SOVEREIGN FOOD INVESTMENTS LIMITED Annual Report 1999 · SOVEREIGN FOOD INVESTMENTS LIMITED 1999...
Transcript of SOVEREIGN FOOD INVESTMENTS LIMITED Annual Report 1999 · SOVEREIGN FOOD INVESTMENTS LIMITED 1999...
SOVEREIGN FOOD INVESTMENTS LIMITED
A n n u a l R e p o r t
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C O N T E N T S
1
P RO F I L E
M I S S I O N S TAT E M E N T
Sovereign Food Investments Limited offers investors an opportunity to participate in a group of companies,
entrepreneurially managed and exhibiting sound synergies amongst its integrated operations.
The Group operates at low cost in a growing market in which it has established a non-cyclical niche.
The Group operates from Uitenhage in the Eastern Cape and serves markets predominantly in the
Western and Eastern Cape. Shares in the Group are listed on the Johannesburg Stock Exchange.
To build a world-class food business in quality of operation.
To constantly innovate products and services in order to offer
more efficient beneficiation to our customers.
To create wealth for our employees, our customers and our shareholders.
1 Profile and Mission Statement
2 Directorate and Administration
3 Value-added Statement
4 Five-year Review
5 Group Structure
6 Shareholders’ Statistics
7 Definitions of Ratios and Terms
8 Chairman and Managing Director’s Report
9 Group Financial and Employment Review
10 Corporate Governance
11 Approval of the Annual Financial Statements
11 Report of the Independent Auditors
12 Directors’ Report
14 Accounting Policies
16 Balance Sheet
17 Income Statement
18 Cash Flow Statement
19 Statement of Changes in Equity
20 Notes to the Financial Statements
29 Subsidiary Companies
30 Notice to Shareholders
30 Shareholders’ Diary
31 Form of Proxy
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DIRECTORATE AND ADMINISTRATION
DIRECTORATE
Directors and Officers
Chairman CG Charlewood (58) Dip Agric, Dip B Man
Appointed 8 May 1995
Managing Director RB Spanjaard (36) BAcc(Hons)
Appointed 8 May 1995
Farms Director MGM Charlewood (32) Dip QS
Appointed 8 May 1995
Financial Director C Coombes (32) BSc(Eng), CA(SA)
Appointed 15 February 1999
Non-executive Directors
VA Bothwell* (61)Appointed 18 August 1995
BA Spanjaard (34)Appointed 1 September 1998
AH Vardy (41) BA, LLB, H Dip (Tax) Appointed 8 May 1995
*(British)
Top Management
Top management of the Group is represented by the
executive directors as well as the following managers:
Technical ManagerH Bosman (40) BVSc
Appointed 8 May 1995
Production ManagerM J Davis (37) BCom
Appointed 8 May 1995
Feedmill ManagerD Vorster (33) BSc
Appointed 1 October 1998
ADMINISTRATION
Sovereign Food Investments LimitedRegistration number 95/03990/06
Registered Office/Postal Address254 Walmer Boulevard
South End, Port Elizabeth 6001
PO Box 1386, Uitenhage 6230
Eastern Cape
Transfer SecretariesComputershare Services Limited
Edura
41 Fox Street
Johannesburg 2001
PO Box 61051, Marshalltown 2107
Gauteng
Company SecretaryC Coombes
AuditorsKPMG
Chartered Accountants and Business Advisors
Principal BankersThe Standard Bank of SA Limited
Websitehttp://www.sovfoods.co.za
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VALUE-ADDED STATEMENT
Value added is the measure of the wealth the Group has been able to create. This concept has been used within the
Group’s operations for several years, primarily as a tool to measure productivity, but also as a mechanism for
reporting to employees. The following is a statement of how this wealth has been distributed:
1999 1998
R’000 Percent R’000 Percent
Turnover 173 653 153 760
Cost of goods and services 122 160 99 567
Value added 51 493 54 193
Non-operating income 2 462 3 528
Total value added 53 955 100 57 721 100
Distributed as follows:
To remunerate employees
Salaries, wages and related benefits 29 366 54 24 883 43
To reward providers of capital
Dividends to shareholders 2 411 4 4 604 8
To providers of finance
Interest on borrowings 8 413 16 8 688 15
To the Government 2 798 5 2 271 4
Company taxation (1) 1
Secondary tax on companies 3 24
Regional service council levies 515 410
Employees’ taxation 2 281 1 836
To replace assets
Depreciation 3 018 6 2 233 4
To expand operations
Attributable income 7 949 15 15 042 26
Total wealth created 53 955 100 57 721 100
The payments to the Government shown above exclude Value-Added Tax of R10 418 543 (1998 – R9 132 457).
1999
VALUE ADDED
19985%
54%4%
16%
4%
43%
15%
8%
Providers of finance
Providers of capital
Employees
Government
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Annualised
1999 1998 1997 1996 1995
R’000 R’000 R’000 R’000 R’000
Consolidated resultsTurnover 173 653 153 760 127 001 77 490 65 419
Group operating profit 13 892 20 203 9 469 15 967 12 646
Attributable income 7 939 15 018 5 274 14 270 11 809
Total assets employed 140 789 127 792 124 028 84 506 61 987
Net current assets 29 184 35 704 24 301 20 082 17 952
Ordinary share performanceEarnings per share (cents) 29 58 20 55 47
Net worth per share (cents) 304 290 233 213 164
Market price at year-end (cents) 190 340 500 900 n/a
Cash flow per share (cents) 48 32 26 34 (35)
LiquidityInterest cover (times) 2,3 3,9 2,3 9,4 15,1
Gearing (percent) 28,8 24,1 20,2 14,5 -
Current ratio (percent) 1,6 2,0 1,4 2,1 2,7
ProfitabilityOperating profit margin (percent) 8,0 13,1 7,5 20,6 19,3
Return on net assets (percent) 12,6 19,9 11,7 23,1 24,7
Net asset turnover 1,6 1,5 1,6 1,1 1,3
Return on shareholders’ equity (percent) 9,6 20,1 8,8 26,0 28,8
Value addedTo remunerate employees (percent) 54 43 56 32 36
To reward providers of capital (percent) 4 8 – 14 –
To providers of finance (percent) 16 15 17 11 7
To the Government (percent) 5 4 5 2 3
To replace assets (percent) 6 4 6 3 3
To expand the Group (percent) 15 26 16 38 51
Total value added (percent) 100 100 100 100 100
The financial review has only been provided for five years as the company was listed on 8 May 1995.
1995 19991996 1997 1998
200
175
125
50
25
75
100
150
65,4
77,5
173,7
127,0
153,8
19991996 1997 1998
48
34
26
32
48
42
30
12
6
18
24
36
TU
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(R
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CA
SH
FL
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PE
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HA
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(c
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FIVE-YEAR REVIEW
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GROUP STRUCTURE
United Chix
(Pty) Limited
(Breeding
activities)
100 percent
Sovereign
Information
Technology
(Pty) Limited
(Technical services)
100 percent
Sovereign Food
Industries (Pty) Limited
(Holding Company)
100 percent
Ritztrade 8 (Pty) Limited
(Holding Company)
100 percent
Directors’ holdings
8 percent
SOVEREIGN FOOD INVESTMENTS LIMITED(Holding Company)
100 percent
Sovereign Food
Holdings (Pty) Limited
55 percent
General public
37 percent
Crown Chickens
(Pty) Limited
(Broiler farming)
100 percent
Rocklands
Animal Feeds
Division
(Feed milling)
Rocklands Cold
Distribution
Division
(Distribution)
Rocklands
Wholesalers
Division
(Trading)
Access
Laboratories
(Pty) Limited
(Technical
services)
80 percent
Country Range
Farm Products
(Pty) Limited
(Food processing)
100 percent
Rocklands
Processed Foods
(Pty) Limited
(Value-added
food processing)
100 percent
Rocklands Fine
Foods (Pty)
Limited
(Value-added
food processing)
100 percent
Non-trading
companies
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SHAREHOLDERS’ STATISTICS
Analysis of ordinary shareholders Number of Percentage Number of Percentageshareholders of total shares (’000) of total
Size of holding
1 – 100 000 160 91 1 679 312 6
100 001 – 500 000 8 5 1 571 332 6
500 001 – 1 000 000 6 3 4 368 259 16
1 000 000 and over 2 1 19 600 779 72
176 100 27 219 682 100
Analysis of holding
Holding company 1 1 15 041 400 55
Insurance companies and pension funds 2 1 4 810 801 18
Nominee companies 19 11 2 095 094 8
Individuals 154 87 5 272 387 19
176 100 27 219 682 100
Major shareholders
Old Mutual Nominees (Pty) Limited 4 559 379 17
The interests of directors and top management in the shares of the company are available upon request to members andthe public.
Dividends
Details of dividends declared and payable are as follows:
No. Declaration Last date to Payment Capitalisation Cash portiondate register date portion (cents)
3 29 April 1999 14 May 1999 17 June 1999 6 per 100 held 6
Statistics 1999 1998 1997 1996
Share price (cents)
high 600 500 850 900
low 150 260 380 525
average 374 341 556 669
closing 190 340 500 900
Ordinary shares in issue at year-end 27 219 682 25 730 575 25 730 575 25 000 000
Number of shares traded 1 916 680 4 544 816 1 516 516 4 463 200
Number of transactions 566 557 396 225
Value of shares traded (R’000) 7 170 15 494 8 428 29 876
Number of shares traded as a percentage of shares issued 7,0 17,7 5,9 17,9
Earnings yield 15,3 17,1 4,0 6,1
Statistics have only been provided for four years as the company was listed on 8 May 1995.
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DEFINITIONS OF RATIOS AND TERMS
Earnings yield Earnings per share as a percentage of market value per share at year-end.
Net worth per share Ordinary shareholders’ funds divided by the number of ordinary shares in issue at year-end.
Cash flow per share Available operating cash flow before dividends divided by the weighted average number
of shares in issue during the year.
Interest cover Profit before interest divided by net interest paid.
Net borrowings Net interest-bearing debt less cash reserves.
Gearing Net borrowings as a percentage of capital employed.
Current ratio Current assets to current liabilities.
Return on net assets Profit before interest as a percentage of net assets.
Net asset turnover Turnover divided by net assets.
Return on shareholders’ Earnings attributable to ordinary shareholders as a percentage of ordinary
equity shareholders’ funds.
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The program of expansion and improvement of assets
is substantially complete and this, combined with the
anticipated drop in interest rates, should lead to an
increase in profits.
Year 2000 compliance
Year 2000 compliance testing and implementation is
substantially complete and the Board is confident that
all areas are now compliant.
There is expected to be no disruption to business
processes nor is there expected to be any liability on
the part of the Group due to the Year 2000 issue.
The Group has examined, in so far as it can, the state
of compliance of and the Group’s dependence on
suppliers, customers and agents and is confident that
there will be no disruption to business processes due to
non-compliance by these parties.
The target date for Year 2000 compliance has been set
as 31 August 1999.
Dividend
It is the policy of the Group to distribute reserves by
way of a capitalisation share award, or for shareholders
who so elect, the right to receive a cash dividend in
lieu thereof.
The proportion of the capitalisation share award
has been set in the range of 3 to 6 new shares per
100 shares held and the Group has maintained this
policy over the past four years.
In the year under review, the Board resolved, as
previously, to make a distribution of reserves by way
of a capitalisation share award, or for shareholders
who so elect, the right to receive a cash dividend in
lieu thereof.
It is pleasing to report that shareholders in majority
chose to receive capitalisation shares signifying their
support for the expansion phase the Group has
undergone.
By order of the Board
CG Charlewood RB Spanjaard
Chairman Managing Director
Port Elizabeth 29 April 1999
CHAIRMAN AND MANAGING DIRECTOR’S REPORT
Period under reviewDespite a good performance in the first six monthsof the year, Sovereign Food Investments had adisappointing second six months. Technical resultsachieved by the broiler division were not as expectedand this contributed substantially to the poorperformance of the Group in the latter half of theyear. Corrective action taken has produced theanticipated results and current performance is closeto the best international benchmarks. Technicalresults achieved by the breeding and hatchingconcerns continued to improve and the cost ofday-old chicks to the Group once again declinedcompared to the previous year.
Although poultry processing volumes grew by
9percent during the year, prices remained soft as
national processed poultry stock levels remained high.
The Group lessened its reliance on the commodity
market through investing heavily in the development
of value-added product ranges. These products are
expected to contribute materially to the Group’s
margins in the coming year.
The spike in interest rates during the second half of
the year also had a negative effect as net interest paid
increased over 15 percent based on almost the same
borrowings level as the previous year.
The Group’s expansion continued with over R20 million
capital expenditure during the year. Heavy investment
was made to develop new products and to access
international markets. Cash management has been
tightened and cash reserves remain comfortable.
Prospects
Exports and new product ranges will be the driving
forces behind the Group’s future profits. The company
has identified high margin export markets and
management’s focus continues to remain in this area.
Technical results are expected to continue at the
improved levels for the coming year. This increase in
volumes, combined with the focus that the Group
applied to decreasing operating costs in the past year,
should lead to a large increase in operating and
net margins.
This increase in profits is expected primarily in the
second half of the year with financial results to August
1999 expected to be significantly lower than the
corresponding period last year.
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Operating results
Compared to the prior year, turnover increased by12,9 percent to R173,7 million and operating incomedeclined by 31,2 percent to R13,9 million withoperating margins declining to 8,0 percent. Netfinance costs increased by 15,3 percent to R6,0 million.
Dividends
The dividend declared on ordinary shares decreased
47,6 percent to R2,4 million, comprising a R2,3 million
capitalisation share award and a R77 601 cash award.
The cash award represents a dividend of 6 cents
per share.
Asset management
Continued focus on working capital management
resulted in working capital per R1 000 turnover
declining by 18 percent.
Financing
Gearing increased by 19,5 percent to 28,8 percent. Cash
generated from operations increased by 40,6 percent to
R18 961 million. The approach of the Group to the
management of financial instrument risk is outlined
on page 13. The debt maturity profile of long-term
borrowings requires repayment of R11,7 million in the
coming financial year, although R6 million will be
extended at repayment, and R35,3 million in the
forthcoming five financial years.
Inflation
The effect of inflation is monitored and taken into
account when considering the Group objective of
creating wealth in real terms. Inflation is considered
when preparing and reviewing cash flows, long-term
budgets and new projects.
Due to the diverse nature of the factors affecting
inflation amongst the Group’s divisions including
climatic conditions, geographical locations and business
cycles, meaningful inflation adjusted financial
statements could not be prepared by using a
standardised procedure and therefore no inflation
adjusted statements are presented.
GROUP FINANCIAL AND EMPLOYMENT REVIEW
Employment review
Training
In-house training is provided for the majority of
employees. In addition, external training is provided
for specific employees.
Housing benefits
Housing facilities are provided for some employees at
no or nominal cost.
Other benefits
Other benefits provided include contributions to
provident and medical aid schemes and the provision
of several sporting facilities.
Community involvement
Educational facilities are provided to local
communities.
Family benefits
Three months paid maternity leave is provided for all
employees.
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C ORPORATE GOVERNANCE
The Board of Directors and Management endorsesthe principles of good corporate governance as setout in the King Report, especially the need toconduct the enterprise with integrity andaccountability. The Group has reviewed therecommendations of the Report and has determinedaction to be taken in appropriate circumstances.
Governance structures
Board of Directors
The Sovereign Food Investments Board currently
comprises four executive directors, including the
Chairman and three non-executive directors, who meet
regularly and maintain full and effective control over
the Group’s affairs. The offices of the Chairman and
Managing Director are held by different directors.
The non-executive directors bring an independent and
outside view of performance, strategy and resource
planning. All directors have full access to the
information and staff resources of the Group leading
to informed Board decisions being taken promptly. All
directors have access to the advice and services of the
company secretary and, in appropriate circumstances
may, at the Group’s expense, seek independent
professional advice concerning the Group’s affairs.
Audit Committee
An Audit Committee whose purpose is to bring
influence to bear on accounting, auditing and financial
reporting matters meets on a periodic basis. The Audit
Committee comprises RB Spanjaard, who has the chair,
C Coombes and AH Vardy. The Group’s external
auditors have unrestricted access to the members and
workings of the Audit Committee.
Remuneration Committee
The Remuneration Committee meets as and when
required throughout the year. The purpose of the
committee is to ensure that remuneration policies
throughout the Group are equitable and that the
directors and senior management are fairly
remunerated.
Internal control and risk management
The directors believe the internal controls in use by the
Group are adequate to safeguard the assets from loss or
unauthorised use and that the financial records may be
relied upon to maintain accountability for Group assets
and liabilities. Internal controls are enhanced by
accounting policies and organisational structures,
providing adequate segregation of duties. The Group
has been careful in the selection and training of
administrative personnel. The cost of enhancements to
internal controls is compared to the benefits to be
derived from their implementation.
Nothing has come to the attention of the directors to
indicate any material breakdown in the functioning of
the Group’s internal controls, procedures and systems
during the year under review.
Management reporting
The Group has a comprehensive system of
management reporting which includes the preparation
of annual budgets at Board and divisional level, the
comparison of actual results to budgets on a weekly,
monthly and annual basis with some indicators being
reviewed on a daily basis. On a monthly basis, cash flow,
working capital and long-term borrowing forecasts are
prepared, reviewed and reported on.
Strategic planning
The strategic focus of the Group is reviewed on a
regular basis at both Board and divisional level and
long-term strategy is reduced to near-term operational
plans and responsibilities.
Equal opportunities
The directors believe in a policy of equitable
employment for members of staff drawn from all
sectors of the community.
Code of ethics
With its mission statement in mind, the Group is
formalising a code of ethics to which it will be
committed. Such a code will address issues to ensure
the future success of the Group and merit the trust and
confidence of present and potential investors.
Environment
Environmental awareness is an integral part of the
Group’s operations. The Group is committed to
ensuring that its operations, packaging and products
are as environmentally friendly as possible and also
considers the environmental impact of new and
existing projects.
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APPROVAL OF THE ANNUAL FINANCIAL STATEMENTS
REPORT OF THE INDEPENDENT AUDITORS
The annual financial statements for the year ended 28 February 1999 set out on pages 12 to 29 have been approved
by the Board of Directors and are signed on its behalf by:
CG Charlewood RB Spanjaard Port Elizabeth
Chairman Managing Director 29 April 1999
To the shareholders of Sovereign Food Investments Limited and its subsidiaries
We have audited the annual financial statements and Group annual financial statements set out on pages 12 to 29.
These financial statements are the responsibility of the company’s directors. Our responsibility is to express an
opinion on these financial statements based on our audit.
Scope
We conducted our audit in accordance with statements of South African Auditing Standards. Those standards require
that we plan and perform the audit to obtain reasonable assurance that the financial statements are free of material
misstatement. An audit includes:
– examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements;
– assessing the accounting principles used and significant estimates made by management; and
– evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
Audit opinion
In our opinion these financial statements fairly present, in all material respects, the financial position of the
company and the Group at 28 February 1999, and the results of its operations and cash flows for the year then ended
in accordance with generally accepted accounting practice and in the manner required by the Companies Act.
KPMGChartered Accountants (SA) Port Elizabeth
Registered Accountants and Auditors 29 April 1999
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DIRECTORS’ REPORTfor the year ended February 1999
Nature of business
Sovereign Food Investments Limited is the holding company of five principal operations within the broiler industry
which cover breeding activities, broiler farming, food processing, animal feed milling and value-added poultry
processing and trading. Further details are given in the Group structure on page 5 and in the Chairman and
Managing Director’s report on page 8, as well as below.
Directors’ responsibility for the annual financial statements
The directors are responsible for monitoring the preparation and integrity of the financial statements and related
information included in this report.
In order for the Board to discharge its responsibilities, management has developed and continues to maintain a
system of internal control. The Board has ultimate responsibility for the system of internal control and reviews
its operation.
The internal controls include a risk-based system of internal accounting and administrative controls designed to
provide a reasonable but not absolute assurance that assets are safeguarded and that transactions are executed and
recorded in accordance with generally accepted business practices and the Group’s policies and procedures. These
controls are implemented by trained, skilled personnel with an appropriate segregation of duties, are monitored by
management and include a comprehensive budgeting and reporting system operating within strict deadlines and an
appropriate control framework. The external auditors are responsible for reporting on the financial statements.
The financial statements are prepared in accordance with generally accepted accounting practice and are based on
appropriate policies consistently applied and supported by reasonable and prudent judgments and estimates.
The directors believe that the company and the Group will be a going concern in the year ahead. For this reason they
continue to adopt the going concern basis in preparing the annual financial statements.
Incorporation of the Group
Sovereign Food Investments was incorporated on 8 May 1995 with the acquisition by the Group of 100 percent of
the share capital of Crown Chickens (Pty) Limited and its operating subsidiaries and divisions, United Chix (Pty)
Limited, Rocklands Animal Feeds (Pty) Limited (dormant), Rocklands Animal Feeds Division, Rocklands
Wholesaling, Rocklands Cold Distribution and Country Range Farm Products (Pty) Limited. At this time the interest
of minorities of 30 percent of the share capital in Country Range Farms Products (Pty) Limited was also acquired.
DividendDetails of the ordinary share dividend declared on 29 April 1999 relating to the year ended 28 February 1999, the
details of which became known on 17 June 1999, are as follows:
Number of shares Amount Shares to be issued
Members electing capitalisation award 25 926 335 1 555 580
Members electing cash dividend 1 293 347 77 601
Secondary taxation on companies to be paid on the above dividend amounts to R9 700 (1998 – R17 117).
Holding company
Sovereign Food Holdings (Pty) Limited, a company incorporated in the Republic of South Africa, is the holding
company of Sovereign Food Investments Limited, with a 55 percent holding of the company’s shares.
Subsidiaries’ income
The attributable interest of the company in the aggregate net income after taxation of its subsidiaries was
R7 894 697 (1998 – R14 921 377). The Group’s interest in subsidiaries as set out on page 21 forms part of
this report.
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During the year the Group acquired a 100 percent interest in the following companies: Ritztrade 8 (Pty) Limited,
Sovereign Information Technology (Pty) Limited, Rocklands Fine Foods (Pty) Limited, Rocklands Processed Foods
(Pty) Limited, Rocklands Poultry (Pty) Limited and WIP One Hundred and Six (Pty) Limited.
Directors and secretary
The names of the directors and secretary of the company at the date of this report are listed on page 2.
Mr BA Spanjaard retired as an Executive Director on 31 August 1998 and was appointed as a Non-executive Director
on 1 September 1998. Mr CA Dreyer retired as Financial Director on 15 February 1999 and Mr C Coombes was
appointed as Financial Director on 15 February 1999.
In terms of the Articles of Association Mr CG Charlewood, Mr RB Spanjaard and Mr BA Spanjaard retire by
rotation and, being eligible, offers themselves for re-election.
Directors’ shareholding
At the year-end, the directors in aggregate held direct beneficial interests in 1 619 306 (1998 – 1 684 736) ordinary
shares in the company and had indirect beneficial interest, including those held through Sovereign Food Holdings
(Pty) Limited, in a further 18 092 952 (1998 – 16 927 281) shares.
Financial instruments
The Group’s financial instruments, other than derivatives, comprise borrowings, some cash and liquid resources and
various items, such as trade debtors, trade creditors, etc. that arise directly from its operations. The main purpose of
these financial instruments is to raise finance for the Group’s operations.
The Group also enters into derivative transactions in the form of commodity futures. The purpose of such
transactions is to manage the commodity risks arising from the Group’s operations and its sources of finance.
It is, and has been throughout the period under review, the Group’s policy that no trading in financial instruments
shall be undertaken.
The main risks arising from the Group’s financial instruments are interest rate risk, liquidity risk, and credit risk.
The Board reviews and agrees policies for managing each of these risks and they are summarised below. These
policies have remained unchanged since May 1995.
Interest rate risk
The Group finances its operations through a mixture of retained profits and bank borrowings. The Group borrows at
both fixed and floating rates of interest. The Group’s policy is to keep between 15 percent and 40 percent of its
borrowings at fixed rates of interest. At the year-end, 38,5 (1998 – 16,3 ) percent of the Group’s borrowings were at
fixed rates.
Liquidity risk
As regards liquidity, the Group’s policy has throughout the year been that, to ensure continuity of funding, at least
10 percent of its borrowings should mature in more than five years. At the year-end, 11,2 (1998 – nil ) percent of the
Group’s borrowings were due to mature in more than five years.
Short-term flexibility is achieved by overdraft facilities.
Credit risk
The Group is exposed to credit losses in the event of non-performance by the counterparties to non-derivative
financial assets but has no off-balance-sheet risk of accounting loss. Concentrations of credit risk arise due to the
Group operating in the poultry industry in South Africa. The Group anticipates, however, that counterparties will be
able to fully satisfy their obligations under the contracts. The Group does not obtain collateral or other security to
support financial instruments subject to credit risk but monitors the credit standing of counterparties.
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The financial statements are prepared on the historical cost basis, adjusted by the revaluation of land and buildings
and incorporate the following principle accounting policies which are materially consistent with those adopted in the
previous financial year:
Basis for consolidation
The consolidated financial statements include companies in which the Group has management control and/or a
significant investment of more than 50 percent of the equity capital. The consolidated income statement includes
the results of new subsidiary companies from the effective date of acquisition.
Fixed assets and depreciation
Land and buildings are valued by the directors, in consultation with independent and qualified valuators,
approximately every five years. Surpluses on revaluation are transferred to non-distributable reserves.
Land and buildings are classified as investment property and are not depreciated. Plant and machinery, vehicles and
equipment are not revalued and are reflected at cost.
Depreciable fixed assets are depreciated on the straight-line basis over their estimated useful lives.
Leased assets
Assets leased in terms of financial lease agreements are capitalised, where material, at the cash cost equivalent and
the corresponding liability to the lessor is raised. Assets subject to sale and leaseback transactions which give rise to a
finance lease are maintained at their carrying value. Lease payments are allocated, using the effective interest rate
method to determine the finance lease cost, which is charged against income, and the capital repayment, which
reduces the liability to the lessor. These assets are depreciated on the same basis as categories of fixed assets owned
by the Group.
Operating lease payments are charged against income as they are incurred.
Inventories
Breeding stock
Breeding stock is capitalised at cost at the beginning of its productive cycle and is amortised on a straight-line basis
over its anticipated productive cycle to its estimated net realisable value.
Live broiler chickens, hatching eggs, finished product and other livestock
Live broiler stock, hatching eggs, finished goods and other livestock are valued at the lower of cost, determined on a
first-in first-out basis, and net realisable value. Costs include all direct production costs and an appropriate portion of
overheads.
Raw materials and consumables
Raw materials and consumables, including feedmill stocks, are valued at the lower of cost, determined on a first-in
first-out basis, and net realisable value.
Deferred taxation
Deferred taxation is calculated using the liability method on the partial basis. In terms of this basis provision is made
for deferred taxation only to the extent that it is probable that a liability will arise in the foreseeable future as a
result of the reversal of existing timing differences. The extent to which a full provision has not been made for all
timing differences existing at the year-end is disclosed by way of contingent liability.
Government grants
Decentralisation and other Government grants are brought to account in the year in which the amounts that will be
received are determined.
AC C OUNTING POLICIESfor the year ended February 1999
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Revenue
Revenue is the invoice price of goods sold, before the deduction of incentive rebates and discounts, allowed in terms
of distribution agreements. Value-Added Tax has not been included in the determination of revenue.
Research and development expenditure
Research and development expenditure is charged to income in the year in which it is incurred.
Borrowing costs
Borrowing costs are charged to income in the year in which they are incurred.
Retirement benefits
The policy of the Group is to provide retirement benefits for all its monthly paid and certain hourly paid permanent
employees. Current contributions to the provident funds operated for employees are charged against income as
incurred.
Trade debtors
Trade debtors to be settled within 60 days are carried at amounts due. The collectability of debt is assessed at balance
sheet date and specific provision is made for any doubtful accounts.
Trade creditors
Liabilities are recognised for amounts in respect of which the Group has an obligation to make payment for goods or
services received, whether or not billed to the Group. Trade accounts payable are normally settled within 60 days.
Bank loans
Bank loans are carried on the balance sheet at their principal amount, subject to set-off arrangements. Interest
expense is accrued at the contracted rate.
Employee entitlements
Wages, salaries, annual leave and sick leave
The provisions for employee entitlements to wages, salaries, annual leave and sick leave represent the amount which
the Group has a present obligation to pay resulting from employees’ services provided up to the balance sheet date.
The provisions have been calculated at undiscounted amounts based on current wage and salary rates.
Derivatives
The Group is exposed to changes in commodity prices from its activities. The Group uses futures commodity price
contracts to hedge these risks. Derivative financial instruments are not held for speculative purposes.
Derivative financial instruments designated as hedges are accounted for on the same basis as the underlying
exposure. Gains and losses on hedges of existing assets or liabilities are treated in the same manner as gains and
losses on the hedged item. Gains and losses related to qualifying hedges of firm commitments or anticipated
transactions are deferred and are recognised in income or as adjustments of carrying amounts when the hedged
transaction occurs.
Futures commodity price contracts
Futures commodity price contracts are used to hedge anticipated purchase commitments. Initial margin
requirements and daily cash calls are met in cash until the underlying transaction occurs, at which time the
unrealised gains and losses are brought to account in income.
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Group Company
1999 1998 1999 1998
Notes R’000 R’000 R’000 R’000
BALANCE SHEETat 28 February 1999
Assets
Non-current assets
Property, plant and equipment 1 93 084 76 020 – –
Interest in subsidiaries 2 – – 61 537 49 132
93 084 76 020 61 537 49 132
Current assets 47 705 51 772 (21) 211
Inventories 3 27 118 21 067 – –
Trade and other receivables 12 869 18 273 – –
Cash and cash equivalents 7 718 12 432 (21) 211
Total assets 140 789 127 792 61 516 49 343
Equity and liabilities
Capital and reserves
Issued capital 4 272 257 272 257
Share premium 5 42 608 38 156 42 608 38 156
Share election reserve 6 2 333 4 467 2 333 4 467
Non-distributable reserves 7 6 955 6 955 – –
Accumulated profits 21 30 493 24 965 36 (8)
82 661 74 800 45 249 42 872
Non-current liabilities
Interest-bearing borrowings 8 27 907 26 976 8 250 –
Current liabilities 30 221 26 016 8 017 6 471
Trade and other payables 18 433 15 894 929 310
Shareholders for dividend 21 78 137 78 137
Taxation 11 10 37 10 24
Current portion of interest-bearing borrowings 8 11 700 9 948 7 000 6 000
140 789 127 792 61 516 49 343
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INC OME STATEMENTfor the year ended 28 February 1999
Revenue 173 653 153 760 1 954 2 496
Operating income/(loss) 9 13 892 20 203 (252) 68
Investment income – – 2 450 4 617
Income/(Loss) before finance costs/(income) 13 892 20 203 2 198 4 685
Net finance costs/(income) 10 5 951 5 160 (260) (29)
Income/(Loss) before taxation 7 941 15 043 2 458 4 714
Taxation 11 (8) 1 (7) –
Income/(Loss) after taxation 7 949 15 042 2 465 4 714
Dividend election plan
Election reserve 21 2 333 4 467 2 333 4 467
Cash dividend 21 78 137 78 137
Secondary tax on companies 11 10 24 10 24
Retained earnings/(accumulated loss)
For the year 5 528 10 414 44 86
At the beginning of the year 21 24 965 14 551 (8) (94)
At the end of the year 21 30 493 24 965 36 (8)
Headline earnings and earnings per ordinary
share (cents) 17 29,2 58,4
Fully diluted earnings per ordinary share (cents) 17 27,6 55,1
Dividends per ordinary share (cents) 17 6,0 15,0
Group Company
1999 1998 1999 1998
Notes R’000 R’000 R’000 R’000
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Group Company
1999 1998 1999 1998
Notes R’000 R’000 R’000 R’000
CASH FLOW STATEMENTfor the year ended 28 February 1999
Cash flows from operating activities
Cash receipts from customers 179 057 166 039 1 954 2 681
Cash paid to suppliers and employees (160 096) (152 553) (11 542) (5 803)
Cash generated from/(utilised by) operations 14.1 18 961 13 486 (9 588) (3 122)
Interest received 2 462 3 528 2 301 32
Interest paid (8 413) (8 688) (2 041) (3)
Dividends paid 14.2 (137) – (137) –
Normal taxation paid 14.3 (12) (11) – –
Secondary taxation on companies paid 14.4 (17) – (17) –
Net cash flow from operating activities 12 844 8 315 (9 482) (3 093)
Cash flows from investing activities
Investment in operations (12 656) (10 971) – –
Additions to fixed assets (13 159) (11 022) – –
Proceeds on sale of fixed assets 503 51 – –
Net cash outflow from investing activities (12 656) (10 971) – –
Cash flows from financing activities
Movement on interest-bearing debt 22 7 565 9 250 3 000
Payment of capital element of finance leases (44) (39) – –
Payment of capital element of instalment
sale agreement (4 880) (2 979) – –
Net cash flow from financing activities (4 903) 4 547 9 250 3 000
Net increase/(decrease) in cash and cash equivalents (4 714) 1 891 (232) (93)
Cash and cash equivalents at the beginning
of the year 12 432 10 541 211 304
Cash and cash equivalents at the end of the year 14.5 7 718 12 432 (21) 211
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Share Non-Share Share election distributable Accumulated
capital premium reserve reserves profit Total
STATEMENT OF CHANGES IN EQUITYfor the year ended 28 February 1999
Balance at28 February 1998 257 38 156 4 400 6 955 24 976 74 744
Capitalisation award no. 2
adjustment (see note 21) – – 67 (11) 56
Restated opening balance 257 38 156 4 467 6 955 24 965 74 800
Capitalisation award no. 2 15 4 452 (4 467) – – –
Capitalisation award no. 3 – – 2 333 – – 2 333
Net profit for the period – – – – 5 528 5 528
Balance at 28 February 1999 272 42 608 2 333 6 955 30 493 82 661
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NOTES TO THE FINANCIAL STATEMENTSfor the year ended 28 February 1999
1. Fixed assets
Cost and valuation
Land and buildings 49 088 42 883 – –
Plant, furniture, equipment and vehicles 52 477 38 947 – –
Capitalised leased vehicles 201 201 – –
101 766 82 031 – –
Accumulated depreciation
Plant, furniture, equipment and vehicles 8 640 5 981 – –
Capitalised leased vehicles 42 30 – –
8 682 6 011 – –
Net book value
Land and buildings 49 088 42 883 – –
Plant, furniture, equipment and vehicles 43 837 32 966 – –
Capitalised leased vehicles 159 171 – –
93 084 76 020 – –
Plant, Land furniture Capitalised
and equipment leasedbuildings and vehicles vehicles Total
Net book value at beginning of year 42 883 32 966 171 76 020
Cost and valuation 42 883 38 947 201 82 031
Accumulated depreciation – 5 981 30 6 011
Additions 6 205 14 539 – 20 744
Disposals – (662) – (662)
Depreciation – (3 006) (12) (3 018)
Net book value at end of year 49 088 43 837 159 93 084
Cost and valuation 49 088 52 477 201 101 766
Accumulated depreciation – (8 640) (42) (8 682)
Details of land and buildings are contained in a register, setting out the information required by P16(6) of the
4th Schedule of the Companies Act, which is available for inspection by members or their duly authorised agents at
the registered office of the company. A copy of the register will be posted on request to members of the public.
Land and buildings were last revalued on the date of incorporation and subsequent additions are recorded at cost.
Investment properties were valued by an independent valuer for insurance purposes on 29 February 1996 at an
estimated new replacement cost of R88 003 500. Details of the name and qualifications of the valuer are available
for inspection at the registered office of the company.
Vehicles, plant, furniture and equipment with a net book value of R19 240 457 (1998 – R15 732 187) are subject to
instalment sale and financial lease agreements (refer note 8).
Group Company
1999 1998 1999 1998
R’000 R’000 R’000 R’000
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Group Company
1999 1998 1999 1998
R’000 R’000 R’000 R’000
2. Interest in subsidiaries
Shares at cost – – 29 746 29 746
Net amounts owing – – 31 791 19 386
– – 61 537 49 132
Included in net amounts owing are loans to Sovereign Food Investments Limited by United Chix (Pty) Limited for
R190 000 and by Country Range Farm Products (Pty) Limited for R638 000. These companies are subsidiaries of
Sovereign Food Investments Limited. These loans are unsecured, have no fixed terms of repayment and bear no
interest.
3. Inventories
Raw materials and consumables 10 840 6 364 – –
Livestock 13 900 12 729 – –
Finished products 2 378 1 974 – –
27 118 21 067 – –
4. Share capital
Authorised
50 000 000 ordinary shares of 1 cent each 500 500 500 500
Issued
27 219 682 ordinary shares of 1 cent each
(1998 – 25 730 575 shares) 272 257 272 257
Number of shares
Under option in terms of the company’s share
incentive scheme at 500 cents per share exercisable
until 15 January 2003 (including nil (1998 –
50 000) shares in respect of executive directors) 49 000 247 000 49 000 247 000
Under option in terms of the company’s share
incentive scheme at 320 cents per share exercisable
until 15 January 2004 (including 150 000 (1998 –
250 000) shares in respect of executive directors) 295 000 495 000 295 000 495 000
Under option in terms of the company’s share
incentive scheme at 350 cents per share exercisable
until 15 January 2004 88 000 15 000 88 000 15 000
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NOTES TO THE FINANCIAL STATEMENTS (cont .)
for the year ended 28 February 1999
Group Company
1999 1998 1999 1998
R’000 R’000 R’000 R’000
4. Share capital (cont.)
Under option in terms of the company’s share
incentive scheme at 400 cents per share exercisable
until 18 February 2005 (including 150 000 (1998 –
300 000) shares in respect of executive directors) 473 000 751 000 473 000 751 000
Under control of the directors for the purpose of
The Sovereign Share Incentive Scheme 1 495 000 992 000 1 495 000 992 000
To be allocated in terms of the capitalisation
award of dividend no. 2 declared 7 April
1998 and issued on 27 May 1998 (including
96 295 shares in respect of executive directors) – 1 489 107 – 1 489 107
To be allocated in terms of the capitalisation
award of dividend no. 3 declared 29 April
1999 and issued on 17 June 1999 (including
96 281 shares in respect of executive directors) 1 555 580 – 1 555 580 –
Under the control of the directors until the next
annual general meeting 18 824 738 20 280 318 18 824 738 20 280 318
Ordinary shares in issue 27 219 682 25 730 575 27 219 682 25 730 575
50 000 000 50 000 000 50 000 000 50 000 000
5. Share premium
Balance at 1 March 1998 38 156 38 156 38 156 38 156
Arising on issue of shares in terms of the
capitalisation award of dividend no. 2
declared 7 April 1998 4 452 – 4 452 –
Balance at 28 February 1999 42 608 38 156 42 608 38 156
6. Share election reserve
Balance at 1 March 1998 4 467 – 4 467 –
Transfer from income statement 2 333 4 467 2 333 4 467
6 800 4 467 6 800 4 467
Utilised for share issue (4 467) – (4 467) –
Balance at 28 February 1999 2 333 4 467 2 333 4 467
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Group Company
1999 1998 1999 1998
R’000 R’000 R’000 R’000
7. Non-distributable reserve
Excess of net asset value of subsidiaries over the
acquisition cost of Crown Chickens (Pty) Limited
and its subsidiaries. 6 955 6 955 – –
8. Interest-bearing debt
Instalment sale creditors payable in monthly
instalments totalling R672 027 (1998 – R518 256).
These liabilities are secured by instalment sale
agreements over assets with a net book value of
R19 302 103 (1998 – R15 560 225). Interest is
charged at variable rates on these agreements. 16 568 13 863 – –
Finance lease agreements repayable in monthly
instalments of R6 639 (1998 – R5 889). These
liabilities are secured by finance lease agreements
over assets with a net book value of R159 457 (1998 –
R171 962). Interest is charged at variable rates on
these agreements. 99 143 – –
Secured loans repayable in monthly instalments
of R39 525 (1998 – R46 916). Interest is charged
at variable rates on these loans. 2 591 2 647 – –
Unsecured loans repayable in quarterly instalments of
R250 000 (1998 – nil) and bearing interest at
15,79 percent per annum (1998 – nil). 9 250 – 9 250 –
Unsecured loans repayable on 30 November 1999
and bearing interest at 20,35 percent per annum
(1998 – 17,00 percent). 6 000 6 000 6 000 6 000
Unsecured loans having no fixed terms of
repayment and bearing interest at 19,00 percent
per annum (1998 – 17,25 percent). 5 099 14 271 – –
39 607 36 924 15 250 6 000
Short-term portion repayable before 28 February 2000 11 700 9 948 7 000 6 000
27 907 26 976 8 250 –
The increased level of borrowings has been largely utilised to fund the Group’s expansion activities.
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NOTES TO THE FINANCIAL STATEMENTS (cont .)
for the year ended 28 February 1999
Group Company
1999 1998 1999 1998
R’000 R’000 R’000 R’000
9. Operating income
Revenue 173 653 153 760 1 954 2 496
Cost of sales 92 667 81 125 – –
Gross profit 80 986 72 635 1 954 2 496
Other operating expenses 67 094 52 432 (2 206) 2 428
Operating income/(loss) 13 892 20 203 (252) 68
Other operating expenses include certain direct costs.
Operating income/(loss) is arrived at after taking
into account:
Revenue items
Management fees from subsidiaries – – 1 954 2 496
Dividends from subsidiaries – – 2 450 4 617
Expense items
Auditors’ remuneration
Audit fees 210 200 12 20
Current year 160 145 10 18
Prior year 28 40 – –
Other fees 22 15 2 2
Depreciation of fixed assets 3 018 2 233 – –
Plant, furniture, equipment and vehicles 3 006 2 219 – –
Capitalised leased vehicles 12 14 – –
Directors’ emoluments for managerial services 1 139 1 290 764 806
Property rentals 316 114 120 131
Operating leases of office equipment 32 7 – –
Managerial, technical, administrative and
secretarial fees paid outside the Group 921 663 65 –
Loss on disposal of fixed assets 159 34 – –
Profit/(loss) on futures (646) 55 –
Research and development expenditure 186 57 – –
10. Net finance costs/(income)
Finance charges on capitalised leases 17 27 – –
Interest on debt 8 396 8 661 2 041 3
8 413 8 688 2 041 3
Interest received (2 462) (3 528) (2 301) (32)
5 951 5 160 (260) (29)
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Group Company
1999 1998 1999 1998
R’000 R’000 R’000 R’000
11. Taxation
SA normal taxation (1) 1 – –
Current year – – – –
Prior year (1) 1 – –
Secondary taxation on companies 3 24 3 24
Current year 10 24 10 24
Prior year (7) – (7) –
2 25 3 24
The estimated taxation losses of certain subsidiaries available for set-off against future taxable income amount toR31 190 342 (1998 – R25 435 895).
Reconciliation of taxation rate Percent Percent Percent Percent
Normal rate of company taxation 35,0 35,0 35,0 35,0
Permanent differences (6,4) (10,2) – (34,3)
Timing differences (40,1) (43,1) – –
Assessed loss provided/(utilised) 11,5 18,3 (35,0) (0,7)
Secondary taxation on companies – 0,2 (45,2) 0,5
Effective taxation rate – 0,2 (45,2) 0 5
12. Deferred taxation
Had the comprehensive basis of providing deferred
taxation been applied:
Net liability at 1 March 1998 13 625 8 391 – –
Rate change (1 946) – – –
Provided for the year 1 788 5 234 – –
Net liability at 28 February 1999 13 467 13 625 – –
Comprising:
Accelerated capital allowances 15 513 15 636 – –
Livestock and raw materials 7 416 6 817 – –
Provisions and other timing differences (105) 75 – –
Provision of assessed loss (net) (9 357) (8 903) – –
13 467 13 625 – –
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NOTES TO THE FINANCIAL STATEMENTS (cont .)
for the year ended 28 February 1999
Group Company
1999 1998 1999 1998
R’000 R’000 R’000 R’000
13. Retirement benefit information
The company provides, through two defined contribution provident plans, retirement benefits for all monthly
paid and certain hourly paid permanent employees. These funds are subject to the Pension Funds Act, 1956, as
amended. All new members pay their own contributions to the funds. Contributions are at the rate of between
15,5 percent and 16,0 percent of pensionable emoluments of which members pay between 6,0 percent and
6,5 percent.
The independent consulting actuaries were of the opinion at the last review of the funds, that the reconciliation
of total contributions showed that the employer’s contribution liabilities for the scheme have been met.
Total value of current service contributions to
the schemes 1 091 563 206 227
Proportion of total employees covered (percent) 45,7 28,2 100,0 100,0
14. Notes to the cash flow statement
14.1 Cash generated from/(utilised by) operations
Income before interest and taxation 13 892 20 203 2 198 68
Depreciation 3 018 2 233 – –
Loss on disposal of fixed assets 159 34 – –
Operating profit before working capital changes 17 069 22 470 2 198 68
Working capital changes
Increase in inventories (6 051) (628) – –
Decrease in accounts receivable 5 404 12 279 – 185
Increase/(decrease) in accounts payable 2 539 (20 635) 619 57
Increase in amounts owing by subsidiaries – – (12 405) (3 432)
18 961 13 486 (9 588) (3 122)
14.2 Dividends paid
Amount outstanding at 1 March 1998 137 – 137 –
Income statement charge 78 137 78 137
Amount paid during the year (137) – (137) –
Amount outstanding at 28 February 1999 78 137 78 137
14.3 Normal taxation paid
Amount outstanding at 1 March 1998 13 23 – –
Income statement charge (1) 1 – –
Amount paid during the year (12) (11) – –
Amount outstanding at 28 February 1999 – 13 – –
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Group Company
1999 1998 1999 1998
R’000 R’000 R’000 R’000
14.4 Secondary taxation on companies paid
Amount outstanding at 1 March 1998 24 – 24 –
Income statement charge 3 24 3 24
Amount paid during the year (17) – (17) –
Amount outstanding at 28 February 1999 10 24 10 24
14.5 Cash and cash equivalents
Bank balance and cash on hand 7 718 12 432 (21) 211
14.6 Non-cash transactions
During the year, the Group acquired buildings,
plant and equipment and commercial vehicles
with an aggregate cost of R5 837 963 (1998 –
R4 820 280) by means of instalment sale and
finance lease agreements.
15. Loans to directors
Included in accounts receivable are the following:
BA Spanjaard – 11 – –
MGM Charlewood 3 1 – –
16. Capital commitments
Authorised
Contracted – – – –
Not contracted for 8 529 6 532 – –
To be expended within one year 8 529 6 532 – –
This capital expenditure will be financed as follows:
Cash generated from current operations 2 689 3 000 – –
Long-term equity finance 5 840 3 532 – –
8 529 6 532 – –
17. Earnings per share
The calculation of earnings per ordinary share is based on net income attributable to ordinary shareholders
of R7 939 295 (1998 – R15 018 054) and weighted average of 27 219 682 (1998 – 25 730 575) ordinary shares
in issue.
The calculation of fully diluted earnings per ordinary share is based on net income attributable to ordinary
shareholders of R7 939 295 (1998 – R15 018 054) and weighted average of 28 775 262 (1998 – 27 219 682)
ordinary shares in issue. The dilution of 1,6 (1998 – 3,2) cents per ordinary share is the result of 1 555 580
(1998 – 1 489 107) ordinary shares issued in terms of the capitalisation dividend dated 29 April 1999.
The dividend per ordinary share is the cash election portion of the capitalisation dividend dated 29 April 1999.
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NOTES TO THE FINANCIAL STATEMENTS (cont .)
for the year ended 28 February 1999
Group Company
1999 1998 1999 1998
R’000 R’000 R’000 R’000
18. Related party transactions
Related party transactions exist between the Group, the holding company and fellow subsidiaries. All purchasing
and selling transactions are concluded at arm’s length.
19. Borrowing powers
The directors have not exceeded their borrowing powers as authorised by the Articles of Association.
20. Financial instruments
Exposure to interest rate and credit risk arises in the normal course of the Group’s business. Derivative financial
instruments are used as a means of reducing exposure to fluctuations in commodity prices. Whilst these financial
instruments are subject to the risk of market rates changing subsequent to acquisition, such changes would
generally be offset by opposite effects on the items being hedged.
20.1 Interest rate risk
The Group generally adopts a policy of ensuring that its exposure to changes in interest rates is on a
fixed rate basis.
20.2 Credit risk
No collateral is required in respect of financial assets. Management has a credit policy in place and the
exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all
customers requiring credit over a certain amount. Reputable financial institutions are used for investing
and cash handling purposes.
At balance sheet date there were no significant concentrations of credit risk.
20.3 Commodity futures
Certain derivative instruments are utilised with the intention of hedging a portion of the Group’s future
strategic raw material purchases. As at 28 February 1999 the Group held eight short (1998 – 80 long)
futures contracts. The risk attached to this position is that the market may rise.
20.4 Fair values
The fair values of all financial instruments are substantially identical to carrying values reflected in the
balance sheet.
21. Prior year adjustment
Prior year figures have been adjusted to take into account the result of the capitalisation award of dividend no 2.
The effect of this adjustment is as follows:
Gross Taxation Net
Reduction in cash dividend 56 – 56
Increase in election reserves 67 – 67
Restatement of opening retained earnings (11) – (11)
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SUBSIDIARY C OMPANIES
Book value of holdingcompany’s interest
Issued share Group’s effective Amounts owing to/(by) capital holding Shares holding company
1999 1998 1999 1998 1999 1998 1999 1998
R R percent percent R’000 R’000 R’000 R’000
Directly owned
Sovereign Food Industries
(Pty) Limited 36 36 100 100 29 746 29 746 5 451 5 001
Indirectly owned
Crown Chickens (Pty)
Limited 5 005 5 005 100 100 27 168 13 833
United Chix (Pty)
Limited 1 000 1 000 100 100 (190) 552
Country Range Farm Products
(Pty) Limited 1 000 1 000 100 100 (638) –
Access Laboratories
(Pty) Limited 100 100 80 80 – –
Rocklands Fine Foods
(Pty) Limited 100 – 100 – – –
Rocklands Processed Foods
(Pty) Limited 100 – 100 – – –
Sovereign Information
Technology (Pty) Limited 100 – 100 – – –
Ritztrade 8 (Pty) Limited 100 – 100 – – –
Rocklands Poultry (Pty)
Limited 100 – 100 – – –
WIP One Hundred and Six
(Pty) Limited 100 – 100 – – –
29 746 29 746 31 791 19 386
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NOTICE TO SHAREHOLDERS
Notice is hereby given that the third annual general
meeting of shareholders in Sovereign Food
Investments Limited will be held at Kruis River Road,
Uitenhage on Thursday, 30 September 1999 at 10:00 to
transact the following business:
1. To receive, approve and adopt the annual
financial statements for the year ended
28 February 1999.
2. To re-elect CG Charlewood, RB Spanjaard and
BA Spanjaard, who retire as directors in terms of
the company’s Articles of Association.
3. To consider, and if deemed fit, to pass with or
without modification, the following ordinary
resolution:
Resolved that, after providing for the
2 500 000 ordinary shares of the company
reserved for the purposes of The Sovereign Share
Incentive Trust, the unissued ordinary shares in
the capital of the company remain under the
control of the directors who shall be authorised
to issue these shares at such times and on such
terms as they may determine, subject to Section
221 of The Companies Act, 1973 (as amended),
and the Regulations of the Johannesburg Stock
Exchange.
4. To confirm the re-appointment of the auditors to
serve until the next annual general meeting and
to authorise the directors to establish their
remuneration for the past year.
5. To transact such other business as may be
transacted at an annual general meeting.
Any shareholder entitled to attend and vote at
the meeting is entitled to appoint a proxy to
attend, speak and on a poll, vote in his stead. The
person so appointed need not be a shareholder.
Forms of proxy must be lodged with or posted to
the company’s transfer secretaries,
Computershare Services Limited, at Edura,
41 Fox Street, Johannesburg 2001 (PO Box
61051, Marshalltown 2107) to be received not
later than 12:00 on Tuesday, 28 September 1999.
By order of the Board
C Coombes
Company Secretary
Port Elizabeth
29 April 1999
Financial year-end February
Announcement of results for the year April 1999
Annual financial statements posted August 1999
Annual general meeting September 1999
Interim report for the half-year ending August 1999 September 1999
SHAREHOLDERS’ DIARY
Produced by Oaktree Communications
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FORM OF PROXY
For use by shareholders at an annual general meeting to be held at 10:00 on Thursday, 30 September 1999
(“the general meeting’’).
I/We
being the holder/s of ordinary shares in the company, hereby appoint (see note 1)
1. or, failing him
2. or, failing him
3. the chairman of the meeting,
as my/our proxy to vote for me/us on my/our name/s at the annual general meeting (and at any adjournment
thereof) to be held at 10:00 on Thursday, 30 September 1999, in the company’s boardroom at Kruis River Road,
Uitenhage, for the purpose of considering and, if deemed fit, passing, with or without modification, the ordinary
resolution to be considered at the general meeting in accordance with the following instructions (see note 2).
Number of votes (1 vote per share)
For Against Abstain
Ordinary resolution (per notice item 3)
If no indication is given, the proxy will vote as he deems fit.
Each shareholder entitled to attend and vote at the annual general meeting may appoint one or more proxies (who
need not be a member of the company) to attend, speak and, on a poll, vote in his stead.
Please read the notes on the reverse side hereof.
Signed at on 1999
Signatures
Assisted by me (where applicable)
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NOTES
1. A shareholder may insert the name of the proxy
or the names of two alternative proxies of the
shareholder’s choice in the space provided with
or without deleting “the chairman of the
meeting” but, any such deletion must be
initialled by the shareholder. The person whose
name appears first on the form of proxy and has
not been deleted, shall be entitled to act as proxy
to the exclusion of those whose names follow.
2. A shareholder’s instructions to the proxy must be
indicated by the insertion of the relevant
number of votes exercisable by that shareholder
in the appropriate box/es provided. Failure to
comply with the above will be deemed to
authorise the proxy to vote or abstain from voting
at the general meeting as he deems fit in respect
of all the shareholder’s votes exercisable thereat.
A shareholder or his proxy is not obliged to use
all the votes exercisable by him, but the total of
the votes cast and in respect whereof abstention
is recorded may not exceed the total of the votes
exercisable by the shareholder or by his proxy.
3. Forms of proxy must be lodged with or
posted to the company’s transfer secretaries,
Computershare Services Limited, at
Edura, 41 Fox Street, Johannesburg 2001
(PO Box 61051, Marshalltown 2107) to be
received not later than 12:00 on Tuesday,
28 September 1999.
4. Any alteration or correction made to this form or
proxy must be initialled by the signatory/ies.
5. Documentary evidence establishing the authority
of a person signing this form of proxy in a
representative capacity, must be attached to this
form of proxy unless previously recorded by the
company’s transfer secretaries or waived by the
chairman of the general meeting.
6. The completion and lodging of this form of
proxy shall not preclude the relevant shareholder
from attending the general meeting and
speaking and voting in person thereat to the
exclusion of any proxy appointed in terms
hereof, should such shareholder wish to do so.
7. The chairman of the general meeting may reject
or accept a proxy form which is completed
and/or received other than in accordance with
these instructions, provided that he is satisfied
as to the manner in which a shareholder wishes
to vote.
8. A minor must be assisted by a parent or
guardian.