Mercantile Investments and Finance PLC (MI), founded over 50 years ago by Mr. George Ondaatjie, among the strongest finance companies listed on the Colombo Stock Exchange, has posted a profit before tax of Rs. 879 million in the year ended March 31, 2018, up "astoundingly" by 180% from a year earlier in the words of its chairman, Mr. Saro Weerasuriya.
"Similarly, net profit after tax (NPAT) rose commendably to Rs. 514 million, up 154% year-on-year compared to the moderate NPAT of Rs. 202 million posted the last financial year," Weerasuriya said in the company’s recently released annual report.
"In keeping to our promises, we created investor wealth, declaring a first interim dividend of Rs. 7 per share and Rs. 8 per share as the second interim dividend. The impressive profitability boosted the EPS (earnings per share) by 154% to Rs. 171, thereby assuring our investors strong earnings potential and reinforcing the market price of the company’s ordinary share which stood high at Rs. 2,580 based on the last traded price," he said.
MI is a closely-held modestly capitalized and asset-rich finance company with the group heavily into the tourism and hospitality sectors with three listed hotel companies, Grand Hotel, Nuwara Eliya, Tangerine Beach Hotel and Royal Palms Beach Hotel standing adjacent to each other at Kalutara. The group entered the resort hotel sector with Nilaveli Beach Hotels (Pvt) Ltd. which is the single largest shareholder of MI owning 20.94% of the parent’s equity.
More recently, the group invested in a city hotel, Fairview in Wellawatte. In addition to its hotels, the MI group owns a valuable quoted share portfolio and real estate.
The report indicated that there was a realized capital gain of Rs. 219 million on its equity portfolio in the year under review, up from the previous year’s Rs. 60 million while dividend income was down to Rs. 70 million from Rs. 177 million a year earlier. This was attributed to the disposal of their equity holding in Commercial Bank in the middle of the previous calendar year.
MI has just 17 shareholders with Mr. George Ondaatjie and his three children and connected companies owning the lion’s share. The share was not traded in the year under review.
Describing its ownership structure, the report said that MI is not a subsidiary of any holding entity and has no investments in subsidiaries of its own. However, it holds 26.12% of Nuwara Eliya Hotels Company PLC as at balance sheet date and this company is treated as an associate in MI’s books.
MI’s stated capital is just Rs. 36 million while its total assets run at over Rs. 40.3 billion against total liabilities of Rs. 31.7 billion of which over Rs. 20 billion comprise customer deposits. A revaluation reserve of over Rs. 1.9 billion, general reserves of Rs. 4.1 billion and retained earnings of Rs. 1.7 billion are part of shareholders’ funds.
Weerasuriya said that the relatively high interest rate regime continued for the third consecutive year, driven by tight government monetary policy and restrictions on credit growth. While recording moderate lending growth, the industry had to be vigilant about its assets quality, particularly in the wake of fluctuating economic conditions and borrower repayment capacity.
MI’s Managing Director Gerard Ondaatjie also used the adjective "astounding" to describe profit growth, both before and after tax, said that in keeping with company policy for retaining earning for future growth, the dividend payment ratio remained lower at 8.8% with a Rs. 15 per share dividend declaration made for the year.
He said that asset quality continued to be "somewhat impacted" on account of a few large lending accounts of the previous year which kept the non-performing lending ratio at 7.58% "though being fully backed by prime collateral." Total impairment charges stood at Rs. 426 million which included additional prudential provisions on these accounts.
He said that MI had mobilized deposits optimally and increased the base to Rs. 20 billion reflecting sound 18% growth.
The directors of the company are Messrs. SHJ Weerasuriya (chairman), GG Ondaatjie (MD), PM Amarasekera (Deputy MD), SH Jayasuriya (Finance Director), Ms. Angeline Ondaatjie (executive), Travice Ondaatjie (executive), Ms. PTK Navaratne, NHV Perera, SMSS Bandara and PC Guhashanka.
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"Similarly, net profit after tax (NPAT) rose commendably to Rs. 514 million, up 154% year-on-year compared to the moderate NPAT of Rs. 202 million posted the last financial year," Weerasuriya said in the company’s recently released annual report.
"In keeping to our promises, we created investor wealth, declaring a first interim dividend of Rs. 7 per share and Rs. 8 per share as the second interim dividend. The impressive profitability boosted the EPS (earnings per share) by 154% to Rs. 171, thereby assuring our investors strong earnings potential and reinforcing the market price of the company’s ordinary share which stood high at Rs. 2,580 based on the last traded price," he said.
MI is a closely-held modestly capitalized and asset-rich finance company with the group heavily into the tourism and hospitality sectors with three listed hotel companies, Grand Hotel, Nuwara Eliya, Tangerine Beach Hotel and Royal Palms Beach Hotel standing adjacent to each other at Kalutara. The group entered the resort hotel sector with Nilaveli Beach Hotels (Pvt) Ltd. which is the single largest shareholder of MI owning 20.94% of the parent’s equity.
More recently, the group invested in a city hotel, Fairview in Wellawatte. In addition to its hotels, the MI group owns a valuable quoted share portfolio and real estate.
The report indicated that there was a realized capital gain of Rs. 219 million on its equity portfolio in the year under review, up from the previous year’s Rs. 60 million while dividend income was down to Rs. 70 million from Rs. 177 million a year earlier. This was attributed to the disposal of their equity holding in Commercial Bank in the middle of the previous calendar year.
MI has just 17 shareholders with Mr. George Ondaatjie and his three children and connected companies owning the lion’s share. The share was not traded in the year under review.
Describing its ownership structure, the report said that MI is not a subsidiary of any holding entity and has no investments in subsidiaries of its own. However, it holds 26.12% of Nuwara Eliya Hotels Company PLC as at balance sheet date and this company is treated as an associate in MI’s books.
MI’s stated capital is just Rs. 36 million while its total assets run at over Rs. 40.3 billion against total liabilities of Rs. 31.7 billion of which over Rs. 20 billion comprise customer deposits. A revaluation reserve of over Rs. 1.9 billion, general reserves of Rs. 4.1 billion and retained earnings of Rs. 1.7 billion are part of shareholders’ funds.
Weerasuriya said that the relatively high interest rate regime continued for the third consecutive year, driven by tight government monetary policy and restrictions on credit growth. While recording moderate lending growth, the industry had to be vigilant about its assets quality, particularly in the wake of fluctuating economic conditions and borrower repayment capacity.
MI’s Managing Director Gerard Ondaatjie also used the adjective "astounding" to describe profit growth, both before and after tax, said that in keeping with company policy for retaining earning for future growth, the dividend payment ratio remained lower at 8.8% with a Rs. 15 per share dividend declaration made for the year.
He said that asset quality continued to be "somewhat impacted" on account of a few large lending accounts of the previous year which kept the non-performing lending ratio at 7.58% "though being fully backed by prime collateral." Total impairment charges stood at Rs. 426 million which included additional prudential provisions on these accounts.
He said that MI had mobilized deposits optimally and increased the base to Rs. 20 billion reflecting sound 18% growth.
The directors of the company are Messrs. SHJ Weerasuriya (chairman), GG Ondaatjie (MD), PM Amarasekera (Deputy MD), SH Jayasuriya (Finance Director), Ms. Angeline Ondaatjie (executive), Travice Ondaatjie (executive), Ms. PTK Navaratne, NHV Perera, SMSS Bandara and PC Guhashanka.
www.island.lk
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