Carson leads blue chips league with biggest pre- and post-tax profit

Conglomerate Carson Cumberbatch Plc has become the most profitable diversified blue chip on pre- and post-tax basis though lagging behind John Keells Holdings (JKH) on net profit attributable to equity holders.

The diversified blue chip Carson Cumberbatch this week announced for the year ended on 31 March 2011 a mega Rs. 12.3 billion Group pre-tax, up by 79%. This was above the Rs. 10.6 billion posted by premier blue chip JKH. Consolidated after-tax profit of Carson grew by 79% to Rs. 9.72 billion, above the Rs. 9.03 billion of JKH.

Carson’s pre-tax and post tax figure can be considered the best among the listed companies with 31 March as the financial year end.

It is slightly behind its parent and plantation sector classified Bukit Darah which owns 46.4% in it, and had posted Rs. 13 billion pre-tax and Rs. 10.1 b post-tax profit.

FY 2011 profit attributable to equity holders of Carson rose by 41% to Rs. 4.6 billion, which however was far below JKH’s impressive Rs. 8.24 billion.

In their own right both blue chips posted best-ever results.

Non controlling interest profit of Carson was Rs. 5.1 billion up by 136% over 2009/10 financial year.

Carson saw its top line grow by 70% to Rs. 36.34 billion, which was also lower in comparison to JKH’s Rs. 60.5 billion.

Unlike JKH, which had a dip in fourth quarter owing to previous year’s corresponding quarter having exceptional capital gains, Carson had a robust 4Q with net profit attributable to equity holders of Rs. 1.7 billion, up by 324% and post-tax profit of Rs. 3.2 billion, up by 356% over the corresponding quarter of FY2010. Pre-tax profit in 4Q was Rs. 4.1 billion, up by 378%. Group revenue of Carson grew by 102% to Rs. 11.4 billion.

Carson FY2011 performance was also boosted by Rs. 798 million in net realised gain on sales of investments, up by 17% over FY10, Rs. 598 million in mark to market value adjustments (unrealised), up by 98% and Rs. 516 million in foreign exchange gain as opposed to Rs. 39 million in FY10.

Sector wise, Carson’s overseas oil palm plantation operations produced Rs. 20.6 billion in revenue, almost double the figure of FY2010 whilst its pre-tax profit was Rs. 8.7 billion, up from Rs. 5 billion. Beverage business brought in Rs. 11.65 billion in revenue up from Rs. 8.1 billion whilst pre-tax profit crossed the Rs. 1 billion mark to Rs. 1.65 billion, as against Rs. 659 million in FY10.

Investment holdings and financial services pre-tax profit grew from Rs. 1.2 billion to Rs. 1.8 billion whilst its revenue rose from Rs. 2 billion to Rs. 3.5 billion in FY11. Real estate sector business top line was almost static but pre-tax profit was Rs. 13 million as against a loss of Rs. 116 million in FY10.

Hotels business increased profits to Rs. 73 million on a turnover of Rs. 336.7 million, up from Rs. 17 million and Rs. 223 million in FY10. Management services continue to make losses though revenues had increased.

As at 31 March 2011, Carson’s group assets had doubled to Rs. 80.1 billion from Rs. 40 billion in FY10. In comparison JKH Group assets were Rs. 110 billion. Carson’s total equity amounted to Rs. 49.2 billion, up from Rs. 29.7 billion.

Group long-term liabilities rose from Rs. 4.3 billion to Rs. 21.6 billion whilst current liabilities grew from Rs. 5.9 billion to Rs. 9.2 billion. Net assets per share was Rs. 122.40, up from Rs. 102 a year ago and earnings per share grew to Rs. 23.42, up by 42% over FY10.

In interim accounts, on capital commitments Carson said as at 31 March 2011 Goodhope Asia Holdings Ltd. (GAHL) through its subsidiary Company Agro Asia Pacific Ltd. (AAPL) had made commitments with Premium Nutrient Berhad (PNB) to acquire 100% ownership in the subsidiary companies owned by PNB,

namely Premium Vegetables Sdn. Bhd. (PVO) and Premium Fats Sdn. Bhd. (PFSB) in Malaysia and Arani Agro Industries Ltd. (AAO) in India for a total consideration of Rs 4,030 million (approx. US$ 36.5 mn.) subsequent to the signing of the Sales and Purchase agreement with PNB.

During FY 2011 Carson Group restructured its investment business portfolio by identifying Guardian Capital Partners PLC (GCP), formerly known as Watapota Investment PLC to specialise in private equity investments. To execute this strategy, the company sold its rights entitlement in GCP rights issue to Ceylon Guardian Investment Trust PLC (CGITPLC), thereby transferring the direct controlling interest of GCP to CGITPLC. The rights were transacted at Rs. 10.30 per share for a total consideration of Rs. 224.8mn.

During the period, ownership of Carson Group’s investment management company, Guardian Fund Management Ltd. (GFM) was transferred from Rubber Investment Trust Limited to Ceylon Guardian Investment Trust PLC (CGITPLC) for Rs. 28.1 m, both companies being Carson Group subsidiaries, as a part of the investment sector restructuring. CGITPLC now owns 99.99% of GFM.

Carson also invested in 41,600,000 ordinary shares of Expolanka Holdings Limited, which were initially held by Group subsidiary Ceylon Investment PLC (CIPLC), on behalf of another Group subsidiary, Guardian Capital Partners PLC (GCP), and transferred during the year for Rs.250.85 m. GCP paid Rs. 5.72 m as interest to CIPLC against the cost of funds at 8% per annum for the said transaction.