2020, the Lower Administrative Court rendered a partially favorable decision. Ambev and the tax authorities filed Special Appeals to the Upper Administrative Court. The Special Appeal filed by Ambev was partially admitted and is awaiting judgment.

The amount related to this uncertain tax position as of 30 June 2021 is approximately 1.0 billion Brazilian real (0.2 billion US dollar). Ambev has not recorded any provisions for this matter.

Disallowance of financial expenses

In 2015, 2016 and 2020, Ambev received tax assessments related to the disallowance of alleged non-deductible expenses and the deduction of certain losses mainly associated to financial investments and loans. Ambev presented defenses and, in November 2019, received a favorable decision at the first level administrative court regarding the 2016 case. In June 2021, Ambev received a partially favorable decision for the 2020 case at the first level administrative court and will file an appeal to the Lower Administrative Court by the beginning of August 2021. The favorable portion of the decision is also subject to mandatory review by the Lower Administrative Court. The 2015 case is still pending decision by the first level administrative court.

The amount related to this uncertain tax position as of 30 June 2021 is approximately 5.1 billion Brazilian real (1.0 billion US dollar). Ambev has not recorded any provisions for this matter as it considers the chance of loss to be possible.

Disallowance of tax paid abroad

Since 2014, Ambev has been receiving tax assessments from the Brazilian Federal Tax Authorities related to the disallowance of deductions associated with alleged unproven taxes paid abroad by its subsidiaries and has been filing defenses. The cases are being challenged at both the administrative and judicial levels. In November 2019, the Lower Administrative Court rendered a favorable decision to Ambev in one of the cases (related to the 2010 tax period), which became definitive.

In January 2020, the Lower Administrative Court rendered unfavorable decisions regarding four of these assessments related to the periods of 2015 and 2016. In these cases, Ambev filed Special Appeals to the Upper Administrative Court which are pending admission and judgment. With respect to the cases related to the periods of 2015 and 2016, tax assessments were filed to charge isolated fines due to the lack of monthly prepayments of income tax as a result of allegedly undue deductions of taxes paid abroad. Ambev filed defenses to the first level administrative court. The 2016 isolated fine case is awaiting judgment by the first level administrative court. With respect to the 2015 isolated fine case, Ambev received an unfavorable decision from the first level administrative court and filed an appeal, which is pending judgment by the Lower Administrative Court. The other cases are still awaiting final decisions at both administrative and judicial courts.

The amount related to this uncertain tax position as of 30 June 2021 is approximately 11.8 billion Brazilian real (2.4 billion US dollar). Ambev has not recorded any provisions for this matter as it considers the chance of loss to be possible.

Presumed Profit

In April 2016, Arosuco (a subsidiary of Ambev) received a tax assessment regarding the use of the “presumed profit” method for the calculation of income tax and the social contribution on net profits instead of the “real profit” method. In September 2017, Arosuco received an unfavorable first level administrative decision and filed an appeal. In January 2019, the Lower Administrative Court rendered a favorable decision to Arosuco, which became definitive.

In March 2019, Ambev received a new tax assessment regarding the same subject and filed a defense. In October 2019, Arosuco received an unfavorable first level administrative decision and filed an appeal.

The amount related to this uncertain tax position as of 30 June 2021 is approximately 0.5 billion Brazilian real (0.1 billion US dollar). Arosuco has not recorded any provisions for this matter as it considers the chance of loss to be possible.

Deductibility of IOC expenses

In November 2019, Ambev received a tax assessment from the Brazilian Federal Tax Authorities related to the interest on capital (“IOC”) deduction in 2014. The assessment refers primarily to the accounting and corporate effects of the restructuring carried out by Ambev in 2013 and the impact on the increase in the deductibility of IOC expenses. In August 2020, Ambev received a partially favorable decision at the first level administrative Court and filed an Appeal to the Lower Administrative Court.

In December 2020, Ambev received a new tax assessment related to the deduction of the IOC in 2015 and 2016. The defense against such assessment was filed by Ambev in January 2021. In June 2021, Ambev received a partially favorable decision and filed an appeal to the Lower Administrative Court. The favorable portion of the decision is also subject to mandatory review by the Lower Administrative Court.

Ambev also distributed IOC in the years following the assessed period, i.e. after 2016. In a scenario where the IOC deductibility would also be questioned for the period after 2016, on the same basis as the aforementioned tax assessments, Ambev management estimates that the outcome of such potential further assessments would be similar to the abovementioned case. Accordingly, the effects of the deductibility of IOC expenses on Ambev’s effective income tax rate for this period would be maintained.

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Disallowance on Income Tax deduction

In January 2020, Arosuco, a subsidiary of Ambev, received a tax assessment from the Brazilian Federal Tax Authorities regarding the disallowance of the income tax reduction benefit provided for in Provisional Measure No. 2199-14/2001 and an administrative defense was filed. In October 2020, the first level administrative Court rendered an unfavorable decision to Arosuco. Arosuco filed an appeal against the aforementioned decision and awaits judgment by the Lower Administrative Court. The amount related to this uncertain tax position as of 30 June 2021 is approximately 2.1 billion Brazilian real (0.4 billion US dollar). Ambev has not recorded any provisions for this matter as it considers the chance of loss to be possible.

ICMS VALUE ADDED TAX, EXCISE TAX (“IPI”) AND TAXES ON NET SALES

Manaus Free Trade Zone – IPI / Social contributions

In Brazil, goods manufactured within the Manaus Free Trade Zone intended for remittance elsewhere in Brazil are exempt and/ or zero-rated from excise tax (“IPI”) and social contributions (“PIS/COFINS”). With respect to IPI, Ambev’s subsidiaries have been registering IPI presumed tax credits upon the acquisition of exempted goods manufactured therein. Since 2009, Ambev has been receiving a number of tax assessments from the Brazilian Federal Tax Authorities relating to the disallowance of such credits.

Ambev and its subsidiaries have also been receiving charges from the Brazilian Federal Tax Authorities in relation to (i) federal taxes allegedly unduly offset with the disallowed presumed IPI excise tax credits that are under discussion in these proceedings and (ii) PIS/COFINS amounts allegedly due on Arosuco’s remittance to Ambev subsidiaries.

In April 2019, the Federal Supreme Court (“STF”) announced its judgment on Extraordinary Appeal No. 592.891/SP and 596.614/SP, with binding effects, deciding on the rights of taxpayers registering IPI excise tax presumed credits on acquisitions of raw materials and exempted inputs originating from the Manaus Free Trade Zone. As a result of this decision, Ambev reclassified part of the amounts related to the IPI cases as remote losses maintaining as possible losses only issues related to other additional discussions that were not included in the analysis of the STF. The cases are being challenged at both the administrative and judicial levels.

Ambev management estimates the possible loss related to these assessments to be approximately 4.8 billion Brazilian real (1.0 billion US dollar) as of 30 June 2021. Ambev has not recorded any provision in connection therewith.

IPI Suspension

In 2014 and 2015, Ambev received tax assessments from the Brazilian Federal Tax Authorities relating to IPI allegedly due over remittances of manufactured goods to other related factories. The cases are being challenged at both the administrative and judicial levels. In 2020, Ambev received a final partial favorable decision at the administrative level in one of the cases. At the judicial level, the case is still in the initial stage.

Ambev management estimates the possible loss related to these assessments to be approximately 1.6 billion Brazilian real (0.3 billion US dollar) as of 30 June 2021. Ambev has not recorded any provision in connection therewith.

ICMS tax credits

Ambev is currently challenging tax assessments issued by the states of São Paulo, Rio de Janeiro, Minas Gerais, among others, questioning the legality of ICMS tax credits arising from transactions with companies that have tax incentives granted by other states. The cases are being challenged at both the administrative and judicial level of the courts. On August 2020, the STF issued a binding decision (Extraordinary Appeal No. 628.075) ruling that tax credits granted by the states in the context of the ICMS tax war shall be consider unlawful. The decision also recognized that the states should abide by the tax incentives validation process provided for in Complementary Law No. 160/17. This decision is subject to appeal and does not change the likelihood of loss in Ambev´s tax assessments.

Ambev management estimates the possible losses related to these assessments to be approximately 2.0 billion Brazilian real (0.4 billion US dollar) as of 30 June 2021. Ambev has not recorded any provision in connection therewith.

ICMS-ST Trigger

Over the years, Ambev has received tax assessments to charge supposed ICMS differences considered due when the price of the products sold by Ambev is above the fixed price table basis established by the relevant states, cases in which the state tax authorities understand that the calculation basis should be based on a value-added percentage over the actual prices and not the fixed table price. Ambev is currently challenging those charges before the courts. The cases are being challenged at both the administrative and judicial levels.

Ambev management estimates the total possible loss related to this issue to be approximately 8.2 billion Brazilian real (1.6 billion US dollar) as of 30 June 2021. Ambev has recorded provisions in the total amount of 7 million Brazilian real (2 million US dollar) in relation to certain proceedings for which it considers the chances of loss to be probable due to specific procedural issues.

SOCIAL CONTRIBUTIONS

Since 2015, Ambev has received tax assessments issued by the Brazilian Federal Tax Authorities relating to PIS/COFINS amounts allegedly due over bonus products granted to its customers. The cases are being challenged at both the administrative and judicial levels of the courts. In 2019 and 2020, Ambev received final favorable decisions at the administrative level in some of these cases and favorable decisions in other cases that are still subject to review. At the judicial level, the case is still in the initial stage.

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Ambev management estimates the possible loss related to these assessments to be approximately 1.7 billion Brazilian real (0.3 billion US dollar) as of 30 June 2021. No related provision has been made.

AB INBEV’S AUSTRALIAN BUSINESS TAX MATTERS

SAB Australia Pty Limited (“SAB Australia”), a former subsidiary of AB InBev, received a tax assessment for the 2012 to 2014 income tax years for 0.4 billion Australian dollar (0.3 billion US dollar)related to the interest deductions of SAB’s acquisition of the Foster’s group (the “Foster’s acquisition”). AB InBev is disputing the 2012 to 2014 assessment and remains confident of the positions it has adopted. The company paid 47 million US dollar related to the tax assessment pending conclusion of the matter and recorded a provision of 0.1 billion US dollar in connection therewith as of 30 June 2021.The Australia disposal was concluded on 1 June 2020 with pre-transaction income tax liabilities being subject to an indemnity by AB InBev.

The Australian tax authorities have also notified SAB Australia that it has commenced an audit of the 2015 to 2020 income tax years. The focus of the audit is the tax treatment of the funding arrangements associated with the Foster’s acquisition.

OTHER TAX MATTERS

In February 2015, the European Commission opened an in-depth state aid investigation into the Belgian excess profit ruling system. On 11 January 2016, the European Commission adopted a negative decision finding that the Belgian excess profit ruling system constitutes an aid scheme incompatible with the internal market and ordering Belgium to recover the incompatible aid from a number of aid beneficiaries. The Belgian authorities have contacted the companies that have benefitted from the system and have advised each company of the amount of incompatible aid that is potentially subject to recovery. The European Commission decision was appealed to the European Union’s General Court by Belgium on 22 March 2016 and by AB InBev on 12 July 2016. On 14 February 2019, the European General Court concluded that the Belgian excess profit ruling system does not constitute illegal state aid. The European Commission has appealed the judgment to the European Court of Justice. The public hearing in the framework of the appeal proceedings took place on 24 September 2020 and AB InBev was heard as an intervening party. Pending the outcome of that appeal, the European Commission opened new state aid investigations into the individual Belgian tax rulings, including the one issued to AB InBev in September 2019, to remedy the concerns that led to annulment of its earlier decision by the General Court. These investigations relate to the same rulings that were subject to the European Commission decision issued on 11 January 2016. AB InBev has filed its observations in respect of the opening decisions with the EU Commission.

On 3 December 2020, the Advocate General (AG) of the European Court of Justice presented her non-binding opinion on the appeal procedure related to the 11 January 2016 opening decision, stating that, contrary to the 14 February 2019 judgment of the European General Court, the Belgian excess profit ruling system would fulfil the legal requirements for an “aid scheme”. In the initial European General Court judgment, the court limited itself to finding the Belgian excess profit rulings were not an “aid scheme”, but did not consider whether they constituted State aid. Consequently, the AG advised the European Court of Justice to refer the case back to the European General Court to review whether the Belgian excess profit rulings constitute State aid. The AG’s opinion is only advisory to the European Court of Justice, which is expected to deliver its binding judgment on the European Commission’s appeal later in 2021.

In addition, the Belgian tax authorities have also questioned the validity and the actual application of the excess profit ruling that was issued in favor of AB InBev and have refused the actual tax exemption which it confers. AB InBev has filed a court claim against such decision before the Brussels court of first instance which ruled in favor of AB InBev on 21 June 2019. The Belgian tax authorities appealed this judgment.

In January 2019, AB InBev deposited 68m euro (80m US dollar) on a blocked account. Depending on the final outcome of the European Court procedures on the Belgian excess profit ruling system, as well as the pending Belgian court case, this amount will either be slightly modified, or released back to the company or paid over to the Belgian State. In connection with the European Court procedures, AB InBev recognized a provision of 68m euro (80m US dollar) in 2020.

WARRANTS

Certain holders of warrants issued by Ambev in 1996 for exercise in 2003 proposed lawsuits to subscribe correspondent shares for an amount lower than Ambev considers as established upon the warrant issuance. In case Ambev loses the totality of these lawsuits, the issuance of 172,831,574 shares would be necessary. Ambev would receive in consideration funds that are materially lower than the current market value. This could result in a dilution of about 1% to all Ambev shareholders. Furthermore, the holders of these warrants are claiming that they should receive the dividends relative to these shares since 2003, approximately 1.0 billion Brazilian real (0.2 billion US dollar) in addition to legal fees. Ambev disputes these claims and intends to continue to vigorously defend these cases. All six lawsuits were ruled favorably to Ambev by the Superior Court of Justice (“STJ”). Three cases were dismissed by the STJ’s Special Court and will no longer be remitted to the STJ’s lower court for a new judgment. The motions for clarification that were filed against the STJ’s Special Court decision were dismissed and may still be subject to a new appeal to the Brazilian Supreme Court (STF). One case was ruled favorably to Ambev by the STJ´s Special Court and the judgment became final. Another case was remitted to the STJ´s lower court for a new judgment. The sixth case was also ruled favorably to Ambev and the decision became final. Considering all of these facts, Ambev and its external counsels strongly believe that the chance of loss in these cases is remote.

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23. Related parties

There are no material changes to the company’s related party transactions during the first six months of 2021 as compared to 2020.

24. Events after the balance sheet date

On 23 July 2021, the company’s wholly owned subsidiary Anheuser-Busch InBev Finance Inc. (“ABIFI”) exercised its option to redeem the outstanding principal amount of the following series of notes:

Date of redemption

Issuer
(abbreviated)

Title of series of notes

issued exchanged

Currency

Original
principal
amount
outstanding

(in million)

Principal
amount
redeemed

(in million)

23 July 2021

ABIFI

4.600% Notes due 2045

USD

565

-41-