SABI Africa : Analyst Presentation 11 October 2001 Script - SABMiller

SABI Africa : Analyst Presentation 11 October 2001 

Script for Jonathan Kirby 

[Slide 2] 

Scope of presentation 

• SABI Africa operations 

• Castel alliance – concluded earlier this year and what it means to SAB 

• SABI Africa market and brand portfolios – information on market place and our 

brands 

• Financial data – our listed companies key characteristics arising there from. 

[Slide 3] 

SABI Africa operations 

Two distinct phases to our investments in Africa 

[Slide 4] 

Original base 

Botswana, Swaziland, Lesotho 

• Late 1970’s early 1980’s 

• Common customs union 

• Key issues: 

• Beer, soft drinks and in the case of Botswana – traditional beer 

• Allowed us to learn about running businesses in Africa and get used to the 

environment. 

• Used SAB brands as platforms. 

[Slide 5] 

Building a successful portfolio 

Early 1990’s 

• Change in RSA political environment 

• Same time collapse of socialism in Africa 

• Natural extension for us given African base allowed us to build on this base and 

learnings. 

How did it happen? 

1993 Tanzania 

• Joint venture with government (privatisation) 

• Invested directly into business versus paying vendor – was very efficient and in a 

sense quite unique 

[Slide 6] 


1994 Zambia 

• Privatisation 

• Joint venture with Zamanglo who had pre-emptive right 

1

[Slide 7] 


• 1995 Mozambique 

• Privatisation 

• 2 breweries Maputo and Beira 

• Govt held balance 

[Slide 8] 


• 1997 Ghana 

• Controlling stake 

• Private swiss investor 

• Competitive market, Guiness and Heineken 

[Slide 9] 


• Also 1997 Uganda 

• Acquired from Madhvani Group 

• Influential Ugandan investors 

• Technical partner 

• Joint management strategic issues – day-to-day running left to SAB 

[Slide 10] Building a successful portfolio 

• 1998 Kenya 

• ‘greenfield entry’ 

• Commissioned on time and within budget 

• Completed our East Africa strategy 

• Strong strategic position - common competitor East African Breweries 

[Slide 11] Building a successful portfolio 

• 1998 Tanzania top up ahead of listing 


• Ghana 

• Rights issue 

• High interest rates 

• Final capex program 


• 1998 Zambia 

• Were two brewers, unsustainable. 

• Value destroying competition 

2

• Acquired National Breweries – copperbelt 

• Took out Zamanglo 


• Angola 

• Management contracts 

• Lubango rehabilitation 

• Luanda soft drink franchise 


The terms of competitive bid 

• Ex Lourho 


• Acquisition of traditional beer in Zambia and Malawi 


• 2000 

• Government divestiture plus 

• Financial institutions 

• Obtain further shareholding to current levels 


• Open market acquisition. Sechaba Brewery Holdings 11.34% affective 6.8% top-up. 


• 2000 Kenya topped up to 87% 


• 2001 Malawi 

• Consolidation more with sole competitor meant diluted stake but NB control of entire 

market. 


• Finally in Uganda July 2001 acquired remaining Madhvani stake and full management 

control 

[Slide 22] Our business today 

3

Zimbabwe 23% equity account stake. 

• 11 countries with direct management control 

• Traditional – same as sorghum yesterday we don’t always use sorghum 


Re-cap 

• Credible and influential 

• Excessive plant ex SA 

• In all cases (late) 

• The good staff 

• Balanced risk profile in tough environment 

[Slide 24] 

Castel alliance 

Took place earlier this year, effective 1/4/2001 

[Slide 25] Castel alliance 

• Angola – same management contract and new brewery Katumbella (south) 

• Mozambique – minority stake in sole competition 

• 16 countries beer and CSD 

[Slide 26] 

Alliance benefits 

• We were looking 

• Pegged to French Franc and Euro – has devalued previously (94) but guaranteed 

remittability and easy access to currency 

[Slide 27] Alliance operations 

• Angola management contract and new brewery 

• Minority stake in Laurentina 

[Slide 29] SABI Africa volume growth 

• Excludes Zimbabwe 

• Portfolio of beverages – clear beer, traditional beer, CSD’s 

• Growth continues (last 6 years) 

• Despite acquisitions – growth has come from our own efforts in turning these 

businesses around (see later in Tanzania case study) 

Reminder: Graham mentioned in September trading statement – Africa enjoying growth, 

countries – Mozambique, Botswana, Tanzania 

[Slide 30] Clear beer volumes 

• Includes Zimbabwe 

4

• Common competitorast Africa 

• Ghana - Heineken and Guinness 

Market sizes vary population, GDP/cap 

[Slide 31] Brand portfolio 

Coke brands in all 3 beverage sectors easily transportable across geographies 

[Slide 32] Brand portfolio (cont) 

However in all countries focus is on building sustainable and strong mainstream brands. Each 

brand has distinctive characteristics and is appropriately positioned in each market. We’ve 

had success as illustrated 


Kgalagadi – particular success story despite strong presence of our SAB brands. 


Swaziland and Lesotho – given their proximity to SA; natural heritage and awareness that is 

primarily created within SA – through media and sports 

[Slide 35] Financial data 

Packs included copies of our annual reports. High level more detail in the case studies. 

[Slide 36] EBIT of SABI Africa listed entities 

US dollar reporting – despite operating in local currencies 

• Growth in Tanzania – maintenance in 2001 in US $ terms despite flattening of 

volumes 

• Botswana – continues to grow year on year, real terms despite currency pressures. 

Robust economy 

• Zambia – dip. Northern acquisition, good news – drop in excise tax rate. Privatisation 

of Zambian Consolidated Copper Mines provide essential stimulus to economy 

• Ghana – overtraded market. 2001 result – economic, currency related while small – 

good result 

[Slide 37] EBIT margin 

Growth comes from initiative expanded on by Gavin yesterday 

• Volume gains 

• Procurement initiatives 

5

• raw material usages (productivity) 

• reduced headcount / Hl 

• Rightsizing the business 

• Improved distribution 

• Strategic (productive) capex programs 

But nowhere near Beer SA levels and definitely more to come. 

[Slide 39] Financial strengths 

Illustrated and representative 

Growth: 

• Low per cap’s 

• Productivity gains 

• Despite tough conditions reasonable prospects do exist for our African 

territories 

• Benefits from Castel alliance 

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SABI Africa : Analyst Presentation 11 October 2001 Script - SABMiller

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