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226 apartments in Havelock City completed, Phase 2 begins

Phase I of the Havelock City project comprising two residential towers of 226 units, covered parking for 520 vehicles and approximately two acres of landscaped gardens has been successfully completed, Singapore tycoon S.P. Tao announced to shareholders of Overseas Realty (Ceylon) PLC (ORCL) in the company’s annual report for 2009.

"Though sales were slow during the first half of the year, increased marketing effort commencing October and improved country sentiment resulted in higher sales of apartments in the fourth quarter," he reported.

"Revenue recognized from apartment sales in 2009 was Rs.1,234 million, a 106% increase over the previous year," he said adding that the net profit contribution from Havelock City to group profitability was Rs.106.5 million.

Although the company’s revenue was up 34% in 2009 to Rs.1.94 billion, a decline in rental income and lower than anticipated apartment sales had pushed down profit after-tax 15% from the previous year.

ORCL’s group profit after-tax stood at Rs.1.4 billion in the year ended December 31, 2009, down from Rs.1.8 billion a year earlier while the company’s earnings after-tax at Rs1.3 billion was down from Rs.1.7 billion the previous year.

Occupancy of the company’s landmark World Trade Centre (WTC) in the Colombo Fort was down 19% during the year under review, and stood at 68% last year. However, an upward trend was seen in the fourth quarter.

Although WTC was able to achieve a 2% increase in the average rental rates earned, rental revenue overall was down 17% in 2009 to Rs.666 million.

However, the company had been able to mitigate this by a 16% reduction in operating expenses.

"The World Trade Centre still remains the best building of its class in Colombo, a testimony to its built-quality and the excellent team that manages and maintains the premises,’’ Tao said. This augurs well for the future as a stronger Sri Lankan economy translates into higher demand for office and commercial space,"

He said that Havelock City remained a unique development in Colombo with living and recreational spaces designed and built to the highest quality. Tao expected that as confidence in Sri Lanka grows, there will be growth in demand for residential accommodation at Havelock City.

The company has currently invested in the foundation work and designs for Phase 2 of the Havelock City project and plans are being drawn to proceed with the clubhouse and commercial development.

From February 1, Mr. Thilan Wijesinghe became CEO and group Managing Director of Overseas Realty.

The company has a stated capital of Rs.9.7 billion, a revaluation reserve of Rs.134.7 million and retained earnings of Rs.6.3 billion in its books.

Total assets were running at Rs.21.5 billion while total liabilities stood at Rs.4.5 billion.

The board of directors has recommended the payment of a dividend or Rs.0.30 per share for the year ended December 31, 2009, down from Rs.0.40 per share paid the previous year. The dividend is exempt from tax in terms of BOI concessions granted to the company.

The major shareholders of the company are Shing Kwan Investments Co. Ltd. with 53.75% followed by Unity Builders Ltd (26.10%), Shing Kwan Investment (Singapore) Pte Ltd. (11.65%), People’s Bank (3.69%) and Chipperfield Investments Ltd. (0.91%) with the public holding standing at 7.59%. The major shareholders are all members of the Shing Kwan Group.

The company’s share traded during the year under review between Rs.6.25 and Rs.16.50 against a trading range of Rs.5.75 to Rs.15 the previous year.

Net assets per share had grown to Rs.21.83 from Rs.20.02 the previous year.

The directors of the company are: Messrs. S.P. Tao (Chairman). H.Z. Cassim (Deputy Chairman), C.J. E. Anthonisz, A.M. de S. Jayaratne, B. Mahadeva, R.L. Nanayakkara, M.T. Ong, M.Y.B. Pin, O.E. Pin (w.e.f. 18.02.2010), M.B. Pereira (w.e.f. 18.02.2010), T.M. Wijesinghe (Group MD w.e.f. 18.02.2010),T.B. Nien (Alternate to S.P Tao), L.K. Ho (Alternate to M.Y.B. Pin) and M.B. Pereira (Alternate to M.T. Ong).

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