Sri Lanka Chevron Lubricants net up 20-pct

July 28, 2014 (LBO) - Sri Lanka's Chevron Lubricants said profits rose 20 percent to 675 million rupees in the June 2014 quarter from a year earlier helped by wider margins.

The firm reported earnings of 5.63 rupees per share for the quarter. For the six months to June the company reported earnings of 11.99 rupees on total profits of 1.43 billion rupees, which were up 8 percent.

Chief executive Kishu Gomes said profits were up on wider gross margins.

Revenues rose 12 percent to 2.7 billion rupees and cost of sales rose at a slower 3 percent to 1.55 billion rupees, allowing gross margins to grow 26 percent to 1.15 billion rupees.

World oil prices have been stable over the past year and the firm hiked prices in January. Up to the March quarter however, the firm saw revenues fall as Sri Lanka recovered slowly from a balance of payments crisis, triggered by credit funded energy subsidies.

Finance income fell 75 percent to 20 million rupees as cash reserves were used to relocate its plant.

DFCC Bank Rs. 5 b Debenture Issue to open on 7 Aug.

DFCC Bank has announced its listed Debenture Issue to raise Rs 3 billion with an option to issue up to Rs 5 billion, carrying a tenor of 3 years.

The Colombo Stock Exchange has approved the listing of the debt securities on the main board and the issue will open to the public on the 7th of August.

Rated AA- by Fitch Ratings (Lanka) Limited, this public issue is attractively structured giving investors the opportunity to select between three options for receiving interest: 8.50% payable annually; 8.33% payable semi annually and 8.24% payable quarterly.

Speaking on the Debenture Issue, Arjun Fernando, CEO, DFCC Bank said, ‘The decision to go public with this Issue is to provide retail and institutional investors with an alternative investment opportunity to earn a fixed rate of interest at their chosen frequency of payment.

The funds raised from this Issue will be utilized for the medium to long term lending activities of the Bank, whilst mitigating DFCC’s interest rate risk by reducing maturity mismatches. In addition it will supplement the diversification of the borrowing base and further strengthen the SME loan portfolio through the ability to offer fixed rates of interest.’

A total of 30,000,000 senior, unsecured, redeemable debentures with a face value of Rs 100 will be on offer with an option to issue a further 20,000,000 if the issue is over-subscribed. The minimum subscription will be Rs 10,000.

The issue is structured by the Long Term Funding and Capital Markets Division of the Bank and managed by Capital Alliance Partners Limited, while the Registrar to the issue is SSP Corporate Services (Private) Limited.
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Overseas Realty posts Rs. 1.5 b profit in first half 2014

Overseas Realty (Ceylon) PLC continued its earnings growth in the first six months of 2014 with a 58% increase in group profit after tax, (excluding fair value gains on Investment property)to reach Rs 1,028 mn.

The Group Revenue increased by 57%to Rs 2,603 mn fronted by healthy growth in Property Leasing, Trading and Service segments. Group profit after tax, including fair value gains, grew by 37% to Rs 1,529 mn.

Growth in group profit was driven by strong performance from leasing of office space at the World Trade Center,Colombo (WTC). Property leasing revenue of Rs 858 mn rose by 19% over the corresponding period, with leased occupancy at the WTC being maintained at98%. Growth in group profit was also supported by revenue and profitability of apartment sales at Havelock City.

The revenue recognised from Property Trading increased by 85 % to Rs 1,686 mn for the six months. The group earnings per share for the six months and net asset value per share as at June 30,2014 stood at Rs1.65 and Rs 28.84 respectively.

The group expects to maintain high occupancy levels throughout the year at the WTC and continue its robust sale of apartments.

The Havelock City Phase 2 Residential Development had achieved 97% completion as at end June 2014 and had sold 89% of the condominiums.

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SEC uses moral suasion to bring down rates

Ceylon FT: The country's capital market watchdog, the Securities and Exchange Commission (SEC) is following the Central Bank's lead and is now resorting to moral suasion to bring down interest rates relating to margin trading and credit extensions provided by stockbrokers.

With the State sector borrowing heavily from the domestic banking sector since 2012, loose monetary policy has seen a significant reduction in interest rates on loans taken by the government and affluent borrowers. Ordinary borrowers have seen their interest rates on loans reduce much slowly whereas deposit rates have fallen sharply, eroding incomes.

The Central Bank has been using moral suasion to convince lending institutions to reduce market lending rates. The SEC has issued letters to stockbrokers and margin providers asking them to reduce interest rates as well.

"It is evident that the stock market has demonstrated a greater stability depicting a positive momentum with the benchmark All Share Price Index recently surpassing the 6,700 mark together with a larger participation of investors in the market and increased level of turnover," the letters, signed by SEC Officer-in-Charge/ Deputy Director General, Dhammika Perera, said.

"It has been observed the average weighted prime lending rate (AWPR) of the Central Bank of Sri Lanka has declined considerably in the recent past and the lending rates on credit extension of certain stockbrokers and rates on margin trading of certain margin providers, have not been adjusted accordingly transferring the benefit of declined rates to clients."

"Hence, the SEC is of the view that it is essential for the lending rates on credit extension be aligned with the policy rates prescribed by the CBSL.

"While thanking those who have already adjusted their lending rates, we urge all stockbrokers and margin providers to act accordingly so that the lending rates of credit extension would be bought to a justifiable level, in line with the prevalent policy rates of the country. All stockbrokers and margin providers are expected to ensure responding forthwith to the above request made by the SEC in a positive manner," the SEC said.

AWPR of the Commercial Banking Sector is an indicative rate compiled by the Central Bank and applies to high net-worth and well-connected borrowers and not ordinary businesses or individuals. The AWPR reached 8.17% in May, down 458 basis points from a year ago.

In May 2014, the average weighted lending rate of the commercial banking sector, which covers AWPR and other borrowing rates, stood at 14.01%, down a mere 225 basis points from a year ago.
The average weighted deposit rate stood at 7.74%, down 300 basis points from a year ago and the fixed deposit rate stood at 9.45%, down 445n basis points from a year ago.

The one year fixed deposit rate at state-owned National Savings Bank was 8%, down 450 basis points from a year ago.
The 12-month benchmark Treasury bill yield was 7.02%, down 384 basis points from a year ago.
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