RHODES FOOD GROUP HOLDINGS LIMITED - Trading update and updated trading statement for the year ended 1 October 2017

Trading update and updated trading statement for the year ended 1 October 2017

Rhodes Food Group Holdings Limited
(Incorporated in the Republic of South Africa)
Registration number 2012/074392/06
JSE share code: RFG
ISIN: ZAE000191979
(“the group”)

TRADING UPDATE AND UPDATED TRADING STATEMENT FOR THE YEAR
ENDED 1 OCTOBER 2017

TRADING UPDATE
Group turnover for the financial year ended 1 October 2017 increased by 10.8%
over the previous financial year. In the group’s voluntary trading update released
on SENS on 5 September 2017 for the 10 months to July 2017, group turnover
reflected an increase of 9.9%.

Regional segment
While trading conditions domestically and in other African markets have
remained challenging the group has continued to show good organic growth.

Regional turnover increased by 21.4%, with organic growth of 12.7%. The
regional performance benefited from the acquisitions of Pakco and Ma Baker
which have settled well and have been consolidated for six months in this period.
The group has continued to gain market share in key categories and sales in the
rest of Africa continue to show good growth.

International segment
The group’s international business has been adversely affected by the stronger
Rand, reduced demand for industrial pulp and puree products, foreign pricing
pressure mainly in Asia, and increasing costs on canned fruit as a result of the
drought in the Western Cape.

The Rand gained approximately 10% against the group’s basket of trading
currencies over the year. The full impact of the strengthening currency on the
operating margin was limited in the first half by the group’s foreign exchange
hedging policy.This could not continue in the second half and margin deteriorated
as a consequence of the stronger Rand.

Canned fruit export volumes recovered in the second half of the year but were
marginally down year-on-year.

Industrial sales of pulp and puree products slowed significantly in the second half
of the year due to a major decline in global pricing and reduced demand in key
international markets.
International turnover for the 12 months showed a decline of 18.1% (decline of
21.9% after 10 months) over the prior year.

Shareholders are advised that the performance of the international business has
had a significant adverse effect on the group’s profitability.

UPDATED TRADING STATEMENT
Further to the trading statement released on SENS on 5 September 2017, the
group is now able to provide more specific guidance on the anticipated earnings
for the year.

Management expects headline earnings for the year to decline by between
17.0% and 22.0% over the restated headline earnings of R293.1million for the
prior year.

The weighted average number of shares in issue has increased by 24.7 million or
11.2% over the prior year following the issue of shares for the capital raise
undertaken by the group in November 2016 and the acquisition of Pakco
effective March 2017.

                              Year ended                  Year ended
                              25 Sept 2016                1 Oct 2017
                               Reported*                Expected range
 Headline earnings                 R293.1m      17% - 22% lower       R228.6m –
                                                                        R243.3m
 Earnings per share                 132.1c      25% - 30% lower     92.5c – 99.1c
 (EPS)**

 Headline earnings per              133.3c      25% - 30% lower     93.3c – 100.0c
 share (HEPS)**
 Diluted HEPS**                     128.0c      25% - 30% lower     89.6c – 96.0c

* IFRS restatement from figures reported in prior period
** Impacted by the increase in the weighted average number of shares in issue

The forecast financial information on which this trading update and updated
trading statement is based has not been reviewed and reported on by the group’s
independent external auditors.

The group’s financial results for the year ended September 2017 will be released
on the Stock Exchange News Service of the JSE on 21 November 2017.

Groot Drakenstein
30 October 2017

Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)

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