| Wed 15 Feb 2012, 12:58 | | DST - Distell Group Limited - Unaudited results of the Group for the six |
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DST
DST
DST - Distell Group Limited - Unaudited results of the Group for the six
months ended 31 December 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")
Unaudited results of the Group for the six months ended 31 December 2011 and
cash dividend declaration
Salient features
> Total sales volumes up 10,2%
> Total revenue up 15,9%
> Favourable currency impact
> Operating profit up 22,4%
> Headline earnings per share up 23,0%
> Interim dividend up 15,3%
Abridged consolidated statements of financial position
Unaudited Audited
31 December 30 June
2011 2010 2011
R`000 R`000 R`000
Assets
Non-current assets
Property, plant and equipment 2 435 923 2 146 305 2 349 699
Biological assets 129 553 140 361 131 827
Financial assets 127 049 81 753 118 541
Investments in associates 63 473 46 839 47 964
Intangible assets 235 670 196 626 221 331
Retirement benefit assets 50 443 30 397 42 391
Deferred income tax assets 57 587 46 938 74 915
Total non-current assets 3 099 698 2 689 219 2 986 668
Current assets
Inventories 3 760 471 3 448 463 3 961 917
Trade and other receivables 2 159 302 1 976 001 1 242 200
Current income tax assets 64 993 66 498 62 945
Cash and cash equivalents 942 644 580 859 229 850
Total current assets 6 927 410 6 071 821 5 496 912
Total assets 10 027 108 8 761 040 8 483 580
Equity and liabilities
Capital and reserves
Capital and reserves 6 273 291 5 588 759 5 688 229
Non-controlling interest 8 129 420 5 780
Total equity 6 281 420 5 589 179 5 694 009
Non-current liabilities
Interest-bearing borrowings 385 811 422 641 423 336
Retirement benefit obligations 62 025 22 692 73 790
Deferred income tax liabilities 238 591 235 028 234 732
Total non-current liabilities 686 427 680 361 731 858
Current liabilities
Trade and other payables 2 577 424 2 157 097 1 801 848
Provisions 322 639 245 087 240 499
Interest-bearing borrowings 38 315 749 865
Current income tax liabilities 120 883 88 567 14 501
Total current liabilities 3 059 261 2 491 500 2 057 713
Total equity and liabilities 10 027 108 8 761 040 8 483 580
Abridged consolidated income statements
Unaudited Audited
Six months ended Year ended
31 December 30 June
2011 2010 Change 2011
R`000 R`000 % R`000
Revenue 7 972 502 6 878 716 15,9 12 327 786
Operating costs (6 811 854) (5 930 686) 14,9 (10 889 439)
Costs of goods sold (5 193 406) (4 619 427) (8 291 871)
Sales and marketing costs (919 388) (728 566) (1 497 260)
Distribution costs (484 365) (412 694) (820 870)
Administration and other
costs (214 695) (169 999) (279 438)
Other losses (343) 147 (1 756)
Operating profit 1 160 305 948 177 22,4 1 436 591
Dividend income 307 2 583 5 180
Finance income 6 218 7 542 18 011
Finance costs (28 185) (35 244) (60 595)
Share of profit of
associates 18 090 17 736 37 950
Profit before taxation 1 156 735 940 794 23,0 1 437 137
Taxation (377 492) (310 649) (477 557)
Profit for the period 779 243 630 145 23,7 959 580
Attributable to:
Equity holders of the
company 776 918 630 710 23,2 960 673
Non-controlling interest 2 325 (565) (1 093)
779 243 630 145 23,7 959 580
Per share performance:
Issued number of ordinary
shares (`000) 202 838 202 396 202 396
Weighted number of
ordinary shares (`000) 202 054 201 599 201 742
Earnings per ordinary
share (cents)
- basic earnings basis 384,5 312,9 22,9 476,2
- diluted earnings basis 372,2 303,1 22,8 448,0
- headline basis 384,6 312,8 23,0 476,8
- diluted headline basis 372,3 303,0 22,9 448,6
Dividends per ordinary
share (cents)
- interim 143,0 124,0 15,3 124,0
- final - - - 132, 0
143,0 124,0 15,3 256, 0
Reconciliation of
headline earnings:
Net profit attributable
to equity holders of the
company 776 918 630 710 23,2 960 673
Adjusted for (net of
taxation): net other
capital losses 247 (106) 1 264
Headline earnings 777 165 630 604 23,2 961 937
Abridged consolidated statements of cash flows
Unaudited Audited
Six months ended Year ended
31 December 30 June
2011 2010 2011
R`000 R`000 R`000
Cash flow from operating
activities
Operating profit 1 160 305 948 177 1 436 591
Non-cash flow items 205 665 181 522 298 278
Working capital changes 69 565 153 214 37 088
Inventories 206 548 364 403 (138 891)
Trade and other receivables (913 354) (644 537) 101 517
Trade payables and provisions 776 371 433 348 74 462
Cash generated from operations 1 435 535 1 282 913 1 771 957
Net financing costs (21 330) (25 194) (37 688)
Taxation paid (251 971) (235 188) (491 875)
Net cash generated from operating 1 162 234 1 022 531 1 242 394
activities
Cash outflow from investment (197 774) (77 068) (410 872)
activities
Cash inflow from financing 6 934 12 129 21 571
activities
Dividends paid (266 681) (266 013) (516 304)
Increase in net cash, cash 704 713 691 579 336 789
equivalents and bank overdrafts
Net cash, cash equivalents and 229 850 (92 733) (92 733)
bank overdrafts at the beginning
of the period
Exchange gains on cash and cash 8 081 (17 987) (14 206)
equivalents
Net cash, cash equivalents and 942 644 580 859 229 850
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
2011 2010 2011
R`000 R`000 R`000
Attributable to equity holders
Opening balance 5 688 229 5 237 317 5 237 317
Comprehensive income
Profit for the year 776 918 630 710 960 673
Other comprehensive income (net
of taxation)
Fair value adjustments:
- available-for-sale financial 1 637 (1 745) (2 753)
assets
Currency translation differences 32 730 (24 824) 2 660
Actuarial gain on post-employment
benefits 26 249 (6 569) (29 270)
Total other comprehensive income 60 616 (33 138) (29 363)
Total comprehensive income for
the period 837 534 597 572 931 310
Transactions with owners
Employee share scheme:
- shares paid and delivered 7 009 12 091 20 723
- value of employee services 3 761 4 354 8 306
BEE share-based payment 3 439 3 438 6 877
Dividends paid (266 681) (266 013) (516 304)
Total transactions with owners (252 472) (246 130) (480 398)
Attributable to equity holders 6 273 291 5 588 759 5 688 229
Non-controlling interest
Opening balance 5 780 984 984
Profit for the year 2 325 (565) (1 093)
Currency translation differences 24 1 5 889
Total non-controlling interest 8 129 420 5 780
Total equity at the end of the 6 281 420 5 589 179 5 694 009
period
Abridged consolidated statements of comprehensive income
Unaudited Audited
Six months ended Year ended
31 December 30 June
2011 2010 2011
R`000 R`000 R`000
Profit for the period 779 243 630 145 959 580
Other comprehensive income (net 60 640 (33 138) (23 474)
of taxation)
Fair value adjustments
- available-for-sale financial 1 637 (1 745) (2 753)
assets
Currency translation differences 32 754 (24 824) 8 549
Actuarial gains and losses 26 249 (6 569) (29 270)
Total comprehensive income for 839 883 597 007 936 106
the period
Attributable to:
Equity holders of the company 837 534 597 572 931 310
Non-controlling interest 2 349 (565) 4 796
839 883 597 007 936 106
Segmental analysis
Unaudited Audited
Six months ended 31 Year ended
December 30 June
2011 2010 2011
Revenue from external customers R`000 R`000 R`000
Sales of alcoholic beverages
South Africa 6 032 625 5 254 322 9 317 099
International 1 870 875 1 539 112 2 848 321
7 903 500 6 793 434 12 165 420
Other revenue 69 002 85 282 162 366
Consolidated 7 972 502 6 878 716 12 327 786
Unaudited Audited
Six months ended Year ended
31 December 30 June
Operating profit 2011 2010 2011
R`000 R`000 R`000
South Africa 1 047 205 1 036 828 1 656 377
International 446 601 190 616 304 756
1 493 806 1 227 444 1 961 133
Corporate services (333 501) (279 267) (524 542)
Consolidated 1 160 305 948 177 1 436 591
Notes
Unaudited Audited
31 December 30 June
2011 2010 2011
R`000 R`000 R`000
1. Sales volumes (litres `000) 316 680 287 357 510 198
2. Net interest-bearing assets
Interest-bearing borrowings
Non-current 385 811 422 641 423 336
Current 38 315 749 865
424 126 423 390 424 201
Cash and cash equivalents (942 644) (580 859) (229 850)
(518 518) (157 469) 194 351
3. Cash outflow from investment
activities
Purchases of property, plant and (74 816) (54 340) (151 861)
equipment (PPE) to maintain
operations
Purchases of PPE to expand (116 213) (36 178) (239 983)
operations
Proceeds from sale of PPE 1 597 1 870 3 497
Purchases of financial assets (3 897) - (38 810)
Proceeds from financial assets - 15 993 34 135
Purchases of intangible assets (4 445) (4 413) (17 850)
(197 774) (77 068) (410 872)
4. Capital commitments
Contracted 163 630 371 558 185 871
Authorised but not contracted 177 070 135 021 330 099
340 700 506 579 515 970
5. Depreciation of property, plant
and equipment 102 841 94 715 190 218
6. Net asset value per share (cents) 3 097 2 762 2 813
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 the
Group submitted an objection to this assessment.
Commentary
Basis of preparation, 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 71 of
2008, as amended; and the Listings Requirements of the JSE Limited.
The interim financial statements have not been audited or independently
reviewed and were prepared under supervision of the financial director, MJ
Botha CA(SA).
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:
Amendments to IAS 24: Related Party Disclosures (effective 1 January 2011)
Improvements to IFRSs 2010 (effective 1 January 2011)
Amendments to IFRIC 14 - Prepayments of a Minimum Funding Requirement
(effective 1 January 2011)
Revision to AC 504: IAS 19 (AC 116) - The Limit on a Defined Benefit
Asset, Minimum Funding Requirements and their Interaction in the
South African Pension Fund Environment (effective 1 January 2011).
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 15,9% to R8,0 billion on a sales volume increase of 10,2%.
Domestic revenue increased 14,8% and sales volumes by 10,1%, despite the
persistently challenging nature of the local trading environment and the
ongoing consumer pursuit of lower-priced options. Distell`s cider and RTD
(ready-to-drink) brands continued their strong performance and the company`s
wine portfolio showed a marginal increase in sales volumes. However, sales
volumes within the spirits portfolio remained constant, with consumer spend
unchanged from the comparable period the year before.
International sales volumes, including Africa, increased by 10,5%, while
revenue improved 21,6%, benefiting from a weaker rand and a more favourable
sales mix. Ciders and RTDs, as well as spirit brands, delivered strong volume
growth. Distell`s wine export volumes also showed sound growth and the Group
was able to further improve its share of South Africa`s total bottled wine
exports for the period.
Africa, in particular, continued to deliver sound growth, contributing 63,3%
to foreign revenue, while other developing markets such as Asia Pacific also
experienced increased sales activity. Encouraging sales volume growth was
achieved in developed economies such as Europe and North America.
In addition to satisfactory sales volume growth, the results for the period
under review were also favourably impacted by a weaker rand, which largely
contributed to an improvement in operating margin and an increase in operating
profit. Steep increases in the cost of certain raw materials, excise duties as
well as increased sales and marketing expenses were offset by foreign currency
conversion gains. Operating expenses increased by 14,9% compared to revenue
growth of 15,9%. Consequently, operating profit increased by 22,4%, while the
net operating margin improved to 14,6% (2010: 13,8%).
Net financing costs decreased from R27,7 million to R22,0 million due to lower
average borrowings during the period.
Headline earnings increased 23,2% to R777,2 million and headline earnings per
share increased 23,0%.
Investment and funding
Total assets increased by 18,2% to R10,0 billion.
Capital expenditure amounted to R191,0 million, of which R74,8 million was
spent on the replacement of assets. A further R116,2 million was directed
mainly to the expansion of cider production capacity.
Investment in net working capital was maintained at R3,0 billion. Inventory
increased 9,0% to R3,8 billion. Investment in bulk stock of spirits in
maturation, planned in accordance with the Group`s longer-term view of
consumer demand, grew 6,6%. Bottled stock and packaging material reflected an
increase of 11,2% on the previous period, with a further improvement in stock
duration.
Cash retained amounted to R704,7 million (2010: R691,6 million), and the Group
remains in a strong financial position, as shown by the positive cash and cash
equivalent balance of R942,6 million (2010: R580,9 million) at the end of the
reporting period.
Prospects
We believe challenging trading conditions, both domestically and
internationally, will continue in the short term, with unemployment and
limited disposable income still adversely impacting household consumption
expenditure. Foreign currency volatility could also impact revenue and
earnings.
However, Distell is well positioned to take advantage of any improvement in
economic conditions, thanks to the flexibility flowing from our diversity of
product offerings, price points and trading destinations.
Cash dividend declaration
The directors have resolved to declare cash dividend number 47 of 143 cents
(2010: 124 cents) per share for the interim period ended
31 December 2011.
The salient dates of this dividend distribution are:
Last day to trade cum dividend Friday, 2 March 2012
Shares commence trading ex dividend from Monday, 5 March 2012
commencement of business on
Record date Friday, 9 March 2012
Payment date Monday, 12 March 2012
Share certificates may not be dematerialised or rematerialised between Monday,
5 March 2012, and Friday, 9 March 2012, both days inclusive.
Signed on behalf of the board
DM Nurek JJ Scannell
Chairman Managing director
Stellenbosch
15 February 2012
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
According to Euromonitor, Distell is ranked third in the world in cider and
holds a top 10 ranking in brandy and cognac, as well as a 12th position in
wine, based on volumes sold in 2010. In 2010 Amarula was also identified by
Euromonitor as one of the world`s top 20 fastest-growing spirit brands by
volume.
www.distell.co.za
Date: 15/02/2012 12:58:02 Produced by the JSE SENS Department.
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