ANNUAL FINANCIAL STATEMENTS 2014 - rfg. · PDF fileThe company’s directors are...

ANNUAL FINANCIAL STATEMENTS

2014

RHODES FOOD GROUP Integrated Annual Report 2014 1

Approval of annual financial statements 2

Secretarial certification 3

Report of the audit and risk committee 4

Independent auditor’s report 6

Directors’ report 7

Consolidated statement of financial position 10

Consolidated statement of profit or loss and other comprehensive income 11

Consolidated statement of changes in equity 12

Consolidated statement of cash flows 13

Segmental report 14

Notes to the annual financial statements 15

CONTENTS

RHODES FOOD GROUP Integrated Annual Report 20142

Approval of annual financial statements

The directors are responsible for the preparation, integrity and objectivity of the financial statements and other information contained in these annual financial statements. In order to discharge this responsibility, the Group maintains internal accounting and administrative control systems, designed to provide reasonable assurance that assets are safeguarded and that transactions are executed and recorded, in accordance with the Group policies and procedures.

The consolidated annual financial statements set out on pages 7 to 50 were approved by the Board of Directors on 21 November 2014 and are signed on its behalf by:

BAS HendersonChief Executive Officer

YG MuthienChairperson


Secretarial certification

In accordance with section 88(2)(e) of the Companies Act, No 71 of 2008, for the year ended 28 September 2014, it is hereby certified that the company and its subsidiaries have lodged with the Companies and Intellectual Property Commission all such returns that are required and that such returns are true, correct and up to date.

A Rich Company secretary


Report of the audit and risk committee

IntroductionThis report of the Rhodes Food Group Holdings Limited audit and risk committee (the committee) is presented to shareholders in compliance with the Companies Act and the King Code of Governance Principles (King lll).

The committee has a statutory role in terms of the Companies Act and also has an independent role with accountability to both the board and to shareholders. The committee operates within a formal charter and complies with all relevant legislation, regulation and governance codes.

Role of the committeeThe committee’s responsibilities include the statutory duties prescribed by the Companies Act, activities recommended by King lll as well as additional responsibilities assigned by the board.

The responsibilities of the committee are as follows:

– Ensure that management has created and maintained an effective financial and operational control environment in the group.

– Ensure that business, financial and other risks have been identified and are being suitably managed.

– Monitor standards of governance, reporting and compliance.

– Oversee integrated reporting and ensure the integrity of the Integrated Report.

– Review the annual financial statements.

– Review the content of the interim results and report.

Composition of the committeeThe committee comprises three suitably qualified independent non-executive directors. The chairman of the board may not serve on the committee.

The committee was reconstituted during the year to align with the recommendations of King lll and at the end of the reporting period comprised the following members:

Mark Bower (chairman) B Com, B Compt (Hons), CA (SA)Thabo Leeuw B Com, B Compt (Hons), MAPAndrew Makenete B Sc, M Sc (Agric Management)

The committee will be elected by shareholders at the annual general meeting each year while the board will appoint the chairman of the committee.

Non-executive directors, the executive directors and the external audit partner attend meetings at the invitation of the committee. The committee may also meet separately with the external auditor without executive management being present.

External auditThe committee has assessed the independence, expertise and objectivity of the external auditor, Deloitte & Touche, as well as approving the fees paid to the external auditor (refer to note 18 in the annual financial statements).

The committee has received confirmation from the external auditor that the partners and staff responsible for the audit comply with all legal and professional requirements with regard to rotation and independence, including the stipulation that they should not own shares in Rhodes Food Group Holdings Limited.

The committee has nominated, for election at the annual general meeting, Deloitte & Touche, as the external audit firm and Mr van Wyk as the designated auditor, responsible for performing the functions of auditor, for the 2015 year. The committee has satisfied itself that the audit firm and designated auditor are accredited as such on the JSE list of auditors and their advisors

Non-audit servicesThe group has a formal policy on non-audit services which can be provided by the external auditor. The total fee earned for non-audit services may not exceed 20% of the total annual fees for audit services without the approval of the board. The policy requires Deloitte & Touche to satisfy the committee that the delivery of non-audit services does not compromise their independence in undertaking normal audit assignments.

During the year under review Deloitte & Touche received R444 000 for non-audit services, equating to 23% of the total audit fees of R1,96 million (2013: R2,02 million). These fees were mainly for advisory services relating to income tax, transfer pricing, stock counts and the incentive scheme. These fees were approved by the board in line with the policy outlined above.


Internal controlSystems of internal control are designed to manage the risk of failure to achieve business objectives and to provide reasonable, but not absolute, assurance against misstatement or loss.

No material matter has come to the attention of the board that has caused the directors to believe that the company’s system of internal controls and risk management is not effective and that the internal financial controls do not form a sound basis for the preparation of reliable financial statements.

The group plans to introduce a formal internal audit function in the forthcoming financial year to assist management in controlling risk, monitoring compliance, improving efficiency and the effectiveness of internal control systems and governance processes.

Evaluation of the chief financial officerThe committee satisfied itself as to the appropriateness of the expertise and experience of the group’s chief financial officer, Tiaan Schoombie. This is based on the qualifications, levels of experience, continuing professional development and the board’s assessment of the financial knowledge of the chief financial officer.

The committee also satisfied itself as to the expertise, resources and experience of the Group’s finance function.

Activities of the committeeThe committee is required to meet at least twice each year, with meetings coinciding with the key dates of the financial reporting and audit cycle. Minutes of the meetings of the committee are circulated to all directors and supplemented by an update from the committee chairperson at each board meeting.

The chairperson of the committee is required to attend all statutory shareholder meetings to respond to questions on the committee’s activities.

The committee performed the following activities during the year under review:

– Recommended to the board and shareholders the appointment of the external auditors.

– Approved the terms of engagement and remuneration of the external auditor, and monitored their independence, objectivity and effectiveness.

– Determined the nature and extent of any non-audit services provided by the external auditor and other auditing firms.

– Reviewed the group’s internal financial control and financial risk management systems.

– Evaluated the appropriateness of the expertise and experience of the chief financial officer.

– Evaluated the expertise, resources and experience of the Group’s finance function.

– Reviewed and recommended to the board for approval the annual financial statements.

Approval of the committee reportThe committee confirms that it has functioned in accordance with its terms of reference for the 2014 financial year and that its report to shareholders has been approved by the board.

Mark BowerChairman

Audit and Risk Committee21 November 2014


Independent auditor’s report

To the shareholders of Rhodes Food Group Holdings Limited We have audited the consolidated annual financial statements of Rhodes Food Group Holdings Limited, set out on pages 10 to 50, which comprise the consolidated statement of financial position as at 28 September 2014, and the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information.

Directors’ responsibility for the financial statementsThe company’s directors are responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa, and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of Rhodes Food Group Holdings Limited as at 28 September 2014, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa.

Other report required by the Companies Act As part of our audit of the consolidated financial statements for the year ended 28 September 2014, we have read the Directors’ Report, Report of the Audit and Risk Committee and the Secretarial certification for the purpose of identifying whether there are material inconsistencies between these reports and the audited financial statements. These reports are the responsibility of the preparer. Based on reading these reports we have not identified material inconsistencies between these reports and the audited financial statements. However, we have not audited these reports and accordingly do not express an opinion thereon.

Deloitte & ToucheRegistered Auditors

Per MA van WykPartner

24 November 2014

Audit – Cape Town: Unit 11 Ground Floor, La Gratitude, 97 Dorp Street, Stellenbosch 7600

National Executive: LL Bam Chief Executive AE Swiegers Chief Operating Officer GM Pinnock Audit DL Kennedy Risk Advisory NB Kader Tax TP Pillay Consulting K Black Clients & Industries JK Mazzocco Talent & Transformation MJ Jarvis Finance M Jordan Strategy S Gwala Managed Services TJ Brown Chairman of the Board MJ Comber Deputy Chairman of the Board

Regional Leader: MN Alberts

A full list of partners and directors is available on request.

B-BBEE rating: Level 2 contributor in terms of the Chartered Accountancy Profession Sector Code

Member of Deloitte Touche Tohmatsu Limited


Directors’ report

The directors have pleasure in presenting their report for the year ended 28 September 2014.

Nature of businessThe 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 and dairy products. The Group’s operations are located in South Africa and Swaziland.

General reviewThe results of the activities for the year under review and financial position of the Group at 28 September 2014 are set out in the financial statements. No other facts or circumstances, except those disclosed below and in the financial statements, require disclosure.

During August 2014 the entity was converted from a private company to a public company, which subsequently lead to a name change from Rhodes Food Group Holdings Proprietary Limited to Rhodes Food Group Holdings Limited.

Events subsequent to reporting dateThe company commenced the public trading of its issued share capital on the JSE Limited on 2 October 2014 which included the listing of 50 000 000 ordinary shares issued during a private placement prior to the listing. R600 000 000 was raised during the private placement prior to the listing and the net proceeds of this were used to repay the following portion of the Group’s debt:

– the “A” cumulative redeemable preference shares and related dividend accrual for a total amount of R223 233 172;

– the Nedbank Limited mezzanine loan of R174 131 260;

– the Capitalworks Rhodes Food Investment Partnership loan of R21 375 690;

– the South African Investment Partnership loan of R3 183 435; and

– the South African Investment Partnership II loan of R9 020 064.

The following directors acquired shares in the company on 2 October 2014: YG Muthien (29 166 ordinary shares), MR Bower (41 666 ordinary shares) TP Leeuw (29 166 ordinary shares) and LA Makenete (8 333 ordinary shares). A Rich, the company secretary, also acquired 41 666 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.

Share capitalDuring August 2014 the company subdivided the 1 000 000 authorised ordinary shares into 1 800 000 000 ordinary shares and 95 000 issued ordinary shares into 171 000 000 ordinary shares. On the same day the company subdivided the “A” and “B” redeemable convertible preference shares authorised from 1 000 000 preference shares to 1 800 000 000 and 5 000 “A” and “B” redeemable convertible preference shares in issue into 9 000 000 redeemable convertible preference shares each. Subsequently the “A” and “B” redeemable convertible preference shares authorised were decreased to 9 000 000, resulting in all authorised preference shares being in issue (2013: The company issued 94 999 ordinary shares, 5 000 “A” and 5 000 “B” redeemable convertible preference shares).

Special resolutions passedOn 1 August 2014 the shareholders of the company passed the following special resolutions:

– The 1 000 000 authorised ordinary shares, of which 95 000 have been issued, be subdivided into 1 800 000 000 authorised ordinary share capital and 171 000 000 issued ordinary shares as approved by the shareholders.

– The 1 000 000 “A” preference shares, of which 5 000 have been issued, be subdivided into 1 800 000 000 authorised “A” preference shares and 9 000 000 issued “A” preference shares; and subject to and following the subdivision of the “A” preference shares as set out above, the authorised “A” preference shares be reduced from 1 800 000 000 authorised “A” preference shares to 9 000 000 authorised “A” preference shares.

– The 1 000 000 “B” preference shares, of which 5 000 have been issued, be subdivided into 1 800 000 000 authorised “B” preference shares and 9 000 000 issued “B” preference shares; and subject to and following the subdivision of the “B” preference shares as set out above, the authorised “B” preference shares be reduced from 1 800 000 000 authorised “B” preference shares to 9 000 000 authorised “B” preference shares.


Directors’ report (continued)

Special resolutions passed (continued)– The current memorandum of incorporation of the company be replaced in its entirety by the new memorandum of incorporation.

– The company be converted from a private company to a public company and the name of the company be changed accordingly from Rhodes Food Group Holdings Proprietary Limited to Rhodes Food Group Holdings Limited.

– The acquisition by the company of shares issued by it and the acquisition by any subsidiary of the company of shares issued by the company, on such terms and conditions as may be determined by the directors of any such subsidiary, be approved as a general approval, subject to the relevant provisions of the Companies Act and the JSE Listings Requirements in force at the time of acquisition. Provided that this authority be limited to a maximum of 5% of the issued share capital of that class in one financial year and that the acquisition of shares by a subsidiary of the company may not, in any one financial year, exceed 10% in the aggregate of the number of issued shares of the company.

– In terms of section 44(3)(a)(ii) of the Companies Act, the provision from time to time of financial assistance by the company to any person, for the purposes of the subscription of any option, or any securities, issued or to be issued by the company or a related or inter-related company of the company, or for the purchase of any securities of the company or a related or inter-related company of the company be approved.

– The provision by the company at any time and from time to time during the period of two years commencing on the date of the adoption of this special resolution, of direct or indirect financial assistance (whether by loan, guarantee, the provision of security or otherwise), to any related or inter-related company or corporation of the company, on such terms and conditions as the directors (or any one or more persons authorised by the directors from time to time for such purpose) may deem fit, be approved.

– The remuneration of each non-executive director of the company be approved, each by way of a separate vote for the 2015 financial year.

– The directors authorised by way of a specific authority in terms of section 41(1) of the Companies Act to, allot and issue ordinary shares to any director, future director, prescribed officer, or future prescribed officer of the company, a person related or inter-related to the company or their nominee.

– To the extent that the allotment and issue by the company of the ordinary shares in connection with the implementation of the listing will be equal to or exceed 30% of the voting power of all the ordinary shares prior to the implementation of the listing, the directors be authorised to effect any such allotment and issue by way of a specific authority in terms of section 41(3) of the Companies Act.

– The listing on the JSE Limited be approved and application be made for the listing of all of the ordinary shares of no par value in the “Food & Beverages” sector of the Main Board of the JSE (under the abbreviated name “Rhodes”, symbol “RFG” and ISIN: ZAE000191979) with effect from 2 October 2014 and further that any member of the transaction committee or any director of the company and/or the company secretary be authorised to sign or authorise all documents necessary or desirable to give effect to the abovementioned listing of ordinary shares.

SubsidiariesRefer to note 30 of the consolidated annual financial statements for a list of subsidiaries.

DividendsNo dividends were declared or paid during the current year (2013: Rnil).

DirectorsThe directors in office during the year under review and at the date of this report are as follows:

Ms YG Muthien (Chairperson) (Appointed 1 August 2014)

MR Bower (Appointed 1 August 2014)

TP Leeuw (Appointed 1 August 2014)

LA Makenete

CL Smart

GJH Willis

BAS Henderson

CC Schoombie

LB Robertson (Resigned 10 July 2014)

JD Shahim (Resigned 10 July 2014)


Directors’ shareholdingRefer to note 19 of the annual financial statements for detail regarding the directors’ shareholding.

Financial year-endThe 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. References to a “financial year” are to the 52 weeks ended on or about 30 September. As a result the financial statements were prepared for the year ended 28 September 2014 (2013: 29 September).

SecretaryThe secretary of the company is Statucor Proprietary Limited (represented by A Rich), whose business and postal addresses are:

Business address Postal addressThe Boulevard Office Park PO Box 3883

2nd Floor, Block D Cape Town

Searle Street 8000

Woodstock

7925

AuditorsDeloitte & Touche were the auditors for the year under review.

Preparer of annual financial statementsThese financial statements were prepared under the supervision of AS Botha, CA(SA), Financial Manager.

Directors’ report (continued)


Consolidated statement of financial positionfor the year ended 28 September 2014

2014 2013Notes R’000 R’000

ASSETSNon-current assets 744 609 706 395

Property, plant and equipment 5 529 152 488 789Intangible assets 6 51 051 51 051Goodwill 7 126 325 126 325Biological assets 8 28 015 28 046Deferred taxation asset 15 – 88Loans receivable 9 9 275 9 625Other financial instruments 10.1 791 2 471

Current assets 936 332 770 542

Inventory 11 542 632 457 663Accounts receivable 12 390 029 301 497Loans receivable 9 1 941 1 973Bank balances and cash on hand 28.3 1 730 9 409

Total assets 1 680 941 1 476 937

EQUITY AND LIABILITIESCapital and reserves 273 888 193 233

Share capital 13 150 001 150 001Accumulated profit 117 567 37 337

Equity attributable to owners of the company 267 568 187 338Non-controlling interest 6 320 5 895

Non-current liabilities 741 401 675 758

Preference shares 13 156 005 156 005Preference shareholders for dividend accrual 13 67 228 30 517Long-term loans 14 465 434 435 237Deferred taxation liability 15 43 603 47 548Employee benefit liability 16.3 9 131 6 451

Current liabilities 665 652 607 946

Accounts payable and provisions 16.1 333 113 289 451Provision for employee benefits 16.2 99 275 72 721Current portion of long-term loans 14 72 799 84 369Taxation payable 28.2 29 684 25 803Other loan 17 – 14 113Bank overdraft 28.3 128 605 116 456Foreign exchange contract liability 10.2 2 176 5 033

Total equity and liabilities 1 680 941 1 476 937


Consolidated statement of profit or loss and other comprehensive incomefor the year ended 28 September 2014

2014 2013Notes R’000 R’000

Revenue 3.4 2 444 225 1 859 089Cost of goods sold (1 790 090) (1 323 714)

Gross profit 654 135 535 375Other income 15 977 16 197Operating costs (433 992) (391 889)

Earnings before interest and taxation 18 236 120 159 683Interest paid 20 (103 446) (91 275)Interest received 597 2 246

Earnings before taxation 133 271 70 654Taxation 21 (50 804) (32 467)

Earnings for the year 82 467 38 187

Earnings attributable to:Owners of the company 81 898 37 337Non-controlling interest 569 850

82 467 38 187

Other comprehensive incomeItems that will not be reclassified subsequently to profit or loss (1 812) –

Remeasurement of employee benefit liability (2 783) –Deferred taxation effect 971 –

Total comprehensive income for the year 80 655 38 187

Total comprehensive income attributable to:Owners of the company 80 230 37 337Non-controlling interest 425 850

80 655 38 187

Earnings per share (cents) 47,9 39 302,1Headline earnings per share (cents) 22.1 47,5 37 535,8Diluted earnings per share (cents) 45,5 37 337,0Diluted headline earnings per share (cents) 22.2 45,2 35 659,0


Consolidated statement of changes in equityfor the year ended 28 September 2014

Share Accumulated Non-controllingcapital profit interest TotalR’000 R’000 R’000 R’000

Balance at 30 September 2012 – – – –Issue of ordinary share capital 142 500 – – 142 500Issue of redeemable convertible preference shares 7 501 – – 7 501Acquisition of subsidiaries – – 5 045 5 045Total comprehensive income for the year – 37 337 850 38 187

Balance at 29 September 2013 150 001 37 337 5 895 193 233Total comprehensive income for the year – 80 230 425 80 655

Balance at 28 September 2014 150 001 117 567 6 320 273 888


Consolidated statement of cash flowsfor the year ended 28 September 2014

2014 2013Notes R’000 R’000

Cash flows from operating activitiesCash receipts from customers 2 864 897 2 106 602Cash paid to suppliers and employees (2 688 450) (1 904 393)

Cash generated from operations 28.1 176 447 202 209Net interest paid (38 853) (35 246)Taxation paid 28.2 (49 809) (15 613)

Net cash inflow from operating activities 87 785 151 350

Cash flows from investing activitiesPurchase of property, plant and equipment 5 (87 763) (51 392)Proceeds on disposal of property, plant and equipment 859 4 788Acquisition of a business as a going concern less cash acquired 28.6 – (798 036)Acquisition of Bull Brand business less cash acquired 28.7 – (128 087)Loan receivable raised (150) (9 624)Loans repaid 554 –

Net cash outflow from investing activities (86 500) (982 351)

Cash flows from financing activities 13Issue of ordinary share capital 13 – 142 500Issue of preference share capital – 163 506Loans raised 77 318 507 818Loans repaid (98 431) (89 870)

Net cash (outflow)/inflow from financing activities (21 113) 723 954

Net decrease in cash and cash equivalents (19 828) (107 047)Cash and cash equivalents at beginning of the year (107 047) –

Cash and cash equivalents at end of the year 28.3 (126 875) (107 047)


Segmental reportfor the year ended 28 September 2014

Products and services from which reportable segments derive their revenuesInformation reported to the chief operating decision-makers 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 directors 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 are as follows:

• Regional

• International

Segment revenues and resultsThe following is an analysis of the Group’s revenue and results by reportable segment.

Segmental revenue

2014 2013R’000 R’000

RegionalFresh products sales 777 213 702 196Long life products sales 818 438 462 720

1 595 651 1 164 916International

Long life products sales 848 574 694 173

Total 2 444 225 1 859 089

Segmental earnings

2014 2013R’000 R’000

Regional 139 316 120 722International 96 004 58 074

Total 235 320 178 796Transaction costs incurred relating to management buyout – (23 859)Other income 800 4 746Interest received 597 2 246Interest paid (103 446) (91 275)

Earnings before taxation 133 271 70 654

Segment revenue reported above represents revenue generated from external customers. Intercompany sales amounted to R321 469 319 (2013: R249 014 678).

The accounting policies of the reportable segments are the same as the Group’s accounting policies described in note 3. Segment profit represents the profit before tax earned by each segment without allocation of transaction costs incurred relating to management buyout, other income, investment income and finance costs. This is the measure reported to the chief operating decision-makers for the purpose of resource allocation and assessment of segment performance.

Geographical informationThe Group’s non-current assets by location of operations (excluding financial instruments, goodwill and deferred tax assets) are detailed below. The chief operating decision makers do not evalutate any other of the Group’s assets or liabilities on a segmental basis for decision making purposes.

2014 2013Non-current assets R’000 R’000

Republic of South Africa 542 470 503 460Kingdom of Swaziland 75 023 74 051

617 493 577 511

Information regarding major customersThree customers individually contributed 10% or more of the Group’s revenues arising from both regional and international sources.


Notes to the consolidated annual financial statementsfor the year ended 28 September 2014

1. GENERAL INFORMATIONRhodes Food Group Holdings Limited is a company domiciled in the Republic of South Africa. These annual consolidated financial statements (“financial statements”) as at and for the financial year ended 28 September 2014 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 and dairy products. There were no major changes in the nature of the business for the Group in the financial year ended September 2014 and 2013.

2. APPLICATION OF NEW AND REVISED ACCOUNTING STANDARDSIn the current year, the group has applied a number of new and revised IFRSs issued by the International Accounting Standards Board that are mandatorily effective for an accounting period that begins on or after 1 January 2013.

2.1 IFRS 1 (amendment) – First-time Adoption of International Financial Reporting Standards (effective 1 January 2013)The amendments effectively add an exception to the retrospective application of International Financial Reporting Standards (IFRS) to require that first-time adopters apply the requirements in IFRS 9 – Financial Instruments.

2.2 IFRS 7 Disclosures – Offsetting Financial Assets and Financial Liabilities (effective 1 January 2013)The amendment amends the required disclosures to include information that will enable users of an entity’s financial statements to evaluate the effect or potential effect of netting arrangements, including rights of set-off associated with the entity’s recognised financial assets and recognised financial liabilities, on the entity’s financial position.

2.3 IFRS 10 – Consolidated Financial Statements (effective 1 January 2013)IFRS 10 replaces all of the guidance on control and consolidation in SIC 12 – Consolidation – Special Purpose Entities and IAS 27 – Consolidated and Separate Financial Statements. IAS 27 is renamed “Separate Financial Statements” and it continues to be a standard dealing solely with separate financial statements. IFRS 10 changes the definition of control so that the same criteria are applied to all entities to determine control. It also provides additional guidance to assist in the determination of control where this is difficult to assess.

2.4 IFRS 12 – Disclosure of Interest in Other Entities (effective 1 January 2013)IFRS 12 includes all the disclosures that are required relating to an entity’s interests in subsidiaries, joint arrangements, associates and structured entities. An entity is now required to disclose the judgements made to determine whether it controls another entity and as such the adoption of this new standard in future will result in additional disclosures.

2.5 IFRS 13 – Fair Value Measurement (effective 1 January 2013)This standard aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs.

2.6 IAS 16 – Classification of Servicing Equipment (effective 1 January 2013)The amendment clarifies that major spare parts and servicing equipment that meet the definition of property, plant and equipment are not inventory. This amendment will have no material impact on the Group.

2.7 IAS 19 – Employee Benefits (effective 1 January 2013)Short and long-term benefits will now be distinguished based on the expected timing of settlement, rather than employee entitlement. Actuarial gains or losses to be recognised through Other Comprehensive Income (“OCI”) and no longer through profit or loss.

2.8 IAS 27 – Separate Financial Statements (effective 1 January 2013)IAS 27 has been renamed “Separate financial statements” and it continues to be a standard dealing solely with separate financial statements. The existing guidance for separate financial statements is unchanged.

2.9 IAS 32 (amendment) – Financial Instruments: Presentation (effective 1 January 2013)The amendments require entities to disclose gross amounts subject to rights of set-off, amounts set off in accordance with the accounting standards followed, and the related net credit exposure. This information will help investors understand the extent to which an entity has applied set-off in its statement of financial position and the effects of rights of set-off on the entity’s rights and obligations.

2.10 Improvements to IFRSs 2011 (effective 1 January 2013)This is a collection of amendments to IFRSs. These amendments are the result of conclusions the IASB reached on proposals made in its annual improvements project for 2011. The annual improvements project provides a vehicle for making non-urgent, but necessary amendments to IFRSs. Certain amendments resulted in consequential amendments to other IFRSs.

The adoption of these new and revised accounting standards did not have a material impact on the results and as such there is no change to comparative information resulting from the adoption of these standards.

RHODES FOODS Integrated Annual Report 201416

Notes to the consolidated annual financial statements (continued)

for the year ended 28 September 2014

2. APPLICATION OF NEW AND REVISED ACCOUNTING STANDARDS (continued)The Group has not adopted the following standards and interpretations that have been issued but are not yet effective and will be adopted by the Group when they become effective:

2.11 IAS 36 (amendment) – Impairment of Assets (effective 1 January 2014)The International Accounting Standards Baord (IASB) has made small changes to the disclosures required by IAS 36 – Impairment of Assets when the recoverable amount is determined based on the fair value less costs of disposal.

2.12 IFRS 9 – Financial Instruments (effective 1 January 2018)Financial assets: The latest phase applies to financial assets and simplifies the classification of financial assets while retaining the measurement principles, being at fair value or amortised cost. Financial assets are classified on the basis of the entity’s business model for managing the financial assets and the contractual cash flow characteristics of the financial asset. The IAS 39 exemption which allows equity instruments to be measured at cost will be limited further and reclassifications between categories will only be allowed in exceptional circumstances.

Financial liabilities: The standard retains the existing IAS 39 classification and measurement requirements for financial liabilities not designated at fair value through profit or loss using the fair value option as well as the criteria within IAS 39 for using the fair value option for financial liabilities. The changes only affect the measurement of fair value option liabilities. All other requirements in IAS 39 in respect of liabilities are carried forward into IFRS 9. For fair value option liabilities, the amount of change in the fair value of a liability that is attributable to changes in credit risk must be presented in other comprehensive income (OCI). The remainder of the change in fair value is presented in profit or loss. The standard prohibits any recycling through profit or loss of amounts recognised in OCI upon derecognition of the liability, but these amounts may be transferred to retained earnings upon derecognition. Liabilities arising from certain derivatives on unquoted equity instruments will no longer be able to be measured at cost and will be required to be measured at fair value.

2.13 IFRIC 21 – Levies (effective 1 January 2014)The interpretation clarifies that a liability for a levy imposed by a government, both for levies that are accounted for in accordance with IAS 37 – Provisions, Contingent Liabilities and Contingent Assets and those where the timing and amount of the levy, is certain.

2.14 Annual improvements to IFRSs 2010 – 2012 and 2011 – 2013 cycle (effective 1 July 2014)This is a collection of amendments to IFRSs. These amendments are the result of conclusions the IASB reached on proposals made in its annual improvements project for 2011. The annual improvements project provides a vehicle for making non-urgent, but necessary amendments to IFRSs. Certain amendments resulted in consequential amendments to other IFRSs.

3. ACCOUNTING POLICIES3.1 Statement of compliance

The financial statements have been prepared in accordance with IFRS, Interpretations issued by the IFRS Interpretations Committee (IFRIC), containing the information required by the Companies Act as well as the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council.

3.2 Basis of preparationThe financial statements have been prepared on the historical cost basis except for certain assets and financial instruments that are measured at fair value at the end of each reporting period, as explained in the accounting policies below.

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis.

In addition, for financial reporting purposes, fair value measurements are categorised into level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety. These are described as follows:

– Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

– Level 2 inputs are inputs, other than quoted prices included within level 1, that are observable for the asset or liability, either directly or indirectly; and

– Level 3 inputs are unobservable inputs for the asset or liability.


3. ACCOUNTING POLICIES (continued)3.3 Basis of consolidation

The financial statements incorporate the financial statements of the Group and entities controlled by the Company (its subsidiaries). Control is achieved where the company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the year are included in the statement of profit or loss and comprehensive income from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with those used by other members of the Group.

All intra-Group transactions, balances, income and expenses are eliminated on consolidation.

Non-controlling interest in the net assets of consolidated subsidiaries is identified separately from the Group’s equity therein. Non-controlling interest consists of the amount of those interests at the date of the original business combination and the non-controlling interest’s share of changes in equity since the date of the combination. Losses applicable to the non-controlling interest in excess of the non-controlling interest’s interest in the subsidiary’s equity are allocated against the interest of the Group except to the extent that the non-controlling interest has a binding obligation and is able to make an additional investment to cover the losses.

3.4 RevenueRevenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.

Revenue represents the following:

3.4.1 Sale of goodsRevenue from sale of goods is recognised when substantially all the risks and rewards of ownership have been transferred to the buyer and the Group does not retain continuing managerial control of the goods to a degree usually associated with ownership, when the amount of revenue and costs incurred or to be incurred in respect of the sale transactions can be measured reliably, and when it is probable that the economic benefits associated with the transaction will flow to the Group.

3.4.2 InterestInterest revenue is recognised on a time proportion basis that takes into account the effective yield on the investment.

3.4.3 DividendsDividend revenue is recognised when the shareholder’s right to receive payment is established.

3.5 Interest paidInterest paid includes interest on the loan accounts, bankers’ acceptances, preference share dividends on preference shares classified as liabilities, and bank accounts, which is expensed as incurred.

3.6 Foreign currenciesThe individual financial statements of each Group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each entity are expressed in Rands, which is the functional currency of the Group, and presentation currency for the financial statements.

In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the reporting date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items, are included in profit or loss for the year.

In order to hedge its exposure to certain foreign exchange risks, the Group enters into forward exchange contracts.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations (including comparatives) are expressed in Rands using exchange rates prevailing on the reporting date. Income and expense items (including comparatives) are translated at the average exchange rates for the year, unless exchange rates fluctuated significantly during that year, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are classified as equity and transferred to the Group’s foreign currency translation reserve. Such translation differences are recognised in profit or loss in the year in which the foreign operation is disposed of.

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.




3. ACCOUNTING POLICIES (continued)3.7 Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

3.7.1 Current taxationThe tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement of profit or loss and comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted by the reporting date.

3.7.2 Deferred taxationDeferred taxation is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interest in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be realised.

Deferred taxation is calculated at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled. Deferred taxation is charged or credited in the statement of profit or loss and comprehensive income, except when it relates to items credited or charged directly to equity, in which case the deferred taxation is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

3.8 Property, plant and equipment3.8.3 Capital work in progress

The cost of property, plant and equipment is recognised as capital work in progress until the property, plant and equipment have been commissioned. Capital work in progress is not depreciated.

3.8.4 Other property, plant and equipmentOther property, plant and equipment are stated at cost less accumulated depreciation and impairment were applicable. The estimated useful lives, depreciation method and residual values of the assets are reviewed annually with the effect of any changes accounted for on a prospective basis. Depreciation is calculated on the straight-line method over the estimated useful lives of the assets less their residual value as follows:

Buildings, improvements and leasehold improvements Range from 5 to 50 years

Plant and machinery Range from 2 to 40 years

Motor vehicles Range from 4 to 15 years

Office equipment Range from 3 to 10 years

Furniture and fittings Range from 3 to 10 years

Land is not depreciated.

The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the statement of profit or loss.

3.9 Biological assetsBiological assets comprise livestock and growing crops which are measured at fair value less estimated point of sale costs.

The fair value of livestock is determined based on market prices of livestock of a similar age, breed and genetic merit.

The fair value of growing crops is determined based on market prices less delivery costs.

3.10 Intangible assetsIntangible assets acquired in a business combination are identified and recognised separately from goodwill where they satisfy the definition of an intangible asset and their fair values can be measured reliably. The cost of such intangible assets is their fair value at the acquisition date.


3. ACCOUNTING POLICIES (continued)3.10 Intangible assets (continued)

Subsequent to initial recognition, intangible assets with finite useful lives, acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses and at cost less accumulated impairment losses in the case of such assets with indefinite useful lives. Amortisation is charged on a straight-line basis over the assets estimated useful lives. The estimated useful lives and amortisation methods are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.

3.11 GoodwillGoodwill arising on the acquisition of a business represents the excess of the cost of acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses.

For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent year.

3.12 ImpairmentAt each reporting date, the Group reviews the carrying amount of tangible and intangible assets to determine whether there is an indication that those assets may be impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Impairment losses are recognised in the statement of profit or loss and comprehensive income in the year in which they arise.

The recoverable amount of an asset or cash generating unit is the higher of its fair value less costs to sell and its value in use.

3.13 InventoryInventory is stated at the lower of cost or net realisable value. Cost is determined on the following basis:

– Raw materials are valued at cost on a first-in, first-out basis. Finished goods and work in progress are valued at average actual cost of production.

– Obsolete and slow moving inventories are identified and written down with regard to their estimated economic and realisable value.

3.14 ProvisionsProvisions are recognised in respect of present legal or constructive obligations that can be estimated reliably and for which it is probable that an outflow of economic benefits will result. Where the effect of discounting are material, provisions are measured at their present values.

A provision for incentives is recognised annually to the extent that; contractual targets are met based on current performance and are expected to be met based on expected performance in future years. Payment of incentives is contingent upon certain contractual events, the outcome of which is outside the control of the Group and therefore the provision is classified as a current liability.

3.15 Cash and cash equivalentsFor the purpose of the statement of cash flows, cash and cash equivalents comprise cash on hand, deposits held on call with banks and bankers’ acceptances, net of bank overdrafts, all of which are available for use by the Group unless otherwise stated.

3.16 Retirement fundingThe Group provide retirement benefits to employees through a defined contribution pension fund and a defined contribution provident funds. Contributions to these retirement funds are charged against income as incurred.

Employee benefitsThe retirement pay obligation is calculated tri-annually by independent actuaries using the projected unit credit method. Under this method, the present value of retirement benefits that have accrued in respect of past service is calculated, allowing for estimated future salary increases, future retrenchments, withdrawals and mortalities. Actuarial gains and losses which are recognised through Other Comprehensive Income (“OCI”).

3.17 Financial instruments3.17.1 Financial assets

Investments are recognised and derecognised on trade date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value.




3. ACCOUNTING POLICIES (continued)3.17 Financial instruments (continued)

3.17.1 Financial assets (continued)Financial assets are classified into the following specified categories: financial assets “at fair value through profit or loss” (FVTPL), “held-to-maturity” investments, “available-for-sale” (AFS), financial assets and “loans and receivables”. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Effective interest methodThe effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant year. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset, or, where appropriate, a shorter period. Income is recognised on an effective interest basis for debt instruments other than those financial assets designated as FVTPL.

Loans and receivablesTrade and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

Impairment of financial assetsFinancial assets, other than those at FVTPL, are assessed for indicators of impairment at each reporting date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted.

For all financial assets evidence of impairment could include:

• significant financial difficulty of the issuer or counterparty; or

• default or delinquency in interest or principal payments; or

• it becoming probable that the borrower will enter bankruptcy or financial reorganisation.

Certain categories of financial assets, such as trade receivables, that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit term of 45 days, as well as observable changes in national or local economic conditions that correlate with default on receivables.

For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account.

When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

Derecognition of financial assetsThe Group derecognise a financial asset only when the contractual rights to the cash flows from the asset expire; or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.

If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continue to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

3.17.2 Financial liabilities and equity instrumentsClassification as debt or equityDebt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.

Equity instrumentsAn equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.


3. ACCOUNTING POLICIES (continued)3.17 Financial instruments (continued)

3.17.2 Financial liabilities and equity instruments (continued)Other financial liabilitiesOther financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.

Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant year. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.

Derecognition of financial liabilitiesThe Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire.

3.18 LeasesFinance leases are leases that transfer substantially all the risks and rewards incidental to ownership of an asset. Title may or may not eventually be transferred.

Assets held under finance leases are recognised as assets of the Group at their fair value at the inception of the lease or, if lower at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Group’s general policy on borrowing costs.

Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease. Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight-line basis over the lease term.

4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTYIn the process of applying the Group’s accounting policies, which are described in note 3, management has made the following judgements that have the most significant effect on the amounts recognised in the financial statements.

Impairment of goodwillDetermining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The value in use calculation requires the Group to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate the present value. In management’s assessment of impairment, the assumption was made that the Group would continue to make profits for the foreseeable future. No impairment loss has been recognised in the current or prior year.

Valuation of biological assetsLivestockThe value of the livestock is calculated based on an independent valuation obtained from an industry specialist.

Growing cropGrowing crops are measured at their fair value less estimated point-of-sale costs to sell. The fair value of growing crops is determined based on current market prices using a discounted cash flow model. Changes in fair value are recognised in profit or loss.

Point of sale costs include all costs that would be necessary to sell the assets, including all costs necessary to get the asset to its saleable state and to get it to the market.

Useful lives and residual values of property, plant and equipmentThe useful lives and residual values placed on assets were estimated by using management’s knowledge and experience of the industry. These are used to calculate the depreciation charge.

Impairment of property, plant and equipmentWhen any internal or external indicators of impairment are identified, management estimates the recoverable amount of the property, plant and equipment to establish whether any permanent impairment of the asset exists. The recoverable amount is estimated with reference to the lower of fair value less cost to sell and the value in use.

Recoverability of receivablesThe recoverability of receivables is assessed by taking into consideration the financial position of the counterparty and past payment history. When assessing the recoverability of receivables, management reviews prior history of losses and any information currently available.

Provision for employee benefitsThe prime rate of interest used as the discount rate to discount expected future incentive payments and management’s assessment of the probability of future targets being met.






4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (continued)Provision for inventory obsolescenceIn determining the provision required for obsolete inventory, management considers the age of the specific inventory item and when it was last used in production. Any specific indicators that inventory is damaged or unsaleable are also taken into account.

Useful life of intangible assetTrademarks and other intangibles that are acquired through acquisition are capitalised on the statement of financial position. These trademarks and other intangibles are valued on acquisition using a discounted cash flow methodology and assumptions and estimates regarding future revenue growth; prices; marketing costs; and economic factors. The assumptions reflect management’s best estimates, but these estimates involve inherent uncertainties, which may not be controlled by management. The cost of brands and other intangibles with a finite life is amortised using a methodology that matches management’s estimate of how the benefit of the assets will be extinguished.

Each year the remaining useful lives of the trademarks and other intangibles are re-evaluated. If the estimate of the remaining useful life changes, the remaining carrying value is amortised prospectively over that revised remaining useful life. Indefinite useful lives are allocated to intangible assets if there is no foreseeable limit to the period over which the entity expects to consume the future economic benefits embodied in the intangible asset. In making this assessment management follows the guidance in IAS 38. Indefinite useful life assets are assessed annually for impairment.

The entity has classified its Rhodes and Bull Brand trademarks as having indefinite lives. Factors considered include: (i) the history of the trademarks; (ii) current market share; (iii) development strategy; and (iv) expected future benefits to be derived from the assets.

5. PROPERTY, PLANT AND EQUIPMENTOpening Closingbalance Additions Disposals Transfers balance

2014 R’000 R’000 R’000 R’000 R’000

COSTLand 43 902 – – – 43 902Buildings and improvements 215 355 – – 8 895 224 250Plant and machinery 236 597 – (430) 34 209 270 376Motor vehicles 6 919 – – 1 446 8 365Office equipment 10 770 – – 11 314 22 084Furniture and fittings 1 460 – – 409 1 869Capital work-in-progress 16 173 87 763 – (56 273) 47 663

531 176 87 763 (430) – 618 509

Opening Closingbalance Depreciation Disposals Transfers balance

R’000 R’000 R’000 R’000 R’000

ACCUMULATED DEPRECIATIONBuildings and improvements 10 824 11 728 – – 22 552Plant and machinery 27 241 29 857 (409) – 56 689Motor vehicles 885 1 123 – – 2 008Office equipment 3 156 4 385 – – 7 541Furniture and fittings 281 286 – – 567

42 387 47 379 (409) – 89 357

Net book value 488 789 529 152


5. PROPERTY, PLANT AND EQUIPMENT (continued)Acquisition of

Opening subsidiaries Closingbalance and businesses Additions Disposals Transfers balance

2013 R’000 R’000 R’000 R’000 R’000 R’000

COSTLand – 43 902 – – – 43 902Buildings and improvements – 202 220 1 879 (749) 12 005 215 355Plant and machinery – 198 464 12 138 (2 618) 28 613 236 597Motor vehicles – 4 050 1 637 (5) 1 237 6 919Office equipment – 4 632 1 188 (53) 5 003 10 770Furniture and fittings – 1 251 – (11) 220 1 460Capital work-in-progress – 28 701 34 550 – (47 078) 16 173

– 483 220 51 392 (3 436) – 531 176

Opening Closingbalance Depreciation Disposals Transfers balance

R’000 R’000 R’000 R’000 R’000

ACCUMULATED DEPRECIATIONBuildings and improvements – 11 157 (333) – 10 824Plant and machinery – 27 879 (638) – 27 241Motor vehicles – 885 – – 885Office equipment – 3 161 (5) – 3 156Furniture and fittings – 284 (3) – 281

– 43 366 (979) – 42 387

Net book value – 488 789

Included in property, plant and equipment are the following items which serve as security as indicated below (refer note 14):

Rhodes Food Group (Proprietary) LimitedA first covering mortgage bond for R900 000 000, registered in favour of Nedbank Limited, over:

– Erf 2, Aeroton, 149 Samuels Road, Johannesburg, Gauteng

– Portion 1 of Farm 1631, Paarl, Western Cape



– Portion 37 of Farm Straatkerk 190, Tulbagh, Western Cape

– Portion 40 of Farm Straatkerk 190, Tulbagh, Western Cape

– Remaining extent of Farm Bellevue 191, Tulbagh, Western Cape

– Portion 1 of Farm Bellevue 191, Tulbagh, Western Cape

– Remaining extent of portion 1 of Farm Groote Vallei 223, Tulbagh, Western Cape

– Remaining extent of portion 5 of Farm Groote Vallei 223, Tulbagh, Western Cape

– Portion 1 of the Farm 378 Tulbagh, Western Cape

– Remaining extent of the Farm 378 Tulbagh, Western Cape

– Portion 226 of the Farm Luipaardsvlei No. 246, Krugersdorp, Gauteng

A first covering mortgage bond of R20 000 000, registered in favour of Nedbank Limited, over Erf 2218, Erf 656 and Erf 1379 in Makhado, a township in the Dzanani district, Limpopo.

A general notarial mortgage bond, for R900 000 000, registered in favour of Nedbank Limited, over all moveable property, including intellectual property, plant and equipment, biological assets, inventory and receivables.




5. PROPERTY, PLANT AND EQUIPMENT (continued)Swaziland Fruit Canners (Proprietary) LimitedIn favour of Nedbank (Swaziland) Limited:

– A first and second mortgage bond for R15 million and R11 million respectively over the land and buildings of the company excluding those mentioned below.

– A first mortgage bond of R1,5 million over portion 4 of farm 670 and portion 2 of farm 45.

– A deed of hypothecation for R35 million over stocks, accounts receivable, plant and equipment and moveable assets.

– A negative deed of pledge over moveable and immovable assets.

In favour of Standard Bank (Swaziland) Limited:

– A first mortgage bond of R16 million over portion A of farm number 286.

The net book value of all the property, plant and equipment, serving as security, is as follows:

2014 2013R’000 R’000

Nedbank Limited 469 209 433 229First National Bank Limited 4 334 1 911Nedbank (Swaziland) Limited 4 174 3 136

A register of particulars of the freehold land and buildings is maintained at the company’s registered office and is available for inspection.

6. INTANGIBLE ASSETSOpening Closingbalance Additions balance

2014 R’000 R’000 R’000

Trademark 50 951 – 50 951Export quota 100 – 100

Net book value 51 051 – 51 051

Acquisition ofOpening subsidiaries Closingbalance and businesses balance

2013 R’000 R’000 R’000

Trademark – 50 951 50 951Export quota – 100 100

Net book value – 51 051 51 051

Management assess the intangible assets for impairment on an annual basis using cash flow projections based on financial strategic projections. These projections are based on past performance and expectations for market development. Key assumptions used by management during the current financial year are:

2014%

2013%

Growth in revenue 6,00 6,00Fair rate of return/discount rate 12,30 20,58Additional margin on branded products 0,50 to 3,00 0,50 to 3,00


7. GOODWILLOpening Closingbalance Additions Disposal balance

2014 R’000 R’000 R’000 R’000

Cost 126 325 – – 126 325

Acquisition ofOpening subsidiaries Closingbalance and businesses Disposal balance

2013 R’000 R’000 R’000 R’000

Cost – 126 325 – 126 325

2014 2013R’000 R’000

The cash generating units (CGUs) to which goodwill have been allocated, are as indicated below:Regional segment 96 918 96 918International segment 29 407 29 407

126 325 126 325

The recoverable amount of the CGUs are determined by calculating the value-in-use. These calculations use pre-taxation cash flow projections based on available management forecasts and a growth rate of 6% for periods exceeding the management forecast period. These projections are based on past performance and expectations for market development. Cash flows are determined for a five-year period. Key assumptions used by management during the current financial year are:

2014 2013% %

Growth in revenue 6,00 6,00Fair rate of return/discount rate 12,30 20,58

Based on the above assessment no impairment is required to be recognised in the current year (2013: Rnil)

2014 2013R’000 R’000

8. BIOLOGICAL ASSETSLivestock 8 602 7 644Growing crops 19 413 20 402

28 015 28 046

Reconciliation of changes in carrying value of biological assetsCarrying value at the beginning of the year 28 046 –Acquisition of subsidiaries – 24 168Gain arising from change in fair value attributable to physical and price changes (31) 3 878

Carrying value at the end of the year 28 015 28 046

A general notarial bond is registered over biological assets of Rhodes Food Group Proprietary Limited, as disclosed in note 5.

LivestockMethod of valuation

The value of the livestock is calculated based on an independent valuation obtained from an industry specialist.

Nature of activities

The company produces dairy products.

Financial risk management strategies

The company is exposed to the following risks relating to its agricultural activities:

Regulatory and environmental risksThe company is subject to laws and regulations in countries in which it operates. The company has established environmental policies and procedures aimed at compliance with local environmental and other laws.






8. BIOLOGICAL ASSETS (continued)Climate and other risksRisk include theft and diseases. Controls in place are property security, identification marks on all cattle, vaccinating and dipping of cattle.

Measurement of fair value

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.

The estimated fair value would increase/(decrease) if:More/(less) livestock were classified as breedersLivestock prices increased/(decreased)Weight and quantity premiums increased/(decreased)

Pineapple plantationsMethod of valuation

Growing crops are measured at fair value less estimated point-of-sale costs.

Nature of activities

The company owns and manages 595 (2013: 598) hectares of pineapples. The company manages a further 916 (2013: 924) hectares of pineapples on leasehold land. The company is engaged in the planting, growing and harvesting of pineapples, which are supplied to the company’s cannery operation which converts fruit to canned products and juice concentrates. A minor quantity of fruit is sold as fresh produce. Fields are managed on a sustainable basis, which comprise a 42-month crop rotation.

Financial risk management strategies

The company is exposed to the following risks relating to its agricultural activities:

Regulatory and environmental risksThe company is subject to laws and regulations in countries in which it operates. The company has established environmental policies and procedures aimed at compliance with local environmental and other laws.

Climate and other risksThe company’s pineapple plantations are exposed to the risk of damage from climatic changes, diseases, and other natural forces. The company follows prudent industry accepted care practices with respect to the use of fertilisers, insecticides and herbicides to control growing diseases and insect infestation. The company does not insure growing crops in the fields.

Measurement of fair value

The fair value 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 (average of 54 975 tons delivered for a four-year period) and estimated pricing (R1 222 per ton delivered) of pineapples harvested.

The estimated fair value would increase/(decrease) if:Pineapple volumes increased/(decreased)Pineapple prices increased/(decreased)Costs of growing or harvesting (increased)/decreased

The following table shows a reconciliation between the opening balance and closing balance for level 3 valuations:

2014 2013R’000 R’000

Carrying value at the beginning of the year 28 046 16 683Acquisition of business – 7 485Gains included in profit or loss (31) 3 878

Change in fair value (realised) – –Change in fair value (unrealised) (31) 3 878

Gains included in other comprehensive income – –

Carrying value at the end of the year 28 015 28 046


9. LOANS RECEIVABLE2014 2013

R’000 R’000

Non-current assetsManagement loans 9 275 9 625Rhodes Food Group Proprietary Limited – –

Current assetsManagement loans (accrued interest) 545 523Constitution Road Wine Growers Proprietary Limited 1 396 1 450

1 941 1 973

The management loans are unsecured and bear interest at a variable rate, which is 6,5% at the reporting date (2013: 6,5%). Rhodes Food Group Proprietary Limited advanced loans to members of management to assist them in acquiring shares in Rhodes Food Group Holdings Limited. Interest is repayable on an annual basis to the extent that incentives due to management exceed the interest payable; unpaid interest will be capitalised. The capital is repayable at the earlier of sale of shares held directly or indirectly in Rhodes Food Group Holdings Limited or termination of employment.

The loan to Constitution Road Wine Growers Proprietary Limited is unsecured, bears no interest and is repayable from future fruit harvest revenue from the relevant orchards of the abovementioned entity. The first repayment was made in the current financial year.

The loan to Rhodes Food Group Proprietary Limited bears no interest and is repayable on demand. It is however not repayable within the next 12 months due to the covenant agreement between Rhodes Food Group Proprietary Limited and Nedbank Limited. The company issued a guarantee and pledge in favour of Nedbank Limited relating to any claims against Rhodes Food Group Proprietary Limited.

10. FINANCIAL INSTRUMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS10.1 Other financial instruments

2014 2013R’000 R’000

Interest rate swap – not designated in hedge accounting relationshipFinancial assetNon-current 791 2 471Current (included in accounts receivable) 1 173 –

Financial liabilityCurrent (included in accounts payable and provisions) – 359

Interest rate swap agreements for an initial period ranging between 12 and 30 months have been concluded to convert floating rates (linked to prime and JIBAR) to fixed rates. The current notional value of the swaps, and the rates applicable, are as follows:

Notional value Fixed rate Variable rateR’000 % %

2014Swap A 73 538 7,45 Prime -1,75Swap B 9 143 8,07 Prime -1,00Swap C 32 118 7,98 Prime -1,00Swap D 30 038 9,01 JIBAR +3,50Swap E 127 500 12,50 JIBAR +6,75

2013Swap A 80 074 7,45 Prime -1,75Swap B 11 615 8,07 Prime -1,00Swap C 45 296 7,98 Prime -1,00Swap D 33 750 9,01 JIBAR +3,50Swap E 127 500 12,50 JIBAR +6,75






10. FINANCIAL INSTRUMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS (continued)10.2 Foreign exchange contracts

The Group enters into forward exchange contracts (FECs) to buy and sell specified amounts of foreign currency in the future at a predetermined exchange rate. The contracts are entered into to manage the Group’s exposure to fluctuations in foreign currency exchange rates on specific transactions. The contracts are matched by anticipated future cash flows in foreign currencies. The Group does not use forward exchange contracts for speculative purposes.

At the reporting date, the Group had entered into the following forward exchange contracts:

ContractForeign Rand fair Contract

2014 amount value value (loss)/gainFEC’s in respect of anticipated receipts from customers ’000 R’000 R’000 R’000

AUD 1 410 14 283 13 981 302CAD 594 5 969 6 045 (76)USD 4 455 50 478 51 960 (1 482)GBP 2 245 41 334 41 508 (174)EUR 3 110 37 243 37 989 (746)

149 307 151 483 (2 176)

2013FEC’s in respect of anticipated receipts from customers

AUD 1 879 17 704 17 824 (120)CAD 777 7 592 7 678 (86)USD 7 070 70 741 71 906 (1 165)GBP 2 393 36 678 39 594 (2 916)EUR 1 687 22 557 23 303 (746)

155 272 160 305 (5 033)

Financial instruments at fair value through profit or loss Level Valuation technique

Interest rate swap Level 2 Mark to market valuation by issuer of instrumentForeign exchange contracts Level 2 Mark to market rates by issuer of instrument

11. INVENTORY2014 2013

R’000 R’000

Finished goods 420 138 349 735Work-in-progress 7 643 5 692Raw materials 114 851 102 236

542 632 457 663

The value of the inventory disclosed at net realisable value is R28 471 013 (2013: R23 349 760) for the Group. A general notarial bond is registered over inventories of Rhodes Food Group Proprietary Limited and Swaziland Fruit Canners Proprietary Limited, as disclosed in note 5.


12. ACCOUNTS RECEIVABLE2014 2013

R’000 R’000

Trade receivables 365 027 286 547Less: Allowance for doubtful debt – (18)

Net trade receivables 365 027 286 529Sundry receivables 4 821 3 470Prepayments 7 509 9 086Deposits 1 238 208Other receivables 3 498 2 204VAT receivable 6 763 –Other financial instruments (refer to note 10.1) 1 173 –

390 029 301 497

Swaziland Fruit Canners Proprietary Limited’s receivables are pledged in favour of Nedbank (Swaziland) Limited.

Rhodes Food Group Proprietary Limited’s current and future receivables are pledged in favour of Nedbank Ltd, as disclosed in note 5.

Trade receivables

The average credit period on sale of goods is 55 days (2013: 56 days) for the Group. No interest is charged on trade receivables with amounts outstanding longer than the credit period.

Of the trade receivables balance at the reporting date, the following amounts are due from the Group’s largest customers:

2014 2013R’000 R’000

Customer A 53 267 49 348Customer B 62 826 40 414Customer C 42 530 30 025Customer D – 51 487

158 623 171 274

Each of the above customers, represent more than 10% of the total balance of Group trade receivables.

In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. Accordingly, the directors believe that an allowance for doubtful debt of Rnil (2013: R17 655) is adequate for the Group. The impairment recognised represents the difference between the carrying amount of these trade receivables and the present value of the expected liquidation proceeds.

2014 2013R’000 R’000

Movement in allowance for doubtful debtsBalance at the beginning of the year (18) –Doubtful debt reversed/(provided) 18 (18)

Balance at the end of the year – (18)

Ageing of impaired trade receivables60 to 90 days – 1890 to 120 days – –120 days and over – –

Closing balance – 18

Included in the Group’s trade receivables balance are debtors which are past due at the reporting date, and against which an allowace has not been raised as there has not been a significant change in credit quality and the amounts are still considered recoverable.

2014 2013R’000 R’000

Ageing of past due but not impaired60 to 90 days 10 380 11 57090 to 120 days 1 738 1 681More than 120 days 2 047 963

14 165 14 214




13. SHARE CAPITAL

2014 2013R’000 R’000

Authorised1 800 000 000 ordinary shares (2013: 1 000 000)9 000 000 “A” redeemable convertible preference shares (2013: 1 000 000)9 000 000 “B” redeemable convertible preference shares (2013: 1 000 000)Issued171 000 000 ordinary shares (2013: 95 000) 142 500 142 5009 000 000 “A” redeemable convertible preference shares (2013: 5 000) 7 500 7 5009 000 000 “B” redeemable convertible preference shares (2013: 5 000) 1 1

150 001 150 001

10 000 “A” cumulative redeemable preference shares 156 005 156 005Preference shareholders for dividend accrual 67 228 30 517

223 233 186 522

Number of shares

% of total of shares

Non-public shareholdingOrdinary sharesMajor shareholdersCapitalworks Rhodes Food Investment Partnership 77 299 200 45,20South African Investment Partnership 11 530 800 6,74South African Investment Partnership II 32 670 000 19,11The Bruce Henderson Trust 21 600 000 12,63The Rhodes Food Group Management Trust 9 900 000 5,79Other shareholders 18 000 000 10,53

171 000 000 100,00

“A” redeemable convertible preference sharesMajor shareholdersCapitalworks Rhodes Food Investment Partnership 5 725 800 63,62South African Investment Partnership 855 000 9,50South African Investment Partnership II 2 419 200 26,88

9 000 000 100,00

“B” redeemable convertible preference sharesMajor shareholdersCostaras Family Trust 1 999 800 22,22Jacian Trust 1 999 800 22,22Lahanja Trust 1 999 800 22,22RK Phillips Trust 1 800 000 20,00Job Mpele 1 200 600 13,34

9 000 000 100,00

The “A” class redeemable convertible preference shares in issue rank pari passu with the ordinary shares in regard to voting rights and distributions. The “B” class redeemable convertible shares do not have any voting rights or rights to distributions.

If certain predetermined targets are achieved the “B” redeemable convertible preference shares will be converted to ordinary shares and an equivalent number of “A” redeemable convertible preference shares will be redeemed at a value of R1,00 per 1 800 shares. To the extent the targets are not achieved the “B” redeemable convertible preference shares will be redeemed at a value of R1,00 per 1 800 shares and an equivalent number of “A” redeemable convertible preference shares will converted to ordinary shares.


13. SHARE CAPITAL (continued)The “A” class cumulative redeemable preference shares in issue relate to Rhodes Food Group Proprietary Limited. The preference shares have a coupon rate of 18% per annum. The preference shares do not have a fixed redemption date and Rhodes Food Group Proprietary Limited does not have any obligation, and no holder has any right to require the company, to redeem or repurchase any “A” Preference Share prior to three years and one day after the date of issue. Rhodes Food Group Proprietary Limited will be obliged to redeem all “A” preference shares which remain in issue if the company is placed into liquidation, business rescue or under judicial management. The redemption amount will be equal to the capital value, R156 005 319, of the shares. The “A” class cumulative redeemable preference shares have been classified as liabilities, with their dividends being recognised as finance charges in the statement of profit or loss and comprehensive income.

The unissued shares are under the control of the directors until the forthcoming annual general meeting.

Management share trust

In order to achieve an alignment of interests, some senior management members of Rhodes Food Group Proprietary Limited participate in the economic benefit of the Group through units held by them in the Rhodes Food Group Management Trust.

Other shareholders

In order to achieve an alignment of interests, key management of Rhodes Food Group Proprietary Limited participate in the economic benefit of the Group either through beneficial interest in family trusts or through direct shareholding in their personal capacity.

Rhodes Food Group Proprietary Limited provided financial assistance through loan advances to the above managers. All managers to whom loans were advanced pledged and ceded their rights and interests in the units in the Management Trust to Rhodes Food Group Proprietary Limited or shares in the company as security for the loans. Details of the loans advance to management are set out in note 9.






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14. LONG-TERM LOANS (continued)14.2 Finance leases

The Group leases certain of its manufacturing equipment under finance leases. For additional disclosure regarding the terms of the leases, refer to note 14.1.

The future lease payments are as follows:

PresentFuture value of

minimum minimumlease lease

payments Interest paymentsR’000 R’000 R’000

2014Less than one year 4 136 891 3 245Between one and five years 7 833 1 031 6 802More than five years – – –

11 969 1 922 10 047

2013Less than one year 1 068 248 820Between one and five years 2 463 250 2 213More than five years – – –

3 531 498 3 033

15. DEFERRED TAXATIONThe major components of the deferred tax balances, together with movements during the year are as follows:

Opening balance

Charge (credit) to income

for the yearClosing

balanceR’000 R’000 R’000

2014Tax effect of:Excess tax allowance over depreciation charges for property, plant and equipment 50 525 918 51 443Excess tax allowances over amortisation of intangible assets 14 266 – 14 266Estimated tax losses (12 926) 3 367 (9 559)Deferred capital gains tax on adoption of IFRS deemed cost of land and buildings 203 2 058 2 261Provisions not allowable for tax purposes (18 102) (10 472) (28 574)Difference between tax and accounting treatment of:– Biological assets 8 253 (720) 7 533– Prepayments 1 110 (85) 1 025– Inventory 5 024 448 5 472– Foreign exchange contracts (893) 629 (264)

47 460 (3 857) 43 603


Opening balance

Acquisition of subsidiaries

Charge (credit) to income

for the yearClosing

balanceR’000 R’000 R’000 R’000

15. DEFERRED TAXATION (continued)2013Tax effect of:Excess tax allowance over depreciation charges for property, plant and equipment – 48 250 2 275 50 525Excess tax allowances over amortisation of intangible assets – 14 266 – 14 266Estimated tax losses – (15 601) 2 675 (12 926)Deferred capital gains tax on adoption of IFRS deemed cost of land and buildings – 2 535 (2 332) 203Provisions not allowable for tax purposes – (4 851) (13 251) (18 102)Difference between tax and accounting treatment of: –– Biological assets – 7 093 1 160 8 253– Prepayments – 1 288 (178) 1 110– Inventory – 2 735 2 289 5 024– Foreign exchange contracts – (775) (118) (893)

– 54 940 (7 480) 47 460

2014 2013R’000 R’000

Deferred taxation asset – (88)Deferred taxation liability 43 603 47 548

Net deferred taxation liability 43 603 47 460

16. ACCOUNTS PAYABLE AND PROVISIONS16.1 Accounts payable

2014 2013R’000 R’000

Trade payables 215 869 191 175VAT payable – 8 646Accruals 117 244 84 132Other payables – 5 139Other financial instruments (refer to note 10.1) – 359

333 113 289 451

The average credit period on purchases is 42 days (2013: 50 days) for the Group. No interest is charged on trade payables within the credit period granted.

The Group has financial risk management policies in place to ensure that all payables are paid within a reasonable time of the credit timeframe.

16.2 Provision for employee benefitsThe provision for employee benefits comprises the following amounts:

2014 2013R’000 R’000

Provision for incentives 86 762 62 578Provision for leave pay 12 513 10 143

99 275 72 721






16. ACCOUNTS PAYABLE AND PROVISIONS (continued)16.2 Provision for employee benefits (continued)

Opening Acquisition of Closingbalance subsidiaries Raised Utilised balance

R’000 R’000 R’000 R’000 R’000

2014Provision for employee benefits 72 721 – 54 871 (28 317) 99 275

2013Provision for employee benefits – 43 813 52 618 (23 710) 72 721

16.3 Employee benefit liability

2014 2013R’000 R’000

Total employee benefit liability per statement of financial position:Swaziland Fruit Canners Proprietary Limited 6 346 3 055Rhodes Food Group Proprietary Limited 2 785 3 396

9 131 6 451

Swaziland Fruit Canners Proprietary LimitedAll employees who leave service by way of retirement, retrenchment or redundancy, are required to be paid an allowance calculated on the number of years of service.

An actuarial valuation was performed by Alexander Forbes Financial Services Proprietary Limited in September 2014 and 2012 respectively.

The amount recognised in the statement of financial position is determined as follows:2014 2013

R’000 R’000

Liability recorded in the statement of financial position as part of “employee benefit liability” 6 346 3 055

Movement in liabilityBalance at the beginning of year 3 055 –Acquisition of subsidiary – 2 612Raised during the year 927 1 033Payments made during the year (790) (590)Actuarial loss on defined benefit obligation 3 154 –

Balance at the end of year 6 346 3 055

The amounts recognised in profit or loss are as follows:Current service costs 502 457Interest cost 425 419Expense – 157

927 1 033

The amounts recognised in other comprehensive income are as follows:Actuarial losses (3 154) –

% %

The principal actuarial assumptions used are as follows:Discount rate 8,50 7,00Inflation rate 6,20 5,00

Salary increase rate 7,20 6,00

Sensitivity analysis on the principle actuarial assumptions is as follows: 2014 % change

A 1% decrease in the discount rate will impact the present value of the liabilities as follows:Total liability 6 953 000 9,60

A 1% decrease in the inflation rate will impact the present value of the liabilities as follows:Total liability 5 816 000 (8,40)


16. ACCOUNTS PAYABLE AND PROVISIONS (continued)16.3 Employee benefit liability (continued)

Rhodes Food Group Proprietary LimitedRhodes Food Group Proprietary Limited is obliged to make contributions to the medical aid fund of Bull Brand retirees who retired before 1 August 2013.An actuarial valuation was performed by Cadiant Partners Consultants & Actuaries in September 2014 and July 2013 respectively.The amount recognised in the statement of financial position is determined as follows:

2014 2013R’000 R’000

Liability recorded in the statement of financial position as part of “employee benefit liability” 2 785 3 396

Movement in liabilityBalance at the beginning of year 3 396 –Acquisition of subsidiary – 3 395Raised during the year 314 1Payments made during the year (554) –Actuarial gain (371) –

Balance at the end of year 2 785 3 396

The amounts recognised in profit or loss are as follows:Operating costs – 1Interest cost 314 –

The amounts recognised in other comprehensive income are as follows:Actuarial gain 371 –

% %

The principal actuarial assumptions used are as follows:Discount rate 7,80 8,00

Mortality rate PA (90) withtwo-year

adjustment

PA (90) withtwo-year

adjustment

Sensitivity analysis on the principle actuarial assumptions are as follows: 2014 % Change

A 1% decrease in the discount rate will impact the present value of the liabilities as follows:Total liability 2 940 000 5,60Service and interest cost 180 000 (7,60)

The impact of a change in mortality basis from the current assumed PA (90) with a two-year adjustment to PA (90) with a four-year adjustment is as follows:Total liability 2 976 000 6,90Service and interest cost 209 000 7,40






17. OTHER LOAN2014 2013

R’000 R’000

KAP Manufacturing Proprietary Limited – 14 113

The loan from KAP Manufacturing Proprietary Limited was unsecured, bore interest at the overnight call funding rate, published by the Standard Bank of South Africa, and was repayable on transfer of the land, buildings and trademark acquired from KAP Manufacturing Proprietary Limited, which occurred in the current financial year.

18. EARNINGS BEFORE INTEREST AND TAXATION2014 2013

R’000 R’000

Earnings before interest and taxation is arrived at after taking the following items into account:IncomeProfit on disposal of property, plant and equipment 838 2 331Unrealised gain on interest rate swap 1 964 2 112

ExpensesAuditors’ remuneration 2 484 2 200

Audit fee– current year: Deloitte & Touche 1 318 1 384– current year: KPMG Swaziland 643 589Other services– current year: Deloitte & Touche 444 227– current year: KPMG Swaziland 79 –

Depreciation 47 379 43 366

Buildings and improvements 11 728 11 035Plant and machinery 29 857 27 879Motor vehicles 1 123 885Office equipment 4 385 3 161Furniture and fittings 286 284Leasehold improvements – 122

Directors’ emoluments 13 188 10 099

– Executive 12 741 9 933– Non-executive 447 166

Management fee paid to Capitalworks 488 450Operating lease charges – paid 18 479 17 927Total staff costs 396 329 325 036

– included in cost of goods sold 166 628 137 831– included in operating expenses 229 701 187 205

Realised loss on interest rate swap 2 440 955Unrealised foreign exchange loss 2 176 5 033


19. REMUNERATION PAID TO DIRECTORS AND PRESCRIBED OFFICERSBAS Henderson

Chief executive officerCC Schoombie

Chief finacial officer

Executive directors 2014 2013 2014 2013

Basic salary 2 372 2 183 1 544 1 377Bonus/performance related payments 4 747 2 282 2 735 2 841Travel allowance 331 331 161 161Contributions under medical scheme 101 92 – –Contributions under pension scheme 363 334 236 211Contributions under disability and funeral scheme 94 66 57 55

8 008 5 288 4 733 4 645

Bruce Henderson Trust(Trust to BAS Henderson)

Jacian Trust(Trust to CC Schoombie)

2014 2013 2014 2013

Number of ordinary shares held 21 600 000 12 000 4 001 400 2 223Value of ordinary shares held (R’000) 18 000 18 000 3 355 3 335Number of “B” redeemable convertible preference shares – – 1 999 800 1 111

Certain directors have beneficial interest in family trusts. During the 2013 financial year these family trusts acquired shares in Rhodes Food Group Holdings Proprietary Limited. A total of 25 601 400 (2013: 14 223) ordinary shares and 1 999 800 (2013: 1 111) preference shares, for R21 334 500 and R111 respectively, were acquired indirectly by the directors as described above. CC Schoombie obtained financial assistance of R1 166 666 in total, from Rhodes Food Group Proprietary Limited, for these acquisitions. As at 28 September 2014, R80 016 (29 September 2013: R78 342) of interest had accrued on these loans.

There are no service contracts with directors of the Group with a notice period of greater than one year and with compensation on termination of greater than one year’s salary.

Fees for services as directors

2014 2013Independent non-executive directors R’000 R’000

Ms YG Muthien 100 –LA Makenete 237 166MR Bower 105 –TP Leeuw 105 –

447 166

CL Swart GJH Willis

Non-executive directors 2014 2013 2014 2013

Number of indirect ordinary shares held 2 516 174 1 398 344 886 192Value of indirect ordinary shares held (R’000) 2 097 2 097 287 287Number of indirect “A” redeemable convertible preference shares 186 401 104 25 549 14Value of indirect “A” redeemable convertible preference shares (R’000) 155 155 21 21

20. INTEREST PAID2014 2013

R’000 R’000

Bank overdraft 14 778 14 331Long-term loans 45 086 41 543Other short-term loans 6 871 4 884Preference share dividend accrual 36 711 30 517

103 446 91 275






21. TAXATION2014 2013

R’000 R’000

Taxation: South AfricaCurrent taxation– current year 52 797 40 681– prior year under/(over) provision 455 (734)Deferred taxation– current year (5 770) (12 289)Taxation: SwazilandCurrent taxation– current year 438 –Deferred taxation– current year 2 884 4 809

50 804 32 467

Deferred taxation recognised through other comprehensive income: remeasurement of defined benefit liability (971) –

Tax rate reconciliation % %

Standard rate 28,00 28,00Non-deductible expenses 5,79 18,25Exempt income – (0,90)Prior year under/(over) provision 2,36 (1,04)Other reconciling items 1,97 1,64

Effective tax rate 38,12 45,95

22. HEADLINE EARNINGS PER SHARE22.1 Headline earnings per share

2014 2013R’000 R’000

Reconciliation between earnings attributable to owners of the parent and headline earnings:Earnings attributable to owners of the parent 81 898 37 337Adjustments to earnings attributable to owners of the parent (603) (1 678)

Gross profit on disposal of property, plant and equipment (838) (2 331)Taxation effect 235 653

Headline earnings 81 295 35 659

Headline earnings per share (cents) 47,5 37 535,8

22.2 Diluted headline earnings per share

Headline earnings 81 295 35 659Diluted headline earnings per share (cents) 45,2 35 659,0

22.3 Weighted average number of shares in issue

Weighted average number of shares in issue 171 000 000 95 000Effect of convertible preference shares 9 000 000 5 000

Weighted average number of dilutive shares in issue 180 000 000 100 000


23. COMMITMENTS FOR CAPITAL EXPENDITUREThe following capital expenditure commitments have been made by the Group:

2014 2013R’000 R’000

Approved but not yet contracted 21 039 11 245Contracted for 28 248 4 892

Finance required to meet this expenditure will be funded from existing cash resources and relevant external financing.

24. CONTINGENT LIABILITIESThe Group has entered into guarantees, the outcome of which has not been determined. These guarantees relate to the following:

2014 2013R’000 R’000

Import and operations activities 7 434 2 376

Unlimited suretyship for Rhodes Food Group Proprietary Limited banking facilities with Nedbank Limited, issued by Swaziland Fruit Canners Proprietary Limited.

R75 000 000 suretyship for Swaziland Fruit Canners Proprietary Limited banking facility with Nedbank (Swaziland) Limited issued by Rhodes Food Group Proprietary Limited.

Unlimited suretyship including cession of loan funds for Swaziland Fruit Canners Proprietary Limited banking facility with Nedbank (Swaziland) Limited issued by Rhodes Foods Swaziland Proprietary Limited.

Cession and pledge of Rhodes Food Group Proprietary Limited shares in Swaziland Fruit Canners Proprietary Limited and Rhodes Foods Swaziland Proprietary Limited in favour of Nedbank Limited.

25. OPERATING LEASE COMMITMENTSPlant and

machineryOffice

equipmentMotor

vehicles LandR’000 R’000 R’000 R’000

2014Due within one year 13 375 589 650 1 730Due within two to five years 3 533 534 1 296 2 439Due after five years – – – –

16 908 1 123 1 946 4 169

2013Due within one year 11 919 282 454 1 530Due within two to five years 14 989 182 369 2 471Due after five years – – – –

26 908 464 823 4 001

26. RETIREMENT BENEFITSRhodes Food Group Proprietary Limited provides retirement benefits to its permanent employees through a defined contribution pension fund and defined contribution provident funds. The pension fund is administered by Alexander Forbes. The Sunpie Foods Provident Fund is administered by Liberty Life, the SACCAWU National Provident Fund is administered by Old Mutual and the Rhodes Food Group Proprietary Limited provident fund is administered by NBC Consultants. The retirement benefit plans are governed by the Pension Funds Act, 1956 (Act 24 of 1956). All of the funds are defined contribution plans; accordingly there is no requirement to have the funds actuarially valued.

Swaziland Fruit Canners Proprietary Limited and Rhodes Foods Swaziland Proprietary Limited provides retirement benefits to its permanent employees through a defined benefit provident fund. The SIBAYA Provident Fund is administered by Alexander Forbes.

The total value of the contributions paid by the Group to the pension fund during the year was R12 397 530 (2013: R9 715 515).

The total value of contributions paid by the Group to the provident funds during the year was R6 472 185 (2013: R4 954 551).

The Group has 365 (2013: 337) employees who contribute to the pension fund, and 832 (2013: 967) employees who contribute to the provident funds.






27. FINANCIAL INSTRUMENTSFinancial instruments consist of loans, preference shares, trade and other receivables, bank balances and trade and other payables resulting from normal business activities.

27.1 Capital risk managementThe capital structure of the Group consists of debt and equity, comprising ordinary share capital, preference shares, accumulated profit and long-term liabilities.

The Group manage their capital to ensure that it will be able to continue as a going concern. The Group’s overall strategy has remained unchanged from the previous financial year.

27.2 Significant accounting policiesDetails of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 3 to the financial statements.

27.3 Financial risk management objectivesThe Group seek to minimise the effects of fair value interest rate risk and price risk through active management processes. The Group do not enter into or trade in financial instruments, including derivative financial instruments, for speculative purposes.

27.4 Foreign currency riskThe Group has transactional currency exposure arising from the purchase and sale of goods that are denominated in foreign currencies. The currencies in which the Group primarily deals are US Dollar, Great British Pound, Euro, Canadian Dollar and Australian Dollar. The settlement of these transactions take place within a normal business cycle. The risk of fluctuations in foreign currencies is hedged by way of taking out forward exchange contracts for sales transactions denominated in foreign currencies. The market value of cash flow hedges at the reporting date is disclosed in note 10. Purchase transactions that create foreign currency cash flows are not hedged. Details of uncovered foreign currency denominated amounts are included in note 31.

27.5 Credit risk managementPotential concentrations of credit risk consist principally of trade receivables, short-term cash investments and loans.

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group have adopted a policy of only dealing with creditworthy counterparties. All changes to credit limits are reviewed and authorised by management. Allowances for doubtful debts are raised based on the customer’s cash status, long-outstanding debts and customers in liquidation, and are assessed by the directors on an ongoing basis. Short-term cash investments are placed with banks with a high credit rating. Loans are monitored and provision is made, where necessary, for any irrecoverable amounts. At the reporting date the directors deemed there not to be any significant credit risk, not provided for.

27.6 Liquidity and interest risk managementUltimate responsibility for liquidity risk management rests with the board of directors, which has built an appropriate liquidity risk management framework for the management of the Group’s short, medium and long-term funding and liquidity management requirements. The Group is able to actively source financing from their shareholders.

The sensitivity analysis below has been determined based on the exposure to interest rates for non-derivative instruments at the reporting date. For floating rate assets and liabilities, the analysis is prepared assuming the amount of asset or liability outstanding at the reporting date was outstanding for the whole year. A 100 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 100 basis points higher or lower and all other variables were held constant, the Group’s earnings before taxation for the year would decrease or increase by R8 785 210 (2013: R8 171 399). This is mainly attributable to the Group’s exposure to interest rates on its variable rate borrowings.


27. FINANCIAL INSTRUMENTS (continued)27.7 Liquidity and interest risk tables

The Group’s exposure to interest rate risk and the effective rates on the financial instruments at the reporting date are as follows:

Interest rate Year 1 Year 1 to 5 Over 5 years Total% R’000 R’000 R’000 R’000

2014AssetsAccounts receivable Interest-free 374 584 – – 374 584Interest rate swap Variable 1 173 791 – 1 964Loan receivable Interest-free 1 396 – – 1 396Bank balances and cash on hand Variable 1 730 – – 1 730Management loans Variable 545 9 275 – 9 820

379 428 10 066 – 389 494

2014

LiabilitiesAccounts payable Interest-free 333 113 – – 333 113Capitalworks Rhodes FoodInvestment Partnership 18% – 25 517 – 25 517South African InvestmentPartnership 18% – 3 806 – 3 806South African InvestmentPartnership II 18% – 10 785 – 10 785Loans from financial institutions Prime and JIBAR 88 846 478 424 73 273 640 543Finance lease liability Prime 4 136 7 833 – 11 969Bank overdraft Variable 128 605 – – 128 605Foreign exchange contract liability Interest-free 2 176 – – 2 176Preference shares 18% – 105 412 – 105 412Preference shareholders for dividend 18% – 67 228 – 67 228

556 876 699 005 73 273 1 329 154

Interest rate Year 1 Year 1 to 5 Over 5 years Total2013 % R’000 R’000 R’000 R’000

AssetsAccounts receivable Interest-free 292 412 – – 292 412Loan receivable Interest-free 1 973 – – 1 973Bank balances and cash on hand Variable 9 409 – – 9 409Management loans Variable 523 9 625 – 10 148

304 317 9 625 – 313 942

2013LiabilitiesAccounts payable Interest-free 280 446 – – 280 446Capitalworks Rhodes FoodInvestment Partnership 18% – 24 263 – 24 263South African InvestmentPartnership 18% – 3 183 – 3 183South African InvestmentPartnership II 18% – 9 020 – 9 020KAP International Holdings Limited Bank rate 14 113 – – 14 113Loans from financial institutions Prime and JIBAR 78 009 490 169 83 840 652 018Finance lease liability Prime 1 585 5 094 – 6 679Bank overdraft Variable 116 456 – – 116 456Foreign exchange contract liability Interest-free 5 033 – – 5 033Preference shares 18% – 156 005 – 156 005Preference shareholders for dividend 18% – 30 517 – 30 517

495 642 718 251 83 840 1 297 733






27 FINANCIAL INSTRUMENTS (continued)27.8 Fair value of financial instruments

The carrying amounts of the financial assets and liabilities reported in the statement of financial position approximate fair values at the reporting date, except where noted otherwise in the notes.

27.9 Analysis per category of financal insturmentsThe financial assets included in the liquidity and interest risk tables are categorised as “loans and receivables”, except for the other financial instruments categorised as “at FVTPL”. The financial liabilities included in the liquidity and interest risk tables are categorised as “at amortised cost”, except for the foreign exchange contract liability categorised as “at FVTPL”.

27.10 Biological asset financial risk managementThe Group does not hedge its exposure to changes in fair value of biological assets.

28. STATEMENT OF CASH FLOWS28.1 Cash generated from operations

2014 2013R’000 R’000

Reconciliation of earnings before taxation to cash generated from operationsEarnings before taxation 133 271 70 654Adjusted for:Depreciation 47 379 43 366Net interest paid 102 849 89 029Profit on disposal of property, plant and equipment (838) (2 331)Revaluation of biological assets 31 (3 878)Employee benefit liability (103) 445

Operating cash flows before working capital changes 282 589 197 285Working capital changes (106 142) 4 924

Increase in inventory (84 969) (63 842)Increase in accounts receivable (88 532) (12 760)Increase in accounts payable and provisions 70 216 79 758Movement in foreign exchange contract liability (2 857) 1 768

Cash generated from operations 176 447 202 209

28.2 Taxation paid

Amount outstanding at the beginning of the year 25 803 –Acquisition of subsidiaries – 685Current taxation charged per the statement of profit or loss 53 690 40 731Amount outstanding at the end of the year (29 684) (25 803)

49 809 15 613

28.3 Cash and cash equivalents

Cash and cash equivalents comprise the following amounts recorded in the statement of financial position:Bank balances and cash on hand 1 730 9 409Bank overdraft (128 605) (116 456)

Bank balances and cash on hand at the end of the year (126 875) (107 047)

RHODES FOODS Integrated Annual Report 2014 45

28. STATEMENT OF CASH FLOWS (continued)28.4 Acquisition of subsidiary

On 1 October 2012 Rhodes Food Group Proprietary Limited acquired the shares in Old Rhodes Food Group Proprietary Limited, including its investment in Swaziland Fruit Canners Proprietary Limited.

1 October 2012

R’000

Assets and liabilities acquired including Swaziland FruitCanners Proprietary Limited assets and liabilitiesProperty, plant and equipment 465 027Deferred taxation asset 2 660Intangible assets 30 951Investments 100Biological assets 24 168Loan receivable 1 450Inventory 325 391Accounts receivable 235 982Bank balance and cash on hand 24Liabilities (89 870)Deferred taxation liability (54 200)Accounts payable and provisions (256 768)Taxation payable (685)Bank overdraft (97 537)Foreign exchange contract liability (3 265)

Fair value of assets and liabilities acquired 583 429Minority shareholders (5 045)Purchase price (700 523)

Goodwill (122 139)

28.5 Acquisition of divisionOn 1 August 2013 Rhodes Food Group Proprietary Limited acquired the Bull Brand division from KAP Manufacturing Proprietary Limited.

1 August 2013

R’000

Assets and liabilities acquiredProperty, plant and equipment 18 193Intangible assets 20 000Inventory 68 431Accounts receivable 52 756Bank balance and cash on hand 11Deferred taxation liability (4 185)Retirement benefit obligations (3 395)Accounts payable and provisions (27 899)

Fair value of assets and liabilities acquired 123 912Purchase price (128 098)

Goodwill (4 186)






28. STATEMENT OF CASH FLOWS (continued)28.6 Acquisition of a business as a going concern

1 October 2012

R’000

Consideration paid:Cash 700 523

Net cash outflow on acquisitionConsideration paid in cash 700 523Net cash acquired 97 513

798 036

28.7 Acquisition of Bull Brand business

1 August 2013

R’000

Consideration paid:Cash 128 098

Net cash outflow on acquisitionConsideration paid in cash 128 098Net cash acquired (11)

128 087

29. RELATED PARTY TRANSACTIONSThe Group in the ordinary course of business, enter into various transactions with related parties.

2014

– Peaty Mills Plc is a related party as N Peaty, a director of a subsidiary, is also a director of Peaty Mills Plc.

– Rhodes Food Group Proprietary Limited is a related party as it is a 100% held subsidiary of Rhodes Food Group Holdings Limited.

– Swaziland Fruit Canners Proprietary Limited is a related party as Rhodes Food Group Proprietary Limited owns 93,7% of the shares in the entity.

– Rhodes Foods Swaziland Proprietary Limited is a related party as Rhodes Food Group Proprietary Limited owns 100% of the shares in the entity.

– Capitalworks Rhodes Food Investment Partnership is a related party as it is a shareholder of the company.

– South African Investment Partnership is a related party as it is a shareholder of Rhodes Food Group Holdings Limited.

– South African Investment Partnership II is a related party as it is a shareholder of Rhodes Food Group Holdings Limited.

During the year the Group entered into the following transactions with the related parties:

2014 2013R’000 R’000

IncomePeaty Mills Plc

Sales 211 427 139 778

ExpensesCapitalworks Rhodes Food Investment Partnership

Interest 3 525 2 921Management fee 488 450

South African Investment PartnershipInterest 521 436

South African Investment Partnership IIInterest 1 476 1 234

At the reporting date the following amounts were receivable from related partiesIncluded in trade receivablesPeaty Mills Plc 42 530 28 957


29. RELATED PARTY TRANSACTIONS (continued)2014 2013

R’000 R’000

At the reporting date the following amounts were due to related partiesIncluded in long-term loans:Capitalworks Rhodes Food Investment Partnership 21 376 17 850South African Investment Partnership 3 183 2 663South African Investment Partnership II 9 020 7 544

The amounts will be settled in cash. No amounts have been provided for during the year in respect of bad or doubtful debts owing by related parties.

Compensation of key management personnelShort-term benefits 28 240 21 963

30. SUBSIDIARIESDirect subsidiaries 2014 2013

Old Rhodes Food Group Holdings Proprietary LimitedIncorporated in South Africa (dormant company).Issued share capital 1 1Percentage holding (%) 100 100Company’s interest in shares (R’000) – –Indebtness (R’000) – –Subsidiary’s profit for the year (R’000) – –

Rhodes Food Group Proprietary LimitedIncorporated in South Africa (manufactures and markets convenience foods).Issued share capital 100 000 100 000Percentage holding (%) 100 100Company’s interest in shares (R’000) 132 000 132 000Indebtness (R’000) 18 218 18 000Subsidiary’s profit for the year (R’000) 70 056 27 139

Indirect subsidiariesMagpie Foods Proprietary LimitedIncorporated in South Africa (dormant company).Issued share capital 120 120Percentage holding (%) 100 100Company’s interest in shares (R’000) – –Indebtness (R’000) – –Subsidiary’s profit for the year (R’000) – –

Tradecor SA Proprietary LimitedIncorporated in South Africa (dormant company).Issued share capital 100 100Percentage holding (%) 100 100Company’s interest in shares (R’000) 100 100Indebtness (R’000) – –Subsidiary’s profit for the year (R’000) – –






30. SUBSIDIARIES (continued)Indirect subsidiaries (continued) 2014 2013

Swaziland Fruit Canners Proprietary LimitedIncorporated in Kingdom of Swaziland (manufactures and markets processed fruit).Issued share capital 9 628 597 9 628 597Percentage holding (%) 93,7 93,7Company’s interest in shares (R’000) 55 226 55 226Indebtness (R’000) – –Subsidiary’s profit for the year (R’000) 8 858 13 649

Rhodes Foods Swaziland Proprietary LimitedIncorporated in Kingdom of Swaziland (manufactures and markets processed fruit).Issued share capital 1 000 1 000Percentage holding (%) 100 100Company’s interest in shares (R’000) 25 000 25 000Indebtness (R’000) – –Subsidiary’s profit for the year (R’000) 4 852 (770)

Old Rhodes Food Group Proprietary LimitedIncorporated in South Africa (dormant company).Issued share capital 100 100Percentage holding (%) 100 100Company’s interest in shares (R’000) – –Indebtness (R’000) – –Subsidiary’s profit for the year (R’000) – –

The Group has not identified any subsidiaries that have a material non-controlling interest.

31. FOREIGN CURRENCY EXPOSUREThe following unhedged and uncovered foreign currency denominated liabilities, included in accounts payable, were in existence at the reporting date.

Foreign currency

amountExchange

rateRand

amountForeign currency ’000 R’000

2014USD 2 847 11,22 31 955GBP 86 18,23 1 572EUR 118 14,24 1 683AUD 69 9,84 679CAD 24 10,06 238

36 127

2013USD 741 10,07 7 462GBP 1 16,26 9EUR 10 13,62 142AUD 24 9,77 230CAD 352 9,38 3 300

11 143


31. FOREIGN CURRENCY EXPOSURE (continued)The following unhedged and uncovered foreign currency denominated assets, included in accounts receivable, were in existence at the reporting date.

Foreign currency

amountExchange

rateRand


2014USD 8 117 11,22 91 103GBP 1 424 18,23 25 961EUR 1 974 14,24 28 097AUD 1 495 9,84 14 711CAD 576 9,77 5 801

165 673

2013USD 6 685 10,07 67 321GBP 940 16,26 15 276EUR 2 134 13,62 29 064AUD 438 9,77 4 282CAD 1 557 9,38 14 608

130 551

The following unhedged and uncovered foreign currency denominated bank overdrafts and (cash and cash equivalents) were in existence at the reporting date.

Foreign currency

amountExchange

rateRand


2014USD 2 173 11,22 24 395GBP 75 18,23 1 374EUR 440 14,24 6 268AUD (7) 9,84 (73)CAD 63 9,77 620

32 584

2013USD (177) 10,07 (1 782)GBP (5) 16,26 (82)EUR 300 13,62 4 080AUD (332) 9,77 (3 244)CAD 38 9,38 353

(675)






31. FOREIGN CURRENCY EXPOSURE (continued)The following table details the Group’s sensitivity to a 10% increase and decrease in the Rand against foreign currencies. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the reporting date for a 10% change in foreign currency exchange rates. A negative number below indicates a decrease in earnings before taxation.

2014 2013R’000 R’000

USD 3 475 5 986GBP 2 301 1 527EUR 2 015 2 892AUD 1 411 405CAD 494 1 131

9 696 11 941

32. EVENTS SUBSEQUENT TO REPORTING DATE The financial statements were approved by the Board of Directors on 21 November 2014,

The company commenced the public trading of its issued share capital on the JSE Limited on 2 October 2014 which included the listing of 50 000 000 ordinary shares issued during a private placement prior to listing. R600 000 000 was raised during the private placement prior to the listing and the net proceeds of this were used to repay the following portion of the Group’s debt:

– the “A” cumulative redeemable preference shares and related dividend accrual for the total amount of R223 233 172; – the Nedbank Limited mezzanine loan of R174 131 260; – the Capitalworks Rhodes Food Investment Partnership loan of R21 375 690; – the South African Investment Partnership loan of R3 183 435; and – the South African Investment Partnership II loan of R9 020 064.

The following directors acquired shares in the company on 2 October 2014; YG Muthien (29 166 ordinary shares), MR Bower (41 666 ordinary shares), TP Leeuw (29 166 ordinary shares) and LA Makenete (8 333 ordinary shares). A Rich, the company secretary, also acquired 41 666 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.

33. FINANCIAL YEAR-ENDThe 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. References to a “financial year” are to the 52 weeks ended on or about 30 September. As a result the financial statements were prepared for the year ended 28 September 2014 (2013: 29 September).

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