| Mon 19 Feb 2001, 0:00 | | Distillers Corporation Limited - Results |
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DISTILLERS CORPORATION LIMITED
SIX MONTHS ENDED YEAR ENDED
31 DECEMBER 30 JUNE
UNAUDITED PRO FORMA PRO FORMA
2000 1999 % 2000
R'000 R'000 CHANGE R'000
REVENUE 2 544 092 2 640 111 (3,6) 4 610 292
OPERATING EXPENSES (2 321 075) (2 324 817) (4 218 611)
NET OPERATING PROFIT 223 017 315 294 (29,3) 391 681
DIVIDEND INCOME 37 145 36 975 72 784
NET FINANCING COST (68 157) (81 253) (145 889)
INCOME FROM ASSOCIATES 2 609 1 525 3 073
PROFIT BEFORE EXCEPTIONAL
ITEMS 194 614 272 541 (28,6) 321 649
EXCEPTIONAL ITEMS (50 983) 41 840 41 840
PROFIT BEFORE TAXATION 143 631 314 381 363 489
TAXATION (22 625) (82 297) (96 355)
PROFIT ATTRIBUTABLE TO MINORITY
SHAREHOLDERS (13) (163) (266)
NET PROFIT ATTRIBUTABLE TO ORDINARY
SHAREHOLDERS 120 993 231 921 (47,8) 266 867
ADJUSTED FOR:
- EXCEPTIONAL ITEMS 32 709 (35 288) (35 288)
AFTER TAX PROFIT ON THE SALE OF
FIXED ASSETS (478) (3 144) (3 795)
HEADLINE EARNINGS 153 224 193 489 (20,8) 227 784
ISSUED ORDINARY SHARES
('000) 195 580 195 580 195 580
EARNINGS PER SHARE (CENTS) - AFTER
EXCEPTIONAL ITEMS 61,9 118,6 (47,8) 136,4
HEADLINE EARNINGS PER
SHARE (CENTS) 78,3 98,9 (20,8) 116,5
DIVIDENDS PER SHARE
(CENTS) 12,0 20,8 (42,2) 62,3
SIX MONTHS ENDED YEAR ENDED
31 DECEMBER 30 JUNE
UNAUDITED PRO FORMA PRO FORMA
2000 1999 2000
R'000 R'000 R'000
NET CASH FLOW FROM
OPERATING ACTIVITIES 178 191 189 538 100 192
NET CASH FLOW FROM
INVESTMENT ACTIVITIES (58 582) (97 148) (159 383)
NET CASH FLOW FROM
FINANCING ACTIVITIES (50 296) (57 231) 99 987
NET INCREASE IN CASH
RESOURCES 69 313 35 159 40 796
CASH RESOURCES AT
THE BEGINNING
OF THE PERIOD 104 923 64 127 64 127
CASH RESOURCES AT THE
END OF THE PERIOD 174 236 99 286 104 923
31 DECEMBER 30 JUNE
UNAUDITED PRO FORMA PRO FORMA
2000 1999 2000
R'000 R'000 R'000
ASSETS
NON-CURRENT ASSETS
PROPERTY, PLANT AND EQUIPMENT 1 033 743 1 033 935 1 027 542
INVESTMENTS IN PREFERENCE
SHARES - UNLISTED 588 135 515 037 551 076
OTHER INVESTMENTS AND
LOANS - UNLISTED 25 124 23 117 25 148
1 647 002 1 572 089 1 603 766
CURRENT ASSETS
INVENTORIES 1 547 550 1 579 079 1 620 413
TRADE AND OTHER RECEIVABLES 687 748 747 049 467 222
TAXATION 26 953 - 17 171
CASH RESOURCES 174 236 99 286 104 923
2 436 487 2 425 414 2 209 729
4 083 489 3 997 503 3 813 495
EQUITY AND LIABILITIES
CAPITAL AND RESERVES
SHARE CAPITAL 1 956 73 512 73 512
SHARE PREMIUM 558 238 - -
NON-DISTRIBUTABLE RESERVES 52 184 52 106 52 398
RETAINED INCOME 1 443 895 1 889 834 1 833 054
2 056 273 2 015 452 1 958 964
MINORITY INTEREST 799 724 786
2 057 072 2 016 176 1 959 750
NON-CURRENT LIABILITIES
INTEREST BEARING LIABILITIES 786 656 779 463 782 360
INTEREST FREE LIABILITIES 15 787 13 990 15 297
DEFERRED TAX 74 416 60 085 71 773
876 859 853 538 869 430
CURRENT LIABILITIES
TRADE AND OTHER PAYABLES 696 701 698 380 412 035
PROVISIONS 30 290 36 019 36 902
INTEREST BEARING BORROWINGS 399 097 332 559 454 178
TAXATION - 20 231 -
SHAREHOLDERS FOR DIVIDENDS 23 470 40 600 81 200
1 149 558 1 127 789 984 315
4 083 489 3 997 503 3 813 495
31 DECEMBER 30 JUNE
UNAUDITED PRO FORMA PRO FORMA
2000 1999 2000
R'000 R'000 R'000
SHARE CAPITAL: 1 956 73 512 73 512
OPENING BALANCE:
DISTILLERS CORPORATION (SA) LTD 45 036 45 036 45 036
OPENING BALANCE:
STELLENBOSCH FARMERS' WINERY
GROUP LTD 28 476 28 476 28 476
ADJUSTMENT ON UNITING OF INTERESTS (28 476) - -
REDUCTION IN PAR VALUE OF SHARE
CAPITAL (43 636) - -
ISSUE OF SHARES 556 - -
SHARE PREMIUM: 558 238 - -
OPENING BALANCE - - -
REDUCTION IN PAR VALUE OF
SHARE CAPITAL 43 636 - -
ISSUE OF SHARES 514 602 - -
NON-DISTRIBUTABLE RESERVES: 52 184 52 106 52 398
OPENING BALANCE 52 398 51 754 51 754
FOREIGN CURRENCY TRANSLATION
RESERVE (214) 352 644
RETAINED INCOME: 1 443 895 1 889 834 1 833 054
OPENING BALANCE 1 833 054 1 648 798 1 648 798
GOODWILL WRITTEN OFF - (14 434) (17 596)
EXCESS OF VALUE OF SHARES ISSUED
OVER NET ASSET VALUE AND
RESERVES ACQUIRED (486 682) - -
CAPITAL PROFIT REALISED - 64 149 56 785
ATTRIBUTABLE PROFIT FOR THE
PERIOD 120 993 231 921 266 867
DIVIDENDS (23 470) (40 600) (121 800)
CLOSING BALANCE OF ORDINARY
SHAREHOLDERS' INTEREST 2 056 273 2 015 452 1 958 964
SIX MONTHS ENDED YEAR ENDED
31 DECEMBER 30 JUNE
UNAUDITED PRO FORMA PRO FORMA
2000 1999 2000
R'000 R'000 R'000
1 EXCEPTIONAL ITEMS
DISPOSAL OF INTEREST
IN NON-ALCOHOLIC
FRUIT BEVERAGES 14 500 - -
RESTRUCTURING COST (65 483) - -
COMPENSATION FOR THE
CANCELLATION OF
EXCLUSIVE DISTRIBUTION
RIGHTS - 20 000 20 000
RELEASE OF RESERVE FOR
RETIREMENT BENEFITS - 21 840 21 840
(50 983) 41 840 41 840
TAXATION EFFECT:
RESTRUCTURING COST 18 274 - -
RELEASE OF RESERVE FOR
RETIREMENT BENEFITS - (6 552) (6 552)
(32 709) 35 288 35 288
2. DIRECTORS' VALUATION OF
UNLISTED INVESTMENTS
- PREFERENCE SHARES 588 135 515 037 551 076
- OTHER INVESTMENTS AND LOANS 41 708 38 393 44 764
629 843 553 430 595 840
3. CAPITAL COMMITMENTS -
4 ORDINARY ACTIVITIES
CONTRACTED 31 948 31 509 51 571
AUTHORISED BUT NOT CONTRACTED 70 415 61 308 123 241
102 363 92 817 174 812
ESTIMATED CAPITAL
COMMITMENTS - RESTRUCTURING
CONTRACTED 7 385 - -
AUTHORISED BUT NOT
CONTRACTED 308 656 - -
316 041 - -
4. DEPRECIATION OF PROPERTY,
PLANT AND MACHINERY 55 699 51 385 111 208
5. NET ASSET VALUE PER
6. SHARE (CENTS) 1 052 1 031 1 002
AS THE GROUP OPERATES
IN ONE PRIMARY SEGMENT
ONLY, NO SEGMENT INFORMATION
IS DISCLOSED.
RESTRUCTURING OF INTERESTS
THE SHAREHOLDERS OF BOTH DISTILLERS CORPORATION (SA) LIMITED "DISTILLERS" AND
STELLENBOSCH FARMERS' WINERY GROUP LIMITED "SFW" APPROVED THE MERGER OF
OPERATIONS OF THE RESPECTIVE GROUPS AT GENERAL MEETINGS ON 10 NOVEMBER 2000.
THE EFFECTIVE DATE OF THE MERGER WAS 1 JULY 2000.
IN TERMS OF THIS TRANSACTION DISTILLERS ACQUIRED THE ASSETS AND LIABILITIES OF
SFW FOR A PURCHASE CONSIDERATION OF R515,2 MILLION WHICH WAS DISCHARGED BY THE
ALLOTMENT OF 55,6 MILLION SHARES IN THE SHARE CAPITAL OF DISTILLERS, INCREASING
THE ISSUED SHARE CAPITAL FROM 140 MILLION TO 195,6 MILLION SHARES. THE
RESTRUCTURING, UNITING THE INTERESTS OF DISTILLERS AND SFW, HAS BEEN ACCOUNTED
FOR BY MEANS OF THE "PREDECESSOR ACCOUNTING" METHOD. THE COMBINED GROUP WILL
CHANGE ITS NAME TO THE DISTELL GROUP LIMITED DURING MARCH 2001.
THIS INTERIM REPORT SHOULD BE READ IN CONJUNCTION WITH THE PRO FORMA STATEMENTS
AS CONTAINED IN THE CIRCULAR TO SHAREHOLDERS, DATED 19 OCTOBER 2000.
THE AUDITED CONSOLIDATED BALANCE SHEETS OF THE TWO GROUPS ON 30 JUNE 2000
INCLUDED THE FOLLOWING:
NON-CURRENT ASSETS 753 983 850 296 1 604 279
CURRENT ASSETS 969 532 1 227 786 2 197 318
NON-CURRENT LIABILITIES 400 212 466 889 867 101
CURRENT LIABILITIES 406 011 561 633 967 644
SHAREHOLDERS' INTERESTS 917 292 1 049 560 1 966 852
BEFORE THE EFFECTIVE DATE THE CONSOLIDATED INCOME STATEMENTS OF THE TWO GROUPS
INCLUDED THE FOLLOWING:
SFW DISTILLERS TOTAL
R'000 R'000 R'000
YEAR ENDED 30 JUNE 2000 (AUDITED)
REVENUE 2 179 909 2 151 774 4 331 683
EARNINGS 69 701 203 562 273 263
HEADLINE EARNINGS 68 254 165 926 234 180
SFW DISTILLERS TOTAL
R'000 R'000 R'000
SIX MONTHS ENDED
31 DECEMBER 1999 (UNAUDITED)
REVENUE 1 261 139 1 224 807 2 485 946
EARNINGS 68 551 143 332 211 883
HEADLINE EARNINGS 67 807 120 932 188 739
ACCOUNTING POLICY AND COMPARATIVE FIGURES
THE INTERIM REPORT HAS BEEN PREPARED IN ACCORDANCE WITH THE SOUTH AFRICAN
STATEMENT ON GENERALLY ACCEPTED ACCOUNTING PRACTICE (GAAP) (AC127), WHICH
RELATES TO INTERIM REPORTING.
THE ACCOUNTING POLICIES AND METHODS OF COMPUTATION FOR THE COMBINED GROUP ARE
IN ALL MATERIAL RESPECTS CONSISTENT WITH THOSE APPLIED BY THE INDIVIDUAL GROUPS
IN THE PREVIOUS FINANCIAL YEAR. THE COMPARATIVE PRO FORMA FIGURES FOR THE YEAR
ENDED 30 JUNE 2000 HAVE BEEN BASED ON THE AUDITED FINANCIAL STATEMENTS.
CERTAIN SUBSIDIARIES CHANGED THEIR ACCOUNTING POLICIES AS FOLLOWS ON 1 JULY
2000 TO BE IN AGREEMENT WITH THE POLICIES OF THE COMBINED GROUP.
CAPITALISATION OF QUALIFYING FINANCING COSTS.
FINANCING COSTS ARE ACCOUNTED FOR AGAINST OPERATING INCOME AS INCURRED.
VALUATION OF PROMOTIONAL MATERIAL.
PROMOTIONAL MATERIAL STOCK IS VALUED AT THE LOWER OF COST, DETERMINED ON THE
FIFO VALUATION METHOD, OR NET REALISABLE VALUE. THE COST OF THIS STOCK IS
ACCOUNTED FOR AGAINST OPERATING INCOME WHEN IT IS USED.
THE ACCOUNTING POLICY OF THE GROUP REGARDING THE TREATMENT OF GOODWILL HAS BEEN
CHANGED IN ORDER TO COMPLY WITH THE CHANGED STATEMENT ON GAAP (AC 131).
GOODWILL ARISING BEFORE 1 JULY 2000 HAS ALREADY BEEN WRITTEN OFF IN FULL
AGAINST RESERVES. COMPARATIVE FIGURES FOR THE SIX MONTHS ENDED 31 DECEMBER 1999
AND THE YEAR ENDED 30 JUNE 2000 HAVE NOT BEEN RESTATED.
THE EFFECT OF THESE CHANGES IN ACCOUNTING POLICIES IS AS FOLLOWS:
INCREASE/(DECREASE) 30 JUNE 2000 31 DECEMBER 1999
R'000 R'000
NON-CURRENT ASSETS (5 412) (5 609)
CURRENT ASSETS 7 752 10 200
NON-CURRENT LIABILITIES 1 847 2 580
CURRENT LIABILITIES - -
SHAREHOLDERS' INTEREST 493 2 011
COMPARATIVE FIGURES HAVE ALSO BEEN RESTATED TO ACHIEVE CONSISTENCY IN THE
PRESENTATION OF LINE ITEMS AND TO CONSOLIDATE THE RESULTS OF RETAIL INTERESTS
OF THE GROUP WHICH WERE PREVIOUSLY ACCOUNTED FOR AS AN ASSOCIATE BY THE
RESPECTIVE GROUPS. THE EFFECT OF THESE ADJUSTMENTS IS AS FOLLOWS:
INCREASE/(DECREASE)
30 JUNE 2000 31 DECEMBER 1999
R'000 R'000
NON-CURRENT ASSETS 4 899 5 643
CURRENT ASSETS 4 659 13 996
NON-CURRENT LIABILITIES 482 (19 647)
CURRENT LIABILITIES 16 671 22 511
SHAREHOLDERS' INTERESTS (7 595) 16 775
COMPARATIVE FIGURES FOR EARNINGS AND DIVIDENDS PER SHARE HAVE BEEN RECALCULATED
ON THE BASIS OF 195,6 MILLION ISSUED SHARES.
RESULTS
THE UNFAVOURABLE ECONOMIC CONDITIONS IMPACTED NEGATIVELY ON THE DOMESTIC MARKET
FOR WINE, SPIRITS AND ALCOHOLIC FRUIT BEVERAGES, IN WHICH THE GROUP IS
OPERATING. CHANGES IN CONSUMER SPENDING PATTERNS IMPACTED NEGATIVELY ON
TRADITIONAL MARKETS. ALTHOUGH THE GROUP HELD ITS POSITION IN THE DOMESTIC
MARKET, TURNOVER IN THIS MARKET DECREASED BY 8%. THE INTERNATIONAL DEMAND FOR
THE GROUP'S PRODUCTS CONTINUES TO IMPROVE. EXPORT SALES HAVE SHOWN AN INCREASE
OF 15% DURING THE PERIOD AND COMPRISE, INCLUDING SALES TO BOTSWANA, LESOTHO,
NAMIBIA AND SWAZILAND, APPROXIMATELY 16% OF THE GROUP'S TOTAL TURNOVER. THE
OPERATING MARGIN REDUCED FROM 11.9% TO 8.8%, PRIMARILY DUE TO THE DECREASE IN
TURNOVER. ALTHOUGH THE GROUP MADE CHANGES TO REDUCE OVERHEAD COSTS, EXPENDITURE
FOR THE PROMOTION OF THE GROUP'S TRADEMARKS WAS NOT CURTAILED. HEADLINE
EARNINGS DECLINED BY 20,8%.
INCOME DOES NOT ACCRUE EVENLY THROUGHOUT A YEAR. TURNOVER DURING THE SECOND SIX
MONTHS OF A FINANCIAL YEAR IS NORMALLY LESS THAN THAT OF THE FIRST SIX MONTHS,
WHILE EXPENDITURE IS MORE EVENLY INCURRED. LIMITED INVESTMENT IN FIXED ASSETS
AND A DECREASE IN OPERATING CAPITAL CONTRIBUTED TOWARDS A REDUCTION IN
FINANCING COSTS. SUBSEQUENT TO THE MERGER THE GROUP BEGAN TO RESTRUCTURE ITS
OPERATIONS, THROUGH SELECTIVE RATIONALISATION AND CONSOLIDATION OF ACTIVITIES.
RESTRUCTURING COST TO THE VALUE OF R65,5 MILLION HAVE BEEN INCURRED AND ARE
DISCLOSED AS AN EXCEPTIONAL ITEM (REFER TO NOTE 1). ESTIMATED FUTURE
EXPENDITURE IS AS FOLLOWS:
EXPENDITURE FOR THE SIX MONTHS TO 30 JUNE 2001: R32,1 MILLION
EXPENDITURE IN THE FOLLOWING FINANCIAL YEAR: R79,9 MILLION
TOTAL ESTIMATED FUTURE EXPENDITURE: R112,0 MILLION
THE DIRECTORS ARE SATISFIED THAT THE RESTRUCTURING PROCESS IS PROCEEDING
ACCORDING TO PLAN AND THAT THE CONSEQUENTIAL COSTS HAVE BEEN WELL CONTROLLED.
FINANCIAL POSITION
TOTAL ASSETS INCREASED BY 2,2% TO R4,1 BILLION. CAPITAL EXPENDITURE WAS LIMITED
TO THE REPLACEMENT OF ESSENTIAL ASSETS. THE EFFICIENT MANAGEMENT OF OPERATING
CAPITAL ENABLED THE GROUP TO IMPROVE CASH-FLOW FROM OPERATIONS BY R259 MILLION.
THE ESTIMATED CAPITAL EXPENDITURE TO RATIONALISE EXISTING STRUCTURES WITHIN THE
TWO GROUPS AMOUNTS TO R308,7 MILLION. THE MERGING OF ACTIVITIES IS EXPECTED TO
RESULT IN A SIGNIFICANT REDUCTION IN TOTAL ASSETS, THROUGH THE SALE OF SURPLUS
ASSETS AND A DECREASE IN INVENTORIES.
PROSPECTS
THE MERGER OF THE OPERATIONS OF DISTILLERS AND SFW IS EXPECTED TO IMPROVE
PROFITABILITY FOR THE ENLARGED GROUP ON A PERMANENT BASIS AND TO CREATE A BASIS
FOR LONG-TERM EARNINGS GROWTH, BY:
* A SYSTEMATIC REDUCTION IN THE LEVELS OF WORKING CAPITAL;
* IMPROVED EFFICIENCY IN MANUFACTURING AND DISTRIBUTION ACTIVITIES;
* AN INCREASE IN DOMESTIC SALES THROUGH THE RESTRUCTURING OF MARKETING AND
SALES ACTIVITIES;
* THE CREATION OF A CAPITAL BASE TO AFFORD THE ESTABLISHMENT AND PROMOTION OF
THE GROUP'S TRADEMARKS IN THE INTERNATIONAL MARKET.
THE ANTICIPATED BENEFITS OF THE MERGER WILL NOT MATERIALISE IN THE CURRENT
FINANCIAL YEAR, BUT ARE PLANNED TO COMMENCE DURING THE ENSUING FINANCIAL YEAR.
AS A RESULT OF THIS, AND THE CONTINUING DECLINE IN CONSUMER SPENDING, A FURTHER
DECLINE IN EARNINGS FOR THE SECOND HALF OF THE FINANCIAL YEAR IS EXPECTED, AS
COMPARED WITH THE COMBINED PROFITS OF DISTILLERS AND SFW DURING THE SAME PERIOD
IN THE PREVIOUS YEAR.
DIVIDEND
IN VIEW OF THE RESTRUCTURING PROCESS, WHICH IS CURRENTLY UNDERWAY, THE
DIRECTORS HAVE CONSIDERED IT APPROPRIATE TO DECLARE AN INTERIM DIVIDEND (NO 25)
OF 12 CENTS PER SHARE ON 19 FEBRUARY 2001. THIS DIVIDEND WILL BE PAID ON 16
MARCH 2001 TO SHAREHOLDERS REGISTERED ON 9 MARCH 2001.
SIGNED ON BEHALF OF THE BOARD
DM NUREK JJ SCANNELL
CHAIRMAN MANAGING DIRECTOR
STELLENBOSCH 19 FEBRUARY 2001
REGISTERED OFFICE: AAN-DE-WAGEN ROAD, STELLENBOSCH
TRANSFER SECRETARIES: COMPUTERSHARE SERVICES LTD, PO BOX 61051, MARSHALLTOWN
2107
