Hayleys, Seylan Bank, Tokyo Cement in S&P Sri Lanka 20 Index

ECONOMYNEXT – The Colombo Stock Exchange (CSE) has included Hayleys, Seylan Bank and Tokyo Cement Company (Lanka) in the S&P Sri Lanka 20 index, which tracks the top 20 largest and most liquid stocks.

They replaced Asiri Hospital Holdings, Cargills Ceylon and Dialog Axiata a semiannual rebalance of the index, previously conducted annually, decided in March 2017 and taking place during June and December each year, the bourse said in a statement.

“The revision also established the inclusion of non‐voting ordinary shares listed by the respective companies of the S&P SL 20 Index, provided that such shares meet relevant liquidity requirements,” it said.

The exclusions and inclusions as announced by S&P Dow Jones Indices are effective from 19 June 2017.

The S&P SL 20 index includes the 20 largest companies by total market capitalization listed on the CSE that meet minimum size, liquidity and financial viability thresholds.

The constituents are weighted by float-adjusted market capitalization, subject to a single stock cap of 15%, which is employed to reduce single stock concentration.

The CSE said the S&P SL 20 index has been designed in accordance with international practices and standards.

All stocks are classified according to the Global Industry Classification Standard (GICS®), which was co-developed by S&P Dow Jones Indices and MCSI and is widely used by market participants throughout the world.

To be eligible for inclusion, a stock must have a minimum float-adjusted market capitalization of 500 million Sri Lankan rupees, a six-month median daily value traded of rupees 0.5 million, have been traded at least 10 days of each month for the three months prior to the rebalancing reference date, and have positive net income over the 12 months prior to the rebalancing reference date.

Effective from 19 June 2017 the stocks in the S&P SL 20 in alphabetical order (including four non‐voting ordinary shares) are as follows.

No. Constituent CSE Ticker
1 Access Engineering PLC AEL.N0000
2 Aitken Spence PLC SPEN.N0000
3 Ceylon Cold Stores PLC CCS.N0000
4 Ceylon Tobacco Company PLC CTC.N0000
5 Chevron Lubricants Lanka PLC LLUB.N0000
6 Commercial Bank of Ceylon PLC COMB.N0000
7 Commercial Bank of Ceylon PLC Non-Voting COMB.X0000
8 DFCC Bank PLC DFCC.N0000
9 Hatton National Bank PLC HNB.N0000
10 Hatton National Bank PLC Non-Voting HNB.X0000
11 Hayleys PLC HAYL.N0000
12 Hemas Holdings PLC HHL.N0000
13 John Keells Holdings PLC JKH.N0000
14 Lanka Orix Leasing Company PLC LOLC.N0000
15 Melstacorp PLC MELS.N0000
16 National Development Bank PLC NDB.N0000
17 Nestle Lanka PLC NEST.N0000
18 People's Leasing & Finance PLC PLC.N0000
19 Sampath Bank PLC SAMP.N0000
20 Seylan Bank PLC SEYB.N0000
21 Seylan Bank PLC Non-Voting SEYB.X0000
22 Teejay Lanka PLC TJL.N0000
23 Tokyo Cement Company (Lanka) PLC TKYO.N0000
24 Tokyo Cement Company (Lanka) PLC Non-Voting TKYO.X0000

Sri Lanka’s Lanka Ceramics diversifies into quartz, palm oil

ECONOMYNEXT - Lanka Ceramics Group plans to diversify into quartz manufacturing for the ceramic tile industry, as well as into palm oil, Chairman Dhammika Perera has said.

The group, which includes tile factories, plantations and packaging, is committed to expanding its customer base further by including a wider range of ceramic product supplies, he told shareholders in the firm’s annual report.

Lanka Ceramic, the mining arm of the group, also intends to improve production capacity and the quality of its plants and quarries through investment in new technology and clay mining lands.

“We have embarked on the diversification of our product portfolio with a foray into quartz manufacturing for the ceramic tile industry,” Perera said.

Lanka Ceramic is also supplying crushed and powdered dolomite to the manufacturing industry as raw material and mineral fertilizer for the plantation sector, he said.

The group will also increase manufacturing capacity in tile and aluminium production.

“Our plans for the plantation business consist of diversification into other crops such as palm oil, while improving productivity,” Perera said.

Sri Lanka Royal Ceramics increasing production of porcelain tiles

ECONOMYNEXT – Sri Lanka’s Royal Ceramics is expanding capacity at its factory by 35 percent, with a 1.2 billion rupee investment in 2017, which will increase the production of porcelain floor tiles for which demand is high.

The expansion project is expected to be completed in October 2017, according to the group’s latest 2016-17 report.

The Royal Ceramics Lanka complex in Eheliyagoda now has a capacity of 5,000 square meters. It produces homogeneous full body porcelain tiles, where the pigment is in the entire tile body, making scratches less noticeable and better used for high traffic areas, along with glazed porcelain tiles under the ‘Rocell” brand.

Porcelain tiles are fired at higher temperatures for a longer time than ceramic, have higher feldspar content, and are much harder and more durable, and less prone to moisture and stain absorption than ceramic tiles, apart from being more expensive.

“One of the advantages of the expansion will be the factory’s ability to increase production of full body porcelain floor tiles for which there is high demand in the market,” the Royal Ceramics annual report said.

It said the project will include the addition of ‘Double Charge technology’ from Italy, where patterns are printed with a double layer of pigment, resulting in a long-wearing tile surface, suitable for heavy traffic commercial projects.

Sri Lanka 01-year Treasuries yield falls

ECONOMYNEXT – The yield on one-year Sri Lankan Treasury Bills fell three basis points to 10.47 percent at an auction on Wednesday from last week, the public debt department of the Central Bank said.

The yield on six-month Treasury Bills eased one basis point to 10.29 percent, while the three-month bill yield remained steady at 9.60 percent, a statement said.

The debt office said it got 62.7 billion rupees worth of bids and accepted bids worth 30 billion rupees.

Anilana’s inflated pricing catches up

By Duruthu Edirimuni Chandrasekera

Anilana Hotels and Properties PLC (Anilana) which has negotiated with Sampath Bank PLC on a repayment schedule to settle its dues some time ago found its public offer application rejected by the authorities, informed sources said.

The company whose Initial Public Offering (IPO) was rejected by the Securities and Exchange Commission (SEC) in 2012 (during the now SEC Chairman Thilak Karunaratne’s earlier tenure in the same capacity) ultimately managed to raise Rs. 486.6 million after the application was approved during the then SEC Chairman Nalaka Godahewa’s time in 2013.

The SEC rejected Anilana’s IPO after accounting watchdog Sri Lanka Accounting and Auditing Standards Monitoring Board (SLAASMB) which monitors company financial statements revealed how inflated Anilana’s balance sheet was that it led to their IPO application being rejected, SEC sources told the Business Times.

These are part of the International Financial Reporting Standards (IFRS) and SLAASMB was concerned by IFRS 13 which relates to fair value measurements, the source added.

Anilana’s IPO application had re-valued property at a substantial valuation. SLAASMB, after consulting the Chief Valuer didn’t accept Anilana’s argument that these are the correct estimates as they had bought these lands at a cheap price during the war and now their value had escalated SLAASMB told the SEC not to allow the IPO to proceed.

Defying all this, the IPO was granted the green light a year later and the company is now submerged in debt.

Anilana said that they will settle their overdue portion of the credit facilities at Sampath with an initial lump sum payment and made settlements in two installment on 5th and 9th May 2017 while promising remainder of the overdue balance on or before 31st July 2017.

The company was targeting largely up-market traveller segment with plans to become the leading hotelier in the East Coast.

Anilana in a stock announcement on Monday said the directors already made arrangements to settle Sampath Bank PLC on or before next month end, but didn’t reveal the action plan.

Sampath had published four notices on their Board resolutions to auction mortgaged property in a national daily mid this month – two pertaining to Anilana alone and two regarding Anilana and Eastern Development Enterprises (Pvt) Ltd.

Values of defaulted credit facilities as at February, the notice said amounted to a total of Rs. 1.323 billion, Rs. 404 million, Rs. 130 million, Rs. 744 million and Rs. 45 million.

The firm whose principal activity is developing hotels and properties and has mortgaged land is in Nilaveli, Passikudah and Vakarai.

Last year Dhammika Perera, businessmen and entrepreneur, was trying to buy Anilana’s Trincomalee Property, but the deal full through after the price quoted was too high. The Anilana team wasn’t available for comment.

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Constant Default Board entrees to be delisted from CSE

By Duruthu Edirimuni Chandrasekera

Sri Lanka’s capital market regulators are to take action against publicly listed firms that have a lackadaisical attitude towards rules and regulations.

The Colombo Stock Exchange (CSE) and the Securities and Exchange Commission (SEC) are mulling to strike off/delist errant firms that constantly enter the default board of the CSE, informed sources say.

Most firms enter the Default Board owing to non submission of annual or interim accounts. “The SEC wants to de list these companies who repeatedly offend and get onto the Default Board,” a source told the Business Times. He said that they’re mulling delisting those that enter this board consecutively for three years.

In 2013, 17 companies were transferred to the Default Board with effect from September that year due to Non-Submission of Annual Report 2012/2013.

They were Asia Capital, The Autodrome, Ceylon & Foreign Trades, Central Investments & Finance, C T Holdings, East West Properties, Huejay International Investments, PC House, People’s Merchant Finance, Radiant Gems International, Standard Capital, Asia Asset Finance, Orient Garments, PC Pharma, PCH Holdings, Ramboda Falls and Tess Agro.

Anilana Hotel and properties, Tess Agro Swadeshi Industrial works and East West Properties were transferred last week.

The Asian Development Bank (ADB) with which the government entered into an agreement last year for a loan of US$250 million from the Ordinary Capital Resources Fund of the Bank to implement the Capital Market Development Programme (CMDP) has also strongly advocated this decision, he added.

Under the CMDP it is desired to develop efficient, stable and transparent capital markets that are a highly proficient conduit for resource mobilsation and that are grounded in a strong legal and regulatory framework. Increasing the capacity and size of the capital market through enhanced market facilitation, demand measures and supply measures are also identified as objectives of the CMDP. The ADB is pushing toward s progressive proposals.

The proposed loan by ADB will be disbursed in two tranches of approximately $125 million each, based on the accomplishment of the policy actions relevant for each of the tranches. The Ministry of Finance will be the executive agency of the programme whereas Central Bank, SEC, Sri Lanka Insurance Board and Sri Lanka Accounting and Auditing Standards Monitoring Board will be the implementing agencies.

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