ABI Limited - Trading Statement
Amalgamated Beverage Industries Limited
(Incorporated in the Republic of South Africa)
(Registration Number 1970/006820/06)
Share code: ABI
ISIN number: ZAE000000048
(`ABI Limited` or `the company`)
Trading Statement
ABI Limited`s headline earnings for the six months ending 30 September 2004 are
expected to be 25 to 30% higher than the headline earnings for the comparable
six month period last year. Earnings attributable to ordinary shareholders
(`earnings`) are expected to be 55 to 60% higher. These estimates are determined
after absorbing the non-recurring tax and interest charge totalling R27 million
noted below. The difference between growth in earnings and headline earnings
will be accounted for mostly by the change to accounting statement AC140:
Business combinations, which necessitates a discontinuation of the amortisation
of goodwill from 1 April 2004. The effect of this change in accounting policy is
a R39 million reduction in amortisation charged to the income statement as
compared to the comparable period last year. Headline earnings are not affected
as the amortisation of goodwill is added back in the calculation of headline
earnings.
The taxation of ICP funds (a subsidy towards cooler investment received in 1998
and 1999 from Coca-Cola Southern and East Africa division) disclosed as a
contingent liability of R69 million in the 2004 annual report, has been settled
with the South African Revenue Services. The net impact to the income statement
is interest payable of R10 million and a tax charge of R17 million. On a
comparable basis (excluding the effect of not amortising goodwill from April
2004, and for the taxation of ICP funds), earnings and headline earnings
adjusting for this effect are expected to be between 40 to 45% higher than for
the comparative six month period.
The main contributor to the improved earnings is volume growth, expected to be
between 5.5% to 7.5% for the period. This has been driven by growing consumer
demand, effective promotional and market execution, and favourable weather
conditions. The company continues to focus on driving operational efficiency
through its manufacturing, sales and distribution processes and has achieved
productivity gains as a result.
The cash balance at the end of the half year is expected to be in the R650 to
R750 million range. This is the net result of the improved trading results, the
payout of the final dividend of R353m in relation to the year ended March 2004,
as well as the final tax payment for the prior year and the interim tax payment
for the current year.
Due to the preponderance of the company`s sales occurring in the summer months,
shareholders are reminded that volume growth for the first six months cannot be
extrapolated over the full financial year. Management expects the company will
continue to benefit from the current positive volume drivers and efficiency
gains, but cautions that the record volume and profit growth achieved in the
second half of the prior financial year is likely to moderate growth in the
second half of the year to levels lower than that achieved in the first half.
The above earnings information has not been reviewed and reported on by the
company`s auditors.
By order of the board
Johannesburg, South Africa
17 September 2004
Sponsor
Cazenove
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