SOVEREIGN FOOD INVESTMENTS LIMITED Annual Report SOVEREIGN FOOD INVESTMENTS LIMITED 1999 Annualised

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Transcript of SOVEREIGN FOOD INVESTMENTS LIMITED Annual Report SOVEREIGN FOOD INVESTMENTS LIMITED 1999 Annualised

  • 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

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    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 Manager H Bosman (40) BVSc

    Appointed 8 May 1995

    Production Manager M J Davis (37) BCom

    Appointed 8 May 1995

    Feedmill Manager D Vorster (33) BSc

    Appointed 1 October 1998

    ADMINISTRATION

    Sovereign Food Investments Limited Registration number 95/03990/06

    Registered Office/Postal Address 254 Walmer Boulevard South End, Port Elizabeth 6001 PO Box 1386, Uitenhage 6230 Eastern Cape

    Transfer Secretaries Computershare Services Limited Edura 41 Fox Street Johannesburg 2001 PO Box 61051, Marshalltown 2107 Gauteng

    Company Secretary C Coombes

    Auditors KPMG Chartered Accountants and Business Advisors

    Principal Bankers The Standard Bank of SA Limited

    Website http://www.sovfoods.co.za

    E-mail info@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 results Turnover 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 performance Earnings 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)

    Liquidity Interest 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

    Profitability Operating 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 added To 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

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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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