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Access Engineering records over Rs. 1 b post-tax profits in Q3 22 

14 Feb 2022

Access Engineering PLC recently released its interim financial statements for the nine months ended 31 December 2021 stating that the company’s after tax profits (PAT) for the nine months stood at Rs. 2.22 billion, a year-on-year (YoY) increase of 74.1%. The company has recorded a PAT of Rs. 1.05 billion for the quarter with a corresponding YoY rise of 87.1%.  Group PAT for the quarter stood at Rs. 1.08 billion, against a corresponding quarterly PAT of Rs. 692 million in 2020/21. Primarily driven by the company's stellar performance, the group too recorded a PAT of Rs. 2.26 billion which was a YoY increase of 78.4%. Earnings Per Share (EPS) for the cumulative period at the group and company levels were recorded at Rs. 2.26 and Rs. 2.22 respectively. For the quarter the EPS were recorded at Rs. 1.07 and Rs. 1.05 respectively at group and company level. Key revenue components of the group included construction (50%), construction related materials (39%), followed by automobile (9%) and property (2%). With the exception of the automobile sector, which was hampered by Government-imposed vehicle import restrictions, revenue growth in other key sectors resulted in a steady margin improvement during the quarter. Core construction activities recorded a 59.2% YoY increase in revenue during the nine months amounting to Rs. 13.8 billion. Main construction projects that contributed to the company revenue during the period included the iRoads Project, Nittambuwa Pasyala Road Project, Elliot Place Housing Project, Stadiumgama Housing Project, Bloemendhal Housing Project, piling and earth works for the new terminal building and viaduct at Bandaranaike International Airport, Anuradhapura Water Supply Project and the Orugodawatta Housing Project. The company also recently commenced work on three flyovers at Gatambe, Kohuwela and Slave Island which would reduce the traffic congestion by catering to the insufficient road capacity in the respective areas. During the third quarter (Q3), the company was also awarded new projects including the design and construction of the Techno Park Development at Nuwaraeliya and Rs. 3.88 billion additional work package of the Central Expressway.   From the construction front, main highlight during the quarter was the awarding of a Rs. 43 billion contract to construct the East Container Terminal (ECT) of the Sri Lanka Ports Authority (SLPA) to the joint venture led by Access Engineering PLC along with its technical partner China Harbour Engineering (CHEC). This is the single biggest contract awarded to a Sri Lankan-led joint venture (JV) to date and will be a catalyst in creating future opportunities for overseas project execution in joint partnerships in major marine construction work, for the company.  The company’s current overseas project for the construction of a T-mall flyover and several foot bridges in Kenya is presently underway and is scheduled for completion in 2022/23. The project is carried out in joint partnership with Centunion S.A. of Spain with whom Access Engineering has executed several projects in Sri Lanka.  The company’s fully owned subsidiary Access Logistics Park Ekala (Pvt.) Ltd. was also awarded the contract to develop a logistics park at Ekala on a Build, Operate and Transfer (BOT) model in partnership with the Urban Development Authority (UDA). Construction of this warehousing complex, which is the first of its kind in Sri Lanka, will be carried out by Access Engineering PLC and its fully owned subsidiary Access Logistics Park Ekala (Pvt) Ltd.  With a topline of Rs. 10.7 billion, the construction material segment performed impressively during the nine months period owing to the sale of asphalt and ready-mix concrete. The Asian Development Bank (ADB) and World Bank (WB)-funded road development programmes and alternative road network expansion projects are driving up demand for construction materials. Expansion of the expressway network, including the Central and Ruwanpura Expressway developments and the elevated road network is expected to create more demand for construction material in future. With a strategically positioned plant network, Access Engineering is one of Sri Lanka’s largest asphalt concrete producers in the country serving a significant market segment today. The company also recently built more capacity in asphalt production with the commissioning of new plants in Ganewalpola and Mathugama, the latter being the largest asphalt manufacturing plant in the island. The company expects this growth momentum to continue into the future. The segment recorded Rs. 1.38 billion in operating profits and Rs. 989 million in PAT with corresponding growth rates of 118.6% and 56.9% YoY respectively. The company is one of the early movers in construction material production having ventured into this segment over a decade ago. Hence the company has sufficient capacity built to cater to the current growing demand with the optimum production formulas in place.   Import restrictions, which have been in place since the previous financial year, have stalled the performance of the automobile industry in general. This had a considerable influence on the selling of new vehicles, which is a core segment of Sathosa Motors PLC. Nevertheless the new ISUZU marine sector, workshop operations, and spare parts sales showed a marked improvement with the company winning the “One Star Prize” while being placed among the top 16th in the world at the Isuzu After Sales Awards 2021. Sathosa Motors PLC expanded their branch network to 10 branches by establishing three more branches during the year. The sector recorded an operating profit of Rs. 60.7 million during the nine months period with a marginal after tax loss of Rs. 4.6 million. Sathosa Motors PLC is the market leader in the new vehicle segment of Japanese light commercial vehicles.   During the period, the company’s two ongoing real estate projects fared well, with above industry average sales. Capital Heights Rajagiriya is expected to be handed over to fully paid owners by the end of the 2021/22 financial year, while Marina Square has completed construction of 35% of the apartment floor levels. Access Towers I and II, which offer approximately 325,000 square feet (Sq. Ft.) of Grade “A” office space had very high occupancy rates during the first nine months. The property sector recorded a segment profit of Rs. 410.3 million during the nine months which was a 23.9% growth over the corresponding period of the previous year. This segment will be further complemented at the completion of the multi storey car park featuring 285 parking bays and over 20,000 sq. ft. of office and commercial space. This is a BOT project with the UDA and upon completion the amalgamated development is expected to significantly enhance the urban landscape at Union Place WUS Logistics (Pvt) Ltd., which is fully owned by Access Engineering PLC is expected to generate revenue in 2022/23 with the leases expected to commence shortly.  Gross profit for the quarter was recorded at Rs. 1.79 billion and Rs. 1.36 billion at group and company level respectively with corresponding margins of 15.8% and 13.9%. As at 31 December 2021, the total asset base of the company amounted to Rs. 69.6 billion and Rs. 52.6 billion at group and company levels respectively. The equity attributed to the owners of the company was recorded at Rs. 25.3 billion at the group level while it was Rs. 23.9 billion at company level. Net asset per share of the group and company as at 31 December 2021 stood at Rs. 25.33 and Rs. 23.86 respectively. The company declared its first interim dividend for 2021/22 financial year amounting to Rs. 0.25 per share which was paid in full in September 2021. This is in addition to paying Rs. 500 million as dividends in June 2021.   The Board of Directors of Access Engineering PLC comprises of Chairman Sumal Perera, Executive Vice Chairman Christopher Joshua, Managing Director Rohana Fernando, Shevantha Mendis, Dharshana Munasinghe, Dilhan Perera, Shamal Perera, Ranjan Gomez, Prof. Malik Ranasinghe, Niroshan Gunaratne, and Dinesh Weerakkody.


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