Primary asset stands there, share buy back in restructure plan
York Arcade Holdings PLC, a member of the Colombo Fort Land and Buildings Group, does not intend renewing the lease on a prime Fort site at York Arcade it leased from its parent for 33 years to develop a commercial building at Nos. 27 and 8 Leyden Bastian Road, the company’s chairman, Mr. A. Rajaratnam, has told shareholders in the company’s annual report.
"Your company’s primary asset – the building constructed at 27 and 8 Leyden Bastian Road, is on a land leased from the Colombo Fort Land and Buildings PLC. The leasehold tenure is coming to an end and the board of York Arcade Holdings PLC has decided that it is not economically feasible for the company to renew the lease," he said.
"The directors of the company will evaluate alternative business opportunities for the company to continue its operation."
The lease ended on August 31, 2017. The report says that subsequent to its expiration, York Arcade Holdings will not generate rent income which is its primary income and hence not incur direct costs.
Under terms of the lease, the land owner (Colombo Fort Land and Buildings) is required to pay York Arcade Holdings 66% of the cost of construction of the building which stands on the property. The cost of construction was Rs. 131.6 million and Rs. 86.86 million is recoverable by York Arcade.
A valuation report by a Chartered Valuation Surveyor has placed the value of the building as at March 31, 2016 as Rs. 104.1 million.
Rajaratnam said that following the decision not to renew the land lease, the directors, having analyzed the existing capital structure of York Arcade Holdings, had decided to restructure the capital "in order to maximize returns to shareholders."
The board had recommended that the restructuring be carried out by way of the repurchase of 4.5 million ordinary shares of the company at a price of Rs. 17 per share which would be followed by the consolidation of the remaining shares subject to shareholder and regulatory approval
The year ended March 31, 2017, ended with York Arcade Holdings increasing revenue by 30% to Rs. 80.2 million and profit after tax by 111% to Rs. 33.1 million – a 10-year high according to data published in the annual report. The written down value of it investment property stood at Rs. 91.6 million, down 11% from a year earlier.
According to its balance sheet, the company had a stated capital of Rs. 14.4 million, retained earnings of Rs. 178.8 million and total assets of Rs. 260.5 million in its books as at March 31, 2017. Total liabilities were Rs. 53.1 million.
The York Arcade share traded between Rs. 12.30 and Rs. 17.20 during the year under review closing at Rs. 12.50. This compared to a trading range of Rs. 9.90 to Rs. 17.50 closing at Rs. 13 the previous year.
The Colombo Fort Land and Buildings Company PLC with 49.27% is the top shareholder of the company with other group companies too being on the Top 20 list.
The directors of the company are: Messrs. S. Rajaratnam (chairman) (alternate Mr. SDR Arudpragasam), J. Theyagamurti, S. Shanmugalingam, AM de S. Jayaratne, SNP Palihena, GDV Perera and S. Rajaratnam.
York Arcade Holdings PLC, a member of the Colombo Fort Land and Buildings Group, does not intend renewing the lease on a prime Fort site at York Arcade it leased from its parent for 33 years to develop a commercial building at Nos. 27 and 8 Leyden Bastian Road, the company’s chairman, Mr. A. Rajaratnam, has told shareholders in the company’s annual report.
"Your company’s primary asset – the building constructed at 27 and 8 Leyden Bastian Road, is on a land leased from the Colombo Fort Land and Buildings PLC. The leasehold tenure is coming to an end and the board of York Arcade Holdings PLC has decided that it is not economically feasible for the company to renew the lease," he said.
"The directors of the company will evaluate alternative business opportunities for the company to continue its operation."
The lease ended on August 31, 2017. The report says that subsequent to its expiration, York Arcade Holdings will not generate rent income which is its primary income and hence not incur direct costs.
Under terms of the lease, the land owner (Colombo Fort Land and Buildings) is required to pay York Arcade Holdings 66% of the cost of construction of the building which stands on the property. The cost of construction was Rs. 131.6 million and Rs. 86.86 million is recoverable by York Arcade.
A valuation report by a Chartered Valuation Surveyor has placed the value of the building as at March 31, 2016 as Rs. 104.1 million.
Rajaratnam said that following the decision not to renew the land lease, the directors, having analyzed the existing capital structure of York Arcade Holdings, had decided to restructure the capital "in order to maximize returns to shareholders."
The board had recommended that the restructuring be carried out by way of the repurchase of 4.5 million ordinary shares of the company at a price of Rs. 17 per share which would be followed by the consolidation of the remaining shares subject to shareholder and regulatory approval
The year ended March 31, 2017, ended with York Arcade Holdings increasing revenue by 30% to Rs. 80.2 million and profit after tax by 111% to Rs. 33.1 million – a 10-year high according to data published in the annual report. The written down value of it investment property stood at Rs. 91.6 million, down 11% from a year earlier.
According to its balance sheet, the company had a stated capital of Rs. 14.4 million, retained earnings of Rs. 178.8 million and total assets of Rs. 260.5 million in its books as at March 31, 2017. Total liabilities were Rs. 53.1 million.
The York Arcade share traded between Rs. 12.30 and Rs. 17.20 during the year under review closing at Rs. 12.50. This compared to a trading range of Rs. 9.90 to Rs. 17.50 closing at Rs. 13 the previous year.
The Colombo Fort Land and Buildings Company PLC with 49.27% is the top shareholder of the company with other group companies too being on the Top 20 list.
The directors of the company are: Messrs. S. Rajaratnam (chairman) (alternate Mr. SDR Arudpragasam), J. Theyagamurti, S. Shanmugalingam, AM de S. Jayaratne, SNP Palihena, GDV Perera and S. Rajaratnam.
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