Hayleys PLC has said of itself in its recently released annual report that what you see above the waterline is just the "tip of the iceberg" with enormous potential for growth lying beneath the surface given the uniquely diverse portfolio of businesses that the group runs.
One of the country’s largest multinationals with a history going back 134 years, Hayleys and its subsidiaries have invested both here and abroad in seven broad categories – global markets and manufacturing, agriculture and plantations, transportation and logistics, leisure and aviation, consumer products, power and energy and investments and services.
The company’s annual report said that today Hayleys account for 2.15% of the country’s export income, 4.5% of tea and 2.5% of rubber production.
The company’s Chairman/CEO, Mr. A.M. Pandithage, has told shareholders that the financial year 2011/12 had seen the company achieving its highest ever earnings in the face of a challenging operating environment both at home and abroad.
The majority of the group’s business sectors had made positive contributions to earnings with particularly strong performances by hand protection, agriculture, purification and transportation sectors.
The group with an export turnover of US$ 360 million (Rs.40 billion) was one of the country’s top export earning companies and turnover during the year had grown 15% to reach Rs.62.5 billion. Group profit before-tax was a record Rs.4.8 billion including a capital gain of Rs.2.3 billion.
Discounting the capital gain, the PBT was up 30% and the group after-tax profit had surged to over Rs.3.8 billion from Rs.1.14 billion a year earlier. However, the group had taken a blow in the textile sector where a massive fraud had been detected and losses in this sector cost Rs. 856.48 million eroding the PBT.
Pandithage explained that a fundamental change had been implemented in 2009 with a policy that Hayleys will focus on investments where they have management and ownership control and exit passive stakes.
In the last three years the group had secured controlling interest in Mabroc, a tea exporting company, Quality Seed, a hybrid seed manufacturer, obtained 100% control of their fertilizer business and enhanced ownership in the plantation sector.
They had exited passive minority stakes in Tropical Villas and Jetwing Hotels.
Major contributions to earnings had been from agriculture (17.6% of PBT), hand protection (39.1% of PBT), purification (14.7% of PBT) and transport (13.8% of PBT).
The group has penetrated new markets with Dipped Products now having significant sales in key emerging economies like Brazil and India.
The group has rekindled its ship owning and operating activities and recently provided logistical support services to the on-going oil exploration off the coast of Mannar.
Pandithage said their recent acquisition of the Amaya group has already brought in significant earnings and also brings in synergies in resort management. With the refurbishment of the Continental Hotel they will have a modern and diverse leisure portfolio positioned to take advantage of the impending tourism boom.
Their investment in wind power on a 10 MW plant in Kalpitiya which is ready for commissioning and mini hydro power is expected to add to the group’s bottom line in the years to come, Pandithage said.
He expected their business process outsourcing unit to add a great deal of value in the future as this sector had shown exceptional growth at the national level.
Mr. Dhammika Perera, now Deputy Chairman of Hayleys has upped his stake in Hayleys to 45% as at March 31, 2011 from slightly over 25% a year earlier. Perera has also continued to buy into Hayleys during the current financial year.
The other major stakeholders of the company are the D.S. Jayasundera Trust with 11.60%, Hayleys Employees Share Trust (9.14%), LOLC (3.23%) and the EPF (2.43%).
Dhammika Perera controlled companies like Vallibel One (2.42%) and Royal Ceramics with 0.49% are also among Hayleys top 20 shareholders.
The company’s stated capital stands at Rs.1.58 billion, capital reserves at Rs.6.62 billion and revenue reserves at nearly Rs.10 billion. Total assets ran at Rs.64.8 billion and total liabilities at nearly Rs.37.1 billion.
Basic earnings per share at Rs.33.60 were up from Rs.9.03 the previous year and net assets per share were up to Rs.242.13 from Rs.208.61.
The Hayleys share closed the year at Rs.360, down from the previous year’s Rs.382.10.
The directors of the company are: Messrs. A.M. Pandithage (Chairman/CEO), K.D.D. Perera (Deputy Chairman), M.R.Zaheed, J.A.G. Anandarajah, S.C. Ganegoda, H.S.R. Kariyawasan, Dr. K.I.M. Ranasoma, Dr. Harsha Cabraal, W.D.N.H. Perera, L.T. Samarawickrama, R.P. Pathirana and M.D.S. Goonathilake.