| Wed 24 Aug 2011, 12:30 | | DST - Distell Group Limited - Audited results of the group for the year ended |
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DST - Distell Group Limited - Audited results of the group for the year ended
30 June 2011 and cash dividend declaration
Distell Group Limited
Registration number 1988/005808/06
JSE share code: DST ISIN: ZAE000028668
("Distell", "the Group" or "the company")
AUDITED RESULTS OF THE GROUP FOR THE YEAR ENDED 30 JUNE 2011 AND CASH DIVIDEND
DECLARATION
Salient features
- Total sales volumes up 2,4%
- Total revenue up 4,4%
- Operating profit up 3,1%
- Headline earnings per share up 1,6%
- Annual dividend maintained
- Lower operating margin due to adverse exchange rate and less favourable
sales mix
Abridged consolidated statements of financial position
Audited
30 June
2011 2010
R`000 R`000
Assets
Non-current assets
Property, plant and equipment 2 349 699 2 157 912
Biological assets 131 827 138 915
Financial assets 118 541 89 105
Investments in associates 47 964 44 054
Intangible assets 221 331 205 680
Retirement benefit assets 42 391 49 656
Deferred income tax assets 74 915 47 122
Total non-current assets 2 986 668 2 732 444
Current assets
Inventories 3 961 917 3 818 661
Trade and other receivables 1 242 200 1 344 701
Current income tax assets 62 945 62 187
Cash and cash equivalents 229 850 243 038
Total current assets 5 496 912 5 468 587
Total assets 8 483 580 8 201 031
Equity and liabilities
Capital and reserves
Capital and reserves 5 688 229 5 237 317
Non-controlling interest 5 780 984
Total equity 5 694 009 5 238 301
Non-current liabilities
Interest-bearing borrowings 423 336 422 467
Retirement benefit obligations 73 790 21 099
Deferred income tax liabilities 234 732 230 380
Total non-current liabilities 731 858 673 946
Current liabilities
Trade and other payables 1 801 848 1 723 966
Provisions 240 499 208 625
Interest-bearing borrowings 865 336 657
Current income tax liabilities 14 501 19 536
Total current liabilities 2 057 713 2 288 784
Total equity and liabilities 8 483 580 8 201 031
Abridged consolidated income statements
Audited
Year ended
30 June
2011 2010 Change
R`000 R`000 %
Revenue 12 327 786 11 808 884 4,4
Operating costs (10 889 439) (10 413 146) 4,6
Costs of goods sold (8 291 871) (7 974 656)
Sales and marketing costs (1 497 260) (1 398 540)
Distribution costs (820 870) (717 755)
Administration and other costs (279 438) (322 195)
Other losses (1 756) (2 821)
Operating profit 1 436 591 1 392 917 3,1
Dividend income 5 180 1 493
Finance income 18 011 15 247
Finance costs (60 595) (83 899)
Share of profit of associates 37 950 32 412
Profit before taxation 1 437 137 1 358 170 5,8
Taxation (477 557) (417 655)
Profit for the year 959 580 940 515 2,0
Attributable to:
Equity holders of the company 960 673 941 556 2,0
Non-controlling interest (1 093) (1 041)
959 580 940 515 2,0
Per share performance:
Issued number of ordinary
shares (`000) 202 396 201 775
Weighted number of ordinary
shares (`000) 201 742 201 143
Earnings per ordinary
share (cents)
- basic earnings basis 476,2 468,1 1,7
- diluted earnings basis 448,0 444,5 0,8
- headline basis 476,8 469,1 1,6
- diluted headline basis 448,6 445,4 0,7
Dividends per ordinary
share (cents)
- interim 124,0 124,0 -
- final 132,0 132,0 -
256,0 256,0 -
Reconciliation of headline earnings:
Net profit attributable to equity
holders of the company 960 673 941 556 2,0
Adjusted for (net of taxation):
net other capital losses 1 264 2 031
Headline earnings 961 937 943 587 1,9
Abridged consolidated statements of cash flows
Audited
Year ended
30 June
2011 2010
R`000 R`000
Cash flow from operating activities
Operating profit 1 436 591 1 392 917
Non-cash flow items 298 278 301 441
Working capital changes 37 088 (139 073)
Inventories (138 891) (140 340)
Trade and other receivables 101 517 (187 572)
Trade payables and provisions 74 462 188 839
Cash generated from operations 1 771 957 1 555 285
Net financing costs (37 688) (69 271)
Taxation paid (491 875) (394 737)
Net cash generated from operating activities 1 242 394 1 091 277
Cash outflow from investment activities (410 872) (542 516)
Cash inflow from financing activities 21 571 22 008
Dividends paid (516 304) (514 931)
Increase in net cash, cash equivalents
and bank overdrafts 336 789 55 838
Net cash, cash equivalents and bank
overdrafts at the beginning of the year (92 733) (144 844)
Exchange losses on cash and
cash equivalents (14 206) (3 727)
Net cash, cash equivalents and bank
overdrafts at the end of the year 229 850 (92 733)
Abridged consolidated statements of changes in equity
Audited
Year ended
30 June
2011 2010
R`000 R`000
Share capital 2 024 2 018
Opening balance 2 018 2 011
Issue of shares 6 7
Share premium 675 982 651 419
Opening balance 651 419 628 017
Issue of shares 24 563 23 402
Treasury shares (14 299) (10 453)
Opening balance (10 453) (9 036)
Issue of shares (24 569) (23 409)
Shares paid and delivered - share scheme 20 723 21 992
Non-distributable and other reserves 170 306 184 486
Opening balance 184 486 203 135
Fair value adjustments (2 753) 2 732
Currency translation differences 2 660 (39 155)
BEE share-based payment reserve 6 877 6 877
Employee share scheme reserve 8 306 8 279
Actuarial gains and losses (29 270) 2 618
Retained earnings 4 854 216 4 409 847
Opening balance 4 409 847 3 983 222
Net profit attributable to equity holders 960 673 941 556
Dividends (516 304) (514 931)
Non-controlling interest 5 780 984
Total equity at the end of the year 5 694 009 5 238 301
Abridged consolidated statements of comprehensive income
Audited
Year ended
30 June
2011 2010
R`000 R`000
Profit for the year 959 580 940 515
Other comprehensive income (net of taxation) (23 474) (33 805)
Fair value adjustments
- available-for-sale financial assets (2 753) 2 732
Currency translation differences 8 549 (39 155)
Actuarial gains and losses (29 270) 2 618
Total comprehensive income for the year 936 106 906 710
Attributable to:
Equity holders of the company 931 310 907 751
Non-controlling interest 4 796 (1 041)
936 106 906 710
Segmental analysis
Year ended
30 June
Revenue from external customers
2011 2010 Change
R`000 R`000 %
Sales of alcoholic beverages
South Africa 9 317 099 8 660 070 7,6
International 2 848 321 2 926 693 (2,7)
12 165 420 11 586 763 5,0
Other revenue 162 366 222 121 (26,9)
Consolidated 12 327 786 11 808 884 4,4
Year ended
30 June
2011 2010 Change
Operating profit R`000 R`000 %
South Africa 1 656 377 1 532 863 8,1
International 304 756 389 741 (21,8)
1 961 133 1 922 604 2,0
Corporate services (524 542) (529 687) (1,0)
Consolidated 1 436 591 1 392 917 3,1
Notes
Audited
30 June
2011 2010
R`000 R`000
1. Sales volumes (litres `000) 510 198 498 094
2. Net interest-bearing borrowings
Interest-bearing borrowings
Non-current 423 336 422 467
Current 865 336 657
424 201 759 124
Cash resources (229 850) (243 038)
194 351 516 086
3. Cash outflow from investment activities
Purchases of property, plant and
equipment (PPE) to maintain operations (151 861) (184 599)
Purchases of PPE to expand operations (239 983) (365 476)
Proceeds from sale of PPE 3 497 3 704
Purchases of financial assets (38 810) -
Proceeds from financial assets 34 135 10 109
Purchases of intangible assets (17 850) (6 254)
(410 872) (542 516)
4. Capital commitments
Contracted 185 871 49 860
Authorised but not contracted 330 099 386 487
515 970 436 347
5. Depreciation of property, plant and equipment 190 218 172 793
6. Net asset value per share (cents) 2 813 2 596
7. 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.
8. Contingencies
The Group received an assessment from the South African Revenue Service
(SARS) for additional employees` tax amounting to R52,4 million (excluding
penalties and interest) relating to the group`s share incentive scheme.
The Group obtained legal and tax specialist opinions on this matter, which
indicated that no provision is necessary and are in process of formalising
an objection to this assessment.
Commentary
Accounting policy and comparative figures
The annual 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 71 of
2008, 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 4,4% to R12,3 billion on a sales volume increase of 2,4%.
Domestic revenue increased 7,6% and sales volumes by 4,0%. The trading
environment remained extremely challenging, characterised by heightened
competitor activity, particularly from the beer segment, and the ongoing
consumer pursuit of lower-priced options. Cider and RTD (ready-to-drink)
brands continued their strong performance, whereas consumer spend across the
company`s spirits portfolio declined. Distell`s wine portfolio also showed a
marginal volume decline.
International sales volumes, including Africa, declined by 2,0%, with revenue
dropping by 2,7%, reflecting the impact of the strong rand against all major
currencies, despite 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.
Africa, in particular, continued to deliver sound growth, contributing 60,9%
to foreign revenue, while other developing markets such as Latin America and
Asia Pacific also saw increased sales activity. It was, however, in the
developed economies, such as Europe and North America, that sales were most
severely affected by the protracted economic downturn.
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. Operating expenses increased
by 4,6% compared to revenue growth of 4,4%. Consequently, operating profit
increased by 3,1%, while the net operating margin deteriorated marginally to
11,7% (2010: 11,8%).
Net financing costs decreased from R68,7 million to R42,6 million due to lower
average borrowings during the period.
The effective tax rate increased from 30,8% to 33,2% primarily due to the
recognition of assessed losses as deferred tax assets in the previous year as
well as prior year adjustments in respect of matters under dispute.
Headline earnings increased 1,9% to R961,9 million and headline earnings per
share increased 1,6%.
Investment and funding
Total assets increased by 3,4% to R8,5 billion.
Capital expenditure amounted to R391,8 million, of which R151,8 million was
spent on the replacement of assets. A further R240,0 million was directed
mainly to the expansion of cider and whisky production capacity.
Investment in net working capital declined 2,1% to R3,2 billion. Inventory
increased 3,8% to R4,0 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. Bottled stock and packaging material at year-end reflected an
increase of 8,8% on the previous year, with a further improvement in stock
duration.
Cash retained amounted to R336,8 million (2010: R55,8 million), and the Group
remains in a strong financial position, as shown by the positive cash and cash
equivalent balance of R229,9 million at the end of the reporting period.
Prospects
Fragile economic conditions persist. We believe challenging trading
conditions, especially in developed countries, will continue in the year
ahead, with unemployment and limited disposable income still adversely
impacting consumer spending. It is anticipated that future growth will
continue to be led by emerging markets.
Distell remains confident in the inherent strength and continued relevance of
its diverse and well-balanced brand portfolio. Its brands are 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.
Directorate
Chris Otto was appointed as an independent non-executive director with effect
from 1 June 2011.
Auditors` report
The consolidated annual financial statements have been audited by
PricewaterhouseCoopers Inc. and their unqualified auditors` report is
available for inspection at the registered office of the company.
Cash dividend declaration
The directors have resolved to declare final cash dividend number 46 of 132
cents (2010: 132 cents) per share for the period ended 30 June 2011. This
represents a total dividend of 256 cents (2010: 256 cents) for the year and a
dividend cover of 1,9 times (2010: 1,8 times) by headline earnings.
The salient dates of this dividend distribution are:
Last day to trade cum dividend Friday, 9 September 2011
Shares commence trading ex dividend from
commencement of business on Monday, 12 September 2011
Record date Friday, 16 September 2011
Payment date Monday, 19 September 2011
Share certificates may not be dematerialised or rematerialised between Monday,
12 September 2011, and Friday, 16 September 2011, both days inclusive.
Signed on behalf of the board
DM Nurek JJ Scannell
Chairman Managing director
Stellenbosch
24 August 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, CA Otto,
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
One of the top 20 fastest growing spirits brands worldwide, Amarula is
outpacing the growth of its competitors internationally.
Fleur du Cap
Fleur du Cap was awarded the 2010 South African Producer of the Year by the
International Wine & Spirit Competition (IWSC). It also achieved two Gold
awards in the 2011 International Wine Challenge.
Savanna
As the world`s third largest cider producer, Distell is capitalising on the
global growth of this segment.
Oude Meester - to the Masters
A celebration of mastery, whereby the young masters of today raise their
glasses in acknowledgement of the old masters.
Van Ryn`s
Distell fine brandies have become the South African benchmark for excellence.
In less than a decade, Van Ryn`s has won: - International Wine & Spirit
Worldwide Best Brandy title - four times
- International Spirits Challenge (ISC) - three times
Underscoring the consistency of top quality, our fine brandies earned during
the year under review:
- IWSC - 2010 3 Golds (Best in Class); 1 Gold
- IWSC - 2011 Worldwide Best Brandy Trophy; 3 Golds (Best in Class); 3 Golds
- ISC - 2010 Best Brandy Trophy; 1 Gold
- Veritas 2010 - 4 Double Golds; 4 Golds
- Concours Mondial - 4 Golds
www.distell.co.za
Date: 24/08/2011 12:30:01 Produced by the JSE SENS Department.
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