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RCL FOODS LIMITED - Unaudited group interim results and cash dividend declaration for the six months ended 31 December 2014

Release Date: 18/02/2015 17:15
Code(s): RCL     PDF:  
Wrap Text
Unaudited group interim results and cash dividend declaration for the six months ended 31 December 2014

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

UNAUDITED GROUP INTERIM RESULTS
AND CASH DIVIDEND DECLARATION
for the six months ended 31 December 2014

Financial highlights
                                                              vs comparative
                                                            Actual    Pro forma

Revenue                                                    Up 38.8%      Up 3.7%
Headline EBITDA                                            Up 73.7%     Up 34.5%
Headline earnings per share from continuing operations  Up 1 358.3%     Up 49.6%
                                                                                
Key features

- Restructuring into ONE company is a key enabler for value creation
- Rainbow's HEBITDA improves as new business model takes effect
- TSB results included for the first time in the interim period
- Material adverse impact of industrial action at Foodcorp and Vector
- Positive impact of debt restructuring on headline earnings and cash flows 

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 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 except for the adoption of the amendments to IAS 19 (Employee Benefits),
IAS 32 (Financial Instruments: Presentation), IAS 36 (Impairment of Assets), IAS 39 (Financial Instruments: Recognition
and Measurement), Annual Improvements 2012 and Annual Improvements 2013, which became effective 1 July 2014. The
adoption of these amendments has no effect on the results, nor has it required any restatement of results.

Following a reassessment of Vector's distribution contracts, R288.5 million of inventory relating to Customer Secondary
Distribution (CSD) contracts has been reclassified to other receivables as at 31 December 2013 as the risks and rewards are
not considered to have passed to Vector. There is no earnings impact relating to this change.

The initial accounting for the Foodcorp business combination was based on provisional values as the transaction occurred
on 1 May 2013, resulting in insufficient time to calculate the fair value of all assets and liabilities. The fair values (mainly
intangibles, goodwill and deferred tax) were reassessed at 30 June 2014, and based on additional evidence necessitated a
restatement of the 31 December 2013 reported fair values. There is no earnings impact relating to this reassessment.

Following a reassessment of Foodcorp's trade agreements with its customers, it was concluded that certain allowances
granted to customers that were previously recorded as an expense should be recorded as a reduction of revenue. As a
result, the revenue total for year ended 30 June 2014 and the six months ended 31 December 2013 have been restated. The
restatement has no impact on operating profit or the statement of financial position.

The effect of the above reassessments on the statement of comprehensive income and statement of financial position for
the year ended 30 June 2014 and six months ended 31 December 2013 is as follows:

                                                  R'000       R'000   
                                                30 June      31 Dec   
                                                   2014        2013   
Impact on statement of comprehensive income                           
Decrease in revenue                           (219 123)   (113 263)   
Impact on statement of financial position                             
Decrease in intangible assets                              (77 654)   
Increase in goodwill                                        117 189   
Decrease in inventory                                     (288 515)   
Increase in trade and other receivables                     288 515   
Decrease in deferred income tax liabilities               (123 761)   
Increase in trade and other payables                        163 296   

RCL Foods corporate activity

Pro forma results

As reported in the 2014 year end results announcement, RCL Foods entered into a number of corporate transactions in the
previous financial year, inter alia, the following:

- Acquired the remaining 35.82% minority interest in Foodcorp in two transactions from Foodcorp management (July 2013)
  and Capitau (September 2013);
- Acquired 100% of the issued ordinary shares in TSB effective January 2014;
- Redeemed Foodcorp's Euro denominated debt in November 2013 (10%) and April 2014 (remaining 90%) through cash and
  new rand-based debt;
- Restructured the existing BEE notional vendor financed shareholding and implemented a new BEE transaction; and
- Raised R790.2 million in a pro-rata minority share offer in February 2014.

Due to the material impact of these corporate transactions on the results for the six month period to 31 December 2013, RCL
Foods has concurrently published pro forma results for the comparative period on SENS on 18 February 2015 that aims to
provide shareholders with a better understanding of the underlying operational performance of the Group. The pro forma
results, which are supported by a reporting accountants report, assume that all corporate activity was effectively concluded
on 30 June 2013 which allows:

- 100% of Foodcorp's results to be included;
- Six months of TSB's results to be included;
- A normalised funding cost line by assuming rand based debt which removes the impact of foreign currency losses and the
  bond redemption;
- The inclusion of the recurring IFRS 2 charge relating to the new BEE scheme and exclusion of the charge relating to the old
  scheme; 
- New shares to be in issue for the full six months; and
- Transaction costs associated with the corporate activity to be excluded.

Shareholders are advised to review the published results in conjunction with the pro forma results in order to obtain a
better understanding of the underlying performance. It is the intention of the Board to publish the pro forma results as an
additional comparative in the 2015 financial year. 

By normalising the impact of the corporate transactions, the Group's profit attributable to equity holders of the company
for the six months ended 31 December 2013 improves from a published profit of R13.1 million (earnings per share from
continuing operations 4.8 cents) to a pro forma profit of R384.6 million with an earnings per share of 46.7 cents from
continuing operations.

Operational restructure
Historically, the Group was structured around the statutory companies of Foodcorp, Rainbow, TSB and Vector. In line with
the Group's strategy of operating with a "one company" mindset, the Board resolved to restructure the Group into the
logical business clusters of "Consumer" (which includes Rainbow and Foodcorp's Grocery, Beverage, Pie and Speciality
divisions) and "Sugar & Milling" (which includes TSB, Rainbow's Feed division Epol and Foodcorp's Milling and Baking
divisions). Vector will continue to operate as a stand-alone business, ultimately responsible for all of the Group operations'
route to market.

Whilst the operational restructure was effective 1 January 2015, the management accounting systems required to enable this
reporting will only be implemented for the 2016 financial year and therefore RCL Foods will continue to report its segmental
information on the historical basis for the 2015 financial year.

Replacement of bridging loan subsequent to reporting period
In November 2014, RCL Foods commenced a process to replace the R4.5 billion bridging loan facility from Rand Merchant
Bank with a more appropriate debt structure. This process was completed in January 2015 with cash flow expected by the
end of February 2015.

RCL Foods financial review
The commentary below uses the previously reported statutory information as the comparative.

RCL Foods' revenue for the six months ended December 2014 increased by 38.8% to R12.0 billion, largely due to the inclusion
of six months of TSB's results and improved performance by Rainbow. RCL Foods' headline EBITDA increased by 73.7% from
R688.3 million to R1 195.5 million with the associated margin increasing from 7.9% to 9.9%.

The table below depicts headline EBITDA from both a statutory perspective and adjusted for unrealised gains and losses
on financial instruments used in Rainbow's feed raw material procurement strategy. Reporting (in terms of IAS 39) the
financial effects of certain financial instruments used in the feed procurement strategy introduces volatility to the Group's
financial results. For the period under review, the pre-taxation impact on the Group's results of these unrealised positions is
a positive impact of R110.7 million (2013: positive R34.1 million), being largely related to the increase in the maize price and
the deterioration in the Rand/USD exchange rate.

                             6 months    6 months         
                               31 Dec      31 Dec
                                 2014        2013      Var
Headline EBITDA (Rm)                                     
Statutory                      1 195.5       688.3    73.7%
Pre-IAS 39                     1 084.8       654.2    65.8%
Headline EBITDA margin (%)                               
Statutory                          9.9         7.9      2.0
Pre-IAS 39                         9.0         7.5      1.5
                          
Foodcorp's EBITDA for the period was R344.3 million (a margin of 9.6%), a decrease of 8.5% from the previous period due largely 
to extended industrial action in the Speciality division and difficult trading conditions within the Milling division. Rainbow 
recorded a R463.2 million statutory EBITDA for the period (a margin of 10.0%), up 142.1% from the previous period due largely 
to the implementation of its new business model as well as improved industry factors. TSB delivered an EBITDA of R290.7 million 
at a margin of 9.0%. Vector's results for the period were negatively impacted by industrial action costs resulting in EBITDA 
decreasing by 11.0% to R110.5 million (a margin of 11.2%).

Headline earnings from continuing operations of R601.6 million increased significantly over the comparative period largely
due to the improved performance of Rainbow, the inclusion of TSB and the replacement of the Euro bonds with a rand
based debt package which eliminated the unfavourable mark to market impact.

Impact of TSB acquisition on the statement of financial position
The acquisition of TSB has had a significant impact on the Group's statement of financial position compared to the
comparative period.

Capital expenditure
Capital expenditure for the six month period was R345.5 million (2013: R184.0 million). Major capital expenditure related to
the solvent extraction plant in the Grocery division at Foodcorp, the Molatek expansion project and on going feasibility spend
in Massingir at TSB.  An amount of R147.1 million (2013: R150.0 million) has been contracted and committed, but not spent,
whilst a further R153.3 million (2013: R98.8 million) has been approved, but not contracted. TSB accounts for R52.9 million
and R43.9 million of these values respectively.

Cash flow and working capital
Cash generated by operations declined to R616.7 million (a decrease of 28.1%). The decrease is mainly attributable to an
outflow of working capital resulting from the higher inventory levels that TSB maintains to cover their off crop period from
January to March.

RCL Foods disinvested from its unit trusts held with Nedgroup Investments, which due to its maturity profile is classified as
money market and not as cash and cash equivalents for IFRS purposes despite having 48-hour liquidity, to realign its cash
resources. The cash inflow from investing activities is largely due to the reduction in investment in the money market of
R424.0 million offset by capital expenditure and an additional investment of R45.8 million in Zamhatch Limited.

The reduction in cash outflows from financing activities is due to the inclusion in the prior period of the Foodcorp minority
buyout and the 10% redemption of the Euro bonds.

Return on equity which is calculated on a rolling 12 month basis, increased to a positive 3.8% (2013: negative 0.3%). The low
return is a function of Rainbow's poor performance in the six month period January to June 2014, the redemption of the
Euro bonds in April 2014 and the additional equity arising from the pro-rata minority rights issue in February 2014.

Foodcorp review of operations
Foodcorp had a disappointing trading performance for the six months ended 31 December 2014, albeit in tough trading
conditions.

Revenue from continuing operations for the six months ended 31 December 2014 was R3 786.5 million, a decrease of
2.0% over the comparable period. The decrease in revenue was impacted by a seven week strike at the Speciality division
(R70.3 million) as well as a poor trading performance from the Milling division. The Grocery division performed well despite
a very competitive environment, with Nola and Yum Yum achieving pleasing margins as a result of efficiencies arising
from the newly commissioned Polyethylene Terephthalate (PET) plant. The management changes and focus on the Baking
division has pleasingly translated into an improved performance with the full benefit expected in the second six months of
the financial year.

EBITDA from continuing operations for the six months ended 31 December 2014 was below expectations at
R344.3 million (2013: R376.1 million), translating into a margin of 9.1% (2013: 9.7%).

Disposal of the Fishing division
The Competition Commission had initially approved the proposed acquisition by Oceana Limited of the fishing interests of
Foodcorp, subject to certain divestiture conditions. One of these conditions was not acceptable to the parties. Accordingly,
the parties filed a Request for Consideration with the Competition Tribunal to challenge the condition in question. The
Competition Tribunal upheld the initial Competition Commission finding. The merging parties referred the matter for Appeal,
and the Competition Appeal Court (CAC) approved the transaction subject to a condition that the Glenryck trademark not
form part of the transaction. Both parties have agreed to accept the condition imposed by the CAC. The last conditions
precedent were finalised on 2 February 2015 and the sale will be reflected in the second six months of the 2015 financial year.
The revised purchase price for the Fishing division was R395.0 million (previously R445.0 million) and the proposed sale of
the Glenryck brand, to a third party is well advanced.

Rainbow review of operations
After an extended period of significant pressure in the poultry industry, Rainbow delivered an improved result for the
six months ending 31 December 2014. In addition to a better supply/demand balance in the local market, Rainbow's new
business model is delivering more profitable and consistent results, including an improved operational performance. 

New business model progress
The successful introduction of measures in the second half of the previous financial year to align bird volume and profitable
demand has exceeded initial expectations, resulting in a significant improvement in production mix and a reduced reliance
on pure commodity lines including IndividualIy Quick Frozen (IQF).

Rainbow posted a pre-IAS39 EBITDA of R352.5 million (2013: R157.2 million) and R463.2 million statutory EBITDA (2013:
R191.3 million) for the period. Retail realisations grew primarily as a result of the conscious decision to reduce overall volumes
(9% decrease over the comparable period). It also enabled the elimination of loss making lines. Rainbow has however
delivered strong growth across the Quick Service Restaurant (QSR) customer base, generating a significantly better mix in
the process.

Despite the lower volumes, cost containment across the agricultural and processing operations resulted in production
costs (excluding feed) being similar to the comparable period. Despite the record crops both internationally and locally,
commodity prices over the period were volatile and remained high relative to long-term historic levels. The rand weakened
by 10.6% over the corresponding period and continues to negatively affect feed cost. The total feed cost (R/ton) increased
by 7% year-on-year, partly due to the exchange rate impacted soyameal cost but also as a result of a change in diet density
to drive improved bird performance and lower overall feed consumption. The higher diet specification is in line with the new
business model guidelines.

Maximising retail added value and QSR volumes remain a key focus area for the business with further innovation, strategic
partnering and an increased investment in marketing spend expected to further step-change the mix in the medium to
long-term.

Industry Issues
The industry remains exposed to two critical issues, namely:

- Imports and dumping of leg quarters; and
- Injection cap proposed by government

Despite the increased general import tariff (not affecting the European Union) and the introduction of interim anti-dumping
duties on certain European countries, imports barely slowed in the last three months of the calendar year. The discovery of
Avian Influenza (AI) in Germany, the Netherlands and United Kingdom has extended the restrictions, effectively banning
imports from affected countries for the immediate future.

The interim anti-dumping duties against the affected European countries expired on 1 January 2015 as the International
Trade and Administration Commission of South Africa (ITAC) have not yet completed their investigation. The medium term
risk is that this analysis is not completed before the AI ban is lifted or the duties are not ratified, allowing an increase in the
level of dumped imports. 

Rainbow remains very supportive of the principle of an injection cap and welcomes the aim of the new legislation to ensure
a level playing field and the protection of consumers' best interests. Towards the middle of the prior financial year, the
Department of Agriculture Forestry and Fisheries (DAFF) announced proposed regulations to cap injection at 15% from
March 2015, however with the change in personnel at DAFF, further investigation and time is required by them to assess the
appropriate level of and monitoring process for the injection cap.

Impairment assessment
Rainbow is encouraged by its performance over the past six months and the continued development of the new business
model. The risk of over supply through inadequate protection of the local industry from dumping remains a key hurdle to
the continued recovery. This risk will remain until government makes a final decision on long-term tariffs and anti-dumping
measures. As a result, the RCL Foods Board of directors continue to assess the need for an impairment of assets but are
comfortable that such is not required at this point.

TSB review of operations
TSB's EBITDA for the period was R290.7 million, a margin of 9.0%. In April 2014 an updated sugar tariff based on the new
dollar based reference price of $566/ton was announced (previously $358/ton). A significant decrease in sugar imports has
been evident post implementation of the increased tariff which has contributed to increased sales volumes in the domestic
market. 

During the six months under review TSB produced 450 000 tons of raw sugar compared to 409 000 in the comparative
period. This increase was due to more favourable milling conditions and improved cane supply.

Molatek sales (TSB's feed operation) increased to 171 000 tons compared to 140 000 tons in the comparative period. The
volume increase was enabled by the expansion project which was commissioned during the 2014 financial year.

Greenfields Massingir project
Massingir is TSB's proposed greenfields expansion in Mozambique. The feasibility studies are substantially completed. 
A decision whether to advance the project to financial closure will be taken before the end of the 2015 financial year.
R77.4 million of setup costs relating to the Massingir project are currently recorded in work-in-progress, with a further
R21.9 million committed. 

Vector review of operations
Vector's revenue growth of 14.6% for the six months was pleasing. New revenue was derived from the introduction of the
second sales and merchandising structure (created to support Foodcorp's and TSB's operations) and a new customer
Sea Harvest. Volumes in the Foodservice industry grew and Burger King increased its store footprint during the period,
contributing to Vector's revenue growth. EBITDA however decreased by 11.0% to R110.5 million (2013: R124.2 million) largely
due to the industrial action at the Midrand facility. This resulted in costs of R20.2 million being incurred in an effort to
maintain service levels for its customers and principals along with security initiatives for non-striking staff and business
premises.

Higher wage rate settlements, coupled with the establishment of the second sales and merchandising structure employing
over a thousand new staff, contributed to a significant increase in the cost base. High electricity and fuel costs continue to
affect the distribution sector although the benefits of recent fuel price reductions should become more apparent during the
second half of the year.

Regrettably McCain, one of the larger principals in the Vector network, elected to move just over half of its volume out of
the network during the period. Vector is currently preparing the network for the take-on of new business which, on an
annualised basis, is anticipated to offset the impact of the exit of McCain.

Equity accounted investments
Royal Swaziland Sugar Corporation ("RSSC")
TSB has a 27% shareholding in RSSC, with equity accounted earnings of R104.7 million being reported for the period. RSSC's
results were negatively impacted upon by the downward pressure on sugar prices in the European Union (EU), offset by
improved volumes of sugar and rand based prices as a result of the weakening Lilangeni/Rand exchange rate. The lower EU
prices are expected to continue in the short to medium term.

Senn Foods Logistics
As previously reported, 49% of Senn Foods Logistics was acquired effective 1 May 2014. Due to differing year-end periods,
Vector Logistics has equity accounted five months of Senn Foods Logistics' results in this period. Senn Foods Logistics
performed in line with expectations during the period.

Zambian operations
RCL Foods has a 49% shareholding in Zam Chick Limited ("Zam Chick") in Zambia under joint management control with
Zambeef Products PLC. Due to differing year-end periods, RCL Foods accounts for Zam Chick's results three months in
arrears. Demand for chicken was high in the first six months of the financial year (April to September 2014) with revenue
increasing by 16% over the comparable period. Zam Chick managed to dramatically reduce the volume contribution of
whole birds during this period from 68% in 2013 to 44% in 2014, thus de-commoditising the mix which drives favourable
pricing and higher margins.

Zamhatch Limited, the hatchery and feed milling joint venture operation has progressed well and will place its first parent
stock during March 2015.

Information technology
During this reporting period RCL Foods has continued to optimise the Enterprise Resource Planning (ERP) systems within
the Group. Significant focus has been placed on leveraging the SAP system to drive procurement benefits. Extended focus
has also been placed on the optimisation of the outbound supply chain through the Vector SAP system solutions. A number
of key Foodcorp ERP enhancement projects were completed. Opportunities for future integration and synergies have been
identified within the expanded Group system landscape. The implementation of global best practice processes and shared
services will enable the delivery of further business benefits into the future.

Cash dividend declaration
The directors have resolved to declare an interim gross cash dividend (number 80) of 15.0 cents per share for the six months
ended 31 December 2014 (2013: nil).

The dividend has been declared from income reserves. Dividend tax will amount to 2.25 cents per share and consequently
shareholders, who are not exempt from dividends tax, will receive a net dividend amount of 12.75 cents per share. The
issued share capital as at 18 February 2015 is 929 739 986 ordinary shares. The company's income tax reference number is
9950019712.

The salient dates of the declaration and payment of the interim dividend are as follows:

Last date to trade ordinary shares cum dividend    Friday, 10 April 2015
Ordinary shares trade ex dividend                  Monday, 13 April 2015
Record date                                        Friday, 17 April 2015
Payment date                                       Monday, 20 April 2015

Share certificates may not be dematerialised or rematerialised between Monday, 13 April 2015 and Friday, 17 April 2015 (both
dates inclusive).

Prospects
The operational improvements that RCL Foods has implemented across the different businesses over the past year should
continue to contribute positively to the earnings performance in an environment where economic conditions remain
challenging. The second half of the financial year is a seasonally lower profit period, especially as relates to Rainbow which
enjoys its peak trading in December, and TSB which has the three month off crop from January to March.

The weak state of the South African economy and the devaluation of the rand means a sustainable improvement in consumer
spending is unlikely in the near future. The lower oil price will temper inflationary pressure and contribute to lower fuel and
oil derivative input costs.

The poultry industry's application for long-term anti-dumping duty protection and the timing of government's regulation of
injection remain as uncertainties.

TSB's use of irrigation has meant that its production is largely unaffected by the drought that is affecting the balance of the
sugar industry. TSB has sufficient irrigation resources for the forthcoming sugar season.

The trading outlook for Vector is largely positive with continued CSD and new customer growth anticipated.

The Group continues to explore opportunities in strategic growth markets in the food sector in South Africa and sub-
Saharan Africa in line with its long-term aspirations.

For and on behalf of the Board

JJ Durand                         M Dally
Non-executive Chairman            Chief Executive Officer

18 February 2015
Durban

CORPORATE INFORMATION

RCL Foods Limited
("RCL Foods" or "Group")

Directors: JJ Durand (Non-executive Chairman), M Dally (CEO)*, HJ Carse, RH Field*, PR Louw, NP Mageza, DTV Msibi,
MM Nhlanhla, RV Smither, GM Steyn, GC Zondi.
* Executive Directors

Company secretary: JMJ Maher

Registration number: 1966/004972/06

JSE share code: RCL

ISIN: ZAE000179438

Registered office: RCL Foods Limited, Six The Boulevard, Westway Office Park, Westville, 3629

Transfer secretaries: Computershare Investor Services Proprietary Limited, 70 Marshall Street, Johannesburg 2001

Auditors and reporting accountants: PricewaterhouseCoopers Inc.

Sponsor: RAND MERCHANT BANK (a division of FirstRand Bank Limited)

Bankers: ABSA Bank Limited

Website: www.rclfoods.com

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
                                                                           Restated
                                                                31 Dec       31 Dec      30 June
                                                                  2014         2013         2014
                                                                 R'000        R'000        R'000
ASSETS
Non-current assets
Property, plant and equipment                                5 184 483    3 629 671    5 132 889
Intangible assets                                            2 689 977    2 742 699    2 740 218
Biological assets                                              424 519                   498 803
Investment in joint ventures                                   407 560      131 446      347 819
Investment in associate                                        443 248                   356 013
Deferred income tax asset                                        8 911        4 327        8 678
Long-term loans                                                  1 555                     1 555
Goodwill                                                     3 035 823    3 022 493    3 035 823

                                                            12 196 076    9 530 636   12 121 798
Current assets
Inventories                                                  2 787 326    1 308 500    2 157 236
Biological assets                                              528 100      496 026      538 881
Trade and other receivables                                  3 372 346    2 711 925    3 041 277
Derivative financial instruments                                 6 025      622 721        2 841
Cash and cash equivalents                                    1 395 950    2 207 738    1 047 710
Investment in money market fund                                 22 000      150 000      446 000
Tax receivable                                                     850       31 710       13 907
Assets of disposal group classified as held for sale           446 754      434 243      541 110

                                                             8 559 351    7 962 863    7 788 962

Total assets                                                20 755 427   17 493 499   19 910 760

EQUITY
Capital and reserves                                         9 900 308    6 580 026    9 436 286
LIABILITIES
Non-current liabilities
Deferred income                                                  2 854                     5 153
Interest-bearing liabilities                                   339 076    5 561 682      367 556
Deferred income tax liabilities                              1 438 363    1 269 267    1 362 670
Retirement benefit obligations                                 233 399      173 929      225 776
Trade and other payables                                         8 827       24 398       35 260

                                                             2 022 519    7 029 276    1 996 415
Current liabilities
Trade and other payables                                     3 889 361    3 506 638    3 604 363
Deferred income                                                  4 978                     3 059
Interest-bearing liabilities                                 4 632 512      251 778    4 627 716
Derivative financial instruments                                18 557                    10 389
Current income tax liabilities                                  51 189          148       25 388
Bank overdraft                                                  64 975                    20 993
Liabilities of disposal group classified as held for sale      171 028      125 633      186 151

                                                             8 832 600    3 884 197    8 478 059

Total liabilities                                           10 855 119   10 913 473   10 474 474

Total equity and liabilities                                20 755 427   17 493 499   19 910 760

CONSOLIDATED INCOME STATEMENT
                                                                                   Restated      Pro forma       Restated
                                                                  Six months     Six months     Six months     Year ended
                                                                      31 Dec         31 Dec         31 Dec        30 June
                                                                        2014           2013           2013           2014
Continuing operations                                                  R'000          R'000          R'000          R'000
Revenue                                                           12 029 301      8 669 470     11 595 235     19 500 842

Operating profit before depreciation, amortisation and
impairment (EBITDA)                                                1 206 059        688 277        889 051      1 122 220
Depreciation, amortisation and impairment                          (339 945)      (245 228)      (313 043)      (588 177)
Operating profit                                                     866 114        443 049        576 008        534 043
Finance costs                                                      (202 018)      (437 830)      (219 642)    (1 043 458)
Finance income                                                        30 586         29 884         43 146        148 283
Share of profits of joint ventures                                    18 432          2 491          6 844         16 854
Share of profit/(loss) of associate                                  104 723                       102 080        (6 520)
Profit/(loss) before tax                                             817 837         37 594        508 436      (350 798)
Income tax expense                                                 (223 791)       (17 600)      (130 914)         44 061
Profit/(loss) after tax from continuing operations                   594 046         19 994        377 522      (306 737)
Profit/(loss) for the period from discontinued operation               6 862       (14 301)       (14 301)         29 755
Profit/(loss) for the period                                         600 908          5 693        363 221      (276 982)
Attributable to:
Equity holders of the company                                        612 758         13 096        384 642      (289 039)
Non-controlling interests                                           (11 850)        (7 403)       (21 421)         12 057

HEADLINE EARNINGS
Continuing operations
Profit/(loss) for the period attributable to equity holders of
the company                                                          606 140         27 308        398 854      (318 794)
(Profit)/loss on disposal of property, plant and equipment           (7 624)             42            178        (9 192)
Impairment loss/(reversal)                                             3 101                                      (4 639)
Headline earnings from continuing operations                         601 617         27 350        399 032      (332 625)
Discontinued operation
Profit/(loss) for the period attributable to equity holders of
the company                                                            6 618       (14 212)       (14 212)        29 755
Headline earnings from discontinued operation                          6 618       (14 212)       (14 212)        29 755

                                                                                                 Pro forma
                                                                  Six months     Six months     Six months    Year ended
                                                                      31 Dec         31 Dec         31 Dec       30 June
                                                                        2014           2013           2013          2014
                                                                       Cents          Cents          Cents         Cents
Earnings per share from continuing and discontinued
operation attributable to equity holders of the company
Continuing operations
Basic earnings per share                                                70.6            4.8           46.7        (45.7)
Basic earnings per share – diluted                                      70.4            4.7           46.6        (45.7)
Headline earnings per share                                             70.0            4.8           46.8        (47.7)
Headline earnings per share – diluted                                   69.8            4.7           46.6        (47.7)
Discontinued operation
Basic earnings per share                                                 0.8          (2.5)          (1.7)           4.3
Basic earnings per share – diluted                                       0.8          (2.5)          (1.7)           4.3
Headline earnings per share                                              0.8          (2.5)          (1.7)           4.3
Headline earnings per share – diluted                                    0.8          (2.5)          (1.7)           4.3

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
                                                                                               Pro forma
                                                                Six months      Six months    Six months     Year ended
                                                                    31 Dec          31 Dec        31 Dec        30 June
                                                                      2014            2013          2013           2014
                                                                     R'000           R'000         R'000          R'000
Profit/(loss) for the period                                       600 908           5 693       363 221      (276 982)
Other comprehensive income
Items that will not be reclassified to profit and loss
Remeasurement of retirement medical obligations-net of tax                                                       15 451
Items that may be reclassified subsequently to profit and loss
Cash flow hedges                                                     3 505          2 565                       (1 874)
Currency translation differences                                   (2 059)              6                         3 295
Other comprehensive income for the period net of tax                 1 446          2 571                        16 872

Total comprehensive income for the period                           602 354         8 264         363 221     (260 110)
Total comprehensive income for the period attributable to:
Equity holders of the company                                       614 204        15 667         384 642     (272 167)
Non-controlling interests                                          (11 850)       (7 403)        (21 421)        12 057
                                                                    602 354         8 264         363 221     (260 110)

CONSOLIDATED CASH FLOW INFORMATION
                                                                              Six months     Six months      Year ended
                                                                                  31 Dec         31 Dec         30 June
                                                                                    2014           2013            2014
                                                                                   R'000          R'000           R'000
Operating profit                                                                 866 114        443 049         534 043
Non-cash items                                                                   445 634        247 560         566 739
Operating profit before working capital requirements                           1 311 748        690 609       1 100 782
Working capital requirements                                                   (695 004)        166 889          73 221
Cash generated by operations                                                     616 744        857 498       1 174 003
Net finance cost                                                               (164 427)      (201 824)       (530 549)
Net cashflows from operating activities - discontinued operation                  98 069         42 634          43 918
Tax paid                                                                       (105 134)       (30 398)        (48 921)
Cash available from operating activities                                         445 252       667 910          638 451
Dividend received                                                                 21 948                         27 673
Dividend paid                                                                  (172 576)
Cash inflows/(outflows) from investing activities - continuing operations         47 899        253 367       (487 506)
Cash outflows from investing activities - discontinued operation                (11 288)        (6 449)         (6 556)
Cash outflows from financing activities - continuing operations                 (26 295)    (1 021 824)     (1 455 017)
Cash (outflows)/inflows from financing activities - discontinued operation         (682)          1 543         (3 519)
Net movement in cash and cash equivalents                                        304 258      (105 453)     (1 286 474)
Cash and cash equivalents at the beginning of the period                       1 026 717      2 313 191       2 313 191
Cash and cash equivalents at the end of the period                             1 330 975      2 207 738       1 026 717

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

                                                             Common     Share-               Controlling         Non-
                                   Stated       Other       control      based      Retained    interest  controlling
R'000                              capital   reserves       reserve   payments      earnings       total     interest        Total
Balance at 1 July 2013           5 079 194      1 041                  185 188     1 468 691   6 734 114      311 306    7 045 420
Total comprehensive income for
the period                                      2 571                                 13 096      15 667      (7 403)        8 264
Acquisition of minority interest
in subsidiary                                                                                               (493 085)    (493 085)
BEE share-based payments
charge                                                                   1 693                     1 693                     1 693
Transfer to retained earnings                                                      (189 182)   (189 182)      189 182
Employee share option scheme:
 Proceeds from shares issued         5 033                                                         5 033                     5 033
 Value of employee services                                             12 701                    12 701                    12 701
Balance at 31 December 2013 5 084 227           3 612                  199 582     1 292 605   6 580 026                 6 580 026
Total comprehensive income for
the period                                    (1 150)                              (286 684)   (287 834)       19 460    (268 374)
Acquisition of minority interest
in subsidiary                                                                                                   (184)        (184)
Acquisition of entity under
common control                   4 000 000               (1 919 832)                           2 080 168       42 421    2 122 589
BEE share-based payments
charge                                                                 110 793                   110 793                   110 793
Pro rata issue of shares           790 184                                                       790 184                   790 184
Employee share option scheme:
 Proceeds from shares issued        81 289                                                        81 289                    81 289
 Value of employee services                                             19 963                    19 963                    19 963
Balance at 30 June 2014          9 955 700      2 462    (1 919 832)   330 338    1 005 921    9 374 589      61 697     9 436 286
Total comprehensive income for
the period                                      1 446                               612 758      614 204    (11 850)       602 354
Ordinary dividend paid                                                            (171 763)    (171 763)       (813)     (172 576)
BEE share-based payments
charge                                                                   8 800                     8 800                     8 800
Employee share option scheme:
 Proceeds from shares issued         2 635                                                         2 635                     2 635
 Value of employee services                                             22 809                    22 809                    22 809
Balance at 31 December 2014      9 958 335      3 908    (1 919 832)   361 947    1 446 916    9 851 274      49 034     9 900 308

SUPPLEMENTARY INFORMATION

                                                                      Six months    Six months    Year ended
                                                                          31 Dec        31 Dec       30 June
                                                                            2014          2013          2014
                                                                           R'000         R'000         R'000
Capital expenditure contracted and committed                             147 063       150 054       172 985
Capital expenditure approved but not contracted                          153 306        98 826       200 158
Contingencies                                                             75 000        23 792        75 000
STATISTICS
Statutory ordinary shares in issue (includes BEE shares)   (000's)       929 740       625 799       929 569
Ordinary shares in issue for accounting purposes           (000's)       858 981       574 622       858 810
Weighted average ordinary shares in issue                  (000's)       858 854       574 404       697 988
Diluted weighted average ordinary shares in issue          (000's)       861 345       576 799       697 988
Net asset value per share                                   (cents)      1 152.6       1 145.1       1 098.8
Ordinary dividends per share:
Interim dividend declared                                  (cents)          15.0
Final dividend paid                                        (cents)                                      20.0

SEGMENTAL ANALYSIS
                                                             Restated      Pro forma       Restated
                                            Six months     Six months     Six months     Year ended
                                                31 Dec         31 Dec         31 Dec        30 June
                                                  2014           2013           2013           2014
                                                 R'000          R'000          R'000          R'000

Revenue                                     12 029 301      8 669 470     11 595 235     19 500 842
Foodcorp                                     3 786 479      3 862 876      3 862 876      7 548 878
Rainbow                                      4 629 440      4 413 617      4 413 617      8 732 933
TSB                                          3 219 496                     2 939 318      2 482 052
Vector                                         986 664        861 356        861 356      1 699 903
Sales between segments:
Foodcorp to Rainbow                           (44 497)       (19 210)       (19 210)       (61 981)
Rainbow to Foodcorp                           (36 321)       (16 139)       (16 139)       (51 736)
TSB to Foodcorp                               (26 468)                      (13 553)       (13 552)
TSB to Rainbow                                 (2 357)
Vector to Foodcorp                            (49 855)       (10 081)       (10 081)       (21 495)
Vector to Rainbow                            (425 895)      (422 949)      (422 949)      (814 160)
Vector to TSB                                  (7 385)
Operating profit before depreciation,
amortisation and impairment                  1 206 059        688 277        889 051      1 122 220
Foodcorp                                       344 331        376 128        373 472        720 960
Rainbow                                        463 245        191 308        189 705        203 650
TSB                                            290 687                       203 910        147 483
Vector                                         110 538        124 171        123 429        199 132
Unallocated group costs                        (2 742)        (3 330)        (1 465)      (149 005)
Depreciation, amortisation and impairment    (339 945)      (245 228)      (313 043)      (588 177)
Operating profit/(loss):
Foodcorp                                       206 267        249 437        246 781        455 172
Rainbow                                        355 565         97 705         96 102            622
TSB                                            222 375                       136 095         79 541
Vector                                          85 310         99 237         98 495        149 119
Unallocated group costs                        (3 403)        (3 330)        (1 465)      (150 411)
Operating profit                               866 114        443 049        576 008        534 043
Finance costs                                (202 018)      (437 830)      (219 642)    (1 043 458)
Finance income                                  30 586         29 884         43 146        148 283
Share of profits of joint ventures:
TSB                                             10 151                         4 353          9 327
Vector                                           3 890
Zambian operations                               4 391          2 491          2 491          7 527
Share of profits of joint ventures              18 432          2 491          6 844         16 854
Share of profit/(loss) of associate:
TSB                                            104 723                       102 080         (6 520)
Share of profit/(loss) of associate:           104 723                       102 080         (6 520)
Profit/(loss)before tax                        817 837         37 594        508 436       (350 798)
Date: 18/02/2015 05:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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