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Kentucky Fried Chicken (Bermuda) Limited - Report to Shareholders – Final Results to 31 January, 2011
Hamilton, Bermuda – 05 July, 2011 - Kentucky Fried Chicken (Bermuda) Limited (KFCB.BH) has released the Chairman’s Letter to Shareholders.
“Further to Kentucky Fried Chicken (Bermuda) Limited’s (“KFC”) release of preliminary 2011 fiscal results on 5 April 2011, the company wishes to report that its auditors have concluded their audit of KFC’s 2011 financial statements for the year ended 31 January and have issued a clean audit opinion thereon.
As indicated in KFC’s preliminary results release, fiscal 2011 was a challenging year for the company as declining sales combined with increased staff costs resulted in a decline of $89,925 (-44.7%) in operating income.
2011 sales were $5.032 million, down $249,390 (-4.7%) from the prior year. Operating expenses declined by $97,546 (-2.6%) as tight cost controls by management enabled declines in all expense categories except Payroll costs and benefits which increased slightly, year-over-year. Net income for 2011 was $167,480 (vs. $234,656 in 2010) or $0.29 per share (vs. $0.40 in 2010) – a decline of $67,176, or $0.11 per share (-28.6%).
As a consequence of reduced profitability the Board of KFC declared only 2 dividend payments to shareholders during 2011 as follows:
Payment date Shareholders of record date Amount
1st September 2010 17th August 2010 $0.10 per share
1st December 2010 16th November 2010 $0.10 per share
As anticipated, KFC has endured a rocky start to fiscal 2012 and continues to see a downward trend in sales together with expense control challenges continuing from the last two years. While KFC remains well capitalised with adequeate liquidity to fund anticipated operations, it is clear that maintaining the status quo will not result in either a near-term return to peak sales or a return to profitability levels previously experienced toward the end of the last decade. With the decline in Hamilton cruise ship visitors, few major construction projects underway within Hamilton, a continuing outflow of guest workers from Bermuda, and difficult economic circumstances for many of our customers, it will be essential for KFC to adapt its operations and cost structures to these realities in order to maintain strength for the company, provide stable employment opportunities for its staff, and deliver an acceptable return to its investors. Through the collaboration and co-operation of the Board, management, and staff, we are optimistic that KFC will adjust to changing circumstances in fiscal 2012 and emerge stronger, continuing its proud tradition of serving Bermuda with a reliable, affordable and high quality product.
KFC commenced discussions with the Bermuda Industrial Union (“BIU”) early in April 2011 regarding renewal of the company’s collective agreement for its unionised staff. To date those discussions are ongoing. Our negotiating team has been given a mandate to reach a fair and economically sensible agreement with the BIU membership that respects the historical service of existing employees, the need for our staff to be fairly compensated, as well as the financial realities of KFC’s business operations and the economic climate of our marketplace.
The annual general meeting of the company will be held on Friday July 15th 2011 at 11:30 A.M. at the LOM Building, Hamilton, Bermuda. We look forward to welcoming our shareholders at that time.”
Donald P. Lines, OBE, FCA, JP
Chairman