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Send  Share  RSS  Twitter  10 Sep 2009

BEVERAGES: Tough Going At Capevin (KWV)


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Capevin (previously KWV) which showed a 20% drop in headline earnings for the year to 30 June, says despite difficult market conditions globally, sales volumes generally held up well with growth achieved in certain areas and or brands. Sales volumes of packed products declined by 0,9% while the bulk spirits volumes were half of that of the previous year. Branded wine volumes were 1,0% lower and packed spirits 0,5% lower. However, growth in excess of 10% was achieved in respect of the Laborie, Roberts Rock, Pearly Bay and Café Culture brands. Sales of Roodeberg also reflected growth over the previous year. Good growth was also achieved in certain markets, notably in Scandinavia, the United Kingdom, Japan and Asia.

Included in cost of sales and other operating expenses are non-recurring and exceptional items totalling R67 million. This included exchange rate losses amounting to R18,6 million (2008: exchange rate profits of R19,4 million) and R24,3 million related to the impairment of assets and loans resulting from difficulties experienced by international trading partners. All of the above contributed to an operating loss of R9,5 million from continuing unbundled operations compared with a prior year operating profit of R57,1 million. Operating costs, excluding asset impairments, were generally well contained, increasing by only 4,5% over the prior year.

Finance costs amounted to R37,5 million, an increase of 3,7% over the prior year.

The group’s share in the net profits of associated companies amounted to R273,8 million compared to R274,9 million in the prior year. Income from the indirect investment in Distell amounted to R279,0 million (2008: R278,9 million). This will be the major and only investment and business in Capevin Holdings after the unbundling. Income from associated companies relating to the unbundled operations, comprising the investments in Vititec and Golden Kaan, amounted to a loss of R5,2 million (2008: R4,0 million loss).

The group incurred an after tax loss from unbundled operations of R42,1 million, of which R38,0 million related to the impairment of assets and loans.

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