Hayleys Fibre PLC, a unit of the Hayleys group, has decided to dispose of its six-acre freehold property in Ekala for a consideration of Rs.420 million to Alumex PLC, another Hayleys group company, a disclosure made by the company to the Colombo Stock Exchange (CSE) said. For this purpose, the company has called for an Extraordinary General Meeting on July 27 to obtain the approval from the shareholders as the transaction value exceeds 50 percent of the total value of the assets of the company – a major transaction under the Companies Act. Further, the CSE listing rules also require the shareholder nod for the transaction as its value exceeds one-third of total assets. As of March 31, 2016, Hayleys Fibre had an asset base of Rs.583.9 million.
The related party transaction will result in a thumping Rs.233.1 million profit as the carrying value of the said property in the books of Hayleys Fibre is Rs.186.9 million. The land, which in full extent, six acres, one rood and 7.9 perches, situated on the Minuwangoda Road, Ekala Road, Ja-Ela, had not been utilized for the company’s core business and rented out to third parties. Hayleys Fibre, a manufacturer and exporter of traditional coir products, said it would invest the sales proceeds in its core business to generate adequate returns.
For the year ended March 31, 2016, the company made a net profit of Rs.16.4 million with an earnings per share of Rs.2.05. “The company is currently reviewing opportunities in business integration and consolidation thereof,” the disclosure said. The Hayleys Fibre share was trading at Rs.91.70, up Rs.2.90 or 3.27 percent yesterday. The buyer, Alumex PLC on the other hand, will use the property for its business expansion. As of March 31, 2016, Hayleys PLC had a 65 percent stake in Hayleys Fibre and 51 percent in Alumex PLC.