Access Engineering posts Rs. 2 b in pre-tax profits; bottom line up 80% to Rs. 1.7 b

Access Engineering Ltd., the first company which had an IPO in 2012 (March), has had a very successful year of operations in terms of the financial results released for the ensuing year.

The fourth quarter turnover of Access Engineering was Rs. 2.79 billion with a comparative of Rs. 1.27 billion for the last financial year. The company together with its two subsidiaries has exhibited unprecedented progress in all performance indicators during this financial year as illustrated below.

Gross profit for the financial year has increased to Rs. 2.11 billion from last year’s Rs. 1.29 billion with a recorded increase of 63%. Pre-tax earnings of the group stood at Rs. 2.03 billion with a 47% increase and after tax earnings attributable to equity of Rs. 1.73 billion showcasing 80% growth from the last year.

Chairman and CEO Sumal Perera, commenting on the financial performance for the financial year 2011/2012, emphasised the fact that this was a landmark year for the company with the main focus of building capacity.

“We are well geared to take advantage of the unprecedented growth that is taking place in infrastructure development and the construction industry. Some of the key highlights in capacity growth were increasing the stated capital from Rs. 3 billion to Rs. 9 billion (this includes the private placement of Rs. 4.5 billion and the IPO of Rs. 500 million). Also, we invested Rs. 1530 million in plant/machinery and increased our workforce from 1,600 to 2,700 employees. With this expansion, we were able to achieve the best financial results in our short history of 10 years.”

“The last financial year included three significant events. Namely, the completion of the successful private placement, acquiring of Sathosa Motors PLC and the listing of Access Engineering Ltd at the Colombo Stock Exchange. This gears us well for future growth and to enhance the group’s future business potential. Something significant that all our stakeholders could take comfort is that, in an era where there is a tendency of increasing interest rates, Access remains totally debt free and has a healthy liquidity position with positive cash balances at both company and group levels. Thereby the company is in a good position to expand its existing business and to look at any attractive investment opportunity that is available.”

He also added that any new business opportunity will always be looked at from a sustainable and long term point of view.

Access Engineering, the leading value engineering solutions provider in Sri Lanka, recorded an overall growth in all spheres of operations by doubling its turnover to Rs. 7.31 billion during the financial year 2011/ 2012.

Established in 2001, Access Engineering from then till now has risen considerably by branching out to many successful business ventures and partnerships with various local and multinational organizations. This has enabled the company to enrich the lives of its employees and stakeholders as well as make a significant contribution to the socioeconomic development of the country.

“The dedication of our workforce maintains the delivery of excellence in their respective fields. They have put in a great deal of hard work which has enabled Access to contribute immensely towards the country’s economy and quality of living. While aspiring to become Sri Lanka’s number one value engineering solutions provider, we have vastly invested in the latest technology that will definitely enhance many of the services we offer to our growing base of clients. These services include engineering, design, specialised construction, quality assurance and much more,” said Rohana Fernando, Chief Operating Officer of Access Engineering.

The company posted an EPS of Rs. 1.83 up by 52% from last year. Similarly, the company’s Net Asset per share increased by 47% to Rs. 10.66. Access Engineering declared a dividend of 25 cents for the financial year 2011/12 which amounted to a dividend payout of Rs. 250 million.

Total asset base of the group stood at Rs. 14.2 billion compared to the previous year asset base of Rs. 5.7billion, mainly owing to the new share issues (private placement of Rs. 4.5 billon and IPO of Rs. 500 million) and fixed asset additions through the theme of capacity building. The company invested heavily on new plant and machinery during the year, targeting its strong order book ahead. The stated capital of AEL is at Rs. 9 billion with a total equity base of Rs. 10.65 billion.

Access continued to maintain acceptable margins at company level from its operations through its unique business model and cost reductions, with a 28% GP margin and 21% NP margin for the financial year 2011/12, with a group level GP and NP margin of 29% and 24% correspondingly.

The group accounted for a return on equity of 16% even after heavy investments made in property, plant and equipment. By efficiently managing the company’s working capital, the group was able to maintain a current asset ratio as high as 2.5 times, a further improvement from its previous year’s figure of 1.9.

The company is currently in possession of a very strong balance sheet with almost zero debt.  This negligible level of gearing is highlighted with the company having an interest cover of 103 times and at group level, an interest cover of 122 times. The resulting low financial risk enables financing of future projects and implementing expansion plans very viable while the above data once again reiterates on its sustainable growth.

The subsidiaries of Access Engineering, namely Access Realties Ltd. and Sathosa Motors PLC, have also improved their performance during the financial year 2011/12.

Access Realties Ltd., which is the managing company of Access Towers at Union Place, Colombo 2, secured a net profit of Rs. 111 million for the financial year 2011/12. Sathosa Motors PLC, the strategic acquisition made by Access in February 2012 has posted a net profit of Rs. 176 million for the year.

The consolidated turnover and profit figures of the group accounts only for the March performance of Sathosa Motors (post acquisition results) presenting a higher level of contribution it could bring to the group during future reporting periods. This potential is further enhanced by many turnaround strategies that Access has in the pipeline for improving the performance of Sathosa Motors.

During the financial year 2011/12, Access Engineering carried out many engineering and construction projects with a host of locally and internationally acclaimed business partners.

Among them are the construction and improvement to the Batticaloa-Trincomalee (A15) road project, the Jaffna-Kankesanthurai-Palali road project, the Kantale-Trincomalee (A6) road project, the Galagedara-Rambukkana road project, the Mannar-Nawakkuli (A32) road project, the Batticaloa water tower project and the Ambalanthota Salinity Barrier project.

During the financial year 2011/12, Access successfully completed two share issues which offered 200 million new shares. The private placement that was held in June 2011 raised Rs. 4.5 billon and attracted many local and foreign high net worth individuals as well as corporate investors.

The company was listed on the Colombo Stock Exchange in March 2012 through its IPO of Rs. 500 million, which was oversubscribed during the opening day. The successful completion of the share issue as well as the positive sentiments and perceptions, bears testament to the trust investors have in the company and its future prospects.

Adding to its strong employee philosophy, the three founding Directors of the company gifted shares worth Rs. 3 billion to each and every employee thus creating a new era of employee recognition and rewards among employers in Sri Lanka.

The company has received numerous prestigious awards from varying institutions from its inception. Among them are Corporate Accountability Rating 2012 - Gold Award, National Business Excellence Awards 2011 – Best Knowledge Integrator (Construction Sector), The Golden Award for Quality & Business Prestige 2011, three National Awards For Construction Performance in 2011 (Bridge Sector), etc.

Accredited by ICTAD, NCASL, IESL with ISO 9001 and ISO 14001 certifications, the company is frequently presented with many accolades of recognition and has also been inducted in to the list of the 100 Most Respected Entities of Sri Lanka in 2012. This milestone was achieved with many years of passion, dedication and hard work by the founder members of the group as well as the increasing employee base, which is regarded by the company as the spirit of Access and its success.