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Kentucky Fried Chicken (Bermuda) Limited - Report to Shareholders
Hamilton, Bermuda - 19 May, 2009 - Kentucky Fried Chicken (Bermuda) Limited (KFCB.BH) today released the Chairman's Letter to Shareholders.
"Net income for the year ended 31st January 2009 increased by $69,826 (23%) at $379,835 compared with $310,009 last year.
Gross margin in the 2009 fiscal year slipped to 74.7% from 75.1% in 2008 as increases in costs of goods sold outpaced price increases. While movement of input costs are generally subject to market forces outside of management control, the Company remains vigilant in working with suppliers to control and reduce input costs. There was also some impact on the Company's margin by the very successful special pricing promotion in January 2009 to drive sales in January 2009, the final month of the fiscal year.
Payroll costs and benefits increased by 4.7% in 2009 from 2008 due to accrual of the expected cost of wage increases negotiated with our unionized employees. Finalization of a new union contract, retroactive to April 2008, was completed in April 2009. Direct Operating expenses increased by 8.3% year-over-year; with increased costs of electricity being the primary contributor.
Dividend payments were as follows:
Payment date Shareholders of record date Amount
16th July 2008 1st July 2008 $0.10 per share
15th October 2008 10th October 2008 $0.10 per share
The Company repurchased and cancelled 9,140 shares during the year. Due to increasing auditing and compliance costs associated with publicly listed companies, the Board of Directors has resolved to explore de-listing of the Company from the Bermuda Stock Exchange during fiscal 2010. This is in an effort to contain expected increases in audit fees due to compliance with IFRS accounting regulations for public companies and the fees for listing on the Bermuda Stock Exchange where we have noted that during the past three years liquidity in the trading of shares has been largely driven by the company's repurchase of shares for cancellation.
At 31st January 2009 the Company had a very strong cash position with $2,306,170 cash on hand compared with $2,066,381 last year while total liabilities amounted to $394,760 compared with liabilities of $361,996 at 31st January 2008. Shareholders' equity at 31st January 2009 was $2,825,490 or $4.86 per outstanding share compared with shareholders' equity of $2,620,043 or $4.43 per share at 31st January 2008.
The Board would like to pay tribute to all our staff for their hard work. I would particularly like to thank Frank Seuss, General Manager, Tracy Robinson, Assistant General Manager, Jerome Talbot, Operations Manager and Basil Outerbridge, for they have all worked hard to improve sales and earnings. I would also like to express our appreciation to Graham Redford, Marketing Consultant, for his help and advice.
We look forward to the 2010 fiscal year with guarded optimism and hope that the steps we have taken to upgrade our facilities and to control costs will continue to generate increased sales and profits in the future.
My personal thanks go to Llewellyn Petty and my fellow Executive Directors, Crayton Greene, Susan Wilson, Bill Thomson and Kevin Gunther for their contribution and assistance during the past year."
Donald P. Lines, OBE, FCA, JP
Chairman