CORPORATE

PPL IPO to re-engineer mini hydro power

by Sapumali Galagoda

The IPO of Panasian Power Limited (PPL) offering 200,000,000 shares valued at Rs. 3 per share was launched in Colombo last week.

The company is in a position to re-engineer the mini hydro power sector in Sri Lanka offering shares to the public to generate investment and enable them to participate in the success of the industry and the company. PPL hopes to power the nation. Owning a 2 MW plant in Ratnapura and having recently bought the 2.4 MW Manelwala Hydropower Limited plant in Nuwara Eliya, PPL is planning to establish mini hydro power plants across the country.

The annual report of the Central Bank of Sri Lanka in 2009 said that the total input capacity of the power sector is 2683 MW. Of this 1,345 MW is hydro power, 1,285 MW is thermal power and 3 MW is wind and solar power.

Sri Lanka currently needs 9,190 GWH of energy and the demand will increase to 12,941 GWH in 2015. Mini hydro power plants are the most eco friendly forms of power generation available.

In Sri Lanka mini hydro power has become a reality because of its landscape. Chairman, PPL Dr. Prathap Ramanujam said: "Development of the energy sector within the country is of core importance if the country is to continue moving forward. The IPO will give the investing public a great opportunity to share the success of the company. "By issuing shares to the public we are creating an opportunity for the citizens to become more involved in a resource that affects each of our lives", said Director PPL, Deepal Sooriyaarachchi.

NSB PAT Rs. 4.6b in Q3

NSB's profit before tax recorded a growth of 39 percent to Rs. 7.8 billion and post-tax profit increased by 40 percent to Rs. 4.6 billion for the nine months ended September 30 over the corresponding period of 2009.

Hennayake Bandara

General Manager and CEO NSB Hennayake Bandara said "The Bank's financial performance in the first nine months is testament to the successful realignment of its business which has seen a broadening of retail businesses across the country.

We remain optimistic about the Bank's performance for the remainder of the year."

The focus on balance sheet management has delivered an increase in net interest income in the third quarter through growth in the lending book, albeit at a lower average yield and reduction in the average cost of funds.

The Bank has successfully maintained its net interest margin at 4.4 percent for the nine months ended September 30 compared with 4.0 percent for the same period in 2009.

The Bank's total operating expenses were up by 9 percent to Rs.4.3 billion for from Rs.3.9 billion in the same period in 2009. Staff costs increased by 4 percent, whilst premises, equipment and establishment expenses increased by 14 percent due to continued investment in expansion of delivery channels and improvement in customer service capability.

Operating income was up by Rs.2.9 billion to Rs. 10.2 billion recording a growth of 39 percent.

This was mainly due to the exceptional gains from secondary market dealings in both equity and government securities.

The Bank's effective overall tax rate inclusive of VAT on financial services was 55 percent for the period.

Loans and advances grew by 15 percent to Rs. 76 billion compared with the same period last year.

Housing loan disbursements recorded a growth of 120 percent. Non-performing loans reduced by 10.0 percent.

Asset quality remains strong with the non-performing loan (NPL) ratio of 2.9 percent, reducing from 3.8 percent at December 31, 2009.

The decline in the NPL ratio was mainly due to increase in total loans and advances and efforts on recovery.

The Bank's total assets were up 9 percent to Rs. 385 billion at September 30 compared with the end of 2009 reflecting, primarily, the increase in investments in government securities and loans and advances.

During the first nine months, the Bank's savings deposits recorded a growth of 14 percent and aggregated customer deposits were Rs. 341.0 billion as at September 30 representing an increase of 9 percent from Rs. 313.0 billion as at December 31, 2009.

Tier 1 and Tier 2 capital for the Bank were 17.7 percent and 14.0 percent compared with the regulatory minimum of 5 percent and 10 percent.

The Group's Operating Profit from Ordinary Activities before Taxes increased to Rs. 10.8 billion recording a growth of 25 percent over the same period of 2009, while Profit after Tax for the period increased to Rs. 4.9 billion recording a growth of 23 percent.

Fitch Ratings Lanka for the eight consecutive year reaffirmed the AAA credit rating for the Bank in September and NSB is the only local bank to receive AAA credit rating.

Hennayake said, "We will continue to maintain our focus on liquidity, credit quality and investments, which we believe represent the key ingredients of success in today's volatile environment."

Mercantile Investment records Rs. 506m net profit in 1 H

Mercantile Investment Ltd (MIL) has recorded a Net Profit After Tax of Rs. 506 million for the half year ended on September 30, 2010, a Rs. 401 million increase over the corresponding period for 2009.

The company also recorded a profit growth increase of 382 percent over the corresponding period of 2009.

Deputy Chairman Gerard Ondaatjie said that it was extremely heartening that a sizable number of depositors remained with the company for over 40 years, whose implicit trust placed in the sincerity of purpose, prudent investments and foresight of the company, have been passed on to the younger generations as well.

Their unshakable trust speaks volumes for the positive image Mercantile Investment Ltd has won from the public.

It is the furtherance of this factor that has seen a growth of 12 percent in the deposit base which now exceeds Rs. 3.6 Billion.

Ondaatjie said that through prudent investments, MIL recorded a capital gain of Rs. 384 million.

Simultaneously, through curtailing cost via practical monitoring, the overhead cost was lowered to Rs. 216 million, reflecting an excellent cost to income ratio.

The Deputy Chairman said that in sharp contrast to the previous year's hampered economy forced decline, this year's first half recorded an increase of 21 percent.

Adding further momentum to this upward trend was the encouraging performance of the Treasury Division which obtained low-cost funding, thus profitably bridging the lending and investment requirements.

Ondaatjie said that lease financing and hire purchasing sectors are destined to experience demand growth.

Hence, further to the launch of MIL's Bentota and the newly opened Trincomalee branches, prudent investments will be made in other identified regional business-hubs across key provinces, to bring the Company's near half a century of flawless services to a greater number of people.

All these positive and commendable achievements have been built on the praiseworthy contributions of the devoted staff as well, most of whom have remained with the Company for quite a long time, evolving with the steady growth of the Company in the process, he said.

HPFL share debut oversubscribed 57 times

HDFL officials look at the board on the first day of trading

Shares of Hydro Power Free Lanka Ltd (HPFL) were traded on October 25 at a price of Rs. 15.50, a gain of 55 percent over its initial price of Rs. 10. The highest price for the day was recorded at Rs. 16 while the lowest at Rs. 15. A volume of 22,208,800 shares was traded to close at Rs. 15.70.

Despite the current slowdown in the stock market, HPFL shares performed exceptionally well on its debut, being the mostly traded share of the day and contributing to more than Rs. 343 million of the market turnover.

At day's closure, HPFL's market capitalisation stood at over Rs. 1.7 billion, or 0.08 percent of the total market capitalisation.

The shares were listed on the Main Board of the Colombo Stock Exchange.

The company offered 35 million shares at the Offer Price of Rs. 10 each and the issue was oversubscribed 57 times on the same day of opening, due to overwhelming investor response, which bears testimony to the future potential of the mini hydro power sector, as the most environmental friendly non-conventional renewable energy source for power generating available to cater to the growing electrification needs of the ever expanding population.

Malwatte profit bounces to Rs. 368m end Q3

The boom in rubber prices has bounced the profits of the high profit earning Malwatte Valley Plantations PLC to break its own record breaking profit run to Rs. 368m to end September beating its 2009 3Q profit of Rs. 348m. The earnings per share is at a high of Rs. 14.88 for the period and the net asset value as per the accounts for the period stand at Rs. 69.

Managing Director W.L. Bogtstra said that if trading conditions remained favourable he predicts another record year for the company.