| Thu 31 May 2001, 0:00 | | South African Breweries Plc - Preliminary Announce |
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SOUTH AFRICAN BREWERIES plc
Incorporated in England and Wales (Registration number 3528416)
Preliminary Announcement
for the year ended 31 March 2001 (unaudited)
Strong international performance - ongoing strategic development
London, 31 May 2001. South African Breweries plc, one of the world's leading
brewers with operations in
22 countries, today announces its preliminary (unaudited) results for the
year to 31 March 2001
FINANCIAL HIGHLIGHTS
2001 2000 % change
US$m US$m US$
Turnover 4,184 4,299 (3) 6
Trading Profit 700 731 (4) 4
Profit before tax 646 691 (7) 2
Adjusted earnings 379 426 (11) (3)
Adjusted earnings per share
- US cents 54.4 56.6 (4) 5
- SA cents (up 15%) 399.2 348.4
Dividends per share (US cents) 25.0 25.0 -
Note: Turnover, trading profit and profit before tax represent continuing
operations before exceptional items. There are no exceptional items in the
current year. In the prior year, exceptional items comprised profit on sale
of PGSI (US$76 million) and brewery closure costs in SAB International
(US$11 million). Continuing operations exclude PGSI in the prior year.
Adjusted earnings also exclude goodwill amortisation. Percentages expressed
in terms of sterling movements are given in order to aid comparability
with other FTSE companies.
Operational highlights and achievements
- Total lager beer volumes up 18% to 62.1 million hectolitres
- International lager beer volumes up 40% to 38.2 million hectolitres -
strong margin performance
- Pressure on Beer South Africa volumes but margin maintained
- Restructuring of Czech businesses delivers improvements ahead of
expectations
- An important pan-African strategic alliance created with the Castel group
- New acquisitions in China announced today
Meyer Kahn, Chairman of SAB plc, states:
"SAB has performed well over the last year with improving fundamentals in
many of our operations. This has been overshadowed by currency weakness to
which the strength of the US dollar has been a contributing factor. Our
international business has delivered strong volume growth and enhanced
profitability, while in South Africa our businesses have reported
commendable results in the face of difficult trading conditions.
In line with our stated strategy we continue to grow and enhance our
position internationally. We have exercised our option to acquire the
balance of the Pilsner Urquell group, announced today the extension of our
prominent position in China and entered into a significant pan-African
strategic alliance. We are committed to participating in industry
consolidation wherever value for shareholders can be obtained."
Group review
Volumes
Total group beverage volumes of 86 million hectolitres were 12.2% above last
year's, with lager beer volumes up 18.3% (4.8% organic growth) to 62.1
million hectolitres. SAB International achieved an impressive growth in
lager beer volumes of 39.7% to reach 38.2 million hectolitres, with strong
organic growth of 13.6%. This more than offset the decline of 4.9% to 23.9
million hectolitres, suffered by our largest individual business, Beer South
Africa. Other beverage volumes were up 2.9% on a like-for-like basis.
Operating results
Turnover from continuing operations, including share of associates, of
US$4.2 billion was 2.7% lower than in the previous year, and group operating
profit, from continuing operations and before exceptionals, fell to US$700
million, a reduction on last year of 4.2%. These figures mask strong
underlying operating performances, which in reporting were impacted by the
strength of the US dollar against most other currencies during the past
twelve months. Our adjusted earnings per share were similarly affected and
at 54.4 US cents are down 3.9% on last year. In sterling, however,
adjusted earnings per share reflected an increase of 4.8%.
All businesses continued their productivity and cost containment initiatives
which led to improved margin performance in most of our operations. In SAB
International, the increase in operating margin before amortisation of
goodwill was an impressive 160 basis points, notwithstanding the lowering
mix effect from the inclusion of Pilsner Urquell and the growth in China.
Our carbonated soft drinks business, ABI, did well under difficult
circumstances, whilst the hotel and gaming operation, Southern Sun,
succeeded in holding occupancy levels ahead of the industry.
Strategy
In South Africa, the main focus is on growth initiatives, in order to ensure
that our beverage businesses explore all possible avenues to achieve volume
gains despite the pressure from many new demands on consumers' disposable
incomes. We are also driving operational efficiencies to offset these
pressures and improve margins. SAB International continues to enhance
established positions as well as acquire further businesses which will add
value. Significantly, our operations in Eastern Europe have all made good
progress, with Poland, Czech Republic and Russia showing market share gains,
synergies from restructuring and substantial volume growth, respectively.
Further investments, in line with our stringent investment criteria, were
made in China and these position us well to continue as one of that
country's leading brewers. We recently finalised the strategic alliance with
the Castel group covering Africa, which will allow both groups to leverage
off each others' established positions to enhance profitability and gain
access to further opportunities on the continent. We continue to evaluate
strategic alternatives for the future of Southern Sun.
Financial review (continuing operations)
Profit before tax
Profit before tax, excluding exceptional items and goodwill amortisation, of
US$666 million was 4% lower than the US$697 million of the previous year.
Exceptional items
There are no exceptional items in the current year. In the prior year,
exceptional items comprised the profit on sale of PGSI (US$76 million) and
brewery closure costs in SAB International (US$11 million). Continuing
operations exclude PGSI in the prior year - disposed of on 30 November 1999.
Interest
Net interest payable of US$54 million was up on the prior year of US$40
million by 35%. This is mainly due to additional borrowings to fund the
acquisition payments for Pilsner Urquell. Net interest for the year was well
covered at 13.0 times. Gross borrowings rose in the year under review from
0.7 to 1.2 times EBITDA.
Taxation
The current year's effective tax rate increased to 28.0% from last year's
unusually low 24.8%. This is largely attributable to reduced allowances and
the inclusion of a greater proportion of profits in higher tax
jurisdictions.
Goodwill
Goodwill of US$865 million at 31 March 2001 includes US$281 million in
respect of the increase in shareholding of Pilsner Urquell, US$32 million in
respect of the increase in shareholding of ABI, and US$30 million in respect
of the increase in shareholdings in several SAB International operations.
Currency
The US dollar demonstrated continuing strength in international currency
markets, for example the average rand/dollar rate for the year was 7.34 -
some 19% below last year's 6.16. SAB International's results as reported in
US dollars were also negatively impacted.
Treasury
Early in the year, the group signed a three-year US$750 million multi-
currency revolving credit facility. On 9 April 2001, immediately after the
financial year end, SAB finalised a successful US$328 million US private
bond placing with an average life of five years. The proceeds have been used
to effect a partial repayment of the three-year US$750 million syndicated
loan, thus extending the maturity profile of interest bearing debt.
Cash flow
Continuing operating activities generated net cash inflows before working
capital movements (EBITDA) of US$854 million - in line with last year's
US$853 million. The ratio of EBITDA to group turnover improved to 23.6 %
from last year's 23.4%.
Acquisitions
Shares purchased from minorities, in the amount of US$453 million, were in
respect of Pilsner Urquell US$332 million, ABI US$73 million, and certain
SAB International operations US$48 million.
On 1 October 2000, SAB International, through its 60% held subsidiary, SAB
India, acquired 100% of the business and assets and liabilities of Narang
Breweries Limited, for a total consideration of US$6 million.
Dividends
The board has proposed a final dividend of US18.5 cents per share, making a
total of US25.0 cents per share for the year, representing a dividend cover
ratio of 2.2 times. Shareholders will be asked to ratify this proposal at
the annual general meeting, scheduled for 30 July 2001. In the event that
ratification takes place, the dividend will be payable on 3 August 2001 to
shareholders on either register on 29 June 2001. The ex-dividend trading
date as stipulated by the LSE will be 27 June 2001 on both the London and
Johannesburg Stock Exchanges. As the group reports primarily in US dollars,
dividends are also declared in US dollars. They are payable in sterling to
shareholders on the UK section of the register and in South African rand to
shareholders on the RSA section of the register. The rates of exchange
applicable on 25 May 2001, being the last practical date before the
declaration date will be used for conversion, ( /$ = 1.4197 and R/$ =
7.9225) resulting in an equivalent final dividend of SA146.5663 cents for
RSA shareholders and UK13.0309 pence for UK shareholders. The equivalent
total dividend for the year for RSA shareholders is SA197.3663 cents (prior:
SA172.20 cents) and for UK shareholders is UK17.6309 pence (prior: UK16.50
pence).
Outlook
Whilst economic indicators in South Africa are positive and monetary and
fiscal policy remain sound, demand for traditional consumer products
continues to be weak in the face of the structural shift in consumer
spending patterns. The rate of change in consumer spending patterns does,
however, appear to be lessening. Growth initiatives being introduced by our
South African beverage businesses, and strong operational management, should
further ameliorate the negative trend.
Our SAB International business had an excellent year, delivering substantial
increases in both volume and profit, notwithstanding the difficult trading
conditions in Africa and negative currency movements. Our portfolio of
international businesses remains well positioned and positive economic
fundamentals are evident in many of our countries of operation. In addition,
we will be working with our partners in Africa, the Castel group, to
identify and drive benefits from our new strategic alliance. We remain
confident in our strategy and that the strong fundamentals of our
international businesses will deliver further meaningful growth in the year
ahead.
The group's reported earnings for the past year were negatively affected by
the strength of the US dollar against our major operating currencies, and
the movement and direction of the US currency in the coming year remains a
factor in our results.
Beer South Africa
2001 2000 % change
Financial summary US$m US$m US$ R
Turnover 1,365 1,608 (15) 1
Trading profit 343 407 (16) 1
Operating margin (%) 25.2 25.3
Sales volume (Hl 000s) 23,904 25,141 (5)
The past financial year was one of the most challenging in recent history.
Volumes were significantly affected by the structural shift in the spending
patterns of South Africans away from non-durable goods into "new" goods and
services (including cellular phones, gaming and the lottery) and durable
goods. Rising fuel prices increased transport costs for our customers,
further reducing income available for traditional consumer goods. Competitor
activity was strong, particularly in the wine sector. The liquor industry
has been affected by a large surplus of white wine products - the wine lake
- which has resulted in the sale of wine at extremely low prices. This has
contributed to a decline in our volumes, and our share of the total alcohol
market, excluding sorghum beer, fell by around 1%. However, early
indications are that these may be a lessening in these negative trends.
Although our sales volumes declined by 4.9%, operating profit in rands
increased over the previous year's and operating margins were virtually
unchanged at 25.2%. This was made possible by a major restructuring exercise
in response to pressure on our volumes and sales, as well as ongoing
productivity initiatives, including the world class manufacturing programme
(delivering better asset utilisation and raw material productivity), our
focus on cost containment, the effectiveness of general procurement projects
and packaging material innovations. The benefits of an effective hedging of
our imported raw materials and the low commodity price cycle, which were
felt in the first half of the financial year, assisted our margins.
We have continued investing in growth initiatives, including an increased
investment in brand marketing, informal market penetration largely through
our extensive refrigeration programme - spend to date totalling R90 million
(US$12 million) on 12,500 units, improvements to the availability and
accessibility of our product, enhancements to our events management
capability and product innovations. Investment in our core brands increased
with several exciting initiatives in support of Castle Lager, the relaunch
and refocus of Lion Lager, the recent launch of Redd's Dry and packaging
innovations, including the successful launch of the new 660 ml "Diva" bottle
in which Redd's and Redd's Dry are offered. These have led to further gains
in our share of the Alcoholic Fruit Beverage category.
Our South African national rugby sponsorship was finalised during the year
and adds to our commitment to national sports. In addition, we renewed our
national soccer support and extended this beyond the national level to
include regional football leagues.
Current research indicates enhanced consumer perceptions of our brands,
benefiting from sustained improvements in the already high quality of our
beer and packaging. We have also increased our focus on distribution over
the year, enhancing fleet mix and resources and continuing the vehicle-
branding programme. There has been further support for the owner-driver
programme, and this mode of delivery now accounts for approximately 80% of
our distribution volume.
Our continuing commitment to our employees is demonstrated by our
substantial investment in training. Training days per employee once again
exceeded six days. The comprehensive HIV and AIDS strategy implemented last
year, with full support from the trade union, continues with `knowledge,
attitude and practice' surveys and peer education programmes.
The new Ibhayi Brewery, near Port Elizabeth, was commissioned on time and
under budget and will increase production efficiency, with production per
employee more than three times previous levels. All spending targets to
encourage significant involvement from local businesses and black
empowerment groups were met. The brewery has an annual production capacity
of 2.3 million hectolitres, more than double the brewing capacity of the
plant which it replaced.
Following the constitutional court judgment in November 1999, setting aside
the Liquor Bill of 1998, new liquor legislation has been under development
at both national and provincial levels. New legislation from the South
African Department of Trade and Industry is not anticipated during calendar
2001. The province actively pursuing liquor legislation is the Western Cape,
where it is expected that legislation will be promulgated later in the year.
This legislation is aimed principally at the retail segment. The Competition
Commission instituted a formal investigation into certain aspects of the
liquor industry in November 2000. SAB has met with the commission and has
provided all assistance requested.
SAB International
2001 2000 % change
Financial summary US$m US$m US$
Turnover 1,797 1,474 22
Trading profit before
exceptionals 260 199 31
- exceptional items - (11)
Operating margin before
exceptionals (%) 14.5 13.5
- pre goodwill
amortisation (%) 15.5 13.9
Sales volume (Hl 000s)
- Lager beer 38,236 27,375 40
- Other beverages 12,392 11,678 6
Overview
Very strong volume growth characterised another good year for SAB
International, assisted by the inclusion of Pilsner Urquell for a full year.
Poland and China volume growth was exceptional, as was that in Russia which
continues to deliver on expectations. In Tanzania and Zimbabwe volumes were
disappointing. SAB International turnover and trading profits rose
significantly and the operating margin, before goodwill amortisation
improved by 160 basis points.
In its first full year as part of SAB International, the Pilsner Urquell
group delivered results ahead of management expectations. China has
continued to make progress towards its strategic objectives in terms of
growth, productivity and cost controls, and profit performance. In Africa,
many of our operations experienced difficult economic conditions and
pressure on currencies, which combined to depress solid underlying operating
performances.
Poland
The Polish beer market continued to grow strongly during the year with
industry volumes ahead by 6.1%. SAB International's business, Kompania
Piwowarska SA, outperformed the market and grew its volumes by 32% to
achieve a market share of more than 30% in the last quarter of the year.
This was largely due to an extended distribution reach for the company's
main brands, Tyskie and Lech, with the Tyskie brand strengthening its
position as the leading Polish beer brand. Pilsner Urquell was introduced
into the brand portfolio during the year and has gained an increasingly
important share of the premium segment. Poland recently announced several
alcohol advertising restrictions, in addition to significant excise
increases expected over the course of the year, which will change the
industry dynamics.
Czech Republic
The Pilsner Urquell group performed well and maintained market share at some
44% on steady industry volumes despite the 3% real price increase obtained
during the year. The merger of our three businesses in the Czech Republic is
well under way and process restructuring is proceeding. Headcount is now 20%
below pre-acquisition levels and best practice procurement and productivity
initiatives are being implemented. Finance, planning, sales and marketing
functions have all been integrated nationally, facilitating substantial
synergies. In total, the above measures boosted merger benefits ahead of
target.
The Czech brand portfolio benefited from packaging upgrades to improve
market differentiation and positioning. These changes have been well
received by consumers, with the Pilsner Urquell brand, in particular,
enjoying substantial domestic volume gains.
China
Our Chinese operations gained organic market share despite fierce price
competition. During the year, through acquisition of the Anhui breweries and
expansion of our existing facilities, we increased capacity by 6 million
hectolitres. Beverage volumes, of which 85% is beer, outperformed the
industry, growing organically by 17%, and beer volumes exceeded the 10
million hectolitre mark for the first time. Significantly, operating
profits grew faster than sales. The Chinese economy continued to perform
strongly with growth in GDP over 7%, supported by a stable currency.
Russia
In Russia we achieved our financial target of EBITDA breakeven in this first
full year of operation due to substantial volume and productivity
improvements. This was facilitated by fast-track modular expansion of the
brewery, which took annual capacity for the summer season to some 1.4
million hectolitres. The brewery has recently been expanded to an annual
capacity of 2.4 million hectolitres. Distribution of our beer Zolotaya
Botchka (Golden Barrel) now reaches most regions in Russia and has a 10%
value share of the key Moscow market. Furthermore, local procurement and
productivity measures have resulted in improved margins and positive, albeit
modest, cash flow. Volumes for the year exceeded 1 million hectolitres for
the first time.
Investments during the year
SAB exercised its rights to acquire the last two tranches of shares in
Pilsner Urquell from Nomura International plc, ahead of the planned date of
30 June 2001.
SAB exchanged 38% of its economic interest in SAB International Africa for
20% of the African beverage interests of the Castel group, effective 1 April
2001. The effect of this transaction is expected to be earnings neutral in
the forthcoming year. However, this strategically important joint venture
intends, inter alia, to expand into new territories; capitalise on bulk
purchasing opportunities; enhance SAB's strategic position in African
markets and benefit from future opportunities to increase co-operation
between the two partners.
We increased our holdings in two key African markets - Tanzania (from 51% to
66%) and Botswana (from 40% to 46.8%) - for a total consideration of some
US$42 million.
SAB's entry into India was initiated with the formation of SAB India. At
present the company, which is 60% held by SAB, owns one brewery site in
Nawabganj, which is in the final stage of an of upgrade and expansion
programme. Further acquisitions are being pursued.
Brands
During the year, encouraging progress has been made in establishing the
infrastructure to develop the Pilsner Urquell brand internationally. The
brand has been introduced through our businesses into Poland, Slovakia and
Hungary, and exports are growing elsewhere, including the United States and
Germany.
Our five major brands in the European region (Pilsner Urquell, Tyskie,
Gambrinus, Lech and Radegast) contributed over 60% of regional volume and
grew 21% during the past year. Product development initiatives resulted in
the launch of four new brands, namely Redd's in Poland, Zolotaya Botchka
Aged in Russia,
Keller in Romania and Volcan in the Canary Islands.
In Africa, our flagship Castle brand outperformed the industry, even with
its semi-premium price position. Castle Lager continues to go from strength
to strength in East Africa, while Castle Milk Stout is growing strongly in
Ghana, where it is starting to make meaningful inroads into the lucrative
stout segment.
In China we concentrated on developing our acquired brands to achieve our
satisfactory volume growth. In addition, we have successfully introduced the
Xue Hua (Snowflake) brand to all the regions in which we are active.
Other SAB International business
Europe
Productivity and volume improvement were evident in Slovakia and Hungary,
with Slovakia benefiting from the relaunch of Czech brands. Additional
opportunities to extract benefits from synergies between the Slovakian and
Czech businesses are being explored. In Hungary the benefit of a lower cost
base from prior years' rationalisation of operations aided a strong cash
flow improvement. Excise duty on wine was introduced this year, thereby
assisting to reverse a decade-long decline in the beer market in Hungary.
In Romania low consumer disposable incomes and an excise regime in favour of
spirits kept prices down, countering the positive effects of sizeable volume
increases.
In the Canary Islands our Dorada and Tropical brands continue to be the
volume and value leaders.
Africa
Pressure on disposable incomes of African consumers, coupled with widely
publicised problems in Zimbabwe, where overall volumes were down 8%, led to
a marginal 2% decline in total beverage volumes. Sorghum volumes held up
well, recording a 1% increase over the prior year. Given our strategy not to
compromise long-term growth potential with overly aggressive pricing in low-
income markets, maintaining US dollar profits was difficult. However, our
efforts to reduce costs through bulk purchasing initiatives, reduced
overheads and productivity improvements at operational level, went a long
way towards offsetting the negative currency effects experienced in many of
the countries in which we operate.
Market share gains were achieved in Mozambique and Tanzania. Cervejas de
Mozambique reported record sales volumes, in excess of 800,000 hectolitres,
despite a repeat of last year's flooding towards the end of the period.
Lager beer and soft drink sales held up well in Botswana, recording positive
growth on last year, although the sorghum beer business contracted
marginally. The lager beer and sorghum beer businesses in Zambia grew
strongly, reflecting recovery in the Zambian economy and a reduction in
excise duties. In Malawi our sorghum beer business, Chibuku Products
Limited, merged with its main competitor, Napolo Ukana, resulting in SAB
International holding a stake of just over 50% in the enlarged business.
Volumes declined in Ghana, Lesotho and Swaziland due to severe pressure on
consumers' disposable incomes.
Other Beverage Interests *
2001 2000 % change
Financial summary US$m US$m US$ R
Turnover 816 954 (14) 2
- ABI 585 654 (11) 6
Trading profit 106 120 (12) 5
- ABI 88 86 2 21
Operating margin (%) 13.0 12.6
- ABI 15.0 13.1
Comparable volumes
(Hl 000s) ** 11,485 11,392 1
ABI volumes (Hl 000s) 10,968 10,910 1
* ABI, Appletiser, Distell (prior year includes TBI)
** Excludes TBI and other disposed operations
Amalgamated Beverage Industries (ABI)
Demand for traditional consumer goods remained weak in South Africa, and as
a result, growth within the beverage industry was constrained and our
volumes showed only marginal growth. However, volume growth in the second
half of the year more than offset the decline in volumes of 3% reported at
the interim stage. Ongoing cost reduction initiatives emanating from the
merger with Suncrush resulted in an improvement in trading profit and
operating margin.
Sales of mainstream carbonated soft drinks remain under pressure,
particularly in the lower income segment of our business. With our franchise
partner, Coca-Cola, ABI has started to develop other beverage opportunities
to broaden the base for growth. The past financial year saw the refocus of
Powerade and the launch of Play, Minute Maid and Bibo in the ABI franchise
territories. Play and Minute Maid will compete in the high value energy
drink and fruit juice categories, both of which are showing strong growth,
and Bibo in the low priced juice-based beverage category. ABI has also
obtained the distribution rights to more of the Appletiser range of
products, including the spring water, Valpr . The bottled water category is
showing strong growth and ABI's product offering was further complemented by
the launch of Bon Aqua, a water brand of the Coca-Cola Company, in April
2001.
Appletiser
Appletiser continued the rationalisation programme initiated last year and
disposed of the broad-spectrum distribution company, Supply Chain Services.
Appletiser changed from a diversified organisation into a focused entity
operating in the premium fruit juice and bottled water segments of the
beverage market. Benefits from this focused approach are beginning to
materialise.
Wines & Spirits
Distillers Corporation (SA) Limited and Stellenbosch Farmers' Winery Group
Limited merged in November 2000 and the name was changed to Distell Group
Limited in March this year. SAB's 30% equity accounted interest in the
combined group remained unchanged. The merger is expected to improve
profitability for the enlarged group and create a basis for long-term
earnings growth. The Competition Tribunal in South Africa recently decided
that the Distell merger is a notifiable transaction and is thus subject to a
ruling from the Competition Commission. The implications of this decision
are currently being assessed by Distell management.
Earnings of Distell for the year were below those of the prior year.
Hotels and Gaming
2001 2000 % change
Financial summary US$m US$m US$ R
Turnover 206 263 (22) (7)
Trading profit (see note) 25 40 (38) (27)
Operating margin (%) 12.1 15.2
"Revpar" R205.70 R192.40 7
Note: During the year, Southern Sun disposed of its 20% interest in Sun
International. Adjusting for this disposal and other non-recurring items,
including the impairment of Monyaka, and the write-off of pre-opening
expenses, trading profit for the year would have been US$30 million (2000:
US$35 million) on turnover of US$189 million (2000: US$210 million).
The South African hotel industry is yet to show any real signs of recovery,
due to increased industry capacity and continued negative sentiment towards
southern Africa. Hotel division occupancies remained at last year's levels
of 65.4% whilst revpar increased by 7% to R205.70, in line with South
African inflation. In rand terms, the hotel division turnover also increased
by 7%, whilst operating profit before exceptionals was up 11%, reflecting
the division's commitment to improving margins. Realignment of the property
portfolio to meet market needs continued, and total rooms owned and managed
increased from 12,780 to 13,163.
Gaming turnover in rand terms increased marginally ahead of inflation. This
represented the net effect of increased revenues as a result of the opening
of the Montecasino gaming and entertainment complex on 28 November 2000 and
the declining revenues during the winding down of the temporary casino at
the Sundome in the third and fourth quarters of calendar 2000. Initial
trading at Montecasino has met expectations. Whilst operating margins in the
Gaming division were maintained in the year under review, they are likely to
fall in the coming year, reflecting the increased depreciation and operating
costs relating to the Montecasino complex.
After a long and protracted adjudication process, Tsogo Sun was awarded one
of the much sought-after Durban casino licences, but this is currently the
subject of a legal challenge by an unsuccessful bidder. Tsogo Sun was also
awarded the East London casino licence, where construction has commenced.
Tsogo has no further licence applications pending. Disappointingly, the
slot route industry in South Africa has not yet been established and the
continuing regulatory delays have resulted in the decision to downsize its
Monyaka operations and, as a consequence, we have decided to write off the
R41 million (US$6 million) invested to date.
During the course of the year Tsogo Investments, Southern Sun's black
empowerment partners in Tsogo Sun, was due to exchange its 50% interest in
Tsogo Sun for a 24% interest in Southern Sun, which was to seek a listing on
the Johannesburg Stock Exchange. However, Gambling Board approvals were not
forthcoming and discussions continue regarding alternative restructuring
proposals.
Annual report and accounts
The group's unaudited summarised financial statements and certain
significant explanatory notes follow. The annual report will be mailed to
shareholders early in July 2001 and the annual general meeting of the
company will be held at 11h00 on 30 July 2001.
This announcement and a copy of the analyst slide presentation are available
on the SAB website at www.sabplc.com
A video interview with Graham Mackay, Chief Executive, can be found at
www.saplc.com and at www.cantos.com
For further information:
31 May 2001
Nick Chaloner (Director
of Communications)
For Media and
Analysts calls South African Breweries Plc +44 20 7659 0119
Anna Miller (Head of
Investor Relations)
For Analysts South African Breweries Plc +44 20 7659 0106
Salom Brown
(Corporate
Communications
Manager) South African Breweries Plc +27 11 407 1718
Jonathan Glass Brunswick (UK) +44 20 7404 5959
Copies of the press release and the detailed Preliminary Announcement are
available from the Company Secretary at
the Registered Office, or from 2 Jan Smuts Avenue, Johannesburg, South
Africa.
Registered office: Dukes Court, Duke Street, Woking, Surrey, GU21 5BH
Telephone: +44 1483 26 4000
Telefax: +44 1483 26 4117
South African Breweries plc
Consolidated Profit and Loss Accounts
For the years ended 31 March
2001 2000 2001 2000
Unaudited Audited Unaudited Audited
Notes US$m US$m Rm Rm
Turnover (including
share of associates'
turnover) 2 4,184 5,424 30,689 33,355
Less: share of
associates' turnover (560) (1,034) (4,105) (6,348)
Group turnover 2 3,624 4,390 26,584 27,007
- continuing operations 3,624 3,646 26,584 22,461
- discontinued
operation - 744 - 4,546
Net operating costs 3 (2,987) (3,724) (21,913) (22,907)
Group operating profit 637 666 4,671 4,100
Share of operating
profit of associates 2 63 102 461 628
Trading profit 2 700 768 5,132 4,728
- continuing operations 700 720 5,132 4,432
- discontinued
operation - 48 - 296
Profit on disposal
of subsidiary 6 - 76 - 468
Profit on ordinary
activities before
interest and taxation 700 844 5,132 5,196
Net interest payable (54) (80) (395) (492)
Group (43) (49) (313) (301)
Associates (11) (31) (82) (191)
Profit on ordinary
activities before
taxation 646 764 4,737 4,704
Taxation on profit on
ordinary activities 5 (186) (186) (1,366) (1,145)
Profit on ordinary
activities after
taxation 460 578 3,371 3,559
Equity minority
interests (101) (94) (736) (580)
Profit for the
financial year 359 484 2,635 2,979
Dividends (174) (179) (1,279) (1,212)
Retained profit 185 305 1,356 1,767
Basic earnings per
ordinary share
(US/SA cents) 6 51.5 64.3 378.0 395.6
Diluted basic earnings
per ordinary share
(US/SA cents) 6 51.4 64.1 376.8 394.7
Adjusted basic earnings
per ordinary share
(US/SA cents) 6 54.4 56.6 399.2 348.4
Dividends per ordinary
share (US cents) 25.0 25.0
South African Breweries plc
Consolidated Balance Sheets
at 31 March
2001 2000 2001 2000
Unaudited Audited Unaudited Audited
Notes US$m US$m Rm Rm
Fixed assets
Intangible assets 7 867 608 6,938 3,971
Tangible assets 1,784 1,913 14,268 12,495
Investments 1,016 989 8,130 6,458
Investments in
associates 364 380 2,916 2,480
Other fixed asset
investments 652 609 5,214 3,978
3,667 3,510 29,336 22,924
Current assets
Stock 205 223 1,637 1,458
Debtors 309 335 2,472 2,186
Investments 10 53 119 422 780
Cash at bank and in
hand 10 165 197 1,324 1,283
732 874 5,855 5,707
Creditors - amounts
falling due within
one year (1,064) (1,390) (8,514) (9,146)
Interest bearing 10 (206) (308) (1,651) (2,010)
Other (858) (1,082) (6,863) (7,136)
Net current liabilities (332) (516) (2,659) (3,439)
Total assets less
current liabilities 3,335 2,994 26,677 19,485
Creditors - amounts
falling due after
one year (854) (297) (6,828) (1,938)
Interest bearing 10 (847) (294) (6,778) (1,923)
Other (7) (3) (50) (15)
Provisions for
liabilities and
charges 8 (89) (138) (715) (903)
Net assets 2,392 2,559 19,134 16,644
Shareholders' funds 2,100 2,161 16,801 14,042
Equity minority interests 292 398 2,333 2,602
Capital employed 2,392 2,559 19,134 16,644
South African Breweries plc
Consolidated Cash Flow Statements
For the years ended 31 March
2001 2000 2001 2000
Unaudited Audited Unaudited Audited
Notes US$m US$m Rm Rm
Net cash inflow from
operating activities 9 859 864 6,298 5,310
Dividends received
from associates 15 17 107 106
Returns on investments
and servicing of finance
Interest received 36 46 267 280
Interest paid (74) (98) (543) (603)
Interest element of
finance lease rental
payments (2) (4) (12) (25)
Dividends received from
other investments 3 2 25 15
Dividends paid to
minority interests (71) (45) (524) (278)
Net cash outflow from
returns on investments
and servicing of finance (108) (99) (787) (611)
Taxation (179) (175) (1,310) (1,075)
Capital expenditure and
financial investments
Purchase of tangible
fixed assets (350) (426) (2,566) (2,620)
Sale of tangible fixed
assets 19 25 136 154
Purchase of investments (15) (570) (110) (3,511)
Sale of investments 22 1 161 2
Net cash outflow for
capital expenditure and
financial investments (324) (970) (2,379) (5,975)
Acquisitions and disposals
Purchase of subsidiary
undertakings 11 (4) (117) (33) (722)
Sale of subsidiary
undertakings 9 233 66 1,439
Net cash disposed with
subsidiary undertakings (1) (9) (5) (55)
Purchase of shares
from minorities 11 (453) (67) (3,323) (412)
Settlement of deferred
creditor (PU) (230) - (1,680) -
Purchase of shares
in associates (42) - (312) -
Net funding to associates (38) (23) (278) (139)
Sale of associate 59 13 431 79
Net cash (outflow)/
inflow for acquisitions
and disposals (700) 30 (5,134) 190
Dividends paid to
ordinary shareholders (177) (50) (1,300) (309)
Management of liquid
resources
Sale of short-term
liquid instruments 50 531 365 3,271
Cash withdrawn from/
(placed in) short-term
deposits 14 (28) 106 (169)
Net cash inflow from
management of liquid
resources 10 64 503 471 3,102
Financing
Issue of shares 3 3 23 16
Issue of shares to
minorities 1 2 5 14
New loans raised 10 741 136 5,433 838
Repayment of loans 10 (254) (69) (1,860) (425)
Net cash inflow from
financing 491 72 3,601 443
(Decrease)/increase in
cash in the year 10 (59) 192 (433) 1,181
South African Breweries plc
Consolidated Statements of Total Recognised Gains and Losses
For the years ended 31 March
2001 2000 2001 2000
Unaudited Audited Unaudited Audited
US$m US$m Rm Rm
Profit for the financial
year 359 484 2,635 2,979
Currency translation
differences on foreign
currency net investments (245) (122) 1,410 12
Share of movements in
reserves of associates 1 (1) 6 (4)
Other movements (5) (5) (36) (27)
Total recognised gains and
losses for the year 110 356 4,015 2,960
Consolidated Reconciliation of Movements in Shareholders' Funds
For the years ended 31 March
2001 2000 2001 2000
Unaudited Audited Unaudited Audited
US$m US$m Rm Rm
Profit for the financial
year 359 484 2,635 2,979
Other recognised gains
and losses relating to
the period (net) (249) (128) 1,380 (19)
Goodwill written back
on the sale of PGSI - 278 - 1,721
Dividends declared by
SAB plc * (174) (179) (1,279) (1,212)
Issue of shares to
SAB shareholders 3 3 23 17
Net (decrease)/increase
in shareholders' funds (61) 458 2,759 3,486
Shareholders' funds at
start of year 2,161 1,703 14,042 10,556
Shareholders' funds at
end of year 2,100 2,161 16,801 14,042
* Dividends received on shares held by Safari Limited netted off.
The amount of cumulative goodwill in respect of purchased subsidiary and
associated undertakings, after taking account of minority share, which has
been set off against shareholders' funds at 31 March 2001 was US$172 million
(R1,375 million) and US$187 million (R1,220 million) at 31 March 2000.
South African Breweries plc
Notes to the Financial Statements
1. Basis of preparation
The consolidated financial statements present the financial record for the
two years ended 31 March 2001 and 31 March 2000.
Financial information in respect of those businesses included within the
consolidated financial statements before 1998 were reported in South African
rand as this was the dominant functional currency of the SAB Limited group
when it included the demerged entities which were all South African rand-
based companies. As a result of the demerger of those entities and further
acquisitions by SAB outside of South Africa, the comparative importance to
the consolidated financial information of the SAB International businesses
has increased. The subsidiary and associated undertakings that comprise the
SAB International businesses operate in the local currency of the country in
which they are based. From a functional perspective, the group regards these
operations as being US dollar-based as the transactions of these entities
are, insofar as is possible, made in US dollars. In management accounting
terms these companies report in US dollars. Following admission of its
shares to the London Stock Exchange, SAB plc is based in, and operated from,
the United Kingdom and is placing greater emphasis on the international
operations of SAB International.
As a consequence of the above factors, the directors of the company believe
that the group has now made the transition from a functional currency of the
rand to the US dollar, being the most representative currency of its
international operations. However, as a result of the large number of South
African shareholders, the consolidated financial statements continue to be
presented in both rand and US dollars. The exchange rates of rand to US
dollars used in preparing the consolidated financial statements were as
follows:
Weighted Closing
average rate rate Year ended
31 March 2000 6.16 6.53
Year ended 31 March 2001 7.34 8.00
The weighted a
