Sri Lanka's People's Leasing March net up 90-pct

ECONOMYNEXT - Profits at Sri Lanka's People's Leasing Plc, the island's largest non-bank lender rose 90 percent from a year ago to 2,009 million rupees in the March 2018 quarter, helped by fund based income and lower operating expenses, interim accounts showed.

The firm reported earnings of 1.27 rupees per share for the quarter in interim accounts filed with the Colombo Stock Exchange. For the year to March the group reported earnings of 306 rupees on total profits of 4.8 billion rupees, which were up 13.2 percent.

The stock traded at 15.60 rupees, up 60 cents.

Net interest income rose 21 percent to 3.69 billion rupees with interest income up 16.6 percent to 7.4 billion rupees and interest expense rising at a slower 21 percent to 3.69 billion rupees.

Group loans and receivables grew 5.3percent to 142.7 billion rupees.

Loan loss provisions rose 16.5 percent to 188 million rupees.

People's Leasing also has an insurance unit. Net premium income had grown 7 percent to 1.056 million rupees, while claims and benefits rose 9.6 percent to 708 million rupees.

The group said operating expenses fell 9.8 percent to 2,073 million rupees.

Gross assets grew 8.6 percent to 170 billion rupees and net assets grew 14.6 percent 30.5 billion rupees.

Sri Lankan shares snap losing streak; fuel price hike weighs

Reuters: Sri Lankan shares ended firmer on Tuesday, edging up from a near five-week closing low hit in the previous session, led by Ceylon Cold Stores Plc, while the recent fuel price hike weighed on sentiment, stockbrokers said.

The day’s turnover slumped to near one-month low as investors stayed on the sidelines, they said.

State-run fuel retailer Ceylon Petroleum Corp (CPC) raised retail prices for gasoline and diesel on Thursday midnight in response to the hike in oil prices, while Lanka IOC, a subsidiary of Indian Oil Corp, increased fuel rates the same day.

“It was a slow day and market participation was very low as the investors are still awaiting to see the real economic impact of the fuel price hike,” said Hisham Haniffa, assistant manager, Softlogic Stockbrokers (pvt) Ltd.

The Colombo stock index ended 0.18 percent firmer at 6,456.32, snapping six straight sessions of declines.

“Market is hovering near its psychological barrier of 6,450 level.”

The day’s turnover stood at 325.4 million rupees ($2.06 million), its lowest since April 19, and well below this year’s daily average of 1.02 billion rupees.

Foreign investors net bought 6.3 million rupees worth of equities on Tuesday, but they have been net sellers of 662.3 million rupees worth of equities so far this year.

Shares in Ceylon Cold Stores Plc ended 1.5 percent higher, while Lanka ORIX Leasing Co Plc closed 2.5 percent firmer and Commercial Bank of Ceylon Plc ended 0.3 percent up.

The market shrugged off the central bank’s policy decision on Friday as it was widely expected, brokers said.

The central bank kept its key policy rates steady, a little more than a month after it unexpectedly cut the main lending rate, forecasting a modest recovery in the economy this year after growth slumped to a 16-year low in 2017.

Analysts said the depreciation of rupee also weighed on investor sentiment as it is likely to hit profits of some listed firms that rely heavily on imports.

The rupee hit a fresh low of 158.00 per U.S. dollar on Monday on importer demand for the U.S. currency.

Analysts said concerns over political instability following President Maithripala Sirisena’s decision to suspend the parliament last month after 16 legislators from his ruling coalition defected also weighed on sentiment.

Last week, Sirisena urged his own coalition government and the opposition to end a power struggle in order to achieve ambitious goals including anti-corruption measures.

($1 = 158.1500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez, Editing by Sherry Jacob-Phillips)

Dialog consolidates performance with strong 1st quarter results

Dialog Axiata PLC announced, May 11 , its consolidated financial results for the three months ended March 31. Financial results included those of Dialog Axiata PLC (the "Company") and of the Dialog Axiata Group (the "Group").

Dialog Group continued its growth momentum across all key business segments including Mobile, Tele-infrastructure, Digital Pay Television and Fixed Line to record a consolidated revenue of Rs. 26.1Bn for Q1 2018, demonstrating a growth of 5% Quarter-on-Quarter ("QoQ") and 18% Year-on-Year ("YoY"). Underpinned by strong revenue growth coupled with disciplined cost management and operational efficiencies, Group Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) grew 9% QoQ and 38% YoY to record at Rs. 9.9Bn for Q1 2018.

Dialog Group adopted SLFRS 15, ‘Revenue from Contracts with Customers’, with effect from 1 January 2018. The adoption of the standard resulted in an EBITDA upliftment of Rs. 422Mn for Q1 2018 which is a 1.6pp increase in the EBITDA margin. The impact on revenue and Net Profit were not material. Normalised for the positive impact from SLFRS 15, the EBITDA margin was recorded at 36.6% for Q1 2018.

The Group Net Profit After Tax (NPAT) declined 10% QoQ on the back of non-cash translational forex loss of Rs. 369Mn for Q1 2018 compared to a gain of Rs. 68Mn recorded for Q4 2017, as the Sri Lankan Rupee (LKR) depreciated against the United States Dollar (USD) by 1.5% in Q1 2018. NPAT grew 84% YoY to be recorded at Rs. 2.8Bn for Q1 2018.

Dialog Group continued to be a significant contributor to state revenues, remitting a total of Rs. 9.2Bn to the Government of Sri Lanka (GoSL) during the first three months of 2018. Total remittances included Direct Taxes and Levies amounting to Rs. 2.9Bn as well as Rs. 6.3Bn in Consumption Taxes collected on behalf of the GoSL.

The Group capital expenditure for Q1 2018 totalled to Rs. 2.4Bn (USD 15.4Mn). Capital expenditure was directed in the main towards investments in High-Speed Broadband infrastructure to further strengthen the Group's leadership in Sri Lanka's Broadband sector. Group Operating Free Cash Flow (OFCF) was recorded at Rs. 5.5Bn for Q1 2018. The Group continued to exhibit a structurally strong balance sheet with the Net Debt to EBITDA ratio being maintained at 0.77x as at end of March 2018.

At an entity level, Dialog Axiata PLC ("the Company") continued to contribute a major share of Group Revenue (79%) and Group EBITDA (77%). The Company further consolidated its market leading position in the Sri Lankan mobile space to surpass 13Mn subscribers during the quarter. Company Revenue for Q1 2018 grew by 2% QoQ and 13% YoY to reach Rs. 20.6Bn. Underpinned by strong revenue growth and cost initiatives, Company EBITDA for Q1 2018 was recorded at Rs. 7.7Bn, an increase of 3% QoQ and 33% YoY. As mentioned, the adoption of SLFRS 15 had a positive impact on the Q1 performance of the Company resulting in an EBITDA upliftment of Rs. 222Mn.

www.island.lk

Property Development shareholders to push for better exit price and dividend

Property Development PLC (PDL), owners of the Bank of Ceylon headquarters building on Echelon Square which is seeking a delisting from the Colombo Stock Exchange, will hold its 38th annual general meeting on May 30 in the backdrop of minority shareholder dissatisfaction of the Bank of Ceylon’s offer to buy their shares at a price of Rs. 123.

The Bank of Ceylon which is the dominant shareholder of PDL with 95.55% of its equity does not wish to sell down its holding which makes it impossible for the company to comply with the requirement of the 20% public float of shares of listed companies required by the Colombo Stock Exchange.

PDL’s directors have determined that given the company’s present financial position, they are of the view that "any capital infusion through a public offering of shares at this stage is not viable or required."

Shareholders have been told that the exit offer price of Rs. 123 per share is at a 44% premium to the Volume Weighted Average Price the share had commanded and a 12% premium to the highest traded price over the three months ending Feb. 8, 2018.

But shareholders voiced dissatisfaction of the exit offer price at an April 4 extraordinary general meeting summoned to seek their approval for the Rs. 123 price and also to change the name of the company to Property Development Ltd. – as it was originally called – following the delisting.

Some argued that the rent charged from the Bank of Ceylon, the only tenant in the building, was unrealistic depressing profits of the company.

In its recently released annual report, PDL said nothing about its plans to delist as well as the exit price offered by BOC to minority shareholders numbering nearly 4,000 of whom the vast majority (2,977) own up to 1,000 shares.

The PDL share closed on the CSE on Friday at Rs. 127.10 – slightly higher that BOC’s exit offer price – for a small quantity of less than 6,000 shares.

PDL which in addition to owning the BOC headquarters building also owns Koladeniya Hydropower (Pvt) Ltd, posted a group profit of Rs. 657.6 million before tax in 2017. The after tax result was Rs. 482.1 million. The company carries over Rs.1.1 billion retained earnings in its books.

The directors have proposed a first and final dividend of Rs. 3.50 per share, down from Rs. 15 per share paid the previous year, for 2017.

Analysts expect shareholders to push at the forthcoming AGM for a better exit price to the minority shareholders together with a higher dividend urging that at least the retained earnings carried in the books of the company should be distributed to shareholders before any delisting.

"Given its holding the BOC will get most of this money. What the minority get will be a pittance but it will be something for many of them," one shareholder said.

All shareholders other than the BOC individually hold less than 0.5% each with the highest owning 0.36%.

The PDL share traded at a low of Rs. 72 and a high of Rs. 115 in 2017 closing at Rs. 97. Earnings per share for the year was Rs. 7/12, up from Rs. 6.30 a year earlier and the net asset value of per share was Rs. 52.69, up from Rs. 46.44 the previous year.

www.island.lk

SLT 2017 revenue up but profit down due to billion rupee depreciation

Despite boosting group revenue 2.57% to Rs. 75.4 billion in financial year 2017, Sri Lanka Telecom PLC has seen its after-tax profit dip 17.75% to Rs. 3.94 billion. At company level, the after tax profit was down 17.22% to Rs. 1.428 billion.

There was a sharp dip of 77.89% of the company’s operating profit to Rs. 258 million in the year under review from Rs. 1.17 billion a year earlier, the company’s recently released annual report reveals.

The report attributed the decline in profitability to higher depreciation charges saying that this was higher by a billion rupees over the previous year due to high capital expenditure incurred in the last three years to build capacity and investment in new products.

It said that SLT Mobitel posted an after-tax profit of Rs. 3.3 billion in the year under review, down from Rs. 4.1 billion a year earlier.

SLT’s two main shareholders are the Government of Sri Lanka with 49.50% of the company’s equity held through the Secretary to the Treasury and Global Telecommunications Holdings (GTH) NV with 44.98%.

Additionally EPF owns 1.40%, Ceybank Unit Trust 1.02%, Sri Lanka Insurance Corp. Life Fund 0.98%, National Savings Bank 0.73%, ETF 0.16% SLIC General Fund 0.11%.

There are 12,247 shareholders in the register with the vast majority owning (9,677) owning up to 1,000 shares each.

The company had earnings per share of Rs. 2.18 during the year, down from the previous year’s Rs. 2.65 and net assets per share of Rs. 39.56, up from Rs. 38.05 the previous year.

The SLT share closed the year at Rs. 28.50 with a high of Rs. 36.70 and a low of Rs. 27. This compared to a trading range of Rs. 46.40 to Rs.31.20 closing at Rs. Rs. 36 the previous year.

The company is maintaining a dividend level of 89 cents per share, the same as the previous year.

SLT’s directors are Messrs. P.G. Kumarasinghe Sirisena (chairman), Chan Chee Beng, Lawrence Paratz, Ms. Lai Coon Foong, Ms. Nilanthi Pieris, WKH Wegapitiya and AR Desapriya.

www.isand.lk

Amãna Bank PAT grows more than double in Q1

Amãna Bank continued its positive growth trajectory into 2018 with a strong Q1 performance of 144% YoY growth in Profit After Tax, recording Rs 162.8 million against Rs 66.6 million posted in Q1 2017. The successful quarter saw the Bank’s Profit Before Tax increase to Rs 226.1 million from Rs 92.5 million recorded a year ago.

Continuing to strengthen its core banking income, the Bank posted a 41% YoY growth in Net Financing Income to close the quarter at Rs 791.3 million, which led to a healthy increase in the Bank’s Financing Margin to 4.6%. The Bank’s Net Fee and Commission Income grew by 24% to record Rs 71.7 million. Net Operating Income grew by a commendable 26% to Rs. 857.7 million during the period despite making impairment provisions of Rs 104.1 million. Having maintained the increase in Operating Expenses within 6%, the Bank was able to record a significant 85% YoY Growth in Operating Profit Before VAT and NBT to close the quarter at Rs 323.0 million.

During the period, the Bank grew its Total Assets to Rs 67.0 billion. The Bank’s core banking business continued its upward trend as customer deposits and advances recorded steady progress, closing the quarter at Rs 53.1 billion and Rs 44.8 billion respectively. The Bank maintained a Gross Non Performing Advances Ratio of 2.20% while Net Non Performing Advances Ratio stood at a healthy 0.81%, well below the industry average.

Commenting on its Q1 results, the Bank’s Chief Executive Officer Mohamed Azmeer said "I am confident that this performance will give added impetus for the rest of the year, ensuring our alignment to the targets set out in our 5 year strategic plan.

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Haycarb records turnover of Rs 15.5 billion

Haycarb PLC reported revenue of Rs. 15.5 billion, profit before tax of Rs. 926 million and profit after tax of Rs. 774 million for financial year 2017/18. The earnings per share of equity holders of the company was Rs. 22.63 for the year.

The Chairman of Haycarb PLC and its parent company Hayleys PLC, Mohan Pandithage said that the significant growth in the top line in spite of key challenges in the supply chain for raw material has proven Haycarb’s strength and position as a leader in the coconut shell based activated carbon industry. He added that the Environmental Engineering arm, Puritas (Pvt.) Ltd. has reported notable growth and contributed positively to the results of the group.

Haycarb PLC Managing Director, Rajitha Kariyawasan explained that the activated carbon business of the company faced significant margin pressure due to the shortage of supplies and substantial increase in prices of coconut shell charcoal in Sri Lanka, India and Thailand particularly during the second half of the financial year due to adverse weather conditions, that resulted in lower profits from the carbon business in the current year.

The availability of raw material in Indonesia on the other hand regained near-normalcy in the last quarter after shortages experienced for two consecutive years, even though the prices remained high due to the scarcity and shortage of the material in other countries.

Kariyawasan explained that the main objective during the year was to ensure that long standing end customers and distributors were supplied with their product requirements, which compelled Haycarb to absorb majority of raw material cost increases, to allow its global distribution network to average out price increases to customers, and mitigate the panic in the distribution chain.

Therefore although Haycarb had to negotiate increase in prices of its activated carbon products, prices were increased with a time lag, as the decision to shield our customers against the full impact of charcoal price increases was made in the medium term interest of the business that resulted in the short term erosion of profit margins.

Kariyawasan said that Haycarb’s Environmental Engineering business, Puritas (Pvt.) Ltd. has posted creditable results backed by growth in its local and regional presence as a superior provider of water and waste water purification solutions, while the activated carbon end products manufactured and marketed by this sector also showed satisfactory growth.
www.dailynews.lk

Sri Lanka still good for global equity investors

Sri Lanka’s currency, despite coming under pressure from an appreciating dollar, still supports sound investment in the equity market, the Wall Street Journal reported.

The Journal, in its Frontiers segment published yesterday, quoted from research done by frontier-focused investment bank Renaissance Capital Analyst Daniel Salter, who believes that Sri Lanka has the right ingredients to be a strong investment.

The excerpt on Sri Lanka from the article is given below.

Focusing on key indicators such as recent credit growth, currency overvaluation and external debt levels, the firm found Pakistan, Egypt, Kenya, Tunisia and Sri Lanka could also present problems for investors if the market environment worsens—for example, through intensifying trade disputes or further appreciation in the dollar.

Sri Lanka may suffer less than most, though, Salter notes, as it tends to be among the economies least affected by changes in the dollar’s value. Investment firm Aberdeen Standard Investments’ Senior Investment Manager James Thom believes Sri Lanka’s market has great potential.

“Although the economics and politics can be a bit challenging, the market’s looking pretty cheap at the moment,” he said. Thom, whose fund takes a stock-picking approach to building its portfolio, notes the macroeconomic and political picture in the South Asian nation can be misleading. “That’s creating opportunities for us at a company level,” he said. “All the ingredients are there for [a break-out].”
www.ft.lk

HNB Group records Rs. 7.2 b PBT in Q1

HNB said yesterday it posted a strong start to 2018 with first quarter PAT growing by 22.5% to Rs. 4.5 billion, while the Group reported a PAT of Rs. 5 billion which is a 24% growth from last year.

HNB expanded its loan book by Rs. 33.7 billion during the quarter which represented growth of 5.3%, enabling a 10.5% year-on-year (YoY) increase in interest income which totalled Rs. 24.9 billion.

The Bank grew its CASA base by 9.9% in the three-month period to Rs. 273.6 billion, improving the CASA ratio to 38.0% from 35.5% as at December 2017. As such, growth in interest expenses was curtailed to 7.2% YoY while Net Interest Income (NII) grew by 15.1% YoY to Rs. 10.7 billion. The low-cost deposit base was instrumental in the bank continuing to attain above industry net interest margins.

Net Fee and Commission Income increased by 11.6% to Rs. 2.2 billion relative to the corresponding quarter of 2017. Core non-funded income sources, credit cards, trade finance and bank guarantees, performed strongly while fees from digital channels exhibited promising growth. A net trading loss of Rs. 273.7 million was reported during the quarter whereas a trading gain of Rs. 541.7 million was reported during first quarter of 2017. This is largely on account of exchange rate movements which adversely impacted the revaluation of swaps obtained to hedge foreign currency positions. However, the commensurate impact on position revaluation boosted ‘Other Operating Income’, which was reported at Rs. 1 billion, relative to a loss of Rs. 254.1 million in the corresponding period of 2017

The total impairment costs of the Bank increased by Rs. 587.5 million against the comparable period in 2017, largely due to adverse weather and market conditions. The gross NPA ratio of the Bank slid to 2.72% at the end of March, in line with the trend witnessed across the Banking sector which saw the industry NPA ratio deteriorating to 3.0%.

The continuous efforts on operational excellence and cost optimisation enabled HNB to curtail the increase in operating expenses to a marginal 2.1% YoY. As a result, the cost-to-income ratio of the Bank improved to a low of 36.3% from 41.9%, recorded in the corresponding period of 2017.

The PBT of the Bank grew by 23.6% YoY to Rs. 6.3 billion while the PAT improved to Rs. 4.5 billion. The Bank recorded a ROE of 16.43% and a ROA of 1.84% for the first quarter of 2018.The Bank’s asset base grew by 3.8% during the quarter to Rs. 990.8 billion, while the Basel III Total Tier I and total capital ratios stood at 12.78% and 15.77% respectively, well above the industry averages and the statutory requirements of 8.875% and 12.875% respectively.

Commenting on the performance, HNB Managing Director/CEO Jonathan Alles stated: “We are pleased with our first quarter performance and truly grateful to all our stakeholders for their continuous support. The banking sector is challenged by the implementation of SLFRS 9 reporting standards which could result in higher impairment charges, Basel III regulations requiring greater capital buffers as well as the new Inland Revenue Act stipulating numerous and significantly higher taxes on banking revenues. Notwithstanding, we stay positive and committed on continuing our efforts to raise the bar.”

All of HNB’s subsidiaries and the joint venture Investment Bank contributed to raise the Group PBT to Rs. 7.2 billion, which is a growth of 25% YoY. The Group ROA improved at 1.96% compared to 1.75% in Q12017.

HNB in early 2018 was adjudged as the best retail bank in Sri Lanka for the 10th time, while Asiamoney magazine bestowed upon it the awards of Best SME and Best Digital Bank in the country. In 2017, the Bank was chosen as the ‘Bank of the Year’ in Sri Lanka by The Banker magazine, UK, and the LMD and Business Today ranked HNB as the highest ranked bank in their respective annual rankings. HNB was also bestowed with the Gold Award in the banking category and Overall Runner-up award at the Association of Chartered Certified Accountants (ACCA) Sri Lanka Sustainability Reporting Awards held earlier this year. The Bank’s Islamic Finance unit was recently adjudged as the ‘Islamic Finance Entity of the Year’ at the Sri Lanka Islamic Banking & Finance Industry (SLIBFI) awards, while also bagging the Gold award for the ‘Islamic Banking Window of the Year’ and a Silver award for “Islamic Finance Deal of the Year’.

HNB is the first local Bank in Sri Lanka to receive an international rating on par with the sovereign from Moody’s Investor Services while maintaining a national long term rating of AA - (lka) from Fitch Ratings Lanka Ltd. HNB is also ranked amongst the top 1,000 banks in the world by The Banker.
www.ft.lk