Accounting procedures will have to be overhauled

Banks to adopt FVA from June

Prevailing market interest rates will play an over-arching role in fair value accounting (FVA) that banks will have to adopt in parallel with the traditional cost based accounting system from June.

Reyaz Mihular, partner, KPMG Ford, Rhodes Thornton & Co., said on Wednesday  that if a bank's lending rate is lower than the prevailing market rate, then the impaired value will have to be subtracted from the bank's topline under the new accounting standards.

Similarly, if a bank's deposit rate is lower than the prevailing market rate, then the difference in value will have to be added on to the bank's topline.

Mihular made these comments at a lecture organized by the Association of Professional Bankers on International Accounting Standards (IAS) 32-39, Fair Value Accounting & Implications for Banks.

He said that FVA for banks reflects the true economic environment in which banks operate.

Otherwise, there is something wrong if banks show healthy profits, while operating in a volatile environment, Mihular said.

If interest rates are going through the roof, those must be reflected in a bank's accounts.

IAS is all about reflecting financials as it is, without trying to smoothen or manage it, he said.

Commercial Bank's Senior Deputy General Manager Finance & Planning Ranjith Samaranayake, another speaker at this event said that with the world moving towards IAS, under which FVA is based on IAS 32-39,  a gamut of accounting procedures will have to be incorporated with the adoption of FVA by banks.

Among those will be on "loans and advances," the single largest base in a bank's balance sheet.

Mihular added that bank staff loans which are generally given at lower lending rates than the prevailing market rates, are also going to hit banks' balance sheets under this new accounting system.

"Short Term Investments" and "Long Term Investments," as is the case of share investments, have been thrown out.

Central Bank's (CB's) Deputy Director Bank Supervision Department A.A.M. Thassim confirmed at this seminar that IAS 32-39 will make its debut from June. He however said that the CB has not set a time frame for the mandatory implementation of FVA under IAS 32-39.

Pakistan has also said that they will implement FVA for the banking sector, but has left open the time frame to make it mandatory. India however has decided to embrace FVA from 2011.

Samaranayake said as such it was not logical for local banks to keep away from IAS.

He said that FVA will have an impact on provisioning and on interest income on non performing loans (NPLs). He said that under the present time based accounting system for banks as per CB guidelines, if after three months no lending interest on a loan is received by a bank, it’s declared non performing.

However, under FVA, the interest recognition policy of NPLs will change.

Mihular said that there is no room for provisioning under FVA. It however has an emphasis on more disclosures.

Ajantha Madurapperuma, Seylan Bank’s Senior Deputy General Manager Corporate & Foreign Currency Banking said that at present special provisioning is challenged by the Inland Revenue Department.

Mihular added that IAS doesn’t set standards for tax, but for accounting.

He said that under the present time based regime for loans, there are NPLs with interest placed on suspense.

But under IAS 39 there will always be interest income. However, impairment testing will be done to identify NPLs.

Under the present system, in the case of NPLs that are past due after six months, a 20% provisioning has to be made and after 18%, 100% provisioning has to be made for bad loans.

CB will therefore have to change their current time based guidelines to accommodate the new accounting standards.

Samaranayake added that the banks’ computer systems which are time based will also have to be changed to accommodate the new standards. Staff training on the new standards will also have to be undertaken.

Rates expected to be steady

Rupee gains 10 cents

The rupee appreciated by 10 cents on Friday (over that of Thursday's close) over the US dollar as the Ceylon Petroleum Corporation (CPC) staying away from the market, coupled with foreigners subscribing to rupee treasury bonds having a salutary effect on the rupee, market sources said.

According to the CB, the rupee has appreciated by 88 cents as per commercial banks' middle rates, when those rates are compared on a year on year basis, with the dollar closing the week at Rs. 107.75, vis-…-vis a rate of Rs. 108.63 a year ago.

The CPC usually makes around $ 7-8 million worth of purchases from the market daily to buy its requirements of crude and refined petroleum products, with the split being "50-50" for these two products, CPC sources said.

However, with the Iranian government extending a US$ 700 million credit line to the government (effective from December 2007) for the CPC to buy its crude oil requirements, CPC's exposure in the market has been halved, effectively having a positive impact on the rupee, market sources said.

Further, the government doubling the threshold permitted for foreigners to subscribe to outstanding rupee treasury bonds from 5% to 10% (an addition of US$ 400 million) also helped the rupee to appreciate, the sources said.

Friday's turnover was around US$ 25 million, with the dollar closing the week at Rs. 107/72(buying)/Rs.107/75 (selling), as opposed to Rs. 107/80/90 on Thursday. Bank of Ceylon (BoC) was seen buying dollars in the market at the Rs. 107/70/72 levels, the sources said.

Rupee..

BoC generally acts as the government's/Central Bank's (CB's) proxy in the foreign exchange market. Other sources were of the opinion that BoC's action of buying dollars and releasing an equivalent amount of rupees to the market was the reason for interest rates to be "stable" these days.

According to the CB, it bought foreign currency worth US$ 139 million from the market last month, while at the same time selling amount of $ 23.8 million, effectively releasing a net sum of $ 115.2 million (Rs. 12.4 billion) to the market.

The souces said that overnight call money market rates, the rates at which commercial banks lend to each other for a day was stable at the 14«-15% levels on Friday, the same levels that it took on Thursday.

However, the market which had a liquidity surplus of Rs. 14 billion on Thursday, saw it being contracted to Rs. one billion on Friday, they said.

Meanwhile, treasury bill rates at Wednesday's primary auction held steady vis-…-vis the previous week's auction, which sources attributed to controlled selling by the CB in an attempt to bring down rates which are close to 20% for all three tenures.

As a result, the weighted average yield rates (WAYRs) for treasury bills of 91 day, 182 day and 364 day tenures fetched 19.25%, 19.29% and 19.45% respectively, the same rates that it fetched at the previous week's auction.

CB sold Rs. 3,820 million worth of treasury bills to the market of 91 day tenure, while obtaining bids worth Rs. 8,713 million for this parcel; Rs. 1,799 million worth of bids for treasury bills of 182 day tenure after obtaining Rs. 4,369 million worth of bids and Rs. 1,914 million worth of treasury bills of 364 day tenure, after receiving bids worth Rs. 5,912 million from the market.

Though the CB is trying to give a signal to the market that they expect rates to come down, they have not been successful in selling that story to investors because of giving mixed signals, they said.

 The CB gave a wrong signal to the market at last week's treasury bond auction when they allowed the trade to subscribe to a nominal amount of Rs. 685 million at a WAYR of a high of 18.88%, the sources added.

It would have had been better of they had cancelled that auction and had placed that amount in the ensuing treasury bill auction, which may have had resulted in the market buying this lot at a lower rate in conformity with CB's expectations, they said.

" But now, 50% of investors in government securities expect the rates to hold, while the other half are expecting rates to go up by 20 basis points (0.2%) over the current rates on their proposed investments in the next primary treasury bill auction for all three tenures, the sources said.

BoC generally acts as the government’s/Central Bank’s (CB’s) proxy in the foreign exchange market. Other sources were of the opinion that BoC’s action of buying dollars and releasing an equivalent amount of rupees to the market was the reason for interest rates to be “stable” these days.

According to the CB, it bought foreign currency worth US$ 139 million from the market last month, while at the same time selling an amount of $ 23.8 million, effectively releasing a net sum of $ 115.2 million (Rs. 12.4 billion) to the market.

The souces said that overnight call money market rates, the rates at which commercial banks lend to each other for a day was stable at the 14½-15% levels on Friday, the same levels that it took on Thursday.

However, the market which had a liquidity surplus of Rs. 14 billion on Thursday, saw it being contracted to Rs. one billion on Friday, they said.

Meanwhile, treasury bill rates at Wednesday’s primary auction held steady vis-à-vis the previous week’s auction, which sources attributed to controlled selling by the CB in an attempt to bring down rates which are close to 20% for all three tenures.

As a result, the weighted average yield rates (WAYRs) for treasury bills of 91 day, 182 day and 364 day tenures fetched 19.25%, 19.29% and 19.45% respectively, the same rates that it fetched at the previous week’s auction.

CB sold Rs. 3,820 million worth of treasury bills to the market of 91 day tenure, while obtaining bids worth Rs. 8,713 million for this parcel; Rs. 1,799 million worth of bids for treasury bills of 182 day tenure after obtaining Rs. 4,369 million worth of bids and Rs. 1,914 million worth of treasury bills of 364 day tenure, after receiving bids worth Rs. 5,912 million from the market.

Though the CB is trying to give a signal to the market that they expect rates to come down, they have not been successful in selling that story to investors because of giving mixed signals, they said.

 The CB gave a wrong signal to the market at last week’s treasury bond auction when they allowed the trade to subscribe to a nominal amount of Rs. 685 million at a WAYR of a high of 18.88%, the sources added.

It would have had been better if  they had cancelled that auction and had placed that amount in the ensuing treasury bill auction, which may have had resulted in the market buying this lot at a lower rate in conformity with CB’s expectations, they said.

“ But now, 50% of investors in government securities expect the rates to hold, while the other half are expecting rates to go up by 20 basis points (0.2%) over the current rates on their proposed investments in the next primary treasury bill auction for all three tenures, the sources said.

Inflation: 21.6%

Inflation, as measured by the new CCPI (N) is likely to remain around 16- 20% during the first half of 2008, the Central Bank said.

Responding to declining demand pressure as well as certain favourable developments in the supply side, inflation is expected to moderate on a gradual path to 10-11% by end 2008 and 9-10% by end 2009. Any unforeseen significant price changes in the international market would, however, result in a deviation from this expected path. inflation as measured by point to point change in CCPI(N) increased to 20.8% last month,  from 18.8% in December 2007, while annual average inflation rose to 16.4%.

Meanwhile, the point to point change in inflation as measured by the old CCPI increased to 21.6% last month, over the December figure of 16.4% for the same.

Merger postponed

Millers PLC has asked the Colombo Stock Exchange (CSE) to remove the suspension that has been placed on their shares being traded as the proposed merger with Ceylon Theatres Ltd., has been postponed. In a letter sent to the CSE on Thursday , Millers has said that due to a procedural issue there has been a delay in obtaining the certificate of amalgamation from the Registrar of Companies (RoC) in relation to the proposed merger.

Therefore the merger of Ceylon Theatres with Millers, scheduled for January 31, 2008; did not go ahead.

However, it will take place at a later date to be determined by the RoC, the letter further said.

Tea, $ 3 a kg.

Tea production last year increased by 2% year on year (YoY) to 310.8 million kilos.

Average tea prices at November's auction saw a 50.8% increase YoY to US$ 2.91 a kg. Meanwhile, net foreign inflows in the first 11 months of last year increased by 16.1% YoY  to US$ 2 billion.

Rubber production in the first 11 months of last year in the meantime increased by 8% YoY to 108.4 mn., kgs., while coconut production increased by 4.7% to 2.7 billion nuts. Source: Central Bank

JKH, NTB boost bourse

The market bolstered by trades in JKH and NTB, recorded a Rs. 358.2 million turnover at Friday's trading.

A "foreign to foreign" transaction of 1.2 million shares of JKH at the Rs. 120 price levels saw JKH contributing Rs. 147 million to the day's turnover. JKH closed at Rs. 120, Rs. 1.75 less than its previous closing price.

Meanwhile, 1.5 million shares of NTB changed hands at the Rs. 27.50 price levels on Friday. Among NTB's sellers was believed to have had been high networth individual A.F. Munas who sold some 1,182,500 shares. NTB closed at Rs. 27.75, 50 cents more than its previous closing price.

The benchmark ASPI closed the week at 2,453.56; 7.43 points more than Thursday's close, while the more sensitive MPI ended at 3,123.38 points; 10.31 points  more over Thursday's close.

Chaaya Village  has top processors in place, having earned  ISO  for ISO 22000, ISO 14001 and OHSAS 18001. A PATA Gold Award for Marketing Media-CD Rom category was also won by CHR for the Corporate Communication CD which was developed to promote the Chaaya Brand.

Kuoni Travel Ltd was the winner of the Presidential Award for the Best Destination Loyal Partner - Foreign Tour Operator Category. The award was received by Whittall Boustead (Travel) Ltd., (WBTL) JKG's destination management company which has represented Kuoni since 1993 in Sri Lanka.

Sri Lanka has been one of Kuoni's top selling destinations and for 2007 they produced an 84 page brochure featuring  48 beach hotels and an array of escorted tours, beach retreats and tailor made itineraries which  reiterates their faith and commitment to Sri Lanka as a holiday destination. This was done together with WBTL, Sri Lanka Tourist Board, SriLankan Airlines and other hotel partners.

Kuoni engages in serving the community that they operate in and has contributed endoscopic equipment to the Mahamodara Maternity and Gynecology Field Hospital, Karapitiya.. Kuoni has also donated towards the construction of a building with equipment and furniture for a clinic in Ambalantota and assisted in the refurbishment of and provision of equipment to the Tangalle District Hospital.

 JKH Deputy Chairman and Leisure Group President Ajit Gunewardene said that he was proud of the leisure group's achievements and reiterated the group's commitment to continue to invest and grow this sector.  He added that this is only the beginning "as we forge ahead with new innovative and exciting projects and further expansion in Sri Lanka and overseas."

M3 brings out "the journalist"

Mobitel's 'M3-Journalist,' a 3.5G service tailored to meet the requirements of the journalist from the electronic media, was launched after trials carried out with ITN Sri Lanka.

Mobitel having launched South Asia's first and only HSPA powered Super 3.5G network in December 2007, dishes out yet another first using its 3rd generation (3G) service under the name 'M3-Journalist' which potentially can empower M3 users to directly communicate through video telephony, giving the ability to broadcast themselves live on ITN initially.

A service trial was successfully conducted on January 11 and successfully commercially launched on January 13,2008 by Mass Media Minister Anura Priyadarshana Yapa on ITN's Sinhala news at 7.00pm and

English news at 9.45pm.

The Minister was interviewed live remotely from the news studio through M3 Journalist, whereby a video call was directly dialled into the ITN studio from the ITN reporter's M3 phone who conducted the interview with Yapa at his residence.

The ITN news studio control room scaled down the visual which was de-multiplexed from the video call and superimposed on the standard broadcast visual frame, finally shown as a 'picture in picture

configuration' where the minister and the newscaster were both seen on TV on their interview.

Yapa said: "New technology needs to be incorporated to enhance the user experience of mass media in Sri Lanka. ITN has been proactively using cutting edge technology provided through M3 Journalist and thereby they have uplifted Sri Lanka's journalism in a sophisticated and "reality-based" manner by the mere fact that public gets to see who reports and what is reported.

As was demonstrated with my interview, latest technology like M3 has the power and the potential to enable almost everybody to report using their 3G mobile phones unlike before where a camera crew had to rush to a location to take footage then rush back to the TV broadcast studio, which especially affects timeliness of breaking news reports.

This way the news which the reporters bring in will be effective as opposed to reading a statement."

ITN took pride in launching M3-Journalist which is a first in South Asia. "This was a breakthrough moment for ITN being the first TV network in the region to incorporate 3rd Generation technology for news reporting" said ITN Chairman Anura Siriwardena.

He said: "with Mobitel we have already taken measures to extend this service to other programmes such as request shows, debates and reality shows while inviting our viewers to take part in our TV programmes through M3 Journalist.

The beauty is that M3 Journalist will turn any type of TV programme into a reality show by introducing the caller's visual into the big screen."

"With the launch of M3, we have already unveiled two important services which deal with mass media" said Mobitel CEO Suren J. Amarasekera. "While M3 offers Mobile TV service, thus ensuring mobility to TV viewers, M3-Journalist will add the 'broadcast-yourself' aspect which is in the boom in most developed countries.

We believe that 'social networking' and 'community driven' services are fast entering the media evolution. As the national mobile service provider we consider it a privilege working with ITN in launching M3 Journalist with the participation of the Minister. We believe that M3 Journalist will upgrade the connectivity of the broadcaster and the viewer from one-way-communication to two-way-communication using advanced video telephony to bring out interactive 'infotainment' to the Sri Lankans."

ITN will involve the public in many TV programmes in the days to come and the M3-Journalist Hot line numbers to be dialled will be announced by the TV programme hosts.

Top awards for Cinnamon Grand

Cinnamon Grand Colombo (CGC) won two prestigious awards for the Best Five Star City Hotel and the Best Restaurant (Lagoon) at the recent Presidential Awards for Travel and Tourism 2007.

This is a significant achievement for a brand that was birthed just two years ago and recognizes CGC's unique brand of hospitality, service and cuisine.This year's  (2007) awards consisted of 44 categories, covering 11 industry segments in all areas of tourism in Sri Lanka.

JKH wins 5 Presidential Awards for Travel & Tourism

John Keells Holdings PLC (JKH) the largest player in the leisure industry with over 2,100 rooms both in Sri Lanka and the Maldives and the leader in Destination Management Services handling the largest number of tourist arrivals to the country has pioneered several new innovations in the tourism sector.

With over 30 years experience in hospitality services, in 2005 the Group embarked on a re-branding initiative and has launched two distinct home-grown brands: "Cinnamon Hotels & Resorts"-an up-scale tier of hotels and "Chaaya Hotels & Resorts" (CHR)-an experience to holiday in with nature and the environment.

John Keells Group (JKG) Destination Management Companies were the first to expand into the region with successful operations in the Maldives and India. Therefore, it was no surprise when they carried away an array of prestigious awards presented at the inaugural Presidential Awards for Travel and Tourism.

Cinnamon Grand Colombo (CGC) won two prestigious Presidential Tourism Awards, being adjudged the Best City Five Star Hotel and for having the best Restaurant, the Lagoon which is known for its unique seafood concept.

 This is a significant achievement for an indigenous brand that was born just two years ago and recognizes CGC's unique brand of hospitality, service and cuisine.  Winning against renowned international hotel chains, CGC is known not only for being the market leader in setting benchmarks and standards, but also in revolutionizing the definition of hospitality in Sri Lanka with innovative features, products and services that conform to its theme of indulgence. 

At its inception in 2005, CGC set for itself an ambitious three year vision of being the best five star city hotel in Sri Lanka and is proud to have achieved this milestone within that timeline, garnering the support of an excellent team that thinks out of the box in creating an "indulgence" milieu for its guests.

Innovation is exemplified by the The Lagoon, CGC's unique seafood restaurant, which won the accolade for Best Restaurant at these awards and earlier in the year was also named Sri Lanka's Favourite Restaurant  from an independent survey conducted by the LIVING magazine.

Conceptualised on a unique concept of an open seafood market introduced for the first time in Sri Lanka, the restaurant which presents an experience of 150 ways to enjoy seafood, has seen international celebrities rank it among the top five seafood restaurants in the world.   

The John Keells Group and its subsidiary companies are also committed to corporate social responsibility and sustainable development.  This commitment was reflected in the Presidential Corporate Social Responsibility Industry Award won by Chaaya Village Habarana (CVH) for its outstanding contribution to the community.

 The 'Halmillawa Village Uplift' is a project of John Keells Social Responsibility Foundation and is implemented by CVH. It seeks to give support to the village and its inhabitants through pre-School teaching, vocational training, youth development, women's empowerment and computer and English language training in the hope that villagers' gain not just knowledge and qualifications but the pre-requisites for employment as well. At CHR, the people, their livelihoods and ways of life are a part of the experience that mirrors the essence of a certain time and sprit manifesting the culture, history and environment that surrounds the hotel.

The award for the Best Effort in Tourism Marketing went to the launch campaign for CHR. Unveiled at the International Tourist Fair in Berlin (ITB), the campaign in its many dimensions brought to life the Brand's promise of  "One Journey, Many Paths" in new and innovative ways.

While the brand broke new ground in introducing the concept of  "Experience Packages" which were unique to the location of each Chaaya property, the marketing and advertising "showcased" these offerings and presented them to travellers in an enticing manner. CHR have since launched 5 resort hotels in Sri Lanka and the Maldives.

CVH was also recognized internationally and awarded the PATA Gold award in the Environment/ Eco tourism field after competing against several international entrants within the Asia Pacific region. The resort involves in eco friendly practices and believes in developing the community and protecting and enhancing the environment.

The hotel endeavours to provide its visitors a travel destination rich in cultural and natural beauty, while ensuring that the eco system or lifestyle of the local population remains undisturbed.

Chaaya Village  has top processors in place, having earned  ISO  for ISO 22000, ISO 14001 and OHSAS 18001. A PATA Gold Award for Marketing Media-CD Rom category was also won by CHR for the Corporate Communication CD which was developed to promote the Chaaya Brand.

Kuoni Travel Ltd was the winner of the Presidential Award for the Best Destination Loyal Partner - Foreign Tour Operator Category. The award was received by Whittall Boustead (Travel) Ltd., (WBTL) JKG's destination management company which has represented Kuoni since 1993 in Sri Lanka.

Sri Lanka has been one of Kuoni's top selling destinations and for 2007 they produced an 84 page brochure featuring  48 beach hotels and an array of escorted tours, beach retreats and tailor made itineraries which  reiterates their faith and commitment to Sri Lanka as a holiday destination. This was done together with WBTL, Sri Lanka Tourist Board, SriLankan Airlines and other hotel partners.

Kuoni engages in serving the community that they operate in and has contributed endoscopic equipment to the Mahamodara Maternity and Gynecology Field Hospital, Karapitiya.. Kuoni has also donated towards the construction of a building with equipment and furniture for a clinic in Ambalantota and assisted in the refurbishment of and provision of equipment to the Tangalle District Hospital.

 JKH Deputy Chairman and Leisure Group President Ajit Gunewardene said that he was proud of the leisure group's achievements and reiterated the group's commitment to continue to invest and grow this sector.  He added that this is only the beginning "as we forge ahead with new innovative and exciting projects and further expansion in Sri Lanka and overseas."

CL's drive to increase "life" business

Sri Lanka's life insurance leader Ceylinco Life (CL) has taken the initiative to declare a Life Insurance Week (LIW) to drive the penetration of life insurance (LI) in the market.

Scheduled to be observed from February 11 - 17 for the first time in the history of local life insurance, LIW will be preceded by a focused, generic media campaign by CL and will culminate with a series of interactive events in seven cities.

This unique initiative dovetails with campaigns run by the life insurance leader last year with the support of two of Sri Lanka's popular cricketing icons Muttiah Muralitharan and Chaminda Vaas to create wider awareness in the market about the need for LI.

Explaining the reasons for the company's decision to launch this initiative, CL's Chief Executive Director R. Renganathan told media: "We believe that the level of penetration of LI in our market is too low and that greater public awareness of the need for LI is the need of the hour."

Pointing out that LI penetration in Sri Lanka was only 10% despite some aggressive marketing initiatives by leading players, Renganathan stressed that "we have to make the average Sri Lankan aware of the fact that life insurance is not for those who die. That it is for those who live."

He disclosed that CL's generic  LI campaign of 2007 themed  "Life, Love, Protection" had helped the company achieve satisfactory growth in new business and premium income during the year. CL had achieved a 20% premium income growth in the year ending December 31, 2007, Renganathan said.

The LIW build-up began on January 24 with a media campaign featuring real life stories that illustrate the realities that make LI a necessary safety net against life's uncertainties.

During LIW, CL will conduct public awareness programmes in Anuradhapura, Trincomalee, Ambalantota, Ratnapura, Gampaha, Teldeniya and Kalutara and that will include presentations by well known personalities and current policyholders.

Each workshop will take place alongside a free medical camp conducted under the company's 'Waidya Hamuwa' programme at which the public are offered free check-ups by a team of doctors.

These interactive sessions will be supported by outdoor banners and pennants in these areas and mobile teams of sales professionals from the company whose task will be to conduct "need analysis" for LI for those interested will be on hand.

A feature of LIW will be the free distribution of thousands of booklets and leaflets that help the layman understand LI and the need for it, and a chance for every person who obtains life cover during this period to receive an attractive gift.

Sri Lanka's largest life insurance provider for the past four years,  CL ended 2007 with premium income of Rs 6.8 billion, an increase of more than Rs 1.1 billion over the previous year. The company's Life Fund exceeded Rs 17 billion as at December 31, 2007.

UML looks to public servants to boost revenue

UNITED Motors Lanka PLC's (UML) turnover grew by 28.4 % year on year (YoY), but profit after tax (PAT) suffers due to high interest rates and increasing import levies.

The company's chairman R.M.S.Fernando in his interim report to shareholders said that the automobile market continued to face challenges due to the escalating cost of imports resulting from the rupee depreciation, high government fiscal levies and rising interest rates.

Mitsubishi vehicle imports he says were particularly affected in the first half of the financial year by the Japanese Yen appreciating against the rupee by 6 %. High import taxes and other government levies on motor vehicles inflated inventory values resulting in increased borrowings.

The Chairman also said that in the first half of 2007/08, UML earned a PAT of Rs. 134.2 million which was 17.8 % below the first half of last year, the drop being mainly due to the issues facing the automobile market.

Group's consolidated PAT of Rs. 95.6 million also reflected a 52% decline over last year due to reduced profits in UML and losses incurred by some of the subsidiary companies.

However the company has succeeded in securing a fair share of orders from senior government officials who have been granted vehicle permits by the government. These orders are expected to boost profits during the second half of this financial year.

From April to September 2007, interest rates had risen by around 25%, fuelling an escalation in the company's borrowing costs. 

Notwithstanding these constraints, UML's 28.4% turnover was propped up by the Mitsubishi Canter Truck in particular, gaining in popularity and recording a near 50% volume increase YoY. After sales services also improved and made a useful contribution to the company's profitability. Despite the country's inflation rate being over 17 %, the company carefully managed its controllable operating expenditure, thereby reducing the impact of high inflation.

Fernando has however raised concerns over the longer term implications of rising oil prices, its effect on inflation and increases in  fiscal levies being imposed on vehicle imports from time to time. 

UML is proud of its track record of good governance practices, having conducted its affairs in keeping with the Code of Best Practice recommended by the Institute of Chartered Accountants of Sri Lanka (ICASL) and the guidelines for Public Listed Companies laid down by the Securities and Exchange Commission (SEC).

Since 1992  UML has regularly won awards at the annual competition for the Best Corporate  Report and Accounts conducted by ICASL,  being sector winner on most occasions. In the most recent awards presentation, UML won a Gold Award, having been adjudged winner in the Motor Companies Sector for its2006/07 Annual Report.

125 apparel marketers

MAS Holdings Pvt. Ltd., General Manager Prasanna Hettiarachchi was the chief guest at the inauguration of the Sri Lanka Apparel Marketers Alumni (SLAMA) which was held at Excel World (Millenium Park) recently.

SLAMA at present consists of 125 apparel marketers. Their objective is to enhance the number of apparel marketers in the industry by launching a promotional drive in the future.

Hettiarachchi was installed to SLAMA's Board of Management at this event.

SLAMA consists of apparel marketers who have successfully completed their professional postgraduate diploma in apparel marketing, initiated by the Chartered Institute of Marketing UK, at the request of the Joint Apparel Association Forum.

This programme was launched in 2002 to develop and bring in marketing expertise to the industry.

Focus on Risk Management

The CIMA Technical Symposium (TS) targeted at the accounting and business fraternity will be held at the BMICH on February 15, 2008.

 CIMA Sri Lanka Division President Aruna Fernando said: "The TS was launched in 2005  with the objective of providing a channel for members and accounting professionals to improve their technical skills learning from professionals in the industry. CIMA has employed technically proficient individuals to research and understand the changing environment and the demands of the industry.

 It is this calibre of professionals who team up with other leading international personalities annually to share their learning and experiences."

. He also said: "I'm proud to note the contribution that this programme had made towards the accounting fraternity over the years and wish to thank  TS Committee Project Chairperson Ms. Melanie Kanaka and her team for their efforts in conceptualizing and organizing this years programme on a theme most appropriate in today's context."

Speaking in general about the CIMA TS and the rationale for its development, the Kanaka said, "CIMA TS was architected by CIMA Sri Lanka past president Lalith Fonseka in 2005.

CIMA is one of the key internationally recognized professional bodies which deliver an annual technically focused symposium for both its members and the business community. Each year the symposium aims to focus on a technical topic that is fundamental to the Chartered Management profession as well as relevant to the business community."

Kanaka added: "CIMA TS creates awareness and stimulates an interest among participants on cutting-edge developments and key challenges of the business community. It also serves as a forum to spur participants to develop their potential further, enabling them to perform better thereby adding value to their stakeholders in business. The forum will equip participants with tools and methodologies which are of direct and practical relevance to them."

Kanaka said, "The TS will revolve round the central focus of Risk Management (RM). The theme has been coined taking into consideration the uncertainties in which today's business environments operate both locally and internationally as well as the added challenges for any business to be more focused both strategically and tactically.  The theme of CIMA TS 2008 is "Risk Management for Sustainable Business Success."

"The speakers will deliver papers focused around the different facets of  risk-ie Enterprise Risk, Strategic Risk, Compliance Risk as well as Risk Assessment and Awareness which is key for all businesses operating in today's challenging environment," she added.

The TS is a day programme which will see a keynote address, the delivery of four diverse papers as well as a session on practical insights as shared by a leading MNC.

The keynote address will be delivered by Nedbank, South Africa Managing Director Alfred Ramosedi. Ramosedi is also the CIMA global Technical Committee Vice Chair.

His address will focus around RM in the context of Changing Role of Chartered Management Accountant.

The other paper presenters are: Management Consultant & Trainer from UK Jean-Francois Lowes. Lowes is also an active CIMA memeber who has been involved in formulating a number of  RM CPD course for CIMA, UK. She will deliver a paper on Enterprise RM.

CIMA UK Technical Development Director Richard Mallett will deliver a paper on Strategic Risk (SR). This paper will be set in the context of the broader frameworks of Enterprise Governance and Enterprise RM, highlighting the importance of  SR.

Indian Institute of Management Bangalore Finance & Control Area Faculty Member Prof. P C Narayan will deliver his paper on "RM & Basel II."

 Narayan will focus on the capital adequacy norms of the financial markets and the need for significant change in the way banks identify, measure, and manage their risks and consequently the way they allocate capital.

This session will deliberate on several other contemporary issues of RM and Basel II and the effectiveness of the rollout of Basel II.

ICICI Bank Joint General Manager Compliance Rajiv Arora will present a paper on Compliance Risk and its impact on  RM and the business environment as a whole.

A session will be dedicated to sharing of practical insights from an MNC.

Ceylon Tobacco Company, Sri Lanka (CTC) Risk & Control Manager Ruwan Kumara will share practical insights on the process they have adopted in managing risks to be within its risk appetite and RM applied in strategy setting down to operational risk.

Contributions to this session would also be made by former CTC Risk & Control Head Ms. Shirani Jayasekera.

Forbes recognizes Sanasa

SANASA Development Bank ranks amongst the world's top microfinance institutions by Forbes Magazine, USA.

Forbes' first-ever list of the World's Top 50 microfinance institutions were chosen from a field of 641 micro-credit providers.  The list was prepared by the Microfinance Information Exchange under the direction of Forbes magazine.            To qualify, institutions must have made available their audited financials and must have passed review by a Forbes panel of advisers.

Amongst the 641 microfinance providers, Sanasa was ranked 5oth place, the only microfinance provider in Sri Lanka ranked within the top 50 MFIs.

The rank (out of 641) for the top institutions according to scale is based on the size of their gross loan portfolio, efficiency, which considers operating expense and the cost per borrower as a percent of the gross national income per capita of their country of operation, risk, which looks at the quality of their loan portfolios, measured as the percent of the portfolio at risk greater than 30 days, and return, which is measured as a combination of return on equity and return on assets.  Each category is equally weighted for an institution's overall ranking.  

Forbes is an American publishing and media company.  Its flagship publication, Forbes magazine, is published bi-weekly.  Its primary competitors in the national business magazine category are Fortune, which is also published bi-weekly and Business Week.  Today the magazine is known for its lists, including its lists of the richest Americans (Forbes 400) and its list of billionaires.

SS, symbol of quality

The mountains that surround Kandy have been recognized as being bounteous in its supply of clear, pure water to the hill capital.

The jewel in the crown of this mountain range is Hantane. The lush green forest cover of Hantane facilitates easy infiltration of rainwater providing a perennial source of water.

The filtered water flows in to the fractures in the core of the mountain and appears on the slopes of the foothills.                                                                                                                                      Add to this, the use of modern filtration techniques in addition to the natural process of purification and you have an assurance of high quality water-that is the promise of Silver Springs (SS).

With the claim of being the only natural mineral water manufactured in Sri Lanka, SS has long held a responsibility towards the discerning Sri Lankan consumer with a product of guaranteed international quality at an affordable price.

The filtration process itself is an exacting method called ultra filtration which is done using hollow fibre membrane technology that excludes all types of bacteria, virus and particles of any size during filtration. This process leaves only the naturally present minerals that remain in the final product to add to the wholesome nature of SS.

The term  "natural mineral water" (NMW) is a legal definition, which guarantees standards as it must comply with a European Directive. According to American and European Regional Codex Standard, the term NMW applies to water obtained directly from natural or drilled sources from the underground water table. Such water should also be collected under conditions which guarantee the original natural bacteriological purity.

It should also be bottled at the point of emergence of the source with particular hygienic precautions that ensure it does not need to be subjected to any chemical treatment. Only then can it truly be termed NMW and be differentiated from bottled water that is (more often than not) tap water in content.

Whereas bottled water of this nature is treated with chemicals like chlorine to decontaminate the water, NMW requires no such treatment and a legal requirement that no additives be used in NMW, preserving its natural goodness.  NMW is also a sure way to a healthier lifestyle due to its assistance in the detoxification of the body and improved digestion and the general functionally of the human body.  SS is currently the only locally manufactured water that satisfies all of the above conditions, making it a symbol of quality and a benchmark in the Sri Lankan Mineral Water industry.

Available in 500ml, 750ml, 1000ml, 1500ml and 5000ml versions, SS comes to you in both corrugated cartons and polythene packaging. The finished bottles are immediately packed in cartons or polythene, depending on customer requirements while ensuring quality and safety of the product right throughout.

A trained (including GMP programmes carried out by SLS) and medically certified employee cadre ensures that packaging is done in a professional manner to avoid damage and contamination during manufacture and after filling, to the point it reaches the consumer.

 SS is registered with the Health Ministry, a testimony that the brand conforms to the standards specified in the food act as well. This registration is provided based on the testing procedure of Sri Lanka Standard Institute.  SS comes to you from Pership, a group of companies with a 119 year history providing supply chain solutions.

Abans for ICT services

When driving down Duplication Road, Kollupitiya, you would have noticed the impressive Nexxt@Abans (N@A) showroom. If you have wondered what N@A is all about, you should take the time to walk into the place and you'll be amazed at what you see.

N@A is a one-stop IT Shop and that without exaggeration is a description of the place. It is the only place in Sri Lanka where you will find a range of the latest next generation genuine computers, laptops and IT accessories, forming the world's best brands under one roof-HP, IBM, LG, Toshiba, Microsoft, Intel, Kingston, Lenovo, Haier, Panasonic, Philips, APC, Canon, D-Link, Belkin, Memorex, HCL, Apple, JVC and more.

Walk into N@A and you can be sure that you'll find the IT solution for your requirement. Customers always find satisfaction when buying a computer from N@A, that's because of the choices they have to offer.

At N@A you are guaranteed of genuine products which are bought from the company's strategic partners, being authorized dealers for LG, HCL, Haier, JVC, Panasonic and Philips and Distributors for HP (Hewlett Packard) for their PCs and notebooks.

N@A already have showrooms in Kollupitiya, Nugegoda, Homagama, Matara, Negombo and Malabe and has expansion plans for 2008. Opening soon will be two new showrooms in Kandy and Kalutara with 20 more showrooms planned for the first quarter of 2008 in their effort to take IT technology to the masses.

To complement their showrooms and strengthen their after sales capabilities, N@A has a chain of  service centres in Colombo, Negombo, Monaragala, Hambantota, Matara, Galle, Kalutara, Chillaw, Anuradhapura, Kurunegala, Dambulla, Kandy, Mawanella, Dehiaththakandiya, Batticolao and Ampara.

N@A has a  corporate  sales team to service the IT needs of  government departments and private sector institutions, hospitals, businesses and banks, and specially large network companies with islandwide branches with operational networks.

AAI's Top 10 Congress'07

The 'Top Ten Congress 2007' of Asian Alliance Insurance PLC (AAI) was held with the participation of over 200 leading sales advisers from all regions islandwide on December 15, 2007.  It was held at Sausiripaya, Colombo.

This is an annual event of AAI held every December, where the Life Division shares their plans and strategies for the upcoming year with the top performing members.

General Manager-Finance Saliya Wickramasingheopened the session with " Financial Highlights 2007." Sales Manager Sandamal Hettiarachchi addressed the audience on the Company's key achievements, whilst General Manager-Sales & Marketing Chula Hettiarachchi shared the future plans which will forge the Company on its road to success. Chief Executive Officer Ramal Jasinghe who was also the chief guest, focused on future plans and strategies and the Life Team's responsibility in achieving the company mission.

The awards for the Best 10 Advisers were claimed by Alexander Christy (Kaduwela), T. E. Clanson Costa (Negombo-who claimed the Awards of Excellence of the AAI 3rd Quarter Competition 2007), Ramal Biyanwila (Negombo), D. Indunil Anurada Wanaguru (Kottawa), U. H. G. S. Saliya Bandara (Kegalle), P. Chandana Perera (Negombo), Jayanandana Hewapathirana (Colombo Central), K. Duminda Perera (Kiribathgoda), C. Tharaka Weerasinghe (Kegalle) and R. M. M. Sampath Rathnayake (Kurunegala).

 The Best Field Management Awards were taken by Nimal Edirisinghe (Kurunegala) and J. G. Saman Rajakaruna (Panadura).

Kasun Dhanushka Galappaththi (Negombo) was also recognized at this event.

Costa (Negombo) and Heshan Ranasinghe (Colombo Central) were also awarded Best Team Awards of Excellence in the 3rd Quarter Competition.

The Senior Management, managers, Life Division staff and the supporting departments and members of all regions including staff, field management and  regional managers were among the invitees.

Life without plastic..

Life without plastic is incomprehensible in view of its functionality in our daily lives. From the moment we wake up it is plastic in the form of our toothbrush, at breakfast you encounter food and beverage in plastic packs, your lunch is in a plastic box, your ice cream comes in a plastic container, you doctor prescribes you medicine which comes in plastic blister packs, the list is endless.

Phoenix Industries (PI), a plastic solutions provider has started exporting to Australia.

 "We have lived up to our slogan Phoenix, and are gratified that our products are being accepted by Australia, where quality standards are so high," said CEO Hasith Prematillake.

PI was recently awarded Business Super Brand status as well, in addition to having won 3 Golds for their storage boxes with wheels, nestable/stackable jumbo and plastic fish crates at the recently concluded Lanka Star Packaging Awards.

Phoenix is exporting their storage bins to Australia, with the boxes being available in 5 different sizes.

"Medically it is not advisable for humans to lift containers beyond a certain weight, hence our storage boxes are on wheels which enables them to be moved around with a full load without a problem."

Being transparent, the contents can be identified and retrieved when required. They can be stored utilizing the minimum possible space.

 "The boxes are attractive to look at and are durable, having a high impact strength," said Prematillake.

 Apart from Australia, PI is also exploring exports to Europe and are confident of soon exporting arange of plastic domestic as well as industrial.

PI was the first in South East Asia to introduce the hi tech in-mould labelling for the up market packaging industry. Phoenix also has a 'just in time' packaging facility, one of the newest packaging concepts at the Caltex Oil Blending facility in Kolonnawa.

Rs. 1.5 mn. settlement

The recent tragedy at Okkampitiya, Buttala that claimed the lives of many innocent civilians triggers in our minds again whether the insurance industry has made adequate efforts in educating the public of the need to obtaining a life insurance (LI).

Out of the many who were killed on the tragic day, Parents of Miss R M Chamila Mihirani, a 21 year old employee of Lanka bell (LB) received an LI claim of Rs. 1.5 million, bringing a ray of relief to her grieving parents and  two elder brothers.

LB GM Human Resources Keerthi Alwis said that LB has a group LI and a personal accident cover for their employees.

 We were devastated by the loss of Mihirani and are glad that we were able to give a Rs. 1.5 million claim to her parents. "We commend Sri Lanka Insurance (SLI) for their speed of claim settlement as we were able to hand over the claim on the very next day of the incident to her parents in Buttala.

SLI Senior Category Manager-Life Aminda Udithithilake said: "We are glad that, through the means of the Group Life, life insurance policy obtained by LB, we were able to ensure financial security for her family after her unfortunate demise."

He confirms that there is a need to educate the public on the importance of LI policies, attesting that most people are unaware of how household income and assets are affected by premature death. He said that LI eases the financial burden on the surviving family and stressed that LI policies are a mean of ensuring financial security for your loved ones.  SLI is committed to continually educate the public of the importance of LI.

Allianz in com. hub

Alliance Insurance Lanka, Ltd., relocated to spacious modern premises in Colombo's business hub at kommpanyaveediya recently.

The move was to accommodate ambitious expansion plans, explained Allianz CEO Mrs Surekha Alles.

The Sri Lanka subsidiary of Munich-based multinational insurance giant Allianz plans to get into new areas of insurance in Sri Lanka, open branches in other parts of the country, and to increase staff and facilities to meet expanding needs.

"Allianz is an A to Z solutions provider. We are looking at venturing into other areas of business in keeping with our global corporate strategy of supporting a diversity of products and services," said Alles.

  Allianz Lanka completed three successful years in Sri Lanka in January this year .

The Company maintained a strong performance throughout 2007 and is poised to build on last year's performance this year.

 "We are satisfied with our performance last year. We achieved our topline and exceeded our bottomline plan as well as our Annual Plan, " said Alles.

Anila on marketing

Former Central Bank (CB) Asst. Governor (AG) Dr. Anila Dias Bandaranaike will be the keynote speaker at The Chartered Institute of Marketing Sri Lanka Region (CIMSLR) organized  programme titled "Opportunities For Marketers Arising From Sri Lanka's Recent Demographic Changes" under the CIM Talking Point series which will be held on February 7 at Ceylon Continental Hotel and sponsored by HSBC.

Bandaranaike served as CB's Director Statistics and Bank Supervision prior to her tenure as CB AG. She has contributed towards enhancing the national statistical systems and national surveys, particularly in relation to socio-economic and financial sector developments.

She also served on the Board of Directors of the Centre for Poverty Analysis. Bandaranaike holds a PhD in Statistics from Cornell University, an M.Sc in Applied Statistics from Oxford University, UK and a B.Sc (First Class Honours) in Mathematics from Colombo University. Prior to joining the CB in 1983, she was a post-doctoral Research Fellow at Harvard University.

The presentation will cover the demographic changes relating to population growth such as age, gender and education profiles and geographic distribution, and related socio economic changes in Sri Lanka, both on the demand and supply side and the challenges and opportunities arising from such changes, replete with recent statistics and findings of national level surveys and studies conducted by the Census and Statistics Department and the CB.

"Despite the adverse impact of the civil conflict on Sri Lanka's economic development over the past 25 years, the economy has grown at an average annual rate of 4.6% during that period.. On the demand side, rising incomes, changing consumer preferences and the demand for more and better information, both local and global, provide challenges and opportunities.

On the supply side, technological advances have led to far greater access to local and global information, to goods and services and to marketing techniques, both print and electronic that can be exploited by businesses. The expansion in global trade, particularly with rapid developments in India and China has also entered the equation." says Bandaranaike, giving an insight into the topic.

The programme will be complemented with a discussion facilitated by a panel of speakers, namely Bharti Airtel Lanka (Pvt) Ltd., Chief Executive Officer Ms. Amali Nanayakkara, Quantum Strategic Services (Pvt) Ltd., Vice President Ms. RoshaniFernando, Kelaniya University's Industrial Management Department's ProfessorSunanda Degamboda and Ceylon Tobacco Company PLC Marketing Director Dr. Rajeev Meewakkala.

Foreign jobs for trainees

The first batch of Hotel school trainees, trained under a special project are scheduled to leave for Doha, Qatar soon. This group consists of 15 trainees who have undergone training at the training school in Hotel Management in Kandy.

The youth have gone through a two month special training programme on an initiative of Deputy Tourism Minister  (DTM) Faiszer Musthapha.

He said that the recruitment which is currently done in Kandy will be extended to other districts such as Anuradhapura, Hambantota and Ampara.

Seylan Bank  (SB) through acting chairperson Dr. Sicille P.C. Kotelawala has come forward to extend financial assistance to these trainees.

SB will be offering them financial assistance with pre-departure loans to meet their cost of airfare and other fees.

They will have the opportunity of remitting money through CeylincoFastCash (CFC) to their families in Sri Lanka.

The remitters will be eligible to a host of value added features such as draws, emergency distress facilities and SwiftCare health services for their families in Sri Lanka offered by CFC and SB.

At a conference held at the Tourist Board auditorium, where the trainees were also present, Musthapha thanked SB for coming forward to offer financial assistance to them.

Also present at the function were Tourist Board Hotel School Principal Kamal Hapuwatte, SB International and Development Banking Director Shirley de Silva, Chief Manager Naina Marikar and M. Azhar, Coordinating Secretary to the DTM.

Stock market announcements

ACL Cables has announced a sub division of shares (1:1 bonus issue) based on shareholding as at March 14, 2008; EGM on March 14; period of dealing suspension from March 17-26 and start of trading of shares consequent to sub-division, March 27.

Chemanex PLC has declared a Rs. 2 interim dividend. Excluding dividend (XD) date is February 18, 2008 and payment date: February 29.

Commercial Bank has declared a final dividend of Rs. 2.50 a share for the financial year 2007 for both voting and non voting shares. AGM on March 28, 2008; XD date on March 31 and payment on April 4, 2008.