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In key performance indicators, the gross profit increased to Rs. 1.5 billion, a 62.9% increase from last year, while profit after tax grew 112.9% to Rs. 805 million, the company’s best performance yet.
“The reason for this outstanding performance is chiefly due to the significant growth in our construction business with several large scale contracts being awarded to our civil engineering subsidiaries where the revenue has increased by 76.8% in the second quarter comparative to the second quarter of last year. The operating profit also improved due to the usage of effective cost management techniques at site and at an administration level. The cost of borrowings has also reduced due to the Group’s active efforts on reducing its interest rates on borrowings by keeping in line with reducing market rates. Our future focus will be to manage debtors by effectively improving the collection cycle, which will add to the bottom line,” said MTD Walkers Group Chief Financial Officer Viraj de Silva.
In other key financial indicators, the net finance cost was Rs. 264 million for the period under review and considering that last year’s total net finance income was Rs. 287 million, the company anticipates a further reduction in the finance cost by the end of the financial year.
The exceptional performance of the company has been reflected through a significant increase in its share price over the last few months. The share price was approximately Rs. 80 as at mid November from Rs. 34.90 reported as at 31 July 2014. Even at the current market price the company is seen to be of exceptional value to potential investors.
MTD Walkers PLC also recently announced a rights issue at Rs. 45 to acquire Wincon Development Ceylon Ltd., a property development company which has constructed 1,088 affordable housing units in the Galle District. The first project consists of 512 housing units in Wakunugoda and the second of 576 units in Habaraduwa which will be ready for sale by the end of December 2014.
The company’s civil engineering subsidiary CML-MTD Construction is also one of the five contractors that have been awarded a portion of the Northern Highway (approximately 17km) at an estimated contract value of over Rs. 40 billion and construction is scheduled to commence in December 2014.
Its other civil engineering company Walker Piling Ltd. also had a very successful second quarter with a number of new projects being mobilised. Being the oldest piling company in Sri Lanka, it is currently in the process of increasing its fleet of piling rigs from six to 10 machines by the end of the third quarter.
De Silva further stated: “We have acquired a property in St. Michael’s Road, Colombo 3 to address the expansion needs of the Group companies and to build a new head office premises to house all our subsidiaries in one location, in order to attract the synergies of being a large Group.”
