CTC contributes Rs. 21.3b to Government coffers

In the first quarter of 2015, Ceylon Tobacco Company (CTC) contributed Rs. 21.3 billion to the Government, an increase of 20% in comparison to the corresponding period last year primarily driven by an excise led price increase experienced in October 2014 and higher volumes.

The increase in domestic volumes of 11% during the quarter could be attributed to a higher level of

consumer confidence and an increase in disposable income. During the first quarter we continued to see a volume growth in the beedi segment.

The volume growth in un-regulated low priced products such as beedi remains a key risk to government revenue contribution from the regulated cigarette industry. The law enforcement agencies continued to effectively curtail the spread of unauthorised and illicit tobacco products.

In the first three months of 2015, a total of 249 raids have yielded six million illegal cigarettes at a market value of Rs. 180 million. The company's Profit after Tax stood at Rs. 2.5 billion for the first quarter. The company complied with 60% pictorial health warning from January 1, 2015 as needed by the regulations.

As a manufacturer, the company also complied with the subsequent change to the law needing 80% pictorial health warning, while the law has provided a grace period to exhaust existing stocks until June 1, 2015.

The total cost of implementing GHW for Q1 is Rs. 118 million.

CTC remains committed to invest into our key brands and predominantly to infuse value in our main-stream brand John Player Gold Leaf. Export sales revenue increased by Rs. 35.4 million for the quarter and the company will continue its endeavour to improve export performance into the future. CTC's flagship CSR initiative, the Sustainable Agricultural Development Program (SADP) continued to focus on alleviating poverty and empowering the livelihoods of families in rural Sri Lanka.

The number of active families supported by the company as at March 2015 stood at 17,464, comprising of 67,307 beneficiaries in 16 districts. The company's estimated liability of the Super Gain Tax as proposed in the interim budget is 3.8 billion calculated at 25% of the taxable income for the year of assessment 2013-2014.

However, the Bill to impose the tax is still pending parliamentary approval. The Directors recommend a first interim dividend of Rs. 3.45 per share to be paid by May 28, 2015.