Zambian Breweries FY2015 Investor Call 5 June 2015

Zambian Breweries Plc. Investor conference call

05 June 2015

F15 Full year results

© SABMiller 2014

Forward Looking Statements

This presentation includes ‘forward-looking statements’ with respect to certain of SABMiller plc’s plans, current goals and expectations

relating to its future financial condition, performance and results. These statements contain the words “anticipate”, “believe”, “intend”,

“estimate”, “expect” and words of similar meaning. All statements other than statements of historical facts included in this presentation,

including, without limitation, those regarding the Company’s financial position, business strategy, plans and objectives of management

for future operations (including development plans and objectives relating to the Company’s products and services) are forward-

looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that

could cause the actual results, performance or achievements of the Company to be materially different from future results,

performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based

on numerous assumptions regarding the Company’s present and future business strategies and the environment in which the

Company will operate in the future. These forward-looking statements speak only as at the date of this document. The Company

expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained

herein to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances

on which any such statement is based. The past business and financial performance of SABMiller plc is not to be relied on as an

indication of its future performance.

All references to “EBITA” in this presentation refer to earnings before interest, tax, amortisation of intangible assets (excluding

software) and exceptional items. EBITA also includes the group’s share of associates’ and joint ventures’ EBITA on the same basis.

All references to “organic” mean as adjusted to exclude the impact of acquisitions and disposals, while all references to “constant

currency” mean as adjusted to exclude the impact of movements in foreign currency exchange rates in the translation of our results.

References to “underlying” mean in organic, constant currency.

2Zambian Breweries Plc

© SABMiller 2014

Agenda

1. Welcome

2. Trading and business environment

3. Strategic review

4. Managing sustainable development

5. Financial highlights

6. CAPEX

7. Prospects

3Zambian Breweries Plc.

Investing in our $33m Maltings plant in the Lusaka south Multi

Facility Economic Zone

© SABMiller 2014

Trading and business environment The regulatory environment stabilized and reported GDP growth for the period was 5.5%, whilst inflation reduced from

7.8% to 7.1%.

Despite this, we saw a general reduction in disposable income of our average consumer as a result of :

Negative sentiment in the mining sector due to uncertainty over government taxation policy, retrenchments and

downscaling of mining operations.

A slow down in the government infrastructure investment program.

Significant currency depreciation through most of the year accelerated in the last quarter on the back of the proposed

mining tax increases.

Reduced credit available as a consequence of the increased statutory reserve ratio from 14% to 18% implemented by

the Bank of Zambia.

The excise increased of 50% resulted in a significant decline in clear beer volumes.

This yet again confirmed how sensitive our consumers are to price increases and how important affordability is in the

current economic environment.

The excise increase resulted in a significant increase in smuggled Castle Lite to the point that more smuggled Castle

Lite is now sold in Zambian than that sold by Zambian Breweries Plc.

Zambian Breweries Plc 4

© SABMiller 2014

Strategic review

Readjusting the business to manage the lower volumes as a result of the excise increase.

Dialed up engagement with government and other stakeholders in our quest to reduce excise.

Continue to focus on dry area penetration and MDC models to capture new growth complimented by a

sustainable credit offering.

Introduction of Cassava into the Eagle brand.

The good performance of Castle Lite and MGD underscores the growing affluence at the higher end

with continuing growth of the middle class.

We held beer market share in the period but remained under pressure in the soft drinks arena from a

share perspective.

Zambian Breweries Plc. 5

© SABMiller 2014

Historical market share F’15

Zambian Breweries Plc. AGM 01 July 2014 6

ZBL, 90%

Others, 10%

Clear Beer

ZBL, 58%

Others, 43%

Soft Drinks

© SABMiller 2014

10 sustainable development priorities becomes 5 Shared Imperatives

7

Endeavour to make beer the natural choice for the moderate and responsible drinker

Secure shared water resources for our business and local communities

Create value through reducing waste and carbon emissions

Support responsible, sustainable use of land for brewing crops

Accelerate growth and social development through our value chains

Encouraging enterprise development in our value chains

Benefitting communities

Contributing to the reduction of HIV/Aids

Respecting human rights

New

Making more beer using less water

Discouraging irresponsible drinking

Reducing our energy and carbon footprint

Packaging reuse and recycling

Working towards zero-waste operations

Transparency and ethics

Zambian Breweries Plc.

Managing sustainable development

© SABMiller 2014 8

Five worlds, five shared imperatives

a thriving world a sociable world a resilient world a clean world a productive world

Zambian Breweries Plc.

Itawa Water Springs Recycling project

Financial Highlights

© SABMiller 2014

Financial highlights - against prior year

Lager volume declined -8% (impact of excise)

Soft drinks volume growth +10%

Net producers revenue decline -11%

Gross profit decline of -14% reflecting major currency depreciation and distribution costs

to regional areas.

Operating profit decline -28% (-16% in constant currency) increased production costs and

overheads


© SABMiller 2014

Financial highlights

Above contributing to operating profit margin decline of -430bp

Finance costs up by 20%

Profit after tax decline of -36% (-25% in constant currency)

Volume decline, currency devaluation, product mix towards lower margin economy brands,

price roll back on 375ml and once off operating costs responsible for the performance.

Earnings per share for the period of $0.038(2014:$0.058) down by -35% from prior year

Board did not recommend a dividend for the year.


© SABMiller 2014

Financial performance – Year Ended 31st March 2015


US$’ 000 Mar-15 Mar-14 Change %

Reported

Net producers revenue (NPR) 210,192 236,291 -11%

Operating profit 38,964 53,997 -28%

Operating profit % NPR 18.5% 22.9% (430bp)

Sales volumes (Hl'000)

Total 2,105 2,122 -1%

Lager 1,161 1,262 -8%

Soft drinks 944 860 10%

© SABMiller 2014

Financial performance – Year Ended 31st March 2015


USD’ 000 Mar-15 Mar-14 Change %

NPR 210,192 236,291 -11.0%

Gross profit 96,353 112,256 -14.2%

Gross margin (%NR) 45.8% 47.5% (170bp)

Net operating expenses (56,359) (58,294) 3.3%

Exchange gains / (Losses) (1,029) 34

Operating profit 38,964 53,997 -27.8%

Finance costs (9,949) (8,303) 19.8%

Profit before tax 29,015 45,694 -36.5%

Income tax expense (8,455) (13,751) -38.5%

Profit for the year 20,561 31,944 -35.6%

© SABMiller 2014

Key financial ratios (US$ where applicable)


Per Hl Analysis F'09 F'10 F'11 F'12 F'13 F'14 F'15

NPR/Hl 106.18 101.71 110.40 113.47 114.88 111.37 99.86

Gross profit/Hl 50.51 41.82 51.72 50.71 53.44 52.91 50.28

Fixed costs/Hl * 35.06 33.51 30.41 29.36 28.30 29.66 28.85

Operating profit/Hl 20.36 8.76 19.43 21.35 23.26 25.45 17.16

Ratios

Operating profit margin 19.2% 8.6% 17.6% 18.8% 20.2% 22.9% 17.2%

Gross profit Margin 47.6% 41.1% 46.8% 44.7% 46.5% 47.5% 50.3%

Interest cover ratio (times) 4.8 1.1 2.0 3.3 3.1 6.5 4.8

Effective tax rate 40.0% 118.8% 32.9% 40.8% 32.9% 30.1% 29.4%

Return on assets 8.7% -0.1% 4.5% 5.3% 6.9% 10.9% 8.8%

Return on equity 29.3% -0.4% 18.7% 11.5% 14.3% 20.7% 15.2%

Return on Capital employed 18.5% 5.2% 13.6% 12.9% 15.2% 18.5% 13.4%

Fixed Assets turnover ratio 1.3 0.8 1.0 1.0 1.0 1.1 1.1

Earning per share 0.03 (0.00) 0.02 0.03 0.04 0.06 0.04

Balancesheet ratios

Current ratio 0.46 0.50 0.93 0.68 1.20 1.19 0.65

Debt ratio 70% 80% 76% 54% 52% 47% 59%

Debt - Equity ratio 2.4 4.1 3.2 1.2 1.1 0.9 1.0

Capitalisation ratio 26% 63% 67% 17% 38% 31% 32%

*Fixed costs as per internal reporting

© SABMiller 2014

CAPEX


42,436

105,949 118,770

183,541

233,345

283,070

320,924

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

F'09 F'10 F'11 F'12 F'13 F'14 F'15

Cumulative Capex Spend (US$'000)

Capex (US$'000)

© SABMiller 2014

Prospects Despite the difficult year, we have confidence in the resilience of our business in the long term.

Key focus areas will include ensuring affordability and capacity utilisation in Beer while supporting the

strong performance of Soft Drinks.

We will continue to restructure and manage costs to cope with the reality of current margins, increased

focus on Total Cost of Manufacturing and Distribution.

Strategic infrastructure investments will go ahead on the premise of future growth.

We will continue to increase our geographical reach to capture rural growth.

We are committed in our belief in the long term prospects of Zambia’s economy as demonstrated by the

continued investments in the Maltings project, which is scheduled for commissioning in the last quarter

of the next financial year.

We are continuing engagement with SEC and LUSE to address the 75% shareholding requirement.


© SABMiller 2014

Thank you

Questions?


Investor Relations

Zambian Breweries FY2015 Investor Call 5 June 2015