| Tue 20 Oct 2009, 8:41 | | PFG - Pioneer Food Group Limited - Trading Statement |
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PFG
PFG
PFG - Pioneer Food Group Limited - Trading Statement
PIONEER FOOD GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1996/017676/06)
JSE share code: PFG
ISIN: ZAE000118279
("the Company" or "Pioneer Foods")
Trading Statement
In terms of paragraph 3.4 (b) of the Listings Requirements of the JSE
Limited, an issuer is required to publish a trading statement as soon as it
is satisfied that a reasonable degree of certainty exists that Headline
Earnings Per Share ("HEPS") and/or Earnings Per Share ("EPS") for the next
period to be reported on are expected to differ by at least 20% from those of
the previous corresponding period.
Consequently, Pioneer Foods advises that for the 12 months ended 30 September
2009, HEPS is expected to be between 350 and 405 cents per share (2008: 292
cps) or between 20% and 39% higher than the previous corresponding period.
EPS is expected to between 315 and 370 cents per share (2008: 282 cps) or
between 12% and 31% higher.
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:
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.
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.
Paarl
20 October 2009
Sponsor:
Barnard Jacobs Mellet Corporate Finance (Proprietary) Limited
Date: 20/10/2009 08:41:48 Produced by the JSE SENS Department.
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