Sri Lanka Kuruwita Textiles to go private after no turnaround

Feb 17, 2014 (LBO) - Sri Lanka's Kuruwita Textiles Plc, said it planned to de-list from the Colombo Stock Exchange amid continued losses, with the main shareholder offering 30 rupees per share.

The stock last traded at 20.90 rupees.

Kuruwita Textiles chairman Aslam Omar said in a stock exchange filing that over the past four years attempts were made to return to profitable but they were not successful.

Its net assets per share had fallen to 24.10 rupees by December 2013 from 43.09 in March 2011.

The main shareholder, Brandix Textile Holdings were offering 30 rupees per share to any minority shareholders who wanted to sell.

Sri Lanka policy rates unchanged

CBSL Press Release: Monetary Policy Review – February 2014

The effectiveness of the policy measures in place was visible as the economy showed signs of further improvement with interest rates adjusting downwards albeit with a lag, and private sector credit picking up during the last quarter of 2013.

In January 2014, inflation continued to remain at single digit levels for the 60th consecutive month, and is expected to remain comfortably at these levels throughout 2014 supported by well managed demand conditions and improved domestic supply. Headline inflation moderated further, recording 4.4 per cent (year-on-year) for January 2014 from 4.7 per cent (y-o-y) in December 2013. Core inflation showed some increase, recording 3.5 per cent (y-o-y) in January 2014.

Provisional data available for December 2013 showed that the growth of credit extended to the private sector by commercial banks bottomed out, with its year-on-year growth accelerating marginally to 7.5 per cent from 7.3 per cent in the previous month. The Quarterly Survey on Commercial Bank Loans and Advances depicted a robust growth in accommodation provided to Industry and Services sectors facilitating the growing economic activities. Accordingly, in absolute terms, outstanding loans and advances granted to Industry and Services sectors by commercial banks recorded a growth of Rs. 200 billion in 2013 compared to the increase of Rs. 167 billion in the previous year. However, agriculture and consumption related pawning advances declined. Going forward, private sector credit is expected to record a growth of around 16 per cent in 2014, with overall broad money (M2b) growth of around 14 per cent.

Market interest rates continued to adjust downwards, following the compression of the Standing Rate Corridor through the reduction of the Standing Lending Facility Rate by 50 basis points on 2nd January 2014 and also the increased levels of liquidity seen in the domestic money market due to a part of the proceeds of the Sovereign Bond issued in January being converted to local currency by the Government. Whilst deposit interest rates and rates on Government securities have indicated signs of stabilising at current levels, longer term lending rates, which displayed some downward adjustments in January, have space to decrease further.

In the meantime, both current and capital accounts of the Balance of Payments (BOP) improved in December 2013, resulting in a stable exchange rate and a favourable international reserve position. In December 2013, earnings from exports recorded a healthy growth; while a notable reduction in imports was witnessed, reducing the trade deficit considerably. Inflows, on account of the workers’ remittances and tourism, recorded the highest monthly values while inflows to the Financial Account increased moderately.

Going forward, the effect of the tapering of the US quantitative easing (QE) programme on the Sri Lanka economy is expected to be minimal as a result of the prudent policies that have consistently been in place to attract investors who have a serious and long term view of the Sri Lankan economy. That position has been confirmed by the fact that, so far during the year (up to 10 February 2014), even after the QE tapering has been in progress, the net inflows to the Sri Lankan bond and stock markets have amounted to US dollars 119 million, although many emerging economies have experienced the reverse phenomenon. Reflecting continued foreign currency inflows, the Central Bank has so far absorbed US dollars 58.7 million on a net basis from the domestic foreign exchange market during this period while the Rupee has remained stable, appreciating against the US dollar by 0.03 per cent so far during the year. Gross official reserves have also remained at comfortable levels, equivalent to around 5.3 months of imports.

Considering the above, the Monetary Board, at its meeting held on 13th February 2014, was of the view that the current monetary policy stance is appropriate, and therefore, decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank unchanged at their current levels of 6.50 per cent and 8.00 per cent, respectively.

At the same time, the Monetary Board took note of the fact that the overall capacity of the economy has increased substantially in recent times as a result of the Government’s mega infrastructure drive, and that such increased capacity of the economy, in turn, has significantly amplified the investment potential and opened up new avenues to be utilised by the private sector. In that background, the Monetary Board was of the view that it would now be appropriate to further encourage the utilisation of this investment potential, since such policies by the government would give rise to increased and accelerated sustainable economic growth in the period ahead.

The date for the release of the next regular statement on monetary policy would be announced in due course.

Harishchandra Mills group shows strong growth and reserves

By J. Kurukulasuriya

The Matara based Harishchandra Mills PLC whose main business is the manufacture and distribution of oils, food products and soaps, has reported a 37% jump in group net profits for the nine months ended 31 December 2013, to Rs 98 million as compared to the corresponding previous period, and within the group the company's profits were up 97%.

Group revenue increased by four per cent during the nine months. The group consists of Harishchandra Mills PLC and Harishchandra Mills (Distributors) Ltd. Segment wise the largest turnover came from food products 61%, while fuel and lubricants 26% and soap 12% also contributed to group turnover.

Relative to its scale of operations, the company has a very low share capital of less than Rs 10 million, which is relatively small compared to other listed companies on the Colombo Stock Exchange. The net asset value per share is relatively high at Rs 1,051 on 31 December 2013. Reserves amount to Rs 999 million, so that the ratio of share capital to reserves is a high 11,100%.

The stated capital is Rs 9,598,000 consisting of 959,800 ordinary shares. The shares traded at a price of between Rs 2,490 and Rs 1,925 each.

Of the three largest shareholders, Seylan Bank PLC holds 38% of the shares, while Upeka de Silva and Chitra Padmini Rodrigo each hold 14%. The percentage of shares held by the public is 14%. Of the directors, S. N. Samarasinghe, the managing director holds 3.99% of the shares.
www.ceylontoday.lk

C.W. Mackie PLC turnover falls but profits improve

By J. Kurukulasuriya

Ceylon FT: C. W. Mackie PLC, a major exporter of crepe, industrial crepe rubber, desiccated coconut and spices, and dealer in light industrial products, released its interim results to 31December 2013, showing a 10% rise in group profits for nine months to Rs 138 million, despite turnover falling by 10% to Rs 4,948 million, against the corresponding period.

Fifty-three per cent of the group's revenue came from consumer goods, 25% from commodity trading, and 15% from manufacture of rubber products. Consumer goods was also the main profit contributor, providing 63% of the profit. The company's finance income fell by more than Rs 27 million. Tax expenses fell by 19% to Rs 40 million.

The acid test ratio of the group accounts stood at 1.4, and quick assets ratio at 2.0. Gross profit ratio was 13%. The company has a stated capital of Rs 507 million. The stated capital of the company represents 35,988,556 ordinary shares with a public holding as at 31 December 2013 of 11.17%. In the three month period to 31 December the shares traded between Rs 65.40 and Rs 51.10.

Lankem Ceylon PLC is the single largest shareholder with 34%, and Seylan Bank PLC/Dr T. Senthilverl, who is also a director, holds 30%.The Employees Provident Fund is also a significant shareholder with 139,000 shares.
www.ceylontoday.lk

Aitken Spence Hotels shows profit growth despite off-season

By J. Kurukulasuriya

Ceylon FT: Aitken Spence Hotel Holdings Plc., a member of the Aitken Spence Group, reported a group profit of Rs 1,668 million, a 28% improvement on the corresponding previous period, interim results for the 9 months to 31 December 2013 show, even though six months of the period under review related to the off season of the tourism industry both in Sri Lanka and overseas.

Other comprehensive income showed a foreign currency translation difference of Rs 171 million as compared to a loss of Rs 59 million in the previous corresponding period. Consolidated net Revenue was up 11% to Rs 8,504 million, and came mainly from the South Asia sector of the company's hotels. The company has entered into a Shareholder Agreement with RIU Hotels of Spain to build a 500 rooms five-star luxury resort in Ahungalla costing approximately US$ 100 million. 'Other operating income' of the group was up 1,198% to Rs 80 million, while expenses did not show marked increases. Net finance income was up 384% to Rs 32 million, from a negative of Rs 11 million previously.

The stated Capital of the Group stood at Rs 3,554 million, while reserves and retained earnings were Rs 10,432 million, up by 11% since the last audited Balance Sheet date of 31 March 2013.

The share price fluctuated between a high of Rs 74.80 and low of Rs 62.10 during the quarter ended 31 December. The percentage of shares held by the public as at 31 December 2013 was 25.39%.
www.ceylontoday.lk

Aitken Spence Plc is the largest shareholder with 71% of the share capital, while the Employees Provident Fund holds nine per cent and Sri Lanka Insurance Corporation two per cent.

The Finance cuts losses

Ceylon FT: The Finance Company PLC (TFC) cut losses by 52% in the third quarter of the 2013/14 financial year, bringing down the losses by 10% for the nine months ending December 2013, interim financial results showed.

TFC reported a Rs 271.5 million loss during the third quarter, down 52% from a year ago.

Losses for the nine months ended December 2013 fell 10% from a year ago to Rs 1.09 billion. Group revenue grew 1% to Rs 1.85 billion during the nine-month period and net interest expenses grew 59% to Rs 978.2 million.

Total operating expenses of the group fell 15% to Rs 799.6 million.

Total assets of the company fell to Rs 17.85 billion as at end December 2013, down from Rs 18.5 billion as at end March 2013. Deposits grew to Rs 23.73 billion, up from Rs 22.77 billion.

As at end December 2013, the top five shareholders of the company were NDB Bank PLC/T Senthilverl (11.79%), Ceylinco Investment (11.04%), Seylan Bank/T Senthilverl (8.90%), EPF (8.90%), Bank of Ceylon/Ceybank Unit Trust (7.72%).

People's Bank has a 3.44% stake in the firm.
www.ceylontoday.lk

Revenue from liquor down but profits buoy Distilleries

Ceylon FT: Diversified Distilleries Company of Sri Lanka PLC saw profits grow 7.74% for the nine months ended December 2013, buoyed by earnings from the beverages sector despite the sector seeing a fall in revenue.

Group net profit grew 7.74% from a year ago to Rs 4.96 billion for the nine-month period.

Gross revenue fell 4.25% to 47.44 billion and net turnover grew a marginal 1.60% to Rs 21.84 billion.The beverages segment saw turnover fall 6.3% to Rs 39.8 billion, down from Rs 42.5 billion a year ago, but profits rose 8.1% to Rs 6.24 billion, up from Rs 5.77 billion a year ago.

The plantations sector saw turnover increase 15.9% to Rs 2.5 billion, up from Rs 2.15 billion a year ago, but profits fell 23.9% to Rs 98 million, down from Rs 128.9 million last year.

The telecommunications sector saw turnover fall 5.8% to Rs 2.89 billion, down from Rs 3.07 billion a year ago and reported a loss of Rs 300 million, up 107.8% from a Rs 144.4 million loss the previous year.

The diversified sector saw turnover increase 22.9% to Rs 2.22 billion, up from Rs 1.81 billion a year ago with profits increasing 197.5% to Rs 482.3 million, up from Rs 162.1 million a year ago.

Earnings per share increased to Rs 16.27 for the nine months ended December 2013, up from Rs 14.99 a year ago.
www.ceylontoday.lk