RCL FOODS LIMITED · Investor Presentation: ... Unaudited pro forma revenue (refer to slide 20) •...

RCL FOODS LIMITEDAudited Results for the Year Ended 30 June 2014Investor Presentation: 28 August 2014

RESULTS FOR THE YEAR ENDED 30 JUNE 2014 2

Salient features

Results summary

Strategic

overview

Key issues and

financial review

Operational

reviewsProspects

Salient features: Twelve months ended 30 June 2014

GROUP REVENUE

R19.7bn

HEBITDA

R1.1bn

HEBITDA margin

5.6%

EPS

(41.4) cents

GROUP REVENUE

R22.6bn

HEBITDA

R1.4bn

HEBITDA margin

6.1%

EPS

50.2 cents

Statutory Pro forma


Salient features

Results summary

Strategic

overview

Key issues and

financial review

Operational

reviewsProspects

Salient features: twelve months ended 30 June 2014

• Results include 12 months of Foodcorp (only two months in the comparative period) and six

months of TSB

• Rainbow’s results have improved but remain depressed

• TSB’s six months results have been compromised by the high level of imports, the three-month off

crop season from January to March, and the impact of the sugar industry strike

• Acquisition of 49% of Botswana–based Senn Foods Logistics, results to be included from 2015

financial year

• Material financing costs resulting from foreign exchange losses on the early redemption of

Foodcorp’s Euro denominated debt

• Material IFRS 2 costs relating to the restructuring of the BEE shareholding

• Material transaction costs associated with the significant corporate activity

• Necessitated the publishing of a set of pro forma results to provide a better understanding of the

Group’s underlying performance


Remgro’s chosen platform for

Food

Africa Strategy

One Company Philosophy

Acquisition of Foodcorp and TSB

JVs in Zambia (chicken) and

Botswana (distribution)

Value CreationFocus

Creation of RCL Foods

2012 -

2014

2015+

Strategic overview: RCL Foods’ evolution


Note (1): Unaudited pro forma revenue (refer to slide 20)

• Created scale

through acquisition

of Foodcorp and TSB

• Defined Africa

strategy

• Entered into JVs with

Zambeef and Senn

Foods

• Embed One

Company

philosophy

• Establish leadership

and governance

through RCL Foods

Executive

Committee

• Empower central

functions

Strategic overview: Creation of RCL Foods

Revenue growth

-

2 500

5 000

7 500

10 000

12 500

15 000

17 500

20 000

22 500

25 000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014(PF)

Reve

nu

e (

R m

illio

ns)

May 2013Acquired

FoodCorp

Jan 2014Acquired TSB Sugar

Dec 2004Acquired

Vector Logistics


Remgro’s chosen platform for

Food

Africa Strategy

One Company Philosophy

Acquisition of Foodcorp and TSB

JVs in Zambia (chicken) and

Botswana (distribution)

Value CreationFocus

Creation of RCL Foods

2012 -

2014

2015+

Strategic overview: RCL Foods’ evolution


• Invest behind brands• Partner with key strategic customers • Drive sharper category focus • Drive strategic acquisitions/JVs• Expand into Africa• Implement right organisation to deliver growth ambition

• New business model for chicken • Improve mix through sharper category focus, strategic

acquisitions and expansion into Africa • Maximise opportunities/synergies across the group • Broaden ownership of value chain• Implement right organisation optimising benefits and

costs

Growth

drivers

Margin

drivers

Strategic overview: Value creation through growth and

margin focus


Grow through Strong Brands

Partner with Strategic Customers

Optimise Value Chain

Right People, Right Organisation

CategoriesCore: Optimise SA, Build ROA*

Added Value: Accelerate SA, build ROA

RCL Foods’ ambitionis to build an African food

business of scale with compelling brandsand a sustainable value chain that delivers to

consumer and customer needs.

MarketsAccelerate SA

Build ROA

We will double our business in five years, whilst driving steady and sustainable improvement in operating margin.

*ROA- Rest of Africa


Chicken, Sugar, Grains (Wheat, Maize),

Animal Feed

Grocery,

Baking,

Beverages,

Chicken AV

Speciality,

Pies, Chicken

Food

Solutions

New

Categories

CORE

ADDED

VALUE

Optimise in SA

Build in ROA

Accelerate in SA

Build in ROA

Strategic overview: Category focus


• Grow ahead of market in key categories

• Steady and

sustainable improvement in operating margin

• Invest behind growth

opportunities

• Joint ventures

with food or route to market players

• Broader ownership of value chain

• Strategic partnerships with key SA customers

ACCELERATE

SOUTH

AFRICA

BUILD

REST OF

AFRICA

Strategic overview: Market Focus


Strategic overview: Growth through strong brands

0% 25% 50% 75% 100%

Wet Pet Food

Dry Pet Food

Sorghum

Rusks

Peanut Butter

Mayonnaise

Baking

Beverages

Pies

Chicken - Added Value

Chicken - Mainstream

Sugar-Consumer

Sugar-Speciality

Sugar-Sweetener

Note: Category shares include DOB; Green indicates category leader

Grocery

Beverages

Pies

Sugar

Chicken

Bread

Strong market positions and leading brands across multiple product categories

Acquire new

brands/businesses

enabling entry into new

strategic growth

categories

Grow key markets by

driving penetration and

consumption whilst

growing market share

Drive category leadership

by investing behind our

brands and partnering with

retailer owned brands

where relevant

Grow with innovation

driving new products and

solutions to address

consumers’ needs


Strategic overview: Partner with strategic customers

RCL Foods’ delivers best in class service and builds its brands together with strategic partners

Speciality Foods

division is a

a major supplier of

superior Ready-to-

Eat and

convenience food

products to SA’s

premium food

retailer, Woolworths.

The leading supplier

of chicken products

to the food service

industry in SA,

providing tailored

chicken solutions for

leading customers

including KFC,

Nando's, Chicken

Licken and Steers.

Established

partnerships with

various Retailers in

sugar, mayonnaise,

peanut butter, pet

food and chicken

categories, as well

as premixes and

flour for in-house

bakeries where

customised Dealer

Own Brand products

are produced and

packaged.

Strategically

pursuing Joint

Business Partnerships

with Retailers in key

categories where

there are common

growth and

profitability

ambitions.

Speciality Foods Food SolutionsDealer Own

BrandsJoint Business Partnerships


Strategic overview: Optimising the value chain

Maximise growth opportunities across RCL Foods

• Foodcorp Innovation capability

• Rainbow Food Service capability

• New scale and relationship synergies

Realise opportunities and synergies

across the Group

Optimise resources and costs

• Finance and IT: Optimise systems and financial

management, e.g. insurance

• Sourcing/Procurement: Scale and Synergies

• HR: People management & Right organisation

Leverage our unique route to market

capability with Vector Logistics

• Warehousing and distribution

• Call centres, sales and merchandising

• Debtors and information management


Develop talent, build leaders

and create the right

organisation to enable our growth ambition.

Drive performance focus and

accountability across businesses to ensure delivery of

results in line with our ambition.

Delivery

Lea

de

rsh

ip S

tan

da

rds

Strategic overview: Right people and organisation

http://www.google.co.za/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&docid=XlaP9xPgPw38TM&tbnid=HbVl-lbIlTi6vM:&ved=0CAUQjRw&url=http://wer3c.org/founding-trustees/&ei=2qaRU6a5GPCV7AbjiICYAw&bvm=bv.68445247,d.ZGU&psig=AFQjCNGRwPpidLK3lWwv6_oWLLEha3lvzA&ust=1402140743222044

http://www.google.co.za/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&docid=XlaP9xPgPw38TM&tbnid=HbVl-lbIlTi6vM:&ved=0CAUQjRw&url=http://wer3c.org/founding-trustees/&ei=2qaRU6a5GPCV7AbjiICYAw&bvm=bv.68445247,d.ZGU&psig=AFQjCNGRwPpidLK3lWwv6_oWLLEha3lvzA&ust=1402140743222044


Support of a highly

regarded

strategic

shareholder

Unique,

integrated

business model

Significant

platform for

expansion

Experienced

management

team with strong

track record

Positioned to

deliver on the

African

opportunity

Portfolio of leading

consumer brands

Strategic overview: What differentiates us?


• Implement destination organisation• Restructure for focus; optimise benefits and costs• Deliver on opportunities and synergies

• Execute Category Growth Strategy (including acquisitions)

• Increase investment behind brands• Continue with Rainbow recovery

Implement

new

organisation

Improve

underlying

performance

Strategic overview: F15 Deliverables

• Distribution and synergies across Group• Sales and merchandising service for entire Group

• Continue to drive Africa agenda and investment

Vector and

Africa scaled


Key financial issues: year ended 30 June 2014

RCL Foods’ 2014 financial results have been materially affected by the following corporate activity:

• Redemption of Foodcorp’s Euro-denominated Senior Secured Notes (SSN’s) at the earliest

opportunity

– SSN’s redeemed in two tranches - 10% @ 103% in November 2013 and the remaining 90% @

108.75% in April 2014 which crystalised material forex losses (net of hedges)

• Restructuring of the BEE shareholdings resulting in material IFRS 2 charges

• Transaction costs associated with these transactions, as well as with the buyout of the remaining

35.8% minority interest in Foodcorp, the acquisition of TSB and the R790.2m pro rata minority

rights offer

As such a set of pro forma 2014 financial results have been published

– By assuming that all corporate activity had taken place on 30 June 2013, the pro formas

represent a normalised income statement and a better reflection of the underlying

performance

Salient features

Results summary

Strategic

overview

Key issues and

financial review

Operational

reviewsProspects


Financial review: Year ended 30 June 2014

(332.6)

403.9

192.6

94.927.4 18.1 (19.3) 385.0

Actual Debt

refinancing

TSB full year BEE

transactions

Transaction

costs

Pro rata

share issue

Foodcorp

minority

buyout

Pro forma

Rm

403.9

Headline earnings from continuing operations – Reconciliation between Actual and Pro forma


Financial review

General operating environment

• General economic environment in South Africa remains challenged

– Labour unrest

– High unemployment

– Depreciating currency

– Pedestrian growth of the SA economy

• All adding pressure on already stretched consumers

• Above inflation cost increases continue (fuel/power)

• Commodity market volatility ongoing

• Customers/Competitors aggressively fighting for volume/market share


Statutory

2014

Pro forma

2014

Actual2013*

Revenue Rm 22 645.7 19 720.0 10 108.8

Headline EBITDA Rm 1 415.5 1 103.0 447.2

Headline EBIT Rm 759.4 514.8 169.0

Effective tax rate % 28.8 (12.6) 113.5

Headline earnings continuing operations Rm 385.0 (332.6) 18.8

Cash generated by operations Rm n/a 1 174.0 669.3

Net cash and investment in money market Rm n/a 1 472.7 2 763.2

Final dividend per share Cents 20.0 20.0 -

Headline earnings per share continuing

operations Cents 45.1 (47.7) 4.8

Capex Spend (excluding intangibles) Rm n/a 654.0 477.0

NAV per share Cents n/a 1 098.8 1 226.9

Return on equity % n/a (3.5) 0.5

Financial review: year ended 30 June 2014

* Restated for IAS 19R, not material

Pre-IAS 392014

Pro forma

2014

Actual2013*

Headline EBITDA Rm 1 514.3 1 201.8 437.8

Headline EBITDA margin % 6.7 6.1 4.3


Financial review summary: Year ended 30 June 2014

1103.0

(588.2)

(1043.5)

148.349.5 10.4

(12.1)

(332.6)

HEB

ITDA

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an

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Taxa

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& a

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iate

Min

ority

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ea

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on

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ing

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tion

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R m

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n

Finance cost

includes R561.0m

fair value

adjustments to

Foodcorp’s Euro

debt and related

hedges


Financial review: operating results summary

* Two months only

Segmental analysis

Revenue (Rm)2014

Pro forma

2014

Actual2013

Foodcorp 7 768.0 7 768.0 1 217.5*

Rainbow 8 732.9 8 732.9 8 143.6

TSB 5 421.4 2 482.1 n/a

Vector 1 699.9 1 699.9 1 476.9

Sales between Segments – Foodcorp to Rainbow (62.0) (62.0) n/a

Sales between Segments – Rainbow to Foodcorp (51.7) (51.7) n/a

Sales between Segments – TSB to Foodcorp (27.1) (13.6) n/a

Sales between Segments – Vector to Foodcorp (21.5) (21.5) (3.4)

Sales between Segments – Vector to Rainbow (814.2) (814.2) (725.8)

Total 22 645.7 19 720.0 10 108.8

Operating profit (Rm)2014

Pro forma

2014

Actual2013

Foodcorp 449.9 455.2 99.8*

Rainbow (2.6) 0.6 (3.1)

TSB 213.6 79.5 n/a

Vector 147.6 149.1 142.9

Unallocated group costs (29.9) (150.4) (72.6)

Total 778.6 534.0 167.0


Financial review: Cash flow summary

Cash generated by operations increased by 75.4%

Rm

Opening balance (including money market investment and net of overdraft) 2 763.2

Operating profit adjusted for non-cash flow items 1 100.8

Working capital movement 73.2

Net finance cost paid (530.5)

Tax paid (48.9)

Capital expenditure (including intangibles) (672.4)

Acquisition of joint venture and non-controlling interest in subsidiary (616.4)

Issue of shares 876.5

Interest-bearing liabilities (1 774.5)

Dividends received 27.7

Discontinued operation - net cash inflows 33.8

Cash acquired in common control transaction (TSB acquisition) 152.8

Proceeds on preference shares and disposal of PP&E 160.9

Other (73.5)

Closing balance 1 472.7


Financial review

Working capital movement (Rm)

2014 2013

Net 73.2 152.5

Trade payables 141.1 160.7

Inventory and biological assets 269.7 (137.4)

Trade receivables (337.6) 129.2

• Working capital impacted by the acquisition of TSB on 01 January 2014


Financial review

RCL Foods’ capital expenditure programme directed at Foodcorp and TSB

• Foodcorp expenditure amounts to R307.2m, of which R112.2m was related to

expansion and capacity building

• TSB expenditure amounted to R148.2m for the six months, largely attributable to the

investment to maintain the sugar mills and the expansion of the Molatek operations

• Capex within Rainbow remains limited to necessary replacement items

• R173.0m has been contracted and committed, but not spent

• A further R200.1m has been approved, but not contracted

Rm 30 June 2014 30 June 2013

Total expenditure (excluding intangibles) 654.0 477.0


Key financial issues

Assessment of impairment

• A restoration of normal trading conditions is required for the poultry industry in

South Africa to survive

• Rainbow and RCL Foods’ Boards continue to assess the need for an

impairment of assets

• A return to adequate profitability is dependant on the local industry returning

to relative supply/demand balance, of which the successful implementation

of permanent anti-dumping duties from 01 January 2015 is one part

• An impairment will need to be raised should the supply/demand equilibrium

not be restored or, despite management intervention, there is no meaningful

improvement in Rainbow’s profitability


Operational review - Foodcorp

Revenue (Rm)2014

Pro forma2014

Actual2013

Foodcorp 7 768.0 7 768.0 1 217.5

Rainbow 8 732.9 8 732.9 8 143.6

TSB 5 421.4 2 482.1 n/a

Vector 1 699.9 1 699.9 1 476.9

Sales between segments (976.5) (962.9) (729.2)

Total 22 645.7 19 720.0 10 108.8


Pro forma2014

Actual2013

Foodcorp 449.9 455.2 99.8

Rainbow (2.6) 0.6 (3.1)

TSB 213.6 79.5 n/a

Vector 147.6 149.1 142.9


Total 778.6 534.0 167.0

• Foodcorp will drive innovation in existing brands and categories and expand into new brand categories

• Being part of RCL Foods enables greater product innovation and investment in new opportunities

− Sizeable capital investments in 2013/4 to expanded factories and milling capacity

• Opportunity to harness the selling, distribution and credit management synergies across the Group

The

opportunity

Management

Cliff Sampson

Managing Director

Appointed: October 2013

• Divisional Managing Director of Foodcorp Consumer Brands since joining in 2008

• Previously Managing Director of National Brands (AVI) for eight years

Foodcorp | Rainbow | TSB | Vector |


Operational review – Foodcorp

Eight Foodcorp brands enjoy either #1 or #2 category positions in their segments

Source: AC Nielsen

Brand investment results in Foodcorp’s core brands enjoying leading market positions

Category

position

Category

share

Foodcorp

growth

Market

growth

Food Brands 2014 2014 2014 2014

National focus

Dry Dog food 1 53% 7.4% 6.1%

Dry Cat food 2 30% 17.1% 1.5%

Peanut butter 1 48% 2.4% 7.1%

Beverages 1 70% 0.5% 2.1%

Rusks 1 40% 0.9% (4.2%)

Pies 1 32% (1.4%) 2.6%

Mayonnaise 2 43% (1.1%) 0.6%

Sorghum 2 28% (0.4%) 3.1%

Flour 4 14% (1.2%) 0.4%

Private label Largest single supplier to Woolworths Speciality

Regional focus

Bread 4 7% 1.0% 0.8%

Maize 5 3% 3.1% 1.4%




Foodcorp had an acceptable trading performance, amidst tough trading

conditions and constrained consumer spending

• Net revenue from continuing operations for the year was R7.8bn – an increase of 6%

over the comparable period (only two months included in the RCL Foods comparative)

• Operating profit was below expectation, but in line with prior year, at R455.2m, a margin

of 5.9%

• Operating profit includes additional R96.0m depreciation and amortisation as a result of

the purchase price allocation

• Grocery, Beverage and Speciality divisions performed well

• Milling division was in line with prior year

• Baking and Pie divisions performance was lower than the prior period; receiving focused

management attention




Foodcorp had an acceptable trading performance, amidst tough trading

conditions and constrained consumer spending

• Selling price increases were necessary in certain categories as a result of higher

commodity and energy costs, as well as an increase in packaging materials

• New management team appointed in the Baking division and this has already begun

to bear results

• The disposal of the Fishing division to Oceana Group Limited was approved by the

Competition Commission subject to certain divestiture conditions, one of these

conditions is not acceptable to both parties and has subsequently been appealed.

The parties have extended the sale of business agreement to 30 September 2014



Foodcorp: Innovation – The Seventh Floor

• The facility is situated in Black River Park in Observatory, Cape Town

• An innovation centre dedicated to cooking up new food concepts for South African consumers

• State-of-the-art development kitchen with an adjacent Chocolate Studio, a lavishly decorated dining room, a

bar, three meeting rooms, the Weber terrace and the Theatre of Food

• Foodcorp strives for innovation through leading edge technology, a commitment to quality, and the use of

organic materials

• Foodcorp created a development kitchen that incorporates solar heating, water recycling (our dishwater water is

recycled seven times), and energy saving appliances and equipment. Efficient waste programmes are promoted,

such as the InSinkErator Waste Disposers and contracting a recycling company for regular collections. An organic

herb garden just off the Weber balcony keeps the kitchen well supplied.

• Its development kitchen is open to all Foodcorp’s retail partners for product demonstrations



Canine Cuisine

Yum Yum

Double Crunch

Ultra Dog

Nola Tangy

American

Cookies

Supreme Turbo

Foodcorp: New product launches



Operational review – Rainbow

Integrated supply chain from “farm to fork”

Revenue (Rm)

2014

Pro forma

2014

Actual2013

Foodcorp 7 768.0 7 768.0 1 217.5

Rainbow 8 732.9 8 732.9 8 143.6

TSB 5 421.4 2 482.1 n/a

Vector 1 699.9 1 699.9 1 476.9


Total 22 645.7 19 720.0 10 108.8


Pro forma

2014

Actual2013

Foodcorp 449.9 455.2 99.8

Rainbow (2.6) 0.6 (3.1)

TSB 213.6 79.5 n/a

Vector 147.6 149.1 142.9


Total 778.6 534.0 167.0

Rainbow pre-IAS 39 operating profit 96.2 99.4 (12.5)


Scott Pitman, Managing Director

Appointed: January 2011

• 19 years’ experience in marketing and sales

• Previously headed up marketing for Robertsons, Distell, Unilever and Rainbow Chicken

The

opportunity

Management

• Consumption and long-term volume growth trends expected to continue

• Focus on value-added products and strategic customers (quick-service restaurants)

• Industry at a cyclical low, affected by dumping and record feed input costs

− Tariffs and anti-dumping protection are key to restoration of acceptable profit margins

− New season crops anticipated to restore global feed stock levels

• Recently announced injection cap is a positive development



• Rainbow’s pre-IAS 39 operating profit, at R99.4m, is

significantly up on the loss of R12.5m this time last year

• This is despite feed costs being up 9.8% (Rand per ton) to a

new record high, little change to dumped imports, and the

industry consequently remaining in crisis

• Rainbow’s improvement in result is due to the implementation

of a new business model, designed to deliver a more

sustainable profit (even in down-markets)




Significant time was spent on delivering the new Rainbow business model:

• Alignment of bird volumes with profitable demand (smaller if necessary)

• More birds for QSR customers (20% more achieved)

• Step change in costs (only 1.9% opex growth)

• Substantially reduced production of IQF (40% reduction already)

• Rapid value added growth

• Strategic customer alignment and growth

Operating expense growth

(excluding feed cost)




Food Solutions

• After a tough period for QSR’s in the first half, key customers have started to grow volume with solid, single figure volume growth

• Rainbow’s step changed ability to produce more QSR weight range birds from the same flocks, will mean less agriculture capex going forward




Retail

• Simply Chicken added value ranges have grown to record market shares, in chilled processed meats and freezer to fryer

• After a year of cost reductions and consequently higher innovation, Rainbow is currently in trade with a raft of innovation, to resume the pressure on growing this reliable part of the business



John du Plessis

Managing Director

Appointed: 2009

• 25 years sugar industry experience, previously held managerial and executive positions at Royal Swaziland Sugar Corp (Swaziland), Booker Tate (United Kingdom), Zambia Sugar (Zambia) and Illovo Sugar (South Africa)

Operational review - TSB

Revenue (Rm)

2014

Pro forma

2014

Actual2013

Foodcorp 7 768.0 7 768.0 1 217.5

Rainbow 8 732.9 8 732.9 8 143.6

TSB 5 421.4 2 482.1 n/a

Vector 1 699.9 1 699.9 1 476.9


Total 22 645.7 19 720.0 10 108.8


Pro forma

2014

Actual2013

Foodcorp 449.9 455.2 99.8

Rainbow (2.6) 0.6 (3.1)

TSB 213.6 79.5 n/a

Vector 147.6 149.1 142.9


Total 778.6 534.0 167.0

The

opportunity

Management


• Significant growth potential into Africa with huge diversification potential • Greenfield sugarcane development project in the Massingir District of Mozambique. The project is still

in the feasibility phase.


Operational review – TSB

Results for the six months only

• Operating profit of R79.5m and an operating margin of 3.2%

• Results negatively impacted by unprecedented levels of sugar imports

• Industry wide strike affected profitability

Production levels forced lower

• TSB produced 190kt of sugar compared to 246kt in the comparative period last year

• Lower output due to strike and extreme wet conditions during the start of 2014/2015

milling season

• Turbidity problems and increased energy costs due to higher moistures in bagasse

impacted the bottom line

Massingir

• Massingir is TSB’s proposed greenfield expansion in Mozambique. Feasibility studies are

ongoing with a final decision on the project likely by December 2014

• R52.2m of setup costs relating to the project is currently recorded as work in progress with

a further R45.7m budgeted for 2015



TSB Agronomics

Cane is provided per seasonJune 2014 June 2013 June 2012

Cane crushed (000) 4 928 4 961 5 407

Raw sugar produced (000) 598 586 658

Cane : Sugar ratio 8.2 8.5 8.2

Sucrose % 14.2% 13.8% 14.2%

TSB Managed Farms

Hectares managed 14 262 14 060 14 040

Cane yield per hectare 113.0 110.3 116.5

Capacity

Cane capacity (000) 5 745 5 745 5 745

Capacity utilisation 86% 86% 94%

TSB Production Share 27.4% 28.7% 33.7%



Operational review – Vector

• Opportunity to leverage Vector’s business model and skills into the ambient area within Foodcorp and TSB Sugar

• Significant investment in new capacity and systems will facilitate higher volumes and improved operational efficiency (c.R13 bn value of goods moved through Vector system annually)

• Well positioned for future growth

The

opportunity

Management

Chris Creed

Managing Director

Appointed: January 2011

• Marketing and sales roles within Bristol Myers Squibb, Adcock Ingram, Capespan

• Appointed Rainbow Farms Distribution Director in 2007

Optimisation of outbound supply chain

Revenue (Rm)

2014

Pro-forma

2014

Actual2013

Foodcorp 7 768.0 7 768.0 1 217.5

Rainbow 8 732.9 8 732.9 8 143.6

TSB 5 421.4 2 482.1 n/a

Vector 1 699.9 1 699.9 1 476.9


Total 22 645.7 19 720.0 10 108.8


Pro-forma

2014

Actual2013

Foodcorp 449.9 455.2 99.8

Rainbow (2.6) 0.6 (3.1)

TSB 213.6 79.5 n/a

Vector 147.6 149.1 142.9


Total 778.6 534.0 167.0




Sales volumes remain under pressure

• Subdued economic environment continues to constrain trading partners and organic growth

• Total revenue up 15.1% to R1.7bn

• Pleasing growth in Primary Transport, Bulk Storage and new business from Burger King and Captain DoRegos in the secondary network

• Pick ‘n Pay basket and Sea Harvest successfully introduced into the network

Inland network optimisation initiatives

• Pleasing progress and cost saving benefits offset by higher manpower, electricity and fuel costs

• Second sales and merchandising unit established

Historical litigation impacts

• Relates to a number of drivers from Roodepoort who were dismissed for misconduct in year 2005

• Added an additional cost of R16.6m

• Operating profit reflects modest growth of only 4.3% to R150m (excluding the settlement cost, growth would have been 15.9%)

Growth remains key

• 49% interest in Senn Foods Logistics was acquired with effect from May 2014 for R79.9m

• Focus on internal efficiencies, corporate governance and accreditation initiatives for the benefit of Vector principals and customers

• Investing in the network: construction of a new facility to the value of R140m in the Coega Development Zone initiated



• 15.1% revenue growth:

– Improvements in primary transport and bulk storage

– New business growth in secondary distribution network from Captain DoRegos, the expansion of Burger King, growth of the Pick ‘n Pay basket and the introduction of Sea Harvest

• Subdued growth by principles partially offsets new business

• Cost containment initiatives, including the restructure of the Inland network, benefits operating costs; largely offset by the impact of litigation and start-up costs relating to the second sales and merchandising structure

• Operating profit improves by 4.3%, negatively impacted by the costs of litigation

• Excluding impact of litigation, operating profit would have grown by 15.9%, in line with revenue growth


Revenue Operating Costs Operating profit

Revenue, Operating Cost, Operating Profit : F14 vs. F13 (Rm)

2013 2014

4.3%

Operating Costs excl litigation Operating profit excl litigation

Operating Cost and Operating Profit excl litigation :

F14 vs. F13 (Rm)

2013 2014

15.5%


15.1%

15.9%

16.7%


Operational efficiency

• Year on year stock levels increased by 1% with 2.1% volume growth driven predominantly by new business

• Service levels declined by 1.9% driven by supply issues from various principals. Despite these issues, overall service levels are still in line with industry norms

• Advanced Planning systems are assisting in maximising service from reduced stockholding

Operational efficiency – Vector

Jul-

12

Au

g-1

2

Sep

-12

Oct

-12

No

v-1

2

De

c-1

2

Jan

-13

Feb

-13

Mar

-13

Ap

r-1

3

May

-13

Jun

-13

Jul-

13

Au

g-1

3

Sep

-13

Oct

-13

No

v-1

3

De

c-1

3

Jan

-14

Feb

-14

Mar

-14

Ap

r-1

4

May

-14

Jun

-14

Stock Holding Trend

Year-on-year stockholding increased by 1% while volume grew by 2.1%

Volume Inventory Service Level

F13 F14

2.1%

1.0%-1.9%



Network Optimisation

• Optimisation of facilities

in Gauteng improved

efficiencies as expected

• As part of the on-going

network optimisation, the

secondary distribution

business based at

Roodepoort was moved

to the Midrand campus

in November 2013. The

Roodepoort operation is

being used as a bulk

storage facility

• The Klerksdorp depot

was mothballed at the

end of June 2013 as part

of the network redesign

Operational review - Vector

Midrand Campus

Secondary distribution business

Roodepoort

Bulk storage



• Vector acquired a 49% interest in Senn Foods Logistics (Pty) Ltd, based in Botswana, for P65.5 million (R79.9m)

• Effective from May 2014

• Senn Foods Logistics is the largest cold chain distribution business in Botswana and is involved in the distribution of dry, frozen and chilled foodstuffs

• Represents most of Vector’s principals in Botswana including Rainbow, McCain, I&J and Fry’s as well as QSR customers Chicken Licken, Nandos, Spur and Wimpy

• Senn Foods is currently expanding their capacity

Acquisition of Senn Foods Logistics - Vector

Refrigerated fleet

Cold storage capacity is being expanded


Botswana


Prospects

• Sustainable improvement in consumer spending is unlikely: the impact of this is

pervasive across all RCL Foods’ segments

• Poultry industry remains in crisis: the recently announced anti-dumping protection

will be key to the survival of the industry

• A good production season is expected for TSB: a lower level of sugar imports

signifies normalisation in the market and better marketing conditions are expected

• Redemption of Foodcorp’s Euro denominated debt has removed the significant

foreign currency valuation volatility: will result in a more stable and a lower cost of

funding

• RCL Foods continues to explore opportunities in strategic growth markets in the

food sector in South Africa and sub-Saharan Africa: in line with long-term

aspirations

Salient features

Results summary

Strategic

overview

Key issues and

financial review

Operational

reviewsProspects


Appendices


Disclaimer

THIS PRESENTATION (WHICH SHALL BE DEEMED TO INCLUDE ANY INFORMATION WHICH HAS BEEN OR MAY BE PROVIDED IN WRITING OR ORALLY IN CONNECTION HEREWITH)

("PRESENTATION") CONTAINS INFORMATION PERTAINING TO RCL FOODS LIMITED ("COMPANY"). THE PRESENTATION MAY NOT BE VIEWED BY PERSONS WHERE TO DO SO

WOULD CONSTITUTE A BREACH OF ANY APPLICABLE LAWS OR REGULATIONS. PERSONS ACCEPTING THIS PRESENTATION REPRESENT AND WARRANT TO THE COMPANY THAT

THEY ARE DOING SO FOR INFORMATION PURPOSES ONLY AND AGREE TO THE FOLLOWING TERMS AND CONDITIONS.

Neither the Company nor its employees, directors, representatives or advisors ("Related Persons") make any representation or warranty, express or implied, as to or the accuracy, completeness or

fairness of any information, statements, representations or forecasts contained in the Presentation and no reliance may be placed on the Presentation.

Neither the Company nor the Related Persons nor any other person shall be liable for any loss, damage, claim or costs (whether direct, indirect or consequential) whatsoever and howsoever suffered or

incurred by any person as a result of or arising from placing reliance on, acting on or refraining from acting on anything contained in, or omitted from, the Presentation, whether the loss, damage, claim

or costs arises as a result of negligence or gross negligence.

The Presentation is being made available in good faith and for information purposes only. The Presentation does not constitute an offer, solicitation or invitation to purchase or subscribe for any shares

in the Company and shall not form the basis of any agreement with the Company. Prospective investors who make an investment in the Company may not rely on the Presentation nor any part thereof

in relation to such investment.

The information disclosed in the Presentation is only current as of the date of the Presentation. Neither the Company nor the Related Persons shall have any obligation to review, update or correct the

information in the Presentation after the date of the Presentation nor to notify recipients of any inaccuracy, incompleteness or change in the information contained in the Presentation. The Company shall

however be entitled to update, amend, supplement or otherwise alter the information contained in the Presentation without notice.

The Presentation may contain "forward-looking" statements. Such statements are only predictions and reflect significant assumptions and subjective judgments by the Company concerning anticipated

future events or performance. These assumptions and judgments may or may not prove to be correct and are subject to inherent risks and uncertainties. Those risks and uncertainties include factors

and risks specific to the Company as well as general economic conditions and conditions in the market. Actual events or results may differ materially from the events or results expressed or implied in

any forward-looking statement and such deviations are both normal and to be expected. Whilst the Company is of the opinion that the views expressed in any such forward-looking statements are based

on reasonable assumptions, neither the Company nor the Related Persons makes any representation or warranty as to the accuracy or likelihood of fulfilment of any forward-looking statement, or any

events or results expressed or implied in any forward-looking statement. Any forward-looking statements made in the Presentation reflect views held as at the date of the presentation.

Prospective investors should not construe the contents of the Presentation as legal, tax, investment or other advice. In making an investment decision, prospective investors must rely solely on their own

analysis of the legal, tax, financial and other consequences of an investment in the Company, including the merits of investing and the risks involved, and are advised to consult their own professional

advisors concerning such matters. Prospective investors will be solely responsible for their own assessment of the market position of the Company and forming their own view of the future performance

of the Company and arriving at an investment decision with regards to the Company. It is the responsibility of each prospective investor to satisfy itself as to full compliance with the applicable laws and

regulations. Prospective investors should inform themselves as to the legal requirements applicable to them in respect of the acquisition, holding and disposition of an interest in the Company.

The publication or distribution of the Presentation in certain jurisdictions may be restricted by law, and persons into whose possession the Presentation herein comes should inform themselves about

and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

Neither this Presentation nor any part or copy thereof may be taken or transmitted into or distributed in or into, directly or indirectly, Australia, Canada, Japan or the United States (including its territories

and possessions, any state of the United Sates and the District of Columbia).

The Presentation may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, in whole or in part, for any purpose. This Presentation is intended for

distribution to, and is only directed at, the recipient on the basis that: (A) in the United Kingdom, they are (i) persons who have professional experience in matters relating to investments falling within

Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”); or (ii) high net worth entities falling within Article 49(2)(a) to (d) of the Order; or (B) they are

outside the UK and are persons to whom it can otherwise lawfully be distributed under local law (all such persons together in (A) and (B) being referred to as “relevant persons”). Persons who are not

relevant persons should not take any action on the basis of this Presentation and should not act or rely on it. By accepting this Presentation the recipient confirms that he or she is a relevant person. Any

investment or investment activity to which this Presentation relates is only available to (i) in the United Kingdom, relevant persons and, (ii) in any member state of the European Economic Area other

than the United Kingdom, “qualified investors” within the meaning of Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/EC), as amended by the 2010 PD Amending Directive (Directive

2010/73/EU), and will be engaged in only with such persons.


Rupert Family

HealthcareFood, Liquor &

Home care Banking Insurance Industrial Infrastructure Media & Sport

RCL Foods is Remgro’s chosen platform for its food strategy in sub-Saharan Africa

Strategic overview: RCL Foods in context


Population will more than double to

2 billion, 22% of world’s

population

Workforce will become the largest in

the world, 25% of the world’s workers

Potential to become

an agricultural power house with 60% of the

world’s available farmland

Food demand is predicted to

increase by 50% by 2030 and 70%

by 2050

Africa 2050 Opportunity

1 in every 4 people in sub-Saharan

Africa lacks

adequate food for a healthy life style

Strategic overview: Africa opportunity


Strategic overview: What differentiates us?

• Own the route to market through integrated outbound supply chain

• Strategic customer relationships

• World-class technology and systems delivering a highly efficient distribution service

• The transformational acquisitions of Foodcorp and TSB Sugar have established a business of significant size and scale with diversification to counter cyclicality

• Opportunity to realise synergies (distribution, sourcing, IT systems, funding) across the Group

Experienced management team with strong operational track

record

• Management team has extensive knowledge and experience in the South African food industry

• Delivered steady, through-the-cycle revenue growth (11% CAGR since 2000)

• Depth of management with experienced senior management at every business segment level

• Leading market position in many categories

• Best known brands that span staples to top-end, value-added offerings

• Emerging middle-class displays strong brand loyalty

Support of a highly regarded strategic

shareholder

• Remgro is a highly regarded investment holding company with substantial size and influence

• Adds value by providing strategic guidance and financial support

• An investment partner of choice

Positioned to deliver on the African opportunity

• RCL Foods is currently pursuing a number of projects in sub-Saharan Africa in addition to the greenfield sugar cane project in Mozambique

• Extensive research and analysis to identify suitable investment opportunities against very specific criteria

Portfolio of leading consumer brands

6

1

5

Unique, integrated business mode

Significant platform for expansion

3

2

4


Foodcorp overview

Foodcorp is a leading manufacturer of quality branded and private label

food products

• Product range includes

– Peanut butter, pet food, mayonnaise, edible oils, breads, bakery products and wheat flour

– Certain traditional SA products such as rusks, sorghum meal, mageu and white maize meal

• It manufactures and sells a wide range of quality convenience ready to eat products including

pies, a range of products, speciality breads and cakes for Woolworths and other retailers

• Foodcorp positions products to appeal to the mass consumer market, representing

approximately 70% of the total South African population

• Foodcorp supplies most products nationally to major retail and wholesale outlets

– Including Shoprite-Checkers, Woolworths, Pick ‘n Pay, Spar and Walmart-Massmart,

independent retailers, forecourts and the food services industry

• Managed under six larger production units

– Grocery division, Milling division, Baking division, Pie division, Beverage division and Speciality

division



Foodcorp: Grocery and Pie Divisions

Swazila

nd

Botswana

NorthWest

Limpopo

Mpumalanga

FreeState

Lesotho

EasternCape

WesternCape

KwaZuluNatal

Gauteng

NorthernCape

Randfontein

Molteno

One mega site which includes 6 operations

The Grocery Division consists of a portfolio of well recognised

brands with market leading positions

Includes a wide range of grain and edible oil based

products, sorghum, peanut butter, rusks, a range of pet

foods, as well as salad dressings, dips and spreads

Brands


The Pie Division produces a range of high quality, predominantly meat pies under the Piemans brand that are sold in these formats: frozen unbaked, frozen baked and chilled baked

Swazila

nd

Botswana

NorthWest

LimpopoProvince

Mpumalanga

FreeState

Lesotho

EasternCape

WesternCape

KwaZuluNatal

GautengKrugersdorp

Centurion

NorthernCape

Brands

Grocery Pie


Foodcorp: Beverage and Milling divisions

The Beverage Division produces a maize-based health drink

under the Mageu No 1, Smooth, Phuzimpilo and Mnandi

brands

Brands


The Milling Division operates the largest single site flour mill in Southern Africa and a maize mill, both based at the same site in Pretoria

Brands

Beverage Milling

Swaziland

Botswana

NorthWest

LimpopoProvince

Mpumalanga

FreeState

Lesotho

EasternCape

WesternCape

KwaZuluNatal

Gauteng

Pretoria

NorthernCape

Swaziland

Botswana

NorthWest

LimpopoProvince

Mpumalanga

FreeState

Lesotho

EasternCape

WesternCape

KwaZuluNatal

Gauteng

Pretoria

NorthernCape


Foodcorp: Baking and Specialist divisions

The Baking Division is the fourth largest bakery group in the

country, operating seven bakeries and distributing its

products in five of the country’s provinces.

Brands


The Speciality Division produces a range of superior ready to eat products, including speciality breads, mainly for Woolworths. The product range includes sandwiches, muffins, desserts, snack foods, scones, rye breads, cake products, pastries and croissants

Brands

Baking Speciality

Swaziland

Botswana

NorthWest

LimpopoProvince

Mpumalanga

FreeState

Lesotho

EasternCape

WesternCape

KwaZuluNatal

Gauteng

NorthernCape

Rustenburg

Tzaneen

Pretoria

Polokwane

BenoniNelspruitBushbuckridge

Swazil

and

Botswana

NorthWest

LimpopoProvince

Mpumalanga

FreeState

Lesotho

EasternCape

WesternCape

KwaZuluNatal

GautengJohannesburg

Pretoria

NorthernCape

2 sites

1 site


Worcester

Hammarsdale

Rustenburg

Wolwehoek

EastLondon

PortElizabeth

Durban

Cape TownGeorge

Roodepoort

Bloemfontein

Nelspruit

Newcastle

Polokwane

Windhoek

Tzaneen

Midrand

KlerksdorpSwaziland

Botswana

Namibia

Lesotho

NorthWest

LimpopoProvince

Mpumalanga

FreeState

EasternCape

WesternCape

NorthernCape

KwaZuluNatal

Pietermaritzburg

Carolina

Rainbow: Infrastructure

209 rearing, laying and broiler farms and hatcheries30m birds on the ground

5 feed mills1.1m tons per year

4 primary processing plantsnearly 250m birds per year

2 further processed plants27,000 tons per year



GP operation

Rainbow: Complex business chain

Integrated supply chain from “farm to fork”

Agriculture Processing

Grandparentchicks 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 daysBroilers

Processing

4 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 Cape

Consumers Brands Customers Distribution

Feed supply• 5 feed mills producing 1.1m tons pa

• Around 80% of production to Rainbow

Grade A Quality,

Grade A Taste

They taste so good

‘cos they eat so good

The

Chicken

ExpertsThe consumer is at the heart of our business


Wholesale

RetailFoodservice


Rainbow: Imports and feed costs

1. Imports are higher than ever and remain the key culprit

2. Feed costs were up another 10% on top of record highs

F14 F13 F12 F11 F10

R/Ton

Feed costs

+10%

Imports

+10%


0.00

5 000.00

10 000.00

15 000.00

20 000.00

25 000.00

30 000.00

35 000.00

Au

g-0

6

Feb

-07

Au

g-0

7

Feb

-08

Au

g-0

8

Feb

-09

Au

g-0

9

Feb

-10

Au

g-1

0

Feb

-11

Au

g-1

1

Feb

-12

Au

g-1

2

Feb

-13

Au

g-1

3

Feb

-14

Imports - Total Chicken (Excl MDM) - Tons per month


Rainbow: Market changing factors update

Trade remedies

• Dti implemented a tariff on bone-in portions in August 2013, which affected non EU

countries

• Subsequent to year-end, the Dti implemented interim anti-dumping duties against

key EU countries effective until 1 January 2015, whilst they complete their research

and a decision is reached on permanent duties

Injection cap

• Rainbow remains supportive of Government’s intended 15% cap on injection

• Rainbow’s stance, because of its strategy of building consistent brands that

consumers demand, has been to inject lower than the industry for years (despite the

relative financial penalty)

• Rainbow welcomes the leveling of these playing fields which is in consumer interests



TSB: Cane Supply Area

TSB’s three mills in South Africa are

Malelane, Komati and Pongola



TSB Mills

Malalane Mill

Mill Mill Established Tons sugar produced Notes

Nkomazi Malalane 1968 189 000 Nkomazi produce

approximately 490 000 tons

of sugar per year

Komati 1993 250 000

Pongola Pongola 1954 163 000 Pongola produce

approximately 135 000 tons

of sugar per year. Adding

Pongola to Nkomazi, TSB

current produces 27% of the

total SA production



RSA Mills 2015 Summary

ExtractionRaw House

Crystallisation

Molatek

Refinery

Boilers &

Power Plant

Cane

5.5 mtc

Molasses

201,000t

Refined Sugar

492,000t

Brown Sugar to Market

157,000t

SteamBagasse

1,373,000t

Bagasse to

Molatek

138,000t

Other Raw Materials

Animal Feed

340,000t

Molasses sold

30,000t

Raw Export

30,000 (shipments)



RSSC Mills 2015 Summary

ExtractionRaw House

CrystallisationDistillery

Refinery

Boilers & Power Plant

SSA

MSP SACU EuropeRegionalUS

Cane

3.41 mtcMolasses

120 000t

Total Production

28.9 mil Potable

Other SugarRefined Sugar

130 000 t

Brown Sugar

278 000 t

Steam

98 000 t 16 000 t 15 000 t 242 000t 314 000t

Bagasse

885 000t



Molatek Animal Feeds Products

Malalane Mill

• Molatek sells ±300 000 tons of

manufactured product

• Products are sold in bulk bags

- 40 kg

- 50kg

Molatek Sales

Bulk Bags

Energy Feeds

Concentrates

Lick Supplements



TSB: Booker Tate in a nutshell

• Booker Tate provides development, management and technical

services to sugar and agribusiness industries throughout the world

• Founded in 1988 from the amalgamation of Booker Agriculture

International (BAI) and Tate & Lyle Agribusiness (TLA) with a sugar

history stretching back to the 18th century

• Booker Tate has successfully completed over 1 500 assignments in

120 countries over 50 years

• Booker Tate has recently worked in Belize, Burkina Faso, Colombia,

Dominican Republic, Guyana, Indonesia, Kenya, Mozambique,

Nigeria, Papua New Guinea, Peru, Sierra Leone, South Africa, Sri

Lanka, Sudan, Suriname, Swaziland and USA



TSB: Royal Swaziland Corporation

27.42% Shareholding

RSSC Key Parameters Metric Actual 2014

Area harvested Ha 19,591

Cane – Estate Tons 2,008,893

Cane – Outgrowers Tons 1,356,162

Cane total Tons 3,365,055

Sugar 96 Pol Tons 433,255

Ethanol Litres 29,667,000



TSB: Quality Sugars, Sugar Marketing and Specialities

White Sugar Brown Sugar


Castor & Icing Specialty Brown

Sticks

Sweetener


Vector: Operational review

Customer Secondary Distribution (CSD)

• Vector is contracted by the customer to deliver

their full basket of products directly to the outlets

• New customers in 2014 – Burger King national roll-

out and Captain DoRegos

Principal Secondary Distribution (PSD)

• Vector is contracted by the principal to deliver to

all retailers, wholesalers and general trade

• New principals added to this business during 2014

include Sea Harvest and Nature’s Garden

Customers Principals


http://www.brandsoftheworld.com/download/brand/176047.html





Worcester

Hammarsdale

Rustenburg

Wolwehoek

EastLondon

PortElizabeth

Durban

Cape TownGeorge

Roodepoort

Bloemfontein

Nelspruit

Newcastle

Polokwane

Windhoek

Tzaneen

MidrandSwaziland

Botswana

Namibia

Lesotho

NorthWest

LimpopoProvince

Mpumalanga

FreeState

EasternCape

WesternCape

NorthernCape

KwaZuluNatal

Carolina

Vector: Infrastructure

Vector infrastructure

• National footprint including

Windhoek

– 5 plant-based cold

stores

– 16 distribution sites

– Capacity 101 302 pallets

– Employees 4 461

– Customer Drop Points

7 000

– 235 000 cases delivered

daily (61m cases pa)

– Tonnage 632 000 tons pa

– Fleet of 401 vehicles

(primary 131 /

secondary 270)

– ISO 22000 and ISO 22002

accreditation for all

Warehouses

– ISO 14001 and OHSAS

18001 across Peninsula,

Midrand, Thekwini and

Roodepoort

plant-based cold stores

distribution sites



Vector: Services

Manufacturers

(PBCS)

Primary Warehousing

(VCS)

Primary Transport

(VPT)

Principal Secondary Distribution

(PSD)

Customer Secondary Distribution

(CSD)

Sales Solutions

(VSS)

Credit & Information

Management

2008

Plant Based Cold Stores

2002

Primary

Warehousing

2007

Primary Transport

1966

Secondary Warehousing &

Transport

2001

Secondary Warehousing &

Transport

2004call centres,

sales and merchandising

2001Debtors and information

management

33%

23%

20%

9%

9%6%

2014

Principal Secondary Distribution (PSD) Primary Transport (VPT)

Customer Secondary Distribution (CSD) Sales and Merchndising (VSS)

Bulk Storage (VCS) Plant Based Cold Storage (PBCS)

In December 2004 Rainbow acquired the Vector business which comprised 94% Principal Secondary

Distribution; Since then:

• Vector manages the entire Rainbow Outbound Supply Chain

• Vector now offers a fully integrated and cost effective outbound supply chain to customers and principals

• The business is more balanced and diversified with service offerings

covering the full outbound supply chain

94%

4% 2%2005

Sources of

revenue


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