Union Bank to get Rs. 500 M Capital Injection

By IsharaGamage

Ceylon Finance Today: UB Finance Co Ltd, a subsidiary of Union Bank will be having an extraordinary general meeting (EGM) during this week to get approval for its Colombo Stock Exchange listing process, a senior official said.

Simultaneous to this stock market listing, UB is also planning to inject an additional Rs 500 million to Rs one billion in capital via a private placement, he said.

"New capital will be through new investor. It may be a large foreign institutional or high networth investor," the source said.

"They are even willing to invest up to two billion rupees and negotiations are currently under way", the official said.

"Actually, TPG Capital, USA (the largest shareholder of Union Bank) is also willing to invest in UB, but pooling knowledge vis-à-vis the participation of this new investor is of a greater advantage to us, where we can have access to fresh expertise", he said. UB Finance Company was formed by Union Bank (UBC), by the latter's acquisition of The Finance and Guarantee Company Ltd. (TF&G), a licenced finance company under the Ceylinco Group which got in to difficulties after the collapse of its now defunct Golden Key Credit company, an unlicenced finance company.

UBC together with an International foreign investment fund Shore Cap II Ltd of USA, acquired over 98% of the voting shares of TF&G subsequently at an investment of over Rs. 1.1. billion. UB Finance, licensed by the Central Bank of Sri Lanka, is currently providing a range of financial...... services that include fixed deposits, savings, real estate, leasing, hire purchase, loans, factoring and pawning. Their services are mostly catering to small and medium enterprises.

TF&G, after its collapse, was earlier managed by Merchant Bank of Sri Lanka. The company has around 3,000 depositors with a total deposit base of Rs. 3.3 billion Over 50% of the company's deposits have been converted to non voting shares with the consent of depositors.

The Board of Directors of UB Finance is led by Chairman Alexis Lovell (Chairman, Union Bank), Ananda Atukorala (Deputy Chairman), Jit Warnakulasuriya, Daman Panditharatne, Davis Golding, Malinda Samaratunga, Ajith Wijeyesekera, Upali Wijeyesekera, Rohendra Wijeyesekera and Nalin Fernand.

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Aitken Spence posts Rs. 1.5bn PBT in first half

Diversified group Aitken Spence posted a pre-tax profit of Rs. 1.5 bn for six months ended 30th September 2015, while reporting a post-tax profit of Rs. 1.15 bn.

The blue chip’s half-year revenue was recorded as Rs. 11.9 bn, results released to the Colombo Stock Exchange revealed. Profit attributable to equity holders was Rs.781 mn for the six months while earnings per share was Rs. 1.92 for the same period.

The conglomerate posted Rs. 773 mn as pre-tax profits and Rs. 567 mn as post-tax profits for the second quarter while recording Rs. 6 bn as revenue. Earnings per share for the quarter stood at Rs. 0.89.

The corresponding results for the previous year included the profits from the operation of the Embilipitiya power plant and insurance proceeds received for the damaged water villas at one of its resorts in the Maldives. If these items were excluded from results of the previous year it would have resultedin a favourable increase in the consolidated profit before tax by 24%.

Aitken Spence PLC is among Sri Lanka’s most dynamic and respected corporate entities with operations in South Asia, the Middle East, Africa and the South Pacific. Listed in the CSE since 1983, it has major interests in hotels, travel, maritime services, logistic solutions and power generation. The group also has a significant presence in plantations, printing, garments, financial services, insurance and information technology.

Tourism sector recorded a pre-tax profit of Rs. 900 mn with revenues of Rs. 5.76 bn for the six months. Maritime and Logistics sector performed well with Rs. 527 mn as profit before tax and Rs. 3.42 bn as revenue for the same period.

The Strategic Investments sector, which includes the power generation segment, recorded loss of Rs. 32 mn with revenue of Rs. 2.3 bn for the first half of the financial year. The Services sector recorded an improved performance with pre-tax profits of Rs. 109 mn, whilst revenue stood at Rs. 426mn, for the six-month period under review.

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CWE falls into debt trap

The Cooperative Wholesale Establishment (CWE) which operates 310 retail outlets countrywide is on the verge of bankruptcy with debts of Rs. 10 billion to two state banks the Bank of Ceylon and the Peoples Bank and Rs. 3 billion to suppliers.The Treasury has turned down a request by Minister of Industry and Commerce Rishad Bathiudeen for Rs.8.5 billion to bailout the CWE. The retail chain is making losses continuously with many of the suppliers already halting supplies due to nonpayment of their dues.

Big suppliers will also curtail their supplies as the CWE has held up payments for 60 to 70 days, a leading fast moving consumer product supplier told the Business Times.Several suppliers were not getting any payment since March this year, following the decision taken by the former CWE Chairman Kiran Atapattu to close the central ware house in Colombo and direct all the supplies to be sent directly to outlets countrywide, a medium scale supplier who wished to remain anonymous said.

CWE took almost five months to pay for the purchases made by them during the months of March and April 2015, he said adding that the confidence of the suppliers had on CWE was lost due to this and some of them halted their supplies and others reluctant to issue goods as per the CWE requirement.The institution is operating without a chairman at present and the ministry official appointed to oversee the functions is not getting involved in operational matters, he disclosed.

www.sundaytimes.lk

Errant broker licences hang in the balance

By Duruthu Edirimuni Chandrasekera

Sri Lanka’s Securities and Exchange Commission (SEC) will ‘critically’ re-look at licences of some market intermediaries who have stepped out of line, a top official said. SEC Chairman Thilak Karunaratne told the Business Times that the regulator has many ‘issues’ but only with ‘very few’ market intermediaries. “We will have to evaluate their licences when they come up for renewal at year end,” he said. He added that the SEC is working on six major cases as part of probes that will be done by a ‘totally’ revamped investigations division.

The SEC reorganisation was completed this month. “We revamped the whole investigation division. We changed staff,” he said, adding that SEC had advertised for staff, including management trainees for certain divisions at SEC. “We also called for new staff for the Investigations Division.”Mr. Karunaratne added that as part of the restructure the SEC has also internally shifted staff from certain divisions to the Investigations Division. “I have no confidence in the Investigations Division,” he stressed, noting that contrary to popular belief no probes have been shelved.

He added that most cases from 2010-2012 periods have been reopened and that three more are also being probed. When asked that despite probing, the SEC is not armed with enough teeth to prosecute the offenders, Mr. Karunaratne said, “We’ll bite with the teeth we have”.
Mr. Karunaratne was first appointed to the SEC in December 2011 but later resigned accusing the government of interference in 17 ongoing cases. When asked why he changed his mind after declaring to ‘never’ take up political appointments, he said that the PM wanted him to complete some unfinished business at the SEC and that he couldnt say ‘no’ to that request.

He resumed his role as chairman in January this year, an honorary position and he’s not on the SEC payroll. He said that the first draft of the SEC Act was completed last week and that the new Act will be civil and administrative compliant. When asked about the charge of ‘not market friendly’ being levelled at him, he said, “Regulations don’t go behind stockbrokers. The brokers must request for meetings, etc which the new President of the Stockbroker Association did and we met them recently. It was more of an ice breaker and we decided to meet as and when required”.

When asked why SEC had advertised for Capital Market Development staff when he had reiterated that the regulator’s mandate isn’t in this area, Mr. Karunaratne responded saying that Capital Market Development entails educating, improving rules, better supervision of market intermediaries.“We spend a lot of money on these aspects. We will give all our support to the Colombo Stock Exchange in order to do their investment promotion.”
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Top SEC official sent on compulsory leave

Dhammika Perera, Deputy Director General (DDG) at the Securities and Exchange Commission (SEC), who has had several controversial issues, was served with compulsory leave orders by the SEC on Wednesday.

This came on the back of the Commissioners conducting a thorough study of Mr. Perera’s activities. “After this they decided to send him on compulsory leave pending inquiry,” a source told the Business Times.

A former SEC Director, Investigations, Mr. Perera was appointed as the DDG in 2012 during the tenure of Nalaka Godahewa as the SEC chairman.
In the meantime the SEC’s Surveillance Division has been strict with errant stockbrokers and investors in a crackdown on malpractices. “When they detect some suspicious transaction, the offenders are warned”.

While high growth in the Colombo stock market was seen in 2009, 2010 and in the first quarter of 2011, it also caused a high degree of price volatility and created many regulatory and supervisory issues plus accusations of fraud and malpractices.
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Piramal Glass Ceylon achieves successful half year results

Revenue at Rs. 3,040 mn and PAT at Rs. 287 mn

Piramal Glass Ceylon PLC has successfully closed the 1st half of F2016 with revenue growth of 19% to Rs. 3040 Million, & PAT growth of 67% to Rs. 287 Million against the previous year similar period.

Q2 :- The Sales for the quarter under review showed a growth of 15% from Rs. 1,291Million to Rs.1,491 Million. This was made possible due to the domestic market which continued with its positive momentum with a growth of 22% over Q2 of previous year. All sectors showed a marked improvement whilst the food & Beverage contributed significantly.

The export market achieved Rs. 252Mn during the period under review as against Rs 276Mn during the similar period of previous year. As a strategy the company is continuously churning the export market shift from mid mass to premium thereby utilising the capacities towards servicing the 100% requirements of the domestic market and remain active player in the export premium and value added segment.

Yet during the period the PGC exports have launched several new bottles in the USA market. Presently USA remain the 2rd largest exporting country in the company’s product portfolio.

The operating profit (PBIDT ) for the second quarter grew by 18% to Rs 329 Million.

The Profit after tax for the quarter ended 30th Sept,2015 stood at Rs 141 million as against Rs 84 Million in the corresponding period previous year.

H1 :- At half year the company achieved a domestic sale of Rs.2,497 Mn as against Rs. 2,031 Mn of previous year with a growth of 23%

The export sales stood at Rs. 543Mn as against Rs. 527Mn of previous year with a growth of 3%.

The operating profits (PBIDT) for the first half of the FY 2015-16 grew by 20% to Rs 672 million as against Rs 560 Million in the similar period of the previous year .

The Gross Profit as at date stood at 21% as against 19% of the previous year. The continuous efforts made by the operations team to improve and enhance productivity & efficiency amidst the strict quality parameters by countries such as USA, Australia contributed much towards these figures.

The company had to increase its level of trading activities to cater to the high domestic demand. At marginal margins the company opted to import some products with the sole objective of servicing its customer.

Further to above Piramal Glass Ceylon PLC was able to secure the gold ward for the Fifth consecutive year at the recently concluded 23rd National Chamber of Exporters awards. The award ceremony was organized by the National Chamber of Exporters of Sri Lanka which is the premium institute looking after the interests of export community in Sri Lanka. The Prestigious glittering award ceremony was held at the Colombo Hilton Hotel under the patronage of the Hon. SujeewaSenasinge, Minister of State for International Trade and Hon. Dr. Harsha De Silva – Deputy Minister of Foreign Affairs along with the participation of a large gathering from business community. 

www.island.lk

SLT Group revenue up by 6% to Rs. 50.8 b; profit down

Sri Lanka Telecom, yesterday reported a Rs. 50.8 billion revenue at Group level during the nine months ending in September 2015 with 6% year-on-year growth with both fixed and mobile telephone segments contributing to the success. 

The group has reported a healthy EBITDA margin of 32.3% during the period under review against the 30.9% of the same period of last year due to maintenance of higher revenue growth than the rate of operating cost escalation.

The operating cost of the Group was reported at Rs. 34.4 b with a year on year growth of 4%, while the EBITDA grew by 11% to Rs. 16.4 b during the 1st nine months of 2015, when compared to the same period of the previous year. Depreciation and amortisations remain at the same level of Rs. 9.8 b, compared to the previous year.

Bottom-line of financials of the Group was largely negated by provisions for foreign currency translation losses relating to foreign currency denominated borrowing due to the sudden depreciation of the LKR against the USD. Most of the borrowings of the Group are dollar denominated as to gain low interest costs. Since, the repayments are going through the internally generated foreign denominated revenues, provisions for translation losses are generally not impacting the group cash-flows.

Owing largely to the above mentioned provisions for translations losses, the Group profit before tax and profit after tax have dipped by 18% and 19% to Rs. 5.4 b and Rs. 4.1 b respectively.

Holding Company Sri Lanka Telecom alone has reported Rs. 30.2 b revenue during the first nine months of 2015, with a year on year growth of 5%. Accelerated i-Sri-Lanka program providing high-speed broadband, voice and IPTV connectivity island-wide, coupled with other large investments in capacity building and introducing new technologies such as LTE and FTTH, have driven the revenue growth.

The operating costs of the Company for the first nine months of 2015 was managed at an acceptable level of 2% increase year on year while the Company EBITDA by 13% to Rs. 8.2 b. EBITDA margin has improved to 27.3% from 25.3% of the same period of last year. As explained above the impact of losses from foreign currency translations have largely impacted dipped the bottom lines of the Company financial performance. Accordingly Company profit before tax and profit after tax have ended at 27% and 29% during the nine months ending in September 2015, compared to the same period of year before to Rs. 2.2 band Rs. 1.4 b respectively.

Group Chief Executive Officer Dileepa Wijesundera looking at the Group future through present performance stated that the initiatives taken across the Group to accelerate the capacity building projects while minimising the time taken for market offerings will boost the group performance in every aspect. Results for the first nine months of 2015 is evident of this phenomenon, he said.

Group Chairman Kumarasinhe Sirisena stated that the investment friendly economic climate evolving in the country is benefitting to the SLT group too. Company performance and economic development of the country are interdependent. According to him all the arrangements have been made within the group to embrace opportunities arising through the economic development of the country.

The mobile arm Mobitel continued to grow despite intensifying competition in the market. Revenue for the first nine months of 2015 increased to Rs. 24.4 b, up by 8% compared to corresponding period in 2014. The revenue growth was mainly driven by the increase in broadband and value added services.

Backed by the robust growth in revenue, Mobitel was able to record a growth in EBITDA and EBIT for the first nine months of 2015 which grew by 9% and 36% respectively YoY. It was aptly supported by operational efficiencies and lower costs due to reduction in input prices such as fuel and electricity expenses.

The profit after tax for the first nine months of 2014 was recorded at Rs. 2.7 b compared to the same of Rs. 2.6 bin the first nine months of 2014. The exchange rate fluctuation in the third quarter of the year triggered a considerable reduction in profits of the company. 
However it is noteworthy that the company excelled in reporting a profit after tax growth by 5% despite these external challenges. 
www.ft.lk