CIC posts best ever results in 2015/16, invests billions in agri-business

CIC Holdings PLC, country’s biggest agri-business with a history of over 50 years, has posted its best ever results in the year ended March 31, 2016 growing revenue 13% to Rs. 26.7 billion and profit after tax 57% to Rs. 1.63 billion, the company’s recently released annual report revealed.

"In addition to the organic growth from the existing business ventures, the group has invested Rs. 2 billion in growth sectors enhancing future earning potential," the Company’s Chairman, Mr. S. H. Amarasekera has said. "Increased earnings and timely risk management initiatives enhanced the asset quality by improving the Net Asset Value per share from Rs. 75. 40 to Rs. 94.44 - a 44% increase."

CIC is into agro produce, livestock solutions and crop solutions in addition to health and personal care and industrial solutions. With new innovations in rice breeding and development programs, CIC grains has invested a billion rupees in a facility for drying and storage of maize in Talawa and Siyambalanduwa with an aggregate capacity of 50,000 MTs.

CIC also developed a red basmati rice released to the market in 2009 which is now exported to the USA, Canada and Australia. It has also produced a rice with ultra small grains having higher eating quality which is now being tested and is at the final stage of development.

Amarasekera has reported that the group which posted the first loss in its history in 2013/14 entrusted its board to play a key role in formulating an enabling and monitoring strategy for the group. This continues with particular emphasis on driving growth as well as positioning the group taking to account forces shaping the business environment globally and locally.

He said that working with external consultants they had critically assessed their business portfolios and their current position. Consequently, they have modified and rearranged the group’s structure into five clear business segments in order to enhance group synergies and to facilitate a sharper focus on potential areas of high growth.

In addition to the billion rupees invested for drying and storing maize, they were making another strategic investment of a billion rupees in cultivating vegetables in greenhouses using the latest technology.

"Higher value vegetables may be grown for export supporting the country’s export drive and building CIC’s reputation as an exporter of high quality vegetables," Amrasekera said.

He explained that investment in greenhouses seeks to mitigate the impact adverse weather, land and labour shortage which regularly hampers the output of the agricultural sector.

CIC is also into pharmaceuticals and health care having bought Link Natural Products (Pvt) Ltd in 2003. The pharmaceutical sector indicates significant potential for growth with a steady income throughout the year, Amaraskera said. The Group’s pharmaceutical manufacturing plant produces generic lifestyle medications used on a continuous basis, including medication for diabetes,hypertension, cholesterol and gastric reflux among others.

CIC has a stated capital of slightly over Rs. 1 billion with total assets of the company standing at Rs. 9.45 billion and of the group at Rs. 32.3 billion. Total liabilities of the company stood at Rs. 5.24 billion and of the group at Rs. 21.4 billion.

Paints and General Industries Ltd (a Sohli Captain company) with 53.31% is the controlling shareholder followed by the EPF with 8.26%. The EPF with 12.7% is the top non-voting shareholder with Paints and General Industries holding 3.3%.

The Directors of the Company are Messrs: S.H. Amarasekere (Chairman), S.P.S Ranatunga (MD/CEO), R.N. Asirwatham, R.S. Captain, S.M. Enderby, M.P. Jayawardena, K.B. Kotagama, Prof. P.W.M.B.E Marambe, Dr. R.C.W.M.R.D Nugawela, A.V.P Silva and D.S Weerakody.

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Sri Lanka inflation in Colombo 5.5-pct in July 2016

ECONOMYNEXT - Consumer prices in the Sri Lankan capital Colombo rose by 5.5 percent in July from a year ago, decelerating from the previous month's 32-month high of 6.0 percent, the Census and Statistics Department said.

Year-on-year inflation of Food Group decreased from 8.2% in June 2016 to 8.1% in July 2016 while Nonfood Group decreased by 4.0% to 3.0% during this period, a statement said.

The contribution to inflation by food commodities was 3.89% for the month of July 2016, on year to year basis.

Sri Lanka sells Rs63bn in bonds; secondary yields up 15 to 20bp

ECONOMYNEXT - Sri Lanka sold 60 billion rupees of 5, 08, 10 year bonds following a 50 basis points rate hike a day earlier, but secondary yields rose only 15 to 20 basis points, far lower than the rate hike, dealers said.

The debt office sold 20.7 billion rupees of 4-year 7-month bonds maturing on 01.03.2021 at a weighted average yield of 12.07 percent after offering 20.0 billion.

A close maturity, (14.07.2021) was last auctioned at 11.67 percent on 12.07.2021 and it was quoted wide around 11.75/12.25 percent before the auction, up from 11.68/72 before the rate hike, dealers said.

But after the auction the bond 01.02.2027 was quoted around 11.90 percent indicating a rise of around 20 basis points.

The debt office sold 20.8 billion rupees of 8-year bonds maturing on 01.08.2024 at an average yield of 12.61 percent after offering 20 billion.

A close maturity (01.01.2024 bond) was quoted wide at 12.25/75 percent before the auction, up from 12.15/25 percent before the rate hike.

After the auction bond was traded around 12.40 percent, indicating an increase in rates of around 20 basis points.

The debt office sold 21.5 billion rupees of 10-year bonds maturing on 01.08.2026 an average yield of 12.86 percent.

A close maturity (01.06.2026) was quoted around 12.50/55 before the rate hike. After trading at 12.90 before the auction, it closed at 12.50/55 percent Friday.

The auctioned 01.08.2026 also closed at a lower 12.65/75 percent.

Around 80 billion rupees of bonds are estimated to be maturing on August 01 without counting coupon maturities. However the debt office also sold 20.3 billion rupees of bonds on July 20.

Central Bank Deputy Governor Nandalal Weerasinghe told reporters earlier Friday that Treasury had indicated that it had cash-flows to repay the bonds.

The central bank said after hiking rates that it did not expect long term yields to move up sharply. There is now a large gap between 01 and 02 year yields, partly due to dealers and banks borrowing overnight from central bank facilities (printed money) to fund portfolios.

The central bank raised its key rate to 8.50 percent from 8.0 percent on Thursday.

Sri Lanka Softlogic group eyes expansion in existing businesses

ECONOMYNEXT – Sri Lanka’s Softlogic group, with sales of Rs57 billion, has said it aims to double in size in five years, within existing businesses including the key retail and healthcare sectors, and not look at new ventures.

Expansion within the chosen growth sectors will drive the group’s short and medium term growth, the 25-year-old Softlogic Group’s founder and chairman Ashok Pathirage was quoted as saying in a statement.

The group, which employs more than 9,000 people in Sri Lanka and Australia, is “not looking at venturing into new sectors at this stage,” the statement said.

“We believe there is enough potential within the sectors we are in, to achieve the growth we seek, and to generate robust shareholder value,” Pathirage said.

In the year to 31 March 2016, group net profit rose 22% to Rs676 million with sales up 42%.

Apart from retail and healthcare, the group also has ICT, financial services, automobiles and leisure businesses.

The statement said Pathirage credits “the group’s rapid organic growth and aggressive acquisitions” as a significant contributor to its current position, singling out its acquisitions of the Asiri Hospitals group and ODEL PLC.

Pathirage says the group is positioned to double in size in the next five years, “if everything goes to plan.”

The Healthcare and Retail sectors, as well as Financial Services look “very exciting” in the roadmap for the group’s immediate future, Pathirage said.

Softlogic aims to be a key player in the leisure sector with the opening of its second international hotel property, Mövenpick later this year, but will “pick and choose” its investments, given the capital-intensive nature of the sector, he said.

“We will also be focussing on profitability in the immediate future as a key component of the next phase of growth,” Pathirage said.

The construction of the 150 bed Asiri Hospital in Kandy has begun and is slated for opening in 2018.

Softlogic is also building what it called the country’s biggest mall, The ODEL Mall.

“We have been a catalyst in the growing popularity of designer brands in the local market and we can see the retail sector emulating Singapore and Dubai. We want to be in that space,” Pathirage said.

People’s Leasing wants People’s Merchant property sale for amalgamation

(LBO) – Sri Lanka’s People’s Leasing and Finance says it will amalgamate with People’s Merchant Finance within this financial year subject to two conditions, the company said.

In a stock exchange filing, People’s Leasing and Finance said the first condition is the sale of People’s Merchant Finance property located at Nawam Mawatha, Colombo 2.

As the second condition, the company want to receive all approvals required for the sale of the above property and the proposed amalgamation from People’s Merchant Finance.

The proposed amalgamation follows a direction issued by the Monetary Board of the Central Bank and the modality of this amalgamation is yet to be finalized.

Textured Jersey Lanka net up 93-pct to Rs399 mln in quarter

The TJL Group (TJ) has reported eight straight quarters of strong quarterly profit growth. The Q1 2016/17 performance has proved to be the Group’s best first quarter recorded to date, posting a consolidated net profit of Rs. 399 Million, representing a YoY growth of 93 percent.

The Group has made significant progress in growing their product portfolio despite challenging market conditions last year. Chairman of the Group, Bill Lam said, that although the Company has shown immense resilience and commitment in pursuing new opportunities, leveraging their regional footing, the future of the textile industry is bound to become more challenging.

“Our customers’ demand for low priced and innovative products, discounts and speed of service is increasing and this is true for the entire textile industry. We recognize the need to keep reinventing the wheel, with new technology and automation featuring in our reengineering process to come up with newer and cost effective ways to meet the demand.”

TJ recorded a 73 percent topline YoY growth and an even more impressive 125 percent gross profit growth. This was a direct result of consolidation, strategic overhead management and an output increase from changing some of its working models.

This together with the vastly improved production efficiencies all round, contributed towards the topline growth and translated it to an impressive net profit of Rs. 399 Million; a YoY growth of 93 percent.

The Coal plant continues to support the production engine providing additional leverage to the Group’s core operational margin improvements. The income tax saw an increase of 365 percent for the Group mainly generated by the consolidation of the deferred tax liabilities of the two acquired entities.

TJ’s cash flow disciplines helped maintain a strong balance sheet from the start of the year, optimizing working capital and remaining unleveraged with a net cash surplus of Rs. 3.1 Billion. The consolidated Earnings per Share was Rs. 0.57, showing a growth of 83 percent; while the standalone Earnings per Share of Rs. 0.41 recorded a growth of 41 percent.

TJL’s standalone performance during the period under review has been impressive with a net profit of Rs. 286 Million, representing a YoY growth of 52 percent. TJL’s bottom-line grew despite the loss of income due to the non-renewal of its operational technical service agreement with OCI. The standalone top line growth was 30 percent, yielding Rs 3.5 Billion, while gross profits grew by 58 percent. The Group’s performance growth strategies have been applied to TJL with equal rigor, bringing its net profit to a YoY growth of 52 percent, at Rs. 286 million.

Sriyan de Silva Wijeyeratne, MD/CEO of TJ said that it was rewarding to see the Synergies of the strategic acquisitions the company has made bear fruit. “The entire Group structure has gone through positive change, and the team has embraced the changes with passion and dedication which is a main part of our success. It is that very commitment which won us the best Dyer & Finisher of the Year title for the 2nd year running at the prestigious ‘World Textile Awards.’

Apart from our people, we have invested in cutting edge technology, seeking broader solutions and honing our innovation capabilities, so that we give of our best to the customer,” he said adding that operating in an increasingly competitive industry, both globally and locally, presents challenges that continues to test TJ’s resilience, constantly driving the company to achieve excellence.

Chairman Bill Lam says as the Group embarks on its new financial year it has already begun the groundwork for long range growth plans, commencing work for its future expansions in India, and setting the foundation for broadening its Printing and Synthetic solutions.

“Whilst the roadmap to increasing growth and shareholder value have been charted out and are underway, we are conscious of the ever-changing global space and the economic challenges it presents,” he says adding that forward thinking, timely innovation, new synergies and a committed team were imperative to maintain the Group’s lead position in the future.

TJ was founded in Sri Lanka in 2001. Listed on the Colombo Stock Exchange, TJ is backed by two leading industrialists – Pacific Textiles Hong Kong and Brandix Lanka as its main shareholders. The company supplies to some of the best international brands including Marks & Spencer, Victoria’s Secret, Intimissimi, Tezenis and Calvin Klein. (Press Release)

No more debate on monorail vs. LRT, Japan confirms funding

(LBO) – Sri Lanka’s government confirmed that the Japanese government will fund the islands proposed Light Rail Transit (LRT), ending a debate on monorail vs. LRT following the conclusion of a high level delegation visit from Japan, Thursday.

“The delegation, led by Hirofumi Katase the Vice Minister for Economy, Trade and Industry of the Government of Japan confirmed their government’s willingness to finance Sri Lanka’s landmark project on deeply concessional terms,” a statement from the Ministry of Megapolis and Western Region development said.

“The two governments have agreed to expedite the detailed technical feasibility in order to initiate the physical implementation of the LRT as soon as possible.”

The decision was conveyed following high level discussions with Sri Lanka Government officials on 26th of July, followed by a meeting with the Cabinet Committee on Economic Affairs on the 27th.

The visit follows Cabinet approval for Light Rail Transit (LRT) system proposed in the Megapolis plan, and a formal request from Sri Lanka to Japan for concessional financing for the project.

“Confirmation of support from Japan for this critical investment under the Megapolis plan marks a major milestone” said Ajita de Costa, chairman of the Western Region Megapolis Project.

“We can now put the debate on monorail vs. LRT behind us, and move forward aggressively to get this project implemented. We are confident of delivering an efficient and lasting mass transit solution for the city, backed by Japan’s commitment to quality.”

While the long term plan developed by the Megapolis team includes an LRT network of approximately 75km, the initial investment is to cover around 25km, connecting Fort, Kollupitiya, Bambalapitiya, Borella, Maradana, Rajagiriya, Battaramulla and Malambe.

The initial segments of the LRT system to come up will be elevated, given the high density of existing development, the statement added.

However, elements of the network to follow are expected to be at grade. The LRT system is also expected to interconnect with the rail and bus networks to provide the commuters with world class transfer facilities as a part of an integrated solution.

Sri Lankan shares steady; seen falling after rate hike

Sri Lankan shares ended steady in thin trade on Friday, though cautious investors fear the gains would be short-lived, as the central bank's surprise move to raise key policy rates will hurt market sentiment.

After market hours on Thursday, the central bank raised its key interest rates by 50 basis points each in a surprise move aimed at curbing stubbornly high credit growth that is adding to concern about inflationary pressures.

The benchmark Colombo stock index ended up 0.03 percent, or 1.72 points, at 6,393.87. The bourse lost 0.54 percent on the week to post its first weekly fall in four.

"It was retail participation today," said Yohan Samarakkody, head of research, SC Securities (Pvt) Ltd. "We might see a staggered reaction to the rate hike after a couple of days."

Stockbrokers said the market is also waiting for an economic policy announcement from Prime Minister Ranil Wickremesinghe, scheduled next month.

Turnover stood at 446.9 million rupees ($3.06 million), less than this year's daily average of around 725.3 million rupees.

Overseas investors were net sellers of 4.65 billion rupees worth of shares so far this year, but they were net buyers of 121.5 million rupees worth of shares on Friday.

Shares in Sri Lanka Telecom Plc rose 1.93 percent, while Carson Cumberbatch Plc climbed 2.04 percent, pushing the overall index up.

Conglomerate John Keells Holdings Plc, which posted a 9 percent growth in the June quarter, gained 0.57 percent.

($1 = 145.9000 Sri Lankan rupees) 

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

Monetary Policy Review – July 2016 - Policy rates increased

The increasing trend in both headline and core inflation continued, reflecting the rise in demand driven inflationary pressures in the economy. Supply side disruptions arising from adverse weather conditions and the revisions introduced to the tax structure by the government also contributed to the upward movement in inflation in the past two months.

Meanwhile, in the real sector, the available indicators suggest a continuation of the growth momentum in economic activity. In particular, power generation, tourism and port related services, construction sector, investment goods imports as well as the purchasing managers’ indices (PMI) for manufacturing and services sectors have shown improvements over the past few months.

On the monetary front, market interest rates have adjusted upwards in response to the monetary tightening measures adopted in early 2016 and continued low levels of rupee liquidity in the domestic money market. Although some deceleration in the growth of broad money (M2b) supply was observed in the month of May 2016, monetary expansion remained above the desired levels. In spite of the increase in market interest rates, credit granted to the private sector by commercial banks increased at the high pace of 28.0 per cent, year-on-year, in May 2016, in comparison to 28.1 per cent in April 2016. Provisional data also indicates that the high growth of credit to the private sector has continued during the month of June as well. The continued appetite for bank credit by the private sector in spite of the upward movement in market interest rates could create excessive demand and high inflation in the economy in future.

The sustained increase in domestic credit also caused a wider trade deficit. Accordingly, the cumulative trade deficit during the first five months of 2016 registered an increase of 1.4 per cent, year-on-year. Increased earnings from tourism and other services exports, workers’ remittances, and long term financial flows to the government, eased the pressure on the balance of payments to some extent.

Taking into consideration the developments discussed above, the Monetary Board, at its meeting held on 28 July 2016, was of the view that further tightening of monetary policy is required to curb excessive demand in order to pre-empt the escalation of inflationary pressures and to support the balance of payments. Accordingly, the Monetary Board decided to increase the main policy interest rates of the Central Bank, namely, the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR), by 50 basis points each, to 7.00 per cent and 8.50 per cent, respectively, effective from the close of business on 28 July 2016.

The Board is of the view that tightening of monetary policy in a forward looking manner will ensure the maintenance of inflation at mid-single digits in the medium term, which is supportive of the growth momentum in the economy. As such, the current policy adjustment is not expected to have a significant impact on the long end of the yield curve. The Central Bank will continue to monitor macroeconomic developments closely and make appropriate adjustments to the monetary policy stance, as necessary.

Artificial boost for capital market could prove disastrous says CBSL Governor

By Hiran H.Senewiratne

"An artificial boost for the capital market will not help the country. Such moves could prove disastrous, Central Bank Governor Dr. Indrajit Coomaraswamy said.

"The Central Bank aims to create a stable environment for companies to grow and make higher profits but there will be no quick fix sugar highs. Therefore, we are looking forward to regulate the artificial movement in the capital market for the betterment of the country, Coomaraswamy said.

"When you look around in many countries you often see government regulators trying to create artificial momentums in markets. The record of such initiatives has invariably been disappointing. You find that pretty much all players are in a worse situation, the Governor said after 'ringing the bell' at the Colombo Stock Exchange to kick off trading yesterday, ahead of taking a policy decision later in the day.

Coomaraswamy said the Central Bank will try to create a stable economic environment where fundamentals are strong and companies could make profits and generate employment."The government is starting a stabilization program and has already set in motion measures to improve budget deficits, he said. Prime Minister Ranil Wickremesinghe is also expected to come out with a detailed 5-year plan.Though Sri Lanka's stock market is not going through "the best of times" now, he said if investors had confidence in these measures, "Sri Lanka would be a buying opportunity."

The Governor said the world is still trying to recover from the massive housing and commodity bubble fired by then US Fed Chief Alan Greenspan and his depression era specialist sidekick Ben Bernanke who cut interest rates to historic lows from around 2001. He kept them at one percent for too long in what some economists called the 'Mother of all liquidity bubbles'.

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JKH Group posts Rs 3.58 bn profit in first quarter

The JKH Group has posted a Group profit before tax (PBT) of Rs.3.58 billion in the first quarter of the financial year 2016/17.

This is an increase of 17 per cent over the Rs.3.05 billion recorded in the previous financial year.

JKH Chairman Susantha Ratnayake said the profit attributable to equity holders at Rs.2.37 billion is an increase of 9 per cent over the Rs.2.18 billion in the corresponding period of the previous financial year.

The revenue at Rs.22.73 billion for the period under review is an increase of 8 per cent over the Rs.21.10 billion recorded in the previous financial year. The Company PBT for the first quarter of 2016/17 at Rs.2.85 billion is a decrease of 12 per cent over the Rs.3.25 billion recorded in the orresponding period of 2015/16, largely due to a timing difference in receiving dividends. The Transportation industry group PBT of Rs.711 million in the first quarter of 2016/17 is an increase of 27 per cent over the first quarter of the previous financial year [2015/16 Q1: Rs.561 million]. Theincrease in profitability is mainly attributable to the performance of the Group’s Ports and Shipping business, where South Asia Gateway Terminals (SAGT) recorded double digit growth in throughput.

Whilst the Group’s Bunkering business recorded an improvement in margins, profitability was impacted due to a decline in volumes resulting from adverse monsoonal conditions which prevailed during the quarter. The Logistics business recorded a strong performance as a result of an increase in throughput in their warehouse facilities.

The Leisure industry group PBT of Rs.558 million in the first quarter of 2016/17 is an increase of 1 per cent over the first quarter of the previous financial year [2015/16 Q1: Rs.553 million]. The City Hotel sector recorded an overall increase in occupancies and profitability. The Sri Lanka Resorts segment achieved higher average room rates due to successful yield management.

Whilst overall arrivals to Sri Lanka demonstrated strong growth in the first quarter of the financial year, the negative publicity and travel warnings following the flooding and landslides in May impacted arrivals in the month of June.

The performance of the Maldivian Resorts segment was impacted by a slower than expected recovery of the overall market from the effects of political events in late 2015.

The Property industry group PBT of Rs.57 million in the first quarter of 2016/17 is a decrease of 72 per cent over the first quarter of the previous financial year [2015/16 Q1: Rs.203 million].

The Consumer Foods and Retail industry group PBT of Rs.1.30 billion in the first quarter of 2016/17 is an increase of 48 per cent over the first quarter of the previous financial year with both sectors contributing to the improved performance.
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Megalopolis and its impact on property prices

Sri Lanka has the proud heritage of being a developed nation in ancient times. It is believed that even before recorded history of 2500 years; there existed developed cities with proper infrastructure.

As recorded in historical chronicles, great cities such as Anuradhapura and Polonnaruwa existed with many aspects of urban development and sustained its existence over a period of 14 centuries.

The buildings were advanced in terms of maximising airflow, sustainability and comfort and still continue to inspire modern architect today.

However, urban development in the post-independence era has been less impressive, typically stretching out along the main truck routes into the capital in the form of low-rise vertical developments that are an eye-sore at best.

Moreover, lack of town planning and vision is currently leading to externalities such as rising levels of traffic congestion, a poor public transport system, a scarcity of public open spaces and air pollution.

According to a report released by an international research agency in 2011, Colombo was listed amongst one of the worst cities to live in.

However, in very recent times, the post-civil war era has witnessed the emergence of some “city beatification” and vertical developments in many parts of the capital in the midst of a rapidly growing economy and a scarcity of land which has essentially necessitated that more residential, commercial or leisure use space is better utilized and the real estate foot-print is maximised.

Whilst there are government drafted zoning plans that continue to guide land use in Colombo, the seemingly spontaneous emergence of tall buildings in all parts of the capital is essentially driven by market forces.

We shall return to this argument about market forces and its interplay with government plans later in this research article.

The immediate concern of many commentators is that despite the visible improvements that has taken place in the city, the lack of an overall strategy that will address multifarious concerns of the capital and its immediate surroundings in the Western Province, poses serious threats to the future growth of this part of the island which represents the economic growth engine of the island economy. Such a scenario threatens to reverse much of the recent progress made.

The Western Region Megalopolis Project


The Western Megalopolis is a project that embraces the plans, implementation and strategies that are diverted to develop the Western Region of the country in order to achieve Sri Lanka's national goal of becoming a high income developed country. Western Megalopolis’ grand plan envelops the entire spectrum of activities that are involved in achieving this great national objective.It is envisioned that the following three methods would be engaged in positioning the nation towards this goal:

1) Enable the national economy to capitalize on the gains of economies of agglomeration that would result in urbanization;

2) Eliminating negative aspects that results from development of urban infrastructure especially unplanned, hap-hazard urbanization;

3) Reducing per unit capital cost of infrastructure provisioning.

The Western region constitutes of three administrative districts, namely Gampaha, Colombo and Kalutara. The city of Colombo is the economic, commercial, financial, and intellectual hub of the country. The western region is centered on the city of Colombo and leads the rest of the country in every sphere of activity.

The administrative capital of Sri Jayawardanapura-Kotte is located in the outskirts of the city of Colombo. The present population of this region is around 5.8 million, with about 2 million living in the city of Colombo and its suburbs. The total population in the proposed Western Megapolis is envisaged to reach 8.7 million by 2030.

The Western region covers only six percent of the total land mass of Sri Lanka but accommodates about 29% of the total population of Sri Lanka. The western region also produces more than 40% of the total GDP of Sri Lanka.

Over the past 10 years, the population growth in the western region was marginal but the level of urbanization was very high, especially in the Gampaha District. This is mainly due to land availability and its proximity to employment and economic centers, such as the city of Colombo, Port, airport, industrial areas, BOI zones.

Presently, the population in Gampaha district is almost the population of the Colombo district and the projection is that Gampaha districts population would surpass the population of Colombo district in the near future.

As RIU has been monitoring land prices in Colombo for over a decade we can note that land prices in central Colombo have hiked at extraordinary rates since the end of the war in 2009. This landmark achievement was the most significant factor to impact the property market.

In the short-terms, we do not expect any major impact of the Megalopolis plan on property prices. We can expect to witness continued interest in apartments, houses and lands from local individuals, expats and to a lesser but growing extent, foreigners. If we consider the luxury apartment segment, current supply is set to move from 3000 units to 6000 by 2019 with projects such as Altair, Shangri-La and Colombo City being completed.

In the long term, land prices in the suburbs and beyond will receive a boost from receiving the benefits of better planning in a similar way to the impact of recent city ‘beautification’ on Colombo central land prices. However, there will be significant differences between areas that benefit from new road and rail infrastructure initiatives from those areas that do not. Therefore, the impact on different geographical locations on the western province will need to be assessed on a case-by-case basis. There will certainly be winners but there may also be some losers.

With reference to the much talked about Colombo Port City project, the green lights that were given to what will be the single biggest private sector development project in the history of the island, turned to amber with the change in political power in 2015.

However, this ambitious project is said to now be incorporated under the overall Megalopolis plan and will go ahead following some additional compliance and environmental impact studies in on order to confirm that there will be no negative impact on the coastline. It is also expected that foreign ownership will be limited to long-term lease agreements as opposed to freehold ownership which was previously agreed.

Assuming that the project will go ahead as planned, its impact on the Colombo real estate market will be a long-term consideration. Whilst it's true that the additional 575 acres of water-front land will add to the supply of real estate stock in the city, we can expect that much of the demand for port city land will arise from new areas of economic activity along with port related businesses and leisure sector developments.

The SLPA Chairman had remarked recently that the area will be” developed as a port city with roads, water, electricity, communication facilities to set up shopping areas, water sports area, mini golf course, hotels, apartments, recreation areas, marinas and with a lot more additions that will develop the area as a modern city.”

Therefore, we would expect the Port City to elevate the profile of Colombo and increase the demand for its real estate from both local as well as foreign investors.





The economy of Sri Lanka and western region has grown at a steady pace over the last few years. The projection is that this momentum would be maintained and sustained in the coming years. Sri Lanka's GDP/Per Capita is about 4000 USD and therefore is considered a middle income country.

GDP for western region is projected to reach over 230 billion USD by 2030. By 2020, the projection is that the per capita income in Sri Lanka will be around 12,000 USD on the assumption of an average annual growth rate of 7 to 8%.

The economic development in the next 15 years is crucial as the country has to move from labour intensive to skill intensive industries and to a knowledge based economy.

Where real estate is concerned, the long-term growth prospects are in the hands of those who will manage the macro-economy of the country.

In whatever eventual form and shape the Western Megalopolis Development program will be implemented, it is expected to change the economy of the country and people, life styles, employment generation, transportation, tourism, infrastructure and the entire gamut of activities in everyday life of not only in the region but in the entire country.

This development program will open doors for many foreigners to come into the country for business and work and many more expat Sri Lankans will return to Sri Lanka. This scenario will create an unprecedented growth in the real-estate market that will cover apartments, gated communities, residential houses, modern commercial spaces, leisure property and lead to the development of smart cities.

We expect the long-term impact of the Megalopolis to be extremely positive on the real estate market. However, how much it will resemble the original plans remains to be seen.
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‘Hotel Minimum Rates to go’

The minimum room rates imposed on city hotels will be abolished with the end of the next winter season said Tourism Development, Lands and Christian Religious Affairs Minister John Amaratunga from March 31, 2017.

This decision was taken by the Minister based on a recommendation of the Tourism Advisory Council which comprises of key players in the hotel and travel trade. The Council was of the view it was time to do away with the minimum rates as it has “now served its purpose.” Convenor of the Tourism Advisory Council, Felix Rodrigo said the Council had arrived at a unanimous decision to recommend to the Minister to abolish the minimum room rates as soon as possible.”

The Tourism Advisory Council was appointed by Minister John Amaratunga to advise him on issues facing the tourism industry and is chaired by business tycoon Harry Jayawardena. The Gazetted minimum rates are applicable to all star class hotels ranging from one to five stars in the Colombo city limits.

Minister Amaratunga considering the forward contracts already entered into by many hotels decided to abolish the minimum rates with the end of the next winter season.

“We need to respect the contracts already entered into for the coming season which is why it will be abolished from end March 2017,” said Minister Amaratunga.

“Almost all the hotels have been calling for the abolition of the minimum room rates and to allow market forces to decide prices. By sticking to the minimum rates we have been pricing ourselves out of the lucrative MICE market and losing out to our regional competitors.

As a result we have been uncompetitive in the MICE market,” said Minister Amaratunga. The minimum room rates were imposed during the height of the war to prevent hotels from undercutting each other and causing a price war. With the end of the war and the influx of tourists the rates have been seen as a stumbling block to making Colombo an attractive destination for tourists.

“With the abolition of the minimum rate regime hotels are free to charge what they want. They can charge 50 dollars or 500 dollars depending on the quality of the product.”
www.dailynews.lk

Union Bank continues growth momentum in 1H 2016

Union Bank of Colombo and its subsidiaries UB Finance Company and National Asset Management Ltd ended the first half of 2016 with an impressive 233% growth in profit after tax reporting Rs.275 mn for the period.

Operating income of the Group grew 31% to Rs.2,120 mn for the period. Total assets of the Group reflected a strong 16% year-to-date (YTD) growth to reach Rs.88,946 mn.

The Bank’s post tax profit for the period was Rs.154 mn, a 156% increase year-on-year (YoY).

Bank’s Director and Chief Executive Officer Indrajit Wickramasinghe said the Bank’s strong half year performance affirms the steady progression of Union Bank towards its strategic positioning as a fully-fledged commercial bank.

Total operating income of the Bank grew by 23% YoY to Rs.1,655 mn. The Bank’s net fee and commission income of Rs.121 mn is an increase of 121% 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 amounted to Rs.278 mn, a growth of 251% YoY. The Bank does not have any exposure to the equity market.

Reflecting significant improvement in the quality of the portfolio, Net NPL ratio improved to 2.0% from 4% in the 2Q 2015 with a corresponding reduction in impairment charges from the comparative period.

The Bank’s total operating expenses increased by 29% to Rs.1,433 mn primarily due to investment spending on New branches, ATMs, staff and technology in line with the strategic plan.

The Bank remains well capitalised with a strong core capital adequacy ratio of 23.2% and a Total capital adequacy ratio of 22.8%.

The Bank’s balance sheet expanded by 16% YTD to reach Rs.82,302 mn. Loans and advances grew by 21% to Rs.48,513 mn during the period under review, while the customer deposits reflected a growth of 22% to Rs.45,803 mn.

The impressive results reveal the success of the expansion initiatives implemented by the Bank, following the TPG investment one of the largest, global private investment firms and affirm the Union Bank’s renewed strategic focus as a fully-fledged commercial bank serving a diverse clientele including Retail, SME and Corporate segments.
www.dailynews.lk

Sri Lankan shares edge up ahead of policy rates announcement

Reuters: Sri Lankan shares ended slightly firmer on Thursday, snapping three sessions of losses as investors picked up diversified and manufacturing shares, while the market awaited directions on the country's economic policy.

The benchmark Colombo stock index ended up 0.15 percent, 9.73 points, at 6,392.15.

"There was institutional buying today, and the good thing is that we saw renewed interest from foreigners as well," said Yohan Samarakkody, head of research, SC Securities (Pvt) Ltd.

Analysts said investors are awaiting directions from the policy rates; the announcement is due later in the day at 1230 GMT.

Sri Lanka's central bank is expected to keep its key interest rates steady for a fifth straight month on Thursday, a Reuters poll showed, despite signs that inflation and private sector credit growth are picking up.

Prime Minister Ranil Wickremesinghe is expected to announce the country's economic policy next month.

Turnover stood at 991.5 million rupees ($6.81 million), its highest since July 14 and well above this year's daily average of around 727.4 million rupees.

Overseas investors were net sellers of 4.78 billion rupees worth of shares so far this year, but they were net buyers of 17.4 million rupees worth of shares on Thursday.

Shares in CT Holdings Plc jumped 5.74 percent while Distilleries Company of Sri Lanka Plc rose 0.99 percent, pushing the overall index up.

($1 = 145.7000 Sri Lankan rupees) 

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

Sri Lankan shares end lower; John Keells, Ceylon Tobacco fall

Reuters: Sri Lankan shares ended slightly lower on Wednesday as investors sold blue-chips such as John Keells Holdings Plc and Ceylon Tobacco Company Plc even as the market awaited directions on the country's economic policy.

The benchmark Colombo stock index ended down 0.09 percent at 6,382.42. It has fallen for three straight sessions through Wednesday.

"Investors area waiting to see tomorrow's policy rates," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd. "The government has promised a lot. So people are waiting to see whether those will be fulfilled in the prime minister's policy statement."

Sri Lanka's central bank is expected to keep its key interest rates steady for a fifth straight month on Thursday, a Reuters poll showed, despite signs that inflation and private sector credit growth are picking up.

Prime Minister Ranil Wickremesinghe is expected to announce the country's economic policy next month.

Turnover stood at 364 million rupees ($2.49 million), well below this year's daily average of around 725.4 million rupees.

Overseas investors were net sellers of 4.79 billion rupees worth of shares so far this year, but they were net buyers of 14.9 million rupees worth of shares on Wednesday.

Shares in conglomerate John Keells Holdings Plc fell 1 percent, while Ceylon Tobacco Company Plc dropped 1.1 percent, dragging the overall index down. 

($1 = 146.0000 Sri Lankan rupees) 

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

Sri Lankan shares hit two-week closing low; turnover down

Reuters: Sri Lankan shares closed at their lowest in two weeks on Tuesday as investors sold blue-chips such as John Keells Holdings Plc even as the market awaited directions on the country's economic policy.

The benchmark Colombo stock index ended down 0.14 percent at 6,387.85, its lowest since July 11.

"Market is down on retail trading in thin trade as the bigger players are waiting to see the prime minister's policy statement, while they also await directions from the central bank's announcement on policy rates," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

"We feel the rates will be unchanged, but if they push the rates up a bit, it will slow down the market."

Sri Lanka's central bank is expected to keep its key interest rates steady for a fifth straight month on Thursday, a Reuters poll showed, despite signs that inflation and private sector credit growth are picking up.

Prime Minister Ranil Wickremesinghe is expected to announce the country's economic policy next month.

Turnover stood at 265.1 million rupees ($1.82 million), the lowest since July 5, and well below this year's daily average of around 728.1 million rupees.

Overseas investors were net sellers of 4.04 million rupees worth of shares on Tuesday, extending the year-to-date net foreign outflow to 4.8 billion rupees worth of equities.

Shares in conglomerate John Keells Holdings Plc fell 0.77 percent, while Hemas Holdings Plc dropped 3.59 percent, and leading fixed line telephone operator Sri Lanka Telecom Plc lost 1.54 percent, dragging the overall index down. 

($1 = 145.6500 Sri Lankan rupees) 

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

Sri Lankan shares end down; turnover slumps

Sri Lankan shares fell on Monday as investors sold large-cap shares like Ceylon Tobacco Company Plc while turnover slumped to a near-three-week low as investors awaited directions on the country's economic policy.

The benchmark Colombo stock index ended down 0.49 percent at 6,397.09, slipping from its highest close since June 21 hit on Friday.

"Investors are taking a look at where the market is going. It's just the direction that is required right now," said Yohan Samarakkody, head of research, SC Securities (Pvt) Ltd.

"Investors are waiting for the prime minister's statement and any clues on the next budget. Quite a lot of uncertainty will be cleared off then."

Analysts said investors have been waiting for direction on the country's economic policy, expected to be announced by Prime Minister Ranil Wickremesinghe next month.

Turnover stood at 285.9 million rupees ($1.96 million), the lowest since July 5 and well below this year's daily average of around 731.6 million rupees.

Overseas investors bought a net 58.1 million rupees worth of shares on Monday, but have been net sellers of 4.8 billion rupees worth of equities so far this year.

Shares in Ceylon Tobacco Company Plc fell as much as 3.12 percent while food and beverage maker Nestle Lanka Plc fell 3.33 percent and leading mobile phone operator Dialog Axiata Plc fell 2.73 percent, dragging the overall index down. 

($1 = 145.5000 Sri Lankan rupees) 

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

IFC to guarantee export credit by Sri Lanka's Sampath Bank

ECONOMYNEXT - Washington-based International Finance Corporation will provide full and partial export credit risk guarantees for customers of Sri Lanka's Sampath Bank.

IFC said its Global Trade-Finance Program promotes trade among emerging markets, helping small and medium businesses, tap export markets.

"IFC’s trade-finance facility will support Sampath Bank’s capacity to help small businesses tap growth opportunities," Sampath Bank Managing Director Aravinda Perera said in a statement.

"Wider access to IFC’s global network of partner banks will facilitate trading transactions of our customers at competitive pricing."

Amena Arif, IFC Country Manager for Sri Lanka said the facility will help small exporters access over 100 emerging market countries. (Colombo/July21/2016)

“This trade finance facility with Sampath Bank is part of IFC’s continued commitment to strengthen Sri Lanka’s banking sector,” said.

Sri Lanka's Bairaha poultry group profits drop 18-pct

ECONOMYNEXT - Profits at Sri Lanka's Bairaha Farms group fell 18 percent to 118.8 million rupees in the June 2016 quarter from a year earlier, amid flat revenues and higher interest costs, interim accounts showed.

The group reported earnings of 7.43 rupees per share.

In the quarter group revenues rose 2.0 percent to 956 million rupees and cost of sales fell 3 percent to 698 million rupees, allowing gross profits to grow 19 percent to 257 million rupees.

But administration costs rose 21 percent to 47.2 million rupees and finance costs rose 72 percent to 14.9 million rupees.

US$1bn loan from Bank of Tokyo – Mitsubishi for Sri Lanka roads

ECONOMYNEXT – The Bank of Tokyo – Mitsubishi UFJ Ltd. (BTMU) has agreed to give a concessional yen loan equivalent to one billion US dollars to fund part of an expressway and Colombo city elevated road at an annualised cost of around 2.02% - 2.22% a year.

The loan will cover the cost of the 3rd phase of the Central Expressway section between Pothuhera and Galagedera and the elevated road from Kelani Bridge to Rajagiriya in the capital Colombo.

The Cabinet of ministers approved a proposal by Prime Minister Ranil Wickremesinghe as minister of national policies and economic affairs to go ahead with talks with BTMU.

The loan will be at an annual interest of 06 month LIBOR (London interbank offered rate) plus 0.95% with repayment over 15 years and a six-year grace period.

The ministry of national policies and economic affairs said the annualised financing cost of the loan would in the range of 2.02% - 2.22% a year.

The two road projects have been identified as priority development projects of the government with the Cabinet Committee on Economic Management recommending loan assistance from BTMU.

Thailand’s Siam City Cement to acquire Sri Lanka’s Holcim for USD400 Mln

(LBO) – Thailand’s Siam City Cement Public Company Limited will proceed with an acquisition of 98.95 percent shares in Holcim (Lanka) Limited, including its subsidiaries from cement giant LafargeHolcim.

LafargeHolcim said in a statement that the enterprise value of sale was 400 million dollars.

In a Thailand Stock Exchange filing, Siam City Cement said that the acquisition of the interest, comprising 164,065,201 ordinary shares, in HLL will be made by a wholly-owned subsidiary of the Company, INSEE Cement Holdings Company Limited, which is under the process of being incorporated.

The Company expects that the completion of the transaction will occur within two weeks following the date of the Agreement, while LafargeHolcim said the transaction would be completed in the third quarter.

Holcim Lanka operates one integrated plant and one grinding plant and is the country’s leading cement manufacturer. The proceeds from the sale of the divestment business will be used to further reduce debt, LafargeHolcim said.

Earlier this month, LarfargeHolcim announced the divestment of Lafarge India to Nirma Limited. The latest sales is a step for LafargeHolcim to reach its 3.5 billion Swiss francs divestment target for 2016. The Group has now secured three-quarters of the program.

With a presence in 90 countries and a focus on cement, aggregates and concrete, LafargeHolcim is the world leader in the building materials industry with 100,000 employees around the world and combined net sales of CHF 29.5 billion (USD 29.8 billion) in 2015.

Siam City Cement was first established in 1969 and began cement production after the completion of its cement plant in 1972, then became a listed company on the Stock Exchange of Thailand in 1977. The company embarked on an expansion strategy and has operations currently in Indonesia, Cambodia and Bangladesh outside of Thailand.

Mexican building materials company CEMEX, S.A.B. de C.V. said in May that it has closed the sale of its operations in Bangladesh and Thailand to Siam City Cement for approximately 53 million dollars.

Siam City Cement group company has approximately 4,000 employees.

It is engaged in the business of Cement, Ready-mixed Concrete and Aggregates, Fibre Cement based building and decorative materials, Autoclaved Aerated Concrete products as Lightweight Concrete, Environmentally-friendly Waste Management Solutions, Power generation from cement production process, Information technology and digitalization business services.

Sri Lanka’s NDB cancels EGM on concerns over required votes

(LBO) – Sri Lanka’s National Development Bank has cancelled its scheduled extraordinary general meeting on fears that it may not obtain the required number of votes at the meeting.

The scheduled EGM was convened by the Directors of NDB for the purpose of obtaining approval of the shareholders to amend Articles 36 (iii) and 49 of the Articles of Association of NDB.

The said Articles relate to the appointment of the Chairman, by way of a Special resolution.

“However, as several major shareholders have intimated their intention to vote against the proposed resolution, the Board is of the opinion that the bank would fail to obtain the requisite approval,” the bank said in a statement.

The board has consequently decided to cancel the EGM scheduled for the 27th July 2016.

Non Executive Director N.G Wickremeratne is the current Chairman of the NDB.

The NDB’s current articles require that its chairman is an “Independent Director’” whilst the Banking Act Direction No. 11 of 2007 on Corporate Governance for Licensed Commercial Banks in Sri Lanka does not impose such a restriction.

NDB proposing the EGM earlier said the requirement for the chairman to be an independent director is a requirement of NDB and not a regulatory requirement.

Articles 36 (iii) of the current Articles of Association of NDB states that an independent director shall mean a director who satisfies the criteria specified in the statutes for determining an independent director.

The article also states that an independent director shall mean a director who is not a shareholder of the company directly or indirectly holding in excess of 1 percent of the number of shares issued by the company.

Section (i) and (ii) of the article 49 says the Chairman of the company shall be an independent director and directors shall elect 1 of their number to be the Chairman of the board.

Access Engineering net up 5.1 pct, IPO for SML Frontier planned

(LBO) – Sri Lanka’s Access Engineering said group net profits grew 5.1 percent to 2.46 billion rupees in the year to March 2016, with the civil engineering firm facing a slow down in the global and local economy.

The company showed a better performance with a 19.1 percent growth in net profits — group revenue grew 6.7 percent to 17.6 billion rupees.

Earnings per share rose 5.1 percent to 2.47 rupees and share closed on Friday at 23.20 rupees. Earnings per share is down from a high of 2.83 rupees in 2014.

“Looking forward, while we remain firmly convinced that there still is great opportunity in our core business, there are also reasons why we need to strengthen our position by way of further diversification,” Chairman Sumal Perera said in the annual report.

The principal way to ensure financial stability is to expand further into real estate, he said.

“We have set ourselves a target of constructing a minimum of three million square feet of valuable real estate over the next five years.”

The group invested in three real estate companies during the year which collectively hold 21 acres of land in Malabe. This would strengthen the balance sheet by converting depreciating assets such as cash and cash equivalents into appreciating assets such as land, bricks and mortar, he said.

“Our thrust into real estate will be backed up by our core competencies in design, engineering, construction and procurement.”

In June, Access Engineering said it invested 800 million rupees to buy 50 percent stake of a property developer, Blue Star Constructions private limited.

Access Engineering said in a stock exchange filing that the developer is the beneficial owner of over a 1 acre property located in Rajagiriya.

“There is every possibility of the engineering and construction sectors being targeted for tax increases like the banking and financial sectors have been. In this scenario, we should focus on lobbying for tax holidays for our investments,” Perera added.

Another thrust of diversification was the Motor Vehicle sector, he said. The investment in Sathosa Motors was “a resounding success” with the shares purchased quadrupling in value.

“Further SML Frontier, which is 50 percent owned by Sathosa Motors has shown a fair performance over the years and we intend to go for an IPO for SML Frontier anytime after November 2016.”

The other Access Engineering Group companies, Sathosa Motors PLC (SML), Access Realties (Private) Limited (ARL), ZPMC Lanka Company (Private) Limited (ZPMC) and Access Projects (Private) Limited, recorded year on year growths both on the top and the bottom lines, the annual report said.

“Access Realties improved on its cash profit compared to last year, primarily because the previous year’s profit included revaluation gain. The Company’s new acquisitions of Horizon Holdings, Horizon Holdings Ventures and Horizon Knowledge City did not have any significant business activities during the year.”

Sri Lanka’s Ceylon Cold Stores net up 56-pct in June quarter

(LBO) – Profits at Sri Lanka’s Ceylon Cold Stores, which has interests in consumer goods and retailing, surged 56 percent to 855 million rupees in the June 2016 quarter from a year earlier as revenues rose 30 percent.

Ceylon Cold Stores is a top producer of carbonated drinks, ice cream and has a retail chain.

The firm reported earnings of nine rupees per share for the quarter in interim accounts filed with the Colombo Stock Exchange. The stock closed at 591 rupees Thursday.

The firm said revenues rose 30 percent to 10.3 billion rupees in the quarter, and cost of sales also rose 28 percent to 8.5 billion rupees — the firm grew gross profits 38 percent to 1.8 billion rupees.

Unspecified other operating income was up 8 percent to 221 million rupees.

Finance costs fell 45 percent to 2.0 million rupees while finance income rose 133 percent to 57.2 million rupees.

In the segmental analysis, manufacturing sector profits rose to 901 million rupees in the quarter from 407 million rupees against the previous year.

Retail sector profits rose to 239 million rupees in the quarter from 149 million rupees, a year earlier.

The Colombo Ice Company (Private) Limited (CICL), a wholly owned subsidiary of Ceylon Cold Stores was incorporated on 18th May 2016.

CICL entered in to an agreement with the BOI on 18th July 2016 to lease a land extent of 9 acres for a period of 50 years for the establishment of an Ice Cream factory.

Ceylon Cold Stores celebrates its 150th anniversary this year.

Amana Takaful Life’s IPO full

Demonstrating strong investor confidence in its vibrant prospects and high growth potential, the Initial Public Offering (IPO) of Amana Takaful Life Limited – via an Offer for Sale of LKR 75 million – was oversubscribed at its opening yesterday.

The company offered 50 million ordinary voting shares at LKR 1.50 per share on Diri Savi Board of the Colombo Stock Exchange (CSE) – which represents 10% of its total stake – at the successful IPO.

“Amana Takaful Life takes great pride in the strong confidence placed by the investors in the potential and prospects of the company – reflected in the oversubscription of the IPO within several hours,” Chairman – Tyeab Akbarally said. “Amana Takaful Life will continue to innovate and carry out its strategic initiatives, which have the potential to further enhance its growth trajectory.”
www.dailynews.lk

Mackwoods Chairman challenges SEC directive

Mackwoods Plantations Chairman Dr Chrishantha Nonis has challenged the Securities and Exchange Commission (SEC) directive in withholding payments on the sale of Dr Nonis’ shares in the company. In a strongly worded response to the directive issued by the Securities and Exchanges Commission on July 20, regarding the sale of 60.8% shares of Agalawatte Plantations, Nonis says that the transaction was carried out with due authorisation and instructions being issued to the stock broker.

“The action by the SEC in issuing a directive on a complaint made by non-shareholders, without making any formal inquiries into the matter, is highly questionable.The sale of Agalawatte shares was completed on July 14, 2016 and six days after the share transaction was concluded, the SEC on July 20 issued a directive stating that shareholder approval had not been obtained.

“The stock broking firm has informed the SEC that the contents in the directive are incorrect in that the instructions received were not only from Dr. Chris Nonis but also from Mrs. Shelendra Ranaweera and Mr. Lalith Fonseka, which information was available to the SEC,”Dr Nonis said in a letter to the SEC.

The letter further states that the SEC should not interfere with the internal affairs of Mackwoods Plantations (Private) Ltd, and has requested that the SEC withdraw its allegations.
www.dailynews.lk

Com Bank ranked among World’s Top 1000 Banks for sixth year

Commercial Bank of Ceylon has become the only Sri Lankan bank to be ranked among the Top 1000 Banks of the World for the sixth year setting a benchmark for consistency.

This ranking is published annually by of the UK’s ‘The Banker’ magazine.The 2016 list is based on the Bank’s key performance indicators for FY 2015.

The Top 1000 Banks of the World are ranked on the basis of Tier I capital, assets, capital assets ratio, pre-tax profits, return on capital, return on assets, BIS (Basel) Capital ratio, NPL to total loans, loans to assets ratio, risk weighted assets (RWA) to total assets (TA) ratio and cost income ratio.

“In banking, size does matter, but the stringent evaluation for this ranking looks at many other mission-critical key performance indicators as well,” Commercial Bank’s Managing Director and Chief Executive Officer Jegan Durairatnam said. “In that context, just being among the Top 1000 is a significant achievement for a Sri Lankan bank, and staying there for six years consecutively is a great demonstration of consistency for which the entire team of Commercial Bank must be given credit.” He also added that the Bank wishes to thank all its stakeholders for their support in achieving this feat.

The Top 1000 World Banks ranking is compiled from a database of over 5,000 of the world’s biggest banks and is acknowledged by the global financial community as the definitive guide to bank rankings and analysis.

Commenting on its latest ranking, The Banker magazine said: “The 2016 Top 1000 results are indicative of the challenging environment banks found themselves operating in during 2015. Even the Chinese banking industry’s meteoric growth shows signs of slowing down for the first time in a decade.

For the last few years, China’s banks have dominated the ranking based on Tier 1 capital. This year Industrial and Commercial Bank of China (ICBC) remains number 1 and China Construction Bank number 2, with 4 out of the top 5 places held by Chinese banks.”

The Banker is published by Financial Times Business, which is the specialist publishing and conferences arm of the FT Group.

Commercial Bank’s overseas operations encompass Bangladesh, where the Bank operates 18 outlets and Myanmar, where it has a Representative Office in Yangon.

www.dailynews.lk

Ritz Carlton enters Lanka with Krrish partnership

Ritz Carlton will be entering the Sri Lanka leisure market.The US based company will partner the Krrish group for the Krrish Tower project which has started piling.

International Economic Affairs State Minister Suejeeva Senasinghe confirmed to Daily News Business that the Krrish tower construction has begun. “They will partner with Ritz Carlton and will build a 70 storied tower. The Ritz-Carlton Hotel Company, L.L.C. is the parent company to the luxury hotel chain, The Ritz-Carlton Hotels.

Ritz-Carlton operates 87 luxury hotels and resorts in major cities and resorts in 29 countries and territories. The hotel company is today a subsidiary of Marriott International.

Senasinghe said that there are still some payments to be made to the government by the Indian based Krrish management. “This I think is for 80 perches in the front portion of the land where there is a colonial building.”

It was earlier stated by the Board of Investment that land titles have not been cleared for this 80 perch block.“Irrespective of this they have started construction in the other area where they had paid the government,” Minister Senasinghe said.

He also said that Thatta Cement of Pakistan is once again looking at investing in the Hambantota Port Economic zone.

“They have an environmental issue since they wanted to generate power through coal. However they have now shifted to other methods of generating power which the government is in favour.”

He also said that in addition a sugar refinery with an investor from Singapore and several other industries are set to open in Hambantota. “Many Chinese investors too are eagerly looking at investing in Hambantota in a special zone exclusively created for them.”

Thatta Cement Company Limited was incorporated in 1980 as a public limited company. It was a wholly owned subsidiary of the State Cement Corporation of Pakistan (Pvt.) Limited. The manufacturing facility was commissioned in 1982. The plant based on dry process technology, had a total installed capacity of 1,000 tons per day of clinker. www.dailynews.lk

Sri Lankan shares end at one-month closing high

Reuters: Sri Lankan shares rose for a second straight session on Friday and posted its highest close in a month, helped by gains in large-cap beverage shares, while investors awaited directions on the macro economy.

The benchmark Colombo stock index ended up 0.18 percent, or 11.31 points, at 6,428.77, its highest close since June 21. The bourse rose 0.09 percent during the week recording a third weekly gain.

"Investors seems to be picking their stocks. Bargain hunting has been happening," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

"Slowly, the interest is growing in the market, but with a note of caution, until the policy statement is out."

Analysts said investors are waiting for a direction on the country's economic policies, which is expected to be announced by Prime Minister Ranil Wickremesinghe next month.

The investor sentiment also got a boost after Sri Lanka raised $1.5 billion in its first sale of dual-tranche eurobonds last week.

The more-than $5.5 billion in offers for the issue showed that global investors were bullish about the prospects of the $82-billion economy.

Yields on local T-bills fell at an auction on Wednesday for the second time since April 15, following the strong response to the bond deal.

Turnover stood at 619.98 million rupees ($4.26 million), less than this year's daily average of around 734.9 million rupees.

Overseas investors, were net sellers of 1.15 million rupees worth of shares on Friday, first net selling in five sessions, extending the year-to-date net selling to 4.86 billion rupees worth of equities.

Among the index heavyweights, shares in food and beverage maker Nestle Lanka Plc climbed 3.70 percent, Distilleries Company of Sri Lanka Plc rose 1.64 percent, while Central Finance Company Plc ended up 3.80 percent.

($1 = 145.5000 Sri Lankan rupees) 

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

Sri Lankan shares steady; led by large-cap consumer stocks

Reuters: Sri Lankan shares ended little changed on Thursday as gains helped by foreign buying and led by financials were offset by some large-cap consumer staples, while the market awaited directions on the macro economy.

The benchmark Colombo stock index ended up 0.05 percent, or 2.97 points, at 6,417.46 in thin trade.

"Things were a bit slow. But investors were looking at more blue chip counters rather than retail stocks," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

Analysts said investors are waiting for a direction on the country's economic policies, which is expected to be announced by Prime Minister Ranil Wickremesinghe next month.

The index touched a three-week high on Friday as investor sentiment got a boost after Sri Lanka raised $1.5 billion in its first sale of dual-tranche eurobonds last week.

The more-than $5.5 billion in offers for the issue showed that global investors were bullish about the prospects of the $82-billion economy.

Yields on local T-bills fell at an auction on Wednesday for the second time since April 15, following the strong response to the bond deal.

Turnover stood at 585.7 million rupees ($4.02 million), well below this year's daily average of around 735.9 million rupees.

Overseas investors, who were net sellers of shares worth 4.86 billion rupees so far this year, were net buyers worth 41.8 million rupees of equities on Thursday.

Among the index heavyweights, shares in beverage maker Distillers Company of Sri Lanka Plc rose 2.65 percent, while Cargills (Ceylon) Plc gained 4.16 percent and Hatton National Bank Plc climbed 1.88 percent.

Among the losers, Nestle Lanka Plc slipped 2.9 percent while Ceylon Tobacco Company Plc lost 1.41 percent. 

($1 = 145.7500 Sri Lankan rupees) 

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

BOC among world’s top 1000 banks, ranked no.1 in Sri Lanka

UK’s ‘The Banker’ Magazine has once again named The Bank of Ceylon as the No. 1 Bank in Sri Lanka among the world’s top 1000 banks in its July 2016 issue.

BOC has won many accolades in the recent past including the title as the ‘Strongest Bank’ in the country given by the ‘Asian Banker’ for the strength of its 2015 balance sheet, the Gold Award as the winner of the National Business Excellence Awards Ceremony and being named the No.1 Brand in the country for the eighth consecutive time. It was able to reach its second trillion by gaining Rs. one trillion deposits in 2016.

The first trillion in assets was achieved in 2012 BOC is set to reach its third trillion in the near future. Breaking its own record set by its 2014 profit before tax of Rs.20.3 billion, it earned the highest ever profit made by a single Sri Lankan business entity which is Rs. 25.3 billion PBT in 2015. This was a 25% growth over the previous year.

“Being able to hold the title as the leading Sri Lankan bank in the World’s Top 1000 banks list is truly a privilege and an honor. As always we have moved forward on a steadfast track as the exemplarily bank in the country’s financial industry. It is my duty to thank all our stakeholders including our Customers and the Government of Sri Lanka at this juncture for encouraging us throughout these years to reach such heights.” Chairman Ronald C. Perera said.

“We have been always driven by the motive of bringing the best out through every task we carry out as the leading bank in the country. It is my duty to thank my committed staff for all their hard work that was put in to get achievements such as this.” General Manager D.M. Gunasekera said.

“The Banker” Magazine UK, is one of the premier banking and finance magazines in the world and has been so since its inception in 1926. The Benchmark top 1000 bank list has been compiled by the “The Banker” since 1970. The Banker database holds comprehensive financial data, news feeds and executive contact data on the leading banks in every country and its ranking sets in the industry standard for measuring bank performance and strength.

www.dailynews.lk

Sri Lanka 03-, 06-month Treasuries yields fall

ECONOMYNEXT - Yield on 03-month and 06-month Sri Lankan Treasury Bills fell at Wednesday’s auction while those on one-year bills remained steady, the Central Bank’s public debt department said.

The yield on 03-month bills fell 03 basis points to 8.80% while the yield on 06-month bills fell 14 basis points to 9.75% and that on 01-year bills remained at 10.49%.

The public debt department got bids worth 22.5 billion rupees and accepted bids worth 9.9 billion rupees.

Nimal Perera sells stake in Sri Lanka’s Kalamazoo

ECONOMYNEXT - High net-worth investor Nimal Perera sold his controlling stake in Kalamazoo Systems to Renuka Holdings for almost Rs50 million Wednesday, a stock exchange filing said.

Renuka bought altogether 34,325 shares of Kalamazoo or an almost 70% stake at Rs1,428 a share.

Nimal Perera bought his stake in Kalamazoo Systems, a virtual shell company, in September 2015 at Rs1,067 a share.

Sri Lanka's SEC halts payment on controversial Agalawatte deal

ECONOMYNEXT - Sri Lanka's Securities and Exchange Commission has ordered a stock broker to halt the payment on a 60 percent stake in Agalawatte Plantations, following a complaint by some shareholders of the privately held controlling Mackwoods group.

Members of Sri Lanka's Nonis family are involved in multiple legal battles alleging mis-management of the group by Chrishantha Nonis, who is de facto chairman.

A 60 percent stake of Agalawatte Plantations, a listed company owned by Mackwoods Plantations Private Ltd, an unlisted company, was sold last week, leading to complaints by Nonis's sisters to SEC.

The SEC in a directive said Nirmalie Samaratunga and M J Varma has complained to the SEC that the stake was sold "without due authorisation and without the approval of the shareholders of Mackwoods Plantations Private Limited.

SEC said Shelendra Ranaweera and Lalith Fonseka were the authorised to instruct brokers to sell shares held by the firm it in dematerialized account, but the instructions had come from Chris Nonis.

SEC said it had to verify whether Nonis was authorized to sell the shares and whether shareholders of Mackwoods Plantations had approved the sale.

SEC told Claridge Stockbrokers Private Ltd, a member of the Mackwoods group, to withhold the sale proceeds of the transaction and retain it with the firm until the regulator probed it and issued new instructions.

Sri Lankan shares end little changed; large caps lead losers

Reuters: Sri Lankan shares ended little changed on Wednesday as gains led by top conglomerate John Keells Holdings were offset by losses in large caps, while investors turned cautious ahead of a policy statement by the government in early August.

The benchmark Colombo stock index ended down 0.02 percent, or 1.32 points lower, at 6,414.49 in thin trade.

"Though the market ended in negative note, we have seen some interest in blue chip counters," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

"Confidence level is improving and investors are having positive mindset. There is not a lot of selling pressure and investors are slowly collecting at their levels."

Investors are waiting for direction on the country's economic policies that Prime Minister Ranil Wickremesinghe is expected to announce in August, dealers said.

Turnover stood at 576.1 million rupees ($3.95 million), well below this year's daily average of around 737 million rupees.

Overseas investors, who were net sellers of shares worth 4.9 billion rupees so far this year, were net buyers worth 18.6 million rupees of equities on Wednesday.

Shares in Indo Malay Estate Plc fell as much as 13.83 percent, while Sri Lanka Telecom Plc lost 0.77 percent and Commercial Leasing and Finance Plc fell as much as 2.56 percent.

Shares of conglomerate John Keells Holding Plc ended 1.62 percent higher.

The index touched a three-week high on Friday as investor sentiment got a boost after Sri Lanka raised $1.5 billion in its first sale of dual-tranche eurobonds last week.

The more-than $5.5 billion in offers for the issue showed that global investors were bullish about the prospects of the $82-billion economy.

Yields on local T-bills fell at an auction on Wednesday for the second time since April 15, following the strong response to the bond deal.

($1 = 146.0000 Sri Lankan rupees) 

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

Sri Lanka tobacco taxes among highest in the world

With President Maithripala Sirisena and Health Minister Rajitha Senarathna campaigning to further tax cigarettes, industry analysts have warned that tobacco taxation in Sri Lanka is already among the highest in the world.

According to the WHO Report on the Global Tobacco Epidemic (2015), Sri Lanka falls among countries with the highest tax incidence in the world. The report also indicates that developed countries such as America, Japan, Singapore and Australia have far lower tax incidences when compared to Sri Lanka.

Last year Government levies amounted to Rs. 80.4 billion, up from Rs. 66 billion, whilst the Value Added to the State was Rs. 91.6 billion. This amounted to 7% of the Government’s total tax revenue.
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Hayleys-Amaya forays into Maldives with $ 23 m luxury resort buy

Hayleys Plc and its leisure brand Amaya have ventured into the Maldives with a $ 23 million investment (around Rs. 3.4 billion) to buy a luxury resort with 51 villas.

The company said it had ventured into owning and operating an overseas resort in the Maldives which would complement its city hotel and resort portfolio in Sri Lanka.

The investment was made by a Hayleys subsidiary, Luxury Resort Ltd., a company incorporated in the Maldives. It acquired Kuda Rah Island Resort Maldives for $ 23 million on Friday.

Kuda Rah Island Resort, which is located in the picturesque South Ari Atoll, consists of 51 luxury villas and is adjacent to the popular Kuda Rah Thila dive site. It also has the Maldives’ first underground nightclub.

The resort will be branded Amaya Kudarah Maldives and will be under the management of Amaya Leisure Plc.

At present Hayleys owns and operate seven resorts in Sri Lanka through the Amaya brand comprising 659 four and five star class and boutique rooms and one city hotel - The Kingsbury - which has 229 five star rooms. Its leisure business, including inbound tours, accounts for 5% of the Hayleys Group’s revenue or Rs. 4.5 billion and 8% of pre-tax profit Rs. 679 million.

Hayleys is the latest Sri Lankan corporate to tap high value tourism in the Maldives. Among others who have benefitted largely on account of several resorts are Aitken Spence and John Keells Holdings.

In the Maldives, Hayleys has a growing logistics business.

The Maldives is targeting 1.5 million high-spending tourists this year, up from 1.2 million in 2015. The Maldives Marketing and Public Relations Corporation, together with Ministry of Tourism, are carrying out various initiatives as 2016 has been declared Visit Maldives Year.
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Sri Lankan shares end down ahead of govt policy statement

Reuters: Sri Lankan shares ended weaker on Monday, from their more than three-week closing high hit in the previous session, as investors turned cautious ahead of the government's policy statement next month.

The bourse touched a three-week high on Friday after investor sentiment was boosted with Sri Lanka raising $1.5 billion in its first sale of dual-tranche eurobonds last week, as over $5.5 billion in offers for the issue showed that global investors were bullish about prospects of the $82 billion economy.

After the bond deal, yields in local T-bill auction fell along with the 364-day T-bill rates at Wednesday's auction for the first time since April 15.

The benchmark Colombo stock index in thin trade ended down 0.11 percent or 6.88 points at 6,415.81, slipping from its highest since June 21 hit on Friday. It gained 0.9 percent last week.

"There was nothing much happening today. Probably, investors were awaiting the Prime minister's policy statement to see the direction," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

Prime Minister Ranil Wickremesinghe is expected to announce the country's economic policies in August, said new central bank chief Indrajith Coomaraswamy last week.

Turnover stood at 357.5 million rupees ($2.46 million), well below this year's daily average of around 738.3 million rupees.

Overseas investors, who were net sellers of shares worth 4.92 billion rupees so far this year, were net buyers of equities worth 134 million rupees on Monday.

Shares in Lanka ORIX Leasing Company Plc fell as much as 2.72 percent while the biggest-listed lender Commercial Bank of Ceylon Plc lost 0.77 percent.

($1 = 145.5000 Sri Lankan rupees) 

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

Lotus Renewable to make mandatory offer for Browns Hydro Power

Lotus Renewable Energy (Private) Limited says it will make a mandatory offer
to buy shares of Browns Hydro Power PLC after purchasing 72.13 percent shares in the company.

The company purchased 73,690,212 shares at seven rupees per share on July 13, leading up to the trading floor announcement under Rule 7 of the Company Take-overs and Mergers Code.

Lotus Renewable Energy, incorporated in February this year, said it offers to purchase from the shareholders of Browns Hydro the remaining 30,397,900 issued shares at a price of seven rupees per share.

Dr T. Senthilverl the holder of 13,323,770 shares in Browns Hydro has informed the Company in writing that he would not be accepting any offer to purchase his shares, a statement filed with the Colombo Stock Exchange said.

Last week, LOLC Securities informed the Colombo Stock Exchange that their client Browns Power Holdings (Private) Limited, fully owned by Browns Capital PLC, had purchased 60.3 percent of Agalawatte Plantations PLC on 14th July 2016 from Mackwood Plantations (Pvt) Ltd for 304 million rupees, in a separate transaction.