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| Tuesday, 5 October 2004 |
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CSFSL after tax profit up 40% to Rs. 104 million Ceylinco Securities and Financial Services Ltd (CSFSL), recorded a turnover of 2.96 billion and 104 million after tax profits for the financial year ended March 31, 2004.
A growth of more than 40% in profit after tax compared with an increase of only 22% in total assets is the result of renewed vigour and redefined strategic focus adopted by the Company in the previous year. Having broadbased the activities of the Company to focus on real estate and leasing CSFSL has been able to increase its market share considerably. The increase in net profit and revenue is mainly due to the excellent performance in the property development and land trading businesses and the boost in net interest income. The drop in interest expense by 5.5% and rise in interest income by 18.8% was a result of the fall in market interest rates. The combined effect of these two variables was reflected in the tremendous increase in net interest income by 162% compared to that of the previous financial year. The contribution of service income to group revenues was also a major factor that led to improved performance. While non-interest income accounted for 80.6% of total group income, service income showed the largest increase; a 114.7% increase year on year. The gross income saw a healthy increase of 57% to Rs. 922.60 million from 586.03 million in the previous year and a consequent increase in net income before provisions and taxation by 38% from 139.02 million to 193.40 million. Earnings per Share rose to 3.56 from 2.45 the previous year. The increase in operating expenses by 63.13% was mainly due to the costs incurred in setting up the new subsidiaries; Ceylinco Bio-Tech Ltd and Ceylinco Construction Co.Ltd. Despite this and the 59% rise in provisioning for doubtful recoveries, the profit before tax rose by a steady 30.4%. During the year the asset base grew by 22%, whilst funds under management increased by 25% from 3.4 billion to 4.2 billion. The Company will concentrate primarily on property development, leasing and capital market activities. The proven ability to pursue successful diversification strategy will be utilised in order to achieve sustainable profitability in the long-term. Chairman/Managing Director Dr. Lalith Kotelawala said that having experienced difficult and testing operating conditions in the past, a series of strategic and operational reviews were undertaken at regular intervals over the years to remodel the Company. Taking advantage of emerging market opportunities, it has ventured into viable areas to enhance the bottomline. Diversification to fund based activities of property development and leasing were given greater prominence and this was a key factor for this eye-catching performance, Dr. Kotelawala said. The Company has moved to the outskirts of the metropolis by setting up branches throughout the country in order to tap the outstation business. Branches of CSFSL have been set up in Kurunegala, Kandy, Matara, Ratnapura, Negombo, Panadura, Dambulla, Tricomalee and Anuradhapura. The collective contribution from these strategies has positioned the Company as a growth driven and value creating enterprise as indicted by the performance. In addition, the performance of its subsidiaries namely Ceylinco Developers Ltd., Ceylinco Stockbrokers (Pvt) Ltd., Ceylinco Selna Ltd. and Asian Finance Ltd. are in tandem with expectations. In line with these developments, the Company will look forward to the coming financial year with cautious optimism. The economy managed to stage a comeback in 2003, setting expectations for an accelerated economic growth phase in 2004. Amidst these, the company will be in a position to fully leverage the improving business climate and close the year on a resounding note", he said. Deputy chairman/CEO of CSFSL M. Ranaweera said that the Company adopted a strategy of speedy, simple and customer-friendly service, giving a district competitive edge. Courteous and well-trained staff will undoubtedly be a significant factor in staying ahead in this highly competitive industry. Facing the competition with service quality, competitive, rates and efficiency, leasing activities of CSFSL will continue to grow in the years ahead. "The recovery activities have contributed significantly to Company profitability largely due to the close monitoring of lease disbursements carried out by a team of experienced and dedicated recovery officers. CSFSL has streamlined its recovery activities and special teams have been formed to carry out investigations, legal and debt collections. Well-trained and highly experienced staff have been employed to assist in the smooth functioning of these activities", Ranaweera said. "The newly set-up legal unit succeeded in executing writs on some doubtful cases and has expedited the legal recoveries. Furthermore, it now seeks the assistance of the Magistrate's Courts to investigate untraced leased articles. It is noteworthy that CSFSL is one of the very few financial companies in the market to use this method to trace leased articles," he said. SP |
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