Three Acre Farms Limited (TAFL), a member of the Ceylon Grain Elevators Group, operating poultry breeder farms at several locations, has reported "tremendous success" in all spheres of its operations in the year ended December 31, 2007, but is declaring no dividend.

The company’s Chairman, Mr. Primus Cheng, said that despite the ``severe pressure’’ felt by the industry at large, the company had managed both to maintain market dominance and also achieve profitability in the face of increasing operating expenses, raw material cost and fierce competition.

The year under review had seen TAFL post group revenue of Rs.924.5 million, up from Rs.686 million the previous year, and an attributable profit of Rs.61.5 million, up from the previous year’s Rs.3.3 million.

At company level, revenue was up to Rs.825.1 million from Rs.556.1 million while the net profit at Rs.54.7 million was up from the previous year’s Rs.2.3 million.

Cheng said that the group had been able to cushion additional cost arising from a surge in raw material prices worldwide by increasing productivity.

With a reduction of market supplies of day old chicks and small farmers re-emerging after the avian influenza threat of 2006 abated, the demand for day-old chicks and layer birds had grown last year although the market for processed chicken was down.

With the selling price of day-old chicks up significantly last year, group revenues were up sharply.

"This price hike and the marginal increase in demand volumes buffered the enormous production costs and helped TAFL to stabilize its finances and generate profits," he said.

With the bird flu scare abating, consumer confidence in poultry had returned and the group was able to quickly recover from the effects of the 2006 labour strike which caused a high mortality rate of its chicks and a poor performance.

"In 2007, the group was able to negate many of the adverse effects of that labour unrest and improve performance," he said.

He said that their significant profit improvement was all the more laudable considering the adverse macro economic conditions prevailing in the country.

"Although the challenges confronting us will not abate in the near future and the economic conditions prevalent in the country today provides corporate entities little hope for strong financial viability, I am more than confident that the strength of our team and our strategic partners will propel our march forward towards profitability and success in the year 2008," Cheng said.

He also reported that the group planned to relocate some of its operations at their Bulathsinhala farm to an ultra modern facility at Hijra.

"Once completed, the Hijra Farm will be top of the line, having been upgraded with the most modern poultry farming equipment and infrastructure," he said.

Over the next two years, the commercial broiler operation at Bulathsinhala will also be relocated and the existing facility converted into a breeder farm, he said. Excess assets will be disposed of while an overall restructuring and modernizing program will be vigorously pushed to maximize productivity.

Despite good performance, the TAFL board has decided not to declare a dividend for the year under review "due to the prevailing uncertain conditions," Cheng said.

TAFL has a stated capital of Rs.623.6 million and accumulated losses of Rs.343.6 million in its books.

Net assets per share had grown to Rs.17.89 in 2007 from Rs.15.49 the previous year and the company’s share traded at a market price of Rs.10, the same as the previous year.

The major shareholders of the company are: Ceylon Grain Elevators Ltd. (57.21%), Prima Ltd. (15.00%), Japfa Cornfeed International Pte Ltd, Singapore (4.22%), Mrs. D.M. Fernando (3.97%), Mr. S.A.S. Al Hokoani (3.27%), Elka Ltd., Singapore (1.33%) and Supra Ltd., Hong Kong (1.10%).