[Corporate News]

Maskeliya Plantations turns loss into Rs. 52m net profit

Maskeliya Plantations PLC recorded a robust turnover of Rs. 776 Mn for the first quarter ending June 2008, a 31% increase over the corresponding period in the previous year.

Estate level Gross Profit improved by 122% to Rs. 121 Mn whilst Profit from Operations after Management Fee increased by 319% to Rs. 71 Mn. The Company recorded a Net Profit after tax of Rs. 52 Mn compared to a loss of Rs. 5 Mn in the corresponding period last year.

Maskeliya Plantations which maintained its eminent position in high end garden marks in terms of quality and price reaped the benefits of investments made in field and manufacturing process development during the last few years in the background of healthy market conditions.

In view of the rising cost of energy the Company replaced factory heaters that use liquid fuel with firewood fired heaters resulting in substantial savings in firing cost. Maskeliya had grown over 500 hectares of fuel wood and timber over the last three years thereby being self-sufficient with fuel wood supply.

Additionally, the Company converted some of its factories into dual processing thereby being flexible and able to manufacture leafy grade teas, when required, to capitalise on the boom for leafy teas. Plans are under way to convert more factories into leafy type manufacture.

The Company’s planned replanting program initiated three years ago which converted old seedling teas into high yielding clonal teas is expected to improve crop and increase revenue in the foreseeable future.

SriLankan’s performance for 2007/08 hit by high cost of aviation fuel

The SriLankan Airlines Group’s financial performance for the year 2007/08 was severely affected by the steep rise in the price of aviation fuel, resulting in an operational loss of Rs. 588 million.

The airline spent an additional Rs. 6.538 billion for fuel in 2007/08, with the fuel bill increasing by 27.64% to Rs. 30.196 billion from Rs. 23.658 billion in the previous year. This was the result of the average price of jet fuel reaching USD 101.81 per barrel in 2007/08, as against USD 87.09 in 2006/07.

However, the sale and leaseback of three Airbus A340 aircraft resulted in a Group Net Profit for the Year is Rs. 4,899.66 million. In the previous year, the Group recorded a Net Profit of Rs. 862.18 million.

The Group consists of SriLankan Airlines Ltd. and its fully-owned subsidiary SriLankan Catering (Pvt) Ltd.

Reflecting the one off gain from the sale and lease back of the three A340 aircraft, the airline itself recorded a Net Profit of Rs. 4,428.23 million for the year under review, compared to Rs. 568.04 million in the previous year.

Revenue from Passenger Sales recorded a significant increase at Rs. 63,808.34 million, up from Rs. 53,862.32 million, an increase of 18.46%. The Group’s Chairman Dr. P.B. Jayasundera said:

“The global aviation industry as a whole is in the throes of its largest ever crisis, brought about by the steep increase and uncertain direction of fuel prices, driven by a combination of price speculation in global markets, and increasing demand from the expanding economies of Asia. In the short term, SriLankan Airlines faces a challenging future, as does the entire global air transport industry, buffeted by volatile fuel prices and economic slowdown.”

Renuka Holdings enters commercial forestry

Renuka Holdings PLC in its recently released annual report said that the company has incorporated Ceylon Forestry (Pvt) Ltd., as a joint venture with two British nationals.

The company holds 60% of this forestry venture and has already commenced its first project, a 70 acre freehold site in the intermediate zone of the Matale district which is being planted with high value endemic timber species.

“The company aims to plant a minimum of 2,500 acres in the next three years and also be eligible for carbon credits through forestation,” said Shamindra Rajiyah, director of the company.

He said “the projections are very attractive, conservatively estimated between a 20% and 25% IRR compounded over a term of 20 years. As a result we believe forestry will be a sound addition to our group investment portfolio.”

Knowledge Conglomerate to tap Lankan talent for key jobs

The Knowledge Conglomerate, which plans to set up a multitude of lean, knowledge-based businesses in Sri Lanka, has finalised plans for setting up the operations, according to MTI Consulting.

Subsequent to the appointment of a Project Manager and formalities pertaining to the incorporation of the company, The Knowledge Conglomerate will launch its recruitment drive next week, whereby the company plans to tap Sri Lankan talent for the key positions of Specialist/Business Partner and Head of Ventures.

Commenting on the opportunity, Hilmy Cader, the CEO of MTI Consulting (responsible for the set up and spin-off of The Knowledge Conglomerate) said, “Knowledge-based businesses represent an increasing share of global wealth.

HNB Assurance records 33% growth in turnover

HNB Assurance PLC has produced impressive results again by achieving a 33% growth in its turnover for the six months ended June 30, 2008. Gross Written Premium (GWP) from General Insurance grew by 19% to record Rs. 417.5 Million while GWP from Life Insurance grew by a staggering 51% to reach Rs. 443.8 Million. The combined turnover amounted to Rs. 861.3 Million.

Despite the continuing decline in premium rates due to heightened competition and the escalating cost of claims, the company was able to achieve a 7% growth in its Profit Before Tax (PBT) and a 4% growth in its Profit After Tax (PAT).

This was entirely based on the results achieved from the General Insurance business since the surplus from life insurance is recognised only after an actuarial valuation is carried out at the year-end.

HNB Assurance PLC was recently ranked in the 57th place among the “top 100 Brands” compiled by LMD in association with Brand Finance.

The Company also recently re-launched its motor guard vehicle insurance policy with several new features including a rapidly escalating No Claim Bonus which reaches its peak level of 75% within six years, the application of the same NCB percentage to all vehicle owned by a single person and the offer of special cash grants in the event of a loss of life due to a vehicle accident under certa in specified conditions.