DISTELL 04 DISTELL. Solid returns despite difficult trading conditions. Embedding a performance culture ANNUAL REPORT

Transcription

1 DISTELL 04 ANNUAL REPORT Looking ahead Reviewing operations Financial highlights Solid returns despite difficult trading conditions Embedding a performance culture How we ve measured up Analysis of performance 4 Duty-bound Focal point for governance 28 DISTELL

2 Inside DISTELL 04 INSIDE DISTELL 04 CONTENTS FEATURES SOCIAL 2 The numbers story Financial highlights 4 How we ve measured up Objectives and performance 6 Our group Structure of the group 7 Our global presence Distell around the world 8 Board matters Composition of the board and executive management 10 Our brands at a glance 12 Seven-year financial review for the years ended 30 June 15 Analysis of shareholders REVIEWS 16 A challenging year Chairman s statement 20 Performance & growth Managing director s report 28 Duty-bound Corporate governance report 35 Taking responsibility Corporate responsibility report 42 Our people Embedding a performance culture 44 The Distell way FINANCIALS 45 Annual financial statements 86 Notice to shareholders, voting forms and dates of importance to shareholders we introduce our DISTELL INSPIRERS OUR MODELS FOR 2004 Employees across the company were asked to nominate those of their colleagues whose example sets the benchmark for others to emulate. Achievement is after all a team effort. The eight people featured in this report were selected as true Distell inspirers. FRONT COVER PHOTOGRAPH: ADRIAAN OOSTHUIZEN INSPIRER: BRENDA DLAMINI SHOT ON LOCATION AT BOHEMIA, STELLENBOSCH PHOTOGRAPHER: ADRIAAN OOSTHUIZEN INSPIRER: SARÉ KOTZE AND FRIEND MARLENE SHOT ON LOCATION AT PLAISIR DE MERLE

3 1 FEATURES inspiring each Firmly focused on the future while building on the past, Distell people strive to do what others only dream. other

4 2 FEATURES ANNUAL HIGHLIGHTS the numbers story 10,7% INCREASE IN TOTAL SALES REVENUE Solid returns despite difficult trading conditions INTERNATIONAL SALES VOLUMES UP 30,2% 14,4% HEADLINE EARNINGS UP GROWTH 41,0% IN TRADING INCOME What we do Our core business We produce and market fine wines, spirits and ready-to-drink alcoholic beverages By unleashing our combined energy and resources, we will Delight customers and consumers everywhere Develop rewarding careers for our employees Deliver excellent returns for our shareholders Achieve significant involvement in our communities Be innovative in all we do Our values We believe in A sense of ownership An entrepreneurial spirit Superior performance A customer service culture Respect and dignity for all

5 Financial results (R 000) % change Turnover ,7 Trading income ,4 Headline earnings ,0 Total assets ,3 Performance per share (cents) % change Headline earnings 183,3 130,1 40,9 Dividends 97,0 75,0 29,3 Net asset value 1 309, ,3 8,4 Cash flow from operating activities 257,3 55,9 359,9 Weighted average share price 1 418, ,0 10,2 3 FEATURES ANNUAL HIGHLIGHTS Financial statistics Return on equity 13,9 10,8 Change in product mix (sales volumes) Domestic markets International -3,4% -0,5% +33,7% +10,7% -0,2% Wines Spirits RTDs Wines Spirits Africa Total +53,6% +11,1% +2,0% +0,3% -3,8% -0,2% Wines Spirits RTDs Wines Spirits RTDs Wines = Natural and sparkling wines RTDs = Ready-to-drink

6 4 FEATURES OBJECTIVES how we ve measured up Objectives Strategic priorities We are committed to becoming a credible global alcoholic beverages company We will establish and grow Amarula as a global brand We will build on our position as South Africa s leading wine exporter We will capture our full potential in the domestic market We will at all times behave as a responsible corporate citizen We will deliver a return on equity in excess of 23% Key objectives Secure international listings Grow African markets Stabilise market share loss in RTDs Drive domestic premium spirits and wine growth Turnaround ultra premium wines Build a reliable and aligned supply chain Drive down waste Establish a high-performance culture Entrench black economic empowerment within the company Objective achieved and receiving ongoing attention Working towards objective Achievements Van Ryn 12-year-old brandy awarded trophy as best brandy in the world at International Wine and Spirit Competition (IWSC), London Launched Three Ships 10-year-old, the first single malt whisky ever in South Africa Gold medals at IWSC and International Wine Challenge (IWC) Domestic market share gains in brandy category, despite loss of two principal brands Nine double gold and nine gold medals at Veritas International Food Standards (IFS) higher-level certification at Adam Tas winery HACCP (Hazard Analysis and Critical Control Points, a UK food safety standard) compliance at Nederburg British Retail Certification at JC le Roux ISO 9001:2000 certification of all 18 distribution centres within the RSA, as well as our tourist facilities at Bergkelder, Durbanville Hills, JC le Roux, Nederburg, Plaisir de Merle and Van Ryn ISO compliance at Durbanville Hills Gold medal at the Logistics of the Year Awards Finalised merger case before Competition authorities Total of employees signed performance contracts Old Brown Sherry, launched in 1916, achieved record-breaking volumes of 12 million litres

7 Performance Return on equity 10,2% 10,8% 13,9% 23,0% Operating margin 8,4% 10,0% 10,4% 20,0% 5 FEATURES PERFORMANCE Target Target Dividend per share (cents) Headline earnings per share (cents) 70,0 75,0 97,0 2 times cover 110,4 130,1 183, Target Cash flow per share (cents) Gearing 112,6 55,9 257,3 60% 55% 38%

8 Our group 6 FEATURES GROUP STRUCTURE Remgro-KWV Investments Limited 60% Other Beverage Interests (Proprietary) Limited ( SABMiller ) 30% DISTELL Distell Group Limited Listed on the JSE Securities Exchange South Africa Other investors 10% South African Distilleries and Wines (SA) Limited (100%) Subsidiaries Joint ventures and associates Manufacturers and distributors of branded alcoholic beverages Distell Limited (100%) Stellenbosch Farmers Winery Limited (100%) Manufacturers of wine Nederburg Wines (Proprietary) Limited (100%) Durbanville Hills Wines (Proprietary) Limited (66%) Farming Nederburg Wine Farms Limited (100%) Wholesale distributors of branded alcoholic and other beverages Distell Namibia Limited (100%) Expo Liquor Limited (100%) Swaziland Liquor Distributors Limited (100%) Manufacturer and distributor of maturation vats Tonnellerie Radoux (SA) (Proprietary) Limited (50%) Manufacturer and distributor of branded alcoholic and other beverages (associate) Tanzania Distilleries Limited (35%) Manufacturers of wine Lusan Holdings (Proprietary) Limited (50%) Papkuilsfontein (Proprietary) Limited (49%) Sorter and washer of second-hand bottles Ecowash (Proprietary) Limited (100%)

9 North America Trend Amarula Wine Volume -1% +37% Value -22% +7% % of total % of total Amarula exports wine exports 24% 13% our global presence Europe Trend Amarula Wine Volume +7% +31% Value -12% +9% % of total % of total Amarula exports wine exports 29% 65% Asia Pacific Trend Amarula Wine Volume -8% +31% Value -47% +6% % of total % of total Amarula exports wine exports 3% 4% 7 FEATURES GLOBAL PRESENCE Latin America Trend Amarula Wine Volume +47% +436% Value +4% +303% Africa Trend Amarula Wine Volume +42% +36% Value +57% +34% % of total % of total Amarula exports wine exports 18% 16% % of total % of total Amarula exports wine exports 18% 1% Total exports Trend Amarula Wine Volume +17% +33% Value -4% +12% % of total export volumes Amarula Wine 11% 81% Exports as Exports as % of total % of total sales volumes sales values 18% 18% A growing international profile Main offices in New York, São Paulo, London and Singapore Branch offices in Sydney, Windhoek and Nairobi Full-time personnel in Miami, Los Angeles, Toronto, Lima, Buenos Aires, Frankfurt, Luanda and Maputo Key account management capabilities established Nine focus markets for wines USA, Canada, UK, Ireland, Belgium, the Netherlands, Germany, Denmark and Sweden Six focus markets for Amarula USA, Canada, Brazilian Triangle, UK, Germany and Spain Four focus cluster markets in Africa Angola, South East (Zimbabwe, Mozambique), East (Kenya, Tanzania) and West (Nigeria) Amarula, our flagship brand, distributed in 87 countries Five global drive wine brands Nederburg, Two Oceans, Fleur du Cap, Durbanville Hills and Drostdy-Hof Specialist marketers for Cape Legends (boutique wines) appointed

10 8 FEATURES BOARD board matters The board is the focal point for the group s execution of corporate governance. This body is ultimately accountable and responsible for the performance, affairs and behaviour of Distell, formalised in a charter for the board and its committees. Board of directors Duimpie Bayly* Director of Duimpie Bayly & Associates, consultant and adviser to the wine industry. Attended 6 out of 6 board meetings. Peter Bester* Retired as executive chairman of Cadbury Schweppes (SA) Ltd in He is currently director of ABI, Anglovaal Industries, Suidwes Beleggings and National Brands. Appointed 28 April Attended 2 out of 2 board meetings. Piet Beyers Director of Remgro, Richemont, VenFin and Unilever- BestfoodsRobertsons. Attended 5 out of 6 board meetings. Merwe Botha # Financial director Appointed 8 December Attended 4 out of 4 board meetings. Joe Madungandaba* Chief executive officer of Community Investment Holdings. Chairman of Marine Data Systems and deputy chairperson of Transtel Audit Committee, executive director of Jasco Electronic Holdings Ltd and nonexecutive director of Air Liquide Healthcare. Attended 5 out of 6 meetings. David Nurek* Regional chairman of Investec Western Cape, deputy chairman of Foschini, and also a director of New Clicks Holdings, Pick n Pay, Aspen Pharmaceuticals and Trencor. Attended 4 out of 6 board meetings; 4 out of 4 audit committee meetings; and 5 out of 5 remuneration committee meetings. Daan Prins* Business consultant, previously financial director of Rothmans International. Attended 6 out of 6 board meetings; and 4 out of 4 audit committee meetings. Johan Carinus* Wine farmer, also a director of Stellenbosch Vineyards and Het Jan Marais Fund. Attended 6 out of 6 board meetings. Smartie Genade # Operations director Attended 6 out of 6 board meetings. Jakes Gerwel* Served as director-general in the Office of former President Nelson Mandela. Presently director of Naspers, Old Mutual, Goldfields, and chairman of Brimstone, Africon Engineering and Educor. Also the chancellor of Rhodes University and chairman of the board of trustees of the Nelson Mandela Foundation. Appointed 28 April Attended 1 out of 2 board meetings. Dr Edwin de la H Hertzog Chairman of Medi-Clinic Corporation and also a director of Remgro,Total (SA) and Trans Hex Group. Attended 5 out of 6 board meetings. Jan Scannell # Managing director Attended 6 out of 6 board meetings. Peter Swartz* Proprietor of Swartz Properties (Pty) Ltd and also a director of Absa, Ellerine, New Clicks, Sanlam and Sunwest International. Attended 6 out of 6 board meetings; and 5 out of 5 remuneration committee meetings. Thys Visser Deputy chairman and chief executive officer of Remgro and also a director of Rainbow Chicken and Nampak. Attended 5 out of 6 board meetings; 4 out of 4 audit committee meetings; and 5 out of 5 remuneration committee meetings. * Independent # Executive

11 Executive management Jan Scannell (53) Managing director BCom, LLB Jan joined the Distillers Corporation in He was appointed as director in 1988, and as managing director in In December 2000, he was appointed as managing director of Distell. Jan must ensure that the company delivers on its objectives, and is responsible for building a high-performance culture. Merwe Botha (51) Financial director BCom Hons (Taxation), BCompt Hons, CA(SA) Merwe joined the Distillers Corporation in He was appointed financial director in 1997 and to his present position at Distell in December Merwe is responsible for financial planning and control, information technology, statutory reporting and internal audit. Stoffel Cronjé (50) Company secretary and human resource director MA Stoffel joined the Distillers Corporation in He was appointed group secretary and human resource director in 1990 and to his present position at Distell in December Stoffel performs all statutory company secretarial functions. He also oversees the human resources division. Smartie Genade (53) Operations director BCom (Hons), MBA Smartie joined Stellenbosch Farmers Winery (SFW) in He was appointed director in 1988, managing director in 2000 and to his present position at Distell in December Smartie oversees the operations of the group, including packaging, distribution, technical services, procurement and supply chain management. Hennie Heÿl (58) Primary production director MSc Agric Hennie joined the Distillers Corporation in He was appointed technical director in 1988, production director in 1997 and to his present position at Distell in December Hennie is responsible for our farms; grape, wine, brandy and other raw material procurement; distillation, winemaking and blending. Etienne Heyns (49) International operations director BCom (Hons), MBA Etienne joined Distell as international operations director in May He has over 20 years of experience in international marketing. Etienne is responsible for growing our international revenue by providing superior service to existing customers and obtaining new listings. Gert Loubser (56) Quality management and research director MSc, PhD Gert joined SFW in He was appointed research and development director in 1994 and to his present position at Distell in December Gert must ensure that total quality management is implemented throughout the group and that ongoing research leads to new products and processes. Malcolm Searle (44) Marketing director BCom (Hons) Malcolm joined Distell as marketing director in January He has almost 20 years experience in the FMCG business, and has worked as marketing executive in several countries across the globe. Malcolm is responsible for building strong brand portfolios on market strategies that leverage consumer insights and drive innovation. André Steyn (54) Corporate affairs director BCom (Hons), LLB André joined SFW in He was appointed human resources, industry and corporate affairs director in 1990 and to his present position at Distell in December André is responsible for managing the corporate reputation, internal communication and new business opportunities. Tim Tarr (46) Sales director Tim joined the Distillers Corporation in He was appointed national sales director in 1995 and to his present position at Distell in December 2000.Tim must ensure that we retain and improve our market leadership in South Africa, Botswana, Lesotho, Namibia and Swaziland. He oversees all our sales forces. Valerio Toros (41) Business process improvement director BEng (Mech), MBA Valerio joined the Distillers Corporation in 1991 as project engineer. After overseeing the SFW/Distillers merger implementation from 2000 to 2001, he became the group manager of business process improvement (BPI). He was appointed as BPI director at the end of Valerio is responsible for the Distell Management Operating System (DMOS), and for major projects and initiatives to improve company performance. 9 FEATURES BOARD

12 10 FEATURES OUR BRANDS AT A GLANCE Domestic (From left) Chateau Libertas Cellar Cask Graça Grünberger JC le Roux Paarl Perlé Sedgwick s Old Brown Sherry Zonnebloem Our brands at a glance Global (From left) Nederburg Two Oceans Durbanville Hills Drostdy-Hof Fleur du Cap Obikwa Oracle Cape legends (From left) Alto Hill & Dale Le Bonheur Neethlingshof Plaisir de Merle Stellenzicht Tukulu Uitkyk Wines

13 Spirits 11 (Clockwise from left) FEATURES OUR BRANDS AT A GLANCE Amarula Klipdrift Klipdrift Premium Klipdrift Gold Flight of the Fish Eagle Mellow-wood Nederburg Brandy Van Ryn range V.R Viceroy Richelieu Oude Meester Old Buck Mainstay Three Ships Ready-todrink (RTDs) (From left) Savanna Hunters Esprit Klipdrift & Cola

14 Seven-year financial review for the years ended 30 June 12 Seven-year compound growth % p.a. Pro forma Pro forma Pro forma FEATURES SEVEN-YEAR FINANCIAL REVIEW Balance sheets (R 000) ASSETS Non-current assets Property, plant and equipment Biological assets Investments and loans Intangible assets Deferred taxation Total non-current assets Current assets Inventories Trade and other receivables Short-term investments Taxation prepaid Cash and cash equivalents Total current assets Total assets 11, Equity and liabilities Total shareholders equity Non-current liabilities Non-current interest-bearing liabilities Interest-free liabilities Deferred taxation Total non-current liabilities Current liabilities Payables and provisions Current interest-bearing liabilities Short-term portion of non-current liabilities Taxation Shareholders for dividends Total current liabilities Total equity and liabilities Note: The pro forma figures comprise the combined amounts of Distillers Corporation (SA) Limited and Stellenbosch Farmers Winery Group Limited.

15 Seven-year compound growth % p.a. Pro forma Pro forma Pro forma 13 Income statements (R 000) Sales revenue 4, Operating expenses ( ) ( ) ( ) ( ) ( ) ( ) ( ) Trading income 3, Dividend income Financing costs ( ) ( ) ( ) ( ) ( ) ( ) (49 312) Foreign currency differences (24 891) (66 767) Income from associates (154) 873 Profit before exceptional items and taxation 0, Exceptional items (73 175) ( ) Profit before taxation Taxation ( ) (86 277) (96 575) (10 862) (97 629) (96 065) ( ) Minority interest (390) (315) (266) (283) (266) (1 312) (1 820) Net profit attributable to ordinary shareholders 2, FEATURES SEVEN-YEAR FINANCIAL REVIEW Cash flow statements (R 000) Cash generated from operations 17, Dividend income Net financing costs ( ) ( ) ( ) ( ) ( ) ( ) (47 171) Taxation paid ( ) (91 015) (71 292) (50 600) (83 831) ( ) ( ) Dividends paid ( ) ( ) ( ) ( ) ( ) ( ) ( ) Cash retained from normal operating activities (42 228) (40 667) (6 616) Exceptional items (73 175) ( ) Cash retained from operating activities (37 266) ( 3 995) Cash outflow from investment activities (19 265) ( ) ( ) ( ) ( ) ( ) Ordinary shares issued Treasury shares purchased (1 480) Minority interest 70 (315) (266) (270) 202 Decrease in interestbearing liabilities (984) (5 458) Cash inflow from financing activities (5 458) Decrease in net short-term borrowings ( ) (64 649) (98 446) (12 224)

16 Seven-year financial review for the years ended 30 June 14 Seven-year compound growth % p.a. Pro forma Pro forma Pro forma FEATURES SEVEN-YEAR FINANCIAL REVIEW Performance per share (cents) Earnings attributable earnings basis 2,3 184,3 159,8 120,9 58,7 136,4 158,9 144,5 headline basis 3,3 183,3 130,1 110,4 106,1 116,5 123,3 139,5 cash equivalent basis 2,2 219,1 162,6 143,5 103,6 171,5 179,1 183,6 Dividends 5,2 97,0 75,0 70,0 53,0 62,3 60,1 69,4 Cash flow 28,9 257,3 55,9 112,6 133,9 112,5 81,5 67,4 Net asset value 8, , , , , ,0 909,1 807,7 Liquidity and solvency Financial gearing ratio 0,38 0,55 0,60 0,55 0,58 0,63 0,42 Total liabilities on total equity Avg 1,0 0,88 1,00 1,05 0,94 0,95 1,00 0,85 Interest-free liabilities on total assets 0,21 0,17 0,16 0,15 0,14 0,16 0,21 Dividend cover (times) 1,9 1,7 1,6 2,0 1,9 2,0 2,0 Current ratio 2,10 1,71 1,71 2,13 2,24 2,33 2,33 Acid test ratio 0,51 0,56 0,64 0,63 0,60 0,59 0,59 Returns (%) Trading income on turnover 10,4 10,0 8,4 7,2 8,5 9,0 10,2 Pre-tax return on equity Avg 18,2 18,9 16,9 15,7 6,2 18,6 23,0 27,9 Effective tax rate 25,7 21,6 29,0 8,6 26,8 23,5 35,5 Return on equity Avg 12,5 13,9 10,8 10,2 10,2 11,6 13,6 17,4 Attributable earnings on total assets 7,5 6,6 5,4 2,9 7,0 8,7 9,7 Attributable earnings on turnover 6,3 6,0 4,8 2,5 5,8 7,2 6,3 Dividend yield 5,7 5,8 6,9 6,7 7,7 12,7 5,5 Productivity Cash value added (R million) 7, , , , , , , ,3 Net asset turn (times) 2,2 2,2 2,3 2,3 2,4 2,4 2,8 Net assets per employee (R 000) 16,2 614,7 544,3 468,6 401,7 333,9 290,3 236,5 Turnover per employee (R 000) 11, , , ,1 905,5 785,4 708,1 667,4 Number of employees

17 Analysis of shareholders at 30 June 2004 Number of % of Number of % of issued Ordinary shares holders holders shares shares 15 Distribution of shareholders Public shareholders , ,80 Non-public shareholders Major beneficial shareholders 2 0, ,64 Directors, including those of subsidiaries, and their associates 30 0, ,46 The Distell Group Share Trust 1 0, , , ,00 Number of shares in issue Total number of shares in issue Shares purchased by The Distell Group Share Trust and accounted for as treasury shares ( ) FEATURES ANALYSIS OF SHAREHOLDERS Weighted number of shares Major beneficial shareholders The following shareholders have a holding of greater than 5% of the issued shares of the company: Number of % of shares total Remgro-KWV Investments Limited ,76 Other Beverage Interests (Proprietary) Limited ( SABMiller ) ,88 JSE Securities Exchange South Africa Price per share (cents) highest during the year lowest during the year closing at year-end weighted average Price earnings ratio 8,1 7,5 11,2 12,4 6,0 6,0 5,6 JSE Actuaries price index at year-end (1997: 100 cents) Distell Group Limited Closing price/net asset value per share 1,1 1,0 1,2 0,7 1,2 1,3 1,2 Weighted average number of shares in issue ( 000) Number of shares traded ( 000) Shares traded/shares in issue (%) 1,8 1,4 3,2 1,9 1,6 3,3 2,0 Value of shares traded (R 000) Number of transactions Number of shareholders Market capitalisation (R million) Net asset value/market capitalisation 0,88 1,01 0,81 1,43 0,86 0,79 0,82 Information for the period 1998 to 2000 refers to the listed shares of Distillers Corporation (SA) Limited.

18 16 REVIEWS CHAIRMAN S STATEMENT a challenging year A statement from Distell s chairman, David Nurek The past year has been characterised by a much strengthened rand, reduced inflation, lower interest rates and accelerated discretionary spending among South Africa s middle and higher income groups on the one hand, but slower spending by lower income consumers, who comprise the majority of South Africans, on the other. Job shedding prompted by a more robust currency that has made the country s exports less price-competitive on international markets, the growing impact of HIV/Aids and adverse weather conditions in many agricultural areas continue to erode their already limited spending power. Understandably, the domestic market for alcoholic beverages experienced muted growth, showing a volume increase for the past year of just 1,9%, with beer the main contributor. A stronger rand has had a significant impact on much of the local liquor industry, particularly the wine sector, where there has been increasing consolidation in an effort to maintain a presence on international markets. Over the past few years, some local wine producers have used a weak rand as their single biggest competitive advantage. Now that this has been lost to them, their profit margins have suffered, particularly in the face of a global oversupply of wine, compounded by a record 2004 vintage, which has delivered exceptional tonnage and quality. Californian producers, now aided by a weaker dollar, Australian and New Zealand producers are seeking new ways to market their wines and deplete their build-up of stocks from earlier vintages. At the same time, the beleaguered French industry has responded to changed market conditions with a revitalised and more competitive operating system. It should be noted that while these countries are supported by government subsidies in their efforts, no such benefit is available to the South African wine industry. Domestic competition has intensified, with producers unable or unwilling to sell their wines abroad, courting local consumers more assiduously then ever, buoyed by greater variety and aggressive pricing strategies. Simultaneously, a strong rand has made South Africa a favourable market for foreign producers. Distell was forced to stringently review its operating costs at the start of the decade and to rationalise its product ranges while servicing a variety of price points in both retail and on-consumption segments, inculcating a culture of fiscal discipline.this, coupled with an ongoing policy of brand building that eschews discounting as a tactic of growing market share in favour of investing in trademarks for the long term, has accorded us a measure of resilience against these conditions. We have also been cushioned to some extent by our strong domestic support base across a wide spectrum of products and pricing segments in wine, spirits and ready-to-drink alcoholic beverages (RTDs). Given our focus on both retail and on-consumption channels in export markets, our vulnerability to the advancing power of the multiple grocers in many key export markets has also been contained. The company also continues to find ways of making the supply chain more cost-efficient through research and partnerships with supplier growers, planning wines in the vineyard and matching growing costs to the eventual selling prices, production site energy audits, judicious use of water and recycling. Our suppliers are responding in similar vein and are passing on the benefits of a stronger rand. Notwithstanding a stronger currency and a decline in global tourism, South Africa remains an attractive tourist destination, particularly for Europeans and North Americans, and the country has continued to outperform its key competitors. The Cape and the winelands have grown in popularity, along with leading game parks and lodges. This development has been good for Amarula, the country s most widely distributed alcoholic beverage, and for our portfolio of wines. CONTINUED OVERLEAF PHOTOGRAPHER: ADRIAAN OOSTHUIZEN INSPIRER: SELWYN GRAHAM SHOT ON LOCATION AT SHOOTERS, STRAND

19 17 REVIEWS CHAIRMAN S STATEMENT Inclusive teamwork, commitment and innovation are Selwyn Graham s cornerstone of delivering superior service levels and world-class quality.

20 18 REVIEWS CHAIRMAN S STATEMENT CONTINUED FROM PAGE 16 The company is also actively engaged in promoting the biodiversity of the Cape, in the interests of nature conservation and ecotourism, and has played a vital role in the establishment of the Biodiversity and Wine Initiative. Its guidelines, set out in the Biodiversity Bill and scheduled to become law during 2004, have in many instances already been implemented in our own vineyards and those of our suppliers. They have also been incorporated into South Africa s very progressive Integrated Production of Wine system that promotes sustainable winegrowing and production. Encouragingly, both Government and the private sector have heightened their focus on broad-based black economic empowerment (BEE). Distell is actively involved in the shaping of the Liquor Industry Charter that has been reviewing the entire manufacturing and distribution chain, from ownership and management to employee equity and skills development, procurement practices, enterprise development and social investment. The company serves on the Charter s steering committee and is represented on all its working groups.at the same time, the Wine Industry Charter, facilitated by the SA Wine and Brandy Company, is making headway in setting targets in all these areas pertaining to wine. Internally, BEE is a drive project of Distell. We are coordinating and strengthening our focus in areas such as preferential procurement, enterprise and skills development, employment equity and corporate social investment. The inclusion of a broad-based black shareholder in Distell is currently being attended to by a subcommittee of the board of directors. As a founding member of the Wine Industry Ethical Trade Association (WIETA) we have been contributing to the development of its code of socially responsible and ethical labour practices. All 18 of our sites are being evaluated by the NGO s independent audit committee, a process due for completion later in The audit process covers a comprehensive range of issues such as health and safety; freedom of association; the right of workers to participate in decisions affecting them; worker benefits and conditions; child labour; fair disciplinary procedures; and the sourcing of and contractual obligations to seasonal workers. The finalisation of the Liquor Act and its implementation are to be welcomed as the culmination of constructive negotiation between Government, producers, wholesalers, distributors and retailers and as a boost for BEE. Not only does the bill encourage diversity of ownership across all three tiers of the industry, but it also provides a more stable basis from which to promote the responsible consumption of alcohol. However, we are concerned at the tardiness to effect legislation at provincial level. To date, just two of the nine provinces have promulgated liquor licensing legislation Gauteng and Eastern Cape, and both of these are fundamentally flawed in that they create more confusion and bureaucracy. There is an urgent need to formalise retail trade in a way that is acceptable to producers, sellers and consumers and that makes it possible to effectively advance responsible drinking. Another issue that requires urgent consideration is the discriminatory level of excise duties applied to wine, which Distell is actively involved in the shaping of the Liquor Industry Charter that has been reviewing the entire manufacturing and distribution chain, from ownership and management to employee equity and skills development, procurement practices, enterprise development and social investment.

21 last February were increased 30,7%, and spirits, which rose 13,8%, while beer went up just 9%. We are of the view that excess consumption of all alcoholic beverages and under-age drinking is best addressed through holistic measures that identify and target vulnerable groups with appropriate interventions such as education and life-skills programmes for consumers; training licensees in how to develop and entrench a culture of moderation among their patrons; counselling and rehabilitating abusers; and by adopting responsible advertising, packaging, promotion and sales. This is the route we have taken through our industry body, the Industry Association for the Responsible Use of Alcohol (ARA) of which we are a leading corporate member. We are gratified by the considerable progress made by Government in combating illicit liquor trading. However, cross-border activities such as round-tripping and smuggling continue, partially exacerbated by such high excise duties, thus providing another compelling reason for a revision in State policy towards taxation of wines and spirits. We welcome three new directors to our board. They are Peter Bester, former executive chairman of Cadbury Schweppes (SA) Limited and a director of several other boards, who brings a wealth of business and marketing expertise, Merwe Botha, Distell s financial director, whose financial acumen is well established, and Jakes Gerwel, former director-general in the Office of the State President, chairman of the board of trustees of the Nelson Mandela Foundation, chancellor of Rhodes University and a director of several major corporates. Professor Gerwel s academic and socio-economic insights and his contribution to business are greatly valued. On behalf of the board, I express our appreciation to every member of Distell for their hard work, expertise and commitment and their role in delivering a solid performance in undoubtedly difficult circumstances. DM Nurek Chairman 16 August REVIEWS CHAIRMAN S STATEMENT

22 20 REVIEWS MANAGING DIRECTOR S REPORT performance & growth A review of operations by the managing director Overview We continued to improve performance across various dimensions of our business during the year under review, making considerable progress towards achieving the important objectives we set ourselves four years ago.these are: To grow our international business To capture the true potential of our brands in the domestic market To reduce our cost base through continuous process improvement in order to fund international expansion, while simultaneously meeting short-term shareholder expectations Although much still needs to be done to fulfil our aspirations, we can reflect on four years of continuous improvement. This year, headline earnings grew 41,0%. Profit before taxation and exceptional items rose 39,8%, achieving cumulative annual growth of 21,3% over a three-year period. The extremely volatile exchange rates since 2001 have obviously impacted on our performance, given that we are a substantial exporter of wines and spirits. Over the past year alone, the rand strengthened by 16,4% on average against the currencies of the countries in which we trade and our performance should be evaluated in this context. International growth Overseas markets Our focus is to build a core portfolio of brands in key markets. Amarula Cream, the company s biggest spirits brand and also South Africa s most widely distributed alcoholic beverage brand internationally, is a top priority. In addition, five wine drive brands Nederburg, Fleur du Cap,Two Oceans, Durbanville Hills and Drostdy-Hof are targeted for growth in nine export markets. Our international business showed exceptional growth over the past financial year, reflecting a 30,2% increase in sales volumes, well in excess of the robust targets we set ourselves. Wine volumes grew 33,7%, significantly outperforming the 20% average for the South African wine export industry over the same period. Moreover, Amarula recorded an impressive growth of 12,7% in what proved to be a very competitive cream liqueur category. Wine volume growth was led primarily by key global drive brands such as Drostdy-Hof (27%), Two Oceans (32%), Nederburg (23%) and Fleur du Cap (16%). Volume gains for these brands were supported by broad distribution in both European and North American markets, which responded enthusiastically to these products. PHOTOGRAPHER: ADRIAAN OOSTHUIZEN INSPIRER: SCHALK BURGER SHOT ON LOCATION AT NEDERBURG CONTINUED OVERLEAF

23 By drawing out the best in people through understanding their needs, Schalk Burger inspires exceptional performance, finding the balance between sensitivities and the task at hand. 21 REVIEWS MANAGING DIRECTOR S REPORT

24 22 REVIEWS MANAGING DIRECTOR S REPORT CONTINUED FROM PAGE 20 We also strengthened our presence through listings with multiple retailers globally, giving us greater product exposure, although numerous opportunities remain to be exploited. Our performance and participation in the multiple grocer distribution environment of the Netherlands and the United Kingdom, did not meet expectations. Consequently, new strategies are being pursued. These include the restructuring of our direct selling arm in Europe as well as of our agent network worldwide to capitalise on profitable opportunities. Amarula Cream s growth has come from key markets such as the US, Canada, Germany, Scandinavia, Brazil and the UK. The brand continued to outperform the category, notwithstanding increased competition, which saw a number of new cream liqueur launches and substantial investments by the major liquor companies. International sales revenue increased by just 4,3% mainly due to the strengthening of the rand. Our challenge remains to protect margins through a continued focus on achieving greater efficiency throughout the value chain. Africa Our Grow Africa Study Project, completed last year, articulates a clear strategy for the continent. Once again we are concentrating on four key markets, focusing our attention on a core portfolio of brands. Management has started to implement the recommendations flowing from this project, restructuring and expanding our organisational structures in the regions and investing in the development of marketing capacity, establishing marketing teams in a number of African countries.we also hold a 29,2% stake in African Distilleries of Zimbabwe, a 40% share in Drinks and Beverages Co in Mauritius and a 35% share in Tanzania Distilleries Limited. The Tanzanian company, which produces and distributes a selection of our brands in its domestic market, continues to deliver excellent returns to its shareholders. In Kenya we have entered into agreements with local partners to manufacture and distribute selections of our brands. The domestic market The domestic market has been characterised by further trade consolidation, new entrants into the market, surpluses in the supply of unfortified wines with resultant pressure on prices and margins, and a substantial increase in excise duties on wines, spirits and flavoured alcoholic beverages announced in February The domestic market for alcoholic beverages grew by 1,9% during the past year, beer being the main contributor to this growth. However, recent statistics indicate that market share growth in beer has slowed down. Our task is to capture the true potential of our brands in the local market, and we accept the challenges we face.we continue to focus on growing drive brand contributions in targeted consumer segments. Since favourable trade relationships are crucial to the success of our strategies, we have made it a core element of our approach to offer distinctive value propositions across trade channels that deliver mutually advantageous benefits. During the year we continued to focus on: Building winning value key account management and category management strategies, which are crucial to favourable customer relationships Improving consumer promotion effectiveness across all consumer segments Developing world-class sales, promotion and merchandising capabilities Surveys on service levels and customer satisfaction are regularly undertaken. The most recent of these, independently undertaken, showed that the vast majority of our customers rated our service as very good to excellent. Our Grow Africa Study Project, completed last year, articulates aclear strategy for the continent. Once again, we are concentrating on four key markets, focusing our attention on a core portfolio of brands.

25 With empathy, support, clear and unambiguous communication, and the ability to ensure that tasks are completed effectively, Brenda Dlamini (right) creates a healthy and productive working environment. Colleague Thabile Skwele (left) nominated Brenda as a true inspirer. Distell s overall volumes in the domestic market remained constant.this was due in part to the loss of the distribution rights to the Martell and KWV 10 and 20-year-old brandies in terms of a ruling by the Competitions Tribunal in June However, the loss of these brandy trademarks, as well as a decline in sales volumes of unfortified wines, was offset by growth elsewhere in the portfolio. Marketing activity Distell is the owner of a well-balanced portfolio of trademarks. Consumer branding is at the heart of everything we do and starts with marketing strategy as a driver of business strategy. Our long-term success depends on our ability to continue to build and develop a well-balanced portfolio of brands to satisfy consumer needs. Our approach is to improve market segmentation, consumer understanding, brand positioning and investment decision-making, effective market execution and measuring trade implementation. Constant innovation is essential in all facets of marketing and is at the heart of a newly embarked on marketing renewal programme that seeks to deliver a new excitement and agility to our brands and our marketing people. We have introduced improved measures to sharpen our consumer insights and to manage consumer knowledge, while a new focus on market activation will also provide consumers the opportunity to encounter our brands with greater frequency and impact. Operational efficiencies Operational management continued to improve efficiencies, customer service levels, product quality and cost-effectiveness, with most key performance indicators showing significant improvement on previous years. Since effective procurement practices provide the most important opportunity to reduce our overall cost base, they remain a top priority. By closely collaborating with key suppliers we have succeeded in protecting margins previously eroded by the volatility in the exchange rate. Some operational highlights were: ISO 9001:2000 listings achieved by all our distribution centres located in South Africa A gold medal earned by our distribution arm at the 2004 Logistics Achiever of the Year Awards The International Food Standards (IFS) higher-level certification accorded the Adam Tas cellars, responsible for a high percentage of export wines. As far as we are aware, this makes Distell the first South African wine producer and marketer to attain this IFS level. Both Adam Tas and sparkling wine production centre, JC le Roux received British Retail Certification. Global Conformity Services audited JC le Roux and Nederburg for HACCP and has recommended certification. Financial and operational performance Effect of the change in accounting policy Distell s accounting policy has been changed to comply with the new South African Statement of Generally Accepted Accounting Practice (GAAP) dealing with Agriculture (AC137). In accordance with this new statement, vineyards owned by the group must be valued at fair value. Fair value was calculated by discounting net cash flows of the vineyards over the balance of their lifespan at an appropriate discount rate. The effect of this change in the period under review is not material. Comparative figures for the year ended 30 June 2003 have been restated, reducing trading income 23 REVIEWS MANAGING DIRECTOR S REPORT CONTINUED OVERLEAF

26 CONTINUED FROM PAGE 23 by R21,3 million and headline earnings by R17,4 million. International sales volumes, excluding Africa, increased (See notes 2 and 32 to the financial statements on 30,2%. Volume growth for both Amarula Cream and pages 59 and 78.) unfortified wines accelerated this year. Amarula Cream achieved volume growth of 12,7% (2003: 8,1%) and Sales revenue unfortified wines 33,7% (2003: 19,3%). However, 24 Sales revenue grew 10,7% to R5,7 billion on a sales volume increase of 1,9%. international sales revenue, mainly as a result of the substantial improvement in the value of the rand, grew by just 4,3%. REVIEWS MANAGING DIRECTOR S REPORT Total sales volumes for the second six months of the financial year showed a strong growth of 5,2% on the corresponding period of the previous year. International sales volume growth outpaced sales growth in the domestic market further improving overall sales mix, given the increased geographic spread of our activities. Sales volumes outside South Africa accounted for 18,3% (2003: 17,1%) of total sales volumes. Locally, sales volumes showed marginal growth of 0,4% but reflected a more profitable product mix. Our trademarks in the important spirits category performed better than our other categories. Although Distell relinquished its distribution rights to the Martell brandies at the beginning of the financial year, and the KWV brandies during the third quarter, spirit volumes were still able to grow 2,0%. If Martell sales are excluded, spirit volumes actually showed a growth of 7,4%, with brandy reflecting an increase of 7,9%. However, sales volumes of unfortified wine came under pressure, declining 2,7% because of increased product and price competition that stemmed from a stronger focus on the local market by domestic and international players. Although the market for ready-to-drink alcoholic beverages (RTDs) remains extremely competitive, Distell succeeded in achieving marginal volume growth in this category. Sales revenue derived from African countries (including BLNS countries) increased 12,3%. Trading income The increase in trading income was driven largely by increased sales revenue, a continued improvement in sales mix and margins, disciplined cost management and the containment of overhead costs through ongoing initiatives to enhance efficiencies across various dimensions of the business. Net operating margin, a key performance indicator, improved from 10,0% to 10,4% notwithstanding the unfavourable impact of the stronger rand on export margins. Financing costs and cash flow Cash flow from trading activities (before working capital movements) rose to R738,9 million from last year s R601,1 million. Cash flow from operating activities improved by R382,2 million, mainly as a result of an increase in trading income, improved working capital management and an amount of R46,5 million received as compensation for relinquishing the distribution rights to Martell brandies last year. CONTINUED OVERLEAF PHOTOGRAPHER: ADRIAAN OOSTHUIZEN INSPIRER: BRUCE MOODIE SHOT ON LOCATION AT GORDON S BAY

27 25 REVIEWS MANAGING DIRECTOR S REPORT Bruce Moodie believes that performing under pressure demands teamwork and that highly effective teams are built through exercising mutual respect, leadership and developing a sense of humour.

28 26 REVIEWS MANAGING DIRECTOR S REPORT CONTINUED FROM PAGE 24 We continue to invest in global markets to build our brands as part of a profitable growth strategy and look forward to increased sales in an improved global economic climate. The group substantially reduced fixed investment spend, Details regarding dividend payment dates and related with investment to maintain and expand operations matters are disclosed in note 25 to the financial statements. amounting to R161,2 million (2003: R195,8 million). Investment and funding The group generated net cash flow of R188,6 million, and Total assets increased R108,5 million to R4,8 billion, an net financing costs, as a result, decreased by R23,4 million increase of 2,3% on the previous year. to R94,8 million. Capital expenditure amounted to R161,2 million. Of this, Interest cover, which is net interest paid in relation to profit R37 million was spent on the second and final phase in the before interest and taxation, improved from 3,9 to expansion and upgrade of the Nederburg cellar in Paarl to 6,1 times. support the continued growth of the brand domestically and internationally. Foreign currency movements Any change in the rate of exchange between transaction Management s focus on the systematic reduction in working date and settlement or period-end date is disclosed capital is reflected in an overall reduction of R22,3 million. separately in the income statement in terms of GAAP. The increase in inventory, mainly as a result of an increase in During the period under review a loss of R24,9 million bulk wines and spirits, is necessitated by the group s long-term (2003: R66,8 million) was reflected in this regard. view of consumer demand for its products.the investment in bulk inventories under maturation is planned accordingly. Taxation The effective tax rate increased from 21,6% to 25,7%, Net interest-bearing liabilities were reduced from mainly as a result of non-taxable income included under R733,9 million to R485,9 million at 30 June Net exceptional items the previous year. interest-bearing liabilities relative to net cash inflow from normal operating activities improved to 0,64 from a level of Headline earnings 1,80 at the prior year-end.the group s gearing, as measured Headline earnings increased by 41,0% to R358,6 million. by net interest-bearing debt relative to net assets, decreased at year-end to 18,9% from last year s 31,1%.The group has This growth is largely attributable to growth in trading substantial unutilised borrowing facilities. income of 14,4%, and a reduction in financing costs and foreign currency conversion losses. However, if the effect of Legal and legislative issues the change in accounting policy is excluded, headline As announced on 12 December 2003, the appeal by the earnings grew 32,0%. Competition Commission against certain findings of the Competition Tribunal in the merger between Distillers Dividends Corporation (SA) Limited and Stellenbosch Farmers The directors have resolved to declare dividend number Winery Group Limited was dismissed in a judgment 32 of 51 cents (2003: 35 cents) per share, making a total handed down by the Competition Appeal Court on dividend of 97 cents per share for the year ended 11 December June 2004 (2003: 75 cents). This dividend represents a dividend cover of 1,9 times (2003: 1,7 times) by headline In September 2003, the National Assembly approved the earnings. new Liquor Bill, which accommodates the industry s

29 concerns, and in particular allows companies to hold licences in both manufacturing and distribution. There is to be an automatic conversion of existing licences and licence holders must demonstrate within 12 months thereafter that they meet certain criteria set by the Minister of Trade and Industry.We believe these criteria are sound. During the legislative process the Government committed itself to ensuring the Bill would not adversely affect the industry s efficiency. Prospects Management continues to focus resources on the important strategic initiatives required to achieve our goals of growing international business, capturing the full potential of our brands domestically and reducing our cost base to be competitive wherever we trade.to this end, we have introduced a formal process to regularly monitor and report on progress achieved and to provide for special interventions so that major initiatives do deliver on target. The domestic market is likely to remain extremely competitive in the near term but a favourable medium to longer-term outlook for the South African economy leads us to believe consumer demand for alcoholic beverages will strengthen, driven in part by lower inflation and interest rates. We continue to invest in global markets to build our brands as part of a profitable growth strategy and look forward to increased sales in an improved global economic climate. We are confident Distell is well positioned to capture opportunities in domestic and foreign markets and the group expects to continue to reflect real growth in earnings and has budgeted accordingly. JJ Scannell Managing director 16 August REVIEWS MANAGING DIRECTOR S REPORT With spontaneity, optimism and a genuine and infectious joy for life Saré Kotze creates an atmosphere of fun and the belief that no task is too onerous.

30 duty-bound 28 Adhering to the principles of sound corporate governance SOCIAL CORPORATE GOVERNANCE Corporate governance report Corporate governance, critically important to Distell s success as a business and in protecting the interests of its shareholders, is managed and monitored by the company s board of directors and several of its subcommittees. The directors are unreservedly committed to the principles of good governance and to this end accept full accountability in applying the necessary disciplines in maintaining the highest standards of professionalism, integrity, independence, fairness and social responsibility, and they acknowledge their accountability to all stakeholders. Transparency in the management process gives shareholders and other interest groups the assurance that the group is managed according to ethical norms and international best practice within the boundaries of prudently determined risk parameters. The board is of the opinion that the group substantially complies with all the significant principles incorporated in the Code of Corporate Practices and Conduct, as set out in the second King Report (King II) and the JSE Securities Exchange Listings Requirements. Board of directors The board evaluates and reviews the strategic direction of the group, agrees on key performance indicators and identifies key risk areas and responses. Executive management is then charged with the detailed planning and implementation of these strategies in accordance with appropriate risk parameters. The board holds management accountable for its activities, which are monitored and controlled through regular reports and discussions. In this way the board is able to: Retain full and effective control over the group, and monitor management s implementation of planning strategies Review the performance of executive management against business plans, budgets and industry standards Consider significant financial matters, including investment decisions Identify, consider, monitor and, if appropriate, approve financial and non-financial matters relevant to the business of the group Ensure a comprehensive system of policies, procedures and controls is operative and adhered to Ensure sound governance, including compliance with relevant laws and regulations, audit and accounting principles and the group s internal governing documents and codes of conduct Define levels of materiality, hold certain powers and delegate other matters with the necessary written authority and terms of reference to management or board committees Be aware of and commit to the underlying principles of good corporate governance, monitor and maintain compliance The board is chaired by independent, non-executive director DM Nurek and comprises 11 non-executive directors (of whom eight are independent) and three CONTINUED OVERLEAF PHOTOGRAPHER: ADRIAAN OOSTHUIZEN INSPIRER: DURANDT VAN ASWEGEN SHOT ON LOCATION AT LE BONHEUR

31 29 SOCIAL CORPORATE GOVERNANCE Through perseverance, commitment, humility and the willingness to go the extra mile, Durandt van Aswegen sets an example for people to perform at their peak.

32 30 SOCIAL CORPORATE GOVERNANCE CONTINUED FROM PAGE 28 executive directors, including the managing director. The roles of the chairman and managing director are separated with responsibilities divided between them. The chairman has no executive functions. Non-executive directors, appointed for their knowledge and experience of a wide range of businesses and business sectors, augment the skills and experience of the executive directors and management and contribute independent viewpoints to matters under consideration. All directors have the appropriate knowledge and experience necessary to fulfil their duties and enjoy significant influence at meetings.this ensures a balance of authority and precludes any one director from exercising unfettered powers of decision-making. Generally, directors have no fixed term of appointment but retire by rotation. At each annual general meeting of the company, a third of the directors (those longest in office since their last election) retire and, if available, are considered for reappointment. Procedures for appointments to the board are formal and transparent and a matter for the board as a whole. The board is always mindful of the need to maintain an infusion of fresh thinking and a relevant mix of skills and experience. The effectiveness of the board composition and the performance of all its directors, including the chairman, are assessed annually. Non-executive directors receive no share options, nor material benefits from Distell, other than their directors fees. All board members are required to disclose the extent of their shareholdings in Distell, other directorships and any potential conflict of interest. It is incumbent on directors to act in the best interests of the company at all times.where a potential conflict of interest does exist, they are expected to recuse themselves from relevant discussions and decisions. Directors and other nominated employees are required to advise and obtain clearance from the chairman before dealing in Distell shares. The chairman will withhold clearance during a closed period or any period when there exists unpublished, price-sensitive information in relation to the company shares. The board convenes at least every two months to review a formal schedule of matters for which its members are fully briefed in advance. Effective chairmanship and a formal agenda ensure that all issues requiring attention are raised and addressed. This enables directors to discharge their responsibilities in determining if prescribed functions have been carried out according to set standards within the boundaries of prudent, predetermined risk levels and in line with international best practice. Adequate Directors and Officers insurance cover has been purchased by the company to meet any material claims against directors and officers. In addition, all directors have unlimited access to the advice of the company secretary, who acts as an adviser to the board and its subcommittees on issues, including compliance with group rules and procedures, statutory regulations and with the King II. Independent professional advice is available to directors in appropriate circumstances at the company s expense. The names and credentials of the directors and their attendance at board meetings are detailed on page 8. Board subcommittees Specific responsibilities have been delegated to board committees, with defined terms of reference from approved charters.all chairs of committees report orally on the proceedings of their committees at the subsequent board meeting and minutes of committee meetings are provided to the board.the principal board committees are as follows: The audit and risk committee The audit and risk committee regularly evaluates the group s exposure and responses to significant business, strategic, statutory and financial risks and reviews: the effectiveness of risk management processes; and the appropriateness and adequacy of the systems of internal financial and operational controls. The committee also reviews and evaluates accounting policies and financial information issued to the public, to ensure appropriate standards of governance and reporting are maintained. The audit and risk committee is responsible for recommending the appointment of the external auditors, determines their fees and assesses the performance of internal as well as external auditors. The committee also ensures effective communication between directors, management and internal and external auditors. The risk

33 management workgroup assists the audit and risk committee with its risk management function. The audit and risk committee comprises three nonexecutive directors, whose details are provided on page 8. The committee is chaired by Mr D Prins, an independent non-executive director. The chairman of the board does not act as chairman of the audit and risk committee. The committee meets at least four times a year. The external auditors, the managing director, the financial director and the company secretary are in attendance at each meeting and other members of the management team, including internal audit representatives, attend as required. However, when issues are raised with the external auditors in which executive attendees have a vested interest, the latter recuse themselves. Audit and risk committee members, as well as the internal and external auditors, have unlimited access to whatever information they require in discharging their responsibilities. Moreover, the internal and external auditors have unlimited access to the chairman. The internal audit department reports directly to the audit and risk committee and is also responsible to the financial director on day-to-day matters. The managing director is copied on all significant reports which are then discussed with him. promote identification with shareholders interests, share incentives are considered a critical element of executive incentive pay. The committee determines the remuneration of executive and non-executive directors and senior management. The remuneration committee is responsible for the identification, assessment and nomination of potential new directors. During the year it nominated Prof GJ Gerwel and Messrs PM Bester and MJ Botha. New directors are provided with suitable induction material designed to familiarise them with all aspects of the business. The remuneration committee consists of three nonexecutive directors, whose details are provided on page 8, and is chaired by Mr DM Nurek. In compliance with its charter the committee met five times during the year. Accountability and audit Internal audit The mandate of the group s internal audit function operates in terms of the audit and risk committee s approved charter to provide management with an independent, objective consulting and assurance service that reviews matters relating to control, risk management, corporate governance and operational efficiency. 31 SOCIAL CORPORATE GOVERNANCE The remuneration committee The remuneration committee is responsible for the assessment and approval of a broad remuneration strategy for the group, including short and long-term incentive pay structures for executive management. These remuneration strategies are aimed at rewarding employees at marketrelated levels and in accordance with their contribution to the group s operating and financial performance in terms of basic pay as well as short and long-term incentives. To The primary mandate of the group s internal auditors is to examine and evaluate the effectiveness of operational activities, the attendant business risks and the effectiveness of the system of internal operational and financial control to manage such risks and to bring material deficiencies, instances of non-compliance and development needs to the attention of management, the external auditors and the audit and risk committee for resolution. In particular, the internal audit function assesses the relevance, reliability and CONTINUED OVERLEAF The group s exposure and responses to significant business, strategic, statutory and financial risks and reviews are regularly evaluated.

34 32 SOCIAL CORPORATE GOVERNANCE CONTINUED FROM PAGE 31 integrity of management and financial information, the efficient and economic use of resources, the safeguarding of assets, compliance with relevant policies, procedures, laws and regulations and the prevention of waste, extravagance and fraud. The function of the group s internal audit is also to provide a risk management facilitation role, ensuring the process of risk management is always accorded the highest priority, but without assuming responsibility for risk management itself, which remains the responsibility of relevant line management. The internal auditors also conduct independent investigations into fraud or other irregularities. The internal audit department functions under the direction of, and reports to the audit and risk committee, but is responsible to the group financial director for dayto-day matters. It has unrestricted access to the chairman of the audit and risk committee. The internal audit plan is presented in advance of audit and risk committee meetings and is based on an assessment of potential risk areas. All Distell business operations and support functions are subject to internal audit. The audit and risk committee approves the yearly audit schedule. Internal audits are conducted in accordance with the standards of the Institute of Internal Auditors. Teams of appropriately qualified and experienced employees perform internal audits. The services of independent external practitioners are engaged from time to time for special assignments and they enjoy equivalent access to information. Every audit assignment is followed by a detailed report to executive management, including recommendations on aspects requiring improvement. Material findings are reported to the audit and risk committee. External audit The external auditors express an independent opinion on the annual financial statements.the external audit function provides reasonable, but not absolute, assurance on the accuracy and reliability of financial disclosures. There is close co-operation between internal and external auditors with the aim of ensuring appropriate combined audit coverage and minimisation of duplicated effort. Internal control Systems of internal control are designed to manage, rather than eliminate, the risk of failure to achieve business objectives and can provide reasonable, but not absolute, assurance against misstatement or loss. While the board of directors is responsible for the internal control systems and for reviewing their effectiveness, responsibility for their actual implementation and maintenance rests with executive management. The systems of internal control are based on established organisational structures, together with written policies and procedures, and provide for suitably qualified employees, segregation of duties, clearly defined lines of authority and accountability. They also include standard cost and budgeting controls, and comprehensive management reporting. The group s treasury department is responsible for controlling and reducing exposure to interest rate, liquidity and currency transaction risks.treasury functions and decisions are guided by written policies and procedures as well as by clearly defined levels of authority and risk assumption.while non-leveraged derivatives are purchased periodically to hedge specific interest rate or currency exposures, the group treasury does not undertake speculative financial transactions. The effectiveness of and adherence to internal control systems are monitored continually through reviews and reports by senior management, through a process of control self-assessment, as well as through the internal and external audit processes. The process of controls self-assessment by management itself, supplements the existing structures to evaluate the systems of internal control, and is designed to assess, maintain and improve controls on an ongoing basis. All divisions report on their assessments on a monthly basis. During the year under review, none of these reviews indicated the occurrence of any significant lapse in the functioning of internal controls. The external auditors plan is reviewed by the audit and risk committee to ensure significant areas of concern are covered, without encroaching on the external auditors independence and right to audit. The directors are satisfied that control systems and procedures are suitably implemented, maintained and monitored on an ongoing basis by qualified personnel, with an appropriate segregation of authority, duties and reporting lines.

35 The group has adopted a continuous, systematic and integrated enterprise-wide risk management process that focuses on identifying, accessing, managing and monitoring all known forms of risks across the group. 33 Risk management The board is responsible for the total process of risk management. The audit and risk committee has specific responsibility for the system of risk management and reviews the risk reports of the group twice a year, reporting to the board on key risks facing the group and its associated risk mitigation responses. A central risk manager, reporting to the audit and risk committee, is responsible for setting policies and procedures on risk management and risk financing. The workgroup supervises the activities of decentralised risk management and loss control departments. The management of operational risk, a line function, is conducted in compliance with set policies and standards. Performance is measured on a regular basis through independent risk audits carried out by a central risk management function, assisted by independent consultants. The group has adopted a continuous, systematic and integrated enterprise-wide risk management process that focuses on identifying, accessing, managing and monitoring all known forms of risks across the group. Management, assisted by external consultants, continued with a process to further develop and enhance its comprehensive risk management framework and related controls. This included the implementation of integrated risk management software, training and communication, continuous control self-assessment by line management and comprehensive reporting. This year, the major emphasis was on developing a comprehensive framework for managing risks associated with information systems and related technologies. Major risks are the subject of ongoing attention of the board of directors and are given particular consideration in the group s annual business plans, which they approve. The most significant risks currently faced by the group include those pertaining to regulations, the supply chain, physical environment, skills and people, technology as well as currency and interest rates. These risks are included in the group s integrated risk management programme. SOCIAL CORPORATE GOVERNANCE

36 34 SOCIAL CORPORATE RESPONSIBILITY Nad Naicker makes personal sacrifices for the benefit of colleagues and ensures that they are motivated to give their best, creating a high level of self-esteem and a willingness to encourage and support others.

37 taking responsibility 35 PHOTOGRAPHER: ADRIAAN OOSTHUIZEN INSPIRER: NAD NAICKER SHOT ON LOCATION AT LE BONHEUR Environment Treatment of effluent Waste from all the company s pressing cellars is recycled in conjunction with an independent chemical company for alcohol, tartrates and animal feed. Recycling The company s Project Grow Returnables has significantly boosted efforts to recycle packaging materials.the value of recycled bottles increased 20% on last year s already advanced growth on In addition, 60% of cans were recycled through the Collect-A-Can initiative. Purchasing contracts also specify the use of recycled and environmentally friendly materials. Integrated Production of Wine (IPW) Distell is fully compliant with IPW, which promotes sustainable wine production and is rated one of the most progressive systems of its type worldwide. The company s Nederburg was the first winery evaluated in the pilot study that led to IPW s establishment in It continues to play a pioneering role in the conservation of the environment. Organic winegrowing Pilot projects are under way at Plaisir de Merle and Papkuilsfontein farms to cultivate Sauvignon Blanc, Chardonnay, Sangiovese and Pinotage strictly in terms of the conditions set by the Swiss-based Société Générale de Surveillance (SGS), the international body that monitors organically grown agricultural foodstuffs. Biodiversity and Wine Initiative Distell has played an important role in the establishment of the Biodiversity and Wine Initiative, set out in the Biodiversity Bill and scheduled to become law in Many of its guidelines have been implemented for some time in the company s vineyards and those of suppliers. They include the removal of alien vegetation in concert with the Department of Forestry, the reestablishment of lowland fynbos and renosterveld, protecting ecologically sensitive wetlands and rare plant populations, participation in the Conservation Stewardship Programme, combating soil erosion and extensive cover cropping. Amarula Elephant Research Programme Amarula is in the third year of its sponsorship of a five-year elephant research programme, based at the University of KwaZulu-Natal, Durban, that involves local and international academics, Government conservation agencies and private game reserves. Projects include introducing older male elephants to mentor adolescent orphans and stop the killing of rhino at Pilansberg and Hluhluwe-Umfolozi parks; the introduction of elephants to St Lucia, a World Heritage Site; research into elephant stress levels; and the development of elephant management programmes for parks and reserves. CONTINUED OVERLEAF SOCIAL CORPORATE RESPONSIBILITY

38 36 SOCIAL CORPORATE RESPONSIBILITY CONTINUED FROM PAGE 35 WWF-SA and Peace Parks Foundation Distell s relationship, through its merged entities, dates back to the inception of the WWF-SA in Involvement includes the protection of habitats, conservation of species and natural resources. Kenya Wildlife Society The company, via Amarula, provides support to this initiative of the Kenyan government to promote and communicate the importance of conservation. Sedgwick s Old Brown Sherry/Oceanographic Research/WWF-SA Fish Tagging Project Sedgwick s Old Brown Sherry provides funding for one of the longest-running and most successful marine conservation projects in South Africa. Established 21 years ago, it has tagged and released over line fish from some 341 species along the South African coastline. Public health Responsible drinking Distell recognises the social and health benefits of moderate and responsible consumption of alcoholic beverages for those who have taken the decision to drink and are not at risk. It also acknowledges that targeting abuse is the collective responsibility of the alcoholic beverage industry, Government, national, provincial and local authorities and police services. The company works with other members of the industry through the Industry Association for Responsible Alcohol Use (ARA) to promote and execute a constructive approach to alcohol use and abuse. The ARA represents the industry in liaison with Government, the Advertising Standards Authority and law enforcement agencies and researches and funds a variety of initiatives into targeting and supporting those at risk. Projects include life-skills education for urban and rural children, youth and adult communities; the identification of alcohol-related health risks; intervention among vulnerable groups through counseling and rehabilitation; research into and creating awareness of the dangers of foetal alcohol syndrome; highlighting the dangers of drinking and driving through the Arrive Alive campaign; running pedestrian-focused campaigns; providing training to licensees to develop and entrench a culture of moderation among patrons; and to eliminate under-age drinking. Advertisements will not show or encourage irresponsible drinking. This applies, for example, to the quantity of drink being consumed in any advertisement. Liquor advertising will not be directed at anyone under the age of 18 years. No-one associated with the act of drinking in an advertisement will be younger than 25. No-one under the age of 18 will be depicted in advertisements except where it would be usual for them to appear, such as in family scenes or in background crowds. They will not be shown drinking alcoholic beverages, nor may it be implied that they are. In addition, no characters or icons with special appeal to children will be featured. Advertisements will not be placed in any medium aimed specifically at children. Moreover, advertisements may not be transmitted in the commercial breaks immediately before, during or immediately after children s programmes on television or radio. Advertisements will not imply that alcoholic beverage consumption is essential to business and social success or acceptance, or that refusal is a sign of weakness. Nor will they be based on a dare or imply any failing in those who do not accept the challenge of a particular alcoholic beverage. Advertisements will not be suggestive of sexual indulgence or permissiveness, or claim or suggest that alcoholic beverages can contribute directly to sexual success or seduction. Advertisements will not claim that alcohol has curative qualities, nor offer it expressly as a stimulant, sedative or tranquilliser. Advertisements may refer to the refreshing attributes of an alcoholic beverage, but will not imply that performance can be improved through the consumption of such a drink. Advertisements will not suggest consumption of liquor under circumstances that are generally regarded as inadvisable, improper or illegal, such as preceding or during any activity requiring sobriety, skill or precision. Examples of such activities are driving, work or sport requiring intense physical effort. Distell s advertising principles The following principles derived from the ARA code apply to all advertising, packaging and promotional material produced on behalf of the company: Advertisements will not depict pregnant women. Alcoholic drinks will not be advertised in a context of aggressive or antisocial behaviour.

39 Sedgwick s Old Brown Sherry provides funding for one of the longest-running and most successful marine conservation projects in South Africa. Established 21 years ago, it has tagged and released over line fish from some 341 species along the South African coastline. All advertisements in print, television and cinema media will Organ Donor Foundation of Southern Africa carry the message: Not for sale to persons under the age of Nederburg Wines stages an annual post-auction gala 18. The minimum specifications set for displaying this charity function in aid of the Organ Donor Foundation. message are designed to ensure its clear visibility.furthermore: The funds raised are used to further the foundation s awareness drive. There must be no variation in the wording of the message line. Mothers 2 Mothers (M2M) Nederburg Wines has run two projects in support of this In the case of TV and cinema media, the message must NGO that uses a mentoring system among HIV-positive be retained for the duration of the advertisement. women to provide health care, psychological and practical support, as well as job training. The first was a celebrity The following rules also apply in the case of all auction. The second involved wine media who created a promotional events undertaken in the name of Distell: white blend from the Nederburg cellars. Called Nederburg Amateur (taking its name from the French for enthusiast), All product launches or promotions will exclude activities the wine was sold at the Nederburg Auction in aid which encourage excessive or irresponsible consumption. of M2M. 37 SOCIAL CORPORATE RESPONSIBILITY Appropriate snacks or meals should be available when promotions or tastings are held. On-campus promotions will be arranged in a manner that meets with the approval of the authorities of the university or other tertiary institutions and care will be taken to avoid serving alcoholic beverages to under-age consumers. No promotions will be permitted that encourage increased consumption within a limited time period. In accordance with the law, Distell will not deliver or sell to unlicensed outlets. Hospice Palliative Care Association of South Africa A central element of the annual Nederburg Auction is the charity auction of rare wines in aid of the Hospice Palliative Care Association of South Africa. For the past 14 years Nederburg has hosted this charity event and also donated many of the exceptional wines that fetch record prices (contributing close on R2 million to the association). Skills transfer Distell funds training in farm management at the Worcester Agricultural College for candidates from the communities where the company farms, and identifies and sponsors the training of candidates at a variety of tertiary institutions in the agricultural sciences. The company also contributes 50% towards two Patrick Grubb Bursaries awarded annually to historically disadvantaged people with winemaking promise. The project enables each successful candidate to spend a harvest with a leading winery abroad. Funding is also provided to train the Gauteng entrepreneurs who are shareholders in Papkuilsfontein Vineyards, Darling, in their fiduciary role and in corporate governance. Annually the top student in the faculty of Commerce at the University of Stellenbosch is awarded a cash prize and the CGW Schumann Medal, named after the faculty s first dean. Amarula funds a scholarship programme for candidates to attend the School of Life and Environmental Studies at the University of KwaZulu-Natal, Durban. CONTINUED OVERLEAF

40 CONTINUED FROM PAGE 37 Black economic empowerment Liquor Industry Charter Distell serves on the steering committee of the Liquor Industry Charter and is represented on all its working groups, reviewing the entire manufacturing and distribution chain, from ownership and management to employee equity and skills development, procurement 38 practices and enterprise development. BEE as a drive Distell focus SOCIAL CORPORATE RESPONSIBILITY Distell has increased black representation on the board of directors to 18% from 8% in The current level is higher than the average both for companies listed on the JSE Securities Exchange South Africa and the food and beverage sector. While the company investment in skills development is significantly higher than the average for listed companies or the sector, black representation at senior management level remains insufficient and measures are under way to remedy this situation, sourcing suitable candidates from within the group and through external recruitment. Moreover, executive management are giving continuous attention to the advancement of black economic empowerment (BEE) within the group, focusing on preferential procurement, enterprise and skills development, employment equity and social investment. Preferential procurement Distell has a policy of identifying and developing BEE suppliers, spending R71,5 million in this way during the year under review. It must be stressed here that the company has evolved long-term partnerships with a substantial portion of its strategic suppliers, particularly those of raw materials and packaging with whom there is extensive joint investment in research, development and application. However, we are confident that once the impact of the Liquor Industry Charter takes effect, there will be far greater opportunity to work with BEE suppliers. Enterprise, skills development and skills transfer Papkuilsfontein Vineyards Papkuilsfontein Vineyards, owned jointly by Distell, a consortium of Gauteng entrepreneurs and a community trust, is shortly to extend its Tukulu range. The 2001 Pinotage, which won the 2003 Tops at Spar WINE Magazine Challenge, and the Chenin Blanc are being joined by a Cabernet Sauvignon and a Shiraz. Durbanville Hills The share purchase trust at Durbanville Hills continues as a vehicle for employee ownership and from next year, a 3,6 ha tract of land will start to yield grapes and olives to be processed and sold in aid of community projects. Owner drivers The company has developed close on 100 BEE owner drivers who distribute Distell products on the company s behalf. Mirma The harvesting season for marula fruit is limited to six to eight weeks. To assist the nearby communities, who supply the fruit to the Amarula production facility in Phalaborwa, a Section 21 not-for-profit company was established. The organisation has run incomegenerating projects such as bricklaying and fence-making and most recently has built and equipped a crèche for local children. Heritage collection Distell is the custodian of several important national monuments, such as the homesteads on the wineries Plaisir de Merle, Nederburg and De Oude Drostdy at Tulbach, maintaining and, where necessary, restoring these buildings, some of which date back to the late 17th century. The company also houses a very valuable and extensive collection of South African and European artworks, Cape and European antiques and winemaking artifacts in its offices and other properties. A curator has been appointed to oversee the conservation and restoration programme and is also responsible for archiving the detailed records of the items in the collection to preserve their historical and collectors value. PHOTOGRAPHER: ADRIAAN OOSTHUIZEN INSPIRER: NANCY FRANSMAN SHOT ON LOCATION AT PLAISIR DE MERLE CONTINUED OVERLEAF

41 39 Loyalty is not something one can buy. Nancy Fransman believes that it grows within a culture of acknowledgement of personal contribution and mutual respect for the individual. SOCIAL CORPORATE RESPONSIBILITY

42 CONTINUED FROM PAGE 38 Arts and culture The association between alcoholic beverages and culture is a long-standing one worldwide.the company, through its forerunners SFW and Distillers Corporation, has a history of actively supporting the arts, particularly performance arts, literally providing a platform for established and new talent throughout the country. 40 SOCIAL CORPORATE RESPONSIBILITY Distell Foundation for the Performing Arts The foundation retained an active profile in six of South Africa s nine provinces, sponsoring the Annual Oude Libertas Amphitheatre Summer Season, arts festivals, community projects, classical music concerts, performances on the company s wine estates, as well as the prestigious Fleur du Cap Theatre Awards, now in their 26th year. Thirty-one percent of the performances were black productions, involving emergent talent, which Distell has made it a policy to nurture and promote. Festivals and other projects supported by the foundation: Eastern Cape Grahamstown Arts Festival The last phase of the Bow Project, a threeyear community development initiative to which many South African composers contributed, is based on the Uhadi bow songs of Nofmishi Dywili, the leading overtone singer and bow player from Lady Frere, accompanied by the Sontonga Quartet. The group has performed locally and in Europe. University of Port Elizabeth The university s regular musical recitals featured the award-winning Sontonga Quartet, whose members are Marc Uys (violin), Waldo Alexander (violin), Xandi van Dijk (viola) and Brian Choveaux (cello). North West Aardklop Arts Festival Potchefstroom Maria de Buenos Aires tango opera that premiered at the Oude Libertas Amphitheatre s Summer Season, was staged at the KKNK and Aardklop in KwaZulu-Natal Hilton Festival A three-day musical festival in Durban included trumpet, oboe organ and two pianos; a classical concert for children; Angela Gilbert in concert; Moscow nights with the Kerimov Trio (violin, cello, piano); Tea with Debussy; The Carnival of the Animals; a performance of romantic chamber music; the Sontonga quartet with Anneke Lamont; Jazz for Two Pianos, Sax & Organ; and a Chopin piano recital. KwaZulu-Natal University Performances included the Odeion String Quartet, Etudes II, composed by Kevin Volans and performed by Jill Richards (piano). Free State Volksbladfees Bloemfontein Priors Runnicles a classical music concert was staged, featuring the Odeion String Quartet. Gauteng University of the Witwatersrand Performances included the Gyorgi Ligeli Commemorative Concert for six pianists; Hear and Now, a programme of Dvorak compositions, featuring Malcolm Nay (piano) and the Rosamunde Quartet (Denise Sutton, Suzanne Martens, Jeanne- Louise Moolman and Marion Lewin) joined by Carla Pohl, singing gypsy songs. Western Cape Suidoosterfees The community theatre production of Kanna hy kô Hystoe was staged at the Pentech Technikon, Belhar. Kalfiefees Hermanus Cape Town City Ballet performed Swan Lake. Woordfees Stellenbosch Performances included Black Tie Ensemble & Mimi Coertse; Russian Music from the Romantic Era; Onderweg, a concert of Elizabeth Eybers poems set to music, performed by Marica Otto and Elna van der Merwe (piano); Prof Piet Vier Ag Dekades with Marianne Serfontein, André Howard and Prof Piet (piano); Die Stem van die Vrou with Zanne Stapelberg, Marianne Serfontein and Mimi Coertse. Youth Music Festival A community development project, in collaboration with the Cape Philharmonic Orchestra and Artscape, staged a concert of classical music and jazz, featuring young South African soloists. KKNK (Klein Karoo Nasionale Kunstefees) Events staged were Kaleidoscope Concert, the University of Pretoria Symphony Orchestra under direction of Eric Rycroft with soloist Johan Botes (piano); a performance by the Sontonga Quartet and Maria de Buenos Aires, an Argentinian opera directed by Marthinus Basson with Nicole Holm in the title role. Distell also sponsored the Kanna Classical Music Prize, won by the Sontonga Quartet. Cederbergfees, Clanwilliam World-renowned South African soprano, Angela Gilbert, now resident in New York, was accompanied by KwaZulu-Natal pianist Christopher Duigan, performing Handel, Gershwin and Lizst. Also presented was Drie Kaapse Tenore with Theresa de Witt. Jazzart Dance Theatre Company and trainees performed Gregory Maqoma s re-phase a re-play at the Artscape Theatre. Abaqondisi Brothers at Khayamandi The tenth anniversary show was presented of this talented group of 12 African male singers and dancers from Khayamandi, Stellenbosch. Ikhwezi Community Theatre Festival A three-week performance workshop and festival was held at the Baxter Theatre, attended by 15 rural groups from the Western Cape. Classical music concerts University of Cape Town master classes were given to students at the UCT College of Music by pianist Prof Frank Weinstock of the University of Cincinnati, US. The Stellenbosch, Port Elizabeth Song Cycle was presented with Angela Gilbert, accompanied by Mark Nixon (piano). The Cape Philharmonic Orchestra Concert Series featured the works of Temmingh,

43 41 Shostakovitch, Sibelius, Saint-Saëns, Glazunov, Tchaikovsky, Ibert, Hofmeyr and Dvorak. The Annual Nederburg Chamber Music Concert Series, from June to October, featured Italian pianists Paola Bruni and Pasquale Lannone; Liezl-Maret Jacobs (piano), Anouk Espi (violin) and Edward McLean (cello); the Cavatina Quartet: Cheryl de Havilland (cello), Xandi van Dijk (viola), Petri Salonen (violin) and Bridget Rennie-Salonen (flute); Russian pianist Boris Petrushansky and the Hand/Dupré Guitar Duo. Concert Series at the House of JC le Roux The series featured Breakfast Included; Women Unite; Lyric Trio; Afrikaans soloist, Emile Minnie, and Magdalena de Vries (marimba) and Sarah James (saxophone). Fleur du Cap Theatre Awards These highly prestigious awards for distinguished acting, directing, indigenous scripts and contribution to theatre were made for productions staged in the Western Cape. The ten winners were announced in the national media. Oude Libertas Amphitheatre Summer Season Robándole al Alma Pure flamenco mixed with stylish, sensual and liquid movement by Ángel Muñoz, Charo Espino, Immaculada Ortega and Maribel Espino. FMR Jazz Workshop Biggish Band at Twilight JWBB, under the leadership of Jannie Hanepoot van Tonder. Original compositions and new arrangements of some indigenous South African standards by Zakes Nkosi, Hugh Masekela and Chris McGregor. Christmas under the Stars Christmas carols by the Cape Philharmonic Choir conducted by Margaret Barlow. L associazione Corale Luigi Canepa Organised by the Committee for Italians Abroad (COM.IT.ES), a Sardinian choir singing operatic and other Italian songs. Oliver Mtukudzi & Black Spirits The first African musician ever to feature on the cover of TIME magazine, the multiaward-winning Zimbabwean, and his band present chimurenga, South African mbaqanga and pop. Vilcabamba at Twilight A rich repertoire of traditional music from the Andes Mountains performed by Pedro Espi-Sanchis, family and friends. Mama Vox This all-female vocal ensemble in a mix of jazz and popular songs with Amanda Tiffin, Lisa Bauer, Monique Hellenberg and Mimi Ntenjwa. Big Band and Bosman Swing and big band music from the Mike Campbell Big Band and Gloria Bosman. Maria de Buenos Aires Marthinus Basson directs Nicole Holm in the title role. Baobabs Don t Grow Here Husband and wife James Cuningham and Helen Iskander, directed by Sylvaine Strike in the story of a Romany couple fleeing Eastern Europe for Africa. Nominated for a Total Theatre Award and The Stage Award for Acting Excellence on the 2003 Edinburgh Fringe Festival. The Sounds of Allou April at Twilight Guitarist Allou April presents a selection of Cape jazz. Van Zyl, Van Der Spuy & Vennote Barry van Zyl, drummer for Johnny Clegg, guitarist Nibs van der Spuy of Durban s Landscape Prayers, joined by guest artists like Neo Muyanga and Laurinda Hofmeyr. Suig An indigenous blend of music, theatre and sculptures with actor/writer Gys de Villiers, Stok musicians Wouter van de Venter, Leon Ecroignard and Jahn Beukes, directed by Jaci Smith. SA Ballet Theatre Kaloyan Boyadjiev s cross-cultural ballet Kopano, mixes Mozart and Makeba, with Dutch and Danish influences. Steve Louw and Big Sky at Twilight Rock guitarist and singer/songwriter Louw joined by Willem Moller (guitar), Peter Cohen (drums), Schalk Joubert (bass) and Simon Orange (keyboard). Ibuyambo-Dizu Plaatjies Singing, dancing, tales and history from sub-saharan Africa, featuring the Congo River Choir and diviner and traditional music authority Mantombi Matotiyana. Cape Philharmonic Orchestra Featuring renowned Austrian violinist Lidia Baich in a programme of Saint-Saëns, Liszt and Mussorgsky, conducted by Victor Yampolsky. Odd Enjinears An adventurous display of the musical potential of machines and installations. Band for Life at Twilight Traditional swing jazz, big band music and vocals of the swing era, featuring Maurice Gawronsky, Stuart Goodwin, Jan Hough and Andrew Ford, with singer Leslie Klein-Smith. Boi Akih This Dutch band combines Indian, African and Moluccan sound, featuring Moluccan singer Monica Akihary and Niels Brouwer (guitar), Sandip Bhattacharya (tabla and percussion) and Ernst Reijseger (cello). Rain in a Dead Man s Footprints Distell also provided the seed money for the original production of this sixth collaboration between Jazzart s Alfred Hinkel and Mark Fleishman of Magnet Theatre, featuring musicians Neo Muyanga and Thandile Mandela. Based on the history and myths of the /Xam, the original inhabitants of the Northern Cape. SOCIAL CORPORATE RESPONSIBILITY