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Unaudited results of the Group for the six months ended 31 December 2012 and cash dividend declaration
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 2012 and cash dividend declaration
SALIENT FEATURES
Sales volumes up 6,6%
Revenue up 9,3%
Favourable currency impact on international revenue
Operating profit up 5,3%
Headline earnings per share up 12,6%
Interim dividend up 6,3%
Abridged consolidated statements of financial position
Unaudited Audited
31 December 30 June
2012 2011 2012
R'000 R'000 R'000
ASSETS
Non-current assets
Property, plant and equipment 2 799 385 2 435 923 2 647 304
Biological assets 120 137 129 553 122 638
Financial assets 146 491 127 049 137 274
Investments in associates 50 774 63 473 62 022
Intangible assets 248 895 235 670 230 404
Retirement benefit assets 57 526 50 443 47 504
Deferred income tax assets 73 043 57 587 74 571
Total non-current assets 3 496 251 3 099 698 3 321 717
Current assets
Inventories 4 481 318 3 760 471 4 489 281
Trade and other receivables 2 316 478 2 159 302 1 436 255
Current income tax assets 36 424 64 993 145 088
Cash and cash equivalents 710 244 942 644 462 429
Total current assets 7 544 464 6 927 410 6 533 053
Total assets 11 040 715 10 027 108 9 854 770
EQUITY AND LIABILITIES
Capital and reserves
Capital and reserves 6 847 332 6 273 291 6 190 465
Non-controlling interest 26 854 8 129 15 514
Total equity 6 874 186 6 281 420 6 205 979
Non-current liabilities
Interest-bearing borrowings 309 997 385 811 347 932
Retirement benefit obligations 65 436 62 025 80 954
Deferred income tax liabilities 298 722 238 591 231 067
Total non-current liabilities 674 155 686 427 659 953
Current liabilities
Trade and other payables 2 873 539 2 577 424 2 094 436
Provisions 320 252 322 639 708 772
Interest-bearing borrowings 223 441 38 315 180 501
Current income tax liabilities 75 142 120 883 5 129
Total current liabilities 3 492 374 3 059 261 2 988 838
Total equity and liabilities 11 040 715 10 027 108 9 854 770
Abridged consolidated income statements
Unaudited Audited
Six months ended Year ended
31 December 30 June
2012 2011 Change 2012
R'000 R'000 % R'000
Revenue 8 717 484 7 972 502 9,3 14 176 047
Operating costs (7 496 342) (6 811 854) 10,0 (12 762 506)
Costs of goods sold (5 810 522) (5 193 406) (9 557 842)
Sales and marketing costs (990 025) (919 388) (1 830 046)
Distribution costs (508 663) (484 365) (915 905)
Administration and other costs (187 132) (214 695) (458 713)
Other gains 178 (343) (1 216)
Operating profit 1 221 320 1 160 305 5,3 1 412 325
Dividend income 106 307 7 645
Finance income 5 548 6 218 21 554
Finance costs (29 685) (28 185) (53 459)
Share of profit of associates 29 760 18 090 37 160
Profit before taxation 1 227 049 1 156 735 6,1 1 425 225
Taxation (351 482) (377 492) (454 365)
Profit for the period 875 567 779 243 12,4 970 860
Attributable to:
Equity holders of the company 877 478 776 918 12,9 969 070
Non-controlling interest (1 911) 2 325 1 790
875 567 779 243 12,4 970 860
Per share performance:
Issued number of ordinary shares ('000) 203 298 202 838 202 838
Weighted number of ordinary shares ('000) 202 618 202 054 202 185
Earnings per ordinary share (cents)
basic earnings basis 433,1 384,5 12,6 479,3
diluted earnings basis 419,5 372,2 12,7 447,4
headline basis 433,0 384,6 12,6 479,7
diluted headline basis 419,4 372,3 12,7 447,8
Dividends per ordinary shares (cents)
interim 152,0 143,0 6,3 143,0
final 152,0
152,0 143,0 6,3 295,0
Reconciliation of headline earnings:
Net profit attributable to equity holders
of the company 877 478 776 918 12,9 969 070
Adjusted for (net of taxation):
net other capital gains (128) 247 876
Headline earnings 877 350 777 165 12,9 969 946
Adjusted for (net of taxation):
abnormal excise provision 214 388
Normalised headline earnings 877 350 777 165 12,9 1 184 334
Abridged consolidated statements of cash flows
Unaudited Audited
Six months ended Year ended
31 December 30 June
2012 2011 2012
R'000 R'000 R'000
Cash flow from operating activities
Operating profit 1 221 320 1 160 305 1 412 325
Non-cash flow items 140 732 205 665 769 228
Working capital changes (494 135) 69 565 (443 833)
Inventories 21 678 206 548 (524 020)
Trade and other receivables (865 062) (913 354) (205 137)
Trade payables and provisions 349 249 776 371 285 324
Cash generated from operations 867 917 1 435 535 1 737 720
Net financing costs (24 827) (21 330) (23 999)
Taxation paid (113 631) (251 971) (558 505)
Net cash generated from operating activities 729 459 1 162 234 1 155 216
Cash outflow from investment activities (213 380) (197 774) (488 704)
Cash inflow from financing activities 37 174 6 934 119 805
Dividends paid (307 989) (266 681) (556 023)
Increase in net cash, cash equivalents and bank overdrafts 245 264 704 713 230 294
Net cash, cash equivalents and bank overdrafts at the
beginning of the period 462 429 229 850 229 850
Exchange gains on cash and cash equivalents 2 551 8 081 2 285
Net cash, cash equivalents and bank overdrafts at the
end of the period 710 244 942 644 462 429
Abridged consolidated statements of changes in equity
Unaudited Audited
Six months ended Year ended
31 December 30 June
2012 2011 2012
R'000 R'000 R'000
Attributable to equity holders
Opening balance 6 190 465 5 688 229 5 688 229
Comprehensive income
Profit for the year 877 478 776 918 969 070
Other comprehensive income (net of taxation)
Fair value adjustments:
available-for-sale financial assets 4 362 1 637 5 123
Currency translation differences 23 658 32 730 27 443
Actuarial gain on post-employment benefits 32 264 26 249 22 646
Total other comprehensive income 60 284 60 616 55 212
Total comprehensive income for the period 937 762 837 534 1 024 282
Transactions with owners
Employee share scheme:
shares paid and delivered 19 187 7 009 15 573
value of employee services 4 469 3 761 10 177
BEE share-based payment 3 438 3 439 6 877
Dividends paid (307 989) (266 681) (556 023)
Changes in ownership interests in subsidiaries that do not
result in a loss of control 1 350
Total transactions with owners (280 895) (252 472) (522 046)
Attributable to equity holders 6 847 332 6 273 291 6 190 465
Non-controlling interest
Opening balance 15 514 5 780 5 780
Profit for the year (1 911) 2 325 1 790
Changes in ownership interests in subsidiaries that do not
result in a loss of control 269 7 944
Acquisition of interest in subsidiary 12 982
Currency translation differences 24
Total non-controlling interest 26 854 8 129 15 514
Total equity at the end of the period 6 874 186 6 281 420 6 205 979
Abridged consolidated statements of comprehensive income
Unaudited Audited
Six months ended Year ended
31 December 30 June
2012 2011 2012
R'000 R'000 R'000
Profit for the period 875 567 779 243 970 860
Other comprehensive income (net of taxation) 60 284 60 640 55 212
Items that may be reclassified subsequently to profit or loss:
Fair value adjustments
available-for-sale financial assets 4 362 1 637 5 123
Currency translation differences 23 658 32 754 27 443
Items that will not be reclassified to profit or loss:
Actuarial gains and losses 32 264 26 249 22 646
Total comprehensive income for the period 935 851 839 883 1 026 072
Attributable to:
Equity holders of the company 937 762 837 534 1 024 282
Non-controlling interest (1 911) 2 349 1 790
935 851 839 883 1 026 072
Segmental analysis
Unaudited Audited
Six months ended Year ended
31 December 30 June
2012 2011 2012
R'000 R'000 R'000
Revenue from external customers
Sales of alcoholic beverages
South Africa 6 632 572 6 032 625 10 598 890
International 2 029 266 1 870 875 3 448 368
8 661 838 7 903 500 14 047 258
Other revenue 55 646 69 002 128 789
Consolidated 8 717 484 7 972 502 14 176 047
Unaudited Audited
Six months ended Year ended
31 December 30 June
2012 2011 2012
R'000 R'000 R'000
Operating profit
South Africa 1 127 460 1 009 741 1 477 847
International 375 722 377 403 482 789
1 503 182 1 387 144 1 960 636
Corporate services (281 862) (226 839) (548 311)
Consolidated 1 221 320 1 160 305 1 412 325
Notes
Unaudited Audited
31 December 30 June
2012 2011 2012
R'000 R'000 R'000
1. Sales volumes (litres '000) 337 703 316 680 560 815
2. Net interest-bearing assets
Interest-bearing borrowings
Non-current 309 997 385 811 347 932
Current 223 441 38 315 180 501
533 438 424 126 528 433
Cash and cash equivalents (710 244) (942 644) (462 429)
(176 806) (518 518) 66 004
3. Cash outflow from investment activities
Purchases of property, plant and
equipment (PPE) to maintain operations (119 925) (74 816) (157 902)
Purchases of PPE to expand operations (144 470) (116 213) (342 218)
Proceeds from sale of PPE 14 647 1 597 4 768
Purchases of financial assets (2 798) (3 897) (9 262)
Proceeds from financial assets 37 155 19 516
Purchases of intangible assets (2 080) (4 445) (3 606)
Acquisition of subsidiary, net of cash acquired 4 091 - -
(213 380) (197 774) (488 704)
4. Capital commitments
Contracted 495 839 163 630 173 205
Authorised but not contracted 316 371 177 070 831 140
812 210 340 700 1 004 345
5. Depreciation of property, plant and equipment 97 964 102 841 194 329
6. Net asset value per share (cents) 3 381 3 097 3 060
7. Segment report
Operating segments were identified based on financial information reviewed regularly by management for the
purpose of assessing performance and allocating resources to these segments. The Group's international
operations have been aggregated when they demonstrate similar economic characteristics and when they do
not individually meet the quantitative recognition thresholds in terms of IFRS 8. Revenue includes excise duty.
The basis on which operating segments report to management was changed during the year and the prior
year figures were restated in line with the new reporting formats.
8. Contingencies
The Group received an assessment from the South African Revenue Service (SARS) for additional
Employees' tax amounting to R52,4 million (excluding penalties and interest) relating to the Group's share
incentive scheme. The Group obtained legal and tax specialist opinions on this matter, which indicated that no
provision is necessary and the Group submitted an objection to this assessment.
Commentary
Basis of preparation, 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); including IAS 34: Interim Financial Reporting, and in accordance
with the requirements of the South African Companies Act 71 of 2008, as amended; and the Listings Requirements of
the JSE Limited.
The interim financial statements have not been audited or independently reviewed and were prepared under
supervision of the financial director, MJ Botha CA(SA).
These financial statements incorporate accounting policies and methods of computation that are consistent with those
adopted for the previous annual financial reporting period, with the exception of the implementation of the following
amendments:
· Amendments to IAS 1 Presentation of Financial Statements (effective 1 July 2012)
The adoption of these amendments has had no material impact on the consolidated results of either the current or
prior periods.
Operating performance
Revenue grew 9,3% to R8,7 billion on a sales volume increase of 6,6%.
Domestic revenue increased by 9,9% and sales volumes by 6,7% in a challenging economic environment which
continued to impact adversely on consumer demand. Distell's cider and RTD (ready-to-drink) brands maintained their
strong performance, but the company's wine and spirits portfolios both showed a decrease in sales volumes. Spirits, in
particular, were adversely affected by the significant increase in excise duty.
International sales volumes, including Africa, rose by 6,5%. Revenue, derived from a less favourable sales mix, did
benefit from a weaker rand to grow by 8,5%. While ciders and RTDs delivered strong volume growth, Distell's wine
and spirits export volumes declined.
Sub-Saharan African markets, outside South Africa, delivered another period of strong growth, contributing 64,4% to
foreign revenue.
The financial results for the period under review, driven primarily by overall volume growth, also benefited from a
weaker rand. Operating expenses rose 10,0% compared to revenue growth of 9,3%. Consequently, operating profit
increased by 5,3% while the operating margin dropped marginally to 14,0% (2011: 14,6%). Steep increases in excise
duties and the cost of certain raw materials were offset by the benefits from improved operational efficiencies
elsewhere in the business. Foreign currency translation gains amounted to R21,9 million, compared to R118,9 million
the previous year.
Net financing costs increased from R22,0 million to R24,1 million due to higher average borrowings during the period.
The effective tax rate was reduced from 32,6% to 28,6% as a result of the Secondary Tax on Companies (STC) being
replaced with a dividends withholding tax.
Headline earnings increased 12,9% to R877,4 million and headline earnings per share increased 12,6%.
Additional excise duty provision
For the financial year ended 30 June 2012, Distell made adequate provision for additional excise duty on wine
aperitifs and no further provisions are needed.
Investment and funding
Total assets increased by 12,0% to R11,0 billion.
Capital expenditure amounted to R264,4 million, of which R119,9 million was spent on the replacement of assets.
An amount of R144,5 million was directed mainly to the expansion of cider production capacity and whisky maturation capacity.
Investment in net working capital increased by 19,3% to R3,6 billion. Inventory increased 19,2% to R4,5 billion.
Investment in bulk stock of spirits in maturation, planned in accordance with the Group's longer-term view of consumer
demand, grew 20,8%. Bottled stock and packaging material reflected an increase of 18,7% on the previous period.
Cash retained amounted to R245,3 million (2011: R704,7 million), and the Group remains in a strong financial
position, as shown by the positive cash and cash equivalent balance of R710,2 million (2011: R942,6 million) at the
end of the reporting period.
Prospects
The prevailing macro-economic volatility makes it difficult to predict consumer spending trends in the markets where
we trade. We are not expecting significant changes in the current conditions, as disposable income remains under
severe pressure, both domestically and internationally.
We remain confident in the versatility and quality of our portfolio and the pricing of our products. Our underlying
financial position remains strong and we continue to invest in brands, plant and other infrastructure to compete
effectively and to maximise trading opportunities.
Cash dividend declaration
The directors have resolved to declare a gross cash dividend number 49 of 152,0 cents (2011: 143,0 cents) per share for
the interim period ended 31 December 2012.
The dividend has been declared from income reserves. There are no STC credits available for utilisation and the
Dividends tax rate is 15%. Dividends tax will amount to 22,8 cents per ordinary share. As a result, ordinary shareholders
who are liable to pay Dividends tax will receive a net dividend amount of 129,2 cents per share. Shareholders exempt
from paying Dividends tax will receive 152,0 cents per share. The issued ordinary share capital as at 25 February 2013 is
203 298 301 ordinary shares. The company's income tax reference number is 9115001712.
The dividend will be payable to shareholders on record on Friday, 22 March 2013, and will be paid on Monday,
25 March 2013. The last day to trade cum dividend will be on Thursday, 14 March 2013, and shares commence trading
ex dividend from Friday, 15 March 2013. Share certificates may not be dematerialised or rematerialised between
Friday, 15 March 2013, and Friday, 22 March 2013, both days inclusive.
Signed on behalf of the board
DM Nurek JJ Scannell
Chairman Managing director
Stellenbosch
25 February 2013
Directors: DM Nurek (Chairman), FC Bayly, PE Beyers, MJ Botha, JG Carinus, GP Dingaan, JJ Durand, E de la H Hertzog,
MJ Madungandaba, LM Mojela, CA Otto, AC Parker, JJ Scannell (Managing director), CE Sevillano-Barredo, BJ van der Ross
Company secretary: CJ Cronjé
Registered office: Aan-de-Wagenweg, Stellenbosch 7600
Transfer secretaries: Computershare Investor Services (Pty) Limited, PO Box 61051, Marshalltown 2107
Sponsor: Rand Merchant Bank (A division of FirstRand Bank Limited)
Brand highlights
Amarula:
Amarula is undoubtedly one of South Africa's most successful exports. The Spirit of Africa is one of the fastest-
growing international spirit brands and in a recent poll conducted by respected global publication, Drinks International,
was featured as one of the world's hottest bar brands.
Bisquit:
Distell acquired Bisquit in 2009. The brand's Prestige cognac won a gold medal at the International Wine & Spirit
Competition. Evident of the brand's growth in Africa, Bisquit has also been successfully launched in Nigeria.
Nederburg:
Nederburg ended 2012 on a high note winning two major accolades. The International Wine & Spirit Competition
voted it the SA Wine producer of the year and its cellarmaster, Razvan Macici, was awarded the 2012 Diners Club
Winemaker of the year title.
Savanna:
Voted South Africa's favourite cider in the TGI Icon Brands survey, Savanna continues to enjoy growth with its new
500 ml pack. The cider is also now available in more than 50 countries worldwide.
Richelieu:
Richelieu was voted Gold Best in Class at the 2012 International Spirit Challenge making it the Best
Blended Brandy in the World. 2012 also saw the launch of the Richelieu 10 Year Old brandy which has shown
considerable growth since its recent launch.
Date: 25/02/2013 02:14:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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