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RCL FOODS LIMITED - Group financial results and cash dividend declaration for the six months ended December 2018

Release Date: 04/03/2019 07:05
Code(s): RCL     PDF:  
 
Wrap Text
Group financial results and cash dividend declaration for the six months ended December 2018

RCL Foods Limited 
(Incorporated in the Republic of South Africa) 
Registration number: 1966/004972/06 
JSE share code: RCL 
ISIN: ZAE000179438 
RCL Foods Limited ("RCL Foods" or "the Company")

GROUP FINANCIAL RESULTS
AND CASH DIVIDEND DECLARATION

FOR THE SIX MONTHS ENDED DECEMBER 2018

FINANCIAL HIGHLIGHTS
FOR THE SIX MONTHS ENDED DECEMBER 2018

REVENUE
R13,3 billion 
Up 3.5%

EBITDA
R1 082,2 million
Down 9.9%

HEADLINE
EARNINGS
R475,1 million
Down 26.3%

HEADLINE
EARNINGS
PER SHARE
54.8 cents
Down 26.4% 

RETURN ON  
INVESTED
CAPITAL
7.1%
Up 0.2 ppts

CASH
GENERATED BY
OPERATIONS
R697,5 million
Up >100%

INTERIM
DIVIDEND
PER SHARE
15.0 cents

KEY FEATURES
- Groceries deliver consistent growth
- Suppressed market pricing in Chicken
- Adverse sales mix in Sugar
- Millbake turnaround progressing well
- Cost pressures erode Animal Feed and Logistics margins 
- Strong cash generation and low gearing 

INTRODUCTION

RCL FOODS' headline earnings for the six months ended December 2018 decreased by 26.3% to R475,1 million (December
2017: R644,7 million). The decline was largely a result of significant challenges within the Sugar and Chicken business units
resulting from lower prices realised, mainly due to oversupply. Margins across the Group were negatively impacted by
higher commodity and transport costs.

Muted economic growth, weak consumer demand and high levels of unemployment continued to impact the South
African economy and the consumer market. Despite the difficult trading environment,  pleasing gains were made in
certain business units. Groceries continues to perform well with volume and margin gains across most categories, whilst
Millbake has shown steady improvement following targeted interventions to improve profitability.

RCL FOODS measures its efficiency and effectiveness of capital allocation through return on invested capital (ROIC).
December 2018 ROIC was 7.1% (December 2017: 6.9%). The decline in profitability was  mitigated by a lower invested
capital balance as a result of lower working capital balances, which translated into a slight ROIC improvement. 

STRATEGIC PROGRESS

RCL FOODS has continued to pursue a variety of initiatives in line with its long-term strategic thrusts.
We have entrenched a strong grocery portfolio with leading brands which is generating much improved results.
We continued to strengthen our brands through consistent investment and innovation, which has sustained and grown
market share positions. The performance of Groceries is testament to the success of this focus. Efforts will be intensified
to leverage the integrated customer and marketing capability built over recent years and to accelerate the contribution
from branded and added-value categories into the future to deliver a more sustainable quality of earnings. Understanding
our customers' businesses and providing them with relevant solutions is also core to this strategy.

Our synergised ONE RCL FOODS platform, including integrated structures, systems, customer and shared service capability, 
is geared for future growth. To further leverage this platform, in H2 we anticipate assuming responsibility for the support 
and outbound supply chain functions for Siqalo Foods Proprietary Limited (100% subsidiary of Remgro Limited), being the Spreads
business which Remgro Limited acquired from Unilever South Africa Holdings Proprietary Limited. 

We continue to engage with government to pave the way for a level playing field in the chicken and sugar markets. Whilst
we have maintained well-invested and vertically integrated agricultural businesses strategically suited to South African
demographics, we acknowledge the need to continue to see and do things differently in this space. We are confident in
our ability to fully restore the Rainbow brand to pre-Listeriosis levels and will intensify efforts for the delivery of a more
consistent through the cycle earnings profile in our revised Chicken model. As we strive to build a more sustainable Sugar
business model, we will continue to maintain our leading low-cost production capability.

We have successfully extended our leading supply chain with additional investment in frozen and super-frozen (ice-cream)
logistics infrastructure to position us as an operator of choice in the multi-temperature supply chain market. 

In terms of our approach to expansion in the rest of Africa, increased focus has been placed on our export efforts and
potential route-to-market acquisitions before making investments in other assets. In line with this, a 45.0% shareholding
in L&A Logistics Limited (L&A)  was acquired on 1 October 2018. L&A is currently a leading distributor of products in
the Zambian market, including brands such as Cadbury's, Dentyne, Bavaria, Divella and Liberty Foods. The acquisition
provides entry into the Zambian logistics market and opportunities to grow our business further in this geography.

RCL FOODS has been driving sustainability as a key business and social imperative for many years and this has gained
further prominence due to current energy and water challenges in South Africa. Co-generation at our Sugar plants,
waste-to-value energy production and solar power already provide 25% energy self-sufficiency to our operations, with a
further aim to increase it to 50% over the medium term. The success of our Worcester waste-to-value plant has prompted
us to invest in a similar waste-to-value plant in Rustenburg, where we expect to provide 65% and 50% respectively of the
energy and water requirements of the total site. 

Our land transfer programmes in the Nkomazi region have been responsible for remarkable transformation for the local
communities. We have been empowering and supporting the local communities as partners in the sugarcane growing
industry and supporting small-scale cane growers with finance and other skills required to sustain their businesses.
We believe that this successful model can be used to further drive the transformation agenda. 

Our DO MORE FOUNDATION continues to further our social agenda in terms of doing more for young children, easing
hunger and supporting youth.

INCOME STATEMENT
RCL FOODS' revenue for the six months to December 2018 increased 3.5% to R13,3 billion (December 2017*: R12,8 billion),
driven largely by higher volumes in Animal Feed as well as in the Pies and Dressings categories. EBITDA for the period
declined 9.9% to R1 082,2 million (December 2017: R1 201,0 million) with the associated margin declining 1.2 ppts to 8.2%.

                                            December          Margin       December          Margin                %         Margin
Rm                                              2018               %           2017               %           change         change

EBITDA                                       1 082,2             8.2        1 201,0             9.4            (9.9)          (1.2)
Consumer                                       624,1             9.3          594,2             8.9              5.0            0.4
Sugar & Milling                                358,0             4.7          501,0             7.1           (28.5)          (2.4)
Logistics                                       88,5             8.2          105,7            10.5           (16.3)          (2.3)
Group                                           11,6                            0,1                                               

*December 2017 revenue has been restated due to the implementation of IFRS 15 'Revenue from contracts with customers'. Refer page 9
for further details. The restatement has not had a material impact on margins.
Consumer's EBITDA improved 5.0% to R624,1 million, driven by gains in the Groceries cluster. Included in the Consumer
result is a R105,0 million profit on dormant farm sales in the Chicken business unit and a positive R34,1 million IFRS 9 fair
value adjustment on commodity procurement positions in Groceries (December 2017: R8,8 million positive adjustment).
Excluding these items, Consumer's EBITDA decreased by 17.2% to R485,0 million, driven by declines in Chicken's underlying
profitability. Sugar & Milling's EBITDA declined R143,0 million (28.5%) to R358,0 million largely as a result of a R147,2 million
drop in Sugar's EBITDA. Logistics EBITDA declined 16.3% to R88,5 million due mainly to higher operating costs.

TAX
The Group's effective tax rate excluding joint venture's and associates is 29.1% (December 2017: 28.1%).

STATEMENT OF FINANCIAL POSITION AND CAPITAL EXPENDITURE
Property, plant and equipment increased R202,5 million from June 2018. The increase was largely driven by capital
expenditure of R532,9 million, offset by depreciation charges of R344,6 million.
Capital expenditure (including intangibles) for the six months ended December 2018 was R534,0 million (December 2017:
R317,8 million).

Major spend items in the current period include:

- Construction of the Rustenburg waste-to-value plant which forms part of the Group's overall sustainability strategy
  (R51,0 million);
- Logistics fleet and infrastructure to build our frozen and super-frozen capabilities (R48,6 million);
- Spend to move the remaining Bronkhorstspruit operations to other Speciality sites, required as part of the decision
  taken to exit the Speciality Prepared lines (R34,4 million); and
- Investments behind high-pressure processing equipment  that provides additional food safety measures for
  vienna's (R22,5 million).
An amount of R551,0 million (December 2017: R358,9 million) has been contracted and committed, but not spent, whilst
a further R278,9 million (December 2017: R318,1 million) has been approved but not contracted.

Major items included in these amounts relate to:
- Completion of the Rustenburg waste-to-value plant (R249,0 million);
- ERP implementations across RCL FOODS (R30,8 million); and
- Expansion of the Pies production lines (R25,1 million).

Investments in associates increased R153,6 million from June 2018. The movement was largely attributable to equity
accounted earnings from the Royal Swaziland Sugar Corporation (RSSC) of R125,6 million for the six months to December
2018 and the acquisition of a 45.0% stake in L&A for R40,6 million on 1 October 2018. L&A have a March year-end and
due to the practicality of obtaining audited results timeously, their results will be accounted for three months in arrears.
As such their results will only be equity accounted from the second half of this financial year.

The goodwill increase of R21,2 million from June 2018 is largely due to the acquisition of Driehoek Voere (Driehoek)
(R17,1 million) on 2 July 2018. The Driehoek purchase price allocation is still provisional and will be finalised at year-end.

Net working capital has decreased R666,3 million (17.2%) from December 2017 to R3 212,0 million mainly due to movements
in trade receivables and payables.

Trade receivables increased by R404,8 million to R4 834,1 million, whilst trade payables increased by R1 443,0 million
to R5 797,9 million. The timing of the period end cut-off had a significant impact on normal month-end receipts and
payments. The current period ended on Sunday, 30 December 2018, whilst the prior period ended on Sunday, 31 December
2017. On a net basis, receivables and payables have declined R1 038,2 million. The decline is due to sound management
of the debtors book which resulted in R324,1 million in early payments from customers in December 2018 and a higher
trade creditors balance due to month-end creditors payments falling due post the period end cut-off. In addition, trade

and other payables included a R182,0 million increase in short-term funding versus the prior year as part of the cash flow
assistance provided to industry participants by the South African Sugar Association (SASA) and a R140,0 million increase
in sugar payables due to higher production volumes.

Inventory increased by R293,2 million driven by higher sugar and molasses volumes on hand and higher feed input costs
which drove a higher chicken finished goods value. Due to a longer crushing season, sugar production increased by
48 428 tons (up 12.7%) for the six months to December 2018, which drove a 17.8% increase in raw and packaged sugar
on hand at December 2018. Biological assets increased R78,7 million with the increase stemming from a higher chicken
valuation as a result of higher feed input costs and additional breeder flocks placed to mitigate the impact of potential
losses from Avian Influenza (AI). Sugar's biological assets valuation was largely in line with the prior year. A 14.6% increase
in sugarcane tons on hand was offset by a 11.1% decrease in the SASA expected price due to a shift in sales mix towards
the lower priced export market.

Interest-bearing liabilities have decreased R480,3 million over the corresponding period mainly due to a R502,0 million
payment resulting from the restructuring of the Group's debt package in December 2018 to take advantage of favourable
capital market conditions. The restructuring resulted in the existing loan of R2  852,0  million being replaced with a
R2  350,0  million debt package. The new debt package has a five-year term expiring in December 2023, with interest
at a rate of three-month JIBAR plus a margin of between 1.5% and 1.55%, compared to a rate of  three-month JIBAR
plus a margin of 1.8% and 2.25% on the previous package. The first capital payment on the new debt package is due in
December 2021. The Group has entered into a collar structure for R1 762,5 million of the total debt package to hedge
interest rate variability, effective from 1 April 2019 to 31 March 2022.

Despite the R502,0 million debt repayment, cash (net of bank overdrafts) 
increased R494,0 million to R637,5 million,
driven by the lower working capital requirements. 

CASH FLOW AND WORKING CAPITAL
Non-cash items are R99,2 million lower than the prior year, mainly due to the R105,0 million profit on dormant farm
sales, the cash proceeds of which are reflected under investing activities. Working capital requirements have reduced
R1,0 billion from the prior year stemming from the lower net working capital balance versus December 2017. Investing
activities include capital expenditure of R534,0 million (December 2017: R317,8 million), the profit on dormant farm sales,
and outflows for the investments in Driehoek (R60,9 million) and L&A (R40,6 million). The R458,7 million outflow from
financing activities is largely due to the R502,0 million payment arising from the restructuring of the debt package.

REVIEW OF OPERATIONS

CONSUMER DIVISION
                                                                                       December       December              %
                                                                                           2018           2017         change

Revenue (Rm)                                                                            6 738,3        6 687,6            0.8
EBITDA (Rm)                                                                               624,1          594,2            5.0
EBITDA margin (%)                                                                           9.3            8.9       0.4 ppts

Consumer's revenue grew 0.8% on the back of good revenue growth in the Groceries cluster (up 6.6%), whilst revenue from
Chicken declined 3.9% on the prior year. EBITDA improved by 5.0% to R624,1 million. Excluding the dormant farm sales
and IFRS 9 fair value adjustments mentioned earlier, Consumer's EBITDA decreased 17.2% to R485,0 million, driven by a
substantially lower contribution in Chicken. Chicken experienced a significant decline in EBITDA due to an oversupplied
market which resulted in lower pricing, rising input costs and the continued impact of the listeria crisis.

The Groceries cluster delivered double-digit growth in EBITDA, benefiting from volume and margin increases in the
Grocery and Pies business units and market share gains in several categories. 

GROCERIES (GROCERY, BEVERAGES, PIES AND SPECIALITY)
Groceries delivered another solid result for the period. EBITDA rose 22.9% to R373,8 million at a margin of 11.9% (December
2017: R304,1 million at a margin of 10.3%). Excluding the IFRS 9 fair value adjustments, Groceries EBITDA increased 15.0%
to R339,7 million at a margin of 10.8%  (December 2017: R295,3 million at a margin of 10.0%). The positive result was
driven by excellent volume growth in the Pies and Dressings categories as well as good gains made in the Beverages and
Spreads (Peanut butter) categories. Despite Ask'd food basket data for the six months to December 2018 indicating lower
growth for the RCL FOODS' basket of 1.2% relative to market growth of 4.3%, RCL FOODS continued to experience strong
market shares with gains in some areas, amid a fiercely competitive category. Margins have expanded, aided by the higher
volumes, as well as an unrelenting focus on innovation and production savings.

In Grocery, promotional activities in the Nola and Yum Yum ranges drove volume growth and market share gains at
significantly improved margins. Good market share gains were also achieved across key categories of dog and cat food.
Focused investment in our brands over an extended period, consistent strategies to remain relevant to consumers in
terms of price, as well as value and continuous innovation, have entrenched RCL FOODS' position as market leader in
key categories. This business unit's expanding portfolio of number one ranked brands include Catmor, Canine Cuisine,
Bobtail, Nola, Yum Yum and Ouma Rusks.

The Pet Food category  experienced favourable consumer reaction on the new ranges launched over recent months,
translating into good market share gains, although the level of competitive response has intensified. The business is well
advanced in building its product ranges into a more credible, complete offering, with innovative launches in special diets
and additional offerings in the Vet channel.

Results within the Grocery business unit were improved further by significant margin gains on by-product oil recoveries
due to the benefit of lower sunflower prices and an increase in internal oil sales to the Animal Feed business unit.

Pies continued to benefit from the initiatives to drive down cost and reinvest in quality, price and targeted marketing.
The business unit generated strong volume growth off an already high base and achieved pleasing margin expansion
due to effective cost savings initiatives. Market response to the recent launch of pie mini's and sausage rolls has been
positive. A bakery fire at the Pies factory in Krugersdorp has placed pressure on meeting current demand. The rebuild of
the bakery is expected to be completed in June 2019 and initiatives are under way in the interim to increase production
to supply the required volumes. 

Speciality's performance was negatively impacted by lower volumes and a strike at the Centurion facility. Additional costs
incurred during the strike to maintain appropriate services levels for customers and relocate lines to other sites as an
interim measure, further contributed to the decline in profitability. A decision was taken in the 2018 financial year to focus
on driving growth in the business unit's Bakery categories and to exit the Prepared lines (which consists primarily of the
deli snacks, sandwiches, salads, biltong and pizza lines). The restructure process is well under way, with the exit from the
Prepared lines expected to be complete in the second half of the 2019 financial year.

Beverages  reflected an  improved result, supported by good volume growth. There is a strong focus on driving costs
down and on innovative product launches to improve capacity utilisation in the new plant.  The business unit recently
introduced exciting new innovations, which are performing well. Another  exciting range, YogoBoost, was launched in
October 2018 and has been well received by the market. 

CHICKEN
Chicken's EBITDA for the six months to December 2018 disappointingly declined 13.7% to R250,3 million at a margin of 6.9% (December
2017: R290,1 million at a margin of 7.7%). The current period result includes a profit on dormant farm sales of R105,0 million,
excluding which Chicken's EBITDA declined 49.9% to R145,3 million at a margin of 4.0%. The industry, after nine months
of relatively stable trading, is in oversupply due to dumped imports entering the market. Profitability in the Chicken
business unit was hampered by a combination of lower pricing and a 9.6% average increase in feed costs versus the prior
period. The prior period result was negatively impacted by AI, which had an estimated financial impact of R58,0 million in
the period, including R48,3 million in once-off losses.

Chicken imports have grown, mainly from Brazil and America, with the only partial relief to the market's oversupply
position being provided by the reduction in volumes as a result of RCL FOODS' changed business model.  Dumped
imports remain a significant component of, and issue for, the local poultry market. From November, feed costs increased
markedly, while excess supply created by dumping pushed prices below those of the prior year, with little opportunity to
recover the increased costs. 

The Quick Service Restaurant (QSR) market was stable, as was our overall market share. This sector is showing signs of
recovery with key customers growing again. 

RCL FOODS was drawn into the Listeriosis crisis despite the fact that no trace of the ST6 "outbreak strain" was identified
at our plants. This unfortunate event damaged our brands and resulted in  the loss of higher margin added-value volumes
for an extended period at significant financial loss. Post the Listeriosis crisis we have introduced a variety of initiatives
to restore confidence in the Rainbow brand and the chilled processed meats category. Our polonies were relaunched in
August 2018 and have already attained close to 80% of previous volume levels. Viennas are expected to be relaunched
in the third quarter of 2019 with new and advanced high-pressure processing equipment  which is currently being
commissioned and that has been installed to exacting standards. 

We remain comfortable that the revised Chicken business model has positioned RCL FOODS optimally to continue to
deliver a business with far less reliance on commodity cycle pricing, resulting in better sustainability and consistency
of profits.

SUGAR & MILLING DIVISION
 
                                                                                          December        December               %
                                                                                              2018            2017          change

Revenue (Rm)*                                                                              7 548,2         7 062,1             6.9
EBITDA (Rm)                                                                                  358,0           501,0          (28.5)
EBITDA margin (%)                                                                              4.7             7.1      (2.4) ppts

*December 2017 revenue has been restated due to the implementation of IFRS 15 'Revenue from contracts with customers'. Refer page 9
for further details. The restatement has not had a material impact on margins.

The Sugar & Milling division generated a 6.9% increase in revenue mainly as a result of volume recoveries in the Animal
Feed business unit, and good revenue growth at Millbake due to the strategic interventions in this business unit over
the past year. An adverse channel mix in Sugar combined with margin erosion due to unrecovered higher input costs in
Animal Feed, led to the EBITDA decline. 

SUGAR
EBITDA reduced by 69.9% to R63,5 million at an unacceptable margin of 2.2% (December 2017: R210,7 million at a
margin of 7.1%). Sugar production volumes have increased by 12.7% to 429 466 tons for the six months to December 2018,
due to the continued improvement in the sugar crop and a longer crushing season. Notwithstanding improved production,
balancing supply and demand in the local market remained challenging throughout the period due to reduced domestic
sugar consumption and the continued impact of imports. Domestic sugar consumption was hampered by both financial
pressure on consumers and declines in consumption brought about by the implementation of the Health Promotion
Levy (sugar tax) in the prior year. Market estimates indicate the latter has reduced domestic consumption by up to 10%
of annual industry production or 200 000 tons per annum. The lower demand, as well as continued volumes of dumped
imports in the first quarter of the period, drove a shift in sales mix towards raw (unrefined) exports. Suppressed world
sugar prices resulted in average export selling prices which were significantly lower than local market prices.
 
A revised Dollar-Based Reference Price and tariff protection was granted by the Department of Trade and Industry in
August 2018, with a 19.5% price increase implemented by the industry in September 2018. The levels of imports have
noticeably decreased during the second quarter of the period, however, high levels of imported stocks remain. Adequate
water supplies will also aid sustained sugar production into the next season. Our recent sweetener acquisition is meeting
performance expectations and has allowed an extension of the product range into the expanding low-carb and low-calorie
segment. We expect to see good growth from this category. 

There remains a strong focus within Sugar to ensure the continued sustainability of the business, as well as the industry. This
is being achieved through a range of cost, productivity and efficiency improvement initiatives, coupled with continuous
interaction with government and industry bodies. Alternative products and uses over the longer term, including ethanol
production, electricity co-generation and bio-plastics are also being considered.

ANIMAL FEED
Animal Feed achieved revenue growth of 19.2%. Volume growth was generated from external business while
internal poultry feed volumes remained flat, post the implementation of the revised Chicken business model. Our product
performance, service delivery, improved technical support and strong value proposition regained key bulk customers.
Driehoek, a recent acquisition, has exceeded expectations and improved RCL FOODS' offering in both the horse and
game sectors.

Profitability was negatively impacted by increases in raw material prices  for maize, soya and particularly molasses.
The Molatek business model is under pressure in the short to medium term due to the industry-set molasses price relative
to maize-based alternatives. Animal Feed generated EBITDA of R138,2 million, down 9.8%, at a margin of 5.1% (December
2017: R153,3 million at a margin of 6.7%).

Despite current challenges, the business has been successful in establishing itself as a leading provider in the industry,
with a well-diversified product basket. Animal Feed has a multi-pronged strategy in place to drive growth through
diversification into further animal feed categories and expanding into new markets and geographies. There is a continuous
focus on developing innovative feed solutions to strengthen brands and broaden the customer base.

MILLBAKE (MILLING AND BAKING)
Millbake delivered a pleasing performance, growing volumes and margins. The Millbake business unit generated an
EBITDA of R156,3 million at a margin of 8.0% (December 2017: R137,0 million at a margin of 7.4%).
Milling reported an improved result, driven by higher sales volumes and cost savings. Milling volumes have improved
despite excess capacity in the industry and strong competition. Our well-regarded brand and better offering in terms of
product performance and technical support have continued to win customers. The focus remains on volumes to increase
capacity utilisation and efficiencies. Increased investment in marketing and sales has been made to drive volumes.

Baking produced a positive result due to higher sales volumes (up 5.3%) and good traction in the cost reduction programmes
in Gauteng, despite the implementation of the promulgated minimum wage and escalating fuel prices. Progress has also
been made with cost initiatives in distribution and manufacturing, which should be realised in the remainder of the year.
Sales volumes in the comparative period were negatively impacted by strike action at the Rustenburg bakery. Labour
conditions have remained stable across the business unit in the current period.

LOGISTICS DIVISION
                                                                                       December       December               %
                                                                                           2018           2017          change

Revenue (Rm)                                                                            1 076,5        1 006,5             7.0
EBITDA (Rm)                                                                                88,5          105,7          (16.3)
EBITDA margin (%)                                                                           8.2           10.5      (2.3) ppts

The Logistics division generated revenue of R1 076,5 million. Revenue growth, despite the tough trading conditions currently 
prevalent in the logistics industry, was driven largely by the following factors:

- A key long-term contract with Pick n Pay for their frozen category (including ice-cream) was signed in the latter
  half of the 2018 financial year. These additional volumes have been seamlessly integrated into our network, thereby
  offsetting a significant proportion of the internal volumes lost through the implementation of the revised Chicken
  business model.
- Foodservice revenue has grown. 

EBITDA was R17,1 million (16.3%) behind the prior year. The reduction was attributable to the cost headwinds faced, which
included once-off start-up costs to enable the Pick n Pay contract, coupled with significant increases in the fuel price
which reached an all-time high.

Logistics acquired a 45.0% shareholding in L&A on 1 October 2018. The purchase price was denominated in Zambian
Kwacha and a forward exchange contract was entered into to fix the rand value of the investment. Due to a significant
devaluation of the Zambian Kwacha close to acquisition date, a R6,2 million  loss was incurred on settlement of the
forward exchange contract. This loss was expensed through the income statement, with the investment in L&A recorded
at the "lower" spot rate on date of acquisition.

Logistics has recently repositioned its brand as "Going beyond" which encompasses our ability to "constantly look beyond
what is now, to co-create what's next". A partial rollout of the new branding in respect of our fleet has been completed
and "Going beyond" has been entrenched as the foundation of our identity, with innovation and collaboration being the
key pillars.

In keeping with this positioning, we are rolling out an electronic proof of delivery (EPOD) platform which not only
significantly reduces the administrative burden for us as well as customer, but also provides the potential for improved
turnaround times, driving more efficient utilisation of our fleet and an improved customer experience at the backdoor.

EQUITY ACCOUNTED INVESTMENTS
Share of profits from associates increased R6,4 million to R125,8 million, due mainly to gains in RSSC. RSSC's results
were not as severely impacted by market conditions as the Sugar business unit, due to a higher share of sales into SADC
markets at higher prices.

Included in the share of profits from joint ventures are the equity accounted results of Mananga Sugar Packers
(MSP) (Eswatini - formerly known as Swaziland), Akwandze Agricultural Finance and Senn Foods Logistics (Botswana).
Share of profits from joint ventures increased R5,7 million to R28,7 million due mainly to higher volumes of sugar processed
in MSP.


PROSPECTS
We expect trading conditions to remain challenging due to South Africa's poor economic outlook. The upcoming elections
are likely to result in an extended period of uncertainty and the prospect of labour instability remains high.
We expect that the poultry market will remain depressed whilst the market remains oversupplied and as commodity input
costs continue to rise. Further volume and market share growth in Groceries will be challenging in a highly competitive
market. The Consumer division will continue to focus on strong innovation, brand investment and efficiencies to
optimise profitability.

The short-term outlook for Sugar remains challenged with the overhang of high levels of imported sugar still impacting the
local market, despite the implementation of tariffs that are offering some level of protection for the industry. The negative
impact of the Health Protection Levy on local market demand is expected to continue. The sugar industry has significant
structural issues which require resolution to ensure long-term sustainability. Various SASA initiatives and engagements
with relevant industry participants are under way to to find an optimal solution. We expect the good progress made in the
first six months at Millbake to continue. Animal Feed will focus on regaining lost volume and margin. 

The Logistics division is well positioned to offer customers a multi-temperature (including chilled, frozen and super-frozen)
route-to-market supply chain solution. The new business won during the period under review bodes well for the remainder
of the year and the focus will be on bedding down these opportunities.

Despite the expected economic headwinds, our strong balance sheet and cash flow generation positions us well. 

CASH DIVIDEND DECLARATION  

Notice is hereby given that the directors have declared an interim gross cash dividend (number 88) of 15.0 cents (12.0 cents net 
of dividend withholding tax) per ordinary share for the six-month period ended December 2018.

The dividend has been declared from income reserves.

A dividend withholding tax of 20% will be applicable to all shareholders who are not exempt
The issued share capital at the declaration date is 940 880 696 ordinary shares. The company's income tax reference
number is 9950019712.

The salient dates for the dividend will be as follows:

Publication of declaration data                                                                            Monday, 4 March 2019
Last day of trade to receive a dividend                                                                  Tuesday, 23 April 2019
Shares commence trading "ex" dividend                                                                  Wednesday, 24 April 2019
Record date                                                                                               Friday, 26 April 2019
Payment date                                                                                              Monday, 29 April 2019

Share certificates may not be dematerialised or rematerialised between Wednesday, 24 April 2019 and Friday, 26 April
2019, both days inclusive.

BASIS OF PREPARATION 
The summarised consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards (IFRS), the information required by IAS 34 'Interim Financial Reporting', IFRIC interpretations,
SAICA financial reporting guides and circulars and in compliance with the Companies Act of South Africa and the
Listings Requirements of the JSE Limited, under the supervision of the Chief Financial Officer, Robert Field CA(SA).
The accounting policies comply with IFRS and are consistent with those applied in the previous year and corresponding
interim period, except for the adoption of new and amended standards as set out below.

New and amended standards adopted by the Group
A number of new and amended standards became applicable for the current reporting period and the Group had to
change its accounting policies and make retrospective adjustments as a result of adopting the following standards:

- IFRS 9 'Financial instruments'
- IFRS 15 'Revenue from contracts with customers'

The impact of the adoption of these standards and related new accounting policies are disclosed in the "Change in
accounting policies" section below. The other standards did not have any impact on the Group's accounting policies and
did not require retrospective adjustments.

Impact of standards issued but not yet effective
IFRS 16 was issued in January 2016. It will result in almost all leases being recognised on the balance sheet, as the distinction
between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and
a financial liability to pay rentals are recognised. The only exceptions are short-term and low-value leases.

The standard will affect primarily the accounting for the Group's operating leases. As at the reporting date, the Group has
not yet determined to what extent the current operating lease commitments will result in the recognition of an asset and
a liability for future payments and how this will affect the Group's profit and classification of cash flows.

Some of the commitments may be covered by the exception for short-term and low-value leases and some commitments
may relate to arrangements that will not qualify as leases under IFRS 16.

The standard is mandatory for first interim periods within annual reporting periods beginning on or after 1 January 2019.
The Group does not intend to adopt the standard before its effective date. The date of initial application of the standard
for the RCL FOODS Group is 1 July 2019 (the 2020 financial year).

CHANGES IN ACCOUNTING POLICIES

This section explains the impact of the adoption of IFRS 9 'Financial Instruments' and IFRS 15 'Revenue from contracts
with customers' on the Group's financial statements and discloses the new accounting policies that have been applied
from 2 July 2018, where they are different to those applied in prior periods.

(a) Impact of IFRS 15 and IFRS 9 on the financial statements
As a result of the changes in the Group's accounting policies, prior year financial statements had to be restated.
As explained below, IFRS 9 was generally adopted without restating comparative information. The adjustments arising
from the new impairment rules are therefore not reflected in the balance sheet as at 1 July 2018, but are recognised in
the opening balance sheet on 2 July 2018. The adoption of IFRS 15 resulted in the reclassification of amounts previously
disclosed in cost of sales to revenue. This reclassification had no impact on profit, retained earnings or the balance sheet.

The following tables show the adjustments recognised for each individual line item. Line items that were not affected
by the changes have not been included. As a result, the sub-totals and totals disclosed cannot be recalculated from the
numbers provided. The adjustments are explained in more detail in the sections that follow.

                                                                1 July                          
                                                                  2018                          
Consolidated statement of financial position (extract)   As originally    IFRS 9       2 July   
R'000                                                        presented    impact         2018   
Assets                                                                                          
Non-current assets                                          11 516 204       369   11 516 573   
Deferred income tax asset                                       28 448       369       28 817   
Current assets                                               9 318 513   (8 955)    9 309 558   
Trade and other receivables                                  4 254 014   (8 955)    4 245 059   
Total assets                                                20 991 297   (8 587)   20 982 710   
Equity                                                     11 179 703    (6 447)   11 173 256   
Retained earnings                                            2 336 451   (6 288)    2 330 163   
Non-controlling interest                                        48 729     (159)       48 570   
Liabilities                                                                                     
Non-current liabilities                                      3 361 071   (2 139)    3 358 932   
Deferred income tax liabilities                              1 253 584   (2 139)    1 251 445   
Total liabilities                                            9 811 594   (2 139)    9 809 455   
Total equity and liabilities                                20 991 297   (8 587)   20 982 710   
                                                              December                          
                                                                  2017               December   
Consolidated income statement (extract)                  As originally   IFRS 15         2017   
R'000                                                        presented    impact   (restated)   
Revenue                                                     12 765 148    52 107   12 817 255   
                                                                  June                          
                                                                  2018                   June   
Consolidated income statement (extract)                   As orginally   IFRS 15         2018   
R'000                                                        presented    impact   (restated)   
Revenue                                                     24 425 996   101 965   24 527 961   


(b) Impact of adoption - IFRS 9 'Financial instruments'
IFRS 9 replaces the provisions of IAS 39 that relate to the recognition, classification and measurement of financial assets
and financial liabilities, derecognition of financial instruments, impairment of financial assets and hedge accounting.
The adoption of IFRS 9 from 2 July 2018 resulted in changes in accounting policies and adjustments to the amounts
recognised in the financial statements. The new accounting policies are set out in part (c) below. In accordance with the
transitional provisions in IFRS 9(7.2.15) comparative figures have not been restated.

The total impact on the Group's total equity as at 2 July 2018 is as follows:

                                                                 Non-                
                                               Retained   controlling        Total   
R'000                                          earnings     interests       equity   
Closing retained earnings - 1 July 2018       2 336 451        48 729   11 179 703   
Increase in provision for trade receivables     (8 734)         (221)      (8 955)   
Increase/decrease in deferred tax                 2 446            62        2 508   
Opening retained earnings - 2 July 2018       2 330 163        48 570   11 173 256   


The impact on the Group's results from the adoption of IFRS 9 relate solely to the new impairment requirements.
The Group has financial assets carried at amortised cost consisting of: 

- current trade and other receivables related to sales of goods comprising the sale of milling, agricultural produce and
  consumer goods and from service revenue comprising logistics, distribution and consulting services; 
- trade and other receivables - non-current;
- cash and cash equivalents; and
- loans receivable.

The impact of the change in impairment methodology on the Group's total equity is disclosed above. The adjustment
arose from changes in the impairment provisions for the Group's current trade and other receivables. Adjustments to all
other financial assets were not material and hence did not warrant a restatement to opening equity.

The Group applies the IFRS 9 simplified approach to measuring expected credit losses on its current trade receivables,
which calculates the loss allowance on a lifetime basis. The Group has credit insurance in place with Lombard for all
domestic trade debtors above R75  000, subject to an excess. The credit policy requires each new customer to be
analysed individually for creditworthiness before delivery and payment terms are offered. The insurance cover is taken
out at inception of the sale and is integral to the enactment of the sale.

To measure the expected credit loss, trade receivables have been grouped based on shared characteristics and days past
due. The calculation of the expected credit loss takes into account the insurance cover in place.
Reconciliation of loss allowance for trade receivables as at 1 July 2018 to 2 July 2018: 

                                                                                  Trade   
                                                                          receivables -   
                                                                             impairment   
R'000                                                                         provision   
Closing impairment provision (as calculated under IAS 39) - 1 July 2018          35 656   
Amount restated through opening equity                                            8 955   
Opening impairment provision (as calculated under IFRS 9) - 2 July 2018          44 611   


Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no
reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with
the Group, a failure to make contractual payments for a period of greater than 120 days past due and/or when the legal
process has not enabled recovery. 

The adoption of the classification and measurement and hedging requirements of IFRS 9 have not had any impact on the
Group's results.

(c) Accounting policies adopted 2 July 2018 - IFRS 9 'Financial instruments'
Classification
From 2 July 2018, the Group classifies its financial assets in the following measurement categories:

- those to be measured subsequently at fair value through profit or loss; and
- those to be measured at amortised cost.

The classification depends on the Group's business model for managing the financial assets and the contractual terms of
the cash flows.

For assets measured at fair value, gains and losses will be recorded in profit or loss.

The Group reclassifies financial assets when, and only when, its business model for managing those assets changes.

Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair
value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at FVPL are expensed in profit or loss.

Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows
are solely payments of principal and interest.

Subsequent measurement of financial assets depends on the Group's business model for managing the asset and the
cash flow characteristics of the asset. There are two measurement categories into which the Group classifies its financial
assets:

Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely
payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included
in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly
in profit or loss and presented in other gains/(losses), together with foreign exchange gains and losses. Impairment losses
are presented as a separate line item in the statement of profit or loss.

FVPL: Assets that do not meet the criteria for amortised cost are measured at FVPL. A gain or loss on a financial asset
that is subsequently measured at FVPL is recognised in profit or loss and presented net within other gains/(losses) in the
period in which it arises.

Impairment
From 2 July 2018, the Group assesses on a forward-looking basis, the expected credit losses associated with its financial
assets carried at amortised cost. The impairment methodology applied depends on whether there has been a significant
increase in credit risk.

For trade receivables, the Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime
losses to be recognised from initial recognition of the receivables.

(d) Impact of adoption - IFRS 15 'Revenue from contracts with customers'
The Group has adopted IFRS 15 from 2 July 2018 which resulted in changes in accounting policies and adjustments to
amounts recognised in the financial statements. In accordance with the transitional provisions in IFRS 15, the Group has
adopted the new rules retrospectively and has restated comparatives, being the December 2017 and June 2018 periods
presented in this report. The adoption of IFRS 15 has required the Group to identify separate performance obligations in
contracts with customers. Certain instances of transport income within the Sugar & Milling division have been identified
as an additional separate performance obligation to the sale of goods. This income has been reclassified out of cost of
sales and into revenue on adoption of IFRS 15. The impact of this change is reflected in the tables below:

                                                                                  December                              
                                                                                      2017   Reclassifi-     December   
Consolidated income statement (extract)                                       As orginally        cation         2017   
R'000                                                                            presented    adjustment   (restated)   
Revenue                                                                         12 765 148        52 107   12 817 255   
                                                                                      June                              
                                                                                      2018   Reclassifi-         June   
Consolidated income statement (extract)                                      As originally        cation         2018   
R'000                                                                            presented    adjustment   (restated)   
Revenue                                                                         24 425 996       101 965   24 527 961

(e) Accounting policies adopted 2 July 2018 - IFRS 15 'Revenue from contracts with customers'
Revenue comprises income arising in the course of the Group's ordinary activities. Revenue is measured based on
the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties.
The Group recognises revenue when it transfers control of a product or service to a customer. Revenue is disclosed net of
value added tax, returns, rebates, discounts and other allowances and after eliminating sales within the Group.

Sales of goods comprise the sale of milling, agricultural produce and consumer goods. Sales of services comprise logistics,
warehousing, distribution and consulting services.

In certain instances, the sale of goods includes delivery and these sales are identified as being a single performance
obligation. In all other cases, where the Group is requested to arrange transport for the customer, two separate performance
obligations arise - the sale of goods and the provision of transport. To the extent that the Group is responsible for the
provision of the transport services to the customer, the Group acts as principal and revenue from transport services is
recorded at the gross amount.

Revenue from the sale of goods is recognised only when the performance obligations arising from the contract with
a customer is satisfied and the amount of revenue that it expects to be entitled to can be determined. For sales that
include delivery (as indicated above), this occurs when a Group entity has delivered the products to the customer and
the customer has accepted delivery. In instances where the delivery is a separate performance obligation (as indicated
above), revenue from the sale of goods is recognised when the goods are transferred to the transport provider for delivery.
Revenue from the sale of services relate mainly to transport services and is recognised when the underlying goods have
been delivered. The Group is not entitled to payment until the delivery service has been completed.

The Group bases its estimates of incentive rebates and settlement discounts on historical results. Variable consideration
is calculated by applying percentages agreed with customer to actual sales for the period.

The following payment terms are applicable to the Group:

- Sale of goods: 0 to 90 days
- Sale of services: 0 to 30 days

The Group currently accepts returns from customers for damaged goods, with the corresponding refund liability recorded
within trade and other receivables unless a separate obligation to settle the customer exists, in which case the liability is
recorded within trade and other payables.

The Group does not expect to have any contracts where the period between the transfer of the promised goods or
services to the customer and payment by the customer exceeds one year. As a consequence, the Group does not adjust
any of the transaction prices for the time value of money.

The directors take full responsibility for the preparation of these results.

RCL FOODS has reported on the retail calendar of trading weeks which treats each financial year as an exact 52-week
period, incorporating trade from Monday to Sunday each week. This treatment effectively results in the loss of a day (or
two in a leap year) per calendar year. These days are brought to account approximately every six years by including a 53rd
week. The results are for the period ended 30 December 2018, a 182-day period, which is consistent with the prior period.
For and on behalf of the Board

JJ Durand                                                      M Dally
Non-executive Chairman                                         Chief Executive Officer

Durban
4 March 2019
Directors: JJ Durand (Non-executive Chairman), M Dally (CEO)*, HJ Carse, RH Field*, CJ Hess, PR Louw, NP Mageza, 
DTV Msibi, MM Nhlanhla, RV Smither, GM Steyn, GC Zondi and PM Moumakwa (appointed 1 January 2019)
* Executive directors
Company secretary: JMJ Maher
Registration number: 1966/004972/06
JSE share code: RCL
ISIN: ZAE000179438
Registered office: RCL Foods Limited, Ten The Boulevard, Westway Office Park, Westville, 3629
Transfer secretaries: Computershare Investor Services Proprietary Limited, Rosebank Towers, 15 Biermann Avenue,
Rosebank, 2196
Auditors: PricewaterhouseCoopers Inc.
Sponsor: RAND MERCHANT BANK (a division of FirstRand Bank Limited)
Bankers: Absa Bank Limited, First National Bank of Southern Africa Limited, Investec Bank Limited  and Standard
Bank Limited
Website: www.rclfoods.com

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

                                                                                                      30 December   31 December       1 July   
                                                                                                             2018          2017         2018   
                                                                                                            R'000         R'000        R'000   
ASSETS                                                                                                                                         
Non-current assets                                                                                                                             
Property, plant and equipment                                                                           6 125 356     5 808 672    5 922 829   
Intangible assets                                                                                       2 125 557     2 166 158    2 162 828   
Investment in joint ventures                                                                              269 936       250 378      248 570   
Investment in associates                                                                                  680 031       624 985      526 437   
Deferred income tax asset                                                                                  51 173         6 247       28 448   
Loans receivable                                                                                           43 494         1 555       35 920   
Trade and other receivables                                                                                57 104        54 315       58 010   
Goodwill                                                                                                2 554 398     2 658 493    2 533 162   
                                                                                                       11 907 049    11 570 803   11 516 204   
Current assets                                                                                                                                 
Inventories                                                                                             3 478 428     3 185 222    2 926 748   
Biological assets                                                                                         697 331       618 670      807 331   
Trade and other receivables                                                                             4 834 093     4 429 313    4 254 014   
Derivative financial instruments                                                                            4 727         8 311        5 031   
Tax receivable                                                                                                509        60 722       32 953   
Loan receivable                                                                                            33 880        15 991       29 072   
Cash and cash equivalents                                                                               1 194 375       426 475    1 263 364   
                                                                                                       10 243 343     8 744 704    9 318 513   
Assets of disposal group classified as held for sale                                                      156 876        15 936      156 580   
Total assets                                                                                           22 307 268    20 331 443   20 991 297   
EQUITY                                                                                                                                         
Capital and reserves                                                                                   11 589 447    10 958 913   11 179 703   
LIABILITIES                                                                                                                                    
Non-current liabilities                                                                                                                        
Deferred income                                                                                                              64           22   
Interest-bearing liabilities                                                                            2 549 805     3 073 147    1 965 983   
Deferred income tax liabilities                                                                         1 312 868     1 241 562    1 253 584   
Retirement benefit obligations                                                                            140 607       143 714      135 072   
Trade and other payables                                                                                    5 382           645        6 410   
                                                                                                        4 008 662     4 459 132    3 361 071   
Current liabilities                                                                                                                            
Trade and other payables                                                                                5 797 863     4 354 880    5 116 615   
Deferred income                                                                                             5 526         5 067        7 835   
Interest-bearing liabilities                                                                              220 648       177 634    1 282 673   
Derivative financial instruments                                                                           13 790        13 752       31 056   
Current income tax liabilities                                                                            114 417        79 047       12 344   
Bank overdraft                                                                                            556 915       283 018                
                                                                                                        6 709 159     4 913 398    6 450 523   
Total liabilities                                                                                      10 717 821     9 372 530    9 811 594   
Total equity and liabilities                                                                           22 307 268    20 331 443   20 991 297   

CONSOLIDATED INCOME STATEMENT

                                                                                                        Six months   Six months   Year ended   
                                                                                                          December     December         June   
                                                                                                              2018         2017         2018   
                                                                                                             R'000        R'000        R'000   
Revenue*                                                                                                13 265 392   12 817 255   24 527 961   
Operating profit before depreciation, amortisation and impairment (EBITDA)                               1 082 159    1 200 984    2 045 984   
Depreciation, amortisation and impairment                                                                (390 108)    (390 714)    (775 640)   
Operating profit                                                                                           692 051      810 270    1 270 344   
Finance costs                                                                                            (164 920)    (161 446)    (315 104)   
Finance income                                                                                              25 832       18 385       62 624   
Share of profits of joint ventures                                                                          28 727       23 011       28 268   
Share of profits of associates                                                                             125 810      119 391       51 834   
Profit before tax                                                                                          707 500      809 611    1 097 966   
Income tax expense                                                                                       (175 418)    (199 659)    (219 589)   
Profit for the period                                                                                      532 082      609 952      878 377   
Attributable to:                                                                                                                               
Equity holders of the company                                                                              578 980      663 376      922 439   
Non-controlling interests                                                                                 (46 898)     (53 424)     (44 062)   
HEADLINE EARNINGS                                                                                                                              
Profit for the period attributable to equity holders of the company                                        578 980      663 376      922 439   
Profit on disposal of property, plant and equipment                                                       (93 628)     (17 330)     (77 583)   
Insurance proceeds                                                                                        (10 264)      (7 493)     (11 931)   
Impairments                                                                                                               6 180        6 107   
Insurance proceeds included in equity accounted earnings of associates                                                               (2 344)   
Loss on disposal of property, plant and equipment included in equity
accounted earnings of associates                                                                                                       1 047   
Headline earnings                                                                                          475 088      644 733      837 735   
                                                                                                             Cents        Cents        Cents   
Earnings per share attributable to equity holders of the company                                                                               
Basic earnings per share                                                                                      66.7         76.7        106.6   
Basic earnings per share - diluted                                                                            65.6         75.6        104.1   
Headline earnings per share                                                                                   54.8         74.5         96.8   
Headline earnings per share  - diluted                                                                        53.8         73.4         94.5   


* The prior periods revenue figures have been restated due to the implementation of IFRS 15, 'Revenue from contracts with customers'.

CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME

                                                                            December   December       June   
                                                                                2018       2017       2018   
                                                                               R'000      R'000      R'000   
Profit for the period                                                        532 082    609 952    878 377   
Other comprehensive income                                                                                   
Items that will not be reclassified to profit or loss                                                        
Remeasurement of retirement medical obligations - net of tax                                         9 041   
Share of associates other comprehensive income                                                       (664)   
Items that may subsequently be reclassified to profit or loss                                                
Cash flow hedges - net of tax                                                             5 173      (467)   
Currency translation differences                                               2 948    (2 115)   (10 011)   
Other comprehensive income for the period - net of tax                         2 948      3 058    (2 101)   
Total comprehensive income for the period attributable to:                   535 030    613 010    876 276   
Total comprehensive income for the period attributable to:                                                   
Equity holders of the company                                                581 928    666 434    920 338   
Non-controlling interests                                                   (46 898)   (53 424)   (44 062)   
                                                                             535 030    613 010    876 276   


CONSOLIDATED CASH FLOW INFORMATION

                                                                     Six months    Six months   Year ended   
                                                                       December      December         June   
                                                                           2018          2017         2018   
                                                                          R'000         R'000        R'000   
Operating profit                                                        692 051       810 270    1 270 344   
Non-cash items                                                          134 950       234 199      512 686   
Operating profit before working capital requirements                    827 001     1 044 469    1 783 030   
Working capital requirements                                          (129 551)   (1 144 200)        1 587   
Cash generated/(utilised) by operations                                 697 450      (99 731)    1 784 617   
Net finance cost                                                      (141 768)     (142 754)    (257 901)   
Tax paid                                                                  (985)     (122 991)    (180 351)   
Cash available from operating activities                                554 697     (365 476)    1 346 365   
Dividends received                                                       23 164        31 966       62 394   
Dividends paid                                                        (218 091)     (174 572)    (304 610)   
Cash outflows from investing activities                               (526 971)     (347 821)    (838 018)   
Cash outflows from financing activities                               (458 703)      (54 422)     (56 549)   
Net movement in cash and cash equivalents                             (625 904)     (910 325)      209 582   
Cash and cash equivalents at the beginning of the period              1 263 364     1 053 782    1 053 782   
Cash and cash equivalents at the end of the period                      637 460       143 457    1 263 364   


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
                                                                                           Common     Share-               Controlling          Non-                
                                                                  Stated      Other       control      based    Retained      interest   controlling                
                                                                 capital   reserves       reserve   payments    earnings         total      interest        Total   
                                                                   R'000      R'000         R'000      R'000       R'000         R'000         R'000        R'000   
Balance at 2 July 2017                                        10 041 690      4 672   (1 919 832)    513 536   1 708 703    10 348 769        37 984   10 386 753   
Profit/(loss) for the period                                                                                     663 376       663 376      (53 424)      609 952   
Other comprehensive income for the period                                     3 058                                              3 058                      3 058   
Ordinary dividend paid                                                                                         (173 030)     (173 030)       (1 542)    (174 572)   
Acquisition of subsidiary                                                                                                                     56 349       56 349   
BEE share-based payments charge                                                                        8 800                     8 800                      8 800   
Employee share option scheme:                                                                                                                                       
Value of employee services                                                                            68 573                    68 573                     68 573   
Exercise of employee share options                                 4 058                             (4 058)                                                        
Balance at 31 December 2017                                   10 045 748      7 730   (1 919 832)    586 851   2 199 049    10 919 546        39 367   10 958 913   
Profit for the period                                                                                            259 063       259 063         9 362      268 425   
Other comprehensive income for the period                                  (13 536)                                8 377       (5 159)                    (5 159)   
Ordinary dividend paid                                                                                         (130 038)     (130 038)                  (130 038)   
BEE share-based payments charge                                                                        8 800                     8 800                      8 800   
Employee share option scheme:                                                                                                                                       
Value of employee services                                                                            65 757                    65 757                     65 757   
Equity component of tax on share-based payments                                                       13 005                    13 005                     13 005   
Exercise of employee share options                                41 493                            (41 493)                                                        
Balance at 1 July 2018                                        10 087 241    (5 806)   (1 919 832)    632 920   2 336 451    11 130 974        48 729   11 179 703   
Change in accounting policy*                                                                                     (6 288)       (6 288)         (159)      (6 447)   
Balance at 2 July 2018                                        10 087 241    (5 806)   (1 919 832)    632 920   2 330 163    11 124 686        48 570   11 173 256   
Profit/(loss) for the period                                                                                     578 980       578 980      (46 898)      532 082   
Other comprehensive income for the period                                     2 948                                              2 948                      2 948   
Ordinary dividend paid                                                                                         (216 841)     (216 841)       (1 250)    (218 091)   
Additional capital contribution by non-controlling interest                                                                                   19 500       19 500   
BEE share-based payments charge                                                                        8 800                     8 800                      8 800   
Employee share option scheme:                                                                                                                                       
Value of employee services                                                                            70 103                    70 103                     70 103   
Equity component of tax on share-based payments                                                          849                       849                        849   
Exercise of employee share options                                47 031                            (47 031)                                                        
Balance at 30 December 2018                                   10 134 272    (2 858)   (1 919 832)    665 641   2 692 302    11 569 525        19 922   11 589 447 

* Restated for the impact from the implementation of IFRS 9 'Financial Instruments', which relates to the adoption of an expected credit loss model for impairments of financial assets.

SUPPLEMENTARY INFORMATION

                                                                                Six months   Six months   Year ended    
                                                                                  December     December         June   
                                                                                      2018         2017         2018   
                                                                                     R'000        R'000        R'000   
Capital expenditure contracted and committed                                       551 023      358 860      327 259   
Capital expenditure approved but not contracted                                    278 919      318 138      586 140   
STATISTICS                                                                                                             
Statutory ordinary shares in issue (includes BEE shares)              (000's)      940 881      935 827      938 087   
Ordinary shares in issue for accounting purposes                      (000's)      870 122      865 068      867 328   
Weighted average ordinary shares in issue                             (000's)      867 668      864 973      865 649   
Diluted weighted average ordinary shares in issue                     (000's)      882 390      877 802      886 486   
Net asset value per share                                             (cents)      1 331.9      1 266.8      1 289.0   
Ordinary dividends per share:                                                                                          
Interim dividend declared                                             (cents)         15.0         15.0         15.0   
Final dividend declared                                               (cents)                                   25.0   
Total dividends                                                       (cents)         15.0         15.0         40.0 

SEGMENTAL ANALYSIS

                                                                              Six months    Six months    Year ended   
                                                                                December      December          June   
                                                                                    2018          2017          2018   
                                                                                   R'000         R'000         R'000   
Revenue*                                                                      13 265 392    12 817 255    24 527 961   
Consumer                                                                       6 738 307     6 687 574    12 752 874   
Sugar & Milling                                                                7 548 238     7 062 071    13 668 815   
Logistics                                                                      1 076 532     1 006 514     1 979 958   
Sales between segments:                                                                                                
Consumer to Sugar & Milling                                                    (110 766)      (57 694)     (136 392)   
Sugar & Milling to Consumer                                                  (1 482 784)   (1 369 834)   (2 727 031)   
Logistics to Consumer                                                          (487 028)     (496 675)     (977 755)   
Logistics to Sugar & Milling                                                    (17 107)      (14 701)      (32 508)   
Operating profit before depreciation, amortisation and impairment (EBITDA)     1 082 159     1 200 984     2 045 984   
Consumer                                                                         624 089       594 238       985 205   
Sugar & Milling                                                                  357 980       501 006       869 037   
Logistics                                                                         88 504       105 641       204 341   
Group                                                                             11 586            99      (12 599)   
Depreciation, amortisation and impairment                                      (390 108)     (390 714)     (775 640)   
Operating profit                                                                 692 051       810 270     1 270 344   
Consumer                                                                         467 874       423 903       654 055   
Sugar & Milling                                                                  177 338       327 634       521 204   
Logistics                                                                         48 992        69 274       131 054   
Group                                                                            (2 153)      (10 541)      (35 969)   
Finance costs                                                                  (164 920)     (161 446)     (315 104)   
Finance income                                                                    25 832        18 385        62 624   
Share of profits of joint ventures                                                                                     
Sugar & Milling                                                                   22 107        16 920        16 576   
Logistics                                                                          6 620         6 091        11 692   
Share of profits of joint ventures                                                28 727        23 011        28 268   
Share of profits of associates                                                                                         
Sugar & Milling                                                                  125 564       119 387        50 889   
Ugandan Operation                                                                    246             4           945   
Share of profits of associates                                                   125 810       119 391        51 834   
Profit before tax                                                                707 500       809 611     1 097 966   


* The prior periods revenue figures have been restated due to the implementation of IFRS 15, 'Revenue from contracts with customers'.

REVENUE

                                                                              Six months    Six months    Year ended   
                                                                                December      December          June   
                                                                                    2018          2017          2018   
                                                                                   R'000         R'000         R'000   
Disaggregation of revenue from contracts1 with customers                                                               
Revenue*                                                                      13 265 392    12 817 255    24 527 961   
Consumer                                                                       6 738 307     6 687 574    12 752 874   
Chicken                                                                        3 432 459     3 609 899     6 693 374   
Groceries**                                                                    2 858 738     2 692 947     5 244 924   
Sales between business units                                                    (14 693)      (17 399)      (35 497)   
Cost recoveries - Chicken***                                                     181 340       150 502       316 052   
Cost recoveries - Groceries***                                                   280 463       251 625       534 021   
Sugar & Milling                                                                7 548 238     7 062 071    13 668 815   
Sugar                                                                          2 934 051     2 966 809     5 419 904   
Animal Feed                                                                    2 734 161     2 294 222     4 691 376   
Millbake                                                                       1 948 166     1 849 644     3 646 531   
Sales between business units                                                    (68 140)      (48 604)      (88 996)   
Logistics                                                                      1 076 532     1 006 514     1 979 958   
Sales between segments                                                       (2 097 685)   (1 938 904)   (3 873 686)   
Timing of revenue recognition2                                                                                         
Point in time                                                                 12 673 391    12 304 950    23 536 361   
Over time                                                                        592 001       512 305       991 600   


* The prior periods revenue figures have been restated due to the implementation of IFRS 15, 'Revenue from contracts with customers'.
** Groceries category includes the Beverages, Grocery, Pies and Speciality business units.
*** Revenue includes items which are considered revenue in terms of IFRS but are cost recoveries for management reporting purposes (e.g. poultry by-products,
sunflower-oil and cake).
(1) An agreement between two or more parties that creates enforeceable rights and obligations. Can be written, oral or implied by customary business practices.
(2) Revenue recognised at a point in time relates to the sale of goods whilst revenue recognised over time relates to the sale of services.



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