Corporate

Aviva NDB records 42% GWP growth

In the first six months of 2010, Aviva NDB Insurance recorded a significant 42% growth in total Gross Written Premium (GWP) income amounting to Rs 4,230m with consolidated group revenue growing 37% to Rs 5,926m, compared to the same period in the previous year. This augurs well for the Company that transformed from Eagle Insurance into Aviva NDB in mid February.

The half-year's commendable top-line performance in GWP was largely driven by the 39% growth in Life insurance and 47% growth in General insurance business compared to the first half of last year.

The Group reported a loss of Rs 127 m, after taxation, attributed to the investment in the company name and brand change, from Eagle to Aviva NDB. Profit before tax excluding the expenditure on brand development amounted to Rs 268 m. Bad weather conditions that prevailed during the period resulted in a higher claims experience in the General insurance business. There was also a prudent increase of provision for incurred but not reported (IBNR) claims arising from the increased volume and mix of new business.

The financial results for the period do not include a bottom-line contribution from the long-term insurance business as it is usual that this is determined at the end of the financial period, after the actuarial valuation is carried out.

Managing Director, Shah Rouf said: "I am pleased with the commitment and enthusiasm displayed by our Wealth Planners who as pioneers of a new category of insurance sales professionals, have been able to reap the benefits of catering to the full spectrum of a client's insurance needs, be it Life, General or Investment-linked products, resulting in an exemplary performance."

Chairman, Bill Lisle was confident of the Company's performance when the year closes and said: "At the pace we have maintained in the first half of the year it is clear that our prudent strategies are steadily paving the path to growth resulting in prosperity and peace of mind for our customers and stakeholders."

Airtel strengthens leadership through robust revenue growth

Bharti Airtel Ltd announced its audited consolidated IFRS results for the first quarter ended June 30, which includes the results of the newly acquired African operations for 23 days of the quarter, effective June 8. The company has adopted IFRS (International Financial Reporting Standards) for its consolidated results effective April 1, 2010; consequently, the results of Indus Towers Ltd have been proportionately consolidated. Bharti Airtel is one of the first companies in India to publish consolidated IFRS results as permitted by Clause 41(I)(g) of the Listing Agreement.

The consolidated total revenues for the quarter ended June 30, of USD 2,625 million grew by 17.4 percent Y-o-Y. India & South Asia total revenues stood at USD 2,419 million, a growth of 8.2 percent Y-o-Y. On a sequential basis, the mobile business in India & South Asia grew by USD 109 million over Q4 FY10. Mobile minutes in India grew by 17.6 billion (over Q4 FY10) to 190.4 billion.

Consolidated underlying EBITDA of USD 968 million grew by 5.0 percent Y-o-Y. Underlying EBITDA margins continued to be robust at 36.9 percent after absorbing a conservative provision of USD 22 million for the proposed spectrum cost hike in India; though this has been stayed by the TDSAT.

The quarter witnessed the adverse impact of the strengthening of the US Dollar (USD) against the Indian Rupee and several African currencies. As a result, derivatives and exchange fluctuations led to a loss of USD 46 million in Q1 FY11 (Previous year: gain of USD 60 million). Consequently, net income dropped by 32.0 percent Y-o-Y to USD 361 million.

During the quarter, the company acquired the African operations of Zain for an enterprise value of USD 10.7 billion. The 3G licences in 13 circles and BWA licences in 4 circles in India were acquired at a total cost of USD 3,350 million.

Capex spend during the quarter was restricted to USD 394 million due to delays in security clearances for equipment imports. The Consolidated Free Cash Flow in Q1 FY11 was an all-time high of USD 786 million. The Net Debt - Equity ratio stood at 1.38, and the Net Debt - EBITDA ratio at 2.87.

Lanka Milk Foods approves Rights Issue

At an Extraordinary General Meeting held recently, the shareholders of Lanka Milk Foods (CWE) PLC unanimously approved a Rights Issue to raise around Rs. 699,965,000 in capital, to fund the ultra modern state-of-the-art dairy complex coming under the umbrella of Ambewela Products (Pvt) Limited, which is a subsidiary of Lanka Milk Foods (CWE) PLC.

Each Rights share priced at Rs. 70 (LMF Ordinary shares were traded at Rs. 99 on the 12th of August 2010), will be based on one Rights Share per three Ordinary Shares held and will see an issue of 9,999,500 new shares, which will be ranked equal and pari passu to the existing Ordinary Shares of the company.

On'ally Holdings PAT Rs. 34.61m

by Sapumali GALAGODA

On'ally Holdings PLC made a profit of Rs. 34.61 million after taxation and profit before taxation was Rs. 53.7 million, as against Rs. 36.93 million and Rs. 56.09 million respectively in the previous year. Turnover increased from Rs. 71.55 million to Rs. 75.57 million, while operating profit also increased from Rs. 43.08 million to Rs. 43.85 million, said Chairman Dr Prathap Ramanujam.

The main reason for the decrease in profit before taxation is due to a decrease in interest rates during the year. The average occupancy based on floor area was 97.35% as at March 31, compared to 97.97% in 2009.

The directors have approved a final dividend of Rs. 1.35 per share (Rs. 1.35 per share in the previous year) while an interim dividend of Rs. 0.90 per share (Rs. 0.90 in the previous year) was paid on December 17 making a total dividend for the year of Rs. 2.25 per share (Rs. 2.25 per share in the previous year).

Ramanujam said that the directors did not make any appropriation to the repairs and maintenance reserve during the year.

The building however is regularly being refurbished and during the year a sum of Rs. 2.82 million was incurred on up-keep and renewals and charged to revenue. This amount was transferred from repairs and maintenance reserve to retained earnings thus reducing the repairs and maintenance reserve account to Rs. 17.43 million.

Unity plaza continues to be the focus of the thriving information technology industry with the majority of its occupants being computer related companies.

It also catered to the state sector with government departments occupying more than two floors of the building during the year. Despite the challenges posed by the current economic climate we look forward with caution, to continued profitability and thus enabling an attractive return to our shareholders, he said.

RAM Ratings reaffirms BBB and P3 ratings of SDB

RAM Ratings Lanka has reaffirmed Sanasa Development Bank's (SDB) respective long and short-term financial institutions ratings, at BBB and P3; the long-term rating has a stable outlook. The ratings are supported by the Bank's healthy financial performance, stringent credit management and strong rural presence, particularly in micro-financing. Nevertheless, these positives are moderated by SDB's highly risky, targeted customer segment and small stature.

SDB is a licensed specialised bank (LSB), accounting for 2.99 percent of the total industry assets as at end December 2009; the largest player took up the lion's share of 69.89 percent.

SDB operates as the apex financial institution of the Sanasa movement - the largest cooperative network in the country, with the objective of catering to the funding needs of the rural community.

The Bank provides micro-financing, leasing, housing loans and project financing, primarily to the low-income segment of the economy, which usually lies outside the risk parameters of commercial banks. SDB disburses loans to Sanasa members through grassroots level primary societies,to non-members as well as small and medium-sized enterprises.

Despite its high-risk target market, SDB has been able to maintain its better-than-industry asset quality, supported by its stringent credit evaluation and monitoring.

As such, SDB's gross non-performing-loans ratio dipped marginally to 6.59 percent as at 31 December 2009, albeit remaining better than the industry average of 10.38 percent as at the same date. Further, the gross NPL ratio ameliorated to 5.50 percent as at end-March 2010. RAM Ratings Lanka opines that SDB has moderate funding and liquidity positions. We are concerned about the widening gap in the Bank's asset-liability maturity mismatch in the 'less than 1 year' bucket, which accounted for 21.10 percent of its interest earning assets as at end-FY Dec 2009.

However, this is partially alleviated by SDB's healthy renewal rates and Rs300 million of unutilised funding lines. The Bank's statutory liquid-asset ratio stood at 25.27 percent as end December 2009.