Increased electricity prices depress Regnis sales

"We’re ready for growth when the market takes off’’: Hemaka

The Regnis annual report ran this photo to claim the company was as "solid as a rock".

 Regnis (Lanka) PLC, a member of the Singer group incorporated in 1987 to manufacture gas cookers, ceiling fans and refrigerators, has now completed 25 years of operation and become the number one white goods manufacturer in Sri Lanka.

The company’s Chairman, Mr. Hemaka Amarasuriya, has told shareholders in the recently released annual report that Regnis manufactures and assembles two of the best loved heritage brands in Sri Lanka marketplace – "Singer" and "Sisil" with Singer continuously reigning as number one in the A.C. Nielsen annual survey as the "Most Popular Brand" in the country.

Sisil had last year celebrated its 50th anniversary. The Singer and Sisil brands under, one umbrella, sells more refrigerators and sewing machines than any other single brand in the home market, Amarasuriya claimed.

"With electrification spreading rapidly across the nation, we anticipated growth in 2013. However a reason for markets not responding was the subsequent increase in tariffs for electricity," he noted.

"Customary sales spikes for holiday sales in April and December did not occur and slow holiday sales affected annual volumes."

He reported that refrigerator penetration levels in the country stood at around 60% and there was significant future market potential. Their plants were currently under deployed, he said.

The 7.2% GDP was not yet resonating in the market place and there was a possibility that drought conditions predicted locally may impact the country’s agriculture sector and spill over elsewhere.

"We can sum up the forecast by stating that our company is ready for growth when the market takes off, that is when consumer sentiment returns," Amarasuriya said.

He explained that to stay ahead in the market and ward off the present strong challenge offered by importers of Korean and Chinese brands, Regnis had to keep abreast of technology changes.

"With the introduction of the new series of Singer GEO Refrigerators, we have eliminated Hydrocarbon gases, replaced by energy efficient R600A gas and LED lighting. These models are substantially energy-efficient and built to last," he said.

Regnis had attempted to enter the lucrative air conditioner manufacture/assembly area but this has been aborted as a result of changes of tariffs and duties. With global warming and rising temperatures, it was inevitable that the AC market will grow exponentially in the second half of this decade, Amarasuriya said.

"Unfortunately there is a crusade today against ‘import substitution’ industries. We should have the foresight to change this nomenclature to ‘Value Added Industry,’ and recollect that the apparel industry which started as a so called ‘import substitution industry’ in the late fifties is today our leading exporter with over USD 4 billion in sales," he noted.

"With the development of the light metal and coil fabricating industry the government should encourage and support this product category (air conditioners) as a viable alternative (as they did successfully with washing machines some years back) to imports."

He reported that while revenue had remained flat in a year of sluggish market conditions, Regnis had grown its group net profit to Rs.107.8 million from Rs.87.3 million the previous year.

A rights issue of one new share for every six held in 2012 raised new capital, reduced finance cost and supported plant expansion. Tax benefits on expansion had also pushed down the company’s effective tax rate to 13.4% in 2013 from 19% in 2012 against a corporate tax rate of 28%.

CEO Asoka Pieris reported that their new generation of refrigerators introduced in the final quarter of 2012 used R600A. This gas does not result in global warming, has no impact on ozone depletion and is a gas used in developed nations and is also recommended for use in the future.

He reported that refrigerators and washing machine volumes had decreased 10% in the year under review with the production of high quality plastic chairs also down 12.5% due to lower demand in the market.

The group had discontinued assembly of refrigerators and air conditioners which came in semi knocked down form due to changes in tariff and tax structures and as a result volumes in these products had decreased.

Regnis has a stated capital of Rs.211.2 million, reserves of Rs.290.3 million and retained earnings of Rs.334.8 million at group level and Rs.272.4 million at company level in its books.

Total assets of the group stood at Rs.1.5 billion and total liabilities Rs.659.5 million while for the company total assets stood at Rs.1.4 billion and total liabilities Rs.616.8 million.

The net profit for the year was the highest in the decade and the company’s net assets per share had grown to Rs.74.22 from Rs.67.24 a year earlier.

The dividend per share for the year under review at Rs.2 per share was down from Rs.2.50 per share paid the previous year.

Singer (Sri Lanka) BV with 58.29% is the controlling shareholder followed by Almar Trading Company (2.31%) and Amana Bank (1.98%).

The directors of the company are: Messrs. Hemaka Amarasuriya (Chairman), Asoka Pieris (MD/CEO), S. Kelegama, G.J. Walker, V.G.K. Vidyaratne and P.L.D.C. Perera.

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Overseas Realty finally reaping

"harvest of our sacrifices’’ says Tao

Special dividend of one rupee a share on top or ordinary dividend

The World Trade Centre in Colombo has maintained an average occupancy of 98% throughout 2013 and achieved a 19% increase in average rental rates, its owning company, Overseas Realty (Ceylon) PLC has said in its annual report for the year ended December 31, 2013.

The report also said that the pre-tax profit, excluding fair value gains of Rs.1.7 billion, was the highest in the group’s history. Also, borrowings were down by Rs.279 million and the debt equity ratio was reduced to 8% from 11% the previous year.

The company’s Chairman, Mr. S.P. Tao, has told shareholders that he believed that Overseas Realty is "finally able to begin to reap the harvest of our considerable sacrifices.’’

He declared that the World Centre building was ``standing tall and proud with almost full occupancy by sterling tenants and most importantly, was free from any debt.’’

Tao also announced that the company’s Board of Directors have proposed a special dividend (Re.1/= per share) "to reward shareholders for their patience and confidence during the past several years."

In addition to the special dividend, a final dividend of Rs.0.45 per share has also been recommended by the directors and adopted by shareholders at an AGM last Thursday.

Tao also reported that they expected completion of the Phase 2 residential development at Havelock City by the middle of this year. This comprises two towers with 219 luxury apartments.

Marketing of Phase 3 of the Havelock City residential development has been launched along with the opening of the Club House in the complex last November.

"The future of the Sri Lankan economy is positive with the prevailing harmony and peace in the country. The property sector is a direct beneficiary of long term economic growth, stability and increased business confidence," Tao said.

"The standard of living in Sri Lanka is expected to improve with economic progression. Hence, as property developers and property managers the future of your company is positive."

Overseas Realty has a stated capital of Rs.10.19 billion, a revaluation reserve of Rs.238.9 million and group retained earnings of Rs.13.75 billion in its books. The company’s retained earnings are Rs.13.23 billion.

Total assets of the group run at Rs.30.9 million and the company at Rs.25 billion while total liabilities of the group are Rs.5.57 billion and of the company Rs.1.36 billion.

The Shing Kwan Investment Company with 53.75%, Unity Builders with 26.1% and the EPF with 5.03% are the major shareholders of the company.

Shing Kwan Investments (Singapore) Limited (2.56%) and Chipperfield Investments (0.91%) are subsidiaries of the parent company.

Among the public sector shareholders of overseas Realty are the People’s Bank, NSB, Bank of Ceylon and the Sri Lanka Insurance Corporation which are among the 20 top shareholders although their stakes in percentage terms is small. The public holds 16.64% of the issued shares.

Earnings per share during the year under review stood at

Rs.2.89 while net assets per share were up to Rs.28.66 from Rs.26.05 the previous year. The overseas Realty share traded at a high of Rs.21.30 and a low of Rs.13.90 against a trading range of Rs.15.60 to Rs.9.50 a year earlier.

The directors of the company are: Messrs. S.P. Tao (Chairman), H.Z. Cassim (Deputy Chairman), T.K. Bandaranayake, A.M. De S. Jayaratne, L.R. de Lanerolle, Rohini Nanayakkara, Mildred Tao Ong, Melville Pin, En Ping Ong and R. Jayamaha.

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Nestle Lanka’s state-of-the-art manufacturing facility in Kurunegala

90% of products marketed in SL made at Kurunegala factory

Nestle Lanka PLC has contributed almost Rs.5 billion to the rural economy last year via procurement of fresh milk and coconuts, Mr. Ganesan Ampalavanar, Managing Director of the company has told shareholders in the company’s annual report.

``We procured 62 million kilograms of local fresh milk from 18,000 Sri Lankan farmers for our dairy based products, marking our highest ever milk collection in Sri Lanka. We also procured 56 million coconuts for our Maggi Coconut Milk Powder," he said.

Nestle has posted net revenue of Rs.30.9 billion during the year, up from Rs.28.6 billion the previous year, and a profit after-tax of Rs.3.3 billion against the previous year’s Rs.2.93 billion with profit before-tax amounting to 13% of net revenue, up from 12% the previous year.

The company which earned Rs.61.51 per share had paid shareholders Rs.60 per share, up from Rs.54 the previous year, posting a dividend payout ratio of 98%.

The Nestle share which traded last year at a high of Rs.2,550 and a low of Rs.1,500 against a trading range of Rs.1,700 to Rs.870 the previous year last traded in 2013 at Rs.2,100.70, up from Rs.1,593.50 a year earlier.

The company’s Chairman, Mr. Etienne Benet, told shareholders in his annual review that Nestle had succeeded in delivering an organic growth of 8.2% together with improvements on its net profit and earnings per share.

"This performance reflects a focus both on our shorter-term performance – seeking to grow faster than the market – and on the longer term – making the right decisions to ensure sustainable profitable growth in the future," he said.

Benet noted that these results had been obtained in the backdrop of a general slowdown in the growth of food and beverage industry last year.

"Operating in a difficult environment required us to work smarter to maintain our edge in the market and deliver greater value for consumers and for you, our shareholders," Ampalavanar said.

"Our investments in 2013 – investments in capabilities and our brands – now provide the opportunity for us to

exploit that investment: to do more with what we have by further leveraging our assets, our scale and our capabilities and work smarter."

He said that investments this year will also extend to their state-of-the-art manufacturing facility in Kurunegala to build capacity and to continue upgrading with the latest technology.

Nestle manufactures 90% of its products sold in Sri Lanka locally at its multi-product factory in Kurunegala.

Nestle SA with 90.82% of the company is its dominant shareholder with only one other shareholder, Coupland Cardiff Funds PLC, owning over one percent. Coupland owns 1.59% of Nestle Lanka.

The directors of the company are: Messrs. Etienne Benet (Chairman), Ganesan Ampalavanar (MD), S. S. Islam, S. Duggal, Mahen Dayananda and R. Seevaratnam.

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Big shareholder exits Sunshine driving turnover

Indices down though gainers outpace losers

The Colombo bourse closed the week yesterday with both indices down on a turnover of Rs.906.3 million, down from the previous day’s Rs.1.1 billion, with the All Share Price Index losing 10.32 points (0.17%) and S&P SL20 declining 6.59 points (0.19%) with 107 gainers ahead of 91 losers while 125 counters closed flat.

"Over a third of the day’s turnover came off block trades in Sunshine Holdings where 11 million shares were crossed in two parcels of 550,000 shares each at a price of Rs.30 per share," a broker said. "These trades were worth Rs.330 million."

Apart from these crossings there were floor trades of over 0.9 million Sunshine which closed Rs.1.40 up at Rs.30.50 trading between Rs.29.80 and Rs.32 contributing Rs.28.4 million to turnover. Brokers said that there were large parcels done at the 30-rupe price among these trades.

"There was no word on the buyers and sellers of these shares although quantities held suggest just two possible sellers," a broker said.

Sampath Bank also saw a crossing of 150,000 shares at Rs.195 per share contributing Rs.29.3 million to turnover.

Royal Ceramics contributed the most to the day’s business volumes with slightly over 0.8 million shares done on the floor between Rs.98 and Rs.102 closing 10 cents up at Rs.100 contributing Rs.81.3 million to turnover. There were fairly large parcels among the quantities traded, brokers noted.

Other counters that showed volume included Commercial Bank and Aitken Spence both of which edged down from the previous close. ComBank (voting) closed 30 cents down at Rs.127 on nearly 0.3 million shares done between Rs.127 and Rs.128.50 generating a turnover of Rs.37 million while Spence closed 10 cents down at Rs.96.50 on over 0.3 million shares done between Rs.96.40 and Rs.97.80 contributing Rs.32.2 million.

"Trades in both these counters also saw large parcels," a broker said.

There was retail activity in Nation Lanka Finance and Softlogic Holdings with Nation Lanka closing 20 cent up at Rs.7.80 on over 3.1 million shares and Softlogic closing flat at Rs.11.80 on slightly over 1.5 million shares.

Commercial Bank (non-voting) closing 40 cents up at Rs.96.90 on 0.2 million shares, George Steuart Finance closing 26.60 up at Rs.80 on over 0.2 million shares, Lanka Tiles closing flat at Rs.92 on nearly 0.2 million shares and Central Finance closing Rs.7.40 up at Rs.192.90 on 70,969 shares were among the most trades stocks.
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Share of vehicles and parts in total imports accelerates in 2013

The expenditure on vehicles and parts imports by Sri Lanka recorded a decline of 17 percent in 2013 compared to 2012. However, ‘the share of imports of vehicles and parts in total imports increased to 11 percent in 2013, a 50 percent increase as against its share in 2012, which stood at 7 percent. Although imports have declined in value terms, the share has increased due to a fall in other imports, such as fuel, a Ceylon Chamber of Commerce (CCC) statistical analysis on local vehicle imports reveals.

The analysis was conducted by the CCC’s Economic Intelligence Unit and provides detaliled import statistics for the period 2005-2013 by vehicle category and country of origin, a CCC press release says. The content of the analysis provides value & direction of vehicle imports covering, tractors, passenger vehicles, vehicles for transport of goods, motorcycles, bicycles etc, the release adds.

 Some other principal findings contained in the anaysis are:

* The declining trend of expenditure on imports of vehicles and parts started from year 2012 with the tax hike introduced in March 2012.

* Vehicle imports to Sri Lanka continued to be dominated by India accounting 43% of total imported value and 72% of total imported quantity of vehicles and parts.

* Japan is the second largest supplier of vehicles and parts to Sri Lanka accounting 38% in terms of value and 20% in terms of quantity.

* Auto Trishaws (Diesel), Tractors, Passenger Vehicles, Vehicles for transport of goods, Motor Cycles and Concrete Mixers Lorries imports to the country has declined during 2013 compared to 2012 both in quantity and value terms while Crane Lorries and Bicycle imports increased in 2013 against 2012.

* Although the total number of passenger vehicles imports declined during 2013, Motor cars other than Auto- trishaws below 1000CC, Passenger vehicles between 1000CC and 3000CC and Passenger vehicles exceeding 3000CC imports to the country has increased during 2013 compared to 2012.
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