Good Hope PLC | Annual Report 2010/11
On behalf of the Board of Directors, I ampleased to present the Annual Reportand Audited Financial Statements of Good Hope PLC, for the year ended 31stMarch 2011 and to welcome you to theone hundred and second Annual GeneralMeeting of the Company.Your Company recorded a profit before taxof Rs.191.68 mn for the year ended 31stMarch 2011,compared to Rs.121.04 mnduring the previous year.The increasedprofit was attributed to higher revenuesstemming from higher average pricesand high dividend income. Resultantly,the Company recorded a net profit aftertax of Rs. 154.87 mn during the yearcompared to a net profit after tax of Rs. 94.86 mn in the previous year.Commodity prices have since recoveredfrom the financial market crisis of 2008,reflecting the recovery of the keyeconomies especially that of the newlydeveloping nations like China, India andIndonesia.Vegetable oils are expected totrade at a reasonably comfortable pricerange over the short to medium termsupported by strong demandfundamentals.The growth of the industry over the lastfew years has resulted in consolidationamongst larger industry players. It hasbecome imperative that a smallercompany is inter linked to a largercompany with presence across the valuechain in order to maintain its bargainingpower and the resultant long termsustenance. Companies can no longeroperate confined to their segment of theindustry value chain.A small player inthe upstream segment like yourCompany, will be vulnerable to prices,given the commodity nature of itsoutput.This was the same rationale thatprompted the creation of Goodhope AsiaHoldings Ltd. (GHL), the holding entity of Carsons’ Group plantation sector. GHLwill hence systematically extend itsoperations across the value chainthrough presence in midstream anddownstream processing and valueadding activities.The consolidation of plantation sector assets under one entitywould hence provide the impetus toenhance volumes and effectivelyintegrate and generate long termshareholder value creation.However, this would have to befacilitated by continuous re-investmentof internally generated funds and newsources of debt and equity to supportexpansion plans. Considering the natureof the industry, a long term risk appetiteis required from any investor in thisindustry; with the ability to weatherimpacts of any cyclical trends in prices.In addition to re-investments of theinternally generated funds, a constantstream of long term funding is alsorequired from equity holders.