Sri Lanka, Singapore ink deal to develop port city of Trincomalee

Sri Lanka’s government and Singapore infrastructure consultancy Surbana Jurong have signed a Memorandum of Understanding (MOU) to develop the port city of Trincomalee.

It will see Surbana detailing a long-term development plan for the Trincomalee metropolitan area and surrounding cities in the island's Eastern Province.

Singapore's Minister for Trade and Industry (Industry) S Iswaran and Sri Lanka's Minister for Development Strategies and International Trade Malik Samarawickrama on Thursday (Jun 2) witnessed the signing of the MOU in Colombo.

Progress in the Eastern Province was hampered over the years by the civil war which ended in 2009. The state government is now focused on its development.

"We in the Eastern Province would certainly be willing to play the role of a launching pad for our two countries to achieve a higher level of economic achievement for the benefit of the people of our two countries," said Mr Nazeer Ahamed, chief minister of the Eastern Province in Sri Lanka.

While in Trincomalee, Mr Iswaran also visited a plant run by Singapore's Prima Group - one of the first Singapore companies to do business in Sri Lanka.

"I was personally struck by first, how long the business has been in operation here,” he said. “And secondly, the close relationship that exists between the government, the people of this region and the Prima flour business. This is the kind of example we'd like to emulate."

Mr Iswaran is in Sri Lanka for a three-day working trip.
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Sri Lanka tea crops reduced by floods, landslides

ECONOMYNEXT – Although volumes at Colombo’s tea auction have been high so far, heavy rains that caused floods and landslides in Sri Lanka recently have reduced crops that will arrive at the sale in future, brokers said.

“Crop harvests have reduced in most planting districts during that past week,” brokers John Keells Ltd. said in a report.

Several earth slips in the mountainous regions where tea is grown and floods in the low lying areas continue to cause complications in daily operations of the industry, the brokers said.

“The country suffered from unprecedented drought from January to April and faced the highest temperatures for decades,” the report said.

“The arrival of the monsoonal rains in May brought relief but in a couple of weeks the relief was replaced by floods, causing much inconvenience and damage to plantation crops and tea exporters.”

Prices fell at this week’s Colombo auction and are expected to fluctuate in the next few weeks, following quality, John Keells said.

Sri Lanka’s Central Bank to sell USD200mn development bonds

(LBO) – The Central Bank will issue 200 million US dollars development bonds with a tenor of 1 year, 2 years, 3 years and 5 years to local and foreign investors.

The Debt Department said the subscription will be at a floating rate of 6 month LIBOR for USD plus a margin through competitive bidding or at a fixed rate to be determined through competitive bidding.

Minimum investment is 10,000 US dollars with additional investments in multiples of 10,000 US dollars.

The issue will be open for subscription from 7 to 13 June and has a date of settlement of 30 June 2016.

Development bonds are to be issued by the Public Debt Department of Central Bank and exempted from income tax paid in Sri Lanka.

Foreigners, non resident or dual citizen Sri Lankans, NRFC/RFC account holders, authorized dealers in foreign exchange, primary dealers in government securities, BOI specified companies and specified insurance companies are among eligible investors.

Sri Lankan shares fall for 5th day on rising interest rates

Reuters: Sri Lankan shares fell for a fifth straight session on Friday and posted their lowest close in five weeks, as rising interest rates and lack of new catalysts dented investor sentiment.

The benchmark Colombo stock index ended 0.07 percent, or 4.61 points, weaker at 6,519.23, its lowest close since April 29. It declined 0.8 percent this week, its third straight weekly fall after gaining for six consecutive weeks.

Treasury bill yields rose between 4 and 35 basis points to near three-year highs in the two weekly auctions through Wednesday despite the central bank leaving key policy rates steady for a third straight month on May 20.

"Investors are waiting to see some positive news and earnings are also not healthy," a stockbroker said asking not to be named.

Stockbrokers said a rise in interest rates could be detrimental to risky assets if they jumped beyond 12 percent. The average prime lending rate (AWPR) edged up 15 basis points to 10.15 percent in the week ended May 27.

Analysts said market sentiment remained weak as investors were waiting for catalysts such as a big foreign direct investment or initial public offering or inflows from the International Monetary Fund (IMF).

Investors are also concerned about foreign investment outflows, they added, with overseas investors offloading a net 5.54 billion rupees ($37.74 million) worth of equities so far this year. Foreign investors bought shares worth a net 49.2 million rupees on Friday.

Turnover stood at 739.8 million rupees, just below this year's daily average of around 791 million rupees.

Shares of Sri Lanka Telecom Plc dropped 3.51 percent, while those of Ceylinco Insurance Plc fell 0.39 percent. 

($1 = 146.8000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez)

Sri Lanka’s Cargills net up 39-pct in March with improved margins

(LBO) – Profits at Sri Lanka’s Cargills group, with interests in retailing and fast moving consumer goods, rose 39 percent to 412 million rupees in the March quarter, the interim accounts showed.

The group reported earnings of 1.84 rupees per share for the quarter against 1.33 rupees recorded in the previous year.

Group sales rose 27 percent to 18.8 billion rupees and sales costs rose at a slower 24 percent to 16.6 billion rupees posting a gross margin of 2.2 billion rupees, up 60 percent.

Total operating expenses rose 8 percent to 1.6 billion rupees and net finance costs rose 30 percent to 159 million rupees.

In the twelve months to March, the group reported earnings of 7.25 rupees per share on total profits of 1.6 billion rupees.

In segmental analysis, retail sector operating profits rose 80 percent to 1.7 billion rupees in the year and fast moving consumer goods jumped 134 percent to 1.6 billion rupees.

69 million rupees loss of restaurant sector has turned to a 124 million rupees profit in the year against the previous year.

By the end of financial year there were 1,857 public shareholders holding 20.49 percent of company shares.

The liability of the group for super gain tax amounted to 57.8 million rupees.

Cargills Bank Limited has been accounted as an associate of the Company based on the nature of the controlling interest of the company in Bank.

The shareholding of the company in Cargills Bank was 18.22 percent as at 31 December 2015.

The company has invested 1.3 billion rupees to acquire 88 million additional shares of the bank that were allotted on 10 May 2016.

Sri Lanka’s LOLC March net up 46-pct amid growing incomes

(LBO) – Sri Lanka’s LOLC group, which has interests in financial services, insurance, plantations, trading and leisure, said net profit for the March quarter rose 46 percent to 2.3 billion rupees.

The group reported earnings per share of 4.83 rupees for the quarter up from 3.31 from a year earlier and the stock closed at 86.00 rupees at CSE on Thursday.

The group reported interest income of 11 billion rupees for the quarter, up 43 percent, and interest expenses rose at a faster 79 percent to 6.1 billion rupees, resulting in net interest income growing at a slower 15 percent to 4.9 billion rupees.

Interest income represents the income receivable for the period on all contracts, rentals on operating leases, income on factoring of client debtors, earned premium on insurance contracts and IT service fees.

Revenues up 89 percent to 5.6 billion rupees and cost of sales rose at a slower 54 percent to 2.8 billion rupees making gross profits to rise at a faster 145 percent to 2.8 billion rupees.

Revenue includes revenue from trading, manufacturing, plantation and other activities of the group.

Net impairment charges fell 53 percent to 801 million rupees while personnel costs rose 133 percent to 3.9 billion rupees.

Direct expenses excluding finance costs fell 17 percent to 1.0 billion rupees while other operating expenses fell 35 percent to 1.6 billion rupees.

In the twelve months to March, the group reported earnings of 17.93 rupees per share on total profits of 9.3 billion rupees.

In the segmental analysis, financial services sector profits rose to 9.6 billion rupees in the year, up from 7.0 billion rupees in the previous year.

Manufacturing and trading sector profits rose to 1.1 billion rupees from 577 million rupees last year.

Plantation and hydro power sector has recorded a loss of 669 million rupees while leisure and entertainment segment posted a loss of 617 million rupees.

As at the end of March 2016, financial assets were fair valued at 276 billion rupees and financial liabilities were fair valued at 278 billion rupees.

The public shareholding at the end of March was 15.50 percent comprising of 3,100 shareholders.

Sri Lanka central bank bond auctions to be more transparent

ECONOMYNEXT – Sri Lanka’s central bank intends to change its Treasury Bond auction practices, being more transparent and adopting international best practices, it announced in a statement which came amid rising concern over auction rigging and insider dealing.

The Employees Provident Fund, the government pension fund, is to actively participate at the primary auctions, the statement of the Monetary Board of the central bank said.

The central bank bond management team would hold pre-bid meetings with all the Primary Dealers to share information on market developments and have a clearly defined auction calendar, it said.

The full statement follows:

This refers to the recent articles and discussions relating to the Treasury bond auctions that took place during the latter part of March 2016, where allegations of lack of transparency were made with regard to the process that was followed. Attention of the public is drawn to the fact that the process followed was similar to what has been in practice since February 2015 when a complete market based mechanism was introduced in auctioning of Treasury bills and bonds.

The Monetary Board noted the large resource needs of the Government. Further, in the context of Monetary Policy actions, mainly the upward adjustment of the Statutory Reserve Requirement (SRR) at the beginning of the year and the subsequent upward adjustment of the policy interest rates, had resulted in an increase in yield for Treasury bills and Treasury bonds.

Given the existing and emerging financial needs of the Government, the Monetary Board has recommended;

1) The relevant management team:

a. to hold pre-bid meetings with all the Primary Dealers to share information on market developments and to have a clearly defined auction calendar,

b. to examine the international best practices with respect to volumes advertised and accepted at public auctions and propose to the Board as to how the Central Bank should adopt such practices, and

2) The Employees Provident Fund to actively participate at the Primary Auctions