Corporate News

LB Finance post tax profit grows 15% to Rs. 206m in 2007/08

LB Finance has recorded a post tax profit of Rs. 206 mln for the year 2007/2008, an increase of 15% compared to last year.

The operational profit of the company was Rs. 421 mln, up by 28% over last year’s operational profit of Rs. 329 mln. Earnings per share was Rs. 7.99 and was achieved after contributing Rs. 215 mln as taxes to the government. Managing Director Sumith Adihetty said that rising interest rates had a negative impact on margins, especially with a portfolio of fixed interest rates.

The rising inflation also negatively impacted on the disposable incomes of people and on their ability to venture into new investments, in turn impacting largely on the growth of the leasing and hire purchase business.

Increase in provision for bad debts from Rs. 28 mln to Rs. 124 mln was primarily due to the company adopting to the new Central Bank regulation on provisioning for loan losses.

This effectively doubled our provisioning levels, although most of these were servicable contracts and the Company’s Non Performing Loans (NPL) portfolio has actually been contracting over the years. The NPL ratio of the company improved from 4.83% to 2.06% during the year.

LB Finance increased lending in our principal activities remarkably during the year. Pawning activities too expanded and the pawning portfolio now stands at Rs. 1.2 bln against Rs. 621 mln during the last year.

The company was successful in canvassing deposits which increased by 60% from Rs. 4.6 bln to Rs. 7.3 bln during the year. The micro finance business of the company grew by 78% during the year and the company will increase the coverage in agro based areas through the branch and pawning centre network. The company is planning to open six new branches and seven pawning centres.

The company has a presence in 40 locations with 25 pawning centres and 14 branches.

Aitken Spence Plantations records best ever year

Elpitiya Plantations Ltd. (EPL), Aitken Spence’s plantation arm recorded its best year of profits during the financial year ended 2007/08.

Profit-after-tax improved to Rs. 170.2 mln, up from Rs. 7.8 mln in the previous year. Turnover rose 41% to reach Rs. 1.81 billion.

Premium tea prices and returns from diversification into multi crops, especially palm oil contributed strongly to the bottom line.

Chairman of Aitken Spence Plantations, J. M. S. Brito said, “We have had an excellent year which had seen our strategy of diversification paying off. Tea production and bought leaf production improved over the previous year.

There was a significant improvement in palm oil production, which is now gradually increasing its productivity. Inclement weather during the year saw rubber production decline compared to the previous year.”

The company said that the sales average for tea showed a distinct improvement after September 2007 particularly in the high grown areas where a larger segment of tea in EPL is produced. Tea prices in the low grown areas continued to rise during the period under review.

Boosted by a rising demand for edible oils internationally and the interest in bio fuels, Elpitiya saw most improvement in returns on palm oil.

The company also invested heavily into energy saving devices such as hot water generators, capacitor banks and energy saving withering fans, which all have contributed to controlling costs despite the wage impact during the year.

EPL is in the process of completing a small hydropower project, which will supply power to the national grid on a Letter of Intent signed with the CEB. The company noted that there is significant potential to develop hydropower in the future.

EPL developed over 400 ha of forestry, which the company intends to add value to in the future.

Isabel Guerrero appointed Vice President, South Asia region

World Bank President Robert B. Zoellick has appointed Isabel Guerrero as Vice President for South Asia Region. Ms Guerrero took over from retiring Vice President Praful Patel on July 2.

Guerrero who moves to her new position from that of Country Director for India based in New Delhi, joined the bank as a “young professional” in 1982. Early in her career she worked as a country economist for the Philippines, Myanmar, Morocco and the Central Asian Republics with a focus on macroeconomics, trade and poverty. For the past eleven years she has been a Country Director, for Bolivia, Ecuador, Paraguay and Peru, Colombia and Mexico and most recently India, where she took up the position in March 2007.

“It is a most special privilege to be invited to take on this role in one of the most important regions of the world as measured by the development agenda,”said Guerrero in Washington this week.

“South Asia is a region of extraordinary hope as demonstrated by its aggressive growth over the past decade. It is also a region in which the range of profound human challenges stand out starkly, from poverty to conflict to tremendous environmental management issues. Finding solutions in South Asia means finding solutions to some of the most intractable problems facing our world.”

New chairman Sampath Bank

Sampath Bank has appointed Arthur Senanayake as its new Chairman, after incumbent Edgar Gunatunge stepped down from the position.

Gunatunge told the bank’s Board of Directors that he intends to step down as Chairman and Director from September 30.

With over 50 years’ banking experience, Gunatunge joined Sampath Bank as Managing Director/Deputy Chairman in January 1991. He retired from the position in December 1996, and continued as a Director until he was appointed Chairman in September 1998. He currently serves on the boards of several public companies.

I. W. (Arthur) Senanayake, who takes up the post on October 1, 2008, is a Founder Director of the bank and currently serves as Deputy Chairman - a position to which he was appointed in April 1998.