| Mon 12 Nov 2001, 0:00 | | Rainbow Chicken Limited - Unaudited Group Results |
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RAINBOW CHICKEN LIMITED
(Registration number 1966/004972/06)
Unaudited Group Results
for the six months ended 30 September 2001
Consolidated Balance Sheet
30 Sept 30 Sept 31 March
2001 2000 2001
R'000 R'000 R'000
ASSETS
Non-current assets
Property, plant and
equipment* 563 977 599 276 561 530
Current assets
Loans 816 1 724 1 344
Inventories 303 664 240 781 250 422
Trade and other receivables 289 481 196 312 235 007
Cash and cash equivalents 8 700 - 6 203
Total current assets 602 661 438 817 492 976
Total assets 1 166 638 1 038 093 1 054 506
EQUITY AND LIABILITIES
Capital and reserves* 759 032 618 790 712 467
Preference share capital 500 500 500
Total shareholders' equity 759 532 619 290 712 967
Non-current liabilities
Deferred taxation 6 118 8 276 8 356
Total non-current liabilities 6 118 8 276 8 356
Current liabilities
Trade and other payables 353 175 267 796 287 874
Provisions 45 011 42 843 45 309
Interest bearing debt
- short-term 2 802 99 888 -
Total current liabilities 400 988 410 527 333 183
Total equity
and liabilities 1 166 638 1 038 093 1 054 506
*Change in Accounting Policy
Six months ended Year ended
30 Sept 30 Sept 31 March
2001 2000 2001
R'000 R'000 R'000
The accounting policy
regarding the revaluation
of land and buildings
has been changed,
effective 1 April 2001,
to revert to the
historical cost basis.
The figures above
have been restated to
give effect to the
change in policy, the
detail of which is
as follows:
Reduction in property,
plant and equipment 206 790 211 158 209 030
Reduction in capital
and reserves 206 790 211 158 209 030
Reduction in depreciation
and impact on
headline earnings 2 240 2 128 4 256
Consolidated Income Statement
Six months ended Year ended
30 Sept 30 Sept 31 March
2001 2000 2001
R'000 R'000 R'000
Revenue 1 377 508 1 186 746 2 493 847
Operating profit
before depreciation
and amortisation 73 149 40 968 167 445
Depreciation and
amortisation* (27 022) (26 448) (52 442)
Operating profit
before interest 46 127 14 520 115 003
Interest paid (1 763) (9 612) (16 300)
Profit before taxation 44 364 4 908 98 703
Taxation 2 232 (460) (547)
Profit after taxation 46 596 4 448 98 156
Preference dividend (31) (31) (62)
Profits attributable
to ordinary
shareholders 46 565 4 417 98 094
Headline Earnings
Profit attributable
to ordinary
shareholders 46 565 4 417 98 094
(Profit)/loss on disposal
of property,
plant and equipment (1 229) (1 353) 2 977
Net asset impairment
provision raised - - 16 372
Headline earnings 45 336 3 064 117 443
Consolidated Cash
Flow Information
Net cash flows from
operating activities 27 935 46 546 161 587
Net cash flows from
investing activities (28 240) (20 395) (29 345)
Net (increase)/decrease
in cash and
cash equivalents (305) 26 151 132 242
Cash and cash
equivalents at the
beginning of the period 6 203 (126 039) (126 039)
Cash and cash
equivalents at the
end of the period 5 898 (99 888) 6 203
Statement of Changes in Equity
Stated Non- Accumulated Consolidated
Capital Reserves Loss Total
R'000 R'000 R'000 R'000
Balance as
previously disclosed
as at 1 April 2000 1 082 853 200 693 (455 887) 827 659
Reversal of asset
revaluation* - (200 693) (12 593) (213 286)
Balance 1 April 2000
restated 1 082 853 - (468 480) 614 373
Attributable profit - - 2 289 2 289
Depreciation on revalued
assets reversed - - 2 128 2 128
Balance
30 September 2000 1 082 853 - (464 063) 618 790
Attributable profit - - 91 549 91 549
Depreciation on revalued
assets reversed - - 2 128 2 128
Balance 1 April 2001 1 082 853 - (370 386) 712 467
Attributable profit - - 46 565 46 565
Balance
30 September 2001 1 082 853 - (323 821) 759 032
Supplementary Information
Six months ended Year ended
30 Sept 30 Sept 31 March
2001 2000 2001
R'000 R'000 R'000
Capital expenditure
contracted and committed 10 038 10 771 3 884
Capital expenditure
approved but not contracted 12 425 1 291 9 916
Contingent liabilities 26 376 23 968 26 376
Statistics
Number of ordinary shares
in issue (000's) 256 119 256 119 256 119
Basic earnings
per share (cents) 18.2 1.7 38.3
Headline earnings
per share (cents) 17.7 1.2 45.9
Net asset value
per share (cents) 296.4 241.6 278.2
Debt/equity ratio (%) - 16.1 -
Comments
RESULTS
The expectations for the first six months, outlined in our annual report
dated 16 May 2001, have materialised. Feed prices have increased sharply,
rising by approximately 6,24% since March 2001 compared to a reduction in
price of 6,25% for the same period last year. Average chicken realisations
were marginally higher, but not sufficiently so to offset the impact of
inflation, due mainly to significant increases in feed, fuel and utility
costs. Consumption demand has not shown any significant improvement and the
industry has thus been left to depend largely on production cost efficiency
improvements in order to sustain itself.
There has been very little improvement in local economic conditions for the
period to date. Whilst interest rates have softened slightly, they remain
high in real terms. Due to much lower levels of maize stocks in the world
there has been very strong upward pressure in the maize price. This has been
exacerbated by the dramatic weakening of the Rand against the US dollar
causing the local price to drift closer to import parity and give rise to an
overall increase in the SAFEX maize price of 12,1% since March 2001 (19,0%
reduction in price to September 2000). The costs of imported feed raw
materials have similarly risen following the weakening Rand resulting in
feed prices rising well ahead of inflation.
Rainbow's restructuring and streamlining process continues to make good
progress. Further improvements in key performance indicators and production
costs are being achieved and progress in product development, marketing and
customer services, together with international alliances formed and
previously reported on, are all bearing fruit.
In our last annual report we indicated the expectation that the slightly
higher price realisation level achieved during the quarter ended 31 March
2001 would carry into the current financial year, giving rise to higher
average realisations being achieved during the first six months of this year
compared to the same period last year. This, inclusive of a volume and mix
improvement, resulted in revenue increasing from R1 186,7 million for the
equivalent period last year to R1 377,5 million for the reporting period.
Operational efficiencies have improved and, barring feed and energy costs,
our cost containment drive continues to make progress.
Epol operates in an environment where the feed industry remains in over
supply despite the mentioned higher feed prices. Recent feed raw material
price increases could not be absorbed by feed consumers and consequently
impacted negatively on margins. Notwithstanding the weak economy, and in
particular the challenges in both volume and pricing in the agricultural
sector, Epol continued to perform reasonably.
During the period, effective 1 April 2001, the group changed its policy
regarding the valuation of land and buildings and has reverted to stating
these assets on the historical cost basis. Comparative figures have been
restated as required in order to give effect to this change in policy. The
effect of the change has been to reduce the fixed assets and reserves by an
amount of R206,79 million (31 March 2001: R209,03 million), to reduce the
depreciation and amortisation charge for the six months by R2,24 million (30
September 2000: R2,128 million) and headline earnings per share changed from
16,8 cents to 17,7 cents.
The group operating profit before interest amounted to R46,1 million (2000:
R14,5 million) for the six months to September 2001. Lower interest rates
and interest bearing debt levels have reduced the interest charge to R1,8
million (2000: R9,6 million). Attributable profit amounted to R46,6 million
(2000: R4,4 million).
BALANCE SHEET
Capital expenditure amounted to R30,5 million (2000: R22,7 million) for the
period. This expenditure was incurred to support growth and further improve
efficiencies in the farming and processing operations.
The working capital investment during the six month period increased by
R41,9 million from R159,8 million in March 2001 to R201,7 million in
September 2001 (September 2000: R28,3 million) mainly due to month end
timing differences. Notwithstanding capital expenditure incurred (R30,5
million) and the increase in working capital investment, improved trading
and the funding of debt through trade payables eliminated the interest
bearing debt and net cash levels remained substantially at the same level.
Despite the achievement of a favourable net cash balance at 30 September
2001, the group is still operating with core borrowings and will continue to
incur interest costs during the remainder of the year. Provided that current
conditions and normal trends prevail for the remainder of the year, interest
bearing debt is expected to peak at approximately
R80 million (2000: R197 million) during the third quarter of the financial
year. Current unsecured short-term borrowing facilities provide adequate
cover for this need.
PROSPECTS
Balanced stock levels in the industry and improved price realisations are
forecast for the latter half of the year. Other than normal seasonal
fluctuations, improved price realisations are, however, not expected to be
significant. Feed prices are expected to continue to increase at the same,
or higher, rate of increase experienced during the first half year. Local
economic conditions are not yet significantly improved and could further
inhibit performance.
Management's main focus will remain on the group's streamlining process to
reduce costs, improve efficiencies and achieve more effective marketing and
customer service. In the execution thereof personnel development continues
to be a key focus area.
With the successful continuation of this process profitability for the year
should improve compared to the previous year.
DECLARATION OF ORDINARY DIVIDEND
Notice is hereby given that on 9 November 2001 the Board declared an interim
dividend (number 57) of 4 cents per ordinary share in respect of the
financial year ending 31 March 2002 (2001: nil).
The dividend is payable to the shareholders of the company recorded in the
books of the company at the close of business on 11 January 2002 (record
date). The last date to trade cum dividend will be 4 January 2002 and
trading commences ex dividend from 7 January 2002. The dividend will be paid
on 14 January 2002. Share certificates may not be dematerialised or
rematerialised between 28 December 2001 and 11 January 2002 (both dates
inclusive).
For and on behalf of the Board
S B HEATH
Group Secretary
9 November 2001
Enquiries regarding this report may be directed to
Mr Y A Lakhnati
(telephone 031-736 2548) or Mr M H Visser (telephone 021-888 3331)
Directors:
M H Visser (Non-executive Chairman)
Y A Lakhnati (Chief Executive Officer)
W E Buhrmann, L J Grobler, N J L Hancock, J Johnston,
D J Loch Davis, L Methven, N Phillips, P J Waud
Registered office:
Rainbow Chicken Limited
1 Stanley Methven Road
Hammarsdale 3700
Transfer secretaries:
Mercantile Registrars Limited
11 Diagonal Street
Johannesburg 2001
