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SouthAfricanBrewerie (SAB)

  Print      Mail a friend       Annual reports

Thursday 31 May, 2001


Preliminary Results - Part 1

South African Breweries PLC
31 May 2001

PART 1     

                         SOUTH AFRICAN BREWERIES plc
       Incorporated in England and Wales (Registration number 3528416)


London, 31 May 2001. South African Breweries plc, one of the world's leading
brewers with operations in 22 countries, today announces its preliminary
(unaudited) results for the year to 31 March 2001.

                            FINANCIAL HIGHLIGHTS

                                     2001    2000       % change       % change
                                     US$m    US$m           US$m              £
Turnover                            4,184   4,299            (3)              6
Trading Profit                        700     731            (4)              4
Profit before tax                     646     691            (7)              2
Adjusted earnings                     379     426           (11)            (3)
Adjusted earnings per share
-US cents                            54.4    56.6            (4)              5
-SA cents (up 15%)                  399.2   348.4
Dividends per share (US cents)       25.0    25.0              -

Note:       Turnover, trading profit and profit before tax represent
continuing operations before exceptional items. There are no exceptional items
in the current  year.  In the prior year, exceptional items comprised profit
on sale of PGSI (US$76 million) and brewery closure costs in SAB International
(US$11 million). Continuing operations exclude PGSI in the prior year.
Adjusted earnings also exclude goodwill amortisation. Percentages expressed in
terms of £ sterling movements are given in order to aid comparability with
other FTSE companies.


*        Total lager beer volumes up 18% to 62.1 million hectolitres
*        International lager beer volumes up 40% to 38.2 million hectolitres -
         strong margin performance
*        Pressure on Beer South Africa volumes but margin maintained
*        Restructuring of Czech businesses delivers improvements ahead of
*        An important pan-African strategic alliance created with the Castel
*        New acquisition in China announced today

Meyer Kahn, Chairman of SAB plc, states:

'SAB has performed well over the last year with improving fundamentals in many
of our operations. This has been overshadowed by currency weakness to which
the strength of the US dollar has been a contributing factor. Our
international business has delivered strong volume growth and enhanced
profitability, while in South Africa our businesses have reported commendable
results in the face of difficult trading conditions.

In line with our stated strategy we continue to grow and enhance our position
internationally. We have exercised our option to acquire the balance of the
Pilsner Urquell group, announced today the extension of our prominent position
in China and entered into a significant pan-African strategic alliance. We are
committed to participating in industry consolidation wherever value for
shareholders can be obtained.'

Group Review


Total group beverage volumes of 86 million hectolitres were 12.2% above last
year's, with lager beer volumes up 18.3% (4.8% organic growth) to 62.1 million
hectolitres. SAB International achieved an impressive growth in lager beer
volumes of 39.7% to reach 38.2 million hectolitres, with strong organic growth
of 13.6%. This more than offset the decline of 4.9% to 23.9 million
hectoliters, suffered by our largest individual business, Beer South Africa.
Other beverage volumes were up 2.9% on a like-for-like basis.

Operating Results

Turnover from continuing operations, including share of associates, of US$4.2
billion, was 2.7% lower than in the previous year, and group operating profit,
from continuing operations and before exceptionals, fell to US$700 million, a
reduction on last year of 4.2%.  These figures mask strong underlying
operating performances, which in reporting 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%.

All businesses continued their productivity and cost containment initiatives
which led to improved margin performance in most of our operations. In SAB
International, the increase in operating margin before amortisation of
goodwill was an impressive 160 basis points, notwithstanding the lowering mix
effect  from the inclusion of Pilsner Urquell  and the growth in China.  Our
carbonated soft drinks business, ABI, did well under difficult circumstances,
whilst the hotel and gaming operation, Southern Sun, succeeded in holding
occupancy levels ahead of the industry.


In South Africa, the main focus is on growth initiatives, in order to ensure
that our beverage businesses explore all possible avenues to achieve volume
gains despite the pressure from many new demands on consumers' disposable
incomes. We are also driving operational efficiencies to offset these
pressures and improve margins. SAB International continues to enhance
established positions as well as acquire further businesses which will add
value. Significantly, our operations in Eastern Europe have all made good
progress, with Poland, Czech Republic and Russia showing market share gains,
synergies from restructuring and substantial volume growth, respectively.
Further investments, in line with our stringent investment criteria, were made
in China and these position us  well to continue as one of that country's
leading brewers. We recently finalised the strategic alliance with the Castel
group covering Africa, which will allow both groups to leverage off each
others' established positions to enhance profitability and gain access to
further opportunities on the continent.  We continue to evaluate strategic
alternatives for the future of Southern Sun.

Financial review (continuing operations)

Profit before tax

Profit before tax, excluding exceptional items and goodwill amortisation, of
US$ 666 million was 4% lower than the US$ 697 million of the previous year.

Exceptional items

There are no exceptional items in the current year.  In the prior year,
exceptional items comprised  the profit on sale of PGSI (US$76 million) and
brewery closure costs in SAB International (US$11 million).  Continuing
operations exclude PGSI in the prior year - disposed of on 30 November 1999.


Net interest payable of US$54 million was up on the prior year of US$40
million by 35%. This is mainly due to additional borrowings to fund the
acquisition payments for Pilsner Urquell. Net interest for the year was well
covered at 13.0 times.  Gross borrowings rose in the year under review from
0.7 to 1.2 times EBITDA.


The current year's effective tax rate increased to 28.0% from last year's
unusually low 24.8%. This is largely attributable to reduced allowances and
the inclusion of a greater proportion of profits in higher  tax jurisdictions.


Goodwill of US$865 million at  31 March 2001 includes US$281 million in
respect of the increase in shareholding of Pilsner Urquell, US$32 million in
respect of the increase in shareholding of ABI, and US$30 million in respect
of the increase in shareholdings in several  SAB International operations.


The US dollar demonstrated continuing strength in international currency
markets, for example  the average rand/dollar rate for the year was 7.34 -
some 19% below last year's 6.16.  SAB International's results as reported in
US dollars were also negatively impacted.


Early in the year, the group signed a three-year US$750 million multi-currency
revolving credit facility.  On 9 April 2001, immediately after the financial
year end, SAB finalised a successful US$328 million US private bond placing
with an average life of five years.  The proceeds have been used to effect a
partial repayment of the three-year US$750 million syndicated loan, thus
extending the maturity profile of interest bearing debt.

Cash flow

Continuing operating activities generated net cash inflows before working
capital movements (EBITDA) of US$854 million - in line with last year's US$853
million.  The ratio of EBITDA to group turnover improved to 23.6 % from last
years 23.4%.


Shares purchased from minorities, in the amount of US$453 million, were in
respect of Pilsner Urquell US$332 million, ABI US$73 million, and certain SAB
International operations US$48 million.

On 1 October 2000, SAB International, through its 60% held subsidiary, SAB
India, acquired 100% of the business and assets and liabilities of Narang
Breweries Limited, for a total consideration of US$6 million.


The board has proposed a final dividend of US18.5 cents per share, making a
total of US25.0 cents per share for the year, representing a  dividend cover
ratio of 2.2 times.  The shareholders will be asked to  ratify this proposal
at the annual general meeting, scheduled for 30 July 2001. In the event that
ratification takes place, the dividend will be payable on 3 August 2001 to
shareholders on either register on 29 June 2001.  The ex-dividend trading
date, as stipulated by the LSE, will be 27 June 2001 on both the London and
Johannesburg Stock Exchanges. As the group reports primarily in US dollars,
dividends are also declared in US dollars.  They are payable  in sterling to
shareholders on the UK section of the register and in South African rand to
shareholders on the RSA section of the register.  The rates of exchange
applicable on 25 May 2001, being the last practical date before the
declaration date, will be used for conversion, (£/$ = 1.4197 and R/$ = 7.9225)
resulting in an equivalent final dividend of SA 146.5663 cents for RSA
shareholders and UK 13.0309 pence for  UK shareholders.  The equivalent total
dividend for the year for RSA shareholders is SA 197.3663 cents (prior: SA
172.20 cents) and for UK shareholders is UK 17.6309 pence (prior: UK 16.50


Whilst economic indicators in South Africa are positive and monetary and
fiscal policy remain sound, demand for traditional consumer products continues
to be weak in the face of the structural shift in consumer spending patterns.
The rate of change in consumer spending patterns does, however, appear to be
lessening.  Growth initiatives being introduced by our South African beverage
businesses, and strong operational management, should further ameliorate the
negative trend.

Our SAB International business had an excellent year, delivering substantial
increases in both volume and profit, notwithstanding the difficult trading
conditions in Africa and negative currency movements.  Our portfolio of
international businesses remains well positioned and positive economic
fundamentals are evident in many of our countries of operation. In addition,
we will be working with our partners in Africa, the Castel group, to identify
and drive benefits from our new strategic alliance. We remain confident in our
strategy and that the strong fundamentals of our international businesses will
deliver further meaningful growth in the year ahead.

The group's reported earnings for the past year were negatively affected by
the strength of the US dollar against our major operating currencies, and the
movement and direction of the US currency in the coming year remains a factor
in our results.

Operating Review

Beer South Africa

                                 2001      2000        %change         % change
Financial Summary                US$m      US$m           US$m                R

Turnover                        1,365     1,608           (15)                1
Trading Profit                    343       407           (16)                1
Operating margin (%)             25.2      25.3

Sales volume (Hl 000s)         23,904    25,141            (5)

The past financial year was one of the most challenging in recent history.
Volumes were significantly affected by the structural shift in the spending
patterns of South Africans away from non-durable goods into 'new' goods and
services (including cellular phones, gaming and the lottery) and durable
goods. Rising fuel prices increased transport costs for our customers, further
reducing income available for traditional consumer goods. Competitor activity
was strong, particularly in the wine sector.  The liquor industry has been
affected by a large surplus of white wine products - the wine lake -  which
has resulted in the sale of wine at extremely low prices. This has contributed
to a decline in our volumes, and our share of the total alcohol market,
excluding sorghum beer, fell by around 1%.  However, early indications are
that there may be a lessening in these negative trends.

Although our sales volumes declined by 4.9%, operating profit in rands
increased over the previous year's and operating margins were virtually
unchanged at 25.2%. This was made possible by a major restructuring exercise
in response to pressure on our volumes and sales, as well as ongoing
productivity initiatives, including the world class manufacturing programme
(delivering better asset utilisation and raw material productivity), our focus
on cost containment, the effectiveness of general procurement projects and
packaging material innovations. The benefits of an effective hedging of our
imported raw materials and the low commodity price cycle, which were felt in
the first half of the financial year, assisted our margins.

We have continued investing in growth initiatives, including an increased
investment in brand marketing, informal market penetration largely through our
extensive refrigeration programme - spend to date totalling R90million (US$12
million) on 12,500 units - improvements to the availability and accessibility
of our product, enhancements to our events management capability and product
innovations. Investment in our core brands increased with several exciting
initiatives in support of Castle Lager, the relaunch and refocus of Lion
Lager, the recent launch of Redd's Dry and packaging innovations, including
the successful launch of the new 660 ml 'Diva' bottle in which Redd's and
Redd's Dry are offered.  These have led to further gains in our share of the
Alcoholic Fruit Beverage category.

Our South African national rugby sponsorship was finalised during the year and
adds to our commitment to national sports.  In addition, we renewed our
national soccer support and extended this beyond the national level to include
regional football leagues.

Current research indicates enhanced consumer perceptions of our brands,
benefiting from sustained improvements in the already high quality of our beer
and packaging.  We have also increased our focus in distribution over the
year, enhancing fleet mix and resources and continuing the vehicle-branding
programme.  There has been further support for the owner-driver programme, and
this mode of delivery now accounts for approximately 80% of our distribution

Our continuing commitment to our employees is demonstrated by our substantial
investment in training. Training days per employee once again exceeded six
days.  The comprehensive HIV and AIDS strategy implemented last year, with
full support from the trade union, continues with 'knowledge, attitude and
practice' surveys and peer education programmes.

The new Ibhayi Brewery, near Port Elizabeth, was commissioned on time and
under budget and will increase production efficiency, with production per
employee more than three times previous levels.  All spending targets to
encourage significant involvement from local businesses and black empowerment
groups were met.  The brewery has an annual production capacity of 2.3 million
hectolitres, more than double the brewing capacity of the plant which it

Following the constitutional court judgment in November 1999, setting aside
the Liquor Bill of 1998, new liquor legislation has been under development at
both national and provincial levels. New legislation from the South African
Department of Trade and Industry is not anticipated during calendar 2001. The
province actively pursuing liquor legislation is the Western Cape, where it is
expected that legislation will be promulgated later in the year.  This
legislation is aimed principally at the retail segment. The Competition
Commission instituted a formal investigation into certain aspects of the
liquor industry in November 2000. SAB has met with the commission and has
provided all assistance requested.

SAB International

                                            2001            2000       % change
Financial Summary                               US$m        US$m            US$

Turnover                                       1,797       1,474             22
Trading profit before exceptionals               260         199             31
-exceptional items                                 -        (11)
Operating margin before
exceptionals (%)                                14.5        13.5
- pre goodwill amortisation                     15.5        13.9

Sales volume (Hl 000s)
- Lager beer                                  38,236      27,375             40
- Other beverages                             12,392      11,678              6


Very strong volume growth characterised another good year for SAB
International, assisted by the inclusion of Pilsner Urquell for a full year.
Poland and China volume growth was exceptional, as was that in Russia which
continues to deliver on expectations. In Tanzania and Zimbabwe volumes were
disappointing. SAB International turnover and trading profits rose
significantly and the operating margin, before goodwill amortisation improved
by 160 basis points.

In its first full year as part of SAB International, the Pilsner Urquell group
delivered results ahead of management expectations. China has continued to
make progress towards its strategic objectives in terms of growth,
productivity and cost controls, and operating performance. In Africa, many of
our operations experienced difficult economic conditions and pressure on
currencies, which combined to depress solid underlying operating performances.


The Polish beer market continued to grow strongly during the year with
industry volumes ahead by 6.1%. SAB International's business, Kompania
Piwowarska SA, outperformed the market and grew its volumes by 32% to achieve
a market share of more than 30% in the last quarter of the year. This was
largely due to an extended distribution reach for the company's main brands,
Tyskie and Lech, with the Tyskie brand strengthening its position as the
leading Polish beer brand.  Pilsner Urquell was introduced into the brand
portfolio during the year and has gained an increasingly important share of
the premium segment. Poland recently announced several alcohol advertising
restrictions,  in addition to significant excise increases expected over the
course of the year, which will change the industry dynamics.

Czech Republic

The Pilsner Urquell group performed well and maintained market share at some
44% on steady industry volumes despite the 3% real price increase obtained
during the year. The merger of our three businesses in the Czech Republic is
well under way and process restructuring is proceeding. Headcount is now 20%
below pre-acquisition levels and best practice procurement and productivity
initiatives are being implemented. Finance, planning, sales and marketing
functions have all been integrated nationally, facilitating substantial
synergies. In total, the above measures boosted merger benefits ahead of

The Czech brand portfolio benefited from packaging upgrades to improve market
differentiation and positioning. These changes have been well received by
consumers, with the Pilsner Urquell brand, in particular, enjoying substantial
domestic volume gains.


Our Chinese operations gained organic market share despite fierce price
competition. During the year, through acquisition of the Anhui breweries and
expansion of our existing facilities, we increased capacity by 6 million
hectolitres. Beverage volumes, of which 85% is beer, outperformed the
industry, growing organically by 17%, and beer volumes exceeded the 10 million
hectolitre mark for the first time.  Significantly, operating profits grew
faster than sales.  The Chinese economy continued to perform strongly with
growth in GDP over 7%, supported by a stable currency.


In Russia we achieved our financial target of EBITDA breakeven in this first
full year of operation due to substantial volume and productivity
improvements. This was facilitated by fast-track modular expansion of the
brewery, which took annual capacity for the summer season to some 1.4 million
hectolitres. The brewery has recently been expanded to an annual capacity of
2.4 million hectolitres. Distribution of our premium beer Zolotaya Botchka
(Golden Barrel) now reaches most regions in Russia and has a 10% value share
of the key Moscow market. Furthermore, local procurement and productivity
measures have resulted in improved margins and positive, albeit modest, cash
flow. Volumes for the year exceeded 1 million hectolitres for the first time.

Investments during the year

SAB exercised its rights to acquire the last two tranches of shares in Pilsner
Urquell from Nomura International plc,  ahead of the planned date of 30 June

SAB exchanged 38% of its economic interest in SAB International Africa for 20%
of the African beverage interests of the Castel group, effective 1 April 2001.
The effect of this transaction is expected to be earnings neutral in the
forthcoming year. However, this strategically important joint venture intends,
inter alia, to expand into new territories; capitalise on bulk purchasing
opportunities; enhance SAB's strategic position in African markets and benefit
from future opportunities to increase co-operation between the two partners.

We increased our holdings in two key African markets - Tanzania (from 51% to
66%) and Botswana (from 40% to 46.8%) - for a total consideration of some
US$42 million.

SAB's entry into India was initiated with the formation of SAB India. At
present the company, which is 60% held by SAB, owns one brewery site in
Nawabganj, which is in the final stage of an upgrade and expansion programme.
Further acquisitions are being pursued.


During the year, encouraging progress has been made in establishing the
infrastructure to develop the Pilsner Urquell brand internationally. The brand
has been introduced through our businesses into Poland, Slovakia and Hungary,
and exports are growing elsewhere, including the United States and Germany.

Our five major brands in the European region (Pilsner Urquell, Tyskie,
Gambrinus, Lech and Radegast) contributed over 60% of our regional volume and
grew 21% during the year. Product development initiatives resulted in the
launch of four new brands, namely Redd's in Poland, Zolotaya Botchka Aged in
Russia, Keller in Romania and Volcan in the Canary Islands.

In Africa, our flagship Castle brand outperformed the industry, even with its
semi premium price position. Castle lager continues to go from strength to
strength in East Africa while Castle milk stout is growing strongly in Ghana,
where it is starting to make meaningful inroads into the lucrative stout

In China we concentrated on developing our acquired brands to achieve our
satisfactory volume growth. In addition, we have successfully introduced the
Xue Hua (Snowflake) brand to all the regions in which we are active.

Other SAB International business


Productivity and volume improvement were evident in Slovakia and Hungary, with
Slovakia benefiting from the relaunch of Czech brands. Additional
opportunities to extract benefits from synergies between the Slovakian and
Czech businesses are being explored. In Hungary the benefit of a lower cost
base from prior years' rationalisation of operations aided a strong cash flow
improvement. Excise duty on wine was introduced this year, thereby assisting
to reverse a decade-long decline in the beer market in Hungary.

In Romania, low consumer disposable incomes and an excise regime in favour of
spirits kept prices down, countering the positive effects of sizeable volume

In the Canary Islands our Dorada and Tropical brands continue to be the volume
and value leaders.


Pressure on disposable incomes of African consumers, coupled with widely
publicised problems in Zimbabwe, where overall volumes were down 8%, led to a
marginal 2% decline in total beverage volumes.  Sorghum volumes held up well,
recording a 1% increase over the prior year.  Given our strategy not to
compromise long-term growth potential with overly aggressive pricing in
low-income markets, maintaining US dollar profits was difficult.  However, our
efforts to reduce costs through bulk purchasing initiatives, reduced overheads
and productivity improvements at operational level, went a long way towards
offsetting the negative currency effects experienced in many of the countries
in which we operate.

Market share gains were achieved in Mozambique and in Tanzania.  Cervejas de
Mozambique reported record sales volumes, in excess of 800,000 hectolitres,
despite a repeat of last year's flooding towards the end of the reporting
period. Lager beer and soft drink sales held up well in Botswana, recording
positive growth on last year, although the sorghum beer business contracted
marginally. The lager beer and sorghum beer businesses in Zambia grew
strongly, reflecting recovery in the Zambian economy and a reduction in excise
duties.   In Malawi our sorghum beer business, Chibuku Products Limited,
merged with its main competitor, Napolo Ukana, resulting in SAB International
holding a stake of just over 50% in the enlarged business.

Volumes declined in Ghana, Lesotho and Swaziland due to severe pressure on
consumers' disposable incomes.


Other Beverage Interests*

                            2001           2000        %change         % change
Financial summary               US$m       US$m            US$                R

Turnover                         816        954           (14)                2
- ABI                            585        654           (11)                6
Trading profit                   106        120           (12)                5
- ABI                             88         86              2               21
Operating margin (%)            13.0       12.6
- ABI                           15.0       13.1

Comparable volumes
(Hl 000s)**                   11,485     11,392              1
ABI volumes (Hl 000s)         10,968     10,910              1

*ABI, Appletiser, Distell  (prior year includes TBI)

** Excludes TBI and other disposed operations

Amalgamated Beverage Industries (ABI)

Demand for traditional consumer goods remained weak in South Africa, and as a
result, growth within the beverage industry was constrained and our volumes
showed only marginal growth. However, volume growth in the second half of the
year more than offset the decline in volumes of 3% reported at the interim
stage.  Ongoing cost reduction inititiatives emanating from the merger with
Suncrush resulted in an improvement in trading profit and operating margin.

Sales of mainstream carbonated soft drinks remain under pressure, particularly
in the lower income segment of our business. With our franchise partner,
Coca-Cola, ABI has started to develop other beverage opportunities to broaden
the base for growth.  The past financial year saw the refocus of Powerade and
the launch of Play, Minute Maid and Bibo in the ABI franchise territories.
Play and Minute Maid will compete in the high value energy drink and fruit
juice categories, both of which are showing strong growth, and Bibo in the low
priced juice-based beverage category. ABI has also obtained the distribution
rights to more of the Appletiser range of products, including the spring
water, Valpre.  The bottled water category is showing strong growth and ABI's
product offering was further complemented by the launch of Bon Aqua, a water
brand of the Coca-Cola Company, in April 2001.


Appletiser continued the rationalisation programme initiated last year and
disposed of the broad-spectrum distribution company, Supply Chain Services.
Appletiser changed from a diversified organisation into a focused entity
operating in the premium fruit juice and bottled water segments of the
beverage market. Benefits from this focused approach are beginning to

Wines & Spirits

Distillers Corporation (SA) Limited and Stellenbosch Farmers' Winery Group
Limited merged in November 2000 and the name was changed to Distell Group
Limited in March this year.  SAB's 30% equity accounted interest in the
combined group remained unchanged. The merger is expected to improve
profitability for the enlarged group and create a basis for long-term earnings
growth. The Competition Tribunal in South Africa recently decided that the
Distell merger is a notifiable transaction and is thus subject to a ruling
from the Competition Commission. The implications of this decision are
currently being assessed by Distell management.

Earnings of Distell for the year were below those of the previous year.

Hotels and Gaming

                                 2001        2000       % change       % change
Financial Summary                US$m        US$m           US$m              R

Turnover                          206         263           (22)            (7)
Trading Profit (see note)          25          40           (38)           (27)
Operating margin (%)             12.1        15.2

'Revpar'                     R 205.70    R 192.40                             7

Note:    During the year, Southern Sun disposed of its 20% interest in Sun
International.  Adjusting for this disposal and other non-recurring items
including the impairment of Monyaka and the write-off of pre-opening expenses,
trading profit for the year would have been US$30 million (2000:US$35 million)
on turnover of US$189 million (2000:US$210 million).

The South African hotel industry is yet to show any real signs of recovery,
due to increased industry capacity and continued negative sentiment towards
southern Africa. Hotel division occupancies remained at last year's levels of
65.4% whilst revpar increased by 7% to R205.70, in line with South African
inflation. In rand terms, the hotel division turnover also increased by 7%,
whilst operating profit before exceptionals was up 11%, reflecting the
division's commitment to improving margins. Realignment of the property
portfolio to meet market needs continued, and total rooms owned or managed
increased from 12,780 to 13,163.

Gaming turnover in rand terms increased marginally ahead of inflation. This
represented the net effect of increased revenues as a result of the opening of
the Montecasino gaming and entertainment complex on 28 November 2000 and the
declining revenues during the winding down of the temporary casino at the
Sundome in the third and fourth quarters of calendar 2000. Initial trading at
Montecasino has met expectations. Whilst operating margins in the Gaming
division were maintained in the year under review, they are likely to fall in
the coming year, reflecting the increased depreciation and operating costs
relating to the Montecasino complex.

After a long and protracted adjudication process, Tsogo Sun was awarded one of
the much sought-after Durban casino licences but this is currently the subject
of a legal challenge by an unsuccessful bidder. Tsogo Sun was also awarded the
East London casino licence, where construction has commenced.  Tsogo has no
further licence applications pending.  Disappointingly, the slot route
industry in South Africa has not yet been established and the continuing
regulatory delays have resulted in the decision to downsize its Monyaka
operations and,as a consequence, we have decided to write off the R41 million
(US$6 million) invested to date.

During the course of the year Tsogo Investments, Southern Sun's black
empowerment partners in Tsogo Sun, was due to exchange its 50% interest in
Tsogo Sun for a 24% interest in Southern Sun which was to seek a listing on
the Johannesburg Stock Exchange.  However, Gambling Board approvals were not
forthcoming and discussions continue regarding alternative restructuring

Annual report and accounts

The group's unaudited summarised financial statements and certain significant
explanatory notes follow. The annual report will be mailed to shareholders
early in July 2001 and the annual general meeting of the company will be held
at 11h00 on 30 July 2001.

-         ENDS

 This announcement and a copy of the analyst slide presentation are available
                     on the SAB website at


For further information:

                                                                   31 May 2001

Nick Chaloner (Director of    South African Breweries Plc     +44 20 7659 0119
For Media and Analyst calls

Anna Miller (Head of Investor South African Breweries Plc     +44 20 7659 0106
For Analysts

Salome Brown (Corporate       South African Breweries Plc     +27 11 407 1718
Communications Manager)

Jonathan Glass                Brunswick (UK)                  +44 20 7404 5959

Copies of the press release and the detailed Preliminary Announcement are
available from the Company Secretary at the Registered Office, or from 2 Jan
Smuts Avenue, Johannesburg, South Africa.

Registered office:    Dukes Court, Duke Street, Woking, Surrey, GU21 5BH
                      Telephone:    +44 1483 264000
                      Telefax:      +44 1483 264117



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