SOUTH AFRICA

AFRICA

About Shanduka Group Growing Operational Involement

Over the last few years, Shanduka has increased its operational involvement in chosen investee companies. It currently has three operated companies: Coca-Cola Shanduka Beverages, McDonald’s South Africa and Shanduka Coal.

• Coca-Cola Shanduka Beverages

Shanduka owns a 70% stake in Coca-Cola Shanduka Beverages (CCSB), one of Coca-Cola’s four franchised bottlers in South Africa. The Coca-Cola Company holds the remaining 30% shareholding in the business.

Coca-Cola Shanduka Beverages is one of approximately 275 bottling partners in the global Coca-Cola system. The com- pany employs more than 800 permanent staff. It services more than 10,000 retail customers across eight trade channels and it has one of the highest outlet density per population and cold drink penetration in South Africa, selling more than 40 brands. It produces over 17 million cases of beverages each year.

This venture is a perfect fit with Shanduka’s strategy to achieve greater operational

involvement in the

companies in which it invests and establish a successful Shanduka operational management track-record. Furthermore, an alliance with a global

enterprise of Coca-Cola’s stature aligns with Shanduka’s growth aspirations.

• McDonald’s South Africa

In March 2011, Shanduka’s Executive Chairman, Cyril Ramaphosa, was appointed by McDonald’s Corporation as the Developmental Licensee for McDonald’s in South Africa under a 20-year Master Franchise Agreement.

McDonald’s has been operating in South Africa for 15 years and employs over 7,500 people. It has over 170 restaurants in the country, 55% of which are owned and operated by franchisees. The company owns around half of all properties on which the restaurants are located and holds the head lease for the balance of its restaurant locations. McDonald’s serves over 6.5 million customers every month.

The developmental licensee model is one of three successful business models McDonald’s employs globally. More than 30 of McDonald’s 120 countries have operated under this structure.

The transaction complements existing relationships with other iconic global consumer brands and fits Shanduka’s focus on strong brands that make a contribution to economic growth. It provides an opportunity, through rapid

growth, to spur entrepreneurial

development through the McDonald’s sub-franchisee system, and to bolster the local supply chain.

• Shanduka Coal

Shanduka has been developing a coal portfolio since 2003, starting with an initial 25% shareholding in Kangra Coal. By increasing its shareholding in Shanduka Coal from 30% to 50.01% in June 2012, Shanduka has made significant progress in becoming an operator in the resources sector.

Shanduka Coal produces thermal coal and, to a lesser extent, anthracite coal. Operated in partnership with Glencore International, Shanduka Coal owns mines in the Witbank coalfields in the Mpumalanga province and one in the KwaZulu Natal province. It has a diversified customer base, supplying inland and export markets and South Africa’s power utility, Eskom.

In addition to current producing assets, the company has exciting development projects. There is also opportunity for further acquisitions of producing assets and resources, as well as benefiting from synergies with Glencore’s other coal investments. Shanduka Coal remains an attractive asset with potential to grow and create substantial additional value. ➔

Finance Monthly CeO AwArdS 2013 69