Growing illicit beverages trading worries Farsons

Beverages are being imported and placed on the market without the eco-contribution and other taxes being paid, shareholders of Simonds Farsons Cisk plc were told.

Farsons shall continue to press for a fair level playing field to be established, Group CEO Louis A. Farrugia told the annual general meeting.

"While the company has always believed in the considerable value and importance of competition for a healthy economy, we shall remain vigilant on this issue.

"We can meet the legitimate challenge with appropriate strategies of low-priced beverages but we must expect and insist that all traders should pay their fiscal dues," Mr Farrugia insisted.

Referring to the new €24 million investment in a new soft drink packaging hall and logistics centre, which was opened last February, he said the project signified a substantial restructuring of operations for Farsons, including the centralisation of its distribution system.

The board of directors has approved a revaluation of its land and buildings, which is being reflected in the consolidated balance sheet. The revaluation amounts to €55.5 million and is based on the independent valuations of two architectural firms.

The net surplus after providing for deferred taxation of €11.1 million, amounts to €44.4 million. This has been credited to reserves and so is part of shareholders' equity.

The board explored the best use that should be made of the properties, the long-term objective being that of ensuring new income streams to the group with added returns to the shareholders.

A board committee, under the chairmanship of Roderick Chalmers, was appointed for this purpose. Mr Chalmers explained to shareholders the board's proposal of transferring the properties to Trident Developments Ltd.

The directors are also proposing that Trident Developments Ltd will be renamed Trident Properties plc and, as a separate public company, would be listed on the Malta Stock Exchange.

Once Trident Properties is set up, all Farsons shareholders will be allotted shares in Trident Properties plc on a pro-rata basis to their shareholding in Simonds Farsons Cisk plc.

The board believes such restructuring will benefit the group in a number of ways.

Trident Properties plc will be managed by a separate CEO with expertise in the property sector.

This will enable the company to attract strategic investors with a view to developing certain properties such as the Wands and Mrieħel sites.

Referring to the construction of a new brew house as the final capital project of the company's investment programme, Mr Farrugia informed shareholders that preliminary design works have already been carried out.

The board will be considering commencement of works for next year with completion targeted for 2011. Once this is done, Farsons would have undergone a total renewal of its operations for the third time in its 80 year history being celebrated this year.

Company chairman Bryan A. Gera referred to the six per cent increase in the group's turnover from €62.2 million to €66.1 million. Group profit before tax increased from €2.2 million to €4 million, up an impressive 77 per cent.

Mr Gera said the board is recommending an improved and record dividend. Apart from the €233,000 interim dividend declared last September, the board proposed a final dividend of €1,367,000, bringing the total dividend to €1,600,000. This represents an increase of 37 per cent over last year's dividend. Both payments are payable out of tax-exempt profits.