| Wed 17 Feb 2010, 13:00 | | DST - Distell Group Limited - Unaudited results of the Group for the six months |
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DST - Distell Group Limited - Unaudited results of the Group for the six months
ended 31 December 2009 and cash dividend declaration
Distell Group Limited
Registration number 1988/005808/06
JSE share code: DST ISIN: ZAE000028668
("Distell" or "the Group")
Unaudited results of the Group for the six months ended 31 December 2009 and
cash dividend declaration
- Total sales volumes up 7,7%
- Total revenue, up 9,3%
- Operating profit up 1,9%
- Headline earnings per share down 2,0%
- Interim dividend maintained at 124 cents per share
- Lower operating margin due to unfavourable exchange rate and sales mix
Abridged consolidated statement of financial position
Unaudited Audited
31 December 30 June
2009 2008 2009
R`000 R`000 R`000
Restated Restated
Assets
Non-current assets
Property, plant and equipment 2 055 698 1 575 581 1 773 480
Biological assets 148 145 139 795 146 375
Financial assets 71 524 85 523 74 281
Investments in associates 40 093 34 169 38 487
Intangible assets 230 087 37 350 244 685
Retirement benefit assets 66 058 35 687 58 150
Deferred income tax assets 25 972 14 335 24 861
Total non-current assets 2 637 577 1 922 440 2 360 319
Current assets
Inventories 3 528 517 3 109 909 3 681 022
Trade and other receivables 1 820 987 1 640 221 1 155 381
Current income tax assets 59 453 48 646 74 381
Cash and cash equivalents 285 143 344 362 178 472
Total current assets 5 694 100 5 143 138 5 089 256
Total assets 8 331 677 7 065 578 7 449 575
Equity and liabilities
Capital and reserves
Capital and reserves 5 186 791 4 751 351 4 807 349
Non-controlling interest 2 193 2 025 2 025
Total equity 5 188 984 4 753 376 4 809 374
Non-current liabilities
Interest-bearing borrowings 423 546 3 485 422 386
Retirement benefit obligations 19 553 16 654 18 300
Deferred income tax liabilities 218 916 162 304 198 288
Total non-current liabilities 662 015 182 443 638 974
Current liabilities
Trade and other payables 2 284 695 2 001 996 1 650 532
Provisions 28 071 35 628 9 282
Interest-bearing borrowings 55 347 - 324 267
Current income tax liabilities 112 565 92 135 17 146
Total current liabilities 2 480 678 2 129 759 2 001 227
Total equity and liabilities 8 331 677 7 065 578 7 449 575
Abridged consolidated income statements
Unaudited Audited
Six months ended Year ended
31 December 30 June
2009 2008 Change % 2009
R`000 R`000 R`000
Restated Restated
Revenue 6 636 879 6 071 747 9,3 10 863 728
Operating expenses (5 687 030) (5 140 864) 10,6 (9 454 968)
Costs of goods sold (4 481 940) (3 986 624) (7 273 020)
Sales and marketing (679 015) (690 497) (1 294 589)
expenses
Distribution costs (371 341) (343 931) (652 208)
Administration and other (154 734) (119 812) (235 151)
costs
Other gains (666) 1 026 1 273
Operating profit 949 183 931 909 1,9 1 410 033
Dividend income 1 450 1 526 1 552
Finance income 6 040 11 164 30 938
Finance costs (50 899) (20 126) (54 162)
Share of profit of 15 521 13 940 30 058
associates
Profit before taxation 921 295 938 413 (1,8) 1 418 419
Taxation (298 444) (302 498) (464 707)
Profit for the period 622 851 635 915 (2,1) 953 712
Attributable to:
Equity holders of the 622 683 635 915 (2,1) 953 712
company
Non-controlling interest 168 - -
622 851 635 915 (2,1) 953 712
Per share performance:
Issued number of ordinary 201 775 201 092 201 092
shares (`000)
Weighted number of 200 948 200 667
ordinary shares (`000) 200 626
Earnings per ordinary
share (cents)
- basic earnings basis 309,9 317,0 (2,2) 475,3
- diluted earnings basis 302,9 309,8 (2,2) 455,4
- headline basis 310,1 316,6 (2,0) 474,8
- diluted headline basis 303,2 309,5 (2,0) 455,0
Dividends per ordinary
share (cents)
- interim 124,0 124,0 - 124,0
- final - - - 132,0
124,0 124,0 - 256,0
Reconciliation of
headline earnings:
Net profit attributable 622 683 635 915 (2,1) 953 712
to equity holders of the
company
Adjusted for (net of
taxation):
net other capital gains 480 (739) (917)
Headline earnings 623 163 635 176 (1,9) 952 795
Abridged consolidated statements of comprehensive income
Unaudited Audited
Six months ended Year ended
31 December 30 June
2009 2008 2009
R`000 R`000 R`000
Restated Restated
Profit for the period 622 851 635 915 953 712
Other comprehensive income (net of 2 995 (57 302) (81 644)
tax)
Fair value adjustments
- available-for-sale investments 883 689 3 419
Currency translation differences (8 147) (579) (56 848)
Actuarial gains and losses 10 259 (57 412) (28 215)
Total comprehensive income for the 625 846 578 613 872 068
period
Attributable to:
Equity holders of the company 625 678 578 613 872 068
Non-controlling interest 168 - -
625 846 578 613 872 068
Abridged consolidated cash flow statements
Unaudited Audited
31 December 30 June
2009 2008 2009
R`000 R`000 R`000
Restated Restated
Cash flow from operating
activities
Operating profit 949 183 931 909 1 410 033
Non-cash flow items 142 639 64 105 135 065
Working capital changes 115 095 (41 531) (514 692)
Inventories 153 538 128 574 (440 950)
Trade and other receivables (674 069) (691 562) (224 453)
Trade payables and provisions 635 626 521 457 150 711
Cash generated from operations 1 206 917 954 483 1 030 406
Net financing costs (45 305) (7 436) (9 258)
Taxation paid (172 569) (219 806) (451 523)
Dividends paid (265 266) (264 855) (513 727)
Net cash generated from 723 777 462 386 55 898
operating activities
Cash outflow from investment (355 946) (102 932) (591 749)
activities
Cash inflow from financing 12 543 735 423 480
activities
Increase in net cash, cash 380 374 360 189 (112 371)
equivalents and bank
overdrafts
Net cash, cash equivalents and (144 844) (31 341) (31 341)
bank overdrafts at the
beginning of the period
Exchange gains on cash and (5 734) 15 514 (1 132)
cash equivalents
Net cash, cash equivalents and 229 796 344 362 (144 844)
bank overdrafts at the end of
the period
Abridged consolidated statements of changes in equity
Unaudited Audited
Six months ended Year ended
31 December 30 June
2009 2008 2009
R`000 R`000 R`000
Restated Restated
Share capital 2 018 2 011 2 011
Opening balance 2 011 2 007 2 007
Issue of shares 7 4 4
Share premium 651 419 628 018 628 017
Opening balance 628 017 615 800 615 800
Issue of shares 23 402 12 218 12 217
Treasury shares (20 111) (11 929) (9 036)
Opening balance (9 036) (909) (909)
Issue of shares (23 409) (12 222) (12 221)
Shares paid and delivered 12 334 4 094
-share scheme 1 202
Non-distributable and other 212 826 218 954 203 135
reserves
Opening balance 203 135 270 040 270 040
Fair value adjustments 883 689 3 419
Currency translations (8 147) (579) (56 848)
differences
BEE share-based payment 3 438 3 438 6 877
reserve
Employee share scheme reserve 3 258 2 778 7 862
Actuarial gains and losses 10 259 (57 412) (28 215)
Retained earnings 4 340 639 3 914 297 3 983 222
Opening balance 3 983 222 3 543 237 3 543 237
Net profit attributable to 622 683 635 915 953 712
equity holders
Dividends (265 266) (264 855) (513 727)
Non-controlling interest 2 193 2 025 2 025
Total equity at the end of the 5 188 984 4 753 376 4 809 374
period
Segmental analysis
Revenue
Six months ended 31 December
2009 2008 Change
R`000 R`000 %
Sales of alcoholic beverages
South Africa 4 945 611 4 489 431 10,2
International 1 557 115 1 389 664 12,0
6 502 726 5 879 095 10,6
Other revenue 134 153 192 652 (30,4)
Consolidated 6 636 879 6 071 747 9,3
Operating profit
Six months ended 31 December
2009 2008 Change
R`000 R`000 %
South Africa 910 611 803 462 13,3
International 288 644 356 970 (19,1)
1 199 255 1 160 432 3,3
Corporate services (250 072) (228 523) 9,4
Consolidated 949 183 931 909 1,9
Notes
Unaudited Audited
31 December 30 June
Restated Restated
2009 2008 2009
R`000 R`000 R`000
1. Sales volumes (litres `000) 279 488 259 458 464 119
2. Net interest-bearing
borrowings
Interest-bearing borrowings
Non-current 423 546 3 485 422 386
Current 55 347 - 324 267
478 893 3 485 746 653
Cash resources (285 143) (344 362) (178 472)
193 750 (340 877) 568 181
3. Cash outflow from
investment activities
Purchases of property, plant
and equipment (PPE) to
maintain operations (84 480) (62 937) (99 966)
Purchases of PPE to expand
operations (287 566) (54 378) (282 142)
Proceeds from sale of PPE 1 993 3 139 5 279
Proceeds from financial assets 14 655 14 921 27 475
disposed
Purchases of intangible assets (548) (3 677) (242 395)
(355 946) (102 932) (591 749)
4. Directors` valuation of
financial assets and
associates
Other investments and loans 71 524 85 503 74 281
Associates 368 795 226 293 304 785
440 319 311 796 379 066
5. Capital commitments
Contracted 169 322 67 349 254 836
Authorised but not contracted 146 147 267 778 551 567
315 469 335 127 806 403
6. Depreciation of property,
plant and equipment 85 277 82 182 144 080
7. Net asset value per share
(cents) 2 572 2 364 2 392
8. Segment report
The basis for reporting segmental financial information has been changed in
accordance with the requirements of IFRS 8: Operating Segments. Previously,
the Group regarded its integrated activities of production, marketing and
distribution of alcoholic beverages as a single primary business segment.
With the implementation of IFRS 8, operating segments were identified based
on financial information reviewed regularly by management for the purpose of
assessing performance and allocating resources to these segments. The
Group`s international operations have been aggregated when they demonstrate
similar economic characteristics and when they do not individually meet the
quantitative recognition thresholds in terms of IFRS 8. Revenue includes
excise duty.
9. 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.
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; and in accordance with
the requirements of the South African Companies Act of 1973, as amended; and the
Listing Requirements of the JSE Limited.
These financial statements incorporate accounting policies and methods of
computation that are consistent with those adopted for the previous annual
financial reporting period, with the exception of the implementation of the
following new accounting standards, amendments and circulars:
- IFRS 8: Operating Segments (effective 1 January 2009)
- IAS 1 (revised): Presentation of Financial Statements (effective 1 January
2009)
- IAS 38 (amended): Intangible Assets (effective 1 January 2009)
- Circular 3/2009 "Headline Earnings" (effective for all financial periods
ending on or after 31 August 2009)
The application of IFRS 8 and IAS 1 (revised) has introduced certain changes to
the presentation of the financial statements and segment information. The
amendment to IFRS 8, which allows an entity to not disclose segmental assets, if
not reviewed by management in that format, has been adopted early. No
adjustments were necessary on the adoption of Circular 3/2009 "Headline
Earnings".
Comparative financial statements have been restated to account for the amendment
to IAS 38: Intangible Assets. Previously, merchandising and promotional stock
items were included in inventory and expensed to the income statement when
utilised. In accordance with the amendment in IAS 38: Intangible Assets, the
Group must expense all merchandising and promotional items, when having access
to such items, regardless of when these items are utilised by the Group.
The effect of the restatement on the comparative financial statements is
summarised below.
Previously Currently Difference
reported reported R`000
R`000 R`000
Income statement
31 December 2008
Operating expenses (5 119 869) (5 140 864) (20 995)
Taxation (308 455) (302 498) 5 957
Profit for the period 650 953 635 915 (15 038)
Headline earnings 650 214 635 176 (15 038)
30 June 2009
Operating expenses (9 453 995) (9 454 968) (973)
Taxation (464 994) (464 707) 287
Profit for the period 954 398 953 712 (686)
Headline earnings 953 481 952 795 (686)
Statement of financial position
31 December 2008
Inventories 3 163 565 3 109 909 (53 656)
Capital and reserves 4 789 855 4 751 351 (38 504)
Deferred income tax 177 456 162 304 (15 152)
liability
30 June 2009
Inventories 3 714 655 3 681 022 (33 633)
Capital and reserves 4 831 501 4 807 349 (24 152)
Deferred income tax 207 769 198 288 (9 481)
liability
Operating performance
Revenue grew 9,3% to R6,6 billion on a sales volume increase of 7,7%.
Domestic sales volumes increased by 5,8% and revenue by 10,2%. In an extremely
challenging trading environment, with consumers seeking lower-priced options,
Distell succeeded in maintaining its share of consumer spend. Cider and RTD
(ready-to-drink) brands continued their strong performance while the spirits
portfolio remained under pressure, with volumes declining. Distell`s wine
portfolio also showed a marginal volume decline.
International sales volumes, including Africa, increased by 13,8%. Spirit
volumes showed encouraging growth, and wines more modest growth. Ciders and RTDs
continued their upward trajectory, although off a smaller base. However, a
stronger rand against all major currencies limited international revenue growth
to 12,0%.
The increase of 1,9% in operating profit resulted mainly from continued revenue
growth. Benefits derived from improved throughput and greater efficiencies were
largely offset by the impact of the stronger rand on the revenue line and a less
profitable sales mix. Moreover, foreign currency conversion losses of R17,9
million (2008: R32,1 million gain) also impacted significantly on the 10,6%
increase in operating expenses. As a result, the net operating margin declined
to 14,3% (2008:15,3%).
Net financing costs increased from R9,0 million to R44,9 million due to higher
average borrowings during the period.
Headline earnings declined 1,9% to R623,2 million and headline earnings per
share declined 2,0%.
Investment and funding
Total assets increased by 11,8% to R8,3 billion.
Capital expenditure amounted to R372,1 million, of which R84,5 million was spent
on the replacement of assets. A further R287,6 million was directed mainly to
the expansion of cider, sparkling wine and whisky production capacity.
Investment in net working capital, including R116,1 million relating to last
April`s acquisition of cognac brand Bisquit, increased by 12,0% to R3,0 billion.
Cash retained from operating activities amounted to R380,4 million (2008: R360,2
million), and the Group remains in a strong financial position, with net
interest-bearing debt of R193,8 million and a debt-equity ratio of 3,7% as at 31
December 2009.
Prospects
The protracted global economic crisis had an adverse impact on consumer
spending, domestically and internationally. Although there have been some signs
of a recovery, the persistent uncertainty makes it difficult to predict either
the timing or the extent of any upturn, particularly given the present high
levels of consumer debt and unemployment.
Distell is well positioned to weather the recession and to take early advantage
of any improvements in the economic conditions of the markets in which we
operate, given our versatile portfolio of strong, appealing and diverse brands,
our capacity to trade across a spectrum of markets at a range of price points
and the security of our financial position.
Cash dividend declaration
The directors have resolved to declare cash dividend number 43 of 124 cents
(2008: 124 cents) per share for the period ended 31 December 2009.
The salient dates of this dividend distribution are:
Last day to trade cum dividend Friday, 5 March 2010
Shares commence trading ex dividend from
commencement of business on Monday, 8 March 2010
Record date Friday, 12 March 2010
Payment date Monday, 15 March 2010
Share certificates may not be dematerialised or rematerialised between Monday, 8
March 2010, and Friday, 12 March 2010, both days inclusive.
Signed on behalf of the board
DM Nurek JJ Scannell
Chairman Managing director
Stellenbosch
17 February 2010
Directors:
DM Nurek (Chairman), FC Bayly, PM Bester, PE Beyers, MJ Botha, JG Carinus, GP
Dingaan, SJ Genade, E de la H Hertzog, MJ Madungandaba, LM Mojela,
AC Parker, JJ Scannell (Managing director), CE Sevillano-Barredo,
BJ van der Ross, MH Visser
Company secretary: CJ Cronje
Registered office: Aan-de-Wagenweg, Stellenbosch 7600
Transfer secretaries:
Computershare Investor Services (Pty) Limited, PO Box 61051, Marshalltown 2107
Sponsor: RAND MERCHANT BANK (A division of FirstRand Bank Limited)
www.distell.co.za
Date: 17/02/2010 13:00:03 Produced by the JSE SENS Department.
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