SAB's BEE partners reap benefits of Zenzele deal

This is the third dividend declared since the programme was launched last year and highlights that the deal continues to deliver excellent value for shareholders, said SAB.

"SAB's broad-based black economic empowerment transaction, SAB Zenzele, continued to deliver real, tangible benefits for shareholders.

"One of the most unique features of SAB Zenzele is the payment of cash dividends to shareholders from the first year," the company said on Thursday.

Based on SAB's performance in the first half of its 2012 financial year, the SAB board declared a 14% increase in the interim dividend of R36.91 million in respect of the shares held by the SAB Foundation, SAB Zenzele Employee Trust and SAB Zenzele Holdings.

An additional once-off dividend of R6.46 million will be paid out to all Zenzele shareholders due to an internal reorganisation, which brings the total interim dividend to R43.37 million.

This will be shared between the three groups of Zenzele beneficiaries, and means that a total of R137.73 million in dividends has been paid out since the transaction was launched last year.

The SAB Foundation, which was officially launched during the review period and supports community based projects, will receive an interim dividend totalling R7.9 million against R5.9 million previously.

These funds are being used to benefit the wider South African community, focused particularly on promoting entrepreneurship among historically disadvantaged people.

A cumulative R25 million in dividends has now been paid to the SAB Foundation since the transaction was launched last year.

SAB Zenzele Holdings, which holds shares for the benefit of retailers, will receive an interim dividend of R18.06 million from R13.51 million previously.

Retailers who acquired the minimum allocation of shares for R100 will receive more than R269 in dividends for the first six months, or 2.7 times their initial investment, while at the top end retailers will receive up to R1,811.

A cumulative R57.36 million in dividends has now been paid to SAB Zenzele Holdings since the launch of the transaction.

Employee beneficiaries of the SAB Zenzele Employee Trust will receive an interim dividend totalling R17.41 million from R13.02 million previously.

The average employee on the shop floor will receive a dividend of almost R1 041 for the six months, with higher grades receiving more.

A cumulative R55 million in dividends has now been paid out to the SAB Zenzele Employee Trust since the deal began.

SAB Chairman and MD Norman Adami said the intention behind SAB Zenzele was to have a truly broad-based, innovative and value-adding transaction.

"Dividends for the interim period have grown significantly over the previous period, which clearly shows we are delivering on our intent of producing an initiative that is broad-based and makes a tangible difference to shareholders," he said.

SAB posted improved group revenue, operating profit and margins for the six months ended September 2011.

The improved performance was posted despite a challenging environment, with weaker consumer demand and the cycling of the positive impact of the 2010 FIFA World Cup in the prior year offsetting the benefit of a peak Easter trading period in April.

SAB is made up of the beer business, soft drinks division ABI, Appletiser and a 29% stake in Distell.

Group revenue grew 10% to $2.669 billion (or 5% on a constant currency basis) in the review period from $2.432 billion previously, factoring in the 7.5% excise increase on beer earlier in the year.

EBITA grew by 13% to $446 million from $394 million (or 8% on a constant currency basis) and EBITA margins showed a 50 basis point improvement to 16.7% from 16.2% previously.

Adami said the successful implementation of SAB's business strategy, launched in 2009, continued to result in tangible benefits for the business.

"The beer business has seen improved market share, operating profit and margins while in the soft drinks business, we have invested in market facing activities and improved productivity through the broader supply chain."

SAB Beer's business saw lager volumes level at 12.290 million hectolitres (hl) from 12.274 million hl the previous year with the beer business gaining market share while operating profit and margins improved.

The growth was underpinned by continued efforts to strengthen the core brand portfolio, including intensifying investments in marketing and sales which were largely funded by cost efficiencies.

"The intensification of investment strengthened our core brands and supported an improvement in market share," said Adami.

Soft drinks volumes declined 3% to 7.245 million hl from 7.467 million hl, cycling the strong growth seen in the same comparable period in 2010, with the added impact of the colder and wetter weather and market share being flat.