Hayleys records 32% increase in year end PAT

Hayleys PLC closed its financial year ending March 2014/15 on a high, consolidating the growth momentum generated over past years. In its filing to the Colombo Stock Exchange, the group reported a 32% increase in Profit After Tax (PAT), to close the year with Rs. 4.9 billion.

Sector wise contribution was led by the Hand Protection Sector, showing strong recovery from a challenging period, supported by investments in new production facilities and expansions. The Hand Protection sector will add additional capacity to its recently commissioned household glove factory in the Biyagama Zone and will also see a new industrial glove manufacturing facility commencing operations in the new financial year in keeping with the continued growth. 

The Transportation and Logistics Sector recovered a commendable growth during the year, and continues to increase its benchmark on service delivery and new business innovations.

The Purification Products Sector recorded profit growth despite challenging conditions including elevated raw material prices and a downturn in the gold market. It is noteworthy that the Purification sector is leading a programme, together with the other sectors in the company, to provide clean drinking water to some of the villages that are worst affected by the Chronic Kidney Disease (CKD). To date over 5,000 families have access to clean drinking water through this initiative.

The Textile sector showcased the success of its turnaround programme, posting a profit, a robust growth from the loss recorded in the previous year. The sector has initiated a number of projects that are helping to redefine the business and gain recognition as an industry leader and an innovator.

The Agriculture Sector PBT increased during the financial year, reflecting positive results from a number of new business ventures, including the seaweed cultivation project in the Mannar region, which engages women in the locality to farm and harvest seaweed, providing them with a supplementary income source.

The Plantation Sector recorded lower profits than in previous years due to the decline in global rubber prices, and economic and political turmoil in key markets in the Middle East and Russia. However, the industry is hopeful that prices have bottomed out and steps are being taken to optimise productivity in the plantations.

The Power and Energy Sector maintained its positive contribution to the consolidated results, as did the Leisure and Aviation Sector, where earnings were supported by steady growth at The Kingsbury, which is gaining recognition as a much sought after venue for events and receptions.

Construction Materials recorded a notable increase in profit, whilst the Fibre Sector recorded appreciable growth in earnings during the year, as the results of restructuring are beginning to materialise.

Hayleys Chairman and CEO Mohan Pandithage stated: “Our current management team has exhibited strong leadership in sustaining growth and turning around businesses in the last financial year. The results from the Textiles and Hand Protection among others are particularly noteworthy. We look forward to seeing the teams building on their efforts in the last year and post further growth in the new financial year.”

The Board of Directors of Hayleys PLC comprises Mohan Pandithage (Chairman and Chief Executive), Dhammika Perera (Co-Chairman), Rizvi Zaheed, Nimal Perera, Sarath Ganegoda, Rajitha Kariyawasan, Dr. Harsha Cabral PC, Dr. Mahesha Ranasoma, Mangala Goonatileke, M. H. Jamaldeen, Lalin Samarawickrama and Ruwan Waidyaratne.
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Sri Lankan shares slip from 12-week high

May 21 Sri Lankan shares edged down on Thursday, erasing early gains to slip from their highest close in nearly 12 weeks hit in the previous session, led by some illiquid large-caps such as Nestle Lanka Plc and Carson Cumberbatch Plc.

The main stock index fell 0.22 percent, or 16.08 points, to close at 7,273.69, slipping from its highest close since Feb. 27 hit on Wednesday.

Turnover was 1.68 billion rupees ($12.6 million), well above this year's daily average of about 1.14 billion rupees.

"The bourse dipped at the end of trading mainly due to losses in illiquid large-cap shares. Local participation outweighed foreign activity yet again with institutional and high networth investors buying into banking shares," said a stockbroker asking not to be named.

"Banking, financing and insurance sectors managed to record the highest turnover for the day," the source added.

Foreign investors were net sellers on Thursday for a second straight session, offloading 64.4 million rupees worth of shares on Thursday. But they have been net buyers of 5.94 million rupees worth of stocks so far this year.

A surge of 11.2 percent in Lanka ORIX Leasing Co Plc and Lion Brewery (Ceylon) Plc 's 15 percent rise was undercut by losses in Nestle Lanka Plc, which fell 1.79 percent, while Carson Cumberbatch Plc declined 13.5 percent.

The bourse hit its highest level in 12 weeks on Wednesday, led by financials on expectations of better quarterly earnings.

Political uncertainty due to Prime Minister Ranil Wickremesinghe-led UNP not having a parliament majority has been a drag on the market, though the trend reversed after the central bank cut key monetary policy rates to record lows on April 15.

The index has gained 5.6 percent since the rate cut through Wednesday. 

($1 = 133.6000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal; Editing by Prateek Chatterjee)

Sri Lanka’s Agalawatte Plantations losses soar

COLOMBO (EconomyNext) – Losses at Sri Lanka’s Agalawatte Plantations widened to 271 million rupees in the March 2015 quarter from a loss of 58 million a year ago as the firm was hit by the commodity price slump.

Sales of the firm, owned by the Mackwoods Group, fell percent to 527 million rupees over the period, a stock exchange filing said. The loss per share was 10.85 rupees.

The firm’s tea business suffered a loss of 91 million rupees compared with a profit of 14 million rupees the year before while the loss in rubber was almost 100 million rupees compared with a profit of 29 million rupees previously.

Oil palm was the only major crop that proved profitable, yielding a gross profit of 26 million rupees, up from 19 million rupees the year before.

Gross profit from other crops remained at around 10 million rupees.

Sri Lanka Treasury bill yields drop

Sri Lanka’s Treasury bill yields were down at Wednesday’s auction with 3-months yield dropped by 0.02 basis points and 6-month yields dropped by 0.03 basis points, data from the state debt office showed.

It was decided to accept 11,129 million rupees from the auction of 03 month yield from received 18,628 million rupees worth bills.

Treasury bills of 4,000 million rupees for 3 months, 6,000 million rupees for six months and 10,000 million rupees for twelve months were offered on an auction basis today.

6-month bill was closed at 6.19 percent and it was decided to accept 11,147 million rupees.

12-month closed at 6.31 percent and 6,035 million rupees were accepted from the auction.

The auction was oversubscribed with bids amounting to 63,906 million rupees being received.

It was decided to accept 28,311 million rupees from the auction. 

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Fitch Affirms Sanasa Development Bank at ‘BB+(lka)’/Stable

Mar 21, 2015 (LBO) – Sri Lanka’s Fitch Ratings Lanka has affirmed Sanasa Development Bank PLC’s (SDB) National Long-Term Rating at ‘BB+(lka)’ with a stable outlook.

The full report is reproduced below :-

KEY RATING DRIVERS

The rating captures SDB’s high exposure to the retail and lower-end SME segments, its weak asset quality, and pressure on capitalisation due to strong loan growth. The rating also reflects its above-average net-interest margins (NIM) stemming from its high-yielding loan book. The rating is constrained by SDB’s high costs, which ultimately limit profitability.

SDB’s loan book expanded by 17% in 1Q15, following growth of 44% in 2014 and 14% in 2013. Its Fitch core capital ratio declined to 13.96% at end-March 2015 from 14.90% at end-2014 and 14.27% at end-2013 despite an equity infusion in late 2014. This was primarily due to the rapid expansion of its loan book. Fitch believes that continued high capital consumption could lead to further deterioration in capital ratios, if internal capital generation proves insufficient or if there is no capital injection.

Of the bank’s gross loans at end-2014, 95% were to retail and SME customers, which, in Fitch’s view, are riskier in nature due to their greater vulnerability to economic cycles, and could to lead to an increase in the reported NPL ratio, which stood at 3.5% at end March 2015 (2014: 3.8%, 2013: 5.1%), should economic conditions worsen.

SDB’s loan-to-deposit ratio was also a casualty of rapid loan growth, crossing 100% in 2014 (2013: 97%) and higher than its peers. Deposits remained the primary source of funding, although its share in total funding declined to 87% at end-2014 from 93% at end-2013. Fitch believes that SDB will rely more on borrowings to fund its above-average growth in the future.

SDB’s return on assets improved to 1.92% in 1Q15 (2014: 1.49%, 2013: 0.91%) mainly due to higher NIM. Profit for 2014 was also supported by capital gains from the sale of stock investments. Fitch believes higher operating costs due to branch expansion and a potential increase in credit costs could hamper profitability.

RATING SENSITIVITIES

Aggressive loan growth that could increase capital impairment risks, either through greater unprovided NPLs and/or a continued deterioration in capitalisation without adequate internal or external capital augmentation, could lead to a downgrade of SDB’s ratings.

A rating upgrade is contingent upon fundamental improvements in its asset quality and moderation of its risk appetite while expanding its asset base.

Sri Lanka offers US$100mn in 1 and 3-year dollar bonds

COLOMBO (EconomyNext) - Sri Lanka has offered 100 million dollars in 1 year 1 month and 2 years 11 month bonds with bids to close on May 28.

The Sri Lanka Development Bonds styled offer will pay a coupon based on the six-month London Interbank Offered Rate.

The bonds can be bought foreign investors and qualified domestic resident companies and banks.

CIFL depositors want former Chairman arrested

Hiran H.Senewiratne

Central Investment and Finance (CIFL), has collapsed due to mismanagement under its former Chairman Deepthi Perera.

An aggrieved depositor said that CIFL's net asset value is lower than the last audit reports. "CIFL's latest audit report was prepared by KPMG, which audited the net assets of the company less than the current net asset value," the investor said.

The previous audit report prepared by KPMG has done the auditing estimation 80 percent less than the real estimated figures.

Therefore, CIFL's entire operations have come to a standstill but only two service points are in operation to recover all debts, sources said told the Daily News Business.Several depositors and other interested parties are working to obtain a court order to bring Perera back from overseas hiding and arrest him and hear this case.

According to well informed sources legal action will be initiated to explore possibilities of bringing back Perera to Sri Lanka.

The affected investors of the company have requested the Director Board to appoint two investors to the Board.It is said that around 5000 depositors are unable to reclaim the deposits that they have made since March 2013.

The CIFL Depositors' Association sources said Perera had defrauded Rs.1.6 billion from depositors' money.

The depositors' request that an immediate investigation be conducted and measures be taken to return their money.

CIFL also known as Central Investments and Finance under the supervision of the Central Bank of Sri Lanka collapsed in 2013.
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