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Rainbow results for the 12 months ended 31 Mar 04

Rainbow reported revenue of R3.8bn (R3.7bn). Headline earnings increased by 24% to R227.5m (R183.4m) with diluted headline earnings per share improving by 21.1% to 80.8cents (66.7 cents).



Net cash generated by operations amounted to R271.9m (R310.3m), resulting in an increase in the cash balance to R482.3m (R290.8m). Working capital requirements increased by R57.1m (reduction of R36m), largely due to the reduction in liabilities attributed to the utilisation of the onerous maize contracts in the amount of R31.7m provided for last year. Capital expenditure was R87m (R114.2m). A further amount of R33.6m had been contracted and committed, but not spent.



Prospects

The group”s consolidation and market management processes are now well underway which, together with a very strong cash position, have set the foundation to pursue strategic investment opportunities in order to grow the business and improve profitability. Interest rates are expected to firm only during the latter half of the new financial year and consumer spending is therefore expected to remain fairly positive over this period. Should the rand remain strong against the US dollar, feed raw material input costs are likely to remain fairly stable – subject to normal seasonal trends. The higher international poultry prices and the recently increased tariff on offal are not expected to significantly reduce the level of imports into South Africa. These factors should, however, to some extent offset import price advantages provided by the stronger rand. The current levels of chicken realisations, stability of both the rand and maize prices, and buoyant consumer spending patterns should have a positive impact on the group”s performance during the first half of the new financial year compared to the same period in the previous year. The directors expect that the group will generate another year of solid operating performance growth for the upcoming financial year. However, as the group now operates off a higher base, year-on-year earnings improvements are not expected to be at the same pace achieved in recent years.