Loading...
See More

Penalties flatten Pioneer dividend

May 24 2010 17:37 Andile Makholwa

Related Articles

Fine hits Pioneer Food profit

Fines to whack Pioneer earnings

Pioneer weighs down Zeder

Pioneer faces R1.6bn milling fine

Pioneer cleans out board

Pioneer cracks the whip

 

Johannesburg – Pioneer Food Group is facing a possible fine of R1.6bn for allegedly contravening competition laws in its milling division, but has only made provision to cover R154m in penalties.

Pioneer was ordered to pay an unrelated R196m fine for its role in a national bread cartel and has set aside a total of R350m for administrative penalties, according to interim results to end-March released on Monday.

Uncertainty about the pending fine has also compelled to firm to abolish paying an interim dividend - 36c per share in 2009.

Headline earnings per share dived 51.9%, down from 169.9c to 81.7c, largely on account of the R350m provision.

In March, the Competition Commission said it had referred its investigation into the wheat and the white maize milling matters to the Competition Tribunal. It listed Pioneer – which produces Sasko bread, Weetbix breakfast cereal and Liquifruit juices – as one of the respondents in these cases, together with other industry participants.  

The commission has recommended an administrative penalty of R1.6bn - 10% of Pioneer's 2009 group revenue in both cases.

"This provision consists of an amount of R154m, applying a rate of 8.5% on the 2006 wheat and white maize affected revenue, and an amount of R196m for the bread business," the company said.   

Pioneer believes the 2009 annual group revenue used by the commission in determining the penalty in the milling matter is not the appropriate revenue basis, and that the 2006 revenue should rather be used given the tribunal’s judgment in the bread matter, and the fact that the alleged activities did not take place after 2007.

Pioneer also said the administrative penalties sought by the commission in the milling and bread matters may be adjusted lower, depending on the outcome of continuing negotiations.

Asked how Pioneer would raise the money if talks with the commission did not yield the desired outcome, a spokesperson for MD André Hanekom said the group preferred not to speculate on the matter. It has renewed its cautionary statement, issued in April after news that the milling issue was being referred to the tribunal. 

"Against the background that the Competition Tribunal issued an order for the payment of an administrative penalty of R196m as well as potential further or increased penalties depending upon the outcome of investigations and negotiations regarding alleged transgressions of the Competitions Act, the board deemed it prudent not to declare an interim dividend," said Pioneer.                           

"Once there is more certainty on the monetary effect of potential penalties, dividend payments will be reconsidered."

 
  - Fin24.com 
pioneer foods
NEXT ON FIN24X

 
 
 

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
1 comment
Add your comment
Comment 0 characters remaining
 

Company Snapshot

We're talking about:

Small Business

Retailers of any shape and size can now unlock the power of mobile transacting.
 
 

10 ways to drive her wild!

Fill her nights with passion and drive her wild with the best sex ever!

 
 

Men24.com

Hottie of the day: Angela
10 things you should never say after sex
Guy code: Looking good for the ladies
SA surfer rides massive waves in Maui

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...
Loading...