INVESTOR PRESENTATION: APPENDICES 26 FEBRUARY 2018 RESULTS FOR THE SIX MONTHS ENDED DECEMBER 2017
RCL FOODS IN CONTEXT FOOD, LIQUOR & HOME CARE BANKING HEALTHCARE INSURANCE INDUSTRIAL INFRASTRUCTURE MEDIA & SPORT 2
AREAS OF BUSINESS 3
4
5
6
OUR BUSINESS MODEL OUR STRATEGIC THRUSTS Our business model is delivered through our six strategic thrusts 7
PERFORMANCE REVENUE (Rbn) 23.4 25.0 25.0 EBITDA (Rm) 2 224.0 19.5 1 762.4 1 747.6 8.7 10.1 12.0 12.9 13.1 12.8 688.3 1 122.2 1 206.1 1 152.2 900.4 1 201.0 4.5 196 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 INTERIM FULL YEAR INTERIM FULL YEAR OVER 20 000 EMPLOYEES AROUND 700 000 TONS OF SUGAR PER YEAR 100 TONS OF MAYONNAISE SOLD DAILY MORE THAN 1 500 DELIVERY VEHICLES 500 000 TONS OF FLOUR AND MAIZE MILLED PER YEAR 400 000 PIES PER DAY 875 000 TONS OF ANIMAL FEED PER YEAR MORE THAN 20 WELL KNOWN & MUCH LOVED BRANDS 500 000 LOAVES OF BREAD PER DAY 24 MILLION CHICKENS ON THE GROUND AT ANY TIME 8
OUR BRANDS RELATIVE SALES (12 Months to December 2017) 6 BRANDS OVER R1bn 4 BRANDS OVER R500m 10 BRANDS OVER R100m 10 BRANDS UNDER R100m 9
MARKET SHARE VOLUME SHARE % FOR THE PERIOD 6MM Dec 17 12MM Dec 17 12MM Dec 16 SOURCE Dogfoods (RCL Brands) 28.3 27.4 26.9 Aztec* Catfoods (RCL Brands) 25.4 23.1 18.8 Aztec Yum Yum Peanut Butter 29.6 30.3 31.1 Aztec Nola Mayonnaise 40.9 41.9 41.9 Aztec Sorghum (RCL Brands) 28.5 29.4 27.0 Aztec Ouma Rusks 48.2 47.7 47.9 Aztec Mageu 71.7 71.2 72.1 Aztec Freezer to Fryer 35.8 37.8 26.0 Aztec Polony (RCL Brands) 10.1 10.0 9.3 Aztec Viennas (RCL Brands) 20.2 20.4 18.8 Aztec Selati 26.6 26.8 29.7 Aztec Pies and Rolls (RCL Brands) 8.7 8.4 5.6 Aztec EPOL 12.7 13.3 15.2 Internal estimates share of AFMA** Molatek 4.8 4.5 4.8 Internal estimates share of AFMA VOLUME SHARE % AT Dec 17 Dec 16 SOURCE Supreme Flour 12.7 11.6 SAGIS*** Sunbake 10.6 10.2 SAGIS *Aztec is a provider of market measurement and related services for consumer packaged goods **AFMA refers to the Animal Feed Manufacturers Associations, which represents approximately 60-65% of the total feed market *** SAGIS is a South African grain information service that supplies market information to the grain and oil seeds industry 13 10
Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 INVESTOR PRESENTATION APPENDICES COMMODITY PRICES YELLOW MAIZE PRICE (R/Ton) RAND/USD 4 500.0 4 000.0 3 500.0 3 000.0 2 500.0 2 000.0 1 500.0 H1 F17 AVG Price (6m) R3 198.4 38.1% H1 F18 AVG Price (6m) R1 981.2 17.0 16.0 15.0 14.0 13.0 12.0 11.0 10.0 H1 F17 AVG Price (6m) R13.98 4.1% H1 F18 AVG Price (6m) R 13.40 SAFEX WHEAT PRICE (R/Ton) CME SOYA PRICE ($/Ton) SAFEX SUNFLOWER PRICE (R/Ton) 450.0 8 500.0 5 300.0 5 100.0 4 900.0 4 700.0 H1 F17 AVG Price (6m) R4 135.9 2.3% H1 F18 AVG Price (6m) R4 231.9 400.0 350.0 H1 F17 AVG Price (6m) $323.1 2.9% H1 F18 AVG Price (6m) $313.6 8 000.0 7 500.0 7 000.0 6 500.0 H1 F17 AVG Price (6m) R6 063.0 23.5% H1 F18 AVG Price (6m) R4 639.9 4 500.0 6 000.0 4 300.0 300.0 5 500.0 4 100.0 5 000.0 3 900.0 250.0 4 500.0 3 700.0 4 000.0 3 500.0 200.0 3 500.0 Source: Reuters 11
CONSUMER: CHICKEN INTEGRATED SUPPLY CHAIN FROM FARM TO FORK GP OPERATION AGRICULTURE PROCESSING GRANDPARENT CHICKS GRANDPARENT FARMS PARENT FARMS BROILER FARMS REARING 21 WEEKS LAYING 40 WEEKS HATCHING 3 WEEKS REARING 21 WEEKS LAYING 40 WEEKS HATCHING 3 WEEKS GROWING 34 DAYS BROILER PROCESSING 3 PLANTS & 2 FP PLANTS World s oldest pedigree broiler breed Located in Carolina and East London to ensure optimal bio-security 3 broad agricultural regions: Northern, KZN, W FEED SUPPLY 5 feed mills producing 875 000 tons pa CONSUMERS BRANDS CUSTOMERS DISTRIBUTION Grade A Quality, Grade A Taste The consumer is at the heart of our business They taste so good cos they eat so good The Chicken Experts 12
CONSUMER: CHICKEN The Chicken business unit produces a wide range of chicken products under 3 well established brands; Rainbow, Simply Chicken and Farmer Brown. Limpopo Province Windhoek North West Rustenburg Gauteng Mpumalanga Carolina 187 rearing, laying and broiler farms and hatcheries 24m birds on the ground Namibia Wolwehoek KwaZulu Natal 3 primary processing plants Free State Northern Lesotho Hammarsdale 2 further processing plants Durban Eastern Western Worcester East London Town 13
CONSUMER: GROCERIES GROCERY The Grocery business unit consists of a portfolio of leading South African brands spanning staples to top end offerings across a range of food and animal product categories. PIES The Pies business unit produces a range of high quality pies under the Pieman s brand in frozen unbaked, frozen baked and chilled baked formats. Limpopo Limpopo North West Randfontein Gauteng Mpumalanga North West Krugersdorp Gauteng Mpumalanga Free State KwaZulu Natal Free State KwaZulu Natal Northern Lesotho Northern Lesotho Molteno Eastern Eastern Western Western 14
CONSUMER: GROCERIES BEVERAGES The Beverages business unit produces a maize-based drink under the Mageu No 1, Smooth and Mnandi brands. SPECIALITY The Speciality business unit produces a range of superior ready to eat products, including speciality breads, mainly for Woolworths. Limpopo Limpopo Centurion Pretoria x2 Mpumalanga Bronkhorstspruit Mpumalanga North West Gauteng North West Gauteng Spartan Free State KwaZulu Natal Free State KwaZulu Natal Northern Lesotho Northern Lesotho Eastern Eastern Western Western Worcester 15
SUGAR & MILLING: SUGAR The Sugar business unit produces a range of sugar products under the leading sugar brand Selati. Limpopo Province Tzaneen Pretoria Malelane Komati Windhoek North West Gauteng Nelspruit Mpumalanga Namibia Free State Pongola KwaZulu Natal Northern Bloemfontein Lesotho Durban 3 Sugar Mills based in Malelane, Komati and Pongola, were established in 1968, 1993 and 1954 respectively produce approximately 700 000 tons of sugar per year. Eastern Western East London Town Port Elizabeth 16
CUMULATIVE TONS IMPORTED (SOUTH AFRICA) INVESTOR PRESENTATION APPENDICES SUGAR IMPORTS AND DUTIES 400 000 3 000 350 000 300 000 2 500 Cumulative tons imported from 1 April 2016 and 2017 (start of industry year) 250 000 2 000 A total of 223 425 tons have been imported for the six months ended December 2017, up 113.3% (H1 2017: 104 724 tons) 200 000 150 000 1 500 1 000 DUTIES Imports have risen following the decrease in duties. Duty free periods in August and September 2017, resulted in record high imports being reported 100 000 500 Duty of R2,131/ton implemented in September 2017, following which imports have decreased 50 000 0 April 16/17 May 16/17 Jun 16/17 Jul 16/17 Aug 16/17 Sept 16/17 Oct 16/17 Nov 16/17 Dec 16/17 0 Despite the tariff, global sugar surpluses and rand strength means imports remain a significant threat 16 (Tons) 17 (Tons) 16 (Duties) 17 (Duties) Source: Import duty is published by Customs in the Government Gazette Source: Import data is obtained by SASA 17
SUGAR & MILLING: MILLBAKE BAKING The Baking operations produce a range of bread products under the Sunbake brand - the fourth largest bread brand nationally. MILLING The Milling operation produces flour and a range of maize meal products at its flour mill - the largest single site flour mill in Southern Africa. North West Rustenburg Pretoria Gauteng Benoni Tzaneen Limpopo Polokwane Bushbuckridge Mpumalanga Nelspruit North West Limpopo Pretoria Mpumalanga Gauteng Free State KwaZulu Natal Free State KwaZulu Natal Northern Lesotho Northern Lesotho Eastern Eastern Western Western 18
SUGAR & MILLING: ANIMAL FEED The Animal Feed business unit produces grain and molasses based feeds for a range of species including game, dairy, poultry, horse, pigs and ruminants, under the leading brands of Epol and Molatek. Limpopo Province Rustenburg Pretoria Malelane Windhoek Namibia North West Gauteng Nelspruit Mpumalanga Pongola 2 molasses based feed mills producing almost 300 000 tons per year Free State KwaZulu Natal Northern Bloemfontein Lesotho Pietermaritzburg Durban 5 grain based feed mills producing almost 875 000 tons per year Eastern Western Worcester East London Town George Port Elizabeth 19
CUSTOMER OVERVIEW: LOGISTICS CUSTOMER SECONDARY DISTRIBUTION (CSD) Vector is contracted by the customer to deliver their full basket of products directly to the outlets PRINCIPAL SECONDARY DISTRIBUTION (PSD) Vector is contracted by the principal to deliver to all retailers, wholesalers and general trade 20
NETWORK OVERVIEW: LOGISTICS Windhoek Namibia Northern Gaborone North West Bloemfontein Polokwane Rustenburg Roodepoort Free State Dartprops Wolwehoek Lesotho Pretoria Limpopo Province Midrand Mpumalanga Nelspruit KwaZulu Natal Newcastle Pietermaritzburg Hammarsdale Durban National footprint including Namibia and 4 plant-based cold stores 14 distribution sites Capacity 100 608 pallets Over 3900 employees Customer drop points over 8 121 Over 216 000 cases delivered daily (58m cases pa) Tonnage more than 560 000 tons pa Fleet of 330 vehicles (primary 80 / secondary 250) ISO 22000(Food safety management system) accreditation for all Warehouses ISO 14001(Environmental management standards) and OHSAS 18001 across Midrand, Thekwini, Peninsula and Roodepoort Eastern Worcester Western East London Plant-based cold stores Distribution sites Town George Port Elizabeth 21