Corporate news

Richard Pieris Group records 322% growth in profits

The Richard Pieris Group recorded an exceptionally impressive growth of 322% more than the previous year in the six months ending September 30, 2008.

The group's profit growth of Rs. 567 million was commendable as it was achieved in spite of the economic factors that affected the buying power of consumers, escalating prices of oil and raw material that challenged most other companies. This growth included a gain on the disposal of land amounting to Rs. 213 million in the first quarter.

The Group's turnover during the six-month period was Rs. 11.5 billion, an increase of 21% and the operating profit was Rs. 1.4 billion, an increase of 44% - compared to the corresponding period in the previous year.

Chairman Dr. Sena Yaddehige said in his annual review, "The group will concentrate on our core business operations that pivot on rubber, retail, tyre, plantations and restructure or exit from marginal businesses with limited potential.

Reduction of interest costs through effective working capital management and controlling of overheads are key challenges faced by the group in these trying circumstances."

The Richard Pieris Group's high performance was right across the company's core business sectors - rubber, retail, tyre and plantations. The rubber sector achieved a growth of 159% amounting to Rs. 49.9 million with exports boosting revenue. The sector's initiative to increase its portfolio of buyers across the regions is expected to boost revenue and profits in the future.

A sound inventory management system and tight control measures on overhead costs increased the profit margins in the Group's retail sector that showed a steady performance with a turnover of Rs. 4.2 billion reflecting a growth of 28%. The operating profit was up 44% over the previous year at Rs. 257.3 million.

The tyre sector introduced new three-wheeler tyre designs to the market and Arpidag International (Pvt) Ltd., the subsidiary manufacturing retreads was awarded ISO 9001 certification. Overall performance of the tyre sector recorded a turnover of Rs. 1.1 billion that is 26% more than last year and an operating profit of Rs. 107 million, which is 10% more.

The performance of the Group's plantation sector was equally commendable with the turnover amounting to Rs. 3.3 billion showing an increase of 21% and the operating profit at Rs. 719 million was an increase of 28% compared to the same period last year.

However, the growth momentum could not be sustained due to the drastic drop in the prices of tea, rubber and palm oil during the latter part of the last quarter.

Capital Reach Offer for sale oversubscribed

The Capital Reach Leasing Ltd Offer for Sale was oversubscribed on the third market day despite difficult market conditions. The offer was opened on December 8, and closed at 4.30 p.m on December 11, a spokesman for the company said.

Capital Reach Leasing Ltd (CRLL), is a specialised leasing Company and a Registered Finance Company having obtained the licence as a Registered Finance Company in February 2007. The Offer for Sale was of a portion of the Holding Company's shares in CRLL.

The spokesman said investors included Corporates and Individuals with a significant interest from the outstations as well. This clearly is an indication of the presence of investors looking for intrinsic value and is definitely an encouragement to other companies listing their shares. The success of the Offer for Sale is certain to boost market sentiments. The shares will now be listed on the second board of the Colombo Stock Exchange after all formalities are complied with.

The Company projected the investment as a medium-term investment and not as an investment for short-term gains.

Seylan debentures add vibrancy to the market

Seylan Bank's 1.0 Billion Rupee Debenture Issue which is under way has stimulated the market with attractive rates of interest to cater to the investing public for five years. Listed on the main board of the Colombo Stock Exchange, they are unsecured subordinated redeemable Debentures amounting to Rs 400 Million with an option to issue at the discretion of the Board, three further tranches of Rs 200 Million each in the event the issue is oversubscribed

Investors have the option of subscribing for debentures offering either a fixed rate of interest or a floating rate of interest. A fixed rate option comprises an annual interest rate of 21.5% per annum or a monthly interest rate of 20.5% per annum (Annual Effective Rate 22.5% per annum)

The first floating interest rate option is based on the simple average of the three-month weighted average Treasury bill rate (after tax) plus 2.5%, payable quarterly and the second floating interest rate option is based on the simple average of the one year weighted average Treasury Bill rate (after tax) plus 2.5%, payable annually.

Fitch ratings Lanka affirmed Seylan Bank's National Long Term Rating of BBB+ (LKA) and Stable outlook, and assigned BBB (LKA) for its unsecured subordinated redeemable debentures.

Director/General Manager/Chief Executive of Seylan Bank Ajita Pasqual said, "despite difficult market conditions both internationally and locally, we are positive that the country as a whole and we at Seylan Bank will successfully weather the storm to sustain growth rates as anticipated".

NDB Bank acquires stake in Capital Market Services Bangladesh

The National Development Bank PLC(NDB) has received approvals from regulatory authorities in SriLanka and Bangladesh including The Central Bank of Sri Lanka, Controller of Exchange and the Ministry of Finance and Planning to make an investment in Capital Market Services Limited, a licensed merchant bank in Bangladesh.

In addition the NDB has executed a joint venture agreement with Capital Market Services Limited, Bangladesh and its existing shareholders whereby NDB would acquire a controlling interest of the company.

The bank in a stock exchange filing said that the investment would be made in the Capital Market Services Limited Bangladesh subject to the fulfillment of pre investment conditions