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Sunday, 8 November 2009

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DFCC profits increase

DFCC Bank’s non-audited profit after tax for the six months ended 30 September 2009 (current period) was Rs. 895 million an increase of 14.6 pc over the comparable period (April to September 2008), said its CEO Nihal Fonseka.

As in the case of the first quarter, the second quarter results also showed an improvement in interest margin that compensated for the contraction in the credit portfolio.

Although the margin on customer advances remained at the levels of the previous quarter, proactive treasury operations to lock in high yields on government securities held to maturity helped increase the overall interest margin.

The Bank was able to contain costs (non-interest expenses) at below the comparable period.

The portfolio contraction resulted in the release of part of the general provision previously made as mandated by Central Bank, which is 1 pc of the portfolio on which specific provisions are not made. However, the Bank made a 3 pc general provision on the finance leases portfolio recognising impairment losses of this portfolio over and above the specific provision, based on currently available evidence.

The Bank will review this provision on a quarterly basis.

Gross specific provisions increased from Rs. 250 million to Rs. 310 million but recoveries of previously provided loans and advances also increased resulting in a decrease in the net specific provisions to Rs. 96 million in the current period from Rs. 111 million in the comparable period.

The foregoing enabled the Bank to post a modest increase of 11 pc in the profit before provisions and taxes in the current period. The contraction of the lease portfolio and the consequential reduction in the deferred tax liability somewhat reduced the effective tax rate leading to an increase of 14.6 pc in profit after tax.

Unlike the first quarter results, which recorded a 6.9 pc reduction in the consolidated profit (attributable to the equity holders after minority interest) over the comparable period, the half-year results show an improvement mainly due to the return to profitability by the venture capital subsidiary Lanka Ventures PLC (LVL).

The consolidated profit attributable to equity holders after minority interest in the current period was Rs. 1,303 million, an increase of 31.8 pc over the comparable period.


Aitken Spence records Stronger Performance in 2Q

Aitken Spence PLC released its second quarter financial results to the Colombo Stock Exchange, reporting Rs. 744mn as pre-tax profit and Rs. 470mn as profit attributable to shareholders for the quarter ended 30th September 2009; both increasing by 16% over the previous year. The Sri Lanka-based diversified conglomerate’s figures for the first six months revealed a pre-tax profit of Rs. 1.23bn and profit attributable to shareholders of Rs. 764mn, reflecting marginal declines of 1.2% and 3.6% respectively. Earnings per share increased 16% from Rs. 14.97 to Rs. 17.37 for the quarter while it dropped by 3.6% to Rs. 28.22 for the six months.

During the quarter under review, the Sri Lankan leisure sector, consisting of hotels and inbound tourism, showed signs of recovery. Aitken Spence Hotels, which operates the country’s largest resort portfolio showed improved earnings over the previous year. Aitken Spence Travels, the largest inbound tourism operator in the country saw tourist numbers increase during the period under review, resulting in higher earnings.

In spite of earnings remaining negative, the Group’s performance in the Maldives was above expectations. Aitken Spence is the largest international resort operator in the Maldives, with a chain of seven resorts. The islands are yet to fully recover from a slump in tourist arrivals due to the aftermath of the global recession.

The Aviation sector, consisting of the General Sales Agencies for Singapore Airlines and Kingfisher Airlines has reported losses during the period. The reduced demand for air travel as a consequence of the global financial crisis which compelled airlines to reduce the number of flights coupled with increased operating costs had an adverse impact on the sector turnover and profitability. Singapore Airlines has shifted to night flights which we believe may facilitate improved returns in the future.

The Maritime sector revealed a better performance over last year despite a challenging operating environment.

Its port management and container services operations in South Africa maintained strong earnings. The company also stated that negotiations are ongoing with the government and the Aitken Spence-China Merchant Holdings Consortium regarding the tender for the development of the South Container Terminal of the Colombo Port expansion project.

In September, Aitken Spence announced the latest addition to its portfolio of hotels in India with the opening of ‘Tamara’ in Coimbatore.

It now operates 25 hotels and resorts in Sri Lanka, Maldives, India and Oman.


Cargills posts impressive profits

Cargills (Ceylon) PLC (CCP) registers excellent 1st half results for the period ended September 30, 2009. In the first six months of the previous year, CCP accounted for a one off income of Rs. 73 Mn arising from the disposal of its quoted investments. Excluding this one off income, the growth in operation profits is an impressive 60%. This growth which is a business growth in real terms is highly commendable as it was achieved in a period where inflationary pressures remained under check. The Group has been successful in containing costs across the board and this too has contributed to profit growth. The second half of the financial year has the added advantage of seasonal benefits and the Group is confident of outperforming the first half year results in the ensuing period.

The Company’s brands Cargills Food City, Cargills Magic, Cargills Kist and KFC have achieved significant growth in their market shares achieving number 1 position in their categories.

Sales of Cargills Magic exceeded one million litres in the month of September 2009 and this trend is set to continue with the Magic brand now cementing market leadership.

The contribution of the restaurant sector to Group profits is on the increase with KFC establishing itself as one of the most patronized quick-service restaurants in the country.

The Group will continue to exceed consumer and community expectation in all sectors it operates while seeking to achieve international benchmarks in terms of return on investment. The Groups focus remains on improving its supply-chain efficiencies and elimination of waste.

The Group is also conscious of its responsibilities in delivering Real Value to all stakeholders through employment generation, development of professionals, empowerment of entrepreneurs and farmers as well as its strong focus on environmental sustainability.

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