Sathosa Motors profits up 86%

Ceylon FT: Sathosa Motors PLC reported an 86% growth in net profits to Rs 244.1 million during the nine months ended December 2013, interim financial results showed.

Turnover grew 24% to Rs 2.19 billion and other operating income grew 209% to Rs 102.34 million.

Administrative expenses grew 123% to Rs 218.3 million and selling and distribution expenses grew 390% to 58.27 million.

Access Engineering PLC has an 84.4% stake in the company as at the balance sheet date. 

The company is agents for Japan's Isuzu and Germany's Opel and operates workshops for a range of vehicles under these brands from cars to heavy construction vehicles.
http://ceylontoday.lk/22-54190-news-detail-sathosa-motors-profits-up-86.html

LB Finance profits down 30%

Ceylon FT: LB Finance saw net profits fall 30% year-on-year to Rs 796.9 million during the nine months ending December 2013, interim financial results showed.

Net interest income grew 26% year-on-year to Rs 4.12 billion; interest income grew 25% to Rs 9.51 billion and interest expenses grew 25% to 5.38 billion.

Auction losses saw net operating income decline by 11% to Rs 3.17 billion.

Personnel expenses grew 28% to Rs 979.5 million, depreciation charges grew 6% to Rs 244.69 million and other operating expenses grew 10% to Rs 751.6 million.

Loans and receivables stood at Rs 17.5 billion as at end December 2013, against Rs 16.45 billion as at end March 2013. Lease rentals and stock out on hire stood at Rs 29.99 billion, from Rs 28.2 billion in March.

Customer deposits stood at Rs 45.2 billion as at end December 2013, up from Rs 38.7 billion as at end March 2013.

http://ceylontoday.lk/22-54186-news-detail-lb-finance-profits-down-30.html

Sri Lankan index slips from over 7-month high on profit-taking, outflows

COLOMBO, Jan 27 (Reuters) - Sri Lankan shares slipped on Monday, retreating from seven-month highs hit in the previous session on foreign outflows and profit-taking after gaining for three straight sessions on low interest rates and expected foreign inflow. 

The fall, however, was much less than its Asian peers, which plunged on concerns over U.S. Federal Reserve further tapering its stimulus this week and fears of a slowdown in China. 

The main stock index fell 0.16 percent, or 9.82 points, to 6,245.81, from its highest close since June 12 hit on Friday. 

Foreign investors were net sellers of 33 million rupees worth of shares. But they have been net buyers of 793.5 million rupees so far this year. 

They had bought 22.88 billion rupees of stocks last year. Conglomerate John Keells Holdings Plc slipped 3.16 percent to 239.20 rupees. 

The index has gained 5.2 percent in the last 12 sessions through Friday including last week's 2 percent gain, which analysts attributed to the central bank's rate cut on Jan. 2 and the recent fall in t-bill yields. 

The index has been in an overbought region since Jan. 7, Thomson Reuters data showed. 

It has risen 5.6 percent so far this year following a 4.8 percent gain in 2013, after having fallen in the previous two years. 

The day's turnover was 872.6 million Sri Lanka rupees ($6.68 million), inline with last year's daily average of about 828.4 million rupees. 

($1 = 130.6500 Sri Lanka rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anand Basu)

http://uk.reuters.com/

Sri Lanka stocks close lower

Jan 27, 2014 (LBO) – Sri Lanka stocks close 0.16 percent lower Monday with diversified stocks losing ground, brokers said.

The Colombo benchmark All Share Price Index closed 9.82 points lower at 6,245.81, down 0.16 percent. The S&P SL20 closed 17.89 points lower at 3,460.20, down 0.51 percent.

Turnover was 872.63 million rupees, down from 1.45 billion rupees last Friday, with stocks of 137 firms closing in the red against 48 gainers.

JKH topped the turnover contribution list with one off market transaction of 164.50 million rupees contributing to 19 percent of the turnover.

Touchwood Investments closed 30 cents higher at 3.20 rupees, attracting most number of trades during the day.

Foreigners bought 249 million rupees worth shares while selling 282 million rupees of shares.

JKH closed 7.80 rupees lower at 239.20 rupees and Finlays Colombo closed 46.90 rupees lower at 253.10 rupees, contributing most to the index drop.

JKH’s W0022 warrants closed 2.30 rupees lower at 77.70 rupees and its W0023 warrants closed 4.70 rupees lower at 80.30 rupees.

Nestle Lanka ended 25.30 rupees lower at 2,125.20 rupees and C T Holdings closed 6.00 rupees lower at 144.00 rupees.

Ceylon Tobacco Company closed 88.90 rupees higher at 1,340.20 rupees and Ceylon Cold Stores ended 10.50 rupees higher at 165.50 rupees.

Lion Brewery closed 5.00 rupees higher at 385.00 rupees and Distilleries closed 50 cents higher at 205.50 rupees.

Carson Cumberbatch ended flat at 355.00 rupees and Bukit Darah also ended flat at 612.00 rupees.

Cargills Ceylon closed 1.30 rupees lower at 152.10 rupees and Commercial Bank closed 1.90 rupees lower at 128.00 rupees.

Ceylinco Insurance ended 49.80 rupees higher at 1,449.80 rupees and Lanka Orix Leasing Company ended 1.70 rupees higher at 75.00 rupees.

Cargills Bank limited to 3-branch chain

The Central Bank license given to Cargills (Ceylon) PLC to operate a commercial bank called Cargills Bank Ltd. has limited the bank chain to three branches, reports say.

Accordingly, the headquarters of Cargills Bank will be set up in the ceramic building in Kollupitiya while the other two branches will be located in Independence Avenue, Colombo 07 and in Batticaloa.

The license lacked the signature of the President Mahinda Rajapaksa for some time. According to the Banking Act, the President's signed approval in his capacity as Finance Minister is required to commence a new Banking venture.

Earlier, a spokesman of Cargills Bank had revealed that the bank would expand throughout the island choosing 10 strategically located branches.

He added that all facilities required were completed and employees required were recruited.

Former CEO of Sampath Bank - Harris Premaratne is to be the CEO of Cargills Bank, which was to kick start operations with a Rs. 4 billion investment.

Ranjit Page will be the Chairman of the Bank.

https://www.srilankamirror.com

Watawala Plantations brews Rs. 4.5 b in revenues; net income of Rs. 311 m in 9 months

Watawala Plantations PLC (CSE: WATA) has reported revenue of Rs. 4.5 billion for the nine months ended 31 December 2013 (9MFY14), up 8.8% YoY. Net profit declined to Rs. 311 million for 9MFY14, from Rs. 589 million recorded in 9MFY13.

The overall decline in YoY PAT is mainly attributed to the 20.0% YoY wage hike which came into effect from April 2013, which inflated the cost of production across all crops.

In 3QFY14, Revenue grew by 13.2% over the same quarter last year to Rs. 1.7 billion. PAT declined 24.8% YoY to stand at Rs. 212 million. The strong bottom line contribution in 3QFY14 was very encouraging as 68% of the total profit was generated in the quarter under review.

Segmental review
WATA’s Managing Director Vish Govindasamy said: “Segment performance overall met our expectations, especially in the 3QFY14. Yield improvements in palm oil have been excellent, while the turnaround in the tea segment has been very encouraging. In a challenging year, we continuously keep re-inventing ourselves with productivity improvements.”

The palm oil segment registered a revenue growth of 5.4% YoY to reach Rs. 1.1 billion in 9MFY14 which accounted for 24.8% of the company’s revenue during the period. The revenue growth was mainly driven by an impressive increase in production of crude palm oil (CPO), resulting from the adoption of good agricultural practices over the last few years, in line with the company’s agriculture policy.

CPO production grew 9.5% YoY to 6.52 m kgs for 9MFY14 from 5.96 m kgs recorded in the same period last year. The segment maintained its position as the highest contributor to company profitability, having made a net profit of Rs. 465 million for 9MFY14, compared Rs. 447 million recorded in 9MFY13.

The tea segment, the dominant revenue contributor which accounted for over 65% of the total revenue, increased 6.7% YoY to Rs. 2.9 billion in 9MFY14, on the back of improved tea prices, and increased production volumes in the 3QFY14. Tea NSA (Net Sale Average) for 9MFY14 improved to Rs. 418, compared to Rs. 403 recorded in the corresponding period in the last year. The negative impact due to reduction in production volumes, resulting from the continuous rains which prevailed in the upcountry area during the 1st few months of FY14 was partially offset by the increased volumes experienced in the 3QFY14, on the back of favourable weather conditions.

Tea production was recorded at 7.28 m kg in 9MFY14, which equalled the previous year’s production of 7.30 m kg. As anticipated, at end of 1HFY14, the cumulative net loss of Rs. 233 million recorded for 1HFY14 reduced to Rs. 197 million, as substantial crops were harvested during 3QFY14, while tea prices continued to be buoyant. 

Yet another factor that needs due consideration was the 20.0% YoY wage hike effective from April 2013 which resulted in an increase of average production cost by Rs. 41 per kg, and as a result, the total negative impact on cost of sales amounted to Rs. 289 million for the 9MFY14.

The rubber segment which accounted for 2.5% of the total revenue for 9MFY14, experienced a 23.1% YoY drop in revenue to Rs. 111 million, from Rs. 145 million recorded in 9MFY13 due to a decline in production by 15.3% YoY, compared to same period last year. The drop in production was accounted by lower number of tapping days due to bad weather that set in from May 2013 through till September 2013. The net loss for rubber amounted to Rs. 15 million in 9MFY14 versus the Rs. 2 million recorded in the same period last year.

Export segment

The export sector recorded a significant improvement in revenue driven by increased volumes due to several additional export orders received from Tata Global Beverages for their Tetley operation in Australia, Russia, Pakistan, and India. In 9MFY14, export revenue grew 75.5% YoY to Rs. 365 million from Rs. 208 million in 9MFY13.

Outlook
WATA has successfully endured a tough 9MFY14, on the back of wage hikes and tea crop losses, aggravated by extreme rainfall, thanks to its diverse range of agri crops which nulled the risk of a single commodity to the company.

FY14 being a ‘wage year’, the company had a 20.0% YoY increase in its staff related cost, but this was somewhat cushioned by strong tea prices, and a good harvest for our palm oil plantations.

Historically, 4Q is known to be the quality season, and provided there are no extraordinary weather conditions, we believe the company can recuperate most of its lost crop in the next few months up to the year-end FY14, to be at least on par with the volumes witnessed last year.

We are also confident that our palm oil plantations will continue to perform well and deliver expected crop, given the current weather conditions.

A member of the Sunshine Group, Watawala Plantations PLC is a diversified plantation company in Sri Lanka, managed by the Group’s subsidiary, Estate Management Services Ltd., a joint venture with the TATA Global Beverages Ltd. and Pyramid Wilmar Plantations (Part of Wilmar International). The company manages a total land extent of over 12,000 hectares in tea, rubber and palm oil with a workforce of over 12,000 people. The company has the largest palm oil plantation and the largest rubber factory in Sri Lanka to augment the production of more than 10m kgs of Ceylon Tea annually.

www.ft.lk

TFC to strike merger deal with a state bank

By Bandula Sirimanna

First finance company to respond to new Central Bank rules

Battling in a difficult financial and negative net-worth situation, the Finance Company Plc (TFC) is close to striking a merger deal with a state bank in accordance with new Central Bank (CB) rules aimed at consolidating the non-banking financial sector, official sources said.

TFC is the very first Non Banking Financial Institution (NBFI) to identify a partner to merge to reach the stipulated Rs. 8 billion in assets and capital of Rs. 1 billion.

The top management of the bank held a discussion with CB authorities on Friday, January 17th to explore the possibility of merging the company with the State Mortgage and Investment Bank (SMIB), the sources said.

The regulatory process will commence shortly after the handing over of the merger plan by TFC to the CB before the March 31st deadline.

However Kamal J. Yatawara, Director/CEO of the company and former President Finance Houses Association of Sri Lanka told the Business Times that three financial institutions have stepped into merger talks with the TFC and the final decision would be conveyed to Colombo Stock Exchange in accordance with listing regulations and before that he was unable to name the institution earmarked for the possible merger.

Provided the regulatory review concludes positively the newly-merged integrated company is expected to provide financial services including business loans, housing loans, leasing, hire purchase, trade finance, foreign currency exchange, foreign remittances, fixed deposits, savings and pawning for customers and new innovative financial products, he revealed.

He said the CB took timely action to consolidate the 58 non-bank financial institutions into 20 larger ones, as most of the NBFIs were struggling to survive as a result of losing confidence on finance companies, with the recent collapse of CIFL. On top of it banks were reluctant to lend to non-bank lenders such as TFC and the interest rate was also high, he said, adding that this made them difficult to survive.

TFC is the country’s oldest finance company and its CEO was hopeful that its “unparalleled” branch network strategically located countrywide and the merger of the company with a strategic partner will help (TFC) bounce back on a platform of efficiency and customer service.

The company is carrying accumulated losses of Rs.6 to 8 billion with total liabilities of Rs.6.6 billion over total assets. Mr. Yatawara said the company has been able to reduce 60 per cent of the accumulated losses amounting Rs. 12 .8 billion.

“The negative impact created by a share transaction of the company during the early part of the year under review hampered the planned growth in the deposits, loan disbursements and real estate sector,” he pointed out.

Commenting on the CB’s plan to merge NBFIs, economic expert and MP Dr. Harsha de Silva told a gathering of disgruntled CIFL depositors who were at a Sathyagraha campaign demanding the repayment of their deposits, that there was a move to merge TFC with a state bank.

Such mergers will only allow the owners and the directors of questionable companies to get away but there will not be any redress for poor depositors.

He said that he has brought to the notice of parliament that troubled finance companies are headed by people with strong links to the Government, raising more questions over the CB’s newly-unveiled plans.

He noted when shares of TFC were bought at Rs. 50 through the National Savings Bank inflating the market rate of Rs. 30. Today the share price has gone below Rs. 10.

Under this set up now the CB is matchmaking to link the loss making TFC with a state bank, he revealed.

The company has not met any regulatory requirements of the CB and losses have grown over the last few years even when it was under the CB restructuring process, even with hand picked directors, he said adding that all these details were disclosed in parliament by him.

People’s Leasing discussing mergers

The People’s Leasing Company (PLC) has begun discussions with some four finance companies to acquire them, PLC officials said.

“They have approached us and we’re talking to them,” a senior official told the Business Times.

The official added that they may also wrap up a deal involving a big finance company and another company where one will purchase a small finance company’s assets and the other will buy its infrastructure.
(Duruthu)

http://www.sundaytimes.lk/140126/business-times/tfc-to-strike-merger-deal-with-a-state-bank-80866.html