Aitken Spence net profit tops Rs. 2.5 b mark with 23% growth

Tuesday, 31 May 2011 00:46 -     - {{hitsCtrl.values.hits}}

Propelled by strong growth in hotels and inbound tourism, Aitken Spence Plc’s net profit attributable to shareholders had risen by 23% to Rs. 2.5 billion in the financial year ended 31 March, 2011 from Rs. 2.1 billion a year earlier.

Net profit before tax increased by 13.8% from Rs. 3.4 billion to Rs. 3.8 billion.

Net revenue for the year rose 4% to Rs. 24.73 billion, from Rs. 23.80 billion a year ago, largely driven by growth in the tourism, cargo logistics and manufacturing sectors. The company reported an impressive growth in earnings per share of 23% to Rs. 6.25, up from Rs. 5.07 during the previous year.

Aitken Spence announced an outstanding dividend per share of Re. 1, which is a rise of 50% from Rs. 0.67 last year. The company’s share price showed a growth of 77.2% compared to the previous year to close the year at Rs. 162.30.

In his review, Chairman of Aitken Spence PLC, Deshamanya D. H. S. Jayawardena said, “I welcome the spirited and upbeat sentiment in the economy and believe that the next few years will bring the transformation of Sri Lanka to a truly competitive emerging economy. For Aitken Spence, our advantage will be on our home ground and this will be reflected in our interests within the Sri Lankan economy.”

 “I can say with certainty that we will invest to expand our existing positions of strength while also aggressively exploring fresh opportunities for diversification in to growth sectors of the economy.”

Deputy Chairman and Managing Director, J. M. S. Brito stated, “There is a positive sentiment and increased investor confidence in the Sri Lankan economy, which was strengthened by the improvements witnessed in the global economy. These factors created the right environment for many of the sectors to perform exceptionally well in 2010/11, having fully emerged from the shadow of a prolonged war.”

He added, “As a mainstay of the Sri Lankan economy, Aitken Spence will seek further growth opportunities in the local economy, particularly in the tourism, logistics, agriculture and IT sectors, while consolidating our operations overseas during the coming year. The Group’s strategy of diversification with our core business will continue, as this has paid rich dividends over the years.”

Having fully refurbished properties, the Group was able to take advantage of the tourism boom, with its three premier Heritance properties in Sri Lanka recording an outstanding performance. The company states that its resort portfolio will be expanded in the short-term through several new expansions; Heritance Ayurveda Mahagedara will be opened next month, while construction has begun on the Six Senses property in Ahungalla, targeted to launch in 2013. The Golden Sun Resort Kalutara is now closed for refurbishment until December 2011 and this development will see the resort being uplifted to a four-star property. Construction of an additional 100 rooms will commence in mid 2011 to increase the total room inventory of this property to 200. Brown’s Beach Hotel, is currently being demolished with plans afoot for a brand new 200-room luxury resort. In a bid to cater to the high-end MICE (meetings, incentives, conferences & exhibitions) segment, a state-of-the-art conference hall will be constructed during the year over the Dambulla wing of Heritance Kandalama. Plans are also being drawn up to develop 100 acres of beach front property in Nilaveli, with the aim of harnessing the property’s maximum value. In April 2011 the Group acquired the ownership of Hilltop Hotel in which previously the Group had only a minority stake.

The destination management business posted robust growth as tour operators increased volumes, and traditional markets as well as new markets responded positively to the new era of peace.

During the third quarter, the Aitken Spence- China Merchant Holdings (International) consortium was awarded a Letter of Intent by the Government of Sri Lanka to build and operate the Colombo South Container Terminal, which is regarded as the single largest foreign direct investment in the country. Site investigation work is now under way and it is anticipated that the first phase of the project will be ready for operation in 2013.

In 2010/11, the company acquired Logilink (Pvt) Ltd, a container freight station operation with a specialised solution for the garment industry which has enabled the Group to service several key apparel sector clients.

The Group notes that the power segment performed well during the year, although heavy periods of rain led to the curtailment of generation at all three plants. Aitken Spence plans to commence two renewable energy projects in the near future- a hydropower plant and a wind power plant.

The Elpitiya Plantations Group posted attractive returns this year owing to the high price of rubber and the good performance of oil palm.

Pursuant to the approval by the shareholders at an Extraordinary General Meeting, the shares of the company were subdivided on 5 October 2010 on the basis of one ordinary share into 15 ordinary shares. Consequent to the subdivision the number of ordinary shares of the company increased from 27,066,403 to 405,996,045, without any change to the Stated Capital of the company of Rs. 2,135 million.