Sri Lanka stocks surge 1.2-pct, rupee stronger

Feb 28, 2014 (LBO) - Sri Lanka's stocks surged 1.2 percent Friday with index heavy John Keells Holdings extending gains, while the rupee strengthened against the greenback, brokers and dealers said.

The Colombo benchmark All Share Price Index closed 67.50 points higher at 5,940.31, up 1.15 percent. The S&P SL20 closed 34.86 points higher at 3,223.66, up 1.09 percent.

Turnover was 851.64 million rupees, up from 446.57 million rupees last Wednesday.

JKH closed 8.70 rupees higher at 220.70 rupees, contributing most to the index gain.

JKH also closed 5.70 rupees higher at 212.00 rupees on Wednesday, with brokers say foreign selling pressure is easing.

JKH’s W0022 warrants closed 3.90 rupees higher at 64.30 rupees and its W0023 warrants closed 3.90 rupees higher at 67.70 rupees.

In forex markets the rupee rose to 130.80/95 levels to the US dollar in the spot market amid strong inflows, dealers said.

Sri Lanka's rupee has come under pressure in recent days dipping below 131.00 to the US dollar amid excess rupee liquidity in money markets generated by earlier Central Bank dollar purchases.

In stock markets, foreign investors bought 140.33 million rupees worth shares while selling 115.87 million rupees of shares.

With more confidence returning to the broader market 153 stocks closed up against 46 going down.

SLT closed 1.80 rupees higher at 44.30 rupees and Lanka Orix Leasing Company closed 3.80 rupees higher at 78.90 rupees.

Sampath Bank ended 2.00 rupees higher at 172.00 rupees and HNB closed 60 cents higher at 152.00 rupees.

Ceylon Tobacco Company closed 9.00 rupees lower at 1,089.40 rupees and Distilleries closed 1.90 rupees lower at 203.00 rupees.

Nestle Lanka ended 6.60 rupees lower at 2,010.00 rupees and Carson Cumberbatch ended 80 cents lower at 349.70 rupees.

Ceylinco Insurance closed 1.20 rupees lower at 1,373.30 rupees and Ceylon Grain Elevators closed 70 cents lower at 34.30 rupees.

Sri Lankan stocks at 1-wk high; John Keells gains

Feb 28 (Reuters) - Sri Lankan shares gained for a second straight session on Friday, moving further away from a near 10-week closing low, led by top conglomerate John Keells Holdings despite foreigners investors selling risky assets.

The main stock index gained 1.15 percent, or 67.50 points, to close at 5,940.31, its highest since Feb. 21. It hit a near 10-week closing low on Tuesday.

The index has dropped nearly 7 percent in the last 15 sessions through Tuesday. It returned to its neutral territory from an oversold zone, Thomson Reuters data showed.

Foreign investors sold a net 43.4 million rupees ($331,200) worth of shares on Friday, extending the net outflow in the past 15 sessions to 5.43 billion rupees as some offshore funds exited the market.

It has seen a net 4.04 billion rupees of foreign outflows in so far 2014, after enjoying net inflows of 22.88 billion rupees last year.

Analysts said investors were concerned about further outflows, though local investors are still optimistic about risky assets due to falling interest rates.

Top conglomerate John Keells Holdings gained 4.10 percent to 220.70 rupees as local and forging investors snapped up the battered share.

The day's turnover was 851.6 million rupees, less than this year's daily average of about 1.09 billion rupees.

($1 = 131.0500 Sri Lanka rupees) 

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

Sri Lanka inflation at 4.2-pct in February

Feb 28, 2013 (LBO) - Sri Lanka's consumer prices rose 4.2 percent in the 12-months February 2014, down from 4.4 percent in January, the state statistics office said.

The widely watched Colombo Consumer Price Index rose 0.2 percent during the month.

Annual average inflation, a lagging indicator averaged across two years eased to 6.0 percent in February 2014 from 6.5 a month earlier, the statistics office said.

Inflation showed up a rise in the food sub-index rose 0.2 percent in February after falling 0.9 percent a month earlier. Non-foods rose 0.1 percent in after rising 1.7 percent a month earlier.

Sri Lanka's inflation spiked to 9.8 percent in February 2013 following a balance of payments crisis in 2012 which sent the rupee spiraling down to 130 to the US dollars from 110 levels and has since moderated amid weak credit growth.

The central bank is targeting inflation of low single digits generally understood to be below 5.0 percent in 2014, after keeping it at single digits for several years.

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Sri Lanka's Sampath Bank net down 31-pct

Feb 28, 2014 (LBO) - Profits at Sri Lanka's Sampath Bank Plc fell 31 percent to 1.0 billion rupees, in the December 2013 quarter from a year earlier, amid higher loan losses, interim accounts showed.

The group reported earnings of 6.37 rupees for the quarter. In the year to December Sampath reported earnings of 21.67 rupees, on total profits of 3.6 billion rupees, down 33 percent.

The group said interest income rose 8.2 percent to 10.2 billion rupees, interest expenses rose 9.8 percent to 6.7 billion rupees and net interest income rose at a slower 5.4 percent to 3.5 billion rupees for the quarter.

Fee income rose 18 percent to 710 million rupees. The group reported 257 million rupees gain on financial instruments.

Loan losses charges rose to 907 million rupees for the quarter with general provisions of 753 million rupees.

The bank reported strong loan growth of 24 percent to 265 billion rupees in the year to December 2013, among the highest recorded in the sector for the year.

Deposits also rose 23 percent to 300 billion rupees.

Gross assets rose 24 percent to 391 billion rupees and net assets rose 14 percent to 31.6 billion rupees.

Sri Lanka's Ceylinco Insurance net up 28-pct

Feb 28, 2014 (LBO)- Profits at Sri Lanka's Ceylinco Insurance Plc, rose 28 percent to 1.8 billion rupees in the December 2013 quarter from a year earlier, helped by investment income and lower claims, despite weak premiums, interim accounts showed.

The group reported earnings of 71.4 rupees per share for the quarter. In the year to December the group reported earnings of 98.7 rupees on total profits of 2.6 billion rupees, which were up 34 percent.

Life insurance gains are included in the December quarter.

Gross written premium fell 01 percent to 5.9 billion rupees in the December 2013 quarter from a year earlier. After re-insurance fees of 868 million rupees, which were flat, net written premiums fell 2 percent to 5.0 billion rupees.

Sri Lanka is recovering from a balance of payments crisis and currency depreciation, which tends to hurt disposable income of people, while interest rates also go up to correct previous imbalances.

Investment income rose 26 percent 2.4 billion rupees. Insurance claims fell 19 percent to 2.1 billion rupees.

Ceylinco Insurance had gross assets of 87.4 billion rupees by December 2013 up from 73 billion rupees a year earlier.

Net assets had grown to 18.3 billion rupees from 14.4 billion rupees.

HSBC, Sampath Bank seal deal for SLT

Ceylon FT: Sri Lanka Telecom PLC received a US$ 100 million five-year loan facility from Sampath Bank and global banking giant HSBC to upgrade its telecommunication infrastructure.

HSBC acted as Lead Arranger and together with Sampath Bank participated in raising this loan.

Patrick J. Gallagher, CEO HSBC Sri Lanka and Maldives said, "This further demonstrates HSBC's capability in structuring and arranging deals of this nature. SLT is a key name in the country and for HSBC Sri Lanka as well, and we hope this will further strengthen our relationship and steer SLT towards achieving their development objectives for the benefit of the country."

This deal stands testimony to HSBC Sri Lanka's strong track record and capabilities in syndicated debt financing and corporate banking capabilities. It also reaffirms HSBC's continued commitment to the development of the local telecommunication industry.

Aravinda Perera, Managing Director Sampath Bank PLC said, "We have always been an active partner with SLT, providing an internet payment gateway and solutions to SLT's client base, conveniences via banking channels harnessing Sampath's edge in technology. Also Sampath Bank has over the years been a partner in Syndicated financing for the SLT Group."

He added that "We are sure that this financing deal will further strengthen our relationship with SLT and contribute our share to the nations' stride towards development through them".

"ICT infrastructure is the backbone of any country, empowering and facilitating all other industries and businesses to function at their best. This is the highest amount raised through a foreign currency loan by SLT so far and is reflective of our commitment and plans to undertake sustainable investments during this year, to support our country's fast track development and vision to achieve a Smart Sri Lanka, through an enhanced ICT infrastructure," commented Lalith De Silva, Group Chief Executive Officer of SLT. "It is a privilege for SLT to partner with two of the leading banks in Sri Lanka, HSBC and Sampath Bank, who have placed their confidence and trust in our financial strength as well as our capabilities and agreed to support us in making our dreams for our nation a reality," he added.

The Fitch AAA (lka) rated HSBC, is the largest foreign commercial bank in the island. HSBC Sri Lanka with its global network and local reach offerscustomized client-led solutions in the corporate and investment banking businesses. Sri Lanka Telecom (SLT), an AAA (lka) rated company by Fitch Ratings, is the nation's number one integrated ICT solutions provider and the leading backbone infrastructure services provider. The company is also the major provider of telecommunication networks and services for top enterprises representing all economic sectors and facilitating them with seamless and sophisticated connectivity to carry out local and global business operations. SLT group provides a full range of ICT facilities and services in the areas of voice, data, broadband, wholesale, enterprise, TV and mobile services.
www.ceylontoday.lk

GAAM outperforms ASPI, S&P SL20

Ceylon FT: Guardian Acuity Asset Management Limited (GAAM) said it recorded healthy gains in unit trusts it manages, outperforming both the All Share Price Index (ASPI) of the Colombo Stock Exchange and the S&P SL20 index of the largest listed firms.

"Two years in operation, GAAM managed to establish a strong footing in the Unit Trust industry with an exceptional growth in the Guardian Acuity Fixed Income (GAFI) Fund which provided an annualized return of 10.11% per annum within the period January 2013 to January 2014. In the meantime GAAM managed to secure high returns on the Guardian Acuity Equity (GAE) Fund which gave a cumulative return of 29.30%, when compared with a growth in the All Share Price Index of 14.09% since inception to January 2014," the company said. Guardian Acuity Asset Management Limited Fund Manager Sumith Perera, said, "The GA Equity Fund has outperformed the All Share Price Index (ASPI) by 4.92% and the S&P SL 20 by 4.66% within the period of January 2013 to January 2014. The investors enjoyed greater returns on their investments despite the relatively low performance of the overall market. Investors should also have a long term outlook on the Equity market if they are to gain better yields as they can stomach the short term volatilities". The performance since inception was 29.30%.

"The Guardian Acuity Fixed Income Fund objective is to give investors the highest possible return by exposing the fund only to high quality instruments and issuers which are investment grade and above.

Investors in the fund have received a competitive return while being able to withdraw the funds at any point in time. Previous year average return was over 12.18% (2013 Return) which is tax free, while one year Treasury Bills gave a comparatively lower yield after tax," Perera said.

GAAM funds consist of Guardian Acuity Equity Fund and Guardian Acuity Fixed Income fund which has varying investment objectives. The equity fund invests in listed equities on the Colombo Stock Exchange, while the fixed income fund invests in high quality corporate debt and bank deposits, with a smaller exposure to government securities which are risk free. The performance of both funds during the last year has been above the market trends and both funds continue to grow even with market uncertainties and volatility.

GAAM is committed to giving better returns to the investors with the least risk and this is mainly due to the investment strategy which GAAM has adopted. The second year performance is evidence of this strategy and how it has helped GAAM to be right on top in terms of fund performance. Unit trusts give the small investor the opportunity to participate in the returns from a large diversity of financial instruments, which have been pooled together.

Guardian Acuity Asset Management Limited was commercially commenced operations in February 2012 with the purpose of bringing together the expertise of the two joint venture partners, Ceylon Guardian Investment Trust PLC and Acuity Partners (PVT) Ltd. 

Acuity Partners is a joint venture between the HNB and DFCC Banks; while Ceylon Guardian is a subsidiary of the Carson Cumberbatch group. Ceylon Guardian's management team contribute to the venture through their fund management expertise, while Acuity bring in their partner network and reach in marketing and distribution of financial products. Currently the unit trusts are marketed through designated branches of the HNB.

The company is an authorized unit trust management company, accredited by the Securities and Exchange Commission of Sri Lanka, holding licences for two unit trust funds – namely the Guardian Acuity Fixed Income Fund and the Guardian Acuity Equity Fund. The company markets a range of investment plans under the brands MoneyMax and MoneyMaker which are structured using these two licensed funds as the underlying investment vehicles.

The Board of Directors of GAAM comprises directors drawn from the two JV partner companies, who carry with them a wealth of experience in the financial services industry.
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Nestlé Lanka profits up amidst challenging environment

Leading nutrition, health and wellness company, Nestlé Lanka PLC, posted a revenue of Rs 7.8 billion for Q4 with a growth of 8.2%. The company recorded a revenue of Rs 30.9 billion and a growth of 8.2% amidst a challenging environment for the full year ending 31 December 2013, the company said releasing its financial results.

The company posted a profit of Rs 698 million for Q4 supported by efficient management of input costs. For the year ending 31 December 2013, the company recorded a profit of Rs 3.3 billion, an increase of 12.5% from the previous year. Nestlé continued to increase investment in trade and marketing activities.

"The macro-environment in 2013 was one of soft growth; fraught with lowered consumer confidence, industry issues and economic ambiguity. Our response was to increase brand support, accelerate innovation, invest in our people, continue responsible business operations and provide consumers with nutritionally superior food and beverages of the highest safety and quality" said Ganesan Ampalavanar, Managing Director of Nestlé Lanka PLC "We have maintained a respectable revenue growth in a challenging environment and, together with efficiencies and structural cost savings, improved margins and sustained a strong cash flow."

Q4 continued to see Nestlé active in the community and recognised for its positive economic and social contribution to the country.

The Ministry of Education Services and Nestlé Lanka PLC announced the incorporation of the Nestlé Healthy Kids Programme into the Government's island wide "Poshanayai Suwadiviyai" (Nutrition for a Healthy Life) nutrition awareness campaign. The Nestlé Healthy Kids Programme material and modules on nutrition education and healthy living will now be available at over 7,500 secondary, public schools across the country.

The company also procured 62 million litres of local fresh milk from 18,000 Sri Lankan farmers in 2013, marking the company's highest ever milk collection in Sri Lanka. The company uses Sri Lankan fresh milk for its popular dairy based products Nespray, Milo and Milkmaid.

The year-end saw the company recognised as one of Sri Lanka's top corporate performers for the financial year 2012-2013 by Business Today, ranked at No. 13 amongst Sri Lanka's top twenty five leading corporates.

Nandu Nandkishore, Executive Vice-President for the Nestlé worldwide group, reconfirmed Nestlé's commitment to Sri Lanka in a visit to the island in December 2013. 

He reinforced the company's desire to create shared value in Sri Lanka and its focus on uplifting nutritional standards via nutritious food and beverages of the highest quality. "We see great value in our emerging markets, including Sri Lanka, and we will continue to invest in its growth, our people and operations and deliver upon our promise of value at every juncture" he added.
www.ceylontoday.lk

Life sustains Union Assurance profits growth

Ceylon FT: Diversified conglomerate John Keells Holdings' insurance unit, Union Assurance PLC, reported a net profit of Rs 1.12 billion for the year ended 31 December 2013, up 22% from Rs 921.26 million a year ago, interim financial results showed.

Gross written premium increased by 12% to Rs 10.9 billion and net investment income grew 17% to Rs 2.63 billion.

Total benefits and claims amounted to Rs 6.77 billion, up 15% from a year ago.

The basic earnings per share increased to Rs 13.11, up from Rs 12.28 a year ago.

Total assets of the company grew 17.5% from a year ago to Rs 21.09 billion.

Life insurance premium increased to Rs 4.7 billion, up from Rs 4.26 billion a year ago, and Non-life insurance premium grew to Rs 5.17 billion, up from Rs 4.43 billion a year ago.

The life insurance segment saw profits after tax increase by 48.44% to Rs 790.96 million and the non-life segment saw profits fall by 17.62% to Rs 391.64 million.
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HNB surpasses Rs 500bn in assets; Rs 10bn in PBT

‘The year 2013 was one of the most challenging years faced by the financial services industry with demand for credit remaining low, margins coming under pressure, asset quality continuing to deteriorate and declining gold prices affecting the pawning business. In this backdrop, HNB has successfully weathered the challenges as demonstrated by its credit growth of 16.8% which is well over the industry growth of 8.8%, above industry interest margins, NPA ratio of 3.6% compared to 5.6% for the Banking sector and pawning NPA of 1.1% for the Bank against the industry average of 12.7% a press release said.

Commenting on the performance of the year 2013 Dr Ranee Jayamaha, Chairperson of Hatton National Bank PLC stated that "year 2013 has been one in which our sustainable business model and the collective skills of our team have been put to test on many fronts. The results speak for themselves and is a testimony of the resilience of the Bank and the collective strength in responding to change and remaining focused".

Interest income which is by far the largest contributor to the Bank's total revenue grew by 18% to Rs. 55.7 Bn driven by the aggressive credit growth achieved by the Bank. While the high interest rates witnessed during major part of 2013 also contributed towards the growth in interest income, the interest write-offs from pawning advances had an adverse impact. Interest expenses increased at a faster pace of 24% during the year, thereby compressing margins. The growth of 13%, in deposits coupled with higher interest rates resulted in the surge in interest cost during the year. Despite the drop in margins the Bank posted a 11% growth in net interest income to achieve Rs 24.3 Bn as a result of the strong balance sheet growth.

‘ Fee and commission income witnessed a 16% yoy growth, driven by fees from card acquisitions, remittances, guarantees and trade income despite overall slow down in international trade during the year. In addition several initiatives in electronic and mobile banking rolled out in 2013 will drive the Bank's fee income in the medium term.

‘The revaluation loss on swaps that were obtained to hedge exchange risk created due to foreign borrowings increased by 11% to Rs 1.8 Bn. This is a reflection of higher swap costs during 2013 compared to 2012.

‘Net gain from financial investments of the Bank increased by Rs 159 Mn due to higher dividends received during the year from its equity investments in the available for sale category.

‘Other income of the Bank mainly reflects exchange gains from customer transactions and revaluation of foreign currency borrowings. The higher depreciation of the Rupee in 2012 compared to 2013, resulted in a lower revaluation gain, resulting in a decline of 24% in other income compared to the previous year.

The total operating income of the Bank stood at Rs 28.6 Bn for 2013, reflecting a growth of 9% over 2012.

The Bank was successful in marginally improving its NPA ratio to 3.64%, by end of 2013 compared to 2012, despite adverse conditions experienced by the industry. The provisions increased to Rs 3.2 Bn largely due to the decline in gold prices, which in turn has resulted in maintaining a healthy provisioning cover of 62.5%. Accordingly, the net NPA for 2013 improved to 1.37% compared to 1.82% in the previous year. The NPA calculations are based on time based provisioning method as per CBSL guidelines.

The overall operating expenses dropped by 1% due to an18.5% reduction in personnel expenses largely on account of the reversal made with regard to the Employee Share Benefit Trust. Other expenses increased by 14.5% mainly due to higher investments made to upgrade technology. Accordingly, the cost to income ratio for 2013 reduced to 47.8% indicating an improvement, compared to 53.0% in the previous year.

The financial VAT increased by 33% to Rs 1.7 Bn in 2013 whereas the corporate tax expense increased by 28% to Rs 3 Bn. Accordingly, the effective rate for VAT & corporate tax increased to 40% from 32% in 2012. In 2012, the Bank had a substantial amount of tax reversals which resulted in the effective tax rate been substantially low compared to 2013.

The Bank's Profit before VAT & Tax grew by 5% to Rs 11.7 Bn while net profit after tax recorded a decline of 7% to stand at Rs 7 Bn for the year.

Mr. Jonathan Alles, Managing Director / CEO of HNB stated that "during the year 2013 we crossed the Rs 500 Bn mark in assets and achieved a PBT of Rs 10 Bn notwithstanding the challenging conditions experienced. In 2013, HNB embarked on a journey united in purpose as one team, towards being the best in class service provider. We made significant investments in technology, enhanced our service delivery through electronic channels and commenced a Business process re- engineering initiative to drive sales by optimising the business operating model. Going forward, the Bank will leverage on these initiatives to reach greater heights".

Other group companies including HNB Assurance PLC, Acuity Partners and Sithma Development (Pvt) Ltd performed very well during the year with profit growth of 11%, 169% and 37% respectively. Accordingly the Group posted a net profit of Rs 7.8 Bn for the year 2013.

The Bank proposes a final cash dividend of Rs 7.00 per share in addition to the interim dividend of Rs 1.50 per share declared in December 2013 resulting in a total cash dividend of Rs 8.50 per share for the year.

The Capital adequacy of the Bank remained strong with the tier I capital ratio at 12.95% and total capital adequacy ratio at 16.52% through internally generated funds and tier II capital raised through subordinated debenture issue.
www.island.lk

Seylan reports Rs. 2.3 b profit after tax for 2013

Seylan Bank’s Profit after Tax reached a record Rs. 2,315 million compared to the Rs. 2,064 million reported in 2012, an impressive 12% growth in PAT for the year ended 31 December 2013.

Profit after Tax for Q-4 2013 (final quarter) was reported at Rs. 780 million as compared with Rs. 466 million for the same period last year reflecting a growth of 67% over Q-4 last year.

Despite slow credit growth and industry wide pressure on interest margins, Net Interest income increased from Rs. 9,014 million to Rs. 9,830 million for the 12 months ended 31 December 2013. Fee and Commission income increased 25.5% from Rs. 1,695 million to Rs. 2,127 million showing a consolidation of the solid growth in core banking activities achieved by Seylan Bank over the past few years.

During the year under review the bank also focused considerably on cost containment. As a result of many effective cost containment initiatives, total other expenses were reduced by 6% from Rs. 3,299 million in 2012 to Rs. 3,091 million in 2013. Total personnel expenses increased by 13%, due to a salary revision granted to all staff at the beginning of the year.

The bank also successfully implemented a core banking system upgrade in February 2013. 

This will have significant cost efficiencies through process improvements to the bank in the coming years. The upgrade will also facilitate many additional functionalities, enabling better product and service delivery to its customers.

The bank grew its deposits base by 14% from Rs. 146.7 billion to Rs. 167.3 billion during 2013 and its net advances portfolio by 9.5% from Rs. 124.7 billion to Rs. 136.6 billion during the year under review.

Even more significantly, despite an industry wide trend of deteriorating asset quality, Seylan is one of the few Banks who was able to improve its asset quality through effective recovery and rehabilitating efforts which resulted in a significant reduction in its Gross NPA (net of IIS) from 12.99% in December 2012 to 10.58% as at end December 2013.

In September 2013, Fitch affirmed the Banks rating at A- lka, with a ‘Stable’ outlook.

The bank also successfully concluded a review, update and extension of its current Strategic Plan to 2016. The areas of focus include advance/deposit growth, branch expansion, customer service improvement, staff development, NPA reduction, cost control, new product development, IT infrastructure, shareholder value, etc. The strategic plan also earmarks the opening of 100 libraries in under privilege schools over a period of four years. In the latter half of 2013, 11 such school libraries were opened by the bank.

During 2013, the bank opened four new branches, fully refurbished 16 branches and relocated a further six branches to more customer friendly locations. As at 31 December 2013, the bank network comprised of 151 branches, 158 ATMs and 86 student savings centres.

The bank’s total capital adequacy ratio stands at 15.75% as at 31 December 2013, well above the regulatory requirement.

As a result of this impressive 2013 performance, Earnings per share stood at Rs 6.74 (Group Rs. 6.78), while return (profit before tax) on assets and return on equity stood at to 1.72% and 11.4% respectively. The bank’s net asset value per share as at 31 December 2013 was Rs. 63.08 (Group Rs. 65.69).
www.ft.lk

Warren Buffett: Markets are like sex

Billionaire Warren Buffett quotes late money manager Barton Biggs in advice for new investors

By Andrew Trotman

There’s nothing like getting a big bang for your buck, and no one knows that more than billionaire investor Warren Buffett.

The 83-year-old founder of Berkshire Hathaway, whose investments have consistently beaten the stock market over the past 50 years, shared a few tips in this year’s annual letter to shareholders, including comparing the stock market with sex.

Mr Buffett said new investors tend to buy shares when the markets are rising and optimism is high, only to get disillusioned when prices fall.

Quoting the late money manager Barton Biggs, whose attention to emerging markets in the 1980s marked him as one of the world’s first and foremost global investment strategists, Mr Buffett added: “A bull market is like sex. It feels best just before it ends.”

He advised investors to “keep things simple” by “accumulating shares over a long period, and never sell when the news is bad and stocks are well off their highs”.

Mr Buffett also revealed the best purchase he ever made: a copy of The Intelligent Investor, written by British-born investor Benjamin Graham.

http://www.telegraph.co.uk/

Touchwood plants guarantees for settlement in Court

Case No. 31/2013/CO filed by K.A.D.L.P. Nanayakkara to wind-up Touchwood Investments PLC was taken up in the Commercial High Court of Colombo on 25 February 2014 where counsel for the Petitioner, the Company sought to be wound up (Touchwood Investments PLC), Securities Exchange Commission, and many other investors of the Company were present in Court.

The CEO of the Company sought to be wound-up, Lanka Kiwlegedara, was also present with few other representatives of the Company. The case was called on 25 February for the purpose of recording a default clause to the terms of settlement recorded in court and for the purpose of filing a list of investors who will be settled in full by the Company sought to be wound-up.

Despite many speculations that the CEO of the Company has left the country to escape from the responsibilities and liabilities undertaken by him, he was present in Court when the case was taken up on 25 February 2014.

Counsel for Touchwood Investments PLC Harsha Amarasekera submitted that the cheques issued for the value of the 1st instalment payable to the Petitioner and seven other creditors will be honoured. Counsel further submitted that property (land) worth approximately Rs. 300 million will be kept as security before the payment of the second instalment. The value of the said property and details of the deeds are to be presented to court on 6 March 2014.

Even though the Company undertook on several occasions to file a comprehensive list of investors who will be paid, the Company has failed to do so up to date and Counsel for the Company further stated that the list would be filed on 6 March 2014.

Upon the request of the Counsel for the Petitioner Avindra Rodrigo, the court fixed 19 March 2014 for the inquiry of the winding-up. Accordingly if the Company fails to adhere to the terms of settlement, that is, to honour the cheques dated 27 February 2014 given to the Petitioner and seven other intervening creditors and to pay the 2nd instalment by 14 March 2014, the Petitioner will proceed with the winding-up application, and inquiry will be taken up on 19 March 2014.

A settlement was entered into by the parties on 31 October 2013 where the Company sought to be wound-up undertook to pay all the investors of the Agarwood Plantation in Thailand to whom the Harvest Agreement Certificates were issued by the Company and the Company failed to adhere to the terms of settlement. The terms of settlement were thus amended on several occasions upon numerous assurances given by the Company to settle all the creditors.

When the case was taken up in Court on 27 January 2014 the present Chief Executive Officer of the Company W. Lanka Kiwlegedara issued cheques dated 27 February 2014 amounting to the value of the 1st instalment that was due on 14 January 2014, from his personal account to the Petitioner and seven other intervening creditors.

Rozali Fernando with Avindra Rodrigo instructed by Messrs. FJ&G Desaram appeared for the Petitioner while Shehan Gunawardene with President’s Counsel Harsha Amarasekara instructed by Messrs. Paul Rathnayake Associates appeared for Touchwood Investments PLC.
www.ft.lk

Sri Lankan stocks recover from near 10-wk low on bargain hunting; Keells leads

Feb 26 (Reuters) - Sri Lankan shares recovered from a near 10-week closing low on Wednesday on bargain hunting in beaten down shares, snapping a nine-session falling streak, led by the top conglomerate John Keells Holdings.

Foreigners investors bought the island nation's risky assets on a net basis in an oversold market.

The main stock index gained 0.63 percent, or 36.89 points, to close at 5,872.81, up from its lowest close since Dec. 18 hit in the previous session.

The index dropped nearly 7 percent in the last 15 sessions through Tuesday and has been in oversold territory since Friday, Thomson Reuters data showed.

Foreign investors bought a net 24.5 million rupees of shares on Wednesday, but the bourse has suffered outflows of 5.41 billion rupees in the past 14 sessions as some offshore funds exited the market.

It has seen a net 4 billion rupees of foreign outflows in 2014, after enjoying net inflows of 22.88 billion rupees last year.

Analysts said investors were concerned about further outflows, though local investors are still optimistic about risky assets due to falling interest rates.

Top conglomerate John Keells Holdings gained 2.76 percent to 212 rupees, reversing a 22-session fall through Tuesday.

The day's turnover was 446.6 million rupees ($3.41 million), less than half of this year's daily average of about 1.09 billion rupees. 

($1 = 131.0750 Sri Lanka rupees) 

(Reporting by Shihar Aneez; Editing by Prateek Chatterjee)

Sri Lanka stocks close up 0.6-pct

Feb 26, 2014 (LBO) – Sri Lanka stocks close 0.63 percent higher Wednesday ending a nine day negative rally with gains in the tobacco and diversified stocks, brokers said.

The Colombo benchmark All Share Price Index closed 36.89 points higher at 5,872.81, up 0.63 percent. The S&P SL20 closed 8.74 points higher at 3,188.80, up 0.27 percent.

Turnover was 446.57 million rupees, up from 426.93 million rupees a day earlier, with stocks of 59 firms closing in the red against 128 gainers.

Distilleries closed 2.10 rupees lower at 204.90 rupees with 58.75 million rupees of an off market transaction contributing to 13 percent of the daily turnover.

JKH’s W0022 warrants closed 3.20 rupees higher at 60.40 rupees and its W0023 warrants closed 2.80 rupees higher at 63.80 rupees, attracting most number of trades during the day.

Foreigners bought 140.33 million rupees worth shares while selling 115.87 million rupees of shares.

JKH closed 5.70 rupees higher at 212.00 rupees and Ceylon Tobacco Company closed 7.70 rupees higher at 1,098.40 rupees, contributing most to the index gain.

Nestle Lanka ended 26.60 rupees higher at 2,016.60 rupees following the announcement of an interim dividend of 32.00 rupees and a final dividend of 28.00 rupees per share.

Commercial Leasing and Finance closed 20 cents higher at 4.10 rupees and Bukit Darah ended 9.00 rupees lower at 545.00 rupees.

Carson Cumberbatch ended 1.80 rupees lower at 350.50 rupees.

Kelsey Homes buys a Rs. 571 mn property from Mount Lavinia

Sri Lanka`s listed Kelsey Development PLC has purchased a Rs. 571 million worth property from Mount Lavinia, a Colombo suburb to develop a large scale housing project.

The purchase has been done by its fully owned subsidiary Kelsey Homes Limited.

The deal has gone through on the 24th of this month.
www.news360.lk

Related Disclosures from CSE:

http://www.cse.lk/cmt/upload_cse_announcements/6401393384697_.pdf

http://www.cse.lk/cmt/upload_cse_announcements/2631393384400_.pdf

NTB profits up 10%

Ceylon FT: Diversified conglomerate John Keells Holdings' banking unit, Nations Trust Bank PLC, reported a group net profit of Rs 2.13 billion for the year ended 31 December 2013, up 10% from a year ago, interim financial results showed.

Gross income increased 14% to Rs 20.36 billion and net interest income increased 33% to Rs 7.67 billion.

Net fees and commission income increased 22% to Rs 2.5 billion and trading expense of Rs 478.4 million was reported as a against an income of Rs 287.6 million a year ago.

Impairment charges for loans and advances increased 4% to Rs 450.6 million.

Operating expenses increased 23% to Rs 5.77 billion.

The non-performing loans ratio stood at 2.13% as at end December 2013, up from 1.31% a year ago.

Assets grew 16% to Rs 142.28 billion as at end December 2013. Its loan book grew 12% to Rs 82.32 billion. Public deposits grew 11% to Rs 95.72 billion.
www.ceylontoday.lk

Sri Lanka stocks end down 0.8-pct, rupee weaker

Feb 25, 2014 (LBO) – Sri Lanka stocks closed 0.8 percent lower Tuesday falling 4.5 percent over nine days amid steady foreign selling, brokers said, while the rupee ended weaker against the US dollar.

The Colombo benchmark All Share Price Index closed 47.13 points lower at 5,835.92, down 0.80 percent. The S&P SL20 closed 27.94 points lower at 3,180.06, down 0.87 percent.

Turnover was 426.93 million rupees, down from 499.40 million rupees a day earlier, with stocks of 118 firms closing in the red against 52 gainers.

Foreign Selling

Foreigners bought 59.68 million rupees worth shares while selling 176.30 million rupees of shares.

Index heavy JKH topped the turnover list with 60.04 million rupees falling 2.70 rupees to close at 206.30 rupees, contributing most to the index drop.

Brokers said foreign selling was seen Tuesday in John Keells Holdings, Commercial Bank and DFCC Bank.

John Keells Holdings has seen heavy foreign selling in recent days with at least one top shareholder on the lookout to sell more shares, brokers said.


There have also been selling by several foreign funds including long term players, in stocks such as Dialog, Lanka Lubricants and Aitken Spence in recent days, helping trigger a sell-off in the broader market.

It is not clear whether foreign sales are to meet redemptions of individual emerging market funds, or due to country specific concerns.

At least one fund has been seen systematically closing its positions, brokers said.

But some foreign investors have been buying stocks totaling 1.6 billion rupees since February 2012, stock exchange data show.

Sri Lanka's economy is recovering from a balance of payments crisis and profits of companies and banks are starting to stabilize with interest rates also falling.

But concerns are rising over deteriorating rule of law, citizen's freedoms and property rights.

The UN is expected to move a resolution calling on Sri Lanka to improve human rights and probe alleged war crimes in March.

Ceylon Tobacco Company closed 28.90 rupees lower at 1,090.70 rupees. JKH’s W0022 warrants closed 80 cents lower at 57.20 rupees and its W0023 warrants closed 10 cents lower at 61.00 rupees.

NDB ended 7.60 rupees lower at 176.00 rupees and Commercial Leasing and Finance closed flat at 3.90 rupees. Distilleries closed flat at 207.00 rupees.

Carson Cumberbatch ended 2.20 rupees higher at 352.30 rupees and Lanka IOC closed 80 cents higher at 37.90 rupees. Bukit Darah ended 6.00 rupees lower at 554.00 rupees and Nestle Lanka ended 10.00 rupees lower at 1,990.00 rupees.

Forex Markets

In forex markets the rupee closed 131.02/10 to the US dollar crossing the 131 mark in the spot market.

Foreign equity sales are also impacting the forex market on some days, dealers said. Funds have also been able to exit equity markets partly due to liquidity provided by state managed funds, brokers say.

But uncertainty over the currency has been a regular occurrence since the 'flexible' exchange rate the new 'flexible' exchange rate policy coupled with heavy purchases of official inflows that has been practiced since the latest balance of payments crisis.

Dealers have come under heavy moral suasion from authorities repeatedly, with market unfortunate participants going through various dramas including selling in the spot next market.

Sri Lanka's central bank buys dollar inflows without allowing inflows to the state to appreciate the rupee and the resulting rupee liquidity later tends to generate imports.

Recently proceeds of a billion US dollar bond boosted liquidity in money markets, which have been mopped up overnight or through term auctions.

But lack of similar enthusiasm is selling dollars at the price at which they were bought, when the rupees are spent on imports and hits the forex markets, pressure the rupee and undermine confidence generating unnecessary uncertainty analysts have said.

Authorities have been selling dollars to smaller banks, Tuesday dealers said, while exporters held back due to weak sentiment.

Selling dollars amid excess liquidity mops up rupees, tightening the monetary system (unsterilized forex sales) and does not undermine a loose peg to the dollar, unlike dollar sales followed by subsequent liquidity injections (sterilized sales).

Update II

Sri Lankan stocks fall to near 10-wk low; outflow continues

Feb 25 (Reuters) - Sri Lankan shares fell for a ninth straight session on Tuesday to hit a near 10-week low as investors sold large caps amid continued foreign selling in risky assets.

The main stock index fell 0.80 percent, or 47.13 points, to 5,835.92, its lowest close since Dec. 18.

The index has dropped nearly 7 percent in the last 15 sessions. The index has dipped into overbought territory since Friday, Thomson Reuters data showed.

Foreign investors sold a net 116.6 million rupees ($889,700) worth of shares on Tuesday, extending outflows to 5.41 billion rupees in the past 13 sessions as some offshore funds exited the market.

The bourse has seen a net 4.02 billion rupees of foreign outflows so far in 2014, after enjoying net inflows of 22.88 billion rupees last year.

Analysts said investors were concerned over possible further outflows, though local investors are still optimistic about risky assets due to falling interest rates.

Shares of market heavyweight Ceylon Tobacco Co Plc fell 2.58 percent to 1,090.70 rupees, while top conglomerate John Keells Holdings fell 1.29 percent to 206.30 rupees.

The day's turnover was 426.93 million rupees, well below this year's daily average of about 1.11 billion rupees. ($1 = 131.0500 Sri Lanka rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Prateek Chatterjee)

Sri Lanka Treasuries edge lower, rupee weaker

Feb 25, 2014 (LBO) - Sri Lanka's Treasures yields edged marginally down at Tuesday's auction with the 3-month yield down 03 basis points to 6.72 percent, data from the state debt office showed.

The 6-month yield fell 01 basis point to 6.89 percent and the 12-month yield fell 01 basis point to 7.07 percent.

The debt office said one billion rupees in three month bills, 8.7 billion rupees in 6-month bills and 12.9 billion rupees in 12-month bills totally 22.6 billion rupees were sold.

In forex markets the rupee weakened below 131.00 to the US dollar in the spot market and was quoted around 131.05/10 in afternoon trade.

There is excess liquidity in money markets, requiring the rupee to be defended with unsterilized dollar sales which will mop up liquidity and not cause any additional pressure.

There had also been some selling in the stock market by foreign investors adding to any pressure coming from excess rupee liquidity, coupled with some exporter conversion delays, dealers said.

Sri Lanka's Commercial Bank net up 25-pct in Dec

Feb 25, 2014 (LBO) - Profits at Sri Lanka's Commercial Bank of Ceylon rose 25 percent to 3.3 billion rupees in the December 2013 quarter from a year earlier, despite a steep loan loss provisioning, interim accounts showed.

The group reported earnings of 3.92 rupees per share. For the 12-months to December the group reported earnings of 12.43 rupees on total profits of 10.5 billion rupees, which were up 4.8 percent. The stock closed flat at 114.50 rupees Tuesday.

In the December quarter interest income rose 11.3 percent to 16.0 billion rupees, interest expense rose at a slower 8.6 percent to 9.3 billion rupees from a year earlier, and net interest income rose at a faster 15.6 percent to 6.68 billion rupees

The bank said there was a trading loss of 863 million rupees but gains on financial instruments were up to 1.3 billion rupees from only 16.4 billion rupees. There were forex costs on swaps.

The bank made a 1.7 billion rupee provision for specific loan losses but a general provision of 260 million rupees was reversed.

Sri Lanka is recovering from a balance of payments crisis that is that is typical for countries with so-called soft-pegged exchange rates.

Loans given during the credit bubble also goes bad during an economic slowdown that follows a balance of payments crisis.

When the balance of payments crisis develops credit bubbles high and during the crisis, the Central Bank usually buys Treasury bills held by banks printing billions rupees in domestic currency, pushing up import demand. Loan-to-deposit ratios in banks deteriorate.

The process reverses as the Central Bank sells down its Treasuries stock and withdraws liquidity, slowing bank credit and building up foreign reserves and trimming the trade deficit. Loan-to-deposit ratios of banks improve.

The Commercial Bank said it loans rose 12 percent to 418 billion rupees in the year to December, and deposits rose 15.5 percent to 451 billion rupees. Investments held to maturity rose 113 percent to 123 billion rupees.

With investment is Treasuries going up, capital adequacy can also improve in banks.

Gross assets rose 18.5 percent to 607 billion rupees during the year. Net assets rose 16 percent to 61.4 billion rupees.

SLT profits up 38% to Rs 5.3B

Ceylon FT: Sri Lanka Telecom PLC (SLT) reported a net profit of Rs 5.33 billion for the year ended 31 December 2013, up 38% from a year ago, financial results filed with the stock exchange showed.

Revenue grew 6% to Rs 60.14 billion and operating costs amounted to Rs 41.2 billion, up 6% from a year ago.

The group reported a foreign exchange loss of Rs 441 million, down from a Rs 1.21 billion loss a year ago.

Revenue from fixed telephony operations increased to Rs 36.7 billion, up from Rs 34.7 billion a year ago with profits increasing to Rs 5 billion, up from Rs 4.6 billion.

Mobile operations generated revenue amounting to Rs 27.5 billion, up from Rs 24.9 billion a year ago, with profits surging to Rs 3 billion, up from Rs 1.7 billion a year ago.

In ‘other segments’ operations, revenue fell to Rs 1.8 billion, down from 2.04 billion a year ago, reporting a Rs 170 million loss, up from Rs 1 million a year ago.
www.ceylontoday.lk

Dhammika’s biz empire opts for China’s Kingsoft over Microsoft!

After successful trials 2,000 PCs at Sampath Bank running on Chinese software; 800 PCs at LB Finance; diversified conglomerate Hayleys is next

If one thought Sri Lanka’s seeming takeover by China is confined to mega infrastructure projects, then there is a fresh business twist with Dhammika Perera’s business empire begining to embrace office software from the land of the dragons over Microsoft.

Following a thorough pre-trial study and analysis as well as successful trial, several of businesses in which Dhammika has considerable stakes have begun to roll out Kingsoft. For example, 2,000 PCs at Sampath Bank are now running on the Chinese software in addition to a further 800 PCs at LB Finance. Diversified conglomerate Hayleys is the next entity which will be rolling out Kingsoft. Dhammika’s business empire includes Royal Ceramic, Vallibel, Delmege Group, Amaya Resorts as well as Pan Asia Bank among others.



Considerable cost saving as well as greater scalability and user friendliness are among primary reasons why the Dhammika’s businesses have embraced Kingsoft.

Kingsoft Office is an office suite for Microsoft Windows, Linux, iOS and Android OS.

Hong Kong-listed Chinese software developer Kingsoft offers four office suites: Kingsoft Office Professional, Kingsoft Office Standard, Kingsoft Office Free and Kingsoft Office Student and Home. The company claims Kingsoft Office Professional 2013 offers features not available in Microsoft Office 2013, and is highly compatible with Microsoft Office file formats.

Kingsoft Office is one of the earliest companies to engage in the research and development of word processors and other office applications, and was the market leader in the late 1980′s and early 1990′s. Today Kingsoft Office is viewed as an inexpensive alternative to Microsoft Office. And it has made relationship with Dell and collaborations with Intel and IBM, and will continue to do so in the future, in order to consistently provide innovative, high quality products and services.

Established in 1989, Kingsoft Office has devoted over two decades to the development of user-friendly office software. It has maintained a similar user interface to Microsoft Office meaning that new users require no retraining, and there is a high degree of compatibility between the two products. It focuses on office software containing the three essential office applications: Kingsoft Writer, Kingsoft Presentation and Kingsoft Spreadsheets. It is also engaged in internet security and entertainment.

Kingsoft Office says it is committed to offering best quality and user-friendly office software to further expand to international markets and become a first class office software developer.

This week Kingsoft joined others including Tencent to build defences against potential internet attacks on Chinese users after support for Windows XP is discontinued on April 8.

Xinhua reported that the companies will start the protection before the shutdown and the “hedge” will continue during a transition period that may last for two to three years or even longer.

“The upcoming shutdown will seriously affect Chinese users,” said Tencent, adding that more than one quarter of China’s computers are running the operating system.
Microsoft announced earlier that it will stop providing technical assistance for Windows XP after 8 April, and computers will still work but they might become more vulnerable to security risks and viruses. 
www.ft.lk

National Equity Fund the best performing unit trust in 2013

The flagship National Equity Fund (NEF), managed by National Asset Management Limited (NAMAL) led the unit trust industry again with outstanding performance in 2013.

The NEF return of 17.1% in 2013 was the best of the 46 unit trusts in the industry according to data compiled by the Unit Trust Association of Sri Lanka.

NEF outperformed the CSE All Share Price Index (ASPI) by 12.30%in 2013 and has delivered an annualised return of 15.1% since inception in 1992.

Avancka Herat, Executive Director and Chief Investment Officer of NAMAL, stated the NEF was able to outperform both the aggregate market and competitor funds through superior selection of equities and timely reallocation of assets.

He stated that the introduction of the NAMAL Retirement Savings Plan linked to the NEF enables investors to benefit from these high returns, by investing regularly through a monthly investment plan (MIP). The Fund’s key equity holdings include Asiri Hospital Holdings, Dialog Axiata PLC, Central Finance, Ceylon Hospitals and Lanka IOC.

NAMAL is Sri Lanka’s first unit trust management company, having commenced operations in 1991 and was awarded the Best Investment Management Company in Sri Lanka in Investment Management Awards 2013 by World Finance.
www.ft.lk

Eden draws Rs. 363 m from LOLC

Eden Hotel Lanka (EDEN) in a filing to the CSE said yesterday that it has borrowed Rs. 363 million from its ultimate parent Lanka Orix Leasing Company Plc (LOLC).

It said that when carrying out refurbishments to the hotel in 2013, the company from time to time sought financial assistance from LOLC, resulting in a total borrowings of Rs.363mn by end September 2013.

EDEN further stated that given the incremental nature of the borrowings, the company had inadvertently overlooked the fact that the total had reached a level which required disclosure, which it made yesterday.

www.ft.lk

Sri Lanka Chevron unit net up 7.3-pct amid flat revenues

Feb 24, 2014 (LBO) - Profits at Chevron Lubricants Lanka Plc, rose 7.3 percent to 590 million rupees in the December 2013 from a year earlier, helped by falling input costs, interim accounts showed.

The firm reported earnings of 4.92 rupees per share for the quarter. In the year to December 2013 the firm reported earnings of 21.10 rupees per share.

Chevron Lubricants said revenues fell 1.3 percent to 2.8 billion rupees but costs fell at a faster 6.5 percent to 1.83 billion rupees allowing gross profits to grow 10.2 percent to 985 million rupees.

The firm had earlier said demand was slow amid a weak economy.

Sri Lanka's thermal energy production had picked up over the past few months, which usually results in higher demand for lubricants.

Sri Lankan stocks dip to over 8-wk low; index oversold

Feb 24 (Reuters) - Sri Lankan shares fell for an eighth straight session on Monday to their lowest close in more than eight weeks, led by large caps amid foreign selling in risky assets as the index fell into oversold territory.

The main stock index fell 0.91 percent, or 54.23 points, to 5,883.05, its lowest close since Dec. 27.

The index has dropped 4.84 percent in the last 14 sessions, erasing all the gains made since start of this year. It is down 0.50 percent so far this year, following a 4.8 percent gain in 2013.

The index has fallen into overbought territory, Thomson Reuters data showed.

Foreign investors sold a net 24.1 million rupees ($184,000) worth of shares on Monday, extending the outflow to 5.90 billion rupees in the past 12 sessions as some offshore funds exited the market.

The bourse has seen 3.90 billion rupees of foreign outflows so far in 2014, after enjoying net inflows of 22.88 billion rupees last year.

Analysts said investors were concerned over possible further foreign outflows, though local investors are still optimistic about risky assets due to falling interest rates.

Shares of market heavyweight Ceylon Tobacco Company Plc fell 3.28 percent to 1,119.60 rupees while top conglomerate John Keells Holdings fell 1.55 percent to 209.00 rupees.

The day's turnover was 499.4 million rupees, well below this year's daily average of about 1.13 billion rupees. 

($1 = 130.9500 Sri Lanka rupees) 

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

Sri Lanka stocks plunge 0.9-pct

Feb 24, 2014 (LBO) – Sri Lanka stocks plunge 0.91 percent Monday continuing the downward trend with losses in the tobacco and diversified stocks, brokers said.

The Colombo benchmark All Share Price Index closed 54.23 points lower at 5,883.05, down 0.91 percent. The S&P SL20 closed 29.82 points lower at 3,208.00, down 0.92 percent.

Turnover was 499.40 million rupees, down from 1.07 billion rupees last Friday, with stocks of 116 firms closing in the red against 53 gainers.

Index heavy JKH topped the turnover list with 154.25 million rupees of market transactions contributing to 31 percent of the daily turnover.

The aggregate value of all off market deals only accounted for 12 percent of the daily market turnover.

JKH shares and warrants also attracted most number of trades during the day.

Foreigners bought 145.81 million rupees worth shares while selling 169.93 million rupees of shares.

Ceylon Tobacco Company closed 38.00 rupees lower at 1,119.60 rupees and JKH closed 3.30 rupees lower at 209.00 rupees, contributing most to the index drop.

JKH’s W0022 warrants closed 1.60 rupees higher at 58.00 rupees and its W0023 warrants closed 10 cents higher at 61.10 rupees.

Bukit Darah ended 15.00 rupees lower at 560.00 rupees and Commercial Leasing and Finance closed 20 cents lower at 3.90 rupees.

Nestle Lanka ended 20.90 rupees lower at 2,000.00 rupees and Distilleries closed 1.00 rupee lower at 207.00 rupees.

Commercial Bank closed 40 cents lower at 114.50 rupees and Lanka Orix Leasing Company closed 80 cents higher at 75.00 rupees.

Dialog closed 10 cents lower at 9.10 rupees and Sri Lanka Telecom closed 90 cents higher at 42.90 rupees.

Vidullanka profits double for nine months ended in FY 2013/14

Vidullanka PLC’s group profit has doubled for the nine months ended for the FY 2013/14 in comparison to the nine month period of the last financial year. The profit after tax of Rs. 198 million is a staggering 138% increase from the last year. The Group revenue for the period topped Rs. 464.5 million, the company disclosed in the quarterly report filed to Colombo Stock Exchange.

Earnings per share for the group for the quarter ended is 9 cents earned through the 25% increase in quarterly revenue. The earnings per share for the last 3 quarters is 41 cents which is twice the EPS reported for the last financial year. The Group’s energy sales increased by 95.7% and the revenue from construction from project management rose by 34%.

RAM Ratings recently reaffirmed Vidullanka PLCs credit ratings to A- with stable long term outlook. During the period under review company invested Rs. 80.1 million in development of new projects in order to venture into more renewable power projects in Sri Lanka and Overseas.

The group has tremendous opportunity to grow in the backdrop of domestic demand for power is expected to grow at about 7% per annum in the next few years in line with robust economic growth, primarily supported by developing infrastructure facilities. Vidullanka, as a renewable energy producer is well positioned to benefit from this economic condition.

The Group financial statements indicate a promising future; especially with the commissioning of the 1.3 MW Wembiyagoda Mini Hydro Power Project (MHPP) to the national grid in March 2013 has made a significant boost in the profitability of the Group, along with the commissioning of the 2.5MW Madugeta MHPP in November. It is also seeking to complete the construction of the 4MW Lower Kothmale MHPP in 2014, which would further increase the bottom line of the Group financial statements in the upcoming financial year.

More recently Vidullanka PLC has commenced the construction of Rideepana MHPP, a 1.75 MW mini hydro power plant, located in the Badulla district through the project company Rideepana Hydro Power (Pvt) Ltd, a fully owned subsidiary of Vidullanka PLC. The total project cost is estimated to be Rs. 440 million and it is expected add 6.0 GWh of environmental friendly electricity, upon commissioning the power plant.

The company paid an interim dividend of 7.5 cents per share on 27 December 2013 following the successful operations in the financial year. The company’s shares closed at Rs. 3.50 as at 31 December 2013 at an annualised PE ratio of 6.4 times.

www.ft.lk

Swarna Maloney gets in touch with some Touchwood depositors

By Duruthu Edirimuni Chandrasekera

‘Wanted-by-the-authorities’ Swarna Maloney, former Group Managing Director of troubled forestry firm Touchwood Holdings’, has got in touch with some distraught depositors over the last two weeks.

“She called some of us from (she said) Cambodia and assured us that she will pay the due monies by months’ end,” a depositor who wished to be anonymous told the Business Times. He added that her plan is to raise money by selling Touchwood’s Plantations in Cambodia.

He also said that if she doesn’t return their dues, some of them will take ‘drastic’ measures.

Ms. Maloney and her husband and founder Chairman of Touchwood Holdings, Roscoe Maloney, fled the country last year when it was alleged that they had defrauded the company’s subsidiary Touchwood Private (Ltd)’s depositors.

Another subsidiary, Touchwood Investments PLC’s (TIP) newly-appointed Chairman Lanka Wijendra Kiwlegedara told shareholders at the annual general meeting held last September that he will secure over Rs.3 billion or US $ 21 million within the next few months to the company from various sources including from one of his other business’ that has a footing in the gem and jewellery and from his privately-known investors in Singapore, and Thailand.

The Securities and Exchange Commission (SEC) is pursuing the Maloneys on numerous fraud probes, according to SEC officials. “These investigations are ongoing,” Dhammika Perera, Officer-in-Charge/Deputy Director General of the SEC confirmed to the Business Times.
http://www.sundaytimes.lk/140223/business-times/swarna-maloney-gets-in-touch-with-some-touchwood-depositors-86324.html

Most finance Cos. racing for int’l funding partnerships to be better ‘brides’ for mergers

By Duruthu Edirimuni Chandrasekera

Most small finance companies, now on a consolidation drive, are scurrying to strike collaborations with international funding lines and investors in a bid to be attractive in the negotiation process when merging with others, industry sources said.

“Most don’t want to sell, but are eyeing opportunities to merge with strategic partners. In order to do that they need to be attractive to the bigger counterparts with whom they want to merge with. They cannot strengthen their assets ‘in a hurry’, but they can increase their capital base with private equity investors and funding lines,” a senior finance company CEO told the Business Times.

Industry sources said that while three firms have already sourced such funding, some small firms are also in discussion with international agencies for similar partnerships. Commercial Credit and Finance PLC, with an asset base of Rs. 24.3 billion as at December 31, 2013 is one of the recent examples which followed this route. They announced last week that frontier markets private equity investor, Creation Investments Capital Management LLC through its wholly owned subsidiary, Creation Investments Sri Lanka LLC has agreed to invest Rs. 1.68 billion (US$12.8 million equivalent) into Commercial Credit and Finance PLC (CCF). The transaction will involve the issuance of 80 million new shares for a consideration of Rs. 1.68 billion or approximately 25.15 per cent of CCF. The transaction will be completed subject to shareholder approval.

Senkadagala Finance last Tuesday also said that the International Finance Corporation has agreed to invest some US$ 7 million (as a loan facility) to support the growth of micro and small businesses across the country.

Nation Lanka Finance Plc, which is getting Rs. 700 million rupee equity investment from Global Emerging Markets (GEM) intends to boost its capital in a few months. GEM also will have the chance to buy unlisted warrants at Rs. 9.90 over the next two to four years, which could bring in another Rs. 674 million rupees, according to company officials.

In line with the recent budget proposal where small finance companies are to be merged reducing the number of finance companies to 20 from a current 58 and strengthening at least five Sri Lankan banks to double their assets to Rs. 1 trillion from a current Rs. 500 billion, most large finance firms will be discussing with their smaller counterparts to acquire them. The proposals are due by next month end.

This week some firms which have less than Rs. 8 billion in assets will be meeting the Central Bank team with their suggestions and for further discussions on this, a finance company CEO said.
http://www.sundaytimes.lk/140223/business-times/most-finance-cos-racing-for-intl-funding-partnerships-to-be-better-brides-for-mergers-86267.html

NBFI List

Central Bank of Sri Lanka (CBSL) in their proposed consolidation of the country’s non banking financial institutions (NBFIs) have categorized those as “A”, “B” and “C” respectively.

Category A comprises NBFIs with assets of more than Rs. eight billion, core capital of more than Rs. one billion and a “high degree of compliance with direction issued by Central Bank of Sri Lanka.” 

Those comprise 19 individual companies and “group wise companies”:13.

Category B comprises registered finance companies (RFCs) or specialized leasing companies (SLCs) or groups of RFCs and/or SLCs that do not fulfil one or more of the criteria of Category A. 

Those comprise 38 individual companies and 35 group wise companies.

Category C: NBFIs where business is at a standstill: One.

Listed category A companies (14): 

1. Alliance Finance Co plc (per: 5.0 and pbv: 0.8); 

2. Bartleet Finance plc (per and pbv are not applicable); 

3. Central Finance co. plc (per: 6.2 and pbv: 1.1); 

4. Citizens Development Business Finance plc (per: 4.3 and pbv: 0.7); 

5. Commercial Credit and Finance plc (per: 4.1 and pbv: 1.9); 

6. Commercial Leasing and Finance plc (per: 26 and pbv: 3.0); 

7. LB Finance plc (per: 5.4 and pbv: 1.2); 

8. Lanka Orix Finance plc (per: 13.2 and pbv: 1.7); 

9. Mercantile Investments & Finance plc (per: 10.6 and pbv: 1.1); 

10. People’s Leasing & Finance plc (per: 7.0 and pbv: 1.3); 

11. Senkadagala Finance plc (per: 5.3 and pbv: 1.4); 

12. Softlogic Finance plc (per: 6.7 and pbv: 0.9); 

13. The Finance Co. plc (per: Negative 0.9 and pbv: negative 0.2) and 

14. Vallibel Finance plc (per: 4.1 and pbv: 1.1).

Listed category B companies (20): 

1. Abans Finance plc (per: 79.8 and pbv: 2.6); 

2. AMW Capital Leasing and Finance plc (per: 3.3 and pbv: 0.5); 

3. Arpico Finance Co. plc (per: 7.3 and pbv: 0.9); 

4. Asia Asset Finance plc (per: 17.0 and pbv: 1.4); 

5. Associated Motor Finance Co. plc (per: 12 and pbv: 2.6); 

6. Bimputh Finance plc (per: 20.2 and pbv: 2.9); 

7. Capital Alliance Finance plc (per: Negative 52 and pbv: 1.9); 

8. Chilaw Finance plc (per: 16.5 and pbv: 1.5); 

9. George Steuart Finance plc (per: Negative 231.5 and pbv: 27.3); 

10. Merchant Bank of Sri Lanka plc (per: Negative 29.6 and pbv: 0.6); 

11. Multi Finance plc (per: Negative 2.8 and pbv: 1.3); 

12. Nanda Investments and Finance plc (per: 27.1 and pbv: 1.3); 

13. Nation Lanka Finance plc (per: 49.1 and pbv: 9.0); 

14. Orient Finance plc (per: 16.4 and pbv: 1.9); 

15. People’s Merchant Finance plc (per: Negative 6.4 and pbv: 0.9); 

16. Singer Finance (Lanka) plc: (per: 7.9 and pbv: 1.0); 

17. Sinhaputhra Finance plc (per: 11.0 and pbv: 0.9); 

18. SMB Leasing plc (per: 19.9 and pbv: 1.9); 

19. Swarnamahal Financial Services plc (per: Negative 1.9 and pbv: Negative 7.5) and 

20. Trade Finance & Investments plc (per: 6.5 and pbv: 1.4). 

(Source: Shiluka Goonewardene, KPMG, Principal, Transactions & Restructuring).
http://www.thesundayleader.lk/2014/02/23/nbfi-list/

Nine-member audit panel to submit report on 38 NBFIs

By Azhar Razak

Sri Lanka’s financial sector regulator, the Central Bank of Sri Lanka (CBSL) has appointed its nine-member accredited panel of auditors with the responsibility of performing a valuation, information memorandum and vendor due diligence on the 38 Non-Bank Financial Institutions (NBFI), an Assistant Governor of CBSL said last week. According to C. J. P Siriwardene, the panel of auditors have been tasked to submit a report to the CBSL by mid- March 2014 so that it could help determine pricing for potential buyers from Category A (Banks and the larger NBFIs).

“Since we will be paying for the services of the auditors, we will keep the report with us but will share the information with potential buyers on request,” Siriwardena said.
The CBSL has given a time period of until March 31, 2014 for local banks and category A NBFIs to identify partners of their choice from within the category B NBFI for such mergers/absorptions.

The consolidation approach the Central Bank recently put forward has directed 19 Category A Non Bank Financial Institutions (NBFIs) to discuss with 38 Category B NBFIs and identify merger partners and agree terms and conditions for Mergers/Absorption. The plan also says that all 38 Category B NBFIs has to merge either with local banks or merge amongst themselves so that they fulfill conditions of category A NBFIs.

According to the CBSL, Category A NBFIs are defined as those with assets more than Rs.8 billion, core capital more than Rs.1bn and those who have a high degree of compliance issued by CBSL. Those in the category B have been defined as those Licensed Finance Companies (LFC) or Specialised Leasing Companies (SLC) or groups of LFCs and/or SLCs that do not fulfill one or more of the criteria of the category A.

http://www.nation.lk/edition/biz-news

Eran wants probe on CB over CIFL

By Maneshka Borham

Opposition Member of Parliament Eran Wickramaratne recently called on the government to investigate the banking regulator, the Central Bank over its failure to take necessary action as there had been reports that the regulator had prior knowledge of the vulnerability of the now troubled Central Investments and Finance Plc (CIFL).

“CIFL, as it is shown in a Central Bank internal audit report, was in trouble two years prior to the revelations. The fact was concealed for unknown reasons or for reasons better known to the Central Bank. This needs to be probed as to why the Central Bank did not act at once these details were revealed,” the National List UNP MP, who was an Ex-banker himself, charged. He noted that the courts should inquire in to the fact that if Central Bank was privy to the fraudulent acts committed at CIFL.

Agreeing it was possible that the facts were concealed to protect the industry, as the regulator had to act with the interests of parties at large, the MP, however, said that the fact then has to be proven that it was done with good intention which should be ascertained by an independent investigation. “We cannot let the regulator get away by shirking their responsibilities as they are not above the law,” he stated adding that post-2013 debacle there is information of more finance companies that are financially vulnerable and it should be resolved by not concealing facts but also in a manner so as to not harm the industry.

http://www.nation.lk/edition/biz-news

Sri Lanka bank in talks with Paypal for inward payments: CB Governor

Feb 22, 2014 (LBO) - A bank in Sri Lanka is in talks with US-based Paypal to become its partner bank for inward remittances, Central Bank Governor Nivard Cabraal said.

Sri Lanka allows outward payments through Paypal via credit cards, but receipts and withdrawals from a domestic bank account are still not allowed.

Cabraal promised to free inward payments last year saying Sri Lanka must move with the times.

At a meeting with foreign correspondents based in Colombo Cabraal said one bank was in talks to become the correspondent bank for Paypal in Sri Lanka which will allow inward remittances.

Paypal inward remittances could boost e-commerce, crowdsourced outsourcing activity and as it has become a popular and less costly method for small payments.

But larger transactions like tourism services are also sold in many countries using Paypal.

Sri Lankan stocks fall to over 7-wk closing low; foreign exit continues

Feb 21 (Reuters) - Sri Lankan shares fell for a seventh straight session on Friday to their lowest closing in more than seven weeks, led by large caps amid foreign selling in risky assets.

The main stock index fell 0.32 percent, or 18.88 points, to 5,937.28, its lowest close since Dec. 31. It has dropped 4.97 percent in the last 13 sessions.

Foreign investors sold a net 438.5 million rupees ($3.35 million) worth of shares on Friday, extending the outflow to 5.27 billion rupees in the past 11 sessions as some offshore funds exited the market.

The bourse has seen 3.88 billion rupees of foreign outflows so far in 2014, after enjoying net inflows of 22.88 billion rupees last year.

Analysts said investors were concerned over possible further foreign outflows, though local investors are still optimistic about risky assets due to falling interest rates.

On Monday, Sri Lanka's central bank kept its policy rates steady at multi-year lows while analysts said local investors were active in the market after interest rates on treasury bills eased to multi-year lows, making fixed-income assets unattractive.

Shares of Nestle Lanka fell 3.77 percent to 2,020.90 rupees, while market heavyweight Ceylon Tobacco Company Plc declined 1.04 percent to 1,157.60 rupees.

Top conglomerate John Keells Holdings fell 0.93 percent to 212.40 rupees.

The index is still 0.41 percent up so far this year, following a 4.8 percent gain in 2013.

The day's turnover was 1.07 billion rupees, less than this year's daily average of about 1.15 billion rupees. 

($1 = 130.9250 Sri Lanka rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Sri Lanka stocks fall 0.3-pct

Feb 21, 2014 (LBO) – Sri Lanka stocks fall 0.32 percent for the seventh consecutive day with losses in the tobacco and diversified stocks, brokers said.

The Colombo benchmark All Share Price Index closed 18.88 points lower at 5,937.28, down 0.32 percent. The S&P SL20 closed 20.26 points lower at 3,237.27, down 0.62 percent.

Turnover was 1.07 billion rupees, up from 851.92 million rupees a day earlier, with stocks of 102 firms closing in the red against 65 gainers.

JKH closed 2.10 rupees lower at 212.30 rupees with 420.00 million rupees of an off market transaction contributing to 39 percent of the daily turnover.

The aggregate value of all off market deals accounted for 50 percent of the daily market turnover.

JKH’s W0022 warrants closed 40 cents higher at 56.40 rupees and its W0023 warrants closed 2.00 rupees higher at 61.00 rupees, attracting most number of trades during the day.

Foreigners bought 244.05 million rupees worth shares while selling 682.59 million rupees of shares.

Nestle Lanka ended 79.10 rupees lower at 2,020.90 rupees and Ceylon Tobacco Company closed 12.20 rupees lower at 1,157.60 rupees, contributing most to the index drop.

Bukit Darah ended 9.30 rupees lower at 575.00 rupees and Distilleries closed 30 cents lower at 208.00 rupees.

Commercial Bank closed 1.10 rupees lower at 114.90 rupees and Commercial Leasing and Finance closed 20 cents higher at 4.10 rupees.

Dialog closed 10 cents higher at 9.20 rupees.

Sri Lankan stocks fall to over 6-wk low; foreigners exit

Feb 20 (Reuters) - Sri Lankan shares fell for a sixth straight session on Thursday to a more-than six-week low, led by market heavyweight Ceylon Tobacco Company PLC and foreign selling in the island nation's risky assets.

The main stock index ended down 0.5 percent, or 30.08 points, at 5,956.16, its lowest close since Jan. 6. It has dropped 4.67 percent in the last 12 sessions.

Foreign investors sold a net 158.2 million rupees ($1.21 million) worth of shares on Thursday, extending the outflow to 4.83 billion rupees in the past 10 sessions as some offshore funds exited the market.

The bourse has seen 3.44 billion rupees of foreign outflows so far in 2014, after enjoying net inflows of 22.88 billion rupees last year.

Analysts said investors were concerned over possible further foreign outflows, though local investors are still optimistic about risky assets due to falling interest rates.

On Monday, Sri Lanka's central bank kept its policy rates steady at multi-year lows while analysts said local investors were active in the market after interest rates on treasury bills eased to multi-year lows, making fixed-income assets unattractive.

Shares of market heavyweight Ceylon Tobacco Co Plc fell 2.4 percent, pulling the overall index down.

The index is still 0.73 percent up so far this year, following a 4.8 percent gain in 2013.

The day's turnover was 851.6 million rupees, less than this year's daily average of about 1.15 billion rupees. 

($1 = 130.8700 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Sunil Nair)

Sri Lanka stocks close down 0.5-pct

Feb 20, 2014 (LBO) – Sri Lanka stocks close down 0.50 percent retreating for the sixth straight day with losses in the tobacco and banking stocks, brokers said.

The Colombo benchmark All Share Price Index closed 30.08 points lower at 5,956.16, down 0.50 percent. The S&P SL20 closed 24.24 points lower at 3,257.53, down 0.74 percent.

Turnover was 851.92 million rupees, up from 714.64 million rupees a day earlier, with stocks of 123 firms closing in the red against 53 gainers.

Dialog closed flat at 9.10 rupees with 138.00 million rupees of off market transactions contributing to 16 percent of the daily turnover.

The aggregate value of all off market deals accounted for 48 percent of the daily market turnover.

JKH’s W0022 warrants closed 3.00 rupees lower at 56.00 rupees and its W0023 warrants closed 1.00 rupee lower at 59.00 rupees, attracting most number of trades during the day.

Foreigners bought 311.21 million rupees worth shares while selling 469.42 million rupees of shares.

Ceylon Tobacco Company closed 29.00 rupees lower at 1,169.80 rupees and Commercial Bank closed 2.00 rupees lower at 116.00 rupees, contributing most to the index drop.

NDB Capital Holdings closed 34.90 rupees lower at 500.00 rupees and Bukit Darah ended 6.20 rupees lower at 584.30 rupees.

Nestle Lanka ended 19.60 rupees lower at 2,100.00 rupees and JKH closed 60 cents lower at 214.40 rupees.

Aitken Spence closed 1.00 rupee higher at 101.00 rupees and Distilleries closed 90 cents higher at 208.30 rupees.

SLT closed 20 cents higher at 41.90 rupees.