Sri Lankan shares end at over 1-week high on hopes of political stability

Sri Lankan shares hit a more than one-week high on Monday, surpassing the 7,000-point psychological barrier as hopes of political stability after the Aug. 17 election helped boost sentiment, stockbrokers said.

The ruling United National Party (UNP) has formed a coalition with some other parties to contest the election. Political analysts see the new coalition could increase the ruling party's chances of winning the election.

"The market will be positive after seeing some kind of clarity and on hopes that there can be a stable government after the elections," said Dimantha Mathew, a research manager at First Capital Equities (Pvt) Ltd.

The main stock index ended up 0.27 percent, or 18.66 points, at 7,002.78, rising for a third session and its highest since July 3.

The index crossed a key barrier of 7,000 points, dealers said.

The day's turnover stood at 531 million rupees ($3.97 million), just about half of this year's daily average of 1.05 billion rupees.

The market saw net foreign outflows of 26.5 million rupees on Monday, extending net outflows for the past 33 sessions to 5.68 billion rupees.

Shares in top fixed-line phone operator Sri Lanka Telecom Plc rose 1.58 percent, while Cargills (Ceylon) Plc rose 6.95 percent, pushing up the overall index.

Mobile phone operator Dialog Axiata Plc rose 1.94 percent.

President Maithripala Sirisena dissolved parliament on June 26 and scheduled elections for Aug. 17, in an effort to consolidate power and push through political reforms.

($1 = 133.7000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Prateek Chatterjee)

Lanka Century Group reverses losses this year

Lanka Century Investment (LCI) Group posted a net profit attributable to shareholders of Rs 33.9 million for the year ended March 31,2015.

This is despite a loss of Rs 663 million the previous year on a 9.4% gain in revenue to Rs 9.3 billion.

The Group also generated Rs 407 m in operating cash flow for the year versus Rs 124 million the previous year. Cash and short-term deposit balances as at March 31,2015 were Rs 902 million versus Rs 884 million the previous year.

During the year the Group divested all non-core activities to focus on manufacturing and exports in textiles, porcelain, and leather footwear.

In addition to the Group focusing its activities on core sectors, strategic changes were also made in operating companies to refocus on higher growth emerging markets, higher value addition, and product innovation to shift the group into higher value added manufacturing in each of these sectors.

To empower the implementation of these initiatives, the management teams in each of the operating companies have been significantly strengthened during the year.

In the textile sector, South Asia Textile Industries Lanka (Private) Limited delivered an outstanding performance generating a profit of Rs 379 million for the year versus Rs 109 million the previous year.

The company has embarked on a significant plant modernisation and capacity expansion programme which will further improve quality, on-time delivery, yields, energy efficiency, and enhance capacity in the future.

In the leather and footwear sector, Ceylon Leather Products PLC had a difficult year with weak and delayed orders in its core business of supplying boots to the state sector.

In addition, the collapse in European orders for high end women’s footwear at its subsidiary company had a significant impact on the sector’s performance. However, going forward the company is restructuring its operations to focus on higher value added products in higher growth emerging markets that are related to its core business of manufacturing high quality boots.

The porcelain sector had a 35% growth in revenue to Rs 2.3 billion driven largely by the acquisition of Royal Fernwood Porcelain (RFPL) by Dankotuwa Porcelain PLC .

The porcelain sector suffered a loss Rs 105 million largely on account of consolidating the activities of RFPL which was incurring losses. However, with the consolidation and integration of activities between DPL and RFPL, the porcelain sector now has a vastly expanded manufacturing capability and product range to offer domestic and international customers.

In addition to this, DPL has also engaged with a leading science and research institution to develop nano engineered materials which will lead to much higher value added porcelain products being manufactured by the company in the future.
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CSE signs MoU with Maldives Stock Exchange

The Colombo Stock Exchange (CSE) signed a Memorandum of Understanding (MoU) with the Maldives Stock Exchange (MSE) in order to help foster prosperity of the respective financial markets, promote cross border investment, cross border listing and explore other opportunities for cooperation between the two Exchanges.

The Exchanges anticipate developing a closer working relationship in the future, and wish to maintain channels of communication for exchange of information, knowledge transfer, sharing of technology and other commercial purposes.

"The CSE is extending its reach beyond borders to cooperate commercially with its peer exchanges in the region, to collectively uplift the performance of regional Exchanges.

We recently hosted the South Asian Investment Conference and took over the Chairmanship of the South Asian Federation of Exchanges (SAFE) and the relationships forged through these regional bodies have already begun to yield positive results, "CSE Chairman Vajira Kulatilaka said at the conclusion of the signing of the MOU.

"We are very pleased to be in Sri Lanka-- our very close neighbor-- and also glad to sign an MoU which will further strengthen our relationship. This MoU will help both our Exchanges to learn from each other's experiences.

In comparison to the CSE the MSE is a very small Exchange, therefore there are many areas in which the CSE can help the MSE to grow and develop," Managing Director/Chief Executive Officer of the MSE Hassan Manik said.

"The Colombo Stock Exchange seeks to foster regional linkages with Exchanges in order to foster growth and collective development within our geographic influence," Chief Executive Officer of the CSE Rajeeva Bandaranaike said.
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SEC vows to take rigorous action against regulatory breaches

Trading on the floor of the CSE. SEC Annual Report says that regulations enable the capital market to function more efficiently, transparently and impartially and spur economic development.

Securities and Exchange Commission (SEC) Chairman’s Review in its Annual Report-2014 states that the SEC is firmly committed to taking rigorous action against those who commit regulatory breach, which include market manipulation, misconduct by regulated entities as well as corporate disclosure-related offences etc.

"Regulations enable capital markets to function more efficiently, transparently and impartially and spur economic development. In addition, SEC’s regulatory jurisdiction extends over market participants institutions and instruments that are traded in the market," the Annual Report stated.

It further said, In terms of regulatory Interventions to Protect Investors of a Public Listed Company, a directive was issued by the SEC on Touchwood Investments PLC, to prevent the alienation of non-current assets and suspend the trades of the company to protect investors pending an investigation by the SEC.

This directive was also extended after the investigation into the company was concluded for the protection of investors. The company was also under liquidation on an application made by creditors to the Commercial High Court of Colombo.

The Commission considering the findings of the investigation reports and the serious consequences that would befall the investors, decided to issue a directive preventing the Company from removing or destroying any records of the company.

The SEC also directed the CSE to suspend trading of shares of Touchwood Investments PLC until the Company releases its interim financial statements to the market. The SEC in doing so took into consideration inter alia the fact that the company has been transferred to the Default Board of the CSE for non-submission of its interim financial statements and the possibility of a liquidator being appointed to wind up the company.

The SEC took an unprecedented step to intervene in the winding up action against Touchwood Investments PLC in a bid to protect the interest of investors and brought to the notice of Court, the findings of the SEC in respect of an investigation conducted into the business affairs of the company that was being sought to be wound up.

Extracts of the investigation report conducted into the affairs of the company was filed in the Commercial High Court for the information of the Court and the liquidator.

A sale of shares by Adam Investments PLC in breach of the Takeovers and Mergers Code was reversed whilst a takeover bid was pending by the said company on PC Pharma PLC and compensation was ordered to be paid to all investors who were affected by the alienation done without the prior approval of the CSE.

Accordingly, the CSE was directed to cancel the sale of PC Pharma PLC shares by Adam Investments PLC done without the prior approval of the CSE which caused the pending mandatory offer to lapse.

The SEC directed all Investment Managers to commence operations within six months of obtaining registration. This was due to a finding that some Investment Managers had not commenced operations although they had obtained a registration to function as Investment Managers.
- (SEC)