Overseas Realty Group ups operating profit by 47% to Rs. 2.5 b

Overseas Realty (Ceylon) PLC, the leading property development group in Sri Lanka, registered a strong financial year in 2012 recording a 47% growth in group operating profits and a group net profit of Rs. 2.5 billion.

The group revenue in 2012 was Rs. 2 billion, which was 21% lower than the previous year. This was mainly due to the revenue recognition policy adopted, whereby the company did not recognise the sale of apartments in the Havelock City Phase 2 residential development.

However, profit excluding fair value gains on investment property, increased by 47% to Rs. 909 million, despite an exchange loss of Rs. 85 million consequent to the depreciation of the Sri Lankan rupee in 2012, compared with an exchange loss of Rs. 40 million in 2011. Profit after tax decreased by 10% due to the lower fair value gain on investment property of Rs. 1.6 billion compared to Rs. 2.1 billion recognised in 2011.

Earnings per share (EPS) of the group excluding fair value gains increased by 63% to Rs. 1.08, whereas the EPS with the fair value gain declined by 8% to Rs. 2.93. The group’s net asset value per share stood at Rs. 26.04 as at end 2012, compared to Rs. 23.35 as at end 2011.

The net profit after tax of the company, comprising the leasing of space at the World Trade Center (WTC), without the fair value gains was Rs. 955 million, which was a strong growth of 108% over the previous year. “The occupancy level at the WTC, the premier business address in Colombo, reached 97% by December 2012 whilst the average occupancy was above 90% throughout 2012, and correspondingly, rental income grew by 57% in 2012 compared to 2011,” a company spokesman said.

Havelock City’s Phase 2 residential development, comprising two more residential towers with 218 luxury apartments, has now reached the 11th level in construction and is expected to be completed by May 2014. As at end February 2013, the main subsidiary Mireka Homes (Pvt.) Ltd. had pre-sold over 60% of the Phase 2 condominiums. The revenue from the sale of apartments recognised in 2012 was Rs. 554 million, which comprised only the sale of the remaining inventory in the Phase 1 development. Revenue and profitability of the apartments sold in Phase 2 will be recognised in 2013.

A state-of-the-art clubhouse comprising over 55,000 square feet of recreational facilities including gymnasium, swimming pools and Jacuzzis, badminton, basketball and squash courts, function rooms and a restaurant, for the exclusive use of the residents, is planned to be opened in August this year. The company is also planning to commence piling work during 2013 for the Havelock City commercial project, a mixed use development which will house Sri Lanka’s largest shopping mall.

Group CEO Pravir Samarasinghe stated that the group is confident in maintaining high occupancy levels and gradually increasing rental yields at the World Trade Centre through 2013, whilst continuing to build momentum in its residential apartment sales which will generate strong operational performance and sustainable growth in future.