"Must rationalize or dispose of continuously losing businesses"
The Colombo Fort Land and Buildings PLC (CFLB), a troubled conglomerate into a variety of businesses including plantations, leisure and industries, has taken a heavy blow from the weather in the year ended March 31, 2017, posting a group loss of Rs. 1.08 billion, up 59% from a loss of Rs. 680 million a year earlier, but is paying its shareholders a first and final dividend of 15 cents a share, it has been stated in its annual report.
The group is into industrial and consumer products, leisure, plantations, property rentals, motor, services, investment and manufacturing.
Listed entities under the group banner include Marawila Resorts, Sigiriya Village Hotels, Beruwela Resorts, Lankem Developments, Lankem Ceylon, EB Creasy, Laxapana Batteries, CW Mackie and CM Holdings.
"The adverse climatic conditions that the group had to face during this financial year contributed significantly to the increased losses that have been incurred. The failure of both monsoons has meant that all the group’s subsidiaries that have a stake in agriculture have faced difficult trading conditions," CFLB Chairman A. Rajaratnam said in the annual report.
"The outlook for the year ahead remains weak. The dry climatic conditions are likely to continue, as are extreme weather conditions of flash floods and high temperatures."
The group’s profitability had also been impacted by rising interest rates with finance costs up to Rs. 2.11 billion from Rs. 1.59 billion a year earlier. But high tea prices had been the silver lining in a bleak picture with losses in the plantation sector reduced, he said.
"In order to tide over these difficult times, the group will undertake an aggressive strategy of cost reductions to ensure that we can return to profitability as soon as possible," Rajaratnam said. "Where businesses are continuously running at losses, steps will be taken to either rationalize their operations or to dispose of them."
KPMG, the group’s auditors have said that "events and conditions may cast significant doubt that the respective subsidiary companies (identified in the notes to the accounts) will be able to continue as a going concern. Our opinion is not modified in respect of this matter."
But CFLB’s directors have said that they, after making necessary inquiries and reviews of the company’s future prospects and risks, cash flows and borrowing facilities, "have reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future."
The financial statements have therefore been prepared on a going concern basis, they have said.
Segmentally, the group had lost mostly in plantations (Rs. 658.2 million against a loss of Rs. 810.6 million a year earlier) and posted negative figures in trading of industrial products ( lossof Rs. 671.1 million), leisure (loss of Rs. 23.4 million, down from the previous year’s profit of Rs. 82 million) and others (Rs. 254.5 million against a profit of Rs. 239 million the previous year.) Trading and consumer products posted a profit of Rs. 529 million, up from Rs. 344.2 million a year earlier.
CFLB has a stated capital of Rs. 327 million and total assets of Rs. 41.9 billion. Total liabilities ran at Rs. 31 billion.
The company’s share with a net asset value of Rs. 8.41, up from Rs. 8.02 a year earlier, traded between a high of Rs. 25.30 and Rs. 17.50 during the year closing at Rs. 18.10. This compared to a trading range of Rs. 20 to Rs. 15.50 closing at Rs. 19.50 the previous year.
The group’s top shareholder is Colombo Investment Trust PLC (13.95%) followed by Property and Investment Holdings (Private) Ltd. (13.78%), Colombo Fort Investments PLC (12.06%) and Capital Investment Ltd. (10.82%).
Many of the Top 20 shareholders are related parties.
The directors of the company are: Messrs. A. Rajaratnam (chairman), SDR Arudpragasam (deputy chairman), Anushman Rajaratnam (MD), AM de S. Jayaratne, R. Seevaratnam, Ms. AK Gunawardhana, CPR Perera, PMA Sirimane and S. Rajaratnam.
The Colombo Fort Land and Buildings PLC (CFLB), a troubled conglomerate into a variety of businesses including plantations, leisure and industries, has taken a heavy blow from the weather in the year ended March 31, 2017, posting a group loss of Rs. 1.08 billion, up 59% from a loss of Rs. 680 million a year earlier, but is paying its shareholders a first and final dividend of 15 cents a share, it has been stated in its annual report.
The group is into industrial and consumer products, leisure, plantations, property rentals, motor, services, investment and manufacturing.
Listed entities under the group banner include Marawila Resorts, Sigiriya Village Hotels, Beruwela Resorts, Lankem Developments, Lankem Ceylon, EB Creasy, Laxapana Batteries, CW Mackie and CM Holdings.
"The adverse climatic conditions that the group had to face during this financial year contributed significantly to the increased losses that have been incurred. The failure of both monsoons has meant that all the group’s subsidiaries that have a stake in agriculture have faced difficult trading conditions," CFLB Chairman A. Rajaratnam said in the annual report.
"The outlook for the year ahead remains weak. The dry climatic conditions are likely to continue, as are extreme weather conditions of flash floods and high temperatures."
The group’s profitability had also been impacted by rising interest rates with finance costs up to Rs. 2.11 billion from Rs. 1.59 billion a year earlier. But high tea prices had been the silver lining in a bleak picture with losses in the plantation sector reduced, he said.
"In order to tide over these difficult times, the group will undertake an aggressive strategy of cost reductions to ensure that we can return to profitability as soon as possible," Rajaratnam said. "Where businesses are continuously running at losses, steps will be taken to either rationalize their operations or to dispose of them."
KPMG, the group’s auditors have said that "events and conditions may cast significant doubt that the respective subsidiary companies (identified in the notes to the accounts) will be able to continue as a going concern. Our opinion is not modified in respect of this matter."
But CFLB’s directors have said that they, after making necessary inquiries and reviews of the company’s future prospects and risks, cash flows and borrowing facilities, "have reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future."
The financial statements have therefore been prepared on a going concern basis, they have said.
Segmentally, the group had lost mostly in plantations (Rs. 658.2 million against a loss of Rs. 810.6 million a year earlier) and posted negative figures in trading of industrial products ( lossof Rs. 671.1 million), leisure (loss of Rs. 23.4 million, down from the previous year’s profit of Rs. 82 million) and others (Rs. 254.5 million against a profit of Rs. 239 million the previous year.) Trading and consumer products posted a profit of Rs. 529 million, up from Rs. 344.2 million a year earlier.
CFLB has a stated capital of Rs. 327 million and total assets of Rs. 41.9 billion. Total liabilities ran at Rs. 31 billion.
The company’s share with a net asset value of Rs. 8.41, up from Rs. 8.02 a year earlier, traded between a high of Rs. 25.30 and Rs. 17.50 during the year closing at Rs. 18.10. This compared to a trading range of Rs. 20 to Rs. 15.50 closing at Rs. 19.50 the previous year.
The group’s top shareholder is Colombo Investment Trust PLC (13.95%) followed by Property and Investment Holdings (Private) Ltd. (13.78%), Colombo Fort Investments PLC (12.06%) and Capital Investment Ltd. (10.82%).
Many of the Top 20 shareholders are related parties.
The directors of the company are: Messrs. A. Rajaratnam (chairman), SDR Arudpragasam (deputy chairman), Anushman Rajaratnam (MD), AM de S. Jayaratne, R. Seevaratnam, Ms. AK Gunawardhana, CPR Perera, PMA Sirimane and S. Rajaratnam.
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