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Aitken Spence 3Q profit down as power sector contribution shrinks

16 November 2015 03:30 am - 0     - {{hitsCtrl.values.hits}}

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The diversified conglomerate, Aitken Spence PLC saw its net profit for the quarter ended September 30, 2015 (2Q15) contracting by as much as 37.6 percent to Rs.361 million from a year ago as the group’s power sector is now making a fraction of the revenues it once did, the interim results released to the Colombo Stock Exchange showed. 

The group’s results for the period further looked small as the corresponding results last year consisted of insurance proceeds received for the damaged water villas at one of its resorts in the Maldives.  

The Earnings Per Share (EPS) dropped to 89 cents from Rs.1.43 from a year ago. 

Spence share however closed 40 cents or 0.43 percent up at Rs.93 at last week’s close. The Power Purchase Agreement (PPA) of Spence’s 100 Mega Watt (MW) thermal power plant in Embilipitiya which ceased in April this year was not extended by the Ceylon Electricity Board (CEB) due to the lower demand for costly oil fired power plants and the country’s increasing power capacity through the recently added Norochcholai coal power plant.

As a result, the group’s strategic investment segment which includes the power generation segment saw its revenues coming down by as much as Rs.5.9 billion during the six months to September 30, 2015 from a year ago to make an after-tax loss of Rs.43.6 million against a profit of Rs.542.9 million in the same period last year. 

The company is now in negotiations with foreign parties from India, Pakistan and South Africa to sell the plant. Spence’s 20 MW thermal power plants in Matara and Horana too had to be sold to an Australian linked party and a Pakistani buyer respectively during 4Q14 and 2Q15 for similar reasons. 

The group’s power sector now consists of only a 2.5 MW mini-hydro power plant in Matale and a 3 MW wind power plant in Ambewela.  The group top line (post revenue taxes) declined by 27.7 percent year-on-year (yoy) to Rs.5.97 billion. 

Meanwhile, the group net profit for the six months ended September 30, 2015 fell 41 percent yoy to Rs. 781.3 million. EPS narrowed to Rs.1.92 from Rs.3.27 a year ago. 

The consolidated revenue (post tax) fell sharply by 33.7 percent yoy to Rs.11.8 million due to the same reasons highlighted above. The segmental results showed the tourism sector narrowing its after-tax profits by 24.4 percent yoy to Rs.681.9 million on a revenue of Rs.7.49 billion, largely unchanged from a year ago. 

The maritime and logistics segment increased its net profits by 41 percent yoy to Rs.429 million on a revenue of Rs.3.8 billion, down from Rs.4 billion recorded in the same period last year. 

The services segment increased its net profit by 47 percent yoy to Rs. 82.2 million on a revenue of Rs.563.2 million, up from Rs.533.5 million a year ago. 
The group is actively seeking cross border opportunities to expand its businesses internationally as it recently came to an agreement to buy 20 percent stake in Fiji Ports Corporation Limited for a consideration of US $ 16.2 million (Rs.2.3 billion). Meanwhile the group is liable for Rs.319.3 million Super Gains Tax of which the first installment was paid on October 30, 2015.

As of September 30, 2015 the business magnet, Harry Jayawardena controlled, Melstacorp (Private) Limited owned 43.07 percent of the company followed by another 16.25 percent stake by Rubicond Enterprises Limited. 

The state controlled private sector pension fund, the Employees’ Provident Fund held 4.01 percent stake in the company being the fourth largest shareholder. 
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