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Lalith Kotelawela

Ceylinco Securities and Financial Services Ltd (CSFSL) has redefined its strategic focus giving renewed emphasis on fund based activities to report a turnover of Rs. 2,199 billion and net profit of Rs. 76 million during the financial year ended March 31, 2003, the annual report of the company said.

This reflects a 80.57% growth in net profit compared with the previous year. Total assets of the Company rose by 15.75 to reach Rs. 4.87 Billion from Rs. 4.2 Billion in the previous year. Net Assets Per Share increased to Rs. 23.82 from Rs. 21.30 while Earnings Per Share has risen to Rs. 2.45 from Rs. 1.16 during this period.

The larger contributions to Group turnover came from Ceylinco Securities and Financial Services Limited (CSFSL), Asian Finance Limited (AFL) and Ceylinco Developers Limited (CDL) which brought Rs. 787 million, Rs. 614 million and Rs. 59.1 million.

Gross income of the Group grew by 26.83% to Rs. 586 million. With operating expenses amounting to Rs. 447 million, profits before provisions and taxes reached Rs. 139 million, an increase of 117.57% from Rs. 63.9 million recorded in the previous year. As a Group, CSFSL recorded an after tax profit of Rs. 76.5 million, up by 80.57% from Rs. 42.4 million in the financial year 2001/2002. CDL contributed as much as 60.7% to the bottom line while CSFSL, AFL and Ceylinco Stock Brokers (Pvt) Limited (CSBL) contributed 14.3%, 10.7%, and 10.5%.

It has already set up eight branches, which in turn enabled the Company to increase the fund based activities significantly.

Ceylinco Securities and Financial Services Ltd Chairman Lalith Kotelawela, in his annual report to shareholders, said:" The financial sector demonstrated a greater degree of stability and was characterised by improved performance in Money, Capital and Foreign Exchange Markets. The Government actively decreased public sector domestic borrowing in 2002.

He said:" Monetary policy focused on price stability. Domestic interest rates fell, assisted by declining inflation, greater fiscal discipline, the availability of rupees, liquidity and decreasing international interest rates. Improved fiscal performance reduced the absorption of funds by the government from the Banking System. The private sector credit expanded, albeit moderately, in response to lower interest rates and economic recovery. Interest margins of financial intermediaries such as banks rose, contributing to increased profitability of these organisations.

He said: " In tandem with improved economic activities, your Company with the investment banking activities being at low levels, CSFSL has ventured into fund based activities and various other business areas such as leasing and property development with success. This along with the performance of its subsidiaries has significantly contributed towards this progress. These indicators reflect the financial stability of your Company and place it at an advantage to face the future challenges. This is all the more creditable in a situation where the Company recorded a rate of growth and profitability above the industry average.

It will concentrate on setting up more branches in the rural sector in order to tap the outstation business in the future. During the year under review, all the divisions and subsidiaries of your Company have performed well. Out of these subsidiaries, Ceylinco Developers Ltd., has performed the best. It has almost completed a mass housing project in Athurugiriya and already purchased lands in Ja-Ela and Piliyandala to do similar projects in the future, he said.

Bandula Ranaweera

Deputy Chairman Bandula Ranaweera in his Annual Review, said:" After almost two decades of ethnic strife, the year 2002 was one marked with peaceful optimism, which not only created a sense of normalcy to this war-weary nation, but also fuelled resurgence in the Sri Lankan economy. Apart from recovering from the setback experienced in 2001, the economy surpassed the earlier expected GDP growth rate of 3.0% to record a growth of 4.0% in 2002. Inflation declined to 9.6% in 2002 from 14.2% in the year before, while interest rates continued to decline further during the year.

"The consolidation of the peace process and the absence of violence contributed to enhance economic activity; business confidence rose as private investment showed positive signs. The absence of hostilities encouraged the flow of foreign assistance to the country.

Capital market activity picked up as local and foreign investors returned to the Colombo bourse and adopted an active stance," he said.

Rejuvenated economic activities augured well for CSFSL and its subsidiaries in the financial year 2002/2003. These factors along with the reduced interest rate regime, which enabled the improvement of interest margins, aided the CSFSL Group to post an impressive performance. It is in this backdrop that the CSFSL Group was able to record a 80.57% increase in profit after taxation in the financial year ended March 31, 2003, Ranaweera said.

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