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The Group’s strategy for sustainable growth has been validated. We achieved solid turnover growth in our core businesses. Our targeted marketing initiatives were well received, leveraging well on the good consumer insights gained from close interaction with customers.
Cerebos Pacific Limited achieved a net profit of S$84.4 million (+21% higher than S$69.6 million in FY2005/06) on a 13% higher turnover of S$745.5 million (S$657.8 million in FY2005/06). If we exclude the favourable exchange gain of S$12.2 million, the growth in full year turnover would have been 11%. Basic earnings per share at 26.85 cents was 21% better than the 22.15 cents last year.
Group operating profit before interest and tax was up 25% at S$116.8 million (FY2005/06 S$93.7 million). If we exclude the favourable exchange gain of S$3.5 million, operating profit for the Group would have improved by 21% primarily generated by the Health Supplements business.
Our Health Supplements business achieved higher sales with BRAND’S® Essence of Chicken continuing as our flagship, leading the growth in this category. We continued with targeted marketing initiatives capitalising on the growing understanding from our good customer relationship management strategies. By getting closer to our consumers, we were able to provide specific solutions to meet their needs. The strong uptrend in our Health Supplement tablets category has continued and we achieved an operating profit this year signaling that the returns on investment in this segment is within grasp. Excluding the exchange gain of S$3.2 million, the growth in the Health Supplements business would have been 12% above last year.
Sales for the People’s Republic of China (PRC) business improved by 14%. This is the result of strong management focus and our strategy to leverage on the scientifically proven benefits of BRAND’S® Essence of Chicken coupled with our concentration on the students segment in our prime target areas of Guangzhou, Shanghai and Beijing. PRC has not yet reached breakeven due to the need for continued investment in brand building and marketing communications aimed at self-consumption and student segments. Nevertheless PRC continues to retain our great attention as it is potentially our largest medium-term growth market.
Australasia (ANZ) experienced 14% higher sales from the strong retail performance in the Gravies category, growth in Foodservice division and Caffe L’affare business. This was achieved in line with our previously identified roadmap to accelerate growth in the medium to long term. Excluding the exchange gain of S$9.0 million, ANZ turnover would be 11% above last year. A key highlight was the opening of the 50th Robert Harris Café in New Zealand, reinforcing our leadership position. Gravox and Fountain brands continued to trend upwards cementing their positions as category leaders by focusing on new product formats and stronger shelf presence.
Our Asian Food division achieved a 9% higher turnover compared to last year primarily due to higher export sales to new European markets. Despite the improvement in sales, operating profit was lower because last year’s operating profit included one-off gains from the disposal of a subsidiary’s factory and the write-back of restructuring provisions.
For the coming year, the outlook for the Group remains reasonably good. Aside from the unforeseen impact of economic sentiment, the Group remains confident of enhancing long-term shareholder value through continuous focus on its core businesses of health supplements, coffee and sauces.
The Board of Directors continues its commitment to good corporate governance and transparency as the basis for managing the Group’s business. In July 2007, Cerebos was ranked no. 55 most transparent amongst Singapore public listed companies in the Business Times Corporate Transparency Index, a clear indication of our intention to ensure stakeholders understand our business strategies.
The Board of Directors is recommending a first and final dividend of 6 cents per share, tax exempt one-tier. (First & final 6 cents per share, tax exempt one-tier in FY2005/06).
Recognising the longstanding and stalwart support from shareholders, the Board is also recommending a bonus dividend of 19 cents per share; tax exempt one-tier. (FY 2005/06: 19 cents; tax exempt one-tier) This represents a dividend yield of approximately 7% (based on share price at 30 Sep 2007).
The Board wishes to formally thank our staunch shareholders, valued business partners and our quality employees. We look forward to your continued support to enable the Group to achieve its goal of steady returns and sustainable growth.
Teo Chiang Long
Chairman
January 2008
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Cerebos
Pacific Limited,
Singapore
Tel: (65) 6212 0100
Fax: (65) 6226 2126
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