The company’s Chairman, Mr. Merrill J. Fernando, has reported that group turnover was up 0.9% to Rs.5.84 billion and the net profit after-tax up 19.3% to Rs.1.67 billion.
He said that the depreciation of the rupee had made a significant contribution to profits but qualified that this was only a provisional benefit "since advantages accruing from currency fluctuations are eventually absorbed by increased costs of inputs."
CTS has a very strong balance sheet with general reserves running at Rs.1.9 billion and retained earnings of Rs.4.67 billion in its books against the stated capital of Rs.200 million.
Fernando said in his chairman’s review that while the prevailing business environment in the country is encouraging, he cannot say the same of several other countries in which CTS markets tea as the downturn in the global economy continues to affect them.
A strong advocate of maintaining the integrity of pure Ceylon tea, Fernando continues to oppose the current ‘tea hub’ proposal seeking to import cheap orthodox teas to blend with pricey Ceylon tea.
"The current debate on making Sri Lanka a centre for trading in tea, and making Ceylon tea a commodity, is an age old wish of a few tea traders. Vested interests, both local and foreign, are bringing pressure on politicians to pursue this adventure once again," Fernando said.
"Let it be a warning to everyone who advocates the removal of restrictions placed on the import of orthodox tea, that they are treading dangerous ground, filled with assumptions and illusions. Their assumptions are far from realities in the market place. Demand for this flows from traders who built brands of foreign companies who, with time and well known purpose, moved to more convenient locations."
He said that the real success of Dilmah tea comes from the quality of single origin pure Ceylon tea packed right where it is grown.
"That is very largely the strength of the brand. Your company has proved beyond doubt that Ceylon tea enjoys consumer perception of quality, which other producers envy," he has told CTS shareholders.
He made the further point that Sri Lanka produces about 325 million kg of tea per year and all of it is sold at the highest prices in the world.
"Average Ceylon tea fetches in the market, between Rs.150 and Rs.200 per kg or more than tea from every other country. So, what is the problem? What are we looking for?" he asserted.
Fernando described himself as a hands-on marketer, "without any marketing qualifications or MBA behind my name." He said he had been able to build a global brand name taking advantage of the quality of the Ceylon tea and consumer perception that it is the world’s finest.
"I was merely the messenger," he explained.
MJF Teas (Pvt) Ltd with 65.38% and MJF Exports with 21.28% are the controlling shareholders of CTS followed by Dr. T. Senthilverl with 7.39%. All other individual shareholders own less than one percent.
The CTS share traded during the year under review at a high of Rs.750 and a low of Rs.530 against a trading range of Rs.1,000 to Rs.650 a year earlier.
Total assets of the company were running at Rs.7.6 billion, non-current liabilities at Rs.86.3 million and current liabilities at Rs.751.4 million.
The directors of the company are: Merrill J. Fernando (Chairman), Himendra S. Ranaweera (Deputy Chairman/CEO), Malik J. Fernando, Dilhan C. Fernando, Minette Perera, Roshan Tissaaratchy, Rajan Asirwatham and G. E. Chitty.