Zambrew and Natbrew brief to institutional shareholders - July 2013

Investor Conference Call

Full year resultsTwelve months ended 31 March 2013

12 July 2013

July 2013© SABMiller plc 2013

ZAMBIA COUNTRY OVERVIEW

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• Robust GDP growth since 2000

• Four peaceful, democratic Presidential transitions since 2000

• Credit Grade:• Moody: B+• S&P: B+

• 2012 US$750mn Eurobond oversubscribed 15-fold:

• Around 425 investors took part in the issue, with 56 per cent of them from the U.S., 40 per cent from Europe, 3 per cent from Asia


Attractive economic fundamentals

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SOURCE: International Monetary Fund; McKinsey Global Institute; Economist Intelligence Unit

Total population : 14.08m

Rural /Urban : 60/40

Gender split (M/F) : 49/51

2012 GDP : US$20.8b


And set to continue looking good

2011 2012 2013 2014 2015

Real GDP growth % 6.4 7.3 7.0 7.8 7.7

Real private consumption growth

8.1 7.6 5.2 5.3 5.9

GDP per capita (US$) 1623 1820 1941 2078 2228

CPI % 6.5 6.9 6.3 6.2 6.7

US$ Exchange rate 5.001 5.17 5.55 5.77 5.8

Population (million) 13.6 13.9 14.3 14.8 15.1

Population growth % 2.1 2.8 2.8 2.8 2.8

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Good prospects for growth of the business

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Country GDP growth%

2012 GDP p/cap

Mozambique 7.5 650

Zambia 7.3 1820

Tanzania 6.8 599

Kenya 4.7 976

Zimbabwe 4.4 755

Botswana 3.8 9398


Real population growth rates of 2.8%Population growth 2010-2013

Robust GDP growth 2012 Percentage growth 7.3%

SOURCE: International Monetary Fund; McKinsey Global Institute; Economist Intelligence Unit

Age Range 2010 2020 % Growth

15-19 1.43 1.57 10%

20-24 1.24 1.41 14%

25-29 0.98 1.17 19%

Totals 3.65 4.15 14%

Demographic evolution in our favour

Zambian Breweries plc.

Full year resultsTwelve months ended 31 March 2013

12 July 2013


Operating Highlights

Good trading environment, despite increase in new regulations

Beer growth of 12% and strong market share growth underpinned by improved

execution and brand health

Soft drinks growth of 30% - affordability, availability and market development

Improved manufacturing and distribution efficiencies

Completion of the construction of the new Ndola Brewery

Successful local sourcing initiatives culminating in the approval of the Maltings

plant

Revised HR structure driving improved processes and employee engagement

Increased our total tax contribution from $95.7m to $107.7m

Investments: The Old Ndola Brewery – Built 1952

Investments: The New Ndola Brewery – Built 2012

Prepared by

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COMPETITOR LANDSCAPE


Clear Beer Competitors

Competitor Brands and Packs Pack Visuals

Kazuma

Amstel 340ml NRB

Heineken 330ml, 340ml CAN and NRB

Windhoek 330ml, 340ml, 440ml CAN and NRB

Congolese Imports

Primus 1000ml PET

Simba, 330ml CAN, 750ml RGB

Turbo King 1000ml PET


AFBs Competitors


Kazuma

Hunters Gold , Dry and Lemon, 340ml, 660ml NRB

Smirnhoff Spin and Ice, 340ml NRB

DistelSavanna Light and Dry 340ml NRB


CSDs Competitors


Varun Beverages Pepsi 250, 330ml CAN, 330ml PET, 350ml RGB, 1.25ml PET and 2L PET

Mirinda 250, 330ml CAN, 330ml PET, 350ml RGB, 1.25ml PET and 2L PET

7Up 250ml CAN, 330ml PET, 350ml RGB, 1.25ml PET and 2L PET

Californian Beverages

Apple-max, Frooty, Cali-Cola, Tingling Ginger, and Hubbly Bubbly (all 350ml PET)

Accacia Beverages Havanna, Lemon-mania and Tango -425ml PET

Zambian Breweries plc.

Financial PerformanceTwelve months ended 31 March 2013


Trading and Business Environment

GDP growth of +7.0% (Copper and Agriculture). CPI at 6.3%

New government - number of sudden regulatory changes

– SI 33 - Local transactions to Kwacha only – excess US$, exchange losses

– SI 23 – Alcohol packaging restrictions – RB and PET in Chibuku

– SI 64 - Trading Hours – Chibuku sales

– SI 47 – Minimum Wages

– BOZ Amendment Act 2013 – forex monitoring

Rebasing of the Kwacha by 1000 on 1 Jan 2013

CAPEX intensive year

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Trading and Business Environment – Exchange Rates

17

ZMK/ZAR

ZMK/USD

Good positive pricevariance on imports

Loss on forward contracts


Financial Highlights

Beer growth of 12%, soft drink growth of 30%

Beer price increase of 7% in March 2012

Soft drink 300ml RGB price reduction of 23% in anticipation of excise

removal in March 2012

Soft drink 500ml PET price reduction of 7% due to the removal of

excise tax in March 2013

Revenue growth of 20%

Strong fixed cost controls in the business

Operating profit growth of 29%

Operating profit margin growth of 140 bps


Financial Highlights

15% reduction in interest burden

Finance costs driven up by $3.3m of exchange losses US$57m of $75m syndicated facility refinanced in February 2013

Drop in effective tax rate from 41% to 33%.

CAPEX spend of US$ 50m in line with approved budget


US$’ 000 March 13 March 12 Change %

Reported

Group revenue 220,811 183,815 20%

EBITA 44,704 34,593 29%

EBITA margin (%) 20.2 18.8 140 bps

Sales volumes (hl’000)

Total 1,922 1,623 18

Lager 1,188 1,059 12

Soft drinks 734 564 30

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Financial results – F13



Group revenue 220,811 183,815 20

Gross Profit 102,706 82,152 25

Gross margin (%) 46.5 44.7 180 Bps

Distribution costs (25,998) (19,507) (33)

Admin and Other expenses (32,004) (28,052) (14)

Operating Profit 44,704 34,593 29

Finance Costs (14,367) (10,408) (38)

Profit before taxation 30,337 24,185 25

Income tax expense (9,987) (9,857) (1)

Profit for the year 20,350 14,328 42

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Income Statement


US$’ 000March 13 March 12

Goodwill and Intangible assets 14,69213,687

Property, plant and equipment 201,266174,863

Non-current assets 556 -

Current assets excluding cash 70,50253,118

Cash and cash equivalents 7,44826,834

Borrowings (61,391)(71,979)

Other current and non-current liabilities (90,546)(71,713)

Net Assets and Total Equity 142,527124,810

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Balance sheet


US$’ 000March 13

March 12

Net cash generated from operating activities 52,061 44,931

Net cash used in investing activities (50,008) (64,484)

Net cash (used in)/generated from financing activities (20,599) 50,971

Net (decrease)/increase in cash and cash equivalents (18,546) 31,418

Movement in cash and cash equivalents

Cash and cash equivalent at the beginning of the year 23,439 (10,471)

Exchange difference on opening balance (758) -

(Decrease)/Increase in cash and cash equivalents (18,546) 31,418

Exchange difference in cash and cash equivalents (3,384) 2,492

Cash and cash equivalent at end of the year

751

23,439 23

Cash flow


Interest Bearing Debt


Capital Expenditure

US$'000

Description F11 F12 F13 F14 Budget

Capacity 6,511 48,829 36,745 2,917 Continuity 6,310 14,306 10,894 21,058 Capability - 1,636 2,164 15,985

Total 12,821 64,771 49,804 39,960 Exchange rates 4.81869773 5.001 5.16802 5.55592CAPEX 12,821 64,771 49,804 39,960 EBITA 28,554 34,593 44,704 59,176 Capex as a % EBITA 44.9% 187.2% 111.4% 67.5%


Dividend recommendation

Owing to high level of debt, interest costs needing to be serviced, no dividend declaration has been recommended for 2013

Internally generated cash will mainly be used to pay down borrowings further

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2012 2013 2014US$ '000

Borrowings (71,979) (61,391) (45,178)Cash and cash equivalents 26,835 7,448 9,001

Net debt (45,145) (53,943) (36,177)

Equity 124,811 142,526

Total capital 169,955 196,470

Gearing 27% 27%

CAPEX spend (64,771) (49,804) (39,960)

Interest paid (12,899) (10,983) (7,538)

Interest burden if 50% dividend paid (702) (1,053)

July 2013© SABMiller plc 2013 27

VAT and Excise Contribution

A – Excise in March ‘09 reduced from 75% to 60% B – Excise rate reduced in April ‘10 from 60% to 40% C – Excise on soft drinks removed from 01 January 2013

A B

C


Financial outlook – current financial year

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Continued strong volume and revenue growth

Raw material input costs expected to rise in double digits - Malt

Offset to some extent by Ndola Brewery efficiencies and local

preform manufacture

Margin sacrifice for RTM advocacy – remote depots

EBITA growth – double digit

Full year CAPEX - US$ 40m – Maltings

Anticipated interest bill - US$ 7.5m

Thank you.

Q&A on Zambian Breweries plc.

National Breweries plc.



Operating Highlights

Good trading environment, despite an increase in new regulations

Roll back of price in March 2012 by 18%

Beer volume growth of 34%

Launch of Chibuku Super in the second half.

Margin pressure as a result of price rollback, commodity cost

increases and the maintenance burden

Approval obtained to build new Lusaka facility

Improved HR function and processes with performance management

as the anchor

Increased our total tax contribution from $15m to $20m

Investments: The New PET Line – Installed 2012

Prepared by

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COMPETITOR LANDSCAPE


Opaque Competitors


Lusaka Breweries Lusaka Beer1,000ml Carton

Nkwazi Breweries Nkwazi Beer,750ml PET1,000ml Carton

Chatbrew Chat Beer750ml PET 1,000ml Carton

National Breweries plc.



Highlights

Chibuku volume growth of 34%

Revenue growth of 31%

Gross margin decline of 720bps due to;

• Price roll back of 18%

• Maize pricing 14%

Fixed cost growth of 5%

Limited operating profit decline to 8%

Chibuku PET line commissioned in October 2013

Increase in effective tax rate from 36% to 38%



Reported

Group revenue 65,300 49,865 31

EBITA 10,178 11,037 (8)

EBITA margin (%) 15.6 22.1 (650) Bps

Sales volumes (hl’000)

Traditional beer 2,317 1,736 34

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Financial results – F13



Group revenue 65,300 49,865 31

Gross Profit 20,675 19,405 7

Gross margin (%) 31.7 38.9 (720) Bps

Distribution costs (4,562) (2,767) (65)

Admin and Other expenses (5,935) (5,601) (6)

Operating Profit 10,178 11,037 (8)

Finance costs (42) (97) 57

Profit before taxation 10,136 10,940 (7)

Income tax expense (3,855) (3,889) (1)

Profit for the year 6,281 7,051 (11)

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Income statement


US$’ 000March 13 March 12

Property, plant and equipment 13,523 8,519

Intangible assets 270 -

Current assets excluding cash 8,859 4,884

Cash and cash equivalents 2,415 1,729

Other current and non-current liabilities (13,924) (9,547)

Net Assets and Total Equity 11,143 5,585

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Balance sheet


Cash Flow

US$’ 000March 13

March 12

Net cash generated from operating activities 8,297 11,308

Net cash used in investing activities (7,434) (3,423)

Net cash used in financing activities (174) (4,683)

Net increase in cash and cash equivalents 689 3,202

Movement in cash and cash equivalents

Cash and cash equivalent at the beginning of the year 1,827 (1,390)

Exchange difference on opening balance (59) -

Increase in cash and cash equivalents 689 3,202

Exchange difference in cash and cash equivalents 51 15

Cash and cash equivalent at end of the year

2,508

1,827


Capital Expenditure

USD'000

Description F12 F13 F14 Budget

Capacity 2,434 3,829 10,955 Continuity 1,129 3,235 14,137 Capability - 432 -

Total 3,563 7,496 25,092

Exchange rates 5.001 5.168 5.55592CAPEX 3,563 7,496 25,092 EBITA 11,037 10,178 Capex as a % EBITA 32.3% 73.7%


Dividend Recommendation

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National Breweries, although in a net cash position has spent funds on the Kitwe Brewery in 2013.

2014 shows an increased CAPEX spend mainly in respect of Lusaka Brewery upgrade and a move into a gearing position for the first time.

2012 2013 2014US$ '000

Borrowings - - (12,088)Cash and cash equivalents 1,729 2,415 -

Net cash/(debt) 1,729 2,415 (12,088)

Equity 5,585 11,143

Total capital 7,314 13,558

Gearing 0% 0% 43%

CAPEX spend (3,563) (7,496) (25,092)

Interest paid (46) (93) (1,490)


VAT and Excise Contribution


Financial outlook – current financial year

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Chibuku Kitwe Super PET line fully commissioned

Change in mix in Chibuku towards SUPER

Chibuku Lusaka rebuild and new SUPER line

Raw material input costs expected to rise in double digits – Maize

EBITA growth – double digit

Full year CAPEX – US$ 25m

Thank you.

Q&A on National Breweries plc.

Investor Relations

Zambrew and Natbrew brief to institutional shareholders - July 2013