Ceylon Cold Stores PLC (CCS), best known as Elephant House, has posted what its Chairman, Mr. Susantha Ratnayake, has called an "exceptional performance" in the year ended March 31, 2012 with record results both in terms of volume growth and profitability.
Ratnayake said in the company’s recently released annual report that CCS had been able to take full advantage of the favourable market conditions by leveraging its brand equity and operational strengths to achieve these results.
He claimed market leadership in both carbonated soft drinks and frozen confectionary although Coco Cola too have claimed market leadership in fizzy drinks.
Ratnayake noted that turnover for the year under review was up 30% to touch Rs.8.3 billion and the profit after-tax, excluding the gain from the increase in the fair value of the company’s investment property in Colombo, had hit Rs.1.1 billion – 342% above the previous year’s profit.
Including the increase in the value of investment property in Glennie Street and Justice Akbar Mawatha in the Slave Island area the profit after-tax was Rs.2.2 billion compared to the previous year’s Rs.252 million, Ratnayake said.
He reported that their investment in rejuvenating the Elephant brand in 2010 has had very positive results making the brand relevant to younger consumers while retaining the trust earned over generations.
Production capacity of soft drinks had been expanded and the company had invested in a state-of-the-art warehouse to increase storage capacity and improve service levels to distributors.
Investments had also been made in the ice cream plant to increase the processing and freezing capacity and they have continued investing in bottle coolers and freezers to support retailers island-wide to expand their network and serve customers better.
During the year under review the company raised Rs.648 million through a fully subscribed rights issue of one share for every ten shares held at a price of Rs.300 per share. This was followed by a sub-division of shares after the rights issue of one new share for every four held increasing the number of shares in issue to 95,040,000.
Thereafter the company invested Rs.500 million of the rights issue cash in Jaykay Marketing Services (Pvt) Limited, a fully owned subsidiary of CCS, in August 2011.
The directors have approved the payment of a first and final dividend of Rs.4 per share for the year under review with a pay out of Rs.380.1 million against the previous year’s dividend payout of Rs.86.4 million.
Ratnayake said that the per capita consumption of both beverages and frozen confectionery in Sri Lanka is still low compared to developed economies in the South East Asia region and they expect the market for both categories to grow.
"With the introduction of new products to extend the range, we are looking to increases our market share," he said.
However, he warned that despite the opportunities, the recent depreciation of the rupee, increase in energy cost and rising interest cost will make the current financial year a challenging one for all business segments of CCS.
CCS has a stated capital of Rs.918.2 million, up from Rs.270.2 million the previous year with a capital reserve of Rs.2.9 billion and revenue reserves of Rs.3.47 billion. Total assets of the company were running at slightly over Rs.11.95 billion and liabilities at Rs.4.66 billion.
Basic earnings per share during the year had grown to Rs.23.73 from Rs.2.11 the previous year. The company’s share traded at a high of Rs.980 and a low of Rs.80 during the year under review against a trading range of Rs.850 to Rs.150 the previous year.
Following the rights issue and the sub-division leading to sharp increase in the number of shares in issue and the down turn in the stock market, the CCS share traded last week at Rs. 100.
John Keells Holdings with 70.61% and its subsidiary Whittall Bousteads with 10.70% are the two biggest shareholders of CCS with EPF owning 1.28% of the company. All but four shareholders individually own less than one percent.
The directors of the company are: Messrs. Susantha Ratnayake (Chairman), A.D. Gunewardene, J.R.F. Peiris, J.R. Gunaratne, A.R. Rasiah, P.S. Jayawardena and U.P. Liyanage.