Wrap Text
Abridged Pre-Listing Statement
RAINBOW CHICKEN LIMITED
(Formerly RAINBOW CHICKEN PROPRIETARY LIMITED)
(Incorporated in the Republic of South Africa)
(Registration number: 2024/200346/06)
ISIN: ZAE000334850
Share code: RBO
("Rainbow")
ABRIDGED PRE-LISTING STATEMENT
The capitalised words and expressions used in this abridged pre-listing statement ("Abridged Pre-listing Statement")
shall, unless expressly defined or indicated otherwise herein, bear the meanings given to them in the full pre-listing
statement issued by Rainbow on Monday, 10 June 2024 ("Pre-listing Statement").
1. INTRODUCTION
This Abridged Pre-listing Statement relates to the admission to listing of 890,296,405 ordinary shares of no par
value in the issued ordinary share capital of Rainbow ("Rainbow Shares") held by RCL Foods, and comprising
100% of the issued ordinary share capital of Rainbow, on the Main Board of the JSE and the subsequent
unbundling thereof, as a pro rata distribution in specie, to RCL Foods Shareholders, in terms of section 46 of
the Companies Act and section 46 of the Income Tax Act, in the ratio of 1 Rainbow Distribution Share for every
1 RCL Foods Share held by Shareholders as at the Unbundling Record Date.
This Abridged Pre-listing Statement does not constitute an offer or form part of any offer or invitation to any
person or the public to purchase, subscribe for, sell or issue, or a solicitation of any offer to purchase, subscribe
for, sell or issue, any securities, including the Rainbow Shares in any jurisdiction but has been prepared and is
issued in compliance with the JSE Listings Requirements for the purpose of providing information to selected
persons in South Africa and other jurisdictions with regards to Rainbow.
The information in this Abridged Pre-listing Statement has been extracted, in summarised form, from the Pre-
listing Statement. This Abridged Pre-listing Statement is not complete and does not contain all of the information
that readers of this Abridged Pre-listing Statement should consider in relation to the Listing and the Unbundling.
2. STATEMENT AS TO LISTING ON THE JSE
The JSE has approved the listing of Rainbow in the "Consumer Goods" sector ("Food Products" sub-sector) on
the Main Board of the JSE under the abbreviated name "RAINBOW", share code "RBO" and international
securities identification number ("ISIN") ZAE000334850 with effect from the commencement of trade on
Wednesday, 26 June 2024.
RCL Foods Shareholders are advised that their Rainbow Shares may be traded on the JSE in dematerialised
form only.
3. SALIENT DATES AND TIMES
The salient dates and times relating to the Listing and Unbundling are as follows:
2024
Publication of the Pre-listing Statement on the RCL Foods' website and the Rainbow Monday, 10 June
website on
Abridged Pre-listing Statement released on SENS on Monday, 10 June
Pre-listing Statement distributed to RCL Foods Shareholders on Monday, 10 June
Release of the Unbundling finalisation announcement by RCL Foods on SENS on Monday, 10 June
Last day to trade for RCL Foods Shareholders to be entitled to participate in the Unbundling Tuesday, 25 June
RCL Foods Shares commence trading "ex" entitlement to Rainbow Shares Wednesday, 26 June
Listing of Rainbow Shares on the Main Board of the JSE, under the abbreviated name Wednesday, 26 June
Rainbow, share code RBO and ISIN ZAE000334850, and shares commence trading on
Announcement of specified ratio to apportion existing cost/base cost of RCL Foods Shares Thursday, 27 June
between Rainbow Shares and RCL Foods Shares for taxation/CGT purposes released on
SENS by 11:00
Unbundling Record Date to receive JSE-listed Rainbow Shares pursuant to the Unbundling Friday, 28 June
Closing price of RCL Foods Shares and Rainbow Shares released on SENS after market Friday, 28 June
close on
Unbundling Operative Date, being the date on which Rainbow Shares are unbundled to Monday, 1 July
RCL Foods Shareholders entitled to participate in the Unbundling
RCL Foods Shareholders' CSDP or Broker accounts updated and credited with JSE-listed Monday, 1 July
Rainbow Shares
Notes:
1. All references to times shown in this Abridged Pre-listing Statement are to South African standard time.
2. There may be no rematerialisation or dematerialisation of RCL Foods Shares between Wednesday,
26 June 2024 and Friday, 28 June 2024, both days inclusive.
4. OVERVIEW OF RAINBOW
Rainbow was incorporated in South Africa on 11 April 2024 in terms of the Companies Act as a private company
with registration number 2024/200346/07. Rainbow was converted to a public company on Friday, 31 May 2024
with registration number 2024/200346/06.
The business of Rainbow, and its principal activity, is to act as a listed holding company for the poultry and
animal feed agri-processing businesses (namely the chicken, animal feed and waste-to-value businesses), via
its shareholding in its wholly owned subsidiaries ("Rainbow Group").
The business of the Rainbow Group started its life through Rainbow Poultry Farms Proprietary Limited, which
was founded in 1960. The Rainbow Group is a market-leading, South African, fully integrated poultry and animal
feed producer, with operations across the entire chicken production value chain. The Rainbow Group's fully
integrated business model incorporates all stages of chicken production with the Rainbow Group controlling and
operating 165 farms, 1,288 houses, 8 hatcheries, 3 primary processing plants, 2 further processing plants
dedicated to added-value chicken products, 6 animal feed mills, and holding a 50% shareholding in a joint
venture ("Matzonox") which operates 2 waste-to-value plants.
Rainbow is structured into three reporting divisions or units/segments, namely (i) chicken farming and
processing ("Chicken"), (ii) animal feed production and sales ("Animal Feed"), and (iii) Waste-to-Value
(Matzonox):
- Chicken: A portfolio of brands with a rich history, spanning 60 to 100 years, with strong brand and
customer affinity and ongoing consumer relevance supported by targeted product innovation. The
division operates under three main retail brands (Rainbow, Rainbow Simply Chicken and Farmer
Brown) and two main food service brands (Rainbow FlavourBurst and Rainbow Ready2Go). Rainbow's
brands offer diverse products which are strong competitors in their respective markets, with various
products commanding upwards of 10% market share in specific categories (per Company Internal
Analysis). The Chicken division has also historically enjoyed a strong leadership position in chicken
product innovation in South Africa with category management and leadership a key focus for the
division to continue distinguishing Rainbow's chicken brands.
- Animal Feed: The second largest feed company in South Africa, delivering consistent, high-quality feed
to the Chicken division and external customers across South Africa through its Epol and Driehoek
Feeds brands. The Animal Feed division's technical team are qualified animal nutritionists, who ensure
that feed produced achieves the required animal performance and health criteria. The division also
provides on-farm technical, nutritional and support services to its customers through an in-house team
of technical managers. Whilst Epol is well-known for its chicken feed products, it also provides feed
solutions for various species both nationally and internationally. Epol aims to be a customer's first
choice, by offering high-quality formulation feed which provides optimal nutrition.
- Matzonox: A waste-to-value operation based at the Chicken division's Worcester and Rustenburg
chicken processing sites which processes wastewater from chicken processing plants and poultry
manure from chicken farms to generate electricity, heat and recycled water. The Worcester plant
converts wastewater from the chicken processing plant into biogas, producing enough renewable
energy to generate up to 30% of the energy requirements of the overall chicken processing site,
producing between 6,500 and 8,500MWh per year. The Rustenburg plant has four times the capacity
of the Worcester plant generating biogas from a combination of wastewater sludge from the abattoir
and chicken litter from the chicken farms. The Rustenburg plant is designed to provide up to 50% of
the energy needs of the Rustenburg chicken and animal feed site. The investment in Matzonox is
integral to Rainbow's long-term sustainability and energy and water resilience strategies.
As a leading producer, the Rainbow Group plays a major role in the national supply of chicken. Key to its long-
term sustainability and competitive positioning, chicken sales are balanced across two main channels namely,
(i) retail and wholesale, and (ii) food solutions. Through its Chicken division, Rainbow sells its products to and
has strong relationships with most major retail and wholesale food and consumer packaged goods businesses
across South Africa, including Shoprite, Checkers, Woolworths, Spar and Pick n Pay. Within the food solutions
channel, the Rainbow Group offers a range of products for either in-store preparation or delivery of the final
product in a form ready for immediate consumption. The products are versatile and can be tailored to meet
specific customer needs, or customers can opt for an existing branded product range.
The Rainbow Group's strong positioning within the food service industry complements its retail and wholesale
exposure through a significant volume of contractual supply and diversification of the overall revenue and margin
mix, and allowing it to partner with key customers, meeting their product requirements as they expand their own
national footprints. In respect of food solutions, the Rainbow Group has a substantial and diversified customer
base within the quick service restaurant segment in South Africa, where it is a leading supplier to popular
franchises such as KFC, Chicken Licken, Nando's, Burger King, Pedros, Spur, Galito's and Hungry Lion,
amongst others.
5. RATIONALE
The Listing and Unbundling follow an extensive and detailed two-year analysis and review by the board of
directors of RCL Foods of various separation options for the business and operations of Rainbow whilst a part
of the RCL Foods Group ("RainbowDiv"). This analysis and review were conducted in parallel with RCL Foods
monitoring RainbowDiv's improving performance, in line with its overarching strategy of being a sustainable,
market-leading, low-cost poultry producer.
RainbowDiv has made significant strides in delivering on its strategy to restore through-the-cycle profitability
through an appropriately structured and sustainable operational base. Given the traction displayed by
RainbowDiv in this regard, particularly in relation to (i) the successful implementation of a change of its chicken
breed (a significant change to the genetics of its breeding stock), which was completed in the current financial
year, and (ii) improved operational resilience in the face of significant headwinds experienced recently, the board
of directors of RCL Foods and the Board have confidence in Rainbow's ability to operate on a standalone basis
and deliver sustainable and attractive financial performance over the long-term.
The Listing and Unbundling is expected to enable both Rainbow and RCL Foods to pursue their respective
growth ambitions and investment cases in a focused manner and with improved alignment on capital allocation
priorities. Equally, RCL Foods Shareholders will be afforded an enhanced ability to manage their preferred
investment exposures to Rainbow and RCL Foods respectively.
6. FINANCIAL HIGHLIGHTS
The following figures are a summary of the Rainbow Group's financial performance for the 3 financial years
ended 2 July 2023, 3 July 2022, and 4 July 2021, and the six-month interim period ended 31 December 2023.
The financial information in respect of the six-month interim period ended 31 December 2023 do not include the
pro forma effects of the implementation by RCL Foods of a recapitalisation of RainbowDiv to improve
RainbowDiv's (and, therefore, Rainbow's) financial condition and the overall strength of its balance sheet and
cash position prior to implementation of the Unbundling. Further detail in this regard is provided in "Section 4:
Restructuring and Formation of the ListCo Group" and "Annexure 4A: Basis of Preparation and the Pro Forma
Financial Information of ListCo" of and to the Pre-listing Statement.
R'000 FY2021 FY2022 FY2023 H1-FY20241
Revenue 10,335,889 11,384,801 13,463,861 7,249,374
Cost of sales (9,192,037) (9,961,301) (12,276,876)
Gross profit 1,143,852 1,423,500 1,186,985
Administration expenses (492,182) (542,512) (481,374)
Selling and marketing expenses (160,259) (174,781) (170,676)
Distribution expenses (888,530) (802,377) (924,932)
Net impairment of property, plant, and (2,088) - (1,417)
equipment, and intangible assets
Other income 189,832 177,448 162,457
Operating profit/(loss) (209,375) 81,278 (228,959) 112,215
Finance costs (50,583) (85,732) (173,169) (107,847)
Finance income 20,879 10,741 5,098 13,472
Share of profit/(loss) of associates 5,810 (4,730) 4,903 -
Profit/(loss) before tax (233,269) 1,557 (392,127) 17,840
Income tax expense 71,505 14,093 106,103 (4,897)
Profit/(loss) for the year (161,764) 15,650 (286,024) 12,943
Note:
1. The detailed operating profit/(loss) note disclosure is not prepared in respect of the interim financial results
i.e. for the interim six-month period ended 31 December 2023. As such, the detailed financial statement
line items between (i) revenue and (ii) operating profit/(loss) are not presented for the interim period.
Reconciliation of operating profit to EBITDA
R'000 FY2021 FY2022 FY2023 H1-FY2024
Operating profit/(loss) (209,375) 81,278 (228,959) 112,215
Depreciation, amortisation, and impairments
of property, plant, and equipment, and 224,434 254,933 267,603 153,185
intangible assets
EBITDA 15,059 336,211 38,644 265,400
In FY2023, the Rainbow Group generated revenue of R13.5bn, an 18.3% improvement from FY2022. Over the
past 3 completed financial years, revenue has grown at a CAGR of approximately 14.0%. For the six-month
period ended 31 December 2023, the Rainbow Group generated revenue of R7.2bn, approximately 53.8% of
the total revenue generated in FY2023. Revenue growth over the financial periods has been driven by a
combination of robust volume growth, and price increases to recover input cost pressure.
Over the past 3 years as part of a revised strategy, Rainbow's management has focused on improving the
operational resilience of the Chicken division through targeted interventions across farming and manufacturing
processes. Improvements in the Chicken division have also yielded clear benefits to the Animal Feed division,
as approximately 70% of total Animal Feed revenue is derived from internal sales to the Chicken division. From
an EBITDA perspective, the Rainbow Group delivered an EBITDA of R38.6 million in FY2023, with EBITDA
having grown at a CAGR of approximately 60.2% from FY2021. In FY2023, the Rainbow Group generated an
operating loss of R229m, a decline of approximately 9.4% from FY2021.
The implementation of management's defined strategy has yielded favourable results, particularly in the last 12
months. Improved agricultural performance due to the new breed roll-out, cost control initiatives, and higher
volumes in the Retail & Wholesale channel have aided in improving results over the interim period. From an
EBITDA perspective, for the six-month period ending 31 December 2023, the Rainbow Group generated an
EBITDA of R265.4 million, a growth of approximately 590% compared to the prior full financial year. The
operating profit for the six-month period ending 31 December 2023 improved to R112.2 million.
7. DIRECTORS
The full names, ages, capacities, dates of appointment and business addresses of the Directors are provided
below.
Full name Age Capacity Date of appointment Business address
Marthinus Petrus 60 Executive Director and 11 April 2024 Southdowns Ridge Office
Stander CEO of Rainbow Park, Ground floor, Suite
12, Cnr John Vorster and
Nelmapius Drive, Irene,
Centurion, 0157
Kerry Rosemary 41 Executive Director and 11 April 2024 Southdowns Ridge Office
van der Merwe CFO of Rainbow Park, Ground floor, Suite
12, Cnr John Vorster and
Nelmapius Drive, Irene,
Centurion, 0157
Wouter Alphonso 57 Executive Director and 23 May 2024 Southdowns Ridge Office
De Wet COO of Rainbow Park, Ground floor, Suite
12, Cnr John Vorster and
Nelmapius Drive, Irene,
Centurion, 0157
Pieter Rudolf Louw 55 Non-executive Director 23 May 2024 Southdowns Ridge Office
and Chairman of the Park, Ground floor, Suite
Board 12, Cnr John Vorster and
Nelmapius Drive, Irene,
Centurion, 0157
Agmat Brinkhuis 61 Independent, non- 23 May 2024 Southdowns Ridge Office
executive Director Park, Ground floor, Suite
12, Cnr John Vorster and
Nelmapius Drive, Irene,
Centurion, 0157
Cindy Joy 48 Independent, non- 23 May 2024 Southdowns Ridge Office
Robertson executive Director and Park, Ground floor, Suite
Lead Independent 12, Cnr John Vorster and
Director Nelmapius Drive, Irene,
Centurion, 0157
Stephen Mark 59 Independent, non- 23 May 2024 Southdowns Ridge Office
Parsons executive Director Park, Ground floor, Suite
12, Cnr John Vorster and
Nelmapius Drive, Irene,
Centurion, 0157
Willem Ockert van 45 Non-executive Director 23 May 2024 Southdowns Ridge Office
Wyk Park, Ground floor, Suite
12, Cnr John Vorster and
Nelmapius Drive, Irene,
Centurion, 0157
Zimkhitha 40 Independent, non- 23 May 2024 Southdowns Ridge Office
Phaphama Zatu executive Director Park, Ground floor, Suite
Moloi 12, Cnr John Vorster and
Nelmapius Drive, Irene,
Centurion, 0157
Note:
1. All the Directors are South African citizens.
8. PUBLIC SHAREHOLDER SPREAD
As at the last practicable date of the Pre-listing Statement, based solely on the securities register of RCL Foods,
(including any disclosures of beneficial interest in RCL Foods shares made to RCL Foods in accordance with
applicable Laws, if any) approximately 19.80% of the issued RCL Foods shares was held by public shareholders.
It is anticipated that, all things being equal and on the assumption that no RCL Foods shareholder will be
prevented from receiving and holding its pro rata portion of the Rainbow distribution shares due to restriction in
their jurisdiction of domicile, following the Unbundling, approximately 19.80% of the Rainbow Shares will be held
by public shareholders.
Accordingly, the level of public shareholders set out in paragraph 4.25 of the JSE Listings Requirements will be
achieved.
9. COPIES OF THE PRE-LISTING STATEMENT
Copies of the Pre-listing Statement are available in English only and are available for inspection during normal
office hours at the registered office of Rainbow at Southdowns Ridge Office Park, Suite 12, Ground Floor, Corner
John Vorster and Nelmapius Drive, Irene, Centurion, 0062 and at the registered office of RCL Foods at Ten The
Boulevard, Westway Office Park, Westville, 3629. The Pre-listing Statement will also be available on the
Rainbow website (https://rainbowchickens.co.za/investor-relations/) and the RCL Foods website
(https://rclfoods.com/investor-center/transaction-documents/).
10. PUBLICATION OF AN INDEPENDENT ANALYST RESEARCH REPORT
10.1. In light of the publication of the Pre-listing Statement, Rainbow and RCL Foods have sought to provide
Shareholders with additional information regarding Rainbow and has, for this purpose, commissioned the
preparation of an independent analyst research report ("Research Report") by VS Research (Pty) Limited.
10.2. The Research Report has been commissioned to provide RCL Foods Shareholders and investors with more
detailed information regarding the poultry industry and comprehensive operational and historical financial
information about Rainbow. The Research Report is not intended to, and does not, constitute investment advice
but rather seeks to provide RCL Foods Shareholders and investors with an independent perspective and
analysis of Rainbow's business prior to the Unbundling.
10.3. RCL Foods Shareholders are advised that the Research Report in no way replaces, substitutes or obviates the
Pre-listing Statement or the disclosures made therein, and should be considered an independent source of
information pertaining to the Rainbow business and the industry/environment in which it operates. Any
investment decisions by RCL Foods Shareholders and/or investors should be based on a careful consideration
of the information contained in the Pre-listing Statement.
10.4. RCL Foods Shareholders are further advised that the information contained in the Research Report has not
been independently audited or otherwise independently verified, and has been based on, inter alia, previously
published historical financial information of Rainbow.
10.5. RCL Foods Shareholders are advised that the Research Report will be published by Rainbow and RCL Foods
on Tuesday, 11 June 2024, and will be accessible on both the Rainbow website
(https://rainbowchickens.co.za/investor-relations/) and the RCL Foods website (https://rclfoods.com/investor-
center/transaction-documents/).
Centurion
10 June 2024
Financial Adviser and Transaction Sponsor
Rand Merchant Bank (A division of FirstRand Bank Limited)
Legal Adviser to RCL Foods and Rainbow
Edward Nathan Sonnenbergs Incorporated (trading as ENS)
Date: 10-06-2024 07:15:00
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