INTERIM RESULTS For the six months ended 29 March 2020
PRESENTATION OUTLINE REVIEW OF THE SIX MONTHS 1 2 FINANCIAL PERFORMANCE TRADING PERFORMANCE 3 4 NEW PRODUCTS COVID-19 IMPACT 5 OUTLOOK 6 QUESTIONS 7
REVIEW OF THE SIX MONTHS
REVIEW OF THE SIX MONTHS . Strong sales growth of 11.5% in the regional business . Regional growth offset by weaker international performance . International turnover severely impacted by slowdown in exports of canned fruit to China from January following outbreak of Covid-19 . Following the declaration of the state of disaster, exports further impacted by constraints at the Cape Town port in March . Net foreign exchange losses of R47.6 million contributed to international business posting a loss of R44.0 million for H1 . Operating profit 5.3% lower due to weak international performance
FINANCIAL PERFORMANCE
NEW ACCOUNTING STANDARDS IFRS 16 – Leases . Adopted on a modified retrospective approach for FY2020 . Comparatives not restated . Net increase in profit after tax R0.1 million . Right-of-use assets R82 million . Short-term lease liabilities R26 million . Long-term lease liabilities R81 million IFRS 15 – Revenue from contracts with customers . Adopted in FY2019 . Distribution and warehouse allowances reclassified from expenses to revenue . Comparatives for revenue and expense line items have been restated
FINANCIAL PERFORMANCE . Group turnover +9.6% ; Regional +11.5% ; International +0.5% . Manufacturing cost growth of 6.8% maintained below level of turnover growth, contributing to margin expansion . Operating costs impacted by higher depreciation, maintenance, insurance and advertising costs . Operating profit -5.3% and operating margin 5.5% (2019: 6.3%) . Regional margin +70 bps . International margin declined from 0.8% to -9.5% . R48.8m net unrealised losses on mark-to-market revaluation of FECs
FINANCIAL PERFORMANCE . EBITDA +4.3% and EBITDA margin 8.9% (2019: 9.3%) . Net interest paid, excluding IFRS 16 charge, down 16.7% . Improved working capital efficiency . Cash generated from operations increased by 16.6% . Net debt reduced by R24.1 million . Net debt to equity ratio improved from 58.9% to 55.0% . On a pre-IFRS 16 basis, ratio improved to 50.3% . Diluted headline earnings per share -3.1% to 31.1 cents
INCOME STATEMENT R’m H1 2020 H1 2019* % change Turnover 2 937 2 680 9.6 Direct manufacturing costs (1 920) (1 798) 6.8 Manufacturing operating costs (332) (291) 14.2 Selling and distribution costs (208) (196) 6.0 Other operating costs (275) (245) 12.4 Other income 7 6 21.3 Net forex (loss)/gain (48) 14 (>100) Operating profit 161 170 (5.3) Net interest paid (54) (58) (7.1) Profit before tax 107 112 (4.4) Tax (29) (32) (7.9) Profit after tax 78 80 (3.0) Diluted HEPS (c) 31.1 32.1c (3.0) WAN shares in issue (‘m) 261.6 261.6 - * Restated
GROUP TURNOVER GROWTH 2 937 2 680 2 507 2 151 1 988 m ' R H1 2016 H1 2017 H1 2018 H1 2019* H1 2020 * Restated
DRIVERS OF TURNOVER GROWTH 2 937 +1.0% +1.1% +5.2% +2.3% 2 680 m ' R H1 2019 Volume Price Forex Acquisition H1 2020 revenue* growth inflation revenue * Restated
SEGMENTAL PERFORMANCE 31% 31% 34% 32% 27% 53% 51% 50% 48% 50% 25% 17% 16% 16% 18% H1 2016 H1 2017 H1 2018 H1 2019* H1 2020 International Regional - Long Life Regional - Fresh * Restated
OPERATING PROFIT 250 30.0% 208 25.0% 200 186 170 162 161 20.0% 150 15.0% 100 10.0% m ' 9.7% 9.4% R 50 5.0% 6.5% 6.3% 5.5% - 0.0% H1 2016 H1 2017 H1 2018 H1 2019* H1 2020 Operating profit Operating profit margin * Restated
INTERNATIONAL REVENUE BY CURRENCY AUD 7% (2019: 10%) CAD 4% (2019: 6%) GBP 17% (2019: 13%) EUR 10% (2019: 14%) Average exchange rates H1 2020 H1 2019 Change USD 62% (2019: 57%) USD R15.37 R14.19 8.3% GBP R19.61 R18.32 7.0% EUR R16.94 R16.14 4.9%
BALANCE SHEET - ASSETS R’m H1 2020 H1 2019 % change Non-current assets 2 595 2 514 3.2 Property, plant & equipment 1 817 1 820 (0.1) Right-of-use assets 82 Intangible assets & goodwill 655 668 (1.9) Other non-current assets 41 26 57.7 Current assets 2 653 2 395 10.8 Inventory 1 405 1 369 2.6 Accounts receivable 1 202 978 22.9 Other current assets 35 35 0 Bank balance & cash on hand 11 13 (15.4) Total assets 5 248 4 909 6.9
BALANCE SHEET – EQUITIES AND LIABILITIES R’m H1 2020 H1 2019 % change Capital and reserves 2 467 2 342 5.3 Non-current liabilities 1 018 1 097 (7.2) Long-term loans 680 865 (21.4) Long-term lease liabilities 81 Other non-current liabilities 257 232 10.7 Current liabilities 20.0 1 763 1 470 Accounts payable & accruals 1 030 878 17.3 Current portion of long-term loans 186 242 (23.1) Short-term lease liabilities 26 Other current liabilities 126 63 100.0 Bank overdraft 395 287 37.6 Total equity and liabilities 5 248 4 909 6.9
WORKING CAPITAL H1 2020 H1 2019 Net working capital days 128 133 112 Inventory days 125 Debtor days 62 58 (46) Creditor days (50) . Inventory levels only 2.6% higher despite slower exports to China, and benefited from increased regional Long Life sales activity in March . Ongoing focus on working capital efficiency
CASH MANAGEMENT 279 300 (141) 100 (50) (73) m ' -100 R (122) (13) (87) -300 Operating Net Net Dividends Loans Lease Purchase cashflows working interest paid repaid liability of PPE capital and tax payments changes paid
CAPITAL INVESTMENT . Capital expenditure of R87 million in H1 (H1 2019: R129 million) . Equipment upgrades and replacement . Fruit products facility, Tulbagh . Vegetable factory, Limpopo . Pie facility, Aeroton . Additional fire protection equipment at Groot Drakenstein . Ongoing development of new pineapple plantations in Eswatini . All planned capital expenditure under review
TOTAL DEBT PROFILE 238 262 m ' R 588 988 847 98 53 259 50 161 108 58 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 Balance outstanding Capital repayments . Includes bank debt and lease liabilities in terms of IFRS 16
CURRENT BANK DEBT PROFILE 238 234 m ' R 988 566 754 84 42 40 188 104 62 22 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 Balance outstanding Capital repayments . Bullet repayment of R450m due by end FY2021 . Proposed extension of R375m capital repayments over four years
PROPOSED BANK DEBT PROFILE 238 234 m ' R 191 84 988 192 754 563 479 190 287 97 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 Balance outstanding Capital repayments . Proposed debt profile based on extending R375m of R450m capital repayment . Based on R75m being paid in FY2021; payments of R150m in FY2023 and FY2024; balance of R75m to be paid in FY2025
DEBT RATIOS H1 2020 H1 2019 Net debt* R’m 1 356 1 380 Net debt to equity* % 55.0 58.9 Net debt to EBITDA* x 5.2 5.5 Working capital facilities^ R’m 925 950 Working capital facilities utilisation^ R’m 384 274 Headroom^ % 58 71 Long-term loan facilities^ R’m 1 310 1 315 Long-term loan facilities utilisation^ R’m 866 1 106 Headroom^ % 34 16 Cost of debt Working capital facilities Prime minus 1.5% Term loan facilities Prime minus 1.25% to 1.55% . Option to convert unused term facilities to * Includes lease liabilities of R106m ^ Bank debt only, excluding lease liabilities working capital facilities, if required
TRADING PERFORMANCE
TRADING PERFORMANCE - REGIONAL R’m H1 2020 H1 2019* % change Revenue 2 220 11.5 2 474 Long Life 1 380 12.6 1 554 Fresh 840 9.6 920 Operating profit 169 21.1 205 Operating profit margin 7.6% 8.3% * Restated . Breakdown of turnover growth . Volume growth 6.0% . Price/mix 4.3% . Acquisition 1.2% . Baby food reclassified from Fresh Foods to Long Life Foods from 1 October 2019
TRADING PERFORMANCE - REGIONAL LONG LIFE FOODS . Volume growth of 6.3% . Good growth in fruit juices and canned vegetables , reflected in growth in brand share . Particularly strong sales in canned vegetables and meat products in March ahead of lockdown . Consolidation of dry foods product range ahead of Hinds Spices launch . Trading in the rest of Africa strong, especially fruit juice . Sustained higher demand for canned goods well into H2
TRADING PERFORMANCE - REGIONAL FRESH FOODS . Volume growth of 4.7% . Acquisition of protein snack foods business contributed 3.2% . Ready meals and pies continued to be main drivers of growth . Overall strong performance with further upside potential from ready meals and snacking . Pie volumes severely constrained in early H2 due to ban on sale of hot foods
MARKET SHARE (RFG as manufacturer) March March Position Market shares (%) 2019 2020 Jams 49 49 1 Canned fruit 49 49 1 Canned vegetables 17 20 2 Canned meats & meals 80 76 1 Long life fruit juices 22 24 2 Salads and pickles 29 29 1 Moving annual total. Retailers scanning data processed by IRI Worldwide (market shares in the defined dataset, in retail prices)
BRAND SHARE March March Position Brand shares (%) Brand 2019 2020 Jams 29 30 2 Canned fruit 30 29 2 Canned pineapple 61 58 1 Canned vegetable 14 17 2 Canned tomato 27 30 1 Corned meat 61 60 1 Moving annual total. Retailers scanning data processed by IRI Worldwide (market shares in the defined dataset, in retail prices)
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