| Wed 16 Feb 2005, 15:32 | | interim results of the group for the six months e |
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DISTELL GROUP LIMITED - UNAUDITED INTERIM RESULTS OF THE GROUP FOR THE SIX
MONTHS ENDED 31 DECEMBER 2004
Distell Group Limited
Registration number 1988/005808/06
JSE share code: DST ISIN: ZAE000028668
Unaudited interim results of the group for the six months ended 31 December 2004
Salient features
Headline earnings up 33,0%
Dividends per share increase 21,7%
Cash generated increases 47,8% to R206,6 million
Total sales revenue increases 7,3%
Trading income rises 14,4%
Reduced foreign currency losses and financing costs
Consolidated balance sheets
Unaudited Audited
31 December 30 June
2004 2003 2004
R`000 R`000 R`000
ASSETS
Non-current assets
Property, plant and equipment 1 196 082 1 230 001 1 225 351
Biological assets 99 118 98 038 98 939
Investments and loans 579 433 522 682 552 261
Intangible assets 6 578 6 769 6 578
Deferred taxation 34 140 30 825 36 431
Total non-current assets 1 915 351 1 888 315 1 919 560
Current assets
Inventories 1 970 130 1 865 026 2 207 296
Trade and other receivables 771 363 778 516 513 414
Short-term investments - 137 000 -
Taxation prepaid - - 33 230
Cash and cash equivalents 271 023 206 653 159 390
Total current assets 3 012 516 2 987 195 2 913 330
Total assets 4 927 867 4 875 510 4 832 890
EQUITY AND LIABILITIES
Capital and reserves
Capital and reserves 2 759 158 2 515 857 2 570 832
Minority interest 1 251 799 1 259
Total equity 2 760 409 2 516 656 2 572 091
Non-current liabilities
Non-current interest-bearing
liabilities 710 419 815 819 754 601
Post-retirement medical liability 16 905 15 297 16 905
Deferred taxation 81 673 87 555 101 127
Total non-current liabilities 808 997 918 671 872 633
Current liabilities
Trade payables and provisions 1 009 168 863 242 1 003 788
Short-term portion of
non-current liabilities 95 005 217 410 89 766
Current interest-bearing 232 814 343 782 294 612
liabilities
Taxation payable 21 474 15 749 -
Total current liabilities 1 358 461 1 440 183 1 388 166
Total equity and liabilities 4 927 867 4 875 510 4 832 890
Consolidated income statements
Unaudited Audited
Six months ended Year ended
31 December 30 June
2004 2003 Change 2004
R`000 R`000 % R`000
Sales volume (litres 176 952 173 829 1,8 310 966
`000)
Sales revenue 3 407 943 3 176 961 7,3 5 743 808
Operating expenses (2 959 (2 785 073) 6,3 (5 149
787) 076)
Trading income 448 156 391 888 14,4 594 732
Dividend income 24 908 28 688 56 013
Financing costs (59 808) (91 737) (150 766)
Foreign currency
differences (8 890) (26 992) (24 891)
Income from associates 6 850 5 427 10 674
Profit before taxation 411 216 307 274 33,8 485 762
Taxation (117 251) (85 621) (124 790)
Minority interest (269) (208) (390)
Net profit attributable
to ordinary shareholders 293 696 221 445 32,6 360 582
Net profit attributable
to ordinary shareholders 293 696 221 445 32,6 360 582
Adjusted for
(net of taxation):
profit on disposal of
fixed assets
and goodwill
impairment/
amortisation (94) (678) (1 958)
Headline earnings 293 602 220 767 33,0 358 624
Issued number of
ordinary
shares (`000) 196 357 195 580 196 357
Weighted number of
ordinary
shares (`000) 196 357 195 580 195 626
Earnings per ordinary
share (cents)
- attributable earnings
basis 149,6 113,2 32,1 184,3
- headline basis 149,5 112,9 32,5 183,3
Dividends per ordinary
share (cents)
- interim 56,0 46,0 21,7 46,0
- final 51,0
56,0 46,0 21,7 97,0
Abridged consolidated cash flow statements
Unaudited Audited
Six months ended Year ended
31 December 30 June
2004 2003 2004
R`000 R`000 R`000
Trading income 448 156 391 888 594 732
Non-cash flow items 39 277 51 871 144 204
Working capital changes (3 295) 35 027 22 259
Inventories 237 166 209 338 (132 932)
Trade and other receivables (258 493) (249 220) (31 618)
Trade payables and provisions 18 032 74 909 186 809
Cash generated from normal
operating
activities 484 138 478 786 761 195
Net financing cost (59 069) (91 258) (149 817)
Foreign currency differences (2 313)
realised (18 468) (10 615)
Taxation paid (77 615) (65 336) (143 915)
Dividends paid (100 142) (68 453) (158 420)
Cash retained from normal
operating
activities 244 999 235 271 298 428
Exceptional items - - 46 500
Cash retained from operating
activities 244 999 235 271 344 928
Cash outflow from investment
activities (32 772) (95 871) (19 265)
Cash outflow from financing
activities (38 796) 187 670 3 314
Decrease in net short-term
borrowings 173 431 327 070 328 977
Net short-term borrowings at the
beginning of the period (135 222) (464 199) (464 199)
Net short-term borrowings at the
end
of the period 38 209 (137 129) (135 222)
Current interest-bearing (232 814) (343 782) (294 612)
liabilities
Cash and cash equivalents 271 023 206 653 159 390
Consolidated statements of changes in equity
Unaudited Audited
Six months ended Year ended
31 December 30 June
2004 2003 2004
R`000 R`000 R`000
Share capital 1 964 1 956 1 964
Share premium 563 702 558 002 563 702
Treasury shares (1 056) - (1 480)
Non-distributable and other 54 532 58 607 60 184
reserves
Opening balance 60 184 58 127 58 127
Hedging reserve (5 218) 401 1 932
Fair value adjustments (361) 14 858
Foreign currency translations (73) 65 (733)
Retained earnings 2 140 016 1 897 292 1 946 462
Opening balance 1 946 462 1 744 300 1 744 300
Net profit attributable to
ordinary shareholders 293 696 221 445 360 582
Dividends (100 142) (68 453) (158 420)
Equity at the end of the period 2 759 158 2 515 857 2 570 832
Notes
Unaudited Audited
31 December 30 June
2004 2003 2004
R`000 R`000 R`000
1. Net interest-bearing
borrowings
Interest-bearing debt
Non-current 710 419 815 819 754 601
Current 327 819 561 192 384 378
1 038 238 1 377 011 1 138 979
Cash resources 271 023 206 653 159 390
767 215 1 170 358 979 589
2. Cash outflow from investment
activities
To maintain operations (17 689) (41 488) (79 385)
To expand operations (15 083) (54 383) (76 910)
Preference shares redeemed - - 137 030
(32 772) (95 871) (19 265)
3. Directors` valuation of
unlisted investments
Preference shares 517 852 603 859 493 683
Other investments and loans 83 273 77 521 80 277
601 125 681 380 573 960
4. Capital commitments
Contracted 43 051 87 476 23 227
Authorised but not contracted 74 306 40 656 119 454
117 357 128 132 142 681
5. Depreciation of property,
plant and equipment 60 870 64 707 132 879
6. Net asset value per share 1 406 1 287 1 310
(cents)
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 adopt South
African Statement of Generally Accepted Accounting Practice (`GAAP`) dealing
with `Business Combinations` (AC 140/IFRS 3) and the revised statements dealing
with `Intangible Assets` (AC 129/IAS 38) and `Impairment of Assets` (AC 128/IAS
36). The effect of these statements requires that the amortisation of goodwill
be discontinued prospectively from our current financial year with goodwill
reassessed annually for impairment.
The impact of this change in accounting policy in the current reporting period
is not material. Comparative figures for the six months ended 31 December 2003
and the year ended 30 June 2004 have not been restated.
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, the requirements of the South African Companies Act 1973
as amended and the Listings Requirements of the JSE Securities Exchange South
Africa (JSE).
Operating performance
Sales revenue grew 7,3% to R3,4 billion on a sales volume increase of 1,8%.
Distell`s sales volumes in the domestic market, which grew by 0,9%, reflect a
favourable sales mix. Our trademarks in the important spirits category continued
to perform better than those in other categories. Spirit volumes increased by
3,2%. Sales volumes of unfortified wine, however, remained under pressure,
declining 2,2%. This was due mainly to increased competition amongst local
producers who, given the strong rand, began focusing on the domestic market.
Ready-to-Drink sales volumes grew 3,1% (2003: 4,1% decline), despite the
aggressive growth in competition.
International sales volumes, excluding Africa, increased 7,2%. A 6,1%
improvement in the value of the rand impacted negatively on sales revenue, with
international sales revenue declining by 1,6%.
Sales revenue derived from African countries increased 7,0%.
The increase of 14,4% in trading income was driven largely by increased sales
revenue, the continual improvement in the domestic sales mix and enhanced
efficiencies across various dimensions of the business.
Operating margin improved from 12,3% to 13,2%, despite the effect of the
appreciation of the rand.
Net financing costs declined by R28,1 million, mainly as a result of a
substantial improvement in cash flow and a reduction in interest rates. Foreign
currency losses dropped to R8,9 million from R27,0 million the previous year.
Consequently, headline earnings for the period reflect an increase of 33,0% to
R293,6 million.
Investment and funding
Total assets increased 2,0% to R4,9 billion.
Capital expenditure amounted to R32,8 million, compared to R95,9 million the
previous year.
Management`s continued focus on systematically reducing working capital is
reflected in a real improvement in cash flow.
Cash generated by normal operating activities amounted to R245,0 million (2003:
R235,3 million), and net interest-bearing borrowings decreased by R212,4 million
(2003: R139,2 million).
Legislative issues
Liquor licences under the previous Liquor Act have been converted to the
appropriate registrations under the current Liquor Act and will be reviewed by
the authorities over the next two years. Provincial legislation dealing with the
registration at the retail level of the liquor industry is proceeding slowly.
Prospects
The domestic and international markets remain extremely competitive, compounded
by the strong rand and worldwide overproduction of wine. We expect the trading
environment to be more challenging for the remainder of the financial year and
the rate of growth in earnings for the full year to be lower than that of the
first six months.
Dividends
The directors have resolved to declare dividend number 33 of 56 cents (2003: 46
cents) per share for the period ended 31 December 2004. This dividend represents
a dividend cover of 2,7 times (2003: 2,5 times) by headline earnings.
Last day to trade `cum` the dividend Friday, 4 March 2005
Shares commence trading `ex` the dividend from
commencement of business on Monday, 7 March 2005
Record date Friday, 11 March
2005
Payment date Monday, 14 March
2005
Share certificates may not be dematerialised or rematerialised between Monday, 7
March 2005, and Friday, 11 March 2005, both days inclusive.
Signed on behalf of the board
DM Nurek JJ Scannell
Chairman Managing director
Stellenbosch
16 February 2005
Directors: DM Nurek (Chairman), FC Bayly, PM Bester, PE Beyers, MJ Botha,
JG Carinus, SJ Genade, GJ 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-Wagenweg, 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: 16/02/2005 02:36:16 PM
Produced by the JSE SENS Department
