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Group financial results for the year ended 31 March 2024 and cash dividend declaration
PREMIER GROUP LIMITED
(Incorporated in the Republic of South Africa)
Registration number 2007/016008/06)
JSE share code: PMR
ISIN: ZAE000320321
(Premier, the "Group" or the "Company")
GROUP FINANCIAL RESULTS FOR THE YEAR ENDED 31 MARCH 2024 AND CASH DIVIDEND DECLARATION
FINANCIAL OVERVIEW
- Revenue increased by 3.6% to R18.6 billion
- Earnings before finance income and finance costs, tax, depreciation and
amortisation ("EBITDA") increased by 18.6% to R2.1 billion
- Operating profit increased by 26.4% to R1.6 billion
- Earnings per share ("EPS") increased by 13.3% to 715 cents per share
- Headline earnings per share ("HEPS") increased by 17.4% to 744 cents per share
- Normalised HEPS(1) increased by 34.8% to 744 cents per share
(1) The prior year normalised headline earnings per share were reduced for foreign exchange gains on cash and loans of a funding
nature of R60 million and by the reversal of accrued withholding tax on preference dividends of R43 million to profit on the
conversion of the redeemable preference shares to ordinary shares. These items were once-off items that were included in prior
year net profit.
COMMENTARY ON PERFORMANCE
We are pleased to present another set of robust results for Premier for the year
ended 31 March 2024. Premier maintained an unrelenting focus on optimising
operational efficiencies, margin management and upskilling our people, paving the
way for the Group's success. Notwithstanding economic constraints, Premier has with
the benefit of R6 billion of capital expenditure over the past ten years, managed to
deliver on its investment case with resilience and commitment to its purpose.
As anticipated, the growth in the Group's revenue moderated to 3.6% bringing revenue
up to R18.6 billion. Both the Millbake and the Groceries and International categories
contributed to the growth increasing by 3.7% and 3.3% respectively. The softening to
single digit revenue growth was expected given the impact of significant soft
commodity inflation in the prior year and its subsequent stabilization.
EBITDA increased by 18.6% to R2.1 billion, underpinned by strong results in both
categories. Millbake EBITDA grew by 20.6%, while the Groceries and International
EBITDA grew by 3.7%. The Group's EBITDA margin of 11.0% improved by 140 basis points
compared to the prior year level of 9.6%.
Operating profit increased by 26.4% to R1.6 billion. The operating profit margin
improved by 160 basis points to 8.8% when compared to last year.
EPS increased by 13.3% to 715 cents and HEPS increased by 17.4% to 744 cents.
Normalised HEPS increased by 34.8% to 744 cents. There was no difference between
HEPS and normalised HEPS for the current year.
Cash generated from operations increased by 54.8% to R2.4 billion, underpinned by
the growth in the Group's EBITDA and supported by well managed working capital with
improved debtor collections and lower inventory balances at 31 March 2024.
The cash generated by the Group has enabled substantial deleveraging
reducing the leverage ratio to a level of 0.9x that is significantly lower than
historical levels. Voluntary capital repayments on borrowings of R706 million were
made and a further R210 million was repaid on the bank overdraft facility during the
year. This voluntary capital repayment remains available to drawdown for future
funding requirements.
MILLBAKE
The Millbake division continued to deliver pleasing results. The moderating of
revenue growth was due largely to the stabilisation of soft commodity prices and
global volatility. The upgrades of several bakeries and wheat mills have improved
efficiencies and yielded positive results. Despite the persistent burdens of high
interest rates and unemployment levels, which continue to negatively impact
disposable income, Premier remains well positioned to service low-income consumers
with its broad product offering.
GROCERIES AND INTERNATIONAL
The Groceries and International division performed well with strong growth in Sugar
Confectionery and pleasing results in Home and Personal Care(HPC). The optimisation
of the confectionery footprint and increased capacity in HPC manufacturing has
introduced enhanced efficiencies and enabled onshoring of supply to the UK market.
The Group's business division in Mozambique, CIM, continues to face headwinds but
the business remains well positioned for the anticipated economic recovery.
CASH DIVIDEND DECLARATION
Premier is pleased to announce that a final gross dividend of 220 cents per share
has been declared out of the Company's reserves in respect of both the ordinary
shares of no-par value and the unlisted "A" and "A1" ordinary shares of no par-value,
for the year ended 31 March 2024. This equates to a final gross dividend of R283.6 million
in respect of the ordinary shares and R2.6 million in respect of the "A" ordinary
shares.
Cash flows over FY2024 remained ahead of expectations, and the Company has shown
strong deleveraging of the balance sheet ahead of initial guidance. Premier continues
to maintain appropriate cash reserves to execute on committed capital requirements,
as well as to retain flexibility to assess organic and inorganic growth opportunities
as they may arise. Furthermore, the Board is satisfied that the Company is solvent
and liquid, and that it has sufficient capital and reserves after the payment of the
final dividend, to support its operations for the foreseeable future.
The "A" and "A1" ordinary shareholders have a right to receive a distribution each
time the Board authorises a dividend to the Company's ordinary shareholders. The "A"
and "A1" distribution is determined in relation to the number of ordinary shares
that equal the value of the "A" and "A1" ordinary shares. The issued share capital
at the declaration date is 128 905 800 ordinary shares, 15 457 "A" ordinary shares
and 23 060 "A1" shares. The latter shares equate to 1 171 167 and 0 ordinary shares
respectively.
A dividend withholding tax of 20% or 44 cents per share will be applicable, resulting
in a net dividend of 176 cents per share, unless the shareholder concerned is exempt
from paying dividend withholding tax or is entitled to a reduced rate in terms of an
applicable double-tax agreement. The Company's tax reference number is 9102629160.
The salient dates relating to the payment of the dividend are as follows:
Last day to trade in order to participate in the dividend Tuesday, 30 July 2024
First day to trade ex-dividend Wednesday, 31 July 2024
Record date Friday, 2 August 2024
Payment date Monday, 5 August 2024
Share certificates may not be dematerialised or rematerialised between Wednesday,31
July 2024 and Friday, 2 August 2024, both days inclusive.
In terms of the Company's Memorandum of Incorporation, dividends will only be
transferred electronically to the bank accounts of shareholders. In the instance
where shareholders do not provide the Transfer Secretaries with their banking
details, the dividend will not be forfeited but will be marked as 'unclaimed' in the
share register until the shareholder provides the Transfer Secretaries with the
relevant banking details for payout.
For FY2025, as part of the 30% – 60% targeted pay-out ratio, Premier will consider
a combination of ordinary dividends, special dividends and share buybacks in an
ongoing commitment to total shareholder returns in line with expectations. Any share
buyback will be executed with consideration to liquidity parameters.
ACQUISITION AFTER YEAR END
Premier has acquired a 30% shareholding in Goldkeys International Proprietary Limited
("Goldkeys") with effect 3 June 2024.
The investment builds on the relationship that commenced on 10 May 2023, when Premier
entered into a Sales, Merchandising and Route to Market Services Agreement with
Goldkeys to manage their sales function to assist them in building its brands and
sales outside of KwaZulu-Natal.
Goldkeys is a rice distributor based in KwaZulu-Natal that was founded in 1994 and
is one of the largest rice importers into South Africa. It supplies branded Thai and
Indian sourced rice under its brands "Golden Delight", "Golden Pride" and "Light &
Right", as well as house brands to a number of South Africa retailers and independent
wholesalers. Goldkeys is a growing business and for the month of February 2024, its
"Golden Delight" brand achieved the No.2 national market share by volume (as measured
by NielsenIQ).
The investment is aligned with Premier's strategy to grow its branded product
portfolio. Rice complements Premier's staple foods basket of bread, maize, and wheat
products offering synergies along the value chain. The investment in Goldkeys will
benefit Premier's existing rice operations outside South Africa where it sources
rice for sale under its own brands.
Premier settled the purchase consideration in cash on 3 June 2024 and has appointed
representatives to the board of directors of Goldkeys. The investment in Goldkeys
will be treated as an associate and equity accounted for.
OUTLOOK
Premier continues to execute on the business strategy articulated in the Pre-listing
statement, retaining focus on efficiencies and agile execution. Lingering volatility
remains, impacting soft commodity prices, and these inflationary pressures are
expected to sustain revenue growth in the coming year. Operational efficiencies
exhibited throughout the business will support the continuation of margins
experienced during the past year. From a capital projects perspective, the
refurbishment of the Aeroton bakery will remain the primary focus for the year.
We continue to align our sustainability journey with our corporate strategy
supporting a long-standing commitment to our purpose. Premier engages constructively
with all spheres of government and looks forward to engaging with the new
administration post the national and provincial elections.
Any forward-looking information contained in this announcement has not been reviewed
or reported on by the Group's auditors.
ABOUT THIS ANNOUNCEMENT
The contents of this results announcement are the responsibility of the directors of
the Company and have not been reviewed or audited by the Group's auditor.
This announcement is a summary of information in the audited consolidated annual
financial statements for the year ended 31 March 2024 ('results') and does not
contain full or complete details. Any investment decisions by investors and/or
shareholders should be based on the results. The results and the summary consolidated
annual financial statements are available on the JSE's cloudlink at
https://senspdf.jse.co.za/documents/2024/JSE/ISSE/PMRE/11062024.pdf and
published on the Company's website,
https://www.premierfmcg.com/investors/results-reports on 11 June 2024.
PricewaterhouseCoopers Inc., the Group's independent auditor, has audited the
consolidated annual financial statements of the Group from which this announcement
has been derived, and has expressed an unqualified audit opinion on the consolidated
annual financial statements.
Non-executive directors
I van Heerden (Chairman), JER Matthews, PRN Hayward-Butt (Alternate Director to JER
Matthews)
Independent non-executive directors
FN Khanyile (Lead Independent), DD Ferreira, H Ramsumer and W Sihlobo
Executive directors
JJ Gertenbach (Chief Executive Officer), F Grobbelaar (Chief Financial Officer)
Company Secretary: B Baker
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
11 June 2024
Date: 11-06-2024 07:05:00
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