DISTELL GROUP HOLDINGS LIMITED - Audited Group results for the year ended 30 June 2018 and cash dividend declaration

Release Date: 24/08/2018 07:05
Code(s): DGH
 
Wrap Text
Audited Group results for the year ended
30 June 2018 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")

Audited Group results for the year ended
30 June 2018 and cash dividend declaration

SALIENT FEATURES

Group revenue up 10,4% on increased volumes of 4,6%
- Domestic volume and revenue growth in all three categories
- Growth in SA RTD market share
- Strong revenue growth in 13 out of the top 15 largest brands
- Exceptional performances in Kenya, Zambia and Zimbabwe
- Strong travel retail performance

EBITDA
- Reported up 20,2%
- Normalised and adjusted for forex up 7,4% (1, 2)

Headline earnings 
- Reported down 5,6%
- Normalised and adjusted for forex up 5,2% (2)

Total dividend for the year up by 4,2% 

Net cash generated from operating activities up 21,6%


1 Normalised Earnings before interest, tax, depreciation and amortisation (EBITDA) refers to EBITDA adjusted for the: a) prior year impairments of Angola land 
  and investment in a wine broker in the UK, b) current year gain on the unbundling of Lusan and sale of Bisquit, c) the one-off losses and write-off in Tanzania
  Distilleries Limited, an associate company, following a sachet ban and excise duty dispute, d) impairment of property, plant and equipment (PPE) and intangible 
  assets, and e) Group restructuring and retrenchment costs.

2 Foreign currencies and abnormal transactions affect the Group's performance. Where relevant in this report, 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 2 to the summary financial statements.

SUMMARY CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
                                                                                                   Audited
                                                                                                   30 June
                                                                                               2018          2017
                                                                                              R'000         R'000
ASSETS
Non-current assets
Property, plant and equipment                                                             6 290 094     5 466 224
Loans and receivables                                                                        20 391       133 595
Available-for-sale financial assets                                                          60 485        29 671
Investments in associates                                                                   862 364       133 558
Investments in joint ventures                                                               141 165       252 282
Intangible assets                                                                         2 008 475     1 921 925
Retirement benefit assets                                                                   522 885       380 963
Deferred income tax assets                                                                  100 154       173 897
Total non-current assets                                                                 10 006 013     8 492 115

Current assets
Inventories                                                                               7 587 016     7 800 305
Trade and other receivables                                                               3 413 036     2 982 470
Current income tax assets                                                                    35 756        28 197
Cash and cash equivalents                                                                 1 084 215     1 183 120
Total current assets                                                                     12 120 023    11 994 092

Total assets                                                                             22 126 036    20 486 207

EQUITY AND LIABILITIES
Capital and reserves
Capital and reserves                                                                     11 640 693    10 542 126
Non-controlling interest                                                                    314 944       301 124
Total equity                                                                             11 955 637    10 843 250

Non-current liabilities
Interest-bearing borrowings                                                               4 432 840     3 567 180
Retirement benefit obligations                                                               27 800        24 533
Deferred income tax liabilities                                                           1 132 135       929 318
Total non-current liabilities                                                             5 592 775     4 521 031

Current liabilities
Trade and other payables                                                                  4 257 093     3 682 025
Interest-bearing borrowings                                                                 113 788     1 276 234
Provisions                                                                                  167 973        89 227
Current income tax liabilities                                                               38 770        74 440
Total current liabilities                                                                 4 577 624     5 121 926

Total equity and liabilities                                                             22 126 036    20 486 207

SUMMARY CONSOLIDATED INCOME STATEMENTS 
                                                                                                   Audited
                                                                                             Year ended 30 June
                                                                                               2018          2017   Change
                                                                                              R'000         R'000        %
Revenue                                                                                  24 230 765    21 940 043     10,4
Operating costs                                                                         (21 836 072)  (19 567 219)    11,6
  Costs of goods sold                                                                   (16 442 193)  (14 646 189)
  Sales and marketing costs                                                              (3 114 655)   (2 832 148)
  Distribution costs                                                                     (1 246 542)   (1 168 220)
  Administration and other costs                                                         (1 032 682)     (920 662)
Other gains and losses                                                                       (6 520)      (27 944)
Operating profit                                                                          2 388 173     2 344 880      1,8
Dividend income                                                                               6 657         7 163
Finance income                                                                               46 927        69 290
Finance costs                                                                              (342 494)     (283 800)
Share of equity-accounted earnings                                                           31 358        59 374
Profit before taxation                                                                    2 130 621     2 196 907     (3,0)
Taxation                                                                                   (632 101)     (623 912)
Profit for the period from continuing operations                                          1 498 520     1 572 995     (4,7)
Discontinued operations                                                                     169 531      (276 192)
Profit for the year                                                                       1 668 051     1 296 803     28,6

Attributable to:
Equity holders of the company                                                             1 646 384     1 296 978     26,9
Non-controlling interest                                                                     21 667          (175)
                                                                                          1 668 051     1 296 803     28,6
Per share performance:
Issued number of ordinary shares ('000)                                                     222 382       222 382
Weighted number of ordinary shares ('000)                                                   219 443       219 298

Earnings per ordinary share (cents)
Basic earnings basis
  From continuing operations                                                                  673,0         717,3     (6,2)
  From discontinued operations                                                                 77,3        (125,9)   161,4
                                                                                              750,3         591,4     26,9
Diluted earnings basis
  From continuing operations                                                                  672,3         716,4     (6,2)
  From discontinued operations                                                                 77,2        (125,8)   161,4
                                                                                              749,5         590,6     26,9
Headline basis
  From continuing operations                                                                  669,9         714,8     (6,3)
  From discontinued operations                                                                 (1,7)         (6,5)    73,8
                                                                                              668,2         708,3     (5,7)
Diluted headline basis
  From continuing operations                                                                  669,3         713,8     (6,2)
  From discontinued operations                                                                 (1,8)         (6,5)    72,3
                                                                                              667,5         707,3     (5,6)
Dividends per ordinary share (cents)
- Interim                                                                                     165,0         165,0        - 
- Final                                                                                       230,0         214,0      7,5
                                                                                              395,0         379,0      4,2
Reconciliation of headline earnings:
Net profit attributable to equity holders of the company                                  1 646 384     1 296 978     26,9
Adjusted for (net of taxation):
  Profit on disposal and impairment of PPE included in share of 
  equity-accounted earnings                                                                 (16 025)            -
  Impairment of intangible assets                                                            31 115       202 071
  Impairment of PPE                                                                          37 178        66 090
  Impairment of investment in available-for-sale financial asset                                  -        38 810
  Gain on previously held equity interest and on sale of investments                       (217 338)        7 425
  Profit on sale of PPE                                                                     (15 086)      (58 072)
Headline earnings                                                                         1 466 228     1 553 302     (5,6)

SUMMARY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                                                                                   Audited
                                                                                               Year ended 30 June
                                                                                               2018          2017
                                                                                              R'000         R'000
Profit for the year                                                                       1 668 051     1 296 803
Other comprehensive income (net of taxation)                                                263 414      (535 729)
Items that may be reclassified subsequently to profit or loss:
Fair value adjustments
- Available-for-sale financial assets                                                         7 662        (2 668)
Currency translation differences                                                            144 157      (565 307)
Fair value adjustments of cash flow hedges                                                    9 115        (9 115)
Items that will not be reclassified to profit or loss:
Remeasurements of post-employment benefits                                                  102 140        43 703
Share of other comprehensive income of associates                                               340        (2 342)

Total comprehensive income for the year                                                   1 931 465       761 074
Attributable to:
Equity holders of the company                                                             1 911 333       760 109
Non-controlling interest                                                                     20 132           965
                                                                                          1 931 465       761 074

Total comprehensive income attributable to equity shareholders arises from:
Continuing operations                                                                     1 741 802     1 072 128
Discontinued operations                                                                     169 531      (312 019)
                                                                                          1 911 333       760 109

SUMMARY CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
                                                                                                   Audited
                                                                                               Year ended 30 June
                                                                                               2018          2017
                                                                                              R'000         R'000
Attributable to equity holders
Opening balance                                                                          10 542 126    10 656 997
Comprehensive income
Profit for the year                                                                       1 646 384     1 296 978
Other comprehensive income (net of taxation)
Fair value adjustments:
- Available-for-sale financial assets                                                         7 662        (2 668)
Cash flow hedge of foreign exchange transactions                                              9 115        (9 115)
Currency translation differences                                                            145 692      (566 447)
Remeasurements of post-employment benefits                                                  102 140        43 703
Share of other comprehensive income of associates                                               340        (2 342)
Total other comprehensive income                                                            264 949      (536 869)
Total comprehensive income for the year                                                   1 911 333       760 109

Redemption reserve                                                                                -       (37 340)

Transactions with owners
Employee share scheme:
- Shares paid and delivered                                                                       1         3 104
- Value of employee services                                                                 49 926        53 595
- Settlement in cash                                                                              -       (38 031)
Capital reorganisation                                                                       13 832             -
Share issue costs                                                                           (45 066)            -
Sale of interest to non-controlling interest                                                      -        (1 350)
Dividends paid                                                                             (832 778)     (832 100)
Transactions with non-controlling interests                                                   1 319       (22 858)
Total transactions with owners                                                             (812 766)     (874 980)

Attributable to equity holders                                                           11 640 693    10 542 126

Non-controlling interest
Opening balance                                                                             301 124        15 262
Profit for the year                                                                          21 667          (175)
Dividends paid                                                                               (4 466)       (2 024)
Sale of interest to non-controlling interest                                                      -        (6 564)
Currency translation differences                                                             (1 535)        1 140
Contribution by non-controlling interests                                                         -        40 303
Transactions with non-controlling interests                                                  (1 846)       22 858
Non-controlling interest arising on business combination                                          -       230 324

Total non-controlling interest                                                              314 944       301 124

Total equity at the end of the year                                                      11 955 637    10 843 250

SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                                                   Audited
                                                                                               Year ended 30 June
                                                                                               2018          2017
                                                                                              R'000         R'000
Cash flows from operating activities
Operating profit                                                                          2 559 330     2 066 758
Non-cash flow items                                                                         693 155       910 419
Working capital changes                                                                    (173 321)     (315 504)
  Inventories                                                                              (245 024)     (136 752)
  Trade and other receivables                                                              (208 022)     (368 435)
  Trade payables and provisions                                                             279 725       189 683

Cash generated from operations                                                            3 079 164     2 661 673
Net financing costs                                                                        (231 935)     (297 055)
Taxation paid                                                                              (580 575)     (500 341)
Net cash generated from operating activities                                              2 266 654     1 864 277
Net cash outflow from investment activities                                              (1 144 635)     (949 638)
Net cash inflow from financing activities                                                   378 988       151 428
Dividends paid                                                                             (837 244)     (832 100)
Increase in net cash, cash equivalents and bank overdrafts                                  663 763       233 967
Net cash, cash equivalents and bank overdrafts at the beginning of the year                 302 876       102 402
Exchange gains on cash and cash equivalents and bank overdrafts                               3 788       (33 493)
Net cash, cash equivalents and bank overdrafts at the end of the year                       970 427       302 876

NOTES

                                                                                                   Audited
                                                                                                   30 June
                                                                                               2018          2017  Change
                                                                                              R'000         R'000       %
1.  Sales volumes (litres 000)                                                              715 005       683 801

2.  Pro forma information
    The results of the Group are significantly impacted by abnormal or non-recurring 
    transactions and the change in foreign exchange rates.

    The Group therefore also discloses adjusted measures in order to indicate the 
    Group's businesses' performance excluding the effect of abnormal transactions and 
    foreign currency fluctuations. These adjusted measures constitute pro forma 
    financial information.

    The adjustments below represents abnormal or non-recurring items which 
    significantly impacted the financial results of the Group:

    Headline earnings                                                                     1 466 228     1 553 302   (5,6)
     Adjusted for (net of taxation):
      Interest income on settlement of excise dispute                                             -       (41 949)
      One-off losses and write-offs in associate following sachet 
      ban and excise dispute                                                                 78 461        22 204
      Retrenchment and Group restructuring costs                                             40 688        17 031
    Normalised headline earnings                                                          1 585 377     1 550 588    2,2

    The results of the Group are also significantly impacted by the change in foreign 
    exchange rates, mainly relating to the UK pound, euro, US dollar and Angolan kwanza
    for both reporting periods, as a result of:
    a)  the translation of foreign operations to the reporting currency; and
    b)  the translation of South African monetary assets and liabilities denominated
        in foreign currency to the reporting currency at year-end.

    In the prior year comparative period, the income of foreign subsidiaries was 
    converted at an average aggregated daily South African Rand (ZAR)/US dollar (USD) 
    exchange rate of R13,61 compared to R12,87 in the current year, 
    and the Angolan kwanza devaluated from 167 Kwanza:USD1 on 30 June 2017 to 
    250 Kwanza:USD1 on 30 June 2018.

    The adjustments below thus represent a restatement of the 2017 foreign income 
    using the current year aggregated daily average exchange rates.

    Normalised headline earnings                                                          1 585 377     1 550 588    2,2
     Adjusted for (net of taxation):
      Prior year restatement to current year aggregated daily average exchange rates              -         1 930
      Exclusion of effect of conversion of foreign currency monetary assets and 
      liabilities to the reporting currency
      - Other major currencies                                                               37 956        46 885    
      - Kwanza (in associate)                                                                59 112             -                                             
    
    Normalised headline earnings adjusted for foreign exchange movements                  1 682 445     1 599 403    5,2
                                                                                                    
    Earnings before interest, taxation, depreciation and amortisation (EBITDA)            3 091 585     2 572 717   20,2
     Adjusted for:
      Impairment of PPE, intangible assets, investments, gain on previously held 
      interest and subsidiaries disposed                                                   (182 962)      250 120
      Losses and write-offs in associate following sachet ban and excise dispute             78 461        22 204
      Retrenchment and Group restructuring costs                                             53 898        23 819
    Normalised EBITDA                                                                     3 040 982     2 868 860    6,0
             
    The adjustments below represents a restatement of the 2017 foreign income using 
    the current year aggregated daily average exchange rates as explained above.

    Normalised EBITDA                                                                     3 040 982     2 868 860    6,0
    Adjusted for:
      Prior year restatement to current year aggregated daily average exchange rates              -         2 699
      Exclusion of effect of conversion of foreign currency monetary assets and 
      liabilities to the reporting currency                                                 
      - Other major currencies                                                               53 086        65 573
      - Kwanza (in associate)                                                                59 112             -     
    Normalised EBITDA adjusted for currency movements                                     3 153 180     2 937 132    7,4
      
    The pro forma financial information is the responsibility of the board of directors of the company and is presented for illustrative purposes only. 
    Because of its nature, the pro forma financial information may not fairly present the Group's financial position, changes in equity, results of 
    operations or cash flows.
               
    An assurance report (in terms of ISAE 3420: Assurance Engagement to Report on the Compilation of Pro Forma Financial Information) has been issued by 
    the Group's auditors in respect of the pro forma financial information included in this announcement. The assurance report is available for inspection 
    at the registered office of the company and will be included in the integrated report 2018.

                                                                                                   Audited
                                                                                                   30 June
                                                                                               2018          2017
                                                                                              R'000         R'000
3.  Net interest-bearing borrowings
    Interest-bearing borrowings
    Non-current                                                                           4 432 840     3 567 180
    Current                                                                                 113 788     1 276 234
                                                                                          4 546 628     4 843 414
    Cash and cash equivalents                                                            (1 084 215)   (1 183 120)
                                                                                          3 462 413     3 660 294

4.  Cash outflow from investment activities
    Purchases of PPE to maintain operations                                                (464 731)     (327 784)
    Purchases of PPE to expand operations                                                  (709 958)     (477 775)
    Proceeds from sale of PPE                                                               126 356        56 698
    Purchases of financial assets, associates and joint ventures                           (752 722)      (12 028)
    Proceeds from financial assets                                                           17 514        57 919
    Purchases of intangible assets                                                          (66 706)      (89 113)
    Proceeds from intangible assets                                                           5 400             -
    Proceeds from disposal of interest in subsidiaries, net of cash                         757 114        20 541
    Acquisition of subsidiaries, net of cash                                                (56 902)     (178 096)
                                                                                         (1 144 635)     (949 638)
5.  Capital commitments
    Contracted                                                                              467 327       657 552
    Authorised, but not contracted                                                        1 991 198     2 416 566
                                                                                          2 458 525     3 074 118

6.  Depreciation of PPE                                                                     432 434       393 555

7.  Net asset value per share (cents)                                                         5 376         4 876

8.  Segmental analysis 
    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. Segment information, including the comparative figures and volume information, 
    have been restated to align with the current year segmentation as reported to management.



                                                                                             

                                                           South                   Rest of                   Rest of
                                                          Africa         BLNS       Africa     Europe  International    Corporate         Total  Change 
    Audited year ended 30 June 2018                        R'000        R'000        R'000      R'000          R'000        R'000         R'000       %
    Revenue                                           18 089 389    1 900 971    1 515 685  1 283 984      1 501 580      (60 844)   24 230 765    10,4
    Costs of goods sold                              (12 539 388)  (1 300 785)  (1 003 475)  (846 008)      (766 095)      13 558   (16 442 193)   12,3
      Material costs and overheads                   (12 539 388)  (1 300 785)  (1 003 475)  (846 008)      (766 095)      66 644   (16 389 107)   12,4
      Currency conversion gains and losses                     -            -            -          -              -      (53 086)      (53 086)

    Gross profit                                       5 550 001      600 186      512 210    437 976        735 485      (47 286)    7 788 572     6,8
    Operating costs                                   (2 529 844)    (228 283)    (348 814)  (357 770)      (561 653)  (1 367 515)   (5 393 879)    9,6
    Operating profit before allocations                3 020 157      371 903      163 396     80 206        173 832   (1 414 801)    2 394 693     0,9
    Equity-accounted earnings and dividend income              -            -        7 596          -         (3 930)      34 349        38 015
    EBIT before allocations                            3 020 157      371 903      170 992     80 206        169 902   (1 380 452)    2 432 708    (0,3)
    Allocations                                          (88 463)     (15 603)      (2 948)    (5 231)        (3 912)     116 157             -
    EBIT after allocations                             2 931 694      356 300      168 044     74 975        165 990   (1 264 295)    2 432 708    (0,3)
    Other gains and losses                                     -            -            -          -              -       (6 520)       (6 520)
    Equity-accounted earnings and dividend income              -            -       (7 596)         -          3 930      (34 349)      (38 015)  (42,9)
    Operating profit from continuing operations        2 931 694      356 300      160 448     74 975        169 920   (1 305 164)    2 388 173     1,8
    EBIT before allocations attributable to:
    Equity holders of the company                      3 021 680      370 410      156 853     80 206        182 694   (1 400 802)    2 411 041
    Non-controlling interest                              (1 523)       1 493       14 139          -        (12 792)      20 350        21 667
                                                       3 020 157      371 903      170 992     80 206        169 902   (1 380 452)    2 432 708
    Non-current assets                                 6 136 254       93 028    1 579 210  2 190 130          7 391            -    10 006 013

                                                           South                   Rest of                   Rest of
                                                          Africa         BLNS       Africa     Europe  International    Corporate         Total   
    Audited year ended 30 June 2017                        R'000        R'000        R'000      R'000          R'000        R'000         R'000       
    Revenue                                           16 429 151    1 748 742    1 109 833  1 117 562      1 514 759       19 996    21 940 043
    Costs of goods sold                              (11 086 369)  (1 158 675)    (724 748)  (696 581)      (701 622)    (278 194)  (14 646 189)
      Material costs and overheads                   (11 086 369)  (1 158 675)    (724 748)  (696 581)      (701 622)    (212 621)  (14 580 616)
      Currency conversion gains and losses                     -            -            -          -              -      (65 573)      (65 573)

    Gross profit                                       5 342 782      590 067      385 085    420 981        813 137     (258 198)    7 293 854
    Operating costs                                   (2 325 221)    (218 779)    (201 682)  (287 593)      (581 808)  (1 305 947)   (4 921 030)
    Operating profit before allocations                3 017 561      371 288      183 403    133 388        231 329   (1 564 145)    2 372 824
    Equity-accounted earnings and dividend income              -            -       26 498          -         (5 345)      45 384        66 537
    EBIT before allocations                            3 017 561      371 288      209 901    133 388        225 984   (1 518 761)    2 439 361
    Allocations                                         (167 519)     (58 595)     (19 828)   (14 532)       (10 800)     271 274             -
    EBIT after allocations                             2 850 042      312 693      190 073    118 856        215 184   (1 247 487)    2 439 361
    Other gains and losses                                     -            -            -          -              -      (27 944)      (27 944)
    Equity-accounted earnings and dividend income              -            -      (26 498)         -          5 345      (45 384)      (66 537)
    Operating profit from continuing operations        2 850 042      312 693      163 575    118 856        220 529   (1 320 815)    2 344 880
    EBIT before allocations attributable to:
    Equity holders of the company                      3 019 025      369 824      215 118    133 388        233 520   (1 531 339)    2 439 536
    Non-controlling interest                              (1 464)       1 464       (5 217)         -         (7 536)      12 578          (175)
                                                       3 017 561      371 288      209 901    133 388        225 984   (1 518 761)    2 439 361
    Non-current assets                                 5 334 336       95 941      564 908  2 465 966         30 964            -     8 492 115
    
    Note:         
    BLNS = Botswana, Lesotho, Namibia and Swaziland
    EBIT =  Earnings before interest and tax

    Included in "Corporate" are production variances from standard as production facilities service various regions, currency conversion gains and losses, 
    performance bonuses for the majority of personnel in the Group, and certain centralised functions including information and communications 
    technology, human resources, corporate finance and governance, quality management, innovation and corporate affairs.

9.  Financial risk management and financial instruments

    Financial risk factors

    The Group's activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest 
    rate risk and price risk), credit risk and liquidity risk.

    The summary consolidated financial statements do not include all financial risk management information and disclosures required in the 
    annual financial statements; they should be read in conjunction with the Group's annual financial statements as at 30 June 2018. There have been no material 
    changes in the Group's credit, liquidity and market risk or key inputs in measuring fair value since 30 June 2018.

    Fair value estimation
    Items carried at fair value are classified according to the fair value hierarchy, by valuation method. The different levels have been defined as follows:
    Level 1:  Quoted prices (unadjusted) in active markets for identical assets or liabilities
    Level 2:  Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or 
              indirectly (that is, derived from prices)
    Level 3:  Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs)

    Available-for-sale financial assets are classified as level 1, 2 or 3 and derivative financial assets and liabilities are classified as level 2.
    There have been no transfers between level 1, 2 or 3 during the period, nor were there any significant changes to the valuation techniques and inputs 
    used to determine fair values.

    The fair values of all other financial assets and liabilities approximate their carrying amounts.

10. Business combinations
    During the period the Group acquired the following interest which was accounted for under IFRS 3: Business Combinations.
    a)  Acquisition of Lusan Holdings Proprietary Limited (Lusan)

    At the end of October 2017 the Group acquired the remaining 50,0% of the issued share capital of the Lusan joint venture, a Stellenbosch-based wine 
    producer and owner of the Alto and Uitkyk wine farms, for a purchase consideration of R193,5 million. The Group recorded a gain on its previously held 
    equity interest of R37,8 million and no goodwill related to the acquisition was recognised. The revenue of Lusan included in the consolidated income 
    statement since November 2017 was R9,0 million and the company contributed profit of R29,8 million over the same period.


OPERATING PERFORMANCE OF CONTINUING OPERATIONS

Group revenue grew by 10,4% to R24,2 billion on 4,6% higher volumes. Revenue excluding excise duty grew by 7,7%.

Domestic market revenue increased by a commendable 10,1% and sales volumes rose by 4,4% while the economy continued to show low GDP growth amidst 
increased costs of living placing pressure on consumer disposable incomes. The Group's ready-to-drink (RTD) portfolio delivered strong revenue and 
volume growth, led by Savanna and Bernini in the face of increased competition and managed to grow market share in the period. The spirits category 
showed continued growth with brandy volumes still resilient and whisky recovering in the second half. Exceptional gin volume growth continues at 29,3% 
alongside growth of 43,6% from vodka following the acquisition of the premium Cruz vodka brand during the previous financial year. The wine portfolio 
showed revenue growth of 7,4% due to premium wine still benefiting from trading-up by consumers from mainstream brands, which also recovered in the second 
half of the financial year.

African markets, outside South Africa, delivered revenue growth of 19,5% on sales volumes which were up by 7,0%, largely driven by the inclusion of 
KWA Holdings E.A. Limited (KHEAL) in Kenya which was acquired in April 2017. Focus markets on the continent such as Botswana, Kenya, Zambia and Zimbabwe all 
recorded strong growth. Solid RTD growth came from Hunter's and Kingfisher. In Kenya, growth in the wine category was attributed to double-digit revenues led 
by J.C. Le Roux and Nederburg with spirits led by Kibao, Viceroy and Hunter's Choice. Overall performance was negatively impacted by challenging trading 
conditions in Mozambique, Nigeria and a one-off negative impact from the Group's Tanzania Distilleries Limited (TDL) associate as indicated below. Currency 
devaluations and the slow extraction of cash significantly impacted second-half performance in our Angolan operations. The Africa region contributed 55,1% 
to foreign revenue.

Volumes in international markets beyond Africa grew by 1,8% driven by Europe, Latin America and Asia-Pacific regions, as well as Travel Retail. Revenue increased 
by 5,8% as the increased local investment in the UK was impacted by the effects of a less favourable sales mix. Travel Retail continues to perform well alongside 
volume growth in our spirits portfolio, led by Amarula and sales of single malts. Scottish Leader managed to grow market share in Taiwan in a declining market. 
Our cider and RTDs delivered strong volume growth as a result of increased investment in the category resulting in Bernini delivering a stellar performance with 
volume growth in excess of 50%. Wine volumes remained constant with UK listings increasing to position growth for the future.

Operating costs, which include the costs of newly acquired KHEAL and investment into the Group's shared service centre, rose by 11,6%. Excluding excise duties, 
which increased by 16,4%, other operating costs increased by 9,7%, of which sales and marketing costs rose by 10,0%. We continue with a structured process to 
consolidate and improve the efficiencies of our supply chain and supporting functions throughout the Group. Foreign currency translation losses amounted to 
R51,4 million (2017: R63,3 million).

The Group acquired the remaining 50% shareholding in the joint venture Lusan Holdings Proprietary Limited (Lusan), and a gain of R37,8 million on the Group's 
previously held equity interest is reflected as part of "other gains and losses" in the income statement.

Included in "other gains and losses" in the income statement are impairments of R78,7 million for intangible assets and PPE mainly relating to our Asian operations.

Net finance costs in the previous year include the reversal of a R41,9 million provision for interest payable after reaching a settlement with the South African
Revenue Service following an extended excise duty dispute. Net finance costs, excluding the reversal, increased from R256,5 million to R295,6 million.

Distell's share of equity-accounted earnings decreased by 47,2%. The R29,8 million contribution of the newly acquired 26% investment in Best Global Brands Limited
(BGB) was more than offset by one-off losses and impairments of R85,9 million following a sachet ban and excise duty dispute which impacted the performance of TDL 
and in which Distell has a 35% interest.

EBITDA grew by 20,2%. Normalised EBITDA, which excludes the impact of the impairments, the profit on sale of investments, the one-off losses in TDL, retrenchment
and group restructuring costs, increased by 6,0%. Normalised EBITDA, excluding foreign currency translation movements, increased by 7,4%.

The effective tax rate was 29,7% (2017: 28,4%) as the impairment charges and capital costs are not tax deductible.

Headline earnings, including discontinued operations, decreased by 5,6% to R1,5 billion and headline earnings per share decreased by 5,7% to 668,2 cents. 
Excluding the currency conversion movements, the reversal of the interest and the TDL losses referred to above, headline earnings increased by 5,2%.

INVESTMENT AND FUNDING

Total assets increased by 8,0% to R22,1 billion.

Investment in net working capital declined by 6,2% to R6,6 billion, benefiting from the Bisquit Dubouche et Cie (Bisquit) disposal referred to below. Inventory
decreased by 2,7% to R7,6 billion. Of this, bulk spirits in maturation, planned in accordance with the Group's longer-term view of consumer demand for its brands in
this category, increased 11,0% to R2,9 billion. This is mainly attributable to the increased investment in our Scottish whisky inventory. Investment in bottled stock
and packaging material increased by 9,6%, in line with revenue growth. Trade and other receivables increased by 14,4% following stronger revenue growth over the last
two months of the financial year compared to the corresponding period in the previous year.

Capital expenditure for the period amounted to R1,17 billion (2017: R805,6 million). Of this, R464,7 million was spent on the replacement of assets. A further 
R710,0 million was directed to the expansion of capacity, mainly in relation to the Group's manufacturing facilities for cider and spirits.

In July 2017, the Group acquired 26% of the ordinary shares of BGB for USD54,6 million. The Group has also entered into an agreement to acquire the remaining 74% of
the 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.

Net cash generated from operating activities increased by 21,6% to R2,3 billion. The Group remains in a strong financial position, which is demonstrated by a debt to
debt-plus-equity ratio of 22,5% (2017: 25,2%) and a debt-to-equity ratio of 29,0% (2017: 33,8%) at the end of the reporting period.

DISCONTINUED OPERATIONS

On 31 January 2018 the Group sold its equity interest in Bisquit for a final cash consideration of EUR50,7 million. The financial results of Bisquit have been 
excluded from the continuing operations of the Group and are disclosed separately in the summary financial statements as "discontinued operations". The Group 
realised a gain of R173,5 million on the disposal of Bisquit, which is also reflected as part of "discontinued operations" in the income statement.

GROUP REORGANISATION

As approved at a Distell Group Limited (DGL) scheme meeting on 27 October 2017, the shareholding structure of DGL was simplified in May and June 2018 through
various schemes of arrangement. Previously DGL had a multi-tiered ownership structure, in which Remgro Limited (Remgro) and Capevin Holdings Limited (Capevin) 
owned a material interest via Remgro-Capevin Investments Proprietary Limited (RCI). Remgro and Capevin each held 50% in RCI, and RCI had a 52,8% direct interest 
in DGL. A new entity, Distell Group Holdings Limited (DGHL), effectively acquired RCI's and all other shareholders' direct and indirect interests in DGL in 
exchange for shares directly in DGHL. DGHL was listed on the JSE Limited (JSE) and DGL was delisted.

The restructuring was categorised as a capital reorganisation of an existing group and consequently the financial results of the Group are presented using the values
of the previous holding company.

The collapsed structure increased free float from 19,5% to 37,5% of its shares in order to provide a simpler, single-entry point into Distell as an investment which
aims to increase share liquidity and broader index inclusion over time. The average daily trading volume (ADTV) in DGH from relisting to end June was 236 979,
representing a 140% increase from a YTD ADTV in Distell Group Limited (DST) before the relisting of 98 909.

PROSPECTS

Growth across advanced economies and most emerging markets points to a more favourable global economic outlook, but with mixed political and economic risks.  
Oil rich African economies such as Angola and Nigeria have yet to benefit from higher oil prices but remain key pockets of opportunities for the Group and its 
product portfolio. The acquisitions of our East and West African route-to-market (RTM) platforms affirm our approach in balancing country risk and leveraging 
growth opportunities.

There are still risks facing the domestic economy in the short term, with consumer income and spending under pressure and rising poverty and unemployment levels going
into 2019. The recent volatility of the rand, higher grape prices as a result of the Western Cape drought and water shortages presents additional challenges to the
business in the short to medium term.

The Group looks to defend and grow its market share through an optimised brand portfolio and innovation. Whilst competition has increased in the local cider and RTD
market, Distell will increase investment in the support of its Hunter's brand, which remains the world's second largest cider brand by volume. It will also enhance its
focus on its premium brands in wine and spirits to capture key premiumisation opportunities which exist both domestically and abroad.

Whilst drought in the Western Cape poses a real risk to the supply of grapes and wine in the medium term, the Group has secured sufficient supply for the 
current cycle and invested a total of R22,0 million to waste water treatment and re-use programmes to mitigate against further water supply risks. The current 38,1% 
reduction in water usage as of June 2018 in the Western Cape has been achieved by accelerating the water management programme, through demand reduction management 
and new water-saving initiatives. Certain water-intensive production activities have also been relocated to areas with sufficient water supply.

The Group has started to fully integrate its new African RTM acquisitions as it seeks to build an effective pan-African platform in select markets. BGB will expand
its presence and execute key brand and RTM initiatives on the continent.

Internationally, the Group looks to sustain the gains made in key markets and execute its whisky growth strategy and wine portfolio restructure. It will look to
further grow its premium spirits portfolio whilst building a self-sufficient supply chain. Distell will continue to seek complementary acquisition opportunities 
alongside its disciplined approach to capital allocation.

The Group is making good progress in its two- to three-year programme to create a more agile and efficient business by restructuring its brand portfolio, asset base and
operating model. Distell has a portfolio of strong, diverse and appealing brands with the ability  to trade across the price continuum, taste profiles and mixed gender
occasions to capture growth opportunities in both domestic and foreign markets.

DIRECTORATE

Mr MJ Bowman was appointed as independent non-executive director with effect from 27 October 2017, but was obliged to resign effective from 26 July 2018 due to a
potential conflicting personal investment in a Western Cape based drinks operation.

AUDITORS' REPORT

The summary consolidated financial statements for the year ended 30 June 2018 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 consolidated financial statements were derived.

A copy of the auditor's report on the summary consolidated financial statements and of the auditor's report on the annual consolidated financial statements are
available for inspection at the company's registered office, together with the financial statements identified in the respective auditor's reports.


CASH DIVIDEND DECLARATION

The directors have resolved to declare a gross cash dividend, number 1, of 230,0 cents (2017: 214,0 cents) per share for the year ended 30 June 2018. This represents a
total dividend of 395,0 cents (2017: 379,0 cents) for the year and a dividend cover of 1,9 times (2017: 1,9 times) by normalised headline earnings.

The dividend has been declared from income reserves. The dividend withholding tax, levied at 20%, will amount to 46,0 cents per ordinary share. As a result, ordinary
shareholders who are liable to pay dividends tax will receive a net dividend amount of 184,0 cents per share. Shareholders exempt from paying dividends tax will receive
230,0 cents per share. The issued ordinary share capital as at 23 August 2018 is 222 382 356 (2017: 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, 14 September 2018, and will be paid on Monday, 17
September 2018. The last day to trade cum dividend will be on Tuesday, 11 September 2018, and shares commence trading ex dividend from Wednesday, 12 September 2018.
Share certificates may not be dematerialised or rematerialised between Wednesday, 12 September 2018, and Friday, 14 September 2018, both days inclusive.

BASIS OF PREPARATION, ACCOUNTING POLICY AND COMPARATIVE FIGURES

The summary consolidated annual financial statements are prepared in accordance with the requirements of the JSE Limited Listings Requirements for preliminary reports
and the requirements of the Companies Act applicable to summary financial statements. The Listings Requirements require 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 directors are 
responsible for the preparation of the summary consolidated annual financial statements, prepared under supervision of the Group finance director, LC Verwey CA(SA), 
and the financial information in this summary has been correctly extracted from the underlying annual financial statements.

The accounting policies applied in the preparation of the consolidated financial statements from which the summary consolidated financial statements were derived are
in terms of IFRS and are consistent with the accounting policies applied in the preparation of the previous consolidated annual financial statements. Comparative
financial information has been restated to account for the discontinued operations relating to the Bisquit sale.

The Group has adopted all new and amended accounting pronouncements issued by the International Accounting Standards Board (IASB) that are effective for financial
years commencing 1 July 2017. None of the new or amended accounting pronouncements that are effective for the financial year commencing 1 July 2017 have a material
impact on the consolidated results of the Group.

Signed on behalf of the board

JJ Durand             RM Rushton
Chairman              Group managing director

Stellenbosch
24 August 2018

Directors:            JJ Durand (chairman), PE Beyers, GP Dingaan, DP du Plessis, PR Louw (alternate), MJ Madungandaba, EG Matenge-Sebesho, CA Otto, AC Parker, RM Rushton
                     (Group managing director), CE Sevillano-Barredo, LC Verwey (Group finance director)
Company secretary:    L Malan
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
www.distell.co.za

OUR BRANDS

AMARULA CREAM
Africa’s most awarded cream liqueur is the first and only in the world to use real sun-ripened, organic Marula fruit, harvested from Marula trees that grow 
wild and uncultivated in the subequatorial regions of Africa.

4TH STREET
Voted as the fastest growing wine brand globally – by the International Wine and Spirit Research (IWSR) Top 100 Wine Brands for 2017 – 4th STREET provides 
an easy-drinking, accessible and flavourful range of wines.

BAIN’S
The World’s Best Single Grain Whisky (IWSC 2018). Bain’s Cape Mountain whisky is made from 100% South African yellow maize (corn), distilled and double matured 
at The James Sedgwick Distillery in Wellington, South Africa.

VICEROY
Made to the same high quality standards for over 150 years. Our brandy is matured to perfection in imported Frenchoak barrels so you can enjoy the smooth 
sophistication you’ve come to expect of Viceroy brandy.

NEDERBURG
One of the South Africa’s most distinguished names in wine, Nederburg has an exceptional track record for international and local awards, trailblazing innovations 
and refreshing, contemporary wines that combine rich fruit flavour with superb structure.

HUNTER’S
Hunter’s Refreshes like Nothing on Earth – the number one cider in Africa and second in global rankings. Whether it’s with Hunter’s Dry, the original Hunter’s Gold, 
Hunter’s Extreme or our Hard Lemon and Export variants, we’ve got something to refresh every taste.




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