ASCOT soars on Rights, Warrants issue

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* Share price gains by 18% as company announces Rs. 75 m fund raiser for new hotel in Yala

Investors toasted ASCOT Holdings Plc’s move for a Rights cum Warrants issue to raise Rs. 75 million for a new hotel in Yala.

The Company’s share price gained by 18% or Rs 16.50 to close at Rs. 106.40 when trading was allowed after a brief halt following the announcement. Intra-day highest was Rs. 112.30 as 273,450 shares changed hands via 744 trades reflecting heavy retail interest.

ASOCT Board has resolved to have a Rights Issue on the basis of one new share for every existing two held at Rs. 12.50 each.

The price was a heavy discount to the market. Book value of ASCOT is Rs. 70 at Group level and Rs. 66.42 at Company level. ASCOT shares saw its share price peak to a highest of Rs.169 and to a low of Rs. 93.50 before closing at Rs. 114.

By issuance of 3.99 million shares the Company will be raising Rs. 50 million. The Company also announced the issuance of 998,188 warrants at an exercise price of Rs. 25 each. One year warrants will be one for every four subscribed rights.

Funds raised via the two moves subject to regulatory and shareholder approval will be used for a hotel project in Yala. Details of the project however weren’t disclosed.

The move signals diversification by ASOCT into tourism sector which has boomed following the end of the conflict in May 2009. The Company specialises in cement-based products (in 2013 it acquired Amtrad Ltd.), quarries and property development and real estate business.

In the year ended 31 March 2014, ASCOT posted a consolidated net profit of Rs. 23.3 million, up by 167% over the previous year. Net profit attributable to equity holders of parent was Rs. 18 million, up from Rs. 11 million. Group revenue rose by 138% to Rs. 345 million. Revenue was boosted due to Rs. 103 million in rental income (up from Rs. 88 million in FY13), sale of stone chips Rs. 118 million (up from Rs. 46 million in FY13) and sale of cement pavers Rs. 122 million (up from Rs. 9.6 million in FY13).

At Company level, FY14 was a loss at Rs. 5 million as against a profit of Rs. 19.5 million. For the fourth quarter both the Group and Company reported small losses.

Asix Investments of Rohan Iriyagolle holds a 26% stake whilst high net worth investor Nimal Perera directly holds 20% and a related party St. Louis Capital holds 21.4%. Public holding of the Company is 63%.

ASCOT appoints Mohan as new Chairman ASCOT Holdings PLC yesterday announced the appointment of Mohan Ratnayake as its new Chairman. He joined the ASCOT Board in 2012/13 financial year. He holds an MBA in Finance and is a Fellow Member of the Institute of Chartered Management Accountants UK and the Society of Certified Management Accountants. Ratnayake has expertise in the fields of tea exports, tea plantations, telecommunications (SLT) and the motor industry (Colonial Motors). He was the Chairman of the Committee to float the first internationally listed Bond ($ 100 million) in Sri Lanka for the expansion of Sri Lanka Telecom and also to obtain an international rating for SLT for the bond to be listed on the Singapore Stock Exchange.