| Tue 19 Feb 2002, 0:00 | | Distell - Interim Results |
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DISTELL GROUP LIMITED
Registration number 1988/005808/06
JSE share code : DST
ISIN number : ZAE 000028668
Interim results of the Group
for the six months ended 31 December 2001
Highlights
Merger process substantially completed
Increase of 5,7% in sales revenue
15,0% growth in trading income
Headline earnings up 36,9%
Consolidated balance sheet
Unaudited Audited
31 December 30 June
2001 2000 2001
R'000 R'000 R'000
ASSETS
Non-current assets
Property, plant and equipment 1 111 021 1 021 732 1 022 442
Investments and loans 707 024 613 259 654 551
Goodwill 7 653 - -
Deferred taxation 9 736 - 8 745
Total non-current assets 1 835 434 1 634 991 1 685 738
Current assets
Inventories 1 505 637 1 547 550 1 600 341
Trade and other receivables 781 138 687 748 477 079
Taxation prepaid 5 680 26 953 25 403
Cash and cash equivalents 265 158 174 236 178 227
Total current assets 2 557 613 2 436 487 2 281 050
Total assets 4 393 047 4 071 478 3 966 788
EQUITY AND LIABILITIES
Capital and reserves
Capital and reserves 2 131 353 2 044 262 2 039 013
Minority interest 799 799 799
Total equity 2 132 152 2 045 061 2 039 812
Non-current liabilities
Long term borrowings 796 413 786 656 791 347
Post retirement medical liability 15 592 15 787 15 592
Deferred taxation 44 070 74 416 47 275
Total non-current liabilities 856 075 876 859 854 214
Current liabilities
Trade payables and provisions 755 959 726 991 562 324
Short term borrowings 648 861 399 097 510 438
Shareholders for dividends - 23 470 -
Total current liabilities 1 404 820 1 149 558 1 072 762
Total equity and liabilities 4 393 047 4 071 478 3 966 788
Consolidated income statement
Unaudited Audited
Six months ended Year ended
31 December 30 June
2001 2000 Change 2001
R'000 R'000 % R'000
Sales volumes (L'000) 174 071 187 724 (7,3) 329 568
Sales revenue 2 689 409 2 544 092 5,7 4 597 916
Operating expenses (2 433 630) (2 321 706) (4 266 071)
Trading income 255 779 222 386 15,0 331 845
Dividend income 39 567 37 145 75 825
Financing costs (12 580) (68 157) (141 897)
Net interest paid (82 221) (77 262) (152 181)
Foreign currency
Differences 69 641 9 105 10 284
Income from associates 5 787 2 609 5 731
Profit before exceptional
items and taxation 288 553 193 983 48,8 271 504
Exceptional items (57 040) (50 983) (145 602)
Profit before taxation 231 513 143 000 61,9 125 902
Taxation (59 384) (22 625) (10 862)
Minority interest (132) (13) (283)
Net profit attributable to
ordinary shareholders 171 997 120 362 42,9 114 757
Adjusted for (net of
taxation):
profit on disposal of
fixed assets (2 454) (478) (3 038)
exceptional items 39 387 32 709 95 767
Headline earnings 208 930 152 593 36,9 207 486
Issued ordinary
shares ('000) 195 580 195 580 195 580
Earnings per ordinary
share (cents)
attributable earnings basis 87,9 61,5 42,9 58,7
headline basis 106,8 78,0 36,9 106,1
Dividends per ordinary
share (cents)
- interim 35,0 12,0 12,0
- final 41,0
35,0 12,0 53,0
Consolidated statement of changes in equity
Unaudited Audited
Six months ended Year ended
31 December 30 June
2001 2000 2001
R'000 R'000 R'000
Share capital 1 956 1 956 1 956
Opening balance 1 956 45 036 45 036
Capital reduction - (43 636) (43 636)
Issue of shares - 556 556
Share premium 558 002 558 238 558 002
Opening balance 558 002 - -
Capital reduction - 43 636 43 400
Issue of shares - 514 602 514 602
Non-distributable reserves 53 305 52 184 52 774
Opening balance 52 774 52 398 52 398
Capital reduction - - 236
Foreign currency translations 531 (214) 140
Retained earnings 1 518 090 1 431 884 1 426 281
Opening balance 1 426 281 1 821 674 1 821 674
Merger adjustment - (486 682) (486 680)
Net profit attributable to
ordinary shareholders 171 997 120 993 116 135
Changes in accounting policies - (631) (1 378)
Dividends (80 188) (23 470) (23 470)
Equity at the end of the period 2 131 353 2 044 262 2 039 013
Abridged consolidated cash flow statement
Unaudited Audited
Six months ended Year ended
31 December 30 June
2001 2000 2001
R'000 R'000 R'000
Trading income 255 779 222 386 331 845
Non-cash flow items 7 875 55 432 194 905
Working capital changes 60 192 130 391 82 953
Inventories 94 704 72 863 20 072
Trade and other receivables (262 334) (220 526) (9 857)
Trade payables and provisions 227 822 278 054 72 738
Cash generated from normal
operating activities 323 846 408 209 609 703
Net financing cost (48 016) (68 071) (151 563)
Taxation paid (42 522) (29 764) (50 600)
Dividends paid (80 188) (81 200) (104 670)
Cash retained from normal
operating activities 153 120 229 174 302 870
Exceptional items (57 040) (50 983) (145 602)
Cash retained from
operating activities 96 080 178 191 157 268
Cash outflow from
investment activities (152 638) (58 582) (148 941)
Cash inflow from financing
Activities 5 066 4 785 8 717
Decrease in net short term
borrowings (51 492) 124 394 17 044
Net short term borrowings at the
beginning of the period (332 211) (349 255) (349 255)
Net short term borrowings at
the end of the period (383 703) (224 861) (332 211)
Short term borrowings (648 861) (399 097) (510 438)
Cash and cash equivalents 265 158 174 236 178 227
Notes
Unaudited Audited
Six months ended Year ended
31 December 30 June
2001 2000 2001
R'000 R'000 R'000
1. Exceptional items
Profit on disposal of interest in
non-alcoholic fruit beverage
operations - 14 500 15 000
Repatriation of surplus assets
of disability fund - - 16 000
Merger costs (59 115) (65 483) (180 124)
Profit on disposal of property 2 075 - 3 522
(57 040) (50 983) (145 602)
Taxation 17 653 18 274 49 835
(39 387) (32 709) (95 767)
2. Net interest bearing borrowings
Interest bearing debt
Non-current 796 413 786 656 791 347
Current 648 861 399 097 510 438
1 445 274 1 185 753 1 301 785
Cash resources 265 158 174 236 178 227
1 180 116 1 011 517 1 123 558
3. Directors' valuation of
unlisted investments
Preference shares 665 594 588 135 626 283
Other investments and loans 57 708 41 708 43 672
723 302 629 843 669 955
4. Capital commitments -
ordinary activities
Contracted 32 003 31 948 656
Authorised but not contracted 19 906 70 415 65 606
51 909 102 363 66 262
Estimated capital commitments -
merger
Contracted 98 653 7 385 22 440
Authorised but not contracted 8 586 308 656 216 764
107 239 316 041 239 204
5. Depreciation of property,
plant and equipment 52 059 56 330 125 880
6. Net asset value per
share (cents) 1 090 1 045 1 043
7. Segment report
The group is engaged in the manufacturing, marketing and distribution
of alcoholic beverages. As these activities comprise an integrated
operation, the group regards this as a single primary business segment, on
which all information is disclosed in this profit announcement.
Operating performance
Sales revenue grew by 5,7% to R2,7 billion, despite a decline of 7,3% in
aggregate beverage volumes.
The rewards of greater emphasis on product profitability in the domestic
market were reflected in a favourable sales mix at improved margins. Key
spirit brands showed strong volume growth of 6,7%, natural wine volumes
remained constant but the group's market share in low margin alcoholic fruit
beverages suffered under increased competitive pressure.
International sales revenue, excluding Africa, increased by 15,0%. Sales
revenue derived from African countries declined by 2,5%.
The increase of 15,0% in trading income was achieved through better gross
margins and a reduction in operating expenditure and is reflected in the
improvement in net margin from 8,7% to 9,5%. The consolidation of production
plants and distribution centres, as well as the restructuring of the sales
and marketing divisions, are substantially completed and the planned merger
benefits, through cost reduction, are starting to materialise. At the same
time, in line with redesigned marketing and sales initiatives, additional
expenditure to promote brands has been incurred.
The substantial depreciation of the rand towards the end of the reporting
period has started to boost international sales revenues. Any change in the
rate of exchange between transaction date and settlement or period end date,
will however be disclosed under financing cost in the income statement in
terms of GAAP. During the period under review an amount of R69,6 million was
reflected in this regard. As a result of the foregoing, headline earnings
increased by 36,9% to R208,9 million.
Exceptional items
This reflects in the main restructuring costs in connection with the merger.
Taxation
The effective tax rate increased from 15,8% to 25,7%, mainly as a result of
the utilisation of assessed losses in the previous year.
Financial position
Total assets increased by 10,7% to R4,4 billion. Capital expenditure to
expand operations amounted to R134,1 million. Of this, R121,9 million was
incurred to restructure the merged operations within the group. The
estimated future capital expenditure to complete the merger programme
amounts to R107,2 million and this will be incurred before the end of the
financial year and will be funded from existing resources. These investments
are expected to create shareholder value by increasing returns on invested
capital over the medium and longer term.
Prospects
The merger process is now substantially completed, and is in accordance with
the pre-determined objectives. In terms of the ruling of the Competitions
Tribunal, full notification has been filed with the Competition Board. The
directors are confident that the merger has created a sound basis for long
term earnings growth.
Based on this, and on the assumption that consumer spending does not
deteriorate, the group expects to continue to reflect a satisfactory growth
in earnings for the full year.
General
The trade mark owner of Gordons Gin has given notice to terminate the
group's production and distribution rights for this product. The group is
taking appropriate steps to protect its rights with regards to its licence
agreement.
Accounting policy and comparative figures
The interim report has been prepared under the historical cost convention,
in accordance with the South African Statement on Generally Accepted
Accounting Practice (GAAP) (AC127). The accounting policies and methods of
computation are in all material respects consistent with those applied in
the previous financial year.
The accounting policy of the group regarding depreciation on owner-occupied
buildings has been changed in order to comply with the new Statement on GAAP
dealing with Investment properties (AC135) and its impact on the existing
Statement on Property, plant and equipment (AC123). Comparative figures for
the six months ended 31 December 2000 and the year ended 30 June 2001 have
been restated. The effect of this change in accounting policy is not
material.
Actuarially determined surpluses of the defined benefit pension funds in the
group have not yet been recognised in the financial statements as required
by the revised Statement on GAAP (AC116). The ownership of a surplus in a
pension fund has historically been a contentious issue, and has now been
addressed by way of the Pension Funds Second Amendment Act, 2001. This
situation continues to be examined in order to ensure that appropriate
action is taken.
Dividends
The directors have resolved to declare dividend number 27 of 35 cents (2000:
12 cents) per share for the interim period ended 31 December 2001. This
dividend is covered approximately three times by headline earnings.
It is expected that the dividend for the full year will be covered two to
two and a half times by headline earnings.
Last day to trade cum the dividend Friday, 8 March 2002
Shares commence trading ex the dividend
from the commencement of business on Monday, 11 March 2002
Record date Friday, 15 March 2002
Payment date Monday, 18 March 2002
Shareholders may not dematerialise or rematerialise their holdings of
Distell shares between Monday, 4 March 2002 and Friday, 15 March 2002, both
days inclusive.
Signed on behalf of the board
D M Nurek J J Scannell
Chairman Managing director
Stellenbosch
19 February 2002
Directors: DM Nurek (Chairman), FC Bayly, WJ Barnard, PE Beyers, JG Carinus,
SJ Genade, E de la H Hertzog, LN Jonker, LB Kriel, MJ Madungandaba, WS
MacFarlane, JJ Scannell (Managing director), PEI Swartz, MH Visser
Company secretary: CJ Cronj
Registered office: Aan-de-Wagenweg, Stellenbosch 7600
Transfer secretaries: Computershare Services Ltd, PO Box 61051, Marshalltown
2107
