DILMAH CEYLON TEA COMPANY PLC DCTC PLC + Subsidiary
Financial Year 2022/23 - Q2 and First Six Months Performance
Chief Executive Officer's Review
Backdrop
The quarter and six months ending 30th September 2022 saw a continuation of the adverse impact of the pandemic & the subsequent economic crisis. A dearth of FDI and dramatically reduced foreign currency inflows, high inflation - both locally and globally - as well as unprecedented interest rates all created macro and microeconomic headwinds which intensified the challenges we faced as a business.
The result was a hostile operating environment both locally and globally, which is now spilling over into the second half of the year. Depreciation of the LKR helped export oriented business to post record revenues and returns in LKR terms, although soaring inflation (70%+), unnaturally high cost of capital, and more than 100% increase in proposed taxation have significantly diminished the corresponding real returns of such businesses.
Performance
Dilmah Ceylon Tea Company PLC, together with its fully owned subsidiary - MJF Beverages (Pvt) LTD, referred to hereon as "the Group", reported strong performance during the quarter ending and year-to- date 30th September 2022 closing the second quarter of 2022/23 financial year with a 104% growth in revenue in LKR terms, recording LKR 10.8 Bn, against previous year LKR 5.3 Bn.
That growth is driven by depreciation of LKR and although export volumes saw an increase of 11% year on year, it is still some distance away from pre-pandemic levels. Recovery of the hospitality sector internationally aided value and volume growth even though high marketing costs and a challenging operating environment offset some of those gains.
The Group's gross profit was recorded at LKR 5.6 Bn for the first six months of 2022/23 relative to LKR
2.3 Bn for the same period last year. The main drivers of this growth were LKR depreciation, volume growth and positive changes in the sales mix. The input costs increased significantly with raw material prices per unit of measure increased by 52% and the packing material increased by 75% year on year. Direct costs & factory overheads too increased by 92% & 31% respectively, due to increased payroll cost as a result of the additional assistance provided to our employees to combat the very high cost of living.
It should also be noted that the full impact of raw material and packing material cost increases are yet to be felt and it is expected to have a significantly higher impact in the coming two quarters and could retard profitability. The Group closed the quarter with a stronger balance sheet as a result of robust policies and strong fundamentals.
Outlook
The positive results achieved in the first half of this year are tempered by predictions of global growth halving, and the likelihood of recession with an IMF warning that 'the worst is yet to come.'
Continued macroeconomic pressure will sustain the high interest rates, lower liquidity in foreign currency and local inflation of above 70%. The proposed changes to the tax structure, disruptions to power supply, fuel shortages and scarcity of essentials will have a significant impact on a greater portion of the population pushing significant number below the poverty line.
In response to the social impacts of the economic crisis in Sri Lanka, we have accelerated the humanitarian interventions of the Dilmah funded MJF Charitable Foundation, with unprecedented worker welfare initiatives ranging from nutrition to transport, health and general welfare and in the wider community, supporting the procurement and supply of emergency medicine, construction of hospitals, supporting the health, nutrition, education and welfare of workers and their families on tea estates, while continuing to also maintain our commitment to sustainability, conservation and restoration of the environment.
This company is the result of devotion to tea, faith, perseverance and a commitment to kindness to people and nature; it is this foundation of integrity, quality and teamwork that my father built this business on, that will see us through the challenges described and allow us to emerge stronger and better. We are optimistic that Sri Lanka will rebound and overcome the worst economic crisis ever faced by the country. For that to happen Government needs to address the factors that have hindered Sri Lanka's progress for decades and - understanding that the world has changed - urgently and committedly embrace the disciplines that are necessary for the social and economic reform that will release Sri Lanka's potential.
Dilhan C Fernando
Chief Executive Officer
11th November 2022
Colombo.
DILMAH CEYLON TEA COMPANY PLC AND ITS SUBSIDIARY
CORPORATE INFORMATION
LEGAL FORM | Quoted Public Company with Limited Liability | ||
COMPANY REGISTRATION NO | PQ 209 | ||
REGISTERED OFFICE | No. 111, Negombo Road, Peliyagoda, Sri Lanka | ||
Telephone: | (94 11) 482 2000 | ||
Facsimile : | (94 11) 482 2001 | ||
: | info@dilmahtea.com | ||
Website | : | www.dilmahtea.com | |
STOCK EXCHANGE LISTING | The Ordinary Shares are listed on the Colombo Stock Exchange | ||
SUBSIDIARY | MJF Beverages (Pvt) Ltd | ||
BOARD OF DIRECTORS | Chairman | ||
Merrill J Fernando | |||
Deputy Chairman | |||
Himendra S Ranaweera | |||
Chief Executive Officer/Director | |||
Dilhan C Fernando - B.Sc | |||
Directors | |||
Malik J Fernando - B.Sc | |||
Minette Perera - FCA, FCMA,FCCA | |||
Roshan Tissaaratchy - B.A, MBA, DipM, FCIM | |||
Rajanayagam Asirwatham - FCA | |||
Ravi A Fernando - DBA, MBA, MSt.(Cambridge) | |||
Darshana Gunasekera - FCMA, FCCA, B.Sc | |||
COMPANY SECRETARY | Jayanga Wegodapola - Attorney at law | ||
BANKS | Bank of Ceylon | ||
Bank of China Limited | |||
Cargills Bank Limited | |||
Commercial Bank of Ceylon PLC | |||
Citibank N.A. | |||
DFCC Bank PLC | |||
Hatton National Bank PLC | |||
The Hongkong & Shanghai Banking Corporation Limited | |||
National Development Bank PLC | |||
Nations Trust Bank PLC | |||
Standard Chartered Bank Limited | |||
AUDITORS | Ernst & Young, | ||
Chartered Accountants, | |||
201, De Saram Place, | |||
Colombo 10. |
Page - 01
Dilmah Ceylon Tea Company PLC and its Subsidiary
Interim Financial Report as at 30th September 2022
Statement of Financial Position | Group | Company | ||||
(All amounts in LKR 000's) | April - Sep - | April - Sep - | April-March | April - Sep - | April - Sep - | April-March |
2022 | 2021 | 2022 (Audited) | 2022 | 2021 | 2022 (Audited) | |
Assets | ||||||
Non-Current Assets | ||||||
Property, Plant and Equipment | 4,050,830 | 3,288,737 | 3,512,925 | 3,998,937 | 3,235,383 | 3,459,568 |
Investment Property | 632,583 | 642,617 | 637,921 | 632,583 | 642,617 | 637,921 |
Intangible Assets | 140,502 | 163,286 | 152,407 | 140,502 | 163,286 | 152,407 |
Right of Use Asset | 1,059,442 | 1,088,792 | 1,084,729 | 1,059,442 | 1,088,792 | 1,074,117 |
Other Non-Current Financial Assets | 483,977 | 350,271 | 303,492 | 483,977 | 350,271 | 303,492 |
Total Non Current Assets | 6,367,334 | 5,533,703 | 5,691,474 | 6,315,441 | 5,480,349 | 5,627,505 |
Current Assets | ||||||
Inventories | 3,097,553 | 1,759,074 | 1,919,742 | 3,058,593 | 1,729,165 | 1,895,379 |
Trade and Other Receivables | 7,493,311 | 4,351,917 | 5,877,985 | 7,461,220 | 4,311,813 | 5,839,953 |
Advances & Prepayments | 1,092,244 | 472,279 | 999,665 | 1,078,537 | 468,126 | 991,614 |
Amounts due from Related Party | - | - | - | 61,652 | 92,105 | 79,282 |
Cash and Cash Equivalents | 11,279,099 | 9,947,472 | 8,434,585 | 11,276,664 | 9,940,114 | 8,429,430 |
Total Current Assets | 22,962,207 | 16,530,742 | 17,231,977 | 22,936,667 | 16,541,324 | 17,235,658 |
Total Assets | 29,329,541 | 22,064,445 | 22,923,451 | 29,252,108 | 22,021,673 | 22,863,163 |
Equity and Liabilities | ||||||
Capital and Reserves | ||||||
Stated Capital | 642,500 | 642,500 | 642,500 | 642,500 | 642,500 | 642,500 |
Other Components of Equity | 250,169 | 116,455 | 69,676 | 250,169 | 116,455 | 69,676 |
Retained Earnings | 22,793,806 | 13,812,047 | 18,006,733 | 22,741,526 | 13,792,990 | 17,971,136 |
Total Equity | 23,686,475 | 14,571,002 | 18,718,909 | 23,634,195 | 14,551,945 | 18,683,312 |
Non Current Liabilities | ||||||
Lease Liability | 1,107,107 | 1,087,193 | 1,112,092 | 1,107,107 | 1,087,193 | 1,102,225 |
Deferred Tax Liabilities | 264,446 | 186,583 | 266,361 | 260,686 | 182,823 | 260,685 |
Retirement Benefit Obligations | 284,150 | 304,436 | 273,331 | 280,712 | 297,274 | 270,349 |
Total Non Current Liabilities | 1,655,702 | 1,578,212 | 1,651,784 | 1,648,505 | 1,567,290 | 1,633,259 |
Current Liabilities | ||||||
Trade and Other Payables | 1,160,015 | 347,837 | 767,697 | 1,150,970 | 343,374 | 765,938 |
Provisions and Accrued Expenses | 2,266,121 | 1,266,861 | 1,578,007 | 2,261,168 | 1,261,285 | 1,575,386 |
Lease Liability | 87,754 | 97,904 | 89,540 | 87,754 | 97,904 | 87,754 |
Short Term Loan | - | 3,996,610 | - | - | 3,996,610 | - |
Income Tax Payables | 471,593 | 203,742 | 117,514 | 469,515 | 203,265 | 117,514 |
Amount due to Related Party | 1,880 | 2,277 | - | - | - | - |
Total Current Liabilities | 3,987,363 | 5,915,231 | 2,552,758 | 3,969,408 | 5,902,438 | 2,546,592 |
Total Equity and Liabilities | 29,329,541 | 22,064,445 | 22,923,451 | 29,252,108 | 22,021,673 | 22,863,163 |
Net Assets per Share | 1,142.23 | 702.66 | 902.68 | 1,139.71 | 701.74 | 900.97 |
These Financial Statements are in compliance with the requirements of the Companies Act No. 07 of 2007.
Chamil Hathurusinghe
Sector Finance Controller
The Board of Directors is responsible for the preparation and presentation of these financial statements.
Signed for and on behalf of the board by,
Dilhan C Fernando | Darshana Gunasekera |
CEO/Director | Group Finance Director |
11th November 2022 | |
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Ceylon Tea Services plc published this content on 16 November 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 November 2022 03:57:04 UTC.
