David Nurek

1
David Nurek

• Chairman

2
Distell is

• A global company of South African essence
• Innovative, with a clear focus on key brands
• Lean, flexible and responsive to consumer needs
• A people company where every stakeholder is
  important

3
Corporate governance

• Board committed to principles of good governance
• Highest standards of integrity, fairness and
  social responsibility
• Formal critical evaluation was conducted of our
  compliance with King II and JSE Securities
  Exchange requirements

4
Characteristics of South African macro
environment in 2001/2002

• Softening Rand
• Negative impact
• Positive impact
• Increased integration with the world economy
• Volatility

5
US/Rand exchange rate for the year to June 2002
Average per month
6
CPI, PPI and food pricesindexed to JJ 1999
Source AC Nielsens, Distell
7
Effects in 2002

• Windfall income from exports
• Maintained prices in foreign currency
• Raw materials scarcity - imports to sustain
  markets
• Increased costs of inputs
• Packaging
• International structures marketing

Imperative to increase exports to reduce risk
8
Final household disposable income
Source Reserve Bank, AC Nielsens
9
Non - durable goodsFinal household consumption
expenditure (1995 prices)
Source Reserve Bank, AC Nielsens
10
Local market trends
Source Nielsens 12 months to JJ
11
Financial highlights

• Merger integration process completed
• Increase of 6,7 in sales revenue
• 24,3 growth in trading income
• Headline earnings up 33,6
• Total dividends increased 32,1

In an environment of increasing domestic
volatility it is essential to be an effective
international player
12
Etienne Heyns

• Director - International Operations

13
Strategic approach

• Wines

• Africa

• Amarula

14
Amarula strategy

• Aspirations
• To become the preferred cream liqueur in the
  world
• Strategy
• Premium positioning with strong support
• Premium pricing (compared to Baileys)
• Big distribution channels
• Strong marketing support
• Financial commitment
• Strong distribution partners
• Brown Forman (USA)
• First Drinks (UK)
• Peter Mielzynski Agencies (Canada)
• Aurora (Brazil)
• Underberg (Germany)
• Marie Brizard (Spain)

15
Amarula - achievements prospects

• Strong growth USA, Canada
• Slower yet good growth Germany, Spain
• Consolidate Brazilian triangle
• UK - turnaround plans in place

Amarula already biggest contributor to marginal
income of Distell - set to grow
16
Africa - strategy

• BLNS - use established structures
• Substantial direct investment in key markets

• Limited structures in markets with good potential
  but risk elements

• Develop efficient distribution for further markets

17
Africa - achievements prospects

• Other than BLNS, performance disappointing in
  2002
• Plan
• Tailored marketing approach
• Flexible distribution structure
• Aggressive sales approach
• Adaptable and tailored production configuration
• Optimal share investment
• Expected return - 3 fold increase

18
Wine strategy
19
Wines - achievements

• New organisation - fully staffed (including UK
  key account manager, value chain analyst)
• Customer segmentation completed
• International logistics in place
• New APO forecasting in place
• UK strategy in place - new listings
• USA pilot project
• Germany, Norway - new listings
• Major new product developments

20
World class service

• Distell must deliver
• very large volumes
• consistent quality
• at target cost
• on short notice
• always on time

21
World class service
22
Jan Scannell

• Managing Director

23
New way of working - DMOS
24
Our employees

• Loyal - 45 of staff over 10 years service
• Average age of 38
• Recruitment of new talent

25
Employment equity

• Plan in place
• Management measured on attainment of goals

26
Corporate social investment

• Must align with corporate objectives
• Arts Culture
• Distell Foundation, Oude Libertas Amphitheatre,
  Arts festivals
• Environment
• waste reduction, effluent, recycling, IPW
• Transformation
• Papkuilsfontein, Phalaborwa, Mandela
• Health
• ARA, Advertising code
• Combating crime

27
The merger

• Forecast merger savings will yield 36 on
  investment of R484 m - 96 has been realised to
  date
• With the merger embedded, we will now build our
  brands

28
We will focus on 3 themes in 2002/03
29
Risks

• Competition authorities
• Gordons Gin
• Liquor Act
• Advertising
• Illegal products

30
Progress in respect of 5 year objectives
International revenue as of turnover
Target 2003 - 20
31
Progress in respect of 5 year objectives Return
on equity
Target 2003 - 16.5
32
Thank you

• Questions?