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Africa & Asia

Our African businesses delivered another year of strong earnings growth, while our Chinese associate, CR Snow, further consolidated its leading position in China.

Financial summary
Turnover 1,937 1,555 25
EBITA* 384 306 25
EBITA margin (%)* 19.8 19.7  
Sales volumes (hls 000s)**      
– Lager 39,505 32,521 21
– Lager organic^ 35,685 32,392 10
– Carbonated soft drinks (CSDs) 4,667 3,879 20
– Other beverages 11,538 10,137 14
* Before exceptional items being profit on the disposal of the group’s interest in Harbin Brewery Group Limited (Harbin) of US$103 million (2004: share of associate’s profit on disposal of a CSD business and brands in Morocco of US$6 million and share of associate’s profit on disposal of a brand in Angola of US$1 million).
** Castel volumes of 12,771 hls 000s (2004: 12,049 hls 000s) lager, 8,260 hls 000s (2004: 9,221 hls 000s) CSDs, and 2,985 hls 000s (2004: 3,326 hls 000s) other beverages are not included.
^ During 2004, the management responsibility for sales to Angola was transferred from Beer South Africa to the Africa division. On a pro forma comparable basis, the organic growth in lager volume in Africa and Asia would have been 9% compared to the prior year.

Our African businesses continued the solid momentum described at the half-year with full-year growth in reported lager volumes of 9%. Volume gains combined with improved productivity and selective price increases led to strong EBITA growth for the year under review. EBITA margin also increased aided by favourable country mix, with good growth in our higher margin territories.

Within the portfolio, Tanzania enjoyed an exceptional year with lager volume growth of 9%, driven by improved market penetration within the context of an improving economy and favourable agricultural conditions. Mozambique also excelled with volume growth of 13% reflecting greater product availability in rural areas and improving economic fundamentals. Angola continued its strong growth in CSDs with volumes improving 15% year-on-year as increased capacity and additional packs were introduced during the year. Botswana recovered from a slow start to the year following the 8% devaluation of the local pula, to post 1.3% total volume growth, within which the CSD portfolio performed best.

Castle brand volumes grew 15% across Africa, with strong performances in Tanzania and Zambia where the brand attracts a price premium. Castle Milk Stout grew in Ghana, also at a premium price position, and the brand was introduced in Cameroon by our strategic alliance partner, Castel, with encouraging initial results. Miller Genuine Draft was launched in selected African countries in the last quarter of the year.

Lager volumes in Castel grew 6% year-on-year, with solid performances in Angola, Democratic Republic of Congo and Algeria. Castel’s CSD volumes reflect a non-organic drop following the sale of their Moroccan and Angolan CSD interests in the latter part of the prior year. EBITA has shown strong growth over the prior year, reflecting improved productivity and a favourable product mix.

Country Various – mainly Botswana, Malawi, Swaziland, Tanzania, Zambia, Zimbabwe
Beer type Sorghum beer
Alcohol content by volume Less than 4%
Chibuku is a traditional unpasteurised African sorghum beer and, because it is ‘live’, it has a short shelf-life of only a few days. In 2005, the group sold over 6.2 million hectolitres in Africa.

Our Chinese associate, CR Snow, expanded further during the year, with seven breweries acquired giving access to new markets in the Yangtze River delta as well as bolstering our position in Anhui. Lager volume growth for the year was 25%, within which underlying organic growth of 10% was achieved. Our national brand, Snow, grew by 27% and comprised 33% of total volumes. Overall, our national market share grew by over one full percentage point to 11.5%.

Double-digit organic EBITA growth was delivered in China driven by our volume performance as well as modest net pricing and mix improvement which offset higher raw material and energy costs. Continuing moderate price inflation trends are encouraging. Additionally, while we are increasing investment in focused brand marketing and distribution initiatives, we are beginning to reap brand portfolio and operational synergies from our recent acquisitions. Reported EBITA was, however, also influenced by the negative impact of the new acquisitions, particularly in the case of the breweries in southern Jiangsu province, which were acquired in October 2004, ahead of the lower-volume winter months.

Our investment in India recorded double-digit sales volume growth, ahead of the industry. The business continued to rehabilitate individual brewing units and added one million hectolitres of new capacity while closing down two smaller breweries during the year. The business is focusing on industry reforms, and is making significant investments in upgrading returnable containers.

Haywards 5000
Country India
Beer type Lager with smooth taste
Alcohol content by volume 7.5% ABV
With annual sales of 1.2 million hectolitres, Haywards 5000 is the largest selling brand in India’s strong beer segment, which accounts for 65% of the total beer market. Recently relaunched, Haywards 5000 is now growing at over 15% per annum.

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Africa and Asia Review of Operations