Sri Lankan shares fall for 7th session in thin trade

Reuters: Sri Lankan shares extended losses into a seventh session on Monday and posted their lowest close in nearly seven weeks, as foreign investors continued to reduce their holdings, while confusion over new tax measures weighed on the market as well.

Lacklustre corporate results and a Moody’s report saying Sri Lanka could face significantly tighter external refinancing conditions in the next five years, also dented investor appetite for riskier assets, analysts said.

A local daily reported on Friday that a number of changes proposed in the Finance Act will impose new levies on several sectors including telecom, vehicle imports and tourism.

“Confidence level is the issue. There is confusion over new taxes and the market still is confused about the proposed taxes,” said Jaliya Wijeratne, CEO, First Capital Equities.

“Foreigners have been selling since last week and that has been a concern for the market.”

Foreign investors sold shares worth a net 11.7 million rupees ($72,965.4) on Monday, extending the foreign outflow to a net 840 million rupees in the last four sessions, and a net 3.48 billion rupees worth of equities so far this year.

The Colombo stock index edged down 0.11 percent to 6,044.23, its lowest close since July 4. It has declined about 5 percent so far this year.

Turnover stood at 193.2 million rupees on Monday, less than a quarter of year’s daily average of 827 million rupees.

Most Asian share markets, however, crept cautiously higher as investors awaited developments on proposed Sino-U.S. trade talks and the Chinese yuan rallied away from alarming lows.

Top mobile phone service provider Dialog Axiata fell 2.1 percent, while top lender Commercial Bank of Ceylon closed 0.8 percent weaker.

The central bank left its key policy rates unchanged, as expected, on Aug. 3, citing its goals of stabilising inflation and fostering sustainable economic growth.

Central bank Governor Indrajit Coomaraswamy said the economy was unlikely to grow more than 4 percent in 2018, falling short of an earlier estimate of 5 percent. 

($1 = 160.3500 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Subhranshu Sahu)

Panasian Power posts Rs 99m PAT in1Q, 2018

Panasian Power PLC, a green energy solutions provider, posted a consolidated net profit of Rs. 99 million for the quarter ending June 30, 2018. This represented an incredible growth of 1380% compared to the same period last year.

Revenue grew by 134% to reach Rs. 177.7 million. Operating profit for the quarter increased to Rs. 138.7 million from Rs. 40.3 million during the same period last year.

These results were attributed to contributions from the Padiyapelella, Manelwala and Rathganga mini hydropower plants, both of which have Standardised Power Purchase Agreements (SPPA) with the Ceylon Electricity Board (CEB) to supply all of the energy generated to the national grid.

During the period under review Panasian Power recorded its first solar power income.The company increased margins during the quarter by exercising prudent cost control practices which brought down direct expenses and finance costs.

This resulted in direct expenses of Rs. 19.5 million compared to Rs. 22.9 million during the same period last year and a finance cost of Rs 25.8 million compared to Rs. 33.6 million during the corresponding period last year.Chief Executive Officer, Panasian Power, Dr. Prathap Ramanujam said, “This monumental growth is validation of the steps we took last year to aggressively seek bottom line growth.

“We fully expect these figures to improve further over time as power generation increases at the plants and with greater contribution coming from our solar power investments. With several solar projects in the pipeline, we continue to explore new opportunities both here and abroad,” he said.

General Manager and Executive Director, Panasian Power, Pathmanatha Poddiwala said, “We have already begun construction on another 900 Kw rooftop solar plant in Kelaniya and a 1 MW ground solar plant is expected to begin construction during the second quarter of this financial year.”

www.sundayobserver.lk

Panasian Power constructing more solar power plants

Panasian Power PLC, which saw a growth spurt in the last quarter ending June 2018, has begun construction on another 900 Kw rooftop solar plant in Kelaniya while a 1 MW ground solar plant is expected to begin construction during the second quarter of the current financial year.

According to Pathmanatha Poddiwala, the company’s General Manager and Executive Director, Panasian has also entered into an agreement to build and operate a 2.9 MW rooftop solar plant in the Kurenegala district which is expected to be commissioned during the third quarter of his financial year.”

The company, in a media release, said it has reported a consolidated net profit of Rs. 99 million for the quarter ending 30th June 2018, up sharply by 1380 per cent compared to the same period last year.

Revenue also grew during this period by 134 per cent to reach Rs 177.7 million. Operating profit for the quarter increased to Rs 138.7 million from Rs 40.3 million during the same period last year.

These strong results were attributed to contributions from the Padiyapelella, Manelwala and Rathganga mini hydropower plants, both of which have Standardised Power Purchase Agreements (SPPA) with the Ceylon Electricity Board (CEB) to supply all of the energy generated to the national grid. The period under review also saw Panasian Power record its first solar power income. The company was also able to increase margins during the quarter by exercising prudent cost control practices which brought down direct expenses and finance costs. This resulted in direct expenses of Rs 19.5 million compared to Rs 22.9 million during the same period last year and a finance cost of Rs 25.8 million compared to Rs 33.6 million during the same period last year.

Commenting on the results, CEO Dr Prathap Ramanujam, said, “We fully expect these figures to improve further over time as power generation increases at the plants and with greater contribution coming from our solar power investments. With several solar projects in the pipeline, as part of our continued energy diversification plans, and as we continue to explore new opportunities both here and abroad, we are that much closer to realizing our ultimate goal of securing a clean energy future.”

www.sundaytimes.lk

Sri Lanka's EPF delay holding up hotel sale: East West

ECONOMYNEXT - A delay by the Employees Provident Fund, a state-managed pension fund in coming up with a price for a 11 percent stake is delaying the sale of a hotel to a Singapore based firm, East West Properties said.

In March 2018, East West said it had signed a letter of intent with HPL Hotels and Resorts Pte Ltd, Singapore to sell a 72 percent stake in Weligama Hotel Properties Ltd.

In a stock exchange filing Friday, East West said HPL Hotels had said they only want a 100 percent stake.

But fund had not come up with a valuation of their 11.11 percent stake "despite all accounts and other details being available to the EPF though their representative" who is director of the hotel, East West the filing said.

No offer price was mentioned in the filing.

Sri Lanka to charge 7-pct tax from banks on added value

ECONOMYNEXT - Sri Lanka has proposed to charge 7 percent value added style-tax from banks and finance companies, in changes proposed to the Finance Act as a so-called Debt Repayment Levy.

The proposed tax will be calculated "applying the attributable method" referred in the value added tax act 14 of 2002, the bill said.

It is not clear whether customers who take loans can recover the tax, through their value added tax payments.

Banks already pay a non-recoverable value added tax which falls mostly on salaries.

If the 'Debt Repayment Levy' is not recoverable as part of the standard value added tax regime by borrowers, the administration would have added yet another tax to the already complex system and would be going against a promise given to reduce the overall number of taxes and broadbase a few and boost compliance in bid to put the country on a faster growth path.

Including the tax in the existing VAT regime is would be consistent with the policy of base-broadening.

Banks are considered easy targets for tax, but the overall effect is to push up nominal interest costs.

The proposed changes to the law also allows for discretion to make exceptions, which critics say can lead to corruption.

"The Ministry may, having regard to the economic development of the country by Order published in the Gazette, exempt any transaction of a financial institution specified in such Order, from the payment of the Levy payable under this Part, subject to such condition as may be specified in such Order.

Sri Lanka Softlogic Holdings June net up 14-pct

ECONOMYNEXT - Profits at Sri Lanka's listed Softlogic Holdings grew 14 percent from a year earlier to 49.7 million in the June 2018 quarter on improving margins arising from group synergies despite falling earnings across retail, healthcare and financial services, interim accounts showed.

Earnings amounted to 5 cents a share in the quarter, interim accounts filed with the Colombo Stock Exchange showed.

The share last traded at 22.20 rupees.

In the June quarter, Softlogic gross profits grew 6.7 percent from a year earlier to 5.8 billion rupees, on revenue growth of 5.4 percent to 16 billion rupees and cost of sales increasing a slower 4.7 percent to 10.2 billion rupees.

The retail segment of the group which includes listed Odel Plc contributed 51 percent to group revenue, followed by 20 percent from Healthcare which includes listed Asiri Hospitals Holdings, and 19 percent from financial services which includes Softlogic Life Insurance and Softlogic Finance.

"Better bargaining power led by group synergies paved the way for margins improving to 36.3 percent in the quarter, from 35.9 percent a year earlier," Chairman Ashok Pathirage told shareholders.

Other operating income fell 50 percent to 196.4 million rupees, after a one-off commission income in retail the previous year and lower revenue from the subsidiary finance company, the group said.

Administrative expenses rose 3.6 percent to 3.4 billion rupees and distribution costs grew 3 percent to 688 million rupees.

Net finance cost inched up 1.6 percent to 963.4 million rupees.

Group net debt reduced 54.3 billion rupees in the June quarter, down from 57.2 billion rupees the previous quarter.

This reduction was due to the rights issue of 3.9 billion rupees that was utilized settle debt in April 2018.

"Interest cost savings resulting from reduction in debt will be reflected in the books in the upcoming periods," Pathirage said.

Insurance liabilities of subsidiary Softlogic Insurance transferred to policyholders, which is treated as an expense, amounted to 264.3 million rupees, up 11.4 percent from a year ago.

-Segment results-

Softlogic Holdings' retail segment saw revenue increase 3.2 percent from a year earlier to 8.2 billion rupees in the June 2018 quarter, with profits falling 34 percent to 182 million rupees.

"The branded fashion segment continued its steady pace amidst challenging economic conditions," Pathirage said.

A 40,000 square feet shopping mall at Colombo City Centre will open end-August and Odel Mall opens in 2020, he said.

The Healthcare segment of the group reported revenue growth of 6.5 percent in the quarter to 3.2 billion rupees with earnings growing 1.1 percent to 422 million rupees.

The group is investing in a high-tech cancer treatment facility and 180-bed hospital in Kandy.

Financial services reported revenue growth of 22.4 percent from a year earlier to 3.1 billion rupees in the June 2018 quarter, with profits falling 18 percent to 226.7 million rupees.

Softlogic Life Insurance gross written premiums grew 38 percent to 4.6 billion rupees.

Total assets as Softlogic Finance increased 2.4 percent to 21.6 billion rupees and deposits grew 3 percent to 15.7 billion rupees.

Tech which comprises software and hardware solutions posted revenue of 666.5 million rupees with earnings falling 75 percent to 12.7 million rupees.

Automobile revenue was 278 million rupees in the June quarter on improving sales of long coaches on booming tourism but losses deepened 154 percent to 48 million rupees.

The hotels and property segment which includes Movenpick and Centara Ceysands Resorts and Spa saw revenue increasing 15 percent to 496 million rupees with losses falling 24 percent to 173.4 million rupees.

"Movenpick Hotel Colombo’s tie-ups with airlines and international sports teams proved to be beneficial," Pathirage said.

Distilleries Company of Sri Lanka June net up 88-pct

ECONOMYNEXT - Profits at listed Distilleries Company of Sri Lanka grew 88 percent from a year earlier to 1 billion rupees in the June 2018 quarter despite falling revenue as margins improved and borrowing costs fell sharply, interim accounts showed.

Earnings amounted to 23 cents a share in the quarter, interim accounts filed with the stock exchange showed.

The share closed unchanged at 20.50 rupees on Wednesday.

Gross revenue in the quarter fell 10.1 percent to 19.2 billion rupees with net revenue after turnover related taxes like VAT and excise duties declining 4 percent to 6.4 billion rupees.

Cost of sales fell 20 percent to 4.2 billion rupees leading to a 55 percent growth in gross profits of 2.2 billion rupees.

Net finance costs fell 47 percent to 55 million rupees as borrowing fell to 2.9 billion rupees at end June 2018 from 8.3 billion rupees a year earlier.

Distribution costs grew 22.7 percent to 147.4 million rupees and administrative expenses fell 1.3 percent to 219.8 million rupees.