Plantations, Mini Hydro Power Sector, Tourism & Leisure Sector and Construction, Real
Estate, Property and Housing Sectors.
The immediate parent enterprise of the Company is Free Lanka Capital (Pvt) Limited
which, in the opinion of the directors is the ultimate parent enterprise which is jointly
owned by Browns Investments Ltd and Perpetual Holdings Ltd.
During the year, the company has invested in the Tea Leaf Resort Holdings (Pvt) Ltd, Free
Lanka Power 2 (Pvt) Ltd and Free Lanka Capital Properties (Pvt) Ltd.
The favorable weather conditions prevailed has significantly supported the Tea industry to record the highest ever National annual production in the calendar year 2010.
The Group Revenue on tea registered an annual growth of 19% over the last year and contributed 70.68% to the Group Revenue of the year. The Tea Sector has recorded a Gross Profit of Rs. 244.0 Mn.
The rubber production of the group has not recorded a growth mainly due to the reduction in revenue extent consequent to uprooting of some low yielding rubber fields for immediate future replanting. A significant extent of rubber replanting undertaken in the previous years will be available for harvesting in the forthcoming years.
The rubber sector has contributed 26% to the Group Turnover and 72% to the Group Gross Profit of the year.
Our Group Corporate Social responsibility of preserving the environment through sustainable development of our land base by replanting, ecological restoration and watershed management, soil conservation have been identified righteously as fundamental requirements.
The Group has cultivated more than 1.6 Mn plants in marginal tea Lands, roadsides, ravines/boundaries and in identified bare lands etc.
The Company through its subsidiaries and sub subsidiaries invested in the power sector. The Group has incorporated Free Lanka Power Holdings (Pvt) Ltd and acquired 50% of the equity of Hydro Power Free Lanka PLC (HPFLPLC) previously owned by an outside shareholder, before its initial public offer (IPO).
Presently the Group is claiming an effective holding of 52.70% of HPFLPLC which is currently operating two Mini Hydro Power Plants (MHPs) at Sanquhar and Delta Estates with a total capacity of 3.2 Mega Watt (MW) within the lands managed by Pussellawa Plantations Ltd. In addition, HPFLPLC is in the process of adding four more MHPs with a total capacity of 5.37 MW. It owns 100% equity of Hydro Power Free Lanka 3 (Pvt) Ltd and Hydro Power Free Lanka 2 (Pvt) Ltd and these 100% owned subsidiaries are in the process of constructing two MHPs at Stellenberg in Gampola and the other at Thebuwana in Kuruwita with the expected capacity levels of
0.94 MW and 0.83 Mw respectively.
Free Lanka Power 1 (Pvt) Ltd which is also a 100% owned subsidiary of HPFLPLC has obtained approvals to construct two MHPs with an aggregate capacity of 3.60 MW.
The Revenues generated by MHPs are received entirely from the sole customer, the Ceylon Electricity Board. HPFLPLC has contributed 2% to the Group Revenue and 7% for the
Group Gross profit for the year ended 31st March 2011.
Tourism & Leisure
To capitalize the gradually booming Tourism and Leisure Industry with the end of war, The Tea Leaf Resorts Holding (Pvt) Ltd (TLRHL) was incorporated as a subsidiary of the group having the controlling interest, to develop two boutique style hotels located in attractive scenic surroundings in Giragama, Kandy and Ayr in Padukka of Pussellawa Plantations Ltd comprising 58 and 34 rooms respectively that would be developed to three star class establishments.
The Project cost of Rs. 850.0 Mn would be financed by issue of equity amounting to Rs. 625.0 Mn of which Rs. 250.0 Mn contributing 40% of the equity would be invested by FLCH out of the IPO funds and the balance will be raised by bank borrowings.
Sierra Cables PLC and Pussellawa Plantations Ltd will be issued with 40% and 20% of the equity respectively to raise further funds of Rs. 375.0 Mn.
Real Estate and Property Development The Company has incorporated Free Lanka Capital Properties (Pvt) Ltd (FLCPL), a fully owned subsidiary for the purpose of constructing and operating a commercial building complex in Borrella with 80,000 sq. ft of rentable space. FLCPL has already purchased a land at D. Senanayaka Mawatha, Colombo 08 with an extent of 0A-01R-09.50P for Rs. 181.67 Mn.
The Company will invest Rs. 600.0 Mn in the equity of FLCPL out of the IPO proceeds financing the total project cost of Rs. 800.0 Mn. The balance funds would be generated either by bank borrowings or by pre-sales (PP)
After the sub division of Ordinary Shares on 30th September 2010, the Company offered to the public for subscription of 300,000,000 new shares at a share offer price of Rs. 5/- per share.
The Company has paid a first and final dividend of Rs. 1,068,000/- to the then-existing
shareholders prior to the sub division of Ordinary Shares.
During the year, Company has invested Rs. 10.0 Mn in Free Lanka Power 2 (Pvt) Ltd., 100% owned subsidiary and Rs. 0.10 Mn as an initial investment in Free Lanka Capital Properties (Pvt) Ltd, a 100% owned subsidiary. In addition, further investment of Rs. 2.50 Mn was made in The Tea Leaf Resorts Holding (Pvt) Ltd, a joint venture Company with a controlling interest and equity holding of 50%. The conversion of Preference Shares held by FLCH in Free Lanka Plantations Co. (Pvt)
Ltd (FLPC) into Ordinary Shares in September 2010 has resulted in increase of holding percentage of FLPC from 55% to 95.34% which has recorded a loss of Rs. 4.2 Mn during the year.
Utilization of IPO Funds;
Towards New Hydro Power Projects - 600.00 Mn
Towards the Development of two Boutique Style Hotels - 250.00 Mn
Towards Commercial Property Development Project - 600.00 Mn
Investments in Subsidiaries;
Name of Subsidiary No. of Ordinary Shares Holding %
The Tea Leaf Resort Holdings (Pvt) Ltd 250,000 50.00
Free Lanka Power 2 (Pvt) Ltd 10,000,000 100.00
Free Lanka Capital Properties (Pvt) Ltd 10,000 100.00
In AR, company has stated how the timber stock valuation has been carried out;
Short - Med Term Cons;
The highest contribution to the Group’s Revenue is derived from tea sector which is heavily dependent on the tea prices in the global market. Tea was once consider the industry with a rooster that lays golden eggs; is currently the third largest foreign exchange earner, employs over 100,000 persons, contributes healthily to the GNP and occupies some 200,000 hectares of good land. Its pre-eminent position seems evident.
Though it’s a drink that is second to water and consumed worldwide, our main buyers are from Middle-East & Russia. Currently tea is a heavily discussed topic due to Libyan issues and is prone to heavy price fluctuations if situation doesn’t have an immediate remedy.
Secondly, the wage hike agreement which was finalized couple of months back is going to be a major resistance in Tea pricing. Due to wages being high of laborers, the company may see a drop in profits margins. Or to cope up with the new productions cost being high, company may have to increase the overall price of the Tea which can again take a beating at competitive local and foreign markets.
Med - Long Term Pros;
The two boutique style hotels located in Giragama, Kandy and Ayr in Padukka of Pussellawa Plantations Ltd comprising 58 and 34 rooms respectively that aimed to be developed to three star class establishments will add more revenue to group in long run.
Proposed addition of four more MHPs with a total capacity of 5.37 MW will also contribute to the bottom line of the group in long run.
Last edited by smallville on Sun Sep 04, 2011 10:26 am; edited 1 time in total (Reason for editing : Changed EPS figures - POST & PRE IPO and also added few extra things..)