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Carson Cumberbatch & Company Limited, released its consolidated financial results to its shareholders recently, ahead of most other companies whose financial years closed on March 31, 2002, and the first company within the diversified conglomerates category of the Colombo Stock Exchange to do so. All 14 listed companies within the Carson Cumberbatch Group released their financial results to the shareholders by May 20. The results show an impressive growth with consolidated turnover and profit before tax recording increases of 39.47% and 94.41%. Consolidated turnover for the year was Rs. 3.31 billion and profit before tax Rs. 321.21 million.

As a regional holding company Carsons owns and manages over 18,000 hectares of oil palm plantations in South East Asia. The commencement of commercial operations by its newest oil palm venture in Indonesia added momentum to the enhanced performance of the Group. This venture, which comprises 13,800 hectares of oil palm plantations and a technologically advanced oil processing mill with a rated capacity of 45 metric tonnes per hour expandable to 90 metric tonnes per hour, is near the port town of Sampit in Central Kalimantan.

A dedicated team of people were responsible for transforming this once uninhabited terrain into a vibrant and productive plantation, now home to over 1,600 families, whose lives revolve around the community that the Company has created for them. This totally self sufficient plantation is equipped with housing, medical and recreational facilities for all employees, and is considered a benchmark for the plantation industry in Indonesia. The infrastructure development within this plantation alone has contributed to the economic uplift for the region, the 800km road network being a prime example of a development which has benefited all the surrounding villages in the vicinity.

Carson Cumberbatch & Company Limited reports that the entire planation will come into maturity in the year 2004, by which time the parent company in Sri Lanka is expected to benefit substantially from the ensuing profits, cashflow and dividend. A further land bank of 2,500 hectares is available within the plantation for development in the near future. With the recovery in world palm oil prices, the group's oil palm plantations in Malaysia returned to profitability and a planned replanting programme has also been implemented.

The brewery sector showed no appreciable growth due to lacklustre market conditions. Profitability was eroded due to the closure costs of the Nuwara Eliya plant, this move being an inevitable consequence of slow market growth due to restrictive regulations applicable to soft alcohol. In this exercise, the Voluntary Severance Scheme cost the Company Rs. 130 million. Carsons acknowledges that the recent removal of the Excise Special Provisions tax applicable to soft alcohol was a step in the right direction by the policy makers.

The brewery sector has passed on a more than proportionate amount of this tax reduction to its softer alcohols, whilst keeping the prices of its products with higher alcohol content unchanged. This is in keeping with the Group's consistent policy of advocating a liberalised regime for the softer alcohol in order to permanently combat the menace of illicit liquor. The brewery sector is looking at enhancing its capacity during the current financial year, as reported in their reviews.

The Carsons investment sector engaged in selective trading for profit gain making use of the opportunities offered by the pre-election upsurge in the bourse. The investment sector comprising primarily of The Ceylon Guardian Investment Trust Limited and its subsidiaries have been managed by Carsons since 1997, since which time it has been consistently profitable. Shareholders too have benefited from regular dividends by these companies. The rights issue made by the two quoted companies of the Guaridan Group have been oversubscribed bearing ample testimony to investor confidence in the strategies adopted by Carsons. Carsons reports that the proceeds of the rights issues will be used to explore new investment opportunities in the new emerging economy. During the year, Carsons investment sector was also involved in a substantial realignment of group holdings whereby cross holdings within the Group were minimised and all sectors were brought under a single parent company, Carson Cumberbatch & Company Limited.

The group's leisure sector has continued to be unprofitable for the last several years. Mounting losses have prompted Carson Cumberbatch to contemplate the divestiture of the two hotels owned by them. Carsons, however, reiterates that its relatively small airline business has attractive future potential and that opportunities for growth of this business would be pursued. The asset rich real estate business of Carsons, comprising a valuable portfolio of properties and a land bank in and around Colombo lends stability to the other relatively riskier businesses of the group. This sector is expected to benefit from the imminent economic recovery.

Carsons reports that it is greatly encouraged by the new direction that the Sri Lankan economy appears to be taking and the progress of the peace initiatives. A revival in investor confidence and the wide ranging economic reforms that are taking place is expected to provide a better base for businesses to operate in future.

Carsons' future business initiatives, it states, will continue to focus on strengthening its existing core businesses by branching out to new activities that are synergistic with the current operations and which will contribute to shareholder value addition. A conglomerate that has adopted results orientation and growth in profitability as key corporate values, Carsons expects all its businesses to concentrate their efforts on improving cashflow, reducing debt and securing above average returns to shareholders.

As a corporate which has over time pursued consistent and prudent policies in managing a diversified business portfolio, Carsons states that promising new ventures in infrastructure and others areas will be considered for future investment of surplus funds generated. These investments will be made, keeping in mind the need for the holding company to have adequate diversity in order to ensure a stable level of returns to its shareholders in the long term.

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Copyright 2001 The Associated Newspapers of Ceylon Ltd.
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