Annual Report 2009/2010 - Colombo Stock Exchange

R e v i e w o f O p e r a t i o n s
4
OPERATIONS REVIEW
From most perspectives it was a momentous year.
May 2009 brought closure to a near 30 year conflict that
had deprived Sri Lanka the stable environment it needed
to pursue growth & prosperity. Some may suggest that
the means used to bring terrorism to an end were
controversial. Yet the President and his administration
must be given the credit for being bold & standing firm in
the face of much pressure from both local & overseas
sources. The President's determination to be led by his
conscience even in the face of severe pressure augurs
well for the Nation; it is an indication that he can take the
hard but necessary decisions to drive Sri Lanka forward.
The Defense establishment too must take pride in
completing the task handed over to them with focus,
commitment & dedication.
In January 2010 the incumbent President was re-elected
by a resounding majority extending his term of office by
a further 6 years. A General Election followed in April
2010, bringing the coalition led by his party to power
with a handsome majority in Parliament.
Thus on the political front, an environment of stability has
returned to Sri Lanka after many a year.
The Government's development program maintained
momentum amidst murmurs of discontent on issues such
as law & order, human rights & good governance. Roads
across the country are being modernized & expanded at
a pace whilst other large scale infrastructure projects
such as ports, airports and power are being brought on
stream steadily. The process of reconstruction in the
North & the East is also underway.
The conclusion of the conflict has meant that Sri Lanka is
once again a destination of choice for many holiday
makers across the globe. Within a few months of May
2009, hotels across the country enjoyed good levels of
occupancy. Internal tourism too has grown significantly
particularly to the North & East
Many Sri Lankans were deprived of visiting these areas
during the conflict but this is no longer the case. The
numbers that travelled to the North in the immediate
aftermath of the opening of the A9 road were
considerable.
The Sri Lankan economy faltered in the first two quarters
of 2009 under the weight of the conflict & the global
financial crisis. However, since then, the conflict was
brought to a conclusion, global commodity prices
reduced significantly and the Government concluded an
assistance package with the IMF stabilizing the currency
& reducing inflation sharply. The economy has
responded and in the final quarter of 2009, GDP growth
was an impressive 6%+.
The stock market responded favorably to these changes
in the environment. The growth in the ASPI during the
year under review was a remarkable 127% whilst the
Colombo Bourse was the second best performing
market in the world in calendar year 2009. Similarly
after many years business confidence moved upwards
steadily. In short, the “feel good” factor is slowly but
steadily re-emerging in the Sri Lankan environment.
Your company – anchored as it is to a portfolio of superb
brands, world class distribution & manufacturing
processes, innovative use of information technology &
sound management – took full advantage of the positive
changes in the environment.
On revenue of Rs 7.92 billion the Company generated a
profit before tax of Rs 632.69 million up from Rs 6.09
billion & Rs 81.89 million respectively in the previous
year whilst earnings per share rose to Rs 7.46 from Rs
0.90. The Company's gearing which stood at 53% at
the commencement of the financial year ended at a
healthy 16%, a result of both the Rights Issue concluded
in September 2009 & the improved operating
performance. Thus the Company concluded the
financial year with a return to a reasonable level of
profitability and a strong balance sheet.