AMW profits up, Susantha’s entry boosts company

The entry of JKH Chairman Susantha Ratnayake to the Board of Directors at Associated Motorways Ltd (AMW) in August as a result of John Keells acquiring a 20% equity stake has boosted AMW, C.T. Smith Stockbrokers Ltd said in a report on AMW’s quarterly results.

"We are confident that Mr. Ratnayake's proven business acumen would be of great benefit to our company," said Tilak de Zoysa, Deputy Chairman and Managing Director of AMW.

AMW's net profit increased by 15% to Rs.339 million for the six months ended 30 September 2006. The share price has appreciated 147% since its 5:1 bonus announcement on 6 September.

According to De Zoysa, the company posted the best ever Group results for the quarter under review with a Group turnover of Rs.3.4 billion, a 51% increase compared to the corresponding quarter the previous year. The Group's pre-tax profit also grew by 8% from the corresponding quarter in 2005, resulting mainly from unparalleled revenue and profit from sales of "Yamaha" Outboard Motors after the December 2004 tsunami. The strong financial position of the company led to the approval of a 5:1 bonus issued by the Board of Directors, which De Zoysa noted was a "key milestone in the company's history."

The main objective of the partnership with JKH is to develop an up market housing and office complex on 3.07 acres of freehold land owned by Whittall Boustead, a JKH subsidiary which is adjoining 217 perches of freehold land in Union Place owned by AMW. AMW said it embarked on several successful marketing initiatives in the past few months and has opened up "Maruti/Suzuki" showrooms in strategic locations around the country. Sound growth in this sector has contributed in net turnover being up by 61% in the first half of 2007 to Rs.6.059 million. AMW Capital Leasing, a fully owned leasing subsidiary began operations in August 2006. CT Smith noted that while being unlikely to match the rates offered by commercial banks, AMW is likely to compete on convenience and by offering a one-stop stop to potential vehicle buyers.

The quarter also saw significant changes to AMW's capital structure as a result of a new issue of shares to JKH and the bonus issued by the Board.