the reporting season gets underway …
Investor confidence low due to uncertain security
With the reporting season for financial year accounts
ending March underway, corporates are churning out satisfactory
results but their reports reflect growing concerns about the security
situation in the country and long term effects on business and the
Many reports including that of John Keells are expected in the next
few weeks as companies prepare to hold their AGMs –most before
But JKH Chairman Susantha Ratnayake said the group has gone through
this situation before. “It’s not new to businesses.
Business has grown and it would be business as usual.”
Dimuthu Abeyesekera, CEO, Asha Phillip Securities Ltd said that
companies while being concerned about the volatile situation in
the country will post very good results, but these results will
not reflect the actual values in the share prices of those respective
companies. “March companies which are to release their annual
results seem to have done very well, but the share prices will not
reflect the actual values because investor confidence at present
is not very good,” he said.
He said the confidence factor has reduced drastically due to the
war situation and many corporates are expected to raise the peace
issue in their reviews and statements. “The main criteria
for investor confidence are peace,” he emphasized.
Deva Rodrigo, President of the Ceylon Chamber of Commerce said the
country's situation is very fragile and if it worsens there is a
threat of increases in freight costs because foreign shipping lines
will push for war risk rates, while increasing corporate taxes will
have a drastic effect on the corporate and investor sentiment at
“It will be interesting to analyse the taxes paid by the corporates
in relation to their profit before tax (PBT) and compare it with
last year. The government is planning to push the corporate tax
to 19 to 20 percent of GDP. It would useful to ascertain how much
the increase in the tax revenue to the government has increased
the effective rates of corporate tax,” he said.
Market analysts said that many companies were very concerned about
a conducive environment to business and are awaiting a firm stand
on peace. Some said that it is noteworthy that the tourism sector
of some companies has shown a revival in the last quarter but the
firms are concerned about the future.
Chinthaka Ranasinghe, Head of Research, John Keells said that corporates
dealing in only tourism will be hit badly but generally the corporate
results that are due to be posted are looking very good. “We
have been through worse times. There will be volatility in the country,
but we are a long way from the post 1994 era,” he said.
Sanjeev Gardiner, Director Ceylon Hotels Corporation said that it
is important for companies to have consistency in efficiency and
productivity in a volatile situation and some companies such as
Dialog have done this. “Dialog has done extraordinarily well
in a challenging environment,” he said.