Value of biological assets & translation of Indonesian currency blur picture
Carson Cumberbatch PLC, founded in 1857 and today one of the country’s strongest diversified conglomerates, has marginally increased group revenue in the year ended March 31, 2014, but seen the attributable profit decline sharply on account of reduced earnings in the group’s extensive oil palm interests in Indonesia and Malaysia.
Carson’s Chairman Tilak de Zoysa, has said in the company’s annual report that although the numbers at first glance suggest diminishing operational profitability, "the real reasons are attributable to material changes in non-cash elements of accounting and translations."
Group revenue was up to Rs. 76.5 billion from Rs. 76.2 billion the previous year while the attributable profit was down 19% to Rs. 3.7 billion from Rs. 4.6 billion a year earlier.
De Zoysa explained that the group’s biological assets (palm oil plantation assets) on profitability had dropped 35% year-on-year which is equivalent to Rs.1.7 billion.
"Biological valuation is a non-cash adjustment to profitability mandated by accounting standards and is determined based on age of plants, yield of palm, location of plantation, price of crude palm oil etc.," he explained.
"The second significant YoY disparity arises from the translation of non-current US Dollar borrowings of the plantation sector into Indonesian currency. This again is a non-cash item necessitated by cross-border accounting where the adverse impact on the current financial year’s results compared to last year is Rs.2.1 billion."
Carson’s oil palm plantations extend through 77,575 ha in Indonesia and Malaysia. A major player in this industry, the company is also into oils and fats refining from its crude palm oil in factories in India and Malaysia.
This segment of the business has returned to operating profitability posting a profit of Rs.271.9 million against a loss of Rs.985.7 million the previous year. The overall net loss in oils and fats had been Rs.128.2 million during the year under review against a net loss of Rs.1.53 billion the previous year.
Outside palm oil, the group is also into beverages controlling the Lion Brewery, the biggest and most profitable in the country.
Carson is further expanding its brewery interests with the forthcoming acquisition of Millers Brewery, makers of Three Coins beer.
Through its control of the Ceylon Guardian Investment Trust, Ceylon Investments and subsidiaries, Carson is one of the biggest players in the portfolio and asset management businesses in the country.
It is also into real estate through two quoted companies, Equity One PLC and Equity Two PLC and the unquoted Equity Three (Pvt) Limited, leisure through the Pegasus Hotels group and management services.
The Carson’s report indicates that the group had during the year under review exited from its airlines operation business where it was General Sales Agent for Air France and KLM Royal Dutch Airlines. The decision to exit had been strategic with the view to increase emphasis on the group’s core operations.
In discussing the leisure segment, Carson’s said that the emergence of lower grade accommodation had posed challenges on occupancy to the Star Class hotels.
Carsons runs both the Pegasus Reef Hotel in Hendala and Giritale Hotel.
Carson’s has a stated capital of Rs.1.1 billion, a capital reserve of Rs.5.3 billion and revenue reserves of Rs.27.8 billion in its books. Total assets ran at Rs.159.4 billion and total liabilities at Rs.91.5 billion.
Bukit Darah PLC with 45.68%, Tower Investments (10.66%), Fulcrum (9.79%) and Lake View Investments (8.79%) are the largest shareholders of Carson’s. The EPF which is among the 20 top shareholders has increased its holding to 2.68% from 1.78% the previous year.
The Selvanathan family is the major beneficial shareholder of Carsons through various holding companies.
The Carson’s share traded at a high of Rs.459 and a low of Rs.340 during the year under review closing at Rs.365. This compared to a trading range of Rs.495 to Rs.410 closing at Rs.440 the previous year.
A dividend of Rs.2 per share, the same as in the previous year, has been proposed by the directors.
The directors of the company are: Messrs. Tilak de Zoysa (Chairman), H. Selvanathan (Deputy Chairman), M. Selvanathan, I. Paulraj, D.C.R. Gunawardena, S. Shah, P.C.P. Tissera, V.P. Malalasekera, M. Moonesinghe (Resigned 31.03.2014), F. Mohideen and R. Theagarajah.
www.island.lk
Carson Cumberbatch PLC, founded in 1857 and today one of the country’s strongest diversified conglomerates, has marginally increased group revenue in the year ended March 31, 2014, but seen the attributable profit decline sharply on account of reduced earnings in the group’s extensive oil palm interests in Indonesia and Malaysia.
Carson’s Chairman Tilak de Zoysa, has said in the company’s annual report that although the numbers at first glance suggest diminishing operational profitability, "the real reasons are attributable to material changes in non-cash elements of accounting and translations."
Group revenue was up to Rs. 76.5 billion from Rs. 76.2 billion the previous year while the attributable profit was down 19% to Rs. 3.7 billion from Rs. 4.6 billion a year earlier.
De Zoysa explained that the group’s biological assets (palm oil plantation assets) on profitability had dropped 35% year-on-year which is equivalent to Rs.1.7 billion.
"Biological valuation is a non-cash adjustment to profitability mandated by accounting standards and is determined based on age of plants, yield of palm, location of plantation, price of crude palm oil etc.," he explained.
"The second significant YoY disparity arises from the translation of non-current US Dollar borrowings of the plantation sector into Indonesian currency. This again is a non-cash item necessitated by cross-border accounting where the adverse impact on the current financial year’s results compared to last year is Rs.2.1 billion."
Carson’s oil palm plantations extend through 77,575 ha in Indonesia and Malaysia. A major player in this industry, the company is also into oils and fats refining from its crude palm oil in factories in India and Malaysia.
This segment of the business has returned to operating profitability posting a profit of Rs.271.9 million against a loss of Rs.985.7 million the previous year. The overall net loss in oils and fats had been Rs.128.2 million during the year under review against a net loss of Rs.1.53 billion the previous year.
Outside palm oil, the group is also into beverages controlling the Lion Brewery, the biggest and most profitable in the country.
Carson is further expanding its brewery interests with the forthcoming acquisition of Millers Brewery, makers of Three Coins beer.
Through its control of the Ceylon Guardian Investment Trust, Ceylon Investments and subsidiaries, Carson is one of the biggest players in the portfolio and asset management businesses in the country.
It is also into real estate through two quoted companies, Equity One PLC and Equity Two PLC and the unquoted Equity Three (Pvt) Limited, leisure through the Pegasus Hotels group and management services.
The Carson’s report indicates that the group had during the year under review exited from its airlines operation business where it was General Sales Agent for Air France and KLM Royal Dutch Airlines. The decision to exit had been strategic with the view to increase emphasis on the group’s core operations.
In discussing the leisure segment, Carson’s said that the emergence of lower grade accommodation had posed challenges on occupancy to the Star Class hotels.
Carsons runs both the Pegasus Reef Hotel in Hendala and Giritale Hotel.
Carson’s has a stated capital of Rs.1.1 billion, a capital reserve of Rs.5.3 billion and revenue reserves of Rs.27.8 billion in its books. Total assets ran at Rs.159.4 billion and total liabilities at Rs.91.5 billion.
Bukit Darah PLC with 45.68%, Tower Investments (10.66%), Fulcrum (9.79%) and Lake View Investments (8.79%) are the largest shareholders of Carson’s. The EPF which is among the 20 top shareholders has increased its holding to 2.68% from 1.78% the previous year.
The Selvanathan family is the major beneficial shareholder of Carsons through various holding companies.
The Carson’s share traded at a high of Rs.459 and a low of Rs.340 during the year under review closing at Rs.365. This compared to a trading range of Rs.495 to Rs.410 closing at Rs.440 the previous year.
A dividend of Rs.2 per share, the same as in the previous year, has been proposed by the directors.
The directors of the company are: Messrs. Tilak de Zoysa (Chairman), H. Selvanathan (Deputy Chairman), M. Selvanathan, I. Paulraj, D.C.R. Gunawardena, S. Shah, P.C.P. Tissera, V.P. Malalasekera, M. Moonesinghe (Resigned 31.03.2014), F. Mohideen and R. Theagarajah.
www.island.lk
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