Asia Capital posts impressive financial results

Managing constructive change successfully announces highest-ever profit of Rs. 222 million after consecutive losses over three years

Asia Capital PLC yesterday announced the achievement of Rs. 222 million net profits for the year ending March 2010. This is a complete turnaround for the group of companies compared to a Rs. 379.2 million loss in 2009.

The operations for 2010 showed a decline in cost of sales which resulted in this profit even though the revenue figures have seen a drop compared to the same period in 2009. The share price alone has increased from a low of Rs. 5.5 in April 2009 to around Rs. 47 at the time of writing.

Asia Capital was faced with a difficult and challenging few years beginning FY2007 up until 2009 due to many changes in the management along with several resignations and new entrants to the Board of Directors.

It is at this time that Monohan Nanayakkara took over as Chairman and Managing Director of Asia Capital, when the group was in deep crisis – experiencing year on year increasing losses.

Now under a new management with a fresh vision, the group of companies is creating a fundamental change by recalibrating their structure and manufacturing real value.

“Over the last several decades, it has been the norm of the management of listed companies in Sri Lanka to bemoan the external environment of considerable political and economic adversity,” stated the Chairman.

“In contrast I wish to state unequivocally that it was my pleasure to take the helm of this company in the immediate aftermath of the cessation of the war and to have led the company during a turbulent period which was coincidentally also the first period of hope in my entire adult working life.

“I consider myself amazingly lucky to have had this opportunity and my team and I have been working extraordinarily hard over the last one year to translate this incredible opportunity into outstanding results for all the stakeholders of our company – be it the customers, the employees, the owners or all of the public bodies that we interact with in the ordinary day to day management of our business,” he added.

According to the Chairman, the turn-around strategy was not an easy one. “The Change Management Committee and the Group Management Committee were the two teams appointed to help me implement it,” he revealed, whose job was to identify and exploit synergies among the three major elements of their core business; namely stock broking and investment banking, insurance, and credit and deposit mobilisation.

Together they formed a cohesive team to maximise value to the group shareholders, whilst minimising the conflict of interest amongst the majority and minority shareholders and between divisions. As a result there has been a clear increase of the earnings per share from a negative of Rs. 4.04 in 2009 to a positive of Rs. 1.91 this year.

“We see ourselves continuing to generate cash and make investments in the medium term,” continued Nanayakkara, stating that they plan to strengthen their ownership control over their core holdings in the first instance and brand and expand the ‘Asia’ franchise to exploit the synergistic business opportunities in financial services within the core holdings.

Commenting on future plans for the group, he explained that they wish to exploit their positioning in the financial services industry to the non-core areas where they will continue to invest in companies that have either fundamentally good management or those that require attention, both financially and management-wise.

“Success is 80% luck and indeed we were lucky due to the opportunities that were presented to us.

The balance 20% is due to knowing when we are lucky and making the best use of it – and I am indeed grateful to all the members of my team and the staff of all the group companies for their commitment and their hard work over the last year to stabilise Asia Capital and record commendable results,” concluded Nanayakkara, adding that at Asia Capital they know that change is key and it is in that spirit that they look forward to more exciting and booming years of business ahead of them.