INTERIM RESULTS For the six months ended 29 March 2020 PRESENTATION - - PowerPoint PPT Presentation

INTERIM RESULTS

For the six months ended 29 March 2020

PRESENTATION OUTLINE

1 2 3 4 5 6 REVIEW OF THE SIX MONTHS FINANCIAL PERFORMANCE TRADING PERFORMANCE NEW PRODUCTS COVID-19 IMPACT OUTLOOK 7 QUESTIONS

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

R ' m

1 988 2 151 2 507 2 680 2 937 H1 2016 H1 2017 H1 2018 H1 2019* H1 2020

* Restated

DRIVERS OF TURNOVER GROWTH

R ' m

2 680 2 937 +2.3% +5.2% +1.1% +1.0% H1 2019 revenue* Volume growth Price inflation Forex Acquisition H1 2020 revenue

* Restated

SEGMENTAL PERFORMANCE

25% 18% 16% 17% 16% 48% 50% 50% 51% 53% 27% 32% 34% 31% 31% H1 2016 H1 2017 H1 2018 H1 2019* H1 2020 International Regional - Long Life Regional - Fresh

* Restated

OPERATING PROFIT

R ' m

186 208 162 170 161 9.4% 9.7% 6.5% 6.3% 5.5% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

• 50

100 150 200 250 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%) USD 62% (2019: 57%)

Average exchange rates H1 2020 H1 2019 Change 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 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 1 763 1 470 20.0 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

. 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

H1 2020 H1 2019 Net working capital days 128 133 Inventory days 112 125 Debtor days 62 58 Creditor days (46) (50)

CASH MANAGEMENT

279 (141) (50) (73) (122) (13) (87)

• 300
• 100

100 300 Operating cashflows Net working capital changes Net interest and tax paid Dividends paid Loans repaid Lease liability payments Purchase

• f PPE

R ' m

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

988 847 259 161 108 58 238 262 588 98 53 50

FY2019 FY2020 FY2021 FY2022 FY2023 FY2024

Balance outstanding Capital repayments

. Includes bank debt and lease liabilities in terms of IFRS 16

R ' m

CURRENT BANK DEBT PROFILE

988 754 188 104 62 22 238 234 566 84 42 40

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

R ' m

PROPOSED BANK DEBT PROFILE

988 754 563 479 287 97 238 234 191 84 192 190

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

R ' m

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%

* Includes lease liabilities of R106m ^ Bank debt only, excluding lease liabilities

. Option to convert unused term facilities to

working capital facilities, if required

TRADING PERFORMANCE

TRADING PERFORMANCE - REGIONAL

. 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 R’m H1 2020 H1 2019* % change Revenue 2 474 2 220 11.5 Long Life 1 554 1 380 12.6 Fresh 920 840 9.6 Operating profit 205 169 21.1 Operating profit margin 8.3% 7.6%

* Restated

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)

Market shares (%) March 2019 March 2020 Position 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

Brand shares (%) Brand March 2019 March 2020 Position 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)

BRAND SHARE

Brand shares (%) Brand March 2019 March 2020 Position 100% fruit juice 16 20 2 Infant meals 10 10 2 Salads and pickles 14 13 3 Dry gravy 26 27 2

Moving annual total. Retailers scanning data processed by IRI Worldwide (market shares in the defined dataset, in retail prices)

TRADING PERFORMANCE - INTERNATIONAL

. Breakdown of turnover growth . Volumes

(11.5%)

. Price/mix

5.2%

. Forex

6.8%

. Net foreign exchange losses of R47.6m compared

to net gains of R14.1m in prior year R’m H1 2020 H1 2019 % change Revenue 463 460 0.5 Operating profit/(loss) (44) 4 Operating profit margin (9.5%) 0.8%

TRADING PERFORMANCE - INTERNATIONAL

. Good progress on fruit cups, particularly into the USA . Expanded footprint into USA retail market through supply agreement

with Walmart, facilitated through Massmart supplier programme

. Limited shipments to China in H1 and expect a slow recovery in H2 . Good sales of product previously destined for China into other Asian

markets

NEW PRODUCTS

NEW PRODUCTS: HINDS SPICES

Relaunch of Hinds Spices through a complete brand overhaul and range extensions

NEW PRODUCTS: PRIVATE LABEL

Ongoing newness in Fresh Foods

COVID-19 IMPACT

RESPONSE TO COVID-19

. RFG continued to trade throughout the lockdown period . National imperative to maintain reliable supply of food products . Group Covid task team constituted to manage workplace risks . Employee and community safety paramount . Protocols to reduce risk of factory closures and allow rapid cleaning

and reopening in the event of infections

. Employee assistance fund established through contributions by

directors and management

IMPACT ON TULBAGH FACTORY

. Production at Tulbagh fruit canning factory impacted by Covid cases . Factory located in Witzenberg region which is a Covid-19 hotspot . Nine Covid cases identified among employees . Screened over 720 employees at factory . Factory closed for 4 days last week for third-party deep cleaning . Close engagement with Departments of Health and Labour . Deciduous canning season due to be completed by end May

TRADING DURING LOCKDOWN

. Ongoing uplift in demand for canned goods during lockdown . Production levels have been increased to meet higher demand . Rapid slowdown in pie sales owing to restrictions on sale of hot food . Pie factories in Gauteng and KwaZulu-Natal closed periodically to

balance production with the significantly reduced demand

. Supply chain functioning efficiently despite current constraints . Sufficient raw material stock cover to meet increased demand

OUTLOOK

REGIONAL . Continued strong demand for canned fruit, vegetables and meat,

partially offset by declining juice sales, particularly in out-of-home channel

. Ready meals sales slowed in early stages of lockdown but recovered and

now performing strongly

. Restriction on pie sales to be lifted in level 3 and expect a quick

recovery, except in food service channel

. RFG’s range of product categories providing resilience . Focus on organic growth, maintaining margins and growing brand shares . Grow off renewed momentum in Africa

OUTLOOK

INTERNATIONAL

. Expect slow recovery in exports of canned fruit into China from July . Product previously destined for China being sold in other markets . Good shipments post end of March despite logistical challenges . Recent decline in Rand/US dollar exchange rate to significantly

benefit profitability in H2 and help bring about a recovery in the segment

OUTLOOK

GROUP

. Focused on cash preservation in Covid-19 environment . Working capital efficiency and reducing debt levels remain priorities . Expect material benefit in H2 from 225 bps reduction in repo rate . Borrowings can be increased if required due to Covid impacts on

cash flows

. Capital expenditure of R150 million planned for FY2020 . Board assessed impact of Covid-19 on solvency and liquidity, and

confident in the group’s ability to continue as a going concern

OUTLOOK

THANK YOU THANK YOU

DISCLAIMER

RFG 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

• n 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, or consequential loss or damage.

INVESTOR RELATIONS CONTACTS

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

www.rfg.com