Sri Lanka's Access Engineering sells university property at profit

ECONOMYNEXT - Sri Lankan construction group, Access Engineering Plc, has sold Horizon Knowledge City Ltd., subsidiary a company that provides facilities for university education, at a big profit.

The subsidiary, Horizon Knowledge City Ltd. was sold for 765 million rupees, according to the March 2018 accounts of Access Engineering filed with the stock exchange.

Access Engineering had bought the firm in 2015 for 575 million rupees.

Horizon Knowledge City Ltd. has land in Malabe, a fast-growing suburb of Sri Lanka's capital Colombo.

A note to the accounts said that Access Engineering had also agreed to sell its stakes in Horizon Holdings (Private) Ltd. for 300 million rupees and Horizon Holdings Ventures (Private) Ltd for 475 million rupees.

The company will be receiving the sales consideration by twelve equal monthly instalments, starting from 20th April 2018.

Sri Lanka's Laugfs Gas March quarter loss falls to Rs390mn

ECONOMYNEXT – Sri Lanka's Laugfs Gas Plc has managed to narrow losses in the March 2018 quarter although the full year loss more than doubled.

The March 2018 quarter loss fell 48% to 390 million rupees from a year ago with sales up 19% to 5.4 billion rupees, interim accounts filed with the stock exchange showed.

The quarterly loss per share was 1.01 rupees. Laugfs Gas shares were trading at 24.50 rupees Thursday.

In the year to 31 March 2018, Laugfs Gas Pls said the loss per share more than doubled to 3.44 rupees with the total loss at 1.3 billion rupees. Annual group sales rose 31% to 21.4 billion rupees.

Sri Lankan shares fall to 5-month closing low; John Keells declines

Reuters: Sri Lankan shares fell for a fourth straight session on Thursday and posted their lowest close in five months, dragged by conglomerate John Keells Holdings Plc on foreign investor selling.

Foreign investors sold shares of John Keells following reports that the MSCI Frontier Markets 100 Index, which captures large- and mid-cap representation across 29 frontier markets, will remove the stock from its index.

MSCI has yet to respond to a Reuters query if it has decided to remove John Keells from the index, but two analysts said the stock will be removed.

Foreign investors sold net 475.9 million rupees worth of equities on Thursday, extending the year-to-date net foreign outflow to 1.4 billion rupees worth of shares.

The Colombo stock index ended 0.35 percent weaker at 6,398.44. For the month, it declined 1.9 percent.

Turnover was 2.3 billion rupees ($14.54 million), more than twice of this year’s daily average of 998 million rupees.

“There was foreign selling on JKH (John Keells Holdings). With the dip in the share price, the All Share Price (Index) also came down,” said Hussain Gani, deputy CEO at Softlogic Stockbrokers.

“There were some month-end settlements also.”

A weaker rupee, political uncertainty and the recent fuel price hike also weighed on sentiment, with local investors mostly keeping to the sidelines awaiting cues about the real impact of the floods that hit the island nation over the past week, brokers said.

Analysts said investors are waiting to see the full impact of the floods, which killed 24 people last week.

Shares of John Keells fell 2.3 percent, Melstacrop Plc ended 3.5 percent weaker, Richard Pieris & Company Plc lost 4.7 percent and Lion Brewery (Ceylon) Plc slipped 2.5 percent.

The rupee hit a fresh low of 158.50 per dollar on May 16 on importer demand for the U.S. currency.

Analysts said market sentiment had been dented by concerns over political instability following President Maithripala Sirisena’s decision to suspend parliament last month after 16 legislators from his ruling coalition defected.

On May 8, Sirisena urged his own coalition government and the opposition to end a power struggle to achieve ambitious goals including anti-corruption measures. 

($1 = 158.2000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Fitch affirms Kotagala Plantations at 'CC(lka)'

Fitch Ratings has affirmed Sri Lanka-based Kotagala Plantations PLC's National Long-Term Rating at 'CC(lka)'. Fitch has also affirmed the National Rating on Kotagala's outstanding senior secured debentures at 'CC(lka)'.

The affirmation reflects the company's continued weak liquidity profile despite improved revenue and EBITDA, asset disposals and restructuring of bank facilities over the previous 12 months. Kotagala had LKR27million of unrestricted cash and no unutilised credit facilities as at end-March 2018 (FY18) to meet LKR671 million of short-term debt falling due in the next 12 months. There is a significant risk that Kotagala may not be able to meet its obligations as they fall due through internally generated cash flow.

Continued Weak Liquidity: We expect the company to continue facing high liquidity pressure in the next 12-18 months due to substantial debt maturities falling due starting 26 May 2018, when the first LKR250 million principal repayment of its LKR1 billion secured debenture falls due. The company holds little cash, does not have access to unutilised committed credit lines and is greatly constrained from generating positive free cash flow over the medium term due to losses from its rubber plantations and high debt-servicing costs. The company's efforts in FY18 to lower debt via asset disposals and debt restructuring have not led to a sustained improvement in its liquidity profile.

Kotagala plans to meet its upcoming repayment by using the LKR100 million proceeds from the partial sale of its stake in Union Commodities (Private) Limited (Unicom) in March 2018, LKR55 million from the sale of old rubber trees as timber and its remaining cash reserves. It also aims to raise high-cost credit facilities from customers and has the option of using the debenture's sinking-fund balance of LKR161 million at end-March 2018 to meet any shortfall, if needed. Even if Kotagala makes the upcoming repayment, there is little visibility as to how it will meet its remaining debt obligations - including the second principal repayment due May 2019 - unless it operating performance improves significantly or upon third-party support or restructuring.

High Refinancing Risk: We believe Kotagala has high re-financing risk, as lenders are likely to be cautious given the plantation sector's volatility and the company's weak financial profile. Kotagala's ability to raise funds through asset disposals is also limited following the divestment of its only profitable subsidiary, Unicom. Furthermore, the company was unsuccessful in raising fresh equity through its rights issue in December 2017 beyond what its parent, Consolidated Tea Plantations Limited (CTPL), injected as part of its share. This means Kotagala will likely have to resort to expensive sources to refinance its debt, such as customer advance payments, which could further exacerbate its credit profile.

Leverage to Remain High: Kotagala's leverage is likely to remain high in the medium term, as we expect moderating commodity prices and continued operating cost increases to adversely affect its EBITDA generation. Kotagala's adjusted net leverage/EBITDAR ratio improved to 9.3x as at end-2017, from 16.5x in FY17 (FY16: 125.3x), mainly from higher global tea prices, which we do not expect to be sustained.

Volatile EBITDAR: We expect tea and rubber sector profitability to be affected in the medium term by volatile end-market demand, lower labour productivity and cost pressure from periodic wage increases. Kotagala's tea segment has seen a strong rebound over the past nine months, helped by rising global prices. However, prices are likely to moderate over the medium-term with easing supply-side pressure.

www.island.lk

Piramal Glass Ceylon declares 18% dividend, turnover crosses Rs 6.8 billion

Piramal Glass Ceylon PLC (PGC) completes yet another challenging year with a turnover of Rs.6,816 Mn & PAT of Rs.344 Mn. Whilst the turnover increase was marginal when compared to the previous year, it was the highest ever turnover recorded by the company.

A total revenue achieved for the year was Rs.6,816 Mn as against Rs.6,783 Mn of the previous year. The domestic revenue saw a dip of 16% from Rs. 5,469 Mn in F17 to Rs. 4,595 Mn during the year under review. Beverage & Liquor segments were affected with the introduction of new taxes & levies while the Agro sale was affected due to the adverse weather conditions.

In the export segment, it was encouraging to note the Rs. 2 Bn mark being crossed with a growth of 77%. The export turnover was Rs. 2,136 Mn when compared to Rs.1,209 Mn during the year F17.

The exports increased mainly in the US & Canadian markets with the company gaining entrance to several new markets which include Malaysia, Africa, Vietnam and Myanmar. The export to US has grown by over 150%, Australia by 72% and a six fold increase in the Canadian markets.

The Gross Profit for the year improved from Rs. 1,371 Mn to Rs. 1,422 Mn depicting a marginal increase in GP margins from 20% to 21%. Also, the Operating Profits increased from 11% to 13% from Rs. 779 Mn to Rs. 869 Mn.

These results were achieved despite the high impact of depreciation on the investments made during the year. The depreciation increased by 31% from Rs. 553 Mn to Rs. 722 Mn. The profitability was further affected by an increase in Interest costs and high energy prices. The annualized impact of the interest on the Long term loan of Rs. 3Bn taken for the relining & upgradation of the facility at Horana is reflected in the year under review. The interest cost was Rs. 328 Mn as against Rs.176 Mn of the previous year. The impact of high furnace oil prices and fluctuating LPG prices continued during the period under review.

The year closed for PGC with a PAT of Rs. 344 Mn as against Rs. 485 Mn of the previous year. However, following the consistent policy of a 50% payout ratio, the Board of Directors have proposed a dividend of 18%.

Piramal Glass Ceylon (Formerly Ceylon Glass Company) is the only Glass Bottle Manufacturing plant in Sri Lanka. It had the opportunity of coming under the umbrella of the Piramal Group in 1999. Presently, located in Horana, it has been in existence for over 55 years. The company, originally at Ratmalana, was relocated at Horana in 2007 as a BOI venture.

PGC at its manufacturing capacity of 300 tonne per day has the capability to offer glass containers in different shapes and colours for multiple industries such as Food, Liquor, Pharmaceutical, Agro chemical and beverages.

The Piramal Group led by Ajay G. Piramal is one of India’s foremost business conglomerates. Driven by the core values of Knowledge Action Care, the Piramal Group has a formidable presence in healthcare, drug discovery & research, glass, real estate and financial services. The Piramal Group also pursues sustained community activities in healthcare, education, emergency medical services, and heritage restoration.

www.island.lk

Ceylinco Insurance announces ‘record’ 315 percent dividend

Ceylinco Insurance PLC, announced an incomparable dividend of Rs.31/50 per share to its shareholders for the year 2017, which constitutes a 315 % dividend of the original share price. This is also an increase of 14.5 % of the dividend declared for 2016. Ceylinco Insurance PLC said that the company was able to declare this dividend due to the exceptional results of its two wholly owned subsidiaries, Ceylinco General Insurance Ltd and Ceylinco Life Insurance Ltd. By consistently delivering on its commitment to grow shareholder wealth in a sustainable manner, the company has earned the trust and confidence of its stakeholders.

The revenue of Ceylinco Insurance PLC exceeded Rs. 44.3billion in 2017 with its insurance sector contributing Rs. 41billion, the education sector Rs. 2.4 billion, the power and energy sector Rs. 545 million, with the others contributing the balance. The consolidated results recorded an imposing expansion, with the profit before tax reaching an exceptional Rs 12.6 billion, and the after tax profit standing at Rs. 11.7 billion. The main contributor to this mammoth profit was the insurance sector, with Rs 10.9 Billion, the education sector with Rs 457 million, the power sector with Rs 142.4 million, the healthcare sector contributing Rs 71.3 million, while the balance came in from the other sectors.

Commenting on the achievement, Ajith Gunawardena, Managing Director / Chief Executive Officer of Ceylinco Insurance PLC had this to say: "Our exceptional financial performance this year has enabled us to extend a generous dividend to our valued shareholders, one of the highest declared by a company in the financial sector. This success belongs to the dedication and commitment of the staff, backed strongly by our best in class systems and processes. Our social and economic governance practices coupled with prudential financial management and cutting edge marketing and customer service standards has brought us this success".

R Renganathan, Director of Ceylinco Insurance PLC and Managing Director of Ceylinco Life Insurance said: "The impressive shareholder returns generated by the company are all the more noteworthy when considering Ceylinco Life Insurance’s record of claim settlement and payment of benefits to policyholders, as well as its commitment to the community. In 2017, Ceylinco Life alone paid out Rs 6.7 billion in gross claims and benefits to policyholders, including Rs 4.45 billion in annual bonuses. Ceylinco Life recorded a gigantic net profit of Rs 9.4 billion for the year and transferred Rs 4.5 billion to shareholders fund".

Patrick Alwis, Managing Director of Ceylinco General Insurance commenting on the performance said ".Contributing to this remarkable performance, Ceylinco General Insurance recorded a profit after tax of Rs. 1.4 billion. This is after paying claims to the tune of Rs. 9.2 billion in 2017. The unprecedented amount of money provided in lieu of claim settlement reflects the company’s continuing commitment to ensuring timely claim settlement to all customers. Ceylinco General Insurance has always maintained an undisputed and unmatched reputation for settling all claims On The Spot enabling our customers to return to normalcy in the fastest possible time.

www.island.lk

Hemas Holdings records Rs 50.9 bn consolidated revenue for 2017/18

Hemas Holdings PLC (HHL) reported full year consolidated revenue of Rs.50.9 billion, an increase of 17.2% over last year for the period ended March 31, 2018.

Revenue growth was primarily driven by enhanced performance in our healthcare and mobility sectors.

HHL registered an operating profit of Rs.4.2 billion during FY 18, a 11.3% y-o-y decline together with earnings of Rs.2.7 billion, 23.0% y-o-y decline. The Atlas acquisition and asset disposals indicate a revenue growth of 14.9% while operating profit and earnings remained flat said Group Chief Executive Officer, Steven Enderby.

“We have made significant investments in growing our businesses which have reduced our operating profits for the year. These have included, commencing Home and Personal Care (HPC) operations in West Bengal, India, investments in digital health start-ups, and a major profit improvement project for our home and personal care business. These investments have reduced operating profit by Rs.397.9mn.”

“We acquired Atlas Axillia, Sri Lanka’s leading school and office stationery business, in January 2018.”

As a result, the acquisition has had a negative impact on operating profit of Rs.197 million and on earnings of Rs.295.1million. We have now fully utilized the capital raised in the rights issue.

“We have also had mixed operating performance across the Group with leisure and travel and HPC Bangladesh underperforming, while price controls on pharmaceuticals continues to put pressure on operating margins. “

The consumer sector comprising of home and personal care and school and office sStationery posted a revenue of Rs.17.4 billion during FY 18, indicating a growth of 8.6% over the previous financial year, revenue growth excluding Atlas was 3.6%. Operating profits stood at Rs.1.4billion, 31.3% YoY decline, a 22.7% decline excluding Atlas.
www.dailynews.lk

Panasian Power posts Rs 207.5 mn PBT

Panasian Power PLC (PAP.N), one of Sri Lanka’s leading green energy solutions providers, posted a profit before tax of Rs. 207.5 million for the year ending 31st March 2018.

The company generated Rs. 489 million in revenue for the year against Rs. 205 million the previous year.

This was compounded by a healthy gearing for the company at 48%.

The company attributed this stellar growth to the addition of a further 6.3MW to the grid within the financial year as well as to improved operational efficiencies, energy enhancement exercises and prudent cost control practices. With this foundation in place, Panasian intends to further increase its installed capacity in FY2019 through solar and mini hydro power projects.

Furthermore, Panasian was able to record significant growth in revenue through solar power engineering, procurement and construction services (EPC) which constitutes part of their diversification process. The company’s investments in rooftop and ground solar plants will result in an additional capacity of 7MW once on grid beginning from 2018.

This diversification into solar comes on the back of the CEB’s plan to move away from coal as a source of energy generation and become an energy self-sufficient nation by 2030. According to the CEB’s long-term power generation plan renewable energy will contribute at least 21.4% towards total power generation by 2025.

In the near term the company will also explore opportunities in wind to eventually create an energy portfolio with equal exposure to all three renewable energy sources. Additionally, Panasian will look at foreign projects, in Africa and South East Asia, with a view to securing dollar revenue streams as well as aggressively reviewing M&A opportunities for future growth.

This is in keeping with the company’s target of becoming Sri Lanka’s largest listed renewable energy solutions provider within the next three years.

Commenting on this record financial year Dr. Prathap Ramanujam, Chief Executive Officer – Panasian Power, said, “We are pleased with our performance in FY2018. We were able to streamline many of our processes and create greater efficiencies within the company.

We also looked at both organic and inorganic growth to increase our power generation as we aggressively sought bottom line growth. We also believe that the long term viability of our projects will ensure that our nation will be on track towards becoming energy independent which will help us reduce our foreign exchange outflows and lead towards wider economic development and a better quality of life for its citizens.”

www.dailynews.lk

First Capital records highest ever PAT of Rs. 1.96 bn

First Capital Holdings PLC (The Group) the only listed investment bank in Sri Lanka, recorded its highest ever consolidated profit after tax of Rs 1,960 million for the year 2017/18, marking a milestone in the investment bank’s history.

The results show a significant growth compared to Rs 232 million in 2016/17. First Capital, with its impressive 35 year history, has total assets of Rs.35 billion and equity in excess of Rs. 3.5 billion.

The Group recorded a total comprehensive income of Rs 1,866 million for the year, a healthy increase from Rs. 238 million recorded in 2016/17. First Capital’s performance includes recognition of a deferred tax asset amounting to Rs. 897 million (2017/18) in accordance to LKAS 12. The Group’s primary dealer contributed Rs. 1,668 million profit after Tax (including recognition of a deferred tax asset of Rs. 845 million) for the year, bolstered by opportunities derived through secondary market activities, the business displayed an impressive performance.

The corporate finance division, mobilized Rs 24 billion through the structuring and placement of corporate debt securities.

Increasing its contribution to the Group’s profitability, the business reported a total fee income of Rs. 80 million for the year.

The wealth management division, increased its assets under management by Rs. 2.1 billion in 2017/18, demonstrating a positive impact to the Group’s bottom line, with a total fee income of Rs 38 million.

The Group’s stock brokering unit, recorded an income of Rs 78 million for the financial year.

www.dailynews.lk

Sri Lanka's Ceylon Cold Stores net down 30-pct in March

ECONOMYNEXT - Profits at Sri Lanka's Ceylon Cold Stores Plc, a retailing and consumer goods company fell 30 percent from a year earlier to 577 million rupees in the March 2018 quarter, interim accounts showed.

The firm reported earnings of 6.08 rupee per share for the quarter. In the year to March it reported earnings of 27.01 rupees per share on total profits of 2.57 billion rupees, which were down 28 percent.

In the March quarter gross profit fell 11 percent to 1.42 billion rupees, with revenues rising 20 percent to 12.28 billion rupees, but cost of sales growing at a faster 25 percent to 11.86 billion rupees.

In the manufacturing area revenues rose to 3.5 billion rupees from 3.32 billion rupees, and profits fell to 1.038 million rupees, down from 1.12 billion a year earlier.

In retailing, revenue grew to 9.6 billion rupees from 7.75 billon but profits fell to 270 million rupees from 404 million rupees.

Net finance income fell 69 percent to 14 million rupees. There was a fair value gain of 21 million rupees, down from 92 million rupees a year earlier.

Sri Lanka Treasuries yields down

ECONOMYNEXT - Sri Lanka's Treasuries yield fell across maturities with the 12-month yield falling 09 basis points to 9.62 percent, data from the state debt office showed.

The debt office offered 5.0 billion rupees of 12-month bills and accepted 8.4 billion rupees of bids.

The 6-month yield fell 01 basis point to 8.93 percent with 5.0 billion rupees of bills being offered 1.06 billion in bids being accepted.

The 3-month bill fell 03 basis points to 8.34 percent with 3.0 billion rupees of bills being offered and 2.5 billion accepted.

A total of 12.0 billion rupees of bills were offered for auction, with an estimated 17 billion maturing.

Sri Lanka hydro power generation up in 2018 amid demand growth

ECONOMYNEXT - Sri Lanka hydro's power generation has bounced back in 2018 with rains returning amid a double digit pick up in overall demand, official data shows.

Total power generation rose 10 percent from a year earlier to 2,480 GigaWatt hours in the first two months of 2019, with February generation up 11.0 percent, data from the central bank shows.

In 2017 power generation only grew 0.3 percent in the first two months.

Hydro power generation at state-run Ceylon Electricity Board has soared 93 percent to 443 GigaWatt hours, in the first two months of the year.

Private sector non-conventional renewable energy, mostly mini-hydro and wind also rose 60 percent to 172 GigaWat hours.

Fuel oil driven energy also grew 21 percent to 496 GWh, amid double digit demand growth and a drop in coal power to 938 GWh in the first two months of 2018.
Private sector thermal energy fell to 411 GWh from 473GWh.

In March 2018 CEB's hydro generation rose 75 percent to 208GWh data from the regulator, which does not include mini-hydro output showed.

Sri Lanka Colombo Port volumes up 16.2-pct in 1Q, fastest after Singapore

ECONOMYNEXT - Containers handled at Sri Lanka's Colombo port grew 16.2 percent from a year earlier to 1.7 million twenty foot equivalent units (TEUs) in the first quarter of 2018, at a rate only second to Singapore, the state port agency said.

Colombo's transhipment volumes grew 20.9 percent to 1.32 million TEUs, with March volumes up 19.4 percent to 477,043.

Only Singapore's grew at a faster rate of 16.5 percent among major ports, Sri Lanka Ports Authority said, quoting a ranking by Alphaliner Monthly, a shipping publication.

Other fast growing ports in the region were Xiamen, China 11.6 percent, Antwerp, Belgium 10.7 percent ad Ningbo-Zhoushan, China at 10.4 percent, which have bigger bases.

Domestic volumes in Colombo were up 1.4 percent to 358,692 with March volumes down 7 percent to 119,375.

Colombo's first quarter growth was much faster than the 8.3 percent recorded in 2017, when the port handled 6.2 million containers, the SLPA said.

Total cargo handling was up 13.4 percent to 25.47 million metric tonnes, with discharged growing 11.6 percent to 15.06 million metric tonnes and loaded cargo up 16 percent to 10.4 million tonnes.

Sri Lanka’s Piramal Glass March net down 56-pct

ECONOMYNEXT – Piramal Glass Ceylon (PGC) said net profit fell 56% to Rs92 million in the March 2018 quarter from a year ago with annual earnings also down owing to lower sales and higher depreciation, interest and energy costs.

The Sri Lankan bottle maker’s March quarter sales were stagnant at Rs1.7 billion, according to interim accounts filed with the stock exchange.

Quarterly earnings per share were 10 cents. PGC shares last traded at Rs5.50, Monday, up 10 cents or 1.85%.

EPS for the year to 31 March 2018 fell to 36 cents from 51 cents the previous year with net profit down 29% to Rs344 million and sales almost stagnant at Rs6.8 billion.

Piramal Glass Ceylon, owned by India’s Piramal group, said domestic revenue dipped 16% to Rs4.6 billion during the year.

“Beverage and liquor segments were affected with the introduction of new taxes and levies while agro sales were affected due to the adverse weather conditions,” a statement said.

“In the export segment, it was encouraging to note the Rs2 billion mark being crossed with a growth of 77%.”

The exports increased mainly in the US and Canadian markets with the company gaining entrance to several new markets which include Malaysia, Africa, Vietnam and Myanmar.

Exports to US grew over 150%, to Australia by 72% and saw a six-fold increase in the Canadian market.

PGC said there was a marginal increase in annual gross profit margins from 20% to 21%.

“These results were achieved despite the high impact of depreciation on the investments made during the year,” it said.

“The depreciation increased by 31% from Rs.553Mn to Rs.722Mn. The profitability was further affected by an increase in interest costs and high energy prices.”

The annualized impact of the interest on the long term loan of Rs3 billion taken for the relining and upgrade of the facility at Horana was reflected in the year under review, PGC said.

The interest cost rose to Rs 328 million from Rs176 million the previous year.

The impact of high furnace oil prices and fluctuating LPG prices continued during the period under review, the company said.

Sri Lanka’s Asian Hotels and Properties March net down 17-percent

ECONOMYNEXT – Sri Lanka’s Asian Hotels and Properties, which operates Cinnamon Grand Colombo and Cinnamon Lakeside Colombo hotels, said net profit fell 17% to Rs689 million in the March 2018 quarter from a year ago.

March quarter sales fell six percent to Rs2.2 billion over the period, according to interim accounts filed with the stock exchange.

Earnings per share of the firm, part of the John Keells Holdings group, fell to Rs1.56 from Rs1.87 the previous year.

Asian Hotels and Properties share was last traded at Rs49, down Rs2.80 or 5.41%.

Full year EPS fell to Rs3.81 from Rs5.12 with net profit down 26% to Rs1.7 billion while sales were down five percent to Rs8.6 billion from the year before.

The accounts showed sales and profits from Asian Hotels and Properties’ two hotels were lower during the year.

However, profit from the property business, Crescat Boulevard shopping mall from which it earns rents, rose despite stagnant sales on gains in investment property fair value.

Sri Lanka’s Hemas invests in digital health start-ups

ECONOMYNEXT – Sri Lankan conglomerate Hemas Holdings is investing more money in technology start-ups as it seeks to grows its digital health business,

Hemas group chief executive Steven Enderby said the investments in digital health start-ups were one reason for reduced operating profits during the March 2018 financial year.

The Hemas group healthcare sector delivered strong financial performance during the year, he told shareholders.

“However, profitability in pharmaceuticals remains challenging due to price regulation and devaluation of the rupee,” Enderby said.

Investing for a better future is a priority and Hemas has made significant investments and acquisitions, Enderby said.

“With a view to drive digital initiatives, including finding better ways to reach our customers through E-Commerce across our evolving healthcare businesses, we have made a number of investments in early stage technology businesses in the digital healthcare space.”

Sri Lanka's Watawala Plantations expect dairy turnaround

ECONOMYNEXT - Sri Lanka's Watawala Plantations Plc, which has interests in oil palm and cattle farming, that benefit from import duty protection, is expecting to return to profit as milk output increase in a dairy start up unit.

The firm made a marginal 6.8 million rupee loss in the March quarter on revenues of 566 million rupees as profits in oil palm was outweighed by diary losses.

Watawala spun off its tea unit which is more exposed to commodity price cycles and wage pressure in Hatton Plantations, and only small volumes of tea remain with the firm.

Managing Director Vish Govindasamy told shareholders that the start-up farm, Watawala Dairies now had 1,128 cows including 602 lactating milch cows.

The unit lost 90 million rupees, including depreciation.

"The loss is in line with the projected loss due to the lower milk yields at the commencement of the lactation cycle," Govindasamy told shareholders in interim accounts filed with the Colombo Stock Exchange.

Milk yields will go up in subsequent lactations, he said. A herd of 240 Australian cattle, which were added to the herd will also improve milk yields, he said.

Palm oil profits also fell he said.

"The lesser prices for crude palm oil compared to the previous year affected the profitability," he said.

"The lower prices were the result of the import duty revisions and the volatility of the crude palm oil prices in the world market.

"The profitability was also impacted by the provision of extra deferred tax of LKR 103 million, owing to the higher tax rate applicable consequent to the new Inland Revenue Act."

Sri Lanka sells Rs90bn 5 and 10-year bonds

ECONMYNEXT - Sri Lanka has sold 90 billion rupees of 5 and 10-year bonds at an auction Monday, data from the state debt office showed.

The debt office sold 50 billion rupees of 4-year, 9-month bonds at a weighted average yield of 10.51 percent, after offering the same amount.

Similar bonds were quoted at 10.42/50 levels are the auction and at 10.40/48 percent levels before the auction, dealers said, indicating that the auction was conducted close to the market.

The debt office also sold 40 billion rupees of 9-year 9-month bonds maturing on 15.05.2028 at an average yield of 10.72 percent.

A close maturity of 01.09.2028 was quoted at around 10.58/78 percent, dealers said.

The auction has to be settled on June 01, 2028.

An estimated 90 billion rupees of bonds were maturing on that date and about 20 billion in coupon payments.

Sri Lanka's John Keells Holdings net up on insurance gain

ECONOMYNEXT - Profits at Sri Lanka's John Keells Holdings Plc rose 100 percent to 9.96 billion rupees in the March 2018 quarter, from a year earlier helped by transfers and one-off gains from its insurance unit.

The group reported earnings of 7.18 rupees per share. In the year to March, it reported earnings of 15.15 rupees per share on total profits of 21 billion rupees, which were up 29 percent from a year earlier.

Group gross profits grew 2 percent in the quarter to 8.6 billion rupees, with revenues up 12 percent to 33.5 billion rupees and costs rising 17 percent to 24.9 billion rupees.

Net finance income was down 3 percent to 2.65 billion rupees.

The group had short term investments of 64.3 billion rupees down from 79 billion a year earlier.

Change in insurance contract liabilities was a positive 1.1 billion rupees, from a negative 1.3 billion rupees a year earlier.

There was another 3.38 billion rupee one off insurance transfer surplus in the quarter. JKH said the one off gains were due to a change in accounting policy mandated by regulations.

Fair value gains rose to 896 million rupees from 473 million a year earlier.