| Mon 16 Aug 2004, 13:28 | | Results Of The Group For The Year Ended 30 June 04 |
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Distell - Audited Results Of The Group For The Year Ended 30 June 2004
Distell Group Limited
Registration number 1988/005808/06
JSE share code: DST ISIN: ZAE000028668
(`Distell` or `the company`)
RESULTS OF THE GROUP FOR THE YEAR ENDED 30 JUNE 2004
Salient features
Increase of 10,7% in total sales revenue
International sales volumes increased 30,2%, revenue up 4,3%
Trading income up 14,4%
Improvement of R382,2 million in cash generated
Financing costs reduced by R23,4 million
Foreign currency losses down
Headline earnings up 41,0%
Consolidated balance sheets
2004 2003
R`000 R`000
Audited Audited
Assets
Non-current assets
Property, plant and equipment 1 225 351 1 197 900
Biological assets 98 939 94 585
Investments and loans 552 261 306 755
Intangible assets 6 578 6 952
Deferred taxation 36 431 19 402
Total non-current assets 1 919 560 1 625 594
Current assets
Inventories 2 207 296 2 074 364
Trade and other receivables 513 414 529 192
Short-term investments - 324 106
Taxation prepaid 33 230 31 864
Cash and cash equivalents 159 390 139 304
Total current assets 2 913 330 3 098 830
Total assets 4 832 890 4 724 424
Equity and liabilities
Capital and reserves
Capital and reserves 2 570 832 2 362 385
Minority interest 1 259 799
Total equity 2 572 091 2 363 184
Non-current liabilities
Non-current interest-bearing liabilities 754 601 424 130
Post-retirement medical liability 16 905 15 297
Deferred taxation 101 127 105 128
Total non-current liabilities 872 633 544 555
Current liabilities
Trade payables and provisions 1 003 788 791 961
Short-term portion of non-current
liabilities 89 766 421 221
Current interest-bearing liabilities 294 612 603 503
Total current liabilities 1 388 166 1 816 685
Total equity and liabilities 4 832 890 4 724 424
Consolidated income statements
2004 2003 Change
R`000 R`000 %
Audited Audited
Sales volume (litres `000) 315 588 309 566 1,9
Sales revenue 5 743 808 5 188 422 10,7
Operating expenses (5 149 076) (4 668 652)
Trading income 594 732 519 770 14,4
Dividend income 56 013 70 208
Net interest paid (150 766) (188 342)
Foreign currency adjustments (24 891) (66 767)
Income from associates 10 674 12 723
Exceptional items - 51 462
Profit before taxation 485 762 399 054 21,7
Taxation (124 790) (86 277)
Minority interest (390) (315)
Net profit attributable to
ordinary shareholders 360 582 312 462 15,4
Net profit attributable to
ordinary shareholders 360 582 312 462
Adjusted for (net of taxation):
profit on disposal of fixed assets
and goodwill amortisation (1 958) (9 287)
exceptional items - (48 762)
Headline earnings 358 624 254 413 41,0
Issued ordinary shares (`000) 196 357 195 580
Weighted number of shares (`000) 195 626 195 580
Earnings per ordinary
share (cents)
- attributable earnings basis 184,3 159,8 15,3
- headline basis 183,3 130,1 40,9
Dividends per ordinary
share (cents)
- interim 46,0 40,0 15,0
- final 51,0 35,0 45,7
97,0 75,0 29.3
Notes
2004 2003
R`000 R`000
Audited Audited
2004 2003
1. Net interest-bearing borrowings
Interest-bearing debt
Non-current 754 601 424 130
Current 384 378 1 024 724
1 138 979 1 448 854
Cash resources 159 390 139 304
979 589 1 309 550
2. Cash outflow from investment activities
To maintain operations (79 385) (95 838)
To expand operations (76 910) (94 103)
Preference shares redeemed 137 030 199 782
(19 265) 9 841
3. Directors` valuation of unlisted investments
Preference shares 493 683 575 650
Other investments and loans 80 277 76 836
573 960 652 486
4. Capital commitments
Contracted 23 227 35 074
Authorised but not contracted 119 454 191 012
142 681 226 086
5. Depreciation of property, plant and equipment 132 879 126 505
6. Net asset value per share (cents) 1 310 1 208
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.
Abridged consolidated cash flow statements
2004 2003
R`000 R`000
Audited Audited
Trading income 594 732 519 770
Non-cash flow items 144 204 81 304
Working capital changes 22 259 (192 296)
Inventories (132 932) (423 288)
Trade and other receivables (31 618) 102 901
Trade payables and provisions 186 809 128 091
Cash generated from normal operating activities 761 195 408 778
Net financing cost (149 817) (187 420)
Foreign currency differences realised (10 615) (25 886)
Taxation paid (143 915) (91 015)
Dividends paid (158 420) (146 685)
Cash retained from normal operating activities 298 428 (42 228)
Exceptional items 46 500 4 962
Cash retained from operating activities 344 928 (37 266)
Cash outflow from investment activities (19 265) 9 841
Cash inflow from financing activities 3 314 40 925
Decrease in net short-term borrowings 328 977 13 500
Net short-term borrowings at the beginning of the
year 464 199 477 699
Net short-term borrowings at the end of the year (135 222) (464 199)
Current interest-bearing liabilities (294 612) (603 503)
Cash and cash equivalents 159 390 139 304
Consolidated statements of changes in equity
2004 2003
R`000 R`000
Audited Audited
Share capital 1 964 1 956
Share premium 563 702 558 002
Treasury shares (1 480) -
Non-distributable and other reserves 60 184 58 127
Opening balance 58 127 52 633
Hedging reserve 1 932 (221)
Fair value adjustments 858 5 005
Foreign currency translations (733) 710
Retained earnings 1 946 462 1 744 300
Opening balance 1 744 300 1 514 126
Effect of adopting AC133 - (270)
Effect of adopting AC137 - 64 667
Net profit attributable to ordinary shareholders 360 582 312 462
Dividends (158 420) (146 685)
Equity at the end of the year 2 570 832 2 362 385
Accounting policy and comparative figures
The accounting policy of the group has been changed to comply with the new South
African Statement of Generally Accepted Accounting Practice (GAAP) dealing with
`Agriculture` (AC137). In accordance with this new statement, vineyards owned by
the group must be valued at fair value. Fair value was calculated by discounting
net cash flows of the vineyards over the balance of their lifespan 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 year ended 30 June 2003 have been
restated. The effect of this change on the previous reporting period is as
follows:
Year to
30 June
2003
R`000
Income statement
Headline earnings previously reported 271 752
Decrease in trading income (21 267)
Decrease in taxation 3 928
Headline earnings restated 254 413
Decrease in attributable earnings per share (cents) (8,9)
Decrease in headline earnings per share (cents) (8,9)
Balance sheet
Decrease in property, plant and equipment (23 120)
Increase in biological assets 94 585
Increase in deferred taxation liability 24 137
Increase in opening balance of retained earnings 64 667
Cash flow statement
Decrease in trading income (21 267)
Increase in non-cash flow items 21 267
The accounting policies and methods of computation are in all other respects
consistent with those applied in the previous financial year and comply with
GAAP.
Operating performance
Sales revenue for the year grew 10,7% to R5,7 billion on a sales volume increase
of 1,9%. Total sales volumes for the second six months of the financial year
showed strong growth of 5,2% over the corresponding period of the previous year.
Domestic
sales volumes grew marginally by 0,4%, but reflected a favourable sales mix. Our
trademarks in the important spirits category performed better than our other
categories. Although Distell relinquished its distribution rights to the Martell
brandies at the beginning of the financial year, spirit volumes still grew 2,0%.
If Martell sales are excluded, spirit volumes actually showed a growth of 7,4%.
However, sales volumes of unfortified wine came under pressure, declining 2,7%.
Alcoholic fruit beverage sales volumes remained virtually unchanged, despite the
aggressive growth in competition.
International sales volumes, excluding Africa, increased 30,2%. Volume growth
for both Amarula Cream and unfortified wines accelerated this year. Amarula
Cream grew 12,7% (2003: 8,1%) and unfortified wines, 33,7% (2003: 19,3%).
However, international sales revenue, mainly as a result of a 16,4% improvement
in the value of the rand, grew by just 4,3%.
Sales revenue derived from African countries increased 12,3%.
The increase of 14,4% in trading income was driven largely by increased sales
revenue, a continued improvement in sales mix and enhanced efficiencies across
various dimensions of the business.
Operating margin improved from 10,0% to 10,4%, despite the effect of the
appreciation of the rand.
Net financing cost declined by R23,4 million, mainly as a result of a
substantial improvement in cash flow and a reduction in net interest rates.
Foreign currency losses were R24,9 million compared to R66,8 million the
previous year.
Consequently, headline earnings for the period reflect an increase of 41,0% to
R358,6 million. If the effect of the change in accounting policy referred to
above is excluded, headline earnings grew by 32,0%.
Investment and funding
Total assets increased 2,3% to R4,8 billion.
Capital expenditure amounted to R161,2 million, compared to R195,8 million the
previous year. This year, a further R37,0 million was spent on the second and
final phase to expand and upgrade the Nederburg cellar in Paarl.
Management`s focus on the systematic reduction in working capital is reflected
in a R215,0 million improvement in cash flow from working capital changes.
Cash generated by normal operating activities amounted to R298,4 million, and
net short-term borrowings decreased by R329,0 million.
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 thereafter that they meet certain criteria set by the Minister of Trade
and Industry. We believe the criteria are sound. During the legislative process
Government committed itself to ensuring the Bill would not adversely affect the
industry`s efficiency.
Prospects
The domestic market is likely to remain extremely competitive in the near term
but a favourable medium to longer-term outlook for the South African economy
leads us to believe consumer demand for alcoholic beverages will strengthen,
driven in part by lower inflation and interest rates.
We continue to invest in key international markets to build our brands as part
of a profitable growth strategy and look forward to increased sales in an
improved global economic climate.
We are confident Distell is well positioned to capture opportunities in domestic
and foreign markets and the group expects to continue to reflect real growth in
earnings.
Board appointments
Prof Jakes Gerwel and Messrs Peter Bester and Merwe Botha, the group`s chief
financial officer, were appointed to the board of directors during the year.
Auditors` report
The annual financial statements have been audited by PricewaterhouseCoopers Inc.
and their unqualified auditors` report is available for inspection at the
registered office of the company.
Dividends
The directors have resolved to declare dividend number 32 of 51 cents (2003: 35
cents) per share, making a total dividend of 97 cents(2003: 75 cents) per share
for the year ended 30 June 2004. This dividend represents a dividend cover of
1,9 times (2003: 1,7 times) by headline earnings.
Last day to trade `cum` the dividend Friday, 3 September 2004
Shares commence trading `ex` the dividend
from commencement of business on Monday, 6 September 2004
Record date Friday, 10 September 2004
Payment date Monday, 13 September 2004
Share certificates may not be dematerialised or rematerialised between Monday, 6
September 2004, and Friday, 10 September 2004, both days inclusive.
Signed on behalf of the board
DM Nurek JJ Scannell
Chairman Managing director
Stellenbosch
16 August 2004
Directors: DM Nurek (Chairman), FC Bayly, PM Bester, PE Beyers, MJ Botha, JG
Carinus, SJ Genade, GL Gerwel, 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-Wagen Road, Stellenbosch 7600
Transfer secretaries: Computershare Investor Services 2004 (Pty) Limited, PO Box
61051, Marshalltown 2107
Sponsor: Rand Merchant Bank (a division of FirstRand Bank Limited)
Corporate Finance
www.distell.co.za
Date: 16/08/2004 01:23:11 PM
Produced by the JSE SENS Department
