The difference between EPS and HEPS is mainly from the impairment of goodwill relating to a particular transaction and certain fixed assets.
A fire occurred at the S.A.D raisin production facility in Upington in August 2009. A provision for loss of raisin stock of R48 million is raised in terms of IAS 37 that prescribes the accounting treatment of provisions, contingent liabilities and contingent assets and is included in EPS and HEPS. This provision is expected to be reversed, possibly even before final approval of the full year results by the Board, once the insurance claim is acknowledged by the insurer. The operational performance for the full year to September 2009 was broadly in line with the guidance provided in the Condensed Interim Financial Results released on 25 May 2009.
The growth momentum of the first half accelerated slightly in the second half with lower selling prices on average in the key pasta, rice, bread and wheaten products categories, compared to the previous year. The deflationary effect of lower input costs and selling prices resulted in lower average inventory and debtor values compared to the previous corresponding period which contributed to better cash utilisation and lower financing costs.
As previously reported by the Company, the legal arguments of the Competition Commission and the Company's wholly-owned subsidiary Pioneer Foods (Pty) Ltd were made before the Competition Tribunal on 9 September 2009 in the two complaint referrals initiated by the Commission for:
1. alleged prohibited practices in the Western Cape requiring, amongst others, the imposition of an administrative penalty of 10% of the revenue derived by Pioneer Foods (Pty) Ltd from the production and sale of bread in the Western Cape in 2006; and
2. allegations of participating in a national bread cartel requiring, amongst others, the imposition of an administrative penalty of 10% of Pioneer Foods (Pty) Ltd's revenue in 2007.
In its answer to the complaint referrals in 2007, Pioneer Foods (Pty) Ltd admitted to certain facts relating to prohibited practices in the Western Cape and has continued to defend itself against all other allegations made by the Commission.
On 28 September 2009, the Commission applied to the Competition Tribunal for leave to amend the relief sought by it in the complaint referrals by introducing, amongst others, claims for:
The growth momentum of the first half accelerated slightly in the second half with lower selling prices on average in the key pasta, rice, bread and wheaten products categories, compared to the previous year. The deflationary effect of lower input costs and selling prices resulted in lower average inventory and debtor values compared to the previous corresponding period which contributed to better cash utilisation and lower financing costs.
As previously reported by the Company, the legal arguments of the Competition Commission and the Company's wholly-owned subsidiary Pioneer Foods (Pty) Ltd were made before the Competition Tribunal on 9 September 2009 in the two complaint referrals initiated by the Commission for:
1. alleged prohibited practices in the Western Cape requiring, amongst others, the imposition of an administrative penalty of 10% of the revenue derived by Pioneer Foods (Pty) Ltd from the production and sale of bread in the Western Cape in 2006; and
2. allegations of participating in a national bread cartel requiring, amongst others, the imposition of an administrative penalty of 10% of Pioneer Foods (Pty) Ltd's revenue in 2007.
In its answer to the complaint referrals in 2007, Pioneer Foods (Pty) Ltd admitted to certain facts relating to prohibited practices in the Western Cape and has continued to defend itself against all other allegations made by the Commission.
On 28 September 2009, the Commission applied to the Competition Tribunal for leave to amend the relief sought by it in the complaint referrals by introducing, amongst others, claims for:
1. substitution of the original relief sought in the Western Cape referral by the demand for an administrative penalty of 10% of Pioneer Foods (Pty) Ltd's revenue for 2006; alternatively an administrative penalty of 10% of Pioneer Foods (Pty) Ltd's revenue derived from the production and sale of bread in 2006; and
2. in the national bread cartel case, alternative relief of an administrative penalty of 10% of Pioneer Foods (Pty) Ltd's revenue derived from the production and sale of bread in 2006.
Pioneer Foods (Pty) Ltd has opposed certain of the amendments sought.
The legal entity Pioneer Foods (Pty) Ltd's audited national revenue in 2006 amounted to R7.86 billion. Pioneer Foods (Pty) Ltd's revenue derived from the production and sale of bread in the Western Cape in 2006 amounted to R384 million and its national revenue from the production and sale of bread in 2006 amounted to R1.65 billion.
To date, the Tribunal has not ruled on the amendment sought by the Commission nor the two complaint referrals.
No provision for a potential administrative penalty has been made by the Company to date.
Pioneer Foods remains committed to the principles of good corporate governance and further entrenching its Legal Compliance Programme.
Pioneer Foods remains committed to the principles of good corporate governance and further entrenching its Legal Compliance Programme.
The annual results for the 12 months ended 30 September 2009 will be announced on or about 30 November 2009. The forecast financial information, on which this trading statement is based, has not been reviewed or reported on by the Company's auditors.
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