| Tue 21 Feb 2006, 14:29 | | Distell Continues To Deliver Sound Results |
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DST
DST
Distell Continues To Deliver Sound Results
DISTELL GROUP LIMITED
Registration number 1988/005808/06
JSE share code: DST
ISIN: ZAE000028668
DISTELL CONTINUES TO DELIVER SOUND RESULTS
Distell has boosted sales revenue 11,2% to R3,7bn on a sales volume increase of
5,9% for the six months to December 2005, notwithstanding tough wine trading
conditions at home and abroad, where the global wine glut is further squeezing
producer margins, said MD Jan Scannell.
All figures are stated, for the first time, in accordance with the International
Financial Reporting Standards (IFRS) and consequently all comparative figures
have been restated.
Headline earnings per share rose 20,7% on a strictly like for like basis, but
allowing mostly for the once-off expense of the broad-based BEE ownership
transaction entered into last October, showed a drop of 4,2% compared with the
same period in 2004. The deal involved the creation of a consortium comprising
Distell employees, a Corporate Social Investment (CSI) Trust and investment
group WIPHOLD to acquire an effective 15% investment in Distell, via the group"s
wholly-owned sole operating subsidiary South African Distilleries and Wines (SA)
Limited (SADW). Employees comprise 45% of the consortium, the CSI trust, 15% and
WIPHOLD, 40%. The total cost of the deal amounts to R122,3m, of which R67,3m,
relating to the non-employee portion of the consortium, is expensed immediately.
The R55,0m relating to the employee portion of the deal is being expensed over
eight years at R6,9m per year.
Trading income rose 17,5%, given the higher sales revenue and enhanced
efficiencies across various dimensions of the business. Operating margin
improved from 13,5% to 14,2%.
Domestic sales volumes increased 4,8%, with spirits and RTD sales continuing
their impressive climb, despite aggressive participation in the market by
competitor producers. Spirits volumes rose 2,8%, while the group"s RTD segment
accelerated the pace of recent growth, with volumes increasing 11,7%. However,
wines sales grew only marginally. Scannell said this was in the face of the
ongoing strength of the rand, which produced an additional influx of wines on
the local market, characterised by heavy discounting in pursuit of market share.
"We remain resolute in maintaining a long-range view when it comes to protecting
Distell brands. We will not drive volume growth through price-cutting."
International revenues rose 16,3%, with export volumes, excluding Africa, up
22,0%. Wines showed an impressive growth of 23,2%, and Amarula Cream, 15,0%.
Revenue from African sales rose 9,2%.
He said a substantial improvement in cash flow saw net financing costs drop by
R13,3m to R21,5m.
Cash generated by normal operating activities amounted to R473,4m (2004:
R246,0m) and net interest-bearing borrowings decreased by R414,7m (2004:
R212,4m), bringing the group into a net investment position.
A dividend of 68c per share had been declared, representing an increase of 21,4%
on the previous year"s interim dividend of 56c per share. The dividend cover of
2,7 times remains unchanged.
Scannell said that given the anticipated ongoing growth in consumer spending for
the second six months and the likelihood that interest levels would remain
unchanged, prospects for domestic growth were favourable. "Nevertheless, we
expect trading conditions to remain competitive, resulting in increased
marketing investment by industry players. Distell"s own investment in brands
will remain robust and we are simultaneously implementing focused strategies to
improve performance across all facets of the business."
Even taking into consideration the global oversupply in wine, the group is
planning for further export growth. "Our enhanced distribution network, wide
geographic reach and strong trademarks strengthen our ability to optimise
opportunities in a difficult trading environment. At the same time, Amarula is
continuing to entrench its presence in important markets."
He said the group was confident of showing growth in earnings for the full year.
DATE FEBRUARY 21, 2006
FOR DISTELL GROUP LIMITED
ISSUED BY DKC (DE KOCK COMMUNICATIONS)
QUERIES JAN SCANNELL, MD (021) 809 7000 or (021) 809 8102 (direct)
MERWE BOTHA, FINANCIAL DIRECTOR (021) 809 7000 or (021) 809 8100 (direct)
SONIA JAMOULLE, COMMUNICATIONS MANAGER, (021) 809 8005 or 076 474 0715
TESSA DE KOCK/PIPPA PRINGLE, DKC (021) 422 2690
Date: 21/02/2006 02:29:03 PM Produced by the JSE SENS Department
