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Hayleys Ltd's Group profit before tax recorded at Rs. 1,029 million in the financial year 2001-2002 was 20 percent below the level reached in the previous year, the Group's Chairman and Chief Executive Sunil Mendis said in the Annual Report.

While profit after tax recorded at Rs. 775 million was 23 percent less than last year, profit attributable to the Company was recorded at Rs. 437.1 million, which was 28 percent lower than the level in 2000/01.

The Chairman said that the Group's coir businesses contributed most to the Group's result, supplemented by substantial contributions from Haycarb Group, Dipped Products Group (DPL) and Maritime Holdings Group.

"The performance of the coir businesses was especially noteworthy, with substantial contributions from Rileys, Volanka Exports, Hayleys Exports Group, Ravi Industries and Toyo Cushion. Haycarb Group's performance was adversely affected by the substantial losses of Haycarb's subsidiary kinetics, which is receiving close attention. DPL's performance reflected a more modest contribution from its plantations business than in the previous year, due to adverse weather conditions and lower prices. Maritime Holdings Group performed well under very challenging conditions.

Some other companies made worthwhile, though more modest contributions to Group profit during the year. Hayleys Plantation Services/Talawakelle Plantations, did well despite less favourable conditions for tea. Hayleys MGT Knitting Mills/Hayleys ADC Textiles improved slightly on their performance of the previous year. Hayleys Electronics Lighting produced a creditable result, helped by substantial income from their floodlighting project in the Maldives. Quality Seed Company performed extremely well and Haychem/Hayleys Agrocare did likewise. HJS Condiments also produced a welcome return. Dimo did not do as well as in the previous year, but still made a reasonable contribution to profit", the Chairman said.

He said some companies engaged in Inland Marketing fared very poorly.

"Chief among these were Hayleys Electronics' Consumer Electronics businesses and Hayleys Photoprint Group. The former registered a large loss, with losses being contained in the second half of the year. The latter also recorded a large loss, due largely to the bad performance of Printers' Requisites and Hayleys Docsolutions. Both areas are included in the program of re-structuring referred to in greater detail below. The operations of Hayleys Docsolutions have been discontinued as of March 31, 2002.

In general, the substantial compensation costs connected with staff reduction in the process of restructuring dented the profitability of Inland Marketing considerably, but we are confident these costs will be justified by the benefits that are expected", Mr. Mendis said.

He said the Group accounts provided for income tax of Rs. 255 million, 25 percent of its pre-tax profit.

"The rate is lower than what it would have been due to tax holidays and concessions enjoyed by some of our export businesses. The Group (excluding associates) contributed a further Rs. 416 million to Government revenue in the year, through payment of other taxes and tariffs", the Chairman said.

He said the Board declared a 17.5 percent interim dividend in April 2002, which was not subject to tax as it was paid from dividends received.

"Following the Rights Issue of one share for every nine shares held at Rs. 15 per share, the dividend was paid on the higher capital in place. We now recommend the payment of a final dividend of 17.5 percent. The total dividend for the years should thus be Rs. 140 million against Rs. 126 million last year", the Chairman said.

He said the Group's focus on consolidating activity will continue, along with emphasis on improving productivity and cutting costs.

"We remain strongly committed to sub-contracting and out-sourcing activity to contain cost increases. We have over the past several years moved out of loss-making activity and will continue to do so where the activity cannot be revived.

Investment in our core businesses continues. This includes continuing investment in Plantations and in Hayleys MGT/Hayleys ADC. Our commitment to the Plantations sector was underlined by our associate company Hayleys Plantation Services' decision to purchase the 19 percent residual stake held in Talawakelle Plantations by the Government when it became available, taking its shareholding to 70 percent of that Company's equity.

Maritime Holdings is investing further in developing its capabilities in supply chain management. Haycarb is currently implementing the first phase of an investment in producing charcoal from coconut shell, with substantial electricity generation in the process. New agricultural crops will be grown for use by HJS Condiments in its retail-packed production, which will include relishes and salads.

Talawakelle Plantations' Great Western Estate became the first tea factory in Sri Lanka to obtain HACCP certification, the international food safety standard. Maritime Holdings' container repair facility received a Sri Lanka National Quality Award in 2001. Hayleys Ltd. itself obtained a SLAA+ credit rating from Fitch Rating during the year", the Chairman said in the Annual Report. 

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Copyright 2001 The Associated Newspapers of Ceylon Ltd.
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