| Mon 24 Apr 2006, 17:15 | | Sovereign - Audited group results for the year end |
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SOV
SOV
Sovereign - Audited group results for the year ended 28 February 2006
Sovereign Food Investments Limited
(Registered in the Republic of South Africa)
(Registration number 1995/003990/06)
JSE code: SOV & ISIN: ZAE000009221
("Sovereign" or "the Group" or "the Company")
AUDITED GROUP RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2006
HIGHLIGHTS
HEADLINE EARNINGS PER SHARE 182.6 CPS UP 51%
OPERATIONAL CASHFLOW PER SHARE OF 325 CPS UP 49%
10-YEAR COMPOUND EARNINGS GROWTH OF 32%
PROPOSED FINAL CAPITAL DISTRIBUTION OF 53,5 CENTS PER ORDINARY SHARE
INCOME STATEMENTS 2006 2005
R"000 R"000
Revenue 398 580 367 380
Operating income 93 489 63 205
Depreciation 7 500 7 731
Net interest paid 6 427 8 966
Profit before taxation 79 562 46 508
Normal and deferred taxation 22 907 11 763
Profit after taxation 56 655 34 745
Retained earnings at beginning of year 72 445 37 700
As previously stated 72 445 37 018
Restatement E 682
Retained earnings at end of year 129 100 72 445
Weighted average number
of shares in issue ("000) 31 071 29 174
Earnings per share (cents) 182,3 119,1
Headline earnings per share (cents) 182,6 120,6
Total capital distribution
per share (cents) 60,0 40,0
Reconciliation between earnings
and headline earnings
Profit after taxation 56 655 34 745
Reconciling items:
Disposal of fixed assets (107) 155
Taxation effect 175 289
Headline profit after taxation 56 723 35 189
BALANCE SHEETS 2006 2005
R"000 R"000
Assets
Non-current assets
Property, plant and equipment 179 827 140 470
Investments E 8 794
Current assets 232 092 125 415
Inventory 52 356 54 169
Trade and other receivables 32 980 24 456
Cash and cash equivalents 146 756 46 790
Total assets 411 919 274 679
Equity and liabilities
Capital and reserves
Share capital and premium 54 957 41 394
Retained earnings 129 100 72 445
Shareholders" interest 184 057 113 839
Liabilities
Long-term loans 119 262 84 697
Long-term portion 97 060 65 850
Short-term portion 22 202 18 847
Deferred taxation 55 915 38 853
Trade and other payables 47 841 37 290
Provision for taxation 4 844 E
Total equity and liabilities 411 919 274 679
CASH FLOW STATEMENTS 2006 2005
R"000 R"000
Cash generated from operations
before working capital changes 93 382 63 563
Changes in working capital 7701 (3 925)
Cash generated from operating activities 101 083 59 638
Interest paid (6 427) (8 966)
Taxation paid (1 000) E
Net cash flow from operating activities 93 656 50 672
Capital distribution paid (12 405) (4 365)
Net cash flow after capital distribution 81 251 46 307
Net cash flows from investing activities 7491 (11 267)
Shares issued for cash 25 736 E
Fixed assets acquired for cash (19 605) (12 041)
Proceeds on disposal of fixed assets 977 1 157
Investments (acquired)/disposed 383 (383)
Net debt raised/(repaid) 2 581 (17 073)
Net increase in cash, cash
equivalents and investments 91 323 17 967
Cash, cash equivalents and
investments at beginning of year 55 433 37 466
Cash, cash equivalents
and investments at end of year 146 756 55 433
STATEMENTS OF CHANGES IN EQUITY
2006 Share Share Share Retained
R"000 capital premium options earnings Total
Opening balance 294 40 773 327 72 445 113 839
New shares issued 31 25 586 25 617
Capital
distribution (12 405) (12 405)
Treasury shares 232 232
Share options 119 119
Net profit for
year 56 655 56 655
Closing balance 325 54 186 446 129 100 184 057
2005 Share Share Share Retained
R"000 capital premium options earnings Total
Opening balance
as
previously stated 291 45 153 37 018 82 462
Restatement
E share options 124 (124) E
Restatement
E fixed assets 806 806
Restated opening
balance 291 45 153 124 37 700 83 268
New shares issued 3 217 220
Capital
distribution (4 365) (4 365)
Treasury shares (232) (232)
Share options 203 203
Net profit for
year 34 745 34 745
Closing balance 294 40 773 327 72 445 113 839
RESULTS FOR THE YEAR UNDER REVIEW
The Group achieved an excellent result for the year under review with earnings
per share increasing 51% over the previous period. Turnover increased by 8%
and feed, a major portion of the cost base of the Group, decreased by 23% per
ton of feed with the balance of the increase in earnings coming from enhanced
operational efficiencies and better control over non-feed costs.
The Group generated cash from operations of R101m or 325 cents per share. This
was achieved partially by better management of working capital which, measured
as a percentage of turnover, decreased by 16% compared to the previous period.
Net cash retained after investing and financing activities was R91m leaving
the Group with R147m in cash at the end of the year.
The Group completed a capital raising exercise during August 2005 and raised
R25m to partially fund the future expansion of the Group. In addition, a
substantial portion of the Group"s debt was restructured to a longer term.
Although debt was restructured and increased in anticipation of the future
expansion of the Group, the Group ended the year under review in a negative
net debt position.
INDUSTRY CONDITIONS
The average selling price per kg of poultry remains strong with prices
currently higher year on year. This is driven by continuing strong growth in
poultry consumption as the industry benefits from the strong economic growth
as well as the "buying up" of the consumer from lower to higher priced protein
sources. This has resulted in a good balance between supply and demand in the
industry.
The lower maize crop estimate has put upward pressure on national maize
prices. However, maize prices for the Group for the coming year are expected
to be lower than the year under review.
The poultry industry as a whole must be alert to the threat posed by avian
influenza and increased vigilance in biological risk control must become a
priority.
PROSPECTS
It is expected that selling prices will be slightly lower in the coming
financial period than the year under review. However, the Group expects to
increase volume by 18% in the coming year and to experience lower unit costs
as a result of better operational efficiencies. The Group has embarked upon a
programme to expand the broiler and processing operations and plans to spend
R25m in the coming financial period on this expansion.
DIRECTORATE
The Group endorses the principles of good corporate governance and, during the
year under review, Mike Davis took up the position of Chief Executive Officer.
Mike has assumed full operational responsibility for the activities of the
Group. Rob Spanjaard becomes Non-executive Chairman.
ANNUAL GENERAL MEETING
Notice is hereby given that the annual general meeting of the Company will be
held on 10am on Thursday, 22 June 2006 at Uitenhage, Eastern Cape.
CAPITAL DISTRIBUTION
It is proposed by the Board of Directors that a final capital distribution out
of share premium of 53,5 cents per ordinary share be declared.
This declaration will be subject to the passing (and where applicable the
registration) of the special and ordinary resolutions at a general meeting to
be held on Thursday, 22 June 2006.
If such resolutions are passed and registered, where applicable, and the
proposal is then accepted, the capital distribution will be payable to
shareholders recorded in the register of the Company at Friday, 14 July 2006.
In compliance with the requirements of STRATE the following dates are
applicable:
Last date to trade "CUM" the capital distribution Friday, 7 July 2006
Trading commences "EX" the capital distribution Monday, 10 July 2006
Record date Friday, 14 July 2006
Date of payment Monday, 17 July 2006
Share certificates may not be dematerialised or rematerialised between Monday,
10 July 2006 and Friday, 14 July 2006, both dates inclusive.
ACCOUNTING POLICIES
The condensed consolidated audited annual financial statements have been
prepared in accordance with International Financial Reporting Standards
("IFRS") with the date of transition to IFRS for the Group being 1 March 2005.
The condensed consolidated annual financial statements are covered by IFRS 1 E
First-time Adoption of International Financial Reporting Standards.
These results have been audited by the Group"s independent auditors, PKF (PE)
Inc. Their unqualified audit report, dated 24 April 2006, is available for
inspection at the registered office of the Company.
Share-based payments
The Group has changed its accounting policy with regard to share-based
payments to comply with IFRS 2. Costs associated with share-based awards under
the share option scheme are now charged to the income statement over the
vesting periods. Sovereign has not elected to apply IFRS 2 to share options
granted prior to 7 November 2002 that had not yet vested by 1 March 2005.
Transition to IFRS
The Group"s financial statements for the year ended 28 February 2006 are its
first annual financial statements to be prepared in accordance with IFRS.
By order of the Board
R B Spanjaard M J Davis
Chairman Chief Executive Officer
25 April 2006
Sovereign Food Investments Limited
e-mail: info@sovfoods.co.za
website: www.sovfoods.co.za
Directorate
RB Spanjaard Chairman, MJB Davis Chief Executive Officer, BR Cape,
C Coombes, BA Spanjaard, AH Vardy
Transfer secretaries
Computershare Investor Services 2004 (Pty) Limited
PO Box 61051, Marshalltown 2107 Gauteng
Sponsor
Barnard Jacobs Mellet Corporate Finance (Pty) Limited
Date: 24/04/2006 05:15:12 PM Produced by the JSE SENS Department
