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Preliminary audited summarised consolidated results and cash dividend declaration for the year ended 1 October 2017
RHODES FOOD GROUP HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 2012/074392/06
JSE share code: RFG
ISIN: ZAE000191979
PRELIMINARY AUDITED SUMMARISED CONSOLIDATED RESULTS AND CASH DIVIDEND DECLARATION
FOR THE YEAR ENDED 1 OCTOBER 2017
KEY FEATURES
GROUP TURNOVER
UP 10.8%
TO R4.6 BILLION
REGIONAL TURNOVER
UP 21.4%
INTERNATIONAL TURNOVER
DOWN 18.1%
HEADLINE EARNINGS
19.1% LOWER
AT R237 MILLION
DILUTED HEPS*
27% DOWN
AT 93.4 CENTS
DIVIDEND
OF 31.1cps
Pakco and Ma Baker acquisitions
successfully integrated
* Impacted by increase in weighted average number of shares
COMMENTARY
PROFILE
Rhodes Food Group is a leading producer of fresh, frozen and long life convenience meal solutions for customers and consumers across South
Africa, sub-Saharan Africa and major global markets. The growing portfolio of market leading brands, which includes Rhodes, Bull Brand, Magpie,
Squish, Bisto, Hinds and Pakco, is complemented by private label product ranges packed for major South African and international retailers.
TRADING AND FINANCIAL PERFORMANCE
Group turnover increased by 10.8% to R4.6 billion with strong growth in the regional segment (South Africa and sub-Saharan Africa) and lower
international revenue. The regional segment accounted for 80% (2016: 73%) of group revenue.
Regional turnover increased by 21.4%, with organic growth of 12.7%. The group's two largest acquisitions to date, namely Pakco and Ma Baker,
have been consolidated for six months in the year and contributed combined turnover of R230 million.
- Fresh Foods sales increased by 30.1% (16.0% organic growth) with continued excellent growth in the pie category across all sales channels
and good growth in ready meals.
- Long Life Foods increased turnover by 15.9% (10.6% organic growth) with volume growth and market share gains in key product categories.
Sales in sub-Saharan Africa (excluding South Africa) increased by 46.8%, driven by robust customer demand for canned meat and fruit juice.
International turnover declined by 18.1% owing to the combined impact of the strengthening Rand in comparison to the prior year, significantly
reduced global demand for industrial pulp and puree products, foreign pricing pressure and increasing costs on canned fruit as a result of the
drought in the Western Cape.
The group's gross profit margin was lower at 27.0% (2016: 29.3%) due mainly to the currency impact and slower sales in the International
division, although the margin in the regional segment strengthened for the year.
Operating costs, excluding the impact of the two acquisitions, grew by 10.5%. Expense growth reflects the higher depreciation charge from the
increased level of capital expenditure in the past two years. Total operating costs increased by 17.8%.
The group operating margin declined from 12.0% to 8.9%. The regional operating margin improved in the second half of the year relative to
the first half but was lower for the full year at 9.6% (2016: 10.3%) owing to the tough consumer environment, particularly in the lower income
consumer market, and dilution from the recent acquisitions. The strengthening currency, lower pricing, reduced volumes and increased product
costs contributed to the international margin declining to 6.3% (2016: 17.1%), with the canned fruit margin being maintained close to the group
margin and industrial products reporting a loss for the year.
The gains in the regional segment were offset by the reduction in international profitability which resulted in group profit after tax declining by 20%
to R234.8 million. Headline earnings were 19.1% lower at R237.0 million. Diluted headline earnings per share (HEPS) decreased by 27.0% to
93.4 cents, in line with the trading statement issued on 30 October 2017. The weighted average number of dilutive shares in issue has increased
by 24.7 million or 10.8% over the prior year, mainly due to the issue of shares for the capital raise undertaken in November 2016 (refer below) and
the acquisition of Pakco effective March 2017.
A cash dividend of 31.1 cents per share has been declared, based on the group's dividend cover policy of three times diluted HEPS.
Net working capital, excluding the take-on balances of Ma Baker and Pakco, increased by R214.0 million owing primarily to the 14.8% increase in
inventory arising from higher regional sales activity, increased prices and the slower than expected export sales.
The group generated strong cash flows of R347.1 million which were R44.9 million higher than the previous year. The group raised net equity
capital of R648 million through the issue of 25 million shares in an accelerated book build in November 2016. The proceeds of the book build
have been applied to funding capital expenditure as well as the acquisition of Ma Baker. The group's net debt to equity ratio improved to 48.0%
(2016: 81.9%). The net overdraft at year-end reduced to R153.8 million (2016: R189.6 million).
Capital investment was increased to R487 million (2016: R238 million). Projects undertaken during the year included the completion of the meat
production plant upgrade, increasing production capacity at the fruit juice, fruit products, vegetable and pie facilities, the completion of the flexible
packaging and baby foods factory at Groot Drakenstein, and production capacity expansion and efficiency improvement projects at Pakco and
Ma Baker.
OUTLOOK
The focus in the regional segment in the year ahead will be to drive organic growth, maximise benefits from the recent acquisitions, grow brand
shares and capitalise on the current sales momentum in sub-Saharan Africa.
While the regional margin will remain under pressure in the short term due to the current constrained consumer environment, it is expected to
show sustained improvement in the medium term as the margins of the recently acquired businesses improve.
Following the completion of the Pakco and Ma Baker integration programmes, the focus in the year ahead will be on brand architecture, product
upgrades and improved distribution. Both businesses are expected to be earnings accretive in the 2018 financial year.
While the outlook for the international canned fruit market is positive, the continued drought in the Western Cape is expected to adversely impact
input costs owing to poorer quality fruit, which will give rise to lower yields and higher labour costs.
The market for industrial fruit products (fruit pulps and juice concentrates) remains weak, but fruit raw material prices are expected to decline.
Currently approximately 20% of industrial products are used internally and the balance is exported or sold regionally. Management plans to
increase the internal usage of these products to around 50% in the short term and up to 70% in the medium term, primarily in the fruit juice
operation. This will result in reduced international revenue but increased regional revenue and margin.
Capital investment of R350 million is planned for the new year with the major projects including the consolidation of certain production facilities
acquired through recent acquisitions, capacity expansion at the pie and bakery facilities, and the installation of a clear juice concentrate plant at
the Groot Drakenstein production hub to further vertically integrate the fruit juice operation.
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 dividend of 31.1 cents per share in respect of the year ended 1 October 2017 for holders of
ordinary shares.
The dividend has been declared out of income reserves. A dividend withholding tax of 20% will be applicable to all shareholders who are not
exempt, resulting in a net dividend to these shareholders of 24.88 cents.
Shareholders are advised of the following salient dates in respect of the dividend declaration:
Last day to trade to receive a dividend Tuesday, 9 January 2018
Shares commence trading "ex" Wednesday, 10 January 2018
the dividend
Record date Friday, 12 January 2018
Dividend payment to shareholders Monday, 15 January 2018
The number of ordinary shares in issue at the date of declaration is 253 762 018.
The company's tax reference number is 9348/292/17/9.
Share certificates may not be dematerialised or rematerialised between Wednesday 10, January 2018 and Friday, 12 January 2018, both
days included.
SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 1 October 2017
Restated* Restated*
Audited Audited Audited
2017 2016 2015
Notes R'000 R'000 R'000
ASSETS
Non-current assets 2 145 186 1 364 722 1 153 769
Property, plant and equipment 2 1 460 493 986 826 793 565
Intangible assets 207 282 81 587 79 908
Goodwill 457 183 287 607 271 775
Deferred taxation asset 9 294 - -
Biological assets 10 664 8 702 8 521
Loan receivable 270 - -
Current assets 1 964 903 1 744 857 1 324 194
Inventory 3 1 144 080 947 488 694 604
Accounts receivable 767 679 749 378 604 078
Biological assets 10 553 16 037 14 127
Loans receivable 6 170 3 000 2 758
Foreign exchange contract asset - 21 925 -
Taxation receivable 32 193 - -
Bank balances and cash on hand 4 228 7 029 8 627
Total assets 4 110 089 3 109 579 2 477 963
EQUITY AND LIABILITIES
Capital and reserves 2 235 865 1 256 898 1 018 157
Share capital 4 1 565 509 720 205 720 205
Equity-settled employee benefits 8 779 2 773 -
Accumulated profit 652 326 524 948 291 582
Equity attributable to owners of the company 2 226 614 1 247 926 1 011 787
Non-controlling interest 9 251 8 972 6 370
Non-current liabilities 877 883 786 544 692 533
Long-term loans 700 407 687 231 621 773
Deferred taxation liability 161 711 85 085 60 993
Employee benefit liability 15 765 14 228 9 767
Current liabilities 996 341 1 066 137 767 273
Accounts payable and accruals 534 590 531 596 430 352
Employee benefits accrual 75 324 126 008 114 927
Current portion of long-term loans 218 831 152 963 109 775
Taxation payable 2 732 58 918 29 820
Bank overdraft 158 077 196 652 72 448
Foreign exchange contract liability 6 787 - 9 951
Total equity and liabilities 4 110 089 3 109 579 2 477 963
*Refer to note 8.
SUMMARISED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
for the year ended 1 October 2017
Restated*
Audited Audited
2017 2016
R'000 R'000
Revenue 4 593 317 4 145 902
Cost of goods sold (3 355 146) (2 932 530)
Gross profit 1 238 171 1 213 372
Other income 54 480 37 221
Operating costs (885 844) (752 265)
Profit before interest and taxation 406 807 498 328
Interest paid (84 836) (89 066)
Interest received 386 13
Profit before taxation 322 357 409 275
Taxation (87 566) (115 924)
Profit for the year 234 791 293 351
Profit attributable to:
Owners of the company 234 512 290 749
Non-controlling interest 279 2 602
234 791 293 351
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss 1 (622)
Remeasurement of employee benefit liability 2 (857)
Deferred taxation effect (1) 235
Total comprehensive income for the year 234 792 292 729
Total comprehensive income attributable to:
Owners of the company 234 513 290 127
Non-controlling interest 279 2 602
234 792 292 729
Earnings per share (cents) 95.9 132.1
Diluted earnings per share (cents) 92.4 127.0
*Refer to note 8.
SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 1 October 2017
Equity-settled
Share employee Accumulated Non-controlling
capital benefits profit interest Total
Note R'000 R'000 R'000 R'000 R'000
Balance at 27 September 2015 720 205 - 291 582 6 370 1 018 157
Total comprehensive income for the
year (restated)* - - 290 127 2 602 292 729
Recognition of share-based payments - 2 773 - - 2 773
Treasury shares dividend received - - 279 - 279
Dividend paid - - (57 040) - (57 040)
Balance at 25 September 2016 (restated)* 720 205 2 773 524 948 8 972 1 256 898
Issue of ordinary share capital 4 845 304 - - - 845 304
Total comprehensive income for the year - - 234 513 279 234 792
Recognition of share-based payments - 6 006 - - 6 006
Treasury shares dividend received - - 475 - 475
Dividend paid - - (107 610) - (107 610)
Balance at 1 October 1 565 509 8 779 652 326 9 251 2 235 865
*Refer to note 8.
SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 1 October 2017
Restated*
Audited Audited
2017 2016
Note R'000 R'000
Cash flows from operating activities
Cash receipts from customers 5 263 596 4 849 840
Cash paid to suppliers and employees (4 916 482) (4 547 577)
Cash generated from operations 347 114 302 263
Net interest paid (86 150) (88 613)
Taxation paid (139 023) (63 899)
Net cash inflow from operating activities 121 941 149 751
Cash flows from investing activities
Purchase of property, plant and equipment (486 946) (238 051)
Proceeds on disposal of property, plant and equipment 1 478 6 703
Acquisition of subsidiary and businesses less net cash acquired 7 (207 297) (123 110)
Loans receivable advanced (3 732) (300)
Loans receivable repaid 1 471 58
Dividends paid (107 610) (57 040)
Treasury shares dividend received 475 279
Net cash outflow from investing activities (802 161) (411 461)
Cash flows from financing activities
Issue of ordinary share capital 648 304 -
Loans raised 621 000 219 570
Loans repaid (556 742) (110 924)
Government grant received 3 432 27 262
Net cash inflow from financing activities 715 994 135 908
Net increase/(decrease) in cash and cash equivalents 35 774 (125 802)
Cash and cash equivalents at beginning of the year (189 623) (63 821)
Cash and cash equivalents at end of the year (153 849) (189 623)
*Refer to note 8.
SUMMARISED CONSOLIDATED SEGMENTAL REPORT
for the year ended 1 October 2017
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
Restated*
Audited Audited
2017 2016
R'000 R'000
Regional
Fresh products sales 1 529 291 1 175 282
Long life products sales 2 151 307 1 856 695
3 680 598 3 031 977
International
Long life products sales 912 719 1 113 925
Total 4 593 317 4 145 902
Segment profit
Regional 358 254 311 440
International 57 553 190 090
Total 415 807 501 530
Impairment loss (3 321) -
Acquisition costs (5 679) (3 202)
Interest received 386 13
Interest paid (84 836) (89 066)
Profit before taxation 322 357 409 275
Segment revenue reported above represents revenue generated from external customers. Intercompany sales amounted to R541.821 million
(2016: R561.168 million).
Included in the regional and international operating profit is depreciation of R92.435 million (2016: R64.137 million) and R18.113 million (2016:
R22.729 million) respectively and amortisation of R5.791 million (2016: R2.688 million) and R0.748 million (2016: R0.633 million) respectively.
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 impairment losses, 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 and deferred taxation asset) and revenue 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
Restated*
Audited Audited
2017 2016
R'000 R'000
Republic of South Africa 1 558 125 973 684
Kingdom of Swaziland 129 878 103 431
1 688 003 1 077 115
Revenue
Audited Audited
2017 2016
R'000 R'000
Republic of South Africa 4 472 594 3 935 282
Kingdom of Swaziland 120 723 210 620
4 593 317 4 145 902
INFORMATION REGARDING MAJOR CUSTOMERS
Two customers (2016: two) individually contributed 10% or more of the Group's revenues arising from both regional and international sources.
*Refer to note 8.
NOTES TO THE SUMMARISED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 1 October 2017
1. BASIS OF PREPARATION
Rhodes Food Group Holdings Limited is a company domiciled in the Republic of South Africa. These audited summarised consolidated
financial statements ("preliminary financial statements") as at and for the financial year ended 1 October 2017 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, dairy products and dry packed foods. There were no
major changes in the nature of the business for the Group during the periods ended September 2017 and 2016.
The preliminary financial statements are an extract from the audited consolidated financial statements for the year ended 1 October 2017,
and have been prepared in accordance with the framework concepts, the measurement and recognition requirements of International
Financial 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 preliminary financial statements contain, as a minimum, the information required by
IAS 34: Interim Financial Reporting.
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 25 September 2016, except for the mandatory
amendments to IAS 41: Agriculture. Therefor the prior years financial results have been restated for the effect of this amendment.
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 following transactions accounted for the movement in the property, plant and equipment balance:
Opening Acquisition of Government Closing
balance subsidiaries Additions grant received Disposals Impairment balance
COST R'000 R'000 R'000 R'000 R'000 R'000 R'000
2017 1 197 797 105 644 486 946 (3 432) (17 788) (3 872) 1 765 295
2016 - Restated 938 330 79 253 238 051 (27 262) (29 446) (1 129) 1 197 797
Opening Closing
balance Depreciation Disposals Impairment balance
ACCUMULATED DEPRECIATION R'000 R'000 R'000 R'000 R'000
2017 210 971 110 548 (16 166) (551) 304 802
2016 - Restated 144 765 86 866 (19 785) (875) 210 971
Opening Closing
balance balance
NET ASSET VALUE R'000 R'000
2017 986 826 1 460 493
2016 - Restated 793 565 986 826
The disposal and impairment of property, plant and equipment resulted in a loss of R0.144 million (2016: R2.958 million) and R3.321 million
(2016: R0.254 million) respectively which were recognised as part of 'operating costs' in the consolidated statement of profit or loss and
other comprehensive income.
During the year, the Group contracted R264.664 million (2016: R170.626 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.
3. INVENTORY
The value of the inventory disclosed at net realisable value is R74.879 million (2016: R20.145 million).
4. SHARE CAPITAL
On 29 November 2016 the company raised net capital of R648.304 million through the private placement of 25 million ordinary shares.
A further 7.762 million shares were issued on 22 March 2017 in order to settle the full purchase price of R197.000 million for the acquisition
of Pakco Proprietary Limited.
5. HEADLINE EARNINGS PER SHARE
Restated
2017 2016
R'000 R'000
5.1 HEADLINE EARNINGS PER SHARE
Reconciliation between profit attributable to owners of the parent and headline earnings:
Profit attributable to owners of the parent 234 512 290 749
Adjustments to profit attributable to owners of the parent 2 495 2 313
Loss on disposal of property, plant and equipment 144 2 958
Impairment of property, plant and equipment 3 321 254
Taxation effect (970) (899)
Headline earnings 237 007 293 062
Headline earnings per share (cents) 96.9 133.3
5.2 DILUTED HEADLINE EARNINGS PER SHARE
Headline earnings 237 007 293 062
Diluted headline earnings per share (cents) 93.4 128.0
5.3 WEIGHTED AVERAGE NUMBER OF SHARES IN ISSUE
Weighted average number of shares in issue 221 000 000 221 000 000
Ordinary shares issued 24 657 869 -
Treasury shares (1 125 000) (1 125 000)
Weighted average number of shares in issue 244 532 869 219 875 000
Effect of convertible preference shares 9 000 000 9 000 000
Effect of share offers 189 081 92 414
Weighted average number of dilutive shares in issue 253 721 950 228 967 414
6. CONTINGENT LIABILITIES
The Group has entered into guarantees in favour of South African Revenue Services, for import and export activities as well as various
municipalities for operational activities. The guarantees from import and operational activities outstanding at year-end amounted to
R6.560 million (2016: R5.872 million). There were no other changes in the contingent liabilities during the current financial year.
7. ACQUISITION OF SUBSIDIARIES
Pakco Proprietary Limited
On 22 March 2017 the Group acquired 100% of the issued share capital and all voting rights of Pakco (Pty) Ltd ("Pakco") through the
issue of 7.762 million shares calculated on a weighted average share price. The Group obtained control based on the voting rights acquired.
Pakco manufactures and markets dry packed, bottled and canned foods under its own brands and private label. 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 operations, product
categories and trademarks, thereby strengthening the Group's product basket to customers.
Included in the profit before tax for the year is a profit of R17.255 million attributable to the Pakco operations. In order to provide a better
measure of performance for future comparison, the profit adjusted for related party transactions is R6.423 million.# Revenue for the year
includes R97.069 million in respect of the acquisition. At the reporting date 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 as we are unable to quantify the impact of the synergies that would have
resulted from the beginning of the period.
2017
R'000
Assets and liabilities acquired
Property, plant and equipment 28 502
Intangible assets 70 266
Inventory 38 169
Accounts receivable* 33 852
Bank overdraft (18 277)
Deferred taxation liability (4 533)
Accounts payable and accruals (42 449)
Employee benefit accrual (5 024)
Fair value of assets acquired 100 506
Purchase price - settled through issue of ordinary shares 197 000
Goodwill 96 494
# The pro forma financial information has been prepared for illustrative purposes only to provide information on the impact of the related party
transactions on the profit for the period of the Pakco operations to the consolidated profit for the year. 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.
There are no events subsequent to the reporting date which require adjustment to the pro forma information. The directors are responsible for
compiling the pro forma financial information in accordance with the JSE Limited Listings Requirements and in compliance with the SAICA Guide on
Pro Forma Financial Information.
The underlying information used in the preparation of the pro forma financial information has been prepared using the accounting policies in place
for the year ended 1 October 2017.
The pro forma 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.
* The accounts receivable acquired (which principally comprised trade receivables) with a fair value of R33.852 million included gross contractual
amounts of R36.057. The best estimate at acquisition date of the contractual cash flows not expected to be collected is R2.205 million.
Ma Baker Group of companies
On 31 March 2017 the Group acquired 100% of the issued share capital and all voting rights of Ma Baker Xpress (Pty) Ltd, Ma Baker
Foods (Pty) Ltd, Ma Baker Properties (Pinetown) (Pty) Ltd, Ma Baker Properties (Pietermaritzburg) (Pty) Ltd and Ma Baker Pies (Pty)
Ltd (collectively the "Ma Baker Group of Companies"). The Group obtained control based on the voting rights acquired. The Ma Baker
Group of Companies operates manufacturing plants in Pinetown and Pietermaritzburg where it manufactures, markets and distribute pie
and pastry-based products under the Ma Baker brand. 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 pies and pastries
operations and thereby strengthening the Group's position in those categories, particularly in the convenience channel.
Included in the profit before tax for the year is a profit of R8.954 million attributable to the Ma Baker operations. Revenue for the year
includes R132.670 million in respect of the acquisition. At the reporting date 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 as we are unable to quantify the impact of the synergies that would have
resulted from the beginning of the period.
2017
R'000
Assets and liabilities acquired
Property, plant and equipment 77 142
Intangible assets 61 968
Inventory 18 588
Accounts receivable* 19 647
Loans receivable 1 179
Bank balances and cash on hand 3 615
Deferred taxation liability (23 744)
Accounts payable and accruals (19 396)
Employee benefit accrual (2 528)
Current portion of long-term loans (14 786)
Taxation payable (2 132)
Fair value of assets acquired 119 553
Purchase price - settled in cash 192 635
Goodwill 73 082
* The accounts receivable acquired (which principally comprised trade receivables) with a fair value of R19.647 million included gross contractual
amounts of R22.485. The best estimate at acquisition date of the contractual cash flows not expected to be collected is R2.838 million.
8. CHANGE IN ACCOUNTING POLICY
The Group has applied the mandatory amendments to IAS 41: Agriculture (effective for annual periods beginning on or after 1 January 2016)
in the current financial year. Previously bearer plants were recognised as biological assets where they were measured at fair value. Due to the
amendments per IAS 41: Agriculture bearer plants were retrospectively reclassified to Property, Plant and Equipment under IAS 16 Property,
plant and equipment under the cost model.
Change in
Previously accounting
reported policy Restated
R'000 R'000 R'000
Year ended 27 September 2015
Statement of financial position
Non-current assets 816 213 (14 127) 802 086
Property, plant and equipment 785 462 8 103 793 565
Biological assets 30 751 (22 230) 8 521
Current assets - 14 127 14 127
Biological assets - 14 127 14 127
Year ended 25 September 2016
Statement of financial position
Non-current assets 1 006 715 (11 187) 995 528
Property, plant and equipment 974 642 12 184 986 826
Biological assets 32 073 (23 371) 8 702
Current assets - 16 037 16 037
Biological assets - 16 037 16 037
Capital and reserves 530 404 3 516 533 920
Accumulated profit attributable to owners of the company 521 597 3 351 524 948
Non-controlling interest 8 807 165 8 972
Non-current liabilities 83 751 1 334 85 085
Deferred taxation liability 83 751 1 334 85 085
Statement of profit or loss and other comprehensive income
Other income 36 451 770 37 221
Operating cost (756 345) 4 080 (752 265)
Profit before taxation 404 425 4 850 409 275
Taxation (114 590) (1 334) (115 924)
Profit for the year 289 835 3 516 293 351
Profit after taxation attributable to owners of the company 287 398 3 351 290 749
Profit after taxation attributable to non-controlling interest 2 437 165 2 602
Earnings per share (cents) 130.6 1.5 132.1
Diluted earnings per share (cents) 125.5 1.5 127.0
Headline earnings per share (cents) 131.8 1.5 133.3
Diluted headline earnings per share (cents) 126.5 1.5 128.0
Statement of cash flows
Net cash inflow from operating activities 140 253 9 498 149 751
Cash flows form investing activities (228 553) (9 498) (238 051)
Purchase of property, plant and equipment (228 553) (9 498) (238 051)
9. RELATED PARTY TRANSACTIONS
The Group generated sales from Peaty Mills Plc for R182.483 million (2016: R269.020 million). Included in trade receivables are amounts due from Peaty
Mills Plc for R43.143 million (2016: R53.638 million). There were no other significant related party transactions during the year under review.
10. DIVIDENDS
On 16 January 2017, a dividend of 42.2 cents (2016: 24.7 cents) per share was paid amounting to a total dividend of R107.6 million (2016:
R57.0 million).
11. EVENTS SUBSEQUENT TO REPORTING DATE
The Group entered into a sale of shares agreement to dispose of 50.83% of the shares in Ma Baker Xpress Proprietary Limited for a
consideration of R6.1 million. The board of directors is of the opinion that the buyer of the shares is more experienced in the retail business
market, seeing as this does not form part of the Group's core business.
The board of directors has declared a gross cash dividend of 31.1 cents (2016: 42.2 cents) per share on 17 November 2017 in respect of the
year ended 1 October 2017.
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.
12. FINANCIAL YEAR-END
The Group's financial year ends in September which reflects 52 weeks of trading, and as a result the reporting date may differ year on year.
The 2017 financial year, however, includes a 53rd week of trading. References to "financial year" are to the 53/52 weeks ended on or about
30 September. As a result the financial statements were prepared for the year ended 1 October 2017 (2016: 25 September).
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 2017.
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 Group's auditors, Deloitte & Touche, have issued unmodified audit reports on the preliminary summarised consolidated financial statements
and the consolidated financial statements. Both reports are available for inspection along with the full set of consolidated financial statements,
on the group's website (http://www.rfg.com) and at the group's registered office.
The auditor's report does not necessarily report on all of the information contained in these financial results. Shareholders are therefore
advised that in order to obtain a full understanding of the nature of the auditor's engagement they should obtain a copy of the auditor's report
together with the accompanying financial information from the issuer's registered office.
CORPORATE INFORMATION
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*
B Njobe* (appointed to the board of directors on 28 September 2017)
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 Deloitte & Touche
Bruce Henderson
Chief Executive Officer
Tiaan Schoombie
Chief Financial Officer
Groot Drakenstein
21 November 2017
Sponsor Rand Merchant Bank, a division of FirstRand Bank Limited
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