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Rainbow - Transition to International Financial Reporting Standards
RAINBOW CHICKEN LIMITED
(Registration number 1966/004972/06)
JSE Share code: RBW & * ISIN code: ZAE000019063
Transition to International Financial Reporting Standards
CONSOLIDATED BALANCE SHEET
IFRS IFRS IFRS
Audited Unaudited Audited
31 March 30 September 1 April
2005 2004 2004
R"000 R"000 R"000
ASSETS
Non-current assets
Property, plant and equipment 850,318 543,462 513,073
Trademarks 1,205 1,605 2,005
Goodwill 287,444 - -
Deferred taxation 16,023 - -
Long-term receivables 441 - -
Total non-current assets 1,155,431 545,067 515,078
Current assets
Inventories 260,493 232,098 244,823
Biological assets 238,656 256,400 216,672
Trade and other receivables 425,442 330,193 296,077
Derivative assets 178 - -
Taxation receivable 15,799 5,503 -
Cash 106,007 421,407 482,286
Total current assets 1,046,575 1,245,601 1,239,858
Total assets 2,202,006 1,790,668 1,754,936
EQUITY AND LIABILITIES
Capital and reserves 1,286,706 1,166,875 1,127,809
Non-current liabilities
Preference share capital - 500 500
Interest bearing debt - long-term 651 1,183 1,694
Post retirement medical obligation 63,677 35,578 33,596
Deferred taxation 180,081 138,999 142,137
Total non-current liabilities 244,409 176,260 177,927
Current liabilities
Trade and other payables 626,654 400,331 369,353
Provisions 15,585 42,412 30,000
Derivative liabilities 15,980 3,660 3,970
Taxation payable 11,408 - 44,381
Interest bearing debt - short-term 1,264 1,130 1,496
Total current liabilities 670,891 447,533 449,200
Total equity and liabilities 2,202,006 1,790,668 1,754,936
CONSOLIDATED INCOME STATEMENT
IFRS IFRS
Audited Unaudited
Year ended Six months to
31 March 30 September
2005 2004
R"000 R"000
Revenue 4,026,998 1,978,257
Operating profit before depreciation and
amortisation 393,298 151,727
Depreciation and amortisation (78,036) (32,960)
Operating profit before interest and taxation 315,262 118,767
Finance income 28,146 20,729
Finance costs (1,126) (111)
Profit before taxation 342,282 139,385
Taxation (111,959) (49,699)
Attributable profit 230,323 89,686
Headline Earnings
Attributable profit 230,323 89,686
Profit on disposal of property, plant &
equipment (8,110) (8,709)
Asset impairment provision release (11,224) -
Headline earnings 210,989 80,977
RECONCILIATION OF INCOME STATEMENT
Audited Unaudited
Year ended Six months to
31 March 30 September
2005 2004
R"000 R"000
As previously reported 232,376 90,434
Share-based payments (4,764) (2,325)
Property, plant and equipment 3,538 1,770
Post-retirement medical obligation (827) (193)
As reported under IFRS 230,323 89,686
RECONCILIATION OF ASSETS, LIABILITIES AND EQUITY
Audited Unaudited Audited
31 March 30 September 1 April
2005 2004 2004
R"000 R"000 R"000
Assets
As previously reported 2,273,832 1,865,020 1,831,816
IFRS adjustments:
Property, plant and equipment (71,826) (74,352) (76,880)
As reported under IFRS 2,202,006 1,790,668 1,754,936
Liabilities
As previously reported 936,021 645,406 649,691
IFRS adjustments:
Preference shares reclassified - 500 500
Property, plant and equipment (21,548) (22,306) (23,064)
Post-retirement medical obligation 827 193 -
As reported under IFRS 915,300 623,793 627,127
Equity
As previously reported 1,337,811 1,219,614 1,182,125
IFRS adjustments:
Preference shares reclassified - (500) (500)
Property, plant and equipment (50,278) (52,046) (53,816)
Post-retirement medical obligation (827) (193) -
As reported under IFRS 1,286,706 1,166,875 1,127,809
CONSOLIDATED CASH FLOW STATEMENT (unchanged from SA GAAP to IFRS)
Audited Unaudited
Year ended Six months to
31 March 30 September
2005 2004
R"000 R"000
Operating profit before working capital
requirements 374,109 144,989
Working capital requirements 28,136 (16,333)
Cash generated by operations 402,245 128,656
Net finance income 27,020 20,618
Taxation paid (146,009) (102,721)
Dividends paid (83,435) (57,386)
Net cash flows from operating activities 199,821 (10,833)
Net cash flows from investing activities (581,570) (53,610)
Net cash flows from financing activities 5,470 3,564
Net decrease in cash (376,279) (60,879)
Cash at the beginning of the year 482,286 482,286
Cash at the end of the year 106,007 421,407
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY - for period ended
30 September 2004
Stated Share-based Preference Retained
capital payments share capital income Total
Unaudited R"000 R"000 R"000 R"000 R"000
Balance at
1 April 2004
as previously
reported 1,098,714 - 500 82,911 1,182,125
Opening IFRS
adjustments:
Share-based
payments 3,627 (3,627) -
Preference
shares
reclassified (500) (500)
Property,
plant and
equipment (53,816) (53,816)
Balance at
1 April 2004
under IFRS 1,098,714 3,627 - 25,468 1,127,809
Issue of shares 4,441 4,441
Attributable
profit as
previously
reported 90,434 90,434
IFRS adjustments:
Share-based
payments 2,325 (2,325) -
Property,
plant and
equipment 1,770 1,770
Post-retirement
medical obligation (193) (193)
Ordinary
dividend
paid (57,386) (57,386)
Balance at
30 September 2004
under IFRS 1,103,155 5,952 - 57,768 1,166,875
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY - for year ended 31 March 2005
Stated Share-based Preference Retained
capital payments share capital income Total
Audited R"000 R"000 R"000 R"000 R"000
Balance at
1 April 2004
as previously
reported 1,098,714 - 500 82,911 1,182,125
Opening IFRS
adjustments:
Share-based
payments 3,627 (3,627) -
Preference
shares
reclassified (500) (500)
Property,
plant and
equipment (53,816) (53,816)
Balance at
1 April 2004
under IFRS 1,098,714 3,627 - 25,468 1,127,809
Issue of
shares 7,245 7,245
Attributable
profit as
previously
reported 232,376 232,376
IFRS adjustments:
Share-based
payments 4,764 (4,764) -
Property,
plant and
equipment 3,538 3,538
Post-retirement
medical obligation (827) (827)
Ordinary
dividend paid (83,435) (83,435)
As reported
under IFRS 1,105,959 8,391 - 172,356 1,286,706
Statistics
As reported under IFRS As previously reported
Audited Unaudited Audited Unaudited
31 March 30 September 31 March 30 September
2005 2004 2005 2004
Number of ordinary shares in
issue 275,449 273,665 275,449 273,665
Weighted average number of
ordinary shares in issue 273,387 270,291 273,387 270,291
Fully diluted weighted average
ordinary shares in issue 281,275 277,757 281,587 277,802
Basic earnings per share 84.2 33.2 85.0 33.5
Basic earnings per share -
diluted 81.9 32.3 82.5 32.6
Headline earnings per share 77.2 30.0 77.9 30.2
Headline earnings per share -
diluted 75.0 29.2 75.7 29.4
Net asset value per share 467.1 426.5 485.7 431.8
Ordinary dividends:
Interim dividend paid 9.5 9.5 9.5 9.5
Final dividend declared 21.0 - 21.0 -
FINANCIAL INFORMATION FOR THE YEAR ENDED 31 MARCH 2005 AND SIX MONTHS ENDED 30
SEPTEMBER 2004 UNDER INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRS")
INTRODUCTION
For the year ended 31 March 2005 Rainbow prepared its financial statements under
South African Statements of Generally Accepted Accounting Practice ("SA GAAP")
as effective at that date. In accordance with the JSE Limited Listings
Requirements the Group will be required to prepare its consolidated financial
statements in accordance with International Financial Reporting Standards
("IFRS") for the year ending 31 March 2006.
This requirement applies to financial reporting for all listed companies for
financial reporting periods beginning on or after 1 January 2005 and,
consequently, Rainbow"s first published IFRS results will be its interim results
for the six months ended 30 September 2005. As the Group publishes comparative
information for one year in its financial statements, the date for transition to
IFRS is 1 April 2004, which represents the start of the earliest period of
comparative information presented.
In order to explain how Rainbow"s reported performance and financial position
are impacted by IFRS, the Group has restated information previously published
under SA GAAP to the equivalent basis under IFRS. This restatement follows the
guidelines set out in IFRS 1 (First-time Adoption of International Financial
Reporting Standards).
It is important to note that this financial information has been prepared in
accordance with IFRS statements that are expected to be effective at 31 March
2006. These are subject to ongoing review and possible amendment by interpretive
guidance from the International Accounting Standards Board ("IASB") and may
therefore be subject to change.
BASIS OF PREPARATION
The Group has prepared a consolidated preliminary balance sheet, income
statement, cash flow statement and statement of changes in equity ("financial
information") for the year ended 31 March 2005 to establish the financial
position and results of operations of the Group necessary to provide comparative
information expected to be included in the Group"s first set of IFRS financial
statements for the year ending 31 March 2006.
The Board acknowledges its responsibility for the preparation of the preliminary
financial information which has been prepared in accordance with IFRS and
policies expected to be adopted when the Board prepares the Group"s first set of
IFRS financial statements for the year ending 31 March 2006. The Board has
approved the preliminary financial information.
APPLICATION OF IFRS 1
The date of transition to IFRS for the Group is 1 April 2004 and therefore as
required by IFRS 1, the Group"s opening balance sheet at 1 April 2004 has been
restated to reflect retrospectively all existing IFRS standards and IFRIC
interpretations expected to be applicable at 31 March 2006, other than where
certain available exemptions and exceptions to this retrospective application
principle has been utilised. The Group is not expecting to early adopt any IFRS
standards or IFRIC interpretations issued but not yet effective as at 31 March
2006.
Management has considered all exceptions and exemptions allowed in IFRS 1 and
have, consistent with Remgro Limited, applied the following:
* Business combinations: the Group has elected not to apply IFRS 3 (Business
Combinations) for business combinations that occurred prior to 1 April 2004.
Subsequent acquisitions have been accounted for in terms of IFRS 3.
* Share-based payments: the Group has elected not to apply the provisions of
IFRS 2 (Share-based payments) to equity instruments granted on or before 7
November 2002, or to equity instruments granted after 7 November 2002 but which
had vested prior to 1 January 2005.
* Property, plant and equipment: A first time adopter may elect to use the fair
value of individual property, plant and equipment at transition date as deemed
cost. The Group has elected not to make use of this optional exemption and has
applied IAS 16 (Property, plant and equipment) retrospectively.
* Employee benefits: The Group has elected to apply the exemption to account for
all cumulative actuarial gains and losses at the date of transition.
* Financial instruments: The Group has elected not to restate its comparatives
for IAS 32 (Financial Instruments - Disclosure and Presentation) and IAS 39
(Financial instruments - Recognition and Measurement). The Group has applied
existing GAAP applicable as at 31 March 2005 to financial instruments in its
2005 figures that will be disclosed as comparatives for the 2006 IFRS results.
ADJUSTMENTS
The basis of the adjustments, net of the taxation impact, as shown in the
reconciliation of assets, liabilities and equity, reconciliation of income
statement and reconciliation of statements of changes in equity are noted below:
Share-based payments
The Group grants share options to employees under the Rainbow Share Incentive
Scheme. Under SA GAAP, other than costs incurred in administering the scheme,
which were expensed as incurred, the scheme did not result in any adjustment,
besides a dilution in earnings per share when the shares were issued.
In accordance with the requirements of IFRS 2, the Group has recognised an
expense in the income statement, with a corresponding credit to equity,
representing the fair value of outstanding employee share options. The fair
value at the date of granting the options is charged to income over the relevant
option vesting periods, adjusted to reflect actual and expected levels of
vesting.
Property, plant and equipment
Past interpretation and practice, generally accepted in South Africa, did not
take into account separate depreciation of significant components of property,
plant and equipment, or the re-assessment of an asset"s useful life on a regular
basis.
The revised version of IAS 16 requires significant components of an asset, with
useful lives that differ significantly from the asset as a whole, to be
depreciated separately over their useful lives and also requires the useful life
and residual value of an asset to be reviewed at least at each financial year-
end.
Post-retirement medical benefits
Previously the Group elected to recognise, in full, actuarial gains and losses
in the year in which they arose. From 1 April 2004, actuarial gains and losses
will be recognised using the corridor method - actuarial gains and losses in
excess of 10% of the defined benefit obligation in the fund will be amortised in
the income statement over the expected remaining working lives of the employees.
Reclassifications
Previously the Group disclosed preference shares and leave pay in equity and
provisions respectively. These balances have now been re-classified under non-
current liabilities and trade and other payables respectively.
SPECIAL PURPOSE AUDIT REPORT
The financial information contained in this announcement has been extracted from
the consolidated preliminary special purpose financial information which has
been audited by the Group"s auditors, PricewaterhouseCoopers Inc. The auditors
expressed the opinion that the consolidated preliminary special purpose
financial information has been prepared, in all material respects, in accordance
with the stated basis of preparation thereof. The basis of preparation of this
information is included in the consolidated preliminary special purpose
financial information and includes a description of how IFRS 1 has been applied,
and the assumptions that management made about standards and interpretations
expected to be effective, and the accounting policies expected to be adopted,
when management prepares the first complete set of IFRS financial statements as
at 31 March 2006.
The auditors" report includes an emphasis of matter that cautions that standards
or interpretations issued by the IASB between the date of this announcement and
the finalisation of the financial statements for the year ending 31 March 2006
may result in changes to the financial information published. They further note
that only a complete set of financial statements comprising a balance sheet,
income statement, statement of changes in equity, cash flow statement, together
with comparative financial information and explanatory notes, can provide a fair
presentation of the Group"s financial position, results of operations and cash
flows in accordance with IFRS. The auditors" report is available for inspection
at the Company"s registered office.
The financial information for the six months ended 30 September 2004 has not
been audited or reviewed.
Date: 01/11/2005 04:26:13 PM Produced by the JSE SENS Department
