Senkadagala Finance posts highest ever pre-tax profit

Senkadagala Finance PLC, among the stronger finance companies in business in Sri Lanka, has closed the year ended Mar. 31, 2017, posting its highest ever profit before tax of Rs. 1.1 billion and profit after tax of Rs. 861 million described as "a noteworthy growth" of 40.41% from the previous year’s Rs. 613 million by its Managing Director Lakshman Balasuriya.

The company which hopes to celebrate its 50th anniversary next year by opening its hundredth branch has also grown its asset base to Rs. 30.9 billion, a commendable achievement Balasuriya said, given that it topped the Rs. 20 billion benchmark only in 2015/16.

Similarly, loans and advances were up 40.5% to Rs. 23.75 billion and the company had been able to break even in the majority of the branches it has opened in the recent past.

Senkadagala, a finance company founded by well known Kandy businessmanm the late E.W. Balasuriya and is now controlled by his children, had done well in the pawning business during the year under review in the face of uncertainties on the price of gold.

"Despite the initial skepticism linked to the falling price of gold, the management decided to strengthen the pawning business of the company," Balasuriya said. "As a result pawning advances grew by 204% to reach Rs. 548 million, an unparalleled growth compared to Rs. 180.2 million the previous year. The success is attributed to the stabilization of the prices of gold towards the latter part of the year."

Senkadagala Chairman Ravi Dias said that in the annual report that the year had been a good one for the company which had posted a sound performance and strengthened its balance sheet.

"With the ongoing investments in technology, the dedicated team of employees and a strong management team, your company is well positioned to deliver increased and sustainable returns to the shareholders," he said.

Dias said the year had seen the continuation of the remarkable progress made over the past several years with the company doing "exceedingly well" during the year under review. As part of its growth strategy, the company was expanding its reach within the island while concentrating on risk factors.

He noted that 10 new branches had been added during the year with the branch network doubling from 45 to 90 within five years. They will continue to expand their footprint to areas where there is potential, he said.

Senkadagala Finance has a stated capital of Rs. 1 billion, total assets of Rs. 30.9 billion and total liabilities of Rs. 27.25 billion. Net assets per share were Rs. 56.14, up from Rs. 45.89 a year earlier, dividend per share Rs. 2.85 against the previous year’s Rs. 2.55 and deposits from customers Rs. 7.2 billion, up from the previous year’s Rs. 6.5 billion.

E.W. Balasuriya and Co. Ltd. with 56.26% of the company is the controlling shareholder. The heirs of the late Mr. EW Balasuriya are among the 20 largest shareholdes with sizable individual stakes.

The directors of the company are Messrs. Ravi Dias Chairman, Lakshman Balasuriya (MD), Dr. P. Ramanujam, Dr. A. Balasuriya, Dr. M. Balasuriya, Ms. L. Fernando, WAT Fernando, S. Kulatunga, SD Bandaranayake, T. Collure and SR Pushpakumara.

www.island.lk

Spence deal drives foreigners to sell side; Downward crawl on CSE continues

The ASPI continued to lose ground by 18.63 points (-0.29% W-o-W) last week to close on Friday at 6,390.74 points with retail activity remaining mostly flat with some profit taking as concerns over Inland Revenue Bill eased buoying market sentiment somewhat among bigger players, Acuity Stockbrokers said in their Share Market Weekly.

"Turnover value however rose by 22.8% W-o-W to LKR 3.24Bn, supported mostly by institutional participation in crossings which accounted for 30.88% (or LKR 1.00Bn) of the total turnover value," the report said.

"Counters including JKH, Nestle, Amana Takaful, Commercial Bank and Sampath garnered significant high net worth investor interest among crossings, with large transactions in these counters contributing to 28.53% of the week’s total market turnover that helped drive the rebound in turnover."

As a result, week’s average daily turnover value stood at LKR 0.81Bn over the week, compared to LKR 0.53Bn in the week before, Acuity noted.

Meanwhile, foreign investors who have been net buyers almost on a daily basis recently, driving inflows from abroad into the bourse this year, moved in the opposite direction ending the week on a net selling position of LKR 0.43Bn after 30 consecutive weeks of buying. This was mostly attributable to the LKR 0.50Bn transaction in Aitken Spence on Tuesday.

In terms of foreign purchases, JKH topped foreign purchases while Aitken Spence topped foreign sales (both in terms of value and volume of shares), Acuity said.

"We expect activity in the following week to be determined by policy direction on the Inland Revenue Bill expected to be presented in the parliament on Sept. 6," the report said.

www.island.lk

LVL Energy Fund plans to 1.2 bn.IPO within next three months

Hydro, wind and thermal presence in SL and Bangladesh with project due in Nepal

LVL Energy Fund Ltd. (LVLEF), a power generating joint venture controlled by HNB and DFCC Banks with a presence in Sri Lanka and Bangladesh and entry into Nepal later this year, has increased earnings in the year ended March 31, 2017 and expects to have an initial public offering (IPO) on the Colombo Stock Exchange within the next three months.

The fund’s investment include hydro, wind power and thermal projects and it will take 40% of a 114 MW heavy fuel oil power plant in Bangladesh to be executed by a project partners expected to be ready by the end of this year. The generating tilt is towards renewables.

Despite the impact of dry weather during the year under review, the fund posted an after tax profit of Rs. 465 million during the year, up from Rs. 357 million an year earlier. The profit share from associate companies mainly made good the lag in other areas of operation – largely interest costs.

LVLEF with a stated capital and reserves of Rs. 2.26 billion, up from Rs. 1.88 billion the previous year, had total assets of nearly Rs. 4 billion in its books at the end of the year under review.

"Whilst the wind power plants recorded power generation comparable to previous years, the performance of hydro power plants was less than satisfactory due to poor rainfall in the catchment areas," LVELF Chairman Jonathan Alles said.

Two thermal plants in Bangladesh where they have stakes had contributed Rs. 224 million to the group profit, up from Rs. 94 million the previous year, he said.

Their Campion hydropower plant, lying across Kehelgamuwa Oya in Bogawantalawa, had been connected to the national grid last April. This project is executed by a subsidiary of LVLEF.

Alles said that they planned to issue 120 million ordinary shares at an issue price of ten rupees per share to raise Rs. 1.2 billion in the forthcoming IPO. Of these funds, Rs. 480 million will be used to settle debt and the balance Rs. 720 million invested in projects.

He said that after commissioning their Bambarapana hydropower plant being built across the Uma Oya in Badulla in October this year, the total installed hydropower capacity in their portfolio will increase to 19.4 MW from 15.7 MW as at Mar. 31, 2017.

The directors of the company are Messrs. Jonathan Alles, Sunil de Silva, Tyronne de Silva, Mohandas Wijetunge, Ray aBeywardene, Ananda Munasinghe, Sumith Arangala and Lakshman Silva.

www.island.lk

Lanka Milk Foods (CWE) PLC triples profits, upbeat on future growth

Lanka Milk Foods (CWE) PLC, a major player in the country’s milk industry, has more than tripled profits in the year ended March 31, 2017, posting an after tax profit of Rs. 542 million, up from Rs. 120.6 million a year earlier.

The LMF Group which includes five subsidiaries is into importing, packing, manufacturing, distributing and marketing some of the country’s best known dairy and beverage brands.

Originally a government owned company that was privatized, the Harry Jayawardena-led and controlled LMF owned 12% of the cash rich Distilleries Company of Sri Lanka but during the year under review swapped this holding for over 151.8 million shares of Melstacorp PLC, now the holding company of Distilleries.

"Every government needs to reiterate its unconditional support for the dairy industry," Jayawardena said in the latest LMF report, "since it saves foreign exchange, contributes to jobs, investment and most important of all, is an industry which provides the nation with a wide range of nutritious food."

He credited government for the continuing expansion of domestic milk production thanks to the thrust towards self-sufficiency of liquid milk. However production is yet insufficient to meet total demand at present.

He said that the milk powder segment continued to be challenged with global prices rising and a 15% VAT imposed on imported milk powder. While all costs continued to increase rapidly, the selling price of powdered milk had been controlled since March 2015 with government having no plans to increase the selling price "even in the future."

LMF runs a herd of 2,100 Ayrshire and Fresian cattle on 1,500 acres of grazing land at its Ambewela dairy farm upcountry located at an elevation of 6,000 feet above sea level. The farm enjoys an average 2,000 mm of rainfall annually with about 200 wet days a year.

The grazing land is cultivated with ryegrass, with an extraordinarily high protein content, and 16,000 litres of high quality milk is produced daily. LMF has invested over a billion rupees in its dairy processing factory at Ambewela which in addition to liquid milk produces cheese and yoghurt and a range of flavored milks.

"Ambewela farm milk is in high demand," Jayawardena said. "The demand for Ambewela yoghurt is beyond the capacity of the factory now. The latest products in the basket are drinking yoghurt, 100g spread cheese pack and 200g Ambewela butter cup."

He said all Ambewela products were of the best quality with an automated milking process and the milk untouched by human hands during the entire value addition process. LMF also produces and markets a range of ready-to-drink fruit juices manufactured from premium quality fruit pulps and concentrates.

Other than its own brands, LMF distributes imported products like Happy Cow cheese, Farley’s and the Heinz range of sauces.

Jayawardena’s daughter, Sanjeevani, executive director at LMF, said in the report that an unprecedented Rs. 5.3 billion turnover had been posted during the year.

"Repeating its outstanding performance from the preceding year, the liquid milk sector was the main contributor to our profitability," she said. "Lanka Dairies (Pvt) Ltd, and Ambewela Products (Pvt) Ltd. contributed admirably to deliver a remarkable income over the previous year, resulting in the group recording an unprecedented turnover of Rs. 5.3 billion."

"We are confident about the future of the group because of the total backward integration that characterizes our business. Having total control of our products from farm to table, we are in an exceptional position to deliver our promise of hygiene, taste and wholesome goodness," she said.

LMF has a stated capital of Rs. 999.95 million, assets of Rs. 12.96 billion and liabilities of Rs. 1.15 billion in its books. Net assets per share at Rs. 295.01 were up from the previous year’s Rs. 253.69. The share closed the year at Rs. 117, up from Rs. 114.50 the previous year.

Milford Exports with 33.57% of the company is the top shareholder followed by Melstacorp (16.78%) and Mills Enterprises 15.30%. All other shareholders individually owned less than 3.5%.

The directors of the company are: Messrs. DHS Jayawardena (Chairman), CR Jansz, Ms. DSC Jayawardena, DSK Amarasekera (Independent non-executive), Dr. A. Shakthevale (Independent non-executive) and D. Hasitha, S. Jayawardena (non-executive).

www.island.lk