Saturday 24 May 2014

No new investments by Guardian Capital Partners despite better climate

Guardian Capital Partners PLC, a member of the Carsons group of companies, has reported what its Chairman, Mr. Israel Paulraj, called "an improvement in the private equity deal flow" during the year ended March 31, 2014 although none that had met the company’s investment criteria had materialized.

"Hence we did not make any investments during the year," Paulraj said with the company’s portfolio confined to Expolanka Holdings PLC (58% of the portfolio), Access Engineering PLC (34%) and Hsenid Business Solutions (Pvt) Ltd (8%) with a total value of Rs.523 million.

The chairman reported that one company in the portfolio had been divested with the other listed positions continuing to be held as the trading price of these companies on the Colombo Stock Exchange "continued to remain below our estimate of their intrinsic value."

The disposal during the year under review was of Textured Jersey Lanka PLC sold for Rs.20 million netting a gain of Rs.8.3 million, the report reveals.

Paulraj said that the year under review had seen the company generating an accounting profit of Rs.15.5 million and a comprehensive net income of Rs.99.6 million representing a significant turnaround relative to the previous year.

"The improvement was driven by favourable conditions at the CSE resulting in fair value gains as well as revenue growth and control in costs," he said.

"Growth in profits resulted in the NAV per share recording a 20.6% growth, increasing from Rs.18.70 to reach Rs.22.56 as at 31st March 2014."

He said that although the company had been challenged once again to make new investments, they continue to strongly believe in the important role that private equity can play helping promising businesses achieve rapid growth.

"Private equity is still a relatively new concept to Sri Lanka, as all stakeholders in the industry gain more experience and comfort in this form of investing, we could expect the level and quality of activity to improve over time," Paulraj said.

"Guardian Capital Partners hopes to play a key role in the development of this asset class."

He said the company will continue to focus on improving various facets of the business such as deal generation, deal evaluation and structuring and they continued to pursue opportunities to tie up with foreign private equity firms and foreign funding partners to expand assets under management and build their expertise.

He reported that the discrepancy between the actual net worth of the company and the price at which its share trades in the market had significantly narrowed relative to the previous year.

The net worth of the company as at March 31, 2014 stood at Rs.22.56 relative to a market price of Rs.25.30 per share.

The directors have once again recommended no dividend for the year under review stressing again to its shareholders that private equity investments are riskier, relatively illiquid in nature, carry a longer gestation period and therefore carry a higher risk rate than listed equity.

An operational review in the annual report said that the portfolio value of the company as at March 31,2014 stood at Rs.523 million recording a growth of 16% driven by fair value gains recorded by both Expolanka and Access whose share prices had increased.

The Expolanka share price had appreciated to Rs.8.70 from Rs.6.80 while Access closed at Rs.22.50, up from Rs.19.70 a year earlier.

Guardian Capital Partners funds are managed by Guardian Fund Management Limited, a fully owned subsidiary of the Ceylon Guardian Investment Trust PLC.

At present Guardian Fund Management manages the largest equity fund in the country and has built up its competencies with a field of portfolio management and research and support services.

Ceylon Guardian Investment Trust PLC is the dominant shareholder with 83.97% of the company followed by Lakeview Investments (2.39%) and Carson Cumberbatch (2.25%).

The company has a stated capital of Rs.513.7 million and revenue reserves of Rs.69.1 million in its books. Total assets ran at Rs.589 million and total liabilities Rs.6.2 million.

The directors of the company are: Messrs. I. Paulraj (Chairman), D.C.R. Gunawardena and S. Mahendrarajah.
www.island.lk

SEC to take earlier management of Touchwood to courts

The Securities & Exchange Commission (SEC) is reportedly preparing to take legal action against the earlier management of crisis torn Touchwood Investments PLC for frauds confirmed to have been committed.

The investigations carried out by the Securities & Exchange Commission together with the Criminal Investigation Department (CID) and Interpol into the frauds committed by the earlier management of Touchwood has revealed several facts.

Based on these facts, the SEC is to take legal action very soon against the earlier management of Touchwood Investments PLC.

The final verdict by courts on the petition by depositors of Touchwood, a reforestation company, to be liquidated is to be delivered on 5 June, 2014.
www.adaderana.lk

CTC seeks clarity on Court of Appeal’s Tobacco Packaging Regulation decision

Ceylon Tobacco Company Plc (CTC) said yesterday it has been compelled to seek clarity from the Supreme Court on the remainder of the regulations on tobacco products (labelling and packaging).

In a statement CTC said earlier this month the Court of Appeal gave its decision on the writ pending before it, relating to the legality of the Tobacco Products (Labelling & Packaging) Regulations published by the Minister of Health.

In its judgement the Court has dealt with the regulation requiring pictorial health warnings by directing the Ministry of Health to amend it by allocating between 50% to 60% for health warnings.

Such variation had been made on the basis of the Court recognising the significance of trademarks to consumers as well as manufacturers.

However, the judgement does not provide clear or adequate directions on the remaining requirements under the said regulation.

As a responsible corporate citizen, CTC is always compliant with all existing laws and regulations in the country and therefore under these circumstances is compelled to seek clarity from the Supreme Court on the remainder of the regulations.

Yesterday CTC has filed Special Leave to Appeal Application in the Supreme Court.
www.ft.lk