Corporate

Union Assurance ends 2009 on a high note

Union Assurance ended 2009 on a high note, reporting increases in both turnover and profitability. Life and general insurance revenue increased by 19%, from Rs. 5.6 billion in 2008 to Rs. 6.7 billion in 2009. Profit before tax amounted to Rs. 467 million, a 31% increase over 2008, and profit after tax increased by 17% from Rs. 342 million in 2008 to Rs. 401 million in 2009.

Both life and general insurance business segments performed well during the year.

Life gross written premium increased by 11% from Rs. 2.5 billion in 2008 to Rs. 2.8 billion in 2009. Profit from the life business also increased by 27%, from Rs. 185 million in 2008 to Rs. 235 million in 2009.

General insurance premiums amounted to Rs. 3.2 billion, which was in line with the premium achieved in 2008.

Retail distribution channels maintained a steady growth momentum. Net profit from the general insurance segment increased from Rs. 157 million in 2008 to Rs. 166 million in 2009.

The Board of Directors has recommended a first and final dividend of Rs. 5.00 per share for approval by the shareholders at the Annual General Meeting to be held on 31st March, 2010.

"We are pleased with the results achieved by UA in 2009, said Chairman Ajit Gunewardene.

The growth in turnover and profitability as well as the national and international awards reflects UA's capability to differentiate itself and prosper in the highly competitive insurance industry."

Commenting on UA's performance, CEO Dirk Pereira said, 'We have used the strengths of our team, portfolio of innovative products and strong reputation to deliver excellent results.

We are confident that these attributes combined with the re-energized brand will enable UA to profitably exploit business opportunities in the future as well.'

During the year, the company launched two innovative life and general insurance products, which could be considered revolutionary in the context of the Sri Lankan insurance industry.

UA re-defined the motor insurance market with their latest product - Union Motor Reload.

In contrast to a standard motor insurance policy, which has to be paid as a lump sum on an annual basis, Union Motor Reload provides greater flexibility and convenience to customers, allowing them to purchase their motor insurance for one, three or six months.

The policy can be purchased from any Keells Super outlet or any UA branch, located islandwide. In addition to the flexible coverage period, the product retains the features of a standard insurance policy currently sold in the market.

For example, in the event of an accident, the claim will be paid similar to a standard motor policy.

Another feature is that the premium will be fixed on an annual basis.

Hence if a customer obtains a one month, three month or six month insurance cover, the premium will not change during the balance period up to twelve months. Customers are also entitled to earn UA's accelerated no claim bonuses after 12 months are completed.

UA also launched Union Health Deposit, the first and only health insurance policy in the market that pays interest on premiums paid, while providing coverage for over 200 surgeries and hospitalisation related expenses.

The policy covers an individual for a ten-year period, and is available in three options to suit the lifestyle needs and financial capacity of all segments of the market. The 2008 annual report was once again judged among the best reports in the South Asian region by the South Asian Federation of Accountants.

The report also won several accolades at the awards ceremony conducted by the Institute of Chartered Accountants of Sri Lanka, including best corporate governance disclosures, best report in the insurance sector and overall third place.

Our sustainability practices were recognised by the Association of Chartered Certified Accountants, as we won first place in the Medium Scale category at the Sustainability Reporting Awards for the second consecutive year.

We were also recognised at the National Business Excellence Awards conducted by the National Chamber of Commerce, winning first place in the insurance sector and first place overall for our performance management practices.

Maskeliya reports Rs. 141 million profits

Maskeliya Plantations PLC recorded a turnover of Rs. 938 million and a profit before tax of Rs. 141million for the quarter ending 31st December, 2009.

The turnover for the nine months ending 31st December, 2009 was Rs. 2.3 billion resulting in a loss before tax amounting to Rs. 102 million.

The reported results have fully absorbed a Rs. 376 million hit on account of gratuity provisioning (Rs. 249 m) and back-wages (Rs. 127 m) consequent on a wage increase in the plantation sector in September, 2009. If not for this impact which had to be absorbed in September 2009, the company would have recorded a profit before tax amounting to Rs. 274 million for the nine months ended on 31st December, 2009.

The company had a successful quarter notwithstanding the fact that it has to absorb a 42% wage increase with effect from 1st April, 2009.

Favourable prices for tea which was attributed to the global supply shortages and effective management of costs contributed positively towards the profitability and the company.

The company continues its strong commitment to quality and sustainability where five factories have been accredited with the ISO 22,000 certification, and by the end of the financial year this is expected to increase up to twelve factories.

The replanting programme which commenced a few years ago continues throughout the year where the company would harvest a better crop into the future.

Four of the company's factories now have the dual manufacturing capability which optimizes the efficiency at a factory level.

Maskeliya Plantations PLC adopts best of manufacturing practices and financial reporting and during the period under review it was awarded the Bronze Award at the annual reports awards ceremony for its annual report for 2008-2009 which was organised by The Institute of Chartered Accountants of Sri Lanka which itself is a statement of the company's commitment towards good governance and accountability towards its stakeholder.

A spokesman for the company stated that the outlook for the final quarter of the financial year 2009/2010 is very promising with strong prices and healthy crops.

SLT records profits despite adverse market condition

The Group comprises of SLT and seven subsidiaries. As common to all the Corporates, year 2009 was a challenging one to the SLT group as well.

Despite the challenges SLT and the group reported Rs. 1,232 million and Rs. 778 million after tax profit for the year.

However, the 4th quarter of the year recorded losses of Rs. 214 million and Rs. 379 million by the Company and the Group mainly due to provisions on some exceptional items.

Group Chairperson Leisha De Silva Chandrasena is of the view that compared to the prevailing economic situation locally and internationally and the high competitive nature of the industry the group has displayed its strong footprint in the market place achieving comparatively better results during the year 2009.

The ongoing transformation program of SLT will further enhance its strengths.

Company performance Pressure on prices from the competition and cost conscious behaviour of subscribers have resulted in the revenue drop by 6% during the year 2009, compared to the year 2008.

However as a result of the positive impact of measures taken by the company to arrest the situation throughout the year the revenue declining trend has been mitigated, bringing down the corresponding reduction during the 4th quarter to a negligible amount, this follows the previous two quarters where favourable increase in revenue have been observed.

This shows on ongoing favourable trend of stable revenue for the company. Introduction of new packages for voice services, expansion of broad band and data services, strengthening of focus on wholesale business, provisioning of more value added services (VAS) and widening of customer bases are some of the actions taken by the Company in this respect.

The company experienced a 21% increase in its operating costs during the year mainly due to the inflationary situation and provisions made during the fourth quarter of the year on some exceptional items.

A provision of Rs. 770 million was made as changing carrying value of inventories. Further Rs. 157 million was charged to profits as impairment cost due to migration of some switches to NGN. As most of the company switches are reaching a level of full depreciation and the Company strategy is to migrate to NGN in several phases over the coming years, the risk of large provisions for impairment is minimal.

Without the impact of provisions for exceptional items the increase of operating cost compared to the previous year would have been about 16%.

Ceylinco Life retains market leader status at end 2009

Ceylinco Life retained its position as the market leader in Sri Lanka's long-term insurance sector in 2009, with Gross Written Premium exceeding Rs 7.5 billion.

Releasing its unaudited figures for the 12 months ending 31st December, the company said its Life Fund grew 20.3 per cent to Rs 25.6 billion, an increase of Rs 4,321 million during the year, while Investment Income grew 28.4 per cent to Rs 3,350 million.

The company sold more than 159,000 new life policies in the year reviewed at an average of 13,250 per month, despite the adverse socioeconomic environment, and paid Rs 2,756 million in customer benefits (up 24.8 per cent), inclusive of Rs 485 million paid as claims, all positive indicators of growth and financial strength.

Our performance in what was undoubtedly the most difficult year in the company's history is most encouraging and illuminating, Ceylinco Life Deputy Chairman R. Renganathan said. 'Adversity is the best test of a company's mettle, and our figures show that we have ended the year with flying colours.'

He said the company's solvency margin, another key indicator of financial health, had improved further in the year under review, and stood at six times the statutory requirement as at 30th November 2009.

Identifying shrinking disposable incomes in target customer segments as one of the challenges to the growth of insurance, Renganathan said the company had responded by developing innovative products that made insurance more affordable and invested in initiatives to improve awareness of the need for life insurance.

A key feature of the company's performance in 2009, he said, was the fact that Ceylinco Life had not scaled down on any of its customer benefits and community programmes during the year. 'Insurance is about promises, and Ceylinco Life fulfilled its promises,' Mr. Renganathan said.

The company had focused on enhancing efficiency and becoming leaner in the face of testing market conditions, and had reduced its expenses on staff, administration, selling and finance by a noteworthy 19.1 per cent, he disclosed.

Investments had grown 20 per cent to Rs 23.3 billion in the year reviewed, while total assets increased 19.5 per cent to Rs 29.9 billion.

Investments pertaining to the Life Fund are made in conformity with the investment guidelines stipulated under the Regulation of the Insurance Industry Act No 43 of 2000.

These investments are subject to regular monitoring by the Insurance Board of Sri Lanka (IBSL).

Ceylinco Life's investment portfolio at the end of 2009 comprised Government Securities (38 per cent); Licensed Private Banks (15 per cent); State Banks (21 per cent); Real Estate (14 per cent); Corporate Debt (6 per cent) and Others (6 per cent).