Asset-rich Colonial’s pay Rs. 6 per share dividend despite Rs. 165 mn. loss

CM Holdings PLC (previously Colonial Motors which was founded 105 years ago) has declared a first and final dividend of six rupees a share for the year ended March 31, 2017, despite an after-tax group loss of Rs. 165 million, up from a loss of Rs. 102 million the previous year.

At company level there was a loss of Rs. 110 million against a profit of Rs. 199 million a year earlier.

The company’s chairman, Mr. A. Rajaratnam has attributed the loss "to lower margins, impairment of long term equity investments and reduced dividend income."

The year saw the group revenue grow 129% to Rs. 4.4 billion, he said.

CM Holdings Group owns a valuable quoted share portfolio with a market value of Rs. 655.7 million against a cost of Rs. 208 million. Of this Rs. 611.1 million (cost Rs. 184.7 million) belongs to the company.

"The investments of your company, apart from those in the subsidiary, are of a long term nature and is vulnerable to price fluctuation in the short term," Rajaratnam has told shareholders in his chairman’s review.

The company is also into the automobile business importing KIA and Mazda vehicles with a Union Place showroom. It also owns valuable Union Place real estate with the chairman saying they had plans to increase revenue streams by maximizing currently available rentable space there.

Rajaratnam said the automobile industry had a challenging year due to government policy on the import of vehicles and duty structures. Changes in the minimum down payment on vehicle leasing further aggravated the problem. The group’s motor segment was hit under these conditions with lower margins and limiting of the marketable range of its vehicles.

However their subsidiary, Colonial Motors (Ceylon) Ltd. had been appointed the authorized importer and distributor of Vespa and Aprilia motorbikes in Sri Lanka adding to its product range. The management believes that the new range will be commercially successful and two showrooms have been opened in Union Place and Peliyagoda for the distribution of these vehicles.

CM Holdings with a stated capital of Rs. 288.39 million had total group assets of Rs. 4.88 billion and liabilities of Rs. 1.16 billion. Available for sale financial assets were Rs. 835.8 million.

Net asset value per share for the company was Rs. 108, down from Rs. 121 the previous year. The share traded at a high of Rs. 104 and a low of Rs. 69 closing at Rs. 74.90 during the year under review against a trading range of Rs. 158 to Rs. 82.60 closing at Rs. 90 a year earlier.

The Colombo Fort Land and Building Company with 63.49% is the controlling shareholder with all other individual holdings below 3%. The Sri Lanka Insurance Corporation’s life fund with 2.58% is the second biggest shareholder.

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Tangerine Beach boosts revenue and profits

Tangerine Beach Hotels PLC, the second seafront property built by entrepreneur George Ondaatjie, has modestly improved performance in the year ended March 31, 2017 boosting revenue 6% to Rs. 631.3 million and after tax profit 2% to Rs. 105.7 million with the owning company maintaining the 50 cents per share dividend level of the previous year, the company’s annual report reveals.

Ondaatjie built Tangerine on the Kalutara coast over three decades ago, naming the hotel after his three children (Gerard, Angeline and Travice), after the phenomenal success of his Nilaveli Beach Hotel near Trincomalee. He thereafter built Royal Palms Beach Hotel PLC, in a site adjoining Tangerine, on land acquired at the time the original property was purchased.

The successful hotelier and finance company (Mercantile Finance and Investment PLC) founder, now retired also controls Nuwara Eliya Hotels PLC, owners of the Grand Hotel. His group recently added a city property, unquoted Fairlawn Hotel in Wellawatte.

Writing the chairman’s message on behalf of her father, Ms. Angeline Ondaatjie reported that the year had seen the tourism industry facing increasing challenges on multiple fronts due to negative global and domestic factors.

"The tourism arrivals to Sri Lanka from China, India and the Middle East dominated the statistics as the traditional European influx decreased due to their burdens with economic/political and terrorism issues," she noted.

"The negative impact thus turned in lower volumes and deprived the industry of much needed revenue."

However, Tangerine had been able to record an "impressive" operating profit of Rs. 80 million and a net profit of Rs. 105.6 million. She expressed confidence in the long term prospects of Tangerine saying they were working closely with a number of local travel agents and foreign tour operators seeking contracts.

"We are expecting robust international arrivals growth in Sri Lanka in the coming years," she said. "The growth is a result of the government’s strategy to diversify our source markets while at the same time continuing to develop our traditional European market."

Tangerine Beach has a strong balance sheet with total assets of Rs. 3.34 billion, against total liabilities of Rs. 238.46 million on a stated capital of Rs. 244.8 million. The company carries over a billion rupees in retained earnings and a revaluation reserve of Rs. 1.8 billion in its books.

Earnings per share for the year under review were up to Rs. 5.28 from Rs. 5.19 the previous year while net assets per share grew to Rs. 155.14 from Rs. 150.35. The Tangerine share traded at a high of Rs. 74 and a low of Rs. 50.10 during the year closing at Rs. 59.50. This compared with a trading range of Rs. 50 to Rs. 90 closing Rs. 66.70 a year earlier.

Nilaveli Beach Hotels and Mercantile Investments and Finance, two Ondaatjie companies with 26.68% and 19.5% respectively, top the shareholders list with the Ondaatjie family members also holding large personal stakes. The EPF (8.15%) is the biggest unrelated shareholder.

The directors of the company are: Deshabandu George Ondaatjie (Chairman and Jt. MD), Ms. AM Ondaatjie (Jt. MD), GG Ondaatjie, TJ Ondaatjie, Ms. CA Ondaatjie, Ms. SD de Silva (deceased 4.3.17), NHV Perera, LH Jayasinghe and PHR Casie Chitty.

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LOLC claims to be top listed profit earner, but pays no dividend

Lanka Orix Leasing Company PLC which describes itself as the country’s "largest non-banking financial institution and one of the biggest diversified conglomerates in Sri Lanka" has posted an after tax group profit of Rs. 21 billion in the year ended March 31, 2017 up 124% over the previous year, but has declared no dividend to its shareholders.

This was raised at the company’s annual general meeting last week when LOLC Deputy Chairman Ishara Nanayakkara chairing the meeting explained that their’s was a rapidly expanding group which needed cash to fund growth. He pointed out that the company’s share price had nearly doubled since last year and indicated, in response to a shareholders suggestion, that the possibility of a scrip dividend would be explored.

In a review of the company’s business for the year in its annual report, Nanayakkara said: "It gives me great pleasure to share with you this exceptional performance which saw the LOLC Group achieve the highest profit among listed entities in Sri Lanka."

LOLC last paid a dividend of 50 cents per share in 2013. Prior to that, it had paid dividends of 23 and 28 cents per share in 2008 and 2009. Its net asset value per share had grown from Rs. 10.02 in 2008 to Rs. 98.89 in the year under review.

The company’s stellar performance during the year had once again been spearheaded by its financial services segment which had contributed 81% of the profit despite a challenging year on the macroeconomic front, Nanayakkara said.

The group portfolio includes leisure, plantations, agri-inputs renewable energy, construction, manufacturing and trading among others. The report said that the group footprint in Sri Lanka spans every district from the rural hinterland to major cities and it has ventured offshore to Cambodia, Myanmar and Pakistan in microfinance and is entering the leisure sector in the Maldives.

Brown and Co. PLC is a subsidiary of LOLC.

Its Japanese partner, the Orix Corporation, owns 30% of the company and is represented in the board by Japanese directors. The largest single shareholder of the company is the late Mr. R.M. Nanayakkara who owned 36.3% of the company and tops the shareholders list.

His children, Ishra Nanayakkara (12.6%) and Mrs. Kalsha Amarasinghe (5%) and wife, Mrs. I. Nanayakkara (0.6%) are also among the top 20 shareholders. The EPF is No. 5 on the list with 3.60%.

There were 3,151 shareholders on the register at the close of the last financial year.

With a stated capital of Rs. 475.2 million, the LOLC Group had total assets of Rs. 640.9 billion (company Rs. 102 billion) and total liabilities of Rs. 538.3 billion (company Rs. 55 billion) at the close of the last financial year.

The companies share traded at a high of Rs. 93 and a low of Rs. 59 during the year under review closing at Rs. 61. This compared with a trading range of Rs. 116.20 to Rs. 64.10 closing at Rs. 72 a year earlier. It is now trading at around Rs. 125.

The directors of the company are Messrs. IC Nanayakkara, WDK Jayawardena, MDD Pieris, RA Fernando, Mrs. KU Amarasinghe, H. Nishio and H. Yamaguchi.

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Dhammika to take personal stake in Singer Sri Lanka

First call on mandatory issue acceptances for him

Colombo business tycoon Dhammika Perera, owning slightly over 50% of the Hayleys conglomerate, will be taking up a personal stake in Singer Sri Lanka PLC of which Hayleys took control earlier this month by acquiring approx. 61.73% from its Dutch holding company.

In a mandatory offer document published last week and due to reach Singer shareholders later this week, Hayleys together with its subsidiaries, Volanka and Carbotels, offered the same Rs. 47 per share price to all other shareholders looking to sell.

The document said that based on acceptances received from Singer shareholders, allocations will firstly be made to Mr. Dhammika Perera, next to Hayleys Advantis, thirdly to Hayleys Agricultural Holdings, fourth to Hayleys Aventura and lastly to Hayleys.

This would mean that Perera, who is joint chairman of Hayleys will have first call on the Singer shares that become available through the mandatory offer. It was not indicated how many he would take.

Singer’s Dutch parent, Retail Holdings (Sri Lanka) BV will continue to hold 9.47% of its original holding for 12 – 15 months when Hayleys have agreed to take up those shares either by itself or through nominees at the Rs. 47 per share price.

Singer Sri Lanka has been trading on the floor of the CSE at price levels of Rs. 45 – 46 but below the Rs. 47 price that will be available to shareholders once the process is concluded in the next few weeks. Those accepting the offer will not have to pay brokerage and other transaction charges they would have to meet if they sell on the secondary market.

Brokers said that while no large volumes of Singer had been transacted on the trading floor since the Sept. 15 takeover of control, there have been some transactions at below the mandatory offer price.

The Hayleys share has declined from the Rs. 280 price it commanded the day before the Singer deal was struck to Rs. 274.50 last Friday.

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