Renuka Shaw Wallace becomes Renuka Foods PLC

Renuka Shaw Wallace PLC has decided to change the name of the company to Renuka Foods PLC.

An extraordinary general meeting is to be convened on 25 September 2014 to pass the special resolution to give effect to this name change of the company.
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Sri Lanka bourse slips from over 3-year high on fall in large caps

(Reuters) - Sri Lankan stocks slipped on Monday from a more than three-year high hit in the previous session, led by a decline in shares of large-caps such as Ceylon Tobacco Co Plc and Nestle Lanka Plc.

Analysts said low interest rates and continued foreign buying into risky assets boosted sentiment.

The main stock index fell 0.05 percent, or 3.20 points, to close at 7,030.89.

The index has gained nearly 19 percent so far this year.

"The market is generally holding on with a bit of profit-taking here and there. Hopefully, September could see another rally," said a stockbroker asking not to be named.

The bourse has been in an overbought region since July. The Relative Strength Index, a momentum indicator tracked by chartists, was at 74.825 on Monday, Thomson Reuters data showed. Stocks are deemed "overbought" above the 70 mark, which tends to signal a reversal in the near term.

Ceylon Tobacco Co Plc, which led the overall fall in the index, fell 1.44 percent to 1,180 rupees, while Nestle Lanka Plc fell 2.23 percent to 2,100 rupees.

Monday's turnover stood at 1.04 billion rupees ($8 million), slightly below this year's daily average of 1.2 billion rupees.

Foreign investors were net buyers of 34.9 million rupees worth of shares on Monday, extending the year-to-date net foreign inflows to 8.24 billion rupees. 

($1 = 130.1600 Sri Lankan rupee) 

(Reporting by Ranga Sirilal; Editing by Prateek Chatterjee)

Sri Lanka stocks close lower

Sep 01, 2014 (LBO) - Sri Lanka's stocks close lower Monday, reversing the gains of tobacco and beverage stocks amid low foreign participation, brokers said.

The Colombo benchmark All Share Price Index closed 3.20 points lower at 7,030.89, down 0.05 percent. The S&P SL20 closed 4.88 points higher at 3,877.39, up 0.13 percent.

Turnover was 1.04 billion rupees, down from 1.14 billion rupees last Friday with 95 stocks closed positive against 95 negative.

Seylan Bank closed 10 cents lower at 83.80 rupees with an off-market transaction of 400.00 million rupees changing hands at 80.00 rupees per share contributing 38 percent of the daily turnover.

Union Bank of Colombo closed 10 cents higher at 21.00 rupees and Sanasa Development Bank closed 3.00 rupees higher at 106.50 rupees, attracting most number of trades during the day.

Foreign investors bought 102.77 million rupees worth shares while selling 67.82 million rupees worth shares.

Ceylon Tobacco Company closed 17.20 rupees lower at 1,180.00 rupees and Nestle Lanka closed 48.00 rupees lower at 2,100.00 rupees, contributing most to the index drop.

Commercial Bank of Ceylon closed flat at 148.00 rupees with the company acquiring the entirety of the ordinary shares of Indra Finance for a purchase consideration of 870 million rupees.

Laugfs Maritime Services (pvt) ltd, a fully owned subsidiary of Laugfs Gas is to purchase a liquid petroleum gas vessel with an investment of 6.9 million US dollars, the company said in a stock exchange filing.

Entrust Securities ends 1Q with impressive results

Entrust Securities PLC, the Primary Dealer arm of Entrust group of Companies has recorded excellent financial results during the first quarter of FY 2014/15. Amid the background of a downward interest rate scenario on Fixed Income Securities and within competitive market conditions, Entrust Securities PLC (ESL) was able to record an increase in its earnings for the quarter ended June 30, 2014. Based on unaudited financials and as indicated the company has achieved a total comprehensive income of Rs 81.9 mn for the quarter ended June 30, 2014, which is a significant increase of 1,239% in earnings when compared with Rs 6.1 mn recorded during the corresponding period last year.

The total asset base has increased by 19.8% compared to March 31, 2014 and as at June 30, 2014 it reached Rs 14.9 bn. The Shareholders’ Fund recorded an improvement of 7.9% during the quarter under review reaching Rs. 1.09 bn when compared with Rs 1.01 bn as at March 31, 2014.

The Earnings Per Share (EPS) on an annualised basis increased to Rs 9.92 against Rs. 8.32 of previous year resulting an increased Net Assets Per Share value of Rs 33.17 as at June 30, 2014. The overall optimism was reflected in the company’s share price as the market price increased from Rs 17.30 as at March 31, 2014 to Rs. 22.80 as at June 30, 2014.

Entrust Securities is the only listed non-banking Primary Dealer licensed by the Central Bank of Sri Lanka. During the past14 years the Company has gained recognition as a leading Primary Dealer and has grown significantly in terms of the bottom line, business volume and enhanced its corporate image. 

www.dailynews.lk

Browns Beach posts Rs 93.2 m PAT

The construction work of the new hotel Heritance Negombo has continued during the year and is expected to be operational during the financial year 2014/15 B r o w n s B e a c h H o t e l s Chairman D.H.S Jayawardena told shareholders.

The resort upon completion will be re-branded as “Heritance Negombo” the latest addition to the Heritance portfolio and will comprise of 143 rooms.

It will be an up market, state-of -the-art property with all modern amenities and will cater to multiple segments of clients including leisure, business and tourist travellers.

During the financial year, Browns Beach Hotels Group reported a profit after tax(PAT) of Rs 93.2 million mainly on the interest income earned from the investments of the funds raised from the rights issue.

Sri Lanka’s tourism for 2013 exceeded the 1.25 million tourists target to reach 1.27 million arrivals, which shows the growing popularity of the destination in the eye of the global traveler.

For Sri Lanka 1.27 million arrivals is a record arrivals figure and one that foretells the arrival of 2.5 million tourists by 2016.

Accordingly, earnings from tourism during 2013 recorded a year-on-year growth of 35 percent to US$ 1.4 billion, compared with cumulative earnings of US$1 billion in 2012.
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TPG allocates Rs 15B for more acquisitions

By Ravi Ladduwahetty

Ceylon Finance Today: Transpacific Group (TPG) of the USA which acquired a controlling stake 70% of Union Bank for US$ 117 million, will allocate a further Rs 15 billion for the acquisition of more financial institutions in Sri Lanka, according to top Central Bank sources.

There will be a minimum of five nominee directors from Culture Financial Holdings, which is based in Cayman Islands and which is an associate company of TPG which will take up positions in the new Union Bank board following the acquisition. Chairman Alex Lovell will remain on the board as chairman by virtue of his shareholding.

Incumbent Managing Director/CEO Anil Amarasuriya, now 60, who is already on an extension, will resign at the end of the year. A new local CEO, who will be acceptable to the new board, will be appointed in due course, these sources said.

There will be an Extraordinary General Meeting of the shareholders of Union Bank on 17 September which will determine chartering the new course for the Union Bank. This will also include a private placement of 742.1 million shares which will be offered at Rs 15.30, which will increase the capital of the bank by another Rs 11.3 billion in excess of the tier capital. The shares could be exchanged between the shareholders, but will be prohibited from sale to the public

There will be another issue of 218.2 million shares over a six year period which will fortify the share capital of the group by another Rs 3.4 billion.

The top 20 shareholders account for 79% of the shares which includes the majority shareholder Genting Berhard of Malaysia (18%), Sampath Bank (7.5%), Associated Electrical Corporation (6.7%) and Select Gain (6.5%)
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LRA reaffirms MBSL ratings at AA-/P1, outlook reinstated at negative

* Proposed Rs. 2 b Unsubordinated Listed Unsecured Redeemable Debentures (2014/2019) rated AA-
Lanka Rating Agency (LRA) has reaffirmed Merchant Bank of Sri Lanka PLC’s (‘MBSL’ or ‘the Company’) respective long- and short-term financial institution ratings, at AA- and P1. Concurrently they have assigned a long-term issue rating of AA- to the company’s proposed Rs. 2 billion Unsubordinated Listed Unsecured Redeemable Debentures (2014/2019).

Meanwhile, the long-term issue ratings of Rs. 1 billion Unsubordinated Listed Unsecured Redeemable Debentures (2013/2017), Rs. 2 billion Unsubordinated Listed Unsecured Redeemable Debentures (2012/2017) and Rs. 1 billion Unsubordinated Listed Unsecured Redeemable Debentures (2011/2015) have been reaffirmed at AA-.

The outlooks on all long-term ratings are reinstated at negative. The ratings are supported by MBSL’s above average capitalisation and the financial flexibility derived from its parent, the state-owned Bank of Ceylon (‘BOC’). On the other hand, the ratings are weighed down by the company’s weak asset quality.

MBSL which is a specialised leasing company (SLC) has two subsidiaries; MBSL Savings Bank Ltd. (MSB), a licensed specialised bank (LSB) and MBSL Insurance Company Ltd. (MBSL Insurance). It also has associate stakes in MCSL Financial Services Ltd. (MCSL), a licensed finance company (LFC) and Lanka Securities Private Ltd. (LSL). Its current subsidiaries – MSB, MBSL Insurance and its associates MCSL and LSL are together known as ‘the Group’. 

MBSL is currently in the process of merging with MSB and MCSL. The amalgamated entity will be registered as a LFC and MBSL will be the surviving entity.

Both MBSL and MCSL chartered a rapid deterioration in asset quality over the review period; absolute gross non-performing loans (NPLs) increased 38.63% y-o-y to Rs. 1.01 billion and 135.89% y-o-y to Rs. 1.68 billion respectively in FY Dec 2013. As such, the impact on MCSL’s gross NPL ratio had been more pronounced, as it weakened from 11.53% to 19.80% while MBSL’s gross NPL ratio deteriorated from 7.42% to 9.64% as at end-FY Dec 2013. Further, the additional provisioning has resulted in weakened performance. As such, the negative outlook was reinstated owing to the deterioration in asset quality.

MBSL’s NPLs primarily stemmed in from the lease and hire-purchase (HP) portfolio following its 25.27% y-o-y growth in FY Dec 2012, as seasoning took effect amidst challenging external conditions. Nevertheless, it is noted that the management has taken steps to improve recovery of NPLs by appointing a former general manager of BOC as a consultant. Overall, the Group’s asset quality is considered weak. The Group’s gross NPL ratio increased from 9.05% as at end-FY Dec 2012 to 9.74% as at end-FY Dec 2013 amid the influx of NPLs and continued to compare relatively weaker than those of its peers.

Meanwhile, the Group’s net interest margin (NIM) remained relatively stable at 7.88% in FY Dec 2013 (FY Dec 2012: 7.84%) and was more or less in line with its similar rated peers. On a separate note, the Group’s cost to income ratio continued to deteriorate from 79.90% in FY Dec 2012 to 90.37% in FY Dec 2013; the ratio remained weaker than most of its peers. Conversely, MBSL’s cost-to-income ratio improved from 64.76% to 60.90% over the same period as nine out of the 16 branches that were opened in fiscal 2012 broke-even by the end of 2013. Elsewhere, the company has appointed a former senior deputy general manager of BOC, as a business promotion consultant. Further, the Group’s performance was hampered by the increased credit cost. This was primarily driven by MBSL as reflected by its credit cost ratio which spiked to 2.06% in FY Dec 2013 (FY Dec 2012: 0.57%). Moreover, in line with the weaker performance of MBSL and losses made by both MSB and MBSL Insurance, the Group made a pre-tax loss of Rs. 80.90 million in FY Dec 2013. Overall, the Group’s performance is deemed moderate.

Looking ahead, its NIM is likely to widen in the short to medium term in light of a receding interest rate environment along with its focus on higher yielding products. That said, overall performance of the Group is expected to be pressured by its deteriorating asset quality.

The Group’s capitalisation is viewed to be above average. Although MBSL’s capitalisation levels declined during the review period, it remains strong compared to its peers. It’s tier-1 and overall risk-weighted capital-adequacy ratios (RWCAR) clocked in at 21.34% as at end-1Q FY Dec 2014 (end-FY Dec 2012: 24.36%).

Elsewhere, concerns hinge upon the deterioration of the Company’s capital cushioning, as reflected in its net NPLs to shareholders’ funds ratio of 17.20% as at end-1Q FY Dec 2014 (end-FY Dec 2012: 12.05%). Nonetheless, it is likely that parent support would be forthcoming from BOC should the need arise. MBSL’s ratings may be pressured if its asset quality indicators do not improve to levels in line with similar rated peers and if the company’s performance weakens. Conversely the outlook may be revised to stable if asset quality indicators improve to levels that are on par with similar-rated peers. Lanka Rating 

Agency (LRA), former RAM Rating Lanka’s, technical partner is CRISIL India (CRISIL). CRISIL is a global analytical company providing ratings, research, and risk and policy advisory services. CRISIL is India’s leading ratings agency and is also the foremost provider of high-end research to the world’s largest banks and leading corporations.

CRISIL’s majority shareholder is Standard and Poor’s (S&P). S&P, a part of McGraw Hill Financial (formerly The McGraw-Hill Companies), is the world’s foremost provider of credit ratings.
www.ft.lk

BOC to raise Rs. 8 b via listed debentures

Bank of Ceylon (BOC) will be raising Rs. 8 billion via the issuance of listed debenture issue.

It will make available 40 million unsecured subordinated redeemable debentures at Rs. 100 each with an option to issue an equal amount in the event the initial figure is oversubscribed.

The debentures, which have tenures of five and eight years and carry fixed and floating coupons, are to be listed on the Colombo Stock Exchange. BOC expects to use the proceeds to strengthen the bank’s regulatory Tier 2 capital base and reduce asset and liability maturity mismatches.

Fitch Ratings Lanka has assigned Bank of Ceylon’s (BOC; BB-/Stable) proposed subordinated debentures a final national long-term rating of ‘AA (lka)’

The public can subscribe to the new debenture issue of BoC from Wednesday whilst its official opening is 16 September.

BOC’s Investment Banking Division are the managers and registrars to the issue.
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CDB to buy Laugfs Capital for Rs. 425 m

* Laugfs to exit financial services with good capital gain

Citizens Development Business Finance PLC (CDB) is to buy 86.26% of leasing specialist Laugfs Capital Ltd. for Rs. 425 million under the Central Bank initiated financial consolidation program.

CDB said its Board of Directors has determined the move in principle by a duly passed resolution. The deal is subject to CDB and Laugfs Capital obtaining relevant statutory and regulatory approvals.

Laugfs Capital is a subsidiary of Laugfs Holdings Ltd. LCL is a specialised Finance Leasing Company, offering a range of products and services including leasing, hire purchase, business loans, personal loans, factoring, micro lending, and issuing of debt instruments.
CDB will also enter into a Memorandum of Understanding with Laugfs Holdings Ltd., to give effect to the proposed share acquisition.

Laugfs entered financial services industry in October 2012 when it acquired 67% stake in Softlogic Credit for Rs. 103.6 million. It bought the stake amounting to 5.1 million shares at Rs. 20.30 each.

Having developed into a household name, Laugfs Capital was aimed at leveraging on the trust and confidence placed in the Laugfs brand, along with its years of experience in catering to the uniquely Sri Lankan demands of its rapidly growing customer base in order to make in-roads into the country’s competitive financial services sector.

The Board of Directors of Laugfs Capital comprised W.K.H. Wegapitiya (Chairman), U.K. Thilak De Silva (MD), Mayura Fernando (CEO), Sudath Jayawardhana (GM), Prof. Sampath Amaratunge, Kamal Goonesinghe, Richard Ebell and Sarojini Mudalige.

CDB is ranked as the fifth among non-banking financial institutions. Its asset base is Rs. 33.7 billion (including Rs. 26 billion in loans and receivables) whilst it liabilities amounts to Rs. 30.1 billion (including Rs. 25 billion in deposits).

Its equity amounts to Rs. 3.5 billion including retained earnings of Rs. 970 million. Its net asset per share is Rs. 65.22. Last week CDB’s share price closed at Rs. 83.70.

In the 2013/14 financial year it posted a pre-tax profit of Rs. 561 million whilst revenue amounted to Rs. 6.1 billion, up from Rs. 489 million and Rs. 4.3 billion in FY2012/13. CDB was formerly Ceylinco Development Corporation.

Ceylinco Insurance PLC holds 31.6% stake in CDB whilst CDB ESOP Trust Fund Ltd., holds 27%.

Its Board of Directors comprises of D.H.J. Gunwardana (Chairman), C.M. Nanayakkara (Managing Director/CEO), T.M.D.P. Tennakoon, W.W.K.M. Weerasuriya, S.V. Munasinghe, R.H. Abeygoonewardena, D.A. De Silva, S.R. Abeynayake, A. Dharmasiri and R. Mohamed.
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