| Tue 18 Feb 2003, 15:10 | | Distell Group Limited - Interim results of the gr |
|
Distell Group Limited
Registration number 1988/005808/06
JSE share code: DST ISIN: ZAE000028668
Interim results of the group for the six months ended 31 December 2002
Salient features
* International sales revenue up by 30,7%
* Increase of 15,7% in comparable total sales revenue
* 52,3% growth in trading income
* Unfavourable foreign currency impact of R53,2 million
* Headline earnings up 22,1%
Consolidated balance sheets
Unaudited Audited
31 December 30 June
2002 2001 2002
R`000 R`000 R`000
ASSETS
Non-current assets
Property, plant and equipment 1 177 464 1 111 021 1 139 182
Investments and loans 587 007 707 024 557 904
Goodwill 7 094 7 653 7 304
Deferred taxation 22 148 9 736 16 789
Total non-current assets 1 793 713 1 835 434 1 721 179
Current assets
Inventories 1 545 499 1 505 637 1 651 076
Trade and other receivables 774 795 781 138 581 978
Short-term investments 206 427 - 195 452
Taxation prepaid 3 486 5 680 29 741
Cash and cash equivalents 240 674 265 158 185 221
Total current assets 2 770 881 2 557 613 2 643 468
Total assets 4 564 594 4 393 047 4 364 647
EQUITY AND LIABILITIES
Capital and reserves
Capital and reserves 2 272 725 2 131 353 2 126 717
Minority interest 799 799 799
Total equity 2 273 524 2 132 152 2 127 516
Non-current liabilities
Long-term borrowings 855 995 796 413 598 791
Post retirement medical liability 15 297 15 592 15 297
Deferred taxation 70 747 44 070 80 959
Total non-current liabilities 942 039 856 075 695 047
Current liabilities
Trade payables and provisions 644 881 755 959 673 844
Short-term portion of long-term
borrowings 205 167 - 205 320
Short-term borrowings 498 983 648 861 662 920
Total current liabilities 1 349 031 1 404 820 1 542 084
Total equity and liabilities 4 564 594 4 393 047 4 364 647
Consolidated income statements
Unaudited Audited
Six months ended Year ended
31 December 30 June
2002 2001 Change 2002
R`000 R`000 % R`000
Restated Restated
Sales volume (L `000) 177 257 174 071 1,8 312 091
Sales revenue 2 927 565 2 689 409 8,9 4 903 843
Operating expenses (2 537 990) (2 433 630) (4 491 252)
Trading income 389 575 255 779 52,3 412 591
Dividend income 41 447 39 567 81 639
Net interest paid (99 522) (82 221) (169 303)
Foreign currency adjustments
(paragraph B) (53 242) 69 641 68 188
Income from associates 7 881 5 787 13 387
Profit before exceptional
items and taxation 286 139 288 553 (0,8) 406 502
Exceptional items 4 962 (57 040) (73 175)
Profit before taxation 291 101 231 513 25,7 333 327
Taxation (76 971) (59 384) (96 575)
Minority interest (170) (132) (266)
Net profit attributable
to ordinary shareholders 213 960 171 997 24,4 236 486
Adjusted for (net of taxation):
profit on disposal of fixed
assets and goodwill
amortisation (4 461) (2 454) (15 065)
exceptional items (4 962) (2 075) (5 412)
Headline earnings (paragraph B) 204 537 167 468 22,1 216 009
Issued ordinary shares (`000) 195 580 195 580 195 580
Earnings per ordinary
share (cents)
attributable earnings
basis 109,4 87,9 24,4 120,9
headline basis 104,6 85,6 22,1 110,4
Dividends per ordinary
share (cents)
- interim 40,0 35,0 35,0
- final 35,0
40,0 35,0 70,0
Notes
Unaudited Audited
31 December 30 June
2002 2001 2002
R`000 R`000 R`000
1. Exceptional items
Repatriation of surplus
assets of disability fund - - 2 994
Merger costs - (59 115) (78 587)
Profit on disposal of property - 2 075 2 418
Profit on sale of subsidiary 4 962 - -
4 962 (57 040) (73 175)
Taxation - 17 653 23 489
4 962 (39 387) (49 686)
2. Net interest bearing borrowings
Interest bearing debt
Non-current 855 995 796 413 598 791
Current 704 150 648 861 868 240
1 560 145 1 445 274 1 467 031
Cash resources 240 674 265 158 185 221
1 319 471 1 180 116 1 281 810
3. Cash outflow from
investment activities
To maintain operations (21 514) (8 403) 23 936
To expand operations (63 548) (134 136) (243 465)
Investment in associate - (10 099) (10 099)
(85 062) (152 638) (229 628)
4. Directors` valuation of
unlisted investments
Preference shares 747 343 665 594 706 146
Other investments and loans 67 830 57 708 68 160
815 173 723 302 774 306
5. Capital commitments
Contracted 96 081 130 656 50 304
Authorised but not contracted 64 698 28 492 251 457
160 779 159 148 301 761
6. Depreciation of property,
plant and equipment 59 526 52 059 115 046
7. Net asset value
per share (cents) 1 162 1 090 1 088
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.
Abridged consolidated cash flow statements
Unaudited Audited
31 December 30 June
2002 2001 2002
R`000 R`000 R`000
Trading income 389 575 255 779 412 591
Non-cash flow items (4 331) 43 462 98 414
Working capital changes (103 305) 24 737 (14 295)
Inventories 105 577 94 704 (50 735)
Trade and other receivables (193 124) (304 059) (109 230)
Trade payables and provisions (15 758) 234 092 145 670
Cash generated from normal
operating activities 281 939 323 978 496 710
Net financing cost (99 272) (82 202) (167 527)
Foreign currency differences
realised (7 660) 34 186 35 567
Taxation paid (63 945) (42 522) (71 292)
Dividends paid (68 453) (80 188) (148 641)
Cash retained from normal
operating activities 42 609 153 252 144 817
Exceptional items 4 962 (57 040) (73 175)
Cash retained from operating 47 571
activities 96 212 71 642
Cashoutflow from investment
activities (85 062) (152 638) (229 628)
Cashinflow from financing
activities 256 881 4 934 12 498
Decrease in net short-term
borrowings 219 390 (51 492) (145 488)
Net short-term borrowings at
the beginning of the period (477 699) (332 211) (332 211)
Net short-term borrowings
at the end of the period (258 309) (383 703) (477 699)
Short-term borrowings (498 983) (648 861) (662 920)
Cash and cash equivalents 240 674 265 158 185 221
Consolidated statements of changes in equity
Unaudited Audited
Six months ended Year ended
31 December 30 June
2002 2001 2002
R`000 R`000 R`000
Share capital 1 956 1 956 1 956
Share premium 558 002 558 002 558 002
Non-distributable
reserves 53 404 53 305 52 633
Opening balance 52 633 52 774 52 774
Hedging reserve (384) - -
Fair value adjustment (870) - -
Foreign currency
translations 2 025 531 (141)
Retained earnings 1 659 363 1 518 090 1 514 126
Opening balance 1 514 126 1 426 281 1 426 281
Change in accounting
policy (270) - -
Net profit attributable
to ordinary
shareholders 213 960 171 997 236 486
Dividends (68 453) (80 188) (148 641)
Equity at the end of
the period 2 272 725 2 131 353 2 126 072
A. Accounting policy and comparative figures
The accounting policy of the group has been changed in order to comply with the
new South African Statement of Generally Accepted Accounting Practice (GAAP)
dealing with "Financial instruments: recognition and measurement" (AC133). The
effect of this change in accounting policy is not material.
The calculation of headline earnings has also been changed to include merger
costs, in line with Circular 7/2002 "Headline Earnings" issued by The South
African Institute of Chartered Accountants. Comparative figures have therefore
been restated. This change had no effect on the current reporting period. The
effect of this change is as follows:
Headline earnings Headline earnings
per share
31 Dec 30 June 31 Dec 30 June
2001 2002 2001 2002
R`000 R`000 Cents Cents
Previously reported 208 930 277 205 106,8 141,7
Merger costs
(net of taxation) (41 462) (61 196) (21,2) (31,3)
Restated 167 468 216 009 85,6 110,4
The accounting policies and methods of computation are in all other respects
consistent with those applied in the previous financial year and are in
compliance with GAAP.
A subsidiary company, Western Province Cellars Group Limited, was sold with
effect from 1 July 2002. As a result, certain line items in the financial
statements are not comparable.
B. Operating performance
Sales revenue for the six months grew by 8,9% to R2,9 billion. However, if
retail sales of Western Province Cellars Group Limited are excluded, sales
revenue improved by 15,7%.
Sales volumes in the domestic market reflect a favourable sales mix at improved
overall margins. Sales volume growth was achieved for most major brands, with
spirit brands growing 4,0%, and wines, boosted by a strong performance of more
profitable premium brands, by 5,3%. Sales volumes of flavoured alcoholic
beverages, however, continued to suffer under increased competitive pressure.
International sales revenue increased by 30,7% and now comprises, on a non-duty
paid basis, 21,6% (2001: 18,4%) of total sales revenue. Amarula Cream achieved
substantial volume growth of 37,0%. Natural wines showed strong volume growth of
32,2% and a favourable sales mix benefited sales revenue, which improved by
38,9%.
The substantial increase of 52,3% in trading income is largely the result of
increased sales revenue; a favourable sales mix and improved production
efficiencies. This is reflected in the improvement in net margin.
The increase in trading income, however, has been negated by the unfavourable
effect of the improvement in the value of the rand towards the end of the
reporting period. During the period under review a loss of R53,2 million (2001:
gain of R69,6 million), which includes an unrealised loss of R45,6 million
(2001: R35,4 million gain) from the conversion of foreign operations, was
reflected in this regard.
Consequently, profit before exceptional items and taxation decreased by 0,8%.
Headline earnings for the period reflect an increase of 22,1% to R204,5 million
over the restated amount of the previous year. Prior to the restatement,
headline earnings declined by 2,1%.
C. Investment and funding
Total assets increased by 4,6% to R4,6 billion.
Capital expenditure amounted to R85,1 million. R55,4 million of this amount was
spent on expanding and upgrading the cellar at Nederburg and the bottling plant
at Epping.
Inventory and accounts receivable showed a decrease in real terms, reflecting
management`s focus on the systematic reduction of working capital. Net working
capital changes, however, reflect a cash outflow of R103,3 million as a result
of the timing of creditors payments. In addition, contracts for bulk wine
purchases have been concluded and settled earlier than the previous year in
order to ensure sufficient supply.
D. Competition Tribunal
The Competition Tribunal has approved the merger subject to the resolution of
its concerns regarding the medium-priced spirits segment. A further hearing, to
be convened at a date still to be set by the Tribunal, will take place to
resolve these concerns.
E. Prospects
Indications are that short-term prospects for world economic growth are now less
favourable and consequently international markets for alcoholic beverages are
increasingly competitive.
Business planning initiatives focusing on driving revenue growth, cost
reduction, improved customer service and reliable product supply are now
entrenched. The group therefore believes that it is well placed to identify and
capitalise on opportunities in domestic and foreign markets.
Income does not accrue evenly throughout a year. Sales revenue 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. Although slower growth is
foreseen for the next six months, the group still expects satisfactory growth in
trading income for the full year.
F. General
Mr. WS MacFarlane retired from the board of directors with effect from 1 January
2003. We thank him for his valuable contribution over the years. Mr. D Prins has
been appointed with effect from 1 March 2003.
G. Dividends
The directors have resolved to declare dividend number 29 of 40 cents (2001: 35
cents) per share for the period ended 31 December 2002. This represents a
dividend cover of 2,6 times (2001: 2,4 times) by headline earnings.
Last day to trade "cum" the dividend Friday, 7 March 2003
Shares commence trading "ex" the dividend
from commencement of business on Monday, 10 March 2003
Record date Friday, 14 March 2003
Payment date Monday, 17 March 2003
Share certificates may not be dematerialised or rematerialised between Monday,
10 March 2003 and Friday, 14 March 2003, both days inclusive.
Signed on behalf of the board
DM Nurek
Chairman
JJ Scannell
Managing director
Stellenbosch
18 February 2003
Directors:
DM Nurek (Chairman), FC Bayly, WJ Barnard, PE Beyers,
JG Carinus, SJ Genade, E de la H Hertzog, LN Jonker, MJ Madungandaba,
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
www.distell.co.za
Date: 18/02/2003 02:57:00 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
