Company achieved a turnover of Rs.20.4bn amounting to a growth of 31% while operating profit before interest and tax increased by 26% to Rs.2.1bn. Group profit after tax from continuing operations amounted to only Rs. 211mn, a drastic drop compared to the previous year. A sharp increase in interest rates resulted in the Group finance cost escalating by 73% to Rs.1.52bn. The company incurred an additional loss of Rs. 167mn from discontinued operations, resulting in the profit for the year declining to Rs. 43.7 Mn.

Retailing sector completed another satisfactory year with expansion of our super centres and continuous improvements in internal processes. The sales grew to Rs. 8.2bn, an increase of 43% over the previous year. Whilst profit from operations grew to Rs. 418mn. The Company continued its steady expansion during the year under review, and now has 10 Super Centres/Stores, and 30 Showrooms. The main event in the expansion programme was the commissioning of a new Super Centre in Negombo. The existing Super Store in Kandy was re-launched following a major revamping programme. A new Super Store was opened in April 2008 in Boralesgamuwa. The Arpico Privilege Card, the CRM initiative, provides enticing rewards for customers, has proven to be highly popular, and now has over 70,000 members, a remarkable feat in only 12 months of operation. Another innovation was ‘Private Labeling’, providing quality ‘Arpico Family’ products at lower prices in order to enhance value to customers.

The Plantations sector recorded impressive results in the year under review. The Sector recorded a robust turnover of 6.8bn which resulted in an operating profit before interest and tax of Rs. 1.2bn to become the highest contributor to Group profits. Kegalle Plantations PLC reported finest ever performance in its long history with a 36% growth in operating profits based on successful results in all three areas of activity. Turnover grew steeply from Rs. 1.8bn up to Rs. 2.2bn, to register a 19% increase over the previous financial year.

Maskeliya Plantations PLC reported a much improved results in this year, with a significantly higher profit than the previous year, from its tea operations which were driven by a higher crop and higher prices. The Company now has five estates under ISO 22000 standard, a further four of ISO 9001; of which five are operating under the Fair Trade labeling, and also has one estate that is certified as Organic. The demand for the Company’s teas is expected to remain high due to its reputation for quality high-grown tea, with unique characteristics, which are used in most high value brands in Russia, the United States, and Europe. Plans initiated last year on dual manufacturing, energy conservation, and tea replanting has laid a good foundation for the future.

Namunukula Plantation PLC’s oil palm operation achieved considerable progress with more palm fields reaching optimum yields. Oil Palm is expected to continue to be a reliable crop in the medium term and 1,300 hectares are now under cultivation.

Finally, The Plantations Sector has been able to improve its St. Claire’s tea exports through its 100% owned subsidiary, Maskeliya Tea Gardens (Pvt) Ltd. The Company now export to Russia, Australia, South Africa, Romania, Japan, Philippines, China, Chile and Kosovo.

The Tyre sector recorded a significant turnaround during the year, despite 30% increase in the rubber prices. Turnover improved by 27% to Rs. 2.7bn while operating profits grew from Rs. 11.6mn to Rs. 199.4mn.

The plastics sector encountered many external challenges. The cost of manufacture increased sharply due to raw material and energy price increases. The Sector generated an operating profit before interest and tax of Rs. 265mn compared to the profit of Rs. 255mn in 2006/07.

The Re-Distribution Division achieved a creditable level of growth during the year under review. Turnover grew by 25%, despite the market being adversely affected by the Country’s economic situation, and stiff competition. The Division underwent a restructuring, and market penetration increased significantly as a result of a variety of new product ranges. These included water pumps and CFL bulbs.

The Rubber Products Exports Sector performance during the year was not satisfactory. The operations of Richard Pieris Exports PLC were adversely affected by labour unrest. This resulted in a marginal operating profit before interest and tax of Rs. 4.2mn for the rubber sector in the financial year under review. The company was successful in regaining its jar sealing ring customers and markets. High latex prices, process inefficiencies and wastage continued to adversely affect the performance of Richard Pieris Natural Foams. The company focused on the high volume U.S. market and managed to capture key customers and is now embarking on a value addition programme.

“We re-evaluated the Group’s business portfolio during the year and decided to concentrate on our core business operations and move away from marginal businesses with limited potential. In the rationalizing process, we divested our Media business and discontinued the real estate development operation. Other poorly performing entities will be restructured or exited. The Group will increase resource allocation to expand retailing and plantations. Additionally we will take measures to reduce our debt levels by disposing idling real estate and implementing well focused working capital management practices. With this foundation, I am confident we will record much improved results in the financial year 2008/09” stated Mr. Pravir Samarasinghe, Director/Chief Operating Officer of Richard Pieris Group.