Wednesday 19 February 2014

PC House sustains losses, as EPF holds on to shares Company says fighting off moves to wind-up

By J. Kurukulasuriya

Ceylon FT: PC House PLC, whose group revenue for the nine months to 31 December 2013 was Rs 710 million – down 58% from the corresponding previous period – reported a group loss of Rs 700 million to 31 December 2013. Within the group the company made a loss of Rs 696 million for the nine-month period.

This is in spite of 'other income' increasing and reductions made in administrative, selling and distribution and finance costs, for the group. Group revenue for the last quarter fell by 51% to Rs 226 million. A loss of Rs 203 million was reported in the last quarter alone.

According to a CSE disclosure filed on 16 January, the company is 'vigorously resisting' the application by KYE Systems Corp Taiwan Republic of China, which has filed an application before the High Court, Western Province, to wind up PC House PLC. The case is to be heard on 21 February 2014, and PC House's lawyers were "communicating with the petitioner to amicably resolve the matter" and "to withdraw the action".

Several events were reported as occurring after the reporting date of 31 December 2013, requiring legal action by the company.

Hatton National Bank has issued a "Parate Notice" to PC House property situated at 451, Galle Road Colombo 3, and the board of directors has taken an injunction order against the same. People's Bank has issued a legal notice against PC House bank facility and the board has sought legal advice and action. The bank facilities provided to PC House by the National Development Bank, Commercial Bank, Hatton National Bank, DFCC Vardana Bank, Amana Bank and Union Bank have all gone overdue.

It was also reported that "some of the remaining branches of PC House have been closed due to cash flow issues and due to cost cutting initiatives."

The company also reported that "some statutory payments are due and the company has taken appropriate steps to negotiate with relevant authorities." The nature or extent of these payments was not specified.

The number of shares issued and fully paid of the company as at 31 December, 2013 is 343,400,001. The stated capital is Rs 1,144,666,675.

As at 31 December the group retained earnings were a negative value – accumulated losses of Rs 642 million.

The public hold 55% of the shares. The major shareholders, as reported by the company, are — Senthilverl who holds 11%, 'Silva' with 10%, National Development Bank PLC/S.H.M.Rishan (COLATER) with 5.8%, LB Finance PLC/S.H. Mohammed Rishan 3.9%.

The Employees Provident Fund, which is the seventh largest shareholder, holds 11,324,228 shares or 3.3% of the share capital. Director S. H. M. Rishan holds 19%, directly and indirectly.

During the last quarter the shares traded at a high of Rs 1 per share and low of 0.60 cents per share. The initial public offering of shares made to the public by the company in August 2010 was oversubscribed, and the stated capital was increased accordingly. At the time, the shares were sold at Rs 11 each.

The company has three subsidiaries – Procifinity Limited, Greenwich Lanka (Pvt) Limited and Infor Serve (Private) Limited. "Consequent to the 'recent financial issues,' the board of directors of PC House has taken a strategic decision of franchising its operations. Initially the new concept has been applied to the IT Hardware operations in Unity Plaza", the company reported.
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