Rainbow figures will be below forecasts
Despite previous expectations expressed in the interim announcement published in November 2004 that there would be continued earnings growth, albeit at a slower rate than in the previous year, shareholders are advised that earnings per share and headline earnings per share for the year ending 31 March 2005 are likely to be lower than the previous year. Although the difference is unlikely to reach the percentage beyond which the JSE requirements oblige a company to issue a trading statement, ie 20%, the Rainbow board views the difference to be important enough to be made the subject of a trading statement. Due to the current volatility of, inter alia, the maize price, which is one of the influencing factors mentioned below, it is difficult to give a more specific range. The factors giving rise to this are largely twofold: Firstly, during the trading period from November 2004 to January 2005, Rainbow experienced negative bird performance in its broiler operations across all three regions. The cause has now been identified and the problem resolved, but it will adversely impact on earnings for the current year. It should be noted however, that the matter has been handed over to the company’s insurance brokers. Secondly, in light of the declining maize price and exposure to certain long maize positions, there will be an unrealised loss on the valuation of specific financial instruments required to be valued in terms of AC133 (Financial Instruments: Recognition and Measurement). Management have executed and remain comfortable with the company’s overall maize procurement strategy and repeat their previous comment that the valuation of only certain procurement instruments in terms of the application of AC133 introduces volatility to the reported results. The forecast financial information on which this trading statement is based has not been reviewed and reported on by the company’s auditors.