Despite what its chairman called "reasonably
good profits," the directors of Lanka Milk Foods (LMF) has
recommended a first and final dividend of only 6% for the year
ended March 31, 2004 although the group profit after-tax was up
15.2% to Rs. 151.2 million while the company profit was down
4.4% to Rs. 95.9 million.
LMF Chairman V. P. Vittachi said that the main
reason for the low dividend was the steep hike in international
milk powder prices which they faced today and was "a well
calculated precautionary measure" in that context.
Vittachi attributed the marginal reduction in
profits at company level to the increase in CIF prices of full
cream milk powder in the world market further compounded by the
fall in the rupee against the US dollar.
"However due to the vigilant and meticulous
practices of the management of your company, the negative
effects of the said criteria were minimized to a large extent,"
Despite the low dividend, the chairman noted
that shareholders of LMF have received a total of 143.5% in
dividends during the last 13 years after the privatization of
LMF imports, packages and sells full cream milk
powder under the Lakspray brand, skimmed milk powder, and also
Happy Cow cheese and Mars chocolates. Its fully owned
subsidiary, Lanka Dairies (Pvt) Limited continues to pack and
sell ultra heat treated flavoured milk packs and a range of
Vittachi claimed that their Ambewela farm fresh
milk packs were the best produced in Sri Lanka at present.
"Since the milk is from our own cows that are
scientifically bred in our own farms, the quality of milk is
definitely unmatched by any other milk pack," he said.
He also reported that the company which runs the
Ambewela and New Zealand dairy farms have increased milk
production 157% since privatization and also produces
international quality milk.
"A large extent of the farmland is brought under
cultivation of specially imported Rye grass, which has converted
Ambewela Farms to a picturesque luscious farmland, to live up to
its popularly known name of New Zealand Farm," he said.
At Ambewela a range of value added products
including four kinds of cheese, goat milk and yoghurt are
The controlling shareholders of LMF are Milford
Exports (Ceylon) Limited (30.93%) and Mills Enterprises Limited
(20.4%), both Stassen related companies. Additionally, the
Distilleries Company of which LMF is a major shareholder (with
nearly 38 million shares) owns 1.91% of LMF.
Other than the Stassen related interests, the
Kuwaiti investors of the Al Nakib family own approximately 14%
Net assets per share of the company had grown to
Rs. 33.28 during the year under review from Rs. 31.58 a year
earlier. LMF shares traded at a high of Rs. 39 and a low of Rs.
10 during the year under review closing on March 31, 2004 at Rs.
22.50. This compared with a trading range of Rs. 12.75 do Rs.
7.75 the previous year.
LMF has an issued share capital of Rs. 300
million, reserves of Rs. 215.1 million and retained earnings of
Rs. 309.1 million in its books.
The directors of the company are: Dr. V. P.
Vittachi (Chairman), Messrs. D. H. S. Jayawardena, R. K.
Obeyesekere, Z. Alif and C. R. Jansz.