| Wed 14 May 2003, 17:34 | | Sovereign Food - Audited Group results for the yea |
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SOVEREIGN FOOD INVESTMENTS LIMITED
Incorporated in the Republic of South Africa
Registration number 1995/003990/06
Share Code: SOV ISIN Number: ZAE000009221
Audited Group results for the year ended 28 February 2003
INCOME STATEMENT
2003 2002
R"000 R"000
Revenue 286 216 214 461
Operating income 21 113 22 324
Depreciation 5 235 4 571
Net interest paid 5 606 3 425
Profit before taxation 10 272 14 328
Taxation (347) 1 434
Profit after taxation 10 619 12 894
Dividends paid 4 316 -
Retained earnings for the year 6 303 12 894
Retained earnings at beginning of year 39 160 26 266
As previously stated 45 231 31 798
Restatement (6 071) (5 532)
Retained earnings at end of year 45 463 39 160
Weighted average number of shares
in issue (000"s) 28 986 28 975
Earnings per share (cents) 36,6 44,5
Headline earnings per share (cents) 34,3 47,1
Dividends per share (cents) - 15,0
Reconciliation between earnings
and headline earnings
Profit after taxation 10 619 12 894
Reconciling items:
Disposal of fixed assets (819) 228
Restructuring costs - 371
Taxation effect 133 151
Headline profit after taxation 9 933 13 644
BALANCE SHEET
Assets
Non-current assets
Property, plant and equipment 101 349 87 977
Investments 4 426 2 502
Current assets 101 335 97 447
Cash and investments 22 554 41 338
Inventory 51 849 41 299
Trade and other receivables 26 932 14 810
Total assets 207 110 187 926
Equity and liabilities
Capital and reserves
Share capital and premium 45 444 45 215
Accumulated profits 45 463 39 160
Shareholders" interest 90 907 84 375
Liabilities
Long-term loans 65 208 58 698
Long-term portion 54 384 49 297
Short-term portion 10 824 9 401
Deferred taxation 9 836 10 722
Trade and other payables 41 159 34 131
Total equity and liabilities 207 110 187 926
CASH FLOW STATEMENT
Cash generated from operations before
working capital changes 20 294 22 551
Changes in working capital (13 504) (3 401)
Cash generated from operating activities 6 790 19 150
Interest paid (5 606) (3 425)
STC paid (539) -
Dividends paid (4 316) -
Net cash flow from operating activities (3 671) 15 725
Net cash flows from investing activities (1 410) (711)
Net cash flows from financing activities (11 779) 12 720
Net increase/(decrease) in cash and
cash equivalents (16 860) 27 734
STATEMENT OF CHANGES IN EQUITY
Change in Net profit
2002 Share accounting for the 2003
R"000 issue policy year R"000
Share capital 288 3 291
Share premium 44 927 226 45 153
Retained earnings 45 231 (6 071) 6 303 45 463
Total 90 446 229 (6 071) 6 303 90 907
COMMENT
PERIOD UNDER REVIEW
Operational Performance
Farming
The three-year project to restructure the farming operations of the company was
largely completed during the year under review and the foundation has now been
established to attain world-class farming results. Major attention has been
given to incorporating best practice at these facilities and a new team has been
installed in the broiler operation. The improvements currently being seen by the
agricultural operations are most encouraging, however, the full impact will only
be seen in the current financial year. At the end of the period under review
production was about 12% higher than in the preceding period.
An extra-ordinary equipment failure on our most modern farm resulted in a loss
of approximately R3 million at that farm during December 2002.
The Day Old Chick production division saw an excellent improvement in
performance during the year and continues to produce world-class results.
Animal Feeds
The Animal Feeds operation has had a major capacity upgrade and this, combined
with a new management team, has resulted in a substantial increase in
performance. The operation remains the largest feed miller in the Eastern Cape.
Income Statement
Although the Group had an effective hedging strategy in place that yielded good
results, feed prices still had large increases during the year due to the
decline in the Rand and the rapid escalation in maize prices. As these cost
increases could not be fully transferred to the consumer, these increases in
costs resulted in a decline in margins.
At the operating level earnings declined by 5,5%. The higher depreciation and
interest charges arising from the extensive investment programme resulted in a
decline of 17,6% in after tax profits.
Balance Sheet
During the year capital expenditure on the projects mentioned above amounted to
R13,5 million. The higher working capital requirements as a result of the higher
food prices and expanded production necessitated a further R15,6 million
investment in working capital. This resulted in the debt:equity level rising to
42%. Low capital expenditure requirements for the coming year combined with
reduced working capital levels will ensure that the debt:equity level declines
in the year ahead.
PROSPECTS
The strengthening of the Rand since January 2003 has seen a marked decrease in
raw material costs and these are expected to return to levels last seen in
October 2001. However, these lower costs will be offset against continuing
pressure on selling prices as a result of imports.
As the benefits from the restructuring programme are brought to account,
improved efficiencies in the broiler and processing divisions are expected to
result in increased margins and earnings in the year ended February 2004.
DIVIDEND DECLARATION
No dividends have been declared for the period under review and the Board
recommends that no dividend be declared.
ACCOUNTING POLICIES
The accounting policy in respect of depreciation of buildings has been changed
to comply with AC 135 and AC 123. The annual financial statements have been
prepared in accordance with South African Statements of Generally Accepted
Accounting Practice and, apart from this change, are consistent with the
accounting policies used in the previous year. These results have been reviewed
by the independent auditors, KPMG Inc. Their unmodified review report dated 13
May 2003 is available for inspection at the registered offices of the company.
By order of the Board
RB Spanjaard MJB Davis
Executive Chairman Managing Director
15 May 2003
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, C Coombes, BA Spanjaard, AH Vardy
Date: 14/05/2003 05:15:36 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
