Sri Lankan shares down to near 5-week low ahead of holiday

Sri Lankan shares ended near a five-week low in thin trade on Monday ahead of a public holiday, while political uncertainty before a parliament election announcement dented sentiment.

The main stock index fell 0.35 percent to close at 7,195.19, its lowest finish since April 30.

"It is a sandwich Monday. So some investors are on holiday," said a stockbroker on condition of anonymity.

Both the stock and currency markets will be closed for a Buddhist religious holiday on Tuesday. Markets will resume trading on Wednesday.

Foreign investors were net buyers for the first time in five sessions. They bought a net 39.9 million rupees worth of shares on Monday, after having sold 1.49 billion in the previous four sessions. The bourse has seen net inflows of 4.49 billion rupees in equities so far this year.

Despite political uncertainty, stockbrokers said better corporate earnings would help the market gain in the future despite the parliament election this year.

"We don't see any major dip in performance," the stockbroker said.

Turnover was 730.8 million rupees ($5.5 million), well below this year's daily average of about 1.13 billion rupees.

Political uncertainty due to the Ranil Wickremesinghe-led government not having a majority has been a drag on the market, though the trend reversed after the central bank cut key monetary policy rates to record lows on April 15.

The index has gained 4.3 percent since the rate cut.

Market heavyweight John Keells Holdings fell 0.51 percent, while large-cap Nestle Lanka fell 2.32 percent, dragging the overall index.

President Maithripala Sirisena's government has said it would dissolve parliament once some crucial reform bills are passed. But it has not scheduled a date for the election.

Analysts say investors are hoping for a stable government after the election coupled with strong economic measures would boost confidence. 

($1 = 133.9000 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Prateek Chatterjee)

Softlogic Capital records 782 M profit

Softlogic Capital PLC which is the financial services holding company of the Softlogic Group, reported Profit after Tax for the Sector of Rs 782 Million for the financial year ended March 2015. The result was more than double previous year's PAT of Rs 309 Million.

The numbers are unaudited and were released to the Colombo Stock Exchange on 25th May. Turnover for the sector after consolidation was Rs 9.95 Billion, an increase of 20% compared with the previous year, whilst pre-consolidation turnover was Rs 10.4 billion.

The Financial Services Sector of the Group offers a comprehensive range of products and services to all of their client segments comprising; Retail, SME, Corporate, Institutional and High Networth clients, that covers Life and General Insurance, Leasing and Finance, Equity Broking and Asset Management. Softlogic Capital PLC has as its subsidiaries; Asian Alliance Insurance PLC, Asian Alliance General Insurance Ltd, Softlogic Finance PLC and Softlogic Stockbrokers Pvt Ltd.

The Sector performance for the year were driven by contributions from Asian Alliance Insurance that posted PAT of Rs 705 Million, Softlogic Finance PLC PAT of Rs 216 Million, Softlogic Stockbrokers PAT of Rs 63 Million. Softlogic Capital PLC returned a PAT of Rs 213 Million compared to a loss of Rs 108 Million in the previous period.

The Softlogic Group that entered the financial services arena in the latter part of 2010, within a short period of just 4 years, has quickly moved to streamline and significantly enhance its acquisitions whilst securing the necessary resources for the aggressive business plans that have been laid out. The Sector has focused on developing the teams in each business, upgrading talent, enabling breakthrough product development and enhancing the brand awareness of the respective companies to fast track business acquisition.

This has delivered impressive results for the year with Asian Alliance performance at PAT level improving by 22%, Softlogic Finance by 31% and Softlogic Stockbrokers improving their performance five-fold. Total Assets of the sector were Rs 32.9 billion as at 31 March 2015 and recorded an increase of 12% for the year compared with Rs 29.6 billion as at 31 March 2014.

Softlogic Capital PLC is part of the Softlogic Group that is one of Sri Lanka's most diversified and fastest-growing conglomerates, with interests in Healthcare, Retail, ICT, Leisure, Automobiles and Financial Services. The Board of the Company comprises; Ashok Pathirage Chairman, Iftikar Ahamed Managing Director, Lucille Wijewardena, Ajitha Pasqual, Harris Premaratne, Erandi Wickremarchchi.
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Expolanka posts Rs 287m PAT for Q4

Expolanka Holdings posted a revenue of Rs 13. 9 billion for the final quarter of the financial year 2014/15 with a growth of 14 percent compared to the corresponding quarter of the previous year. Profit after tax reached Rs 287 million for the final quarter of this year recording a growth of 181 percent in comparison to the corresponding quarter of the previous year.

“A year after implementing the strategic restructuring plan and striking a partnership with SG Holdings Japan, we are pleased with the progress and confident about our future.The solid platform built with the synergy gained from our partnership with SG Holdings Japan and the focused restructuring strategy will result in aggressive growth in the coming years,” Expolanka Holdings Group CEO and Director, Hanif Yusoof said.

The strategic restructure was undertaken with the aim of focusing the Group attention on core business sectors, Freight and Logistics and Travel and Leisure.In spite of the positive growth during the final quarter of this financial year, the Group’s net profit declined to Rs 1 billion from Rs 1.5 billion recorded during the financial year 2013/14 mainly due to one off gains recorded in the previous year related to divesting several non-core businesses.

Freight and Logistics sector posted a revenue of Rs11.9 billion for the fourth quarter indicating a healthy growth of 36% from the recorded revenue of Rs 8.7 billion during the same period last year. Strong performance from North America Trade lane coupled with steady growth in Asia trade lane supported this growth. The Net Profit for the sector reached Rs 407 million for the quarter which is a 100% growth compared to similar period last year.

Travel and Leisure sector posted a revenue of Rs 747 million for the financial year 2014/15 demonstrating a healthy growth of 31% from the recorded revenue of Rs 568 million during the same period last year. “We are confident in achieving sustainable growth and I believe that our well defined plans will continue to bear fruit in the future,” Yusoof added. 

www.dailynews.lk

MBSL Insurance on profit part with Rs. 35 mn target for 2015

Shirajiv Sirimane

The MBSL Insurance Company, which suffered staggering Rs. 214 million losses in 2013 and 2014 had made a remarkable u turn and is on its way to post record profits.

The new Chairman of the Company, said that due to poor management the company suffered Rs. 172 million losses in 2013 and another Rs. 42 million loss in 2014. The irony of this is that the company had posted a Rs. 8.1 million profit in 2012.

Chairman, T. M. S. Nanayakkara, an eminent lawyer said that in addition to bad management there were several bad under writing decisions that led to the bleeding of the company. “After I took over in January, in addition to adopting several meaningful cost cutting measures, we also has a ‘tighter’ and ‘right’ control of paying back claims. I think maintaining tough financial discipline in all sectors was a key to this turn around.”

On the guide line of the Minister of Finance, Ravi Karunanayake several other meaningful steps were also taken to turn around the company.

He said that tough steps were also taken to collect their long standing debts and now they have being able to post a profits of Rs. 6.18 million for last April 2014. “This I think is a remarkable turnaround and the staff too contributed greatly towards this.”

The company which was earlier known as ABC insurance has now set a profit target of Rs. 35 million for 2015 end. “This would be an all time record for the company. But I am sure with more brand awareness and our robust expansions plans, MBSL Insurance should be able to certainly over run this target by a couple of millions”

The Chairman said that they have now put in place a five year corporate plan that also includes regional expansion. “We will add six more branches by the end of this year in strategic places”.

MBSL would soon separate the life and general segments and would also go Public. “We would also go for a new branding and look at introducing several Industry first products soon.” 

www.dailynews.lk

Tea Smallholder Factories PBT tops Rs 29.41 m for FY-14/15

Tea Smallholder Factories PLC’s profit before tax (PBT) for the financial year 2014/15, was Rs.29.41 million, this being a 74 percent decrease over the PBT of Rs.112.24 million recorded in the previous financial year.

The profit attributable to the equity holders of Rs.35.99 million was a 56 per cent decrease over the Rs.81.48 million reported in the previous financial year.

The decline in profitability is primarily on account of the 4 percent reduction in the average sales price for low grown tea in the financial year 2014/ 15 compared with the previous financial year. Revenue was Rs.2.52 billion, this being a decrease of 6 per cent over the revenue of Rs.2.68 billion recorded in the previous financial year. www.dailynews.lk

Asian Hotels PBT tops Rs. 2.32b for 2014/15

Asian Hotels and Properties PLC recurring profit before tax of Rs.2.32 billion for the financial year 2014/15.

The recurring profit before tax (PBT) for the financial year 2014/15, excluding the fair value gains on investment property, was Rs.2.32 billion, a decrease of 16 per cent over the recurring PBT of Rs.2.78 billion recorded in the previous year.

The recurring profit attributable to equity holders of the parent of Rs.1.74 billion represented a decrease of 18 per cent over the Rs.2.13 billion recorded in the previous financial year.

The Group revenue for the financial year 2014/15 was Rs.8.08 billion, this being a marginal decrease of 2 per cent over the Rs.8.26 billion recorded in the previous financial year.
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People’s Bank ups 1Q pre-tax profit by 17.3% to Rs. 4.02 b

With an impressive 91.9% increase in net interest income, People’s Bank unveiled a cascade of ground-breaking financials in a splendid all-round performance in the first quarter ended 31 March 2015.

The net interest income zoomed to Rs. 12.16 billion in the first quarter 2015 compared to Rs. 6.34 billion during the corresponding period in 2014.

The bank’s pre-tax profits surged to Rs. 4.02 billion, witnessing 17.3% growth in comparison to Rs. 3.43 billion in the first quarter of 2014.

Profit after tax also saw a satisfactory 11.4% growth, climbing to Rs. 2.84 billion in 2015 from Rs. 2.55 billion the previous year. Net operating income ballooned to Rs. 11.77 billion from Rs. 9.41 billion in 2014 – a 25.1% increase over the period under review.

The bank’s total assets grew by 3.1% to Rs. 1.06 trillion by 31 March 2015 compared to Rs. 1.03 trillion in December 2014. Tier 1 of the capital adequacy now stands at 10.5%, while the total capital ratio is 13.4%.

The overall savings base of People’s Bank increased to Rs. 328 billion in the first quarter, in comparison to Rs. 318.9 billion at the end of 2014.

With a 7% growth, Gross Loans stands at Rs. 732 billion at present, compared to Rs. 685 billion in December 2014.

People’s Bank Chairman Hemasiri Fernando described the achievements as “very satisfactory and encouraging,” as Sri Lanka’s second biggest Government-owned financial institution continued to cruise to greater heights with numbers that underlined healthy growth and progress.

“As a singular and focused bank, the significant growth in the savings and loans portfolios and other segments were well placed and did work out as planned,” he stressed.
“We have launched an ambitious project to make People’s Bank the most digitalised bank in Sri Lanka,” the Chairman stressed.


There are certain deficiencies in the banking operation, which demands remedial measures, he said. “We should further improve customer care, introduce new and modern technology and change the general attitude of employees through training.”

Fernando said that the necessary funds to digitalise People’s Bank had already been budgeted and the initiative would be launched soon. It is an investment to make the bank a state-of-the-art, efficient and customer-friendly financial institution.


“I have no doubt that with the present team of management headed by the GM, we will be able to achieve this objective without much difficulty,” the Chairman said.

CEO/General Manager N. Vasantha Kumar said that further improving customer care and staff training and development were key areas that the bank was focusing on in its onward journey to achieve greater excellence.


“I am happy about the financials of the first quarter 2015 and we need to focus more on the SME sector and credit growth in the second quarter,” he noted.

Kumar underscored that digitalisation could produce better results and People’s Bank, which remained the ‘Pulse of the People,’ expected more growth in deposit mobilisation as well as lending.


“We have rebranded our loan portfolio and it is now easy to understand and easy to make use of,” he said.

People’s Bank closed 2014 with an impressive performance by posting a record Rs. 1 trillion on its balance sheet, only the second bank in Sri Lanka to do so. During the year, the bank also notched the best profitability for a year-end since its inception in 1961.
www.ft.lk

Hemas posts underlying earnings growth of 23.5% in FY15

For 2014/15 Hemas Holdings PLC has recorded consolidated revenues of Rs. 32.5 b, a 19.2% growth over last year, while operating profits and earnings were Rs. 3.4 b and Rs. 1.9 b respectively, a decline of 3.2% and 20.0%.

Excluding the discontinued Power sector operations and one-off items recognised the previous year, the Group recorded an underlying growth of 27.5% in operating profit to Rs. 3.1 b, while the profits attributable to the parent grew by 23.0% to Rs. 1.9 b.

Hemas CEO Steven Enderby said the renewed focus on Wellness businesses was intended to drive superior growth and the company had seen the results of this in personal care where there has been 23.1% growth in sales and 24.6% growth in profitability.

“We have delivered strong performance with multiple brands including, our multi award winning beauty soap Velvet, good growth in baby care with Baby Cheramy maintaining its strong leadership position, Clogard and Diva performing well and our new Fems range gaining market share. Of particular note has been the progress of our personal care business in Bangladesh. During the year we have established our own sales and distribution network in Bangladesh enhancing our market coverage and providing us with more detailed insight in consumer behaviour,” the CEO said.

Hemas Healthcare sector performed well recording a revenue growth of 15.4% and a profit growth of 41.9% for the period under review. In pharmaceuticals Hemas has seen a topline growth of 9.8%. The pharmaceutical manufacturing subsidiary JLMorison recorded strong growth in both revenues and profitability of 14.7% and 16.2% respectively.

“This is an excellent performance in pharmaceutical markets which have been subdued, showing negative growth based on IMS data,” Enderby said.

He said Hemas hospitals have performed well in 2014/15 with an overall growth in revenue of 34.9%. All three hospitals have grown, with Wattala building its reputation in orthopaedics, Thalawatugoda developing its patient base and Galle growing well even with new competition emerging. Dr Lakith Pieris has joined Hemas Hospitals as Managing Director to spearhead the ongoing growth in this sector.

Hemas Hotel revenues grew by 23.3% over last year and profits by 42.9%. However these growth levels have in part been driven by lower room inventory in 2013/14 due to the hotel closure for refurbishment. Performance for the period was impacted by the conflict in Ukraine and the significant depreciation of the Euro.

“The development of our two new properties Anantara Peace Haven Tangalle and Anantara Kalutara continue and we look forward to the opening of both of these properties in 2015/16,” the CEO said.

The Transportation Sector continued to generate strong growth during the year, posting revenue growth of 16.1% led by maritime and logistic segments. To signify the continued growth momentum in the maritime segment Hemas Transportation entered into a joint venture with Far Shipping Singapore to consolidate its presence in the region. “Our Logistics segment performed well experiencing full capacity at our warehousing complex, while our container yard was successful in securing new clients,” Enderby said.

Hemas IT solutions business N*able has also delivered a record year growing revenues and profits by 26.2% and 144.3%.
www.ft.lk

JKH sets the record straight on Waterfront project

Premier blue chip John Keells Holdings (JKH) has set the record straight on the landmark Waterfront project, which entails the biggest-ever private sector investment of over $ 650 million.

In JKH’s 2014/15 Annual Report, Chairman Susantha Ratnayake has assured shareholders that the Waterfront project will continue. He also clarified about the casino operations.

“For clarity, we wish to state that Waterfront was to lease a 150,000 square foot area, this being a mere 3% of a total area of 4.5 million square feet of the constructed area, to an existing casino licence holder to operate in partnership with an international Gaming operator under strict gaming regulations consistent with the best in the world. Waterfront Properties Ltd. did not intend to operate a casino nor did it intend to own a casino licence,” the JKH Chief has said in his review in the Annual Report. 

He said it was also noteworthy that the Waterfront project “did not request, and, in fact, turned down, any tax exemptions on gaming activities under the Strategic Development Projects Act”.

“I wish to reiterate that Waterfront is uniquely placed to cater towards the emerging requirements of the contemporary tourist and the increasing Meetings, Incentives, Conferences and Exhibitions (MICE) traffic, particularly from India, with services, products and facilities that are on par or exceed those of other regional destinations,” Ratnayake said. 

“This, I am confident, will enable us to attract the high spending segment of tourists which Sri Lanka has hitherto been unable to satisfy. It is indeed this vision of Colombo as a hub for business and leisure travel which was at the heart of conceptualising the Waterfront project,” the JKH Chairman added.

The project consists of an 800-room luxury hotel, large high-end retail mall, luxury residencies, state-of-the-art office space and convention, ballroom and banqueting space.

Construction work on Waterfront, which is funded by a mix of equity and debt, started in April last year and is scheduled to complete in 2018.

According to JKH, said demand for both residential and commercial spaces continue to remain encouraging with 20% and 30% of units available for sale being reserved as of 31 March 2015 respectively.

Ratnayake also said JKH was confident that the investments which it was making today in pursuing a sustainable long-term future “will result in improved returns on our capital employed in the medium to long term”.

Via the release of its accounts last week, JKH proved its prowess in the league of listed corporate entities, finishing the 2014/15 financial year with the highest-ever profits.

Consolidated pre-tax profit of JKH grew by 25% to a record Rs. 19.08 billion and after-tax profit by 22% to Rs. 15.74 billion. The bottom line or profit attributable to equity holders of the parent grew in a similar fashion to Rs. 14.35 billion in comparison to FY14.JKH’s results in FY15 set an all-time record for a listed corporate entity. The impressive profitability came despite a modest 6% growth in Group revenue to Rs. 91.58 billion.

In the Chairman’s Review, Ratnayake said from a portfolio and diversification perspective, the investments in key growth industries such as the Consumer Foods and Retail and Financial Services industry groups have borne fruit, contributing towards a more balanced portfolio and a diverse stream of cash flows.

These two industry groups in particular have scaled up significantly over the last few years and now account for nearly 25% of Group PAT even after eliminating for the impact of the one-off capital gain on the disposal of the General Insurance business.

The prospects for Consumer Foods and Retail and Financial Services, in particular, are promising given the significant under-penetration of consumption, banking and insurance in comparison to other regional markets, the JKH Chief said.

“The outlook for our other industry groups is also positive considering the growth prospects of the country and the continued growth in tourism,” Ratnayake added.
Urgently review land restriction legislation: JKH

Premier blue chip John Keells Holdings (JKH) has called for an “urgent review” of the Land Restrictions legislation passed by the previous regime, saying it deters capital formation and foreign investment in the country.

Amidst widespread concerns from the private sector, the Land (Restrictions on Alienation) Act was legislated on 29 October 2014 with retrospective application from 1 January 2013.

JKH Chairman Susantha Ratnayake in his review in the company’s 2014/15 Annual Report said that whilst it recognised and appreciated the need to monitor and manage the freehold sale of land to foreign nationals, JKH was of the view that the Act had much ambiguity.

“The uncertainty it creates as a result will be deterrents to capital formation and foreign direct investment in Sri Lanka and, therefore, requires urgent review,” emphasised Ratnayake.
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