Johannesburg / ZA. (tbl) Tiger Brands Limited, South Africa´s largest food and branded consumer-goods company, announced its group results and capital distribution for the first half 2010. Tiger Brands achieved headline earnings per share (HEPS) of 6,689 ZAR for the six months ended 31 March 2010, representing a seven percent increase on that achieved in the six months ended 31 March 2009. Earnings per share (EPS) increased by five percent to 6,622 ZAR per share. Headline earnings of 1’056,9 million ZAR and profit attributable to ordinary shareholders of 1’046,3 million ZAR increased by seven percent and six percent respectively.
The company´s BEE Phase II transaction which was approved by shareholders in October 2009, became effective on 20 October 2009. Arising from this transaction, a once-off charge amounting to 150,7 million ZAR after tax has been included in abnormal items for the six months ended 31 March 2010. Excluding this once-off abnormal charge, HEPS and EPS for the half year ended 31 March 2010, reflect an increase of 22 percent and 20 percent respectively compared to that achieved in the corresponding period last year.
Overview of results
In the prior year, the Company ceased to proportionately consolidate the results of Oceana with effect from the end of March 2009 as, from that date, the Company no longer had joint control of Oceana. Accordingly, Oceana´s results are included in the comparative six month period on a proportional consolidation basis, whereas its results for the six months to 31 March 2010 are equity accounted in line with the accounting policy for associate companies. The Group´s share of Oceana´s results is consequently included in HEPS and EPS in both periods. This change in the basis of accounting for Oceana makes meaningful comparison of the Group´s operational results difficult and hence, to assist shareholders in comparing the performance of the Group with the same period last year, the comparative information in the commentary below excludes Oceana´s results (which have been commented on separately under the Group´s Fishing interests). Also refer to Note 13 of the accompanying results for further information in this regard. The commentary below therefore relates only to the Group´s FMCG businesses.
The trading environment for the period under review was characterised by price deflation on the Group´s staple product categories such as wheat, rice and maize, as well as an overall market contraction which resulted in a general decline in sales volumes. Turnover from continuing operations (excluding Oceana) amounted to 10,2 billion ZAR, reflecting a decrease of two percent on the previous period.
Operating income for the half year (excluding Oceana) rose by five percent to 1’594,4 million ZAR. The Group operating margin improved from 14,6 percent last year to 15,7 percent, benefiting from the decline in soft commodity prices. The Grains, Snacks + Treats, Beverages and Value Added Meat Products businesses all contributed to the operating margin improvement.
Abnormal items reflect a net abnormal charge of 187,3 million ZAR before tax for the six month period. The current period composition of abnormal items primarily comprises the Share-based Payment – IFRS 2 empowerment transaction costs associated with the Company´s BEE Phase II transaction implemented in October 2009.
Net financing costs (excluding Oceana) of 48,4 million ZAR (2009 : 165,7 million ZAR) reflect the benefits of a lower interest rate environment combined with reduced net debt levels in the current six month period relative to the same period last year. Group net debt rose from 377,4 million ZAR at 30 September 2009 to 888,6 million ZAR at 31 March 2010, primarily due to the acquisition of the Crosse + Blackwell business. Net interest cover remains at a sound level of 33,2 times.
Income from associates reflects a significant increase compared to the prior period due to the inclusion in the current period of the Company´s share of the after tax earnings of Oceana. A strong trading performance by Chilean-based Empresas Carozzi was partially offset by the effect of the depreciation of the Chilean Peso against the Rand. In addition, the prior year result included a capital profit of 16,8 million ZAR.
The average tax rate, before abnormal items, reduced to 29,7 percent (2009: 32,6 percent). This was primarily due to a reduced STC charge as a result of the 2009 final dividend being distributed as a payment of capital out of share premium in January 2010.
The negative amount attributable to non-controlling interests (minority shareholders in subsidiaries) is mainly due to the loss incurred in the Deciduous Fruit business, partially offset by the minorities´ share of current year income in respect of the two African subsidiaries, Haco and Chococam.
Info: The complete press release «Tiger Brands Limited – Group results and capital distribution for the six months ended 31 March 2010» (PDF, 19 pages, 55 KB) is available on tigerbrands.co.za.
