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Amendments to the Reviewed Provisional Results for the year ended 28 February 2013 and Abridged Consolidated Audited
Taste Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 2000/002239/06) JSE code: TAS ISIN: ZAE000081162
(Taste or the company or the group)
Amendments to the reviewed provisional results for the year ended
28 February 2013 and abridged consolidated audited results for the year
ended 28 February 2013
Shareholders are referred to the SENS announcement dated 23 July 2013 and
are advised that the Integrated Report for the year ended 28 February 2013,
which was dispatched to shareholders on 23 July 2013, contains the
following modifications from the reviewed results for that year, which
were released on SENS on 22 May 2013. These modifications only comprise
reclassifications, result in improved disclosure and have had no effect on
the revenue, profit, total equity, total assets and total liabilities
reported. In addition, the unqualified review opinion issued by BDO South
Africa Inc. on 23 May 2013 remains unchanged. Details of these
reclassifications are as follows:
Consolidated statement of comprehensive income for the year ended
28 February 2013
Reviewed Audited
results results
28 February 28 February
2013 Adjustment 2013
Note R000 R000 R000
Operating costs 1 (152 271) (397) (152 668)
Share based payment expense 1 (397) 397 -
Consolidated statement of financial
position as at 28 February 2013
Non-current other financial assets 2 7 904 (2 019) 5 885
Current other financial assets 2 1 261 3 169 4 430
Advertising levies 2 3 089 (1 150) 1 939
Non-current borrowings 3 45 342 (296) 45 046
Current borrowings 3 10 398 296 10 694
Consolidated statement of cash
flows for the year ended
28 February 2013
Cash flows from operating
activities 7 728 (204) 7 524
Comprising of:
Cash generated from operating
activities 4 36 363 (245) 36 118
Taxation paid (15 684) 41 (15 643)
Net cash from investing 4 (16 111) 204 (15 907)
activities
Comprising of:
Proceeds on disposal of non-
current assets held for sale 220 (220) -
Loans advanced (2 442) (2 607) (5 049)
Loans repaid - 1 392 1 392
Acquisition of business (3 770) 1 637 (2 133)
Consolidated statements of
cash flows for the year ended
29 February 2012
Cash flows from operating activities
comprising of:
Cash generated from operating
activities 5 43 132 (4 000) 39 132
Net cash from investing activities
comprising of:
Acquisition of business 5 (60 000) 5 000 (55 000)
Net cash flows from financing
activities
comprising of:
Loans raised to vendors 5 1 000 (1 000)
Notes:
1. The share based payment expense which was reflected as a separate line
item on the statement of comprehensive income has now been reclassified
and included in operating expenses. This has not resulted in a change to
profit.
2. The adjustment is attributable to a reclassification between non-current
and current other financial assets and advertising levies. Total group
assets remain unchanged at R369.67 million.
3. The adjustment is attributable to a reclassification between non-current
borrowings and current borrowings. Total group liabilities remain
unchanged at R180.42 million.
4. The adjustment to the consolidated statement of cash flows is as a result
of the reclassifications detailed in notes 2 and 3 above, as well as
reclassifications of amounts within the statement of cash flows. Total
change in cash and cash equivalents remain unchanged at R18.37 million.
5. The adjustment in the comparative year is a reclassification of amounts
within the statement of cash flows. Total change in cash and cash
equivalents remain unchanged at R17.6 million.
The abridged consolidated audited results are presented below.
Abridged consolidated audited results for the year ended 28 February 2013
Abridged consolidated statement of comprehensive income
28 February 28 February 29 February
2013 2013 2012
Reviewed Audited Audited
R'000 R'000 R'000
Revenue (2) 506 431 506 431 304 264
Cost of sales (2) (311 367) (311 367) (170 352)
Gross profit (3) 195 064 195 064 133 912
Other income 496 496 9
Operating costs (4) (152 271) (152 668) (98 740)
Operating profit (5) 43 289 42 892 35 181
Share-based payment expense (6) (397) - -
Investment revenue 1 956 1 956 884
Finance costs (7) (7 162) (7 162) (5 684)
Profit before taxation 37 686 37 686 30 381
Taxation (8) (12 911) (12 911) (9 310)
Profit for the year 24 775 24 775 21 071
Other comprehensive income - - -
Total comprehensive income for
the year 24 775 24 775 21 071
Attributable to:
Equity holders of company 24 775 24 775 21 071
Earnings per share attributable to
equity holders of Company
Basic earnings per share (cents) 12.8 12.8 12.2
Diluted earnings per share
(cents) 12.3 12.3 11.6
Dividends declared per share
(cents) 5.1 5.1 4.0
Abridged consolidated statement of financial position
28 February 28 February 29 February
2013 2013 2012
Reviewed Audited Audited
R'000 R'000 R'000
Assets
Non-current assets 179 763 177 744 171 414
Property, plant and equipment
(10) 17 063 17 063 11 853
Intangible assets 83 508 83 508 87 045
Goodwill (11) 69 934 69 934 68 669
Other financial assets (12) 7 904 5 885 3 092
Deferred tax 1 354 1 354 755
Non-current assets held for sale
(13) 675 675 1 258
Current assets 189 229 191 248 168 693
Inventories (14) 94 029 94 029 70 576
Trade and other receivables (15) 67 541 67 541 56 606
Current tax receivables 2 978 2 978 1 137
Advertising levies 3 089 1 939 1 435
Other financial assets (12) 1 261 4 430 3 631
Cash and cash equivalents (16) 20 331 20 331 35 308
Total assets 369 667 369 667 341 365
Equity and liabilities
Equity attributable to holders
of parent 189 246 189 246 171 840
Share capital 2 2 2
Retained earnings 108 171 108 171 91 162
Share premium 80 101 80 101 80 101
Equity-settled share-based
payment reserve 972 972 575
Non-current liabilities 67 059 66 763 76 320
Borrowings (17) 45 342 45 046 54 195
Long-term employee benefits 126 126 252
Deferred tax 21 591 21 591 21 873
Current liabilities 113 362 113 658 93 205
Provisions 250 250 250
Current tax payable 3 3 55
Trade and other payables (15) 88 510 88 510 70 707
Balance due to vendors 1 000 1 000 1 000
Bank overdrafts (16) 13 163 13 163 9 770
Dividends payable 38 38 17
Borrowings (17) 10 398 10 694 11 406
Total equity and liabilities 369 667 369 667 341 365
Abridged consolidated statement of cash flows
28 February 28 February 29 February
2013 2013 2012
Reviewed Audited Audited
R'000 R'000 R'000
Cash flow from operating
activities 7 728 7 524 20 412
Cash generated by operating
activities (18) 36 363 36 118 39 132
Investment revenue 1 956 1 956 884
Finance costs (7 162) (7 162) (5 684)
Dividends paid (7 745) (7 745) (5 088)
Taxation paid (15 684) (15 643) (8 832)
Cash flows from investing
activities (16 111) (15 907) (60 588)
Acquisition of property, plant
and equipment (19) (8 601) (8 600) (2 954)
Acquisition of intangible assets (1 839) (1 839) (2 150)
Proceeds of disposals of
property, plant and equipment 321 322 11
Proceeds on disposal of non-
current assets held for sale 220 - 211
Proceeds on disposal of retail
store - - 1 150
Acquisition of business (20) (3 770) (2 133) (55 000)
Loans advanced (2 442) (5 049) (1 856)
Loans repaid - 1 392 -
Cash flows from financing
activities (9 987) (9 987) 57 771
Decrease in long-term employee
benefits (126) (126) (177)
Proceeds from issue of shares - - 36 960
Loans raised (9 861) 921 20 988
Loans repaid (17) - (10 782) -
Change in cash and cash
equivalents (18 370) (18 370) 17 595
Cash and cash equivalents at
beginning of year 25 538 25 538 7 943
Cash and cash equivalents at end
of year 7 168 7 168 25 538
Abridged consolidated statement of changes in equity
Share Share Total share
capital premium capital
R000 R000 R000
Balance 1 March 2011 2 43 141 43 143
Share-based payment (6) - -
Share issue (9) 36 960 36 960
Dividends paid - -
Comprehensive income for the year - -
Balance 1 March 2012 2 80 101 80 103
Share-based payment (6) - -
Dividends paid - -
Comprehensive income for the year - -
Balance 28 February 2013 2 80 101 80 103
Equity-
settled
share-based
payment Retained
reserve earnings Total
R000 R000 R000
Balance 1 March 2011 176 75 196 118 515
Share-based payment (6) 399 - 399
Share issue (9) - - 36 960
Dividends paid - (5 105) (5 105)
Comprehensive income for the year - 21 071 21 071
Balance 1 March 2012 575 91 162 171 840
Share-based payment (6) 397 - 397
Dividends paid - (7 766) (7 766)
Comprehensive income for the year - 24 775 24 775
Balance 28 February 2013 972 108 171 189 246
Abridged consolidated segment report
Year ended 28 February 2013
Food Food Food
franchise Services Retail
R000 R000 R000
Revenue 131 388 183 681 260
Operating profit/(loss) 30 735 893 (684)
Investment revenue 627 118 -
Finance costs (1 610) (2 312) -
Profit before taxation 29 752 (1 301) (684)
Segment depreciation and
amortisation (2 741) (1 887) -
Segment assets 106 234 73 316 140
Segment liabilities 61 079 54 085 1
Segment capex ** 1 403 7 022 -
Jewellery
franchise and Jewellery
wholesale retail
R000 R000
Revenue 121 484 77 181
Operating profit/(loss) 10 404 18 251
Investment revenue 458 -
Finance costs (2 887) -
Profit before taxation 7 975 18 251
Segment depreciation and amortisation (835) (1 726)
Segment assets 65 683 50 558
Segment liabilities 44 389 932
Segment capex ** 153 -
Inter-
Corporate segment
services revenues Total
R000 R000 R000
Revenue 12 360 (19 923) 506 431
Operating profit/(loss) (16 707) - 42 892
Investment revenue 753 - 1 956
Finance costs (353) - (7 162)
Profit before taxation (16 307) - 37 686
Segment depreciation and
amortisation (1 747) - (8 936)
Segment assets 73 736 - 369 667
Segment liabilities 19 935 - 180 421
Segment capex ** 22 - 8 600
Abridged consolidated segment report
Year ended 29 February 2012
Food Food Food
franchise Services Retail
R000 R000 R000
Revenue 74 965 47 679 2 477
Operating profit/(loss) 22 479 3 577 (628)
Investment revenue 51 90 -
Finance costs (876) (566) -
Profit before taxation 21 654 3 101 (628)
Segment depreciation and
amortisation (1 020) (1 185) -
Segment assets * 99 939 67 553 1 399
Segment liabilities * 68 953 38 353 1
Segment capex ** 283 996 -
Jewellery
franchise and Jewellery
wholesale retail
R000 R000
Revenue 123 946 56 926
Operating profit/(loss) 13 778 9 319
Investment revenue 471 -
Finance costs (3 959) -
Profit before taxation 10 290 9 319
Segment depreciation and amortisation (825) (1 789)
Segment assets * 62 919 36 592
Segment liabilities * 41 823 967
Segment capex ** 347 986
Inter-
Corporate segment
services revenues Total
R000 R000 R000
Revenue 10 287 (12 556) 304 264
Operating profit/(loss) (13 344) - 35 181
Investment revenue 272 - 884
Finance costs (283) - (5 684)
Profit before taxation (13 355) - 30 381
Segment depreciation and
amortisation (1 732) - (6 551)
Segment assets * 72 963 - 341 365
Segment liabilities * 19 428 - 169 525
Segment capex ** 342 - 2 954
* Prior year balances have changed due to the finalisation of the
provisional purchase price allocation for the acquisition of The Fish &
Chip Co. in 2012. See note 20. There has been no effect on income as a
result of these changes.
** The significant capital expenditure incurred during the year is
attributable to the set up and establishment of two distribution depots
within the food services division situated in Cape Town and Gauteng
respectively. The expenditure was funded from internal cash resources.
Notes to the abridged consolidated financial information
1. Reconciliation of headline earnings
Earnings attributable to ordinary
28 February 28 February 29 February
2013 2013 2012
Reviewed Audited Audited
R'000 R'000 R'000
shareholders adjusted for: 24 775 24 775 21 071
Impairment losses 1 226 1 226 491
Profit on sale of property, plant
and equipment and non-current
assets available for sale (120) (120) (165)
Tax effect on headline earnings
adjustments 18 18 24
Headline earnings attributable to
ordinary shareholders 25 899 25 899 21 421
Weighted average shares in issue
('000) (9) 194 161 194 161 172 850
Diluted shares in issue ('000) 201 911 201 911 182 285
Earnings per share (cents) 12.8 12.8 12.2
Diluted earnings per share (cents) 12.3 12.3 11.6
Headline earnings per share
(cents) 13.3 13.3 12.4
Diluted headline earnings per
share (cents) 12.8 12.8 11.8
Dividend paid per share (cents) 4.0 4.0 3.0
2. The 66% increase in revenue for the year ended 28 February 2013 (the
current period, or 2013) when compared to the year ended 29 February
2012 (the prior period or 2012) is due primarily to the increase in
the revenue of the food services division and the acquisition of The Fish
& Chip Co. on 1 February 2012.
In prior periods marketing royalties, which are reimbursements of
marketing costs, have been accounted for as a reimbursement of expenditure
included in operating costs. In terms of IFRS these royalties have been
reclassified to revenue and the related costs to cost of sales.
Comparatives have been adjusted accordingly (see note 21). This
restatement has had no effect on 2012 earnings but has resulted in lower
group margins. The group does not derive a profit/(loss) from these
marketing funds. As per previous years and to the extent that marketing
royalties received are under/(over) spent, a receivable or payable is
recognised in the group statement of financial position. Marketing
royalties included in the revenue in the current period amount to
R41.4 million (2012: R34.6 million).
3. The gross profit increase of 46% is lower than the revenue increase due
to an expected decline in the gross profit margin from 44% in 2012 to 39%
in the current period. This is due to the larger contribution of the food
services division to the group, which trades at a lower gross margin than
the remainder of the group.
4. The increase in operating costs includes the costs associated with the
food distribution business as well as those of The Fish & Chip Co. brand,
as the prior period had only one month of costs included.
5. The operating profit increase of 22% was impacted negatively by
inefficiencies and once-off and establishment costs of a further R2.5
million incurred in the food services division during the start-up phase
of the food distribution business.
6. This expense relates to the Taste share option scheme.
7. The increase in finance costs is mainly as a result of the loan raised
for the acquisition of The Fish & Chip Co. and the restructuring of the
groups total long-term debt into one new loan, payable over five years
from 1 February 2012, at prime interest rate.
8. The effective taxation percentage is 34.3%. The increase from the prior
year is due mainly to an increase in non-deductible expenses, most notably
legal fees.
9. The increase in the number of shares in issue is as a result of the
issue of 24 million ordinary shares to Brimstone Investment Corporation
Limited on 20 January 2012, to partially fund the acquisition of The Fish
& Chip Co.
10. The vast majority of the increase in property, plant and equipment is
due to the capital expenditure incurred during the commissioning of the
Cape Town and Gauteng distribution depots within the food services
division, which expenditure was funded from internal cash resources.
11. Reconciliation of goodwill
28 February 29 February
2013 2012
R'000 R'000
Opening balance 68 669 18 654
Acquisition of business 1 265 50 234
Disposals - (219)
Closing balance 69 934 68 669
12. Other financial assets consist of:
loans made to marketing funds of brands within the group. These loans
attract interest, and are repayable in monthly instalments,
loans to franchised stores. These loans are secured, attract interest
and are repayable in monthly instalments; and
extended payment terms given to certain franchisees.
13. The decline in non-current assets held for sale is as a result of the
impairment of one company-owned food outlet, ownership of which is not a
core strategy.
14. The increase in inventories is mainly due to:
an increase of approximately R18 million in the jewellery segment mainly
as a result of owning/operating nine more corporate stores than at 29
February 2012.
an increase of R5.2 million in the food services division as a result of
the establishment of two food distribution depots in Cape Town and
Gauteng.
15. The changes are due largely to the establishment of the food
distribution business and the increase in inventory as described in note
14 above.
16. Refer to the statement of cash flows for explanation of movements in
cash and cash equivalents.
17. The decrease is due to the repayment of the groups borrowings.
18. During the year the group took the decision to acquire / operate an
additional nine NWJ corporate outlets as well as establish its food
distribution business. As detailed in note 14 above this required an
investment in inventory of R23 million and a resultant total investment in
working capital of R18 million.
19. The group internally funded the capital investment required for the
establishment of its food distribution depots in Gauteng and Cape Town as
well as increasing capacity in its sauce manufacturing business. This
investment amounted to approximately R7 million during the period.
20. Acquisition of business
Acquisition of The Fish & Chip Co.
February Restated February
2012 adjustment 2013
R'000 R'000 R'000
Property, plant and equipment 566 - 566
Intangible assets 20 624 - 20 624
Trade and other receivables 33 129 - 33 129
Contractual amount 50 073 (2 564) 47 509
Estimated non-recoverable amount * (16 944) 2 564 (14 380)
Inventory 1 000 - 1 000
Non-current assets held for sale 200 - 200
Advertising levies (960) - (960)
Trade and other payables (39 018) - (39 018)
Deferred tax (5 775) - (5 775)
Fair value of assets acquired 9 766 - 9 766
Consideration paid (56 000) (4 000) (60 000)
In cash (55 000) - (55 000)
Contingent consideration - (4 000) (4 000)
Balance owed to vendors (1 000) - (1 000)
Goodwill acquired 46 234 4 000 50 234
* while these receivables formed part of the business they were not
included in Taste's valuation of the Fish and Chip Co. business
On 1 February 2012 the group acquired the assets and certain liabilities
of The Fish & Chip Co. Shareholders are referred to the 2012 annual report
for details about the rationale for this acquisition. The purchase price
allocation was provisionally accounted for in the prior year, as permitted
by IFRS 3 Business Combinations, and has now been finalised. As a result,
the goodwill acquired has increased by R4.0 million to R50.2 million due
to the accounting for a contingent consideration in anticipation of The
Fish & Chip Co. legal dispute. The directors consider this information to
be sensitive and accordingly no further disclosure has been made. In
addition to this, the valuation of the trade and other receivables has
been finalised.
Acquisition of jewellery stores
Between August and December 2012, the jewellery division acquired the
assets of five franchised NWJ stores as these stores were located in key
strategic sites. The acquisition consisted of inventory and property,
plant and equipment.
The fair value of assets and liabilities acquired is set out below:
2013
R'000
Property, plant and equipment 992
Inventory 1 513
Fair value of assets acquired 2 505
Consideration paid (3 770)
In cash (2 133)
Balance owed by vendors (1 637)
Goodwill acquired 1 265
The purchase consideration was discharged in cash. During the period that
these five stores were owned/operated by the jewellery division, they
contributed R8.9 million to revenue and R2.5 million to operating profit.
The revenue and operating profit as if these stores were owned for the
full year cannot be disclosed, as complete and compliant financial records
of these stores prior to the dates that the jewellery division acquired
control of these stores could not be obtained.
None of the goodwill recognised is expected to be deductible for tax
purposes (see note 11).
21. Comparatives
The purchase price allocation has been provisionally accounted for in
the prior year as permitted by IFRS 3 Business Combinations and has now
been finalised. As a result the goodwill and trade and other payables
balances have changed (see note 20).
Contributions to marketing funds and the utilisation thereof were
previously presented as recoveries of operating costs. In order to ensure
proper and meaningful understanding of the transactions that have occurred
and interpretation of IFRS, these contributions are now presented in
revenue and the utilisation thereof in cost of sales. As a result, revenue
increased with R34.6 million and the cost of sales increased with R34.6
million (see note 2).
Included in revenue are services provided to franchise owners of a certain
brand to assist with the start-up of their store. In the comparative year,
revenue was presented net of contributions received from the franchise
owners. In order to ensure a proper and more meaningful understanding of
the transactions that have occurred and interpretation of IFRS, revenue
and contributions that represent principal transactions are represented
gross. As a result, revenue increased with R4.4 million and the cost of
sales increased with R4.4 million.
The above changes in presentation have had no effect on the groups
profits, statement of changes in equity or statement of financial position
except for the effect on goodwill and trade and other payables noted
above.
Basis of preparation
The information contained in these abridged consolidated financial
statements has been extracted from the groups 2013 audited annual
financial statements which have been prepared in accordance with the
requirements of the JSE Limited Listings Requirements for abridged
reports, and the requirements of the Companies Act applicable to summary
financial statements. The Listings Requirements require the abridged
financial statements to be prepared in accordance with the conceptual
framework and the measurement and recognition requirements of
International Financial Reporting Standards (IFRS), the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee, and
also, as a minimum, to contain the information required by IAS 34 Interim
Financial Reporting. The accounting policies applied in the preparation of
the consolidated financial statements, from which the abridged
consolidated financial statements were derived, are in terms of IFRS
and are consistent with the accounting policies applied in the
preparation of the previous consolidated annual financial statements.
The new amended standards and interpretations adopted during the current
period had no material impact on the group.
Auditors report
BDO South Africa Inc.s unqualified audit reports on the 2013 group annual
financial statements and the abridged consolidated financial statements
contained herein are available for inspection at the companys registered
office.
Events subsequent to year end
On 12 June 2013 a total of 1 657 325 share options were granted and
accepted in terms of the Taste Holdings Share Trust, at a strike price of
386 cents, of which Evangelos Tsatsarolakis and Duncan John Crosson (who
are executive directors of the company) accepted 475 000 and 577 126 share
options respectively. The directors are not aware of any other matter or
circumstance arising since the end of the year up to the date of this
report.
Dividend to shareholders
The directors declared a dividend on 22 May 2013 of 5.1 cents per ordinary
share, paid on 8 July 2013 to ordinary shareholders recorded in the
companys register at the close of business on 5 July 2013.
Details of annual general meeting
The Annual General Meeting of shareholders of the company will be held on
22 August 2013 at 12:00 at the companys offices, 12 Gemini Street, Linbro
Business Park, Sandton.
The following salient dates apply to the Annual General Meeting:
Record date for determining those shareholders entitled to vote at the
Annual General Meeting. Friday,16 August 2013
Last day for receipt of forms of proxy for the Annual General Meeting
(or they may be handed to the Chairman at the meeting).By 10:00 on Tuesday,
20 August 2013
On behalf of the board
C F Gonzaga E Tsatsarolakis
Chief Executive Officer Financial Director
31 July 2013
Corporate information
Non-executive directors: R L Daly (Chairperson), K Utian, J B Currie, A
Berman, H R Rabinowitz, S Patel, W P van der Merwe
Executive directors: C F Gonzaga (CEO), D J Crosson, L Gonzaga, E
Tsatsarolakis (FD)
Registration number: 2000/002239/06
Registered address: 12 Gemini Street, Linbro Business Park, Sandton 2065
Postal address: 12 Gemini Street, Linbro Business Park, Sandton 2065
Company secretary: M Pretorius
Telephone: (011) 608 1999
Facsimile: 086 696 1270
Transfer secretaries: Computershare Investor Services Proprietary Limited
Sponsor: Vunani Corporate Finance
These results and an overview of Taste are available at
www.tasteholdings.co.za
Date: 31/07/2013 02:11:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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