Farsons reports 'credible' performance in changed scenario

Farsons shareholders yesterday approved the board's recommendation for a total net dividend of 2c4 per ordinary share of 12c5 out of tax exempt profits. This amounts to Lm604,000 which is equal to last year's dividend.

Addressing the shareholders at the 58th annual general meeting, company chairman Bryan A. Gera referred to the eight per cent increase in Farsons Group's turnover in the past financial year reaching Lm26.8 million. This increase was not reflected in an increase in profitability, which hit the Lm826,000 mark.

Mr Gera said one could not compare the profit after taxation with last year's figure (Lm1.1m), which included a significant write back of Lm1,441,000 in the deferred tax provisions made as a result of the parent company's eligibility to tax benefits under the Business Promotion Act.

Mr Gera reported that the board had approved a change in the accounting policy. Investment properties that were previously valued at cost, according to the new policy are now being valued at open market value. This increased shareholders' reserves by Lm1.1 million after providing for deferred tax on this revaluation.

He also informed shareholders that the restructuring exercise of developing the group into four distinct and compatible businesses was now complete. These are: production and sale of beers and beverages; importation of food, beverages, wines and spirits; food franchising and property management. Group chief executive officer Louis A. Farrugia referred to the new scenario, which features a large number of new beers at a wide range of prices and, for the first time, the parallel trading of the major international brands of imported beers. He said Farsons adopted a strategy of competing at all levels.

"Our performance has been credible. Local production decreased marginally while profit margins were also put under pressure. But additional local value added has been won through the agreement with Anheuser-Busch to package Budweiser in Malta. We can state that Farsons actually increased its production of packaged beer in the year under review. This was part of the strategy of the group to optimise its resources and minimise the impact of a fully liberalised beer market on the company's operations."

Mr Farrugia referred to the importation of wines, food, spirits and beverages, saying this segment now comprised 29 per cent of the Group's turnover.

A major innovation was the launching of the Group's own brands of wines produced and bottled in Chile, Argentina, France and Spain. Both Villa Tritone and Compass Point brands are owned by Trident Wines Limited - a fully owned subsidiary within the Group.

Sales of both brands in a fully liberalised wine market had been very satisfactory.

On property management, he said that given the investment plan already announced, a substantial amount of property owned and utilised by the group will be released in the years ahead.