Dialog Records Rs5.2Bn Net Profit for FY 2013

17th February, 2014. Colombo. 

Dialog Axiata PLC announced, Monday 17th February 2014, its consolidated financial results for the year ended 2013. Financial results included those of Dialog Axiata PLC (the “Company”) and of the Dialog Axiata Group (the “Group”) post-consolidation with subsidiaries Dialog Broadband Networks (Pvt) Ltd (“DBN”), and Dialog Television (Pvt) Ltd (“DTV”).

The Group demonstrated strong revenue growth across Mobile, International, Digital Pay Television, Tele-infrastructure and Fixed Line businesses to record consolidated revenue of Rs63.3Bn for FY 2013, delivering a Year to Date (“YTD”) growth of 12%. Group Revenue for Q4 2013 was recorded at Rs16.3Bn, reflecting growth of 1% Quarter on Quarter (“QoQ”).

Revenue growth in combine with continued operational improvements led to the Group posting a healthy 7% YTD growth in EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) with FY 2013 EBITDA being recorded at Rs19.9Bn. Group EBITDA Margin for FY 2013 declined marginally by 1.5 percentage points on YTD basis to 31.5%. Group EBITDA contracted by 12% QoQ due to higher cost base including escalation of network and other operating costs. Group Net Profit for FY 2013 was recorded at Rs5.2Bn, a decrease of 14% compared to FY 2012, inclusive of a provision for income tax of Rs 1.1Bn., following the Company completing its tax holiday as at the end of FY2012. Group Net Profit Before Tax (NPBT) was recorded at Rs6.3Bn.

Non-Operational performance below EBITDA was positively impacted by the appreciation of the SLR relative to the USD by 0.8% QoQ, resulting in the recognition of a non-cash translational foreign exchange gain of Rs347Mn in the 4th quarter. Inclusive of the recognition of the said non-cash translational foreign exchange gain, Group Net profit for Q4 2013 decreased by 27% to be recorded at Rs1.1Bn. On normalising for the foreign exchange gain, Group NPAT was recorded at Rs769Mn, decreased by 56% QoQ. Group Net Profit for FY 2013 was recorded at Rs5.2Bn, a decrease of 14% compared to FY 2012. While the corresponding period in 2012 featured substantial non-cash foreign exchange losses (totalling to Rs2.2Bn), the accounting impact of the said losses were mitigated through the recognition of the reversal of deferred tax provisions amounting to Rs2.3Bn. Group NPAT post normalisation for the non-cash foreign exchange loss was recorded at Rs5.9Bn for FY2013, representing a decrease of 5% relative to the corresponding period in 2012 on similarly normalised basis excluding exceptional provisions and reversals.

In line with the performance of the Group and taking in to account forward investment requirements to serve the nation’s demand for Mobile, Fixed, Broadband and Digital Television services, the Board of Directors of Dialog Axiata PLC, resolved to propose for consideration by the Shareholders of the Company, a cash dividend to ordinary shareholders representing 45% of group earnings and translating to twenty nine cents (Rs0.29) per share and totalling to Rs2,362mn. The dividend so proposed will be considered for approval by the shareholders at the Annual General Meeting (AGM) of the Company, the date pertaining to which would be notified in due course.

At an entity level, Dialog Axiata PLC (“the Company”) featuring the Mobile, International and Tele-Infrastructure segments of the Group portfolio continued to contribute a major share of Group Revenue (88%) and of Group EBITDA (89%). Company Revenue grew by 1% QoQ on the back of its 8 Million over mobile subscriber base, to reach Rs14.2Bn in Q4 2013. Revenue for FY 2013 was recorded at Rs55.4Bn, up 11% relative to FY 2012. Underpinned by strong revenue performance Company EBITDA for FY 2013 grew by 9% to be recorded at Rs17.6Bn translating to an YTD EBITDA margin of 32%.

Company NPAT for Q4 2013 was recorded at Rs1.6Bn, a decrease of 8% QoQ. Company NPAT for FY 2013 was recorded at Rs6.1Bn, representing a contraction of 2% compared to FY 2012, due to the differential in exceptional charges and reversals recorded in the periods under comparison. On normalized basis, Company NPAT increased by 6% on YTD basis relative FY 2012. Following the expiry of its 15 year tax holiday in 2012, the Company recorded a provision for Income Tax on the basis of 2% of revenue amounting to Rs277Mn in Q4 2013 and Rs1.1Bn for FY 2013.

In December, Dialog secured the distinction of being appointed the first and only authorised Partner and Service Provider for Apple iPhone in Sri Lanka. Following the establishment of the partnership between Apple and Dialog, 4G compatible Apple iPhones can now be connected on 4G mode to Dialog’s 4G LTE network. Accordingly, Dialog’s 4G and 3G HSPA+ networks will provide Apple users with unparalleled connectivity and a superior smart phone experience.

Dialog Television (DTV), the Digital Pay Television business of the Dialog Group continued its positive growth momentum recording YTD revenue growth of 21% to reach Rs3.6Bn for FY 2013. DTV EBITDA was recorded at Rs662Mn for FY 2013, an improvement of 4% YTD underpinned by strong revenue growth. Net Profit for FY 2013 was recorded at negative Rs302Mn, compared to a Net Profit of Rs11Mn in FY 2012 mainly due to one-off impairment of assets relating to DVBT and DVBT CPEs. On excluding the alluded one-off impairment, NPAT was recorded at Rs28Mn. DTV’s Pay Tv Subscriber base increased by 26% YoY to be recorded at 332,000 as at the end of FY 2013.

Dialog Broadband Networks (DBN) featuring the Group’s Fixed Telecommunications and Broadband Business recorded revenue of Rs5.8Bn for FY 2013, representing a YTD increase of 15%. Revenue growth YTD was achieved in the main through the successful consolidation of  Suntel Ltd., supplemented by healthy growth in data and voice solutions revenues. EBITDA contracted by 12% on a YTD basis due to high network and other costs associated with fixed LTE deployment. DBN’s Net Loss for FY 2013 was recorded at Rs483Mn relative to the Net Loss of Rs120Mn in FY 2012. Negative NPAT performance is attributed to additional depreciation charges accruing from build out of the company’s Fixed 4G LTE network and the amortisation of spectrum license fees associated with Fixed 4G LTE spectrum assets.

Group capital expenditure for FY 2013 was recorded at Rs28.3Bn. Group capital expenditure for FY 2013 included strategic investments in spectrum assets featuring the acquisition of Spectrum for Mobile 4G-LTE services and the payment of spectrum re-farming fees to enable the conversion of Spectrum amalgamated through the acquisition of Sky TV for the purpose of providing fixed 4G-LTE services. Capital expenditure for FY 2013 additionally included investments made on account of Mobile license and 2G spectrum renewals. On the back of significantly higher capital expenditure, the Group recorded a negative Free Cash Flow of Rs8.4Bn for FY 2013. Notwithstanding the expansion of capital investments, the Dialog Group continues to exhibit a structurally robust balance sheet with the Group’s Net debt to EBITDA being maintained at a modest level of 1.29x as at end of FY 2013.

Sri Lanka stocks close down 0.4-pct

Feb 17, 2014 (LBO) – Sri Lanka stocks close 0.45 percent lower for the third straight day with diversified stocks losing ground, brokers said.

The Colombo benchmark All Share Price Index closed 27.28 points lower at 6,056.11, down 0.45 percent. The S&P SL20 closed 19.52 points lower at 3,306.24, down 0.59 percent.

Turnover was 613.42 million rupees, down from 665.01 million rupees last Thursday, with stocks of 126 firms closing in the red against 42 gainers.

Nations Trust Bank closed flat at 66.00 rupees with 198.00 million rupees of off market transactions contributing to 32 percent of the total turnover.

The aggregate value of all off market deals accounted for 36 percent of the daily market turnover.

Dankotuwa Porcelain closed 50 cents higher at 13.10 rupees, attracting most number of trades during the day.

Foreigners bought 138.32 million rupees worth shares while selling 283.04 million rupees of shares.

Cargills Ceylon closed 12.00 rupees lower at 135.00 rupees and JKH closed 2.10 rupees lower at 219.90 rupees, contributing most to the index drop.

JKH’s W0022 warrants closed 2.40 rupees lower at 60.60 rupees and its W0023 warrants closed 4.00 rupees lower at 62.00 rupees.

Ceylon Tobacco Company closed 10.00 rupees lower at 1,240.00 rupees and Aitken Spence closed 2.50 rupees lower at 100.10 rupees.

Commercial Bank closed 1.00 rupee lower at 117.00 rupees and NDB closed 2.30 rupees higher at 185.00 rupees.

SLT closed 50 cents higher at 43.00 rupees and Carson Cumberbatch ended flat at 350.00 rupees.

Distilleries closed 10 cents higher at 215.10 rupees and Bukit Darah ended 5.30 rupees lower at 595.00 rupees.

Nestle Lanka ended flat at 2,100.00 rupees.

Sri Lankan whistleblower demands SEC to publish more information on listed firms

Chandra Jayaratne, a whistleblower request the market regulator to take steps to publish critical information of mergers and acquisitions conducted by listed firms during the last seven years for the benefit of market stakeholders.

He has made this request in a letter sent to the Deputy Director General of the Securities and Exchange Commission.

“I seek professional intervention and due facilitation, in the due discharge of public accountability of yourself and your colleagues copied in on this mail, in the publication of the under noted critical market information essential for good governance led capital market development, surveillance and effective enforcement,” Jayaratne said in his letter, which we have reproduced below.

“Some listed firms once undergoes a merger or acquisition changes its policies and dividend structures etc. which affects specially the minority shareholders,” Jayaratne told News360.lk.

“If they publish these information, the shareholders can make their own judgement,” he added.

Below we reproduce the letter sent by Chandra Jayaratne to Securities and Exhchage Commission of Sri Lanka

16th February 2014

Officer-in-Charge / Deputy Director General,

Securities and Exchange Commission of Sri Lanka,

Level 28 and 29, East Tower,

World Trade Centre,

Echelon Square,

Colombo 01.

Dear Sir,

Seeking Public Disclosure of Critical Information for Good Governance Assurance by Listed Companies

I seek professional intervention and due facilitation, in the due discharge of public accountability of yourself and your colleagues copied in on this mail, in the publication of the under noted critical market information essential for good governance led capital market development, surveillance and effective enforcement:

1. Details of all key mergers and acquisitions by listed companies of other listed and unlisted business entities over the last 7 years, where the value of the entities subject to merger and acquisition exceeded 5% of the net asset value of the acquiring listed entity, detailing the following;

a. Names of the listed entity making the acquisition or merger

b. Name of the entity acquired or merged

c. Date of Acquisition or merger

d. Whether the entity subject to acquisition or merger was a related party, associate or subsidiary company of the listed entity

e. Whether there were common directors in the acquiring company and the acquired or merged entities at the time of merger or acquisition and if so the names of these common directors

f. Whether there were any common shareholders with voting share ownership in excess of 5% of the voting shares in the acquiring company and the entity that it acquired or merged with

2. Details of all listed companies, where over the last 7 years, the effective controlling shareholding changed or where on the exceeding of 30% shareholding by related parties led to the trigger requirement for a mandatory offer was activated , detailing

a. Names of the listed entities covered

b. Names of the parties acquiring the controlling interest

c. Directors of the listed Companies concerned at the time of the trigger or controlling interest change

d. Names of Directors after the controlling shareholding or mandatory offer shareholding became effective

e. Whether the average annual earnings per share of the entities subject to controlling shareholding change, declined in excess of 15 % post such change as compared with the period three years prior to such change

f. Whether the average annual dividends per share of the entities subject to controlling shareholding change, declined in excess of 15 % post such change as compared with the period three years prior to such change

I trust that you will no doubt agree that the above disclosures will be of significant benefit to investors, market analysts and market intermediaries and therefore I believe that you will take due steps to make such public disclosure at your earliest convenience.

www.news360.lk

Sri Lanka Kuruwita Textiles to go private after no turnaround

Feb 17, 2014 (LBO) - Sri Lanka's Kuruwita Textiles Plc, said it planned to de-list from the Colombo Stock Exchange amid continued losses, with the main shareholder offering 30 rupees per share.

The stock last traded at 20.90 rupees.

Kuruwita Textiles chairman Aslam Omar said in a stock exchange filing that over the past four years attempts were made to return to profitable but they were not successful.

Its net assets per share had fallen to 24.10 rupees by December 2013 from 43.09 in March 2011.

The main shareholder, Brandix Textile Holdings were offering 30 rupees per share to any minority shareholders who wanted to sell.

Sri Lanka policy rates unchanged

CBSL Press Release: Monetary Policy Review – February 2014

The effectiveness of the policy measures in place was visible as the economy showed signs of further improvement with interest rates adjusting downwards albeit with a lag, and private sector credit picking up during the last quarter of 2013.

In January 2014, inflation continued to remain at single digit levels for the 60th consecutive month, and is expected to remain comfortably at these levels throughout 2014 supported by well managed demand conditions and improved domestic supply. Headline inflation moderated further, recording 4.4 per cent (year-on-year) for January 2014 from 4.7 per cent (y-o-y) in December 2013. Core inflation showed some increase, recording 3.5 per cent (y-o-y) in January 2014.

Provisional data available for December 2013 showed that the growth of credit extended to the private sector by commercial banks bottomed out, with its year-on-year growth accelerating marginally to 7.5 per cent from 7.3 per cent in the previous month. The Quarterly Survey on Commercial Bank Loans and Advances depicted a robust growth in accommodation provided to Industry and Services sectors facilitating the growing economic activities. Accordingly, in absolute terms, outstanding loans and advances granted to Industry and Services sectors by commercial banks recorded a growth of Rs. 200 billion in 2013 compared to the increase of Rs. 167 billion in the previous year. However, agriculture and consumption related pawning advances declined. Going forward, private sector credit is expected to record a growth of around 16 per cent in 2014, with overall broad money (M2b) growth of around 14 per cent.

Market interest rates continued to adjust downwards, following the compression of the Standing Rate Corridor through the reduction of the Standing Lending Facility Rate by 50 basis points on 2nd January 2014 and also the increased levels of liquidity seen in the domestic money market due to a part of the proceeds of the Sovereign Bond issued in January being converted to local currency by the Government. Whilst deposit interest rates and rates on Government securities have indicated signs of stabilising at current levels, longer term lending rates, which displayed some downward adjustments in January, have space to decrease further.

In the meantime, both current and capital accounts of the Balance of Payments (BOP) improved in December 2013, resulting in a stable exchange rate and a favourable international reserve position. In December 2013, earnings from exports recorded a healthy growth; while a notable reduction in imports was witnessed, reducing the trade deficit considerably. Inflows, on account of the workers’ remittances and tourism, recorded the highest monthly values while inflows to the Financial Account increased moderately.

Going forward, the effect of the tapering of the US quantitative easing (QE) programme on the Sri Lanka economy is expected to be minimal as a result of the prudent policies that have consistently been in place to attract investors who have a serious and long term view of the Sri Lankan economy. That position has been confirmed by the fact that, so far during the year (up to 10 February 2014), even after the QE tapering has been in progress, the net inflows to the Sri Lankan bond and stock markets have amounted to US dollars 119 million, although many emerging economies have experienced the reverse phenomenon. Reflecting continued foreign currency inflows, the Central Bank has so far absorbed US dollars 58.7 million on a net basis from the domestic foreign exchange market during this period while the Rupee has remained stable, appreciating against the US dollar by 0.03 per cent so far during the year. Gross official reserves have also remained at comfortable levels, equivalent to around 5.3 months of imports.

Considering the above, the Monetary Board, at its meeting held on 13th February 2014, was of the view that the current monetary policy stance is appropriate, and therefore, decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank unchanged at their current levels of 6.50 per cent and 8.00 per cent, respectively.

At the same time, the Monetary Board took note of the fact that the overall capacity of the economy has increased substantially in recent times as a result of the Government’s mega infrastructure drive, and that such increased capacity of the economy, in turn, has significantly amplified the investment potential and opened up new avenues to be utilised by the private sector. In that background, the Monetary Board was of the view that it would now be appropriate to further encourage the utilisation of this investment potential, since such policies by the government would give rise to increased and accelerated sustainable economic growth in the period ahead.

The date for the release of the next regular statement on monetary policy would be announced in due course.

Harishchandra Mills group shows strong growth and reserves

By J. Kurukulasuriya

The Matara based Harishchandra Mills PLC whose main business is the manufacture and distribution of oils, food products and soaps, has reported a 37% jump in group net profits for the nine months ended 31 December 2013, to Rs 98 million as compared to the corresponding previous period, and within the group the company's profits were up 97%.

Group revenue increased by four per cent during the nine months. The group consists of Harishchandra Mills PLC and Harishchandra Mills (Distributors) Ltd. Segment wise the largest turnover came from food products 61%, while fuel and lubricants 26% and soap 12% also contributed to group turnover.

Relative to its scale of operations, the company has a very low share capital of less than Rs 10 million, which is relatively small compared to other listed companies on the Colombo Stock Exchange. The net asset value per share is relatively high at Rs 1,051 on 31 December 2013. Reserves amount to Rs 999 million, so that the ratio of share capital to reserves is a high 11,100%.

The stated capital is Rs 9,598,000 consisting of 959,800 ordinary shares. The shares traded at a price of between Rs 2,490 and Rs 1,925 each.

Of the three largest shareholders, Seylan Bank PLC holds 38% of the shares, while Upeka de Silva and Chitra Padmini Rodrigo each hold 14%. The percentage of shares held by the public is 14%. Of the directors, S. N. Samarasinghe, the managing director holds 3.99% of the shares.
www.ceylontoday.lk

C.W. Mackie PLC turnover falls but profits improve

By J. Kurukulasuriya

Ceylon FT: C. W. Mackie PLC, a major exporter of crepe, industrial crepe rubber, desiccated coconut and spices, and dealer in light industrial products, released its interim results to 31December 2013, showing a 10% rise in group profits for nine months to Rs 138 million, despite turnover falling by 10% to Rs 4,948 million, against the corresponding period.

Fifty-three per cent of the group's revenue came from consumer goods, 25% from commodity trading, and 15% from manufacture of rubber products. Consumer goods was also the main profit contributor, providing 63% of the profit. The company's finance income fell by more than Rs 27 million. Tax expenses fell by 19% to Rs 40 million.

The acid test ratio of the group accounts stood at 1.4, and quick assets ratio at 2.0. Gross profit ratio was 13%. The company has a stated capital of Rs 507 million. The stated capital of the company represents 35,988,556 ordinary shares with a public holding as at 31 December 2013 of 11.17%. In the three month period to 31 December the shares traded between Rs 65.40 and Rs 51.10.

Lankem Ceylon PLC is the single largest shareholder with 34%, and Seylan Bank PLC/Dr T. Senthilverl, who is also a director, holds 30%.The Employees Provident Fund is also a significant shareholder with 139,000 shares.
www.ceylontoday.lk