Access upbeat despite dip in profit, venturing overseas


Access Engineering PLC, the premier civil engineering firm listed on the Colombo Stock Exchange which has successfully completed over 100 major projects since 2001 when it was founded, has seen top line growth in the year ended March 31, 2015 but seen attributable profit both at group and company level down 17.2% and 30.5 % respectively.

However, the company remains upbeat about the future and has maintained a dividend level of one rupee per share during the year under review, the same as the previous year, although earnings per share for the group was down to Rs. 2.35 from Rs. 2.83 a year earlier and for the company for Rs. 1.75 from Rs. 2.52.

"Looking ahead, Access Engineering will continue to consolidate its core business via our value engineering approach," the Company’s Chairman, Mr. Sumal Perera, has said in the annual report. "We will continue our exploration of opportunities overseas. We are also looking at building a land bank, with the objective of exploring opportunities in the property development market of Sri Lanka."

The company presently employs over 1,800 workers, comprising more than 150 engineering and technical professionals, skilled personnel, tradesmen, skilled and unskilled workers.

The group comprises several fully-owned subsidiaries as well as an associate company where it holds a 30% stake in a joint venture with China’s Zhenhua Heavy Industries Company Limited (ZPMC), the world’s largest container-handling equipment manufacturer.

Fully-owned subsidiary, Access Realties (Pvt) Ltd owns Access Towers on Union Place, while Access Realties 2 (Pvt) Ltd is developing the proposed Access Towers 2 currently under construction.

Its 84% owned subsidiary, Sathosa Motors PLC holds a franchise for Isuzu commercial vehicles. The latest addition to the group is 80% owned Access Projects (Pvt) Ltd, a leader in the leisure-related building construction and interior solutions.

Perera said while GDP last year was up 7.37 % on the back of strong growths in the construction sector, the devaluation of the rupee against the USD posed a challenge to the business sector. Also, volatility and uncertainty beset the latter part of the year due to the presidential elections and the subsequent change of government.

In a joint statement, a company’s Managing Director, Christopher Joshua and Rohana Fernando, its Chief Operating Officer, said that investment in the country’s developing infrastructure continues apace with many of the major projects receiving Chinese funding. Many other multilateral and bilateral funding agencies lent muscle to the country’s infrastructure development projects.

They said that the construction 9of roads and rehabilitation of existing roads continued to be one of the development priorities last year in line within the National Road Master Plan (2007-2017).

The company’s primary focus for the year under review was consolidating its core business with expansion only undertaken where there were synergies with their core values. They continue to invest in capacity building having invested Rs. 714 million in enhancing and infusing plant, equipment and machinery with new technological capabilities. This expenditure was on top of Rs. 3.2 billion invested in this regard over the previous three financial years, they said.

Exploring business opportunities overseas remain within their immediate focus with a project started in Papua New Guinea in the previous financial year and completed during the year under review making a positive contribution to the bottom line. They have opened a branch office in Djibouti in February to help push further a field.

The joint review said that the top line of Rs. 11.2 billion was supported by highway construction (40%), building construction (34%), sale of construction related material (11%) and water and drainage construction (10%).

"We experience a reduction in other income mainly due to the depreciation of the exchange rate of the euro against the SLR where we had income in euro on the Labugama-Kalatuwawa Water Supply Project," they said. "Our net profit ratio margin, at 16%, was well above the world industry average. Access Engineering is debt-free and its liquidity is at a position of great strength."

At group level, Access Realties contributed approximately Rs. 314 million to the bottom line, a year-on-year growth of over 130% mainly on the account of a revaluation gain of Rs.174 million. Sathosa Motors contributed approximately Rs. 270 million while the recently acquired Access Projects contributed Rs. 145 million.

The company continues to enjoy a preferential 12% tax rate applicable to the construction industry.

Access has a stated capital of Rs. 9 billion and retained earnings of Rs. 7.17 billion in its books. Total assets ran at Rs. 22.33 billion and total liabilities at Rs. 5.63 billion.

Mr. Sumal Perera owns 25% of the company and is its top shareholder followed by fellow directors, R.J.S. Gomez (12%) and J.C. Joshua (10%). The directors, their spouses and children control the company with over 50% of its equity. The EPF owns 1.54 %.

The company’s share traded at a high of Rs. 43.50 and a low of Rs. 18.50 during the year under review closing at Rs. 19.20. This compared to a trading range of Rs. 23.50 to Rs. 19.10 closing at Rs. 22.50 the previous year.

The Directors of the Company are Messrs S.J.S Perera (Chairman), R.J.S. Gomez, J.C. Joshua, S.H.S. Mendis, D.A.R. Fernando, S. D. Munasinghe, Prof. Malik Ranasinghe, N.D. Gunaratne, S.D. Perera and D.S. Weerakkody.

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