| Thu 13 May 2004, 17:01 | | GROUP RESULTS AND DIVIDEND DECLARATION |
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TIGER BRANDS LIMITED - GROUP RESULTS AND DIVIDEND DECLARATION
Tiger Brands Limited
(Registration number 1944/017881/06)
(Incorporated in the Republic of South Africa)
JSE Share code: TBS
ISIN: ZAE 000023560
GROUP RESULTS AND DIVIDEND DECLARATION
Highlights
* Headline earnings per share +28%
* Operating income from operating operations +38%
* Intention to unbundle Spar
The unaudited results for the six months ended 31 March 2004 are set out herein.
This report has been prepared using the same principles as contained in AC127 -
Interim Financial Reporting. The principles adopted herein are consistent, in
all material respects, with those applied in the most recently published annual
financial statements, except as disclosed in note 5, and comply with the
requirements of Statements of South African Generally Accepted Accounting
Practice.
GROUP BALANCE SHEET
Audited
Unaudited As at
As at 31 March 30 Sept
2004 2003 2003
Rm Rm Rm
ASSET
Non-current assets 4,836.3 4,571.4 4,562.9
Property, plant & equipment 1,695.8 1,500.8 1,631.4
Goodwill and other 712.0 377.0 454.7
intangibles
Investments 2,256.3 2,480.3 2,282.5
Deferred tax asset 172.2 213.3 194.3
Current assets 7,114.3 6,242.9 6,652.3
Inventories 2,558.1 2,497.1 2,315.0
Accounts receivable 3,516.1 3,109.9 3,312.2
Cash and cash equivalents 1,040.1 635.9 1,025.1
TOTAL ASSETS 11,950.6 10,814.3 11,215.2
EQUITY AND LIABILITIES
Capital and reserves 3,557.8 2,987.3 3,336.8
Share capital and premium 749.6 709.7 721.4
Non-distributable reserves 2,808.2 2,277.6 2,615.4
and accumulated profits
Minority interest 138.2 134.3 132.2
Total non-current liabilities 3,218.3 3,085.5 3,004.8
Deferred tax liability 450.6 338.8 373.3
Provision for post-retirement 419.0 383.7 399.9
medical aid
Long-term borrowings 2,348.7 2,363.0 2,231.6
Total current liabilities 5,036.3 4,607.2 4,741.4
Short-term borrowings 645.5 533.5 705.1
Taxation 190.6 185.2 350.7
Accounts payable 4,200.2 3,888.5 3,685.6
TOTAL EQUITY AND LIABILITIES 11,950.6 10,814.3 11,215.2
GROUP INCOME STATEMENT
Unaudited Audited
Six months ended Year ended
31 March 30 Sept
Notes 2004 2003 Change 2003
Rm Rm % Rm
Revenue 12,719.4 11,346.0 12 23,039.1
Continuing 12,566.7 11,153.9 13 22,708.1
operations
Discontinued 152.7 192.1 331.0
operations
Operating income 1 1,130.6 806.6 40 1,918.2
before
amortisation of
intangibles
Continuing 1,129.4 816.8 38 1,935.6
operations
Discontinued 1.2 (10.2) (17.4)
operations
Amortisation of 2 17.9 6.6 20.2
intangibles
Operating income 1,112.7 800.0 39 1,898.0
after amortisation
of intangibles
Income from 16.8 20.2 48.7
investments
Net financing (109.1) (102.5) (221.4)
costs
Profit before 1,020.4 717.7 42 1,725.3
taxation and
abnormal items
Abnormal items 3 (133.9) 2.3 16.1
Profit before 886.5 720.0 23 1,741.4
taxation
Income tax expense 333.2 229.7 548.9
Net profit after 553.3 490.3 13 1,192.5
taxation
Income from 4 11.5 29.3 (61) 92.7
associates
Minority interest (6.9) (17.6) (27.3)
Dividends on - - (0.1)
preference shares
Net profit for the 557.9 502.0 11 1,257.8
period
Number of ordinary 168,160 167,169 167,466
shares in issue
(000"s)
Weighted average 167,861 167,013 167,106
number of ordinary
shares on which
headline earnings
and basic earnings
per share are
based (000"s)
Headline earnings 419.7 327.6 28 777.0
per ordinary share
(cents)
Diluted headline 416.2 326.1 28 768.4
earnings per
ordinary share
(cents)
Basic earnings per 332.4 300.6 752.7
ordinary share
(cents)
Diluted basic 329.6 299.2 744.3
earnings per
ordinary share
(cents)
Dividends per 100.0 79.0 27 290.0
ordinary share
(cents)
Interim dividend 100.0 79.0 79.0
declared
Final dividend 211.0
declared
Reconciliation Between Net Profit And Headline Earnings
Rm Rm Rm
Net profit for the period 557.9 502.0 1,257.8
Adjusted for:
Losses on sale or discontinuation 9.0 - -
of operations, net
(Profit)/loss on sale of fixed (18.4) 3.8 (17.4)
assets, net of impairment charge
Net loss on sale of interest in - 2.2 10.5
subsidiaries and joint ventures
Impairment of investments 140.9 - -
Goodwill amortisation 13.6 3.7 11.4
Associates 1.5 35.5 37.4
Discontinuation of operations 1.2 35.0 35.0
Other 0.3 0.5 2.4
Other - - (1.3)
Headline earnings for the period 704.5 547.2 29 1,298,4
ABRIDGED CASH FLOW STATEMENT
Audited
Unaudited Year ended
Six months ended
31 March 30 Sept
2004 2003 2003
Rm Rm Rm
Cash operating profit 1,308.4 944.7 2,289.2
Working capital changes (0.6) (328.5) (372.8)
Net interest paid (109.1) (102.5) (221.4)
Dividends received 20.8 32.1 85.5
Taxation paid (417.4) (466.3) (606.9)
Cash available from operations 802.1 79.5 1,173.6
Dividends paid (358.4) (357.1) (500.4)
Net cash inflow/(outflow) from 443.7 (277.6) 673.2
operating activities
Net cash outflow from investing (536.3) (588.7) (1,186.9)
activities
Net cash outflow before financing (92.6) (866.3) (513.7)
activities
Net cash inflow/(outflow) from 123.8 (122.8) (69.1)
financing activities
Net increase/(decrease) in cash and 31.2 (989.1) (582.8)
cash equivalents including short
term borrowings regarded as cash
and cash equivalents
SEGMENTAL ANALYSIS
Unaudited Unaudited Audited
Six months Six months Year ended
ended ended
31 March 31 March ** 30 Sept **
2004 2003 Change 2003
Rm % Rm % % Rm %
Revenue -
continuing
operations
FMCG - 5,025.0 39 4,453.9 40 13 9,276.5 39
Domestic
Domestic 4,363.1 34 3,894.5 35 12 8,203.3 35
Food
Grains 2,179.4 17 2,378.7 21 (8) 4,740.1 20
- Milling 1,674.2 13 1,912.3 17 (12) 3,753.8 16
and baking
+
- Other 505.2 4 466.4 4 8 986.3 4
grains #
Groceries 752.8 6 643.1 6 17 1,337.4 6
Snacks & 457.6 4 443.9 4 3 865.3 4
Treats
Perishables 973.3 7 428.8 4 127 1,260.5 5
Consumer 661.9 5 559.4 5 18 1,073.2 4
Healthcare
OTC 144.0 1 125.0 1 15 271.9 1
Medicines
Personal 116.7 1 119.5 1 (2) 242.3 1
Babycare 139.2 1 115.9 1 20 226.5 1
Homecare 262.0 2 199.0 2 32 332.5 1
REGULATED 497.3 4 431.5 4 15 911.3 4
HEALTHCARE
Branded 338.3 3 313.9 3 8 639.5 3
Medicines
Generic 159.0 1 117.6 1 35 271.8 1
Medicines
HOSPITAL 328.9 2 293.3 2 12 617.2 3
PRODUCTS
EXPORTS 292.9 2 395.2 3 (26) 621.1 3
SPAR 6,073.6 47 5,074.5 43 20 10,121.1 44
FISHING 772.5 6 870.3 8 (11) 1,703.9 7
OTHER 0.0 0 1.6 0 0 2.5 0
12,990.2 100 11,520.3 100 13 23,253.6 100
Less: 423.5 366.4 545.5
Intragroup
revenue
12,566.7 11,153.9 13 22,708.1
Operating
Income -
continuing
operations*
FMCG - 554.1 49 305.7 37 81 886.3 46
Domestic
Domestic 421.8 38 199.7 24 111 666.9 34
Food
Grains 239.2 21 72.2 9 231 391.3 20
- Milling 149.2 13 21.1 3 607 259.6 13
and baking
+
- Other 90.0 8 51.1 6 76 131.7 7
grains #
Groceries 74.7 7 71.9 9 4 130.7 7
Snacks & 17.1 2 44.9 5 (62) 85.4 4
Treats
Perishables 90.8 8 10.7 1 749 59.5 3
Consumer 132.3 11 106.0 13 25 219.4 12
Healthcare
OTC 46.6 4 41.0 5 14 93.8 5
Medicines
Personal 23.7 2 23.3 3 2 52.5 3
Babycare 23.4 2 14.7 2 59 32.0 2
Homecare 38.6 3 27.0 3 43 41.1 2
REGULATED 209.7 18 186.0 23 13 389.4 20
HEALTHCARE
Branded 161.4 14 153.9 19 5 315.8 16
Medicines
Generic 48.3 4 32.1 4 50 73.6 4
Medicines
HOSPITAL 96.4 9 80.7 10 19 175.5 9
PRODUCTS
EXPORTS (18.4) (2) (38.7) (5) 52 (78.2) (4)
SPAR 215.5 20 178.1 22 21 346.4 18
FISHING 80.5 7 118.2 14 (32) 219.1 11
OTHER (8.4) (1) (13.2) (1) 36 (2.9) (0)
1,129.4 100 816.8 100 38 1,935.6 100
+ Comprised Maize milling, Wheat milling and baking, sorghum beverages and
malt based breakfast cereals
# Comprises Rice and oat based breakfast cereals
* Operating Income is stated before amortisation of intangible assets
** Reallocation between certain segments
OTHER GROUP SALIENT FEATURES
Unaudited Audited
Six months Year
ended ended
31 March 30 Sept
2004 2003 2003
Net worth per ordinary share (cents) 2,120 1,787 1,993
Net debt to equity (%) 52.9 72.4 55.1
Interest cover - net (times) 10.4 8.0 8.8
Current ratio (:1) 1.4 1.4 1.4
Capital expenditure (R million) 206.9 162.3 359.5
- expansion 128.0 81.2 164.7
- replacement 78.9 81.1 194.8
Capital commitments (R million) 101.5 82.7 232.8
- contracted 53.5 33.5 102.5
- approved 48.0 49.2 130.3
Capital commitments will be funded
from normal operating cash flows and
the utilisation of existing borrowing
facilities
Contingent liabilities (R million)
Guarantees and contingent 813.9 605.9 734.2
liabilities *
* R559.2 million (Sep 2003: R479.5
million) comprises contingencies in
respect of head leases entered into
by the Spar group for which they have
entered into equivalent sub-leases.
Carrying value of investments 2,256.3 2,480.3 2,282.5
(R million)
Listed 374.8 232.8 291.5
Unlisted 1,276.4 1,184.2 1,222.2
Associates 605.1 1,063.3 768.8
Fair valuation of investments 2,263.3 2,480.3 2,283.8
(R million)
Listed - market value 374.8 232.8 291.5
Unlisted - directors" valuation 1,276.4 1,184.2 1,222.2
Associates - directors" valuation 612.1 1,063.3 770.1
NOTES
Unaudited Audited
Six months Year
ended ended
31 March 30 Sept
2004 2003 2003
Rm Rm Rm
1. Operating income
Operating income before amortisation
of intangibles is reflected after
charging:
Cost of sales 9,609.6 8,750.7 17,507.1
Sales and distribution expenses 1,038.2 918.9 1,875.2
Marketing expenses 268.8 259.9 555.6
Other operating expenses 672.2 609.9 1,183.0
Depreciation (included in cost of 125.3 128.7 259.8
sales and other operating expenses)
2. Amortisation of intangibles
Goodwill 13.6 3.7 11.4
Trademarks and other intangible 4.3 2.9 8.8
assets
17.9 6.6 20.2
3. Abnormal Items
Net loss on discontinuation of (11.7) - -
operations
Profit on sale of land and buildings 24.8 4.5 26.6
net of impairment charge on
properties
Net loss on sale of interest in - (2.2) (10.5)
subsidiaries and joint ventures
Impairment of investments (142.2) - -
Other (4.8) - -
Abnormal (loss)/profit before (133.9) 2.3 16.1
taxation
Taxation 2.6 (0.9) 1.4
(131.3) 1.4 17.5
Outside shareholders" interest (2.2) 1.5 (0.2)
Abnormal (loss)/profit attributable (133.5) 2.9 17.3
to shareholders in Tiger Brands
Limited
4. Income from associates
Normal trading 12.7 64.3 129.2
Abnormal items (1.2) (35.0)* (36.5)
Discontinuation of operations (1.2) (35.0) (35.0)
Other - - (1.5)
11.5 29.3 92.7
* Previously disclosed under Abnormal Items.
5. Change In Accounting Policy
In terms of the JSE Listings Requirements, the Tiger Brands Share Purchase
Trust is now consolidated. The Trust does not hold any shares in Tiger
Brands Limited but holds a number of shares in Astral Foods Limited, which
were transferred to the Trust at the time of the unbundling of Astral Foods
in 2001 to meet the requirements of the Tiger Brands (1985) Share Option
Scheme. This change in accounting policy has not had an effect on earnings
in the current reporting period or in the prior year. The balance sheets as
at 31 March 2003 and 30 September 2003 have been restated to reflect the
shares in Astral Foods at their market value as well as the fair value of
the liability on respect of the Astral options granted.
STATEMENT OF CHANGES IN EQUITY
Share Non-
capital and distributable Accumulated
premium reserves profits Total
Rm Rm Rm Rm
Balance at 30 721.4 378.7 2,236.7 3,336.8
September 2003
Issue of share 28.2 28.2
capital and
premium
Fair value 44.1 44.1
adjustments -
investments
Foreign (20.7) (20.7)
currency
translation
reserve
movement
Transfers 14.4 (14.4) 0.0
between
reserves
Movements in (34.0) (34.0)
reserves of
associates
Net profit for 557.9 557.9
the period
Dividends on (354.5) (354.5)
ordinary
shares
Balance at 31 749.6 382.5 2,425.7 3,557.8
March 2004
Balance at 30 696.4 556.2 1,476.2 2,728.8
September 2002
Adjustment to 290.3 0.9 291.2
opening
reserves in
terms of AC133
Adjustment 696.4 846.5 1,477.1 3,020.0
balance at 1
October 2002
Issue of share 13.3 13.3
capital and
premium
Fair value (55.6) (55.6)
adjustment -
investments
Foreign (200.1) (200.1)
currency
translation
reserve
movement
Transfers 21.9 (21.9) 0.0
between
reserves
Movements in 60.4 60.4
reserves of
associates
Net profit for 502.0 502.0
the period
Dividends on (352.7) (352.7)
ordinary
shares
Balance at 31 709.7 673.1 1,604.5 2,987.3
March 2003
REVIEW OF OPERATIONS
Tiger Brands achieved an increase of 28% in headline earnings per share for the
six months ended 31 March 2004 compared to the corresponding period last year.
This result has been influenced by a strong performance from the company"s local
FMCG (fast moving consumer goods) businesses, including a significant
improvement in the contribution to operating income by the Grains businesses.
During the reporting period, the acquisition of Nelspruit Wholesalers (Pty) Ltd
by The Spar Group Limited was finalised and these results have been consolidated
from 1 November 2003, the date of acquisition.
RESULTS
Revenue from continuing operations rose by 13% with operating income reflecting
a 38% improvement. The operating margin increased to 9.0% (2003: 7.3%). Whereas
the past two years" results have been significantly affected by the volatility
of the Rand, the period under review has been characterised by a more stable
currency. The strength of the Rand over the reporting period has, however,
again impacted upon the Company"s exports which continued to show a loss, albeit
at a lower level compared to the previous year.
Acquisitions during the course of 2003, together with the acquisition of
Nelspruit Wholesalers during the current reporting period, have had a
significant effect on revenue and operating income comparisons relative to the
previous year. Comparisons are also affected by the consolidation of Enterprise
Foods (Pty) Limited as a wholly-owned subsidiary with effect from 1 May 2003,
following last year"s acquisition by Tiger Brands of the remaining 50% interest
in that company. The results of Enterprise Foods were previously equity
accounted. On a strictly comparable basis, excluding the effect of acquisitions,
revenue and operating income increased by 3% and 22% respectively.
The income statement reflects a net abnormal charge of R133.9 million in the
current reporting period. This includes an impairment provision of R137.2
million taken against the carrying value of the company"s investment in
associate company C & T Malt. This write-down was necessitated by the continuing
deterioration in profitability which has been experienced by the US, Canadian
and UK operations of C & T Malt.
The results for the period were underpinned by a strong cash flow performance.
Before investment and financing activities, there was a net cash inflow of
R443.7 million compared to a net cash outflow of R277.6 million last year. This
improvement of R721.3 million was largely attributable to an increase in cash
operating profit of R363.7 million and the containment of working capital levels
in line with those reported at 30 September 2003. In the prior year, an amount
of R372.8 million was utilised to fund increased working capital requirements.
Notwithstanding the cost of recent acquisitions, which has absorbed some R526
million of cash in the last 12 months, net financing costs were at a similar
level to last year, resulting in a further improvement in the interest cover
ratio to 10.4 times (2003: 8.0). The balance sheet at 31 March 2004 reflected
net borrowings of R1 954.1 million compared to net borrowings of R2 260.6
million a year ago, with a corresponding reduction in net gearing to 53% (2003:
72%).
Income from associates reduced by 61% to R11.5 million (2003: R29.3 million).
However, the figures are not directly comparable as a result of the inclusion of
an abnormal charge of R35.0 million in the previous year (C&T Malt plant closure
costs) as well as the equity accounted earnings of Enterprise Foods. On a like
for like basis, the most significant change relates to the earnings of C & T
Malt, where there was a positive profit contribution of R30.5 million in 2003
compared to a small loss incurred in the current period. This reversal in
profitability is a reflection of the extremely difficult trading conditions
being encountered by the malt industry worldwide. Empresas Carozzi performed
ahead of expectations, although the appreciation of the Chilean peso against
most South and Central American currencies continued to have an adverse effect
on Carozzi"s export earnings. On an after tax basis, its contribution to Tiger"s
earnings was below the previous year as a result of Carozzi now being in a full
tax paying position following the utilisation, last year, of all remaining tax
losses.
FMCG - Domestic
The FMCG - Domestic operations performed well, reflecting an 81% increase in
operating income compared to the previous year on a 13% revenue increase.
The results of the Domestic Food operations were bolstered by a significant
improvement in the Grains business. This improvement was assisted by a sharp
turnaround in the Maize milling operations which returned to profitability after
incurring a loss of R78.8 million in the previous year. This loss included the
write-off of R73 million in respect of maize hedging costs, necessitated by the
sharply falling maize price over that period. The Domestic Food results were
further enhanced by the inclusion of Value-Added Meat Products (Enterprise)
within Perishables.
An 8% decline in revenue in the Grains category was primarily attributable to a
reduction in maize volumes as a consequence of aggressive competitor pricing
activity, together with price deflation in the maize market. The Maize milling
business is currently operating profitably, despite the volume decline. In
addition, steps have been taken to reduce the cyclicality of the business. The
Wheat milling business recorded steady growth in operating income, benefiting
from relatively stable raw material pricing.
Bakeries (Albany) performed well, significantly improving their performance
compared to the previous year. The launch of a new Superior bread (Best of Both)
in April 2004 and ongoing investment in product quality and technology upgrades,
should see the current momentum carried through to the second half.
King Food enjoyed increased levels of profitability driven by recoveries in the
sorghum malt and beer powder markets and volume growth in the Morvite breakfast
cereal range.
Rice recorded a strong increase in operating income largely as a result of good
volume growth in the premium brands (Tastic and Aunt Caroline) and the benefits
of low raw material input costs as a result of the strengthening Rand. Jungle
Oats benefited from lower raw material procurement costs, which led to increased
levels of profitability. The launch of the muesli breakfast product, Jungle
Energy Crunch, has been a significant contributor to the growth of the brand.
The Groceries segment includes Condiments & Ingredients (All Gold, Colmans),
Spreads (All Gold, Black Cat), Pasta (Fatti"s & Moni"s) and Desserts &
Vegetables (Koo). This segment reflected a 4% increase in operating income on a
17% growth in revenue.
The domestic grocery business has benefited from strong volume growth in the key
areas of tomato sauce and baked beans, and also from tight control of costs.
Innovations in peanut butter and soups will be launched in the second half of
the year. The Pasta business has been adversely affected by increased
competition from imported pasta and dealer own brands. A better performance is
expected in the second half.
The Snacks & Treats business (Beacon) recorded a 62% decline in operating income
on a 3% increase in revenue. These results reflect the extremely difficult
trading environment in the local sugar confectionery market where aggressive
competition from South America has seen the company"s volumes running well
behind the prior year. The situation has been exacerbated by the impact on
production levels of high stock levels at the beginning of the year, which has
had an adverse effect on labour and factory overhead recoveries. Retrenchment
costs of R13.8 million were also provided for in the period under review. A
significantly improved performance is expected in the second-half of the year.
The Perishables category comprises Value-Added Meat Products (Enterprise) and
the Dairy business (DairyBelle). Value-Added Meat Products produced a strong
performance, confirming the value of this operation as a wholly-owned
subsidiary. The business benefited from raw material cost reductions arising
from the stronger Rand and also from favourable production yields. Some volume
growth was recorded in viennas and polonies. Although DairyBelle"s overall
performance was pleasing, the cheese results for the half year were affected by
adverse market conditions, primarily in the bulk cheese sector. Overall, the
Dairy business is benefiting from a drive to revitalise the DairyBelle brand.
The Consumer Healthcare operations improved operating income by 25% on an 18%
revenue increase.
OTC Medicines (schedule O and 1 medicines) showed a satisfactory growth in
revenue and operating income, benefiting from a good performance in the second
quarter. Panado recorded volume growth notwithstanding increased competition
from housebrands. There was a strong performance from Compral, whilst the
benefits of innovation have seen revenue double in the Bioplus brand.
Personal Care reflected a marginal increase in operating income, with the
performance of the bodycare category being particularly disappointing. Ingram"s
Camphor Cream experienced pressure on sales volumes as did Gill shampoo. The
Facecare business achieved a good result, influenced by a strong performance
from Lemon Lite.
The Babycare category performed well, with both Purity and Elizabeth Anne"s
recording good revenue growth. Purity"s Cream of Maize Meal brand has been
particularly successful. The Homecare category benefited from strong sales of
insecticide (Doom, Fastkill, the Dy-range), and the relaunch of the Jeyes and
Airoma brands during the period.
REGULATED HEALTHCARE
Regulated Healthcare, which comprises Branded Prescription Medicines (including
Schedule 2 drugs) and Generic Medicines, reflected a 13% increase in operating
income on a 15% revenue growth. These results were achieved during a period of
uncertainty following the publication of the Draft Drug Pricing Regulations in
January 2004. Branded Prescription Medicines produced a satisfactory performance
notwithstanding continued downward pressure on medicine prices as a result of
steps taken by Government and healthcare funders to reduce the cost of medicine.
These margin pressures were to some extent ameliorated by the impact of the
strengthening Rand over the period which reduced raw material input costs.
Declining sales volumes continued to be experienced in the Lentogesic and Syndol
brands, whilst Corenza C, Mypaid, Medi-Keel and Pynstop recorded good volume
growth. The integration of the Parke-Med business, which was acquired towards
the end of the last financial year, was successfully completed.
The Generic Medicines business achieved an excellent performance, increasing
revenue and operating income by 35% and 50% respectively. These results
benefited from a generic market which is showing strong growth and also from the
success of new products including Adco-Simvastatin and Adco-Zolpidem. There is
an extensive list of new products, covering both acute and chronic medicines,
currently in the registration process.
The recent publication of the regulations relating to drug pricing in terms of
the Medicines and Related Substances Control Act, whilst not to the satisfaction
of all industry participants, reflects the outcome of a positive engagement
between the Department of Health and industry representatives.
HOSPITAL PRODUCTS
Hospital Products showed an increase of 19% in operating income on an increase
in revenue of 12%. Profitability was favourably influenced by the ongoing
introduction of new products, particularly in the areas of wound care management
and intravenous infusion systems, and the impact of the strong Rand on imported
costs. Good performances were recorded by Renal Products, Blood Products and
Hospital Pharmaceuticals.
EXPORTS
The Export operations incurred a reduced loss of R18.4 million (2003: R38.7
million). Exports primarily consist of canned deciduous fruit where, despite
improvements in both sales volumes and dollar prices, the impact of the stronger
Rand resulted in a loss for the period. Currency losses on the conversion of
foreign monetary assets accounted for approximately R13 million of the overall
loss. The outlook is encouraging for a return to profitability in the second six
months.
SPAR
Spar achieved satisfactory results, increasing revenue and operating income by
20% and 21% respectively. The results of Nelspruit Wholesalers (Pty) Limited
were incorporated with effect from 1 November 2003. Excluding the results of
Nelspruit Wholesalers, revenue and operating income increased by 12% and 13%
respectively.
In an extremely competitive environment, with sustained low levels of inflation,
operating margins have held up well. Spar continues to focus on its perishables
business which recorded a 15% growth in revenue.
During the period, 17 new Spar stores were opened whilst a further 38 stores
were upgraded. There are now a total number of 762 voluntary traded retail
stores in South Africa, inclusive of the Nelspruit Wholesalers" stores.
SPAR UNBUNDLING
The board of Tiger Brands Limited has been considering a number of strategic
alternatives with regard to the optimal future structure of the group in order
to maximize shareholder value. To this end it is intended to unbundle the Spar
business and to list it as a separate entity on the JSE Securities Exchange
South Africa before the end of 2004. Any such unbundling and subsequent listing
of Spar would be subject to all appropriate regulatory requirements, the
provision of further details to shareholders relating to the proposed
transaction and the ultimate approval of shareholders.
FISHING
The Company"s Fishing interests, which comprise 73% held Sea Harvest and 41%
held Oceana, reflected a 32% decline in operating income on an 11% fall in
revenue. The Company"s investment in Oceana is proportionately consolidated.
Despite volume growth, margins at Sea Harvest were negatively impacted by the
effect of the stronger Rand on export realisations, a higher percentage of low
value, small fish, compared to the previous year and higher catch costs as a
result of the relocation of fishing vessels from the West Coast to the East
Coast where catching conditions were more favourable.
Separately listed Oceana experienced a 15% decrease in headline earnings per
share. Pilchard landings were higher than those for the same period last year,
however, production yields were lower due to poor fish size and the increased
distance to fishing grounds. Although lobster catches were good, export
realisations were lower due to both weaker dollar selling prices and the
stronger Rand. The strong Rand also affected the turnover of the Midwater
pelagic fishing operations. The Squid operations performed well, with record
catches for the second successive year. The trading results of Glenryk (UK)
Limited, which was acquired for R73 million, will be consolidated from 1 April
2004.
DIVESTMENT
The Company recently obtained the approval of the Competition Commission for the
disposal of its edible oils & margarine business to a local manufacturer. The
effective date of the disposal is 31 May 2004. The effect of the disposal on
Tiger"s earnings and net asset value per share is not material.
DIVIDEND POLICY, INTERIM DIVIDEND AND SHARE REPURCHASE
In view of the Company"s strong cash generating capability, a decision has been
taken by the board to return to shareholders an increasing percentage of profits
in the form of higher cash dividends. The board has decided to adopt a
progressive dividend policy in terms of which it is anticipated that the annual
dividend cover will be reduced over time.
In line with this policy, it has been decided to reduce the annual dividend
cover for 2004 to 2.5 times and to also partially address the historic imbalance
between the interim and final dividend relative to headline earnings per share.
Taking these factors into account, together with the prospects for the remainder
of the year, the Company has declared an interim dividend of 100 cents per share
for the half-year ended 31 March 2004. This represents an increase of 27% on
last year"s interim dividend of 79 cents per share.
In addition, the board has resolved to execute the mandate provided by
shareholders at the February 2004 AGM to repurchase the company"s shares as part
of a general share buyback programme. Such repurchases will take place subject
to prevailing market conditions and the company"s future cash flow requirements.
It is anticipated that this measure should improve returns to shareholders over
time.
PROSPECTS
Although the Company has produced a pleasing set of results for the period under
review, comparisons against last year are affected by a number of factors which
significantly depressed the results for the six month period ended 31 March
2003. These factors included the impact on margins of the sharply falling maize
price, the effect of the utilisation of higher priced maize stocks carried over
from 2002, maize hedging costs written off and the impact of the strengthening
Rand.
The trading outlook for the second six months of the current financial year
ending 30 September 2004 is positive, although the effects of competitive
pressures in a low inflationary environment will continue to be felt. Overall,
headline earnings for the full year will show a rate of increase well below that
reported at the half year. Nevertheless, headline earnings are still expected to
reflect real growth compared to the previous year.
For and on behalf of the Board:
R A WILLIAMS
Chairman
N DENNIS
Chief Executive Officer
13 May 2004
DECLARATION OF ORDINARY DIVIDEND NO 119
Notice is hereby given that an interim dividend of 100 cents per ordinary share
has been declared in respect of the half-year ended, 31 March 2004.
In compliance with the requirements of STRATE, the electronic settlement and
custody system used by the JSE Securities Exchange South Africa, the company has
determined the following salient dates for the payment of the dividend:
Last day to trade cum-dividend Friday, 2 July 2004
Shares commence trading ex-dividend Monday, 5 July 2004
Record date Friday, 9 July 2004
Payment of dividend Monday, 12 July 2004
Shareholders will not be permitted to dematerialise/rematerialise their shares
between Monday, 5 July 2004 and Friday, 9 July 2004, both days inclusive.
By order of the board
I W M Isdale Sandton
Secretary 13 May 2004
Directors:
Independent directors:
R A Williams (Chairman), B H Adams, D D B Band, B P Connellan, U P T Johnson,
A C Nissen, G N Padayachee, B L Sibiya, J L van den Berg, L C van Vught
Executive:
N Dennis (Chief Executive Officer) (British), M H Franklin, J H McBain
(British), M C Norris, R V Smither, C F H Vaux
Company secretary:
I W M Isdale
Share registrars:
Computershare Limited,
Investor Services Division
PO Box 61051,
Marshalltown, 2107,
South Africa
70 Marshall Street,
Johannesburg, 2001,
South Africa
Registered office:
85 Bute Lane,
Sandown,
Sandton,
South Africa
PO Box 78056,
Sandton, 2146,
South Africa
These results and a copy of the presentation given to analysts and investors in
respect of these results will be available on the company"s web site.
WEBSITE ADDRESS: http://www.tigerbrands.com
Date: 13/05/2004 04:53:40 PM Produced by the JSE SENS Department
