Sunday 23 February 2014

Vidullanka profits double for nine months ended in FY 2013/14

Vidullanka PLC’s group profit has doubled for the nine months ended for the FY 2013/14 in comparison to the nine month period of the last financial year. The profit after tax of Rs. 198 million is a staggering 138% increase from the last year. The Group revenue for the period topped Rs. 464.5 million, the company disclosed in the quarterly report filed to Colombo Stock Exchange.

Earnings per share for the group for the quarter ended is 9 cents earned through the 25% increase in quarterly revenue. The earnings per share for the last 3 quarters is 41 cents which is twice the EPS reported for the last financial year. The Group’s energy sales increased by 95.7% and the revenue from construction from project management rose by 34%.

RAM Ratings recently reaffirmed Vidullanka PLCs credit ratings to A- with stable long term outlook. During the period under review company invested Rs. 80.1 million in development of new projects in order to venture into more renewable power projects in Sri Lanka and Overseas.

The group has tremendous opportunity to grow in the backdrop of domestic demand for power is expected to grow at about 7% per annum in the next few years in line with robust economic growth, primarily supported by developing infrastructure facilities. Vidullanka, as a renewable energy producer is well positioned to benefit from this economic condition.

The Group financial statements indicate a promising future; especially with the commissioning of the 1.3 MW Wembiyagoda Mini Hydro Power Project (MHPP) to the national grid in March 2013 has made a significant boost in the profitability of the Group, along with the commissioning of the 2.5MW Madugeta MHPP in November. It is also seeking to complete the construction of the 4MW Lower Kothmale MHPP in 2014, which would further increase the bottom line of the Group financial statements in the upcoming financial year.

More recently Vidullanka PLC has commenced the construction of Rideepana MHPP, a 1.75 MW mini hydro power plant, located in the Badulla district through the project company Rideepana Hydro Power (Pvt) Ltd, a fully owned subsidiary of Vidullanka PLC. The total project cost is estimated to be Rs. 440 million and it is expected add 6.0 GWh of environmental friendly electricity, upon commissioning the power plant.

The company paid an interim dividend of 7.5 cents per share on 27 December 2013 following the successful operations in the financial year. The company’s shares closed at Rs. 3.50 as at 31 December 2013 at an annualised PE ratio of 6.4 times.
www.ft.lk

Swarna Maloney gets in touch with some Touchwood depositors

By Duruthu Edirimuni Chandrasekera
‘Wanted-by-the-authorities’ Swarna Maloney, former Group Managing Director of troubled forestry firm Touchwood Holdings’, has got in touch with some distraught depositors over the last two weeks.

“She called some of us from (she said) Cambodia and assured us that she will pay the due monies by months’ end,” a depositor who wished to be anonymous told the Business Times. He added that her plan is to raise money by selling Touchwood’s Plantations in Cambodia.

He also said that if she doesn’t return their dues, some of them will take ‘drastic’ measures.

Ms. Maloney and her husband and founder Chairman of Touchwood Holdings, Roscoe Maloney, fled the country last year when it was alleged that they had defrauded the company’s subsidiary Touchwood Private (Ltd)’s depositors.

Another subsidiary, Touchwood Investments PLC’s (TIP) newly-appointed Chairman Lanka Wijendra Kiwlegedara told shareholders at the annual general meeting held last September that he will secure over Rs.3 billion or US $ 21 million within the next few months to the company from various sources including from one of his other business’ that has a footing in the gem and jewellery and from his privately-known investors in Singapore, and Thailand.

The Securities and Exchange Commission (SEC) is pursuing the Maloneys on numerous fraud probes, according to SEC officials. “These investigations are ongoing,” Dhammika Perera, Officer-in-Charge/Deputy Director General of the SEC confirmed to the Business Times.
http://www.sundaytimes.lk/140223/business-times/swarna-maloney-gets-in-touch-with-some-touchwood-depositors-86324.html

Most finance Cos. racing for int’l funding partnerships to be better ‘brides’ for mergers

By Duruthu Edirimuni Chandrasekera

Most small finance companies, now on a consolidation drive, are scurrying to strike collaborations with international funding lines and investors in a bid to be attractive in the negotiation process when merging with others, industry sources said.

“Most don’t want to sell, but are eyeing opportunities to merge with strategic partners. In order to do that they need to be attractive to the bigger counterparts with whom they want to merge with. They cannot strengthen their assets ‘in a hurry’, but they can increase their capital base with private equity investors and funding lines,” a senior finance company CEO told the Business Times.

Industry sources said that while three firms have already sourced such funding, some small firms are also in discussion with international agencies for similar partnerships. Commercial Credit and Finance PLC, with an asset base of Rs. 24.3 billion as at December 31, 2013 is one of the recent examples which followed this route. They announced last week that frontier markets private equity investor, Creation Investments Capital Management LLC through its wholly owned subsidiary, Creation Investments Sri Lanka LLC has agreed to invest Rs. 1.68 billion (US$12.8 million equivalent) into Commercial Credit and Finance PLC (CCF). The transaction will involve the issuance of 80 million new shares for a consideration of Rs. 1.68 billion or approximately 25.15 per cent of CCF. The transaction will be completed subject to shareholder approval.

Senkadagala Finance last Tuesday also said that the International Finance Corporation has agreed to invest some US$ 7 million (as a loan facility) to support the growth of micro and small businesses across the country.

Nation Lanka Finance Plc, which is getting Rs. 700 million rupee equity investment from Global Emerging Markets (GEM) intends to boost its capital in a few months. GEM also will have the chance to buy unlisted warrants at Rs. 9.90 over the next two to four years, which could bring in another Rs. 674 million rupees, according to company officials.

In line with the recent budget proposal where small finance companies are to be merged reducing the number of finance companies to 20 from a current 58 and strengthening at least five Sri Lankan banks to double their assets to Rs. 1 trillion from a current Rs. 500 billion, most large finance firms will be discussing with their smaller counterparts to acquire them. The proposals are due by next month end.

This week some firms which have less than Rs. 8 billion in assets will be meeting the Central Bank team with their suggestions and for further discussions on this, a finance company CEO said.
http://www.sundaytimes.lk/140223/business-times/most-finance-cos-racing-for-intl-funding-partnerships-to-be-better-brides-for-mergers-86267.html

NBFI List

Central Bank of Sri Lanka (CBSL) in their proposed consolidation of the country’s non banking financial institutions (NBFIs) have categorized those as “A”, “B” and “C” respectively.

Category A comprises NBFIs with assets of more than Rs. eight billion, core capital of more than Rs. one billion and a “high degree of compliance with direction issued by Central Bank of Sri Lanka.” 
Those comprise 19 individual companies and “group wise companies”:13.

Category B comprises registered finance companies (RFCs) or specialized leasing companies (SLCs) or groups of RFCs and/or SLCs that do not fulfil one or more of the criteria of Category A. 
Those comprise 38 individual companies and 35 group wise companies.

Category C: NBFIs where business is at a standstill: One.

Listed category A companies (14): 
1. Alliance Finance Co plc (per: 5.0 and pbv: 0.8); 
2. Bartleet Finance plc (per and pbv are not applicable); 
3. Central Finance co. plc (per: 6.2 and pbv: 1.1); 
4. Citizens Development Business Finance plc (per: 4.3 and pbv: 0.7); 
5. Commercial Credit and Finance plc (per: 4.1 and pbv: 1.9); 
6. Commercial Leasing and Finance plc (per: 26 and pbv: 3.0); 
7. LB Finance plc (per: 5.4 and pbv: 1.2); 
8. Lanka Orix Finance plc (per: 13.2 and pbv: 1.7); 
9. Mercantile Investments & Finance plc (per: 10.6 and pbv: 1.1); 
10. People’s Leasing & Finance plc (per: 7.0 and pbv: 1.3); 
11. Senkadagala Finance plc (per: 5.3 and pbv: 1.4); 
12. Softlogic Finance plc (per: 6.7 and pbv: 0.9); 
13. The Finance Co. plc (per: Negative 0.9 and pbv: negative 0.2) and 
14. Vallibel Finance plc (per: 4.1 and pbv: 1.1).

Listed category B companies (20): 
1. Abans Finance plc (per: 79.8 and pbv: 2.6); 
2. AMW Capital Leasing and Finance plc (per: 3.3 and pbv: 0.5); 
3. Arpico Finance Co. plc (per: 7.3 and pbv: 0.9); 
4. Asia Asset Finance plc (per: 17.0 and pbv: 1.4); 
5. Associated Motor Finance Co. plc (per: 12 and pbv: 2.6); 
6. Bimputh Finance plc (per: 20.2 and pbv: 2.9); 
7. Capital Alliance Finance plc (per: Negative 52 and pbv: 1.9); 
8. Chilaw Finance plc (per: 16.5 and pbv: 1.5); 
9. George Steuart Finance plc (per: Negative 231.5 and pbv: 27.3); 
10. Merchant Bank of Sri Lanka plc (per: Negative 29.6 and pbv: 0.6); 
11. Multi Finance plc (per: Negative 2.8 and pbv: 1.3); 
12. Nanda Investments and Finance plc (per: 27.1 and pbv: 1.3); 
13. Nation Lanka Finance plc (per: 49.1 and pbv: 9.0); 
14. Orient Finance plc (per: 16.4 and pbv: 1.9); 
15. People’s Merchant Finance plc (per: Negative 6.4 and pbv: 0.9); 
16. Singer Finance (Lanka) plc: (per: 7.9 and pbv: 1.0); 
17. Sinhaputhra Finance plc (per: 11.0 and pbv: 0.9); 
18. SMB Leasing plc (per: 19.9 and pbv: 1.9); 
19. Swarnamahal Financial Services plc (per: Negative 1.9 and pbv: Negative 7.5) and 
20. Trade Finance & Investments plc (per: 6.5 and pbv: 1.4). 
(Source: Shiluka Goonewardene, KPMG, Principal, Transactions & Restructuring).
http://www.thesundayleader.lk/2014/02/23/nbfi-list/

Nine-member audit panel to submit report on 38 NBFIs

By Azhar Razak

Sri Lanka’s financial sector regulator, the Central Bank of Sri Lanka (CBSL) has appointed its nine-member accredited panel of auditors with the responsibility of performing a valuation, information memorandum and vendor due diligence on the 38 Non-Bank Financial Institutions (NBFI), an Assistant Governor of CBSL said last week. According to C. J. P Siriwardene, the panel of auditors have been tasked to submit a report to the CBSL by mid- March 2014 so that it could help determine pricing for potential buyers from Category A (Banks and the larger NBFIs).

“Since we will be paying for the services of the auditors, we will keep the report with us but will share the information with potential buyers on request,” Siriwardena said.
The CBSL has given a time period of until March 31, 2014 for local banks and category A NBFIs to identify partners of their choice from within the category B NBFI for such mergers/absorptions.

The consolidation approach the Central Bank recently put forward has directed 19 Category A Non Bank Financial Institutions (NBFIs) to discuss with 38 Category B NBFIs and identify merger partners and agree terms and conditions for Mergers/Absorption. The plan also says that all 38 Category B NBFIs has to merge either with local banks or merge amongst themselves so that they fulfill conditions of category A NBFIs.

According to the CBSL, Category A NBFIs are defined as those with assets more than Rs.8 billion, core capital more than Rs.1bn and those who have a high degree of compliance issued by CBSL. Those in the category B have been defined as those Licensed Finance Companies (LFC) or Specialised Leasing Companies (SLC) or groups of LFCs and/or SLCs that do not fulfill one or more of the criteria of the category A.
http://www.nation.lk/edition/biz-news

Eran wants probe on CB over CIFL

By Maneshka Borham

Opposition Member of Parliament Eran Wickramaratne recently called on the government to investigate the banking regulator, the Central Bank over its failure to take necessary action as there had been reports that the regulator had prior knowledge of the vulnerability of the now troubled Central Investments and Finance Plc (CIFL).

“CIFL, as it is shown in a Central Bank internal audit report, was in trouble two years prior to the revelations. The fact was concealed for unknown reasons or for reasons better known to the Central Bank. This needs to be probed as to why the Central Bank did not act at once these details were revealed,” the National List UNP MP, who was an Ex-banker himself, charged. He noted that the courts should inquire in to the fact that if Central Bank was privy to the fraudulent acts committed at CIFL.

Agreeing it was possible that the facts were concealed to protect the industry, as the regulator had to act with the interests of parties at large, the MP, however, said that the fact then has to be proven that it was done with good intention which should be ascertained by an independent investigation. “We cannot let the regulator get away by shirking their responsibilities as they are not above the law,” he stated adding that post-2013 debacle there is information of more finance companies that are financially vulnerable and it should be resolved by not concealing facts but also in a manner so as to not harm the industry.
http://www.nation.lk/edition/biz-news