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Investor Relations: Financial Results Investor Relations

17 May 2002

Results for the half year ended 31 March 2002
Financial Statement And Dividend Announcement

The Directors are pleased to make the following announcement of the unaudited results for the half year ended 31 March 2002:-

     Group  Company
       
    -------- Half year to --------   -------- Half year to --------  
    31/3/2002 31/3/2001 Change 31/3/2002 31/3/2001 Change
      (restated)#     (restated)#  
    $'000 $'000 % $'000 $'000 %
 
1. PROFIT STATEMENT            
  Revenue............................... 559,488 528,021 6.0 - - -
  Investment income................ 1,101 966 14.0 26,457 81,959 (67.7)
  Other income including interest income.....................
3,711
7,399
(49.8)
13,224
10,924
21.1
  ===== =====   ===== =====  
   
  Operating profit before interest, depreciation and amortisation.........................

92,908

87,217

6.5

23,056

78,750

(70.7)
   
  Income derived from joint venture companies..............
12,920
9,191
40.6
- 
- 
- 
   
  Foreign exchange gain........ 765 1,933 (60.4) 312 1,039 (70.0)
   
  Depreciation and amortisation.........................
(22,088)
(21,791)
1.4
(367)
(439)
(16.4)
  --------- ---------   --------- ---------  
   
  Operating profit before interest, taxation and exceptional item....................

84,505

76,550

10.4

23,001

79,350

(71.0)
   
  Interest income.................... 2,365 6,222 (62.0) 505 174 190.2
   
  Interest on borrowings........ (875) (2,942) (70.3) (29) (2,175) (98.7)
  --------- ---------   --------- ---------  
   
  Profit before taxation and exceptional item....................
85,995
79,830
7.7
23,477
77,349
(69.6)
   
  Exceptional item................... - 25,126 (100.0) - - -
  --------- ---------   --------- ---------
   
  Profit before taxation............ 85,995 104,956 (18.1) 23,477 77,349 (69.6)
   
  Taxation............................. (23,127) (27,802) (16.8) (5,351) (19,807) (73.0)
  --------- ---------   --------- ---------  
   
  Profit after taxation.............. 62,868 77,154 (18.5) 18,126 57,542 (68.5)
   
  Attributable to outside shareholders.......................
(11,908)
(14,530)
(18.0)
-
-
-
  --------- ---------   --------- ---------  
   
  Attributable net profit
     Before exceptional item.....
   Exceptional item...............
50,960
-
43,370
19,254
17.5
(100.0)
18,126
-
57,542
-
(68.5)
-
    50,960 62,624 (18.6) 18,126 57,542 (68.5)
  ===== =====   ===== =====  
Attributable net profit had there been no change in accounting policy #............. 51,631 63,333 (18.5) 18,126 5,600 223.7

# - See paragraph 9
2. RATIOS   Group
    -------- Half year to --------
    31/3/2002 31/3/2001
      (restated)#
       
  Profit after tax before deducting minority interests as a percentage of revenue.............. 11.2% 14.6%**
       
  Earnings per ordinary share based on weighted average share capital:    
            - Before exceptional item................................................................................... 20.1 cents 17.1 cents
            - After exceptional item...................................................................................... 20.1 cents 24.7 cents
       
  Earnings per ordinary share on a fully diluted basis:    
            - Before exceptional item................................................................................... 20.1 cents 17.1 cents
            - After exceptional item..................................................................................... 20.1 cents 24.7 cents
       
  Net tangible asset backing per ordinary share............................................................. $2.82 $2.66 ##
       
** This included exceptional gain of $25.1 m from the disposal of Corban Wines. Excluding the exceptional gain, this would be 9.9%.
       
## Comparative refers to NTA per ordinary share as at 30 Sep 2001.
3.   SEGMENTAL RESULTS  Revenue  PBIT *
  Group revenue and profit analysis ------ Half year to ------ ------ Half year to ------
    31/3/2002     31/3/2001     31/3/2002     31/3/2001
           
  By Business Activity $'000 $'000 $'000 $'000
  Brewery operations
      - Subsidiary companies................................................... 559,488 528,021 72,523 68,206
      - Joint venture companies............................................... - - 12,920 9,191
  Investment income............................................................ - - 1,101 966
  Corporate office costs......................................................... - - (2,039) (1,813)
    --------- --------- --------- ---------
    559,488 528,021 84,505 76,550
    ===== ===== ===== =====
  By Territory
  Singapore........................................................................ 197,156 188,294 27,279 31,776
  Malaysia......................................................................... - - 8,347 6,060
  Papua New Guinea........................................................... 45,015 45,334 8,786 8,254
  New Zealand................................................................... 123,153 115,805 17,049 15,714
  Indochina......................................................................... 170,379 154,029 25,104 17,735
  China.............................................................................. 23,785 24,559 (5,743) (5,464)
  Thailand........................................................................... - - 5,722 4,288
  Corporate office costs......................................................... - - (2,039) (1,813)
    --------- --------- --------- ---------
    559,488 528,021 84,505 76,550
    ===== ===== ===== =====

* PBIT = Profit before interest, taxation and exceptional item
4.   EXCEPTIONAL ITEM    
There are no exceptional item for the period under review. The exceptional gain in the previous period refers to the disposal of Corban Wines.

# - See paragraph 9
5. ATTRIBUTABLE NET PROFIT  Group  
     
    -------- Half year to --------    
    31/3/2002 31/3/2001    
      (restated)#    
    $'000 $'000    
  Brewery operations
      - Subsidiary companies.................................................. 45,106 39,813    
      - Joint venture companies.............................................. 6,997 4,542    
  Investment income........................................................... 896 828    
  Corporate office costs........................................................ (2,039) (1,813)    
    --------- ---------    
    50,960 43,370    
  Exceptional item............................................................... - 19,254    
    --------- ---------    
    50,960 62,624    
    ===== =====    

 

6. BALANCE SHEET  Group  Company
    31/3/2002 30/9/2001 31/3/2002 30/9/2001
      (restated)#   (restated)#
    $'000 $'000 $'000 $'000
           
  Fixed assets....................................................................... 482,113 484,550 2,416 2,300
  Subsidiary companies........................................................ - - 803,406 772,160
  Joint venture companies.................................................... 89,777 82,021 102,898 94,812
  Associated companies........................................................ 3,767 3,349 - -
  Other investments............................................................. 46,379 41,580 11,651 11,732
  Goodwill.......................................................................... 4,329 - - -
  Brands.............................................................................. 5,760 5,973 5,760 5,973
  Deferred tax assets............................................................ 3,840 2,629 - -
  Current assets        
      - Cash.......................................................................... 274,419 241,848 5,015 438
      - Others....................................................................... 176,336 155,172 17,934 18,809
  Current liabilities        
      - Borrowings................................................................ (11,118) (10,488) - -
      - Others...................................................................... (222,925) (192,101) (224,428) (179,357)
  Deferred liabilities
      - Borrowings................................................................ (15,976) (6,018) - -
      - Others...................................................................... (26,854) (29,342) - -
    --------- --------- --------- ---------
  Net assets.......................................................................... 809,847 779,173 724,652 726,867
    ===== ===== ===== =====
 
  Financed by:-
  Share capital..................................................................... 253,615 253,125 253,615 253,125
  Share premium................................................................. 1,399 - 1,399 -
  Reserves........................................................................... 470,066 425,823 469,638 473,742
    --------- --------- --------- ---------
    725,080 678,948 724,652 726,867
  Outside shareholders........................................................ 84,767 100,225 - -
    --------- --------- --------- ---------
    809,847 779,173 724,652 726,867
    ===== ===== ===== =====

# - See paragraph 9

7. STATEMENT OF CHANGES IN EQUITY  Group  Company
    31/3/2002 31/3/2001 31/3/2002 31/3/2001
      (restated)#   (restated)#
  Issued Capital $'000 $'000 $'000 $'000
 
  Balance at beginning of period.......................................... 253,125 253,125 253,125 253,125
  Issued upon exercise of ESOS.......................................... 490 - 490 -
    --------- --------- --------- ---------
  Balance at end of period.................................................. 253,615 253,125 253,615 253,125
    --------- --------- --------- ---------
  Share Premium        
 
  Balance at beginning of period.......................................... - - - -
  Premium on shares issued during the period...................... 1,399 - 1,399 -
    --------- --------- --------- ---------
  Balance at end of period ................................................. 1,399 - 1,399 -
    --------- --------- --------- ---------
  Reserves        
 
  Balance at beginning of period        
     As previously reported.................................................
   Change in accounting policies.......................................
428,458
(2,635)
382,527
(2,807)
473,901
(159)
429,466
(159)
     As restated................................................................ 425,823 379,720 473,742 429,307
 
  Net profit for the period................................................... 50,960 62,624 18,126 57,542
 
  Dividends on ordinary shares .......................................... (22,817) (22,781) (22,817) (22,781)
 
  Currency exchange difference arising from translating foreign subsidiary and joint venture companies................
16,100
2,573
587
473
 
  Goodwill on acquisition of minority interest in subsidiary... - (254) - -
 
  Revaluation losses realised upon disposal of Corban Wines. - (402) - -
    --------- --------- --------- ---------
  Balance at end of period.................................................. 470,066 421,480 469,638 464,541
    --------- --------- --------- ---------
  Total Shareholdersí Equity ........................................ 725,080 674,605 724,652 717,666
    ===== ===== ===== =====

8. GROUP CASH FLOW STATEMENT  
   
    -------- Half year to --------
    31/3/2002 31/3/2001
    $'000 $'000
       
  Operating profit before taxation........................................... 85,995 104,956
  Adjustments for non cash items.......................................... 8,044 (13,346)
  Changes in working capital and currency realignment......... 1,452 5,162
  Income tax paid................................................................ (15,728) (13,478)
    --------- ---------
  Cash flow from operating activities..................................... 79,763 83,294
    --------- ---------
       
  Purchase of fixed assets and investments............................ (31,852) (13,502)
  Proceeds from sale of assets and investments...................... 575 109,355
  Loans to joint venture company......................................... (8,086) (10,505)
  Investment income.......................................................... 11,506 8,307
    --------- ---------
  Cash flow (used in)/from investing activities........................ (27,857) 93,655
    --------- ---------
       
  Proceeds from issue of share capital.................................... 1,889 -
  Proceeds from term loans.................................................. 9,509 -
  Repayment of loans......................................................... - (35,129)
  Capital reduction paid to outside shareholders...................... (2,020) (25,451)
  Payment of dividends....................................................... (28,713) (27,635)
    --------- ---------
  Cash flow used in financing activities.................................. (19,335) (88,215)
    --------- ---------
       
  Net cash increase for the period ........................................ 32,571 88,734
  Cash at beginning of the period......................................... 241,848 183,215
    --------- ---------
  Cash at end of period........................................................ 274,419 271,949
    ===== =====

# - See paragraph 9
9. CHANGE IN ACCOUNTING POLICY
 

In compliance with Singapore Statements of Accounting Standard, the Group has this period modified its accounting policies in respect of:

  • deferred taxation; and
  • provision for employee entitlements to annual leave for services rendered up to end of financial period.

In consequence, deferred taxation and accrued annual leave as at 1 October 2000, $2.8 million have been adjusted by a charge against reserves. The comparative figures in the profit statement for the six months to 31 March 2001 have been restated in compliance with the new policy resulting in group attributable net profit for that period, $62.6 million, being lower than previously reported by $0.7 million (last year as reported $63.3 million).

The comparatives in the profit statement of the Company have been restated in consequence of a change in accounting policy relating to dividend income which are recognised when the dividends are declared and approved. This change in accounting policy is to comply with Singapore Statements of Accounting Standard and has been adopted in the Financial Statements for year ended 30 September 2001.

10. 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 subsidiary and joint venture companies.

Despite the economic slowdown, sales revenue grew by 6% over the comparable period in the previous year.

Group operating profit before interest, taxation and exceptional item (PBIT) for the half year increased by 10.4% to $84.5 million compared to the corresponding period in the previous year. Attributable net profit before exceptional item increased by 17.5% to $51.0 million.

Singapore
Higher marketing spend boosted domestic beer sales and market share under competitive but subdued economic conditions, resulting in lower operating profitability. Exports of Tiger beer continue to record strong growth.

Malaysia
Increased sales and reduced costs coupled with write-back of surplus sales tax provisions lifted PBIT by 37.7%.

Papua New Guinea
Notwithstanding a 14 % weakening of the Kina, PBIT increased by 6.4% on the back of improved sales and product mix.

New Zealand
Improved product mix and a stronger NZ$ resulted in a PBIT growth of 8.5%.

Indochina
Improved sales and product mix in Vietnam contributed to the 41.6% increase in PBIT.

China
Losses in China were stable even though competitive pressures escalated.

Thailand
The 33.4% growth in PBIT reflected the continued growth of the Heineken brand.

Net Interest Income
The current low interest rate environment has resulted in a 62% decline in interest income to $2.4 million. Likewise interest expense declined 70.3% to $0.9 million.

Net Tangible Assets (NTA)
NTA per share on 30 September 2001 was $2.66 (restated). The NTA per share as at 31 March 2002 increased to $2.82 principally as a result of the unappropriated profits earned over the last 6 months.

11. OUTLOOK
 

The Group continues to benefit from its focus on the production, marketing and sale of beer and stout. Vietnam and Thailand continue to grow strongly and now account for more than 30% of total group PBIT. The improved economic environment in the region is likely to have a positive effect on the performance of the group.

Barring unforeseen circumstances, attributable profit before exceptional items for the full year is expected to be ahead of last year.

The Company has embarked on its second phase of regionalisation with the resumption of construction of Hatay brewery (in North Vietnam) and doubling of the breweryís capacity in Thailand by Year 2003.

It will also actively explore new growth opportunities in the region.

No significant trend or event affecting the earnings of the Company or the Group has occurred between the end of the financial period, 31 March 2002, and the date of this announcement.
12.

DIVIDEND
  (a)

The Directors have declared an interim dividend of 12 Singapore cents (last year: 9 cents) per share, being AFTER deduction of Singapore tax, to be paid on 19 June 2002. This is equivalent to a gross (pre-tax) dividend of 15.4%.
   

 
  (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 5 June 2002 will be registered before entitlements to the dividend are determined. Notice is hereby given that the share registers will be closed on 6 and 7 June 2002 for preparation of dividend warrants.

BY ORDER OF THE BOARD
I A MacLean
Company Secretary

17 May 2002



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