Sri Lankan shares end steady; Keells bounces back

Sri Lankan shares closed steady in thin trade on Friday led by market heavyweight John Keells Holdings Plc, rising from a six-week low hit the previous session, but concerns over political uncertainty before elections to parliament hit sentiment.

President Maithripala Sirisena's government has said it would dissolve parliament once some crucial reform bills are passed, but has yet to fix a date for the election.

The main stock index ended 0.03 percent higher at 7,122.73, edging up from its lowest close since April 23 hit on Thursday.

"The market is very slow with the political uncertainty. This trend will continue till the elections are over," said Dimantha Mathew, research manager at First Capital Equities (Pvt) Ltd.

"Keells bounced back today on the lack of foreign selling after heavy selling we have seen last few days."

Analysts said foreign investors sold shares amid expectations the U.S. would hike key interest rates sooner than later.

Foreign investors were however net buyers on Friday for the first time in three sessions, buying 22.9 million rupees ($171,023.15) worth of shares after offloading a net 1.55 billion rupees worth shares in the past eight sessions.

The bourse, however, has seen net inflows of 4.38 billion rupees in equities so far this year.

Despite political uncertainty, stockbrokers said better corporate earnings would help the market gain.

Turnover was 517.7 million rupees, the lowest since April 20 and less than half this year's daily average of about 1.12 billion rupees.

Political uncertainty 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.

On Friday, losses in Ceylon Tobacco Company Plc, which fell 1.37 percent, were outpaced by gains in conglomerate John Keells Holdings which rose 2.09 percent, helping the overall index end steady.

($1 = 133.9000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal; Editing by Biju Dwarakanath)

Com Bank renames Indra Finance as Serendib Finance

Commercial Bank has re-named its fully-owned subsidiary as Serendib Finance Limited, nine months after it acquired Indra Finance.

Acquired by Commercial Bank on September 1 2014, the company will operate under its new name and a new corporate logo, the announcement said.

While retaining its share in the motor vehicle leasing market as well as in hire purchase, mortgage loans and consumer finance, Serendib Finance -- which operates 11 branches in Sri Lanka -- will, with the backing of the country's largest private bank, seek to consolidate and expand its reach, the Bank said.

The acquisition of Indra Finance and the re-launch of the Company under a new name would also benefit the Bank by enabling it to further extend its leasing operations and penetratenew customer segments to enhance its strengths in leasing through its ability to offer lower priced finance options to customers who finance vehicles through Serendib Finance, Commercial Bank's Managing Director and CEO Jegan Durairatnam said.

"Commercial Bank had identified leasing as an area for development as part of its strategic expansion to reach untappedmarket segments and business lines, and saw the potential of Indra Finance in this context," Durairatnamsaid. "The acquisition is therefore expected to be beneficial to both customers and the stakeholders of the renamed Indra Finance."

The adoption of the new name Serendib Finance is supported by a re-branding initiative which included redesigned signage at the Head Office and branches of the Company and the launch of a new logo.

Indra Finance Limited was incorporated in 1987. The company was licensed as a Specialized Leasing Company in 2007 and then as a Licensed Finance Company in 2013. The company's principal activities are granting lease facilities, hire purchase, mortgage loans and other credit facilities.
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Colombo fastest growing city in MasterCard Global Destination Cities Index

* Five Asian cities – Bangkok, Singapore, Kuala Lumpur, Seoul and Hong Kong – make it into Global Destination Cities Index top 10




Colombo leads the pack as the fastest growing city in terms of international overnight visitor numbers in the annual MasterCard Global Destinations Cities Index released yesterday. 

The rapid rise in tourism after the end of Sri Lanka’s long running civil war brought about Colombo’s double-digit cumulative annual growth rate over the last six years. Seven of the top 10 fastest growing cities by visitor number over this period are in Asia.

Forecasted top 10 fastest growing cities are: 1. Colombo – 21.1%, 2. Chengdu – 20.7%, 3. Abu Dhabi – 20.4%, 4. Osaka – 19.8%, 5. Riyadh – 18.0%, 6. Xi An – 16.2%, 7. Taipei – 14.9%, 8. Tokyo – 14.6%, 9. Lima – 13.9%, and 10. Ho ChiMinh City – 12.9%

In addition, Asian cities continue to dominate the index, making up half of the top 10. Bangkok has retained its position at number two with 18.24 million international overnight visitors and is catching up with top-ranked city, London.

Singapore, Kuala Lumpur, Seoul and Hong Kong round off the top 10, taking seventh, eighth, ninth and 10th place respectively.

Forecasted international overnight visitors to the top 10 cities: 1. London – 18.82 million, 2. Bangkok – 18.24 million, 3. Paris – 16.06 million, 4. Dubai – 14.26 million, 5. Istanbul – 12.56 million, 6. New York – 12.27 million, 7. Singapore – 11.88 million, 8. Kuala Lumpur – 11.12 million, 9. Seoul – 10.35 million, and 10. Hong Kong – 8.66 million.

Driven by insights into travel patterns, the Global Destinations Cities Index provides a ranking of the 132 most visited cities from around the world. More than just a travel tracker, the Index provides an understanding of how people move around the world and the importance of the world’s cities as homes, destinations and engines of growth.
The report can be downloaded in full at http://news.mstr.cd/1BGlGSw.

MasterCard South Asia Executive Director Vikas Varma commented: “Colombo’s ranking as the fastest growing city on MasterCard’s latest Global Destination Cities Index reflects the rising appeal of Sri Lanka as a tourist destination. Having been in the market for over 25 years, MasterCard sees great potential in the island nation. We will continue to showcase Sri Lanka as a premier tourist destination across our network, offering several exciting benefits and privileges for travellers.”

Chief Economist and MasterCard Center for Inclusive Growth Academic Advisory Council Chair Dr. Yuwa Hedrick-Wong said: “Against a background of generally weak global economic growth and anemic pace of exports, a vibrant tourism sector is providing a powerful boost to income and job creation in Asia Pacific. As shown by MasterCard’s latest Global Destination Cities Index, Asian cities dominate among the leading destinations in the world in attracting international visitors arriving by air. Even more astonishing is that seven out of the world’s top 10 fastest growing destination cities are in Asia Pacific, which is a strong leading indicator of their continuing outstanding performance in the years to come.”

The majority of visitors to cities in Asia originate from within Asia Pacific. This may help to explain the continued growth of visitor numbers over the last five years as European and North American markets experienced economic slowdown. The top five feeder cities to Bangkok, Singapore and Kuala Lumpur in 2015 are all in Asia Pacific. However, this shows the lack of diversity in the origin of visitors to many destinations in Asia, which presents risks to long-term resilience to any global economic shocks.

The challenge going forward for many of these otherwise very successful destination cities is to diversify their sources of visitors while maintaining their robust rates of growth. Nevertheless, globally, international overnight visitor numbers and their cross-border spending have consistently grown faster than world real GDP since 2009.

The MasterCard Index of Global Destination Cities ranks cities in terms of the number of their total international overnight visitor arrivals and the cross-border spending by these same visitors in the destination cities, and gives visitor and passenger growth forecasts for 2015.

Public data is used in deriving the international overnight visitor arrivals and their cross-border spending in each of the 132 destination cities, using custom-made algorithms; paying special attention to eliminate the hub effects for destination cities such as Singapore, Dubai, Amsterdam and Frankfurt.

This Index and the accompanying reports are not based on MasterCard volumes or transactional data.
www.ft.lk

CIC Holdings records turnaround performance in 2014/2015

* Rebounds from loss of Rs. 1.1 b in FY 14 to profit of Rs. 1 b in FY15​

CIC Holdings PLC recorded an impressive performance for the financial year ending 31 March 2015. 

Group profit after tax (PAT) was recorded at Rs. 1040.84 million, a strong improvement over last year’s loss of Rs. 1,126.84 million. The Group recorded revenue growth of 3%, a continuing business turnover growth of 9% and profit before tax of Rs. 1,423.12 million, demonstrating a turnaround business performance.

CIC’s Agriculture and Livestock division and its Consumer and Pharmaceutical division contributed to 60% and 25% of the group’s total revenue respectively. The company’s improvement in profitability from a loss of Rs. 847.25 million to a profit of Rs. 512.55 million is a testimony to its strength and ability to implement effective change.

CIC Holdings’ profitability has also had a positive impact on the Group’s operating cash flow. The group interest cost has reduced by more than 50% and this saving goes beyond interest rate reductions and can be attributed to careful financial management.

No dividend was declared in the previous year; however, two interim dividend payments of Rs. 1 per share were paid in September 2014 and March 2015.
CIC’s impressive performance is part of a new direction and strategy for growth that the Group has undertaken.

Commenting on CIC’s performance, CIC Holdings PLC Chairman S.H. Amarasekera stated: 

“The Board of Directors has re-strategised the way forward for CIC and embarked on a much needed restructuring programme during the period under review. Our focus was on ensuring sustainable business growth and long-term returns. The past year has been immensely challenging and has tested the resilience of both the company and the group. Now we are well on track to performing at an even higher level in the year ahead. CIC Holdings will continue to focus on innovation, product development, market development and technology to drive our business forward.”

CIC Holdings PLC Managing Director/CEO S.P.S. Ranatunga stated: “Our success in this financial year is due to expertise of the Board and the dedication and hard work of the CIC team. I would also like to extend our appreciation to our stakeholders, banking partners and shareholders who supported us in our efforts to deliver an exceptional financial performance this year.”

As part of its future plans, CIC Holdings PLC will continue to focus on strengthening its core competencies in key sectors which have been selected for their growth potential. These sectors include fertiliser, rice, seeds and farms, feeds and poultry, crop care, industrial solutions, healthcare and strategic businesses.
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Dialog investment capacity reduced by heavy taxation

* Rs. 3 b impact to balance sheet from super gains tax

* 25% telco levy expected to negatively impact investment in 2015

* Free OTT services depleting voice, SMS revenue

* Focus on data profitability imperative

* Group has invested $ 1.74 b in Sri Lanka of which $ 116.3 m was in 2014

By Channa Fernandopulle

Heavy taxation of the telecom industry is likely to constrain Dialog Axiata Plc’s capacity to invest in infrastructure development in 2015.

The Group expects to be hit with a Rs. 3 billion levy under the Super Gains Tax proposed in the draft Finance Bill tabled in Parliament while the proposed Telecommunication Levy (Amendment Bill) – if legislated – is expected to impose a 25% tax on telecom operators based on the value of supply but excluding internet services.

The Group has invested a total of $ 1.74 billion in Sri Lanka, of which $ 116.3 million was invested during in the 2014 financial year.

Commenting on the Group’s position relative to the two taxes in his statement for the Group Annual Report 2014, Dialog Axiata CEO Dr. Hans Wijayasuriya said: “We are duly cognisant of the potential extraneous dilution of cash flows available for investment due to impacts arising from the Interim Budget 2015 of the Government of Sri Lanka. If legislated, this levy will no doubt draw considerably on the operating cash flows of the Group and hence on the investing capacity during the year ahead.”

Elaborating on the Group’s strategic vision going forward, Wijayasuriya stated that data pricing, viable returns on broadband infrastructure investment, neutrality in service taxation across traditional channels and disruptive ‘Over the Top’ (OTT) services like Whatsapp – that are free or zero cost – would be critical to preserving and growing the business moving forward.

“I share the concern of industry counterparts that the capability of the sector to deliver real economic returns to shareholders, maybe at risk in the medium term unless structural corrections with respect to industry pricing and cost structures are implemented on an immediate basis.

“It is of particular concern that today broadband pricing appears to be sub-cost and to be subsidised by domestic and international voice services. The resulting cost versus revenue formulation is both precarious and foolhardy in the context of the very real risk of voice revenue erosion ahead,” Wijayasuriya cautioned.

He added that the Group’s efforts to establish a nation-wide fibre optic cable network parallel to initiatives to connect Sri Lanka to the global internet via the Bay of Bengal Gateway cable project would be crucial to supplementing high speed broadband connections in the country.

Commenting on the impact of OTT services, he noted that telecommunications sector contributions to government revenue around the world had been eroded by such services which are not easily taxable yet eat into numerous streams of telco revenue as evidenced by the depletion of international termination and IDD revenues, mutation of voice revenue growth and a declining trend in SMS revenues.

“As evident from hotly-contested net-neutrality and sovereign taxation based debates in advanced markets such as the USA and European Union, an era where the rich contribution to government revenues from the telecommunications sector evaporates at exponential pace could well be imminent in Sri Lanka and other regional markets,” Wijayasuriya warned.

He further noted that industry consolidation, profitable data pricing, network sharing and collaborative investments with a focus on consumer affordability balanced with fair returns to service providers would be required to form a principle policy framework for a sustainable telecom industry in Sri Lanka.

“We view the future with extreme diligence but equally with an abundance of excitement and unbridled energy which we will harness in capturing every available opportunity for growth and advancement. Our people, systems and innovation driven process are finely aligned with the emerging digital era and the Dialog Group is confident in its capability to deliver superlative social and economic dividends to Sri Lankan citizens through the inclusive proliferation of digital empowerment,” he concluded.
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