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Audited summary group results for the year ended 30 June 2017 and cash dividend declaration
CAPEVIN HOLDINGS LIMITED
("Capevin Holdings" or "the Company" or "the Group")
(Incorporated in the Republic of South Africa)
Registration number 1997/020857/06
JSE Share code CVH
ISIN ZAE000167714
AUDITED SUMMARY GROUP RESULTS
FOR THE YEAR ENDED 30 JUNE 2017
AND CASH DIVIDEND DECLARATION
- Headline earnings per share -4.1% to 47.2 cents
- Final ordinary dividend per share 13.60 cents
- Intrinsic value per share at 30 June 2017 R9.14
SUMMARY GROUP STATEMENT OF FINANCIAL POSITION
30 June
2017 2016
R'000 R'000
ASSETS
Non-current assets
Investment in joint venture 2 819 439 2 852 443
Current assets
Cash and cash equivalents 23 364 15 871
Total assets 2 842 803 2 868 314
EQUITY AND LIABILITIES
Equity
Ordinary shareholders' interest 2 826 961 2 856 204
Current liabilities 15 842 12 110
Trade payables 382 268
Unclaimed dividends 15 442 11 800
Current income tax liability 18 42
Total equity and liabilities 2 842 803 2 868 314
Net asset value per share (cents) 321.2 324.5
SUMMARY GROUP STATEMENT OF COMPREHENSIVE INCOME
Year ended
30 June
2017 2016
R'000 R'000
Share of profit of joint venture 347 127 410 662
Loss on dilution of interest in joint venture (1 619) (2 527)
Investment income 1 831 1 452
Profit on sale of investment - 1 650
Unclaimed dividends forfeited 1 265 1 252
Administrative expenses (2 930) (2 162)
Profit before taxation 345 674 410 327
Taxation (513) (496)
Profit for the year 345 161 409 831
Other comprehensive income (156 138) 92 615
Items that may be reclassified subsequently to profit or loss:
Fair value adjustment - available-for-sale asset - (150)
Tax charge relating to available-for-sale asset - 28
Reclassified to profit or loss - (1 343)
Share of other comprehensive income of joint venture
Fair value adjustment – available-for-sale asset (715) (4 630)
Fair value adjustment – cash flow hedges (2 439) -
Currency translation differences (151 622) 65 244
Reclassified to profit or loss (946) (754)
Items that will not be reclassified to profit or loss:
Share of joint venture's remeasurements of post-employment benefits 11 685 22 092
Other equity movements of joint venture (12 101) 12 128
Total comprehensive income for the year 189 023 502 446
Profit for the year attributable to:
Owners of the parent 345 161 409 831
Total comprehensive income attributable to:
Owners of the parent 189 023 502 446
Earnings per share (cents)
- Basic 39.2 46.6
- Diluted 39.2 46.4
HEADLINE EARNINGS RECONCILIATION
Year ended
30 June
2017 2016
R'000 R'000
Earnings attributable to ordinary shareholders 345 161 409 831
Headline earnings adjustable items
Share of joint venture's adjustments
Impairment of property, plant and equipment* 84 120 -
(Profit)/loss on sale of property, plant and equipment (19 058) 491
Taxation relating to sale of property, plant and equipment 3 522 (91)
Impairment of intangible asset* - 21 463
Gain on disposal of investment - (1 650)
Tax effect on gain of disposal of investment - 92
Loss on dilution of interest in joint venture 1 619 2 527
Headline earnings 415 364 432 663
Earnings per share (cents)
- Basic 39.2 46.6
- Diluted 39.2 46.4
Headline earnings per share (cents)
- Basic 47.2 49.2
- Diluted 47.1 49.0
Number of shares (thousands)
- In issue 880 103 880 103
- Weighted average 880 103 880 103
* The impairments relate to Distell's investments in the Bisquit cognac entity, a British wine broking company and the industrial
property rights held by one of Distell's Angolan subsidiaries.
SUMMARY GROUP STATEMENT OF CHANGES IN EQUITY
Year ended
30 June
2017 2016
R'000 R'000
Ordinary shareholders' equity at the beginning of the year 2 856 204 2 546 060
Total comprehensive income 189 023 502 446
Dividends paid (218 266) (192 302)
Ordinary shareholders' equity at the end of the year 2 826 961 2 856 204
Dividend per share (cents)
- Interim 10.60 11.40
- Final 13.60 14.20
SUMMARY GROUP STATEMENT OF CASH FLOWS
Year ended
30 June
2017 2016
R'000 R'000
Cash flows from operating activities
Dividends received 222 374 207 129
Dividends paid (218 266) (192 302)
Interest received 1 831 1 442
Administrative expenses (2 930) (2 162)
Taxation paid (537) (491)
Increase/(decrease) in trade and other payables and unclaimed dividends 5 021 (4 237)
7 493 9 379
Cash flows from investing activities
Proceeds from disposal of investment - 1 650
Net increase in cash and cash equivalents 7 493 11 029
Cash and cash equivalents at the beginning of the year 15 871 4 842
Cash and cash equivalents at the end of the year 23 364 15 871
NOTES TO THE SUMMARY GROUP FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION AND ACCOUNTING POLICIES
The summary group financial statements are prepared in accordance with the requirements of the JSE
Limited (JSE) for preliminary reports, and the requirements of the Companies Act (No. 71 of 2008), as
amended, applicable to summary financial statements. The JSE requires preliminary reports to be prepared
in accordance with the framework concepts and the measurement and recognition requirements of
International Financial Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as issued
by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting
Standards Council and to also, as a minimum, contain the information required by IAS 34: Interim Financial
Reporting.
The accounting policies applied in the preparation of the group financial statements, from which the
summary group financial statements were derived, are in terms of IFRS and are consistent with those
accounting policies applied in the preparation of the previous group annual financial statements, except for
the adoption of the amendments to IAS 16: Property, plant and equipment and IAS 41: Agriculture
applicable on bearer plants. The effect of the change was immaterial.
As Capevin Holdings does not have any investments in subsidiaries as of 2013, but only an investment in a
joint venture, the Company prepares economic interest financial statements in which its investment is equity
accounted. These economic interest financial statements are referred to as group.
The summary group financial statements do not contain all the information and disclosures required in the
group financial statements. The summary group financial statements were extracted from the group audited
financial statements on which PricewaterhouseCoopers Inc. has issued an unmodified report. The audited
group financial statements and the unmodified audit report are available for inspection at the Company's
registered office.
These summary group financial statements have been compiled by the Company's appointed manager,
Remgro Management Services Limited, under the supervision of the Financial Director, P R Louw CA(SA).
2. GROUP STRUCTURE
The sole investment of Capevin Holdings is an effective interest of 26.74% (2016: 26.77%) in the issued
share capital of Distell Group Limited (Distell), held via its 50% interest in Remgro-Capevin Investments
Proprietary Limited (RCI).
3. RELATED PARTY TRANSACTIONS
During the year the Group received dividends from RCI (a joint venture) of R222 374 460
(2016: R207 119 220). The Group also paid administrative fees of R1 049 135 (2016: R980 500) to Remgro
Management Services Limited (a subsidiary of an investor with significant influence over the Group).
During the prior year the Group also disposed of its investment in Historical Homes of South Africa Limited
to Eikenlust Proprietary Limited (a subsidiary of an investor with significant influence over the Group) for
a total amount of R1 650 000.
Directors' emoluments
30 June 2017 30 June 2016
Director R R
A E v Z Botha 53 100 37 200
R M Jansen 66 400 37 200
E G Matenge-Sebesho 53 200 24 800
C A Otto 66 400 37 200
239 100* 136 400
* R93 100 of the fees paid for the year ended 30 June 2017 relates to the duties fulfilled by the independent Board as part of the
simplification of the multi-tiered ownership structure of Distell.
Directors' interests
No director (or associate of any of the directors), holds an interest in the securities of the Company.
There has been no change in the interests of the directors in the securities of the Company from the reporting
date up to the approval of the annual financial statements.
4. SEGMENT REPORT
Capevin Holdings is an investment holding company, with its sole investment being an effective interest in
Distell. The directors have not identified any other segment to report on.
5. THE PROPOSED RESTRUCTURING OF DISTELL'S OWNERSHIP STRUCTURE
The investment in Distell is currently held through a multi-tiered ownership structure in which Capevin
Holdings and Remgro Limited each owns 50% in RCI. RCI, in turn, holds a 52.8% (on a fully diluted basis)
direct investment in Distell. The Board of Directors resolved to simplify the ownership structure through
schemes of arrangement in terms of which a new entity, Distell Group Holdings Limited (DGHL) will
effectively acquire RCI's and all other shareholders' direct and indirect interests in Distell in exchange for
shares in DGHL. DGHL will be listed on the JSE, while Distell and Capevin Holdings will be delisted.
Refer to the SENS announcement of 22 June 2017 for more detail.
6. EVENTS AFTER THE REPORTING DATE
During July 2017, Distell acquired 26% of the ordinary shares of Best Global Brands (BGB) for
USD 54.6 million. It also entered into an agreement to acquire the remaining 74% of BGB's ordinary shares,
which will become effective no earlier than the end of 2019 once certain operating hurdles are achieved and
conditions precedent to closing are fulfilled or waived. BGB and Distell expect the transaction to generate
significant synergies in the short to medium term, which will unlock further value for both parties.
COMMENTARY (unaudited)
FINANCIAL RESULTS
For the year ended 30 June 2017 Distell's revenue grew by 3.7% to R22.3 billion on constant sales volumes.
Distell's results for the year were negatively impacted by a substantially stronger rand against the major
currencies in which Distell trades. Operating costs rose by 4.5%.
Distell reported a 3.6% decrease in headline earnings to R1 553.3 million, with headline earnings per share
decreasing by 3.7% to 708.3 cents. Capevin Holdings' headline earnings per share for the year ended
30 June 2017 consequently decreased by 4.1% to 47.2 cents per share.
Distell's headline earnings adjusted for foreign exchange movements increased by 7.4% to R1 600.2 million
(2016: R1 490.6 million).
The Company's intrinsic value decreased by 15.3% to R9.14 per share – based on Distell's last traded price of
R137.01 at 30 June 2017 (excluding capital gains tax) (30 June 2016: R161.80). Capevin Holdings' discount
to intrinsic value has narrowed from 16.8% at 30 June 2016 to 1.0% at 30 June 2017.
PROSPECTS
Distell's board believes that the outlook for global economic growth will remain muted, while African gross
domestic product growth will still be impacted by low commodity prices. Distell will continue to invest in its
priority markets and is restructuring its brand portfolio and asset base in order to simplify and focus the
business. Distell has a diversified and exciting range of well-priced, good quality wine, spirit, cider and RTD
brands that enables it to compete effectively and to continue to maximise trading opportunities.
Refer to www.distell.co.za for Distell's comprehensive results.
REPORTS OF THE INDEPENDENT AUDITOR
The Company's directors are responsible for the preparation of a summarised version of the audited group
financial statements.
These summary group financial statements for the year ended 30 June 2017 have been audited by
PricewaterhouseCoopers Inc., who expressed an unmodified opinion thereon. The auditor also expressed an
unmodified opinion on the annual financial statements from which these summary group financial statements
were derived.
A copy of the auditor's report on the summary group financial statements and of the auditor's report on the
annual group financial statements are available for inspection at the Company's registered office, together with
the financial statements identified in the respective auditor's reports.
The auditor's report does not necessarily report on all of the information contained in this
announcement/financial results. Shareholders are therefore advised that in order to obtain a full understanding
of the nature of the auditor's engagement they should obtain a copy of the auditor's report together with the
accompanying financial information from the issuer's registered office.
DECLARATION OF CASH DIVIDEND
In terms of the dividend policy of Capevin Holdings, dividends received from its indirect interest in Distell,
after providing for administrative expenses, will be distributed to shareholders. The directors have consequently
resolved to approve and declare a final gross cash dividend (dividend number 26) of 13.60 cents
(2016: 14.20 cents) per share for the year ended 30 June 2017. The dividend has been declared from income
reserves.
A dividend withholding tax of 20% or 2.7200 cents per share will be applicable, resulting in a net dividend of
10.88 cents per share, unless the shareholder concerned is exempt from paying dividend withholding tax or is
entitled to a reduced rate in terms of an applicable double-tax agreement.
The total gross dividend per share for the year ended 30 June 2017 therefore amounts to 24.20 cents, compared
to 25.60 cents for the year ended 30 June 2016.
The number of issued ordinary shares as at 13 September 2017 is 880 103 265. The Company's income tax
number is 9599/656/71/8.
Dates of importance:
Last day to trade in order to participate in the dividend Tuesday, 3 October 2017
Shares trade ex dividend Wednesday, 4 October 2017
Record date Friday, 6 October 2017
Payment date Monday, 9 October 2017
Share certificates may not be dematerialised or rematerialised between Wednesday, 4 October 2017, and
Friday, 6 October 2017, both days inclusive.
In terms of the Company's Memorandum of Incorporation (MOI), dividends will only be transferred
electronically to the bank accounts of shareholders, while dividend cheques are no longer issued. In the instance
where shareholders do not provide the Transfer Secretaries with their banking details, the dividend will not be
forfeited, but will be marked as "unclaimed" in the share register until the shareholder provides the Transfer
Secretaries with the relevant banking details for payout.
In terms of the Company's MOI, the Board declared all dividends that are not claimed by shareholders after a
three-year period forfeited in terms of the applicable prescription laws.
The Annual Report will be posted to members and will be available on Capevin Holding's website at
www.capevin.com during September 2017.
Signed on behalf of the Board of Directors.
Chris Otto Pieter Louw
Chairman Financial Director
Stellenbosch
13 September 2017
DIRECTORATE
Non-executive directors
C A Otto* (Chairman),
A E v Z Botha*, J J Durand, R M Jansen*, E G Matenge-Sebesho*
(*Independent)
Executive director
P R Louw (Financial Director)
CORPORATE INFORMATION
Secretary
Remgro Management Services Limited
Listing
JSE Limited
Sector: Consumer – Food and Beverage – Beverages – Distillers & Vintners
Business address and registered office
Millennia Park, 16 Stellentia Avenue, Stellenbosch 7600
(PO Box 456, Stellenbosch 7599)
Transfer Secretaries
Computershare Investor Services Proprietary Limited,
Rosebank Towers, 15 Biermann Avenue, Rosebank 2196
(PO Box 61051, Marshalltown 2107)
Auditor
PricewaterhouseCoopers Inc.
Stellenbosch
Sponsor
Rand Merchant Bank (A division of FirstRand Bank Limited)
Website
www.capevin.com
Date: 13/09/2017 05:01:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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