Cargills, International Finance Corp reach USD 20 million agreement

Cargills (Ceylon) PLC has entered into an agreement with the International Finance Corporation (IFC) for an equity investment into Cargills Foods Company (Private) Limited which is the wholly owned subsidiary carrying out the retail operations of Cargills (Ceylon) PLC.

IFC is to invest approximately USD 20 million (Rs. 2,550 million) to subscribe in an 8% stake in the share capital of Cargills Foods Company.

Cargills Foods Company (Private) Limited carries out the retail operations of the Cargills Group, including the Food City and Food City Express supermarket chains.

The Group’s other operations like the FMCG sector including the dairy and restaurant sectors and investments into banking and property will remain with Cargills (Ceylon) PLC.
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Sri Lanka stocks slip from 3-year high on profit-taking

Aug 25 (Reuters) - Sri Lankan stocks fell on Monday, ending a five-day gaining streak, to slip from a three-year high hit in the previous session as investors booked profits in conglomerate John Keells Holdings Plc, brokers said.

The main stock index ended down 0.34 percent, or 23.99 points, at 6,984.03, easing from its highest close since Aug. 18, 2011 hit on Friday.

The index has gained 18.12 percent so far this year.

"There was a bit of profit-taking which dragged the market," said a stockbroker, asking not to be named.

Market heavyweight John Keells Holdings fell 0.82 percent to 243 rupees.

United Motors Plc, which traded after a two-for-three share split led the fall in the index, plunging over 31 percent to 101.20 rupees a share.

Monday's turnover stood at 1.2 billion rupees ($9.22 million), in line with this year's daily average.

The bourse saw a net foreign inflow of 445.1 million rupees on Monday, extending the year-to-date net foreign inflow to 7.52 billion rupees worth of shares. 

1 US dollar = 130.1800 Sri Lankan rupees) 

(Reporting by Ranga Sirilal; Editing by Sunil Nair)

Sri Lanka stocks close down 0.3-pct

Aug 25, 2014 (LBO) - Sri Lanka's stocks closed 0.34 percent lower with index heavy John Keells Holdings losing ground, brokers said.

The Colombo benchmark All Share Price Index closed 23.99 points lower at 6,984.03, down 0.34percent. The S&P SL20 closed 8.61 points lower at 3,855.27, down 0.22 percent.

Turnover was 1.22 billion rupees, down from 2.70 billion rupees last Friday with 96 stocks closed positive against 102 negative.

John Keells Holdings closed 2.00 rupees lower at 243.00 rupees with an off-market transaction of 51.03 million rupees changing hands at 243.00 rupees per share contributing 5 percent of the daily turnover.

JKH’s W0022 warrants closed 40 cents lower at 68.60 rupees and its W0023 warrants closed 90 cents lower at 78.10 rupees.

HVA Foods closed 1.50 rupees higher at 12.10 rupees, attracting most number of trades during the day.

Foreign investors bought 567.51 million rupees worth shares while selling 122.41 million rupees worth shares.

Index heavy John Keells Holdings contributed most to the index drop.

Ceylon Cold Stores closed 12.50 rupees lower at 231.00 rupees and Nestle Lanka closed 20.00 rupees lower at 2,130.00 rupees.

Lion Brewery Ceylon closed 35.00 rupees higher at 638.00 rupees.

Central Bank Responses to Sunday Times Question

The Monetary Law Act sets out the main objectives of the Central Bank, which are the
maintenance of economic and price stability and the maintenance of financial system
stability. Maintaining financial system stability is a very important task because investments are made and maintained by persons and institutions only if the financial system is stable. In maintaining stability, confidence in the system is a major factor, and that is why the Central Bank focuses on maintaining confidence within the financial system and the economy. The reason that Sri Lanka has been able to benefit by massive investments, both local and foreign, in order to maintain an average economic growth of 7½ per annum for nearly 5 years, is the high level of confidence that investors have placed on Sri Lanka.

For this purpose, the Central Bank regularly conducts Investor Updates in different parts of the world, participates at many seminars, workshops and symposia, publishes messages in the media, disseminates information via its website on a continuous basis, and provides up todate information about the Sri Lankan economy and other socio-economic developments in the country. By doing so, present and potential stakeholders of the Sri Lankan economy are provided the opportunity to make important decisions based on accurate information. While carrying out this endeavor, the Central Bank regularly faces many challenges due to various erroneous and mischievous statements that are also publicized by many persons, both local and international. As a result, the Central Bank also has to often provide responses in order to convey the correct picture about the country and the economy.

Since the end of the conflict in May 2009, the Central Bank has observed with deep concern,that well-organized and well-funded sections by certain members of the Tamil Diaspora andthe local and international media, have been trying to convey inaccurate stories which are detrimental to Sri Lanka, which if allowed to continue unchecked and unchallenged, could affect the image of the country and the economy.

Since the end of the conflict, many investments have flown into the country, based upon the benign conditions as well as robust economic growth that has been experienced since then.

However, some of the Tamil Diaspora and the media yet continue their efforts to discourage foreign investments into Sri Lanka.

It was in that context, that the Monetary Board decided to implement a comprehensive overseas campaign to provide an accurate account of the Sri Lankan political and economic environment to US leaders, think tanks, investors, business chambers and interested citizens to keep them abreast of the true situation in the country. In order to carry out such a campaign effectively and successfully in the USA, the normal practices in the USA have to be followed, based upon proper advice and effective interventions. The Sri Lankan economy has now grown in stature and character in the international sphere, with exports of around US$ 11 bn; imports of about US$ 18 bn; remittances of around US$ 7 bn; foreign investments in sovereign bonds and governments securities of over US$ 6 bn; foreign reserves at over US$ 9 bn; FDIs at around US$ 2 bn; and foreign stock market portfolio holdings at about US$ 8 bn.

In that background, investing a modest sum to create awareness in the world's largest
economy would undoubtedly benefit the Sri Lankan economy, and the Central Bank efforts
have complemented and supported the activities of the Ministry of Foreign Affairs who have also been implementing many programmes in the face of the extra ordinary and vicious campaigns carried out by sections of the Tamil Diaspora in the USA.

It may also be mentioned that similar awareness efforts are carried out by a large number of countries and global organizations in the USA, in order to apprise the US leaders and other influential agencies about various matters that those countries or organizations, wish to place before the aforementioned leaders and agencies.

http://www.cbsl.gov.lk/pics_n_docs/latest_news/press_20140825e.pdf

DFCC records strong performance in 1Q

DFCC Group has recorded a consolidated profit after tax of Rs 1.14 billion for the three months ended 30 June 2014 compared with Rs. 612m in the corresponding period of the previous year, recent financials showed. Apart from the Banking Business which contributed Rs 1,093m to profit after tax the investment banking joint venture, Acuity Partners (Pvt) Limited (APL) contributed Rs. 3m in the current period (LKR 10m in the comparable period). The contribution from all other subsidiaries and associate company collectively was Rs. 48m in the current period (Rs 24m in the comparable period), DFCC Chief Executive Officer Arjun Fernando told shareholders.

The Banking Business of the DFCC Group is undertaken by DFCC Bank (DFCC), a licensed specialized bank and 99% owned subsidiary DFCC Vardhana Bank (DVB), a licensed commercial bank. Both banks function as one economic entity and as such it is appropriate to analyse the consolidated performance of the two banks as DFCC Banking Business (DBB).

During the quarter, Net Interest Income (NII) of DBB for the period decreased by 20% from Rs 2,120m to Rs 1,693m due to the drop in lending rates in tandem with a drop in benchmark interest rates. 

“Credit growth exceeded industry average and was an increase of 15% year on year. However, the major part of the asset build up was based on disbursements towards the latter part of the quarter,” Fernando said.

The DBB recorded Rs. 1,541m as operating profit before taxes, an increase of 61% over the comparable period. Profit after tax (both VAT on financial services and income tax) was Rs 1,093m, an increase of 89% over Rs 577m in the comparable period.
www.nation.lk

Impressive growth in Life, General for HNB Assurance in 1H 2014

HNB Assurance PLC has recorded an impressive growth as per the latest interim results released to the Colombo Stock Exchange. The company was also successful in strengthening its topline over the first half of FY 2014, where the combined turnover, expressed as Gross Written Premium (GWP), of both Life and Non-Life Insurance businesses escalated by 24% over the same period of the previous financial year.

This achievement was driven by an impressive 27% growth in Life Insurance GWP while Non-Life Insurance GWP also contributed with a growth of 21%.Accordingly, the combined GWP achievement for the period stood at Rs. 2,254.8 million, with a contribution of Rs.1, 133.9 million from the Life Insurance business and Rs. 1,120.9 million from the Non-Life Insurance business.

Commenting on this significant growth, HNB Assurance General Manager General Insurance Niranjan Manickam confirmed: “The strong topline growth signals the effectiveness of the Company’s business practices and the success of the strategies adopted to remain a resolute player in the industry despite challenging market conditions. Our strategic focus has been to attract selected segments of the market by designing products and services which would cater to the expectations of these customers whilst also leveraging on the relationship we have formed with financial institutions by providing customized insurance solutions to their clientele.”

Commenting on the growth in Life Insurance, General Manager Life Insurance Prasantha Fernando stated: “The fact that we have seen this growth in the midst of structural changes within the company to separate General and Life insurance businesses, as stipulated by legislation by early next year, is noteworthy.”

Further he acknowledged: “The growth in Life Gross Written Premiums of 27%, against the overall life insurance industry growth of 7% is quite impressive, considering the very competitive insurance market in Sri Lanka. Our continued focus on developing innovative insurance solutions and delivering them to the identified customer segments caringly, efficiently and passionately has made us strong in the face of new challenges confronting the life insurance market.”

The company also surpassed the Rs. 100 million mark in post-tax profits during the first half of the financial year. Accordingly, the PAT of the company stood at Rs. 108.million for the period, while PBT also increased to Rs. 127 million. This is entirely from the General Insurance business since a profit from the Life Insurance business is recognised only at the end of each financial year based on actuarial valuations.
www.ft.lk

Nobody wants to sell PC Pharma to Adam!

Adam Investments Ltd. (AINV) last week concluded the mandatory offer on PC Pharma Plc (PCP), with almost no sellers.

AINV said when the mandatory offer closed, shareholder/s owning only 1,000 shares had accepted the offer made at Rs. 1.70 per share. This amounted to an insignificant 0.001%. Prior to the offer, AINV held 31.152% whilst it acquired 1.416 million PCP shares or 1.4% from the trading floor.

Analysts said the majority of the minority shareholders not wanting to sell either reflected they felt the PCP share is worth more or they had confidence of greater future upside.

The AINV-PCP had the dubious distinction of being the first time when the offeror sold the stake to the market whilst a mandatory offer to buy remaining shareholding was on. 

However the sale was reversed by the SEC on the grounds that AINV violated rules which require an offeror not to sell during an offer without obtaining approval.

AINV which accepted the error was asked to compensate any buyer who may have suffered a loss in view of the reversal.

AINV sold its majority stake at prices higher than the mandatory offer and from levels from which it originally acquired the stake. Analysts viewed least interest in sellers in the mandatory offer could be because shareholders felt AINV will remain long-term focused following the SEC’s reversal of the sale.

AINV had cited several reasons why it tried to sell, including the fact that PCP and its parent PCH Holdings on which too a mandatory offer was on was facing multiple legal battles with allegations of a key subsidiary being sold by PCHH Chairman M. Rishan and AINV claiming the subsidiary as an asset in the mandatory offer.
www.ft.lk

Union Assurance reports steady growth in 1H 2014

Union Assurance PLC (UA), a leading player in the Sri Lankan insurance sector recorded steady growth in combined gross written premium (GWP) and profits in the second quarter of 2014.

Combined GWP for the six months amounted to Rs. 5,388 million. Life insurance premiums amounted to Rs. 2,753 million and non-life premiums contributed Rs. 2,635 million. Profit after tax (PAT) increased by 13% from Rs. 190 million in 2013 to Rs. 214 million in 2014. 

PAT excludes the surplus from life insurance segment which is determined after an actuarial valuation at the end of the year.

As at 30 June 2014, UA’s life fund stood at Rs. 21 billion with a healthy solvency ratio indicating the financial strength of the life business.

UA continues to have an excellent range of products, and its innovation pipeline continues to be strong. The latest product launched by the company ‘Union Super Investor’ combines the protection benefits of an insurance product with attractive investment returns.

Customers need to pay for a five year term and enjoy life insurance cover of five times the basic sum assured up to the age of 75 years. The relatively short premium payment term combined with extended life insurance coverage makes this an ideal solution for any person to accumulate wealth while being adequately safeguarded against unforeseen risks.

Union Assurance operates on the platform of trust with the brand values of convenience, respect and transparency. The company is anchored by a team of dynamic professionals, a strong capital base and reinsurance partnerships with highly rated global reinsurers to deliver these values to all its stakeholders. 
www.ft.lk