Cash-rich Lee Hedges makes disclosure of Rs. 73 m CSR venture in north
Wednesday, 9 July 2014 00:49
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To invest Rs. 62 m in apparel training centre in Jaffna and Rs. 11 m in agribusiness in Vavuniya as part of CSR efforts
Sale of Colpetty Mills property to Avic for star-class hotel brings in Rs. 1.25 b in other income in FY14
Rich with cash and its highest-ever profit, following the sale of a strategic land for Rs. 1.2 billion, Lee Hedges PLC last week made a rare disclosure among listed entities regarding a Rs. 73 million CSR project.
Indicating it was making a disclosure as required by Section 8 of the Listing Rules of the CSE, Lee Hedges said it was investing Rs. 62 million in setting up an apparel training centre in Jaffna and Rs. 11 million in an agriculture project in Vavuniya.
Company analysts viewed Lee Hedges’ disclosure concerning Corporate Social Responsibility (CSR) projects as perhaps the first-of-its-kind. Several listed companies spend larger amounts on CSR, though no specific disclosure is made.
In its filing to the CSE, Lee Hedges said its Rs. 62 million investment in an apparel training centre in Jaffna was as a CSR project to uplift the life of the community in the Northern Province by providing training in the apparel sector for better employment. This project is intended to train young adults who are presently unemployed in Jaffna to learn skills related to the apparel industry, and thereafter employ them in the production of garments for both the local and foreign export markets.
The filing however didn’t specify whether the company planned on setting up a factory for the production of garments or not, or whether those trained would look for opportunities in a select few apparel units coming up in the north.
The second CSR project with an investment of around Rs. 10.8 million is for the cultivation of red lady papayas and Cavendish bananas to create employment for the communities in Vavuniya.
The Rs. 73 million CSR investment in the north comes hot on the heels of Lee Hedges in the financial year ended on 31 March 2014 posting its highest-ever profit of Rs. 1.17 billion. This was in a year when Group revenue was only Rs. 4 million, up from Rs. 1 million in FY13.
This is because of other income of Rs. 1.28 billion following the sale of land last year. The company, which has around 950 shareholders, hasn’t paid dividends for over a decade.
In October last year, Lee Hedges PLC said it executed the deed of transfer with Avic International Hotels Lanka Ltd., for the sale of Lot A of the land called Colpetty Mills at No. 418 R.A.de Mel Mawatha, Colombo 3 contained in an extent of one acre and 21.5 perches, for Rs. 1.24 billion.
In FY12, the company, (then known as Shaw Wallace and Hedges) sold 264.65 perches of land in Colpetty for Rs. 1.85 billion to Avic International. The sale proceeds were to be used to finance the ongoing 30-storey development project on the adjoining property. Avic is building a star-class hotel on the newly-acquired land.
The deal with Avic was following the Board of Directors in July resolving to enter into a MOU with the Urban Development Authority for the lease of a property at No. 349, Galle Road, Colombo 3, known as the Cashew Corporation land, in extent of 53 perches for a 99-year lease term at a total value of Rs. 466.5 million for the intended development of the property by the company.
The property leased from the UDA was originally owned by the company and was acquired by the Government in 1970 for the Cashew Corporation. The company was happy to have re-secured the property and is likely to enhance the value.
In March this year, Lee Hedges said its subsidiary Lee Hedges Investments Ltd. signed an agreement with the BOI for a mixed development project with an envisaged investment of $ 9.5 million on the land at No. 439, Galle Road, Colombo 3.
Though enjoying Rs. 1.5 billion in revenue reserves as of end FY13 and Rs. 2.7 billion in FY14, during the past 11 years, Lee Hedges had suffered losses in six years. The highest loss of Rs. 116 million was in FY2009 with a Rs. 72 million loss in FY 2008, Rs. 89 million loss in FY2010 whilst in FY12 it was Rs. 94 million. In 2011 it posted a profit of Rs. 77 million and Rs. 7 million in FY 2012. It has invested Rs. 2.4 billion in short-term investments.
Lee Hedges and Company holds a 51% stake and Pioneer Homes Ltd., and Elgin Investments own 7% and 4% each.
The Lee Hedges PLC Board of Directors comprises of S. Vamadhevan (Chairman), L.L. Samarasinghe, S. Balaratnam and S.M.N.L. Senanayake.
