In its recently released Annual Report, Lanka Tiles PLC unveiled results that showed that the Company was in remarkably good financial health.
In financial year 2009/2010, the Company's profit after tax increased 34% to Rs. 379 million, the highest in its 25-year history. These figures are proof of Lanka Tiles' commitment to strong corporate governance, operational efficiency, prudent investments, and shareholder value creation.
Indeed, the Company's shares performed exceptionally well, a stunning achievement given the country's sometimes turbulent stock market. The Company also paid out the highest amount of dividends in its recent history, rewarding its shareholders for the trust they had reposed in it.
Lanka Tiles Chairman Anthony Page, commented that shareholders can "expect this trend to continue in the future".
In spite of the challenges posed by difficult global and domestic economic circumstances, Lanka Tiles was able to achieve commendable financial results. For example, the Company's gross revenues increased by 10.9% to Rs. 2.852 billion, despite an economy-wide slowdown in foreign demand for Sri Lankan products. In marked contrast to this gloomy macroeconomic picture, however, it is heartening to note that Lanka Tiles succeeded in increasing exports by 20% during the year under review, an achievement driven primarily by demand from Australia.
The global recession emboldened the Company to continue the carefully-managed expansion of its domestic operations. Lanka Tiles invested approximately Rs. 200 million towards upgrading plant and machinery in order to more efficiently meet consumer demand. This focus on improving the Company's fixed assets succeeded in maintaining production capacity and increasing the cost-effectiveness of its manufacturing processes.
Lanka Tiles took stock of itself during the difficult financial environment, using the adverse conditions as an opportunity to rigorously assess the efficiency of its manufacturing operations. As a result, Lanka Tiles was able to achieve greater operational efficiency and improve its gross profit margins to 30%.
During the period under review, the Company also unveiled its brand new warehouse complex in Biyagama, built at a cost of Rs. 200 million. These ultra-modern facilities, erected on a 2-acre property, will give Lanka Tiles an additional 40,000 sq. ft. of warehouse space. As the warehouse complex is connected online to all of the Company's showrooms, it will greatly improve Lanka Tiles' inventory management.
The importance of this upgrade takes on additional significance when the Company's sales expansion is taken into account. Six franchise dealers in Nittambuwa, Moratuwa, Pandadura, Kiribathgoda, Maharagama, and Jaffna were added to the Lanka Tiles retail network. The Company also appointed one new distributor, four new direct dealers, and eleven sub-dealers during the year under review, helping it expand and enhance its sales presence.
Lanka Tiles has also diversified its product portfolio, with tile grout and mortar being marketed under the 'Swisstek' brand name. The Company will also be introducing premium-quality marble and granite flooring in the upcoming year, which will give customers an even wider range of flooring solutions.
These changes look certain to herald an even more successful year for Lanka Tiles, with the Company posting impressive results in the first two months of the current financial year.