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by Saruchi Dissanayake

Aitken Spence & Company Ltd. is a diversified multinational conglomerate with holdings in a range of businesses from tourism and logistics to infrastructure and plantations. Established in 1868, the company is now headed by Chairman Prema Cooray, a veteran in the local tourism industry.

Aitken Spence is a leading player in the local tourism industry. It operates a chain of 10 hotels locally including the award winning eco-friendly Kandalama Hotel, Triton Hotel, Neptune Hotel, Browns Beach Hotel, and theme hotel - The Tea Factory. The company also owns and operates three resorts in the Maldives - Bathala Island Resort, Club Rannalhi and Meedhupparu Island Resort. It also operates inbound and outbound tours. It is the General Sales Agent for Singapore Airlines and Silkair, as well as for Tradewinds of Singapore, European Railways, London Transport and British Railways. Aitken Spence is also involved in the conventions business - formulating and managing packages for Meetings, Incentives, Conferences and Exhibitions (MICE).

In addition to Tourism, a core business is Cargo Logistics. The Cargo Logistics Services delivered by a series of Aitken Spence subsidiaries include freight forwarding, container depots, warehousing, distribution and shipping. Aitken Spence has been a Lloyd's agent since 1876, covering all commercial ports in Sri Lanka and the Maldives. Aitken Spence pioneered international freight forwarding and inland container handling in Sri Lanka. The company also operates Ace Bangladesh Ltd, providing air and sea freight forwarding services in Bangladesh. Aitken Spence also has interests in the plantation sector, being part of a consortium that owns Elpitiya Plantations (15 estates) and Talawakelle Plantations (18 estates).

The Group entered infrastructure development with two thermal power projects the first of which a 20 MW plant - was commissioned in Matara in March. The power projects are expected to bring in excellent return on investment for the company with plans to sell 167 GWH of energy to the Ceylon Electricity Board for ten years. The second 20 MW plant is to be commissioned later this year at Horana.

Chairman Prema Cooray said that the company is an attractive option for investors because it is involved in service industries with the greatest potential in the country. He said there would be tremendous scope and potential in the Tourism and Shipping sectors in Sri Lanka, predicting that the two industries would be developing rapidly in the near future.

Cooray said there are no immediate expansion plans where tourism is concerned, despite hype to that effect. He did say, however, that the company was preparing the ground for the future with two properties identified for hotel projects - a 100-acre site in Nilaveli, Trincomalee and one next to the Triton Hotel in Ahungalle. The Chairman said the company was looking for something special and we are even willing to open our minds to a foreign joint venture. He said such a possibility may not have been considered earlier but that the company was now considering a foreign tie up with a top global company in one of the two proposed hotel projects with the intention of providing a high end product. There are no plans in place to carve out a market for themselves in other South Asian countries in addition to Sri Lanka and the Maldives.

Aitken Spence is always looking for opportunities in the Maldives because the group has performed very well there, according to Cooray. Aitken Spence is firmly established in the Maldives and is at present, the biggest international hotel operator there. He said however that opportunities in the Maldives were rare and expensive and therefore the group faces the challenge of ensuring that whatever expansion takes place in the Maldives, is reasonably profitable. The advantage for the company so far has been that properties in the Maldives were built by the company itself.

The company is actively pursuing infrastructure development with a second 20 MW power plant due to be commissioned in November this year with the company capitalising on the power shortages in this part of the world. Cooray said Aitken Spence now had within itself, considerable expertise and skill in power generation and therefore was seeking to expand its presence in the energy sector.

He said the company was keen to invest further in infrastructure, such as roads, utilities and transportation and especially those areas that are linked with the company's main business of tourism. Cooray said Aitken Spence was keeping abreast of developments in the shipping industry to identify opportunities. He said they were especially keen on Hambantota, where the proposed Southern Sea Port is expected to give rise to a plethora of infrastructure development projects.

Jayantha Perera, Head of Research at DFCC Stockbrokers recommends Aitken Spence as a good buy. Aitken Spence is a bargain among conglomerates because it is still trading below book value, Perera said. The stock is trading at discount levels as its earning potential is much greater. Prospects are also bright for the future, especially in the tourism sector while Perera expects the company's power projects to contribute to positive bottomline growth this year.

Namal Kamalgoda, Senior Fund Manager at Eagle NDB Fund Management said Aitken Spence stands to gain with improvements in the political climate, as the prospect of a lasting peace would contribute directly towards revitalising tourism.

According to Kamalgoda, an advantage Aitken Spence enjoys is that the strength of its Maldivian operations would help the company tide over bad times in the local economy. The plantations downside is of concern however, because exposure to the sector may be a drag on the company as plantations are in general, not performing well, Kamalgoda said.

Gross revenue for 2000/2001 amounted to Rs. 5.005 billion up 1.5% from the Rs. 4.933 billion recorded in 2000/2001. Profit before taxes in the year ended March 3, 2002 was Rs. 567.9 million, down 13.3% from Rs. 654.9 million recorded a year before. Earnings per share for 2001/2002 was Rs. 13.37 while the price earning ratio was 6.73. A 15% interim dividend was paid in March 2002, while a final ordinary dividend of 25% was paid in June 2002. Dividends per share amounted to Rs. 4.00. In the three months ended June 30, 2002, Group revenue stood Rs. 1.201 billion, up 12.3% from the corresponding period in 2001. Group profit after taxes in that quarter was Rs. 494.5 million up 292.1% from the figures for 2001.

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Copyright 2001 The Associated Newspapers of Ceylon Ltd.
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