Dunamis quick off the blocks with 1Q net profit of Rs. 135.6 million

Dunamis Capital PLC has made a dynamic start to FY 2014-15, growing its first quarter bottom line more than five-fold over that of the first quarter of the previous year.

The holding company of First Capital, Kelsey Homes and Premier Synthetic Leather has reported profit after tax of Rs. 135.6 million for the three months ending 30th June 2014, from Rs. 24.7 million in the first quarter of 2013-14.

Revenue grew by 29.7 per cent to Rs. 651.6 million and cost of sales by 9.6 per cent to Rs. 408.8 million, the Group said in a filing with the Colombo Stock Exchange.

Dunamis converted a loss of Rs. 6 million on fair value of investments held for trading in the first quarter of the previous year to a gain of Rs. 26.7 million this year, and also reported a gain of Rs. 25.3 million on fair value of derivative financial instruments in the three months reviewed.

Profit before tax improved by 156 per cent to Rs. 145.5 million. Net profit attributable to equity holders of the parent company grew from Rs. 18.3 million a year earlier to Rs. 103.8 million for the quarter under review.

Commenting on the Group’s performance, Dunamis Capital’s Managing Director Manjula Mathews said profits of its financial services unit, First Capital Holdings PLC were Rs. 218 million compared to Rs. 66 million in the previous year, due to the opportunities afforded by the continued decline in interest rates. The First Capital group had recorded a profit after tax of Rs. 400 million for July 2014, taking its four month profit toRs. 620 million, she said.

Kelsey Developments PLC, the Property Development unit of the group also improved performance during the quarter with consolidated revenue of Rs. 88.4 million as against Rs. 36.6 million in the corresponding period of the previous year. During the quarter under review, Kelsey launched two large scale projects, ‘Templers Square’ and ‘Riverfront’, the former now half sold and the latter sold out within a week of its launch. The 100-house project at Templers Road, Mount Lavinia launched in March 2014 has had a favourable response and it is expected that a profit of Rs. 250 million will be realised by Kelsey over the next two financial years, Ms. Mathews said.

Premier Synthetic Leather Manufacturers (Pvt) Ltd commenced commercial operations during June 2014 and reported an operating loss of Rs. 22.4 million for the period under review. "We expect the company to breakeven before the end of the financial year and be a strong contributor to group profits during the coming years," she said.

In July 2014 Dunamis PLC raised Rs. 1 Billion in long term debt through a listed issue of 5 year Debentures.

Ms. Mathews said the group is well-positioned to generate consistent profits, and expects its financial services arm to be the main contributor to profits during the financial year. "We expect our property development arm to make a significant contribution to the Group profits during the next financial year," she added.

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Com Bank’s 6-month pre-tax profit surpasses Rs. 6 billion mark

The Commercial Bank of Ceylon PLC has reported a noteworthy performance, posting profit before tax of Rs 6.474 billion and net profit after tax of Rs 4.479 billion for the first half of 2014, despite shrinking margins.

Sri Lanka’s largest private bank reported a 9.39% improvement in its total operating income of Rs 17.698 billion for the six months ended June 30, 2014, through higher business volumes coupled with a notable increase in recoveries, despite there being a drop in foreign exchange income which was largely attributable to the appreciation of the Sri Lankan Rupee against the US Dollar. Gross income for the first six months of 2014 grew by 1.9% to reach Rs. 35.374 billion, the Bank said in a filing with the Colombo Stock Exchange.

Interest expenses declined by 5.13% to Rs 17.301 billion with an improvement in the Bank’s CASA ratio, the Bank said. Consequently, net interest income for the period at Rs 13.133 billion reflected an improvement of 10% over the first half of 2013.

Total expenses for the period amounted to Rs 7.626 billion, and this reflected an increase of 9.09% compared to the corresponding period last year.

The Bank’s profit before financial VAT and NBT was up 1.92% to Rs 7.587 billion. The imposition of Nation Building Tax (NBT) from 1st January 2014 resulted in the Bank’s NBT for the six months amounting to Rs 159 million. Financial VAT and NBT together totalled Rs 1.113 billion for the first half 2014, an increase of 18.88%. These factors contributed to the marginal drop in the profit before tax of Rs 6.474 billion for the period under review. However, the profit after tax of Rs 4.479 billion reflected an increase of Rs 7.5 million.

Commenting on these results, Commercial Bank Chairman Dharma Dheerasinghe said the higher business volumes recorded, strong deposit and asset growth and improvement of key ratios during the six month reviewed are indicative of the ability of the Bank to weather the changing conditions in the banking industry.

Commercial Bank’s Managing Director/CEO Mr Jegan Durairatnam said the Bank had adopted a more robust mechanism in provisioning for individual impairment aimed at improving the provision cover. Although this resulted in an increase in the total impairment charges by Rs. 741.559 million, the operating profit of the Bank reflected an improvement over the first half of 2013.
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US company to partner Krrish Square project

Urban Development Authority Chairman Nimal Perera has said that the Krrish Group chairman Amit Katyal has assured government authorities that the work on the ‘Krrish Square’ will be commenced soon.

Perera has said that according to Katyal, Ritz-Carlton Hotels of the US had agreed to partner this project.

“The Krrish Group owes the UDA another Rs. 640 million for the land. He agreed to settle all these payments before beginning work on the project,” he had added.

This 85 storied tower project with luxury homes, shopping complexes, a seven star hotel and an additional four towers raised a huge controversy during the recent past. The reason for the controversy included the inability of the Krrish Group to begin its construction work by the stipulated time period.

The UDA has offered the 04 acres and 37.10 perch plot of land where the Transworks Building in Colombo stands now bordered by Chatham Street, York Street and lotus Road, at a cost of Rs. 4,995 million to Krrish Group on a 99 year lease agreement.

This is considered the first foreign project by the Krrish Group.

Source: srilankamirror

Huge chunk of Union Bank goes to Cayman Islands registered investor

A Cayman Islands registered company, Cultural Financial Holdings Ltd. has entered into an agreement to buy nearly 70% of Union Bank of Colombo PLC shares for nearly Rs. 15 billion.

Cultural Financial Holdings has agreed to buy 742.1 million ordinary voting shares of Union Bank of Colombo PLC at Rs. 15.30 per share as a Private Placement.

The largest US based investment company TPG and its most recent Asia-focused investment fund TPG Asia VI, L.P and its related entities indirectly hold a 100% equity interest in Cultural Financial Holdings Ltd. through TPG Asia VI SF Pte. Ltd.

Union Bank of Colombo PLC has also resolved to issue to Cultural Financial Holdings Ltd. simultaneously with the issue of the Private Placement of shares, 218.2 warrants at Cents 30 each conferring Cultural Financial Holdings Ltd with the right to subscribe to ONE new ordinary voting share per warrant within a period of SIX years from the issue of such warrants at the exercising price of Rs. 16 per share.

The Union Bank of Colombo PLC board of directors obtained approval from the Central Bank of Sri Lanka for Cultural Financial Holdings Ltd. to acquire 75% of shares from Union Bank of Colombo PLC and reduce it to 15% in 15 years thereafter.

This investment will be made on a staggered basis with Cultural Financial Holdings Ltd initially acquiring a 68% stake in Union Bank of Colombo PLC by subscribing for new ordinary voting shares and subsequently increasing the stake up to 70% through a mandatory general offer and finally up to 75% if required by exercising the warrants.

At the date of announcement the stated capital of Union Bank of Colombo PLC is Rs. 4.9 billion and its public holding percentage is 63.79%.

The proceeds will be utilized by Union Bank of Colombo PLC to enhance its Tier 1 capital and also enable it to meet the minimum capital requirements imposed by the Central Bank of Sri Lanka which will come into effect from 01 January 2016.

The Colombo Stock Exchange temporarily suspended the trading of Union Bank of Colombo PLC shares this morning in expectation of this announcement.
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Sri Lanka stocks gain for eighth straight session; turnover doubles

Aug 14 (Reuters) - Sri Lankan stocks broke through the key psychological barrier of 7,000 points on Thursday to end near a three-year closing high as declining interest rates drove investors into risky assets and foreign inflows helped boost sentiment.

The main stock index, which hit 7,018.72 during intra-day trade, ended up 0.27 percent, or 18.95 points firmer at 6,973.09, its highest close since Sept. 9, 2011.

It has risen 17.93 percent so far this year.

Stockbrokers, however, expect a correction in the overbought market, even as the index gained for the eighth straight session.

Turnover was 2.02 billion rupees ($15.52 million), nearly double this year's daily average of 1.12 billion rupees.

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 to 14 basis points at a weekly auction on Wednesday.

"There is positivity. The market is supported by low interest rates and good earnings," said Reshan Kurukulasuriya, chief operating officer of Richard Peiris Securities.

"Now, the foreigners are looking at Sri Lanka. There is a premium for banking stocks and some blue chips. There should be a correction going in to September, but it'll be flat..."

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

The bourse saw net foreign inflow of 453 million rupees on Thursday, extending year-to-date net inflows to 12.67 billion rupees.

Union Bank of Colombo Plc on Thursday said it had agreed to sell a 70 percent stake to a subsidiary of TPG Capital Management LP for $113 million.

Ceylon Tobacco Company Plc, which led the gain in the overall index, rose 3.64 percent to 1,195.80 rupees, while Ceylon Cold Stores Plc gained 10.15 percent to 247.50 rupees. 

(1 US dollar=130.1600 Sri Lankan rupee) 

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

Sri Lanka stocks close up 0.3-pct

Aug 14, 2014 (LBO) - Sri Lanka's stocks closed 0.27 percent higher on Thursday with tobacco stocks gaining amid strong foreign buying, brokers said.

The Colombo benchmark All Share Price Index closed 18.95 points higher at 6,973.09, up 0.27percent. The S&P SL20 closed 8.51 points higher at 3,828.77, up 0.22 percent.

Turnover was 2.01 billion rupees, up from 1.82 billion rupees a day earlier with 119 stocks closed positive against 84 negative.

Hemas Holdings closed 2.30 rupees lower at 49.70 rupees with four off-market transactions of 147.68 million rupees changing hands at 52.00 rupees per share contributing 7 percent of the daily turnover.

Commercial Bank closed 10 cents higher at 143.80 rupees with three off-market transactions of 147.37 million rupees changing hands at 145.00 rupees per share contributing 7 percent to the turnover.

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

Lanka Century Investments closed 60 cents higher at 12.60 rupees and First Capital Holdings closed 5.40 rupees higher at 34.00 rupees, attracting most number of trades during the day.

Foreign investors bought 714.30 million rupees worth shares while selling 261.30 million rupees worth shares.

Ceylon Tobacco Company closed 42.00 rupees higher at 1,195.80 rupees, contributing most to the index gain.

Nestle Lanka closed 87.00 rupees lower at 2,112.00 rupees.

Richard Peiris buys 12.5% stake in Chillaw Finance

Richard Peiris Arpico Finance Ltd. yesterday acquired 12.54% stake in Chillaw Finance PLC for over Rs. 100 million.

Chillaw Finance, a relatively small finance company with assets worth Rs. 1.3 billion and liabilities of Rs. 796 million, saw 6.6 million of its shares traded yesterday for Rs. 167.54 million. This included a crossing of 3.09 million shares at Rs. 25.50 each. It hit an intra-day high of Rs. 25.90 and a low of Rs. 24.80 before closing at Rs. 25.50, up by Rs. 1.10. Its Net 
Asset Per share is Rs. 15.43.

The seller was Asia Asset Finance Ltd., which had around 3.3 million shares. RPC had also picked up some quantities from the market.

In its filing to the CSE, Richard Peiris didn’t mention that the acquisition was a part of the Central Bank-initiated financial sector consolidation, whilst some analysts speculated it could be part of RPC’s strategy of looking for a strategic stake.

Chillaw Finance directors including J.A.D.N. Jayasuriya and related parties collectively own 27.6% stake in the company. The other largest shareholder is R.W. Kulatunga – owning 11%. Chillaw Finance has 61% in public share holding.
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Chairman Sumal buys 1.3% of Access Engineering for Rs. 357 m

Chairman Sumal Perera yesterday bought into his own company Access Engineering PLC collecting around 13 million shares for Rs. 357.5 million. The market saw 16.58 million AEL shares traded for Rs. 455.6 million.

The Daily FT learned that Perera bought around 13 million or 1.3% stake. The major seller was high net worth investor and low profile business leader Ajita de Zoysa’s Associated Electrical Corp.

Prior to yesterday’s purchase, Perera held a 25% stake of AEL under his name and is the largest shareholder. The price paid by him was above the IPO level. AEL accounted for the highest turnover yesterday as the stock market gathered further strength due to block deals and improved investor sentiments. Sources close to the Perera said that it was the first time that he had bought shares from the market. The net asset per share of AEL is currently Rs. 15.

On Friday Access Engineering announced that top line recorded a growth of 10.5% and 6.9% respectively at company and group level. Earnings attributable to equity at company and group level were Rs. 503 million and Rs. 545 million respectively.

At Group level, 84%-owned subsidiary Sathosa Motors PLC and fully-owned subsidiary Access Realties Ltd. have contributed Rs. 44 million and Rs. 36 million respectively to the bottom line. The company’s 30% owned Associate ZPMC Lanka Company Ltd., which commenced operations in September 2013, contributed Rs. 2 million to the bottom line in the quarter.

The total asset base of the group stood at Rs. 20,353 million. Equity attributable to owners of the company of Rs. 15,458 million at the group level translates into a net asset per share of Rs. 15.46, a growth of 4% since 31 March 2014. The earnings per share for the quarter were Rs. 0.54 and Rs. 0.50 at the group and company levels respectively. The liquidity position of the company has improved by 12% and 19% respectively at company and group level.

The Board of Directors of AEL comprises Sumal Perera (Chairman), Christopher Joshua (Managing Director), Rohana Fernando (COO), Shevantha Mendis, Dharshana Munasinghe, Ranjan Gomez, Dilhan Perera, Professor Malik Ranasinghe, Niroshan Gunarathna and Alexis Lovell.
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Mixed first quarter for Hemas

Hemas Holdings Plc had to content with a mixed first quarter in the new financial year of 2014/15, with top line growth and a dip in bottom line.

The Group recorded consolidated revenue of Rs. 7.3 billion, up by 20% and operating profit of Rs. 452 million down by 7% whilst earnings were down 12% to Rs. 247 million in the first three months ended on 30 June 2014. Pre-tax profit was down 14% to Rs. 353.5 million.

Hemas CEO Steven Enderby said the variance between top line growth and decline in earnings was due to sharp variations in performance of the different sectors within the Group.

“The strong performance of our healthcare, personal care, leisure and transportation businesses is encouraging in tough market conditions and these have driven good revenue growth,” Enderby said.

However the plant closure at J.L. Morison, poor rainfall impacting mini hydro power plants, the charging of the heat rate reserve at the thermal plant and weak results of N-Able have been a drag on profits, resulting in a 12% decline in Group profit after tax, he added.

The FMCG sector performed well during the first quarter registering revenue of Rs. 2.9 billion, a strong growth in comparison to last year. Enderby said all categories contributed positively.

“Our Bangladesh operation recorded significant growth on account of the higher sales generated from our hair care segment. The multiple re-launches that took place during 2013/14 financial year have started to deliver results and operating profits have grown in line with sales,” he added.

The Healthcare sector registered revenue of Rs. 3 billion, a growth of 9% driven by the strong performance of its hospitals. The Pharmaceuticals business faced weak market conditions during the quarter in review, impacting sales and resulting in low growth.

“In these difficult trading conditions we retained our industry leadership position with a market share of 21.05% (Source: IMS),” the CEO said.

The Hospitals business performed well with overall revenue growing by 42% over last year. 

The revenue growth was driven by the notable performance of Hemas Wattala Hospital along with the improving performance of Thalawathugoda Hospital, which completed its first year in operations during the quarter under review.

Hemas’ newest addition J. L. Morison experienced an 8% drop in sales due to production being disrupted by a machine breakdown, which resulted in the closure of the manufacturing plant for several weeks.

“The plant is now back in its full production and we used this period to upgrade the factory. On a positive note, the distributed pharmaceuticals segment showed growth against the previous year’s turnover,” Enderby said.

The Leisure sector posted revenue of Rs. 515 million, a growth of 34% over the last year. 

Revenue growth was driven by hotels business which recorded a top line of Rs. 287 million, a growth of 78%. However, last year’s numbers were impacted by the partial closure of Club Hotel Dolphin and Hotel Sigiriya for refurbishment during the corresponding period.

Hotels enjoyed a healthy occupancy rate of 70%, a significant improvement over the last year. The sector closed the quarter on a positive note registering a profit before tax of Rs. 11 million, an improvement from its last year’s loss during the same period.

Hemas’ transportation sector experienced a strong performance with turnover growing by 19% to Rs. 334 million over last year mainly due to top line growth in the logistics segment, while earnings grew by 13% to Rs.99 million.

The maritime segment saw an increase in earnings arising out of the joint venture with Far Shipping Agency, while operations at the new container depot were a significant contributor towards the top line growth of the sector.

During the quarter, the turnover of the Power sector experienced a dip due to the low rainfall experienced at all five of its power plants and as a result, the accumulated power generation reduced to 7.6Mn Kwh, a 42% drop over the last year.

Enderby said with the introduction of SLFRS 11, the equity method has been adopted in accounting for Heladhanavi, thermal power plant. The power sector loss is mainly due to the heat rate reserve for Heladhanavi being charged to the income statement from this quarter onwards. The power sector overall earnings declined by Rs. 128 m compared to last year.

N-Able, the Hemas IT solutions business, had a difficult quarter with the delay in finalization of key contracts resulting in a loss of Rs. 34 million despite revenue being up by 14% compared to the last year.

Enderby said the Hemas team is continuing to work hard to improve the profit performance of the Group. J.L. Morison is now back on track, however the thermal power plant coming to the end of its power purchase agreement will continue to impact financial performance.
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ASCOT soars on Rights, Warrants issue

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* Share price gains by 18% as company announces Rs. 75 m fund raiser for new hotel in Yala

Investors toasted ASCOT Holdings Plc’s move for a Rights cum Warrants issue to raise Rs. 75 million for a new hotel in Yala.

The Company’s share price gained by 18% or Rs 16.50 to close at Rs. 106.40 when trading was allowed after a brief halt following the announcement. Intra-day highest was Rs. 112.30 as 273,450 shares changed hands via 744 trades reflecting heavy retail interest.

ASOCT Board has resolved to have a Rights Issue on the basis of one new share for every existing two held at Rs. 12.50 each.

The price was a heavy discount to the market. Book value of ASCOT is Rs. 70 at Group level and Rs. 66.42 at Company level. ASCOT shares saw its share price peak to a highest of Rs.169 and to a low of Rs. 93.50 before closing at Rs. 114.

By issuance of 3.99 million shares the Company will be raising Rs. 50 million. The Company also announced the issuance of 998,188 warrants at an exercise price of Rs. 25 each. One year warrants will be one for every four subscribed rights.

Funds raised via the two moves subject to regulatory and shareholder approval will be used for a hotel project in Yala. Details of the project however weren’t disclosed.

The move signals diversification by ASOCT into tourism sector which has boomed following the end of the conflict in May 2009. The Company specialises in cement-based products (in 2013 it acquired Amtrad Ltd.), quarries and property development and real estate business.

In the year ended 31 March 2014, ASCOT posted a consolidated net profit of Rs. 23.3 million, up by 167% over the previous year. Net profit attributable to equity holders of parent was Rs. 18 million, up from Rs. 11 million. Group revenue rose by 138% to Rs. 345 million. Revenue was boosted due to Rs. 103 million in rental income (up from Rs. 88 million in FY13), sale of stone chips Rs. 118 million (up from Rs. 46 million in FY13) and sale of cement pavers Rs. 122 million (up from Rs. 9.6 million in FY13).

At Company level, FY14 was a loss at Rs. 5 million as against a profit of Rs. 19.5 million. For the fourth quarter both the Group and Company reported small losses.

Asix Investments of Rohan Iriyagolle holds a 26% stake whilst high net worth investor Nimal Perera directly holds 20% and a related party St. Louis Capital holds 21.4%. Public holding of the Company is 63%.

ASCOT appoints Mohan as new Chairman ASCOT Holdings PLC yesterday announced the appointment of Mohan Ratnayake as its new Chairman. He joined the ASCOT Board in 2012/13 financial year. He holds an MBA in Finance and is a Fellow Member of the Institute of Chartered Management Accountants UK and the Society of Certified Management Accountants. Ratnayake has expertise in the fields of tea exports, tea plantations, telecommunications (SLT) and the motor industry (Colonial Motors). He was the Chairman of the Committee to float the first internationally listed Bond ($ 100 million) in Sri Lanka for the expansion of Sri Lanka Telecom and also to obtain an international rating for SLT for the bond to be listed on the Singapore Stock Exchange.