Sri Lanka shares down on profit-taking after rally

Feb 12 (Reuters) - Sri Lankan shares slipped from a near two-week high on Thursday, snapping a five-day winning streak, on profit-taking in large caps and blue chips.

The main stock index, which fell 0.65 percent in the early trade, ended 0.38 percent, or 28.02 points, weaker at 7,331.39, slipping from its highest close since Jan. 29.

"There was some profit-taking and negative impact also came from the Lanka IOC's bad results," said Dimantha Mathew, research manager at First Capital Equities (Pvt) Ltd.

"Today's selling came in lower volumes and there was not much selling pressure. The buyers were on the watch, trying to get better price," Mathew said.

Lanka IOC Plc posted a 51.4 percent drop in its third-quarter net profit. The stock ended 8.48 percent weaker on Thursday.

Foreign investors bought a net 28.3 million rupees ($213,102) worth of shares on Thursday, extending net foreign inflows so far this year to 1.58 billion rupees. The bourse had net foreign inflows of 22.07 billion rupees in 2014.

Thursday's turnover was 1.03 billion rupees, less than this year's daily average of 1.52 billion rupees.

Shares in Ceylon Tobacco Co Plc fell 2.8 percent, while conglomerate John Keells Holdings Plc lost 1.05 percent. 

($1 = 132.8000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anand Basu)

Aberdeen buys 15.3% stake in Vidullanka

Vidullanka Plc, a specialized company in the designing and construction of mini-hydro power projects has sold Rs. 73.3 million worth shares to Aberdeen Holdings at six rupees per share.

This transaction provides Aberdeen Holdings, a private family owned group of business, a share of 15.3%.The Colombo Stock Exchange filing stated that the shares were sold by T. Senthilverl on February 9.
www.dailynews.lk/

Aussie billionaire Packer in Sri Lanka's list of unwelcome people

By Esther Tanquitic-Misa

James Packer, Australia's fourth billionaire according to a list by Forbes, has been included in a list of unwelcome personalities in Sri Lanka, after he decided to quit plans of setting up a casino in the South Asian country.

Crown Resorts Ltd., the Australian casino company controlled by Packer, in a 2013 regulatory statement, had proposed to construct a five-star resort in the tropical island nation. It will have 450 hotel rooms and suites, gaming areas and restaurants. It will be located at Beira Lake in the centre of Colombo.

But Packer's Crown Group abandoned the $400 million development plan after the new government of Prime Minister Ranil Wickremesinghe removed the $1 billion tax concessions in 10-year tax breaks that were so generously extended by the previous regime which had envisioned Colombo turning into a regional gaming hub someday. "We need only good investors ... we don't want an economy relying on casinos," Wickremesinghe said in a statement released by his office. Wickremesinghe was appointed prime minister in January following the election of Maithripala Sirisena as president.

"Packer says he will not come. Who asked you to come?" the Sri Lankan prime minister added. "Please don't come — not in this lifetime."

The previous 10-year regime of Mahinda Rajapaksa had planned to put in casinos and hotel projects in Colombo to rejuvenate the economy of Sri Lanka, thus the grant of tax concessions to Packer's Crown Group. But Sirisena, Sri Lanka's new President dubbed the casino developments as "antisocial business concerns" and vowed to cancel whatever licences the previous administration had given.

Apart from the planned 450-room property of Packer's Crown Group, a $700 million complex developed by Sri Lanka's largest conglomerate by revenue, John Keells Holdings, was likewise affected.

The latter had announced it will proceed only with the hotel, not with the casino. 

Packer's project had been approved in December 2013. Construction however has yet to commence. "Crown Resorts respects the decision and on that basis the project would not be going ahead," a spokesperson for Packer's casino conglomerate said in a statement. (International Business Times Australia)
www.ceylontoday.lk

First Capital’s 9-month after tax profit tops Rs. 1 b mark

First Capital Holdings PLC has recorded a profit after tax of Rs. 1.09 b for the nine months ended 31 December 2014, indicating a stable growth trajectory.

The company, which offers a range of investment banking products and services across the financial spectrum, saw an increase in profit after tax, in comparison to Rs. 262.9 m reported for the same period last year.

Commenting on the Group’s performance over the period under review, First Capital Holdings PLC Chief Executive Officer Dilshan Wirasekara said: “Strategic decisions and concentrated growth initiatives have enabled us to capture areas of advancement and build on our business footprint. We are both pleased and grateful that we have grown to gain the support and trust of our investor base.”

Leveraging on favourable macro-economic conditions, a decline in secondary market interest rates and research-based decision making, First Capital Treasuries, the Group’s Primary Dealer Unit, cemented its position as a frontrunner in the Non-Banking Primary Dealer segment. First Capital Treasuries realised trading gains of Rs. 905 m during the period under review – driving an increase from Rs. 145 m reported during 2013/14.

Funds under management saw a four-fold increase to Rs. 4.2 b, bearing testament to the unit’s progression during the period. The period under review concluded with the First Capital Wealth Fund establishing itself as the best performing fixed income Unit Trust fund in Sri Lanka. The Stock Broking and Margin Trading units also contributed positively towards the Group’s results during the period under review.

The Corporate Debt Unit mobilised Rs. 19 b in corporate debt securities, including the structuring and placement of Rs. 9.4 b listed debenture issues, earning a corresponding fee income of Rs. 112 m (2013/14 – Rs. 26 m). First Capital surpassed competitors to become the leading listed debenture manager as well as the leading intermediary in the secondary market for listed debentures via the DEX.

First Capital Treasuries poised itself to take advantage of the dynamic financial environment by issuing a listed debenture of Rs. 500 m in January 2015, improving its long term capital base (Tier II). The group’s stockbroking arm, First Capital Equities, became a fully owned subsidiary in November 2014.

Reaffirming the group’s commitment to its client base and long-term strategic priorities, Wirasekara concluded: “Our results confirm that our development initiatives and decision making have been a success. We hope to make the most of our current position by strengthening the company in order to attain our vision of becoming Sri Lanka’s leading investment bank. We are ideally placed to sharpen our competitive edge further and deliver consistent value for our clients.”

For nearly 30 years, First Capital Holdings PLC has been a leading investment bank operating in Colombo, Matara and Kandy. The company offers a full range of investment banking products and services. First Capital Holdings PLC has a credit rating of A-.
www.ft.lk

Aitken Spence 9-month results steady

Leading conglomerate Aitken Spence PLC recorded a challenging third quarter but showed a steady performance for the nine months, revealed its interim results to the Colombo Stock Exchange (CSE) released on Wednesday.

The blue-chip’s financial results for the nine months ended 31 December 2014 saw profit-before-tax increasing by 4.4% to Rs. 3.8 b while profit attributable to shareholders decreased by 4.8% to Rs. 2.2 b.

Aitken…The diversified group’s third quarter results showed profit-before-tax decreasing by 5.9% to Rs. 1.6 b and profit attributable to shareholders falling by 19.5% to Rs. 870 m, 
“Although we had a challenging third quarter, we were able to record a steady performance for the year so far,” said Aitken Spence PLC Deputy Chairman and Managing Director J.M.S. Brito.

“With the new administration in Sri Lanka, we see a significant boost to business confidence. We are confident that the 100-day plan which has received bi-partisan support will strengthen good governance, which augers well for much needed healthy foreign investment to the country,” Brito added.

Profit before tax from the tourism sector was up by 3.5% to Rs. 2.5 b while revenue rose by 7.2% to Rs. 12.4 b, for the nine months. Aitken Spence operates a wide portfolio of hotels and resorts in Sri Lanka, Maldives, India and Oman. Its travel arm, the largest in Sri Lanka, is a joint venture with TUI Travel. It also acts as GSA for major airlines in Sri Lanka and the Maldives.

The Group’s Hotels arm is currently overseeing two large hotel projects in Negombo and Ahungalla.

The Maritime and Logistics sector recorded Rs. 525 m as profits-before-tax, a decrease of 2.8% over the previous year, while revenue was up by8.5% to Rs. 5.2 b. Aitken Spence is Sri Lanka’s largest integrated logistics services provider and has port management services in Africa and the South Pacific. Port operations in Fiji contributed significantly to the sector profits with the company achieving high efficiency levels in the ports of Suva and Lautoka.

Strategic investments sector showed a rise of 32.7% in profits-before-tax and 10.1% in revenue, to Rs. 695 m and Rs. 10.6 b respectively, for the period under review. Power, printing and garments businesses performed better than last year during the nine months, with investments in new machinery and expansion of manufacturing facilities.

The Group’s services sector saw profits-before-tax falling by 42.4% to Rs. 104 m and revenue rising by 14.4% to Rs. 607 m. The services sector includes financial services, insurance, elevator agency and technology businesses. The fairly nascent technology business accounted for a significant share of the losses in the services sector.
www.ft.lk

DFCC Group pre-tax profit up 77% to Rs. 3.6 b

The DFCC Group has recorded a consolidated profit after tax of Rs. 3,594m for the nine months ended 31 December 2014 compared with Rs. 2,028m in the corresponding period of the previous year (comparable period).

The contribution from Banking Business (DBB) comprising the DFCC Bank (DFCC), a licensed specialised bank and its 99% owned subsidiary DFCC Vardhana Bank PLC (DVB), a licensed commercial bank is analysed below.

DFCC…
Apart from DBB, which contributed Rs. 3,390m to profit after tax, the investment banking joint venture, Acuity Partners (Pvt) Limited (APL) contributed Rs. 141m (Rs. 82m in the comparable period) while the subsidiary Lanka Industrial Estates Ltd., contributed Rs. 102m (Rs. 92m in the comparable period). The contribution from the other subsidiaries and associate company collectively was Rs. 18m in the current period (loss of Rs. 12m in the comparable period).

Banking business: DFCC Banking Business (DBB) recorded Rs. 4,926m as operating profit before taxes, an increase of 56% over the comparable period. Profit after tax (both VAT on financial services and income tax) was Rs.3,390m, an increase of 74% over Rs.1,949m in the comparable period.

DBB recorded a credit growth of 14% during the period. The Net Interest Income (NII) of DBB for the period however decreased by 16% from Rs.5,970m to Rs.4,989m. Unlike in commercial banks our funding is mainly through long term borrowing sources. As such the reduction in NII was mainly due to the drop in lending interest rates which were warranted by market conditions and the time lag in re pricing of the long term borrowings.

Net fee and commission income of DBB in the current period increased by 25% to Rs.743m compared to Rs.596m in the previous comparable period. Fee income is generated largely by DVB the commercial banking subsidiary from trade finance and commercial banking services. Fee income also included consultancy fees earned from overseas assignments undertaken during the period.

Capitalising on the upward momentum in the stock market, on 31 October 2014 the bank divested the entire holding of 9.92% ordinary voting shares of Nations Trust Bank PLC and realised a capital gain of Rs. 829 m. The bank was able to divest some of the other mature equity holdings as well and generate a further capital gain of Rs.306 m during the period.

The forward exchange contracts are accounted as a derivative and its fair value changes are reported as net gain/(loss) from financial instruments at fair value through profit or lossin the income statement.

The revised impairment assessment methodology implemented during the first quarter has been consistently applied during the period ended 31 December 2014. The cumulative allowance for impairment for loans and advances was maintained at a healthy level of 63% as a percentage of impaired loans and advances of DBB on 31 December 2014.

Due to stringent cost management DBB was able to contain the overall operating cost increases to 11.6% over that of the comparable period while absorbing a 3.9% cost increase in the current period expenses due to a charge for Nation Building Tax which was introduced with effect from 1 January 2014.

In common with banking industry, the personnel cost is a significant proportion of the operating expenses. The personnel cost of DBB increased by 6% in the current period to Rs. 1,252m from Rs.1,178m in the comparable period. Salary and benefits in DBB were revised in October 2014 following a survey to bring these in line with market. DBB added four more branches during the period.

Investments: Listed shares are classified as available for sale and carried at fair value. Fair value changes that represent unrealised gains/loss are recognised in other comprehensive income. During the period ended 31 December 2014, due to market appreciation of available for sale securities there was a fair value gain of Rs.6,204 m. In the comparable period the fair value gain was Rs.1,287 m.

Equity capital: Under SLFRS, the total income for the period comprises the income reported in the income statement and other comprehensive income. The equity capital is significantly augmented due to the gain as a result of the recognition of shares listed in the Colombo Stock Exchange and owned by the bank at fair value.

Prudential indicators: The capital adequacy and liquidity ratios continued to be well above the stipulated regulatory minimum. The regulatory capital computation excludes fair value changes on financial assets classified as available for sale.

Proposed amalgamation with National Development Bank PLC: A considerable amount of preparatory work relating to the proposed amalgamation has been undertaken during the period under review. The Bank will await further information on this matter from the regulators before deciding on the next steps.

Events occurring after 31 December 2014: In terms of the DFCC Bank (Repeal and Consequential Provisions) Act No 39 of 2014 the DFCC Bank was incorporated under the Companies Act as a public company listed in the Colombo Stock Exchange with the name ‘DFCC Bank PLC’ (Company Registration No. PQ 233) with effect from 6 January this year and will continue to carry on its business as a licensed specialised bank without any interruption.
www.ft.lk