Annual Report 2010-2011 - Colombo Stock Exchange

Financial Review
Plastic sector recorded a growth of 43% in operational
profits during the year, which accounts for 12% of the group
operational profit. Plastic sector profits increased by Rs. 140 mn
to Rs. 460 mn., mainly due to an improvement in productivity,
and efficient controls in inventory levels.
Segmental Profit Composition
%
60
50
51
Despite the growth in volumes, Tyre sector’s contribution to
the Group operational profits declined from 14% to 7%, giving
rise to a negative growth of 12% during the year. Operational
profits reduced from Rs. 300 mn to Rs. 264 mn., mainly due to
escalating rubber prices.
Rubber sector has suffered in many ways during the year. High
rubber prices, lower demand from Western countries due to
slower economic growth together with an appreciation of local
currency has resulted in complete erosion of the profitability of
the Rubber sector. The sector has made a negative of Rs. 25
mn contribution to Group’s operational profit, compared to a
profit of Rs. 65 mn in the previous period.
40
30
20
10
0
3
(1)
14
7
15
11
23
21
Rubber Tyre Plastic Retail Services Plantations
2009/2010 2010/2011
8
11
37
Finance Cost
Market interest rates continued their downward trend during
the current financial year. Average Weighted Prime Lending
Rate which is the most appropriate indicator for corporate
borrowing rate has declined by 3.79% to 9.83% under the
same period which resulted in a significant decline in Group
average borrowing cost. Group debt further reduced by Rs. 913
mn during the year. As a result, finance cost reduced by Rs.
175 mn to Rs. 795 mn., and consequently the interest cover
ratios, too, improved to 4 times compared to 2 times in the last
financial year.
Share of results from Associates
RPC group owns 25% stake in Asian Alliance Insurance PLC
and 19% of AEN Oil Palm Limited which make up the associate
investments of the Group. Enhanced profitability of these two
institutions resulted in a growth of 90% in share of associates
profits which recorded at Rs. 113 mn during the current financial
year.
Profit/Loss on Discontinued Operations
Discontinued operations of Arpico Homes Ltd, RPC Global
Travels (Pvt) Ltd and Hameefa Kegalle (Pvt) Ltd showed a
marginal decline in losses from Rs. 18 mn to Rs. 12 mn as
compared to last year.
Finance Cost vs. Interest Cover Ratio
Rs. Mn.
1,600
1,200
800
400
0
2 880
1,473
1,436
2 969
795 4
1
1
06/07 07/08 08/09 09/10 10/11
Finance Cost (Rs. Mn.) Interest Cover Ratio
Losses on Discontinued Operations
Rs. Mn.
250
200
150
100
166
203
108
5
4
3
2
1
0
50
18
12
0
06/07 07/08 08/09 09/10 10/11
37
Annual Report 2010/2011 | Richard Pieris and Company PLC