Sri Lanka’s DFCC is to become a public limited company

Oct 13, 2014 (LBO) – Sri Lanka’s Government presented a Bill in Parliament on 10th October 2014 that provides for the registration of DFCC Bank as a public limited company incorporated under the Companies Act with the name DFCC Bank PLC (Company).

The bill will become law once parliament passes it and it is certified by the Speaker, the company says in a stock announcement.

The proposed law will enable the company to come into being on a date to be specified and continue to carry on its business as a licensed specialized bank without any interruption.

The Bill provides for all assets, liabilities, rights, obligations and contract of DFCC Bank including those relating to all borrowings, securities issued, deposits, lending, investments, shares issued, services, undertaking of government relating to foreign exchange risk cover, directors and employees to seamlessly transfer to and vest in the company.

Further disclosure will be made in due course as matters progress.

Sri Lankan stocks fall to near 4-wk low on profit-taking

(Reuters) - Sri Lankan stocks fell more than 2 percent on Monday to their lowest in nearly four weeks on profit-taking, with banking stocks leading the decline.

The main stock index fell to 2.03 percent before closing down 1.87 percent, or 136.78 points, at 7,184.22, its lowest since Sept. 17. It hit a near 3-1/2 year closing high on Oct. 3.

"It's a free fall. Today the fall is led by banking and large-cap shares," said Dimantha Mathew, manager, research at First Capital Equities (Pvt) Ltd.

First Capital Research in a note to investors said it expects selling pressure to continue for the next few days mainly stemming from large-cap counters.

Biggest listed lender Commercial Bank of Ceylon Plc , which led the overall fall, lost 5.92 percent to 157.30 rupees, while DFCC Bank Plc shed 6.27 percent to 215.40 rupees.

The day's turnover was 1.97 billion rupees ($15.09 million), more than this year's daily average of 1.36 billion rupees.

Foreign investors bought 284.1 million rupees worth of shares on Monday after three straight sessions of outflows. The bourse has enjoyed a net foreign inflow of 9.45 billion rupees year-to-date, exchange data showed.

The market saw 526.9 million rupees ($4 million) worth of foreign selling in stocks during the last three sessions through Friday.

($1 = 130.5500 Sri Lankan rupee) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil Nair)

Sri Lanka stocks close down 1.9-pct

Oct 13, 2014 (LBO) - Sri Lanka's stocks closed 1.87 percent lower with banking stocks losing ground despite foreign buying, brokers said.

The Colombo benchmark All Share Price Index closed 136.78 points lower at 7,184.22, down 1.87 percent. The S&P SL20 closed 95.47 points lower at 4,014.55, down 2.32 percent.

Turnover was 1.97 billion rupees, down from 2.81 billion rupees last Friday with 23 stocks closed positive against 211 negative.

Chevron Lubricants Lanka closed 1.10 rupees lower at 340.00 rupees with three off-market transactions of 238.00 million rupees changing hands at 340.00 rupees per share contributing 12 percent of the turnover.

The aggregate value of all off-the-floor deals represented 22 percent of the daily turnover.

First Capital Holdings closed 5.60 rupees lower at 49.50 rupees and Access Engineering closed 1.10 rupees lower at 30.50 rupees, attracting most number of trades during the day.

Foreign investors bought 627.33 million rupees worth shares while selling 343.27 million rupees worth shares.

Commercial Bank of Ceylon closed 9.90 rupees lower at 157.30 rupees and DFCC Bank closed 14.40 rupees lower at 215.40 rupees, contributing most to the index drop.

Hatton National Bank closed 8.00 rupees lower at 187.00 rupees and National Development Bank closed 12.40 rupees lower at 245.10 rupees.

Ceylon Tobacco Company closed 22.10 rupees higher at 1,147.00 rupees.

CB issues guidelines on tax incentives to promote financial sector consolidation

The Central Bank with the concurrence of the Ministry of Finance and Planning has issued Guidelines on the ascertainment of cost of acquisition/merger as a qualifying payment and on the claimability of any unabsorbed input credit in terms of the Inland Revenue Act and the Value Added Tax, respectively.

These Guidelines are applicable for licensed banks, licensed finance companies and specialised leasing companies and are effective from 01 April 2014.

These Guidelines specify the items of costs in relation to the acquisition of a business as a going concern or the acquisition of shares or the merger with another bank/finance company/leasing company. Accordingly, the cost of acquisition will include purchase consideration, professional fees, documentation fees, expenditure incurred on IT systems, human resource related costs, advertising costs and infusion of capital at the time of acquisition/merger.

These costs will be permitted to be deducted from the year of assessment of the acquisition/merger subject to a maximum limit of 1/3 of the assessable income. However, if the assessable income of the acquiring Financial Institution is less than Rs. 300 million, the qualifying payment can be deducted up to the level of assessable income and any amount remaining could be carried forward and set off against the future assessable income. The transfer of shares due to the acquisition/merger will be exempted from Stamp Duty by an Order published in the Gazette.

These Guidelines will further promote the financial sector consolidation process and ensure the expeditious completion of the on-going mergers and acquisitions of banks, finance companies and leasing companies. They reiterate the commitment of the Government of Sri Lanka and the Central Bank to further strengthen the stability and resilience of the financial sector.

These Guidelines can be accessed through the Central Bank’s website www.cbsl.gov.lk

Banks asked to cut pawning advances interest rate by 20% to 12% The Central Bank has requested all banks which are participating in the Credit Guarantee Scheme supported by the Government and the Central Bank to reduce the applicable interest rate for such pawning advances to 12% from the current rate of 15%t, with immediate effect. At present, 12 banks have joined the Credit Guarantee Scheme and such banks grant advances up to 80% of the market value of gold.

 www.ft.lk

Acme announces 1:1 rights issue

Ceylon Finance Today: Acme Printing and Packaging PLC announced a 1:1 rights issue at an exercise price of Rs 12 per share. The Extraordinary General Meeting for approval of the Rights Issue will be held on 14 October 2014.

Acme's flexible packaging solutions and products are used by some of the premier FMCG (Fast Moving Consumer Goods) companies in Sri Lanka including multinationals such as Unilever, GSK and Fonterra as well as other large indigenous companies such as Ceylon Biscuits Ltd., Maliban and Dilmah.

In addition, Acme currently caters to a large clientele in the food, beverage, confectionery, dairy, pharmaceuticals, household care, agro-chemicals and tobacco industries.

"The emerging supermarket culture in Sri Lanka has triggered a growing demand for hygienically and conveniently packed goods in different forms, which offers Acme a significant opportunity for growth and expansion. In order to cater to the growing needs of its customer base, the proceeds from the rights issue will be utilized to modernize equipment at the factory and to restructure the company while strengthening the working capital base of the company," the company said in a statement.

As a first step, the company recently installed a state-of-the-art laminator to further improve its product performance/quality at its new plant in Pannala.
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Packer shows no interest in Sri Lanka

By Mario Andree

Ceylon Finance Today: Australian billionaire gaming tycoon James Packer's, as well as local gaming mogul Dhammika Perera's projects which received parliamentary approvals have come to a halt, with no progress made so far.

Minister of Investment Promotion Lakshman Yapa Abeywardena told Journalists in Colombo that James Packer had not made any moves on his Colombo project and the project was at a standstill.

According to him, Dhammika Perera's Queensberry Project too had not commenced despite the necessary approvals being given.

Responding to queries, he said the two parties had not responded and that the commencement of the projects was uncertain.

The approvals for the projects, which according to Minister Abeywardena were given following guidelines of the country's legal framework, might have been not pleasing to some investors, and the continuation of the project was in their hands.

One of the three much criticized projects; the Water Front Properties by John Keells Holdings, has commenced construction and is expected to be completed in 2017.

Packer's project was said to have been put on hold after the government released a Gazette notification on the project, which left out the setting up of gaming facilities.

Ceylon FT earlier this year reported that despite some legal issues that needed to be ironed out in the agreement, the US$ 400 million mixed development would proceed as planned.

The minister said, the agreement had not specified proper terms and conditions, after it was decided to rescind the casino agreement amidst growing opposition.

Australian billionaire and gaming tycoon James Packer according to news reports in April this year had informed the Sri Lankan Government that he would abandon the planned US$ 400 million integrated resort project in Colombo, if the operation of casinos was not allowed.

Packer's project as well as two other projects by local blue chip, John Keells Holdings and Local Gaming Mogul Dhammika Perera, came under serious criticism following gazette notifications which said that the first two projects approved by Cabinet included casinos.

Contradicting the statements of President Mahinda Rajapaksa and Economic Development Minister Basil Rajapaksa, government spokesman Keheliya Rambukwella in early May this year said that Packer and Perera would be able to operate casinos in their projects, as a result of restricting casino operations in the country to D. R. Wijewardena Mawatha.
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Nation Lanka divests Millennium Housing for Rs 458M

By Ravi Ladduwahetty

Ceylon Today Finance: Nation Lanka Finance PLC on Friday sold its entire stake of 91.7 million shares of its subsidiary Millennium Housing to a Nawaloka Group member company for Rs 458 million.

The Nawaloka Group subsidiary which bought the 68.3% stake in Millennium Housing was Ceyoka (Pvt) Ltd.

"We had to do this in accordance with the Central Bank regulations and this was also aimed at raising Tier Capital," Nation Lanka Finance PLC Chairman Asanka Seneviratne told Ceylon FT.

The transaction saw the shares being traded at Rs 5 each and the Nawaloka Group subsidiary acquired it. Nation Lanka Finance, by this sale, has made a capital gain of Rs 305.8 million. Its profits for the year ended 2015, is expected to be much more than the Rs. 23.6 million it made for the year ended March 31, 2014, he said. 

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