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Kentucky Fried Chicken (Bermuda) Limited – Interim Report to Shareholders
Hamilton, Bermuda – 17 November, 2010 - Kentucky Fried Chicken (Bermuda) Limited (KFCB.BH) today released the Chairman’s Letter to Shareholders.
“As anticipated when we last reported to shareholders, fiscal 2011 is proving to be a difficult operating environment for your Company and the effects of that challenging environment are having a dramatic negative impact on the Company’s earnings. Net income for the six months ended 31st July 2010 amounted to $66,474 ($0.11 per share), a decrease of 57.49% compared to adjusted net income of $156,387 in the six months ended 31st July 2009.
Sales for the first half of fiscal 2011 were $130,193 (4.89%) lower than the prior year. Correspondingly, gross profit decreased by $100,261 (4.99%) over the same period in fiscal 2010 despite management’s commendable efforts to tightly control costs of goods. We believe that both economic hardships faced by the local population as well as minimal cruise ship dockings in Hamilton have contributed to declining sales. Despite difficult times, the Company will continue to innovate and introduce new offerings (such as Krushems, launched in August 2010) to encourage repeat customers and entice new customers.
Non-staff expenses decreased by $19,797 (1.98%) from the same period in the previous year while staff-related expenditures increased by $33,093 (3.74%) over the prior year as factors such as increased payroll taxes negatively impacted the Company’s operating costs. Your Company is proud to have continued to offer stable employment to its staff in the face of declining sales and profitability. A stable, flexible and reliable work force is essential to the Company’s ability to efficiently serve customers in good times as well as bad. We thank our employees for their dedication and flexibility as together we search for practical ways to avoid staff reductions during a difficult operating environment while ensuring total operating expenses are contained appropriate to our level of business activity.
The Company remains highly liquid with $2.25 million in cash and equivalents on hand at 31st July, 2010 – a 7% increase over the prior year. Total shareholder’s equity stood at $2,951,572 at the close of the first half ($5.07 per share).
No dividends were paid in the first half of the year. However, the Board has resolved to pay from retained earnings two dividend payments of .10¢ per share on each of 1st September 2010 and 1st December 2010 to shareholders of record as at 17th August 2010 and 16th November, 2010 respectively.”
Donald P. Lines, OBE, FCA, JP
Chairman
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KENTUCKY FRIED CHICKEN (BERMUDA) LIMITED
Balance Sheet (unaudited)
July 31, 2010 (Expressed in Bermuda Dollars)
2010 2009
Assets
Current assets
Cash and deposits 2,257,149 2,102,910
Portfolio investments (at cost) 367,000 367,000
Accounts receivable and
prepayments 20,693 52,145
Inventory 56,778 39,058
2,701,620 1,908,361
Fixed assets 651,446 759,449
3,353,066 2,839,747
Liabilities
Accounts payable and
accrued liabilities 401,494 396,959
Shareholders' Equity
Capital stock 582,716 591,900
Share premium 1,475,665 1,523,444
Retained earnings 893,191 425,117
2,951,572 2,540,462
3,353,066 2,839,747
Statement of Income and Deficit (unaudited)
For the Six Months Ended July 31, 2010 (Expressed in Bermuda Dollars)
2010 2009
Income
Sales 2,532,897 2,663,090
Cost of sales 625,110 655,042
Gross profit 1,907,787 2,008,048
Expenses
Salaries and wages 916,818 883,725
Operating expenses 871,152 884,657
Depreciation 86,572 92,864
Total expenses 1,874,542 1,861,246
Operating income for the period 33,245 146,802
Other income 33,229 9,585
Net income for the period 66,474 156,387
Dividends - -
66,474 156,387
Surplus - Beginning of period 826,717 708,613
Surplus - End of period 893,191 865,000