summary of the
unaudited months ended 31 december 2013
of the Group for the six
5,5%, normalised 4,9%
15,1%, normalised 9,0%
Normalised operating profit
Normalised headline earnings per share
1,3% to 154,0 cents per share
Amarula is undoubtedly one of South Africa’s most successful exports. As the only South African brand on
the Impact Databank list of the world’s top 100 premium spirits brands, it is sold in more than 100 countries.
Amarula is also the 36th most popular spirit sold in Duty-free, according to International Wine & Spirit Research.
Bisquit Thanks to a positive momentum in its traditional markets (Belgium, Switzerland, France) and strong
development in new ones (South Africa, Duty-free, Nigeria), Bisquit is consolidating its growth. This growth was
supported by innovation (Experience Bisquit Coffret) and limited editions (XO Gold). For the fifth year in a row,
Bisquit has won medals for each of its authentic French cognacs at the International Wine & Spirit Competition,
the only cognac House to do so. Nederburg continues to raise its profile further as the official wine sponsor
of MasterChef South Africa, now in its third season. As the country’s most awarded winery, Nederburg has
maintained its reputation for excellence, excelling at the most recent Decanter World Wine Awards, International
Wine & Spirit Competition, International Sweet Wine Challenge and Veritas Awards. Nederburg also achieved four
five-star ratings in the current edition of the Platter’s South African Wine Guide. Savanna continues to enjoy
global growth and is now available in more than 60 countries. The recent launch of Savanna Dark has created
a stir in the marketplace as it is the first brand to be launched in black glass in South Africa. The brand also
won two coveted digital awards recognising the brand’s dedication to social media. Bain’s Cape Mountain
Whisky This fast-growing local brand was recently in the global spotlight when it won the title of World’s Best
Grain Whisky at the 2013 World Whisky Awards. Bunnahabhain’s distinctive 12, 18 and 25 year old single
malt whiskies, all un-chillfiltered, bring back time-honoured traditions in whisky-making and earn the distillery
a growing reputation for excellence. Bunnahabhain 25 year old single malt (Scotch whisky), produced on the
world-famous Isle of Islay, was awarded gold at the International Wine & Spirit Competition, double gold for the
second consecutive year at the San Francisco World Spirits Competition and a trophy for the Best Islay Single
Malt in the “21 years and over” category at the World Whisky Awards.
This information is a summary only and does not contain full details of the interim financial
results. Accordingly, any investment decisions should be based on information contained in the full
announcement which can be found on SENS, or on the company’s website at www.distell.co.za.
Operating expenses increased by 15,3% while revenue rose 15,1%. Operating profit margin,
excluding the gain on the remeasurement of the BSD contingent purchase consideration, declined
marginally from 14,0% to 13,8%.
Net finance costs increased from R23,9 million to R110,2 million, mainly as a result of increased
borrowings during the period.
The directors, who take responsibility for the contents of this short-form announcement, present
the unaudited abridged interim results of the Distell Group for the period ended 31 December 2013.
The condensed consolidated results were prepared under supervision of the financial director,
MJ Botha CA(SA).
Basis of preparation of financial information
These results have been prepared in accordance with section 3.46 of the Listings Requirements
of the JSE Limited (JSE) and have been applied consistently to all the periods presented and the
previous reporting periods, with the exception of the implementation of the following new accounting
standards, interpretations and amendments to IFRS:
• IAS 19: Employee Benefits (effective 1 January 2013)
• IFRS 10: Consolidated Financial Statements (effective 1 January 2013)
• IFRS 11: Joint Arrangements (effective 1 January 2013)
Comparative financial statements have been restated, where applicable, to account for the
amendments to and adoption of these standards.
Reported headline earnings rose 22,9% to R1,1 billion, while operating profit increased 27,2% to
In April 2013, the Group acquired Burn Stewart Distillers Limited (BSD). The results of this entity for
the six months, the remeasurement of the contingent purchase consideration payable on the BSD
acquisition, as well as new business development expenses, are included in earnings.
The effective tax rate decreased from 28,6% to 26,5%, due to non-taxable income.
Investment and funding
Total assets increased by 46,9% to R16,1 billion. Total assets, excluding new business acquisitions
since the previous interim reporting period, grew 15,4% to R12,7 billion.
Excluding the impact of new business acquisitions, investment in net working capital, on an organic
basis, increased by 20,7% to R4,3 billion and inventory by 12,0% to R4,9 billion. Of this, bulk spirits
in maturation, planned in accordance with the Group’s longer-term demand projections, grew
20,5%. Bottled stock and packaging materials reflect an increase of 5,7% on the previous year.
Capital expenditure for the six months amounted to R387,2 million, of which R144,3 million
was spent on the replacement of assets. A further R242,9 million was directed to the expansion
of capacity, mainly at cider and whisky manufacturing facilities and expanding our operations in
Cash retained for the six months amounted to R143,7 million (2012: R241,1 million). The Group
remains in a strong financial position, as shown by a debt to debt-plus-equity ratio of 25,1% and
a debt-equity ratio of 33,6% at the end of the reporting period.
Impact of restructured BEE transaction
Normalised headline earnings and operating profit, which exclude the results of BSD, as well as
the remeasurement of the contingent purchase consideration and the full impact of new business
development expenses in the current period, increased by 8,8% and 13,4% respectively.
As disclosed in a circular to shareholders on 17 December 2013, Distell’s original BEE transaction
was restructured on 17 January 2014. The 17,7 million additional shares, issued to members of the
BEE Consortium in terms of the transaction, will only impact the weighted average number of shares
in issue and therefore earnings and headline earnings per share for the full year. The additional
shares are, however, entitled to the interim dividend and therefore impact dividends per share for
this reporting period.
Revenue grew 15,1% to R9,9 billion on a sales volume increase of 5,5%.
Domestic revenue increased by 5,2% and sales volumes by 3,1% in a challenging economic
environment which continued to curtail consumer demand. Distell’s cider and RTD (ready-to-drink)
brands continued their strong performance. The spirits portfolio showed a volume decline, mostly as
a result of the depressed performance of the brandy category. Sales volumes of the wine portfolio
We believe challenging trading conditions in many of our markets will persist for the remainder of
the year. However, the strength, appeal and diversity of our brands, our enhanced capacity to trade
across a spectrum of markets and the security of our financial position will allow us to continue
pursuing our strategic course successfully.
International sales volumes, including Africa, rose by 12,7% while revenue improved 48,9%,
benefiting from a weaker rand and the addition of the BSD brand portfolio. Ciders and RTDs once
again delivered strong volume growth. The wine and spirits portfolios delivered growth of 6,4% and
The directors have resolved to declare a gross cash dividend, number 51, of 154,0 cents (2012:
152,0 cents) per share for the interim period ended 31 December 2013.
Sub-Saharan African markets, outside South Africa, continued to deliver exceptional results with
strong volume growth across all categories. The region contributed 55,1% 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 marketing expenses were partially
offset by foreign currency gains, the benefits from improved efficiencies in the business and the
normalisation of certain raw material input costs.
Cash dividend declaration
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 23,1 cents per ordinary
share. As a result, ordinary shareholders who are liable to pay dividends tax will receive a net
dividend amount of 130,9 cents per share. Shareholders exempt from paying dividends tax will
receive 154,0 cents per share. The issued ordinary share capital as at 20 February 2014 is
221 435 026 ordinary shares. The company’s income tax reference number is 9115001712.
Access to information
The dividend will be payable to shareholders on record on Friday, 14 March 2014, and will
be paid on Monday, 17 March 2014. The last day to trade cum dividend will be on Friday,
7 March 2014, and shares commence trading ex dividend from Monday, 10 March 2014. Share
certificates may not be dematerialised or rematerialised between Monday, 10 March 2014, and
Friday, 14 March 2014, both days inclusive.
The full interim financial results:
– can be viewed on SENS;
– can be viewed online at www.distell.co.za (Investor Centre);
– available for inspection at the company’s registered offices and the offices of the sponsor,
at no charge, during normal business hours from 21 February 2014; or
may be requested in printed format from the company secretary, tel: +27 21 809 7000
Signed on behalf of the board
20 February 2014
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, LC Verwey Company secretary: CJ Cronjé 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)
Registration number: 1988/005808/06 JSE share code: DST ISIN: ZAE000028668 WEBSITE: www.distell.co.za
GREYMATTER & FINCH # 7267