Thursday, 17 April 2014 00:00
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A majority of the shareholders of Kuruwita Textile Mills PLC last week approved a delisting move proposed by the Board of Directors.
The company said that 97% of shareholders present by person and proxy voted in favour of the delisting move at the EGM held on 9 April.
The delisting is at Rs. 30 per share which the Directors have arranged to buy the shares of any shareholder who wishes to sell their shares. Brandix Textile Holdings is the majority shareowner with a 77.7% stake directly and via related parties 80.26%.
As at 31 March 2013, the company had 1,217 shareholders of whom, 1,034 or 85% held between 1 and 1,000 shares accounting for 0.75% and a further 148 shareholders holding between 1001 and 10,000 shares or a 1.99% stake. Other major shareholders include JB Cocoshell (5.22%), L.P. Hapangama (3.6%), and T. Al Nakib (3.48%).
Kuruwita last traded on 13 February 2013 at Rs. 20.90.
In its original announcement, the Kuruwita Board said: “Over the last four years management of Kuruwita Textiles has taken several steps to turn around the company and return to profitability. However, these steps have not been successful and the net assets per share of the company reduced from Rs. 43.09 as at 31 March 2011 to Rs. 24.10 as at 31 December 2013.”
Retained loss as at 31 December 2013 was Rs. 409.5 million at group level and Rs. 249.3 million at company level.
In the quarter ended 31 December 2013, the company witnessed a profit for the period in keeping with the historical trend of seasonality. However revenue recorded a decline of 21% during the quarter in comparison to the same quarter of FY 12/13 pointing to the fact that performance is not up to the desired mark. Revenue for the nine month period two recorded a decline of 10% to Rs. 5.3 billion.
Gross profit for the period was Rs. 133 million down 12% in comparison to the same period for FY 12/13. However for the nine month period the company had fared worse off in comparison to the same period of FY 12/13 recording a loss of Rs. 98 million in comparison to a profit of Rs. 224 million.
Reductions in semi-variable costs accounted under administrative and distribution expenses by 53% enabled the company to improve its operating and net profit figures in comparison to the same period of FY 12/13. However on a cumulative basis the company recorded a net loss of Rs. 448 million for the nine month period to December 2013 in comparison to a net loss of Rs. 133 million as at December 2012. This was an increase in the loss in excess of three fold.
These continuous negative results reported, have resulted in the net assets of the company eroding continuously, creating a reduction in share holder wealth. Net assets per share which stood at Rs. 43.09 in March 2011 declined to Rs. 24.10 over the corresponding period due to the losses recorded. This was in spite of a number of changes made by the management and steps taken, in their attempt to turn around the company.
The Board of Directors of Kuruwita Textile Mills PLC comprises of M.A. Omar (Chairman), G. Bandaranayake (Managing Director), U. Liyanage, F. Omar, H.A. Ariyaratne (nominee of DFCC) and H. Premaratne.
