Audit reveals Sri Lanka Agalawatte Plantations loss over Rs1.2bn

ECONOMYNEXT – Re-audited accounts of Sri Lanka’s Agalawatte Plantations have revealed over Rs4.5 billion accumulated losses and liabilities with the new owners of the firm promising legal action against those responsible for the swindle.

“This catastrophic situation faced by the company had risen as a direct result of misappropriation of the company’s assets by the previous management and pure negligence in maintaining the state-owned assets leased to the company,” D R Investment (Pvt) Ltd. said in a stock exchange filing.

Re-audited accounts of Agalawatte Plantations show losses at over Rs1.2 billion and outstanding liabilities at over Rs3.3 billion as at December 2016 with the group’s net worth negative, it said.

D R Investment (Pvt) Ltd., an investment firm that’s part of the Damro furniture manufacturing group, said it would ask the government to extend the lease on Agalawatte estates and more time to settle outstanding lease rentals.

It also intends asking banks to restructure loans and write off outstanding interest payments and would also inject Rs1 billion as share capital by way of a rights issue.

The new management will also take legal action against the previous management for misappropriation of funds during their tenure and use the money to settle outstanding liabilities.

The value of several assets would need to be impaired including Rs106 million spent to build a tea museum at Labookellie estate “to exhibit the private assets of the former chairman,” the stock exchange filing said.

The Damro group last month bought Agalawatte Plantations from the Browns group which has acquired it in 2016 from the Mackwoods group with a legal battle erupting between former chairman Chris Nonis and other family members for control of the firm.

Melwa to invest USD 100Mn, manage six Hilton hotels in Sri Lanka

(LBO) – Hilton (NYSE: HLT) has signed six management agreements on Wednesday with Melwa Hotels & Resorts Private Limited to manage three Hilton Hotels and Resorts and three ‘Double Tree by Hilton’ properties in Sri Lanka.

This will mark the entry of the award-winning ‘Double Tree by Hilton’ brand in Sri Lanka and expands Hilton’s presence in the country.

The six new-build properties, including three resorts scheduled to opened between 2019 and 2025 are:

• Hilton Kandy Resort
• Hilton Yala Resort & Spa
• Hilton Kosgoda Resort
• DoubleTree by Hilton Nuwara-Eliya
• DoubleTree by Hilton Colombo International Airport
• DoubleTree by Hilton Negombo

“Our hotels are strategically located in the heart of key tourist destinations of Kandy, Yala, Kosgoda, Nuwara-Eliya, Colombo and Negombo, allowing them to reap the full benefits of the burgeoning growth in tourism in Sri Lanka,” said Guy Phillips, senior vice president, Development – Asia & Australasia, Hilton.

“We are pleased to be working with a partner of the experience and standing of Melwa Hotels & Resorts to advance our footprint within this dynamic country.”

Given Sri Lanka’s rich natural and cultural heritage, tourism is a chief propellant of economic growth. Sri Lanka’s tourism appeal is widely recognized, with the country ranked among the “Top 10 Coolest Countries” in the world to visit in 2015, by Forbes magazine.

Total international arrivals have been charting an impressive growth trajectory and in 2016, tourist arrivals surpassed all previous records to hit a new milestone of more than two million – a 14 percent increase from 2015.

The government has also launched a series of initiatives to grow tourism, embarking on key infrastructure developments such as expanding the national road network which will positively impact the six proposed hotels.

“We are delighted to add to our existing portfolio in Sri Lanka with our world-class Hilton Hotels &Resorts and DoubleTree by Hilton brands in highly attractive destinations within the country, and we look forward to welcoming guests with our renowned Hilton hospitality,” said Sean Wooden, vice president, brand management, Asia Pacific, Hilton.

“With few international hotel brands having a widespread presence throughout the country, Hilton will enjoy the first mover advantage in riding on Sri Lanka’s growth trajectory.”

Hilton Kandy, Hilton Yala Resort & Spa, Hilton Kosgoda Resort, Double Tree by Hilton Nuwara-Eliya, DoubleTree by Hilton Colombo International Airport and DoubleTree by Hilton Negombo will participate in Hilton Honors®, the award-winning guest-loyalty program for Hilton’s 14 distinct brands.

Hilton Honors members who book directly through preferred Hilton channels have access to instant benefits, such as an exclusive member discount, free standard Wi-Fi and a flexible payment slider that allows members to choose nearly any combination of Points and money to book a stay.

Members can also redeem their Points for free nights, and can gain access to unique events through the Hilton Honors auction platform.

Sri Lanka Dec quarter listed company earnings +5 pct: First Capital

Apr 03, 2017 (LBO) – Earnings of Sri Lanka’s listed companies grew 5 percent, year-on-year, during the December quarter supported by the banking and diversified sectors, First Capital said in a research report.

However, energy and utilities under-performed contributing to the slower growth in the quarter compared with 26.7 percent year-on-year growth during the September reporting season.

The banking sector was the largest contributor to earnings achieving a profit of 15.2 billion rupees, up 20 percent YoY, driven by stronger net interest margins and higher than expected private sector credit growth, despite increased VAT, First Capital said.

COMB (+26% YoY), HNB (+14% YoY) and SAMP (+67% YoY) represented 72 percent of sector earnings.

Improved performance in the Capital Goods Sector, which posted a net profit of 12.7 billion rupees (+14% YoY) was driven by JKH (+32% YoY) and DOCK (+93% YoY).

JKH saw strong retail segment and higher finance income with rising interest rates while DOCK experienced better margins via ship repair activities.

Market earnings were negatively affected by the Energy Sector which recorded a net profit of LKR 72Mn (-94% YoY) driven by LIOC (-71% YoY) & LGL (-170% YoY) which saw a steep dip in margins due to increased oil gas prices in the global market.

Utilities Sector posted a net loss of 14 million rupees (-102% YoY) due to lack of rainfall affecting many hydro power plants including VLL (-111% YoY) and VPEL (-70% YoY).

One-off events affected 4Q16 earnings, with losses of 74 billion rupees attributable to DIST during the quarter following share swap arrangement with MELS.

In addition, 5 companies of the CARS Group (+377% YoY) — BUKI (+509% YoY), SHAL (+20,060% YoY), INDO (+21,649% YoY), SELI (-826%) and GOOD (+52,245% YoY) — together recorded a total gain of 12.6 billion rupees attributable to disposal of plantation assets.

After adjusting for these gains and losses the sector resulted in a profit of LKR 9.1Bn (-7% YoY, adjusted).

Sri Lanka’s RIL Property IPO oversubscribed on opening day

ECONOMYNEXT – A share issue by RIL Property Limited (RIL), the owner and operator of commercial office space in the Sri Lankan capital Colombo, at Rs8 a share was oversubscribed on the opening day Tuesday.

RIL Property offered 120 million ordinary voting shares in the Initial Public Offering to raise Rs960 million.

RIL shares are expected to be traded on the Colombo Stock Exchange during the first week of May subsequent to processing of applications and payment of refunds, a statement said.

“We intend to execute our business plans to cater to the strong demand for commercial office spaces in Colombo and create value to our investors,” said Hiroshini Fernando, chief executive of RIL.

Tthe funds raised are to be used to refurbish an existing building adding approximately 60,000 square feet of Grade ‘A’ office space to the company’s portfolio and to expand the operations of Foodbuzz (Pvt) Ltd, its fully owned subsidiary holding the BreadTalk franchise in Sri Lanka.

A cornerstone investor tranche in line with regional market practices was introduced in the RIL IPO for the first time on the CSE to provide validation on the pricing and manage the success of the IPO, the statement said.

NDB Capital Holdings Limited (NCAP), the cornerstone investor, has committed to subscribe for up to 25,000,000 shares amounting to Rs200 million. NCAP is the parent company of NDB Investment Bank Limited (NDBIB), joint managers to the issue.

“We experienced strong demand for the IPO from value investors in the market,” said Nilendra Weerasinghe, Head - Corporate Advisory of NDBIB.

“The healthy appetite for real estate investments, particularly in the commercial office space segment, resulted in the IPO succeeding despite tough market conditions”.

Sushara Vidyasagara, Chief Manager of the Investment Banking Unit of Commercial Bank, lead manager and underwriter of the IPO, said: “RIL’s growth trajectory, strong track record, the successful development of its flagship commercial office complex Parkland combined with the reasonable valuation that was on offer generated investor interest for the IPO.”

Commercial Bank can subscribe up to a maximum of 37.5 million shares amounting to Rs 300 million.

Sri Lanka brush maker Beira group closes up after debut

ECONOMYNEXT – Shares of Sri Lanka's BPPL Holdings, a brush exporter also known as Beira Group, closed at Rs12.50, up 50 cents or 4% when trading started on the Colombo bourse Tuesday.

The firm, whose initial public offer of 30.68 million ordinary shares at Rs12 each was oversubscribed on the opening day, opened at Rs12.50 and traded between Rs13-12.40 with a turnover of Rs10.8 million and 853,881 shares traded.

Sri Lanka 03-month Treasuries yield hits 9.67-pct

ECONOMYNEXT – Yields on Sri Lankan Treasury Bills rose across the board at Wednesday’s auction with the 03-month bill yield rising 04 basis points to 9.67 percent, the public debt office, a unit of the central bank, said in a statement.

The yield on the 06-month bill rose 07 bp to 10.69 percent and the yield on the 01-year bill rose 04 bp to 11.02 percent at the auction.

The public debt office got bids worth Rs71.2 billion and accepted bids worth Rs25 billion.

Sri Lankan shares hit near 3-month closing high on foreign buying

Reuters: Sri Lankan shares rose on Wednesday to their highest close in nearly three months led by blue chips such as John Keells Holdings Plc, as continued foreign buying boosted sentiment.

The Colombo stock index ended 0.84 percent firmer at 6,198.32, its highest close since Jan. 16. The index rose 1.1 percent last week, posting its first weekly gain in six.

"Foreigners see value in some select blue chips now. Now, we see there is a demand for stocks mainly because foreign investors are buying them gradually," said Prashan Fernando, CEO, Acuity Stockbrokers.

Foreign investors net bought shares worth 231.6 million rupees ($1.53 million) on Wednesday, raising the year-to-date net foreign inflow to 6.07 billion rupees in equities. They have net bought 3.58 billion worth equities in the past 12 sessions.

Turnover stood at 640.7 million rupees, less than this year's daily average of 747.7 million rupees.

Shares of conglomerate John Keells Holdings Plc gained 2 percent, while Hatton National Bank Plc climbed 0.2 percent.

($1 = 151.5500 Sri Lankan rupees) 

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

Sri Lankan shares hit highest close in over six weeks on foreign buying

Reuters: Sri Lankan shares hit their highest closing in more than six weeks on Tuesday, as foreign buying boosted sentiment while block deals lifted the day's turnover, stockbrokers said.

The Colombo stock index ended 1.1 percent firmer at 6,146.69, its highest close since Feb. 17. The index rose 1.1 percent last week, posting its first weekly gain in six.

"Foreign buying and foreign interest on blue chips pushing the market up and we hope the trend will continue," said Atchuthan Srirangan, senior research analyst, First Capital Equities (Pvt) Ltd.

Foreign investors net bought shares worth 140.8 million rupees ($928,148) on Tuesday, raising the year-to-date net foreign inflow to 5.84 billion rupees in equities.

Turnover stood at 1.4 billion rupees, well above this year's daily average of 749.4 million rupees.

Shares of conglomerate John Keells Holdings Plc gained 2.14 percent, while Ceylon Cold Store Plc jumped 4.77 percent.

Ceylon Tobacco Company Plc climbed 1.73 percent, Hemas Holding Plc rose 3.18 percent and the biggest-listed lender Commercial Bank of Ceylon Plc gained 1.98 percent.



($1 = 151.7000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sherry Jacob-Phillips)