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Investor Relations: Financial Results Investor Relations

12 November 2001

Results For The Year Ended 30 September 2001
Financial Statement And Dividend Announcement

The Directors are pleased to make the following announcement of the unaudited results for the year ended 30 September 2001:-

     Group  Company
       
    30/9/2001 30/9/2000 Change 30/9/2001 30/9/2000 Change
      (restated)#     (restated)#  
    $'000 $'000 % $'000 $'000 %
 
1. PROFIT STATEMENT            
  Revenue            
     Continuing operations...
   Discontinued operations
        - wine & liquor........
1,009,087

-
960,960

215,536
5.0

N/M
-

-
-

-
-

-
    1,009,087 1,176,496 (14.2) -  -  - 
  Investment income.......... 2,101 2,026 3.7 127,206 105,680 20.4
  Other income including interest income...............
12,143
9,638
26.0
22,042
21,926
0.5
  ===== =====   ===== =====  
   
  Operating profit before interest, depreciation and amortisation            
     Continuing operations...
   Discontinued operations
        - wine & liquor........
149,594

-
140,632

22,083
6.4

N/M
121,654

-
98,000

-
24.1

- 
    149,594 162,715 (8.1) 121,654 98,000 24.1
  Income derived from joint venture and associated companies......................

14,122

13,070

8.0

- 

- 

- 
  Foreign exchange gain/(loss)...............................
2,717
(474)
N/M
82
(74)
N/M
  Depreciation and amortisation...................
(42,749)
(51,417)
(16.9)
(887)
(712)
24.6
  --------- ---------   --------- ---------  
   
  Operating profit before interest, taxation and exceptional items
     Continuing operations...
   Discontinued operations
        - wine & liquor........
123,684

-
106,736

17,158
15.9

N/M
120,849

-
97,214

-
24.3

- 
    123,684 123,894 (0.2) 120,849 97,214 24.3
  Interest income.............. 9,885 7,441 32.8 1,598 4,106 (61.1)
  Interest on borrowings..... (2,967) (8,502) (65.1) (2,233) (24,560) (90.9)
  --------- ---------   --------- ---------  
   
  Profit before taxation and exceptional items
     Continuing operations...
   Discontinued operations
        - wine & liquor........
130,602

-
105,675

17,158
23.6

N/M
120,214

-
76,760

-
56.6

- 
    130,602 122,833 6.3 120,214 76,760 56.6
   Exceptional items............... 27,144 (13,517) N/M - (47,141) N/M
  --------- ---------   --------- ---------
   
  Profit before taxation....... 157,746 109,316 44.3 120,214 29,619 305.9
  Taxation....................... (40,942) (43,047) (4.9) (30,439) (25,045) 21.5
  --------- ---------   --------- ---------  
   
  Profit after taxation....... 116,804 66,269 76.3 89,775 4,574 N/M
  Attributable to outside shareholders...................
(21,243)
(15,501)
37.0
-
-
-   
  --------- ---------   --------- ---------  
   
  Attributable net profit -
     Continuing operations....
   Discontinued operations
   - wine & liquor..............
   Exceptional items..........
74,811

-
20,750
55,906

6,029
(11,167)
33.8

N/M
N/M
89,775

-
-
4,574

-
-
N/M

- 
- 
    95,561 50,768 88.2 89,775 4,574 N/M
  ===== =====   ===== =====  
Attributable net profit had there been no change in accounting policy #............. 95,561 47,558 100.9 37,834 18,331 106.4

N/M - Not Meaningful
# - See Note 8
2. RATIOS   Group
    30/9/2001 30/9/2000
      (restated)#
  Profit after tax before deducting minority interests as a percentage of revenue 11.6% 5.6%
       
  Earnings per ordinary share based on existing issued share capital:    
            - Before exceptional items........................................ 29.6 cents 24.5 cents
            - After exceptional items.......................................... 37.8 cents 20.1 cents
       
  Earnings per ordinary share on a fully diluted basis:    
            - Before exceptional items........................................ 29.6 cents 24.5 cents
            - After exceptional items.......................................... 37.8 cents 20.1 cents
       
  Net tangible asset backing per ordinary share.................... $2.67 $2.49
3.   SEGMENTAL RESULTS  Revenue  PBIT *
  Group revenue and profit analysis    
    30/9/2001     30/9/2000     30/9/2001     30/9/2000
       (restated)#    (restated)#
    $'000 $'000 $'000 $'000
  By Business Activity        
  Brewery operations
      - Subsidiary companies................................................... 1,009,087 960,960 111,924 97,971
      - Joint venture companies............................................... - - 14,122 13,070
  Investment income............................................................ - - 2,101 2,026
  Corporate office costs(net).................................................. - - (4,463) (6,331)
    --------- --------- --------- ---------
    1,009,087 960,960 123,684 106,736
  Discontinued operations - wine & liquor............................... - 215,536 - 17,158
    --------- --------- --------- ---------
    1,009,087 1,176,496 123,684 123,894
    ===== ===== ===== =====
  By Territory
  Singapore........................................................................... 372,745 343,922 52,835 53,963
  Malaysia.............................................................................. - - 8,854 10,850
  Papua New Guinea.............................................................. 91,727 107,283 16,835 20,767
  New Zealand....................................................................... 215,617 225,157 24,187 20,620
  Indochina........................................................................... 279,292 240,983 27,227 24,561
  China.................................................................................. 49,706 43,615 (7,853) (22,312)
  Thailand.............................................................................. - - 6,062 4,618
  Corporate office costs(net)................................................... - - (4,463) (6,331)
    --------- --------- --------- ---------
    1,009,087 960,960 123,684 106,736
  Discontinued operations - wine & liquor............................... - 215,536 - 17,158
    --------- --------- --------- ---------
    1,009,087 1,176,496 123,684 123,894
    ===== ===== ===== =====

* - PBIT = Profit before interest, tax and exceptional items
# - See Note 8

4.   EXCEPTIONAL ITEMS  Group  Company
       
    30/9/2001     30/9/2000     30/9/2001     30/9/2000
       (restated)#    (restated)#
  Exceptional items comprise: $'000 $'000 $'000 $'000
                    
  Gain/(loss) on disposal of businesses..................................... 27,144 (4,995) - 1,449
  Exchange loss on NZ$ deposit placed to support general offer
for DB Group......................................................................
-
(8,522)
-
(8,522)
  Provision for write down of investment in a joint venture
company............................................................................
-
-
-
(40,068)
    --------- --------- --------- ---------
    27,144 (13,517) - (47,141)
    ===== ===== ===== =====
                    
5. ATTRIBUTABLE NET PROFIT  Group  
     
  By Business Activity 30/9/2001 30/9/2000    
      (restated)#    
    $'000 $'000    
  Brewery operations
      - Subsidiary companies.................................................. 72,146 51,937    
      - Joint venture and associated companies......................... 7,925 8,936    
  Investment income............................................................ 1,444 1,364    
  Corporate office costs........................................................ (6,704) (6,331)    
    --------- ---------    
    74,811 55,906    
  Discontinued operations - wine & liquor............................. - 6,029    
  Exceptional items............................................................... 20,750 (11,167)    
    --------- ---------    
    95,561 50,768    
    ===== =====    

 

6. BALANCE SHEET  Group  Company
    30/9/2001 30/9/2000 30/9/2001 30/9/2000
    $'000 $'000 $'000 $'000
      (restated)#   (restated)#
           
  Fixed assets....................................................................... 484,550 553,868 2,300 2,040
  Subsidiary companies........................................................ - - 772,160 852,526
  Joint venture companies.................................................... 82,021 71,906 94,812 78,558
  Associated companies........................................................ 3,349 1,385 - -
  Other investments............................................................. 41,580 27,148 11,732 11,847
  Brands.............................................................................. 5,973 6,346 5,973 6,346
  Current assets        
      - Cash.......................................................................... 241,848 183,215 438 451
      - Others....................................................................... 155,172 193,922 18,809 12,690
  Current liabilities        
      - Borrowings................................................................ (10,488) (33,299) - -
      - Others...................................................................... (191,699) (193,126) (179,198) (261,467)
  Deferred liabilities
      - Borrowings................................................................ (6,018) (32,686) - (20,400)
      - Others...................................................................... (24,434) (26,795) - -
    --------- --------- --------- ---------
  Net assets.......................................................................... 781,854 751,884 727,026 682,591
    ===== ===== ===== =====
 
  Financed by:-
  Share capital..................................................................... 253,125 253,125 253,125 253,125
  Reserves........................................................................... 428,458 382,527 473,901 429,466
    --------- --------- --------- ---------
    681,583 635,652 727,026 682,591
  Outside shareholders........................................................ 100,271 116,232 - -
    --------- --------- --------- ---------
    781,854 751,884 727,026 682,591
    ===== ===== ===== =====

# - See Note 8

7. GROUP CASH FLOW STATEMENT  
   
    30/9/2001 30/9/2000
      (restated)#
    $'000 $'000
       
  Operating profit before taxation......................................... 157,746 109,316
  Adjustments for non cash items.......................................... 766 43,914
  Changes in working capital and currency realignment........ (1,608) 19,584
  Income tax paid................................................................ (32,572) (39,633)
    --------- ---------
  Cash flow from operating activities..................................... 124,332 133,181
    --------- ---------
       
  Purchase of fixed assets and investments............................ (56,859) (98,338)
  Proceeds from sale of assets and investments...................... 121,216 19,289
  Loans to joint venture and associated companies............... (17,478) (7,656)
  Investment income............................................................ 16,035 17,864
    --------- ---------
  Cash flow from/(used in) investing activities........................ 62,914 (68,841)
    --------- ---------
       
  Repayment of loans........................................................... (39,644) (41,409)
  Capital reduction paid to outside shareholders.................... (25,451) -
  Payment of dividends ....................................................... (54,133) (56,385)
    --------- ---------
  Cash flow used in financing activities.................................. (119,228) (97,794)
    --------- ---------
       
  Net cash increase/(decrease) for the year........................ 68,018 (33,454)
  Cash at beginning of the year......................................... 173,830 207,284
    --------- ---------
  Cash at end of year........................................................ 241,848 173,830
    ===== =====

Note: Cash is net of short term borrowings
# - See Note 8

8. CHANGES IN ACCOUNTING POLICY
 

In compliance with new Statements of Accounting Standard, the Company and the group has this year modified its accounting policy in respect of:

  • deferred expenditure (mainly pre-operating expense) which is now written off in the year incurred instead of being amortised over the first three years of operation;
  • items outside normal trading activities which are now treated as ìexceptionalî instead of ìextraordinary" and are presented before calculating "profit before taxation" and
  • dividend income and dividend payment which are recognised as an asset or liability when declared payable instead of when proposed by the directors.
In consequence:
  • deferred expenditure as at 1 October 1999, $4.3 million for the group was adjusted by a charge against reserves. The comparative figures in the profit statement have been restated in accordance with the new policy resulting in group attributable net profit for the year to 30 September 2000, $50.8 million, being higher than previously reported by $3.2 million (last year as reported: $47.6 million).
  • dividend income recorded on a declared basis resulted in attributable net profit of the Company for the year to 30 September 2000, $4.6 million, being lower than previously reported by $13.7 million (last year as reported: $18.3 million).
Final dividend proposed after the balance sheet date is presented as a separate component of shareholdersí equity.

9. REVIEW OF OPERATIONS
 

The principal activities of the Group are the brewing and sale of beer and stout. These activities are carried out through the Companyís subsidiary, joint venture and associated companies to which the Company provides management and administrative services.

Investment income of the Company is derived mainly from dividends from its subsidiaries.

Group operating profit before interest, taxation and exceptional items (PBIT) from continuing operations increased by 15.9% to $123.7 million. Attributable net profit from continuing operations and before exceptional items increased by 33.8% to $74.8 million.

Singapore
Higher domestic beer sales and strong growth in exports were offset by higher marketing spend.

Malaysia
Competitive market conditions have eroded operating margins.

Papua New Guinea
Despite higher beer volume, earnings were affected by a 13% weakening of the Kina.

New Zealand
Improved product mix and greater cost efficiencies have enhanced profitability despite translation losses arising from a 10% depreciation of the NZ$. The sale of the wine business was completed early in the year under review (see "Exceptional Items" below).

Indochina
Profitability in Indochina continued to be boosted by improved sales and product mix in Vietnam.

China
Overall, losses in China have declined significantly. A maiden profit was achieved in Hainan, and our share of the losses in Shanghai have declined despite an increased shareholding from 35% to 48.5%.

Thailand
Continued sales growth of the Heineken brand has improved profitability significantly.

Corporate Office Cost
Net corporate office cost declined as a result of higher royalty income and lower corporate office expenses.

Exceptional Items
The disposal of the wine business by DB Group in New Zealand and discontinuance of the soft drinks business in Papua New Guinea resulted in a gain of $25.7 million and $1.4 million respectively.

Taxation
The effective tax rate declined from 39.4% to 26.0% due to non-taxable exceptional gains and significantly lower losses in China which cannot be offset against profits elsewhere.

Net Interest Income
Lower borrowings and surplus funds from the disposal of wine business resulted in positive net interest income.

Net Tangible Assets (NTA)
The NTA per share as at 30 September 2001 increased from $2.49 to $2.67 as a result of the unappropriated profits earned during the year.
10. OUTLOOK
 

The Group has sharpened its focus having divested its non-beer interests in 2000. The regionalisation strategy embarked upon in the early 1990s has paid off. Our newer breweries (especially those in Vietnam and Thailand) have performed well and contributed 19% to the Groupís attributable profit in the financial year under review. Plans are in hand to complete a new brewery in Hatay in northern Vietnam and for the doubling of brewery capacity (to 1.9 million hls) in Thailand. These projects are expected to be completed by October 2003 and March 2003 respectively.

In a normal business environment, the progress achieved would have given reason to expect further improvement in results for the year ahead but the uncertain global political and economic situation make it difficult to predict the outlook for the current financial year at this point in time.

Nevertheless the Board continues to remain confident in the long term positive development of the Group.

Other than the political/economic situation already referred to, no significant trend or event affecting the earnings of the Company or the Group has occurred between the end of the financial year, 30 September 2001, and the date of this announcement.
10.

DIVIDEND
  (a)

The Directors propose, subject to shareholders' approval at the Annual General Meeting to be held on 29 January 2002, a final dividend of 9 Singapore cents per share of $1, being AFTER deduction of Singapore tax, to be paid on 21 February 2002. This is equivalent to a gross dividend of 11.9%. Taken with the interim dividend this will give a total distribution for the year of 18 cents per share after tax, or 23.8% gross (last year: 18 cents after tax, or 24% gross).
   

 
  (b)

Registrable transfers received by the Company's Registrars, Barbinder & Co Pte Ltd, 8 Cross Street, #11-00 PWC Building, Singapore 048424 by 5.00pm on 6 February 2002 will be registered before entitlements to the dividend are determined. Notice is hereby given that the share registers will be closed from 7 February 2002 to 8 February 2002, both dates inclusive, for preparation of dividend warrants.
   

 
  (c)

Notice is hereby given that the Annual General Meeting of the Company will be held at Level, 2 Alexandra Point, 438 Alexandra Road, Singapore 119958 on Tuesday 29 January 2002 at 10.00 am.

BY ORDER OF THE BOARD
I A MacLean
Company Secretary

12 November 2001



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