| Thu 24 May 2001, 0:00 | | Sovereign Food Investments Limited - Group Audited |
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SOVEREIGN FOOD INVESTMENTS LIMITED
Registration number 1995/003990/06
Audited Group results for the year ended 28 February 2001
Earnings 39 cents per share
Cash generated 101 cents per share
Debt: equity reduced from 54% to 22%
INCOME STATEMENT
2001 2001
R'000 R'000
Revenue 191 735 184 781
Continuing operations 191 735 181 222
Discontinued operation - 3 559
Operating income 21 477 7 882
Depreciation 3 949 3 596
Net interest paid 4 975 6 246
Profit/(Loss) before taxation 12 553 (1 960)
Continuing operations 12 553 (779)
Discontinued operation - (1 181)
Taxation 1 319 (675)
Profit/(Loss) after taxation 11 234 (1 285)
Shares in issue (000's) 28 775 28 775
Earnings/(Loss) per share (cents) 39,0 (4,5)
Headline earnings/(Loss)
per share (cents) 33,5 (4,5)
BALANCE SHEET
Assets
Non-current assets
Property, plant and equipment 86 236 93 378
Current assets 56 216 52 132
Cash 16 106 5 710
Inventory 25 242 27 263
Trade and other receivables 14 868 19 159
Total assets 142 452 145 510
Equity and liabilities
Capital and reserves
Share capital and premium 45 215 45 215
Non-distributable reserves - 6 955
Accumulated profits 31 798 20 564
Shareholders' interest 77 013 72 734
Liabilities
Long-term loans 33 027 45 049
Long-term portion 27 845 38 781
Short-term portion 5 182 6 268
Deferrred taxation 9 288 7 969
Trade and other payables 23 124 19 758
Total equity and liabilities 142 452 145 510
CASH FLOW STATEMENT
Cash generated from operations before
working capital changes 19 180 7 941
Changes in working capital 10 006 (4 903)
Cash generated from operating 29 186 3 038
activities
Interest and tax paid (4 975) (6 334)
Net cash flow from operating 24 211 (3 296)
activities
Net cash flows from 2 213 (2 486)
investing activities
Net cash flows from financing (16 028) 3 774
activities
Net increase/(decrease) in cash 10 396 (2 008)
and cash equivalents
COMMENT
PERIOD UNDER REVIEW
The Group experienced a tremendous recovery for the period under review with
earnings rising to R11,2 million compared to a loss in the previous year of
R1,3 million. This increase in earnings was due to lower unit costs as a
result of better operating efficiencies and lower raw material prices. The
Group generated cash of R29,2 million during this period and, using this
strong cash generation, redeemed debt of R16,0 million to reduce debt:
equity to 22%.
Income Statement
Turnover was 4% higher than the previous period due to a 2% increase in
price and a 2% increase in volume. During the reappraisal of the business
discussed in the last annual report the Group decided to focus on value
added product lines rather than higher turnover volumes and this, together
with a decrease in the cost per unit due to operational efficiencies and
continuous cost control, has seen operational margins increase to 9,1%.
Finance costs fell to R5,0 million from R6,2 million in the previous period
due to lower interest rates, reduced debt levels and higher cash balances.
52% of the Group's debt is now held at fixed rates and the Group is
therefore substantially protected against potential interest rate increases.
Balance Sheet
As discussed in the interim results to August 2000, the Board has reassessed
its approach to the revaluation of land and buildings which has resulted in
non-distributable reserves being reversed.
Net debt has decreased to R16,9 million from R39,3 million and has also been
restructured with only 5,2% of debt being of a short-term nature.
Continued focus on effective working capital management has seen a 40%
decrease in working capital per R1 000 of turnover from R145 to R87.
PROSPECTS
Prices are expected to remain strong during the coming year due to lower
national stock levels and stronger consumer confidence.
The Group is undertaking a restructuring of the broiler division that will
see further improvements in farming results. This restructuring and improved
operating efficiencies at the plant and mill should lead to a decreased cost
per unit.
Although the cost of raw materials is expected to remain high during the
coming year, the Group has fixed a substantial portion of these purchases
and is therefore not unnecessarily exposed to potential price fluctuations.
Value added product lines continue to be a focus of the Group and exports of
value added products will contribute towards greater value added volumes.
Value added products have been shipped to the Middle East and export volumes
will increase significantly in the coming year.
The Board is therefore confident of a significant increase in earnings in
the coming and following years.
DIRECTORATE
Mike Davis has been appointed to the Board as deputy managing director with
effect from 9 April 2001. Mike joined the Group in May 1995 as operations
manager and brings sound operational knowledge and experience to the Board.
DIVIDENDS
Cash generated during the year has been utilised to reduce net debt and
therefore the Board recommends that no dividend be declared.
By order of the Board
CG Charlewood RB Spanjaard
Non-executive Chairman Managing Director
24 May 2001
Sovereign Food Investments Limited
Registration number 1995/003990/06
e-mail: info@sovfoods.co.za
website: www.sovfoods.co.za
Transfer secretaries
Computershare Services Limited
PO Box 61051
Marshalltown 2107
Gauteng
Directorate
CG Charlewood (Non-executive Chairman), RB Spanjaard (Managing Director), VA
Bothwell (British), B Cape, MGM Charlewood, C Coombes, MJ Davis, BA
Spanjaard, AH Vardy
