| Mon 19 Aug 2002, 0:00 | | Distell Group Limited - Results For The Group For |
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Distell Group Limited - Results for the group for the year ended 30 June 2002
Distell Group Limited
Registration number 1988/005808/06
JSE share code: DST ISIN number: ZAE 000028668
Results for the group
for the year ended 30 June 2002
Highlights
* Merger integration process completed
* Increase of 6,7% in sales revenue
* 24,3% growth in trading income
* Headline earnings up 33,6%
* Total dividends increased 32,1%
Consolidated balance sheets
2002 2001
R`000 R`000
Audited Audited
ASSETS
Non-current assets
Property, plant and equipment 1 139 182 1 022 442
Investments and loans 557 904 654 551
Goodwill 7 304 -
Deferred taxation 16 789 8 745
Total non-current assets 1 721 179 1 685 738
Current assets
Inventories 1 651 076 1 600 341
Trade and other receivables 581 978 477 079
Short-term investments 195 452 -
Taxation prepaid 29 741 25 403
Cash and cash equivalents 185 221 178 227
Total current assets 2 643 468 2 281 050
Total assets 4 364 647 3 966 788
EQUITY AND LIABILITIES
Capital and reserves
Capital and reserves 2 126 717 2 039 013
Minority interest 799 799
Total equity 2 127 516 2 039 812
Non-current liabilities
Long-term borrowings 598 791 791 347
Post retirement medical liability 15 297 15 592
Deferred taxation 80 959 47 275
Total non-current liabilities 695 047 854 214
Current liabilities
Trade payables and provisions 673 844 562 324
Short-term portion of
long-term borrowings 205 320 -
Short-term borrowings 662 920 510 438
Total current liabilities 1 542 084 1 072 762
Total equity and liabilities 4 364 647 3 966 788
Number of shares in issue (thousand) 195 580 195 580
Abridged consolidated cash flow statements
2002 2001
R`000 R`000
Audited Audited
Trading income 412 591 331 845
Non-cash flow items 98 414 196 378
Working capital changes (14 295) 81 480
Inventories (50 735) 20 072
Trade and other receivables (109 230) (11 330)
Trade payables and provisions 145 670 72 738
Cash generated from normal
operating activities 496 710 609 703
Net financing cost (167 527) (151 563)
Foreign currency differences realized 35 567 -
Taxation paid (71 292) (50 600)
Dividends paid (148 641) (104 670)
Cash retained from normal
operating activities 144 817 302 870
Exceptional items (73 175) (145 602)
Cash retained from
operating activities 71 642 157 268
Cash outflow from investment activities (229 628) (148 941)
Cash inflow from financing activities 12 498 8 717
Increase in net short-term borrowings (145 488) 17 044
Net short-term borrowings at the
beginning of the period (332 211) (349 255)
Net short-term borrowings at the
end of the period (477 699) (332 211)
Short-term borrowings (662 920) (510 438)
Cash and cash equivalents 185 221 178 227
Consolidated income statements
2002 2001
R`000 R`000 Change
Audited Audited %
Sales volume (L`000) 312 091 329 568 (5,3)
Sales revenue 4 903 843 4 597 916 6,7
Operating expenses (4 491 252) (4 266 071)
Trading income 412 591 331 845 24,3
Dividend income 81 639 75 825
Net interest paid (169 303) (152 181)
Foreign currency gains 68 188 10 284
Income from associates 13 387 5 731
Profit before exceptional
items and taxation 406 502 271 504 49,7
Exceptional items (73 175) (145 602)
Profit before taxation 333 327 125 902 164,8
Taxation (96 575) (10 862)
Minority interest (266) (283)
Net profit attributable to
ordinary shareholders 236 486 114 757 106,1
Adjusted for (net of taxation):
profit on disposal of fixed assets
and goodwill amortisation (8 967) (3 038)
exceptional items 49 686 95 767
Headline earnings 277 205 207 486 33,6
Issued ordinary shares (`000) 195 580 195 580
Earnings per ordinary
share (cents)
attributable earnings basis 120,9 58,7 106,1
headline basis 141,7 106,1 33,6
Dividends per ordinary
share (cents)
- interim 35,0 12,0
- final 35,0 41,0
70,0 53,0 32,1
Consolidated statements of changes in equity
2002 2001
R`000 R`000
Audited Audited
Share capital 1 956 1 956
Opening balance 1 956 45 036
Capital reduction - (43 636)
Issue of shares - 556
Share premium 558 002 558 002
Opening balance 558 002 -
Capital reduction - 43 400
Issue of shares - 514 602
Non-distributable reserves 52 633 52 774
Opening balance 52 774 52 398
Capital reduction - 236
Foreign currency translations (141) 140
Retained earnings 1 514 126 1 426 281
Opening balance 1 426 281 1 833 054
Changes in accounting policies - (11 380)
Merger adjustment - (486 680)
Net profit attributable to ordinary
Shareholders 236 486 114 757
Dividends (148 641) (23 470)
Equity at the end of the year 2 126 717 2 039 013
Notes
2002 2001
R`000 R`000
Audited Audited
1. Exceptional items
Profit on disposal of interest in non-
alcoholic fruit beverage operations - 15 000
Repatriation of surplus assets of
disability fund 2 994 16 000
Merger costs (78 587) (180 124)
Profit on disposal of property 2 418 3 522
(73 175) (145 602)
Taxation 23 489 49 835
(49 686) (95 767)
2. Net interest-bearing borrowings
Interest-bearing debt
Non-current 598 791 791 347
Current 868 240 510 438
1 467 031 1 301 785
Cash resources 185 221 178 227
1 281 810 1 123 558
3. Cash outflow from investment
activities
To maintain operations 23 936 6 786
To expand operations (243 465) (155 727)
Investment in associate (10 099) -
(229 628) (148 941)
4. Directors` valuation of unlisted
investments
Preference shares 706 146 626 283
Other investments and loans 68 160 43 672
774 306 669 955
5. Capital commitments -
ordinary activities
Contracted 6 198 656
Authorised but not contracted 237 057 65 606
243 255 66 262
Estimated capital commitments
- merger
Contracted 44 106 22 440
Authorised but not contracted 14 400 216 764
58 506 239 204
6. Depreciation of property, plant
and equipment 115 046 125 880
7. Net asset value per share (cents) 1 087 1 043
8. 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 6,7% to R4,9 billion, despite a decline of 5,3% in
aggregate sales volumes. The benefits of focused sales and marketing
initiatives, with greater emphasis on product profitability, is reflected in a
favourable sales mix at improved margins.
In the domestic market, although Distell achieved sales volume growth in most
major product categories, its share of the total alcoholic beverage market
declined. Key spirit brands showed strong volume growth of 5,4%. As a result of
better performance by more profitable premium trademarks, wine volumes increased
by 2,4%. Distell`s sales volumes of flavoured alcoholic beverages have, however,
suffered under increased competitive pressure.
International sales revenue, excluding Africa, increased by 37,4%. Amarula Cream
achieved substantial volume growth of 14,0%. Sales revenue from natural wines
improved by 33,5%.
Sales revenue derived from African countries declined by 3,3%.
The increase of 24,3% in trading income was achieved through improved sales
revenue, better gross margins and a reduction in operating expenditure. This is
reflected in the improvement in net margin from 7,2% to 8,4%. The consolidation
of production plants and distribution centres, as well as the restructuring of
the sales and marketing divisions, were completed during the year and the
planned merger benefits, through cost reduction, are starting to materialise.
These benefits will be fully realised in the next financial year. At the same
time, in line with redesigned marketing and sales initiatives, additional
expenditure to promote brands, has been incurred.
Net financing costs rose by R11,3 million as a result of increased funding
requirements.
The substantial depreciation of the rand during the period under review boosted
international sales revenues. The effect of any change in the rate of exchange
between transaction date and settlement or period end date is disclosed
separately in the income statement in terms of Generally Accepted Accounting
Practice (GAAP). During the period under review a gain of R68,2 million, which
includes an unrealised amount of R32,5 million arising from the conversion of
foreign operations, was reflected in this regard.
As a result of the aforementioned, headline earnings increased by 33,6% to R
277,2 million, a timely recovery from the decline of 8,3% experienced in the
previous year.
Exceptional items
This reflects, in the main, restructuring costs in connection with the merger.
Taxation
The effective tax rate, before adjustment for the effect of exceptional items,
increased from 22,6% to 30,4%, mainly as a result of an increase in the amount
for Secondary Tax on Companies. The taxation impact of exceptional items reduced
the overall effective tax rate to 29,0%.
Investment and funding
Total assets increased by R397,9 million to R4.4 billion.
Capital expenditure to expand operations amounted to R243,5 million. Of this,
R171,2 million was incurred to restructure the merged operations within the
group. The merger process is now completed and costs were well controlled and
within budget. Other capital expenditure was confined to replacement of
essential assets.
Investment in working capital increased by 2,9% to R1,6 billion. To ensure
product availability, contingency stock was carried throughout the merger
period. Since the supply chain has stabilised, management now focuses on a
systematic reduction in inventory and accounts receivable.
Prospects
The merger, and the implementation of important strategic initiatives, have been
completed. These initiatives are aimed at driving revenue growth, reducing costs
and ensuring reliable product supply. Management is confident that the
foundations for future success have been laid.
In terms of the ruling of the Competition Tribunal, full notification of the
merger has been filed with the Competition Board. The inquiry into the merger is
nearing resolution and a ruling from the Competition Authorities, regarding the
merger itself, is now being awaited.
Distell is well placed to capture opportunities in the domestic and foreign
markets. On the assumption that consumer spending does not deteriorate, the
group expects to continue to reflect satisfactory growth in earnings, and has
budgeted accordingly.
Accounting policy and comparative figures
The accounting policies and methods of computation, disclosed in the group`s
annual financial statements for the year under review, are in all respects
consistent with those applied in the previous financial year and are in
compliance with South African Statements of Generally Accepted Accounting
Practice (GAAP).
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
year ended 30 June 2001 have been restated. The effect of this change in
accounting policy is not material.
The financial statements have been audited by PricewaterhouseCoopers Inc. and
their auditor`s report is available for inspection at the registered office of
the company.
DIVIDEND DECLARATION ANNOUNCEMENT
With Reference to the announcement released on SENS earlier today, please take
note of the following paragraph that was omitted:
The directors have resolved to declare dividend number 28 of 35 cents per share,
making a total dividend of 70 cents per share for the year. This compares with a
total dividend of 53 cents per share in the previous year and represents a
dividend cover of 2,0 times by headline earnings (2001: 2,0 times).
Last day to trade "cum" the dividend Friday, 6 September 2002
Shares commence trading "ex" the dividend
from commencement of business on Monday, 9 September 2002
Record date Friday, 13 September 2002
Payment date Monday, 16 September 2002
Share certificates may not be dematerialised or rematerialised between Monday, 9
September 2002 and Friday, 13 September 2002, both days inclusive.
Signed on behalf of the board
DM Nurek JJ Scannell
Chairman Managing director
Stellenbosch
19 August 2002
Directors: DM Nurek (Chairman), FC Bayly, WJ Barnard, PE Beyers, JG Carinus, SJ
Genade, E de la H Hertzog, LN Jonker, 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 Investor Services Ltd, PO Box 61051,
Marshalltown 2107
Date: 19/08/2002 03:55:00 PM Produced by the JSE SENS Department
