| Wed 21 Nov 2001, 0:00 | | Tiger Brands Limited - Group Results For The Year |
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(Registration number 1944/017881/06)
(Incorporated in the Republic of South Africa)
Share code: TBSP
ISIN code: ZAE 000023578
Group results for the year ended 30 September 2001
The audited results of the Group for the year ended 30 September 2001 are
set out herein. This report has been prepared in compliance with South
African Statements of Generally Accepted Accounting Practice. Accounting
policies are consistent with those of the previous year except as set out in
note 1.
- Turnover from continuing operations up 11%
- Operating income from continuing
operations up 16%
GROUP INCOME STATEMENT
Year ended
30 September
Notes 2001 2000* Change
Rm Rm %
Revenue 16 840,5 16 246,5 4
Continuing operations 16 463,3 14 828,2 11
Discontinued operations 377,2 1 418,3
Operating income 1 697,5 1 530,4 11
Continuing operations 1 689,4 1 462,4 16
Discontinued operations 8,1 68,0
Income from investments 29,0 33,1
Net financing costs (395,8) (316,7)
Income before taxation
and abnormal items 1 330,7 1 246,8 7
Abnormal items 2 (40,4) (53,6)
Income before taxation 1 290,3 1 193,2
Income tax expense 393,0 344,0
Income after taxation 897,3 849,2
Income from associates 121,9 99,8 22
Net income of the group 1 019,2 949,0
Minority interest and
preference dividends 30,9 90,1
Income attributable
to ordinary
shareholders in
Tiger Brands Limited 988,3 858,9 15
Number of ordinary
shares in issue (000's) 165 959 165 643
Weighted average number
of ordinary shares
on which headline
earnings and earnings
per share are based (000's) 165 758 165 563
Headline earnings per ordinary
share (cents) 3 611,5 542,8 13
Fully diluted headline earnings
per ordinary share (cents) 607,9 540,3
Earnings per ordinary share (cents) 596,2 518,8
Fully diluted earnings per
ordinary share (cents) 592,7 516,4
Dividends per ordinary share (cents) 213,0 192,1 # 11
* Pro-forma-excluding the Agri-Poultry interests which were unbundled with
effect from 1 October 2000
# Pro-forma at September 2000 based on the actual dividend cover for the
year ended 30 September 2000
NOTES
Year ended
30 September
2001 2000
Rm Rm
1. Change in accounting policies
1.1 The company has changed its accounting policy
for goodwill and other intangible assets. Whereas
goodwill and other intangible assets were previously
written off to distributable reserves,they are now
capitalised and amortised over their expected useful
lives in terms of AC129. This policy has been applied
prospectively with effect from 1 October 2000
(i.e. prior year figures have not been restated).
1.2 Provisions have been accounted for in accordance
with AC 130.
This has resulted in an adjustment to opening retained
income as disclosed in the statement of changes in
equity as follows:
Reversal of excess provisions brought forward 87,8
Reversal of deferred tax on excess provisions (3,0)
Adjustment to opening retained income 84,8
2. Abnormal items
Cost of discontinued operations (24,9) (42,0)
Loss on disposal of land and buildings (41,0) (2,1)
Profit (loss) on change of interest in
subsidiaries, associates and other investments 23,9 (6,2)
Other 1,6 (3,3)
Abnormal loss before taxation (40,4) (53,6)
Taxation (0,4) 11,8
Minority share of abnormal items (0,9) (0,2)
Abnormal (loss)/profit attributable to
shareholders in Tiger Brands Limited (41,7) (42,0)
3. Determination of Headline earnings
Net income per income statement 988,3 858,9
Adjusted for:
Losses on sale or discontinuation of operations 24,0 42,4
Losses/(profits) on sale of fixed assets 26,9 (4,2)
Losses/(profits) on change of interest in
subsidiaries, associates and other investments (18,6) (5,0)
Other including abnormal profits
included in income from associates (7,0) 6,6
Headline earnings 1 013,6 898,7
GROUP CASH FLOW STATEMENT
Year ended
30 September
2001 2000*
Rm Rm
Cash operating income 1 962,4 1 838,6
Working capital changes (18,0) (160,1)
Net financing costs (399,2) (283,4)
Dividends received 43,4 47,6
Taxation paid (421,4) (475,8)
Cash available from operations 1 167,2 966,9
Dividends paid (390,9) (319,2)
Net cash inflow from operating activities 776,3 647,7
Net cash inflow/(outflow) from investing
activities 31,1 (4 600,0)
Net cash inflow/(outflow) before financing
Activities 807,4 (3 952,3)
Net cash (outflow)/inflow from financing
Activities (125,7) 3 004,7
Net increase/(decrease) in cash and cash
Equivalents 681,7 (947,6)
* Pro-forma-excluding the unbundled Agri-Poultry interests
GROUP BALANCE SHEET
As at
30 September
2001 2000
Rm Rm
ASSETS
Non-current assets 3 570,9 3 267,7
Property,plant & equipment 1 492,6 1 551,6
Goodwill 30,9
Investments 2 047,4 1 716,1
Current assets 6 083,0 5 080,8
Inventories 1 610,5 1 580,2
Accounts receivable 2 524,1 2 215,1
Bank and cash resources 1 948,4 1 285,5
TOTAL ASSETS 9 653,9 8 348,5
EQUITY AND LIABILITIES
Capital and reserves 1 678,6 637,4
Minority interest 102,1 119,1
Total non-current liabilities 2 855,7 3 104,2
Deferred tax liability 55,9 41,9
Long term borrowings 2 799,8 3 062,3
Total current liabilities 5 017,5 4 487,8
Short term liabilities 1 223,3 1 113,5
Accounts payable including
shareholders for dividend 3 794,2 3 374,3
TOTAL EQUITY AND LIABILITIES 9 653,9 8 348,5
* Pro-forma-excluding the unbundled Agri-Poultry interests
Group statement of changes in equity
Share Non-
capital and distributable Retained
Notes premium reserves income total
Rm Rm Rm Rm
Balance at
30 September 2000
(Pro forma) 652,2 287,7 (302,5) 637,4
Adjustment to
opening balance 1.2 84,8 84,8
652,2 287,7 (217,7) 722,2
Shares issued 12,4 12,4
Foreign currency
translation reserve
movement 44,5 44,5
Transfers between reserves 34,5 (34,5) 0,0
Deferred surplus on revaluation
of financial instruments 5,6 5,6
Movements on associates
not taken to income 20,9 20,9
Prior year goodwill
written off - now realized 238,1 238,1
Income attributable to
ordinary shareholders 988,3 988,3
Dividends on ordinary shares (353,4) (353,4)
Balance at 30 September 2001 664,6 393,2 620,8 1 678,6
Segmental analysis
2001 2000* Change
Rm % Rm % %
Revenue
- continuing operations
Food Brands 8 512,1 52 8 039,2 54 6
Dry Groceries 6 741,4 41 6 504,8 44 4
- Cereals & Beverages 4 149,6 25 4 137,9 28 0
- Culinary 1 799,0 11 1 641,4 11 10
- Confectionery 792,8 5 725,5 5 9
Perishables 1 770,7 11 1 534,4 10 15
- Fishing 1 430,0 9 1 222,3 8 17
- Dairy 340,7 2 312,1 2 9
Healthcare 1 868,5 11 1 700,5 11 10
- Pharmaceutical 863,1 5 813,4 5 6
- Consumer 561,6 3 490,4 3 15
- Critical Care & other 443,8 3 396,7 3 12
Spar 7 075,4 43 6 028,5 41 17
Other 137,3 1 6,8
17 593,3 107 15 775,0 106 12
Intragroup Revenue (1 130,0) (7) (946,8) (6)
16 463,3 100 14 828,2 100 11
Operating income
- continuing operations
Food Brands 813,9 48 611,1 42 33
Dry Groceries 547,6 32 402,8 28 36
- Cereals & Beverages 298,6 18 200,6 14 49
- Culinary 173,4 10 139,0 10 25
- Confectionery 75,6 4 63,2 4 20
Perishables 266,3 16 208,3 14 28
- Fishing 241,3 14 186,5 13 29
- Dairy 25,0 2 21,8 1 15
Healthcare 661,0 39 601,4 41 10
- Pharmaceutical 412,2 24 387,2 26 6
- Consumer 126,0 8 99,9 7 26
- Critical Care & other 122,8 7 114,3 8 7
Spar 239,9 14 203,5 14 18
Other (25,4) (1) 46,4 3
1 689,4 100 1 462,4 100 16
* Pro forma - excluding the unbundled Agri-Poultry interests
REVIEW OF OPERATIONS
Tiger Brands achieved a pleasing result for the year ended 30 September 2001
increasing headline earnings per share by 13% in a highly challenging
market. Headline earnings from continuing operations reflected growth of
16%. The results were favourably influenced by a strong second half
performance which benefited from further efficiency gains and the inclusion
of an additional week's trading in Food Brands and Spar. After eliminating
the effect of the additional week, the growth in headline earnings per share
reduces to 10%.
As part of the re-focusing by Tiger on its core brands, the Agri-Poultry
interests were unbundled during the year into a separately listed company
called Astral Foods Limited. The effective date of the unbundling was 1
October 2000. For comparative purposes the prior year figures have been
restated to exclude the Agri-Poultry results in order to provide financial
information which is relevant for the company after the unbundling.
As a consequence of the refocusing on its core activities, a number of
disposals took place during the year. These disposals included the company's
interest in Lagap Pharmaceuticals - the UK based generics wholesaler, the
49.9% interest in Pets Products (Pty) Ltd and the 30% interest in Jumbo Cash
& Carry (Pty) Ltd. Subject to the approval of the Competition authorities,
the company has sold to Nestl South Africa its 50% interest in Dairymaid-
Nestl (Pty) Ltd.
As reported at the half year, Tiger Brands is involved in a major change
process aimed at the achievement of profitable top-line growth through the
creation of a demand-driven synergised business. The process has as its
objective the generation of increased demand for the company's wide range of
branded Food and Healthcare products. The initial steps of this programme
were successfully completed during the year under review. This includes the
creation of a new business framework in terms of which the businesses are
being restructured according to newly defined consumer categories. The major
benefits of the programme will only be realised from the 2003 financial
year.
Results
Total turnover and operating income increased by 4% and 11% respectively.
However, turnover and operating income from continuing operations rose by
11% and 16% respectively, with the resultant operating margin improving to
10.3% (9.9%). Profit before tax and abnormal items increased at a lower rate
of 7% as a result of a 25% increase in net financing costs. The higher
interest costs are due to the acquisition of the full ownership of Adcock
Ingram during December 1999. At the headline earnings level, the adverse
interest effect is offset by the lower share of profit attributable to
outside shareholders.
Notwithstanding the unbundling of the Agri-Poultry interests, the balance
sheet was significantly strengthened during the year with net borrowings
reducing by R962 million and an amount of R779 million being added to
ordinary shareholders funds. This includes a recovery of goodwill of R238
million written off in the previous year, relating to the disposal of Lagap
Pharmaceuticals.
Net cash flow from operating activities showed an increase of 20%.
Food Brands
Including the benefit of an additional week's trading in 2001, Food Brands
achieved an excellent 33% increase in operating income on a turnover growth
of 6%. This strong result has been achieved by way of a general improvement
in performance across all the Food Brands operations. Good contributions
have been made through the turnaround in profitability in the Maize Meal and
Bakery operations. The rationalisation of the Bakery interests during the
year has resulted in the closure of a number of unprofitable bakeries.
Bakeries achieved a satisfactory profit for the year as a whole, after
recording a loss in the first six months. Maize Meal benefited from very
favourable raw material input prices.
The Cereals and Beverages business reflected a good improvement in operating
income of 49%. The improved performances in the Maize Meal and Sorghum Malt
categories that were noted at the half-year continued for the balance of the
year. The Rice category significantly improved its performance in the second
half of the year although volumes were marginally down on the previous year.
The Pasta category was positively affected by lower durum wheat prices and
improved volume growth.
The Culinary business, which comprises the former Langeberg operations,
Colman Foods and the Edible Oil and Margarine interests, reflected an
operating income growth of 25% on turnover growth of 10%. This result arose
primarily from improved operating efficiencies, higher export earnings as a
result of the decline in the value of the Rand and synergies achieved from
rationalisation.
The Confectionery business performed well with a 20% increase in operating
income. Particular focus was given to product innovation which was a
significant driver in the 9% turnover increase.
The Perishable businesses, comprising the company's fishing operations (73%
held Sea Harvest and 40% held Oceana) together with DairyBelle, improved
operating income by 28% on a turnover increase of 15%. The disposal of the
50% interest in Dairymaid-Nestl referred to above, is effective from 1
April 2001.
The Cheese and Butter category performed satisfactorily despite pressure on
cheese volumes.
Separately listed Oceana increased headline earnings by 20% with operating
profit improving by 24%. This result was a consequence of good contributions
from fish meal and oil, the Lucky Star brand, the lobster operations and
Commercial Cold Storage.
Sea Harvest achieved a strong operating profit growth with export earnings
impacted by the favourable Rand/Dollar exchange rate. However, hake sales
were negatively affected by below average catch rates in South Africa.
Healthcare Brands
Healthcare Brands achieved a 10% increase in both revenue and operating
income from continuing operations, during a period of re-investment and
positioning for growth. A strong performance by the Consumer business was
partly offset by modest profit growth at Pharmaceuticals and Critical Care.
The Pharmaceutical business improved performance in the second half of the
year after a disappointing first half. This improvement was largely due to
the benefits arising from increased investment in major brands such as
Corenza C. Growth continued to be hampered by the lack of new products,
although a number of new products have recently been launched. The full
benefits of the new product development programme will be evident from the
2003/2004 financial years.
A very good result was achieved by the Consumer business with a 15% growth
in revenue giving rise to a 26% increase in operating income. This
performance was driven by strong growth in core brands such as Panado,
Ingrams Camphor Cream and Compral that resulted from a more focused
marketing spend. Increased operational efficiencies also contributed to the
improved results.
The Critical Care business was adversely affected by the loss of a tender
for the supply of intravenous solutions. This was offset by growth in new
business which includes diagnostics, renal pharmaceuticals and hospital
disposable products.
Spar
The Spar business continued its strong performance reflecting a turnover
increase of 17% with an operating income growth of 18%.
During the year, Spar further increased its share of the retail food market,
whilst a total of 51 stores were opened or converted to the Spar format
compared to 43 in the previous year.
Associates
Income from Associates improved by 22% compared to the previous year. This
was influenced by a substantial improvement in the performance of ConAgra
Malt which benefited from lower interest rates, increased operational
efficiencies and better raw material procurement. Chilean based Empresas
Carozzi made a good contribution following its successful acquisition of
confectionery manufacturer Ambrosoli.
The contribution from Enterprise Foods was below that of last year as a
result of the profits being fully taxed this year following the utilisation
of its remaining tax loss in the prior year. The results of Jumbo Cash &
Carry have been equity accounted up to 1 April 2001, being the effective
date of sale.
STRATE
Tiger Brands has been selected by the JSE Securities Exchange South Africa
("JSE") to transfer its issued share capital to the electronic STRATE
environment effective from 5 November 2001. In terms of the JSE's revised
listing requirements, the Tiger Brands move to STRATE is obligatory and will
result in participation in a sophisticated settlement process which equates
to international best practice.
The three significant dates in respect of the move to STRATE are:
5 November 2001 - Dematerialisation commenced;
26 November 2001 - Electronic trading commences;
3 December 2001 - Electronic settlement commences.
If you require further information regarding STRATE, they may be contacted
at +27 (11) 520-7700 or at liaisondesk@strate.co.za.
Dividend
The company has declared a final dividend of 145 cents per share. This
brings the total dividend for the year to 213 cents per share, an increase
of 11% over the pro forma dividend of 192.1 cents per share in the previous
year.
Prospects
The Food Brands category management programme is expected to have a positive
impact on top-line growth in the year ahead. Cost savings generated by the
programme, together with cost reductions from other initiatives underway
(which are mainly focused in the area of supply chain logistics), will
initially be re-invested in intellectual capital within market research,
brand and customer management, and research and development. As a result,
the benefits of the restructuring are only expected to have a meaningful
impact on the results from 2003 onwards.
In Healthcare Brands, the Pharmaceutical business is not expected to show a
meaningful improvement in performance until 2003, when it is anticipated
that a significant number of new products will be introduced to the market.
Spar has a number of initiatives underway aimed at driving top-line growth,
which include further store refurbishments.
It is important to note that the results in 2001 included an additional
week's trading at Food Brands and Spar, which will not occur again in 2002.
In addition, recent raw material price increases will put significant
pressure on maize meal and flour margins in the year ahead.
It is expected that in the 2002 financial year, Tiger Brands will achieve a
more modest rate of real growth in headline earnings per share.
By order of the Board
R A WILLIAMS N DENNIS
Chairman Chief Executive Officer
Website address: http://www.tigerbrands.com
Directors
Messrs R A Williams (Chairman), N Dennis (Managing Director) (British)
B H Adams, D D B Band, B P Connellan, D E Cooper, M H Franklin
J H McBain (British), A C Nissen, M C Norris, I B Skosana, R V Smither
J L van den Berg, C F H Vaux
Company secretary
I W M Isdale
Registered office
85 Bute Lane, Sandown
Sandton, South Africa
Postal address:
PO Box 78056
Sandton, 2146, South Africa
London office
St James Corporate
Services Limited
6 St James's Place
London
SW1A 1NP
Share transfer secretaries
South Africa:
Mercantile Registrars Limited
11 Diagonal Street
Johannesburg
2001
Postal address:
PO Box 1053, Johannesburg, 2000
United Kingdom:
Computershare Services plc, PO Box 82,
Caxton House
Redcliffe Way, Bristol, BS99 7NH
