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| Sunday, 2 June 2002 |
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Guardian Group records 267% growth in post-tax profits The Ceylon Guardian Investment Trust Limited (CGITL), the blue chip investment holding company, together with its quoted subsidiary, Ceylon Investment Company Limited (CICL), which primarily makes up the Guardian Group, has posted a consolidated post-tax profit of Rs. 194.5 million for the year ended March 31, 2002, the Group annual report for 2001/2002 said. This is an increase of 267 per cent from the previous year's post-tax profit of Rs. 52.99 million. Its consolidated turnover of Rs. 215 million was an increase of 175 per cent over the previous year's turnover of Rs. 78 million, Chairman Israel Paulraj said in his review. The controlling interest and management of the Guardian Group is held by Carson Cumberbatch and Company Limited. The companies within the Group had a portfolio costing of Rs. 1,242.7 million, which carried a market value of Rs. 1,700.3 million as at the balance sheet date. Taking in to account the expectations of a revival in the economy and the recent progress in share market activity, the Guardian Group embarked on a strategy of enhancing its liquidity position, by undertaking a rights issue followed by a bonus issue. "This issued funds of Rs. 33.9 million to CGITL and Rs. 31 million to CICL. The total value of the shares issued by the two listed companies under these rights issues was Rs. 64.9 million, thus positioning the Guardian Group to benefit from a potential market revival in the months to come," the Chairman said in the review. The Group has commented on the attractive strategic investment opportunities in infrastructure projects. In keeping with its core business of investment holding, more than 99 per cent of the funds are invested in equities. As at March 31, 2002, the Group's portfolio with a cost of Rs. 1.2 billion had a market value of Rs. 1.7 billion, an improvement of 38.4 per cent and 50.3 per cent respectively, against the previous year. The increase in cost as well as market value can be compared against the increases in the All Share Price Index of 46 per cent and the Milanka Price Index of 56 per cent during the year. The Group's total net surplus in liquid funds as at March 31, 2002 was Rs. 25.56 million, which was invested in short positions in call deposits and overnight repurchase agreements with the intention of maintaining adequate funds in hand to exploit attractive market opportunities. The Guardian Group continued its focus on the diversified sector and the banks and finance and food and beverages sector due to their steady growth supported by strong fundamentals and earnings potential in the long term. The Group also continued to hold its investments in the soft alcohol and oil palm plantation sectors due to strategic reasons. The Group's key strategic holdings, as stated in the annual report, are 12.95 per cent of Ceylon Cold Stores Ltd., 10.9 per cent of John Keells Ltd., 3.7 per cent of John Keells Holdings Ltd., 7.7 per cent of Hayleys Ltd. and 7.1 per cent of Hunter and Company Ltd. The Guardian Group was also involved in a realignment exercise of the investment portfolios held by a number of companies within the Carson Cumberbatch Group, with the objective of eliminating cross-holdings within the Group companies, enabling the sectors to concentrate on their core activities. As a result, the Group enhanced its holding in the oil palm sector, increasing its shareholding to over 20 per cent in four oil palm plantation companies listed on the Colombo Stock Exchange which are now treated as associate companies of the Group. The oil palm plantation sector of the Carson Cumberbatch Group, which includes the recent flagship plantation project in Indonesia, currently controls over 18,000 hectares of oil palm plantations in South East Asia. In spite of fairly adverse operating conditions, the Guardian Group maintained an attractive dividend policy strengthening the company's record of having had consistent dividend declarations in the years past. The directors proposed a first and final dividend of 10 per cent to the shareholders for the years on the enhanced share capital after both the rights and bonus issues, the annual report said. CGITL Chairman, in his statement, has commended the recent relaxation of regulations on Foreign Direct Investments, where foreign holding up to 100 per cent in sectors such as banking and finance, insurance and infrastructure are allowed, together with the tax incentives proposed in the Budget for 2002, as these are likely to heighten stock market activity. The Chairman also welcomes the steps taken by the Insurance Corporation Ltd., in allocating Rs. 200 million of its funds to each of three selected private sector fund managers, which indicates the policy stance of the Government in encouraging greater private sector-led investment activities. The Ceylon Investment Company, during the year under review, generated a turnover of Rs. 26.6 million, a 27 per cent increase over the previous year's Rs. 21 million. It recorded a post-tax profit of Rs.93.4 million, a 340 per cent growth over the Rs. 21.2 million last year. It had a portfolio costing Rs. 421.8 million, which carried a market value of Rs. 766.4 million as at the balance sheet date. |
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