Taste Holdings issues trading statement
Fin24

Taste Holdings issues trading statement

2014-09-12 11:13

Johannesburg - Taste Holdings [JSE:TAS] is currently finalising its results for the six months ended August 31 2014.

In light of a rights offer that opens on Monday September 15 2014, the directors issued a Sens trading statement substantially earlier than in prior years.

Notwithstanding the early release of the statement, the directors of Taste confirmed that the earnings guidance published in the rights offer declaration data announcement on August 28 2014, has marginally improved.

The directors anticipate that the earnings per share and the headline earnings per share for the six months ended August 31 2014 are expected to be between 3.0 cents and 3.7c, compared to the earnings per share of 5.8c and the headline earnings per share of 5.7c for the six months ended August 31 2013.

As announced in the aeclaration announcement, the results for the current period already include a portion of the initial expected once-off and up-front investment costs related to the Domino's Pizza roll-out and conversion.

These once-off investment costs include costs relating to the store conversions, establishment of a centralised dough production facility and initial training and marketing.

As these costs relate to the investment in Domino's, core headline earnings exclude such costs and take into account the normalising of the prior period's pizza division profit from store openings that occurred in the prior period, as the decision was taken this year not to open new Scooters Pizza or St Elmo's outlets in the current period due to the anticipated Domino's Pizza roll-out and conversion.

Core headline earnings more accurately reflects the comparable performance of the underlying business and Taste will disclose this performance measure for as long as it is relevant to stakeholders and at least until the conversion of Scooters Pizza & St Elmo's stores to Domino's is complete.

Accordingly, the guidance on core Ebitda for the current period, as published in the declaration announcement has improved and core Ebitda is now expected to be R1.7m to R2.2m higher than the prior period (R21.2m).

The guidance on core headline earnings for the current period, as published in the declaration announcement has improved and core headline earnings is now estimated to be between R0.8m and R1.3m lower than the prior period (R9.9m).

In the current period amortisation, depreciation and finance costs are materially higher than the prior period as a result of the capital expenditure incurred in the second half of the 2014 financial year for the acquisition of NWJ stores and expansion of capacity and further integration of the food services division.

Human resources

Additionally, changes were made to the human resource structure of the food division in the second half of the 2014 financial year in order to capatalise on international brand opportunities and acquisition potential in the local market. These additional costs are, therefore, not in the prior period.

Benefits from the NWJ capital expenditure are expected in the latter half of the current financial year due to the seasonal nature of the Groups jewellery division.

The benefits of the restructure of resources in the food division have been realised to some degree through the conclusion of a master licence agreement with Domino's.

The financial information on which this trading statement is based has not been reviewed or reported on by Taste's auditors. Taste's financial results are expected to be released on Sens on or about October 9 2014.