Dhammika interested in more healthcare business

Dhammika Perera, Sri Lanka’s biggest entrepreneur/businessman, increased his presence in the healthcare sector, buying a larger stake in Nawaloka Hospitals (NHL) and raising his total holding to 24 per cent on Thursday. He told the Business Times that he’s interested in this sector and that he’s open to more deals such as this, triggering speculation in the stock market as to whether his interest would extend to opening a hospital chain in his organisation. Some 305.9 million Nawaloka shares were traded in three crossings at Rs 4 on Thursday early noon.

The NSB held 17.7894 million NHL shares as at last September and top market investor, Dr. S Senthilverl who held 309.5 million NHL shares or nearly 22 per cent, sold some 13.6 per cent to Mr. Perera, according to a stock market disclosure. Earlier on February 23, Dr. Senthilverl, a Director of Nawaloka Hospitals sold Rs.20 million Nawaloka Hospitals shares at Rs.3.80 per share to Mr. Perera who had also purchased the EPF’s stake of 1.76 per cent last week. “I bought some shares last month,” Mr. Perera said. The hospital is controlled by its Chairman Jayantha Dharmadasa with 32.83 per cent and Nawaloka Construction Company with 31.34 per cent. (DEC)

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Dian Gomes wants to share ‘Hela’ wealth

Hela Clothing, a clothing group which recently came under apparel expert Dian Gomes, plans to go public while also investing in Kenya, a source market for the US. The company plans to go public in about four years once it becomes a US$400 million organization, company Chairman Dian Gomes told the Business Times.

He said that in doing so they would be “sharing the wealth” with the people.
The company also plans to establish itself by buying more small local factories.
Commenting on his own work systems he said “People think I’m a radical, but I’m a socialist.”
He noted that Kenya is a market which has duty free access to the US for its products as a result of which they moved in with one plant.

The company has acquired six plants from Jinadasa company and plans more mergers with smaller companies, he explained. Currently, it has plants in Hambantota, Matale and Kurunegala and were marketing to clients like Calvin Klein, Marks and Spencer, Levis, Decathlon and Soma Intimates, a US brand.

When Mr. Gomes moved into Hela Clothing, it was a $80 million company with about 6,000 people and about six plants but has now grown to a $130 million company with 10,000 people. Retiring in December 2015 from MAS, Mr. Gomes joined Hela Clothing bringing in British national and former Merrill Lynch Chairman Robert Wigley as an investor in February this year. Marketing lingerie, casual wear and kids-wear, Hela joined Foundation Garments which has a history of about 25 years, it was noted.

Mr. Gomes explained that they were looking at making this industry much more productive through lean innovation and speed to the market with timely delivery. The ex-MAS Director has been able to attract a number of staffers from his previous workplace to join the new establishment having picked about two senior persons in this regard and a few others joining the new clothing line.

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Aitken Spence eyes more Port management deals abroad

By Duruthu Edirimuni Chandrasekera

The Aitken Spence group (Spence), hot on the heels of securing (part) ownership and management of all ports in Fiji, is searching for more regional opportunities to manage ports, officials said. According to them opportunities in the African region for port technical handling remain a top “priority”, a senior official told the Business Times. Aitken Spence presently conducts operations in several ports in South Africa and Mozambique. “Our programmes have been very successful and we have been able to cover all the major container terminals in South Africa.

It is the intention of Spence’s port efficiency enhancement and terminal management services arm, Port Management Container Services Ltd to expand their activities in the other African ports too,” the official said. According to him, Spence is eyeing more port management contracts not only in Africa but elsewhere in the region as well. He added the company is looking at other regions and is interested in the Free Trade Agreements with Pakistan, India and China which will increase the demand for the freight and logistics businesses for Spence. Aitken Spence PLC has a 20 per cent shareholding in Fiji Ports Corporation Ltd, the first ever public-private partnership by a Sri Lankan company.

The local firm also entered into a public-private partnership acquiring a 51 per cent majority stake in Fiji Ports Corporation’s subsidiary, Ports Terminal Ltd in May 2013 for US$ 6 million to handle cargo activities in two ports of Fiji totaling to estimated capacity of 700,000 TEUs per annum. In August 2013 Spence took management control of the Suva and Lautoka ports also in Fiji for a period of 15 years. During the past years, the increase in profits from companies in the port management, ship agency and airline sub sectors contributed towards the profits of the Maritime and Logistics Sector, the official said.

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Sri Lankan shares rise; index breaches key 6,000 mark

Reuters: Sri Lankan shares gained for a second straight session on Friday as investors bought beaten-down stocks, with the index touching its technical resistance level of 6,000 points.

However, foreign investors were net sellers for the first time in 10 sessions.

The benchmark share index ended 1.21 percent up at 6,019.95.

The index had lost 3.2 percent in the two sessions through Wednesday as a government move to hike value added tax (VAT) and reintroduce capital gains tax to break out of a debt trap and qualify for a $1.5-billion IMF loan weighed on sentiment.

With the central bank's unexpected hike in interest rates in mid-February and yields on treasury bills at two-year highs, investors prefer fixed interest rate bearing assets over risk assets, stockbrokers said.

"Very slowly buying interest is coming in from high net worth investors and short-term investors who expect short gains," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

"We expect the market to stabilise around 6,000 points."

Foreign investors were net sellers for the first time in 10 sessions, selling 16.7 million rupees ($115,371.33) worth of shares on Friday, extending the net foreign outflow so far this year to 262.8 million rupees worth of shares.

Turnover stood at 748.1 million rupees ($5.17 million), just below this year's daily average of 776.5 million rupees.

The index moved into neutral territory on Friday for the first time in the last 12 sessions after being in the oversold zone, with the 14-day relative strength index ending at 34.747 on Friday, compared with Thursday's 25.530, Thomson Reuters data showed.

A level between 70 and 30 indicates the market is neutral.

Shares in Sri Lanka Telecom Plc rose 6.57 percent while biggest listed lender Commercial Bank of Ceylon Plc rose 4.10 percent. 

($1 = 144.7500 Sri Lankan rupees) 

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

‘Seylan not in merger talks’

In a release to the CSE on 8th March 2016, Seylan Bank stated that the Bank is not engaged in merger talks with National Development Bank PLC or any other entity at present.

Seylan Bank has, over the last 5 years delivered a consistent and impressive performance ending with a remarkable 2015 and accordingly, the Board was of the view that the Bank has robust and sustainable growth potential to continue to deliver optimal stakeholder value.

Based on the audited financial statements released to the CSE on 3rd March 2016, the Bank reported a Profit after Tax of Rs. 3.83 billion (5-year CAGR of 25.53%), with a ROE of 15.62% and a ROA (after tax) of 1.4% for 2015. The Bank reported a Net Credit growth of 24.61%, with net advances growing from Rs. 154,963 Million in 2014 to Rs. 193,104 Million in 2015.

The Bank also grew its deposit base by 20.76% from Rs. 185,924 Million to Rs. 224,525 Million in 2015. The Bank’s low cost deposit base comprising current & savings accounts (CASA) stood at 36% of the total deposit base as at end December 2015.

As at 31st December 2015, the Bank network comprised of 159 Branches and 182 ATMs. The Bank?s total Capital Adequacy ratio stood at 12.87%, of which the Tier 1 ratio stood at 12.24% at the end of 2015, both well above the regulatory requirements.

In July 2015, Fitch affirmed the Bank’s rating at A-lka with a stable outlook. As a result of the impressive performance, Earnings per share was at Rs 11.11 (Group Rs. 11.18) for 2015, while the Bank?s Net Asset Value per share as at 31st December 2015 was Rs 72.63 (Group Rs 76.21).

Tax amendments to Budget 2016

Corporate Tax

• Proposed Corporate Tax Structure delayed by 1 year; Previous system to continue for 2016 only.


• Previous System to continue:

a) Tourism, construction, agriculture, exports and SME which were earlier liable at 10% and 12% will increase to 17.5 %

b) Liquor and tobacco will be at 40%

c) All other sectors will remain at 28%

• New System to apply from 2017:

a) 30% tax rate: Banking and financial services, insurance and whole sale, retail trade


b) 15% tax rate: All other sectors

Income Tax

• Proposed Income Tax Structure delayed by 1 year; Previous system to continue for 2016 only.

• Previous System to continue:

a) Previous slabs of 4%, 8%, 12% and 16% will apply


• New System to apply from 2017:

a) A flat rate of 15% was proposed; But the flat rate has increased to 17.5%

b) Individual income up to LKR 2.4Mn per annum and to tax income above the exempt limit at a flat rate of 17.5%.

Nation Building Tax

• NBT current rate of 2% will continue. Proposed 4% will not apply

• Threshold lowered to LKR 3mn per quarter from 3.75mn per quarter of turnover

• Exemptions for Electricity, Lubricants and Telecommunication Services removed

Value Added Tax

• VAT increased to 15% from the current 11%. Proposed 2 tier structure of 8% and 12.5% will not apply

• Exemptions for Telecommunication Services, Private Education and Private Healthcare removed

• VAT to be imposed on retail and wholesale sector excluding essential items

Capital Gains Tax

• Proposed to reintroduce Capital Gains Tax on listed shares and real estate.

• Tax on capital gains from sale of shares quoted in the CSE was abolished in 1987 and tax on capital gains arising on other assets were abolished in 2002.

• During the previous system before 1987 capital gains were calculated on the basis of realized increases in value at the time the gain is in fact realized.

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Ceylinco Insurance posts a consolidated After Tax Profit of Rs. 3.8 billion

Marking another remarkable year, the Ceylinco Insurance sector recorded a mammoth after tax profit of Rs.3.1 billion, for the year ended 31st December 2015. Contributing to this remarkable performance, Ceylinco General Insurance and Ceylinco Life Insurance recorded profits after tax of Rs.1 billion and Rs.2.1 billion, respectively. Moreover, the consolidated results recorded an imposing expansion, with the profit before tax reaching an exceptional Rs.4.2 billion, and the after tax profit standing at Rs.3.8 billion.

As the clear market dominator, and consolidating its leadership position further for the 12th consecutive year, Ceylinco Insurance, in 2015, remained far ahead of the competition. Thus, the Company managed to return an impressive premium income of Rs.27 billion in 2015, with Ceylinco General Insurance recording Rs.13.5 billion, marking a growth of 11.4%;an increase of nearly Rs.1.4 billion year on year, just as Ceylinco Life Insurance registered a premium income of Rs.13.45,marking a growth of 12.1%;an increase of Rs.1.4 billion. Meanwhile, the premium of the flagship brand Ceylinco VIP alone stood at a staggering Rs.8.1 billion, with Non Motor Insurance contributing an impressive Rs.5.4billion, allowing the total premium income of Ceylinco General Insurance to record yet another fantastic year.

Referring to its performance, Ceylinco Life Insurance Managing Director/ Chief Executive Officer, R. Renganathan, opined: "The year 2015 marks a twelve year period of unbroken market leadership for Ceylinco Life Insurance in the long term insurance segment. This is an incredible achievement, given the context of ever-increasing competition and the short - sighted tactics employed by smaller players in the market, in a bid to achieve short-term growth. The prime focus of Ceylinco Life has always been on the principal basis for Life Insurance - to provide assurance of the best possible protection to policyholders and their loved ones." - Ceylinco Insurance

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