Sectors Shares

Rcl Foods Limited - Trading Statement Year Ended June 2017

Release Date: 17/08/2017 14:40
Code(s): RCL
 
Wrap Text
Trading statement – year ended June 2017

RCL FOODS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1966/004972/06)
ISIN: ZAE000179438
Share Code: RCL
(“RCL FOODS" or “the Group”)

TRADING STATEMENT – YEAR ENDED JUNE 2017

Comparison to reported June 2016 results

Shareholders are advised that RCL FOODS expects that its headline
earnings per share (“HEPS”) for the year ended June 2017 is
expected to be between 57.5 cents (-41.6%) and 67.5 cents (-31.5%)
when compared to the reported HEPS of 98.5 cents for the
corresponding year ended June 2016.

Earnings per share (“EPS”) for the year ended June 2017 is
expected to be between 57.0 cents (+133.6%) and 61.0 cents
(+150.0%) when compared to the reported EPS of 24.4 cents for the
corresponding year ended June 2016, largely related to the Milling
impairment in the prior year referred to below.

Restatement of June 2016 results

The prior year results have been restated for the impact of the
change in the accounting standards relating to the treatment of
bearer plants (IAS16 and IAS41), which has reduced the reported
June 2016 HEPS by 2.0 cents and EPS by 3.3 cents.

HEPS for the year ended June 2017 is expected to be between 57.5
cents (-40.4%) and 67.5 cents (-30.1%) when compared to the
restated HEPS of 96.5 cents for the corresponding year ended June
2016.

EPS for the year ended June 2017 is expected to be between 57.0
cents (+170.1%) and 61.0 cents (+189.1%) when compared to the
restated EPS of 21.1 cents for the corresponding year ended June
2016.

Material once-off items

The financial results have been impacted by material once-off
items in both the current and corresponding period, further
details of which will be included in our results announcement to
be released on SENS on 29 August 2017. These items relate to:

  •   Impairments in the current period of R123,8 million (post
      tax) in the Chicken business unit relating to redundant plant
      and equipment identified as part of the decision to reduce
      commodity chicken volumes and from the related decision to
      dispose of the Tzaneen chicken operation. The impairments are
      excluded from HEPS, whilst the impact on EPS is a negative
      14.3 cents;

  •   The recognition in the current period of R37,4 million (post
      tax) in restructuring costs and fair value adjustments on
      biological assets, also associated with the decision to
      reduce chicken volumes. The impact on HEPS and EPS is a
      negative 4.3 cents;

  •   An insurance receipt in the current period relating to the
      Pongola silo which was damaged in July 2015, with R84,8
      million (post tax) related to the the assets portion of the
      claim and R20,8 million (post tax) relating to prior year
      business interruption. The impact on HEPS is a positive 2.4
      cents and a positive 12.2 cents on EPS;

  •   A foreign exchange loss of R27,9 million relating to the
      settlement of the Zam Chick Ltd ("Zam Chick") and Zamhatch
      Ltd ("Zamhatch") options in the current year, with the prior
      year including a R67,7 million gain (R118,9 million headline
      earnings gain) related to the accounting for the exercise of
      the options. The impact on EPS and HEPS for the year ended
      June 2017 was a negative 3.2 cents. The impact on HEPS and
      EPS for the corresponding year ended June 2016 was a positive
      13.8 cents and 7.8 cents respectively;

  •   The release of a R163,3 million provision in the prior year
      for uncertain taxation disputes raised as part of the
      Foodcorp acquisition. The impact on HEPS and EPS in the June
      2016 results was a positive 18.9 cents;

  •   An impairment loss in the prior year of R568,5 million (post
      tax) relating to the Milling operation in the Sugar & Milling
      division. The impairment is excluded from HEPS, whilst the
      impact on EPS in the June 2016 results was a negative 65.9
      cents.

Excluding the above once-off items, normalised HEPS for the year
ended June 2017 is expected to be between 64.0 cents (+0.3%) and
74.0 cents (+16.0%) when compared to the restated normalised HEPS
of 63.8 cents for the year ended June 2016.

The improvement in the underlying results over the corresponding
year is attributable to the recovery in the Sugar business unit on
the back of the higher industry pricing and better channel mix, as
well as the turnaround within the Millbake business unit with the
Gauteng bakeries returning to profitability.

As previously announced, RCL FOODS downsized its Chicken business
unit to restore its profitability by limiting production of
consequential commodity products. From 1 Februay 2017 the Chicken
business unit’s Hammarsdale operation was reduced to a single
shift, thereby eliminating a portion of loss making IQF
(Individually Quick Frozen) product. The new business model has
shown positive early results, with the Chicken business unit
expected to report an EBITDA profit for the year, after posting a
trading loss in the interim results to December 2016.

The Group’s financial results for the year ended June 2017 are
expected to be released on SENS on 29 August 2017.

The financial information on which this trading statement is based
has not been reviewed and reported on by the Group’s external
auditors.

Durban
17 August 2017


Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)

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