Summarised Consolidated Annual Financial Statement and Notice to Shareholders 2021

2021 SUMMARY

CONSOLIDATED FINANCIAL STATEMENTS

FEATURES

GROUP REVENUE

26,3%

GROUP REVENUE AND VOLUMES

RECOVERING TO

PRE-COVID-19 LEVELS

• Domestic revenue up 29,4% alongside market share gains across all categories
• Africa revenue (including BLNE) up by 22,9% as route-to-market expands
• Strong and profitable international premium spirits performance continues

EXCISE DUTY

31,8%	• Excise duty contribution up by 31,8% to R8,3 billion
E B I T D A
99,8%		87,3% 1, 2
REPORTED		NORMALISED AND ADJUSTED FOR
		FOREX
HEADLINE EARNINGS
227,3%		302,4% 2
REPORTED		NORMALISED AND ADJUSTED FOR
		FOREX

RETURN ON INVESTED CAPITAL (ROIC)

10bps

ON PRE-COVID-19 LEVELS

Dividend payments remain suspended due to ongoing discussions with Heineken

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) retrenchment, legal disputes and merger and acquisition related costs, and (c) the expected credit loss on Zimbabwe savings bonds in the prior year.
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 13 to the summary consolidated financial statements.

("Distell" or "the Group" or "the Company")

CONTENTS

COMMENTARY	02
DIRECTORS' RESPONSIBILITIES FOR FINANCIAL REPORTING	07
CERTIFICATE BY THE COMPANY SECRETARY	07
SUMMARY CONSOLIDATED FINANCIAL STATEMENTS	08
Summary consolidated statement of financial position	08
Summary consolidated income statement	09
Summary consolidated statement of comprehensive income	10
Summary consolidated statement of changes in equity	11
Summary consolidated statement of cash flows	12
Notes to the summary consolidated financial statements	13
NOTICETO SHAREHOLDERS OF AN ANNUAL GENERAL MEETING	23
Dates of importance to shareholders	IBC
Administration	IBC
Proxy Form - inserted

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SUMMARY

CONSOLIDATED

FINANCIAL STATEMENTS

COMMENTARY

RESULTS IN CONTEXT

The financial results for the year ended 30 June 2021 exhibit a resilient performance of the Group compared to the prior year, when extreme measures were taken worldwide to stem the spread of COVID-19. To place the current-year results in context we include an overview of the current-year performance compared to those of the 2020 and 2019 financial years.

			% Change 2021 vs. 2020		% Change 2021 vs. 2019
	Group			Africa				Africa
	result		South	(incl.	Inter-		South	(incl.	Inter-
	R billion	Group	Africa	BLNE)	national	Group	Africa	BLNE)	national
Volumes (million
litres)	700,7	+26,3%	+28,7%	+30,7%	-10,8%	-2,1%	-3,5%	+11,5%	-22,5%
Revenue	R28,3	+26,3%	+29,4%	+22,9%	+10,0%	+7,9%	+5,8%	+19,2%	+0,3%
Reported EBITDA	R3,8	+99,8%				+53,6%
Normalised
EBITDA
adjusted for forex	R3,8	+87,3%				+5,9%
Reported
headline earnings
(HLE)	R1,7	+227,3%				+18,0%
Normalised HLE	R1,8	+166,2%				-2,3%
Normalised HLE
adjusted
for forex	R1,9	+302,4%				+3,2%

OPERATING PERFORMANCE

Group revenue increased by 26,3% to R28,3 billion on 26,3% higher volumes. Revenue excluding excise duty was up by 24,2%.

Domestic revenues increased by 29,4%, with volumes up by 28,7%. This was achieved despite 20% of trading days being lost during the reporting period due to the second and third sale of alcohol bans introduced by the South African government. Our diverse product portfolio, with well-known brands, recent innovations and strong route-to- market in South Africa contributed to market share gains across all three categories. Both ciders and ready-to-drink beverages (RTDs) and spirits surpassed pre-COVID-19 revenue levels. Our digital Business-to-Business sales and e-commerce business showed excellent adoption rates and robust growth as customers and consumers adapted purchasing preferences. All three categories performed well as consumption preferences for trusted brands across categories played to Distell's diverse portfolio strength. The Group's premium cider brand, Savanna, continued its momentum, with phenomenal revenue and market share growth that saw it pulling level with well-known premium beers. Key gin and vodka brands performed well in the spirits category. The wine category benefited from growth in mainstream wine while accessible premium brands started to recover, driven by in-home consumption trends.

In African markets, outside South Africa, revenue increased by 22,9% on 30,7% higher sales volumes, well above pre-COVID-19 levels. Volumes in BLNE countries (Botswana, Lesotho, Namibia and Eswatini), also impacted

by various lockdowns, grew by 22,2%. Focus markets on the continent, outside the Southern African Customs Union, grew revenue by 22,4%. Our operations in Nigeria, Ghana, Mozambique and Zambia continued to perform well. The team surpassed its target of growing its overall Africa customer base to 48 000. Excellent growth was achieved across all three categories, driven by ciders and RTDs growing revenue by 65,0%, alongside key spirits and mainstream wine brands. The Africa region contributed 63,6% to foreign revenue, with its contribution to Group revenue comprising 17,2% in the period.

02.	2 0 2 1 S U M M A R Y C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

Revenue in international markets outside Africa grew by 10,0% alongside an expected volume decline of 10,8%, attributable to the cessation of sales of non-core wine brands, bulk whisky and the exit from the RTD business. The earnings before interest and tax (EBIT) margin more than doubled. Strong international premium spirits growth continued, led by single malts in all major markets. Scottish Leader grew strongly in Taiwan with market share gains. Amarula grew strongly in most key markets, with gains in Germany reaching a key milestone of 1 million litres in market sales as a result of innovation and a step-up in consumer marketing. The export portfolio put in a resilient performance despite the continued pressure on the global travel retail sector, and out of stock positions as a result of supply chain disruptions due to the pandemic. We have focused our existing wine position to pursue profitable business opportunities while continuing to build our important larger wine brands in selected markets. Despite declines in wine volumes, margins have increased. The business is successfully leveraging the consumer shift to online channels where revenue more than doubled compared to the previous period.

While operating costs increased by 21,2%, this compares to revenue growth of 26,3%. Overall sales and marketing costs declined by 8,5%, as we had to adjust our marketing activities following the introduction of restrictions on gatherings, travel and trading to prevent the spread of COVID-19, and on the sale of our products during various lockdowns. The overall provision for expected credit losses on trade and other receivables increased by 22,0% (2021: R211,9 million, 2020: R173,7 million) as customers across the various distribution channels remain financially constrained because of restrictions on trade, sale of alcohol bans and the general weak economic conditions. The Group, however, decreased its provision for obsolete and slow-moving inventory by 44,9% to R115,1 million. While administration and other costs increased by R318,2 million to R1,3 billion, this was solely due to a R312,1 million (2020: R19,8 million) short-term incentive (STI) bonus payment for all employees as the Group achieved its STI targets aligned to key revenue, cash generation and sustainable development key performance indicators (KPIs) to enable the business to recover.

Other gains and losses reflected a gain of R259,4 million (2020: R209,4 million loss). The gain in the current year included a profit of R180,8 million on the sale of the premium wine farms Alto and Plaisir de Merle. The impairment of R58,7 million of our investment in the TD Spirits LLC (TD Spirits) joint venture in the US made in the prior year was reversed as the Company was able to generate a profit this year and our full investment was refunded prior to this joint venture being terminated.

Foreign currency translation losses amounted to R226,8 million (2020: R266,3 million gains) as the rand strengthened against the major currencies in which the Group trades.

A concerted effort to substantially reduce the Group's interest-bearing debt paid off, with net finance costs declining 23,6% to R291,1 million.

Distell's share of equity-accounted earnings increased by 17% to R113,8 million, driven by an improvement in Tanzania Distilleries Limited's performance.

Reported EBITDA increased by 99,8% to R3,8 billion. Normalised EBITDA, which mainly excludes the items referred to in note 13 to the summary consolidated financial statements, increased by 56,9%. Normalised EBITDA, excluding foreign currency translation movements, increased by 87,3%.

The effective tax rate declined from 43,6% to 25,1%. This was largely attributable to the R202,6 million impairment of our investments in Best Global Brands Limited and TD Spirits in the prior year, which was not tax deductible, and non-taxable income relating to the sale of the premium wine assets and the reversal of the TD Spirits impairment in the current year.

Headline earnings and headline earnings per share increased by 227,3% to R1,7 billion and by 227,1% to 769,6 cents respectively. Excluding the currency conversion movements and the items referred to in note 13 to the summary consolidated financial statements, headline earnings increased by 302,4%.

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