Trading update for the five months ended February 2020

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 FOR THE FIVE MONTHS ENDED FEBRUARY 2020

Group turnover for the five month period ended February 2020 (“the period”)
increased by 7.6%.

Regional segment
Turnover in the group’s regional segment (South Africa and the rest of Africa) for
the period increased by 9.3%.

Regional fresh foods turnover increased by 15.9% for the five months, with
volume growth of 3.5% and acquisitive growth of 4.3%. The performance was
driven by the strong growth in the ready meals and pie categories.

Regional long life turnover grew by 5.7% with volume growth of 3.2%. Fruit juices
and baked beans continue to perform well. Squish baby food, previously reported
in the regional fresh foods segment, is being reported in the regional long life
foods segment from 1 October 2019. The change did not have a material impact
on the reported numbers.

The operating profit margin for the regional segment improved for the five-month
period, although at a slower rate than expected. Trading for March has been
strong across all categories and there has been an uplift in canned food volumes
(particularly vegetable and meat products) following the national state of disaster
being declared in the country.

International segment
International turnover declined by 1.7% owing mainly to a marked slowdown in
exports of canned fruit to China since January following the outbreak of
COVID-19. Limited exports have been made to China since January which has
resulted in a decline of 11.3% in international volumes. The impact of this
reduction in export volumes was partially offset by inflation of 6.0% and the 3.6%
depreciation of the Rand against the basket of trading currencies.

While some of the excess volume of canned fruit earmarked for China was
exported to other Asian markets, a significant volume will be placed in alternative
markets at lower margins than those typically achieved in China.
The recent devaluation of the Rand will have a favourable impact on the second
half performance but the profitability of the segment in the first half will be
adversely affected by the mark-to-market revaluation of forward exchange
contracts at the end of March.

Interest payments
Shareholders are advised that interest payments for the six months to March
2020 are expected to be R5 million lower than the prior period owing to the
group’s reduced debt levels.

RFG response to COVID-19
Management confirms RFG’s adherence to the highest food safety standards.
The COVID-19 outbreak has not impacted any of RFG’s manufacturing facilities
and precautionary measures have been implemented for staff, contractors and
visitors across the group’s operations to reduce the risks associated with the
virus.

These precautionary measures include restricting all international travel and
limiting local travel to business-critical travel only. External and internal visits to
the group’s facilities are being limited and are subject to strict approvals and
screening of visitors.

While it is still too early to determine consumer buying patterns during this period
of social isolation by many South Africans, households are stocking up on long
life products including canned meat and vegetables, and baby food. RFG has
capacity at most of its manufacturing facilities to increase production at relatively
short notice should consumer demand increase.

The production facilities are supported by a robust supply chain and the group
currently has sufficient raw material stock cover for 9 to 12 weeks on imported
materials should the international supply chains be disrupted.

The group expects a slow recovery of volumes into China from around mid-year.
Management is confident that the shipments previously destined for China will be
successfully placed in other markets. The impact of the lower margin yielded on
exports to these other markets should be partially offset by the weaker currency.

The financial information on which this voluntary trading update is based 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 ending 29 March 2020 will
be released on the Stock Exchange News Service of the JSE on 19 May 2020.

Groot Drakenstein
23 March 2020

Sponsor
Rand Merchant Bank (A division of FirstRand Bank Limited)

Date: 23-03-2020 10:00:00

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