ANNUAL RESULTS for the year ended September 2015
PRESENTATION OUTLINE 1 REVIEW OF THE YEAR 2 FINANCIAL PERFORMANCE 3 TRADING PERFORMANCE 4 OUTLOOK 5 QUESTIONS 2 RHODES FOOD GROUP – ANNUAL RESULTS 2015
REVIEW OF THE YEAR
REVIEW OF THE YEAR Strong organic growth, particularly in regional segment Market share gains across core product categories Improved international performance in H2 as timing of export orders and shipments normalised JSE listing accelerating group’s growth strategy Successfully integrated three acquisitions: R365 million Fourth acquisition concluded in 2015 effective 1 October 4 RHODES FOOD GROUP – ANNUAL RESULTS 2015
ACQUISITIONS Pacmar acquired for R165 million; fully integrated; effective 1 April 1 Fruit juice manufacturer: local, regional and international markets Extensive synergies between Pacmar products and existing range of bulk fruit purees and juice concentrates Range of Rhodes branded juices launched Sept 2015 Pleasing revenue contribution in H2 5 RHODES FOOD GROUP – ANNUAL RESULTS 2015
ACQUISITIONS Boland Pulp R174 million; fully integrated; effective 3 August 2 Produces fruit concentrates and purees Integral to fruit growth strategy: industrial channel Operates in domestic, regional and 30 international markets Vertical integration and synergies with Pacmar Produces baby foods and sauces in innovative pouches 6 RHODES FOOD GROUP – ANNUAL RESULTS 2015
ACQUISITIONS Saint Pie R26 million; fully integrated; effective 1 June 3 Aligned with group’s existing pie and pastry offering Production centralised at existing facility in Aeroton, Johannesburg Manufacturing facility in Lydenburg closed Saint Pie brand retained; focus on forecourts 7 RHODES FOOD GROUP – ANNUAL RESULTS 2015
ACQUISITIONS POST YEAR END Deemster R25 million; effective 1 October 2015 1 Vegetable canning and salad bottling business Produces third party brands and private label ranges Entry into new categories of beetroot and gherkins Opportunity for lateral extension of Rhodes brand Food Service business of General Mills SA; 30 November 2015 2 Produces dry and frozen bakery products Complements the group’s growing pies and pastries business Focused mainly on convenience channel High quality automated manufacturing facility in Johannesburg 8 RHODES FOOD GROUP – ANNUAL RESULTS 2015
ACQUISITIONS POST YEAR END Alibaba Foods R42 million; effective 1 February 2016 3 Manufactures halaal Eastern foods, mainly samoosas All major food retailers and forecourt bakery outlets Produces all Woolworths’ samoosas and Indian snacks Strengthen group’s position in bakery and snacking category Complement pies and pastries business, and newly acquired bakery business from General Mills Entry into retail frozen food space Acquisition subject to due diligence 9 RHODES FOOD GROUP – ANNUAL RESULTS 2015
CAPITAL EXPENDITURE PROGRAMME Investing in capacity expansion and production efficiency Capex of R176 million in 2015 (2014: R88 million) Investment programme 2014 - 2015 Capex Status Upgrading Bull Brand facility R50m Ph 1: Complete Ph 2: H1 2016 R52m Complete Increasing storage and dispatch capacity at fruit production facilities Increasing efficiency at vegetable plant R20m Complete Installation and upgrading of generators R22m Complete Upgrading production capacity at R26m Completion Pacmar H1 2016 10 RHODES FOOD GROUP – ANNUAL RESULTS 2015
WELL-INVESTED PRODUCTION FACILITIES 11 production facilities 11 RHODES FOOD GROUP – ANNUAL RESULTS 2015
INNOVATION – LONG LIFE FOODS New Rhodes packaging Corned chicken introduced Old New Tomato range relaunched Green EZO tabs on cans Rhodes juice range Chakalaka range launched 12 RHODES FOOD GROUP – ANNUAL RESULTS 2015
INNOVATION – FRESH FOODS Woolworths Carb Clever range Magpie burger pie range launched expanded Saint Pie range rationalised Pie snacking range introduced and upgraded 13 RHODES FOOD GROUP – ANNUAL RESULTS 2015
FINANCIAL PERFORMANCE
FINANCIAL PERFORMANCE Turnover +23.7% to R3.0 billion Normalised* operating profit +31.8% to R311 million Normalised* operating margin up from 9.7% to 10.3% Profit after tax +105.9% to R169.8 million Normalised** diluted HEPS +136.3% to 83.9 cps Maiden dividend of 24.8 cents per share * Excludes once-off listing costs of R21.8 million in FY2015 ** Assumes 221 million shares in issue in 2014 and 2015 periods, and excludes once-off listing costs of R21.8 million in FY2015 15 RHODES FOOD GROUP – ANNUAL RESULTS 2015
INCOME STATEMENT R’m 2015 2014 % change Turnover 3 023 2 444 23.7 Cost of goods sold (2 180) (1 790) 21.8 Gross profit 843 654 28.9 Gross profit margin 27.9% 26.8% Other income 28 16 79.4 Operating costs (582) (434) 34.2 Operating profit 289 236 22.6 Net interest paid (47) (103) (54.1) Profit before tax 242 133 81.7 Tax (72) (51) 42.5 Profit after tax 170 82 105.9 Normalised HEPS 87.4 36.9 136.9 Normalised diluted HEPS 83.9 35.5 136.3 16 RHODES FOOD GROUP – ANNUAL RESULTS 2015
GROUP TURNOVER 17 RHODES FOOD GROUP – ANNUAL RESULTS 2015
BREAKDOWN OF TURNOVER GROWTH 3 200 3 023 +9.4% 3 000 +2.5% 2 800 +7.0% +4.8% 2 600 2 444 R'm 2 400 2 200 2 000 1 800 1 600 2014 Volume Price Forex Acquisitions 2015 revenue growth inflation impact revenue 18 RHODES FOOD GROUP – ANNUAL RESULTS 2015
SEGMENTAL TURNOVER 19 RHODES FOOD GROUP – ANNUAL RESULTS 2015
OPERATING PROFIT * Normalised operating profit and margin 20 RHODES FOOD GROUP – ANNUAL RESULTS 2015
FOREIGN CURRENCY MANAGEMENT Rand depreciated 7% against trading basket of currencies in 2015 Effect of the depreciating Rand largely neutralised by the group’s hedging strategy Positioned to benefit from weaker currency in 2016 21 RHODES FOOD GROUP – ANNUAL RESULTS 2015
WORKING CAPITAL MANAGEMENT 2015 2014 Net working capital days* 121 124 Inventory 104 111 Accounts receivable 65 55 Accounts payable (48) (42) Acquisitions increased working capital by R121 million on acquisition Trade receivables R154 million higher due to strong sales growth in Q4 * Normalised for the effect of acquisitions 22 RHODES FOOD GROUP – ANNUAL RESULTS 2015
CASH MANAGEMENT 741 576 346 (156) (176) (126) 12 12 (169) R'm (408) ) ) (577) ) Ordinary Preference Loans Loans Capital Acquisitions Other EBITDA Working Net interest share share repaid raised expenditure capital and tax paid capital capital changes issued repaid 23 RHODES FOOD GROUP – ANNUAL RESULTS 2015
FINANCIAL GUIDANCE - ACQUISITIONS Company Deemster General Mills Alibaba Foods Effective date 1 Oct 2015 30 Nov 2015 1 Feb 2016 Purchase price (R’m) 25 Not disclosed 42 Historic turnover (R’m) 51 66 48 Historic EBITDA (R’m) 0 Not disclosed 6 H1 2016 impact - EBIT - Interest cost Comment Fully integrated Integration on Due diligence in schedule progress 24 RHODES FOOD GROUP – ANNUAL RESULTS 2015
FINANCIAL GUIDANCE AND TARGETS Four acquisitions completed in FY2015 to be accretive in FY2016 – Partially funded by debt; interest cost to increase Effective tax rate to be in line with corporate tax rate Capital expenditure of R252 million in 2016 Capacity to raise debt to fund capex and current acquisitions Committed to achieving medium-term targets – Gross profit margin over 30% – Operating margin over 10% 25 RHODES FOOD GROUP – ANNUAL RESULTS 2015
TRADING PERFORMANCE
SEGMENTAL TURNOVER 27 RHODES FOOD GROUP – ANNUAL RESULTS 2015
TRADING PERFORMANCE: REGIONAL R ’ m 2015 2014 % change Revenue 2 114 1 596 32.5 Long Life 1 185 819 44.8 Fresh 929 777 19.5 Operating profit 212 139 52.2 Operating profit margin 10.0% 8.7% Volume growth of 9.9%; price inflation 9.1%; acquisitions 13.5% Sustained increase in demand for canned fruit, jams, meat and vegetables Bull Brand turnaround well on track and into final phase Strong growth in pie category Sales in Sub-Saharan Africa, excluding SA, up 55.2% Contributions from Pacmar (6 months) and Boland Pulp (2 months) 28 RHODES FOOD GROUP – ANNUAL RESULTS 2015
REGIONAL: LONG LIFE FOODS
REGIONAL: LONG LIFE FOODS Beverage division created within Long Life and both Pacmar and Boland Pulp successfully integrated Strong volume growth, improved brand share and factory efficiencies in Bull Brand New Rhodes packaging launched Range of Rhodes brand juices launched in September – 25 SKUs across three pack sizes Strategic focus on Sub-Saharan Africa – Growth lifted by adding canned meat and juice to product range 30 RHODES FOOD GROUP – ANNUAL RESULTS 2015
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