| Wed 13 Feb 2008, 13:30 | | DST - Distell Group Limited - Unaudited interim results of the group for the six |
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DST - Distell Group Limited - Unaudited interim results of the group for the six
months ended 31 December 2007 and cash dividend declaration
Distell Group Limited
Registration number 1988/005808/06
JSE share code: DST & ISIN: ZAE000028668
("Distell`` or "the Group" or "the company")
UNAUDITED INTERIM RESULTS OF THE GROUP FOR THE SIX MONTHS ENDED 31 DECEMBER 2007
AND CASH DIVIDEND DECLARATION
Abridged consolidated balance sheets
Unaudited Audited
31 December 30 June
2007 2006 2007
R`000 R`000 R`000
Assets
Non-current assets
Property, plant and 1 504 606 1 254 770 1 330 516
equipment
Biological assets 125 196 116 239 114 675
Financial assets 72 527 407 484 72 822
Investments in associates 26 610 22 960 23 270
Intangible assets 31 344 17 239 34 060
Retirement benefit assets 187 052 48 795 187 052
Deferred income tax assets 21 937 31 861 28 762
Total non-current assets 1 969 272 1 899 348 1 791 157
Current assets
Inventories 2 636 173 2 271 687 2 703 336
Trade and other receivables 1 275 127 1 038 948 809 024
Financial assets 374 528 266 273 361 152
Cash and cash equivalents 172 978 461 167 332 426
Total current assets 4 458 806 4 038 075 4 205 938
Total assets 6 428 078 5 937 423 5 997 095
Equity and liabilities
Capital and reserves
Capital and reserves 4 278 304 3 639 519 3 938 202
Minority interest 2 190 1 822 2 478
Total equity 4 280 494 3 641 341 3 940 680
Non-current liabilities
Interest-bearing borrowings 3 019 330 281 2 629
Retirement benefit 12 842 12 191 12 842
obligations
Deferred income tax 185 639 123 009 164 033
liabilities
Total non-current 201 500 465 481 179 504
liabilities
Current liabilities
Trade and other payables 1 575 187 1 450 346 1 386 401
Provisions 23 302 40 857 103 539
Interest-bearing borrowings 328 484 298 888 329 264
Current income tax 19 111 40 510 57 707
liabilities
Total current liabilities 1 946 084 1 830 601 1 876 911
Total equity and 6 428 078 5 937 423 5 997 095
liabilities
Abridged consolidated income statements
Unaudited Audited
Six months Year ended
ended
31 December 30 June
2007 2006 Change 2007
R`000 R`000 % R`000
Sales volumes
(litres `000) 223 789 208 077 7,6 391 889
Revenue 4 837 696 4 285 237 12,9 7 954 602
Operating expenses (4 052 853) (3 616 12,1 (6 839 869)
160)
Trading income 784 843 669 077 17,3 1 114 733
Net other gains 10 050 29 066 73 876
Operating profit 794 893 698 143 13,9 1 188 609
Dividend income 466 420 1 284
Finance income 28 637 37 163 87 172
Finance costs (27 122) (39 292) (79 203)
Share of profit of
associates 10 061 7 079 14 255
Profit before 806 935 703 513 14,7 1 212 117
taxation
Taxation (256 699) (217 310) (367 243)
Profit for the 550 236 486 203 13,2 844 874
period
Attributable to:
Equity holders of
the company 550 524 486 695 13,1 847 853
Minority interest (288) (492) (2 979)
550 236 486 203 13,2 844 874
Per share
performance:
Issued number of
ordinary shares 200 660 199 760 199 760
(`000)
Weighted number of
ordinary shares 199 624 198 773 199 079
(`000)
Earnings per
ordinary
share (cents)
- basic earnings 275,8 244,8 12,6 425,9
basis
- diluted earnings
basis 266,0 240,9 10,4 396,8
- headline basis 271,6 231,4 17,4 391,5
Dividends per
ordinary
share (cents)
- interim 104,0 87,0 19,5 87,0
- final - - - 109,0
104,0 87,0 19,5 196,0
Reconciliation of
headline earnings:
Net profit
attributable
to equity holders of
the company 550 524 486 695 13,1 847 853
Adjusted for
(net of taxation):
net other capital
gains (8 266) (26 730) (68 559)
Headline earnings 542 258 459 965 17,9 779 294
Abridged consolidated cash flow statements
Unaudited Audited
Six months ended Year ended
31 December 30 June
2007 2006 2007
R`000 R`000 R`000
Trading income 784 843 669 077 1 114 733
Non-cash flow items 1 617 47 278 117 539
Working capital changes (279 933) 161 375 (44 171)
Inventories 69 098 227 530 (191 065)
Trade and other receivables (517 220) (431 265) (125 884)
Trade payables and provisions 168 189 365 110 272 778
Net other gains 65 363 - 11 006
Cash generated from operating
activities 571 890 877 730 1 199 107
Net financing costs 1 959 (25 657) (21 895)
Taxation paid (266 864) (236 372) (365 380)
Dividends paid (217 572) (169 071) (342 729)
Cash retained from operating
activities 89 413 446 630 469 103
Cash outflow from investment
activities (251 278) (70 472) 50 800
Cash inflow from financing
activities 1 141 (25 443) (309 345)
Decrease in net cash and
cash equivalents (160 724) 350 715 210 558
Net cash and cash equivalents
at the beginning of the period 332 426 121 795 121 795
Exchange gains on cash and
cash equivalents 1 276 (11 343) 73
Cash and cash equivalents
at the end of the period 172 978 461 167 332 426
Abridged consolidated statement of recognised income and expense
Unaudited Audited
Six months ended Year ended
31 December 30 June
2007 2006 2007
R`000 R`000 R`000
Fair value adjustments (net of
tax):
- available-for-sale investments 258 212 3 093
Cash flow hedge realised to income - 294 256
Currency translation differences (689) (708) (7 893)
Actuarial gains and losses - - 98 689
Net loss recognised directly
in equity (431) (202) 94 145
Profit for the period 550 236 486 203 844 874
Total recognised income
for the period 549 805 486 001 939 019
Attributable to:
Equity holders of the company 550 093 486 493 941 998
Minority interest (288) (492) (2 979)
549 805 486 001 939 019
Notes
Unaudited Audited
31 December 30 June
2007 2006 2007
R`000 R`000 R`000
Net interest-bearing borrowings
1.
Interest-bearing borrowings
Non-current 3 019 330 281 2 629
Current 328 484 298 888 329 264
331 503 629 169 331 893
Cash resources 172 978 461 167 332 426
158 525 168 002 (533)
2. Cash outflow from investment
activities
To maintain operations (108 428) (43 201) (123 212)
To expand operations (142 850) (27 271) (89 960)
Preference shares redeemed - - 275 277
Investment in associates - - (11 305)
(251 278) (70 472) 50 800
3. Directors` valuation of financial
assets and associates
Preference shares 374 528 614 869 361 152
Other investments and loans 72 526 58 890 73 107
Associates 170 165 38 111 162 046
617 219 711 870 596 305
4. Capital commitments
Contracted 172 155 116 540 155 772
Authorised but not contracted 103 458 105 830 371 260
275 613 222 370 527 032
5. Depreciation of property, plant
and equipment 73 351 66 561 126 637
6. Net asset value per share (cents)
2 133 1 823 1 973
7. Segment report
The Group is engaged in the production, marketing and distribution of
alcoholic beverages. As these activities comprise an integrated
operation, the Group regards this as a single primary business segment,
on which all information is disclosed in this profit announcement.
8. Contingencies
In prior years the Group received compensation for relinquishing its
distribution rights to certain trademarks. The South African Revenue
Service has issued revised tax assessments to the value of R29,5 million
in terms of which the proceeds of R67 million have been subjected to
income tax and value added tax. The Group has lodged an appeal against
these assessments and the matter will be heard in the Special Income Tax
Court.
Salient features
- Headline earnings per share up 17,4%
- Interim dividend per share up 19,5%
- Total revenue up 12,9%
- Trading income up 17,3%
- Total sales volumes up 7,6%
Accounting policy and comparative figures
The interim financial statements are prepared in accordance with the recognition
and measurement principles of International Financial Reporting Standards
(IFRS), including IAS 34: Interim Financial Reporting, the requirements of the
South African Companies Act of 1973, as amended, and the Listing Requirements of
the JSE Limited.
The accounting policies and methods of computation are consistent with those
adopted in the previous period, with the exception of the following new
accounting standards, interpretations and amendments to IFRS:
- IAS 1 (AC 101) (Amendment) - Presentation of Financial Statements - Capital
Disclosures (effective from 1 January 2007)
- IFRS 7 (AC 144) - Financial Instruments: Disclosures, and a complementary
Amendment to IAS 1 (AC 101), Presentation of Financial Statements - Capital
Disclosures (effective from 1 January 2007)
- IFRIC 10 (AC 443) - Interim Financial Reporting and Impairment (effective 1
November 2006)
- IFRIC 11: IFRS 2 - Group and Treasury Share Transactions (effective 1 March
2007), adopted early
The Group changed its accounting policy on 1 July 2006 by adopting the option in
the amended statement of IFRS dealing with Employee Benefits (IAS 19), to
recognise all actuarial gains and losses in retirement benefit obligations,
outside profit and loss in the period in which they occur, in the Statement of
Recognised Income and Expense (SoRIE). This change in policy requires the Group
to present the SoRIE as a primary statement in place of the Statement of Changes
in Equity.
This change in accounting policy has been accounted for retrospectively and the
comparative financial statements for 31 December 2006 have been restated.
Comparative figures for "Net other gains" for the six months to 31 December 2006
have also been restated by including profit on the sale of property, plant and
equipment, previously included under operating expenses.
The effect of the above changes on 31 December 2006 is as follows:
R`000
Income statement
Increase in operating expenses 4 050
Increase in net other gains 4 050
Increase in profit before taxation -
Balance sheet
Increase in retirement benefit assets 38 823
Increase in deferred income tax assets 1 709
Decrease in retirement benefit obligations 21 153
Increase in deferred income tax liabilities 18 809
Increase in non-distributable and other reserves 42 876
Except for where indicated above, the adoption of these new accounting
standards, interpretations or amendments to IFRS had no material impact on the
consolidated results of either the current or prior periods.
Operating performance
Revenue grew 12,9% to R4,8 billion on a sales volume increase of 7,6%.
Domestically, sales volumes increased 5,4%. Cider brands and RTDs (ready-to-
drinks) continued their strong performances, with sales volumes growing an
impressive 10,6%. This was despite the production constraints resulting from the
national shortage in supplies of packaging and carbon dioxide which have been
impacting on the entire beverage industry, as well as capacity limitations at
Distell`s own production plants. Additional facilities to expand our capacity
were successfully commissioned during the period under review. Spirit volumes
rose 2,3%, driven primarily by the growth of key brands in the brandy, whisky
and liqueur categories. The white spirits market, however, remained under
pressure. Despite a fragmented and highly price-competitive market, the wine
portfolio was able to deliver profitable volume growth of 1,9%.
International sales volumes, excluding Africa, increased 17,7%. Spirit volumes
grew 11,9%, thanks to solid performances in most key markets. Wine sales volumes
also showed a healthy increase, rising 18,4%. As a result, international revenue
grew 20,7%.
Revenue derived from African countries rose 23,8% on a volume growth of 19,7%.
African countries outside the BLNS region (Botswana, Lesotho, Namibia and
Swaziland) began to make a significant contribution and succeeded in delivering
revenue growth of 33,3%.
The increase of 17,3% in trading income resulted not only from satisfactory
revenue growth, but also from improved throughput and the continued improvement
in efficiencies across the business. The Group`s ability to raise the
performance of its operating units once again allowed for significantly greater
brand investment, sales support and representation, as well as stepped-up
marketing activities, while net operating margin improved from 15,6% to 16,2%.
In August 2007, a fire at the company`s brandy maturation facility at De Wet,
near Worcester, caused partial damage to buildings, machinery and inventory. The
portion of the insurance claim which relates to damages to infrastructure
amounts to R10 million and is disclosed separately in the income statement as
net other gains.
Cash retained from operating activities amounted to R89,4 million.
Headline earnings grew 17,9% to R542,3 million and headline earnings per share
improved by 17,4%.
Investment and funding
Total assets increased 7,2% to R6,4 billion.
Capital expenditure amounted to R252,3 million, of which R108,4 million was
spent on the replacement of assets. A further R142,9 million was directed to the
expansion of cider and spirit production capacity, as well as the refurbishment
of the Wadeville plant.
Investment in net working capital increased R475,8 million to R2,3 billion.
Inventory rose R364,5 million, mainly as a result of an increase in spirits kept
under maturation to meet anticipated longer-term demand and the increase in the
stock holding of packaging material to ensure reliable supply.
Cash generated by operating activities amounted to R571,9 million (2006: R877,7
million), and the Group remains in a strong financial position, as shown by the
positive cash and cash equivalents balance of R173,0 million at period end.
Prospects
While South Africa`s economic fundamentals are sound, recent developments point
to slower economic growth in the short term. Higher fuel and food prices,
increased debt servicing costs and a moderation in real disposable income could
have an adverse impact on consumer spending in the short term. Nevertheless, the
board is expecting growth in consumer demand to continue, albeit at a slower
pace. The erratic supply of electricity has a disruptive impact on business, and
impacts on Distell`s ability to meet consumer demand.
Leading indicators suggest that global economic growth is likely to slow down
considerably in the year ahead, despite the still robust growth occurring in the
major emerging markets.
The trading environment is expected to remain competitive locally as well as
further afield and the alcoholic beverage industry will continue to face
challenges globally. The board believes the business is appropriately
structured, with a portfolio of compelling brands across a range of segments and
price points that will allow it to compete effectively. It should continue to
capture opportunities in key markets.
Distell expects to reflect continued growth in revenue and earnings.
DIRECTORATE
Jakes Gerwel and Peter Swartz resigned as directors and we thank them for their
valuable contribution.
CASH DIVIDEND
The directors have resolved to declare cash dividend number 39 of 104 cents
(2006: 87 cents) per share for the period ended 31 December 2007.
The salient dates of this dividend distribution are:
Last day to trade cum dividend Friday, 7 March 2008
Shares commence trading ex dividend from
commencement of business on Monday, 10 March 2008
Record date Friday, 14 March 2008
Payment date Monday, 17 March 2008
Share certificates may not be dematerialised or rematerialised between Monday,
10 March 2008, and Friday, 14 March 2008, both days inclusive.
Signed on behalf of the board
DM Nurek JJ Scannell
Chairman Managing director
Stellenbosch 13 February 2008
Directors: DM Nurek (Chairman), FC Bayly, PM Bester, PE Beyers, MJ Botha, JG
Carinus, SJ Genade, E de la H Hertzog, RL Lumb, MJ Madungandaba, LM Mojela, GP
Mthethwa, JJ Scannell (Managing director), MH Visser
Company secretary: CJ Cronje
Registered office: Aan-de-Wagenweg, Stellenbosch 7600
Transfer secretaries: Computershare Investor Services 2004 (Pty) Limited, PO Box
61051, Marshalltown 2107
Sponsor: RAND MERCHANT BANK (A division of FirstRand Bank Limited)
www.distell.co.za
Winner of the International Distiller of the Year Award
The International Wine and Spirit Competition (IWSC)
The IWSC is the largest spirits competition in the UK with close to 1 300
submissions in 2007 from 70 countries worldwide.
The judges whittled down the number of contenders for the trophy to a shortlist
of 26 and finally settled on Distell, based on the outstanding results achieved
by Mainstay, Amarula Cream and brandies from the Klipdrift, Van Ryn, Oude
Meester, Richelieu and Nederburg brands.
Ironically, Mainstay won the trophy for the best vodka in the competition,
outclassing Russian, Polish and Finnish producers.
Amarula, Distell`s best-selling liquor brand on the international market, won
the IWSC trophy for the best liqueur, while Distell`s brandy portfolio walked
off with two gold and eight silver medals, as well as four best-of-class
ratings.
Date: 13/02/2008 13:30:24 Produced by the JSE SENS Department.
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