Overseas Realty records Rs 723 million profit for 1st quarter 2016

Overseas Realty (Ceylon) PLC recorded a Group Profit after tax of Rs. 723Mn, for the 1st Quarter ended 31st March 2016.

Rs. 476Mn revenue was recorded from Property Leasing at the World Trade Center (WTC) and the company expects to maintain good occupancy levels during 2016. Revenue from Other Services was Rs. 63Mn. However, as apartment sales revenue from Havelock City was not recognized during the period, the Group Revenue decreased resulting in a marginal decline in profits over the corresponding period of 2015.

Piling work of Havelock City Phase 3 was completed in early 2016 and pilling work of Phase 4 is on schedule and expected to be completed during 2016. Phase 3 Sales were launched in March and as at the quarter end around 16% of units had been pre-sold.

Design works are underway for the Commercial Complex of Havelock City which comprise an Office Tower which will be an iconic landmark in the vicinity and a dominant feature of the development and a large Shopping Mall developed to international standards with a fusion of Retail, F&B and Entertainment.

The Group Net Asset Value per Share as at 31 March 2016 stood at Rs 33.05 and the Earnings per Share for the period stood at Rs 0.82.

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Sri Lanka shares hit over 15-week closing high on IMF loan

Reuters: Sri Lankan shares closed more than 1 percent up on Friday, trading in high volumes after the International Monetary Fund said it had reached a staff-level agreement with the island nation for a $1.5 billion three-year loan.

Investors were also buoyed by positive sentiment after the central bank left rates steady earlier this week.

The benchmark stock index ended up 1.14 percent, or 73.73 points, higher at 6,516.26, its highest close since Jan. 13.

"It's purely on the IMF deal. The buying came in and we will see this trend continuing for a few more days," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

"But it could be a short-lived one with expected poor earnings while interest rates have been on the rise," he said, referring to the increase in the market interest rates until last week as the central bank allowed the rise to ease the pressure on the rupee.

Analysts say the central bank will be compelled to allow the rise in market interest rates to ease the depreciation pressure on the rupee if the country does not see high dollar inflows.

Before the market opened on Friday, the IMF said it had reached an agreement with Sri Lankan authorities over the loan to help the island nation avert a balance of payments crisis.

The loan, which would have to be approved by the global lender's board in June, is subject to Sri Lanka implementing reforms, including streamlining the tax code and reducing a bloated deficit, the IMF said.

The central bank on Tuesday kept benchmark rates steady as expected while the yields on short-term government securities were also steady at a weekly auction on Wednesday.

The central bank's measures signalled that market interest rates may not rise as was earlier expected.

Turnover stood at a four-week high of 1.53 billion rupees ($10.48 million), twice this year's daily average of around 777.8 million rupees.

Foreign investors were net sellers of 22.5 million rupees worth of equities on Friday, extending the year-to-date net foreign outflow in shares to 2.99 billion rupees.

Shares in Ceylon Tobacco Company Plc rose 1.77 percent while those of Distilleries Company of Sri Lanka Plc rose 0.65 percent.

($1 = 146.0000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anupama Dwivedi)

Sri Lanka shares end higher led by large-caps

Reuters: Sri Lankan shares rose for a third straight session on Thursday led by large-caps on positive sentiment after the central bank left rates steady earlier this week.

However, analysts said investors were cautious and awaited the outcome of a loan deal with the International Monetary Fund.

The benchmark stock index ended up 0.13 percent at 6,442.53, its highest close since Jan. 14.

"It looks like new phase of wind blowing through the market. The negativity is fading away and buying is coming in slowly," said Reshan Kurukulasuriya, Chief Operating Officer at Richard Pieris Securities Pvt Ltd.

The central bank kept benchmark rates steady on Tuesday, as expected, as it gauges the effect of the recent tightening amid final stages of talks with the IMF for a $1.5-billion loan to tide over a payments crisis.

Yields on short-term government securities were also steady at a weekly auction on Wednesday.

The measures also signalled market interest rates may not rise as early as the market expected.

Turnover stood at 560.1 million rupees, less than this year's daily average of around 767.8 million rupees.

Foreign investors were net buyers of 15.5 million rupees ($106,382.98) worth of equities on Thursday, but have been net sellers of 2.97 billion rupees worth of shares so far this year.

Shares in Ceylon Tobacco Company Plc rose 0.91 percent while Ceylon Cold Stores Plc rose 2.85 percent. 

($1 = 145.7000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil Nair)

Sri Lanka's People's Leasing group net up 2.1-pct

ECONOMYNEXT - Profits at Sri Lanka's People's Leasing and Finance, rose 2.1 percent to 1.15 billion rupees in the March 2016 quarter helped by profits at its insurance unit and a lower tax charge as interest margins at finance company was squeezed.

The group reported earnings of 75 cents per share for the quarter. In the year to March 2016, it reported earnings of 3.0 rupees per share on total profits of 4.7 billion rupees which rose 15.6 percent.

At the stand-alone company, the country's largest non-bank lender, profits fell 5 percent in the March 2016 quarter from a year earlier to 1.029 billion rupees despite a lower tax charge helping buffer a margin squeeze.

Interest income fell 4.3 percent to 4.4 billion rupees, interest expenses rose 5.5 percent to 2.0 billion rupees and net interest expenses income 11.6 percent to 2.3 billion rupees, in the quarter.

Loan losses were 32 million rupees compared to a write-back of 362 million rupees last year.

Loans grew 11.6 percent to 98.4 billion rupees in the year to March.


At group level interest income fell 3.2 percent to 4.5 billion rupees and net earned interest rose 9.3 percent to 844 million rupees in the quarter.

Group gross assets grew 1.9 percent to 131 billion rupees during the year. Net assets grew 11.9 percent to 24.6 billion rupees.

Union Bank excels in first quarter performance

Union Bank of Colombo PLC (The Bank) and its subsidiaries UB Finance Co. Ltd. and National Assets Management Ltd. (The Group) ended the first three months of 2016 with an impressive performance, reflecting a continued growth momentum with forward looking expectations.

The Bank’s post tax profit for the quarter is Rs. 80.4 mn, a 220% increase year on year (YoY). Total operating income of the Bank grew by 16% YoY to Rs.766 mn.

Net interest income (NII) of Rs. 443.8 mn recorded a 16% reduction over the comparative period ended March 31, 2015 due to a higher investment made in Unit Trusts of which the return is reflected in net trading income along with the narrowing margins.

Director and Chief Executive Officer Indrajit Wickramasinghe stated “We are off to a good start in 2016, and the Bank’s 1st quarter performance signifies the Bank’s capacity to reach the ambitious growth projected for the remainder of 2016. With the backing of a strong capital base and a focused strategic business plan; UBC is well geared to take on the challenges and opportunities of the market.”

Profitability was strengthened by much improved net fee and commission income, net gains from trading as well as other operating income. The Bank’s net fee and commission income stood at Rs. 61.7 mn at the end of Q1 2016, an increase of 146% over the comparative period with fee income from business lending, cards and trade transactions being the primary contributors of the said impressive growth. Net gains from trading led by investments in unit income recorded a growth of Rs. 115.3 mn YoY. The Bank does not have any exposure to the equity market.

Impairment charges have declined by Rs. 55.8 mn YoY, a 96% reduction owing to stringent management of recoveries. Net NPL ratio of the Bank has improved to 2.3% as at the end of Q1 2016.

The Bank’s total operating expenses increased by 23% to Rs. 672 mn due to the investments in staff and technology in keeping with the strategic plans. Corresponding to the above investments, the cost to income ratio of the Bank increased to 88% over 83% of the comparative period.

The Bank remains well capitalized within the minimum regulatory requirements, with Tier 1 Ratio of 24.9% and Tier 2 Ratio of 24.5%.

The Bank’s balance sheet expanded by 7% during the three months’ period to reach Rs. 75,823 mn in comparison to 31st December 2015. Loans and advances grew by 7.8% to Rs. 43,259 mn while the customer deposits reflected a growth of 13% to Rs. 42,598 mn.

The Group’s post tax profit for the quarter was Rs. 142.5Mn in comparison to Rs. 37.8 mn, an impressive growth of 276% YoY.

The total assets of the Group grew by 7% during the three months’ period to reach Rs. 82,078Mn, while the customer deposits reflected a growth of 12% amounting to Rs. 46,633 mn.

www.dailynews.lk

Sri Lanka shares at 15-week closing high; banks lead gains

Reuters: Sri Lankan shares rose for a second straight session on Wednesday to hit a 15-week closing high, led by financial and diversified shares, a day after the central bank kept the key interest rates steady.

However, analysts said investors were cautious, ahead of an imminent loan deal with the International Monetary Fund.

The central bank kept benchmark rates steady, as expected, as it gauges the effect of the recent tightening amid final stages of talks with the IMF for a $1.5-billion loan to tide over a payments crisis.

The benchmark stock index ended up 0.45 percent, or 28.95 points, at 6,434.24, its highest close since January 14.

"With the central bank holding rates steady and the news of finalising the IMF loan coming closer, investors turned positive," said Yohan Samarakkody, head of research, SC Securities (Pvt) Ltd.

A visiting IMF mission said it expected to complete negotiations with Sri Lanka for a three-year loan programme in the next two weeks.

Sri Lanka is expected to reach a staff level agreement with the IMF for a loan as early as this week, the central bank deputy governor said on Tuesday.

Foreign investors were net sellers of 41.9 million rupees ($288,309.36) worth of equities on Wednesday, extending the net foreign outflow so far this year to 2.99 billion rupees.

Turnover stood at 591.1 million rupees, less than this year's daily average of around 770.6 million rupees.

Shares in Ceylon Cold Stores Plc rose 5.42 percent while Carson Cumberbatch Plc ended up 3.77 percent and Commercial Bank of Ceylon Plc gained 0.76 percent.

($1 = 145.3300 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sherry Jacob-Phillips)

BOC confirms its place as the ‘No.1 Brand in the Country’

Click here to view 

Most Valuable Brands of Sri Lanka - 2016

BOC once again was bestowed as the No.1 Brand among all the brands in Sri Lanka for the 8th consecutive year by the renowned Brand Finance Lanka through an independent and stringent analysis. Brand Finance Lanka is partnered with the Brand Finance UK with its global network spread in 17 countries. The Brand "BOC" now boasts for overwhelming Rs. 41 Billion, a growth of 8.78% in 2016 compared to Rs. 38 Billion in 2015.

The chairman of the Bank of Ceylon President’s Counsel Ronald C. Perera had this to say, "Our prime objective at all times has been to create and enhance value for all our stakeholders that includes all Sri Lankans. As the country moves on in the progressive path for a more refined and long term economic and social development the Bank of Ceylon, the leader in the banking industry will take up the responsibility to assist this endevuor, financially connecting every other sector in the country to walk towards the same goal. Therefore it is such an honor to be valued as the No.1 Brand in the country for the 8th successive year as recognition of our tireless effort." With the confidence and trust the Bank of Ceylon has build in the Sri Lankan banking and finance industry over 76 years as the leader it has been able to set many key benchmarks that have elevated the Sri Lankan banking industry. Since its inception in year 1939 the Bank of Ceylon has been at the epicenter for enriching the lives of Sri Lankans through banking services. As of today BOCs local market reach consists of 626 Braches, 15 SME Centers and 605 ATMs and Cash Deposit Machines (CDMs) that counts to over 1200 customer touch points which are spread throughout the country and currently serve customers ranging from individuals to corporate of all walks of life. Bank maintains over 12 million accounts which amount to more than half of the population in the country.

"Developing the brand identity in the international banking and finance arena is also in focus as it is one of the needs for the country, in order to ensure our success we have adapted visionary thoughts of the digital world that could also transform the country’s banking landscapes. " the chairman further added. (BoC)

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Fitch rates Sampath Bank’s Debt ‘A(lka)(EXP)’

Fitch Ratings has assigned Sampath Bank PLC’s (A+(lka)/Stable) proposed Basel II-compliant subordinated debentures an expected National Long-Term Rating of ‘A(lka) (EXP)’.

The issuance is to total Rs 6 bn, with the debentures to mature in five years and carry fixed and floating coupons. The debentures are to be listed on the Colombo Stock Exchange. Sampath Bank plans to use the proceeds to support its Tier 2 capital base.The proposed subordinated debentures are rated one notch below Sampath Bank’s National Long-Term Rating to reflect the subordination to senior unsecured creditors.

Sampath Bank’s rating reflects its lower capitalisation relative to that of its peers and relatively higher risk appetite, which offset benefits from the growth of its franchise. The Outlook is Stable.
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Guardian Acuity Asset Management sees growth

Guardian Acuity Asset Management has recorded steady growth in subscriptions for the year ended 2015.

The company which is a JV of Acuity Partners and Ceylon Guardian Investment Trust PLC has been in operations since 2012 and manages three unit trust funds.

In year under review the funds under management of the company have increased from Rs. 1.9 billion to Rs. 5.8 billion, which is an increase of more than 200%. The Money Market Fund and the Equity Fund, which have been in existence since inception of the company, had seen the number of unit holders top 200. Guardian Acuity launched its Money Market Gilt fund in 2015, drew more than 80 investors and more than Rs. 800 million in funds.As per the annual report recently released, the equity fund which is a long term investment plan which offers access to the stock market for busy professionals has, as at the end of 2015, returned a cumulative 71.6% since inception in February 2012. 

The benchmark All Share Index in the comparable period gained 25.89% making the fund an ideal vehicle in which to build a diversified and dynamic portfolio. The money market fund, which gives access to short term corporate debt products, which are otherwise only accessible to sophisticated investors returned a cumulative 43.5% since inception in February 2012.

The benchmark for the fund, which is the NDBIB-CRISIL 91 day T-Bill Index, had gained 36.64% in the same period. The annualised average returns of both funds are 15.08% and 11.31% respectively in December 2015. For the quarter ending March 2016, the equity fund’s returns were down 10.78% against the ASI’s decline of 11.93%, caused mainly by market volatility. The current yield of the money market fund is 8.65 % p.a. (as of 15 April 2016). The company has embarked on an ambitious rollout plan for it products with clients able to buy their products at selected HNB branches. With interest rates at elevated levels and share prices depressed , the fund managers Sumith Perera and Asanka Jayasekara are of the view that that this is the best time to enter the market in a disciplined way with periodic cash injections to the equity fund for investors looking for a medium to long term return.

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Seylan Bank posts Rs. 720 mn net profit for Q1, 2016

Seylan Bank, recorded a strong quarterly performance with Profits after Income Tax reaching Rs. 720 million, for the three months ended March 31,2016, a 4% increase over the Rs. 691 mn reported in the corresponding period of 2015.

Net Interest income increased from Rs 2,805 million to Rs 2,939 million, a 4.8% increase for the three months ended March 31,2016. Net fee and Commission income increased 23.6% from Rs 562 Million to Rs 695 Million during Q-1 2016, showing a consolidation of the solid growth achieved by Seylan Bank over the past few years.

Other operating income comprising net gains from trading, gains on financial instruments, gains on foreign exchange and other income decreased by 117% from Rs 401 million in 2015 to a net loss of 68 million during Q-1 2016 mainly as a result of mark- to-market losses on Government Securities, due to the upward movement in interest rates.

During the period under review the Bank also focused considerably on cost containment. This was evident by the containment of growth in total expenses of 6.8% from 2,129 million to Rs.2,273 million during Q-1 2016.

The Bank reported a net credit growth of 4.27%, with net advances growing from Rs 193,103 Million to Rs 201,350 Million during Q-1 2016.

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Amana Takaful to raise Rs 200 mn

Amana Takaful Plc is to raise around Rs 200 million via a right issue of shares to raise funds to meet the regulatory capital requirement in terms of risk based capital rules issued by the Insurance Board of Sri Lanka (IBSL).

The company will issue 300,000, 216 ordinary shares at Rs .0.70 cents each in the ratio of one for every five existing shares. The current stated capital of the entity is Rs.1,650,001,188 .(IH)
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Monetary Policy Review – April 2016 - Policy rates unchanged

Headline inflation, as measured by the Colombo Consumers’ Price Index (CCPI, 2006/2007=100), declined to 2.0 per cent on a year-on-year basis in March 2016 from 2.7 per cent in February 2016, mainly due to the decline in food inflation. On an annual average basis, CCPI based headline inflation edged up to 1.1 per cent in March 2016 from 0.9 per cent in the previous month. Year-on-year headline inflation, based on the National Consumer Price Index (NCPI, 2013=100), was 2.2 per cent in March 2016 compared to 1.7 per cent in the previous month, and was 2.4 per cent on an annual average basis. Meanwhile, the CCPI based core inflation, which reflects underlying demand pressures in the economy, declined to 4.5 per cent in March 2016 from 5.7 per cent in the previous month, on a year-on-year basis. 

In the monetary sector, broad money (M2b) recorded a year-on-year growth of 19.8 per cent in February 2016, compared to 19.1 per cent in the previous month, driven by the expansion in domestic credit aggregates. Credit granted to the private sector by commercial banks, which is the largest category of domestic credit, increased by 26.5 per cent in February 2016, on a year-on-year basis, compared to 25.7 per cent in January 2016, while in absolute terms, credit granted to the private sector grew by Rs. 53.7 billion during the month of February 2016. Meanwhile, market interest rates have risen reflecting the tight monetary conditions in the economy. Going forward, a gradual slowdown in money and credit expansion is expected in the period ahead, as the recent monetary policy measures are expected to have an impact on the economy with some time lag.

In the external sector, the decline in expenditure on imports in February 2016 has been greater than the decline in earnings from exports, thereby narrowing the deficit in the trade account by 11.7 per cent, year-on-year. Earnings from tourism are estimated to have increased by 22.8 per cent in March 2016, while workers’ remittances recorded a healthy increase of 8.3 per cent in February 2016. Gross official reserves are estimated to have stood at US dollars 6.2 billion by end March 2016 compared to US dollars 6.6 billion at end February 2016, and the Sri Lanka rupee remained broadly unchanged against the US dollar thus far during 2016. 

Considering the fact that the Central Bank has already adopted measures to tighten monetary policy by raising the Statutory Reserve Ratio (SRR) and policy interest rates, and that the impact of these measures is yet to be reflected in monetary conditions in full, the Monetary Board, at its meeting held on 26 April 2016, was of the view that the current monetary policy stance is appropriate and decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank unchanged at 6.50 per cent and 8.00 per cent, respectively.

Sri Lanka shares up from near two-week low ahead of cenbank policy

Reuters: Sri Lankan shares edged up on Tuesday from its near two-week low hit in the previous session, as investors turned cautious, ahead of an imminent loan deal with the International Monetary Fund, and while awaiting cues from the central bank on interest rates.

The central bank's April monetary policy announcement is scheduled for later on Tuesday, and expectations are that the bank would keep key interest rates steady, a Reuters poll showed.

However, a surprise hike is not ruled out as five of 11 analysts expect the central bank to raise the policy rate and keep government borrowing in check through tighter financing conditions.

The central bank has tightened rates twice since December to ease the pressure on a fragile rupee.

The benchmark stock index ended up 0.4 percent, or 25.76 points, at 6,405.29.

"A sudden retail buying which came in the latter part of the day put some upward pressure on the market. We do not think it can sustain with the high interest rates and also the poor economic conditions," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

A visiting IMF mission said it expected to complete negotiations with Sri Lanka for a three-year loan programme in the next two weeks.

Foreign investors were net buyers of 96.8 million Sri Lankan rupees ($665,063.55) worth of equities on Tuesday, but have been net sellers of 2.95 billion rupees so far this year.

Turnover stood at 540.7 million rupees, less than this year's daily average of around 776.3 million rupees.

Shares in conglomerate John Keells Holdings Plc rose 1.84 percent.

($1 = 145.5500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sherry Jacob-Phillips)

Paranthan Factory reconstruction starts this year with Rs525Mn

(LBO) – A now defunct Lankan chemical pioneer is to be revived and construction work shall start before the end of this year to revive the historic manufacturing giant, a minister said.

“We have earmarked Rs 525 Mn to start work on the Paranthan Chemicals Factory in Kilinochchi, The construction work will begin before the end of this year,” said Industry and Commerce Minister Rishad Bathiudeen.

Minister made the announcement on 24 April while he was on a visit to a patch of 217 acre landmass in Kilinochchi where the former Paranthan Chemicals Factory was located before it was destroyed in 1985.

“With the recommencement of these factories we can produce our total Chlorine requirements domestically and save valuable foreign exchange of around $ 900000 per year that we spend to import Chlorine.”

Once recommenced, Paranthan factory can take its required salt from Elephant Pass saltern.

“We are also planning to upgrade Elephant Pass saltern so that we will become self-sufficient in domestic and industrial salt supplies.” said Minister Bathiudeen.

Former Paranthan Chemicals Factory that functioned under the state owned Paranthan Chemical Co, was established in 1954 as Government Chemicals Factory at Paranthan in Kilinochchi District.

It manufactured Caustic Soda using salt as the key raw material and was re-named as Paranthan Chemicals Corporation in 1957 by the State Industrial Corporation Act No 49 of 1957.

The factory was destroyed due to terrorism that began in 1983, and as a result, by 1985, Caustic Soda and Chlorine had to be imported for local soap, paper, textiles and manufacturing.

At present, Paranthan Chemical Co imports liquid Chorine in 900 Kg cylinders and refill in to 68Kg cylinders at its refilling units in Horana and Kaluthara.

It can supply the entire chlorine required by the Water Supply and Drainage Board and private sector industries. Paranthan Chemical Co is a profit making state firm that reported more than Rs 150 Mn profits in 2015.

Chevron goes for sub-division

The Board of Directors of Chevron Lubricants Lanka has resolved to increase the number of shares by way of a sub-division of each existing ordinary share (1) to two (2) ordinary shares.

At the conclusion of the proposed sub division, the number of shares currently in issue will increase from 120,000,000 shares to 240,000,000 shares. There will be no change to the stated capital of the company.The increase of shares by way of a sub division is subject to shareholder approval at a General Meeting.
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Sri Lanka Piramal Glass to expand capacity, annual profit up 50-pct

ECONOMYNEXT – Sri Lankan glass bottle maker Piramal Glass Ceylon said net profit during the year ended 31 March 2016 rose almost 50 percent with strong domestic sales although earnings dipped in the fourth quarter.

The firm, a unit of India’s Piramal Glass Ltd., said annual profit rose 49 percent to 654 million from a year ago with sales up 17 percent to 6.8 billion rupees.

“The revenue growth was mainly contributed by the domestic sales which saw a significant growth of 23 percent from 4,422 million rupees to 5,436 million rupees,” a stock exchange filing said.

“The major portion of growth was backed by food and beverage segments.”

Annual earning per share were 0.69 cents against 46 cents the year before.

“The Board of Directors has proposed a 35 percent dividend maintaining its consistent policy of dividend pay-out ratio,” the statement said.

In the March 2016 quarter EPS fell to 21 cents from 22 cents the year before with net profit at 200 million rupees although sales grew 18 percent to 1.9 billion rupees.

Piramal Glass Ceylon said it had “exceptional sales during the festive season.”

Sanjay Tiwari, Managing Director of Piramal Glass Ceylon, said the company’s furnace which was built in 2007 is to be rebuilt and relined during F2017 with an investment of three billion rupees.

Capacity will be increased to 300 tonnes a day from the existing 250 tonnes.

“The company is also doubling the facility for producing colour bottles through colouring forehearth. This expansion also includes further investment in more sophisticated down-stream facilities.”

Sri Lanka shares end near 2-week low ahead of cenbank policy

Reuters: Sri Lankan shares fell to a near two-week low on Monday as cautious investors waited for cues from the central bank's decision on interest rates and talks on a loan deal with the International Monetary Fund.

The central bank's April monetary policy announcement is scheduled for 1130 GMT on Tuesday, and expectations are that it would keep key interest rates steady, a Reuters poll showed.

However, a surprise hike is not ruled out as five out of 11 analysts expect the central bank to raise the policy rate to keep government borrowing in check through tighter financing conditions.

The central bank has twice tightened rates since December to ease the pressure on a fragile rupee.

The benchmark stock index ended 0.67 percent or 43.12 points weaker at 6,379.53, its lowest close since April 12.

"The selling pressure was there and we expect it to continue over the week due to the high interest rates and also the poor economic conditions," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

A visiting IMF mission said it expected to complete negotiations with Sri Lanka for a three-year loan programme in the next two weeks.

Foreign investors were net buyers of 102.2 million rupees ($702,646.96) worth of equities on Monday, but have been net sellers of 3.04 billion rupees so far this year.

Turnover stood at 437.1 million rupees, less than this year's daily average of around 776.3 million rupees.

Shares in John Keells Holdings Plc fell 2 percent, while those in Commercial Bank of Ceylon Plc dropped 1.50 percent.

($1 = 145.4500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anupama Dwivedi)

‘No consistent state policy on driving CSE’

By Hiran H.Senewiratne

The government does not have a proper direction or consistent policy to drive the Colombo Stock Exchange (CSE) to boost investor confidence, which is now dropping drastically, president, Colombo Stock Brokers Association (CSBA) Ravi Abeysuriya said.

"The government should have proper strategies and policies to meet all the government expenses and to address macro economic issues, which is now the need of the hour to salvage the economy from this bad situation, Abeysuriya told The Island Financial Review.

He said that when it comes to the CSE per se, the market is not performing well but there are some good stocks which need to be picked and choosen carefully before buying. Further, the global economic depression is adding insult to injury, Abeysuriya said.

"The All Share Price Index (ASPI) is more popular at the Colombo Stock Exchange compared with S&P Sri Lanka 20 and these two indicators play a major role in Sri Lanka's stock market performance. We can predict in which direction the Colombo Stock Exchange would move, looking at these indicators, he said.

"These indicators are useful to have an idea of Sri Lanka stock market performance but a lack of proper direction and inconsistent policies put the market into uncertainty.This makes investors to think twice before investing, Abeysuriya explained.

He also said that under these conditions it is not prudent to invest in the CSE heavily because of its high market volatility. "Therefore, my advice to the investors is don't jump in to the market without understanding value added stocks, he said.

The CSBA president also said that the IMF financial facility would bring some financial discipline to the country, because of it being a long term financial bail out.

The CSE Chief Executive Officer Rajeeva Bandaranaike said that the CSE is now in a positive improvement mode compared to the last few months. This will continue for some time.

"We have seen the market moving into positive territory, which will continue for some time. Under these conditions, foreign investors will be active in the market due to other markets in the region not performing well,he said.

The CEO said that the market will move forward due to the new government's economic policies, which will come into force in the future.

www.island.lk

Union Assurance declares higher dividends

Union Assurance declared a 9.5% dividend rate on their Life Advantage Plan for 2015.

This is a significantly higher rate than the minimum guaranteed rate of 8% for 2015, a rate that is still higher than the average market interest for 2015, which stood at 5.99%.

The year’s bonus payout is consistent with the Company’s practice of providing policyholders with a significantly higher return than promised. This is the third year running that Union Assurance presented its policy holders with a higher than expected dividend rate.

Policyholders of ‘Union Life Advantage’ policies were able to enjoy this rate of dividend, which is based on the investment earnings on the life fund attributable to the dividend-based products of the company.

The investment account maintained for each individual dividend based policyholder is credited with the dividend on monthly compounding basis.

The Company’s “With Profit” policyholder’s who were in force as at December 31,2015 will receive an annual bonus for 2015, which will be added to their policy. The company has been able to pay higher benefits to its valued policyholders due to its continued growth in 2015 by earning over Rs. 6.9Bn in gross written premiums.

General Manager, Life Operations, Iroshini Tittagalla said, “The Company’s performance in 2015 continued in the upward trajectory and it has considerably strengthened its position over that of 2014. The outlook for Union Assurance in 2016 continues to be extremely positive. The strong numbers this year demonstrates our determination to achieve, and our commitment to rewarding the trust and confidence placed upon us by our loyal customers.

Union Assurance operates on the platform of Trust, which enforces the brand values of convenience, respect, and transparency. Union Assurance believes that sustainable growth can be achieved and maintained through the use of correct strategies that ensure that the right people and the best processes are in place to provide an all-round customer experience.

This customer-centric approach has resulted in steady and continuous growth over the years, with excellent end-year financials results in 2015 reinforcing the Company’s reputation as a trusted service provider.

www.dailynews.lk

Sanasa Bank PBT tops Rs.1 bn with impressive growth

Sanasa Development Bank (SDB) has recorded an impressive performance with the bank’s net profit before tax surpassing Rs.1 billion mark for the first time in the history.

This is an exceptional 48% growth compared to the previous year and ended up with a post-tax profit of Rs.720 million for the financial year ended December 31, 2015.

This growth was led by interest income coupled with the responsible interest expenses management. This healthy profitability performance was recorded under challenging market conditions and it demonstrates Bank’s prudent management policies in managing the external forces.

Chairperson Samadanie Kiriwandeniya said the SDB is now poised for a quantum leap through a transformation process leading to a significant revenue enhancement.

Chief Executive Officer Nimal C. Hapuarachchi said 2015, being a year with several political and regulatory postures being changed, which had mixed impact on the financial services sector, achieving a phenomenal growth amidst such macroeconomic challenges, affirms SDB’s position as a resilient financial institution in the market”, Hapuarachchi said.

During the year bank increased its interest income by 36.2% and interest expense increased by only 34.9%. This resulted in net interest income of the bank growing by 37.5% to Rs. 3.3 billion, despite the banking sector margins continuing to drop in 2015.

Net interest income contributed 93% to the total operating income during the year as against 86% contribution during 2014.

Gross income, comprising of interest income, net fee and commission income, net gains/(losses) from financial assets held through fair value through profit and loss and other operating income recorded a 31% increase to reach Rs 6.8 bn for the year.

Operating expenses which comprises personnel cost, depreciation and amortization and other operating expenses increased by 30.6% and posts Rs. 2.2 billion compared to the level of Rs. 1.6 billion posted in the previous financial year.

The primary drivers for this growth were personnel costs and office administration and establishment expenses accounting for 46% and 21% respectively of the total operating expenses.

The growth in personnel cost was driven largely by the increased head count, taken for future expansions as well as the periodic salary revision made in June 2015. These changes have been made amidst the expected aggressive business transformation across the bank, the benefits of which will accrue over the coming years. Although the overall operating expenses reflected an increasing trend, it is noteworthy that the cost to income ratio was controlled at 60.4% from 62.6% in financial year 2014, demonstrating the bank’s shrewd management of expenses.

Impairment charge for loans and receivables of the bank was Rs. 49.5 million and compares with a charge of Rs. 204.3 million in 2014, a decrease of 75.7% over 2014. This substantial decline represents the bank’s sound judgment in assessing the fair value of the impaired loans, based on objective evidence of future recoveries and is in accordance with bank’s stringent risk management policies.

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Thai giant to pump Rs 500 mn on fish canning plant

One of Asia’s largest fish canning factories in Asia, Anuorn Group Thailand will be investing Rs. 500 million to set up a fish canning plant and a dry ice manufacturing factory in Eastern Sri Lanka.

Anuorn Group Thailand Chairman and Thai Overseas Fisheries Association President Aphisit Techanitisawad said that they have already visited Sri Lanka last March and the project has been accepted by the International Trade Relations Ministry after having discussions with Ministers Malik Samarawickreme and Daya Gamage.

He said that they are initially planning to market about 80% of their products in Sri Lanka and the rest to the region. “With the EU ban in fish exports now being lifted we will now look at exporting to the EU region as well and we will pump in more capital again.”

He said that they conduct their operations in a unique manner where they partner around 600 fishermen who have their own boats. “We provide them modern equipment, technical assistance, training and come to a forward agreement to buy their ‘catch’.

“Our training, the GPS and other equipment we offer will also give them a higher catch. As we have a forward agreement with them they are assured that they sell directly to the buyer thus eliminating the middle man and also getting a better price for their catch.”

“This is the model that we will be implementing in Sri Lanka and it will offer direct employment for over 1,200 fishermen.

He that said that Sri Lanka still imports fish and this is a very sad scenario and the reason for this is the outdated technology Sri Lankan fishermen adopt. “In addition fish prices in Sri Lanka too are high and we hope our entry to the country would be a game changer for the fishing industry.”

Thailand is the world’s biggest tuna packer and we are ready to share our expertise to firstly make Sri Lanka self sufficient and then a major player in the export sector. According to the Thai Department of Fisheries, Thailand’s seafood exports to the EU alone are worth 30 billion baht (US$ 887.4 million) annually.

He said that their company which has five fish canning plants in coastal areas in Thailand is also in the restaurant business. “We many also look at expanding this business to Sri Lanka as well.” He however said that though they also own fishing vessels they will not introduce it to Sri Lanka since they want the Sri Lankan fishermen also to grow with them.

www.dailynews.lk

Vehicles permits for public servants soon

Public Administration Ministry is to secure Cabinet approval soon for giving duty free vehicle permits to public servants entitled for the benefit, Minister Ranjith Madduma Bandara said.

Already, the Finance Ministry has submitted the Cabinet memorandum in this regard. Minister Bandara said his Ministry also made its observations in this regard.

“We hope we will be able to issue duty free vehicle permits to the entitled public servants very soon. The Cabinet approval can be secured soon,” he said.
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SEC’s proposed whistle-blower policy to award ‘bounty’ to corporate staff spilling beans

By Duruthu Edirimuni Chandrasekera


Amid a growing number of scams and corporate swindling in listed firms, Sri Lanka’s securities watchdog is to make it mandatory for listed firms to have a whistle-blower policy for their employees and directors in a bid to take would-be perpetrators to task, officials said. “This is popular in many developed nations and provides an opportunity for employees to report any misdoings and misconduct within their company. We want to introduce it in the new laws (Act),” a Securities and Exchange Commission (SEC) official told the Business Times this week. He said those who alert the authorities will be rewarded with a ‘bounty’. “We wanted to make the extent of trouble attractive for the staff member and in terms of this gleaned some best practices from other jurisdictions.

So we came up with a bounty for those who ‘shout-out’,” he said. He said that the US has been encouraging at a national level both the incidence of whistle-blowing and the protections and incentives that are open to whistle-blowers over a long period. He said that India has also adopted this policy through the Whistle-Blowers Protection Act, 2011, an Act of the Parliament of India which provides a mechanism to investigate alleged corruption and misuse of power by public servants and also protect anyone who exposes alleged wrongdoing in government bodies, projects and offices. The wrongdoing might take the form of fraud, corruption or mismanagement. The Act will also ensure punishment for false or idle complaints.

The whistle-blower policy provides a guided process for any employee to make a written or verbal complaint on any familiarity or suspect of illegal or unethical employment or business practices exercised by a colleague in any capacity in their company. According to the official, a whistle-blower policy allows the SEC to minimise the harm to investors, better preserve the integrity of the capital markets, and promptly hold accountable those responsible for dishonest conduct. The employee is assured of confidentiality and anonymity and the employer’s onus is to take necessary safeguards to protect whistle-blowers from victimisation according to the proposed provisions in the new Act. The official said that while checks would also be required against any misuse of this facility, the move to come forth with discriminating information won’t be taken lightly; hence original information by a whistle-blower qualifies for a ‘bounty’.

www.sundaytimes.lk

15% interest finally for senior citizens

By Bandula Sirimanna

Here is good news for senior citizens. The Government has finally – after hemming and hawing over a November 2016 budget proposal offering a 15 per cent interest on deposits – agreed to its implementation. There is also an added bonus. The proposal will cover both finance companies and commercial banks; will apply to anyone above 55 years (earlier it was 60 years) and up to a maximum of Rs. 1.5 million (earlier Rs. 1 million). The Business Times has been repeatedly highlighting the need for the government to implement this proposal.

This was confirmed by Treasury Secretary R.H.S Samaratunge who told the paper that a circular will be issued before the end of the month to the Central Bank (CB) to issue a directive to finance companies (and commercial banks) to implement the proposal. He said clear guidelines would be issued to minimise any confusion. In the absence of clear instructions, commercial banks have been, this year, renewing deposits of senior citizens’ accounts that were placed at 15 per cent interest under earlier budget proposals.
The letter of instructions has been prepared and it will be sent to the CB before the end of this month, Dr. Samaratunge said. Thereafter the CB will need to issue a circular to the banking and finance sector with the date of implementation.

www.sundaytimes.lk

Entrust owes Rs. 9 bln to clients

By Duruthu Edirimuni Chandrasekera

The liabilities in the bond market by Entrust Securities, a primary market dealer under-fire since early this year, is at Rs. 9 billion and not Rs. 5 billion as earlier estimated, latest data revealed. Informed sources told the Business Times that Entrust has some Rs. 5.3 billion that it owes to just three institutions – and the two on top of the list are the Central Bank (CB) and the Ceylon Electricity Board (CEB). “Entrust owes Rs. 2.2 billion to CB and Rs. 1.8 billion to CEB,” a source told the Business Times adding that Arpico came in at the third slot on Entrust’s list of liabilities with Rs. 1.3 billion.

All others are hovering around Rs. 500 million each and all together total around Rs. 9 billion. The CB took over the crisis-hit firm in January after it was revealed that liabilities far exceeded assets. Shamir Mendis, a former director at Delmege Group, has sued Entrust for Rs. 100 million in the High Court. “There are others who are also planning this,” a source close to Mr. Mendis told the Business Times.”We will find out the exact position in a few months time,” he added.

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Vehicle import duties dominate Govt’s tax drive

The Government has set a target of Rs. 886 billion revenue from taxes with the biggest contribution expected from vehicle import duties amounting to Rs. 280 billion. The Government is also expecting Rs. 125 billion via import tax followed by Rs. 95 billion from port and airport development levy (PAL), Rs. 85 billion from excise duties, Rs. 75 billion from VAT, Rs. 65 billion from special commodity levy (SCL) and Rs. 54 billion from import Cess levy.

The Finance Ministry has prepared letters, circulars, guidelines, revenue bills, and amendments to the Finance Act and Inland Revenue Act to implement 2016 budget proposals soon, Treasury Secretary R.H.S. Samaratunge told the Sunday Times.

Necessary amendment bills relating to the implementation of VAT and NBT revisions are being prepared although the enactment of revenue bills and the issuing of guidelines and circulars to relevant ministries and institutions had been delayed due to unavoidable reasons, he added.

VAT has been increased to 15 percent from 8-12.5 percent from May 2 but water, electricity and medicinal drugs are exempted from the increase. The NBT will remain at 2 percent, he said adding: “In Sri Lanka it is difficult to implement tax increases but easy to implement tax cuts.”

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Lifting of fish export ban: EC miffed over early announcement

The European Commission (EC) has objected to Thursday’s early announcement by the Fisheries Ministry in Sri Lanka that the ban on Lankan fisheries product exports to Europe has been lifted by the European Union.

Taking up the matter through diplomatic channels in Brussels, the Directorate-General for Maritime Affairs and Fisheries (DG MARE) has sought clarification on how the announcement was made by the ministry in advance before the decision was formally announced.

The Fisheries Ministry in an official communiqué on Thursday said that the EU had informed the ministry that it had lift the ban with effect from April 21. The statement said a special media briefing would be held on the same date where Minister Mahinda Amaraweera would be explaining about the benefits of lifting the ban.

However soon after the media queries were made from the ministry whether the ban had been lifted another statement followed. It said the EU was due to take a decision regarding the lifting of the ban on April 21 and the Minister would be briefing the media about the decision.

A third media release by the ministry followed thereafter blaming the media for publishing ‘baseless reports’.The Sunday Times learns the Prime Minister’s office had taken up the matter with the Fisheries Ministry.

The European Commission spokesperson in apparent reaction to the Fisheries Ministry’s move to make the advance announcement refrained from making mention of the recommendation to lift the ban. Subsequently a press release was issued.

Fish exports to EU countries from Sri Lanka is set to begin by July with approval from the European Council — the Cabinet of the 28 member-state Ministers — now pending, officials said.

This week’s European Commission Decision on Sri Lanka recommending the lifting of the ban on fish exports is likely to be taken up within the next two to three months by the European Council.

www.sundaytimes.lk

Sri Lanka shares end steady ahead of cbank rate decision

Reuters: Sri Lankan shares ended flat in dull trade on Friday as investors waited for negotiations to conclude on a loan deal with the International Monetary Fund and ahead of a central bank decision on interest rates next week.

The central bank's April monetary policy announcement is scheduled at 1230 GMT on Tuesday, and expectations are that it would keep key interest rates steady, a Reuters poll showed.

The central bank twice tightened rates since December to ease pressure on a fragile rupee.

The benchmark stock index was barely changed at 6,422.65 on Friday, hovering near its highest close since Feb. 2 hit on Wednesday.

It rose 0.3 percent on the week.

"The IMF deal is keenly awaited and we expect the market to move sideways until the deal is over," a stockbroker said asking not to be named.

A visiting IMF mission said last week it expected to complete negotiations with Sri Lanka for a three-year loan programme in the next two weeks.

Markets were closed on Thursday for a Buddhist religious holiday.

Shares in Chevron Lubricants Lanka PLC, which accounted for a third of the day's turnover, ended 1.5 percent lower.

Foreign investors net sold 98 million rupees ($670,315) worth of equities on Friday, extending net outflows to 3.15 billion rupees so far in the year.

The 14-day relative strength index ended at 73.976 on Friday, compared with Wednesday's 74.059, Reuters data showed. A level between 70 and 30 indicates the market is neutral.

Turnover stood at 615.2 million rupees, less than this year's daily average of around 780 million rupees.

($1 = 146.2000 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Biju Dwarakanath)

Sri Lanka to exempt power, water from VAT: minister

ECONOMYNEXT - Sri Lanka will not charge value added tax from power and water but telecom and health and education services will be charged, ministers said.

State minister for finance Lakshman Yapa Abeywardene said a decision had been taken to exempt water and telecom.

Private health services will be charged VAT but drugs will be exempted.

Private education services will also be charged VAT.

Sri Lanka's Seylan Bank to sell up to Rs5.0bn debt

ECONOMYNEXT - Sri Lanka's Seylan Bank Plc said it will sell up to 5.0 billion rupees in listed debt with tenors of 5 and 7 years.

The lender said in a stock exchange filing that its board has approved the issue of 3.0 billion rupees of debt with an option to sell another 2.0 billion rupees.

The debentures will have a coupon on 100 rupees.

The interest rates will be decided shortly before the offer is made

Sri Lanka shares end up 2nd straight session

Reuters: Sri Lankan shares rose for the second straight session on Wednesday as investors bought diversified shares such as market heavyweight John Keells Holdings Plc, brokers said.

However, trading was dull as investors turned cautious ahead of an imminent loan deal with the International Monetary Fund and uncertainty over a tax policy.

Foreign investors were net buyers of 92.4 million rupees ($631,794.87) worth of equities on Wednesday, but were net sellers of 3.05 billion rupees worth of shares so far this year.

The benchmark stock index ended up 0.55 percent at 6,423.13, its highest since Feb. 2.

"We have not seen any serious buying coming in. It's retail and speculative buying. Everybody is still waiting to see the direction on the tax implementation and the IMF deal," a stockbroker said requesting not to be named.

Sri Lanka will raise value added tax (VAT) to 15 percent from 11 percent on May 2, a treasury official said last week, as the island nation reaches the final stages of negotiating an IMF loan.

Clarifying a contradictory statement by President Maithripala Sirisena, the junior finance minister on Wednesday said the government has exempted some sectors to ease the indirect tax burden.

High interest rates and lower-than-expected earnings in the March quarter dented investor sentiment.

The 14-day relative strength index ended at 74.059 on Wednesday, compared with Tuesday's 71.893, Reuters data showed. A level between 70 and 30 indicates the market is neutral.

Turnover stood at 577.4 million rupees, less than this year's daily average of 783.4 million rupees.

Shares in John Keells Holdings Plc rose 1.97 percent while Ceylon Tobacco Company Plc gained 0.73 percent.

The markets will be closed on Thursday for a Buddhist religious holiday and will resume trading on Friday. 

($1 = 146.2500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez)

Sri Lanka 03-month T-bill yield steady at 8.45-pct

ECONOMYNEXT – Sri Lanka’s three month Treasury Bill yield was steady at 8.45 percent at this week’s auction compared with last week, the public debt department of the central bank said.


The six-month T-bill yield edged down one basis point to 9.53 percent while the one-year bill yield rose 17 bp to 10.17 percent, it said.

It got bids worth 59.6 billion rupees and accepted bids of 32.9 billion rupees.

DFCC Bank launches Vardhana Virtual Wallet

DFCC Bank PLC has introduced an innovative mobile payment solution,Vardhana Virtual Wallet which is equivalent to having cash in hand.

Owned and operated by DFCC Bank and developed by Synapsys, the Vardhana Virtual Wallet is a digital application that can be downloaded onto a mobile device, connecting consumers to merchants and other consumers. This solution enables users to send and receive electronic cash, thus simplifying their shopping experiences and helping them to stay in control of their finances. Its many uses include purchasing goods and services, paying utility bills, transfering funds between Wallets, withdrawing cash and topping up cash from designated merchant outlets or from the Bank account linked to the Wallet. All these features could be accessed while on-the-go from a data enabled mobile device. Funds can be maintained in the Virtual Wallet to conduct transactions, eliminating the need to carry any other payment instrument.

This product also has great benefits for merchants regardless of their scale or scope of operation, as mobile payments is a fast growing trend. Some of the benefits include reduction of operating costs, the ability to earn attractive commission income and the ability to create a consumer-centric shopping experience may it be at the merchant's premises or at the door step of a consumer. Thus their brand proposition is further enhanced.

DFCC Bank CEO Arjun Fernando said DFCC Bank has evolved and diversified to meet the changing needs of customers and the nation. Our progress and achievements have resulted in many firsts, and the introduction of the Virtual Wallet is a financial inclusion enabler and yet another first in the country's banking industry.”

The Bank's personal account holders need to only submit a duly completed form and on receiving confirmation from the bank, may download the Vardhana Virtual Wallet digital application to their device from Apple iStore or Android Play Store. Further assistance can be obtained by calling DFCC's customer care hotline. On activation of the Virtual Wallet, the user can login with the registered credentials and start using the Wallet to experience its sheer convenience. Merchants also can register in the same manner, where they can additionally login through a mobile connection or PC and laptop connected to the Internet depending on the nature of their business.

www.dailynews.lk

Ceylinco Life stronger at end of challenging 2015

Life insurance market leader Ceylinco Life ended 2015, a year it describes as one of ‘unusual challenges,’ with a characteristically strong performance that kept it at the top for the 12th successive year. Managing Director and CEO R. Renganathan elaborates on the company's performance.Excerpts of the interview.

Q: Ceylinco Life is now a standalone life insurance company following the segregation of life and general insurance by law. How has this affected your business

A: Our business is as strong as ever! We have the same products, the same sales team, the same senior executive team, and above all, the same passion, commitment and professionalism that made us the number one life insurer in Sri Lanka in 2004, a position we have defended and strengthened for the past 12 years. Ceylinco Life is one of Sri Lanka's most powerful and trusted brands, and will remain so. The segregation of life and general insurance has no adverse impact on how we operate as a business. In fact we were always in favour of the segregation.

Q: Does your financial performance in the last year support this assertion

A: The figures speak for themselves. Ceylinco Life ended 2015 with total income of Rs 19.89 billion, a growth of 7 per cent. Of this, premium income accounted for Rs 13.4 billion, making the company the largest life insurer in the market for the 12th consecutive year. The growth in premium income was more than 12 per cent, which is very satisfactory. We recorded net profit of Rs 2.060 billion for the year and transferred Rs 1.8 billion to shareholders.

Q: How did the company's investment income grow in the last financial year

A: Investment and other income remained flat at Rs 6.74 billion, which is not surprising in the context of the interest rates in effect. However, Ceylinco Life's investment portfolio increased by a solid 17.35 per cent in value to Rs 67.1 billion, while total assets grew by a noteworthy Rs 9.1 billion or 12.9 per cent to Rs 80.2 billion. We pay a lot of attention to the prudent management of our investment portfolio, which is one of the strengths of the company.

Q: What sectors are your funds invested in

A: At the end of 2015, we had invested more than half of our funds, 53 per cent to be precise, in Government Securities. The rest of the investment portfolio comprised of Licensed Private Banks -18 per cent; State Banks - 2 per cent; Real Estate - 7 per cent; Corporate Debt - 19 per cent and Others (1 per cent). These investments are made in conformity with the investment guidelines stipulated under the Regulation of the Insurance Industry Act No 43 of 2000 and are subject to regular monitoring by the Insurance Board of Sri Lanka.

Q: How did your Life Fund grow in 2015

A: Our Life Fund posted net growth of Rs 7.99 billion to reach Rs 68.01 billion at the end of 2015. This represents a growth of 13.31 per cent. Ceylinco Life was, in fact, the fastest company in the local life insurance industry to reach a Life Fund of Rs 60 billion, a feat we achieved in 2014.

Q: What kind of growth did the company achieve in new business in the last year

A: We sold 170,007 new policies in 2015 averaging 14,166 a month, which is quite satisfactory in the context of the conditions that prevailed. Sales of retirement plans grew by a noteworthy 30% per in 2015, which is something we are most pleased about. Overall, 2015 was a tough but memorable year for the company, particularly because we achieved our results in the face of unusual challenges, including an attempt to take over the company, which we were able to overcome without losing our focus on operational performance. Our 2015 results can therefore be viewed as a measure of the company's strength and resilience, and its unwavering attention to business fundamentals.

Q: How did policyholders benefit from the company's success

A: Benefits to policyholders totalled Rs 5.9 billion in 2015, which was a 21.7 per cent improvement over the previous year. This included ‘Avurudu cash’ bonuses to more than 14,000 policyholders apart from the Rs 2.9 billion in annual bonuses declared. The annual bonus pay-out in 2015 was the highest in Ceylinco Life's history, and surpassed the previous year's by Rs 500 million.

Q: So it would appear that Ceylinco Life emerged stronger in many aspects at the end of 2015

A: There is a lot of truth in the saying ‘That which does not kill us, makes us stronger.’ The challenges we faced did not deter our performance, and we certainly did end the year stronger than when we began it. One indicator of the strength of an insurance company is its solvency ratio, which is computed on the basis of admissible assets over total liabilities. Ceylinco Life maintained its solvency ratio at eight times the legal requirement in 2015.

The solvency margin is one of the most important key performance indicators for a life insurance business because it represents a company's ability to meet the obligations arising from its life insurance contracts. The prevailing insurance regulations require insurance companies to maintain a solvency margin of not less than 5 per cent of their statutory liabilities at all times.

Q: Any other memorable achievements in 2015

A: There were several. One of them was the reaffirmation by World Finance, the respected UK-based magazine, of Ceylinco Life as the ‘Best Life Insurance Company in Sri Lanka’ for a second consecutive year. This followed an in-depth assessment of key performance indicators. (VW)

www.dailynews.lk

Taprobane Holdings makes profits

Taprobane Holdings made a turn around in the financial year ending in March 2016 by recording a profit of Rs 12.5 million when considering the previous financial year which incurred several losses.

The company resulted in making revenue of Rs. 9.9 million which is a significant growth when compared to the Rs. 711 million.

“Modest contributions from the money broking and investment in government securities, as well as a doubling of revenue from the stock broking arm also supported revenue growth.

“As interest rates trended downwards, the Group benefited from profits on bond sales and, as investors sought higher returns amid the prevalent low interest rate scenario, a keen interest was seen in the stock market, which rendered a notable improvement in revenues for the stock broking arm,” Group Chief Executive Officer Ruwan Sugathadasa said.

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Sri Lanka shares edge up; eyes on IMF loan deal

Reuters: Sri Lankan shares ended slightly firmer on Tuesday as investors turned cautious ahead of an imminent loan deal with the International Monetary Fund and uncertainty over a tax policy.

The benchmark stock index ended up 0.09 percent, or 5.54 points, at 6,387.85, hovering near its 10-week closing high of 6,401.32 points, that was hit on Friday.

Foreign investors were net buyers of 178.8-million-rupees ($1.22 million) worth equities on Tuesday, but these investors were net sellers of 3.14 billion rupees worth of shares so far this year.

"Investors are waiting for a clear sense of direction in terms of tax policies and IMF deal," a stockbroker said requesting not to be named.

"There are a few confusions because of some inconsistent statements on value added tax."

Sri Lanka will raise value added tax (VAT) to 15 percent from 11 percent on May 2, a treasury official said last week, as the island nation reaches the final stages of negotiating an IMF loan.

However, local media quoted President Maithripala Sirisena as saying he would not have any tax increase that would be a burden for the public and stockbrokers.

High interest rates and lower-than-expected earnings in the March quarter dented investor sentiment.

The index remained in 'overbought' zone on Tuesday for a fourth straight session.

The 14-day relative strength index ended at 71.893 on Tuesday, compared with Monday's 71.547, Reuters data showed. A level between 70 and 30 indicates the market is neutral.

Turnover stood at 753 million rupees, just below this year's daily average of 786.4 million rupees.

Shares in Bukit Darah Plc rose 3.09 percent while Asiri Hospital Holdings Plc gained 3.60 percent.

($1 = 145.0000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sherry Jacob-Phillips)

Sri Lanka rejects all bids at bond auction

ECONOMYNEXT - Sri Lanka has rejected all bids for an auction after offering to sell, 4, 6 and 7 year bonds, the debt office said.

The debt office, which is a unit of the Central Bank offered five billion rupees bonds maturing on 15.12.2020 for which 14.08 billion rupees of bids were received.

For bonds maturing on 01.10.2022, 14.2 billion rupees of bids were received. For 7-year 8-month bonds maturing on 01.01.2024 bids of 31.23 billion rupees were received

The central bank rejected all bids.

Sri Lanka shares end lower amid foreign fund outflow

Reuters: Sri Lankan shares slipped on Monday from a near 10-week closing high hit in the previous session, led by financials amid foreign investor outflow as rising interest rates and lower earnings in the March quarter dented investor sentiment, brokers said.

The benchmark stock index ended 0.3 percent weaker, or 19.01 points, at 6,382.31, slipping from its highest close since Feb. 8 hit on Friday.

Foreign investors were net sellers of 221.5 million rupees ($1.53 million) worth equities on Monday, extending the year to date net foreign outflow to 3.32 billion rupees worth of shares.

"Market showed some dry activities and the retail activity was very dull after the new year (holidays)," said Yohan Samarakkody, head of research, SC Securities (Pvt) Ltd.

Investors will be wary due to policy uncertainty, higher interest rates, lower than expected March-quarter earnings and a falling rupee, he said.

The index remained in overbought zone on Monday for the third straight session.

The 14-day relative strength index ended at 71.547 on Monday, compared with Friday's 74.472, Reuters data showed.

A level between 70 and 30 indicates the market is neutral.

Turnover stood at 613.9 million rupees ($4.23 million), less than this year's daily average of 786.9 million rupees.

Shares in Commercial Leasing & Finance Plc fell 4.88 percent, while Aitken Spence Plc fell 3.19 percent and Lanka ORIX leasing Company Plc fell 2.11 percent. 

($1 = 145.0000 Sri Lankan rupees) 

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

Bogala closes disappointing 2015,but last quarter encouraging

Drop in demand for graphite in U.S. and Europe

Bogala Graphite Lanka PLC has closed what its chairman, Mr. Vijaya Malalasekera has called a "rather challenging year" ended December 31, 2015, breaking even with a marginal net profit of Rs. 0.2 million, down from Rs. 74.5 million a year earlier, due to a drop in demand for their products in Europe and the U.S. and a volatile Euro.

But he had said that the situation had looked up in the last quarter of the year and he was optimistic of a turnaround in the current financial year.

The chairman reported that despite a 50% increase in demand from the Far Eastern market compared to 2014, the substantial decline in demand from Europe, UK and the US markets and from their (German) parent company had pushed down revenue to Rs. Rs. 583 million from Rs. 607 million the previous year.

Also the product mix had changed with low margin graphite being more in demand compared to graphite that would have sold at higher margins. The drop in demand from the Middle East market too had added to their woes.

"In summary the performance during the year has been disappointing for the company when compared to earlier years," he said. "The primary factor appears to be the lack of sales that have not been forthcoming though anticipated during our budgeting process."

He reported that internationally there had been a reduction in prices of commodities and the minerals market has declined significantly. The management was taking steps to ensure better sales in a challenging environment.

Bogala CEO Amila Jayasinghe said that despite the setbacks, they were heartened by their ability to post a profitable last quarter during the year under review and they would be entering the new financial year on a positive note, better placed to respond to opportunities and challenges that may arise.

They were playing close attention to the activities of their competitors and potential new players in the country’s graphite industry. Given their resources and strategic advantages, they believed they were favorably positioned to meet the challenges ahead.

Their decision two years ago to open the Rangala mine whose accessibility makes it very competitive has paid off with the mine continuing to produce well with a capacity to produce 200 MT per year – an area of potential profit which they planned to exploit.

The year under review had seen the company moving to the Diri Savi board of the Colombo Stock Exchange and capitalizing reserves to give shareholders a one for one bonus shares pushing up the stated capital of the company from Rs. 80 million to Rs. 102 million.

Graphit Kropfmuhl GMBH (79.58%) and Alterna GK LLC (10.33%) are the main shareholders of Bogala with the Secretary to the Treasury owning 0.54%.

The directors of the company are Messrs. Vijaya Malalasekera (Chairman), Frank. E. Berger, Jayampathi Jayasinghe, Thomas A. Junker, Amila Jayasinghe, Torben Muller, Ms. Coralie Pietersz, Sugath Amarasinghe and Mohamed Adamaly.

www.island.lk

Nestle sustains high dividend record on CSE

Billions paid to govt. tax coffers and pumped into rural economy

Nestle Lanka PLC, one of the highest dividend paying companies quoted on the Colombo Stock Exchange, has closed 2015 with revenue up nine percent from the previous year to Rs. 35.9 billion of which Rs. 6.7 billion went to the exchequer and Rs. 7.2 billion to the rural economy and an earning per share of Rs. 76.77 the bulk of which is being paid out to its over 5,000 shareholders.

"In the light of your company’s consistent and solid performance, your directors were pleased to declare an interim dividend of Rs. 34.50 per share on Feb. 23, 2016 and are recommending a final dividend of Rs. 30 per share for your approval," Nestle Chairman Suresh Narayanan has said in the company’s recently released annual report.

The contribution to the rural economy comprised Rs. 3.6 billion to nearly 20,000 local dairy farmers for fresh milk supplied and Rs. 2.6 billion to the coconut industry for procuring fresh coconuts.

Narayanan noted that Nestle which will celebrate the milestone of a 110-year presence in Sri Lanka this year – and a global presence of 150 years – looked forward to making 2016 "the first successful year of our next 150 years."

The company’s MD/CEO Shivani Hegde described the year under review as a good one for Nestle, delivering strong results in what had been a challenging year. She reported that their "much loved power brands, Nestomalt, Milo and Maggi" had played an important role in fuelling the company’s growth.

"Nespray which comes to consumers with the goodness of Sri Lankan milk and the Nestlé’s global expertise in child nutrition, strengthened its portfolio with the launch of Nespray Nutri-Up, a ready-to-drink product fortified with vitamins A and D," she reported.

She reported they had continued to invest in Sri Lanka’s rural economy contributing more than six billion rupees to almost 25,000 local farming families to purchase fresh milk and coconuts for their products; and remained committed to manufacturing as efficiently as possible, reducing energy consumption by 40% and water consumption by 39% over the last seven years.

The year under review saw Nestle growing revenue to Rs. 35.85 billion from the previous year’s Rs. 32.9 billion and the after tax profit to Rs. 4.12 billion from Rs. 3.79 billion.

The company’s stated capital stood at Rs. 537.25 million and retained earnings at Rs. 3.98 billion. The Nestle share traded at a high of Rs. 2,390 and a low of Rs. 1,960.40 during the year under review.

Nestle S.A. with 90.82 percent of the company is the controlling shareholder. Much of the balance in held by foreign funds with the EPF owning 0.19%. There are a handful of resident local shareholders in the top twenty list.

The directors of the company are Messer’s. Suresh Narayanan (Chairman), Shivani Hegde (MD), Jagdish Kumar Singla, Shobinder Duggal, Mahen Dayananda and Ranjan Seevaratnam.

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Sri Lanka shares hit near 10-wk closing high on steps to narrow fiscal gap

Reuters: Sri Lankan shares hit a near 10-week closing high on Friday as an imminent loan deal with the International Monetary Fund and government measures to fix the country's fiscal gap aided sentiment, dealers said.

Sri Lanka has requested the IMF for a loan to help weather a looming balance of payments crisis, while an increase in the value added tax (VAT) to 15 percent from the current 11 percent is expected to help curb the budget deficit.

The country's central bank chief also said on Tuesday that it will stop excess government borrowing in a bid to get out of a debt trap.

The benchmark stock index ended 0.76 percent higher, or 48.12 points, at 6,401.32, its highest close since Feb. 8, after stock markets reopened Friday from a two-day break for the Sinhala-Tamil New Year.

"The positive trend is continuing with the government implementing revenue measures and finalising the IMF loan, which are seen as positive," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

However, higher interest rates and lower March-quarter earnings could impact stocks in the short term, he added.

Sri Lanka's bourse will reimpose a 0.3 percent share transaction levy it stopped in January, an exchange official said on Tuesday, after a proposal to tax capital gains met strong opposition amid foreign investor outflow from the stock market.

The move will help boost investor sentiment, analysts said.

The index moved further into overbought territory on Friday for the second time since Aug. 19 after being in neutral territory since March 11 through April 12.

The 14-day relative strength index ended at 74.472 on Friday, compared with Tuesday's 71.758, Reuters data showed.

A level between 70 and 30 indicates the market is neutral.

Turnover stood at 719.3 million rupees ($4.98 million), just below this year's daily average of 789.5 million rupees.

Foreign investors bought a net 158.5 million rupees worth equities on Friday, but they have been net sellers of 3.09 billion rupees worth of shares so far this year.

Shares in Ceylon Tobacco Company Plc rose 3.46 percent, while Lanka ORIX Leasing Company Plc climbed 5.88 percent.

($1 = 144.5000 Sri Lankan rupees) 

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

Central Bank aware of identify of ‘Sri Lankan names” in Panama Papers leak - Governor

The Central Bank has the names of Sri Lankans identified in the Panama Papers leak but no details wouldn't be revealed until a proper investigation is undertaken, the governor said on Tuesday.

Mr. Arjuna Mahendran told reporters that the bank’s Financial Investigation Unit (FIU) is carrying out an investigation into some of those papers that they have received and was also requesting information from other central banks and other investigative arms globally.

He said that as they were unable to give details as - according to preliminary investigations carried out - there seems to be some doubt regarding the authenticity of the documents.

Mr. Mahendran noted that there are millions of pages of documents and the doubts regarding authenticity was mostly because of the fact that the information had come from third parties who themselves were likely to have even planted names of individuals.

“I find it difficult (to believe) that so much money has left (Sri Lanka). I find it difficult to believe those large numbers,” the governor said referring to the large numbers mentioned in the media concerning monies that would have left the country.

The Panama papers are an unprecedented leak of 11.5 million files from the database of the world’s fourth biggest offshore law firm, Mossack Fonseca. The documents indicate the manner in which some of the richest people exploiting secretive offshore tax regimes with the names of 12 national leaders among 143 politicians, their families and close associates from around the world who have used offshore tax havens. (SD)

www.sundaytimes.lk

Sri Lanka’s Janashakthi Insurance appoints Husein Esufally as Chairman

(LBO) – Sri Lanka’s Janashakthi Insurance announced the appointment of Husein Esufally,

as the new Chairman of its Board, following the retirement of W. T. Ellawala, a statemet said.

Esufally, prior to the appointment, held the position of Deputy Chairman of the Board of Janashakthi Insurance and its subsidiary Janashakthi General Insurance.

He is presently the Chairman of Hemas Holdings PLC., where he served as Chief Executive Officer from January 2001 – March 2014.

“Esufally has been instrumental in transforming Hemas from a private company to one of the leading blue chips on the Colombo Stock Exchange,” it said.

The Board of Directors of Janashakthi Insurance now comprises Husein Esufally–Chairman, Prakash Schaffter, Managing Director, Jude Fernando, Director/ Chief Executive Officer, L. C. R. de C. Wijetunge, Manjula Mathews, Ramesh Schaffter, Eardley Perera and Anushya Coomaraswamy

Sri Lanka needs to raise US$ 2.5 billion this year for government expenses

Sri Lanka needs to raise US$ 2.5 billion this year for government funding requirement, Governor of Central Bank Arjuna Mahendran said today.

The Governor, speaking at a press conference held on Tuesday on the state of the economy, said the discussions with the International Monetary Fund (IMF) to obtain a loan facility have been positive but it is not yet a "done deal".

"So far the discussions (with the IMF) have gone very positively, so we hope to get some form of IMF assistance in the next couple of weeks. But it's still not a done deal. We have lot of further negotiations to be held," Mahendran said.

The Sri Lankan team attending the spring meeting of the IMF and the World Bank in Washington from April 12-17, including the Finance Minister Ravi Karunanayake, the Governor, and Treasury Secretary Dr. RHS Samaratunga, will continue the discussions with the IMF, Mahendran said.

Mahendran said Sri Lanka needs to raise around US$ 2.5 billion for its government funding requirement this year, and would look at Chinese renminbi bonds as well as dollar bonds in coming months.

He said the economic situation is going according to the plan. Imports, funded by high bank credits, were high last year but now showing signs of plateauing with the tight monetary policy.

"The rate of growth (of imports) I think has been arrested, which is desirable," he said adding that the lending by the banks were very high last year and early this year growing at about over 25 percent which is clearly undesirable as it would increase inflation.

The Central Bank started tightening the monetary policy to discourage imports and keep the inflation low and it has begun to yield the desired effects, he said.

He said the IMF has suggested continuing the tightening of monetary policy but it is not necessary if the economy continues to achieve a "soft landing" as planned and the Central Bank remains hopeful that there won't be a need to hike interest rates. Controlling inflation remains a main objective of the economic plan, he said.

I would say that that is not necessary if the economy continues to achieve a soft landing, if the economy goes according to plan. The Central Bank however reserves the right to increase rates, he said.

He said that on a positive note, the economic outlook is strong although the economy grew only 2.5 percent in the fourth quarter of 2015. He attributed the low figure to the "base effect" compared to the 10.4 percent growth in the fourth quarter of 2014.

Overall, Sri Lanka's economy grew at 4.8 percent in 2015 versus 4.9 percent in 2014, according to the Central Bank.

The Governor said on a conservative basis the economy is expected to grow 5-5.5 percent this year, adding that if the Chinese investments negotiated by the Prime Minister during his recent visit to China come to fruition in the second half of the year, a higher growth can be expected.

According to the Governor if IMF assistance is secured in the next two weeks that will also give confidence to the investors. Mahendran said he was hopeful of obtaining around US$ 1 billion to US$ 1.25 billion support from the IMF.

He said the government has decided not to borrow excessively and the thrust of economic activity in going forward will be private investments. All infrastructure projects in future will be done with public-private partnerships, he added.

The IMF concluding a review mission on Monday, said it has made significant progress toward a staff level agreement with the government of Sri Lanka on an economic program that could be supported by a 36-month Extended Fund Facility (EFF) and it could get approval within the next two weeks.

Ceylon Dollar Bond Fund records 8.82 percent dollar return

(LBO) – The Ceylon Dollar Bond Fund (CDBF) that invests in Sri Lanka Dollar Sovereign Bonds and Bank Bonds has recorded an 8.82 percent per annum annualized return (10.60 percent in Rupee terms) during the first quarter of 2016, its managers said.

The dollar denominated fund in Sri Lanka is managed by Ceylon Asset Management, while Deutsche Bank is Trustee and Custodian of the fund. The fund has been awarded a B+ rating by Fitch Ratings that mirrors Sri Lanka’s country dollar rating.

“The tax exempted Unit Trust is operated out of Colombo and Singapore. The fund is open to investment exclusively for Sri Lankans living or working overseas, BOI companies and all foreign nationals and companies. The fund is open to retail investors from US$ 1,000 upwards, as well as institutional investors who can invest via Singapore or Colombo,” a statement said.

“The open-ended fund structure enables investor’s easy exit whenever they please, without being locked-in for a fixed deposit. The fund has invested in dollar denominated Sovereign Bonds issued by the Government of Sri Lanka, and Dollar Bonds issued by Bank of Ceylon, National Savings Bank and DFCC Bank.”

Ceylon Asset Management’s Economic Advisor and Director, Rainer Michael Preiss in Singapore says “The CDBF has been able to capitalize on high interest rates available in Sri Lankan bonds following the US Federal Reserve raising interest rates last December, and Sri Lanka’s rating downgrade.”

Preiss went on to note that as Sri Lanka’s economy gains momentum, the high interest rates will decline as the country’s rating is potentially upgraded once again.

“The Fed is unlikely to raise interest rates again in the near future. Therefore, investors should take advantage of the current interest rate scenario and a strong US dollar by investing in the CDBF sooner than later.”

“The returns on the Ceylon Dollar Bonds are attractive, compared to regional and international fund returns” Preiss said, upbeat on Sri Lankan government plans to increasingly engage in international Capital Markets. “The fund will surely attract foreign investor capital into Sri Lanka bonds,” he said.

Managing Director of Ceylon Asset Management, Dulindra Fernando says “the Ceylon Dollar Bond Fund has the potential to begin what Non-Resident Indians have done for Indian capital markets”.

“We believe it is time for Sri Lankan Diaspora as well as Lankans living abroad, to begin investing in Sri Lankan capital markets due to attractive valuations available,” said Fernando.

The Ceylon Dollar Bond Fund has been approved for investment by the Central Bank of Sri Lanka, while it is the first dollar denominated Unit Trust licensed by the Securities and Exchange Commission of Sri Lanka. Ceylon Asset Management is an associate company of Sri Lanka Insurance Corporation Ltd and Commercial Credit & Finance PLC.

Sri Lanka’s Hilton gets new board

(LBO) – Krishantha Cooray has been appointed Chairman and Non Executive Director of Hotel Developers Lanka (Hilton Hotel), a statement said.

Following Non-Executive Directors too have been appointed: Athula Senanayake, Tehani S. Mathew, Dinouk Colombage, Sonali Liyanamana, Dhanushka R. Samarasinghe and M.Shezmin Manzoor, according to a filing to the Stock Exchange.

Sri Lanka VAT raised to 15-pct from May 2, proposed income tax cuts suspended

ECONOMYNEXT – Sri Lanka’s finance ministry said value added tax (VAT) would be increased to 15 percent from 11 percent with effect from 02 May 2016 while the Nation Building Tax (NBT) would remain unchanged at 2-percent.

Deputy Secretary to the Treasury S R Attygalle said the changes were in accordance with that announced by Prime Minister Ranil Wickremesinghe last month in parliament.

The changes are a key to increasing revenue, reducing domestic borowing and money printing which will help eventually stabilize the credit system and the rupee.

The finance ministry statement also announced the re-imposition of the 0.3 percent share transaction levy.

It said the threshold for registration for VAT shall be 03 million rupees per quarter or 12 million rupees a year.

Wholesale and retail trade (other than by a manufacturer or importer) shall be liable for VAT and the tax shall be charged only on liable supplies.

The restriction on exempt supplies (deemed VAT) will be removed.

Supplies which are currently exempted shall be liable for VAT.

These are telecommunication services, import or supply of telecom equipment or machinery, high tech equipment including copper cables for telecom industry, telco licenses, healthcare services and supply of goods or services to any specified projects other than housing.

The finance ministry said the threshold for the Nation Building Tax (NBT) will be reduced to 03 million rupees per quarter from 25 million rupees, except for any locally procured agricultural produce in the preparation for sale.

It removed present exemptions on telecommunication services, electricity supply, lubricants and supply of goods or services to any specified projects other than housing.

Another Treasury circular said banks, finance and insurance companies will be charged income tax at 28 percent. Lottery, betting and gaming will be at 40 percent from the year starting April 2016. All other companies to be taxed at 17.5 percent.

Pay-as-you-earn tax will be at a maximum of 16 percent on the same slabs as earlier. The employer will no longer be able to pay tax on behalf of the employee. Witholding tax on interest at 2.5 percent will be continued.