Sri Lankan shares end steady ahead of long weekend

Reuters: Sri Lankan shares were flat at the close of trade on Thursday, as gains led by industrial and telecom counters were offset by losses in stocks of manufacturing companies.

The Colombo stock index edged up 0.01 percent to 6,390.74, but fell 0.3 percent during the week, its seventh straight weekly fall. It has shed more than 4 percent since July 27 up to Thursday’s close.

Sri Lanka’s stock and foreign exchange markets are closed on Friday for a religious holiday.

Diversified conglomerate Hemas Holdings Plc ended 0.9 percent higher, while Sri Lanka Telecom Plc rose 1 percent.

Knitted fabrics manufacturer Teejay Lanka Plc fell 2.2 percent, while conglomerate Richard Pieris Plc dropped 1.7 percent.

“We...see the accumulation of blue chips is continuing,” said Dimantha Mathew, head of research at First Capital Holdings. “We don’t see a big uptrend, but we see a complete slowdown in the downtrend.”

Foreign investors net sold 70.5 million rupees ($461,690) worth of shares, but they have net bought 27.5 billion rupees worth equities so far this year.

“We are yet to see big foreign inflows for the market to start a run. But we hope it will return after the tax confirmation following the Inland Revenue Bill,” Mathew said.

The bill, Sri Lanka’s major tax reform since independence from Britain in 1948, seeks to expand the tax net and stamp out evasion. It is expected to be presented in parliament on Sept. 6.

Turnover stood at 845.3 million rupees, slightly lower than this year’s daily average of around 858 million rupees. 

($1 = 152.7000 Sri Lankan rupees) 

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

Hayleys buys Sri Lanka Shipping Company for Rs4.9bn

ECONOMYNEXT - Diversified Hayleys group said its logistics division had bought Sri Lanka Shipping Company Limited, a privately held firm, for 4.9 billion rupees.

"The acquisition is in line with the Group's strategy on expanding its maritime operations and paving the way for the establishment of the largest marine and shipping company in Sri Lanka," Hayleys said in a statement.

The group said is Hayleys Advantis Limited had brought 94.81 percent of Sri Lanka Shipping Company Limited on August 23, 2017.

Sri Lanka Shipping Company offers shipping agency services, stevedoring, clearing and forwarding, has fertilizer bagging plant at Colombo port, wareshousing and tea blending for export.

Sri Lanka's Seylan Bank to sell Rs10bn unsecured bonds

ECONOMYNEXT - Sri Lanka's Seylan Bank Plc said it planned to sell 6.0 billion rupees of unsecured subordinated with an option to sell a further 4.0 billion if there was demand.

The debentures would have a tenor of 5 to 10 years.

The interest rate would be set before the opening of the issue.

Seylan Bank said it will not go ahead with a plan announced in October 05, 2016 to issue rated senior unsecured debt.

The subordinated debt will company with BASEL III capital requirements.

Sri Lanka Treasuries yields marginally up

ECONOMYNEXT - Sri Lanka's 12 - month Treasuries yield rose 02 basis points to 9.67 percent at Wednesday's auction data from the state debt office showed.

The 6-month yield rose 03 basis points to 9.30 percent.

The debt office sold 10 billion rupees of 6-month bills and 8 billion rupees of 12-month bills.

There were no sales of 3-month bills.

Sri Lanka's Treasury bill yields has risen over the past two weeks, after falling sharply in earlier weeks. However bond yields have eased.

Sri Lankan shares fall for 2nd day; bank stocks, beverages down

Reuters: Sri Lankan shares fell for a second session on Wednesday, ending near a more than four-month closing low hit last week, as investors sold shares of banks and beverages companies.

The Colombo stock index fell 0.13 percent to 6,390.26.

Shares of Nestle Lanka Plc fell 0.6 percent, while biggest listed lender Commercial Bank of Ceylon Plc slipped 0.7 percent and Sri Lanka Telecom Plc lost 1 percent.

The index closed at its lowest since April 18 on Thursday. It fell 0.4 percent last week, its sixth straight weekly fall, and has shed more than 4 percent since July 27 up to Wednesday’s close.

“It was totally a volatile market. Lack of retail participation is the main reason for the market to come down,” said Atchuthan Srirangan, a senior research analyst at First Capital Holdings PLC.

“Still, investors are waiting to see the outcome of the Inland Revenue Bill.”

The bill, Sri Lanka’s major tax reform since independence from Britain in 1948, seeks to expand the tax net and stamp out evasion. It is expected to be presented in parliament on Sept. 6.

Foreign investors net bought 89.5 million rupees (about $585,925) worth of shares, extending the year-to-date net foreign inflow into equities to 27.6 billion rupees.

Turnover stood at 592 million rupees, compared with this year’s daily average of around 858.1 million rupees.

($1 = 152.8000 Sri Lankan rupees)

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

Sri Lankan shares end lower on selling by foreign investors

Reuters: Sri Lankan shares ended slightly weaker on Tuesday, hovering near a more than four-month closing low hit last week, as foreign investors sold diversified shares, brokers said.

Foreign investors turned net sellers for the first time in six sessions, selling shares worth a net 495 million rupees ($3.24 million), although they have net bought 27.5 billion rupees worth of equities so far this year.

The day’s turnover however touched the highest in more than one month at 1.6 billion rupees, well above this year’s daily average of around 859.8 million rupees.

“Market slipped on a few counters, but it looks healthy with over a billion rupee in turnover,” said Hussain Gani, deputy CEO of Softlogic Stockbrokers.

The Colombo stock index ended 0.2 percent lower at 6,398.79, near its lowest close since April 18 hit on Thursday.

Shares of Hemas Holdings Plc fell 3.68 percent, while Nestle Lanka Plc ended 0.4 percent weaker and conglomerate John Keells Holdings Plc lost 0.3 percent.

The index fell 0.42 percent last week, its sixth straight weekly fall, and has shed more than 4 percent since July 27 through Tuesday.

($1 = 152.7500 Sri Lankan rupees) 

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

Fitch affirms Bimputh Finance at BB(lka); outlook stable

Fitch Ratings Lanka has affirmed Bimputh Finance PLC’s National Long-Term Rating at ‘BB(lka)’. The Outlook is Stable.

KEY RATING DRIVERS

Bimputh’s rating reflects its small franchise compared with higher-rated peers and high-risk appetite stemming from its microfinance-dominated loan portfolio, which Fitch sees as risky due to the segment’s greater susceptibility to economic cycles. Fitch’s assessment also captures likely pressure on Bimputh’s capitalisation from high loan growth, which is forecast by management’s guidance, and limited funding diversity due to a heavy reliance on borrowings.

Fitch believes aggressive loan growth would pressure Bimputh’s capitalisation in the absence of any meaningful capital infusions. The company’s Fitch Core Capital ratio remained flat at 16.5% as at end-March 2017 and Fitch believes Bimputh would depend on its 94% owner, Daya Group, for capital infusions.

Fitch expects microfinance to remain Bimputh’s dominant product exposure, notwithstanding that this exposure declined to 63% of total lending in the financial year ending March 2017 (FY17), from 82% at FYE16, due to increased exposure to non-microfinance loans supported by corporate and personal loans. A challenging operating environment, together with prolonged drought and several floods, reduced loan growth to 39% during FY17, from 118% in FY16.

Fitch expects Bimputh’s assets quality to remain under pressure. The reported six-month non-performing loan (NPL) ratio increased to 3.0% at end-March 2017, from 0.8% at end-March 2016, due to microfinance defaults. However, the company maintains adequate provisioning levels for these NPLs.

Fitch believes weaker net interest margins from its business-model shift to a lower share of microfinance and higher funding costs could weigh on Bimputh’s profitability and increase its credit costs. We expect Bimputh to continue relying on wholesale borrowings due to its weaker deposit franchise relative to peers. Deposits made up only 30% of its funding at end-March 2017 and are highly concentrated among the top-20 deposit holders.

Bimputh is a small finance company accounting for 0.95% of licensed finance company and specialised leasing company sector assets at end-March 2017 (March 2016: 0.86%).

RATING SENSITIVITIES

Weaker capitalisation metrics may place downward pressure on the company’s ratings. Heightened risk appetite, indicated through aggressive loan growth or greater unprovided NPLs that increase capital impairment risks, could also lead to a downgrade of Bimputh’s ratings.

An upgrade is contingent on an improved franchise while sustaining credit metrics – in particular, capitalisation – similar to higher-rated peers, alongside a moderation of risk appetite.

Source: LBO

Sri Lanka motor car registrations rise to 3,221 units in July: JB

LBO - Sri Lanka’s motor car registrations rose to 3,221 units in July, up from 2,802 units in June, the highest monthly figure so far this year, JB Securities said in a research note.

Registrations are still down from a high of 14,544 units in September 2015.

‘Overall, brand new motor cars have increased by 17 percent month-on-month. Micro observed growth in the “Panda” car, Renault observed growth in the “KWID” and Tata observed the most significant growth in their “Nano Twist XTA,”’ the note said.

Pre-owned motor cars increased by 13.7 percent month-on-month. Toyota, Suzuki and Honda observed growth in pre-owned registrations.

Premium car registrations have declined from 94 units in June to 65 in July. “Brand new premium cars remained the same with Mercedes Benz leading the way with growth observed in the E-Class.”

Overall weak electric car registrations increased from 13 in June to 17 in July, with Nissan leaf recorded 13 registrations.

Three-wheelers observed a decline by 4.7 percent month-on-month to 1,787 units. Bajaj’s market share dropped from 94.6 percent to 92.1 percent.

Two-wheelers registered 30,226 units in July, a 10 percent increase month-on-month.

The note said, “130cc segment share improved from 79.4% to 80.8%. Honda’s dominant market share increased from 36.5% to 38%. Scooters increased from 14,846 to 17,893 in July, led by growth in Honda.”

Light trucks increased significantly by 55 percent in July to 177 units, while buses grew by 7.7 percent to 205 units, down from a high of 381 in March.

Sri Lanka shares hit 1-week closing high after govt drops tax plan

Reuters: Sri Lankan shares ended slightly firmer on Monday, recovering from a more-than-four-month closing low hit last week, as investors bought battered shares after the government’s decision to drop a proposed tax on profits from share trading.

However, the day’s turnover touched its lowest in more than five months. It was 210.3 million rupees ($1.38 million), lowest since March 13, and well below this year’s daily average of around 859.2 million rupees.

Junior finance minister on Thursday said Sri Lanka will not go ahead with a proposed tax on profits from share trading that was planned as part of a major tax reform bill.

The bill is expected to be presented in the parliament on Sept. 6.

The Colombo stock index ended 0.05 percent higher at 6,412.37, its highest since Aug. 21.

The index fell 0.42 percent last week recording its sixth weekly fall.

It shed 4.3 percent since July 27 through Thursday, and has fallen in 18 of 20 sessions on lacklustre corporate earnings in the June quarter and speculation that the new reform bill may impose a tax on stock trading.

“Sentiment is improving though the turnover is low. We see an improvement in the buying interest,” said Dimantha Mathew, head of research, First Capital Holdings.

“The positive sentiment has returned after the minister cleared doubts over the taxes and also due to longer-than-expected correction.”

Foreign investors bought shares worth a net 42.1 million rupees ($275,433) on Monday, extending their year-to-date net inflows to 28 billion rupees.

Shares of conglomerate John Keells Holdings Plc ended 0.3 percent higher, while Commercial Leasing & Fiance Plc closed 3.6 percent higher and Union Bank Plc ended 4.2 percent firmer.

($1 = 152.9000 Sri Lankan rupees) 

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

Odel Mall expands shopping area

Fashion retail giant, Odel has added another 10,000 square feet to its flagship store at Alexandra Place, offering shopaholics an opportunity to explore an exciting new space internationally designed and built by Blocher Partners – the Germany headquartered architecture firm that designed the 645,000 square foot Odel Mall that will soon begin to take shape at the adjoining site.

Softlogic Chairman Ashok Pathirage said, “Anticipation is building up rapidly on the new Odel Mall that will soon dwarf all others in the country in terms of scale, sophistication and offering.”

“The newly opened internationally designed 10,000 sq. ft. retail area which has been added to the Odel retail space provides just an inkling of what our customers can expect when the Odel Mall, for which the ground-breaking took place today, is completed,” he said.

“This new area is also an acknowledgement of the ever-rising brand standards and retail experience we strive to offer our discerning customers, while pitching Sri Lankan fashion retail alongside international standards,” Pathirage said.With an assortment of top international brands such as Aldo and Desigual, a revamped and fully-loaded Odel sports department comprising Nike, Reebok, Adidas, and Canterbury; lingerie, swimwear, menswear, a wider selection of shoes and bags, luggage and a Denim Lab featuring a wide array of international denim brands, this new extension is set to transform the Odel customer shopping experience and take Sri Lanka’s most iconic shopping destination to new heights, a company said.

Along with this expansion, Odel introduces Aldo, the dynamic global Canadian fashion footwear and accessories brand that is at the forefront of high-street footwear and accessories for both men and women.

Synonymous with style and elegance, Aldo is frequently endorsed and worn by numerous pop-culture icons and celebrity fashion figures.

The brand is intended to fill the gap that existed in the market for branded men’s footwear and accessories, with its vibrant spirit and cutting-edge take on international style.

ODEL Customers can now purchase quality, trendy footwear for both men and women from Aldo at a dedicated section in the new retail area.

www.sundayobserver.lk

Ceylon Cold Stores (CCS) income up, profit down in 1Q

Ceylon Cold Stores (CCS) saw its 1Q18 revenue up by 20 per cent year on year (YoY) but its gross profit was down by 6 per cent for the same period, the company’s interim results showed.

In the said quarter, CCS’s manufacturing sector net profit and revenue were down YoY to Rs. 3,383,238 and Rs. 698,504 million, respectively.
The retail sector revenue and net profit were up YoY at Rs. 9 billion and Rs. 277 million.

In the last quarter (in early June) A.R. Rasiah, having served the CCS board for over 12 years, resigned.

CCS used capital expenditure (funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment) of Rs. 778 million in 1Q18 and out of this Rs. 700 million was invested in the retail sector.

Officials say that investments in capacity expansion at CCS and store expansion at Jaykay Marketing Services (Pvt) Ltd (JMSL) significantly increased the future earnings potential of the group. CCS serves an island-wide network of over 110,000 retail outlets, 164 distributors and source from 4,461 farmers and 2,297 other suppliers.

CCS is enhancing capacity with investments of Rs. 3.8 billion in constructing a new ice cream factory and a further investment of Rs. 2.5 billion in a new bottling facility for beverages. JMSL will continue to rapidly expand its outlet footprint, whilst constructing a new distribution centre at an estimated investment of approximately Rs. 3.2 billion. The new distribution centre will consolidate both dry and fresh produce. Enabling the business to further improve its offering to our customers, achieve significant scale benefits as well as deliver operational excellence.

During the last financial year, CCS introduced new products into its portfolio, including a range of fruit drinks and successfully replaced sugar with natural sweeteners. CCS also implemented initiatives to improve its carbon footprint and water usage, according to officials,
In the last quarter CCS saw two international funds increasing stakes in its shares while another two slightly shed theirs in the company.

Standard Chartered Bank Mauritius S/A Chambers Street Global Fund, LP which had 1.11 per cent in CCS bought 1,629 168 shares and now own 2.82 per cent. CCS’s eighth largest shareholder, CB London S/A Verdipapirfondet Holberg Rurik which had some 380,044 shares (0.40 per cent) increased this to 0.20 per cent. HSBC International Nominees Ltd-Ssbt-Debutsche Bank Ag Singapore A/C 01 sold CCS shares to stand at 0.31 percent. Seylan Bank PLC/Channa Nalin Rajahmoney which had 0.20 per cent also shed 0.02 per cent to 0.18 per cent.
www.sundaytimes.lk

Sri Lanka shares recover after govt drops plan to tax trading profits

Reuters: Sri Lankan shares ended firmer on Friday, recovering from an over four-month closing low hit in the previous session as investors bought battered shares following the government’s decision to drop a proposed tax on profits from share trading.

Junior finance minister on Thursday said that Sri Lanka will not go ahead with a proposed tax on profits from share trading that was planned as part of a major tax reform bill.

The bill is expected to be presented in the parliament on August 30.

The Colombo stock index ended 0.42 percent or 26.83 points higher at 6,409.37, edging up from its lowest close since April 18 hit on Thursday.

The index is still down 0.42 percent during the week recording its sixth weekly fall.

It shed 4.3 percent since July 27 through Thursday and has fallen in 18 out of 20 sessions on lacklustre corporate earnings in the June quarter and speculation that the new reform bill may impose a tax on stock trading.

“With the minister’s statement, some positive sentiment has come in to the market,” said Dimantha Mathew, head of research at First Capital Holdings.

“We expect the statement to clear the doubts over the tax and this sentiment to continue for next two to three weeks.”

Foreign investors bought shares worth a net 47.8 million rupees ($312,622.63) on Friday, extending their year-to-date net inflows to 28 billion rupees.

Turnover was 613 million rupees, less than this year's daily average of around 859.2 million rupees.

Shares of conglomerate John Keells Holdings Plc jumped 2.1 percent, while Lanka Orix Leasing Plc ended 3.4 percent firmer, Hatton National Bank Plc ended 1.3 percent up and Melstacorp Ldt rose 1.7 percent. 

($1 = 152.9000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Vyas Mohan)

No change in Sri Lanka stock market taxes: Eran

ECONOMYNEXT - No changes were planned for taxes on stock market trading in revamped income tax law being presented to parliament tomorrow, State Minister for Finance Eran Wickramaratne said.

"There will not be a change on how stock market transactions are taxed," Wickramaratne told reporters in Colombo.

"The current share transaction levy will continue."

The new Inland Revenue bill proposed a steep 28 percent tax on profits of stock trading (capital gains), instead of a more reasonable rate like 5 or 10 percent, while long term investment would remain free of tax.

At the moment only 0.3 percent tax is imposed on stock at the point of purchase. The new administration however slapped a 15 percent value added tax on hospital care.

Over 100 amendments are planned for the bill from what was originally gazetted, officials have said.

Sri Lankan shares hit over four-month closing low

Reuters: Sri Lankan shares on Thursday hit an over four-month closing low as gains in telecom shares were offset by losses in diversified stocks.

Analysts, however, said the market saw some buying in the latter part of the day after the government said it dropped a proposed tax on profits from share trading that was planned as part of a major tax reform bill.

Junior Finance minister said that Sri Lanka will not go ahead with a proposed tax on profits from share trading that was planned as part of a major tax reform bill.

The bill is expected to be presented in the parliament on Friday.

The Colombo stock index ended little changed, 0.01 percent down at 6,382.54, its lowest close since April 18.

The index shed 4.3 percent since July 27 through Thursday and has fallen in 18 out of 20 sessions on lacklustre corporate earnings in the June quarter and speculation that the new reform bill may impose a tax on stock trading.

"We have seen some local interest coming in to market with the minister clarifying on tax on stock trading," said Dimantha Mathew, head of research at First Capital Holdings.

Foreign investors bought shares worth a net 43.8 million rupees ($286,461.74) on Thursday, extending the year-to-date net inflows to 27.9 billion rupees.

Turnover was 476 million rupees, less than this year's daily average of around 860.8 million rupees.

Shares of Nestle Lanka Plc fell 0.6 percent while conglomerate John Keells Holdings Plc ended 0.1 percent lower.

Shares of Dialog Axiata Plc rose 0.9 percent. 

($1 = 152.9000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Vyas Mohan)

Sri Lanka Treasuries yields up for second week

ECONOMYNEXT - Sri Lanka's Treasuries yield rose across maturities at Wednesday's auction, with the three month yield rising 10 basis points to 9.27 percent, data from the state debt office showed.

The 12-month yield rose 09 basis points to 9.65 percent.

The debt office offered 2.0 billion rupees of 3-month bills, 8.0 billion rupees of 6-month bills and 10,000 billion rupees of 12-month bills.

However it accepted 15 billion rupees of six month bills, much higher than offered, and 5.0 billion rupees of 12-month bills and rejected all bids for 3-month bills.

Last Wednesday the six month yield rose 15 basis points to 9.17 percent and the 12-month yield rose 16 basis points to 9.54 percent. No 3-month bills were offered.

Treasuries yields fell sharply over the past month, though demand from some buyers fell away as yields fell below 10 percent.

Dealers say funding costs range from 9.00 to 9.25 percent at the moment.

Political uncertainty has also affected sentiment, and bond yields have also edged up, with trading volumes falling, dealers said.

There is also uncertainty over the new bond auction system, with fears that it could be used to coerce dealers and allow the central bank to engage in financial repression again.

The first bond auction also created uncertainty with auction yields around 20 basis points below the secondary market, leading to speculation that captive sources had been pressured to buy at high prices by the authorities.

Sri Lanka's central bank in general and its public debt department in particular has a history of engaging in financial repression and de-stabilizing the credit system, according to analysts who give early warning of its tendency to generate high inflation and balance of payments crises.

But Sri Lanka is now emerging from a balance of payments triggered by money printing and financial repression in 2015 and 2016 and budgets are improving.

However there can be temporary mis-matches between spending and revenues. In June private credit also picked up after being subdued for two months. State energy enterprises are also facing tigher finances in the face of thermal generation and higher import prices.

Analysts say it is important to allow credit demand or other factors to be signalled through prices, to create renewed demand.

Sri Lankan shares fall for third straight day; blue chips drag

Reuters: Sri Lankan shares fell for the third straight session on Wednesday, hitting their lowest close in more than four months, as investors sold heavyweights amid continuing uncertainty over a proposed tax reform bill.

The Colombo stock index fell 0.19 percent, or 12.05 points, to 6,383.27, its lowest close since April 18.

The index shed 4.3 percent since July 27 through Wednesday and has fallen in 17 out of 19 sessions due to lacklustre corporate earnings in the June quarter and speculation that the new tax reform bill might impose a tax on stock trading.

"Things are very slow. Even foreign side is slow as everybody is waiting for the tax bill to settle things," said Dimantha Mathew, head of research at First Capital Holdings.

Junior Finance Minister Eran Wickramaratne said on Thursday concerns over tax on share trading would be addressed before the proposed bill is passed. The bill is expected to be presented in the parliament on Friday.

Foreign investors bought shares worth a net 114.6 million rupees ($749,509.48) on Wednesday, extending the year-to-date net foreign inflow to 27.9 billion rupees worth of shares.

Turnover was 808.2 million rupees, less than this year's daily average of around 863.3 million rupees.

Shares of conglomerate John Keells Holdings Plc fell 0.9 percent, while both Melstacorp Ltd and Cargills (Ceylon) Plc lost 1.7 percent.

($1 = 152.9000 Sri Lankan rupees)

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Amrutha Gayathri)

Union Assurance posts profit of Rs 175 mn in 2Q

Union Assurance (UA) reported steady progress in the life insurance business, reporting 19% growth in gross written premium for the second quarter of the current financial year, compared with the previous year. Profit amounted to Rs. 175 million compared with Rs. 119 million in 2016. Profit for the period does not include a surplus from the life business which is actuarially valued at year end.

As at June 30, 2017, UA’s life fund stood at Rs. 34 billion with a healthy solvency ratio indicating the financial strength of the business.

UA’s financial performance is underpinned by a continuous focus on innovation, brand management and people development.

Union Assurance is anchored by a team of experienced and dynamic professionals and is backed by a strong capital base and reinsurance partnerships with highly rated global reinsurers.

Celebrating 30 years of excellence in 2017, Union Assurance continues to invest in people, products and processes to become a true partner in successfor all our stakeholders.

www.dailynews.lk

‘Swedish investor to bail out CIFL depositors’

A Swedish investor has finally come forward to bail out the Central Investment and Finance Co Ltd (CIFL) depositors.

CIFL Depositors Association (CIFLDA) President Wijaya Gunawardane said that a representative of the Swedish company attended the annual general meeting (AGM) last Saturday at the Public Library. He then informed depositors of the details of the payment. This will be capital plus interest which would be paid in full within four years.

This proposal was approved by the majority of the deposit holders attending the AGM. Gunawardane said that this investor has been coordinated by the Central Bank of Sri Lanka who came forward to assist the depositors. The Swedish investor would either buy shares of the depositors or pay them cash. The whole process would be completed in less than three years.

“The Swedish company taking over CIFL and subsequently running it is a major boost to the local economy and a sigh of relief for the depositors who were in great difficulty due to this issue.”

On August 4, U. P. Alawattage, Director, Department of Supervision of Non Bank Financial Institutions, speaking to Daily News Business after a press conference, said that several local and foreign investors have positively responded to bail out three ailing finance companies including CIFL

He said that the three companies, CIFL, City Finance and The Standard Credit have some issues and the Central Bank has come forward to bail them out.

CIFL was initially registered as a public limited liability company on July 3, 1968. Subsequently it came under the ownership of Deepthi Perera of ASPIC Group in 2004. It became a public liability company in July 2011 and is currently listed on the CSE.

www.dailynews.lk

Ceylon Tea Brokers to raise Rs. 205 m via Rights to finance modern warehouse

Ceylon Tea Brokers Plc is to raise Rs. 205.2 million via a Rights Issue to finance a modern warehouse complex.

The Board of CTB on Friday resolved to issue 68.4 million shares via a three for five Rights Issue at Rs. 3 per share. The net asset value per share as at June 2017 was Rs. 2.15. The share price yesterday closed at Rs. 3.90.

The company said proceeds will be utilised to build a state-of-the-art warehousing complex with modern equipment and machinery to provide an effective and efficient service to clients while reducing costs and operating time.In May this year the company entered into a share sale agreement with Lanka Commodity Brokers to buy Logicare for Rs. 233 million and in July Logicare Ltd. signed a 39-year lease with the Sri Lanka Land Reclamation and Development Corporation for a plot of land in Muthurajawela.

For the quarter ended 30 June 2017, CTB posted a profit of Rs. 28 million as against a figure of Rs. 2.3 million. Revenue grew by 92% to Rs. 156 million.

The company’s current stated capital is Rs. 128 million represented by 114 million shares. Capital Alliance Holdings owns 81.35% stake in Ceylon Tea Brokers Plc. The public holding is 15% comprising 1,556 shareholders.

www.ft.lk

Despite margin pressure LB Finance maintains profits in 1Q

LB Finance PLC saw its margins coming under pressure as the funding cost escalated and the new loans and leases showed signs of slowing down during its most recent quarter but the company managed to maintain profitability, LB Finance interim financial accounts showed.

The interest income of the fourth largest finance company in the country grew by 28 percent year-on-year (YoY) to Rs.5.5 billion but the corresponding cost of the funds spiked 54 percent YoY to Rs.2.6 billion, resulting in a net interest income of Rs.2.6 billion, up by a modest 10 percent YoY for the April-June quarter (1Q18).

The pace at which the interest expense grew demonstrated the pressure exerted on the interest margins. Hence, the company managed to report a net profit of Rs.940 million or Rs.6.79 a share compared to Rs.911.7 million or Rs.6.58 a share during the same period last year – an increase of modest 3.0 percent YoY.

LB Finance, with an asset base of little under Rs.110 billion, loaned Rs.3.2 billion for the quarter, relatively slow, but better than some of the small commercial banks in the country. “LB Finance continues to display remarkable resilience and growth even amidst the prevailing challenges in the external environment,” LB Finance Managing Director Sumith Adhihetty said in a statement.

The company has a total loans and leases book of Rs.93 billion.

LB Finance is also one of the main microfinanciers in Sri Lanka but the sector is currently undergoing some challenges with rising delinquencies as some borrowers have taken loans from multiple companies and are now in a debt trap.

In a bid to avoid the issue being spiralled into a much larger socio-economic issue, the microfinance sector is expected to come under the Credit Information Bureau (CRIB) by the end of the year. 

While the specifics are not clear, the provisions made against the possible bad loans of the company tripled to Rs.68.6 million from Rs.22.5 million a year earlier.

Meanwhile, the company increased its customer deposits by Rs.4.8 billion, a commendable growth, given the competition from the banks and similar finance companies.

The company now has a total deposit portfolio of Rs.65.2 billion.

The investment vehicle of business magnate Dhammika Perera, Vallibel One PLC, together with Royal Ceramics Lanka PLC, held a 77.83 percent stake in LB Finance PLC.

SBI Ven Holdings Pte Ltd, an investment holding company that is part of Japan’s SBI Holdings, Inc., held 1.15 percent in the company being the fourth largest shareholder.

www.dailymirror.lk

Panasian Power plans two mini hydro plants in Nuwara Eliya

(LBO) – Panasian Power has announced the acquisition of Lower Kotmale-Oya Power Two (Pvt) Ltd to construct two mini hydro-power plants (MHP) in the Nuwara-Eliya district in early 2018.

The construction will have an estimated investment of 400 million rupees, and envisages combined output of 7.53 GWh per annum.

“This latest acquisition is in keeping with our long term goal of increasing our renewable energy footprint to meet the local demand for clean, low cost energy. Furthermore, our decade long experience in the mini hydropower sector makes us ideally suited to ensure that the project runs efficiently with the highest energy output,” said Pathmanatha Podiwala, General Manager of Panasian Power.

“Renewable energy projects like this will help propel Sri Lanka towards a sustainable energy future that will yield benefits throughout our economy and increase the quality of life.”

Due to the convenient accessibility, short length of structures and minimal environmental impact, construction of the project is not expected to exceed 12 months, Podiwala said.

The Lower KotmaleOya Power Two(Pvt) Ltd was formed as a special purpose vehicle company to develop two cascade projects, the Lower KotmaleOya II MHP and Medakumbura MHP, utilizing water resources from KotmaleOya in the Pudaluoya township, NuwaraEliya district.

Panasian Power, which was incorporated in 1982, owns and operates a Mini Hydropower Plantsand supplies electricity directly to the Ceylon Electricity Board in accordance with the Small Power Purchase Agreement (SPPA) entered into on 5th July 2004 and spans for 15 years with a further extension of 5 years.

Sri Lanka’s Odel expands retail space

ECONOMYNEXT – Sri Lankan retailer Odel Plc said it has added another 10,000 square feet to its main store at Colombo’s Alexandra Place and was offering new footwear and sportswear brands.

A statement said the extension increases the floor area of the Alexandra Place store to 52,000 square feet and was the second such investment by its owner Softlogic in the location in the past eight months.

The extension was designed and built by Blocher Partners, the Germany-headquartered architecture firm that designed the 645,000 square foot Odel Mall that will soon begin to take shape at the adjoining site.

In July 2017, Odel said it plans to do a mixed developed property project there with an investment of $105.7 million.

Along with the expansion, Odel said it has introduced Aldo, the global Canadian fashion footwear and accessories brand.

Sri Lanka's MTD Walkers to expand shipyards, eyes Maldives

ECONOMYNEXT - Sri Lanka's MTD Walkers, a publicly traded construction and engineering group, said it is eyeing a third shipyard in Galle, and opportunities in the Maldives as expected to win more business in the Indian Ocean.

The firm said it had invested 1.3 billion rupees building a shipyard in Mutwal, near Colombo Port, which can accommodate vessels of up to 1,250 tonnes. It will have a shiplift and transfer system, which is being built by a group company.

The yard has already built a barge to carry out sea-piling, and two tugboats for its own use are also being built.

"Further to this, the sector will evaluate emerging opportunities in the Galle Harbour and Maldives," the firm told shareholders. "The sector’s strategy is to establish shipyards across the island to cater to growing demand for quality ship repair and shipbuilding services in the Indian Ocean."

The Mutwal shipyard is expected to start commercial operations in the next financial year. Already, offshore ship repairs are being done, the firm said.

The Trincomallee yard in Cod Bay Fishery harbour will have a boatlift and cater to smaller fishing vessels.

MTD Walkers group is already engaged in civil engineering work in the Maldives.

Sri Lankan shares fall to lowest close in four months

Reuters: Sri Lankan shares fell to their lowest close in more than four months on Tuesday as persisting uncertainty over a proposed tax reform bill dragged down blue chips.

The Colombo stock index fell 0.39 percent, or 25.21 points, to 6,395.32, its lowest close since April 18.

The index shed 4.1 percent since July 27 through Tuesday and has fallen in 16 out of 18 sessions due to lacklustre corporate earnings in the June quarter and speculation that the new tax reform bill might impose a tax on stock trading.

"Market slipped a bit with lower-than-expected results and overall negative sentiment on tax worries," said Hussain Gani, deputy CEO at Softlogic Stockbrokers.

"Investors are awaiting clarity on the tax bill."

Junior Finance Minister Eran Wickramaratne said on Thursday concerns over tax on trading stocks would be addressed before the proposed bill is passed in the parliament. The bill is expected to be presented in the parliament on Friday.

However, foreign investors bought into the island nation's risky assets in the session.

Foreign investors bought shares worth a net 78.4 million rupees ($512,586) on Tuesday, extending the year-to-date net foreign inflow to 27.8 billion rupees worth of shares.

Turnover was 419.4 million rupees, less than half of this year's daily average of around 866.5 million rupees.

Shares of conglomerate John Keells Holdings Plc fell 0.7 percent, while Melstacorp Ltd lost 1.7 percent and Hemas Holdings Plc ended 1.4 percent weaker. 

($1 = 152.9500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Amrutha Gayathri)

Sri Lankan shares end weaker in thin trade; tax proposal weighs

Reuters: Sri Lankan shares ended weaker on Monday, lingering near a four-month low, in their lowest turnover in nearly a month, as investors awaited direction on a new tax reform bill after a string of disappointing June-quarter corporate results.

The Colombo stock index fell 0.24 percent, or 15.75 points, to 6,420.53, hovering near its lowest close since April 18 hit on Thursday.

The index shed 3.7 percent since July 27 through Monday and fell in 15 out of 17 sessions due to lacklustre corporate earnings in the June quarter and speculation that the new tax reform bill might impose a tax on stock trading.

"Investors are staying away awaiting for clarity on the tax on share trading," said Dimantha Mathew, head of research at First Capital Holdings.

"Very interestingly, the foreign interest also slowed down on shares."

Junior Finance Minister Eran Wickramaratne said on Thursday the concerns over tax on trading stocks would be addressed before the proposed bill is passed in the parliament. The bill is expected to be presented in the parliament on Friday.

Foreign investors turned net sellers for the first time in nine sessions. They sold shares worth a net 36.2 million rupees ($236,447) on Monday. But they have been net buyers of shares worth 27.7 billion rupees so far this year.

Turnover was 322.6 million rupees, its lowest since July 26, and less than half of this year's daily average of around 866.5 million rupees.

Shares of conglomerate John Keells Holdings Plc fell 0.6 percent, while Bukit Darah Plc lost 3.8 percent and Dialog Axiata Plc ended 0.9 percent weaker. 

($1 = 153.1000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Amrutha Gayathri)

Softlogic Holdings records Rs15.2 bln revenue in 1Q, +6.2 pct

LBO - Softlogic Holdings recorded a revenue growth of 6.2% posting Rs15.2 bn in the first quarter this year, from Rs14.3 bn in the same period last year.

“The results were resilient despite tightened monetary policy, contracting purchasing power and inclement weather, all contributing to lackluster demand,” the company said.

The prime contributors to the Group top line were Retail (32.0%), ICT (25.6%), Healthcare Services (19.9%), Financial Services (16.7%) and Automobile (3.0%).

The Leisure sector is expected to improve its contribution and reduce its overall losses in the periods to come with Mövenpick Hotel’s monthly trajectory of occupancy improving as anticipated, the company said.

“Intermittent full occupancy in today’s context in both hotels, Centara Ceysands Resort and Spa and Mövenpick Hotel Colombo augurs positively for the sector.”

Gross Profit improved strongly by 21.2% to Rs. 5.4 billion (Bn) reflecting a GP margin improvement from 31.5% in 1QFY17 to 35.9% in 1QFY18. Group synergies and economies of scale helped profitability.

The Healthcare sector was a key contributor to the Gross Profit growth during the period with increasing demand and bed occupancy in our four hospitals augmenting performance in an unprecedented manner.

Operating profit increased 34.5% to Rs. 1.8 Bn during the first three months of the financial year. An improvement in operating profit margins from 9.6% in the comparative quarter to 12.2% was witnessed in 1QFY18. Group’s continuous focus on cost discipline and efficiency measures led to the improvements in cost margins.

Operational expenses increased 17.5% to Rs.4.0 Bn. Distribution costs declined 21.6% to Rs. 667.8million (Mn ) whilst administrative costs registered an increase of 30.6% to Rs. 3.3 Bn during the quarter particularly due to the new city hotel.

EBITDA for the quarter improved a strong 37.2% to Rs.2.5 Bn from Rs. 1.8 Bn in 1QFY17.

Finance Expenses increased 39.6% to Rs. 1.3 Bn during quarter primarily owing to increasing interest rates. Profit before tax improved 8.8% to Rs. 659.6 Mn pushing the profit after taxation for the first three-months of FY2017/18 to Rs. 429.6 Mn after a tax charge of Rs. 230.0 Mn (Rs. 99.1 Mn in 1QFY17).

Retail sector’s revenue was Rs. 4.8 Bn. Primary contributors to this sector continued to be Softlogic Retail and the Odel group. Branded apparel and accessories business performance continue to support Odel’s growth momentum.

Operating profit increased 63.4% to Rs. 699.4 Mn during 1QFY18 reflecting an OP margin improvement from 9.0% in 1QFY17 to 14.4% in 1QFY18 owing to the Group’s stringent cost controls while expanding. Sector PBT improved strongly to Rs. 290.7 Mn.

Retail sector PAT reported a robust growth to Rs. 222.8 Mn during the quarter.

EB Creasy posts group loss, pays Rs. 36 per share dividend

Modestly capitalized but asset rich with Rs. 2.5 billion retained earnings

EB Creasy and Co. PLC, a modestly capitalized 84-year old company quoted on the Colombo Stock Exchange since 1968, has posted a pre-tax profit of Rs. 393 million in the year ended March 31, 2017, up 18% from a year earlier on a turnover of Rs. 4.1 billion (up 14% from the previous year) but seen a group loss of Rs. 301.6 million, down from a profit of Rs. 452.7 million the previous year.

The company chairman, Mr. A. Rajaratnam, has explained the group loss in the annual report to losses posted in their industrial products and leisure segments. He said that group turnover was Rs. 26.3 billion.

The company’s turnover had been driven by the fast moving consumer goods (FMCG) businesses, he said. But increased market interest costs and investment in working capital had pushed up interest costs 53% Rs. 193.8 million.

"Despite the increase in finance cost, the company reported a profit before tax of Rs. 393 million, and 18% increase over last year’s profit of Rs. 332 million. The profit after tax increased by 45% over the last year to Rs. 383.9 million," he said.

EB Creasy which joined the Ceylon Chamber of Commerce in 1890 is one of its first members. Modestly capitalized at Rs. 25.7 million, the company paid its shareholders a dividend of Rs. 36 per share during the year under review which the chairman said was 20% above the previous year.

Analysts noted that Creasy’s are among the top dividend payers among companies quoted on the CSE.

Controlled by the Colombo Fort Lands Group, with Colombo Fort Land and Building PLC holding 52.98% of the company with some of its associates and subsidiaries owning 15% more, the company has retained earnings of nearly Rs. 2.5 billion in its books. However its net current liabilities stand at over Rs. 1.1 billion.

Other than the Colombo Fort Lands Group, Dr. T. Senthilverl with 16.73% is the largest shareholder.

The illiquid EB Creasy share traded during the year under review at a high of Rs. 1,450 and a low of Rs. 950.10 closing at Rs. 1,447.90.

EB Creasy and Co. is mainly into the manufacture of consumer disposables, marketing of hardware and automotive accessories and solar power lighting systems for rural electrification. Quoted members of the group include Laxapana Batteries PLC, Lankem Ceylon PLC, Muller and Phipps PLC, Sigiriya Village Hotels PLC, Beruwela Resorts PLC, Marawila Resorts PLC and CW Mackie PLC.

There are also about three dozen unquoted subsidiaries in the EB Creasy group.

The directors of the company are: Messrs. A. Rajaratnam, Chairman, SDR Arudpragasam (MD), S. Rajaratnam, RCA Welikala, RN Bopearatchy, PMA Sirimane, AR Rasiah, SNP Palihena, Dr. AM Mubarak, AMdeS Jayaratne, R Seevaratnam and SW Gunawardena.

www.island.lk

Higher rubber prices bite Kelani bottom line

Kelani Tyres PLC has seen a decline in profitability in the year ended March 31, 2017, attributed by it chairman, Mr. Chanaka de Silva to increased raw material prices that pushed down the operational profit of its production Joint Venture (with India’s Ceat) to an after-tax Rs. 1.3 billion from the previous year’s Rs. 1.6 billion.

He has said in the recently released annual report of the company that the year under review had been "very challenging" with over two years of stable and relatively low raw material prices ending in the first quarter of the year under review.

"Our cost of natural rubber increased by approx. 22% during the year in tandem with significant increases in synthetic rubber prices as well," he reported. "In fact, prices of all other raw materials too appreciated during the year under review."

This had resulted in an adverse effect on margins "when our prices were already under pressure from imported tyres flooding the market."

"The intense price competitiveness internationally affected our export sales as well, which fell by around 15% compared to the previous year," he said.

Production for the year at over 15.4 million MT was flat but export earnings had gained slightly to Rs. 2.44 billion from the previous year’s Rs. 2.39 billion.

He said the Joint Venture (JV) hoped to take many strategic decisions to strengthen its market position which would have a positive impact on Kelani. The JV would expand on new sizes and has also been looking at manufacturing truck radials here. There was a distinct possibility of this happening enabling the JV to cater to the total requirement of pneumatic tyres in Sri Lanka.

De Silva said the Ministry of Finance had been supporting them to work towards their prime objective of total import substitution of pneumatic tyres in Sri Lanka with quality products on par with the best tyre brands in the world.

He announced an interim dividend of Rs. 2.50 (net) per share on the performance of the company in the year under review and the subsequent dividend received from the JV. This would involve a Rs.201 million payout.

On June 30, 1999, Kelani transferred its tyre manufacturing assets to a joint venture company, CEAT Kelani Holdings (Private) Ltd. (CKH). Kelani owns 50% of CKH.

Kelani Tyres has a stated capital of Rs. 402 million and total assets of Rs. 4.19 billion. Total liabilities run at Rs. 52.8 million.

Silverstock Ltd. with 43.7% of Kelani is its top shareholder followed by the Ceybank Unit Trust (10%). Ceybank Century Growth Fund, EPF and the Bank of Ceylon are among its top ten shareholders.

The Kelani share traded during the year under review at a high of Rs. 77.40 and a low of Rs. 52.20 closing at Rs. 55. This compared with a trading range of Rs. 89 to Rs. 59 closing at Rs. 64.

The directors of the company are: Messrs. Chanaka de Silva, Rohan. T. Fernando, T. Bevan Perera, Kamantha Amarasekera, Ms. SS Jayatilaka, Eraj Fernando and RP Weerasooria.

www.island.lk

AIA Sri Lanka reports solid 2017 Half Year Results

AIA Insurance Lanka PLC ("AIA Sri Lanka" or the "Company") last week announced the financial results of the Company and its subsidiary for the six months ended June 30, 2017.

The main highlights are stressed by a company news release were:

Consolidated revenue increased 28 per cent from the same period last year to LKR 8,765 million, driven by gross written premium (GWP) growth of 14 per cent to LKR 5,532 million. The growth in GWP was mainly attributed to growth in renewal business.

Conventional life GWP increased 17 per cent from the same period last year, to LKR 5,115 million. Investment income went up 15 per cent from the same period last year, to LKR 2,636 million, benefiting from prudent investments made by the Company and the increase in interest rates.

Consolidated profit after tax amounted to LKR 135 million, an increase of 13 per cent compared with the same period last year. The surplus of the life insurance business is reported annually at the year end and is therefore not included in the half-year profit.

Pankaj Banerjee, Chief Executive Officer of AIA Sri Lanka, said:

"AIA Sri Lanka’s consolidated revenue was boosted by a solid 28 per cent compared with last year. AIA remains committed to growing our business both quantitatively and qualitatively and the execution of our growth strategy has reflected this. We are focused on ensuring that we continuously improve the customer experience. The investments we have made in our agency force through our Premier Agency strategy to equip our Wealth Planners with the best in training and technology have set AIA apart from the competition when it comes to serving our customers’ long-term savings and protection needs."

William Lisle, Chairman of AIA Sri Lanka, said:

"I am very pleased that AIA Sri Lanka had a strong first half in 2017. Our initiatives under Premier Agency Strategy and Bancassurance partnerships are showing excellent results and we are confident that AIA Sri Lanka is well positioned to benefit from the growth momentum of the Sri Lanka life insurance market."

www.island.lk

Taj returns to profit after three consecutive loss-making years

Owning company chairman confident market will absorb increased supply of 5-star room

Tal Lanka Hotels PLC, owners of the Taj Samudra in Colombo, has returned to profit after three consecutive loss-making years in the year ended March 31, 2017, posting a profit of Rs. 103.7 million, up from a loss of Rs. 116.9 million the previous year and losses of Rs.180.8 million and Rs.530 million in the two years prior. 

The owning company however retains accumulated losses of Rs. 1.15 billion in its books but commands ownership of one of Colombo’s top five-star hotels built on a sprawling leasehold site of over 11 acres of land fronted by the Galle Face Green and the Indian Ocean.The hotel which is managed by India’s well-known Taj group attracts a large clientele of up-market travelers from India but, according to a shareholder, has paid no dividends since it was commissioned over 30 years ago.

"I don’t remember any dividend being paid but I can’t be sure," he said. "Sometime ago shareholders were hosted to an annual lunch, a practice that was followed by some other non-dividend paying hotels too. But the Taj, like the others, discontinued the practice and none of them issue vouchers for two free lunches like before."

The owning company’s chairman, Mr. Rakesh Sarna, has said in the recently published annual report for 2016/17 that hotels in Colombo had recorded 64% average occupancy in the year under review though the city average rates had shown a decline.

"The city has witnessed room night supply growth over the past three years in the budget and mid-market segment, a welcome addition to a market previously dominated by five-star and five-star deluxe hotels," he said.

"These hotels have been quickly absorbed in the market given their popularity with the price conscious travelers; however, they have added pressure on the existing five-star hotels, thereby restricting their ability to increase rates."

Sarna complained that the constant depreciation of Sri Lanka rupee has adversely affected the average room rate due to which market wide average room rates depict a decline or only marginal increase in US dollar terms. He noted that the rupee was volatile against the dollar averaging Rs. 149 to the dollar last year and expected this trend to continue over the next five years.

He quoted the Sri Lanka Tourism Development Authority saying the highest guest arrivals were from China followed by India, UK, Germany, France, Russia and Australia.The company’s revenue was up 6% from Rs. 2.66 billion the previous year to Rs. 2.83 billion during the year under review. The gross margin increased by Rs. 73 million from the previous year.

Sarna reported that the company’s finance expenses were down by Rs. 160 million to Rs. 223 million during the year under review primarily due to decrease of loss on foreign exchange.

The owners continue to invest in the hotel and are now in the final stage of installing new guest elevators with more rooms to be renovated next year and work to upgrade the property planned targeting an increased market share.

"Going forward we expect commercial demand to drive business for the branded hotels, given the increased interest in the modernization of the city and the infrastructure development in the country," he said.

"…..though supply pressure may affect market performance in the short term, we believe that the city will continue to remain a vital destination for tourism in the country, and gradually absorb new supply to establish itself as a robust hotel market."

No dividend has been proposed for the year under review with earnings per share at Rs. 0.74 against the previous year’s loss of Rs. 0.84 per share.

Tal Lanka has a stated capital of Rs. 1.4 billion and total assets of over Rs. 5.3 billion against total liabilities of nearly Rs. 3 billion. The company’s share traded during the year at a high of Rs. 31.20 and a low of Rs. 20 closing the year at Rs. 21. This compared to the previous year’s trading range of Rs. 34 to Rs. 20 closing at Rs. 23.40.

Tal Hotels and Resorts Ltd. with 58.14% with IHOCO BV with 24.62% are the major shareholders followed by the EPF with 5.55%.

The directors of the company are Messrs. RK Sarna (Chairman), BK Chaudhary, R. de Mel, RK Chaudhary, Tilak de Zoysa, G. Sunderam, V. Govindasamy, P. Verma, U Narain, S. Singh and C. Subramanian. 
www.island.lk

HNB Assurance posts Rs. 176 M PBT

HNB Assurance PLC (HNBA) and its fully owned subsidiary HNB General Insurance Limited (HNBGI) posted a Profit After Tax (PAT) of Rs. 176 million for the second quarter of 2017, reflecting a phenomenal growth of 332% compared to the PAT of Rs. 41 million recorded during the same period of 2016. The impressive performance of the Group reflected in all performance indicators. The Parent Company, HNBAposted a PAT of Rs 100 million marking a growth of 54% while its subsidiary with a PAT of Rs. 76 million recorded a more impressive growth of 414% in PAT.

During the second quarter of 2017, the Group achieved a 22% growth in its Gross Written Premium (GWP), depicting a value of Rs. 3.8 billion as against the GWP of Rs. 3.1 billion recorded during the comparable periodin 2016. The Life Insurance segment contributed a GWP of Rs. 1,919 million and the General Insurance segment contributed a GWP of Rs. 1,901 million to the overall GWP. The Life and General Insurance segments recorded Premium growth rates of 17% and 27% respectively. During the second quarter of 2017, the group recorded an investment income growth of 54% reaching a value of Rs. 771 million against Rs. 500 million recorded during the same period of 2016.

The Total Assets of the Group reached a value of Rs. 16 billion and Investments in Financial Instruments reached a value of Rs. 13 billion. During the same period the Life Insurance Fund and General Insurance Fund grew by 14% and 29% reaching values of Rs. 10 billion and Rs. 2.5 billion respectively.

Sharing her thoughts on the Group’sfinancial performance, Chairperson of HNBA and HNBGI, Rose Cooray stated, “We are indeed delighted to announce the results of another successful quarter. Both Life and General Insurance segments have showcased steady revenue growths. The concerted and well targeted efforts the Group has taken throughout 2017 to grow profitable business has made both HNBA and HNBGI more resilient and competitive Insurance companies in the industry. The Group continues to leverage on its core competencies in stabilizing its market share by delivering a substantial long-term value to our shareholders whilst meeting all our obligations to our valued customers with highest responsibility. These financial results are a testament of the Group’s continuous financial stability and its growth momentum”.

Speaking on the financial performance of the Group, Managing Director/CEO of HNBA and HNBGI, Deepthi Lokuarachchi stated, “Despite many tough challenges in a rapidly changing market, the Group has made significant strides by creating a stronger platform for growth by delivering a steady financial performance. This growth momentum of the Group showcases the strength of our business strategy and we are confident that both our Life and General Insurance companies will reach out as strong players in this industry.”
www.sundayobserver.lk

Sri Lanka's Ceylinco Insurance June quarter net profit up 75-pct

ECONOMYNEXT - Sri Lanka's Ceylinco Insurance Plc said net profits rose 75 percent in the June 2017 quarter to 894 million rupees from a year earlier.

Ceylinco Insurance reported earnings of 33.84 rupees per share for the quarter, according to interim results filed with the stock exchange. The share last traded at 1,400 rupees.

Net written premiums after re-insurance costs grew 5.0 percent to 6.9 billion rupees, the accounts showed. Non-life premiums grew 11.5 percent and life rose 3.2 percent.

Investment income increased 31 percent from a year earlier to three billion rupees in the quarter.

Claims rose 11 percent to 3.6 billion rupees. Income tax expenses more than doubled to 284 million rupees. Ceylinco Insurance is liable to income tax at the rate of 28%.

The company said in a statement its investment portfolio reached 92.4 billion rupees as at 30th June 2017, up 14 per cent since 31st December 2016.

“We believe this performance is a good illustration of the momentum that has kept the company ahead of the competition for the past 13 years,” Ceylinco Life Managing Director/CEO R. Renganathan said.

“General business sentiment remains somewhat subdued and the insurance market is fiercely competitive.”

Total assets grew to 144.5 billion rupees from 130.8 billion rupees in December 2016.

Sri Lanka's Kotagala Plantation says shortfall in debenture sinking fund

ECONOMYNEXT - Sri Lanka's Kotagala Plantations Plc says a sinking fund to repay a billion rupee debenture has a shortfall as it had not made payments as required.

The sinking fund to repay a billion rupee bond issued in 2014 "has not been made in the manner stipulated" in a trust deed, the firm said in a stock exchange filing, without disclosing the shortfall.

"The company is currently evaluating multiple options available in respect of bridging this deficit, and intends on making good the shortfall during the course of the next three months," the firm said.

The Trustee of the transaction has been informed of the actions being planned, the firm said.

Kotagala said interest payments have been made on the time it expects to make future interest payments and the capital, when it falls due.

In May, Fitch Ratings downgraded the firm's debt from 'B+(lka)' to 'CC(lka)' amid falling tea prices and deteriorating liquidity. An investment in Cambodia may require further debt, Fitch warned.

This year, better tea prices may improve profits and oil palm may help in the long term when they start to bear.

Sri Lanka's Janashakthi Insurance net down in June

ECONOMYEXT - Profits at Sri Lanka's Janashakthi Insurance fell 50 percent to 135 million rupees in the June 2017 quarter from a year earlier amid a one-off 133 million rupee impairment cost, interim accounts showed.

The group reported earnings of 25 cents per share for the quarter. In the six months to June, it reported earnings of 65 cents per share on total profits of 352 million rupees, which were down 44 percent.

Gross written premium was up 7.6 percent to 3.4 billion rupees and net earned premium after re-insurance was 1.3 percent lower at 2.8 billion rupees. In the six months to June, gross written premium was up 10.6 percent.

"..[W]e have been able to maintain the momentum gained during Q1 2017 and register double-digit growth in premiums through the first six months of the year," Managing Director Prakash Schaffter said in a statement.

Its life insurance division was being re-structured to bring better results in the future, the firm said.

In the June quarter, the firm paid 1.78 billion rupees in claims and benefits to customers, up 6.2 percent from a year earlier.

Investment income rose 16.6 percent to 584 million rupees. However, an impairment charge of 133 rupees, reduced profits.

Gross group assets grew from 32 billion rupees to 34 billion rupees in the six months to June. Net assets was at 8.95 billion rupees, marginally down from 9.0 billion rupees in December.

Sri Lanka’s Dankotuwa Porcelain June net profit up sharply

ECONOMYNEXT - Sri Lankan tableware manufacturer Dankotuwa Porcelain said net profit shot up 880 percent to 29 million rupees in the June 2017 quarter from a year ago.

Sales of the group were stagnant at 565 million rupees, according to interim results filed with the stock exchange.

Dankotuwa Porcelain’s quarterly earnings per share were 18 cents compared with two cents the year before. Its share traded at 9.10 rupees on Thursday.

The company, which was hit by a strike in July over a pay dispute, had retired part of its debt, with 500 million rupees from its rights issue and plans to modernise its factory with the balance 222 million rupees.

The group includes Royal Fernwood Porcelain Limited, Lanka Decals (Private) Limited, Fernwood Lanka (Private) limited and Taprobane Capital (Private) Limited.

Sri Lanka's Colombo Dockyard makes Rs37mn loss in June quarter

ECONOMYNEXT – Sri Lanka’s Colombo Dockyard fell back into the red in the June 2017 quarter with a loss of 37 million rupees compared with a profit of 57 million rupees a year ago.

The firm had returned to profit in the March 2017 quarter with earnings of 141 million rupees.

Sales of the firm, a unit of Japan’s Onomichi Dockyard, rose 23 percent to 3.1 billion rupees in the June quarter from a year ago, according to interim results filed with the stock exchange.

Colombo Dockyard reported a loss per share of 51 cents. But, its earnings per share for the six months to June 2017 were 1.46 rupees, with sales up 37 percent to 7.2 billion rupees.

Revenues from ship repair and ship building rose in the half-year, but profits from ship building fell while earnings from ship repair rose. The yard had been hit hard by the prolonged slump in shipping, with clients cancelling new building orders or negotiating pries down.

It had managed to reduce loses to 432 million rupees in 2016 from 708 million rupees the year before.

Sri Lanka's Access short of construction labour

ECONOMYNEXT - Sri Lanka's Access Engineering said it faced shortages of skilled workers, and has started training schemes and had to import labour to complete projects.

"In common with the rest of the industry, the company faced serious challenges due to the scarcity of skilled labor," the firm told shareholders. "Faced with the situation, the company has, at times, resorted to engaging foreign labor in some of its large private sector projects.

"However, the company is addressing this problem by initiating its own training and development program, which is carried out at some of the vocational training centres including Don Bosco Technical Centre Facility in Negombo. Many persons have already been trained and absorbed into the permanent cadre under this programme."

The firm says training and skills development programemes are planned with the National Apprenticeship Board.

In the year to March 2016, the firm had revenue of 20.4 billion rupees, up from 17.6 billion a year earlier. Group employees rose to 3,237 from 2,625.

Sri Lanka's unemployment is falling and aspirational workers are seeking higher salaries and going to the Middle East and East Asian countries like Korea and Japan with stronger currencies. Factories also have vacancies.

Sri Lanka’s Pan Asian expects 25-pct return on hydro power investment

ECONOMYNEXT - Pan Asian Power said it had bought Lower Kotmale Oya Power Two (Pvt) Ltd., a special purpose vehicle company formed to develop two mini-hydro power plants on which it expects a 25 percent internal rate of return.

It said, in a stock exchange filing, that the SPV was formed to develop two cascade projects – the 2.0MW Lower Kotmale Oya II mini-hydro power project and the 1.0MW Medakumbura MHP.

The plants will use the water from Kotmale Oya in Pundaluoya township in the Nuwara Eliya district.

The restructured project is expected to start by mid-2018 after the remaining approvals are acquired, Pan Asian Power said.

The estimated total investment in the two power plants, which will generate 7.53 Giga watt hours a year, is 400 million rupees.

“The company expects the IRR on the investment to exceed 25 percent based on reasonable estimates,” it said.

“Due to convenient accessibility, short length of the structures and minimum environmental impact, management expects the timeline of construction to not exceed 12 months.”

Sri Lanka’s Udapussellawa Plantations back in profit

ECONOMYNEXT - Sri Lanka’s Udapussellawa Plantations returned to profit in the June 2017 quarter with earnings of 103 million rupees compared with a loss of 22 million rupees the year before as tea prices improved.

Sales of the firm, part of James Finlay Plantation Holdings (Lanka) Limited, rose 46 percent to 724 million rupees.

Earnings per share were 5.29 rupees for the quarter. Udapussellawa Plantations shares last traded at 32.40 rupees.

EPS in the six months to June 2017 was 10 rupees, with net profit of 194 million rupees against a loss the previous year, and sales up 40 percent to 1.3 billion rupees.

Sri Lanka’s RIL Property reports full occupancy, expands bakery chain

ECONOMYNEXT – RIL Property Limited (RIL), a developer, owner and operator of commercial office space in the Sri Lankan capital Colombo, said net profit rose 37 percent to 78 million rupees in the June 2017 quarter from a year ago.

Sales rose 14 percent to 248 million rupees in the quarter, according to interim results filed with the stock exchange.

Earnings per share were 13 cents. The share last traded at 7.80 rupees on Friday.

RIL Property Chairman Sunil Wijesinha said Parkland, its 22-floor office complex in the heart of Colombo, reached 100 percent occupancy during the quarter and the firm had begun refurbishing the Readywear building in the same location.

The company was expanding its outlets of Bread Talk, a Singaporean food chain, with two outlets opened in the Maharagama and Mount Lavinia suburbs becoming fully operational during the quarter.

Sri Lankan shares snap five days of falls on bargain-hunting

Reuters: Sri Lankan shares rose on Friday on bargain-hunting following five consecutive sessions of falls and after a top official said the government would address concerns about a possible tax on trading stocks.

The Colombo stock index rose 0.44 percent, or 28.16 points, to 6,436.28, but shed 0.8 percent for the week. On Thursday, it had closed at its lowest level since April 18.

"The market bounced back with bargain hunting," said Hussain Gani, deputy CEO at Softlogic Stockbrokers.

"The government addressing tax concerns also helped to install investor confidence."

The Colombo stock index had shed 3.9 percent through Thursday since July 27 and slid in 14 out of 15 sessions due to a string of disappointing June-quarter corporate results and speculation that the new tax reform bill will impose a tax on trading stocks.

Junior Finance Minister Eran Wickramaratne said on Thursday that these concerns would be addressed before the proposed bill is passed in the parliament.

Foreign investors bought shares worth a net 42.9 million rupees ($279,843.44) on Friday, extending the year-to-date net inflow to 27.7 billion rupees.

Turnover was 622.4 million rupees, less than this year's daily average of around 870 million rupees.

Shares of Lanka ORIX Leasing Co Plc gained 4.5 percent, Sri Lanka Telecom Plc ended up 2.7 percent, Hatton National Bank Plc ended 1.2 percent firmer and conglomerate John Keells Holdings Plc rose 0.3 percent. 

($1 = 153.3000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Sri Lankan shares mark 4-mth closing low in thin trade

Reuters: Sri Lankan shares fell for a fifth session on Thursday, posting their lowest close in four months, as local investor sentiment was subdued following a string of disappointing June-quarter corporate results.

However, the decline was limited as foreign investors bought into equities.

The Colombo stock index fell 0.14 percent, or 9.29 points, to 6,408.12, its lowest close since April 18.

The bourse has fallen 3.9 percent since July 27 and slid in 14 out of 15 sessions due to a fall in June-quarter profit and speculation that the new tax reform bill will impose a tax on trading stocks.

However, State Finance Minister Eran Wickramaratne on Thursday said the concerns on the tax will be addressed.

"The market somewhat recovered and still we see investors buying stocks which have value," said Hussain Gani, deputy CEO at Softlogic Stockbrokers.

Foreign investors bought shares worth a net 13.6 million rupees ($88,744) on Thursday, extending the year-to-date net inflow to 27.7 billion rupees.

Turnover was 334.9 million rupees, less than half of this year's daily average of around 871.7 million rupees.

Shares of C T Holdings Plc lost 7.8 percent, while Nestle Lanka Plc ended 2.2 percent weaker, Melstacorp Ltd fell 1.9 percent and Hatton National Bank Plc declined 1.1 percent. 

($1 = 153.2500 Sri Lankan rupees) 

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

Bukit Darah Leisure sector 1Q records 20.5% YoY increase

Portfolio and Asset Management sector of Bukit Darah is currently evaluating several investment opportunities in the venture capital space as well as revitalizing its marketing strategy with the objective of increasing the client base and deriving enhanced returns.

Meanwhile for the three months ended June 2017, the revenue contribution from Portfolio and Asset Management sector of Bukit Darah group marginally declined by 3% to Rs. 183.3 million(Mn) from Rs.188.4Mn observed in the previous corresponding period.

Pegasus Reef hotel operated with its full room capacity of 140 rooms during the three months under review whereas during the comparative three months period in 2016, room refurbishment was commenced.
www.dailynews.lk

Amãna Bank Rights Issue infuses USD 22 mn FDI

Amãna Bank’s recently concluded 1 for 1 Rights Issue brought in Foreign Direct Investments valued at over USD 22 million to Sri Lanka.

Rights Issue which was oversubscribed increased the Bank’s capital by Rs. 4.75 billion of which Rs.3.37 billion was from overseas shareholders.

IB Growth Fund (Labuan) LLP an investment firm under the aegis of the Islamic Development Bank (IDB) was the main subscribers to the Rights Issue, infusing a fresh capital of Rs. 2.4 billion along with IDB. IDB is a ‘AAA’ multilateral development financial institution which has over 50 countries as its membership. IDB’s subsidiary the Islamic Corporation for the Development of the Private Sector (ICD) , which oversees investments made by its subsidiary IB Growth Fund (Labuan) LLP, completed a 3 month comprehensive due diligence of Amãna Bank prior to committing their investment at the 42nd Annual Meeting of IDB Governors held in Jeddah.

Sharing his views on the inflow of foreign funds, Amãna Bank’s Chairman Osman Kassim said “At a time when the country’s focus is to increase FDIs, we are truly honoured to have had the support and confidence of our overseas shareholders, which has resulted in majority of our Rights Issue funds coming in as FDIs.

I am indeed thankful for IDB’s continued patronage despite Sri Lanka not being an IDB member country. ”

The IDB Group along with the participation of other overseas and local strategic shareholders will play a key role in supporting Amãna Bank to capitalize on the growing market potential for its unique and people friendly banking model across the country.

www.dailynews.lk

Nations Trust Bank 1H PBT up by 27%

Nations Trust Bank closed the first half ending June 30, 2017 with a pre- tax profit of Rs. 2,977 million (Mn) up by 27% over the corresponding period in the previous year.

Post tax profits increased at a lower rate of 12% as a result of the increase in the effective tax rate stemming from higher financial services VAT as well as the additional tax provision of Rs. 90 Mn for the inter company dividend transfer which impacted the Group bottom line growth. However the dividend income received from the subsidiaries resulted in a higher profit growth for the Bank and further strengthened the capital base of the Bank. Performance was driven by the momentum achieved in the Bank’s core activities which posted a revenue growth of 21% while the operating expenses increase was kept at 11%.

The resulting improvement to operating margins were somewhat subdued by higher impairment charges for the period under review. Net interest income increased by 19% as the volume growth outperformed the impact arising from the narrowing of NIMs.

Interest income increased by 45% whilst interest expense increased at a faster rate of 70% as deposit rates in the market continued to increase due to tight liquidity.

Net fees and commission based income recorded a growth of 32% primarily driven by cards and trade related products. Other operating income also recorded good growth due to non trade related FX income. Net trading losses for the year amounted to Rs. 267Mn which is reflective of the swap cost arising from an increase in the funding FX SWAP book and unfavorable movements in forward premiums.

www.dailynews.lk

CB suspends Pan Asia Bank primary dealership for 6 months

LBO - Sri Lanka’s Central Bank has suspended business activities of the primary dealer of Pan Asia Banking Corporation (PABC) for a period of six months with effect from Tuesday.

Releasing a statement, the Central Bank said the regulatory action is based on the findings of an investigation carried out by them related to PABC’s transactions with Perpetual Treasuries in the government securities market.

“The Central Bank wishes to inform the general public that the above regulatory action does not in any way affect PABC’s ability to carry on banking activities set out in Schedule II of the Banking Act as a Licensed Commercial Bank.”

“Accordingly, PABC may continue to deal in government securities to the extent permitted under schedule II of the Banking Act.”

The Central Bank said action will also be taken to safeguard the interests of the customers and counterparties of PABC in the government securities market, in an orderly manner.

The Central Bank emphasized that this regulatory action restricts PABC’s access to the primary auctions for government securities but does not affect any of the other services of PABC.

Earlier last month, the monetary board of the Central Bank suspended Perpetual Treasuries from carrying on the business and activities of a primary dealer for a period of six months.

Sri Lanka distilleries net down amid tax hikes, consumer crunch

ECONOMYNEXT - Distilleries Corporation of Sri Lanka, the country's largest hard alcohol marker, saw profits plunge 63.9 percent to 579 million rupees in the June quarter as revenues stayed flat amid weak demand.

The firm reported earnings of 1.93 rupees per share for the quarter. Distilleries is part of Melstacorp, and is no longer traded following a share swap.

In the June quarter, gross revenues rose 0.2 percent to 21.34 billion rupees, and net revenues after sales taxes rose 8.4 percent to 6.69 billion rupees, but costs surged 8.4 percent to 5.2 billion rupees, shrinking gross profits 50 percent to 1.42 billion rupees.

Total revenues are down from the 22.6 billion rupees reported in the March quarter.

Industry analysts say the Distilleries was hit by higher import taxes on ethanol imposed after the last budget, while value-added taxes re-imposed in full also added to the total price.

Some competitors are, however, selling below the market leader's price, raising questions over excise tax administration, they say.

The high price of legal arrack as well as strong beer has raised questions whether moonshine is taking legal market share.

Beer sales are sharply down at the expense of hard liqour after the new administration raised beer taxes faster. In the past, taxes on beer were below the actual alcohol content, according to promoters of higher beer taxes.

Meanwhile, several publicly traded consumer firms have reported weaker sales, pointing to larger weakness in demand.

In 2015, Sri Lanka's Central Bank printed tens of billions of rupees to help finance an expanded budget deficit, and driving credit to unsustainable levels, in a so-called 'Keynesian stimulus' generating a balance of payments crisis and capital flight.

It is usual for demand to come down during the Keynesian hangover phase, analysts say, especially when the centarl bank collect forex reserves, amid slowing credit.

Sri Lanka's Commercial Bank net up 17-pct in June

ECONOMYNEXT - Sri Lanka's Commercial Bank of Ceylon said net profits rose 17.8 percent from a year earlier to 3.8 billion rupees in the June 2017 quarter, with incremental growth in fund- and fee-based income.

The group reported earnings of 4.15 rupees per quarter. In the six months to June, the group reported earnings of 8.26 rupees per share on total profits of 7.6 billion rupees, which rose 17 percent. In mid-day trading on Monday, the stock was up 50 cents to 138.00 rupees.

Interest income for the quarter rose 30 percent to 25.5 billion rupees, and interest expenses increased 41 percent to 16.2 billion rupees, and net interest income grew at a slower 15 percent to 9.3 billion rupees.

Loan losses rose 24 percent to 708 million rupees, with a general provision of 648 million rupees. Fee and commission income was up 33 percent to 2.0 billion rupees. Net gains and losses from trading was 482 million rupees against a 1.89 billion rupee loss in the last quarter.

Other income was down to 271 million rupees down from 2.33 billion rupees a year earlier.

In the six months to June, the group loan book grew 8.5 percent to 673 billion rupees. Deposits also grew 8.2 percent to 804 billion rupees.

The gross non-performing loan ratio fell to 2.1 percent from 2.18 percent.

Financial instruments available-for-sale was up 1.5 percent to 162 billion rupees, and the held-to-maturity portfolio grew 4.9 percent to 66.7 billion rupees.

Total assets rose 7.2 percent to 1,095 billion rupees. Equity was up 22 percent to 97.6 billion rupees. Core capital adequacy at bank level rose from 11.5 percent to 12.2 percent and total capital adequacy rose from 15.9 percent to 17.2 percent.

Sri Lanka hospital profits boosted by Dengue: Hemas

ECONOMYNEXT - Sri Lanka's Hemas Group said falling profits from price controls on pharmaceuticals and currency depreciation was contained by a dengue epidemic, which has boosted occupancy at its hospitals.

Although pharmaceutical sales increased, profits were hit, the group said.

"However, this decline in profitability was mitigated by the strong growth in hospitals," Chief Executive Steven Enderby told shareholders. "Hospitals operated at high capacity levels over the quarter in part due to the dengue epidemic."

Hemas said consolidated healthcare revenues grew 18.7 percent to 5.1 billion rupees, which grew operating profits 22.4 percent.

Meanwhile, Sri Lanka imposing price controls on pharmaceuticals has busted the currency from 131 rupees to 154 rupees from early 2015, printing money through a soft pegged Central Bank. Central Bank money printing also worsens the credit cycle, creating booms and busts. The latest balance of payments crisis came from money printed to finance a state salary hike and vote-buying subsidies.

But now, the economy is going through a correction, with more taxes being raised to finances state spending and income redistribution. State spending usually gives less 'bang-for-buck' as it has no incentive to choose the best return for other people's money.

Hemas said its Bangladesh operations was also in the midst of a restructuring, and the leisure sector suffered losses. Its logistics unit grew 80 percent with shipping, helped by agencies for Evergreen and Far Shipping.

In the June quarter, group profits were down a marginal 3 percent to 694 million rupees. The group reported earnings of 1.21 rupees for the quarter. In mid-day trading on Monday, the stock was up 4.0 rupees to 144.

Revenues grew 14.9 percent to 11.3 billion rupees, cost of sales grew at a faster 17 percent to 7.1 billion rupees and gross profits rose 11 percent to 4.1 billion rupees.

Sri Lanka's Bogawantalawa Tea June net profit up 56-pct

ECONOMYNEXT – Sri Lanka’s Bogawantalawa Tea Estates reported that net profit rose 56 percent to 79 million rupees in the June 2017 quarter from a year ago, with exports fetching high prices during the period.

Sales of the firm, part of Metropolitan Resources Holdings, rose 17 percent to 1.2 billion rupees, according to interim accounts filed with the stock exchange.

Earnings per share were 94 cents compared with 60 cents the previous year. The share last traded at 15.40 rupees on Monday.

June quarter profit came from tea, with its small rubber business showing losses.

Sri Lanka's Serendib Hotels losses more than double in June quarter

ECONOMYNEXT – Sri Lanka’s Serendib Hotels group losses more than doubled to Rs72 million in the June 2017 quarter from a year ago with occupancy levels lower amid stiff competition from other hotels and informal accommodation.

Sales of the firm, part of the Hemas Holdings group, fell three percent to Rs303 million, according to interim accounts filed with the stock exchange.

The loss per share was 65 cents compared with 30 cents the year before. The Serendib Hotels share last traded at Rs24.10 Monday.

Serendib Hotels Executive Director Malinga Arsakularatne said the group had an average occupancy of 60% during the quarter under review, down 7 percent from last year.

“However, the loss in room nights was compensated by a 10% increase in the average room rates in rupee terms,” he said.

Club Hotel Dolphin achieved an occupancy of 66% and Avani Bentota achieved 59%, while Sigiriya achieved only 49%.

Arsakularatne said losses were also because of increased food and beverage costs, largely due to an increase in the all-inclusive package mix particularly in Club Hotel Dolphin.

Bad debt and other one-off provisions, higher IT-related expenses and amortization due to new systems implementations, and business development expenses also contributed to losses.

“While the industry is set to grow in terms of supply as well as demand, we expect the rest of the financial year to continue to be challenging,” Arsakularatne said.

“There seems to be an increasing trend towards the emerging traveler seeking alternative types of accommodation such as boutique hotels and villas, backpacking lodges etc, at the expense of the traditional tourist seeking mainstream hotels and resorts.”

The Serendib Hotels group comprises of Serendib Hotels and its subsidiaries, Dolphin Hotels, Hotel Sigiriya and Serendib Leisure Management Ltd.

It also manages AVANI Bentota Resort & Spa, AVANI Kalutara Resort, Club Hotel Dolphin and Hotel Sigiriya with a total of 413 rooms.

Jada Resorts & Spa (Pvt) Ltd., the owning company of Avani Kalutara, is treated as an investment and its earnings were not included in the accounts.