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.”
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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.
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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.

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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