| Wed 14 Feb 2007, 14:33 | | DST - Distell Group Limited - Unaudited results of |
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DST
DST
DST - Distell Group Limited - Unaudited results of the Group
Distell Group Limited
Registration number 1988/005808/06
JSE share code: DST & ISIN: ZAE000028668
("Distell" or "the Group" or "the company")
UNAUDITED RESULTS OF THE GROUP FOR THE SIX MONTHS ENDED 31 DECEMBER 2006
SALIENT FEATURES
Basic earnings per share up 68,1%
Headline earnings per share up 59,3%
Headline earnings per share, excluding non-recurring BEE expense, up 29,0%
Dividend per share up 27,9%
Total revenue up 16,6%
Trading income up 30,5%
Total sales volumes up 11,0%
Abridged consolidated balance sheets
Unaudited Audited
31 December 30 June
2006 2005 2006
R`000 R`000 R`000
Assets
Non-current assets
Property, plant and equipment 1 254 770 1 235 896 1 256 900
Biological assets 116 239 101 202 104 380
Financial assets 407 484 302 371 403 107
Investments in associates 22 960 14 092 15 383
Intangible assets 17 239 13 002 11 211
Retirement benefit assets 9 972 - 9 972
Deferred income tax assets 30 152 44 396 35 061
Total non-current assets 1 858 816 1 710 959 1 836 014
Current assets
Inventories 2 271 687 2 102 786 2 499 217
Trade and other receivables 1 038 948 901 516 617 097
Financial assets 266 273 323 675 254 640
Cash and cash equivalents 461 167 318 560 227 578
Total current assets 4 038 075 3 646 537 3 598 532
Total assets 5 896 891 5 357 496 5 434 546
Equity and liabilities
Capital and reserves
Capital and reserves 3 596 643 3 126 472 3 270 407
Minority interest 1 822 4 192 2 765
Total equity 3 598 465 3 130 664 3 273 172
Non-current liabilities
Interest-bearing borrowings 330 281 302 026 330 646
Retirement benefit obligations 33 344 21 391 33 344
Deferred income tax liabilities 104 200 94 432 101 838
Total non-current liabilities 467 825 417 849 465 828
Current liabilities
Trade payables and provisions 1 491 203 1 359 858 1 196 201
Interest-bearing borrowings 298 888 408 400 432 502
Current income tax liabilities 40 510 40 725 66 843
Total current liabilities 1 830 601 1 808 983 1 695 546
Total equity and liabilities 5 896 891 5 357 496 5 434 546
Abridged consolidated income statements
Unaudited Audited
Six months ended Year ended
31 December 30 June
2006 2005 Change 2006
R`000 R`000 % R`000
Sales volumes (litres
`000) 208 077 187 434 11,0 342 633
Revenue 4 285 237 3 673 616 16,6 6 717 210
Operating expenses (3 612 110) (3 157 956) 14,4 (5 827 815)
Trading income 673 127 515 660 30,5 889 395
BEE share-based payment - (67 241) (67 241)
Net other gains 25 016 - -
Operating profit 698 143 448 419 55,7 822 154
Dividend income 420 1 485 1 497
Finance income 37 163 33 388 93 483
Finance costs (39 292) (56 353) (120 846)
Share of profit of
associates 7 079 4 968 9 856
Profit before taxation 703 513 431 907 62,9 806 144
Taxation (217 310) (145 058) (271 756)
Profit for the period 486 203 286 849 69,5 534 388
Attributable to:
Equity holders of the
company 486 695 286 839 69,7 534 388
Minority interest (492) 10 -
486 203 286 849 69,5 534 388
Per share performance
Issued number of
ordinary shares (`000) 199 760 198 250 198 969
Weighted number of
ordinary shares (`000) 198 773 196 916 197 414
Earnings per ordinary
share (cents)
- basic earnings basis 244,8 145,7 68,1 270,7
- diluted earnings basis 240,9 145,0 66,2 269,3
- headline basis 231,4 145,2 59,3 271,5
- adjusted headline 231,4 179,4 29,0 305,6
basis
Dividends per ordinary
share (cents)
- interim 87,0 68,0 27,9 68,0
- final - - - 85,0
87,0 68,0 27,9 153,0
Reconciliation of
headline earnings
Net profit attributable
to equity holders of the
company 486 695 286 839 69,7 534 388
Adjusted for
(net of taxation):
profit on disposal of
property, plant and
equipment (2 875) (828) (181)
loss on disposal of
interest in associate - - 1 763
net other capital gains (23 855) - -
Headline earnings 459 965 286 011 60,8 535 970
Adjusted for
(net of taxation):
BEE share-based payment - 67 241 67 241
Adjusted headline
earnings 459 965 353 252 30,2 603 211
Abridged consolidated cash flow statements
Unaudited Audited
Six months ended Year ended
31 December 30 June
2006 2005 2006
R`000 R`000 R`000
Trading income 673 127 515 660 889 395
Non-cash flow items 43 228 58 674 185 540
Working capital changes 161 375 150 264 (174 812)
Inventories 227 530 143 482 (252 949)
Trade and other receivables (431 265) (353 092) (41 870)
Trade payables and provisions 365 110 359 874 120 007
Cash generated from operating
activities 877 730 724 598 900 123
Net financing costs (25 657) (46 552) (74 490)
Taxation paid (236 372) (69 189) (153 388)
Dividends paid (169 071) (132 117) (266 788)
Cash retained from operating
activities 446 630 476 740 405 457
Cash outflow from investment
activities (70 472) (69 209) (164 364)
Cash outflow from financing
activities (25 443) (38 022) (79 301)
Increase in net cash and cash
equivalents 350 715 369 509 161 792
Net short-term borrowings at the
beginning of the period 121 795 (47 610) (47 610)
Exchange losses on cash and
cash equivalents (11 343) (3 339) 7 613
Net cash and cash equivalents at
the end of the period 461 167 318 560 121 795
Call accounts and bank overdrafts - - (105 783)
Cash and cash equivalents 461 167 318 560 227 578
Abridged consolidated statements of changes in equity
Unaudited Audited
Six months ended Year ended
31 December 30 June
2006 2005 2006
R`000 R`000 R`000
Share capital 1 998 1 983 1 990
Share premium 602 022 585 211 590 488
Treasury shares (12 451) (12 028) (4 113)
Non-distributable and other reserves 152 131 128 865 146 723
Opening balance 146 723 57 736 57 736
Hedging reserve 294 1 263 2 433
Fair value adjustments 212 119 2 577
Foreign currency translations (708) (5 830) 5 720
BEE share-based payment reserve 3 438 74 118 74 118
Employee share scheme reserve 2 172 1 459 4 139
Retained earnings 2 852 943 2 422 441 2 535 319
Opening balance 2 535 319 2 267 719 2 267 719
Net profit attributable to equity
holders 486 695 286 839 534 388
Dividends (169 071) (132 117) (266 788)
Minority interest 1 822 4 192 2 765
Total equity at the end of the period 3 598 465 3 130 664 3 273 172
Notes
Unaudited Audited
31 December 30 June
2006 2005 2006
R`000 R`000 R`000
1. Net interest-bearing borrowings
Interest-bearing borrowings
Non-current 330 281 302 026 330 646
Current 298 888 408 400 432 502
629 169 710 426 763 148
Cash resources 461 167 318 560 227 578
168 002 391 866 535 570
2. Cash outflow from investment
activities
To maintain operations (43 201) (37 728) (106 317)
To expand operations (27 271) (31 481) (58 047)
(70 472) (69 209) (164 364)
3. Directors` valuation of financial
assets and associates
Preference shares 614 869 567 369 590 921
Other investments and loans 58 890 58 677 66 826
Associates 38 111 29 243 30 534
711 870 655 289 688 281
4. Capital commitments
Contracted 116 540 87 906 61 387
Authorised but not contracted 105 830 51 671 202 143
222 370 139 577 263 530
5. Depreciation of property, plant
and equipment 66 561 66 597 128 866
6. Net asset value per share (cents) 1 801 1 579 1 645
7. Segment report
The Group is engaged in the production, 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
In prior years the Group received compensation for relinquishing its
distribution rights to certain trademarks. The South African Revenue
Service has issued revised tax assessments to the value of R29,5
million in terms of which the proceeds of R67 million have been
subjected to income and value added tax. The Group has lodged an
appeal against these assessments and the matter will be heard in the
Special Income Tax Court.
9. Retirement benefits
The Distell Retirement Fund has a net asset in the employer surplus
account of R50,4 million. The fund is waiting on the FSB to approve
the surplus apportionment within this fund and therefore no asset is
recognised at balance sheet date in this regard.
Accounting policy and comparative figures
The interim financial statements are prepared in accordance with the recognition
and measurement principles of International Financial Reporting Standards
(IFRS), IAS 34 "Interim Financial Reporting", the requirements of the South
African Companies Act of 1973, as amended, and the Listing Requirements of the
JSE Limited.
The accounting policies and methods of computation are consistent with those
adopted in the previous period, with the exception of the following new
accounting standards, interpretations and amendments to IFRS:
* IFRS 4 (Amendment): Financial Guarantee Contracts
* IFRIC 4: Determining whether an Arrangement Contains a Lease
* IFRIC 7: Applying the Restatement Approach under IAS 29: Financial Reporting
in Hyperinflationary Economies
* IFRIC 9: Reassessment of Embedded Derivatives
* Amendments to IAS 19: Employee Benefits
* Amendments to IAS 21: Effects of Changes in Foreign Exchange Rates
* Amendments to IAS 39: Financial Instruments - Recognition and Measurement
The adoption of these new accounting standards, interpretations or amendments to
IFRS had no impact on the results of either the current or prior periods.
The presentation of comparative figures for the six months ended 31 December
2005, has been restated to include the R6,9 million recurring portion of the BEE
share-based payment, relating to employees, in operating expenses.
Operating performance
Revenue grew 16,6% to R4,3 billion on a sales volume increase of 11,0%.
Distell`s sales volumes in the domestic market grew 11,9%. The company is now
reaping the benefits of responsible pricing and marketing and improved
efficiencies. Spirit volumes, including brandy, rose 3,7% (2005: 2,8%). RTD
sales volumes grew 25,5% (2005: 11,7%). Sales volumes of wine increased 4,6%
(2005: 0,9%).
International sales volumes, excluding Africa, increased 3,3%, with Amarula, in
particular, delivering exceptional growth of 33,4%. Although natural wines
showed a volume decline of 3,7%, mainly as a result of the oversupply affecting
European markets, promising gains were made in North America and Asia Pacific.
As a result, total international revenue rose 27,5%.
Revenue derived from African countries increased 16,3% on a sales volume growth
of 10,5%. African countries outside the BLNS region (Botswana, Lesotho, Namibia
and Swaziland) showed revenue growth of 20,2%, although off a relatively small
base.
The increase of 30,5% in trading income was driven largely by increased revenue,
benefits derived from improved throughput and ongoing initiatives to still
further enhance efficiencies across the business, particularly in production.
The company significantly stepped up its marketing investment and the resources
required to improve its market presence and the position of its trademarks.
Consequently, operating margin improved from 14,0% to 15,7%.
In November 2006, a fire at the company`s production facility in Wadeville,
Johannesburg, caused partial damage to some buildings and machinery. However,
production was diverted to other sites until normal activities could be resumed.
An amount of R25,0 million for damages to infrastructure is expected from an
insurance claim and is disclosed separately in the income statement as net other
gains.
A further improvement in cash flow resulted in a reduction of R20,8 million in
net financing costs.
Headline earnings, excluding the BEE expense of the previous year, reflect a
30,2% increase to R460,0 million.
Investment and funding
Total assets increased 8,5% to R5,9 billion.
Capital expenditure, focused mainly on replacement of assets, amounted to R69,8
million.
Investment in working capital increased 10,5% to R1,9 billion. Although an
increase in the production of spirits under maturation was necessitated by the
Group`s long-term view of consumer demand for its products, the continued focus
on working capital management resulted in a further improvement in overall stock
management.
Cash generated by operating activities amounted to R877,7 million (2005: R724,6
million), and net interest-bearing borrowings decreased R367,6 million (2005:
R414,7 million). At the end of the reporting period the Group remained in a net
cash position.
Prospects
On the domestic front, growth in consumer spending is expected to continue,
albeit at a slower pace. There are indications that interest rates could
stabilise and without further hikes, consumer spending is unlikely to dampen
materially in the months ahead. Growing consumer demand, together with the
ongoing expansion in the domestic economy, should benefit sales in the alcoholic
beverage industry.
Prospects for the world economy remain favourable, although global GDP growth is
expected to moderate over the short term. The effects of the oversupply in wine
in both the global and domestic markets continue, placing ongoing pressure on
producers participating in major markets. As Distell participates across a broad
geographical front, exposure to volatility in any single market is reduced.
Moreover, a wide spectrum of products across a range of categories and price
points makes the Group well placed to capitalise on changes in consumption
patterns.
Distell expects to reflect continued growth in revenue and in adjusted headline
earnings.
Directorate
Daan Prins resigned as director during the course of the year and we thank him
for his services. Robert Lumb was appointed to the board of directors with
effect from 19 October 2006.
Dividends
The directors have resolved to declare dividend number 37 of 87 cents (2005: 68
cents) per share for the period ended 31 December 2006.
The salient dates of this dividend distribution are:
Last day to trade "cum" dividend Friday, 2 March 2007
Shares commence trading "ex" dividend from Monday, 5 March 2007
commencement of business on
Record date Friday, 9 March 2007
Payment date Monday, 12 March 2007
Share certificates may not be dematerialised or rematerialised between Monday, 5
March 2007, and Friday, 9 March 2007, both days inclusive.
Signed on behalf of the board
DM Nurek JJ Scannell
Chairman Managing director
Stellenbosch 14 February 2007
Directors: DM Nurek (Chairman), FC Bayly, PM Bester, PE Beyers, MJ Botha, JG
Carinus, SJ Genade, GJ Gerwel, E de la H Hertzog, R Lumb, MJ Madungandaba, LM
Mojela, GP Mthethwa, 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: 14/02/2007 14:33:01 Produced by the JSE SENS Department.
