Corporate

Commercial Bank records impressive growth

Pre and post tax profit 18.9% and 17.0%:

Continued improvements in key performance indicators in the second quarter of 2010 have enabled the Commercial Bank Group to record noteworthy profit growth for the six months ended 30th June, despite a drop in foreign exchange income.

The Group, comprising Commercial Bank PLC, its subsidiaries and associates has reported profit before tax of Rs 4,038.5 million, an increase of Rs 598.2 million or 17.39 per cent over the corresponding period of last year. Profit after tax was up 14.84 per cent to Rs 2,314.0 million.

Among the principal contributors to this growth was a 27.74 per cent growth in net interest income attributed to efficient management of interest expenses, which reduced by 24.13 per cent in the period under review, during which period interest income too declined by 7.57 per cent.

Elaborating on this, Commercial Bank's Chief Financial Officer Nandika Buddhipala said the re-pricing of interest-sensitive assets and liabilities had contributed to an improvement in interest margins to 4.53 per cent.

The positive effects of an improved net interest margin and a substantially lower requirement for specific provisions for bad and doubtful debts was dampened somewhat by a 53.79 per cent drop in foreign exchange income from Rs 1,915.2 million in the first half of 2009 to Rs 885.1 million in the period reviewed.

This was largely due to translation losses consequent to the appreciation of the Sri Lanka Rupee against the US Dollar and a drop in the volume of foreign exchange transactions.

Nevertheless, Group net income improved by Rs 579.3 million or 6.16 per cent to Rs 9,987.2 million despite this reduction in foreign exchange income.

Taken separately, the Commercial Bank, the largest entity in the Group, has reported a profit before tax of Rs 4,024.7 million for the six months reviewed, reflecting a growth of 18.92 per cent.

The Bank's profit after tax stood at Rs 2,313.6 million, an increase of 17.0 per cent over the corresponding six months.

Total deposits of the Bank rose from Rs 234.7 billion as at 31st December 2009 to Rs 242.3 billion at 30th June 2010, an increase of 3.21 per cent. Total gross loans and advances grew by Rs 3.7 billion in the same period, from Rs 182.9 billion to Rs 186.6 billion.

The Bank's assets, which stood at Rs 322.3 billion at the end of 2009 increased by 4.85 per cent to Rs 337.9 billion at the end of the first half of 2010.

As at 30th June 2010, the Commercial Bank's shares traded at Rs 178.50 (voting) and Rs 138.00 (non-voting) after a share split of one share for every two held compared with pre share split price of Rs 134.00 and Rs 84.50 respectively a year ago.

The Bank's Capital Adequacy Ratios at the end of the review period stood at 11.59 (Tier I) and 13.39 (Tier I and II).

Ranked first among banking institutions in Sri Lanka in the latest Business Today rankings, the Commercial Bank of Ceylon PLC has been adjudged Sri Lanka's 'Bank of the Year' seven times by 'The Banker,' 'Best Bank in Sri Lanka' for 12 consecutive years by 'Global Finance' magazine, and the Best Bank in Sri Lanka twice by FinananceAsia.

It has also been rated 'Best Local Trade Bank' in Sri Lanka by the UK based 'Trade Finance' magazine.

Dipped Products maintains growth in Q1

Dipped Products Group of Companies (DPL) has posted healthy turnover and profit growth in the first quarter of 2010-11, although margins in rubber glove manufacturing operations were eroded by a sharp increase in natural rubber prices.

According to figures filed with the Colombo Stock Exchange, the Hayleys Group's globally-positioned hand protection business which also has a substantial interest in plantations, increased turnover by 47 per cent to Rs 3,314 million in the three months ending June 30. Hand Protection improved turnover by 37 per cent and Plantations grew 93 per cent.

Dipped Products Thailand (DPTL) DPL's medical glove manufacturing company reported a 52 per cent increase in turnover to Rs 524 million, while ICOGUANTI S.P.A. the Group's Italian marketing company achieved revenue of Rs 901 million, a 17 percent growth over the corresponding quarter of the previous year.

DPL's consolidated profit before tax of Rs 121 million reflected a 33 per cent improvement in the period reviewed. Profit after tax was up 49 per cent to Rs 95 million.

The principal contributor to profit growth was DPL's plantations company Kelani Valley Plantations PLC (KVPL), which posted a pre-tax profit of Rs 78 million compared to a loss of Rs 48 million in the first quarter of 2009-10, DPL Managing Director J. A. G. Anandarajah said.

In the Hand Protection segment, unprecedented high rubber prices in the domestic and international markets and the stronger rupee adversely impacted profit growth in local manufacturing operations as well as on the growth expected out of DPTL, he said.

Anandarajah disclosed that latex prices at the Colombo auctions during the quarter reviewed had been consistently 13 to 14 per cent more than international prices which were also 77 per cent higher on average than the prices that prevailed a year previously. The unsustainably high local prices and a shortage of rubber in the local market had compelled DPL to import latex for its manufacturing operations in Sri Lanka during the quarter, he said.

"The abnormal increase in local rubber prices could not be passed on to customers, and resulted in reduced margins for our manufacturing operations," Anandarajah said, but added that this situation could ease in the months ahead if weather improved, allowing particularly the local rubber production to increase.

In contrast, DPL's Plantations sector businesses, helped by higher rubber prices and better tea crops, contributed Rs 947 million to turnover inclusive of inter-segmental sales, with revenue from tea up 103 per cent to Rs 652 million, and rubber up 86 per cent to Rs 307 million.

Established in 1976, Dipped Products is one of the leading non-medical rubber glove manufacturers in the world, and accounts for a 5 percent share of the global market.

The company's products now reach 68 countries.

The Board of Directors of Dipped Products PLC comprises A. M. Pandithage (Chairman), J. A. G. Anandarajah (Managing Director), G. K. Seneviratne, N. Y. Fernando, N. B. Weerasekera, R. Seevaratnam, F. Mohideen , K. A. L. S. Fernando, L. G. S. Gunawardena, S. C. Ganegoda and Dr. M. Ranasoma.

Aitken Spence reports strong Q1 results

Aitken Spence PLC released its first quarter financial results to the Colombo Stock Exchange on Tuesday, reporting a pre-tax profit of Rs. 647m for the three months ended June 30, a growth of 33 per cent, compared to last year. Profits attributable to the shareholders soared by 50 per cent to Rs. 440m during the quarter, over the previous year.

Group revenue has increased by 12 per cent to Rs. 5.66 b, while earnings per share rose 50 per cent from Rs. 10.86 to Rs. 16.24.

Deputy Chairman and Managing Director J.M.S. Brito said: "Our tourism sector performed stronger during the quarter with the Sri Lankan leisure segment reporting an improved performance compared to last year, despite Neptune Hotel being closed for renovation.

We have been able to trim our losses in the Maldives leisure segment, where the industry is still recovering from the downturn."

During the quarter under review, Aitken Spence Hotel Holdings successfully concluded a rights issue of one new share for every four held at an issue price of Rs. 260 per share to finance future investments.

"Our commitment to Sri Lanka over the years, displayed through investments made into our resort portfolio in the island has positioned us strongly to reap the benefits of the tourism upturn we are beginning to witness.

We have aggressive plans to strengthen our tourism interests in the island to position Sri Lanka as a high-end sustainable tourism destination", he said.

The Group's Singapore Airlines agency recorded strong growth during the quarter by reporting profits, compared to the corresponding period in the last financial year. Printing and Insurance sectors showed an improved performance from last year, while earnings from the Cargo, Logistics and Strategic Investments sectors remained flat.

Aitken Spence Travels and its subsidiary Ace Travel & Conventions won the two most important awards given for travel companies as the Best Destination Management Company and the Best Conference Organiser respectively for the third consecutive year, gaining entry into the Hall of Fame at the Presidential Awards for Travel & Tourism.

The Group's flagship hotel, Heritance Kandalama was rated as the Best 5-Star Resort in the island for the third consecutive year and was also welcomed to the Hall of Fame.

Malwatte Valley records Rs. 296m profit

"Malwatte Valley Plantation PLC recorded a profit of Rs. 296m to end the first half of the year 2010", said Managing Director W. L. Bogastra.

Having fine balance of tea and rubber, the sector profits at operational level for these two crops were Rs. 17m and Rs. 143m respectively.

MVP PLC has had exhibited extreme resilience showing positive results over the past years due to its very prudent management of cost levels. Going on results todate, the company should end 2010 with a very satisfactory profit, provided overall conditions experienced so far this year prevail.

The Company turnover increased by 36 per cent with tea prices remaining favourable and rubber is enjoying a boom.

KVPL recovers from losses of 2009

The surge in rubber prices and higher crop volumes in tea have generated significant growth for Kelani Valley Plantations PLC in the six months ending June 30.

The plantation subsidiary of Dipped Products PLC has reported a net profit of Rs 125 million for the period, from a net loss of Rs 5.3 million for the corresponding half of last year.

Profit before tax grew from a nominal loss a year previously to Rs 128.5 million while turnover reached Rs 1.8 billion, reflecting a growth of 60 percent.

Profit attributable to equity holders of the company grew to Rs 119.4 million from a loss of Rs 4.8 million for the first half of 2009.

KVPL Managing Director Kavi Seneviratne said this growth was achieved despite rubber production falling by 8 percent in the review period due to adverse weather conditions.

Tea production on the other hand, improved by 23 percent, but prices, especially of high growns, declined somewhat in the last two months of the second quarter, Seneviratne said, but added that he anticipates prices to pick up in the third quarter. KVPL's earnings per share for the period stood at Rs 3.51 from a loss of 14 cents for the first half of last year.

A member of the Hayleys Group, Kelani Valley Plantations manages 27 estates, over 13,000 hectares in extent, divided almost equally to tea and rubber.

All of the company's black tea producing factories are certified as HACCP and ISO 22000-2005 compliant with regard to product and quality standards, ensuring that the product meets the highest international food safety parameters.