One of the largest conglomerates that has switched from ownership of subsidiaries to a subsidiary after a ‘Brand Switch’ in last two years, Billionaire Harry Jayawardena controlled Distilleries Company of Sri Lanka (DCSL) Board of Directors has resolved that a minimum of 70% pay-out ratio will be maintained in the future.
In the latest annual review of the company Harry Jayawardena notes that directors are recommending a Rs. 0.67 per share dividend for the year 2017/18., and subsequent to the restructure the company will continue as a manufacturer of liquor while other business activities have been transferred to the holding company, Melstacorp PLC.
“Therefore the company would now be maintaining a much higher dividend pay-out ratio than the past. The Board has resolved that a minimum of 70% pay-out ratio will be maintained in the future” Jayawardena assures in his review.
DCSL has 4.6 billion ordinary voting shares in issue and almost over 96% is controlled by Harry Jayawardena controlled Melstacorp, Milford Exports and Lanka Milk Foods consortium.
The DCSL being the sole investor of Melstacorp Limited (“MC”) has restructured the DCSL Group with effect from 30 September 2016 as described in the announcement made to CSE on 1 August 2016. Earlier the restructuring of the Group has been dully approved by the shareholders of DCSL and the Courts under the part X of the Companies Act No. 07 of 2007. Consequent to the restructuring arrangement, the shareholders of DCSL have been allotted with shares in MC in the proportion of Four (4) MC shares in exchange of every One (1) share held in DCSL. Accordingly, DCSL became the wholly own subsidiary of MC with effect from 30 September 2016 and the shareholders of DCSL became the shareholders of MC and through MC all the subsidiaries in the Group. As a result of the restructuring arrangement, DCSL’s ownership interest in MC was diluted from 99.95% (voting shares) to 0.0002% (non-voting) shares and the resultant loss on dilution of Rs. 75 Billion is has been recognized in the profit or loss. The Company subdivided 300,000,000 shares being the all of the shares issued by the Company at end of trading on 14th February 2018 into ten (10) shares without any change to the stated capital of the company and leaving unaffected the relative voting and distribution rights of the holders of the same shares and consequent to the sub division, the total number of shares was increased to a total of 3,000,000,000 shares (3 billion).
Further, the Company issued 1,600,000,000 (1.6 billion) shares rank equally and pari passu in all respects with the existing ordinary shares by way of a private placement to its parent Melstacorp PLC for a consideration of Rs. 20,000,000,000 (Rs. 20 billion). On completion of the private placement the total number of shares was increased to 4,600,000,000 (4.6 billion). The Company also carried a capital reduction from Rs. 20,300,000,000 (Rs. 20.3 billion) to Rs. 3,000,000,000 (Rs. 3 billion) in order to partially wipe out the negative retained earnings of the Company without any changes to the number of issued shares of the Company.
“We are happy to note that current market capitalization of DCSL PLC is approximately Rs. 100 billion which shows that the market has recognized the true value of your company. I am very confident that DCSL will grow from strength to strength” Harry Jayawardena notes in his review in the latest annual report of the company.
– Reporting by Devendra Francis