Touchwood boss could face jail?

CEO of Touchwood Investments Plc (TWOD), Vijan Lanka Kiwlegedara could face arrest after handing over a bad cheque of Rs. 21 million, reports say.

Handing over a bad cheque intentionally is considered a criminal offence and challenges Kiwlegedara's competency to hold leading posts in a listed firm.

Under this backdrop, a special AGM could also take place, reports say.

Source say that Kiwlegedara also faces charges of misleading the judiciary by handing over a bad cheque.

The charge is leveled after a motion filed in the Commercial High Court of Colombo by a petitioner named Priyanka Nanayakkara (petitioner) called to wind up the TWOD.

The call for the appointing of a provisional liquidator is expected to continue.

The case is to be taken up today (March 06).

Meanwhile, it is said that the company has been shifted to No. 220, Nawala Road, Nawala and further inquires can be made on 0777-077324.
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Sri Lanka index hits 2-wk high led by John Keells

(Reuters) - Sri Lankan shares ended at their highest level in two weeks on Thursday led by top conglomerate John Keells Holdings PLC amid mild foreign inflows.

The main stock index ended up 0.43 percent, or 25.50 points, at 5,961.93 points, its highest close since Feb. 19.

Shares in John Keells rose 2.23 percent to 224.90 rupees.

The day's turnover was 716.1 million rupees ($5.48 million), much below this year's daily average of about 1.02 billion rupees.

Analysts said investors were cautious and waiting for direction as a tough resolution on Sri Lanka comes up for voting at the United Nation's Human Rights Council later this month.

Reacting to a report by the U.N. human rights chief last week, Sri Lanka questioned the independence of the human rights office of the U.N. on Wednesday, a day after the United States asked the U.N. to investigate human rights violations by the Sri Lankan government.

Foreign investors bought a net 3.1 million rupees worth of shares on Thursday, but they have been net sellers of 5.41 billion rupees for the last 19 sessions as some offshore funds exited the market.

The index has seen a net 4.02 billion rupees of foreign outflows so far in 2014, after net inflows of 22.88 billion rupees last year. ($1 = 130.5950 Sri Lanka rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil Nair)

Sri Lanka's Rs850mn Alumex IPO oversubscribed

Mar 06, 2014 (LBO) - An 853 million rupees initial public offer by Alumex Limited, an aluminium extrusions maker has been oversubscribed within hours of opening Thursday, managers to the issue said.

The offer will be kept open till 4.30 pm today, NDB Investment Bank said.

The firm offered 17.85 million shares to raise 250 million rupees for factory expansion. Existing shareholders were selling down another 42 million shares.

The sale will allow the firm to qualify for lower corporate income taxes given to companies listing on the stock exchange before March 2014.

In the nine months to December 2013 the firm said revenues rose to 2.02 billion rupees from 1.8 billion rupees and cost of sales rose to 1.43 billion rupees from 1.28 billion rupees allowing gross profits to rise to 547 million rupees from 483 million rupees.

Finance costs fell to 15.7 million rupees from 38.9 million rupees.

Profits rose to 283 million rupees from 216 million rupees.

The company will have 299 million shares after the initial public offer.

Sri Lanka stocks close up 0.4-pct

Mar 06, 2014 (LBO) - Sri Lanka's stocks close 0.43 percent higher Thursday with index heavy John Keells Holdings extending gains, brokers said.

The Colombo benchmark All Share Price Index closed 25.50 points higher at 5,961.93 up 0.43 percent. The S&P SL20 closed 17.08 points higher at 3,234.05, up 0.53 percent.

Turnover was 716.06 million rupees, up from 281.18 million rupees a day earlier with 112 stocks close positive against 63 negative.

Foreign investors bought 461.70 million rupees worth shares while selling 458.61 million rupees of shares.

JKH’s W0022 warrants closed 70 cents higher at 63.90 rupees and its W0023 warrants closed 30 cents higher at 66.30 rupees, attracting most number of trades during the day.

JKH closed 4.90 rupees higher at 224.90 rupees and Trans Asia Hotels closed 3.80 rupees higher at 83.40 rupees, contributing most to the index gain.

SLT closed 30 cents higher at 45.10 rupees and Dialog Axiata closed flat at 9.00 rupees.

Ceylon Tobacco Company closed flat at 1,120.00 rupees and Distilleries closed 80 cents lower at 204.20 rupees.

DFCC bank closed 1.90 rupees higher at 144.10 rupees and NDB Bank ended 1.00 rupee higher at 180.00 rupees.

Union Bank closed 50 cents higher at 18.50 rupees and HDFC Bank closed 10 cents higher at 31.40 rupees.

Sri Lanka listed company profits up 6-pct in Dec quarter: report

Mar 06, 2014 (LBO) - Aggregate profits at Sri Lanka's listed companies rose 5.9 percent to 51 billion rupees in the December 2013 quarter from a year earlier, though bank profits were down 16 percent on loan losses, an equities research report said.

Without one-off gains, profits were down 1 percent for the quarter, with 274 companies reporting, CAL Research said in a report.

But it was a recovery from 29 percent fall in the September quarter.

In the calendar year 2013, aggregate profits were down 13 percent to 170 billion rupees from a year earlier.

In the fourth quarter revenues of firms other than banks, finance and insurance companies were up 12 percent to 511 billion rupees, which indicates a partial recovery in consumer spending, CAL Research said.

Sri Lanka is recovering from a balance of payments crisis in 2011/2012 which was triggered by excessive loans taken by state energy enterprises to subsidize energy and ultimately accommodated with central bank credit.

Profits at commercial banks fell 16 percent hit by loan losses, especially in gold-backed loans. Loan loss charges rose to 4.7 billion rupees in the quarter from 3.5 billion a year earlier.

Loan books however grew 16 percent and net interest margins fell 30 basis points to 4.4 percent.

Profits at finance companies and other financial institutions had grown 30 percent with net interest margins remaining flat at 9.6 percent, the report said.

Insurance firms had seen profits grown 30 percent from a year earlier, with gross written premiums growing 7 percent.

The bank, finance and insurance sector made up 34 percent of total profits and was up 0.9 percent to 17.8 billion rupees.

Beverage food and tobacco sector profits were up 19 percent to 6.2 billion rupees with most coming from Ceylon Tobbaco and Distilleries Corporation.

Profits at diversified companies fell 4 percent to 8.2 billion rupees.

Telecoms were up 55 percent to 2.6 billion rupees with revenues up 8 percent.

Motor sector earnings were up 100 percent, hotel and travel up 32 percent, manufacturing was up 0.2 percent, plantations were down 22 percent and healthcare was down 61 percent.

Construction and engineering was down 15 percent (mainly due to Colombo Dockyard), Chemicals and Pharma was down 38 percent.

Capital market listing more attractive for investors now – CSE

Indunil Hewage


Level of financial literacy in Sri Lanka is relatively low among entrepreneurs as well as investors, Dhammika Perera, Deputy Director General and the Officer-in-Charge of the Securities and Exchange Commission of Sri Lanka said.

He made these views addressing a seminar on “Unlock the Value of Your Company”, in Colombo.

Colombo Stock Exchange(CSE) and Securities and Exchange Commission of Sri Lanka (SEC) have embarked on a constructive awareness endeavour in Sri Lanka to create awareness about benefits of listing in CSE not only among the investors, market participants but also among groups such as entrepreneurs, business community and even financial journalists.

Perera noted that the total amount of capital mobilized by the businesses through the market in 2013 had been gigantic Rs 95 billion, out of which around Rs 65 billion was through debt.


CSE CEO
Rajeeva Bandaranaike

“With the interest rates coming down in a very unprecedented way in Sri Lanka, savings in your bank is not going to give you an attractive interest rate. Hence capital market is becoming more and more attractive for investors. I can see a huge potential even for entrepreneurs, business community to tap the market and mobilize long-term capital in any country,” Perera said.

Colombo Stock Exchange Chief Executive Officer Rajeeva Bandaranaike said, ASPI has significantly outperformed global market indices such as Dow Jones , FTSE, MSCI World and DAX and ASPI has also outperformed some of the best performing regional indices namely, Bombay, Jakarta, Hanoi, Dhaka, Philippines and Thailand.

As many as 100 companies have listed since 2010. About Rs 124 billion have been raised through new listings and further Rs 131 billion have been raised through right issues. In the recent past, the market witnessed a positive flow of foreign investments, epitomizing foreign investor confidence in Sri Lanka’s economic prospects.

Net foreign inflows in 2012 reached Rs 40 billion and in 2013, Net foreign inflows recorded Rs 32 billion. Capital raised through debt issues soared to Rs 10.5 billion by end April 2013, compared to Rs 12.5 billion in 2012 and Rs 1 billion in 2011.

“In terms of cost of listings, Colombo is relatively cheap in getting listed compared to some other markets in the world. The capital market is one primary tool which allows you to access a large amount of capital. Listing on the CSE brings with it a number of benefits, in addition to the raising of capital. A company is able to enhance its corporate profile through visibility, attribute an objective value to the company, obtain tax incentives and create and optimal capital structure,” Bandaranaike said.

“The country seeks to project itself as a knowledge hub, therefore the development of IT industry is vital .By listing on the stock exchange, IT companies are able to better strengthen their internal structure and become more attractive to potential strategic investors who would value transparency and governance,” Madu Ratnayake ,Chairman SLASSCOM and Head of Digital, SVP and GM, Virtusa said.
www.dailynews.lk

Sluggish 2013: Corporate earnings fall 4%

By Hiyal Biyagamage, Mario Andree and Rishar Saleem

Ceylon FT: Cumulative earnings of 267 of the 291 companies listed on the Colombo Stock Exchange fell 4.2% during the year 2013, an analysis of earnings data showed, despite the government expecting economic growth to reach 7.3% for that year.

Total earnings for 2013 were down to Rs 129.3 billion, from Rs 134.9 billion in the previous year, 2012.

High interest rates, inflation, rising energy, raw materials and wage costs weighed down earnings of the corporate sector.

Banking sector earnings fell 3.69% to Rs 48.54 billion, down from Rs 50.4 billion a year ago. Beverage sector earnings grew 5.05% to Rs 20.94 billion, up from Rs 19.93 billion a year ago.

Diversified sector earnings fell 26.08% to Rs 13.3 billion, down from Rs 17.99 billion a year ago and Telecommunication earnings grew 6.72% to Rs 10.62 billion, up from Rs 9.95 billion a year ago.

Hotel and travel earnings grew 11.81% to Rs 3.73 billion and the construction sector earnings fell 12.33% to Rs 3.28 billion.

The power and energy sector grew 91.3% to Rs 6.62 billion and plantation sector earnings fell 51.84% to Rs 2.09 billion.

The manufacturing sector saw earnings grow 2.14% to Rs 8.84 billion and healthcare grew 21.5% to Rs 2.14 billion.

The motors sector fell 30.33% to Rs 1.75 billion.

The IT sector reported a cumulative loss of Rs 666.6 million, down 1,611% from a Rs 44.11 million gain the previous year.

Some of the companies reported results for nine months up to end December 2013, and others for 12 months.

2013 was a tough year for the private sector, crowded-out by the government for bank loans.

New loans to the private sector amounted to Rs 155.3 billion in 2013, a four-year low. New loans generated by the domestic banking system to the government surged to Rs 435.1 billion in 2013, a four-year high.

Economists at the Economics Association of Sri Lanka and Verité Research have pointed out that since the end of the decades-long conflict in 2009, economic growth was fuelled by imports, construction and heavy government spending, and was therefore unsustainable. Exports and foreign direct investment were not performing satisfactorily enough to generate real economic growth, and steer the economy away from a debt trap. 

The Central Bank said there was enough capacity for domestic banks to generate private sector credit this year contributing to the real economy without creating inflation.

So far this year, private sector credit growth has been sluggish as well, with banks opting to park excess liquidity in government securities.

Economists warn that the low policy rate regime could bring down market interest rates and fuel imports, and if the exchange rate was defended by selling down reserves, pressure could mount on the balance of payments as well.
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