Central Securities Limited, the Central Finance associate owning a valuable share portfolio, has emerged from a long period of loss making with a profit of Rs. 16.6 million during the 9 months ended December 31, 2001, up from a loss of Rs. 2.4 million a year earlier.

The positive bottom line resulted from the reversal of provisions previously made of Rs. 22.2 million for the fall in market value of investments during the protracted stock market downturn. But the post-election upsurge had meant a change of fortune for the company, whose share price hit a high of Rs. 26 on Dec. 10 from a low of Rs. 3.50 on Oct. 8.

But for the write-back of previously made provisions for the decline in the market value of its portfolio, the company would have remained in its loss making mode with an operating loss of Rs. 8.3 million for the period under review.

The company’s revenue for the period at Rs. 14.8 million was up 327% from Rs. 3.5 million during the comparative period the previous year. Its cost of sales at Rs. 22.3 million was over nine times the Rs. 2.2 million incurred on this account a year earlier, leaving it with a gross loss of Rs. 7.6 million, down from a profit of Rs. 1.3 million a year earlier.

Administrative expenses has risen to Rs. 0.7 million from Rs. 0.5 million the previous year and the operating loss of Rs. 8.3 million compared with an operating profit of Rs. 0.8 million a year earlier.

The turning point was the reversal of provisions for the decline in market value in investments of Rs. 22.2 million against a provision of Rs. 4.5 million that was made a year earlier.

The company made a profit of Rs. 13.3 million before finance income of Rs. 2.7 million earned during this period enabling a bottom line of Rs. 16.6 million profit against a loss of Rs. 2.4 million during the first 9 months of the previous year.

Central Securities had no tax obligations for the period under review on account of brought forward tax losses.

In the year ended March 31, 2001, the company lost Rs. 1 million on a revenue of Rs. 4.1 million.

Central Securities had an issued share capital of Rs. 49.2 million and retained earnings of Rs. 8.3 million in its books as at Dec. 31, 2001. Its investments in quoted shares as at the same date was Rs. 27.5 million against a market value of Rs. 24.6 million.

The company’s investments include blue chips like the Commercial Bank of Ceylon, DFCC Bank, HNB, NDB, Aitken Spence, Hayleys, JKH etc.

The company also has a long term investment of 55,000 shares in Tea Smallholder Factories Limited in which its parent, Central Finance, is a major stakeholder along with JKH.