Wrap Text
Summary consolidated financial statements for the year ended 30 September 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”)
Summary consolidated financial statements for the year ended 30 September 2014
PIONEER FOODS SALIENT FEATURES
Revenue for continuing operations R17.7bn +9%
Adjusted operating profit (before items of a capital nature) for
continuing operations* R1.68bn +46%
Adjusted headline earnings per share for continuing operations* 637c +37%
Final gross dividend per share 156c +81%
Continuing operations:
Revenue R17 699 million +9%
Adjusted operating profit (before items of a capital nature)* R1 680 million +46%
Adjusted headline earnings* R1 169 million +38%
Adjusted headline earnings per share* 637 cents +37%
Group:
Earnings R965 million +93%
Earnings per share 527 cents +91%
Headline earnings R1 055 million +49%
Headline earnings per share 576 cents +48%
Adjusted headline earnings* R1 242 million +46%
Adjusted headline earnings per share* 678 cents +44%
Net asset value per share 3 318 cents -8%
Final gross dividend per listed ordinary share (2013: 86 cents) 156 cents +81%
Total gross dividend per listed ordinary share (2013: 132 cents) 221 cents +67%
Headline earnings (“HE”) is calculated based on Circular 2/2013 issued by the South African
Institute of Chartered Accountants.
* HE and operating profit (before items of a capital nature) are adjusted for the impact of the
share-based payment charge on the B-BBEE Phase I transaction on profit or loss due to the
volatility of this share-based payment charge.
Enquiries:
Pioneer Foods: +27 21 974 4000
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
COMMENTARY
Introduction
2014 has been a defining year for Pioneer Foods in respect of the twin objectives set, namely
strengthening of brands and expanding margins. Notwithstanding the difficult trading environment
and strong economic headwinds, the business navigated its way with precision, and delivered a
pleasing set of results for the 12 months ending 30 September 2014.
The One Pioneer business model has been institutionalised and Pioneer Foods has emerged a more
streamlined, agile and resilient business, thereby enhancing its ability to create value on a
sustainable basis. The clear and coherent corporate strategy has been embraced throughout the
Group yielding positive results within our local, international and joint venture businesses.
The following salient features underpinned the Group’s performance:
- Beverage and cereal volume growth
- Normalisation of maize profitability
- Traction in bakeries across the value chain
- Power brands’ share recovery and gains
- Robust Africa and international performance
- Significant benefits from cost and efficiency efforts
- Quantum Foods’ turnaround and unbundling
Financial
Revenue from continuing operations increased by 9% to R17.7 billion for the period under review.
This is largely attributable to increased selling prices, exports and sales mix. There was a
strong recovery in both maize and bread sales volume and market shares in the second half. Group
revenue, including Quantum Foods, increased by 7.5% to R21.3 billion.
Cost of goods sold from continuing operations increased by 7%. The gross margin expanded from
29.0% to 30.4% as a result of effective procurement and containment of conversion costs. Growth
in cash operating expenses was well contained yielding exceptional operating leverage.
The financial results for 2014 and 2013 have been impacted by the non-operational charge
relating to the Phase I B-BBEE transaction. The table below provides the results on a statutory
and adjusted basis in order to provide clarity on the comparable operating performance.
Summary of performance from continuing operations
Revenue R17 699 million +9%
Operating profit (before items of a capital nature) R1 493 million +48%
Adjusted operating profit* R1 680 million +46%
Adjusted operating margin* 9.5% (F13: 7.1%) +34%
Headline earnings R981 million +40%
Adjusted headline earnings* R1 169 million +38%
Headline earnings per share 535 +39%
Adjusted headline earnings per share* 637 +37%
* Operating profit and headline earnings (2014 and 2013) have been adjusted for the effect of
the Phase I (2006) B-BBEE transaction. This charge results from the share price movement and
number of scheme participants at each reporting date. The current year charge of R187 million
(2013: R146 million) was further exacerbated by the accelerated vesting of the Quantum Foods’
participants leaving the Group’s employment in the new financial year.
Adjusted headline earnings for the Group, including Quantum Foods, increased by 46% to
R1 242 million and represents 678 cents per share.
Earnings for the Group, including Quantum Foods, increased by 93% to R965 million and represents
527 cents per share, impacted by the year-on-year difference in the level of impairments
discussed below.
Net cash profit increased by 37% to R2 134 million and net cash flow from operating activities
amounted to R1 767 million, after a decrease in working capital of R28 million and income tax
paid of R386 million.
Total capital invested for the Group amounted to R486 million (2013: R1 378 million). Expansion
capital for the year was R270 million, with the Malmesbury/Paarl mill consolidation project being
the main beneficiary. The balance of R216 million was spent on replacement capital.
Net interest-bearing debt (excluding third-party funding relating to the 2012 Phase II B-BBEE
transaction) decreased by R812 million to R166 million, yielding a net debt to equity ratio of
3% (2013: 15%).
Essential Foods (Sasko)
Essential Foods posted good results in a challenging, low-growth environment. Maize profitability
improved to normalised levels through judicious price/volume management in a difficult procurement
season. Wheat posted pleasing results, while bakeries made exceptional progress on clear value
drivers, resulting in significantly improved profitability. Rice profitability improved and pasta
continued to contribute positively.
Groceries (Bokomo Foods and Ceres Beverages)
Bokomo Foods’ performance was bolstered by a large fruit crop and solid performance from the
cereals business. Corn flake volumes grew significantly, given favourable product acceptance by
consumers. Biscuits achieved targeted volume growth, albeit at lower margins. The beverage
business performed well as a result of strong volume growth, both locally and internationally,
and improved operational efficiencies.
The merger of Bokomo Foods and Ceres Beverages was successfully concluded, and overall costs
were particularly well managed throughout the year.
Quantum Foods
The business returned to profitability after significant re-engineering efforts. A good
performance from the feeds business, price recovery in the egg category, the downscaling of the
Western Cape broiler operations and a pleasing performance from Mega Eggs (Zambia) were the
main contributors to the business turnaround.
Unbundling of Quantum Foods, impairments, joint venture accounting and other restatements
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 Ltd ("JSE") during 2014. The listing was
successfully completed on 6 October 2014. Accordingly, as at 30 September 2014 and for the
comparative period, Quantum Foods has been accounted for as an “asset held for sale” and
treated as a “discontinued operation” in terms of IFRS 5 – Non-current Assets Held for Sale
and Discontinued Operations.
The net assets of Quantum Foods therefore have to be recognised at the lower of its carrying
value 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
after tax (2013: R208 million).
By mutual agreement between Pioneer Foods and PepsiCo Inc., the Pepsi bottling agreement will
not be renewed. The Pepsi brand portfolio will however remain in South Africa. A controlled
exit by Pioneer Foods will take place by no later than July 2015. Due to sustained losses,
the investment in the Pepsi business was impaired in the year under review by an after tax
amount of R34 million. These impairments are included in items of a capital nature.
In terms of IFRS 11 – Joint Arrangements and IAS 28 – Investments in Associates and Joint
Ventures, results from joint ventures are now equity accounted and no longer proportionately
consolidated as in previous reporting periods. The revised requirements of IAS 19 – (revised)
Employee Benefits were applied during the year under review, with a marginal effect on the
results. Comparative numbers in this respect have been restated accordingly.
Prospects
Whilst the South African economy remains vulnerable and is unlikely to recover in the short
term, Pioneer Foods has been competitively repositioned to defend and grow its brands. The
corporate portfolio will continue to be honed in an effort to sharpen the focus,
appropriately direct capital allocations and, in so doing, enhance shareholder returns.
Dividend
Shareholders’ attention should be drawn to the fact that, consequent to the unbundling of
Quantum Foods, a dividend in specie of one Quantum Foods’ share for every Pioneer Foods’
share was declared. The resulting dividend is reflected as a dividend payable to
shareholders as at 30 September 2014.
Furthermore, a gross final dividend of 156 cents (2013: 86 cents) per share has been
approved and declared by the Board for the year ended 30 September 2014 from income
reserves. The applicable dates for the final dividend are as follows:
Last date of trading cum dividend Friday, 23 January 2015
Trading ex dividend commences Monday, 26 January 2015
Record date Friday, 30 January 2015
Dividend payable Monday, 2 February 2015
The total dividend for the year under review, excluding the above dividend in specie,
increased to 221 cents per share, up 67% from 132 cents per share in the prior year.
A gross final dividend of 46.8 cents (2013: 25.8 cents) per class A ordinary share, being 30%
of the gross final dividend payable to ordinary shareholders in terms of the rules of the
relevant employee scheme, will be paid during February 2015.
It is the stated intention of the Company to move towards a dividend cover which is more
reflective of fast-moving consumer goods (“FMCG”) industry norms.
Share certificates may not be dematerialised or materialised between Monday, 26 January 2015
and Friday, 30 January 2015, both days inclusive.
By order of the Board
ZL Combi PM Roux
Chairman Chief Executive Officer
Bellville
24 November 2014
Pioneer Food Group Limited
Summary consolidated financial statements for the year ended 30 September 2014
Group statement of comprehensive income
Audited Audited
Year ended Year ended
30 September 30 September
2014 2013
Restated
R'm R'm
Continuing operations
Revenue 17 698.6 16 240.9
Cost of goods sold (12 321.2) (11 527.5)
Gross profit 5 377.4 4 713.4
Other income and gains/(losses) net 115.9 135.8
Other expenses (4 000.5) (3 842.5)
Excluding the following: (3 813.2) (3 696.6)
Phase I B-BBEE transaction share-based payment charge (187.3) (145.9)
Items of a capital nature (47.0) 10.7
Operating profit 1 445.8 1 017.4
Investment income 22.3 22.6
Finance costs (138.0) (125.5)
Share of profit of investments accounted for using the
equity method 69.8 24.7
Profit before income tax 1 399.9 939.2
Income tax expense (451.8) (238.7)
Profit for the year from continuing operations 948.1 700.5
Profit/(loss) for the year from discontinued operations
(attributable to owners of the parent) 18.2 (200.4)
Profit for the year 966.3 500.1
Other comprehensive income/(loss) for the year
Items that will not subsequently be reclassified to profit
or loss:
Remeasurement of post-employment benefit obligations 0.6 (1.5)
Items that may subsequently be reclassified to profit or
loss: 10.8 80.3
Fair value adjustments to cash flow hedging reserve (9.3) 17.3
For the year 62.8 (13.7)
Current income tax effect (18.4) 4.4
Deferred income tax effect 1.7 (0.5)
Reclassified to profit or loss (75.8) 37.7
Current income tax effect 20.7 (10.7)
Deferred income tax effect (0.3) 0.1
Fair value adjustments on available-for-sale financial assets 4.9 0.8
For the year 9.9 18.8
Deferred income tax effect (1.2) (1.7)
Reclassified to profit or loss (3.8) (16.3)
Share of other comprehensive income of investments accounted
for using the equity method 3.1 6.5
Movement on foreign currency translation reserve 12.1 55.7
Total comprehensive income for the year 977.7 578.9
Profit/(loss) for the year attributable to:
Owners of the parent
For continuing operations 947.0 699.0
For discontinued operations 18.2 (200.4)
Non-controlling interest
For continuing operations 1.1 1.5
966.3 500.1
Total comprehensive income/(loss) for the year attributable to:
Owners of the parent
For continuing operations 973.7 752.5
For discontinued operations 2.9 (175.1)
Non-controlling interest
For continuing operations 1.1 1.5
977.7 578.9
Headline earnings reconciliation
Audited Audited
Year ended Year ended
30 September 30 September
2014 2013
Restated
R'm R'm
Reconciliation between profit/(loss) attributable to owners of the parent
and headline earnings
Profit/(loss) attributable to owners of the parent
For continuing operations 947.0 699.0
For discontinued operations 18.2 (200.4)
965.2 498.6
Remeasurement of items of a capital nature continuing operations 47.0 (10.7)
Net loss on disposal of property, plant and equipment and
intangible assets 1.3 4.9
Net profit on disposal of available-for-sale financial assets (3.7) (16.4)
Impairment of property, plant and equipment and intangible assets
and loan 49.4 0.8
Tax effect on remeasurement of items of a capital nature (12.9) 1.7
34.1 (9.0)
Remeasurement of items of a capital nature discontinued operations 76.0 230.9
Net profit on disposal of property, plant and equipment and
intangible assets (1.7) (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 (20.3) (23.7)
55.7 207.2
Remeasurement of items of a capital nature included in
equity-accounted results
Effect on remeasurement of items of a capital nature 0.1 13.0
Tax effect on remeasurement of items of a capital nature (3.1)
0.1 9.9
Headline earnings 1 055.1 706.7
For continuing operations 981.2 699.9
For discontinued operations 73.9 6.8
Phase I B-BBEE transaction share-based payment charge 187.3 145.9
Adjusted headline earnings (Note 1) 1 242.4 852.6
For continuing operations 1 168.5 845.8
For discontinued operations 73.9 6.8
Number of issued ordinary shares (million) 231.7 231.0
Number of issued treasury shares:
held by subsidiary (million) 18.0 18.0
held by share incentive trust (million) 1.1 1.4
held by B-BBEE equity transaction participants (million) 18.1 18.1
held by BEE trust (million) 10.6 10.6
Number of issued class A ordinary shares (million) 6.0 7.4
Weighted average number of ordinary shares (million) 183.3 181.3
Weighted average number of ordinary shares diluted (million) 192.1 185.8
Earnings per ordinary share (cents):
basic 526.5 275.0
diluted 502.4 268.4
headline 575.6 389.8
diluted headline 549.2 380.4
adjusted headline (Note 1) 677.8 470.3
diluted adjusted headline (Note 1) 646.7 458.9
adjusted headline for continuing operations (Note 1) 637.4 466.5
diluted adjusted headline for continuing operations (Note 1) 608.2 455.2
Gross dividend per ordinary share (cents) 221.0 132.0
Gross dividend per class A ordinary share (cents) 66.3 39.6
Net asset value per ordinary share (cents) 3 318.2 3 598.1
Debt to equity ratio (%) 10.9 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 the impact of the
share-based payment charge on the B-BBEE Phase I transaction on profit or loss due to the
volatility of this share-based payment charge.
Group statement of financial position
Audited Audited
30 September 30 September
2014 2013
Restated
R'm R'm
Assets
Property, plant and equipment 4 229.1 4 162.6
Goodwill 220.8 217.7
Other intangible assets 457.2 470.7
Biological assets 16.0 16.0
Investments in and loans to associates and joint ventures 402.3 344.1
Available-for-sale financial assets 70.0 59.0
Trade and other receivables 23.4 20.7
Deferred income tax 3.7 74.1
Non-current assets 5 422.5 5 364.9
Current assets 5 420.9 4 416.1
Inventories 2 423.3 2 401.2
Derivative financial instruments 14.9 10.6
Trade and other receivables 1 873.8 1 624.6
Current income tax 1.3 0.7
Cash and cash equivalents 1 107.6 379.0
Assets of disposal group classified as held for sale 2 066.8 1 953.4
Total assets 12 910.2 11 734.4
Equity and liabilities
Capital and reserves attributable to owners of the parent 6 102.4 6 581.3
Share capital 23.2 23.1
Share premium 2 255.2 2 188.6
Treasury shares (1 186.5) (1 190.9)
Other reserves 428.5 426.2
Retained earnings 4 582.0 5 134.3
Non-controlling interest 10.4 9.3
Total equity 6 112.8 6 590.6
Non-current liabilities 2 308.6 2 304.6
Borrowings
B-BBEE equity transaction third-party finance 449.7 449.7
Other 1 063.8 1 007.6
Provisions for other liabilities and charges 101.5 120.3
Share-based payment liability 245.2 251.4
Deferred income tax 448.4 475.6
Current liabilities 3 920.7 2 357.2
Trade and other payables 2 258.2 1 926.1
Current income tax 18.1 28.1
Derivative financial instruments 9.7 6.2
Borrowings 260.7 381.8
Loan from joint venture 15.7 14.7
Share-based payment liability 115.8
Dividends payable 1 242.5 0.3
Liabilities of disposal group classified as held for sale 568.1 482.0
Total equity and liabilities 12 910.2 11 734.4
Group statement of cash flows
Audited Audited
Year ended Year ended
30 September 30 September
2014 2013
Restated
R'm R'm
Net cash profit from operating activities 2 133.9 1 556.3
Cash effect from hedging activities (7.8) 22.7
Working capital changes 27.5 66.8
Accrual for Competition Commission penalties paid (216.7)
Net cash generated from operations 2 153.6 1 429.1
Income tax paid (386.4) (233.1)
Net cash flow from operating activities 1 767.2 1 196.0
Net cash flow from investment activities (392.7) (1 287.2)
Property, plant and equipment and intangible assets
additions (269.7) (828.1)
replacements (216.3) (235.0)
proceeds on disposal 55.7 26.7
Business combinations (315.0)
Proceeds on disposal of and changes in available-for-sale
financial assets and loans (1.1) 26.4
Interest received 24.3 22.5
Dividends received 1.6 1.7
Dividends received from joint ventures 12.8 13.3
Dividends received from associates 0.3
Net cash flow from financing activities (422.0) (200.2)
Proceeds from syndicated borrowings 1 870.0
Proceeds/(repayments) of other borrowings 78.1 (1 698.8)
Share schemes transactions (72.3) (17.1)
Interest paid (150.8) (142.8)
Dividends paid (277.0) (211.5)
Net increase/(decrease) in cash, cash equivalents and bank overdrafts 952.5 (291.4)
Net cash, cash equivalents and bank overdrafts at beginning of year 65.6 357.0
Net cash, cash equivalents and bank overdrafts at end of year 1 018.1 65.6
For continuing operations 912.5 41.0
For discontinued operations 105.6 24.6
Group statement of changes in equity
Audited Audited
Year ended Year ended
30 September 30 September
2014 2013
Restated
R'm R'm
Share capital, share premium and treasury shares 1 091.9 1 020.8
Opening balance 1 020.8 987.3
Movement in treasury shares 4.4 16.7
Ordinary shares issued share appreciation rights 66.8 49.6
Employee share scheme repurchase of shares (0.1) (32.8)
Other reserves 428.5 426.2
Opening balance 426.2 350.3
Equity compensation reserve transactions 26.5 15.2
Ordinary shares issued share appreciation rights (66.8) (49.6)
Deferred income tax on share-based payments 31.8 30.0
Share of other comprehensive income of investments accounted for
using the equity method 3.1 6.5
Other comprehensive income for the year 7.7 73.8
Retained earnings 4 582.0 5 134.3
Opening balance 5 133.2 4 847.3
Effect of changes in accounting policies 1.1 0.7
Restated opening balance 5 134.3 4 848.0
Profit for the year 965.2 498.6
Other comprehensive income/(loss) for the year 0.6 (1.5)
Dividends paid (1 519.2) (211.3)
Management share incentive scheme disposal of shares 1.7 0.8
Employee share scheme transfer tax on share transactions (0.6) (0.3)
Non-controlling interest 10.4 9.3
Opening balance 9.3 8.2
Dividend paid (0.4)
Profit for the year 1.1 1.5
Total equity 6 112.8 6 590.6
Group segment report
Audited Audited
Year ended Year ended
30 September 30 September
2014 2013
Restated
R'm R'm
Segment revenue (Note 1)
Essential Foods (formerly Sasko) 10 927.5 10 314.4
Quantum Foods 3 591.4 3 575.6
Bokomo Foods 3 728.3 3 148.4
Ceres Beverages 3 340.8 3 021.2
21 588.0 20 059.6
Less : Internal revenue (298.0) (248.5)
Total 21 290.0 19 811.1
Segment results (Note 1)
Essential Foods (formerly Sasko) 1 074.9 784.3
Quantum Foods 21.6 (18.9)
Bokomo Foods 406.7 279.0
Ceres Beverages 328.7 263.8
Other (115.7) (154.3)
1 716.2 1 153.9
Reversal of depreciation charge in Quantum Foods legal entities
(asset held for sale) 54.7
Phase I B-BBEE transaction share-based payment charge (187.3) (145.9)
Operating profit before items of a capital nature 1 583.6 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 1 583.6 1 008.0
Adjusted for:
Remeasurement of items of a capital nature (123.0) (220.2)
Interest income 24.3 22.5
Dividends received 1.6 1.7
Finance costs (138.7) (126.3)
Share of profit of investments accounted for using the equity method 70.4 24.8
Profit before income tax (including discontinued operations) 1 418.2 710.5
Note 1
Includes discontinued operations.
Notes to the summary consolidated financial statements
1. Basis of preparation
The preliminary summary consolidated financial statements of the Group for the year ended
30 September 2014 have been prepared in accordance with the requirements of the JSE for
preliminary reports, and the requirements of the Companies Act of South Africa, Act 71 of 2008,
as amended, applicable to preliminary reports. The Listings Requirements of the JSE require
summary financial statements to be prepared in accordance with the framework concepts and the
measurement and recognition requirements of International Financial Reporting Standards ("IFRS")
and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and the
Financial Pronouncements as issued by the Financial Reporting Standards Council and also, as a
minimum, to contain the information required by IAS 34 Interim Financial Reporting. This
summary report is an extract from audited information, but this summary report has not been
audited.
The directors take full responsibility for the preparation of the summary consolidated financial
statements and that the financial information has been correctly extracted from the underlying
financial records.
2. Accounting policies
The accounting policies applied in the preparation of the consolidated financial statements from
which the summary consolidated financial statements were derived, are in terms of IFRS and are
consistent with those accounting policies applied in the preparation of the previous consolidated
annual financial statements, 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 the
summary consolidated 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 year ended
30 September 2014 and the financial position at 30 September 2014.
In preparing these summary consolidated 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.
Audited Audited
Year ended Year ended
30 September 30 September
2014 2013
R'm R'm
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 year 231 006 847 230 314 486
Shares issued in terms of employee share appreciation rights scheme 685 034 692 361
At end of year 231 691 881 231 006 847
685,034 (30 September 2013: 692,361) listed ordinary shares of
10 cents each were issued at an average of R97.47
(30 September 2013: R71.64) per share in terms of the share
appreciation rights scheme.
Number of treasury shares held by the share incentive trust
At beginning of year 1 422 116 2 545 933
Movement in shares (311 903) (1 123 817)
At end of year 1 110 213 1 422 116
Proceeds on the sale of treasury shares by the share incentive
trust (R'000) 6 262 18 662
Number of treasury shares held by B-BBEE transaction participants
At beginning and end of year 18 091 661 18 091 661
Number of treasury shares held by Pioneer Foods Broad-Based BEE Trust
At beginning and end of year 10 599 988 10 599 988
Number of treasury shares held by a subsidiary
At beginning and end of year 17 982 056 17 982 056
Number of unlisted class A ordinary shares
At beginning of year 7 367 360 8 198 120
Shares bought back and cancelled (1 323 420) (830 760)
At end of year 6 043 940 7 367 360
Purchase consideration paid for unlisted class A ordinary shares
bought back (R'000) 74 988 32 736
4. Impairment of property, plant and equipment and goodwill
4.1 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 Quantum Foods Zambia Ltd) that
produce and sell eggs, chicken products, animal feeds and commercial laying hens. Further
announcements on SENS in this regard were issued on 5 September 2014 and 18 September 2014.
Pioneer Foods unbundled its interests in Quantum Foods to its shareholders and subsequently listed
Quantum Foods as a separate legal entity on the JSE on 6 October 2014. 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 year ended
30 September 2014 and the year ended 30 September 2013.
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 and 30 September 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 year ended 30 September 2014. This impairment charge attributable to property, plant and
equipment is as follows:
Audited Audited
Year ended Year ended
30 September 30 September
2014 2013
Nature R'm R'm
Property, plant and equipment and other intangible assets 77.7 155.1
Goodwill 76.9
77.7 232.0
Income tax effect (20.6) (23.9)
After income tax effect 57.1 208.1
4.2 Carbonated soft drinks business
During the current reporting period, the results of the carbonated soft drinks business of the
Ceres Beverages segment were lower than expected with continued losses being incurred. Consequently,
the carrying amounts of the related assets were impaired. The impairment loss for these assets was
calculated by comparing the carrying amount of the assets to the fair value less costs to sell of
the assets. The fair value less costs to sell was determined by an independent valuator with
reference to the market value of similar used equipment.
The impairment charge of R47.8 million is recognised in the line item "Items of a capital nature" in
the statement of comprehensive income. This impairment charge attributable to property, plant and
equipment is as follows:
Audited Audited
Year ended Year ended
30 September 30 September
2014 2013
Nature R'm R'm
Property, plant and equipment 47.8 -
Income tax effect (13.4) -
After income tax effect 34.4 -
5. Borrowings
Pioneer Foods obtained a R300 million vehicle and asset finance facility during the year. This
facility will be used to finance the replacement of the Group's bakery delivery vehicle fleet. The
vehicles are acquired in terms of instalment sale agreements. These borrowings are secured by the
vehicles acquired in terms of these agreements. At 30 September 2014, new borrowings obtained in
terms of these facilities amounted to R40.7 million.
No other 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 final dividend of 156.0 cents (2014: gross interim dividend
of 65.0 cents and 2013: gross final dividend of 86.0 cents) per ordinary share. This will amount to
approximately R344 903 353 (2014: interim of R143 601 201 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. 31.2 cents (2014: gross interim of 13.0 cents and 2013: gross final
dividend of 17.2 cents) per share, amounting to R3 307 196 (2014: interim of R1 377 998 and
2013: final of R1 823 198).
The Board approved a gross final dividend of 46.8 cents (2014: gross interim dividend of 19.5 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 R2 828 564 (2014: interim of R1 204 213 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 Service 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 a 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 132.60 cents per ordinary share and 39.78 cents per class A
ordinary share for shareholders liable to pay dividends tax. The dividend amounts to 156.0 cents
per ordinary share and 46.8 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 231 691 881 and 5 702 620
respectively as at the date of this declaration.
6.2 Unbundling of interest in Quantum Foods
Shareholders were advised on SENS on 5 September 2014 and 18 September 2014 that the Board resolved
to proceed with the unbundling of its interest in Quantum Foods and to list Quantum Foods as a
separate entity on the JSE. Quantum Foods was subsequently listed on the JSE on 6 October 2014.
6.3 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 summary consolidated financial statements by the Board.
7. Contingent liabilities
7.1 Dispute with egg contract producers discontinued operations
Pioneer Foods is defending contractual claims from its privatised egg contract producers. 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 of the remaining three contract egg producers (being Flinkwink Properties (Pty) Ltd,
KwaZulu Egg Producers (Pty) Ltd and Moerasrivier Boerdery (Pty) Ltd) are still unresolved. Pioneer
Foods filed pleas to all these claims and, in respect of 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.
No further legal action has been taken during the year under review. Based on legal opinion
obtained, management is satisfied that these unresolved matters are low risk and pose no material
financial risk to the Group.
Pioneer Foods unbundled its interests in Quantum Foods to its shareholders and, subsequently,
Quantum Foods was listed on the JSE on 6 October 2014. Quantum Foods indemnified Pioneer Foods
from any potential financial exposure to the claims from the egg contract producers.
7.2 Dispute with breeder farms and broiler farms discontinued operations
Several breeder farms (being Bergsig Breeders (Pty) Ltd and Mountainview Breeders CC) and broiler
farms (being Claudewil Broilers (Pty) Ltd and Dassenberg Broilers (Pty) Ltd) (four in total) also
filed claims against Pioneer Foods for the alleged breach of the terms of their supply agreements
with Pioneer Foods. Claudewil Broilers (Pty) Ltd withdrew its claim in 2014.
No further action has transpired in the year under review. Based on legal opinion obtained,
management is satisfied that these unresolved matters are low risk and pose no material financial
risk to the Group.
Pioneer Foods unbundled its interests in Quantum Foods to its shareholders and, subsequently,
Quantum Foods was listed on the JSE on 6 October 2014. Quantum Foods indemnified Pioneer Foods
from any potential financial exposure to the claims from the breeder and broiler farms.
7.3 Guarantees
The Group had guarantees in issue of R50.2 million (30 September 2013: R48.5 million) as at
30 September 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 amounts to R299.8 million
(30 September 2013: R265.0 million). Capital expenditure approved by the Board, but not contracted
for yet, amounts to R351.6 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 Holdings Ltd, Quantum Foods (Pty) Ltd,
Philadelphia Chick Breeders (Pty) Ltd, Lohmann Breeders SA (Pty) Ltd, Bokomo Uganda (Pty) Ltd,
Quantum Foods Zambia Ltd and Bokomo Zambia Ltd (included with Quantum Foods until 31 July 2014),
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 year ended 30 September 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.
Shareholders were advised on SENS on 5 September 2014 and 18 September 2014 that the Board resolved
to proceed with the unbundling of its interest in Quantum Foods and to list Quantum Foods as a
separate entity on the JSE. Quantum Foods was subsequently listed on the JSE on 6 October 2014.
The unbundling has been accounted for as a dividend in specie at fair value in accordance with
IFRIC 17 Distributions of Non-cash Assets to Owners. IFRIC 17 requires distributions within its
scope to be measured at the fair value of the assets to be distributed at the date when the dividend
is appropriately authorised and is no longer at the entity's discretion. Consequently, an amount of
R1 242 220 000, representing the fair value of the interest in Quantum Foods attributable to
external shareholders, has been accounted for as a dividend payable to shareholders at 30 September
2014. Refer to Note 10 for the methods and assumptions used to determine the fair value.
Audited Audited
30 September 30 September
2014 2013
R'm R'm
Assets of the disposal group classified as held for sale:
Property, plant and equipment 1 075.5 1 129.6
Intangible assets 7.2
Investment in associates 6.1 6.8
Inventories 232.5 235.9
Biological assets 292.4 276.7
Trade and other receivables 343.5 275.3
Deferred income tax 3.1 3.1
Derivative financial instruments 0.9 0.9
Current income tax 0.5
Cash and cash equivalents 105.6 24.6
2 066.8 1 953.4
Liabilities of the disposal group classified as held for sale:
Deferred income tax 195.7 196.3
Provision for other liabilities and charges 15.6 9.3
Trade and other payables 355.3 274.8
Current income tax 1.5 1.6
568.1 482.0
Hedging reserve 0.2
Currency translation reserve 7.3 22.9
The results of discontinued operations and the results recognised on
the remeasurement of the Quantum Foods disposal group is as follows:
Audited Audited
30 September 30 September
2014 2013
Restated
R'm R'm
Revenue 3 591.3 3 570.1
Operating profit before items of a capital nature 90.8 1.3
Items of a capital nature 1.7 1.1
Investment income 3.6 1.6
Finance costs (0.7) (0.8)
Share of profit of associated companies 0.6 0.3
Profit before income tax 96.0 3.5
Income tax (20.7) 4.2
Profit after income tax 75.3 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
Profit/(loss) for the year from discontinued operations 18.2 (200.4)
Other comprehensive income/(loss) for the year from discontinued
operations
Fair value adjustments to cash flow hedging reserve
For the year 0.3
Deferred income tax effect (0.1)
Currency translation differences (15.5) 25.3
Total comprehensive profit/(loss) for the year from discontinued
operations 2.9 (175.1)
Audited Audited
Year ended Year ended
30 September 30 September
2014 2013
Restated
R'm R'm
Cash flows of the disposal group classified as held for sale:
Net cash flow from operating activities 93.0 90.8
Net cash flow from investment activities (37.8) (469.6)
Net cash flow from financing activities 25.8 391.3
Net increase in cash, cash equivalents and bank overdrafts 81.0 12.5
Net cash, cash equivalents and bank overdrafts at beginning of year 24.6 12.1
Net cash, cash equivalents and bank overdrafts at end of year 105.6 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.
Audited fair value measurements at
30 September 2014 using:
Quoted
prices in
active
markets for Significant
identical other Significant
assets and observable unobservable
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 68.6
Unlisted securities 1.4
Derivative financial instruments
Foreign exchange contracts 14.3
Embedded derivative 0.7
Biological assets
Vineyards 16.0
Assets of disposal group classified as held
for sale 2 066.8
Liabilities measured at fair value
Derivative financial instruments
Foreign exchange contracts 9.7
Liabilities of disposal group classified as
held for sale 568.1
Dividend in specie payable unbundling of
Quantum Foods - - 1 242.2
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 inputs 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 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 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 year ended 30 September 2014 and the year ended
30 September 2013. Refer to Note 9 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 CGUs' 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 consist of a number of CGUs. Bokomo Uganda (Pty) Ltd and Quantum
Foods 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 tests, by CGU, were as follows:
30 September 2014 31 March 2014 30 September 2013
Discount rate
South Africa 17.4% 17.0% 17.6%
Uganda 27.1% 28.6% 28.6%
Zambia 25.1% 23.1% 23.1%
Perpetual growth rate
South Africa 5.5% 5.5% 5.5%
Uganda 5.5% 5.5% 5.5%
Zambia 6.5% 6.5% 6.5%
Income tax rate
South Africa 28.0% 28.0% 28.0%
Uganda 30.0% 30.0% 30.0%
Zambia 12.5% 12.5% 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 Reclassification of line items of statement of comprehensive income
During the current year, the Group has reallocated certain customer advertising expenditure
from marketing costs to revenue. The reason for the reclassification is to reflect more
appropriately the way in which economic benefits are derived from customer advertising expenditure.
Group statement of comprehensive income
Year ended 30 September 2013
Previously Change in Change in
reported accounting accounting
policy policy
IFRS 11 IAS 19
R'm R'm R'm
Continuing operations
Revenue 16 992.3 (675.0)
Cost of goods sold (11 985.8) 447.1
Gross profit 5 006.5 (227.9)
Other income and gains/(losses) net 139.5 (3.7)
Other expenses (4 090.7) 180.9 2.1
Excluding the following: (3 944.8) 180.9 2.1
Phase I B-BBEE transaction share-based
payment charge (145.9)
Items of a capital nature (2.2) 12.9
Operating profit 1 053.1 (37.8) 2.1
Investment income 18.3 4.3
Finance costs (128.6) 3.1
Share of profit of investments accounted
for using the equity method 1.0 23.7
Profit before income tax 943.8 (6.7) 2.1
Income tax expense (245.2) 6.7 (0.2)
Profit for the year from continuing
operations 698.6 1.9
Loss for the year from discontinued
operations (attributable to owners of the
parent) (200.4)
Profit for the year 498.2 1.9
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)
Items that may subsequently be
reclassified to profit or loss: 80.3
Fair value adjustments to cash flow
hedging reserve 17.3
For the year (13.7)
Current income tax effect 4.4
Deferred income tax effect (0.5)
Reclassified to profit or loss 37.7
Current income tax effect (10.7)
Deferred income tax effect 0.1
Fair value adjustments on available-for-
sale financial assets 0.8
For the year 18.8
Deferred income tax effect (1.7)
Reclassified to profit or loss (16.3)
Share of other comprehensive income of
investments accounted for using the
equity method 6.5
Movement on foreign currency
translation reserve 62.2 (6.5)
Total comprehensive income for the
year 578.5 0.4
Profit for the year attributable to:
Owners of the parent
For continuing operations 697.1 1.9
For discontinued operations (200.4)
Non-controlling interest
For continuing operations 1.5
498.2 1.9
Total comprehensive income for the
year attributable to:
Owners of the parent
For continuing operations 752.1 0.4
For discontinued operations (175.1)
Non-controlling interest
For continuing operations 1.5
578.5 0.4
Group statement of comprehensive income (continued)
Year ended 30 September 2013
Discon
tinued
Operations Reclassi-
IFRS 5 fication Restated
R'm R'm R'm
Continuing operations
Revenue (11.2) (65.2) 16 240.9
Cost of goods sold 11.2 (11 527.5)
Gross profit (65.2) 4 713.4
Other income and gains/(losses) net 135.8
Other expenses 65.2 (3 842.5)
Excluding the following: 65.2 (3 696.6)
Phase I B-BBEE transaction share-based
payment charge (145.9)
Items of a capital nature 10.7
Operating profit 1 017.4
Investment income 22.6
Finance costs (125.5)
Share of profit of investments accounted
for using the equity method 24.7
Profit before income tax 939.2
Income tax expense (238.7)
Profit for the year from continuing
operations 700.5
Loss for the year from discontinued
operations (attributable to owners of the
parent) (200.4)
Profit for the period 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: 80.3
Fair value adjustments to cash flow
hedging reserve 17.3
For the period (13.7)
Current income tax effect 4.4
Deferred income tax effect (0.5)
Reclassified to profit or loss 37.7
Current income tax effect (10.7)
Deferred income tax effect 0.1
Fair value adjustments on available-for-
sale financial assets 0.8
For the period 18.8
Deferred income tax effect (1.7)
Reclassified to profit or loss (16.3)
Share of other comprehensive income of
investments accounted for using the
equity method 6.5
Movement on foreign currency
translation reserve 55.7
Total comprehensive income for the
period 578.9
Profit for the period attributable to:
Owners of the parent
For continuing operations 699.0
For discontinued operations (200.4)
Non-controlling interest
For continuing operations 1.5
500.1
Total comprehensive income for the
period attributable to:
Owners of the parent
For continuing operations 752.5
For discontinued operations (175.1)
Non-controlling interest
For continuing operations 1.5
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 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)/increase 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 financial position
As at 30 September 2012
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 4 641.5 (201.3) 4 440.2
Goodwill 271.9 (11.9) 260.0
Other intangible assets 464.3 (0.2) 464.1
Biological assets 16.0 16.0
Investments in associates and joint ventures 56.9 290.8 347.7
Available-for-sale financial assets 52.8 52.8
Trade and other receivables 20.4 (0.1) 20.3
Deferred income tax 2.7 2.7
Non-current assets 5 526.5 77.3 5 603.8
Current assets 5 079.6 (193.9) 4 885.7
Inventories 2 450.0 (89.9) 2 360.1
Biological assets 228.7 (7.1) 221.6
Derivative financial instruments 6.8 (0.5) 6.3
Trade and other receivables 2 014.3 (77.6) 1 936.7
Current income tax 4.2 (0.2) 4.0
Cash and cash equivalents 375.6 (18.6) 357.0
Total assets 10 606.1 (116.6) 10 489.5
Equity and liabilities
Capital and reserves attributable to owners of
the parent 6 184.9 0.7 6 185.6
Share capital 23.0 23.0
Share premium 2 171.8 2 171.8
Treasury shares (1 207.5) (1 207.5)
Other reserves 350.3 0.1 350.4
Retained earnings 4 847.3 (0.1) 0.7 4 847.9
Non-controlling interest 8.2 8.2
Total equity 6 193.1 0.7 6 193.8
Non-current liabilities 1 377.5 (34.1) (0.7) 1 342.7
Borrowings
B-BBEE equity transaction third-party finance 449.7 449.7
Other 48.0 (19.8) 28.2
Provisions for other liabilities and charges 119.2 (1.0) 118.2
Share-based payment liability 108.2 108.2
Deferred income tax 652.4 (14.3) 0.3 638.4
Current liabilities 3 035.5 (82.5) 2 953.0
Trade and other payables 1 933.0 (68.6) 1 864.4
Current income tax 4.7 (1.2) 3.5
Derivative financial instruments 3.1 3.1
Borrowings 871.7 (19.7) 852.0
Loan from joint venture 7.0 7.0 14.0
Accrual for Competition Commission penalties 215.5 215.5
Dividends payable 0.5 0.5
Total equity and liabilities 10 606.1 (116.6) 10 489.5
12. Preparation of financial statements
These summary consolidated financial statements have been prepared under the supervision of
LR Cronjé, CA(SA), Group financial director.
13. Audit
The external auditors, PricewaterhouseCoopers Inc., have audited the Group's financial statements
for the year ended 30 September 2014 and their unqualified auditor's report is available for
inspection at the registered office of the Company.
The Group's auditors have not reviewed nor reported on any of the comments relating to prospects.
Directors
ZL Combi (Chairman), PM Roux (CEO)*, LR Cronjé*, 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
Glacier Place, 1 Sportica Crescent, Tygervalley, 7530
Tel: 021 974 4000 Fax: 086 407 0044
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: 24/11/2014 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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