| Mon 30 Apr 2007, 14:00 | | SOV - Sovereign - Audited group results for the ye |
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SOV
SOV
SOV - Sovereign - Audited group results for the year ended 28 February 2007
SOVEREIGN FOOD INVESTMENTS LTD
Incorporated in the Republic of South Africa
Registration number 1995/003990/06
JSE code: SOV
ISIN: ZAE000009221
("Sovereign" or "the group" or "the company")
AUDITED GROUP RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2007
HIGHLIGHTS
HEADLINE EARNINGS 206.7 CPS - UP 13%
OPERATIONAL CASH FLOW 308 CPS
5 YEAR COMPOUND EARNINGS GROWTH OF 39%
PROPOSED FINAL CAPITAL DISTRIBUTION OF 61.5 CPS - UP 15%
Income statement Audited Audited
2007 2006
R`000 R`000
Revenue 458,652 398,580
Operating income 108,420 93,489
Depreciation 9,267 7,500
Net interest paid 4,404 6,427
Profit before taxation 94,749 79,562
Normal and deferred taxation 27,364 22,907
Profit after taxation 67,385 56,655
Retained earnings at beginning of year 129,100 72,445
Retained earnings at end of year 196,485 129,100
Weighted average number of shares in issue (000`s) 32,608 31,071
Earnings per share (cents) 206.7 182.3
Headline earnings per share (cents) 207.2 182.6
Total capital distribution per share (cents) 70.0 60.0
Reconciliation between earnings and headline earnings
Profit after taxation 67,385 56,655
Reconciling items:
Disposal of fixed assets 240 (107)
Taxation effect (70) 175
Headline profit after taxation 67,555 56,723
Balance sheet Audited Audited
2007 2006
R`000 R`000
Assets
Non-current assets
Property, plant and equipment 269,986 179,827
Current assets 209,564 232,092
Inventory 24,452 25,669
Biological assets 32,687 26,687
Trade and other receivables 34,867 32,980
Cash and cash equivalents 117,558 146,756
Total assets 479,550 411,919
Equity and liabilities
Capital and reserves
Share capital and premium 35,131 54,957
Retained earnings 196,485 129,100
Shareholders` interest 231,616 184,057
Liabilities
Long-term loans 121,549 119,262
Long-term portion 98,558 97,060
Short-term portion 22,991 22,202
Deferred taxation 75,115 55,915
Trade and other payables 43,798 47,841
Provision for taxation 7,472 4,844
Total equity and liabilities 479,550 411,919
Cash flow statement Audited Audited
2007 2006
R`000 R`000
Cash generated from operations before
working capital changes 108,693 93,382
Changes in working capital (8,300) 7,701
Cash generated from operating activities 100,393 101,083
Interest paid (4,404) (6,427)
Taxation paid (5,537) (1,000)
Net cash flow from operating activities 90,452 93,656
Capital distribution paid (20,127) (12,405)
Net cash flow after capital distribution 70,325 81,251
Net cash flows from investing activities (80,188) 7,491
Shares issued for cash 549 25,736
Fixed assets acquired for cash (80,738) (19,605)
Proceeds on disposal of fixed assets 1 977
Investments (acquired) disposed - 383
Net debt raised (repaid) (19,335) 2,581
Net increase in cash, cash equivalents
and investments (29,198) 91,323
Cash, cash equivalents and investments at
the beginning of the year 146,756 55,433
Cash, cash equivalents and investments at
the end of the year 117,558 146,756
Statement of changes in equity - Audited
2007 Share Share Share Retained
capital premium options earnings Total
Opening balance 325 54,186 446 129,100 184,057
New shares issued 5 543 548
Capital distribution (20,127) (20,127)
Share options (247) (247)
Net profit for the year 67,385 67,385
Closing balance 330 34,602 199 196,485 231,616
2006 Share Share Share Retained
capital premium options earnings Total
Opening balance 294 40,773 327 72,445 113,839
New shares issued 31 25,586 25,617
Capital distribution (12,405) (12,405)
Treasury shares 232 232
Share options 119 119
Net profit for the year 56,655 56,655
Closing balance 325 54,186 446 129,100 184,057
RESULTS FOR THE PERIOD UNDER REVIEW
The group once again achieved satisfactory results for the period under review
with headline earnings per share increasing 13% over the previous period. EBITDA
margin remained strong at 23.6% and this is the third year in succession that
the group has shown EBITDA margins of greater than 17%.
The group has undertaken a substantial four year expansion programme of which
the first year was completed during the period under review with a total cost of
R99.5m. This will enable the group to grow aggressively over the next several
years. The bulk of the expansion for the period under review was funded through
operational cash and the group ended the period under review with negligible net
gearing of 1.7%. The group continued its strong cash generation and achieved
cash from operations of R100m or 308 cents per share.
As a result of its hedging strategies to mitigate against the substantial
increase in the international and national price of maize experienced since
September 2006, the group showed a derivative trading profit of R21.7m before
tax for the period under review.
INDUSTRY CONDITIONS
The substantial increase in the price of maize since October 2006 and the
expected high maize prices through to March 2008 will be a major factor in the
poultry industry in the coming year. Internationally, the price of poultry has
increased significantly as international producers have passed the cost of high
grain prices on to consumers. This trend is already apparent domestically and it
is expected that this trend will continue into the new year.
The national supply and demand situation remains satisfactory with higher
international poultry prices and a weakening rand leading to lower import
volumes.
Pricing in the coming year will therefore remain a factor of international
prices, the R/USD exchange rate and the effect of the high maize prices on
poultry and poultry substitutes.
PROSPECTS
The group remains positive about the coming year notwithstanding the higher
maize prices and other factors as outlined above. As part of the aggressive
growth plans of the group, the group expects to increase volumes substantially
in the coming year.
In the coming financial period, the group plans to spend R150m on the second
phase of the four year expansion programme.
DIRECTORATE
During the year Rob Spanjaard resigned as non-executive chairman. Rob was one of
the founders of the group and was instrumental in its listing in 1995. Rob has
expressed his desire to focus on developing his Asset Management business. The
board wishes to thank Rob for the role that he has played in running the company
since 1995.
Charles Davies was appointed as non-executive chairman with effect from 19
February 2007. Charles is the former CEO of Norwich Holdings Ltd. He is
currently a non-executive director of Basil Read Holdings Ltd and The Land Bank
of South Africa.
During the year Adrian Vardy also resigned as a non-executive director. Adrian
was also one of the founders of the group and provided invaluable guidance to
the board since its founding. The board wishes to thank Adrian for this
guidance.
During the year Blaine van Rensburg and Mark Manley were appointed as executive
directors in the roles of operations and procurement directors, respectively.
ANNUAL GENERAL MEETING
Notice is hereby given that the annual general meeting of the company will be
held at 10.00 on Wednesday, 27 June 2007 at Uitenhage, Eastern Cape.
CAPITAL DISTRIBUTION
It is proposed by the board that a final capital distribution out of share
premium of 61.5 cents per ordinary share be declared.
This declaration will be subject to the passing (and where applicable the
registration) of the special and ordinary resolutions at the annual general
meeting to be held on Wednesday, 27 June 2007.
If the resolutions are passed and registered, where applicable, and the proposal
is then accepted, the capital distribution will be payable to shareholders
recorded in the register of the company as at Friday, 20 July 2007.
In compliance with the requirements of STRATE the following dates are
applicable:
Last date to trade "CUM" the capital distribution Friday, 13 July 2007
Trading commences "EX" the capital distribution Monday, 16 July 2007
Record date Friday, 20 July 2007
Date of payment Monday, 23 July 2007
Share certificates may not be dematerialised or rematerialised between Monday,
16 July 2007 and Friday, 20 July 2007, both dates inclusive.
ACCOUNTING POLICIES
The condensed consolidated audited annual financial statements have been
prepared in accordance with International Financial Reporting Standards
("IFRS").
These results have been audited by the group`s independent auditors, PKF (PE)
Inc. Their unqualified audit report, dated 26 April 2007, is available for
inspection at the registered offices of the company.
By order of the board
CP Davies MJB Davis
Non-executive chairman Chief executive officer
30 April 2007
e-mail: info@sovfoods.co.za
website:www.sovfoods.co.za
Registered address
Kruis River Road,
Uitenhage 6230
Transfer secretaries
Computershare Investor Services 2004 (Pty) Limited
PO Box 61051
Marshalltown 2107
Gauteng
Sponsor
Barnard Jacobs Mellet Corporate Finance (Pty) Limited
Directorate
CP Davies* (Non-executive chairman), MJB Davis (Chief executive officer), BR
Cape*, C Coombes, MP Manley, BA Spanjaard*, BJ Van Rensburg (*non-executive)
Date: 30/04/2007 14:00:01 Produced by the JSE SENS Department.
