Dividends and increased rent boost Property Development profits

Property Development PLC (PDL), the Bank of Ceylon subsidiary owning the bank’s headquarters building at Echelon Square, had substantially increased both revenue and profitability in the year ended December 31, 2013 on account of a rental increase of approximately 10% with effect from July 1, 2013 from its sole tenant, the Bank of Ceylon, as well as dividend income.

PDL Chairman Raju Sivaraman, has told shareholders in the annual report that the company’s revenue for the year was up 17.8% over the previous year mainly due to income received from their subsidiary, Koladeniya Hydropower (Pvt) Limited amounting to Rs.82.1 million and a dividend of Rs.42.6 million received from their investment in the Lanka Hospitals Corporation PLC. There had been a rental increase of approx. 10% from July 2013.

"Total expenditure increased by 7.8% year on year, mainly due to increase in operational expenses. Nevertheless, this can be considered a marginal increase relative to inflation," the chairman said.

The Koladeniya hydropower plant had been commissioned in April 2012 and continues to deliver hydro electricity to the national grid under a standardized power purchase agreement signed with the CEB.

"The performance and revenue during the financial year under reference have been much better than the estimates at the feasibility stage," Sivaraman said.

The company had continued to focus on high quality maintenance of the BOC Tower and the rehabilitation program for plant and machinery had continued during the year under review. Rehabilitation of toilets was in progress and 58 out of 78 toilets in the building had been upgraded to date, he said.

A management agreement between PDL and BOC Property Development & Management (Pvt) Limited, a fully owned subsidiary of the BOC continues. Under this agreement the company maintains the BOC Merchant Tower building in Kollupitiya and Ceybank House in Kandy and a fee of Rs.15.6 million, up from Rs.14.3 million the previous year, had been received on this account in the year under review.

The directors have recommended a first and final dividend of Rs.3 per share, up from Rs.2.50 the previous year, for 2013.

The BOC Tower which is tenanted by the BOC comprises 600,000 sq. ft. of prime office space in Colombo Fort.

PDL owns 9.53% of Lanka Hospitals Corporation PLC while Koladeniya Hydropower is a fully owned subsidiary.

The after-tax profit of Rs.428.6 million earned in 2013, up from Rs.348.4 million the previous year is the highest on record. The company is carrying forward retained profits of over Rs.1.5 billion in its books.

The stated capital of Property Development is Rs.660 million with reserves of Rs.335 million in the company’s books as at December 31, 2013. Total assets stood at Rs.3.66 billion and total liabilities Rs.486 million.

Net assets per share had grown to Rs.48.03 from Rs.43.75 and the company’s share traded at a high of Rs.69 and a low of Rs.40.23 during the year under review. This compared with a trading range of Rs.65 to Rs.25.10 the previous year.

The Bank of Ceylon owns 94.09% of the company, up from 93.16% the previous year while Ceybank Unit Trust owns 0.67%. All other shareholders amounting to 3,484 individually own less than 0.4%.

The directors of the company are: Messrs. Raju Sivaraman (Chairman), B. M. Amarasekera, Dr. M.S. Perera, L.N. de S. Wijeyeratne, P.A. Lionel and S. E. de Silva.

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