CDB 9-month pre-tax profit up 16%

As per interim results released to the Colombo Stock Exchange (CSE), CDB recorded an impressive balance sheet size of Rs. 31.6 billion as at 31 December 2013 reflecting a growth of 29% from the last audited balance sheet date of 31 March 2013. 

The pre-tax profits for the nine months stood at Rs. 541 million, a growth of 16% while after-tax profits grew to Rs. 429 million, reflecting growth of 12% in the backdrop of substantially higher impairment charges and income tax expenses. Total comprehensive income for the period was Rs. 621 million.

During the nine months, overall revenue grew to Rs. 4.5 billion, a remarkable growth of 47% in comparison to the corresponding previous period. Net interest income was Rs. 1.7 billion, a healthy growth of 35%.

This underlying momentum has been fuelled by a deposit portfolio growth of 27% or Rs. 22.5 billion while the loan book grew by 25% standing at Rs. 24.4 billion. EPS recorded a figure of Rs.7.90 for the nine months whilst book value per share stood at Rs. 64 as at 31 December 2013.

CDB’s Managing Director/CEO Mahesh Nanayakkara said: “It is certainly another milestone for CDB to surpass the 30 billion mark in total assets and this provides us further capacity to serve our customers as one of the strongest leading financial institutions in the country. Our network of 59 online connected outlets coupled with the accessibility to the single largest ATM network of Commercial Bank of Ceylon has strengthened our client reach and convenience. We are thankful to our customers and business partners for their patronage which enabled us to achieve this milestone.”

Recently CDB received a tremendous boost when it successfully completed its first listed debenture issue of  Rs. 1, billion which was oversubscribed on the opening day. Managed by CDB’s Corporate Finance Division, the issue strengthens the Tier 2 capital base of the company, helping to maintain a healthy capital adequacy ratio.

“It is certainly another milestone for CDB to surpass the 30 billion mark in total assets and this provides us further capacity to serve our customers as one of the strongest leading financial institutions in the country – CDB Managing Director/CEO Mahesh Nanayakkara”

CDB also received accolades for being the first and only NBFI to implement a core bank solution. This comprehensive product with multi-currency, multi-branch and multi-banking capabilities enables CDB to provide enhanced client service standards covering deposits and lending with faster and efficient processes such as online credit approvals, faster deposit certificate delivery and the ability to withdraw interest payments even on holidays.

During the period under review CDB opened 16 new outlets and obtained its first foreign funding line US$ 6mn from a multilateral agency from Belgium Investment organisation based in Brussels.

With its strong distribution network, state-of-the-art IT platform, brand franchise, unparallel customer service standards coupled with a committed team across the organisation, CDB is well positioned and poised to exploit full potential of the country’s accelerated economic development and to contribute towards inclusive economic growth.
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Sri Lankan bourse at 6-wk low; falls below key barrier

Feb 19 (Reuters) - Sri Lankan shares fell for a fifth straight session on Wednesday to a six-week low, breaching the psychological 6,000-point mark as foreign investors dumped the island nation's risky assets.

The main stock index ended down 0.59 percent, or 35.42 points, at 5,986.24, its lowest close since Jan. 7. It has dropped 4.19 percent in the last 11 sessions.

Foreign investors sold a net 59.7 million rupees ($456,200) worth of shares on Wednesday, extending outflows to 4.87 billion rupees in the past eight sessions as some offshore funds exited the market.

The bourse has seen 3.54 billion rupees of foreign outflows so far in 2014, after enjoying net inflows of 22.88 billion rupees last year.

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

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

Analysts said local investors were active in the market after interest rates on treasury bills eased to multi-year lows, making fixed-income assets unattractive.

Top conglomerate John Keells Holdings Plc lost 1.56 percent to close at 215.00 rupees, pulling the overall index down.

Shares of market heavyweight Ceylon Tobacco Co Plc fell 0.90 percent to 1,198.80 rupees.

The index is still 1.24 percent up so far this year, following a 4.8 percent gain in 2013.

The day's turnover was 714.6 million rupees, less than this year's daily average of about 1.2 billion rupees. 

($1 = 130.8500 Sri Lanka rupees) 

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

Sri Lanka shares close down 0.5-pct

Feb 19, 2014 (LBO) – Sri Lanka stocks close down 0.59 percent retreating for the fifth consecutive day with losses in the index heavy tobacco and diversified stocks, brokers said.

The Colombo benchmark All Share Price Index closed 35.42 points lower at 5,986.24, down 0.59 percent. The S&P SL20 closed 6.27 points lower at 3,281.77, down 0.19 percent.

Turnover was 714.64 million rupees, up from 604.12 million rupees a day earlier, with stocks of 124 firms closing in the red against 58 gainers.

JKH topped the turnover contribution with 271.56 million rupees of market transactions contributing to 38 percent of the daily turnover.

PC House closed 20 cents lower at 30 cents, attracting most number of trades during the day.

Foreigners bought 302.35 million rupees worth shares while selling 104.54 million rupees of shares.

JKH closed 3.40 rupees lower at 215.00 rupees and Ceylon Tobacco Company closed 10.90 rupees lower at 1,198.80 rupees, contributing most to the index drop.

JKH’s W0022 warrants closed 1.00 rupee lower at 59.00 rupees and its W0023 warrants closed 70 cents lower at 60.00 rupees.

SLT closed 1.10 rupees lower at 41.70 rupees and Dialog closed 10 cents lower at 9.10 rupees.

Commercial Leasing and Finance closed 30 cents lower at 3.90 rupees and Bukit Darah ended 1.80 rupees lower at 590.50 rupees.

Commercial Bank closed 1.50 rupees higher at 118.00 rupees and Sampath Bank closed 5.00 rupees higher at 170.00 rupees.

Nestle Lanka ended 19.60 rupees higher at 2,119.60 rupees and Cargills Ceylon closed 4.00 rupees higher at 139.00 rupees.

Ceylinco Insurance closed 28.50 rupees higher at 1,374.50 rupees and Aitken Spence closed 1.00 rupee lower at 100.00 rupees.

Distilleries closed 60 cents lower at 207.40 rupees and Carson Cumberbatch ended flat at 350.00 rupees.

Sri Lanka Treasuries yields ease

Feb 19, 2014 (LBO) - Sri Lanka's Treasuries yields edged lower across maturities at Wednesday's auction with the 12 month yield down 02 basis points to 6.75 percent, the state debt office said.

The 6-month yield was also down 02 basis points to 6.90 percent and the 12-month yield was down 02 basis points to 7.08 percent.

The debt office said it accepted 3.0 billion rupees in 3-month bills, 5.3 billion rupees in 6-month bills and 10.4 billion rupees in 12-month bills.

Sri Lanka cabinet approves integrated resort investments

Feb 19, 2014 (LBO) - Sri Lanka's cabinet of ministers had approved investment concessions for three integrated resort projects which appear to limit income tax cuts to gaming, according to public notices published.

Government gazette notices for Lake Leisure Holdings (Private) Limited (connected to Australia's James Packer), Waterfront Properties (Private) Limited. (connected to John Keells Holdings) and The Queensbury Leisure Limited connected to entrepreneur Dhammika Perera said corporate income tax holidays and import duty concessions on materials have been approved.

The concessions when first published ran into a controversy as all resorts are also expected to have gaming operations.

The gazette said the resorts will have rooms, shopping malls, residences, office spaces and "associated facilities".

The revised tax concessions contained no specific references to gaming, and contained wording that appeared to exclude a corporate income tax holidays for revenue profits from gaming, other than rental income.

No limits have been place on rents.

The gazette notice said "activities of the Project including sale, lease, rent proceeds of apartments, office and services space, room charges and rental income from all tenants," will get a 12 or 15 year tax holiday.

The notice also said that in due to exemptions already granted to the projects " no tenant or any other party associating with the project or the project company will be granted any exemptions or concessions under this Act, in view of or consequent to such association."

Under Sri Lanka's Strategic Development Act, sweeping tax concessions to large projects have to be published for public comment, in a bid to limit revenue erosion.

The concession are then approved by the cabinet and tabled in parliament.

The tax concession for gaming ran into controversy, with opposition legislator Harsha de Silva in particular taking up the case and the three projects are now going though the process for a second time.

But Sri Lanka's parliament had already lifted value added tax from gaming and limited gaming revenue based taxes to only 5.0 percent, before the projects were approved.

Legislator Harsha de Silva also opposed the bill at the time, saying taxes on gaming revenues ranged close to 20 percent where income tax was also charged (as in Singapore) or 60 percent where there was no corporate income tax.

LOLC profits up 12%

By J. Kurukulasuriya

Ceylon FT: Lanka Orix Leasing Company PLC (LOLC) reported a group profit of Rs 1,986 million, a 12% improvement as compared to the corresponding previous period, in spite of a fall of 17% in revenue to Rs 11, 704 million, interim results for the nine months ending 31 December 2013, show.

The bottom line was boosted by acquisition of Beira Parawood Products (Private) Limited (Beira), in November 2013 by one of the subsidiaries of the LOLC group, resulting in a profit of Rs 72 million. Also in November 2013, the group disposed its stake of 76% in Royal Fernwood Porcelain group for a consideration of Rs. 300 million, resulting in a profit of Rs 6.6 million.

The shares in Royal Fernwood were purchased from Brown's Group of companies. As at 31December 2013, the group had a stated capital of Rs 475.2 million, broken into 475,200,000 shares.

It had reserves/retained earnings of Rs 19,508 million, giving a relatively high ratio of share capital to reserves of 1:41. Net assets per share stood at Rs 42, down from Rs 43.96 on 31 March.

Director R. M. Nanayakkara has the highest stake in the company with a 36% shareholding, while Orix Corporation holds 30%. Deputy Chairman I. C. Nanayakkara holds 13% as the 3rd largest shareholder. Other significant shareholders are the Employees' Provident Fund with a three per cent stake of 15 million shares. The Bank of Ceylon holds over 1.5 million shares.

The share price fluctuated between a high of Rs 80.50 and low of Rs 56 during the quarter ended 31 December.
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PC House sustains losses, as EPF holds on to shares Company says fighting off moves to wind-up

By J. Kurukulasuriya

Ceylon FT: PC House PLC, whose group revenue for the nine months to 31 December 2013 was Rs 710 million – down 58% from the corresponding previous period – reported a group loss of Rs 700 million to 31 December 2013. Within the group the company made a loss of Rs 696 million for the nine-month period.

This is in spite of 'other income' increasing and reductions made in administrative, selling and distribution and finance costs, for the group. Group revenue for the last quarter fell by 51% to Rs 226 million. A loss of Rs 203 million was reported in the last quarter alone.

According to a CSE disclosure filed on 16 January, the company is 'vigorously resisting' the application by KYE Systems Corp Taiwan Republic of China, which has filed an application before the High Court, Western Province, to wind up PC House PLC. The case is to be heard on 21 February 2014, and PC House's lawyers were "communicating with the petitioner to amicably resolve the matter" and "to withdraw the action".

Several events were reported as occurring after the reporting date of 31 December 2013, requiring legal action by the company.

Hatton National Bank has issued a "Parate Notice" to PC House property situated at 451, Galle Road Colombo 3, and the board of directors has taken an injunction order against the same. People's Bank has issued a legal notice against PC House bank facility and the board has sought legal advice and action. The bank facilities provided to PC House by the National Development Bank, Commercial Bank, Hatton National Bank, DFCC Vardana Bank, Amana Bank and Union Bank have all gone overdue.

It was also reported that "some of the remaining branches of PC House have been closed due to cash flow issues and due to cost cutting initiatives."

The company also reported that "some statutory payments are due and the company has taken appropriate steps to negotiate with relevant authorities." The nature or extent of these payments was not specified.

The number of shares issued and fully paid of the company as at 31 December, 2013 is 343,400,001. The stated capital is Rs 1,144,666,675.

As at 31 December the group retained earnings were a negative value – accumulated losses of Rs 642 million.

The public hold 55% of the shares. The major shareholders, as reported by the company, are — Senthilverl who holds 11%, 'Silva' with 10%, National Development Bank PLC/S.H.M.Rishan (COLATER) with 5.8%, LB Finance PLC/S.H. Mohammed Rishan 3.9%.

The Employees Provident Fund, which is the seventh largest shareholder, holds 11,324,228 shares or 3.3% of the share capital. Director S. H. M. Rishan holds 19%, directly and indirectly.

During the last quarter the shares traded at a high of Rs 1 per share and low of 0.60 cents per share. The initial public offering of shares made to the public by the company in August 2010 was oversubscribed, and the stated capital was increased accordingly. At the time, the shares were sold at Rs 11 each.

The company has three subsidiaries – Procifinity Limited, Greenwich Lanka (Pvt) Limited and Infor Serve (Private) Limited. "Consequent to the 'recent financial issues,' the board of directors of PC House has taken a strategic decision of franchising its operations. Initially the new concept has been applied to the IT Hardware operations in Unity Plaza", the company reported.
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IFC invests in Senkadagala Finance to expand financing to small businesses

IFC, a member of the World Bank Group, is investing $7 million in Sri Lanka’s Senkadagala Finance PLC to support the growth of micro and small businesses across the country.

IFC’s funding will enable Senkadagala Finance to extend over 50,000 new loans to micro, small, and medium enterprises over a five-year period.

The loan will help Senkadagala Finance increase its presence in Sri Lanka, focusing on the northern and eastern regions. This is IFC’s first investment in a non-bank financial institution in Sri Lanka since 1999.

“IFC’s investment is timely, as we plan to expand our reach by opening 50 more branches and service centres across Sri Lanka over the next five years. It will also increase access to credit for micro and small businesses,” said Sanath Bandaranayake, Director/Additional CEO of Senkadagala Finance.

Micro, small, and medium enterprises play an important role in Sri Lanka. In 2011, IFC estimates thatthe sector accounted for over 90% of all businesses in the country, and contributed nearly 52% to Sri Lanka’s Gross Domestic Product. Small businesses also play a critical role in promoting balanced regional development. However, credit constraints hinder their development.

“Our investment in Senkadagala will create indirect employment, reduce poverty, and boost shared prosperity,” said Adam Sack, IFC Country Manager for Sri Lanka and Maldives. “Small businesses are critical to Sri Lanka’s continued growth and development, it is vital they have access to affordable financing options.”

Senkadagala Finance PLC, incorporated in 1968, is a prominent, licensed deposit-taking institution. It currently has 61 branches and service centres across Sri Lanka.

Sri Lanka is a priority country for IFC. IFC’s committed portfolio of over $280 million in Sri Lanka covers projects across a range of sectors, including infrastructure, tourism, renewable energy, finance, and healthcare. IFC also provides advisory services to promote sustainable growth among small and medium enterprises by facilitating access to finance, and by offering capacity-building and training opportunities.
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