Sri Lanka Newspapers 25/01/2012

Bourse continues to bleed, indices down sharply
Margin calls & panic selling evident

The Colombo bourse continued to bleed yesterday with turnover at Rs.1.28 billion, up from the previous day’s Rs.827.22 million, partly attributed to panic selling as well as margin calls that were evident, brokers said.

The All Share Price Index was down 127 points (2.24%) while the Milanka lost 100.81 points (2.10%) with 38 gainers dismally trailing 185 losers.

"There was a lot of panic selling and margin calls too were evident," a broker said on condition of anonymity. ``At one time the index was down 200 points when some bargain hunters came in."

Yesterday’s top turnover was generated by JKH which lost Rs.4 to close at Rs.161 on nearly 1.2 million shares done between Rs.159 and Rs.165 contributing Rs.184.5 million to the day’s business volume.

Brokers said that there were no crossings but judging by size of some of the parcels transacted, high net worth participation was obvious. These parcels ranged from around 10,000 to 50,000 with several trades of 25,000 and thereabouts posted.

Swarnamahal Finance Services was the second highest business generator gaining Rs.14.30 to close at Rs.111.60. The counter was done between Rs.103 and Rs.116 contributing Rs.150.5 million to turnover. Brokers said that there were no crossings.

Citrus Kalpitiya gained 20 cents to close at Rs.13.50 on nearly 7.2 million shares done between Rs.11 and Rs.17.50 with no crossings. One big parcel of nearly 6.8 million shares was done on the trading floor at Rs.17.50.

Asia Asset Finance edged up 20 cents to close at Rs.6.20 on slightly over 7.6 million shares done between Rs.5.60 and Rs.6.20 while ERI lost Rs.1.40 to close at Rs.27 on over 1.8 million shares done between Rs.26.40 and Rs.38.50.

Central Finance and Commercial Bank were among the blue chip losers with ComBank down 70 cents to close at Rs.99 on over 0.2 million shares and Central Finance down Rs.9.70 to close at Rs.180 on over 0.1 million shares. Ceylon Guardian also edged down 10 cents to close at Rs.230 on over 0.1 million shares.

Hotel Services announced that the Hotel Ceylon Continental, the country’s first five-star, will be closed on February 1 for a Rs.1.8 billion refurbishment with the 259-room hotel due to reopen with a new look in October.
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Sri Lanka based MillenniumIT, a technology solutions provider and a part of the London Stock Exchange Group (LSEG), announced the group’s plan for further investment in MillenniumIT. LSEG will invest in the construction of a new state of the art software complex to accommodate the company’s growing specialised international software and services business.

Since the acquisition of MillenniumIT in 2009, LSEG has invested heavily in growth of the company – expanding the workforce to over 600 and investing in property and infrastructure on its Malabe campus. The new 40,000 sq ft complex is expected to house approximately 300 people and will be built within MillenniumIT’s extensive 16.5 acre Malabe Campus to accommodate the demands of MillenniumIT’s increasing operation. LSEG Chairman, Chris Gibson-Smith, CEO, Xavier Rolet and Tony Weeresinghe, MillenniumIT’s CEO were amongst those present at the foundation stone laying ceremony held today at the construction site.

Since MillenniumIT joined LSEG, there has been no looking back for either party. London Stock Exchange’s (LSE) equity cash markets went live last year with MillenniumIT’s high performance trading software, at an average latency of less than 120 microseconds, making the LSEone the fastest trading venues in the world. MillenniumIT’s trading platform, Millennium Exchange is highly scalable and designed for multi-asset class trading, offering London Stock Exchange’s clients superior technical performance and enhanced functionality.

MillenniumIT has also directly benefited from being part of an increasingly diverse international exchange group, reporting strong growth in financial performance and benefitting from greater international visibility. This is further evidenced by the fact that in 2011 MillenniumIT accounted for over 20% of Sri Lanka’s software exports revenue. Over the past two years MillenniumIT’s software business has also significantly increased its global client base, having signed over 15 new clients, including the Chittagong Stock Exchange, the Delhi Stock Exchange and the Securities and Exchanges Commission (SEC) of Sri Lanka. MillenniumIT’s local SI business has also seen revenue growth of over 30% since 2009. The SI business complements the software projects by providing the infrastructure build for clients.

Xavier Rolet, CEO of the London Stock Exchange Group said, "I am delighted to be in Sri Lanka and to be laying the foundation stone for MillenniumIT’s new campus building. Since joining London Stock Exchange Group in 2009, MillenniumIT has revolutionised our own Group technology, providing us with one of the fastest and most advanced trading platforms in the world. Millennium has also been instrumental in helping drive the Group’s international expansion through sales to exchanges and business around the world."

Tony Weeresinghe, CEO of MillenniumIT said, "Since MillenniumIT joined the London Stock Exchange Group, we have directly benefited from the international strength of LSEG’s brand. This has helped the company to innovate, expand, create jobs and importantly to contribute to Sri Lankan economic growth. Today is another very important step in MillenniumIT’s exciting history. Our new campus building will allow MillenniumIT to continue to expand our operations in Sri Lanka and also our ability to successfully deliver for our customers around the world."

British High Commissioner to Sri Lanka, John Rankin said, "I am delighted to see the continuing investment the London Stock Exchange Group is making in Sri Lanka. The LSEG is at the heart of the world’s financial community. Sri Lanka’s ICT industry is, in turn, recognised for its innovative excellence and Millennium IT is synonymous with this. This latest venture is a further boost to the strong commercial ties between our two countries."
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By Hiran H. Senewiratne

With a population of 20 million Sri Lanka has only 27,000 Unit Trust holders, making it necessary to popularise unit trusts because returns were higher than conventional savings instruments, HNB CEO Rajendra Theagarajah said yesterday (Jan. 24) at the launch of the Guardian Acuity Unit Trust Fund.

With interest income on the decline, unit trusts were an excellent instrument with which to deploy deposits, which gives a steady return on investment from the medium to long-term perspective, Theagarajah said.

Guardian Acuity Asset Management Limited, a joint venture fund management company formed by Ceylon Guardian Investment Trust Plc (of the Carson Cumberbatch Group) and Acuity Partners Pvt Limited, the investment banking arm of HNB and DFCC banks.

Theagarajah said that although a bank’s deposits were its bread and butter, HNB yet wanted to promote unit trusts as an innovative product through its branches and to increase the awareness level among people throughout the country.

The HNB CEO also said that the new trust fund would be marketed through a network of 65 selected braches of HNB, making it accessible to a wider investor base. It would benefit from the long term capital gains and income streams.

According to the Central Bank November statistics total bank deposits were more than three trillion rupees, while the assets of unit trusts was 11 billion rupees. Therefore promoting unit trusts was the need of the hour, Theagarajah said.

Chairman Guardian Acuity Asset Management Chandima Gunawardena said the Guardian Acuity Fund was positioned as a long term savings plan covering all segments of investors, who have a varied choice of investing for their important life events, like their children’s education, retirement or even starting a new venture.

GAAM Director Ray Abeywardena said that the trust would offer a mix of three equity and fixed income investment plans in appropriate mixes depending on the time horizon preferred by each investor.

Abeywardena also said that for the more sophisticated investor, the company had an investment plan called MoneyMaker, which gave the investor the choice to decide his own risk level with a suitable combination of equity and fixed income investment.

Further, strengthening the concept of long term investment, the savings plans allow for periodic topping-up of investments on a regular basis, thus encouraging the savings habit among investors, GAAM Director, Ruvini Fernando said.

She said that flexibility to switch between funds at no extra costs would give investors the freedom to vary their equity and fixed income investment proportions to suit their risk taking ability, given the volatility in stock prices and interest rates.
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According to the agreement between Sri Lanka and Cairn India, if commercially viable deposits of hydro carbons are found, based on the investment multiple, the shares in profits will begin from 12.5 percent to Sri Lanka and increase to 60 percent within five years of commencement of oil extraction.

Also, the government expects a 10 percent royalty, apart from the profit share based on the investment multiple, taxes and the revenue of the participating National Oil Company which will be incorporated if and when commercial oil extraction commences.

Cairn was given a 3,000 square kilometre block in depths ranging from 200 to 1,800 metres.

The Sri Lankan side of the Mannar Basin is about 30,000 sq km and was divided into eight blocks. Two blocks were allocated to India and China on nomination but no clear response has been given by either country.

India is already extracting oil from its side of the basin.
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Cairn Lanka, a fully owned subsidiary of Cairn India, says it has notified the government that it would soon enter phase 2 of its oil exploratory activities in Sri Lanka’s side of the Mannar Basin.

Our successive discoveries in Sri Lanka have established a working hydrocarbon system in the frontier Mannar Basin. This success demonstrates Cairn India’s strong skill set, which we will continue to leverage for future opportunities. We have also notified the Sri Lankan Government about our intention to enter the second phase of exploration," Rahul Dhir, Managing Director and Chief Executive Officer, Cairn India said, releasing financials for the third quarter of the 2011/12 financial year.

Cairn Lanka completed the first phase of exploration in the ‘frontier’ Mannar Basin. "The three well drilling campaign has resulted in two successive discoveries, establishing a working hydrocarbon system," the company said.

An industry expert said that where earlier Cairn had been groping in the dark, the second phase would entail a much more detailed study of the terrain.

Cairn India won the first oil exploratory licence issued by Sri Lanka in 2008. According to earlier studies carried out by the Petroleum Resources Development Secretariat, there is a 60 percent probability of finding commercially viable hydrocarbon deposits.
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* Treasury holding it down with 13% EPF stake

Galadari Hotels (Lanka) PLC sustained a heavy loss amounting to Rs. 199.68 million for the December 2011 quarter driven by exchange loss as the 5-Star hotel mulls a downgrade as it struggles to fill its rooms much to the dislike of the government, which is blocking this move having invested public money from the Employers’ Provident Fund (EPF).

According to interim financial statements filed with the Colombo Stock Exchange, Galadari recorded a growth in revenue during the December 2011 quarter to Rs. 373.17 million from Rs. 320.9 million a year earlier. However, sharp exchange loss amounting to Rs. 191.89 eroded the bottomline, resulting in a Rs. 199.68 million loss. The hotel had recorded an exchange gain of Rs. 50.9 million a year earlier where net profit amounted to Rs. 35.47 million.

For the 12 months ending December 31, 2011, the hotel sustained a loss of Rs. 221.63 million from a net profit of Rs. 23.6 million a year earlier.

Revenue had grown from Rs. 1.04 billion to Rs. 1.32 billion, but higher operating expenses, Rs. 514.2 million from Rs. 395.4 million, and an exchange loss of Rs. 153 million from a Rs. 170.6 million gain the previous year, resulted in sinking the hotel into the red.

The management of Galadari is mulling a downgrade from its 5-Star status in a bid to attract more guests but the Treasury which owns the second highest stake (13 percent) in the hotel through the EPF is blocking this move, highly place sources told The Island Financial Review. However, an official of the hotel when contacted said there was no such move to downgrade the status of the hotel.

Iceberg 2 Ltd holds a 16.18 percent stake in the property while the Galadari brothers too hold significant stakes collectively.

The public holds a 17.74 percent stake in the troubled 5-Star hotel.

Galadari has reported Rs. 9.1 billion in accumulated losses and Rs. 1.3 billion in net assets as at December 31, 2011.

Its building and leased land is valued at Rs. 7.6 billion and its latest revaluation has not been incorporated, the company said in the notes to the interim statements.

According to reports, a debt to equity swap is being planned.

The Director Board comprises; KAA Solaiman, MHOK Al Shehi, LR De Silva, SMHA Khooray, HKJ Dharmadasa, JAS Felix, PMA Sirimane, MHAW Al Garf, Amit Chib and HJC Perera.

* Opposition wants to question Central Bank

Why was EPF used to invest in Galadari?

A major shareholder sold his stake in Galadari Hotel to the Employers’ Provident Fund saying it was a great relief. So in other words, the working people of this country now have to live with this headache thanks to the Central Bank not following laid-down guidelines regarding investing EPF funds, Opposition Lawmaker and deleted Economic Spokesman Dr. Harsha De Silva said.

"All along we have been voicing our legitimate concerns as to how the EPF was being managed. According to laid down guidelines, the Central Bank is supposed to invest in blue-chip companies and Galadari Hotels does not even come close to being a blue-chip," Dr. De Silva said speaking to The Island Financial Review.

"The Central Bank has been summoned before parliament to answer for some its questionable investments of EPF funds. We would like to know why EPF money was used to invest in a loss making entity like Galadari, which was clearly against the guidelines which governs EPF investments," he said.
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Ceylon Continental Hotel announced that a major refurbishment of the centrally located property in Colombo will commence next month with its operator Hotel Services (Ceylon) PLC investing Rs 1.8 billion into the development which will transform the property into a fully refurbished 229 room 5-star hotel.

The property was developed to be Sri Lanka’s first 5-star hotel in 1972 under the Intercontinental Hotels chain. The company, Hotel Services (Ceylon) PLC, was established in 1969.

According to the last published financial statements, the company recorded a Rs. 2.68 million loss at the end of the September quarter 2011, from a Rs. 12 million profit a year earlier. Revenue had grown 18 percent to Rs. 299.55 million.

The extensive refurbishment program will mean that the hotel will close from February 01, 2012, and it is proposed that the new?look property will re?open in October 2012, Hotel Services said in a statement.

"As part of the refurbishment, the rooms will be completely revamped. The standard room designs will result in a soothing earth tone colour scheme, with luxurious white marble bathrooms and soft cream furniture giving the rooms a sense of spaciousness with an opulent touch. The lobby and main entrance will also be renovated to a grander scale with an impressive entrance gallery and lobby lounge with unsurpassed sea views.

Another area of the hotel that will be changing quite dramatically is the pool area which will now feature an infinity edged swimming pool that would give the illusion of it projecting into the vast ocean.

An added feature, that the public can expect is the highly anticipated Sky Bar, at the roof top. This bar would offer a chic outdoor space that embraces the sky and the sea, all at the same time. Designed with frameless glass balustrades on a timber deck, the Sky Bar would feature an iconic circular bar at the centre which would glow at night. The bar would provide guests with a view like no other and be the new and hip entertainment spot in the city.

Introduction of new restaurants and cafes featuring an exciting selection of tasty treats to satisfy any craving will be an added facet. In line with the fresh and revitalised start, the hotel will be given a completely new appearance.

Elements of the "neo-classical" architecture are embraced through the property with the aesthetics of days gone by and the added lavishness of today’s lifestyle.

A complete renovation of this building would ensure an overall change in the ambience of spaces as well as the spatial progression experienced by the visitor. All in all, this property will stand as one of timeless character," the company said.

The Director Board of Hotel Services PLC comprises; A. M. Pandithage (Chairman), N. J. Deva Aditya De Silva, S.C. Ganegoda (Non Executive Director), S. P. Dissanayake (Non Executive Director), S. J. Wijesinghe (Non Executive Director), L.T. Samarawickrama (Non Executive Independent Director), L.N. De S Wijeyeratne (Non Executive Independent Director), K. D. D. Perera, R. N. Ponnambalam, L.K.B. Godamunne (Non Executive Independent Director) and W.D.N.H. Perera.

Hayleys PLC holds a controlling stake in the company.

The Intercontinental chain first owned the property which was later acquired by Indian businessman Sharma. Nahil Wijesuriya of East West fame later took control of the property.
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Thanks for sharing