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Business |
RSL profit falls 62%
Miller blames low
sugarcane yield on stunting disease
By BAEAU TAI
RAMU Sugar Ltd suffered a 62% drop in net profit to K3.45 million
during the first six months of last year from K9.091 million
during the same period in 2005.
In its half year report ending Sept 30, 2006, RSL blamed the
profit plunge to a sugar cane disease called “ratoon stunting
disease” which substantially reduced the volume of sugar cane
harvest to only 363,000 tonnes, a 25% drop, during the period.
From this volume, RSL produced a total of only 32,000 tonnes of
milled sugar.
First discovered in 1994, RSD attacks the cane and stunt its
growth, making the crop susceptible to other diseases.
“The reduction of sugar made it necessary to import 7,000 tonnes
of sugar to meet the local demand,” RSL chief executive David
Alderdice said yesterday.
“This is equal to the US export quota which was essential for the
company to maintain,” he said.
Mr Alderdice said the company had taken all steps necessary to
produce a satisfactory cane crop next year.
He also said costs incurred to date on the factory maintenance and
refurbishment programme currently being undertaken were in line
with budget forecasts.
“Recent weather at Gusap has been such as to enable reasonable
growing conditions for sugar cane,” Mr Alderdice said.
The comparatives for March 2006 and September 2005 had been
restated to reflect the change in accounting policy in the
valuation of ‘standing cane’ and the consequent costing of sugar
inventory.
Directors of the sugar cane company consider that the price paid
for outgrower cane is no longer an appropriate basis for measuring
the fair value of the company’s own cane.
In the absence of a market determined price or a reliable
alternative method to determine fair value for the company’s sugar
cane, “standing cane” is now valued at cost less any impairment
losses as allowed under IAS 41: Agriculture. This has had a
consequent impact on the costing of manufacturing sugar stocks.
The impact of this change is to increase the profit after tax for
the half year to September 2006 by K835,000 (and decrease the
profit for the half year to September 2005 by K107,000) and
increase net assets as at Sept 30, 2006 by K4,708,000.
RSL also reported on its other business activities.
For the cattle operations, pastures are now well established and
the company is seeking to secure additional land to increase beef
volumes.
Oil palm development is going according to plan. The 2,000ha of
oil palmalready planted are growing well and overall progress is
encouraging. Planting of the next phase of 2,000ha is progressing.
Construction of the palm oil mill is underway and production is
expected to commence in the last quarter of 2007.
A joint venture with Cashews International Ltd has started trials
of cashew nut cultivation at Leron Plains. These trials are
expected to take two years to complete.
 
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