| Wed 16 Feb 2011, 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 2010 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 2010 AND
CASH DIVIDEND DECLARATION
Salient features
- Total sales volumes up 2,8%
- Total revenue up 3,6%
- Operating profit maintained
- Headline earnings per share up 0,9%
- Interim dividend maintained at 124 cents per share
- Lower operating margin due to unfavourable exchange rate and less
favourable sales mix
Abridged consolidated statements of financial position
Unaudited Audited
31 December 30 June
2010 2009 2010
R`000 R`000 R`000
Assets
Non-current assets
Property, plant and equipment 2 146 305 2 055 698 2 157 912
Biological assets 140 361 148 145 138 915
Financial assets 81 753 71 524 89 105
Investments in associates 46 839 40 093 44 054
Intangible assets 196 626 230 087 205 680
Retirement benefit assets 30 397 66 058 49 656
Deferred income tax assets 46 938 25 972 47 122
Total non-current assets 2 689 219 2 637 577 2 732 444
Current assets
Inventories 3 448 463 3 528 517 3 818 661
Trade and other receivables 1 976 001 1 820 987 1 344 701
Current income tax assets 66 498 59 453 62 187
Cash and cash equivalents 580 859 285 143 243 038
Total current assets 6 071 821 5 694 100 5 468 587
Total assets 8 761 040 8 331 677 8 201 031
Equity and liabilities
Capital and reserves
Capital and reserves 5 588 759 5 186 791 5 237 317
Non-controlling interest 420 2 193 984
Total equity 5 589 179 5 188 984 5 238 301
Non-current liabilities
Interest-bearing borrowings 422 641 423 546 422 467
Retirement benefit obligations 22 692 19 553 21 099
Deferred income tax liabilities 235 028 218 916 230 380
Total non-current liabilities 680 361 662 015 673 946
Current liabilities
Trade and other payables 2 157 097 2 284 695 1 723 966
Provisions 245 087 28 071 208 625
Interest-bearing borrowings 749 55 347 336 657
Current income tax liabilities 88 567 112 565 19 536
Total current liabilities 2 491 500 2 480 678 2 288 784
Total equity and liabilities 8 761 040 8 331 677 8 201 031
Abridged consolidated income statements
Unaudited Audited
Six months ended Year ended
31 December 30 June
2010 2009 Change 2010
R`000 R`000 % R`000
Revenue 6 878 716 6 636 879 3,6 11 808 884
Operating costs (5 930 686) (5 687 030) 4,3 (10 413 146)
Costs of goods sold (4 619 427) (4 481 940) (7 974 656)
Sales and marketing
costs (728 566) (679 015) (1 398 540)
Distribution costs (412 694) (371 341) (717 755)
Administration and
other costs (169 999) (154 734) (322 195)
Other gains 147 (666) (2 821)
Operating profit 948 177 949 183 (0,1) 1 392 917
Dividend income 2 583 1 450 1 493
Finance income 7 542 6 040 15 247
Finance costs (35 244) (50 899) (83 899)
Share of profit of
associates 17 736 15 521 32 412
Profit before
taxation 940 794 921 295 2,1 1 358 170
Taxation (310 649) (298 444) (417 655)
Profit for the period 630 145 622 851 1,2 940 515
Attributable to:
Equity holders of
the company 630 710 622 683 1,3 941 556
Non-controlling
interest (565) 168 (1 041)
630 145 622 851 1,2 940 515
Per share
performance:
Issued number of
ordinary shares
(`000) 202 396 201 775 201 775
Weighted number of
ordinary shares
(`000) 201 599 200 948 201 143
Earnings per ordinary
share (cents)
- basic earnings basis 312,9 309,9 1,0 468,1
- diluted earnings basis 303,1 302,9 0,0 444,5
- headline basis 312,8 310,1 0,9 469,1
- diluted headline basis 303,0 303,2 (0,0) 445,4
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 to
equity holders of
the company 630 710 622 683 1,3 941 556
Adjusted for (net of
taxation):net other
capital gains (106) 480 2 031
Headline earnings 630 604 623 163 1,2 943 587
Abridged consolidated statements of cash flows
Unaudited Audited
Six months ended Year ended
31 December 30 June
2010 2009 2010
R`000 R`000 R`000
Cash flow from operating
activities
Operating profit 948 177 949 183 1 392 917
Non-cash flow items 181 522 142 639 301 441
Working capital changes 153 214 115 095 (139 073)
Inventories 364 4043 153 538 (140 340)
Trade and other receivables (644 537) (674 069) (187 572)
Trade payables and provisions 433 348 635 626 188 839
Cash generated from operations 1 282 913 1 206 917 1 555 285
Net financing costs (25 194) (45 305) (69 271)
Taxation paid (235 188) (172 569) (394 737)
Net cash generated from operating 1 022 531 989 043 1 091 277
activities
Cash outflow from investment (77 068) (355 946) (542 516)
activities
Cash inflow from financing 12 129 12 543 22 008
activities
Dividends paid (266 013) (265 266) (514 931)
Increase in net cash, cash 691 579 380 374 55 838
equivalents and bank overdrafts
Net cash, cash equivalents and (92 733) (144 844) (144 844)
bank overdrafts at the beginning
of the period
Exchange losses on cash and cash (17 987) (5 734) (3 727)
equivalents
Net cash, cash equivalents and 580 859 229 796 (92 733)
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
2010 2009 2010
R`000 R`000 R`000
Share capital 2 024 2 018 2 018
Opening balance 2 018 2 011 2 011
Issue of shares 6 7 7
Share premium 675 982 651 419 651 419
Opening balance 651 419 628 017 628 017
Issue of shares 24 563 23 402 23 402
Treasury shares (22 931) (20 111) (10 453)
Opening balance (10 453) (9 036) (9 036)
Issue of shares (24 569) (23 409) (23 409)
Shares paid and delivered - share 12 091 12 334 21 992
scheme
Non-distributable and other reserves 159 140 212 826 184 486
Opening balance 184 486 203 135 203 135
Fair value adjustments (1 745) 883 2 732
Currency translation differences (24 824) (8 147) (39 155)
BEE share-based payment reserve 3 438 3 438 6 877
Employee share scheme reserve 4 354 3 258 8 279
Actuarial gains and losses (6 569) 10 259 2 618
Retained earnings 4 774 544 4 340 639 4 409 847
Opening balance 4 409 847 3 983 222 3 983 222
Net profit attributable to equity 630 710 622 683 941 556
holders
Dividends (266 013) (265 266) (514 931)
Non-controlling interest 420 2 193 984
Total equity at the end of the period 5 589 179 5 188 984 5 238 301
Abridged consolidated statements of comprehensive income
Unaudited Audited
Six months ended Year ended
31 December 30 June
2010 2009 2010
R`000 R`000 R`000
Profit for the period 630 145 622 851 940 515
Other comprehensive income (net of (33 138) 2 995 (33 805)
taxation)
Fair value adjustments
- available-for-sale financial
assets (1 745) 883 2 732
Currency translation differences (24 824) (8 147) (39 155)
Actuarial gains and losses (6 569) 10 259 2 618
Total comprehensive income for the 597 007 625 846 906 710
period
Attributable to:
Equity holders of the company 597 572 625 678 907 751
Non-controlling interest (565) 168 (1 041)
597 007 625 846 906 710
Segmental analysis
Revenue Unaudited Audited
Six months ended Year ended
31 December 30 June
2010 2009 2010
R`000 R`000 R`000
Sales of alcoholic beverages
South Africa 5 254 322 4 945 611 8 660 070
International 1 539 112 1 557 115 2 926 693
6 793 434 6 502 726 11 586 763
Other revenue 85 282 134 153 222 121
Consolidated 6 878 716 6 636 879 11 808 884
Unaudited Audited
Six months ended Year ended
31 December 30 June
Operating profit 2010 2009 2010
R`000 R`000 R`000
South Africa 1 036 828 910 611 1 532 863
International 190 616 288 644 389 742
1 227 444 1 199 255 1 922 605
Corporate services (279 267) (250 072) (529 688)
Consolidated 948 177 949 183 1 392 917
Notes
Unaudited Audited
31 December 30 June
2010 2009 2010
R`000 R`000 R`000
1. Sales volumes (litres `000) 287 357 279 488 498 094
2. Net interest-bearing borrowings
Interest-bearing borrowings
Non-current 422 641 423 546 422 467
Current 749 55 347 336 657
423 390 478 893 759 124
Cash resources (580 859) (285 143) (243 038)
(157 469) 193 750 516 086
3. Cash outflow from investment
activities
Purchases of property, plant and (54 340) (84 480) (184 599)
equipment (PPE) to maintain
operations
Purchases of PPE to expand (36 178) (287 566) (365 476)
operations
Proceeds from sale of PPE 1 870 1 993 3 704
Proceeds from financial assets 15 993 14 655 10 109
disposed
Purchases of intangible assets (4 413) (548) (6 254)
(77 068) (355 946) (542 516)
4. Directors` valuation of
financial assets and associates
Other investments and loans 81 753 71 524 89 105
Associates 419 945 368 795 375 224
501 698 440 319 464 329
5. Capital commitments
Contracted 371 558 169 322 49 860
Authorised but not contracted 135 021 146 147 386 487
506 579 315 469 436 347
6. Depreciation of property, plant 94 715 85 277 172 793
and equipment
7. Net asset value per share 2 762 2 572 2 596
(cents)
8. Segment report
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 - and value added tax. The Group has lodged an
appeal against these assessments and the matter was heard in the
Special Income Tax Court during October 2010, but judgment has not been
delivered.
Commentary
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
Listings 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:
- Amendment to IFRS 2: Group Cash-settled Share-based Payment Transactions
(effective 1 January 2010)
- IFRIC 19 (AC 452): Extinguishing Financial Liabilities with Equity
Instruments (effective 1 July 2010)
- IASB annual improvements project (2009)
The adoption of these new accounting standards, interpretations or amendments to
IFRS has had no material impact on the consolidated results of either the
current or prior periods.
Operating performance
Revenue grew 3,6% to R6,9 billion on a sales volume increase of 2,8%.
Domestic sales volumes increased by 3,2% and revenue by 6,2%. The trading
environment remained extremely challenging, characterised by intensified
competition, increased competitor market investment and the ongoing consumer
pursuit of lower-priced options. Cider and RTD (ready-to-drink) brands continued
their strong performance, whereas spend across the company`s spirits portfolio
declined. Distell`s wine portfolio also showed a marginal volume decline.
International sales volumes, including Africa, increased by 1,6% to reflect a
more favourable sales mix. Ciders and RTDs continued to deliver strong growth.
Spirit volumes grew marginally. Although Distell`s wine export volumes showed a
decline, the Group was nevertheless still able to improve its share of South
Africa`s total bottled wine exports for the period. A stronger rand against all
major currencies resulted in a marginal decline in revenue derived from
international markets.
Africa, in particular, continued to deliver strong growth, contributing 64,1% to
foreign revenue.
Although reasonable sales volume growth was achieved, the results for the period
under review were significantly impacted by adverse exchange rates and, to a
lesser extent, a less favourable sales mix. Benefits were derived from improved
throughput and better operating efficiencies; however, these were insufficient
to protect margins and profitability. Consequently, operating profit declined
marginally by 0,1%, while the net operating margin deteriorated to 13,8% (2009:
14,3%).
Net financing costs decreased from R44,9 million to R27,7 million due to lower
average borrowings during the period.
Headline earnings increased 1,2% to R630,6 million and headline earnings per
share increased 0,9%.
Investment and funding
Total assets increased by 6,8% to R8,8 billion.
Capital expenditure amounted to R90,5 million, of which R54,3 million was spent
on the replacement of assets. A further R36,2 million was directed mainly to the
expansion of cider, sparkling wine and whisky production capacity.
Investment in net working capital was maintained at R3,0 billion. Inventory was
2,3% lower at R3,4 billion. Investment in bulk stock of spirits in maturation,
planned in accordance with the Group`s longer-term view of consumer demand, was
re-evaluated in view of the recent decline in sales volumes.
Cash retained amounted to R691,6 million (2009: R380,4 million), and the Group
remains in a strong financial position, as shown by the positive cash and cash
equivalent balance of R580,9 million at the end of the reporting period.
Prospects
Although there are indications of a global economic recovery, lingering
vulnerabilities persist in some quarters. Moreover, widespread unemployment and
limited disposable income are likely to continue to impact adversely on consumer
spending. The trading environment is expected to stay extremely competitive,
both domestically and internationally.
Distell remains confident in the inherent strength and continued relevance of
its diverse and well-balanced portfolio. Its brands are very well accepted and
are perceived as offering good value. In addition, the portfolio is backed by
excellent quality credentials, strong service levels and well-established routes
to market, enabling the Group to compete effectively, while maximising trading
opportunities and profitability.
Cash dividend declaration
The directors have resolved to declare an interim cash dividend number 45 of 124
cents (2009: 124 cents) per share for the period ended 31 December 2010.
The salient dates of this dividend distribution are:
Last day to trade cum dividend Friday, 4 March 2011
Shares commence trading ex dividend
from commencement of business on Monday, 7 March 2011
Record date Friday, 11 March 2011
Payment date Monday, 14 March 2011
Share certificates may not be dematerialised or rematerialised between Monday,
7 March 2011, and Friday, 11 March 2011, both days inclusive.
Signed on behalf of the board
DM Nurek JJ Scannell
Chairman Managing director
Stellenbosch
16 February 2011
Directors:
DM Nurek (Chairman), FC Bayly, PM Bester, PE Beyers, MJ Botha, JG Carinus, GP
Dingaan, 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)
Brand highlights
Amarula is listed as one of the world`s hottest bar brands for 2011 by Drinks
International. The South African SuperBrand is also featured as one of the 2010
Impact Databank World`s Top 100 Premium Spirit Brands.
Klipdrift Export, the first South African brandy to make it onto the list of
2010 Impact Databank World`s Top 100 Premium Spirit Brands.
Euromonitor International ranks Hunter`s as the world`s second biggest cider
brand by volume.
Van Ryn`s is South Africa`s flagship name in fine brandy, twice earning the
title of Best Brandy on the International Spirits Challenge, and three times the
Worldwide Best Brandy award on the International Wine & Spirit Competition.
Nederburg is the 2011 Platter`s South African Winery of the Year with an
unprecedented achievement of five five-star ratings, while the 2010 Lyric is
chosen as Platter`s SuperQuaffer of the Year for its great taste and value.
www.distell.co.za
Date: 16/02/2011 13:00:01 Produced by the JSE SENS Department.
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