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Richard Pieris declares 27% Tax free Dividends

The Directors of Richard Pieris & Co. Ltd. recommend a first and final dividend of 27%. This dividend will be tax free in the hands of recipient shareholders. The dividend payout of 23% provides a tax free yield of 5% on year end market prices.

Group turnover increased by 5% to Rs. 2,603 million. Profit from operations decreased by 9% to Rs. 303 million. Income from associate companies continued to be depressed due mainly to poor performance from the plantation sector. Profit from ordinary activities reduced to Rs. 230 million from Rs. 261 million recorded in the previous year.

The loss incurred in the new resin rubber shoe soling sheet project in its first full year of commercial operation and eroding profitability in some rubber goods export companies resulted in a decline in overall profitability. Conversely, most of the other sectors registered improved performance to counter the imbalance to some extent.

The rubber sector registered mixed results in the backdrop of severe price competition from other rubber goods producing countries. Natural foam rubber, a star in this sector, continued to register impressive profit growth. The Company has created a renewed interest in natural foam rubber mattresses by pioneering this concept to the bedding industry in the USA. The product has been exceptional in quality and has triggered a response among other world renowned foam manufacturers in Europe and the USA forcing them to embark on programmes involving natural rubber.

The rubber matting and flooring business, in which the Group enjoys a reputation of being a leading quality global supplier, continued to register volume growth. The export of rubber food jar sealing rings experienced a setback consequent on a quality issue that arose with a key customer in Europe, but the Company’s research and development team is actively addressing its mind to counteract this problem.

Arpitalian Compact Soles (Pvt) Ltd. the BOI approved project to manufacture resin rubber shoe soling sheets completed a full year of commercial production. Demand and prices in the world market were sluggish and the Company was unable to export sufficient volumes to recover overhead expenditure. This resulted in the Company incurring a loss and accumulating further debt. This position was precipitated by the original Italian joint venture partner failing to fulfil contractual obligations in relation to a buy-back of finished products. However, the Company was successful in arranging a buy-out of the original collaborator by a reputed shoe sole manufacturer in Italy. This move provides valuable access to both international markets and improved technology. There appears to be signs of recovery in this fashion sensitive industry despite tremendous price competition. Plans are underway to restructure the debt and strengthen the balance sheet. The management is optimistic of reducing losses in the ensuing year.

The commencement of the Company’s own international marketing division was a significant strategic move in the export sector. Increased volatility of world markets and broadening of the product range have made it vital for the Company to exercise a greater level of control over export marketing activities. The outcome so far of its international marketing operations has been encouraging and the Company is now better positioned to respond more effectively and expeditiously to market needs, develop new products and penetrate hitherto untapped markets. Steps have been taken to appoint distributors in new and underdeveloped markets.

The tyre sector continued to dominate the tyre rebuilding industry and recorded impressive growth in sales volumes and market share in the face of increasing competition. A new plant for conventional tyre retreading was commissioned during the year to supplement the existing precured plant in Kurunegala.

The plantation sector registered a marginal drop in profitability due to depressed commodity prices that prevailed during most parts of the year. However, a welcome improvement in tea prices from September 1999 onwards due to shortfalls in crop in India and Kenya and in rubber prices from the third quarter 1999 onwards helped to a great extent to reverse losses made in the first half of the year. This positive trend is expected to continue in year 2000. However, the outcome of wage negotiations currently taking place with estate sector trade unions would have an indelible impact on earnings.

A significant development in the financial services sector was the establishment of Asian Alliance Insurance Co. the latest entrant to the insurance industry in Sri Lanka. This Company was promoted by Asia Capitol and Richard Pieris’s invested in a 25% stake in the equity. Considering the heavy under penetration levels in life insurance and improved medium term economic prospects for Sri Lanka together with its positive impact on general insurance, this industry, though competitive, has potential for growth in the mid and long term. The Company commenced general insurance activities in December 1999 and expects to venture into life insurance shortly.

The Group expended Rs. 208 million on property, plant, equipment and equity investments during the year compared to Rs. 363 million in the previous year. The Company followed a cautious and prudent approach towards new investments in the background of a depressed economic climate. Investments were confined to high priority and shorter pay back areas.

The Group will actively pursue its policy to consolidate, rationalise and develop existing businesses whilst investing in selective high growth areas which have synergy with core activities.

The Company plans to allocate substantial financial resources next year to develop two retailing centres in Battaramulla and Dehiwala. Construction has commenced and the shopping complexes are expected to open in May 2001. These centres will eventually increase retailing space by over 50% and be an added impetus to the growth of the retailing business. The Company plans to be a major player in the retailing arena in this Country.

Mr. Henry Pieris, expressed his concern about the FTA with India and stated in his Chairman’s Statement in the Company’s Annual Report that; "I take this opportunity yet again to express our deep concern about the ramifications the Free Trade Agreement with India has on local industry. The vast raw material base, economies of scale, comparatively favourable labour laws among other factors enjoyed by Indian counterparts, will decidedly provide a competitive advantage over most domestic manufacturers. Furthermore, the stipulated rules of origin do not provide much scope to penetrate Indian markets considering the high import dependency of most industries and the resultant low value addition. Therefore the concept of a veritable flood of exports to the largest democracy of a population of over one billion is open to debate on its practicality."

"However, by the same token opportunity does exist for certain industries to take advantage of preferential entry. We are actively seeking opportunities particularly in exporting resin rubber shoe soling sheets and other rubber based products. Over the last few years we have been obliged to discontinue manufacturing activities that would not be in a position of effectively compete with Indian industries. Hence, although we have insulated ourselves to a great extent from the adverse effects of free trade, the consequences on certain lines of manufacture which would be rendered unsustainable with comparative industries in the Indian subcontinent will be disastrous."


Dankotuwa Porcelain makes good in first quarter

In the three months ending March 31,2000, Dankotuwa Porcelain has recorded a fair growth. While the cost of sales has declined by 5% the turnover has increased to Rs.161,947,000/- compared to the same period last year, which was Rs.158,385,000/- an increase of 2%.

The provisional accounts of the company yet to be audited, records a 24% profit growth for the first quarter.

Gross profit stands at Rs.48,744,000/- as compared to last year’s Rs.39,235,000/-.

After tax profit shows a growth of 110%. Earnings per share (annualised) is recorded at Rs. 2.03 while net asset value stands at Rs 20.84.

Dankotuwa Porcelain products are exported to a large number of countries including the United State and India.


CIMA launches Global Business Management Week

CIMA has launched the Global Business Management Week a CIMA-led intiative that will take place across the world from 25 to 29 September 2000.

This inaugural event, to be held annually, has been designed to achieve a global media focus on the importance of the multi-disciplinary manager. While the core focus of CIMA Global Business Management Week will be aimed primarily at key business decision-makers, the broad spectrum of events taking place will appeal to a much wider audience.

The need for good management skills in business is nothing new. However, the need has traditionally been focused exclusively on either financial or people management. Board rooms and business leaders around the globe will increasingly be required to demonstrate professional excellence in both. It is for this reason that we are excited to announce the inaugural CIMA Global Business Management Week, to raise awareness for the need to combine excellence in both fields.

There will be a number of events taking place throughout the week across the globe. These will be organised by CIMA and a number of participating organisations. The results of a key piece of business research will also be published that week.

The CIMA Sri Lanka Division has organised a number of events during this week, such as a Management Book Fair and Exhibition, CIMA Convocation, Management lecture and seminar and Management Career Guidance programmes.

Further details and updates of the worldwide events taking place will be provided by the week’s website, www.cimaglobal.com.

CIMA is leading business into the 21st century with a qualification that anticipates the need for CIMA members to play a wider role in business than ever before.


"Excellent!" say participants at SLIM telephone skills workshop

Ms. N. K. D. Sirimanne from Brown & Company commented that the SLIM Training programme on "Essential Professional Telephone Skills" was excellent. She was one of the participants who was who obtained this training. All participants have rated the training programme at very high levels.

"Today, telephone has become a business tool rather than a piece of mere communication equipment. Organizations continue to invest heavily in more sophisticated telecom systems to increase efficiency. This poses a challenge to the organization in balancing the technical complexity with human inputs. Eventually this lies with the telephone skills of the people in the organization...a skill most of us take for granted. Mis-communicated messages, poor telephone responses, can lead to soured relationships and finally loss of customers" said Mr. Deepal Sooriyaarachchi, immediate past president - SLIM, who was behind the formulation of the workshop.

Mr. Prasanna Karunaratna was the resource person. He has a degree in Telecommunications and is presently Manager E-commerce at Eagle Insurance Company.

The programme was inaugurated by Mr. Ananda Warakawa, Mr. David Nicolle from the Hotel Galadari, Mr. Nimal Wirasekara from the SLIM, and two participants, by lighting the traditional oil lamp. Ms. Naomi Fraser Co-ordinated the programme with the assistance of Ms. Manjula Wolff.

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