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RAINBOW RESULTS FOR 6 MONTHS ENDED 30 SEP 01

The accounting policy regarding the revaluation of land and buildings has been changed to revert to the historical cost basis (effective 1 Apr 01). Comparatives have been restated. Revenue rose to R1.4bn (R1.2bn), operating profit jumped to R46.1m (R14.5m), and attributable income improved to R46.6m (R4.4m). Interest paid decreased to R1.8m (R9.6m). EPS were up at 18.2c (1.7c) and HEPS increased to 17.7c (1.2c). Rainbow declared a 4c (nil) interim dividend. Feed prices have increased sharply, lifting more than 6% since Mar against the lower prices experienced last year. Consumption demand has not shown significantly leaving the industry dependent on production cost efficiencies. Maize prices have risen as international stocks have fallen. This has been exacerbated by the weaker rand and local prices have drifted closer to import parity.

However, the extensive restructuring and streamlining process undertaken to return Rainbow to profitability continued to make progress. Further improvements in key performance indicators and production costs were being achieved and progress in product development, marketing and customer services and the international alliance with Cobb were bearing fruit. Operational efficiencies have also improved and barring feed and energy costs, the cost containment drive will continue making progress.

Epol operated in an environment where the feed industry remains oversupplied, despite higher feed costs. The recent feed raw material price hikes were not absorbed by consumers and affected margins, but the division still performed “reasonably”.

Management”s main focus will remain on the group”s streamlining process to reduce costs, improve management’s efficiencies and achieve more effective marketing and customer service,