Financial Sector Consolidation Update - September 2014

During September 2014, the Monetary Board approved, in-principle, another 8 consolidation proposals submitted by banks and Non-Bank Financial Institutions (NBFIs), thus bringing the total number of proposals approved so far to 37. At the same time, consolidation plans of another 4 banks and 4 NBFIs are also being finalized, and are due to be announced in the near future.

The work relating to the mergers/acquisitions that have already commenced continued to progress, with the respective banks and NBFIs working towards the timelines set at the beginning of the year.

The Central Bank held a further round of discussions with selected NBFIs with a view to resolving pending issues on their respective consolidation processes, and at these meetings, necessary guidance was provided for the facilitation of the implementation of the respective merger plans.

In the meantime, the Central Bank’s Internal Committees also reviewed the current regulatory framework for banks and NBFIs with a view to further strengthening financial system stability in the post-consolidation period.
http://www.cbsl.gov.lk/pics_n_docs/latest_news/press_20140930eb.pdf

Sri Lanka stocks close up 0.2-pct

Sep 30, 2014 (LBO) - Sri Lanka's stocks closed 0.19 percent higher with conglomerate John Keells Holdings gaining despite continued strong foreign selling, brokers said.

The Colombo benchmark All Share Price Index closed 13.98 points higher at 7,252.14, up 0.19 percent. The S&P SL20 closed 19.30 points higher at 4,038.30, up 0.48 percent.

Turnover was 4.29 billion rupees, up from 3.46 billion rupees a day earlier with 91 stocks closed positive against 98 negative.

John Keells Holdings closed 2.70 rupees higher at 253.70 rupees with seventeen off-market transactions of 211.18 million rupees contributing 5 percent of the turnover.

JKH also had market transactions of 1.77 billion rupees contributing 41 percent of the daily turnover.

Commercial Bank of Ceylon closed 1.10 rupees lower at 155.90 rupees with an off-market transaction of 204.16 million rupees changing hands at 156.00 rupees per share contributing 5 percent of the turnover.

The aggregate value of all off-the-floor deals represented 30 percent of the daily turnover.

Dunamis Capital closed 1.40 rupees lower at 37.50 rupees and Janashakthi Insurance closed 40 cents lower at 23.70 rupees, attracting most number of trades during the day.

Foreign investors bought 1.23 billion rupees worth shares while selling 3.01 billion rupees worth shares.

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

Dialog Axiata closed 20 cents higher at 11.50 rupees and HNB closed 4.40 rupees higher at 190.40 rupees.

NAMAL acuity value fund declares Rs. 2.50 dividend

The NAMAL Acuity Value Fund (NAVF) managed by National Asset Management Ltd. 

(NAMAL), the only unit trust listed on the Colombo Stock Exchange, declared a dividend of Rs. 2.50 for FY14, up from Rs. 0.50 in the previous year.

This is resulting from a sharp increase in earnings for the 12 months ending 31 March 2014, where the fund’s gross income rose by 89.1% YoY to Rs. 202.2 m and total net earnings were at Rs. 173.9 m.

NAMAL Executive Director and Chief Investment Officer Avancka Heart stated that NAVF was able to report significant income growth due to the timely portfolio reallocation to equities.

As of 31 March 2014, the Fund’s equity exposure was at 88.3% with 11.7% invested in debentures, fixed deposits and cash equivalents. The Fund’s top five equity holdings were Asiri Hospitals Holdings, Commercial Bank of Ceylon, Sampath Bank, Nations Trust Bank and Ceylon Hospitals during the same period.

NAVF has outperformed the Colombo Stock Exchange’s benchmark All Share Price Index (ASPI) by 4.62% with a year-to-date return of 23.6% (August 2014).
www.ft.lk

LOLC Leisure rebranded as Browns Hotels and Resorts

Browns Investments Plc today announced the rebranding of LOLC Leisure to Browns Hotels and Resorts.

In March this year, Browns Investments acquired sole shareholder status of LOLC Leisure. BI previously held a minority interest of 30% in LOLC Leisure. The investment in the hotel sector was made jointly along with BI’s parent company, LOLC.

As part of its consolidation efforts, LOLC divested its direct exposure in leisure to BI, giving the company the opportunity to focus on nurturing and growing this sector. LOLC continues to be the holding company for the Browns Group.



Hotels under in the group include the Eden Resort and Spa, the Dickwella Resort and Spa and Green Paradise, Dambulla. The company also announced the construction of a 71-room four star hotel in Passikudah, which is scheduled to be opened later this year.

The company’s current portfolio holds 308 keys, with plans to increase it to around 1000 within the next few years.

“Browns Investments has expanded its footprint in the leisure sector and made a number of significant acquisitions. This increased interest will lead us to soon be one of the largest hotel operators in Sri Lanka. This is extremely timely, considering the country’s increased focus on tourism,” Browns Investments PLC Managing Director/ Chief Executive Officer Rimoe Saldin stated.

A 363-roomed, 25-acre property located along the golden mile of Beruwala, currently under construction and scheduled to be completed in 2016, will be included in the portfolio of hotels, as will a 172-roomed five-star property already under construction in Kosgoda which will be completed during the first half of 2015.




The company also owns properties in Nilwella and Trincomalee, and is looking at options for a new city hotel.

Browns Hotels and Resorts Sales and Marketing Head Adrian Jansz added: “This is an exciting year for us, with our current properties being upgraded to suit the demands of the modern tourist. Our current portfolio includes a number of landmark properties, with the promise of more exquisite properties earmarked. The changes taking effect have made us step back and re-evaluate our offerings, and has led us to draw parallels between the emotional connect of our customers and their satisfaction. This is the promise of Browns Hotels and Resorts.”

Browns Investments PLC is a subsidiary of the legendary 135+ year old Brown & Company PLC, with its ultimate parent company being LOLC. Browns Investments operates in fast-growing sectors of the economy such as leisure, agriculture and plantations, construction, marine and manufacturing and power generation.
www.ft.lk

Sri Lanka stocks end steady despite foreign outflows

(Reuters) - Sri Lankan stocks edged higher on Monday, led by banking shares, but profit-taking in blue-chips and foreign selling in risky assets kept the gains in check.

Stockbrokers expect the rising streak to continue due to lower interest rates and growth optimism.

The main stock index ended up 0.06 percent, or 4.45 points, at 7,238.16, hovering near a more than three-year high close hit on Tuesday.

Foreign outflows were at 1.89 billion rupees, the worst performance since Aug. 19. However, foreign investors have been net buyers of 8.75 billion rupees in stocks this year.

"There might be some profit-taking. But investors don't have any alternative to park their money due to low interest rates. So the market will continue its upward momentum with some profit-taking," said Reshan Wediwardana, research analyst at First Capital Equities (Pvt) Ltd.

The day's turnover was 3.46 billion rupees ($26.5 million), the highest since Sept. 11 and well above this year's daily average of over 1.29 billion rupees. Stockbrokers cited block deals for the day's turnover boost.

People's Leasing & Finance Plc rose 3.65 percent to 19.90 rupees. But profit-taking in Aitken Spence and Co Plc and market heavyweight John Keells Holdings Plc weighed on the index.

Aitken Spence fell 1.8 percent to 109.30 rupees, while Keells edged down 0.08 percent to 251 rupees.

($1 = 130.4000 Sri Lankan rupee) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Prateek Chatterjee)

Sri Lanka stocks close higher

Sep 29, 2014 (LBO) - Sri Lanka's stocks closed higher with the turnover crossing 3.4 billion rupees mark despite strong foreign selling, brokers said.

The Colombo benchmark All Share Price Index closed 4.45 points higher at 7,238.16, up 0.06 percent. The S&P SL20 closed 10.58 points higher at 4,019.00, up 0.26 percent.

Turnover was 3.46 billion rupees, up from 2.73 billion rupees last Friday with 86 stocks closed positive against 118 negative.

John Keells Holdings closed 20 cents lower at 251.00 rupees with seven massive off-market transactions of 1.38 billion rupees changing hands at 251.00 rupees per share contributing 40 percent of the turnover.

The aggregate value of all off-the-floor deals represented 45 percent of the daily turnover.

Dunamis Capital closed 7.00 rupees higher at 38.90 rupees, First Capital Holdings closed 6.80 rupees higher at 56.30 rupees and Janashakthi Insurance closed 1.60 rupees higher at 24.10 rupees, attracting most number of trades during the day.

Foreign investors bought 375.47 million rupees worth shares while selling 2.27 billion rupees worth shares.

Lion Brewery Ceylon closed 14.50 rupees higher at 630.10 rupees and People’s Leasing and Finance closed 70 cents higher at 19.90 rupees, contributing most to the index gain.

DFCC Bank closed 3.60 rupees higher at 199.90 rupees and HNB closed 2.60 rupees higher at 186.00 rupees.

Fitch rates Central Finance 'A+(lka)'

Fitch Ratings Lanka has affirmed Central Finance Company Plc's (CF) National Long-Term Rating at 'A+(lka)' with a stable outlook. Fitch has also affirmed CF's senior secured and senior unsecured debt at 'A+(lka) and its subordinated debt at 'A(lka)'.CF's rating reflects its strong capitalization, which is supported by robust profitability and high profit retention. Counterbalancing these strengths are the pressure on loan quality and its low provisioning levels compared with its peers'. The rating also captures CF's high margins, which are supported by the company's strength in raising funds at relatively low rates through the solid franchise developed over a long operating history.

CF has historically maintained strong capitalization. The regulatory reported Tier 1 capital ratio was 24.92x at end-June 2014 and the Fitch core capital (FCC) ratio was higher at around 40x. The FCC is higher because it captures the revaluation reserves, while the consolidated equity position and the balance sheet equity used are higher due to lower loan impairment charges that are in line with international accounting rules.

CF's asset quality continued to be under pressure, with its regulatory non-performing loans (loans overdue by six months or more) increasing to 3.8% at end-June 2014 from 2.45% at end-June 2013. This was due to a slowing macroeconomic environment and the company's exposure to the agricultural sector, which has been adversely affected by unfavourable weather conditions. The regulatory non-performing loans (including interest in suspense) increased by 46% in the financial year ended 31 March 2014 (FY14) and by 18% in 1Q15. The ratio of impairment reserves to gross loans increased to 1.3% at end-June 2014 from 1.0% three months earlier. This is still low compared to peers and implies a lower provisioning coverage.

The company has sufficient unutilized credit lines to fund its maturity mismatches. CF's well-established deposit franchise supports liquidity. Customer deposits funded about 50% of CF's assets and were fairly granular with 88% of loan contracts being for loans under LKR1m (USD7,700) at 1Q15.

CF's senior unsecured debentures are rated in line with CF's National Long-Term Rating of 'A+(lka)' as they constitute unsecured and unsubordinated obligations of the company.

The senior secured debentures, which are secured by a primary mortgage over receivables from identified hire-purchase and lease agreements, are also rated in line with CF's National Long-Term Rating. There is no rating uplift for the collateralization as the note's recovery prospects are assessed to be. average and comparable with those of the unsecured notes in a developing legal system.

The subordinated debentures are rated one notch below CF's National Long-Term Rating to reflect their subordination to senior unsecured creditors.

Greater product diversity, together with improved funding flexibility commensurate with higher-rated peers, could lead to an upgrade. However, taking into account the current pressure on its asset quality, Fitch does not see an upgrade as likely in the medium term.

CF's rating could be downgraded if it is not able to provide a buffer against further loan quality deterioration through profit, which would lead to an increase in unprovided NPLs relative to equity.

The debt ratings will move in tandem with CF's National Long-Term Rating.

CF is a Licensed Finance Company established in 1957. Its 22.6% held by the Wijenaike family, the founders of the company, 16.1% owned by Corporate Services (Pvt) Ltd, and the rest is publicly held. The company's lending portfolio consists largely of vehicle financing.
www.ceylontoday.lk

Fitch affirms AMW Capital Leasing at 'BB-(lka)'

Fitch Ratings Lanka affirmed Sri Lanka-based AMW Capital Leasing and Finance PLC's (AMCL) National Long-Term Rating at 'BB-(lka)'. The Outlook is Stable.

The rating reflects AMCL's relatively weak deposit franchise among finance companies, modest capitalization and better asset quality metrics. AMCL's rating is a reflection of its stand-alone financial strength, and as such already factors in ordinary support from parent Associated Motorways Limited (AMW).

Fitch believes that AMCL may be under pressure to increase its asset base by 27% to LKR8bn from an asset base of Rs 6.3 billion as at end-June 2014 before the end of this year. This is in line with the government's master plan to consolidate the financial system, according to which the consolidation in the non-bank financial institution segment is based on the asset and capital bases of the players. A rush to expand amid a weak economy could raise AMCL's credit risk profile. The company's assets rose 14% in 1H14 from Rs 5.5 billion as at end-2013 (2013: 15% and 2012: 31%).

AMCL continues to have access to local wholesale funding, and it has unutilized credit lines that are sufficient to cover gaps arising from the mismatches in the maturities of its assets and liabilities. AMCL's external borrowings and borrowings channelled through .its parent accounted for 64% and 10% respectively of total assets at end-1H14 (end-2013: 37% and 33%). The high proportion of borrowings could lead to liquidity pressure in the event AMCL is unable to source such funding directly or through the parent. Fitch's view is that liquidity can erode rapidly in times of stress.

AMCL's deposit base of Rs 657 million accounted only for 14% of its total funding at end-1H14 (end-2013: 6.5%; end-2012: 0.1%) and has a relatively high deposit concentration. Fitch does not expect the share of deposit funding to increase given AMCL's management intends to continue to rely on wholesale funding.

AMCL's reported regulatory gross NPL ratio stood at 2.1% at end-2013, better than the industry average of 6.7%. However, Fitch expects the NPL ratio to increase due to the challenging operating environment and as the loan book seasons. The company has been shifting towards providing financing for more non-AMW brand vehicles as it seeks to expand its loan book while increasing its market share of AMW products. AMW brand vehicles remain a significant part of its loan portfolio as at December 2013.

Fitch expects AMCL's capitalization to continue to decline due to its expanding operations but to remain at a satisfactory level for its current rating. Fitch may take positive rating action if AMCL develops its franchise, both in funding and lending, while maintaining its financial profile relative to higher-rated peers.

Deterioration in the company's liquidity profile, asset quality, or capitalization to levels below its peers would place downward pressure on AMCL's rating.
www.ceylontoday.lk

CLC acquires BRAC Lanka Finance

Commercial Leasing & Finance PLC (CLC), LOLC’s subsidiary acquired the controlling stake of 56.3% in BRAC Lanka Finance Company PLC (BLFC). Completing the transaction with BLFC’s previous owner, CLC bought the balance held by BRAC consolidating its position at 59.33%. With this acquisition, LOLC Group owns 94.35% of BLFC considering the associate stake in BLFC of 35.02% held by LOLC Micro Investments Ltd.

With this acquisition, CLC will be making a mandatory offer to the rest of the shareholders of BLFC to acquire the balance shareholding. CLC is planning on merging BLFC’s full business operations in the near future in line with the CBSL direction on financial sector consolidation. CLC’s total investment in BLFC is expected to be Rs.1.025 billion, the firm said.
www.nation.lk

Anilana Hotels And Properties Announces Rights Issue

Sri Lanka’s Anilana Hotels and Properties Limited is to raise Rs 767 million, by way of Rights to existing shareholders to finance the balance construction of a hotel project in Dambulla, Sri Lanka and settle existing debt, the company said in a Colombo Stock Exchange announcement.

The company plans to issue upto 109,624,114 ordinary shares at a price of Rs. 7 per share, to the existing shareholders, in the proportion of two new ordinary shares for every seven ordinary shares held.

Approximately 600 million rupees of the funds raised would be utilized to finance the balance construction of the Dambulla hotel project, which is currently carried out under Dambulla Hotel Resort and Country Club (Pvt) Limited, a fully owned subsidiary of the company and to retire approximately 167 million rupees of the existing debt of the company.

The current stated capital of the company is 3,095,892,850 rupees represented by 383,684,400 ordinary shares.

The firm is currently operating three properties in Pasikuda, Nilaveli and Nuwara Eliya and is planning several more.
www.sundayleader.lk

CB says no favouritism in the financial sector consolidation process

The Central Bank has denied claims of favouritism in the implementation of the financial sector consolidation process stating that no finance company will be allowed to continue without merger or absorption.

Assistant Governor of Central Bank C.J.P. Siriwardena told the Business Times that they will stick to the master plan on consolidation of the financial sector.The consolidation process is on track to reduce the number of non-banking financial institutions to 20 from 58, he said, adding that the merger or acquisition of these financial institutions is mandatory in accordance with the plan.

He was responding to the allegation leveled by certain finance companies that at least 10 financial institutions are to be allowed to continue its functions hindrance.Mr. Siriwardena noted that no such approval has been given to any financial institution to continue without merger or absorption surpassing the guidelines of the master plan. However he pointed out that he Central Bank has the power to issue directions exempting any financial institution from this mandatory requirement.

Several finance companies expressed dismay on a ‘decision’ to allow three finance companies to continue as micro finance companies without merging.
www.sundaytimes.lk

Financial sector consolidation important to respond to a crisis situation – CB

By Duruthu Edirimuni Chandrasekera

Since there has not been any significant crisis situation in Sri Lanka’s financial system except for some non-systemic failures of a few mismanaged financial institutions in the recent past, the question raised by many local and international agencies was why the Central Bank (CB) came up with a financial sector consolidation programme for a well-functioning stable financial system, set the stage for CB’s 64th Anniversary oration titled “Financial Sector Consolidation: Why and How?” held recently.

Past global experiences show that all the consolidation programmes implemented to stabilise those economies’ financial systems were introduced as a national policy in response to a crisis situation, C. J.P. Siriwardene, Assistant Governor CB delivering the oration said, adding that Sri Lanka’s drive beyond 2016 will largely depend on the strengh and the dynamism of the financial sector.

Some financial institutions have failed due to their inability to adapt to the rapidly changing economic conditions. Small financial institutions not complying with corporate governance principles, capital and liquidity requirements were also a reason for some past crises, which have resulted in exerting pressure on the stability of the financial system of the country, Mr. Siriwardene said.

Serious distress

During 1988-90, 13 Licensed Finance Companies reported serious distress, of which two companies were revived by infusing new capital while 11 companies were liquidated. A specialised bank Pramuka Bank failed in 2002. It was only in 2007 that the deposits of the Pramuka Bank were transferred to a new Savings Bank. “In 2009, eight financial institutions faced liquidity problems, mainly due to the collapse of the parent company of a particular group,” Mr. Siriwardene said, adding that most of those financial institutions are still undergoing restructuring. CB had studied several consolidation models of other countries, to fashion consolidation in an effective manner. “In Asia, following the Asian financial crisis, many countries consolidated their financial institutions successfully,” Mr. Siriwardena said. Amongst them Malaysia, Thailand and Singapore were prominent.

As larger banks grow, it will be difficult for smaller banks to remain competitive, therefore, small banks will be induced to merge with stronger partners. “The outcome of the consolidation in the banking sector is expected to result in a sector where at least five Sri Lankan banks will have assets of over Rs. 1 trillion with a stronger regional presence by 2016, while domestic banks, which hold assets less than Rs.100 billion now will have to increase their asset base above Rs.100 billion through organic growth and merger/absorption by 2016.

The three banks with development banking focus in Sri Lanka, namely, the National Development Bank PLC, DFCC Bank and DFCC Vardana Bank Ltd., are still not as big as we would like them to be to cater to the current and future needs of the economy. Therefore, these three banks will be merged so that the resulting entity would be large enough to comfortably raise capital from international markets and cater to the growing demand for investments by both the private and public sectors.”

The two large state commercial banks, Bank of Ceylon and People’s Bank, are encouraged to operate with higher levels of capital and conduct private banking on a wider scale, Mr. Siriwardena said, adding they’re expected to strengthen their off-shore banking operations and grow and expand towards a stronger regional presence. “We have encouraged the National Savings Bank to broad-base their banking activities to contribute to the economy on a larger scale while, the Pradeshiya Sanwardhana Bank (the regional development bank of the country) is encouraged to serve the niche market of microfinance, targeting inclusive growth in the provinces.”

“Most of the banks and NBFIs submitted their respective confirmed merger proposals by 30 June 2014, while only a few financial institutions did not have firm plans due to certain reasons and were in need of additional time to finalise their respective plans. In order to resolve issues related to these banks and NBFIs, the second round of meetings, chaired by the Governor of the Central Bank, was held during 11-22 July 2014. At these meetings, matters relating to the delays in arranging mergers and acquisition were discussed and financial institutions were provided with appropriate guidance to manage the consolidation process. Accordingly, all NBFIs who had not confirmed their consolidation plans were requested to submit their final plans at their earliest,” Mr. Siriwardene said.

As of mid-September 2014, eight banks and 29 NBFIs have confirmed their merger and acquisition transactions under the consolidation programme while a few NBFIs are progressing under the restructuring process.

“We are now in the middle of the consolidation programme and the Central Bank intends to complete the programme by end March 2015.However, considering the complexity of the merger and acquisition models of some companies, some flexibility would be granted on a case by case basis to ensure smooth transition. After the successful completion of the consolidation programme, the Central Bank expects to work more closely with the financial institutions in order to maintain the right balance in the regulatory system”.
www.sundaytimes.lk

SEC relaxes price constraints on finance company crossings

The Securities and Exchange Commission (SEC) on Tuesday directed the Colombo Stock Exchange (CSE) to relax rules pertaining to price constraints on share crossings on finance companies gearing for consolidation.

Now a crossing shall not take place at a price below 5 per cent of the closing price in a crossing in CSE’s Automated Trading Rules. As an example, if the closing price of a share was Rs. 100 the crossing cannot be at less than Rs. 95. This rule will be relaxed to any price.

“The SEC further decided to require companies seeking to benefit from this directive to apply to SEC to determine whether the proposed share transactions fall within the ambit of the financial sector consolidation plan if requested by the respective firms and to be determined by the SEC as such,” the SEC circular said.

As of mid this month, some eight banks and 29 non bank financial institutions confirmed their merger and acquisition transactions under the consolidation programme, according to the Central Bank.
www.sundaytimes.lk

Unit trusts on SEC radar

The Securities and Exchange Commission (SEC) this week directed all unit trusts to maintain a minimum of 50 unit holders for each fund at all times and initiated that it’ll get tough with non compliance.

“If this is not met due to redemption by a unit holder or any other supervening circumstances, the managing company of unit trust funds will be required to make best efforts to comply within three months from the date of the first short fall and consult he Commission forthwith,” SEC said, adding that this directive will be with immediate effect.

Unit trusts are also required to obtain a minimum of 50 unit holders during An Initial Public Offering (IPO) period and if that is not met unit trusts will have to refund the monies collected at the close of the IPO period.

Unit trust funds existing prior to this date will be granted six months ending 31 March 2015 to comply with the continuous maintenance requirement.

There are nearly 50unit trusts funds operating in the country and in the last four years, and the SEC has been very keen for this industry to grow and broad-base across the country, analysts said.

“Roadshows across the country were organised and awareness programmes were telecast on TV as well as various benefits being offered like full tax relief from all income earned from Units and lifting of exchange controls to permit foreigners to invest,” an analyst said, but pointed out that the number of funds grew but they were not broad-based. Some were using it as a method of reducing their income taxes. “It is probably because of this that the SEC has put in these fresh qualifications,” the analyst added. www.sundaytimes.lk

CB in talks with 3 parties willing to bail out CIFL

By Duruthu Edirimuni Chandrasekera

The Central Bank (CB) is in talks with three foreign investors in a bid to restructure the failed CIFL (Central Investments and Finance Ltd), CB sources said.

“We’re in the process of restructuring CIFL under the Financial Sector Consolidation programme,” a CB source told the Business Times. He added that CIFL Depositors Association had withdrawn the court case against the CB and the CB in turn promised to try to find an investor to finance another Rs 1 billion to augment the financial structure of CIFL.

K. Wijaya Gunawardena, President, CIFL Depositors Association confirmed to the Business Times that the case against the CB was withdrawn on September 19.

The CB source said that if an investor infuses Rs 1 billion in cash, the CB has promised to grant a ‘matching’ loan at a concessionary rate from the Deposit Insurance and liquidity Support Scheme (SLDILSS). It’s a 10 year funding facility. “We want them to bring in Rs 1.5 billion.”

At the CB’s 64th Anniversary oration titled “Financial Sector Consolidation: Why and How?” recently C J P Siriwardene, Assistant Governor CB delivering the oration said that although in 2013 CIFL accounted for only 0.35 per cent of the assets of the financial sector, the publicity it created resulted in a huge uproar in the financial market and the economy.

“We introduced revival plans on a case by case basis so that public confidence will be restored and financial system stability will be sustained. Under this revival plan, the CB decided to provide supplementary long-term funding facility through SLDILSS for any new investor or financial institution, which acquires or merges with any cash-strapped non-bank financial institution (NBFI), so that operations of such NBFI could be revived and restructured without weakening the financial position of the acquirer,” he said.

www.sundaytimes.lk

Asiri Central Hospitals changes from ‘PLC’ to ‘Limited’

Following the shares of Asiri Central Hospitals PLC being de-listed from the official list of the Colombo Stock Exchange, the name of the company is to be changed to Asiri Central Hospitals Limited in accordance with the Companies Act of Sri Lanka.

At the Annual general Meeting on 25 September the company authorized the sale of its land and premises at No. 37, Horton Place, Colombo 07 to Ms. P.P.M. Edwards for a consideration of Rs. 2.6 billion.

The shareholders of Asiri Central Hospitals PLC also resolved to appoint Ernst & Young Chartered Accountants as the Auditors of the Company.
www.adaderana.lk

Arpico Finance to repurchase shares in Alfinco Insurance Brokers

Arpico Finance Company PLC has decided to accept the offer by Alfinco Insurance Brokers (Pvt) Limited to repurchase the shares held by Arpico Finance Company PLC in Alfinco Insurance Brokers (Pvt) Limited for Rs. 186,100,000 which amount has been independently arrived at by KPMG as being fair.

All necessary regulatory approvals have been obtained.

www.adaderana.lk

Sri Lanka stocks end steady after 2 days of falls; banks up, foreigners sell

(Reuters) - Sri Lankan stocks steadied on Friday after two straight sessions of losses as profit-taking in blue chips offset gains in banking and palm oil shares, while foreign investors sold risky assets.

Stockbrokers expect the rising streak to continue due to lower interest rates and growth optimism.

The main stock index ended up 0.01 percent, or 0.73 points, at 7,233.71, hovering near a more than three-year high close hit on Tuesday.

"There will be a temporary correction with the index moving sideways, but the market will go up for the simple reason that there is no other avenue for people to invest," said an analyst asking not to be named.

"People might feel the market is a little overheated, but the bourse will still continue its run on lower interest rates and positive economic outlook."

Hatton National Bank Plc rose 1.33 percent to 183.40 rupees a share, while palm oil firm Good Hope Co Plc rose 12.43 percent to 1,800 rupees.

Shares of conglomerate John Keells Holdings Plc fell 0.91 percent to 251.20 rupees, while Ceylon Tobacco Co Plc ended down 0.62 percent at 1,152.8 rupees.

The day's turnover was 2.73 billion rupees ($20.9 million), well above this year's daily average of over 1.29 billion rupees.

Foreign investors were net sellers of 711.6 million rupees of shares on Friday, but have been net buyers of 10.65 billion rupees in stocks this year. 

($1 = 130.3500 Sri Lankan rupee) 

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

Serendib Hotels PLC mulls re-structuring

Hemas Holdings PLC and Minor International PLC, the parent companies of Leisure Asia Investments Limited and Lodging Investment (Labuan) Limited have made a proposal to the Board of Serendib Hotels PLC to consolidate the multiple Sri Lankan hotel property investments of Serendib Hotels PLC and the two major shareholders under Serendib Hotels PLC.

While considering this proposal the Directors of Serendib Hotels PLC have appointed an independent valuer to carry out valuations pertaining to the investments relevant to the proposal.

The Board of Serendib Hotels PLC will thereafter assess the proposal and if found feasible advise the shareholders of the company accordingly.
www.adaderana.lk/

Sri Lanka stocks fall on profit-taking; seen gaining

(Reuters) - Sri Lankan stocks fell for the second straight session on Thursday as investors booked profits, but stockbrokers expect the market to continue its gaining streak due to persistent foreign buying, lower interest rates, and positive economic outlook.

The main stock index ended down 0.3 percent, or 21.45 points, at 7,232.98, further slipping from its over three-year high close hit on Tuesday. It has gained in six of the last eight sessions till Thursday.

"Market is down on correction as it has been going up for the last few months. A correction is warranted," said Reshan Kurukulasuriya, COO of Richard Pieris Securities.

"Market will start moving up with all the positive factors," he said referring to lower interest rates, positive economic outlook, and continued foreign buying.

Shares of Sri Lanka Telecom Plc, which led the overall fall, ended 2.44 percent weaker at 51.9 rupees, while Heyleys Plc lost 3.53 percent at 352.10 rupees.

Shares in biggest listed lender Commercial Bank of Ceylon Plc fell 1.07 percent to 157.20 rupees.

The day's turnover was 1.19 billion rupees ($9.13 million), less than this year's daily average of over 1.28 billion rupees.

Foreign investors were net buyers of 125.3 million rupees worth of shares on Thursday, extending the year-to-date net foreign inflows in stocks to 11.36 billion rupees. 

($1 = 130.3000 Sri Lankan rupee) 

(Reporting by Ranga Sirilal and Shihar Aneez)

Sri Lanka stocks close down 0.3-pct

Sep 25, 2014 (LBO) - Sri Lanka's stocks closed in red owing to negative price movements on counters such as Sri Lanka Telecom and Commercial Bank, brokers said.

The Colombo benchmark All Share Price Index closed 21.45 points lower at 7,232.98, down 0.30 percent. The S&P SL20 closed 9.61 points lower at 4,013.02, down 0.24 percent.

Turnover was 1.19 billion rupees, down from 1.53 billion rupees a day earlier with 83 stocks closed positive against 112 negative.

The aggregate value of all off-the-floor deals represented 18 percent of the daily turnover.

Dunamis Capital closed 3.30 rupees higher at 29.80 rupees and George Steuart Finance closed flat at 30.40 rupees, attracting most number of trades during the day.

Foreign investors bought 187.16 million rupees worth shares while selling 61.82 million rupees worth shares.

Sri Lanka Telecom closed 1.30 rupees lower at 51.90 rupees and Commercial Bank of Ceylon closed 1.70 rupees lower at 157.20 rupees, contributing most to the index drop.

Nestle Lanka closed 17.00 rupees lower at 2,112.50 rupees and John Keells Holdings closed 1.30 rupees lower at 253.50 rupees.

JKH’s W0022 warrants closed 70 cents higher at 75.00 rupees and its W0023 warrants closed 10 cents higher at 78.10 rupees.

Sri Lanka stocks slip from 3-yr highs; more losses seen

(Reuters) - Sri Lankan stocks slipped on Wednesday from their highest in more than three years hit in the previous session as investors took profits in recent gainers such as Bukit Darah Plc, brokers said.

The main stock index ended down 0.09 percent, or 6.21 points, at 7,254.43, slipping from its highest closing level since June 9, 2011 hit on Tuesday. The index fell for the first time in seven sessions.

"Illiquid shares led the index to end marginally down," said Dimantha Mathew, manager, research at First Capital Equities (Pvt) Ltd. "The index might struggle a bit on profit-taking and correction as we feel big-cap counters are over valued."

Shares of Commercial Leasing and Finance Plc, which led the overall losses, fell 4.17 percent to 4.60 rupees, while Bukit Darah lost 1.37 percent to 725 rupees.

Conglomerate John Keells Holdings Plc, which fell 1.54 percent during the day, ended 0.35 percent firmer at 254.80 rupees.

The day's turnover was 1.53 billion rupees ($11.7 million), surpassing this year's daily average of over 1.27 billion rupees.

Foreign investors were net buyers of 156.94 million rupees worth of shares on Wednesday, extending the year-to-date net foreign inflows in stocks to 11.23 billion rupees. 

($1 = 130.2800 Sri Lankan rupee) 

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

Sri Lanka stocks close down 0.1-pct

Sep 24, 2014 (LBO) - Sri Lanka's stocks closed 0.09 percent lower with the losses in counters such as Commercial Leasing and Finance and Bukit Darah, brokers said.

The Colombo benchmark All Share Price Index closed 6.21 points lower at 7,254.43, down 0.09 percent. The S&P SL20 closed 7.46 points lower at 4,022.63, down 0.19 percent.

Turnover was 1.53 billion rupees, down from 2.18 billion rupees a day earlier with 90 stocks closed positive against 108 negative.

The aggregate value of all off-the-floor deals represented 10 percent of the daily turnover.

George Steuart Finance closed 30 cents higher at 30.40 rupees, attracting most number of trades during the day.

Commercial Leasing and Finance closed 20 cents lower at 4.60 rupees and Bukit Darah closed 10.10 rupees lower at 725.00 rupees, contributing most to the index drop.

Ceylon Cold Stores closed 6.90 rupees lower at 238.10 rupees and Nestle Lanka closed 19.40 rupees higher at 2,129.50 rupees.

Ceylon Tobacco Company closed 5.00 rupees higher at 1,160.00 rupees and John Keells Holdings closed 90 cents higher at 254.80 rupees.

Cargills Ceylon closed 2.80 rupees higher at 168.00 rupees.

Deshodaya Development Finance Company has purchased 15,806,250 voting ordinary shares, acquiring 70.25 percent of the issued share capital of George Steuart Finance, a stock exchange filing said.

Sri Lanka stocks edge up after policy rate decision

(Reuters) - Sri Lankan stocks rose for the sixth straight session on Tuesday to touch their highest in more than three years after the central bank effectively reduced its standing deposit facility rate to boost credit and economic growth.

Before the market opened, the central bank announced moves to make commercial banks lower their interest rates and increase lending to support an economy expected to grow 7.8 percent this year, while keeping its own policy lending rate unchanged.

The main stock index ended up 0.06 percent, or 4.23 points, at 7,260.64, its highest closing level since June 9, 2011.

"We expect a surge in activity due to declining interest rates," said Hussain Gani, deputy CEO at Softlogic Stockbrokers said. "I think there will be demand for fundamentally sound shares and we see an increase in buying using margin credit."

Stockbrokers said they expect the index to gain further, fuelled by the indirect rate cut.

The central bank also cut its year-end inflation projection to 3-4 percent from 4-5 percent due to a cut in energy prices on Sept. 16.

Sri Lanka is aiming for a higher economic growth of 8.2 percent and a lower fiscal deficit target of 4.4 percent of gross domestic product next year, a government document showed last week.

The stock index has gained 22.8 percent so far this year.

The bourse has been in an overbought region since July. The Relative Strength Index, a momentum indicator tracked by chartists, rose to 85.616 on Tuesday compared with Monday's 84.729, Thomson Reuters data showed.

Shares of Commercial Leasing and Finance Plc, which led the overall gains, rose 4.35 percent to 4.80 rupees, while Bukit Darah Plc gained 3.54 percent to 735.1 rupees.

Sri Lanka Telecom Plc added 1.92 percent to close at 53.20 rupees.

The day's turnover was 2.18 billion rupees ($16.7 million), well above this year's daily average of over 1.28 billion rupees.

Foreign investors were net sellers for the fist time in six sessions. They sold 305.33 million rupees worth of shares on Tuesday, but have been net buyers of 11.24 billion rupees in shares so far this year. 

($1 = 130.2800 Sri Lankan rupee) 

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

Sri Lanka stocks close higher

Sep 23, 2014 (LBO) - Sri Lanka's stocks closed 0.06 percent higher with telco and palm oil stocks gaining amid net foreign selling, brokers said.

The Colombo benchmark All Share Price Index closed 4.23 points higher at 7,260.64, up 0.06 percent. The S&P SL20 closed 0.78 points lower at 4,030.09, down 0.02 percent.

Turnover was 2.18 billion rupees, up from 1.94 billion rupees a day earlier with 102 stocks closed positive against 102 negative.

John Keells Holdings closed 20 cents lower at 253.90 rupees with three off-market transactions of 440.09 million rupees contributing 20 percent of the turnover.

JKH’s W0022 warrants closed 70 cents lower at 74.30 rupees and its W0023 warrants closed 1.90 rupees higher at 79.00 rupees.

The aggregate value of all off-the-floor deals represented 34 percent of the daily turnover.

First Capital Holdings closed 1.20 rupees higher at 46.60 rupees and Softlogic Holdings closed 40 cents higher at 16.50 rupees, attracting most number of trades during the day.

Foreign investors bought 561.09 million rupees worth shares while selling 866.41 million rupees worth shares.

Bukit Darah closed 25.10 rupees higher at 735.10 rupees and Sri Lanka Telecom closed 1.00 rupee higher at 53.20 rupees, contributing most to the index gain.

Commercial Leasing and Finance closed 20 cents higher at 4.80 rupees and Ceylon Tobacco Company closed 15.00 rupees lower at 1,155.00 rupees.

The SEC has decided to lift the price constraints imposed on the crossings board for share transactions falling within the ambit of the Central Bank’s Financial Sector Consolidation Plan.

This will be effective from 22 September 2014.

‘Multi Finance continues to make profits in first quarter’

Multi Finance PLC recorded a 120% increase in its bottom line in the first quarter ended June 30, 2014 recording a net profit of Rs. 8.6 Mn, against Rs. 39.2 Mn loss in the preceding quarter 2013, as per published accounts.

A press release says: ‘During the quarter under review, net income from operations reached Rs. 56.2 Mn, 236% growth compared to the quarter ended June 2013 which was recorded as Rs. 16.7 Mn. The net interest income for the quarter ended 06/14 also increased with 215% reaching Rs. 50.5 Mn, compared to Rs. 16.0 Mn QonQ owning to improvements in quality lending and strict credit processes introduced. Operating expenses of the company fell to Rs. 32.3 Mn as against Rs. 40.3 Mn QonQ which is a 19.8% improvement owning to strict cost control mechanisms adopted.

‘During the period company’s net impairment has remained in the same range despite the significant increase in its lending portfolio and increase in impairment of pawning which stands at Rs. 16.5Mn. Further NPLs on leasing, HP and loans have come down to 4.42% quarter on quarter due to aggressive recovery techniques and strict monitoring process adopted by the company. Earnings per Share of the company have improved from -6.98% to 1.53% within the quarter while improving the company’s quality of the asset portfolio. Return on equity has improved to 2.6% from -12.34% and Return on Assets is up by 121% from -2.84% to 0.60% QonQ in line with the profits.

‘The company’s total assets grew by 3.5% to stand in excess of Rs 1.38 Bn as of 30thJune 2014 and the deposit base grew by 9.8% over the same quarter of the previous year displaying the investor confidence placed on the company.

‘Commenting on company’s improvement, Multi Finance Chief Executive Officer Pushpike Jayasundera said the introduction of prudent credit policies, risk management tools and stringent recovery processes were the key factors contributed for this significant results in the quarter. These results were achieved in the midst of interest rate pressures and slowdown in credit growth which was common to the industry during the period concerned.
www.island.lk

Sri Lanka stocks up for fifth session on foreign buying, low rates

(Reuters) - Sri Lankan stocks gained for the fifth session on Monday to touch their highest in more than three years, led by banking and diversified stocks on bullish sentiment due to lower interest rates, higher foreign fund buying and positive economic outlook.

Stockbrokers said they expect the index to gain further as the market sees a possible rate cut during the central bank's monetary policy rate meeting next week. The announcement is scheduled for 0200 GMT on Tuesday.

The main stock index ended up 0.3 percent, or 21.49 points, at 7,256.41, its highest closing level since June 9, 2011.

"Market is on a bullish trend on diversified and banking sector counters with a lot of foreign and institutional buying," said Dimantha Mathew, manager research at First Capital Equities (Pvt) Ltd.

"There is a possibility of a rate cut while the recent fuel price cut will ease inflation further and the government is also expecting improvement in the credit growth."

Yields on treasury bills fell 3-4 basis points at a weekly auction on Wednesday and are below the central bank's standing deposit facility rate or the rate at which the central bank mops up liquidity from commercial banks.

The cut in energy prices on Tuesday has also enthused the market.

Sri Lanka is aiming for a higher economic growth of 8.2 percent and a lower fiscal deficit target of 4.4 percent of gross domestic product next year, a government document showed on Thursday.

The index has gained 22.72 percent so far this year.

The bourse has been in an overbought region since July. The Relative Strength Index, a momentum indicator tracked by chartists, rose to 85.259 on Monday compared with Friday's 83.442, Thomson Reuters data showed.

Shares in Hemas Holdings Plc, which led the overall gain in the index, rose 6.10 percent to 62.6 rupees, while Ceylon Theatres Plc jumped 6.19 percent to 169.90 rupees.

Shares in Dialog Axiata Plc rose 1.8 percent to 11.30 rupees and Hatton National Bank Plc added 2.27 percent to 180 rupees.

The day's turnover was 1.95 billion rupees ($15 million), more than this year's daily average of over 1.27 billion rupees.

Foreign investors were net buyers of 458 million rupees worth of shares on Monday, extending their year-to-date net purchases of 11.56 billion rupees. 

($1 = 130.3000 Sri Lankan rupee) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anand Basu)

Sri Lanka stocks close up 0.3-pct

Sep 22, 2014 (LBO) - Sri Lanka's stocks closed in green with the price gains witnessed in Hemas Holdings and CT Holdings amid strong foreign buying, brokers said.

The Colombo benchmark All Share Price Index closed 21.49 points higher at 7,256.41, up 0.30 percent. The S&P SL20 closed 11.89 points higher at 4,030.87, up 0.30 percent.

Turnover was 1.94 billion rupees, down from 2.52 billion rupees last Friday with 102 stocks closed positive against 104 negative.

Asiri Hospital Holdings closed 1.10 rupees higher at 22.60 rupees with two off-market transactions of 110.00 million rupees changing hands at 22.00 rupees per share contributing 6 percent of the turnover.

The aggregate value of all off-the-floor deals represented 20 percent of the daily turnover.

Access Engineering closed flat at 29.00 rupees with market transactions of 115.63 million rupees contributing 6 percent of the daily turnover.

Hayleys Mgt Knitting Mills closed 1.10 rupees higher at 19.80 rupees and First Capital Holdings closed 3.10 rupees higher at 45.40 rupees, attracting most number of trades during the day.

Foreign investors bought 780.03 million rupees worth shares while selling 322.05 million rupees worth shares.

Hemas Holdings closed 3.60 rupees higher at 62.60 rupees and CT Holdings closed 9.90 rupees higher at 169.90 rupees, contributing most to the index gain.

Dialog Axiata closed 20 cents higher at 11.30 rupees and Sri Lanka Telecom closed 1.30 rupees lower at 52.20 rupees.

John Keells Holdings closed 2.60 rupees lower at 254.10 rupees.

Packer's project a 'go'

By Mario Andree

Ceylon Finance Today: Australian billionaire gaming tycoon James Packer's US$ 400 million resort project in Colombo is still on the cards with the government in the process of finalizing the agreement.

Packer's project was said to have been put on hold after the government released a Gazette notification on the project, which left out the setting up of gaming facilities.

Minister of Investment Promotion Lashman Yapa Abeywardena told Ceylon FT, that despite some legal issues that needed to be ironed out in the agreement, the US$ 400 million mixed development would proceed as planned. The minister said the agreement had not specified proper terms and conditions, after it had to rescind on the casino agreement amidst growing opposition.

Australian billionaire and gaming tycoon James Packer according to news reports in April this year had informed the Sri Lankan Government that he would abandon the planned US$ 400 million integrated resort project in Colombo, if the operation of casinos was not allowed.

Packer's project as well as two other projects by local blue chip, John Keells Holdings and Local Gaming Mogul Dhammika Perera, came under serious criticism following gazette notifications, which said that the first two projects approved by Cabinet included casinos.

Contradicting President Mahinda Rajapaksa and Minister of Economic Development Basil Rajapaksa's statements, government spokesman Keheliya Rambukwella in early May this year said that Packer and Perera would be able to operate casinos in their projects, as a result of restricting casino operations in the country to D. R. Wijewardena Mawatha.

www.ceylontoday.lk

Amtrad helps boost Ascot profits

The recent acquisition of Amtrad Limited by Ascot Holdings PLC and the expansion of L & A Quarries (Pvt) Limited in the North of Sri Lanka had helped Ascot Holdings PLC to massively increase revenue by 134% and the profit after tax by 194% from the previous year in the year ended March 31, 2014, its Chairman Mohan Ratnayake has said in the annual report.

"Amtrad Limited will continue with the improvements to the main factory in Pasyala with the intention of further improving quality and the cost effectiveness of newer technology. We see an enormous potential in Amtrad considering the rapid development taking place in the country in the infrastructure and construction segment," Ratnayake said.

Ascot reported a 25% increase in its operating profit to Rs.92.6 million in the year under review while its pretax profit was up 89% to Rs.37.2 million and its attributable net profit by 86% to Rs.20.3 million resulting in an earnings per share of Rs.2.54 against Rs.1.36 a year earlier.

Ratnayake said that administrative cost had been held with a marginal increase of Rs.5 million by 10% despite the twofold increase in revenue.

Finance expenses too had been held at previous year’s level representing 16% of revenue against 37% of revenue the previous year.

"We have been successful in restructuring the financial liabilities of Ascot Developments (Pvt) Limited to match the cash flows of the company. In keeping with our focused strategic investments, we have been successful in gaining entry into the leisure sector to reap the benefits of the boom in the tourism industry," Ratnayake said.

He saw the year concluded as one of tremendous growth in the group and said that the Board will continue to invest and further expand on strategic investments to add to its portfolio.

The directors have not recommended the payment of any dividend for the year under review.

Ascot has a stated capital of Rs.92.4 million, revenue reserves of Rs.445.3 million and other components of equity of Rs.23.1 million in its books.

Total assets ran at Rs.1.34 billion and total liabilities Rs.710.7 million.

The main shareholders of the company are Axis Investments (Pvt) Limited (25.77%), St. Louis Capital (21.46%) and Mr. W.D.N.H. Perera (20.41%).

The company’s share with a book value of Rs.70.23, up from Rs.67.68 the previous year, traded at a high of Rs.169 and a low of Rs.93.50 closing at Rs.114. This compared with a trading range of Rs.220 to Rs.130 closing at Rs.157.30.

The directors of the company are: Messrs. R.M.M.J. Ratnayake (Chairman), A.G. Weerasinghe (Resigned on 15.02.2014), R.A. Iriyagolle, N.D. Gunaratne, D.J. Gunaratne, M.D.A. Weerasooriya, M.T.U. Mendis (w.e.f. 23.07.2014) and Ms. C.P.S. Bogollagama.
www.island.lk

Kotmale profits dip due to capacity constraints etc.

Cargills’ dairy sector consolidated

Kotmale Holdings PLC, a member of the Cargills group of companies, has seen group profits dip in the year ended March 31, 2014 to Rs.93.4 million from Rs.116.1 million a year earlier.

This followed the consolidation of the dairy sector operations within the Cargills group and capacity constraints where some of Kotmale’s branded products are now manufactured elsewhere.

However, the royalty fee is being paid to the Kotmale for the use of the brand, Mr. Stuart Young, Chairman of the company has said in the annual report.

This resulted in a revenue decline of 36% to Rs.783 million during the year under review with other income up by Rs.56.6 million as a result of the royalties.

Young, previously MD/CEO of Nestle Lanka from November 2002 to October 2008, reported an increasing trend in domestic milk production during the year with the total milk production in the country up 6.8% to 319.8 million litres in 2013.

"Consequently the importation of milk powder declined by 16.9% in 2013 in line with the state policy of achieving self-sufficiency in milk," he said.

This enabled the country to reduce the import of milk powder to 65.9 million kg from 79.4 million kg in 2012, he reported.

Increased milk production was supported by various initiatives such as improved chilling facilities, provision of financial assistance to smallholders and stable farm gate prices. There was also a shift in the market towards the consumption of local fresh milk and milk products.

Kotmale Holdings which collects fresh milk both for its own operations as well as those for other Cargills group companies is presently the second largest private sector milk collector in the country with an average daily collection of approximately 50,000 litres, Young said.

"Our network comprises over 98,000 farmers from the Central region of Sri Lanka who directly supply to the company through 330 collection centres connected to 15 chilling centres spread across the Central Province," he said.

During the year under review Kotmale had paid a total of Rs.790 million to smallholder farmers.

Young said that the trend in shifting from imported powder milk to local fresh milk created a substantial supply constraint within the domestic dairy sector particularly in relation to UHT (Ultra Heated Treated) milk.

Addressing this problem would require a long-term collaborative effort from the private and public sector to increase animal productivity, build farmer capacities, enhance feed and feed quality while developing the infrastructure to meet the increasing demand.

"Our parent company Cargills, having made substantial investments in adding capacity to its dairy sector is now focused on building the supply side towards sustainable growth," he said.

Young reported that yoghurt and the newly introduced ‘Yoguard’ as well as pasteurized and UHT milk categories are successfully marketed under the Kotmale brand and enjoyed wide consumer appeal.

Kotmale cheese wedges, a product of high quality, further strengthens the brand’s position in the cheese category, he said.

"The success of the ‘Kotmale’ brand is attributed to the strong distribution network of Cargills both in mass market and modern trade," Young said.

Kotmale has a stated capital of Rs.314 million, reserves of Rs.94.6 million and retained earnings of Rs.471.3 million in its books. Total assets ran at Rs.1.23 billion and total liabilities at Rs.352 million.

Cargills Quality Foods Limited with 94.07% of the company is the dominant shareholder with all other shareholders individually owning less than one percent.

Net assets per share were down to Rs.17.01 from Rs.17.41 a year earlier and the company’s share traded at a high of Rs.58 and a low of Rs.33.50. This compared with a trading range of Rs.47.10 to Rs.20 the previous year.

The directors of the company are: Messrs. Stuart Young (Chairman), V.R. Page (Deputy Chairman), M.I. Abdul Wahid (MD), P.S. Mathavan, A.T.P Edirisinghe, Sunil Mendis and J.C. Page.
www.island.lk

Odel was looking at making brand international before Otara’s exit

Otara Gunewardene as she appears in the latest annual report of Odel PLC. The tall and willowy Gunewardene who had been a fashion model from before she launched her brand has been her company’s most visible brand ambassador.

Before the sell-off to Softlogic on Sept. 11, Odel had been looking at leveraging synergies with Parkson "to take our brand to international markets and to bring more international brands to Sri Lanka," Odel Chairman Ruchi Gunewardene has said in the company’s recently released annual report.

Parkson Retail Asia Limited with 47.46% of Odel was the company’s top shareholder as at March 31, 2014. Pathirage’s Softlogic has acquired 45% thereafter.

With Softlogic acquiring the shares of Ms. Otara Gunewardene and her brothers Ajit and Ruchi, and a mandatory offer at a price of Rs.22 per share pending, analysts expect Softlogic to become the controlling shareholder.

Softlogic Chairman, Ashok Pathirage is on record saying that he was open to working with Parkson. However, Parkson’s intentions have still not been made public.

Ruchi Gunewardene said in the annual report that they have significant land banks under their belt opposite the Town Hall and at Battaramulla. He noted that there are only a few available vacant blocks of this scale in Colombo and Greater Colombo giving them some good strategic expansion options.

"Our management team is working hard with the architects and local authorities to finalize these plans," he said.

He also reported that they have invested heavily in upgrading their information technology system which will enable them to better serve customers and they were making significant progress in their human resources management to ensure better train and motivate employees to provide superior customer service.

Otara Gunewardene said in what was perhaps her last CEO’s letter in the Odel annual report that the introduction of the new VAT on retail businesses earnings of Rs.500 million a quarter had impacted retail sales and margins during FY 2013. This had impacted their bottom line.

"However, with improved sourcing, continuous negotiations and more efficient supply chain management, we were able to offset this to a great extent and hope to see improvement to the bottom line in the years ahead," she said.

The annual report did not offer any hint of the Gunewardenes planning to exit the company which Otara founded.

The company’s AGM was held on Sept. 9 in Colombo.

Other than the Parkson and Otara and Ajit Gunewardene, Dr. T. Senthilverl, with 1.87% is the biggest shareholder ranking No.4.

Net assets per share were up to Rs.19.18 from Rs.18.72 the previous year. The Odel share traded at a high of Rs.28.10 and a low of Rs.18.10 during the year under review against a trading range of Rs.26.90 to Rs.16 the previous year.

The directors of the company are (as at March 31, 2014): Mr. Ruchi Gunewardene (Chairman), Ms. Otara Gunewardene, Messrs. Paul Topping, Sanjay Kulatunga, Ignatius Perera, Yoong Choong, Kheng San, Koh Huat Lai, Hia Ngee Yeow (alternate to Datuk Cheng Yoong Choong). 
www.island.lk

An overwhelming endorsement from Union Bank Shareholders for TPG Investment

Union Bank of Colombo PLC (UBC) held its extraordinary general meeting on 17th September 2014, facilitating shareholder approval for the conclusion of its landmark investment agreement of US$ 117Mn with TPG, a leading global investment firm. Mr. Alex Lovell, Chairman of Union Bank stated that the Bank received an overwhelming endorsement from shareholders for the TPG investment. As per the circular to shareholders issued by UBC, the resolutions passed in summery included (1) the issue of 742,156,249 ordinary voting shares of the Company for LKR 15.30 each to Culture Financial Holdings Ltd (CFHL) by way of a private placement. (2) The issue of 218,281,250 warrants to CFHL for LKR 0.30 per warrant conferring the right to subscribe to one new ordinary voting share per Warrant at any time within a period of six (6) Years at a consideration of Sri Lankan Rupees sixteen (LKR 16.00) per ordinary voting share.. (3). 742,156,249 ordinary voting shares to be issued to CFHL by way of the private placement without offering such ordinary voting shares to the holders of the existing ordinary voting shares of the Company. (4). Articles of Association of the Company be amended to reflect provisions of the investment agreement.

The investment, one of the largest foreign direct investments to Sri Lanka in the recent years, now places Union Bank amongst the top five private Banks in equity and dominates in the second position in stated capital amongst all Banks in Sri Lanka. It further aligns UBC to the Central Bank road map on consolidation in the banking and non -bank financial institution sectors. Marking this milestone investment to the financial services industry in Sri Lanka and to Union Bank in particular, Mr. David Bonderman, Founding Partner of TPG is currently in Sri Lanka.

Mr. Lovell, further stated that the investment agreement would leverage highlighted benefits to Union Bank, its subsidiaries and the shareholders. It would ensure strong capital support with The Central Bank Road Map anticipating the increase of capital in licensed commercial banks to a minimum of LKR 10 billion in the next two years. www.island.lk

Weather hits Colombo Fort Lands bottom line

Group posts a loss on account of plantation subsidiaries

The Colombo Fort Land & Building PLC, a modestly capitalized asset rich company, has posted a group loss of Rs.457 million in the year ended March 31, 2014, against a profit of Rs.1,400 million a year earlier. The group's attributable loss was Rs.313 million against a profit of Rs.744 million the previous year.

The group's auditors, KPMG, while stating that the consolidated financial statements gave a true and fair view of the financial position of the company and its subsidiaries, had without qualifying their opinion laid emphasis on the fact that that several subsidiaries whose accounts had been prepared on a `going concern' assumption carried heavy accumulated losses with net assets less than half the stated capital of these companies.

These subsidiaries included Agarapatana Plantations Limited, Lankem Consumer Products Limited, SunAgro Farms Limited, Lankem Development PLC and SunAgro Foods Limited.

The Colombo Fort Lands group had total assets of nearly 35.3 billion in its books as at March 31, 2014 against total liabilities of slightly over Rs.22.6 billion.

The company's Chairman, Mr. A. Rajaratnam, has reported to shareholders that group performance had been greatly handicapped by the sub-optimal weather patterns experienced in the country during the course of the year under review.

"The operations of some of the company's main subsidiaries, the plantation companies - Kotagala Plantations PLC and Agarapatana Plantations Limited and Lankem Ceylon PLC's crop protection activities are heavily dependent on weather and extreme drought and very heavy rainfall had a direct impact on the profitability of these operations," he said.

"To a lesser extent, Lankem Ceylon PLC's paint division was also adversely affected by long spells of heavy rainfall and gloomy conditions. The decline in commodity prices, especially the price of natural rubber has also impacted profitability."

He also said that the performance of Lankem Ceylon PLC and its plantation subsidiaries, Kotagala Plantations and Agarapatana Plantations continued to be affected by the weather.

Other areas of the groups businesses had fared relatively well compared to the competition with operations of C.W. Mackie PLC and E.B. Creasy & Company PLC rebounding strongly in the year under review.

There had been further improvement in the group's subsidiaries operating in the hospitality sector with occupancy in their four properties showing positive improvement.

"The demography of tourists coming to Sri Lanka is changing. We are now getting many more visitors from the Middle East and Asia. Our hotels are well placed to take advantage of the changing trends in the industry and increase the profitability of their operations," Rajaratnam said.

"The coming years are likely to see the hospitality sector becoming a major driver of the group's profitability."

He said that the performance of the group's automotive sector continued to be subdued with the very high prices Lankan consumers pay for motor vehicles dampening the demand for the two vehicle brands the group markets.

"While the holding company C.M. Holdings PLC continues to operate at a profit, the true potential of the company cannot be realized without an easing of the myriad of high taxes that are imposed on the industry," he said.

Rajaratnam said that the impact on the weather cannot be understated with regard to the performance of the group and the need of the hour is for companies impacted by the weather to diversify their businesses into less weather dependent industries.

"For the plantation sector this must involve the setting up of plantations outside of Sri Lanka. We will take all steps to further mitigate the impact of weather on the profitability of the companies. The group is also taking steps to rationalize costs so that we can rapidly recover from this downturn," he said.

At company level a profit of Rs.88 million has been posted, down from Rs.99.9 million the previous year. This was attributed by the chairman to weaker dividend yields from their subsidiaries.

He said that despite the group's loss, the company will pay a dividend of 30 cents per share, the same as the previous year.

Property and Investment Holdings (Pvt) Limited with 15.78%, Colombo Investment Trust PLC (13.94%), Capital Investments Limited (12.91%) and Colombo Fort Investments PLC (12.025%) are the major shareholders of the company.

Colombo Fort Lands group has been profitable from the financial year ended March 31, 2005 until it reverted to a loss making year in the year under review.

The directors of the company are: Messrs. A. Rajaratnam (Chairman - Alternate Anushman Rajaratnam), S.D.R. Arudpragasam, N.H.B.S. Perera, A.M. de S. Jayaratne, R. Seevaratnam, Anushman Rajaratnam Ms. A. K. Gunawardhana and C.P.R. Perera.
www.island.lk

‘Our ship is on the way,’ says Wegapitiya while elaborating on latest plans

A ship capable of transporting liquid petroleum gas (LPG) has been ordered by Laugfs Gas at an investment of USD 6.9 million and the company would take delivery of this ship very soon, Laugfs Group Chairman W.K.H. Wegapitiya told AdaderanaBiz.lk

This ship ordered from Europe is capable of carrying around 7,000 metric tons of gas at a time and it would be utilized in the company’s LPG gas business, he added.

“Sri Lanka has been planned to be made a maritime hub under the Mahinda Chintana manifesto. This is how Laugfs Gas is assisting these policies. We bring LP gas from foreign countries on our own. In the future we may be able to provide such services to other countries in the region as well,” he proudly added further.

Recently, Mr. Wegapitiya had informed the Colombo Stock Exchange that Laugfs Gas PLC has incorporated a fully owned subsidiary under the name Laugfs Maritime Services Private Limited as a Board of Investment (BOI) approved project.

Laugfs Maritime Services Private Limited would own, operate, hire and charter various types and sizes of ships including Liquid Petroleum Gas (LPG) shipping vessels and other types of vessels that can carry various energy products.

He had also stated that a memorandum of understanding has been signed to purchase the LGP shipping vessel ‘Gas Puffer’ at an initial investment of around USD 6.9 million, rename it as ‘Gas Challenger’ and register it under the Sri Lankan flag.

Laugfs Gas is the second largest business entity in Sri Lanka’s LP gas market while the largest is Litro Gas which had earlier been Shell Gas Ltd and later acquired by the government.
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HNB acquires PC House premises at Kollupitiya

The Hatton National Bank has acquired the registered premises of financially troubled PC House PLC situated at Kollupitiya in Colombo 3.

Hatton National Bank PLC acquired and took over the entire premises at No. 451, Galle Road, Colombo 3 under a parate execution.
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Sri Lanka bourse gains for 4th straight session; seen gaining further

(Reuters) - Sri Lankan stocks rose for the fourth straight session on Friday to touch its highest in more than three years. The gains were led by banking and diversified shares on bullish sentiment due to lower interest rates, higher foreign fund buying and positive economic outlook.

Stockbrokers said they expected the index to gain further as the market is expecting another rate cut during the central bank's monetary policy rate meeting next week. The announcement is scheduled for 0200 GMT on Tuesday.

The main stock index ended up 0.39 percent, or 28.02 points, at 7,234.92, its highest closing level since June 9, 2011.

"The market is continuing its bull run on the back of lower interest rates and positive outlook," said a stockbroker asking not to be named. "The market is expecting a rate cut because the treasury bill rates are now below the policy rates."

Yields on treasury bills fell 3-4 basis points at a weekly auction on Wednesday and are below the central bank's standing deposit facility rate or the rate at which the central bank lends money to commercial banks.

The cut in energy prices on Tuesday has also enthused the market.

Sri Lanka is aiming for a higher economic growth of 8.2 percent and a lower fiscal deficit target of 4.4 percent of gross domestic product next year, a government document showed on Thursday.

The index has gained 22.36 percent so far this year.

The bourse has been in an overbought region since July. The Relative Strength Index, a momentum indicator tracked by chartists, rose to 83.883 on Friday compared with Thursday's 81.562, Thomson Reuters data showed.

Shares in Bukit Darah Plc, which led the overall gain in the index, rose 2.69 percent to 725 rupees, while the biggest listed lender by market capitalisation, Commercial Bank of Ceylon, rose 1.27 percent to 158.90 rupees.

The day's turnover was 2.52 billion Sri Lankan rupees ($19.35 million), more than this year's daily average of over 1.27 billion rupees.

Foreign investors were net buyers of 196.3 million rupees worth of shares on Friday, extending their year-to-date net purchases of 11.1 billion rupees.

($1 = 130.2500 Sri Lankan rupee) 

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

Sri Lanka stocks close up 0.4-pct

Sep 19, 2014 (LBO) - Sri Lanka's indices closed in the positive territory with the price gains witnessed in diversified stocks amid strong foreign participation, brokers said.

The Colombo benchmark All Share Price Index closed 28.02 points higher at 7,234.92, up 0.39 percent. The S&P SL20 closed 29.38 points higher at 4,018.98, up 0.74 percent.

Turnover was 2.52 billion rupees, down from 2.90 billion rupees a day earlier with 130 stocks closed positive against 79 negative.

John Keells Holdings closed 1.10 rupees lower at 256.70 rupees with three off-market transactions of 114.89 million rupees changing hands at 258.00 rupees per share contributing 5 percent of the turnover.

The aggregate value of all off-the-floor deals represented 15 percent of the turnover.

Chevron Lubricants Lanka closed 1.00 rupee lower at 344.00 rupees with market transactions of 270.70 million rupees contributing 10 percent of the daily turnover.

Richard Pieris and Company closed 20 cents higher at 9.30 rupees and Access Engineering closed 50 cents higher at 29.00 rupees, attracting most number of trades during the day.

Foreign investors bought 828.48 million rupees worth shares while selling 632.16 million rupees worth shares.

Bukit Darah closed 19.00 rupees higher at 725.00 rupees and Hemas Holdings closed 3.20 rupees higher at 59.00 rupees, contributing most to the index gain.

Carson Cumberbatch closed 6.70 rupees higher at 447.70 rupees and CT Holdings closed 6.50 rupees higher at 160.00 rupees.

Commercial Bank of Ceylon closed 2.00 rupees higher at 158.90 rupees.

Sri Lanka stocks at over-3-year high; more gains seen

(Reuters) - Sri Lankan stocks closed at their highest in more than three years on Thursday led by large-caps on improved sentiment due to lower interest rates, higher foreign buying and a positive economic outlook.

Stockbrokers said they expected the index to gain further.

The main stock index ended up 0.39 percent, or 27.70 points, at 7,206.90, its highest close since June 10, 2011.

"There is a lot of buying demand. Sellers are hiding until they get a premium price," said Jaliya Wijeratne, CEO at First Capital Equities (Pvt) Ltd. "We expect the index to gain further due to lower interest rates and positive outlook."

Institutional investors were very active on Thursday, while retail participation was also high due to an optimistic outlook, analysts said.

The cut in energy prices on Tuesday also enthused the market.

Sri Lanka is aiming for a higher economic growth of 8.2 percent and a lower fiscal deficit target of 4.4 percent of gross domestic product next year, a government document showed on Thursday.

Yields on treasury bills fell 3-4 basis points at a weekly auction on Wednesday.

The index has gained 21.89 percent so far this year.

The bourse has been in an overbought region since July. The Relative Strength Index, a momentum indicator tracked by chartists, rose to 81.562 on Thursday compared with Wednesday's 80.087, Thomson Reuters data showed.

Shares in Ceylon Tobacco Company, which led the overall gain in the index, rose 0.85 percent to 1,180 rupees, while large-cap Nestle Lanka Plc rose 1.03 percent to 2,100.10 rupees.

The day's turnover was 2.9 billion rupees ($22.26 million), more than this year's daily average of over 1.25 billion rupees.

Foreign investors were net buyers of 29 million rupees worth of shares on Thursday, extending the year-to-date net foreign buyers of 10.91 billion rupees. 

(1 US dollar = 130.2600 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Sunil Nair)

Sri Lanka stocks close 0.4-pct

Sep 18, 2014 (LBO) - Sri Lanka's stocks closed 0.39 percent higher with tobacco and beverage stocks gaining amid strong foreign participation, brokers said.

The Colombo benchmark All Share Price Index closed 27.70 points higher at 7,206.90, up 0.39 percent. The S&P SL20 closed 12.79 points higher at 3,989.60, up 0.32 percent.

Turnover was 2.90 billion rupees, up from 2.18 billion rupees a day earlier with 129 stocks closed positive against 68 negative.

Access Engineering closed 60 cents higher at 28.50 rupees with ten off-market transactions of 356.23 million rupees changing hands at 28.00 rupees per share contributing 12 percent of the turnover.

John Keells Holdings closed 20 cents lower at 257.80 rupees with three off-market transactions of 283.72 million rupees changing hands at 257.80 rupees per share contributing 10 percent of the turnover.

The aggregate value of all off-the-floor deals represented 42 percent of the daily turnover.

First Capital Holdings closed 4.10 rupees higher at 42.80 rupees, attracting most number of trades during the day.

Foreign investors bought 995.22 million rupees worth shares while selling 966.21 million rupees worth shares.

Ceylon Tobacco Company closed 10.00 rupees higher at 1,180.00 rupees and Nestle Lanka closed 21.50 rupees higher at 2,100.10 rupees, contributing most to the index gain.

Hayleys closed 13.60 rupees higher at 353.40 rupees.

BOC’s Rs. 8 b debenture issue oversubscribed

By Shabiya Ali Ahlam
The Bank of Ceylon’s (BOC) first debenture issue for the year worth Rs. 8 billion was oversubscribed on its official opening day on Tuesday following an oversubscription.

“The issue took place just as expected. With BOC having a strong position in the market, we were confident the debenture would be oversubscribed on the opening day itself,” BOC Senior Deputy General Manager International, Treasury and Investment P. A. Lionel told the Daily FT.

He said the first trench of Rs. 4 billion was reached within an hour of opening and was oversubscribed by 2 p.m. the same day. The exact number of applications for the issue which comprised five and eight year tenure, and the basis of allotment will be notified in due course. Fund raised from the issue will be used to strengthen BOC’s Tier 2 capital base and reduce asset and liability maturity mismatches.

BOC offered involved 40 million unsecured, subordinated, redeemable debentures at Rs. 100 each with an option to issue an equal amount in the event the initial figure of Rs. 4 billion was oversubscribed.

The debenture is the sixth to be issued by BOC, and its first for the year.

Rated ‘AA’ by Fitch, the public issue was attractively structured giving investors the opportunity to select from five types of debentures: Type A with a five year tenure and 8% payable annually, Type B with a five year tenure and 7.75% (Annual Equivalent Rate, AER 7.98%) payable quarterly, Type C with a tenure of five years and six months gross T-bill rate +0.50% payable bi-annually, Type D with a tenure of eight years and 8.25% payable annually and Type E with a tenure of eight years and six months gross T-bill rate +0.50% payable bi-annually. The managers and registrars for the issue was BOC’s Investment Banking Division.

According to a report released by NDB Securities, the fund raised will help strengthen BOC’s liquidity position while taking advantage of the comparatively low interest rates in the market and manage the gap exposure in the bank’s asset and liability portfolios.

While the debenture offered a lower premium to prevalent Treasury Bond yields in comparison to debentures with similar tenures issued in the recent past, BOC’s credit rating is the highest among the comparable listed debentures justifying the lower premium, NDB Securities said.

BOC, in its last debenture that was issued on October 2013, raised Rs. 8 billion with it being oversubscribed also on the official opening day. It drew applications worth Rs. 11.69 billion. It was valued at Rs. 4 billion, with an option to increase the size up to Rs. 8 billion in the event of oversubscription.

The debenture was priced at Rs. 100 each. The unsecured, subordinated, redeemable debentures were divided into nine choices and had tenures in the range of five to 10 years, with both fixed and floating coupon rates.

The interest rates offered ranged from 13% payable annually to 12.6% semi annually, on five-year fixed rate debentures, as well as one with five-year floating rate payable semi annually, and eight-year fixed at 13.25% payable annually, an eight-year floating rate payable semi annually, nine-year fixed rate of 13.25% payable annually and 10-year fixed rate of 13.75 payable annually.
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Citi delighted with success of NSB’s $ 250 m Bond Issue

* American banking giant’s Sri Lanka branch acts as Joint bookrunner and Joint Lead Manager


Citi has expressed its delight over the recent success of the National Savings Bank’s (NSB) US$ 250 million Bond Issurance.

Citi acted as Joint Bookrunner and Joint Lead Manager for this transaction that represented the lowest yield outside of the sovereign itself.

NSB raised $ 250 million from the international debt market via a five-year bond. NSB is a policy bank wholly-owned by the Government of Sri Lanka. The transaction had over $ 2 billion in orders, underlining the strength of demand for NSB and strong investor interest in Sri Lanka. The coupon of 5.15% represented the lowest coupon by a Sri Lankan institution in the international debt capital markets.

“Citi Sri Lanka is extremely proud to be associated with NSB in achieving this significant outcome, which was the lowest yield attracted by a Sri Lankan issuer outside of the sovereign. The incredible pricing outcome was achieved due to an overwhelming demand from a high-quality investor base,” Citi Sri Lanka Country Officer Ravin Basnayake said.

“Citi acted as Joint Lead Manager for all recent bond issuances by the Government of Sri Lanka, inaugural Bank of Ceylon Bond in 2012, National Savings Bank’s initial $ 750 million bond offering and DFCC Bank’s Bond issuance in 2013. Our role in these deals augurs well with our strategy in Sri Lanka in using the strong Citi global franchise and presence to broaden the reach of our local clients,” Basnayake added.

Citi Sri Lanka Financial Institutions Head Dinithi Ratnayake added: “This is a fantastic outcome for both NSB and Sri Lanka, and Citi is proud to be a part of it. The deal closed with a high demand resulting in an orderbook in excess of $ 2 billion and an 8.4 times oversubscription. This is testament to the continued interest we have received from global investors for high quality bond issuances out of Sri Lanka. The bonds were issued in the Reg S/144 format given the significant interest from US investors, which continues to be a key investor base for Sri Lankan issuers, and a market of geographic strength for Citi.”

Citi, the leading global bank, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services and wealth management.
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Balance of Payments surplus tops $ 2 b

• Gross official reserves at $ 9.2 b by end August

The Central Bank said yesterday that the Balance of Payments (BOP) surplus in the first seven months is estimated to be $ 2.015 billion as against a deficit of $ 180 million a year earlier.
The estimate was disclosed in the release of July external trade data yesterday. “The improved BOP position strengthened the international reserves and stabilized the exchange rate further,” the Central Bank added.
It said as at end July 2014, Sri Lanka’s gross official reserves amounted to $ 9 billion, while the same is estimated to have increased to $ 9.2 billion by end August.
Total foreign assets, which include foreign assets of the banking sector, amounted to $ 10.5 billion at end July 2014. Gross official reserves were equivalent to 5.9 months of imports, while total foreign assets were equivalent to 6.9 months of imports.
A healthy level of reserves was maintained amidst foreign exchange outflows on account of debt service payments amounting to $ 1,478 million and repayment of the IMF-SBA of $ 433 million during the first seven months of the year.
The Central Bank said long term loan inflows to the Government amounted to $ 1,100.3 million during the first seven months of the year compared to $ 1,050.5 million during the same period of 2013.
Net inflows to the Government securities market stood at $ 231.8 million by end July 2014, which included Treasury bills and Treasury bonds amounting to $ 81.7 million and $ 150.1 million, respectively. Foreign investments in the Colombo Stock Exchange (CSE) up to end July 2014 recorded a net inflow of $ 84.3 million.
Foreign Direct Investments, including loans to BOI companies, amounted to $ 850 million during the first half of 2014 recording a growth of 54.8% from $ 549.1 million in the first half of 2013. Meanwhile, inflows to licensed commercial banks and licensed specialised banks amounted to $ 125 million during the first seven months of 2014.
Commenting on the exchange rate behaviour, the Central Bank said the rupee remained stable against the US dollar during the period up to 15 September, with a marginal appreciation of 0.36%.
Based on cross currency exchange rate movements, the Sri Lankan rupee appreciated against the euro by 6.85%, the Canadian dollar by 4.54%, the Chinese renminbi by 1.65%, the Japanese yen by 2.57%and the pound sterling by 1.87%. Meanwhile, the Sri Lankan rupee depreciated against the Indian rupee by 1.69%and the Australian dollar by 0.60%.

Exports maintains growth momentum in July Apparel leads in Industrial exports growth of 12%; agriculture exports up 8% First seven months total exports up 16% to $ 6.4 b Sri Lanka’s exports remained on the up in July thanks to positive contribution from all categories and more significantly from the industrial sector. The Central Bank said yesterday earnings from exports grew by 11.1% to $955 million in July 2014, recording a cumulative growth of 15.9% to $ 6.4 billion during the first seven months of 2014. “All major export categories contributed to the growth in exports, while the largest contribution came from industrial exports,” the Central Bank said. Reflecting the impact of seasonal demand, textile and garment exports grew at a higher rate (by 11% to $ 414.5 million) while the exports of rubber products also increased by 17%, helped by an enhanced level of exports of rubber tyres. However, export earnings from bunkering and aviation fuel which account for a major share in petroleum products declined due to lower volume although an increase in prices was recorded. “This partly reflects the heightened competition in the industry from major regional players such as India and Singapore,” the Central Bank said. Exports earnings from gems and diamonds dipped while jewellery exports increased in July 2014. However, the overall sector saw a decline of 31% in July. Earnings from agricultural exports rose by 7.8% mainly due to enhanced performance in coconut and tea exports. The growth in kernel product exports drove the increase in earnings on coconut exports. Meanwhile, earnings from tea exports recorded a healthy growth of 8.5% supported by favourable prices despite declined volumes. Export earnings from seafood and minor agricultural products also contributed significantly to the growth in agricultural exports. However, in July 2014, earnings from rubber exports declined mainly due to adverse weather conditions and continuous drop in rubber prices in the international market, while earnings from export of spices declined mainly due to lower production.

Oil spikes July imports, trade deficit A sharp rise in oil purchases in July as opposed to a year ago saw a spike in imports for the first time in three months apart from widening the trade deficit by 55%. Import expenditure on fuel increased by 93.3%, year-on-year, to $516 million in July 2014 mainly due to the base effect of non-importation of crude oil in July 2013 and 6.5% increase in imports of refined petroleum products. Expenditure on overall imports increased by 29% to $1,845 million in July 2014 reflecting an increase in all major import categories, but were particularly in fuel, the Central Bank said. “Expenditure on imports also recorded an increase in July 2014 compared to the decline recorded in the preceding three months,” it added. Spike in July imports dwarfing exports growth saw trade deficit widened by 55% to $891 million, compared to $574 million in July 2013. However, on a cumulative basis, trade deficit in first seven months of 2014 is lower by 11.5% $ 3.96 billion compared to the corresponding period in 2013. On a cumulative basis, expenditure on imports increased by 2.9% to $ 10.8 billion during the first seven months of 2014. Import expenditure on base metals increased by 137.9%, year-on-year to $56 million mainly due to an increase in iron, steel and copper imports. Import expenditure on consumer goods increased due to an increase in both food and non-food consumer good categories. A substantial increase in imports of sugar and confectionery, cereals and milling industry and dairy products led the increase in import expenditure on food and beverages, while non-food consumer goods imports increased mainly due to the significant increase in clothing and accessories and vehicle imports. Expenditure on imports of investment goods grew in July 2014 supported by imports of machinery and equipment and building materials.

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