National Breweries FY2015 Investor Call 5 June 2015

National 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.

19National 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

20National Breweries Plc.

© 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.

Significant commissioning and design problems at the new Lusaka Brewery (Commercial production

started on 15th December 2014) resulted in under supplying the market with their trusted Chibuku products.

Zambian Breweries Plc 21

© SABMiller 2014

Strategic review

Investment in systems and utilities to enhance our operational efficiency will continue.

Focused on Chibuku Super PET and Returnable Bottle category expansion, while

maintaining our core Carton business.

Super accounts for 15% of sales but it is clear that affordability is a constraint for our

customers.

The playing field for the opaque beer business remained unleveled as some competitor

breweries continued to trade in bulk beer due to the non enforcement of SI No. 72 of 2012.

(The liquor license regulation quantities and packaging 2012) .

Availability of cheap spirits has increased significantly.

The market on the Copperbelt became more competitive at the end of the second quarter

after one of the opposition breweries introduced a new brand of beer on the market. The

new product is packaged in 1L HDPE bottles and has a highly competitive price point.

Counter action has however been instituted.National Breweries Plc. 22

© SABMiller 2014 23

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

National Breweries Plc.

Managing sustainable development

10 sustainable development priorities becomes 5 Shared Imperatives

© SABMiller 2014 24

Five worlds, five shared imperatives

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

National Breweries Plc.

Financial Highlights

© SABMiller 2014

Financial highlights – against prior year

Chibuku Carton volume decline -2%

Chibuku Super volume decline -7%

Net producers revenue decline -13%

Gross profit decline -15% driven by an increase in distribution cost due to plant

availability challenges

Operating profit decline -50% (-41% in constant currency)

National Breweries Plc. 26

© SABMiller 2014

Financial highlights

Above contributing to operating profit margin decline of -770bp

Profit after tax decline of -49%

Negative performance driven by volume mainly in the last quarter due to the

commissioning problems of the new Lusaka Brewery, coupled with an increase

in fixed and distribution costs.

Earnings per share for the period of $0.07(2014:$0.13)

The board did not recommend a dividend payment for year.


© SABMiller 2014

Financial performance – Year Ended 31st March 2015


US$’ 000 Mar-15 Mar-14 Change %

Reported

Net revenue (NPR) 62,038 71,653 -13.4%

Operating profit 6,716 13,298 -49.5%

Operating profit % NPR 10.8% 18.6% (770bp)

Sales volumes (Hl'000)

Total 2,128 2,179 -2.3%

Chibuku Carton 1,804 1,831 -1.5%

Chibuku Super 324 348 -6.8%

© SABMiller 2014

Financial performance – Year Ended 31st March 2015


US$’ 000 Mar-15 Mar-14 Change %

NPR 62,038 71,653 -13.4%

Gross profit 21,065 24,862 -15.3%

Gross margin (%NPR) 34.0% 34.7% (70bp)

Net operating expenses (13,636) (11,500) -18.6%

Exchange losses (713) (64)

Operating profit 6,716 13,298 -49.5%

Finance income/(costs) 100 98

Profit before tax 6,817 13,396 -49.1%

Income tax expense (2,499) (4,945) -49.5%

Profit for the year 4,318 8,451 -48.9%

© 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 27.38 27.59 28.56 28.72 28.14 32.88 29.15

Gross profit/Hl 12.97 13.13 11.27 11.17 8.91 11.41 11.45

Fixed costs/Hl* 6.21 6.42 6.51 7.93 6.03 7.03 7.62

Operating profit/Hl 5.56 6.12 6.32 6.36 4.39 6.10 3.16

Ratios

Operating profit margin 20.3% 22.2% 22.1% 22.1% 15.6% 18.6% 10.8%

Gross profit Margin 47.4% 47.6% 39.5% 38.9% 31.7% 34.7% 39.3%

Interest cover ratio (times) 49.3 53.6 65.8 113.6 109.8 372.7 238.1

Effective tax rate 36.5% 37.9% 35.6% 35.6% 38.0% 36.9% 36.8%

Return on assets 56.4% 40.7% 44.8% 46.6% 25.1% 22.9% 10.7%

Return on equity 169.9% 111.4% 120.1% 126.2% 56.4% 48.7% 24.3%

Return on Capital employed 90.7% 66.8% 69.4% 72.9% 40.6% 36.0% 16.7%

Fixed Assets turnover ratio 8.4 6.9 7.2 5.9 4.7 3.5 2.1

Earning per share 0.09 0.10 0.12 0.11 0.10 0.13 0.07

Balancesheet ratios

Current ratio 0.79 1.02 1.03 0.80 0.95 0.99 0.51

Debt ratio 67% 63% 63% 63% 56% 53% 56%

Debt - Equity ratio 2.0 1.7 1.7 1.7 1.2 1.1 1.3

Capitalisation ratio 19% 17% 17% 18% 16% 14% 4%

*Fixed costs as per internal reporting

© SABMiller 2014

CAPEX

Zambian Breweries Plc. 31

3,872 5,215 7,234

10,888

18,956

33,840

54,193

-

10,000

20,000

30,000

40,000

50,000

60,000

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

Cartons remain the backbone of our business.

The environment remains highly competitive.

Continued pressure on disposable incomes is expected to impact sales with

consumers trading down.

Step change in the business with the introduction of the new Lusaka Brewery and

growth in Super .

We will take advantage of the shelf life on Super to enhance our sales to more

remote areas.

More focus to be placed on strengthening our reputation as a responsible stakeholder

in the investment, tax, sustainable development and employment framework in

Zambia.


National Breweries FY2015 Investor Call 5 June 2015

Investor Relations

Transcript of National Breweries FY2015 Investor Call 5 June 2015