Chevron Lanka 1Q15 net profit down

Says would be liable to pay a total of Rs.847.3 million as Super Gains Tax 
Chevron Lubricants Lanka PLC, the local unit of US-based multi national saw its net profit for the quarter ended March 31, 2015 (1Q15) falling Rs.210 million amid subdued top line growth, the interim financial accounts released to the Colombo Stock Exchange showed. 

The earnings per share deteriorated to Rs.6.19 from Rs.6.36. The revenue for the quarter under review fell by Rs.177 million to Rs.2.81 billion while the gross profit fell to Rs.1.19 billion from previous year’s Rs.1.24 billion despite a considerable fall in cost of sales from Rs.1.74 billion to Rs.1.161 billion. 

The administrative expenses also edged down to Rs.108 million from Rs.115 million. 

The finance income fell to Rs.28.7 million from Rs.45 million. 

The company said it would be liable to pay a total of Rs.847.3 million as Super Gains Tax in three equal installments in May, July and September if the Draft Act gazetted by the government for the imposition of the tax is enacted by Parliament. 

 However Chevron Lubricants Lanka said it had not provided for the liability. The company has announced Rs.5 per share as first interim dividend. 

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BOC posts Rs. 20.3 billion profit before tax

The Bank of Ceylon (BOC) closed its 75th year by recording the highest ever profit before tax (PBT) in the bank’s history as well as in the Sri Lankan banking industry of Rs.20.3 billion, up 29 per cent compared to the previous year, according to a BOC media release.

Post tax profit stood at Rs. 13.6 billion – a 12 per cent growth. “The group has reported Rs.21.4 billion PBT recording a 33 per cent growth over last year with the bank dominating the results of the group accounting for 95 per cent of earnings and 97 per cent of the group’s assets,” the release added.

Despite the dip in interest margin due to the low interest rate regime, PBT was boosted by fee income, trading income and gains from financial investments. Fee income increased by 42 per cent to Rs.9.2 billion due mainly to the increase in export and import transactions and guarantees fees, it said, adding that net gains from trading in treasury bills and dealing securities grew by 50 per cent to Rs.4.9 billion. “Increase in these income bases shows the bank’s ability to find alternative income generating channels at difficult times.”

Amidst the challenging operating environment which prevailed throughout most of the year, the bank’s assets grew by 11 per cent to Rs.1.3 trillion, the release said. The bank is the first domestic bank to achieve a trillion assets balance sheet and continues as the only bank to have done it so far. BOC is the largest provider of finance to both Government and private sectors.

Loans and advances account for 56 per cent of the bank’s one trillion asset base and gross loans stood at Rs.777.5 billion as at end 2014. The release said that the growth of the assets was also supported by the increase in financial investments and reverse repurchase agreements. “Even though the asset growth is at a moderate level, BOC continues to secure its market leadership in terms of assets, advances, deposits, profits, NRFC deposits and Inward Remittances.”

Deposits accounted for 74 per cent of the bank’s liabilities as at the end of 2014, according to the release which said that the total customer deposit base has grown from Rs.842.1billion in December 2013 to Rs.934 billion as of end 2014 amidst interest rate margin pressure.

“This is an 11 per cent growth and is in line with the industry growth rate which reflects the strong domestic franchise of the bank. The CASA ratio also has been improved to 43 per cent from 38 per cent resulting in a favourable deposit mix.”
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LAUGFS to buy second ship

By Duruthu Edirimuni Chandrasekera

Laugfs Gas PLC’s new subsidiary, Laugfs Maritime Services (P) Ltd (LMS) with plans to strike partnerships in international shipping, logistics and maritime services, is to ink its second cargo ship deal next week, officials said.

“We were on the lookout for a second liquefied petroleum gas (LPG) vessel, having secured our first last September and we’ll finalise this deal in a few days time,” an official told the Business Times.

The company has been inspecting many ships over the past few months. According to him, the first cargo ship had an initial investment of US$ 6.9 million while the new ship will cost about the same. “Our first ship was named as ‘Gas Challenger’ and we will appropriately name the second one which will sail under the Sri Lankan flag,” he added.

He said that plans to sign with international partners for business in this area are also progressing. “Many international firms are talking to us,” an official told the Business Times, adding that those in discussion are mostly British and Middle Eastern firms.

LMS will own, operate, hire and charter various types and sizes of ships including LPG vessel and other type of vessel that can carry various energy products and depending on the need each year LMS has plans to acquire a ship.

The official said that Laugfs Gas PLC wants to collaborate with their suppliers in a bid to trade LP Gas and oil in the South Asian region as well. The LP Gas supply in Asia is mostly linked to refining. In the Middle East, it’s linked mostly to associated gas with a growing linkage to non-associated gas, whilst North America is essentially linked to non-ssociated gas, he said, noting that the company is surveying all these aspects in its decision to enter countries in the South Asian region.

The company also has plans to set up a LPG storage terminal to be commissioned in two years.
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Stockmarket and bond market mafia in for a rude shock

By Duruthu Edirimuni Chandrasekera

Sri Lanka’s so-called stock and bond market mafia dons seem to have no bearing in the change in government, but they’ll wake up to a ‘rude shock’, a top government minister 

warns.

“This mafia whether in the stock or bond market seem to have no bearing to the change in government. Well, they’re living in false hope. They’ll wake up to a rude shock one day,” Harsha de Silva, Deputy Minister of Policy Planning and Economic Affairs, told the Business Times recently.
In this light, he said that probes on malpractices in related sectors are now on full speed.

Pertaining to the Securities and Exchange Commission (SEC) probes, Dr. De Silva added that delay in these investigations was mainly due to inadequate staff and some insider dealings’ of a unique kind. “The issue was with not having the right staff and also these probes were hampered by people within/inside (the SEC) who are connected to the stockmarket mafia,” he said, adding that, “Now with the new Director General at the SEC, share market manipulations are being investigated and the SEC chairman would have the ability to quickly move this process.”

On April 10, Vajira Wijegunawardane was appointed as the SEC Director General.

The SEC recently called for information from the Colombo Stock Exchange (CSE) on suspect transactions during 2011-2013, sources close to CSE said.

Dr. De Silva added that large scale and significant reforms in the financial markets are being done.

“We want to remove the conflicts of interests that the Central Bank (CB) has with Public Debt Department and the Employee Provident Fund (EPF).”

He reiterated that the country needs a good public debt management strategy.

“There were so many adhoc decisions in the past that may not have resulted in the optimum borrowing strategy for the country.” He added that now, some Rs. 672 billion worth of bills need to be settled for which no proper allocation seem to have been made in the earlier regime.

“There has been a window dressing of accounts. Despite the earlier regime saying that debt to GDP was falling, the actual debt burden hasn’t been captured. It’s outside of contingent liabilities.” He added that as a result, debt sustainability is different to what was said at that time.

“It’s in this context that we are trying to bring in a transparent, realistic and appropriate debt management programme,” he added.
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Fresh Interpol alert to arrest former CIFL chairman

By Quintus Perera

President intervenes to help desperate depositors

President Maithripala Sirisena’s intervention in the crisis at the battered CIFL (Central Investment and Finance Ltd) where depositors are struggling to get their money back has led to a renewed Interpol alert to arrest the company’s former chairman Deepthi Perera said to be hiding in Thailand.

K.W. Gunawardena, President, CIFL Depositors’ Association (CIFLDA), told the Business Times that on April 17 at the request of the President, a 4-member association delegation met him at his official residence at Wijerama Mawatha, Colombo.

The President told the delegation that he has submitted all the documents that were tendered to him by CIFLDA (prior to the presidential election) to the relevant officials to process them in order to settle the dues to the CIFL depositors, according to Mr Gunawardena.

He said that in the meantime, Senior Advisor to the President, Thilak Ranavirajah who has been assigned by the President to coordinate the issues between the association and the authorities has sent a memorandum to the CIFLDA, the Central Bank and the CID.

The CID Interpol OIC is taking necessary steps to bring down former CIFL Chairman Deepthi Perera, accused of misappropriating Rs. 1.6 billion of CIFL money, from Thailand where he is learnt to be at the moment. When the President was told that a similar alert had been issued some months back but little action had been taken, he had instructed the authorities to pursue the matter vigorously.

The CID, which has already alerted the Interpol on this matter, will renew the request.

Mr. Gunawardena said that the CID also has submitted a B Report to the Attorney General in a bid to file a court case against Mr. Perera. He said the President’s intervention in this manner was a blessing since 30 of their members who were senior citizens have died unable to meet their medical expenses as these elderly persons were living on the interest they received on the lifetime savings deposited in CIFL.

He said that 75 per cent of their members are all senior citizens and out of them more than 50 are in a pathetic situation having cancer, heart failure, kidney problems, high cholesterol and diabetic as they find it very difficult to get necessary funds to meet their medical expenses.

Mr. Gunawardena said that President Sirisena has instructed the Finance Ministry Secretary to take all necessary action to settle the CIFL crisis. He said that most probably, as a result of persistent media coverage on CIFLDA agitations (particularly the Business Times), the Central Bank recently inserted a newspaper advertisement in all three languages requesting all CIFL depositors to submit details of their deposits on a format given in the advertisement and that this information would be directed to the KPMG audit firm.
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