Weather hits Colombo Fort Lands bottom line Group posts a loss on account of plantation subsidiaries

[AjithR]

Weather hits Colombo Fort Lands bottom line
Group posts a loss on account of plantation subsidiaries
The Colombo Fort Land & Building PLC, a modestly capitalized asset rich company, has posted a group loss of Rs.457 million in the year ended March 31, 2014, against a profit of Rs.1,400 million a year earlier. The group's attributable loss was Rs.313 million against a profit of Rs.744 million the previous year.

The group's auditors, KPMG, while stating that the consolidated financial statements gave a true and fair view of the financial position of the company and its subsidiaries, had without qualifying their opinion laid emphasis on the fact that that several subsidiaries whose accounts had been prepared on a `going concern' assumption carried heavy accumulated losses with net assets less than half the stated capital of these companies.

These subsidiaries included Agarapatana Plantations Limited, Lankem Consumer Products Limited, SunAgro Farms Limited, Lankem Development PLC and SunAgro Foods Limited.

The Colombo Fort Lands group had total assets of nearly 35.3 billion in its books as at March 31, 2014 against total liabilities of slightly over Rs.22.6 billion.

The company's Chairman, Mr. A. Rajaratnam, has reported to shareholders that group performance had been greatly handicapped by the sub-optimal weather patterns experienced in the country during the course of the year under review.

"The operations of some of the company's main subsidiaries, the plantation companies - Kotagala Plantations PLC and Agarapatana Plantations Limited and Lankem Ceylon PLC's crop protection activities are heavily dependent on weather and extreme drought and very heavy rainfall had a direct impact on the profitability of these operations," he said.

"To a lesser extent, Lankem Ceylon PLC's paint division was also adversely affected by long spells of heavy rainfall and gloomy conditions. The decline in commodity prices, especially the price of natural rubber has also impacted profitability."

He also said that the performance of Lankem Ceylon PLC and its plantation subsidiaries, Kotagala Plantations and Agarapatana Plantations continued to be affected by the weather.

Other areas of the groups businesses had fared relatively well compared to the competition with operations of C.W. Mackie PLC and E.B. Creasy & Company PLC rebounding strongly in the year under review.

There had been further improvement in the group's subsidiaries operating in the hospitality sector with occupancy in their four properties showing positive improvement.

"The demography of tourists coming to Sri Lanka is changing. We are now getting many more visitors from the Middle East and Asia. Our hotels are well placed to take advantage of the changing trends in the industry and increase the profitability of their operations," Rajaratnam said.

"The coming years are likely to see the hospitality sector becoming a major driver of the group's profitability."

He said that the performance of the group's automotive sector continued to be subdued with the very high prices Lankan consumers pay for motor vehicles dampening the demand for the two vehicle brands the group markets.

"While the holding company C.M. Holdings PLC continues to operate at a profit, the true potential of the company cannot be realized without an easing of the myriad of high taxes that are imposed on the industry," he said.

Rajaratnam said that the impact on the weather cannot be understated with regard to the performance of the group and the need of the hour is for companies impacted by the weather to diversify their businesses into less weather dependent industries.

"For the plantation sector this must involve the setting up of plantations outside of Sri Lanka. We will take all steps to further mitigate the impact of weather on the profitability of the companies. The group is also taking steps to rationalize costs so that we can rapidly recover from this downturn," he said.

At company level a profit of Rs.88 million has been posted, down from Rs.99.9 million the previous year. This was attributed by the chairman to weaker dividend yields from their subsidiaries.

He said that despite the group's loss, the company will pay a dividend of 30 cents per share, the same as the previous year.

Property and Investment Holdings (Pvt) Limited with 15.78%, Colombo Investment Trust PLC (13.94%), Capital Investments Limited (12.91%) and Colombo Fort Investments PLC (12.025%) are the major shareholders of the company.

Colombo Fort Lands group has been profitable from the financial year ended March 31, 2005 until it reverted to a loss making year in the year under review.

The directors of the company are: Messrs. A. Rajaratnam (Chairman - Alternate Anushman Rajaratnam), S.D.R. Arudpragasam, N.H.B.S. Perera, A.M. de S. Jayaratne, R. Seevaratnam, Anushman Rajaratnam Ms. A. K. Gunawardhana and C.P.R. Perera.


http://www.island.lk/index.php?page_cat=article-details&page=article-details&code_title=110618

[slstockVeteran]

Thank you.

[pee ratioActive Member]

Thanking you for this.
ah looks like weather gods are also angry with these chaps.
rain no play. no rain no play. match over ?

[sereneTop contributor]

Thanks Ajiths