19-Nov-2012 Interim financial statements 30-09-2012

CARGILLS (CEYLON), CEYLON & FOREIGN TRADES, DUNAMIS CAPITAL & THE FORTRESS RESORTS - Interim Financial Statements for the period ended 30-09-2012 have been uploaded on the CSE website.

CARGILLS (CEYLON) - http://www.cse.lk/cmt/upload_report_file/457_1353158453264.pdf

Cargills (Ceylon) PLC, a member of the C T Holdings Group, is pleased to present to you the Provisional Financial Statements for the six month period ended 30th September 2012.

The Group reports a strong performance for the first half of the financial year, despite challenging market conditions and reductions in
consumer spend. Transaction growth in the Retail sector was below expectation while a decline in the consumption of branded FMCG goods
continues. The trend was more evident in the urban markets where the increase of fuel and utility prices has had a greater impact than in the
regions. Despite these set-backs, the Group turnover during the six months period saw an increase of 20.5% to reach Rs 27.9 Billion.

Gross profit of the Group recorded a growth of 24.2% during the six months period largely reflecting the performance of Retail, Restaurants
and Manufacturing segments that continue to hold the Group in good stead, countering losses incurred by two of our newly acquired
businesses. The Group recorded an overall growth in Operating Profit of 17.2% for the 2nd quarter and 19.2% for the six months period.However profit-after tax for the period has declined by 39.6% due to the substantial increase in interest cost attributed to the new acquisitions.

We are particularly pleased with the performance of our dairy segment. Our investments in capacity expansion and new production lines see
an unrivalled product portfolio and supply strength towards long term market leadership in the dairy segment. Investments have been made
into state-of-the-art UHT milk production which would substantially increase production volumes while the added capacity of the yoghurt line
and a diversified cheese category positions our dairy segment towards long term growth.

The continued growth of the soft alcohol market is reflected in the performance of the brewery business. Brewing capacity has been doubled
since acquisition in early 2011 and the expansion drive is on schedule to reach 400,000 hectolitres capacity in the near term to meet the rising
demand.

Recent acquisitions and investments have resulted in an increase in Group debt and a corresponding increase in the finance cost. Finance
costs increased by 136.9% during the period compared to last year and amounted to Rs. 608.8Mn. The average rate of interest payable by
the group has shown an increase of approximately 70% over the last twelve months whilst the quantum of bank borrowings at the end of the
period has almost doubled compared to 30th September 2011. The increased Borrowings of the group has been utilized to fund new
acquisitions and investments, to expand production facilities in the Soft-Alcohol and Dairy sectors and to invest in freehold property as per the
future expansion plans of the Group.

Higher interest costs and utility expenses have had a direct impact on the Group’s profit margins. This together with the macro-economic
implications of the 2013 budget on our retail segment requires the Group to take stock of its future investment and expansion plans. While the
growth of our core businesses would remain on course the Group would certainly review its risk appetite to ensure optimum and sustained
value creation for our shareholders and the communities we serve.
14 November 2012

High borrowing companies are effected heavily as expected.

But most of these companies gross profit from operations increased.


But theoratically, CARG is trading at heavy premium to valuations. Seems many consider this a growth share so the prices are held today at Rs 145.

Many efficient management mitigates a part of excessive finance cost through operational efficiency applying cost reduction program.

Reduction of over staff, discontinuation of weakly operational segments, outsourcing of activities, minimizing the wastage of office/factory consumables etc..are strictly applied.

It is real challenge for any type of business enterprise & depend on operational management those who handle daily business activities.

Nov 20, 2012 (LBO) - Fortress Resort and Spa, a hotel in Koggala in Sri Lanka's southern coast said profit rose sharply to 35 million rupees in the six months to September 2012 recovering from a loss a year earlier.

The firm reported earnings of 32 cents for the half year.

Sri Lanka's rupee weakened in 2012 and tourist arrivals have also been strong, though some 5-star resorts are saying that occupancy is not high.

The hotel is positioning itself in the premium market becoming a member of the 'Small Luxury Hotels' network.

The hotel said revenues rose 29 percent to 210 million rupees in the half year and cost of sales rose at a slower 7 percent to 54.7 million rupees allowing gross profits to grow 39 percent to 155 million rupees.

Administration costs rose 21 percent to 109 million rupees. Finance costs at 25 million rupees were flat, and there was 4.3 million rupees of finance income.

The cashflow statements showed a 6.2 million gain on asset disposals and 4.2 million rupee exchange gains.
http://lbo.lk/fullstory.php?nid=986122559

Nov 20, 2012 (LBO) - Cargills (Ceylon) Plc Sri Lanka's a consumer goods group which runs the island's largest retail network said its taking stock of future expansion following a budget for 2013 and a slowdown in consumer spend.

Inflation picked up sharply in 2012 and the rupee fell after authorities took large volumes of credit to manipulate energy prices and resisted interest rate rises with printed money.

"Transaction growth in the Retail sector was below expectation while a decline in the consumption of branded FMCG goods continues," Cargills told shareholders in a stock exchange filing.

"The trend was more evident in the urban markets where the increase of fuel and utility prices has had a greater impact than in the regions."

A budget for 2013 proposed extending value added tax to the retail trade, targeting larger operators.

"This together with the macro-economic implications of the 2013 budget on our retail segment requires the Group to take stock of its future investment and expansion plans," the group said.

"While the growth of our core businesses would remain on course the Group would certainly review its risk appetite to ensure optimum and sustained value creation for our shareholders and the communities we serve."

Cargills runs Sri Lanka's fast expanding 'Food City' franchise which has also provided formal service sector retail jobs in an air conditioned environment for hundreds of young girls without any state intervention.

Sri Lanka has to find news sources to tax to keep the budget deficit down as the state expands. Shortly before the budget the administration said more than 50,000 unemployable graduates will be given tax payer funded jobs.

At around the same time the inland revenue department said it was looking for 50,000 new income tax payers through a 'tax week'.

In the September 2012 quarter, profits at Cargills fell 63 percent to 81 million rupees.

Group revenues rose 15 percent to 13.7 billion rupees, cost of sales rose 14.5 percent to 12.3 billion rupees and gross profit rose 24.5 percent to 1.4 billion rupees.

Finance costs rose 157 percent to 333 million rupees, hurting the bottom line.

Cargills said debt rose with new acquisitions, two of which were still making losses.

But its dairy business was doing well. Dairy is heavily protected in Sri Lanka with import duties.

"Our investments in capacity expansion and new production lines see an unrivalled product portfolio and supply strength towards long term market leadership in the dairy segment," the group said.

"Investments have been made into state-of-the-art UHT milk production which would substantially increase production volumes while the added capacity of the yoghurt line and a diversified cheese category positions our dairy segment towards long term growth."

Capacity at is brewery business had been doubled.

"The continued growth of the soft alcohol market is reflected in the performance of the brewery business," the firm said.

"Brewing capacity has been doubled since acquisition in early 2011 and the expansion drive is on schedule to reach 400,000 hectolitres capacity in the near term to meet the rising demand."

Taxes on beer were also raised during the year.
http://lbo.lk/fullstory.php?nid=859016531