| Wed 28 Nov 2001, 0:00 | | Remgro Limited - Interim Report For The Six Months |
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Interim Report For the six months ended 30 September 2001
Increase in headline earnings per share: +28.5%
Increase in interim dividend per share: +30.4%
Abridged Consolidated Balance Sheet
Unaudited Audited
30 September 31 March
2001 2000 2001
R million R million R million
Assets
Non-current assets
Property, plant and equipment 2 058 2 035 2 033
Goodwill and trade marks 2 760 62 3 493
Investments - Associated companies 14 336 13 633 12 523
Investments - Other 115 147 115
Loans 24 12 10
Deferred taxation 9 - 9
19 302 15 889 18 183
Current assets 4 089 3 239 3 395
Cash and cash equivalents 2 195 1 396 1 810
Other current assets 1 894 1 843 1 585
Total assets 23 391 19 128 21 578
Equity and liabilities
Capital and reserves
Ordinary shareholders' interest 21 149 16 233 19 419
Minority interest 839 737 796
Total shareholders' equity 21 988 16 970 20 215
Non-current liabilities 237 409 263
Long-term interest-bearing loans 159 311 211
Deferred taxation 78 98 52
Current liabilities 1 166 1 749 1 100
Short-term interest-bearing loans 113 102 89
Other current liabilities 1 053 1 647 1 011
Total equity and liabilities 23 391 19 128 21 578
Net asset value - per share (Rand)
At book value R40.52 R31.10 R37.20
Adjusted for market value/directors'
Valuation* of investments and
listed subsidiary companies R76.66 R56.56 R64.32
(*Refer to note under investments
in additional information)
Abridged consolidated statement of changes in equity
Unaudited Audited
Six months ended Year ended
30 September 31 March
2001 2000 2001
R million R million R million
Balance at 1 April 19 536 12 635 12 635
Prior year adjustments (117) (196) (196)
Adjusted balance at 1 April 19 419 12 439 12 439
Net profit 1 631 3 718 6 590
Dividends paid (553) - (292)
Exchange rate adjustments 774 174 892
Other (122) (98) (210)
Interest of own members 21 149 16 233 19 419
Abridged Consolidated income statement
Unaudited Audited
Six months ended Year ended
30 September 31 March
2001 2000 2001
R million R million R million
Revenue 4 262 3 316 7 358
Operating profit before depreciation 359 316 741
Depreciation (93) (90) (173)
Finance costs (27) (55) (67)
Profit from operations 239 171 501
Share of after-tax profit of associated
companies 1 781 1 384 2 919
Amortisation of goodwill (191) (72) (159)
Exceptional items (138) 2 252 3 422
1 691 3 735 6 683
Taxation (13) - 14
Profit after taxation 1 678 3 735 6 697
Minority interest (47) (17) (107)
Net profit 1 631 3 718 6 590
Reconciliation of headline earnings:
Basic earnings - Net profit 1 631 3 718 6 590
Plus/(minus) - attributable to own
members:
- Exceptional items 94 (2 303) (3 541)
- Amortisation of goodwill 191 72 159
- Net surplus, after taxation, on
disposal of property, plant and
equipment (8) (2) (6)
- Impairment of assets - - 9
Headline earnings 1 908 1 485 3 211
Segmental analysis - Headline earnings
Trade mark interests 966 767 1 599
Mining interests 137 429 823
Industrial interests 203 98 380
Financial services 484 109 238
Corporate finance and other interests 118 82 171
1 908 1 485 3 211
Earnings and dividends per share
30 September 31 March
2001 2000 2001
Cents Cents Cents
Headline earnings 365.5 284.5 615.1
- Diluted 364.9 284.5 614.7
Basic earnings 312.5 712.3 1 262.5
- Diluted 312.0 712.3 1 261.5
Dividends 73.00 56.00 162.00
- Interim 73.00 56.00 56.00
- Final 106.00
Abridged cash flow statement
Unaudited Audited
Six months ended Year ended
30 September 31 March
2001 2000 2001
R million R million R million
Cash generated from/(utilised in)
operations (60) (496) 442
Dividends received 1 161 626 1 155
Dividends paid (564) (10) (303)
Taxation paid (59) (48) (116)
Net cash inflow from operating
activities 478 72 1 178
Investing activities (52) 223 356
Financing and other activities (138) 102 (631)
Net increase in cash and cash
equivalents 288 397 903
Cash and cash equivalents at the
beginning of the period 1 800 897 897
Cash and cash equivalents at
the end of the period 2 088 1 294 1 800
Cash and cash equivalents -
per balance sheet 2 195 1 396 1 810
Bank overdraft (107) (102) (10)
Additional information
30 September 31 March
2001 2000 2001
Shares in issue
Ordinary shares of 1 cent
each 486 493 650 486 493 650 486 493 650
- B shares of 10 cents each 35 506 352 35 506 352 35 506 352
Total 522 000 002 522 000 002 522 000 002
- In determining headline and basic earnings per share the total number of
shares in issue was taken into account.
- In determining diluted headline and basic earnings per share the total
number of shares in issue was adjusted for the dilutive effect of the
Company's long-term share incentive scheme.
30 September 31 March
2001 2000 2001
R million R million R million
Listed investments
Associated
- Book value 6 283 5 520 5 123
- Market value 10 575 8 150 9 943
Other
- Book value 50 51 50
- Market value 145 128 131
Unlisted investments
Associated
- Book value 8 053 8 113 7 400
- Directors' valuation 23 118 16 762 18 442
Other
- Book value 65 95 65
- Directors' valuation 73 97 75
Note:
As in previous years, the directors' valuations of investments were done on
a conservative basis and to comply with statutory requirements and will
therefore not correspond with valuations as at 1 October 2001 for the
purpose of capital gains tax. Valuations for the purpose of capital gains
tax will be done in due course.
Additions to and replacement of
property, plant and equipment 95 154 176
Capital commitments 85 78 100
(Including amounts authorised, but
not yet contracted for)
Dividends received
Dividends included in operating profit 7 29 33
Dividends from associated companies
set-off against investments 1 003 580 1 482
Interest received
From unlisted investments and deposits 97 41 108
(Included in operating profit)
Exceptional items
Exceptional items of subsidiary
companies consist of the following:
Net capital surplus on the sale of
investments and businesses (3) 155 1 518
Other (3) (7) 5
(6) 148 1 523
Share of exceptional items of associated
companies (132) 2 104 1 899
Restructuring costs and
discontinuance of operations (136) (91) (273)
Capital surplus on redemption of
convertible preference shares in
British American Tobacco Plc (BAT) - 2 202 2 202
Other 4 (7) (30)
Total before taxation (138) 2 252 3 422
Taxation 43 41 120
Total after taxation (95) 2 293 3 542
Attributable to minorities (1) (10) 1
Attributable to own members (94) 2 303 3 541
Taxation
Profit from operations (56) (41) (106)
Exceptional items 43 41 120
(13) - 14
COMMENTS
1. ACCOUNTING POLICIES
The interim report is prepared mainly on the historical cost basis, is in
accordance with South African Statements of Generally Accepted Accounting
Practice and incorporates accounting policies which, with the exception of
accounting for investment properties, are consistent in all material
respects with those of the previous financial periods.
2. RESTATEMENT OF COMPARATIVE FIGURES
Rainbow Chicken Limited (Rainbow) has changed its accounting policy in
respect of investment properties to comply with Accounting Statement AC 135.
Effective 1 April 2001, land and buildings are accounted for on the
historical cost basis whereas previously they were revalued.
Remgro's comparative figures have been restated as follows:
Six months ended Year ended
30 September 2001 31 March 2001
R million R million
Balance sheet
Reduction in property, plant and
equipment 211 209
Reduction in ordinary shareholders'
interest 118 117
Reduction in minority interest 93 92
Income statement
The effect on headline earnings was not material, therefore
the comparative income statements have not been restated.
3. RESULTS
- Headline earnings per share
Headline earnings per share increased by 28.5% from 284.5 cents to 365.5
cents.
The contribution of the tobacco interests, which represented 49.7% (2000:
50.7%) of total headline earnings for the period under review, increased by
25.5% of which 14.2% was contributed by the weaker rand.
Mining interests' total contribution declined mainly as a result of the
exchange of the interests in Billiton Plc and Gold Fields Limited for
interests in FirstRand Limited (FirstRand) and RMB Holdings Limited (RMBH)
earlier this year. The contribution of Gencor Limited and Trans Hex Group
Limited (Trans Hex) respectively increased by 67.8% and decreased by 41.5%.
The contribution of industrial interests increased by 106.9% mainly as a
result of the good performance by Rainbow as well as better results from,
amongst others, Malbak Limited (Malbak) and Total South Africa (Proprietary)
Limited.
FirstRand's and RMBH's joint contribution to Remgro's headline earnings
amounted to R354.4 million. ABSA Group Limited and Medi-Clinic Corporation
Limited also continued their steady earnings growth with increases of
approximately 20%.
- Basic earnings per share
Basic earnings, after exceptional items and amortisation of goodwill,
decreased from 712.3 cents to 312.5 cents per share. This decrease was
mainly a result of the inclusion of an amount of R2 202 million in the
comparative half-year, which was Remgro's share of the non-recurring capital
surplus that arose on the redemption by R&R Holdings of one-half of the BAT
preference shares.
4. REVENUE
30 September 31 March
2001 2000 2001
R million R million R million
Revenue, excluding dividends
and interest 3 147 2 645 5 735
Dividends and interest 1 115 671 1 623
Total revenue 4 262 3 316 7 358
Due to the nature and composition of the Group, segmental information in
respect of revenue is not meaningful.
5. TOBACCO
Remgro's tobacco interests are represented by a one-third shareholding in
R&R Holdings, Luxembourg, (R&R). The other two-thirds are held by Compagnie
Financi re Richemont AG (Richemont).
In June 2000, R&R exercised its put option over one half of its holding of
BAT preference shares, reducing its effective interest in that company from
35.0% to 31.58% at that time. However, in terms of the Rembrandt Group
Limited restructuring during 2000, the non-tobacco assets of R&R, including
the proceeds of the aforementioned redemption, were transferred to R&V
Holdings Limited, Jersey (R&V) of which VenFin Limited (VenFin) holds one-
third and Richemont two-thirds. In R&R's results for the comparative six
months, the income attributable to the redeemed BAT preference shares and
other non-tobacco assets was allocated to R&V. In the period under review,
R&R has equity accounted its effective 31.53% interest in BAT for the full
six month period.
In line with the practice adopted in the prior year, R&R's share of BAT's
earnings for the six months to 30 September 2001 is based on BAT's results
for the nine month period to 30 September 2001, adjusted to eliminate the
results for the quarter to 31 March 2001, taking into account the
differences in accounting policies applied by the two companies. After
elimination of exceptional items and goodwill amortisation, R&R's
contribution to Remgro's headline earnings is as follows:
Six months to September
2001 2000
million million
R&R's headline earnings for the
six months ended 30 September 243 230
Less: Portion allocated to R&V Holdings
during the comparative period (11)
243 219
Remgro's 33.33%-share thereof 81 73
R million R million
Converted at the average /R rate
of 11.7415 (2000 : 10.4140) 949 756
BAT performed well in the nine months to the end of September, which is the
period it has most recently reported on. Its adjusted earnings per share on
a fully diluted basis, after elimination of exceptional items and goodwill
amortisation, increased by 8%. Sales volumes, at 602 billion cigarettes,
were slightly above that of the comparative period, with international
brands increasing by more than 2%. BAT's key global brands achieved an
overall volume growth of 9% in the nine month period to 30 September 2001.
Each of BAT's operating regions contributed to the good overall performance.
Profits were well ahead in all the main America-Pacific markets and,
although market share in the US domestic business was down on the
comparative nine months, there are now some encouraging trends in the market
place.
In Asia-Pacific, profit increased despite deteriorating overall economic
conditions in South-East Asia, while in Latin America profit benefited from
good performances in several markets, where market shares were generally
higher. In the Africa, Middle East and Central Asia region, excellent profit
growth was combined with slightly higher volumes.
The profit in Europe was also driven by volume growth, as the region
continues to build on the benefits of the merger with Rothmans
International. Volume increases reflected excellent growth in Eastern
Europe, offset by market size reductions in the Netherlands, Belgium and the
UK.
The Chairman of BAT, Martin Broughton, in the report to 30 September 2001,
commented "The terrorist attacks in the United States have had little
immediate impact on our businesses but they have added a further dimension
to the economic uncertainties that were already apparent. Looking to the
future, the Board is confident of British American Tobacco's continuing
ability to progress in bad times as well as good."
6. INVESTMENTS
The most important changes subsequent to the previous reporting date were as
follows:
Lenco Holdings Limited (Lenco)
On 28 May 2001, the shareholders of Lenco approved the unbundling of its
shareholding in Malbak. In terms of the unbundling, Lenco distributed 99.3%
of its shares in Malbak to its shareholders by way of a distribution in
specie.
Immediately thereafter Lenco (Proprietary) Limited, in which Remgro has a
75% interest, made an offer of 15 cents per share to all Lenco shareholders.
The listing of Lenco was terminated on 15 June 2001.
Malbak
As a result of the aforementioned Lenco transactions, Remgro's direct
interest in Malbak increased by 2.3% to 51.2%. Due to the negotiations
between Malbak and Nampak Limited (Nampak) referred to below and a possible
dilution of Remgro's effective interest, Malbak was not consolidated but, as
in the past, equity accounted for the period under review.
On 2 November 2001, Malbak and Nampak issued a joint cautionary statement in
which it was announced that the two companies have entered into negotiations
regarding a possible merger.
Trans Hex
On 13 November 2001, the shareholders of Trans Hex approved the issue of 16
million unsecured 13.5% participating compulsory convertible debentures to
Mvelaphanda Diamonds (Proprietary) Limited (Mvelaphanda). After converting
these debentures Mvelaphanda will have an interest of approximately 19.4% in
Trans Hex while Remgro's interest will be diluted from 42.2% to 35.4%.
Furthermore, Mvelaphanda has an option to acquire from Remgro 5 million
shares in Trans Hex, which will further dilute Remgro's interest to 30.4%.
Robertsons Holdings (Proprietary) Limited (Robertsons)
On 12 September 2001 it was announced that Robertsons and Unilever Plc
(Unilever) had agreed in principle to restructure their interests in the
existing joint venture between Robertsons and Bestfoods Europe. This
proposal is a direct result of Unilever's acquisition of Bestfoods' global
interests. The envisaged transaction is subject to a final agreement as well
as certain suspensive conditions of which the following are the most
important:
* approval of the transaction at a meeting of shareholders of Hunt Leuchars
& Hepburn Holdings Limited;
* approval by the relevant regulatory authorities, amongst which are the JSE
Securities Exchange South Africa, the South African Reserve Bank and the
competition authorities.
Directorate
Mr P K Harris was appointed as a non-executive director on 28 November 2001.
Secretary
On 28 November 2001, Mrs M Lubbe was appointed as Company Secretary in the
place of Mr JC Engelbrecht who has retired.
Strate
As fully explained in a circular to shareholders, dated 14 September 2001,
the listed ordinary shares of the Company were transferred to the STRATE
system on Monday, 12 November 2001.
Dividends
Notice is hereby given that an interim dividend of 73 cents per share has
been declared in respect of both the ordinary shares of one cent each and
the B shares of ten cents each, for the half year to 30 September 2001.
Dates of importance:
Last day to trade and to register transfers
of certificated securities in order to
participate in the interim divi Friday, 11 January 2002
Trading on or after this date will be ex
the interim dividend Monday, 14 January 2002
Record date Friday, 18 January 2002
Payment date Monday, 21 January 2002
On payment date, if so mandated, dividends due to holders of certificated
securities will either be transferred electronically to bank accounts, or
alternatively, cheques will be posted to their registered addresses.
Dividends in respect of dematerialised shareholdings will be paid through
the STRATE system.
Shareholders may not dematerialise or rematerialise their holdings of
ordinary shares between Monday, 7 January 2002 and Friday, 18 January 2002,
both days inclusive.
Signed on behalf of the Board of Directors.
Johann Rupert Thys Visser
Chairman Chief Executive Officer/
Deputy Chairman
Stellenbosch, 28 November 2001
Directorate and administration
Directors: Johann Rupert* (Chairman),
M H Visser (Deputy Chairman/Chief Executive Officer), P E Beyers*,
W E B hrmann, G D de Jager*, J W Dreyer*, P J Erasmus*, D M Falck,
E de la H Hertzog*, E Molobi*, J F Mouton*, J A Preller (Mrs), F Robertson*,
P G Steyn*, T van Wyk, P K Harris* (*Non-executive)
Secretary: M Lubbe (Mrs)
Listing: JSE Securities Exchange South Africa Sector: Diversified
Industrial
American Depository Receipt (ADR) Program:
Cusip number 75956M107
ADR to ordinary share 1:1
Depository:
The Bank of New York, 620 Avenue of the Americas, New York NY 10011
Business address and registered office:
Carpe Diem Offices, Quantum Street, Techno Park, Stellenbosch 7600
(PO Box 456, Stellenbosch 7599)
Transfer Secretaries:
Computershare Services Limited, 41 Fox Street, Johannesburg 2001
(PO Box 61051, Marshalltown 2107)
Auditors: PricewaterhouseCoopers Inc.
Sponsor: Rand Merchant Bank Corporate Finance
Website: www.remgro.com
