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  • INTERIM RESULTS PRESENTATIONfor the six months ended 31 March 2016

  • 1

    Agenda

    Strategic Update

    Financial Performance

    Divisional Performance

    Outlook and Imperatives

  • 2

    Strategic UpdatePhil Roux

    CEO

  • 3

    Environmental Discontinuities

    Cause

    Political instability

    Drought

    Low growth

    Consumer weakness

    Africa instability

    Effect

    Rand weakness

    Hyper inflation and raw

    material shortages

    Increased rivalry

    Evolving shopper habits

    Currency devaluation

    Cost and margin pressure

  • 4

    Financial Highlights

    For the 6 months ended 31 March 2016 for continuing operations

    Revenue** 9% to R10.01 bn

    Operating profit* 6% to R1 236 m

    Operating margin* 12.3%

    HEPS* 6% to 479 cents

    Interim dividend declared 11% to 105 cents

    * Adjusted for the Phase I B-BBEE income/charge and items of a capital nature ** Excluding biscuits, Pepsi & Maitland Vinegar

  • 5

    Financial Highlights

    1H 2013 * 1H 2016

    581 1 236Operating profit (Rm)

    Gross Margin 29.3% 31.0%

    Operating Margin 7.2% 12.3%

    Headline earnings per share (cents) 230 479

    Share price (cents) 7 157 13 904

    * Excludes Quantum Foods

    3 yr CAGR

    29%

    Excluding Phase I B-BBEE income/charge and items of a capital nature

    3 yr CAGR

    25%

  • 6

    Our Strategy

    Cost and margin pressure

    Drive above-market growth Enhance competitiveness

    Shape a

    winning

    portfolio

    Focus on

    power

    brands

    Strategic

    customer

    management

    Reset the

    cost base

    Build a high

    performance

    team

    Sustainability Adopt sustainability best practices in all we do

  • 7

    Strategic Pillars: Progress Update

    Shapin

    g a

    Win

    nin

    g

    Port

    folio

    Portfolio mix optimisation

    Future Life Integration and innovation

    FCP Nigeria

    Bakeries Sustained growth and leverage

    Aggressive SKU rationalisation

    Step change in rice performance

    Robust acquisition funnel

    SKU Stock keeping unit

  • 8

    Strategic Pillars: Progress Update

    Cost

    s &

    Eff

    icie

    ncie

    s

    Containment of manpower costs < 60% of Revenue growth

    Delivered enhanced manufacturing efficiencies

    Elimination of residual costs on disposals

    COEs increase < 10% of Revenue growth rate

    COS increase > Revenue growth rate (Raw material inflation)

    COE Cash operating expenses

    COS Cost of sales

  • 9

    Corporate share1

    %, 6 mm to March 2016

    Safari

    Spekko

    White Star

    Liqui-Fruit

    Weet-Bix

    Value

    share

    40.2

    31.6

    22.5

    32.2

    28.8

    17.1

    -2.1

    Share Pts

    change

    1.2

    7.3

    0.0

    -1.4

    0.5

    7.2

    Category

    Growth (%)

    6.6

    7.4

    21.9

    18.9

    8.4

    Sasko

    6 mm October 2015 to March 2016

    2015 2016

    Pioneer Foods

    Power Brands Market Share Performance TEG (modern trade)

    1 Measured as weighted average of

    Pioneer's share in 18 categories in

    which it operates. TEG only.

    Including DOBs. Source: Aztec

    31.2

    31.8

    Brand investment maintained

  • 10

    Financial PerformanceCindy Hess

    CFO

  • 11

    Salient features

    Group margin maintained despite strong headwinds

    Pleasing revenue growth

    Significant raw material cost push constrains Essential Foods

    Cash operating costs stringently managed

    Exceptional performance from Groceries and International

    Operating margin maintained amidst severe discontinuities

    Working capital management intensifies

    Positive cash flow sustained

  • 12

    Revenue analysis

    Pleasing revenue growth across all segments

    * Excluding biscuits, Pepsi and Maitland Vinegar from the comparative figures

    SEGMENTAL REVENUE MIX

    Essential Foods

    R6 054m60%

    GroceriesR2 508m

    25%

    InternationalR1 448m

    15%

    Six months to 31 March 2016 Rm Change

    Essential Foods 6 054 +8%

    Groceries 2 508 +7% *

    International 1 448 +20%

    Total Revenue 10 010 +9% *

  • 13

    Segmental analysis

    Group maintains operating margin despite external vagaries

    * Adjusted for the Phase I B-BBEE income/charge and items of a capital nature

    Segmental results are reflected after the reallocation of corporate costs

    Operating Profit * Operating Margin *

    2016 % 2016 2015

    Six months to 31 March Rm Change

    Group 1 236 6% 12.3% 12.3%

    Essential Foods 645 -8% 10.6% 12.4%

    Groceries 343 35% 13.7% 9.6%

    International 252 16% 17.4% 18.0%

    Other (Group Costs) (4)

  • 14

    Income statement summary

    Cost and efficiency benefits kick in

    * Adjusted for the Phase I B-BBEE income/charge and items of a capital nature

    ** Excluding biscuits, Pepsi and Maitland Vinegar from the comparative figures

    Six months to 31 March 2016 Rm Change

    Revenue ** 10 010 +9%

    Cost of goods sold (6 905) +8%

    Gross profit 3 105 +2%

    Gross margin 31.0% F15: 32.3%

    Net other operating expenses * (1 869) -1%

    Operating profit * 1 236 +6%

    Operating margin 12.3% F15: 12.3%

  • 15

    Income statement (continued)

    * Adjusted for the Phase I B-BBEE income/charge and items of a capital nature

    Six months to 31 March 2016 Rm Change

    Operating profit * 1 236 +6%

    Investment income 27 +70%

    Finance costs (75) +11%

    JV equity-accounted earnings 42 +25%

    Profit before tax * 1 230 +7%

    Income Tax (348) +9%

    Profit for the period * 882 +6%

    Joint ventures perform well

  • 16

    Net operating profit reported

    * Adjusted for the Phase I B-BBEE income/charge and items of a capital nature

    Six months to 31 March (Rm) 2016 2015 Change

    Adjusted operating profit * 1 236 1 166 6%

    Add/Less 155 (249)

    Phase I B-BBEE transaction 143 (203)

    Items of a capital nature 12 (46)

    Impairment of BEE SPV QF shares (18) (51)

    Profit on disposal of subsidiary 24 -

    Other 6 5

    Net operating profit as reported 1 391 917 52%

  • 17

    Six months to 31 March (Rm) 2016 2015 Change

    Adjusted headline earnings 887 830 +7%

    Adjusted HEPS 479 cents 451 cents +6%

    Group earnings

    Effect of the Phase 1 B-BBEE income/(charge)

    * 2015 includes discontinued operations

    Add/less Phase I B-BBEE income/(charge) 143 (203)

    Headline earnings 1 030 627 +64%

    HEPS 556 cents 341 cents +63%

    Add/less Items of a capital nature 7 (82)

    Earnings* 1 037 545 +90%

    EPS 560 cents 296 cents +89%

    Adjusted EPS 493 cents 434 cents +14%

  • 18

    Cash flow analysis

    Strong cash generation despite soft commodity inventory

    Six months to 31 March (Rm) 2016 2015

    Cash profit from operating activities 1 428 1 345 +6%

    Change in working capital (780) (838) -7%

    Inventory (571) (208)

    Debtors (225) (333)

    Creditors 16 (297)

    Cash effect from commodity hedging 42 (11)

    Cash generated by operations 690 496 39%

  • 19

    Group net working capital

    Working capital relatively stable

    17.1%

    14.9%

    17.1%

    12.9%

    17.1%

    11.5%

    15.6%

    14.0%

    17.7%

    0%

    2%

    4%

    6%

    8%

    10%

    12%

    14%

    16%

    18%

    20%

    Mar 12 Sep 12 Mar 13 Sep 12 Mar 14 Sep 14 Mar 15 Sep 15 Mar 16

    % of revenue

  • 20

    Cash flow analysis

    Cash flow from investing activities

    Six months to 31 March (Rm) 2016 2015

    Net cash flow from investing activities (394) (231)

    PPE additions (217) (64)

    PPE replacements (132) (232)

    Proceeds on disposal of PPE 45 31

    Proceeds on disposal of subsidiary 74 -

    Investment in joint ventures (201) (81)

    Proceeds on disposal of and changes in available-for-sale

    financial assets and JV loans(15) 77

    Interest and dividends received 52 38

    Net cash and cash equivalents at end of period 840 680

  • 21

    NET debt (Rm) and debt equity ratio (%)

    Significant gearing capacity

    1,589

    978

    1,542

    166 535

    -97

    470

    -500

    -

    500

    1,000

    1,500

    2,000

    2,500

    3,000

    3,500

    4,000

    Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16

    Rm

    Excludes B-BBEE (third party) debt

    25% 15% 22% 3% 8% -1% 6% Net Debt to Equity Ratio

    R'm

    Debt

    capacity

  • 22

    Interim dividend per share

    11% increase in interim dividend

    46

    65

    95

    105

    0

    20

    40

    60

    80

    100

    2013 2014 2015 2016

    cents per share

    Year

    3 yr

    CAGR

    +32%

  • 23

    Divisional Performance

    Phil Roux

    CEO

  • 24

    Essential Foods: Back drop

    Maize category volume contraction -5.8% *

    White maize crop shortfall estimate -1,2 m tons

    Wheat duty increases by R1 068/ton over

    12 months

    Maize import regulations limiting

    White maize raw material price increase +90%

    Wheat category c

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