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AMALGAMATED BEVERAGE INDUSTRIES LIMITED - UNAUDITED INTERIM RESULTS FOR THE SIX
MONTHS ENDED 30 SEPTEMBER 2004
Amalgamated Beverage Industries Limited
(Registration number 1970/006820/06)
ISIN: ZAE000000048 Share code: ABI
ABI
Reaching further together
Unaudited interim results for the six months ended 30 September 2004
- Beverage volumes up 7.9% to 5.7 million hectolitres
- Sales revenue grows by 14.0% to R2.6 billion
- Trading profit increases by 50.4% to R340 million
- Headline earnings increase by 24.1% to R211 million
- Dividends per share increase by 24.5% to 61 cents per share
COMMENTARY
Overview: Following on from the good results for the year ended March 2004, real
growth in earnings has been maintained for the half-year ended September 2004
through sustained volume growth, revenue management and productivity gains. The
primary driver of the 7.9% volume growth has been increased consumer spending,
led by improved disposable income in middle and upper income groups. This was
further assisted by effective marketing activity and relatively favourable
weather conditions. Mainstream carbonated soft drink volumes increased by 7.2%,
while other soft drinks grew by 20.8%. The latter contributed 5.2% to total
volumes sold, up from 5.0% over the previous financial year.
Financial performance: Headline earnings increased by 24.1% compared to the six
months ended 30 September 2003. These earnings are determined after absorbing
non-recurring taxation and interest charges totalling R27 million on the
Immediate Consumption Programme (ICP: a subsidy towards cooler investment
received in 1998 and 1999 from the Coca-Cola Southern and East Africa division).
The taxation and related interest on ICP funds, 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 taxation charge of R17 million. Excluding
the effect of this, the growth in headline earnings would have been 40%.
The 14% increase in sales revenue was primarily driven by the higher volumes
together with selling price increases. Gross margins improved slightly over the
comparable period last year from 34.7% to 34.9%. Higher selling prices and raw
material cost efficiencies have been offset to some extent by increased
container amortisation resulting from high container investment in the latter
half of the prior year.
As a consequence of the above, together with overhead productivity gains,
trading profit grew by 50.4% compared to the comparable period last year,
strengthening ABI`s trading margin from 9.9% to 13.0%.
Net interest earned has seen a decline of R22 million despite an increase in the
average cash reserves relative to the comparable period last year. This is due
to the ICP interest charge referred to earlier, as well as the progressive
reduction in interest rates.
The cash balance has improved by R209 million when measured against the same
period last year. This is primarily due to the improved operating performance
as well as the improved net working capital position. The decline in the cash
balance of R131 million, from R802 million at the last year-end to R671 million,
is mainly due to the final dividend as well as final and provisional taxation
payments made.
Sustainability: ABI continues to take a holistic approach to business
sustainability with appropriate investment in quality, health and safety, the
environment and the communities within which the company operates. To this end
ABI continues to improve NOSA and ISO 14000 ratings and product quality results
across all plants. The company remains active in its support of HIV/Aids orphans
through the NOAH (Nurturing Orphans of Aids for Humanity) and Starfish
Foundation initiatives. Other areas of support include participation in
environmental projects and assistance to smaller businesses through training and
other programs. ABI is also a member of the JSE Socially Responsible Investment
(SRI) Index.
Outlook: Sales are expected to continue on a positive growth trend for the
balance of the year, albeit at a lower rate than that achieved in the first
half. Given an expectation of stable economic growth, with moderate input cost
increases and further productivity gains, real earnings growth is expected for
the full year.
Scheme of arrangement: The attention of shareholders is drawn to the scheme of
arrangement as detailed in the circular to ABI shareholders issued on Thursday,
14 October 2004.
Accounting policies: These results have been compiled in accordance with the
South African Statements of Generally Accepted Accounting Practice and the
listing requirements of the JSE Securities Exchange South Africa and Schedule 4
of the South African Companies Act. With the exception noted below, the
accounting policies and methods of computation used in the preparation of the
results are consistent in all material respects with those adopted in the annual
financial statements for the year ended 31 March 2004. The following exception
should be noted:
- AC140: Business combinations, has been applied which necessitates a
discontinuation of the amortisation of goodwill from 1 April 2004, subject to
the requirements of AC128: Impairment of assets.
The effect of this change in accounting policy is a R40 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.
Ernst & Young, the company`s external auditors, have not reviewed or audited the
financial results for the six months ended 30 September 2004.
Declaration of dividend No. 58: Notice is hereby given that on 27 October 2004,
the board of directors declared an interim dividend of 61 cents per share (2003:
49 cents) for the year ending 31 March 2005. This dividend will be paid out of
profit on ordinary activities after taxation, as determined by the directors, to
ordinary shareholders recorded as such in the register at the close of business
on the record date, Friday, 10 December 2004. The last date to trade to
participate in the dividend is Friday, 3 December 2004. Shares will commence
trading ex-dividend from Monday, 6 December 2004.
The important dates pertaining to this dividend are as follows:
Last day to trade `cum` dividend Friday, 3 December 2004
Shares trade `ex` dividend Monday, 6 December 2004
Record date Friday, 10 December 2004
Payment date Monday, 13 December 2004
Share certificates may not be dematerialised or rematerialised between Monday, 6
December 2004 and Friday, 10 December 2004, both days inclusive.
By order of the board
MJ Bowman V Pillay
Managing director Financial director 27 October 2004
group income statements
Half-year Half-year Year
30 September 30 September 31 March
2004 2003 2004
Rm Rm % Rm
(Unaudited) (Unaudited) Change (Audited)
Revenue 2 667 2 349 5 666
Sales revenue 2 616 2 294 14 5 571
Cost of sales (1 702) (1 499) (3 339)
Gross profit 914 795 2 232
Net operating costs (574) (569) (1 192)
Trading profit 340 226 50 1 040
Goodwill amortisation - (40) (78)
Operating profit 340 186 962
Income from an
associate 22 18 48
Profit on ordinary
activities before
interest and taxation 362 204 77 1 010
Net finance income 18 40 66
Profit on ordinary
activities before
taxation 380 244 1 076
Taxation (166) (110) (377)
Profit on ordinary
activities after
taxation 214 134 699
Equity minority
interests (4) (5) (11)
Net profit for the
period 210 129 688
Reconciliation of
headline earnings (Rm)
Net profit for the
period 210 129 63 688
Loss on disposal of
property, plant and
equipment after
taxation 1 1 9
Goodwill amortisation - 40 78
Headline earnings 211 170 24 775
Earnings per share
(cents)
Basic earnings 137 85 61 450
Headline earnings 138 112 23 507
Dividends per share
(cents) 61 49 24 280
Net asset value per
share (cents) 2 272 2 053 11 2 359
Number of ordinary
shares in issue
(million) 153 152 153
Weighted average number
of ordinary shares in
issue (million) 153 152 153
GROUP CASH FLOW STATEMENTS
Half-year Half-year Year
30 September 30 September 31 March
2004 2003 2004
Rm Rm Rm
(Unaudited) (Unaudited) (Audited)
Trading profit 340 226 1 040
Depreciation 126 108 217
Non-cash items 17 26 1
Decrease/(increase) in working
capital 150 88 (126)
Cash generated from operating
activities 633 448 1 132
Dividend income received 16 13 28
Normal taxation paid (216) (244) (394)
Secondary tax on companies paid (42) (35) (42)
Net cash inflow from operating
activities 391 182 724
Finance income received 36 46 73
Finance costs paid (16) (3) -
Dividends paid (353) (290) (366)
Net cash retained 58 (65) 431
Cash utilised in investment
activities
Investment to maintain and
upgrade operations (118) (135) (209)
Investment to expand operations (80) (139) (241)
Proceeds on disposal of assets 4 26 41
Net cash invested (194) (248) (409)
Cash effects of financing
activities
Long-term loans repaid - (2) (5)
Premium on issue of share
capital used for share options 5 9 15
Net cash received 5 7 10
(Decrease)/increase in cash
and cash equivalents (131) (306) 32
Balance at the beginning of
the period 802 773 773
Currency translations - (5) (3)
Balance at the end of the period 671 462 802
GROUP BALANCE SHEETS
30 September 30 September 31 March
2004 2003 2004
Rm Rm Rm
(Unaudited) (Unaudited) (Audited)
Assets
Non-current assets 3 117 3 047 3 011
Property, plant and equipment 1 719 1 615 1 615
Investment properties 3 3 3
Goodwill 1 107 1 145 1 107
Investment in an associate 241 221 236
Deferred taxation asset 47 63 50
Current assets 1 621 1 285 1 580
Inventories 359 325 309
Trade and other receivables 343 285 309
Prepayments 175 101 160
Current taxation asset 73 112 -
Cash and cash equivalents 671 462 802
Total assets 4 738 4 332 4 591
Equity and liabilities
Capital and reserves
Share capital and premium 1 619 1 608 1 614
Non-distributable reserves (1) (3) (5)
Accumulated profits 1 833 1 492 1 976
Ordinary shareholders` funds 3 451 3 097 3 585
Minority interests 25 24 24
Total shareholders` funds 3 476 3 121 3 609
Non-current liabilities 199 249 214
Long-term loans 6 7 6
Deferred taxation liability 97 133 107
Deferred income 66 81 74
Retirement benefit obligation 30 28 27
Current liabilities 1 063 962 768
Trade and other payables 1 037 944 708
Provisions 26 18 47
Current taxation - - 13
Total equity and liabilities 4 738 4 332 4 591
Future capital expenditure
Contracted - 29 6
Authorised by the directors but
not yet contracted 487 177 437
STATEMENTS OF CHANGES IN EQUITY
Non- Ordinary
Ordinary Ordinary distri- Accu- share-
share share butable mulated holders`
capital premium reserves profits funds
Rm Rm Rm Rm Rm
Balance at 31 March
2003 1 1 598 2 1 652 3 253
Premium on issue of
share capital used
for share options - 9 - - 9
Foreign currency
translation
differences - - (5) - (5)
Net profit for the
period - - - 129 129
Dividend - - - (289) (289)
Balance at
30 September 2003 1 1 607 (3) 1 492 3 097
Premium on issue of
share capital used
for share options - 6 - - 6
Foreign currency
translation
differences - - (2) - (2)
Net profit for the
period - - - 559 559
Dividend - - - (75) (75)
Balance at 31 March
2004 1 1 613 (5) 1 976 3 585
Premium on issue of
share capital used
for share options - 5 - - 5
Foreign currency
translation
differences - - 4 - 4
Net profit for the
period - - - 210 210
Dividend - - - (353) (353)
Balance at
30 September 2004 1 1 618 (1) 1 833 3 451
STATEMENTS OF CHANGES IN EQUITY
Total
share-
Minority holders`
interests funds
Rm Rm
Balance at 31 March
2003 21 3 274
Premium on issue of
share capital used
for share options - 9
Foreign currency
translation
differences (2) (7)
Net profit for the
period 5 134
Dividend - (289)
Balance at
30 September 2003 24 3 121
Premium on issue of
share capital used
for share options - 6
Foreign currency
translation
differences (4) (6)
Net profit for the
period 6 565
Dividend (2) (77)
Balance at
31 March 2004 24 3 609
Premium on issue of
share capital used
for share options - 5
Foreign currency
translation
differences (3) 1
Net profit for the
period 4 214
Dividend - (353)
Balance at
30 September 2004 25 3 476
Amalgamated Beverage Industries Limited (Registration number 1970/006820/06)
ISIN: ZAE000000048 Share code: ABI
Registered office ABI House, 14 Pongola Crescent, Eastgate Extension 17, Sandton
2199. PO Box 76202, Wendywood 2144, South Africa
Directorate and administration Non-executive chairman EAG Mackay. Independent
non-executive directors MP Adonisi; PM Bester. Non-executive directors JA
Mabuza; MI Wyman (British).
Executive directors MJ Bowman (managing director); EM Borcherds; TK Gibbon; MBB
Lloyd; V Pillay; TC Sanderson. Company secretary S Pienaar
Transfer secretaries Computershare Investor Services 2004 (Proprietary) Limited,
70 Marshall Street, Johannesburg 2001. P.O. Box 61051, Marshalltown 2107, South
Africa
www.abi.co.za
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