Not best of times to sell but uncertainty on capital market taxes forced our hand, says chairperson
Ceylon Guardian Investment Trust PLC, the country’s wealthiest quoted investment trust, had encashed some unrealized capital gains in its portfolio last year, selling down at a disadvantageous time over concerns on new taxes, the company’s recently released annual report said.
Saying they were carrying "significant" capital gains in their portfolio as a result of a strategy of value driven long term investing, "in order to protect shareholder returns we realized profit on investments that had significant gains over the years," it said.
As a result they had divested "significant positions" in John Keells Holdings, Commercial Bank, Sampath Bank and Tokyo Cement "to secure gains to shareholders under the present tax regime."
"This divestment was prompted by an anticipated tax on share trading as a business," the report said. "It is of significant concern that tax issues have caused us to sell at an unsuitable time. Nevertheless, as a cautionary measure, we decided to realize the higher accumulated gains."
Guardian which is the holding company of the investment business of the Carson Cumberbatch Group held an investment portfolio worth approximately Rs. 18.7 billion as at Mar. 31, 2017. The holding included stakes in some of the country’s best blue chips.
The year under review saw the Group posting an attributable profit of over a billion rupees, double that of the previous year largely on account of capital gains.
Mrs. Rose Cooray, the company’s chairperson, said in the report that the group had performed exceptionally well in a turbulent environment with its discretionary portfolio significantly outperforming the All Share Price Index of the Colombo Stock Exchange during a three-year period by posting a compounded annual growth rate of 4.37%.
"The discretionary portfolio provided a 9.10% annual return for the financial year in a flat market environment," she noted.
On realizing capital gains on some blue chips in the portfolio, Cooray said: "Though it was not the best of times to sell out, lack of confidence in the direction of capital market taxes forced us to realize gains at a sub-optimal point of time to protect shareholder returns."
Guardian’s top five holdings at the end of the year under review comprised HNB, Sampath, Cargills, Commercial Bank and Dialog with a market value opf Rs. 5.25 billion comprising over 40% of its discretionary portfolio.
Carsons which is the controlling shareholder of Guardian holds 67.15% of the company with the second biggest shareholder, Thurston Investments Ltd. owning 3.74% and the EPF 3.58%. The ETF too has 0.59% with some foreign funds and high net worth investors being among the top 20 shareholders with individual stakes of below 2%.
The directors have proposed a dividend of Rs. 4 per share for the year under review, up from Rs. 3 a year earlier. The Guardian share closed at Rs. 90.10 on Mar. 31, 2017, down from Rs. 119.70 a year earlier, trading between a high of Rs. 175 and a low of Rs. 89 during the year under review.
The directors of the company are Mrs. Rose Cooray (chairperson), Messrs. DCR Gunawardena, VM Fernando, K. Selvanathan, CW Knight, TCM Chia and Mrs. WYR Fernando who succeeded Mr. I. Paulraj who resigned on 15.8.16.
Ceylon Guardian Investment Trust PLC, the country’s wealthiest quoted investment trust, had encashed some unrealized capital gains in its portfolio last year, selling down at a disadvantageous time over concerns on new taxes, the company’s recently released annual report said.
Saying they were carrying "significant" capital gains in their portfolio as a result of a strategy of value driven long term investing, "in order to protect shareholder returns we realized profit on investments that had significant gains over the years," it said.
As a result they had divested "significant positions" in John Keells Holdings, Commercial Bank, Sampath Bank and Tokyo Cement "to secure gains to shareholders under the present tax regime."
"This divestment was prompted by an anticipated tax on share trading as a business," the report said. "It is of significant concern that tax issues have caused us to sell at an unsuitable time. Nevertheless, as a cautionary measure, we decided to realize the higher accumulated gains."
Guardian which is the holding company of the investment business of the Carson Cumberbatch Group held an investment portfolio worth approximately Rs. 18.7 billion as at Mar. 31, 2017. The holding included stakes in some of the country’s best blue chips.
The year under review saw the Group posting an attributable profit of over a billion rupees, double that of the previous year largely on account of capital gains.
Mrs. Rose Cooray, the company’s chairperson, said in the report that the group had performed exceptionally well in a turbulent environment with its discretionary portfolio significantly outperforming the All Share Price Index of the Colombo Stock Exchange during a three-year period by posting a compounded annual growth rate of 4.37%.
"The discretionary portfolio provided a 9.10% annual return for the financial year in a flat market environment," she noted.
On realizing capital gains on some blue chips in the portfolio, Cooray said: "Though it was not the best of times to sell out, lack of confidence in the direction of capital market taxes forced us to realize gains at a sub-optimal point of time to protect shareholder returns."
Guardian’s top five holdings at the end of the year under review comprised HNB, Sampath, Cargills, Commercial Bank and Dialog with a market value opf Rs. 5.25 billion comprising over 40% of its discretionary portfolio.
Carsons which is the controlling shareholder of Guardian holds 67.15% of the company with the second biggest shareholder, Thurston Investments Ltd. owning 3.74% and the EPF 3.58%. The ETF too has 0.59% with some foreign funds and high net worth investors being among the top 20 shareholders with individual stakes of below 2%.
The directors have proposed a dividend of Rs. 4 per share for the year under review, up from Rs. 3 a year earlier. The Guardian share closed at Rs. 90.10 on Mar. 31, 2017, down from Rs. 119.70 a year earlier, trading between a high of Rs. 175 and a low of Rs. 89 during the year under review.
The directors of the company are Mrs. Rose Cooray (chairperson), Messrs. DCR Gunawardena, VM Fernando, K. Selvanathan, CW Knight, TCM Chia and Mrs. WYR Fernando who succeeded Mr. I. Paulraj who resigned on 15.8.16.
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