Corporate

Eagle's Pretax Profit up 11%

Eagle Insurance PLC has announced that its Board of Directors has recommended a first and final dividend of Rs. 7 per share for approval by its shareholders at the Annual General Meeting of the Company.

In its constant endeavour to deliver value to all stakeholders, the Company has declared a gross dividend of 10% to its life policyholders in 2008.

Steady profits

The Company continues to maintain its record of steady profits despite the many challenges posed by the external environment with profit after tax reported at Rs. 464 million for the year. Pre-tax profit recorded an increase of 11 per cent over 2007 to reach Rs. 605 million, and this includes the gross up of tax withheld at source on interest income from government securities of Rs. 171.2 million.

The profit performance of 2008 is in line with the Company's expectations and results in a Return on Net Assets of 27.2%. It is commendable that the Company has contained its growth in management expenses at a satisfactory level of 11% in an environment of relatively high inflation, and this has helped sustain the bottom line performance. Total net assets grew by 10% in 2008 to reach Rs. 2,224 million by year end.

Solvency ratio

Eagle Insurance maintains a solvency ratio of 1.32 times the required solvency margin for Life business as at end 2008 where the required solvency margin was Rs. 663 million and the Company maintained an excess in admissible assets of Rs. 209 million.

The solvency ratio for General insurance business as at end 2008 was 3.19 times the required solvency margin where the required solvency margin was Rs. 240 million and the Company maintained an available solvency margin of Rs. 765 million. As such, the Company maintains a strong financial position and the technical provisions and reserves for both Life, Business and General insurance business are well above the adequate level to operate the business. A strong financial position assumes greater importance in the context of the financial crisis currently experienced by many institutions.

Greater emphasis

During the year, the Company placed greater emphasis on the quality of its book of business considering the prevalent economic and business climate, and this is reflected in the modest growth recorded in gross written premium. Life business gross written premium grew by 15% during 2008 and General insurance business gross written premium recorded a growth of 10%. However, the consolidated revenue of the Company recorded an appreciable growth during 2008 primarily due to the higher income earned by the investment portfolios.

Revenue of the Group for the year recorded an impressive 24%, and this includes the gross up of tax withheld at source on interest income from government securities stated above. The growth in revenue excluding this is still impressive at 21%.

Commercial Bank PAT up 4 percent

The Commercial Bank of Ceylon PLC, Sri Lanka's internationally-lauded private bank has demonstrated its resilience in the financial year ended December 31, 2008 despite global and local volatilities, and an inflation rate that hovered around 20 per cent for most of the 2008.

Foreign exchange profits recorded a phenomenal growth of 70.46 per cent to reach Rs. 2.633 billion mainly due to higher gains realised from forward foreign exchange deals transacted during the year and also due to depreciation of the Rupee against US Dollar by 3.96 per cent in 2008 compared to 0.93 per cent in 2007.

Mahendra Amarasuriya

Other income recorded a growth of 99.2 per cent over the previous year mainly due to profit made on disposal of shares of Commercial Leasing Company PLC, a former associate of the Bank, and due to higher recovery of loans provided in previous years, the Bank said.

The Commercial Bank, the largest entity in the group has reported a profit before tax and after financial VAT of Rs. 7.520 billion for the year ended December 31, 2008 an increase of Rs.815 million or 12.16 per cent over the pre-tax profit for the previous year. The Bank's profit after tax and financial VAT stood at Rs. 4.268 billion compared to Rs. 4.104 billion recorded in 2007 reflected a growth of 4.02 per cent.

The pre-tax profit of the Bank has been arrived at after charging Rs 692.162 million in payments made on account of oil hedging transactions and after recognising Rs. 405.531 million in profit on sale of Bank's stake in its shares of Commercial Leasing Company PLC. Discounting for the effects of these two exceptional items, the normalized pre-tax profit of the Bank would amount to Rs. 7.529 billion. On this basis the normalised pre-tax profit for 2008 represents a growth of Rs. 825 million or 12.31% over 2007. "Although the operating environment in Sri Lanka has been tough for many years where rising oil prices, high inflation, the war and low business confidence have made things hard for the industry, that the Bank has managed to perform, and perform creditably in these years is satisfying," the Chairman of the Commercial Bank Mahendra Amarasuriya said.

"The Bank is confident it can ride crisis situations by sticking to the fundamentals: strong reserves, optimum liquidity, healthy capital adequacy ratios, product innovation, a lean organisational structure and a motivated management team and workforce. The Bank with its well-structured processes, disciplines and work culture will ride these rough seas and continue to deliver value to all our stakeholders," Amarasuriya added. Profit growth of the Bank was facilitated by an increase of Rs. 1.302 billion or 11.26 per cent in net interest income, which reached Rs. 12.852 billion at the end of 2008 due to timely re-pricing of loans and advances.

Commercial Bank Managing Director Amitha Gooneratne said: "2007 was an exceptional year for the Bank. We posted a strong performance in that year despite the unfavourable economic and political climate."

CSE listing rules revised

Investors and stock brokers said revision of the Listing Rules by the Colombo Stock Exchange (CSE) as a good move to ensure uniformity and proper adherence of the new Companies Act. An official of the NDB Investment Bank said the change in the rules of listing is vital to ensure compliance and correct interpretation of the new Companies Act. "The change in the name of the Second Board gives a positive impression to investors of the availability of other options to invest", he said. subsequent to obtaining comments from The name of the Second Board has been changed to Diri Savi Board

LF

 ICASL announces changes

The Institute of Chartered Accountants of Sri Lanka announces changes to the effective date of adoption of SLASs 44 and 45. To provide the Financial Statement preparers with adequate time, the Institute has decided to make it effective for the Annual Periods beginning on or after January 01, 2011 (and not January 01, 2009 as communicated earlier) with early adoption being encouraged.