Cargo Boat well on the road to recovery

Despite two bomb blows, the Cargo Boat Development Company Ltd. is well on the road to recovery with its building now almost fully occupied and, in the words of its chairman, "much needed cash flows and profit generated.''

The chairman, Mr. R.B. Thambiayah, has reported to shareholders that the rehabilitation work necessitated by damage suffered in the Central Bank blast was substantially completed by February 1997 and the financial year 1997/98 saw the leasing of almost all the floor area of the building.

"These cash flows greatly helped to overcome the serious debacle suffered as a consequence of the blast, and set the company firmly on the road to recovery. During the year, the company also obtained a `soft' loan of Rs. 16 million offered by the government and utilized these funds for the renovation work,'' Thambiayah said.

The second bomb in the Galadari hotel premises in October last year caused considerable damage to the windows of the building and an expenditure of Rs. 4.5 million was incurred on repairs. A substantial portion of that cost was reimbursed by the company's terrorism insurance policy.

"Therefore the financial impact of this blast on our company was not as detrimental as was the case with the earlier bomb blast,'' the chairman said.

The new leases permitted a "healthy turnover'' of Rs. 17.6 million during the year under review enabling an operating profit of Rs. 12.9 million. Interest and non-operating income of Rs. 3.3 million was also earned boosting the profit to Rs. 16.2 million.

Even after deducting the extraordinary item of the cost of rehabilitating the building after the Galadari blast, Cargo Boat had a plus position of Rs. 15.3 million for the year enabling it to wipe off retained losses of Rs. 9.6 million and carry forward Rs. 5.7 million unappropriated profits at the end of the year.

"This financial position indicates that the company has returned to a profitable state once again by the end of the financial year,'' Thambiayah said. But no dividend was being declared as substantial expenditure on renovation and repairs had been expended and there was a need to build up a reserve "to face the future with a greater degree of confidence.''

The company had continued to maintain and expand its investment portfolio in outside enterprises and the cost of such investments had grown to Rs. 23.1 million from Rs. 18.6 million. Although the share market was down today, as at March 31, 1998, it was heartening to note that the market value of the Cargo Boat Development portfolio exceeded cost by 19%. Investment income too ran at a health Rs. 2 million during the year under review, the chairman said.

The company has an issued capital of Rs. 34 million. Its directors are Messrs. R.B. Thambiayah, N.A.L. Cabraal, Daya Perera, Mrs. I.R. Rajiyah, Merril. J. Fernando and Mrs. N.A. Thambiayah.