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Preliminary audited summarised results and cash dividend declaration for the year ended 27 September 2015
Rhodes Food Group Holdings Limited
(Previously Rhodes Food Group Holdings Proprietary Limited)
(Incorporated in the Republic of South Africa)
Registration number: 2012/074392/06
JSE share code: RFG
ISIN: ZAE000191979
Preliminary audited summarised results and cash dividend declaration for the year ended 27 September 2015
HIGHLIGHTS
- Turnover up 23.7% to R3.0 billion
- Normalised HEPS up 136.9% to 87.4 cents per share
- Profit after tax up 105.9% to R169.8 million
- Maiden dividend 24.8 cents per share
Commentary
Profile
Rhodes Food Group Holdings Limited and its subsidiaries ("the Group") is a leading producer of convenience meal
solutions in fresh, frozen and long life product formats, catering for needs across all consumer income groups. The
Group's growing portfolio of strong brands includes Rhodes, Bull Brand, Magpie, Saint Pie and Puré Squish. These
brands are complemented by private label product ranges prepared for selected local and international retailers.
Rhodes Food Group Holdings Limited listed on the JSE Limited in October 2014.
Financial performance
Turnover for the 12 months ended 27 September 2015 ("the period") increased by 23.7% to R3.0 billion
(2014: R2.4 billion), with strong organic growth in the regional segment which accounted for 70% (2014: 65%) of total
Group turnover.
The international division posted a stronger second half performance, in line with management's guidance, after the
first six months were negatively impacted by a shift in timing of export orders and shipments which normalised over
the course of the year. Turnover also benefited from the 7.3% depreciation in the value of the Rand against the Group's
basket of trading currencies.
The Group's gross profit margin improved by 110 basis points to 27.9% through improved efficiencies in the regional
long life segment. The gross profit increased by 28.9% to R842.9 million. The Group continues to target a gross margin
above 30% in the medium term.
Operating costs, excluding listing expenses of R21.8 million, increased by 29.1% as the Group significantly increased
its investment in marketing and advertising to support its brands and commercial operations. The businesses acquired
during the year increased the cost base by approximately R56 million or 12.9%.
The operating margin was consistent with the prior year at 9.6% and operating profit increased by 22.6% to
R289.4 million. On a normalised basis, excluding listing expenses, the operating margin was 10.3% and the operating
profit R311.2 million.
Profit after tax more than doubled and increased by R87.3 million to R169.8 million, with headline earnings for the
year 109.6% higher at R170.4 million. The effective tax rate at 29.9% (2014: 38.2%) is higher than the SA corporate
tax rate due to the non-deductibility of certain listing costs and transaction costs associated with recent acquisitions.
The tax rate is expected to reduce to be in line with the corporate tax rate of 28% in the 2016 financial year.
Normalised headline earnings per share (HEPS) increased by 136.9% to 87.4 cents, assuming the number of
shares in issue post listing applied in both 2014 and 2015 and adjusting for R21.8 million listing costs in the period.
These results are in line with the Group's trading statement released on 13 November 2015.
Net working capital increased by R261.0 million, including working capital of R120.9 million from the three businesses
acquired by the Group. Trade receivables were R154.0 million higher than the prior year owing to stronger sales growth
in the fourth quarter.
The Group generated strong cash flows of R220.3 million, an increase of R43.9 million over the prior year. The cash
was used to partially fund acquisitions and capital expenditure.
R431.0 million of the listing proceeds were used to settle long-term debt and the related preference share interest
accrual. New loans of R450million were raised to partially fund the acquisitions concluded and capital expenditure in
2015.
The directors have declared a maiden dividend of 24.8 cents per share based on a dividend cover ratio of three times
diluted headline earnings per share.
Capital expenditure was increased significantly to R175.9 million (2014: R87.8 million) as the Group invested in
capacity expansion and enhancing production efficiency. Maintenance capital expenditure accounted for 33% of the
expenditure. Capital expenditure was invested mainly in upgrading warehouse and dispatch capacity
at the fruit production facilities in Tulbagh and Swaziland, upgrading the meat production plant, expanding the pie
production capacity and installing and upgrading generators at several production facilities to minimise the impact of
electricity load shedding.
Trading performance
Regional segment
The regional segment includes business generated in South Africa, which accounts for the majority of the segment,
and 14 other countries in sub-Saharan Africa. Sales in this segment are diversified across the entire product range.
Turnover increased by 32.5% to R2.1 billion with market share gains in key product categories and significant growth
in the relatively new channels of wholesale and sub-Saharan African markets.
Fresh Foods sales increased by 19.5% to R929 million with strong organic growth in the pie category and in its supply
of products to Woolworths.
Long Life Foods grew turnover by 44.8% to R1.2 billion through increased demand for Bull Brand products, canned
fruit and vegetables, and the early contributions from the acquisitions of Pacmar Proprietary Limited ("Pacmar")
(included for six months) and the business assets of Boland Pulp Proprietary Limited ("Boland Pulp") (two months).
Sales in sub-Saharan Africa (excluding SA) increased by 55.2% with strong growth in canned meat.
Operating profit increased by 52.2% to R212.0 million. The turnaround programme at Bull Brand, together with
enhanced production efficiencies at all plants, contributed to the operating margin for the segment improving from
8.7% in the prior year to 10.0%.
The Rhodes brand is the market leader in canned pineapple, tomato paste and jam in glass jars, with number two
positions in canned fruit, canned jams, canned vegetables and canned tomatoes. Bull Brand remains the market leader
in corned meat.
International segment
The international segment exports canned fruit, fruit juice purees and concentrates. The main export markets are
Europe, the Far East, USA, Canada, Australasia, Russia and the Middle East.
International turnover recovered in the second half and ultimately grew by 7.1% for the year, also benefiting from the
weakening of the Rand. Price inflation in Rand terms averaged 8.0%. The effect of the depreciation of the Rand was
neutralised by the Group's hedging policy but the business is well positioned to benefit from the weaker currency in
the 2016 financial year.
Operating profit increased by 9.8% to R105.4 million with the operating margin increasing by 30 basis points to 11.6%.
Acquisitions
The Group aims to complement its organic growth strategy by acquiring food producers in aligned product categories
or those that can facilitate entry into new product categories.
Fruit juice manufacturer and distributor, Pacmar, was acquired with effect from 1 April 2015 and has been successfully
integrated. Shortly before year end the Group launched its Rhodes-branded fruit juice range to a highly favourable
response from major retail and wholesale chains. The acquisition of Pacmar has been the catalyst for this entry into
the fruit juice market.
The business assets of Saint Pie (Pty) Ltd ("Saint Pie"), acquired from 1 June 2015, have been integrated into the
Group's operations, with production centralised at the Johannesburg pie facility and the Saint Pie manufacturing facility
in Lydenburg being closed.
The acquisition of the business assets of Boland Pulp, a producer of fruit and vegetable concentrates and purees, was
effective from 3 August 2015. The operations have been successfully integrated by year end.
The acquisition of the business assets of Deemster (Pty) Ltd ("Deemster"), a vegetable canning and salad bottling
business, was effective from 1 October 2015.
After the end of the reporting period the Group announced two further acquisitions. The first was the Food Service
business assets of General Mills South Africa (Pty) Ltd ("General Mills") which produces dry and frozen bakery
products. The frozen bakery category complements the Group's growing pie and pastries business and good synergies
are expected to arise from the acquisition.
The business assets of Alibaba Food Holdings (Pty) Ltd ("Alibaba") were acquired for R42 million. Alibaba manufactures
halaal Eastern products which are sold to all major South African food retailers, forecourt bakery outlets and independent
traders. Alibaba will strengthen the Group's position in the bakery and snacking category.
Outlook
The Group will continue to drive organic growth through gaining market share in both the Fresh Foods and Long Life
segments, realising the benefits of the ongoing turnaround in Bull Brand and increasing sales in sub-Saharan Africa.
The acquisitions concluded during 2015 will all be earnings accretive from 2016. The two major acquisitions, Pacmar
and Boland Pulp, have both performed well since being integrated and are expected to perform strongly in the 2016
financial year. The acquisition of General Mills is expected to be effective from 30 November 2015 and Alibaba from
1 February 2016.
The business generates strong operating cash flows and has capacity to raise debt to fund capital expenditure and the
acquisitions announced to date. The board may consider additional sources of funding for future investments, including
material acquisitions.
Capital expenditure of R252 million is planned for 2016 for the ongoing investment in capacity expansion and the
upgrading of production facilities.
Any reference to future performance included in this announcement has not been reviewed or reported on by the
auditors.
Declaration of ordinary dividend
The board of directors has declared a maiden gross cash dividend of 24.8 cents per share in respect of the year ended
27 September 2015 for holders of ordinary shares.
The dividend has been declared out of income reserves. A dividend withholding tax of 15% will be applicable to all
shareholders who are not exempt, resulting in a net dividend to these shareholders of 21.08 cents.
Shareholders are advised of the following salient dates in respect of the dividend declaration:
Last day to trade to receive a dividend Friday, 15 January 2016
Shares commence trading "ex" the dividend Monday, 18 January 2016
Record date Friday, 22 January 2016
Dividend payment to shareholders Monday, 25 January 2016
The number of ordinary shares in issue at the date of declaration is 221 000 000.
The company's tax reference number is 9348/292/17/9.
Share certificates may not be dematerialised or rematerialised between Monday, 18 January 2016 and Friday,
22 January 2016, both days included.
SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 27 September 2015
2015 2014
Notes R' 000 R' 000
ASSETS
Non-current assets 1 167 896 744 609
Property, plant and equipment 2 785 462 529 152
Intangible assets 79 908 51 051
Goodwill 271 775 126 325
Biological assets 4 30 751 28 015
Loans receivable – 9 275
Other financial instruments 5.1 – 791
Current assets 1 310 067 936 332
Inventory 3 694 604 542 632
Accounts receivable 604 078 390 029
Loans receivable 2 758 1 941
Bank balances and cash on hand 8 627 1 730
Total assets 2 477 963 1 680 941
EQUITY AND LIABILITIES
Capital and reserves 1 018 157 273 888
Share capital 6 720 205 150 001
Accumulated profit 291 582 117 567
Equity attributable to owners of the company 1 011 787 267 568
Non-controlling interest 6 370 6 320
Non-current liabilities 692 533 741 401
Preference shares 6 – 156 005
Preference shareholders for dividend accrual 6 – 67 228
Long-term loans 621 773 465 434
Deferred taxation liability 60 993 43 603
Employee benefit liability 9 767 9 131
Current liabilities 767 273 665 652
Accounts payable and accruals 430 352 333 113
Employee benefits accrual 114 927 99 275
Current portion of long-term loans 109 775 72 799
Taxation payable 29 820 29 684
Bank overdraft 72 448 128 605
Foreign exchange contract liability 5.2 9 951 2 176
Total equity and liabilities 2 477 963 1 680 941
SUMMARISED CONSOLIDATED STATEMENT OF
PROFIT OR LOSS OR OTHER COMPREHENSIVE INCOME
for the year ended 27 September 2015
2015 2014
Notes R' 000 R' 000
Revenue 3 022 604 2 444 225
Cost of goods sold (2 179 655) (1 790 090)
Gross profit 842 949 654 135
Other income 28 665 15 977
Operating costs (582 241) (433 992)
Profit before interest and taxation 289 373 236 120
Interest paid (47 256) (103 446)
Interest received 34 597
Profit before taxation 242 151 133 271
Taxation (72 373) (50 804)
Profit for the year 169 778 82 467
Profit attributable to:
Owners of the company 169 728 81 898
Non-controlling interest 50 569
169 778 82 467
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss 99 (1 812)
Remeasurement of employee benefit liability 77 (2 783)
Deferred taxation effect 22 971
Total comprehensive income for the year 169 877 80 655
Total comprehensive income attributable to:
Owners of the company 169 827 80 230
Non-controlling interest 50 425
169 877 80 655
Earnings per share (cents) 77.1 47.9
Diluted earnings per share (cents) 74.1 45.5
Headline earnings per share (cents) 7.1 77.4 47.5
Diluted headline earnings per share (cents) 7.2 74.4 45.2
SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 27 September 2015
Non-
Share Accumulated controlling
capital profit interest Total
Notes R' 000 R' 000 R' 000 R' 000
Balance at 29 September 2013 150 001 37 337 5 895 193 233
Total comprehensive income for the year – 80 230 425 80 655
Balance at 28 September 2014 150 001 117 567 6 320 273 888
Issue of ordinary share capital 6 569 891 – – 569 891
Treasury shares sold 6 313 4 188 – 4 501
Total comprehensive income for the year – 169 827 50 169 877
Balance at 27 September 2015 720 205 291 582 6 370 1 018 157
SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 27 September 2015
2015 2014
R' 000 R' 000
Cash flows from operating activities
Cash receipts from customers 3 661 423 2 864 897
Cash paid to suppliers and employees (3 441 124) (2 688 450)
Cash generated from operations 220 299 176 447
Net interest paid (104 557) (38 853)
Taxation paid (64 321) (49 809)
Net cash inflow from operating activities 51 421 87 785
Cash flows from investing activities
Purchase of property, plant and equipment (175 882) (87 763)
Proceeds on disposal of property, plant and equipment 528 859
Acquisition of subsidiaries and businesses less net cash acquired (407 796) –
Loans receivable advanced (1 510) (150)
Loans receivable repaid 13 063 554
Net cash outflow from investing activities (571 597) (86 500)
Cash flows from financing activities
Issue of ordinary share capital 575 641 –
Preference shares repaid (156 005) –
Loans raised 740 867 77 318
Loans repaid (577 273) (98 431)
Net cash inflow/(outflow) from financing activities 583 230 (21 113)
Net increase/(decrease) in cash and cash equivalents 63 054 (19 828)
Cash and cash equivalents at beginning of the year (126 875) (107 047)
Cash and cash equivalents at end of the year (63 821) (126 875)
SUMMARISED CONSOLIDATED SEGMENTAL REPORT
for the year ended 27 September 2015
Products and services from which reportable segments derive their revenues
Information reported to the chief operating decision maker for the purposes of resource allocation and assessment of
segment performance focuses on the types of goods or services delivered or provided, and in respect of the 'regional'
and 'international' operations, the information is further analysed based on the different classes of customers. The
executive management of the Group have chosen to organise the Group around the difference in geographical areas
and operate the business on that basis.
Specifically, the Group's reportable segments under IFRS 8: Operating segments are as follows:
– Regional
– International
Segment revenues and results
The following is an analysis of the Group's revenue and results by reportable segment.
Segment revenue
2015 2014
R' 000 R' 000
Regional
Fresh products sales 928 780 777 213
Long life products sales 1 185 065 818 438
2 113 845 1 595 651
International
Long life products sales 908 759 848 574
Total 3 022 604 2 444 225
Segment profit
2015 2014
R' 000 R' 000
Regional 212 020 139 316
International 105 372 96 004
Total 317 392 235 320
Listing fees (21 796) –
Acquisition costs ( 6 223) –
Other income – 800
Interest received 34 597
Interest paid (47 256) (103 446)
Profit before taxation 242 151 133 271
Segment revenue reported above represents revenue generated from external customers. Inter-company sales
amounted to R362 272 405 (2014: R321 469 319).
The accounting policies of the reportable segments are the same as the Group's accounting policies described in
note 1. Segment profit represents the profit before tax earned by each segment without allocation of listing fees,
acquisition costs, other income, investment income and finance costs. This is the measure reported to the chief
operating decision maker for the purpose of resource allocation and assessment of segment performance.
Geographical information
The Group' s non-current assets by location of operations (excluding financial instruments, goodwill and deferred tax
assets) are detailed below. The chief operating decision maker does not evaluate any other of the Group's assets or
liabilities on a segmental basis for decision making purposes.
2015 2014
R' 000 R' 000
Non-current assets
Republic of South Africa 787 174 542 470
Kingdom of Swaziland 108 947 75 023
896 121 617 493
Information regarding major customers
Two customers (2014: two) individually contributed 10% or more of the Group's revenues arising from both regional
and international sources.
Notes to the SUMMARISED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 27 September 2015
1. BASIS OF PREPARATION
Rhodes Food Group Holdings Limited is a company domiciled in the Republic of South Africa. These summarised
consolidated financial statements ("financial statements") as at and for the financial year ended 27 September
2015 comprise the company and its subsidiaries (together referred to as the "Group"). The main business of
the Group is the manufacturing and marketing of convenience foods. These include fresh and frozen ready
meals, pastry based products, canned jams, canned fruits, canned vegetables, canned meat, fruit purees and
concentrates, juice and juice products and dairy products. There were no major changes in the nature of the
business for the Group during the periods ended September 2015 and 2014.
The preliminary financial statements are an extract from the audited consolidated financial statements for the
year ended 27 September 2015, and have been prepared in accordance with the framework concepts, the
measurement and recognition requirements of International Reporting Standards ("IFRS") and the SAICA
Financial Reporting Guides as issued by the Accounting Practices Committee, the Financial Pronouncement as
issued by the Financial Reporting Standards Council, and the requirements of the Companies Act of South Africa
and the JSE Limited Listings Requirements.
The accounting policies and methods of computation applied in the presentation of the preliminary financial
statements are consistent with those applied in the audited consolidated financial statements for the year ended
28 September 2014.
The preliminary financial statements contain, as a minimum, the information required by IAS 34: Interim Financial
Reporting, and the accounting policies adopted and methods of computation are in accordance with IFRS.
These preliminary financial statements were prepared under the supervision of CC Schoombie, CA (SA), Chief
Financial Officer.
2. PROPERTY, PLANT AND EQUIPMENT
During the year ended the Group acquired assets with a cost of R175 882 717 (2014: R87 763 245).
Assets with a fair value of R139 053 904 were acquired through the acquisition of Pacmar Proprietary Limited and
its subsidiary and the acquisition of the business assets of Saint Pie Proprietary Limited, Boland Pulp Proprietary
Limited and Boland Pulp Property Holdings Proprietary Limited.
Assets with a carrying amount of R1 514 909 (2014: R21 500) were disposed of during the period. This disposal
resulted in a loss of R984 716 (2014: gain of R838 183), which was recognised as part of 'operating costs' (2014:
'other income') in the consolidated statement of profit or loss and other comprehensive income.
During the year, the Group contracted R45 728 751 (2014: R28 247 694) for future capital commitments.
There has been no major change in the nature of property, plant and equipment, the policy regarding the use
thereof, or the encumbrances over the property, plant and equipment, except for the additional encumbrances
noted below:
Swaziland Fruit Canners Proprietary Limited
A third mortgage bond for R25 million, registered in favour of Nedbank (Swaziland) Limited, over certain of the
company's land.
Pacmar Proprietary Limited
A general notarial bond for R90 million, registered in favour of Nedbank Limited, over all moveable assets,
including plant and equipment, inventory and receivables.
Pacmar Properties Proprietary Limited
A first covering mortgage bond for R44 million, registered in favour of Nedbank Limited, over Erf 12912 Wellington.
3. INVENTORY
The value of the inventory disclosed at net realisable value is R23 848 099 (2014: R28 471 013).
2015 2014
R' 000 R' 000
4. BIOLOGICAL ASSETS
Livestock 8 521 8 602
Growing crops 22 230 19 413
30 751 28 015
Measurement of fair value of livestock
The fair values of the livestock have been categorised as level 3 fair values based on the inputs to valuation
techniques used. The valuation technique is based on the fair value less estimated point-of-sale costs of which the
unobservable inputs consist of premiums on the classification of livestock and premiums for quality depending
on the physical attributes of the livestock.
Livestock:
The estimated fair value would increase/(decrease) if:
More/(less) livestock were classified as breeders
Livestock prices increased/(decreased)
Weight and quantity premiums increased/(decreased)
Growing crops
The estimated fair value would increase/(decrease) if:
Pineapple volumes increased/(decreased)
Pineapple prices increased/(decreased)
Costs of growing or harvesting (increased)/decreased
Measurement of fair value of growing crops
The fair values of the pineapple plantations have been categorised as level 3 fair values based on the inputs to
valuation techniques used. The valuation technique is based on the fair value (which approximates market value)
less estimated point-of-sale costs at the point of harvest of which the unobservable inputs consist of estimated
volumes (2015: average of 57 083 tonnes delivered for a four year period, 2014: average of 54 975 tonnes
delivered for a four year period) and estimated pricing (2015: R1 277 per ton delivered, 2014: R1 222 per ton
delivered) of pineapples harvested.
2015 2014
R' 000 R' 000
Carrying value at the beginning of the year 28 015 28 046
Value of crops harvested (17 190) (16 764)
Additions 9 133 8 501
Gain included in profit or loss 10 793 8 232
Net change in fair value 10 793 8 232
Carrying value at the end of the year 30 751 28 015
2015 2014
R' 000 R' 000
5. FINANCIAL INSTRUMENTS AT FAIR VALUE
HELD THROUGH PROFIT OR LOSS
5.1 Other financial instruments
Interest rate swap – not designated in hedge accounting relationship.
Financial asset
Non-current – 791
Current (included in accounts receivable) – 1 173
5.2 Foreign exchange contracts
Contract loss 9 951 2 176
5.3 Valuation of financial instruments at fair value held through profit or loss
Financial instruments Valuation
at fair value through profit or loss Level technique
Interest rate swap Level 2 Mark to market valuation by issuer of instrument
Foreign exchange contracts Level 2 Mark to market valuation by issuer of
instrument
2015 2014
R' 000 R' 000
6. SHARE CAPITAL
Authorised
1 800 000 000 ordinary shares
9 000 000 "A" redeemable convertible preference shares
9 000 000 "B" redeemable convertible preference shares
Issued
221 000 000 (2014: 171 000 000) ordinary shares 713 641 142 500
937 500 treasury shares held by subsidiary (937) –
9 000 000 "A" redeemable convertible preference shares 7 500 7 500
9 000 000 "B" redeemable convertible preference shares 1 1
720 205 150 001
10 000 "A" cumulative redeemable preference shares – 156 005
Preference shareholders for dividend accrual – 67 228
– 223 233
Reconciliation of ordinary and treasury shares in issue:
Ordinary shares at the beginning of year 142 500 142 500
Shares issued on 1 October 2014 571 141 –
Treasury shares held by subsidiary (1 250) –
Treasury shares held by subsidiary sold 313 –
Ordinary and treasury shares at the end of year 712 704 142 500
2015 2014
R' 000 R' 000
7. HEADLINE EARNINGS PER SHARE
7.1 Headline earnings per share
Reconciliation between profit attributable to owners of the parent
and headline earnings:
Profit attributable to owners of the parent 169 728 81 898
Adjustments to profit attributable to owners of the parent 709 (603)
Loss/(profit) on disposal of property, plant and equipment 985 (838)
Taxation effect (276) 235
Headline earnings 170 437 81 295
Headline earnings per share (cents) 77.4 47.5
Normalised headline earnings per share(1) (3) (cents) 87.4 47.5
Normalised headline earnings per share(1) (2) (3) (cents) 87.4 36.9
7.2 Diluted headline earnings per share
Diluted headline earnings per share (cents) 74.4 45.2
Normalised diluted headline earnings per share(1) (3) (cents) 83.9 45.2
Normalised diluted headline earnings per share(1) (2) (3) (cents) 83.9 35.5
7.3 Weighted average number of shares in issue
Weighted average number of shares in issue 171 000 000 171 000 000
Ordinary shares issued 50 000 000 –
Treasury shares (937 500) –
Effect of convertible preference shares 9 000 000 9 000 000
Weighted average number of dilutive shares in issue 229 062 500 180 000 000
Weighted average number of shares in issue assuming the
number of shares in issue post listing applied in 2015
and 2014(2) (3) 220 062 500 220 062 500
Weighted average number of dilutive shares in issue assuming
the number of shares in issue post listing applied in 2015
and 2014(2) (3) 229 062 500 229 062 500
(1) Normalised headline earnings and normalised diluted headline earnings have been adjusted for once-off
listing fees incurred of R21 795 875 (not deductible for taxation purposes), relating to the listing of the
company's issued share capital on the JSE Limited.
(2) On 2 October 2014 the company commenced the listing of its issued share capital on the JSE Limited
which included the listing of 50 000 000 ordinary shares issued. Normalised headline earnings and
normalised diluted headline earnings per share for the period and prior period have been adjusted with
the assumption that these additional shares were issued in both 2015 and 2014.
(3) The pro forma financial information has been prepared for illustrative purposes only to provide information
on how the normalised headline earnings and normalised diluted headline earnings adjustment might
have impacted on the financial results of the Group. Because of its nature, the pro forma financial
information may not be a fair reflection of the Group's results of operation, financial position, changes in
equity or cash flows.
The underlying information used in the preparation of the pro forma financial information has been
prepared using the accounting policies that comply with International Financial Reporting Standards.
These are consistent with the audited consolidated financial statements for the year ended 27 September
2015.
There are no post-balance sheet events which require adjustment to the pro forma information.
The directors are responsible for compiling the pro forma financial information on the basis of the
application criteria specified in the JSE Listings Requirements.
The pro forma financial information should be read in conjunction with the unqualified Deloitte & Touche
independent reporting accountants' report thereon, which is available for inspection at the company's
registered offices (Pniel Road, Groot Drakenstein, 7680), at no charge, during normal business hours.
8. CONTINGENT LIABILITIES
The Group has entered into guarantees, the outcome of which has not been determined.The guarantees from
import and operational activities for the period are R4 733 262 (2014: R7 434 287). Additional contingent
liabilities incurred during 2015 is as follows:
- Suretyship of R90 000 000 for Rhodes Food Group Proprietary Limited banking facilities with Nedbank Limited,
issued by Pacmar Proprietary Limited.
-Suretyship of R44 000 000 for Rhodes Food Group Proprietary Limited banking facilities with Nedbank Limited,
issued by Pacmar Properties Proprietary Limited.
9. ACQUISITION OF SUBSIDIARY
On 1 April 2015 the Group acquired 100% of the shares in Pacmar Proprietary Limited, which holds 100%
of the shares in Pacmar Properties Proprietary Limited, for a total cash consideration of R165 000 000.
The board is of the opinion that the acquisition presents an attractive investment opportunity which is aligned
with the Group's strategy of expanding its business through lateral extensions into product categories adjacent
to its current product ranges. The Group, with its two fruit plants situated in the Western Cape and Swaziland,
respectively, produces an extensive range of fruit purees and juice concentrates which it sells to the international
beverage industry. The acquisition offers a significant opportunity to add further value to these products.
The board is of the view that good synergies will arise from the acquisition and that the Group is well placed to
add value to the Pacmar business.
The Group is unable to quantify the amounts of revenue and profit or loss since the acquisition date as well as the
revenue and profit or loss as if the business was acquired at the beginning of the financial year, because this is
impracticable due to business restructure and integration.
1 April
2015
R' 000
Assets and liabilities acquired
Property, plant and equipment 68 826
Intangible assets 15 520
Inventory 46 976
Accounts receivable 57 603
Bank balance and cash on hand 272
Liabilities (17 953)
Deferred taxation liability (5 477)
Accounts payable and provisions (51 565)
Bank overdraft (43 672)
Fair value of assets and liabilities acquired 70 530
Purchase price (165 000)
Goodwill (94 470)
10. ACQUISITION OF BUSINESSES
10.1 Saint Pie Proprietary Limited
On 1 June 2015 the Group acquired the business assets of Saint Pie Proprietary Limited. The board is of the
opinion that the acquisition presents an attractive investment opportunity which is aligned with the Group's
strategy of expanding its business operations through acquisitions. The Group has a Pies and Pastries facility
based in Aeroton, Gauteng, which produces a range of pastry products under its Magpie brand. In addition to
its Magpie range, the Group produces pies and pastries under private label for Woolworths and Corner Bakery.
The acquisition will enable the Group to extend its pie business operations by adding this additional well
established pie brand. The acquisition will also result in customer and geographic diversification. The board
of the Group is of the view that good synergies will arise from the acquisition.
The Group is unable to quantify the amounts of revenue and profit or loss since the acquisition date as
well as the revenue and profit or loss as if the business was acquired at the beginning of the financial year,
because this is impracticable due to business restructure and integration.
1 June
2015
R' 000
Assets acquired
Property, plant and equipment 6 917
Inventory 1 450
Accounts receivable 2 145
Deposits 260
Bank balance and cash on hand 11
Fair value of assets acquired 10 783
Purchase price (25 907)
Goodwill (15 124)
10.2 Boland Pulp Proprietary Limited and Boland Pulp Property Holdings Proprietary Limited
On 3 August 2015 the Group acquired the business assets of Boland Pulp Proprietary Limited and Boland
Pulp Property Holdings Proprietary Limited. The board of the Group is of the opinion that the acquisitions
present an attractive investment opportunity which is aligned with the Group's strategy of expanding its
business by means of vertical integration and lateral extension into product categories complementary to
its current product ranges.
The Group is unable to quantify the amounts of revenue and profit or loss since the acquisition date as
well as the revenue and profit or loss as if the business was acquired at the beginning of the financial year,
because this is impracticable due to business restructure and integration.
3 August
2015
R' 000
Assets and liability acquired
Property, plant and equipment 63 310
Intangible assets 14 353
Inventory 64 000
Deferred taxation liability (4 019)
Fair value of assets and liability acquired 137 644
Purchase price (173 500)
Goodwill (35 856)
11. RELATED PARTY TRANSACTIONS
During the year the Group entered into related party transactions, the substance of which is similar to those
explained in the audited consolidated annual financial statements.
12. EVENTS SUBSEQUENT TO REPORTING DATE
The Group acquired the business assets of Deemster Proprietary Limited on 1 October 2015 for a purchase price
of R10 million plus trading stock of R15 million.
The Group entered into the following sale and purchase agreements to acquire:
– the Foodservice Operations business assets of General Mills South Africa Proprietary Limited with effect from
30 November 2015. The purchase consideration has not been disclosed due to confidentiality clauses within
the sale and purchase agreement.
– the business assets of Alibaba Foods Holdings Proprietary Limited subject to conditions precedent for
R42 million effective from 1 February 2016.
The board is of the opinion that these acquisitions present attractive investment opportunities which are aligned
with the Group's strategy to grow through value accretive acquisitions.
The acquisition date accounting has not been established on the date of the approval of the financial statements
for the above mentioned acquisitions, due to the valuation of the assets acquired not yet being finalised.
The board of directors has declared a maiden gross cash dividend of 24.8 cents per share in respect of the year
ended 27 September 2015 for holders of ordinary shares.
The directors are not aware of any other matter or circumstance of a material nature arising since the end of the
financial year, otherwise not dealt with in the financial statements, which significantly affect the financial position
of the Group or the results of its operations.
13. APPROVAL OF PRELIMINARY SUMMARISED CONSOLIDATED
FINANCIAL STATEMENTS
The preliminary summarised consolidated financial statements were approved by the Board of directors on
19 November 2015.
14. DIVIDENDS
The company did not declare any dividends during the years ended 27 September 2015 and 28 September 2014
respectively.
15. AUDIT OPINION
These audited preliminary summarised consolidated financial statements have been derived from the consolidated
financial statements and are consistent, in all material respects, with the consolidated financial statements.
The auditors, Deloitte & Touche, have issued unmodified audit opinions on the consolidated financial statements
and on these preliminary summarised consolidated financial statements for the year ended 27 September 2015.
The audit opinion on the consolidated financial statements, together with the consolidated financial statements,
is available for inspection on the Group's website (www.rhodesfoodgroup.com). These reports together with the
auditor's ISAE 3420 report are also available at the Group's registered office (Pniel Road, Groot Drakenstein,
7680), at no charge, during normal business hours.
Registered address
Pniel Road, Groot Drakenstein, 7680
Private Bag X3040, Paarl, 7620
Directors
Dr YG Muthien* (Chairperson)
BAS Henderson (Chief Executive Officer)
MR Bower*
TP Leeuw*
LA Makenete*
CC Schoombie (Chief Financial Officer)
CL Smart**
GJH Willis**
* Independent non-executive
**Non-executive
Company secretary
Statucor Proprietary Limited
Transfer secretaries
Computershare Investor Services Proprietary Limited
70 Marshall Street, Johannesburg 2001
PO Box 61051, Marshalltown 2107
Auditors and reporting accountants
Deloitte & Touche
www.rhodesfoodgroup.com
Bruce Henderson
Chief Executive Officer
Tiaan Schoombie
Chief Financial Officer
Groot Drakenstein
23 November 2015
Sponsor
Rand Merchant Bank, a division of FirstRand Bank Limited
Date: 23/11/2015 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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