Sri Lanka's Softlogic Finance sells Rs 1.4 bn debentures

August 12, 2014 (LBO) - Sri Lanka's Softlogic Finance is to sell up to 1.4 billion rupees in five year fixed and floating rate debenture which will be utilized in order to give financial assistance to build businesses and livelihood of customers, the company said in a media release.

The debenture have been given an “AAA” rating by Ram Rating Lanka.

The company offers 14,000,000 redeemable, guaranteed debentures to the public at a face value of 100 rupees each. The company has already received approval in principal from the Colombo Stock Exchange.

Soft logic offers 5-year debentures paying a fixed interest rate of 10 percent, payable quarterly with an AER of 10.38 percent or based on a floating interest rate of three months net treasury bill + 1.50 p.a., paid quarterly.

The issue will be open for subscription on 21st of August 2014, and the Prospectus and Application forms will be available at all Softlogic Finance branches in addition to all stockbrokers registered with the Colombo Stock Exchange.

Softlogic Finance plans to use this funding line to develop relationships with customers who require financial assistance, to build their businesses and improve their livelihoods.

Softlogic Finance is a part of the Softlogic Group that has interests in Healthcare, Retail, Financial Services, ICT, Leisure, Automobiles and Restaurants.

The Debenture issue of Softlogic Finance has been made in collaboration with GuarantCo who have guaranteed the instrument that carries a Barclays Bank guarantee as part of GuarantCo’s structure.

GuarantCo is owned by the Private Infrastructure Development Group (PIDG) which is a multi-donor, member-managed organization includes the UK Department for International Development (“DFID”), the Swiss State Secretariat for Economic Affairs (“SECO”), the Netherlands Ministry of Foreign Affairs (“DGIS”), the Swedish International Development Cooperation Agency (“Sida”), the World Bank, the Austrian Development Agency (“ADA”), Irish Aid, Kreditanstalt für Wiederaufbau ("KfW"), and the Australian Agency for International Development (AusAid).

Sri Lanka bourse recoups early losses, ends firm

Aug 12 (Reuters) - Sri Lankan stocks recovered on Tuesday to end a tad firmer around a three-year closing high, led by large caps such as Ceylon Tobacco Company Plc, as lower interest rates and buying by foreign funds helped investors bet on risky assets.

Stockbrokers, however, expect a correction during the week, in an overbought market, after the index gained for a sixth straight session.

The main stock index, which fell as much as 0.57 percent during the early trade, closed 0.07 percent, or 4.98 points firmer at 6,947.90, its highest close since Sept. 12, 2011. It has risen 17.51 percent so far this year.

"The market rebounded during the latter part of the day with gains in big cap illiquid shares," said a stockbroker requesting not to be named. "A correction is expected. But the market will break the 7,000 level."

Analysts said hopes of a policy rate cut on Friday and further fall in interest rates helped boost turnover, and that better corporate earnings and continued foreign buying too have helped maintain sentiment.

Turnover was 1.2 billion rupees ($9.22 million), more than this year's daily average of 1.11 billion rupees.

Foreign investors bought a net 164.5 million rupees worth of shares on Tuesday, extending the year-to-date net foreign inflow to 12.29 billion rupees.

Ceylon Tobacco Company Plc which led the overall index gain, added 4.15 percent to 1,197.70 rupees, while Ceylon Cold Stores Plc gained 3.92 percent to 220.20 rupees.

Profit taking dragged the market heavyweight John Keells Holdings Plc down 0.63 percent to 238 rupees, analysts said. 

(1 US dollar = 130.1800 Sri Lankan rupee) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Biju Dwarakanath)

Sri Lanka shares close up 0.1-pct

Aug 12, 2014 (LBO) - Sri Lanka's shares closed in a positive territory on Tuesday with index heavy tobacco stocks gaining amid net foreign buying, brokers said.

The Colombo benchmark All Share Price Index closed 4.98 points higher at 6,947.90, up 0.07percent. The S&P SL20 closed 1.02 points lower at 3,817.52, down 0.03 percent.

Turnover was 1.20 billion rupees, up from 1.15 billion rupees a day earlier with 66 stocks closed positive against 125 negative.

Nations Trust Bank closed 70 cents higher at 82.10 rupees with two off-market transactions of 91.84 million rupees changing hands at 82.00 rupees per share contributing 8 percent of the daily turnover.

John Keells Holdings closed 1.50 rupees lower at 238.00 rupees with two off-market transactions of 91.30 million rupees changing hands at 239.50 rupees per share also contributing 8 percent to the turnover.

JKH’s W0022 warrants closed 30 cents lower at 70.50 rupees and its W0023 warrants closed 1.70 rupees higher at 77.70 rupees.

The aggregate value of all off-the-floor deals represented 24 percent of the turnover.

Malwatte Valley Plantations closed 20 cents higher at 5.00 rupees and Nation Lanka Finance closed 20 cents lower at 7.10 rupees, attracting most number of trades during the day.

Foreign investors bought 292.23 million rupees worth shares while selling 127.70 million rupees worth shares.

Ceylon Tobacco Company closed 47.70 rupees higher at 1,197.70 rupees, contributing most to the index gain.

Vallibel One has disposed its 50 percent stake in Orit Apparels Lanka (OAL) on Monday recording a net capital gain of 137.97 million rupees, the company said in a stock exchange filing.

NTB posts profit of Rs 1,157 m in first 6 Months

The Nations Trust Bank closed the first six months ending June 30 2014 with a post-tax profit of Rs.1,157 mn recording a growth of 18% over the corresponding period in 2013.

Core revenue recorded a faster rate of growth over operating expenses, thereby significantly improving operating margins. However, higher impairment charges and introduction of new tax levies slowed bottom line growth over the corresponding period. Performance for the quarter was up by 27% in terms of post tax profit. The improved performance in the current quarter is mainly attributed to lower impairment charges compared to that reported for the first quarter 2014. The Bank also witnessed slow growth in loans and advances particularly in the corporate portfolio. The lackluster demand for credit amidst a relatively low interest rate regime prevailed across the industry during the first six months of the year and the Banking sector recorded a contraction in loans and advances partly attributable to the significant decline in pawning advances.

Impairment on the pawning portfolio in the 1H of 2013 has been comparatively lower since the sharp decline in the market price of gold began only in April 2013. Since then, the Bank's exposure to pawning has been managed below 2.0% of the overall loan book whilst the loan to value ratio has been appropriately adjusted to manage the volatility in the market value of gold. As such, the trend in impairment on the pawning portfolio is expected to improve in the 2H of 2014. Bank has also undertaken appropriate measures to strengthen its credit card recovery process to arrest further impairment thereby stabilizing the portfolio in the 2H of 2014.

The capital position was sound at Rs.14.8 bn with Capital Adequacy Ratios, despite a drop over December 2013 were maintained at comfortable levels. The drop is mainly attributable to the dividend pay-out impacting retained earnings.

Director and CEO Renuka Fernando said the first half results demonstrate a resilient performance withstanding multiple industry challenges. "We anticipate a possible turn around in demand for credit in the second half of the year with the positive outlook on key macro-economic indicators. A significant amount of resources and effort across the organisation have been deployed for the core banking upgrade project and much progress have been made thus far. The completion of it will give us the technological capabilities to steer Nations Trust Bank through its next phase of growth in a digitalized environment.

www.dailynews.

Sri Lankan bourse rises for 5th session on hope for lower rates

Aug 11 (Reuters) - Sri Lankan stocks gained for the fifth straight session on Monday and hovered near a three-year closing high as hopes for a policy rate cut this week and a further fall in interest rates boosted buying, stockbrokers said.

Better earnings and continued foreign buying also have boosted the sentiment.

The main stock index rose 0.36 percent, or 24.69 points to 6,942.92, its highest close since Sept. 12, 2011. It has risen 17.4 percent so far this year.

"The confidence of local investors is gradually increasing as corporate earnings released so far are not too bad," said a stockbroker requesting not to be identified.

Stockbrokers said investors had "no option" but to buy into stocks due to low interest rates as the market was expecting another rate cut on Friday.

Central bank chief Ajith Nivard Cabraal on Thursday said there was a greater chance of a cut, rather than an increase, in key policy rates, a day after yields on one-year government debt fell below the rate of 6.50 percent at which the central bank mops up liquidity from commercial banks.

Turnover was 1.15 billion rupees ($8.84 million), compared with a daily average this year of about 1.11 billion rupees.

Foreign investors bought a net 90.9 million rupees worth of shares on Monday, extending the year-to-date net foreign inflow to 12.12 billion rupees.

The gain on Monday was led by Ceylon Theatres Plc which rose 7.68 percent to 159.90 rupees. Dialog Axiata Plc , gained 1.85 percent to 11 rupees.

Conglomerate John Keells Holdings Plc edged up 0.13 percent to 239.50 rupees

The index has been in the overbought region since July 3, as local investors moved funds from fixed income to riskier assets such as shares because of low interest rates and foreign buying. 

(1 US dollar = 130.1500 Sri Lankan rupee) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Robert Birsel)

Ashok gets Rs. 9 m per perch in mega deal

* Asiri Central signs MoU to sell Colombo 7 land and premises for Rs. 2.6 b

Asiri Central Hospitals Plc yesterday announced it has entered into an agreement to sell and transfer the 293 perch land and premises at Horton Place, Colombo 7 for Rs. 2.6 billion.
As per the deal the price works out to Rs. 9 million per perch.

The transaction is subject to Asiri Central obtaining shareholder approval at a General Meeting since this amount to a major transaction as per Section 185 of the Companies Act of 2007.

Asiri said in terms of the agreement, the sale will be concluded only upon the buyer completing a due diligence within 90 days of the execution of the agreement.

Real estate sources speculated the buyer was an individual and the deal being managed by a firm of chartered accountants as well as a law firm.
www.ft.lk

HDFC Bank 1H pre-tax profit soars by 240%

Housing Development Finance Corporation Bank of Sri Lanka (HDFC Bank) has recorded Rs. 310.6 m profit before tax in 1H 2014 as against 91.4 m in the corresponding period in 2013, an increase of 240%.

The profit after tax had been Rs. 185.1 m as against Rs. 50.5 m in 1H, an increase of 267%. The bank’s interest income has grown from Rs. 1,674.5 m to Rs. 2,118.6 m, an increase of 27%. The net interest income has grown up from Rs. 521.7 m to Rs. 856.4 m, an increase of 64%. The bank’s fee-based income has risen to Rs. 130.9 m in 1H as against 37.5 m in the corresponding period 2013, the bank’s CEO/GM Nimal Mamaduwa stated in a media release.

The bank’s loan portfolio stood at Rs. 21.5 b in 1H as against Rs. 19.7 b as at 31 December 2013 an increase of 9%. The deposit portfolio has risen to Rs. 22.3 b from Rs. 18.9 b, an increase of 18% during 1H 2014.

The Return on Assets (ROA) stood at Rs. 2.61 m in 1H 2014 and the Return on Equity (ROE) as at 1H 2014 stood at Rs. 13.49 m as at 30 June. The bank was able to improve the cost income ratio to 78.9% as at 30 June as against 92.6% in the corresponding period in 2013.

The HDFC Bank has met the capital adequacy requirement stipulated by the CBSL in 1H Tier 1 and Tier 2 capital and as at 30 June stood at 15.43% and 16% respectively as against 5% and 10% regulatory requirement. The bank also maintains a healthy statutory liquid asset ratio of 30.84% as against the minimum requirement of 20%.

The bank had been able to improve the performance in 1H as against the previous year six-month period mainly due to the change of the business model by introducing a number of new short-term products. Despite the sluggish loan growth in the industry, HDFC Bank was able to record 9% growth in advances in 1H due to its portfolio diversification.

The bank firmly believes that financing micro and SME enterprises and improving access to finance in the provinces remain important to minimise regional disparities and strengthen the economies of the provinces as expected by the Government.

The bank also recently signed a Memorandum of Understanding with the Central Bank of Sri Lanka for a Commercial Scale Dairy Development Loan Scheme (CSDDLS) by which the bank expects to grant credit facilities up to a maximum of Rs. 25 m per project for improving productivity of dairy projects.

During 1H 2014 the bank was able to commence the process of acquiring the technology applications to meet the present challenges. The bank wishes to complete a new core banking solution within the next few months ahead.

The bank also initiated a strategic planning process in the latter part of 2013 to be executed in 2014. Therefore the bank is now armed with a comprehensive and detailed strategy and action plan for the next three years to expedite growth.

Since the bank has now ventured into various product diversifications, whilst maintaining housing as core business, expansion of branches in outstation regions has also become a priority in the strategic plan.
www.ft.lk

Expolanka posts Rs. 194 m after tax profit in1Q

Expolanka Holdings Plc in a statement said it has recorded a revenue of Rs. 12, 388 million and a net profit of Rs. 194 million for the first quarter of the financial year 2014/15.

The recorded net profit attributable to equity holders of the Group was Rs. 173 million in comparison to the Rs. 323 million recorded during the corresponding period last year.

Expolanka Holdings PLC Group CEO and Executive Director Hanif Yusoof commented: “As a Group we are at the threshold of a new and an exciting phase in our journey. During this quarter we finalised a strategic deal with SG Holdings Japan which acquired a controlling stake in the Group amounting to 51.43%.”

“SG Holdings, a leading logistics company in Japan, has a robust presence in the Asian region as well as considerable expertise in express services and transportation. In this context, we plan to achieve sustainable growth and develop our international business presence in the long term with special focus on our core portfolio of businesses, with a 
particular emphasis on Freight and Logistics,” Yusoof said.

Earnings from the Freight and Logistics sector for the first quarter recorded revenue of Rs. 8, 598 million. The sector growth remained flat due to less than expected yield in the Far East, which affected the profit margin. Perfomances in Bangladesh and India dampended results due to volatile market conditions that are not conducive to growth. However, Indonesia and China performed well in this sector. The Group expects the Indian business to settle following the post-election activities, resulting in a positive shift.

The Travel Leisure sector recorded revenue of Rs. 679 million with a marginal increase of 2% in comparison to the corresponding period of last year. Classic Travel’s outbound travel service market witnessed a growth while Akquasun business margins improved post the restructuring efforts.

In the International Trading and Manufacturing sector, Expolanka Ltd. posted a healthy margin following the restructure of its operations Expolanka Teas continues to face challenges due to the unstable market conditions in the Middle East.

Yusoof added: “In the current business year, we will concentrate on achieving higher profitability and continued growth in all business units. We are optimistic about our growth opportunities within this financial year.”
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SEC punishes corporate Adam for discreetly seeking forbidden fruit!

* Regulator directs CSE to cancel last Thursday’s sale of Adam Investments’ 31% stake in PC Pharma in the market for around Rs. 100 million

* Sale was whilst Adam’s mandatory offer on PCP was in force thereby violating rules of SEC Takeovers and Mergers Code

* Adam sale (above mandatory offer price) was discreet without disclosure hence viewed as price sensitive and price manipulative

* Analysts welcome swift action by SEC and CSE to ensure investor confidence

Capital markets regulator the SEC yesterday acted swiftly to punish new kid on the block Adam Investments Ltd. (AINV) for violating rules and discreetly selling a 31% stake in PC Pharma Plc (PCP) for an unethical gain.

The Securities and Exchange Commission directed the Colombo Stock Exchange (CSE) to cancel the sale of the 31% stake or 31.46 million shares in PCP by AINV at prices ranging from Rs. 2.10 per share to Rs. 2.90 per share. The sale by AINV was whilst a mandatory offer at Rs. 1.70 per share by the company for minority shareholders of PCP was in force. It was to expire on 21 August 2014.

The SEC’s swift action was because AINV had violated the SEC Takeovers and Mergers Code, of which Section 28 (3) specifically states that an offeror cannot sell shares of an entity on which it is making a mandatory offer without prior approval from the CSE.

The sale which some viewed as akin to ‘dumping’ took place on Thursday, exactly two weeks before the expiry of the mandatory offer. On that day 46.825 million PCP shares changed hands via 653 trades for Rs. 107.3 million. The brisk activity prompted the PCP share price hit an intra-day high of Rs. 3 (whilst mandatory offer price was Rs. 1.70) before closing at Rs. 2.30, down by 50 cents from Wednesday’s close.

The market at large didn’t know who the seller was. SEC was of the view that had the market known the seller was in fact the party which made the mandatory offer, then there wouldn’t have been any buyers. Analysts said this information (the offeror selling) could be interpreted as “price sensitive” and if so there wasn’t disclosure and such discreet selling could also tantamount to price manipulation.

In July and June AINV bought the stake at prices ranging from Rs. 1.20 and Rs. 1.90 per share from the former main shareholder British American Technologies and other investors. The sale by AINV had been at profit, though thanks to SEC action, the unlawful gain wouldn’t materialise.

Analysts welcomed the swift action by the SEC since a failure would have led to a serious erosion of investor confidence. The CSE on its part also suspended the trading of PCP and AINV on Friday pending clarifications from the two firms.

“We found the transaction improper and a violation of the rules, hence we acted fast after a proper investigation. This was to ensure investor confidence,” SEC Chairman Dr. Nalaka Godahewa told the Daily FT. “The company may have had reasons to sell. That is a different matter. But how they did violated the rules,” the SEC Chief added.

AINV had apologised to the SEC over its action and had been told to make its case over the difficulty in concluding the mandatory offer or persisting with its original investment separately to the SEC.

The SEC’s swiftness was critical because any cancellation if there were to be had to be done by or before T+2, which fell yesterday.

Any form of reversal of a transaction in markets is usually frowned upon by foreign investors. However, SEC Officer-in-Charge and Deputy Director General Dhammika Perera responded saying, “Protection of investor interest is paramount. What took place was against the law apart from being unethical and we had to take necessary action.”

PCP as well as its original parent PCHH have been under heavy criticism for mismanagement apart from being embroiled in litigation. CSE on Friday also suspended trading of PCHH over Chairman S.H.M. Rishan’s disclosure about the sale of a subsidiary and claim by AINV which is a major shareholder of PCHH that the subsidiary was still a part of the assets.

In a filing to the CSE on 30 July, AINV said the company filed a petition before the Commercial High Court on 25 July seeking certain interim orders which inter alia had the effect of protecting the assets of PCP from misappropriation and preventing the management of company funds.

PCP and current directors of the company who are respondents of the petition were represented in Court and objected to the grant of such interim relief.

However, pending the Court inquiring into the matter, the PCP Chairman has given an undertaking to Court to the effect that the assets will be safeguarded until the next court date. In view of this undertaking AINV lawyers did not seek further interim relief at that juncture and Court accordingly granted a future date to the Respondents to file their objection in writing.

In the first nine months of FY14, PC Pharma made a Rs. 102 million loss and had retained loss of Rs. 71.5 million. It is likely that when full year results are out, PCP will be having a negative net worth.
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