Ceylon Guardian Investment Trust PLC, a member of the Carson’s group and owners of valuable equity portfolio including substantial stakes in four quoted blue chips, has posted a strong performance in the year ended March 31, 2009 with group revenue up to Rs.2.35 billion from Rs.0.5 billion a year earlier and the profit after-tax up to Rs.653.2 million from the previous year’s Rs.368.4 million.

Guardian owns 2.8% of JKH, 2.2% of Distilleries, 3.5% of Aitken Spence and 3.2% of Cargills. Additionally, it has acquired 15% of the unlisted Durdans Medical and Surgical Hospital Ltd., gaining exposure to the health care sector.

The market value of its investment portfolio topped Rs.6.1 billion as at March 31, 2009, down from Rs.9.4 billion a year earlier while net assets per share at book value was Rs.224.95, down from Rs.297.31 million.

Guardian Chairman Israel Paulraj reported to shareholders that their 77% increase in consolidated profit during the year under review reflected the company’s efforts to preserve portfolio value in a year of turbulent and uncertain market conditions.

The year under review had seen the Guardian group exiting from some of its substantial minority stakes in companies like Union Assurance and Hayleys to unlock the value created by holding these investments over the years.

These divestments realized about Rs.2.9 billion cash to the group creating flexibility within its portfolio to weather difficult market conditions and seek new investment opportunities in the more positive environment that emerged during the current financial year.

"We would particularly emphasize that liquidity within the portfolio strengthened our ability to re-balance exposures to the sectors which are expected to grow more rapidly in the current environment," he said.

Of the total cash realized, Rs.957 million was re-invested in new equities to take advantage of market growth while the balance was held in fixed income instruments which gave a superior rate of return to equities during the year under review.

The board had since recommended an interim dividend of Rs.11.50 per share by part utilizing cash raised through disposals and interest income generated so far. This dividend was funded entirely from tax-free profits available for distribution.

Paulraj said that the 35% drop in their portfolio value to Rs.6.1 billion during the year under review was a result of poor market conditions that prevailed due to both local and global factors.

Despite the negative outlook, Guardian continued looking for high quality equity investments concentrating on medium and long-term growth on portfolio. These included stakes in listed companies as well as an unlisted investment in the healthcare sector where Guardian committed itself to take 15% of Durdans Medical and Surgical Hospital at a cost of Rs.262.5 million.

"Going forward we see more opportunities for Guardian to participate in funding such pre-IPO ventures for superior returns along with management representation," Paulraj said.

"In keeping with our investment philosophy of gaining exposures to growth sectors through well managed companies, we have revamped the Guardian portfolio to reflect the new opportunities that would arise in a rejuvenated Sri Lankan economy."

He reported that the start of the current financial year was momentous for the group with the portfolio growing by over 61.3% from its previous low as a result of the market growing 48.5% during this period.

"As equity specialists, Guardian is justifiably pleased with this performance which illustrates its ability to pick stocks that can seriously outperform the market," he said.

"For Guardian, the dramatic turnaround in our home market brings with it the promise of long term sustainable growth."

Paulraj also said that Guardian will be looking at activating the dedicated country fund for Sri Lanka managed by Guardian Fund Management – the Sri Lanka Fund incorporated overseas.

"Management of outsourced funds will be an area of business we will continue to explore in the market recovery," he said.

Guardian has a stated capital of Rs.672.8 million, capital reserves of Rs.1 billion and revenue reserves of nearly 2.9 billion. Its borrowings with a Rs.57.7 million bank overdraft is low in comparison to assets.

Carson Cumberbatch PLC with 66.65% of Guardian is its main shareholder followed by Thurston Investments (6.60%) and the late Mr. M. Radhakrishnan (2.11%).

Net assets per share at market value were down to Rs.252.77 during the year under review from Rs.457.47 the previous year while the Guardian share traded at a high of Rs.115 and a low of Rs.82 during the year under review against a trading range of Rs.177 to Rs.117.50 the previous year.