| Wed 17 Aug 2005, 14:39 | | Distell - Audited results of the group for the yea |
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Distell - Audited results of the group for the year ended 30 June 2005
Distell Group Limited
Registration number 1988/005808/06
JSE share code: DST ISIN: ZAE000028668
Audited results of the group for the year ended 30 June 2005
Salient features
* Headline earnings per share up 34,1%
* Dividends per share increases 26,8%
* Total sales revenue increases 7,0%
* Trading income rises 19,8%
* Reduced foreign currency losses and financing costs
Consolidated balance sheets
2005 2004
R`000 R`000
Audited Audited
Assets
Non-current assets
Property, plant and equipment 1 172 876 1 225 351
Biological assets 107 170 98 939
Investments and loans 291 138 543 166
Investment in associates 9 721 9 095
Intangible assets 6 578 6 578
Deferred taxation 44 396 36 431
Total non-current assets 1 631 879 1 919 560
Current assets
Inventories 2 244 129 2 207 296
Trade and other receivables 551 241 513 414
Short-term investments 309 249 -
Taxation prepaid 52 536 33 230
Cash and cash equivalents 196 316 159 390
Total current assets 3 353 471 2 913 330
Total assets 4 985 350 4 832 890
Equity and liabilities
Capital and reserves
Capital and reserves 2 840 684 2 570 832
Minority interest 1 653 1 259
Total equity 2 842 337 2 572 091
Non-current liabilities
Non-current interest-bearing liabilities 329 014 754 601
Post-retirement medical liability 21 391 16 905
Deferred taxation 95 191 101 127
Total non-current liabilities 445 596 872 633
Current liabilities
Trade payables and provisions 1 022 829 1 003 788
Short-term portion of non-current liabilities 429 989 89 766
Current interest-bearing liabilities 244 599 294 612
Total current liabilities 1 697 417 1 388 166
Total equity and liabilities 4 985 350 4 832 890
Consolidated income statements
2005 2004 Change
R`000 R`000 %
Audited Audited
Sales volumes (litres `000) 316 445 310 966 1,8
Sales revenue 5 951 146 5 563 969 7,0
Operating expenses (5 238 589) (4 969 237) 5,4
Trading income 712 557 594 732 19,8
Dividend income 49 824 56 013
Financing costs (102 098) (150 766)
Foreign currency differences (999) (24 891)
Income from associates 13 554 10 674
Profit before taxation 672 838 485 762 38,5
Taxation (190 267) (124 790)
Minority interest (394) (390)
Net profit attributable to
ordinary shareholders 482 177 360 582 33,7
Net profit attributable to
ordinary shareholders 482 177 360 582 33,7
Adjusted for (net of taxation):
profit on disposal of fixed
assets and goodwill impairment/
amortisation (4) (1 958)
Headline earnings 482 173 358 624 34,5
Issued number of ordinary
shares (`000) 197 347 196 357
Weighted number of ordinary
shares (`000) 196 194 195 626
Earnings per ordinary
share (cents)
- attributable earnings basis 245,8 184,3 33,3
- headline basis 245,8 183,3 34,1
Dividends per ordinary
share (cents)
- interim 56,0 46,0 21,7
- final 67,0 51,0 31,4
123,0 97,0 26,8
Abridged consolidated cash flow statements
2005 2004
R`000 R`000
Audited Audited
Trading income 712 557 594 732
Non-cash flow items 172 978 144 204
Working capital changes (91 038) 22 259
Inventories (36 833) (132 932)
Trade and other receivables (38 939) (31 618)
Trade payables and provisions (15 266) 186 809
Cash generated from normal operating
activities 794 497 761 195
Net financing costs (100 888) (149 817)
Foreign currency differences realised (927) (10 615)
Taxation paid (219 236) (143 915)
Dividends paid (209 948) (158 420)
Cash retained from normal operating activities 263 498 298 428
Exceptional items - 46 500
Cash retained from operating activities 263 498 344 928
Cash outflow from investment activities (91 620) (19 265)
Cash outflow from financing activities (84 939) 3 314
Decrease in net short-term borrowings 86 939 328 977
Net short-term borrowings at the beginning
of the year (135 222) (464 199)
Net short-term borrowings at the end
of the year (48 283) (135 222)
Current interest-bearing liabilities (244 599) (294 612)
Cash and cash equivalents 196 316 159 390
Consolidated statement of changes in equity
2005 2004
R`000 R`000
Audited Audited
Share capital 1 974 1 964
Share premium 572 098 563 702
Treasury shares (9 461) (1 480)
Non-distributable and other reserves 57 382 60 184
Opening balance 60 184 58 127
Hedging reserve (4 400) 1 932
Fair value adjustments 1 048 858
Foreign currency translations 550 (733)
Retained earnings 2 218 691 1 946 462
Opening balance 1 946 462 1 744 300
Net profit attributable to ordinary
shareholders 482 177 360 582
Dividends (209 948) (158 420)
Equity at the end of the year 2 840 684 2 570 832
Notes
2005 2004
R`000 R`000
Audited Audited
1. Net interest-bearing borrowings
Interest-bearing debt
Non-current 329 014 754 601
Current 674 588 384 378
1 003 602 1 138 979
Cash resources 196 316 159 390
807 286 979 589
2. Cash outflow from investment activities
To maintain operations (59 546) (79 385)
To expand operations (32 074) (76 910)
Preference shares redeemed - 137 030
(91 620) (19 265)
3. Directors` valuation of unlisted
investments
Preference shares 542 297 493 683
Other investments and loans 89 538 80 277
631 835 573 960
4. Capital commitments
Contracted 46 808 23 227
Authorised but not contracted 175 842 119 454
222 650 142 681
5. Depreciation of property, plant and
equipment 138 291 132 879
6. Net asset value per share (cents) 1 440 1 310
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.
8. Contingencies
The group has given guarantees to financial institutions to the
amount of R54 million. These exposures are covered by mortgage
bonds over properties of third parties.
In prior years the group received R67 million as compensation for
relinquishing its distribution rights to certain trademarks. The
tax authorities are of the opinion that this transaction should be
subject to taxation and have issued revised assessments to the
amount of R29,5 million. The group has lodged an appeal against
these assessments after consultation with our professional
advisors and legal council.
Accounting policy and comparative figures
Change in accounting policy
The accounting policy of the group has been changed in order to adopt the 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, starting 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 and comparative figures for the year ended 30 June 2004 have not
been restated.
Comparative figures
Comparative figures for the year ended 30 June 2004 for sales volumes have been
restated to exclude contract packaging litres done on behalf of unrelated third
parties and sales revenue has been restated by deducting discounts and rebates
previously included in operating expenses.
The effect of these changes on the results of 30 June 2004 is as follows:
Currently Previously
reported reported Adjustment
Increase/(Decrease) R`000 R`000 R`000
Sales volumes (litres `000) 310 966 315 588 (4 622)
Sales revenue 5 563 969 5 743 808 (179 839)
Operating expenses 4 969 237 5 149 076 (179 839)
Trading income 594 732 594 732 -
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 Limited (JSE).
Operating performance
Sales revenue, on a restated basis, grew 7,0% to R6,0 billion on a sales volume
increase of 1,8%.
Distell`s sales volumes in the domestic market, which grew by 1,0%, reflect a
favourable sales mix. Our trademarks in the spirits and ready-to-drink (RTD)
categories continued to perform better than those in the wine category. Spirit
volumes increased by 3,4%. RTD sales volumes grew 3,7% (2004: 0,2%), despite
aggressive competition. Sales volumes of unfortified wine, however, remained
under pressure, declining 2,6%. This was due mainly to increased competition
amongst local producers who, given the strong rand, began courting the domestic
market.
International sales volumes, excluding Africa, increased 7,0%. A 5,0%
improvement in the value of the rand impacted negatively on international sales
revenue, which remained constant.
Sales revenue derived from African countries increased 3,3%.
The increase of 19,8% in trading income was driven largely by increased sales
revenue and the continued improvement in the domestic sales mix. The group also
benefited from improved throughput, further operational efficiencies and
favourable procurement initiatives.
Operating margin improved from 10,7% to 12,0%, despite the effect of the
appreciation of the rand.
Net financing costs declined by R42,5 million to R52,3 million, mainly as a
result of a substantial improvement in cash flow and a reduction in interest
rates. During the year under review, exchange rates were less volatile and no
foreign currency losses arose as a result (2004: R24,9 million).
Consequently, headline earnings for the year reflects an increase of 34,5% to
R482,2 million.
Investment and funding
Total assets increased 3,2% to R5,0 billion.
Capital expenditure amounted to R92,8 million, compared to R161,2 million the
previous year.
Investment in working capital increased by 5,1% to R1,9 billion. Process and
systems enhancement enabled management to further improve on overall stock
duration.
Cash generated by normal operating activities amounted to R263,5 million (2004:
R298,4 million), and net interest-bearing borrowings decreased by R220,9 million
(2004: R248,0 million). The group`s gearing, as measured by net interest-bearing
debt relative to net assets, decreased at year end to 9,3% from last year`s
18,9%.
Prospects
Favourable economic conditions in South Africa, with lower inflation and
interest rates likely to lead to an increase in disposable income, are expected
to continue in the year ahead. In addition, the global economic outlook remains
positive.
We expect the trading environment to remain competitive, compounded by a
worldwide overproduction of wine, which in turn will lead to increased marketing
investment by industry players.
We believe our business is appropriately structured, with a portfolio of
reputable brands and an efficient cost base that will allow us to compete
effectively, and to capture opportunities in domestic and foreign markets.
The group expects to continue to reflect growth in earnings.
Auditors` report
The annual financial statements have been audited by Pricewaterhouse-Coopers
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 34 of 67 cents (2004: 51
cents) per share, making a total dividend of 123 cents (2004: 97 cents) per
share for the year ended 30 June 2005. This dividend represents a dividend cover
of 2,0 times (2004: 1,9 times) by headline earnings.
Last day to trade `cum` the dividend Friday, 2 September 2005
Shares commence trading `ex` the dividend
from commencement of business on Monday, 5 September 2005
Record date Friday, 9 September 2005
Payment date Monday, 12 September 2005
Share certificates may not be dematerialised or rematerialised between Monday, 5
September 2005, and Friday, 9 September 2005, both days inclusive.
Signed on behalf of the board
DM Nurek JJ Scannell
Chairman Managing director
Stellenbosch
17 August 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)
www.distell.co.za
Date: 17/08/2005 02:38:35 PM
Produced by the JSE SENS Department
