Aitken Spence records profit of Rs. 4.2 billion in 2019-2020 amidst unprecedented challenges

The year under review experienced two black swan events with their distinctive and severe impacts within the space of one year. Aitken Spence PLC remained resilient despite these challenges due to the Group’s diversified business portfolio and strategic direction.

The Group’s financial performance for the twelve months ending 31st March 2020 recorded a year-on-year profit-before-tax of Rs. 4.2 billion compared Rs. 7.3 billion last year.

Despite considerable economic headwinds the organisation’s agile strategy was reflected in the earnings from the overseas businesses that contributed 39% compared to 43% last year. This underlined the exceptional relationships that have been built with global industry players across the key sectors. The Group’s businesses from the domestic market derived 61% earnings of the Group’s PBT for 2019/2020 compared to 57% in the previous year.

The total revenue of the Group ending 31st March 2020 was Rs. 53.5 billion, a 4% drop from the previous year, primarily due to a reduction of revenue from the Tourism sector which was affected by the significant impacts mentioned above. However, the drop was compensated by the commencement of the operations during the third quarter of the year of Heritance Aarah, the flagship hotel in the Maldives.

The total assets of the Group increased by 14% to Rs. 140 billion. The Group invested Rs. 10 billion in capital expenditure across many sectors with the highest investment incurred in the power generation segment to fund the construction of the pioneering waste to energy power project, the first of its kind in Sri Lanka. This reflects the organisation’s confidence in its future earnings growth capacity.

The Group’s expansion increased to 9 countries as the Maritime & Freight Logistics sector re-established its presence in South Africa whilst the Tourism sector commenced operations in Myanmar during the year.

The launch of Heritance Aarah was a key milestone in the Tourism portfolio as it was the first time that the Heritance brand was launched overseas. Heritance Aarah is the first LEED certified building in the Maldives reflecting their commitment to sustainable and energy efficient design. Heritance Aarah has also set the bar for culinary excellence in this popular tourist destination emerging victorious in the World Culinary Olympics in Germany, having also won the Maldivian and Sri Lankan competitions during the year.

The Tourism sector recorded a loss before tax of Rs. 15.3 million compared to a profit of Rs. 3.1 billion last year. This sector was hardest hit by the Easter terror attacks at the beginning of the year with dramatic declines in tourist arrivals in the following months. Overall, performance of the overseas Tourism sector was dampened by the increased depreciation and interest costs related to Heritance Aarah which is inevitable due to the capital intensive and long-term nature of the industry. 

Heritance Kandalama and Heritance Tea Factory made profits despite the setbacks. This was owing to the differentiated marketing strategy that helped to mitigate losses, carving out a niche that could be finetuned to enhance yields over time. Aitken Spence Travels handled around 14% of organised tourist arrivals to country underlying its position as the market leader and providing a healthy contribution to the Group and the country, to accelerate and strengthen the recovery of this key economic sector. Additionally, Airline General Sales Agency business added another regional passenger carrier to its portfolio which is expected to commence operations in the new financial year.

The Maritime & Freight Logistics sector contributed an outstanding profit before tax of Rs. 2.25 billion which was once again the largest contributor accounting for 54% of the Group profits. The resumption of operations in South Africa, completed a short-term assignment which supported the performance of the sector.

The Sri Lankan operations of the Maritime & Freight Logistics sector also recorded an increase in operating profits despite a significant decline in trade volumes due to global trade tensions and import restrictions. Integrated logistics performed very well by securing new multinational clients through service excellence.

The Strategic Investments sector recorded PBT of Rs. 1.7 billion compared to Rs. 1.8 billion last year. Steady progress has been made in the country’s first waste to energy power plant although the final commissioning is likely to be delayed given the challenges with the current situation. Apparel had improved efficiencies and had a good year but witnessed a drawback due to the impact of COVID-19 at the end of the financial year. The printing and packaging segment continued to differentiate itself in the market leveraging its sustainable printing agenda but was adversely impacted due to higher costs of paper leading to narrower margins and the cessation of operations in the latter part of March following the lockdown imposed in the country.

The Group’s investment in the printing & packaging segment in the South Pacific region is nearing completion and is expected to commence full scale operations soon. This strategic investment will support the printing and packaging segment’s aspirations to expand services in the South Pacific region using its expertise in sustainable printing to differentiate their value proposition. 

Performance of the plantations segment was commendable despite the lower prices of tea experienced throughout the financial year due to its business diversification strategy. Escape Theme Parks signed an agreement to develop a park in Devithurai estate making Elpitiya Plantations the first Regional Plantation Company to embark on a non-agri diversification project of this scale. 

The Services sector performance was commendable recording PBT of Rs. 298 million compared to Rs. 269 million last year. The insurance segment performed remarkably well and no major impact from COVID-19 is expected for this segment. The elevators segment secured a large number of contracts but may experience delays in installations as the market may be impacted due to the COVID-19 related economic downturn. Despite work remittances to the country declining during the financial year, the Money transfer segment of the Group performed well due to operational efficiencies.

“As we emerge from the great lockdown of our time to a world that has changed significantly, it is crucial that we are prepared for a paradigm shift within the Group to seize new opportunities by responding to changing demand dynamics. Plans are taking shape to ‘Realign, Reinvent and Relaunch’ our businesses to be even more relevant to society’s changing needs to deliver sustainable growth in earnings to our shareholders, upholding the Spensonian legacy of adapting to thrive,” stated Dr. Parakrama Dissanayake, Deputy Chairman and Managing Director of Aitken Spence PLC.

Aitken Spence PLC won the Best Corporate Citizen Sustainability Award 2019 for the third successive year and has been ranked among the Top 10 Best Corporate Citizens of Sri Lanka for an unprecedented 14 consecutive years.

Listed in the Colombo Stock Exchange since 1983 and marking its 150th year milestone in 2018, Aitken Spence is a blue-chip conglomerate with a strong regional presence in hotels, travels, maritime, freight and logistic solutions, plantations, power generation, financial outsourcing, insurance, printing, apparel and other services.


Deshamanya D.H.S. Jayawardena –

Chairman Aitken Spence PLC

Dr. Parakrama Dissanayake – Deputy Chairman and Managing Director Aitken Spence PLC