| Thu 27 Sep 2007, 14:30 | | SOV - Sovereign - Unaudited group results for the |
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SOV
SOV
SOV - Sovereign - Unaudited group results for the six months ended 31 August
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")
UNAUDITED GROUP RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2007
HIGHLIGHTS
- PROFIT AFTER TAX UP 27%
- HEADLINE EARNINGS PER SHARE UP 30%
- CASH GENERATED FROM OPERATIONS 203 CENTS PER SHARE
Income statement Unaudited Audited
six months ended year ended
31 August 28 February
2007 2006 2007
R`000 R`000 R`000
Revenue 286 197 204 346 458 652
Operating income 59 985 42 907 108 420
Depreciation 6 337 4 523 9 267
Net interest paid 5 793 1 208 4 404
Net operating income 47 855 37 176 94 749
Normal and deferred taxation 14 306 10 764 27 364
Retained earnings for the period 33 549 26 412 67 385
Weighted average number of shares
in issue (000`s) 33 003 32 426 32 608
Earnings per share (cents 101.7 81.5 206.7
Headline earnings per share (cents) 105.9 81.5 207.2
Capital distribution per share (cents)
- final prior year - - 61.5
Capital distribution per share (cents)
- interim - 8.5 -
Reconciliation between earnings and headline earnings
Profit after taxation 33 549 26 412 67 385
Reconciling items:
Impairment/sale of fixed assets 1 986 - 240
Taxation effect (576) - (70)
Headline profit after taxation 34 959 26 412 67 555
Balance sheet Unaudited Audited
six months ended year ended
31 August 28 February
2007 2006 2007
R`000 R`000 R`000
Assets
Non-current assets
Property, plant and equipment 375 674 209 606 269 986
Current assets 203 434 213 922 209 564
Cash and cash equivalents 84 902 120 959 117 558
Inventory and biological assets 71 342 54 273 57 139
Trade and other receivables 47 190 38 690 34 867
Total assets 579 108 423 528 479 550
Equity and liabilities
Capital and reserves
Equity 244 897 193 079 231 616
Interest-bearing debt 150 374 109 375 121 549
Long-term portion 118 431 86 069 98 558
Short-term portion 31 943 23 306 22 991
Deferred taxation 88 981 66 679 75 115
Trade and other payables 93 384 50 053 43 798
Provision for normal taxation 1 472 4 342 7 472
Total equity and liabilities 579 108 423 528 479 550
Cash flow statement Unaudited Audited
six months ended year ended
31 August 28 February
2007 2006 2007
R`000 R`000 R`000
Cash generated from operations before
working capital changes 61 907 42 868 108 693
Changes in working capital 5 085 (4 376) (8 300)
Cash generated from operating activities 66 992 38 492 100 393
Interest paid (5 793) (1 208) (4 404)
Taxation paid (6 440) (502) (5 537)
Net cash flow from operating activities 54 759 36 782 90 452
Capital distribution paid (20 297) (17 331) (20 127)
Net cash flow after capital distribution 34 462 19 451 70 325
Net cash flows from investing in
fixed assets (68 828) (26 992) (80 737)
Net cash flows from issuing of shares - - 549
Net cash flows from debt raised/(repaid) 1 710 (18 256) (19 335)
Net change in cash and cash equivalents (32 656) (25 797) (29 198)
Statement of changes in equity
28 Net Share Capital 31
February profit based distri August
2007 for the payments bution 2007
R`000 period R`000
Share capital 330 - - - 330
Share premium 34 602 - - (20 297) 14 305
Share based payments 199 - 29 - 228
Retained earnings 196 485 33 549 - - 230 034
Total 231 616 33 549 29 (20 297) 244 897
28 Net Share Capital 31
February profit based distri- August
2006 for the payments bution 2006
R`000 period
R`000
Share capital 325 - - - 325
Share premium 54 186 - - (17 331) 36 855
Share based payments 446 - (59) - 387
Retained earnings 129 100 26 412 - - 155 512
Total 184 057 26 412 (59) (17 331) 193 079
Results for the period under review
The group had a stronger than forecast trading period and increased headline
earnings per share by 30% over the prior period. This was on the back of an
increase in feed costs of 17% per unit sold but was countered by a stronger than
average selling price and as a result, EBITDA margins remained consistent at
21%.
The 40% increase in turnover was driven by 14% increase in volumes and a 26%
increase in selling price over the prior period. The capital expansion programme
announced in May 2007 is well underway and a total of R114m was spent on capital
expansion in the period under review of which R68m was financed via operational
cash flows.
Industry conditions
Higher international poultry prices as a result of higher international
commodity prices have led to strong national pricing during the period under
review. Local commodity prices have also been high as a result of the poor local
maize harvest and higher international prices.
Prospects
Pricing in the second half of the year is traditionally stronger than in the
first half of the year and the Group expects the volume increase in the first
half to be accelerated in the second half of the year.
Currently, national supply and demand is well balanced and this is expected to
continue for the second half of the year.
Directorate
The board is pleased to announce the following appointments to the directorate
of the Company with effect from 21 September 2007.
Khanya Kweyama has been appointed as a non-executive director. Khanya is
currently Group Executive, Corporate Affairs and Government Relations at Altech
and has held positions in the telecommunications and human relations fields.
Phinda Madi has been appointed as a non-executive director. Phinda is currently
the Ad Hominem Professor at Rhodes University Business School. Phinda also
serves on the boards of Illovo Sugar Limited and The Spar Group Limited and is
currently Chairman of Allcare Medical Aid Administrators.
Litha Nyhonyha, a chartered accountant, has been appointed as a non-executive
director. Litha is currently executive director of Regiments Capital, is non-
executive chairman of Plessey and serves as a non-executive director on the
boards of AECI Limited, the Land Bank and Worldwide African Investments.
Mike Hankinson has been appointed as a non-executive director. Mike is currently
the non-executive chairman of The Spar Group Limited and was chief executive
officer of Dunlop Tyres International (Pty) Limited.
During the period under review Brian Cape resigned as a non-executive director.
The board wishes to thank Brian for his contribution to the group.
Accounting Policies
The condensed consolidated interim financial statements have been prepared in
accordance with International Financial Reporting Standards ("IFRS") 34 with the
date of transition to IFRS for the group being 1 March 2005 and are consistent
with the accounting policies used in the previous period.
Interim dividend
The board of directors has proposed that no interim dividend be considered due
to the large capital expansion programme planned into the future.
By order of the board
CP Davies - Non-executive chairman
MJ Davis - Chief executive officer
27 September 2007
Sovereign Food Investments Limited
Registration number 1995/003990/06
e-mail: info@sovfoods.co.za
Website:www.sovfoods.co.za
Registered address
Kruis River Road
Uitenhage 6230
PO Box 1386
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), MJ Davis (Chief executive officer),
C Coombes, M Hankinson*, K Kweyama*, P Madi*, MP Manley, L Nyhonyha*, BA
Spanjaard*, B Van Rensburg (*non executive)
Date: 27/09/2007 14:30:01 Produced by the JSE SENS Department.
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