SABSA HOLDINGS LIMITED Registration number: …...2017, SABSA Holdings Limited has lodged with the...

SABSA HOLDINGS LIMITED Registration number: 1998/005173/06 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS For the year ended 31 March 2017

SABSA HOLDINGS LIMITED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2017 CONTENTS Page Company information 1 Report on corporate governance 2 - 3 Report of the Audit Committee 4 - 5 Statement of responsibility and approval by the Board of Directors 6 Directors’ report 7 - 9 Independent auditor’s report 10 - 18 Income statements 19 Statements of comprehensive income 20 Statements of financial position 21 - 22 Statements of changes in equity 23 - 25 Cash flow statements 26 Notes to the annual financial statements 27 - 78

SABSA HOLDINGS LIMITED COMPANY INFORMATION for the year ended 31 March 2017

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COMPANY INFORMATION Registration number: 1998/005173/06 Entity domicile: South Africa Legal form: Public company Country of incorporation: South Africa Address of registered office: 65 Park Lane Sandton Johannesburg 2196 Principal activity: Investment holding Name of holding company: SABMiller Finance BV

(Incorporated in the Netherlands) Name of ultimate holding company: AB InBev SA/NV

(Incorporated in the Kingdom of Belgium) Directors: R Almeida (Nationality: Brazilian) (Appointed 1 December 2016)* J Awbrey (Nationality: British) #

NP Dongwana#

MP Fandeso (Resigned 1 April 2017)* MP Fandeso (Appointed 1 April 2017) ^

J Kirby (Resigned 30 April 2017)* J Mabuza (1 March 2017) #

HL Matsela (Resigned 30 June 2017) ^ KD Moroka (Resigned 17 May 2017) #

A Murray (Nationality: American) (Appointed 1 May 2017)* MM Ngoasheng#

S Shapiro (Resigned 1 October 2016) ^

* Executive

# Independent Non Executive

^ Non Executive

Company secretary: J F Lam (Resigned 31 August 2016) D Pask (Appointed 1 September 2016) Auditors: PricewaterhouseCoopers Inc. Level of assurance: These annual financial statements have been audited in compliance with the applicable requirements of the Companies Act 71 of 2008. The consolidated annual financial statements have been prepared under the supervision of the SAB Group Accounting Manager, Beejal Vallabh CA (SA). DECLARATION BY THE COMPANY SECRETARY In terms of section 88(2)(e) of the Companies Act, No 71 of 2008, I confirm that for the period ended 31 March 2017, SABSA Holdings Limited has lodged with the Companies and Intellectual Property Commission all such returns and notices as are required of a company in terms of the Act and that all such returns and notices are true, correct and up to date. ___________________ Company Secretary

SABSA HOLDINGS LIMITED REPORT ON CORPORATE GOVERNANCE for the year ended 31 March 2017

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Report on corporate governance and risk management Introduction

SABSA Holdings Limited (“Company”) is an investment holding company with no employees. It is a wholly owned subsidiary of Anheuser-Busch InBev (“AB InBev”). The corporate governance practices of Anheuser-Busch InBev are reflected in its Corporate Governance Charter, which is available on http://www.ab-inbev.com/investors/corporate-governance.html. The Charter is regularly updated. Anheuser-Busch InBev is a company incorporated under Belgian law with a primary listing on Euronext Brussels (Euronext: ABI) and with secondary listings on the Mexico Stock Exchange (MEXBOL: ABI) and the Johannesburg Stock Exchange (JSE: ANB) (ISIN: BE0974293251). As a Belgian company with primary listing on Euronext Brussels, Anheuser-Busch InBev adheres to the principles and provisions of the Belgian Corporate Governance Code, published in March 2009 (www.corporategovernancecommittee.be), taking into account its specific status as a multinational group with secondary listings in Mexico and Johannesburg. Further to the New York Stock Exchange listing of ADS’s representing ordinary shares of AB InBev, the New York Stock Exchange Corporate Governance rules for Foreign Private Issuers are applicable to the Company. According to these rules, the Company discloses in item 16G of its annual report on Form 20-F any significant ways in which its corporate governance practices differ from those followed by domestic companies listed on the NYSE. AB InBev has also registered under the U.S. Securities Exchange Act of 1934, as amended. As a result, it is subject to the Sarbanes-Oxley Act of 2002 and to certain U.S. Securities laws and regulations relating to corporate governance. The AB InBev rules of corporate governance have been established by the Board to reinforce its standards for the Company. As part of these rules, the Company has adopted a Code of Business Conduct, including a code of share dealing as a publicly traded Company and supplemented by a global anti-corruption policy. The corporate governance charter aims at providing a transparent disclosure of the Company’s governance, which is further detailed in the Company’s articles of association. It will be periodically reviewed and updated as required. In addition, the Company includes in its annual report a corporate governance statement with factual information with respect to its corporate governance and relevant modifications thereto, together with details of executive remuneration and of relevant events that took place during the year AB InBev manages effective corporate governance throughout the group with various closely monitored structures, policies and procedures. SABSA Holdings Limited (“SABSA”) and its subsidiaries are committed to sound corporate governance and recognised best practice codes. SABSA believes that sound corporate governance ensures that the business operations and conduct of the Company on economic, social and environmental well-being are transparent, and makes the Company accountable to all stakeholders. King III is recognised as the definitive code for listed and unlisted companies in South Africa and is, therefore, the main code of conduct to which SABSA and its subsidiaries subscribe.

SABSA HOLDINGS LIMITED REPORT ON CORPORATE GOVERNANCE for the year ended 31 March 2017

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Report on corporate governance and risk management (continued) SABSA Holdings Limited applies the principles of the King III Code except where noted below:

KING III GOVERNANCE ELEMENT STATUS

Ethical leadership and corporate citizenship

The board applies the Code.

Board and directors

SABSA does not produce an integrated report. The chairman of the board is an independent director. The majority of the board are independent non-executive directors.

Audit committee/Governance of risk

SABSA applies the code except that SABSA does not produce an integrated report.

Governance of information technology

SABSA does not apply the Code because responsibility for IT governance resides with the holding company AB InBev and the SABSA Holdings Ltd subsidiary, The South African Breweries (Pty) Ltd.

Compliance with laws, rules, codes and standards

The Company applies the Code.

Internal audit

The company applies the Code although it is noted that the Internal Audit function is managed via AB InBev and The South African Breweries (Pty) Ltd.

Governing stakeholder relationships

The company does not apply the Code because stakeholder relations are managed in compliance with King III by AB InBev and The South African Breweries (Pty) Ltd.

Integrated reporting and disclosure

SABSA does not apply the Code. The board considers disclosure in the AB InBev annual report to meet the needs of its stakeholders.

SABSA HOLDINGS LIMITED REPORT OF THE AUDIT COMMITTEE for the year ended 31 March 2017

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Report of the Audit Committee in terms of Section 94 (7) of the Companies Act, (71 of 2008) Audit Committee Terms of Reference The Audit Committee has adopted formal Terms of Reference which has been approved by the Board of SABSA Holdings Limited and reviewed annually. The Committee has conducted its affairs in compliance with its Terms of Reference and the Companies Act, 71 of 2008. The Committee has discharged its responsibilities contained therein. Audit Committee members and meeting attendance The Committee is constituted as per section 94 (7) of the Companies Act, 71 of 2008 and comprises at least three independent non-executive directors. In accordance with its Terms of Reference it meets at least twice per annum. There were two meetings held during the year and all three members of the Committee attended both meetings. Role and responsibility The Committee’s role and responsibilities include statutory duties as per the Companies Act and further responsibilities assigned to it by the Board of SABSA Holdings Limited which are contained in the Terms of Reference. External auditor appointment and independence The Committee considered the matters set out in section 94 of the Companies Act and nominated PricewaterhouseCoopers Inc. for appointment as external auditor for SABSA Holdings Limited and its subsidiaries (“SABSA Group”). The Committee has satisfied itself that the external auditor is independent of the SABSA Group as set out in section 94(8) of the Companies Act. Requisite assurance was sought and provided by the auditor that internal governance processes within the audit firm support and demonstrate its claim to independence. The Committee ensured that the appointment of the auditor complied with all legislation relating to appointment of auditors. The Committee, following consultation with management, approved the engagement letter, terms, audit plan and budgeted audit fees for the year ended 31 March 2017. The Committee reviews the performance of the external auditor and the value of the services on an annual basis and concluded that it is comfortable to recommend the appointment of PricewaterhouseCoopers Inc. for the coming year. The Committee determined the nature and extent of any non-audit services which the auditor may provide and pre-approved any proposed contract with the auditor for the provision of non-audit services to the SABSA Group. Financial statements and accounting practices The Committee has reviewed the accounting policies and is satisfied that they are appropriate and comply with International Financial Reporting Standards. The Committee concluded that the SABSA Group is a going concern. A process has been established to receive and deal appropriately with any concerns or complaints relating to the accounting and reporting practices of the SABSA Group. No matters have been raised during the year.

SABSA HOLDINGS LIMITED REPORT OF THE AUDIT COMMITTEE for the year ended 31 March 2017

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Internal financial controls The Committee is responsible for assessing the SABSA Group’s systems of internal financial and accounting control. In this regard the Committee has evaluated the adequacy and effectiveness of the SABSA Group’s systems of internal control. Based on the results of this review, it is the view of the Committee that the SABSA Group’s internal financial controls are effective in producing accurate financial information and a fair presentation of the financial performance of the SABSA Group in these annual financial statements. Internal audit The SAB Group Internal Audit Department have conducted an internal audit of various companies within the SABSA Group. The Committee considered the effectiveness of the Internal Audit Department and monitored adherence to the annual internal audit plan. Opinion Based on the information and explanations given by management, and discussions with the Group Internal Audit Department and the independent external auditor regarding the results of their audit, the Committee is satisfied that there was no material breakdown in the internal financial controls during the year under review. The Committee has reviewed the annual financial statements for the year ended 31 March 2017 and based on the information provided to the Committee, considers that the SABSA Group complies, in all material respects, with the requirements of the Companies Act and International Financial Reporting Standards. The Committee has recommended the annual financial statements to the Board for approval. J Awbrey Chairman: Audit Committee 28 September 2017

SABSA HOLDINGS LIMITED STATEMENT OF RESPONSIBILITY AND APPROVAL BY THE BOARD OF DIRECTORS for the year ended 31 March 2017

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The directors are responsible for preparing the consolidated financial statements in accordance with applicable laws and regulations. The directors have prepared the consolidated financial statements in accordance with International Financial Reporting Standards (“IFRSs”). The consolidated financial statements are required by law to present fairly in all material respects the state of affairs of the group and of the profit or loss of the group for that year. In preparing those financial statements the directors are required to:

Select suitable accounting policies and then apply them consistently;

Make judgements and estimates that are reasonable and prudent;

State that the financial statements comply with IFRS;

Prepare the consolidated financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business, in which case there should be supporting assumptions or qualifications as necessary.

The directors confirm that they have complied with the above requirements in preparing the consolidated financial statements. The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The directors acknowledge that they are ultimately responsible for the system of internal financial control established by the group and place considerable importance on maintaining a strong control environment. To enable the directors to meet these responsibilities, the board of directors sets standards for internal control aimed at reducing the risk of error or loss in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the group and all employees are required to maintain the highest ethical standards in ensuring the group’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the group is on identifying, assessing, managing and monitoring all known forms of risk across the group. While operating risk cannot be fully eliminated, the group endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints. The directors are of the opinion, based on the information and explanations given by management that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or loss. The directors have reviewed the Company’s budget and cash flow forecasts. On the basis of this review, and in light of the current financial position and existing borrowing facilities, the directors are satisfied that the Company is a going concern and have continued to adopt the going concern basis in preparing the consolidated financial statements. The consolidated financial statements, which appear on pages 7 to 78, have been approved by the Board of Directors on 28 September 2017 and are signed on its behalf by: ...................................................... ..................................................... Director Director

SABSA HOLDINGS LIMITED DIRECTORS’ REPORT for the year ended 31 March 2017

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The directors have pleasure in submitting their report which forms part of the consolidated and separate financial statements of the Company and the Group for the year ended 31 March 2017. Group structure1

1All subsidiaries are wholly-owned by the Group unless stated otherwise. Principal activities The Company is an investment holding company. The principal activities of the Group for the year under review are the manufacture and distribution of beer in southern Africa, the bottling and distribution of carbonated soft drinks, and the bottling and distribution of other beverages, most notably fruit juices and bottled water, both locally and internationally. Significant events On 10 May 2016 the transaction to create the continent’s largest Coca-Cola bottler, serving 12 countries, with around 40% of all Coca-Cola beverage volumes in Africa, Coca-Cola Beverages Africa (CCBA) was approved by the South African Competition Tribunal. CCBA will drive superior top line growth and the transaction will expand our footprint to include high potential markets in other parts of the continent. With a shared vision, extensive experience of operating in African markets, and long-term commitment to the continent, CCBA will be strongly positioned to offer consumers greater choice, broader availability and better value. CCBA commenced operations on 1 July 2016. On 10 October 2016, AB InBev announced the completion of the Belgian Merger and the successful completion of the business combination with SABMiller. The combined company has operations in virtually every major beer market and an expanded portfolio that includes global, multi-country and local brands, providing more choices for consumers around the world. Customers will benefit from a broad distribution network and strong brand-building expertise. The company will also continue to develop its business in partnership with its suppliers as it continues brewing the best beers using the best ingredients. As a result of the Belgian merger, which was the final step in completion of the combination, the former AB InBev merged into Newbelco, and Newbelco has become the holding company for the combined former AB InBev and SABMiller groups. All assets and liabilities of the former AB InBev have been transferred to Newbelco, and

SABSA Holdings

Limited

The South African

Breweries (Pty) Ltd

Other Beer subsidiaries at 100% and Coleus

Packaging (Pty) Ltd at 60%

Other Beverage Interests (Pty) Ltd

100%

Distell Group Ltd 26.78%

Coca‐Cola Beverages Africa (Pty) Ltd at

51.04%

Minor subsidiaries including Sabsure Limited

SABFIN Proprietary Limited

AB InBev

Namibia


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Newbelco has automatically been substituted for the former AB InBev in all its rights and obligations by operation of Belgian law. Newbelco has been renamed Anheuser-Busch InBev, and the former AB InBev has been dissolved by operation of Belgian law. The ultimate holding company of the Group is now AB InBev. As a result of the combination the SAB Zenzele scheme which forms part of the Group’s Broad Based Black Economic Empowerment strategy was enhanced. Under the original SAB Zenzele scheme, shareholders were to exchange their SAB Zenzele shares into listed, tradable SABMiller plc shares in 2020. Following the combination, it was necessary to amend the SAB Zenzele scheme. Importantly, SAB Zenzele will continue until 2020. Enhancements to the scheme were also concluded detailed below:

SABMiller plc shares are replaced in 2020 with AB InBev shares

A guaranteed minimum value for SAB Zenzele shares in 2020, escalated at inflation to 2020. This value

reflects the premium paid by AB InBev for SABMiller as well as the locked in value generated in SAB Zenzele to date of the combination. Furthermore, this value represents the minimum value that retailer shareholders can expect at the end of the scheme, with potential upside should the new combined business perform well.

An advance payment of R1.5 billion in the form of a special dividend to all shareholders. The advance payment represented a portion of the exit value in 2020.

Continued dividends in the normal course to 2020. On 11 October 2016, AB InBev was notified by The Coca-Cola Company of its intention to acquire AB InBev’s stake in Coca-Cola Beverages Africa (“CCBA”). On 21 December 2016, The Coca-Cola Company and the company have reached an agreement regarding the transition of AB InBev’s 54.5% equity stake in CCBA for USD3.15 billion, after customary adjustments. CCBA includes the Coca-Cola bottling operations in South Africa, Namibia, Kenya, Uganda, Tanzania, Ethiopia, Mozambique, Ghana, Mayotte and Comoros. As such CCBA has been classified as a discontinued operation for purposes of these financial statements. Refer note 35. On 15 December 2016, AB InBev entered into a binding agreement to sell its entire indirect shareholding in Distell Group Limited (“Distell”) to the Public Investment Corporation (SOC) Limited, acting on behalf of the Government Employees Pension Fund (“Distell Sale”). The stake comprises 58 674 000 ordinary shares or approximately 26.4% of Distell’s issued share capital (“the Distell Shareholding”). As part of its ruling to approve the business combination with SABMiller, the South African Competition Tribunal required AB InBev to dispose of the Distell Shareholding. Remgro Limited and Capevin Holdings Limited, who hold pre-emptive rights in relation to the Distell Shareholding, confirmed that they will not exercise their pre-emptive rights triggered by the Sale. As such the investment in Distell was classified as ‘held for sale’ for purposes of these financial statements. Refer note 33. Financial results Amidst a tough economic backdrop and the inclusion of the Coca-Cola Beverages Africa Group from July 2016, the Group delivered strong gains in revenue and operating profit for the year to end March 2017 as the continued focus on market facing investments, selective pricing and retail execution delivered positive results. The Group grew net revenue from R38 billion to R39.7 billion on a continuing operations basis. This is a strong performance given that the previous year included two Easter peak periods. Lager volume growth declined, reflecting a challenging economic environment which resulted in continued pressure on consumers’ disposable income, while the soft drinks business focused on re-investing to drive synergies of the combined new African business. The focus on manufacturing and distribution efficiencies bore some gain whilst fixed cost productivity in the SAB beer business came under pressure mainly as a result of the combination. SAB Zenzele benefitted from the performance, receiving a full year dividend of R151.9-million bringing the total dividends declared to date to R2.5-billion.


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Share capital Refer to note 19 for details of the authorised and issued share capital. Dividends Dividends of R8,078,611,000 (2016: R8,472,489,000) were declared by the Company during the year. Subsequent events The 26.78% investment in Distell was sold effective April 2017. Going concern The directors have reviewed the group’s performance for the year and the principal risk it faces, together with the budget and cash flow forecast and the application of reasonably possible sensitivities associated with the forecast. On the basis of this review, and in the light of the current financial position and existing committed borrowing facilities, the directors are satisfied that the group has adequate resources to continue in operational existence and therefore have continued to adopt the going concern basis in preparing the consolidated financial statements.

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Independent auditor’s report To the Shareholder of SABSA Holdings Limited

Report on the audit of the consolidated and separate financial statements

Our opinion

In our opinion, the consolidated and separate financial statements present fairly, in all material respects, the consolidated and separate financial position of SABSA Holdings Limited (the Company) and its subsidiaries (together the Group) as at 31 March 2017, and its consolidated and separate financial performance and its consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS) and the requirements of the Companies Act of South Africa.

What we have audited

SABSA Holdings Limited’s consolidated and separate financial statements set out on pages 19 to 78 comprise:

● the consolidated and separate statements of financial position as at 31 March 2017;

● the consolidated and separate income statements for the year then ended;

● the consolidated and separate statements of comprehensive income for the year then ended;

● the consolidated and separate statements of changes in equity for the year then ended;

● the consolidated and separate cash flow statements for the year then ended; and

● the notes to the financial statements, which include a summary of significant accounting policies.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated and separate financial statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We are independent of the Group in accordance with the Independent Regulatory Board for Auditors Code of Professional Conduct for Registered Auditors (IRBA Code) and other independence requirements applicable to performing audits of financial statements in South Africa. We have fulfilled our other ethical responsibilities in accordance with the IRBA Code and in accordance with other ethical requirements applicable to performing audits in South Africa. The IRBA Code is consistent with the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (Parts A and B).

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Our audit approach

Overview

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the consolidated and separate financial statements. In particular, we considered where the directors made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters, consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.

Materiality

The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated financial statements.

Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall group materiality for the consolidated financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the financial statements as a whole.

Overall group materiality

R474 million

How we determined it 5% of consolidated profit before tax, for continuing operations, adjusted for exceptional items per note 5 of the consolidated financial statements. We adjusted for exceptional items as they are not part of the normal operating activities of the group.

Rationale for the materiality benchmark applied

We chose consolidated profit before tax as the benchmark because, in our view, it is the benchmark against which the performance of the Group is most commonly measured by users, and is a generally accepted benchmark. We chose 5% which is consistent with quantitative materiality thresholds used for profit-oriented companies in this sector.

Overall group materiality

● Overall group materiality: R474 million, which represents 5% of consolidated profit before tax, for continuing operations adjusted for exceptional items per note 5 to the consolidated financial statements.

Group audit scope

● We conducted full scope audits at four business units and limited scope audit procedures at a further one business unit.

Key audit matters

● Zenzele scheme modification; ● Accounting for Distell proposed sale; and ● Accounting for the amalgamation of Coca Cola bottlers (CCBA).

Materiality

Group scoping

Key audit matters

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How we tailored our group audit scope

We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operates. In-scope business units were identified based on scoping benchmarks such as the business unit’s contribution to key financial statement line items (consolidated profit before tax, consolidated revenue, consolidated total assets and consolidated total liabilities), risk associated with the business unit and known accounting matters related to the business unit. We conducted full scope audit procedures at four business units, due to their financial significance to the Group, and limited scope audit procedures at one business unit in order to supplement our overall audit evidence. In establishing the overall approach to the Group audit, we determined the type of work that needed to be performed by us, as the Group engagement team, or component auditors from other PwC network firms operating under our instruction. Where the work was performed by component auditors, we determined the level of involvement we needed to have in the audit work at those components to be able to conclude whether sufficient appropriate audit evidence had been obtained as a basis for our opinion on the Group financial statements as a whole.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated and separate financial statements of the current period. These matters were addressed in the context of our audit of the consolidated and separate financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

The key audit matters below relate to the consolidated financial statements. We have determined that there are no key audit matters in respect of the separate financial statements to communicate in our report.

Key audit matter How our audit addressed the key audit matter

Zenzele scheme modification

In October 2016, the combination of SABMiller plc (“SABMiller”) and Anheuser-Busch InBev (“AB InBev”) resulted in the following key terms being agreed to with the SAB Zenzele shareholders:

● SABMiller shares will be replaced with AB InBev shares; and

● An advance cash payment in the form of a special dividend of R1,5 billion will be paid;

● The terms of the scheme were modified to include a guaranteed floor value of GBP45 per share on termination of the Zenzele scheme, escalated with inflation.

Management determined the changes in the scheme to represent a modification in terms of IFRS 2 “Share-based Payments” and engaged an external valuation expert to perform a valuation (Monte Carlo) of the incremental value as at 12 October 2016.

We made use of our accounting expertise to assess the appropriateness of the accounting for the transaction, against the requirements of the relevant accounting standards, specifically IFRS 2 “Share-Based Payments”. This entailed inspecting agreements entered into between SABMiller/AB InBev and the SAB Zenzele shareholders and considering whether the revised terms as agreed between the relevant parties resulted in a modification. Based on the results of our work, we accepted management’s conclusion that the transaction constitutes a modification in terms of IFRS 2. We made use of our valuation expertise to perform an independent valuation of the share-based payment charge as a result of the modification. We compared the assumptions relating to the risk free rate, current share price of the underlying shares, expected volatility of the share price and CPI forecasts to relevant industry benchmarks and accepted these assumptions as reasonable for the purposes of the valuation.

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The valuation performed by management’s expert required judgement in the determination of key assumptions and future market conditions, particularly in relation to:

● the exercise price of the option; ● the life of the option; ● the current price of the underlying

shares; ● the expected volatility of the share price; ● CPI forecasts; ● dividend yield on the shares; and ● the risk-free interest rate for the life of

the option. ●

Based on the results of the valuation performed by management’s experts, a modification charge was recognised in the consolidated income statement per note 5 to the consolidated financial statements. This area was considered to be a matter of most significance to the current year audit for the following reasons:

● The accounting for the modification in terms of IFRS 2 “Share-based Payments” is inherently complex and required the application of management judgement;

● Management made use of external valuation experts to determine the value of the incremental charge related to the share-based payment as a result of the modification; and

● The valuation requires the use of appropriate assumptions, as listed above, and movements in these assumptions could have a material impact on the results of the valuation.

We agreed the exercise price and life of the option to the signed agreements entered into with the SAB Zenzele shareholders. We further obtained management’s calculation of the dividend yield on the shares and compared the projected yield percentage to the actual percentage achieved in the prior year. We found these to be comparable. Based on our work performed, we accepted management’s valuation as falling within an acceptable range of our independent calculation.

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Accounting for Distell proposed sale

Note 33 to the consolidated financial statements details the proposed disposal of SAB’s interest in Distell Group Limited (“Distell”) in fulfilling the Competition Commission condition as a result of the SABMiller / AB InBev merger.

Management assessed the proposed sale of the investment in Distell against the requirements of IFRS 5 “Non-current Assets Held For Sale and Discontinued Operations” and concluded that as at 11 October 2016, the effective date of the merger between SABMiller and AB InBev, the investment is held for sale and therefore equity accounting ceased. On 14 November 2016, SAB entered into an agreement for the sale of Distell at an agreed fixed price. Certain conditions precedent were imposed on the transaction before the sale would be effective. The fact that the purchase price was agreed before the actual sale took place resulted in a firm commitment which was accounted for in accordance with IAS 39 “Financial Instruments: Recognition and Measurement” and therefore revalued at every reporting period with reference to the listed Distell share price.

The firm commitment was accounted for as a derivative asset in the consolidated statement of financial position and the resultant gain (R 1.8 billion) recognised in the consolidated income statement. An assessment was made as to whether, at 31 March 2017, the conditions precedent in the sale agreement had been met. Based on this assessment, management concluded that not all substantive conditions had been met and therefore the sale was not effective at year end. As such, the investment was classified as held for sale, as disclosed in note 33 to the consolidated financial statements.

The matter was considered to be of most significance to the audit in the current year due to the following reasons:

● the classification of non-current assets to “held for sale” per IFRS 5, specifically in relation as to whether the requirements as set out in the standard are met, incorporates significant judgement; and

● the firm commitment entered into and agreed before sale of the investment further complicates the accounting for the proposed sale and therefore deemed to be an area of focus.

To assess the classification of the investment in Distell as held for sale, we made use of our technical accounting expertise to assess the indicators management has used against the requirements set out in IFRS 5. Our assessment included the following:

● We inspected the agreement entered into with the Competition Commission setting out the condition for the sale of Distell upon finalisation of the merger between SABMiller and AB InBev;

● We inspected press releases issued by SABMiller indicating the success and effective date of the merger, therefore triggering the Competition Commission condition; and

● We held discussions with management in order to understand whether the shares in Distell are available for sale in their present condition.

Based on the procedures performed above, we accepted management’s conclusion of not classifying the investment as a discontinued operation according to IFRS 5. We tested the firm commitment as follows:

● We inspected the sales agreement between SAB and the buyer, specifically noting the agreed price and conditions precedent to the sale being finalised;

● We obtained the closing Distell share price at date of agreement (14 November 2016) and 31 March 2017 from an independent external source; and

● We recalculated the firm commitment on initial recognition and at 31 March 2017 and accepted the gain as recognised by management as a result of this commitment.

In order to assess that not all substantive conditions precedent as per the sales agreement had been met at year end, we inspected the binding legal opinion from SAB’s external legal counsel. Based on this we accepted management’s conclusion that the investment in Distell remains held for sale as at 31 March 2017.

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Accounting for the amalgamation of Coca Cola bottlers (CCBA)

Note 34 to the consolidated financial statements details the Coca Cola Beverages Africa (CCBA) amalgamation.

In assessing the accounting implications of the transaction, management assessed the contribution of the Coca Cola Company (TCCC) and Gutsche Family Investments (GFI) interests into the transaction to represent a business combination in terms of IFRS 3 “Business Combinations”. As such, a purchase price allocation (“PPA”) analysis was performed by management in accordance with IFRS 3 on the TCCC and GFI businesses contributed to CCBA.

To assist with the valuation, management requested external valuation experts to perform the identification and valuation of the material identifiable intangible assets and the valuation of plant and equipment relating to the acquisition. Through this process, the bottling licence agreements were identified as the only identifiable intangible asset as a result of the business combination and therefore fair valued.

As SAB was determined to be the acquirer in the transaction, the purchase consideration was concluded to be the fair value of Coca-Cola Canners interest of 32.43% held by ABI Bottling Group, as well as the fair value of 45.5% of ABI Bottling Group (excluding Canners) and AB In Bev Africa’s operations, as this represents the contribution made by the AB InBev Group in order to acquire a 54.5% shareholding in CCBA. This resulting transaction with non-controlling interest (“NCI”) resulted in a gain recognised in the merger relief reserve, which is in equity.

Goodwill amounting to R8,97 billion was recognised as a result of this transaction.

This area was considered to be a matter of most significance to the current year audit for the following reasons:

· Complexity in the accounting considerations as a result of the business combination and the transaction with non-controlling interests; and

· The complexity, as well as significant amount of judgement involved, in performing the purchase price allocation, including the identification and valuation of intangible assets, and other related assets.

We made use of our technical accounting expertise to assess the accounting treatment applied by management against the requirements of IFRS 3 and other accounting considerations (common control accounting).

Our assessment involved inspecting the relevant agreements entered into by the parties to the transaction. Additionally, extensive discussions were held with management to understand the transaction.

We considered the work performed by management’s external experts involved in determining the fair values of the intangible assets and tangible assets (plant and equipment) following assessment of their professional competence, objectivity and capabilities. We made use of our valuations expertise to independently perform a valuation of intangible assets in accordance with IFRS 3 and in accordance with industry and best practice.

Based on our work performed, we accepted management’s valuation as falling within an acceptable range of our independent calculation.

From the results of our inspection of the shareholders agreement entered into, to effect this transaction, as well as recalculating the value, we accepted management’s conclusion regarding the purchase consideration, and the resultant goodwill on transaction date.

We recalculated the gain recognised in the merger relief reserve resulting from the transaction with NCI, which is in equity.

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Other information

The directors are responsible for the other information. The other information comprises the Directors’ report, Report of the Audit Committee and the Declaration by the Company Secretary, as required by the Companies Act of South Africa and the Report on corporate governance and the Statement of responsibility and approval by the Board of Directors. Other information does not include the consolidated and separate financial statements and our auditor’s report thereon.

Our opinion on the consolidated and separate financial statements does not cover the other information and we do not express an audit opinion or any form of assurance conclusion thereon.

In connection with our audit of the consolidated and separate financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated and separate financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the directors for the consolidated and separate financial statements

The directors are responsible for the preparation and fair presentation of the consolidated and separate financial statements in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa, and for such internal control as the directors determine is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated and separate financial statements, the directors are responsible for assessing the Group and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group and/or the Company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the consolidated and separate financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated and separate financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

● Identify and assess the risks of material misstatement of the consolidated and separate financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

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● Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and the Company’s internal control.

● Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

● Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated and separate financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group and / or Company to cease to continue as a going concern.

● Evaluate the overall presentation, structure and content of the consolidated and separate financial statements, including the disclosures, and whether the consolidated and separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

● Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the consolidated and separate financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

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Report on other legal and regulatory requirements

In terms of the IRBA Rule published in Government Gazette Number 39475 dated 4 December 2015, we report that PricewaterhouseCoopers Inc. has been the auditor of SABSA Holdings Limited for 19 years. The business of SABSA Holdings Limited is transacted through The South Africa Breweries Proprietary Limited, of which PricewaterhouseCoopers Inc. and its predecessor firms have been the auditors for 121 years.

PricewaterhouseCoopers Inc. Director: C Marais Roux Registered Auditor Sunninghill 29 September 2017

SABSA HOLDINGS LIMITED INCOME STATEMENTS for the year ended 31 March 2017

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Group Company Notes 2017 2016* 2017 2016** R’000 R’000 R’000 R’000

CONTINUED OPERATIONS Revenue 2 39,760,724 38,013,393 7,576,073 8,678,099 Net operating (expenses) / income 3 (32,300,405) (28,589,538) (2,585) (21,542) Operating profit 7,460,319 9,423,855 7,573,488 8,656,557 Operating profit before exceptional items 9,707,911 9,423,855 7,573,488 8,656,557 Exceptional items 5 (2,247,592) - - - Net finance (costs) / income 6 (33,254) (145,213) 65,288 65,257 Finance cost (367,511) (174,592) (78,889) (80,082) Finance income 37,257 29,379 144,177 145,339 Share of post-tax results of associates & joint venture 12,14 100,286 432,168 - - Profit before tax 7,230,351 9,710,810 7,638,776 8,721,814 Taxation 7 (3,230,499) (2,693,916) (17,594) (13,034) Profit for the year from continuing operations 3,999,852 7,016,894 7,621,182 8,708,780 Profit for the year from discontinued operation 35 2,541,581 1,865,235 - - Profit for the year 6,541,433 8,882,129 7,621,182 8,708,780

Attributable to: Equity holders of the group 5,476,492 8,883,190 7,621,182 8,708,780 Non-controlling interest 1,064,941 (1,061) - - 6,541,433 8,882,129 7,621,182 8,708,780

The notes on pages 27 to 78 are an integral part of these consolidated financial statements. *Restated as a result of discontinued operations. See note 35. **Restated due to IAS 18. See note 2.

SABSA HOLDINGS LIMITED STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 March 2017

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Group Company Notes 2017 2016* 2017 2016** R’000 R’000 R’000 R’000

Profit for the year 6,541,433 8,882,129 7,621,182 8,708,780 Items that may be reclassified to profit or loss Fair value adjustments on available for sale financial assets 13 (3,262) 19 - - Cash flow hedges (55,092) (131,868) - - Currency translation differences (1,334,531) - - - Share of associates gains included in other comprehensive income 12 (130,139) 254,666 - - Income tax relating to available for sale financial assets 22 - 187 - - Income tax relating cash flow hedges 22 15,498 36,923 - - Items that will not be reclassified to profit or loss Actuarial gain on post retirement obligations 23 252 53,976 - - Share of associates gains included in other comprehensive income 12 13,972 26,644 - - Income tax relating to actuarial gain on post retirement obligations 22 (496) (15,228) - - Other comprehensive income for the year, net of tax (1,493,798) 225,319 - - Total comprehensive income for the year 5,047,635 9,107,448 7,621,182 8,708,780 Attributable to: Equity holders of the Group 4,415,379 9,108,509 7,621,182 8,708,780 Non-controlling interest 632,256 (1,061) - - 5,047,635 9,107,448 7,621,182 8,708,780

Attributable to: Continuing operations 3,851,397 7,253,711 7,621,182 8,708,780 Discontinued operations 1,996,238 1,853,737 - - 5,047,635 9,107,448 7,621,182 8,708,780

The notes on pages 27 to 78 are an integral part of these consolidated financial statements. *Restated as a result of discontinued operations. See note 35. **Restated due to IAS 18. See note 2.

SABSA HOLDINGS LIMITED STATEMENT OF FINANCIAL POSITION as at 31 March 2017

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Group Company Notes 2017 2016 2017 2016 R’000 R’000 R’000 R’000 ASSETS Non-current assets Intangible assets 8 2,556,275 4,335,772 - - Property, plant and equipment 9 11,845,272 14,009,586 - - Biological assets 10 - 25,659 - - Investment in subsidiaries 11 - - 112,500 112,500 Investments in associates 12 - 3,487,232 - - Available for sale investments 13 338,086 74,813 - - Investment in joint venture 14 - 2,800 - - Inter-group indebtedness 17 - - - 1,000,000 Trade and other receivables 16 23,149 1,102 - - Deferred tax asset 22 482,716 33,504 - - Derivative financial instruments 27 5,368 197 - - 15,250,866 21,970,665 112,500 1,112,500 Current assets Inventories 15 3,214,175 3,278,071 - - Trade and other receivables 16 3,540,542 3,886,834 982,236 1,484,774 Derivative financial instruments 27 1,930,418 132,470 - - Inter-group indebtedness 17 68,690 127,770 2,809,237 1,769,208 Income tax asset 80,027 6,645 2,563 - Cash and cash equivalents 18 668,923 593,233 1 - 9,502,775 8,025,023 3,794,037 3,253,982 Assets held for sale 33,35 61,449,569 - - - Total assets 86,203,210 29,995,688 3,906,537 4,366,482

The notes on pages 27 to 78 are an integral part of these consolidated financial statements.

SABSA HOLDINGS LIMITED STATEMENT OF FINANCIAL POSITION as at 31 March 2017

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Group Company Notes 2017 2016 2017 2016 R’000 R’000 R’000 R’000 EQUITY AND LIABILITIES Equity attributable to equity holders of the parent Share capital and share premium 19 462,026 462,026 386,629 386,629 Retained earnings 7,799,191 8,326,894 2,460,526 2,917,955 Reserves 20 19,451,540 2,709,350 36,540 36,540 Non-controlling interest 15,463,076 38,289 - - Total equity 43,175,833 11,536,559 2,883,695 3,341,124 Non-current liabilities Borrowings 21 32 995,341 - 994,887 Deferred tax liability 22 2,758,597 1,893,529 - - Derivative financial instruments 27 - 12,929 - - Provisions and employee benefit obligations 23 1,420,660 741,663 - - 4,179,289 3,643,462 - 994,887 Current liabilities Borrowings 21 8,149,422 931,562 997,443 - Derivative financial instruments 27 161,280 181,950 - - Trade and other payables 25 7,362,234 10,345,441 23,112 22,934 Income tax liability 349,996 217,373 - 287 Provisions and employee benefit obligations 23 269,636 - - - Inter-group indebtedness 17 2,999,616 3,139,341 2,287 7,250 19,292,184 14,815,667 1,022,842 30,471 Liabilities held for sale 35 19,555,904 - - - Total equity and liabilities 86,203,210 29,995,688 3,906,537 4,366,482


SABSA HOLDINGS LIMITED STATEMENTS OF CHANGES IN EQUITY for the year ended 31 March 2017

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Group

Share capital and share premium

Retained earnings Reserves Total

Non-controlling

interest

Total equity R’000 R’000 R’000 R’000 R’000 R’000 Balance at 31 March 2015 462,026 7,989,940 2,448,342 10,900,308 39,350 10,939,658 Total comprehensive income for the year - 8,931,292 177,217 9,108,509

(1,061) 9,107,448

Profit for the year - 8,883,190 - 8,883,190 (1,061) 8,882,129 Other comprehensive income - 48,102 177,217 225,319 - 225,319 Share based payment charge on Zenzele BBBEE transaction - - 84,446 84,446 - 84,446 Disposal of available for sale investment - (106) (655) (761) - (761) Dividends declared - (8,594,232) - (8,594,232) - (8,594,232) Balance at 31 March 2016 462,026 8,326,894 2,709,350 11,498,270 38,289 11,536,559


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Group

Share capital and share premium

Retained earnings Reserves Total

Non-controlling

interest

Total equity R’000 R’000 R’000 R’000 R’000 R’000 Balance at 31 March 2016 462,026 8,326,894 2,709,350 11,498,270 38,289 11,536,559 Total comprehensive income for the year - 5,484,310 (1,068,931) 4,415,379 632,256 5,047,635 Profit for the year - 5,476,492 - 5,476,492 1,064,941 6,541,433 Other comprehensive income - 7,818 (1,068,931) (1,061,113) (432,685) (1,493,798) Share based payment charge on Zenzele BBBEE transaction - - 3,379,735 3,379,735 - 3,379,735 Transfer to/from reserves - 3,461,190 (3,461,190) - - - Share buy back - (10,211) - (10,211) 358 (9,853) Disposal of subsidiary - (9,749) - (9,749) - (9,749) Dividends declared - (9,397,881) - (9,397,881) (233,902) (9,631,783) Business combinationNote34

Common control acquisition Note34 Transaction with NCI Note34

- - 17,892,723 17,892,723 11,247,405 29,140,128 - (50,120) (147) (50,267) 408,010 357,743 - - - - 3,472,851 3,472,851

Minority buy-out - - - - (66,333) (66,333) Change in accounting policy* - (5,242) - (5,242) - (5,242) Exchange adjustments - - - - (35,858) (35,858) Balance at 31 March 2017 462,026 7,799,191 19,451,540 27,712,757 15,463,076 43,175,833

The notes on pages 27 to 78 are an integral part of these consolidated financial statements. *SAB Hop Farms previously used a fair value model in accounting for bearer plants as biological assets. The company has reclassified bearer plants from biological assets to property, plant and equipment in compliance with changes in financial reporting standards for bearer plants.


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Company

Notes Share capital and

share premium Retained earnings Reserves Total equity R’000 R’000 R’000 R’000 Balance at 1 April 2015 386,629 2,681,664 36,540 3,104,833 Profit for the year - 8,708,780 - 8,708,780 Dividends declared to holding company 25.3

- (8,472,489) - (8,472,489)

Balance at 31 March 2016 386,629 2,917,955 36,540 3,341,124 Profit for the year - 7,621,182 - 7,621,182 Dividends declared to holding company 25.3 - (8,078,611) - (8,078,611) Balance at 31 March 2017 386,629 2,460,526 36,540 2,883,695


SABSA HOLDINGS LIMITED CASH FLOW STATEMENTS for the year ended 31 March 2017

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Group Company Notes 2017 2016 2017 2016 R’000 R’000 R’000 R’000


Cash flow from operating activities Cash generated from operations 26.1 14,874,240 15,044,753 (2,534) (492) Dividends received 317,529 337,304 8,078,611 8,634,068 Interest received 84,729 36,231 144,177 145,339 Interest paid (736,212) (143,983) (76,205) (77,525) Income tax paid 26.2 (3,038,615) (3,459,123) (20,444) (20,615) Net cash generated from operating activities 11,501,671 11,815,182 8,123,605 8,680,775 Cash flow from investing activities

Investment in subsidiaries (1,267,351) - - - Proceeds from the disposal of property, plant and equipment 124,870 39,965 - - Proceeds from disposal of intangibles 30,533 - - - Cash disposed with subsidiaries (546,108) - - - Investment to upgrade operations (4,523,906) (2,095,014) - - Investment to expand operations (2,221,017) (1,244,535) - - (Purchase of)/Proceeds from sale of available for sale investments (235,269) 878 - - Net cash utilised in investing activities (8,638,248) (3,298,706) - - Cash flow from financing activities Dividends paid 26.3 (9,648,629) (8,591,452) (8,078,611) (8,472,489)

Repayment of borrowings - (22,340) - - Proceeds from borrowings 7,860,574 8,360 - - Increase / (decrease) of inter-group indebtedness 79,118 312,908 (44,993) (209,229)

Purchase of shares from NCI (288,052) -

Increase in overdraft 679,581 28,268 - - Net cash utilised in financing activities (1,317,408) (8,264,256) (8,123,604) (8,681,718)

Net increase/(decrease) in cash and cash equivalents 1,546,015 252,220 1 (943) Effects of exchange rate changes 1,164,405 - - - Cash and cash equivalents at beginning of year 593,233 341,013 - 943 Cash and cash equivalents at end of year 3,303,653 593,233 1 -

SABSA HOLDINGS LIMITED NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2017

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1 Accounting policies

The principal accounting policies adopted in the preparation of the Group’s financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

1.1 Basis of preparation The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations Committee (IFRIC) interpretations. The financial statements are prepared under the historical cost convention, except for the revaluation to fair value of certain financial assets and liabilities, and post retirement assets and liabilities as described in the accounting policies below. The accounts have been prepared on a going concern basis. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. Actual results could differ from those estimates.

1.2 Recent accounting developments New standards, amendments and interpretations of existing standards that are not yet effective and have not been early adopted by the group. The following standards, interpretations and amendments to existing standards mandatory for the group’s accounting periods beginning on or after 1 April 2017 are not expected to have a material impact on the consolidated results of operations or financial position of the group.

Amendment to IAS 7 – Cash flow statements, effective from 1 January 2017 Amendment to IAS 12 – Income taxes, effective from 1 January 2017

The group has yet to assess the full impact of the following standards and amendments to existing standards mandatory for the group’s accounting periods beginning on or after 1 April 2017 or later periods, which have not been early adopted.

IFRS 16, ‘Leases’, is effective from 1 January 2019 IFRS 9, ‘Financial Instruments’, is effective from 1 January 2018 IFRS 15, ‘Revenue from contracts with customers’, is effective from 1 January 2018 Amendment to IAS 12 – Income taxes, effective date 1 January 2017 Amendment to IAS 7 – Cash flow statements, effective 1 January 2017 Amendment to IFRS 9 -'Financial instruments' on general hedge accounting from 1 January 2018 Amendment to IFRS 15 – Revenue from contracts with customers, is effective from 1 January 2018 Amendment to IFRS 2 – Share based payments, effective 1 January 2018

1.3 Significant judgements and estimates In determining and applying accounting policies, judgement is often required where the choice of specific policy, assumption or accounting estimate to be followed could materially affect the reported results or net position of the Group, should it later be determined that a different choice be more appropriate. Management considers the following to be areas of significant judgement and estimation for the Group due to greater complexity and / or particularly subject to the exercise of judgement:


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1.3 Significant judgements and estimates

(i) Impairment reviews Goodwill arising on business combinations is allocated to the relevant cash generating unit (CGU). Impairment reviews in respect of the relevant CGUs are performed at least annually or more regularly if events indicate that this is necessary. Impairment reviews are based on future cash flows discounted using the weighted average cost of capital with terminal values calculated applying the long-term growth rate. The future cash flows are based on business forecasts. The long-term growth rates and the discount rates used are dependent on management estimates and judgements. Future events could cause the assumptions used in these impairment reviews to change with a consequent adverse impact on the results and net position of the Group. Details of the estimates used in the impairment reviews for the year are set out in note 8. (ii) Pension and post-retirement benefits Pension accounting requires certain assumptions to be made in order to value the Group’s pension and post-retirement obligations in the balance sheet and to determine the amounts to be recognised in the statement of profit and loss and other comprehensive income and in other comprehensive income in accordance with IAS 19. The calculations of these obligations and charges are based on assumptions determined by management which include discount rates, salary and pension inflation, healthcare cost inflation, mortality rates and expected long-term rates of return on assets. Details of the assumptions used are set out in note 23. The selection of different assumptions could affect the net position of the Group and future results. (iii) Property, plant and equipment The determination of the useful economic life and residual values of property, plant and equipment is subject to management estimation. The Group annually reviews all of its depreciation rates and residual values to take account of any changes in circumstances, and any changes that could affect prospective depreciation charges and asset carrying values. Refer to note 9. (iv) Exceptional items Exceptional items are expense or income items recorded in a period which have been determined by management as being material by their size or incidence and are presented separately within the results of the Group. The determination of which items are disclosed as exceptional items will affect the presentation of profit measures and requires a degree of judgement. Details relating to exceptional items reported during the year are set out in note 5. (v) Taxation Significant judgement is required in determining the provision for taxes as the tax treatment is often by its nature complex, and cannot be finally determined until a formal resolution has been reached with the relevant tax authority which may take several years to conclude. Amounts provided are accrued based on management’s interpretation of country specific tax laws and the likelihood of settlement. Actual liabilities could differ from the amount provided which could have a consequent adverse impact on the results and net position of the group. Further significant judgment is required in determining whether a deferred tax asset is recoverable, and thus recognised. This is based on management’s expectations with regards to taxable temporary differences and forecast of future taxable profits. (vi) Valuations If third party information, such as listed share price or exchange rates are used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of IFRS, including the level in the fair value hierarchy in which the valuations should be classified. In applying IFRS 2, Share-based Payment, management has made certain judgements in respect of the fair value option pricing models to be used. Assumptions are used in the valuation model regarding the exercise price of the option, the life of the option, current price of the underlying shares; the expected volatility of the share price; CPI forecasts, dividend yield on the shares; and the risk free interest rate for the life of the option.


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1.3 Significant judgements and estimates (continued)

(v) Measurement of fair values for financial assets A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. The Group has an established control framework with respect to the measurement of fair values. This includes a valuation team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to the board of directors' of SABSA. The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as listed share price or exchange rates are used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of IFRS, including the level in the fair value hierarchy in which the valuations should be classified. Significant valuation issues are reported to the company’s audit committee. When measuring the fair value of an asset or a liability, the company uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability,

either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3: inputs for the asset or liability that are not based on observable market data (unobservable

inputs).

1.4 Basis of consolidation The Company is a public company incorporated in South Africa. The consolidated financial statements include the financial information of the subsidiaries, associates and joint venture entities owned by the Company.

1.5 Subsidiaries Subsidiaries are entities controlled by the company. Control is where the company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Where the company’s interest in subsidiaries is less than 100%, the share attributable to outside shareholders is reflected in non-controlling interests. Subsidiaries are included in the financial statements from the date control commences until the date control ceases. The acquisition method is used to account for business combinations. The identifiable net assets (including intangibles) are incorporated into the financial statements on the basis of their fair value from the effective date of control, and the results of subsidiary undertakings acquired during the financial year are included in the group’s results from that date. On the acquisition of a company or business, fair values reflecting conditions at the date of acquisition are attributed to the identifiable assets (including intangibles), liabilities and contingent liabilities acquired. Fair values of these assets and liabilities are determined by reference to market values, where available, or by reference to the current price at which similar assets could be acquired or similar obligations entered into, or by discounting expected future cash flows to present value, using either market rates or the risk-free rates and risk-adjusted expected future cash flows. The consideration transferred is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of the acquisition, and also includes the group actions entered into fair value of any deferred consideration payable. Acquisition-related costs are expensed as incurred. Where the business combination is achieved in stages and results in a change in control, the acquisition date fair value of the acquirer’s previously held equity interest in the acquire is re-measured to fair value at the acquisition date through profit or loss.


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1.5 Subsidiaries (continued)

Where the business combination agreement provides for an adjustment to the cost that is contingent on future events, the consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. On an acquisition by acquisition basis, the group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets. Investments in subsidiaries are recognised at cost less accumulated impairment losses. Investments are written down from cost to recoverable amount, determined by reference to quoted market values or other appropriate measures, unless declines in value are considered to be temporary in nature. On the subsequent disposal or termination of a previously acquired business, the results of the business are included in the Group’s results up to the effective date of disposal. The profit or loss on disposal or termination is calculated after charging the amount of any related goodwill to the extent that is has not previously been taken to the statement of profit and loss and comprehensive income. Inter-group balances, and any unrealised gains and losses or income and expenses arising from inter-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred.

1.6 Associates and joint ventures Associates are entities in which the Group has a long-term interest and over which the Group has directly or indirectly significant influence, where significant influence is the ability to influence the financial and operating policies of the entity. Joint ventures are contractual arrangements which the group has entered into with one or more parties to undertake an economic activity that is subject to joint control. Joint control is the contractually agreed sharing of control over an economic activity, and exists only when decisions relating to the relevant activities require the unanimous consent of the parties sharing the control. The Group’s share of the recognised income and expenses of associates and joint ventures are accounted for using the equity method from the date significant influence commences to the date it ceases based on present ownership interests. The date significant influence commences is not necessarily the same as the closing date or any other date named in the contract. The Group recognises its share of associates’ and joint ventures’ post-tax results as a one line entry before profit before tax in the statement of profit and loss and comprehensive income and its share of associates’ and joint ventures equity movements as a one line entry under other comprehensive income in the statement of comprehensive income. When the Group’s interest in an associate and joint venture has been reduced to nil because the Group’s share of losses exceeds its interest in the associate and joint venture, the Group only provides for additional losses to the extent that it has incurred legal or constructive obligations to fund such losses, or make payments on behalf of the associate or joint venture. Where the investment in an associate or joint venture is disposed, the investment ceases to be equity accounted.

1.7 Transactions with non-controlling interests Transactions with non-controlling interests are treated as transactions with equity owners of the group. For purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity where there is no loss of control.


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1.8 Business combination

The Group applies the acquisition method of accounting to account for acquisitions of businesses. The cost of an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred and equity instruments issued. Identifiable assets, liabilities and contingent liabilities acquired or assumed are measured separately at their fair value as of the acquisition date. The excess of the cost of the acquisition over the company’s interest in the fair value of the identifiable net assets acquired is recorded as goodwill. The allocation of fair values to the identifiable assets acquired and liabilities assumed is based on various assumptions requiring management judgment. Acquisition-related costs are expensed as incurred. If the business combination is achieved in stages, the acquisition date carrying value of the Group’s previously held interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognized in profit or loss. Common control transactions are transactions where the entity is ultimately controlled by the same parties before and after the transaction. Common control transactions are accounted for using the predecessor values of the assets and liabilities at the date of the transaction in the parent company financial statements. Predecessor values are the values as at the highest level of consolidation and include any previously recognised goodwill relating to the business being transferred. No additional goodwill is recognised in common control transactions. The difference between any consideration given and the fair value of the previously held equity interest, non-controlling interests and the aggregate predecessor value of assets and liabilities of the acquired entity are recorded as an adjustment to equity as a common control reserve. The consideration given is the fair value of the assets transferred or equity issued at acquisition date. Transactions are accounted for from acquisition date, therefore comparatives not restated. Previously held equity interests are recognised at fair value, and cumulative fair value gains relating to these investments are recognised in the income statement.

1.9 Discontinued operation and assets held for sale A discontinued operation is a component of the company that either has been disposed of or is classified as held for sale and represents a separate major line of business or geographical area of operations and is part of a single coordinated plan to dispose of or is a subsidiary acquired exclusively with a view to resale. The Group classifies a non-current asset (or disposal group) as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use if all of the conditions of IFRS 5 are met. A disposal group is defined as a group of assets to be disposed of, by sale or otherwise, together as a group in a single transaction, and liabilities directly associated with those assets that will be transferred. Immediately before classification as held for sale, the company measures the carrying amount of the asset (or all the assets and liabilities in the disposal group) in accordance with applicable IFRS. Then, on initial classification as held for sale, non-current assets and disposal groups are recognized at the lower of carrying amount and fair value less costs to sell. Impairment losses on initial classification as held for sale are included in profit or loss. The same applies to gains and losses on subsequent re-measurement. Non-current assets classified as held for sale are no longer depreciated or amortized.

1.10 Foreign exchange (i) Foreign exchange translation Items included in the financial statements of each of the group’s entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented in rands which is the Company’s functional and Group’s presentation currency.


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1.10 Foreign exchange (continued)

(ii) Transactions and balances Transactions in foreign currencies are recorded in their functional currency at the rate of exchange ruling at the date of the transaction. Monetary items denominated in foreign currencies are retranslated at the rate of exchange ruling at the statement of financial position date with the resultant translation differences being included in operating profit in the statement of profit and loss and other comprehensive other than those arising on financial assets and liabilities which are recorded within net finance costs and those which are deferred in equity as qualifying cash flow hedges and qualifying net investment hedges. Translation differences on non-monetary assets such as equity investments classified as available for sale assets are included in other comprehensive income. (iii) Foreign entities One-off items in the income and cash flow statements of foreign entities expressed in currencies other than the Rand are translated to rands at the rates of exchange prevailing on the day of the transaction. All other items are translated at weighted average rates of exchange for the relevant reporting period. Assets and liabilities of these undertakings are translated at closing rates of exchange at each statement of financial position date. All translation exchange differences arising on the retranslation of opening net assets together with differences between statement of profit and loss and other comprehensive income translated at average and closing rates are recognised as a separate component of equity. For these purposes net assets include loans between companies that form part of the net investment, for which settlement is neither planned nor likely to occur in the foreseeable future. When a foreign operation is disposed of, any related exchange differences in equity are reclassified to the statement of profit and loss and comprehensive income as part of the gain or loss on disposal. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

1.11 Intangible assets Intangible assets are stated at cost less accumulated amortisation on a straight-line basis (if applicable) and impairment losses. Cost is usually determined as the amount paid by the Group, unless the asset has been acquired as part of a business combination. Intangible assets acquired as part of a business combination are recognised at their fair value at the date of acquisition. Amortisation is included within net operating expenses in the statement of profit and loss and comprehensive income. Internally generated intangibles are not recognised except for software and applied development costs referred to under software and research and development below. Intangible assets with finite lives are amortised over their estimated useful economic lives, and only tested for impairment where there is a triggering event. The Group regularly reviews all of its amortisation rates and residual values to take account of any changes in circumstances. The directors’ assessment of the useful life of intangible assets is based on the nature of the asset acquired, the durability of the products to which the asset attaches and the expected future impact of competition on the business. Intangible assets acquired as part of a business combination are recognised separately when they are identifiable, it is probable that economic benefits will flow to the Group and the fair value can be measured reliably. (i) Goodwill Goodwill arising on consolidation represents the excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable assets (including intangibles), liabilities and contingent liabilities of the acquired entity at the date of acquisition. Where the fair value of the group’s share of identifiable net assets acquired exceeds the fair value of the consideration, the difference is recognised immediately in the statement of profit and loss and comprehensive income. The carrying amount of goodwill in respect of associates is included in the carrying value of the investment in the associate or joint venture.


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1.11 Intangible assets (continued)

(ii) Software Where computer software is not an integral part of a related item of property, plant and equipment, the software is capitalised as an intangible asset. Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring them to use. Direct costs associated with the production of identifiable and unique internally generated software products controlled by the Group that will probably generate economic benefits exceeding costs beyond one year are capitalised. Direct costs include software development employment costs (including those of contractors used), capitalised interest and an appropriate portion of overheads. Capitalised computer software, licence and development costs are amortised over their useful economic lives of between three and eight years. Internally generated costs associated with maintaining computer software programmes are expensed as incurred. (iii) Research and development Research and general development expenditure is written off in the period in which it is incurred. Certain applied development costs are only capitalised as internally generated intangible assets where there is a clearly defined project, separately identifiable expenditure, an outcome assessed with reasonable certainty (in terms of feasibility and commerciality), expected revenues exceed expected costs and the Group has the resources to complete the task. Such assets are amortised on a straight line basis over their useful lives once the project is complete. (iv) Investment in bottlers’ agreement Investment in bottlers' agreements is recognised as an indefinite life intangible asset and impairment reviews are conducted annually to determine write-off's required for permanent impairment, if any.

1.12 Property, plant and equipment Property, plant and equipment are stated at cost net of accumulated depreciation and any impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the assets. Subsequent costs are included in the asset’s carrying value or recognised as a separate asset as appropriate, only when it is probable that future economic benefits associated with the specific asset will flow to the Group and the cost can be measured reliably. Repairs and maintenance costs are charged to the statement of profit and loss and other comprehensive income during the financial period in which they are incurred. (i) Assets in the course of construction Assets in the course of construction are carried at cost less any impairment loss. Cost includes professional fees and for qualifying assets certain borrowing costs as determined below. When these assets are ready for their intended use, they are transferred into the appropriate category. At this point depreciation commences on the same basis as on other property, plant and equipment. (ii) Assets held under finance leases Assets held under finance leases which result in the Group bearing substantially all the risks and rewards incidental to ownership are capitalised as property, plant and equipment. Finance lease assets are initially recognised at an amount equal to the lower of their fair value and the present value of the minimum lease payments at inception of the lease, then depreciated over the lower of the lease term or their useful lives. The capital element of future obligations under the leases is included as a liability in the balance sheet classified, as appropriate, as a current or non-current liability. The interest element of the lease obligations is charged to the statement of profit and loss and other comprehensive income over the period of the lease term to reflect a constant rate of interest on the remaining balance of the obligation for each financial period.


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1.12 Property, plant and equipment (continued)

(iii) Returnable containers Returnable containers in circulation are recorded within property, plant and equipment at cost net of accumulated depreciation less any impairment loss. Depreciation of returnable bottles and containers is recorded to write the containers off over the course of their economic life. This is typically undertaken in a two stage process;

The excess over deposit value is written down over a period of 1 to 10 years. Provisions are made against the deposit values for breakages and loss in trade together with a design

obsolescence provision held to write off the deposit value over the expected bottle design period – which is a period of no more than 14 years from the inception of a bottle design. This period is shortened where appropriate by reference to market dynamics and the ability of the entity to use bottles for different brands.

(iv) Depreciation No depreciation is provided on freehold land or assets in the course of construction. In respect of all other plant, property and equipment, depreciation is provided on a straight-line basis at rates calculated to write off the cost, less the estimated residual value of each asset over its expected useful life as follows:

Freehold buildings 20 - 50 years Leasehold buildings Shorter of the lease term or 50 years Plant, vehicles and systems 2 - 30 years Returnable containers 1 - 14 years Assets held under finance leases Lower of the lease term or life of the asset

The Group regularly reviews all of its depreciation rates and residual values to take account of any changes in circumstances. When setting useful economic lives, the principal factors the Group takes into account are the expected rate of technological developments, expected market requirements for the equipment and the intensity at which the assets are expected to be used. The profit or loss on the disposal of an asset is the difference between the disposal proceeds and the net book amount. (v) Capitalisation of borrowing costs Financing costs incurred, before tax, on major capital projects during the period of development or construction that necessarily take a substantial period of time to be developed for their intended use, are capitalised up to the time of completion of the project.

1.13 Biological assets Biological assets are measured at their fair value less cost to harvest and costs to sell. Biological assets exclude bearer plants, which are included in property, plant and equipment, but include the bearer harvest still on the plants. A gain or loss arising on initial recognition of biological assets at fair value less cost to harvest and costs to sell is included in profit or loss for the period in which it arises.

1.14 Inventories Inventories are stated at the lower of cost incurred in bringing each product to its present location and condition, and net realisable value, as follows:

Raw materials, consumables and goods for resale: Purchase cost net of discounts and rebates on a first-in first-out basis (FIFO).

Finished goods and work in progress: Raw material cost plus direct costs and a proportion of manufacturing overhead expenses on a FIFO basis.

Net realisable value is based on estimated selling price less further costs expected to be incurred to completion and disposal. Costs of inventories include the transfer from equity of any gains or losses on matured qualifying cash flow hedges of purchases of raw materials.


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1.15 Financial assets and financial liabilities

Financial assets and financial liabilities are initially recorded at fair value (plus any directly attributable transaction costs, except in the case of those classified at fair value through profit or loss). For those financial instruments that are not subsequently held at fair value, the group assesses whether there is any objective evidence of impairment at each balance sheet date. Financial assets are recognised when the Group has rights or other access to economic benefits. Such assets consist of cash, equity instruments, a contractual right to receive cash or another financial asset, or a contractual right to exchange financial instruments with another entity on potentially favourable terms. Financial assets are derecognised when the right to receive cash flows from the asset have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Financial liabilities are recognised when there is an obligation to transfer benefits and that obligation is a contractual liability to deliver cash or another financial asset or to exchange financial instruments with another entity on potentially unfavourable terms. Financial liabilities are derecognised when they are extinguished, that is discharged, cancelled or expired. If a legally enforceable right exists to set off recognised amounts of financial assets and liabilities, which are in determinable monetary amounts, and there is the intention to settle net, the relevant financial assets and liabilities are offset. Where these arrangements meet the set-off rules under IFRS, the balances has been reported net on the balance sheet. Interest costs are charged to the statement of profit and loss and comprehensive income in the year in which they accrue. Premiums or discounts arising from the difference between the net proceeds of financial instruments purchased or issued and the amounts receivable or repayable at maturity are included in the effective interest calculation and taken to net finance costs over the life of the instrument. There are four categories of financial assets and financial liabilities. These are described as follows: (i) Financial assets and financial liabilities at fair value through profit or loss Financial assets and financial liabilities at fair value through profit or loss include derivative assets and derivative liabilities not designated as effective hedging instruments. All gains or losses arising from changes in the fair value of financial assets or financial liabilities within this category are recognised in the statement of profit and loss and comprehensive income. a. Derivative financial assets and financial liabilities Derivative financial assets and financial liabilities are financial instruments whose value changes in response to an underlying variable, require little or no initial investment and are settled in the future. These include derivatives embedded in host contracts. Such embedded derivatives need not be accounted for separately if the host contract is already fair valued; if it is not considered as a derivative if it was freestanding; or if it can be demonstrated that it is closely related to the host contract. There are certain currency exemptions which the Group has applied to these rules which limit the need to account for certain potential embedded foreign exchange derivatives. These are: if a contract is denominated in the functional currency of either party; where that currency is commonly used in international trade of the good traded; or if it is commonly used for local transactions in an economic environment. Derivative financial assets and liabilities are analysed between current and non-current assets and liabilities on the face of the balance sheet, depending on when they are expected to mature. For derivatives that have not been designated to a hedging relationship, all fair value movements are recognised immediately in the statement of profit and loss and other comprehensive income.


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1.15 Financial assets and financial liabilities (continued)

Loans and receivables include trade receivables, amounts owed by associates – trade, amounts owed by joint ventures – trade, accrued income and cash and cash equivalents. a. Trade receivables Trade receivables are initially recognised at fair value and subsequently measured at amortised cost less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the terms of the receivables. The amount of the provision is the difference between the asset’s carrying value and the present value of the estimated future cash flows discounted at the original effective interest rate. This provision is recognised in the statement of profit and loss and comprehensive income. b. Cash and cash equivalents Cash and cash equivalents include cash in hand, bank deposits repayable on demand and other short-term highly liquid investments with original maturities of three months or less. (iii) Available for sale investments Available for sale investments are non-derivative financial assets that are either designated in this category or not classified as financial assets at fair value through profit or loss, or loans and receivables. Investments in this category are included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date. They are initially recognised at fair value plus transaction costs and are subsequently re-measured at fair value and tested for impairment. Gains and losses arising from changes in fair value including any related foreign exchange movements are recognised in other comprehensive income. Purchases and sales of investments are recognised on the date on which the Group commits to purchase or sell the asset. Investments are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. (iv) Financial liabilities held at amortised cost Financial liabilities held at amortised cost include trade payables, accruals, trade amounts owed to associates and joint ventures-trade, other payables and borrowings. a. Trade payables Trade payables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method. Trade payables are analysed between current and non-current liabilities on the face of the balance sheet, depending on when the obligation to settle will be realised. b. Borrowings Borrowings are recognised initially at fair value, net of transaction costs and are subsequently stated at amortised cost and include accrued interest and prepaid interest. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months from the balance sheet date. Bank overdrafts are shown within borrowings in current liabilities and are used to meet liquidity requirements.


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1.16 Impairment

This policy covers all assets except inventories (see note 15), financial assets (see note 13, 16, 18) and deferred tax assets (see note 22). Impairment reviews are performed by comparing the carrying value of the non-current asset to its recoverable amount, being the higher of the fair value less costs to sell and value in use. The fair value less costs to sell is considered to be the amount that could be obtained on disposal of the asset, and therefore is determined from a market participant. The recoverable amount under both calculations is determined by discounting the future post-tax cash flows generated from continuing use of the cash generating unit (CGU) using a post-tax discount rate. Value in use is determined by discounting the future post-tax cash flows generated from continuing use of the CGU using a post-tax discount rate, as this closely approximates to applying pre-tax discount rates to pre-tax cash flows. Where impairment is identified using post-tax cash flows and post-tax discount rates, the impairment review is re-performed on a pre-tax basis in order to determine the impairment loss to be recorded. Where the asset does not generate cash flows that are independent from the cash flows of other assets, the Group estimates the recoverable amount of the cash generating unit (CGU) to which the asset belongs. For the purpose of conducting impairment reviews, CGUs are considered to be groups of assets that have separately identifiable cash flows. They also include those assets and liabilities directly involved in producing the income and a suitable proportion of those used to produce more than one income stream. An impairment loss is held firstly against any specifically impaired assets. Where impairment is recognised against a CGU, the impairment is first taken against goodwill balances and if there is a remaining loss it is set against the remaining intangible and tangible assets on a pro-rata basis. Should circumstances or events change and give rise to a reversal of a previous impairment loss, the reversal is recognised in the statement of profit and loss and other comprehensive income in the period in which it occurs and the carrying value of the asset is increased. The increase in the carrying value of the asset is restricted to the amount that it would have been had the original impairment not occurred. Impairment losses in respect of goodwill are irreversible. Goodwill is tested annually for impairment. Assets subject to amortisation are reviewed for impairment if circumstances or events change to indicate that the carrying value may not be fully recoverable.

1.17 Provisions Provisions are recognised when there is a present obligation, whether legal or constructive, as a result of a past event for which it is probable that a transfer of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Such provisions are calculated on a discounted basis where the effect is material to the original undiscounted provision. The carrying amount of the provision increases in each period to reflect the passage of time and the unwinding of the discount and the movement is recognised in the statement of profit and loss and other comprehensive income within net finance costs. Restructuring provisions comprise lease termination penalties and employee termination payments. Provisions are not recognised for future operating losses. Provisions are recognised for onerous contracts where the unavoidable cost exceeds the expected benefit.

1.18 Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.


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1.19 Revenue recognition

(i) Sale of goods Revenue represents the fair value of consideration received or receivable for goods provided to third parties and is recognised when the risks and rewards of ownership have been transferred to the buyer, and no significant uncertainties remain regarding recovery of the consideration due, associated costs or the possible return of goods, and there is no continuing management involvement with the goods. The Group presents revenue gross of excise duties because unlike value added tax, excise is not directly related to the value of sales. It is not generally recognised as a separate item on invoices, increases in excise are not always directly passed on to customers, and the Group cannot reclaim the excise where customers do not pay for product received. The Group therefore considers excise as a cost to the Group and reflects it as a production cost. Consequently any excise that is recovered in the sale price is included in revenue. Revenue excludes value added tax. It is stated net of price discounts, promotional discounts, settlement discounts and after an appropriate amount has been provided to cover the sales value of credit notes yet to be issued that relate to the current and prior periods. The same recognition criteria also apply to the sale of by-products and waste (such as spent grain, malt dust and yeast) with the exception that these are included within other income. The Group operates a loyalty programme, Dinaledi, which allows customers to accumulate points based on specific criteria, which can be redeemed for various free products. The proportion of revenue that can be reliably measured relating to the loyalty program is deferred. The deferred revenue is recognised as income when the points are redeemed. (ii) Royalty income Royalty income is recognised on an accruals basis in accordance with the relevant agreements and is included in other income (iii) Interest income Interest income is recognised on an accruals basis using the effective interest method. When a receivable is impaired the Group reduces the carrying amount to its recoverable amount by discounting the estimated future cash flows at the original effective interest rate, and continuing to unwind the discount as interest income. (iv) Dividend income Dividend income is recognised when the right to receive payment is established.

1.20 Operating leases Rentals paid and incentives received on operating leases are charged or credited to the statement of profit and loss and other comprehensive income on a straight-line basis over the lease term.

1.21 Exceptional items Exceptional items are those that in management’s judgment need to be disclosed by virtue of their size or incidence with are non-recurring. Such items are disclosed on the face of the consolidated income statement or separately disclosed in the notes to the financial statements. Transactions which may give rise to exceptional items are principally restructuring activities, impairments and gains or losses on disposal of investments.


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1.22 Taxation

The tax expense for the period comprises current and deferred tax. Tax is recognised in the statement of profit and loss and other comprehensive income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity, in which case it is recognised in other comprehensive income or directly in equity, respectively. Current tax expense is based on the results for the period as adjusted for items that are not taxable or not deductible. The Group’s liability for current taxation is calculated using tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax is provided in full using the liability method, in respect of all temporary differences arising between the tax bases of assets and liabilities and their carrying values in the consolidated financial statements, except where the temporary difference arises from goodwill (in the case of deferred tax liabilities) or from the initial recognition (other than a business combination) of other assets and liabilities in a transaction that affects neither accounting nor taxable profit. Deferred tax liabilities are recognised where the carrying value of an asset is greater than its tax base, or where the carrying value of a liability is less than its tax base. Deferred tax is recognised in full on temporary differences arising from investment in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. A net deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it is probable that future taxable profit will be available against which the temporary differences (including carried forward tax losses) can be utilised. Deferred tax is measured at the tax rates expected to apply in the periods in which the timing differences are expected to reverse based on tax rates and laws that have been enacted or substantively enacted at balance sheet date. Deferred tax is measured on a non-discounted basis.

1.23 Dividend distributions Dividend distributions to equity holders of the parent are recognised as a liability in the company and group’s financial statements in the period in which the dividends are approved by the group’s shareholders. Interim dividends are recognised when approved. Dividends declared after the balance sheet date are not recognised, as there is no present obligation at the balance sheet date.

1.24 Employee benefits (i) Wages and salaries Wages and salaries for current employees are recognised in the statement of profit and loss and other comprehensive income as the employees’ services are rendered. (ii) Leave and long-term service awards costs The Group recognises a liability and an expense for accrued leave pay when such benefits are earned and not when these benefits are paid. The Group also recognises a liability and an expense for long-term service awards where cash is paid to the employee at certain milestone dates in a career with the Group. Such accruals are appropriately discounted to reflect the future payment dates at discount rates determined by reference to local high quality corporate bonds.


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1.24 Employee benefits (continued)

(iii) Profit-sharing and bonus plans The Group recognises a liability and an expense for bonuses and profit-sharing, based on a formula that takes into consideration the profit attributable to the Group’s shareholders after certain adjustments. The Group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation. At a mid-year point an accrual is maintained for the appropriate proportion of the expected bonuses which would become payable at the year end. (iv) Share-based compensation The Group operates a variety of equity-settled, share-based compensation plans. These comprise option plans (with and without non-market performance conditions attached) and a performance share award plan (with market conditions attached), and awards related to the employee element of the Broad-Based Black Economic Empowerment (BBBEE) transaction. An expense is recognised to spread the fair value of each award granted after 7 November 2002 over the vesting period on a straight-line basis, after allowing for an estimate of the share awards that will eventually vest. A corresponding adjustment is made to equity over the remaining vesting period. The estimate of the level of vesting is reviewed at least annually, with any impact on the cumulative charge being recognised immediately. In addition the Group has granted an equity-settled share-based payment to retailers in relation to the retailer element of the BBBEE transaction. A one-off charge has been recognised based on the fair value at the grant date with a corresponding adjustment to equity. The charge will not be adjusted in the future. The charge is based on the fair value of the award as at the date of grant, as calculated by various binomial model calculations and Monte Carlo simulations. The charge is not reversed if the options are not exercised because the market value of the shares is lower than the option price at the date of grant. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised. For cash-settled plans a liability is recognised at fair value in the balance sheet over the vesting period with a corresponding charge to the statement of profit and loss and other comprehensive income. The liability is re-measured at each reporting date, on an actuarial basis using the analytic method, to reflect the revised fair value and to adjust for changes in assumptions such as leavers. Changes in the fair value of the liability are recognised in the statement of profit and loss and other comprehensive income. Actual settlement of the liability will be at its intrinsic value with the difference recognised in the statement of profit and loss and other comprehensive income. The expense is included in management fees paid by the Group to its ultimate holding company. (v) Pension obligations The Group has both defined benefit and defined contribution plans. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognised past service costs. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability. Increases in life expectancy will result in increases in the scheme liabilities. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in full as they arise outside of the statement of profit and loss and other comprehensive income and are charged or credited to equity in other comprehensive income in the period in which they arise, with the exception of gains or losses arising from changes in the benefits regarding past services, which are recognised in the statement of profit and loss and other comprehensive income. The current service cost, the net interest cost, any past service costs and the effect of any curtailments and settlements are recognised in operating costs in the statement of profit and loss and other comprehensive income.


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1.24 Employee benefits (continued)

Past service costs are recognised immediately in the statement of profit and loss and other comprehensive income. The contributions to defined contribution plans are recognised as an expense as the costs become payable. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available. (vi) Other post-employment obligations The Group provides post-retirement healthcare benefits to qualifying employees. The expected costs of these benefits are assessed in accordance with the advice of qualified actuaries and contributions are made to the relevant funds over the expected service lives of the employees entitled to those funds. Actuarial gains and losses arising from experience adjustments, and changes in actuarial assumptions are recognised in full and are charged or credited to equity in other comprehensive income in the period in which they arise. These obligations are valued annually by independent qualified actuaries. The group ensures mortality rate assumptions incorporated in the actuarial calculations of the present value of post-employment obligations are from reliable sources. (vii) Termination benefits Termination benefits are payable when employment is terminated before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal, or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after balance sheet date are discounted to present value in a similar manner to all long-term employee benefits.

1.24 Derivative financial instruments – hedge accounting Financial assets and financial liabilities at fair value through profit or loss include all derivative financial instruments. The derivative instruments used by the Group, which are used solely for hedging purposes (i.e. to offset foreign exchange and interest rate risks), comprise forward foreign exchange contracts. Such derivative instruments are used to alter the risk profile of an existing underlying exposure of the Group in line with the Group’s risk management policies. Derivatives are initially recorded at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the hedging relationship. In order to qualify for hedge accounting, the group is required to document at inception, the relationship between the hedged item and the hedging instrument as well as its risk management objectives and strategy for undertaking hedging transactions. The group is also required to document and demonstrate that the relationship between the hedged item and the hedging instrument will be highly effective. This effectiveness test is re-performed at each period end to ensure that the hedge has remained and will continue to remain highly effective. The group designates certain derivatives as either: hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge); or hedges of highly probable forecast transactions or commitments (cash flow hedge); or hedges of net investments in foreign operations (net investment hedge). (i) Fair value hedges Fair value hedges comprise derivative financial instruments designated in a hedging relationship to manage the Group’s interest rate risk to which the fair value of certain assets and liabilities are exposed. Changes in the fair value of the derivative offset the relevant changes in the fair value of the underlying hedged item attributable to the hedged risk in the statement of profit and loss and other comprehensive income in the period incurred. Gains or losses on fair value hedges that are recognised as highly effective are recorded in the statement of profit and loss and other comprehensive income together with the gain or loss on the hedged item attributable to the hedged risk.


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1.25 Derivative financial instruments – hedge accounting (continued)

(ii) Cash flow hedges Cash flow hedges comprise derivative financial instruments designated in a hedging relationship to manage currency risk to which the cash flows of certain liabilities are exposed. The effective portion of changes in the fair value of the derivative that is designated and qualifies for hedge accounting is recognised in other comprehensive income. The ineffective portion is recognised immediately in the statement of profit and loss and other comprehensive income. Amounts accumulated in equity are reclassified to the statement of profit and loss in the period in which the hedged item affects profit or loss. However, where a forecasted transaction results in a non-financial asset or liability, the accumulated fair value movements previously deferred in equity are included in the initial cost of the asset or liability. Where a derivative ceases to meet the criteria of being a hedging instrument or the underlying exposure which it is hedging is sold, matures or is extinguished, hedge accounting is discontinued and amounts previously recorded in equity are reclassified to the statement of profit and loss and other comprehensive income. A similar treatment is applied where the hedge is of a future transaction and that transaction is no longer likely to occur. When the hedge is discontinued due to ineffectiveness, hedge accounting is discontinued prospectively. Certain derivative instruments, whilst providing effective economic hedges under the Group’s policies, are not designated as hedges. Changes in the fair value of any derivative instruments that do not qualify or have not been designated as hedges are recognised immediately in the statement of profit and loss and other comprehensive income. The Group does not hold or issue derivative financial instruments for speculative purposes.

1.25 Deposits by customers Returnable bottles and containers in circulation are recorded within property, plant and equipment and a corresponding liability is recorded in respect of the obligation to repay the customers’ deposits. Deposits paid by customers for branded returnable containers are reflected in the balance sheet within current liabilities. Any estimated liability that may arise in respect of deposits for unbranded containers is shown in provisions.

1.26 Deferred income Capital receipts from the Group’s franchisor for upgrading and replacing marketing capital equipment in terms of the Immediate Consumption Programme (ICP) are accounted for in current liabilities. Deferred income is credited to the statement of profit and loss and other comprehensive income, in line with the depreciation of the assets acquired. Capital receipts in terms of the Growth Incentive Agreement (GIA) are credited to the statement of profit and loss and other comprehensive income over the agreement terms of 10 years. The Group operates a loyalty programme, Dinaledi, which allows customers to accumulate points based on specific criteria, which can be redeemed for various free products. The proportion of revenue that can be reliably measured relating to the loyalty program is deferred. The deferred revenue is recognised as income when the points are redeemed.


43

2 Segmental analysis

Group Continued operating segments reflect the management structure of the group and the way performance is evaluated and resources allocated based on revenue and operating profit by the group’s chief operating decision maker (the board of directors). All reportable segments derive their revenues from the sale of beverages. Beverages represent the sale of beer as well as share of revenue derived from associates. The information that the board of directors looks at, is the information shown in the primary statements and noted to the financial statements. Given that the group only has one segment, the disclosure pertaining to segment assets, liabilities, revenue and expenses has not been disclosed in this note as the numbers are evident from the primary statements. R’000 R’000 R’000 R’000 2017

Revenue

Share of associates’

revenue Operating

profit

Share of post-tax

results of associates

and joint venture

Beverages 39,760,724 2,548,708 7,468,932 100,286 Other - - (8,613) - 39,760,724 2,548,708 7,460,319 100,286

Export sales of R525 million are included in revenue. 2016*

Revenue

Share of associates’

revenue Operating

profit

Share of post-tax

results of associates

and joint venture

Beverages 38,013,393 5,586,802 9,490,685 432,168 Other - - (66,830) - 38,013,393 5,586,802 9,423,855 432,168

Export sales of R533.6 million are included in revenue. *Restated as a result of discontinued operations. See note 35. Company 2017 2016** R’000 R’000

Revenue Dividend income from subsidiaries 7,576,073 8,678,099 7,576,073 8,678,099

**Restated due to IAS 18.


44

2 Segmental analysis (continued)

Paragraph 7 of IAS 18 Revenue, defines revenue as being the gross inflow of economic benefits during the period arising in the course of the ordinary activities of an entity. During the year the Company reconsidered the definition in the context of the Company not engaging directly in any operating activities itself. The Company concluded that dividends received on investments in subsidiaries should be regarded as revenue for the Company. The following prior year financial statement lines have been updated to reflect the new disclosure of revenue: Income statement (extract) 2016 Company Previously Change Restated R’000 R’000 R’000 Revenue - 8,678,099 8,678,099 Other income 8,678,099 (8,678,099) -

3 Net operating expenses / (income) Group Company 2017 2016* 2017 2016** R’000 R’000 R’000 R’000

Cost of inventories recognised as an expense 6,869,991 6,232,940 - - Excise duties 10,939,384 10,375,317 - - Employee benefit costs (note 4) 5,622,870 3,893,509 1,818 1,815 Selling, marketing and distribution costs 4,890,465 3,788,929 - - Depreciation (note 9) - - Buildings 69,939 63,394 - - Plant, vehicles and systems 792,105 697,264 - - Returnable containers 580,303 475,023 - - Net (gain)/loss on disposal of property, plant and equipment (24,293) 11,721 - - Dilution gain(note 12) - (14,104) - - Gain on disposal of available for sale investments - (497) - - Profit on sale of subsidiary (2,735) - Amortisation of software (note 8) 146,470 149,559 - - Royalties expense 373,805 369,192 - - Repairs and maintenance 722,162 661,416 - - Impairment of trade receivables (note 27) 15,929 38,698 - - Operating lease rentals 176,584 143,083 - - Management fees 979,760 665,906 - - Other operating expenses 565,831 1,261,424 767 19,727 Operating expenses 32,718,570 28,812,774 2,585 21,542 Dividend income from third parties (98,775) (466) - - Other operating income1 (319,390) (222,770) - - Operating income (418,165) (223,236) - - Net operating expenses / (income) 32,300,405 28,589,538 2,585 21,542

*Restated as a result of discontinued operations. See note 35. **Restated due to IAS 18.


45

3 Net operating expenses / (income) continued

Included in the above operating expenses, is the following audit fees and other services: Group Company 2017 2016* 2017 2016 R’000 R’000 R’000 R’000

Group auditors Audit and assurance related services 11,527 11,633 699 563 Audit related to group reporting 4,751 36 - - Other services2 385 482 - - 16,663 12,151 699 563 Other auditors Audit and assurance related services 31 104 - - Other services3 1,268 6,590 - 645 1,299 6,694 - 645 17,962 18,845 699 1,208

1 Principally relates to rental income, sale of scrap, by-product income and other recoveries

2 Principally relates to fees for technical accounting opinions, forensic audit work, and review of dividend calculation

3 Principally relates to business optimisation consulting services

4 Employee benefit costs Wages and salaries 3,602,048 2,955,584 - - Pension and post retirement costs 330,396 346,480 - - Zenzele share based payment charge – employees 1,108,788 63,704 - - Social security costs 184,725 177,016 - Training 94,211 90,460 - - Other 302,702 260,265 1,818 1,815 5,622,870 3,893,509 1,818 1,815

Total number of persons employed by the Group for continuing operations at 31 March 2017 is 7,022 (2016: 7,019). There are no employees employed by the company, costs relate to non-executive director fees. Key management compensation The directors are defined as key management. As at 31 March 2017, there are 4 directors as part of key management (2016:7).

5 Exceptional items Exceptional items included in operating profit: Zenzele IFRS 2 charge 2,423,296 - - - Public interest commitment 1,000,000 - - - Fair value gain on firm commitment (1,877,568) - - - Restructuring costs 701,864 - - - 2,247,592 - - -

*Restated as a result of discontinued operations. See note 35.


46

5 Exceptional items (continued)

Zenzele IFRS 2 charge In October 2016, the combination of SABMiller and AB InBev resulted in key enhancements to SAB Zenzele. The SABMiller plc shares will be replaced in 2020 with AB InBev shares, the introduction of a guaranteed minimum value in 2020; an advance cash payment in the form of a special dividend and the continuation of SAB Zenzele to 2020. The enhancement results in a modification to the Zenzele scheme in terms of IFRS 2, which led to a once off IFRS 2 charge for the retailers of R 1.4 billion and R1 billion for employees. The IFRS 2 valuation was performed by an independent expert. Public interest commitment As part of the SABMiller and AB InBev combination, a Public interest commitment in South Africa was agreed upon with the Competition Commission of South Africa. This represents a R1 billion investment into the South African economy to support agriculture, enterprise development and benefit the wider South African society. Fair value gain on firm commitment As part of the Public interest commitment, the Group was required to dispose of the investment in the Distell Group Ltd. This resulted in a firm commitment, as the price was agreed with a third party buyer prior to year end (refer to note 27.1). Restructuring costs As a result of the SABMiller and AB InBev combination, R701 million has been incurred in relation to a voluntary severance offer.

6 Net finance costs / (income) Group Company 2017 2016* 2017 2016 R’000 R’000 R’000 R’000

Finance costs Borrowings 331,881 142,077 77,852 79,773 Inter-group indebtedness 24,447 14,725 1,037 309 Finance lease liabilities 11,183 17,790 - - 367,511 174,592 78,889 80,082 Finance income Bank (37,257) (29,379) (3) (35) Inter-group indebtedness - - (144,174) (145,304) (37,257) (29,379) (144,177) (145,339) 330,254 145,213 (65,288) (65,257)

7 Taxation Current tax Charge for the current year 3,073,536 3,309,683 17,592 18,427 Prior year adjustment (22,903) (31,849) 2 (5,393) 3,050,633 3,277,834 17,594 13,034 Deferred tax Charge for the current year 635,654 92,935 - - Prior year adjustment 43,432 15,315 - - 679,086 108,250 - - Withholding tax# 145,630 19,140 - - 3,875,349 3,405,224 17,594 13,034


47

Group Company 2017 2016* 2017 2016 R’000 R’000 R’000 R’000

7 Taxation (continued)

Taxation attributable to: Profit from continuing operations 3,230,499 2,693,916 17,594 13,034 Profit from discontinued operations 644,850 711,308 - - 3,875,349 3,405,224 17,594 13,034

Tax rate reconciliation

Profit from continuing operations before taxation 7,230,351 9,710,810 7,638,776 8,721,814 Profit from discontinued operations before taxation 3,186,431 2,576,543 - - Less: Share of post-tax profits of associates from continuing operations (100,286) (432,168) - - Less: Share of post-tax profits of associates from discontinued operations (16,279) (97,583) - - 10,300,217 11,757,602 7,638,776 8,721,814

Tax at the aggregated weighted nominal rate 3,070,940 3,287,926 2,138,857 2,442,108 Adjusted for: Exempt income (1,318,119) (9,906) (2,121,301) (2,429,868) Deductible items (10,193) (360) - - Non-deductible expenses 857,826 104,562 36 6,187 Tax losses 19,658 - - - Withholding tax* 145,628 19,140 - - Deferred tax not recognised 3,395 13,747 - - Adjustment for profits not taxed at local rate (29,372) - - - Capital gains tax 1,115,658 5,970 - - Tax provision movements (527) 4,116 - - Penalties (74) (3,437) - - Current tax – prior year adjustment (22,903) (31,849) 2 (5,393) Deferred tax – prior year adjustment 43,432 15,315 - - Tax difference explained 804,409 117,298 (2,121,263) (2,429,074)

Taxation 3,875,349 3,405,224 17,594 13,034

Effective tax rate 37.62% 28,96% 0,23% 0,15%

*Restated as a result of discontinued operations. See note 35. **Restated due to IAS 18. See note 2.

#Withholding taxes relate to dividends and interest


48

Group R’000 R’000 R’000

8 Intangible assets

Goodwill

Other intangible

assets# Total

Cost: At 1 April 2015 3,914,000 1,481,535 5,395,535 Additions - 126,323 126,323 Disposals - (338,720) (338,720) Transfers - 340 340 At 31 March 2016 3,914,000 1,269,478 5,183,478 Additions - 112,209 112,209 Disposals - (23,094) (23,094) Transfers - (577) (577) Business combination 8,973,806 19,764,060 28,737,866 Common control acquisition 270,651 1,542 272,193 Reclassified as held for sale (11,131,526) (19,720,529) (30,852,055) Exchange adjustments 255,144 (314,992) (59,848) At 31 March 2017 2,282,075 1,088,097 3,370,172

Accumulated amortisation: At 1 April 2015 - (1,006,115) (1,006,115) Amortisation - (179,509) (179,509) Disposals - 337,918 337,918 At 31 March 2016 - (847,706) (847,706) Amortisation - (175,339) (175,339) Disposals - 13,164 13,164 Transfer - 270 270 Reclassified as held for sale - 195,648 195,648 Exchange adjustments - 66 66 At 31 March 2017 - (813,897) (813,897)

Net book value: At 31 March 2017 2,282,075 274,200 2,556,275 At 31 March 2016 3,914,000 421,772 4,335,772

Assumptions made on impairment test of goodwill: The recoverable amount for a cash generating unit (CGU) is determined based on value in use calculations. Value in use is determined by discounting the future post-tax cash flows generated from continuing use of the CGU using a post-tax discount rate. Where a potential impairment is identified on a post-tax basis, the impairment review is re-performed on a pre-tax basis. The key assumptions for the value in use calculations are as follows: Expected volume growth rate – cash flows are based on financial forecasts approved by management covering five-year periods and are dependent on the expected volume growth rates. The expected volume growth rate for the period 2017 – 2021 is 5.4% (2016: 2017-2020 is 5.1%). Discount rate – The discount rate (weighted average cost of capital) is calculated using a methodology which reflects the returns from long term government treasury bonds, and a SAB specific beta. The post-tax discount rate is 12.19% (2016: 11.8%). Where a potential impairment is identified on a post-tax basis, the impairment review is re-performed on a pre-tax basis. Long-term growth rate – cash flows after the first five-year period were extrapolated using a long-term growth rate, in order to calculate the terminal recoverable amount. The long-term growth rate is 5.4% (2016: 3.5%). # Other intangible assets include software and the investment in bottlers’ agreements


49

9 Property, plant and equipment

Assets in course of

construction Land and buildings

Plant, vehicles and systems

Returnable containers Total

R’000 R’000 R’000 R’000 R’000 Group Cost: At 1 April 2015 1,180,650 3,711,937 15,920,428 4,342,494 25,155,509 Additions 1,378,544 53,660 843,541 963,312 3,239,057 Disposals - (18,815) (726,348) (13,261) (758,424) Breakages and shrinkages - - - (160,256) (160,256) Transfers (829,221)

-

137,399

-

691,474

2,737

8

-

(340)

2,737 Transfers from inventory At 31 March 2016 1,729,973 3,884,181 16,731,832 5,132,297 27,478,283 Additions 2,162,057 145,237 1,619,598 1,507,011 5,433,903 Disposals (468) (52,577) (503,941) (1,429,647) (1,986,633) Breakages and shrinkages - - - (127,961) (127,961) Transfers (1,810,656) 533,167 1,266,863 11,203 577 Impairment - - (8,963) - (8,963) Change in accounting policy - - 20,416 - 20,416 Business combination 761,089 4,752,569 6,879,269 870,223 13,263,150 Common control acquisition 38,865 173,427 521,119 112,835 846,246 Reclassified as held for sale (1,599,412) (5,988,090) (12,989,631) (1,992,128) (22,569,261) Exchange adjustments (117,854) (327,477) (458,188) (81,825) (985,344) At 31 March 2017 1,163,594 3,120,437 13,078,374 4,002,008 21,364,413


50

9 Property plant and equipment (continued)

Assets in course of

construction Land and buildings

Plant, vehicles and systems

Returnable containers Total

R’000 R’000 R’000 R’000 R’000

Accumulated Depreciation: At 1 April 2015 - (1,208,852) (9,265,587) (2,027,437) (12,501,876) Depreciation - (95,887) (1,050,260) (523,651) (1,669,798) Disposals - 11,484 697,850 9,401 718,735 Transfers - - (15,758) - (15,758) At 31 March 2016 - (1,293,255) (9,633,755) (2,541,687) (13,468,697) Depreciation - (143,986) (1,514,145) (895,082) (2,553,213) Disposals - 16,641 424,703 1,417,322 1,858,666 Transfers - (19,821) 19,551 - (270) Impairment - - (135,797) (2,613) (138,410) Reclassified as held for sale - 483,291 3,680,697 553,268 4,717,256 Exchange adjustments - 8,360 45,250 11,917 65,527 At 31 March 2017 - (948,770) (7,113,496) (1,456,875) (9,519,141)

Net book value: At 31 March 2017 1,163,594 2,171,667 5,964,878 2,545,133 11,845,272 At 31 March 2016 1,729,973 2,590,926 7,098,077 2,590,610 14,009,586 Details of freehold and leasehold properties are available at the Group’s registered office. Included in group land and buildings is a balance of R106.4 million (2016: R246.3 million) of freehold land which is not depreciated. Included in property, plant and equipment is the following balance related to assets held under finance leases R 16.7 million (2016: R30.3 million).

Capitalised borrowing costs Included in plant, vehicles and systems are borrowing costs capitalised of: 2017 2016 R’000 R’000

At 1 April 78,537 77,614 Capitalised costs 413,955 2,291 Depreciation of borrowing costs (3,076) (1,368) Reclassified as held for sale (424,712) - Exchange adjustments 10,756 - At 31 March 75,460 78,537


51

10 Biological assets

A group company owns four farms on which hop plants are cultivated. These plants were classified as biological assets. The hops that are produced from these plants are used in the brewing of malt beer. The planted area of these farms amounts to 156ha at 31 March 2017 (2016: 156ha). The fair value of the hops harvested during the year amounts to R 20.4 million (2016: R20.8 million). The fair value is calculated with reference to the price that is paid to independent hop farmers less point-of-sale costs. Productive years of the plants are considered to be 13 years (2016:13 years). Due to a change in accounting policy, biological assets are now classified as property, plant and equipment. Group Company R’000 R’000

At 1 April 2015 33,843 - Fair value adjustment (8,184) - At 31 March 2016 25,659 - Change in accounting policy (5,242) - Decrease to due harvest (20,417) - At 31 March 2017 - -

11 Investments in subsidiaries Group Company 2017 2016 2017 2016 R’000 R’000 R’000 R’000

Shares at cost - - 112,500 112,500

A list of the Company’s principal subsidiaries including the name and proportion of ownership is set out in note 32. Group Company 2017 2016 2017 2016 R’000 R’000 R’000 R’000

12 Investments in associates At 1 April 3,487,232 3,000,424 - - Dilution of shareholding - 14,104 - - Share of post-tax results of associates 122,380 530,450 - - Share of associates move in reserves (115,403) 281,310 - - Dividends received (175,829) (336,839) - - Step up to subsidiary (317,931) - - - Profit in stock elimination 225 (2,217) - - Reclassified as held for sale (3,000,674) - At 31 March - 3,487,232 - -


52

12 Investments in associates (continued)

Group Company

2017 2016 2017 2016 R’000 R’000 R’000 R’000

At carrying value Listed Distell Group Limited - 3,081,113 - - Unlisted - Coca-Cola Canners of Southern Africa Proprietary Limited - 348,012 - - Associated Fruit Processors Proprietary Limited - 58,107 - - - 3,487,232 - -

At market value Listed Distell Group Limited - 9,211,818 - - - 9,211,818 - -

Distell Group

Ltd

Coca-Cola Canners (Pty)

Ltd

Associated Fruit

Processors (Pty) Ltd Total

R’000 R’000 R’000 R’000 At 1 April 2015 2,560,650 385,235 54,539 3,000,424 Dilution of shareholding 14,104 - - 14,104 Share of post-tax results 432,168 94,714 3,568 530,450 Share of associates movement in reserves

281,310 (1) - 281,309

Dividends received (207,119) (129,720) - (336,839) Profit in stock eliminations - (2,216) - (2,216) At 31 March 2016 3,081,113 348,012 58,107 3,487,232 Share of post-tax results 100,286 19,176 2,918 122,380 Share of associates movement in reserves

(115,403) - - (115,403)

Dividends received (125,562) (50,267) - (175,829) Profit in stock eliminations - 1,010 (785) 225 Step up to subsidiary - (317,931) - (317,931) Reclassified as held for sale (2,940,434) - (60,240) (3,000,674) At 31 March 2017 - - - -

A list of the Company’s principal associates including the name and proportion of ownership is set out in note 31.


53

12 Investments in associates (continued)

Set out below is the summarised financial information of each associate that is material to the Group. The summarised financial information is adjusted to reflect adjustments made by Group when applying the equity method as required by IFRS 12.

Distell Group Ltd#

Coca-Cola Canners

(Pty) Ltd

Associated Fruit

Processors (Pty) Ltd

2016 2016 2016 R’000 R’000 R’000 Summarised balance sheet Total assets 21,555,840 1,645,455 162,298 Non-current assets 8,213,701 378,527 37,616 Current assets 13,342,139 1,266,928 124,682 Total liabilities (10,459,437) (598,277) (55,085) Non-current liabilities (4,268,499) (89,256) (15,109) Current liabilities (6,190,938) (509,021) (39,976) Non-controlling interests (15,184) - - Net assets attributable to owners

11,081,219 1,047,178 107,213

Summarised income statement Revenue 20,815,209 4,168,132 220,232 Profit after tax and non-controlling interest

1,595,683 (109,180) 7,135

Other comprehensive income 1,018,376 1,236 - Total comprehensive income 2,614,059 (107,944) 7,135

Opening net assets attributable to owners

9,179,072 1,155,122 100,078

Total comprehensive income 2,614,059 (107,944) 7,135 Dividends paid (757,350) - - Movement in foreign exchange

45,438 - -

Closing net assets attributable to owners

11,081,219 1,047,178 107,213

Ownership interest 26.78% 32.43% 50% Interest in associates excluding goodwill

2,967,550 339,600 53,607

Goodwill

84,812 8,412 250 Changes in ownership percentage

28,751 - -

Loan owing by associate

- - 4,250 Carrying value of investment in associates

3,081,113 348,012 58,107

#Results as at 31 December 2015


54

Group Company 2017 2016 2017 2016 R’000 R’000 R’000 R’000

13 Available for sale investments

None of the available for sale investments are past due or impaired. Listed securities Equities 103,740 74,454 - - Bonds 73,348 - - - Preference shares 14,559 - - - Property 76,258 - - - Collective investment scheme 25,000 - - - Unlisted securities Equities 43,181 359 - - Preference shares 2,000 - - - 338,086 74,813 - -

Gains & (losses) recognised in: Profit & loss 31,286 (11,981) - - Other comprehensive income (3,262) 19 - -

14 Investment in joint venture At 1 April 2,800 3,499 - - Share of loss after tax (5,815) (699) - - Transfer from available for sale 5,199 - - - Business combination 17,784 - - - Reclassified as held for sale (19,968) - - - At 31 March - 2,800 - -

The investment above is represented by a plant that manufactures raw carbon dioxide.

15 Inventories Raw materials 1,824,790 1,792,190 - - Work in progress 306,043 244,831 - - Consumable stores 211,653 302,697 - - Finished goods 871,689 938,353 - - 3,214,175 3,278,071 - -

Inventories expected to be utilised after 12 months - 64,515 -

In the current period there were no inventory write downs to net realisable value.


55


16 Trade and other receivables

Current Trade receivables 2,132,499 3,454,684 - - Provision for impairment (82,505) (178,196) - - Net trade receivables 2,049,994 3,276,488 - - Dividends receivable 194 - 982,236 1,484,774 Prepayments and accrued income 1,170,523 210,387 - - Staff receivables 8,079 7,493 - - Outstanding claims - 17 - - Amounts owed by associates - 52,932 - - Other receivables 311,752 339,517 - - 3,540,542 3,886,834 982,236 1,484,774

Non-current Trade receivables 23,149 1,102 - -

The net carrying values of trade and other receivables are considered a close approximation of their fair values.

17 Inter-group indebtedness Receivable Non - Current Subsidiaries Interest-bearing - - - 1,000,000 - - - 1,000,000

The amount of R1 billion attracted an interest rate of 7.48% (2016:7.48%) and was repaid in full. Current Parent company Interest-free - - - - Fellow subsidiaries Interest-bearing 5,175 15,226 - - Interest-free 63,515 112,544 - - Subsidiary Interest-bearing - - 1,701,324 661,295 Interest-free - - 1,107,913 1,107,913 68,690 127,770 2,809,237 1,769,208

Payable Current Parent company Interest-bearing 19,341 19,337 - - Interest-free 2,471,559 2,629,386 2,287 7,250 Fellow subsidiaries Interest-bearing 422,573 390,184 - - Interest free 86,143 100,434 - - 2,999,616 3,139,341 2,287 7,250

The average interest rate for current loans is 7.98% (2016: 6.94%). All current balances are receivable or payable on demand.


56


18 Cash and cash equivalents

Cash at bank and on hand 668,923 593,233 1 -

19 Share capital and share premium Authorised share capital comprises 1 000 ordinary shares at a par value of R1 each. R R R R

Share capital 1,000 1,000 1,000 1,000

Issued share capital comprises 500 ordinary shares at a par value of R1 each. R R R R

Share capital 500 500 500 500 Share premium 462,025,000 462,025,000 386,628,000 386,628,000 462,025,500 462,025,500 386,628,500 386,628,500

The unissued shares are under the control of the directors until the next annual general meeting.

20 Reserves


Merger relief reserve 19,673,069 1,786,229 - - Capital contribution 36,540 36,540 36,540 36,540 Other reserves (258,069) 886,581 - - 19,451,540 2,709,350 36,540 36,540

The merger relief reserve arose on the restructuring of the SABSA Group. The change in the merger relief reserve is as a result of the combination with CCBA. The ABI Bottling Group was exchanged for a 51% share in CCBA. This transaction was treated as a common control transaction and a merger relief reserve created. Other reserves are made up of fair value adjustments on available for sale assets and cash flow hedge and foreign currency translation reserve balances, including the Group’s share of associates’ reserves.


57


21 Borrowings

Non-current Secured Guaranteed notes - 994,887 - 994,887 Finance lease liabilities 32 454 - - 32 995,341 - 994,887 Current Secured Finance lease liabilities 419 513 - - Bank overdraft 30,183 35,290 - - Guaranteed notes 997,443 - 997,443 - Other borrowings* 7,121,377 895,759 - - 8,149,422 931,562 997,443 -

*Other borrowings relate to an overnight facility held by SABFIN (Pty) Ltd, to fund the group. During the year ended 31 March 2013 the Company issued R1 billion, 7.125% guaranteed notes, guaranteed by SABMiller plc. The notes mature on 28 March 2018. The notes were issued under the R6 billion Domestic Medium Term Note Programme established on 10 December 2012. The notes are redeemable in whole or in part upon occurrence of certain changes in taxation at their principal amount with accrued and unpaid interest to the date of the redemption. During the year the guarantor for the notes has changed to AB InBev. The fair value of the non-current listed bond is valued at R989.9 million (2016: 964.4 million). The listed bond is classified as Level 2 on the fair value hierarchy. The bond is not actively traded, hence not classified as Level 1. Minimum lease payments of finance lease liabilities Gross finance leases Within one year 32 513 - - Between one and five years 420 454 - - 452 967 - - Future finance charges - - - - Present value 452 967 - -

Present value of finance leases Within one year 420 513 - - Between one and five years 32 454 - - Present value 452 967 - -

Obligations under finance leases and hire purchase agreements are secured over property and plant. Leases are for a period of four years (2016: four years). The average interest rates applicable to the leases are 12% (2016: 12%).


58


22 Deferred tax

Non-current Continuing operations Deferred tax asset 482,716 33,504 - - Deferred tax liability (2,758,597) (1,893,529) - - (2,275,881) (1,860,025) - -

Discontinued operations Deferred tax asset 520,783 - - - Deferred tax liability (6,614,911) - - - (6,094,128) - - -

Total (8,370,009) (1,860,025) - -

Deferred tax asset Fixed asset allowances - (6,485) - - Receivables allowances 38,975 - - - Provisions and payables 741,242 3,223 - - Tax losses 217,744 21,815 Other 5,538 14,951 - - 1,003,499 33,504 - -

Deferred tax liability Fixed asset allowances (8,546,279) (2,276,513) - - Excise duty in stock (69,821) (67,596) - - Receivables allowances (19,611) (4,103) - - Provisions and payables (6,547) 471,453 Other (731,250) (16,770) - - (9,373,508) (1,893,529) - -

Movement in deferred tax balance At 1 April 1,860,025 1,773,657 - - Statement of profit and loss and other comprehensive income charge 679,086 108,250 - - Amount recognised in equity (49,105) (21,882) - - Business combination 6,091,195 - - - Exchange adjustments (211,192) - - - At 31 March 8,370,009 1,860,025 - -


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23 Provisions and employee benefit obligations

Litigation and demerged

entities

Post-retirement

medical aid obligations

Long service awards

Post retirement

pension fund

Public interest

commitment Restructuring Total R’000 R’000 R’000 R’000 R’000 R’000 R’000

Group At 1 April 2015 68,321 515,037 181,648 273 - - 765,279 Contributions paid - (21,394) (10,223) - - - (31,617) Utilised during the year (6,410) - - - - - (6,410) Actuarial gain - (52,823) (9,095) (1,153) - - (63,071) Interest cost - 42,033 13,728 - - - 55,761 Current service cost - 8,220 12,063 1,438 - - 21,721 At 31 March 2016 61,911 491,073 188,121 558 - - 741,663 Contributions paid - (22,117) (7,498) (558) - - (30,173) Utilised during the year (12,343) - - - (979) - (13,322) Actuarial gain - (252) - - - - (252) Interest cost - 53,664 15,328 - - - 68,992 Current service cost - 9,537 11,914 - - - 21,451 Income statement movement - - - - 1,400,000 70,615 1,470,615 Business combination - 98,360 - - - - 98,360 Reclassified as held for sale - (166,603) (50,395) - (400,000) - (616,998) Exchange adjustments - (472) - - - - (472) Release of provision (49,568) - - - - - (49,568) At 31 March 2017 - 463,190 157,470 - 999,021 70,615 1,690,296 Analysed as at 31 March 2017 Non-current - 463,190 157,470 - 800,000 - 1,420,660 Current - - - - 199,021 70,615 269,636 Analysed as at 31 March 2016 Non-current 61,911 491,073 188,121 558 - - 741,663 Current - - - - - - -


60

23 Provisions and employee benefit obligations (continued)

The Group provides medical benefits, which are mainly unfunded, for retired employees and their dependants. 2017 2016

The principal assumptions used in the valuation of the balances are as follows: Health care cost inflation 8.85% 9.1% Health discount rate 10.15% 10.25% Long service benefit inflation 6.85% 7.1% Long service discount rate 9.1% 9.45% Normal retirement age 63 years 63 years

Litigation and demerged entities During previous financial years the Group recognised the above provision relating to the disposal of certain demerged entities. Claims are being contested by SAB and have been submitted for dispute resolution to independent experts. The actual outcome of the dispute and the timing of the resolution cannot be estimated by the directors at this time. During the current year all disputes were settled. Public interest commitment As part of the SABMiller and AB InBev combination, a Public interest commitment in South Africa was agreed upon with the Competition Commission of South Africa for the ensuing five years. This represents a R1 billion investment into the South African economy to support agriculture, enterprise development and benefit the wider South African society. Restructuring As part of the combination between SABMiller and AB InBev, a re-organisation of the South African group took place. This resulted in a restructuring provision for voluntary severance pay.

24 The ABI Pension Fund On 1 July 2005 the Fund was closed. All active members were transferred to either the ABI Provident Fund or the SAB Staff Provident Fund. All pensioner liabilities were outsourced. The fund will be deregistered and liquidated once all assets and liabilities have been settled. The latest valuation was carried out by an independent actuary using the projected unit credit method. The surplus apportionment scheme for the ABI Pension Fund has been approved by the Financial Services Board. The active and pensioner liabilities in respect of the ABI Pension Fund have been settled. The only liabilities remaining are in respect of the surplus apportionment scheme. The liabilities for the ABI pension fund are in respect of the former members, pensioner surplus and unclaimed benefits. These have been rolled forward from the 31 March 2016 accounting valuation allowing for actual benefit payments and fund returns. The assets are not valued at 31 March 2017, as the Pension fund is now classified as a discontinued operation and does not form part of the Group’s ongoing liability. The Suncrush Pension Fund and the Suncrush Retirement Fund The surplus apportionment scheme for the Suncrush Pension Fund has been approved by the Financial Services Board. The active and pensioner liabilities in respect of the Suncrush Pension Fund have been settled. The Section 14 transfer of members from the Suncrush Pension Fund to the SAB Staff Provident Fund was annulled by the Financial Services Board (“FSB”) on 24 August 2011. The Rules of the Fund have been amended to allow for a provision for a paid-up benefit; which would make provision for the members of the Fund as at 1 July 2005 to have their benefits paid-up as at that date and to be paid out to them upon exit.


61

24 The ABI Pension Fund (continued)

The Suncrush Pension Fund has liabilities in respect of paid-up benefits, former member surplus, pensioner surplus and unclaimed benefits. These have been rolled forward from the 31 March 2016 accounting valuation allowing for actual benefit payments and late payment interest. The assets are not valued at 31 March 2017, as the Pension fund is now classified as the discontinued operation and does not form part of the Group’s ongoing liability. The surplus apportionment scheme for the Suncrush Retirement Fund has been approved by the Financial Services Board. The active and pensioner liabilities in respect of the Suncrush Retirement Fund have been settled. The closure of the Suncrush Retirement Fund has been delayed due to an outstanding tax issue in relation to Pen Fund (Pty) Ltd. Pen Fund (Pty) Ltd is a property company whose shareholding is split between the Suncrush Retirement Fund and the Suncrush Pension Fund (62:38 respectively). During the 31 March 2014 accounting valuation period, this issue was resolved and R3,487,000 was paid from the Suncrush Retirement Fund to the Suncrush Pension Fund. A full valuation would be required in order to determine the outstanding former member surplus due. However, for the purposes of the requested roll-forward valuation; we have kept the defined benefit obligation at nil. The assets are valued at current market value as at 29 February 2016 and projected with expected cash flow and returns to 31 March 2016. The disclosures below for the 31 March 2016 yearend are as per the requirements of the revised accounting standard. Suncrush ABI Pension Total R’000 R’000 R’000

2016 Defined benefit obligation (35,323) (134,930) (170,253) Fair value of plan assets 34,791 229,130 263,921 (Deficit)/Surplus not recognised (532) 94,200 93,668 Surplus recognised (Paragraph 65 Limit) (26) (94,200) (94,226) Deficit (558) - (558)

At 31 March 2015 (273) - (273) Amount recognised in the profit and loss: (191) (1,247) (1,438)

Current service cost (168) (1,208) (1,376) Interest cost on defined benefit obligation (2,265) (8,250) (10,515) Interest income on assets 2,248 13,959 16,207 Interest on limit (6) (5,748) (5,754)

Re-measurements recognised in OCI: (94) 1,247 1,153 Current year gains (164) (117) (281) Change in Paragraph 65 Limit 70 1,364 1,434

At 31 March 2016 (558) - (558)

Suncrush ABI

Pension 2016 2016

Actuarial assumptions Discount rate 7.80% 7.80% Inflation rate n/a n/a Expected return on assets n/a n/a Future pension increases n/a n/a


62

24 The ABI Pension Fund (continued)

The Appletiser SA Pension Fund From 1 September 1997 the Fund was closed to new entrants. On 1 September 2010 the pensioner liabilities were outsourced to an insurer in the name of the fund. The transfer of these policies into the pensioners’ name was approved by the Registrar on 2 April 2012. On 1 March 2012 the active members started contributing to the Appletiser Retirement Fund, and their transfer values were transferred to individual retirement annuities. The physical transfer of these assets took place on 5 April 2012. The fund will be deregistered once all assets and liabilities have been settled. The only liabilities remaining are in respect of the unclaimed benefits and termination expenses. There was no valuation performed at 31 March 2017.

25 Trade and other payables Group Company 2017 2016 2017 2016 R’000 R’000 R’000 R’000

Trade payables 3,885,527 5,992,493 - - Containers in the hands of customers 1,301,783 1,617,237 - - Capital expenditure creditors 13,396 43,433 - - Deferred income 60,221 45,024 - - Amounts owed to associates - 349,264 - - Excise duty payable 962,782 889,140 - - VAT and other taxes payable 442,266 441,590 20,437 20,310 Dividends payable 42,013 6,522 - - Payroll related payables 155,361 591,552 - - Other 498,885 369,186 2,675 2,624 7,362,234 10,345,441 23,112 22,934

The fair value of trade and other payables approximate their carrying values.


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Group Company 2017 2016 2017 2016 R’000 R’000 R’000 R’000 (Restated)

26 Cash flow information

26.1 Cash generated from operations

Operating profit 11,062,724 11,878,619 7,573,488 8,656,557 Adjusted for:

Depreciation (note 9) 2,496,424 1,669,798 - - Amortisation (note 8) 175,325 179,509 - - Container breakages and shrinkages (note 9) 127,961 160,256 - - Deferred income 23,630 30,882 - - Dividend income (98,775) (466) (7,576,073) (8,678,099) Fair value (gains) / losses on derivative instruments (1,924,644) 113,209 - - Impairment charges 107,192 15,758 - - Net gain on disposal of property, plant and equipment (23,061) (3,172) - - Profit on disposal of subsidiary (2,735) - - - Gain on disposal of available for sale assets - (497) - - Profit on step-up of associate (1,210,932) (14,104) - - Zenzele share based payment charge 3,404,698 84,445 - - Other non-cash items 35,403 133,755 - -

14,173,210 14,247,992 (2,585) (21,542) Movement in net working capital

Increase in inventories (697,784) (630,936) - - (Increase) / decrease in trade and other receivables (113,811) (440,037) - 194 (Decrease) / increase in trade and other payables (13,968) 1,837,369 51 20,856 Decrease in provisions 1,526,593 30,365 - -

701,030 796,761 51 21,050 14,874,240 15,044,753 (2,534) (492)

26.2 Income tax paid Opening balance (210,728) (370,877) (287) (7,868) Current income tax (3,196,263) (3,277,834) (17,594) (13,034) Withholding tax - (19,140) - - Business combination (120,657) - - - Exchange adjustments 13,961 - - - Other* 2,054 (2,000) - - Tax paid 3,038,615 3,459,123 20,444 20,615 Closing balance (473,018) (210,728) 2,563 (287)

*Excise provision (non-cash)


64

26 Cash flow information (continued)

26.3 Dividends paid


Dividends paid to holding company (8,182,594) (8,472,489) (8,078,611) (8,472,489) Dividends paid to Zenzele participants (1,466,035) (118,963) - - (9,648,629) (8,591,452) (8,078,611) (8,472,489)

27 Financial instruments

27.1 Fair value of derivative financial instruments Financial liabilities Forward foreign exchange Contracts (196,769) (143,020) - - Commodity contracts (1,970) (51,859) - - Financial assets Forward foreign exchange Contracts 26,201 123,579 - - Commodity contracts 34,385 9,088 - - Firm commitment* 1,877,568 - - - 1,739,415 (62,212) - -

Attributable to: Continuing operations 1,774,506 (62,212) - - Discontinued operations (35,091) - - - 1,739,415 (62,212) - -

The group entered into forward foreign currency contracts to manage short-term foreign currency exposures of expected future trade imports and exports. These derivatives are fair valued based on discounted future cash flows with gains and losses taken to the statement of profit and loss and other comprehensive income. The notional amounts of these contracts are USD 129.2 million, €107.9million (2016: USD 117.3 million, £2.2 million, €3.5million). Majority of the forward foreign currency contracts are expected to be realised within the next year. *During the year, a subsidiary in the Group entered into an agreement to dispose of its investment in Distell Group Limited. The firm commitment represents the movement in the fair value from 15th November 2016 the contractual date, up to year-end. The firm commitment is linked to a significant decrease in the share price between these dates. IFRS deemed this period to be a derivative contract and therefore the firm commitment that arises is considered a derivative gain. (See note 5)


65


27 Financial instruments (continued)

27.2 Financial instruments by category

Financial assets Available for sale investments 338,086 74,813 - - Loans and receivables1 5,788,017 4,270,782 982,236 1,484,774 Inter-group indebtedness held at amortised cost 143,788 127,770 2,809,237 1,769,208 Derivative financial instruments at fair value through the statement of profit and loss and other comprehensive income 1,938,154 132,667 - - 8,208,045 4,606,032 3,791,473 3,253,982

Financial liabilities Borrowings 13,509,377 1,926,903 997,443 994,887 Trade and other payables2 11,871,905 8,205,411 23,113 22,934 Inter-group indebtedness held at amortised cost 3,260,298 3,139,341 2,287

7,250

Derivative financial instruments at fair value through the statement of profit and loss and other comprehensive income 198,739 194,879 - - 28,840,319 13,466,534 1,022,843 1,025,071

1 Excludes prepayments and accrued income

2 Excludes deferred income, VAT, other taxes payable, payroll related payables and dividends

Financial assets analysed as: Continuing operations 4,735,586 4,606,032 3,791,473 3,253,982 Discontinued operations 3,472,459 - - - 8,208,045 4,606,032 3,791,473 3,253,982

Financial liabilities analysed as: Continuing operations 17,009,940 13,466,534 1,022,843 1,025,071 Discontinued operations 11,830,379 - - - 28,840,319 13,466,534 1,022,843 1,025,071

27.3 Financial risk factors

The group and company activities expose it to a variety of financial risks, specifically credit risk, liquidity risk and market risk (including foreign currency exchange, price risk and fair value interest rate risk). The group and company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the group and company’s financial performance. The group and company use derivative financial instruments to hedge certain risk exposures. (i) Credit risk Credit risk is the risk of financial loss to the group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. Credit risk is managed on a group and company basis. Credit risk arises mainly from its credit exposure to its customers. The utilisation of credit limits is regularly monitored. Sales to customers are settled in cash or via electronic fund transfer. Policies are in place to ensure that sales of products are only made to customers with an appropriate credit history.


66



27.3 Financial risk factors (continued)

Net carrying value of trade receivables Trade receivables 4,947,844 3,454,684 - - Provision for impairment of trade receivables (297,588) (178,196) - - 4,650,256 3,276,488 - -

As at 31 March 2017 trade receivables of R3,367 million (2016: R2, 918 million) of the group were past due but not impaired. These relate to customers in respect of who there is no recent history of default. The ageing of these trade receivables is as follows: Within three months 4,401,303 3,091,012 - - Between three and six months 225,997 78,673 - - More than six months 320,544 284,999 - - 4,947,844 3,454,684 - -

The ageing of the provision for impairment of trade receivables is estimated as follows: Within three months 34,326 13,539 - - Between three and six months 138,518 38,489 - - More than six months 124,744 126,168 - - 297,588 178,196 - -

Reconciliation of the provision for impairment of trade receivables At 1 April 178,196 130,351 - - Increase in provision 83,587 74,122 - - Provision utilised (717) (26,277) - - Business combination 35,531 - - - Exchange adjustments 991 - - - At 31 March 297,588 178,196 - -

Collateral To reduce the group and company credit risk, collateral as security is held against the carrying value of trade receivables. The propensity of customers to fail is assessed using an integrated risk model, following which collateral is held appropriately. The Group and Company have policies in place with its customers to utilise this collateral as security against the amount in arrears, in the event of customer default. Collateral held primarily includes investments held with the bank, bank guarantees and charges over assets. Value of collateral held 542,226 420,421 - -

The ageing of collateral is as follows: Within three months 540,617 420,421 - - Between three and six months 1,609 - - - More than six months - - - - 542,226 420,421 - -


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Credit quality The Group and Company have strict policies on the issue of credit to customers that are approved by the Board and monitored daily. There is no significant concentration of credit risk as the Group has a large number of customers. The customer base ranges from sole proprietors to national retailers. The Group has implemented policies that require appropriate credit checks on potential customer before sales commence. Credit risk is managed by limiting the aggregate amount of exposure to any one counterparty. On average during the year, the Group’s exposure to loss did not exceed 6% (2016: 4.2%) of total trade receivables. (ii) Liquidity risk Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through adequate credit facilities. The Group and Company maintain credit facilities with the top 5 banks to manage liquidity risk and minimise credit concentration risk. SABFIN (Pty) Limited maintains overnight borrowing facilities to ensure that it has sufficient liquidity to meet its operational requirements. These consist of a mix of committed and uncommitted borrowing facilities and are spread across a number of banks. All external debt will be settled through AB InBev group funding. The group had the following undrawn committed facilities available at 31 March in respect of which all conditions precedent had been at that date:

Due within one

year Due between two and

five years Total R’000 R’000 R’000 2017 (1,370,628) - (1,370,628) 2016 (2,015,829) (1,007,076) (3,022,905)

The table below analyses the Group and Company’s maturity of its financial liabilities which will be settled on a net basis into the relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within one year equal their carrying balances as the impact of discounting is not considered to be significant.

Inter-group with no

repayment terms

Due within one year

Due between two and five years Total

R’000 R’000 R’000 R’000 Group 2017 Finance lease liabilities - 24,746 14,030 38,776 Bank overdraft - 714,871 - 714,871 Inter-group indebtedness 3,260,298 - - 3,260,298 Other borrowings - 12,435,139 320,592 12,755,731 Trade and other payables# - 11,871,906 - 11,871,906 3,260,298 25,046,662 334,622 28,641,582


68



Inter-group with no

repayment terms

Due within one year

Due between two and five years Total

R’000 R’000 R’000 R’000 2016 Finance lease liabilities - 513 454 967 Bank overdraft - 35,290 - 35,290 Inter-group indebtedness 3,139,341 - - 3,139,341 Guaranteed notes - - 994,887 994,887 Other borrowings - 895,760 - 895,760 Trade and other payables# - 8,205,411 - 8,205,411 3,139,341 9,136,974 995,341 13,271,656

Company 2017 Inter-group indebtedness 2,287 - - 2,287 Guaranteed notes - 997,443 - 997,443 Trade and other payables# - 23,113 - 23,113 2,287 1,020,556 - 1,022,843

2016 Inter-group indebtedness 7,250 - - 7,250 Guaranteed notes - - 994,887 994,887 Trade and other payables# - 22,932 - 22,932 7,250 22,932 994,887 1,025,069

# Excludes deferred income, VAT, other taxes payable, payroll related payables, dividends and discount accruals The table below analyses the Group’s derivative financial instruments which will be settled on a net basis into relevant maturity groupings based on the remaining period at the balance sheet to contractual date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within one year equal their carrying balances as the impact of discounting is not considered to be significant. Forward foreign exchange contracts outflow

Due within

one year

Due between two and five

years Total R’000 R’000 R’000

Group 2017 198,737 3 198,740 2016 181,950 12,929 194,879


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(iii) Market risk a. Foreign exchange risk The Group and Company operate internationally and are exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US Dollar and Euro. Foreign exchange risk arises from future commercial transactions. If the currency had weakened / strengthened by 2% against the US dollar with all other variables held constant, post-tax profit for the year would have been R33.1 million (2016: R21.7 million) lower / higher mainly as a result of foreign exchange losses / gains on translation of US Dollar-denominated financial assets at fair value through profit or loss. If the currency had weakened / strengthened by 2% against the Euro with all other variables held constant, post-tax profit for the year would have been R6.9 million (2016: R3.2 million) lower / higher, mainly as a result of foreign exchange losses / gains on translation of Euro-denominated financial assets at fair value through profit or loss. b. Price risk The Group and Company is exposed to variability in the price of commodities used in the production and packaging of finished products, such as malt, sugar and barley. These prices are managed principally by contracting with international suppliers through fixed price contracts. No sensitivity analysis has been provided on these outstanding contracts as the impact is considered to be immaterial. c. Fair value interest rate risk The Group and Company interest rate risk arises from borrowings. Borrowings issued at variable rates expose the Group and Company to cash flow interest rate risk. Borrowing at fixed rates, expose the Group and Company to fair value interest rate risk. All of the Group and Company’s variable rate borrowings were denominated in local rand currency. The Group and Company analysed its interest rate exposure to its borrowing based on shifts in interest rate. Based on the simulations performed, the impact on post-tax profit of a 2% shift would be as follows: Group 2017 2016 R’000 R’000

2% increase Cash flow interest rate risk (138,757) (10,483) Interest rate risk (14,400) (14,400) Post tax decrease (153,157) (24,883)

2% decrease Cash flow interest rate risk 138,757 10,483 Interest rate risk 14,400 14,400 Post tax increase 153,157 24,883


70

Company 2017 2016 R’000 R’000

27 Financial instruments (continued) 27.3 Financial risk factors (continued)

2% increase Cash flow interest rate risk 24,536 (10,483) Interest rate risk (14,400) (14,400) Post tax decrease 10,136 (24,883)

2% decrease Cash flow interest rate risk (24,536) 10,483 Interest rate risk 14,400 14,400 Post tax increase (10,136) 24,883

27.4 Capital risk management

The group and company defines its capital as comprising share capital, share premium, revaluation and other distributable reserves The group and company’s objective when managing capital is to safeguard the group and company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the group and company performs economic value analysis on new projects and only invests in those projects that are in excess of the group and company’s weighted average cost of capital rate, which is used as an investment hurdle rate. The group and company do not utilise gearing ratios as a basis to manage its capital structure as this is managed on a global basis by the ultimate holding company AB InBev.

28 Operating lease commitments The future aggregate minimum lease payments under non-cancellable operating lease agreements due: Group Company 2017 2016 2017 2016 R’000 R’000 R’000 R’000

Land and buildings Within one year 65,065 25,411 - - Between two and five years 30,793 18,810 - - After five years 2,718 5,130 - - 98,576 49,351 - - Plant, vehicles and systems Within one year 169,991 50,077 - - Between two and five years 162,935 98,843 - - After five years 2,634 2,858 - - 335,560 151,778 - -


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29 Capital commitments

Capital expenditure contracted at the balance sheet date but not yet incurred is as follows: Property, plant and equipment 716,558 191,791 - - 716,558 191,791 - -

The capital expenditure will be financed by net cash flow from operations and the utilisation of cash resources and borrowing facilities within the Group and Company.

30 Contingent liabilities and guarantees Other contingent liabilities - 6,281 - - - 6,281 - -

The Group and Company is subject to certain legal claims incidental to its operations. In the opinion of the directors, after taking appropriate legal advice, these claims are not expected to have, either individually or in aggregate, a material adverse effect upon the Group and Company’s financial position, except insofar as already provided in the consolidated financial statements.

31 Principal subsidiaries, associates and joint ventures The principal subsidiaries of the Group and Company include:

Country of incorporation Effective interest in ordinary

share capital 2017 2016

Appletiser South Africa Proprietary Limited1 South Africa 45.84% 100% ABI Bottling Proprietary Limited1 South Africa 45.84% 100% Other Beverage Interests Proprietary Limited South Africa 100% 100% SABFIN Proprietary Limited South Africa 100% 100% SABSURE Limited South Africa 100% 100% The South African Breweries Barley Farm Proprietary Limited South Africa 100% 100% The South African Breweries Proprietary Limited South Africa 91.55% 91.55% The South African Breweries Hop Farms Proprietary Limited South Africa 100% 100% SABMiller Namibia Proprietary Limited Namibia 60% 60% The South African Breweries Maltings Proprietary Limited South Africa 100% 100% The SAB Thrive Proprietary Limited South Africa 49% 49% Coca-Cola Beverages Africa Proprietary Limited South Africa 51.04% -


72

31 Principal subsidiaries, associates and joint ventures (continued)

The principal associates of the Group and Company include:

Country of incorporation Effective interest in ordinary share capital

2017 2016 Coca-Cola Canners of Southern Africa Proprietary Limited1 South Africa 45.84% 32.43% Associated Fruit Processors Proprietary Limited1 South Africa 22.92% 50% Distell Group Limited South Africa 26.78% 26.84%

The joint venture of the group and company is:

Country of incorporation Effective interest in ordinary

share capital 2017 2016

The CO2 Generation Partnership1 South Africa - 16.39%

1Now included as part of investment in CCBA

32 Related party transactions Related party transactions for the Group: 2017 2016 R’000 R’000 R’000 R’000 Transaction Balance Transaction Balance Parent companies Non-interest bearing SABMiller plc# 381,354 (2,443,505) 115,612 1,833,781 SABMiller International BV* 284,024 (81,701) 360,459 (135,568) SABMiller Corporate Services Limited^ 499,352 (259,518) 712,495 (399,695) SABMiller Procurement GmbH^ 363,087 (55,966) 495,969 (148,220) Interest bearing loan (payable) / receivable SABMiller plc (2,380) (15,479) (1,410) (19,337) SABI Proprietary Limited (8,858) (164,991) (6,844) (138,349) Swaziland Brewers Limited (2,309) (40,766) (1,446) (21,758) Maluti Mountain Brewery Proprietary Limited (6,555) (139,905) (1,220) (53,630) SABMiller Global Services (2,647) (19,648) (225) (136,206) Brewex Pty Ltd (3,393) (56,856) (1,888) (37,463) Tanzania Breweries 1,673 - - - Dividends paid SABMiller Finance BV 8,078,611 - 8,472,489 -

#Share option costs

* Royalties

^ Management fees


73

32 Related party transactions (continued)

Related party transactions with associates for the Group: 2017 2016

R’000 R’000 R’000 R’000 Transaction Balance Transaction Balance

Associates Dividends received Coca-Cola Canners of Southern Africa Proprietary Limited 129,720 - 129,720 - Distell Group Limited 207,119 - 207,119 - Trading (Payables)/Receivables Coca-Cola Canners of Southern Africa Proprietary Limited - - (1,903,245) (304,775) Delta Corporation - - 53 53 Distell Group Limited - - 34,692 1,428 Associated Fruit Processors Proprietary Limited (16,573) - (25,092) 6,962

Related party transactions for the Company: 2017 2016 R’000 R’000 R’000 R’000 Transaction Balance Transaction Balance Parent Companies and Subsidiaries Non-interest bearing The South African Breweries Proprietary Limited 7,576,073 1,107,913 8,678,099 1,107,913 SABMiller plc (2,557) (2,287) (2,557) (7,250) Interest bearing loan receivable The South African Breweries Proprietary Limited 74,750 1,000,000 74,750 1,000,000 SABFIN Proprietary Limited 69,424 701,324 70,554 661,295 Dividends paid SABMiller Finance BV 8,078,611 - 8,472,489 -

33 Held for sale Group Company 2017 2016 2017 2016 R’000 R’000 R’000 R’000

Assets held for sale Investment in associate 2,940,435 - - - 2,940,435 - - -

As part of the public interest commitment, the Group was required to dispose of the 26.78% investment in the Distell Group Ltd. This resulted in the investment in associate being reclassified as held for sale from 11 October 2016, and no longer being equity accounted as part of the Group.


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34 Business combination and common control transaction

On 1 July 2016, Coca-Cola Beverages Africa (CCBA) was created. CCBA is the combination of The Coca-Cola Company (TCCC), Gutsche Family Investments (GFI) and AB InBev’s (formerly SABMiller plc) soft drinks businesses on the African continent. The AB InBev Group’s soft drinks businesses are made up of its South African operations held via the 100% shareholding in the ABI Bottling Group as well as its operations in the rest of Africa held by AB InBev Africa (formerly SABMiller Africa (Pty) Ltd). AB InBev contributed both its Africa and South Africa operations, ultimately resulting in a 54.5% shareholding in CCBA, represented by 51.04% holding by SAB and 3.46% by AB InBev Africa. CCBA will be the continent’s largest Coca-Cola bottler, serving 12 countries, with around 40% of all Coca-Cola beverage volumes in Africa. This will drive superior top line growth and the transaction expands the footprint to include high potential markets in other parts of the continent. With a shared vision, extensive experience of operating in African markets, and long-term commitment to the continent, CCBA is strongly positioned to offer consumers greater choice, broader availability and better value. The contribution of TCCC and GFI interests were treated as a business combination under IFRS3. The transaction resulted in the Group stepping up its associate interest in Coca-Cola Canners of Southern Africa (Pty) Ltd from 32.43% to an effective 45.84% controlling interest. The contribution of the AB InBev Africa operations were treated as a transaction under common control at predecessor values for purposes of these financial statements. As a result of further group restructuring arising as part of the combination, transactions were recognised with non-controlling interests. With a 51.04% shareholding, SABSA via its subsidiary SAB maintains control and thus consolidates the CCBA Group. Non-controlling interests are represented by the 48.96% shareholding held by TCCC, GFI and AB InBev Africa.

Business combination R’000 Purchase consideration in the form of: Non-controlling interests share in AB InBev’s contribution to the combination 19,322,038 Fair value of previously held interest in Coca-Cola Canners of Southern Africa (Pty) Ltd 1,528,863 20,850,901 The assets and liabilities recognised at fair value as part of the business combination are as follows:

Cash 377,219 Trade receivables 2,554,008 Inventories 2,145,071 Property, plant and equipment 13,263,150 Deferred tax asset 23,867 Intangible assets 19,764,060 Trade payables (4,323,697) Borrowings (4,305,649) Deferred tax liability (6,088,169) Provisions (285,360) Net identifiable assets acquired 23,124,500 Less: Non-controlling interests (11,247,405) Add: Goodwill 8,973,806 Net assets acquired 20,850,901

Goodwill is attributable to the workforce and the Coca-Cola Bottlers licence agreements. The licence agreements were valued using the income approach method. This method reflects the present value of the operating cash flows generated. The fair value of the property, plant and equipment was estimated at arm’s length with a willing buyer and seller.


75

34 Business combination and common control transaction (continued) R’000

Re-measurement of previously held interest Carrying value of associate investment in Coca-Cola Canners of Southern Africa (Pty) Ltd (Note 12)

317,931

Fair value of previously held interest in Coca-Cola Canners of Southern Africa (Pty) Ltd 1,528,863 Gain recognised in profit and loss (Note 26.1 and 35.1) 1,210,932

Common control transaction with AB InBev Africa Fair value of common control interests 2,797,278 Net identifiable assets 1,542,461 Gain included in merger relief reserve below 1,254,817 Non-controlling interest share of gain in merger relief reserve @ 48.96% 614,341

Transaction with non-controlling interests Dilution of existing interest arising from business combination (100% to 54.5%) Non-controlling interests share in AB InBev’s contribution to the combination 19,322,038 Carrying value of non-controlling interests* (2,526,415) Gain recognised in merger relief reserve 16,795,623 AB InBev Africa’s share of common control transaction Non-controlling interests share in AB InBev’s contribution to the combination 1,469,888 Carrying value of non-controlling interests* (192,192) Gain recognised in merger relief reserve 1,277,696 AB InBev Africa’s share of business combination Non-controlling interests share in TCCC & GFI’s contribution to the combination 1,324,117 Carrying value of non-controlling interests* (754,244) Gain recognised in merger relief reserve 569,873 Transaction with Coca-Cola Fortune’s non-controlling interests (434,521) ABI Bottling Group contribution adjustment (315,948) Merger relief reserve 17,892,723 *Transactions with non-controlling interests recognised above (3,472,851)


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35 Discontinued operations

On 21 December 2016, The Coca-Cola Company and AB InBev reached an agreement regarding the transition of AB InBev’s 54.5% equity stake in CCBA for USD3.15 billion, after customary adjustments. SAB holds a 51.08% share in CCBA. The transactions are subject to the relevant regulatory and minority approvals and are expected to close by the end of the calendar year 2017. The CCBA Group is seen as a separate major line of business operation for the SABSA Group, hence has been classified as held for sale and a discontinued operation.

35.1 Statement of profit and loss and other comprehensive income

2017 2016 R’000 R’000

Revenue 31,399,330 15,377,677 Net operating expenses (29,007,857) (12,922,913) Gain on re-measurement of previously held interest (Note 34) 1,210,932 - Operating profit 3,602,405 2,454,764 Operating profit before exceptional items 3,694,678 2,454,764 Exceptional items (92,273) - Net finance costs (432,253) 24,196 Share of post-tax results of associates & joint ventures 16,279 97,583 Profit before taxation 3,186,431 2,576,543 Taxation (644,850) (711,308) Profit for the year 2,541,581 1,865,235 Items that may be re-classified to profit and loss Cash flow hedges (16,408) (14,940) Currency translation differences (1,334,531) - Tax on cash flow hedges 5,596 4,183 Items that will not be re-classified to profit and loss Actuarial loss on post-employment obligations - (991) Tax on actuarial loss - 250 Other comprehensive income (1,345,343) (11,498) Total comprehensive income for the year 1,196,238 1,853,737

35.2 Cash flow information Group 2017 2016 R’000 R’000

Cash generated from operations 3,482,179 3,065,753 Cash from investing activities (4,322,884) (850,862) Cash from financing activities 2,214,474 (2,125,064) Net cash generated from operating activities 1,373,769 89,827 Effect of exchange rate changes 1,164,405 - Net increase in cash and cash equivalents 2,538,174 89,827 Cash and cash equivalents at beginning of year 96,556 6,729 Cash and cash equivalents at end of year 2,634,730 96,556


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35 Discontinued operations (continued) 35.3 Assets and liabilities of disposal group

Group 2017 R’000

Assets classified as held for sale Intangible assets 31,070,165 Property, plant and equipment 17,713,352 Investments in associates 60,240 Available for sale investments 143 Investment in joint venture 19,968 Derivative financial instruments 2,369 Deferred tax asset 520,783 Inventories 2,856,800 Trade and other receivables 3,394,849 Inter-group indebtedness 75,098 Income tax asset 160,636 Cash and cash equivalents 2,634,730 Other Assets 2,940,434 Total assets of disposal group held for sale 61,449,569 Liabilities directly associated with assets held for sale Borrowings 5,359,923 Derivative financial instruments 37,460 Deferred taxation 6,614,911 Provisions and employee benefit obligations 746,926 Trade and other payables 6,172,314 Taxation 363,685 Inter-group indebtedness 260,685 Total liabilities of disposal group held for sale 19,555,904

36 Post-balance sheet events Subsequent to the period end SABSA Holdings Limited received dividends from SAB (Pty) Ltd in May 2017 of R369.9 million, in June 2017 of R318.5 million, in July 2017 of R946.8 million, in August 2017 of R303.5 million and in September 2017 of R374.3 million. Subsequent to the period end SABSA Holdings Limited received dividends from Sabsure Ltd in June 2017 of R120 million. The Company declared a dividend to SABMiller Finance B.V. in April 2017 of R982.2 million, in May 2017 of R369.9 million, in June 2017 of R438.5 million, in August 2017 of R1.250 million and in September 2017 of R374.3 million. The 26.78% investment in Distell was sold effective April 2017.


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37 Directors remuneration

The following remuneration was earned by directors of the Company from the SABSA Group:

Basic

remuneration Retirement

benefits

Share based benefits and

bonus* Fees Total 2017

Total 2016

R’000 R’000 R’000 R’000 R’000 R’000 R Almeida 3,224 - 8,335 - 11,559 - J Awbrey - - - 666 666 442 NP Dongwana - - - 421 421 410 M Dunn@ - - - - - 15,134 MP Fandeso^ 5,528 533 32,977 - 39,038 19,148 JA Kirby 7,835 664 14,712 - 23,211 - J Mabuza - - - - - - HL Matsela~ 2,975 - 10,840 - 13,815 12,649 KD Moroko - - - 380 380 362 MM Ngoasheng - - - 916 916 602 S Shapiro# - - - - - -N Trikamjee@ - - - - - 4,563

Share incentives held

BSE/LSE performance share awards –

EPS JSE share appreciation rights 2017 2016 2017 2016 R Almeida 34,964 - - - J Awbrey - - - - NP Dongwana - - - - M Dunn@ - 67,078 - - MP Fandeso^ - 46,993 - 16,621 J Mabuza - - - - HL Matsela~ - 75,950 - 34,828 KD Moroko - - - - MM Ngoasheng - - - - S Shapiro# - - - -

#Messer Shapiro was a salaried employee of SABMiller plc. No directors' remuneration has been paid to him from the company. @Messrs Dunn and Trikamjee were salaried employees of The South African Breweries (Pty) Ltd. No directors’ remuneration has been paid to them from the company. ^Messer Fandeso was a salaried employee of AB InBev Africa (Pty) Ltd and The South African Breweries (Pty) Ltd. No directors’ remuneration has been paid to him from the company. ~Messrs Almeida, Matsela and Kirby are salaried employees of AB InBev Africa (Pty) Ltd. No directors’ remuneration has been paid to them from the company. *Share based benefits are valued at grant date.

SABSA HOLDINGS LIMITED Registration number: …...2017, SABSA Holdings Limited has lodged with the...

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