DPL is proud to be a truly international company. While our ownership is predominantly Sri Lankan, we have numerous overseas shareholders. Our operations, too, have long since spread beyond our country of origin. Our market is global - our products are sold and used on all six continents, and our penetration into formerly untapped or marginal markets continues to increase. We maintain international standards of quality and ethical manufacturing practices and integrate principles of social and environmental sustainability across our business.
In the year under review, we sought successfully to mitigate our exposure to the global economic challenges, specially in the European markets. We are responding to the changing needs of our customers whilst building new business in our traditional as well as non-traditional markets. DPL Group turnover increased by 20% to Rs. 23,658 million, delivering an attributable profit of Rs. 1,418 million to our shareholders. Our hand-protection sector posted PBT of Rs. 1.3 billion creating a new height in performance, while plantations contributed PBT of Rs. 963 million.
These results were achieved in the face of stiff competition from Chinese, Malaysian and other East Asian manufacturers. We held fast to our product quality standards and did not allow any compromise to our global reputation. We also continued to integrate sustainability practices into our businesses. It was in this manner that we consolidated our market position against the competition.
The contribution from Dipped Products (Thailand) Ltd. remained negative despite the fall in rubber prices. This subsidiary's margins were affected by severe competition and a reduction in demand for natural-latex medical examination gloves in favour of synthetic products. Steps were taken to increase our production of synthetic-latex medical gloves, but this was not sufficient to offset the negative pressure on profits.
More encouragingly, ICOGUANTI S.p.A., our marketing company based in Italy, showed improved results despite the difficult market conditions prevalent in the Eurozone.
Plantations registered their best-ever profitability, due mainly to good results from both our rubber and tea business. The main contributor was Kelani Valley Plantations PLC, which once again posted strong results. Talawakelle Tea Estates PLC, also made a commendable turnaround this year, converting last year's loss into a healthy profit.
We continued our ongoing drive to adopt leaner processes, driving up productivity and reducing costs while improving throughput. To reduce energy costs, we installed a biomass-fuelled heater at our Hanwella facility and began work on the installation of a similar heater at our facility in Thailand. Other plants underwent modification to improve their performance and broaden the range of their manufacturing capability. We also commenced developing new lines and processes that would meet the growing demand for DPL Products of high quality.
Externally, we actively developed new business in new areas, attending trade fairs around the world, leveraging the internet to find potential customers, and finding them in markets as far apart as Russia and Australia. Fortunately, demand has remained steady in markets outside Europe.
These efforts achieved a good degree of success that we were able to transcend, not just the external threats referred to above, but also the many challenges we faced on the domestic front. The most salient of these was a rise in input costs across the board - imported material inputs, wages and utility costs (particularly electricity and fuel) all rose substantially in the year under review. On the positive side, a steady decline in the price of natural rubber, whose average price year-on-year fell by Rs. 61.36/kg., helped us hold down pricing. Passing these benefits on to customer helped us build sales volumes, more than offsetting the negative effect of the difficult economic conditions prevailing in Europe.
The effective tax rate of the Group increased by a third, to 18% in the current year. The previous year's effective rate was low due to tax exempt capital gains on sale of shares. The full tax holiday enjoyed by Texnil (Pvt) Ltd. also expired at the end of the financial year. ICOGUANTI's effective tax rate, however, decreased to 37% from 40% in the previous year.
Grossart (Pvt) Ltd., Venigros (Pvt) Ltd. and Neoprex (Pvt) Ltd. paid respective interim dividends of Rs. 35/-, Rs. 22/- and Rs. 27/50 per share during the year. Feltex (Pvt) Ltd., Hanwella Rubber Products Ltd. and DPL Plantations (Pvt) Ltd. paid interim dividends of Rs. 10/50, Rs. 1/75 and Rs. 2/- per share respectively. Kelani Valley Plantations PLC paid a dividend of Rs. 6/- per share and ICOGUANTI distributed €444,000 as dividend in 2012.
Your Company declared an interim dividend of Rs. 4/- per share in March 2013 out of dividends (less withholding tax paid at source) received from subsidiaries in Sri Lanka.
Your Directors now propose a final dividend of Rs. 3/- per share, representing a total dividend payout of Rs. 7/- per share. This being entirely from dividend received by the Company and will be free of tax in your hands.
Two Non-Executive Directors resigned from the Board at the end of the year under review, consequent to their retirement from the Group. Mr. J A G Anandarajah's resignation took place on March 31, while Mr. G K Seneviratne resigned his seat with effect from April 7. Mr. Anandarajah first joined the Company in January 1980, serving as an Executive Director from 1989 onward and as Managing Director of DPL from January 2007 until March 2011. Mr. G K Seneviratne joined the Board in 1998 and has been serving as Managing Director of Kelani Valley Plantations since 2004. We thank them both for the valuable contributions they made as members of the DPL Board.
Two new Directors, Mr. R M T Premaratna, Head of Operations of DPL and Mr. Viraj Gunasekara have been appointed to the Board with effect from May 1, 2013 to fill the vacancies left by these resignations. These two new Directors will be serving in the capacity of Executive Director and Non-Executive Director respectively.
Looking forward to 2013-14, we face a number of challenges. The economic weather in our traditional markets remain unsettled, and the demand for lower-priced product alternatives seems set to continue in some markets at least albeit in the short term. The fall in natural rubber prices seems to be bottoming out; it is likely that they will begin to move up again possibly towards the third quarter. We have also seen the Sri Lanka Rupee appreciating considerably during the current year so far, compared to the last year. At the same time, domestic input costs are rising: we have already experienced substantial revisions to the minimum wage and to electricity tariffs. Clearly, the year ahead is going to be a tough one, but we remain undeterred in our efforts to transcend these challenges and move forward with planned investments in increased capacity and redoubled marketing efforts including the penetration of new markets.
New plant capacity is planned during the course of the new financial year in order to cater to demand growth specially for industrial hand protection products. Several innovative products that have been developed over the year under review will be commercialised in the course of the new financial year. Combining these with leaner manufacturing efforts will, we believe, continue to deliver growth and profits. DPTL is expected to turnaround as its major infrastructure bottleneck has been resolved with commissioning of an additional bio-mass heater.
We also take this opportunity to thank sincerely all DPL's employees, customers and business partners for their unstinting support, and our colleagues on the Board of Directors for their valuable inputs and guidance.
A M Pandithage
Dr. K I M Ranasoma
May 14, 2013