Sri Lanka shares up; Wickremesinghe sworn in as prime minister

Reuters: Sri Lankan shares ended firmer on Friday on hopes of political stability after Ranil Wickremesinghe was sworn in as the new prime minister, and formed an alliance with President Maithripala Sirisena's party to push ahead reforms.

The main stock index ended 0.29 percent or 21.35 points firmer, at 7,471.17.

"We have seen some buying interest coming in," said Dimantha Mathew, a research manager at First Capital Equities (Pvt) Ltd.

"We expect the market to move after the formation of the new government."

The formation of the broad coalition will put Sirisena into a position to advance reforms begun when he quit Rajapaksa's government and in January defeated the nationalist strongman's bid to win an unprecedented third term as president.

The day's turnover stood at 959.4 million rupees ($7.2 million), less than this year's daily average of 1.14 billion rupees.

Foreign investors were net sellers of a net 10.3 million rupees worth of equities on Friday extending the year to date net foreign outflow to 1.17 billion rupees.

Shares in Ceylon Theatres Plc rose 8.99 percent and Hemas Holdings Plc rose 1.78 percent, leading the index higher. 

($1 = 134.0000 Sri Lankan rupees) 

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

Asia Capital Q1 loss lower at Rs92 million

(LBO) – Sri Lanka’s financial services firm Asia Capital PLC reported a loss of 92 million rupees for the first quarter to June, down from a loss of 120 million rupees in the same quarter last year, in interim results released to the Colombo Stock Exchange.

Nevertheless, annual revenue rose to 1.6 billion rupees in the year to March, from 970 million rupees in the same period last year, driven by its investment and leisure sectors, the company said.

In their annual report released this week, Asia Capital said it will look at investments in the tourism industry, going forward.

“With the astronomical growth predictions for the country’s tourism industry, our focus, at least for the near-term would be on securing leisure-based projects,” J. Ratnayake, the chairman, said.

Asia Capital has shown highly variable profitability over the years. Overall loss attributable to shareholders has been around six hundred million rupees during the last ten years. Still, it made net profits of 538 million rupees in 2012, 988 million rupees in 2011 and 209 million rupees in 2010.

Some companies of the group performed poorly last year. According to notes to its financial statements, current liabilities of Asia Growth Fund 1 (Private) Limited exceeded its current assets by 117 million rupees. Asia Digital Entertainment (Private) Limited had accumulated losses of 92.8 million rupees, and Asia Wealth Management (Private) Limited has accumulated losses of 30.3 million rupees.

“The Financial Statement of the Group do not include any adjustment in relation to the recoverability and classification of recorded asset amounts or and classification of liabilities that may be necessary of the following Company is unable to continue as going concern,” Asia Capital said in relation to these companies.

Sri Lanka seafood exports dive 36-pct in first half after EU ban

ECONOMYNEXT - Sri Lanka seafood exports dived 36 percent to 85.8 million US dollars in the first six months of 2015, following ban by the European Union, official data showed.

The Central Bank said exports of fisheries products to the EU fell 72 percent in June 2014 from a year earlier. But exports to non-EU markets picked up 18 percent.

June exports of total fisheries products fell 26.7 percent to 13.5 million US dollars from 18.4 million a year earlier.

Sri Lanka's fish exports was banned after the country was unable to convince the EU that is was taking sufficient steps to counter illegal fishing by unidentified vessels suspected to be originating from the island.

Sri Lanka is setting up a vessel monitoring system to satisfy EU requirements.

Union Assurance reports steady progress in first half

Union Assurance PLC (UA) recorded a steady growth in gross written premium (GWP) and profits as at the end of the second quarter of 2015.GWP for the six months to the 30thof June 2015was Rs. 3.2 billion compared to Rs. 2.8 billion in the corresponding period, a growth of 15%.

Total net revenue excluding gains recorded from disposal of the non life business amounted to Rs. 4.4 billion, which was a 6% increase over the previous year. Total net revenue including the gain was Rs. 5.6 billion.

Profit after tax (PAT),including the disposal gain amounted to Rs. 1.4 billion. PAT excluding the disposal gain amounted to Rs. 194 million which is a 169% increase over the Rs. 72 million PAT reported in 2014. The above PAT figures do not include a surplus from the life business, as the surplus is transferred at year end following actuarial valuation.

As at 30th June 2015, UA's life fund stood at Rs. 25 billion with a healthy solvency ratio indicating the financial strength of the business.

The Board of Directors of Union Assurance have resolved that up to a maximum of 26,785,714 of its ordinary shares will be repurchased at a price of Rs. 167.80 per share on a pro rata basis of ten (10) shares for every thirty two (32) shares held.
www.dailynews.lk

HDFC Bank posts Rs 388 m profit in first half 2015

Housing Development Finance Corporation Bank of Sri Lanka (HDFC Bank) has recorded Rs. 388.9 m profit before tax (PBT) in the first half of 2015 as against Rs. 310.5 mn in the corresponding period of 2014.

The profit after tax (PAT) is Rs. 276.2 mn as against Rs. 185.1 mn an increase of 49%. The interest income has increased from Rs. 2118 mn to Rs. 2260 mn, an increase of 6.7%. The net interest income of the Bank has increased from Rs. 856.3 mn to Rs. 1,050.6 Mn, an increase of 22.7%. The interest expenses have been reduced to Rs. 1209.9 mn from Rs. 1262.2 mn due to re-pricing of deposits.

The Operating Expenses has increased to Rs. 622.2 mn from Rs. 513.5 mn, an increase of 21% due to additional staff costs and expenditure incurred due to Branch expansion, Bank's Chief Executive Officer and GM Nimal Mamaduwa said.

The Bank's customer deposit base increased from Rs. 24.5 bn to Rs. 26.1 bn during the first six months, an increase of 6.8%. The loan book increased from Rs. 23.3 b toRs. 24.6 b, an increase of 5.2%. The Return on Assets (ROA) stood at 2.71% as against 2.51% as at 31st December 2014, whilst the Return on Equity (ROE) increased from 13.7% to 18.3%.

The Bank's T1 capital and Total Capital Adequacy Ratio stood 13.08% and 12.29% respectively which are well within the regulatory requirements, although the ratios have been marginally reduced due to the credit growth shown in the first half of 2015. The Bank also maintains a healthy statutory liquid asset ratio of 30.6% as against the regulatory requirement of 20%.

During the first half year of 2015 the Bank was able to establish two new Branches in Polonnaruwa and Kiribathgoda under the Branch expansion programme thereby making the total network to 38 Branches. The Bank will continue to expand its branch network as we believe that there are still many unbanked people in rural areas.

The Banks strategy of diversifying our product portfolio initiated in the year 2013 delivered significant gain for the Bank in terms growth and profitability.
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Vallibel Finance deposits crosses Rs 12bn

Vallibel Finance affirmed its continuing ascendency, announcing yet another impressive performance in 2014-15. Pre-tax profits soared by 28% to exceed Rs.623 million over the previous year's Rs.489 million. The company's consistent rise in the financial sphere was further secured with net profits reaching Rs. 374 million, recording an ...increase of 23% from the previous year's figure of Rs 303 million. The company capped an outstanding year with all key indicators showing an impressive performance.

Increasingly popular as the name-bearer of the iconic Vallibel Group, public confidence in the company continues to grow as numbers for fixed deposits showing a sharp rise, year after year.

The Fixed Deposits portfolio grew by 31% to cross the Rs 12 billion threshold from the previous year's Rs 9 billion. Recording the highest gains was the company's asset base which recorded a 34% rise to reach Rs 16.8 billion.

The previous figure stood at Rs 12.5 billion.

Vallibel Finance was ranked amongst the top 50 most respected entities in the country by LMD in its 2014 survey and its significant rise in brand equity was recognized in LMD's top 100 Most Valuable Brand Survey 2014 where Vallibel Finance's rank rose to 67th, standing alongside some of the greats of the banking and finance sectors.

Rangamuwa, Managing Director avers that in a volatile industry subject to many unforeseen influences continuous good performance comes on the back of fundamental values.

"As we keep reiterating, macro-economic landscape will always witness challenging times, but the company's proven formula of building values ensures a resilient performance, year after year.

The year under review saw more branches joining its expanding network which serves as a catalyst of development for people from diverse backgrounds. The lending portfolio increased by 26%. Total lendings stood at Rs 12.5 billion rising from a previous Rs 9 billion.

Vallibel Finance deals chiefly in Hire Purchase, Leasing, Pawning (Gold Loan), Fixed Deposits, Group Personal Loans, Mortgage Loans, Education Loans and Micro finance products deployed via a cutting-edge technological framework.

The increasing stature of Vallibel Finance, on the back of its impressive performances, is further augmented by the highly diversified Vallibel conglomerate led by corporate leader Dhammika Perera. Vallibel Finance's standing in the business landscape is also affirmed by the upgrading of its rating to BBB- by Lanka Rating Agency.
www.ceylontoday.lk

LOLC leaps to the top 10 in Most Respected Firms List

Lanka ORIX Leasing Company (LOLC) has leaped a significant 5 notches to reach the top ten in the latest edition of LMD's Most Respected Entities in Sri Lanka. LOLC is recognized by the magazine as one of the 'movers and shakers' in the 2015 list.

Commissioned and conceptualised by LMD, and conducted by a leading Research Company, ACNielsen, the ranking of the 11 most respected entities was based on the views of 800 business leaders such as chairpersons, managing directors and CEOs. This year's edition of the Most Respected bears testimony to the can-do corporate spirit. The final rankings were compiled, taking into account key factors such as professional management, good financial performance, size of the organization, innovative nature, diversification, social responsibility, service standards and contribution to developing the national economy.

The magazine reports that LOLC was highly regarded among the Most Respected entities for its financial performance. It reiterates that the group's revenue exceeded Rs 45 billion in the 2014/15 financial year while profit after tax more than doubled – to register Rs 6.3 billion. LOLC also acquired a 60% stake in a Cambodian microfinance entity – 
ThaneakeaPhum Cambodia (TPC) for US$ 20.3 million. It has also invested in two properties in the Maldives, to expand its leisure footprint. The conglomerate made a notable entry to the top 10 for the ...first time this year, when some multinational companies lost their footing, falling drastically in the list.

Sixty-eight listed companies make the cut in the 2015 edition of the Most Respected, followed by 47 private entities, 22 multinationals and 11 state-owned enterprises. As for sector preferences, conglomerates, food and beverage entities, and the banking sector continued to be the most favoured, with nearly a quarter of the Most Respected organizations in the island coming from within the ranks of diversified businesses.

The special annual edition notes that investors, financiers and consumers across the world are making greater demands from corporates to adopt responsible and ethical business practices. "Honesty, after all, is a key measure of respect", states the Most Respected edition which has keenly analysed transparency, commitment to ethics, honesty, mutual trust and equality in its evaluation process.

"Integrity and internal honesty are key indicators of an ethically managed company. Smart marketing, alone, will not deliver corporate respect. Therefore, corporates that are better attuned to uplifting ethics and values will outperform others in the longer term", underscored the magazine.

In an exclusive interview with LMD's Most Respected entities Edition, Group Managing Director / Chief Executive Officer of LOLC, Kapila Jayawardena noted that honesty and ethics take on even more weight for financial services entities.

"Respect has to be earned; it can't be bought. Companies wishing to be successful have to work hard to prove themselves to their stakeholders and their peer groups; shortcuts won't do", he added.

From a leading financial services provider, to the largest non-banking financial institution, LOLC is today one of the largest and most diversified conglomerates in Sri Lanka.

Its portfolio is broadly categorized as financial services and non-financial services encompassing leisure, plantations, agri-inputs, renewable energy, construction as well as manufacturing and trading. Backed by the two overseas investments in Cambodia and Myanmar, LOLC plans to expand its international presence and actively pursue new opportunities in the region.
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Softlogic net surges 35 pct on ICT, retailing post-ODEL acquisition

(LBO) – Sri Lanka’s Softlogic Holdings PLC, with diversified interests, reported a 35 percent rise in net profit to 304 million rupees for the three months to June, on revenues of 13 billion rupees, driven by stronger ICT and retailing activities.

Earnings per share was 0.11 rupees for the quarter, up from 0.05 rupees. Full year earnings per share was 0.72 rupees in the year to March. The share last traded at 16.80 rupees.

“Retail sector pulled in the reins to lead in Group turnover with a contribution of 33.4 percent post-ODEL consolidation,” Ashok Pathirage, the chairman of Softlogic, said.

Softlogic acquired more than 90 percent shares in the retailing company ODEL PLC after a 45 percent stake taken in September 2014 for 2.7 billion rupees.

The retail sector contributed 33 percent to the topline with 4.4 billion rupees along with the consolidation of ODEL financials. Pathirage said the group had derived synergies through operational cost savings and better use of a sales platform with ODEL.

“Our first major initiative for ODEL is the development of a megamall adjoining the flagship store at Alexandre Place.”

The mall with 400,000 square feet of space will retail Softlogic brands and rent out space to other retailers, cinemas and restaurants. Blocher Blocher Partners, an architecture and design firm from Germany, has been contracted for its development.

Pathirage said the branded apparel division introduced ‘Pepe Jeans’ and ‘Crocs.’ Giordano and an International watch store had been opened at Liberty Plaza.

For the ICT cluster, revenue more than doubled to 3.8 billion rupees with contributions from its Microsoft and Samsung products, while the group’s interests in healthcare contributed 18 percent to revenues after registering a growth of 10 percent during the quarter.

“We are progressing on the pre-construction schedule for Asiri Kandy Hospital. We target to commence construction in October 2015,” he said.

“Construction of the laboratory and administrative building and the facelift process of Asiri Hospital Holdings in Kirula Road would be completed by mid-2016,” he added.

The automobile sector recorded 296 million rupees in revenue with contributions from its 3S-Ford facility and its ‘King Long’ range of buses, while the leisure sector brought in 131 million rupees or one percent to the top line.

In the leisure sector, Centara Ceysands Resorts & Spa had performed “better than most competitors new in the industry.” The 24-storied Movenpick City Hotel is expected to open in April 2016.

Commenting on future outlook, Pathirage said: “With the group’s growth being rapid and the acquisitions making good commercial sense at this point in time, the returns to group, due to strong synergy and depth, is likely to witness the multiplier effect in growth in the upcoming periods.”

Sri Lanka’s Janashakthi Insurance to raise Rs 3.3bn through rights issue

(LBO) – Sri Lankan insurance player Janashakthi is to raise 3.3 billion rupees by way of a rights issue, the company said in a stock exchange filing.

Subject to the necessary approvals, the company is to issue 181.5 million ordinary shares at 18.50 rupees each in the ratio of one for every two shares.

The proceeds are to be utilized to fund the future expansion of the insurance business, the company said.

The current stated capital of the entity is 1.5 billion rupees consisting of 363 million shares.

The insurance company appointed a new deputy chairman (Husein N Esufally) and a chief executive officer last month.

The stock closed at 23.00 rupees on Wednesday.

Sri Lanka’s Browns & Co plans tourism industry expansion

(LBO) – Sri Lanka’s household goods retailer Brown & Company wants to build two hotels in Maldives and expand from its current 308 operational rooms to approximately 1,000 in the near future, the company said.

“As the tourism industry continues to grow rapidly, Browns will partner by contributing approximately 1,000 rooms in the coming years, supporting country targets of increased tourist arrivals by 2020,” Ishara Nanayakkara, executive chairman of Browns and Company, told shareholders in the company’s 2015 annual report.

The company has signed agreements with an international chain to manage its 172- room hotel in Kosgoda, which will also commence operations in the near future, the annual report said.

Phase one of a plan to construct a 367-room project in the property housing the former Palm Gardens, Riverina and Tropical Villas in Beruwela, is also progressing according to plan.

“Several other strategic locations across the island are also under review for expansion,” Nanayakkara said.

The company said it will expand into regional markets as it builds on the investment in two new properties in the Maldives, which the company made during the year, in line with plans to expand its presence globally.

The group’s hotel chain includes Eden Resort & Spa (158 rooms), the four-star property in Beruwela, Dickwella Resort & Spa (76 rooms), which are both located in Sri Lanka’s South, and the Paradise Resort & Spa in Dambulla (67 chalets). The latest addition to this portfolio, the Calm Resort & Spa, in Pasikuda on Sri Lanka’s Eastern coast, is a four-star hotel which was opened to the public in mid-June 2015.

“Supporting these developments, Browns Investments launched a dynamic website for Browns Hotels & Resorts Ltd to cater to the information needs of travellers both locally and overseas.”

The Company recorded a revenue of 7 billion rupees while gross profit was 1.5 billion rupees and profit before tax was recorded at 1.4 billion with profit after tax (PAT) at 1.3 billion for the financial year 2014/2015.

Sri Lanka's Pan Asia Bank given time to raise capital

ECONOMYNEXT - Sri Lanka's Pan Asia Bank said it had been given more time to raise minimum capital requirements by the Central Bank.

Under the new deadlines the lender should have 5.0 billion in capital by January 2016, 7.5 billion rupees by January 2017 and 10 billion rupees by January 2018.

PABC had net assets of 5.1 billion rupees by June 2015 with gross assets of 85 billion rupees.

Sri Lanka Treasuries yields up across maturities

ECONOMYNEXT – Sri Lankan Treasuries yields rose across the board at Wednesday's auction, with the state debt office accepting five billion rupees worth of bids.

The 3-month yield rose 8 basis points to 6.36 percent, and the 6-month and 12-month yields rose 9 basis points each to 6.66 percent and 6.72 percent.

The central bank offered 16 billion rupees worth of Treasury bills and the auction was oversubscribed by 2.0 times with bids received amounting to 31 billion rupees.

Sri Lanka shares fall from 7-month closing high on retail selling

Aug 20 Sri Lankan shares ended weaker on Thursday, moving away from more than seven-month closing high hit in the previous session, on profit-taking by some retail investors.

Retail investors booked some profit as they waited for the Prime Minister Ranil Wickremesinghe-led government to announce its economic policies after the parliamentary election victory.

The main stock index ended 0.65 percent or 48.96 points weaker, at 7,449.82, slipping from its highest close since Jan. 16 hit on Wednesday.

"It was mostly retail selling because retail investors have bought shares for credit, expecting the index to gain sharply after the election results," a stockbroker said on condition of anonymity.

"Investors are waiting for some clarity on the formation of the government and its economic policies."

Wickremesinghe's centre-right United National Party (UNP) is expected to form a stable government along with President Maithripala Sirisena's centre-left Sri Lanka Freedom Party (SLFP), to help pass promised reforms.

Wickremesinghe is expected to continue as the prime minister of a centre-right government that would seek to revive stalled reforms to make the government more open and accountable.

The day's turnover stood at 1.24 billion rupees ($9.3 million), more than this year's daily average of 1.14 billion rupees.

Foreign investors bought a net 131.3 million rupees worth of equities on Thursday, but they have been net sellers of 1.16 billion rupees so far this year.

The fall in index was led by Dialog Axiata Plc, which lost 2.52 percent. 

($1 = 133.9000 Sri Lankan rupees) 

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