Sunday, 31 August 2014

New land transfer laws may affect CSE-listed companies

A new draft Bill restricting the transfer of land to foreigners says that if a local company sells a majority of its shares to a foreigner within twenty years of purchasing land, that property transaction will be deemed null and void. Lawyers warned that this might have implications for local companies listed on the Colombo Stock Exchange. The draft Land (Restrictions on Alienation) Bill clearly states that the law, once passed, will be effective from January 1, 2013. This could also have ramifications for transactions that took place in the interim between then and when the law is eventually passed.

A senior lawyer said: “Say a local listed company bought land. It cannot sell its shares to foreigners on the stock market because this law obliges it to maintain less than 50 per cent foreign shareholding for twenty years of purchasing the land. If not, the company will lose what it bought.” “Since it has retrospective effect dating back to January 1, 2013, what happens to transactions that have already taken place during the interim when we had no such law?”

The Land (Restrictions on Alienation) Bill was finally published by the Government Printer on August 15, 2014 — more than 18 months after it was first proposed in the 2013 budget to ban the sale of land to foreigners. The law makes provisions to stipulate the restrictions on the alienation of land in Sri Lanka to foreigners, foreign companies and certain institutions with foreign shareholding; to specify the circumstances where the exemptions are granted; and to impose a land lease tax for the leasing of lands to foreigners, foreign companies and certain institutions with foreign shareholdings. It also makes provisions to grant concession to certain development projects.

The Sunday Times obtained a copy of the draft Bill. It prohibits the transfer of land to a foreigner; a company incorporated in Sri Lanka under the Companies Act that has foreign shareholding of 50 per cent or more; and to a foreign company. Land can be transferred to any Lankan company with less than 50 percent foreign shareholding provided it maintains this ratio for a minimum 20 consecutive years from the date of such transfer.

However, if the company increases its foreign shareholding up to 50 per cent or above contrary to the above condition, “the transfer of land referred to therein shall be null and void with effect from the date of increasing of the foreign shareholding,” it says. With regard to the rights of foreigners to inherit property, the Bill says: “… the transfer of title of a land to a next of kin (who is a foreigner) of an owner of such land, shall be registered by the registrar of lands, where the notary public attesting such instrument of transfer certifies in his attestation that the transferee is a next of kin of the owner of the land transferred, as recognised by the applicable laws of succession of Sri Lanka.”

The Bill also codifies the land lease tax that was introduced in the 2013 budget. In the absence of legislation, it is presently being charged from foreigners through instructions contained in administrative circulars. The Bill makes provision for a land lease tax to be payable upfront by the lessee for every lease of land. The rate shall be 15 per cent of the total rental payable for the entire duration of the lease. 

www.sundaytimes.lk

Touchwood former directors to be held liable

By Sunimalee Dias

The Touchwood case on Thursday took a new twist in the Commercial High Court when lawyers said the former directors should also be held accountable.

The company’s former directors and not only the present Touchwood Chairman/CEO Lanka Kiwlegedera could also be held liable for the company it was stated in court.

Avindra Rodrigo, Counsel for the petitioner in the Touchwood winding up case, had stated that the company directors were not acting bona fide and had committed fraud on the investors and reserved his right to make any further applications to court if and when appropriate.
Court ordered an interim report to be submitted by September 19 by the court appointed liquidator Sudath Kumar.

In the report, the liquidator would be expected to identify other assets available to the company, the lands, any movable assets, data and accounts to be submitted, Counsel appearing for the liquidator, Hafeel Fariz told the Business Times.

He noted that they would try to value the properties even though the deeds were not submitted to the liquidator by Mr. Kiwlegedera.

However, Counsel appearing for Mr. Kiwlegedera, Nihal Fernando stated that the former chairman could not be held liable for the assets of the company as the deeds were taken by the former owners of the company, the Maloneys.

During the proceedings it was found that documents related to the Agarwood plantation in Thailand were not available and had been stolen by the former directors of the company.

Counsel Fernando said the current Touchwood CEO had no knowledge of the assets of the company or the documents pertaining to the assets of the company as all such records had been stolen before he was appointed CEO. Counsel further stated that it is the duty of the Liquidator to find the assets and documents of the company and take over the business of the company. Counsel for the Petitioner, Mr. Rodrigo had countered the arguments stating that once Mr. Kiwlegedera was appointed head of the company he has assumed responsibility for and on behalf of the company and has represented the company in the winding-up action.

Counsel further stated that the liquidator cannot be put on a quest of finding the assets or the records of the company as it is the statutory obligation of the directors of a company being wound-up to hand over the assets and all other documents to the liquidator.

During the proceedings it was stated that Touchwood had disclosed in its 2013 financial statements and in the affidavit submitted to court by Mr. Kiwlegedera that the company had assets worth Rs. 8 billion. But it was found that the present Statement of Affairs has disclosed assets only worth approximately Rs.659 million.

Meanwhile, V.K. Choksy appearing for two depositors P.N. Pestongee of Abans Group and M. Kandasamy of Oxonia Institute raised the issue of the competency and qualifications of the liquidator.

In this regard, he had filed papers to remove the liquidator on the basis that the liquidator up to date had difficulties but had not taken constructive action to mitigate the hardship to depositors. The two depositors have requested for a court panelled liquidator from SJMS Associates.

The application would be supported after the liquidator submits the interim report on September 19 if it was found to be inadequate.
www.sundaytimes.lk

Saturday, 30 August 2014

Sri Lanka inflation declines to 3.5 percent in August 2014

Aug 29, Colombo: Sri Lanka's inflation, as measured by the change in the Colombo Consumers' Price Index (CCPI) , declined to 3.5 percent in August 2014 on a year-on-year basis after rising to 3.6 percent in July, figures released by the Census and Statistics Department Friday showed .

The year on year inflation has been in single digit figures for 64 months continuously.

Annual average inflation, which declined since June 2013, declined further to 4.5 percent in August 2014, from 4.7 percent in the previous month.

The general price level decreased in August 2014 by 0.5 percent for the first time in 10 months compared to the prices in the previous month. The absolute CCPI computed by the Department of Census and Statistics dropped to 182.3 from 183.2 in July.

Decline in prices of certain food items, mainly in vegetables, Potatoes, Red onions, Green Chilies, Coconuts and Sugar offset the rise in prices of rice contributing to the overall decline in the index for August.
www.colombopage.com

CHC Rest Houses to be developed

The Ceylon Hotels Corporation (CHC) Rest Houses would be developed with an investment of Rs.250 million through the joint venture leisure arm of CHC, Ceylon Holidays Holdings (CHH), a company filing to the stock exchange stated. CHH is a fully owned subsidiary of CHC and Zinc Hospitality Lanka would be investing Rs.250 million for 50 per cent equity in Ceylon Holidays. Zinc Hospitality is the hospitality arm of the multinational conglomerate Cinnovation / CG Group.
www.sundaytimes.lk

Sri Lanka stocks at over 3-year high on large caps, banks

Aug 29 (Reuters) - Sri Lankan stocks hit more than three-year high on Friday, led by large cap and banking shares as low interest rates and continued foreign buying into risky assets boosted sentiment, brokers said.

The main stock index ended up 0.61 percent, or 42.33 points, at 7,034.09, its highest close since Aug. 16, 2011.

Up to Friday's close, the index had gained 18.96 percent this year.

"With low interest rates and low inflation the market will continue to go up despite being slightly over heated," said a stockbroker asking not to be named.

"We may see profit-taking here and there but it will continue to go up."

The bourse has been trading in an overbought region since July and on Friday the Relative Strength Index, a momentum indicator tracked by chartists, was at 74.982, Thomson Reuters data showed. Stocks are deemed "overbought" above the 70-mark, which tends to signal a reversal in the near-term.

Ceylon Tobacco Co Plc, which led the overall gains in the index, rose 1.37 percent to 1,197.20 rupees, while biggest listed lender Commercial bank of Ceylon Plc rose 1.3 percent to 148 rupees.

Shares in Dialog Axiata Plc rose 0.9 percent to 11.20 rupees.

Friday's turnover stood at 1.14 billion rupees ($8.76 million), slightly below this year's daily average of 1.2 billion rupees.

Foreign investors were net buyers of 101.3 million rupees worth of shares on Friday, extending the year-to-date net foreign inflow to 8.2 billion rupees.

The central bank rejected all 91-day treasury bill bids for the second straight week at an auction, while yields on the 182-day and 364-day treasury bills held steady at a weekly auction on Wednesday. 

($1 = 130.1800 Sri Lankan rupee) 

(Reporting by Ranga Sirilal; Editing by Anand Basu)

Friday, 29 August 2014

Sri Lanka stocks close up 0.6-pct

Aug 29, 2014 (LBO) - Sri Lanka's stocks close 0.61 percent higher on Friday with beverage stocks gaining despite low foreign participation, brokers said.

The Colombo benchmark All Share Price Index closed 42.33 points higher at 7,034.09, up 0.61 percent. The S&P SL20 closed 26.64 points higher at 3,872.51, up 0.69 percent.

Turnover was 1.14 billion rupees, up from 888.75 million rupees a day earlier with 118 stocks closed positive against 79 negative.

Commercial Bank of Ceylon closed 1.90 rupees higher at 148.00 rupees with three off-market transactions of 102.00 million rupees changing hands at 148.00 rupees per share contributing 9 percent of the daily turnover.

Sanasa Development Bank closed 10.70 rupees higher at 103.50 rupees, attracting most number of trades during the day.

Foreign investors bought 165.47 million rupees worth shares while selling 64.13 million rupees worth shares.

Ceylon Tobacco Company closed 16.20 rupees higher at 1,197.20 rupees and Nestle Lanka closed 48.00 rupees higher at 2,148.00 rupees, contributing most to the index gain.

Lion Brewery Ceylon closed 26.70 rupees higher at 632.30 rupees.

MTD Walkers enters property development with Rs. 2 b investment

MTD Walkers Plc is foraying into property development business with an acquisition worth Rs. 2.1 billion.

The company said its Board has approved the purchase of 100% equity in Wincon Development Ceylon Ltd. for Rs. 2.174 billion at Rs. 4.01 per share.

Wincon Development is venture by a Malaysian investor and at present is engaged in a public housing scheme in Galle.

MTD Walkers specialises in construction and engineering and the acquisition signals it foray into real estate and property development given its belief of future upside.
www.ft.lk

Thursday, 28 August 2014

Sri Lanka bourse edges up on Keells; seen near 3-year high

Aug 28 (Reuters) - Sri Lankan stocks edged up on Thursday, hovering near a three-year high, led by conglomerate John Keells Holdings Plc in low volume trade with foreign investors buying into risky assets, brokers said.

The main stock index ended 0.1 percent, or 6.85 points up at 6,991.76, near its highest close since Aug. 18, 2011 hit on Tuesday.

Analysts said an increase in speculative trading in fundamentally weak shares could dent the healthy growth the index has seen this year.

The index has gained 18.25 percent so far this year.

"The market is slightly over heated that's why we are seeing it stagnate at these levels around 7000 points for a while till the next earnings season," said Dimantha Mathew, manager, research, at First Capital Equities (Pvt) Ltd.

"There is no major reason for the index to come down."

Analysts said the market is struggling to rise above a psychological barrier of 7,000 points which has turned it to a technical barrier now.

The bourse has been trading in an over bought region since July and on Thursday the Relative Strength Index was at 72.573 points, above its upper neutral region of 70, Thomson Reuters data showed.

Market heavyweight John Keells Holdings Plc, which led the overall gain in the index, rose 1.59 percent to 248.90 rupees, while Lanka IOC Plc rose 3.41 percent to 42.40 rupees.

Shares in Distillers Sri Lanka Plc rose 0.70 percent to 209 rupees.

Thursday's turnover stood at 887.2 million rupees ($6.82 million), well below this year's daily average of 1.2 billion rupees.

Foreign investors were net buyers of 102.7 million rupees worth of shares on Thursday, extending the year-to-date net foreign inflow to 8.1 billion rupees.

The central bank rejected all 91-day treasury bill bids for the second straight week at an auction, while yields on the 182-day and 364-day treasury bills held steady at a weekly auction on Wednesday.

($1 = 130.1800 Sri Lankan rupee) 
(Reporting by Ranga Sirilal; Editing by Anupama Dwivedi)

Senkadagala Finance buys over Newest Capital

Senkadagala Finance PLC has entered into a share purchase agreement with Newest Capital Limited to acquire 100 percent of the fully paid issued share capital for Rs. 300 million.

Accordingly, from 25 August 2014, Newest Capital is a fully owned subsidiary of Senkadagala Finance PLC.

This is under the Master Plan for the Consolidation of the Financial Sector 2014 initiated by the Central Bank of Sri Lanka.
www.adaderana.lk

Sri Lanka stocks close up 0.1-pct

Aug 28, 2014 (LBO) - Sri Lanka's stocks close 0.10 percent higher on Thursday with index heavy John Keells Holdings gaining despite low foreign participation, brokers said.

The Colombo benchmark All Share Price Index closed 6.85 points higher at 6,991.76, up 0.10 percent. The S&P SL20 closed 3.04 points higher at 3,845.87, up 0.08 percent.

Turnover was 888.75 million rupees, up from 742.11 million rupees a day earlier with 92 stocks closed positive against 109 negative.

Aitken Spence Hotel Holdings closed 1.40 rupees higher at 84.00 rupees with an off-market transaction of 37.10 million rupees changing hands at 85.00 rupees per share contributing 4 percent of the daily turnover.

Blue Diamonds Jewellery Worldwide closed 10 cents lower at 3.50 rupees, attracting most number of trades during the day.

Foreign investors bought 151.02 million rupees worth shares while selling 48.32 million rupees worth shares.

John Keells Holdings closed 3.90 rupees higher at 248.90 rupees, contributing most to the index gain.

JKH’s W0022 warrants closed 10 cents higher at 69.20 rupees and its W0023 warrants closed 10 cents lower at 79.00 rupees.

Ceylon Tobacco Company closed 18.00 rupees lower at 1,181.00 rupees.

DFCC Bank, NDB Bank merger before November budget

By Ravi Ladduwahetty

Ceylon Finance Today: The merger of the three major banks – DFCC Bank, DFCC Vardhana Bank and the NDB Bank will be completed prior to the 2015 national budget, billed to be presented in Parliament in November.


Top sources from the Central Bank, and the two development banks, while confirming this, said that the amalgamation will see the movable, immovable assets and the human resources being brought under one banner, though a common name for the bank has not been determined yet.

They also added that even the management structure of the three merged banks, has also not yet been decided.

Among the other mandatory requirements for the merger, will be the need for the refilling of the DFCC Bank Act, getting the approval of the government and presenting it to Parliament.

The need for the refilling of the DFCC Bank Act (successors to the Development Finance Corporation of Ceylon) has arisen as it was formed following an Act of Parliament. The NDB Bank (successors to the National Development Bank) was formed under the Companies Act.

These sources also said the leadership of the three banks is also seeking the advice of the famous Boston Consulting Group of the USA and also its Indian subsidiary – the Boston Consulting Group ( India) Pvt) Ltd.

The controlling shares of the DFCC Bank, in addition to the government, is being held by business magnate Harry Jayawardena led parties while the controlling shares of the DFCC Bank, in addition to the government, is being held by Deputy Chairman Ashok Pathirage, who is also the Chairman of the Softlogic Group.

The assets of the NDB Bank is higher than the DFCC Bank, albeit the DFCC Vardhana Bank acquisition.
www.ceylontoday.lk

LRA assigns BBB+/P2 rating to HDFC Bank

Lanka Rating Agency has upgraded financial institution ratings of Housing Development Finance Corporation Bank (HDFC) to BBB+ and P2 from BBB and P3.

The long term ratings will continue to carry a stable outlook. Concurrently long-term issue ratings of Rs 2 billion secured senior listed debenture (2013/2018) has been upgraded to BBB+ from BBB. Meanwhile, the ratings are upheld by the state's majority ownership of the Bank and the on-going support of the government of Sri Lanka as well as a good capital cushioning level. The ratings are tempered by HDFC's below-average asset quality and its small stature.

HDFC is a licensed specialised bank (LSB) under the Housing Development Finance Corporation Act (No. 7 of 1997) and falls under the purview of the Finance and Planning Ministry.

The GOSL remains its largest shareholder with a 49.73% stake through the National Housing Development Authority (NHDA).
www.dailynews.lk

Abans records 9% revenue increase

Abans PLC, market leader in electronics and home appliances and the leading retailer of consumer durables with 400 plus showrooms, has reported revenue of Rs. 25.8 billion and an increase of 9% over last year.

In spite of sluggish market conditions, the growth recorded is very encouraging, the company noted in a statement yesterday.

In a disclosure released to the Colombo Stock Exchange (CSE), the company has cited that the bottom line was impacted due to pre operational losses and finance costs owing to its planned Mega Mixed Development Project.

The company floated a Rs. 2 billion debenture in December 2013 which was oversubscribed, from which funds were utilised to replace short-term borrowing.

“The company is about to begin construction of its mixed development project consisting of a shopping mall, five-star hotel and residence complex in a 55-storey tower which will provide the residents with uninterrupted majestic views of the Beira Lake, the ocean, Colombo Harbour and Viharamahadevi Park,” the statement added.

The mega mall is expected to be one of Sri Lanka’s landmarks with shopping, entertainment, movie theatres, large food court and children’s play facilities in an integrated concept.

The spacious, stylish and modern shopping centre will house sections for branded fashion garments for men, women and children, accessories, toys, stationery, jewellery, perfumes, cosmetics, groceries, etc.

The large food court will serve clean and wholesome food offering a variety of Sri Lankan and international cuisine, fast foods, snacks, ice cream and beverages. The movie theatres will screen the latest movies and 3D films. There will also be a gym, a cyber café, bowling alley and indoor archery. 
www.ft.lk

Court orders Liquidator to file comprehensive report on Touchwood assets

The case for the winding-up of Touchwood Investments PLC was called in the Commercial High Court of Colombo yesterday.

Heated arguments between the Counsel for the Petitioner, Company and Liquidator continued for nearly two hours when the case was taken up.

Court ordered the Company on the last occasion to hand over all the documents, books of account, and all other documents pertaining to the assets of the Company to the Liquidator by 25 August 2014 by 5 p.m.

Counsel for the Liquidator Hafeel Farisz submitted that certain documents were handed over by the Company but all pertaining to the assets have been conveyed to the investors.

Counsel further stated that no documents pertaining to the freehold property of the Company have been handed over to the Liquidator. It was also stated that the Company has not handed over possession of any other assets movable or immovable.

Counsel also filed a preliminary report by the Liquidator in Court and stated that the said report reflects prima facie the disparities of the documents handed over to the Liquidator. Counsel submitted that the Interim Financial Statements filed by the Company in June 2013 and the Affidavit filed by the present CEO in Court in October 2013 categorically stated that the assets of the Company are worth Rs. 8 billion and when compared with the Statement of Affairs submitted on 25 August 2014, a shortfall of Rs. 6.5 billion is reflected. Counsel also stated that no documents have been given pertaining to the shares worth Rs. 252,668,995 which have been issued by the Company being wound-up.

Counsel for the Company Nihal Fernando PC stated that all the documents in the possession of the Company have been handed over to the Liquidator. The President’s Counsel further stated that the books, documents and computers belonging to the Company have been stolen. It was also stated that the documents related to the Agarwood plantation in Thailand were not available in the Company and had been stolen by the former directors of the Company.

He further defended the present CEO of the Company by stating that the he has no knowledge about the assets of the Company or the documents pertaining to the assets of the Company as all such records had been stolen before he was appointed CEO. Counsel further stated that it is the duty of the Liquidator to find the assets and documents of the Company and take over the business of the Company.

Countering the submission made by the Counsel for the Company, Counsel for the Petitioner Avindra Rodrigo stated that the present CEO could not simply absolve himself of all liabilities stating that he has no knowledge of the goings-on or the records of the Company as he has assumed responsibility for and on behalf of the Company and has represented the Company in the winding-up action.

Counsel further stated that the Liquidator cannot be put on a quest of finding the assets or the records of the Company as it is the statutory obligation of the directors of a Company being wound-up to handover the assets and all other documents to the Liquidator. Upon a winding-up Order being made the onus automatically shifts to the officers of the Company to handover the properties and records to the Liquidator.

Reiterating the submissions of the Liquidator Counsel Rodrigo further stated that not a single asset of the Company has been handed over. Counsel also questioned as to how a public-quoted Company has carried on its business without a single computer or vehicle.

Counsel further reiterated that the Company had disclosed assets worth Rs. 8 billion in the Financial Statements of 2013 and in the Affidavit of the CEO filed in Court in 2013 and that the present Statement of Affairs has only disclosed assets worth approximately Rs. 659 million. Counsel further submitted that the directors of the Company are not acting bona fide and have committed fraud on the investors and reserved his right to make any further applications to Court if and when appropriate.

Court ordered the Liquidator to file a comprehensive report on the assets of the Company when the case is called on 19 September 2014. Court also ordered the liquidator to ascertain any documents pertaining to the assets of the Company such as title deeds from the respective land registry as no such documents have been handed over by the Company. 
www.ft.lk

Wednesday, 27 August 2014

Sri Lanka stocks slips from 3-year high on low trade, retail profit-taking

Aug 27 (Reuters) - Sri Lankan stocks slipped on Wednesday, retreating from a three-year high hit on Tuesday, led by illiquid shares in low trade, with retail profit-taking in speculative shares, brokers said.

The bourse hit a three-year high on Tuesday, helped by the low interest rates and analysts said an increase in speculative trading in fundamentally weak shares could dent the healthy growth the index has seen this year.

The main stock index ended down 0.41 percent, or 28.41, at 6,984.91, slipping from its highest close since Aug. 18, 2011 hit on Tuesday.

The index has gained 18.13 percent so far this year.

"The market was brought down by the illiquid shares in low trade while we have seen some retail profit-taking in speculative counters," said Dimantha Mathew manager, research at First Capital Equities (Pvt) Ltd.

The index plummeted more than 20 percent after it hit a record peak in February 2011 mainly due to speculative trading.

Analysts said the market is struggling to hold above 7,000 points its psychological barrier which turned it to a technical barrier now.

Good Hope Plc, which led the overall fall in the index, fell 23.86 percent to 1,500 rupees in one share trade, while Lion Brewery (Ceylon) Plc fell 5.02 percent to 606 rupees.

Wednesday's turnover stood at 742 million rupees ($5.70 million), its highest since July 28 and well below this year's daily average of 1.2 billion rupees.

Foreign investors were net sellers of 2.91 million rupees worth of shares on Wednesday, but they have been net buyers of 8 billion rupees so far this year.

The central bank rejected all 91-day treasury bill bids at an auction for the second straight week, while the yields in the 182-day and 364-day treasury bills held steady at a weekly auction on Wednesday.

($1 = 130.2000 Sri Lankan rupee)

(Reporting by Ranga Sirilal; Editing by Anand Basu)

Packer plan for Sri Lanka Crown casino faces fresh delay on legal hitch - Minister

* Minister cites unspecified 'legal issues' for delay

* $400 mln resort project first won approval in April

* Packer in discussion on the deal since February 2013


By Ranga Sirilal

COLOMBO, Aug 27 (Reuters) - Australian gambling tycoon James Packer's Crown Ltd is facing months of new delays in building a planned $400 million Sri Lanka hotel and casino resort due to unspecified legal issues, a government minister said on Wednesday.

Packer, one of Australia's richest men, first obtained Sri Lanka cabinet approval for the project nearly a year ago. But terms of the approval were altered in the face of strong opposition from some Buddhist leaders and political parties, and construction on the project has yet to start.

"We have something to be sorted out from our legal side," Investment Promotion Minister Lakshman Yapa Abeywardena told Reuters in a telephone interview. He declined to say exactly what the legal matter is.

"There are some legal issues from our side once they paid the necessary fees for the land," Yapa said. "We have informed them to start the construction they have also some issues. It will take another two three months (to start)."

While Sri Lanka's parliament first approved the Crown development in April 25 without a casino, President Mahinda Rajapaksa's government said two weeks later it would not oppose a Crown casino if it is operated using an existing licence held by a local partner.

Packer's Sri Lankan partner, Ravi Wijeratne, who owns two casino licences was not immediately available for comments. Packer has been in discussion with Sri Lankan ministers and officials on hotel and entertainment investment options since February 2013.

Some analysts say the delay could last until the next presidential polls, which could be scheduled in January next year, as Rajapaksa seeks a third six-year term in office.

The government had earlier said casinos will be restricted to D.R. Wijewardena Mawatha, the area of Colombo where Crown has planned its hotel.

However, after strong opposition, the government said it has not designated any gaming zone in the country. The government has yet to clarify which state agency is authorised to issue casino licences and regulate the industry.

Sri Lanka's parliament has separately approved two other casino resort projects planned by local investors.

A $300 million resort called Queensbury being developed by Sri Lanka's Vallibel One Plc is expected to include a casino near Packer's planned complex. Meanwhile Sri Lanka's biggest conglomerate, John Keells Holdings Plc, has committed up to $850 million for a project with a casino in another part of Colombo called the Water Front. 


(Writing and additional reporting by Shihar Aneez; Editing by Kenneth Maxwell)

Sri Lanka Treasuries yields flat

Aug 27, 2014 (LBO) - Sri Lanka's Treasuries yields were flat at Wednesday's auction without accepting any bid for three months for the second straight session, data from the state debt office showed.

The 6-month yield was unchanged at 6.28 percent and the 12-month yield unchanged at 6.30 percent.

The debt office said 1,335 million in 6-month bills and 7,424 million in one year bills totaling 8,759 million rupees were sold after offering 12.00 billion for rollover.



Sri Lanka shares close down 0.4-pct

Aug 27, 2014 (LBO) - Sri Lanka's shares close 0.41 percent lower Wednesday with oil palm and beverage stocks losing ground amid low foreign participation, brokers said.

The Colombo benchmark All Share Price Index closed 28.41 points lower at 6,984.91, down 0.41percent. The S&P SL20 closed 9.02 points lower at 3,842.83, down 0.23 percent.

Turnover was 742.11 million rupees, down from 1.73 billion rupees a day earlier with 84 stocks closed positive against 120 negative.

Seylan Developments closed 10 cents higher at 14.10 rupees with an off-market transaction of 28.00 million rupees changing hands at 14.00 rupees per share contributing 4 percent of the daily turnover.

Lanka Century Investments W0006 warrants closed 40 cents lower at 2.10 rupees, attracting most number of trades during the day.

Foreign investors bought 55.49 million rupees worth shares while selling 58.40 million rupees worth shares.

Good Hope closed 470.00 rupees lower at 1,500.00 rupees, contributing most to the index drop.

Lion Brewery Ceylon closed 32.00 rupees lower at 606.00 rupees and Nestle Lanka closed 31.70 rupees lower at 2,118.30 rupees.

CT Holdings closed 6.70 rupees lower at 152.30 rupees and John Keells Holdings closed 3.00 rupees higher at 245.00 rupees.

JKH’s W0022 warrants closed 60 cents higher at 69.10 rupees and its W0023 warrants closed 80 cents higher at 79.10 rupees.

CTC ranked 'Most Respected Entities' in Sri Lanka

Ceylon Tobacco Company (CTC), has been ranked amongst the top 10 most respected entities in Sri Lanka in the annual LMD rankings 2014. CTC was up by 14 positions from last year, ranking as the 9th most respected entity in the country.

Companies were evaluated based on financial performance, quality consciousness, management profile, honesty, innovation, dynamism, corporate culture, CSR, vision and nation - mindedness. Based on the evaluation criteria, CTC was placed within top 3 in financial performance, corporate culture and CSR.

While CTC had been ranked within the top 20 positions on three previous occasions, this is the first time the company has moved into the top 10, a reflection on the company's performance, dynamism and focus on good governance. Felicio Ferraz - CEO, CTC said, "Business best practice and good governance have been the cornerstone of CTC's success over the years and being ranked among the top 10 most respected companies in Sri Lanka is testament to how we have carried out our business even in challenging times" Felicio further went onto say, "Our people are the backbone of our entire business.

They are clearly the advantage that makes CTC a winning organisation. The right people and the right working environment set the stage to achieve our vision to be the inspiration for corporate excellence in Sri Lanka." The annual ranking is conceptualised by LMD and conducted by Nielsen on an opinion based survey expressed by respondents to ascertain who they perceive as being the 'most respected entities.'
www.dailynews.lk

Richard Pieris Arpico Finance deposit base tops Rs 1 billion

The deposit base of Richard Pieris Arpico Finance Company has reached Rs. one billion just one year since its inception. Richard Pieris Arpico Finance CEO M. M. Jabir said this achievement has shown the confidence that clients have placed on the company, since the mother company Richard Pieris has been in existence for over 80 years. “The commitment of our staff members contributed immensely to achieve these goals and the other factor is the trust people have kept with the Richard Pieris Group and the new finance company,”Jabir said. “Our performance was tremendous.

People had great confidence in our commitment and also trust in the company, whose mother company Richard Pieris has been operating superbly for 83 long years. All this contributed to reach our goals within a short span of one year,” the CEO said. Commenting on the branches, “Opening plans are made by Richard Pieris Arpico Finance for this year”.

Jabir said this year is very challenging, especially as the Central Bank expects finance companies to be stable, bigger and stronger, with a wider presentation all over the country.

Richard Pieris Arpico Finance plans to open five branches within the next four to five months. The first one will be in Matara. On the consolidation process of finance company mergers, Jabir said they will be coming out with a very positive announcement soon.

The deadline for mergers to be completed is at the end of the year. He further added that the process is excellent as it is very good for the country, economy, financial sector and the investors and customers at large.
www.dailynews.lk

Ceylon Leather Products earns Rs 80.8 m PAT

Ceylon Leather Products has increased the company's gross turnover by 38.9% compared to last year inspite of the uncertain marketing environment. Overall the current financial year under review earned a net profit of Rs 80.8 m after providing a provision of Rs 50.5 m for impairment of investment as compared to Rs 133.2 m previous year,Ceylon Leather Products Chairman Neville Peiris, said in the company's annual report for 2013-2014 .

"It was very encouraging to note that South Asia Textile Industries Lanka of which 51.5% is owned by Ceylon Leather Products has turned around favourably and making good progress in the current year. South Asia Textile Industries Lanka completed a Rights Issue to the existing Shareholders of the Company offering Eight Ordinary Shares for every One Ordinary Share at a price of 0.10 cts a Share.

Ceylon Leather Products subscribed in full for their Rights entitlement by investing Rs. 306.4 million. Consequent to the Rights issue Ceylon Leather Products now owns 80.39% of the Issued Share Capital of South Asia Textile Industries Lanka.

Funds raised from the Rights Issue will be used to modernize the machinery at the factory. www.dailynews.lk

Dankotuwa Porcelain posts Rs 23.8 m net profit

Dankotuwa Porcelain PLC (DPL) made an after tax net profit of Rs 23.8 million for the year which is a decline from the Rs 31.3 million posted in the previous financial year.

At a Group level with the consolidation of Royal Fernwood Porcelain (RFPL), which was acquired on 31 December 2013, the Group posted a loss of Rs 28.2 million due to the significant losses at RFPL.

Chairman Rajan Asirwatham said the losses at RFPL have now been significantly reduced. However much effort is still required in restructuring the operations of RFPL in the coming year, he said in the company's Annual Report and Audited Financial Statements for the Financial Year ended March 31,2014.

"The acquisition of RFPL was done in a bid to complement and significantly enhance your company's competitive presence in the local and international tableware market,''he said .

RFPL has a largely complementary product line to Dankotuwa Porcelain (DPL) with a strength in coloured and hand painted tableware whereas DPL is more strongly positioned in the higher end of the market in the formal tableware segment.

These combined entities now have a much stronger product offering and economies of scale in marketing and distribution both locally and overseas.

In addition to strengthening the Group's product line and marketing efforts both locally and globally, the Company will also embark on many initiatives in the coming year to significantly enhance the level of innovation in the Group that will lead to better product offerings in the market along with enhanced efficiencies and margins.

Chief Executive Officer Sarath Mallawa Arachchi said the export turnover continued to show a growth in this year, too. It grew from Rs 953.8 million to Rs 1,028.6 million, showing a 7.8% increase.

The company's export turnover passed the Rs one billion mark. The exports to USA increased by 74%. We could achieve 97.2% of budgeted export sales revenue.

The local sales also continued to show a steady growth. The sales figure went up from Rs 574.9 million to Rs 640.2 million, an increase of 11%. This is a remarkable achievement against the budgeted figure. We could hit 102.4% of the local sales budget.
www.dailynews.lk

Tuesday, 26 August 2014

Sri Lanka stocks at 3-year high on retail buying

(Reuters) - Sri Lankan stocks edged up on Tuesday, hovering near three-year highs, led by retail buying in manufacturing and telecommunication shares, while the low interest rates boosted sentiment, brokers said.

Analysts say an increase in speculative trading in fundamentally weak shares could dent the healthy growth the index has seen this year.

The main stock index ended 0.42 percent, or 29.29 points firmer, at 7,013.32, its highest close since Aug. 18, 2011.

The index has gained 18.61 percent so far this year.

"Big caps are slightly slow today the index is up on some illiquid shares and on retail activity," said Dimantha Mathew manager, research at First Capital Equities (Pvt) Ltd.

The index plummeted more than 20 percent after it hit a record peak in February 2011 mainly due to speculative trading.

Companies' earnings were recovering and the bourse had seen a 22 percent year on year net growth in earnings of 272 companies, First Capital Equities said in a note to investors.

Richard Pieris and Co Plc, which led the overall gain in the index, rose 16.67 percent to 9.10 rupees, while Sri Lanka Telecom Plc rose 1.11 percent to 54.60 rupees.

Shares in Commercial Leasing & Finance Plc rose 4.65 percent to 4.50 rupees.

Tuesday's turnover stood at 1.73 billion rupees ($13.3 million), more than this year's daily average of 1.2 billion rupees.

The bourse saw a net foreign inflow of 480.1 million rupees on Tuesday, extending the year-to-date net foreign inflow to 8 billion rupees worth of shares. 

($1 = 130.1700 Sri Lankan rupee) 

(Reporting by Ranga Sirilal; Editing by Anand Basu)

Sri Lanka stocks close up 0.4-pct

Aug 26, 2014 (LBO) - Sri Lanka's stocks continued to rise above the 7,000 mark with price gains witnessed in Richard Pieris and telco stocks amid strong foreign buying, brokers said.

The Colombo benchmark All Share Price Index closed 29.29 points higher at 7,013.32, up 0.42percent. The S&P SL20 closed 3.42 points lower at 3,851.85, down 0.09 percent.

Turnover was 1.73 billion rupees, up from 1.22 billion rupees a day earlier with 124 stocks closed positive against 79 negative.

John Keells Holdings closed 1.00 rupee lower at 242.00 rupees with three off-market transactions of 379.39 million rupees contributing 22 percent of the daily turnover.

JKH’s W0022 warrants closed 10 cents lower at 68.50 rupees and its W0023 warrants closed 20 cents higher at 78.30 rupees.

The aggregate value of all off-the-floor deals represented 31 percent of the turnover.

Lanka Cement closed 1.60 rupees higher at 11.00 rupees and HVA Foods closed 40 cents higher at 12.50 rupees, attracting most number of trades during the day.

Foreign investors bought 543.15 million rupees worth shares while selling 62.80 million rupees worth shares.

Richard Pieris closed 1.30 rupees higher at 9.10 rupees, contributing most to the index gain.

Sri Lanka Telecom closed 60 cents higher at 54.60 rupees and Dialog Axiata closed 10 cents higher at 11.20 rupees.

Commercial Leasing and Finance closed 20 cents higher at 4.50 rupees.

Singer ranked Most Respected Consumer Electronics Company

Singer has been adjudged the “Most Respected Consumer Electronics Company” in Sri Lanka and has been placed amongst the top 15 Most Respected Entities in the country, according to the results of a survey conducted by Nielsen on behalf of LMD.

Speaking to LMD, Mahesh Wijewardene, Director Marketing and Commercial at Singer, said that it was “a great honour, because [the survey] is an independently conducted ranking which positions us among the most respected corporates in Sri Lanka.” He also emphasized the importance of benchmarks like the Most Respected Entities list in enhancing internal performance indicators.

He said the Most Respected Entities ranking will be a blueprint enabling them to achieve their objectives, including gaining market leadership for our products and market segment, providing customers with the best service and shopping experience, optimizing employee potential, and maximizing shareholder wealth with steady asset growth and a return on investment that is above industry norms.”

The survey is based on the opinions of 800 participants, selected from senior and middle management at listed companies and the organizations ranked in the LMD 100 and the LMD Brands Annual.

These awards are a reflection of Singer’s commitment to continually deliver enhanced value to its customers by evolving through continuous improvements to consistently satisfy customer requirements over time. Backed by the country’s largest retail and service networks – numbering more than 400 retail outlets, ten regional service centres and over 150 service agents – the company remains dedicated to honouring its most important benchmark: giving Sri Lankans “trusted excellence,” a commitment that has stood in good stead for 136 years.
www.dailynews.lk

PABC’s Rs 3 b debentures rated BBB

Lanka Rating Agency has assigned Pan Asia Banking Corporation PLC’s (PABC) respective long- and short-term financial institution ratings at BBB+ and P2. The outlook on the long-term rating is stable. Concurrently, the long-term ratings of the Bank’s proposed Listed Unsecured Subordinated Redeemable Debentures up to Rs 3 billion (2014/2019) carry an issue rating of BBB.

In keeping with the LRA methodology PABC’s proposed debenture is rated one notch below the entity rating to reflect its subordinated status. The rating is supported by the Bank’s average capitalisation, liquidity and improving performance but is tempered by its relatively small size and asset quality.

The Bank remains one of the smallest players in the domestic LCB industry, with an asset base of Rs 64.9 billion and a loan book of Rs 44.7 billion as at end-FY Dec 2013. This accounted for 1.29% of the LCB sector assets and 1.31% of sector loans. Nevertheless, the Bank has been consolidating its presence in the local arena while improving its franchise during the past 5 years. As at end-1Q FY Mar 2014, PABC operated 77 branches with 1232 staff members.
www.dailynews.lk

India’s Muthoot acquires 30% stake in Asia Asset Finance

The largest gold financing company in the world, Muthoot Finance yesterday acquired a 30% stake in Asia Asset Finance.

A stock market filing to the Colombo Stock Exchange by Asset Finance disclosed 167,785,600 ordinary shares of the company had been purchased at Rs.1/60. This constituted 29.98% of the shares in issue, it noted.

Kerala-based non-banking financial company Muthoot Finance Ltd. said it had acquired a 30% stake in Sri Lanka-based Asia Asset Finance Plc (AAF).

In a notice to Bombay Stock Exchange (BSE), Muthoot Finance said it had paid approximately $ 2.1 million to acquire the stake.

India’s…“Muthoot Finance is seeking synergies by helping the AAF to operationalise loan against gold ornaments in Sri Lanka drawing on the expertise of Muthoot Finance in this field. Muthoot Finance through this investment expects AAF to improve its lending operations and profitability in coming years and which may improve value of its present investment in AAF in coming years,” the company said.

AAF, which is listed on the Colombo Stock Exchange, is into retail finance, hire purchase and business loans and has 11 branches across Sri Lanka, according to the release.

The deal was announced after market hours.

On Monday, shares of Muthoot Finance dropped 0.73% to Indian Rs. 189.75 apiece on the BSE, while the exchange’s benchmark index, Sensex gained 0.07% to 26,437.02 points.
www.ft.lk

LOLC net up 46%

LOLC Group reported a net profit of Rs 1 billion for the three months ended June 2014, up 46% from Rs 694 million a year ago, interim financial results published showed.

The group reported a Rs 1.35 billion profits before tax (PBT), up 45% over the last year's Rs 934 million, reflecting of the strong profitability recorded from its operating activities which grew by 23% compared to June 2013.

External effects on the company, namely, significant reduction in interest rates have contributed positively to the reduction in borrowing costs which saw an overall drop of 20% compared with last year and this is despite the growth in savings and deposits increasing the overall borrowings of the group. The increase in the borrowings base reflects the growth strategy fuelling higher executions strengthening the financial sector lending portfolio. A reduction in lending interest rates were also seen during the current period however, the higher quantum of lending resulted in the interest income from the group's lending business moving up 7% compared with last year June quarter end.

The financial services sector shows tremendous performance in the lower interest rate regime along with better collection results coming from all three financial services companies of the group.

The contribution to profits (PBT) from this sector increased from Rs 672 million to Rs 1.14 billion, which is an increase of 71%. LOLC's flagship finance company, Lanka ORIX Finance PLC (LOFC) posted strong profits for the quarter, with Rs 325 million as PBT, which is an increase of 222% over previous year June. This reflects the strong collections together with lower interest costs. The company has managed to reduce its borrowing costs as a result of the reduction in interest rates on its deposits base, which grew by Rs 2 billion to Rs 45 billion over the last year. Strong growth in the deposit base of the company reflects strong financial strength and the customer confidence in LOFC which has drawn funds even at low interest rates. LOFC looks positively to year 2014/15 with lower borrowing costs and higher level of income fuelled by the expansion in the lending book increasing its core interest income.

Commercial Leasing & Finance PLC (CLC) too showed strong performance and maintained profits at the same level as in the last year, despite pressures on collections. The PBT for the June quarter was Rs 381 million. The company's deposit base grew from Rs 3 billion to Rs 9 billion, a growth of 200% over the comparative period last year. CLC commenced its deposit mobilizing activities two-and-a-half years ago and the deposit base growth shows its financial stability and depositors' confidence in the company. The higher level of deposits and other borrowings will fuel higher level of lending, targeting an increase in the asset book, higher earnings from interest income, the key focus for the year 2014/15.

LOLC Micro Credit Ltd (LOMC) too recorded strong profits in the first quarter, with Rs 407 million as PBT compared with Rs 268 million in the last year. The company shows strong profits as a result of the reduced interest rates coupled with superior collections, which was a challenge throughout the year of 2013/14 due to poor weather affecting its agriculture centric customer base. However, strong recovery is seen in the current year, resulting in higher collections.

The two associate companies of LOLC operating in the financial services sector, Seylan Bank and PRASAC Micro Finance Company in Cambodia continues to give strong positive growth in profits, an impressive increase of 74% over last year. The contribution from the share of profits from its associate companies was Rs 423 million against Rs 243 million in June 2013. PRASAC's contribution to these profits is a Rs 201 million compared with Rs 86 million in June 2013.

Though the trading sector of the group shows lower profits compared to last year, Brown and Company PLC which is the main contributor to the trading business of LOLC, shows promising recovery in its core business trading, which was at negative profits last year vs. strong profits in the current quarter of Rs 148 million. Last year's profits were mainly from other income which is seen shifting to its core activities, trading and manufacturing.

LOLC, the parent company records higher profits compared with last year, a 202% growth over last year, reaching Rs 44 million. The company continues to reduce its lending book, which is passed on to its subsidiaries in line with its conversion into a core holding company. The company earns income from the shared services activities that provides common services to group companies. The company also continues to reduce its borrowings, strengthening its balance sheet with stronger gearing.

The borrowing book saw a drastic reduction, Rs 22 billion reducing to Rs 15 billion which has improved the company's gearing ratio to a strong holding company ratio of 0.46
Envisioning LOLC's financial services expansion strategy, LOLC entered into Myanmar through LOLC Micro Investment Ltd (100% subsidiary of LOLC) in 2013, obtaining formal approval to commence lending business in Myanmar. LOLC is one of the first financial services giants to enter Myanmar, which is essentially an untapped market with great potential for the industry. LOLC's operation has already made a positive impact in Myanmar, with its first three branches being opened in Myangone, North Okkalapa and Dalla. The business is already flourishing and the group is extremely positive of this investment, which is expected to derive steady growth in business and long term profitability.

In the coming months, LOLC will align group strategies towards strengthening its financial position further with increasing interest income with higher executions coupled with stronger collections in the financial services sector. The other sectors too will further strengthen its business operations, to derive medium to long term profitability. The group is well positioned and all sectors are being developed with strong investment backing to strengthen its business proposition for long term profitability growth.
www.ceylontoday.lk

Monday, 25 August 2014

Cargills, International Finance Corp reach USD 20 million agreement

Cargills (Ceylon) PLC has entered into an agreement with the International Finance Corporation (IFC) for an equity investment into Cargills Foods Company (Private) Limited which is the wholly owned subsidiary carrying out the retail operations of Cargills (Ceylon) PLC.

IFC is to invest approximately USD 20 million (Rs. 2,550 million) to subscribe in an 8% stake in the share capital of Cargills Foods Company.

Cargills Foods Company (Private) Limited carries out the retail operations of the Cargills Group, including the Food City and Food City Express supermarket chains.

The Group’s other operations like the FMCG sector including the dairy and restaurant sectors and investments into banking and property will remain with Cargills (Ceylon) PLC.
www.adaderana.lk

Sri Lanka stocks slip from 3-year high on profit-taking

Aug 25 (Reuters) - Sri Lankan stocks fell on Monday, ending a five-day gaining streak, to slip from a three-year high hit in the previous session as investors booked profits in conglomerate John Keells Holdings Plc, brokers said.

The main stock index ended down 0.34 percent, or 23.99 points, at 6,984.03, easing from its highest close since Aug. 18, 2011 hit on Friday.

The index has gained 18.12 percent so far this year.

"There was a bit of profit-taking which dragged the market," said a stockbroker, asking not to be named.

Market heavyweight John Keells Holdings fell 0.82 percent to 243 rupees.

United Motors Plc, which traded after a two-for-three share split led the fall in the index, plunging over 31 percent to 101.20 rupees a share.

Monday's turnover stood at 1.2 billion rupees ($9.22 million), in line with this year's daily average.

The bourse saw a net foreign inflow of 445.1 million rupees on Monday, extending the year-to-date net foreign inflow to 7.52 billion rupees worth of shares. 

1 US dollar = 130.1800 Sri Lankan rupees) 

(Reporting by Ranga Sirilal; Editing by Sunil Nair)

Sri Lanka stocks close down 0.3-pct

Aug 25, 2014 (LBO) - Sri Lanka's stocks closed 0.34 percent lower with index heavy John Keells Holdings losing ground, brokers said.

The Colombo benchmark All Share Price Index closed 23.99 points lower at 6,984.03, down 0.34percent. The S&P SL20 closed 8.61 points lower at 3,855.27, down 0.22 percent.

Turnover was 1.22 billion rupees, down from 2.70 billion rupees last Friday with 96 stocks closed positive against 102 negative.

John Keells Holdings closed 2.00 rupees lower at 243.00 rupees with an off-market transaction of 51.03 million rupees changing hands at 243.00 rupees per share contributing 5 percent of the daily turnover.

JKH’s W0022 warrants closed 40 cents lower at 68.60 rupees and its W0023 warrants closed 90 cents lower at 78.10 rupees.

HVA Foods closed 1.50 rupees higher at 12.10 rupees, attracting most number of trades during the day.

Foreign investors bought 567.51 million rupees worth shares while selling 122.41 million rupees worth shares.

Index heavy John Keells Holdings contributed most to the index drop.

Ceylon Cold Stores closed 12.50 rupees lower at 231.00 rupees and Nestle Lanka closed 20.00 rupees lower at 2,130.00 rupees.

Lion Brewery Ceylon closed 35.00 rupees higher at 638.00 rupees.

Central Bank Responses to Sunday Times Question

The Monetary Law Act sets out the main objectives of the Central Bank, which are the
maintenance of economic and price stability and the maintenance of financial system
stability. Maintaining financial system stability is a very important task because investments are made and maintained by persons and institutions only if the financial system is stable. In maintaining stability, confidence in the system is a major factor, and that is why the Central Bank focuses on maintaining confidence within the financial system and the economy. The reason that Sri Lanka has been able to benefit by massive investments, both local and foreign, in order to maintain an average economic growth of 7½ per annum for nearly 5 years, is the high level of confidence that investors have placed on Sri Lanka.

For this purpose, the Central Bank regularly conducts Investor Updates in different parts of the world, participates at many seminars, workshops and symposia, publishes messages in the media, disseminates information via its website on a continuous basis, and provides up todate information about the Sri Lankan economy and other socio-economic developments in the country. By doing so, present and potential stakeholders of the Sri Lankan economy are provided the opportunity to make important decisions based on accurate information. While carrying out this endeavor, the Central Bank regularly faces many challenges due to various erroneous and mischievous statements that are also publicized by many persons, both local and international. As a result, the Central Bank also has to often provide responses in order to convey the correct picture about the country and the economy.

Since the end of the conflict in May 2009, the Central Bank has observed with deep concern,that well-organized and well-funded sections by certain members of the Tamil Diaspora andthe local and international media, have been trying to convey inaccurate stories which are detrimental to Sri Lanka, which if allowed to continue unchecked and unchallenged, could affect the image of the country and the economy.

Since the end of the conflict, many investments have flown into the country, based upon the benign conditions as well as robust economic growth that has been experienced since then.

However, some of the Tamil Diaspora and the media yet continue their efforts to discourage foreign investments into Sri Lanka.

It was in that context, that the Monetary Board decided to implement a comprehensive overseas campaign to provide an accurate account of the Sri Lankan political and economic environment to US leaders, think tanks, investors, business chambers and interested citizens to keep them abreast of the true situation in the country. In order to carry out such a campaign effectively and successfully in the USA, the normal practices in the USA have to be followed, based upon proper advice and effective interventions. The Sri Lankan economy has now grown in stature and character in the international sphere, with exports of around US$ 11 bn; imports of about US$ 18 bn; remittances of around US$ 7 bn; foreign investments in sovereign bonds and governments securities of over US$ 6 bn; foreign reserves at over US$ 9 bn; FDIs at around US$ 2 bn; and foreign stock market portfolio holdings at about US$ 8 bn.

In that background, investing a modest sum to create awareness in the world's largest
economy would undoubtedly benefit the Sri Lankan economy, and the Central Bank efforts
have complemented and supported the activities of the Ministry of Foreign Affairs who have also been implementing many programmes in the face of the extra ordinary and vicious campaigns carried out by sections of the Tamil Diaspora in the USA.

It may also be mentioned that similar awareness efforts are carried out by a large number of countries and global organizations in the USA, in order to apprise the US leaders and other influential agencies about various matters that those countries or organizations, wish to place before the aforementioned leaders and agencies.
http://www.cbsl.gov.lk/pics_n_docs/latest_news/press_20140825e.pdf

DFCC records strong performance in 1Q

DFCC Group has recorded a consolidated profit after tax of Rs 1.14 billion for the three months ended 30 June 2014 compared with Rs. 612m in the corresponding period of the previous year, recent financials showed. Apart from the Banking Business which contributed Rs 1,093m to profit after tax the investment banking joint venture, Acuity Partners (Pvt) Limited (APL) contributed Rs. 3m in the current period (LKR 10m in the comparable period). The contribution from all other subsidiaries and associate company collectively was Rs. 48m in the current period (Rs 24m in the comparable period), DFCC Chief Executive Officer Arjun Fernando told shareholders.

The Banking Business of the DFCC Group is undertaken by DFCC Bank (DFCC), a licensed specialized bank and 99% owned subsidiary DFCC Vardhana Bank (DVB), a licensed commercial bank. Both banks function as one economic entity and as such it is appropriate to analyse the consolidated performance of the two banks as DFCC Banking Business (DBB).

During the quarter, Net Interest Income (NII) of DBB for the period decreased by 20% from Rs 2,120m to Rs 1,693m due to the drop in lending rates in tandem with a drop in benchmark interest rates. 


“Credit growth exceeded industry average and was an increase of 15% year on year. However, the major part of the asset build up was based on disbursements towards the latter part of the quarter,” Fernando said.


The DBB recorded Rs. 1,541m as operating profit before taxes, an increase of 61% over the comparable period. Profit after tax (both VAT on financial services and income tax) was Rs 1,093m, an increase of 89% over Rs 577m in the comparable period.
www.nation.lk

Impressive growth in Life, General for HNB Assurance in 1H 2014

HNB Assurance PLC has recorded an impressive growth as per the latest interim results released to the Colombo Stock Exchange. The company was also successful in strengthening its topline over the first half of FY 2014, where the combined turnover, expressed as Gross Written Premium (GWP), of both Life and Non-Life Insurance businesses escalated by 24% over the same period of the previous financial year.

This achievement was driven by an impressive 27% growth in Life Insurance GWP while Non-Life Insurance GWP also contributed with a growth of 21%.Accordingly, the combined GWP achievement for the period stood at Rs. 2,254.8 million, with a contribution of Rs.1, 133.9 million from the Life Insurance business and Rs. 1,120.9 million from the Non-Life Insurance business.


Commenting on this significant growth, HNB Assurance General Manager General Insurance Niranjan Manickam confirmed: “The strong topline growth signals the effectiveness of the Company’s business practices and the success of the strategies adopted to remain a resolute player in the industry despite challenging market conditions. Our strategic focus has been to attract selected segments of the market by designing products and services which would cater to the expectations of these customers whilst also leveraging on the relationship we have formed with financial institutions by providing customized insurance solutions to their clientele.”

Commenting on the growth in Life Insurance, General Manager Life Insurance Prasantha Fernando stated: “The fact that we have seen this growth in the midst of structural changes within the company to separate General and Life insurance businesses, as stipulated by legislation by early next year, is noteworthy.”

Further he acknowledged: “The growth in Life Gross Written Premiums of 27%, against the overall life insurance industry growth of 7% is quite impressive, considering the very competitive insurance market in Sri Lanka. Our continued focus on developing innovative insurance solutions and delivering them to the identified customer segments caringly, efficiently and passionately has made us strong in the face of new challenges confronting the life insurance market.”

The company also surpassed the Rs. 100 million mark in post-tax profits during the first half of the financial year. Accordingly, the PAT of the company stood at Rs. 108.million for the period, while PBT also increased to Rs. 127 million. This is entirely from the General Insurance business since a profit from the Life Insurance business is recognised only at the end of each financial year based on actuarial valuations.
www.ft.lk

Nobody wants to sell PC Pharma to Adam!

Adam Investments Ltd. (AINV) last week concluded the mandatory offer on PC Pharma Plc (PCP), with almost no sellers.

AINV said when the mandatory offer closed, shareholder/s owning only 1,000 shares had accepted the offer made at Rs. 1.70 per share. This amounted to an insignificant 0.001%. Prior to the offer, AINV held 31.152% whilst it acquired 1.416 million PCP shares or 1.4% from the trading floor.


Analysts said the majority of the minority shareholders not wanting to sell either reflected they felt the PCP share is worth more or they had confidence of greater future upside.

The AINV-PCP had the dubious distinction of being the first time when the offeror sold the stake to the market whilst a mandatory offer to buy remaining shareholding was on. 

However the sale was reversed by the SEC on the grounds that AINV violated rules which require an offeror not to sell during an offer without obtaining approval.

AINV which accepted the error was asked to compensate any buyer who may have suffered a loss in view of the reversal.

AINV sold its majority stake at prices higher than the mandatory offer and from levels from which it originally acquired the stake. Analysts viewed least interest in sellers in the mandatory offer could be because shareholders felt AINV will remain long-term focused following the SEC’s reversal of the sale.

AINV had cited several reasons why it tried to sell, including the fact that PCP and its parent PCH Holdings on which too a mandatory offer was on was facing multiple legal battles with allegations of a key subsidiary being sold by PCHH Chairman M. Rishan and AINV claiming the subsidiary as an asset in the mandatory offer.
www.ft.lk

Union Assurance reports steady growth in 1H 2014

Union Assurance PLC (UA), a leading player in the Sri Lankan insurance sector recorded steady growth in combined gross written premium (GWP) and profits in the second quarter of 2014.

Combined GWP for the six months amounted to Rs. 5,388 million. Life insurance premiums amounted to Rs. 2,753 million and non-life premiums contributed Rs. 2,635 million. Profit after tax (PAT) increased by 13% from Rs. 190 million in 2013 to Rs. 214 million in 2014. 


PAT excludes the surplus from life insurance segment which is determined after an actuarial valuation at the end of the year.

As at 30 June 2014, UA’s life fund stood at Rs. 21 billion with a healthy solvency ratio indicating the financial strength of the life business.

UA continues to have an excellent range of products, and its innovation pipeline continues to be strong. The latest product launched by the company ‘Union Super Investor’ combines the protection benefits of an insurance product with attractive investment returns.

Customers need to pay for a five year term and enjoy life insurance cover of five times the basic sum assured up to the age of 75 years. The relatively short premium payment term combined with extended life insurance coverage makes this an ideal solution for any person to accumulate wealth while being adequately safeguarded against unforeseen risks.

Union Assurance operates on the platform of trust with the brand values of convenience, respect and transparency. The company is anchored by a team of dynamic professionals, a strong capital base and reinsurance partnerships with highly rated global reinsurers to deliver these values to all its stakeholders. 
www.ft.lk

Sunday, 24 August 2014

Founder shareholder Shanker exits Browns Investments

Founder shareholder Shanker Somasunderam has exited Browns Investments Plc (BIL). Last week he sold 25 million shares and 24.7 million shares at 10 cents each.

As at 30 June 2014, Shanker who also sits on BIL Board held 50 million shares as the sixth largest shareholder. BIL share price closed the June quarter at Rs. 1.60. Its Net Asset per Share is Rs. 3.41 whilst at Group level it is Rs. 5.70. Shareholders of BIL on 4 August approved the Rights Issue of one New Ordinary Share for every one existing Ordinary Share at Rs. 1.25 each. Brown and Company (37%), Century Investments Plc (GREG) (20% stake) and LOLC Investments Ltd (13%) are among major shareholders of BIL.

In first quarter of FY15, bottom line of BIL which has interests in investments, leisure, porcelain, construction and travel was a negative Rs. 22.6 million, as opposed to a positive Rs. 76 million a year earlier. Group post-tax loss was Rs. 166 million, in comparison to a profit of Rs. 34 million. Group revenue was down by 5% to Rs. 226 million. 
www.ft.lk

Singer revenue hits Rs. 14b in 1H

Singer (Sri Lanka) notched a 14% increase in Group revenue in the second quarter of the 2014 financial year, compared to the corresponding period of the previous financial year.

This follows an 8% increase in revenue in the first quarter of 2014.

Group revenue crossed the Rs. 14 billion mark at the end of the first half, a 11% increase. Company revenue for the first half climbed by 12% with Singer Finance, a Group subsidiary, reporting a 7% increase in first revenue.

Although revenue has been trending upwards, profits have been affected by the imposition of the deemed VAT. The Group's net profits declined by 18% while Company net profits decreased by 19% primarily due to deemed VAT. Singer Finance recorded a 6% decrease in net profit for the first half.

Sales and administrative expenses increased by 10% due to inflation and an increase in rent and electricity expenses. The Group's net finance costs, however, decreased by 18%, as interest rates and borrowings declined.

Business conditions continued to be challenging, with the prevailing drought conditions and resulting difficulty in collections affecting the industry overall. However, Singer's industry-best systems and culture have allowed it to maintain momentum. For example, the Group has leveraged its state-of-the-art online real-time ERP system and its call centre service, SMS reminders and more traditional collection drives to ensure that the collections process was well managed. 
www.sundayobserver.lk

Saturday, 23 August 2014

Taxes, re-structuring, exiting brewery hit Cargills profits in Q2

Cargills PLC, a subsidiary of CT Holdings, recorded losses for the group in its second quarter financial results amounting to Rs.144.2 million compared to the previous year’s figures that indicated profits at Rs.123.4 million during the same period. 

Cargills will be looking at furthering the dairy production as it continued to gain profitability growing by 8 per cent and in this respect would be eyeing an increase in volumes as well, the company stated. As part of its re-structuring decision, the company had accrued losses but were looking at ensuring profitability in the second half of 2014 and beyond. 

Exiting the soft alcohol sector had cost the company a loss of Rs.116 million for the quarter but recovery of these were expected upon the conclusion of the disposal of this investment, the company noted. (SD) 
www.sundaytimes.lk

CT Holdings losses mount to Rs.191 mln

CT Holdings releasing its second quarter financial results stated it had recorded a group loss of Rs. 191 million compared to profits made during the same period last year. 

Group losses were recorded at Rs.191.3 million compared to a profit of Rs.144 million in the same period last year, the company stated. The group recorded a drop in profits with Gross Profit recorded at Rs.1.5 billion compared to Rs.1.6 billion during the same period last year. But group turnover was above last year by 8 per cent at Rs.16.07 billion. 

CT Holdings had taken initiatives to re-structure the retail sector by transferring operations and related assets to Cargills Food Company. During the second quarter of this year these were transferred to the subsidiary resulting in a one-off tax charge of Rs.101 million. 

The 25 per cent cap on VAT had also impacted on the company’s operating results in the retail sector, the company noted. 

FMCG sector performed well but was hampered by losses in the soft alcohol sector. The dairy sector had seen an investment of Rs.1.3 billion by the group during the past two years and commercial operations of brewery were scaled back during the last quarter due to the subsequent disposal of this operation. In the real estate sector, the group’s two malls namely Majestic City and the Jaffna Square were fully rented out, it was noted. 

Further the group has invested in a joint venture project currently implemented in Kotahena. In addition, CT Holdings has experienced low turnover from its restaurant business due to closure for refurbishments. On the other hand, it also opened two cinema screens at the newly refurbished Arcade Independence Square that comprises 3D viewing facilities and high quality seating. (SD) 
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Asia Capital lists 21.3 Mn shares

Asia Capital on Thursday listed the private placement of 21.3 million shares of the company by its Japanese investors. 

The company stated in a stock exchange filing that shares amounting to over 21.3 million were issued via a private placement and were listed on Thursday. 

Shares were sold at Rs.18 per share amounting to a total of approximately Rs.384 million. The shares were bought by the Japanese investors, brothers Mr. Yoshimichi Watanabe and Mr. Eiji Watanabe, the company stated. (SD)
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Govindasamy Ramanan in mandatory offer on Industrial Asphalt

People’s Merchant Bank Acting CEO/Managing Director Govindasamy Ramanan would be announcing a mandatory offer for Industrial Asphalts (Ceylon) PLC. 

This was announced to the Colombo Stock Exchange on Friday after Capital Trust Financial stated that Mr. Ramanan had bought 440, 914 shares of Industrial Asphalts on Thursday amounting to 66.15 per cent of the voting shares in issue. 

This resulted in Mr. Ramanan’s stake increasing to 66.32 per cent of the voting shares in issue. Shares were bought at Rs.201 per share. 

Mr. Ramanan making the announcement stated that he would be making the mandatory offer at an offer price of Rs.201 per share. Capital Trust Financial would be the managers to the offer. 

A corporate financial professional, Mr. Ramanan is currently the Managing Director / CEO of Capital Trust Financial and Capital Trust Wealth Management. (SD)
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Hybrids boost July vehicle registrations

Motor car registration figures for July show a significant increase with 2,551 registrations, compared to 2,256 in June and 2,305 year-on-year (yoy), with 827 brand new cars composing the figure, according to JB Securities’ market research.

“First signs of a major up tick in vehicle registrations, July numbers show a noticeable increase. It remains to be seen whether this is a monthly anomaly or signs of a trend reversal,” said JB Securities CEO Murtaza Jafferjee.

The increase was boosted by hybrid vehicles, which composed 1,942 of the 2,551 total registrations, up from 1,481 in June and 799 yoy.

Toyota led the green car wave with 1,006 pre-owned cars, from 837 in June and 465 yoy, while 106 of the 120 new hybrid registrations were also claimed by Toyota with 48 Axio Hybrid units registered compared to 14 the month before.

Honda kept to their second place in hybrid cars with 474 registrations compared to 454 in June and 323 yoy, while only claiming 6 new registrations.

Ten brand new Mercedes Benz S400 units and 2 preowned BMW Active Hybrids rounded up the luxury hybrid car category, while Honda dominated the SUV segment with a massive 328 new registrations of Honda Vezel, up from 90 in June and an almost 200 percent of its aggregate registrations of 172 until July.

Meanwhile the number of electric cars registered for July went up by just 1 compared to June.

“Electric cars were 11 units mainly Nissan Leaf. We are yet to see a Tesla import, it’s a great car,” Jafferjee noted.

He hopes the government does not increase tax rates on hybrids, as a sizable Rs.47 billion is collected as revenue each year.

“If one factors in total social cost due to better fuel efficiency, the taxation policy has been in the right direction. Nevertheless, I have a niggling feeling that the tax rate of 60 percent may go up,” said Jafferjee.

Meanwhile, brand new car registrations were led by Maruti Suzuki’s 351 units, up from 255 in June and 275 yoy; fuelled by 38 Celerios and followed by Toyota’s 175, from 82 in June and 65 yoy; with contributions by Axios and 59 Allion and Premios.

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Softlogic Finance AAA debenture draws Rs 4 bn

Softlogic Finance PLC said that its AAA rated Debenture received subscriptions of over Rs 4Billion on the opening day of its Issue of Rs 1.4Billion, and the issue was closed on the same day. The instrument that has been rated AAA by Ram Ratings (Lanka) Ltd, offered 14,000,000- redeemable, guaranteed debentures to the public at a face value of Rs 100- each and had received approval from the Colombo Stock Exchange. The issue opened for subscription on August 21, 2014, and saw substantial interest from an entire spectrum of Investors that included banks, insurance companies, institutional investors and retail investors.

A press release said: ‘The Debenture issue of Softlogic Finance was made in collaboration with GuarantCo who have guaranteed the instrument that also carries a Barclays Bank guarantee as part of GuarantCo’s structure. The Five Year Issue (2014/2019) offered attractive fixed and floating interest rates payable quarterly. The two options included; Option A –a fixed interest rate of 10% payable quarterly with an AER of 10.38% or Option B – based on a floating interest rate of three months net Treasury Bill + 1.50%, paid quarterly. The issue was managed by First Capital and legal counsel was provided by Nithya Partners. Trustees to the issue are Deutsche Bank AG and PW Corporate Secretarial are acting as registrars to the transaction.

‘The transaction is viewed by many as a ground breaking event, not only as a result of the AAA rating given to the issue, but also due to it paving the way towards more foreign participation in providing alternative solutions to developing the debt capital market in the country. Commenting on the successful culmination of the transaction Ashok Pathirage, Chairman, Softlogic Finance PLC said "We are very happy to have structured this landmark transaction that has received tremendous investor interest. We will continue to explore alternative means of funding that will be utilized to develop the very important SME sector of the country."

‘GuarantCo is owned by the PIDG members through the PIDG Trust and, in the case of DGIS, through FMO. The GuarantCo concept came from the Private Infrastructure Development Group ("PIDG") which is a multi-donor, member-managed organisation. Current PIDG members include: the UK Department for International Development ("DFID"), the Swiss State Secretariat for Economic Affairs ("SECO"), the Netherlands Ministry of Foreign Affairs ("DGIS"), the Swedish International Development Cooperation Agency ("Sida"), the World Bank, the Austrian Development Agency ("ADA"), Irish Aid, Kreditanstalt für Wiederaufbau ("KfW"), and the Australian Agency for International Development (AusAid).
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Friday, 22 August 2014

Sri Lanka bourse ends at 3-yr high on financials amid speculative trading

Aug 21 (Reuters) - Sri Lanka stocks hovered around three-year highs on Thursday, led by financials due to lower interest rates, but analysts said increasing speculative trading in fundamentally weak shares could impede the healthy growth the index has had this year.

The main stock index ended up 0.07 percent, or 4.78 points, at 7,004.75, its highest close since Aug. 18, 2011.

The index has gained 18.4 percent so far this year.

"Shares with weak fundamentals are also moving up from this week. If this set of stocks gathers momentum, it could be attractive for retail investors," Danushka Samarasinghe, the COO at Softlogic Stockbrokers, told Reuters.

"It could sharply increase the market risk as in the past," he said, referring to the index plummeting more than 20 percent after it hit a record peak in February 2011.

Shares of investment firm and broker Taprobane Holdings jumped 66.7 percent to 4.50 rupees in heavy volume which stockbrokers cited as a speculative move, while market heavyweight John Keells Holdings gained 1.51 percent to 248.70 rupees.

Thursday's turnover was 1.47 billion rupees ($11.3 million), higher than this year's daily average of 1.19 billion rupees.

The bourse saw net foreign inflows of 88.1 million rupees on Thursday, extending the year-to-date inflows to 7.57 billion rupees.

(1 US dollar = 130.2000 Sri Lanka rupee) 

(Reporting By Shihar Aneez; Editing by Prateek Chatterjee)

Sri Lanka stocks close higher

Aug 22, 2014 (LBO) - Sri Lanka's stocks closed in a positive territory Friday with index heavy stocks gaining amid strong foreign selling, brokers said.

The Colombo benchmark All Share Price Index closed 3.27 points higher at 7,008.02, up 0.05percent. The S&P SL20 closed 0.97 points higher at 3,863.88, up 0.03 percent.

Turnover was 2.70 billion rupees, up from 1.47 billion rupees a day earlier with 103 stocks closed positive against 105 negative.

John Keells Holdings closed 3.70 rupees lower at 245.00 rupees with eight off-market transactions of 964.54 million rupees changing hands at 244.00 rupees per share contributing 36 percent of the daily turnover.

JKH’s W0022 warrants closed 1.40 rupees lower at 69.00 rupees and its W0023 warrants closed 1.00 rupee lower at 79.00 rupees.

The aggregate value of all off-the-floor deals represented 50 percent of the turnover.

Taprobane Holdings closed 70 cents higher at 5.20 rupees and Lanka Century Investments closed 90 cents higher at 16.40 rupees, attracting most number of trades during the day.

Foreign investors bought 475.53 million rupees worth shares while selling 963.09 million rupees worth shares.

Ceylon Tobacco Company closed 15.00 rupees higher at 1,203.30 rupees and Bukit Darah closed 20.20 rupees higher at 700.20 rupees, contributing most to the index gain.

Sri Lanka ASPI index crosses 7,000 mark

August 22, 2014 (LBO) - An index of stocks by the All Share Price Index (ASPI) Sri Lanka has crossed tandem to 7000 mark yesterday (21-08-14) closing at 7,004.75 points after three years, the Colombo stock exchange (CSE) said in a media release.

The CSE says the market also recorded a high turnover value of 8.2 billion rupees on 19th of August, this year which is the highest record since a turnover value of 15.7 billion rupees on the 16th of March 2012.

The Colombo bourse is within top six best performing markets in the region with the ASPI showing an 18.46 percent year to date growth.

CSE says there have been five equity IPOs, an equity introduction and five debt IPOs within the course of 2014.

The capital raised through Equity IPOs has been the highest since 2011 with 2,693.8 million rupees, being raised in the first eight months of this year and the market has seen a total of 12 billion rupees of debt and equity capital raised through primary and secondary offerings.

Local retail investor participation in the market has grown to 37.9 percent from 33.5 percent in 2013 while foreigners remained net buyers during 2014 with a net foreign inflow of 8 billion rupees, CSE said.

Asia Leisure plan for 100 room luxury hotel in Galle

* Total investment of Rs. 1.8 bn

Asia Leisure, a fully owned subsidiary of Asia Capital PLC (ACAP) today announced the construction of a 100 room luxury resort in Galle, which is expected to be the largest hotel property in the southern coastal town. Asia Leisure currently owns and manages four globally acclaimed luxury boutique hotels in the south – Shinagawa Beach, Tamarind Hill, The River House and Taprobana (opening in 3 weeks). Asia Leisure at present has a 70 room inventory and the new property will more than double its inventory to 170 keys.

A press release said: ‘The property will be built on 2-acres of fine beachfront real estate and will be financed equally by Asia Capital and its Japanese partners. Construction is expected to begin at the end of the year and will take approximately two years to be completed.

‘Speaking about the launch of this new property Stefan Abeyesinhe, the CEO of ACAP said, "As Sri Lanka surges towards becoming a tourism hub, the country has commanded keen interest from global tourism players, with its room inventory expanding through large volumes of foreign direct investments. Given the bullish prospects for tourism, our growing expertise in the leisure sector is of immense strength to the Group’s future. It is with a sense of optimism and accomplishment that we unveil this, our fifth and largest property to date."

‘Explaining the reasons for investing in this project Jin Sashida, the Chairman and CEO of City Creation Holdings Inc said, "The main reason I chose to invest in this project is because I realized that Asia Capital and City Creation Holdings share a very similar goal and vision. Also, Sri Lanka’s economy has been showing healthy growth over the past few years and we are fully confident that under this government this trend will only improve. This is promising for Sri Lanka as a whole and we are very happy to be part of the development of this country."

‘The resort will consist of 100 sea view rooms/suites with all luxury amenities including the options of double bath or plunge pool and will be built under the ‘without boundaries’ concept. The hotel will also consist of a large swimming pool overlooking the Indian Ocean and will feature a Pool Bar and Water Lounge. The spa will offer the finest of therapies and treatments one could ask for while the restaurants add more spice to the stay in the hotel, coupled with the sea breeze and excellent service offered by the hotel staff.

‘The company is also in discussions with two international hotel operators for the management of the property but may also opt to undertake the management themselves considering the experience and knowledge gained from managing its other four properties. Given that Asia Leisure already engages in hotel management, the company has implemented a strategic plan to manage other properties. Asia Leisure has already negotiated for three more hotels in which Asia Leisure would either manage the operations of or have minority financial interest depending on the hotel’s requirements. Hotelier Reyhan Morris, the CEO of Asia Leisure and his team have been brought in due to their expertise and capabilities to take Asia Leisure to the next sphere.
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