Distell produces and markets fine wines, spirits and flavoured alcoholic beverages in South Africa and internationally.

Distell Group Limited (Distell)

Distell has a June year-end and therefore its results for the twelve months ended 30 June 2015 have been included in Remgro’s results for the year under review. Distell’s contribution to Remgro’s headline earnings for the year under review, which includes Remgro’s indirect interest in Distell held through Capevin Holdings Limited, decreased by 10% to R445 million (2014: R495 million).

Distell reported for its year ended 30 June 2015 that turnover grew by 10% to R19 589 million (2014: R17 740 million) on a sales volume increase of 5.7%. Sales volume in the South African market increased by 6.7%, while revenue increased by 11.8%. International sales volumes, including Africa, decreased by 5.5% while revenue from this segment increased by 3.8%, benefiting from a weaker rand. Sub-Saharan African markets, excluding South Africa, contributed 51.4% to international revenue and continued to deliver strong results as volumes grew across all categories, despite the slower economic growth in the region.

Distell’s reported headline earnings for its year ended 30 June 2015 decreased by 5.2% to R1 435 million (2014: R1 514 million). The decrease is mainly attributable to the accounting for a remeasurement of R159 million of the contingent purchase consideration payable on the acquisition of Burn Stewart Distillers Limited during the previous year. Normalised headline earnings, which exclude the impact of the aforementioned once-off item during the previous year was 6.5% higher at R1 443 million (2014: R1 355 million) as a result of the growth in revenue and efficiency improvement across the business.

Investments have been made to support the corporate strategy, improve pricing relative to key competitors and support the group’s capability to grow in Africa and select international markets in order to enhance the competitiveness of the group for delivery of sustainable revenue and profit growth over the longer term.

RCL Foods is a holding company with interests in diversified food businesses, which include Rainbow Chicken, Foodcorp, TSB Sugar and Zam Chick, as well as integrated logistics operations through Vector Logistics.

RCL FOODS Limited (RCL FOODS)

For the year ended 30 June 2015, the reported headline earnings of RCL Foods amounted to R972 million (2014: headline loss of R303 million). In the previous year, the results of RCL Foods were materially impacted by the following once-off items:

• Material foreign exchange losses on the early redemption of Foodcorp’s euro-denominated debt;
• Non-recurring BEE costs relating to its BEE restructuring; and
• Transaction costs relating to the various corporate actions.

Remgro’s share of the headline earnings of RCL Foods amounted to R755 million (2014: loss of R239 million) for the year under review.

The increase of 134% in pro forma comparable headline earnings of RCL Foods from R415 million to R972 million is mainly as a result of better operational performances from Rainbow and the inclusion of Tsb Sugar’s results for the full 12 months.

RCL Foods’ total revenue for the year under review increased by 20% to R23 428 million (2014: R19 501 million) mainly due to the inclusion of a full 12 months of revenue from TSB amounting to R6 134 million (2014: R2 482 million for the six months to 30 June 2014). Foodcorp’s contribution to revenue decreased slightly to R7 520 million (2014: R7 549 million) and the revenue of the chicken business (Rainbow) increased by 4% to R9 078 million (2014: R8 733 million). TSB’s contribution to operating profit before depreciation and amortisation (EBITDA) increased to R505 million (2014: R137 million for the six months since acquisition) while Rainbow and Foodcorp, contributed R774 million (2014: R204 million) and R743 million (2014: R721 million) respectively. The increase in EBITDA from Rainbow is largely attributable to a better balanced market of supply and demand due to Rainbow’s reduction in exposure to commodity lines and closure of less efficient local suppliers, despite im­port volumes remaining at similar levels to that of previous years. EBITDA from Vector, the logistics operations of RCL Foods, increased by 4% to R206 million (2014: R199 million). This reflects strong operating cash generation by all business units.

RCL Foods continues to explore food sector opportunities in strategic growth markets in South Africa and sub-Saharan Africa to build a diversified food business of scale with compelling brands that meet consumer needs.