Sri Lanka Treasuries bids rejected

Feb 05, 2014 (LBO) - Bids for 3 and 6 month tenors at a weekly Treasury bills auction was rejected Wednesday, but the 12-month yield fell 04 basis points to 7.10 percent.

The state debt office said 15.4 billion rupees of bids were accepted for 12-month bills after offering 12.0 billion rupees of bills for auction.

Sri Lanka Dimo profits higher

Feb 05, 2014 (LBO) - Profits at Sri Lanka's Diesel and Motor Engineering Plc rose to 110 million rupees in the December 2014 quarter from 4.5 million rupees a year earlier helped by better margins and lower interest costs, interim accounts showed.

Dimo has the agency for Mercedes and Tata in Sri Lanka.

The firm reported earnings of 12.47 rupees per share for the quarter. For the nine months to December DIMO reported earnings of 21.09 rupees per share on total profits of 187 million rupees, which were down 60 percent.

Dimo said revenues fell 13 percent to 5.6 billion rupees in the December 2014 quarter from a year earlier, but costs also fell 13 percent to 5.5 billion rupees, and it grew gross profits 20 percent to 1.09 billion rupees.

Interest costs also fell 21 percent to 107 million rupees.

Sri Lanka's motor companies have been hit after the state raised taxes on cars used by ordinary citizens, especially small ones, while the elected ruling class gets tax free cars and state workers get tax slashed cars.

State workers have also been selling their tax free 'permits' to ordinary citizens allowing the richer people to import luxury vehicles.

Sri Lanka has a habit of subsidizing energy with bank and central bank credit, which triggers even more imports, a balance of payments crisis and currency depreciation.

Policy makers then raise taxes on identified imports like cars, imagining that it will help cure currency pressure, which is a monetary problem needing higher interest rates and a halt of liquidity injections (printing money) in to the banking system.

First Capital Holdings profits grow 15%

Ceylon FT: First Capital Holdings PLC reported a group net profit of Rs 263 million for the nine months ended December 2013, up 15% from a year ago, interim financial results showed.

Turnover grew 15% to Rs 1.33 billion with net trading income amounting to Rs 398 million, up 23% from a year ago.

Earnings per share amounted to Rs 2.46, up from Rs 2.10 a year ago.

The gain in profits was largely due to 'higher gains on sale of trading securities, partly offsetting higher administrative expenses', an official of the company said.

"First Capital Treasuries Limited, the group's primary dealer arm was again the primary source of revenue, taking advantage of interest rate movements and exceeding targets. 

Other business segments like structuring and placement of corporate debt securities and investment management (Corporate Debt Securities) also contributed to the results, although performance was below expectations," First Capital Holdings PLC CEO/Director Jehaan Ismail told shareholders.

"We were able to hold strategic trading positions in the primary dealer business and benefited through the continuous reduction of policy rates made by the Central Bank of Sri Lanka (CBSL). Both the Standing Deposit Facility Rate (Repurchase) and Standing Lending Facility Rate (Reverse Repurchase) were reduced by 1% and 1.5% respectively during the period under review. Currently the Standing Deposit Facility Rate and Standing Lending Facility Rate stand at 6.50% and 8.00% respectively.

"In the light of relaxation of governing protocols relating to primary dealer operations and the issue of new licences, the competition is now more intense.

We have taken steps to protect our human resource base and to aggressively maintain and build on our client relationships.

"First Capital Limited continues to seek mandates in the listed corporate debt market and we expect to close some mandates in the last quarter of 2013/14. First Capital Asset Management Limited has been undertaking many sales calls across a wide range of personal and institutional clients and we expect to keep growing our assets under management, especially in the unit trust business.

"There was muted activity in the stock market and we struggled to make both brokerage and margin trading revenues. However, we have seen a minor bounce back in January 2014 and we hope this will continue and increase during the rest of the year.

"The group continues to explore other business opportunities, especially in the corporate advisory space and will also remain committed to managing risk effectively and being fully compliant with regulations at all times. 

We are thus confident that we are well on the way towards becoming a full-fledged investment bank,"Ismail said. 

The group's assets stood at Rs 15.5 billion as at end December 2013, compared with Rs 13.9 billion a year ago, with financial investment held for trading amounting to Rs 12.2 billion, up from Rs 7 billion a year ago.
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PLC profits up 2.4%

Ceylon FT: People's Leasing and Finance PLC (PLC) saw group net profits grow 2.4% year-on-year to Rs 2.3 billion for the nine months ended December 2013, interim financial results showed.

Interest income grew 15% to Rs 14.77 billion during the nine-month period and interest expenses grew 11.3% to Rs 8.36 billion, leading to a net interest income of Rs 6.38 billion, up 20.1% from a year ago.

Impairment charges for loans and receivables grew 86.3% to 1.12 billion.

Total operating expenses grew 14.1% to Rs 4.17 billion.

Earnings per share amounted to Rs 1.46, up marginally from 1.42 a year ago.

The group's asset base increased 12.2% to Rs 113.44 billion. Net asset per share amounted to Rs 11.76, up six cents from a year ago.

Its loan book grew 4.4% to Rs 92.2 billion as at end December 2013. 

Lease and advances, insurance and other business lines showed growth in earnings. State-owned People's Bank has a 75% stake in the company followed by the Employees' Provident Fund with a 4.77% stake and state-owned National Savings Bank with 3.75% and Distilleries Company of Sri Lanka with 1.55%.

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John Keells Hotels profits grow

Ceylon FT: John Keells Hotels PLC, which operates luxury resorts in Sri Lanka and the Maldives, reported a net profit of Rs 599.4 million for the nine months ended December 2013, up 59% from a year ago, interim financial results filed with stock exchange showed.

Revenue grew 20% during the nine-month period to Rs 7.5 billion with gross profit amounting to Rs 4.8 billion, up 18% from a year ago.

Administrative expenses grew 9% to Rs 2.5 billion and other operating expenses grew 21% to Rs 1 billion.

Net finance costs fell 17% to Rs 273.7 million.

Earnings per share stood at 41 cents, compared with 26 cents a year ago. Net assets per share amounted to Rs 7.03, up from Rs 6.79 a year ago.

The company operates several hotels under the cinnamon and Chaaya brands in Sri Lanka and the Maldives.

John Keells Holdings PLC holds an 80.32% stake in the company, followed by the Employees' Provident Fund at 5.39% and Sri Lanka Insurance Corporation Ltd - Life Fund at 5%.

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Local sales buoy Lanka Tiles

Ceylon FT: Boosted by local sales, Lanka Tiles PLC reported a net profit of Rs 452.3 million for the nine months ended December 2013, up 21% from a year ago, interim financial results filed with the stock exchange showed.

Export sales during the nine-month period grew 2% year-on-year to Rs 184 million and local sales grew 11% to Rs 3.95 billion.

Cost of sales fell 5% to Rs 2.54 billion.

Distribution costs increased 60% to 324.2 million and [‘other’ income fell 22% to Rs 22.6 million.

Finance cost increased 80% to Rs 129.6 million.

Share of results of associated companies contributed to the bottom line, improving from a negative Rs 13.3 million to a positive contribution of Rs 16.6 million, a 225% improvement.

Lanka Walltiles PLC is the largest shareholder of the company with a 68% stake, followed by the Employees Provident Fund (EPF) which holds 10%. 

Cash flow statements indicated an exchange gain on a US$ loan, of Rs 22 million, during the period.

The company’s Balance Sheet shows a reserves to stated capital ratio of 2.83, and the stated capital currently stands at Rs 900 million.

The shares hit a high of Rs 80 and a low of Rs 65.10 during the December quarter, closing at Rs 78.90 on 31 December 2013.

The total number of shares in issue as at 31 December 2013 was 53,050,410. (JK)

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Associated Motor Finance profits dip 3%

Ceylon FT: Associated Motor Finance Co PLC reported a three per cent year-on-year dip in net profits to Rs 112.77 million for the nine months ended December 2013, interim financial results showed.

Net interest income for the period amounted to Rs 286.66 million, up 25% from a year ago. 

Net profits included a Rs 1 million gain on the sale of a financial asset.

‘Other’ expenses surged to Rs 38.60 million, up from Rs 0.25 million a year ago.

The company’s balance sheet shows strong reserves to stated capital ratio of 11.6 to 1, indicative of opportunities for further growth.

The shares hit a high of Rs 359.80 and a low of Rs 334 during the nine months to 31 December 2013.

Imperial Import & Export Co. (Pvt) Ltd is the single largest shareholder of the company with a 43% holding, amounting to 2.4 million ordinary shares. 

The two major shareholders hold more than 85% of the share capital of the company, the second being J. P. I. Nalantha Dayawansa with a 42.76% stake. (JK)

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