Sri Lanka shares end at over 1-yr high on lower rates, foreign inflows

(Reuters) - Sri Lankan stocks rose for a fifth straight session on Monday to close at their highest in more than a year, led by large-caps such as Ceylon Tobacco Company PLC amid lower interest rates and continued foreign buying boosting investor sentiment.

The main stock index rose 0.24 percent, or 15.13 points, to close at 6,378.62, its highest since June 5, 2013.

Analysts said the market would move sideways in the short term with lesser risk due to lower interest rates, with yields on treasury bills edging down further on Wednesday at a weekly auction.

Analysts said foreign buying could continue due to lower inflation after the government data showed annual inflation eased to 2.8 percent in June, its lowest since February 2012, edging down from 3.2 percent a month ago

"With low interest rates and low inflation, investors are looking at taking positions in the market due to continued foreign buying," said a stockbroker, asking not to be named.

The bourse saw net foreign inflows for the fifth straight session. Foreign investors were net buyers of 184.7 million rupees ($1.42 million) of stocks on Monday, extending foreign inflows so far this year to 6.25 billion rupees.

However, analysts said investors are concerned over the recent ethnic violence and possible implications of a government spokesman saying Sri Lanka bought Iran crude via third parties.

Ceylon Tobacco Company rose 1.34 percent to 1,063.90 rupees a share.

Turnover was 1.45 billion rupees, higher than this year's daily average of 993.8 million rupees.

The market has been on a rising trend since late February due to continued foreign buying and lower interest rates. ($1 = 130.3000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil Nair)

Sri Lanka shares close up 0.2-pct

June 30, 2014 (LBO) - Sri Lanka's shares closed 0.24 percent higher on Monday boosting turnover to a six-week high amid strong foreign participation, brokers said.

The Colombo benchmark All Share Price Index closed 15.13 points higher at 6,378.62, up 0.24 percent. The S&P SL20 closed 13.58 points higher at 3,534.43, up 0.39 percent.

Turnover was 1.45 billion rupees, up from 1.13 billion rupees last friday with 98 stocks closed positive against 88 negative.

John Keells Holdings closed 20 cents lower at 219.90 rupees with seven off-market transactions of 266.77 million rupees changing hands at the same price per share contributing 18 percent of the daily turnover.

The diversified conglomerate also had market transactions of 223.37 million rupees contributing 15 percent of the turnover.

JKH’s W0022 warrants closed 10 cents lower at 59.90 rupees and its W0023 warrants closed 1.10 rupees higher at 71.10 rupees.

The aggregate value of all off-the-floor deals represented 23 percent of the turnover.

Adam Investments closed 90 cents higher at 5.90 rupees, attracting most number of trades during the day.

Foreign investors bought 677.96 million rupees worth shares while selling 493.31 million rupees worth shares.

Ceylon Tobacco Company closed 14.10 rupees higher at 1,063.90 rupees and oil palm firm Shalimar (Malay) closed 284.60 rupees higher at 2,444.60 rupees, contributing most to the index gain.

Commercial Bank closed 1.10 rupees higher at 140.60 rupees and People’s Leasing and Finance closed 40 cents lower at 16.00 rupees.

Nestle Lanka closed 12.70 rupees higher at 1,980.10 rupees and Cargills Ceylon closed 50 cents lower at 149.20 rupees.

Sri Lanka's Cargills Bank opens doors

Starting Up June 30, 2014 (LBO) - Cargills Bank Plc, Sri Lanka's newest commercial bank promoted by listed Cargills (Ceylon) Plc and CT Holdings opened for business Monday.

Central Bank Governor Nivard Cabraal said as Sri Lanka emerged from a 30-year war and already the changes were beginning to be seen and the new bank could grow with the country.

Chairman Louis Page said the bank will cater to all social and income groups.

Managing Director Haris Premaratne said key Sri Lankan business groups and entrepreneurs including Merril J Fernando, Mahesh Amalean, Ashok Pathirage, Melwa group, Hydramani group, Phoenix Ventures, Ishara Traders and Lalan Rubbers had invested in the bank.

The bank was issued a provisional license shortly before the Central Bank started a process to consolidate the banking sector.

Lanka Aluminium awarded contract for Mövenpick Hotel

Lanka Aluminium Industries PLC recently announced that it has been awarded a contract by M/s Softlogic City Hotels [Pvt] Ltd - the franchise holder of Mövenpick Hotels Corporation - to design, supply and install the Façade and Window systems for the new Mövenpick Hotel which is currently under construction in Colombo 3.

The Mövenpick Hotel Colombo is a 200 room business hotel spread over 24 storeys.

The unique framing structure for the Front Facade which ranges from the 6th to the 22nd floor is being developed by Lanka Aluminium in collaboration with an overseas Systems Design House to bring to life the vision of well-known Architect Murad Ismail of MICD, and will probably be the first such intricately detailed glazed façade to be installed on a building in Sri Lanka.

Installation of the window systems will begin in June and end in mid-2015 in time for the scheduled launch. "We always offer high quality products at competitive prices to our customers. Our extrusion systems are modern designs manufactured to international standards, easy to fit and are of great value," said Dinal Peiris.
Source: www.dailynews.lk

Sri Lanka conglomerate and Spanish hotel chain to build $ 100m resort

Aitken Spence joins up with Spanish chain to start a new hotel in Ahungalla under BOI.

Aitken Spence partners with RIU Hotels Spain to build USD 100mn resort in Ahungalla spearheading the first business model around Southern development.

Aitken Spence PLC entered into an agreement with the Board of Investment of Sri Lanka (BOI) to set up a five star Luxury Resort in Aungalla. This agreement was signed by the Chairman of the BOI, Dr. LakshmanJayaweera and the Directors of Aitken Spence MalinHapugoda and VipulaGoonathilake.

Aitken Spence PLC will launch the first business model involving the Southern Highway and the Mattala Airport by investing in a USD 100 million beach resort in Ahungalla to be managed by an international hotel chain. The 5 story 500 roomed 5 star luxury resort which will be managed by RIU Hotels, Spain, would also be a first for the Spanish chain, being their inaugural project in the Asia Pacific region.

"The timing of the hotel's opening will be right since the Southern Highway to Hambantota is expected to reach completion by then and we have the Mattala Airport facility already in place, giving us the perfect mix for our business model. Aitken Spence has always encouraged infrastructure development in the country and our investment is proof of our confidence and support of the Government's development plans" said RajanBrito, Deputy Chairman of the Group.

The Aitken Spence management is also of the opinion that the private sector needs to develop business modes of this nature, which are in line with the Government's vision for the country's development.

BOI stated, "BOI is very pleased that this project will be started in Ahungalla. The policy of the Government is to get 2.5 Million tourist arrivals by 2016. Hence hotel room capacity needs to be increased to meet growing demand"

The project will also be unique in its concept, since it will introduce Charter flights to the country. The hotel which would cater to high end customers looking for long stay vacations will arrive on Boeing 787 Dreamliner charters which can carry up to 200 – 300 passengers at a time. RIU Hotels is an all-inclusive model which has seen international success across 107 properties managed by them in 16 countries.

This business model spearheaded by the Group would also have a snowball effect in developing the tourist industry, particularly in the Deep South of the country.

"This would be a huge boost to the tourism sector as 700 - 800 guests coming into the country in one go would help in creating international awareness of Sri Lanka as an emerging holiday destination in Asia" says the Deputy Chairman.
www.island.lk

Fitch affirms People’s Merchant Finance at ‘BB+’

Fitch Ratings Lanka has affirmed People’s Merchant Finance PLC‘s (PMF) National Long-Term rating at ‘BB+lka’. The Outlook is Stable.

PMF’s rating reflects Fitch’s expectation that support would be forthcoming from its main shareholder, state-owned People’s Bank (PB; ‘AA+(lka)’/Stable), if required. PB has a 36% effective shareholding in PMF, directly and via PB’s subsidiary People’s Leasing & Finance PLC (‘AA-(lka)’/Stable). Fitch’s view of support is also based on PMF’s association with, and consequent reputational risk to, PB’s franchise given the common brand identity, PB’s representation on PMF’s board and support demonstrated by PB in the form of borrowings and equity injections. Nevertheless, there is a multiple notch differential between PMF’s and PB’s ratings, taking into account PMF’s relatively less important role in and lower integration with the group’s overall operations.

Key rating sensitivities- national ratings and senior debt
PMF’s rating may be downgraded if there is any change to PB’s ability or propensity to extend support. This may stem from a change to PB’s National Long-Term Rating or a material weakening of linkages with PB, such as a dilution of PB’s effective shareholding or board control.

PMF’s standalone profile is very weak and characterised by continuing operating losses, deteriorating asset quality, and a thin loss-absorption capacity.

The company made a pre-impairment operating loss of Rs. 6.7 million in FY14 as a result of lower net interest margins and high operating costs. PMF also incurred significant loan impairment charges of 3% of average loans in FY14. This stemmed from a further weakening of PMF’s asset quality along with a challenging macroeconomic environment, which has affected its largely subprime customer base. Fitch believes that PMF’s loan book could face further asset quality stress unless risk management is strengthened.

PMF’s funding is predominantly from term deposits, which, although improving, remains concentrated. Fitch expects liquidity support from PB to be forthcoming if required.

Fitch believes that PMF is likely to be merged or acquired as a part of the Government of Sri Lanka’s ‘master plan’ to consolidate the financial system.
www.ft.lk

Orient Insurance to go public in October

* Keen on listing despite likely exemptions to foreign-owned, parent-quoted entities
* Entry into life insurance in medium term plans
* In SL to add value and not capture market share by undercutting rates, says Orient Chief
* Confident company will have a YOY growth of 15% for the next three years
* Stresses the need for joint effort amongst insurance companies to increase awareness on the need of insurance policies

By Shabiya Ali Ahlam
Orient Insurance Sri Lanka, which has been in operation in the country since December 2011, is all set to be listed on the Colombo Stock Exchange (CSE) in October this year, complying with regulations set by the Insurance Board of Sri Lanka (IBSL).

The insurer, which is a member of the Al-Futtaim Group, has not requested from the regulator to be exempted from the requirement of going public even though it is already listed on the United Arab Emirates (UAE) stock exchange.

While some foreign owned insurance companies listed in other countries had requested for an exemption in this regard, UAE President/Orient Insurance Sri Lanka Chairman Omer Elamin said the institution will comply with the law.

“If the law says we should be listed then we will. We feel that under the law no one can be exempted. If there are any changes in the law we will comply. Keeping in line with that, Orient Insurance Sri Lanka is getting ready to be listed in the CSE by October this year,” Elamin told the Daily FT during the sidelines of the launch of ‘Travel Care’, its newest policy.

The local insurance law requires all insurers to be listed by 11 February 2016, and those insurers registered with the IBSL after 11 February 2011 to go public within three years.

However, fully foreign-owned insurers that are owned by a holding company incorporated abroad and listed on a stock exchange acceptable by the IBSL are to be exempted on request under changes planned to the insurance law.

With Orient Insurance Sri Lanka current offering only general insurance policies, it has in its medium term plans to bring in life insurance as well.

“Since we will need two licenses we thought that we don’t want to ride two horses at the same time. We will first establish the general insurance company and then once that it reaches a certain stage of stability we will move into life,” he shared.

According to Elamin, the progress of Orient Insurance Sri Lanka is on track and as planned. Stating the company is in Sri Lanka to add value and not capture market share by undercutting rates, he stated with this policy the company has done well, if not better than expected.

Having recorded a net profit of Rs. 6 million in its second year of operations, Elamin is confident the company will record a higher profit by the end of 2014 and will continue have a 15% YOY growth for the next three years. “All in all we are satisfied with the progress of the company,” said Elamin.

Acknowledging that the insurance penetration in Sri Lanka is on a declining trend, Elamin noted this is due to the awareness on the need and importance of having a policy not being at the required level.

To improve this situation he said it is necessary for all insurance companies to come together work towards this endeavour.

“There is defiantly a need to increase awareness. For this insurance companies will have to join hands and this can probably be done through the Insurance Association of Sri Lanka (IASL). It is important they work together to increase the awareness of the public on the importance of insurance. It should be a joint effort of the whole market.”

Orient Insurance Sri Lanka currently handles all classes of general insurance namely fire, motor, marine import and export, and property insurance. The company also offers casualty, accident, liability, and medical insurance covers.

Orient Insurance Sri Lanka and Orient Insurance OJSC are part of the Al-Futtaim Group which has been in operation since 1930 and is one of the most diversified business conglomerates based in the UAE.

Orient Insurance PJSC has an ‘A’ rating from Standards & Poor’s and an ‘A Excellent’ from AM Best. The business is recognised to be one of the largest insurers in the Middle East.
www.ft.lk

Sri Lanka inflation to be 2.8-pct in June 2014: Treasury Secretary

June 29, 2014 (LBO) - Sri Lanka's inflation would be 2.8 percent in June and the country now had strong economic growth and a stable exchange rate, Treasury Secretary P B Jayasundera said.

Jayasundera told a forum of Sri Lanka's key exporters and importers Friday that as he walked into the forum he got a text message that inflation in June would be 2.8 percent.

"International rates. And last five months plus this month we are having inflation below 5 percent," he said.

"Single digit. So governor central bank can have a carnival. He can be a governor who can claim 'I am a governor of the central bank because monetary policy, financial stability is in place'."

He said no bank has collapsed.

"Exchange rate is flexible, yet foreign exchange rate regime is stable," Jayasundera said.

"Flexibility does not mean ruthless fluctuations. So it needs to be predictable. In fact that has come in line."

He said foreign reserves were also nearly 9 billion US dollars and was moving towards the 10 billion mark.

Sri Lanka's rupee has been facing upward pressure over several months after weak or negative credit growth reduced outflows of foreign exchange as domestic demand fell and a depreciated exchange rate decimated the spending power of the poor and the rich alike.

Sri Lanka is recovering from a balance of payments crisis triggered in 2011 after the state manipulated energy prices with bank loans which were ultimately accommodated with central bank credit (printed money) through sterilized foreign reserve sales.

The rupee fell from 110 to 130 to the US dollar in the wake of the crisis.

Sri Lanka has been prone to high inflation and balance of payments trouble since shortly after 1951 when a hard peg was broken by then finance minister J R Jayewardene and a money printing central bank was set up to join then now collapsed Bretton Woods soft-peg system.

The forex shortages also gave an opportunity for trade-deficit Mercantilists and autarkist- nationalists to raise their head and seek rents from protectionism and import substitution, denying the less affluent affordable access to products especially foods, critics say.

Another pyramid scheme busted

By Charundi PanagodaView(s):

Around September last year, Malin, a businessman from Beliatta, received a phone call from his elder sister who happily informed him about the “really high” returns she was receiving from an “investment” at a company called Panora Advertising. She talked about receiving some Rs. 40, 000 a month from this company.His sister had heard about Panora from a relative of her husband. This relative was recruiting members of his family, and so far had recruited “about a hundred” people for a Rs. 3,000 fee for each person roped in. Even an old aunt of Malin’s had taken out a huge lease on a vehicle to invest in Panora. Around this time, Panora had become “very well known” in the area.

Malin, too, wanted a piece of that pie. So he and a friend drove to Ambalantota, “a little bit further from the town, near the temple,” where Panora’s main office was located “to check it out.” When his sister first told him about the company, frankly, he was suspicious. It all sounded just a bit too good to be true. But when he visited the office, his suspicions began to dissipate little by little.

“The office looked like a legitimate place,” he recalled. “There were about 10 to 15 support staff, computers and the rest. Even some Army personnel were there. I don’t know whether they were buying anything, but they were there.”

Malin and his friend were told that they could receive monthly payment for “watching ads” online. The company’s director, Somalal, explained to them the “business of advertising.” Big marketing companies paid huge sums of money, “about 15 to 20 lakhs,” Somalal told them, to advertise on TV shows. Panora could do for customers like Malin what the big marketers were doing for TV shows, was Somalal’s sales pitch to them.

“He said big ad companies paid them for showing ads,” Malin said recounting the encounter. “He said with that ad revenue, they’d be able to pay about a 25 per cent interest rate on an initial investment from us.”

So Malin purchased a Panora “investment package” for Rs. 156,000 (the minimum package was Rs. 1,800) where he was promised a Rs. 10,000 weekly payment for two years for watching ads online on www.panoraadvertising.net. Malin is only a small-time businessman. He collects “things like pepper” from villages to be sold in Colombo. He got the money to invest in Panora by pawning his wife’s jewellery, thinking he’d recover it all in a couple of months.

Last Monday the Tangalle Police arrested Jayasinghe Manachchige Somalal for defrauding people by running a pyramid scheme. The Central Bank defines a pyramid scheme as “… where a participant is required to contribute or pay money, and the benefits earned by the participant are largely dependent on the increase in the number of participants in the scheme; or increase in the contributions made by the participants in the scheme.”

network marketing, where “individuals sell products to the public — often by word of mouth and direct sales,” according to consumer protection information provided by the Federal Trade Commission, an independent U.S. Government agency. If the money the marketers make is based on actual sales to the public, it could be considered a genuine marketing plan. But if the money is based on the number of people recruited and the number of sales to them, then it’s a pyramid scheme.

According to Central Bank information pamphlets, pyramid schemes can take many guises, such as buying gold coins or “colourful” wrist watches, providing some services online, or as in the case of Panora, asking customers to deposit or invest a sum of money. These schemes were made illegal in Sri Lanka by an amendment to the Banking Act No. 30 of 1988, where offering or participating in a pyramid scheme is deemed a criminal offence.

“Pyramid schemes are ultimately unsustainable because the number of participants increases exponentially,” said Dr. Sirimal Abeyratne, Professor in Economics at the Colombo University. “It can’t run forever, when participants come to withdraw money it collapses, and more the participants greater the damage. A big, island-wide scheme like this could even cripple the whole financial system.”

For his deposit in September last year, Malin received only one week’s payment after a five-week waiting period. After that the payments stopped. Last December, Panora was closed for weeks and its accounts were frozen pending a Central Bank investigation for not being a licensed financial institution, and yet Somalal continued to promise his customers payment. In a YouTube video uploaded about a month ago, Somalal described his legal troubles as “agitation” caused by “jealous people.”

Somalal had been running the scheme for about five months and had recruited about 25,000 customers, said OIC Wasantha Kumara, one of the investigating officers. The company had three bank accounts, and had even issued receipts to customers for transactions, OIC Kumara said. Somalal made around Rs. 150 to Rs. 200 million from the whole venture. He used the money mostly to buy supermarkets and filling stations. By the time he was arrested he had spent over three-fourths of the money he made.

He and a partner of his, Nilan Indika, who has an arrest warrant out for him, had got the idea for floating Panora from an identical establishment in Tissamaharama called Luminous Advertising, which was also busted earlier this year. Somalal and Nilan had worked at Luminous, where they “quickly picked up the business,” OIC Kumara said.

“Somalal was a mason baas by profession,” he added. “He was only educated up to O/L and barely passed even that, but his customers were engineers, doctors, teachers, and even some policemen. However, he is a good orator and really knows how to convince people. He says he did this to earn a living.”

Somalal, a 32-year-old impoverished man from Dikwella, promoted Panora as a legitimate, up-and-coming business with weekly meetings and community events, including one at a Hambantota hotel where about 200 people turned up. The company even got a two-page promotional write-up published in the Sunday Lakbima.

Despite the hype, it eventually came to a point where Somalal could no longer pay his customers. Some angry customers even protested outside his home some months back until the Police dispersed them. Customer complaints mainly prompted police investigations into Luminous and Panora.

Malin is only one out of hundreds of people who lost money in this scheme. A number of victims the Sunday Times spoke with said they had pawned gold jewellery to raise money, jewellery they’ll never get back. Chitra, a small tea shop owner from Tissamaharama said she borrowed money from a number of people last year for a Panora “investment,” when it was gaining popularity in the town. Now she has to ward off the moneylenders, on top of worrying about her children’s school fees.

Central Bank officials say, despite the many public warnings people continue to fall for scams like Panora’s because they are “fooled by the high returns, and get greedy.”"There are so many legal ways to invest but people want to make easy money at whatever risk,” a Central Bank communications official said. “These things are difficult to prevent. It is difficult to convince people of the risk until it’s too late. Despite what happens to others, they think they will somehow get their money back.”

To avoid such potential frauds, officials advise the public to be aware of a country’s normal interest rate and be wary of anyone offering “extraordinary rates.” The Central Bank advises the public only to transact business with financial institutions licensed by the Bank.

www.sundaytimes.lk

Touchwood: A case of deception and confusion

By Sunimalee Dias

Touchwood Investments PLC has filed an appeal in the Supreme Court against the Commercial High Court order issued to wind up the company.

The company was issued the winding up order on June 5 and liquidator Mr. Sudath Kumar was appointed as well.

Mahogany trees at the Gomaragala Estate in Eheliyagoda.

However, in a stock exchange filing the company stated that they had appealed their case against the winding up order.

Touchwood Investments PLC ran into trouble when they were found to be unable to pay back their investors cum clients who had invested in the purchase of trees on their teak, mahogany, sandalwood plantations in Sri Lanka and Agarwood plantations in Thailand.
It was found out that in the winding up case that the company had duped investors to believe that all Touchwood companies were connected under one large group.

It was noted during the case that the Touchwood which started as a Touchwood Investments (Pvt) Ltd in 1999 changed name in 2001 to Touchwood Investment Ltd and later registered under Touchwood Investments PLC in 2007.

In fact in their Annual Report for 2012/2013 it was found that the company referred to other Touchwood companies as affiliates, subsidiaries, associates and authorised representatives and even in the Harvest Agreement Certificate of the Petitioner in the winding up case. But correspondence with the investors was carried out under the cover of five other Touchwood company names.

The chart indicates the number of companies that were run by Roscoe A. Maloney along with his wife Swarna Maloney.

During the investigation carried out by the Securities and Exchange Commission (SEC) it was noted that the board of directors present remained mum when queried about the number of companies and their connections except to state that the companies only had common directors namely Roscoe and Swarna Maloney and Asitha Koralage who was the company’s Deputy Chairman.

When the company ran into problems in terms of paying back the investors upon the maturity of the trees it was found that the company management was scurrying from one end to another in another in a bid to get the money.

In this respect, the Maloneys used their Touchwood (Pvt) Ltd company registered in Moratuwa to raise over Rs.200 million through a debenture issue to settle the Agarwood plantation clients.

They were found to have settled their personal due to by inflating the values on assets belonging to Touchwood PLC. This money the Maloneys’ used to purchase controlling interest of ASPIC Holding Private Ltd (which is a holding company of Central Investments Finance PLC).

In addition, following investments made in Cambodia on alleged state land development the Maloneys’ borrowed money through Touchwood Investment PLC for Cambodia property firm Touchwood Investment PLC Property with 5 acres of vanilla and 5 acres of sandalwood in Matale valued around Rs.27 million used to settle lenders.

Moreover, the Maloneys’ transferred approximately Rs.150 million deposits held at LOLC under Touchwood Investment PLC to LOLC as payback.

LOLC sold Touchwood Investments PLC shares to recover loans with share composition become 90 per cent public and 10 per cent non-public (Mr. Maloney’s shares) and the Touchwood Hong Kong stake in Touchwood Sri Lanka was also sold in April/May 2013.Further during the court hearings it was revealed that cheques presented in open court by current Touchwood Investments PLC Chairman Lanka Kiwlegedara to pay back the petitioner in the winding up case had bounced.

At the conclusion of the hearings the Commercial High Court issued the order based on the fact that the company had no money to pay back the investors as a reason for the winding up as a result of which the liquidator was appointed as well.

The fact that the company’s continuous failure to settle the debts owed to the Petitioner and other creditors have also been made note of when delivering the Order.

CIFL: Depositors plan to appeal against recent court ruling

By Quintus PereraView(s):

The CIFL (Central Investment and Finance Ltd) depositors are restlessly awaiting a copy of last week’s Appeal Court decision dismissing their case against the CIFL and the Central Bank (CB) as they want to file an appeal in the Supreme Court (SC).

The dismissal of the appeal paves the way for the CB to go ahead with its restructuring plan unless the depositors are able to move the SC to get a stay order pending determination of their proposed appeal.

Some members of the CIFL Depositors Association (CIFLDA) monitoring the stock market have found one individual, believed to be a politically-powerful government advisor, to be continuously buying CIFL shares in the past few days to the tune of 250,000 shares per day.

In this manner, if this person continues to purchase shares he could be a majority shareholder and later there is a possibility of his coming forward as an investor. One of the CIFLDA members explained that if the person becomes an investor the commitment of the interest thereby paid to the depositor would be low.

The total deposits, he said, is Rs. 3.5 billion and assuming 60 per cent is converted into shares (under the CB plan) the amount so converted is Rs. 2.1 billion with the remainder 40 per cent being Rs. 1.4 billion and this 40 per cent would be the existing deposit base.
At the rate of 5 per cent the interest commitment would then be Rs. 70 million only. So, he said, that any investor who makes a low investment will benefit from these flaws.

Then that means, the CIFLDA member pointed out. the deposit liability could be brought down and the interest commitment would then come down, making it an investor-oriented plan and not a deposit-oriented one. He said that thus, whoever who now purchases large chunks of shares at such low rate as 60 cents per share could be working on an agenda set by the authorities.

Meanwhile M.A. Gunasinghe, Administrative Secretary, CIFL Depositors Association (CIFLDA) said their committee met on Monday and confirmed the plan to appeal against the Appeal Court decision.

One depositor, H R Perera, an attorney-at-law himself from Dehiwela, has filed a private plaint at the Fort Magistrates Court to recover his deposit of Rs 1.5 million and the interest thereof as the maturity period is over.

He said the CIFL has failed to pay the capital plus the interest. He said that at the last date the case could not be heard as the summons could not be served and he obtained a further date.

Mr. Perera told the Business Times that several of the CIFL depositors have complained to the police to recover their money and the police is awaiting the Attorney-General’s decision to proceed with prosecutions.

P. K. Mahindapala, Secretary, CIFLDA said that they are in search of genuine investors to finance the failed CIFL and once such investors are found they would be routed through courts. To resolve all these matters they would be summoning a general meeting of all the depositors very soon.

The Business Times is inundated with pathetic woes of these desperate persons, most of them ailing old people, and with their means of living lost, their end appears to be etched in their faces.
www.sundaytimes.lk

Bad weather drives Maskeliya to the red, but investment sustained

Plants rubber in Bandarawela, citrus and cinnamon on tea estates

Dr. Sena Yaddehige, Chairman

Maskeliya Plantations PLC, a member of the Richard Pieris group, has posted a loss of Rs.92.2 million in the year ended March 31, 2014 against a profit of Rs.151.7 million a year earlier but had boosted capital expenditure to Rs.230.3 million from Rs.211.4 million the previous year.

The company’s Chairman, Dr. Sena Yaddehige attributed these results to unfavourable weather including excessive rainfall and continued gloomy conditions from May to July with some of their estates recording only 40% of the estimated crop during this period.

Also the wage hike and short supply of key inorganic fertilizer during the financial year had hurt the company with the situation worsening with dry weather in the last quarter of the year under review.

Production was down 8% during the year to 8.25 million kg. of tea and despite better prices, turnover was down 4% to Rs.3.4 billion.

The crop was the lowest ever due to adverse weather conditions in the Maskeliya, Upcot and Talawakelle regions. However, they have maintained good quality in the tea produced.

Capital expenditure covered replanting and maintenance of tea (Rs.164 million), Rs.39 million for rubber planting, Rs.14 million for fruit cultivation and Rs.2 million for cultivating cinnamon.

Maskeliya had planted rubber in poor tea land and cultivable bare land in the Bandarawela region and expected that dendro power (gliricidia) and fruit cultivation projects undertaken will give long-term benefits upon completion of the crop diversification process.

"Maskeliya Plantations PLC commenced harvesting of timber in accordance with the Forestry Management Plan during the year under review. Action has already been initiated to

plant timber species in the areas where timber has been harvested in order to establish the same canopy in the plantation and to generate income in the future," Yaddehige said.

"The company plans to introduce more effective methods to improve productivity and to eliminate losses due to the shortage of workers during high cropping periods."

Maskeliya controls 10,561.33 ha of land in Upcot, Maskeliya, Talawakelle and Bandarawela.

The company has a stated capital of Rs.673.7 million, a general reserve of Rs.540 million, timber reserves of Rs.517.4 million and retained losses of Rs.321.8 million in its books. Total assets stood at Rs.4.2 billion and total liabilities at Rs.2.79 billion.

RPC Management Services (Pvt) Ltd with 83.40% is the major shareholder followed by David Pieris Motor Company (2.15%) and Mr. C.P. de Silva (1.45%).

A management fee of Rs.150.4 million, down from Rs.184.1 million a year earlier, had been paid to the parent company, the report revealed.

The directors of the company are: Dr. Sena Yaddehige (Chairman), Mr. J.H.P. Ratnayeke (Deputy Chairman), Mr. S.S. Poholiydde (CEO), Dr. H.S.D. Soysa, Mr. E.M.M. Boyagoda and Dr. L.S.K. Hettiarachchi (w.e.f. 02.05.2014)

www.island.lk

Three production lines in new Biyagama factory operational

DPL profitable despite Rathupaswela disaster

A.M. Pandithage, Chairman

Dipped Products PLC, one of the world’s leading manufacturers and distributors of protective gloves, has completed what its Chairman called "the most challenging period the company ever endured" as a result of the forced closure of its Rathupaswala factory.

DPL Chairman A.M. Pandithage, has told shareholders in the company’s recently released annual report, that their hand was forced despite independent investigations confirming that the factory’s treated effluents were not the cause of alleged ground water quality issue.

Despite the factory closure costing the company tidily, DPL saw group revenue down only by a marginal 2% to Rs.23.1 million although the group’s after-tax profit was down 35% to Rs.1.16 billion and the profit attributable to equity holders of the parent down 44% to Rs.795.1 million.

Focusing on overcoming multitude of challenges that followed the closure of the factory, DPL took a strategic decision to incorporate a new glove manufacturing facility at the BOI’s Biyagama industrial zone.

"The closure of the factory unfortunately led to severe losses across the value chain, from rubber farmers to our global customers, apart from the loss of foreign exchange to the country," Pandithage and DPL’s Managing Director K.I.M. Ranasoma said in a joint statement in the annual report.

The contribution by the group’s hand protection sector to the bottom line was down to Rs.910 million during the year under review from Rs.1.34 billion a year earlier.

Profits from plantations too were down to Rs.747 million from Rs.962 million a year earlier, the statement said. This was as a result of the depressed rubber market, adverse weather conditions and a 20% wage increase effective during the year under review.

"Profit before tax decreased by 32% at Kelani Valley Plantations PLC compared to the previous year, while Talawakelle Tea Estates PLC recorded its second highest earnings since inception," the statement said.

Mabroc Teas, a branded tea exporter, had delivered improved results during the year with revenue up 7% to Rs.2.47 billion and the pre-tax profit up to Rs.49 million.

Pandithage and Ranasoma said that the new factory at Biyagama involved a total investment of Rs.1 billion and this fast tracked project had seen three manufacturing plants already into commercial production.

"This strategic investment decision also supports adding new capacity to cater to DPL’s future growth," they said.

DPL expressed its gratitude for the understanding and cooperation extended by their customers worldwide during a difficult period and thanked them for the trust placed on the company. Their endurance in continuing with DPL despite the tremendous pressures within their own business operations, arising from supply disruptions for more than 10 consecutive months, was highly appreciated.

The new Biyagama factory owned by DPL Premier Glove Manufacturing Limited, approved by the BOI, was expected to reach steady production by the third quarter of the current financial year.

　

"In the medium term, DPL Premier Gloves factory will add new production capacity for unsupported latex gloves with a view to expanding DPL’s market footprint in this segment. Likewise, we will gear up to expand our supported glove output in order to improve our product portfolio to cater to the industrial sector hand protection needs," the report said.

DPL accounts for approximately 5% of global production of non-medical rubber gloves. A predominantly Sri Lankan owned company it has many overseas shareholders, a production facility manufacturing medical examination gloves among others in Thailand and a marketing company based in Italy.

DPL has a stated capital of Rs.598.6 million, capital reserves of Rs.457.3 million and revenue reserves of Rs.6.3 billion in its books. Total assets ran at Rs.20 billion and total liabilities at Rs.10.4 billion.

Hayleys with 41.61% followed by the EPF with 13.06% and Volanka (Pvt) Ltd (a Hayleys company) with 8.14% are the other major shareholders. Haycarb, a subsidiary of Hayleys owns 6.8%.

Earnings per share during the year under review were down to Rs.13.28 from Rs.25.53 the previous year with net assets per share growing to Rs.122.40 from Rs.114.34 a year earlier.

The directors have proposed a final dividend of Rs.3 per share for the year under review on top of an interim Rs.2.50 per share paid in March.

The directors of the company are: Messrs. A.M. Pandithage (Chairman), Dr. K.I.M. Ranasoma (MD), R.K. Witanachchi (Deputy MD w.e.f. 01.01.2014), N.Y. Fernando (Retired 12.12.2013), R. Seevaratnam (Resigned 30.07.2013), F. Maiden, K.A. Fernando, L.G.S. Gunawardena (Resigned 28.02.2014), S.C. Ganegoda, Dhammika Perera, M. Bottino, R.M.T. Premarathna (Resigned 20.11.2013),V.R. Gunasekara, S. Rajapakse (w.e.f. 30.07.2013), G.K. Seneviratne (Retired 08.04.2013) and Ms. D.S.N. Weerasooriya (Alternate to Dhammika Perera - appointed on 01.12.2013).

www.island.lk

Equity One Chairman sees "exciting prospects’’ ahead

Sale of six acres in Mt. Lavinia enables capital gain and debt release

Mr. D.C.R. Gunawardena, the Chairman of Equity One PLC, a listed real estate and property developer, sees "exciting prospects and opportunities" flowing into their business from economic fundamentals that are in place assisting the real estate segment of the economy.

Equity One has closed the financial year ended March 31, 2014 on what the Chairman called a "high note" with overall occupancy at group level rising to 91% from 85% a year earlier.

"However the key highlight for the year was the addition of further 44,000 square feet to the group’s rentable property portfolio with the completion of renovation and refurbishment of the building held by subsidiary company, Equity Two PLC, at assessment No.55, Janadhipathi Mawatha," he said.

"We also succeeded in sourcing a tenant to occupy the entire floor area of the said building, immediately upon completion."

As a result they expect this property to generate what he called "a decent contribution" to the group’s rental income and future earnings although the impact on incremental cash flows will be limited.

This is because the company has received rent advances and deposits against payments due on occupation by the tenants and such funds have already been deployed to finance the project.

The sale of six acres of land in Mount Lavinia during the year under review had helped Equity One to substantially reduce debt by way of repayment.

The decision to sell this land was strategic to reduce borrowings that arose mainly from the cost incurred to pay this land.

"From the losses incurred by the group from property development activities, we have now consolidated to a greater extent with the settlement of a significant portion of the company’s debt," Gunawardena said.

During the year under review Equity One saw the profit after-tax up 48.47% to Rs.127.2 million. However, if the one-off gain on the sale of land and appreciation in fair value of investment property is discounted, the net profit was Rs.47.4 million against the previous year’s Rs.42.1 million.

The one-off gain on the land sale amounted to Rs.79.8 million while the fair value gain on revaluation of investment properties amounted to Rs.68.8 million.

"With the burden of debt affecting the balance sheet eased to a greater extent during the year, your company is well positioned to reap maximum benefits from the real estate sector growth envisaged and reach new heights in time to come," Gunawardena said.

He also reported that the issue of restricted access to Janadhipathi Mawatha remains unresolved up to now. This has an adverse impact on the value potential of their two properties located there.

"However, considering the develop　

ment projects taking place in the Fort area coupled with the admirable level of beautification and township development activities underway in the vicinity, we are optimistic that our properties will be able to realize their full potential in the near future," he said.

Equity One is a member of the Carsons group with a stated capital of Rs.1.09 billion, capital reserves of Rs.13.2 million and revenue reserves of Rs.771.5 million. Total assets ran at Rs.2.44 billion and total liabilities at Rs.497.1 million.

Carson Cumberbatch with 96.27% is the dominant shareholder with all other shareholders owning less than one percent.

Net assets per share had grown to Rs.46.38 from Rs.41.93 the previous year and the share traded at a high of Rs.35.70 and a low of Rs.25.40 during the year under review. This compared with trading range of Rs.41.20 to Rs.22 the previous year.

The sale of the Mount Lavinia land for Rs.571.2 million yielded a net gain of Rs.79.8 million. The renovation of the Janadhipathi property owned by Equity Two PLC, a subsidiary of Equity One, cost Rs.199.6 million and added 44,000 sq. ft. to the group’s total rentable area.

The directors of the company are: Messrs. D.C.R. Gunawardena (Chairman), S. Nagendra, K.C.N. Fernando, E.H. Wijenaike, A.P. Weeratunge, S. Mahendrarajah and P.D.D. Fernando.

www.island.lk

Merchant Bank amalgamation confirmed

The amalgamation of Sri Lanka Merchant Bank (MBSL), MBSL Savings Bank (MSB) and MCSL Financial Services has received the approval of the respective boards of directors.

While announcing this, MBSL chairman M.R. Shah said only the Sri Lanka Merchant Bank (MBSL) would remain as an institution after the amalgamation.

This amalgamation would be effective from the date specified by the Registrar General of Companies.

Under the amalgamation, every 280.25 MSB ordinary voting share would receive one ordinary voting share of MBSL and every 389.10 ordinary non-voting share would receive one ordinary voting share of MBSL.

Apart from this, every 2.35 of MCSL Financial Services ordinary voting share would receive one ordinary voting share of MBSL.

Fitch Affirms and Withdraws Sri Lanka's HDFC Bank Rating

Fitch Ratings Lanka has affirmed the Housing Development Finance Corporation Bank of Sri Lanka's (HDFC Bank) National Long-Term Rating at 'BBB(lka)' with a Stable Outlook and has simultaneously withdrawn the rating.

The rating has been withdrawn as it is no longer considered by Fitch to be relevant to the agency's rating coverage. Fitch will no longer provide ratings and analytical coverage of HDFC Bank.

KEY RATING DRIVERS
HDFC Bank's rating reflects Fitch's expectation that the bank would receive extraordinary support from the state, if needed, given that the state effectively holds 51% of the bank. It also reflects Fitch's view of the bank's quasi-policy role in supporting the state's initiatives to develop more housing for low and middle-income families. However, the potential for state support is lower than for larger state-owned banks in Sri Lanka due to HDFC Bank's lower systemic importance.

http://in.reuters.com

Sri Lanka shares close at over 1-yr high on large-caps, lower rates

(Reuters) - Sri Lankan stocks rose for a fourth straight session on Friday to close at their highest in more than one year, led by large-caps such as Ceylon Tobacco Co Plc amid lower interest rates and continued foreign buying boosting investor sentiment.

The main stock index rose 0.56 percent, or 35.33 points, to close at 6,363.49, its highest since June 11, 2013.

Analysts said the market would move sideways in the short term with lesser risk due to lower interest rates, with yields on treasury bills edging down further on Wednesday at a weekly auction.

However, analysts said investors are concerned over the recent ethnic violence and possible implications of a government spokesman saying Sri Lanka bought Iran crude via third parties.

Ceylon Tobacco Co rose 5.09 percent to 1,049.80 rupees, while Sri Lanka Telecom Plc rose 2.78 percent to 48 rupees.

The bourse saw net foreign inflows of 47.8 million rupees ($366,800) into stocks on Friday, extending foreign inflows so far this year to 6.06 billion rupees.

Turnover was 1.13 billion rupees, higher than this year's daily average of 993.8 million rupees.

The market has been on a rising trend since late February due to continued foreign buying and lower interest rates. 

($1 = 130.3000 Sri Lankan Rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Prateek Chatterjee)

Sri Lanka shares close up 0.6-pct

June 27, 2014 (LBO) - Sri Lanka's shares closed 0.56 percent higher for the forth consecutive day with tobacco stocks gaining amid net foreign buying, brokers said.

The Colombo benchmark All Share Price Index closed 35.33 points higher at 6,363.49, up 0.56 percent. The S&P SL20 closed 13.31 points higher at 3,520.85, up 0.38 percent.

Turnover was 1.13 billion rupees, up from 484.95 million rupees a day earlier with 90 stocks closed positive against 87 negative.

Access Engineering closed 1.00 rupee higher at 25.00 rupees with an off-market transaction of 125.00 million rupees changing hands at the same price per share contributing 11 percent of the daily turnover.

The aggregate value of all off-the-floor deals represented 32 percent of the daily turnover.

John Keells Holdings closed 2.70 rupees lower at 220.10 rupees with market transactions of 361.02 million rupees contributing 32 percent of the daily turnover while attracting most number of trades during the day.

JKH’s W0022 warrants closed flat at 60.00 rupees and its W0023 warrants closed 50 cents lower at 70.00 rupees.

Foreign investors bought 207.25 million rupees worth shares while selling 159.48 million rupees worth shares.

Ceylon Tobacco Company closed 50.80 rupees higher at 1,049.80 rupees, contributing most to the index gain.

Commercial Bank closed 2.30 rupees higher at 139.50 rupees and Lanka Orix Finance closed 10 cents lower at 3.70 rupees.

Bukit Darah closed 6.00 rupees lower at 648.00 rupees.

Sri Lanka's Vidullanka constructs 4 MW mini-hydro plant in Kothmale

June 26, Colombo: Sri Lanka's private mini power generator Viddullanka PLC has completed the construction of a 4 MW Lower Kothmale Mini-Hydro Power Plant (MHPP) in Kothmale in the Nuwara Eliya district.

The plan was connected to the national grid Wednesday (June 25), the company said in a stock market disclosure Thursday.

The Lower Kothmale Mini-Hydro Power Plant is owned by the Lower Kothmale Oya Hydro Power (pvt) Limited which is a joint venture between Viddullanka PLC and Jaywise Construction Limited.

Vidullanka, a BOI approved company founded in 1997, constructs and operates hydroelectric power projects.

www.colombopage.com

Sri Lanka shares at more-than-1-week high on lower rates

(Reuters) - Sri Lankan stocks rose for the third straight session in low-volume trade on Thursday to hit their highest in more than a week, led by banking and financial shares as lower interest rates and continued foreign buying helped boost investor sentiment.

The main stock index rose 0.1 percent, or 6.61 points, to close at 6,328.16, its highest since June 17.

Analysts said the market would move sideways in the short term with lesser risk due to lower interest rates.

Yields on treasury bills edged down further on Wednesday at a weekly auction.

However, analysts said investors are concerned over the recent ethnic violence and possible implications of a government spokesman saying Sri Lanka bought Iran crude via third parties. ,

Shares in biggest listed lender Commercial Bank of Ceylon PLC rose 1.63 percent to 137.2 rupees.

The bourse saw a net foreign inflow of 46.3 million rupees ($355,600) worth of stocks on Thursday, extending net foreign inflow so far this year to 6.02 billion rupees.

Turnover was 484.95 million rupees, its lowest since June 3 and well below this year's daily average of 992.6 million rupees.

The market has been on a rising trend since late February due to continued foreign buying and lower interest rates. 

($1 = 130.2000 Sri Lankan rupees) 

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

Sri Lanka shares close up 0.1-pct

June 26, 2014 (LBO) - Sri Lanka's shares closed 0.10 percent higher for the third consecutive day with banking stocks gaining amid thin foreign participation, brokers said.

The Colombo benchmark All Share Price Index closed 6.61 points higher at 6,328.16, up 0.10 percent. The S&P SL20 closed 5.99 points higher at 3,507.54, up 0.17 percent.

Turnover was 484.95 million rupees, down from 705.26 million rupees a day earlier with 95 stocks closed positive against 72 negative.

Hemas Holdings closed 20 cents lower at 43.60 rupees with two off-market transactions of 43.50 million rupees changing hands at 43.50 rupees per share contributing 9 percent of the daily turnover.

The aggregate value of all off-the-floor deals represented 22 percent of the daily turnover.

Ceylon Leather Products W0014 closed 50 cents lower at 2.80 rupees and Central Investments and Finance closed flat at 1.20 rupees, attracting most number of trades during the day.

Foreign investors bought 127.80 million rupees worth shares while selling 81.46 million rupees worth shares.

Commercial Bank closed 2.20 rupees higher at 137.20 rupees and Property Development closed 21.60 rupees higher at 123.80 rupees, contributing most to the index gain.

Nestle Lanka closed 19.60 rupees higher at 1,950.00 rupees and Ceylon Beverage Holdings closed 30.00 rupees higher at 540.00 rupees.

Ceylinco Insurance closed 30.00 rupees higher at 1,350.00 rupees and Commercial Leasing and Finance closed 10 cents lower at 4.00 rupees.

Sri Lanka Telecom closed 80 cents lower at 46.70 rupees and Dialog Axiata closed 10 cents lower at 10.50 rupees.

Aitken Spence closed 80 cents lower at 103.20 rupees and John Keells Holdings closed 1.10 rupees lower at 222.80 rupees.

JKH’s W0022 warrants closed 80 cents lower at 60.00 rupees and its W0023 warrants closed 50 cents lower at 70.50 rupees.

Sydney’s Bora Bora acquires stake in Lankan graphite mine firm

The Sydney-based gra-phite exploration company, Bora Bora Resources, has entered  binding Heads of Agreement that places the company on the fast track to potential commercial graphite and graphene oxide production in Sri Lanka.

The company will acquire a 50% interest in RS Mines (RSM), which owns the producing Queens Graphite Mine and associated graphene oxide production facilities.
Notably, the mine is located just two kilometres from the Kahatagaha Graphite Mine in central Sri Lanka that is surrounded by its Matale Graphite Project.

Queens Graphite Mine was a historical producer of exceptional quality, high grade natural crystalline vein graphite until it was abandoned in 1948. RSM acquired the mining lease in 2011 and is currently mining graphite.

Its ore has a run of mine head grade of up to 99% total graphitic carbon while RSM have developed a process to manufacture graphene oxide, the precursor and building block to graphene technology.

In addition, Bora Bora’s recent VTEM survey confirms a significant bullseye anomaly over the Queens Mine with a similar intensity to the nearby Kahatagaha Graphite Mine, which has been producing ultra high grade graphite for over 140 years.

“RS Mines are to be commended on their foresight in becoming an early stage leader in the value added graphite and graphene sectors,” Bora Bora Executive Director Chris Cowan said.

“We are confident based on the VTEM data, site trips, and ongoing discussions with RS Mines there is a strong likelihood that they are sitting on a high grade graphite deposit similar to that originally discovered at the Kahatagaha Graphite Mine. “If this is the case, then this accelerates our mine production plans and is another step in the right direction for Bora Bora Resources towards securing a pipeline of high grade vein graphite mines to supply the best quality natural graphite and graphene globally.”

Bora Bora is in the process of sourcing an appropriate drill rig to complete its due diligence on RSM and drill test other bulls-eye anomaly targets generated from the recently flown VTEM survey.

Under the terms of the Heads of Agreement, the company has paid RSM a non-refundable deposit of A$100,000, in order to exclusively conduct due diligence over the producing Queens Graphite Mine and its associated graphene oxide production facilities.

It will earn its stake in RSM by funding the commercial development of the Queens Graphite Mine and scale up of graphene oxide production facilities to meet the expected strong demand for graphene oxide from the battery, solar, high-end electronics and other industries.

Subject to Bora Bora making a potential commercially viable graphite discovery, the agreement also requires RSM to process any potential ore supplied by Bora Bora Resources from its other Sri Lankan graphite operations through its facilities on an arm’s length toll treatment basis.

The transaction consists of five key stages: Due diligence; Initial earn-in to 15% by paying four million BBR ordinary shares, two million performance shares, $400,000 payment to RSM shareholders and $650,000 investment into RSM; subsequent earn-in to 25% by investing $500,000 once CAPEX budget, business plan and production specifications have been agreed, a further $1.75 million scale up investment into RSM once minimum off-take and supply agreements have been entered into as well as $750,000 once plant and mine development is completed and has been commissioned; option for BBR to go to 50% will be negotiated between the two companies or determined by an independent valuation; and first right-of-refusal to acquire remaining 50% in RSM.

The Queens Graphite Mine was a historical producer of exceptional quality, high grade natural crystalline vein graphite until it was abandoned in 1948.
RSM acquired the 21 acre mining lease in 2011 and is currently mining graphite after re-commissioning the mine.

It has tested and assessed the quality of the high grade natural crystalline vein graphite, supplying potential off-take parties with graphite bulk samples. RSM converted graphite from the Queens Graphite Mine into graphene oxide, and supplied samples of graphene oxide to end users.

Notably, Graphene Batteries of Norway had in 2013 tested over 50 types of graphite from around the world and found that material from RSM yield the best end performance.

RSM have supplied graphite and/or graphene oxide to clients including a major supplier to the electronics industry with a market capitalisation in excess of $ 2 billion; Norway’s Graphene Batteries; and various research institutes including Manchester University.

Customers have indicated that RSM’s Sri Lanka graphite has superior electrical and conductivity properties when compared to flake graphite and synthetic graphite.

The same holds true for the graphene oxide produced from its ultra-high grade natural crystalline vein graphite, which demonstrates superior properties to other graphene products.

This suggests that the vein graphite from the region where Bora Bora’s Matale/Kurunegala Project is situated potentially hosts highly strategic graphene resources.

RSM also holds additional land in other potentially high grade graphite bearing areas of Sri Lanka.

Bora Bora has applied for all exploration ground around the operating mines in the region.

Besides the Queens Graphite Mine, which consists of 13 old pits, there are two other operating high grade graphite mines. Notably, these do not experience the watering problems and lower grades such as those found further to the south of Sri Lanka.

The company is focussed on exploring for and developing high grade vein graphite deposits. This will allow it to supply premium end products such as graphite, spherical graphite and graphene oxide to end users.

These products sell at a material premium to graphite produced from other parts of the world due to the unique properties and purity of Sri Lankan vein graphite
The proposed transaction with RSM adds another dimension in fulfilling its objectives.
www.ft.lk

Touchwood breaks silence, files appeal against liquidation ruling

Troubled Touchwood Investments Plc (TWOD) has finally spoken, following the landmark Commercial High Court ruling calling for its liquidation.

Nearly 20 days after the Commercial High Court’s judgment, TWOD in a filing dated 24 June to the Colombo Stock Exchange, TWOD said that with regard to the case held on 5 June in relation to the company, the judgment was given for the company to be wound up.

It said G.K. Sudath Kumar via a letter on 16 June had indicated that he had been appointed as the liquidator for TWOD.

“An appeal against the judgment that was given against Touchwood Investments Plc, a notice of appeal was filed on 23 June,” the company said in its filing to the CSE.

It also revealed that the counsel who would be appearing on behalf of TWOD in the Supreme Court would be President’s Counsel Nihal Fernando and Sanath Wijayawardhane is the new instructing Attorney for the company.

In opposing the winding-up application, President’s Counsel Harsha Amarasekera with Shehan Gunawardene instructed by Paul Rathnayake Associates appeared for TWOD.
www.ft.lk

Adam Investments buys 26% stake in PC Pharma for Rs. 37 m

New kid on the block, Adam Investments Ltd. has bought a 25.7% stake or 25.962 million shares in PC Pharma Plc Ltd., adding another associate to its growing profile.

The acquisition of the stake estimated at a cost of Rs. 37 million was over three days. On Monday it picked up an 18% stake at a cost of Rs. 24 million. Price paid ranged between a high of Rs. 1.50 per share for a block of 3.5 million shares and a low of Rs. 1.20 each for the block of 10.43 million shares. Subsequent stakes however had been at a slightly higher price.

On Monday nearly 25 million shares of PC Pharma traded between a low of Rs. 1.10 and a high of Rs. 1.60 before closing at Rs. 1.40, up by 20 cents. On Tuesday 12 million shares traded and the share price closed at Rs. 1.80. Yesterday around seven million PC Pharma shares traded before closing at the same price though hitting an intra-day high of Rs. 1.90.

On Monday the major seller was British American Technologies, which divested a 16% stake. Rest of the stake had been collected from the market by Adam. PC Pharma’s Chairman S.H.M. Rishan has over a 20% stake under his name whilst PCH Holdings holds a 28% stake. In the first nine months of FY14, PC Pharma made a Rs. 102 million loss and had retained loss of Rs. 71.5 million.

Investment into PC Pharma is the second most recent by Adam after it acquired controlling stake of 40% in Orient Garments Plc and a 10% stake in PC House Holdings Plc. Adam is seeing potential for revival and value in PC Pharma hence the investment.

Adam, which had its debut on the CSE in early June, also has equity investments in Ceylon & Foreign Trades Plc and substantial shares of private limited liability companies, namely Network Communications Ltd., Adam Metals Ltd., Adam Apparels Ltd., Adam Automobiles Ltd. and Adam Air Conditions Ltd.

Adam, which raised Rs. 300 million via its IPO at Rs. 3 per share, yesterday saw its share price peak to Rs. 5 before closing at Rs, 4.90, up by 20 cents.

Adam Investments’ Board of Directors – led by Dr. Ali Asger Shabbir Gulamhusein – believes uniting these entities under the Adam Investments umbrella will strengthen all, allowing each company to thrive in their respective sectors while synergies and streamlined management practices between companies could help create a sustainable environment for growth and excellence.
www.ft.lk

Sri Lanka stocks at 1-week high on lower rates, Keells up on foreign buying

(Reuters) - Sri Lankan stocks rose for the second straight session on Wednesday to hit one-week highs, as lower interest rate helped boost local investor sentiment, while foreign investors bought market heavyweight John Keells Holdings Plc.

The main stock index rose 0.17 percent, or 10.68 points, to close at 6,321.55, its highest since June 17.

Analysts said the market would move sideways in the short term with lower risk due to lower interest rates.

Yields in treasury bills edged down further on Wednesday at a weekly auction.

Market heavyweight John Keells Holdings, which ended 0.95 percent firmer, accounted for 34.8 percent of the day's turnover.

The bourse saw a net foreign inflow of 138.7 million rupees ($1.07 million) worth of stocks on Wednesday, extending the net foreign inflows so far this year to 5.97 billion rupees.

Turnover was 705.3 million rupees, less than this year's daily average of 997.1 million rupees.

Analysts said investors were awaiting to see the impact of the recent ethnic violence and possible implications after a government spokesman said Sri Lanka bought Iran crude via third parties.

Stockbrokers said investors perceive the violence in the previous weekend that killed at least three people could hit the market and the tourism sector.

Sri Lanka's government spokesman said on Thursday the island nation has been buying Iranian crude from various countries via third parties, and avoiding Western sanctions with the understanding of the United States. The United States denied the claim.

The market has been on a rising trend since late February due to continued foreign buying and lower interest rates. ($1 = 130.2000 Sri Lankan Rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anand Basu)

Sri Lanka Treasuries edge lower

June 25, 2014 (LBO) - Sri Lanka's Treasuries yield eased lower across maturities at Wednesday's auction, data from the state debt office said.

The 3-month yield fell 02 basis points to 6.51 percent and the 6-month yield also fell 02 basis points to 6.69 percent.

The 12-month yield fell 01 basis point to 6.99 percent.

The debt office said 1.00 billion rupees in 3-month bills, 1.00 billion in 6-month bills and 20.00 billion in one year bills totaling 22.00 billion rupees were sold after offering 12.00 billion for rollover.

Related News:

Sri Lanka shares close up 0.2-pct

June 25, 2014 (LBO) - Sri Lanka's shares closed 0.17 percent higher with index heavy John Keells Holdings contributing most to the index gain for the second straight session amid net foreign buying, brokers said.

The Colombo benchmark All Share Price Index closed 10.68 points higher at 6,321.55, up 0.17 percent. The S&P SL20 closed 5.43 points higher at 3,501.55, up 0.16 percent.

Turnover was 705.26 million rupees, down from 874.88 million rupees a day earlier with 84 stocks closed positive against 86 negative.

John Keells Holdings closed 2.10 rupees higher at 223.90 rupees with three off-market transactions of 132.79 million rupees changing hands at 223.00 rupees per share contributing 19 percent of the turnover.

JKH’s W0022 warrants closed 80 cents higher at 60.80 rupees and its W0023 warrants closed flat at 71.00 rupees.

The aggregate value of all off-the-floor deals represented 24 percent of the daily turnover.

Central Investments and Finance closed 50 cents higher at 1.20 rupees, attracting most number of trades during the day.

Foreign investors bought 345.29 million rupees worth shares while selling 206.57 million rupees worth shares.

Property Development closed 16.10 rupees higher at 102.20 rupees and East West properties closed 10 cents higher at 13.00 rupees.

Lanka Orix Leasing Company closed 1.90 rupees higher at 91.90 rupees and Union Assurance closed 3.90 rupees lower at 106.10 rupees.

Cargills Ceylon closed 4.80 rupees lower at 150.00 rupees and Nestle Lanka closed 10.60 rupees lower at 1,930.40 rupees.

Hayleys closed 5.00 rupees lower at 285.00 rupees and Aitken Spence closed flat at 104.00 rupees.

Adam Investments has acquired 18,516,585 shares of PC Pharma on June 23, 2014 amounting to 18.33 percent of the shares of PC Pharma on the trading floor of the CSE, the firm said in a stock exchange filing.