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DISTELL GROUP HOLDINGS LIMITED - Unaudited Group results for the six months ended 31 December 2019 and cash dividend declaration

Release Date: 27/02/2020 07:05
Code(s): DGH     PDF:  
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Unaudited Group results for the six months ended 31 December 2019 and cash dividend declaration

Distell Group Holdings Limited
REGISTRATION NUMBER: 2016/394974/06               
JSE share code: DGH        
ISIN: ZAE000248811
("Distell" or "the Group" or "the Company")

UNAUDITED GROUP RESULTS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2019 AND CASH DIVIDEND DECLARATION

Salient features

Group revenue up 2,7% on 6,6% lower volumes

Excise duty contributed to fiscus increased by 6,4% to R4,1 billion

EBITDA
- Reported up 3,8%
- Normalised and adjusted for forex down 3,3%(1)(2)

Headline earnings 
- Reported down 4,7%
- Normalised and adjusted for forex down 9.0%(2)

Interim dividend maintained

1 Normalised earnings before interest, tax, depreciation and amortisation (EBITDA) refers to EBITDA adjusted for the: (a) profit or loss on disposal and impairment of
  property, plant and equipment (PPE) and intangible assets; (b) Group restructuring, retrenchment and other non-recurring costs; (c) expected credit loss on Zimbabwe
  financial assets; and (d) the implementation of IFRS 16: Leases, which resulted in lease operating expenses being replaced by depreciation and interest.
2 Foreign currencies and abnormal transactions affect the Group's performance. Where relevant, adjusted non-IFRS measures are presented. These adjusted measures
  represent pro forma financial information. A reconciliation of the pro forma financial information to the equivalent IFRS metrics is provided in note 3 to the
  summary financial statements.

Operating performance 

- Group revenue grew to R14,8 billion on 6,6% lower volumes. Revenue excluding excise duty grew by 1,4%. Distell anticipated a weakening in economic conditions and 
  heightened competition. As a result, we made tactical revenue management decisions in the previous financial year, which moderated the gross margin contraction.
- Domestic revenue increased 1,7% with sales volumes down by 7,8%. Revenue from spirits and RTDs grew, while wine declined.
- Our new Venture Business streamlined and renewed a cluster of business units, aiming to grow international and domestic premium spirits and wines outside of
  South Africa. The business delivered commendable performance in premium spirits.
- African markets, outside South Africa, delivered double-digit revenue growth of 10,5% on marginally lower sales volumes. Nigeria, Kenya and Zambia recorded
  strong growth as our investments in route-to-market and in-country production deliver on Distell's strategic intent to grow the Group across the continent.
- Operating costs rose by 3,6%. Cost of goods sold increased by 6,0%. Other operating costs declined by 5,1% due to optimisation benefits. 
  We have completed the implementation of the Group's new operating model and ways of working. We will continue to invest in our digital transformation process.
- Basic earnings per share and headline earnings per share decreased by 3,9% to 550,3 cents and by 4,8% to 548,6 cents respectively.

Outlook

In a tough economy with increased competition and changing consumer trends, Distell will continue to:
- defend and grow our South African business across a diverse portfolio in both premium and mainstream brands;
- restructure our portfolio for optimal returns; 
- invest further in digital capabilities, consumer engagement, marketing of key brands and innovation;  
- leverage years of investment into a modernised domestic network to extract efficiencies;
- invest thoughtfully in our African route-to-market expansion and local production footprint;
- grow premium spirits through the Venture Business; and
- maintain its commitment to sustainability and transformation. 

The board remains confident in the long term strength and resilience of the business in spite of the short term headwinds and challenges. It has therefore resolved to maintain the dividend for the interim period and will assess the final dividend at year-end. In our pursuit of returns, Distell will be responsible in balancing channel, volume and market share dynamics. 

"Distell's much loved brands, which trade across taste profiles, genders and repertoires, are the foundation of our diversified portfolio. From this base of brands, we will innovate and capture growth opportunities in our ambition to become an African drinks champion benefiting all stakeholders."

Cash dividend declaration 

The directors have resolved to declare a gross cash dividend, number 4, of 174,0 cents (2018: 174,0 cents) per share for the interim period ended 31 December 2019.

The dividend has been declared from income reserves. The dividend withholding tax, levied at 20%, will amount to 34,8 cents per ordinary share. As a result, ordinary shareholders who are liable to pay dividends tax will receive a net dividend amount of 139,2 cents per share. Shareholders exempt from paying dividends tax will receive 174,0 cents per share. The issued ordinary share capital as at 26 February 2020 is 222 382 356 (2019: 222 382 356) ordinary shares. The Company's income tax reference number is 9759621163.

The dividend will be payable to shareholders who are recorded as such on the register on the record date on Friday, 20 March 2020, and will be paid on 
Monday, 23 March 2020. The last day to trade cum dividend will be on Tuesday, 17 March 2020, and shares commence trading ex dividend from Wednesday, 18 March 2020. Share certificates may not be dematerialised or rematerialised between Wednesday, 18 March 2020, and Friday, 20 March 2020, both days inclusive.

Directors' statement

The directors, who take responsibility for the contents of this short-form announcement, present the unaudited summary results of the Distell Group for the six months ended 31 December 2019. The summary consolidated results were prepared under supervision of the Group chief financial officer, LC Verwey CA(SA).

Stellenbosch
27 February 2020

DIRECTORS: JJ Durand (chairman), GP Dingaan, DP du Plessis, T Kruythoff, PR Louw (alternate), MJ Madungandaba, EG Matenge-Sebesho, CA Otto, AC Parker, RM Rushton (Group chief executive officer), CE Sevillano-Barredo, LC Verwey (Group chief financial officer)

COMPANY SECRETARY: L Malan

This information is a summary only and does not contain full details of the financial results. Accordingly, any investment decisions should be based on information contained in the full announcement which is published and available at https://senspdf.jse.co.za/documents/2020/JSE/ISSE/DGHE/DGH1H20.pdf and on the company's website at www.distell.co.za (Investor centre): https://www.distell.co.za/investor-centre/financial-results/DGH1H20.pdf. The full announcement is also available for inspection at the registered office of the company and the sponsor (at the addresses set out below), at no charge, during normal business hours.

VIEW THESE RESULTS ONLINE: WWW.DISTELL.CO.ZA

REGISTERED OFFICE: Aan-de-Wagenweg, Stellenbosch 7600

TRANSFER SECRETARIES: Computershare Investor Services Proprietary Limited, Rosebank Towers, 15 Biermann Avenue, Rosebank 2196

SPONSOR: RAND MERCHANT BANK (A division of FirstRand Bank Limited), 1 Merchant Place, c/o Rivonia Road and Fredman Drive, Sandton 2196

Date: 27-02-2020 07:05:00
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