FC Research Analyst: Amanda Lokugamage

Transcription

1 LKR FC Research Analyst: Amanda Lokugamage LANKA WALLTILES PLC STRONG BUY LWL.N0000 Current Price: LKR Fair Value: LKR Sep 2016 KEY DATA Share Price (LKR) Average Daily Volume (Shares) 14,989 Average Daily Turnover 1,597,471 Market Capitalisation (LKR mn) Figure 1: LWL Price Volume Graph Volume Disclosure on Shareholding: Price Source: CSE First Capital Group and its affiliates hold 433,516 shares in LWL. Neither First Capital Group nor its affiliates have traded in the shares in the three trading days prior to this document, and will not trade in the shares for three trading days following the issue of this document ,804 Price Performance (%) 1 mth 3 mths 12mths LWL -3.4% -5.3% -10.1% ASPI -2.6% -0.5% -9.5% Major Shareholders as at 30th June 2016 Lanka Ceramics PLC CT Holdings PLC Arunodhaya Industries (Pvt) Ltd Arunodhaya (Pvt) Ltd Arunodhaya Investments (Pvt) Ltd w High/Low (LKR) 119.8/93.0 Issued Share Capital (Shares mn) 62.2% 2.7% 2.2% 2.2% 2.2% Public Holding 29.2% Figure 2: Subsidiary/ Associate Valuations Stock Code 18M Return Recommendation TILE 69% Strong Buy PARQ 58% Strong Buy (Refer 6.0) '000 Undervalued Wall-tile manufacturer P/E 31 March FY15 FY16 FY17E FY18E FY19E Revenue (LKR Mn) 14,596 15,539 16,546 18,423 19,814 Net Profit (LKR Mn) 1,044 1,332 1,383 1,773 1,922 EPS (LKR) YoY % Growth 13% 28% 4% 28% 8% Valuations PER (X) PBV (X) Dividend Yield (%) 3.8% 7.1% 7.4% 10.3% 11.2% NAVPS DPS (LKR) Payout Ratio 21% 31% 31% 34% 34% Lanka Walltiles PLC, is a key player in the domestic construction subsector with a market share of 45%, together with its subsidiary/ associate companies offer a product portfolio ranging from wall-tiles, floor-tiles to aluminium products. LWL s earnings is expected to grow at a CAGR of c.13% FY16-FY19E reaching c.lkr 1.8Bn in FY18E and c.lkr 1.9Bn in FY19E. LWL is expected to grow its earnings mainly driven by the increased demand deriving from the domestic market coupled with the benefit of comparatively lower production costs. FC Research expect LWL to provide a return of 78% at LKR STRONG BUY Domestic demand to boost revenue: LWL s topline is expected to grow at a CAGR of c.8% over FY16-FY19E to reach c.lkr 18.4Bn and c.lkr 19.8Bn in FY17E and FY18E respectively mainly driven by the increased demand stemming from the domestic construction subsector which is witnessing a boom in the residential property and real estate resultant to the rise in the urbanization that stands at 18% at present coupled with increased disposable income levels. Improved GP, EBIT and NP margins: Cost efficacies arising from the investment into plant modernization, economies of scale deriving from increased volumes coupled with comparatively lower commodity prices to reduce the overall cost of sales thus record it at c.lkr 13.5Bn in FY18E with a CAGR of 8% over FY16- FY18E in comparison to the revenue of c.lkr 18.4Bn (CAGR of c.9% over FY16- FY18E) leading to an increase in LWL earnings to c.lkr 1.8Bn in FY18E amidst improved GP, EBIT and NP margins of c.32%, c.19% and c.13% respectively. LWL to provide 78% return over 18-months period: FC Research expect LWL to achieve a fair value of LKR providing a total return of 78% (Dividend yield 18%) over 18-month period. [DCF based LKR and PER based LKR 146.1] Risks associated: Changes in government policy, competition from less costly imports and fluctuations in exchange rates are the risks exposed by LWL.

2 Figure 3: Revenue sources of RCL 17% 1.1 Introduction Market Leader in Walltiles: LWL, established in 1975, engages in manufacturing and sale of wall tiles. The company produces mainly for the local market where it held a market share of 56% as of The company which is a 62% owned subsidiary of Lanka Ceramics PLC has a capacity of c.2.3mn square meters of tiles annually. 11% 14% Tiles and associated Plantation Aluminium 58% Packing material Operational and segmental review: LWL produces export quality wall tiles however markets its tiles at an affordable price for the locals. The ISO certified company has 44 retail showrooms that strengthen its distribution network. LWL employs c.400 employees and has a market capitalization of LKR 5.7Bn. The company generates c.9% of revenues from exports to Australia, USA and Europe. The company holds Lanka Tiles PLC (TILE.N0000) and Swisstek Ceylon PLC (PARQ.N0000) among several other businesses. Source: RCL Annual Report SWOT analysis: Strengths Market leader Brand equity Weaknesses Concentration in wall tiles Opportunities Boost in the construction sector Better technology Threats Delays in mega projects Intense competition from imports Figure 4: ASPI vs LWL Source: CSE

3 Figure 5: Manufactured Vs. imported 30% - 40% 1.3 Tile sector overview Tile sector: Sri Lanka provides evidence for richly crafted ceramics dating back several centuries. The country is gifted with natural mineral deposits such as kaolin, ball clay, feldspar, silica quartz and dolomite which is a major factor strengthening the local manufacturing of tiles. Skilled workforce is abundant at a competitive labor cost. The locally manufactured tiles are reputed for its superior quality and is sold at a premium price, catering the upper end of the market. Tiles (floor tiles and wall tiles) are featured in several varieties such as glazed vs. unglazed and ceramic vs. porcelain. Locally manufactured Imported 60% - 70% Import and export performance: The locally manufactured tiles account for c.60%-70% while imported tiles comprise c.30%-40% of the market. The imported tiles are primarily coming from India and China and is subject to CESS and other import taxes. Sri Lanka exports its locally manufactured tiles to United States, Australia, Canada, Japan, UK and several other European countries. Source: RCL Annual Report, FC Research Estimates Figure 6: Export performance 1,400 1,200 1, Figure 7: Monopoly lead by RCL Royal Ceramics PLC (RCL.N0000) Lanka Ceramic PLC (CERA) (77%) Lanka Walltiles PLC (LWL) Lanka Tiles PLC (TILE) Source: Central Bank of Sri Lanka Monopoly lead by Royal Ceramics: The local tile manufacturing is dominated by the cluster of companies lead by Royal ceramics (Figure 2). They have the majority of market share in both wall tiles as well as floor tiles (Figure 4). Swisstec Ceylon PLC Royal Porcelain (Pvt) Ltd) (100%) Rocell Bathware Ltd (61%) Rocell (Pty) Ltd (100%) Source: Royal Ceramics Annual Report Note: Non-ceramic businesses are excluded

4 Figure 8: Market shares in wall tiles and floor tiles 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 37% 63% 40% 23% 44% 56% RCL Group Other Source: Royal Ceramics Annual Report Figure 9: Company revenues and profits 6,000 5,000 4,000 3,000 2,000 1,000 - Revenue Net profit Source: Company Annual Report Major tile manufacturers in the consortium other than LWL Royal Ceramics PLC (RCL): RCL, established in 1990, engages in manufacturing and sale of floor tiles, wall tiles and other ceramic products while having diversified into financial services and plantations. Through a series of acquisitions, the company presently holds the monopoly position in the tile sector, controlling c.60%-70% of the tile market.. Company generates c.3% of its revenue from exports to Europe, North America, Australia and several parts of Asia. Royal ceramics employs c.10,000 employees and has a market capitalization of LKR14Bn. Lanka Tiles PLC (TILE.N0000): TILE caters the floor tile segment and has a capacity of c.3mn square meters of tile per annum. TILE employs c.500 employees and has a market capitalization of LKR 6Bn. Lanka Walltiles PLC (LWL): LWL is a subsidiary of RCL and produces wall tiles for more economic users. LWL has a production capacity of c.2.3mn square meters per annum. The ISO certified company employs c.500 employees and has a market capitalization of LKR 6Bn.

5 2.0 Domestic demand to boost revenue Revenue to reach LKR 19.8Bn in FY19E: LWL s revenue is expected to reach c.lkr 19.8Bn in FY19E growing at a CAGR of c.14% over FY16-19E on the back of increased demand in the domestic market stemming from the favourable macro-economic conditions prevailing in the market. Tiles and associated items coupled with Aluminium products are expected to generate c.lkr 13.1Bn accounting for c.66% of the total revenue in FY19E while Aluminium products segment is expected to generate c.lkr 2.7Bn contributing c.10% of LWL s total revenue in FY17E primarily driven by the increased volumes created by the improved demand. 2.1 Construction sector boom driven volume Figure 10: Construction as a % of GDP and GNI Rising urbanization amidst growth in GDP: Country s GDP registered a YoY growth of 4.5% and 4.8% in 2014 and 2015 respectively while the same is expected to record a growth of c. 5.5% and c. 6.3% in 2016E and 2017E respectively leading to a steady growth in country s middle income population. Sri Lanka is expected to move into upper middle income levels of USD 4,035 per capita as defined by the World Bank in 2017 from current lower middle income levels. Aforesaid has resulted in an increase in the growth in the urban population which was recorded at 18% by end 2015 leading to an increase in the demand for housing in the urban areas and a boom in the real estate segment of the country. Figure 11: Urbanisation Grwoth ( ) Favourable conditions in the market: Country s urbanization records at 18% resultant to the urban population increasing at an accelerated pace. Depicting the rise in the urban population an increased demand was witnessed in the housing market and real estate market resulted in domestic construction segment to register a 6.5%YoY growth in Credit granted by commercial banks to the private sector for construction recorded a YoY growth of 36% in 2015 while credit granted to personal housing registered a YoY growth of 35% in the same year indicating the increased demand for housing and residential construction projects. Figure 12: Construction as a % of GDP 2.2 Growth in Tourism segment: Tourist arrivals were recorded at 1.8Mn by December 2015 recoding an 18%YoY growth as opposed to 1.5Mn recorded in Tourist arrivals has experienced a steady growth over the years with the eradication of war in Tourist arrivals are expected to surpass 2.0Mn in 2016 to reach 2.2Mn by end 2016 with a YoY growth of 22% which creates the demand for an estimated 50,000 rooms to accommodate the increasing number where as existing capacity is estimated at 20,000 rooms. In order to meet the demand requirements major investments are directed towards the construction of tourism led construction projects specifically in the informal segment (e.g. boutique hotels, guest house, etc ) which creates more demand for tiles and associated products and aluminium product.

6 3.0 Improved GP, EBIT and NP margins Figure 13: Margins GP, EBIT and NP Improved margins of 32%, 19% and 13% GP, EBIT and NP margins are expected to record at c.32%, c.19% and c.13% in FY18E respectively. Overall cost of sales is expected to record at c.lkr 20.0Bn in FY18E resultant to the economies of scale stemming from increased volumes coupled with comparatively lower commodity prices. 3.1 LWL to enjoy the benefit of economies of scale: With the boom witness in the construction sector and real estate segment Sri Lanka witness a YoY growth of 6.5% in domestic construction subsector in 2015 which is likely to continue in 2016 and beyond. This results in an increased demand for surface covering (e.g. wall-tiles, floor-tiles, wooden flooring, etc ), aluminium products like aluminium doors, windows, window casings, etc... and complimentary products like tile grout, tile mortar, etc which are manufacture by LWL s subsidiary/ associate companies of Lanka Tiles PLC, Swissteck Ceylon PLC, Swisstek Aluminium Limited. Increased volumes is expected to result in LWL benefiting from economies of scale thus decline in the overall cost of production which is expected to record at c.lkr 13.5Bn in FY19E with a CAGR of c.8% over FY16-FY19E

7 Figure 14: Aluminium Price Movement ( ) USD 1, Comparatively lower commodity prices: During 2015 Aluminium prices experienced a dip of 17%YoY to reach USD 1,497 per MT from USD 1,815 per MT a year ago while in November 2015 Aluminium prices reached five year s low of USD 1,468 per MT. As of August 2016 Aluminium prices were recorded at USD 1,639 per MT which is still below the average of USD 1,664 per MT recorded in During 2015 world crude oil prices declined while Sri Lanka s energy prices were reduced during the same period which resulted in a lower production cost thus improving GP margins to 31% in FY16 as opposed to 26% recorded in FY15. Amidst the lower production costs GP Margins are expected to register at c.32% in FY17E. Cost Management Initiatives: LWL invested LKR 189Mn in order to improve factory processes including the installation of a digital printing system and enhancing manufacturing capabilities. LKR 75Mn was invested in sorting line automation which resulted in lower wasted and improved efficiencies. Further LKR 30Mn was invested in capacity expansion and modernization of storage facility at Meepe factory. These moves resulted in a cost saving of LKR 18.0Mn during FY16. Further, a six-sigma project was initiated to reduce the volume of defects arising out of the glazing and printing processes. A 4% reduction in rejects was observed owing to this initiative, leading to a saving of approximately LKR 25 Mn for the year.

8 LKR Mn Undervalued Wall-tile manufacturer 4.0 LWL to provide a 78% return P/E 31 March FY15 FY16 FY17E FY18E FY19E Revenue (LKR Mn) 14,596 15,539 16,546 18,423 19,814 Net Profit (LKR Mn) 1,044 1,332 1,383 1,773 1,922 EPS (LKR) YoY % Growth 13% 28% 4% 28% 8% Valuations PER (X) PBV (X) Dividend Yield (%) 3.8% 7.1% 7.4% 10.3% 11.2% NAVPS DPS (LKR) Payout Ratio 21% 31% 31% 34% 34% LWL Earnings CAGR of 13% FY16-19E: We expect LWL s earnings to reach LKR 1.9bn in FY19E (13% CAGR over FY16-FY19E). In FY17E LWL is expected to record a net profit of LKR 1.4Bn, growing by 28%YoY and 8%YoY in FY18E. At the current price forward PER is expected to be 4.3x, 3.3x and 3.0x by FY17E, FY18E and FY19E respectively. Figure 15: Earnings to grow at 13% CAGR FY16-FY19E 2,800 2,600 2,400 2,200 Net Profit 2,000 1,800 1,600 1,400 1,200 1,000 Source: Annual Report and FC Research

9 4.1 LWL Total Return of 78% Fair Value of LKR 170.0: FC Research target price for LWL stands at LKR providing an annualized total return of 47% based on the company s value as at March The target price of LKR is based on the average price of LKR via DCF valuations and LKR via PER based valuations. FY17E: For FY17E we expect a fair value of LKR based on average price of LKR via DCF valuations and LKR via PER based valuations providing a total return of 39% at current market price of LKR Expeceted LWL Price FY17E FY18E DCF Valuations based Target Price PER based Target Price Average Target Price Target Price (Rounded Up) Dividend Yield of 18%: FC Research expects a DPS of LKR 18.8 for FY18E resulting in a dividend yield of 18% for LWL. Return FY17E FY18E Target Price Current Price Capital Gain (LKR) Dividend (LKR) Capital Gain % 32% 60% Dividend Yield % 7% 18% Total Return % 39% 78% Annualised Return % 39% 47% 4.2 Discounted Cash flow Valuation COE (K e) R f 11% R m 18% 1.56 K e =R f + (R m -R f ) 22% WACC K e 22% K d 10% D/E Assumption 40 / 60 Terminal Growth (%) 3% WACC 17% Valuations FY17E FY18E NPV 9,725 11,057 Debt (-) -4,068-4,918 Cash (+) 2,827 4,562 Total Value of Equity 8,909 10,179 No. of Shares Value of Equty per Share FY18E Terminal Growth (%) FY17E Terminal Growth (%) WACC % 16% 17% 18% 19% 1% % % % % WACC % 16% 17% 18% 19% 1% % % % %

10 4.3 Average PER of 4.5x Figure 16: PE Band Graph LWL price has been trading between 2.0x 4.0x bands during the last 4 years. We expect LWL to trade at a PER of 4.5 by FY17E and FY18E. LWL s FY18E EPS is expected to reach LKR At 4.5x earnings, the price for LWL stands at LKR

11 5.0 Investment Risks Possible changes in government policy: At the 2016 Budget Proposal it was proposed to remove tile and sanitary-ware segment from BOI negative list which creates opportunity for a new player to enter the currently dominant tile and sanitary-ware market. Further, it was suggested to revise the import related duties on tiles and sanitary-ware which enables the import of tile and sanitary-ware at a relatively less cost causing the treat of substitute. Dumping imports: Sri Lankan tile industry is prone to dumping of the cheaper Indian and Chinese tiles. In addition, the tile sector is increasingly becoming commoditized causing a threat to the local tile manufacturer. Since LWL is competing in the lower-end of the market, it faces an increasing competition from the cheaper imports which may erode the market share over time. Exchange Rate Risk: Export tile sales of LKR 777Mn contributes 10% of LWL s revenue from sale of tiles and associated products in FY16. Export revenue accounted for 6% of total revenue of LKR 15.5Bn in FY16. Company is exposed to the risks caused by the fluctuations in the USD exchange rate as LWL s export destinations include Australia, North America, Europe and Russia.

12 6.0 Subsidiary/ Associate Valuations TILE 69% and PARQ 58% return 6.1 TILE and PARQ to record a revenue growth of 14% and 13% respectively for FY18E FY18E Valuation Summary: TILE is expected to have a fair value of LKR [DCF based LKR and PER based LKR 167.5]. Based on the current price of LKR 110.2, TILE would generate an annualized return of 42%. STRONG BUY PARQ is expected to have a fair value of LKR [DCF based LKR and PER based LKR 78.1]. Based on the current price of LKR 71.5, PARQ would generate an annualized return of 36%. STRONG BUY TILE - Y/E 31 Mar FY15 FY16 FY17E FY18E FY19E Revenue (LKR mn) 5,350 5,541 6,017 7,243 8,400 Net Profit (LKR Mn) 840 1,179 1,208 1,481 1,702 EPS (LKR) YoY % Growth 29% 40% 3% 23% 15% Valuations PER (X) PBV (X) Dividend Yield (%) 4.1% 6.4% 6.6% 8.1% 9.3% NAVPS DPS (LKR) Payout Ratio 28% 32% 32% 32% 32% PARQ - Y/E 31 Mar FY15 FY16 FY17E FY18E FY19E Revenue (LKR mn) 1,857 2,690 2,965 3,406 3,911 Net Profit (LKR Mn) EPS (LKR) YoY % Growth 113% 26% -4% 17% 13% Valuations PER (X) PBV (X) Dividend Yield (%) 0.7% 2.1% 2.1% 2.1% 2.1% NAVPS DPS (LKR) Payout Ratio 6% 14% 15% 12% 11%

13 6.2 TILE and PARQ to provide returns of 69% and 58% respectively Expeceted TILE Price FY18E DCF Valuations based Target Price PER based Target Price Average Target Price Target Price (Rounded Up) Expeceted PARQ Price FY18E DCF Valuations based Target Price PER based Target Price 78.1 Average Target Price Target Price (Rounded Up) TILE Return FY18E Target Price Current Price Capital Gain (LKR) 59.8 Dividend(LKR) 16.2 Capital Gain % 54% Dividend Yield % 15% Total Return % 69% Annualised Return % 42% PARQ Return FY18E Target Price Current Price 71.5 Capital Gain (LKR) 38.5 Dividend(LKR) 3.0 Capital Gain % 54% Dividend Yield % 4% Total Return % 58% Annualised Return % 36% 6.3 DCF value of LKR for TILE and LKR for PARQ for FY18E Valuations - TILE FY18E NPV 8,514 (+) Cash 1,699 (-) Debt (739) Total Value of Equity 9,474 No. of shares 53 Value of Equity per share Valuations - PARQ FY18E NPV 3,812 (+) Cash 21 (-) Debt (156) Total Value of Equity 3,677 No. of shares 27 Value of Equity per share 134.3

14 6.4 PER of 6.0x for TILE and PER 6.5x PARQ for FY18E Figure 17: PE Band Graph At 6.0x TILE is expected to have a PER based value of LKR Figure 18: PE Band Graph At 6.5x PARQ is expected to have a PER based value of LKR 78.1.

15 Appendix 1 Recommendation Criteria Categorization Grade A Grade B Grade C Company Category S&P SL20 Companies Rest of the Companies Companies less than LKR 1Bn Market Cap Strong Buy Buy Hold Sell T.Bill + 10% & Above T.Bill + 13% & Above T.Bill + 16% & Above T.Bill + 5% & Above T.Bill + 8% & Above T.Bill + 11% & Above T.Bill + 1% & Above T.Bill + 3% & Above T.Bill + 6% & Above Below T.Bill + 1% Below T.Bill + 3% Below T.Bill + 6% *1 Year T Bill rate as of % Appendix 2 Income Statement Profit & Loss Statement P/E 31 March FY15 FY16 FY17E FY18E FY19E Revenue 14,596 15,539 16,546 18,423 19,814 Cost of sales (10,856) (10,758) (11,330) (12,453) (13,514) Gross profit 3,740 4,781 5,215 5,970 6,300 Other income Distribution cost (988) (1,272) (1,522) (1,607) (1,706) Administrative expenses (822) (998) (1,059) (1,092) (1,203) EBIT 2,119 2,681 2,800 3,455 3,589 Finance income Finance cost (327) (256) (332) (355) (339) Profit before tax 1,798 2,488 2,596 3,327 3,608 Income tax expense (348) (680) (727) (932) (1,010) Profit for the period 1,451 1,808 1,869 2,396 2,598 Non controlling interest Equityholders of Lanka Walltiles PLC 1,044 1,332 1,383 1,773 1,922 EPS Source: Annual Reports and FC Research Estimates

16 Appendix 3 Balance Sheet Balance Sheet P/E 31 March FY15 FY16 FY17E FY18E FY19E Assets Non - Current Assets Property, plant and equipment 10,061 12,339 12,769 13,207 13,649 Intangible assets - goodwill Other Receivables Current Assets 10,165 12,404 12,834 13,271 13,714 Inventories 3,473 3,137 3,309 3,786 4,126 Trade and other receivables 2,327 2,199 2,357 2,726 3,040 Other Cash and cash equivalents 977 1,785 2,827 4,562 5,696 6,816 7,128 8,497 11,076 12,865 Total Assets 16,982 19,532 21,331 24,347 26,578 Equity and Liabilties Capital and Reserves Stated capital Reserves 1,005 2,307 2,307 2,307 2,307 Retained earnings 4,705 5,564 6,631 7,963 9,406 Shareholders' funds 6,497 8,659 9,725 11,057 12,501 Non controlling interest 2,750 3,335 3,708 4,173 4,677 Non - Current Liabilities 9,247 11,994 13,433 15,230 17,178 Interest bearing liabilities 1,742 1,725 2,486 2,610 2,767 Deferred tax liabilities Retirement benefit liability ,065 Deferred income & Capital grants Current Liabilities 3,257 3,532 4,398 4,643 4,938 Trade and other payables 1,649 1,524 1,556 1,804 2,027 Income tax liabilities Amounts due to related parties Current portion of interest bearing liabilities 2,634 2,120 1,582 2,308 2,074 4,477 4,006 3,500 4,474 4,462 Total Equity & Liabilties 16,982 19,532 21,331 24,347 26,578 NAVPS Source: Annual Reports and FC Research Estimates

17 Appendix 4 Cash flow Statement Cashflow Statement P/E 31 March FY15 FY16 FY17E FY18E FY19E Profit before income tax 1,798 2,488 2,596 3,327 3,608 Adjustments for Depreciation & amortisation Profit/ (loss) on sale of property, plant & equipment (34) Interest income (6) (62) (129) (228) (358) Finance costs Provision for retirement benefit obligations Others (37) Operating profit/(loss) before working capital changes 2,750 3,486 3,475 4,214 4,443 Working capital adjustments (Increase)/ decrease in inventories (172) (476) (340) (Increase)/ decrease in trade and other receivables (159) (368) (314) (Increase) /decrease in due from related parties (1) (4) Increase/ (decrease) in due to related parties 26 (6) Increase /(decrease) in trade and other payables 293 (123) Increase/ (decrease) in investments 1 (0) Cash generated from operations 3,341 3,768 3,180 3,618 4,011 Interest received Finance costs paid (327) (256) (332) (355) (339) Retirement benefit plan costs paid (73) (79) Income tax paid (161) (482) (727) (932) (1,010) Net cash flows from/(used in) operating activities 2,786 3,014 2,249 2,558 3,019 Cash Flows From / (Used In) Investing Activities Acquisition of property, plant & equipment (397) (990) (1,000) (1,075) (1,158) Acquisition of plantation assets (241) (194) Others Net cash flows from/(used in) investing activities (581) (1,138) (1,000) (1,075) (1,158) Cash Flows From / (Used In) Financing Activities Interest bearing loans & borrowings obtained 463 3, (78) Repayment of interest bearing borrowings (1,265) (3,477) Dividends paid - on Ordinary Shares (355) (410) (317) (441) (478) Dividend paid to non controlling interest (127) (130) (113) (158) (171) Others Net cash flows from/(used in) financing activities (1,276) (808) (207) 251 (727) Net increase/(decrease) in cash and cash equivalents 928 1,068 1,043 1,734 1,135 Cash and cash equivalents at the beginning of the year (868) 60 1,128 2,170 3,905 Cash and cash equivalents at the end of the year 60 1,128 2,170 3,905 5,039 Bank Over draft Cash in Balace sheet 977 1,785 2,827 4,562 5,696 Source: Annual Reports and FC Research Estimates

18 HEAD OFFICE 347 1/1, Dr. Colvin R. De Silva Mawatha, Colombo 2 Sales Desk: Fax: BRANCHES 347 1/1, Negombo Dr. Colvin R. De Silva Mawatha, No.72A, 2/1, Colombo 2 Sales Desk: Old Chilaw Road, Negombo Fax: Tel: SALES BRANCHES CEO Jaliya Wijeratne Negombo Priyanka Anuruddha Colombo Priyantha Wijesiri Damian Le Grand Nishantha Mudalige Isuru Jayawardana Anushka Buddhika Gamini Hettiarachchi Thushara Abeyratne First Capital Equities (Pvt) Ltd RESEARCH Dimantha Mathew Amanda Lokugamage Atchuthan Srirangan Michelle Weerasinghe Hansinee Beddage FIRST CAPITAL GROUP HEAD OFFICE BRANCHES No. 2, Deal Place, Matara Kurunegala Kandy Colombo 3 No. 24, 1/3, 2nd Floor, No. 6, 1st Floor, No , Tel: Lakshman Cooray Building, Union Assurance Building, Peradeniya Road, Anagarika Dharmapala Mawatha, Rajapihilla Mawatha, Kandy Matara Kurunegala Tel: Tel: Tel: Disclaimer: This Review is prepared and issued by First Capital Equities (Pvt) Ltd. and is based on information available in the public domain, internally developed and other sources believed to be correct. Although all reasonable care has been taken to ensure that the contents of this document are accurate, First Capital Equities (Pvt) Ltd and its Directors and employees, are not responsible for its accuracy, usefulness and reliability and disclaim liability for any loss suffered by the use of information contained herein. First Capital Equities (Pvt) Ltd may act as a Broker in the investments which are the subject of this document or any related investments and may have acted on or have used the information contained in this document, or the research or analysis on which it is based, before its publication.