Trading update for the five months ended February 2021 RFG 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 FOR THE FIVE MONTHS ENDED FEBRUARY 2021 Following a positive start to RFG?s new financial year in October 2020, trading slowed considerably during the peak of the second wave of the Covid-19 pandemic in November and December 2020. However, sales started recovering in January and February 2021. The ongoing impact of the pandemic on two of the group?s largest product categories of fruit juice and pies, compounded by the additional Covid-19 restrictions over the festive season, contributed to RFG reporting lower sales volumes in the five months to February 2021 (?the period?), with sales growth being driven mainly by price inflation. Group turnover for the period increased by 1.3% to R2.3 billion, with major declines in fruit juice and pies offsetting good growth from other categories. Regional segment Turnover in the group?s regional segment for the period increased by 1.5%. Regional long life turnover grew by 3.2%, with price inflation of 10.0% and a 6.2% decline in volumes. Fruit juice and pie declines offset good growth from other categories. Dry foods and canned vegetables performed well, both reporting double digit sales growth. Fruit juice, which was the strongest performing category in the comparative period, was adversely impacted by the Covid-19 restrictions on entertainment and leisure activities during the summer holiday season as well as the delay in the start of the school year from January until February 2021. The category is now showing a recovery, with February 2021 sales down by only 7.6% year-on-year. Long life foods sales into the rest of Africa grew by a strong 14.8%. Regional fresh foods turnover declined by 1.4% over the period, with price inflation of 3.2% and volumes being 4.4% lower. The reduced travel and holidays over the festive season resulted in a slowdown in convenience and forecourt traffic which adversely impacted pie and bakery sales. The consolidation of the KwaZulu-Natal pies and pastries operation into the group?s Gauteng pie and bakery facilities, as reported in the group?s financial results in November 2020, was successfully completed. This consolidation, together with the rationalisation of associated commercial operations, resulted in once-off retrenchment and closure costs of approximately R14 million and an impairment of properties of approximately R18 million. The group expects to raise approximately R24 million from the disposal of these properties in the second half. Following the restructuring, the group expects to realise savings of R26 million on an annualised basis. The centralisation of the pie facilities has created a more efficient operating structure which positions the business for growth in this key category. Shareholders should note that the group is facing a very high sales base for the month of March 2021. The regional segment reported sales growth of 22.2% for March 2020, driven by strong customer demand and panic buying following the declaration of the state of emergency and the introduction of the national lockdown. This base effect is expected to negatively impact sales growth rates for the month and the six-month period ending March 2021. International segment Sales for the period increased by 0.6%. Export volumes declined by 6.4% and this was offset by inflation of 7.4% as the Rand depreciated by 5.3% against the group?s basket of trading currencies over the period. Demand for the group?s canned fruit products has been strong across all its international markets. Logistical challenges, including the shortage of empty shipping containers, has constrained volumes in the short term, but this backlog is expected to be caught up in March 2021. The deciduous fruit season is progressing well and normal volumes are expected to be produced. Interest payments Shareholders are advised that interest payments for the six months to March 2021 are expected to be approximately R20 million lower than the prior interim period owing to a combination of the group?s lower debt levels and the significant reduction in borrowing rates. Outlook While the consumer spending environment is likely to remain constrained in the short to medium term, the further lifting of lockdown restrictions with the country?s move to alert level 1 this week is expected to contribute to a sustained recovery in the juice and pie categories. The relaxation of restrictions is also positive for the hospitality sector which should benefit the group?s sales in the food service channel. The group enjoyed strong growth in sales into the rest of Africa in the first half of the year and management expects this to be maintained in the second six months. International sales are anticipated to gain momentum into the second half of the year. The once-off restructuring costs incurred in the first half of the year are expected to be compensated by the non-recurrence in the period of the losses of R48.8 million on the mark-to-market revaluation of foreign exchange contracts in the international segment in the first half of the 2020 financial year. The financial information in this trading update is the responsibility of the directors and has not been audited, reviewed or reported on by the group?s independent external auditors. The group?s interim financial results for the six months to March 2021 will be released on the Stock Exchange News Service of the JSE on 19 May 2021. Groot Drakenstein 4 March 2021 Sponsor Rand Merchant Bank (A division of FirstRand Bank Limited) Date: 04-03-2021 09:07:00 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.