| Thu 16 May 2002, 0:00 | | Hunt Leuchars & Hepburn Holdings: Audited Financia |
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Hunt Leuchars & Hepburn Holdings: Audited Financial Results
HUNT LEUCHARS & HEPBURN HOLDINGS LIMITED
("HL&H")
Registration number 1924/001164/06
JSE Share code: HLH ISIN: ZAE000003299
JSE Share code: HLHP ISIN: ZAE000011441
AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 31 MARCH 2002
HIGHLIGHTS
Revenue up 12%
Headline earnings up 39%
Operating profit up 32%
Diluted headline earnings per share up 28%
Consummation of the Unilever/Robertsons transaction
INCOME STATEMENTS
12 Months 12 Months
March March
(Rms) 2002 2001
Revenue 3 353,3 2 996,9
Operating profit 440,9 334,7
Exceptional items (2,1) 5,1
Profit before interest and taxation 438,8 339,8
Interest received 18,5 14,8
Interest paid (46,5) (53,3)
Share of loss of associates (0,4) (0,1)
Profit before taxation 410,4 301,2
Taxation 147,2 89,5
Profit after taxation 263,2 211,7
Preference dividends (52,8) (52,8)
Minorities (10,4) (6,8)
Net profit 200,0 152,1
SEGMENTAL REPORTS
12 Months 12 Months
March March
(Rms) 2002 2001
Revenue
Food and homecare products 2 132,1 1 940,1
Sugar, citrus and tea 1 221,2 1 056,8
3 353,3 2 996,9
Operating profit
Food and homecare products 281,6 249,0
Sugar, citrus and tea 166,4 92,6
Corporate (7,1) (6,9)
440,9 334,7
BALANCE SHEETS
12 Months 12 Months
March March
(Rms) 2002 2001
Assets:
Property, plant, vehicles, equipment,
intangibles and plantations 1 530,8 1 485,7
Associate companies and investments 14,9 9,9
Current assets 1 318,7 1 181,3
Total assets 2 864,4 2 676,9
Equity and liabilities:
Ordinary share capital 423,6 421,9
Non-distributable reserves 481,7 320,6
Retained earnings 860,9 732,2
Convertible debentures and loan accounts 40,5 40,5
Convertible preference share capital 166,8 166,8
Total shareholders` equity 1 973,5 1 682,0
Minority interest 21,3 15,3
Interest bearing debt 143,5 299,5
Non-interest bearing liabilities 726,1 680,1
Total equity and liabilities 2 864,4 2 676,9
Net asset value per ordinary share (cents) 804,0 671,6
STATEMENTS OF CHANGES IN EQUITY
Ordinary Non-
share distributable Retained
(Rms) capital reserves earnings
Balances at 1 Apr 2001 421,9 320,6 732,2
Issue of share capital 1,7
Share of joint venture profits 55,7 (55,7)
Foreign currency translation 105,8
Share of associate
companies` loss (0,4) 0,4
Net profit 200,0
Dividends paid (16,0)
Balances at 31 March 2002 423,6 481,7 860,9
Balances at 1 April 2000 420,0 243,8 621,4
Prior year adjustments (3,2) (1,7)
Balances at 1 April 2000-restated 420,0 240,6 619,7
Issue of share capital 1,9
Share of joint venture profits 23,5 (23,5)
Foreign currency translation 56,3
Share of associate
companies` loss (0,1) 0,1
Dividends paid (15,9)
Other 0,3 (0,3)
Net profit 152,1
Balances at 31 March 2001 421,9 320,6 732,2
STATEMENTS OF CHANGES IN EQUITY
Preference
share
(Rms) Debentures capital Total
Balances at 1 Apr 2001 40,5 166,8 1 682,0
Issue of share capital 1,7
Share of joint venture profits
Foreign currency translation 105,8
Share of associate
companies` loss
Net profit 200,0
Dividends paid (16,0)
Balances at 31 March 2002 40,5 166,8 1 973,5
Balances at 1 April 2000 40,5 166,8 1 492,5
Prior year adjustments (4,9)
Balances at 1 April 2000-restated 40,5 166,8 1 487,6
Issue of share capital 1,9
Share of joint venture profits
Foreign currency translation 56,3
Share of associate
companies` loss
Dividends paid (15,9)
Other
Net profit 152,1
Balances at 31 March 2001 40,5 166,8 1 682,0
CASH FLOW STATEMENTS
March March
(Rms) 2002 2001
Net cash inflow from operating activities 387,9 189,7
Net cash outflow from investing activities (114,2) (105,3)
Net cash outflow from financing activities (134,5) (4,8)
Net increase in cash and cash equivalents 139,2 79,6
HEADLINE EARNINGS AND SEGMENTAL ANALYSIS
March March
(Rms) 2002 2001
Net profit 200,0 152,1
Headline adjustments:
Exceptional items: 2,1 (5,1)
Loss on conversion of TSB debentures 17,1
Release of provision no longer required (15,0)
Expenses related to the TSB/Tongaat-Hulett
merger negotiations 4,3
Profit on disposal of Israeli
distribution centre (9,4)
Profit on disposal of property,
plant, equipment,intangibles and vehicles (2,0) (1,9)
Investment written-off 1,0
Headline earnings 201,1 145,1
Dilution adjustments:
Interest on debentures, after taxation 2,4 2,4
Preference dividends 52,8 52,8
Headline earnings - diluted 256,3 200,3
Segmental contribution:
Robertsons 181,8 166,0
TSB 77,2 33,9
Corporate (2,7) 0,4
256,3 200,3
STATISTICS AND SUPPLEMENTARY INFORMATION
March March
2002 2001
Per share information
Weighted average number of
ordinary shares (000`s) 222 062 221 283
- diluted (000`s) 352 422 351 642
Basic earnings per ordinary
share (cents) 90,1 68,7
- diluted (cents) 72,4 59,0
Headline earnings per ordinary
share (cents) 90,6 65,6
- diluted (cents) 72,7 57,0
Supplementary information (Rms)
Depreciation 138,9 120,8
Capital expenditure 116,7 132,9
Capital commitments
- Contracted 20,4 20,6
- Authorised but not contracted 49,3 63,1
Dividends received 0,2 0,2
Operating lease commitments
- following year 29,4 23,3
- thereafter 192,3 64,0
Contingent liabilities 8,4 15,9
Investments and associate companies
- Unlisted: Directors` valuation 15,2 11,8
COMMENTS
ACCOUNTING POLICIES
The accounting policies in respect of the financial year ended 31 March
2001, other than indicated below, have been consistently applied to the
results for the year ended 31 March 2002. These policies conform with South
African Statements of Generally Accepted Accounting Practices.
Change in accounting policy
In compliance with AC116 (revised) Employee Benefits and AC107 Events
After Balance Sheet Date, respectively, the Group:
now provides comprehensively for all post-retirement medical benefits,
and
accounts for distributions in the period the distribution is declared.
Comparative figures have been restated and the effect was a net reduction
of R1,7 million to the retained earnings and R3,2 million to the non-
distributable reserves at 31 March 2000. The net impact on the results for
the years ended 31 March 2002 and 2001 was a reduction of net profit of R3,2
million and R0,9 million, respectively.
FINANCIAL REVIEW
Results
TSB increased its revenue by 16% to R1 221,2 million for the year. World
sugar prices were somewhat better than the previous year and sales value was
further enhanced by the Rand`s depreciation. Robertsons revenue increased to
R2 132,1 million, an improvement of 10% over the previous year. Both Foods
and Homecare operations contributed to this growth with Homecare enjoying an
exceptional insecticide season. Israel`s revenue showed some growth which
was enhanced due to the depreciation of the Rand.Group revenue thus
increased by 12%.
TSB`s margins improved considerably during the year, due to the factors
mentioned above, but also due to ongoing efficiencies in both sugar and
citrus. Robertsons` margins were marginally higher than the previous year`s,
despite being lower in Israel due to the difficult trading conditions there.
This contributed to a growth in Group operating profit of 32%.
Net financing costs reduced by R10,5 million over 2001 due to lower
interest rates as well as reduced core debt resulting from positive cash
flows. The resulting profit after interest but before tax improved by 36%.
This increase was somewhat diluted with profit after tax increasing by
24%.
The main reason was higher effective tax rates due to deferred tax charges
in TSB on its Komati mill as well as higher tax rates prevailing in Israel
and flowing through to Robertsons.
The Group`s diluted headline earnings (before preference dividends and
debenture interest) amounted to R256,3 million, an increase of 28% over the
R200,3 million achieved last year. The contribution from Robertsons was
R181,8 million, an increase of 10%, achieved mainly from Foods and Homecare
and marginally offset by a nevertheless commendable performance in Israel
under difficult circumstances. TSB`s headline earnings increased to R77,2
million from the R33,9 million achieved in the previous year. Better world
sugar prices and a turnaround in the citrus performance contributed largely
to this improvement. Group diluted headline earnings per share of 72,7 cents
compares to 57,0 cents achieved last year, an increase of 28%.
As a result of the above, the Group reports an increase in headline
earnings of 39% to R201,1 million for the year to 31 March 2002.
Exceptional items
A loss of R17,1 million was incurred on the conversion of debentures in
TSB. This conversion is beneficial to the company due to the lower interest
rates prevailing. A warranty provision of R15 million, raised in respect of
a previous transaction in a prior year, has now been released as it is no
longer required.
Balance sheet
The balance sheet at 31 March 2002 reflects the proportionate
consolidation of the Bestfoods Robertsons joint venture.
As a result of generating R387,9 million cash from operating activities,
compared to R189,7 million last year, the Group has sufficient cash
available to eliminate interest bearing borrowings resulting in a positive
cash to equity ratio of 17% (2001 - 2%), after taking account of cash
resources on hand of R482,6 million (2001 - R335,3 million).
DIVIDENDS
Preference dividend No 11
The board resolved to declare a cash dividend of 21,7 cents per share in
respect of the period from 1 October 2001 to 31 March 2002 payable to
holders of 7% compulsorily convertible cumulative preference shares
("preference shares"). In accordance with the settlement procedures of
STRATE, the last day to trade "cum" the dividend is Friday, 17 May 2002, the
preference shares commence trading "ex" the dividend on Monday, 20 May 2002
and the record date is Friday, 24 May 2002.
Holders of certificated preference shares may not
dematerialise/rematerialise their shares from Monday, 13 May 2002 to Friday,
24 May 2002, both days inclusive. The dividend will be paid on Monday, 27
May 2002.
Ordinary dividend No 39
Notice is hereby given that the board has resolved to declare a final
dividend of 7,0 cents per share payable to holders of ordinary shares. In
accordance with the settlement procedures of STRATE, the last day to trade
"cum" the dividend is Friday, 31 May 2002, the ordinary shares will commence
trading "ex" the dividend on Monday, 3 June 2002 and the record date is
Friday, 7 June 2002.
Holders of certificated ordinary shares may not
dematerialise/rematerialise their shares from Monday, 27 May 2002 to Friday,
7 June 2002, both days inclusive.
The dividend will be paid on Monday, 10 June 2002.
STRATE
During the year the board implemented the Issuer-Sponsored Nominee
programme to assist shareholders to dematerialise existing certificated
shares. The company`s shares commenced trading on the JSE Securities
Exchange South Africa ("JSE") in uncertificated form on Monday, 3 September
2001 with the first electronic settlement under STRATE occurring on Monday,
10 September 2001.
RESTRUCTURE OF BESTFOODS ROBERTSONS JOINT VENTURE
On 1 July 1998, Robertsons and Bestfoods Europe entered into a joint
venture agreement incorporating the food interests and certain resources of
Robertsons and certain African and Israeli businesses of Bestfoods Europe,
to manufacture and market a range of food products predominantly in Southern
Africa and Israel as well as other African countries.
On 4 October 2000 Unilever formally completed the acquisition of the
worldwide interests of Bestfoods, of which Bestfoods Europe was a wholly-
owned subsidiary. As a consequence of this transaction, the parties have
agreed to restructure the existing Bestfoods Robertsons JV and their
respective food businesses in the territory.
All the conditions required to make this transaction effective have been
met and the Unilever Bestfoods Robertsons venture was established in which
Robertsons holds 41%.
In granting their approval, the South African Competition authorities
required the divestiture by the Unilever Bestfoods Robertsons venture of the
following:
* the "Oxo" brand name;
* the "Royco" brand name, including selected sub-brand names and ranges;
and
* the "Quick Soup" and "Oodles of Noodles" sub-brands from the "Knorr"
stable.
Excluded from the aforementioned divestiture are the "Royco" sub-brands
"Cup-a-Soup", "Cup-a-Snack", "Mates" and "Pasta & Sauce".
The transaction is effective from 1 April 2002.
Robertsons Homecare business is excluded from the above transaction.
However, given the above restructure, Robertsons Holdings is reviewing the
strategic options for this business.
PROSPECTS
TSB has achieved sustainable efficiencies in the past year and has
competitive advantages in its industry. However, the world sugar price,
which has a major impact on industry profitability, is at a low level
currently. Given some recovery in the future TSB expects growth in earnings
for 2003.
The Robertsons/Unilever transaction is effective from 1 April 2002. Growth
and cost synergies will be achieved by combining technological resources
throughout the region and the businesses within each country, thereby
positively impacting future earnings.
The transaction will result in Robertsons accounting for an exceptional
profit of approximately R550 million, against which will be incurred its
proportionate share of exceptional implementation and structuring costs
amounting to approximately R50 million. The businesses within Israel and
South Africa will be integrated and restructured in order to achieve
synergies that will reach their full potential within three years. In order
to deliver these benefits, integration and reorganisation expenses (of which
Robertsons` proportionate share is approximately R80 million) will be
incurred mostly within the first six months of the financial year, with the
non-recurring negative impact on the company`s profitability during that
period. The payback on these costs is expected to be between two and three
years.
Robertsons` share of the new venture re-organisation costs will materially
impact on reported earnings of HL&H, especially in the first half-year, but
excluding these non-recurring items, the Group is expected to show further
growth in earnings in the year ahead.
On behalf of the board
B H de Klerk
Company Secretary
16 May 2002
Enquiries regarding this report may be directed to Mr N Phillips at
telephone number (031) 561-4690.
Registered office: Hunt Leuchars & Hepburn Holdings Limited, 1st Floor,
Kohler House, 4 Pybus Road, Wierda Valley, Sandton
2196
Transfer secretaries: Computershare Investor Services Limited, 2nd Floor,
Edura.
41 Fox Street, Johannesburg 2001
Date: 16/05/2002 05:11:00 PM Produced by the SENS Department
