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.

www.island.lk

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.