We’ve been in the industry for 150 years

Consult us on regulatory changes says Bogala chief

Mr. Vijaya Malalasekara, Chairman of Bogala Graphite Lanka PLC, has expressed the hope that Bogala, which has been in the graphite industry for the last 150 years, will be consulted by the authorities who are proposing regulatory changes for the industry.

"We earnestly hope that the authorities concerned will consult us as we have been in this industry for the last 150 years. Regulations, we believe, should be done in consultation with parties who could be affected," he said in the company’s annual report.

The Geological Survey and Mines Bureau had informed the mining industry that the related ministry intends to make changes to the regulations applicable to the industry.

Bogala which hoped they would be consulted prior to promulgation of new regulations said they would be in a position to contribute positively towards the formulation of these regulations given their long history in the mining industry in Sri Lanka.

Bogala CEO Amila Jayasinghe said they have already sought clarification from the line ministry (about what is intended). "Pending response of the Ministry our capital expenditure plans have been temporarily reduced."

He further said that they are aware that foreign investors have shown interest in mining graphite in Sri Lanka. Depending on what their objectives are the competitive landscape is likely to change, Jayasinghe said.

The year ended December 31, 2013 had seen Bogala’s revenue decline to Rs.535 million from Rs.556 million the previous year due to changes in the product mix in sales resulting from the different grades of graphite extracted during the early part of the year.

"However, the company ended the year with a profit after-tax of Rs.24.8 million compared to PAT of Rs.23.8 million in 2012. It is also salient to mention that a reversal of depreciation amounting Rs.7.4 million resulting from the re-estimation of useful lifetime of Plant & Machinery is included in the PAT of the year," Malalasekara said.

He reported that the rupee had shown a modest depreciation against the US dollar during the year while the depreciation against the Euro was great. Despite this the company had suffered an exchange loss of Rs.13.8 million against a loss of Rs.30.6 million in 2012.

Malalasekara said that the year had been one of mixed fortunes for Bogala emerging from the changing competitive environment and regulatory (measures) and the likely legislative pressures.

"These challenges have tested our strength and our ability to adapt to them whilst ensuring that the sustainability of our business into the future is not affected," he said.

He reported that the investment the company had made in its Lubricant Plant was delivering incremental returns. They continued to focus on cost minimization and productivity improvements and have also focused on improving processes. The initial results they have seen were very encouraging.

"The process improvements that have been carried out should enable us to cater to the high end graphite market," he said.

"The support we received from our parent company AMG Mining AG particularly towards our marketing efforts is commendable considering the slow recovery of the international economy. Their continued support for the management team has been an inspiration and will continue to be so," Malalasekara said.

The company’s CEO, Mr. Amila Jayasinghe said that a 30% increase in electricity rates announced in April 2013 had adversely affected the company’s bottom line. Pressure on profitability and cash generation had been further aggravated by having to recognize an increase in royalty by 2% of the FOB value last November.

The higher royalty had been enforced retrospectively from October 2013 leading to an increase in the payment of royalty. Despite these setbacks the company had closed the year with a net profit of Rs.24.8 million including an adjustment in depreciation of Rs.7.4 million.

Bogala has a stated capital of Rs.80.07 million, reserves of Rs.5.7 million and retained earnings of Rs.111.2 million in its books. Total assets ran at Rs.537.6 million and total liabilities at Rs.340.6 million.

AMG Mining AG owns 90.33% of Bogala followed by the Secretary to the Treasury (0.54%). All other shareholders individually own less than 0.5%.

The Bogala share traded at a high of Rs.27.80 and a low of Rs.18 in 2013 closing at Rs.18.40. Net assets per share had grown to Rs.4.16 from Rs.3.64 the previous year.

The directors of the company are: Messrs. Vijaya Malalasekara (Chairman), Frank E. Berger (Vice Chairman), J.C.P. Jayasinghe, N.A. De Mel, T. Junker, J.J. Ambani, Amila Jayasinghe (CEO/MD), ET. Muller and Ms. Coralie Pietersz.

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Dividends and increased rent boost Property Development profits

Property Development PLC (PDL), the Bank of Ceylon subsidiary owning the bank’s headquarters building at Echelon Square, had substantially increased both revenue and profitability in the year ended December 31, 2013 on account of a rental increase of approximately 10% with effect from July 1, 2013 from its sole tenant, the Bank of Ceylon, as well as dividend income.

PDL Chairman Raju Sivaraman, has told shareholders in the annual report that the company’s revenue for the year was up 17.8% over the previous year mainly due to income received from their subsidiary, Koladeniya Hydropower (Pvt) Limited amounting to Rs.82.1 million and a dividend of Rs.42.6 million received from their investment in the Lanka Hospitals Corporation PLC. There had been a rental increase of approx. 10% from July 2013.

"Total expenditure increased by 7.8% year on year, mainly due to increase in operational expenses. Nevertheless, this can be considered a marginal increase relative to inflation," the chairman said.

The Koladeniya hydropower plant had been commissioned in April 2012 and continues to deliver hydro electricity to the national grid under a standardized power purchase agreement signed with the CEB.

"The performance and revenue during the financial year under reference have been much better than the estimates at the feasibility stage," Sivaraman said.

The company had continued to focus on high quality maintenance of the BOC Tower and the rehabilitation program for plant and machinery had continued during the year under review. Rehabilitation of toilets was in progress and 58 out of 78 toilets in the building had been upgraded to date, he said.

A management agreement between PDL and BOC Property Development & Management (Pvt) Limited, a fully owned subsidiary of the BOC continues. Under this agreement the company maintains the BOC Merchant Tower building in Kollupitiya and Ceybank House in Kandy and a fee of Rs.15.6 million, up from Rs.14.3 million the previous year, had been received on this account in the year under review.

The directors have recommended a first and final dividend of Rs.3 per share, up from Rs.2.50 the previous year, for 2013.

The BOC Tower which is tenanted by the BOC comprises 600,000 sq. ft. of prime office space in Colombo Fort.

PDL owns 9.53% of Lanka Hospitals Corporation PLC while Koladeniya Hydropower is a fully owned subsidiary.

The after-tax profit of Rs.428.6 million earned in 2013, up from Rs.348.4 million the previous year is the highest on record. The company is carrying forward retained profits of over Rs.1.5 billion in its books.

The stated capital of Property Development is Rs.660 million with reserves of Rs.335 million in the company’s books as at December 31, 2013. Total assets stood at Rs.3.66 billion and total liabilities Rs.486 million.

Net assets per share had grown to Rs.48.03 from Rs.43.75 and the company’s share traded at a high of Rs.69 and a low of Rs.40.23 during the year under review. This compared with a trading range of Rs.65 to Rs.25.10 the previous year.

The Bank of Ceylon owns 94.09% of the company, up from 93.16% the previous year while Ceybank Unit Trust owns 0.67%. All other shareholders amounting to 3,484 individually own less than 0.4%.

The directors of the company are: Messrs. Raju Sivaraman (Chairman), B. M. Amarasekera, Dr. M.S. Perera, L.N. de S. Wijeyeratne, P.A. Lionel and S. E. de Silva.

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Shares for debt swap lifts Galadari from the red

Debts to Galadari Brothers and GOSL fully repaid

Galadari Hotels (Lanka) PLC has reported what its chairman called a "remarkable turnaround’’ during the year ended December 31, 2013 with an after-tax profit of Rs.286 million against a loss of Rs.861 million posted the previous year.

"The main contribution to this performance came from the restructuring of the company’s balance sheet, which resulted in the conversion of the Rs.7.2 billion loan of Galadari Brothers Co. LLC into equity," the company’s Chairman Mr. Khaled Aly Soliman has said in the annual report.

"Another noteworthy achievement in 2013 was the repayment of Rs.263.6 million to the Treasury as part settlement of the long outstanding loan to the Government of Sri Lanka."

He said that the remaining amount of Rs.263.6 million had been repaid this year.

"With the financial strength of a healthier balance sheet, Galadari Hotels (Lanka) PLC is well poised to realise its potential, in line with the government’s vision for Sri Lanka and the significant role that the tourism sector is expected to play in the country’s economic growth," Soliman said.

Despite the hotel now being profitable, it carried accumulated losses of Rs.9.36 billion in its balance sheet as at December 31, 2013, down from Rs.9.58 billion a year earlier.

The owning company has a stated capital of nearly Rs.9 billion and a revaluation reserve of Rs.8.7 billion in its books. Total current assets ran at Rs.10.38 billion and total liabilities at Rs.1.88 billion.

The company issued nearly 318.4 million new shares to Galadari Brothers Company LLC of the United Arab Emirates at the rate of Rs.22.50 per share and liquidated its debt to that company. In January this year it also settled a further Rs.71 million balance due to Galadari Brothers.

The report reveals that the loan from the Government of Sri Lanka of Rs.263.7 million has been rescheduled during the year with the accrued interest waived. The company has fully settled the Government loan on March 20, 2014.

Galadari Brothers with 63.57% of the company is the dominant shareholder with Iceberg 2 Limited following with 5.89%. The EPF holds 4.73% and several members of the Galadari family, in their individual capacities, are also among the top 20 shareholders.

The Galadari share traded at a high of Rs.15 and a low of Rs.9.10 in 2013 closing at Rs.11.30. This compared with a trading range of Rs.30.50 to Rs.10.40 closing at Rs.14.20 the previous year.

The company’s net assets per share had grown to Rs.16.97 during the year under review from Rs.4.25 the previous year.

The directors of the company are: Messrs. Khaled Aly Soliman (Chairman) S.M.H. Ahmed Khoory, L. R. de Silva, Dr. J.A.S. Felix, M.H.A.W. Al Garf, Amit Chib and H.A. Mohamed.

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