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Tuesday 08 December, 2009


Detailed Terms of BBBEE Trans

RNS Number : 7109D
08 December 2009

8 December 2009 

SABMilleannounces the detailed terms of its proposed Broad-Based Black Economic Empowerment transaction in South Africa

SABMiller today announces the detailed terms of its proposed broad-based black economic empowerment transaction in South Africa, preliminary details of which were first announced on 1 July 2009. The transaction will result in 8.45% of its South African subsidiary, The South African Breweries Limited, being held by a broad base of black participants, reflecting the group's long-standing and continuing commitment to socio-economic progress in South African society. Participants will include SAB's employees; black-owned licensed liquor retailers and retail liquor licence applicants, as well as registered black-owned customers of ABI, the soft drinks division of SAB ("Retailers"); and the broader South African community through a newly established SAB Foundation. 

The total value of the transaction is US$988 million (R7.3 billion) based on a R/US$ exchange rate of 7.39.

Under the transactionThe South African Breweries Limited ("SAB") will issue three new classes of ordinary shares in SAB (the "SAB Shares"), in aggregate comprising 8.45% of SAB's enlarged issued share capitalto three separate investment entities, which will hold the interests of the participants as follows

  • SAB's employees will in aggregate hold 18,532,491 E Ordinary Shares, being 3.39% of SAB's enlarged issued share capital, through an employee share trust ("The SAB Zenzele Employee Trust")

  • Retailers will in aggregate hold 19,228,250 R Ordinary Sharesbeing 3.52% of SAB's enlarged issued share capital, through an investment entity, SAB Zenzele Holdings Limited ("SAB Zenzele"); and

  • The SAB Foundation will hold 8,412,359 F Ordinary Shares, being 1.54% of SAB's enlarged issued share capital. 

The transaction period is expected to be approximately ten years ("Transaction Term"), after which time the E and F Ordinary Shares, and the ordinary shares in SAB Zenzele will be acquired by members of the SABMiller Group, and participants will receive shares in SABMiller plc which, broadly, will have an aggregate value linked, inter alia, to the operating performance of SAB during the Transaction Term.

The transaction will not require any external bank funding, and meaningful cash dividends are expected to be paid to participants from the first year. By way of example, had the transaction been implemented on 1 April 2008, the aggregate amount of dividends payable to holders of the SAB Shares would have been approximately R77 million in respect of the SAB financial year ended 31 March 2009This amount, net of any costs and administration expenses, would have been distributed to transaction participants. This example should, however, not be construed as an indication of future financial performance and is included for illustrative purposes only.

The transaction is subject to the fulfilment of the conditions precedent as set out later in this announcement.

SAB's compliance with the South African Government's Codes of Good Practice on Broad-Based Black Economic Empowerment (the "Codes") will be materially enhanced through the transaction. SABMiller believes that the transaction will support the normalisation of the South African liquor industry by supporting retail liquor licensing in South Africa, and, by seeking to promote sustainable economic growth and social development in South Africa, the transaction will align the interests of the group's South African stakeholders with SABMiller's shareholders, and will maximise long term shareholder value.

Graham Mackay, Chief Executive of SABMiller plc, said:

"The group's broad-based black economic empowerment transaction in South Africa further entrenches SABMiller's long standing commitment to the country and its people, while at the same time enhancing the growth and profitability of the company." 


Norman Adami, Managing Director of SAB, said:  

"SAB is proud to announce further details of this innovative transaction, once again demonstrating the company's determination to set new standards in societal leadership, make a significant contribution to its black employees and stakeholders and play its full part in the on-going normalisation and regulation of the South African liquor industry. The word Zenzele, which means "do it (for) yourself", epitomises the essence of what this transaction is all about - the unquenchable desire to achieve personal improvement and growth".


SABMiller believes that broad-based black economic empowerment is a key requirement for the promotion of sustainable economic growth and social development in South Africa. Further, the South African government promulgated the Codes as a means of reducing the effects of entrenched inequalities and improving the participation of previously disadvantaged people in effective economic activity, creating regulatory changes that must be complied with.

In line with SABMiller's and SAB's empowerment objectives, the transaction is therefore designed to increase black participation in SAB by providing long term economic benefits to a broad range of black South Africans, comprising employeesRetailers, and the broader South African community. 

SABMiller believes that the transaction, through the inclusion of these participant groups as shareholders, will facilitate the closer alignment of SAB's interests with its many stakeholders and compliance with the regulatory changes. Through the transaction, SAB seeks to support the licensing process in South Africa and believes that there are considerable socio-economic benefits to be derived from a normalised and regulated industry in which liquor retailers, the vast majority of whom are currently unlicensed, are formally incorporated into the economy and liquor industry.

SAB is also required to demonstrate a commitment to Broad-based Black Economic Empowerment ("BBBEE") as part of its regulatory commitments and it has committed to attaining at least Level Four Contributor status on the basis of the scorecard contained in the Codes by 2012. The Transaction will make a material contribution towards achieving this objective. Based on current assumptions, the Transaction will constitute an effective 14.1 % broad-based black economic empowerment ownership transaction in terms of the Codes, after adjusting for mandated investments.

SABMiller believes that the proposed transaction is necessary in order to comply with existing regulatory commitments in South Africa and to provide SAB the continuing ability to adapt to any future changes in regulatory requirements.  SABMiller believes that it will have a positive impact on future growth and will enhance its position as a leading corporate citizen in South Africa.

More details on the Codes and the scorecard process are set out in Note 1 to this announcement.




The transaction is to be implemented through the creation of three separate investment entities being:

  • The SAB Zenzele Employee Trust, which will hold SAB Shares for the benefit of employees

  • SAB Zenzele (a South African registered public company, specifically incorporated for the purposes of the transaction), which will hold SAB Shares for the benefit of Retailers; and

  • The SAB Foundation, which will hold SAB Shares and apply the dividend income received from those shares for the benefit of the broader South African community.

Each of these investment entities will subscribe for new separate classes of ordinary shares in SABamounting in aggregate to 8.45% of SAB's enlarged issued share capital, equating to a transaction value of US$988 million (R7.3 billion).

The value of SAB, and resultant value of the SAB Shares for the purposes of the transaction, was calculated using the implied trading enterprise value ("EV") to EBITA multiple of the SABMiller Group. EBITA is defined as operating profit before exceptional items and amortisation of intangible assets, excluding software, but including the group's share of associates' and joint ventures' operating profit on a similar basisThe EV is based on the volume weighted average price of R196.38 per SABMiller ordinary share on the JSE for the 60 trading days ended at the close of trading on 27 November 2009 and the average R/US$ exchange rate of 7.47 over that period. The consolidated EBITA for SABMiller and SAB were both based on the results of the 12 months to 30 September 2009.


The respective interests of the three investment entities in SAB, and their respective participation in the transaction, are set out in the table below:

Number of SAB Shares (millions)

% interest in SAB's enlarged issued share capital

Value of SAB Shares

(US$ million)

Value of SAB Shares

(Rand million)

SAB Zenzele Employee Trust





SAB Zenzele





SAB Foundation










Participants will, from inception, have voting and economic rights in SAB through their respective investment entities' interests in SAB. Cash dividends are expected to be paid to all participants on their indirect holding of SAB Shares from the first year. 

Participating Retailers will be required to make a relatively small cash investment as part of the subscription for their shares in SAB Zenzele. This cash investment will be based on a sliding scale relative to the value of the allocation subscribed for, as more fully described belowEmployees and The SAB Foundation will not be required to make any cash investment toward their respective participations. 

Benefits delivered to participants and mechanics of the transaction

Participantsthrough their respective investment entities, can expect to receive economic benefits in two forms: 

  • regular dividend on their indirect holdings of SAB Shares from the first year; and 

  • receipt of SABMiller shares at the end of the Transaction Term in exchange for their SAB Shares (or in the case of Retailers, in exchange for their SAB Zenzele shares).

The dividend on SAB Shares is expected to be paid bi-annually, and the amount of the dividend, although dependent on SAB's operational performance and capital requirements, is expected to be meaningful.  If SAB declares and pays a dividend in respect of any six month period ending 31 March or 30 September during the Transaction Term, each SAB Share will have the right to receive a dividend equal to 25% of SAB's adjusted attributable profit for that period, divided by the number of all the issued ordinary shares in the share capital of SAB (including the SAB Shares).  By way of example, had the transaction been implemented on 1 April 2008, the aggregate amount of dividends payable to holders of the SAB Shares would have been approximately R77 million in respect of the SAB financial year ended 31 March 2009. This amount, net of any costs and administration expenses, would have been distributed to transaction participants. This example should, however, not be construed as an indication of future financial performance and is included for illustrative purposes only.

At the end of the Transaction Term, a portion of the SAB Shares will be repurchased by SAB for an amount equal to the par value per share as at the subscription date (which equals R0.000 001) and the remaining SAB Shares and all of the SAB Zenzele ordinary shares will be compulsorily acquired by SABMiller (or a member of the SABMiller Group nominated by SABMiller) in exchange for the issue of SABMiller shares.

The value of the SABMiller shares received will be calculated by taking into account the difference between: 

  • the initial value of the SAB Shares, net of any cash investment received, escalated at an interest rate equal to 85% of the South African prime interest rate during the Transaction Term, and offsetting against that escalated value the difference between the dividends which would have been paid on SAB ordinary shares, had SAB pursued a 100% dividend policy during the Transaction Term (escalated at the same rate), and the actual dividends paid on the SAB Shares; and

  • the actual value of the SAB Shares at the end of the Transaction Term, as determined using the same valuation methodology as that used to determine the value of the SAB Shares issued at the beginning of the Transaction Term.

The benefits to participants at the end of the Transaction Term will, therefore, reflect the performance of SAB in South Africa over the Transaction Term.

The SABMiller shares issued at the end of the Transaction Term to The SAB Zenzele Employee Trust will then be distributed to participating employees, and those issued in exchange for the ordinary shares in SAB Zenzele will be issued directly to participating Retailers. It is envisaged that The SAB Foundation will retain into perpetuity the SABMiller shares issued to it.

The net effect will be that at the end of the Transaction TermSAB will again be a wholly-owned subsidiary of SABMiller and the transaction participants will hold shares directly in SABMiller, which shares will be freely tradable on the JSE.


The transaction value is calculated as US$988 million (R7.3 billion) based on a R/US$ exchange rate of 7.39. However, the economic cost of the transaction to the SABMiller group (based on SABMiller's current assumptions and on market conditions as at Friday27 November 2009 and applying the option valuation methodology that is common practice for transactions of this nature) is calculated at approximately US$279 million (R2.1 billion). This same option pricing methodology is used to value the IFRS 2 expense as described below. 

The transaction is expected to become effective in the financial year beginning on 1 April 2010, and as such will not impact the SABMiller group's adjusted earnings for the current financial year.  Under International Financial Reporting Standard 2 or IFRS 2, the transaction will result in a share-based payment expense being reflected in the income statement of SABMiller over the Transaction Term, with the majority of this expense being charged in the financial year ending 31 March 2011. This non-cash expense, and the cash transaction costs, will be excluded for the purposes of calculating adjusted earnings.

More details on the calculation of the share-based payment expense and its accounting treatment are set out in Note 2 to this announcement.

Pro forma financial effects 

The following unaudited pro forma financial information of the SABMiller group is based on the historical consolidated income statement of SABMiller for the six months ended 30 September 2009, and has been prepared to show the effect of the Transaction, as if the Transaction had occurred on 1 April 2009.

The unaudited pro forma financial information has been prepared for illustrative purposes only and because of its nature, addresses a hypothetical situation, and therefore does not represent the group's actual financial position or results.



Pro forma

6 months ended

30 September



US cents

US cents

Basic earnings per share 




Adjusted earnings per share 




Notes to the unaudited pro forma financial information


The pro forma adjustments comprise:

a) An adjustment to debit net operating expenses in the income statement relating to the IFRS 2 Share based payments charge in relation to the Employee and Retailer offers, amounting to US$123 million.

Assuming the weighted average R/US$ exchange rate for the six months ended 30 September 2009 of R8,12:US$1 the total share-based payment charge for the Transaction amounts to US$208 million for the full Transaction Term

  • The share-based payment charge associated with the Employee offer amounts to US$103 million for the full Transaction Term and will be expensed in the income statement over the Transaction Term. The charge for the six months ended 30 September 2009 amounts to US$18 million. It is assumed that approximately 34% of the share-based payment charge relating to the Employee offer will be expensed in the first year, with the remaining 66% being expensed over the remainder of the transaction period. Not all of the share-based payment charge is incurred in year 1 due to the fact that certain service conditions are attached to the employee allocations, whereby employees forfeit their effective entitlement to the E Ordinary shares, according to a predetermined forfeiture profile, should they leave the employ of the SABMiller group under certain conditions. Effective rights to forfeited shares are then reallocated at SAB's discretion.

  • A once-off share-based payment charge of US$105 million attributable to the participation of the Retailers. 

  • There is no share-based payment charge associated with the shares issued to The SAB Foundation.

The charge to the income statement is assumed to be exceptional. 

b) An adjustment to debit donation expenses in the income statement relating to dividends paid to The SAB Foundation of US$1 million, assuming the weighted average R/US$ exchange rate for the six months ended 30 September 2009 of R8.12:US$1, based on these dividends having been distributed in the form of donations to social investment beneficiaries, (assuming all dividends received by the SAB Foundation are paid out in the same period).  The associated STC charge on the dividends is US$nil. This adjustment will have a continuing impact.

c) An adjustment to debit net operating expenses in the income statement to reflect the estimated one-off costs of the transaction of US$14 million and the associated credit to the taxation charge in the income statement of US$4 million, assuming the South African statutory tax rate of 28% and a weighted average exchange rate for the six months ended 30 September 2009 of R8.12:US$1.

Pro forma basic earnings per share has been calculated by dividing pro forma profit attributable to equity shareholders of US$839 million less an adjustment of US$3 million for SAB dividends paid to SAB Zenzele and to The SAB Zenzele Employee Trust (assuming the dividends paid to SAB Zenzele and to The SAB Zenzele Employee Trust are equivalent to 25% of the adjusted attributable profits of SAB divided by the total number of SAB ordinary shares, including the SAB Shares) and the weighted average exchange rate for the six months ended 30 September 2009 of R8.12:US$1, by 1,545 million shares, being the SABMiller weighted average number of shares in issue for the six months ended 30 September 2009.  The associated STC charge on those dividends is US$nil. The dividend adjustment will have a continuing impact.


Pro forma adjusted earnings per share has been calculated by dividing pro forma adjusted earnings by 1,545 million shares, being the SABMiller weighted average number of shares in issue for the six months ended 30 September 2009. Pro forma adjusted earnings are the sum of adjusted earnings of US$1,236 million less an adjustment of US$3 million for SAB dividends assumed to be paid to SAB Zenzele and to The SAB Zenzele Employee Trust as described above, less an adjustment of US$1 million to reflect the non-exceptional income statement costs associated with the transaction as detailed in note 1(b) above. The dividend adjustment will have a continuing impact.


Employee offer 


The inclusion of employees in the transaction is intended to create broad-based ownership in SAB and to spread a significant portion of the benefits of the transaction among SAB's employees. The sustainability and growth prospects of SAB will be enhanced by improving SAB's ability to attract and retain employees, aligning the interests of employees and shareholders.


The Employee offer will include all permanent employees of SAB and its subsidiaries and of the SABMiller Group who are black, as defined in the Codes, and are permanently resident in South Africa. It will also include those permanent employees who are not black for the purpose of the Codes but who are not normally eligible for participation in the SABMiller Group share incentive plans and are permanently resident in South Africa ("Employees")

The Employee offer will result in 18.5 million E Ordinary Shares being issued to The SAB Zenzele Employee Trust, equating to 3.39% of the ordinary issued share capital of SAB. Employees will not be required to invest any cash.  Subject to SAB declaring a dividend in respect of the relevant six month period, participating Employees will receive dividends twice a year. The amount of the dividends that are expected to be paid to participants, although dependent on SAB's operational performance and capital requirements, are expected to be meaningful. By way of example, had the transaction been implemented on 1 April 2008, the aggregate amount of dividends payable to The SAB Zenzele Employee Trust would have been approximately R31 million in respect of the SAB financial year ended 31 March 2009. This amount, net of any costs and administration expenses, would have been distributed to transaction participants. This example should, however, not be construed as an indication of future financial performance and is included for illustrative purposes only.

Participating Employees will be allocated participation rights within The SAB Zenzele Employee Trust that will entitle them to an equal number of E Ordinary Shares held by The SAB Zenzele Employee Trust on their behalf13% of the participation rights in The SAB Zenzele Employee Trust will be reserved to cater for qualifying Employeewho join SAB during the Transaction Term. Participation rights will vest on day one, subject to the forfeiture events detailed below, and will not be transferable in any way for the duration of the Transaction Term.

Allocation and Forfeiture Events

An allocation committee will determine the extent of the participation rights to be allocated to Employees, both current and future. Allocations to Employees will be determined on the basis of their annual remuneration as at the allocation date, with employees who are not normally eligible for participation in the SABMiller group share incentive plans ("General Staff") being entitled to further participation rights based on years of service to the SABMiller group. In terms of allocation of value of participation rights, each Employee will receive a common multiple related to annual remuneration, with an increase of up to 25% for employees categorised as General Staff relating to years of service.

Employees who resign, are retrenched or retire may forfeit some or all of their participation rights in accordance with an established forfeiture profile contained in the trust deedEmployees who are dismissed for good cause will forfeit all of their participation rights. Any participation rights forfeited by Employees will be re-allocated by the trustees in a manner determined by the allocation committee, to new and existing Employees.


The SAB Zenzele Employee Trust will hold the interests of participating Employees in the SAB Shares over the Transaction Term, and will be governed by the trust deed of The SAB Zenzele Employee Trust. The participating Employees will, from inception, have voting rights, which will be exercised on their behalf and at their direction by the trustees of The SAB Zenzele Employee Trust. There will be a total of eight trustees of The SAB Zenzele Employee Trust, a majority of whom will be black, and will comprise:

  • three trustees, who will be employees of the SABMiller groupand will be appointed by the Board of Directors of SAB

  • two trustees, who will be participating Employees, and will be appointed through a process facilitated by trade unions recognised by SAB; and

  • two trustees, who will be participating Employees, and will be elected by the Employees directly; and

  • one independent trustee, who will neither be employed within the SABMiller group nor a member or official of a trade union recognised by SAB

The chairperson of the trustees, who will be a participating Employee elected by the trustees, will have a casting vote in the event of a deadlock.

Retailer offer 


SAB believes that participation by black retailers and retail liquor licence applicants will create genuine broad-based empowerment, by improving the social well-being and sustainability of retailers, and in supporting the normalisation and regulation of the South African liquor industry. SABMiller believes that the transaction, through the inclusion of these participant groups as shareholders, will facilitate the closer alignment of SAB's interests with its many stakeholders.


The following Retailer categories will be eligible to participate in the transaction

  • black individuals or groups who are liquor retailers with a valid retail liquor licence, including temporary liquor permits issued in the Gauteng province of South Africa

  • black individuals or groups who can provide evidence that a retail liquor licence application has been lodged or is materially complete in respect of those application requirements that are within the applicant's control; and  

  • black individuals or groups who are registered customers of ABI.

Participants will be required to be a qualifying black person or a greater than 51% black-owned entity, as defined in terms of the Codes, in order to participate in the offer. 

The transaction will result in 19.2 million R Ordinary Shares being issued to SAB Zenzele, equating to 3.52% of the ordinary issued share capital of SAB. Participating Retailers will be required to make an affordable cash investment towards their subscription for shares in SAB Zenzele (as more fully described below). Subject to SAB declaring a dividend in respect of the relevant six month period, participating Retailers will receive dividends twice a year through their shareholding in SAB Zenzele and the size of the dividends that are likely to be paid to participants bi-annually, although dependent on SAB's operational performance and capital requirements, is expected to be meaningful. By way of example, had the transaction been implemented on 1 April 2008, the aggregate amount of dividends payable to SAB Zenzele would have been approximately R32 million in respect of the SAB financial year ended 31 March 2009. This amount, net of any costs and administration expenses, would have been distributed to transaction participants. Assuming administration expenses of Rmillion had been incurred by SAB Zenzele for the year ended 31 March 2009 and that the Retailer offer was fully subscribed, Retailers with a base allocation of R50,000 would have received dividends of R444, and Retailers with a maximum allocation of R500,000 would have received dividends of R4,440This example should, however, not be construed as an indication of future financial performance and is included for illustrative purposes only.

SAB Zenzele will hold the interests of participating Retailers in SAB Shares, for the Transaction Term

Retailers will be able to apply for a base allocation of SAB Zenzele shareswhich will have a value of R50,000, by making a minimum cash investment of R100 (US$14) In addition, Retailers will be able to apply for additional SAB Zenzele shares as follows:

  • Retail liquor licence holders can apply for an allocation of SAB Zenzele Shares up to a maximum value of R500,000 for a cash investment of R25,000 or any of the other specific allocation values for the corresponding cash investments set out in the table below.  

  • Retail liquor licence applicants can apply for either:

    • an allocation of SAB Zenzele Shares having a value of R50,000 for a cash investment of R100; or

    • an allocation of SAB Zenzele Shares having a value of R100,000, for a cash investment of R2,500.

  • ABI retailers can apply for an allocation of SAB Zenzele Shares up to maximum value of R250,000 for a cash investment of R10,000 or any of the other specific allocation values for the corresponding cash investments set out in the table below.

The subscription prices and the value of the SAB Zenzele Shares are detailed in the table below:

Number of SAB Zenzele Shares

Subscription price (Rand)

Value of SAB Zenzele Shares issued (Rand)

Excess of initial value over subscription price

Percentage of initial value in excess of subscription price




















































In the case of over-subscription of the Retailer offer, SAB will, in its sole discretion, decide how to allocate the SAB Zenzele shares, while ensuring that the SAB Zenzele offer is as broad-based as possible and that there is an appropriate spread across the Retailer categories.

Bonus Shares

In addition to the above, retail liquor licence applicants who obtain a valid retail liquor licence within three years from the allocation date of SAB Zenzele shares, may be entitled to additional (bonus) SAB Zenzele shares at no additional cost to them, out of a pool of SAB Zenzele shares set aside for this purpose.

Prior to the issue of additional SAB Zenzele shares, the dividends paid by SAB Zenzele will be split between the Retailer shareholders and The SAB Foundation, as the holder of a special share in SAB Zenzele. The entitlement of The SAB Foundation to SAB Zenzele dividends will be pro rata to the proportion of the share capital of SAB Zenzele that has been authorised, but not yet issued. In addition, The SAB Foundation, as the holder of a special share in SAB Zenzele, will be entitled to dividends and the economic benefit of any SAB Zenzele authorised shares not subscribed for by applicants in terms of this SAB Zenzele offer and of any SAB Zenzele shares that may have been forfeited during the transaction term (see below for details on forfeiture).

The economic benefits accruing to The SAB Foundation as the holder of the special share in SAB Zenzele will therefore diminish over time as additional shares are allocated to licence applicants as they become licensed.

Forfeiture Events

Participating Retailers will forfeit their entire interest in SAB Zenzele if they fail to remain a minimum 51% black-owned entity as defined by the Codes. Retailer participants who become permanently disabled or deceased will not forfeit their shares in SAB Zenzele. Should any black group be placed under liquidation or should a black individual be placed under sequestration, SAB Zenzele will allow the transfer of that black group's or black individual's SAB Zenzele shares to a qualifying black person. 

The ordinary shares in SAB Zenzele held by participating Retailers will not be transferable in any way for the duration of the Transaction Term. 


Initially, the SAB Zenzele board of directors will consist of five directors who will be nominated by SAB.

In due course and at each subsequent annual general meetingthe board of directors will be reconstituted such that there will be a total of at least five directors on the board of SAB Zenzele who will be selected as follows:

  • two SAB appointees; and

  • at least three directors elected by the shareholders of SAB Zenzele.

The participating Retailers will, as shareholders in SAB Zenzele, have voting rights in SAB Zenzele. The directors of SAB Zenzele will exercise the voting rights of the SAB Shares held by SAB Zenzele on behalf of the SAB Zenzele shareholders. 

A prospectus containing the details of the SAB Zenzele offer will be made available at participating South African Post Offices, SAB or ABI sites, or the registered office of SAB Zenzele or the transfer secretary, full details of which will be released in due course.  

The SAB Foundation 


The primary focus of The SAB Foundation will be to engage in community initiatives that provide benefits to historically disadvantaged South Africans. Through the Board of Trustees, and its independent ChairmanThe SAB Foundation will aim to distribute the benefits of the transaction to 

a wide group of beneficiaries, and oversee the creation and maintenance of a visible, sustainable fund of a meaningful size, that is able to start operating within the first year of the transaction being implemented

The SAB Foundation will primarily focus on supporting entrepreneurship development as SAB believes this will deliver broad and sustainable economic benefits for South Africa. It will target historically disadvantaged people with a priority on women, the youth, and persons with disabilities, particularly in rural areas. 

It is envisaged that The SAB Foundation will continue its existence indefinitely, becoming an evergreen contributor to community development.


The SAB Foundation element of the transaction will result in 8.4 million F Ordinary Shares being issued to The SAB Foundation, equating to 1.54% of the ordinary issued share capital of SAB. The SAB Foundation will not be required to invest any cash. The SAB Foundation will receive dividends twice a year and the size of the dividends that are likely to be paid to The SAB Foundation bi-annually, although dependent on SAB's operational performance and capital requirements, is expected to be meaningful. By way of example, had the transaction been implemented on 1 April 2008, the aggregate amount of dividends payable to The SAB Foundation would have been approximately R14 million in respect of the SAB financial year ended 31 March 2009. This amount, net of any costs and administration expenses, could have been used by The SAB Foundation to make disbursements within its mandate. This example should, however, not be construed as an indication of future financial performance and is included for illustrative purposes only.

During the Transaction Term, the operating and capital expenditure of The SAB Foundation will be funded from the dividends received on the F Ordinary shares held by The SAB Foundation, as well as from any other donations received from SAB or other sources. Following the end of the Transaction TermThe SAB Foundation will principally be funded from dividends received from its SABMiller shares, as well as from donations received.


The SAB Foundation allows for between three and ten trustees who will be appointed by SAB. At all times:

  • at least half of the trustees, and the Chairperson, will be independent; 

  • up to half of the trustees will be SAB employees; 

  • none of the trustees will be employed by, or be beneficiaries of, The SAB Foundation; and

  • in accordance with the requirements of the Codes, at least half the trustees will be black persons, and at least 25% of the trustees will be black women.

Mr Cyril Ramaphosa has agreed to act as the Chairperson of The SAB Foundation.  Mr Ramaphosa is an independent non-executive director of SABMiller plc.

The other independent trustees to be appointed are Dr. William Rowland, Honorary President of the South African National Council for the Blind and Honorary President of Disabled People South Africa, and Polo Radebe, CEO of the Identity Development Fund Pty Ltd

SAB 's trustees are Norman Adami (Managing Director), Vincent Maphai (Corporate Affairs and Transformation Director) and Hepsy Mkhungo  (Head of Department: Transformation, CSI and Enterprise Development). 



Owing to the dilutive nature of the proposals on SABMiller shareholders, the Board of SABMiller intends to seek the approval of SABMiller shareholders and the sanction of the High Court of Justice in England for a scheme of arrangement between SABMiller and its members under Part 26 of the UK Companies Act 2006 (the "Scheme") for the issue of shares to or for the benefit of Employees, Retailers and The SAB Foundation. If the Scheme is sanctioned by the High Court of Justice in England, it will become binding on SABMiller and all of its shareholders.


The transaction is subject to the fulfilment or waiver, inter alia, of the following conditions precedent:

  • the passing of the appropriate resolutions by the shareholders of SABMiller to approve the Scheme and the transaction, and to authorise the issue of new SABMiller shares and the establishment of The SAB Zenzele Employee Trust;

  • the sanction by the High Court of Justice in England of the Scheme, and the Scheme becoming effective in accordance with its terms (unless waived by the directors of SABMiller);

  • the registration of SAB Zenzele, The SAB Zenzele Employee Trust and The SAB Foundation;

  • the adoption by SAB and SAB Zenzele of their constitutional documents or amendments to their constitutional documents as necessary to implement the transaction, in such form as SABMiller may approve in writing;

  • the passing by the shareholders of SAB and SAB Zenzele of such resolutions as necessary to implement the transaction (including, without limitation, the adoption or amendment of constitutional documents referred to above) and the registration of the special resolutions with the South African Companies Intellectual Property Registration Office;

  • the signature of all agreements required to implement the transaction; and

  • any other regulatory approvals required by SABMiller or the investment entities in order to effect the transaction having been obtained and remaining in full force.

Subject to shareholder approval, it is expected that the SAB Zenzele offer to Retailers will be launched, and the allocations in respect of all three categories of participants will be finalised, in the first half of 2010.


SABMiller's two major shareholders, Altria Group, Inc and BevCo Limited, have each indicated to the SABMiller board their support for the transaction and have confirmed that they intend to vote in favour of the resolutions to approve the Scheme and the transaction in respect of their beneficial holdings of ordinary Shares, which amount to 430,000,000 shares and 225,000,000 shares respectively (representing in total 41.6% of the total shares eligible to be voted at the meetings).


A meeting of SABMiller shareholders will be held at the direction of the Court of Justice in England ("Court Meeting") at 11:00 on Wednesday, 13 January 2010, at the Grosvenor House Hotel, Park Lane, London W1K 7TN England, to consider and, if deemed fit, approve the implementation of the Scheme.


A general meeting of SABMiller shareholders ("General Meeting") will be held at 11:15 (or immediately following the conclusion of the Court meeting, if later) on Wednesday, 13 January 2010, at the same location, to consider and, if deemed fit, pass, with or without modification, the resolutions required to approve the transaction, and to authorise the issue of new SABMiller Shares and the establishment of The SAB Zenzele Employee Trust.


Circular to be posted to SABMiller shareholders to convene the Court Meeting and the General Meeting of shareholders
15 December 2009
Last day to trade SABMiller Ordinary Shares on the JSE in order to be recorded in the register of members of SABMiller to vote at the Court Meeting and the General Meeting
4 January 2010
Last day to trade SABMiller ordinary shares on the LSE in order to be recorded in the register of members of SABMiller to vote at the Court Meeting and the General Meeting
8 January 2010
Latest time and date for receipt of Court Meeting Forms of Proxy, and CREST voting instructions for shareholders who are not registered on the South African section of the register of member s
11.00 am on 11 January 2010
Latest time and date for receipt of General Meeting Forms of Proxy, General Meeting Voting Instruction Forms and CREST voting instructions for shareholders who are not registered on the South African section of the register of members
11.15 am on 11 January 2010
Latest time and date for receipt of Court Meeting Forms of Proxy for Shareholders who are registered on the South African section of the register of members
1.00 pm (South African time) on 11 January 2010
Latest time and date for receipt of General Meeting Forms of Proxy for Shareholders who are registered on the South African section of the register of members
1.15 pm (South African time) on 11 January 2010
Record date – time by which SABMiller shareholders must be recorded in SABMiller’s register of members in order to attend and/or vote at the Court Meeting and the General Meeting
6.00 pm on 11 January 2010
Court Meeting
11.00 am on 13 January 2010
General Meeting
11.15 am on 13 January 2010, or immediately after conclusion or adjournment of the Court Meeting, if later
Announcement of results of the General Meeting and the Court Meeting
13 January 2010
The following dates are subject to change:
Court hearing to sanction the Scheme
3 February 2010
If the Scheme is sanctioned
Announcement about the sanctioning of the Scheme
4 February 2010
Effective date of the Scheme
4 February 2010


1.    References to times and dates in this document are to London times and dates unless otherwise

2.    Shareholders are advised that, as trading in the ordinary shares of SABMiller on the JSE is settled
       within the STRATE environment (five business days following the trade), shareholders acquiring
       dematerialised shares after 
4 January 2010 will not be eligible to vote at the Court Meeting and the 
       General Meeting.

3.    If the date of the Court Meeting or General Meeting is adjourned or postponed, Court Meeting Forms
       of Proxy and General Meeting Forms of Proxy or Court Meeting Voting Instruction Forms and  
       General Meeting Voting Instruction Forms (as the case may be) must be received by no later than 
       24 hours prior to the time of the adjourned or postponed meeting, provided that for the purposes of 
       calculating the latest time by which such Forms of Proxy and Voting Instruction Forms must be 
       received, Saturdays, Sundays and public holidays will be excluded.

The dates given in this expected timetable are based on SABMiller's current expectations and may be subject to change. If any of the scheduled dates change, SABMiller will give notice of the change by issuing an announcement through RNS and SENS 

SABMiller is being advised in connection with the transaction by Standard Bank as Investment Bank, and by Bowman Gilfillan (South Africa) and Lovells LLP (UK) as legal advisors.


  About SABMiller 

SABMiller is one of the world's largest brewers with brewing interests and distribution agreements across six continents. The group`s wide portfolio of brands includes premium international beers such as Grolsch, Miller Genuine Draft, Peroni Nastro Azzurro and Pilsner Urquell, as well as market-leading local brands such as Aguila, Castle, Miller Lite, Snow and Tyskie. SABMiller is also one of the largest bottlers of Coca-Cola products in the world. 

In the year ended 31 March 2009, the group reported US$3,405 million in adjusted pre-tax profit and group revenue of US$25,302 million. SABMiller is listed on the London and Johannesburg stock exchanges.

This announcement is available on the company website and high resolution images are available for the media to view and download free of charge from the Image Library in the News and media section of  

About SAB

SAB was established in 1895 and has in the region of 9,400 permanent employees, including its soft drinks division, ABI. It owns seven breweries with a brewing capacity of some 31 million hectolitres. Total beer volumes during the financial year ended 31 March 2009 were 25.9 million hectolitres. ABI is the largest producer and distributor of Coca-Cola brands in southern Africa. With five manufacturing plants in South Africa, ABI accounts for approximately 60% of Coca-Cola's sales in South Africa, and total sales volumes of soft drinks in the year ended 31 March 2009 (including sparkling soft drinks, fruit juices and water) were 17.3 million hectolitres. SAB is South African subsidiary of SABMiller. For more information, visit the company's website:

SABMiller's history of BBBEE in South Africa

SABMiller has been actively engaged in the advancement of black economic empowerment initiatives in South Africa since the 1970's. The group has progressed a number of initiatives in all spheres of black economic empowerment, including: ownership, through the creation of Tsogo Sun Holdings in a landmark black economic empowerment ownership transaction in the hotel and gaming industry; enterprise development, through the establishment of a number of benchmark programmes such as SAB's Owner-Driver programme, the SAB KickStart Awards (funding and mentoring of aspirant businesses), the Taung barley farmers programme, the establishment of joint ventures with black partners to supply certain key raw materials; SAB's Mahlasedi Taverner Training programme; and human resources development, through the implementation of employment equity practices.

In addition, SAB has placed significant focus on procurement equity throughout its value chain. The company embarked an aggressive black economic empowerment campaign during the 1980s in an effort to place a considerable portion of its business with black suppliers. Today, in its procurement, outsourcing and contract-awarding activities, SAB favours those companies who have demonstrated a tangible and deliverable commitment to black economic empowerment principles. 



Tel: +44 20 7659 0100

Sue Clark

Director of Corporate Affairs

Tel: +44 20 7659 0184

Gary Leibowitz

Senior Vice President, Investor Relations

Tel: +44 20 7659 0174

Nigel Fairbrass

Head of Media Relations

Tel: +44 7799 894265


Vincent Maphai

Executive Director of Corporate Affairs and Transformation

Tel: +27 11 881 8503

Robyn Chalmers

Communications Manager

Tel: +27 11 881 8502

  NOTE 1:



Background to the Codes

On 7 January 2004, the South African Government passed into law the Broad-Based Black Economic Empowerment Act, No. 53 of 2003 (the "Act"). The Act provides for the Codes for the practical implementation of the Act and these became operational as of the date of publication in the Government Gazette, No. 29617, on 9 February 2007.  

The Act states that every organ of state and public entity must take into account the Codes when: determining qualification criteria for issuing of licences; developing and implementing a preferential procurement policy; determining qualifications for sale of state-owned enterprises; and developing criteria for entering into partnerships with the private sector.

Adjustments for "Mandated Investments"

Mandated Investments may be described as investments made through any third party which is regulated by legislation (for example, a pension fund), on behalf of the actual investor. When determining the level of equity ownership of an enterprise in terms of the Codes, up to 40% of the total ownership rights of that enterprise that is attributable to these Mandated Investments may be excluded. This exclusion is in recognition of the fact that some of the beneficiaries of Mandated Investments may be historically disadvantaged people or groups and this proportion may be administratively burdensome to verify.

The generic scorecard

A key component of the Codes is the balanced scorecard which measures a company's empowerment status in seven core areas. Each area is allocated a weighting and compliance target, and the overall score determines the rating of the entity being measured. 20 points of the scorecard are attributed to equity ownership of the entity by historically disadvantaged people or groups.


BBBEE elements

Code reference


Direct empowerment

1. Equity ownership



Human Resources Development

2. Management control



Indirect empowerment

3.  Employment Equity



4.  Skills Development



5.  Preferential Procurement



6.  Enterprise Development



7. Socio-economic Development



The BBBEE status of an enterprise is based on the score achieved using the generic scorecard (below). Recognition is expressed in terms of 8 levels and Level Four is recognised as to 100%. For example, a company that scores 70 points is classified as a Level Four contributor. Thus, in measuring Code 500 (Preferential Procurement), any procurement from a level four contributor will be regarded as 100% BBBEE spend.  

BBBEE status

Qualification (generic scorecard points)

Recognition level

Level 1 contributor

> 100 

135 %

Level 2 contributor

> 85 but < 100 

125 %

Level 3 contributor

> 75 but < 85

110 %

Level 4 contributor

> 65 but < 75

100 %

Level 5 contributor

> 55 but < 65

80 %

Level 6 contributor

> 45 but < 55

60 %

Level 7 contributor

> 40 but < 45

50 %

Level 8 contributor

> 30 but < 40

10 %


< 30 points 

0 %

  The ratings achieved by businesses are important as Government has set specific targets for Government departments and organs of state in relation to providing business to black empowered organisations. In order to enhance their scores, companies can also benefit by doing business with suppliers with a high BBBEE status, thereby earning points in the preferential procurement area and ultimately providing positive empowerment effects throughout the value chain.  

In some industries, a minimum BBBEE score is a requirement for the issue or maintenance of an operating licence from a Government regulator. SAB is currently a level five contributor to BBBEE. SAB has committed to being at least a level four contributor by 2012, as part of its regulatory commitments.

  Note 2

Background to IFRS 2 

In February 2004 the International Accounting Standards Board ("IASB") issued IFRS 2 "Share-based payment". Under IFRS 2, SABMiller is required to recognise an equity balance relating to the in-substance share options granted, with a corresponding debit to the income statement. In terms of South African AC 503 - Accounting for Black Economic Empowerment ("BEE") transactions, the BEE credentials received in transactions do not qualify for recognition as an asset and are accordingly recognised as an expense. 

Fair value of the transactions 

IFRS 2 requires recognition of equity-settled share-based payments at the fair value of the goods and services received, unless that fair value cannot be estimated reliably. If the entity cannot estimate reliably the fair value of the goods or services received, the entity shall measure their value, and the corresponding increase in equity, indirectly, by reference to the fair value of the equity instruments granted. In the absence of a market price for the equity instruments granted, fair value is measured by applying an option valuation methodology to the SAB Shares issued under the transaction, effectively treating the SAB Shares as if they were, in substance, options to acquire shares in SABMiller, adjusted for the terms and conditions applicable to these share options.

Monte Carlo option pricing methodology has therefore been used to value the SAB Shares issued to transaction participants. This methodology was used to simulate future movements of the value of an SAB Share over the Transaction Term. Dividends are also simulated and used to calculate the value of the SABMiller shares to be issued at the end of the period. These simulations are then discounted back to today's terms, and the average result of all of these simulations represents the IFRS 2 charge, together with the present value of the simulated dividends that transaction participants are assumed to be entitled to receive over the period.

Accounting treatment of the transaction

An IFRS 2 share-based payment expense, as described in the above paragraph will be recognised in the consolidated financial statements of SAB and of SABMiller. As at 27 November 2009, the total IFRS 2 expense relating to the transaction is calculated at approximately US$228 million (R1.7 billion), using the exchange rate at that date.  Of this total IFRS 2 expense, it is expected that approximately 68% will be expensed in SABMiller's financial year ending 31 March 2011 and the remaining 32% will be expensed over the remainder of the Transaction Term. The total IFRS 2 expense value differs from the economic cost value because, for accounting purposes, there is no IFRS 2 expense associated with the issue of shares to The SAB Foundation

Additional expenses will be reflected in the SABMiller income statement as and when The SAB Foundation spends the dividend income which it has received on the F Ordinary Shares. Dividends paid on the E Ordinary Shares and R Ordinary Shares will not be reflected as an expense in SABMiller's income statement, but will reduce the consolidated earnings figure used to calculate earnings per share.  

It is currently anticipated that all three investment entities will be accounted for as subsidiaries in the accounts of SAB and SABMiller, because they will be regarded as being controlled by SAB for accounting purposes. 

With respect to basic earnings per share calculations, the weighted average number of shares will not therefore be impacted by the transaction. With respect to diluted earnings per share calculations, the weighted average number of shares in issue will increase by the total number of SABMiller Shares regarded as being potentially dilutive at each reporting date, as if that date were the end of the Transaction Term, using the market price of SABMiller shares at the reporting date.

   Forward looking statements

This announcement does not constitute an offer to sell or issue or the solicitation of an offer to buy or acquire securities of SABMiller or any of its affiliates ("SABMiller Group") in any jurisdiction or an inducement to enter into investment activity. 

This document includes "forward-looking statements". These statements may contain the words "anticipate", "believe", "intend", "estimate", "expect" and words of similar meaning. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding the SABMiller Group's financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to the SABMiller Group's products and services) are forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the SABMiller Group to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements are based on numerous assumptions regarding the SABMiller Group's present and future business strategies and the environment in which the SABMiller Group will operate in the future. These forward-looking statements speak only as at the date of this announcement. The SABMiller Group expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this announcement to reflect any change in the SABMiller Group's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Any information contained in this announcement on the price at which the SABMiller Group's securities have been bought or sold in the past, or on the yield on such securities, should not be relied upon as a guide to future performance. 

This information is provided by RNS
The company news service from the London Stock Exchange