A decline in tandem of prices of tea and rubber in the final quarter of 2008 has taken the shine off the full year performance of Kelani Valley Plantations PLC (KVPL).

The company which is owned and managed by the Hayleys Group’s multinational rubber glove manufacturing group Dipped Products PLC, has reported that turnover for the year ending December 31, 2008 grew 10 per cent to Rs 3,109 million. However, net profit before tax declined 31 per cent to Rs 300 million, while profit after tax fell 32 per cent to Rs 278.7 million.

Reviewing these results, Hayleys Group Chairman N. G. Wickremeratne said KVPL would have ended 2008 with a far more attractive bottom line if not for the highly detrimental impact of the global financial collapse on commodity trading.

“The year under review commenced on a promising note and, apart from minor seasonal fluctuations, tea prices maintained healthy levels with prices overall being considerably higher than 2007, till the end of the third quarter,” he said. “October saw a complete reversal with sale averages declining to a two year low and an accumulation of a large proportion of unsold catalogued volumes by end November. This coupled with a similar downturn in rubber prices severely eroded profit margins,” Mr. Wickremeratne explained.

Turnover growth was derived from both tea and rubber, which recorded increases of 13 per cent and 3 per cent respectively contributing Rs. 1,966 million and 1,091 million and accounting for 63 per cent and 35 per cent of total turnover.

Profit attributable to equity holders of the company declined 33.5 per cent to Rs 275.8 million from Rs 415 million in 2007, which was the best year in the company’s history.

Based on these results, the Board of Directors of KVPL PLC has proposed a total dividend of Rs. 3/50 for 2008, as against Rs 5.50 per share in 2007.

Capital expenditure during the year was substantial, with investment focussing on renewal of the crop asset base, upgrading of plant and machinery, implementation of energy saving measures in the manufacturing process and to enhance the product range and manufacturing flexibility, Mr. Wickremeratne said. A major portion of the outlay was absorbed by rubber and tea re-planting followed by plant and machinery upgrades, which included the purchase of five Colour Separator units incorporating the latest technology.

Expenses were also incurred on the new effluent treatment plants as well as on the rehabilitation of existing effluent treatment systems to ensure that effluent discharged is in full compliance with the stringent standards mandated by the Central Environmental Authority. Improvements to worker housing and other related aspects under the company’s ‘A Home for Every Plantation Worker’ programme also received allocation of funds, he said.

A highlight of the year was the accreditation of all 19 tea plantations of the company as GLOBAL G.A.P compliant, by SGS-New Zealand. A team of environmental scientists commissioned by the company also carried out a bio-diversity assessment of all plantations under its management, producing a comprehensive fauna and flora inventory which will add further value to KVPL’s environmental management strategy.

The company’s contribution to the agriculture and plantation sector received national recognition during the year from the National Chamber of Exporters (NCE), which awarded KVPL the National Business Excellence Award and the NCE Export Gold Award.

Kelani Valley Plantations manages 27 estates with an extent of more than 13,000 hectares, divided almost equally in to tea and rubber. All of the company’s black tea producing factories have been certified as compliant with HACCP, ISO 22000:2005 and SGS-TASL product quality standards, ensuring that the teas they manufacture meet the highest required international food safety standards.

The Board of Directors of Kelani Valley Plantations Limited comprises Messrs N. G. Wickremeratne (Chairman), J. A. G. Anandarajah, G. K. Seneviratne (Managing Director) R. W. Soysa, , Dr. W. S. E. Fernando, B. P. W. Jayasekera, A.  M.  Pandithage (Alternate: R. A. Ebell), R. Seevaratnam and F. Mohideen.