‘Multi Finance continues to make profits in first quarter’

Multi Finance PLC recorded a 120% increase in its bottom line in the first quarter ended June 30, 2014 recording a net profit of Rs. 8.6 Mn, against Rs. 39.2 Mn loss in the preceding quarter 2013, as per published accounts.

A press release says: ‘During the quarter under review, net income from operations reached Rs. 56.2 Mn, 236% growth compared to the quarter ended June 2013 which was recorded as Rs. 16.7 Mn. The net interest income for the quarter ended 06/14 also increased with 215% reaching Rs. 50.5 Mn, compared to Rs. 16.0 Mn QonQ owning to improvements in quality lending and strict credit processes introduced. Operating expenses of the company fell to Rs. 32.3 Mn as against Rs. 40.3 Mn QonQ which is a 19.8% improvement owning to strict cost control mechanisms adopted.

‘During the period company’s net impairment has remained in the same range despite the significant increase in its lending portfolio and increase in impairment of pawning which stands at Rs. 16.5Mn. Further NPLs on leasing, HP and loans have come down to 4.42% quarter on quarter due to aggressive recovery techniques and strict monitoring process adopted by the company. Earnings per Share of the company have improved from -6.98% to 1.53% within the quarter while improving the company’s quality of the asset portfolio. Return on equity has improved to 2.6% from -12.34% and Return on Assets is up by 121% from -2.84% to 0.60% QonQ in line with the profits.

‘The company’s total assets grew by 3.5% to stand in excess of Rs 1.38 Bn as of 30thJune 2014 and the deposit base grew by 9.8% over the same quarter of the previous year displaying the investor confidence placed on the company.

‘Commenting on company’s improvement, Multi Finance Chief Executive Officer Pushpike Jayasundera said the introduction of prudent credit policies, risk management tools and stringent recovery processes were the key factors contributed for this significant results in the quarter. These results were achieved in the midst of interest rate pressures and slowdown in credit growth which was common to the industry during the period concerned.
www.island.lk

Sri Lanka stocks up for fifth session on foreign buying, low rates

(Reuters) - Sri Lankan stocks gained for the fifth session on Monday to touch their highest in more than three years, led by banking and diversified stocks on bullish sentiment due to lower interest rates, higher foreign fund buying and positive economic outlook.

Stockbrokers said they expect the index to gain further as the market sees a possible rate cut during the central bank's monetary policy rate meeting next week. The announcement is scheduled for 0200 GMT on Tuesday.

The main stock index ended up 0.3 percent, or 21.49 points, at 7,256.41, its highest closing level since June 9, 2011.

"Market is on a bullish trend on diversified and banking sector counters with a lot of foreign and institutional buying," said Dimantha Mathew, manager research at First Capital Equities (Pvt) Ltd.

"There is a possibility of a rate cut while the recent fuel price cut will ease inflation further and the government is also expecting improvement in the credit growth."

Yields on treasury bills fell 3-4 basis points at a weekly auction on Wednesday and are below the central bank's standing deposit facility rate or the rate at which the central bank mops up liquidity from commercial banks.

The cut in energy prices on Tuesday has also enthused the market.

Sri Lanka is aiming for a higher economic growth of 8.2 percent and a lower fiscal deficit target of 4.4 percent of gross domestic product next year, a government document showed on Thursday.

The index has gained 22.72 percent so far this year.

The bourse has been in an overbought region since July. The Relative Strength Index, a momentum indicator tracked by chartists, rose to 85.259 on Monday compared with Friday's 83.442, Thomson Reuters data showed.

Shares in Hemas Holdings Plc, which led the overall gain in the index, rose 6.10 percent to 62.6 rupees, while Ceylon Theatres Plc jumped 6.19 percent to 169.90 rupees.

Shares in Dialog Axiata Plc rose 1.8 percent to 11.30 rupees and Hatton National Bank Plc added 2.27 percent to 180 rupees.

The day's turnover was 1.95 billion rupees ($15 million), more than this year's daily average of over 1.27 billion rupees.

Foreign investors were net buyers of 458 million rupees worth of shares on Monday, extending their year-to-date net purchases of 11.56 billion rupees. 

($1 = 130.3000 Sri Lankan rupee) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anand Basu)

Sri Lanka stocks close up 0.3-pct

Sep 22, 2014 (LBO) - Sri Lanka's stocks closed in green with the price gains witnessed in Hemas Holdings and CT Holdings amid strong foreign buying, brokers said.

The Colombo benchmark All Share Price Index closed 21.49 points higher at 7,256.41, up 0.30 percent. The S&P SL20 closed 11.89 points higher at 4,030.87, up 0.30 percent.

Turnover was 1.94 billion rupees, down from 2.52 billion rupees last Friday with 102 stocks closed positive against 104 negative.

Asiri Hospital Holdings closed 1.10 rupees higher at 22.60 rupees with two off-market transactions of 110.00 million rupees changing hands at 22.00 rupees per share contributing 6 percent of the turnover.

The aggregate value of all off-the-floor deals represented 20 percent of the daily turnover.

Access Engineering closed flat at 29.00 rupees with market transactions of 115.63 million rupees contributing 6 percent of the daily turnover.

Hayleys Mgt Knitting Mills closed 1.10 rupees higher at 19.80 rupees and First Capital Holdings closed 3.10 rupees higher at 45.40 rupees, attracting most number of trades during the day.

Foreign investors bought 780.03 million rupees worth shares while selling 322.05 million rupees worth shares.

Hemas Holdings closed 3.60 rupees higher at 62.60 rupees and CT Holdings closed 9.90 rupees higher at 169.90 rupees, contributing most to the index gain.

Dialog Axiata closed 20 cents higher at 11.30 rupees and Sri Lanka Telecom closed 1.30 rupees lower at 52.20 rupees.

John Keells Holdings closed 2.60 rupees lower at 254.10 rupees.

Packer's project a 'go'

By Mario Andree

Ceylon Finance Today: Australian billionaire gaming tycoon James Packer's US$ 400 million resort project in Colombo is still on the cards with the government in the process of finalizing the agreement.

Packer's project was said to have been put on hold after the government released a Gazette notification on the project, which left out the setting up of gaming facilities.

Minister of Investment Promotion Lashman Yapa Abeywardena told Ceylon FT, that despite some legal issues that needed to be ironed out in the agreement, the US$ 400 million mixed development would proceed as planned. The minister said the agreement had not specified proper terms and conditions, after it had to rescind on the casino agreement amidst growing opposition.

Australian billionaire and gaming tycoon James Packer according to news reports in April this year had informed the Sri Lankan Government that he would abandon the planned US$ 400 million integrated resort project in Colombo, if the operation of casinos was not allowed.

Packer's project as well as two other projects by local blue chip, John Keells Holdings and Local Gaming Mogul Dhammika Perera, came under serious criticism following gazette notifications, which said that the first two projects approved by Cabinet included casinos.

Contradicting President Mahinda Rajapaksa and Minister of Economic Development Basil Rajapaksa's statements, government spokesman Keheliya Rambukwella in early May this year said that Packer and Perera would be able to operate casinos in their projects, as a result of restricting casino operations in the country to D. R. Wijewardena Mawatha.

www.ceylontoday.lk

Amtrad helps boost Ascot profits

The recent acquisition of Amtrad Limited by Ascot Holdings PLC and the expansion of L & A Quarries (Pvt) Limited in the North of Sri Lanka had helped Ascot Holdings PLC to massively increase revenue by 134% and the profit after tax by 194% from the previous year in the year ended March 31, 2014, its Chairman Mohan Ratnayake has said in the annual report.

"Amtrad Limited will continue with the improvements to the main factory in Pasyala with the intention of further improving quality and the cost effectiveness of newer technology. We see an enormous potential in Amtrad considering the rapid development taking place in the country in the infrastructure and construction segment," Ratnayake said.

Ascot reported a 25% increase in its operating profit to Rs.92.6 million in the year under review while its pretax profit was up 89% to Rs.37.2 million and its attributable net profit by 86% to Rs.20.3 million resulting in an earnings per share of Rs.2.54 against Rs.1.36 a year earlier.

Ratnayake said that administrative cost had been held with a marginal increase of Rs.5 million by 10% despite the twofold increase in revenue.

Finance expenses too had been held at previous year’s level representing 16% of revenue against 37% of revenue the previous year.

"We have been successful in restructuring the financial liabilities of Ascot Developments (Pvt) Limited to match the cash flows of the company. In keeping with our focused strategic investments, we have been successful in gaining entry into the leisure sector to reap the benefits of the boom in the tourism industry," Ratnayake said.

He saw the year concluded as one of tremendous growth in the group and said that the Board will continue to invest and further expand on strategic investments to add to its portfolio.

The directors have not recommended the payment of any dividend for the year under review.

Ascot has a stated capital of Rs.92.4 million, revenue reserves of Rs.445.3 million and other components of equity of Rs.23.1 million in its books.

Total assets ran at Rs.1.34 billion and total liabilities Rs.710.7 million.

The main shareholders of the company are Axis Investments (Pvt) Limited (25.77%), St. Louis Capital (21.46%) and Mr. W.D.N.H. Perera (20.41%).

The company’s share with a book value of Rs.70.23, up from Rs.67.68 the previous year, traded at a high of Rs.169 and a low of Rs.93.50 closing at Rs.114. This compared with a trading range of Rs.220 to Rs.130 closing at Rs.157.30.

The directors of the company are: Messrs. R.M.M.J. Ratnayake (Chairman), A.G. Weerasinghe (Resigned on 15.02.2014), R.A. Iriyagolle, N.D. Gunaratne, D.J. Gunaratne, M.D.A. Weerasooriya, M.T.U. Mendis (w.e.f. 23.07.2014) and Ms. C.P.S. Bogollagama.
www.island.lk

Kotmale profits dip due to capacity constraints etc.

Cargills’ dairy sector consolidated

Kotmale Holdings PLC, a member of the Cargills group of companies, has seen group profits dip in the year ended March 31, 2014 to Rs.93.4 million from Rs.116.1 million a year earlier.

This followed the consolidation of the dairy sector operations within the Cargills group and capacity constraints where some of Kotmale’s branded products are now manufactured elsewhere.

However, the royalty fee is being paid to the Kotmale for the use of the brand, Mr. Stuart Young, Chairman of the company has said in the annual report.

This resulted in a revenue decline of 36% to Rs.783 million during the year under review with other income up by Rs.56.6 million as a result of the royalties.

Young, previously MD/CEO of Nestle Lanka from November 2002 to October 2008, reported an increasing trend in domestic milk production during the year with the total milk production in the country up 6.8% to 319.8 million litres in 2013.

"Consequently the importation of milk powder declined by 16.9% in 2013 in line with the state policy of achieving self-sufficiency in milk," he said.

This enabled the country to reduce the import of milk powder to 65.9 million kg from 79.4 million kg in 2012, he reported.

Increased milk production was supported by various initiatives such as improved chilling facilities, provision of financial assistance to smallholders and stable farm gate prices. There was also a shift in the market towards the consumption of local fresh milk and milk products.

Kotmale Holdings which collects fresh milk both for its own operations as well as those for other Cargills group companies is presently the second largest private sector milk collector in the country with an average daily collection of approximately 50,000 litres, Young said.

"Our network comprises over 98,000 farmers from the Central region of Sri Lanka who directly supply to the company through 330 collection centres connected to 15 chilling centres spread across the Central Province," he said.

During the year under review Kotmale had paid a total of Rs.790 million to smallholder farmers.

Young said that the trend in shifting from imported powder milk to local fresh milk created a substantial supply constraint within the domestic dairy sector particularly in relation to UHT (Ultra Heated Treated) milk.

Addressing this problem would require a long-term collaborative effort from the private and public sector to increase animal productivity, build farmer capacities, enhance feed and feed quality while developing the infrastructure to meet the increasing demand.

"Our parent company Cargills, having made substantial investments in adding capacity to its dairy sector is now focused on building the supply side towards sustainable growth," he said.

Young reported that yoghurt and the newly introduced ‘Yoguard’ as well as pasteurized and UHT milk categories are successfully marketed under the Kotmale brand and enjoyed wide consumer appeal.

Kotmale cheese wedges, a product of high quality, further strengthens the brand’s position in the cheese category, he said.

"The success of the ‘Kotmale’ brand is attributed to the strong distribution network of Cargills both in mass market and modern trade," Young said.

Kotmale has a stated capital of Rs.314 million, reserves of Rs.94.6 million and retained earnings of Rs.471.3 million in its books. Total assets ran at Rs.1.23 billion and total liabilities at Rs.352 million.

Cargills Quality Foods Limited with 94.07% of the company is the dominant shareholder with all other shareholders individually owning less than one percent.

Net assets per share were down to Rs.17.01 from Rs.17.41 a year earlier and the company’s share traded at a high of Rs.58 and a low of Rs.33.50. This compared with a trading range of Rs.47.10 to Rs.20 the previous year.

The directors of the company are: Messrs. Stuart Young (Chairman), V.R. Page (Deputy Chairman), M.I. Abdul Wahid (MD), P.S. Mathavan, A.T.P Edirisinghe, Sunil Mendis and J.C. Page.
www.island.lk

Odel was looking at making brand international before Otara’s exit

Otara Gunewardene as she appears in the latest annual report of Odel PLC. The tall and willowy Gunewardene who had been a fashion model from before she launched her brand has been her company’s most visible brand ambassador.

Before the sell-off to Softlogic on Sept. 11, Odel had been looking at leveraging synergies with Parkson "to take our brand to international markets and to bring more international brands to Sri Lanka," Odel Chairman Ruchi Gunewardene has said in the company’s recently released annual report.

Parkson Retail Asia Limited with 47.46% of Odel was the company’s top shareholder as at March 31, 2014. Pathirage’s Softlogic has acquired 45% thereafter.

With Softlogic acquiring the shares of Ms. Otara Gunewardene and her brothers Ajit and Ruchi, and a mandatory offer at a price of Rs.22 per share pending, analysts expect Softlogic to become the controlling shareholder.

Softlogic Chairman, Ashok Pathirage is on record saying that he was open to working with Parkson. However, Parkson’s intentions have still not been made public.

Ruchi Gunewardene said in the annual report that they have significant land banks under their belt opposite the Town Hall and at Battaramulla. He noted that there are only a few available vacant blocks of this scale in Colombo and Greater Colombo giving them some good strategic expansion options.

"Our management team is working hard with the architects and local authorities to finalize these plans," he said.

He also reported that they have invested heavily in upgrading their information technology system which will enable them to better serve customers and they were making significant progress in their human resources management to ensure better train and motivate employees to provide superior customer service.

Otara Gunewardene said in what was perhaps her last CEO’s letter in the Odel annual report that the introduction of the new VAT on retail businesses earnings of Rs.500 million a quarter had impacted retail sales and margins during FY 2013. This had impacted their bottom line.

"However, with improved sourcing, continuous negotiations and more efficient supply chain management, we were able to offset this to a great extent and hope to see improvement to the bottom line in the years ahead," she said.

The annual report did not offer any hint of the Gunewardenes planning to exit the company which Otara founded.

The company’s AGM was held on Sept. 9 in Colombo.

Other than the Parkson and Otara and Ajit Gunewardene, Dr. T. Senthilverl, with 1.87% is the biggest shareholder ranking No.4.

Net assets per share were up to Rs.19.18 from Rs.18.72 the previous year. The Odel share traded at a high of Rs.28.10 and a low of Rs.18.10 during the year under review against a trading range of Rs.26.90 to Rs.16 the previous year.

The directors of the company are (as at March 31, 2014): Mr. Ruchi Gunewardene (Chairman), Ms. Otara Gunewardene, Messrs. Paul Topping, Sanjay Kulatunga, Ignatius Perera, Yoong Choong, Kheng San, Koh Huat Lai, Hia Ngee Yeow (alternate to Datuk Cheng Yoong Choong). 
www.island.lk