| Thu 16 May 2002, 0:00 | | Rainbow Chicken Limited - Abridged Audited Group R |
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Rainbow Chicken Limited - Abridged Audited Group Results for the year ended
Rainbow Chicken Limited
(Registration number 1966/004972/06)
ISIN: ZAE000019063
Sharecode: RBW
Abridged Audited Group Results for the year ended
31 March 2002
These financial statements have been prepared in compliance with Generally
Accepted Accounting Practice and on a basis consistent with that of the
previous year except for any changes in accounting policy.
Consolidated Balance Sheet
31-Mar 31-Mar
2002 2001
R`000 R`000
ASSETS
Non-current assets
Trademarks, property, plant and equipment* 556 107 561 530
Current assets
Loans 434 1 344
Inventories 313 518 250 422
Trade and other receivables 329 744 235 007
Cash resources 70 406 6 203
Total current assets 714 102 492 976
Total assets 1 270 209 1 054 506
EQUITY AND LIABILITIES
Capital and reserves* 857 300 712 467
Preference share capital 500 500
Total shareholders` equity 857 800 712 967
Non-current liabilities
Interest bearing debt 4 848 -
Post retirement medical obligation 28 960 14 221
Deferred taxation 5 591 8 356
Total non-current liabilities 39 399 22 577
Current liabilities
Trade and other payables 319 648 287 874
Provisions 49 495 31 088
Taxation 815 -
Interest bearing debt 3 052 -
Total current liabilities 373 010 318 962
Total equity and liabilities 1 270 209 1 054 506
*Change in Accounting Policy
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 204 550 209 030
Reduction in capital and reserves 204 550 209 030
Reduction in depreciation and impact
on headline earnings 4 480 4 256
Consolidated Income Statement
Year ended Year ended
31-Mar 31-Mar
2002 2001
R`000 R`000
Revenue 3 040 231 2 493 847
Operating profit before depreciation and amortisation 208 825 167 445
Depreciation and amortisation* (51 997) (52 442)
Operating profit before interest 156 828 115 003
Interest paid (3 567) (16 300)
Profit before taxation 153 261 98 703
Taxation 653 -547
Current year profit 153 914 98 156
Headline Earnings
Profit attributable to ordinary shareholders 153 852 98 094
Loss on disposal of property, plant and equipment 2 061 2 977
Net asset impairment provision (released)/raised (1 258) 16 372
Headline earnings 154 655 117 443
Consolidated Cash Flow Information
Cash generated by operations 102 886 177 379
Interest and taxation paid (4 864) (16 312)
Dividends paid (10 336) -62
Net cash flows from operating activities 87 686 161 005
Net cash flows from investing activities (47 377) (29 345)
Net cash flows from financing activities 20 842 582
Net increase in cash and cash equivalents 61 151 132 242
Cash and cash equivalents at the beginning of the year 6 203 (126 039)
Cash and cash equivalents at the end of the year 67 354 6 203
Statement of Changes in Equity
Stated Non- Accumulated Consolidated
distributable
Capital Reserves Loss Total
R`000 R`000 R`000 R`000
Balance as previously
disclosed as at 1 April 1 082 853 200 693 (455 887) 827 659
2000
Reversal of asset - (200 693) (12 593) (213 286)
revaluation*
Balance 1 April 2000 1 082 853 - (468 480) 614 373
restated
Attributable profit to
31-Mar-01 - - 98 094 98 094
Balance 1 April 2001 1 082 853 - (370 386) 712 467
Retained income for the - - 143 578 143 578
year
Current year profit 153 914 153 914
Preference dividends -62 -62
paid
Attributable profit 153 852 153 852
Ordinary interim dividend paid (10 274) (10 274)
Issue of shares 1,255 - - 1,255
Balance 31 March 2002 1 084 108 - (226 808) 857 300
Supplementary Information
Year ended Year ended
31-Mar 31-Mar
2002 2001
R`000 R`000
Capital expenditure contracted and committed 24 496 3 884
Capital expenditure approved but not contracted 15 140 9 916
Contingent liabilities 62 726 26 376
Statistics
Number of ordinary shares in issue (000`s) 256 837 256 119
Weighted average number of ordinary (000`s) 256 298 256 119
shares in issue
Fully diluted weighted average (000`s) 278 449 268 414
ordinary shares in issue
Basic earnings per share# (cents) 60 38.3
Basic earnings per share - diluted (cents) 56.5 36.5
Headline earnings per share# (cents) 60.3 45.9
Headline earnings per share - (cents) 56.8 43.8
diluted
Net asset value per share (cents) 333.8 278.2
Ordinary dividends:
Interim dividend paid (cents) 4 -
Final dividend declared (cents) 10 -
#Calculated using the weighted average number of ordinary shares in issue.
Comments
OPERATING ENVIRONMENT
The South African agricultural and food industry continued to experience
modest growth during the past year. The economy improved, but was not
robust. Interest rates softened during the first six months, but reverted to
higher levels towards year-end. Consumption demand had thus not shown
significant improvement.
Due to low levels of maize stocks in the world, particularly in South
Africa, there has been significant upward pressure on the local maize price.
This has been exacerbated by the dramatic weakening of the Rand against the
U.S. Dollar toward the end of the 2001 fiscal year causing the local price
to move to import parity. Year on year the SAFEX maize price for March
increased by 82,6% (2001: 27,4%). The cost of other imported feed raw
materials have similarly risen following the weakening Rand. These factors
resulted in overall feed prices rising by approximately 25,0% (2001: 3,6%),
well ahead of inflation. As feed cost represents the single biggest input
cost within the chicken industry, this increase in feed cost had a dramatic
impact on chicken production costs, especially during the latter half of the
year, despite hedged positions within the industry.
In the feed milling industry, where surplus production capacity makes the
industry extremely competitive, the substantial feed raw material price
increases could not be absorbed by feed consumers and consequently impacted
negatively on feed milling margins.
The chicken industry experienced an improvement in realisations during the
first six months of our financial year, but realisation increases were not
sufficient to recover the feed related chicken production cost increases
during the second six months.
GROUP TRADING RESULTS
Rainbow`s restructuring and streamlining process continues to make good
progress and has to date met expectations. 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 previously reported on, are all bearing fruit. The
abovementioned improvement process has made Rainbow much more resilient and,
notwithstanding the challenging conditions prevailing in the industry, the
Group achieved a good performance for the past year.
Mainly as a result of volume growth, mix improvement and higher price
realisations in both feed and chicken operations, Group revenue for the year
improved by 21,9% (2001: 8,6%) from R2 493,8 million to R3 040,2 million.
Higher chicken price realisations were largely attributable to the higher
feed cost, but did not compensate for the full impact thereof.
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 the change. The effect of
the change has been to reduce fixed assets and reserves by R204,55 million
(2001: R209,03 million) and to reduce the depreciation and amortisation
charge for the year by R4,48 million (2001: R4,26 million), resulting in
headline earnings per share changing from 58,9 cents to 60,3 cents.
The Group achieved an operating profit before interest of R156,8 million
(2001: R115,0 million) for the year to March 2002, an increase of 36,3%
(2001: 104,4%). Lower average debt levels during the year and marginally
lower interest rates reduced the interest charge to R3,6 million (2001:
R16,3 million). Attributable profit amounted to R153,9 million (2001: R98,1
million), representing an increase of 56,9% (2001: 280,7%). Headline
earnings amounted to R154,7 million (2001: R117,4 million), representing an
increase of 31,8% (2001: 548,6%).
BALANCE SHEET
The Group committed a total of R78,1 million (2001: R37,6 million) to
capital expenditure during the year and expended a total of R53,6 million
(2001: R34,8 million) during the year. The expenditure was incurred largely
to facilitate growth and to improve efficiencies across the whole supply
chain.
Focus on the balance sheet and cash management continued throughout the
year. The Group continued to operate with fluctuating short-term core
borrowings for the year. Net cash generated during the year from operating
profit before working capital requirements amounted to R209,6 million (2001:
R186,8 million) representing a R22,9 million improvement on the prior year.
Driven in the main by feed price increases, the Group was required to invest
an additional R106,7 million (2001: R9,4 million) in working capital. As a
result of this investment the net cash generated by operations decreased
from R177,4 million in the previous year to R102,9 million in the current
year.
Despite the Group achieving a net positive cash balance of R67,4 million at
31 March 2002 (2001: R6,2 million), the Group is still operating with
fluctuating short-term core borrowings and will continue to incur interest
costs in the new year. Provided that current trading conditions and normal
cash flow trends prevail for the remainder of the year, interest bearing
debt is expected to peak at approximately R60,0 million (2001: R100,0
million) during the first half of the new year. Current unsecured short-term
borrowing facilities provide adequate cover for this need.
PROSPECTS
The biggest impact of the dramatic weakening of the Rand on feed raw
materials and the imported component relating to capital expenditure only
began to filter through to chicken production costs during the last quarter
of the financial year and the full impact will only be manifested during the
first quarter of the new year. A further feed cost increase of similar
magnitude to that experienced over the past year is thus expected to
materialise early in the new year, unless the Rand strengthens significantly
from its position at year-end. A further production cost increase of such
scale would cause further upward pressure on price realisations, and to the
extent that this cannot be attained, it would put significant strain on both
feedmilling and chicken operating margins.
Management`s main focus will remain on the continuation of its successful
streamlining process to further reduce costs and improve efficiencies,
market effectiveness and customer service. In the execution thereof
personnel development continues to be a key focus area.
Whilst the Group is confident of realising more benefits from its
streamlining process, in the event of the Rand not strengthening
significantly, the Group is unlikely to improve appreciably on its current
levels of profitability and may indeed have difficulty in sustaining current
performance levels. As the most dramatic feed price increases occurred
recently, performance is expected to be more adversely affected in the first
six months of the new financial year compared to the same period last year.
DECLARATION OF ORDINARY DIVIDEND
Notice is hereby given that on 15 May 2002 the Board declared a final
dividend (number 58) of 10 cents per ordinary share in respect of the
financial year ended 31 March 2002 (2001: nil).
The last date to trade cum dividend will be 19 June 2002 and trading will
commence ex dividend from 20 June 2002. The record date will be 26 June 2002
and the dividend will be paid on 27 June 2002. Share certificates may not be
dematerialised or rematerialised between 12 June 2002 and 26 June 2002 (both
dates inclusive).
Having paid an interim ordinary dividend of 4 cents per share on 14 January
2002, the above declaration brings the total ordinary dividend declared in
respect of the year ended 31 March 2002 to 14 cents per share (2001: nil).
DIRECTORATE
Mr P J Waud will retire as a non-executive director on 31 July 2002 and the
board wishes to express its sincere appreciation to Mr Waud for his valuable
contribution during the 10 year tenure of his appointment.
We would like to welcome Mr S M Parsons who was appointed as executive
director during the year.
APPRECIATION
We sincerely thank the directors, our employees and all our business
partners for their ongoing efforts and continued support during the year.
M H VISSER Y A LAKHNATI
Non-Executive Chairman Chief Executive Officer
16 May 2002
Directors:
M H Visser (Non-executive Chairman)
Y A Lakhnati (Chief Executive Officer)
W E Bhrmann, L J Grobler, N J L Hancock, J Johnston, D J Loch Davis,
L Methven, S M Parsons, N Phillips, P J Waud
Registered office: Transfer secretaries:
Rainbow Chicken Limited Computershare Services Limited
1 Stanley Methven Road 11 Diagonal Street
Hammarsdale 3700 Johannesburg 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 3000).
Date: 16/05/2002 04:21:17 PM Produced by the SENS Department
