‘Allianz Lanka registers impressive Q1 2017’

Allianz Lanka continued to maintain its growth momentum across its life and general insurance businesses through Q1 2017.

The Non-Life company, Allianz Insurance Lanka Ltd., recorded 33% YoY growth in Gross Written Premium (GWP) at Rs.1.493 billion during the period under review, with a Profit After Tax (PAT) of Rs. 13 million despite expenditure on expansion.

The Life company, Allianz Life Insurance Lanka Ltd., registered a 7% YoY growth in GWP, ending the quarter at Rs.277 million with an impressive growth of 23% in annualized new business fueled by Universal Life Products which contributed Rs. 174 million. The PAT stood at Rs.24 million which marked a continuation of making profits since last quarter 2016.

Commenting on the company’s performance during the quarter, Surekha Alles, Chief Executive Officer - Allianz Lanka, said, "I’m excited to report that we have recorded a positive start to FY 2017 with both the life and non-life businesses registering steady growth. Our efforts to expand our retail network around the country were instrumental in helping Allianz Insurance Lanka Limited register impressive growth in GWP. This together with the uniqueness of our products has helped us gain the confidence of customers and grow the business. The parent company Allianz SE’s capital infusion of Rs.405 million too contributed to the non-life business’ growth numbers. Allianz Life Insurance Lanka Limited was able to consolidate its market position with a focus on recruitment and new business creation under its new leadership in sales. Energized by these results, we look forward to continuing to grow our business through FY 2017."

Prevailing high interest rates together with the company’s prudent investment strategy helped drive 70% and 17% growth in investment income in the non-life and life businesses, respectively. The non-life business’ investment portfolio grew by 23% YoY to Rs.2.301 billion while the life business’ investment portfolio grew by 34% YoY to Rs.2,105 million. - Allianz Lanka

Fitch downgrades Kotagala to 'CC(lka)' on worsening liquidity

Fitch Ratings Lanka has downgraded Sri Lanka-based Kotagala Plantations PLC's National Long-Term rating to 'CC(lka)' from 'B+(lka)'. The agency has also downgraded the National Long-Term rating on Kotagala's outstanding listed senior secured debentures of LKR1 billion to 'CC(lka)' from 'B+(lka)'.

The downgrade follows continued deterioration in the company's liquidity, as its operating EBITDA weakened further in the financial year ending-March 2016 (FY16) due to falling tea and rubber prices, high labour costs and poor labour productivity. Consequently, Kotagala's operating EBITDA of LKR30 million was insufficient to cover its borrowing costs of LKR503 million and the company had to utilise cash reserves to meet most of its financial obligations.

The company's EBITDA recovered to LKR247 million in 9MFY17, from LKR198 million in 9MFY16, driven by improving tea and rubber prices. However, we expect EBITDA to fall short of meeting the company's borrowing costs and operating lease rent in the next 12 months-18 months. Kotagala has around LKR546 million of bank loan maturities due in FY18. The company has benefitted from banks' willingness to restructure its borrowings in the past. However, principal repayments on its listed senior secured debenture will fall due in FY19, starting with LKR250 million principal due in May 2018.

Weak Liquidity; High Refinancing Risk: Kotagala faces substantial debt maturities from FY18 and we believe it will be challenging for the company to meet its obligations due to its low cash balance and negative free cash flow generation in the next two years. Further, the company does not have any committed credit lines at its disposal, limiting its financial flexibility and exposing it to significant refinancing risk. The company's efforts in FY16-FY17 to lower debt via asset disposals and extending the maturity of part of its existing debt has not led to a sustained improvement in liquidity.

Challenging Operating Conditions: The profitability of Kotagala's tea and rubber plantations has improved in the previous few months with rebounding global prices, but we do not believe the improvement is sufficient to offset the sector's structural decline stemming from continued supply-side pressure, such as lower productivity and high labour costs.

www.island.lk

Sri Lanka Watawala Plantations March quarter net profit up 168-pct

ECONOMYNEXT - Sri Lanka’s Watawala Plantations said net profit rose 168% to Rs212 million in the March 2017 quarter from a year ago with its tea business returning to profit and despite a sharp fall in palm oil earnings.

Sales of the group rose 5% to Rs1.8 billion over the period, according to interim accounts filed with the stock exchange.

Quarterly earnings per share were 89 cents compared with 32 cents a year ago. The stock last traded at Rs33.60.

The accounts showed Watawala Plantations’ tea business returned to profit in the March 2017 quarter while there was a sharp fall in palm oil profit.

“The palm oil segment profitability was below the expectations as the government reduced the duty on palm oil by Rs 40/- in 4QFY17,” said Watawala Plantations Managing Director Vish Govindasamy.

In the year to March 2017, EPS was Rs5.18 with net profit up 137% to Rs1.2 billion which Govindasamy said was Watawala’s highest ever profit “on the back of the increased performance in oil palm and tea segment.”

Palm oil continued to be the highest contributor to the company’s annual profitability, mainly because of the increased crop and higher Net Sale Average achieved during the year, he said.

Watawala Plantations achieved the highest profitability by any regional plantations company since privatization, he said.

Sri Lanka 03-month Treasury Bill yield steady at 9.62-pct

ECONOMYNEXT – The yield on 03-month Sri Lankan Treasury Bills stayed steady at 9.62 percent at Wednesday’s auction, the same as last week, the public debt department of the Central Bank said.

The 06-month t-bill yield fell to 10.40 percent from 10.42 percent last week and the 01-year bill yield remained at 10.73 percent the same as last week.

A statement said the public debt department got 77 billion rupees worth of bids and accepted bids worth 25 billion rupees.

Sri Lankan shares rise as foreign investors buy blue chips

Reuters: Sri Lankan shares edged up from a one-week low on Wednesday as foreign investors bought shares in blue chips such as John Keells Holdings PLC, with turnover hitting a 5-week high.

The Colombo stock index ended 0.32 percent firmer at 6,711.67, from its lowest close since May 15 hit on Tuesday.

The index rose 0.83 percent last week and has climbed 11 percent since March 31 through Friday.

Turnover stood at 3.56 billion rupees ($23.33 million), its highest since April 19 and well above this year's daily average of 886.5 million rupees.

Foreign investors net bought shares worth 879.4 million rupees, extending their year-to-date net inflows to 19.4 billion rupees.

"Continuous foreign participation improved market sentiment and we see that local participation is also improving which is a good sign," said Hussain Gani, deputy CEO at Softlogic Stockbrokers.

Shares in Hemas Holdings Plc jumped 5.40 percent, while the biggest listed lender, Commercial Bank of Ceylon Plc , climbed 1.47 percent and conglomerate John Keells Holdings Plc was up 1.19 percent. 

($1 = 152.6000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal; Editing by Biju Dwarakanath)

CIC embarks on 2020 re-strategising, retains MTI

• Dedicates 2017/18 for business rationalisation and strategic re-alignment

The diversified conglomerate CIC Holdings has embarked on a major strategic change initiative titled ‘2020 Re-strategising’, which will see the group undertaking an intensive business rationalisation exercise, followed by strategic and organisational re-alignment. MTI Consulting has been retained for this 12-month assignment – covering CIC Holdings, CIC Agri and Chemanex.“In 2013/14 we undertook the first phase of our re-strategising exercise, post which the Group had three successive years of healthy growth. We now embark on the final phase of this strategic change initiative aimed at ensuring a future proof business to meet both the challenges and opportunities in the multiple domains we operate in. This year (2017/18) we plan to go through an intense round of business and organisational rationalisation, so that we are ready for a more profitable 2018/19, with a highly focused business portfolio and a much leaner and agile organisation. In order to facilitate this process, in 2017/18 we need to take a step-back, rationalise and re-focus – with the strategic intent of a much stronger business model and operating performance in 2018/19,” stated Group Managing Director/CEO Samantha Ranatunga, who is spearheading this initiative.Led by their International CEO Hilmy Cader, MTI has assigned a multi-disciplinary team of international and local consultants, analysts and project managers for this CIC assignment.

Commenting on this assignment, Cader said: “Astute organisations recognise the need to challenge and critique its own performance even when the going is good, so as to further strengthen its strategic and operational agility. CIC is well positioned in its three main operating domains i.e. agri, healthcare and industrial solutions. This exercise, while making some conscious rationalisation in 2017/18, will strengthen the business fundamentals and gear up for high growth in 2018/19 and beyond.”
www.ft.lk

Sri Lanka’s People`s Merchant Finance sells property for Rs1bn

ECONOMYNEXT - People`s Merchant Finance (PMF) said it had sold a 108-perch property to its parent firm, Sri Lanka’s state-owned People's Bank, for just over a billion rupees that would help settle debt and which may increase profitability.

A stock exchange filing said the related party transaction was done on normal commercial terms after two valuations including one by the government valuer.

The 108.4 perch property is located at No. 21 Nawam Mawatha, Colombo 2, part of the capital’s business district.

The funds will also be used to strengthen People's Merchant Finance’s core capital in order to meet minimum capital requirements set for finance companies.

“The excess money may be used for future expansion of PMF,” the statement said. “It may increase the net interest income and profitability of PMF accordingly.”