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Wednesday, June 1, 2011

Cargills joins Rs. 1 billion net profit league

■ Bottom line swells by 56% in FY 2011; Group revenue tops Rs. 37 b mark with 20% growth

Cargills (Ceylon) Plc is the latest entrant to the one billion rupee net profit league, with the fast-expanding blue chip’s bottom line growing by 56% to Rs. 1.112 billion in the financial year ended 31 March 2011.
Consolidated profit after tax grew by 57% to Rs. 1.118 billion from Rs. 712 million in 2009/10 financial year. Pre-tax profit saw a 43% increase to Rs. 1.43 billion from Rs. 1.0 billion in 2009/10.

Group revenue (minus inter-segment sales) crossed the Rs. 37 billion mark in FY 2011 aided by a healthy 20% growth. Cargills has had a strong fourth quarter in 2010/11 with revenue almost at Rs. 10 billion, higher by Rs. 1.67 billion in the corresponding quarter of last year. Net profit attributable to equity holders in 4Q was Rs. 268 million, up from Rs. 220 million a year earlier.

With a series of acquisitions Cargills Group assets had grown to Rs. 19.3 billion as at 31 March 2011, up from Rs. 14 billion a year earlier. With retained earnings of Rs. 2.2 billion, shareholders funds amounted to almost Rs. 7 billion, up from Rs. 1.5 billion and Rs. 6.1 billion respectively as at end of FY 2010.

Net asset per share in FY 2011 was Rs. 31.58 at Group level, up from Rs. 27.42 a year earlier. Earnings per share rose to Rs. 4.97 from Rs. 3.18. Dividend per share grew from 80 cents to Rs. 1.30 in FY 2011.

Cargills’ food and beverage business had produced Rs. 36.8 billion revenue and a profit of Rs. 2.2 billion up from Rs. 30.5 billion and Rs. 1.58 billion respectively in FY 2010. The distribution segment contributed to Rs. 3.1 billion up from Rs. 2.7 billion but its profit dipped to Rs. 68.7 million from Rs. 142 million in the previous year.

As at 31 March 2011, Cargills (Ceylon) PLC transferred the ownership of Kotmale Holdings PLC to its wholly-owned subsidiary Cargills Quality Foods Limited. This transaction was done outside the trading floor of Colombo Stock Exchange consequent to a special approval from the Securities and Exchange Commission of Sri Lanka. The sales consideration amounted to Rs. 1,038 million and was accounted as intercompany receivable. As at the balance sheet date, the entire amount was due to the company.

The deal follows Cargills (Ceylon) PLC purchasing 23,046,538 shares of Kotmale Holdings PLC on 3 November 2010. The purchase was made at prices ranging from Rs. 37 to Rs. 40 per share, with the largest parcel purchased being at Rs. 40, resulting in an average price of Rs. 39.91. Accordingly, the Company acquired 73.4% of the total issued ordinary (voting) shares of Kotmale Holdings PLC.

In consequence thereto, it has become obligatory on the part of the Company to make a mandatory offer in terms of the Company Takeovers and Mergers Code 1995 (as amended in 2003) under Rule 31 of the Code to the holders of all the remaining Ordinary Shares carrying voting rights in Kotmale Holdings PLC.
In compliance with the provisions of the Company Takeovers and Mergers Code 1995 (as amended in 2003) – Rule 31, the Company made a Mandatory Offer (closing date was 30 December 2010) to the holders of all the remaining Ordinary Shares of Kotmale Holdings PLC and purchased further 2,612,934 shares of Kotmale Holdings PLC. Consequent to this acquisition, the Company increased its holding to 81.72% of the total issued ordinary (voting) shares of Kotmale Holdings PLC. Subsequent to the Mandatory offer, the Board of Directors was reconstituted on 5 January 2011.

Cargills Quality Foods Limited, a wholly owned subsidiary of Cargills (Ceylon) PLC, acquired 100% of the issued share capital of Diana Biscuits Manufacturers (Pvt) Ltd. on 24 November 2010. Accordingly, the financial statements of Diana Biscuits Manufacturers have been consolidated in Cargills Group financial statements.

Millers Brewery Limited, a wholly-owned subsidiary of Cargills (Ceylon) PLC, entered into an agreement for the sale and purchase of the business and business assets, including the brands of McCallum Breweries (Ceylon) (Private) Limited, McCallum Brewing Company (Private) Limited and Three Coins Company (Private) Limited at a purchase consideration of Rs. 1,425 m. In relation to this transaction, Millers Brewery Limited obtained the relevant licenses dated 7 February 2011 from the Excise Commissioner (Revenue) of the Excise Department of Sri Lanka.

Cargills (Ceylon) PLC has advanced a sum of Rs. 1,010 m to Millers Brewery Limited to fund the purchase of assets. This amount is reflected as an intercompany receivable pending the issue of shares in Millers Brewery Limited.

source - www.ft.lk