| Mon 16 Feb 2004, 15:12 | | results of the group for the six months ended 31 D |
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Distell - Interim results of the group for the six months ended 31 December 2003
Distell Group Limited
Registration number 1988/005808/06
JSE share code: DST
ISIN: ZAE000028668
("Distell" or "the group")
Interim results of the group for the six months ended 31 December 2003
Salient features
- Increase of 8,5% in total sales revenue
- Local sales volumes down 1,6%
- 19,7% growth in international sales volumes
- International sales revenue down 9,9% due to strong rand
- Headline earnings up 7,8%
- Dividends per share increase 15,0%
Consolidated balance sheets
Unaudited Audited
31 December 30 June
2003 2002 2003
R"000 R"000 R"000
Restated Restated
Assets
Non-current assets
Property, plant and equipment 1 230 001 1 154 543 1 197 900
Biological assets 98 038 116 377 94 585
Investments and loans 522 682 587 007 306 755
Intangible assets 6 769 7 094 6 952
Deferred taxation 30 825 22 148 19 402
Total non-current assets 1 888 315 1 887 169 1 625 594
Current assets
Inventories 1 865 026 1 545 499 2 074 364
Trade and other receivables 778 516 774 795 529 192
Short-term investments 137 000 206 427 324 106
Taxation prepaid - 3 486 31 864
Cash and cash equivalents 206 653 240 674 139 304
Total current assets 2 987 195 2 770 881 3 098 830
Total assets 4 875 510 4 658 050 4 724 424
Equity and liabilities
Capital and reserves
Capital and reserves 2 515 857 2 337 644 2 362 385
Minority interest 799 799 799
Total equity 2 516 656 2 338 443 2 363 184
Non-current liabilities
Non-current interest-bearing 815 819 855 995 424 130
liabilities
Post-retirement medical liability 15 297 15 297 15 297
Deferred taxation 87 555 99 284 105 128
Total non-current liabilities 918 671 970 576 544 555
Current liabilities
Trade payables and provisions 863 242 644 881 791 961
Short-term portion of non-current
liabilities 217 410 205 167 421 221
Current interest-bearing liabilities 343 782 498 983 603 503
Taxation payable 15 749 - -
Total current liabilities 1 440 183 1 349 031 1 816 685
Total equity and liabilities 4 875 510 4 658 050 4 724 424
Consolidated income statements
Unaudited Audited
Six months ended Year ended
31 December 30 June
2003 2002 Change 2003
R"000 R"000 % R"000
Restated Restated
Sales volume (litres
"000) 176 340 177 257 (0,5) 309 566
Sales revenue 3 176 961 2 927 565 8,5 5 188 422
Operating expenses (2 785 073) (2 537 265) (4 668 652)
Trading income 391 888 390 300 0,4 519 770
Dividend income 28 688 41 447 70 208
Financing costs
Net interest paid (91 737) (99 522) (188 342)
Foreign currency
differences (26 992) (53 242) (66 767)
Income from associates 5 427 7 881 12 723
Profit before exceptional
items and taxation 307 274 286 864 7,1 347 592
Exceptional items - 4 962 51 462
Profit before taxation 307 274 291 826 5,3 399 054
Taxation (85 621) (77 444) (86 277)
Minority interest (208) (170) (315)
Net profit attributable
to ordinary shareholders 221 445 214 212 3,4 312 462
Net profit attributable
to ordinary shareholders 221 445 214 212 3,4 312 462
Adjusted for (net of
taxation):
profit on disposal of
fixed assets and
goodwill amortisation (678) (4 461) (9 287)
exceptional items - (4 962) (48 762)
Headline earnings 220 767 204 789 7,8 254 413
Issued ordinary
shares ("000) 195 580 195 580 195 580
Earnings per ordinary
share (cents)
attributable earnings
basis 113,2 109,5 3,4 159,8
headline basis 112,9 104,7 7,8 130,1
Dividends per ordinary
share (cents)
- interim 46,0 40,0 40,0
- final 35,0
46,0 40,0 15,0 75,0
Abridged consolidated cash flow statements
Unaudited Audited
31 December 30 June
2003 2002 2003
R"000 R"000 R"000
Restated Restated
Trading income 391 888 390 300 519 770
Non-cash flow items 51 871 (5 056) 81 304
Working capital changes 35 027 (103 305) (192 296)
Inventories 209 338 105 577 (423 288)
Trade and other receivables (249 220) (193 124) 102 901
Trade payables and provisions 74 909 (15 758) 128 091
Cash generated from normal
operating activities 478 786 281 939 408 778
Net financing cost (91 258) (99 272) (187 420)
Foreign currency differences realised (18 468) (7 660) (25 886)
Taxation paid (65 336) (63 945) (91 015)
Dividends paid (68 453) (68 453) (146 685)
Cash retained from normal
operating activities 235 271 42 609 (42 228)
Exceptional items - 4 962 4 962
Cash retained from operating activities 235 271 47 571 (37 266)
Cash outflow from investment activities (95 871) (85 062) 9 841
Cash inflow from financing activities 187 670 256 881 40 925
Decrease in net short-term borrowings 327 070 219 390 13 500
Net short-term borrowings at
the beginning of the period (464 199) (477 699) (477 699)
Net short-term borrowings at
the end of the period (137 129) (258 309) (464 199)
Current interest-bearing liabilities (343 782) (498 983) (603 503)
Cash and cash equivalents 206 653 240 674 139 304
Consolidated statements of changes in equity
Unaudited Audited
Six months ended Year ended
31 December 30 June
2003 2002 2003
R"000 R"000 R"000
Restated Restated
Share capital 1 956 1 956 1 956
Share premium 558 002 558 002 558 002
Non-distributable and other reserves 58 607 53 404 58 127
Opening balance 58 127 52 633 52 633
Hedging reserve 401 (384) (221)
Fair value adjustments 14 (870) 5 005
Foreign currency translations 65 2 025 710
Retained earnings 1 897 292 1 724 282 1 744 300
Opening balance 1 744 300 1 514 126 1 514 126
Effect of adopting AC133 - (270) (270)
Effect of adopting AC137 - 64 667 64 667
Net profit attributable to ordinary
shareholders 221 445 214 212 312 462
Dividends (68 453) (68 453) (146 685)
Equity at the end of the period 2 515 857 2 337 644 2 362 385
Notes
Unaudited Audite
31 December 30 Jun
2003 2002 200
R"000 R"000 R"00
Restated Restate
1. Net interest-bearing liabilities
Interest-bearing debt
Non-current 815 819 855 995 424 13
Current 561 192 704 150 1 024 72
1 377 011 1 560 145 1 448 85
Cash resources 206 653 240 674 139 30
1 170 358 1 319 471 1 309 55
2. Cash outflow from investment
activities
To maintain operations (41 488) (21 514) (95 838
To expand operations (54 383) (63 548) (94 103
Preference shares redeemed - - 199 78
(95 871) (85 062) 9 84
3. Directors" valuation of unlisted
investments
Preference shares 603 859 747 343 575 65
Other investments and loans 77 521 67 830 76 83
681 380 815 173 652 48
4. Capital commitments
Contracted 87 476 96 081 35 07
Authorised but not contracted 40 656 64 698 191 01
128 132 160 779 226 08
5. Depreciation of property, plant and
equipment 64 707 58 926 126 50
6. Net asset value per share (cents) 1 287 1 196 1 20
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.
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 "Agriculture" (AC137). This new statement requires that the
vineyards owned by the group be valued at fair value. The fair value was
calculated by discounting the net cash flows of the vineyards over the remaining
lives thereof at an appropriate discount rate.
The effect of this change in accounting policy in the current reporting period
is not material. Comparative figures for the six months ended 31 December 2002
and the year ended 30 June 2003 have been restated. The effects of this change
on previous reporting periods are as follows:
6 months to 12 months to
31 December 30 June
2002 2003
Increase/(decrease) R"000 R"000
Income statement
Trading income 725 (21 267)
Taxation (473) 3 928
Net profit attributable to ordinary shareholders
252 (17 339)
Headline earnings 252 (17 339)
Attributable earnings per share (cents) 0,1 (8,9)
Headline earnings per share (cents) 0,1 (8,9)
Balance sheet
Property, plant and equipment (22 921) (23 120)
Biological assets 116 377 94 585
Deferred taxation liability 28 537 24 137
Opening balance of retained earnings 64 667 64 667
Cash flow statement
Trading income 725 (21 267)
Non-cash flow items (725) 21 267
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.
Operating performance
Sales revenue grew 8,5% to R3,2 billion. Overall sales volumes, however,
remained constant.
Distell"s sales volumes in the domestic market, which declined by 1,6%, reflect
a favourable sales mix. Our trademarks in the important spirits category
performed better than other categories. Although Distell relinquished its
distribution rights to the Martell brandies at the beginning of the period,
spirit volumes grew by 1,0%. If Martell sales are excluded, spirit volumes
showed growth of 6,2%. Sales volumes of natural wines declined by 3,4%. The
market for flavoured alcoholic beverages remains extremely competitive and our
sales volumes in this category declined by 4,1%.
International sales volumes, excluding Africa, increased by 19,7%. Natural wines
showed strong volume growth of 23,8%. Amarula Cream achieved volume growth of
4,1%. The substantial appreciation of the rand during the reporting period
impacted unfavourably on international sales revenues. As a result, margins
deteriorated and sales revenue declined by 9,9%. The group, however, continued
to invest in international markets.
Sales revenue derived from African countries increased by 14,9%.
The unfavourable effect of the improvement in the value of the rand on margins
largely negated growth in trading income, which increased by only 0,4%.
Profit before exceptional items and taxation increased by 7,1%.
Headline earnings for the period reflect an increase of 7,8% to R220,8 million.
Investment and funding
Total assets increased by 3,2% to R4,9 billion.
Capital expenditure amounted to R95,9 million. Of this R30,0 million was spent
on expanding and upgrading the Nederburg cellar in Paarl to support the
continued growth of the brand domestically and internationally.
Cash generated by normal operating activities increased by 69,8% to R478,8
million, mainly as a result of improved working capital management towards the
end of the reporting period.
The increased investment in inventories, mainly as a result of an increase in
bulk wines and spirits, are necessitated by the group"s long-term view of
consumer demand for its products. The investment in bulk inventories under
maturation is therefore planned accordingly.
During February 2003 a new system was implemented in terms of which excise duty
on spirits is levied at source. Excise duty of R158,7 million is included in
inventory for the first time. The benefit of extended duty payment terms is
reflected under trade payables.
Legislative issues
As announced on 12 December 2003, the appeal by the Competition Commission
against certain findings of the Competition Tribunal in the merger between
Distillers Corporation (SA) Limited and Stellenbosch Farmers" Winery Group
Limited was dismissed in a judgment handed down by the Competition Appeal Court
on 11 December 2003.
In September 2003, the National Assembly approved the new Liquor Bill, which
accommodates the industry"s concerns, and in particular allows companies to hold
licences in both manufacturing and distribution. There is to be an automatic
conversion of existing licences and licence holders must demonstrate within 12
months that they meet certain criteria set by the Minister of Trade and
Industry. We believe that the criteria are sound. During the legislative process
the Government committed itself to ensuring that the Bill would not adversely
affect the industry"s efficiency.
Prospects
The local market remains intensely competitive. The group pursues focused and
clear strategies to grow drive brand contributions to improve revenue growth
across product categories. The general expectation is that the domestic economy,
measured in terms of household consumption expenditure, will grow by
approximately 3% in the year ahead. This, together with interest rates, which
are expected to remain at current levels in the year ahead, should also benefit
consumer demand for alcoholic beverages.
Success in the international market, key to the group"s medium and long- term
growth, remains a challenge and requires continued investment and a strong focus
on cost competitiveness. Early indications are that the world economy is
starting to recover.
The group expects continued real growth in headline earnings for the full year.
Directorate
Merwe Botha, the group"s chief financial officer, has been appointed to the
board of directors with effect from 8 December 2003.
Dividends
The directors have resolved to declare dividend number 31 of 46 cents (2002: 40
cents) per share for the period ended 31 December 2003. This dividend represents
a dividend cover of 2,5 times (2002: 2,6 times) by headline earnings.
Last day to trade "cum" the dividend Friday, 5 March 2004
Shares commence trading "ex" the dividend
from commencement of business on Monday, 8 March 2004
Record date Friday, 12 March 2004
Payment date Monday, 15 March 2004
Share certificates may not be dematerialised or rematerialised between Monday, 8
March 2004, and Friday, 12 March 2004, both days inclusive.
Signed on behalf of the board
DM Nurek JJ Scannell
Chairman Managing director
Stellenbosch
16 February 2004
Directors: DM Nurek (Chairman), FC Bayly, PE Beyers, MJ Botha, JG Carinus, SJ
Genade, E de la H Hertzog, MJ Madungandaba, D Prins, JJ Scannell (Managing
director), PEI Swartz, MH Visser
Company secretary: CJ Cronje
Registered office: Aan-de-Wagenweg, Stellenbosch 7600
Transfer secretaries: Computershare Limited, PO Box 61051, Marshalltown 2107
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
CORPORATE FINANCE
Date: 16/02/2004 03:00:11 PM Produced by the JSE SENS Department
