[PPT] - ANNUAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 SEPTEMBER 2018 PowerPoint Presentation

SLIDE 1

ANNUAL RESULTS PRESENTATION

FOR THE YEAR ENDED 30 SEPTEMBER 2018

SLIDE 2

AGENDA

Year under review
Financial performance
Group performance
Divisional performance
Essential Foods
Groceries
International
Sustainability
Outlook
Questions

SLIDE 3

YEAR UNDER REVIEW

TERTIUS CARSTENS

SLIDE 4

SALIENT FEATURES

Frail SA economic conditions prevailed, deepened
Currency weakness, accelerated input inflation
Key category participation and volume growth

pleasing

African beverage exports resilient
Dried fruit export performance step changed
Bread and wheat flour disappoints
UK Brexit uncertainty remains
Lizi’s (UK), Wellington’s and Today’s on board
Capital investments enabling, curtailed
Cash generation strong, lean debt position
Financing structure successfully renegotiated

SLIDE 5

FINANCIAL REVIEW

1 Adjusted for Phase I B-BBEE share-based payment charge and the related hedge, as well as items of a capital nature and, in 2017 only, once-off M&A costs

Twelve months to 30 September 2018 Volume +4% Revenue +3% to R20.2 billion Adjusted operating profit1 +26% to R1 603 million Operating margin From 6.5% to 8.0% Adjusted HEPS1 +25% to 553 cents Net cash profit from operating activities +25% to R2.1 billion Dividend for the year (Final 260 cents) 365 cents

SLIDE 6

TOTAL SA FOOD PERFORMANCE

YTD Sep 2018 12MM 6MM 3MM ASK’d Value 0.7% 0.3% 1.7% ASK’d Volume 3.7% 4.4% 5.5%

Muted value gain, volume recovery off very weak base

Source: ASK’d September 2018

SLIDE 7

Corporate Share1

Value Share by Brand

BRAND PERFORMANCE

1 Measured as weighted average of Pioneer Foods’ share in 18 categories in which it operates and reads. Nielsen Trade Desk, excluding DOB’s (New categories added include defined frozen prepared meals, defined cold sauces).

12MM OCT 2017 – SEP 2018

Value Share Share points change 31.2% 0.3% 25.8% 2.0% 30.7%

0.8%

21.8%

1.3%

15.5%

0.3%

22.1%

0.2%

27.8%

1.1%

Bakery

Power Brands

Flour

Category growth 3.4% 12.6%

12.6%

1.3% 7.8% 4.5% 6.4%

SLIDE 8

FINANCIAL REVIEW

FELIX LOMBARD

GROUP PERFORMANCE

SLIDE 9

FINANCIAL REVIEW

4%

VOLUME

3%

REVENUE to R20.2 million

26%

ADJUSTED OPERATING PROFIT to R1 603 million

8.0%

OPERATING MARGIN from 6.5%

25%

ADJUSTED HEPS to 553 cents

25%

NET CASH PROFIT FROM OPERATING ACTIVITIES to R2 073 million DIVIDEND DECLARED maintained at 365 cents NET DEBT (excl. BEE) Down to R442 million

Year ended September 2018

SLIDE 10

2018 Rm 2017 Rm % Change Volumes (‘000 ton) 2 286 2 197 4 Revenue 20 152 19 575 3 Cost raw materials and packaging 11 420 11 845 4 Naked margin 8 732 7 730 13 Naked margin % 43.3% 39.5%

Gross profit %

28.8% 26.3%

Operating cost

7 129 6 453 (10) Adjusted operating profit1 1 603 1 277 26 Adjusted operating margin 8.0% 6.5%

Breakfast cereals (SA and UK),

long life juice and export fruit the major volume performers (Acquisitions + 0.5%). Sales price deflation, mainly related to maize commodity deflation (Acquisitions + 1.5%). Margin recovery related to maize performance recovery. Operating cost contained. Per unit sold, inflation of 5%. Energy and distribution challenges (Acquisitions + 2%).

GROUP OPERATIONAL INCOME STATEMENT

1 Adjusted for Phase I B-BBEE share-based payment charge and the related hedge, as well as items of a capital nature and, in 2017 only, once-off M&A costs

SLIDE 11

2018 Rm 2017 Rm % Change Revenue Essential Foods 11 859 12 470 (5) Groceries 5 120 4 403 16 International 3 173 2 702 17 Group 20 152 19 575 3 Adjusted operating profit1 Essential Foods 915 800 14 Groceries 419 357 17 International 285 121 136 Other (16) (1)

Group

1 603 1 277 26

Essential Foods Volume growth and significant deflation. Maize major contributor to improvement in performance, wheaten value chain significantly weaker. Groceries Excellent growth in volumes from major categories. Gross margin maintained. International Major improvement in fruit profitability. Excellent growth in UK cereal volumes. Immediate profit contribution from Lizi’s.

SEGMENTAL PERFORMANCE

1 Adjusted for Phase I B-BBEE share-based payment charge and the related hedge, as well as items of a capital nature and, in 2017 only, once-off M&A costs

SLIDE 12

UNDERSTANDING ADJUSTMENTS

2018 Rm 2017 Rm % Change Adjusted operating profit 1 603 1 277 26 Once-off merger and acquisition costs

(18)
Phase I B-BBEE share-based payment charge and

related hedge (30) (103)

Items of a capital nature

73 (57)

Operating profit

1 646 1 099 50 Investment income 28 22 27 Finance costs (198) (196) (1) Share of (loss)/profit of investments accounted for using the equity method

60
Profit before income tax

1 476 985 50 Income tax expense (399) (259) (54) Profit for the year 1 077 726 48

Sale of properties, captive listed shares and Heinz Foods SA JV to subsidiary. Heinz Foods SA performance. Pioneer Foods share price

performance. Hedge 100%

valued while liability is phased

ver time.

SLIDE 13

Turnover - PFG share Share of PAT1 2018 Rm 2017 Rm % Change 2018 Rm 2017 Rm % Change Other 193 179 8 26 20 30 Bokomo Botswana 464 555 (16) 19 18 6 Bokomo Namibia 272 279 (3) 1 8 (88) Heinz Foods SA 180 375 (52) (70) (27) (159) Food Concepts Pioneer Ltd

70
3
Future Life Health Products

142 148 (4) 17 17

Weetabix East Africa

90 42 114 14 5 180 1 341 1 648 (18) 7 44 (84)

Namibia encountered challenging economic circumstances. Acquired March 2017. Performed well notwithstanding political challenges and liquidation of Nakumatt. Became a subsidiary during 2017. Once-off adjustments of certain items on the Heinz Foods SA balance sheet as well as poor

perational performance.

PERFORMANCE OF JOINT VENTURES AND ASSOCIATES

Very good performance from food coating business driven by strong volume growth. Botswana major overhaul of milling operations. Two months

ut of commission. Strong run

rate thereafter.

1 Before items of a capital nature

SLIDE 14

CASH FLOW ANALYSIS

2018 Rm 2017 Rm % Change Net cash profit from operating activities 2 073 1 661 25 Change in working capital 281 752 Inventory (38) 178 Debtors (20) 271 Creditors 339 303 Cash effect from hedging activities 2 166 Net cash generated by operations 2 356 2 579 Cash effect B-BBEE share-based payment charge and the related hedge (1) (28) Settlement of forward purchase contract on

wn equity
(493)

Income tax paid (364) (288) Net cash flow from operating activities 1 991 1 770 12

Major contributors:

International debtors management step

changed.

Accounts payable performance enhanced

by Sunday year-end.

Further opportunity in:

○ Inventory - Investment in S&OP. ○ Accounts payable - Interest rate differentials. Improved operating performance.

Continued strong cash generation

SLIDE 15

GROUP NET DEBT AND DEBT EQUITY RATIO

Excellent cash conversion:

Growth in cash profit
Improved working capital

management

Contained capital spend
Cash conversion ratio of 67%

○ Highest in 6 years Increased syndicated debt facilities at very competitive rates

SLIDE 16

DIVISIONAL PERFORMANCE

ESSENTIAL FOODS

RIAAN HEYL

1

SLIDE 17

Improved EBIT performance lead by maize
Wheaten value chain underperformed

○ Industry capacity and competitive landscape

Balance of portfolio satisfactory
Continued deflation vs. cost pressure

○ All 6 main categories (Trade Desk)1 ○ Essential Foods lower deflation than category (5 out of 6 including maize and bread)1

Maize category sustained volume growth2

○ Significant down-trading observed

Bakeries H2 traction encouraging

ESSENTIAL FOODS

Performance summary

1 Source: Nielsen Trade Desk 12MM Sep 2018 2 Source: SAGIS

SLIDE 18

ESSENTIAL FOODS

Performance summary – 12 months ended 30 September 2018

Rice & maize, but all categories positive Bakeries +1% (Q4: +5%)

+2%

VOLUMES

Strong full year maize performance Wheat milling & baking remained under pressure

+14%

OPERATING PROFIT

R915M

Balance of Grains lost momentum in H2

+1.3pp

OPERATING MARGIN

7.7%

2017: 6.4%

5%

EXTERNAL REVENUE

R11.9BN

Maize deflation 22% Marginal inflation bread and rice only Generated R1.6bn cash from operations

SLIDE 19

ESSENTIAL FOODS

Maize

Industry milling all time high September 20181

○ Raw material, consumer value, capacity

Category down-trading accelerated

○ Fuel/transport cost impact on consumer ○ Deflation despite raw material inflation2 ○ DOB volume share of Trade Desk: 26% → 34%3

White Star maintained value share leadership

○ White Star value/volume share ratio: 1.11 → 1.253 ○ White Star RSP deflation 11% vs. category 25%3

White Star Instant Porridge gained further traction

○ Trade Desk Q4 volume leadership established3 ○ Enhanced overall category performance

1 Source: SAGIS 2 Source: SAFEX WM near month, STATS SA Food Price Monitor 3 Source: Nielsen Trade Desk 3MM Sep 2017 vs. Sep 2018

SLIDE 20

ESSENTIAL FOODS

Maize OUTLOOK

Category demand and consumer quest for value sustained

○ Ample raw material and constrained consumer ○ Inflationary pressure across staple categories

Response

○ Manage immediate raw material cost pressure ○ Restore White Star volume relevance ○ Investment in process innovation ○ Uncompromised White Star quality ○ Optimise sales mix ○ Sustain White Star brand support and leverage basket

Weaker F19 EBIT contribution expected in H1

SLIDE 21

ESSENTIAL FOODS

Wheat milling and baking

Wheat milling and baking margins remained

constrained ○ Industry milling capacity in a soft demand cycle ○ Inability to recover cost pressure

Bread deflation first time ever from January 20171

○ Some price relief noted in September 2018

Procurement volatility remains

○ Import duty, import origins, currency

Bakeries operational execution and route-to-market

effectiveness step-changed in H2 → volume traction ○ Production damages all time low ○ Bread quality improved ○ Increased Sasko bread availability and service ○ 6 700 additional outlets served on average daily September 2018 vs. 2017

1 Source: STATS SA Food Price Monitor

SLIDE 22

ESSENTIAL FOODS

Wheat milling and baking OUTLOOK

Competitive environment to remain intense
Inflationary cost push evident
Impact of VAT legislative change uncertain
Durban Mill on stream early 2019, enabling:

○ Bread growth ○ Supply chain efficiencies ○ Flour category participation

Bakeries operational execution to be sustained

○ Availability and quality

Capacity investments made

SLIDE 23

ESSENTIAL FOODS

Pasta, rice, dried vegetables

Reasonable pasta performance

○ H2 impacted by growth of imports and category deflation

Rice delivered despite promotional frenzy

○ Spekko market share restored post H1 supply chain disruptions

Dried vegetables sustained performance

OUTLOOK

Pasta category growth potential and capacity to participate
Spekko growth to be sustained

○ Recognised quality platform ○ Supply chain capabilities

SLIDE 24

DIVISIONAL PERFORMANCE

GROCERIES

MARTIN NEETHLING

2

SLIDE 25

GROCERIES

Portfolio delivered strong volume recovery in core

+15%

VOLUMES

+16%

EXTERNAL REVENUE

R5.1BN

Wellington’s adds 4%, Organic growth of 12% Portfolio inflation of 1.3% Moderate inflation

+0.1pp

OPERATING MARGIN

8.2%

2017: 8.1% Strong cereals and LLFJ performance

+17%

OPERATING PROFIT

R419M

Snacks, dilutables and Lipton regress, Wellington’s dilutes profitability Wellington’s contributes to 0.6pp margin dilution

SLIDE 27

GROCERIES

Cereals

Excellent volume performance
Weet-Bix 450g up 1% in Q4F18 vs. declines earlier in the year2
Portfolio delivered 1.7% CAGR growth in price from 2016
Weet-Bix additional capacity utilised in line with plan – factory
perates at high levels of efficiency
Cereals grows volume and value share in expanding category1

and Pronutro achieves 3 year market share high

Strong volume growth of 31% on Bokomo Corn Flakes, due to

close management of relative shelf pricing

Bokomo Corn Flakes surpasses Kellogg’s 1kg value share in

major retailer past 3 months

Breakfast portfolio strategy gaining traction

1 Source: Nielsen Trade Desk 6MM March 2018 2 Morgan Stanley report, 30 October 2018

SLIDE 28

GROCERIES

Excellent juice volume performance, up 28%
Strong LLFJ market share recovery, with LiquiFruit gaining 2.0% points

value market share growth1. Ceres and Fruitree also gain share

Judicious price point management, and effective promotional support,

assisted to “restore the core”

Increased price competitiveness compared to CSD’s2 supported demand
Summer pricing moved only 0.7% on key 1l LiquiFruit pack
LLFJ manufacturing architecture progressed well
Dilutables category volume continues to decline, however Wild Island

volumes recovered in H2

Lipton gained share in weak category

1 Source: Nielsen Trade Desk 12MM Sep 2018 2 Morgan Stanley report, 30 October 2018

Beverages

SLIDE 29

GROCERIES

Included in portfolio from June 2018
Provided top line growth, but margin dilutive
Immediate uptick in sales performance achieved
Frozen category grew 4.5% in volume, with Today’s

basket growing 14.4%1

Condiments grew 1.3% in volume, with Wellington’s/

Heinz basket growing 26%1

Supply discontinuities on imported lines hampered

service levels

Introduction of John West MSC Tuna a first in SA

1 Source: Nielsen Trade Desk 3MM Sep 2018

Pioneer Foods Wellington’s (previously Heinz Foods SA)

SLIDE 30

GROCERIES

Balance of Portfolio

Fruit margins contracted due to unfavourable supply

mix

Moir’s baking aids continues to gain in growing

INTERNATIONAL

THUSHEN GOVENDER

3

SLIDE 33

INTERNATIONAL

Performance summary – 12 months ended 30 September 2018

Fruit and beverage exports delivered Lizi’s (UK) acquisition contributed

+12%

VOLUMES

+17%

EXTERNAL REVENUE R3.2BN

Continued traction in Nigeria Vine fruit USD export prices at all time high

+4.5pp

OPERATING MARGIN 9%

+136%

OPERATING PROFIT R285M

Nigeria and UK contribution increasing Fruit availability, Mozambican recovery Strong performance across portfolio Weaker rand delivers margin enhancement 2017: 4.5%

SLIDE 34

INTERNATIONAL

Consumer Exports

Notable improvement from strategic markets enabled by new

route to market models

Improved USD liquidity in some markets
Prudent credit management regime
East African markets continue to grow, enabled by in-market

beverage team within the WEA JV

Socio-economic conditions in Zimbabwe remain under pressure
Increasing tariff and non-tariff barriers across African markets

remain an issue

Ongoing focus on supply chain efficiencies to improve service

delivery

SLIDE 35

Increasing focus on brand development

INTERNATIONAL

SLIDE 36

INTERNATIONAL

Fruit Exports

2018 season delivered a record raisin crop with improved

quality

Higher USD vine export prices fuels local competition
Strong global demand for SA vine fruit, supported pricing

○ Vine fruit quality ○ Short US crop ○ Short Greece currant crop

Western Cape drought impacted currants and tree fruit, in

particular apricots

International market development in progress to address

local surplus of peaches and pears

Hedging policy mitigates currency risk

SLIDE 37

INTERNATIONAL

United Kingdom

Overall volume growth driven by granolas and porridges
Fruit Bowl redesign and launch

○ Brand architecture updated to appeal to a broader target market ○ Price/margin focus reduces volume however enhances profitability

Private label wheat biscuit performance impacted by category

decline

Integration of the Lizi’s completed, focussed growth strategy

○ Adjacent category entry, breakfast drinks ○ Relaunch of kids product offering

Continued focus on efficiencies as labour and energy costs grow

ahead of inflation

SLIDE 38

INTERNATIONAL

Nigeria

Current year performance driven by the sausage roll

SUSTAINABILITY

TERTIUS CARSTENS

SLIDE 41

SUSTAINABILITY

Corporate Social Investment

○ School Breakfast Nutrition Programme ○ 6 provinces, 29 schools, 26 000 learners

Enterprise and Supplier Development

○ 4 x Majority black-owned commercial farms ○ 7 x Independent Distribution Contractors, with R21m in loans advanced and 191 jobs created

Pioneer Foods Education and Community Trust

○ 55 bursary students, community and youth projects

Enrolled 193 unemployed learnerships, 59 apprentices
Environment

○ Water conservation success across the business Flagship projects

SLIDE 42

OUTLOOK

TERTIUS CARSTENS

SLIDE 43

STRATEGIC FOCUS

Profitable growth

Drive above market growth

○ Alternative routes to market - local and export ○ Innovation - highly selective approach ○ Smaller categories to contribute

Continue to enhance competitiveness

○ Operating cost discipline ○ Process efficiency fixation ○ Logistics network enhanced ○ SAP ERP refresh and future readiness

Acquisitive vigilance

○ M&A work in progress, price expectations pose a barrier

Geographic expansion

○ Baking capacity in Lagos, Nigeria ○ Exploring similar approaches elsewhere in Africa

SLIDE 44

EXPECTATIONS

Muted trading and demand environment
Input cost inflation a reality
Competitiveness in maize elevated and to remain
Bread volume traction encouraging
Sound vine fruit crop expected
Beverage capacity investment
Pioneer Foods Wellington’s turnaround
Trade participation and consumer relevance key
Prudent capital investment for growth and

efficiency Facing the challenges

SLIDE 45

THANK YOU

This document contains forward looking statements that, unless otherwise indicated, reflect the company’s expectations as at 19 November

2018. Actual results may differ materially from the company’s expectations if known and unknown risks or uncertainties affect the business, or if

estimates or assumptions prove to be inaccurate. The company cannot guarantee that any forward looking statement will materialise and, accordingly, readers are cautioned not to place undue reliance on these forward looking statements. The company disclaims any intention and assumes no obligation to update or revise any forward looking statement even if new information becomes available as a result of future events

r for any other reason, save as required to do so by legislation and/or regulation.