interim results · review of the six months competitive performance from regional segment continued...

INTERIM RESULTSFOR THE SIX MONTHS ENDED 1 APRIL

2018

PRESENTATION OUTLINE

1 REVIEW OF THE SIX MONTHS

2

3

4

5

6

7

CAPITAL INVESTMENT

FINANCIAL PERFORMANCE

TRADING PERFORMANCE

MARKET-LEADING BRANDS

INNOVATION

OUTLOOK

JOB015236_Rhodes_AnalystBook_SlidesTemplate – May 18, 2018 5:15 PM

RHODES FOOD GROUP INTERIM RESULTS 2018 1

REVIEW OF THE SIX MONTHS



REVIEW OF THE SIX MONTHS

▪ Competitive performance from regional segment

▪ Continued market share gains across core categories

▪ Trading conditions constrained domestically and regionally

▪ International impacted by higher canned fruit costs due to drought,

stronger Rand, weak market for industrial purees and concentrates

▪ Acquistions of Pakco and Ma Baker contributed revenue of R209m

▪ Increased capital investment programme



INTEGRATION OF RECENT ACQUISITIONS

Pakco▪ Performed well in first full year since acquisition▪ Restructure fully settled and significant cost duplication removed▪ Renewed focus has brought about improvement in sales distribution▪ Business tracking ahead of expectations▪ Brand portfolio relaunched in March and well accepted by trade

– extensive product innovation– new pack formats– refreshed packaging designs



INTEGRATION OF RECENT ACQUISITIONS

Ma Baker▪ Integration has taken longer than initially planned▪ Top-line maintained but operating issues took time to settle▪ Once-off costs resulted in a loss for first half▪ Changes made to management team▪ Pietermaritzburg plant restructured to focus only on baking,

repackaging and distribution▪ Automation of Pinetown plant completed in April▪ Integration challenges addressed and

business now profitable▪ Focus on improving margins to

achieve expected level of profit




▪ Turnover +16.6% to R2.5 billion– Regional +19.5%

– International +3.6%

▪ Gross profit margin 25.3% (2017: 27.1%)– Regional fresh foods impacted by lower Ma Baker margins

– Regional long life foods consistent with prior year

– Increased costs and currency impact on international

▪ Operating cost growth, excluding acquisitions, contained to 9.2%– Depreciation and amortisation R19 million higher owing to higher capex

over past two years and acquisitions of Pakco and Ma Baker

– Further impacted by once-off Ma Baker costs and Alibaba relocation

Note: The reporting period comprises 26 trading weeks compared to 27 weeks in the comparable prior period




▪ Operating margin 6.5% (2017: 9.7%)– Regional impacted by Ma Baker dilution and once-off costs

– On a comparable basis regional margin in line with prior period

– International impacted by weak industrial purees market, higher canned fruit costs and strengthening currency

▪ Interest payments R17.4 million higher at R51.9 million– Increased capex programme and funding Ma Baker acquisition

▪ Profit after tax -35.1% to R80.9 million

▪ Headline earnings -34.8% to R82.4 million

▪ Diluted HEPS -38.9% to 31.4 cps

▪ 6.7% increase in weighted average number of shares



INCOME STATEMENT

R’m H1 2018 H1 2017 % changeTurnover 2 507 2 151 16.6Cost of goods sold (1 874) (1 567) 19.5Gross profit 633 584 8.4

Gross profit margin 25.3% 27.1%Other income 36 41 (11.6)Operating costs (507) (417) 21.7Operating profit 162 208 (22.2)Net interest paid (52) (34) 50.3Profit before tax 110 174 (36.6)Tax (30) (49) (38.7)Profit after tax 80 125 (35.1)

Diluted HEPS 31.4c 51.4c (38.9)WAN shares in issue (‘m) 252.6 236.7 6.7



GROUP TURNOVER GROWTH

1 1521 295

1 9882 151

2 507

H1 2014 H1 2015 H1 2016 H1 2017 H1 2018

R'm



COMPONENTS OF TURNOVER GROWTH

R'm

2 151

+6.3% +1.3%

-0.7%

2 507

1 200

1 400

1 600

1 800

2 000

2 200

2 400

2 600

H1 2017revenue

Volumegrowth

Priceinflation

Foreximpact

Acqui-sitions

H1 2018revenue

+9.7%



SEGMENTAL TURNOVER

350 345 500 396 411

429 503

949 1 066 1 251373 447

539 689

845

H1 2014 H1 2015 H1 2016 H1 2017 H1 2018International Regional - Long Life Regional - Fresh

R'm



107 126

186 208

162

9.3% 9.7% 9.4% 9.7%

6.5%

0%

5%

10%

15%

20%

25%

30%

-

50

100

150

200

250

H1 2014 H1 2015 H1 2016 H1 2017 H1 2018Operating profit Operating profit margin

OPERATING PROFIT

R'm



INTERNATIONAL REVENUE BY CURRENCY

AUD 18% (2017: 22%)

CAD 3% (2017: 4%)

GBP 13% (2017: 12%)

EUR 11% (2017: 14%)

USD 53% (2017: 47%)

ZAR 2%(2017: 1%)

▪ Rand appreciated 4% against trading basket of currencies in H1 2018 (H1 2017: Rand appreciated by 11%)

▪ Foreign exchange hedging policy maintained



BALANCE SHEET - ASSETS

R’m H1 2018 H1 2017 % change

Non-current assets 2 334 1 914 21.9Property, plant & equipment 1 659 1 272 30.4Intangible assets & goodwill 647 633 2.2Biological assets 11 9 20.0Other non-current assets 17 -

Current assets 2 260 2 103 7.5Inventory 1 393 1 320 5.5Accounts receivable 779 702 11.0Biological assets 11 19 (43.7)Other current assets 60 22 177.8Bank balance & cash on hand 17 40 (56.9)

Total assets 4 594 4 017 14.4



BALANCE SHEET - EQUITY AND LIABILITIES

R’m H1 2018 H1 2017 % change

Capital and reserves 2 240 2 123 5.5

Non-current liabilities 847 646 31.2

Current liabilities 1 507 1 248 20.6Accounts payable & accruals 737 683 7.9

Other current liabilities 289 226 27.4Bank overdraft 481 339 42.0

Total equity and liabilities 4 594 4 017 14.4



WORKING CAPITAL MANAGEMENT

H1 2018 H1 2017

Net working capital days 139 149Inventory days 137 147Debtor days 51 48Creditor days (49) (46)

▪ Recovery of international sales volumes contributed to improved inventory days



CASH MANAGEMENT

240

(103)

(68)76

(82)(105) (3)

(264) (300)

(200)

(100)

-

100

200

300

Operatingcashflows

Workingcapital

changes

Net interestand tax paid

Dividendspaid

Loansraised

Loansrepaid

Other Purchaseand disposal

of PPE

R'm



TRADING PERFORMANCE



REVENUE CONTRIBUTION



REGIONAL PERFORMANCE

R’m H1 2018 H1 2017 % change

Revenue 2 097 1 755 19.5Long Life 1 252 1 066 17.4Fresh 845 689 22.7

Gross profit margin 27.5% 28.9%Operating profit 164 162 1.4Operating profit margin 7.8% 9.2%

▪ Components of turnover growth– Volume growth 5.1%– Price/mix 2.5%– Acquisitions 11.9%

▪ Operating margin diluted by once-off costs and Ma Baker loss in Fresh Foods



REGIONAL PERFORMANCE

▪ Continued strong organic growth

▪ Strong performance from bakery category, driven by new products

▪ Continued good growth in pies, snacking and ready meals

▪ Fruit juice performed well in highly competitive environment

▪ Manufacturing and distribution agreement concluded with BOS Brands

▪ Sales in sub-Saharan Africa slowed to 19.6% as strengthening Rand

made products less price competitive in certain markets

▪ Pakco products gaining good traction and new launches will add further momentum



INTERNATIONAL PERFORMANCE

R’m H1 2018 H1 2017 % change

Revenue 411 396 3.6Gross profit margin 16.8% 25.3%Operating (loss)/profit (1) 50 (102.7)Operating profit margin (0.5)% 12.6%

▪ Components of turnover growth– Price/mix (4.1)%– Volumes 11.5%– Forex (3.9)%

▪ R51m movement in operating profit had a significant effect on group results▪ Canned fruit market stable but H1 operating margin well below guided 10%▪ Losses incurred on industrial products



INTERNATIONAL PERFORMANCE

▪ Export volumes recovered

▪ Impacted by increased cost of canned fruit owing to drought in

Western Cape over the past two years

▪ Industrial puree market remains weak

▪ Further impacted by strengthening Rand

▪ Industrial product costs will reduce in H2 due to the lower price

paid for fruit

▪ Business is on track to be utilising 50% of industrial product output

internally by 2019



CAPITAL INVESTMENT PROGRAMME



WELL CAPITALISED PRODUCTION BASE

15 production facilities located close to source

of raw materials and markets

* Site being consolidated into facilities at Groot Drakenstein

*



INCREASED CAPITAL INVESTMENT

▪ Ongoing investment to expand capacity and enhance efficiencies across production base

▪ R1bn capital investment programme from 2017 – 2019

▪ Estimated R850m invested in FY2017 and FY2018

▪ Investing in new and upgraded facilities, mainly for new product categories entered through acquisition

▪ Priority to ensure projects are completed in FY2018 to generate returns to enhance group earnings

▪ Capex to reduce in FY2019 and normalise in FY2020



CAPITAL INVESTMENT PROJECTS 2017 - 2019

Projects completed in FY2017

Meat production facility: phase 3 of 3-year upgrade completed

New flexible packaging and baby foods factory, Groot Drakenstein

Fruit production facility Tulbagh: new fruit cup line commissioned

Fruit juice facility: installation of two new juice lines



CAPITAL INVESTMENT PROJECTS 2017 - 2019

Installation of clear base juice concentrate plant**Relocation of pulps and purees to Groot Drakenstein

New food technology laboratory and product development centre**Dry packed foods (Pakco): overhaul of dry-packed facility and installation of two new packaging lines**

New baked bean production facility, Krugersdorp**Pies and pastries KZN (Ma Baker): new automated pie making line**

Bakery facility: installation of new line for non-pie pastry products**Expansion of ready meals plant to accommodate consolidation of snacking (former Alibaba Foods business) (early FY2019 completion)

New 1 000ha pineapple plantation on leased land in Swaziland (over three years)

** Projects completed during H1 and early H2 FY2018



CAPITAL INVESTMENT PROJECTS

Groot Drakensteinproduction hub

Dairy plant

New lab and product development centre

Fruit cold stores

Ready meals plant

New ready meals factory services

New ready meals extension

New clear juice plantNew pulps and purees location

Regional DC

New baby food plant

Ready meals bulk store

RFG head office




Food technology laboratory and product development centre Groot Drakenstein




Clear juice concentrate plantGroot Drakenstein




Clear juice concentrate plant




Baked beans production facility Krugersdorp



MARKET-LEADING BRANDS



EXPANDING BRAND PORTFOLIO



MARKET SHARE (RFG as manufacturer)

Market shares* (%) March 2017

March 2018

Position

Jams 48 48 1

Canned fruit 46 46 1

Canned vegetables 19 16 2

Canned meats & meals 66 72 1

Long life fruit juices 17 22 2

Salads and pickles 21 24 3

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



BRAND SHARE

Brand shares* (%) March 2017

March 2018

Position

Jams 27 29 2

Canned fruit 26 26 2

Canned pineapple 55 53 1

Canned vegetables 16 13 2

Canned tomato 29 31 1

Corned meat 50 59 1

100% fruit juice 10 16 2

Infant food meals 6 8 2

Salads and pickles 13 15 3* Moving annual total. Retailers scanning data processed by IRI Worldwide (market shares in the defined retail channel, in retail prices)



INNOVATION: PRODUCT AND PACKAGING



PAKCO Authentic Asian cuisineNew products, pack formats

and refreshed packaging



BISTO

Bisto Corn Flour range introduced

New and innovative pack formats, and

flavours



Southern Coatingnew packaging and improved recipes

Rhodes Trottersjelly range extended



BULL BRAND

Bull Brand stock powder

launched

Bull Brand Woza Wozasoya mince



ONGOING NEWNESS IN LONG LIFE FOODS

Rhodes 600g plastic cup range

Rhodes 100% juice range200ml leaf pack



ONGOING NEWNESS IN LONG LIFE FOODS

BOS ice tea

RhodesSquish

jelly

Rhodes Hindscustard powder



ONGOING NEWNESS IN FRESH FOODS



OUTLOOK



OUTLOOK

Regional▪ Trading conditions expected to remain constrained▪ Maintain momentum in sub-Saharan Africa; conditions remain tough▪ Maximise benefits from recent acquisitions and major projects▪ Grow brand shares▪ Benefit from Pakco brands in Long Life product offeringInternational▪ Expect to return to profitability in H2 but margin will remain low▪ Strengthening Rand remains a risk to performance▪ Benefit from sale of lower cost-based industrial products▪ Expect small increase in foreign selling prices of canned fruit▪ Continued improvement in volumes



OUTLOOK

▪ RFG investment case remains robust despite headwinds in international business

▪ Ma Baker now profitable and expected to contribute to H2 earnings, although at a lower level than originally anticipated

▪ Working capital management a priority to reduce interest costs

▪ Capital investment of R115 million committed for second half

▪ Focus on completing current capital investment programme to generate returns for shareholders into 2019

▪ Committed to medium-term targets

▪ Gross profit margin over 30%

▪ Operating margin 10% - 12%



THANK YOU



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, or consequential loss or damage.



INVESTOR RELATIONS CONTACTS

Bruce Henderson CEO [email protected]

Tiaan Schoombie CFO [email protected]

Graeme Lillie IR [email protected]

www.rfg.com



CO

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2018

GROUP TU

RNOVER

(R’m

illion)

2014 2015

2016 2017

2018

1 1521 295

2 1512 507

1 988

CAGR* 21.5%

*Compound annual grow

th rate.

Long Life FoodsFresh Foods

International

16%

34%

50%

REGIONAL

INTERNATIONALREVENU

E CON

TRIBUTION

BY SEGM

ENT

KEY FEATURES FOR THE SIX MONTHS

GR

OU

P TU

RN

OVER

UP16.6%

HEA

DLIN

E EAR

NIN

GS

34.8%LOW

ER

ON

WEA

K IN

TERN

ATION

AL R

ESULTS

DILU

TED H

EPS

38.9%DOW

N

TO 31.4 C

ENTS

REG

ION

AL TU

RN

OVER

UP19.5%

INTER

NATIO

NA

L TUR

NO

VERUP3.6%

COMM

ENTARY

PROFILE R

hodes Food Group is a leading producer of fresh, frozen and long life convenience m

eal solutions for customers and consum

ers across South A

frica, sub-Saharan A

frica and in major global m

arkets. The growing portfolio of m

arket leading brands, which

includes Rhodes, B

ull Brand, M

agpie, Squish, Bisto, H

inds and Pakco, is com

plemented by private label product ranges packed

for major South A

frican retailers and international customers.

TRADING AN

D FINAN

CIAL PERFORMAN

CEG

roup turnover for the six months increased by 16.6%

to R2.5 billion, w

ith organic growth of 6.9%

.

Turnover in the regional segment (South A

frica and the rest of Africa) increased by 19.5%

, with organic grow

th of 7.6%.

The regional segment accounted for 8

4% (2017: 82%

) of total revenue.

• Fresh Foods sales increased by 22.7% (9.3%

organic growth) w

ith a strong performance from

the bakery category driven by product innovation and continued good grow

th in pies, snacking and ready meals.

• Long Life Foods increased turnover by 17.4% (6.5%

organic growth) w

ith the fruit juice category again performing w

ell in a highly com

petitive environment. The group’s brands continued to gain m

arket share across core product categories. Grow

th in the rest of A

frica has slowed as the im

pact of the stronger Rand in certain m

ajor African m

arkets has made the group’s products less

price competitive.

The acquisitions of Pakco and M

a Baker, w

hich were not included in the com

parable prior period, contributed combined turnover

of R20

9 million. P

akco has performed ahead of expectations in its first full year in the group w

hile some initial challenges w

ere experienced at M

a Baker. These have been addressed and the integration has been bedded dow

n.

International turnover increased by 3.6%. W

hile export volumes have recovered the business has been im

pacted by the increased costs of canned fruit due to the ongoing drought in the W

estern Cape and the strengthening of the R

and against the group’s trading currencies.

The reporting period comprises 26 trading w

eeks compared to 27 w

eeks in the prior period.

The group’s gross profit margin w

as lower at 25.3%

(2017: 27.1%) ow

ing mainly to increased costs and the adverse currency

impact in the International business. The regional gross profit m

argin was im

pacted negatively by lower m

argins in the Ma B

aker business. The gross profit m

argin of the Long Life component of the regional business w

as maintained at last year’s levels.

Operating costs, excluding the im

pact of the two acquisitions, grew

by 9.2%. D

epreciation and amortisation increased by

R19 m

illion owing to the higher level of capital expenditure in the past tw

o years and the acquisitions of Pakco and M

a Baker at

the end of the prior period. Once-off costs relating to the M

a Baker integration and the relocation of the snacking plant (form

erly A

libaba Foods) to the Groot D

rakenstein production facility also contributed to the increase.

The group operating margin declined from

9.7% to 6.5%

. The regional operating margin reduced from

9.2% to 7.8%

owing to the

dilution caused by the Ma B

aker business and the once-off costs referred to above. The regional margin on a com

parable basis w

as in line with the prior period. The w

eak market for industrial purees, increased canned fruit costs and strengthening currency

contributed to the international segment posting a loss for the first half.

Interest payments w

ere R17.4 m

illion higher at R51.9 m

illion due to the increased capital investment program

me and funding for

the Ma B

aker acquisition.

Profit after tax declined by 35.1%

to R8

0.9 million w

ith headline earnings 34.8%

lower at R

82.4 million. D

iluted headline earnings per share decreased by 38.9%

to 31.4 cents, in line with the group’s trading statem

ent issued on 20 March 2018. The w

eighted average num

ber of shares in issue has increased by 15.9 million or 6.7%

over the prior six-month period.

RH

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72

COMM

ENTARY continued

The ongoing focus on efficient working capital m

anagement is reflected in the increase in net w

orking capital being contained to 7.2%

.

Cash generated from

operations of R135.8 m

illion was R

42.3 million higher than the prior period due to the low

er investment in

working capital. The group’s net debt to equity ratio increased to 6

0.4% (2017: 45.2%

) owing to the higher level of funding for the

capital investment program

me.

The group invested R26

8 million (2017: R

233 m

illion) in capital projects in the first half. Major projects include capacity expansion

at the Gauteng pie and bakery facilities, com

missioning a new

baked bean production facility, upgrading facilities at Pakco and M

a B

aker, and the installation of a clear juice concentrate plant at the Groot D

rakenstein production hub to further vertically integrate the fruit juice operation.

OUTLOOK

Driving organic grow

th, increasing brand shares and extracting benefits from the recent acquisitions and m

ajor projects will be

the focus areas in the regional business. The group will look to m

aintain mom

entum in sub

-Saharan Africa and benefit from

the addition of the P

akco brands to the Long Life product offering.

The Pakco brand portfolio w

as relaunched in March w

ith extensive product innovation, new pack form

ats and refreshed packaging designs across the B

isto, Hinds, P

akco and Southern Coating brands.

After reporting a loss for the first half, M

a Baker has returned to profitability and is expected to be earnings accretive in the

second half.

The international business should benefit in the second half from the sale of low

er cost-based industrial products from the

2018 season coming onto the m

arket as well as a sm

all uplift in foreign selling prices of canned fruit and continued improvem

ent in volum

es. How

ever, the operating margin for the international segm

ent will rem

ain low and a strengthening R

and remains a risk

to performance.

The group plans a further R115 m

illion capital investment in the second half of the year. The com

pletion of the current production capacity expansion and upgrade progam

me is a priority to ensure that these projects start generating returns to enhance the

group’s earnings. Working capital m

anagement rem

ains a focus area to reduce interest costs.

Trading conditions are expected to remain constrained over the rem

ainder of the financial year. While the im

proving consum

er confidence in the country is positive for growth, it is too early to expect any m

arked improvem

ent in the regional trading environm

ent.

Any reference to future perform

ance included in this announcement has not been review

ed or reported on by the auditors.

Bruce Henderson

Tiaan Schoombie

Chief Executive Officer

Chief Financial Officer

Groot D

rakenstein22 M

ay 2018

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CONDENSED CONSOLIDATED STATEMENT

OF FINANCIAL POSITION

Reviewed

Review

ed

Six-month

Six-month

Audited

period endedperiod ended

Year ended

1 April

2 April

1 October

20182017

2017

Notes

R’000R

’00

0R

’00

0

ASSETS

N

on-current assets

2 333 8151 914 124

2 145 186

Property, plant and equipm

ent4

1 658 5741 272 0

391 4

60 493

Intangible assets

202 49016

4 138

207 282G

oodwill

4

44 857

46

8 984

457 183

Investment in associate

55 740

––

Biological assets

10 760

8 96

310 6

64

Deferred taxation asset

2 688

–9 2

94

Loans receivable

8 706–

270

Current assets

2 259 7952 102 4

38

1 96

4 90

3

Inventory6

1 393 4911 320 301

1 144 0

80

Accounts receivable

779 390

702 041

767 679B

iological assets

10 55318 742

10 553

Loan receivable

4 1233 307

6 170Taxation receivable

40 80

410 0

84

32 193Foreign exchange contract asset

14 237

8 021–

Bank balances and cash on hand

17 197

39 942

4 228

Total assets

4 593 6104 016 5

624 110 0

89

EQUITY AN

D LIABILITIES

Capital and reserves

2 239 771

2 122 7162 235 8

65

Share capital

1 565 5091 5

65 50

91 5

65 50

9Equity-settled em

ployee benefits reserve

13 1895 776

8 779A

ccumulated profit

652 025

541 74

4652 326

Equity attributable to owners of the com

pany

2 230 7232 113 02

92 226 614

Non-controlling interest

9 0

489 6

879 251

Non-current liabilities

8

47 1356

45 618877 8

83

Long-term loans

650 635

50

9 37470

0 407

Deferred taxation liability

180 928

126 38

3161 711

Employee benefit liability

15 572

9 861

15 765

Current liabilities

1 506 704

1 248 228

99

6 341

Accounts payable and accruals

737 597

68

3 482

53

4 590

Employee benefits accrual

50 134

75 70775 324

Current portion of long-term

loans

237 32715

0 117218 8

31Taxation payable

258

–2 732

Bank overdraft

481 388

33

8 92215

8 077Foreign exchange contract liability

–

–6 787

Total equity and liabilities

4 593 610

4 016 562

4 110 08

9

as at 1 April 2018

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CONDENSED CONSOLIDATED STATEMENT OF PROFIT

OR LOSS AND OTHER COMPREHENSIVE INCOM

E

Reviewed

Review

ed

Six-month

Six-month

Audited


Year ended

1 April

2 April

1 October

20182017

2017

R’000

R’0

00

R’0

00

Revenue

2 507 3752 15

0 7374 593 317

Cost of goods sold

(1 873 723)

(1 567 317)

(3 355 146)

Gross profit

633 6525

83 420

1 238 171

Other incom

e

36 27541 017

54 4

80

Operating costs

(507 193)

(416 735)(8

85 8

44)

Profit before interest and taxation

162 734

207 7024

06 8

07Interest paid

(51 855)

(34 4

62)(8

4 836)

Interest received

9322

38

6

Profit before taxation

110 972173 262

322 357Taxation

(30 107)

(48 616)

(87 56

6)

Profit for the period

80 865124 6

46

234 791

Profit attributable to:

O

wners of the com

pany

81 068123 931

234 512


(203)

715279

80 865124 6

46

234 791

Other comprehensive incom

e

Item

s that will not be reclassified subsequently to profit or loss

–

–1

Rem

easurement of em

ployee benefit liability

––

2D

eferred taxation effect

––

(1)

Total comprehensive incom

e for the period

80 865124 6

46

234 792


e attributable to:

O

wners of the com

pany

81 068123 931

234 513


(203)

715279

80 865124 6

46

234 792

Earnings per share

(cents)32.1

52.495.9

Diluted earnings per share

(cents)30.9

50.4

92.4

for the six-month period ended 1 April 2018

R

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4


OF CHANGES IN EQUITY

Equity-settled

Share

employee

benefits A

ccumulated

Non-controlling

capitalreserve

profitinterest

Total

R’0

00

R’0

00

R’0

00

R’0

00

R’0

00

Balance at 25 September 2016 – audited

720 2052 773

524 94

88 972

1 256 8

98Issue of ordinary share capital

845 30

4–

––

845 30

4Total com

prehensive income for the period

––

123 931715

124 64

6R

ecognition of share-based payments

–3 0

03

––

3 00

3Treasury shares dividends received

––

475–

475D

ividend paid–

–(107 610)

–(107 610)

Balance at 2 April 2017 – reviewed

1 565 5

09

5 7765

41 744

9 687

2 122 716


e for the period–

–110 30

3(4

36)10

9 867

Recognition of share-based paym

ents–

3 00

3–

–3 0

03

Treasury shares dividends received–

–279

–279

Balance at 1 October 2017 – audited1 5

65 50

98 779

652 3269 251

2 235 865


e for the period–

–81 068

(203)80 865

Recognition of share-based paym

ents–

4 410–

–4 410

Treasury shares dividends received–

–350

–350

Dividend paid

––

(81 719)–

(81 719)

Balance at 1 April 2018 – reviewed

1 565 50913 189

652 0259 0

482 239 771


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OF CASH FLOWS

Review

ed R

eviewed

Six-month

Six-month

Audited

period ended

period endedYear ended

1 April

2 April

1 October

2018

20172017

R’000

R’0

00

R’0

00

Cash flows from

operating activities

Operating cash flow

s before working capital changes

239 732257 5

675

32 420W

orking capital changes(103 978)

(164 122)

(185 30

6)

Cash generated from operations

135 754

93 445

347 114

Net interest paid

(51 766)(37 010)

(86 15

0)Taxation paid

(16 348)(10

0 43

8)(139 023)

Net cash inflow

/(outflow) from

operating activities67 6

40(4

4 00

3)121 9

41

Cash flows from

investing activities

Purchase of property, plant and equipm

ent(268 475)

(233 25

8)(4

86 9

46)

Proceeds on disposal of property, plant and equipm

ent4 865

2691 478

Acquisition of subsidiaries and businesses less net cash acquired

–(18

0 477)(207 2

97)Loan receivable advanced

(3 273)(307)

(3 732)Loans receivable repaid

246–

1 471D

ividend paid(81 719)

(107 610)(107 610)

Treasury shares dividend received–

475475

Net cash outflow

from investing activities

(348 356)(520 9

08)

(802 161)

Cash flows from

financing activities

Issue of ordinary share capital–

64

8 304

64

8 304

Loans raised75 589

300 0

00

621 00

0Loans repaid

(105 215)(495 492)

(556 742)

Governm

ent grant received–

2 7423 4

32

Net cash (outflow

)/inflow from

financing activities(29 626)

455 554

715 99

4

Net (decrease)/increase in cash and cash equivalents

(310 342)(10

9 357)35 774

Cash and cash equivalents at beginning of the period

(153 849)

(189 623)

(189 623)

Cash and cash equivalents at end of the period(46

4 191)(2

98 980)

(153 8

49)


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CONDENSED CONSOLIDATED SEGM

ENTAL REPORT

PRODUCTS AN

D SERVICES FROM W

HICH

REPORTABLE SEGMEN

TS DERIVE THEIR

REVENU

ESInform

ation reported to the chief operating decision-maker for the purposes of resource allocation and assessm

ent of segment perform

ance focuses on the types of goods or services delivered or provided, and in respect of the 'regional' and 'international' operations. The inform

ation is further analysed based on the different classes of custom

ers. The executive managem

ent of the Group have chosen to organise the G

roup around the difference in geographical areas and operate the business on that basis.

Specifically, the Group’s reportable segm

ents under IFRS 8: O

perating Segments are as follow

s:

• Regional

• International

SEGMEN

T REVENU

ES AND RESU

LTSThe follow

ing is an analysis of the Group’s revenue and results by reportable segm

ent. Segm

ent revenue

Review

ed R

eviewed

Six-month

Six-month

Audited

period ended


1 April

2 April

1 October

2018

20172017

R’000

R’0

00

R’0

00

Regional

Fresh products sales8

44 955

68

8 54

61 52

9 291

Long life products sales1 251 622

1 065 693

2 151 307

2 096 577

1 754 239

3 68

0 598International

Long life products sales

410 79839

6 498912 719

Total 2 507 375

2 150 737

4 593 317

Segm

ent profit

Regional

164 322

161 77935

8 254

International(1 3

48)49 930

57 553

Total 162 974

211 709

415 807

Impairm

ent loss–

–(3 321)

Acquisition costs

(240)(4 0

07)(5 679)

Interest received93

223

86

Interest paid(51 855)

(34 4

62)(8

4 836)

Profit before taxation110 972

173 262322 357

Segm

ent depreciation

Regional

51 5913

8 68

592 4

35International

13 84

410 428

18 113

Total 65 435

49 113110 5

48

Segm

ent amortisation

Regional

4 5111 422

5 791International

281321

748

Total 4 792

1 743

6 539

Segment revenue reported above represents revenue generated from

external customers. Inter-com

pany sales amounted to R

271.84

0 million

(six months ended 2 A

pril 2017: R28

5.29

0 million, year ended 1 O

ctober 2017 R5

41.821 million).

The accounting policies of the reportable segments are the sam

e as the Group's accounting policies described in note 1 to the condensed

consolidated interim financial statem

ents. Segment profit represents the profit before tax earned by each segm

ent without allocation of

impairm

ent losses, acquisition costs, interest received and interest paid. This is the measure reported to the chief operating decision-m

aker for the purpose of resource allocation and assessm

ent of segment perform

ance.


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GEOGRAPHICAL IN

FORMATION

The Group's non-current assets by location of operations (excluding goodw

ill and deferred taxation asset) and revenue are detailed below.

The chief operating decision-maker does not evaluate any of the G

roup's other assets or liabilities on a segmental basis for

decision-making purposes.

N

on-current assets

Review

ed R

eviewed

Six-month

Six-month

Audited

period ended


1 April

2 April

1 October

2018

20172017

R’000

R’0

00

R’0

00

Republic of South A

frica1 753 6

471 3

32 852

1 54

8 831

Kingdom

of Swaziland

132 623112 28

812

9 878

1 886 270

1 445 14

01 678 70

9

Revenue

Republic of South A

frica2 458 651

2 103 111

4 472 594

Kingdom

of Swaziland

48 72447 626

120 723

2 507 375

2 150 737

4 593 317

INFORM

ATION REGARDIN

G MAJOR CU

STOMERS

Two custom

ers (six months ended 2 A

pril 2017: two, year ended 1 O

ctober 2017: two) individually contributed 10%

or more of the G

roup's revenue arising from

both regional and international sources.

CONDENSED CONSOLIDATED SEGM

ENTAL REPORT continued

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1.BASIS OF PREPARATION

Rhodes Food G

roup Holdings Lim

ited is a company dom

iciled in the Republic of South A

frica. These condensed consolidated interim

financial statements ("interim

financial statements") as at and for the six-m

onth period ended 1 April 2018 com

prise the company and its

subsidiaries (together referred to as the ''Group'').

The interim financial statem

ents are prepared in accordance with IA

S 34 Interim

Financial Reporting, the SA

ICA

Financial Reporting G

uides as issued by the A

ccounting Practices C

omm

ittee, the Financial Pronouncem

ents as issued by the Financial Reporting Standards C

ouncil, and the requirem

ents of the Com

panies Act of South A

frica and the JSE Listings Requirem

ents.

The accounting policies and m

ethods of computation applied in the preparation of the interim

financial statements are consistent w

ith those applied in the audited consolidated financial statem

ents for the year ended 1 October 2017.

The accounting policies adopted and m

ethods of computation are in accordance w

ith International Financial Reporting Standards.

These interim

financial statements w

ere prepared under the supervision of CC

Schoombie C

A(SA

), Chief Financial O

fficer.

2.SEASON

ALITY OF OPERATIONS

The G

roup’s performance is subject to seasonal trends based on the seasonality of fruit crops w

hich are processed annually from N

ovember

to April and June to A

ugust. Due to the seasonal nature of fruit production w

orking capital is actively managed over an annual cycle.

3.EVEN

TS SUBSEQU

ENT TO REPORTIN

G DATE

On 1 M

ay 2018 the company appointed B

Lakey as company secretary subsequent to the resignation of Statucor (P

ty) Ltd. The directors are not aw

are of any other matter or circum

stance of a material nature arising since the end of the six-m

onth period ended 1 April 2018,

otherwise not dealt w

ith in the interim financial statem

ents, which significantly affect the financial position of the G

roup or the results of its operations.

4.PROPERTY, PLAN

T AND EQUIPM

ENT

Opening

Acquisition of

Government

Closing

balancesubsidiaries

Additionsgrant received

DisposalsIm

pairment

balanceCOST

R’000R’000

R’000R’000

R’000R’000

R’000

1 April 2018

1 765 295–

268 475–

(18 148)–

2 015 622

2 April 2017

1 197 797107 419

233 25

8(2 742)

(374)(3 872)

1 531 4

86

1 October 2017

1 197 797105 6

44

48

6 94

6(3 4

32)(17 78

8)(3 872)

1 765 295

Opening

Closing

balance

DepreciationDisposals

Impairm

entbalance

ACCUM

ULATED DEPRECIATION

R’000R’000

R’000R’000

R’000

1 April 2018

304 802

65 435(13 189)

–357 0

48

2 April 2017

210 97149 113

(161)(476)

259 447

1 October 2017

210 971110 5

48

(16 166)

(551)30

4 802

Opening

Closing

balance

balance

NET ASSET VALU

ER’000

R’000

1 April 2018

1 460 493

1 658 574

2 April 2017

986 826

1 272 0

39

1 October 2017

986 826

1 4

60 493

The disposal of property, plant and equipment resulted in a loss of R

0.09

4 million (six m

onths ended 2 April 2017: profit of R

0.056 m

illion, year ended 1 O

ctober 2017 loss of R0.14

4 million). The im

pairment of property, plant and equipm

ent resulted in a loss of Rnil (six m

onths ended 2 A

pril 2017: loss of R3.39


ctober 2017 loss of R3.321 m

illion). These losses were recognised as part of

'operating costs' in the condensed consolidated statement of profit or loss and other com

prehensive income.

D

uring the six-month period ended 1 A

pril 2018, the Group contracted R

105.595 million (six m

onths ended 2 April 2017: R

366.717 m

illion, year ended 1 O

ctober 2017: R26

4.66

4 million) for future capital com

mitm

ents.

There has been no m

ajor change in the nature of property, plant and equipment, the policy regarding the use thereof, or the encum

brances over the property, plant and equipm

ent.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEM

ENTS

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ENTS continuedfor the six-m

onth period ended 1 April 2018

5.IN

VESTMEN

T IN ASSOCIATE

The Group entered into a sale of share agreem

ent during October 2017 to dispose of 5

0.83%

of the shares in Ma B

aker Xpress Proprietary

Limited for a consideration of R

6.100 m

illion. On the date of disposal M

a Baker Xpress P

roprietary Limited ceased to be a subsidiary. From

that date it w

as accounted for as an investment in an associate, using the equity accounting m

ethod, at a value of R5.9

00 m

illion.

During the six m

onths ended 1 April 2018 the loss from

the investment in the associate recognised in 'operating costs' w

as R0.16

0 million.

6.IN

VENTORY

A

provision of R13.49

0 million for the six m

onths ended 1 April 2018 (six m


6.06


ctober 2017: R

13.38

0 million) w

as raised in order to recognise inventory at the lower of cost or net realisable value.

Reviewed

Review

ed

Six-month

Six-month

Audited


Year ended

1 April

2 April

1 October

20182017

2017

R’000

R’0

00

R’0

00

7.EARNIN

GS PER SHARE

7.1

HEADLIN

E EARNIN

GS PER SHARE

Reconciliation betw

een profit attributable to owners of the com

pany and headline earnings:

Profit attributable to ow

ners of the company

81 068123 931

234 512

Adjustm

ents to profit attributable to owners of the com

pany

1 284

2 405

2 495

Loss/(profit) on disposal of property, plant and equipment

9

4(5

6)14

4

Im

pairment of property, plant and equipm

ent

–3 39

63 321

Loss on sale of subsidiary

1 216–

–

Taxation effect

(26)(935)

(970)

Headline earnings

82 352

126 336

237 007

Headline earnings per share

(cents) 32.6

53.4

96.9

7.2

DILUTED H

EADLINE EARN

INGS PER SH

ARE

D

iluted headline earnings per share (cents)

31.451.4

93.4

7.3

WEIGH

TED AVERAGE NU

MBER OF SH

ARES IN ISSU

E

Ordinary shares in issue at beginning of the period

253 762 018221 0

00 0

00

221 00

0 00

0

W

eighted number of shares issued during the period

–16 8

53 874

24 657 869

Treasury shares

(1 125 000)(1 125 0

00)

(1 125 00

0)

Weighted average num

ber of shares in issue

252 637 018236 728 874

244 5

32 869

Effect of convertible preference shares

9 000 0009 0

00 0

00

9 00

0 00

0

Effect of share options

403 093

175 82818

9 081

Weighted average num

ber of dilutive shares in issue

262 040 111

245 90

4 70225

3 721 950

8.CON

TINGEN

T LIABILITIES

The Group has entered into guarantees in favour of South A

frican Revenue Service, for im

port and export activities as well as various

municipalities for operational activities. The guarantees from

import and operational activities outstanding as at 1 A

pril 2018 are R

6.56

0 million (six m


5.070 million, year ended 1 O

ctober 2017: R6.5

60 m

illion). There were no other changes in

the contingent liabilities from the prior period as disclosed in the audited annual financial statem

ents for the year ended 1 October 2017.

R

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OD

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ULTS

20

18

10

9.RECLASSIFICATION

OF PRIOR PERIOD DISCLOSURE

R18.742 m

illion of the non-current biological assets balance in the Condensed C

onsolidated Statement of Financial P

osition for the period ended 2 A

pril 2017 was reclassified to the current portion of biological assets, as this is a better representation of the expected lifespan of

the asset.

10.RELATED PARTY TRANSACTION

S

The Group generated sales from

Peaty M

ills Plc of R

86.122 m

illion (six months ended 2 A

pril 2017: R76.30


ctober 2017: R

182.48

3 million). Included in accounts receivable are am

ounts due from P

eaty Mills P

lc of R3

4.96

0 million (six m

onths ended 2 April

2017: R28.718 m

illion, year ended 1 October 2017: R

43.14

3 million). There w

ere no other significant related party transactions during the period under review

.

11.DIVIDEND

On 15 January 2018, a dividend of 31.1 cents per share, total dividend R

81.719 million (16 January 2017, a dividend of 42.2 cents per share,

total dividend R107.610 m

illion) was paid.

12.SIX-MON

TH PERIOD EN

D

The Group's financial year ends in Septem

ber which reflects 52 w

eeks of trading, and as a result the reporting date may differ year on year.

The 2017 financial year, however, included a 5

3rd week of trading. R

eferences to an interim financial period are to the 26

/27 weeks ended

on or about 31 March. A

s a result the interim financial statem

ents were prepared for the 26 w

eek period ended 1 April 2018 (27 w

eek period ended 2 A

pril 2017).

13.REVIEW REPORT

The directors have elected to engage the G

roup’s auditors, Deloitte &

Touche, to conduct a voluntary review of the condensed consolidated

interim financial statem

ents.

The G

roup’s auditors have issued an unmodified review

report on the condensed consolidated interim financial statem

ents. Any reference to

the Group’s outlook included in this announcem

ent has not been reviewed or reported on by the G

roup’s auditors.

INDEPEN

DENT AU

DITOR’S REVIEWReport on the condensed consolidated financial statem

ents

To the shareholders of Rhodes Food Group Holdings Lim

ited

We have review

ed the condensed consolidated financial statements of R

hodes Food Group H

oldings Limited, contained in the accom

panying consolidated interim

financial statements, w

hich comprise the condensed consolidated statem

ent of financial position as at 1 April 2018 and

the condensed consolidated statement of com

prehensive income, changes in equity and cash flow

s for the period then ended, and selected explanatory notes.

Directors’ responsibility for the condensed consolidated financial statements

The directors are responsible for the preparation and presentation of these condensed consolidated financial statements in accordance

with International Financial R

eporting Standard (IAS) 3

4, Interim Financial R

eporting, the SAIC

A Financial R

eporting Guides, as issued

by the Accounting P

ractices Com

mittee and Financial P

ronouncements as issued by the Financial R

eporting Standards Council and the

requirements of the C

ompanies A

ct of South Africa, and for such internal control as the directors determ

ine is necessary to enable the preparation of interim

financial statements that are free from

material m

isstatement, w

hether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express a conclusion on these interim

financial statements. W

e conducted our review in accordance w

ith International Standard on R

eview Engagem

ents (ISRE) 2410, R

eview of Interim

Financial Information Perform

ed by the Independent Auditor of the Entity. ISR

E 2410 requires us to conclude whether anything has com

e to our attention that causes us to believe that the condensed consolidated financial statem

ents are not prepared in all material respects in accordance w

ith the applicable financial reporting framew

ork. This standard also requires us to com

ply with relevant ethical requirem

ents.

A review

of condensed consolidated financial statements in accordance w

ith ISRE 2410 is a lim

ited assurance engagement. W

e perform

procedures, primarily consisting of m

aking inquiries of managem

ent and others within the entity, as appropriate, and applying analytical

procedures, and evaluate the evidence obtained.

The procedures performed in a review

are substantially less than and differ in nature from those perform

ed in an audit conducted in accordance w

ith International Standards on Auditing. A

ccordingly, we do not express an audit opinion on these condensed consolidated

financial statements.

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1

1


ENTS continuedfor the six-m

onth period ended 1 April 2018

Conclusion

Based on our review

, nothing has come to our attention that causes us to believe that the accom

panying condensed consolidated financial statem

ents of Rhodes Food G

roup Holdings Lim

ited for the six month period ended 1 A

pril 2018 are not prepared, in all material respects,

in accordance with IA

S 34, Interim

Financial Reporting, the SA

ICA

Financial Reporting G

uides as issued by the Accounting P

ractices C

omm

ittee and Financial Pronouncem

ents as issued by Financial Reporting Standards C

ouncil and the requirements of the C

ompanies A

ct of South A

frica.

Deloitte & Touche

Registered Auditor

Per: PJ Schneider

Partner

1st Floor The Square, C

ape Quarter, 27 Som

erset Road, G

reen Point, 8

005, W

estern Cape, D

ocex 5 C

laremont

22 May 2018

National Executive: *LL B

am C

hief Executive O

fficer *TMM

Jordan Deputy C

hief Executive O

fficer, Clients &

Industries *MJ Jarvis C

hief O

perating Officer A

F Mackie A

udit & A

ssurance *N Sing R

isk Advisory *N

B K

ader Africa Tax &

Legal TP P

illay Consulting S G

wala B

PS

*JK M

azzocco Talent and Transformation M

G D

icks Risk Independence &

Legal *TJ Brow

n Chairm

an of the Board

Regional leader: MN

Alberts

*Partner and Registered Auditor

A full list of partners and directors is available on request.B-BBEE rating: Level 1 contribution in term

s of the DTI Generic Scorecard as per the amended Codes of Good Practice

Associate of D

eloitte Africa, a M

ember of D

eloitte Touche Tohmatsu Lim

ited

INDEPEN

DENT AU

DITOR’S REVIEW continued

R

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20

18

12

RHODES FOOD GROU

P HOLDIN

GS LIMITED

(Incorporated in the Republic of South A

frica)R

egistration number 2012

/074392

/06

JSE share code: RFG

ISIN: Z

AE0

00191979

Registered addressP

niel Road, G

root Drakenstein, 76

80

P

rivate Bag X30

40, P

aarl, 7620

Directors

Dr YG

Muthien* (C

hairperson)

MR

Bow

er*

BA

S Henderson (C

hief Executive O

fficer)

TP Leeuw

*

LA M

akenete*

B N

jobe*

CC

Schoombie (C

hief Financial Officer)

C

L Smart**

G

JH W

illis**

* Independent non-executive

** Non-executive

Company secretary

B Lakey

Transfer secretariesC

omputershare Investor Services P

roprietary Limited

SponsorR

and Merchant B

ank, a division of FirstRand B

ank Limited

AuditorsD

eloitte & Touche

CORPORATE INFORMATION

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interim results · review of the six months competitive performance from regional segment continued...

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