Monday Sep 23, 2024
Monday Sep 23, 2024
Tuesday, 10 May 2011 00:00 - - {{hitsCtrl.values.hits}}
Asia Capital PLC yesterday announced that it has joined the billion rupee profit per year club in terms of the un-audited accounts for the 12 months ending 31 March 2011 by recording an Rs.1.001 billion net profit after all expenses for the Group.
This is an increase of over 350% compared to the audited results of 2010. Approximately 30% of that profit has been from gains from the sale of investments through Asia Capital PLC, principally from the sale of Capital Reach when that company was purchased by Asia Capital PLC in 2008 and disposed of it in 2010, together with some gains from short term investments in the secondary market. These profits are indicative of the true wealth of the investment company.
“For example at the current market valuation of Asia Capital’s 54% stake of Asian Alliance Insurance is worth more than US$50 million, representing over 56% of the market capitalisation of Asia Capital. Several other majority holdings of Asia Capital, specially Asia Asset Finance and Asia Leisure when added together, surpass US$90 million the market capitalisation of ACAP at its current price. From time to time when we feel that the markets are buoyant and the valuations are not un-attractive, we shall dispose some of our investments to realise capital gains. This will continue to be one of the principal activities of Asia Capital to create shareholder value,” stated Manohan Nanayakkara, Chairman of Asia Capital PLC in his review.
Stock broking and investments accounted for 29% of the group profits last year. Deposit mobilisation and credit accounted for 10%. Insurance accounted for 34%. The return on net assets (RONA) of Asia Capital is at 50% which is very respectable and quite high compared to its peer companies. The earnings per share for the group for the year is at approximately Rs.10 and this more than justifies the current market value at Rs.90 for ACAP which is a PE of only 9. “I am confident that even that company is well positioned for the future, particularly due to the new segments that we are entering into. In our last annual report I identified the year 2010 as a shift from loss to profit. A profit of over 200 million was recorded from a loss of 379 million. At the end of 2010 despite the profit, the Group was operating at a weak level due to years of losses and we needed to strengthen our balance sheet, instead of going back to the shareholders to strengthen our balance sheet, we decided to prime the pump by pushing all of the subsidiary companies into greater activity and profit at a turnover of Rs. 2, 647, 028, 000 which is up 90% over last year,” he avers.
“We have internally generated almost Rs.1 billion in profits during 2010 which is a significant achievement making ACAP one of the biggest groups in the country,” adds the Chairman.
Despite being on the floor at the conclusion of the last financial year, the companies of the group managed to wipe out all of the accumulated losses which is unusual in a turnaround situation.
“I wish to congratulate our management team on this significant achievement. We have not requested for any new money from our shareholders to stabilise the company and we have not brought any stress on our shareholders but have successfully increased the share price to Rs. 90 per share from around Rs.10 per share.”
In his review, he further speaks of plans to take listing of their Securities Company and Asia Asset Finance over the course of the next quarter to exploit the unusual buoyant conditions of the market so that they will have a market benchmark to measure the true value of assets at Asia Capital. This will give the potential shareholder opportunity to buy the parent company stock or his own desired mix of companies based on his portfolio preference.
“Additionally, we are working with several new projects for Insurance and Deposit & Loan products for our clients targeted at the bottom of the pyramid. Also we have started on a geographical and new product development growth expansion at Asia Asset Finance. I am even encouraging Asian Alliance Insurance management to generate new products to increase their market space to become more relevant and competitive to the customer base. We are also hoping to sell some of our non-strategic assets in the future to raise cash for investment.”
He further adds, “The year 2012 is going to be the year of growth. It is not going to happen automatically. It is only going to come through new innovations and initiatives. New initiatives can come from organic growth from each individual company or from Joint Ventures. We already have a partnership with Mubasher Financial Services in the Middle East and Ataraxia in Australia and we are contemplating a partnership with Gemini Laboratories in South India and several US Companies in the entertainment sphere. It is my view that markets are likely to be rocky over the coming two years and we are going to have our setbacks. Growth is going to come from new ideas and our ability to absorb such risk taking.
The other major thrust during the coming period is the implementation of an Asia House concept. “I wish all our customers to have access to all our companies at an Asia House in every commercial hub in Sri Lanka, which will be built in order to get closer to our customer,” he explains. The Asia House will house securities trading operations, insurance operations, Asia Asset operations and ensure broad public acceptance of the group, thus boldly creating ACAP brand value and obtaining economies and efficiencies in expansion
“My other major push during this period of consolidation for the next 15 months is our expansion into the North and East. The North and East is a blue ocean as far as ACAP is concerned. I wish ACAP to dominate the financial services in the North and East. We have already opened out an Asia House in Jaffna and are currently looking at Batticaloa and Ampara as our next destinations. Our CSR project “put a little bit of Jaffna in your life” further indicates our commitment to the North and East. Like all good CSR projects I expect this to go beyond just doing a good deed but creating a long term value to shareholders. If we are to dominate the North and East’s financial services, we need to become one with that community. The purpose of our CSR project is to totally engage the community so that we are not going to be a Colombo based company merely trying to make some extra profit in Jaffna but supporting that community in their hour of need.”
“I wish to transform this company from a well-managed enterprise into a great one,” he adds in conclusion. We cannot achieve greatness without passion and daring, and risk taking cannot be put down into equations and taught in textbooks. All of our employees have been encouraged to look into their hearts and question themselves whether they are going to lose this wonderful opportunity.”
