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SOVEREIGN FOOD INVESTMENTS LIMITED - Announcement regarding the repurchase of securities

Release Date: 18/06/2013 11:12
Code(s): SOV     PDF:  
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Announcement regarding the repurchase of securities

SOVEREIGN FOOD INVESTMENTS LIMITED
Incorporated in the Republic of South Africa
Registration Number 1995/003990/06
JSE Code: SOV
ISIN Number: ZAE000009221
(“Sovereign” or “the Company”)


ANNOUNCEMENT REGARDING THE REPURCHASE OF SECURITIES

1. INTRODUCTION

Sovereign shareholders are advised that the Company has concluded a general
repurchase of 2 870 118 Sovereign ordinary shares (“shares”), which represent 3.61% of
the issued shares of the Company on the open market of the JSE Limited ("JSE")
(“Repurchase”). The Repurchase was effected in accordance with the general authority
approved by Sovereign’s shareholders at the annual general meeting held on
3 August 2012 to repurchase up to 10% of the Company’s issued shares (“General
Authority”).


2. IMPLEMENTATION

The Repurchase commenced on 1 October 2012 and continued on a day-to-day basis as
market conditions allowed. Details are as follows:-

      Number of shares repurchased                              2 870 118
      Value of shares repurchased                               R14 077 187
      Highest price paid per share                              R5.00
      Lowest price paid per share                               R4.25
      The number and percentage of shares which may still
       be repurchased by the Company in terms of the
       General Authority                                        5 069 455 (6.39%)
      Total shares in issue as at the date of this announcement 76 525 616

Share repurchases were made on the following dates:-

2012:
1 October 2012; 8 October 2012; 9 October 2012; 10 October 2012; 23 October 2012;
24 October 2012; 25 October 2012; 26 October 2012; 19 November 2012;
20 November 2012; 21 November 2012; 22 November 2012; 23 November 2012;
18 December 2012; 19 December 2012; and 21 December 2012.

2013:
7 January 2013; 9 January 2013; 10 January 2013; 14 January 2013; 22 January 2013;
5 February 2013; 6 February 2013; 7 February 2013; 12 February 2013;
15 February 2013; 19 February 2013; 20 February 2013; 22 February 2013;
28 February 2013; 10 April 2013; 12 April 2013; 15 April 2013; 18 April 2013; 22 April 2013;
26 April 2013; 02 May 2013; 30 May 2013; and 13 June 2013.


3. SOURCE OF FUNDS

The Repurchase has been funded from available cash resources.
4. OPINION OF THE DIRECTORS

The directors of Sovereign have considered the impact of the Repurchase and are of the
opinion that:

       •     the Company will, in the ordinary course of business, be able to pay its debts
             for a period of 12 months from the Company first acquiring shares under the
             Repurchase;
       •     the liabilities of the Company will not exceed the assets of the Company,
             calculated in accordance with the accounting policies used in the audited
             financial statements for the year ended 29 February 2012, for a period of 12
             months from the Company first acquiring shares under the Repurchase;
       •     the share capital and reserves of the Company will be adequate for ordinary
             business purposes for a period of 12 months from the Company first acquiring
             shares under the Repurchase;
       •     the working capital of the Company will be adequate for ordinary business
             purposes for a period of 12 months from the Company first acquiring shares
             under the Repurchase; and
       •     the Company will satisfy the solvency and liquidity test as set out in the
             Companies Act No. 71 of 2008.

The directors of Sovereign further confirm that paragraph 5.72(a) of the JSE Listings
Requirements has been complied with.

5. PRO FORMA          FINANCIAL     EFFECTS      (“FINANCIAL      EFFECTS”)      OF    THE
   REPURCHASE

The Financial Effects have been based on Sovereign’s Reviewed Condensed Consolidated
Provisional Group Results for the year ended 28 February 2013 as published on the Stock
Exchange News Service on 16 May 2013 (“2013 Results”). The Financial Effects of the
Repurchase on Sovereign’s earnings per share (“EPS”), headline earnings per share
(“HEPS”), diluted earnings per share (“DEPS”), diluted headline earnings per share
(“DHEPS”), net asset value per share (“NAVPS”) and net tangible asset value per share
(“NTAV”) are set out below.

The Financial Effects are prepared for illustrative purposes only, and because of their
nature, may not give a fair presentation of Sovereign’s financial position or the effect and
impact of the Repurchase. The Financial Effects are the responsibility of Sovereign’s
directors.


                                                                Pro forma
                                                As at 28        financial
                                                February       effects of
                                                    2013              the        After the
                                                   (1, 3)      Repurchase  Repurchase (2,3)
EPS (cents) (4)                                   66.2             1.7            67.9
HEPS (cents) (4)                                  74.5             2.0            76.5
NAVPS (cents) (5)                                 808              4.0             812
TNAVPS (cents) (5)                                808              4.0             812
DEPS (cents) (4)                                  66.2             1.7            67.9
DHEPS (cents) (4)                                 74.5             2.0            76.5
Number of shares in issue (3)                  77 378 951      (853 335)       76 525 616
Weighted average number of shares in
issue (3, 4)                                     79 258 398     (2 732 782)       76 525 616
Diluted weighted average number of shares
in issue (3, 4)                                  79 270 583     (2 732 782)       76 537 801

Notes:
1. Extracted from the 2013 Results.
2. Sovereign has repurchased a total of 2 870 118 shares for a total cash consideration of
   R14 077 187 since 1 October 2012.
3. Of the total number of shares repurchased by Sovereign in terms of the Repurchase,
   2 016 783 shares were acquired by Sovereign for a total cash consideration of
   R9 836 112 prior to 28 February 2013 resulting in the 2013 Results already
   incorporating the financial effects of such share repurchases.
4. The pro forma financial effects of the Repurchase on EPS, HEPS, DEPS and DHEPS
   were prepared on the following assumptions:
       i. The Repurchase was concluded in full on 1 March 2012 and the repurchased
          shares were delisted immediately.
      ii. The weighted average number of shares in issue and diluted weighted average
          number of shares in issue were both decreased by 2 732 782 shares as a result
          of the 2013 Results already accounting for 137 336 of the total number of shares
          repurchased before 28 February 2013.
     iii. The Repurchase was financed using available cash resources. For purposes of
          the Financial Effects, it is assumed that interest foregone on cash utilised for the
          Repurchase amounted to R703 859 [R14 077 187 x 5%] resulting in a decrease
          in taxation of R197 081 [R703 859 x 28%] and net profit after tax of R506 778.
5. The pro forma financial effects of the Repurchase on NAVPS and TNAVPS were
   prepared on the following assumptions:
       i. The Repurchase was concluded in full on 28 February 2013 and all shares
          repurchased were delisted on that date.
      ii. Cash and cash equivalents would decrease by R4 241 075 being the difference
          between the total cash consideration of R14 077 187 and the R9 836 112 that
          was already accounted for in the 2013 Results.
     iii. Equity would decrease by R4 241 075, being effect of the share repurchase on
          Share Capital and Premium.


6. JSE LISTING

Sovereign currently holds 724 000 shares in treasury which will be cancelled and delisted in
due course.


Port Elizabeth
18 June 2013


Sponsor
One Capital

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