Equity One PLC, a Carsons group company spearheading its thrust in property development, has been likened by its chairman as a "sleeping giant which once awakened at the right time would stride ahead in leaps and bounds.’’

The company however earned only a modest group profit of Rs.2.1 million in the year ended March 31, 2008, down sharply from Rs.166.3 million posted the previous year.

Equity One Chairman, D.C.R. Gunawardena explained that the main contributor to the net profit the previous year was the gain of Rs.169.5 million on fair value adjustment. Also the group’s direct operating cost had grown to Rs.60.2 million from the previous year’s Rs.41 million due to cost incurred in launching a property management company.

The company which has brought all the properties within the Carsons group under its umbrella controls assets worth over Rs.2 billion and a land banking of over three acres within the Colombo city and over nine acres in the suburbs.

Equity One believes that with this asset base and the support of Carsons, their property sector is now well placed to raise the required stream of funding for aggressive and ambitious development plans lined up for the future.

Equity One has now floated a fully owned subsidiary, Carsons Real Estate Management Services (Pvt) Limited, to undertake property management and development activities and the required engineering, marketing and finance staff have been recruited.

"With all the prerequisites in place, Equity One is now geared to carry out its ambitious development plans and guide its subsidiary companies to ensure increased shareholder value in the long-term," the company said.

The chairman said that during the year under review the property market segment’s performance lagged in comparison to the marketing efforts as the anticipated take-off in pre-sales had not materialized.

"However, undaunted by this fact, the subsidiaries continued construction of four housing units to beat the ever increasing construction costs through the financial backing of its ultimate parent, Carsons group," he said.

"Renewed marketing efforts are underfoot both locally and overseas to pull-in the value conscious buyers through multi-focused sales campaigns carrying novel financing packages."

Gunawardena reported that the group’s property rental business continued "on a steady course" generating the fixed income backing to their other business segment.

High occupancy levels had been maintained on all their properties despite the general commuting difficulties faced in Metropolitan Colombo with their property at Janadhipathi Mawatha suffering most.

The Equity One report has made the point that in the real estate business, market location and the product is key to success. Therefore their holding of prime properties in key locations within the Colombo city and in the suburbs was one of their main strengths.

The group already rents over 134,000 sq. ft. of office space and over 32,000 sq. ft. of warehousing with high occupancy and rental growth keeping the business buoyant.

The year under review saw the generation of a net rental income of Rs.93.7 million, up 4% from Rs.89.9 million earned the previous year, with a net profit of Rs.33.2 million posted on account of rental income.

The business review made the point that the market value of their property portfolio had significantly increased over the years adding value to the company’s net worth.

Their Dharmapala Mawatha 8-storey complex standing on 94 perches and their stores complex at Vauxhall Lane on 220 perches are currently 100% occupied.

The report said that the property owned by Equity Two PLC, located at Janadhipathi Mawatha is its most valuable property neighbouring the World Trade Centre, Central Bank and star class hotels. Most importantly, it is very close to the Colombo harbour.

"However it is unfortunate to state that we have not been able to generate the rental that it deserves due to the access roads being closed down to the public for security reasons," the review said.

"The property owned by Equity Three (Pvt) Limited is situated at George R. de Silva Mawatha in Colombo 13. This is in close proximity to the Colombo harbour as well and is currently fully occupied."

Equity Five Limited owns a property situated in Braybrooke Place comprising a land of 70 perches. This neighbourhood has progressed immensely in the recent past with the development of many high-end residential apartments, restaurants, supermarkets, etc.

"The key feature of this property is the easy access to many roads in the Colombo city whilst nestled in a relatively quiet neighbourhood," the review said.

The company said that it will continue to ensure that a healthy rental income is generated by its properties by ensuring full occupancy and regular rent reviews will be effected to ensure market rates.

However, the report admitted that while the company’s city properties have approached peak commercial values, the returns generated from them did not justify their market value.

"Therefore, our medium to long-term strategy also involves property reshaping and transforming our existing property portfolios into more fruitful ventures," the company said.

"For this we have the operating capacity, the balance sheet and the appetite to take on large-scale property development projects.’’

Equity One has a stated capital of Rs.1.08 billion, a capital reserve of Rs.13.2 million and revenue reserves of Rs.709.9 million. The group carried long-term bank borrowings of Rs.565.1 million in its books

The directors have recommended a first and final dividend of Rs.0.20 per share for the year under review involving a pay out of Rs.8.1 million, the same as in the previous year.

Carson Cumberbatch PLC with 70.45% of Equity One and Shalimar (Malay) PLC, also a Carsons company, with 24.14% are the company’s major shareholders.

The directors of the company are: Messrs. D.C.R. Gunawardena (Chairman), S. Nagendra, K.C.N. Fernando and E.H. Wijenaike.