Beruflich Dokumente
Kultur Dokumente
Wireless Networks
Information Security
Consultancy
Design
Video surveillance
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Senit technologies (Pvt) Limited (SENT)
Senit Technologies (Pvt) Limited is an e-commerce software solution services provider mainly
concentrating on Online Hotel Reservation Solution, Online Shopping Cart Solution, and Online
Payment Gateway Integrations.
2013/2014
Unaudited
2012/2013
Audited
%
Revenue LKR 000 4,198 3,116 35%
Gross profit LKR 000 4,198 3116 35%
Net Loss LKR 000 (3,946) (30,003) -87%
Loss per share LKR 000 (3,946) (30,003) -87%
Total Assets LKR 000 10,194 9,969 2%
Deficit per share LKR 000 (61,536) (57,589) 7%
Table 14- SENTs financial indicators
Source: Audited Financial Statements & draft financial statements prepared the management
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Browns Investment PLC (BIL)
Browns Investment was incorporated in November 2008 as in investment company and has
interests in several sectors namely; plantations, leisure, manufacturing, construction &
engineering, telecommunication and power sector. BIL was initially incorporated as Browns
Plantation Investments Pvt Limited and subsequently changed to Browns Investments Limited.
The main course of business is diversifying investments into different sectors deriving investment
income, dividend income and capital gains. BIL was listed on the Colombo Stock Exchange
on 26 July 2011.
BIL is a subsidiary of Brown & Co PLC. BIL invests in fast growing areas of the Sri Lankan economy.
BIL operates as the strategic investment vehicle of the Browns Group and may invest on its own
or in concert with other investors.
BIL holds 100% ownership in Browns Hotels & Resorts Ltd (formerly LOLC Leisure Ltd.) Browns
Hotels & Resorts owns and operates the five star Eden Resort & Spa as well as Dickwella Resort
& Spa. Browns Hotels & Resorts also has within its portfolio the properties, which were formerly
Riverina, Club Palm Garden and Tropical Villas. The first stage of the 367 roomed mega project
in the property housing the former Palm Gardens, Riverina and Tropical villas is progressing
according to plan. The 172-roomed hotel is nearing completion. The project site, which is
unique in nature, has the sea beach on the west with two water bodies in the north and south,
adjacent to the turtle hatchery. While this location is unique, negotiations are in the final stages
to have an international chain to manage this 5 star hotel.
BIL acquired a controlling interest in the Green Paradise Resort in Dambulla. This unique
property houses 67 rooms, include superior duplex, deluxe and garden suites. The property new
to the region complete with luxury finishes beautiful landscaped gardens and is within close
proximity to the cultural triangle and other tourist sites. BIL also acquired a controlling interest
in the Sun & Fun Resort in Passikudah. The resort is still under construction and it will be a 71
roomed luxury resort.
BILs policy in managing hotels is a hybrid, being relatively new to the leisure sector. Some
properties are managed and operated by the group. Other properties would be managed
by international chains to capitalize on their capabilities and skills in hotel management and
marketing.
In a strategic restructuring of sectors, the travel segment, under Brown and Company PLC is in
the BIL since year 2013. With over 45 years of experience in the travel industry and with expertise
in destination management, the Travel segment fully complements the work of the Leisure
sector. The travel segment through BG Air Services (Pvt) Ltd, acts as the general sales agents
(GSA) for Austrian Airlines and Scandinavian Airlines in addition to handling outbound travel
and inbound travel through Browns Tours (Pvt) Ltd. Inbound travel has been successful in
capturing the aviation market by providing assistance to airlines to obtain permission with the
Civil Aviation Authority in Sri Lanka to operate flights in and out of Colombo, SLOT clearance
from Sri Lankan Airlines, landing and parking clearance to park craft overnight, aircraft
catering services, customs and immigration formalities for crews etc. BIL is also building a name
in event management by providing the MICE (Meetings, Incentives, Conferences and Events)
market with specialized services.
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BILs subsidiary Excel Global Holdings has a subsidiary called Millennium Development (Pvt) Ltd.
This subsidiary has leasehold rights to property termed Excel World. This is a well-known property
situated in the centre of Colombo with easy access. It is planned to build a one of a kind mix
mega development on this property. This property will include shopping, super marketing,
conferencing facilities, gymnasiums and spas as well as restaurants, pubs and entertainment
arcades. In the short term, the property has been upgraded and continues to operate as an
entertainment location as well as a conferencing facility. It also houses the popular KEG pub
and restaurant.
2013/2014
Unaudited
2012/2013
Audited
%
Revenue LKR 000 2,881,984 2,624,821 10%
Gross profit LKR 000 483,298 447,321 8%
Net Profits LKR 000 20,052 33,928 -41%
Earnings per share LKR 0.02 -0.02 >100%
Total Assets LKR 000 22,160,641 12,697,974 75%
Net Assets LKR 000 15,284,524 12,654,077 20%
Property Plant & Equipment LKR 000 10,679,978 2,881,570 >100%
Net assets per share LKR 5.72 5.73 -0.2%
Table 15 - BIL's financial indicators
Source: Annual Reports and Unaudited Financial Statements published as at the report date
On 10 June 2014, BIL has resolved to issue 1,860,000,000 ordinary voting shares via a rights issue
in the proportion of 1-for-1 based on the shareholding as at 5 August 2014. The rights issue will
raise LKR 2.325 Bn to settle debts of BIL. Lanka Century Investments PLC has in principle agreed
to invest LKR 465 Mn in this regard for its holding of 20% in BIL and is expected to be sourced
from external funding.
As at 11 July 2014, BILs share is trading at LKR 1.80 and during the past one year have
generated a negative price return of LKR 30.20%. BILs annualized return volatility during the
past year is 52.95%.
Figure 6- BIL One year price trend
Source: Colombo Stock Exchange
1.00
1.50
2.00
2.50
3.00
3.50
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
12-Jul 12-Aug 12-Sep 12-Oct 12-Nov 12-Dec 12-Jan 12-Feb 12-Mar 12-Apr 12-May 12-Jun 12-Jul
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4. Taprobane Holdings PLC
Taprobane Holdings PLC incorporated in September 2006 was formed with the vision of
becoming a leading investment powerhouse by generating a large fund base and mobilizing
such funds, by investing in the government securities market, debt securities market, equity
market and real estate market. Marking our presence in the investment market as a company
with integrity and honesty in its dealings, Taprobane is known for its flair for creativity in
mobilizing funds and identifying strategic investment options.
The special feature of this fund is that it provides investors with unique combinations of risk and
return options through various combinations of asset classes. In May 2012, Taprobane was
successfully listed on the Diri Savi Board of the Colombo Stock Exchange, boosting and
strengthening stakeholder confidence.
The myriad of financial services offered by its group companies, which includes Money
Brokering, Stock Brokering, Margin Trading and Corporate Finance is well supplemented by the
extensive expertise into the government securities market, possessed in-house. Apart from its
notable investments into the financial services sector, the groups investment strategy
implements a multi-disciplinary approach, marking presence in an array of sectors, including
real estate and commercial property management.
Figure 7- Taprobane Group Structure
Source: Company Profile
Brief description of the Taprobane group of companies
1. Heron Agro Products (Pvt) Ltd A farming project mainly involved in estate management.
2. Taprobane Securities (Pvt) Ltd A licensed Stockbroker of the Colombo Stock Exchange.
3. Capital Trust Partners (Pvt) Ltd - An investment holding company that has sizable
investment.
4. Taprobane Investments (Pvt) Ltd A licensed Money broker of the Central Bank of Sri Lanka.
5. Lexinton Holdings (Pvt) Ltd Involved in property management which extends to
maintaining commercial property. The subsidiaries of this company includes;
Lexinton Financial Services (Pvt) Ltd A Licensed Margin Provider of the SEC engaged
in Margin Trading activities
Lexinton Resorts (Pvt) Ltd Involved in real estate management
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Taprobane Plantations Ltd Involved in managing sports and recreational activity
centres of Excel World Entertainment Park
6. Taprobane Wealth Plus (Pvt) Ltd The Corporate Finance arm of the group primarily
involved in equity and debt issue management.
Top 20 Shareholders as at 30 June 2014
Name of Shareholder No. of Shares %
1. SEYLAN BANK PLC/ARC CAPITAL (PVT) LTD 355,526,332 35.46
2. MR. - ISHARA CHINTHAKA NANAYAKKARA 225,920,922 22.53
3. BROWNS INVESTMENTS PLC 200,587,305 20.00
4. SEYLAN BANK PLC/PUBUDHU SARANGA WIJAYAKUMARI
RUPASINGHE SEYLAN 84,497,064 8.43
5. COMMERCIAL BANK CEYLON PLC/ARC CAPITAL (PVT) LTD 51,190,106 5.11
6. SEYLAN BANK LIMITED/RUWAN PRASANNA
SUGATHADASA/ 18,241,706 1.82
7. WALDOCK MACKENZIE LIMITED/MRS.A.C.JAYASINGHE/ 18,241,669 1.82
8. L.A.C. HOLDINGS (PVT) LTD 12,702,671 1.27
9. MR. - RAJANIK ROSHAN ANTONY 8,629,762 0.86
10. MRS. - TERUNI MARIA WIKRAMANAYAKE 5,073,000 0.51
11. MR. - DHARSHAN ASHANTHA BANDARA DASSANAYAKE 4,046,465 0.40
12. SIERRA TELECOMMUNICATIONS PRIVATE LIMITED 2,095,238 0.21
13. SEYLAN BANK PLC/R.P.L. EHELIYAGODA & S.U.R.
EHELIYAGODA SEYLAN BANK 2,000,000 0.20
14. ENTRUST LIMITED 1,211,476 0.12
15. SEYLAN BANK PLC /CAPITAL TRUST HOLDINGS LIMITED 1,076,481 0.11
16. MR. - NADARAJAH MURALEE PRAKASH 1,047,619 0.10
17. SPRINGCARE HOLDINGS (PRIVATE) LIMITED 1,047,619 0.10
18. Mr CHARITHA PRASANNA DE SILVA 997,333 0.10
19. MR. - NICHOLAS ANDREW FOLEY 759,592 0.08
20. SAMPATH BANK PLC/CAPITAL TRUST HOLDINGS LIMITED 750,809 0.07
Table 16- Top 20 Shareholders as at 30 June 2014
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5. The Valuations
Free Cash Flow (FCF) valuation
The FCF valuation is based on the projected income statements and balance sheets of Lanka
Century Investments PLC and its subsidiary Companies provided by the respective companies,
senior management discussions and assumptions provided. We have derived the FCF to the
equity holders of Lanka Century Investments PLC and its companies and discounted them by
the relevant weighted average cost of capital to derive the value of equity. Then the
calculated equity value is taken into consideration based on the shareholding of the
respective company to calculate the Equity Value of Lanka Century Investments PLC.
The result of such FCF calculations are given in Table 17 below.
Entity
Enterprise value
LKR 000
Value of Equity
LKR 000
% of
holding
Value to GREG
LKR 000
GREG 361,233 355,927 100.00% 355,927
CLPL 1,026,382 878,079 91.39% 802,476
DPL 1,737,641 1,352,509 65.51% 886,029
RFPL 1,434,602 1,046,142 49.49% 517,736
SAT 7,014,891 5,901,073 86.08% 5,079,644
CCH 249,208 223,946 66.40% 148,700
OLAN 204,730 38,331 93.15% 35,705
PALL 23,332 - 55.19% -
BIL 20.00% -
Equity Value 7,826,217
Number of share 349,367
FCF value per share 22.40
Status of offer price Lower
Table 17- Results of FCF valuation
The forecasts and the respective assumptions of Browns Investments PLC was not made
available for Merchant Bank of Sri Lanka PLC as at the reporting date to calculate the Free
Cash flow Valuations and Equity Value of BIL. Lanka Century Investments PLC holds 20%
shareholding of BIL. Therefore, FCF valuations are excluding the value arising from BIL.
SATs previous control through CLPL of 51.55% and the direct control by GREG of 8.09% will
effectively change via a rights issue of 8:1 at a price of LKR 0.10 to CLPLs control of 80.39% and
GREGs direct control to 12.61%. Therefore, GREGs effective control will change from 55.19%
to 86.08% after the rights issues. The set of assumptions used in this valuation is listed below.
No sale of any assets or discontinuation of businesses of any companies during the next
five years.
The 347,721,600 Warrants of GREG outstanding will not be converted at the exercise
price of LKR 39.00 in year 2015.
The risk free rate is 8.93%, the 5 year bond rate
The expected market return is 12.50%.
Perpetual Growth rate of all the considered companies after the fifth year is 0.00%.
The projections for the FCF valuations were provided by the respective companies and
senior management of GREG.
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The total non-current liabilities were considered when arriving at the value of debt as
at today.
Therefore, the FCF value is significantly above the offer price of LKR 11.00 offered by Taprobane
Holdings PLC through the voluntary offer.
If the FCF valuation of BIL was calculated and incorporated in the FCF valuation of GREG, it
will have a positive impact on FCF valuation.
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Relative valuations
Sector based valuation
The sector based relative valuations are calculated based on the Price to book value multiples
of the Investment Trust sector. As at date there are nine listed companies (including GREG)
operating in this sector. The Price to Earnings ratio is not considered since GREG incurred a loss
during the financial year ended 31 March 2014.
The basic snapshot of the offer is given in Table 18 below.
Offer Price LKR 11.00
Group's net profit LKR "000" (304,179)
Groups EPS LKR (0.89)
Price Earnings ratio Times N/A
Group's Net assets ("000") LKR "000" 8,855,891
Group's Net assets per share 31 March 2014 LKR 22.08
Price to Book value based on offer price Times 0.50
No of Ordinary shares "000" 349,367
Table 18 - GREG Offer details
Price to book value based valuations
The valuation used in this methodology is the overall sector based net assets compared to the
sector market capitalization. Based on Table 19, below the offer price made on the voluntary
offer is significantly lower than the valuation presented from the sector based valuation.
Sector Investment Trust
Sector Price to book value 1.10
Sector PBV based valuation 24.30
Status of offer price Lower
Table 19 - GREG Sector PBV Valuation
Market based valuation
The valuation methodology used is the overall market net assets compared to the overall
market capitalization. Based on the Table 20 below, the offer price made on the voluntary
offer is significantly lower than the value presented from the sector based valuation.
Market
Market PBV as at 16 June 2014 2.07
Market PBV based valuation 45.70
Status of offer price Significantly lower
Table 20 - GREG Market PBV Valuation
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Peer based valuation
The valuation methodology used is the peer based net assets compared to the peer market
capitalization. Based on Table 21 below, the offer price made on the voluntary offer is
significantly lower than the valuation presented from the peer based valuation.
Peer Company Ascot Holdings PLC
Price as at 13 Jul 2014 LKR 105.00
Net assets per share LKR 69.93
Price to Book value Times 1.50
Peer Company
Ceylon Guardian
Investment Trust PLC
Price as at 13 Jul 2014 LKR 192.30
Net assets per share LKR 166.93
Price to Book value Times 1.15
Average Peer Price to Book Value Times 1.33
GREG net assets value 31 March 2014 LKR 22.08
GREG value based on Peer PBV LKR 29.26
Status of offer price Significantly lower
Table 21 - Peer based PBV valuation
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Market Price based valuation
The average of closing prices for the last one-year commencing from 12 July 2013 to 11 July
2014 is considered to calculate the average market prices of GREG. Given in Table 22 below,
the offer price made on the voluntary offer is lower than the average closing prices for the last
1-year and last three months.
Starting date
12-Jul-13
Ending period
11-Jul-14
Number of trading days
240
Highest closing price
LKR 15.60
Highest traded price
LKR 16.00
Lowest closing price
LKR 10.00
Lowest traded price
LKR 9.90
Average daily price return/(loss)
% -0.09
Total Price return/(loss)
% -21.94
Annualized Volatility
% 38.33
One year average closing price
LKR 12.90
Three months average closing price
LKR 11.40
Status of offer price
Lower
Table 22 - GREG price statistics
Figure 8- GREG One year price trend
Source: Colombo Stock Exchange
8.00
9.00
10.00
11.00
12.00
13.00
14.00
15.00
16.00
17.00
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
Jul-13 Aug-
13
Sep-13 Oct-13 Nov-13 Dec-
13
Jan-14 Feb-14Mar-14 Apr-14 May-
14
Jun-14 Jul-14
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Market Value of Investments
The net realizable value (NRV) of assets is usually computed when the liquidation approach is
used to value a company. Marketable securities will be considered at the present value
considering a sale and other assets at the book values.
Stake of
GREG
No of
shares
Market
Price
Control
Premium
LKR "000"
CLPL
Voting Shares 91.39% 31,284,589 68.00 N/A 2,127,352
Warrant - 2014 73.65% 18,411,702 0.60 N/A 11,047
Warrant 2015 73.65% 18,411,702 3.00 N/A 55,235
BIL 20% 372,000,000 2.30 N/A 855,600
DPL 58.36% 42,163,000 12.00 505,956
PHAR 66.40% 845,159 520.00 20% 527,379
Textured Jersey Lanka PLC
Turn over (LKR) Bn 12.725
Market Cap (LKR) Bn 13.1
South Asia Textile Industries Lanka (Pvt) Limited 12.61% N/A 627,921
Turnover -(LKR) 4.873 Bn
Net Realizable Values from GREG - 31 March 2014
Cash & Cash Equivalents 346,423
Other assets 20,798
Total Net Realizable Value of assets 5,077,711
No of shares 349,367
Value per share 14.53
Status of offer price Lower
Table 23- Realizable Market Values
Market price as at 21 July 2014 except for BIL which is as at 6 June 2014 in order to adjust for
prices before the rights issue.
South Asia Textile Industries Lanka (Pvt) Limited has been valued based on Textured
Jersey Lanka PLCs Market capitalization weighted on turnover for the year ended 31 March
2014.
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6. Independent Opinion
The objective of this independent opinion is to examine whether the offer price of LKR 11.00
offered by Taprobane Holdings PLC for the existing shareholders of Lanka Century Investments
PLC is reasonable and fair. Merchant Bank of Sri Lanka PLC has adopted the following
valuation methodologies included in section 5 of this report with the detailed valuations. The
valuation outcomes of such methodologies are given below in Table 24.
Valuation method Value Status
Free Cash flow based 22.40 Lower
Sector Price to book value based
24.30 Lower
Market Price to book value based
45.70 Significantly lower
Peer Price to book value based 29.26 Significantly lower
One year Average market price based 12.90 Lower
Market Value of Investment 14.53 Lower
Table 24- Summary of valuations
Considering the valuation outcomes given Table 24 above, we are of the opinion that the offer
price of LKR 11.00 made by Taprobane Holdings PLC to the remaining shareholders of Lanka
Century Investments PLC is not attractive as the offer price is at a discount against all the
valuations methodologies adopted as at the valuation date 28 July 2014.
Risk Factors specifically associated with the offer
Shareholders who accepts the offer:
The share price of GREG will change in secondary market based on many factors. If a
shareholder accepts this offer and sell his shares and thereafter if the share price surge
in the secondary market, such shareholders will experience a lost opportunity of
retaining a higher capital gain.
After accepting the offer, if the Company declare dividends to its shareholder, such
shareholders who accepted this offer may not receive such dividends.
Shareholders who reject the offer
The share price of GREG will change in secondary market based on many factors. If a
shareholder rejects this offer and thereafter if the share price decline in the secondary
market, such shareholders may incur a capital loss.
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7. Declaration to the Shareholders and Directors of GREG
28 July 2014
DECLARATION BY THE INDEPENDENT ADVISOR, MERCHANT BANK OF SRI LANKA PLC
We, Merchant Bank of Sri Lanka PLC (MBSL) of No. 28, St. Michaels Road, Colombo 03 being
the Independent Advisor to the Voluntary offer made by Taprobane Holdings PLC (Offeror) to
acquire the remaining Ordinary Voting Shares, not already owned by Taprobane Holdings PLC
or any person acting in concert with Taprobane Holdings PLC, of Lanka Century Investments
PLC (Offeree) do hereby declare and confirm that we do not act as the financial advisor to
the Offeror Company nor we have any interest in or financial connection with either the
Offeror or the Offeree.
MBSL as the independent advisor has given and not withdrawn the consent to the publication
of the report to the Board of Directors and shareholders of Lanka century Investments PLC
Yours faithfully,
MERCHANT BANK OF SRI LANKA PLC
--------------------------------------- --------------------------------------------
Mr A M A Cader Ms Lalangi Goonawardena
Deputy General Manager Manager
Corporate Advisory & Capital Markets Corporate Advisory
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28 July 2014
The Board of Directors
Lanka Century Investments PLC
No. 10,
5th Floor, Gothami Road,
Colombo 08.
Dear Sir / Madam
INDEPENDENT ADVISORS REPORT ON THE OFFER MADE BY TAPROBANE HOLDINGS PLC TO THE
SHAREHOLDERS OF LANKA CENTURY INVESTMENTS PLC
At the request of the Board of Directors, we have carried out the valuation of the ordinary
shares of Lanka Century Investments PLC for the above purpose and pleased to submit
herewith our opinion in compliance with the rules and regulations contained in the Company
Takeovers and Mergers code 1995 (as amended in 2003) of the Securities and Exchange
Commission of Sri Lanka.
Thanking You
Yours faithfully
MERCHANT BANK OF SRI LANKA PLC
------------------------- ------------------------------------
Mr A M A Cader Ms Lalangi Goonawardena
Deputy General Manager Manager
Corporate Advisory & Capital Markets Corporate Advisory
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