TO SHAREHOLDERS OF ZAMBIAN BREWERIES PLC THIS ......TO SHAREHOLDERS OF ZAMBIAN BREWERIES PLC THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION The definitions and interpretations

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TO SHAREHOLDERS OF ZAMBIAN BREWERIES PLC THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

The definitions and interpretations commencing on page 4 apply to this cover page.

ACTION REQUIRED BY SHAREHOLDERS: 1. If you have disposed of all of your Zambrew Shares, please forward this Circular, together with the attached Form of Proxy,

to the purchaser of such shares, the sponsoring broker or the broker through whom the disposal was effected. 2. This entire Circular is important and should be read with particular attention to the section entitled “Action Required by

Shareholders”, which commences on page 16. 3. If you are in any doubt as to the action you should take, you should immediately seek advice from your broker, banker, legal

advisor, accountant or other professional advisor.

Zambrew does not accept responsibility and will not be held liable for any action of, or omission by, any broker, including, without limitation, any failure on the part of the broker of any Shareholder to notify such Shareholder of the Extraordinary General Meeting or any other matter set out in this Circular.

ZAMBIAN BREWERIES PLC

Incorporated in Zambia Registration Number: 31609

Share Code: ZAMBREW ISIN: ZM0000000078

“Zambrew” or “the Company”

CIRCULAR TO SHAREHOLDERS relating to, among other things:

the proposed disposal by the Company of its business of manufacturing, distributing, marketing and selling non-alcoholic ready-to-drink beverages (excluding the manufacturing, distribution, marketing and sale of maheu beverages), which disposal constitutes a category 1 transaction in terms of the LuSE Listings Requirements;

and incorporating:

the Notice of EGM; and a Form of Proxy in respect of the Extraordinary General Meeting.

SPONSORING BROKER

INDEPENDENT REPORTING

ACCOUNTANT

LEGAL ADVISORS

TRANSFER SECRETARY

STOCKBROKERS ZAMBIA LIMITED

GRANT THORNTON ZAMBIA

BOWMAN GILFILLAN INC. CHIBESAKUNDA & CO ADVOCATES

CORPSERVE TRANSFER AGENTS LIMITED

DATE OF ISSUE: WEDNESDAY, 4 JULY 2018 This Circular is available in English only. Copies of this Circular may, during normal business hours, be obtained from the registered office of Zambrew, the Sponsoring Broker and the Transfer Secretary whose addresses are set out in the “Corporate Information and Advisors” section of this Circular and will be available from the date of issue of this Circular until the date of the Extraordinary General Meeting, both days inclusive. The Circular will also be available in electronic form from the Sponsoring Broker’s website (www.sbz.com.zm ) and the LuSE website (www.luse.co.zm) from the date of issue of this Circular.

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CORPORATE INFORMATION AND ADVISORS

REGISTERED OFFICE OF ZAMBREW Plot 6438 Mungwi Road Heavy Industrial Area P.O. Box 31293 Lusaka Zambia

BOARD OF DIRECTORS Valentine Chitalu (Chairman)*#

George Sokota*# Jose Daniel Moran Ramirez (Country Director) Martyn Brunnock# Pedro Cruz# * Independent # Non-executive

COMPANY SECRETARY Deborah Bwalya Plot 6438 Mungwi Road Heavy Industrial Area P.O. Box 31293 Lusaka Zambia

SPONSORING BROKER Stockbrokers Zambia Limited 32 Lubu Road Longacres P.O. Box 38956 Lusaka Zambia

REPORTING ACCOUNTANT Grant Thornton Zambia 5th Floor Mukuba Pension House Dedan Kimathi Road P.O. Box 30885 Lusaka Zambia

LEGAL ADVISORS Bowman Gilfillan Inc. 11 Alice Lane Sandton, 2146 Johannesburg South Africa Chibesakunda & Co Advocates CCO House, Stand No. 2374 Kelvin Siwale Road P.O. Box 30279 Lusaka Zambia

TRANSFER SECRETARY Corpserve Transfer Agents Limited 6 Mwaleshi Road Olympia Park P.O. Box 37522 Lusaka Zambia

AUDITORS PricewaterhouseCoopers PwC Place Thabo Mbeki Road P.O. Box 30942 Lusaka Zambia

Date and place of incorporation 26 May 1994 Zambia

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TABLE OF CONTENTS

PAGE CORPORATE INFORMATION AND ADVISORS 2 TABLE OF CONTENTS 3 DEFINITIONS AND INTERPRETATIONS 4 SALIENT DATES AND TIMES 14 IMPORTANT INFORMATION 15 ACTION REQUIRED BY SHAREHOLDERS 16 SALIENT FEATURES OF THE TRANSACTION 17 A CHAIRMAN’S LETTER TO ZAMBREW SHAREHOLDERS 18 B STATUTORY INFORMATION IN RESPECT OF THE TRANSACTION 33 C GENERAL INFORMATION 35 ANNEXURE 1: INDEPENDENT REPORTING ACCOUNTANTS’ REPORT ON THE STATEMENT OF

FINANCIAL POSITION AND STATEMENT OF COMPREHENSIVE INCOME FOR THE THREE YEARS ENDED 31 MARCH 2015, 31 MARCH 2016, 31 MARCH 2017 AND NINE MONTHS ENDED 31 DECEMBER 2017

[●]

STATEMENT OF COMPREHENSIVE INCOME FOR THE THREE YEARS ENDED 31 MARCH 2015, 31 MARCH 2016, 31 MARCH 2017 AND NINE MONTHS ENDED 31 DECEMBER 2017

STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2015, 31 MARCH 2016, 31 MARCH 2017 AND NINE MONTHS ENDED 31 DECEMBER 2017

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES INDEPENDENT REPORTING ACCOUNTANTS’ REPORT ON THE FORECAST

FINANCIAL INFORMATION

PROFORMA STATEMENT OF COMPREHENSIVE INCOME FOR THE NINE MONTHS TO 31 DECEMBER 2017

ADJUSTED PROFORMA STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2017

FORECAST STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2018

NOTICE OF EXTRAORDINARY GENERAL MEETING [●] FORM OF PROXY / FORM OF INSTRUCTION [●]

CORPORATE INFORMATION AND ADVISORS 2

TABLE OF CONTENTS 3

DEFINITIONS AND INTERPRETATIONS 4

SALIENT DATES AND TIMES 14

IMPORTANT INFORMATION 15

ACTION REQUIRED BY SHAREHOLDERS 16

SALIENT FEATURES OF THE TRANSACTION 17

A CHAIRMAN’S LETTER TO ZAMBREW SHAREHOLDERS 18

B STATUTORY INFORMATION IN RESPECT OF THE TRANSACTION 34

C GENERAL INFORMATION 36

ANNEXURE 1: INDEPENDENT REPORTING ACCOUNTANTS’ REPORT ON THE STATEMENT OF FINAN-CIAL POSITION AND STATEMENT OF COMPREHENSIVE INCOME FOR THE THREE YEARS ENDED 31 MARCH 2015, 31 MARCH 2016, 31 MARCH 2017 AND NINE MONTHS END-ED 31 DECEMBER 2017

40

STATEMENT OF COMPREHENSIVE INCOME FOR THE THREE YEARS ENDED 31 MARCH 2015, 31 MARCH 2016, 31 MARCH 2017 AND NINE MONTHS ENDED 31 DECEMBER 2017STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2015, 31 MARCH 2016, 31 MARCH 2017 AND NINE MONTHS ENDED 31 DECEMBER 2017SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESINDEPENDENT REPORTING ACCOUNTANTS’ REPORT ON THE FORECAST FINANCIAL INFORMATIONPROFORMA STATEMENT OF COMPREHENSIVE INCOME FOR THE NINE MONTHS TO 31 DECEMBER 2017ADJUSTED PROFORMA STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2017FORECAST STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DE-CEMBER 2018

NOTICE OF EXTRAORDINARY GENERAL MEETING 96

FORM OF PROXY / FORM OF INSTRUCTION 99

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DEFINITIONS AND INTERPRETATIONS In this Circular, unless the context indicates a contrary intention, a word or an expression which denotes any gender includes the other genders, a natural person includes a juristic person and vice versa, the singular includes the plural and vice versa and the following words and expressions bear the meanings assigned to them below:

"ABI" Anheuser-Busch InBev SA/NV, a public limited company (société anonyme / naamloze vennootschap) incorporated in Belgium;

"Affiliate" with respect to any Person, any other Person, directly or indirectly, controlling, controlled by or under common control with such Person;

"Assumed Liabilities" has the meaning given to it in paragraph 6.1.2(v), Part A of this Circular;

"Board" or "Board of Directors" or "Directors" the board of directors of the Company, for the time being and from time to time, which, as at the Last Practicable Date, is comprised of those persons identified as directors in paragraph 4, Part C of this Circular;

“Business” Zambrew’s business of manufacturing, distributing, marketing and selling non-alcoholic ready-to-drink beverages (excluding the manufacturing, distribution, marketing and sale of maheu beverages);

"Bowmans" Bowman Gilfillan Inc.; a company incorporated in South Africa with registration number 1998/021409/21, particulars of which appear in the “Corporate Information and Advisors” section of this Circular;

"Business Employees" employees of the Business that are identified by Zambrew;

"Business of ABI" each of the following activities: (a) brewing, manufacturing, producing, processing, packaging and bottling Products of ABI; and (b) marketing, distributing, importing, transporting and selling Products of ABI, excluding (i) any business or activity carried out in Zambia pursuant to the terms of the Manufacturer’s Agreement or the Transition

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Services Agreement and (ii) any business or activity carried out anywhere in the world other than Zambia;

"Business of TCCC" each of the following activities: (a) brewing, manufacturing, producing, processing, packaging and bottling Products of TCCC; and (b) marketing, distributing, importing, transporting and selling Products of TCCC, excluding (i) any business or activity carried out in Zambia pursuant to the terms of the Manufacturer’s Agreement or the Transition Services Agreement and (ii) any business or activity carried out anywhere in the world other than Zambia;

"Business Portion of Seller Transaction Expenses" has the meaning given to it in paragraph 6.4.2(iii), Part A of this Circular;

"Carve-Out Guidelines" policies, practices and procedures described in the MPA;

"Carve Out Transaction" the transaction or series of transactions pursuant to which the Business, including the SoftCo Assets and the Assumed Liabilities, is separated from the other businesses conducted by Zambrew in Zambia and transferred to SoftCo, in each case in accordance with the MPA;

"CCBA" Coca-Cola Beverages Africa Proprietary Limited, a company incorporated in South Africa with registration number 2016/050997/07;

"CCHA" Coca-Cola Holdings Africa Limited, a company incorporated in England and Wales with registration number 9351841;

"CCO" Chibesakunda & Co Advocates;

"Circular" this document, dated 4 July 2018, together with the annexures and attachments hereto;

"Closing" consummation of the sale and purchase of the SoftCo Shares;

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"Closing Date" the date on which the Closing occurs;

"Closing Date Required Consents" the following consents, registrations, approvals, permits or authorizations:

approval of the Circular by the LuSE;

approval, by the Seller in general meeting, of the Transaction contemplated by the MPA or any Transaction Document pursuant to Section 9 of the LuSE Listings Requirements (or any meeting held as a result of an adjournment or a reconvening thereof);

approval of the COMESA Competition Commission;

notification of the retrenchments of the Transferred Employees to the Labor Commissioner, at least 60 days prior to such retrenchments; and

notification to the employee representative of the National Union of Commercial and Industrial Workers, at least 30 days prior to the retrenchments of the Transferred Employees;

"Company" or "Zambrew" Zambian Breweries Plc, a company incorporated in Zambia with registration number 119950031609 the issued Shares of which are listed on the LuSE;

"Contract" any written or legally binding oral agreement, contract, subcontract, lease, understanding, instrument, note, warranty, license, sublicense, insurance policy, benefit plan or legally binding commitment or undertaking of any nature, whether express or implied;

"Estimated Business Portion of Seller Transaction Expenses"

has the meaning given to it in paragraph 6.4.2(iii), Part A of this Circular;

"Estimated Inventory Value" has the meaning given to it in paragraph 6.4.2(ii), Part A of this Circular;

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"Exchange Rate" the mid-price for converting ZMW into United States Dollars, which shall be the Historical Currency Exchange Rate as of the fifth business day prior to the Closing Date as determined by OANDA Corporation and made available on its website at http://www.oanda.com/convert/fxhistory, or, if such information is no longer available, such source as may be reasonably and mutually selected by Zambrew and the Purchaser;

"Excluded Assets" has the meaning given to it in paragraph 6.1.2(iv), Part A of this Circular;

"Extraordinary General Meeting" or "EGM" the extraordinary general meeting of Shareholders to be held at the Southern Sun Ridgeway Hotel, Lusaka, Zambia at 08:00 on Friday, 27 July 2018, convened in terms of the Notice of the EGM (together with any meeting held as a result of any adjournment or postponement or reconvening thereof) for Shareholders to consider and, if deemed fit, pass, with or without modification, the Resolutions;

"Form of Proxy" the form of proxy attached to this Circular for use at the Extraordinary General Meeting;

"Governmental Authorization" any approval, permit, order, agreement, license, certificate, franchise, permission clearance, registration, qualification, accreditation, exemption, classification, consent, variance or other authorization issued, granted, given or otherwise made available by or under the authority of any governmental entity or pursuant to any law;

"Grant Thornton" Grant Thornton Zambia, a company incorporated in Zambia, particulars of which appear in the “Corporate Information and Advisors” section of this Circular;

"Independent Reporting Accountant" Grant Thornton;

"Initial Purchase Price" has the meaning given to it in paragraph 6.4.2., Part A of this Circular;

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"Inventory" all products imported in cans that are goods in stock, good in transit and finished products (excluding, for avoidance of doubt, spare parts, raw materials and work in progress products), in each case held for sale by the Business;

"Inventory Value" has the meaning given to it in paragraph 6.4.2(ii), Part A of this Circular;

"ISIN" International Securities Identification Number;

"Last Practicable Date" the last practicable date prior to the finalization of this Circular being, Tuesday, 19 June 2018;

"LuSE Listings Requirements" the Listings Requirements of the LuSE, as amended from time to time;

"LuSE" as the context requires, either the Lusaka Securities Exchange Plc, a company incorporated in Zambia with registration number 12012003049 and licensed to operate as a stock exchange under the Securities Act, or the securities exchange operated by that company;

"Majority Control" with respect to any Person, (a) the possession, directly or indirectly, of the power or ability (whether through ownership of voting securities, contractual rights or otherwise) to elect, designate or appoint more than fifty percent of the directors of the board of directors (or other group performing similar functions) of such Person or (b) ownership of more than fifty percent of the issued and outstanding equity securities of such Person, and similar expressions such as “Majority Controlling” or “Majority Controlled by” will have a corresponding meaning;

"Majority Controlled Affiliates" with respect to any Person, any other Person Majority Controlled by such Person;

"Manufacturer’s Agreement" the agreement titled “Manufacturer’s Agreement” to be entered into between TCCC and the Company and the related side letters,

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each substantially in the forms attached to the MPA;

"MPA" the agreement titled “Zambia Master Purchase Agreement” between the Purchaser, the Company, and, solely for the purposes of the covenant described in paragraph 6.6.3, Part of this Circular and the guarantees described in paragraph 6.6.4, Part A of this Circular, TCCC and ABI, dated 2 May 2018;

"Notice of EGM" the notice of the Extraordinary General Meeting, forming part of this Circular;

"Person" any individual, entity, trust, governmental entity or other organization;

"Products of ABI" (a) all beverages manufactured or sold by the Company as at the date of execution of the MPA (including, without limitation, clear beer, traditional African beer, cassava beer, flavoured beer and cider) and (b) all alcoholic and non-alcoholic brewed malt beverages;

"Products of TCCC" (a) carbonated soft drinks, (b) waters, (c) flavored waters, (d) isotonic beverages, (e) ready-to-drink maheu. For the avoidance of doubt, Products of TCCC shall not include juices, dairy products, ready-to-drink tea and or ready-to-drink coffee;

"Purchase Price" has the meaning given to it in paragraph 6.4.1, Part A of this Circular;

"Purchaser" Strategic Alliance J.V., a company incorporated in Mauritius with registration number 51847 C1/GBL;

"Records" any (i) personnel records relating to the SoftCo Employees (ii) financial and asset records relating to the SoftCo Assets and the Business and (iii) data and records related to customer lists and records, referral sources, systems, procedures, service and warranty records, operating guides and manuals relating to the SoftCo Assets and the Business;

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"Resolutions" the resolutions contained in the Notice of EGM to be considered and voted upon by Shareholders at the Extraordinary General Meeting;

"Restructuring Closing" consummation of the Carve-Out Transaction;

"Restructuring Closing Date" the date on which the Restructuring Closing occurs;

"Restructuring Purchase Price" has the meaning given to it in paragraph 6.1.2(vi), Part A of this Circular;

"Retained Business" any business, business line, operation, asset or undertaking of Zambrew or its Affiliates other than the Business;

"Retained Names and Marks" “Zambian Breweries”, “Zambrew” and “ZB”;

"Schweppes" Schweppes Holdings Limited;

"Securities Act" the Securities Act, No. 41 of 2016 of the Laws of Zambia;

"SENS" the Stock Exchange News Service of the LuSE;

"Shareholder" a registered holder of a Share;

"Shares" or "Zambrew Shares" ordinary par value shares of ZMW0.01 each in the issued share capital of Zambrew, which are listed on the LuSE;

"SoftCo" Kalundu Beverages Limited, a company incorporated in Zambia with registration number 120180003874;

"SoftCo Assets" has the meaning given to it in paragraph 6.1.2(iii), Part A of this Circular;

"SoftCo Assumed Contracts" the service Contracts, equipment leases, license agreements, sales Contracts, shelf Contracts, point of sale Contracts, cooler placement Contracts, marketing Contracts, including agency, sponsorships and advertisement commitments, and distribution Contracts, in all cases as entered into by Zambrew with respect

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to the Business, set forth in the MPA and amended in accordance with the MPA;

"SoftCo Coolers" all the TCCC branded coolers and all other coolers allocated to the Purchaser in the MPA;

"SoftCo Employees" those Business Employees who accept employment with SoftCo and who commence such employment as of the Transfer Time;

"SoftCo Intellectual Property" all intellectual property of Zambrew that is used exclusively in the operation of the Business, if any (but excluding, for the avoidance of doubt, the Retained Names and Marks, software relating to IBIS, Flowcentric and Syspro and registered intellectual property);

"SoftCo Inventory" the Inventory of the Business on the Closing Date;

"SoftCo Records" all Records exclusively related to the operation of the Business (but other than as related to any Excluded Asset); and (ii) subject to any restrictions or redactions that may be necessary under applicable law, copies of any parts of any other Records related to the Business and not exclusively related to it, or necessary for SoftCo to operate the Business after the Closing Date;

"SoftCo Shares" has the meaning given to it in paragraph 6.2, Part A of this Circular;

"SoftCo Tangible Personal Property" all tangible property (other than real property and the appurtenances thereon) that is used primarily in the operation of the Business, including spare parts in connection therewith, to be selected by Zambrew in its reasonable discretion, a list of which shall be sent to the Purchaser prior to the Closing; provided that Zambrew must select such tangible assets in accordance with the Carve-Out Guidelines and section 4.18 of the MPA which deals with the tangible assets audit (see paragraph 6.4.2(iv), Part A of this Circular);

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"SoftCo Welfare Plans" has the meaning given to it in paragraph 6.6.1(iii), Part A of this Circular;

"South Africa" the Republic of South Africa;

"Sponsoring Broker" Stockbrokers Zambia Limited;

"Stockbrokers Zambia Limited" or "SBZ" Stockbrokers Zambia Limited, a company incorporated in Zambia with registration number 120030052224, a member of the LuSE and sponsoring brokers to Zambrew, particulars of which appear in the “Corporate Information and Advisors” section of this Circular;

"Tax" (a) all taxes, assessments, charges, duties, levies or other similar charges, in each case, in the nature of a tax, imposed by any governmental authority or subdivision thereof, including all income, franchise, profits, capital gains, capital stock, transfer, sales, use, occupation, property, excise, severance, windfall profits, stamp, stamp duty reserve, license, payroll, withholding, ad valorem, value added, alternative minimum, environmental, customs, social security (or similar), unemployment, sick pay, disability, healthcare, registration and other taxes, assessments, charges, duties, fees, levies or other similar governmental charges of any kind whatsoever, whether disputed or not, together with all estimated taxes, deficiency assessments, additions to tax, penalties and interest and (b) any liability for the payment of any amount described in clause (a) as a transferee or successor, by contract or otherwise;

"Taxing Authority" any U.S. federal, state, provincial, local or non-U.S. government, any subdivision, agency, commission or authority thereof or any quasi-governmental body exercising Tax regulatory authority;

"TCCC" The Coca-Cola Company, a Delaware corporation;

"Transaction" collectively, the Carve Out Transactions, the purchase and sale of the SoftCo Shares and all

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other transactions contemplated by the MPA or any other Transaction Document;

"Transaction Document" the MPA, the Manufacturer’s Agreement and the Transition Services Agreement, as well as any other agreement, certificate or other instrument contemplated by such agreement or executed in connection with such agreements, in each case as they may be amended before the Closing Date in accordance with the provisions of such agreements;

"Transferred Employee" each SoftCo Employee who is employed by SoftCo as of the Closing Date;

"Transfer Secretaries" Corpserve Transfer Agents Limited, a company incorporated in Zambia with registration number 120080074349, particulars of which appear in the “Corporate Information and Advisors” section of this Circular;

"Transfer Time" 12:01 a.m. on the Closing Date;

"Transition Services Agreement" the agreement titled “Zambia Transition Services Agreement” to be entered into between Zambrew and SoftCo, substantially in the form attached to the MPA;

"USD" or "United States Dollars" the official currency of the United States of America;

"VAT Act" Chapter 331 of the Laws of Zambia, including any subsidiary legislation, regulations, statutory instruments and/or administrative rules;

"VAT Taxes" Value added Taxes, including those imposed by the VAT Act;

"Zambia" the Republic of Zambia; and

"ZMW" or "Kwacha" Zambian Kwacha, the official currency of Zambia.

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SALIENT DATES AND TIMES The definitions and interpretations commencing on page 4 of this Circular apply to this section.

EVENT DATE Notice record date to determine which Shareholders are eligible to receive the Notice of EGM on

Friday, 6 July 2018

Circular incorporating the Notice of EGM and Form of Proxy posted to Shareholders on

Friday, 6 July 2018

Notice of EGM announced on SENS on Friday, 6 July 2018 Notice of EGM announced in the press on Friday, 6 July 2018 Last day to trade Shares in order to be eligible to vote at the EGM on Monday, 23 July 2018 Last day to lodge Forms of Proxy in respect of the EGM by no later than 17:00 on

Wednesday, 25 July 2018

EGM record date to be eligible to vote at the EGM on Thursday, 26 July 2018 Extraordinary General Meeting of the Shareholders held at the Southern Sun Ridgeway Hotel, Lusaka, Zambia at 08:00 on

Friday, 27 July 2018

Results of the EGM released on SENS on Tuesday, 31 July 2018 Results of the EGM announced in the press on Wednesday, 1 August 2018

Notes:

1. All times referred to in this Circular are Zambian times. 2. The above dates and times are subject to amendment at the discretion of Zambrew. Any such

amendment will be published on SENS and in the local press. 3. If the EGM is adjourned or postponed, Forms of Proxy submitted for the initial EGM will remain

valid in respect of any adjournment or postponement of the EGM unless the contrary is stated on such forms of proxy.

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IMPORTANT INFORMATION The definitions and interpretations commencing on page 4 of this Circular apply to this section. Zambrew accepts responsibility for the information contained in this Circular. Zambrew has taken all reasonable care to ensure that this Circular is true and correct in all material respects, does not contain any untrue statement of a material fact, is not misleading and does not omit to state any material fact, the result of which would make the statements, opinions and intentions herein, in the context in which they are made, misleading in any material respect. SBZ, Grant Thornton, Bowmans, CCO (“the Advisors”) have not separately verified the information contained in this Circular. Accordingly, no representation, warranty or undertaking, express or implied is made and no responsibility is accepted by the Advisors as to the accuracy or completeness of the information contained in this Circular or any other information provided by Zambrew. The Advisors do not accept any liability in relation to the information contained in this Circular or any other information provided by Zambrew in connection with the Transaction. The statements made in this paragraph are without prejudice to the responsibilities of Zambrew. No person has been authorised by Zambrew to give any information or to make any representation not contained in or not consistent with this Circular and, if given or made, such information or representation must not be relied upon as having been authorised by Zambrew or the Advisors. Neither the delivery of this Circular nor any action taken in connection herewith shall, under any circumstances, create any implication that there has been no change in the affairs of Zambrew since the date hereof, or that any other financial statement or other information supplied in connection with the Circular is correct at any time subsequent to the date indicated in the document containing the same. This Circular does not constitute or form part of any offer or invitation to purchase, subscribe for or sell any shares or other securities in the Company nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with any contract therefor. The distribution of this Circular in jurisdictions other than Zambia may be restricted by law and therefore persons into whose possession this Circular and/or the accompanying Form of Proxy comes should inform themselves about and observe such restrictions. Any failure to comply with such restrictions may constitute a violation of the securities laws of any such jurisdiction.

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ACTION REQUIRED BY SHAREHOLDERS

The definitions and interpretations commencing on page 4 of this Circular apply to this section. This Circular is important and requires your immediate attention. The action you need to take is set out below. If you are in any doubt as to what action you should take, you should seek advice from your broker, banker, legal advisor, accountant or other professional advisor immediately. If you have disposed of all of your Zambrew Shares, please forward this Circular, together with the attached Form of Proxy, to the purchaser of such shares, the sponsoring broker or the broker through whom the disposal was effected. AN EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS WILL BE HELD AT THE SOUTHERN SUN RIDGEWAY HOTEL, LUSAKA, ZAMBIA AT 08:00 ON FRIDAY, 27 JULY 2018 AT WHICH MEETING SHAREHOLDERS WILL BE REQUESTED TO CONSIDER AND, IF DEEMED FIT, TO PASS, WITH OR WITHOUT MODIFICATION, THE RESOLUTIONS SET OUT IN THE NOTICE OF EGM. Shareholders are entitled to attend, or be represented by proxy, and may vote at the Extraordinary General Meeting. If you are unable to attend the Extraordinary General Meeting, but wish to be represented thereat, you must complete and return the attached Form of Proxy, in accordance with the instructions contained therein. Your attention is drawn to the letter from the Chairman of Zambrew set out in Part A of this Circular. Shareholders should read the whole of this document. Completion of the Transaction is conditional on, among other things, approval by Shareholders, which is being sought at the Extraordinary General Meeting of the Company to be held at the Southern Sun Ridgeway Hotel, Lusaka, Zambia at 08:00 on Friday, 27 July 2018. Shareholders will find enclosed with this Circular a Form of Proxy. To be valid, the Form of Proxy must be completed, signed and returned in accordance with the instructions printed thereon so as to be received by the Company Secretary at the registered head office, Plot 6438, Mungwi Road, Heavy Industrial Area, P.O. Box 31293, Lusaka, Zambia as soon as possible, and, in any event, by 17:00 hours on Wednesday, 25 July 2018 (or, in the case of an adjournment of the Extraordinary General Meeting, within 72 hours (excluding weekends and public holidays)) before the time appointed for the adjourned Extraordinary General Meeting. The completion and return of a Form of Proxy will not preclude Shareholders from attending and voting in person at the Extraordinary General Meeting should they subsequently wish to do so.

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SALIENT FEATURES OF THE TRANSACTION

The definitions and interpretations commencing on page [4] of this Circular apply to this section.

This summary presents the salient information in relation to the Transaction, the detailed terms and conditions of which are more fully set out in this Circular. The Circular should accordingly be read in its entirety for a full appreciation of the rationale for, and the implications of, the Transaction as well as with regard to determining the action required by the Shareholders with respect to the EGM outlined in this Circular.

Salient features and Rationale for the Transaction The Board is proposing the disposal by the Company of its business of manufacturing, distributing, marketing and selling non-alcoholic ready-to-drink beverages (excluding the manufacturing, distribution, marketing and sale of maheu beverages). Following the change in control arising from ABI’s acquisition of SABMiller in 2016, TCCC notified Zambrew of its intention to terminate the TCCC Bottler’s Agreements. Following TCCC’s notification, ABI and TCCC reached an agreement in principle for TCCC or an affiliate of TCCC to acquire the non-alcoholic ready-to-drink business segment of Zambrew.

Zambrew EGM The EGM to be held at the Southern Sun Ridgeway Hotel, Lusaka, Zambia at 08:00 on Friday, 27 July 2018 will allow Shareholders to vote on the Transaction. It will also provide an opportunity for the Board to highlight the future of the Company following the Transaction.

Important Dates Notice record date to determine which Shareholders are eligible to receive the Notice of EGM on

Friday, 6 July 2018


Friday, 6 July 2018

EGM FRIDAY, 27 JULY 2018

Results of EGM released on SENS Tuesday, 31 July 2018 Note: The above dates and times are subject to amendment at the discretion of Zambrew. Any such amendment will be published on SENS and in the local press.

Queries If you have any queries on any aspects of this Circular, please contact your broker, accountant, banker, legal advisor or other professional advisor, or the Sponsoring Broker, Stockbrokers Zambia Limited at the contact details below:

Stockbrokers Zambia Limited 32 Lubu Road Longacres P.O. Box 38956 Lusaka Zambia Tel: +260 211 232456 Email: [email protected]

A. CHAIRMAN’S LETTER TO ZAMBREW SHAREHOLDERS

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SALIENT FEATURES OF THE TRANSACTION

The definitions and interpretations commencing on page 4 of this Circular apply to this section.

This summary presents the salient information in relation to the Transaction, the detailed terms and conditions of which are more fully set out in this Circular. The Circular should accordingly be read in its entirety for a full appreciation of the rationale for, and the implications of, the Transaction as well as with regard to determining the action required by the Shareholders with respect to the EGM outlined in this Circular.

Salient features and Rationale for the Transaction The Board is proposing the disposal by the Company of its business of manufacturing, distributing, marketing and selling non-alcoholic ready-to-drink beverages (excluding the manufacturing, distribution, marketing and sale of maheu beverages). Following the change in control arising from ABI’s acquisition of SABMiller in 2016, TCCC notified Zambrew of its intention to terminate the TCCC Bottler’s Agreements. Following TCCC’s notification, ABI and TCCC reached an agreement in principle for TCCC or an affiliate of TCCC to acquire the non-alcoholic ready-to-drink business segment of Zambrew.

Zambrew EGM The EGM to be held at the Southern Sun Ridgeway Hotel, Lusaka, Zambia at 08:00 on Friday, 27 July 2018 will allow Shareholders to vote on the Transaction. It will also provide an opportunity for the Board to highlight the future of the Company following the Transaction.

Important Dates Notice record date to determine which Shareholders are eligible to receive the Notice of EGM on

Friday, 6 July 2018


Friday, 6 July 2018

EGM FRIDAY, 27 JULY 2018

Results of EGM released on SENS Tuesday, 31 July 2018 Note: The above dates and times are subject to amendment at the discretion of Zambrew. Any such amendment will be published on SENS and in the local press.

Queries If you have any queries on any aspects of this Circular, please contact your broker, accountant, banker, legal advisor or other professional advisor, or the Sponsoring Broker, Stockbrokers Zambia Limited at the contact details below:

Stockbrokers Zambia Limited 32 Lubu Road Longacres P.O. Box 38956 Lusaka Zambia Tel: +260 211 232456 Email: [email protected]


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“ZAMBREW” or “the Company” 4 July 2018 Dear Shareholder,

1. INTRODUCTION AND PURPOSE OF THIS CIRCULAR

1.1. Shareholders are referred to the cautionary announcements (“Cautionary Announcements”) published by the Company on: i. 20 October 2016; ii. 27 December 2016; iii. 24 February 2017; iv. 19 April 2017; v. 8 June 2017; vi. 23 August 2017; vii. 30 October 2017; viii. 7 March 2018; ix. 3 May 2018; x. 11 June 2018; and xi. 11 June 2018; and xii. 22 June 2018

1.2. The Cautionary Announcements advised Shareholders that on 11 October 2016, ABI

confirmed receipt of notification from TCCC regarding its intention to acquire the stake of ABI in CCBA.

1.3. Shareholders were also advised that Zambrew’s soft drinks business does not form part of

CCBA but it does, however, operate in terms of bottler’s agreements that have been concluded between Zambrew and TCCC (“TCCC Bottler’s Agreements”). In addition, Zambrew’s soft drinks business operates in terms of bottler’s agreements that have been concluded between Zambrew and Schweppes (“Schweppes Bottler’s Agreements”).

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1.4. Each of TCCC and Schweppes notified Zambrew of its intention to terminate the TCCC Bottler’s Agreements and the Schweppes Bottler’s Agreements respectively.

1.5. Furthermore, Shareholders were advised that ABI and TCCC reached an agreement in

principle for TCCC (or an affiliate of TCCC) to acquire the non-alcoholic ready-to-drink business segment of the Company, subject to receipt of any requisite regulatory approvals and material consents.

1.6. On Thursday, 3 May 2018, Zambrew announced on SENS that it entered into the MPA with

CCHA, pursuant to which Zambrew agreed to dispose of the Business to CCHA. ABI and TCCC entered into the MPA solely for the purposes of the covenant described in paragraph 6.6.3, Part A of this Circular and the guarantees described in paragraph 6.6.4, Part A of this Circular. Save for the obligations of ABI and TCCC under the covenant and the guarantees, neither ABI nor TCCC has any rights or obligations under the MPA.

1.7. On 11 June 2018, Zambrew announced on SENS that CCHA entered into an Assignment and Assumption Agreement with the Purchaser and TCCC, in terms of which CCHA irrevocably assigned all of its rights, interest and obligations under the MPA and other related agreements to the Purchaser.

1.8. The purpose of this Circular is to:

1.8.1. provide Shareholders with information regarding the Transaction, the manner in

which it will be implemented and the terms and conditions of the Transaction so as to enable Shareholders to make an informed decision in respect of the Resolutions; and

1.8.2. convene the Extraordinary General Meeting in order to consider and, if deemed

fit, pass, with or without modification, the Resolutions.

2. RATIONALE FOR THE TRANSACTION

Following the notifications from TCCC and Schweppes of their intention to terminate the TCCC Bottler’s Agreements and the Schweppes Bottler’s Agreements, ABI and TCCC reached an agreement in principle for TCCC (or an affiliate of TCCC) to acquire the Business. The MPA was accordingly entered into in order for Zambrew to dispose of the Business to give effect to such agreement in principle between ABI and TCCC.

3. OVERVIEW OF ZAMBREW

Zambrew originated as Northern Breweries Limited, a private company, in 1963. South African Breweries then owned 80% of the issued share capital and Labatt Breweries of Canada owned 20%. In 1968, the Government, through INDECO, nationalised the Company through an acquisition, from South African Breweries, of 55% of the issued share capital, with the remaining 25% being sold to ZAMIC. Subsequently, the company was renamed Zambian Breweries Limited.

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In 1988, Labatt Breweries sold its 20% shareholding to INDECO, which became the dominant shareholder with 75% of the issued share capital, while 25% remained with ZAMIC. Until 1994, Zambian Breweries Limited operated from two production locations, one in Lusaka (Central Division) and another in Ndola (Northern Division), and distributed its products through 13 depots located throughout the country. In 1994, as part of the Government’s privatisation programme, the assets and liabilities of Zambian Breweries Limited, were split, in terms of a scheme of arrangement, with those of the Central Division being transferred to Lusaka Breweries Limited and those of the Northern Division being transferred to Northern Breweries (1995) PLC. Lusaka Breweries Limited, which later changed its name to Zambian Breweries PLC, was incorporated on 26 May 1994 to take over the assets, the “Mosi” trademark and liabilities of the Central Division purchased by ZAMIC and Indol under a sale agreement dated 24 August 1994. ZAMIC and Indol each took up 45% of the issued share capital, whilst the remaining 10% was transferred to the ZPTF on 8 September 1995 for future sale to the Zambian public and institutions. ZAMIC was the vehicle through which the Anglo American group owned various investments in Zambia. Indol was a wholly-owned subsidiary of South African Breweries and was the vehicle through which South African Breweries owned various investments in Africa. On 9 June 1997, the Company became the fifth company listed on the LuSE and in October 2016, Zambrew became an indirect subsidiary of ABI, the largest brewer in the world, following ABI’s acquisition of SABMiller plc. Its product range includes clear beers such as Mosi Lager, Castle, Carling Black Label, and Eagle Beer.

4. BACKGROUND INFORMATION ON THE PURCHASER

The Purchaser is an investment holding company incorporated in Mauritius. It is an indirect, wholly-owned subsidiary of CCBA. CCBA is, in turn, majority owned by subsidiaries of TCCC, which is the world’s largest total beverage company, offering over 500 brands to people in more than 200 countries.

5. RELATIONSHIP BETWEEN TCCC AND ZAMBREW

Zambrew is the authorized Coca-Cola bottler for Zambia. The relationship is governed under the TCCC Bottler’s Agreements, which grant rights to prepare, package, distribute and sell Coca-Cola products in Zambia.

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6. TERMS OF THE TRANSACTION

6.1. CARVE-OUT TRANSACTION

6.1.1. In order to facilitate the Transaction, Zambrew will implement the Carve-Out Transaction to separate the Business from Zambrew’s business of brewing, manufacturing, distributing, marketing and selling alcoholic beverages in Zambia.

6.1.2. In terms of the Carve-Out Transaction:

(i) Zambrew has procured the incorporation of a new company, SoftCo;

(ii) SoftCo’s authorised share capital consists of 15 000 ordinary par value shares of

ZMW1.00 each and its issued share capital consists of 100 ordinary par value shares of ZMW1.00 each of which 99 shares are held by Zambrew and one share is held by Jose Daniel Moran Ramirez;

(iii) Zambrew will sell and transfer to SoftCo, which will purchase and acquire from

Zambrew, all of Zambrew’s right, title and interest in and to all of its assets, properties and rights of every kind, nature, character and description, whether real, personal or mixed, whether tangible or intangible, and wherever situated, in existence on the date of the MPA and any additions thereto prior to the Restructuring Closing, in each case, to the extent primarily used or held for use in the Business (except for the Excluded Assets), including, among other things, the following assets, properties and rights (“SoftCo Assets”):

a. SoftCo Inventory; b. the SoftCo Tangible Personal Property, including without limitation certain

specific production assets, forklifts, cars, trucks and other vehicles listed in the MPA;

c. all tangible assets primarily allocated to the SoftCo Employees; d. the SoftCo Assumed Contracts, including all rights, claims, credits, causes of

action, rights to indemnification or contribution, rights of setoff or rights to refunds or recoupment thereunder;

e. the SoftCo Intellectual Property; f. the SoftCo Records; and g. the SoftCo Coolers;

(iv) the SoftCo Assets will not include any of the following assets, properties or rights

(“Excluded Assets”): a. any cash or accounts receivable of Zambrew or the Business and all rights in

and to any bank account, other account or lock box; b. Governmental Authorisations not exclusively used in the Business; c. any assets in respect of any employee benefit plan; d. any records prepared in connection with the Transaction; e. any rights of Zambrew under the MPA and any other Transaction Document; f. any equity interest or security in or of any Person; g. any intellectual property or rights thereto other than the SoftCo Intellectual

Property;

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h. any Retained Names and Marks; i. any (A) spare parts, raw materials or work in process or (B) goods in stock,

finished products or other inventory that has been transferred or disposed of by Zambrew prior to the Restructuring Closing in the ordinary course of business, consistent with past practice, without violation of the MPA;

j. any real property or rights to real property, including any lease arrangements; or

k. any other assets, properties or rights of any kind, nature, character or description, whether real, personal or mixed, whether tangible or intangible, wherever situated, in existence on the date hereof or any additions thereto prior to the Restructuring Closing, in each case, that are not primarily related to the Business (unless specifically addressed in paragraph 6.1.2 above);

(v) SoftCo will assume, with effect from the Restructuring Closing, and will pay,

perform and discharge when due, the liabilities, commitments and obligations of Zambrew and its Affiliates under each SoftCo Assumed Contract, SoftCo Welfare Plans and offer letter entered into by SoftCo pursuant to offers of employment made by SoftCo to the Business Employees (see paragraph 6.6.1(i), Part A of this Circular) except to the extent that such liabilities, commitments or obligations are required to be performed, observed and discharged prior to the Restructuring Closing Date (“Assumed Liabilities”). Save for the Assumed Liabilities, SoftCo will not assume any liability or obligation of Zambrew whatsoever, and Zambrew will accordingly retain responsibility for such liabilities and obligations;

(vi) the consideration to be paid by SoftCo to Zambrew in consideration for the sale,

assignment and transfer of the SoftCo Assets will be (a) an amount equal to the tax written down values of the SoftCo Assets as at the Closing Date, as reflected in Zambrew’s books of account and records for the Business (“Restructuring Purchase Price”) and (b) the assumption by SoftCo of the Assumed Liabilities;

(vii) the Restructuring Closing will occur prior to the Closing and, on the

Restructuring Closing Date, SoftCo will discharge the Restructuring Purchase Price by issuing 14 900 ordinary par value shares of ZMW1.00 each in SoftCo to Zambrew.

6.2. SALE AND PURCHASE OF SHARES

Following the completion of the Carve-Out Transaction, and subject to the terms and conditions of the MPA, Zambrew will sell to the Purchaser, and the Purchaser will purchase from Zambrew, all of the issued shares in SoftCo then held by Zambrew, being 14 999 ordinary par value shares of ZMW1.00 each (“SoftCo Shares”). The one share in SoftCo held by Jose Daniel Roman Ramirez will be transferred to such Person as the Purchaser may nominate for that purpose by no later than five business days prior to the Closing Date.

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6.3. CLOSING DATE

Unless Zambrew and the Purchaser agree otherwise, the Closing will take place on the second business day following the day on which the last to be satisfied or waived of the conditions referred to in paragraph 6.5 below have been satisfied or waived (other than those conditions that by their terms are to be satisfied at the Closing). However, unless otherwise agreed, the Closing will not occur during the two weeks prior to the end of any calendar quarter.

6.4. PURCHASE PRICE FOR THE SOFTCO SHARES

6.4.1. Subject to the adjustments described below, the consideration to be paid by the

Purchaser to Zambrew for the SoftCo Shares will be an aggregate purchase price of USD142 272 000.00 in cash (“Purchase Price”).

6.4.2. On the Closing Date, the Purchaser (or its designee) will pay to the Company an

amount (“Initial Purchase Price”) equal to:

(i) the Purchase Price; plus

(ii) an amount equal to the lesser of (A) the Company’s good faith estimate (“Estimated Inventory Value”) of the cost of the Inventory, excluding margins obtained by Affiliates of Zambrew and converted from local currency in United States Dollars at the Exchange Rate (“Inventory Value”) of all SoftCo Inventory and (B) USD94 861.40; minus

(iii) an amount equal to fifty percent of the Company’s good-faith estimate

(“Estimated Business Portion of Seller Transaction Expenses”) of any shared one-off costs identified in the MPA, as well as any expenses to be borne by the Company under the MPA, if any, in any case that are not paid as of the Closing and will become payable or paid by SoftCo (“Business Portion of Seller Transaction Expenses”); plus or minus

(iv) the amount of any adjustment (to be calculated in accordance with a formula

set out in terms of the MPA) that may be made pursuant to a tangible asset audit that will be conducted by Zambrew and the Purchaser prior to Closing; minus

(v) ZMW42 954 886.37, converted into United States Dollars at the Exchange Rate.

6.4.3. The Initial Purchase Price will be adjusted after the Closing Date as follows:

(i) if the Inventory Value is less than the Estimated Inventory Value, the Initial

Purchase Price will be reduced by, and Zambrew will pay to the Purchaser an amount in cash equal to, the difference between the Estimated Inventory Value and the Inventory Value;

(ii) if the Inventory Value is greater than the Estimated Inventory Value, the Initial Purchase Price will be increased by, and the Purchaser will pay to Zambrew an

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amount in cash equal to, the difference between (A) the lessor of (1) the Inventory Value and (2) USD94 861.40 and (B) the Estimated Inventory Value;

(iii) if the Business Portion of Seller Transaction Expenses is greater than the Estimated Business Portion of Seller Transaction Expenses, the Initial Purchase Price will be reduced by, and the Company will pay to the Purchaser, an amount in cash equal to, the difference between the Business Portion of Seller Transaction Expenses and the Estimated Business Portion of Seller Transaction Expenses; and

(iv) if the Business Portion of Seller Transaction Expenses is less than the Estimated Business Portion of Seller Transaction Expenses, the Initial Purchase Price will be increased by, and the Purchaser will pay to the Company, an amount in cash equal to, the difference between the Estimated Business Portion of Seller Transaction Expenses and the Business Portion of Seller Transaction Expenses.

6.5. CONDITIONS

6.5.1. Conditions to the Obligations of Zambrew and the Purchaser

The obligations of Zambrew and the Purchaser to consummate the Transaction are subject to the satisfaction of the following conditions on or before the Closing Date:

(i) that (a) all waiting periods applicable to the consummation of the Transaction

under applicable competition laws shall have expired or been earlier terminated; or (b) all such Governmental Authorizations and consents of or filings with any governmental entity required prior to the consummation of the Transaction under applicable competition laws are obtained or made;

(ii) that there is no order or law of a governmental entity in force making it illegal,

enjoining or prohibiting the consummation of the Transaction or any portion thereof, and that there is no pending or threatened legal proceedings by any such governmental entity seeking to restrain or prohibit the Transaction;

(iii) that the Shareholders approve the Transaction pursuant to Section 9 of the LuSE

Listings Requirements;

(iv) that the Purchaser and the Company execute and deliver any licenses reasonably required by either the Purchaser or the Company in respect of material intellectual property shared between the Business and the other businesses of the Company and its subsidiaries as may be necessary for (a) SoftCo to continue operating the Business and (b) the Company to continue operating its businesses other than the Business, in each case following the Closing;

(v) that the Company and the Purchaser have completed the tangible assets audit

referred to in paragraph 6.4.2(iv) above.

Any and all of the conditions referred to above may be jointly waived in writing by Zambrew and the Purchaser (to the extent permitted by applicable law).

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6.5.2. Conditions to the Obligations of the Purchaser

The obligations of Purchaser to consummate the Transaction are subject to the satisfaction of the following additional conditions on or before the Closing Date:

(i) that (a) each of the representations and warranties of Zambrew (other than the

representations and warranties relating to (A) organization, standing and power, subsidiaries; (B) authority and enforceability, and (C) capitalization of SoftCo) are true and correct in all respects as of the Closing Date, with the same effect as though made as of the Closing Date, except where the failure of such representations and warranties to be so true and correct does not have, and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect; and (b) each of the representations and warranties of Zambrew relating to (A) organization, standing and power; subsidiaries, (B) authority and enforceability, and (C) capitalization of SoftCo are true and correct in all material respects as of the Closing Date, with the same effect as though made as of the Closing Date;

(ii) that each of the covenants and obligations set out in the MPA that Zambrew,

ABI or any of their respective Affiliates is required to comply with or perform at or prior to the Closing has been complied with or performed in all material respects;

(iii) that the Purchaser has received a certificate executed by an authorized

representative of Zambrew as to compliance with the conditions described in paragraphs 6.5.2(i) and (ii);

(iv) that all of the Closing Date Required Consents shall have been obtained or made

and shall be in full force and effect, in each case in form and substance reasonably satisfactory to the Purchaser;

(v) that Zambrew has delivered, or caused to be delivered, to the Purchaser the

closing deliverables set out in the MPA, each of which, in the case of agreements and documents, shall be in full force and effect, except for any such items that are required to be executed or delivered on Closing or any other date pursuant to the MPA, which closing deliverables include: a copy of the minutes of the general meeting of Zambrew convened to

consider and approve the sale and purchase of the SoftCo Shares pursuant to Section 9 of the LuSE Listings Requirements (or any meeting held as a result of an adjournment or a reconvening thereof);

a duly executed counterpart to each of the Manufacturer’s Agreement and the Transition Services Agreement; and

the Closing Date Required Consents;

(vi) that Zambrew has delivered, or caused to be delivered, to the Purchaser evidence, reasonably satisfactory to the Purchaser, that Zambrew, ABI or any of

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their respective Affiliates have complied in all material respects with the Tax covenants and agreements set forth in the MPA;

(vii) that a material adverse effect (as defined in the MPA) shall not have occurred

and be continuing since 31 March 2017;

(viii) that there shall not be pending any legal proceedings by or before any governmental entity (a) seeking to restrain or prohibit the Purchaser’s direct or indirect ownership or operation of any portion of the Business or the business and assets of SoftCo; or (b) seeking to impose limitations on the ability of the Purchaser to hold or exercise full rights of ownership of the capital stock of SoftCo;

(ix) that all obligations contemplated as part of the Carve-Out Transaction shall have

been completed in all material respects;

(x) that SoftCo shall be registered for (a) VAT Taxes pursuant to the VAT Act; and (b) all other Taxes for which SoftCo is required to be registered in order to operate the Business as it is being conducted by Zambrew immediately prior to the Restructuring Closing Date pursuant to Zambian law; and

(xi) all Governmental Authorizations and consents of or filings with any

Governmental Entity required prior to the consummation of the Transaction under applicable competition laws have been obtained or made without modification to the obligations of Zambrew, ABI and their respective Affiliates under the non-compete undertakings set out in the MPA (see paragraph 6.6.3 below), unless the effect of such modifications, individually or in the aggregate, would reasonably be expected to be immaterial to the rights and protections of TCCC, the Purchaser or SoftCo contained therein as of the date of the MPA.

Any and all of the conditions referred to above may be waived in writing by the Purchaser.

6.5.3. Conditions to the Obligations of Zambrew

The obligations of Zambrew to consummate the Transaction are subject to the satisfaction of the following conditions on or before the Closing Date:

(i) that (a) each of the representations and warranties of the Purchaser (other than

the representations and warranties relating to organization, standing and power, authority and enforceability) are true and correct in all respects as of the Closing Date, with the same effect as though made as of the Closing Date, except where the failure of such representations and warranties to be so true and correct does not have, and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect; and (b) each of the representations and warranties of the Purchaser relating to organization, standing and power, authority and enforceability are true and correct in all

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material respects as of the Closing Date, with the same effect as though made as of the Closing Date;

(ii) that each of the covenants and obligations set out in the MPA that the Purchaser

is required to comply with or perform at or prior to the Closing has been complied with or performed in all material respects;

(iii) that Zambrew has received a certificate or certificates executed by a duly

authorized representative of the Purchaser as to compliance with the conditions described in paragraph 6.5.3(i) and (ii); and

(iv) that the Purchaser has delivered, or caused to be delivered, to Zambrew the

closing deliverables set out in the MPA, each of which, in the case of agreements and documents, shall be in full force and effect, except for any such items that are required to be executed or delivered on Closing or any other date pursuant to the MPA, which closing deliverables include a duly executed counterpart to each of the Manufacturer’s Agreement and the Transition Services Agreement.

Any and all of the conditions referred to above may be waived by Zambrew.

6.6. OTHER SIGNIFICANT TERMS OF THE MPA

6.6.1. Employee Matters

(i) Offers of Employment

Prior to the Restructuring Closing Date, SoftCo will make an offer of employment to each Business Employee, in each case to be effective as of the Transfer Time.

The offer of employment to each Business Employee will provide substantially similar terms and conditions of employment to those terms and conditions applicable to such employee immediately before the Closing Date, inclusive of a total compensation package (including base salary or wages, annual target bonus opportunity and other employee benefits) that is no less favorable, in the aggregate, to the total compensation package (including base salary or wages, annual target bonus opportunity and other employee benefits) provided to each such employee immediately prior to the Closing Date.

Zambrew will terminate the employment of each Business Employee by reason of redundancy or any other lawful means of termination, effective as of immediately prior to the Transfer Time.

(ii) Continuation and Compensation of Benefits

For the one-year period immediately following the Closing Date, or such longer period as may be required by applicable law, the Purchaser will

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maintain each Transferred Employee’s terms and conditions of employment substantially similar to those terms and conditions applicable to the Transferred Employee immediately before the Closing Date(including base salary or wages, annual target bonus opportunity and other employee benefits) that is no less favorable, in the aggregate, to the total compensation package (including base salary or wages, annual target bonus opportunity and other employee benefits) provided to each such Transferred Employee immediately prior to the Closing Date.

(iii) Employee Benefits

Prior to the Closing, Zambrew will use commercially reasonable efforts to cause SoftCo to establish employee benefit plans, programs and arrangements that are substantially similar to those in which the Business Employees participate as of the date of the MPA (“SoftCo Welfare Plans”).

Zambrew will cooperate with the Purchaser in connection with the design and establishment of the SoftCo Welfare Plans.

As of or as soon as practicable following the Closing, the Purchaser will establish any additional employee benefit plans, programs and arrangements (including a private pension scheme) sufficient for the Purchaser to comply with its obligations under paragraph 6.6.1(ii) above. To the extent that the Purchaser does not have in effect a private pension scheme for the benefit of the Transferred Employees as of the Closing, the Purchaser will, with respect to any period following the Closing in which the Purchaser does not have a private pension scheme in effect, and pending the Purchaser's establishment of such a scheme, provide a benefit to each Transferred Employee with an aggregate value equal to the value of the contributions Zambrew would have made for each Transferred Employee under Zambrew's existing private pension scheme as of the Closing, had each such Transferred Employee continued to participate in Zambrew’s private pension scheme during such post-Closing period.

6.6.2. Other Undertakings, Warranties And Indemnities

The MPA contains other terms customary for agreements of this nature including, among other things: (i) negotiated representations, warranties, indemnities and limitation on liability customary for a transaction of this nature; (ii) provisions governing the operation of the Business during the period falling between the date of signature of the MPA and the Closing Date; and (iii) a company-specific material adverse effect definition.

6.6.3. Non-compete

The MPA contains reciprocal non-compete undertakings in terms of which it is agreed that during the period commencing on Closing and ending on the third anniversary of Closing:

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(i) ABI and the Company will not, and will cause each of their Majority Controlled

Affiliates not to, directly or indirectly, (1) engage in any Business of TCCC in Zambia or (2) manage, operate, lend money, grant a bottling agreement or render material services in respect of or that are of a material benefit to any Products of TCCC or license intellectual property rights related to any Product of TCCC to, or participate in the management or operation of, in each case, any person if such activities are a material part of any Business of TCCC in Zambia in which such person is engaged; provided that ABI, the Company and their Majority Controlled Affiliates are not prohibited from, directly or indirectly: a. acquiring, owning or a holding (x) debt securities of any Person that are

not convertible into, exchangeable or exercisable for equity securities of such Person, (y) securities of any Person that are listed on a recognized stock exchange in any employee pension or similar plan, or (z) equity securities of any Person that do not give ABI, the Company or any of their Majority Controlled Affiliates Majority Control of such Person; or

b. owning or acquiring, in a transaction or series of transactions Majority

Control of any person or business (an “Acquired Business”) that, directly or indirectly, at the time of such acquisition, engages in a Business of TCCC in Zambia, or engages in any of the activities set forth in paragraph 6.6.3(i)b (the portion that includes such a Business of TCCC or activities, an “Acquired Business of TCCC”) and the continuation of such Acquired Business of TCCC shall not be a breach of the non-compete, provided that (A) the revenue attributable to the Acquired Business of TCCC in Zambia constitutes less than ten percent of the total revenue of the Acquired Business, and (B) ABI and its Majority Controlled Affiliates cease to engage in such Acquired Business of TCCC following the date that is twenty-four months after the completion of the relevant transaction or transactions.

(ii) To avoid the sharing of competitively-sensitive information by the employees

formerly involved with the distribution of the Products of ABI, TCCC and the Purchaser will not, and will cause each of their Majority Controlled Affiliates not to, directly or indirectly, (1) use the assets used in conducting the Business in Zambia as a going concern, or any employees formerly involved with the distribution of the Products of ABI, to engage in any business which competes with the Business of ABI in Zambia or (2) manage, operate, lend money, grant a bottling agreement or render material services in respect of or that are a material benefit to any Products of ABI or license intellectual property rights related to any Product of ABI to, or participate in the management or operation of, in each case, any Person if such activities are a material part of any Business of ABI in Zambia in which such Person is engaged; provided that TCCC, the Purchaser and their Majority Controlled Affiliates are not prohibited from, directly or indirectly:

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a. acquiring, owning or holding (x) debt securities of any Person that are not convertible into, exchangeable or exercisable for equity securities of such Person, (y) securities of any Person that are listed on a recognized stock exchange in any employee pension or similar plan, or (z) equity securities of any Person that do not give TCCC, the Purchaser or any of their Majority Controlled Affiliates Majority Control of such Person; or

b. owning or acquiring, in a transaction or series of transactions Majority Control of any Acquired Business that, directly or indirectly, at the time of such acquisition, engages in a Business of ABI in Zambia, or engages in any of the activities set forth in 6.6.3(ii)(i)b (the portion that includes such a Business of ABI or activities, an “Acquired Business of ABI”), and the continuation of such Acquired Business of ABI shall not be a breach of the non-compete, provided that (A) the revenue attributable to the Acquired Business of ABI in Zambia constitutes less than ten percent of the total revenue of the Acquired Business, and (B) TCCC and its Majority Controlled Affiliates cease to engage in such Acquired Business of ABI following the date that is twenty-four months after the completion of the relevant transaction or transactions.

6.6.4. Parent Company Guarantees

Each of ABI and TCCC has guaranteed the due, punctual, full and complete performance of the obligations of Zambrew (in the case of ABI) or the Purchaser (in the case of TCCC) under the MPA.

6.6.5. Related Agreements

Pursuant to the MPA, the Manufacturer’s Agreement and the Transition Services Agreement will be entered into, the material details of which are set out below.

(i) Manufacturer’s Agreement

a. The Manufacturer’s Agreement records the terms and conditions on

which TCCC authorises Zambrew to prepare and package beverages under certain trade marks owned by TCCC (namely Coca-Cola, Coca-Cola Light, Fanta and Sprite) for sale and delivery only to certain designated distributors.

b. The Manufacturer’s Agreement commences on the Closing Date and

expires on 20 July 2019 in relation to the Lusaka Plant and has a five term in relation to the Ndola Plant, unless it is terminated earlier in accordance with its terms.

c. Zambrew has a number of obligations under the Manufacturer’s

Agreement, which include, among other things: to buy beverage base concentrate from TCCC or authorised

suppliers;

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to use the beverage base concentrate exclusively for the preparation of non-alcoholic beverage syrups or powders and the preparation and packaging of non-alcoholic beverage products;

to prepare, package and sell to the designated distributor(s) such quantities of the non-alcoholic beverage products as shall in all respects satisfy fully the designated distributor(s)’s demand for such non-alcoholic beverage products;

to report to TCCC accurate and current information on preparation, packaging and sales of the non-alcoholic beverage products, at such intervals, in such detail, and in such form as may be requested by TCCC;

to conform to the standards, including quality, hygienic, environmental and otherwise, established in writing from time to time by TCCC and comply with all applicable legal requirements in preparing and packaging the non-alcoholic beverage products.

(ii) Transition Services Agreement

a. The Transition Services Agreement records the terms upon which

Zambrew will provide or cause to be provided (through one of its Affiliates or a subcontractor) to the Purchaser certain services on a transitional basis.

b. The services to be provided are described in the Transition Services

Agreement and are categorized as “General Services” (which include vendor management, fleet maintenance and human resources services) and “IT Services” (which include access to listed IT applications and end-user support).

c. The General Services will be provided for a period of three months

following the Closing Date, and the IT Services will be provided for a period of twelve months following the Closing Date.

7. APPLICATION OF PROCEEDS

The sale proceeds with be applied as follows:

(i) replacement of or upgrades to systems and assets that have been impacted as part of the

Transaction. In particular, Zambrew will be upgrading its clear beer capacity (increasing brewing and filtration capacity both in Ndola and Lusaka) and purchasing new trucks and containers to enhance its growth on the clear beer side;

(ii) paying down of local borrowings to ensure suitable capital structure for the reduced business

is maintained; and

(iii) surplus cash will be distributed to Shareholders by way of a special dividend.

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8. FINANCIAL INFORMATION

8.1. HISTORICAL FINANCIAL INFORMATION The statement of forecast of comprehensive income for the year ended 31 December 2017, taking into consideration the impact of the Transaction appears in Annexure 1, while the Independent Reporting Accountant’s report thereon appears in Annexure 2.

8.2. PRO FORMA FINANCIAL EFFECTS

The purpose of the table below is to illustrate the pro forma financial effects of the Transaction and such pro forma financial effects, as set out below, are the responsibility of the Directors.

The pro forma financial effects are presented in a manner consistent with the basis on which the historical financial information of Zambrew has been prepared and in accordance with Zambrew’s accounting policies. The pro forma financial effects have been presented for illustrative purposes only, and because of their nature, may not give a fair reflection of Zambrew’s financial position, changes in equity or of the effect on future earnings post the Transaction.

ZMW BEFORE TRANSACTION AFTER TRANSACTION CHANGE %

Earnings (E) 220,820 1,391,119 529.98% Headline Earnings (HE)

220,820 204,342 7.46%

Net Asset Value (NAV)

1,428,854 1,438,427 0.67%

Net Tangible Asset Value (NTAV)

1,356,043 1,420,542 4.76%

EPS 0.404 2.548 529.98% HEPS 0.404 0.374 7.46% NAVPS 2.617 2.634 0.67% NTAVPS 2.484 2.602 4.76% Shares in Issue 546,000 546,000

Notes: 1. Earnings (E) (Total profits)/(Weighted average number of shares outstanding). Includes profits from abnormal extra-ordinary items 2. Headline Earnings (HE) [Total profits less extra-ordinary income/(losses)]/(Weighted average number of shares outstanding). Removes profits from abnormal extra-ordinary items 3. Net Asset Value (NAV) [Total Assets-Total Liabilities] = Equity Position as per Statement of Financial Position

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8. FINANCIAL INFORMATION

8.1. HISTORICAL FINANCIAL INFORMATION The statement of forecast of comprehensive income for the year ended 31 December 2017, taking into consideration the impact of the Transaction appears in Annexure 1, while the Independent Reporting Accountant’s report thereon appears in Annexure 2.

8.2. PRO FORMA FINANCIAL EFFECTS

The purpose of the table below is to illustrate the pro forma financial effects of the Transaction and such pro forma financial effects, as set out below, are the responsibility of the Directors.

The pro forma financial effects are presented in a manner consistent with the basis on which the historical financial information of Zambrew has been prepared and in accordance with Zambrew’s accounting policies. The pro forma financial effects have been presented for illustrative purposes only, and because of their nature, may not give a fair reflection of Zambrew’s financial position, changes in equity or of the effect on future earnings post the Transaction.

ZMW BEFORE TRANSACTION AFTER TRANSACTION CHANGE %

Earnings (E) 220,820 1,391,119 529.98% Headline Earnings (HE)

220,820 204,342 7.46%

Net Asset Value (NAV)

1,428,854 1,438,427 0.67%

Net Tangible Asset Value (NTAV)

1,356,043 1,420,542 4.76%

EPS 0.404 2.548 529.98% HEPS 0.404 0.374 7.46% NAVPS 2.617 2.634 0.67% NTAVPS 2.484 2.602 4.76% Shares in Issue 546,000 546,000

Notes: 1. Earnings (E) (Total profits)/(Weighted) average number of shares outstanding). Includes profits from abnormal extra-ordinary items 2. Headline Earnings (HE) Total profits less extra-ordinary income/(losses)/(Weighted average number of shares outstanding). Removes profits from abnormal extra-ordinary items 3. Net Asset Value (NAV) Total Assets-Total Liabilities = Equity Position as per Statement of Financial Position

-7.46%

-7.46%

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4. Net Tangible Asset Value (NTAV) (Total Assets less Intangible Assets)-Total Liabilities = Equity Position as per Statement of Financial Position less Intangible Assets

9. ADVISERS’ CONSENTS

SBZ and Grant Thornton have consented in writing to act in the capacities stated and to their names being stated in the Circular and, in the case of Grant Thornton, the Independent Reporting Accountant, have consented to the inclusion of their report and to the references to their report in the form and context in which it appears, and have not withdrawn their consents prior to publication of this Circular.

10. DIRECTORS’ RECOMMENDATION AND OPINION The Directors consider the Transaction to be fair and reasonable in so far as the Shareholders of Zambrew are concerned and to be in the interests of the Company. Accordingly, the Board recommends that Shareholders vote in favour of the Resolutions at the EGM. As mentioned below, none of the Directors hold Shares and will accordingly not be entitled to vote on the Resolutions at the EGM.

11. DIRECTORS RESPONSIBILITY STATEMENT The Directors, whose names are given in the Corporate Information and Advisors section of this Circular, collectively and individually accept full responsibility for the accuracy of the information furnished relating to this Circular and certify that to the best of their knowledge and belief there are no facts that have been omitted which would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made, and that this Circular contains all information required by law and the LuSE Listings Requirements.

SIGNED BY VALENTINE CHITALU AND JOSE DANIEL MORAN RAMIREZ ON BEHALF OF ALL THE DIRECTORS IN LUSAKA ON 4 JULY 2018.

________________________________ ________________________________ VALENTINE CHITALU JOSE DANIEL MORAN RAMIREZ

Zambian Breweries Plc Annual Report 2018 5

The recent cholera outbreak reinforced the importance attached to our water resources, and highlighted the work of our Manja Pamodzi campaign to clean up packaging waste in Lusaka in partnership with Lusaka City Council, the Millennium Challenge Account and others.

Support for youth empowerment has also continued to be a focus of our work in the community, and we continue to play a strong and vibrant role in supporting the Nation’s music, culture and sport through our brand activations and sponsorships, most notably the successful annual Mosi Day of Thunder Music Festival in Livingstone.

Our role in the cassava, barley and sorghum value chains continues to boost livelihoods for small-scale farmers.

Future ProspectsWith the economic growth gathering pace, Zambian Breweries is conscious more than ever of the close correlation between national prosperity and the health of its business.

Beer consumption remains a leading indicator of economic growth and disposable incomes.

Our investments are starting to bear fruit, and the pick-up in production and sales not only demonstrates that the Nation is on the right track, but also means that Zambian Breweries is well placed to contribute to that growth through further investment, job creation and stimulation of consumer spending.

We will endeavour to maintain our brands as household names in a responsible manner by promoting responsible drinking and enhanced choice and affordability.

Chairman of the Board of Directors

green shoots of recovery were beginning to take root.The exchange rate between the Kwacha and the United

States Dollar remained reassuringly stable throughout the period, stabilising at between K9 and K10 to the USD. This made it easier for us to plan on a day-to-day basis and gave us confidence to further our capital investment plans.

Further boosts resulted from the Bank of Zambia’s reduction in the policy rate by 1.5 percentage points during the first half of 2017, which resulted in reduced borrowing costs and stimulation of investment opportunities. Adjustments in monetary policy and increased confidence on the market led to improved liquidity during the second quarter.

A drop in Zambia’s inflation rates, from 7.5 percent in December 2016 to 6.1 percent in December 2017 was also an encouraging sign.

A rebound in copper prices has also helped market growth, with signs of a pick-up of disposable incomes trickling through into our sales reports.

Strategic ReviewAs economic growth gathered pace, the Company looked beyond its immediate production needs and put in place a number of initiatives that would take the business to the next level in coming years.

Among the most significant was the launch of our cassava farming project in Luapula Province in the first quarter, propelling our affordable Eagle lager brand onto a new level. I am pleased to report that thanks to the input of those farmers and the expertise of our Technical Department, we can now confidently declare Eagle as a mainstream brand and a significant component of our brand portfolio.

In addition to cassava, we are also proud of the fact that we are now sourcing all our barley and sorghum locally for clear beer production, largely due to the full operation of our new USD33 million Malting Plant in Lusaka.

Another significant investment during the period has been the USD18.2 million spent on a new production line at the Ndola plant, which has increased production from 750 000 to 1.3 million hectolitres per year.

We continued to face strong competition from other beer brands in the market, as well as the threat of illicit alcohol.

The Company continued engaging with the Zambia Revenue Authority, Ministry of Finance and Lusaka City Council to undertake enforcement exercises to curb sales and consumption of illicit high-alcohol content spirits known as tujilijili and junta.In terms of non-alcoholic beverages, competitor activity during the period was intense.

Despite the uncertainty caused by ongoing discussions about the future of the Bottling Agreements between AB InBev and The Coca-Cola Company, we are confident that the transaction will be finalised in the coming months.

Sustainable Development Zambian Breweries has fully adopted the AB InBev Group’s Better World strategy, incorporating its dream of creating a growing, healthier and cleaner world.

Preservation of water is a key component of that strategy. The Company has been involved with various stakeholders including the Ministry of Water Development, Sanitation and Environment Protection, Lusaka Water Sewerage Company, Water Regulatory Management Authority, and the World Wide Fund for Nature to meet and discuss the specific technical issues and to identify partners to support the project.

ZB 2018 ARA NARRATIVE & FINANCIALS Rev2.indd 5 3/6/18 17:36

An aerial view of the recently upgraded packaging line at the Lusaka Plant.

88

Country Director’s Report | Continued

Commercial PerformanceOur mainstream category has posted significant recovery ending in an increase of 5% against prior year for the full period under review (growing 25% against prior year in the last quarter of the year). The introduction of the 750ml bulk pack is driving an explosion of volume in the market and bringing incremental volume for the category. Our 375ml pack is also back to growth and remains our main focus to ensure profitability

Our affordable segment grew at double digit rates by 85% against prior year, since we have been improving availability in trade. Our Eagle brand is one of the “big bets” for the future year, which will get a significant boost with the increased capacity from the new Ndola line.

Our premium segment was reinvigorated by the introduction of Castle Lite 330ml RGB (local production), which is slowly gaining traction among consumers.

We recently introduced Stella Artois, our AB InBev global brand (GB) in the local market, and we are planning the launch of another GB during the second half of the year.

Investment and long-term approachThe new packaging line in Ndola increased capacity and will contribute to meeting our volume aspirations for the peak season in 2018 and towards achieving our Dream of 3 million hectolitres in sales volumes by 2020. This upgrade is part of our overall capacity expansion plan for the next three years, with a projected investment of more than USD$ 45 million in upgrading and expanding our brewing and packaging capacity at the Ndola and Lusaka sites.

Zambian Breweries Plc demonstrated compliance in meeting previous commitments and I am pleased to confirm that our tax framework for 2018 will be maintained, keeping excise at 40% on malt-based clear beer and 10% on cassava based beer. We will continue engaging the Government to achieve a middle-term tax framework for a two to three year period.

OutlookEagle lager performance represents a real opportunity for us with the brand’s affordability remaining a key driver for its growth. We will continue driving our affordability approach to make sure our consumers get access to the best brands at the best prices and sizes in the market.The strengthening of the copper prices in the past few months and relative stability in the mining industry has improved disposable income and is likely to continue in the short to medium term, particularly in the North of the Country.

Inflation dropped to 6.6% at the end of September, 2017 and further to 6.1% in December, 2017. This favourable trend demonstrates the potential for a boost in sales in 2018.

These are exciting times for the African beer industry, being the World’s fastest growing beer market. Our Continent will represent approximately 8.1% of the global beer industry volumes by 2025, up from approximately 6.5% in 2016, which constitutes growth at nearly three times the rate of global beer volumes during the period and Zambia is no exception.I have utmost confidence in Zambian Breweries’ future prospects and the furtherance of our shared Dream of

achieving 3 million hectolitres by 2020. We are well-positioned and all the enablers are present to realize our vision.

We are committed to doing our best to keep driving growth for the business, building a Company that is recognized for its efficiency and the difference it makes in society, and most importantly, to making our Company a best in class employer.As a Company, we never take shortcuts. Integrity, hard work, quality, and responsibility are key to building our Company and achieving a “Super Thunderous” performance in 2018.

Jose Daniel Moran Ramirez

Zambia Country Director

2. BUSINESS OVERVIEW

*Comparisons in the report with the prior period or prior year refer to the

previous 9 month period.

ZB 2018 ARA NARRATIVE & FINANCIALS Rev2.indd 8 3/6/18 17:36

The Directors consider the Transaction and the Purchase Price, which is 12.16 times adjusted EBITDA of USD 11.7 m, to be fair and reasonable in so far as the Shareholders of Zambrew are concerned and to be in the interests of the Company as TCCC has notified the Company of its intention to terminate the Bottler’s Agreements. Accordingly, the Board recommends that Shareholders vote in favour of the Resolutions at the EGM. As mentioned below, none of the Directors hold Shares and will accord-ingly not be entitled to vote on the Resolutions at the EGM.

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B. STATUTORY INFORMATION IN RESPECT OF THE TRANSACTION

1. MATERIAL CONTRACTS Since the last reporting date, being the Annual Report for the financial year ended 31 December 2017, save for the Transaction Documents, no material contracts have been entered into by Zambrew other than in the normal course of business.

2. MATERIAL CHANGES Save as disclosed in the Company’s Audited Annual Reports and Financial Statements, there have been no material changes to the Company’s business during the past five years and no material changes in the Company’s financial position since the last reporting date being 31 December 2017.

3. EXPENSES The estimated costs of the Transaction, excluding VAT Taxes, are set out below.

US$ Financial advisor and transaction sponsor 2,500,000 Legal advisors 360,000 Independent Reporting Accountant 15,000 Printing, publication, distribution and advertising expenses 7,400 SEC and LuSE Documentation and Ruling Fees 1,500 Transfer Secretaries Fees 3,000 Total 2,886,900

4. WORKING CAPITAL STATEMENT

The Directors are of the opinion that the working capital available to the Company is sufficient for the Company’s present working capital requirements and will, post the Transaction, be adequate for at least 12 months from the date of issue of this Circular.

5. CLASSIFICATION OF TRANSACTION The nature of the Transaction classifies it as a Category 1 Transaction and is subject to Shareholder approval in accordance with Section 9 of the LuSE Listings Requirements.

6. SHAREHOLDER APPROVAL At the EGM to be held at the Southern Sun Ridgeway Hotel, Lusaka, Zambia at 08:00, on Friday, 27 July (notice for the meeting is contained on page 96 of this Circular), Shareholders will be required to vote on the Resolutions. Shareholder approval is one of the conditions to give effect to the Transaction.

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7. ZAMBREW’S PROSPECTS These are exciting times for the African beer industry, being the world’s fastest growing beer market. It is predicted that the African continent will represent approximately 8.1% of the global beer industry volumes by 2025, up from approximately 6.5% in 2016, which constitutes growth at nearly three times the rate of global beer volumes during the period and Zambia is no exception. Zambrew is confident in its future prospects and the furtherance of its goal of achieving 3,000,000 hectolitres by 2020.

8. DOCUMENTS AVAILABLE FOR INSPECTION The following documents, or copies thereof, will be available for inspection by Shareholders during normal business hours at the registered office of Zambrew and at the offices of SBZ, the details of which appear in the Corporate Information and Advisors section of this Circular from the date of issue of this Circular until the date on which the EGM is held (both days inclusive): the Certificate of Incorporation of Zambrew; the Articles of Association of Zambrew; the Annual Reports of Zambrew for the financial years ended 31 March 2015, 31 March

2016, 31 March 2017 and 31 December 2017; the Independent Reporting Accountants Report; all consent letters referred to in this Circular; the MPA; the Manufacturer’s Agreement; the Transition Services Agreement; and a signed copy of this Circular.

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C. GENERAL INFORMATION

1. SIGNIFICANT SHAREHOLDERS The ten largest shareholdings in Zambrew and the respective number of shares held at the Last Practicable Date is as follows:

Name of Shareholder % Number of Shares AB InBev Africa Holdings Limited 87.13 475,732,350 Standard Chartered Zambia Securities Services Nominees Limited

8.90 48,569,114

Saturnia Regna Pension Trust Fund 1.47 8,043,234 Stanbic Bank Zambia Nominees 0.47 2,586,776 KCM Pension Trust Scheme 0.37 2,000,563 Barclays Bank Staff Pension Trust Fund 0.21 1,143,252 Standard Chartered Bank Pension Trust Fund 0.11 605,988 Stanbic Bank Pension Trust Fund 0.09 501,093 Sandvic Mining Pension Scheme 0.07 398,798 Zanaco Plc DC Pension Scheme 0.07 397,370 Total 98.89 539,978,538

2. SHARE CAPITAL

The share capital of the Company as at the Last Practicable Date is as follows:

Number of Shares Nominal Value per

Share (ZMW) Total Nominal Value

(ZMW) Authorised Ordinary Share Capital

600,000,000 0.01 6,000,000

Issued Ordinary Share Capital

546,000,000 0.01 5,460,000

The authorised share capital of the Company has not been changed in any way over the past three years.

3. LITIGATION STATEMENT

Zambrew is not involved in any legal or arbitration proceedings, nor are the Directors aware of any proceedings which are pending or threatened that may have or have had, in the twelve-month period preceding the date of this Circular, a material effect on Zambrew.

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4. DIRECTORS 4.1. DIRECTORS’ INFORMATION

The full names, qualifications, nationalities, addresses and occupations of the directors of Zambrew are set out below:

Name Valentine Chitalu (Mr.) (Non-Executive Chairman) Other directorship MTN Zambia

Africa Life/Sanlam Choppies (Z) Limited Phatisa Group Armada Minerals/Frontex Lomax Investments Limited CDC Group Plc African Energy Limited Consolidated Nickel Mines Growthpoint Investec Africa Properties Limited (Mauritius)

Address Plot 161 Kudu Road, Kabulonga, Lusaka, Zambia. Nationality Zambian Business Experience Mr. Chitalu is an entrepreneur in Zambia and Southern Africa

specializing in private equity and local private sector development. Until December 2003, Mr. Chitalu worked for CDC/Actis in London and Lusaka specializing in deals origination throughout Southern Africa and portfolio management in Zambia and Malawi. Mr. Chitalu was previously Chief Executive Officer at the Zambia Privatisation Agency where he was responsible for the divestiture of over 240 enterprises. He also worked for KPMG Peat Marwick in the United Kingdom in the early part of his career.

Name George Sokota (Mr.) (Non-Executive) Other directorship Nshimbi Steel (Z) Limited

Upeo (Z) Limited Geo Petroleum (Z) Limited

Address Plot 2180/M Luombe Farm, Leopards Hill Road, Lusaka, Zambia.

Nationality Zambian Business Experience Mr. Sokota is a professional accountant by background and

training. He spent most of his professional career with Deloitte & Touche where he was Senior Partner for many years. He is a leading businessman with many business interests in various business sectors.

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Name Jose Daniel Moran Ramirez (Mr.) (Executive) Other directorship None. Address House No. 1, 25A Twin Palm Road, Kabulonga, Lusaka, Zambia. Nationality Ecuadorian Business Experience Mr. Ramirez has diverse experience in the Fast-Moving

Consumer Goods (FMCG) sector. He began his career in 2000 with Ernst and Young LLP in USA, Canada and Latin America. Mr. Ramirez joined the SABMiller Group in 2007 in Latin America and was formerly the Sales Director for ABInBev operations in Mozambique.

Name Martyn Brunnock (Mr.) (Non-Executive) Other directorship South African Breweries Proprietary Limited Address 23 Gulfstream Buolevard, Centurion, South Africa. Nationality British Business Experience Currently Finance Director – South and Southern Business

Unit, based in South Africa for ABI. Has formerly held various finance positions in South African Breweries Proprietary Limited since 1999. Holds a B Comm Honors / CTA from Wits University, is a Chartered Accountant (SA) and holds a Masters of Business Administration (MBA) from Wits Business School.

Name Pedro Cruz (Mr.) (Non-Executive) Other directorship Cervejas de Mocambique Address Rua de Marracuene, 31, Maputo, Mozambique. Nationality Portuguese Business Experience Mr. Cruz joined the Board with over 20 years’ experience and

is currently the Business Unit President Southern Africa for the combined ABInBev/SABMiller Group. He joined SABMiller in 2007 as Commercial Director in Mozambique and formerly worker with PepsiCo in Portugal, Spain and the UK in a number of senior Sales Marketing and Finance roles between 1988 and 2006. Mr Cruz holds a degree in Business Administration and an MBA from the Catholic University of Lisbon in Portugal.

4.2. DIRECTORS’ SERVICE CONTRACTS

There are no service contracts or letters of appointment between Zambrew and the non-executive directors do not have service contracts and have not signed Directors have not concluded any service contracts with the Company. Jose Moran Ramirez has an employment contract with Zambrew. The contract was entered into on 1 September 2017 for a term of three years which allows for termination by either party giving three months’ notice.

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4.3. DIRECTORS’ REMUNERATION AND BENEFITS

31 December 2017

31 March 2017

Directors’ remuneration: US$ US$ Non-executive Directors fees 415 411 Salaries and short term emoluments 4,659 2,949 Other emoluments 2,025 3,114 Retirement benefit cost 927 124

8,026 6,598

4.4. DIRECTORS’ INTERESTS ON SECURITIES None of the Directors hold shares in the Company.

4.5. DIRECTORS’ INTEREST IN THE TRANSACTION Neither the Directors of Zambrew nor any person acting in concert with the Directors, has control or is interested, beneficially or otherwise, in the Transaction.

4.6. FACILITIES A summary of the facilities available to the Company is set out below. As at the Last Practicable Date, the utilization on each of the facilities is nil.

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Zambian Breweries Limited PLC Report of the Reporting Accountants June 2018

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INDEPENDENT REPORTING ACCOUNTANTS’ REPORT ON HISTORICAL FINANCIAL INFORMATION

Contents Page no.

INDEPENDENT REPORTING ACCOUNTANTS’ REPORT.................................................................................................... 2 STATEMENT OF COMPREHENSIVE INCOME FOR THE YEARS ENDED 31 MARCH 2015, 31 MARCH 2016, 31 MARCH 2017 AND NINE MONTHS ENDED 31 DECEMBER 2017 ...................................................................................................... 4 STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2015, 31 MARCH 2016, 31 MARCH 2017 AND NINE MONTHS ENDED 31 DECEMBER 2017 .......................................................................................................................................................... 5 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ....................................................................................................................... 6

1. Accounting policies ......................................................................................................................................................... 6 SUMMARY OF SIGNIFICANT NOTES TO THE FINANCIAL STATEMENTS................................................................. 15

1. Financial risk management ........................................................................................................................................... 15

2. Financial instruments by category ................................................................................................................................ 20

3. Critical accounting estimates and judgements ............................................................................................................ 22

4. Segment information ..................................................................................................................................................... 23

5. Other operating expense/(income) .............................................................................................................................. 26

6. Expenses by nature ........................................................................................................................................................ 27

7. Employee benefits expense ........................................................................................................................................... 27

8. Finance income and costs ............................................................................................................................................. 28

9. Income tax ...................................................................................................................................................................... 28

10. Earnings per share ......................................................................................................................................................... 30

11. Share capital ................................................................................................................................................................... 30

12. Hedge reserve ................................................................................................................................................................. 30

13. Borrowings ..................................................................................................................................................................... 31

14. Deferred income tax....................................................................................................................................................... 32

15. Property, plant and equipment ..................................................................................................................................... 35

16. Intangible assets ............................................................................................................................................................ 37

17. Assets disposal group classified as held for sale .......................................................................................................... 40

18. Inventories ...................................................................................................................................................................... 41

19. Trade and other receivables .......................................................................................................................................... 41

20 Cash and cash equivalents ............................................................................................................................................ 42

21 Trade and other payables .............................................................................................................................................. 42

22 Related party transactions ............................................................................................................................................. 43

23 Contingent liabilities ...................................................................................................................................................... 46

24 Commitments ................................................................................................................................................................. 46 INDEPENDENT REPORTING ACCOUNTANTS’ REPORT ON THE FORECAST FINANCIAL INFORMATION .......... 47 PROFORMA STATEMENT OF COMPREHENSIVE INCOME FOR THE NINE MONTHS TO 31 DECEMBER 2017 ...... 51 ADJUSTED PROFOMA STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2017, ........................................... 52 FORECAST STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED ........................................................... 53 31 DECEMBER 2018 ............................................................................................................................................................................................... 53

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1

12 June 2018 The Directors Zambia Breweries Plc Plot No 6438 Mungwi Road Heavy Industrial Area Head Office P O Box 35135 Lusaka Dear Sir We have reviewed the audited financial statements of Zambia Breweries Plc (“Zambrew”), which comprises the statement of financial position and statement of comprehensive income for the (3) years ended 31 March 2015, 31 March 2016, 31 March 2017 and Nine months ended 31 December 2017, and a summary of significant accounting policies and other explanatory notes. PriceWaterhouseCoopers (PWC) are the auditors of Zambrew for the (3) years ended 31 March 2015, 31 March 2016, 31 March 2017 and Nine months ended 31 December 2017 and has issued an unmodified audit reports on these financial statements from which the financial information is extracted. Effective 31 December 2017, the financial year end was changed from 31 March to 31 December. Included in the audited financial statements for 31 December 2017 is a key audit matter relating to the treatment of the non-current asset held for sale and discontinued operations relating to the announcement made by The Coca cola company (TCCC) to acquire the non-alcoholic ready to drink business segment of the company. The auditors evaluated the information provided and made relevant disclosures of critical judgement relating to the transaction which are included in note 3 of this report.

Grant Thornton 5thFloor Mukuba Pension House Dedan Kimathi Road P.O Box 30885 Lusaka, Zambia +260 (211) 227722-8 +260 (211) 223774 [email protected]

T F E

Partners Edgar Hamuwele (Managing) Christopher Mulenga Wesley Beene Rodia Musonda Chilala Banda

Chartered Accountants Zambian Member of Grant Thornton International

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2 The financial statements had net current liabilities for all the four periods as shown on the statement of financial position and tabulated below: 31 December 2017 31 March 2017 31 March 2016 31 March 2015 K000 K000 K000 K000 Current assets 1,006,964 784,217 743,099 660,201 Current Liabilities (1,126,438) (1,054,306) (795,774) (746,963) Net current Liabilities

(119,474)

(270,089)

(52,675)

(86,762)

This state of affairs may be indicative of the existence of a condition that may cast doubts over the company ability to continue as a going concern. As a result the directors performed an assessment of the company’s ability to continue as a going concern and were satisfied that it has resources to continue in business for the next twelve months from the dates of reporting. This conclusion was arrived at after taking into account the following: a) The company continued to make profits during the reported periods; b) The company was in full compliance with financial covenants contained in its existing borrowing agreements; c) The directors were implementing various business strategies aimed at improving performance and enhancing

sustainable operations in the foreseeable future. These audited financial statements were prepared in accordance with the International Financial Reporting Standards (IFRS) and Companies Act of Zambia. Our responsibility is to express a conclusion on the financial statement based on our review. For the purpose of the engagement, we are not responsible for updating or reissuing any reports or opinion on any historical financial information used in preparing the financial information. The directors are confident that the company will have sufficient working capital to finance its operations and meet financial obligations as and when they fall due and accordingly, are satisfied that it is appropriate to prepare the financial statements on a going concern basis. Furthermore, the directors are not aware of any material uncertainty that may cast significant doubt upon the company’s ability to continue as a going concern. The financial statements on which the following information is based are the responsibility of the directors of Zambrew. We report on the information in accordance with the requirements of the First Schedule to The Securities (Registration of Securities) Rules, 1993. We are a Firm of registered accountants with partners who hold practicing certificates issued by The Zambia Institute of Chartered Accountants under the Accountants Act, 1982 as amended. In our opinion the information set out on pages 4 to 46 below gives a true and fair view of the results for the (3) years ended 31 March 2015, 31 March 2016, 31 March 2017 and Nine months ended 31 December 2017 and of the statement of financial position of Zambrew as at 31 March 2015, 31 March 2016, 31 March 2017 and 31 December 2017 for the purpose of The acquisition of the non-alcoholic ready-to-drink business segment of Zambrew, by The Coca-Cola Company (TCCC) following the announcement and confirmation of the receipt on 11th October 2016, by Anheuser-Busch InBev SA/NV (“ABInBev”) (Euronext: ABI) (NYSE: BUD) (MEXBOL: ANB) (JSE: ANH) from The Coca-Cola Company (“TCCC”) regarding its intention to acquire the stake of ABInBev in Coca-Cola Beverages Africa Propriety Limited (“CCBA”). Zambrew’s soft drinks business does not form part of CCBA but it does, however, operate in terms of bottler’s agreements that have been concluded between Zambrew and TCCC (“Bottler’s Agreements”). In this regard, TCCC has notified its intention to terminate the Bottler’s Agreements with Zambrew. This termination will result in TCCC acquiring the non-alcoholic ready-to-drink business segment of Zambrew.

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3 Further, Grant Thornton has given and has not withdrawn its written consent, prior to the issue of this Circular, with its statement included in the form and context in which it is in as fact, included under the appropriate Annex of the Reporting Accountants’ Report 2018.

Chartered Accountants Lusaka

Wesley Beene(AUD/F000465) Name of Partner signing on behalf of the firm

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4 ZAMBIAN BREWERIES LIMITED PLC STATEMENT OF COMPREHENSIVE INCOME FOR THE YEARS ENDED 31 MARCH 2015, 31 MARCH 2016, 31 MARCH 2017 AND NINE MONTHS ENDED 31 DECEMBER 2017

Notes 31 December 2017

K'000

31 March 2017

K'000

31 March 2016

K'000

31 March 2015

K'000

Revenue 1,561,138 1,974,021 1,712,869 1,347,369 Cost of sales (877,354) (1,160,812) (1,018,427) (729,951) Gross profit 683,784 813,209 694,442 617,827 Other operating (expense)/income 5 (8,957) 17,216 3,081 3,743 Distribution costs (129,328) (205,897) (191,735) (186,920) Administration expenses (179,482) (263,571) (187,976) (184,808) Operating profit 366,017 360,957 317,812 249,842 Finance income 20,733 18,751 72,430 33,725 Finance costs (66,721) (193,902) (112,061) (97,517) Finance costs – net 8 (45,988) (175,151) (39,631) (63,792 Profit before income tax 320,029 185,806 278,181 186,050 Income tax expense 9 (99,209) (57,638) (84,031) (54,213)

Profit for the period 220,820 128,168 194,150 131,837 Attributable to: Continuing operations 194,769 83,309 194,150 131,837 Discontinued operations 26,051 44,859 - - 220,820 128,168 194,150 131,837 Other comprehensive income: Items that may be subsequently reclassified to profit or loss

Cash flow hedge - 23,637 (23,637) 5,286 Other comprehensive income for the year, net of tax

9 -

23,637 (23,637) 5,286

Total comprehensive income for the period 220,820 151,805 170,513 137,123 Earnings per share for profit attributable to the equity holders of the company

Basic and diluted (Kwacha per share) 10 0.404 0.235 0.356 0.241

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5 ZAMBIAN BREWERIES LIMITED PLC

STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2015, 31 MARCH 2016, 31 MARCH 2017 AND NINE MONTHS ENDED 31 DECEMBER 2017

ASSETS Notes 31 December

2017 31 March

2017 31 March

2016 31 March

2015 K'000 K’000 K'000 K’000

Capital and reserves attributable to the company’s equity holders

Share capital 11 5,460 5,460 5,460 5,460 Share premium 450,207 450,207 450,207 450,207 Retained earnings 862,777 752,367 680,099 546,556 Hedge reserve 12 - - (23,637) 5,286 Proposed dividends 110,410 - - - Total assets 1,428,854 1,208,034 1,112,129 1,007,509 Non-current liabilities Borrowings - - 200,000 - Deferred income tax 14 507,254 412,286 354,678 336,840 507,254 412,286 554,678 336,840 Total equity and non-current liabilities 1,936,108 1,620,320 1,666,807 1,344,349 Non-current assets

Property, plant and equipment 15 1,482,767 1,817,350 1,643,537 1,349,829 Intangible assets 16 72,811 73,059 75,049 75,511 Non-current receivables and prepayments - - 896 5,771 1,555,578 1,890,409 1,719,482 1,431,111 Current assets Inventories 18 482,628 345,569 364,636 256,891 Trade and other receivables 19 193,691 342,962 273,858 275,273 Current income tax 9 5,909 5,521 13,004 13,959 Deferred income tax - - 5,275 54,938 Derivative financial instruments - - - 8,133 Cash and cash equivalents 20 324,736 90,165 86,326 51,007 1,006,964 784,217 743,099 660,201 Non Current assets held for sale 17 500,004 - - - Current liabilities Trade and other payables 21 869,378 437,517 492,378 314,482 Derivatives financial instruments - - 36,365 - Borrowings 13 257,060 616,789 267,031 432,481

1,126,438 1,054,306 795,774 746,963 Net current liabilities

(119,474) (270,089) (52,675) (86,762)

Total assets less current liabilities 1,936,108 1,620,320 1,666,807 1,344,349

6

ZAMBIAN BREWERIES LIMITED PLC SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. Accounting policies

The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all years/periods presented, unless otherwise stated.

a) Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). The financial statements have been prepared under the historical cost convention, unless otherwise stated in the accounting policies below.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires Directors to exercise judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or where assumptions and estimates are significant to the financial statements, are disclosed in Note 5.

b) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Executive Committee that makes strategic decisions. The Executive Committee consists of the following personnel:

Country Director Finance Director Brewery Operations Director Human Resources Director Marketing Director Corporate Affairs Director.

c) Foreign currency translation

(i) Functional and presentation currency Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The financial statements are presented in Zambian Kwacha (K) which is the Company’s functional currency.

(ii) Translations and balances Foreign currency transactions are translated into the functional currency of the Company using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in profit or loss. Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in profit or loss within ‘finance income or finance cost’. All other foreign exchange gains and losses are presented in profit or loss within other operating income/(expense).

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6

ZAMBIAN BREWERIES LIMITED PLC SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. Accounting policies

The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all years/periods presented, unless otherwise stated.

a) Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). The financial statements have been prepared under the historical cost convention, unless otherwise stated in the accounting policies below.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires Directors to exercise judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or where assumptions and estimates are significant to the financial statements, are disclosed in Note 5.

b) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Executive Committee that makes strategic decisions. The Executive Committee consists of the following personnel:

Country Director Finance Director Brewery Operations Director Human Resources Director Marketing Director Corporate Affairs Director.

c) Foreign currency translation

(i) Functional and presentation currency Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The financial statements are presented in Zambian Kwacha (K) which is the Company’s functional currency.

(ii) Translations and balances Foreign currency transactions are translated into the functional currency of the Company using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in profit or loss. Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in profit or loss within ‘finance income or finance cost’. All other foreign exchange gains and losses are presented in profit or loss within other operating income/(expense).

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7

ZAMBIAN BREWERIES LIMITED PLC SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1 Accounting policies( Continued)

d) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for goods supplied, stated net of value added tax (VAT), returns, rebates and discounts.

The Company recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Company and when specific criteria have been met for each of the Company’s activities as described below. The Company bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specific of each arrangement.

Revenue is recognized as follows:

i) Sales of goods are recognised in the period in which the Company has delivered products to

the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery does not occur until the products have been accepted by the customer.

Accumulated experience is used to estimate and provide for discounts and returns. The volume discounts are assessed based on actual purchases.

e) Interest income

Interest income is recognised using the effective interest method. f) Trade receivables

Trade receivables are amounts due from customers for goods sold in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

Trade receivables are recognized initially at fair value and subsequently measured at amortised cost using the effective interest method less provision for impairment.

g) Cash and cash equivalents

In the statement of cash flows, cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less and bank overdrafts. In the statement of financial position, bank overdrafts are shown within borrowings in current liabilities.

h) Trade and other payables Trade and other payables represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They ae recognized initially at their fair value and subsequently measured at amortised cost using the effective interest method.

8


i) Borrowings Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost using the effective interest method; any differences between proceeds (net of transaction costs) and the redemption value are recognized in profit or loss over the period of the borrowings using the effective interest method.

Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as pre-payment for liquidity services and amortised over the period of the facility to which it relates.

Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the end of reporting period.

j) Borrowing costs

General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognized in profit or loss in the period in which they are incurred.

k) Property plant and equipment

All categories of property, plant and equipment are initially recorded at cost and are subsequently measured at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance cost are charged to profit or loss during the financial period in which they are incurred. Depreciation is calculated using the straight line method to allocate their cost less their residual values over their estimated useful lives, as follows:

Buildings 25-40 years Plant and machinery 15-20 years Containers and crates 3 – 5 years Motor vehicles, furniture & fittings and Computer equipment 5 – 10 years The residual values and useful lives of the assets are reviewed, and adjusted if appropriate, at the end of each reporting period.

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8


i) Borrowings Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost using the effective interest method; any differences between proceeds (net of transaction costs) and the redemption value are recognized in profit or loss over the period of the borrowings using the effective interest method.

Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as pre-payment for liquidity services and amortised over the period of the facility to which it relates.

Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the end of reporting period.

j) Borrowing costs

General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognized in profit or loss in the period in which they are incurred.

k) Property plant and equipment

All categories of property, plant and equipment are initially recorded at cost and are subsequently measured at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance cost are charged to profit or loss during the financial period in which they are incurred. Depreciation is calculated using the straight line method to allocate their cost less their residual values over their estimated useful lives, as follows:

Buildings 25-40 years Plant and machinery 15-20 years Containers and crates 3 – 5 years Motor vehicles, furniture & fittings and Computer equipment 5 – 10 years The residual values and useful lives of the assets are reviewed, and adjusted if appropriate, at the end of each reporting period.

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9


k) Property plant and equipment (continued)

Property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell, and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Gains and losses on disposal of property, plant and equipment are determined by comparing the proceeds to their carrying amount and are included in profit or loss.

l) Intangible assets

(i) Goodwill Goodwill arose on the acquisition of subsidiaries and represented the excess of the consideration transferred over the Company’s interest in net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquire and the fair value of the non-controlling interest in the acquire. On hive-up of operations, the Company allocated the goodwill to the operating segment or the CGU at alcoholic and non-alcoholic segments. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to the CGU that is expected to benefit from the synergies of the combination. The unit to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level. Goodwill recognized has an indefinite useful life on which impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs to sell. Any impairment is recognized immediately as an expense and is not subsequently reversed.

In determining the useful life of Goodwill, the Directors have taken into consideration the following factors: The expected usage by the entity – the entity expects to make use of the assets for an indefinite

period of time. In this regard, the entity has made massive investments in terms of plant and equipment over the years to ensure that the entity’s operations continue.

The typical product life cycle for the assets and published information about useful lives of similar assets that are used in a similar way – the treatment adopted by the Directors is in line with companies in the similar businesses in the same industry.

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10

ZAMBIAN BREWERIES LIMITED PLC

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1 Accounting policies( Continued)

I) Intangible assets (continued)

The stability of the industry in which the asset operates and changes in market demand for the products or services from or related to the asset – Directors are of the view that the industry in which the entity operates is stable and hence the assets are more likely to be of use indefinitely.

Expected actions by actual or potential competitors – there are no actual or potential competitors

that will affect the market share of the entity.

(ii) Computer software Computer software is stated at historical cost less accumulated amortization. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Directly attributable costs that are capitalized as part of computer software include an approximate portion of overheads. Computer software is amortised over its useful life of 3 years.

m) Inventories

Inventories are stated at the lower of cost and net realizable value. The cost of raw materials, work in progress (WIP), finished goods and engineering spares is determined using the weighted average cost method less provision for impairment. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overhead (based on normal operating capacity). Net realizable value is the estimated selling price in the ordinary course of business, less the cost of completion and applicable variable selling expenses.

n) Employees benefits

Retirement benefit obligations The Company operates defined contribution retirement benefit schemes for its employees. The Company and all its employees also contribute to the National Pension Scheme Fund, which is a defined contribution scheme.

A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. The Company has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

The assets of all schemes are held in separate trustee administered funds, which are funded by contributions from both the Company and employees.

The Company’s contributions to the defined contribution schemes are charged to profit or loss in the year/period in which they fall due.

o) Income tax The tax expense for the period comprises current and deferred income tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity respectively.

The current income tax charge is calculated on the basis of the tax enacted or substantively enacted at the reporting date. The Directors periodically evaluate positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. They establish provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

The Company has tax incentives offered under investment licenses issued by the Zambia Development Agency (ZDA) for capital investments. The income taxable for these specific investments are subjected to a lower corporate tax rate for the first ten years under the ZDA license.

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11

ZAMBIAN BREWERIES LIMITED PLC SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1. Accounting policies( Continued)

o) Income tax (continued)

Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying values in the financial statements. However, the deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates and laws that have been enacted or substantively enacted at the reporting date and are expected to apply when the related deferred income tax liability is settled. Deferred income tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilized. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

p) Share capital

Ordinary shares are classified as ‘share capital’ in equity. Any premium received over and above the par value of the shares is classified as ‘share premium’ in equity. Incremental costs directly attributable to the issue of new ordinary shares are shown in equity as a deduction from share premium. Where such ordinary shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s holders.

q) Derivative financial instruments and hedging activities

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

The Company designates certain derivatives as hedges of a particular risk associated with a recognized asset or liability or a highly probable forecast transaction (cash flow hedge). The Company documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Company also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flow of hedged items. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining hedged item is more than 12 months, and as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Trading derivatives are classified as a current asset or liability.

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q) Derivative financial instruments and hedging activities (continued)

Cashflow hedge The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedge is recognize in other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in the income statement with ‘other gains/(losses) – net’. Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss (for example, when the forecast sale that is hedged takes place). The gain or loss relating to the effective portion of the foreign exchange hedge is recognized in other comprehensive income. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset (for example, inventory or fixed assets), the gain and losses previously deferred in equity are transferred from equity and included in the profit and loss. The deferred amounts are ultimately recognized in cost of goods sold in the case of inventory or in depreciation in the case of fixed assets. When a hedging instrument expires or is sold, or when hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognized when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement within ‘Other gains/(losses) –net’.

In prior year the company discontinued the use of forward contracts for hedging.

r) Comparatives

Under IAS 1, comparative information must be provided for all amounts reported in the financial statements, except when a standard provides otherwise. IAS 1 further states that comparative information should also be provided for narrative and descriptive information when it is relevant to an understanding of the current period’s financial statements. Where necessary, comparative figures have been adjusted to conform to changes in presentation in the current period.

s) Dividend distribution

Dividend distribution to the Company’s shareholders is charged to liabilities in the financial statements in the period in which the dividends are approved by the Company’s shareholders.

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t) Financial assets

(i) Classification All financial assets of the Company are classified as loans and receivables, based on the purpose for which the financial assets were acquired. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of reporting period. These are classified as non-current assets. The Company’s loans and receivables comprise ‘non-current receivables and prepayments’, ‘trade and other receivables’ and ‘cash and cash equivalents’ in the statement of financial position.

(ii) Recognition and measurement Regular purchases and sales of financial assets are recognized on the trade-date- the date on which the Company commits to purchase or sell the asset. Loans and receivables are subsequently carried at amortised cost using the effective interest method.

(iii) Offsetting financial instruments Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

(iv) Impairment The Company assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

u) Non-current assets held for sale

Non-current assets (or disposal groups) are classified as held for sale if the carrying amount will be recovered principally through sale rather than through continuing use. This condition is regarded as met only when the sale is highly probable, the assets (or disposal groups) are available or immediate sale in its present condition and management is committed to the sale which should be expected to qualify for recognition as a completed sale within one year from the date of the classification. Immediately prior to being classified as held for sale the carrying amount of assets and liabilities are measured in accordance with the applicable standard. After classification as held for sale it is measured at the lower of the carrying amount and fair value less costs to sell. An impairment loss is recognized in profit or loss for any initial and subsequent write-down of the asset and disposal group to fair value less costs to sell. A gain for any subsequent increase in fair value less costs to sell is recognised in profit or loss to the extent that it is not in excess of the cumulative impairment loss previously recognised. Non-current assets or disposal groups that are classified as held for sale are not depreciated.

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v) Impairment of non-financial assets

Assets that have an indefinite useful life – for example, goodwill, are not ready to use- are not subject to amortization and are tested annually for impairment. Assets that are subject to amortization are reviewed for impairment whenever, event or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use.

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

w) Leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight line basis over the period of the lease.

x) Earnings per share

Basic earnings per share is calculated by dividing:

the profit attributable to owners of the Company, excluding any costs of servicing equity other than ordinary shares.

By the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year and excluding treasury shares.

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15

ZAMBIAN BREWERIES LIMITED PLC SUMMARY OF SIGNIFICANT NOTES TO THE FINANCIAL STATEMENTS

1. Financial risk management

The Company’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk and interest rate risk), credit risk and liquidity risk. The Company’s risk management framework and governance structures are intended to provide comprehensive controls and ongoing management of its major risks. The Board of Directors exercises oversight through delegation from the Board to various sub-committees, notably the Audit Committee and the Executive Committee, which are organized in line with risk management policies of AB InBev, the ultimate parent company. Financial risk management is carried out by the finance department and AB InBev under policies approved by the Board. An overview of the key aspects of risk management and use of financial instruments is provided below. (a) Market risk

The significant market risks to which the company is exposed are foreign exchange risk and interest rate risk. (i) Foreign exchange risk

The Company imports raw materials and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar (USD), South African Rand (ZAR) and Euro (EUR). Foreign exchange risk arises from future commercial transactions and cash and cash equivalents, and payables. The Company’s policy is continuously monitors markets and purchase any foreign currency required at the spot rate. In the prior period, the company used to hedge 95% of foreign exchange as a way of managing foreign exchange risk against the Company’s functional currency. However, due to significant losses incurred from the use of forward contracts for hedging purposes, the Company discontinued the use of forward contract in foreign currency risk management. Management now purchases foreign currency at sport rates.

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16

ZAMBIAN BREWERIES LIMITED PLC SUMMARY OF SIGNIFICANT NOTES TO THE FINANCIAL STATEMENTS 1. Financial risk management (continued)

(a) Market risk (continued)

(i) Foreign exchange risk (continued)

The table below set out the Group’s currency exposures from financial assets and liabilities held by the group companies in currencies other than their functional currencies and resulting in exchange movements in profit or loss and statement of financial position. Exposure in ZAR

K’000 USD

K’000 Euro K’000

Total K’000

31 December 2017 Financial assets/(liabilities) Cash and cash equivalents 13,425 3,010 1,960 18,395 Trade and other payable (80,523) (73,016) (12,352) (165,891) Net monetary assets/(liabilities) (67,098) (70,006) (10,392) (147,496) 31 March 2017 Financial assets/(liabilities) Cash and cash equivalents (185) 12,639 81 12,535 Trade and other payable (48,605) (19,826) (4,087) (72,518) Net monetary assets/(liabilities) (48,790) (7,187) (4,006) (59,983)

At 31 December 2017, if the currency had weakened/strengthened by 3% (March 2017: 12%) against the USD with all other variables held constant, the effect on post-tax profit for the year and shareholder equity would have been K2.2 million (March 2017: K0.06 million) lower/higher, mainly as a result of USD trade payables and bank balances. At 31 December 2017, if the currency had weakened/strengthened by 11% (March 2017:3%) against the ZAR with all other variables held constant, post-tax profit for the year and shareholder equity would have been K7.5 million (March 2017: K3.5 million) higher/lower, mainly as a result of ZAR trade payables and bank balances. At 31 December 2017, if the currency had weakened/strengthened by 15% (March 2017:18%) against the EUR with all other variables held constant, the impact on post-tax profit for the year and shareholder equity would have been K2.0 million (March 2017: K1 million) higher/lower, mainly as a result of EUR trade payables and bank balances.

Page 58 of 100

17


1. Financial risk management (continued)


(ii) Interest rate risk

The Company’s interest rate risk arises primarily from interest paid on floating rate borrowings. The floating rate borrowings expose the Company to cash flow interest rate risk. As at 31 December 2017, with other variables unchanged, a 5% (March 2017:5%) decrease/increase in the base interest rate would have resulted in post tax profit for the year and shareholder equity being K12 million (March 2017: K20 million) higher/lower.

(iii) Price risk The company is not exposed to commodity price risk.

(b) Credit risk The Company does occasionally have funds on deposit at various banks but on those occasions when the amounts involved are material, the length of time that the funds are being held, is short. In addition, the Company only banks with reputable well established financial institutions. The Company’s main credit risk therefore comes from its exposure to trade and other receivables mainly arising from balances outstanding from retail supermarkets during the year. Credit risk is managed by the Finance Director. The Finance Director assesses the credit quality of each customer before standard payment and delivery terms are offered, taking into account its financial position, past experience and other factors. Individual credit limits and terms are set based on limits set by the Board. The utilization of credit limits and the adherence to settlement terms are constantly monitored. All receivables that are neither past due nor impaired are within their approved credit limits, and no receivables have had their terms renegotiated. The Company does not use external credit ratings for the purpose of assessing credit quality. The credit quality of financial assets that are neither past due nor impaired is assessed by reference to historical information about counterparty default rates.

31 December

2017 K’000

31 March 2017

K’000

31 March 2016

K’000

31 March 2015

K’000

Current trade receivables 94,734 76,550 79,255 60,092 Other receivables (excluding prepayments) 20,187 3,738 6,401 22,767 114,921 80,288 85,656 82,859

None of the financial assets are past due or impaired except for the following amounts in trade receivables (which are due within 30 days of the end of the month in which they are invoiced):

Page 59 of 100

18




31

December 2017

K’000

31 March 2017

K’000

31 March 2016

K’000

31 March 2015

K’000

Current 94,734 76,550 - - Past due but not impaired:

- by up to 30 days 17,777 17,684 5,266 7,368 - by more than 31 to 60 days 3,702 5,702 609 1,451 - above 60 days 1,953 3,782 7,611 6,590

Total past due but not impaired 23,432 27,168 13,486 15,409

Impaired 18,323 14,568 3,562 2,878

Receivables individually determined to be impaired

Carrying amount before provision for impairment loss

18,323

14,568

3,562

2,878

Provision for impairment loss (18,323) (14,568) (3,562) (2,878) Net carrying amount - - - -

The maximum exposure to credit risk at the reporting date is the carrying value which approximates fair values.

Page 60 of 100

19



(b) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company manages liquidity risk by maintaining cash and cash equivalent balances and available credit facilities to ensure that it is able to meet its short term and long term obligations as and when they fall due. Company-wide cash projections are managed centrally and regularly updated to reflect the dynamic nature of the business and fluctuations caused by exchange rate movements. The Directors perform cash flow forecasting and monitor rolling forecasts of the Company’s liquidity requirements to ensure it has sufficient cash to meet its operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the Company does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities. The table below analyses the Company’s financial liabilities into relevant maturity groupings based on the remaining period at the end of the reporting period to the contractual maturity dates. The amounts disclosed in the table are the contractual discounted cash flows. The cash flows presented are discounted on the premise that the effect discounting cash-flows over a period of a year or less is expected to immaterial.

Less than 3 months

K’000

Between 3 months

and 1 year K’000

Between 1

and 2 years K’000

Total K’000

At 31 December 2017 - Borrowings 15,142 241,918 - 257,060 - trade and other payables (excluding

statutory liabilities)

788,499

-

-

788,499 Total financial liabilities 803,641 241,918 - 1,045,559

At 31 March 2017

- borrowings 14,619 667,300 - 681,919 - trade and other payables (excluding


381,724

-

-

381,724 Total financial liabilities 396,343 667,300 - 1,063,643

At 31 March 2016

- borrowings - 267,031 200,000 467,031 - trade and other payables (excluding


438,129

-

-

438,129 - Interest on borrowings 5,852 51,500 51,500 108,852

Total financial liabilities 443,981 318,531 251,500 1,014,012 At 31 March 2015

- Borrowings 222,481 210,000 - 432,481 - trade and other payables (excluding


213,148

55,398

-

268,546 - Interest on borrowings 14,514 41,134 - 55,648

Total financial liabilities 450,143 306,532 - 756,675

Page 61 of 100

20



(c) Capital management

The Company’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Company may adjust the amount of divided paid to shareholders, issue new capital or sell assets to reduce debt. Consistent with others in the industry, the Company monitors capital on the basis of a gearing ratio. This ratio is calculated as net debt divided by the total capital of the Company in Zambia. Net debt is calculated as total borrowings less cash and cash equivalents. Total capital is calculated as equity plus net debt. During the period, the Company’s strategy was to maintain a gearing ratio of less than 75%. The gearing ratio at reporting periods were as follows: 31 December

2017 K’000

31 March 2017

K’000

31 March 2016

K’000

31 March 2015

K’000 Total borrowings 257,060 616,789 467,031 432,481 Less: Cash at bank and in hand (324,736) (90,165) (86,326) (51,007)

Net debt (67,676) 526,624 380,705 381,474 Total equity 1,428,854 1,208,034 1,112,129 1,007,509 Total capital 1,361,178 1,734,658 1,492,834 1,388,983 Gearing ratio 0% 30% 26% 27%

2. Financial instruments by category

At 31 December 2017

Loans and Receivables

K’000 Assets as per the statement of financial position Trade and other receivables (excluding pre-payments) 173,490 Cash at bank and in hand 324,736 498,226 Other financial

liabilities at amortised cost

K’000 Liabilities as per the statement of financial position Borrowings 257,060 Trade and other payables (excluding statutory liabilities) 788,499 1,045,559

Page 62 of 100

21


SUMMARY OF SIGNIFICANT NOTES TO THE FINANCIAL STATEMENTS

2. Financial instruments by category (continued)

At 31 March 2017 Loans and

receivables Assets as per the statement of financial position K’000 Trade and other receivables (excluding pre-payments) 333,969 Cash at bank and in hand 90,165 424,134 Other financial


Liabilities as per the statement of financial position K’000 Borrowings 616,789 Trade and other payables (excluding statutory liabilities) 381,724 998,513

At 31 March 2016

Loans and receivables

Assets as per the statement of financial position K’000 Trade and other receivables (excluding pre-payments) 249,444 Cash at bank and in hand 86,326 Non-current receivable 896 336,666 Liabilities at fair value

through profit or loss Other financial


Liabilities as per the statement of financial position K’000 Borrowings - 467,031 Trade and other payables (excluding statutory liabilities) - 438,129 Derivative financial instruments 36,365 - 36,365 905,160

At 31 March 2015

Financial assets at fair value through profit or

loss

Loans and receivables

Assets as per the statement of financial position K’000 K’000 Trade and other receivables (excluding pre-payments) - 191,458 Cash and cash equivalents - 51,007 Derivative financial instruments 8,133 - Non-current receivable - 5,777 8,133 248,242 Other financial


Liabilities as per the statement of financial position K’000 Borrowings 432,481 Trade and other payables (excluding statutory liabilities) 262,966 695,447

Page 63 of 100

22



3. Critical accounting estimates and judgements

Critical accounting estimates and assumptions Estimates and judgements are continually evaluated and are based on historical experience and other factors, including experience of future events that are believed to be reasonable under the circumstances. The Directors make estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below: Impairment of goodwill The company tests annually whether goodwill has suffered any impairment, in accordance with accounting policy stated in Note 2. The recoverable amounts of cash-generating units have been determined using the value in use model and the fair value less costs to sell model. The assumptions used in the calculations are set out in Note 16(I). Non-current assets held for sale and discontinued operations On 19 April 2017 and subsequently on 8 June 2017 and 23 August 2017, the Directors announced publicly that a deal had been reached, in principle, for The Coca Cola Company (TCCC) to acquire the non-alcoholic ready-to-drink business segment of the Company. Completion of this deal was subject to receipt of any requisite regulatory approvals and material consents. Expiration of the existing bottling agreement is expected to take effect upon the execution of the legal arrangements governing the transaction. As at period-end, although significant progress had been made with respect to the nature and form of the transaction, and how the operations of the Company will be impacted, the related legal arrangements were yet to be finalized. In light of the above, the Directors made judgements as to whether, as at period-end, this transaction fell within the scope of IFRS 4: Non-current assets held for sale and discontinued operations. A transaction of this nature is considered to be within the scope of IFRS 5: Non-current assets held for sale and discontinued operations when the assets in question are available for immediate sale in their present condition, and the sale is highly probable.

The Directors determined that this transaction fell within the scope of IFRS 5 at period-end on the basis that the sale was highly probable and the assets that are subject to this transaction were available for immediate sale in their present condition. Consequently, the Directors have accounted for the non-alcoholic business segment as a discontinued operation as required by IFRS 5.

Income taxes Significant judgement is required in determining the Company’s income taxes. There are transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Specifically, the Directors have applied judgement in determining an appropriate approach of applying ZDA tax incentives in computing current and deferred income taxes for the year. The Company records provisions for potential liabilities based on estimates of whether it is probable that additional taxes may be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current income tax and deferred income tax provisions in the period in which such determination is made.

Page 64 of 100

23


3. Critical accounting estimates and judgements (continued)

Useful lives of equipment Critical estimates are made by the directors in determining depreciation rates for property, plant and equipment. The rates used are set out in Note 2 (k) above. The carrying value of property, plant and equipment is disclosed in Note 15.

4. Segment information

The Executive Committee (“The Committee”) is the Company’s Chief operating decision –maker. The Board of Directors have determined the operating segments based on the information reviewed by the Executive Committee for the purposes of allocating resources and assessing performance. The Board considers the activities of the Company to substantially fall within the same product range and within the same geographic region (Zambia). The products are distributed to similar classes of customers using similar distribution channels. The Executive Committee assesses the performance of the Company based on EBITA. The Company does not incur any non-recurring expenditure and therefore does not adjust EBITA.

Page 65 of 100

24

ZA

MBI

AN B

REW

ERIE

S LIM

ITED

PLC

SU

MM

ARY

OF SI

GNIF

ICAN

T N

OTES

TO

THE

FIN

ANCI

AL ST

ATEM

ENTS

4. Se

gmen

t (co

ntinu

ed)

N

ine m

onth

s end

ed 31

Dec

embe

r 201

7 Ye

ar En

ded 3

1 Marc

h 201

7

Al

coho

lic

K’00

0

Non

-Al

coho

lic

K’00

0

To

tal

K’00

0

Al

coho

lic

K’00

0

Non

-Al

coho

lic

K’00

0

To

tal

K’00

0 Re

venu

e fro

m ex

terna

l

Cu

stome

rs:

Alco

holic

beve

rages

1,189

,026

- 1,1

89,02

6 1,3

87,47

4 -

1,387

,474

Non-a

lcoho

lic be

verag

es

- 37

2,112

3

72,11

2

-

586,5

47

58

6,547

To

tal re

venu

e 1,1

89,02

6 37

2,112

1,5

61,13

8 1,3

87,47

4 58

6,547

1,9

74,02

1 Fix

ed an

d vari

able

expe

nses

(860,0

52)

(326,2

04)

(1,18

6,256

) (1,

192,2

74)

(481,4

39)

(1,67

3,713

) EB

ITA

328,9

74

45,90

8 37

4,882

19

5,200

10

5,108

30

0,308

In

terest

inco

me

10,23

9 1,8

77

12,11

6 12

,188

6,563

18

,751

Inter

est ex

pens

e (56

,778)

(9,94

3) (66

,721)

(85,32

1) (45

,942)

(131,2

63)

Amor

tisati

on

(161)

(87)

(248)

(1,29

3) (69

7) (1,

990)

Inco

me ta

x exp

ense

(87,50

5) (11

,704)

(99,20

9) (37

,465)

(20,17

3) (57

,638)

Profi

t afte

r inco

me ta

x 19

4,769

2

6,051

22

0,820

8

3,309

4

4,859

12

8,168

Total

asse

ts 1,9

90,65

5 1,0

71,89

1 3,0

62,54

6 1,7

38,50

8 93

6,118

2,6

74,62

6

Total

liabil

ities

1,0

61,90

0 57

1,792

1,6

33,69

2 95

3,285

51

3,307

1,4

66,59

2

Page 66 of 100

25

ZA

MBI

AN B

REW

ERIE

S LIM

ITED

PLC

SU

MM

ARY

OF

SIGN

IFIC

ANT

NO

TES T

O T

HE

FIN

ANCI

AL ST

ATEM

ENTS

4. Se

gmen

t (co

ntin

ued)

Ye

ar en

ded

31 M

arch

2016

Ye

ar E

nded

31 M

arch

2015

Al

coho

lic

Non

-Al

coho

lic

To

tal

Al

coho

lic

Non

-Al

coho

lic

To

tal

Reve

nue f

rom

exter

nal

Custo

mers

:

Al

coho

lic b

evera

ges

1,112

,691

- 1,1

12,69

1 88

8,427

-

888,4

27

Non

-alco

holic

beve

rages

-

600,1

78

600

,178

-

459,3

51

459

,351

Total

reve

nue

1,112

,691

600,1

78

1,712

,869

888,4

27

459,3

51

1,347

,778

Fixe

d and

varia

ble ex

pens

es

EB

ITA

221,2

82

119,1

51

340,4

33

152,7

23

82,23

5 23

4,958

In

teres

t inc

ome

1,164

62

7 1,7

91

361

195

556

Inter

est e

xpen

se

(40,3

87)

(21,7

47)

(62,1

34)

(30,9

63)

(16,6

73)

(47,6

36)

Amor

tisati

on

(1,24

1) (6

68)

(1,90

9) (1

,188)

(640

) (1

,828)

Inco

me t

ax ex

pens

e (5

4,620

) (2

9,411

) (8

4,031

) (3

5,238

) (1

8,975

) (5

4,213

) Pr

ofit

after

incom

e tax

12

6,198

67

,952

194,1

50

85,69

5 46

,142

131,8

37

To

tal a

sset

s 1,6

00,67

8 86

1,903

2,4

62,58

1 1,3

59,35

3 73

1,959

2,0

91,31

2

Tota

l liab

ilitie

s 8

77,79

4 47

2,658

1,3

50,45

2 7

04,47

2 37

9,331

1,0

83,80

3

Page 67 of 100

26


4. Segment (continued)

The revenue from external parties reported to the Executive Committee is measured in a manner consistent with that in the statement of profit or loss and other comprehensive income. The amounts provided to the Executive Committee with respect to total assets and liabilities are measured in a manner consistent with that of the financial statements. All non-current assets are located in Zambia. As the Company primarily sells to distributors, wholesalers and large retail outlets, it had two customers during the period who contributed 10% or more of the Company’s total revenue. This amounted to K609 million (March 2017: K591 million) in total. As disclosed in Note 3, as at period –end, a deal had been reached in principle for TCCC to acquire the non-alcoholic business segment of the Company. As a result, the Directors classified this segment as a discontinued operation.

5. Other operating expense/(income) Nine month

period ended 31 December 2017

K’000

Twelve month ended

31 March 2017 K’000

Twelve month ended

31 March 2016 K’000

Twelve month ended

31 March 2015 K’000

Interest income - - 1,791 556 Other income 669 2,630 938 7,656 Net foreign exchange (loss)/gains other than on borrowings and cash and cash equivalents

(9,937)

14,424

302

(6,601) Profit on disposal property, plant and equipment

311

162

50

2,132

(8,957 17,216 3,081 3,743

Page 68 of 100

27

ZAMBIAN BREWERIES LIMITED PLC SUMMARY OF SIGNIFICANT NOTES TO THE FINANCIAL STATEMENTS 6. Expenses by nature

The following expenses have been charges in arriving at the profit before income tax:

Nine month period ended

31 December 2017 K’000

Twelve month ended

31 March 2017 K’000

Twelve month ended

31 March 2016 K’000

Twelve month ended

31 March 2015 K’000

Amortisation of intangible asset

248

1,990

1,909

1,828

Auditor’s remuneration 1,278 1,090 1,075 1,008 Depreciation on property, plant and equipment

170,273

133,366

106,279

94,733

Employee benefits expense (Note) 7 127,548 195,550 139,340 130,788 Maintenance 40,115 57,980 55,453 41,214 Management fees 32,723 44,709 42,094 44,614 Marketing 35,537 52,783 50,155 41,021 Other expenses 82,547 72,527 71,163 63,721 Provision for impairment losses on trade receivables

3,755

11,197

1,364

899

Provision for slow moving inventory - 23,824 - - Raw materials and consumables used 562,442 864,322 782,431 537,908 Royalties 59,499 72,471 59,809 48,112 Service Contracts 2,457 29,536 24,288 33,335 Transportation expenses 67,742 68,935 62,778 62,498 Total cost of sales, distribution and administration costs

1,186,164

1,630,280

1,398,138

1,101,679

7. Employee benefits expense The following are included within the employee benefits expense:



Twelve month ended

31 March 2017 K’000

Twelve month ended

31 March 2016 K’000

Twelve month ended

31 March 2015 K’000

Salaries and wages 113,087 143,353 127,372 113,464 Voluntary separation costs 9,929 38,754 - 5,198 Defined contribution schemes – NAPSA and Saturnia

4,532

13,443

11,968

12,126

127,548 195,550 139,340 130,788

Page 69 of 100

28

ZAMBIAN BREWERIES LIMITED PLC SUMMARY OF SIGNIFICANT NOTES TO THE FINANCIAL STATEMENTS 8. Finance income and costs

Finance income:



Twelve month ended

31 March 2017 K’000

Twelve month ended

31 March 2016 K’000

Twelve month ended

31 March 2015 K’000

Interest income 12,116 18,751 - - Net foreign exchange gains on cash and cash equivalents

8,617

-

72,430

33,725

20,733 18,751 72,430 33,725 Finance costs: Interest expense: -Intercompany interest paid

(3,424)

(1,487)

-

-

-Overdrafts (42,539) (71,264) (23,406) (20,004) -FNB loan (Syndicated loans) (4,032) (8,090) (34,353) (27,632) -Revolving credit facility (16,726) (50,422) (4,375) - (66,721) (131,263) (62,134) (47,636) Net foreign exchange losses on cash and cash equivalents

-

(62,639)

(49,927)

(49,881)

(66,721) (193,902) (112,061) 97,517 Finance costs – net (45,988) (175,151) (39,631) (63,792)

9. Income tax

Current income tax 4,241 7,483 955 333 Deferred income tax charge 94,968 50,155 (24,021) 19,510 Prior year deferred tax under provision

- - - 16,668

Impairment of ZDA Incentive benefits

-

-

107,097

17,702

Income tax expense 99,209 57,638 84,031 54,213

The tax on the company’s profit before income tax differs from the theoretical amount that would arise using the statutory income tax rate as follows:



Twelve month ended

31 March 2017 K’000

Twelve month ended

31 March 2016 K’000

Twelve month ended

31 March 2015 K’000

Profit before income tax 320,029 185,806 278,181 186,050 Tax calculated at the statutory income tax rate of 35%

112,010

65,032

97,363

65,118

Tax effects of: - Income not subject to tax - - (123,968) (51,531) - Prior year deferred tax under

provision

-

-

-

16,668 - Expenses not deductible for

tax purposes

3,673

64,265

3,539

5,303 - Provision held against ZDA

incentive benefits

85,557

(35,906)

107,097

17,702 - Income subject to a lower tax

rate

(102,031)

(35,753)

-

953 Income tax expense 99,209 57,638 84,031 54,213

Page 70 of 100

29

ZAMBIAN BREWERIES LIMITED PLC SUMMARY OF SIGNIFICANT NOTES TO THE FINANCIAL STATEMENTS 9. Income tax (continued)

Current income tax movement in the statement of financial position



Twelve month ended

31 March 2017 K’000

Twelve month ended

31 March 2016 K’000

Twelve month ended

31 March 2015 K’000

At start of the period (5,521) (13,004) (13,959) (238) Charge for the period 4,241 7,483 955 333 Paid during the period (4,629) - - (14,054) At end of the period – asset (5,909) (5,521) (13,004) (13,959)

Tax losses The losses are available for carrying forward for a maximum period of five years. The Company has tax losses as below:

Year

Tax loss K’000

Utilised during

the year K’000

Losses expired during the

period K’000

Cumulative K’000

Year of expiry K’000

31 March 2011 60,241 - - 60,241 2016 31 March 2012 119,407 (40,007) (79,400) - 2017 31 March 2013 11,950 - - 11,950 2018 31 March 2014 48,092 - - 60,042 2019 31 March 2015 119,995 - - 180,037 2020 31 March 2016 122,790 - - 302,827 2021 31 March 2017 32,032 - - 334,859 2022 31 December 2017 - (111,012) - 223,847 2023

In the current period, there were no deferred income tax movements relating to components of other comprehensive income. Details relating to prior year movements are shown below:

31 March 2017 Before tax

K’000 Tax credit

K’000 After tax

K’000 Cash flow hedge (36,365) 12,728 (23,637) Other comprehensive income (36,365) 12,728 (23,637) Deferred income tax - 12,728 -


K’000 Tax credit

K’000 After tax

K’000 Cash flow hedge (36,365) 12,728 (23,637) Other comprehensive income (36,365) 12,728 (23,637) Deferred income tax - (12,728) -


K’000 Tax credit

K’000 After tax

K’000 Cash flow hedge 8,133 (2,847) 5,286 Other comprehensive income 8,133 (2,847) 5,286

Deferred income tax - (2,847) -

Page 71 of 100

30


10. Earnings per share

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company by the weighted average number of ordinary shares outstanding during the year.



Twelve month ended

31 March 2017 K’000

Twelve month ended

31 March 2016 K’000

Twelve month ended

31 March 2015 K’000

Profit attributable to equity holders of the Company K’000)

220,820

128,168

194,150

131,837 Weighted average number of ordinary shares in issue (millions)

546

546

546

546 Basic earnings per share (in kwacha)

0.404

0.235

0.356

0.241

There were no potentially dilutive shares outstanding at 31 March, 2015, 31 March 2016, 31 December 2017 or 31 March 2017. Diluted earnings per share are therefore the same as basic earnings per share.

11. Share capital Number of

shares (million)

Ordinary Shares K’000

Share premium

K’000 Balance as at 1 March 2015, 31 March 2016, 31 March 2017 and 31 December 2017

546

5,460

450,207

The authorized share capital of the Company remained unchanged at 600,000,000 ordinary shares of K0.01 each of which 546,000,000 are issued and fully paid.

12. Hedge reserve



Twelve month ended

31 March 2017 K’000

Twelve month ended

31 March 2016 K’000

Twelve month ended

31 March 2015 K’000

At start of the year - (23,637) 5,286 7,073 Transfers to cost of sales - 36,365 (8,133) (10,881) Tax on transfers to cost of sales - (12,728) 2,847 3,808 Fair value gains in year - - (36,365) 8,133 Tax on fair value gains in year - - 12,728 (2,847) At end of the year - - (23,637) 5,286

The hedge reserve is used to record gains and losses on derivatives that are designated and qualify as cash flow hedges and that are recognized in other comprehensive income. Amounts are reclassified to profit or loss when the associated hedge transaction affects profit or loss. During the year ended 31 March 2017, the Company discontinued the use of forward contracts to hedge against foreign exchange risk. It is for this reason that no hedge reserve is shown in the current year financial statement.

Page 72 of 100

31


13. Borrowings

The bank overdraft facilities form various banks are all unsecured. Non-current



Twelve month ended

31 March 2017 K’000

Twelve month ended

31 March 2016 K’000

Twelve month ended

31 March 2015 K’000

Revolving credit facility - principal

-

-

200,000

-

Current: Bank overdraft 15,142 260,072 187,233 138,947 Bank overdrafts – accrued interest

-

1,434

-

-

Intercompany lending 141,918 64,111 79,798 83,534 Revolving credit facility - Principal

100,000

200,000

210,000

Revolving credit facility – accrued interest

-

3,236

-

-

FNB loan - Principal - 85,000 - - FNB loan – accrued interest - 2,936 - - 257,060 616,789 267,031 432,481 Total borrowings 257,060 616,789 467,031 432,481

The revolving credit facility is held with Stanbic Bank Zambia Limited following an agreement entered into on 24 February 2016 with an expiration date of 24 February 2018. The facility is secured by a guarantee from AB InBev Holdings Limited. Interest on the loan facility is payable at 21.25% per annum for the remaining tenure of the loan. Due to the short term nature of the borrowings, the contracted rate approximates the effective interest rate.

The overdraft facility are held with four different bank namely. Stanbic Bank Zambia Limited, Citi bank Zambia Limited, ZANACO Bank PLC and Standard Chartered Bank (Z) Limited. The combined facility is K319 million therefore resulting in an unsecured position of K304 million as at 31 December 2017. The bank overdraft facilities from various banks are un secured. Interest on the bank overdrafts are payable at the prevailing Bank of Zambia (BOZ). Monetary Policy Rate plus a liquidity premium and a margin ranging from 1.00% to 6.5%. The bank overdrafts expiring within a year are annual facilities subject to renewal at various dates during 2017. The interest rate during the period was 19.88% (March 2017:30%). Due to the short term nature of the borrowings, the contractual rate approximates the effective interest rate.

The intercompany loan is payable to Heinrich’s Syndicate Limited and is unsecured. Interest on the facility is payable at 17.25% per annum and it is repayable on demand. During the period, interest expense of K1.2 million (March 2017: K1.5 million)) was charged on the balance. The fair value of the contractual rate approximates the effective interest rate.

There were no facilities in default during the period. The carrying amount of the current borrowings approximates to the fair value. All borrowings are denominated in Kwacha.

Page 73 of 100

32



14. Deferred income tax

Nine month period ended 31 December

2017 K’000

Twelve month

ended 31 March 2017

K’000

Twelve month

ended 31 March 2016

K’000

Twelve month

ended 31 March 2015

K’000 At start of the period 412,286 349,403 281,902 228,983 Under provision from prior year - - - 16,668 Charge for the period 94,968 50,155 (24,021) 19,510 Tax (credit)/charge relating to cash flow hedge

-

-

(12,728)

2,847

Tax charge on hedge reclassified to profit and loss

-

12,728

(2,847)

(3,808)

Impairment of ZDA incentive benefit

-

-

107,097

17,702

At end of period 507,254 412,286 349,403 281,902

The analysis of deferred tax assets and deferred tax liabilities is as follows: Deferred income tax assets:

- Deferred income tax assets to be recovered after 12 months

(56,490)

(117,201)

(168,866)

-

- Deferred income tax assets to be recovered within 12 months

(11,840)

(6,762)

(12,728)

(127,303) (68,330) (123,963) (181,594 (127,303

Deferred income tax liabilities - Deferred income tax assets

to be recovered after 12 months

544,808

505,473

523,544

336,840

- Deferred income tax assets to be recovered within 12 months

30,776

30,776

7,453

72,365 575,584 536,249 530,997 409,205

Deferred income tax liabilities - net 507,254 412,286 349,403 281,902

Net deferred income tax liabilities - Net deferred tax liabilities to

be recovered after more than 12 months

488,318

388,272

354,678

336,840

- Net deferred tax liabilities to be recovered within more than 12 months

18,936

24,014

(5,275)

(54,938)

Deferred income tax liabilities - net

507,254 412,286 349,403 281,902

Page 74 of 100

33


14. Deferred income tax (continued) Deferred income tax assets and liabilities, deferred income tax charge/(credit) in profit or loss are attributed to the following items:

Period ended 31 December 2017

At start of the period K’000

Charged/(credited) to P/L

K’000

At end of the period K’000

Deferred income tax liabilities Property, plant and equipment 403,509 (46,222) 357,287 403,509 (46,222) 357,287 Deferred income tax assets Other deductible temporary differences (6,762) (5,078) (11,840) Tax losses carried forward (117,201) 60,711 (56,490) (123,963) 55,633 (68,330) Net deferred income tax liability 279,546 9,411 288,957 Provision held against ZDA incentive benefit

132,740

85,557

218,297

Deferred income tax liability recognised 412,286 94,968 507,254

Year ended 31 March 2017 Deferred income tax liabilities Property, plant and equipment 362,351 41,158 - 403,509 362,351 41,158 - 403,509 Deferred income tax assets Other deductible temporary differences

- (6,762) - (6,762)

Tax losses carried forward (168,866) 51,665 - (117,201) Hedges (12,728) - 12,728 - (181,594) 44,903 12,728 (123,963) Net deferred income tax liability 180,757 86,061 12,728 279,546 Provision held against ZDA incentive benefit

168,646

(35,906)

-

132,740

Deferred income tax liability recognised

349,403

50,155

12,728

412,286

Page 75 of 100

34


14. Deferred income tax (continued)

Year ended 31 March 2016

At start of the period

K’000

Charged/ (credited)

to P/L K’000

Credit to OCI

K’000

Current tax on items

reclassified to P/L

K’000

At end of the period K’000

Deferred income tax liabilities Property, plant and equipment 344,809 17,542 - - 362,351 Hedges 2,847 - - (2,847) - 347,656 17,542 - (2,847) 362,351 Deferred income tax assets Other deductible temporary differences

(7,968)

7,968

-

-

-

Tax losses carried forward (119,335) (49,531) - - (168,866) Hedges - - (12,728) - (12,728) (127,303 (41,563) (12,728) - (181,594) Net deferred income tax liability 220,353 (24,021) (12,728) (2,847) 180,757 Impairment of ZDA incentive benefit 61,549 107,097 - - 168,646 Deferred income tax liability recognised

281,902

83,076

(12,728)

(2,847)

349,403

Year ended 31 March 2015 Deferred income tax liabilities Property, plant and equipment 315,078 29,731 - - 344,809 Hedges 3,808 - 2,847 (3,808) 2,847 318,886 29,731 2,847 (3,808) 347,656 Deferred income tax assets Other deductible temporary differences

(418)

(7,550)

-

-

(7,968)

Tax losses carried forward (133,332) 13,997 - - (119,335) Hedges (133,750) 6,447 - - (127,303) Net deferred income tax liability 185,136 36,178 2,847 (3,808) 220,353 Impairment of ZDA incentive benefit 43,847 17,702 - - 61,549 Deferred income tax liability recognised

228,983

53,880

2,847

(3,808)

281,902

Page 76 of 100

35


15. Property, plant and equipment

Buildings K’000

Motor

Vehicles K’000

Plant &

containers K’000

Capital work in

progress K’000

Total K’000

At 1 April 2016 Cost 279,898 104,966 1,574,330 350,453 2,309,647 Accumulated depreciation (27,774) (76,612) (561,724) - (666,110) Net book amount 252,124 28,354 1,012,606 350,453 1,643,537 Year ended 31 March 2017 Opening net book amount 252,124 28,354 1,012,606 350,453 1,643,537 Additions - - 101,118 233,126 334,244 Disposals - (105) (23,963) - (24,068) Intercompany transfers (542) - (2,455) - (2,997) Transfers 25,902 10,831 141,611 (178,344) - Depreciation charge (7,495) (11,601) (114,270) - (133,366) Closing net book amount 269,989 27,479 1,114,647 405,235 1,817,350 At 31 March 2017 Cost 305,258 111,499 1,784,485 405,235 2,606,477 Accumulated depreciation (35,269) (84,020) (669,838) - (789,127) Closing net book amount 269,989 27,479 1,114,647 405,235 1,817,350 Period ended 31 December 2017 Opening net book amount 269,989 27,479 1,114,647 405,235 1,817,350 Additions - - 98,658 235,768 334,426 Disposals - (179) (16) - (195) CWIP transfers 152,604 964 183,234 (336,802) - Intercompany Transfers - 417 1,046 - 1,463 Depreciation charge (6,161) (7,408) (156,704) - (170,273) Closing net book amount 416,432 21,273 1,240,865 304,201 1,982,771 At 31 December 2017 Cost 457,862 112,701 2,067,407 304,201 2,942,171 Accumulated depreciation (41,430) (91,428) (826,542) - (959,400) Closing net book amount 416,432 21,273 1,240,865 304,201 1,982,771 Attributable to: Continuing operations 1,482,767 Discontinued operations 500,004 1,982,771*

* Included in the net book value (NBV) as at 31 December 2017 is assets with an NBV of K500 million separately presented as non-current assets held for sale on the statement of financial position (note 19).

Page 77 of 100

36

ZAMBIAN BREWERIES LIMITED PLC SUMMARY OF SIGNIFICANT NOTES TO THE FINANCIAL STATEMENTS 15 Property, plant and equipment (continued)

Buildings K’000

Motor

Vehicles K’000

Plant &

containers K’000

Capital work in

progress K’000

Total K’000

At 1 April 2014 Cost 191,296 93,157 1,274,515 129,656 1,688,624 Accumulated depreciation (15,080) (52,335) (397,747) - (465,162) Net book amount 176,216 40,822 876,768 129,656 1,223,462 Year ended 31 March 2015 Opening net book amount 176,216 40,822 876,768 129,656 1,223,462 Additions - - 38,940 196,179 235,120 Disposals - (19) (14,001) - (14,020) Transfers 71,435 11,316 147,745 (230,496) - Depreciation charge (5,897) (12,435) (76,401) - (94,733) Closing net book amount 241,754 39,684 973,051 95,339 1,349,829 At 31 March 2015 Cost 262,731 104,454 1,447,200 95,339 1,909,724 Accumulated depreciation (20,977) (64,770) (474,148) - (559,895) Closing net book amount 241,754 39,684 973,052 95,339 1,349,829 Year ended 31 March 2016 Opening net book amount 241,754 39,684 973,052 95,339 1,349,829 Additions - - 61,908 352,176 414,084 Disposals - - (14,097) - (14,097) Transfers 17,167 572 79,323 (97,062) - Depreciation charge (6,797) (11,902) (87,580) - (106,279) Closing net book amount 252,124 28,354 1,012,606 350,453 1,643,537 At 31 March 2016 Cost 279,898 104,966 1,574,330 350,453 2,309,647 Accumulated depreciation (27,774) (76,612) (561,724) - (666,110) Closing net book amount 252,124 28,354 1,012,606 350,453 1,643,537

The register showing the details of buildings and land, as required by Section 193 of the Zambia Companies Act, is available during business hours at the registered office of the Company. Major component under the Capital Work in Progress relates to the Ndola Plant that is currently under extension.

Page 78 of 100

37


16. Intangible assets

Goodwill

K’000

Software Licences

K’000

Total K’000

At 1 April 2016 Cost 71,987 10,846 82,833 Accumulated amortisation - (7,784) (7,784) Net book amount 71,987 3,062 75,049 Year ended 31 March 2017 At start of year 71,987 3,062 75,049 Amortisation charge - (1,990) (1,990) At end of year 71,987 1,072 73,059 At 31 March 2017 Cost 71,987 10,846 82,833 Accumulated amortisation - (9,774) (9,774) Net book amount 71,987 1,072 73,059 Period ended 31 December 2017 At start of year 71,987 1,072 73,059 Amortisation charge - (284) (248) At end of year 71,987 824 72,811 At 31 December 2017 Cost 71,987 10,846 82,833 Accumulated amortisation - (10,022) (10,022) Net book amount 71,987 824 72,811

Page 79 of 100

38

ZAMBIAN BREWERIES LIMITED PLC SUMMARY OF SIGNIFICANT NOTES TO THE FINANCIAL STATEMENTS 16 Intangible assets (continued)

Goodwill

K’000

Software Licences

K’000

Total K’000

At 1 April 2014 Cost 71,987 9,396 81,383 Accumulated amortisation - (4,047) (4,047) Net book amount 71,987 5,349 77,336 Year ended 31 March 2015 Opening net book value 71,987 5,349 77,336 Additions - 3 3 Amortisation charge - (1,828) (1,828) At end of year 71,987 3,524 75,511 At 31 March 2015 Cost 71,987 9,399 81,386 Accumulated amortisation - (5,875) (5,875) Net book amount 71,987 3,524 75,511 Year ended 31 March 2016 At start of year 71,987 3,524 75,511 Additions - 1,447 1,447 Amortisation charge - (1,909) (1,909) At end of year 71,987 3,062 75,049 At 31 March 2016 Cost 71,987 10,846 82,833 Accumulated amortisation - (7,784) (7,784) Net book amount 71,987 3,062 75,049

Page 80 of 100

39

ZAMBIAN BREWERIES LIMITED PLC SUMMARY OF SIGNIFICANT NOTES TO THE FINANCIAL STATEMENTS 16. Intangible assets (continued)

(i) Goodwill Goodwill is allocated to the Company’s cash-generating units (CGUs) identified according to operating segment: The Directors monitor the business on the basis of the operating segments and have thus allocated the goodwill on that basis. The allocation of the goodwill is as follows:



Twelve month ended

31 March 2017 K’000

Twelve month ended

31 March 2016 K’000

Twelve month ended

31 March 2015 K’000

Alcoholic beverages 17,061 17,061 17,061 17,061 Non-alcoholic beverages

54,926

54,926

54,926

54,926

71,987 71,987 71,987 71,987

The recoverable amount is determined as the higher of value in use and the fair value less costs to sell. In the current period, the directors applied the fair value less costs to sell model in assessing goodwill for impairment for both CGUs. Alcoholic business segment The value in use calculations use expected cash flow projections based on financial budgets approved by the Directors covering a three year period. Cash flows beyond the three year period are extrapolated using the estimated growth rates stated below. The growth rates do not exceed the long term average growth rates for the respective business in which the CGU operates. The key assumptions used for value-in-use calculations are as follows:



Twelve month ended

31 March 2017 K’000

Twelve month ended

31 March 2016 K’000

Twelve month ended

31 March 2015 K’000

Growth rate 7.00% 11.70% 10.9% 6.10%

Discount rate 16.50% 27.50% 22.2% 14.2%

The growth rate is based on past performance and management’s expectations of market development. The discount rates used reflect specific risks relating to the segment.

The recoverable amount exceeded the carrying value in the current period, hence no impairment losses were recognised in 2017. (March 2017: Nil).

Non-alcoholic ready to drink business segment

During the year, the directors announced that a deal in principle had been reached between. The Coca Cola Company (TCCC) and AB InBev for the former to acquire the Company’s non-alcoholic ready-to-drink business.

In light of this development, the directors have deemed it more appropriate to determine the recoverable amount of this CGU based on the consideration the expect to receive from TCCC in exchange for this business segment. The recoverable amount exceeded the carrying value in the current period, hence no impairment losses were recognized in 2017. (March 2017: Nil).

Page 81 of 100

40


16. Intangible assets (continued)

(ii) Computer software Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their estimated useful lives of four years.

17. Assets disposal group classified as held for sale


31 March 2017 K’000

Property, plant and equipment 500,004 - Non-current receivables and prepayments

Other non-current receivables 896 5,771

The amount disclosed above has been determined based on the separation principles governing the transaction. This amount includes K443 million relating to assets that are fully dedicated to the non-alcoholic business segment and an estimate of K57 million relating to assets that are deployed jointly within the operations of the alcoholic and non-alcoholic business segments.

The non-current assets held for sale are measured at the carrying value which is the lower of the carrying amount and fair value less costs to sell.

Financial performance of the discounted operation of the Non-alcoholic business segment



Twelve month ended

31 March 2017 K’000

Twelve month ended

31 March 2016 K’000

Twelve month ended

31 March 2015 K’000

Revenues 372,112 586,547 - - Expenses (334,357) (521,515) - - Profit before income tax 37,755 65,032 - - Income tax expense (11,704) (20,173) - - Profit after income tax of discounted operations

26,051

44,859

-

-

Page 82 of 100

41



18. Inventories



Twelve month ended

31 March 2017 K’000

Twelve month ended

31 March 2016 K’000

Twelve month ended

31 March 2015 K’000

Raw materials 139,305 210,393 172,694 123,476 Work in progress 104,698 22,658 22,262 8,245 Finished goods 72,509 55,190 62,327 51,886 General stores and consumables

166,117

57,328

107,353

73,284

482,629 345,569 364,636 256,891 The cost of inventories recognized as an expense and included in ‘cost of sales’ amounted to K562 million (March 2017: K864 million). At 31 December 2017, the provision made for inventory amounted to K33 million (March 2017: K37 million).

19. Trade and other receivables

Nine month period ended 31 December

2017 K’000

Twelve month ended

31 March 2017 K’000

Twelve month ended

31 March 2016

K’000

Twelve month ended

31 March 2015 K’000

Trade receivables 136,489 118,286 82,817 62,970 Less: Provision for impairment losses

(18,323) (14,568) (3,562) (2,878)

Net trade receivable 118,166 103,718 79,255 60,092 Amount due from related parties 35,138 226,513 163,788 109,533 Prepayments 20,200 8,993 24,414 82,881 Other receivables 20,187 3,738 6,401 22,767 193,691 342,962 273,858 275,273 Movements on the provision for impairment of trade receivables are as follows:

At start of year 14,568 3,562 2,878 5,501 Provision in the year 5,233 11,197 1,364 899 Receivables written off during the year as uncollectible

(1,478)

(191)

(680)

(3,522)

At end of period 18,323 14,568 3,562 2,878

The creation and release of provision for impaired receivables have been included in administrative expenses in the statement of profit or loss and other comprehensive income. Amounts charged to the allowance account are generally written off, when there is no expectation of recovering additional cash. The other classes within trade and other receivables do not contain impaired assets.

The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The Company holds security in the form of bank guarantees and title deeds for some (38%) of the credit customers.

The fair value of trade and other receivables approximates their carrying value.

Page 83 of 100

42



20 Cash and cash equivalents



Twelve month ended

31 March 2017 K’000

Twelve month ended

31 March 2016 K’000

Twelve month ended

31 March 2015 K’000

Cash at bank 324,491 89,924 - - Cash in hand 245 241 86,326 51,007 324,736 90,165 86,326 51,007

Cash and cash equivalents include the following for the purposes of the statement of cash flows:

Cash at bank and in hand 324,736 90,165 86,326 51,007 Bank overdrafts (15,142) (260,072) (187,233) (138,947) 309,594 (169,907) (100,907) (87,940)

21 Trade and other payables



Twelve month ended

31 March 2017 K’000

Twelve month ended

31 March 2016 K’000

Twelve month ended

31 March 2015 K’000

Trade payables 211,022 103,203 231,332 62,560 Amounts due to related companies

357,570

112,643

90,653

69,513

Accrued expenses 89,945 53,784 39,365 41,829 Dividends payable 459 1,759 381 344 Other payables 210,382 166,128 130,647 140,236 869,378 437,517 492,378 314,482

Page 84 of 100

43


SUMMARY OF SIGNIFICANT NOTES TO THE FINANCIAL STATEMENTS 22 Related party transactions

The Company is controlled by AB InBev Africa Holdings Limited incorporated in Netherlands AB InBev Plc (incorporated in Belgium) which is also the ultimate parent. There are other companies that are related to Zambian Breweries Plc through common shareholding or common directorships.



Twelve month ended

31 March 2017 K’000

Twelve month ended

31 March 2016 K’000

Twelve month ended

31 March 2015 K’000

i) Sales of goods and services No sales were made to related parties

ii) Purchase of goods

and services

SAB miller & Asia (PTY) Limited

-

-

6,396

-

AB InBev Africa Holdings Limited

-

1,168

28,862

-

Cervejas de Mocambique

9

-

-

-

South African Breweries (Pty) Limited

118,380

21,125

84,054

909 Sabmark International

– a division of SAB SAB Miller

International BV (Royalties

59,499

72,471

59,809

48,112 SABMiller

Management BV (M (Management fees)

32,723

44,709

42,094

44,614 Kgalagadi Breweries

PLC

-

1,852

3,666

1,002 Coca Cola Canners 10,476 1,786 - - Brewex - - - 58 952 Mubex 360,649 481,611 447,600 315,651 581,736 624,722 672,481 469,240

Page 85 of 100

44

ZAMBIAN BREWERIES LIMITED PLC SUMMARY OF SIGNIFICANT NOTES TO THE FINANCIAL STATEMENTS 22 Related party transactions (continued)



Twelve month ended

31 March 2017 K’000

Twelve month ended

31 March 2016 K’000

Twelve month ended

31 March 2015 K’000

iii) Interest expense

Mubex 1,584 1,469 58 - National Breweries Plc 583 - - - Heinrich’s Syndicate Limited

1,257

1,487

3,616

4,252 3,424 2,956 3,674 4,252 iv) Director’s remuneration

and key management compensation

Directors remuneration: Non-executive Director fees

415

411

434

252 Salaries and short term emoluments

4,659

2,949

3,781

2,437

Other emoluments 2,025 3,114 876 957 Retirement benefit cost 927 124 57 19 8,026 6,598 5,148 3,665

Other key management compensation

Salaries and short term emoluments

2,386

7,643

8,903

7,611

Other emoluments 1,147 7,520 2,321 6,724 Retirement benefit cost 106 500 84 248 3,639 15,663 11,308 14,583 v) Outstanding balances

relating to borrowings

Amounts to due to related parties Fellow subsidiaries:

Heinrich’s Syndicate Limited 141,918 64,111 79,798 83,534 The terms of the loan are disclosed in

vi) Outstanding balances

arising from sale of goods/services

Amounts to due to related parties Fellow subsidiaries: Cervejas De Mocambique LDA

-

-

-

1,780

Mubex - 28,930 - - National Breweries Plc 35,138 197,583 163,788 107,753 35,138 226,513 163,788 109,533

The receivables from related parties arise mainly from sale transactions and are due one month after the date of sale. The receivable from National Breweries Plc mainly arises from the payment of services on behalf of the fellow subsidiaries as part of the group’s cash management system. The receivables are unsecured and bear no interest. No provisions are held against receivables form related parties (March 2017: Nil).

Page 86 of 100

45


SUMMARY OF SIGNIFICANT NOTES TO THE FINANCIAL STATEMENTS 22 Related party transactions (continued)



Twelve month ended

31 March 2017 K’000

Twelve month ended

31 March 2016 K’000

Twelve month ended

31 March 2015 K’000

vii) Outstanding balances from purchases of goods/services

Amounts to due to related parties

Fellow subsidiaries: AB InBev Africa Holdings Limited

238

1,186

-

-

Bevman Services AG (Management fees)

13,103

10,495

-

- Brewex - - - 6,683 Cervejas De Mocambique

389

-

-

-

Coca Cola Canners - 641 - - Kgalagadi Breweries PLC

559

511

557

1,199

South African Breweries

(Pty) Limited

47,219

20,276

10,460

690 Sabmark International – a division of SAB SAB Miller International BV (Royalties

38,737

16,396

14,432

9,328 SABmiller Africa & Asia (PTY) Limited

-

-

2,018

-

SABmiller Management BV (Management fees)

-

-

11,035

2,787 SABmiller PLC - - - 574

Tanzania Breweries Ltd

2,336

610

-

-

Mubex 208,185 62,528 52,151 48,252 Heinrich’s Syndicate Limited 46,804 - - - 357,570 112,643 90,653 69,513

viii) Interest income

Fellow subsidiaries: National Breweries

Plc 8,139 18,169 - -

Heinrich Syndicate Ptd

3,977 199 - -

12,116 18,368 - -

Page 87 of 100

46



23 Contingent liabilities Zambian Breweries Plc had several pending legal proceedings at 31 December 2017. The Directors having obtained appropriate legal advice, are of the opinion that there will be no material losses arising for the pending legal proceedings. The value of potential claims against the Company is K54 million (March 2017: K56.2 million.

24 Commitments Capital and operating expenditure contracted for at the end of the reporting date but not recognized in the financial statements is as follows:



Twelve month ended

31 March 2017 K’000

Twelve month ended

31 March 2016 K’000

Twelve month ended

31 March 2015 K’000

(i) Capital commitments Property, plant and equipment

14,037

70,039

40,024

71,092

(ii) Capital commitments

Raw material commitments

8,889

113,368

109,563

15,813

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47

ZAMBIAN BREWERIES LIMITED PLC INDEPENDENT REPORTING ACCOUNTANTS’ REPORT ON THE FORECAST FINANCIAL INFORMATION 12 June 2018 The Directors Zambia Breweries Plc Plot No 6438 Mungwi Road Heavy Industrial Area Head Office P O Box 35135 Lusaka Dear Sirs Report on the forecast financial information We have examined the proforma statements of profit or loss and other comprehensive income and financial position and the underlying assumptions of Zambia Breweries Plc (“Zambrew”) for the financial year ending 31 December 2017 and the forecast statements of profit or loss and other comprehensive income for the year ended 31 December 2018 in accordance with the International Standards on Assurance Engagements applicable to the examination of prospective financial information. Directors’ Responsibility for the forecast financial information The Directors are responsible for the preparation and presentation of the forecast information including the assumptions on which it is based in accordance with the Lusaka Stock Exchange listing rules. This is responsibility includes determining whether:

The assumption barring unforeseen circumstances, provide a reasonable basis for the preparation of the forecast information;

The forecast information has been properly completed on the basis stated; The forecast information has been properly presented and that all material assumptions are adequately

disclosed; and The forecast information is presented on a basis consistent the accounting policies of the Company.

Reporting Accountants’ responsibility Our responsibility is to express limited assurance on the reasonableness of the assumptions used in the forecast information and whether the forecast information has been prepared on the basis of those assumptions and is presented in accordance with the Lusaka Stock Exchange listing rules, based on the procedures we have performed and the evidence we have obtained.

Grant Thornton 5thFloor Mukuba Pension House Dedan Kimathi Road P.O Box 30885 Lusaka, Zambia +260 (211) 227722-8 +260 (211) 223774 [email protected]

T F E

Partners Edgar Hamuwele (Managing) Christopher Mulenga Wesley Beene Rodia Musonda Chilala Banda

Chartered Accountants Zambian Member of Grant Thornton International

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We ascertain that the accounting policies to be applied by the Zambrew in the future were applied consistently in arriving at forecast income, and that they are in compliance with international Financial Reporting Standards, except for the application of International Financial Reporting Standards (IFRS 9) on impairment accounts receivables and other financial assets. Further, asset separation and verification for the alcoholic and non alcoholic production lines are yet to be concluded by management. The assets allocation in the forecast and the proforma balance sheet is based on a methodology agreed by management and the consultants. Other variances and matters of principle were primarily discussed with the Country Director of the Zambrew and the consultants. We conducted our assurance engagement in accordance with the International Standard on Assurance Engagement 3400. The Examination of Prospective Financial Information (“ISAE 3400”), issued by the engagement to obtain sufficient appropriate evidence on which to base our limited assurance conclusion as to whether or not:

Management’s best-estimate assumptions on which the forecast information is based are not unreasonable and are consistent with the purpose of the information;

The forecast information is properly prepared on the basis of the assumptions; The forecast information is properly presented and all material assumptions are adequately disclosed; and The forecast information is prepared and presented on a basis consistent with the accounting policies of the

Zambrew in question for the period concerned. In a limited assurance engagement, the evidence-gathering procedures vary in nature from, and are less in extent than for a reasonable assurance engagement and, therefore, less assurance is obtained than in a reasonable assurance engagement. We believe that the evidence obtained is sufficient and appropriate to provide a basis for our limited assurance conclusion. Information and sources of information In arriving at our conclusion, we have relied upon forecast financial information prepared by management of the company and other information from various public and industry sources. The principal sources of information used in arriving at our conclusion are as follows:

The audited historical financial information of the Zambrew for the periods ended 31 December 2017, 31 March 2017, 31 March 2016 and 31 March 2015;

Management prepared forecasts for the years ending 31 December 2018 and the adjusted proformas for 31 December 2017;

Discussions with the management of the Zambrew regarding the forecasts presented; Discussions with management the consultants (Ernst and Young) of the Zambrew regarding the prevailing

market and economic conditions; and Discussion and reviewing the assumption adopted by Zambrew to split the assets of the non alcoholic ready to

drink production line from the alcoholic drinks. The forecasts and pro formas do not include one-off costs and/or transaction costs (e.g. costs for Non-

alcoholic ready to drink business segment) finding a warehouse; advisors and other transaction costs which can not be estimated at the moment

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Procedures In arriving at our limited assurance conclusion, we performed the following procedures and evaluated the overall presentation of the forecast information. Application of accounting We ascertain that the accounting policies to be applied by the Zambrew in future were applied consistently in arriving at the forecast financial information and that they are in compliance with International Financial Reporting Standards. Matters of principle and were discussed with the Country Director and Consultants. Model review We determined that the assumptions tested in the procedures described above were those used in the forecast model. Inherent limitation Achievability of the results The forecast information is based on the assumptions about events that may occur in the future and possible actions by the company. It is highly subjective in nature and the preparation requires the exercise of considerable judgement. While evidence may be available to support the assumptions on which the forecast information is based, such evidence is itself generally future oriented and therefore speculative in nature. Therefore, we are unable to express an opinion as to whether the results shown in the forecast information will be achieved. Accuracy of the information The objective of our engagement is to provide a limited assurance conclusion on the reasonableness of the assumptions used in the forecast information, whether the forecast information has been prepared on the basis of those assumptions and is presented in accordance with the LUSE Listing Rules. We relied upon and assumed the accuracy and completeness on the information provided to us in writing, or obtained through discussion with management and the consultants of the company. While our work has involved an analysis of historical financial information and consideration of other information provided to us, our assurance engagement does not constitute an audit or review of historical financial information conducted in accordance with International Standards on Auditing or International Standards Review Engagements. Accordingly, we do not express an audit or review opinion thereon and assume no responsibility and make no representations in respect of the accuracy or completeness of any information provided to us in respect of the forecast financial information included in the prospectus or circular. Limited assurance opinion In our opinion, except for the matters highlighted in our basis of limited assurance opinion paragraph below, based on our examination of the evidence supporting the assumptions, nothing has come to our attention which causes us to believe that:

The assumptions do not provide a reasonable basis for the forecast information; The forecast information has not been properly complied on the basis stated; The forecast information has not been properly presented in accordance with the LUSE Listing Rules and

material assumption are not adequately disclosed; and The forecast information is not presented on a basis consistent with the accounting policies of the Company.

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Basis of limited assurance opinion

the company has not adopted IFRS 9 and have not yet assessed the impact of this standard on the forecast and the comparative figures;

Management is yet to complete the asset verification and allocation to the two different business segment. The forecast has used a method which was agreed by the consultants and Zambrew management;

Zambrew has some incentives awarded by the Zambia Development Agency (ZDA) and has carry forward losses arising from taxes on both the alcoholic and non-alcoholic ready to drink business segment. These incentives and tax losses are not transferable from Zambrew and the forecast may not have adjusted for the effects that would arise if these incentives were to be allocated to different business segment.

Actual results are likely to be different from the forecast information since anticipated events frequently do not occur as expected and the variation may be material. Restriction of distribution Our report and the conclusion contained herein is provided sorely for the benefit of the directors of Zambrew, for the purposes of the first schedule one transactions under LuSE rules relating to the proposed sell of non alcoholic business segments to TCCC. This letter is not addressed to or may not be relied upon by any other third party for any other purpose.

Chartered Accountants Lusaka

Wesley M Beene (AUD/F000465) Name of Partner signing on behalf of the firm

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ZAMBIAN BREWERIES LIMITED PLC PROFORMA STATEMENT OF COMPREHENSIVE INCOME FOR THE NINE MONTHS TO 31 DECEMBER 2017 Audited Adjusted

For the 9-month

Pro forma for 9- month ended 31

Dec 2017 K’000

Period ended 31 Dec

2017 K'000

Revenue 1,561,138

1,189,026 Fixed and variable expenses (1,186,256) (860,052) EBITDA 374,882 328,974

Other income:

Manufacturing margin income -

14,727

Interest income 12,116

10,239

Interest expense

(66,721)

(56,778) Amortisation (248) (161) Income tax expense (99,209) (92,660) Profit for the period 220,820 204,342

Other comprehensive income: Continuing operations 194,769 194,769 Discontinued operations 26,051 1,186,777 Total comprehensive income 220,820 1,381,546

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ZAMBIAN BREWERIES LIMITED PLC ADJUSTED PROFOMA STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2017,

Audited as at 31 December 2017

Adjusted as at 31 December

2017 K’000 K’000 Capital & Reserves Attributable to the

Company's Equity Shareholders

Share capital 5,460 5,460 Share premium 450,207 450,207 Proposed dividends 110,410 110,410 Retained earnings 862,777 872,350 1,428,854 1,438,427 Non-Current Liabilities Deferred income tax 507,254 416,502

507,254

416,502

Total Equity & Non-Current Liabilities

1,936,108

1,854,929

Non-Current Assets

Property, plant & equipment 1,482,767 1,217,489 Intangible assets

72,811

17,885

1,555,578

1,235,374

Current Assets

Inventories 482,628 481,682 Trade and other receivables 193,691 195,900 Current income tax 5,909 5,909 Cash at bank and in hand 324,736 613,740 1,006,964 1,297,231

Non-Current Assets Held For Sale

500,004

500,004

Current Liabilities

Trade and other payables 869,379 920,621 Borrowings 257,060 257,060 1,126,439 1,177,681

Net Current Liabilities (119,475) (119,550) Total Assets Less Current Liabilities 1,936,107 1,854,928

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ZAMBIAN BREWERIES LIMITED PLC FORECAST STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2018

K,000

Revenue

2,063,893 Fixed and variable expenses

(1,326,204)

EBITDA

737,689

Interest expense

(62,340) Amortisation

(139,570 )

Income tax expense

(160,681)

Profit for the period

375,098

Other comprehensive income: Continuing operations

- Discontinued operations

-

Total comprehensive income

375,098

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12 June 2018 To: The Secretary Lusaka Securities Exchange And To: The Board of Directors Zambian Breweries Plc RE: THE CIRCULAR TO SHAREHOLDERS OF Zambia Breweries Plc (“Zambrew”) REGARDING THE ACQUISITION OF THE NON-ALCOHOLIC READY-TO-DRINK BUSINESS SEGMENT OF ZAMBREW, BY THE COCA-COLA COMPANY (TCCC) FOLLOWING THE ANNOUNCEMENT AND CONFIRMATION OF THE RECEIPT ON 11TH OCTOBER 2016, BY ANHEUSER-BUSCH INBEV SA/NV (“ABINBEV”) (EURONEXT: ABI) (NYSE: BUD) (MEXBOL: ANB) (JSE: ANH) FROM THE COCA-COLA COMPANY (“TCCC”) OF ITS INTENTION TO ACQUIRE THE STAKE OF ABINBEV IN COCA-COLA BEVERAGES AFRICA PROPRIETY LIMITED (“CCBA”). We the undersigned confirm our appointment as Reporting Accountants to Zambia Breweries Plc. We consent to the inclusion of our Accountants Report of on the intention to acquire the non-alcoholic ready-to-drink business segment of Zambrew, by the Coca-Cola company (TCCC) following the announcement and confirmation of the receipt on 11th October 2016, by Anheuser-Busch Inbev SA/NV (“ABINBEV”) (EURONEXT: ABI) (NYSE: BUD) (MEXBOL: ANB) (JSE: ANH) from the Coca-Cola company (“TCCC”) of its intention to acquire the stake of ABINBEV in Coca-Cola Beverages Africa Propriety limited (“CCBA”) and reference to us Grant Thornton and having read the Circular to be dated 4th July 2018 confirm our consent to being referred to as such therein. As at the date hereof such consent has not been withdrawn.

Chartered Accountants

Wesley M Beene (AUD/F000465) For and on behalf of Grant Thornton Lusaka

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“ZAMBREW” or “the Company”

NOTICE OF AN EXTRAORDINARY GENERAL MEETING

All terms defined in the Circular to which this Notice of Extraordinary General Meeting is attached, shall bear the same meanings where used in this Notice of Extraordinary General Meeting. Notice is hereby given that an Extraordinary General Meeting of the Shareholders will be held at the Southern Sun Ridgeway Hotel, Lusaka, Zambia at 08:00, on Friday, 27 July 2018, for the purposes of considering and, if deemed fit, passing, with or without modification, the resolutions set out below: ORDINARY RESOLUTION 1 – APPROVAL OF THE TRANSACTION IN TERMS OF THE LUSE LISTINGS REQUIREMENTS “RESOLVED AS AN ORDINARY RESOLUTION in accordance with the provisions of section 9 of the LuSE Listings Requirements, that the Transaction be and is hereby approved.” For Ordinary Resolution 1 to be passed, votes in favour of the resolution must represent more than 50% of the voting rights exercised at the Extraordinary General Meeting in person or by proxy and who are entitled to exercise voting rights in respect of Ordinary Resolution 1. Reason and effect The reason for Ordinary Resolution 1 is that the Transaction is categorised as a Category 1 transaction for Zambrew in terms section 9 of the LuSE Listings Requirements. Consequently, Shareholders are required to approve the Transaction by way of an ordinary resolution in terms of section 9 of the LuSE Listings Requirements. The effect of Ordinary Resolution 1, if passed, will be to grant the necessary shareholder approval of the Transaction in terms of the LuSE Listings Requirements. ORDINARY RESOLUTION 2 – AUTHORITY “RESOLVED AS AN ORDINARY RESOLUTION that any Director be and is hereby authorised (with the power of substitution), on behalf of the Company, to do or cause all such things to be done and sign and cause to be signed, all documents, and/or notices (including any amendments thereto), as may be necessary or desirable to give effect to the above resolutions, and, insofar as any of them has done any of the aforegoing prior to the passing of this resolution, such action/s be and is hereby ratified and approved to the extent permitted by law.” For Ordinary Resolution 2 to be passed, votes in favour of the resolution must represent more than 50% of the voting rights exercised at the Extraordinary General Meeting in person or by proxy and who are entitled to exercise voting rights in respect of Ordinary Resolution 2.

Page 2 of 4

Reason and effect The reason for and effect of Ordinary Resolution 2 is to authorise any Director to do all such things and sign all such documents as are deemed necessary or desirable to implement Ordinary Resolution 1. VOTING AND PROXIES Shareholders are entitled to attend, or be represented by proxy, and may vote at the Extraordinary General Meeting. If you are unable to attend the Extraordinary General Meeting, but wish to be represented thereat, you must complete and return the attached Form of Proxy, in accordance with the instructions contained therein. To be valid, the Form of Proxy must be completed, signed and returned in accordance with the instructions printed thereon so as to be received by the Company Secretary at the registered head office, Plot 6438, Mungwi Road, Heavy Industrial Area, P.O. Box 31293, Lusaka, Zambia as soon as possible, and, in any event, by 17:00 hours on Wednesday, 25 July 2018 (or, in the case of an adjournment of the Extraordinary General Meeting, within 72 hours (excluding weekends and public holidays)) before the time appointed for the adjourned Extraordinary General Meeting. The completion and return of a Form of Proxy will not preclude Shareholders from attending and voting in person at the Extraordinary General Meeting should they subsequently wish to do so. By order of the Board _______________________ Signatory: Deborah Bwalya Designation: Company Secretary

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NOTICE OF AN EXTRAORDINARY GENERAL MEETING

All terms defined in the Circular to which this Notice of Extraordinary General Meeting is attached, shall bear the same meanings where used in this Notice of Extraordinary General Meeting. Notice is hereby given that an Extraordinary General Meeting of the Shareholders will be held at the Southern Sun Ridgeway Hotel, Lusaka, Zambia at 08:00, on Friday, 27 July 2018, for the purposes of considering and, if deemed fit, passing, with or without modification, the resolutions set out below: ORDINARY RESOLUTION 1 – APPROVAL OF THE TRANSACTION IN TERMS OF THE LUSE LISTINGS REQUIREMENTS “RESOLVED AS AN ORDINARY RESOLUTION in accordance with the provisions of section 9 of the LuSE Listings Requirements, that the Transaction be and is hereby approved.” For Ordinary Resolution 1 to be passed, votes in favour of the resolution must represent more than 50% of the voting rights exercised at the Extraordinary General Meeting in person or by proxy and who are entitled to exercise voting rights in respect of Ordinary Resolution 1. Reason and effect The reason for Ordinary Resolution 1 is that the Transaction is categorised as a Category 1 transaction for Zambrew in terms section 9 of the LuSE Listings Requirements. Consequently, Shareholders are required to approve the Transaction by way of an ordinary resolution in terms of section 9 of the LuSE Listings Requirements. The effect of Ordinary Resolution 1, if passed, will be to grant the necessary shareholder approval of the Transaction in terms of the LuSE Listings Requirements. ORDINARY RESOLUTION 2 – AUTHORITY “RESOLVED AS AN ORDINARY RESOLUTION that any Director be and is hereby authorised (with the power of substitution), on behalf of the Company, to do or cause all such things to be done and sign and cause to be signed, all documents, and/or notices (including any amendments thereto), as may be necessary or desirable to give effect to the above resolutions, and, insofar as any of them has done any of the aforegoing prior to the passing of this resolution, such action/s be and is hereby ratified and approved to the extent permitted by law.” For Ordinary Resolution 2 to be passed, votes in favour of the resolution must represent more than 50% of the voting rights exercised at the Extraordinary General Meeting in person or by proxy and who are entitled to exercise voting rights in respect of Ordinary Resolution 2.

Page 2 of 4

Reason and effect The reason for and effect of Ordinary Resolution 2 is to authorise any Director to do all such things and sign all such documents as are deemed necessary or desirable to implement Ordinary Resolution 1. VOTING AND PROXIES Shareholders are entitled to attend, or be represented by proxy, and may vote at the Extraordinary General Meeting. If you are unable to attend the Extraordinary General Meeting, but wish to be represented thereat, you must complete and return the attached Form of Proxy, in accordance with the instructions contained therein. To be valid, the Form of Proxy must be completed, signed and returned in accordance with the instructions printed thereon so as to be received by the Company Secretary at the registered head office, Plot 6438, Mungwi Road, Heavy Industrial Area, P.O. Box 31293, Lusaka, Zambia as soon as possible, and, in any event, by 17:00 hours on Wednesday, 25 July 2018 (or, in the case of an adjournment of the Extraordinary General Meeting, within 72 hours (excluding weekends and public holidays)) before the time appointed for the adjourned Extraordinary General Meeting. The completion and return of a Form of Proxy will not preclude Shareholders from attending and voting in person at the Extraordinary General Meeting should they subsequently wish to do so. By order of the Board _______________________ Signatory: Deborah Bwalya Designation: Company Secretary

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FORM OF PROXY

All terms defined in the Circular to which this notice of Extraordinary General Meeting is attached, shall bear the same meanings where used in this Form of Proxy.

If you wish to appoint a proxy to act on your behalf at the Extraordinary General Meeting to be held at the Southern Sun Ridgeway Hotel, Lusaka, Zambia at 08:00, on Friday, 27 July 2018 and at any adjournment or postponement thereof, please complete and return this form of proxy.

I/WE

of [insert address]

being the member/s of and the registered holder/s of _____________ Shares in the Company,

hereby appoint:

1. ____________________________________________________ or failing him/her;



4. the chairman of the Extraordinary General Meeting.

as my/our proxy to participate in, and speak and vote for me/us on my/our behalf at the Extraordinary General Meeting of the Company to be held at the Southern Sun Ridgeway Hotel, Lusaka, Zambia at 08:00, on Friday, 27 July 2018.

Please indicate with an “X” the instructions to your proxy in the spaces provided below. In the absence of such indication the proxy will be entitled to exercise his/her discretion in voting.

FOR AGAINST ABSTAIN Ordinary Resolution 1 – Approval of the Transaction Ordinary Resolution 2 – Authority

Signed at ________________ on ________________________________________ 2018

Signature _______________________________________________

Name:

Capacity:

Date:

Notes:

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Page 4 of 4

1. Each Shareholder is entitled to appoint one (or more) proxies (none of whom need be a Shareholder) to attend, speak and vote in place of that Shareholder at the Extraordinary General Meeting.

2. A Shareholder may insert the name of a proxy or the names of two alternative proxies of the Shareholder’s choice in the space/s provided. The person whose name stands first on this Form of Proxy and who is present at the Extraordinary General Meeting will be entitled to act as proxy to the exclusion of those whose names follow.

3. A Shareholder’s instructions to the proxy must be indicated by the insertion of the relevant number of votes exercisable by the Shareholders in the appropriate box provided. Failure to comply with the above will be deemed to authorise and direct the Chairman of the Extraordinary General Meeting, if the Chairman is the authorised proxy, to vote or any other proxy to vote or abstain from voting at the Extraordinary General Meeting as he/she deems fit, in respect of all the Shareholder’s votes exercisable at the Extraordinary General Meeting.

4. Completed Forms of Proxy and the authority (if any) under which they are signed must be lodged with or posted to the company secretary at the registered head office, Plot 6438 Mungwi Road, Heavy Industrial Area, P.O. Box 31293, Lusaka, Zambia, as soon as possible, and, in any event, by 17:00 hours on Wednesday, 25 July 2018 (or, in the case of an adjournment of the Extraordinary General Meeting, within 72 hours (excluding weekends and public holidays)) before the time appointed for the adjourned Extraordinary General Meeting).

5. The completion and lodging of this Form of Proxy will not preclude the relevant Shareholder from attending the Extraordinary General Meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof, should such Shareholder wish to do so.

6. The Chairman of the Extraordinary General Meeting may accept or reject any Form of Proxy not completed and/or received in accordance with these notes or with the articles of association of the Company.

7. Any alteration or correction made to this Form of Proxy must be initialled by the signatory/ies. 8. Documentary evidence establishing the authority of a person signing this Form of Proxy in a

representative capacity (e.g. for a company, close corporation, trust, pension fund, deceased estate, etc.) must be attached to this Form of Proxy, unless previously recorded by the Company or waived by the Chairman of the Extraordinary General Meeting.

9. Where this Form of Proxy is signed under power of attorney, such power of attorney must accompany this Form of Proxy, unless it has been registered with the Company or waived by the Chairman of the Extraordinary General Meeting.

10. Where any Company shares are held jointly, all joint holders are required to sign this Form of Proxy.

11. A minor Shareholder must be assisted by his/her parent/guardian, unless the relevant documents establishing his/her legal capacity are produced or have been registered with the Company.

12. This Form of Proxy shall be valid at any resumption of an adjourned Extraordinary General Meeting to which it relates, although this Form of Proxy shall not be used at the resumption of an adjourned Extraordinary General Meeting if it could not have been used at the Extraordinary General Meeting from which it was adjourned for any reason other than it was not lodged timeously for the Extraordinary General Meeting from which the adjournment took place.

13. A vote given in accordance with the terms of an instrument of proxy shall be valid, notwithstanding the death or mental disorder of the principal or revocation of the proxy or of the authority under which the proxy was executed, or the transfer of the share in respect of which the proxy is given, provided that no notification in writing of such death, insanity, revocation or transfer as aforesaid shall have been received by the Company before the commencement of the Extraordinary General Meeting or adjourned Extraordinary General Meeting at which the proxy is used.

14. Any proxy appointed pursuant to this Form of Proxy may not delegate his/her authority to act on behalf of the relevant Shareholder.

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FORM OF PROXY

All terms defined in the Circular to which this notice of Extraordinary General Meeting is attached, shall bear the same meanings where used in this Form of Proxy.

If you wish to appoint a proxy to act on your behalf at the Extraordinary General Meeting to be held at the Southern Sun Ridgeway Hotel, Lusaka, Zambia at 08:00, on Friday, 27 July 2018 and at any adjournment or postponement thereof, please complete and return this form of proxy.

I/WE

of [insert address]

being the member/s of and the registered holder/s of _____________ Shares in the Company,

hereby appoint:




4. the chairman of the Extraordinary General Meeting.

as my/our proxy to participate in, and speak and vote for me/us on my/our behalf at the Extraordinary General Meeting of the Company to be held at the Southern Sun Ridgeway Hotel, Lusaka, Zambia at 08:00, on Friday, 27 July 2018.

Please indicate with an “X” the instructions to your proxy in the spaces provided below. In the absence of such indication the proxy will be entitled to exercise his/her discretion in voting.

FOR AGAINST ABSTAIN Ordinary Resolution 1 – Approval of the Transaction Ordinary Resolution 2 – Authority

Signed at ________________ on ________________________________________ 2018

Signature _______________________________________________

Name:

Capacity:

Date:

Notes: