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February 2002
Sovereign Food Investments Ltd
Incorporated in the Republic of South Africa
Registration Number 1995/003990/06
Share code: SOV
ISIN code: ZAE 000009221
Audited Group Results for the year ended
28 February 2002
HIGHLIGHTS
HEADLINE EARNINGS INCREASE 47%
FINAL DIVIDEND OF 15 CENTS PER SHARE
CASH GENERATED 67 CENTS PER SHARE
DEBT:EQUITY REDUCED FROM 22% TO 16%
Income Statement
2002 2001
R'000 R'000
Revenue 214 461 191 735
Operating income 22 551 19 102
Disposal of fixed assets 227 (2 375)
Depreciation 4 032 3 949
Net interest paid 3 425 4 975
Profit before taxation 14 867 12 553
Taxation 1 434 1 319
Profit after taxation 13 433 11 234
Shares in issue (000's) 28 775 28 775
Earnings per share (cents) 46,7 39,0
Headline earnings per share 49,3 33,5
(cents)
Dividends per share (cents) 15,0 -
Reconciliation between earnings
and headline earnings
Profit after taxation 13 433 11 234
Reconciling items:
- Disposal of fixed assets (228) (2 297)
- Restructuring costs 371 734
- Taxation effect 607 (41)
Headline profit after taxation 14 183 9 630
Balance Sheet
2002 2001
R'000 R'000
Assets
Non-current assets
Property, plant and equipment 94 048 86 236
Current assets 99 949 56 216
Cash and investments 43 840 16 106
Inventory 41 299 25 242
Trade and other receivables 14 810 14 868
Total assets 193 997 142 452
Equity and liabilities
Capital and reserves
Share capital and premium 45 215 45 215
Accumulated profits 45 231 31 798
Shareholders' interest 90 446 77 013
Liabilities
Long term loans 58 698 33 027
Long term portion 49 297 27 845
Short term portion 9 401 5 182
Deferred taxation 10 722 9 288
Trade and other payables 34 131 23 124
Total equity and liabilities 193 997 142 452
Cash Flow
2002 2001
R'000 R'000
Cash generated from operations 22 551 19 180
before working capital changes
Changes in working capital (3 401) 10 006
Cash generated from operating 19 150 29 186
activities
Interest paid (3 425) (4 975)
Net cash flow from operating 15 725 24 211
activities
Net cash flows from investing (711) 2 213
activities
Net cash flows from financing 12 720 (16 028)
activities
Net increase in cash and cash 27 734 10 396
equivalents
Statement of changes in equity
2001 Net 2002
R'000 profit R'000
for the
year
Share capital 288 - 288
Share premium 44 927 - 44 927
Retained earnings 31 798 13 433 45 231
Interest and tax paid 77 013 13 433 90 446
Period under review
The Group experienced strong growth for the period under review with
headline earnings per share rising 47% from 33.5 cents per share to 49.3
cents per share. The Group generated cash of R19.2m during this period
reducing the debt:equity level from 22% to 16%. Operating margins showed a
slight improvement over the previous year, increasing from 10.0% to 10.5%.
Operating profit increased by 18% year on year. Most operating units
performed at acceptable levels with the exception being the poultry cut and
pack operation.
Balance Sheet
The group has a strong cash balance of R43.8m. Net debt has decreased to
R14.9m from R16.9m with almost all debt being long term in nature. The
strong cash generation has made it possible to pay a dividend of 15 cents
per share.
High inventory and trade creditors levels were caused by a one-off import of
maize just prior to year-end, this had the effect of increasing inventories
and trade creditors by R 8.6m. Higher raw material prices are responsible
for most of the additional increase in working capital.
The restructuring of the broiler division accounted for R11.3m of the R16.6m
capital expenditure incurred during the period under review.
Prospects
Selling prices are expected to remain strong during the coming year. Raw
material prices have however increased substantially due to the weak rand.
The group is looking for improved operating efficiencies to make up this
shortfall. The capital of R24.0m invested back in the business over the past
2 years is already contributing to improved operational efficiencies.
Expectations are for improved earnings in the coming financial year.
Directorate
Rob Spanjaard has been appointed as Executive Chairman and Mike Davis as
Managing Director with effect from 23 April 2002. The Board would like to
thank Charles Charlewood for all that he has given to the company during his
years as its Chairman. Charles will remain a Director.
Dividend declaration
Notice is hereby given that a final dividend for the year ended 28 February
2002 of 15,0 cents (2001 - nil) has been declared to all holders of
ordinary shares. The last day to trade ("CUM" the dividend) in order to
participate in the dividend will be Friday, 24 May 2002. The share will
commence trading "EX" the dividend from the commencement of business on
Monday, 27 May 2002 and the record date will be Friday, 31 May 2002. Payment
of the dividend will be effected on Monday, 3 June 2002. Share certificates
may not be de-materialised or re-materialised from Monday, 20 May 2002 to
Friday, 31 May 2002, both days inclusive.
Accounting policies
The annual financial statements have been prepared in accordance with
statements of GAAP and consistent with the accounting policies used in the
previous year.
By order of the Board
RB Spanjaard Executive Chairman
MJB Davis Managing Director
7 May 2002
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
RB Spanjaard Executive Chairman, MJB Davis Managing Director, B Cape, CG
Charlewood, MGM Charlewood, C Coombes, BA Spanjaard, AH Vardy
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