Talawakelle posts record profit and turnover

Talawakelle Tea Estates PLC has returned to profitability in the year ended December 31, 2010 posting its highest ever profit after-tax with group turnover too crossing the Rs. 3 billion milestone, the company’s annual report reveals. These results had been achieved in the face of a 42% wage hike and erratic weather conditions, the report said, noting that the company had bounced back from a period of adversity.

However, its Chairman, Mr. Mohan Pandithage, warned that a new wage agreement with the workers was impending and this matter must be handled with caution or the company may well be pushed back into the red this year.

"We anticipate the wage expectations to be lower in this instance, with the government successfully containing inflation to single digit from double digit levels of the past," Pandithage said.

"The wage increases in the recent past have amounted to over 30%, with the last revision at 42.5%. It is paramount that all parties including the policy makers recognize that international competitiveness is a prerequisite for the future stability of the industry."

He urged that the wage structure and related legislation should mirror the flexibility and the competitiveness that the industry is called upon to display.

The year under review saw Talawakelle at company level posting revenue of nearly Rs.2.9 billion, up from Rs.2.7 billion the previous year, while at group level turnover cleared Rs.3 billion against the previous year’s Rs.2.8 billion.

The company posted a profit of Rs.135.2 million, up from a loss of Rs.13.8 million the previous year, and a group profit of Rs.164.5 million, up from a loss of Rs.30.4 million a year earlier, was achieved.

The year had seen Aitken Spence PLC exiting Hayleys Plantation Services (Pvt) Ltd, the main shareholder of Talawakelle. Dipped Products PLC, a Hayleys’ subsidiary bought out Aitken Spence and Talawakelle’s main shareholders now are Hayleys Plantation Services (74.74%) and Merrill J. Fernando and Sons (4.99%).

Hayleys group had also acquired the controlling interest in Mabroc Teas (Pvt) Ltd, a leading exporter of Ceylon Tea, with which Hayleys’ plantation companies are closely associated. Pandithage said that this move will add value to Talawakelle tea.

Talawakelle which has proposed a final dividend of Rs.2.50 per share for 2010 (no dividend was declared in 2009) has also done well in generating its own hydro power on three estates – Somerset, Radella and Palmerston located upcountry and drawing water from the Nanu Oya.

Over 10,000 KWH of electric power was generated last year and Talawakelle is now nearly self-sufficient in electricity with the power generated being worth Rs.131.6 million at cost of purchase.

The company has also partnered with MJF Foundation to build a new primary school at Hollyrood Estate at a cost of Rs.7.5 million benefiting approximately 125 children in the area.

Talawakelle has a stated capital of Rs.350 million and retained earnings of Rs.811.6 million in its books with total assets running at the end of last year at Rs.3.12 billion. Liabilities stood at Rs.1.6 billion (non-current) and 0.4 million (current).

The company’s share had net assets of Rs.48.77 per share as at last balance sheet date, up from Rs.42.56 a year earlier and it traded at a high of Rs.55 and a low of Rs.24.75 in the year under review. This compared to a trading range of Rs.29.25 to Rs.13.50 the previous year.

The directors of the company are: Messrs. Mohan Pandithage (Chairman), Merrill J. Fernando (Alternate- Ms. Minette Perera), Malik J. Fernando (Alternate – D.C. Fernando), Dr. R.M. Fernando (Resigned – 07.04.2010), J.M.S. Brito (Resigned – 07.04.2010), S.T. Gunatilleke (CEO), M.M.M. de Silva, Prof. U. Liyanage, Dr. S.S.S.B.D.G. Jayawardena, L.N. de S. Wijeyeratne, J.A.G. Anandarajah (w.e.f. 29.04.2010) and G.K. Seneviratne (w.e.f. 29.04.2010).

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