Wrap Text
Unaudited condensed consolidated interim financial statements for the six months ended 31 March 2014
Pioneer Food Group Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1996/017676/06)
(Tax registration number: 9834/695/71/1)
(Share code: PFG)
(ISIN code: ZAE000118279)
(“Pioneer Foods” or “the Group” or “the Company”)
Unaudited condensed consolidated interim financial statements for the six months ended 31 March 2014
PIONEER FOODS SALIENT FEATURES
Revenue for continuing operations R8.8bn +9%
Adjusted headline earnings per share for continuing operations* 325c +41%
Interim gross dividend per share 65c +41%
Revenue R10 566 million +7%
Revenue for continuing operations R8 776 million +9%
Interim gross dividend per listed ordinary share (2013: 46 cents) 65 cents +41%
Operating profit (before items of a capital nature) R969 million +96%
Adjusted operating profit (before items of a capital nature)* R921 million +60%
Adjusted operating profit (before items of a capital nature) for
continuing operations* R855 million +43%
Earnings R639 million +96%
Earnings per share 349 cents +93%
Headline earnings R695 million +112%
Headline earnings per share 380 cents +109%
Adjusted headline earnings* R647 million +60%
Adjusted headline earnings for continuing operations* R595 million +44%
Adjusted headline earnings per share* 353 cents +58%
Adjusted headline earnings per share for continuing operations* 325 cents +41%
Net asset value per share 3 819 cents +8%
* Headline earnings and operating profit (before items of a capital nature) adjusted for the IFRS 2 share-based
payment income/(charge) on the Phase 1 B-BBEE transaction (2014 and 2013) and re-organisation costs
(2013 only).
Enquiries:
Pioneer Foods: +27 21 807 5100
Phil Roux: +27 73 306 4804, phil.roux@pioneerfoods.co.za
Leon Cronje: +27 82 801 7772, leon.cronje@pioneerfoods.co.za
CapitalVoice: Johannes van Niekerk +27 82 921 9110
Introduction
Performance for the six months under review is characterised by reasonable growth in revenue with exceptional
operating leverage, notwithstanding economic headwinds. The following key value drivers underpinned the Group’s
performance:
- Good domestic beverage volume growth
- Strong export volume growth on both fruit and beverages
- Normalisation of maize profitability
- Significant progress on cost and efficiency efforts
- Early signs of traction within bakeries
- Export benefits from rand weakness
- Quantum Foods turnaround
Financial review
Revenue from continuing operations for the period under review, increased by 9% to R8.8 billion, largely as a
consequence of increased selling prices, exports and sales mix. Volumes across the Group’s basket increased by
0.4%. Revenue, inclusive of Quantum Foods, increased by 7% to R10.6 billion.
While cost of goods sold from continuing operations increased by 7%, positive leverage was generated with the
gross profit margin expanding to 30.3% from 29.3%, consequent to procurement and efficiency gains. Cash
operating expenses, excluding the adjustments referenced below, increased marginally by 2% as a result of value
enhancement initiatives gaining traction.
Operating profit from continuing operations, before items of a capital nature, and adjusted in the respective
periods for the abnormal costs described below, increased by 43% to R855 million, delivering an operating
profit margin of 9.7% (2013: 7.4%).
Operating profit includes a share-based payment gain of R48 million, relating to the Phase I (2006) B-BBEE
transaction. Conversely, there was a R65 million charge in the comparative period, both purely as a result of
the movement in share price and number of scheme participants at each reporting date. The comparative period
was also negatively impacted by non-recurring re-organisation costs of R15 million.
Headline earnings from continuing operations, adjusted as described above, increased by 44% to R595 million or
325 cents per share.
Headline earnings for the Group, adjusted as described above, including Quantum Foods, increased by
60% to R647 million.
Net cash profit increased by 47% to R1 091 million and net cash generated from operations amounted to
R190 million, after an investment of R886 million in working capital. The increase in working capital results
from a seasonal increase in raw material stock and timing differences in respect of trade receipts and
payments.
The capital expansion programme is nearing completion with an amount of R259 million invested in the reporting
period of which R161 million was attributable to expansion capital, mainly for the completion of the
Malmesbury/Paarl mill consolidation project. The balance of R98 million was for replacement capital.
Net interest-bearing debt (excluding third-party funding relating to the 2012 Phase II B-BBEE transaction)
increased by R570 million to R1 581 million in the reporting period, with a debt to equity ratio of 23%. The
increase in debt during the first half of the year is normal and relates mainly to increased seasonal
investment in working capital, which is expected to decrease for the full year.
Essential Foods (formerly Sasko)
Essential Foods posted pleasing results in a challenging and low-growth market environment. Maize profitability
improved to normalised levels. Wheat posted volume growth and the rice performance improved as Thai input costs
reduced. Value enhancements in bakeries are showing early indications of progress. Pasta continued to contribute
positively.
Bokomo Foods
Performance by Bokomo Foods was bolstered by a larger fruit crop and a fair performance by the cereals
business. Biscuits maintained strong volume growth, but is however loss making, with smaller categories in the
portfolio contributing positively. Costs were particularly well managed as the merged Groceries business entity
(Bokomo Foods and Ceres Beverages) gained momentum.
Ceres Beverages
The beverage business performed particularly well, benefiting from:
- Strong domestic and international volume growth
- Market share gains in the long-life juice category
- Manufacturing and distribution efficiencies
Competition within the dairy fruit blend category remains fierce with the concomitant pressure on margins.
Quantum Foods
The business returned to profitability after significant re-engineering efforts. The following performance
drivers contributed to the improvement:
- Price recovery in the egg category
- Downscaling of broiler operations in the Western Cape
- Significant cost reduction and improved farm productivity
- Solid feeds performance
- Increased contribution from Mega Eggs in Zambia
Prospects
Prospects for Pioneer Foods remain good despite strong economic headwinds. A critical focus on market share is
fundamental as a key source of growth in a highly combative market environment. Continuing transformation of
the organisation’s business model is an enabling imperative to sustained profitability and margin expansion.
Precision in executing the aforementioned will be a high priority. Margin management within the maize category,
cost-push inflation, and the generation of value chain efficiencies are key focal points in the second half of
the financial year.
Unbundling of Quantum Foods, impairment and joint venture accounting
In September 2013, Pioneer Foods announced its intention to unbundle Quantum Foods and to list the business as
a separate legal entity on the JSE during 2014. The listing is likely to be early in the new financial year,
subject to market conditions and regulatory requirements. Accordingly, Quantum Foods has been accounted for as
an “asset held for sale” and a “discontinued operation” in terms of IFRS 5 – Non-current Assets Held for Sale
and Discontinued Operations for the period under review.
As a result, the net assets of Quantum Foods are valued at the lower of its carrying amount or fair value less
costs to sell. An independent valuation reflected the continued macro-challenges in the broiler industry and
resulted in a further impairment of R57 million to the net asset value of Quantum Foods, included in items of
a capital nature of discontinued operations.
Results for the comparative period in the statement of comprehensive income were restated to reflect Quantum
Foods as a discontinued operation.
In terms of IFRS 11 and IAS 28, results from joint ventures are now equity accounted and no longer
proportionately consolidated as in previous reporting periods. Comparative numbers have been restated
accordingly.
Dividend
A gross interim dividend of 65 cents (2013: 46 cents) per share, an increase of 41%, has been approved and
declared by the Board. The applicable dates are as follows:
Last date of trading cum dividend Friday, 27 June 2014
Trading ex dividend commences Monday, 30 June 2014
Record date Friday, 4 July 2014
Dividend payable Monday, 7 July 2014
A gross interim dividend of 19.5 cents (2013: 13.8 cents) per class A ordinary share, being 30% of the gross
interim dividend payable to ordinary shareholders in terms of the rules of the relevant employee scheme, will be
paid during July 2014.
Share certificates may not be dematerialised or rematerialised between Monday, 30 June 2014, and Friday,
4 July 2014, both days inclusive.
By order of the Board
ZL Combi PM Roux
Chairman Chief Executive Officer
Paarl, 19 May 2014
GROUP STATEMENT OF COMPREHENSIVE INCOME
Unaudited Audited
Six months ended Year ended
31 March 30 September
Restated Restated
2014 2013 2013
R’m R’m R’m
Continuing operations
Revenue 8 775.7 8 071.9 16 306.1
Cost of goods sold (6 114.7) (5 708.9) (11 527.5)
Gross profit 2 661.0 2 363.0 4 778.6
Other income and gains/(losses) – net 56.3 71.2 135.8
Other expenses (1 814.2) (1 918.1) (3 907.7)
Excluding the following: (1 862.3) (1 838.3) (3 693.3)
Re-organisation costs – (15.0) (68.5)
Phase I B-BBEE transaction share-based payment income/(charge) 48.1 (64.8) (145.9)
Items of a capital nature 0.6 8.2 10.7
Operating profit 903.7 524.3 1 017.4
Investment income 10.1 13.0 22.6
Finance costs (65.4) (49.8) (125.5)
Share of profit of investments accounted for using the equity method 34.6 3.0 24.7
Profit before income tax 883.0 490.5 939.2
Income tax expense (238.8) (154.5) (238.7)
Profit for the period from continuing operations 644.2 336.0 700.5
Loss for the period from discontinued operations (attributable
to owners of the parent) (4.2) (9.4) (200.4)
Profit for the period 640.0 326.6 500.1
Other comprehensive income/(loss) for the period
Items that will not subsequently be reclassified to profit or loss:
Remeasurement of post-employment benefit obligations – – (1.5)
Items that may subsequently be reclassified to profit or loss: (23.2) 47.9 80.3
Fair value adjustments to cash flow hedging reserve (14.4) 16.3 17.3
For the period 97.5 (29.9) (13.7)
Current income tax effect (28.2) 8.5 4.4
Deferred income tax effect 0.9 (0.2) (0.5)
Reclassified to profit or loss (117.5) 52.7 37.7
Current income tax effect 32.4 (14.9) (10.7)
Deferred income tax effect 0.5 0.1 0.1
Fair value adjustments on available-for-sale financial assets 2.8 5.4 0.8
For the period 5.3 10.3 18.8
Deferred income tax effect (0.7) (1.5) (1.7)
Reclassified to profit or loss (1.8) (3.4) (16.3)
Movement on foreign currency translation reserve (11.6) 26.2 62.2
Total comprehensive income for the period 616.8 374.5 578.9
Profit for the period attributable to:
Owners of the parent
For continuing operations 643.4 335.1 699.0
For discontinued operations (4.2) (9.4) (200.4)
Non-controlling interest
For continuing operations 0.8 0.9 1.5
640.0 326.6 500.1
Total comprehensive income for the period attributable to:
Owners of the parent
For continuing operations 646.3 365.4 752.5
For discontinued operations (30.3) 8.2 (175.1)
Non-controlling interest
For continuing operations 0.8 0.9 1.5
616.8 374.5 578.9
HEADLINE EARNINGS RECONCILIATION
Unaudited Audited
Six months ended Year ended
31 March 30 September
Restated Restated
2014 2013 2013
R’m R’m R’m
Reconciliation between profit attributable to owners
of the parent and headline earnings
Profit attributable to owners of the parent
For continuing operations 643.4 335.1 699.0
For discontinued operations (4.2) (9.4) (200.4)
639.2 325.7 498.6
Remeasurement of items of a capital nature – continuing operations (0.7) (8.2) (10.7)
Net (profit)/loss on disposal of property, plant and equipment
and intangible assets (0.1) (4.8) 4.9
Net profit on disposal of available-for-sale financial assets (1.9) (3.4) (16.4)
Impairment of property, plant and equipment and intangible
assets and loan 1.3 – 0.8
Tax effect on remeasurement of items of a capital nature 0.3 0.4 1.7
(0.4) (7.8) (9.0)
Remeasurement of items of a capital nature – discontinued operations 76.7 (1.8) 230.9
Net profit on disposal of property, plant and equipment
and intangible assets (1.0) (1.8) (1.1)
Impairment of property, plant and equipment and intangible assets 77.7 – 232.0
Tax effect on remeasurement of items of a capital nature (20.4) 0.5 (23.7)
56.3 (1.3) 207.2
Remeasurement of items of a capital nature included in
equity-accounted results
Effect on remeasurement of items of a capital nature (0.3) 14.4 13.0
Tax effect on remeasurement of items of a capital nature 0.1 (3.3) (3.1)
(0.2) 11.1 9.9
Headline earnings 694.9 327.7 706.7
For continuing operations 642.8 338.4 699.9
For discontinued operations 52.1 (10.7) 6.8
Phase I B-BBEE transaction share-based payment (income)/charge (48.1) 64.8 145.9
Re-organisation costs – 10.8 49.3
Recognition of deferred income tax asset – – (74.1)
Adjusted headline earnings (note 1) 646.8 403.3 827.8
For continuing operations 594.7 414.0 821.0
For discontinued operations 52.1 (10.7) 6.8
Number of issued ordinary shares (million) 231.3 230.8 231.0
Number of issued treasury shares:
– held by subsidiary (million) 18.0 18.0 18.0
– held by share incentive trust (million) 1.2 1.9 1.4
– held by B-BBEE equity transaction participants (million) 18.1 18.1 18.1
– held by BEE trust (million) 10.6 10.6 10.6
Number of issued class A ordinary shares (million) 6.5 7.8 7.4
Weighted average number of ordinary shares (million) 183.1 180.2 181.3
Weighted average number of ordinary shares – diluted (million) 190.7 183.0 185.8
Earnings per ordinary share (cents):
– basic 349.2 180.7 275.0
– diluted 335.1 177.9 268.4
– headline 379.6 181.8 389.8
– diluted headline 364.3 179.1 380.4
– adjusted headline (note 1) 353.3 223.8 456.6
– diluted adjusted headline (note 1) 339.1 220.4 445.5
– adjusted headline for continuing operations (note 1) 324.9 229.7 452.9
– diluted adjusted headline for continuing operations (note 1) 311.8 226.2 442.0
Gross dividend per ordinary share (cents) 65.0 46.0 132.0
Gross dividend per class A ordinary share (cents) 19.5 13.8 39.6
Net asset value per ordinary share (cents) 3 818.7 3 537.9 3 598.1
Debt to equity ratio (%) 29.0 31.9 22.2
Note 1
Headline earnings (“HE”) is calculated based on Circular 2/2013 issued by the South African Institute of
Chartered Accountants. Adjusted HE is defined as HE adjusted for material once-off occurrences as well
as for the impact of the share-based payment income/(charge) on the B-BBEE Phase I transaction on profit or
loss due to the volatility of this share-based payment income/(charge). During the reporting periods for the
year ended 30 September 2013, and for the six months ended 31 March 2013, HE was adjusted for the impact of
once-off re-organisation costs and for the recognition of a deferred income tax asset.
GROUP STATEMENT OF FINANCIAL POSITION
Unaudited Audited
31 March 30 September
Restated Restated
2014 2013 2013
R’m R’m R’m
Assets
Property, plant and equipment 4 242.0 5 041.7 4 162.6
Goodwill 219.7 291.0 217.7
Other intangible assets 460.3 474.1 470.7
Biological assets 16.0 16.0 16.0
Investments in and loans to associates and joint ventures 366.6 335.3 344.1
Available-for-sale financial assets 64.9 61.2 59.0
Trade and other receivables 22.6 20.8 20.7
Deferred income tax 74.6 4.6 74.1
Non-current assets 5 466.7 6 244.7 5 364.9
Current assets 4 913.4 5 309.1 4 416.1
Inventories 2 635.0 2 512.1 2 401.2
Biological assets – 289.0 –
Derivative financial instruments 9.5 7.0 10.6
Trade and other receivables 1 950.6 2 289.2 1 624.6
Current income tax 0.1 0.6 0.7
Cash and cash equivalents 318.2 211.2 379.0
Assets of disposal group classified as held for sale 2 054.0 – 1 953.4
Total assets 12 434.1 11 553.8 11 734.4
Equity and liabilities
Capital and reserves attributable to owners of the parent 7 003.3 6 448.2 6 581.3
Share capital 23.1 23.1 23.1
Share premium 2 167.4 2 195.2 2 188.6
Treasury shares (1 188.0) (1 199.3) (1 190.9)
Other reserves 384.4 382.0 426.2
Retained earnings 5 616.4 5 047.2 5 134.3
Non-controlling interest 10.1 9.1 9.3
Total equity 7 013.4 6 457.3 6 590.6
Non-current liabilities 2 307.4 1 445.8 2 304.6
Borrowings
B-BBEE equity transaction third-party finance 449.7 449.7 449.7
Other 1 016.0 9.6 1 007.6
Provisions for other liabilities and charges 122.9 122.3 120.3
Share-based payment liability 201.6 171.4 251.4
Deferred income tax 517.2 692.8 475.6
Current liabilities 2 628.2 3 650.7 2 357.2
Trade and other payables 1 692.0 1 807.8 1 926.1
Current income tax 39.4 13.6 28.1
Derivative financial instruments 6.1 9.1 6.2
Borrowings 883.0 1 808.7 381.8
Loan from joint venture 7.3 11.1 14.7
Dividends payable 0.4 0.4 0.3
Liabilities of disposal group classified as held for sale 485.1 – 482.0
Total equity and liabilities 12 434.1 11 553.8 11 734.4
GROUP STATEMENT OF CHANGES IN EQUITY
Unaudited Audited
Six months ended Year ended
31 March 30 September
Restated Restated
2014 2013 2013
R’m R’m R’m
Share capital, share premium and treasury shares 1 002.5 1 019.0 1 020.8
Opening balance 1 020.8 987.3 987.3
Movement in treasury shares 2.9 8.3 16.7
Ordinary shares issued – share appreciation rights 25.7 36.6 49.6
Employee share scheme – repurchase of shares (46.9) (13.2) (32.8)
Other reserves 384.4 382.0 426.2
Opening balance 426.2 350.3 350.3
Equity compensation reserve transactions 9.1 6.7 15.2
Ordinary shares issued – share appreciation rights (25.7) (36.6) (49.6)
Deferred income tax on share-based payments (2.0) 13.7 30.0
Other comprehensive (loss)/income for the period (23.2) 47.9 80.3
Retained earnings 5 616.4 5 047.2 5 134.3
Opening balance 5 134.3 4 847.3 4 847.3
Effect of changes in accounting policies – 0.7 0.7
Restated opening balance 5 134.3 4 848.0 4 848.0
Profit for the period 639.2 325.7 498.6
Other comprehensive loss for the period – – (1.5)
Dividends paid (157.6) (127.5) (211.3)
Management share incentive scheme – disposal of shares 0.9 1.1 0.8
Employee share scheme – transfer tax on share transactions (0.4) (0.1) (0.3)
Non-controlling interest 10.1 9.1 9.3
Opening balance 9.3 8.2 8.2
Dividend paid – – (0.4)
Profit for the period 0.8 0.9 1.5
Total equity 7 013.4 6 457.3 6 590.6
GROUP STATEMENT OF CASH FLOWS
Unaudited Audited
Six months ended Year ended
31 March 30 September
Restated Restated
2014 2013 2013
R’m R’m R’m
Net cash profit from operating activities 1 090.9 741.6 1 556.3
Cash effect from hedging activities (14.7) 22.8 22.7
Working capital changes (886.3) (587.5) 66.8
Accrual for Competition Commission penalties paid – (216.7) (216.7)
Net cash generated from/(utilised in) operations 189.9 (39.8) 1 429.1
Income tax paid (188.8) (103.5) (233.1)
Net cash flow from/(utilised in) operating activities 1.1 (143.3) 1 196.0
Net cash flow from investment activities (210.8) (747.8) (1 287.2)
Property, plant and equipment and intangible assets
– additions (160.7) (384.7) (828.1)
– replacements (97.8) (95.7) (235.0)
– proceeds on disposal 33.0 17.6 26.7
Business combinations – (315.0) (315.0)
Proceeds on disposal of and changes in available-for-sale
financial assets and loans (9.3) 7.9 26.4
Interest received 10.5 12.9 22.5
Dividends received 0.7 0.8 1.7
Dividends received from joint ventures 12.8 8.0 13.3
Dividends received from associates – 0.4 0.3
Net cash flow from financing activities (260.1) (319.6) (200.2)
Proceeds from syndicated borrowings – – 1 870.0
Proceeds/(repayments) of other borrowings 15.5 (126.7) (1 698.8)
Share schemes transactions (44.9) (4.7) (17.1)
Interest paid (73.2) (60.5) (142.8)
Dividends paid (157.5) (127.7) (211.5)
Net decrease in cash, cash equivalents and bank overdrafts (469.8) (1 210.7) (291.4)
Net cash, cash equivalents and bank overdrafts at
beginning of period 65.6 357.0 357.0
Net cash, cash equivalents and bank overdrafts at end of period (404.2) (853.7) 65.6
For continuing operations (513.9) (853.7) 41.0
For discontinued operations 109.7 – 24.6
GROUP SEGMENT REPORT
Unaudited Audited
Six months ended Year ended
31 March 30 September
Restated Restated
2014 2013 2013
R’m R’m R’m
Segment revenue (Note 1)
Essential Foods (formerly Sasko) 5 404.1 5 100.4 10 379.5
Quantum Foods 1 789.9 1 769.5 3 575.6
Bokomo Foods 1 791.7 1 481.2 3 148.4
Ceres Beverages 1 705.3 1 610.2 3 021.2
10 691.0 9 961.3 20 124.7
Less: Internal revenue (125.5) (125.4) (248.5)
Total 10 565.5 9 835.9 19 876.2
Segment results (Note 1)
Essential Foods (formerly Sasko) 527.1 349.6 784.3
Quantum Foods 26.2 (32.6) (18.9)
Bokomo Foods 185.0 133.1 279.0
Ceres Beverages 215.4 169.0 263.8
Other (60.8) (59.7) (154.3)
892.9 559.4 1 153.9
Reversal of depreciation charge in Quantum Foods legal entities
(asset held for sale) 28.2 – –
Phase I B-BBEE transaction share-based payment income/(charge) 48.1 (64.8) (145.9)
Operating profit before items of a capital nature 969.2 494.6 1 008.0
Reconciliation of operating profit (before items of a capital
nature) to profit before income tax
Operating profit before items of a capital nature 969.2 494.6 1 008.0
Adjusted for:
Remeasurement of items of a capital nature (76.0) 10.0 (220.2)
Interest income 10.5 12.9 22.5
Dividends received 0.7 0.8 1.7
Finance costs (65.4) (50.6) (126.3)
Share of profit of investments accounted for using the
equity method 34.6 3.3 24.8
Profit before income tax (including discontinued operations) 873.6 471.0 710.5
Note 1
Includes discontinued operations.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. Basis of preparation
The unaudited condensed consolidated interim financial statements of the Group for the six months ended
31 March 2014 have been prepared in accordance with International Financial Reporting Standards (“IFRS”), the
Listings Requirements of the JSE Ltd and the Companies Act of South Africa, Act 71 of 2008, as amended. The
condensed interim financial statements comply with the requirements of IAS 34 – Interim Financial Reporting,
the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and the Financial
Reporting Pronouncements as issued by the Financial Reporting Standards Council. These condensed interim
financial statements have not been audited.
The directors take full responsibility for the preparation of the interim financial statements and that the
financial information has been correctly extracted from the underlying financial records.
2. Accounting policies
These condensed consolidated interim financial statements incorporate accounting policies that are consistent
with those applied in the Group’s annual financial statements for the year ended 30 September 2013 and with
those of previous financial years, except for the adoption of the following new standards, amendments to
published standards and interpretations that became effective for the current reporting period beginning on
1 October 2013:
IAS 19 – (revised) Employee benefits
IAS 19 (revised) amends the accounting for employment benefits. The Group has applied the standard
retrospectively in accordance with the transitional provisions of the standard. The amended standard impacted
the Group’s treatment of the provision for post-retirement medical benefits. The financial effect thereof has
been disclosed in note 11.
IFRS 10 – Consolidated financial statements
Under IFRS 10, subsidiaries are all entities (including structured entities) over which the Group has control.
The Group controls an entity when the Group has power over an entity, is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to affect these returns through its
power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to
the Group. They are deconsolidated from the date that control ceases. The Group has applied IFRS 10
retrospectively in accordance with the transitional provisions of IFRS 10. The adoption of this new standard
did not have an effect on the financial position or results of the Group.
IFRS 11 – Joint arrangements
Under IFRS 11, investments in joint arrangements are classified either as joint operations or joint ventures
depending on the contractual rights and obligations each investor has, rather than the legal structure of the
joint arrangement. Before 1 October 2013, the Group’s interest in its jointly controlled entities was
accounted for using proportionate consolidation. Under IFRS 11, these jointly controlled entities have been
classified as joint ventures and have been accounted for using the equity method. The Group has applied the
new policy for its interest in the joint ventures in accordance with the transitional provisions of IFRS 11.
The financial effects of this change have been disclosed in note 11.
IFRS 13 – Fair value measurement
IFRS 13 measurement and disclosure requirements are applicable for the 30 September 2014 financial year-end.
The Group has included the disclosures required by IAS 34 paragraph 16A(j) in these interim financial
statements (refer to note 10). The adoption of this new standard did not have any material impact on the
Group’s results and cash flows for the six months ended 31 March 2014 and the financial position at
31 March 2014.
In preparing these condensed consolidated interim financial statements, the significant judgements made by
management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the
same as those that applied to the consolidated financial statements for the year ended 30 September 2013.
Unaudited Audited
Six months ended Year ended
31 March 30 September
2014 2013 2013
3. Share capital
During the period under review the following share transactions
occurred:
Number of listed issued and fully paid ordinary shares
At beginning of period 231 006 847 230 314 486 230 314 486
Shares issued in terms of employee share appreciation
rights scheme 297 286 526 261 692 361
At end of period 231 304 133 230 840 747 231 006 847
297,286 (30 September 2013: 692,361 and 31 March 2013: 526,261)
listed ordinary shares of 10 cents each were issued at an
average of R86.54 (30 September 2013: R71.64 and 31 March 2013:
R69.46) per share in terms of the share appreciation rights
scheme.
Number of treasury shares held by the share incentive trust
At beginning of period 1 422 116 2 545 933 2 545 933
Movement in shares (188 756) (640 916) (1 123 817)
At end of period 1 233 360 1 905 017 1 422 116
Proceeds on the sale of treasury shares by the share
incentive trust (R’000) 4 018 10 267 18 662
Number of treasury shares held by B-BBEE transaction
participants
At beginning and end of period 18 091 661 18 091 661 18 091 661
Number of treasury shares held by BEE Trust
At beginning and end of period 10 599 988 10 599 988 10 599 988
Number of treasury shares held by a subsidiary
At beginning and end of period 17 982 056 17 982 056 17 982 056
Number of unlisted class A ordinary shares
At beginning of period 7 367 360 8 198 120 8 198 120
Shares bought back and cancelled (885 500) (400 890) (830 760)
At end of period 6 481 860 7 797 230 7 367 360
Purchase consideration paid for unlisted class A ordinary
shares bought back (R’000) 46 853 13 199 32 736
4. Impairment of property, plant and equipment and goodwill
Impairment losses due to the treatment of Quantum Foods as an asset held for sale
Shareholders were advised on SENS on 5 September 2013 of the Board’s intent to restructure the Company’s
interest in the Quantum Foods segment, which includes the South African subsidiaries and two foreign African
subsidiaries (Bokomo Uganda (Pty) Ltd and Bokomo Zambia Ltd) that produce and sell eggs, chicken products,
animal feeds and commercial laying hens.
It is Pioneer Foods’ intention to unbundle its interests in Quantum Foods to its shareholders and subsequently
list Quantum Foods as a separate legal entity on the JSE, subject to market conditions and regulatory
requirements, or any other acceptable corporate action, within approximately six months. Accordingly, Quantum
Foods has been presented as an “asset held for sale” and as “discontinued operations” in terms of IFRS 5 –
Non-current Assets Held for Sale and Discontinued Operations for the reporting period ended 31 March 2014 and
the year ended 30 September 2013. Results for the period ended 31 March 2013 were restated accordingly. Refer
to note 11 for further detail.
In terms of IFRS 5, an entity shall measure a non-current disposal group classified as held for sale at the
lower of its carrying amount and fair value less costs to sell. The fair value less costs to sell was
determined using the average results of an income valuation approach and different scenarios for a market
valuation approach. These valuations were performed at 30 September 2013 and updated at 31 March 2014.
In addition to the impairment charge of R232.0 million recognised in the results for the year ended
30 September 2013, a further impairment charge of R77.7 million is recognised in the line item “Items of a
capital nature” for discontinued operations in the statement of comprehensive income for the reporting period.
This impairment charge attributable to property, plant and equipment is as follows:
Nature 2014
Property, plant and equipment 77.7
Income tax effect (20.6)
After income tax effect 57.1
5. Borrowings
No material new borrowings were concluded during the period under review. Changes in borrowings mainly reflect
repayments made in terms of agreements. Short-term borrowings fluctuate in accordance with changing working
capital needs.
6. Events after the reporting date
6.1 Dividend
The Board approved and declared a gross interim dividend of 65.0 cents (2013: gross interim dividend of 46.0
cents and 2013: gross final dividend of 86.0 cents) per ordinary share. This will amount to approximately
R143,457,694 (2013: interim of R101,352,454 and 2013: final of R189,727,441) depending on the exact number of
ordinary shares issued at the record date. In addition, the 10,599,988 Pioneer Foods shares issued to the
Pioneer Foods Broad-based BEE Trust, will receive 20% of the dividend payable, i.e. 13.0 cents (2013: gross
interim of 9.2 cents and 2013: gross final dividend of 17.2 cents) per share, amounting to R1,377,998 (2013:
interim of R975,199 and 2013: final of R1,823,198).
The Board approved a gross interim dividend of 19.5 cents (2013: gross interim dividend of 13.8 cents and 2013:
gross final dividend of 25.8 cents) per class A ordinary share, being 30% of the dividend payable to the other
class ordinary shareholders in terms of the rules of the relevant employee scheme. This will amount to
approximately R1,263,963 (2013: interim of R1,047,579 and 2013: final of R1,729,642) depending on the exact
number of class A ordinary shares issued at the record date.
Additional information disclosed:
These dividends are declared from income reserves and qualify as a dividend as defined in the Income Tax Act,
Act 58 of 1962.
Dividends will be paid net of dividends tax of 15%, to be withheld and paid to the South African Revenue
Services by the Company. Such tax must be withheld unless beneficial owners of the dividend have provided the
necessary documentary proof to the relevant regulated intermediary that they are exempt therefrom, or entitled
to a reduced rate as result of the double taxation agreement between South Africa and the country of domicile
of such owner.
The total credits for secondary tax on companies utilised as part of this declaration amount to Rnil. The net
dividend amounts to 55.25 cents per ordinary share and 16.58 cents per class A ordinary share for shareholders
liable to pay dividends tax. The dividend amounts to 65.0 cents per ordinary share and 19.5 cents per class A
ordinary share for shareholders exempt from paying dividends tax.
The number of issued ordinary shares and issued class A ordinary shares is 231,304,783 and 6,373,990
respectively as at the date of this declaration.
6.2 Other material events
There have been no other material events requiring disclosure after the reporting date and up to the date of
approval of the condensed consolidated interim financial statements by the Board.
7. Contingent liabilities
7.1 Dispute with egg contract producers – discontinued operations
As previously reported, the claims from four contract egg producers are still unresolved.
Pioneer Foods is defending contractual claims from its privatised egg contract producers and the matters were
set down for arbitration during 2012. Since the hearings commenced in 2012, settlements were negotiated with
the two egg contract producers that had the largest claims. These settlements had no adverse financial impact
on Pioneer Foods. The claims from the remaining four contract egg producers are still unresolved.
Pioneer Foods filed pleas to all these claims and in two of these claims, counterclaims have been filed to
recover damages suffered by Pioneer Foods as a result of breach of contract by the contract producers. Pioneer
Foods is awaiting the allocation of trial dates in these two matters.
Management is of the view, based on legal advice regarding the merits of the claims against the Group, that
the Group will not incur any material liability in respect of this matter.
7.2 Dispute with broiler farms and breeder farms – discontinued operations
Several breeder farms and broiler farms (four in total) also filed claims against Pioneer Foods for the
alleged breach of the terms of their supply agreements with Pioneer Foods.
Only letters of demand have been received thus far and these claims should eventually be finalised by means of
arbitration. No date has been set for the arbitration proceedings.
A further breeder farm has filed a claim against Pioneer Foods for the alleged breach of the terms of a
shareholder agreement. A preliminary hearing on the matter was held in March 2013 and the court case had been
postponed until August 2013 for hearing. Final judgement was granted in favour of Pioneer Foods during
April 2014.
Based on legal advice regarding the merits of these claims, management is of the view that the Group will not
incur any material liability in respect of these matters.
7.3 Class action – continuing operations
Stemming from the Competition Commission investigation into collusion among the bread producers in 2006,
Pioneer Foods (Pty) Ltd, Tiger Brands Ltd and Premier Foods (Pty) Ltd (“the Producers”) were sued by the
consumers (members of the public who consumed bread during that period) and the independent distributors that
had been contracted by the Producers. They claimed that the Competition Act, Act 89 of 1998, paved the way
for class actions against the Producers if they could each have their classes certified. After judgement was
handed down by Judge van Zyl in the Cape High Court on 29 August 2011, dismissing the consumers and
distributors applications for leave to appeal, both parties have since decided to petition the Supreme Court of
Appeal (“SCA”). The consumers’ petition papers were served on Pioneer Foods on 22 September 2011 and those of
the distributors were served on 28 September 2011.
The SCA held hearings on 6 November 2012 on the distributor matter and on 7 November 2012 on the consumer
matter. These proceedings are a result of the appeals launched by the distributors and the consumers in their
applications for class certification. The certification applications are a preliminary means for instituting
class actions for damages against the Producers relating to previous conduct of these firms in relation to
bread, in contravention of the Competition Act, Act 89 of 1998.
Pioneer Foods successfully defended the class actions by the consumers and distributors during November 2012
resulting in a judgement where the distributors’ appeal was dismissed by the SCA. The appeal by the consumers
for a “national class” certification was also dismissed by the SCA. The only remaining issue that was remitted
back to the Western Cape High Court was whether the consumers would be able to argue for a “Western Cape
Class”; however, the papers before the SCA did not support such a finding. They were given an opportunity to
supplement their papers, which they have done and the quantum of their claim is R2 million as against the (and
to be shared by) the three respondents.
At the time of reporting, the latter matter was still pending before the Western Cape High Court for the
consumers and has been placed under case management by the court’s registrar.
The distributors subsequently filed an appeal with the Constitutional Court against the SCA’s judgement that
had dismissed their claim. The distributors’ Constitutional Court matter was heard in May 2013 and judgement
handed down in June 2013. The distributors’ appeal was upheld by the Constitutional Court and their matter
remitted back to the Western Cape High Court in a similar manner as those of the consumers.
Based on legal advice, management is of the view that no material liability will arise from these claims.
7.4 Guarantees
The Group had guarantees in issue of R29.0 million (30 September 2013: R48.5 million) as at 31 March 2014,
primarily for loans by third parties to contracted suppliers.
As part of the financial assistance provided by Rand Merchant Bank, a division of FirstRand Bank Ltd (“RMB”),
to BEE Investors in terms of the B-BBEE equity transaction concluded during 2012, Pioneer Foods (Pty) Ltd
provided RMB with a guarantee amounting to R100 million.
8. Future capital commitments
Capital expenditure approved by the Board and contracted for amount to R115.1 million (30 September 2013:
R265 million). Capital expenditure approved by the Board, but not contracted for yet, amount to R228.7 million
(30 September 2013: R242.4 million).
9. Non-current assets held for sale and discontinued operations
The assets and liabilities related to the Quantum Foods segment, which include the equity interests held in
the wholly owned subsidiaries Quantum Foods (Pty) Ltd, Philadelphia Chick Breeders (Pty) Ltd, Lohmann Breeders
SA (Pty) Ltd, Bokomo Uganda (Pty) Ltd and Bokomo Zambia Ltd, have been presented as an “asset held for sale”
and as “discontinued operations” in terms of IFRS 5 – Non-current Assets Held for Sale and Discontinued
Operations for the reporting period ended 31 March 2014 and the year ended 30 September 2013 following the
approval of the Board in September 2013 to restructure the Company’s interest in the Quantum Foods segment.
It is Pioneer Foods’ intention to unbundle its interests in Quantum Foods to its shareholders and subsequently
list Quantum Foods as a separate legal entity on the JSE, subject to market conditions and regulatory
requirements, or any other acceptable corporate action, within approximately six months.
Unaudited Audited
31 March 30 September
2014 2013
R'm R'm
Assets of the disposal group classified as held for sale:
Property, plant and equipment 1 052.3 1 129.6
Investment in associates 5.9 6.8
Inventories 227.7 235.9
Biological assets 291.2 276.7
Trade and other receivables 362.4 275.3
Deferred income tax 4.3 3.1
Derivative financial instruments – 0.9
Current income tax 0.5 0.5
Cash and cash equivalents 109.7 24.6
2 054.0 1 953.4
Liabilities of the disposal group classified as held for sale:
Deferred income tax 186.9 196.3
Provision for other liabilities and charges 9.3 9.3
Trade and other payables 286.2 274.8
Derivative financial instruments 1.5 –
Current income tax 1.2 1.6
485.1 482.0
Currency translation reserve (3.2) 22.9
Unaudited Audited
Six months ended Year ended
31 March 30 September
2014 2013 2013
R'm R'm R'm
The results of discontinued operations and the results recognised on
the remeasurement of the Quantum Foods disposal group is as follows:
Revenue 1 789.8 1 764.0 3 547.5
Operating profit/(loss) before items of a capital nature 66.1 (21.5) 1.3
Items of a capital nature 1.0 1.8 1.1
Investment income 1.2 0.8 1.6
Finance costs – (0.8) (0.8)
Share of profit of associated companies – 0.2 0.3
Profit/(loss) before income tax 68.3 (19.5) 3.5
Income tax (15.4) 10.1 4.2
Profit/(loss) after income tax 52.9 (9.4) 7.7
Loss after income tax recognised on the remeasurement of assets
of the disposal group (57.1) – (208.1)
Before income tax (77.7) – (232.0)
Income tax 20.6 – 23.9
Loss for the period from discontinued operations (4.2) (9.4) (200.4)
Other comprehensive (loss)/income for the period from discontinued
operations
Currency translation differences (26.1) 17.6 25.3
Total comprehensive loss for the period from discontinued
operations (30.3) 8.2 (175.1)
Cash flows of the disposal group classified as held for sale:
Net cash flow from operating activities 224.3 - 90.8
Net cash flow from investment activities (20.1) - (469.6)
Net cash flow from financing activities (119.1) - 391.3
Net increase in cash, cash equivalents and bank overdrafts 85.1 - 12.5
Net cash, cash equivalents and bank overdrafts at beginning
of period 24.6 - 12.1
Net cash, cash equivalents and bank overdrafts at end of period 109.7 - 24.6
10. Fair value measurement
The information below analyses assets and liabilities that are carried at fair value at each reporting
period, by level of hierarchy as required by IFRS 7 and IFRS 13.
Unaudited fair value measurements at
31 March 2014 using:
Quoted prices
in active Significant
markets for other Significant
identical assets observable unobservable
and liabilities input input
(Level 1) (Level 2) (Level 3)
R’m R’m R’m
Assets measured at fair value
Available-for-sale financial assets
– Listed securities 64.2 – –
– Unlisted securities (traded over-the-counter) – 0.7 –
Derivative financial instruments
– Foreign exchange contracts – 9.5 –
Biological assets
– Vineyards – – 16.0
Assets of disposal group classified as held for sale – – 2 054.0
Liabilities measured at fair value
Derivative financial instruments
– Foreign exchange contracts – 7.6 –
Liabilities of disposal group classified as held for sale – – 485.1
There have been no transfers between level one, two or three during the period, nor were there any significant
changes to the valuation techniques and input used to determine fair values.
Financial assets and liabilities
The fair values of financial instruments traded in active markets (such as publicly traded derivatives and
available-for-sale securities) are based on quoted market prices at the reporting date. A market is regarded as
active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group,
pricing service, or regulatory agency, and those prices represent actual and regularly occurring market
transactions on an arm’s length basis. The quoted market price used for financial assets held by the Group is
the current bid price. The appropriate quoted market price for financial liabilities is the current ask price.
These instruments are included in level 1. Instruments included in level 1 comprise primarily JSE-listed equity
investments classified as available-for-sale.
The fair values of financial instruments that are not traded in an active market (for example, over-the-counter
securities) are determined by using valuation techniques. These valuation techniques maximise the use of
observable market data where it is available and rely as little as possible on entity-specific estimates. If
all significant input required to fair value an instrument were observable, the instrument is included in
level 2.
The Group uses a variety of methods that makes assumptions that are based on market conditions existing at the
reporting date. Quoted market prices or dealer quotes for similar instruments are used for long-term debt
instruments. Other techniques, such as estimated discounted cash flows, are used to determine the fair value
for the remaining financial instruments. The fair values of interest rate swaps and collars are calculated as
the present value of the estimated future cash flows. The fair value of foreign exchange contracts is
determined using quoted forward exchange rates at the reporting date.
The carrying amounts of cash, trade and other receivables less provision for impairment, trade and other
payables and short-term borrowings are assumed to approximate their fair values due to the short term until
maturity of these assets and liabilities.
The fair value of financial liabilities for disclosure purposes is estimated by discounting the future
contractual cash flows at the current market interest rate that is available to the Group for similar financial
instruments. The fair values of long-term investments and long-term borrowings are not materially different
from the carrying amounts.
Biological assets
The fair value of vineyards is calculated as the future expected net cash flows from the asset, discounted at a
current market-determined rate, over the remaining useful lives of the vineyards.
Assets and liabilities of disposal group classified as held for sale
The assets and liabilities related to the Quantum Foods segment have been presented as an “asset held for sale”
and as “discontinued operations” in terms of IFRS 5 – Non-current Assets Held for Sale and Discontinued
Operations for the reporting period ended 31 March 2014 and the year ended 30 September 2013. Results for the
period ended 31 March 2013 were restated accordingly. Refer to notes 9 and 11 for further detail.
In terms of IFRS 5, an entity shall measure a non-current disposal group classified as held for sale at the
lower of its carrying amount and fair value less costs to sell. The fair value less costs to sell was
determined using the average results of an income valuation approach and different scenarios for a market
valuation approach.
In terms of the income approach the discounted cash flow method is used to determine the present value of
projected future cash flows for a cash-generating unit (“CGU”) using a rate of return that is commensurate with
the risk associated with the business and the time value of money. This approach requires assumptions about
revenue growth rates, operating margins, tax rates and discount rates. The assumptions regarding growth are
based on the CGU’s internal forecasts for revenue, operating margins and cash flows for a period of five years
and by application of a perpetual long-term growth rate thereafter. Past experience, economic trends as well
as market and industry trends were taken into consideration. The discount rate used to arrive at the present
value of future cash flows represents the weighted average cost of capital (“WACC”) for comparable companies
operating in similar industries as the applicable CGU, based on publicly available information. The WACC is an
estimate of the overall required rate of return on an investment for both debt and equity owners. Its
determination requires separate analysis of the cost of equity and debt and considers a risk premium based on
an assessment of risks related to the projected cash flows of the CGU.
The South African businesses are deemed a single CGU. Bokomo Uganda (Pty) Ltd and Bokomo Zambia Ltd are two
separate CGUs. The market approach assumes that companies operating in the same industry will share similar
characteristics and that company values will correlate to these characteristics. The publicly available
financial information of similar listed entities have been used to estimate two scenarios of fair value based
on EBITDA multiples of these benchmark entities.
The key assumptions used in performing the impairment test, by CGU, were as follows:
Discount rate
South Africa 17.0%
Uganda 28.6%
Zambia 23.1%
Perpetual growth rate
South Africa 5.5%
Uganda 5.5%
Zambia 6.5%
Income tax rate
South Africa 28.0%
Uganda 30.0%
Zambia 12.5%
11. Restatement of financial information for comparative periods
11.1 Impact of the application of IFRS 11
In terms of IFRS 11 – Joint Arrangements, the Group ceased proportionate consolidation of its investments in
joint ventures and now accounts for these investments using the equity method in accordance with IAS 28 –
Investments in Associates and Joint Ventures.
The Group applied the change in accounting policy in accordance with the transitional provisions of IFRS 11
from the beginning of the earliest period presented (1 October 2012). The Group recognised the investment in
joint ventures as at 1 October 2012 as the aggregate of the carrying amounts of the assets and liabilities that
were previously proportionately consolidated. This is the deemed cost of the Group’s investment in its joint
ventures at initial recognition for purposes of applying equity accounting.
As per the requirements of IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors, the
relevant comparative information has been restated.
11.2 Impact of the application of IAS 19 (revised)
IAS 19 (revised) makes a number of changes to the accounting for employee benefits, the most significant
relating to defined benefit plans.
IAS 19 (revised):
- eliminates the ‘corridor method’ and requires the recognition of remeasurements (including actuarial gains
and losses) arising in the reporting period in other comprehensive income;
- changes the measurement and presentation of certain components of the defined benefit cost. The net amount
in profit or loss is affected by the removal of the expected return on plan assets and interest cost
components and their replacement by a net interest cost based on the net defined benefit asset or liability;
- enhances disclosures, including more information about the characteristics of defined benefit plans and
related risks.
IAS 19 (revised) has been applied retrospectively in accordance with its transitional provisions. Consequently,
the Group has restated its reported results throughout the comparative periods presented and reported the
cumulative effect as at 1 October 2012 as an adjustment to opening equity.
The effects of the application of IFRS 11 and IAS 19 (revised) are reflected below.
11.3 Non-current assets held for sale and discontinued operations
The assets and liabilities related to the Quantum Foods segment have been presented as an “asset held for sale”
and as “discontinued operations” in terms of IFRS 5 – Non-current Assets Held for Sale and Discontinued
Operations for the reporting period ended 31 March 2014 and the year ended 30 September 2013. The statement of
comprehensive income for the period ended 31 March 2013 was restated accordingly.
GROUP STATEMENT OF COMPREHENSIVE INCOME
Year ended 30 September 2013
Change in Change in
accounting accounting Discontinued
Previously policy policy Operations
reported IFRS 11 IAS 19 IFRS 5 Restated
R’m R’m R’m R’m R’m
Continuing operations
Revenue 16 992.3 (675.0) – (11.2) 16 306.1
Cost of goods sold (11 985.8) 447.1 – 11.2 (11 527.5)
Gross profit 5 006.5 (227.9) – – 4 778.6
Other income and gains/(losses) – net 139.5 (3.7) – – 135.8
Other expenses (4 090.7) 180.9 2.1 – (3 907.7)
Excluding the following: (3 876.3) 180.9 2.1 – (3 693.3)
Re-organisation costs (68.5) – – – (68.5)
Phase I B-BBEE transaction share-based
payment charge (145.9) – – – (145.9)
Items of a capital nature (2.2) 12.9 – – 10.7
Operating profit 1 053.1 (37.8) 2.1 – 1 017.4
Investment income 18.3 4.3 – – 22.6
Finance costs (128.6) 3.1 – – (125.5)
Share of profit of investments accounted
for using the equity method 1.0 23.7 – – 24.7
Profit before income tax 943.8 (6.7) 2.1 – 939.2
Income tax expense (245.2) 6.7 (0.2) – (238.7)
Profit for the year from continuing
operations 698.6 – 1.9 – 700.5
Loss for the year from discontinued
operations (attributable to owners of
the parent) (200.4) – – – (200.4)
Profit for the year 498.2 – 1.9 – 500.1
Other comprehensive income/(loss) for
the year
Items that will not subsequently be
reclassified to profit or loss:
Remeasurement of post-employment benefit
obligations – – (1.5) – (1.5)
Items that may subsequently be
reclassified to profit or loss: 80.3 – – – 80.3
Fair value adjustments to cash flow
hedging reserve 17.3 – – – 17.3
For the year (13.7) – – – (13.7)
Current income tax effect 4.4 – – – 4.4
Deferred income tax effect (0.5) – – – (0.5)
Reclassified to profit or loss 37.7 – – – 37.7
Current income tax effect (10.7) – – – (10.7)
Deferred income tax effect 0.1 – – – 0.1
Fair value adjustments on available-for-sale
financial assets 0.8 – – – 0.8
For the year 18.8 – – – 18.8
Deferred income tax effect (1.7) – – – (1.7)
Reclassified to profit or loss (16.3) – – – (16.3)
Movement on foreign currency translation
reserve 62.2 – – – 62.2
Total comprehensive income for the year 578.5 – 0.4 – 578.9
Profit for the year attributable to:
Owners of the parent
For continuing operations 697.1 – 1.9 – 699.0
For discontinued operations (200.4) – – – (200.4)
Non-controlling interest
For continuing operations 1.5 – – – 1.5
498.2 – 1.9 – 500.1
Total comprehensive income for the year
attributable to:
Owners of the parent
For continuing operations 752.1 – 0.4 – 752.5
For discontinued operations (175.1) – – – (175.1)
Non-controlling interest
For continuing operations 1.5 – – – 1.5
578.5 – 0.4 – 578.9
GROUP STATEMENT OF FINANCIAL POSITION
As at 30 September 2013
Change in Change in
accounting accounting
Previously policy policy
reported IFRS 11 IAS 19 Restated
R’m R’m R’m R’m
Assets
Property, plant and equipment 4 363.1 (200.5) – 4 162.6
Goodwill 227.7 (10.0) – 217.7
Other intangible assets 470.8 (0.1) – 470.7
Biological assets 16.0 – – 16.0
Investments in and loans to associates and joint ventures 44.0 300.1 – 344.1
Available-for-sale financial assets 59.0 – – 59.0
Trade and other receivables 20.9 (0.2) – 20.7
Deferred income tax 74.3 (0.2) – 74.1
Non-current assets 5 275.8 89.1 – 5 364.9
Current assets 4 641.4 (225.3) – 4 416.1
Inventories 2 491.2 (90.0) – 2 401.2
Biological assets 8.4 (8.4) – –
Derivative financial instruments 11.0 (0.4) – 10.6
Trade and other receivables 1 730.9 (106.3) – 1 624.6
Current income tax 1.3 (0.6) – 0.7
Cash and cash equivalents 398.6 (19.6) – 379.0
Assets of disposal group classified as held for sale 1 953.4 – – 1 953.4
Total assets 11 870.6 (136.2) – 11 734.4
Equity and liabilities
Capital and reserves attributable to owners of
the parent 6 580.2 – 1.1 6 581.3
Share capital 23.1 – – 23.1
Share premium 2 188.6 – – 2 188.6
Treasury shares (1 190.9) – – (1 190.9)
Other reserves 426.2 – – 426.2
Retained earnings 5 133.2 – 1.1 5 134.3
Non-controlling interest 9.3 – – 9.3
Total equity 6 589.5 – 1.1 6 590.6
Non-current liabilities 2 344.2 (38.5) (1.1) 2 304.6
Borrowings
B-BBEE equity transaction third-party finance 449.7 – – 449.7
Other 1 034.4 (26.8) – 1 007.6
Provisions for other liabilities and charges 121.8 – (1.5) 120.3
Share-based payment liability 251.4 – – 251.4
Deferred income tax 486.9 (11.7) 0.4 475.6
Current liabilities 2 454.9 (97.7) – 2 357.2
Trade and other payables 2 010.3 (84.2) – 1 926.1
Current income tax 29.4 (1.3) – 28.1
Derivative financial instruments 6.2 – – 6.2
Borrowings 401.3 (19.5) – 381.8
Loan from joint venture 7.4 7.3 – 14.7
Dividends payable 0.3 – – 0.3
Liabilities of disposal group classified as
held for sale 482.0 – – 482.0
Total equity and liabilities 11 870.6 (136.2) – 11 734.4
GROUP STATEMENT OF CASH FLOWS
Year ended 30 September 2013
Change in
accounting
Previously policy
reported IFRS 11 Restated
R’m R’m R’m
Net cash profit from operating activities 1 623.3 (67.0) 1 556.3
Cash effect from hedging activities 22.7 – 22.7
Working capital changes 53.1 13.7 66.8
Accrual for Competition Commission penalties paid (216.7) – (216.7)
Net cash generated from operations 1 482.4 (53.3) 1 429.1
Income tax paid (243.1) 10.0 (233.1)
Net cash flow from operating activities 1 239.3 (43.3) 1 196.0
Net cash flow from investment activities (1 333.0) 45.8 (1 287.2)
Property, plant and equipment and intangible assets
– additions (842.6) 14.5 (828.1)
– replacements (242.5) 7.5 (235.0)
– proceeds on disposal 28.4 (1.7) 26.7
Business combinations (315.0) – (315.0)
Proceeds on disposal of and changes in available-for-sale
financial assets and loans 18.5 7.9 26.4
Interest received 18.2 4.3 22.5
Dividends received 1.7 – 1.7
Dividends received from joint ventures – 13.3 13.3
Dividends received from associates 0.3 – 0.3
Net cash flow from financing activities (204.6) 4.4 (200.2)
Proceeds from new syndicated borrowings 1 870.0 – 1 870.0
Repayments of other borrowings (1 700.0) 1.2 (1 698.8)
Share schemes transactions (17.1) – (17.1)
Interest paid (146.0) 3.2 (142.8)
Dividends paid (211.5) – (211.5)
Net decrease in cash, cash equivalents and bank overdrafts (298.3) 6.9 (291.4)
Net cash, cash equivalents and bank overdrafts at
beginning of year 368.1 (11.1) 357.0
Net cash, cash equivalents and bank overdrafts at
end of year 69.8 (4.2) 65.6
For continuing operations 45.2 (4.2) 41.0
For discontinued operations 24.6 – 24.6
GROUP STATEMENT OF COMPREHENSIVE INCOME
Six months ended 31 March 2013
Change in
accounting Discontinued
Previously policy operations
reported IFRS 11 IFRS 5 Restated
R’m R’m R’m R’m
Continuing operations
Revenue 10 163.4 (327.5) (1 764.0) 8 071.9
Cost of goods sold (7 389.7) 223.8 1 457.0 (5 708.9)
Gross profit 2 773.7 (103.7) (307.0) 2 363.0
Other income and gains/(losses) – net 95.1 (2.6) (21.3) 71.2
Other expenses (2 351.6) 83.7 349.8 (1 918.1)
Excluding the following: (2 271.8) 83.7 349.8 (1 838.3)
Re-organisation costs (15.0) - - (15.0)
Phase I B-BBEE transaction share-based payment charge (64.8) – – (64.8)
Items of a capital nature (4.4) 14.4 (1.8) 8.2
Operating profit 512.8 (8.2) 19.7 524.3
Investment income 11.5 2.3 (0.8) 13.0
Finance costs (52.3) 1.7 0.8 (49.8)
Share of profit of investments accounted for using
the equity method 0.8 2.4 (0.2) 3.0
Profit before income tax 472.8 (1.8) 19.5 490.5
Income tax expense (146.2) 1.8 (10.1) (154.5)
Profit for the period from continuing operations 326.6 – 9.4 336.0
Loss for the period from discontinued operations
(attributable to owners of the parent) – – (9.4) (9.4)
Profit for the period 326.6 – – 326.6
Other comprehensive income/(loss) for the period
Items that may subsequently be reclassified to profit
or loss: 47.9 – – 47.9
Fair value adjustments to cash flow hedging reserve 16.3 – – 16.3
For the period (29.9) – – (29.9)
Current income tax effect 8.5 – – 8.5
Deferred income tax effect (0.2) – – (0.2)
Reclassified to profit or loss 52.7 – – 52.7
Current income tax effect (14.9) – – (14.9)
Deferred income tax effect 0.1 – – 0.1
Fair value adjustments on available-for-sale financial
assets 5.4 – – 5.4
For the period 10.3 – – 10.3
Deferred income tax effect (1.5) – – (1.5)
Reclassified to profit or loss (3.4) – – (3.4)
Movement on foreign currency translation reserve 26.2 – – 26.2
Total comprehensive income for the period 374.5 – – 374.5
Profit for the period attributable to:
Owners of the parent
For continuing operations 325.7 – 9.4 335.1
For discontinued operations – – (9.4) (9.4)
Non-controlling interest
For continuing operations 0.9 – – 0.9
326.6 - - 326.6
Total comprehensive income for the period attributable to:
Owners of the parent
For continuing operations 373.6 – (8.2) 365.4
For discontinued operations – – 8.2 8.2
Non-controlling interest
For continuing operations 0.9 – – 0.9
374.5 – – 374.5
GROUP STATEMENT OF FINANCIAL POSITION
As at 31 March 2013
Change in Change in
accounting accounting
Previously policy policy
reported IFRS 11 IAS 19 Restated
R’m R’m R’m R’m
Assets
Property, plant and equipment 5 234.6 (192.9) – 5 041.7
Goodwill 301.0 (10.0) – 291.0
Other intangible assets 474.1 – – 474.1
Biological assets 16.0 – – 16.0
Investments in and loans to associates and joint ventures 52.9 282.4 – 335.3
Available-for-sale financial assets 61.2 – – 61.2
Trade and other receivables 21.0 (0.2) – 20.8
Deferred income tax 4.7 (0.1) – 4.6
Non-current assets 6 165.5 79.2 – 6 244.7
Current assets 5 527.7 (218.6) – 5 309.1
Inventories 2 597.5 (85.4) – 2 512.1
Biological assets 295.8 (6.8) – 289.0
Derivative financial instruments 8.3 (1.3) – 7.0
Trade and other receivables 2 386.5 (97.3) – 2 289.2
Current income tax 1.0 (0.4) – 0.6
Cash and cash equivalents 238.6 (27.4) – 211.2
Total assets 11 693.2 (139.4) – 11 553.8
Equity and liabilities
Capital and reserves attributable to owners of
the parent 6 447.5 – 0.7 6 448.2
Share capital 23.1 – – 23.1
Share premium 2 195.2 – – 2 195.2
Treasury shares (1 199.3) – – (1 199.3)
Other reserves 382.0 – – 382.0
Retained earnings 5 046.5 – 0.7 5 047.2
Non-controlling interest 9.1 – – 9.1
Total equity 6 456.6 – 0.7 6 457.3
Non-current liabilities 1 486.4 (39.9) (0.7) 1 445.8
Borrowings
B-BBEE equity transaction third-party finance 449.7 – – 449.7
Other 37.0 (27.4) – 9.6
Provisions for other liabilities and charges 123.3 – (1.0) 122.3
Share-based payment liability 171.4 – – 171.4
Deferred income tax 705.0 (12.5) 0.3 692.8
Current liabilities 3 750.2 (99.5) – 3 650.7
Trade and other payables 1 870.2 (62.4) – 1 807.8
Current income tax 15.6 (2.0) – 13.6
Derivative financial instruments 9.1 – – 9.1
Borrowings 1 849.3 (40.6) – 1 808.7
Loan from joint venture 5.6 5.5 – 11.1
Dividends payable 0.4 – – 0.4
Total equity and liabilities 11 693.2 (139.4) – 11 553.8
GROUP STATEMENT OF CASH FLOWS
Six months ended 31 March 2013
Change in
accounting
Previously policy
reported IFRS 11 Restated
R’m R’m R’m
Net cash profit from operating activities 770.1 (28.5) 741.6
Cash effect from hedging activities 22.8 – 22.8
Working capital changes (607.5) 20.0 (587.5)
Accrual for Competition Commission penalties paid (216.7) – (216.7)
Net cash utilised in operations (31.3) (8.5) (39.8)
Income tax paid (106.9) 3.4 (103.5)
Net cash flow utilised in operating activities (138.2) (5.1) (143.3)
Net cash flow from investment activities (770.7) 22.9 (747.8)
Property, plant and equipment and intangible assets
– additions (387.4) 2.7 (384.7)
– replacements (102.2) 6.5 (95.7)
– proceeds on disposal 17.6 – 17.6
Business combinations (315.0) – (315.0)
Proceeds on disposal of and changes in available-for-sale
financial assets and loans 4.4 3.5 7.9
Interest received 10.7 2.2 12.9
Dividends received 0.8 – 0.8
Dividends received from joint ventures – 8.0 8.0
Dividends received from associates 0.4 – 0.4
Net cash flow from financing activities (318.8) (0.8) (319.6)
Repayments of borrowings (124.1) (2.6) (126.7)
Share schemes transactions (4.7) – (4.7)
Interest paid (62.3) 1.8 (60.5)
Dividends paid (127.7) – (127.7)
Net decrease in cash, cash equivalents and bank overdrafts (1 227.7) 17.0 (1 210.7)
Net cash, cash equivalents and bank overdrafts at
beginning of period 368.1 (11.1) 357.0
Net cash, cash equivalents and bank overdrafts at
end of period (859.6) 5.9 (853.7)
12. Preparation of financial statements
These condensed consolidated interim financial statements have been prepared under the supervision of
LR Cronjé, CA(SA), Group financial director.
13. Audit
These results have not been audited or reviewed by the external auditors.
Directors
ZL Combi (Chairman), PM Roux (CEO)*, LR Cronje*, N Celliers, MM du Toit, Prof ASM Karaan, NS Mjoli-Mncube,
G Pretorius, LP Retief, AH Sangqu (* Executive)
Company secretary
J Jacobs
E-mail: Jay-Ann.Jacobs@pioneerfoods.co.za
Registered address
32 Market Street, Paarl, 7646
PO Box 20, Huguenot, 7645, South Africa
Tel: 021 807 5100 Fax: 021 807 5280
E-mail: info@pioneerfoods.co.za
Transfer secretaries
Computershare Investor Services (Pty) Ltd
PO Box 61051, Marshalltown, 2107, South Africa
Tel: 011 370 5000 Fax: 011 688 5209
Sponsor
PSG Capital (Pty) Ltd
PO Box 7403, Stellenbosch, 7599, South Africa
Tel: 021 887 9602 Fax: 021 887 9624
Date: 19/05/2014 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
