Corporate

Hayleys records Rs. 1.3 billion profit

The Hayleys Group has achieved significant growth in profits at the end of the first nine months of 2009-10, with its businesses in Global Markets and Manufacturing continuing their strong performance in the third quarter.

In results released to the Colombo Stock Exchange, Hayleys PLC reported this week that profit after tax more than doubled to Rs. 1.3 billion, and that profit attributable to shareholders increased four and a half times to Rs. 832 million over the corresponding nine months of last year.

Pre-tax profit for the period reviewed was up 61 per cent to Rs. 1.7 billion, while turnover increased by 10 per cent to Rs. 27.2 billion, the blue chip conglomerate said.

In a statement accompanying the figures for the nine months, Hayleys Chairman Mohan Pandithage said Hand Protection, Purification Products and the Fibre sectors had improved performances. The contribution from Textiles to profits had risen consequent to the Group's increased shareholding in Hayleys MGT Knitting Mills, although the latter's profits were slightly lower in the period under review.

In the Agri Sector, Agri Products showed improved results, Pandithage said. Agri Inputs continued to perform strongly, and the Consumer Sector recorded an improvement over the first nine months of the previous year.

Pandithage stated that portfolio realignment initiatives also contributed to the profit achieved. The overall improved performance from the Group has resulted in a marked increase in cash flow from operating activities.

Looking ahead, he affirmed that 'Our optimism for the Group's outlook for this financial year is endorsed by the result for the nine months ending 31st December 2009. We remain committed to seeking new business opportunities in agriculture, transportation, power and leisure, while other businesses will continue to explore avenues of expansion locally and overseas. The Group's Income Statement for the nine months ending 31st December 2009 indicates that net finance costs were reduced by 31 per cent to Rs. 564 million.

The Group's Earnings per Share increased from Rs. 2.46 a year earlier to Rs. 11.09 for the period under review, an improvement of 351 per cent.

KVPL reduce losses; looks to better 2010

An improvement of commodity prices and crop volume in the fourth quarter enabled Kelani Valley Plantations PLC (KVPL), the plantation subsidiary of Dipped Products PLC, to end 2009 on a hopeful note.

According to figures released to the Colombo Stock Exchange for the year ending 31st December 2009, KVPL, which reported a loss before tax of Rs. 215 million at the end of its first nine months, reduced this loss to Rs. 28 million at the end of the year, recouping Rs. 187 million in its final quarter.

A year in which a worker wage increase determined in September with retrospective effect from April added Rs. 350 million to KVPL's operational expenditure, 2009 was also characterised by substantial crop losses due to erratic weather, resulting in the company's tea and rubber crop declining by 19 percent and 14 percent.

Combined with poor commodity prices in the first quarter, this reduced production resulted in turnover for the year declining by 9 percent to Rs. 2,860 million, and the company posting a loss after tax of Rs. 40 million.

Commenting on these results, KVPL and Hayleys' Group Chairman Mohan Pandithage said: "With worker wages constituting around 60 per cent of operational expenses, the industry's future viability depends on wage increases being reciprocated, at least in part, by concomitant productivity improvements."

Analysing the prospects for the company, he said: "As long as oil prices sustain current levels, rubber prices may reasonably be expected to remain firm, and the improved buying power of the oil producing countries will keep tea prices, particularly the low grown and associated varieties buoyant." Pandithage however cautioned that "this market stability relies heavily on the delicate balance of several factors, including economic and political.

First Capital PAT tops Rs. 6 million

First Capital Holdings PLC (FCH) has reported strong top and bottom line growth at the end of the third quarter of 2009-10, primarily through substantial capital gains from investments in government securities in an environment of easing monetary policy.

A company spokesman said that in keeping with the Group's policy of a high dividend payout ratio, the company has announced a dividend of Rs 15 per share.

The total dividend payout amounts to Rs. 506.25 million.

First Capital achieved profit after tax of Rs. 619.5 million for the nine months ending 31st December 2009, a nine-fold increase over the corresponding period of last year.

Profit attributable to equity holders of the parent company grew nearly 12 times to Rs. 553.2 million.

Earnings per Share increased to Rs 16.39 for the review period from Rs. 1.39 for the first nine months of 2008-09, while Group Net Assets per Share stood at Rs. 29.71 as at 31st December 2009, up from Rs. 10.91 a year earlier. A spokesman attributed the growth to timely and aggressive trading of government securities by the Group's primary dealer First Capital Treasuries.

First Capital Holdings PLC, formerly V Capital PLC, held an EGM in late 2009 to write off brought forward losses accrued prior to its acquisition of the First Capital Group.

This paved the way for the dividend announced this week, the spokesman said. The company's equity attributable to the parent company has increased to over Rs. 1 billion from Rs. 368 million a year ago.

Contributing to the Group's performance are three progressive and profitable financial services companies.

First Capital Treasuries (FCT) is a Central Bank appointed primary dealer with a mandate to create a market for government Treasury Bills, government treasury bonds and repurchase agreements, with investors seeking risk free investment opportunities.

FCT has fulfilled this mandate since the inception of the Primary Dealer system in 1992 and continues to be a market leader, serving a wide range of investors through its regional branches.

First Capital Markets (FCM) is the group's arm dealing with corporate debt. FCM interacts closely with corporate entities, assisting them with structuring and placing of both short-term and long-term debt issues.

The company is also a SEC approved Margin Provider for listed equity and provides loan facilities to investors in the share market enabling them to capitalize on both short-term and long-term equity market opportunities.

First Capital Asset Management (FCAM) is a SEC approved fund manager specializing in managing wealth for high net worth individuals as well as for trusts, provident funds and companies.

As part of a group with high visibility and understanding of the financial markets, FCAM is able to offer clients investment options which would otherwise not be available to them.

Bright results light the way for Sunshine Holdings

Strong prospects underpinned by solid performances at the end of third quarter of 2009-10 by its businesses in healthcare and plantations have promoted Sunshine Holdings PLC to announce plans for a one into ten share sub division which will greatly increase share capital liquidity.

The company currently has 13,333,333 issued ordinary shares which will increase to 133,333,330 upon sub division.

The owning company of Swiss Biogenics Limited, Watawala Plantations PLC and companies in travel and packaging, Sunshine Holdings achieved an attributable profit of Rs. 252 million for the nine months ending 31st December 2009, a remarkable 90 per cent increase over the corresponding nine months of last year.

Group profit before tax grew by a noteworthy 87 per cent to Rs. 558 million, while profit after tax more than doubled to Rs. 433.5 million on a turnover of Rs. 6.9 billion, which reflected an increase of 23 per cent.

Describing these results as "impressive" Sunshine Holdings' Chairman Rienzie T. Wijetilleke attributed the Group's performance to a renewed focus on operational efficiencies in all group companies.

Announcing plans to enter the power sector in the fourth quarter of the year with the launch of Sunshine Power Limited, he said: "With this diversification, we hope to be a significant player in building the infrastructure of our economy."

This will be the Group's first venture into the renewable energy sector and will generate hydropower potential of 1.6 MW in the foreseeable future.

"We anticipate," Wijetilleke said, 'that the country's economic environment will rebound faster than the region, especially as Sri Lanka has just begun to capitalise on the peace dividend.

The unprecedented opportunity this provides will allow all sectors of the economy to grow faster than expected, and this will be reflected in all our business sectors as well".

Total assets of the Group increased to Rs. 6.7 billion as at 31st December 2009, a growth of 5 per cent over the preceding 12 months. Earning per share nearly doubled from Rs. 9.96 for the first nine months of the previous year to Rs. 18.90 for the period under review, while net assets per share improved 17 per cent to Rs. 120.75. The Sunshine Holdings share price achieved a high of Rs. 196 during this period.

In segment results, the healthcare sector comprising Swiss Biogenics, the largest private sector player in Sri Lanka in pharmaceutical, diagnostics and surgical accessories, and Healthguard, a strategic venture in healthcare retailing, posted a profit after tax of Rs. 165 million, a growth of 31 per cent.

'Our presence in all major sectors in healthcare products, pharmaceutical, surgical and medical devices, diagnostics and nutraceuticals enabled us to increase our overall market share as we introduced new products in all segments," Wijetilleke disclosed.

The Group's plantations company increased its post-tax profit contribution to Rs. 227 million, a growth of 225 per cent on the back of improved performances from Palm Oil and retail marketing.

In the Packaging sector, the Group incurred a marginal loss attributed to the impacts of the global recession.

"We however foresee a recovery in our main customer segment tea exporters as their trading environment improves, and with timely investment in equipment, we should be able to improve returns in the medium term", Wijetilleke noted.

The Travel sector (Sunshine Travels and Tours Limited) achieved a 22 per cent growth in turnover and reported a profit after tax of Rs. 1.3 million.

"We are exploring opportunities to take advantage of the demand for eco tourism and to invest in upgrading and renting out more of the Group's tea plantation bungalows to tap this demand, he added.

Among the other significant aspects of the Group's performance in the nine months reviewed, was its ability to limit the increase in administrative expenses to 7 per cent, and to restrict the increase in finance costs to 5 per cent over the corresponding period of the previous year.

A group focused on expansion locally and internationally, Sunshine Holdings is associated with Tata Tea Ltd, and its subsidiary the Tetley Group, and has also extended its interests into telecommunications with the acquisition of a 10 per cent stake in Tata Communications Lanka Ltd,a subsidiary of Tata Communications Ltd, India (TCL), which is owned by the Tata Group.

Sunshine Holdings also owns the household-name tea brand Zesta, which is marketed locally and in global markets by Watawala Plantations.

As at 31st December 2009, 25 per cent of the Group was owned by Aureos South Asia Fund Llc.