Expolanka posts Rs. 194 m after tax profit in1Q

Expolanka Holdings Plc in a statement said it has recorded a revenue of Rs. 12, 388 million and a net profit of Rs. 194 million for the first quarter of the financial year 2014/15.

The recorded net profit attributable to equity holders of the Group was Rs. 173 million in comparison to the Rs. 323 million recorded during the corresponding period last year.

Expolanka Holdings PLC Group CEO and Executive Director Hanif Yusoof commented: “As a Group we are at the threshold of a new and an exciting phase in our journey. During this quarter we finalised a strategic deal with SG Holdings Japan which acquired a controlling stake in the Group amounting to 51.43%.”

“SG Holdings, a leading logistics company in Japan, has a robust presence in the Asian region as well as considerable expertise in express services and transportation. In this context, we plan to achieve sustainable growth and develop our international business presence in the long term with special focus on our core portfolio of businesses, with a 
particular emphasis on Freight and Logistics,” Yusoof said.

Earnings from the Freight and Logistics sector for the first quarter recorded revenue of Rs. 8, 598 million. The sector growth remained flat due to less than expected yield in the Far East, which affected the profit margin. Perfomances in Bangladesh and India dampended results due to volatile market conditions that are not conducive to growth. However, Indonesia and China performed well in this sector. The Group expects the Indian business to settle following the post-election activities, resulting in a positive shift.

The Travel Leisure sector recorded revenue of Rs. 679 million with a marginal increase of 2% in comparison to the corresponding period of last year. Classic Travel’s outbound travel service market witnessed a growth while Akquasun business margins improved post the restructuring efforts.

In the International Trading and Manufacturing sector, Expolanka Ltd. posted a healthy margin following the restructure of its operations Expolanka Teas continues to face challenges due to the unstable market conditions in the Middle East.

Yusoof added: “In the current business year, we will concentrate on achieving higher profitability and continued growth in all business units. We are optimistic about our growth opportunities within this financial year.”
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SEC punishes corporate Adam for discreetly seeking forbidden fruit!

* Regulator directs CSE to cancel last Thursday’s sale of Adam Investments’ 31% stake in PC Pharma in the market for around Rs. 100 million

* Sale was whilst Adam’s mandatory offer on PCP was in force thereby violating rules of SEC Takeovers and Mergers Code

* Adam sale (above mandatory offer price) was discreet without disclosure hence viewed as price sensitive and price manipulative

* Analysts welcome swift action by SEC and CSE to ensure investor confidence

Capital markets regulator the SEC yesterday acted swiftly to punish new kid on the block Adam Investments Ltd. (AINV) for violating rules and discreetly selling a 31% stake in PC Pharma Plc (PCP) for an unethical gain.

The Securities and Exchange Commission directed the Colombo Stock Exchange (CSE) to cancel the sale of the 31% stake or 31.46 million shares in PCP by AINV at prices ranging from Rs. 2.10 per share to Rs. 2.90 per share. The sale by AINV was whilst a mandatory offer at Rs. 1.70 per share by the company for minority shareholders of PCP was in force. It was to expire on 21 August 2014.

The SEC’s swift action was because AINV had violated the SEC Takeovers and Mergers Code, of which Section 28 (3) specifically states that an offeror cannot sell shares of an entity on which it is making a mandatory offer without prior approval from the CSE.

The sale which some viewed as akin to ‘dumping’ took place on Thursday, exactly two weeks before the expiry of the mandatory offer. On that day 46.825 million PCP shares changed hands via 653 trades for Rs. 107.3 million. The brisk activity prompted the PCP share price hit an intra-day high of Rs. 3 (whilst mandatory offer price was Rs. 1.70) before closing at Rs. 2.30, down by 50 cents from Wednesday’s close.

The market at large didn’t know who the seller was. SEC was of the view that had the market known the seller was in fact the party which made the mandatory offer, then there wouldn’t have been any buyers. Analysts said this information (the offeror selling) could be interpreted as “price sensitive” and if so there wasn’t disclosure and such discreet selling could also tantamount to price manipulation.

In July and June AINV bought the stake at prices ranging from Rs. 1.20 and Rs. 1.90 per share from the former main shareholder British American Technologies and other investors. The sale by AINV had been at profit, though thanks to SEC action, the unlawful gain wouldn’t materialise.

Analysts welcomed the swift action by the SEC since a failure would have led to a serious erosion of investor confidence. The CSE on its part also suspended the trading of PCP and AINV on Friday pending clarifications from the two firms.

“We found the transaction improper and a violation of the rules, hence we acted fast after a proper investigation. This was to ensure investor confidence,” SEC Chairman Dr. Nalaka Godahewa told the Daily FT. “The company may have had reasons to sell. That is a different matter. But how they did violated the rules,” the SEC Chief added.

AINV had apologised to the SEC over its action and had been told to make its case over the difficulty in concluding the mandatory offer or persisting with its original investment separately to the SEC.

The SEC’s swiftness was critical because any cancellation if there were to be had to be done by or before T+2, which fell yesterday.

Any form of reversal of a transaction in markets is usually frowned upon by foreign investors. However, SEC Officer-in-Charge and Deputy Director General Dhammika Perera responded saying, “Protection of investor interest is paramount. What took place was against the law apart from being unethical and we had to take necessary action.”

PCP as well as its original parent PCHH have been under heavy criticism for mismanagement apart from being embroiled in litigation. CSE on Friday also suspended trading of PCHH over Chairman S.H.M. Rishan’s disclosure about the sale of a subsidiary and claim by AINV which is a major shareholder of PCHH that the subsidiary was still a part of the assets.

In a filing to the CSE on 30 July, AINV said the company filed a petition before the Commercial High Court on 25 July seeking certain interim orders which inter alia had the effect of protecting the assets of PCP from misappropriation and preventing the management of company funds.

PCP and current directors of the company who are respondents of the petition were represented in Court and objected to the grant of such interim relief.

However, pending the Court inquiring into the matter, the PCP Chairman has given an undertaking to Court to the effect that the assets will be safeguarded until the next court date. In view of this undertaking AINV lawyers did not seek further interim relief at that juncture and Court accordingly granted a future date to the Respondents to file their objection in writing.

In the first nine months of FY14, PC Pharma made a Rs. 102 million loss and had retained loss of Rs. 71.5 million. It is likely that when full year results are out, PCP will be having a negative net worth.
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Sri Lanka stocks close up 0.4-pct

Aug 11, 2014 (LBO) - Sri Lanka's stocks closed 0.36 percent higher with the turnover crossing one billion rupee mark amid net foreign buying, brokers said.

The Colombo benchmark All Share Price Index closed 24.69 points higher at 6,942.92, up 0.36percent. The S&P SL20 closed 16.67 points higher at 3,818.54, up 0.44 percent.

Turnover was 1.15 billion rupees, down from 1.58 billion rupees last Friday with 115 stocks closed positive against 79 negative.

Hayleys closed 1.30 rupees lower at 309.70 rupees with an off-market transaction of 45.00 million rupees changing hands at 300.00 rupees per share contributing 4 percent of the daily turnover.

The aggregate value of all off-the-floor deals represented only 12 percent of the turnover.

John Keells Holdings closed 30 cents higher at 239.50 rupees with market transactions of 86.93 million rupees contributing 8 percent of the turnover.

First Capital Holdings closed 3.20 rupees higher at 29.40 rupees and Orient Finance closed 20 cents higher at 14.80 rupees, attracting most number of trades during the day.

Foreign investors bought 182.33 million rupees worth shares while selling 91.36 million rupees worth shares.

CT Holdings closed 11.40 rupees higher at 159.90 rupees and Dialog Axiata closed 20 cents higher at 11.00 rupees, contributing most to the index gain.

National Development Bank closed 9.00 rupees higher at 229.00 rupees and Commercial Leasing and Finance closed 20 cents lower at 4.40 rupees.

The Securities and Exchange Commission on Monday directed the CSE to cancel the sale of PC Pharma’s 31 percent stake by Adam Investments with immediate effect.

The CSE has also imposed a trading halt on PCH Holdings pending further clarification on the disclosure made by them on last Friday.

Janashakthi to acquire Bartleet Finance to merge with Orient Finance

Janashakthi Ltd. has entered into an agreement to acquire 86.79% of Bartleet Finance Plc (BFP) and plans to amalgamate the latter with Orient Finance Plc.
The move is in compliance with the financial sector consolidation program of the Central Bank.

The planned acquisition is subject Janashakthi obtaining all relevant statutory and regulatory approval and Janashakthi Ltd. carrying out due diligence of BFP and being satisfied with the financials submitted.

Orient Finance Plc said the Central Bank by its letter of 7 August 2014 has approved in principle the planned acquisition by Janashakthi Ltd., the ultimate parent of Orient Finance Plc, on behalf of OFP and the subsequent amalgamation of BFP with OFP. Janashakthi Ltd. also holds a 67.85% stake in Janashakthi Insurance Plc.

Net asset per share was Rs. 81.81 as at 31.3.2014 up from Rs. 76.43 in FY13. BFP’s highest share price in the FY14 was Rs. 98.15 and lowest was Rs. 83.78 before closing at Rs. 98.15, up from Rs. 79.75 in the previous year.

Bartleet Group, whose origins date back to 1904 and became a 100% Sri Lankan-owned entity under Mallory Wijesinghe in 1958, holds a 86.79% stake in BFP via Bartleet Trans Capital Ltd.

Bartleet Group financial services sector business also includes a 50% stake in stock-broking firm Bartleet Religare Securities Ltd. and Bartleet Asset Management Ltd., as well as a 100% stake in Strategic Insurance Brokers Ltd. and 19.5% in Life Insurance Corporation (Lanka) Ltd.

Apart from Bartleet Trans Capital, there are a host of individual shareholders and a few institutional shareholders in BFP.

As at 31 March 2014, BFP, which has 17 branches, had assets worth Rs. 7.8 billion including Rs. 5.6 billion in loans and advances to customers. Liabilities amounted to Rs. 7.2 billion inclusive of Rs. 6.46 billion as due to customers.

Shareholders’ Funds were Rs. 626 million including stated capital of Rs. 306 million.
In FY14, income amounted to Rs. 1.5 billion whilst net operating income was Rs. 435 million.

Pre-tax profit was Rs. 36.4 million, down from Rs. 63 million in FY13.

On the other hand, Orient Finance posted a Rs. 1 billion total income and posted a net profit of Rs. 75.5 million, though down from Rs. 169 million in FY13. Its deposit base was Rs. 1.47 billion as at end FY14. Its net asset per share was Rs. 7.43, up from Rs. 6.94 in FY13.

Orient Capital Ltd. holds a 65% stake in Orient Finance whilst First Capital Holdings owns a 20% stake. In the first quarter of FY15, Orient Finance saw income grow by 20% to Rs. 299 million and net profit by 91% to Rs. 18.6 million.

Assets grew by 8% to Rs. 5.3 billion and liabilities by 9% to Rs. 4.4 billion inclusive of Rs. 2.05 billion in customer deposits. It had retained earnings of Rs. 319.6 million. Net asset per share was Rs. 7.60 as at 30 June 2014.
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Access Engineering 1Q results demonstrate sustainability

Access Engineering PLC has announced that top line recorded a growth of 10.5% and 6.9% respectively at Company and Group level. Earnings attributable to equity at Company and Group level were Rs. 503 million and Rs. 545 million respectively.

At Group level, 84%-owned subsidiary Sathosa Motors PLC and fully-owned subsidiary Access Realties Ltd. have contributed Rs. 44 million and Rs. 36 million respectively to the bottom line.

The Company’s 30% owned Associate ZPMC Lanka Company Ltd., which commenced operations in September 2013, contributed Rs. 2 million to the bottom line in the quarter.

The total asset base of the group stood at Rs. 20,353 million. Equity attributable to owners of the Company of Rs. 15,458 million at the Group level translates into a net asset per share of Rs. 15.46, a growth of 4% since 31 March 2014. The Earnings per Share for the quarter were Rs. 0.54 and Rs. 0.50 at the Group and Company levels respectively. 

Liquidity position of the Company has improved by 12% and 19% respectively at Company and Group level.

The Board of Directors of AEL comprises Sumal Perera (Chairman), Christopher Joshua (Managing Director), Rohana Fernando (COO), Shevantha Mendis, Dharshana Munasinghe, Ranjan Gomez, Dilhan Perera, Professor Malik Ranasinghe, Niroshan Gunarathna and Alexis Lovell.
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TKS Group successfully completes merger

The TKS Group yesterday announced that it had completed the integration of two of its finance sector holdings, TKS Finance Ltd., and Asian Finance Ltd.

The merger was initiated with the approval of the Boards of Directors and shareholders of both companies and the Central Bank of Sri Lanka (CBSL) in June this year. This is one of the first mergers to have been completed under the CBSL’s ongoing push for consolidation to reinforce the country’s financial sector.

TKS Finance Limited Senior Director Dr. S.H.A.M. Abeyratne said, “We are delighted to note that our core team has moved swiftly and wrapped up this merger exercise in record time. With the data migration duly completed on 1 August 2014, all Asian Finance Limited branches will begin to operate as TKS Finance Limited.”

With this move the Board of Directors of the company is now in the process of implementing a new business model to offer better financial services to customers while delivering greater value to shareholders.

Rasika Kaluarachchi will be heading the operations of the merged entity, TKS Finance Limited as its CEO. With its head office at 245 Dharmapala Mawatha, Colombo 07 and a wide network of 11 branches spanning Colombo, Ratnapura, Matara, Negombo, Nugegoda, Kandy, Kiribathgoda, Kurunegala, Galle, Ambalangoda, and Trincomalee; TKS Finance Limited is geared to extend greater levels of service to its customers around the island.

The TKS group is striving to make the company the most accomplished and successful finance company in Sri Lanka. TKS will continue to function as a trustee of people’s funds and protector of their financial capital by serving them as an honourable corporate entity.
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Record 1Q for Sunshine with Rs. 326m profit

Sunshine Holdings PLC (CSE: SUN) reported PATof LKR 326m for thequarter ending 30 June 2014 (1QFY15), up 161.0% YoY compared to LKR125m in the same quarter last year. Reported top line stood at LKR4.0bn in 1QFY15, compared to LKR 3.5bn in 1QFY14, up 14.7% YoY. EPS was LKR1. 03 for 1 QFY 15, up 110.5% YoY.

EBIT margin saw a significant improvement in 1QFY 15, up to 10.9% against 6.0% in the same quarter last year. The growth in both revenue and profitability mainly stems from the group’s Agri sector, especially due to the improvement in its tea plantations. Profit to equity holders (PATMI)is up111.3% YoY to LKR 138m in 1QFY 15, and PAT grew 161.0% YoY. Majority of the growth in PAT is on account of the strong performance of the Agri sector which has a limited impact at the PATMI level due to low effective holding. But Vish Govindasamy, Group Managing Director of SUN, emphasized that the Healthcare sector is still the largest contributor to PAT in 1QFY15 with LKR74m, which represents 53.9% of total PATMI.

This represents 35.5% of total group revenue. Growth in Healthcare revenue is similar to what was seen during FY14, and the healthcare sector in Sri Lanka (Pharma), which only grew 2.1% YoY for FY14,as reported by IMS.

PAT for the quarter amounted to LKR231m in 1QFY15, against LKR 11m in the same quarter last year. The growth in PAT, which is close to 20x is attributed to the profitability of the tea segment which benefited from favorable weather conditions, and buoyant market prices for its teas. It should be noted that 1QFY 14 was an exceptionally poor quarter for WATA due to the impact of heavy rains and floods, in a wage impact year.
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