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Unaudited results of the group for the six months ended 31 December 2014 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 2014 AND CASH DIVIDEND DECLARATION
SALIENT FEATURES
* Sales volumes up 3,7%
* Revenue up 10,5%
* Operating profit
- normalised up 7,0%
- reported down 4,6%
* Headline earnings
- normalised up 9,5%
- reported down 7,6%
* Interim dividend of 158,0 cents per share
ABRIDGED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Unaudited Audited
31 December 30 June
2014 2013 2014
R'000 R'000 R'000
ASSETS
Non-current assets
Property, plant and equipment 4 025 672 3 694 351 3 882 077
Biological assets 105 079 103 046 104 559
Loans and receivables 193 742 254 394 211 288
Available-for-sale financial assets 98 050 97 352 91 424
Investments in associates 199 780 70 718 77 064
Investments in joint ventures 149 852 105 337 137 901
Intangible assets 1 789 866 1 808 374 1 798 065
Retirement benefit assets 241 492 364 679 265 293
Deferred income tax assets 73 959 56 849 71 210
Total non-current assets 6 877 492 6 555 100 6 638 881
Current assets
Inventories 6 598 445 6 180 628 6 872 615
Trade and other receivables 3 175 262 2 971 709 1 839 808
Current income tax assets 39 189 33 927 56 818
Cash and cash equivalents 1 160 157 405 361 451 611
Total current assets 10 973 053 9 591 625 9 220 852
Total assets 17 850 545 16 146 725 15 859 733
EQUITY AND LIABILITIES
Capital and reserves
Capital and reserves 9 179 072 8 466 683 8 569 623
Non-controlling interest 20 613 20 646 31 532
Total equity 9 199 685 8 487 329 8 601 155
Non-current liabilities
Interest-bearing borrowings 3 143 095 559 985 3 114 090
Retirement benefit obligations 26 432 23 890 25 176
Deferred income tax liabilities 646 268 626 818 584 221
Total non-current liabilities 3 815 795 1 210 693 3 723 487
Current liabilities
Trade and other payables 4 011 997 3 467 273 2 567 301
Interest-bearing borrowings 479 357 2 695 386 761 761
Provisions 271 331 187 412 203 038
Current income tax liabilities 72 380 98 632 2 991
Total current liabilities 4 835 065 6 448 703 3 535 091
Total equity and liabilities 17 850 545 16 146 725 15 859 733
ABRIDGED CONSOLIDATED INCOME STATEMENTS
Unaudited Audited
Six months ended Year ended
31 December 30 June
2014 2013 Change 2014
R'000 R'000 % R'000
Revenue 10 996 674 9 947 576 10.5 17 739 609
Operating costs (9 527 515) (8 575 441) 11.1 (15 744 401)
Costs of goods sold (7 207 069) (6 470 796) (11 610 234)
Sales and marketing costs (1 264 658) (1 271 470) (2 501 977)
Distribution costs (612 604) (562 990) (1 063 200)
Administration and other costs (443 184) (270 185) (568 990)
Other losses (4 884) 163 505 172 114
Operating profit 1 464 275 1 535 640 (4.6) 2 167 322
Dividend income 362 559 6 150
Finance income 11 497 7 402 15 082
Finance costs (138 246) (117 627) (232 709)
Share of equity-accounted earnings 41 143 30 453 86 266
Profit before taxation 1 379 031 1 456 427 (5.3) 2 042 111
Taxation (394 733) (386 417) (517 846)
Profit for the period 984 298 1 070 010 (8.0) 1 524 265
Attributable to:
Equity holders of the company 990 296 1 071 761 (7.6) 1 523 304
Non-controlling interest (5 998) (1 751) 961
984 298 1 070 010 (8.0) 1 524 265
Per share performance:
Issued number of ordinary shares ('000) 221 737 203 758 221 435
Weighted number of ordinary shares ('000) 218 619 203 089 209 881
Earnings per ordinary share (cents)
- basic earnings basis 453.0 527.7 (14.2) 725.8
- diluted earnings basis 451.6 504.5 (10.5) 695.6
- headline basis 455.7 526.1 (13.4) 721.3
- diluted headline basis 450.3 503.0 (10.5) 691.3
Dividends per ordinary share (cents)
- interim 158.0 154.0 2.6 154.0
- final - - - 183.0
158.0 154.0 2.6 337.0
Reconciliation of headline earnings:
Net profit attributable to equity holders
of the company 990 296 1 071 761 (7.6) 1 523 304
Adjusted for (net of taxation):
net other capital gains (2 885) (3 222) (9 421)
Headline earnings 987 411 1 068 539 (7.6) 1 513 883
Adjusted for (net of taxation):
remeasurement of contingent consideration 8 891 (159 029) (159 029)
Normalised headline earnings 996 302 909 510 9.5 1 354 854
ABRIDGED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Unaudited Audited
Six months ended Year ended
31 December 30 June
2014 2013 2014
R'000 R'000 R'000
Profit for the period 984 298 1 070 010 1 524 265
Other comprehensive income
(net of taxation) (1 991) 503 931 474 198
Items that may be reclassified
subsequently to profit or loss:
Fair value adjustments
- available-for-sale financial assets 4 853 10 046 10 917
Currency translation differences 2 693 421 921 465 254
Items that will not be reclassified
to profit or loss:
Actuarial gains and losses (9 537) 71 964 1 215
Share of other comprehensive income
of associates - - (3 188)
Total comprehensive income for the period 982 307 1 573 941 1 998 463
Attributable to:
Equity holders of the company 988 594 1 575 552 1 997 292
Non-controlling interest (6 287) (1 611) 1 171
982 307 1 573 941 1 998 463
ABRIDGED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Unaudited Audited
Six months ended Year ended
31 December 30 June
2014 2013 2014
R'000 R'000 R'000
Attributable to equity holders
Opening balance 8 569 623 7 246 885 7 246 885
Comprehensive income
Profit for the year 990 296 1 071 761 1 523 304
Other comprehensive income
(net of taxation)
Fair value adjustments:
- available-for-sale financial assets 4 853 10 046 10 917
Currency translation differences 2 982 421 781 465 044
Actuarial loss on post-employment benefits (9 537) 71 964 (1 973)
Total other comprehensive losses (1 702) 503 791 473 988
Total comprehensive income for the period 988 594 1 575 552 1 997 292
Transactions with owners
Employee share scheme:
- shares paid and delivered 8 176 10 764 17 463
- value of employee services 12 562 5 112 20 582
Dividends paid (399 883) (371 630) (708 049)
Changes in ownership interests in
subsidiaries that do not result in a
loss of control - - (4 550)
Total transactions with owners (379 145) (355 754) (674 554)
Attributable to equity holders 9 179 072 8 466 683 8 569 623
Non-controlling interest
Opening balance 31 532 30 650 30 650
Loss for the period (5 998) (1 751) 961
Dividends paid (831) (742) (742)
Currency translation differences (289) 140 210
Contribution by non-controlling interest - - 8 104
Transactions with non-controlling interests (3 801) (7 651) (7 651)
Total non-controlling interest 20 613 20 646 31 532
Total equity at the end of the period 9 199 685 8 487 329 8 601 155
ABRIDGED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited Audited
Six months ended Year ended
31 December 30 June
2014 2013 2014
R'000 R'000 R'000
Cash flow from operating activities
Operating profit 1 464 275 1 535 640 2 167 322
Non-cash flow items 209 612 (93 739) 148 225
Working capital changes 360 287 (268 496) (755 655)
Inventories 264 254 441 625 (390 088)
Trade and other receivables (1 317 924) (1 147 977) (41 380)
Trade payables and provisions 1 413 957 437 856 (324 187)
Cash generated from operations 2 034 174 1 173 405 1 559 892
Net financing costs (86 591) (109 846) (226 245)
Taxation paid (243 896) (185 164) (459 101)
Net cash generated from operating
activities 1 703 687 878 395 874 546
Net cash outflow from investment
activities (382 684) (404 263) (671 770)
Net cash inflow from financing
activities 215 984 41 160 552 158
Dividends paid (399 883) (371 630) (708 049)
Increase in net cash, cash equivalents
and bank overdrafts 1 137 104 143 662 46 885
Net cash, cash equivalents and bank
overdrafts at the beginning of the
period 7 335 (70 197) (70 197)
Exchange gains on cash and cash
equivalents 15 718 29 640 30 647
Net cash, cash equivalents and
bank overdrafts at the end of the period 1 160 157 103 105 7 335
SEGMENTAL ANALYSIS
Unaudited Audited
Six months ended Year ended
31 December 30 June
2014 2013 Change 2014
R'000 R'000 % R'000
Revenue from external customers
Sales of alcoholic beverages
South Africa 7 862 606 6 962 319 12.9 12 073 559
International 3 086 867 2 935 043 5.2 5 577 014
10 949 473 9 897 362 10.6 17 650 573
Other revenue 47 201 50 214 (6.0) 89 036
Consolidated 10 996 674 9 947 576 10.5 17 739 609
Unaudited Audited
Six months ended Year ended
31 December 30 June
2014 2013 Change 2014
R'000 R'000 % R'000
Operating profit
South Africa 1 418 577 1 091 390 30.0 1 796 352
International 560 803 575 819 (2.6) 886 703
1 979 380 1 667 209 18.7 2 683 055
Corporate services (510 221) (295 074) 72.9 (687 847)
1 469 159 1 372 135 7.1 1 995 208
Other gains (4 884) 163 505 (103.0) 172 114
Consolidated 1 464 275 1 535 640 (4.6) 2 167 322
NOTES
Unaudited Audited
31 December 30 June
2014 2013 2014
R'000 R'000 R'000
1. Sales volumes (litres '000) 369 223 356 127 619 608
2. Net interest-bearing borrowings
Interest-bearing borrowings
Non-current 3 143 095 559 985 3 114 090
Current 479 357 2 695 386 761 761
3 622 452 3 255 371 3 875 851
Cash and cash equivalents (1 160 157) (405 361) (451 611)
2 462 295 2 850 010 3 424 240
3. Cash outflow from investment
activities
Purchases of property, plant and
equipment (PPE) to maintain operations (165 814) (144 257) (276 349)
Purchases of PPE to expand operations (139 926) (242 904) (415 463)
Proceeds from sale of PPE 6 842 16 318 19 286
Purchases of financial assets and
associates (111 338) (18 794) (23 939)
Proceeds from financial assets 38 448 - 66 486
Purchases of intangible assets (2 925) (2 425) (41 791)
Acquisition of subsidiaries,
net of cash acquired (7 971) (12 201) -
(382 684) (404 263) (671 770)
4. Capital commitments
Contracted 340 456 269 479 196 268
Authorised, but not contracted 951 634 458 500 1 181 503
1 292 090 727 979 1 377 771
5. Depreciation of property, plant
and equipment 148 023 114 398 246 870
6. Net asset value per share (cents) 4 149 4 165 3 884
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. Revenue includes
excise duty.
BASIS OF PREPARATION, ACCOUNTING POLICY AND COMPARATIVE FIGURES
The interim financial statements are prepared in accordance with the JSE Limited Listings Requirements
for preliminary reports and the requirements of the Companies Act applicable to interim financial statements.
For the Listings Requirements preliminary reports must be prepared in accordance with the framework concepts,
the measurement and recognition requirements of International Financial Reporting Standards (IFRS), the
SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, and must also, as a minimum,
contain the information required by IAS 34 Interim Financial Reporting. The directors are responsible for the
preparation of the interim financial statements, prepared under supervision of the Group financial director,
MJ Botha CA(SA).
The accounting policies applied in the preparation of the interim financial statements are in terms of IFRS and
are consistent with the accounting policies applied in the preparation of the previous consolidated annual financial
statements, with the exception of the implementation of the following new accounting standards, interpretations and
amendments to IFRS standards that have come into effect and have been adopted by the Group during the current
financial year:
- Amendments to IAS 32: Financial Instruments - Presentation (effective 1 January 2014)
- Amendments to IAS 19: Employee Benefits (effective 1 July 2014)
- Amendments to IAS 36: Impairment of Assets - Recoverable amount disclosures for non-financial assets
(effective 1 January 2014)
- Amendments to IAS 39: Financial Instruments - Novation of derivatives and continuation of hedge
accounting (effective 1 January 2014)
- Annual Improvements 2010-12 cycle (effective 1 July 2014)
- Annual Improvements 2011-13 cycle (effective 1 July 2014)
- IFRIC 21: Levies (effective 1 January 2014)
The adoption of these amendments and statements had no material impact on the consolidated results of either
the current or prior periods.
OPERATING PERFORMANCE
Revenue grew 10,5% to R11,0 billion on a sales volume increase of 3,7%.
Domestic revenue increased by 12,9% and sales volumes by 6,0% in a challenging economic environment which
continued to experience curtailed consumer demand. Sales volumes of the wine portfolio reflected strong growth.
Distell’s cider and RTD (ready-to-drink) brands reflected satisfactory growth albeit at a slower pace than in
previous years. The spirits portfolio showed a marginal volume increase.
Revenue derived from the sale of the Group’s brands in international markets, outside Africa, grew 9,3% on
a volume decline of 1,0%. The Group’s international business also benefited from a weaker rand. The spirits
portfolio delivered volume and revenue growth of 6,3% and 12,3% respectively. The wine category achieved revenue
growth of 6,2% while volumes contracted by 2,4%.
In sub-Saharan African markets, outside South Africa, revenue grew 4,1%, while total volumes declined by 2,7%,
mainly due to the timing of export shipments to Angola. The region contributed 55,3% to foreign revenue.
The financial results for the period, supported by satisfactory overall revenue growth, were positively influenced
by a weaker rand. Steep increases in excise duties and investments that are made to support corporate strategy were
partially offset by lower increases in raw material input costs.
Operating expenses increased by 11,1% on the back of increased investments made in key strategic initiatives. Revenue
rose 10,5%, resulting in operating profit margin declining marginally from 13,8% to 13,4%.
Net finance costs increased from R110,2 million to R126,7 million.
The effective tax rate, as reported, increased from 26,5% to 28,6%, mainly due to non-taxable gains relating to the
remeasurement of the Burn Stewart Distillers Limited (BSD) contingent purchase consideration in the previous year.
Normalised headline earnings and operating profit, that exclude the adjustments in respect of the purchase
consideration for BSD referred to below, increased by 9,5% and 7,0% respectively.
In April 2013, the Group acquired BSD. A gain arising from the remeasurement of the contingent purchase consideration
for this acquisition amounted to R159,0 million and was included in the comparative period’s earnings. In the current
period an expense of R8,9 million relating to the finalisation of this transaction is also included in earnings.
Reported headline earnings decreased by 7,6% to R987,4 million and headline earnings per share decreased by 13,4% to
455,7 cents. Operating profit decreased 4,6% to R1,5 billion.
INVESTMENT AND FUNDING
Total assets increased by 10,6% to R17,9 billion.
Investment in net working capital remained at R5,5 billion. Inventory increased by 6,8% to R6,6 billion. Of this,
bulk spirits in maturation, planned in accordance with the Group’s longer-term demand projections, grew 15,5%.
Bottled stock and packaging materials reflect a decrease of 1,6% on the previous year.
Capital expenditure for the six months amounted to R305,7 million, of which R165,8 million was spent on the
replacement of assets. A further R139,9 million was directed to the expansion of capacity, mainly in relation to
the Group’s cider and whisky manufacturing facilities.
During December 2014, the Group acquired a 26% equity stake in KWA Holdings E.A. Limited, Kenya's leading spirits
manufacturer, bottler and distributor, for a cash consideration of R111,3 million. This transaction will enable the
Group to expand its production and distribution footprint in the important East African market.
Cash retained for the six months amounted to R1,1 billion (2013: R143,7 million). The Group remains in a strong
financial position, as shown by a debt to debt-plus-equity ratio of 21,1% and a debt-equity ratio of 26,8% at the end
of the reporting period.
PROSPECTS
The global environment continues to be challenging due to diverging growth and monetary policy expectations in
developed economies alongside a more notable moderation in emerging market growth. Tough trading conditions are
therefore expected to persist.
The Group nevertheless continues to pursue and invest in its long term strategy to deliver shareholder value. This
is backed by a robust and diverse portfolio of appealing brands, as well as a strengthened and extended route to
market network that continues to evolve across a range of economies and regions.
CASH DIVIDEND DECLARATION
The directors have resolved to declare a gross cash dividend, number 53, of 158,0 cents (2013: 154,0 cents) per share for
the interim period ended 31 December 2014.
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 23,7 cents per ordinary share. As a result, ordinary
shareholders who are liable to pay dividends tax will receive a net dividend amount of 134,3 cents per share.
Shareholders exempt from paying dividends tax will receive 158,0 cents per share. The issued ordinary share capital as
at 16 February 2015 is 221 737 356 (2014: 221 435 026) ordinary shares. The company’s income tax reference number
is 9115001712.
The dividend will be payable to shareholders on record on Friday, 13 March 2015, and will be paid on Monday,
16 March 2015. The last day to trade cum dividend will be on Friday, 6 March 2015, and shares commence trading
ex dividend from Monday, 9 March 2015. Share certificates may not be dematerialised or rematerialised between
Monday, 9 March 2015, and Friday, 13 March 2015, both days inclusive.
Signed on behalf of the board
DM Nurek RM Rushton
Chairman Managing director
Stellenbosch
16 February 2015
Directors: DM Nurek (Chairman), PE Beyers, MJ Botha, JG Carinus, GP Dingaan, JJ Durand,
E de la H Hertzog, MJ Madungandaba, LM Mojela, CA Otto, AC Parker,
RM Rushton (Managing director),CE Sevillano-Barredo, BJ van der Ross
Company secretary: L Malan
Registered office: Aan-de-Wagenweg, Stellenbosch 7600
Transfer secretaries: Computershare Investor Services Proprietary Limited, 70 Marshall Street, Johannesburg,
PO Box 61051, Marshalltown 2107
Sponsor: RAND MERCHANT BANK (A division of FirstRand Bank Limited)
www.distell.co.za
HUNTER’S is a natural cider crafted from the highest quality ingredients. Its popularity has grown since
its launch in 1988 making it the largest cider brand in South Africa and the “go to” thirst quencher for
every occasion. The Hunter’s range includes Hunter’s Dry, Hunter’s Gold and Hunter’s Extreme. Hunter’s is
available in more than 36 countries.
AMARULA is South Africa’s only brand to be featured on the Impact Databank list of the world’s 100 top
premium spirits brands. Amarula Cream continues to win international accolades, including gold at the
San Francisco World Spirits Competition, Concours Mondial and the International Wine & Spirit Competition,
while Amarula Gold recently took the title of Liqueur of the Year at the New York International Spirits
Competition – testimony of the brand’s quality and appeal.
BAIN’S CAPE MOUNTAIN WHISKY - The first South African whisky to be awarded World’s Best Grain Whisky at
the annual Whisky Magazine’s World Whisky Awards in 2013, Bain’s Cape Mountain Whisky is distilled and
double matured at The James Sedgwick Distillery in Wellington in the Western Cape. Earlier this month,
Distell was declared Distiller of the Year by the authoritative Whisky Magazine in its 2015 Icons of
Whisky competition, winning in the category ‘Rest of the World’ which includes Japan, Australia,
England and Ireland.
SCOTTISH LEADER - One of the fastest growing Scotch whiskies in the world, Scottish Leader is an
award-winning blended Scotch whisky distilled and carefully blended from only the finest malt and
grain Scotch whiskies. Scottish Leader has been revitalised with a new look – a modern tall container,
made of flint glass with clean edged glass chamfers, which were skillfully designed and manufactured to
showcase the golden colour of the whisky. Scottish Leader is sold in over 60 countries around the world.
RICHELIEU 10 - With many accolades to its name including a Gold Outstanding award at the 2014
International Wine & Spirit Challenge, Richelieu 10 is something to be savoured as the night matures.
Bred from the heart of selected grapes, this vintage brandy gets its purity from the fine art of copper
pot distillation. The 10-year-old brandy offers a rich and rewarding aroma spectrum of chocolate,
vanilla, green fig preserve and underlying hints of peaches and plums.
NEDERBURG is a South African brand leader that continues to strengthen its domestic presence with
an active marketing programme that includes sponsorship of the MasterChef South Africa series.
The brand’s profile is steadily growing internationally, notably in key African markets, Germany and
the UK. Nederburg consistently demonstrates its top quality credentials on major international and
domestic wine competitions, regularly winning trophies and gold medals.
Date: 16/02/2015 12:51:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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