ANNUAL RESULTS for the year ended September 2015 PRESENTATION - - PowerPoint PPT Presentation

ANNUAL RESULTS

for the year ended September 2015

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RHODES FOOD GROUP – ANNUAL RESULTS 2015

PRESENTATION OUTLINE

1 REVIEW OF THE YEAR 2 FINANCIAL PERFORMANCE 3 TRADING PERFORMANCE 4 OUTLOOK 5 QUESTIONS

REVIEW OF THE YEAR

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RHODES FOOD GROUP – ANNUAL RESULTS 2015

REVIEW OF THE YEAR

• Strong organic growth, particularly in regional segment
• Market share gains across core product categories
• Improved international performance in H2 as timing of

export orders and shipments normalised

• JSE listing accelerating group’s growth strategy
• Successfully integrated three acquisitions: R365 million
• Fourth acquisition concluded in 2015 effective 1 October

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RHODES FOOD GROUP – ANNUAL RESULTS 2015

ACQUISITIONS

Pacmar acquired for R165 million; fully integrated; effective 1 April

• Fruit juice manufacturer: local, regional and international markets
• Extensive synergies between Pacmar products and existing range of

bulk fruit purees and juice concentrates

• Range of Rhodes branded juices launched Sept 2015
• Pleasing revenue contribution in H2

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RHODES FOOD GROUP – ANNUAL RESULTS 2015

ACQUISITIONS

Boland Pulp R174 million; fully integrated; effective 3 August

• Produces fruit concentrates and purees
• Integral to fruit growth strategy: industrial channel
• Operates in domestic, regional and 30 international markets
• Vertical integration and synergies with Pacmar
• Produces baby foods and sauces in innovative pouches

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RHODES FOOD GROUP – ANNUAL RESULTS 2015

ACQUISITIONS

Saint Pie R26 million; fully integrated; effective 1 June

• Aligned with group’s existing pie and pastry offering
• Production centralised at existing facility in Aeroton, Johannesburg
• Manufacturing facility in Lydenburg closed
• Saint Pie brand retained; focus on forecourts

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RHODES FOOD GROUP – ANNUAL RESULTS 2015

ACQUISITIONS POST YEAR END

Deemster R25 million; effective 1 October 2015

• Vegetable canning and salad bottling business
• Produces third party brands and private label ranges
• Entry into new categories of beetroot and gherkins
• Opportunity for lateral extension of Rhodes brand

Food Service business of General Mills SA; 30 November 2015

• Produces dry and frozen bakery products
• Complements the group’s growing pies and pastries business
• Focused mainly on convenience channel
• High quality automated manufacturing facility in Johannesburg

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RHODES FOOD GROUP – ANNUAL RESULTS 2015

ACQUISITIONS POST YEAR END

Alibaba Foods R42 million; effective 1 February 2016

• Manufactures halaal Eastern foods, mainly samoosas
• All major food retailers and forecourt bakery outlets
• Produces all Woolworths’ samoosas and Indian snacks
• Strengthen group’s position in bakery and snacking category
• Complement pies and pastries business, and newly acquired

bakery business from General Mills

• Entry into retail frozen food space
• Acquisition subject to due diligence

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RHODES FOOD GROUP – ANNUAL RESULTS 2015

CAPITAL EXPENDITURE PROGRAMME

• Investing in capacity expansion and production efficiency
• Capex of R176 million in 2015 (2014: R88 million)

Investment programme 2014 - 2015 Capex Status Upgrading Bull Brand facility R50m

Ph 1: Complete Ph 2: H1 2016

Increasing storage and dispatch capacity at fruit production facilities R52m

Complete

Increasing efficiency at vegetable plant R20m

Complete

Installation and upgrading of generators R22m

Complete

Upgrading production capacity at Pacmar R26m

Completion H1 2016

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RHODES FOOD GROUP – ANNUAL RESULTS 2015

WELL-INVESTED PRODUCTION FACILITIES

11 production facilities

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RHODES FOOD GROUP – ANNUAL RESULTS 2015

INNOVATION – LONG LIFE FOODS

• New Rhodes packaging
• Green EZO tabs on cans
• Rhodes juice range
• Corned chicken introduced
• Tomato range relaunched
• Chakalaka range launched

Old New

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RHODES FOOD GROUP – ANNUAL RESULTS 2015

INNOVATION – FRESH FOODS

• Woolworths Carb Clever range

expanded

• Pie snacking range introduced
• Magpie burger pie range

launched

• Saint Pie range rationalised

and upgraded

FINANCIAL PERFORMANCE

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RHODES FOOD GROUP – ANNUAL RESULTS 2015

FINANCIAL PERFORMANCE

• Turnover +23.7% to R3.0 billion
• Normalised* operating profit +31.8% to R311 million
• Normalised* operating margin up from 9.7% to 10.3%
• Profit after tax +105.9% to R169.8 million
• Normalised** diluted HEPS +136.3% to 83.9 cps
• Maiden dividend of 24.8 cents per share

* Excludes once-off listing costs of R21.8 million in FY2015

** Assumes 221 million shares in issue in 2014 and 2015 periods, and excludes once-off listing

costs of R21.8 million in FY2015

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RHODES FOOD GROUP – ANNUAL RESULTS 2015

INCOME STATEMENT

R’m 2015 2014 % change Turnover 3 023 2 444 23.7 Cost of goods sold (2 180) (1 790) 21.8 Gross profit 843 654 28.9 Gross profit margin 27.9% 26.8% Other income 28 16 79.4 Operating costs (582) (434) 34.2 Operating profit 289 236 22.6 Net interest paid (47) (103) (54.1) Profit before tax 242 133 81.7 Tax (72) (51) 42.5 Profit after tax 170 82 105.9 Normalised HEPS Normalised diluted HEPS 87.4 83.9 36.9 35.5 136.9 136.3

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RHODES FOOD GROUP – ANNUAL RESULTS 2015

GROUP TURNOVER

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RHODES FOOD GROUP – ANNUAL RESULTS 2015

BREAKDOWN OF TURNOVER GROWTH

R'm

2 444 +4.8% +7.0% +2.5% 3 023 1 600 1 800 2 000 2 200 2 400 2 600 2 800 3 000 3 200 2014 revenue Volume growth Price inflation Forex impact Acquisitions 2015 revenue +9.4%

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RHODES FOOD GROUP – ANNUAL RESULTS 2015

SEGMENTAL TURNOVER

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RHODES FOOD GROUP – ANNUAL RESULTS 2015

OPERATING PROFIT

* Normalised operating profit and margin

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RHODES FOOD GROUP – ANNUAL RESULTS 2015

FOREIGN CURRENCY MANAGEMENT

• Rand depreciated 7% against trading basket of currencies in 2015
• Effect of the depreciating Rand largely neutralised by the group’s

hedging strategy

• Positioned to benefit from weaker currency in 2016

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RHODES FOOD GROUP – ANNUAL RESULTS 2015

WORKING CAPITAL MANAGEMENT

2015 2014 Net working capital days* 121 124 Inventory 104 111 Accounts receivable 65 55 Accounts payable (48) (42)

• Acquisitions increased working capital by R121 million on acquisition
• Trade receivables R154 million higher due to strong sales growth in Q4

* Normalised for the effect of acquisitions

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RHODES FOOD GROUP – ANNUAL RESULTS 2015

CASH MANAGEMENT

R'm

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(126) 576 (169) (408) 346 (176) 741 (577) (156) ) ) ) Ordinary share capital issued Preference share capital repaid Loans repaid Loans raised Capital expenditure Acquisitions Other EBITDA Working capital changes Net interest and tax paid 12

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RHODES FOOD GROUP – ANNUAL RESULTS 2015

FINANCIAL GUIDANCE - ACQUISITIONS

Company Deemster General Mills Alibaba Foods Effective date 1 Oct 2015 30 Nov 2015 1 Feb 2016 Purchase price (R’m) 25 Not disclosed 42 Historic turnover (R’m) 51 66 48 Historic EBITDA (R’m) Not disclosed 6 H1 2016 impact

• EBIT
• Interest cost

     

Comment Fully integrated Integration on schedule Due diligence in progress

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RHODES FOOD GROUP – ANNUAL RESULTS 2015

FINANCIAL GUIDANCE AND TARGETS

• Four acquisitions completed in FY2015 to be accretive in

FY2016

– Partially funded by debt; interest cost to increase

• Effective tax rate to be in line with corporate tax rate
• Capital expenditure of R252 million in 2016
• Capacity to raise debt to fund capex and current

acquisitions

• Committed to achieving medium-term targets

– Gross profit margin over 30% – Operating margin over 10%

TRADING PERFORMANCE

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RHODES FOOD GROUP – ANNUAL RESULTS 2015

SEGMENTAL TURNOVER

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RHODES FOOD GROUP – ANNUAL RESULTS 2015

TRADING PERFORMANCE: REGIONAL

• Volume growth of 9.9%; price inflation 9.1%; acquisitions 13.5%
• Sustained increase in demand for canned fruit, jams, meat and vegetables
• Bull Brand turnaround well on track and into final phase
• Strong growth in pie category
• Sales in Sub-Saharan Africa, excluding SA, up 55.2%
• Contributions from Pacmar (6 months) and Boland Pulp (2 months)

R’m 2015 2014 % change

Revenue 2 114 1 596 32.5 Long Life 1 185 819 44.8 Fresh 929 777 19.5 Operating profit 212 139 52.2 Operating profit margin 10.0% 8.7%

REGIONAL: LONG LIFE FOODS

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RHODES FOOD GROUP – ANNUAL RESULTS 2015

REGIONAL: LONG LIFE FOODS

• Beverage division created within Long Life and both

Pacmar and Boland Pulp successfully integrated

• Strong volume growth, improved brand share and factory

efficiencies in Bull Brand

• New Rhodes packaging launched
• Range of Rhodes brand juices

launched in September

– 25 SKUs across three pack sizes

• Strategic focus on Sub-Saharan Africa

– Growth lifted by adding canned meat and juice to product range

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RHODES FOOD GROUP – ANNUAL RESULTS 2015

REGIONAL: LONG LIFE FOODS – MARKET SHARE

Market shares* (%) Sept 2010 Sept 2013 Sept 2014 Sept 2015 Position Jams 29.9 35.8 38.4 40.5 2 Canned fruit 31.4 40.7 40.5 45.5 1 Canned vegetables 7.7 12.6 14.4 15.2 2 Canned meats

• 66.2

66.3 66.5 1 Long life fruit juice

• 9.2

2 Infant food meals

• 4.3

2

* Moving annual total. Retailer scanning data processed by Iri Aztec (market shares in the defined retail channel, in retail prices)

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RHODES FOOD GROUP – ANNUAL RESULTS 2015

REGIONAL: LONG LIFE FOODS – BRAND SHARE

* Moving annual total. Retailer scanning data processed by Iri Aztec (market shares in the defined retail channel, in retail prices)

Brand shares* (%) Sept 2010 Sept 2013 Sept 2014 Sept 2015 Position Jams 12.0 15.7 18.2 21.6 2 Jam in glass 5.7 12.5 17.4 18.6 1 Canned fruit 12.9 22.3 23.3 26.4 2 Canned pineapple 39.5 49.5 52.5 58.0 1 Canned vegetables 5.5 10.7 12.5 13.3 2 Canned tomato 8.3 20.3 20.8 24.7 2 Tomato paste 5.9 28.7 31.3 31.2 1 Corned meat

• 37.5

39.0 44.1 1

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RHODES FOOD GROUP – ANNUAL RESULTS 2015

REGIONAL: FRESH FOODS

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RHODES FOOD GROUP – ANNUAL RESULTS 2015

REGIONAL: FRESH FOODS

• Good volume growth, particularly from pies
• Growth in Corner Bakery business and opportunity for

product extensions

• Initial capacity improvement at

pie facility completed

• Acquisitions of General Mills and

Alibaba announced post year end

• Acquisitions provide opportunity for further growth in

bakery category, specifically to the convenience channel

INTERNATIONAL SEGMENT

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RHODES FOOD GROUP – ANNUAL RESULTS 2015

INTERNATIONAL: PERFORMANCE

• Turnover recovered in H2 as export orders normalised over the year
• International managed on a 12 month cycle owing to

seasonality of orders and shipping

R’m 2015 2014 % change

Revenue 909 849 7.1 Operating profit 105 96 9.8 Operating profit margin 11.6% 11.3%

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RHODES FOOD GROUP – ANNUAL RESULTS 2015

INTERNATIONAL

• Core export products are canned fruit, fruit cups, bulk

fruit purees and concentrates

• Continue to optimise core offer of

canned fruit

• Shift in fruit volumes from

international to regional market

• Growth to be driven by the industrial

channel and further value add opportunities

• Boland Pulp to enhance industrial offer

OUTLOOK

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RHODES FOOD GROUP – ANNUAL RESULTS 2015

OUTLOOK

• Focus on organic growth through market share gains

and entry into new categories

• Realise benefits from turnaround in Bull Brand
• Continue to expand presence in Sub-Saharan Africa
• Pacmar and Boland Pulp positioned for strong growth
• Finalise and integrate General Mills and Alibaba

acquisitions

• Focus on bakery and convenience channel
• Well positioned for growth in International segment
• Capital investment of R252 million for long-term growth

THANK YOU QUESTIONS

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RHODES FOOD GROUP – ANNUAL RESULTS 2015

DISCLAIMER

Rhodes Food Group Holdings Limited (“RFG” or “the company”) has acted in good faith and has made every reasonable effort to ensure the accuracy and completeness of the information contained in this presentation, including all information that may be defined as 'forward-looking statements' within the meaning of United States securities legislation. Forward-looking statements may be identified by words such as 'believe', 'anticipate', 'expect', 'plan', 'estimate', 'intend', 'project', 'target', 'predict' and 'hope'. Forward-looking statements are not statements of fact, but statements by the management of RFG based on its current estimates, projections, expectations, beliefs and assumptions regarding the group's future performance. No assurance can be given that forward-looking statements will prove to be correct and undue reliance should not be placed on such statements. The risks and uncertainties inherent in the forward-looking statements contained in this presentation include, but are not limited to: changes to IFRS and the interpretations, applications and practices subject thereto as they apply to past, present and future periods; domestic and international business and market conditions; changes in the regulatory and legislative environments; changes to operational, social, economic and political risks; and the effects of both current and future litigation. RFG does not undertake to update any forward-looking statements contained in this presentation and does not assume responsibility for any loss or damage whatsoever and howsoever arising as a result of the reliance by any party thereon, including, but not limited to, loss of earnings, profits,

• r consequential loss or damage.

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RHODES FOOD GROUP – ANNUAL RESULTS 2015

CONTACT DETAILS

Bruce Henderson CEO hendersonb@rhodesfoodgroup.com Tiaan Schoombie CFO schoombiet@rhodesfoodgroup.com Graeme Lillie IR graeme@tier1ir.co.za

www.rhodesfoodgroup.com