Tuesday, 28 May 2002  
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Ceylon Guardian Investment Trust records Rs. 194.5 m post tax profit

One of Sri Lanka's leading blue chip investment holding companies, The Ceylon Guardian Investment Trust Limited, (CGITL) together with its quoted subsidiary, The Ceylon Investment Company Limited (CICL) which primarily makes up the Guardian Group, has recorded a consolidated post tax profit of Rs. 194.5 million, for the year ended March 31, 2002, an increase of 267% from the previous year's post tax profit of Rs. 52.99 million. The controlling interest and management of the Guardian Group is held by Carson Cumberbatch and Company Limited.

Taking in to account the expectations of a revival in the economy and the recent progress in share market activity, the Guardian Group embarked on a strategy of enhancing its liquidity position, by undertaking a rights issue followed by a bonus issue. The total value of the shares issued by the two listed companies under these rights issues was Rs. 64.96 million, thus positioning the Guardian Group to benefit from a potential market revival in the months to come. The Guardian Group has particularly commented on the attractive strategic investment opportunities in infrastructure projects.

In keeping with the Company's core business of investment holding, more than 99% the funds are invested in equities. As at March 31, 2002 the Group's portfolio with a cost of Rs. 1.2 billion had a market value of Rs. 1.7 billion, a significant improvement of 38.4% and 50.2% respectively, against the previous year. The increase in cost as well as market value can be compared against the increases in the ASPI of 46% and the MPI of 56% during the year.

The Group's total net surplus in liquid funds as at March 31, 2002 was Rs. 25.56 million, which were invested in short positions in call deposits and overnight repurchase agreements with the intention of maintaining adequate funds in hand to exploit attractive market opportunities. The Guardian Group continued its focus on the diversified sector and the banks and finance and food and beverages sector due to their steady growth supported by strong fundamentals and earnings potential in the long term.

The Group also continued to hold its investments in the soft alcohol and oil palm plantation sectors due to strategic reasons. Group's key strategic holdings as stated in the annual report are 12.95% of Ceylon Cold Stores Ltd, 10.89% of John Keells Ltd., 3.69% of John Keells Holdings Ltd, 7.74% of Hayleys Ltd and 7.10% of Hunter & Company Ltd.

The Guardian Group was also involved in a realignment exercise of the investment portfolios held by a number of companies within the Carson Cumberbatch Group, with the objective of eliminating the cross holdings within the Group companies thus enabling the sectors to concentrate on their core activities. As a result, the Guardian Group enhanced its holding in the oil palm sector, increasing its share holding to over 20% in four oil palm plantation companies listed on the CSE which are now treated as associate companies of the Guardian Group. The oil palm plantation sector of the Carson Cumberbatch Group, which includes the recent flagship plantation project in Indonesia, currently controls over 18,000 hectares of oil palm plantations in the South East Asia.

In spite of fairly adverse operating conditions, the Guardian Group maintained an attractive dividend policy strengthening the Company's record of having had consistent dividend declarations in the years past. The Directors of the Guardian Group propose a first and final dividend of 10% to the shareholders for the year on the enhanced share capital after both the rights and bonus issues.

The Chairman of CGITL, in his statement outlined the recent relaxation of regulations on Foreign Direct Investments, were foreign holding up to 100% in sectors such as banking and finance, insurance and infrastructure are allowed, together with the tax incentives proposed in the Budget for the year 2002, as these are likely to heighten stock market activity.

The Chairman also welcomed the steps taken by the Insurance Corporation Ltd, in allocating Rs. 200 million of their funds to each of three selected private sector fund managers, which indicates the policy stance of the Government in encouraging greater private sector-led investment activities. 

Quotations for Newsprint

Sampath Bank

Crescat Development Ltd.

www.priu.gov.lk

www.helpheroes.lk


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