Ambeon Group launched to take on techno-centric business world of tomorrow

In a strategic move to reposition the entity to represent the Group’s business vision and take on the dynamic, technocentric business world of tomorrow, Taprobane Group announced the transformation of the Group including the name change to Ambeon.

As such, Taprobane Holdings PLC will be repositioned as Ambeon Capital PLC, while Lanka Century Investments PLC will be Ambeon Holdings PLC, with immediate effect.

The transformation of Ambeon Group, which includes restructuring of its diversified businesses to bring about collective focus, optimize investments and increase shareholder value, is now said to be well-poised to take the leap and transform the latent opportunities into lucrative ventures that deliver sustained value.

With over 3500 employees, Ambeon Group is reputed for its market dominance in the areas of financial services, manufacturing, real estate, technology and strategic investments.

Post-restructuring of the Group, Ambeon Capital PLC will be the holding company while all businesses have been repositioned and realigned legally under Ambeon Holdings PLC, transforming the Group to become a medium-sized, diversified conglomerate geared to take on the business opportunities available in global markets.

“Today’s announcement about the launch of Ambeon and the transformation of the Group is yet another milestone in our journey to build on our foundation of re-engineering success,” Ambeon Capital PLC Chairman Sanjeev Gardiner said.

“Ambeon Group is now ready and well-poised to compete amongst the elite conglomerates in the country. As a dynamic and diversified group of companies, Ambeon will continue to seek for lucrative business opportunities and transform entities to be the best within their respective industries in Sri Lanka and the world. This is just the beginning. True to our commitment, we will continue our journey to enhance the overall wealth and value creation of our shareholders and all other stakeholders beyond ambition,” Gardiner added.

Under the new Group structure, the subsidiaries of Ambeon Holdings PLC will include Taprobane Capital Plus (Pvt.) Ltd (a leading financial services provider with a wealth of experience in capital markets in Sri Lanka), South Asia Textiles Industries Lanka (Pvt.) Ltd (a leading manufacturer of exceptional quality weft knitted fabric specializing in knitting, dyeing, finishing, printing, brushing, sueding and anti-pin micro/polar fleece fabric for leading global brands such as Victoria Secret, Next, Marks & Spencer, Tesco, Calvin Klein, Decathlon and Adidas), Dankotuwa Porcelain PLC and Royal Fernwood Porcelain Ltd (manufacturers of porcelain tableware and gift items for global giants such as Oneida, Macy’s, Country Road, Lenox, John Lewis, Crate & Barrel, Megros, Jasanmal, Ralph Lauren, the Walt Disney Company and Dilmah), Ceylon Leather Products PLC (manufacturer of leather footwear and accessories, popularly known as DI), Millennium Information Technologies (Pvt.) Ltd (Sri Lanka’s leading information systems solutions providers delivering IT solutions for many industries, including banks and finance, telecommunications, apparel and leading conglomerates) and Colombo City Holdings PLC (real estate).

Commenting on the transformation, Ambeon Capital PLC and Ambeon Holdings Group Managing Director/Chief Executive Officer Murali Prakash PLC stated, “It is with a sense of pride that I announce the birth of Ambeon – a well-diversified group of companies, empowered and backed by the market dominance, infinite potential and financial strengths of Taprobane Holdings PLC and Lanka Century Investments PLC.

The Group has been restructured and realigned to be astute, driven, nimble and visionary – one with an expanded range of products, strong globalized local brands, premier technology and innovation platforms along with the required resources will pave the way for Ambeon to extend its footprint across new businesses, markets and regions.”

“Ambeon Group is built on a robust set of values which include identifying the latent opportunities and moving first with the utmost discipline, empowering our people and channelling teamwork across all disciplines, building a culture of actioning results across all our businesses and seeing beyond the horizon in search of the next frontier. Integrity, governance, risk and compliance are further built into our DNA.

This ensures that the Group maintains transparency across all processes, invariably benefitting our customers and creating sustainable long-term value for our shareholders and all other stakeholders. We are now future-ready to re-engineer success across all our businesses,” Prakash concluded.

Ambeon Group is powered and guided by the renowned corporate giants – the Galle Face Hotel group, Hirdaramani group and Navitas Holdings.

The Ambeon Capital PLC board of directors comprises of eminent personalities – Sanjeev Gardiner (Chairman/Non-Independent Non-Executive Director), Ajith Devasurendra (Deputy Chairman/Non-Independent, Non-Executive Director), Murali Prakash (Group Managing Director/Chief Executive Officer), Priyantha Fernando (Independent Non-Executive Director), Harsha Amarasekera P.C. (Non-Independent Non-Executive Director), Ranil Pathirana (Non-Independent Non-Executive Director), Sarinda Unamboowe (Independent Non-Executive Director), Deshamanya Deva Rodrigo (Independent Non-Executive Director), while the board of directors of Ambeon Holdings PLC include – A.G. Weerasinghe (Chairman/Non-Independent Non-Executive Director), Murali Prakash (Group Managing Director/Chief Executive Officer), Ruwan Sugathadasa (Non-Independent Non-Executive Director), Mangala Boyagoda (Independent Non-Executive Director) and Priyantha Maddumage (Non-Executive Director).
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Sri Lanka's Finance companies to face tougher capital requirements from July

• BASEL-like model to increase minimum capital every year up to 2021 
• Tier I and tier II ratios to increase to 8.5% and 12.5% from current 5%t and 10%
• Fitch says higher capital requirements will improve sector resilience 
• But says will add to capitalization pressures for small-scale finance firms

Accordingly, the tier I and tier II ratios of licensed finance companies will increase to 8.5 percent and 12.5 percent from the current 5 percent and 10 percent respectively, effective from next month.If there was any leniency enjoyed by the Sri Lanka’s finance companies on their capital and disclosure requirements thus far, such will end soon as the sector is set to come under a BASEL-like regulatory framework.

The new capital regulations on licensed finance companies, which will take the form of BASEL rules on banks, will require the finance companies to gradually increase their capital ratios from 2018 through 2021, said Fitch Ratings on a special note on the sector ahead of the new rules coming into effect from July 1. Further, the finance companies with assets over Rs.100 billion – termed as systematically-important licensed finance companies – will be required to build an additional capital surcharge of 150 basis points starting from July 1, 2019 to July 1, 2021. This effectively takes the total capital ratio up to 14 percent by 2021 for such larger finance companies. However, the most immediate hurdle for all finance companies will be to up their tier I ratio to 6.0 percent by next month. “New capital-adequacy regulations for Sri Lankan finance companies are likely to improve the resilience of the sector to economic shocks, but will add to capitalization pressures— particularly for the country’s numerous small-scale finance companies,” Fitch Rating said. Fitch noted the finance companies that they rate already stay on top of the capital thresholds coming into effect next month even after taking into account the potential risk-weighted asset changes based on the current asset mix. While most of them already comply with the 2021 thresholds with some requiring external capital to stay in line, the rating agency said the small finance companies are struggling to raise capital to comply with an earlier requirement, which asked them to hold a minimum core capital of Rs. 2.5 billion by January 1, 2021. “The new minimum capital ratios are likely to add to those difficulties”, Fitch said. Sri Lanka’s licensed finance company sector has long been subjected to less stringent checks and balances compared to the banks on their capital adequacy, measurement of risks and disclosure requirements. The lax regulatory framework on the sector resulted in many finance companies filing for bankruptcy due to mismanagement of funds with the taxpayers having to rescue the hapless depositors.Meanwhile, capital ratios of the finance companies will come under downward pressure due to substantial increase in risk weighted assets/loans in the sector stemming from additional risk weighting made on ‘operational risks’ and the changes in the computation of risks weighted assets for credit risk.Therefore Fitch said those finance companies exposed to uncollateralized lending such as micro-financing, “may see the sharpest increases in RWAs, as this lending will be risk-weighted at 125 percent instead of 100 percent as previously”. However, the sector does not consider the ‘market risk’ in their trading book when computing the risk weighted assets in a finance company’s balance sheet because the regulator still views such a risk is low in the sector. The staggered capital ratio increments for the licensed finance sector in Sri Lanka is coming into effect precisely one year after the country’s banking sector was made subjected to BASEL III regulations on capital requirements.www.dailymirror.lk

Sri Lanka to remove VAT from hospital bills

ECONOMYNEXT - Sri Lanka will remove value added tax from hospital bills from next week, Finance Minister Mangala Samaraweera said in the wake of calls by President Maithripala Sirisena also to lift the tax.

Sri Lanka slammed a 25 value added tax on hospital bills while threatening price controls on private hospital bills and also depreciating the rupee in a bid to boost exports by improving 'competitiveness' which involves the destruction of real wages of workers.

Every person who goes to a private hospital, will save resources from the state hospital system.

Sri Lanka provides education and healthcare free, and also uses both services as an excuse to justify the existence of the state and the taxation system.

Though President Sirisena had admitted placed stumbling blocks proposed reforms of the United National Party that will free the common man from vested domestic business oligarchs who are exploiting them though import duties, some analysts say he was right to oppose the VAT on healthcare.

Instead of healthcare some analysts say VAT should be built into areas like energy, where people can contribute small amounts tax over time to pay for hospital upkeep. Hospital bills on the other hand are large and sudden.

A VAT on energy will also help the exports become competitive without destructive measures like currency depreciation.

EPF proven a winner with its large divestiture of John Keells (JKH) shares to Malaysians in 2012

LBO - The EPF as of late has not been proven to be the most savvy investor, but with one of its biggest moves in the stock market 6 years ago, the provident fund clearly made the right choice.

Early in 2012, Sri Lanka’s largest provident fund sold an 8.4% stake in John Keells Holdings (JKH) to the Malaysian sovereign fund Khazanah for Rs13.7bn. This was a blockbuster deal at the time, and many analysts were critical that the shares were sold at too low a price.

Over the past 6 years, JKH has had complicated adjustments to its share count due to rights issues, warrant issues, and sub division of shares. When all these events are taken into account, EPF could likely buy the shares it sold back at a similar price 6 years later. During that 6 years, it is likely that the EPF has earned close to a 100% return with its investments in fixed income.

Stock brokers in Colombo are constantly lobbying the state institutions (of which EPF is the largest) to invest more money into the stock market. However, these arguments made by brokers who will benefit financially from the EPF investments into the stock market, have for the most part fallen on deaf ears. For those Sri Lankan’s who hold their savings in the EPF, this has been a blessing as investments into the stock market would have likely drastically underperformed fixed income over the corresponding period. The Central bank has not provided analysis of how its investments in the stock market have performed relative to fixed income over long time periods. Thus, EPF holders are left in the dark when trying to evaluate the management of their funds.

This begs the question…. Why is the EPF investing in the stock market at all?

MTD Walkers (KAPI) reports a massive loss of Rs2.8bn

LBO - The woes of Colombo Stock Exchange listed stocks continue with the financial results of construction company MTD Walkers (KAPI). For the year ended March 31st 2018, KAPI has reported a staggering loss of Rs2.87bn, Analysts say this is one of the largest losses of any listed company in recent memory.

Many construction companies in Sri Lanka had benefited from contracts with the last government. However, with the new regime in power since January 8th 2015, several companies have reported rocky results.

The company is sitting on a large balance sheet of Rs46bn, and a significant debt load of Rs30bn. Payables are also a significant Rs8bn. With such large losses being reported, it is uncertain how the company can continue to operate with such a large debt load.

KAPI is 90% owned by Malaysian investors who have pumped billions into the company over the last several years, only to produce a retained net loss of Rs1.4bn.

The stock last traded at Rs13.4, less than half of its Rs33 net asset value.

Melstacorp, Softlogic, Vallibel, Ceylinco in S&P Sri Lanka 20 Index

ECONOMYNEXT – The Colombo Stock Exchange (CSE) has included four new firms, Melstacorp, Softlogic Holdings, Vallibel One and Ceylinco Insurance in the S&P Sri Lanka 20 index, which tracks the top 20 largest and most liquid stocks, in its latest revision.

They replace Ceylon Cold Stores, Ceylon Tobacco Company, Nestle Lanka and Seylan Bank in the semiannual rebalancing of the index, made by S&P Dow Jones Indices, the CSE said in a statement.

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.

Effective from 18 June2018 the stocks in the S&P Sri Lanka 20 in alphabetical order are as follows.

COMPANY TICKER
Access Engineering PLC                                            AEL.N0000
Aitken Spence PLC                                                   SPEN.N0000
Ceylinco Insurance PLC                                            CINS.N0000
Chevron Lubricants Lanka PLC                                  LLUB.N0000
Commercial Bank of Ceylon PLC                               COMB.N0000
Commercial Bank of Ceylon PLC Non-Voting              OMB.X0000
DFCC Bank PLC                                                        DFCC.N0000
Dialog Axiata PLC                                                    DIAL.N0000
Hatton National Bank PLC                                        HNB.N0000
Hatton National Bank PLC Non-Voting                       HNB.X0000
Hemas Holdings PLC                                                HHL.N0000
John Keells Holdings PLC                                        JKH.N0000
Lanka Orix Leasing Company PLC                            LOLC.N0000
Melstacorp PLC                                                      MELS.N0000
National Development Bank PLC                             NDB.N0000
People's Leasing & Finance PLC                              PLC.N0000
Richard Pieris & Company PLC                                RICH.N0000
Sampath Bank PLC                                                 SAMP.N0000
Softlogic Holdings PLC                                           SHL.N0000
Teejay Lanka PLC                                                 TJL.N0000
Tokyo Cement Company (Lanka) PLC                     TKYO.N0000
Tokyo Cement Company (Lanka) PLC Non-Voting    TKYO.X0000
Vallibel One PLC                                                   VONE.N0000