To view the PDF file, sign up for a MySharenet subscription.

RHODES FOOD GROUP HOLDINGS LIMITED - Preliminary audited summarised results and cash dividend declaration for the year ended 25 September 2016

Release Date: 21/11/2016 07:05
Code(s): RFG     PDF:  
Wrap Text
Preliminary audited summarised results and cash dividend declaration for the year ended 25 September 2016

Rhodes Food Group Holdings Limited
(Incorporated in the Republic of South Africa)
Registration number: 2012/074392/06
JSE share code: RFG
ISIN: ZAE000191979 

PRELIMINARY SUMMARISED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS AND CASH DIVIDEND DECLARATION
FOR THE YEAR ENDED 25 SEPTEMBER 2016

HIGHLIGHTS
- TURNOVER UP 37.2% TO R4.1 BILLION
- PROFIT AFTER TAX UP 70.7% TO R290 MILLION
- NORMALISED OPERATING PROFIT MARGIN UP 160 bps
- REGIONAL OPERATING MARGIN 10.2%
- INTERNATIONAL OPERATING MARGIN 16.8%
- NORMALISED DILUTED HEPS UP 50.8% TO 126.5 CPS
- DIVIDEND UP 70.0% TO 42.2 CPS

Commentary

Profile
Rhodes Food Group is a leading producer of convenience meal solutions in fresh, frozen and long life product formats,
catering for all consumer income groups. The Group's growing portfolio of market leading brands includes Rhodes, Bull
Brand, Magpie and Squish. These brands are complemented by private label product ranges prepared for major local
and international retailers.

Trading and financial performance
Turnover grew by 37.2% to R4.1 billion (2015: R3.0 billion) through sustained organic growth and the benefit of recent
acquisitions, while international revenue was boosted by Rand weakness during the year.

Regional turnover, which accounted for 73% (2015: 70%) of Group's turnover this year, increased by 43.4%. Fresh
Foods sales increased by 26.5% with particularly strong growth in the pie category. Long Life Foods increased turnover
by 56.7% with juice and canned meat the best performing categories. Sales in Sub-Saharan Africa (excluding South
Africa) increased by 67.3%, with strong performances from juice and canned meat.

International turnover increased by 22.6% as the Rand depreciated by 17.4% in value against the Group's basket of
trading currencies over the past year. Trading in international markets has been difficult, with pricing under pressure in
certain markets, including China.

Acquisitions contributed turnover of R651.3 million in the year, representing 21.5% of the revenue growth. Organic
growth contributed the balance of 15.7% of the overall revenue growth. Pacmar, Boland Pulp, Saint Pie and Deemster
have been consolidated for the full 12 months. General Mills has been included for 10 months and Alibaba Foods for
8 months.

The Group's gross profit margin improved by 140 basis points to 29.3% through improved efficiencies and the currency
tailwinds in the International division. Gross profit increased by 43.9% to R1.2 billion.

Acquisitions increased the cost base by R94.5 million or 16.2%. Overall operating costs were 29.9% higher as the
Group significantly increased its investment in marketing and advertising, and grew headcount and IT infrastructure to
support the organic and acquisitive growth of the business.

The operating margin improved strongly in the second half and increased by 230 basis points to 11.9%, ahead of the
Group's medium-term target of 10%. On a normalised basis (excluding once off listing costs in 2015) the operating
profit margin increased by 160 basis points. This can be attributed mainly to the currency benefit in the international
division, margin expansion in the beverage division and progress with the integration of acquisitions. The regional
operating margin expanded to 10.2%, ahead of the medium-term target, after recovering strongly from 8.0% at half year.

Profit after tax increased by R120.0 million to R289.8 million, with headline earnings for the year 70.0% higher at
R289.7 million.

Diluted headline earnings per share (HEPS) increased by 70.0% from 74.4 cps to 126.5 cps. Normalised diluted HEPS
increased by 50.8% to 126.5 cents, adjusting for listing costs of R21.8 million in the prior period. These results are in
line with the Group's trading statement released on 14 November 2016.

The Group declared a cash dividend of 42.2 cents per share, based on a dividend cover ratio of three times diluted
headline earnings per share. This follows the maiden dividend of 24.8 cents declared for the 2015 financial year.

The Group generated strong cash flows of R292.8 million, an increase of 32.9%. Cash was used to partially fund
acquisitions and capital expenditure, and the Group's net overdraft increased to R189.6 million (2015: R63.8 million).

Capital expenditure of R229 million (2015: R176 million) was invested mainly in upgrading the meat production plant,
increasing production capacity at the fruit juice and fruit products facilities, and commencing the building of a baby
foods factory.

Acquisitions
The Group has continued to pursue its strategy of complementing organic growth by acquiring food producers in aligned
product categories.

The acquisitions of Deemster, General Mills and Alibaba Foods, which were all completed in the first half of the year,
have been successfully integrated and reported stronger second half performances. Through these acquisitions Rhodes
has accelerated its entry into the bottled salads and pickles, bakery products and snacking categories.

After the year-end, the Group announced the acquisitions of Durban-based Pakco, which produces spices, condiments
and instant meals (R200 million), and KwaZulu-Natal-based pie producer Ma Baker (R212 million). These are the
Group's two largest acquisitions to date.

Pakco has a portfolio of strong and well-known brands including Bisto, Southern Coating, Hinds, Trotters and Gold Dish,
and the acquisition will enable Rhodes to enter the dry packed foods market. Ma Baker will strengthen the Group's
position in the growing pie and pastry market, and diversify its customer base and geographic presence. The acquisition
will also enable synergies to be achieved with the snacking and bakery operations of Alibaba and General Mills. Both
acquisitions are subject to due diligence investigations and competition approval.

Outlook
The Group will seek to capitalise on its strong growth momentum by driving organic growth in the Fresh Foods and Long
Life segments, grow brand shares, expand its presence in sub-Saharan Africa and maintain its focus on private label
ranges produced for major retailers.

Export volumes are expected to grow but the currency strength will have an adverse effect on the International segment.

The completion and integration of the Pakco and Ma Baker acquisitions are a priority for the Group. Management
will continue to extract benefits from the other recent acquisitions through new and expanded ranges, and 
product innovation.

The severe drought and water shortages being experienced across the country had an adverse impact on the business
in 2016. These factors remain a risk and could impact on the Group's production costs and volumes in the year ahead
if there is no improvement in climatic conditions.

Capital expenditure of R250 million is planned for 2017 for the continued upgrading of production facilities and ongoing
investment in capacity expansion.

The Group will continue to pursue its strategy of complementing organic growth with value accretive acquisitions. The
Group continually reviews its capital structure and funding needs to ensure it has the necessary capacity to pursue
growth opportunities. This may include accessing the capital markets at an opportune time, should additional capital
raising be deemed appropriate.

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 gross cash dividend of 42.2 cents per share in respect of the year ended
25 September 2016 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 35.87 cents.

Shareholders are advised of the following salient dates in respect of the dividend declaration:

Last day to trade to receive a dividend                 Tuesday, 10 January 2017
Shares commence trading "ex" the dividend             Wednesday, 11 January 2017
Record date                                              Friday, 13 January 2017
Dividend payment to shareholders                         Monday, 16 January 2017

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 Wednesday, 11 January 2017 and Friday,
13 January 2017, both days included.

Summarised consolidated STATEMENT OF FINANCIAL POSITION
as at 25 September 2016
      
                                                                                        2016       2015
                                                                           Notes       R'000      R'000
ASSETS                            
Non-current assets                                                                1 375 909   1 167 896
Property, plant and equipment                                                 2     974 642     785 462
Intangible assets                                                                    81 587      79 908
Goodwill                                                                            287 607     271 775
Biological assets                                                             4      32 073      30 751
                            
Current assets                                                                    1 728 820   1 310 067
Inventory                                                                     3     947 488     694 604
Accounts receivable                                                                 749 378     604 078
Loan receivable                                                                       3 000       2 758
Foreign exchange contract asset                                              5.1     21 925           -
Bank balances and cash on hand                                                        7 029       8 627
                            
Total assets                                                                      3 104 729   2 477 963
                            
EQUITY AND LIABILITIES                            
Capital and reserves                                                              1 253 382   1 018 157
Share capital                                                                       720 205     720 205
Equity-settled employee benefits                                              6       2 773           -
Accumulated profit                                                                  521 597     291 582
Equity attributable to owners of the company                                      1 244 575   1 011 787
Non-controlling interest                                                              8 807       6 370
                            
Non-current liabilities                                                             785 210     692 533
Long-term loans                                                                     687 231     621 773
Deferred taxation liability                                                          83 751      60 993
Employee benefit liability                                                           14 228       9 767
                            
Current liabilities                                                               1 066 137     767 273
Accounts payable and accruals                                                       531 596     430 352
Employee benefits accrual                                                           126 008     114 927
Current portion of long-term loans                                                  152 963     109 775
Taxation payable                                                                     58 918      29 820
Bank overdraft                                                                      196 652      72 448
Foreign exchange contract liability                                          5.1          -       9 951
                            
Total equity and liabilities                                                      3 104 729   2 477 963
                      
Summarised consolidated STATEMENT OF PROFIT OR LOSS OR OTHER COMPREHENSIVE INCOME
for the year ended 25 September 2016      
        
                                                                                     2016          2015
                                                                        Notes       R'000         R'000
Revenue                                                                         4 145 902     3 022 604
Cost of goods sold                                                            (2 932 530)   (2 179 655)
Gross profit                                                                    1 213 372       842 949
Other income                                                                       36 451        28 665
Operating costs                                                                 (756 345)     (582 241)
Profit before interest and taxation                                               493 478       289 373
Interest paid                                                                    (89 066)      (47 256)
Interest received                                                                      13            34
Profit before taxation                                                            404 425       242 151
Taxation                                                                        (114 590)      (72 373)
Profit for the year                                                               289 835       169 778
Profit attributable to:         
Owners of the company                                                             287 398       169 728
Non-controlling interest                                                            2 437            50
                                                                                  289 835       169 778
Other comprehensive income        
Items that will not be reclassified subsequently to profit or                       (622)            99
loss        
Remeasurement of employee benefit liability                                         (857)            77
Deferred taxation effect                                                              235            22
        
Total comprehensive income for the year                                           289 213       169 877
Total comprehensive income attributable to:         
Owners of the company                                                             286 776       169 827
Non-controlling interest                                                            2 437            50
                                                                                  289 213       169 877
        
Earnings per share (cents)                                                          130.6          77.1
Diluted earnings per share (cents)                                                  125.5          74.1
Headline earnings per share (cents)                                       7.1       131.8          77.4
Diluted headline earnings per share (cents)                               7.2       126.5          74.4
Weighted average number of shares in issue ('000)                         7.3     219 875       220 063
Weighted average number of dilutive shares in issue ('000)                7.3     228 967       229 063
  
Summarised consolidated STATEMENT OF CHANGES IN EQUITY
For the year ended 25 September 2016

                                        Equity-settled
                           Share              employee      Accumulated    Non-controlling
                         capital      benefits reserve           profit           interest        Total
                           R'000                 R'000            R'000              R'000        R'000
Balance at 28            150 001                     -          117 567              6 320      273 888
September 2014  
Issue of ordinary        569 891                     -                -                  -      569 891
share capital  
Treasury shares sold         313                     -            4 188                  -        4 501
Total comprehensive            -                     -          169 827                 50      169 877
income for the year  
Balance at 27            720 205                     -          291 582              6 370    1 018 157
September 2015    
    
Total comprehensive            -                     -          286 776              2 437      289 213
income for the year   
Recognition of share-          -                 2 773                -                  -        2 773
based payments     
Treasury shares                -                     -              279                  -          279
dividends received   
Dividend paid                  -                     -         (57 040)                  -     (57 040)
Balance at 25            720 205                 2 773          521 597              8 807    1 253 382
September 2016

Summarised consolidated STATEMENT OF CASH FLOWS
for the year ended 25 September 2016

                                                                                     2016          2015
                                                                                    R'000         R'000
Cash flows from operating activities               
Cash receipts from customers                                                    4 849 840     3 673 521
Cash paid to suppliers and employees                                          (4 557 075)   (3 453 222)
Cash generated from operations                                                    292 765       220 299
               
Net interest paid                                                                (88 613)     (104 557)
Taxation paid                                                                    (63 899)      (64 321)
Net cash inflow from operating activities                                         140 253        51 421
               
Cash flows from investing activities               
Purchase of property, plant and equipment                                       (228 553)     (175 882)
Proceeds on disposal of property, plant and equipment                               6 703           528
Acquisition of subsidiary and businesses less net cash acquired                 (123 110)     (407 796)
Loans receivable advanced                                                           (300)       (1 510)
Loans receivable repaid                                                                58        13 063
Dividends paid                                                                   (57 040)             -
Treasury shares dividend received                                                     279             -
Net cash outflow from investing activities                                      (401 963)     (571 597)
               
Cash flows from financing activities               
Issue of ordinary share capital                                                         -       575 641
Preference shares repaid                                                                -     (156 005)
Loans raised                                                                      219 570       740 867
Loans repaid                                                                     (110 924)    (577 273)
Government grant received                                                          27 262             -
Net cash inflow from financing activities                                         135 908       583 230
Net (decrease)/increase in cash and cash equivalents                             (125 802)       63 054
Cash and cash equivalents at beginning of the year                                (63 821)    (126 875)
Cash and cash equivalents at end of the year                                     (189 623)     (63 821)

Summarised consolidated SEGMENTAL REPORT
for the year ended 25 September 2016

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
                                                                                  2016               2015
                                                                                 R'000              R'000
Regional
   Fresh products sales                                                      1 175 282            928 780
   Long life products sales                                                  1 856 695          1 185 065
                                                                             3 031 977          2 113 845
International
 Long life products sales                                                    1 113 925            908 759
Total                                                                        4 145 902          3 022 604
                                                                                    Segment profit
Regional                                                                       309 948            212 020
International                                                                  186 732            105 372
Total                                                                          496 680            317 392

Listing fees                                                                         -           (21 796)
Acquisition costs                                                              (3 202)            (6 223)
Interest received                                                                   13                 34
Interest paid                                                                 (89 066)           (47 256)
Profit before taxation                                                         404 425            242 151

Segment revenue reported above represents revenue generated from external customers. Intercompany sales amounted
to R561 168 198 (2015: R362 272 405).

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, interest received and interest paid. 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 goodwill) 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.

                                                                                 Non-current assets
                                                                                2016                2015
                                                                               R'000               R'000
Republic of South Africa                                                     973 684             787 174
Kingdom of Swaziland                                                         114 618             108 947
                                                                           1 088 302             896 121

Information regarding major customers
Two customers (2015: 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 25 September 2016

1.   BASIS OF PREPARATION
     Rhodes Food Group Holdings Limited is a company domiciled in the Republic of South Africa. These audited
     summarised consolidated annual financial statements ("preliminary financial statements") as at and for the
     financial year ended 25 September 2016 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 meal solutions.
     These include fresh and frozen ready meals, pastry-based products, canned jams, canned fruits, canned and
     bottled salads and 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 2016 and 2015.

     The preliminary financial statements are an extract from the audited consolidated annual financial statements
     for the year ended 25 September 2016, 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 annual financial statements for the year
     ended 27 September 2015.

     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 R228.554 million (2015: R175.882 million).
     The Group received a government grant for capital expenditure of R27.262 million (2015: Rnil) which was offset
     against the cost incurred.

     Assets with a fair value of R79.253 million (2015: R139.053 million) were acquired through the acquisition of
     the sale assets of Deemster Proprietary Limited, business assets of the Foodservice Operations of General Mills
     Proprietary Limited and business assets and liabilities of Alibaba Foods Holdings Proprietary Limited in the current
     year and Pacmar Proprietary Limited and its subsidiary, the business assets of Saint Pie Proprietary Limited and
     the business assets of Boland Pulp Proprietary Limited and Boland Pulp Property Holdings Proprietary Limited
     in the prior year.

     Assets with a carrying amount of R9.661 million (2015: R1.513 million) were disposed of during the period under
     review. This disposal resulted in a loss of R2.958 million (2015: R0.985 million), which was recognised as part of
     'operating costs' in the consolidated statement of profit or loss and other comprehensive income.

     Assets with a carrying amount of R0.254 million (2015: Rnil) were impaired during the period under review. This
     impairment resulted in a loss of R0.254 million (2015: Rnil), which was recognised as part of 'operating costs' in
     the consolidated statement of profit or loss and other comprehensive income.

     During the year, the Group contracted R170.626 million (2015: R45.729 million) 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 encumbrance
     noted below:

     Rhodes Food Group Proprietary Limited
     A first covering mortgage bond of R14.3 million is registered in favour of Nedbank Limited, over Erf 2950, Erf
     6494 and Erf 10561 in Wellington.

3.   INVENTORY
     The value of the inventory disclosed at net realisable value is R20.145 million (2015: R23.848 million).

                                                                                        2016               2015
                                                                                       R'000              R'000
4.  BIOLOGICAL ASSETS
    Livestock                                                                          8 702              8 521
    Growing crops                                                                     23 371             22 230
                                                                                      32 073             30 751

    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 (2016: average of 53 987 tonnes delivered for a four-year period, 2015: average of 57 083 tonnes
    delivered for a four-year period) and estimated pricing (2016: R1 491 per ton delivered, 2015: R1 277 per ton
    delivered) of pineapples harvested.

                                                                                          2016               2015
                                                                                         R'000              R'000
    Carrying value at the beginning of the year                                         30 751             28 015
    Value of crops harvested                                                          (18 774)           (17 190)
    Additions                                                                           10 012              9 133
    Gain included in profit or loss                                                     10 084             10 793
    Carrying value at the end of the year                                               32 073             30 751

                                                                                          2016               2015
                                                                                         R'000              R'000

5.  FINANCIAL INSTRUMENT AT FAIR VALUE HELD THROUGH PROFIT OR LOSS
    5.1  Foreign exchange contracts
         Contract gain / (loss)                                                         21 925            (9 951)

    5.2  Valuation of financial instrument at fair value held through profit or loss
         Financial instruments at fair value through profit or loss   Level       Valuation technique
         Foreign exchange contracts                                   Level 2     Mark to market rates by issuer of instrument

                                                                                          2016               2015
                                                                                         R'000              R'000

6.  EQUITY-SETTLED EMPLOYEE BENEFITS
    Equity-settled employee benefits granted                                             2 773                  -
    The Rhodes Food Group 2015 Share Plan ("the Plan") is a long-term (share-based) incentive scheme for
    executives and managers of the company and its subsidiaries and was approved by shareholders at the annual
    general meeting on 11 February 2016.

    In December 2015, offers under the Plan were granted to executives and selected managers of the company
    and its subsidiaries. The offers will vest over a three-year period starting from the third and ending on the fifth
    anniversaries of the offers. The offers consist of a weighted combination of the following types of equity-settled
    benefits:

    - Allocations of Share Appreciation Rights (equity settled).
    - Conditional awards of (full value) Performance Shares.
    - Grants of (full value) Restricted Shares.

    Offers of 283 352 Share Appreciation Rights, 191 471 Performance shares and 88 806 Restricted shares were
    granted at a fair value of R7.84, R21.32 and R25.48 respectively. The Share appreciation rights exercise price is
    R24.12. The valuations were derived using the Black Scholes valuation model.

    The fair value of offers granted during the year ended 25 September 2016 was estimated on the date of grant
    using the following assumptions:

    Dividend yield (1%)
    Expected volatility (25%)
    Risk-free interest rate (8.5%)
    Expected life of share offers (3 - 5 years)
    Weighted average share price R23.70

    There has been no movement in options since the commencement of the Plan.

                                                                                          2016                2015
                                                                                         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                                  287 398             169 728
          Adjustments to profit attributable to owners of the parent                     2 313                 709
          Loss on disposal of property, plant and equipment                              2 958                 985
          Impairment of property, plant and equipment                                      254                   -
          Taxation effect                                                                (899)               (276)
    
          Headline earnings                                                            289 711             170 437
          Headline earnings per share (cents)                                            131.8                77.4
          Normalised headline earnings per share (cents)(1), (2)                         131.8                87.4
   
    7.2   Diluted headline earnings per share   
          Headline earnings (R'000)                                                    289 711             170 437
          Diluted headline earnings per share (cents)                                    126.5                74.4
          Normalised diluted headline earnings per share (cents)(1), (2)                 126.5                83.9
   
    7.3   Weighted average number of shares in issue   
          Weighted average number of shares in issue                               221 000 000         171 000 000
          Ordinary shares issued                                                             -          50 000 000
          Treasury shares                                                          (1 125 000)           (937 500)
          Weighted average number of shares in issue                               219 875 000         220 062 500
          Effect of convertible preference shares                                    9 000 000           9 000 000
          Effect of share offers                                                        92 414                   -
          Weighted average number of dilutive shares in issue                      228 967 414         229 062 500

          (1) Normalised headline earnings and normalised diluted headline earning for the 2015 financial year 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) 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 
              25 September 2016.

              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 for
    import and operational activities outstanding at year-end amounted to R5.872 million (2015: R4.733 million).
    There were no other changes in the contingent liabilities during the current financial year.

9.  ACQUISITION OF BUSINESSES AND SUBSIDIARIES 2016
    9.1  Deemster Proprietary Limited
         On 1 October 2015, the Group acquired the business assets of Deemster Proprietary Limited. Deemster
         conducts a canning and bottling business in Bethlehem in the Free State. Its products include canned
         vegetables and bottled salads and pickles such as beetroot and gherkins and as such offers the
         opportunity for the Group to enter into these new categories. It primarily co-packs products for third-party
         brands and produces private label products for most South African retail companies. The board is of the
         opinion that the acquisition presents an attractive investment opportunity which is aligned with the Group's
         strategy to grow through value accretive acquisitions.

         Included in the profit for the period is a profit of R4.609 million attributable to the Deemster operations.
         Revenue for the period includes R63.740 million in respect of this acquisition.

                                                                                                       1 October
                                                                                                            2015
                                                                                                               R
         Assets acquired 
         Property, plant and equipment                                                                    10 000
         Inventory                                                                                        15 020
         Fair value of assets acquired                                                                    25 020
         Employee liabilities                                                                              (419)
         Purchase price - settled in cash                                                               (24 601)
         Goodwill                                                                                              -

    9.2  General Mills Proprietary Limited
         The Group acquired the Foodservice Operations business assets of General Mills South Africa Proprietary
         Limited with effect from 30 November 2015. General Mills manufactures dry and frozen bakery products
         from its operations in Johannesburg. The board is of the opinion that the acquisition presents an attractive
         investment opportunity which is aligned with the Group's strategy to grow through value accretive acquisitions.

         Included in the profit for the period is R4.698 million attributable to the additional business generated by
         General Mills. Revenue for the period includes R49.939 million in respect of this acquisition. The Group
         is unable to quantify the revenue and profit or loss as if the business was acquired at the beginning of the
         financial year due to insufficient information available.
                                                                                                      30 November
                                                                                                             2015
                                                                                                                R
         Assets acquired 
         Property, plant and equipment                                                                     49 253
         Inventory                                                                                          8 628
         Fair value of assets and liabilities                                                              57 881
         Employee liabilities                                                                             (1 372)
         Purchase price - settled in cash                                                                (56 509)
         Goodwill                                                                                               -

    9.3  Alibaba Foods Holdings Proprietary Limited
         On 1 February 2016, the Group acquired the business assets and liabilities of Alibaba Foods Holdings
         Proprietary Limited, for a total cash consideration of R42 million. Alibaba, based in Athlone, Cape Town,
         manufactures a range of halaal Eastern food products. The board is of the opinion that the acquisition
         presents an attractive investment opportunity which is aligned with the Group's strategy to grow through
         value accretive acquisitions.

         The goodwill recognised anticipates the expected future revenues to be derived from expanding the
         Group's existing bakery and snacking operations and thereby strengthening the Group's position in those
         categories, particularly in the convenience channel.

         Included in the profit for the period is a profit of R1.634 million attributable to the Alibaba operations.
         Revenue for the period includes R30.460 million in respect of this acquisition. The Group is unable to
         quantify the revenue and profit or loss as if the business was acquired at the beginning of the financial
         year due to insufficient information available.
                                                                                                       1 February
                                                                                                             2015
                                                                                                                R
         Assets and liability acquired 
         Property, plant and equipment                                                                     20 000
         Intangible assets                                                                                  5 000
         Inventory                                                                                          1 492
         Accounts receivable                                                                                5 281
         Accounts payable and accruals                                                                    (3 931)
         Employee benefit accrual                                                                           (274)
         Deferred taxation liability                                                                      (1 400)
         Fair value of assets and liability acquired                                                       26 168
         Purchase price - settled in cash                                                                (42 000)
         Goodwill                                                                                        (15 832)

10. 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.

11. DIVIDENDS
    On 25 January 2016, a dividend of 24.8 cents per share (total dividend R57.040 million) was paid. The company
    did not pay any dividends during the year ended 27 September 2015.

12. EVENTS SUBSEQUENT TO REPORTING DATE
    The Group entered into the following sale and purchase agreements:

    -  to purchase the share equity and claims of Pakco Proprietary Limited, subject to conditions precedent, for
       R200 million effective from 1 January 2017;
    -  to purchase the share equity and loan claims of Ma Baker Express Proprietary Limited, Ma Baker
       Foods Proprietary Limited, Ma Baker Properties (Pinetown) Proprietary Limited, Ma Baker Properties
       (Pietermaritzburg) Proprietary Limited and Ma Baker Pies Proprietary Limited (collectively the "Ma Baker
       Companies"), subject to conditions precedent, for R212 million effective from five business days after the date
       of fulfilment or waiver of the conditions precedent.

    The board of directors is of the opinion that the 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 not having been finalised.

    The board of directors has declared a gross cash dividend of 42.2 cents per share (2015: 24.8 cents) in respect
    of the year ended 25 September 2016.

    The board of directors is 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 affects the financial
    position of the Group or the results of its operations.

13. APPROVAL OF PRELIMINARY SUMMARISED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS
    The preliminary summarised consolidated annual financial statements were approved by the board of directors
    on 17 November 2016.

14. 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 25 September 2016.
    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)
MR Bower*
BAS Henderson (Chief Executive Officer)
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

Auditors and reporting accountants
Deloitte & Touche

Bruce Henderson 
Chief Executive Officer

Tiaan Schoombie
Chief Financial Officer

Groot Drakenstein
21 November 2016

Sponsor
Rand Merchant Bank, a division of FirstRand Bank Limited











Date: 21/11/2016 07:05:00 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.

Share This Story