Business
Strong result from Dilmah in 2019/20 despite exchange rate hit
IPO investors richly rewarded with a Rs. 10,000 investment earning Rs. 8.6 million in dividends
Dilmah Ceylon Tea Company PLC (previously Ceylon Tea Services) has posted an excellent result within a challenging environment in the year ended Mar. 31, 2020, growing revenue eight percent and gross profit 14% over the previous year; but the bottom line declined two percent owing to what its chairman, Mr. Merril. J. Fernando called a “remarkable” 46% decline in the exchange rate.
Commenting that the outlook for the global economy appeared bleak, he said how long the corona virus will last God alone knows, adding “we can only pray for it to disappear soon and bring hope and comfort back to our homes and our lives.”
Dilmah, with the consent of its shareholders, has increased its contribution to the MJF Charitable Foundation from 10% to 15% of pre-tax profits to be spent towards addressing inequality and wider social and environmental concerns as a part of its core business. This will enable a significant increase in the foundation’s humanitarian operations.
The company’s key numbers for the year under review were: revenue up 8% to Rs. 11.61 billion, operating profit up 25% to Rs. 1.98 billion, pre-tax profit up 17% to Rs. 1.99 billion and the after tax profit down 2% to Rs. 1.56 billion. Dilmah’s total assets stood at Rs. 17.3 billion against liabilities of Rs. 4.97 billion.
Fernando, in his chairman’s review in the company’s recently published annual report, had drawn attention to the extraordinary rewards enjoyed by investors in what was then Ceylon Tea Services over the years. An investment of Rs. 10,000 in a thousand shares at the company’s initial public offering in 1982 had yielded Rs. 8.6 million in dividends and the original1,000 shares had increased to 20,000 via several bonus issues.
He has noted that the cost of an original ten-rupee share in the hands of the investor has as a result come down to fifty cents and the original 10,000-rupee investment is now valued at Rs. 531,000 at the current market price of the Dilmah share.
“Such is the power of Ceylon Tea in the hands of committed investors in the industry,” he has said.
It is not only investors who have benefited from Fernando’s conviction that “business is a form of human service.” He has said youth from the plantation community assisted by the MJF Foundation’s scholarship program have produced among others doctors, magistrates and chefs.
He says that the tea industry which is being written off by many, offers enormous potential to investors who believe in it. Government authorities responsible for tea can turn it around if they have a realistic vision for the industry, Fernando said welcoming recent interest and initiatives by government in finding solutions to longstanding issues in plantations and exports. Such efforts wold deliver benefit to the country’s economy and Ceylon Tea.
“If the tea industry is strategically managed in the hands of capable people with proven expertise, export earnings could well reach USD 5 billion within the next five years. Bulk tea exports should be discouraged and value added exports should be generously incentivised for the social end economic benefits they bring,” he said.
“Part of the additional income from value added export must be used to advertise and promote quality brands. This is likely to encourage bulk tea exporters to change course.”
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SLT-Mobitel, the nation’s ICT and Telecommunications Service Provider recently partnered with Spotify, to mark their launch in Sri Lanka. Spotify is a paid premium music streaming app which allows subscribers to listen to music to their hearts content. Both, SLT-Mobitel Post-Paid and Pre-Paid customers will now be able to enjoy Spotify by activating a monthly recurring subscription or one-time subscription plan and access unlimited music streaming and downloading facilities.
The subscription charges will get added to the user’s customary billing, where payment will be deducted in real time. Starting from the payment date, the user will be able to access Spotify and download their favourite songs, for the next 30 days. Users who sign up for their first monthly subscription will receive an additional one month, courtesy of Spotify. The one-month subscription plan is not applicable with one-time subscription plans. SLT-Mobitel data rates, depending on the user’s respective broadband charges, will apply.
Spotify also has some exciting features that will provide SLT-Mobitel customers with the opportunity to listen to ad-free music, access millions of uninterrupted music under one platform, play any song they like, anywhere they go, and also be able to enjoy their music offline.
SLT-Mobitel customers can select their preferred premium package under four categories; Individual, Duo, Family, Student. Each category has recurring and non-recurring plans. After one month of free streaming, the package will activate once the offer period terminates. While both, the Individual and Student premiums are limited to one account user, the Duo package offers two accounts and the Family premium is accessible through six accounts. To view Spotify plans, users can log on to https://spoti.fi/3aLWvce
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by Sanath Nanayakkare
Anyone conversant with the elements of a political economy would know that Sri Lanka is using its ‘sovereign power’ to manage the different dynamics of the economy in a sustainable manner, Professor W. D Lakshman Governor of the Central Bank said on Wednesday.
“Some critics are saying that we adopt a so-called modern monetary theory. That’s not the case. In fact, Sri Lanka is using its sovereign power in a number of economic aspects to honour its external debt repayment commitments as well as to reduce its debt burden in the medium term as well as achieve resilient growth in the medium to long term, he said.
“We make policy decisions to boost our gross foreign reserves, meet our external debt servicing, to facilitate monetary expansion, to boost our GDP growth, to strengthen our current account balance and manage our domestic and external economic variables in a sustainable manner. This is not a modern monetary theory. This is an age-old tool used by central banks around the world when the circumstances demand it, he said.
“Certain trade-offs will be necessary when dealing with an economy which has a big fiscal gap to bridge. There are efforts to push Sri Lanka towards the IMF again which would in turn have influence on our policymaking. We have taken policy measures to stabilize the economy and we have adequate reserve levels to meet our debt repayments. Meanwhile, we are in negotiations with overseas central banks and multilateral agencies to further boost our reserve level and it would materialise within a matter of weeks,” he noted.
“One of the tools the Central Bank has introduced is in respect of repatriation of export proceeds into Sri Lanka and conversion of such proceeds into Sri Lankan rupees in order to strengthen the foreign exchange situation of the country,” he said.
The Governor made these remarks while delivering the keynote speech at a webinar organised by the Veemansa Initiative led by its Managing Director Luxman Siriwardene – the former Executive Director of Pathfinder Foundation.
The webinar revolved round the topic ‘External debt situation in Sri Lanka: Are we heading for a resolution or crisis?’
Professor Sirimal Abeyratne, Prof. Sumanasiri Liyanage, Dr. Nishan de Mel and Dr. Ravi Liyanage were the other speakers on the panel.
Author
By Hiran H.Senewiratne
CSE produced signs of a rebound yesterday with both indices closing positive, though turnover remained low. Central Bank Governor W.D Lakshman’s recent statement on managing foreign reserves gave some boost to the market yesterday, stock market analysts said.
The index experienced a zigzag movement within the early hours of trading; thereafter, it recorded a slight up-trend as it reached its intraday high of 7,439. Later, the market witnessed a down-trend at mid-day, followed by a sideways movement and closed at 7,372, gaining 43 points during the month of February, market sources said.
It is said the banking sector dominated turnover with a contribution of considerable parcel trades in Sampath Bank, Commercial Bank and HNB.
Further, the Commercial Bank’s impressive quarterly results during the recent turbulent period also built investor confidence. Commercial Bank was able to register a18 percent net interest income when other banks were reporting a decline. Its share price increased by Rs. 3 or 3.5 percent. On the previous day, its shares started trading at Rs. 85 and at the end of the day they moved up to Rs. 88. Due to the positive growth results, the bank announced a Rs. 4.40 dividend per share, plus a Rs. 2 script divergent for every share.
Further, Sampath Bank shares also appreciated in both crossing and retail. In crossings its shares appreciated by Rs. 1.At the end of the day they moved up to Rs. 154.50. In the retail market, its shares moved up by Rs. 2 or 1.3 percent. Previously, its shares fetched Rs. 154 and at the end of yesterday they moved up to Rs. 156.
Amid those developments, both indices moved upwards. The All Share Price Index went up by 104.48 points and S and P SL20 rose by 67.78 points. Turnover stood at Rs. 3 billion with four crossings. Those crossings were reported in Sampath Bank, where 3.9 million shares crossed for Rs. 602.2 million, its share price being Rs. 154.50, HNB 375,000 shares crossed for Rs. 39.4 million, its shares traded at Rs. 105, Pan Asia Power 9.5 million shares crossed for Rs. 33.2 million, its shares traded at Rs. 3.50 and Access Engineering 1.2 million shares crossed for Rs. 28.2 million; its shares traded at Rs. 24.
In the retail market top five companies that mainly contributed to the turnover were, Expolanka Rs. 450 million (10 million shares traded), JKH Rs. 205 million (1.3 million shares traded), Browns Investments Rs. 199 million (34.9 million shares traded), Sampath Bank Rs. 191 million (1.2 million shares traded) and Dipped Products Rs. 137.7 million (2.8 million shares traded). During the day 101 million share volumes changed hands in 18046 transactions.
During the day, Expolanka, the biggest contributor to the turnover, saw its share price appreciating by Rs. 6.20 or 15 percent. Its share price quoted on the previous day was Rs. 41 and at the end of trading yesterday it moved up to Rs. 47.
Sri Lanka’s rupee quoted wider at 193.50/195.50 levels to the US dollar in the spot next market on Thursday while bond yields remained unchanged, dealers said. The rupee last closed in the spot market at 194.50/195.00 to the dollar on Wednesday.
