Hapugastenne Plantations Ltd. has reported that 1997 was "the best year for the company'' since the 1992 privatisation of plantation management with the "highest level of production, productivity and profitability being achieved.''

The company's chairman, Mr. R.L. Juriansz, has reported to shareholders that the average prices realised by its teas at the Colombo auctions was Rs. 118.74 a kg., the sixth highest among the tea and tea cum rubber regional plantation companies.

The company's total turnover at Rs. 1.13 billion was up 235% from the previous year. Profitability at operational level had grown 200%, Juriansz said.

The directors said that the company had recorded a profit of Rs. 248 million before managing agents' and sub-managing agents' remuneration. Accumulated losses up to Dec. 1997 was Rs. 156 million. No dividend has been declared for the year.

The managing agents and sub-managing agents remuneration based on a percentage of turnover and profits was Rs. 134.4 million, over twice the previous year's Rs. 63.9 million. A note to the financial statements does not specify what percentage of turnover and profits are payable as management remuneration. It merely says such payments were computed on "a percentage of turnover'' and "a percentage of the profit after interest payable and similar charges.'' Such percentages, however, are unspecified.

According to the profit and loss account, the operating profit of Rs. 290.1 million was up from Rs. 129.7 million a year earlier. Interest was down to Rs. 41.5 million from the previous year's Rs. 49.2 million while the employees profit share was down to 10 million from the previous year's Rs. 13 million.

The employees' profit share has been calculated on 5% of operating profit after interest less an over-provision of Rs. 2.4 million made the previous year.

Juriansz said that Hapugastenne continued to stress an accelerated field development programme through a rational land use plan and sound agricultural practices to optimize the utilisation and productivity of the company's land base. During the year under review Rs. 98 million was invested in such development which included replanting/new planting of 72 ha. of tea and maintenance of 125 ha. of immature tea; and the replanting/new planting of 98 ha. of rubber and maintenance of 237 ha. of immature rubber.

"The major constraint in our tea lands is a legacy of an inadequate bush population and an unsatisfactory soil structure due to erosion in the past. The major emphasis is on the rehabilitation of the soil coupled with increased bush cover through soil rehabilitation programmes and infilling of tea,'' the chairman said.

He said that a further 107 ha. have been planted with timber and fuelwood during the year. The large scale reforestation programme serves the dual purpose of enabling self-sufficiency in fuelwood , income from timber harvest and improved ecology on their plantations, Juriansz said.

He also reported that the company would receive an ADB credit line under the bank's plantation reform project.

Discussing prospects, Juriansz said that increased harvests have already been recorded and tea prices were stable. He expected better results this year than in 1997 despite the wage increase that came into effect at the beginning of this year.

Hapugastenne has leasehold rights on 16,746 ha. of land comprising 17 tea estates, 3 tea cum rubber estates and 2 rubber estates. The company produced 8.8 mn. kg. of tea and 972,000 kg. of rubber in 1997.

Subsequent to the balance sheet date, PERC sold on May 31 the total shareholding of the Plantation Investments and Management Co. (Pvt.) Ltd. (PIMC) which owned 51% of Hapugastenne. These shares were bought by James Finlay and Co. (Colombo) Ltd., whose subsidiary, Finaly plantation Management (Pvt.) Ltd. have managed Hapugastenne since the 1992 privatisation of plantation management.

In January this year, the Secretary to the Treasury sold a 20% stake of Hapugastenne (4 million shares) to the public at the par value of Rs. 10 per share. 10% of the company (2 million shares) were distributed free to company employees under the government's privatisation policy.

The directors of the company are R.L. Juriansz, C.L.K.P. Jayasuriya, E.R. Croos Moraes, N.K.H. Ratwatte and Dixon Nilaweera.