Printcare PLC, pioneers in manufacturing tea bag envelopes, has posted the highest ever profit attributable to equity holders since its founding in 1979 but had seen a drop in profits from its tea bag packaging business, its recently released annual report reveals.
"In the year under review, your company recorded a turnover of Rs.4,344 million and profit before tax of Rs.358 million, compared with corresponding figures of Rs.3,842 million and Rs.309 million in the previous year. This is an improvement of 13.1% and 15.9% respectively. I am pleased to report that our profit attributable to equity holders this year is the highest achieved by your company since its inception," Printcare Chairman Merrill J. Fernando said.
"Despite the strong performance by the group as a whole, I have to report drop in profits from our tea bag packaging business. Increasing competition and a desire by some of our major export customers to have supplies from distances of under 24 hours has had a negative impact on our sales and margins."
Fernando said that while local sales had been steady, they had been subject to pricing pressures. Also this business is becoming saturated with excess capacity.
"In the year under review, your company recorded a turnover of Rs.4,344 million and profit before tax of Rs.358 million, compared with corresponding figures of Rs.3,842 million and Rs.309 million in the previous year. This is an improvement of 13.1% and 15.9% respectively. I am pleased to report that our profit attributable to equity holders this year is the highest achieved by your company since its inception," Printcare Chairman Merrill J. Fernando said.
"Despite the strong performance by the group as a whole, I have to report drop in profits from our tea bag packaging business. Increasing competition and a desire by some of our major export customers to have supplies from distances of under 24 hours has had a negative impact on our sales and margins."
Fernando said that while local sales had been steady, they had been subject to pricing pressures. Also this business is becoming saturated with excess capacity.
Anticipating this trend, they had begun diversifying their product range into the self-adhesive labels segment which they believed is a growing market.
"Meanwhile, our Indian operation continues to make excellent progress. Your company now has a substantial market share of the Indian tea bag packaging business. Our new factory, currently under construction in Coimbatore, will come on stream in July 2014," he said.
Their carton division also continued to deliver encouraging results boosted by growth in export sales attracting top-end business houses both at home and abroad.
Fernando told shareholders that in the second quarter of the current financial year they will bring new technology that will provide an enormous boost to the packaging industry. Their customers then will be able to access complex and innovative packaging solutions that were previously unavailable here and financially outside their reach.
"It is our belief that our customers’ hand will be greatly strengthened by these new offerings, and as a result, their products will exceed the sophistication of competitor products on the supermarket shelves," Fernando said.
Printcare has also concluded a joint venture agreement with a US based company which is currently one of the world’s leading suppliers of branded packaging and trims to the apparel industry. Fernando expected this to provide a fresh impetus to their commitment to diversify their product portfolio into the apparel business.
"Commercial operations at this plant are expected to commence in August 2014," Fernando said.
Printcare’s security printing division has continued to show good progress in volume and in profits. The company has invested in new technology to keep abreast of global trends in security printing.
"Your company is poised for growth over the next few years. The Rs.800 million investment in plant and machinery that we have committed, will enhance our technology, increase our capacity, and be a driver of growth in the medium to long term. However, let me caution you that due to additional depreciation and interest charges that will be incurred, there is likely to be an impact on profitability in the short term. But this is a step we must necessarily take to maintain our position as market leader and to ensure sustainable value creation for our shareholders in the long term," Fernando said.
The directors have recommended a final dividend of 50 cents per share giving shareholders a return of 90 cents per share for the year under review.
Printcare has a stated capital of Rs.271.9 million, reserves of Rs.96 million for the company and Rs.336.5 million for the group and retained earnings of Rs.603.4 million for the company and Rs.1.6 billion for the group. Total group assets ran at Rs.3.65 billion and Rs.1.35 billion for the company. Group liabilities stood at Rs.1.85 billion and the company’s liabilities at Rs.369.4 million.
MJF Holdings with 26.87% of the company with MJF Exports owning a further 3.04% is the biggest shareholder of Printcare. Dr. T. Senthilverl with 23.82% and the Ravindran family owning nearly 25% are substantial shareholders.
Net assets per share had grown to Rs.28.75 from Rs.26.10 the previous year and the share closed the year Rs.29 against Rs.28 the previous year.
The directors of the company are: Messrs. Merrill J. Fernando(Chairman), Abbas Esufally, K.R. Ravindran, Ejaz Chatoor, Dayasiri Warnakulasooriya, Ms. Anushya Coomaraswamy, Simon Scarff (Resigned 22.04.2014) and Aslam Mehdi (w.e.f. 22.04.2014).
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"Meanwhile, our Indian operation continues to make excellent progress. Your company now has a substantial market share of the Indian tea bag packaging business. Our new factory, currently under construction in Coimbatore, will come on stream in July 2014," he said.
Their carton division also continued to deliver encouraging results boosted by growth in export sales attracting top-end business houses both at home and abroad.
Fernando told shareholders that in the second quarter of the current financial year they will bring new technology that will provide an enormous boost to the packaging industry. Their customers then will be able to access complex and innovative packaging solutions that were previously unavailable here and financially outside their reach.
"It is our belief that our customers’ hand will be greatly strengthened by these new offerings, and as a result, their products will exceed the sophistication of competitor products on the supermarket shelves," Fernando said.
Printcare has also concluded a joint venture agreement with a US based company which is currently one of the world’s leading suppliers of branded packaging and trims to the apparel industry. Fernando expected this to provide a fresh impetus to their commitment to diversify their product portfolio into the apparel business.
"Commercial operations at this plant are expected to commence in August 2014," Fernando said.
Printcare’s security printing division has continued to show good progress in volume and in profits. The company has invested in new technology to keep abreast of global trends in security printing.
"Your company is poised for growth over the next few years. The Rs.800 million investment in plant and machinery that we have committed, will enhance our technology, increase our capacity, and be a driver of growth in the medium to long term. However, let me caution you that due to additional depreciation and interest charges that will be incurred, there is likely to be an impact on profitability in the short term. But this is a step we must necessarily take to maintain our position as market leader and to ensure sustainable value creation for our shareholders in the long term," Fernando said.
The directors have recommended a final dividend of 50 cents per share giving shareholders a return of 90 cents per share for the year under review.
Printcare has a stated capital of Rs.271.9 million, reserves of Rs.96 million for the company and Rs.336.5 million for the group and retained earnings of Rs.603.4 million for the company and Rs.1.6 billion for the group. Total group assets ran at Rs.3.65 billion and Rs.1.35 billion for the company. Group liabilities stood at Rs.1.85 billion and the company’s liabilities at Rs.369.4 million.
MJF Holdings with 26.87% of the company with MJF Exports owning a further 3.04% is the biggest shareholder of Printcare. Dr. T. Senthilverl with 23.82% and the Ravindran family owning nearly 25% are substantial shareholders.
Net assets per share had grown to Rs.28.75 from Rs.26.10 the previous year and the share closed the year Rs.29 against Rs.28 the previous year.
The directors of the company are: Messrs. Merrill J. Fernando(Chairman), Abbas Esufally, K.R. Ravindran, Ejaz Chatoor, Dayasiri Warnakulasooriya, Ms. Anushya Coomaraswamy, Simon Scarff (Resigned 22.04.2014) and Aslam Mehdi (w.e.f. 22.04.2014).
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