Trading update and trading statement for the year ending 30 September 2018 Rhodes Food Group Holdings Limited (Incorporated in the Republic of South Africa) Registration number 2012/074392/06 JSE share code: RFG ISIN: ZAE000191979 (“RFG” or “the group”) TRADING UPDATE AND TRADING STATEMENT FOR THE YEAR ENDING 30 SEPTEMBER 2018 Trading update The increasingly challenging local economic environment and the prolonged drought in the Western Cape have adversely impacted the group’s regional and international performance. Regional segment (South Africa and the rest of Africa) Trading conditions showed a marked deterioration in the second half of the group’s financial year as declining consumer disposable income resulted in a sharp slowdown in sales growth, in line with the pressure being experienced in the food retail sector. Despite the tougher trading environment, market shares have been maintained or grown. - The pie category has proven to be resilient in the current consumer slowdown. However, the turnaround in Ma Baker has been slower than expected and the business is anticipated to report a small loss for the full year. - Dry foods (formerly Pakco) continues to perform well and gain momentum from the relaunch of its brand portfolio earlier in the year. - Escalating meat prices have contributed to margin dilution in Bull Brand. - Fruit juices have shown good growth in an intensely competitive environment. Trading in the sub-Saharan Africa markets remains tough owing to poor economic conditions and liquidity constraints in some major markets. The regional operating margin for the second half is anticipated to be at a similar level to the 7.8% reported for the first half, although the margin for the first six months was net of certain once-off costs. International segment International revenue will show an increase for the year due to improving export volumes. Industrial puree and concentrate pricing has remained weak and margins continued to be impacted by increased canned fruit product costs as a result of the drought in the Western Cape over the last two seasons. The higher canned fruit costs could not be recovered through price increases and this together with the currency impact has had a material impact on profitability which will contribute to the international segment posting a loss for the year. Trading statement In addition to the trading performance, the group’s earnings will be adversely impacted by increased interest payments which are expected to be between R26 million and R28 million higher than the previous year. This relates mainly to the funding for the acquisition of Ma Baker, the increased capital investment programme and lower levels of cash generated as a result of the lower profit over the past year. Earnings have benefited by R11 million from an income tax rebate relating to capital projects in the current year and the release of an over-provision for prior years. As a result of these factors outlined above, management expects headline earnings for the year ending 30 September 2018 to be between 28% and 38% lower than the R237.0 million reported for the previous year. Earnings per share measures have been impacted by the 8.1 million or 3.3% increase in the weighted average number of shares in issue over the prior year relating to the issue of shares for the capital raise and the acquisition of Pakco in the previous year. Year ended Year ending 1 October 2017 30 September 2018 Reported Expected range Headline earnings R237.0m 28% - 38% lower R170.6m – R146.9m Earnings per share (EPS)* 95.9c 31% - 41% lower 66.2c – 56.6c Headline earnings per share 96.9c 30% - 40% lower 67.8c – 58.1c (HEPS)* Diluted HEPS* 93.4c 30% - 40% lower 65.4c – 56.0c * Impacted by the increase in the weighted average number of shares in issue The forecast financial information on which this trading update and trading statement is based has not been reviewed and reported on by the group’s independent external auditors. The group’s annual financial results for the year ending 30 September 2018 will be released on the Stock Exchange News Service of the JSE on 20 November 2018. Groot Drakenstein 17 September 2018 Sponsor RAND MERCHANT BANK (A division of FirstRand Bank Limited) Date: 17/09/2018 07:05:00 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.