Cargills (Ceylon) Limited has posted an after-tax profit of Rs. 64.1 million during the year ended March 31, 2004, up from Rs. 16.3 million a year earlier on the back of a turnover growth of 59% (for the group) and 49% (for the company.).

The company’s Chairman, Mr. Anthony Page, has reported that after-tax profit of the group was up 266% (by Rs. 46.6 million) while that of the company was up 113% (by Rs. 45.9 million).

The group profit for the year is the second highest ever, only surpassed by the Rs. 69.6 million earned in 2002.

Page has reported that the group had invested slightly over Rs. 1 billion in property, plant and equipment during the year through a combination of internally generated funds and borrowings.

"The increased borrowings resulted in group finance costs increasing by Rs. 50 million over the previous year to Rs. 129 million. Increased finance cost is expected to be temporary and will reverse once the investments achieve optimum returns," he said.

"The group sees future earnings potential from the previous and current year’s investments (group investment the previous year was Rs. 324 million). The expansion program will continue into the year 2004/2005."

Cargills, which has a history of over 160 years has grown to be one of the country’s biggest retailers with its Food City Supermarket chain which first opened in 1983 expanded through the provinces in a spectacular manner.

Turnover during the year under review at Rs. 7.6 billion for the group was up from Rs. 4.7 billion a year with 21 new outlets opened during the year under review.

Page said that they have also introduced a new concept of Convenience Stores under the brand of Cargills Express at LIOC filling stations mainly in the Colombo and its suburbs.

Cargills have floated a wholly owned subsidiary, Cargills Retail (Pvt) Limited to carry out the expansion of the Food City Supermarkets taking advantage of BOI concessions.

Page said that the company which had paid two interim dividends of 15.22% and 45% for the year under review did not intend proposing a further final dividend.

"Our focus continues in improving efficiency, better sourcing, eliminating waste, increasing productivity and harnessing the full potential of our human resources. Our central storage and delivery facility allows us to pass on to customers the benefits from reduced wastage while ensuring that the producers too receive a fair price," he said.

In addition to its retailing business, Cargills had continued to consolidate and grow their food processing activities with their Cargills Magic dairy ice cream, Cargills Kist cordials and preserves and Cargills Meats which the chairman claimed "continued to create excitement in the market with our new and innovative products."

The Kentucky Fried Chicken Restaurants (KFC), part of the international franchise chain, has now localized its products range to suit Lankan customer taste and preferences, Page said with KFC chicken kottu introduced during the year under review and a new restaurant opened at Kotahena during the year.

Page said that their tax liability had increased substantially from Rs. 25 million to Rs. 61 million for the company and to Rs. 59 million from Rs. 37 million for the group.

He concluded by reporting that the group is well positioned to continue to grow and expand taking advantage of future opportunities.

Millers Limited, a Ceylon Theatres subsidiary, is the biggest shareholder of Cargills with 61.82% followed by Ceylon Theatres (12.32%) and three members of the Page family owning between 1% and 5% in their personal capacities totalling 9.2%,. The Galle Face Hotel Company (4.58%) and Cyril Gardiner Limited are also substantial shareholders. The percentage of shares held by the public as at March 31, 2004 amounted to 15.76%.

Cargills has an issued share capital of Rs. 56 million, reserves of Rs. 794 million and accumulated profits of Rs. 72.6 million in its books as at the last balance sheet date.

Net assets per share at Rs. 166.28 were up from Rs. 161.67 a year earlier. The share traded at a high of Rs. 135 and a low of Rs. 82 during the year under review.

The Cargills freehold building in the Fort costing Rs. 21.2 million had been revalued at Rs. 279.4 million as at March 31, 2003.