Corporate News

DFCC Group posts Rs. 2.2 b net profit for 2007/08

The DFCC Group has recorded a Rs. 2,247,258,000 net profit for the financial year ended March 31, 2008, a Rs. 554,494,000 increase compared to the previous year.

During the year the group revenue recorded Rs. 11,723,253,000 million, an increase of Rs. 3,618,312,000 compared to 2007. The DFCC Group has announced a Rs. 5 per share dividend for the year and the earnings per share of the group increased by Rs. 2.75 to Rs. 14.37.

The DFCC Bank posted a Rs. 1,318,439,000 net profit in the financial year and the Bank's revenue was Rs. 9,636,415,000.

Chairman of the DFCC Group J.M.S. Brito in the annual report said turbulent macro economic conditions were not conducive for the core business of the DFCC Bank, long term project and capital asset financing. Therefore, given other considerations, the Bank adopted a cautious growth strategy for its loans and leases portfolios.

Nonetheless, profit after tax at the Bank level was up by 17.2% while at the Group level it was up 32.8%. This is noteworthy, given the bank's circumstances and the fact that financial services VAT and income tax continue to have a substantial impact on profitability, Brito said.

DFCC CEO Nihal Fonseka said that despite many challenges it faced in the year the Group performance is satisfactory.

Profit before tax of the Group increased by 22% but two taxes absorbed 53% of the profit, he said.

However, the profit attributable to equity holders increased by 37% to Rs. 2,168 million, he said.

DFCC Vardhana Bank profit after tax soars 89% to Rs. 41.8m in 1Q, 2008

The fastest growing commercial bank in the country, DFCC Vardhana has recorded very impressive first quarter results for 2008 whilst facing a challenging economic environment.

The earlier Merc Bank which was acquired by the parent company DFCC Bank and restructured under the DFCC umbrella has been in operation for four years under the new brand Vardhana.

The total on balance sheet assets now reaching Rs 18 billion mainly made up of net loans and advances of Rs 12.18 billion and investments of over Rs 2 billion, the bank has shown a rapid growth in a fiercely competitive environment.

The Vardhana Bank became the first bank among its peers to meet the Central Bank's new regulatory capital requirement of Rs 2.5 billion in December 2007 mainly aided by new equity infusions from the parent company DFCC Bank.

Another major milestone recorded by the bank was achieving a rapid growth in its deposit base which now exceeds Rs 12 billion.

During the first quarter of 2008 DFCC Vardhana reported a profit before tax of Rs 97.494 million compared to Rs 56.249 million in the first quarter of 2007. The bank paid the Government Rs 55.710 million as corporate tax and VAT on financial services as against Rs 34.231 million paid in the corresponding period of the previous year and consequently reporting a profit after tax of Rs 41.784 million, a 89% growth from the 2007 results.

Janashakthi IPO to raise Rs. 400m

Janashakthi, the third largest insurance company in the country launched its Initial Public Offering (IPO) last week to raise around Rs. 400 million.

The Janashakthi IPO is coming during a hard financial and economic situation globally as well as locally and the investors are stiff. However, the company expects an oversubscription of the IPO and the success of Janashakthi IPO would be an endorsement to the financial system of the country, analysts said.

The IPO will open on June 16 and the company will issue 33 million ordinary shares at Rs. 12 each. Initially, Janashakthi will issue 16.5 million shares with an option to double the offering, said Janashakthi chairman W. T. Ellawala.

Ellawala said that the intention of the IPO is to broaden the ownership of the company by enabling the public to be stakeholders in the company.

"Insurance companies should be open and transparent. This IPO would make us more open and transparent as a public company.

We have been in business for 14 years and expect further growth. The IPO will bring the investment we need for further expansion," he said.

Ellawala said that after the IPO, Janashakthi will invest on HR development, improvement of the brand image, expanding the branch network, overseas operations and further development of the company's IT system.

Janashakthi, incorporated in 1992 as a family business has a good track record.

The company started business operations in 1994 with life insurance. In 1995 it started general insurance separately. In 1996 it ventured overseas and went to the Maldives. In 2000 it merged life and general insurance companies and built the company to its present form, Janashakthi Insurance Co Ltd. In 2001 it acquired the National Insurance Company, the first and only take over in the insurance industry in Sri Lanka. Today the company has the second largest branch network.

Janashakthi has a steady growth record over the last couple of years and in 2007 it recorded Rs. 5.2 billion revenue and Rs. 525 million profit.

The Company's claim payments for the year recorded Rs. 2.5 billion and the capital fund at Rs.1.75 billion which exceeds the 2012 requirement. By 2007 the company had over Rs. 10 billion assets.

The Merchant Bank of Sri Lanka is the manager to the Janashakthi IPO. The issue price of a share Rs. 12 is the lowest in the insurance industry share prices today and the company expects a rapid growth in the share price.

Aitken Spence profit after tax grows 24% to Rs. 2.8 billion

Aitken Spence posted a remarkable 26% growth in profits attributable to shareholders over the previous year, despite an adverse and challenging environment faced by both the national and global economies.

In its annual results released to the Colombo Stock Exchange for the financial year 2007/08, the diversified bluechip revealed its annual profit-after-tax figure rising 24% to Rs. 2.8 b and group revenue surging 39% to Rs. 27.5 b.

"Our pioneering spirit and vision enabled us to forge strategic alliances and achieve sustained growth. Through evolution and innovation, Aitken Spence has successfully gained greater profitability and market growth", said Deputy Chairman and Managing Director of Aitken Spence and Co. PLC, J. M. S. Brito.

Earnings per Share stood at Rs. 68 while the Return on Equity was a commendable 17%.

The Group which has invested extensively in the Sri Lankan tourism industry saw restricted profitability and potential returns from its local resorts.

Brito said, "However, we strongly believe in the country's great potential and remain optimistic on the dawn of peace.

The Sri Lankan economy has proven to be resilient and we see opportunities to continue investing heavily."

"Despite growing difficulties, the Sri Lankan hotels operations posted a noteworthy decline in losses during the year which was a creditable achievement bearing in mind the low occupancies and the high debt service cost burdening the hotel properties.

The lack of high yield travellers compounded by intense competition amongst beach properties, rising wages and energy costs further constricted profitability," he said.

Hemas turnover up 20.6% to Rs. 14.4b in 2008

Hemas Holdings PLC reported another year of double digit growth as it prepared to enter its 60th year with plans to embark on a new and exciting growth strategy. For the year ended March 31, 2008, Hemas recorded a turnover of Rs. 14.4Bn reflecting a growth of 20.6% over the previous year. Company Earnings grew by 12.9% to close at Rs.1.14Bn whilst Operating Cash flow closed at Rs. 930M.

At a function hosted to announce the new Strategic Direction, CEO Hemas Holdings Husein Esufally also unveiled the company's new purpose statement and its new logo.

"Although Hemas can look back with pride over what we have achieved over the last 60 years, the Board of Directors felt that the time was opportune to re-energise and re-invent the Company with a view to the future. In this context, we commissioned A.T. Kearney, a global strategy consulting firm, to work with us to review our business portfolio and help formulate an accelerated growth strategy", he said.

"As a result, we now have a greater degree of focus on our existing businesses and have identified several new growth initiatives for the future. To make this happen, a new flatter organisational structure aligned with strategy has been put into place.