Five state firms SUFFER Rs. 56b losses

Five of Sri Lanka’s biggest State Owned Enterprises (SOE) the Ceylon Electricity Board (CEB), Sri Lanka Transport Board (SLTB), Sri Lanka Railways (SLR), the Department of Posts (DOP), and SriLankan Airlines (SLA) have suffered a cumulative loss of a staggering Rs. 56.6 billion, the Central Bank’s 2014 Annual Report released last week disclosed. However, the financial position of CPC witnessed a turnaround during the year reporting a profit of Rs. 1.7 billion in 2014 compared to Rs.7.9bn loss suffered in 2013.

Accordingly, CEB recorded an operating loss of Rs. 11.7 billion in 2014 in contrast to an operating profit of Rs. 24.6 billion in 2013.

SriLankan Airlines had racked up a 29.0 billion rupee operating loss in 2014, taking total operating losses since parting of ways with Emirates Airlines to 122 billion rupees.

The Central Bank’s annual report for 2014 says the airline’s revenues rose 5.5 percent to115.5 billion rupees but operating expenses rose 4.6 percent to 144.4 billion rupees.

Sri Lanka Railways meanwhile reported an operational loss of Rs. 11 billion last year in comparison to Rs. 5.2 in 2013. Accordingly, the total revenue of SLR increased by 9 percent to Rs. 5.9 billion while recurrent expenditure increased by 60 percent to Rs. 16.9 billion.

Sri Lanka Transport Board (SLTB) during 2014 reported an operating loss of Rs. 1.9 billion compared to a loss of Rs. 3.5 in 2013. Accordingly, the total revenue of SLTB increased by 11.5 percent to Rs. 33.7 billion. However, operating expenditure also increased by 5.5 per cent to Rs. 35.5 billion.

In addition, the operating loss of the Department of Posts (DOP) increased by 4.4 per cent to Rs. 3 billion in 2014, compared to the loss of Rs. 2.9 billion in 2013.

However, three institutions namely the Ceylon Petroleum Corporation (CPC), Sri Lanka Ports Authority (SLPA) and National Water Supply and Drainage Board (NWSDB) recorded profits amounting to Rs. 13.1 billion.

SLPA meanwhile recorded an operating profit of Rs. 8.9 billion in 2014 compared to Rs. 2.4 billion in 2013. The NWSDB in the meantime recorded a profit of Rs. 2.5 billion compared to its profit of Rs. 1.9 billion in 2013.

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Vasu, Wimal go to Bribery Commission against CBK over JKH land deal

Democratic Left Front (DLF) General Secretary Vasudeva Nanayakkara and National Freedom Front (NFF) Leader Wimal Weerawansa yesterday filed a complaint at the Commission to Investigate Allegations of Bribery or Corruption over a case against former President Chandrika Bandaranaike Kumaratunga which has been lying idle at the commission for years pending investigation.

The complaint against Kumaratunga was initially lodged in 2007 concerning an incident where John Keells Holdings Ltd. was awarded 10 acres of land inside the Colombo Harbour in breach of due process. According to Nanayakkara, the Supreme Court considered the Fundamental Rights petition filed by Nanayakkara against Kumaratunga in 2007 and ordered the Bribery Commission, Criminal Investigation Department (CID) and the Attorney General to investigate the incident further.

However, addressing the media yesterday outside the Bribery Commission, Nanayakkara claimed that the Bribery Commission and the CID had failed to investigate the issue for seven years or to take any steps regarding this matter.

“My lawyers sent several letters to the Bribery Commission inquiring about the imminent investigations yet they didn’t receive any response from the commission. Therefore we came to the Bribery Commission today to remind the authorities about the pending investigation which was ordered by the Supreme Court that the Bribery Commission has failed to conduct even though seven long years have passed since the order was given. 

Nevertheless, we are still waiting for justice,” Nanayakkara said.

Meanwhile, Weerawansa, who also accompanied Nanayakkara to the commission, said that the Government should give the same amount of attention to this particular case too that it was presently giving to other criminal investigations.

“We are challenging the Government to carry out investigations regarding this case. However, we will wait and watch whether this Government has the ability to carry out this investigation or not,” Weerawansa stated.
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Sri Lankan shares hit over 8-wk closing high on earnings hope

(Reuters) - Sri Lankan shares edged up to their highest closing level in more than eight weeks on Thursday, as retail investors picked up risky assets in moderate volumes on hopes companies would report better earnings and as low rates perked up sentiment.

The passage of constitutional reforms that would help establish independent bodies for good governance also buoyed the market, analysts said, adding however concerns over political stability remained.

Sri Lanka's parliament passed reforms Tuesday to reduce some of the president's powers, although they were far fewer than President Maithripala Sirisena had promised.

The main stock index edged up 0.08 percent to 7,179, its highest closing level since March 6. It has gained 4 percent since the central bank cut key rates on April 15, while yields on t-bills have fallen 41-51 basis points since then.

The index gained 5.26 percent in April.

"We saw a bit of activity taking place with select buying on fundamentally sound stocks on earning expectations," said Dimantha Mathew, research manager at First Capital Equities (Pvt) Ltd.

Turnover stood at 801.8 million rupees ($6.02 million), compared with this year's daily average of around 1.06 billion rupees.

The market saw net foreign outflow of 65 million rupees worth of shares on Thursday. Foreign investors have bought net 3.74 billion rupees worth shares so far this year.

Analysts said the market could be dull until the perception of political uncertainty is addressed and many investors would be in a wait-and-watch mode before the parliamentary elections.

Shares of leading mobile phone operator Dialog Axiata Plc rose 1.77 percent, while Finlays Colombo Plc jumped 9.41 percent.

The index lost 6.6 percent last month, its biggest monthly drop since October 2012, as investors sold holdings to settle margin trades amid concerns about political stability and a rise in interest rates.

Sri Lanka's stock and foreign exchange markets will be closed on Friday for May Day and on Monday for a Buddhist religious holiday. Normal trading will resume on Tuesday.

($1 = 133.1000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Biju Dwarakanath)

Sri Lanka to get US$400mn from RBI tomorrow

COLOMBO (EconomyNext) – Sri Lanka’s Central Bank said it will get the first US 400 million dollar tranche in a currency swap with the Reserve Bank of India on Thursday, 30th April, 2015.

Another 1.1 billion US dollars has been approved by the Union Cabinet of the Indian government for augmenting the currency swap arrangement between the two Central Banks. 

“This additional amount is expected to be made available in due course,” a central bank statement said.

The currency swap facility was agreed on during the visit of Indian prime Minister Narendra Modi to Sri Lanka on 14th March, 2015.

The funds are from Reserve Bank of India’s financing facility for South Asian Association for Regional
Cooperation (SAARC) member country Central Banks.

Textured Jersey Lanka PLC recorded its highest ever annual net profit of Rs.1.3bn for the FY 2014/15

Textured Jersey Lanka PLC (TJL) recorded its highest ever annual net profit of Rs.1.3bn for the year ended 31st March 2015, an increase of 16% year on year. This result was achieved on the back of Rs. 512mn net profit for the quarter ended 31st March 2015, representing an impressive 46% year on year increase. The strong quarterly performance enabled the company to conclude the year with a record profit despite the slowdown in sales experienced in the early part of the year, attributed to unusual and extreme weather conditions in the United States. 

With demand from its main customers back on track, TJL reported a notable Rs.3.8bn in sales during 4Q FY2014/15, up 16% year on year. Improved demand conditions coupled with recently added capacity enabled TJL to optimize capacity utilisation and product mix to achieve gross profit margins of 15% for 4Q FY 2014/15 compared to 12% during the same quarter last year. This in turn allowed the company to increase its gross profit by 45% to Rs.583mn for 4Q FY2014/15 and drive its annual gross profit to Rs.1.6bn, up 11% compared to the year before. 

The strong performance at gross profit level allowed TJL to post an operating profit of approximately Rs.476mn for 4Q FY 2014/15, recording 52% year on year growth at the operating profit level. TJL’s annual operating profit for the year ended 31st March 2015 came in at Rs.1.2bn, 14% higher year on year. 

TJL continued to maintain its near debt-free balance sheet as at 31st March 2015, with a net cash position of Rs.1.9bn. Lower interest rates, combined with a marginally lower cash position versus a year before led to net finance income dropping to Rs.14mn for 4Q FY2014/15. The net finance income for the year ended 31st March 2015 came in at Rs.58mn, down 36% compared to the year before.

Despite the reduction in finance income, the quarter concluded with a net profit of Rs.512mn growing 46% year on year. The combined effect of added capacity and strong demand recovery in the latter part of the financial year coupled with solid cost and productivity management enabled TJL to report a record annual net profit of Rs.1.3bn for FY2014/15 despite challenges. 

Additionally, during the quarter TJL engaged Ernst & Young to carry out an independent valuation of Ocean India Private Limited and Quenby Lanka Prints Private Limited as a part of the initial discussions to further its acquisition plans. Additional updates will be provided on the outcome of these discussions in due course. 

Looking towards the future; recently enhanced capacity and strategic investments coming into fruition will place TJL on a solid growth platform for the coming year. As regional expansion plans move forward to secure TJL’s long term growth trajectory, the prospects of GSP Plus in the future would further augment TJL’s current momentum. 

Sri Lankan shares at over 8-wk closing high after reforms approved

(Reuters) - Sri Lankan shares edged up to their highest close in more than eight weeks on Wednesday, a day after the country's parliament overwhelmingly approved some diluted reforms, but concerns over political stability remained.

The parliament passed the reforms on Tuesday reducing some of the president's powers, in a move that did not go as far as President Maithripala Sirisena had promised but is nevertheless seen as a victory for the leader.

The main stock index ended up 0.55 percent at 7,173.37, its highest close since March 6. It has gained 3.95 percent since the central bank cut key rates on April 15, while yields on t-bills have fallen 41-51 basis points since then.

"Market is up on positive sentiment but people will be a little wary till the elections are over," said Reshan Kurukulasuriya, chief operating officer of Richard Pieris Securities (Pvt) Ltd.

The day's turnover was 974.7 million rupees ($7.33 million), compared with this year's daily average of around 1.06 billion rupees.

The market saw a net foreign inflow of 2.73 million rupees worth of shares on Wednesday, extending the net foreign inflow so far this year to 3.81 billion rupees.

Analysts said the market could be dull until the perception of political uncertainty is addressed and many investors were in a wait-and-watch mode before the parliamentary elections.

Shares of Carson Cumberbatch Plc jumped 4.17 percent, while C T Holdings Plc rose 0.08 percent.

Some analysts said the markets would stay volatile until parliamentary elections.

Investors have been cautious due to political uncertainty as Prime Minister Ranil Wickremesinghe's party does not have a majority in parliament and Sirisena promised to dissolve parliament after the end of his 100-day programme on April 23.

The index lost 6.6 percent last month, its biggest monthly drop since October 2012, as investors sold holdings to settle margin trades amid concerns about political stability and a rise in interest rates. 

($1 = 132.9000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil Nair)

Kalpitiya Beach Resort requested to postpone EGM

The Securities and Exchange Commission of Sri Lanka (SEC) yesterday requested Kalpitiya Beach Resort PLC to postpone the scheduled Extraordinary General Meeting (which was scheduled by the said Company in response to a Directive of the SEC) by another month from the date of scheduled EGM.   This was to enable the company to come up with a precise direction on the future course of action on how the company proposes to safeguard the minority shareholder interests prejudiced by the delays caused in constructing the resort hotel, Citrus Kalpitiya.

The SEC made this request from the company after perusing the circular issued to the shareholders of Kalpitiya Beach Resort PLC, in consequence of the above said directive of the SEC as the SEC was of the opinion that the alternate courses of action stated in the circular to the shareholders lacked specific direction with regard to providing adequate recourse to the minority shareholders in respect of their investment.

The company by way of a prospectus issued to the public raised approximately Rupees two hundred and eighty three million (Rs. 283 million) to part finance the construction of a resort hotel within the stipulated period of twenty four to thirty months.   The company gave this undertaking in the prospectus issued to the public on or about December 2011.   The company has been requested by the SEC that in the event the company is unable to rectify the issues in respect of the construction of the hotel, that it is required to propose a viable alternate scheme to redress the shareholders who have been prejudiced by the failure of the company to carry out its objectives as stated in the prospectus. (SEC)