125% dividend, 4 for 1 bonus shares
Millers boom on Kraft and KodakMillers Ltd., the well known department store owner and importer had a successful year ended March 31, 1998, when the company returned to profitability, posting an after-tax earning of Rs. 32.8 million against the previous year's loss of Rs. 52.2 million.
Kraft food products and Kodak films and photographic material had as in previous years been the company's major money spinner according to its recently published annual report and accounts now with shareholders. Processed cheese led sales in the Kraft range.
The controlling interest of Millers, whose subsidiary Cargills Ltd. owns the valuable Fort real estate comprising the sprawling York Street building that the two companies occupy, is controlled by Ceylon Theatres Ltd. Millers are also owners of the Bandarawela Hotel managed by Aitken Spence.
Consolidated turnover during the year at Rs. 2.4 billion was up 13% from a year earlier and the operating profit of Rs. 144.4 million was better than double the Rs. 44.4 million earned the previous year. Investment income of Rs. 9.8 million helped boost this figure.
Interest charges at Rs. 76.4 million was down 21% from a year earlier when a charge of Rs. 96.9 million on this account dragged the company's bottom line into the red. Despite this loss, the very modestly capitalized Millers which has an issued capital of only Rs. 6.2 million was able to pay its shareholders a dividend of 120% last year from retained earnings.
Shareholders get a bonanza this year with a 125% dividend plus a bonus issue on four new shares for each share held by capitalizing Rs. 24.9 million from reserves to bring its issued capital more in line with its actual worth. The group holding in property, plant and equipment alone is valued at over Rs. 500 million.
Given its low issued capital and high net worth, its eight-rupee shares which are infrequently traded commands a high price on the Colombo Stock Exchange. During the year under review the highest price a share commanded was Rs. 200 and the lowest Rs. 190. Millers shares were last transacted on the CSE at Rs. 180.25 on Sept. 29. Buyers were quoted at Rs. 200. There were no sellers.
Reviewing the year, the company's executive chairman, Mr. Anthony (Baba) Page attributed the "significant profit improvement'' to improved sales volumes mainly of the Kraft range of food products and by reduced cost.
"Improved management of inventories and receivables, with the consequent reduction of interest costs, also contributed to this situation. Kodak had to cope with unfair competition posed by grey imports of photographic films and paper which had escalated,'' Page said. This reference was to the widespread smuggling of photographic material about which the legitimate importers are now agitating.
Page anticipates "considerable challenges'' in the year ahead given the volatile conditions in all markets in which their business operates. He said that they were continuing a process of rationalising and divesting loss making activities.
"Efforts will be directed towards marketing and provision of customer service. Investments in the expansion of retail activities and the construction of a warehouse to meet the requirements of the group are also envisaged,'' the chairman said.
Among the agencies held by Millers in addition to Kodak, with whom the company has had a several decades long relationship, and Kraft, include the Sheaffer range of writing instruments, Bonlac non-fat milk, Foster's larger and a range of liquor.
The directors of the company are: Messrs. Anthony. A. Page (executive chairman), R. Senathi Rajah (deputy chairman), T.D.E. Jayanithie (managing director), S.R. Balachandran (finance director), J.A. Aloysius, B.M. Amarasekera, Sanjeev Gardiner, J.W.A. Muttukumaru. J.C. Page, L.R. Page, V.R. Page, Errol. E.A.D. Perera and A.T.P. Edirisinghe (alternate to L.R. Page)