Swisstek under new owners emerging from the woods

Swisstek (Ceylon) PLC, previously Parquet (Ceylon) PLC established in 1967 and now a member of the Lanka Walltiles group of companies, has increased turnover 43% to Rs.320.1 million in the year ended March 31, 2014 and made a pre-tax profit of Rs.53.4 million, up from Rs.9.2 million the previous year.

"This was a commendable improvement in performance during the period under review. The profit after tax for the year was Rs.49.6 million as compared to the profit of Rs.7.0 million made in 2012/13," the company’s Chairman Mr. Nimal Perera said.

However the company continues to carry retained losses of Rs. 160.8 million and the group losses Rs. 85.2 million and the directors have recommended no dividend for the year under review.

Swisstek is into tile mortar products and imported solid wooden flooring. Its subsidiary, Swisstek Aluminium Ltd deals in aluminium extrusion profiles and manufactures tiled beading and step edging.

Perera said that Swisstek Aluminium had contributed significantly to the increase in group turnover by growing its business volumes by 22%.

"As predicted last year, despite many challenges the company saw a remarkable turnaround during the year. Swisstek Aluminium ended with a total comprehensive income of Rs.69 million for the year, a significant improvement, considering the comprehensive income of Rs.6.9 million made last year was after a gain of Rs.34.2 million arising from land revaluation," he said.

Group turnover at Rs.1.49 billion was up 25% from the previous year and the total comprehensive income of the group at Rs.114.9 million was up from the previous year’s Rs.21.9 million.

Swisstek is the market leader in the manufacture and sale of tile grout and tile mortar which remains its main line of business and its newly opened sales outlet at Belummahara had brought good results during the year under review, Perera said.

Following the acquisition of the Lanka Ceramic group by Royal Ceramics, Swisstek has now become a subsidiary of Royal Ceramics and is able to offer Rocell branded tiles and bath ware from Swisstek sales outlets.

Swisstek Aluminium’s investment in the latest technology to powder coat aluminium profiles has paid rich dividends with both powder coated and wood finish product sales increasing considerably during the year.

The company continues to offer wooden flooring made of imported species such as Burma Teak, Merbaru, Pyinkado and Walnut for flooring requirements in the local market. Contribution made by this division during the year was encouraging and prospects for the future remained good, Perera said.

Swisstek has a stated capital of Rs.368.3 million, reserves of Rs.411.4 million and accumulated losses of Rs.85.2 million for the group and Rs.160.8 million for the company in its books.

Total assets ran at Rs.1.8 billion and total group liabilities at Rs.1.05 billion. At company level total assets were Rs.922.9 million and total liabilities Rs.333.6 million.

Lanka Tiles PLC with 47.8% and Lanka Walltiles PLC with 11.5% are the two biggest shareholders of the company followed by Mr. D.G. Wijemanne (7.6%) and Mr. J.A.P.M. Jayasekera (6.8%). Royal Ceramics is the ultimate controlling shareholder.

The directors of the company are: Messrs. Nimal Perera Chairman), J.A.P.M. Jayasekera (MD), K.Y. Choi, K.I.S. Udumalagala, S.A.D.M. Ratnayake and J.K.A. Sirinatha.
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Central Finance sustains profitability in challenging year

Despite challenging market conditions, Central Finance Company PLC, perhaps the strongest finance companies in business in the country, has sustained profitability at the previous year’s level in the year ended March 31, 2014 boosting total assets by 15%, total deposits by 21% and shareholders’ funds by 23%.

"I am indeed pleased to note that despite obvious challenges, the company succeeded in consolidating its activities and delivering consistent performance throughout the year," CF Chairman J.D. Bandaranayake said.

The company’s total assets stood at Rs.61.57 billion during the year under review, deposits at Rs.33 billion and shareholders’ funds at Rs.17.93 billion.

The company’s Managing Director, Mr. E. H. Wijenaike, noted that despite intense competition the strength of the CF brand was reflected the healthy growth in deposits which had increased from Rs.27.26 billion in April last year to Rs.33 billion in March 2014.

"Our key deposit strategy was to shift investor preference from short term investments to longer term alternatives throughout new initiatives launched during the year," he said.

Wijenaike reported that the company moved to minimize the mismatch between assets and liabilities and make use of the low interest rate environment by securing long-term borrowings. This included the launch of two debentures of Rs.2 billion each in June and December 2013 with tenures ranging from three to five years.

"Testament to our investor confidence, the issues were oversubscribed on the first day of each issue by 4.3 and 7.5 times, respectively," he said. "Both issues are listed on the Colombo Stock Exchange providing tax free returns to the investors."

The directors have recommended a final dividend of Rs.1.50 per share giving shareholders a total return of Rs.3.20 per share for the year under review, up 10% from the previous year.

The year saw the full impact of the duty hike on imported vehicles with a drastic decline observed in the demand for private vehicles which in turn hurt the business of financing such vehicles.

Also, the financing of construction vehicles and equipment which was at its peak in 2012/13 also dropped sharply amidst severe financial difficulties faced by the construction sector in the face of persistent delays in collections.

"Consequently sector specific NPLs’ also shot up, prompting the company to reduce the exposure to the sector," the report said.

Challenges faced by the construction, transportation and tourism sectors throughout the year under review together with economic challenges posed throughout the year inevitably exerted cash flow pressures on CF customers in these business segments.

"Consequently, recoveries from these three sectors remained particularly challenging throughout the year," the report said. "As industry-wide NPL’s shot up, CF embarked on a strategic realignment agenda to progressively ease the company’s exposure to these sectors in the longer term,"

CF has a stated capital of Rs.568.4 million, capital reserves of Rs.1.9 billion, a reserve fund of Rs.1.08 billion and investment fund of Rs.732.7 million and revenue reserves of Rs.13.59 billion. Total assets of the company ran at Rs.61.57 billion and total liabilities at Rs.43.6 billion.

Net assets per share had grown to Rs.171.01 from Rs.138.81 and the CF share traded at a high of Rs.194.90 and a low of Rs.171.10 during the year. This compared with a trading range of Rs.185 to Rs.121 the previous year.

Corporate Services (Pvt) Ltd with 16.11% is the biggest individual shareholder of the company followed by Mr. E.H. Wijenaike (15.41%) and the EPF (10.04%), up from 7.55% the previous year. The ETF also owns 1.14%.

The directors of the company are: Messrs. J.D. Bandaranayake (Chairman), E.H. Wijenaike (MD), G.S.N. Peiris, R.E. Rambukwelle, A. K. Gunaratne, D.P. de Silva, C.L.K.P. Jayasuriya, S.C.S. Wickramasinghe, F. Mohideen and A.N. Fernando.
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Invests heavily in diversifying as core business gets saturated Printcare posts best attributable profit since inception

Printcare PLC, pioneers in manufacturing tea bag envelopes, has posted the highest ever profit attributable to equity holders since its founding in 1979 but had seen a drop in profits from its tea bag packaging business, its recently released annual report reveals.

"In the year under review, your company recorded a turnover of Rs.4,344 million and profit before tax of Rs.358 million, compared with corresponding figures of Rs.3,842 million and Rs.309 million in the previous year. This is an improvement of 13.1% and 15.9% respectively. I am pleased to report that our profit attributable to equity holders this year is the highest achieved by your company since its inception," Printcare Chairman Merrill J. Fernando said.

"Despite the strong performance by the group as a whole, I have to report drop in profits from our tea bag packaging business. Increasing competition and a desire by some of our major export customers to have supplies from distances of under 24 hours has had a negative impact on our sales and margins."

Fernando said that while local sales had been steady, they had been subject to pricing pressures. Also this business is becoming saturated with excess capacity.

Anticipating this trend, they had begun diversifying their product range into the self-adhesive labels segment which they believed is a growing market.

"Meanwhile, our Indian operation continues to make excellent progress. Your company now has a substantial market share of the Indian tea bag packaging business. Our new factory, currently under construction in Coimbatore, will come on stream in July 2014," he said.

Their carton division also continued to deliver encouraging results boosted by growth in export sales attracting top-end business houses both at home and abroad.

Fernando told shareholders that in the second quarter of the current financial year they will bring new technology that will provide an enormous boost to the packaging industry. Their customers then will be able to access complex and innovative packaging solutions that were previously unavailable here and financially outside their reach.

"It is our belief that our customers’ hand will be greatly strengthened by these new offerings, and as a result, their products will exceed the sophistication of competitor products on the supermarket shelves," Fernando said.

Printcare has also concluded a joint venture agreement with a US based company which is currently one of the world’s leading suppliers of branded packaging and trims to the apparel industry. Fernando expected this to provide a fresh impetus to their commitment to diversify their product portfolio into the apparel business.

"Commercial operations at this plant are expected to commence in August 2014," Fernando said.

Printcare’s security printing division has continued to show good progress in volume and in profits. The company has invested in new technology to keep abreast of global trends in security printing.

"Your company is poised for growth over the next few years. The Rs.800 million investment in plant and machinery that we have committed, will enhance our technology, increase our capacity, and be a driver of growth in the medium to long term. However, let me caution you that due to additional depreciation and interest charges that will be incurred, there is likely to be an impact on profitability in the short term. But this is a step we must necessarily take to maintain our position as market leader and to ensure sustainable value creation for our shareholders in the long term," Fernando said.

The directors have recommended a final dividend of 50 cents per share giving shareholders a return of 90 cents per share for the year under review.

Printcare has a stated capital of Rs.271.9 million, reserves of Rs.96 million for the company and Rs.336.5 million for the group and retained earnings of Rs.603.4 million for the company and Rs.1.6 billion for the group. Total group assets ran at Rs.3.65 billion and Rs.1.35 billion for the company. Group liabilities stood at Rs.1.85 billion and the company’s liabilities at Rs.369.4 million.

MJF Holdings with 26.87% of the company with MJF Exports owning a further 3.04% is the biggest shareholder of Printcare. Dr. T. Senthilverl with 23.82% and the Ravindran family owning nearly 25% are substantial shareholders.

Net assets per share had grown to Rs.28.75 from Rs.26.10 the previous year and the share closed the year Rs.29 against Rs.28 the previous year.

The directors of the company are: Messrs. Merrill J. Fernando(Chairman), Abbas Esufally, K.R. Ravindran, Ejaz Chatoor, Dayasiri Warnakulasooriya, Ms. Anushya Coomaraswamy, Simon Scarff (Resigned 22.04.2014) and Aslam Mehdi (w.e.f. 22.04.2014).
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Adam Investments gets Court order to stop PCH Holdings from selling assets

Adam Investments Ltd., yesterday got an interim order from the Commercial High Court restraining PCH Holdings Plc from selling any of its assets.

The move follows PCHH yesterday disclosing to the Colombo Stock Exchange that its Board has resolved to sell 100% stake of Beico Link Carbons Ltd (BCL) amounting to 5.7 million shares to M.M.D. Ventures Lanka Ltd for Rs.180 million to safeguard the business of BCL as a going concern business which has to settle dues to top urgent creditors.

To restrain this impending move in suspect of asset stripping, Adam Investments which this week triggered the SEC Takeovers and Mergers Code on PCHH by increasing the stake to 43%, prayed for interim order before Commercial High Court Judge L.T.B. Dehideniya.

The Judge considered submissions made by Adam Investments’ lawyers Harsha Amarasekera PC with Kanchana Peiris, the plaint, affidavit and the documents tendered that he was satisfied that unless interim orders were issued, the assets of PCHH will not be safe.

Therefore the Court intervened to take action to safeguard the assets of PCHH.
PCHH in its filing to the CSE said that its lawyers Nithi Murugesu and Associates had advised due to certain deficiencies in the application made by PC House Plc (founding shareholder of PCHH) to stop parate execution of the sale of several of the properties of PC House Plc and likelihood of not succeeding before the Supreme Court and thereupon banks foreclosing and this having effects on the entire Group (PC House, PC Pharma and PCHH), that it is important to dispose of assets within the PCHH Group to safeguard the business of Beico Link Carbon, as a going concern business which has to settle dues to top urgent creditors who had filed legal action and create sever hardships to the business of BCP and its employees.

PCHH said since DFCC Vardhana Bank has already sent Letters of Demand to BLC and the next cause of action is going to be the Parate Execution on the property mortgaged of BLC. “This action will have serious repercussions on the welfare of the company and its long standing staff. Since the Group has no financial stability to service the loans of BLC, the most appropriate option is to dispose BLC,” PCHH said in its filing to the CSE.
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