Friday, May 17, 2013

Malwatte Valley Plantations makes below NAV buyback share offer

◾ Proposed repurchase of 32 m voting shares and 23 m non-voting shares to cost Rs. 170.5 m
◾14.28% stake of voting shares at
◾Rs. 5 each; net assets per share is Rs. 8.68; Price for non-voting is Rs.3.50, below current levels
◾Board says move is in the interest of the company and from surplus funds not immediately required
◾Higher dividend announced for FY12, accumulated profits at Rs. 1.77 b as bottom line swells over FY11

The Malwatte Valley Plantations Plc Board has proposed a conditional share buyback offer at a price below Net Asset Value as well current market levels.

The company said its Board resolved to offer to purchase proportionately part of the issued shares of the company given the surplus of funds of around Rs. 175 million not required for immediate purpose.

 The plan is to buy back 32 million voting shares or 14.28% of that class out of a total of 224.5 million at Rs. 5 per share and nonvoting shares amounting to 3.285 million or 14.28% of total of 23 million at Rs. 3.50 per share. The proportion was one share out of seven held.

 As per provisional FY2012 accounts, Malwatte Valley Plantations Net Asset Value was Rs. 8.68, up from Rs. 7.45 in 2011. Whilst the buyback move was announced after the market was closed, Malwatte’s voting shares traded yesterday between a high of Rs. 4.70 and a low of Rs. 4.50 before closing unchanged at Rs. 4.60. Nonvoting shares closed unchanged at Rs. 4.70 with a trading of a solitary share.

 The 52-week highest price of voting is Rs. 6 and lowest is Rs. 3.20 whilst for nonvoting it was Rs. 6.90 and Rs. 2.70 respectively. The company ended the 31 December 2012 quarter with voting share at Rs. 4.70 and non-voting at Rs. 4.40.

 The Board said the purchase of shares was “in the interest of the company” and the terms of the offer and consideration to be paid are in the opinion of the company’s Auditors (Ernst & Young) a “fair value”.

As at 31 December 2012, total equity amounted to Rs. 2.15 billion, up from Rs. 1.84 billion. This included accumulated profits of Rs. 1.77 billion by end FY12 up from Rs. 1.47 billion a year earlier.
 The company also announced a first and final dividend of Rs. 0.075 per share up from Rs. 0.05 per shares

 Subject to approval of shareholders at the EGM, the buyback offer would commence on 25 June and close on 16 July.

 Wayamba Plantation Ltd. owns 62% of the voting shares whilst Lanka Mountcastle Ltd. owns 83% of the non-voting shares. Managing Director Willem Bogtstra owns 12 million voting shares or 5% stake in the company.

 Public shareholding of voting shares is 32.44% whilst that of nonvoting is 17%. As at end 2011, there were 19,628 owners of voting shares of Malwatte Valley of which 41% or 8,000 were holding between one and 1,000 shares and a further 57% holding between 1,001 and 10,000 shares. Their collective stake was 12%. A further 427 hold a 6% stake.

 In the nonvoting class there are 462 shareholders of which 87% own between one and 10,000 shares with a collective stake of 4%.

 In mid 2011, the company had a Rights Issue to raise Rs. 606.5 million requiring voting shareholders to pay Rs. 6.75 per share and Rs. 5.50 per share by nonvoting shareholders. The Rights pricing at that time was below market price at that time as well as Net Asset Value.

 In April 2011, the company subdivided its shares on the basis of 10 for one.

 The company ended FY12 with a profit of Rs. 318.3 million, up from Rs. 86.6 million in the previous year. Improved bottom line was despite dip in turnover marginally to Rs. 2.96 billion, from Rs. 3.02 billion in FY11. However, cost of sales was lower leading to a gross profit of Rs. 408 million, as opposed to Rs. 220 million in the previous year. Profit from ordinary activities was Rs. 325 million, up from Rs. 108 million in FY11.

 Tea business brought in Rs. 1.8 billion in turnover up from Rs. 1.7 billion whilst pre-tax profit was Rs. 111.6 million as against a loss of Rs. 227 million in FY11. Rubber turnover was Rs. 528.4 million, down from Rs. 690.6 million, whilst profit was Rs. 250 million, lower in comparison to Rs. 409 million.

 As at 31 December 2012, total equity amounted to Rs. 2.15 billion, up from Rs. 1.84 billion. This included accumulated profits of Rs. 1.77 billion by end FY12 up from Rs. 1.47 billion a year earlier.
 Total assets were Rs. 3.8 billion as at end FY12.

 Liabilities were Rs. 1.6 billion, down from Rs. 1.8 billion.

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