| Fri 26 Sep 2008, 7:33 | | SOV - Sovereign Food Investments - Unaudited Group Results For The Six Months |
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SOV
SOV
SOV - Sovereign Food Investments - Unaudited Group Results For The Six Months
Ended 31 August 2008
Sovereign Food Investments Limited
Incorporated in the Republic of South Africa
Registration number 1995/003990/06
JSE code: SOV & ISIN: ZAE000009221
("the Group")
Unaudited Group Results for the six months ended 31 August 2008
- Volumes up 31%
- Revenue up 28%
- Significant expansion in capacity
Income Statement
Unaudited Audited
six months ended year ended
31 August 29 February
2008 2007 2008
R`000 R`000 R`000
Revenue 365 246 286 197 581 232
Operating (loss)/income (11 657) 59 985 87 546
Depreciation 8 916 6 337 13 207
Net interest paid 22 304 5 793 10 912
Net operating (loss)/income (42 877) 47 855 63 427
Normal and deferred taxation (8 531) 14 306 16 711
(Accumulated loss)/retained earnings
for the period (34 346) 33 549 46 716
Weighted average number of shares in
issue (000`s) 33 003 33 003 33 003
(Loss)/earnings per share (cents) (104,1) 101,7 141,6
Headline (loss)/earnings per share
(cents) (104,1) 105,9 155,0
Diluted (loss)/earnings per share
(cents) (102,9) 100,5 140,0
Diluted headline (loss)/earnings per
share (cents) (102,9) 104,7 153,3
Reconciliation between (loss)/
earnings and headline (loss)/earnings
(Loss)/profit after taxation (34 346) 33 549 46 716
Reconciling items:
Impairment of property, plant and
equipment - 1 986 6 168
Taxation effect - (576) (1 728)
Headline (loss)/earnings after
taxation (34 346) 34 959 51 156
Balance Sheet
Unaudited Audited
as at as at
31 August 29 February
2008 2007 2008
R`000 R`000 R`000
Assets
Non-current assets
Property, plant and equipment 703 729 375 674 552 446
Current assets 267 459 203 434 259 239
Cash and cash equivalents 50 914 84 902 125 154
Inventory and biological assets 118 747 71 342 89 457
Trade and other receivables 97 798 47 190 44 628
Total assets 971 188 579 108 811 685
Equity and liabilities
Capital and reserves
Equity 252 595 244 897 286 941
Long-term liabilities
Interest bearing debt 362 074 118 431 246 565
Deferred taxation 93 564 88 981 98 619
Short-term liabilities 262 955 125 327 179 560
Short term portion of interest
bearing debt 117 857 31 943 70 175
Trade and other payables 145 098 93 384 109 385
Provision for normal taxation - 1 472 -
Total equity and liabilities 971 188 579 108 811 685
Cash Flow Statement
Unaudited Audited
six months ended year ended
31 August 29 February
2008 2007 2008
R`000 R`000 R`000
Cash (utilised)/generated from
operations before
working capital changes (11 657) 61 907 87 546
Changes in working capital (46 747) 5 085 23 508
Cash (utilised)/generated from
operating activities (58 404) 66 992 111 054
Interest paid (22 304) (5 793) (10 912)
Taxation received/(paid) 3 476 (6 440) (8 131)
Net cash flow from operating
activities (77 232) 54 759 92 011
Capital distribution paid - (20 297) (20 297)
Net cash flow after capital
distribution (77 232) 34 462 71 714
Net cash flows from investing in
property, plant and equipment (160 252) (102 108) (265 552)
plant and equipment
Net cash flows from debt raised 163 245 34 990 201 434
Net change in cash and cash
equivalents (74 239) (32 656) 7 596
Statement of Changes in Equity
29 February Net loss Share- Capital 31 August
2008 for the based distribu- 2008
R`000 period payments tion R`000
Share capital 330 - - - 330
Share premium 14 305 - - - 14 305
Share-based
payments 257 - - - 257
Revaluation
reserve 28 848 - - - 28 848
Retained
earnings 243 201 (34 346) - - 208 855
Total 286 941 (34 346) - - 252 595
Net
28 February profit Share- Capital 31 August
2007 for the based distribu- 2007
R`000 period payments tion 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
Commentary
Results for the period under review
As set out in the trading update published on 29 July 2008, the Group
experienced difficult trading conditions during the six months ended 31 August
2008.
This decrease in earnings can be attributed to a 52% increase in the cost of
broiler feed to the Group as a result of increases in the cost of maize, soya
and other feed ingredients.
In addition, the sales value per kg of poultry sold decreased by 3% for the
period. This was as a result of over-supply in the poultry industry and reduced
consumer spending in the first quarter of the year which led to a decrease in
pricing of 12% for the first quarter. Pricing in the second quarter of the year
was stronger as a result of reduced imports, a balanced national supply and
demand and higher red meat prices and was 8% higher than the second quarter of
the previous year.
Volumes were 31% higher than the same period last year as a result of the
expansion that the Group has undertaken.
As a result of the higher feed prices and increased volumes, the Group ended the
period with increased net working capital.
The Group ended the period with a net debt:equity ratio of 170%, partly as
result of the decrease in equity due to the loss incurred in the period under
review and partly as a result of the increase in debt in order to complete the
bulk of the planned expansion.
Industry conditions
National supply and demand is well balanced and the weakness in the Rand/US$
exchange rate has led to extremely low imports of poultry. Red meat, pork and
poultry producers are now passing on the increased feed prices to consumers.
Prospects
Higher volumes are expected for the second half of the year and the Group is
confident that it will reach its target of approximately 60% increase in volumes
for the full year to 28 February 2009.
The Group is confident that poultry prices will continue to increase on the back
of significantly reduced imports and also higher red meat prices as higher feed
costs continue to force red meat, pork and poultry producers to pass on these
higher feed costs to consumers.
The Group has hedged maize forward to February 2009 and it is therefore expected
that further increases in the cost of maize will be considerably mitigated.
Accounting Policies
The condensed consolidated interim financial statements have been prepared in
accordance with International Accounting Standards 34 and International
Financial Reporting Standards ("IFRS") 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.
These results have not been reviewed or reported on by the Group`s auditors.
Interim dividend
The Board of Directors has agreed that no interim dividend will be paid.
By order of the Board
CP Davies MJB Davis
Non-executive Chairman Chief Executive Officer
25 September 2008
Email: info@sovfoods.co.za
Transfer secretaries
Computershare Investor Services (Pty) Limited, PO Box 61051, Marshalltown 2107,
Gauteng
Sponsor
Barnard Jacobs Mellet Corporate Finance (Pty) Limited
Directorate
CP Davies* (Chairman), MJB Davis (Chief Executive Officer), C Coombes, MJ
Hankinson*, KT Kweyama*, Prof PM Madi*, LM Nyhonyha*,
BJ van Rensburg, GG Walter
(*Non-executive)
www.sovfoods.co.za
Date: 26/09/2008 07:33:20 Produced by the JSE SENS Department.
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