Overseas Realty concerned over security zone

Overseas Realty (Ceylon) Limited (ORCL), on the back of a successful financial restructuring eliminating the foreign exchange exposure while reducing its financial costs, posted an after tax profit of Rs. 2,024.8 million for the 18 months ended 31st December 2006, but the high security zone where the World Trade Centre (WTC) is located has become a concern.

“WTC tenant’s security concerns are an ongoing issue,” S. P. Tao, Chairman, ORCL in his annual report statement has said. “New leasing commitments will further increase occupancy to 90.5 percent in early 2007, but this was not without its difficulties,” he has said, adding that the new challenge which (ORCL) faces is the rapid increase in operational costs, particularly electricity, which have more than doubled in recent months. “We are constantly seeking new operational and energy efficiencies, but with such huge increases, it is inevitable that some of these will have to be passed on to our tenants,” he has warned.

Tao said that the Rs.2 billion profit figure was achieved because the revised Sri Lanka Accounting Standards (SLAS) 40 has stipulated that the fair value adjustment of Rs.1, 683.2 million for the 18 months to be brought into the income statement. WTC achieved a 15 percent increase in average rental rates for the period under review, as compared to the previous accounting period, Tao has said. ORCL went on to declare a first and final dividend of three percent after the Rs.7 million in the preceding financial year, while the financial restructuring the company saw a capital reduction of Rs. 906.7 million. “The entire dilution was taken by the Shing Kwan Group in the interests of protecting minority shareholders. The rights issue of 69.1.million new shares raised a total of Rs. 1,035.9 million.

The rights issue and financial restructuring combined, reduced the ordinary share capital of the company from Rs. 5,839.5 million to Rs. 5,623.2 million,” he has said. During the 18 months, ORCL’s rental and property management related recurring revenues increased to Rs. 883.2 million, compared to Rs. 508.5 million in the previous year. Tao has said that the revenues from the Havelock City project will form an increasingly important component of future profits with the construction of the first two of eight residential towers well advanced and preview sales already taking place.