Lion Brewery (Ceylon) PLC (Lion) turned a net loss of Rs.323.7 million for the quarter ended March 31, 2015 (4Q’15) from a net profit of Rs.395.2 million posted a year ago, the interim results released to the Colombo Stock Exchange (CSE) showed.
 
The loss per share was Rs.4.05 from an earnings per share (EPS) of Rs.4.94 recorded a year ago.

The performance was negatively impacted by the loss on disposal of the company’s old canning line and impairment provisions charged against the profit in respect of a bottling line.

During the period Lion sold its old canning line to Wallart Sarl of France and entered into a sale agreement for the sale of the old bottling line. The total loss and the impairment on disposal amounted to a massive Rs.274. 5 million.

A further Rs.340 million was charged to the income statement in respect of an input Value-Added Tax (VAT) in relation to the acquired, Miller Brewery Limited (MBL).

“The input VAT of Rs.480 million was to have been recovered from the output VAT due on Lion’s turnover. However, on October 24, 2014, the government through its budget exempted beer sales from VAT. As at October 24, 2014, Rs.340 million remained outstanding on account of recoverable input VAT on the transaction pertaining to the acquisition of trademarks and brands of MBL.

Since the recovery of this amount is in doubt, a provision of Rs.340 million has been made in the accounts for the period ended March 31, 2015,” the company said in its financial statements.

On October 30, 2014 Lion together with its 100 percent-owned subsidiary, Pearl Springs (Private) Limited, acquired a 100 percent stake in MBL for a purchase consideration of Rs.5.15 billion – Rs.4 million for trademarks and Rs.1.15 billion to purchase of MBL’s shareholding.

A further provision of Rs.120 million for the impairment of the investment made in Pearl Springs (Pvt.) Ltd was also recorded as at March 31, 2015.
The top line for the 4Q’14 rose 43 percent year-on-year (YoY) to Rs.9.47 billion while the gross profit rose by 25 percent YoY to Rs.2.14 billion as the cost of sales rose by 49 percent YoY to Rs.7.33 billion.

Meanwhile, for the financial year ended March 31, 2015 the Lion group posted a net profit of Rs.1.34 billion, largely unchanged from last year.
The EPS declined to Rs.15.24 from Rs.16.79.

However, the top line grew by 25 percent to Rs.32.35 billion and the cost of sales grew by 22 percent to Rs.24.2 billion resulting in a gross profit of Rs.8.13 billion, up 36 percent.

The company said despite its acquisition of MBL, it has no immediate plans to manufacture beer at the Millers Brewery location.

As of March 31, 2015 Ceylon Beverage Holdings PLC held a 52.25 percent stake in the company followed by Carlsberg Brewery Malaysia Berhad with 24.97 percent.