The chairman of the country’s biggest equity investment fund has said that market upturns and downturns are both ``good for business and indeed necessary if portfolios are to grow and thrive over the medium to long-term.’’

This remark has been made by Mr. Israel Paulraj, Chairman of Ceylon Guardian Investment Trust PLC in the company’s annual report where a 50% downturn in group profitability to Rs.355.1 million has been reported.

Despite the lower profit, the directors of the company which is a member of the Carson’s group have recommended a payment of a first and final dividend of Rs.1.75 a share, up from Rs.1.50 the previous year.

Paulraj explained that the higher dividend, despite a year where profits were low, was to "keep shareholders returns consistent in the temporary absence of a significant share price appreciation."

"It also illustrates our confidence that Guardian has the capacity to support shareholder returns over the years, based on the inherent strength of its pool of accumulated resources and underlying asset base," he said.

The Ceylon Guardian group and its subsidiaries, Ceylon Investments and the Rubber Investment Trust, commands a total equity portfolio which was valued at Rs.9.4 billion at the close of the financial year, down 7% from Rs.10.1 billion a year earlier.

Paulraj said that these performance figures must be viewed in the context of the All Share Price Index during the same period which depreciated by 8.6%.

"Our average annualized performance over the last five years was 50% - a pertinent indicator given that Guardian’s underlying investment horizon is essentially long-term," he said.

"As would be expected in any financial market, after six years of sustained growth, the CSE took a dip of 8.6% in the calendar year 2007," he noted.

Paulraj made the point that although the ASPI was in negative mode during the year under review, both fundamentally strong companies as well as speculative ones – "and both are needed for a capital market to grow" – gave investors selective opportunities to make superior returns.

"Such transactions reflected the ability of our small but vibrant capital market to support profitable economic activity in the country," he said.

Guardian’s long-term portfolio comprising mainly of companies within the Carson’s group including the Sri Lanka incorporated Malaysian plantation companies, was worth Rs.5.2 billion while its trading portfolio was valued at Rs.572 million.

During the year under review, Guardian has invested into the F&B, telecoms, retail and healthcare sectors which Paulraj said they expected "would be superlative performers" in the future in the context of the current state of the country’s economic development and consumer purchasing power.

He reported that investments into these sectors had taken place during the current financial year when Guardian disposed of its 5.4% stake in Hayleys taking a substantial capital gain.

Outside the Carsons group, Guardian held 2.7% of JKH, 20.2% of Ceylon Cold Stores, 1.5% of Distilleries, 5.4% of Hayleys (since disposed), 2% of Cargills, 0.3% of SLT, 1.7% of Aitken Spence, 0.1% of Dialog, 10.9% of John Keells and one percent of Asian Hotel Properties.

Within the Carsons group their holdings included Bukit Darah PLC which owns 46% of Carsons (26.75%), Indo-Malay PLC (4.93%), Union Assurance PLC (3.83%), Good Hope PLC (3.75%) and Selinsing PLC (3.40%).

Guardian Fund Management Limited, the group’s dedicated fund management company, is actively seeking to manage equity funds for external clients too in the near future, Paulraj said.

He also revealed that this company will be more actively involved in seeking business opportunities regionally given its present expertise in managing the Cayman Islands incorporated Sri Lanka Fund, the only dedicated country fund abroad for Sri Lanka.

Ceylon Guardian has a stated capital of Rs.672.8 million, capital reserves of nearly Rs.1.1 billion and revenue reserves of Rs.2.3 billion in its books.

Net assets per share at "historical costs" were up to Rs.224 from Rs.177.59 the previous year and at market value were down to Rs.457.47 from the previous year’s Rs.492.76.

The company’s share traded at a high of Rs.177 and a low of Rs.117.50 during the year under review against a trading range of Rs.194 to Rs.105 the previous year.

Carson Cumberbatch with 66.653% is the biggest shareholder followed by Thurstan Investments (6.56%) and the late Mr. M. Radhakrishnan (2.11%).