Corporate

Dialog grows but records loss in 2008

Dialog Telecom PLC, while consolidating its leadership in the mobile industry with a 29 per cent increase in its subscriber base to record 5.5 million customers as at the end of year 2008, announced that it had incurred a loss of Rs. 388 million. The Company with its growth drive, investments made to expand and enhance coverage, capacity and quality of service has resulted in a increase in non-operating costs including depreciation (81 per cent YoY) and finance costs (233 per cent YoY) the returns on which will be witnessed in the future.

The company recorded revenue of Rs. 33.11 billion. for the year ended 31st December 2008, a modest growth of 1 per cent compared to FY 2007. Revenue growth was mitigated by successive reductions in mobile telephony charges during the course of 2008 in line with the company's conscious decision to lower charges to subscribers in the wake of economic pressures. Results of this strategy are evidenced by company's continued success in capturing a major share of mobile subscriber additions across the country notwithstanding aggressive competition.

The lowering of consumer charges in combination with impact of general inflation, increased network costs (45 per cent YoY), and network related energy costs (84 per cent YoY), and non-operating costs (107 per cent YoY) resulted in profitability being impacted. Further the company took a conscious decision in 2008 to make way for technology modernization by way of amortization and impairment provisions totally to Rs. 1.25 billion.

The company's technology modernization strategies target cost efficiencies and competitive advantage it terms of consumer offerings, going forward. EBITDA (Operating Profit) recorded at Rs. 8.37 billion, was accordingly diluted to a NPAT of Negative Rs. 388 million - reflecting a 104 per cent dilution on a YoY basis.

During the course of 2008, the company contributed significantly to GOSL, revenues with the remittance of direct and indirect levies amounting to Rs. 6.37 billion up 80 per cent YoY from the corresponding figure of Rs. 3.53 billion in FY 2007. The Profit impact of GoSL levies is recorded at approximately Rs. 3.41 billion. in FY 2008 compared to figure of Rs. 1.68 billion. in FY 2007.

DFCC Bank records a pre-tax profit of 1.167 m

DFCC Bank's own non-audited profit after tax for the nine months ended 31 December 2008 (current period) was Rs. 1,167 million, an increase of 7.6 pc over the comparable period (April to December 2007). The rate of increase has slowed down from the half year primarily due to the cumulative impact of the reduction of the advances and asset portfolio and reduced capital gains in the third quarter.

The slower growth in profit is the outcome of a strategy to control credit portfolio growth and utilize improved liquidity to reduce borrowings and maintain a healthy liquidity cushion in the context of the uncertainties in the global and local economic environment. Thus, the Bank reduced the total borrowing from Rs. 48 billion to Rs. 42 billion during the 9 months period.

The 10-year Floating Rate Notes issued in 1998 for US$ 65 million was redeemed in December 2008. Since Sinking Funds had been built up to meet this liability this repayment did not have a significant impact on the liquidity of the Bank.

The consolidated profit attributable to equity holders after minority interest in the current period however was Rs. 1,627 million an increase of only 1.8 pc over the comparable period. This was due to a reduction in contribution from subsidiaries.

Consolidated earnings per share for the current period decreased to Rs. 12.48 from Rs. 12.78 in the comparable period. Since the exercise price of outstanding stock options is currently higher than the market price, there is no dilution of the basic earnings.

Kelani Valley Plantations' turnover up

A decline in tandem of prices of tea and rubber in the final quarter of 2008 has taken the shine off the full year performance of Kelani Valley Plantations PLC (KVPL). In results released to the Colombo Stock Exchange this week, the company which is owned and managed by the Hayleys Group's multinational rubber glove manufacturing group Dipped Products PLC, has reported that turnover for the year ending December 31, 2008 grew 10 per cent to Rs 3,109 million. However, net profit before tax declined 31 per cent to Rs 300 million, while profit after tax fell 32 per cent to Rs 278.7 million.

Reviewing these results, Hayleys Group Chairman N. G. Wickremeratne said KVPL would have ended 2008 with a far more attractive bottom line if not for the highly detrimental impact of the global financial collapse on commodity trading. "The year under review commenced on a promising note and, apart from minor seasonal fluctuations, tea prices maintained healthy levels with prices overall being considerably higher than in 2007, till the end of the third quarter," he said. "

Aviva reports growth in long-term savings

Aviva plc, the fifth largest insurance group in the world which acquired the controlling interest in Eagle Insurance PLC in 2006, has reported significant growth in Global long-term savings sales and Life and pensions sales in 2008; Today Aviva is the biggest insurer in the UK. The group has 57,000 employees serving 45 million customers worldwide with more than GBP 359 billion of assets under management.

Sales have continued to grow - Global long-term savings sales up 1per cent to œ40.3 billion (down 7per cent on local currency basis) - Life and pensions sales up 11per cent to œ36.3 billion (up 2per cent on local currency basis) - Sales figures reported on Market Consistent Embedded Value (MCEV) basis for the first time.