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SAB plc Annual General Meeting

30 July 2001

Letter to the Company Announcements Office of the London Stock Exchange from the Company Secretary, South African Breweries plc, at the Annual General Meeting of South African Breweries plc held today (30th July, 2001) at the Hotel Intercontinental, London, W1J 7QY. The Chairman reported, introducing a review from the Chief Executive, as follows:

“Good morning, ladies and gentlemen, and welcome to this year’s Annual General Meeting of South African Breweries plc. This meeting marks the completion of the second financial year for the company since our listing on the London Stock Exchange on 8th March 1999. The year under review saw our international businesses perform well with strong growth in both volumes and profits, while in South Africa the company has performed admirably despite difficult trading conditions.

In South Africa consumer spending on the lottery and cell phones, combined with increased fuel costs and the surplus of cheap wine, led to a decline in beer volumes by 4.9%. However, the management at Beer South Africa is to be commended for maintaining margins at last year’s levels despite these difficulties.

Turning to our international businesses, Poland increased its volumes by 32% and strong performances were also seen in China and Russia. Zambia and Mozambique showed significant increases in profits and our Czech operation delivered results ahead of management expectations. By the year-end our worldwide total beverage volumes had risen 12.2% to 86 million hectolitres.

Our strong underlying operating performances were impacted by the strength of the US dollar against most other currencies during the past twelve months. Our adjusted earnings per share were similarly affected and at 54.4 US cents are down 3.9% on last year. In £ sterling, however, adjusted earnings per share reflected an increase of 4.8%.

Now to the business of today: Resolution No. 3 proposes to this meeting that the shareholders approve the final dividend of 18.5 US cents per share proposed by the board for payment on 3rd August 2001. Together with the interim dividend of 6.5 US cents per share, this makes an unchanged total of 25 US cents for the year, resulting in a dividend covered 2.2 times by adjusted earnings per share.

The group wishes to retain flexibility to amend the mix of debt and shareholders’ funds to optimum levels for the long-term benefit of all shareholders. Accordingly, Resolution No. 9 being proposed today is to seek updated shareholder approval to purchase the company’s own shares as, and when, appropriate. Your directors have no immediate plans to use this facility.

This month the company announced the offering by its subsidiary, SAB Finance (Cayman Islands) Limited, of US$500 million guaranteed convertible bonds, to be issued and redeemed at par. These bonds are due in 2006 and are convertible at an exchange price of 615 pence per share into existing or new SAB ordinary shares via exchangeable redeemable preference shares in the issuer. The coupon rate has been fixed at 4.25% p.a. payable semi-annually. J P Morgan, the sole bookrunner and joint lead manager for the offering, has an option to purchase additional bonds up to US$100 million. Closing is expected on or about 10 August 2001.

The proceeds of the bonds will be used to refinance existing debt utilized for past acquisitions, enhance SAB’s funding flexibility for future acquisitions, in line with our strategy, and for general corporate purposes. The offering will broaden SAB’s investor base in the international capital markets, lengthen the maturity profile of its debt and fix funding costs in a relatively low interest rate environment.

Applications will be made for the bonds to be listed and admitted to trading on the London Stock Exchange’s market for listed securities.

I now call upon the Chief Executive, Mr. Graham Mackay, to report on recent developments and on current trading.”

Mr. Graham Mackay, Chief Executive of South African Breweries plc, stated: “Beer South Africa’s volumes remain under pressure from the issues that negatively impacted last year’s performance, but these have lessened, leaving cumulative volume 1% down on the prior year’s relatively firm first quarter.

SAB International has continued to build on its strong position in key emerging markets. At the time of our preliminary results on 31st May, we announced the acquisition of three new breweries in China and our businesses there are continuing to perform well. On 28th June we announced our acquisition of a controlling interest in Mysore Breweries Limited in South West India, further evidence of our commitment to the Asian region. In the same month we also announced the acquisition of a further 53.1% in Nile Breweries, Uganda, which results in a shareholding of over 90% of that business.

Our businesses in Botswana, Tanzania and Mozambique, which are larger members of our African portfolio, have seen a good start to the year. Despite a late onset of summer in Eastern Europe, which resulted in volumes being somewhat lower than hoped, our financial performance there continues to be strong. In Poland, in the face of a poorer economic situation, our business has maintained market share, while in the Czech Republic the Pilsner Urquell brand is performing well and the business is ahead of financial projections. Our plans to grow the Pilsner Urquell brand internationally are also showing encouraging results, especially in the US and UK. In Russia our business is operating ahead of expectations.

In South Africa soft drink volumes at ABI have shown a positive trend with volumes up 2% for the first quarter. Pressure continues on the hotel and gaming businesses, which operate in a highly competitive environment, and occupancies are running at levels slightly lower than those of last year.

Overall, the group’s financial performance in the first quarter of the current year is in line with our expectations.”

AOC TONKINSON
COMPANY SECRETARY: SOUTH AFRICAN BREWERIES PLC
ONE STANHOPE GATE, LONDON W1K 1AF 30TH JULY 2001

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