Rights Issue by Palm Gardens Hotels PLC

Palm Gardens Hotels PLC is to offer a Rights Issue of 32,450,250 ordinary shares at Rs. 55.00 each in the proportion of 03 ordinary shares for every existing ordinary share as at the relevant date.

The current stated capital of Palm Gardens Hotels PLC is Rs. 651,327,020 represented by 10,816,750 ordinary shares.

The proceeds of the issue are to be utilized for the construction of a star class hotel and repay existing debts.
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Trading of Ascot Holdings shares resume: New hotel at Yala

Though trading of Ascot Holdings PLC shares was suspended this morning due to a discrepancy in the notice issued to the Colombo Stock Exchange (CSE), trading has resumed again by now.

A CSE spokesman told adaderanabiz.lk that trading resumed since the discrepancy had been rectified.

Meanwhile, Ascot Holdings PLC states that it is to issue shares with attached warrants by way of a rights issue to construct a hotel in the Yala region.

Ascot Holdings is to issue 3.9 million shares in the proportion of one new ordinary share at Rs. 12.50 each for every two existing ordinary shares.

Apart from this, 998,188 share warrants are to be issued at Rs. 25.00 each.

Upali Mendis was appointed recently as chairman of Ascot Holdings PLC and in January 2013 Ascot Holdings bought 80% shares of the concrete block manufacturing entity Amtrad Limited for Rs. 6.2 million.
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Sri Lanka’s First Capital profits up to Rs 218 mn in June

Aug 13, 2014 (LBO)- Sri Lanka's First Capital Holdings said profits in the first quarter ending June 2014 soared by 230 percent to 218 million rupees , benefiting from lower interest rates and higher trading volumes.

Sri Lanka's First Capital Holdings said profits in the first quarter ending June 2014 soared by 230 percent to 218 million rupees , benefiting from lower interest rates and higher trading volumes.

The group has recorded a turnover of 577 million rupees up 17 percent over the corresponding period of the last year, the company said in a Colombo stock exchange filling.

Net trading income for the three months increased by 71 percent to 254 million rupees.

“The Group’s leading subsidiary First Capital Treasuries Limited had continued to be the main contributor to revenue and profits in the period under review,” Manjula Mathews, Managing Director of First Capital Holdings was quoted in the media release.

“The declining interest rates presented opportunities with increased activity across the yield curve contributing to higher trading volumes.”

First Capital Treasuries Limited launched a medium to long term repurchase agreement called ‘Platinum Bond’ backed by Government Securities, raising a total fund in excess of 700 million rupees.

First Capital Treasuries is one of four non-bank primary dealers in the country.

Sri Lanka stocks edge up on high turnover

(Reuters) - Sri Lankan stocks rose on Wednesday to end at a near three-year closing high as falling interest rates left investors with few options but to invest in risky assets despite foreign outflows.

Stockbrokers, however, expect a correction during the week, as the market is overbought with the index gaining for seven straight sessions.

The main stock index, closed 0.09 percent, or 6.24 points firmer at 6,954.14, its highest close since Sept. 12, 2011. It has risen 17.6 percent so far this year.

Turnover was 1.82 billion rupees ($14 million), much more than this year's daily average of 1.12 billion rupees.

"The market is struggling simply because it is near its psychological barrier of 7,000," said Dimantha Mathew, manager, research at First Capital Equities (Pvt) Ltd.

"We are expecting bit of a correction on some high networth and blue-chip shares which are overvalued but the rest of the market is positive."

Analysts said hopes of a policy rate cut on Friday and a further fall in interest rates helped boost turnover. Yields in government treasury bills fell 9-14 basis points at a weekly auction on Wednesday.

Better corporate earnings and continued foreign buying too have helped maintain positive sentiment.

Foreign investors were net sellers for the first time in nine sessions. They sold a net 70 million rupees worth of shares on Wednesday. But foreigners have been net buyers of 12.22 billion rupees worth of shares so far this year.

Nestle Lanka Plc, which led the overall index's gain, rose 4.63 percent, while Sri Lanka Telecom Plc gained 1.09 percent.

Commercial Bank of Ceylon Plc, the country's biggest listed lender, rose 0.56 percent to 143.70 rupees. 

(1 US dollar = 130.2000 Sri Lankan rupee) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Prateek Chatterjee)

Sri Lanka stocks close up 0.1-pct

Aug 13, 2014 (LBO) - Sri Lanka's stocks closed in the green on Wednesday with beverage stocks gaining while tobacco stocks losing ground, brokers said.

The Colombo benchmark All Share Price Index closed 6.24 points higher at 6,954.14, up 0.09percent. The S&P SL20 closed 2.74 points higher at 3,820.26, up 0.07 percent.

Turnover was 1.82 billion rupees, up from 1.20 billion rupees a day earlier with 114 stocks closed positive against 84 negative.

Access Engineering closed 20 cents lower at 27.30 rupees with two off-market transactions of 412.50 million rupees changing hands at 25.50 rupees per share contributing 23 percent of the daily turnover.

The aggregate value of all off-the-floor deals represented 32 percent of the turnover.

Ascot Holdings closed 16.50 rupees higher at 106.40 rupees attracting most number of trades during the day following a temporary halt in the trading of its shares.

Foreign investors bought 178.09 million rupees worth shares while selling 84.40 million rupees worth shares.

Nestle Lanka closed 97.40 rupees higher at 2,199.00 rupees, contributing most to the index gain.

Ceylon Tobacco Company closed 43.90 rupees lower at 1,153.80 rupees.

Sri Lanka Treasuries edge lower

Aug 13, 2014 (LBO) – Sri Lanka's Treasuries yields dropped across maturities at Wednesday's auction with the 12-month yield falling 14 basis points to 6.31 percent, data from the state debt office showed.

The 3-month yield fell 9 basis points to 6.19 percent and the 6-month yield also dropped 9 basis points to 6.30 percent.

The debt office said 1.00 billion rupees in 3-month bills, 2.00 billion in 6-month bills and 10.59 billion in one year bills totaling 13.59 billion rupees were sold after offering 12.00 billion for rollover.


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Vallibel One exits apparel biz with Rs. 138 m capital gain

Business leader Dhammika Perera’s Vallibel One Plc has exited from the apparel business with a capital gain of Rs. 138 million.

The company said it divested the total shareholding in Orit Apparels Lanka Ltd., amounting to a 50% stake. The shares were divested at Rs. 40.27 or $ 0.3098 per share. The price is equal to Orit’s net asset per share. The sale had realised a net capital gain of Rs. 138 million.

The buyer was Orit Chairman Channa Palansuriya who held the balance 50%.

The premier denim specialist manufacturer in Sri Lanka, Orit Apparels, produces over 8.5 million pieces annually, exporting to some of the most prestigious brands around the world. Orit is one of the three key product development centers for Levi’s.

Eight plants manned by a team of over 6,000 produce specialised apparel for Levi’s USA, Levi’s Europe, Gloria Vanderbilt, Kohls, Sears, Macy’s, Next, Ralph Lauren, Jessica Simpson, Kenneth Cole, Bon Ton and Rachel Roy.

Orit Apparels in FY14 posted a turnover of Rs. 9.78 billion whilst it suffered a loss of Rs. 
134 million.

Vallibel One in FY14 posted an after tax profit of Rs. 3.06 billion, down by 1.2% over the previous year. Net profit attributable to equity holders was Rs. 1.57 billion, down by 27% from FY13. Group turnover grew by 46% to Rs. 48.33 billion.

Vallibel One holds 64.3% of LB Finance Plc, 51% in Royal Ceramics Plc., 15% in Sampath Bank Plc., 20% in Waskaduwa Beach Resorts Plc, 62% in Delmege Ltd., and 100% in Greener Water Ltd.
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NDB defends borrowing foreign funds; says strong pipeline of projects justifies move

By Shabiya Ali Ahlam

NDB this week defended its move in having reached out for foreign borrowings, stating competitive sourcing of new funds was in view of a deep project pipeline and not to simply inject money into the Government.

Chief Executive Officer Rajendra Theagarajah adding clarity to NDB’s foreign borrowing exercises at this week’s investor forum said: “The funds were not mobilised just to pump money into Government bonds. We have made a decision to disburse it in the pipeline and I can confidently say that we have a deep project pipeline.”

Capitalising on the strong relationships maintained with international funding agencies, NDB in March and June this year raised $ 125 million and $ 75 million respectively via a syndication facilitated by the International Finance Corporation.

Theagarajah said $ 200 million was mobilised from medium to long term money, which the bank will be lending from 18 months to eight years.

This amount figured in the rising foreign borrowing by the financial sector.

With the enhanced presence of local banks in the international securities market, inflows to the Licensed Commercial Banks (LCBs) and Licensed Specialised Banks (LSBs) increased, resulting in a net increase in liabilities by $ 1.78 billion in 2013. Inflows in the first five months of 2014 were $ 94 million. Criticism from the Opposition and other sceptics was that banks with large State ownership were using their balance sheet strength to raise foreign funds on behalf of Government use. Given implied or explicit Government guarantee in some cases, the debate has been that higher foreign borrowing at commercial rates will increase the burden on the public.

Acknowledging that some of the funds were invested in Government bonds as ordinary course of the bank’s business, Theagarajah justified NDB’s borrowing by stating: “The ultimate purpose of mobilising those foreign borrowings on Government bonds was because we saw a clear window there rather than just going down the traditional deposits. It secures some serious medium to long term funding which could anchor the project and business portfolio.”

He also emphasised that the bank borrows since it has a natural business thirst in the segment.

“We have borrowed at rates which have made meaningful sense to us. We also tried to raise money through the international bond market, but we chose not to take that route since it did not make business sense to us. We were able to mobilise the same quantum of money at a much lower rate using likeminded confidence, with the willingness to achieve the same objective. It is the willingness to identify the right funding source,” clarified Theagarajah.

NDB’s asset base at Group level increased by 16% in the first half from end December 2013 and stood at Rs. 239 billion, thereby maintaining its growth momentum ahead of the industry growth levels.

The bank’s balance sheet growth was fuelled by a marked increase in loans and receivables and investments. Loans and receivables recorded a 26% increase (of Rs. 33 billion) over the last 12 months, primarily due to increase in infrastructure and working capital financing.

Loans and receivables also recorded a 12% increase over December 2013, which is well above the industry loan growth rate. Asset quality was sustained with a non-performing loans ratio of 2.69%, which is also well below the industry average.

NDB said the funds raised via this syndication facility would be infused into the SME sector of the country and other eligible sectors that contribute towards national development. 

The $ 200 million syndication saw several leading international banks and more than five international development financial institutions lending to the bank (some of them lending to Sri Lanka for the first time), which reflects the growing confidence the international financial fraternity has placed in the bank as well as Sri Lanka at large. The second phase of the syndication facility will also help further strengthen the Group’s balance sheet.
Theagarajah said part of the $ 200 million is being swapped into rupees but the majority of it was lent to local companies with dollar income.

At the investor forum in response to a question on whether the $ 200 million is being lent in dollars or being swapped into rupees, Theagarajah said part of it was swapped into rupees but the bank had also lent some to offshore business and most lent locally for companies with a dollar income.

In response to a query on whether the swaps done were at market rates, the NDB CEO said 50% of the overall swaps come at zero cost and the rest of it was the bank’s choice. 

“50% of the overall cover comes at zero cost; 25% has to be at market rate and the 

remaining 25% is open,” he said, adding that on the 25% market swap which NDB has obtained from the Central Bank, the rupee appreciated so the bank made money on that. 

He also said some funds were invested in Government bonds.

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HNB Group surpasses Rs 5 Bn in PBT for first six months; PAT grows by 8%

HNB recorded a healthy performance during the first half of 2014, with PAT of the Bank as well as the Group growing by 8% to Rs. 3.38Bn and Rs. 3.69Bn respectively. This growth was achieved despite lower margins experienced during H1 of 2014 as a result of the drop in lending rates and over Rs 1.5 Bn of interest written off on account of pawning. The margins for the second half are expected to improve with re-pricing of deposits in line with the lending rates and the tapering off of the adverse impact from pawning.

Commenting on the performance in H1 2014, Dr Ranee Jayamaha, Chairperson of HNB Plc stated that "the solid performance recorded in the first 6 months of 2014 is attributable to the strategic focus, adoption of prudent policies, untiring efforts of staff at all levels, as well as the confidence placed on us by our valued customers."

Despite industry credit growth continuing to remain sluggish with a yoy growth of 4.4%, the Bank was successful in recording a yoy credit growth of 8.3% as at end of Q2 2014 through a focused sales drive. This growth was achieved notwithstanding a drop of approximately 40% in the pawning portfolio during the period.

The strong brand image as well as efforts of an effective sales force enabled the Bank to improve the total deposit base by over Rs. 22Bn during the first half of 2014, with the growth in low cost deposit base accounting for over 68% of the total growth. As a result, the local currency CASA ratio improved to 41.5% as at end of Q2 2014.

Though net interest income witnessed a drop inline with the industry as a result of lower margins, the Bank's continuing focus on enhancing fee based income enabled to record a robust growth of 20% in fee income with increase in card volumes, guarantee commission contributing towards the growth.

The increase in net gain from financial investments to Rs. 1,074Mn in the period under review was mainly due to the gains from disposal of shares held in Visa Inc and MasterCard Worldwide.

The impairment provision for the period recorded a significant improvement over the corresponding period of the previous year, propelled by the aggressive recovery efforts initiated by the Bank. The reduction in impairment provision by approximately Rs. 1.7Bn was largely due to provision reversals effected in H1 2014 on account of pawning. The focus on recoveries also resulted in the NPA ratio as at end of June 2014 improving to 4.06% in comparison to 4.53% recorded in March 2014 despite industry NPA levels remaining high at 6.2%.

The Bank was successful in curtailing the increase in other expenses to 4% during the period. The increase recorded in personnel expenses was due to same being exceptionally low in 2013 as a result of the reversal of provision amounting to Rs. 1.5Bn effected in H1 of 2013 on account of Employee Share Benefit Trust (ESBT), consequent to the decision to windup same during this period.

Accordingly, the Bank recorded a PBT of Rs 4.94Bn for the period compared to Rs 4.69Bn recorded in the corresponding period of the previous year while, the HNB group posted a PBT of Rs 5.27Bn as against the PBT of Rs 5Bn recorded in H1 2013.

Jonathan Alles, Managing Director/CEO of HNB Plc stated that "HNB has once again showcased its resilience backed by a very sustainable business model and strong strategic intent. Considering the expected changes in the macro conditions, the market potential and the opportunity for HNB to propel growth, we have already commenced the process of formulating our strategic plan for the next three years. Our concerted efforts on driving a strong sales culture, continuously improving internal processes, achieving excellence in service delivery and leveraging on significant investments made in technology combined with the more positive outlook for the second half will undoubtedly enable HNB to reach greater heights in the future".

He further added that "HNB's recent announcement to acquire a 51% stake in Prime Grameen Micro Finance Ltd will complement the Bank's investments in insurance and capital markets and further strengthen the position of HNB Group in the financial services sector".
(HNB)

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