Annual General Meeting
31 July 2000
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 AT THE MILLENNIUM BRITANNIA MAYFAIR HOTEL, GROSVENOR SQUARE, LONDON, THE CHAIRMAN REPORTED, INTRODUCING A REVIEW FROM THE CHIEF EXECUTIVE, AS FOLLOWS:
Ladies and Gentlemen, it is with pleasure that I welcome you to this Second Annual General Meeting of South African Breweries plc, which marks the completion of the first financial year following the listing of the Company on the London Stock Exchange on 8th March 1999, and the second year it has reported results since it became the successor parent Company of The South African Breweries Limited Group.
The year under review was one of the most memorable in SAB's history. The results turned out better than we had originally expected. All of our South African businesses performed well, overcoming subdued economic growth, exceptionally poor weather and consequentially lower beverage volume sales.
We also saw rapid growth in the size and scope of our international business. Our acquisition of the Pilsner Urquell Group, the major brewer in the Czech Republic, with its well-known brands, became effective on 1st January. We achieved some excellent trading results, most notably Poland, Russia, China and Botswana. Our worldwide, total beverage volume rose 9% to 77 million hectolitres.
Adjusted earnings were up 8%, translating to 14% at constant exchange rates. Adjusted earnings per share were 56.6 US cents per share, up from 54 US cents in the previous year.
In my statement to shareholders in last year's Annual Report, I recorded that the Board's newly adopted dividend policy would move the dividend cover over the medium term from approximately 1.8 times for Financial 1999 to a range of 2.2 to 2.5 times. In considering the levels of the interim and final dividends, the Board took the view that it was in the interests of all shareholders to achieve the targeted cover range sooner rather than later. Accordingly, Resolution 3 proposes to this meeting that shareholders approve the final dividend of 18.5 US cents per share proposed by the Board, for payment on 4th August 2000. Together with the interim dividend of 6.5 US cents per share, this makes a total of 25 US cents per share for the year, resulting in a dividend covered 2.3 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. 7 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.
I now call upon the Chief Executive, Mr Graham Mackay, to report on recent developments and on current trading.
"Overall, the Group's financial performance was ahead of prior year and in line with our expectations for the first quarter. Importantly, the growth, and increasing significance, of our international operations is offsetting a slower performance in South Africa.
SAB International's total volumes were up 30% for the quarter, aided by fine early summer weather in Europe, before including our new acquisition in the Czech Republic. There, the Pilsner Urquell Group was ahead of projections and our management efforts are clearly starting to take effect. In Poland, and further afield in China, our sales volumes kept up their strong growth rates.
However, growth in South Africa has not yet resumed. Beer volumes were down 1% in the first three months, although margins remain on target. Soft drink volumes were behind last year by some 3%. The hotel and gaming operations are doing well in a competitive environment with advances in revenue per available room and gaming's net revenues.
The next trading update will be given at the time of the Company's half-year interim report in November."
COMPANY SECRETARY: SOUTH AFRICAN BREWERIES PLC
25 GROSVENOR STREET, LONDON W1X 9FE
31 JULY 2000