Aitken Spence’s net profit up in second quarter 2007-08

Aitken Spence has reported a 33% year on year increase in its 2Q08 net profit to Rs.416 million, resulting in its 1H08 net profit rising 17% year on year to Rs.757 million, broadly in line with the expectations of CT Smith Stockbrokers (Pvt) Ltd.

The 2Q 08 revenue was mainly attributable to a 48% year on year increase in revenue to Rs. 4,426 million of the company's Strategic Investments sector, mainly consisting of power plants. According to CT Smith, there was also a 37% increase in revenue in the tourism sector to Rs.1,616 million.

Finance costs were up 41% year on year to Rs.280 million in 2Q08 with debt rising to Rs.11.1 billion as at 30 September 2007 compared with Rs.10.3 billion as at 30 September 2006. CT Smith said Aitken Spence also undertook a strategic investment in FY07 by purchasing 50% of MMBL Money Transfer (Pvt) Ltd, a subsidiary of Mercantile Merchant Bank Ltd. MMBL Money Transfer is a principle agent for Western Union money transfer service in Sri Lanka. Remittances worth US$2.3 billion, primarily from the Middle East, accounted for almost 9% of Sri Lanka's Gross Domestic Product (GDP) in 2006. CT Smith believes the industry has significant growth potential.

The main contributor to the increase in earnings in Aitken Spence's tourism sector was the reduction in losses by the Group's Sri Lankan resorts and steady growth in its Maldivian and new India operations. The company recently acquired its fifth Maldivan resort, Vaadhoo for US$13 million.