Richard Pieris records Rs.32 bn revenue in first 9M of 2015/16

The Richard Pieris Group has posted a group revenue of Rs.32 billion, with a 14 % growth from the previous year.

The Group PBT for the first nine months (M) amounted to Rs.2.7 billion which is a 33% growth compared to previous year. All business sectors with the exception of the plantation sector performed well with many activities. The plantation sector continued to suffer with the declining prices and the volumes of the crops. The reported profits represent business profits, and do not include any gains of a capital nature.The retail sector of the Group comprises of Arpico super centres, super stores and the network of Arpico outlets scattered island wide. The third quarter was the busiest period in the year for the sector with the seasonal peak in the month of December 2015.

The sector also began commercial operations in an Arpico daily outlet in the town of Palanwatte during the quarter under review.

The Plastics and Distribution Sector continued its success of 2014/15 and reported a growth of 75.3% in its reported Operating Profit over and above last year.

The Ayu mattress/Hybrid mattress introduced to the market continues to develop the market share and the consumer promotion 'Nidaganna Piyabanna' created a lot of excitement amongst consumers, driving the mattress volumes. The plantation sector of the Group experienced a very challenging first nine months facing many adverse factors.The Richard Pieris Group possesses three of the largest plantation companies in the country with diverse crops which includes high grown, mid grown and low grown tea, rubber, oil palm, coconut, cinnamon, cardamom, rambutan and other crops contributing to more than 15% of Group Revenue.

During the period under review the tyre sector recorded a growth of 16% in its operating profits over the corresponding period of the previous year.

The sector expanded its retreading distribution channel to north during the period under review.

The rubber manufacturing sector continued its success reporting 29% growth in operating profits over the corresponding period of the previous year. Sales volumes continued to increase in the sector due to market expansion activities and enabled by strategic investments made in the recent past.

The financial services sector of Richard Pieris Group consists of its own life insurance, stock broking, fund management and a finance company. The Sector reported a 253% growth in its operating profit over the corresponding period of the previous year.

Arpico Insurance PLC's new branches were opened at Kegalle and Ambalantota during the period under review.
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Expolanka posts Rs. 563 mn PBT for 3Q of 2015/16

Expolanka recorded a profit before tax (PBT) of Rs 563 million for the third quarter of the financial year posting an overall profit growth of 14% in comparison to the corresponding period of the previous financial year.

The recorded profit attributable to equity holders for the third quarter was Rs. 344 million. The recorded PBT for the nine months that ended in December 2015 was Rs 1.6 billion with an overall profit growth of 69% in comparison to the corresponding period last year.

Hanif Yusoof, Group CEO - Expolanka Holdings PLC said, "In last financial year we took several strategic steps to ensure the sustainable growth of our business. These positive results indicate the effectiveness of our concentrated efforts on business growth in the Group's core sectors including operational efficiencies and restructuring efforts".

The Group's core sector Freight and Logistics recorded a revenue of Rs 35 billion and a revenue growth of 23% for the nine months ended in December 2015 in comparison to the corresponding period of the previous financial year.

The positive results were fueled by steady performance of the Indian subcontinent and the strong contribution of the East Asian markets namely countries such as Vietnam, Indonesia, Hong Kong and China. The Travel and Leisure sector continued to show positive signs during the period recording a revenue of Rs2.8 billion for the nine months ended in December 2015. Both Inbound and Outbound operations performed well, posting a high level of growth.

Inbound operations has kept up the momentum gained in the last quarter to post better results in comparison to the corresponding quarter of the previous financial year.

Expolanka's Inbound business in particular shows better volume growth in the aftermath of the Company restructuring effort that took place during the previous year.

The International Trading & Manufacturing sector recorded a revenue of Rs. 3 billion for the nine months ended in December 2015.

In this sector, both the perishable goods business and the food processing business has performed well and shows potential to perform even better in the next quarter.

"Each sector in the Group has contributed to the positive growth of this quarter. We hope to capitalize on this growth to build a solid platform for future performances. We have already identified and implemented measures such as more focused investments on developing IT enabled business growth to seize greater growth opportunities," Yusoof added.
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Fitch rates DFCC Bank’s Senior Debentures Final ‘AA-(lka)’

Fitch Ratings has yesterday assigned DFCC Bank PLC’s (DFCC; AA-(lka)/Stable) proposed senior unsecured debentures of up to Rs 7billion a final National Long-Term Rating of ‘AA-(lka)’.

The assignment of the final rating follows the receipt of documents conforming to information already received, and the final rating is the same as the expected ratings assigned on 3 November 2015.

The proposed debentures, which will have tenors of three years and carry fixed coupons, will be listed on the Colombo Stock Exchange. DFCC expects to use the proceeds to reduce asset and liability maturity mismatches.

The proposed senior debentures are rated in line with DFCC’s National Long-Term Rating. The issues rank equally with the claims of the bank’s other senior unsecured creditors.

DFCC’s rating is driven by its high capitalisation and its developing commercial banking franchise.

The ratings on the proposed debentures will move in tandem with DFCC’s National Long-Term Rating.

A rating upgrade for DFCC would be contingent on the bank achieving a significantly stronger commercial banking franchise while maintaining strong credit metrics. DFCC’s rating could be downgraded if there is a sustained and substantial increase in risk appetite that could materially weaken its strong capital position.
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Softlogic Group revenue tops 15 bn in 3Q

Softlogic group revenue reported a strong growth of 43.8% to near Rs. 16 billion while the cumulative revenue has increased 51.7% to Rs. 42.1 in the third quarter of FY2015/16.

Chairman, Ashok Pathirage said that the contributors to the Group's outstanding performance were primarily derived from its fully owned subsidiaries in the Retail (33.3% contribution to Group topline) and ICT (29.7% of Group revenue) sectors followed by Healthcare Services (17.3%) and Financial Services (16.0%).

"We are yet to reach full potential of our Leisure sector with our 5-star city hotel to be opened, perhaps, by mid-2016.The sales team of the automotive sector is taking aggressive sales effort and cost cutting measures to enhance bottom line," he said.

Consolidated Gross Profit has reached Rs.4.9 billion, reflecting an increase of 24.2%, during the third quarter of the financial year with cumulative Gross Profit increasing 35.8% to Rs. 13.6 billion. Operational expenses increased 17.7% to Rs. 3.4 billion during the quarter with operating expenses for 1-3 QFY16 growing 25.5% to Rs. 9.6 billion.

Stringent cost control measures have been a vital part of our expansion strategy and helped operating cost margins to decline from 22.8% in 1-3QFY16 from 27.6% in the cumulative comparative period.

The quarter registered an increase of 11.3% in administrative costs to Rs. 2.6 billion and 44.1% increase in distribution costs to Rs. 820.6 million.

Thereby, distribution costs increased to Rs.2.1 billion (up 29.5%) while administration costs reached Rs. 7.5 Bn(up 24.4%) for the cumulative period under review.

Finance Income, which registered a decline of 12.1% to Rs. 860.6 million during the nine-month period and Rs. 312.9 million for the quarter (a decrease of Rs. 243.5 million in the comparative quarter).

The increasing interest rates resulted in 14.9% increase in finance cost for the cumulative period to Rs. 2.4 billion whilst the quarter witnessed a marginal increase of 7.7% to Rs. 811.7 million.

Group PBT reported a significant increase of 70.0% to Rs.2.4 billion during the cumulative period while the quarterly PBT improved 92.9% to Rs. 1.4 billion. Taxation for the period more than doubled to Rs. 700.7 million (Rs. 327.7 million in 1-3QFY15) during the nine-month period.

Profit after tax for the period during the nine months of FY2015/16 amounted to Rs.1.7 billion (up by 56.9%) with 3QFY16 reporting Rs.1.0 billion (up99.6%).
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Sri Lankan stocks end lower on rising rates, economic worries

Reuters: Sri Lankan shares edged down for the sixth straight session on Monday to close at a more-than-three-week low, as rising domestic interest rates forced investors to stay off risky assets while concerns over global worries also weighed.

Sri Lanka's main stock index ended down 0.27 percent at 6,266.17, its lowest close since Jan. 20. It fell 1.9 percent last week.

Foreign investors were net sellers of 169.6 million rupees worth of shares on Monday, extending the year-to-date net foreign outflow to 345.7 million rupees worth of equities.

"Investors expect the market to come further down as the selling side remains high with no match for the buyers. Even buyers are waiting for prices to ease further," said Dimantha Mathew, research manager at First Capital Equities (Pvt) Ltd.

"If this continues we may see a round of margin calls which will speed up the fall."

The key index has fallen 9.1 percent this year through Monday, amid a rise in market interest rates.

Yields on t-bills rose between 8 and 17 basis points at a weekly auction on Wednesday, with the 182-day and the 364-day t-bill yields climbing to more-than-two-year highs, signalling a further rise in market interest rates.

Some investors are shifting to fixed interest rate-bearing assets due to a gradual rise in interest rates, analysts said.

Turnover was 491.7 million rupees, less than this year's daily average of 733.5 million rupees.

Shares of Nestle Lanka Plc fell 1.23 percent while Lanka ORIX Leasing Company Plc eased 0.26 percent and Dialog Axiata Plc lost 0.99 percent. 

($1 = 143.9500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil Nair)

Bharti Airtel in talks to merge Sri Lanka unit with Dialog Axiata

(LBO) – Bharti Airtel is believed to be in talks to merge its wholly-owned Sri Lanka unit with Dialog Axiata in a likely share-swap deal, two people familiar with the matter said.

A potential Airtel Lanka-Dialog-Axiata merger is likely to be along the lines of the recent merger of Bharti Airtel and Axiata’s telecom units in Bangladesh, a report by The Economic Times of India said.

In this scenario, Axiata will be the dominant shareholder and Airtel a strategic minority holder in the combined entity, sources said.

Indications are Dialog Axiata may issue ordinary shares to Bharti Singapore, a wholly-owned Bharti Airtel offshore arm, akin to the model followed by Bharti and Axiata group in the ongoing merger exercise of their Bangladesh subsidiaries, one of the persons cited said. “The negotiations are still on.”

Sources say one key hurdle is that the Competition Commission of Sri Lanka may have some issues with a potential Airtel Lanka-Dialog merger since Dialog Axiata already controls over half the country’s mobile market.

Axiata Group has an 83.32 percent controlling stake in the Colombo Stock Exchange-listed Dialog Axiata Plc while the balance shares are with the public. “There is no development for us to report at this stage,” said a Bharti spokesperson in a written response to ET’s queries.

The stakes are big for the Sunil Mittal-founded mobile carrier, the largest in India and among the top four globally by subscriber base.

A merger with market leader Dialog Axiata would catapult Airtel Lanka from the fourth-largest carrier spot to becoming a part of an entity which is the No 1 mobile operator in Sri Lanka. Airtel Lanka has a shade over 2 million customers, and currently trails Dialog, Mobitel and Etisalat, which are the top-three mobile operators in the island nation. Dialog has some 10 million customers.

Sri Lanka is also among the few countries in the world where the government has pegged a floor price mobile tariff, which market leader Dialog has matched. Accordingly, rivals cannot drop their tariffs any further. According to sources, this is a key reason why Airtel Lanka hasn’t been able to effectively compete with Dialog and boost market share in Sri Lanka, The Economic Times reported.

Hemas Holdings posts Rs 2.8 bn profit in nine months

Hemas Holdings PLC (HHL) and its subsidiaries achieved consolidated revenues of Rs.28.3 bn, with a year-on-year (YoY) growth of 19.7% for the nine months ended December 31, 2015.

During this period operating profit reached Rs.2.8 bn and earnings Rs.1.9 bn, growth of 25.6% and 65.2% respectively. Eliminating the one off transactions in the preceding year and the additional interest income of Rs.196 mn earned from investing the proceeds of the rights issue, underlying operating profit and earnings maintained a healthy growth of 30.8% and 30.2% respectively,Group CEO Steven Enderby said.

The FMCG sector achieved total revenues of Rs.11.2 bn for the nine months, a 24.4% YoY increase over the previous financial year. Operating profits were Rs.1.4 bn, 54.4% YoY growth, whilst earnings grew at 32.9% to stand at Rs.1.1 bn. Excluding the one-off capital gains recorded previous year, underlying earnings growth was 49.3%. This performance has been driven by our Bangladesh operation maintaining excellent revenue and profit growth, strong sales across all our major brands in the domestic market and relatively weak commodity prices for key raw material inputs,Enderby said.

Overall healthcare sector revenue for the nine months under review stood at Rs.11.9 bn, a YoY increase of 18.3% whilst earnings grew at 25.8%. During the quarter, Hemas Hospitals opened its first wellness centre at Orion City responding to a call to provide top quality healthcare services to the 6,000 plus employee strength, at Colombo’s premier IT park.

This marks another novel concept by Hemas Hospitals in the development of the Sri Lankan healthcare industry. Our hospitals growth in revenue contributed 31.0% of the overall segments revenue growth. Hemas pharmaceutical distribution operation registered a YoY topline growth of 12.1% maintaining its market leadership position. Our pharmaceutical sales growth continues to be driven by our strong presence in growing therapeutic segments.

J. L. Morison posted a YoY growth of 28.6% and earnings growth of 71.7% for the nine months ended December 31, 2015. Revenue growth was largely driven by the increase in sales from the buyback arrangement with Government of Sri Lanka and sales growth in key diagnostics agencies. Transportation sector reported a revenue of Rs.1.3 bn, a 15.2% YoY topline growth. The increase in revenue resulted from growth in our domestic logistics and maritime operations with warehouses operating at high levels of capacity, new customers for our distribution operation and higher

levels of container handling and repair activity. Aviation businesses continued to experience challenges due to lower yields of ticketing income despite increases in volumes.

Triggered by limited revenue growth from the aviation segment, transportation sector registered an operating profit of Rs.271 mn indicating a de - growth of 6.1%.

The leisure segment recorded a total revenue of Rs.2.2 bn, reflecting a 9.2% YoY growth for the nine months under consideration. Serendib Hotels posted a revenue growth of 11%, driven by strong performances from AVANI Bentota and Hotel Sigiriya with an overall occupancy of 78%.

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