Nestle Lanka continues Rs 10bn investment plan; to comply with listing rule

(LBO) – Nestlé Lanka, a unit of the Swiss-based food group, said they would continue to invest in infrastructure, brands and people as part of a 5-8 year plan to invest 10 billion rupees in the island.

“We’ve so far invested about four billion rupees and this is ongoing and there is no reversing on that,” Bandula Egodage, vice president corporate affairs and communications of Nestle Lanka, said.

In 2010 the company announced plans to invest between 8 to 10 billion rupees in an accelerated growth plan over the next eight years, Egodage said while participating at the market opening bell ringing ceremony at the Colombo Stock Exchange Tuesday.

“We are committed to this and are working on it.’

The Company also said that it’s planning on complying with the islands CSE listing rule of 80 percent local ownership.

“We will comply with this rule and we have till the end of 2016 to do it,” Egodage said.

A listed foreign company has to have an 80 percent local ownership to be listed in the main board of the CSE according to current listing rules.

Nestle is 90 percent owned by foreigners at present.

Nestle Lanka’s profits rose 33 percent to 1.3 billion rupees in the June 2015 quarter from a year earlier and the firm reported earnings of 24.18 rupees per share for the quarter against 18.16 rupees reported a year earlier.

At mid day the company stock was trading at 2,098.00 rupees, up 48.00 rupees.

Sri Lankan shares end lower on profit-taking

Reuters: Sri Lankan shares closed lower for a second session on Tuesday on profit-taking, while investors waited for direction on interest rates from a weekly auction of government securities, stock brokers said.

The country's central bank late on Monday kept its main interest rates steady at record lows as expected, with inflation seen lower in the next few months, and said it was keen to avoid any excessive growth in credit.

Analysts said investors were waiting for direction on market interest rates from a weekly t-bill auction scheduled for Wednesday after the central bank held the policy rates steady.

The country's main stock index ended 0.11 percent lower, or down 8.19 points, at 7,298.75, not far off its lowest close since July 23 hit on Aug. 25.

Foreign investors were net sellers of 96.7 million rupees ($718,959.11) worth of shares on Tuesday, extending the year to date net foreign outflow to 3.45 billion rupees.

Turnover stood at 732.2 million rupees, less than this year's daily average of 1.16 billion rupees, as investors awaited President Maithripala Sirisena's speech at the first parliament session on Wednesday.

Shares in DFCC Bank Plc fell 2.51 percent while Commercial Bank of Ceylon Plc fell 0.80 percent, dragging down the overall index.

Shares in conglomerate John Keells Holdings fell 0.33 percent while Ceylon Tobacco Company Plc fell 0.36 percent. 

($1 = 134.5000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Biju Dwarakanath)

Sri Lanka’s Odel plans mega mall, closes outlets

ECONOMYNEXT – The new owner of Sri Lankan retailer Odel PLC has closed down some of its stores but plans to build a ‘Mega Mall’ of 300,000 square feet adjoining its present flagship outlet in Colombo.

Odel chairman Ashok Pathirage, whose Softlogic Group bought the retailer last year, said luxury retailers are benefitting from income gains among the top earners in the island and are thriving.

“Growth in this sector is a key factor in driving expansion across the board,” he told shareholders in the firm’s annual report.

Odel has a chain of 20 fashion stores with a footfall of around 5,000 people daily.

“Whilst we serve customers through 20 stores, our new business model aims at smaller outlets and one big mall,” Pathirage said.

“We have closed down some of our bigger outlets, including Maharagama and Jaela, with other outlets currently under evaluation.”

The company aims to upgrade the Ward Place Odel flagship store to improve quality of offerings to customers and plans to build a ‘Mega Mall’ adjoining it along with car park amenities, he said. The mall is projected to be completed within three years.

Pathirage also said he intend to bring his Softlogic Brands portfolio to Odel. 

Sri Lanka’s Abans says Colombo City Center is on track, 54 pct- apartments are already booked

(LBO) – Sri Lanka’s Abans group says, their joint venture Colombo city center, which began with 150 million dollar investment, is on track and piling works has been completed.

The joint venture between the local retail giant Abans PLC, and Singapore’s Silverneedle Hospitality, that operates hotels and resorts across the globe, is expected to become a key feature in Colombo’s changing landscape as the city hurtles towards rapid urbanisation and modernization.

Sri Lanka’s current urbanisation rate is set to increase from the 18 percent to 30 percent in the prevailing era of peace and stability, resulting in nearly 2.5 million people moving into cities over the next few years, Abans says.

This number, will be further enhanced by the inward migration of a three million strong diaspora.

The company added that the mixed development venture, will contribute towards positioning Colombo city as an emerging modern metropolis in the region and will factor significantly towards overall economic value creation through employment generation, leisure, retail and real-estate incomes.

“In this context, the Colombo City Centre will be a landmark achievement for both Abans and the country as a whole,” Aban Pestonjee, Chairperson of Abans Plc told shareholders.

“I am happy to report that we are on track with our plans, and I would like to take this opportunity to update our stakeholders regarding progress of the Colombo City Centre,”

“The ground breaking ceremony for the complex was held on December 14, 2014 and piling works was also completed.” Pestonjee added.

The multipurpose lifestyle centre is scheduled to complete in early 2018 will consists of a lifestyle retail mall, a 200-room NEXT Hotel and 180 residential units.

Pestonjee says pre sales of apartments has been begun and 54 percent of apartments has been already booked.

“There is strong interest in the project with many inquiries and pre-sales of apartment complexes have commenced,”

“We have also received a number of inquiries regarding retail space within the shopping complex which will have the capacity to host a number of retail outlets and showrooms,”

“We are currently negotiating with some leading international brands on allocation of retail space.” Pestonjee said.

Lanka Milk Foods profits up

Pamodi Kuruppu

Lanka Milk Foods (CWE) PLC, has posted a profit after tax of Rs. 68 million for the year compared to Rs.44 million in the previous year.

All Group companies contributed to the overall group performance, led by Ambewela Products, recorded a turnover of Rs. 955 million against Rs. 848 million in the previous year, the company said.

The LMF Group earned revenue of Rs. 3,952 mn. During the financial year under review, while the Group Gross Profit reached Rs. 310 mn. LMF’s strategy to enliven the revenue mix and exercise greater cost controls has helped drive profitability for the group in the year under review, Chairman Harry Jayewardene said.

The LMF group has embarked on milk, yoghurt and cheese production by leveraging on strategic promotions in each product line, which has helped to boost sales andrevenue growth in the dairy sector. Lakspray experienced a turnover increase of 8% over the previous year, while Daily (200 ml) improved its sales by 14%, with a 13% increase in cases sold.

There was also a rise in fresh milk consumption in the public during the year, and Ambewela Fresh Milk mirrored this trend, improving its turnover by 10%. A significant increase was witnessed in the Non Fat Fresh Milk category, with an increase in sales by 15%.

Ambewela Dairy Farm and New Zealand Dairy Farm are well-positioned to provide the raw material required for the said factories, namely, best quality fresh milk full of nutritive value. Hence, Lanka Milk Foods Group is well focused on meeting the future demand of excellent quality milk and milk related products in the country.

DCS Jayawardane, Directress of Lanka Milk Foods, points out that the shortage of high quality raw milk to meet the increasing liquid milk demand will continue to pose an obstacle to meeting the needs of the sector. Simultaneously, the increasing import duty on imported milk powder will continue to make milk powder a luxury and not a necessity, as should be the case for the citizens of the country. However despite all these things she thinks that the Company has a bright future.
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LankaClear surpasses Rs 500 m threshold

LankaClear has recorded a 12% growth in revenue surpassing the Rs. 500 mn revenue threshold and recording a topline of Rs.518 mn in the financial year 2014/2015.

The highest ever revenue figure recorded by the company was mainly driven by growth in electronic transactions across all LankaClear electronic payment products, despite stagnant growth incheque clearing. Chairman Anil Amarasuriya said LankaClear is on target to achieve its final objective of developing and deploying a comprehensive common electronic payment infrastructure for the country.

“In the new financial year LankaClear will continue to consolidate the country’s common payment system by educating the public and all other key stakeholders regarding LankaPay, thereby assisting the nation to reap the full benefits of the national common payment network. Given LankaClear’s track record to date, I am confident Sri Lanka will see a fully operational comprehensive national electronic payment platform by end 2016.”

LankaClear’s General Manager and Chief Executive Officer, Sunimal Weerasooriya said the significant growth in electronic transactions is a testimony to the increasing awareness and confidence placed on the payment systems we deploy.

“Our achievements would not have been possible without our team of exceptionally talented and dedicated people.A common national payment system to facilitate any type of electronic transaction 24x7 is now ready for deployment, positioning the country for rapid socio-economic change.”

The Company experienced pressure on the bottom line due to higher operational expenses from the LankaPay project and the new payment systems not reaching breakeven point. However, the company recorded a decent PBT of Rs.183mn and a PAT of Rs. 129 m with a Net Profit Ratio of 25%. LankaClear closed the year with a strong balance sheet with net assets reaching Rs.1.2 b which is a 9.4% increase compared to the previous year.

During the year 2014/15 five commercial banks joined the LankaPay common ATM network, expanding the number of interconnected ATMs by 1,296. As at end March 2015, a total of 2,558 ATMs of 9 banks accounting for 80% of the total ATMs in the country, were linked up.Currently, the LankaPay Common ATM network has grown to over 2,600 ATMs of 11 Banks. 

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Softlogic Holdings Group boosts revenue to Rs.40.0 bn

Softlogic Holdings PLC boosted Group Revenue to nearly Rs.40.0 Bn (a 35.3% growth) while Profit before tax grew to Rs.2.3 Bn (up 80.3%) and profit after tax increased to Rs.1.8 Bn (up 80.3%) for the financial year 2014/2015.

Asset growth: Total assets at end - March 2015 rose to Rs.87.6 Bn, from Rs.65.9 Bn last year, said Softlogic Holdings PLC Chairman, Ashok Pathirage.

He identified Opening of Group’s first resort, Centara Ceysand Resorts & Spa, acquisition of Odel, commencement of ‘Samsung’ operations and the representation of new brands (Tommy Hilfiger, Pepe Jeans, Whirlpool and Crocs). As some key strategic moves last year.

“The Odel acquisition was the year’s highlight, and we now own 93.39% of the company.”

“Our Financial Services sector moved steadily during the year, with good performances all round. Asian Alliance Insurance, which ranks 5th in Life Insurance, led the way. Overall Gross Written Premium for both Life and General insurance reached Rs.4.9 Bn, an increase by 16.1% over the previous year.

Life business recorded a growth of 20.4%. General Insurance, which enjoys some synergy with our Healthcare and Automotive Sectors, saw premiums rise 8.9%.”
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